CHARLES ROUNDS CO v. JOINT COUNCIL OF TEAMSTERS NO 42 420 606

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Court of Appeal, Second District, Division 4, California.

CHARLES J. ROUNDS CO., a corporation, Plaintiff and Appellant, v. JOINT COUNCIL OF TEAMSTERS NO. 42, Teamsters Local Union No. 420, and Teamsters Local Union No. 606, Defendants and Respondents.

Civ. 34977.

Decided: June 16, 1970

Findlay A. Carter, and Robert P. Schifferman, Los Angeles, for plaintiff and appellant. Brundage, Neyhart, Miller, Ross & Reich, and Julius Reich, Los Angeles, for defendants and respondents.

Plaintiff employer filed a complaint against the defendant unions seeking compensatory damages for breach of a no-strike clause contained in a collective bargaining agreement (hereafter referred to as the ‘Agreement’). Defendants filed an answer which contained a general denial and set up the affirmative defense that the dispute was covered by an arbitration clause in the Agreement; that plaintiff's failure to utilize the grievance procedure provided therein, precluded any action for damages allegedly arising out of the dispute. By agreement of the parties, the special defense was tried first. Following a court ruling favorable to defendants, a judgment of dismissal was entered, from which plaintiff prosecutes this appeal.

No dispute exists as to the following facts: Plaintiff was an employer in the construction industry who was engaged in interstate commerce. Plaintiff was a member of the employer organization known as the Southern California Chapter of the Associated General Contractors of America. The latter, acting as plaintiff's authorized agent, entered into a collective bargaining agreement with the defendant unions. Article IV of the Agreement contains both ‘no-strike’ and ‘no-lockout’ clauses. The same srticle further provides that, ‘all grievances or disputes arising between them [the parties] over the interpretation or application of the terms of this Agreement shall be settled by the procedure set forth in Article V hereof. * * *’ Article V, which then sets up grievance and arbitration procedures, provides that, ‘All grievances, other than jurisdictional disputes, arising out of the interpretation or application of any of the terms or conditions of this Agreement shall be submitted for determination and shall be determined by the procedure set forth in this Article, * * *.’ The procedures set forth include the establishment of a Joint Adjustment Board composed of equal numbers of labor and management representatives. Both the Union and the Employer are required to refer grievances or disputes to this Board. If the Board is unable to decide a matter, or if either party disagrees with its decision, the Board selects an Impartial Chairman from a list supplied by the Federal Mediation and Conciliation Service. Decisions of the Impartial Chairman, or nonappealed decisions of the Joint Adjustment Board, are ‘final and binding.’

As to the specific grievance and arbitration machinery for iniating grievances, the agreement in Article V(C) provides: ‘A Contractor shall refer a grievance or dispute to the Joint Adjustment Board through the appropriate employer Association. The Association shall then refer the grievance or dispute to the Joint Adjustment Board by sending written notice to the Contractor and the Union Chairmen of the Joint Adjustment Board. The Union shall refer a grievance or dispute to the Joint Adjustment Board by sending written notice to the Union Chairman of the Joint Adjustment Board. Upon receipt of such written notice, the Union Chairman of the Joint Adjustmen Board shall, by mutual agreemen with the appropriate employer Association, establish a time and place for the Joint Adjustment Board to convene. The written notice of referral required by this paragraph shall contain the name of the Contractor and the Union directly involved, the date and place of occurrence of the grievance or dispute and a brief description of the nature of the grievance or dispute.’

The complaint alleges that, in violation of the no-strike pledge in the labor agreement, the defendant unions called a strike which caused a work stoppage on the job site on July 2, 3 and 5, 1963. It was stipulated that plaintiff never filed a grievance under the labor agreement concerning the matters alleged in the complaint. In dismissing the action, the trial court found that the work stoppage dispute was subject to the arbitration provision of the agreement and that the action was barred by plaintiff's failure to utilize such provision.

Since plaintiff was engaged in interstate commerce, the issue of the arbitrability of the dispute in question must be resolved by the application of the substantive federal law fashioned by the federal courts under the mandate of section 301 of the Labor Management Relations Act (29 U.S.C. § 185(a) (1964).) (Local 174, Teamsters etc. Union v. Lucas Flour Co., 369 U.S. 95, 102–103, 82 S.Ct. 571, 7 L.Ed.2d 593; Butchers Union Local 229 v. Cudahy Packing Co., 66 Cal.2d 925, 930–931, 59 Cal.Rptr. 713, 428 P.2d 849; Leon Handbag Co. v. Local 213, etc., 276 A.C.A. 285, 287, 81 Cal.Rptr. 63.) Federal law ‘* * * commands a state court to order arbitration unless, after resolving all doubts in favor of that procedure, it can determine ‘with positive assurance’ that the dispute is not covered by the arbitration clause.' (Butchers Union Local 229 v. Cudahy Packing Co., supra, 66 Cal.2d at p. 927, 59 Cal.Rptr. at p. 714, 428 P.2d at p. 850.) Applying this test or standard, it cannot be seriously doubted that the dispute based upon defendant's alleged violation of the no-strike clause, was a matter which was arbitrable under the labor agreement.

As above indicated in the statement of the facts, the agreement provides (in Article IV) for settlement through arbitration of ‘all grievances or disputes arising between * * * [the parties] over the interpretation or application of the terms of this agreement.’ Thereafter, in Article V, which sets out the arbitration procedure, is contained the provision that, ‘all grievances, other than jurisdictional disputes, arising out of the interpretation or application of any of the terms or conditions of this Agreement shall be submitted for determination and shall be determined by the procedure set forth in this Article, * * *’ It goes without saying that a dispute concerning the no-strike clause is one involving ‘the interpretation’ of a term of the agreement. Article V(C) expressly provides the machinery for employer-initiated grievances. Only ‘jurisdictional disputes' are grievances which the agreement specifically provides are not subject to arbitration.

