Earl Warren: Number 262, Goodall-Sanford, Incorporated, versus United Textile Workers of America.
Douglas M. Orr: May it please the Court.
Earl Warren: Mr. Orr. (Inaudible)
Douglas M. Orr: Mr. Mahoney argued this case in the lower courts and was to have argued it here, but his health is deemed very poor. So, I apologize that you must take up for a substitute.
Earl Warren: Yes, sir.
Douglas M. Orr: The petitioner here is Goodall-Sanford, Inc, a Maine corporation that did have a very substantial textile business at Sanford, Maine. The respondent is AFL local 802 -- 1802 now AFL-CIO Local 1802 and United Textile Workers of America CIO. The parties entered into a collective bargaining agreement in 1951, which was renewed in 1953 and which expired in July 1955. That agreement provided among other things that management of the business was to be vested exclusively in the company. That an employee's service continued until it was terminated. An employee's service could be terminated for any of three reasons, a voluntary quit, a discharge for cause, or a layoff for a period of 18 months. The contract also provided for the customary four steps of grievance procedure which were not followed in this case, but which were deemed to have been waived by the District Court. Following those four steps, contract provided for arbitration. It also provided for the usual no-strike clause except on a question of a general increase in wages. Now, the contract also provided for certain benefits to the employee and those benefits are what are in issue here. One is vacation pay for employees who are on the payroll on June 1st of any year and who had 900 hours of service since the previous June 1. Secondly, it provided for certain hospitalization, Blue Cross, and life insurance benefits. And the application of those benefits to employees on layoff was somewhat different from those who were terminated in that they could continue paying a reduced premium and keep them alive during the layoff period. Thirdly, the contract provided for pensions to employees who had 20 years service of $20 a week upon reaching age 65 and of $25 a week -- a month -- thank you, for those who had 25 years of service upon reaching age 65. Now, the general background on this case, Goodall-Sanford, Inc.had sales for the fiscal year ending June 30, 1954 of approximately $50 million and a loss before taxes of about $4.5 million. Consequently, sometime in the spring of 1954, liquidation of a substantial part of the operations was contemplated and plans were made for it. Incidentally, during the summer of 1954, Burlington Industries, Inc.made a public tender for the common stocks of Goodall-Sanford and is now an owner of substantially all of it. The liquidation of the --of the company's plants at Sanford, Maine continued. And by the end of May 1955, it had completely gone out of business there and all of its employees had been terminated. Now, Goodall-Sanford, Inc.as a corporation is still alive and it still operates two plants, one at Hot Springs, North Carolina and another at Reading, Massachusetts.
Felix Frankfurter: And in any event, Burlington, Inc.is taking it over?
Douglas M. Orr: That's right, sir. Now, in January of 1955, some 1100 hired employees who were then on layoff status, were notified that they would be terminated because the departments in which they worked was completely shut down and would not reopen in any event. In February 1955, some 255 more employees were also terminated. In March of 1955, the Union asked the company to arbitrate the issues involved in whether they had a right to terminate these employees. And this request was refused by the company on the ground that it was a prerogative of management to close the business for economic reasons. And that it also had the right to terminate employees incidental, thereto, if there was no hope of ever re-employing. So, I will say that in this case of the three that are here before the Court today, the decision of the Court is of very material importance aside from the principle involved. Because a fairly substantial amount of money is involved and the question of whether they are entitled to vacation pay, whether those who were terminated and thereafter would have gotten pensions would be entitled to them and certain incidental insurance benefits which they might have been deprived of prior to the termination of the union contract, July 1955. Now, following the --
William J. Brennan, Jr.: You mean -- you mean it is important --
Douglas M. Orr: -- the refusal but --
William J. Brennan, Jr.: You mean it's important that those issues were lost in arbitration if arbitration is directed?
Douglas M. Orr: Yes. And it's important if -- if they won, too, sir. I mean --
William J. Brennan, Jr.: No. Well, I mean --
Douglas M. Orr: -- a material amount of money involved if it goes to arbitration and the arbitrator decides it either way.
Speaker: This --
Douglas M. Orr: Now, the --
William J. Brennan, Jr.: But the -- but the fact of the amount involved has no bearing in what the --
Douglas M. Orr: No sir. It does not. Following the refusal to arbitrate --
Speaker: What was the ground of the company's refusing to arbitrate?
Douglas M. Orr: Because it was a prerogative of management to close the plant and if the employees had no hope of re-employment, that they could also terminate the employment of the employees. And that therefore, it was not an arbitrable issue under the terms of the contract.
Charles E. Whittaker: In other words, whether they should go on or quit was wholly a management problem.
Douglas M. Orr: Yes, sir. Whether the business should be continued.
Charles E. Whittaker: And not an arbitrable one, that's your position?
Douglas M. Orr: Exactly, sir. And the complaint --
Felix Frankfurter: That's not the question here, though, is it? But that is not the question here?
Douglas M. Orr: No, sir.
Felix Frankfurter: (Inaudible)
Douglas M. Orr: No, sir.
Felix Frankfurter: Now, that's not a corruption.
