Court Opinion

ID: 9701545
Source: CourtListenerOpinion
Date Created: 2023-08-25 22:24:12.674965+00
Date Added: 2024-06-11T15:06:31.328854
License: Public Domain

*467O’HERN, J.,
concurring in part, dissenting in part.
The attitude of courts about alternate dispute settlement techniques recalls Mark Twain’s quip about the weather—“Everybody talks about it but nobody ever does anything about it.”
In my judgment that is the effect of the majority’s decision. We frequently express preference for a policy favoring arbitration. Ohio Cas. Ins. Co. v. Benson, 87 N.J. 191, 196 (1981); Barcon Associates v. Tri-County Asphalt Corp., 86 N.J. 179, 186 (1981). We need to give that preference meaning.
The tortured history of these proceedings, involving a sum perhaps not in excess of $10,000, demonstrates how far we have strayed from the goal of providing a “final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between the parties.” Barcon Associates, supra, 86 N.J. at 187. The issue here was simple. Did an employer use a shell corporation to conceal its liability for union fringe benefits for its workers. No great amount of skill is required to resolve that issue. The union sought to resolve the issue by an arbitration commenced in July of 1979. The arbitrator entered an interim order on August 1, 1979 directing that the employer and its alleged alter ego corporations permit the union and trustees of the employees’ pension funds to audit payroll and other pertinent financial records. The union promptly obtained confirmation of that order from the Superior Court under N.J.S.A. 2A:24-7. Now, two and a half years later, the majority remands the matter to the trial court for a hearing on the issue of arbitrability.
... Arbitration can attain its goal of providing final, speedy and inexpensive settlement of disputes only if judicial interference with the process is minimized; it is, after all, “meant to be a substitute for and not a springboard for litigation.” [Barcon Associates v. Tri-County Asphalt Corp., supra, 86 N.J. at 187 (1981)].
The problem with this case is a hangup on the near metaphysical question of identity. The Appellate Division concluded that since there was no identity between the parties there could be no arbitration. This Court recognizes that there may be identity but says that the Superior Court must try that issue. *468The result is an even more cumbersome procedure than the bifurcated process that we condemned in Ohio Cas. Ins. Co. v. Benson, 87 N.J. 191 (1981).
Putting aside the fictional concepts of corporate identity, the reality of the arbitrator’s order was to direct the alter ego corporations to produce their books and records for inspection and review. Under N.J.S.A. 2A:24-6 the arbitrator could subpoena “any person as a witness and, in a proper case, to bring with him any book or written instrument.” By the narrowest view of his powers, the arbitrator could enter an award against the signatory party for the full amount of the liability disclosed. This award could then be pursued in a third-party claim against the alter ego corporation. Yacker v. Weiner, 109 N.J.Super. 351 (Ch.Div.1970).
How can public policy possibly be served by such a procedure? There is no doubt that a non-signatory party can be compelled to arbitrate a labor dispute. Wiley & Sons v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (arbitration provisions of union collective bargaining agreement survive dissolution of employer corporation and are operative against successor corporation). It has also been the policy of this State to recognize that collective bargaining agreements are controlled by substantive federal law and create practically a “private law” of their own.
... The law of arbitration in the labor field is practically sui generis. Id., passim. In that area “[t]he clear thesis is that the judicial role should be a very limited one, considerably less even than the restricted court function in commercial arbitration matters.” [Moreira Constr. Co., Inc. v. Wayne Tp., 98 N.J.Super. 570, 580 (App.Div.1968), quoting Standard Motor Freight v. Local Union No. 560, 49 N.J. 83, 95 (1967) (emphasis added)].
The issue here is similar to the coverage issues analyzed in Perez v. American Bankers Ins. Co., 81 N.J. 415 (1979) and Ohio Cas. Ins. Co. v. Benson, supra. In those cases, the parties agreed to arbitrate an uninsured motorist’s coverage based upon a phantom vehicle contact. We said:
The arbitrable issue subsumes the subordinate issue, whether a hit and run driver existed. Common sense and practicality militate against a technical construction that would cause unnecessary delay.... The logic of fairness and *469economy suggests a one-stop proceeding. [Ohio Cas. Ins. Co. v. Benson, 87 N.J. at 199]
Such a rule here would be more consistent with the federal policy of settling labor disputes through the indispensable agency of arbitrators whose “knowledge of the customs and practices ... of a particular industry” enables him “to bring of a problem.” United Steelworkers v. Enterprise Corp., 363 U.S. 593, 596-97, 80 S.Ct. 1358, 1360-1361, 4 L.Ed.2d 1424, 1428 (1960); see also Pine Mfg. v. Intern. Ladies Garment Workers, 6 Mass. App. 957, 383 N.E.2d 543 (1978) (arbitrator has power to decide whether non-signatory corporation is bound by predecessor’s collective bargaining agreement with employees).
Proper regard for the limited judicial role in this area can be accommodated with due regard for an alter ego’s right to have the courts determine substantive arbitrability by modifying the rule of Battle v. General Cellulose Co., 23 N.J. 538 (1957), to require the opponent of arbitration to seek prior judicial determination of arbitrability when the subordinate issue and the arbitrable issue are subsumed by the same facts. See Pine Mfg. v. Intern. Ladies Garment Workers, supra. That would be consistent with our procedural ruling in Barcon Associates, Inc. v. Tri-County Asphalt Corp., supra, requiring prehearing disposition of bias charges under penalty of waiver.
The California Court of Appeals, while adhering to the view that normally an arbitrator can render an award concerning alter ego status only if authorized by the parties, left open the question whether an arbitration award would bind an alter ego entity that had adequate notice of the proceedings but failed to file a timely response. See So. Cal. Pipe Trades, Dist. Council v. Merritt, 126 Cal.App.3d 530, 179 Cal.Rptr. 794 (1981). See also Carpenters 46 No. Cal. Counties v. Zweigle, 130 Cal.App.3d 337, 181 Cal.Rptr. 805 (1982) (alter ego issue arbitrable under contract but arbitrator’s award not enforced against third party not noticed in arbitration or served in enforcement). But see Glasser v. Price, 313 N.Y.S.2d 1, 35 A.D2d 98 (App.Div.1970), (holding as a matter of statutory interpretation that failure of *470non-signatory party to apply for stay of arbitration did not bind such party to the arbitration award).
Of course, proper notice must be afforded to the party to be charged. Battle v. General Cellulose Co., supra. The record here is inconclusive as to whether the Cardell corporations received such notice. I would limit the remand to that issue.
For affirmance as modified—Chief Justice WILENTZ and Justices PASHMAN, CLIFFORD, SCHREIBER, HANDLER and POLLOCK—6.
Concurring in part and dissenting in part—Justice O’HERN —1.