author: TERENCE T. EVANS, District Judge.

text:
    Robert STEPP, Plaintiff, v. FORD MOTOR CREDIT COMPANY, Defendant.
    Civ. A. No. 80-C-776.
    United States District Court, E.D. Wisconsin.
    Dec. 18, 1985.

      Dennis Grzezinski, Frisch, Dudek & Slattery, Milwaukee, Wis., for plaintiff.
    Jon P. Christiansen, Foley & Lardner, Milwaukee, Wis., for defendant.
   DECISION and ORDER

TERENCE T. EVANS, District Judge.

This case is before the court on defendant Ford Motor Credit Company’s (FMCC) motion for summary judgment. The motion will be granted in part and denied in part.

Robert Stepp seeks compensatory and punitive damages from FMCC for violations of § 2 of the Sherman Act, § 3 of the Clayton Act, the Federal Dealers Day-in-Court Act (15 U.S.C. § 1221, et seq.), § 218.01, Wis.Stats., § 133.03, Wis.Stats., and numerous common law claims. Stepp’s complaint is neither modest nor selective. Seventeen different causes of action are presently being pursued.

Summary judgment motions may be granted where no genuine issue of material fact is in dispute. Where, as a matter of law, a plaintiff will not be able to prevail at trial, summary judgment should be granted. Disputed facts, however, must be resolved in favor of the party opposing the summary judgment motion. Trotter v. Anderson, 417 F.2d 1191 (7th Cir.1969). Janowiak v. City of South Bend, 750 F.2d 557 (7th Cir.1984). In reviewing the facts here, they are viewed in the light most favorable to the plaintiff.

I. Facts

Stepp became the business manager of Jack White, Inc. (JWI), a Milwaukee area Ford dealership, in 1964. He became a minority shareholder in the dealership in 1972, and in January, 1979, he became the majority stockholder and president. On August 29, 1979, JWI was sold to Russell Darrow, Jr.

Stepp was associated with JWI for fifteen years, and during this time FMCC provided JWI with wholesale financing credit known as “floor planning”. Wholesale financing is necessary for automobile dealerships to purchase the cars with which they stock their showrooms. Wholesale financing is extended directly to the dealership, rather than the ultimate purchasers of the automobiles. JWI, as the largest Ford dealership in Wisconsin, required approximately $2.5 million of wholesale financing between 1965 and 1975. After 1978, as a condition for this financing, FMCC required Stepp and other JWI stockholders to submit yearly personal financial statements, to personally guarantee JWI’s obligations, and to keep JWI’s capitalization at a specific level.

Automobile dealerships commonly obtain wholesale financing through a subsidiary finance company of the automobile manufacturer with whom they do business. That is, Chrysler dealers commonly obtain wholesale financing through the Chrysler Credit Corporation, while Ford dealers commonly obtain wholesale financing through FMCC. Wholesale financing is also available from other sources such as banks or independent finance companies; however, these institutions may be unable, or in some cases unwilling, to supply the financing necessary to keep a large dealership in business.

In 1964, JWI and FMCC entered into a wholesale financing and security agreement wherein FMCC held a security interest in JWI’s new vehicle inventory. FMCC paid Ford Motor Company directly for Ford products which were sent to the dealers, and in turn the dealers were to pay FMCC. The dealers’ obligations to FMCC are found in a “security agreement and promissory note”.

From 1964-79, FMCC also provided retail financing to automobile consumers, which involves the financing of installment contracts. These installment contracts, known as retail paper, are usually sold by automobile dealers to financing institutions or a credit company such as FMCC. Retail financing is profitable, but dealers often sell the installment contracts because they cannot afford to administer them themselves.

JWI did not sell all of its retail paper to FMCC. Instead, JWI sold retail paper through a private purchase plan financed by the M & I Bank. The purchase plan competed with FMCC in making small loans to automobile purchasers. This arrangement was profitable both to JWI and the M & I Bank. Some of JWI’s retail paper was also sold to other banks; and some consumers had their contracts financed through their own personal banks. JWI thus spread its retail paper around rather than selling it all to one institution; JWI’s management believed that in doing so it would better serve its customers. In 1970, JWI gave FMCC approximately 10% of its retail paper business.

Until 1975, FMCC based its flat rate finance charge for JWI’s wholesale financing on the amount of retail paper which it was able to purchase from JWI. That is, the more retail paper it got the lower the flat rate charge for wholesale financing. This practice was abolished at the end of 1974.