Douglas M. Orr: Now, the complaint filed by the union upon the refusal of the arbitration asked for two things. It asked for a temporary restraining order against the termination of some 1800 additional employees who were still on the payroll and who would not be terminated, at least, until the end of the contract period according to the union, but which the company had already given notice would be terminated. So, they asked through injunction against their termination and also asked for a --a specific decree ordering arbitration of the company's right to terminate anybody. The District Court granted the temporary restraining order. And then after a hearing, the temporary injunction was granted but then dissolved. But the District Court did, upon a motion for summary judgment, ordered the matter to be arbitrated. A motion to dismiss made by the company on the ground of Westinghouse was denied.
Charles E. Whittaker: Then I don't understand your answer to Justice Frankfurter's question that the issue of arbitrability of this thing is not now an issue here. And you --
Douglas M. Orr: No, sir.
Charles E. Whittaker: Is it not --
Douglas M. Orr: The -- the issue of arbitrability was put in by the Circuit Court. We asked for certiorari on that question but the -- this Court denied a review of that question. Yes, sir. Now, the District Court held that this -- that it had jurisdiction under Section 301 and it decreed specific performance of the agreement to arbitrate. It also, as I mentioned a while ago, held that the issue was arbitrable and sent it to an arbitrator to determine two questions. Did Goodall-Sanford violate its agreement by terminating these employees on the ground that business operations were such that it ceased in, completely, in continuing operations and terminated the employees because of it? And secondly, if the company had violated the contract, what must it do to remedy the wrong to the employees? It also said that the decision of the arbitrator was to be final and binding upon the parties and did not specifically reserve any jurisdiction in the Court --
Felix Frankfurter: May I ask --
Douglas M. Orr: -- as many as award.
Felix Frankfurter: May I ask you, Mr. Orr, whether the late Judge Clifford went on the law of Maine or some federal law (Inaudible)
Douglas M. Orr: He did not go on the law of Maine because it seems to have been conceded even at that time,that the law of Maine would not permit the arbitration of a future dispute.
Felix Frankfurter: What did he go on? General (Voice Overlap) --
Douglas M. Orr: His opinion was pretty general. I think he went mainly on the American Trade case.
Felix Frankfurter: Massachusetts law or --
Douglas M. Orr: Yes. [Laughs]
Felix Frankfurter: Well, that in --
Douglas M. Orr: While federal law was interpreted by Judge Wyzanski.
Felix Frankfurter: Judge -- Judge Wyzanski went on for federal law.
Douglas M. Orr: That's exactly -- is the answer. Now, in the First Circuit Court of Appeals, Judge Magruder, at the same time had reversed another District Court in the General Electric case applying the late Judge Clifford's decision in this case. And he said first, that the order of the District Court was appealable since it was a final order. That's a question that's unique to this case of the three and also a question, incidentally, which was not raised in the District Court. But he held that it was appealable, nevertheless. Second, he said that the Court had jurisdiction under Section 301 but it could not grant an injunction under that section compelling arbitration because this -- the substantive common law of the federal courts would not permit it. However, and he said incidentally that the substantive federal common law would have been applicable and not the state law because it wasn't a diversity case. Thirdly, he raised for the first time, U.S.Arbitration Act in this case which wasn't considered either by the respondent or the District Court. And he said under the U.S.Arbitration Act that it was, the Court did have jurisdiction to compel arbitration both because this was not in a form of the contract and it was a transaction -- a -- contract governs in a transaction in commerce. He also considered the Norris-La Guardia Act and held it inapplicable. And finally, he decided that the dispute of whether the company have the right to terminate employees was inarbitrable. He also volunteered the suggestion in the General Electric case that the question of the very arbitrability of the contract might be passed on to the arbitrator if the parties have worded their contract so that the arbitrator had that power. So, we view the legislation that Judge Magruder enacted as almost a complete application of the general jurisdiction of federal courts in this entire hearing.
Felix Frankfurter: Why do you call it application instead of absorption?
Douglas M. Orr: [Laughs] I think that might be a better word. But he held that they could -- the courts would compel the submission to arbitration. He further held that in this case the very wide discretion given to the arbitrator to determine what remedies were proper was correct and the arbitrator's decision was to be final and binding. And finally, he even suggested that the decree of the Court might not be appealable. Now, this Court granted certiorari because of the conflict in the Lincoln Mills case. Now, I'm going to touch on only those points that I think might have some material bearing on this dispute. Now, the first one is what federal question is involved? And I think that question has been decided by the (Inaudible) case in the Fifth Circuit. In that case, the complaint by the union was that the company had breached an agreement to pay certain welfare benefits through a commission. And it asked for past damages for its past failures and an injunction against discontinuing to make those payments. And the Court noted that the contract was made in Texas, was to be performed in Texas, and was breached in Texas. And it stated and has the language that it said -- said it here and I think it's very apt. The crucial problem is the degree to which federal law affects the decision of the controversy. In the instant case, federal law does not affect it at all on its merits. I think the same thing is true in this case. I think that if I had read the statutes at large from the beginning to the end I could not have found the federal law. I think that was Mr. Wernick's job and I don't think he will point one out to you either. That same decision was reached in Amalgamated Association versus Southern Bus Lines in the Fifth Circuit. In that case, the union brought suit on behalf of its members against a bus line to compel arbitration of changes in the employment contract. And the plaintiff apparently alleged these grounds for jurisdiction but the suit was based on facts arising out of interstate commerce on the contract involving interstate transportation. And therefore, arises under the laws of the United States. Now, I assume that it was so and it was construed as an argument an allegation that it was a question arising under the Interstate Commerce Act. In any event, the Court said what is here involved is merely a controversy between the parties as to the construction of a contact which allegedly arises out of the laws of the United States, respecting collective bargaining between employers and employees in interstate commerce. But the right of action asserted does not arise out of those laws, but only arises from the subsequent contractual relations of the parties. The wrongful breach of such relations does not confer federal jurisdiction unless there is diverse citizenship.
