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McGuire v. Humble Oil & Refining Co.

decided: January 31, 1966.


Medina, Waterman and Hays, Circuit Judges.

Author: Medina


This case involves an appraisal of the extent to which the principles of John Wiley & Sons, Inc. v. Livingston, 1964, 376 U.S. 543, 11 L. Ed. 2d 898, 84 S. Ct. 909 are applicable where, instead of a merger, there has been a purchase of part of the business of another concern, and where there is another union representing the employees of the purchasing corporation. Judge Tenney in the Southern District of New York (247 F. Supp. 113) has held the terms of collective bargaining agreements requiring arbitration of disputes between Local 553 and Weber & Quinn, the seller, binding on Humble Oil & Refining Company, the purchaser. Humble appeals from the judgment requiring it to submit to arbitration. We reverse.

While the contentions of the parties cover a wide range, we think it necessary to discuss only two aspects of the case. First, as this is a purchase of part of a business and not a merger, are the circumstances such as to indicate that "the lack of any substantial continuity of identity in the business enterprise before and after a (the) change would make a duty to arbitrate something imposed from without, not reasonably to be found in the particular bargaining agreement and the acts of the parties involved?" John Wiley & Sons, Inc. v. Livingston, supra, at p. 551. See also Piano & Musical Instrument Workers Union v. W.W. Kimball Co., 1964, 379 U.S. 357, 13 L. Ed. 2d 541, 85 S. Ct. 441, reversing Per Curiam 333 F.2d 761 (7 Cir. 1964).

We agree with the recent holdings by the Third and Ninth Circuits that the mere fact that we are here dealing with a purchase and sale rather than a merger does not of itself make the principles of Wiley inapplicable. Wackenhut Corp. v. International Union, United Plant Guard Workers, 1964, 9 Cir., 332 F.2d 954; United Steelworkers of America v. Reliance Univ., Inc., 3 Cir., 1964, 335 F.2d 891. Indeed, Mr. Justice Harlan's opinion in Wiley states in so many words that the duty to arbitrate cannot be automatically removed by "a change in the corporate structure or ownership of a business enterprise" (376 U.S. at p. 549). Nor would it seem to be decisive that the transfer was of something less than the business as a whole or of all the assets of the seller. Here, however, the precise terms of the contract of purchase and sale are not before us. Only 13 of the former employees of Weber & Quinn were integrated into the group of 260 truck drivers and 95 mechanics employed by Humble. There are other factors. For example, Local 553 might have sought protection of the rights of the former Weber & Quinn employees by prosecuting arbitration proceedings against Weber & Quinn which the proofs disclose as still in existence and functioning.

In any event, as we have decided the case on the second point, namely the theory that the presence of another union at Humble, Industrial Employees Association, Inc., and the decision of the National Labor Relations Board, to which reference will be made below, make the enforcement of the arbitration clauses as against Humble unpractical and inequitable, we do not decide whether, if there was no union representing all the employees of Humble, including those previously in the employ of Weber & Quinn, the decision to compel arbitration could be sustained. We think it better to avoid crossing that bridge until it is necessary to do so.

As we find the union features of the case dispositive of the issues, we shall now discuss the facts in some detail.


Prior to the transaction of purchase and sale on August 7, 1964 Weber & Quinn owned and operated a retail coal and fuel oil business at 73 Ninth Street, Brooklyn, N.Y. Burdi Fuel Co., Inc. had a similar business at 242 Central Avenue in Brooklyn. The partnership of Weber & Quinn bought out Burdi and the corporation was dissolved, but Weber & Quinn continued to use the Burdi name. There were in effect four collective bargaining agreements with the union, Coal, Gasoline, Fuel Oil Teamsters, Chauffeurs, Oil Burner Installation, Maintenance, Servicemen and Helpers of New York City and Vicinity, Nassau and Suffolk Counties, New York, N.Y., Local Union 553, affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America; i.e. one agreement for drivers and one agreement for servicemen with Weber & Quinn and with Burdi. We may disregard the separate agreement with Burdi as the terms of the agreements were identical. The agreement with Weber & Quinn expired on December 15, 1965. It established Local 553 as the exclusive bargaining agent of the employees of Weber & Quinn and contained numerous provisions relative to seniority, the processing of grievances, pension and welfare rights, job security and other matters. Weber & Quinn, including Burdi, employed 10 drivers and 14 mechanics.