Plaintiff finds support for the position that it was not required to use the grievance machinery provided in the agreement, from language at the end of Article XII, which reads, ‘A parry to this Agreement shall not * * * file any action for damages because of a claimed breach of this Agreement without giving notice in writing to the other party and allowing ten days thereafter to such party for redress or correction.’ Plaintiff points out that the record shows that it complied with the notice requirement before filing suit. Plaintiff apparently reads this provision as permitting a party to maintain an action over any grievance after giving ten day's notice. A more reasonable construction is that this provision, although a condition precedent to the filing of the action, is no bar to a defense based upon the defendant's election to rely upon the arbitration procedure, should defendants choose to do so.

The case of McCarroll v. Los Angeles County etc. Carpenters, 49 Cal.2d 45, 315 P.2d 322, cited by plaintiff, is clearly distinguishable. In that case, as our Supreme Court was careful to point out, the labor agreement which was involved covered only ‘the usual employee complaints' and provided no machinery for raising employer grievances. (See Posner v. Grunwald-Marx, Inc., 56 Cal.2d 169, 181–182, 14 Cal.Rptr. 297, 363 P.2d 313, which distinguished the McCarroll case on the same ground.) Rather, applicable here are the decisions in Drake Bakeries, Inc. v. Local 50, American Bakery & C.W.I. (1961) 370 U.S. 254, 82 S.Ct. 1346, 8 L.Ed.2d 474, and Don da Roza, Inc. v. Northern Cal. etc. Hod Carriers Union, 233 Cal.App.2d 96, 43 Cal.Rptr. 264, both of which involved broadly worded arbitration provisions which were held to encompass disputes involving no-strike clauses.

Even if the arbitration board lacks power under this contract to award damages (a question which we need not decide on this appeal) it is their function to decide whether or not there was any breach by the union of the collective bargaining agreement. If the arbitration board decides that it does not have jurisdiction to award damages, but decides the issue of violation against the unions, then of course, once the stay which we order has been lifted, the plaintiff may proceed with its lawsuit to resolve the portion of the dispute thus left unresolved.

Plaintiff contends that defendants have waived their right to arbitrate. It is a familiar rule that when action is brought upon a contract containing an agreement to arbitrate, the defendants waive their right to arbitration if they allow the litigation to proceed without asserting their right to arbitrate. (See, e. g., Local 659, I.A.T.S.E. v. Color Corp. Amer., 47 Cal.2d 189, 194, 302 P.2d 294; Trubowitch v. Riverbank Canning Co., 30 Cal.2d 335, 339, 182 P.2d 182; Sauter v. Superior Court, 2 Cal.App.3d 25, 29, 82 Cal.Rptr. 395.)

Code of Civil Procedure, section 1281.4, authorizes a stay of pending actions only when an arbitration proceeding is pending or when an application is made to the court for an order compelling arbitration. This section is a part of the arbitration statute drafted by the California Law Revision Commission and enacted in 1961. With respect to this particular subject the study prepared under the direction of the commission's consultant, Professor Sam Kagel, has this to say:

‘When a party requests a stay in a civil action on the basis of an agreement to arbitrate, he is using that agreement to arbitrate as a defense. But, under existing law, there is no provision that compels a person to arbitrate even though the action is stayed; hence, it may be necessary for the party whose action is stayed to commence another proceeding in a court having jurisdiction to order arbitration in order to compel the arbitration to proceed. If a party is going to request a stay because there is an arbitration agreement, he should show his willingness to proceed with the arbitration as the means of settling the dispute. The best way for the defendant to demonstrate this willingness is to obtain an order to compel arbitration.

‘Section 2(d) of the Uniform Arbitration Act handles this problem by providing that the stay of an action shall be granted ‘if an order for arbitration or an application therefor has been made under this section.’ Thus the initiation of a proceeding to compel arbitration under the agreement becomes a condition precedent for the granting of a stay.'1

The recommendation of the commission to the Legislature includes this:

‘A pending action should not be stayed because the matter in controversy is subject to arbitration unless the party seeking the stay has taken or is taking action to compel arbitration.'2

In the light of this recommendation it is clear that Code of Civil Procedure, section 1281.4 was adopted to preclude any stay of a civil action unless the party seeking a stay was also seeking arbitration as an alternative means of disposing of the controversy.

As we have indicated above, defendants in their answer, pleaded the existence of the arbitration clauses in the collective bargaining agreement. Section 1281.2 of the Code of Civil Procedure, reads as follows:

‘On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy * * *.’

In California, (except in situations not herein applicable) a litigant is entitled to whatever relief is appropriate under the facts alleged, even though he has not expressly sought such relief. We think that the ‘affirmative defense,’ set out in defendants' answer, was sufficient to entitle them to the relief provided for in section 1281.2, and that those allegations were sufficient to show that they had not, and did not, waive their right to demand that the dispute between them and the plaintiff be submitted to arbitration. Since, as we have indicated, the arbitration may leave unresolved part of the issues, the defendants' remedy was an order to compel arbitration and not a complete dismissal.

The judgment is reversed; the case is remanded to the trial court with directions to enter its order requiring the parties to proceed with arbitration and staying further proceedings in the action before it until such arbitration shall have been concluded. Neither party shall recover costs on this appeal.

FOOTNOTES

1.  California Law Revision Commission, Recommendation and Study Relating to Arbitration (1960), p. G–39.

2.  Ibid. p. G–7.

JEFFERSON, Associate Justice.

FILES, P. J., and KINGSLEY, J., concur.