Yesterday we looked how precise language in a collective bargaining agreement forced a company to arbitrate a claim even though the employees had decertified the union. Today we look at how successorship language in a union contract prohibited a company from selling its equipment during tough financial times.
Team Carriers is a trucking company whose employees are represented by the Steelworkers union. Team Carriers had provided services to Mead Westvaco for over a decade until Mead Westvaco submitted local trucking services to competitive bidding. Team Carriers lost the bid, laid off 59 bargaining unit members, and sought to sell some now surplus equipment to Garten Trucking, the company that won the bid.
In its best Lee Corso voice, the Steelworkers said, “Not so fast!”
The union filed a grievance alleging Team Carrier was contractually obligated via the successorship language in the union contract to condition the sale upon Garten hiring Team Carrier’s Steelworker-represented employees. In other words, the Steelworkers sought to bind the drivers to the trucks as a package deal. Team Carrier responded that Garten is not a successor company; rather, Garten is simply buying Team Carrier equipment. The USW then sought a temporary restraining order stopping Team Carrier from selling its equipment until an arbitrator ruled whether the drivers went with the trucks.
The injunction was granted, and Team Carrier was prohibited from initially selling its trucks. According to the federal judge who granted the injunction, the successorship language was ambiguous enough that it could possibly be interpreted to mean that the drivers went with the trucks – and that is an issue for an arbitrator to decide, not a judge.
My guess is that if the arbitrator decides that the drivers (and thus the Steelworkers union) go with the trucks, Garten will not buy the trucks.
Don’t let your successorship language be ambiguous. Make sure your successorship language can only be interpreted in one way – the way you intend to interpret it. The sale of trucks should not invoke successorship language like it did here. Identify and define successors as true purchasers of the entire company’s assets or stock, and expressly exclude any other type of purchaser as a successor, i.e. a company that simply buys used equipment, vehicles, furniture, or real estate.
Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.