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September 24, 2002


The opinion of the court was delivered by: J. Phil Gilbert, District Judge


This matter comes before the Court on the motions for summary judgment filed by defendants Matsushita Universal Media Services ("MUMS") (Doc. 62), Panasonic Disc Services Corporation ("Panasonic") (Doc. 70), and the International Leather Goods, Plastics, Novelty and Service Workers Union ("the International") (Doc. 82). The plaintiffs, International Leather Goods, Plastics, Novelty and Service Workers Union, Local 352 ("Local 352"), a member organization of the International, and 75 of Local 352's individual members or former members ("individual plaintiffs"), have responded to the motions (Docs. 65 & 66), and the defendants have filed their respective replies (Docs. 67, 73 & 76). The Court also considers the plaintiffs' response (Doc. 113) to the Court's order to show cause why their claims against Universal Music & Video Distribution, Inc. ("Universal") should not be dismissed pursuant to Federal Rule of Civil Procedure 4(m) for failure to effect service within 120 days after the filing of the complaint.

The plaintiffs bring this suit against Universal, MUMS and Panasonic pursuant to § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, for breach of a collective bargaining agreement. They have sued the International pursuant to § 9(a) of the National Labor Relations Act, 29 U.S.C. § 159(a), for breach of the duty of fair representation based on a violation of § 101(a)(1) of the Labor Management Reporting and Disclosure Act, 29 U.S.C. § 411(a)(1).

I. Summary Judgment Standard

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Spath, 211 F.3d at 396. Where the moving party fails to meet its strict burden of proof, a court cannot enter summary judgment for the moving party even if the opposing party fails to present relevant evidence in response to the motion. Cooper v. Lane, 969 F.2d 368, 371 (7th Cir. 1992).

In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 322-26; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996). A genuine issue of material fact is not demonstrated by the mere existence of "some alleged factual dispute between the parties," Anderson, 477 U.S. at 247, or by "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Michas v. Health Cost Controls of Ill., Inc., 209 F.3d 687, 692 (7th Cir. 2000). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252; accord Michas, 209 F.3d at 692.

II. Facts

Viewed in the light most favorable to the plaintiffs, the admissible evidence establishes the following facts.*fn1

A. The Pinckneyville Plant

As a result of a corporate reorganization following Universal's parent company's merger with PolyGram, Universal announced in January 1999 that it would be closing the Pinckneyville returns department.

B. The Joint Venture

In late 1998, Universal and Panasonic began discussing the possibility of a joint venture to manufacture CDs and DVDs. Universal and Panasonic did not share any corporate parentage and were completely separate corporations. Panasonic wanted to establish a manufacturing operation closer to its customers and its warehouses in the eastern and midwestern United States than its manufacturing operations in California, which were operating at peak capacity at the time. Panasonic was also interested in a joint venture with Universal because it believed that the venture could spawn a long-term contract to supply DVDs or CDs to Universal, one of Panasonic's largest customers, and could give Panasonic access to lower cost raw materials. On the other side, Universal wanted to find additional uses for the Pinckneyville facility, which it believes would become underutilized after Universal's parent company's merger with PolyGram and the subsequent reorganization.

On April 15, 1999, Universal notified Local 352 and Rosemary Behrman ("Behrman"), general president of the International and the International's Midwest Joint Board and member of the International's General Executive Board, that, with the exception of the returns department, it would be selling its Pinckneyville operations. In a meeting held May 7, 1999, Local 352's Executive Board was told that the new owner refused to be bound by the 1996 Universal CBA but that it would accept the economic terms of the 1996 Universal CBA if some changes were allowed to the non-economic terms of the agreement. Otherwise, the new owner would "go non-union." Behrman did not inform the Local Executive Board of the specific changes the new owner wanted because she did not know what they were. The Local Executive Board authorized Behrman to accept a "language change" to the non-economic terms of 1996 Universal CBA in a new agreement with the new employer.

On May 13, 1999, in a letter agreement, Behrman agreed with Panasonic on behalf of the joint venture company, MUMS,*fn2 that MUMS would offer jobs to all of the employees working in Universal's manufacturing plant under modified terms and conditions. They also agreed that if a majority of the MUMS workforce had been represented by the International when they were employed at Universal, MUMS would recognize the International as the exclusive bargaining representative of its workforce as well. In return, the International agreed to enter into a new collective bargaining agreement with MUMS under non-economic terms that differed slightly from the 1996 Universal CBA. The agreement was clear that the returns department employees would not be offered MUMS employment, would not become employees of MUMS and would not be able to bump less senior Universal manufacturing department employees from their jobs at MUMS.

