Appeal from order of the United States District Court for the Southern District of New York, Mary Johnson Lowe, J., finding appellant in contempt of a prior order of the court and directing the posting of a $300,000 bond, and fining appellant $1,000 for each day it remains in contempt. Reversed in part and remanded.
Before Waterman, Feinberg and Timbers, Circuit Judges.
UFI Razor Blades, Inc. appeals from an order of the United States District Court for the Southern District of New York, Mary Johnson Lowe, J., that found UFI in contempt of a prior order of the district court, imposed a coercive fine upon UFI of $1,000 for each day it remains in violation of that order, and required UFI to post a bond of $300,000. UFI claims that it is not in contempt of the court's earlier order and that the coercive fine was inappropriate. For reasons given below, we are compelled to reverse the finding of contempt and with it the coercive fine, but we do not disturb the requirement of a bond. We remand to the district court for further proceedings in accordance with this opinion.
This is the second appeal before us growing out of a labor dispute between UFI and District 65, Wholesale, Retail, Office and Processing Union, Affiliated with the Distributive Workers of America, which for some time has represented the employees at UFI's plant in New York City. The current collective bargaining agreement expires in April 1980. Until recently UFI manufactured various types of razor blades in New York City, reaching a peak complement in 1976 of 130-140 employees working in three shifts. UFI was acquired in that year by Wilkinson Sword, Inc.,*fn1 and not long thereafter production at the New York plant began to fall off. This was apparently due, at least in part, to the foreign production by Wilkinson in England of some blades for UFI accounts. In February 1978, the company advised the union that it would discontinue "some of the operation" at the New York plant, and in March the company made clear that it intended, among other things, to
Discontinue double edged and Twin II blade processing (manufacture) in the United States and source these products from Wilkinson's operations in England.
The union immediately protested the contemplated layoffs such a move would produce, claiming principally a violation of the provision in the labor agreement prohibiting subcontracting. The company responded that
The dispute was then submitted to arbitration, in accordance with the labor contract. After hearing the evidence from the parties, the arbitrator in June 1978 ruled for the union in an 11-page opinion, which noted that:
The circumstances of this matter clearly establish that manufacturing previously performed by bargaining unit employees has been sublet to Wilkinson's plants in England, or perhaps elsewhere, but in any event, well outside the contract's thirty-five mile "no moving" limitation.
It is equally clear that the importation of Twin II blades brought on a series of layoffs of employees who previously had been manufacturing the same blades.
The arbitrator's award provided as follows:
The Employer violated Articles 7 and 8 (SUB-CONTRACTING) of the collective bargaining agreement.
The Employer is directed to cease and desist from violating Articles 7 and 8 of the contract.
The Employer is directed to reinstate to their jobs those employees who were laid off subsequent to the purchase of UFI Industries Razor Blades, Inc. by Wilkinson Sword, Inc., and to reimburse each of them for the wages lost ...