Livingston v. John Wiley & Sons, Inc.
313 F.2d 52 (1963)
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Rule of Law:
A successor employer may be bound to arbitrate disputes under a collective bargaining agreement entered into by its predecessor, even if it is not a signatory to the agreement. Questions of procedural compliance with the agreement's grievance process are for the arbitrator, not the court, to decide.
Facts:
- District 65, Retail, Wholesale and Department Store Union (the Union) had a collective bargaining agreement with Interscience Publishers, Inc., which was set to expire on January 31, 1962.
- The agreement did not contain a clause making it binding on Interscience's successors.
- In June 1961, the Union learned of a proposed consolidation between Interscience and another publishing firm, John Wiley & Sons, Inc.
- The Union informed Interscience of its position that the contract would remain in effect despite the consolidation, but Interscience insisted the agreement would terminate.
- On October 2, 1961, Interscience consolidated with Wiley for bona fide business reasons, and Wiley became the successor employer.
- Wiley hired all of Interscience's employees but informed the Union that the collective bargaining agreement was terminated.
- Wiley refused to recognize seniority rights, make contributions to the employee pension fund, or honor other provisions of the Interscience agreement, asserting that all rights under it were extinguished by the consolidation.
- The Union sought to compel Wiley to arbitrate the dispute over the survival of employee rights such as seniority, pension contributions, job security, and vacation pay.
Procedural Posture:
- District 65, Retail, Wholesale and Department Store Union, AFL-CIO, commenced an action against John Wiley & Sons, Inc. in the U.S. District Court for the Southern District of New York.
- The Union filed a motion to compel Wiley to arbitrate disputes under a collective bargaining agreement originally signed by Interscience Publishers, Inc.
- The District Court denied the Union's motion to compel arbitration.
- The Union, as appellant, appealed the District Court's denial to the U.S. Court of Appeals for the Second Circuit, with Wiley as the appellee.
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Issue:
Does a successor employer have a duty to arbitrate disputes under a collective bargaining agreement entered into by its predecessor, where the successor is not a party to the agreement and the agreement does not contain a successor clause?
Opinions:
Majority - Medina, Circuit Judge.
Yes, a successor employer does have a duty to arbitrate disputes under a predecessor's collective bargaining agreement. The court holds that the federal policy of promoting industrial peace and stability through arbitration requires that a corporate consolidation does not automatically terminate all rights arising from a collective bargaining agreement. Even though Wiley was not a signatory and the agreement lacked a successor clause, the national policy favoring arbitration compels the successor employer to arbitrate the dispute over whether employee rights 'vested' under the predecessor's contract survived the consolidation. Furthermore, the court distinguishes between 'substantive arbitrability' (whether the subject matter is arbitrable, which is for the court to decide) and 'procedural arbitrability' (whether grievance procedures were followed, which is for the arbitrator to decide). By holding that procedural questions are for the arbitrator, the court prevents such issues from becoming tools for obstructionism and delay, thereby promoting the speed and effectiveness of the arbitral process.
Concurring - Kaufman, Circuit Judge
Yes, the successor employer has a duty to arbitrate. The holding should be interpreted to mean that the court is allowing the arbitrator to decide the threshold questions of whether the collective bargaining agreement as a whole survived the consolidation and whether Wiley is bound by its terms. The court's decision merely makes Wiley a potential party to a binding arbitration, but it does not preclude the arbitrator from ultimately determining that Wiley was not meant to be bound by the agreement's obligations, including the duty to arbitrate or to respect any 'vested' rights. The court's ruling simply sends these complex questions to the arbitrator for determination rather than deciding them judicially.
Analysis:
This case is significant for establishing the labor law doctrine of successorship, which imposes a duty to arbitrate on a non-signatory successor employer. The decision prioritizes the federal policy of maintaining industrial peace through arbitration over traditional contract law principles requiring privity. It prevents a new owner from unilaterally voiding a collective bargaining agreement's arbitration clause upon a merger, thus preserving a crucial mechanism for dispute resolution and stabilizing labor relations during corporate transitions. Additionally, the court's influential distinction between substantive arbitrability (for courts) and procedural arbitrability (for arbitrators) streamlined the path to arbitration by removing procedural prerequisites from judicial review, a holding later affirmed by the Supreme Court.
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