Cofab, Inc. v. Philadelphia Joint Board, Amalgamated Clothing & Textile Workers Union ( 1998 )

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
4-8-1998
Cofab Inc v. Phila Joint Bd
Precedential or Non-Precedential:
Docket 97-1425
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Recommended Citation
"Cofab Inc v. Phila Joint Bd" (1998). 1998 Decisions. Paper 69.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/69
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Filed April 8, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-1425
COFAB, INC.
v.
PHILADELPHIA JOINT BOARD, AMALGAMATED
CLOTHING AND TEXTILE WORKERS UNION, AFL-CIO-
CLC a/k/a UNITE!
Philadelphia Joint Board, Amalgamated Clothing & Textile
Workers Union, AFL-CIO-CLC, a/k/a UNITE,
Appellant
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 97-cv-01835)
Argued January 22, 1998
Before: SLOVITER, LEWIS* and ROSENN, Circuit Judges
(Opinion Filed April 8, 1998)
Bernard N. Katz (Argued)
Elissa B. Katz
Meranze & Katz
Philadelphia, PA 19102
Attorney for Appellant
_________________________________________________________________
* Judge Lewis heard argument in this matter but was unable to clear the
opinion due to illness.
Adolph F. Fellmeth III
(Argued)
Jenkintown, PA l9046
Attorney for Appellee
OPINION OF THE COURT
SLOVITER, Circuit Judge.
The Philadelphia Joint Board, Amalgamated Clothing &
Textile Workers Union, AFL-CIO-CLC, also known as Unite!
["the Union"], appeals from the district court's order staying
the action before it pending the final completion of related
proceedings before the National Labor Relations Board. The
action was filed pursuant to section 301 of the Labor
Management Relations Act, as amended, by Cofab, Inc.,
seeking an injunction and an order vacating and/or staying
enforcement of an arbitrator's award finding that Cofab was
the alter ego and successor of DA Clothing Co. The Union
filed a counterclaim to enforce the award. Cofab filed a
motion to stay, which the district court granted, and the
Union appeals. Before we can consider the merits of the
Union's agreement, we must decide whether we have
jurisdiction over the district court's order granting a stay.
I.
DA Clothing Company, the alleged predecessor to Cofab,
operated a manufacturing facility in Clifton Heights,
Pennsylvania, and was a party to a Collective Bargaining
Agreement ("CBA") with the Union. On December 17, 1993,
the company closed its doors without giving any notice to
the Union. The following month, the son of the former
owner of DA Clothing opened a new non-union plant, under
the name Cofab, Inc., about fifteen minutes away from the
location of DA Clothing. Cofab hired many of the former
employees of DA Clothing, retained much of DA Clothing's
equipment, and serviced the same single customer.
In March 1994, the Union filed an unfair labor practice
charge against Cofab with the National Labor Relations
2
Board, asserting that, as the successor and alter ego of DA
Clothing, Cofab was bound by the collective bargaining
agreement between DA Clothing and the Union. Following
a two-day hearing in January 1995, an Administrative Law
Judge determined that Cofab was a successor to, but not
an alter ego of, DA Clothing. Joined by the Union, the
General Counsel of the NLRB filed exceptions to the ALJ's
determination that Cofab was not an alter ego. There was
a hearing in Washington, D.C., after which the NLRB
issued its decision on September 5, 1996, concluding that
Cofab and DA Clothing were alter egos, and that Cofab was
therefore obligated to comply with the terms of the
collective bargaining agreement between DA Clothing and
the Union. On September 30, 1996, however, the NLRB
General Counsel filed a motion to modify or clarify the
NLRB's order. Both parties assumed that this motion
remained pending up to the time of oral argument on this
appeal.
Buoyed by the NLRB finding that Cofab was an alter ego
of DA Clothing, in October 1996 the Union filed a request
for expedited arbitration of its grievances pursuant to the
collective bargaining agreement between the Union and DA
Clothing. Cofab sought a temporary restraining order in the
district court to stay the arbitration. The district court
denied the request for a stay, stating that Cofab could
present its jurisdictional argument to the arbitrator. At the
arbitration hearing in November 1996, Cofab appeared only
for the purpose of registering its objection that the
arbitrator lacked jurisdiction over Cofab on the ground that
it was not a party to the CBA, and was not subject to its
terms. The arbitration nevertheless proceeded in Cofab's
absence.
