Opinion ID: 2086024
Heading Depth: 1
Heading Rank: 1

Heading: Weber's Affirmative Defense.

Text: Plaintiffs assert two reasons why the circuit court properly struck Weber's affirmative defense. The first is that the arbitrator's award is res judicata on the issue raised by the defense. The second is that, inasmuch as the arbitrator found that Weber did not go out of business when it transferred work to Fox Head, it would be no defense to plaintiffs' claims for damages for Weber to prove that without such transfer it would have been forced to cease operations before the contract period ended. As a general rule the doctrine of res judicata is applicable to final awards made by arbitrators. Park Construction Co. v. Independent School Dist. No. 32 (1943), 216 Minn. 27, 11 N. W. (2d) 649; Rueda v. Union P. R. Co. (1946), 180 Or. 133, 175 Pac. (2d) 778; 5 Am. Jur. (2d), Arbitration and Award, p. 628, sec. 147; 6 C. J. S., Arbitration and Award, p. 243, sec. 97. Cf. Decker v. Ladish-Stoppenback Co. (1931), 203 Wis. 285, 234 N. W. 355. Thus the decision of this court in Cf. Dehnart v. Waukesha Brewing Co. (1962), 17 Wis. (2d) 44, 115 N. W. (2d) 490, Precludes defendant from attacking the arbitrator's award to the extent that the arbitrator found that defendant breached its employment contract by the transfer of work to Fox Head. The real issue which remains, however, is whether the arbitration award necessarily and properly included a finding that defendant would not have shut down operations prior to the termination date of the collective-bargaining contract. The language of the award which relates to this issue is as follows: The . . . employees of Weber Waukesha Brewing Co. . . . who were laid off as the result of the transfer of work from the Weber plant to the Fox Head plant shall be compensated for any earnings lost thereby, from the time of the layoff to the termination date of the union-management contract now in force [May 1, 1960] if they should continue to remain laid off, exclusive of any earnings they may have received from employment at the Fox Head brewery since their layoff. (Italics supplied.) The key words in the above-quoted extract are  lost thereby.  We interpret these words to be the equivalent of caused thereby. If upon trial the facts establish that Weber would have been compelled for economic reasons to close down its operations prior to May 1, 1960, then any earnings plaintiffs had lost from that time to May 1, 1960, would not have been caused by Weber's breach of contract in transferring work to Fox Head. We deem that that portion of the award which mentioned the termination date of the contract served merely to restrict the plaintiffs' damages to the period of the collective-bargaining contract. Our review of the grievance which was submitted to arbitration and the arbitrator's award disclose that the two issues to which the arbitration extended were: (1) Whether the particular grievance was arbitrable under the provisions of the collective-bargaining contract; and (2) whether the alleged transfer of work by Weber to Fox Head violated this contract so as to entitle the Weber employees to damages for any earnings lost by them as a result of the transfer. The issue of how the affected employees' damages (lost earnings) were to be computed was not a subject for arbitration. The arbitrator recognized this when he stated in his decision: The Union asks in its brief that the Arbitrator retain jurisdiction, if his finding sustained the grievance, so that the measure of damages may be worked out. However, the Company is correct in saying that in ad hoc arbitration, the Arbitrator has fulfilled his mission by deciding the matter before him, and it is not in the nature of an equity proceeding wherein jurisdiction may be retained unless the parties agree to it de novo.  (Italics supplied.) Plaintiffs rely on the following statements appearing in the arbitrator's decision as demonstrating that the arbitrator did pass on the identical defense, which Weber now has attempted to raise in its affirmative defense: The Company insists that the reason for this move was economic, but in the absence of a forced liquidation or voluntary bankruptcy, neither of which certainly can be said to be involved here, a company which agrees with its employees that it will not transfer work from them is not relieved by allegedly poor business from fulfilling the obligation. . . . It may be argued that Weber Waukesha simply gave up the ghost and went out of business. But did it ? It is obvious that a mere change in its name could not affect the situation, but it is interesting to note that it still appears as Waukesha Brewing Co. Brewing persists as being indigenous to its very existence. If the transaction goes through; i.e. if arrangements can be made with the mortgagee, Waukesha stockholders become the Fox Head stockholders; it is their brew which is being made there, by their executive team which heads their company. The `Weber' name and goodwill is being and will continue to be used. Their Company still is in existence and it is a brewing concern, if it is any concern. The only significance which we attach to these last-quoted extracts is that they reflect the arbitrator's answer to Weber's argument that the transfer of work to Weber was not a breach of the collective-bargaining contract because it was forced by economic necessity. If they were to be construed as deciding the issue as to whether plaintiffs' damages in the way of lost earnings could not extend beyond a future date when Weber would have been forced to cease operations by pressure of economic necessity if Weber had not made the transfer, such a determination would be beyond the scope of the arbitrable issues submitted to the arbitrator. Therefore, it would not be res judicata on this latter issue in any event. Restatement, Judgments, p. 326, sec. 71, states: Where a court has incidentally determined a matter which it would have had no jurisdiction to determine in an action brought directly to determine it, the judgment is not conclusive in a subsequent action brought to determine the matter directly. We deem that this principle has equal application to the res judicata effect of an arbitrators' award. The Connecticut court in Local 63, Textile Workers Union v. Cheney Brothers (1954), 141 Conn, 606, 613, 109 Atl. (2d) 240, held that an arbitrator's award must conform to the submission and is void to the extent it is outside the submission. If, after a breach of contract occurs by the employer which would entitle affected employees to recover wages lost by reason thereof, the employer is forced by economic reason to shut down, the employees would not be entitled to recover lost earnings for a period subsequent to the date of shutdown. Town & Country Mfg. Co. (1962), 136 NLRB No. 111, p. 1022, 49 LRRM 1918; Roselle Shoe Corp. (1962), 135 NLRB No. 57, p. 472, 49 LRRM 1516. See also footnote 7, Phelps Dodge Corp. v. Labor Board (1941), 313 U. S. 177, 61 Sup. Ct. 845, 85 L. Ed. 1271, 133 A. L. R. 1217, wherein it is stated (p. 199): If the business conditions would have caused the plant to be closed or personnel to be reduced, back pay is awarded only for the period which the worker would have worked in the absence of discrimination. Matter of Ray Nichols, Inc., 15 N.L.R.B. 846. We determine that this same principle should be applicable to a situation such as we have here where, because of the breach, the arbitrator found that Weber's operations were not shut down, but Weber alleges that, if the transfer to Fox Head had not occurred, it would have been forced to shut down prior to the expiration date of its collective-bargaining contract. We find support for this holding in the statement appearing in footnote 13 of Star Baby Co. (1963), 140 NLRB No. 67, pp. 678, 684, 52 LRRM 1096 (63 1 CCH NLRB, at page 18,708): In this respect, the instant case differs from the type of cases where the record shows that even absent the unfair labor practices, the Respondents would in any event have closed their plant for economic reasons at a subsequent date. See Myers Ceramics Corp., 140 NLRB No. 33 [1962 CCH NLRB § 11,934]. Here, however, the Respondents have made no showing that they would have been compelled to go out of business for economic reasons at any time. [1] In view of the foregoing we conclude that Weber is entitled to have litigated the issue of whether economic necessity would have forced it to shut down operations at some time after the transfer of work to Fox Head and prior to the termination of the collective-bargaining contract. Therefore, it was error for the circuit court to adjudge that Weber's affirmative defense be stricken.