Humble, on the other hand, is a fully integrated oil company. In its New York Area, which includes Westchester, New York City and Long Island, Humble distributes substantial quantities of gasoline, fuel oil and other petroleum products to thousands of gasoline stations, commercial establishments and homes. Deliveries are made from bulk plants where large quantities of gasoline and fuel oil are kept in storage tanks. These distribution activities are carried on principally by motor truck salesmen, truck drivers, mechanics and bulk plant operators. Since 1937 these employees have been represented by the Association above referred to. The collective bargaining agreement between Humble and the Association at the time of the purchase and sale will continue in effect until April 30, 1966. The Association, while not certified, is made the exclusive bargaining agent for all the employees "with respect to rates of pay, wages, hours of work and other conditions of employment," and provision is made for the modification of the agreement prior to its date of expiration, upon 15 days notice by Humble or by the union. This collective bargaining agreement also contains numerous provisions affecting seniority, the processing of grievances and job security. In addition, provision is made for disability protection, retirement annuities and other welfare benefits. As of December 31, 1964 this agreement covered 518 employees. Of these 260 are truck drivers and 95 are mechanics in the New York area.

The agreement of purchase and sale contained an express disclaimer by Humble of any obligations of Weber & Quinn to its employees, whether arising out of collective bargaining agreements or otherwise; and it contained no promise on the part of Humble to employ the former employees of Weber & Quinn. What Humble bought was "certain assets," including some trucks and equipment, but "principally" the Weber & Quinn fuel oil accounts in Brooklyn. Of the 10 Weber & Quinn drivers, 4 voluntarily entered the employ of Humble. Of the 14 Weber & Quinn mechanics, 9 voluntarily entered the employ of Humble. In his opinion denying the motion of Local 553 for a temporary injunction Judge Sugarman found: "Certain other Weber-Quinn employees either refused an offer of employment from Humble or failed to pass Humble's regular physical examination and were not hired."

The process of integrating the former Weber & Quinn employees into the Humble organization had been planned in advance and was consummated immediately after the closing. The trucks were removed and repainted, and none of the employees formerly covered by the Local 533 agreements were kept on the premises of Weber & Quinn after August 7, 1964. Interim arrangements were made for receiving orders over the telephone, and receipts for deliveries bearing the names of Weber & Quinn and Burdi were used for a time, solely for certain accounting purposes connected with the terms of the sale.

Local 553 promptly demanded arbitration. As the arbitration clause*fn1 of the Local 553 agreements provided for arbitration by a designee of the New York State Board of Mediation, the items claimed to be the subject of arbitration are set forth in a letter of September 10, 1964 to the Board from counsel for Local 553. The judgment appealed from directs the parties to proceed to arbitration "of the disputes noticed for arbitration before the New York State Board of Mediation on September 10, 1964," and we have set forth in the margin the letter of September 10, 1964, in which 26 items of dispute are enumerated.*fn2

Humble's refusal to arbitrate was followed on December 23, 1964 by the commencement of this action to compel Humble to submit to arbitration, pursuant to Section 301 of the Labor-Management Relations Act of 1947, as amended, 29 U.S.C., Section 185. On January 20, 1965 Humble filed with the National Labor Relations Board a petition for clarification "of the appropriate bargaining unit represented by the Association, so as to make clear that such unit includes the former employees of Weber." On July 11, 1965 the Board granted Humble's petition and ruled that the former Weber & Quinn employees being "effectively merged * * * into the New York unit currently represented by Industrial [the Association] * * * cannot now be considered a separate appropriate unit." Humble Oil & Refining Co., 1965, 153 NLRB No. 111. Although ...

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