Felix Frankfurter: May I (Inaudible) you, Mr. Orr, what are you reading from? What (Voice Overlap) --
Douglas M. Orr: That is 189 F.2d page --
Felix Frankfurter: What's the name?
Douglas M. Orr: -- 219. Amalgamated Association versus Southern Bus Lines.
Felix Frankfurter: Thank you.
Douglas M. Orr: Now, it may be said that if none of these questions arise under a federal law, then how could a 301 case come at -- up at all? And in my opinion, it is quite remote and it's even remote in the case of a cause of action simply for damages either by a company against a union or by a union against a company because there is no federal statute under which it arises. Now, there could be cases and I think the cases, Mr. Justice Frankfurter, were mentioned in a note you made to Westinghouse. For example, suppose a contract contained a provision that the union members would not engage in partaking -- in picketing the premises of a customer. Well, that might be a secondary boycott question which is covered by section 303 and therefore, you might say that that case arises under a federal law. Or you might have a provision that the company agrees that it will not overtly or otherwise, make any payment to any representative of the union and there you might have a case that comes up under section 303 which forbids that. Similarly, you could have provisions in a contract which involve unfair labor practices which would thereby give the jurisdiction -- give jurisdiction to a federal court under section 301. It's our position you should not go further than that. The second point I wish to cover is that assuming the Court does have jurisdiction, can it compel arbitration? Now, our view is that the Fifth Circuit in the Lincoln Mills case and the Steelworkers case in the Seventh Circuit decided last month are right on that question. Both of them followed the same reasoning. The Steelworkers case, in fact, just sprung along with the Fifth Circuit in the Lincoln Mills case. But they -- the -- the Court in the Galland-Henning Manufacturing Company case which was the Steelworkers case said, "That a reading of the plea on an ambiguous language, however, forces us to review that no substantive rights will create." The -- the Lincoln Mills majority opinion said, "There's no federal substantive law out of which to fashion such a remedy. And there's no state law out of which to fashion such a remedy. So, there can be none assuming the U.S.Arbitration Act is inapplicable." Now, if this question turns on whether arbitration would substantially affect the outcome as has been mentioned in some cases, while whether this is a diversity case or not, we think that it does substantially affect the outcome. Incidentally, I should like to mention a recent Article in 66 Yale Law Journal at page 167, which points out that the common law rule against enforcement of future disputes for arbitration has been abrogated in only 15 States out of the 48 and that of those 15, only seven specifically permit the application to an agreement in a labor dispute. An example for example, is Massachusetts which provided that the parties to a contract may submit future -- agree to submit future disputes to arbitration, but then it went further and said specifically, that an arbitration agreement in a union contract is valid and enforceable. I think that if you -- if -- if arbitration did not seriously affect the outcome of these cases, we wouldn't be here today. The union, I'm sure, has selected arbitration much if a very drastic change from the view, they took of it many years ago because they believe they will come out better by a decision of an arbitrator unfettered by the judicial protection that a court puts around this issue. In 1929, the union took a different position and this is mentioned in the petitioner's brief in the General Electric case, where in their bulletin they said that arbitrators won but sometimes for appeal and they would do so even more if they knew that Courts where going to judicially enforce these agreements.
Felix Frankfurter: Do I understand you (Inaudible) only in 15 States may an agreement that -- that in all but 15 States, an agreement to arbitrate may be spoken without being enforced?
Douglas M. Orr: I -- I'm forced to take the word of the author of the Yale Law Journal Article on that.
Felix Frankfurter: It's not for me to question the Yale, I'm certain.
Douglas M. Orr: Well, I think there might be very good grounds for it, Your Honor. [Laughs] But I -- I say this and incidentally, there's a recent case in Mississippi which is to the contrary where there was no statute at all but which nevertheless, I must call this attention to mind. They haven't seen it but they said it's a public policy of the State is such that they would enforce these specific agreements without the statute. But, again, turning to the question of whether the submission to arbitration will seriously affect the outcome of this case. I would like to point out a comment that was made in petitioner's brief in the Lincoln Mills case in which he said there are two theories of the function of an arbitrator. One, he interprets the language of the contract, and the second is that he tries to reach some mutually acceptable decision. Now, here there's no continuing relationship between the parties. So, there's no motive to reach a mutually acceptable decision. But I submit to you that this arbitrator may be one of those who believe that he doesn't have to interpret the contract even if there's a provision in there that says he may not modify or vary and we would therefore, come out pretty bad. As matter of fact, I would --
William J. Brennan, Jr.: I -- I don't follow what -- what the relevance here, of this argument to the issue.
