John Wiley & Sons, Inc. v. Livingston
376 U.S. 543 (1964)
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Rule of Law:
A successor employer is bound by the arbitration clause of a collective bargaining agreement entered into by its predecessor if there is a substantial continuity of identity in the business enterprise. Once a court determines that a dispute's subject matter is arbitrable, procedural questions related to that dispute are for the arbitrator, not the court, to decide.
Facts:
- District 65, Retail, Wholesale and Department Store Union, AFL-CIO (the Union) had a collective bargaining agreement with Interscience Publishers, Inc. (Interscience), set to expire on January 31, 1962.
- The agreement did not contain an express provision making it binding on successors of Interscience.
- On October 2, 1961, Interscience merged into a larger, non-unionized publishing firm, John Wiley & Sons, Inc. (Wiley), and ceased to exist as a separate entity.
- Wiley was a much larger concern than Interscience and none of its original employees were represented by a union.
- Following the merger, Wiley hired all of Interscience's union-represented employees, who continued in Wiley's employ.
- The Union asserted that it continued to represent the former Interscience employees and that Wiley was obligated to honor certain rights that had 'vested' under the Interscience agreement, such as seniority and severance pay.
- Wiley asserted that the merger terminated the collective bargaining agreement for all purposes and refused to recognize the Union as the employees' bargaining agent or honor the terms of the agreement.
Procedural Posture:
- The Union commenced an action in the U.S. District Court to compel Wiley to arbitrate under the Interscience collective bargaining agreement.
- The District Court, a court of first instance, refused to order arbitration.
- The Union, as appellant, appealed the decision to the U.S. Court of Appeals for the Second Circuit.
- The Court of Appeals reversed the judgment of the District Court and directed Wiley, the appellee, to proceed with arbitration.
- The U.S. Supreme Court granted certiorari to review the judgment of the Court of Appeals.
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Issue:
Does a corporate employer that acquires another company through merger have a duty to arbitrate with a union under the predecessor's collective bargaining agreement, and if so, is it for the court or the arbitrator to decide if the procedural prerequisites for arbitration have been met?
Opinions:
Majority - Mr. Justice Harlan
Yes, a successor employer has a duty to arbitrate under the predecessor's collective bargaining agreement when there is a substantial continuity of identity in the business, and procedural questions are for the arbitrator to decide. The disappearance of a corporate employer by merger does not automatically terminate all rights of employees under a collective bargaining agreement. Federal labor policy, which favors arbitration as a means of achieving industrial peace, supports imposing a duty to arbitrate on a successor employer, especially since a collective bargaining agreement is not an ordinary contract but a 'generalized code' governing the entire employment relationship. This duty is not absolute and depends on a 'substantial continuity of identity in the business enterprise,' which was present here as evidenced by the wholesale transfer of Interscience employees to Wiley. Furthermore, once a court determines the parties must arbitrate the subject matter of a dispute, procedural questions like timeliness or the fulfillment of grievance steps are intertwined with the merits and should be resolved by the arbitrator to avoid delay and the fractioning of disputes.
Analysis:
This landmark decision establishes the successorship doctrine in American labor law, ensuring that the duty to arbitrate under a collective bargaining agreement can survive a change in corporate ownership. By treating the collective bargaining agreement as more than an ordinary contract, the Court prevents employers from using mergers and acquisitions as a tool to evade their labor obligations. The ruling also clarifies the division of labor between courts and arbitrators, assigning questions of 'procedural arbitrability' to the arbitrator, which strengthens the power and efficiency of arbitration as the preferred method for resolving labor disputes.
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