On January 31, 1997, the arbitrator filed his opinion and
award. The arbitrator rejected Cofab's jurisdictional
objection and in a written opinion noted that the facts
presented before him were the same as the facts presented
before the Administrative Law Judge of the NLRB to which
Cofab had not filed exceptions. He found that the two real
principals of DA Clothing Company were Phyllis D'Amore
and her son Robert D'Amore, that they closed the operating
facility and reopened under the Cofab, Inc. name, with
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Robert D'Amore being designated the chief executive officer
while his mother occupied some other corporate position
but that they both participated as they had under the label
of DA Clothing Co., that their employees were the same,
and that their one customer was the same, and that
therefore Cofab meets "all of the contract criteria for being
deemed a successor" as envisioned by the CBA. App. at 34-
35. After concluding that Cofab was bound by the CBA, the
arbitrator ordered Cofab to observe the terms of the CBA,
and awarded the Union $1,394,529 in damages. App. at
38-39.
On March 13, 1997, Cofab filed in the district court the
complaint that initiated this suit in which it sought to
vacate the award, "and/or for [a] preliminary and
permanent injunction staying enforcement of [the]
arbitration award." App. at 4. Cofab stated that if the NLRB
decision remained unchanged by the motion for
modification, it intended to appeal to this Court. Cofab
contended that a stay pending a final decision from the
NLRB would be appropriate because it would prevent costly
relitigation in the district court of the same issues
presented to the ALJ and the NLRB. The Union argued that
the motion pending before the NLRB requested only a
clarification of the remedy and did not seek to modify the
substance of the Board's decision, and it asked the district
court either to enforce or vacate the award.
The district court declined the Union's request, and
instead it stayed the action. The district court stated:
To make any ruling on the arbitrator's award, I would
have to determine whether the arbitrator had
jurisdiction, an issue that hinges on whether Cofab
and DA are alter egos. Accordingly, I would have to
make the same determination on alter ego status that
has been made by the Board, and that will ultimately
be made by the Third Circuit on appeal of the Board's
order. The Union rightly points out that the Board and
arbitration proceedings are separate proceedings
designed to enforce different rights. The central
question in each of these proceedings, however, is the
same--whether Cofab is the alter ego of DA. Cofab has
represented to this court that it will pursue an appeal
4
to the Third Circuit as soon as the Board certifies its
decision. Presumably, the Third Circuit will then rule
on Cofab's alter ego status. Under these
circumstances, I find that a stay of these proceedings
is appropriate.
App. at 122-23. The district court also ordered the parties
to "keep the court advised of all relevant proceedings." App.
at 125. The district court docket entries indicate that the
case was never closed.
The Union filed this appeal contending, preliminarily,
that the district court erred by not dismissing Cofab's
complaint because it was filed thirty-six days after the
issuance of the arbitrator's award, beyond the thirty day
period to challenge an award set by 42 Pa. Cons. Stat.
S 7314. The Union also challenged the stay on the merits,
arguing that: (1) the stay was inconsistent with the court's
earlier ruling denying a stay pending arbitration; (2) the
award can be enforced based upon the undisputed finding
that Cofab was a successor to DA Clothing; and (3) the
"stay" did not meet the criteria for the issuance of an
injunction.
Cofab countered that: (1) the statute of limitation is
applicable only to parties who signed a CBA, and it argues
it has no CBA with the Union; (2) it is required to comply
with the CBA only if it is found to be an alter ego, not
merely a successor; and (3) a stay was appropriate to avoid
relitigating the key issue of whether Cofab was an alter ego
of DA Clothing.
This court sua sponte inquired of the NLRB as to the
status of the long-pending motion for clarification by the
General Counsel and learned that the Board, by order
dated September 15, 1997, granted the motion for
clarification and amended its September 5, 1996 order to
state that Cofab employees who were unlawfully denied
employment at Cofab enjoy the "full make whole" remedies
provided by statute. The clarification order did not alter the
Board's essential finding that Cofab is an alter ego of DA
Clothing.
We note that had either party made appropriate inquiry
and advised the district court as it requested when the
5
status changed, it is likely that this appeal would not have
been necessary. Following receipt of this information, we
requested both parties to submit supplemental briefs on
this court's jurisdiction, an issue to which we now turn.1
II.
Neither party questioned this Court's jurisdiction in its
initial submission, apparently based on the assumption
that the district court's order was an interlocutory
injunction appealable under 28 U.S.C. S 1292(a)(1). This
court's inquiry as to this issue at oral argument and our
request for supplemental briefing led to reconsideration by
the appellee. Cofab now contends that we lack jurisdiction,
because the underlying order is merely one granting a stay.