Douglas M. Orr: Well, there has been some comment, Mr. Justice Brennan, that if it is a substantive question should -- which should turn on the law of the State if it substantially affects the outcome. Now, the law of the State of Maine has been conceded to forbid the issuance of a decree in such a case.
William J. Brennan, Jr.: Yes, but the fact -- the fact that your client voluntarily, I suppose, signed an agreement to arbitrate something. And the only problem before us is whether your client shall be required to arbitrate that something?
Douglas M. Orr: Yes, sir. But I submit that that contract was entered into under the laws of Maine which would not require it unless the partners wouldn't do it.
William J. Brennan, Jr.: Well, that's something -- that's something else again. But what may be the outcome of an arbitration if you are required to arbitrate? It doesn't seem to me to bear at all upon the question whether you shall be required to arbitrate.
Douglas M. Orr: Well, I -- I'm just making the point --
Speaker: Wouldn't that be a relevant question that you're relying on diversity jurisdiction here? This 301 has good -- a good federal question jurisdiction, what relevance to all these stuff?
Douglas M. Orr: Well, now that is a point, Mr. Justice Harlan. If you say that a law of United States is concerned and involved, it may well be that you couldn't look to -- to state law at all. But some of the Circuit Courts have --
Felix Frankfurter: Yes.
Douglas M. Orr: -- commented in -- along that line.
Felix Frankfurter: But some of the Circuit Courts had said even if arbitration is to be directed, you have to enforce state arbitration.
Douglas M. Orr: Yes, sir. That's the point I'm making. And the --
William J. Brennan, Jr.: Well, perhaps you have a point --
Douglas M. Orr: Turning back to your --
William J. Brennan, Jr.: -- but I still haven't caught it.
Douglas M. Orr: -- your question. Some courts have said that if the question involved seriously can affect the outcome of the case, then it is a substantive question which must be decided under state law and not a procedural questions which would be decided on federal law.
Felix Frankfurter: Although you are in the federal court out of -- on federal jurisdiction and not diversity.
Douglas M. Orr: Have I answered your question?
William J. Brennan, Jr.: I don't think so, but go on.
Douglas M. Orr: Well, as the law of Maine is quite clear that a -- an agreement to arbitrate a future dispute cannot be enforced in the courts. And I say that if you have time to start with Maine law because this is -- this is a substantive question, then the answer is clear.
William J. Brennan, Jr.: Yes. But the point -- the only point I'm making is that you made an agreement to arbitrate.
Douglas M. Orr: Yes, sir. We did. (Voice Overlap) --
William J. Brennan, Jr.: (Voice Overlap) -- Well, now did you make it with an understanding that it was never enforceable under the law of Maine?
Douglas M. Orr: If the law, the Maine law, if Your Honor please, I think it's a logical assumption that it was to be made if the parties wanted to agree to it and if they didn't, they didn't have to.
William J. Brennan, Jr.: Yes. But now having agreed to it, your point is nevertheless Maine law says it's unenforceable?
Douglas M. Orr: Yes, sir.
William J. Brennan, Jr.: Well then, now what importance is it how it may come out if in fact you're required to arbitrate it --
Douglas M. Orr: But if we required --
William J. Brennan, Jr.: -- under federal law?
Douglas M. Orr: -- it doesn't make any difference at all, but if it's a -- such a substantive question as distinguished from procedural that you've got to apply state law.
William J. Brennan, Jr.: Well, a state law is and it's unenforceable and we have to enforce state law then you're not to be required to arbitrate.
Douglas M. Orr: That's exactly our --
William J. Brennan, Jr.: Well, then what difference does it make? How it may come out if you are required to arbitrate? That's what I don't follow.
Douglas M. Orr: Because if it -- it makes a lot of difference how we come out, then it makes a lot of difference where the state law ought to be applied according to the comments in some of the circuit law.
William J. Brennan, Jr.: Well, that's why you're lose.
Douglas M. Orr: (Voice Overlap) --
William J. Brennan, Jr.: Well, that's why you're losing.
Douglas M. Orr: [Laughs] Well, that that very language was used in the --
Felix Frankfurter: May I suggest that it doesn't do losing but still on the decisions of the Courts.