C. MUMS Goes On Line

The joint venture became a reality on May 22, 1999, when Universal and Panasonic officially formed MUMS, a limited liability corporation. The joint venture documents signed by Universal and Panasonic contained the following provisions:

3.1 Closing The transfer of assets contemplated by this UMVD Contribution Agreement shall occur simultaneously with, and as part of, the Closing of the JV Agreement. At Closing, with respect to the [Universal] Contributed Assets:
(b) [Universal] and [MUMS] shall enter into an assignment of the amended Union Contract. . . .
5.4 Employees. [MUMS] shall offer employment following Closing to each Employee at the Pinckneyville Facility who is employed in the C.D. replication and packaging business of the Pinckneyville Facility at the Closing on substantially equivalent salary, wages and benefits . . . taken as a whole, as provided to such Employees by [Universal] prior to Closing. Employees involved in the distribution and returns business at the Pinckneyville Facility will not be employed by [MUMS] following Closing, and [MUMS] will have no liability or obligations with respect to such employees. . . .

5.5 Union.

5.5.3 [Universal] will bargain in good faith with the Union concerning the "effects" of the assignment of the contract to [MUMS].

UMVD Contribution Agreement Among Matsushita Universal Media Services LLC of America and Universal Music and Video Distribution, Inc., Dated as of May 22, 1999.

The day after MUMS was formed, MUMS recognized the International as the exclusive bargaining representative of its workforce and, on behalf of the International, Behrman signed a collective bargaining agreement with MUMS ("1999 MUMS CBA"). She represented that she had the authority to sign the agreement on behalf of the International and purported to sign the agreement under the powers granted by the International's constitution, which states, in pertinent part, "The General Executive Board, shall also have the power, in cooperation with the Local Union, Joint Board or Council . . . to make contracts with employers." Constitution of the International Leather Goods, Plastics, Novelty and Service Workers Union art. VII, § 5. No provision of the International's constitution required ratification by the membership, but Local 352's constitution provided, "Proposed contracts shall be negotiated by a committee elected by the members of the shop affected and must be approved by a majority of the members of the shop attending a meeting and by the Executive Board of the Union." Constitution and By-Laws of International Plastic and Novelty Workers Union Local 352, AFL-CIO art. 12, § 2. By its terms, the 1999 MUMS CBA was effective from May 23, 1999, to June 9, 2001, and possibly longer. Neither Universal nor Panasonic was a party to the 1999 MUMS CBA.

MUMS acquired all of Universal's Pinckneyville buildings, including the building housing the returns department, but Universal retained ownership and control over the returns department operations. MUMS did not have and did not need a returns department. As promised in the May 13, 1999, letter agreement, MUMS offered employment to Universal's manufacturing operations employees under the 1999 MUMS CBA. However, shortly after it began operating, MUMS needed additional workers for DVD manufacturing jobs and accepted applications for those jobs from Universal returns department employees. MUMS ultimately hired some of those workers, including some of the individual plaintiffs, under the terms of the 1999 MUMS CBA. The individual plaintiffs who were not hired by MUMS continued to work in Universal's returns department under the terms of the 1996 Universal CBA. MUMS and Universal never employed the same workers at the same time.

Universal's returns department employees were supervised by one or two Universal site managers. However, MUMS performed human resources and other administrative functions for Universal's returns department employees pursuant to a contract with Universal. Thus, the time clock for returns department employees was kept in the MUMS facility, as were other payroll and human resources records. MUMS employees sent out Universal paychecks using MUMS envelopes, monitored and administered discipline for returns department absenteeism and implemented the garnishment of returns department employee wages as appropriate. Other than keeping human resource records and other administrative functions, MUMS had no authority or control over the terms of employment of the Universal employees in the returns department. In connection to one Universal employee's grievance, a settlement document prepared by a Universal attorney purported to settle with MUMS and Universal and contained only one signature line. The Universal attorney did not have authority to settle claims involving MUMS.

Despite the mostly separate management of the companies, there was some slight overlap. One Universal employee unloaded trucks and drove a forklift at the MUMS facility three times. On at least one occasion, MUMS employees ran a machine in the returns department building. MUMS also assisted the returns department in some shipping functions such as creating invoices and shipping paperwork, brought over Universal deliveries that had been mistakenly delivered to MUMS, and delivered shipments from MUMS to Universal at the returns department. MUMS and the returns department also shipped boxes, supplies and merchandise to each other without the standard shipping paperwork.

Using MUMS employees, MUMS maintained the building in which the returns department was housed as well as the equipment and property in the returns department, including the computers and machinery that it had purchased from Universal. MUMS charged Universal for maintaining the returns department building.