The Union, on the other hand, characterizes the order as
an injunction because the practical effect has been to
enjoin the enforcement of the labor arbitration award.
Although the effect on the Union from the district court's
stay may not be dissimilar from that of an injunction, we
cannot agree that S 1292(a)(1) is applicable here. The
district court "enjoined" no party or proceeding but rather
stayed its own action regarding the arbitration award
pending the outcome of a final NLRB ruling. The district
court did not evaluate Cofab's request under the familiar
criteria for the issuance of injunctive relief. See Gerardi v.
Pelullo, 16 F.3d 1363, 1373 (3d Cir. 1994). The district
court made only passing reference to harm, a relevant
factor to be considered in entering an injunction, when it
noted that a stay would "impose a significant hardship on
Cofab" and that to "rule on the arbitrator's jurisdiction now
would be a repetitious and wasteful use of judicial
resources." App. at 124. Because we cannot characterize
the stay as a preliminary injunction under 28 U.S.C.
S 1292(a)(1), we must find a basis for our jurisdiction, if
any, elsewhere. See Allied Air Freight, Inc. v. Pan American
World Airways, Inc., 340 F.2d 160, 161 (2d Cir. 1965) (stay
_________________________________________________________________
1. We have also learned that on November 17, 1997, the NLRB filed in
this Court an Application for Enforcement of its Order. See C.A. Nos. 97-
3596 and 97-3642. That application remains pending.
6
of federal action pending completion of administrative
proceedings not appealable as preliminary injunction).
Our search for an alternative basis for jurisdiction has
not been successful. Although the Federal Arbitration Act
has provisions permitting an appeal from an order that,
inter alia, denies a petition under the Act to order
arbitration to proceed or denies an application to compel
arbitration, see 9 U.S.C. S 16(a)(1), there is no provision
authorizing an appeal from an interlocutory order granting
a stay of any award entered after an arbitration. See
Abernathy v. Southern Cal. Edison, 885 F.2d 525, 530 n.18
(9th Cir. 1989) (where "order staying the proceeding or
compelling arbitration is only one step in the judicial
proceedings and the case can be expected to return to the
district court, the order is nonfinal and not subject to
immediate appeal.")
Our research has not disclosed any cases holding that an
appellate court has jurisdiction to review an order granting
a stay of enforcement of an arbitration award pending a
final NLRB decision. The issue arose in Nelson v.
International Bhd. of Elec. Workers, Local Union No. 46, 899
F.2d 1557 (9th Cir. 1990), where the court noted its
uncertainty about its appellate jurisdiction over a district
court stay of enforcement of an arbitration award. Because
the court found jurisdiction permissible on other grounds,
it expressed no opinion on this issue. However, the court
stated:
The Chapter has raised some questions concerning the
appealability of the stay issued in the section 301 suit.
Although we have ruled that we do not have
jurisdiction over appeals from stays pending, or orders
compelling, arbitration, we have not determined the
appealability of a stay of an action to enforce an
arbitral ruling. Without expressing an opinion on the
general question of the appealability of a stay of a
section 301 action, we believe that the issues raised
. . . here are so intertwined that we must uphold the
stay . . . .
Id. at 1563 n.5. Cf. Richman Bros. Records, Inc. v. U.S.
Sprint Communications Co., 953 F.2d 1431 (3d Cir. 1991)
7
(order staying lawsuit while referring a question to Federal
Communications Commission is not final decision
reviewable on appeal).
This court has recently had occasion to consider our
jurisdiction over an appeal from a district court order
staying proceedings pending resolution of a state court
action. See Michelson v. Citicorp Nat'l Servs., Inc., ____ F.3d
____ , No. 97-5157 (3d Cir. Mar. 11, 1998). The context in
Michelson was different from that before us here, but in
that case we had occasion to reiterate Justice Brennan's
statement that " ``the usual rule that a stay is not ordinarily
a final decision for purposes of S 1291, since most stays do
not put the plaintiff effectively out of court'." Id., slip op. at
9 (quoting Moses H. Cone Memorial Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 10 n.11 (1983) (internal
quotations omitted)). See also Marcus v. Township of
Abington, 38 F.3d 1367, 1370 (3d Cir. 1994) ("Stay orders
normally are not appealable final orders because they
merely delay proceedings in the suit."); Schall v. Joyce, 885
F.2d 101, 104 (3d Cir. 1989) (recognizing that Moses H.