Douglas M. Orr: Yes, sir. It -- it has been now. Now, the petitioner in the Lincoln Mills case has gone to great pains to say that the arbitration provision is a consideration for the no-strike provision and if the company can sue for damages because of violation of the no-strike agreement, then you've got to let the union sue to compel specific performance. I don't think that's true if it were every agreement could have a no-strike clause would also have to have an arbitration clause. And furthermore, as pointed out by the General Electric Company, the no-strike clause is actually the inducement to the entire contract on the part of most companies because without it, there would be very little advantage to them in entering into a collective bargaining agreement at all. I say the no-strike clause is consideration for the wages, workloads, seniority provisions and everything else. And you can't segregate it that way. And incidentally, if you follow that argument to its conclusion it said in -- in the present situation that our agreement to arbitrate is consideration for the union's agreement not to strike, you end up very foolishly because all the work is gone. I would like to remind, Mr. Justice Clark, of his comment in the Cutter Laboratories case. Black versus Cutter Laboratories was decided last summer which involved the question of whether a woman who is a member of the Communist Party was discharged for cause. And the Supreme Court of California said that she was and this Court said in confronting the California Supreme Court, the decision involves -- and this was a -- a union contract case. The decision involves only California Construction of a local contract under a local law and therefore, no substantial federal question is presented. Now, I believe if it is local for the California Supreme Court, it is local also of the United States Supreme Court and the federal courts. Turning just a minute to the Norris-LaGuardia Act and I'm not going to spend any time on it because this particular statute is the most frustrating to argue about.
Speaker: Yes.
Douglas M. Orr: In my opinion there is. If a statute says you can't issue an injunction any place, anywhere unless you conform strictly to the following rules. To argue that nevertheless, where you got an arbitration case you don't have to conform to those rules. You can issue it anyways. Where the plain -- where the language is so plain that you don't have to turn any place else to see what it means, it's our view that you've got to follow the language. You shouldn't have to go back into what the legislature said or anything else.
Charles E. Whittaker: Mr. Orr, I'm --
Douglas M. Orr: Section 1 of that Act provides, "That no court of the United States shall have jurisdiction to issue any injunction in a labor dispute except in strict compliance with the provisions of the Act."
Charles E. Whittaker: Is a decree to enforce a common garden variety of covenant an injunction?
Douglas M. Orr: I submit it most certainly is whether it's a mandatory injunction, whether you're saying in effect that we will enjoin you from continuing not to arbitrate --
Speaker: Yes.
Douglas M. Orr: -- or whether we will issue an injunction compelling you to arbitrate are one and the same thing.
Charles E. Whittaker: I can see if it arose in anyway under an equitable right as distinguished by the enforcement specifically of a covenant that you would be right. But it's hard for me to see why we should in truth call a simple specific performance of a covenant an injunction, a mandatory injunction.
Douglas M. Orr: Well now, if Your Honor, please. On that reasoning you could enjoin the union's covenant not to strike because they have agreed in this contract that they would not strike. And you could say, “Well, I'm not enjoined the -- enjoining the employees from striking. What I'm doing is enjoining the Union from permitting to strike.” Well, I think the Union would have to take a long time to go along with that. They -- they wouldn't (Voice Overlap) --
Charles E. Whittaker: Well, I would --
Douglas M. Orr: -- in -- with the police.
Charles E. Whittaker: I -- I will agree, there are -- there's no virtue in labels. But if something just rebels in me to consider a contract to -- a -- a suit to specifically (Inaudible) a simple covenant as an injunction?
Douglas M. Orr: Well, may I ask you, Your Honor. Would you consider a -- a decree enjoining the union from failing to perform its agreement not to strike, which is a simple covenant not to strike. Would that be prohibited by the Norris-LaGuardia Act? I believe the Mead case has held it is forbidden because it involves possible -- it's within --
Speaker: Norris --
Douglas M. Orr: -- the specific provision of Section 4. Anyway, if I may just repeat the one point I wish to make that section 1 provides, "That no court shall issue any injunction in a labor dispute except in strict compliance with the provisions of the Act." And section 7, similarly says, "That no court of the United States shall have jurisdiction to issue an injunction and a labor dispute except after hearing and findings of fact that unlawful acts are threatened and the public officers won't furnish the needed protection." Now, just because they can't bring themselves within that exception, the respondents are forced to say that the Act is not applicable at all.
Felix Frankfurter: Can we get the judgment, the actual judgment in this case in the record, Mr. Orr?
Douglas M. Orr: Yes, I'm sure you could.
Felix Frankfurter: Where is it?. Don't -- don't take it up yet.
Douglas M. Orr: Yes, yes.
Felix Frankfurter: (Voice Overlap) -- on page 49.
Douglas M. Orr: Yes, sir.
Felix Frankfurter: Thank you very much.
Douglas M. Orr: Turning now for a moment to the United States Arbitration Act. I would like to borrow what I consider a right, apt phrase used by Judge Wyzanski in the Boston Printing Pressmen's Union case. Would Congress ever have dreamed that section 301 driven in tandem with the United States Arbitration Act would be used to specifically enforce an injunction -- to specifically enforce an agreement to arbitrate? The dilemma that this has thrown some of the Court's standards indicated, I think, even by Judge Magruder's language in the General Electric case below because he has to argue inconsistently with himself. And this has been pointed out in the Steelworker's case which is to be here also on grant of certiorari. In other words, he says, in saying that this is not a contract, evidencing a -- this is a contract evidencing a transaction in commerce, he has to say this, “The collective agreement sets the terms and conditions under what, which not one, but hundreds or thousands of workers are employed." That's when he's arguing that it's a contract evidencing a transaction in commerce, but then he at the same time concludes that it's not an employment contract under section 1. Now, as all of you (Inaudible) the average textile mill worker at least has nothing to evidence his contract of employment except he's put on the payroll and where there is a union contract, it covers practically all of the rest with the terms and conditions if it's as broad in scope as the contract which we have under consideration here.