MUMS now manufactures CDs and DVDs. Manufacturing DVDs requires different, additional manufacturing equipment and worker skills than manufacturing CDs. MUMS sells more than half of the DVDs to Panasonic, which had not been a Universal customer prior to MUMS' formation. MUMS also intends to expand its Pinckneyville manufacturing facility and currently employs at least as many manufacturing workers as Universal did in its CD-only manufacturing operations. As a consequence of new manufacturing jobs created since MUMS was originally formed, MUMS received tax incentives from the state of Illinois' Economic Development for a Growing Economy ("EDGE") program, which had been passed by the Illinois legislature four days prior to MUMS' formation. From May 1999 until the 1999 MUMS CBA's termination date, MUMS, its employees and the International observed the 1999 MUMS CBA.

D. Internal Union Matters

On another front, the International was encountering problems with its own internal governance. During the relevant time periods, the International was affiliated with the Service Employees International Union AFL-CIO, CLC ("SEIU"). On July 11, 1999, the SEIU placed the International's Midwest Joint Board into trusteeship, removed all officers of the Midwest Joint Board, including Behrman, and appointed Bruce Boyens ("Boyens") as one of its deputy trustees.*fn3 Several weeks later, Boyens instructed Local 352 and other local unions within the Midwest Joint Board that he alone was their legal representative.

E. Close Of Returns Department

On July 15, 1999, Universal informed Local 352 that because of the planned closing of the returns department, the 184 Local 352 members working in the returns department would be laid off beginning on September 17, 1999. Subsequently, some of the plaintiffs filed grievances under the 1996 Universal CBA on behalf of Local 352 members regarding MUMS' opening. Some were filed with MUMS and others were filed with Universal. When MUMS received grievances from Universal employees purportedly under the 1996 Universal CBA, it referred them to Universal. Pursuing the grievances, the International met with Universal to discuss the closing and with MUMS to discuss future employment of its members. The grievants were not included in the meetings although the 1996 Universal CBA provides that they will attend Step 3 of the grievance process. On September 7, 1999, MUMS signed an agreement ("Side Letter Agreement") with Boyens on behalf of the International. In the Side Letter Agreement, MUMS agreed to give a hiring preference to Universal's returns department employees and to allow those employees to keep certain vacation benefits. In light of the Side Letter Agreement, the International did not pursue the grievances further. The returns department employees were, in fact, laid off in September and October 1999. The individual plaintiffs are 75 of those laid off.

III. The Litigation

The plaintiffs filed this lawsuit on November 23, 1999, alleging that MUMS and Panasonic either (1) are the alter egos of Universal, (2) are a single or joint employer with Universal or (3) assumed the obligations of the 1996 Universal CBA by virtue of the joint venture agreements, and are therefore bound by the 1996 Universal CBA. They claim that MUMS and Panasonic breached the 1996 Universal CBA when they (1) denied laid off returns department employees the right to claim jobs at MUMS, (2) laid off returns department employees when other jobs at MUMS were available, (3) coerced employees into reopening the 1996 Universal CBA, (4) attempted to ratify the resulting new terms without a vote by Local 352, (4) failed to follow the proper grievance procedure regarding the aforementioned breaches, and (5) violated §§ 12.02, 14.03 16.07 & 17.02 of the 1996 Universal CBA. They bring these claims pursuant to § 301 of the Labor Management Relations Act, 29 U.S.C. § 185.*fn4

The plaintiffs also sued the International under Section 9(a) of the National Labor Relations Act, 29 U.S.C. § 159(a), based on an alleged violation of § 101(a)(1) of the Labor Management Reporting and Disclosure Act, 29 U.S.C. § 411(a)(1). They allege that the International breached its duty of fair representation when it (1) failed to grieve Panasonic's refusal to abide by the 1996 Universal CBA, (2) recommended to the Local Executive Board that Behrman be allowed to accept a collective bargaining agreement with MUMS that was the same as the 1996 Universal CBA except for some changes to non-economic terms without finding out or telling the Local Executive Board what those changes would be and (3) executed the 1999 MUMS CBA without disclosing its terms to or seeking ratification from Local 352.

MUMS and Panasonic argue in their motions for summary judgment that they cannot be held liable for breaching the 1996 Universal CBA because they were not parties to that agreement and are not alter egos of or single/joint employers with Universal,. They also argue that, even if they were bound by the 1996 Universal CBA, there was no breach and that, even if there was a breach, all disputes over the breach were settled with the International.

The International argues in its motion for summary judgment that the plaintiffs' claim cannot succeed because they cannot prevail in their breach of contract claims against MUMS or Panasonic, a prerequisite for prevailing in a hybrid suit for the breach of the duty of fair representation against the International. It also argues that its actions were not arbitrary, discriminatory or in bad faith and that the plaintiffs suffered no damage from its actions.

The plaintiffs' response to the motions is a hodge-podge of factual assertions, legal conclusions and legal rules with very little analysis or organization. To the extent it understands them, the Court will attempt to ...

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