Cone reaffirmed the "usual rule" that a stay is not
ordinarily a final decision for purposes of S 1291).
This court has recognized that where a stay is indefinite
and may "unreasonably delay[ ] a plaintiff's right to have his
case heard," the order may be deemed appealable. Cheyney
State College Faculty v. Hufstedler, 703 F.2d 732, 735 (3d
Cir. 1983). In this case, there is no suggestion that the
district court intended to "deep six" the suit, an intent we
also held missing in Cheyney. Id. The district court order
here merely postponed consideration of the arbitration
award, and in fact the district court made explicit its
anticipation of the return of the case by requiring the
parties to "keep the court advised of all relevant
proceedings." App. at 125. There is no reason to assume
that the district court will not rule promptly once it is
advised that the NLRB has issued its ruling on the extent
of the make-whole remedy, the issue as to which the
General Counsel sought clarification.
This case is unlike Moses H. Cone, 460 U.S. at 9-10,
where the stay of the federal suit pending resolution of the
state suit meant that there would be no further litigation in
8
the federal forum, and is more like Marcus, 38 F.3d at
1370, where we held that "[a]ppellate review is
inappropriate here because the stay entered by the district
court merely delays the federal litigation and does not
effectively terminate it." See also Schall, 885 F.2d at 104-05
(same).
We have also considered but reject the possibility that
this case falls within the small class of collateral orders
that are reviewable even though they do not terminate the
underlying litigation under the "collateral order" doctrine
first announced in Cohen v. Beneficial Industrial Loan
Corp., 337 U.S. 541 (1949). The collateral order doctrine
allows an appellate court to review a collateral order that (1)
finally resolves a disputed question; (2) raises an important
issue distinct from the merits of the case; and (3) is
effectively unreviewable on appeal from a final judgment.
Praxis Properties, Inc. v. Colonial Sav. Bank, S.L.A., 947
F.2d 49, 54 (3d Cir. 1991). The stay order in this case
could not qualify as a collateral order because, inter alia, it
does not finally resolve a disputed question but merely
postpones the district court's decision to enforce or vacate
the arbitration award. See, generally , Rolo v. General
Develoment Corp., 949 F.2d 695 (3d Cir. 1991) (stay order
that merely delays resolution in the district court not
reviewable under collateral order doctrine).
Based on the foregoing analysis, we come to the
inevitable conclusion that the order granting a stay in this
case is not an appealable order. There is only one other
vehicle by which the order could come before us for review
at this time, i.e., on a petition for mandamus which is
appropriate when a district court has refused to act on a
motion within its jurisdiction. Before we would construe the
appeal as a request for mandamus under 28 U.S.C. S 1651,
see Cheyney, 703 F.2d at 736, we would have to find that
the district court committed a clear error " ``approach[ing]
the magnitude of an unauthorized exercise of judicial
power, or a failure to use that power when there is a duty
to do so'." Richman Bros. Records, 953 F.2d at 1448
(quoting Lusardi v. Lechner, 855 F.2d 1069, 1069 (3d Cir.
1988)). This is not such a case.
9
The Union correctly notes that, as a general matter, the
"mere possibility of a conflict [between the NLRB and the
district court] is no barrier to enforcement of the
[arbitration] award," nor does a "pending charge before the
NLRB require stay or dismissal of the enforcement suit."
Sheet Metal Workers' Int'l Ass'n, Local No. 252 v. Standard
Sheet Metal, Inc., 699 F.2d 481, 483-84 (9th Cir. 1983)
(citing Orange Belt Dist. Council of Painters No. 48 v.
Maloney Specialties, Inc., 639 F.2d 487, 490 (9th Cir. 1980)
(potential for conflict between arbiter's award and NLRB
decision does not preclude district court's confirmation of
award)).
We need not decide how we would rule on the stay if it
were properly before us for review in the course of an
appeal. It is not, and nothing about the circumstances in
this case would impel us to issue a writ of mandamus. See
United Ass'n of Journeymen and Apprentices of the
Plumbing and Pipe Fitting Indust., Local Union No. 525 v.
Foley, 380 F.2d 474 (9th Cir. 1967) (denying mandamus
petition to vacate stay pending outcome of related
proceedings before NLRB).
III.
For the reasons set forth, this appeal will be dismissed
for lack of jurisdiction.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
10