Speaker: What do you think the legislative history indicates as to whether Congress considered that these agreements would be specifically enforced or not?
Douglas M. Orr: The -- the legislative history of the U.S.Arbitration Act?
Speaker: No, no.
Douglas M. Orr: Of 301? I don't think they considered it at all except when, as Mr. Justice Frankfurter has pointed out, they had up before them the question of whether a breach of contract should be an unfair labor practice.
Speaker: Well, that's --
Douglas M. Orr: And they --
Speaker: As (Voice Overlap) --
Douglas M. Orr: -- decided not to include that. They -- and they -- there was specific comment, I believe, in that discussion as to whether a failure to abide by covenant to arbitrate should be considered an unfair labor practice. And they didn't include that either.
Felix Frankfurter: What you're saying is if -- if breach of a contract, the collective agreement had been an unfair labor practice were included among the unfair labor practices, then you would have a statute of the United States?
Douglas M. Orr: Yes.
Felix Frankfurter: And relief under it would be relief under -- arising under the law, a law of the United States --
Douglas M. Orr: Exactly.
Felix Frankfurter: -- deriving a law of the United States means a statute, doesn't mean a hodgepodge philosophy.
Douglas M. Orr: But I -- I still agree that, that would have been so, had they done it, which they didn't.I think that the petitioner in the Lincoln Mills case is so -- hung himself in persisting so earnestly in his argument that a collective bargaining agreement is something vastly and entirely different from a commercial contract. And therefore, the fact that there's no substantive law allowing this specific enforcement of a contact to arbitrate in a commercial dispute, has no application whatsoever to a labor dispute. You've got to consider that something entirely different. Now, if that is so, I think he's hung on the U.S.Arbitration Act because everyone conceives that at least primarily it had as its purpose nothing more than commercial contracts, agreements to arbitrate in commercial contracts.
Felix Frankfurter: Well, that doesn't foreclose. That doesn't -- in fact, what -- what Congress had in mind, or so we find that, it doesn't contract the appropriate scope of the language of the statute to something larger than what they predominantly had in mind.
Douglas M. Orr: That's right.
Felix Frankfurter: And you have the common place in legislation --
Douglas M. Orr: Yes.
Felix Frankfurter: -- a specific evil or specific concern, gives rise to legislation but the language of the legislation may not be restricted to that --
Douglas M. Orr: Yes.
Felix Frankfurter: -- historical source.
Douglas M. Orr: Now, section 4 of the Arbitration Act provides that a litigant can come in and enforce arbitration under section 4 if the United States Courts had jurisdiction except for the agreement to arbitrate. Well, I think that -- and I'm coming to this in just a moment, except for the agreement to arbitrate, you don't have anything here but a Westinghouse case. But he gets around that by saying, “Well, we will use sections 1 and 2 of the Arbitration Act to say that this is a valid and enforceable contract. But we elect not to use section 4 because we can't use it." Now, as this Court knows there's been several interpretations of section 1. That the definitions in section 1 of U.S.Arbitration Act are applicable to the entire Act. It's an integral statute and I submit very earnestly that you cannot use Sections 1 and 2 and then because you can't comply with section 4 that we will rely on general equitable jurisdiction to let us enforce it even though we can't comply with it. And I want to specifically mention two things in section 4 that are very material on that point. One is that a party may ask for a jury trial if either there is an issue on whether the agreement to arbitrate was made or whether the agreement to arbitrate was breached. And I might mention that the petitioner here did not have that election because the U.S.Arbitration Act was never mentioned at all. We didn't have the choice of a jury trial. And although it wasn't a substantial issue in the court below, it might have been if we felt we could have got a jury rather than the judge. Now, coming to the underlying merits of the case aside from the agreement to arbitrate, you have nothing in the world here but the Westinghouse case. In Westinghouse, the union asked for a declaratory judgment that 4000 employees were entitled to one day's pay in April. Here, you have a request for arbitration that some 1400 employees should be entitled to vacation pay, should be entitled to pensions where they have length of service sufficient to warrant them, and that they should have certain money payments under the group insurance provisions of the group insurance contract. So, absent, the agreement to arbitrate, you don't have anything in the world here but a Westinghouse case and I submit that an agreement to arbitrate and specific enforcement of that agreement is practically the same as a declaratory judgment on the part of the union asking for the same thing. Now, if in -- a declaratory judgment is granted under section 2202 or maybe -- 2202. The federal court may go further and grant whatever relief it -- it feels may be warranted on the basis of the declaratory judgment. Here, if this Court enforces specific arbitration, the arbitrator is at liberty to grant whatever relief might be warranted. But I might point out that if the arbitrator says that the Union is entitled to no relief, I believe that 1400 employees are not barred at all in any way from going into a state court and suing on their particular contract of hiring, the company has got to start all over again. Coming finally to the appealability of this case --
Felix Frankfurter: But you -- I -- would you mind repeating that last point, individuals?
