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Eaton Corp. v. International Association of Machinists and Aerospace Workers

decided: July 26, 1978.


Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 77-489-C - James E. Noland, Judge.

Pell and Wood, Circuit Judges, and Grant, Senior District Judge.*fn*

Author: Grant

GRANT, Senior District Judge.

This action was commenced on August 11, 1977, when Appellee Eaton Corporation filed its Complaint in the court below against the appellants, International Association of Machinists and Aerospace Workers (Union). The Complaint alleged the breach of a labor agreement under Section 301 of the Labor Management Relations Act of 1947, as amended, 29 U.S.C. § 185 and 28 U.S.C. § 1337, and sought damages for the breach of the Collective Bargaining Agreement (Agreement) which binds all of the parties to this action. Eaton then filed an Amended Complaint seeking, in addition to damages, an injunction prohibiting the Union from any strike, work stoppage, picketing, or the encouragement of any such activity, in violation of the terms of the Agreement. Eaton further sought in its Amended Complaint an order that the Company and the Union comply with the grievance and arbitration procedure of the Agreement. The Union filed its responsive pleading on August 22, 1977.

The District Court, after hearing witnesses for both the Company and the Union and the oral argument of counsel, found that the parties were contractually bound to arbitrate the issues in dispute and that all of the prerequisites for injunctive relief in a labor case had been satisfied, and entered a preliminary injunction ordering a cessation of the strike and work stoppage and ordering the parties to arbitrate their disputes. It is from this order that the Union now appeals.

The Eaton Corporation is a facility employing approximately 185 persons located in Richmond, Indiana. The employees have been represented by the International Association of Machinists and Aerospace Workers, Local 2143, for over twenty years. On April 1, 1977, the parties entered into a three-year Collective Bargaining Agreement making provisions against any strike or other cessation of operations. The major issue in the negotiations leading to this Agreement was Eaton's desire to improve its competitive position, by imposing a "productivity increase" for employees paid on a piece work, or incentive basis. That productivity increase had the effect of a substantial wage cut. The Union agreed that Eaton would be allowed to increase productivity up to fifteen per cent, although many of the details of this productivity improvement plan were unfortunately left for further development by the parties over the life of the Agreement.

After the Agreement went into effect, Eaton moved to implement the terms of the Agreement by reducing the incentive rates by the full fifteen per cent. Union President Charles Koch testified at the hearings before the District Court that the Union was taken by surprise by Eaton's unilateral imposition of a maximum productivity increase on all jobs. Nevertheless, the productivity increase was subjected to the grievance procedures established by the Agreement. Formal grievance meetings were held, at which time the Union requested all the information in Eaton's possession supporting the imposition of the maximum fifteen per cent increase. Eaton agreed to provide information that it felt was relevant to the issues in question but refused to produce any documents they claimed to be extraneous to the grievances then being prosecuted by the Union.

On August 3, 1977, Union President Charles Koch was given a three-day layoff for protesting a piece work disallowance for time spent on machine maintenance. Eaton took the position that Koch's protest represented insubordination and resorting to self-help as opposed to use of the normal grievance procedures of the Agreement. In any event, the suspension served to intensify the growing dispute between Eaton and the Union.

A third step grievance meeting was held on August 4, 1977. At this meeting, the Union requested an opportunity to discuss the layoff of Mr. Koch. The Union also requested an opportunity to discuss Eaton's continuing refusal to furnish it with information necessary to the processing of grievances, including those grievances on the fifteen per cent wage cut. Eaton, in reliance upon an agenda supplied for the meeting by the Union, agreed only to discuss Mr. Koch's layoff once a written grievance had been filed, and once again took the position that it would only make available relevant information in relation to the fifteen per cent wage cut. After a heated discussion on the issue of the production of documents, the Union asked for a recess and eventually decided that it would take these matters to the National Labor Relations Board.

Later that same day, Eaton's employees walked off the job. On August 16, 1977, the International Association of Machinists and Aerospace Workers officially sanctioned the strike by the membership of the Local. Prior to this, on August 5, 1977, the Union filed charges with the National Labor Relations Board on Eaton's refusal to bargain in good faith over the fifteen per cent wage cut. These charges were pending at the time the labor injunction was issued. Eaton and the Union did not meet or discuss the issues underlying the strike during the period from August 5 through August 23, 1977, the first day of hearings on the preliminary injunction before the District Court. Eaton and the Union also failed to discuss the disputes underlying the strike during a two-day recess between the hearings of August 24 and 25, 1977. The basis for this failure to negotiate was the prevailing unwillingness among the parties to meet and confer during the pendency of the strike.

The Union took the position before the District Court that the strike was a lawful, peaceful, economic strike. Eaton, relying on the provisions of Sections 27 and 28 of the Collective Bargaining Agreement*fn1 entered into by the Company, and the Union, maintained that the contract compels the Union to arbitrate the underlying issues and prohibits the Union from undertaking economic action. The District Court determined that the issues in question were subject to binding arbitration, that an effective no-strike provision was contained in the Agreement, and that all the prerequisites for injunctive relief had been met. Accordingly, the District Court ordered arbitration and required the Union to go back to work on August 29, 1977.

We are here faced with a labor dispute involving a detailed and sometimes confusing factual background. Fortunately, however, the rules of law to be applied in this area are for the most part well established. The pivotal question to this appeal is whether the District Court, based upon the exception first created by Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 26 L. Ed. 2d 199, 90 S. Ct. 1583 (1970), properly granted the preliminary injunction requested by Eaton. The Union takes the position that the anti-injunction provisions of Section 4 of the Norris-LaGuardia Act barred the issuance of an injunction by the District Court and that the Boys Markets exception is not applicable to the present case.

Section 4 of the Norris-LaGuardia Act provides:

No court of the United States shall have jurisdiction to issue any restraining order or temporary or permanent injunction in any case involving or growing out of any labor dispute to prohibit any person or persons participating or interested in such dispute (as these terms are herein ...

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