Douglas M. Orr: Well --
Felix Frankfurter: I just didn't -- (Voice Overlap) --
Douglas M. Orr: -- it seems to me that if the -- this is submitted to arbitration at the request of the union. And the arbitrator says, “We don't -- I don't think you're entitled to anything.” I don't think that's res judicata for the individual employees. I think they may later go into a state court and say, “Well, I -- I'm entitled to this vacation pay and I want damages because of it and I don't believe that the arbitrator's award would follow that.” The individual employee is not -- having been appointed to it all.
Speaker: What's the use of the arbitration?
Douglas M. Orr: Well, if they win, I assume that we're stuck but if they lose, then they're not. [Laughs] That -- one-sided situation, I'm afraid you --
Felix Frankfurter: I-- I don't know anything about it. But I suppose if the arbitration, if the award, the arbitral award -- it's the normal thing, is it not, that the arbitral's award requires enforcement in the courts?
Douglas M. Orr: Yes, sir. That's so.
Felix Frankfurter: And therefore, I suppose that subject that I (Inaudible) really to thinking that the test may be too much if the arbitrator merely did hand down an award and nothing happened. I suppose res judicata as you say would not apply. But I don't know.
Douglas M. Orr: I'm thinking of the reversed decision.
Felix Frankfurter: Pardon me?
Douglas M. Orr: I'm -- I'm thinking of the revised situations.
Felix Frankfurter: Yes, I mean the other way around?
Douglas M. Orr: Yes.
Felix Frankfurter: He -- he throws them out. He throws them out.
Douglas M. Orr: Then they not barred. I don't see anywhere you could bar them at all. In coming to the last question, the --
Speaker: Yes.
Douglas M. Orr: -- the appealability which as I mentioned before was raised in the first instance by Judge Magruder and he raised it and then knocked it down as being a strong man. He said that he believed that if -- if the petitioner who had requested arbitration was refused arbitration, there wouldn't be any question of what -- what he should have the right to appeal. Therefore, he granted it. The losing party should similarly have a right to appeal. But I -- I would like to point out, and I -- I don't think this is a very serious issue even on the part of the respondent in this case. That there's no question whatsoever that this proceeding is not ancillary to either an action at law or an action at inequity. It's a completely independent proceeding. And the award that's made is final in every sense of the word within the meaning of title 28 of the code. It's also an injunction within the meaning of the title 28 of the code. And I'm happy to announce that the Second Circuit has finally straightened itself out on this question which it seemed to be having quite a good deal of difficulty in -- in the recent case of Farr & Co.versus Intercontinental De Navegacion De Cuba, decided February 4, 1957. They went back and said that within this Bernstein case, that should be distinguished because it was a continuous proceeding in which an award have been made and which a request have been made to vacate the award and to resubmit it to arbitration. So, they said it was interlocutory in character. But when they had the actual case of an independent proceeding on all fours of this one, although that was a maritime case in which damages were asked for -- damages to sugar on a vessel. It distinguished the previous case and said, where you have an independent proceeding, where the only relief asked has been granted or denied, it is appealable.
Speaker: Would you mind giving me the name of that case?
Douglas M. Orr: Yes, sir. That's Farr, F-A-R-R, and Co.versus Intercontinental and so forth, Second Circuit, February 4 of this year.
Felix Frankfurter: Does the Steel case been reported Mr. Orr --
Earl Warren: Mr. Orr --
Douglas M. Orr: Yes.
Earl Warren: Justice Frankfurter asked you question.
Felix Frankfurter: Does the Steel case of the Seventh Circuit -- the Steel case been reported in the -- in the federal before you?
Douglas M. Orr: This case -- no, sir. I believe we had to look for it upstairs in our --
Felix Frankfurter: All right. That's -- is this to be (Inaudible) not in federal employees.
David E. Feller: It's not in the federal side --
Felix Frankfurter: That's -- that's -- (Voice Overlap) --
David E. Feller: -- in labor -- labor employee --
Felix Frankfurter: (Inaudible)
Earl Warren: Thank you. Mr. Feller, you may proceed now.
David E. Feller: I -- I might add, Mr. Justice Frankfurter, the petition for certiorari will be filed any day now. So, that we'll have printed copies of the opinion in that case. I think in the eight minutes --
Felix Frankfurter: Do not look, but do not be lost in the race of these cases (Inaudible)
David E. Feller: Well, I hope that it will simply be held and disposed of as these cases are. We -- we don't want to litigate another case but we are faced with the final order in the Seventh Circuit --
Felix Frankfurter: Yes, of course.
David E. Feller: -- involving the same question. I think in the eight minutes or so that I have, Your Honors, I can best occupy myself by instead of engaging in a formal -- beginning of a formal presentation, attempt to answer a few of the questions which have been raised in the prior arguments on this case. And so doing, I would like to address myself first to Mr. Justice Whittaker's question as to the nature of the grievance here. I gather that he's a little concerned that the union was trying to keep this employer in business. I want to make it clear, that when we filed a grievance against the termination of these employees, we were not contending for a minute that the employer had to keep them on the payroll in the sense of paying them and giving them work. In labor contracts, there is a difference between laying a man off and terminating. You terminate him when you fire. Then you discharge him. On the other hand, when you don't have any work for him, you lay him off. And this distinction is carried out in this contract, laid-off the employee. That is employees who are on a layoff status are entitled to vacation pay if they have worked enough in the prior year. They've accrued of the employment. The same light goes to their certain pension rights and certain insurance rights to employees who are laid off. The question in this case was whether in a contract which provided that employees could be terminated after they've been laid off for 18 months or they would be terminated if they quit or they were discharged. The employer, when he decided that there wasn't any work for them and that there wouldn't be any work for them had the right to terminate them, cutting off their rights or that they stayed on the layoff status and accrued whatever rights the parties agreed in their contract, laid-off employees should have. And that's the -- that was the only question which the union sought to arbitrate. We didn't want to keep this fellow in business. We recognize that these are perfectly right on the management clause to shut up anytime he wants. All we want to do is have our employees continue to have the rights they would have had if he laid them all off and said, "I have no work for you for 18 months."
Charles E. Whittaker: That that must be the result to the end of the contract term?
David E. Feller: That is correct. These are accrued rights which laid-off employees have and which we think these employees were entitled to. Now, the next question I'd like to address myself to is the question which arose in many of the prior arguments as to the -- of relationship between -- we'll put it this way, perhaps. What Congress was trying to do in section 301 as far as we can determine it from the authoritative legislative materials. And the relationship between the agreement to arbitrate and the agreement not to strike. Preliminary to that comment, I think, it's perfectly plain that not only are there only 15 States as far as we know which enforce executory agreements to arbitrate. But I don't think only seven of them applied that to -- to labor contracts. So that in the great majority of States, it's a matter of state law, and I can't say that I read the cases in all these States. I'm just citing a secondary authority but in most of these States. With the exception of seven, agreements to arbitrate future disputes are not enforceable. What this means is, that a union which agrees not to strike, and typical language in a collective bargaining agreement, now there -- there are simply hundreds in which this -- this occurs. The union agrees that the employer has the right to manage the business. He takes the actions. He pays the wages. He schedules the work. He tells the people what they have to do and you have to do it if you work in the plant. You can't say this is contrary to the agreement. You have to do it. And the only protection which the union has in these cases is to either you can shut it down. You have a strike on the issue. That's the old fashioned way. That's the way it used to be done. That was the kind of case you had in Westinghouse. That was the kind of contract you had. You could strike on a question of interpretation and application of the agreement. The employer didn't pay as he was supposed to in the collective bargaining agreement. If he didn't schedule the people, if he didn't provide safe conditions, if he didn't do any of the things which the collective bargaining agreement required him to do, the Union could call a strike. Today, in better than 90% of collecting bargaining agreements have their differences. They have a contract which says there shall be no strikes during the term of this agreement. But all questions of interpretation and application of the agreement shall be settled in accordance with the grievance procedure. The Lincoln Mills case, as a matter of fact, they put a right on the same clause. It says no-strikes arbitration. That was the clause. No-strike arbitration. Now, we come to 301. Irrespective of what the Congress intended, the federal courts to device seniority law or overtime law, and I don't think they did. There is one thing that I think they clearly, and that is that if you have one of these clauses in a contract and there was a strike, the union ought to be sued for damages and ought to collect in the federal court, irrespective of state law. I could wish it were otherwise. I'm sure all unions would prefer it otherwise. But the Senate Committee was particularly explicit on that. It said the whole purpose of a collective bargaining arrangement is to ensure industrial peace for the life of the agreement. And they repeated that again and again. And then they said, now, one of the problems here is suing unions. That's what they were faced with. But this problem was a procedural problem basically. Though I will say it's not only a procedural problem, it's a substantive problem in some States. Therefore, we said we'll not be able to allow you to sue these unions as entities. And this was provided in 301 (b). That when you get a union in court, you'll treat it as an entity. You can -- you have jurisdiction over it where its offices are. They provided how they should be served what I -- but then they said, “How you're going to get them in court? You've got to have a federal cause of action.” And they pointed out in the Senate Committee and I'm paraphrasing the Senate Committee report, I think, that it would -- extreme faithfulness as far as I can. They said there are no federal laws giving either an employer or even the Government any right of action against the union for a breach of contract. Thus, there is no, their own quote, "substantive right" to enforce in order to make the union sueable as such in the federal courts. Then they proceeded to the proposition that if to get them into the federal courts, they would have to make this a federal statutory cause of action and they said that's a fine thing, anyhow. They said statute -- and this is again a quote from the Senate Committee report, “Statutory recognition of the collective agreement as a valid, binding, and enforceable contract is a logical and necessary step. It will promote a higher degree of responsibility upon the parties to such agreements and will thereby promote industrial peace.” Well, this is from the Senate Committee report on section 301, which is virtually the statute which the Senate version was adapted by the House and which was virtually what statute we have. Now, concededly, they focused entirely on the cases where unions broke these promises. That the method of policing the contract would be through the grievance machinery and not by a strike. Obviously, if the strike says, you can strike, you can strike, if the contract said so.
Earl Warren: We'll recess now.