In April of 1978, FMCC’s Milwaukee district manager, Pat Barrett, informed Stepp and other stockholders that, in FMCC’s mind, JWI was undercapitalized. This decision was based on FMCC’s determination of JWI’s “tangible base capital” (TBC), a measure of capitalization and liquidity used in measuring the credit-worthiness of its dealer borrowers. TBC is determined by subtracting certain assets which are not easily converted to cash, for example leasehold improvements, from the dealership’s net worth. Stepp and JWI’s other principal shareholders were unaware (at least I must on this motion accept as true the fact that they were unaware) of FMCC’s method of calculating TBC, and were unaware that FMCC regarded their capitalization as a problem. Barrett requested that JWI increase its tangible base capital by $100,000. He also requested that FMCC be provided with the personal guarantees of JWI stockholders Stepp, John White and Dale Knight, subordinate a $42,000 note due White, and provide certified annual financial statements. These requests, it is said, came as a shock to Stepp because of JWI’s excellent reputation and status as a major Ford dealership.

There has been substantial evidence presented to the effect that FMCC wished to receive a larger share of JWI’s retail paper. Jack White and Stepp both testified during depositions that Barrett told them in 1978 that had they sold more retail paper to FMCC, JWI would not have been placed in the difficult situation with respect to its capitalization. White indicated that Barrett constantly and aggressively sought to increase the amount of retail paper which JWI sent to FMCC. Additionally, Frederick Mueller, a Ford dealer who considered investing in JWI, testified that he was informed by Barrett that “in the event you do decide to [buy into JWI] and we provide this capital loan, ... we are going to expect a good share, a good opportunity to buy your retail paper.” FMCC has presented conflicting testimony which tends to show that no coercion or tying was present. FMCC employee John Golden testified that he would not have pressured JWI to increase the retail paper it sent to FMCC by threatening to withdraw JWI’s wholesale financing.

On June 30, 1978, Barrett told Stepp, White and Knight that FMCC would no longer provide JWI with wholesale financing. This caused JWI’s management grave concern, and on July 6, 1978, Stepp met with Barrett in an attempt to salvage the financing. Barrett, according to Stepp, began the meeting by stating that some dealers were ideal because they gave FMCC all of their retail paper, and that JWI would have to give FMCC more retail paper if JWI wished its wholesale financing to continue. At the July 6 meeting, or as a result of it, Stepp agreed to meet the four conditions that FMCC had established in April. Stepp also agreed to increase the amount of retail paper that JWI gave to FMCC. Former JWI employees Bender and Rossi have indicated, however, that they were not told to increase the retail paper sent to FMCC. According to FMCC, an agreement was reached between Stepp and Barrett that JWI would maintain a tangible base capital level of $650,000. Barrett told Stepp that FMCC's wholesale financing depended upon the maintenance of this figure. To meet the required TBC, Stepp invested an additional $100,000 in the dealership as had been requested in April of 1978. In January of 1979, Stepp became the majority shareholder and president of JWI.

In late 1978 and early 1979, JWI’s sales were declining. In April of 1979, Barrett once again indicated that JWI was undercapitalized. Barrett told Stepp that JWI needed to increase its capitalization by $200,000. Stepp then decided to look for an investor for the dealership in order to raise the capital. Mueller, at this time, was considering buying into the dealership, and he and Stepp sought financing from FMCC and Ford Motors’ Dealer Development Division. On June 18, 1979, Stepp was informed that Ford only provided dealer development money to new dealerships and, as JWI had been in existence for over twenty years, it was not eligible. (However, it is said that funds were later provided from the Dealer Development Division to the owner of another existing Milwaukee area Ford dealership.)

On June 21,1979, Barrett sent a memo to his area manager recommending that JWI’s wholesale financing be suspended due to JWI’s poor financial condition. On June 28, 1979, Barrett told Stepp that FMCC would no longer provide wholesale financing on new cars for JWI. This action was taken one day before a scheduled meeting between Stepp, Mueller, White and representatives of Ford’s District Sales office concerning Mueller’s potential investment into JWI. At the June 29 meeting, Barrett informed Stepp and Mueller that if the wholesale line were reinstated, tangible base capital levels would have to be maintained or the dealership would risk withdrawal of its credit line. During the meeting Stepp presented a capital loan application. The application included a security agreement giving FMCC a chattel mortgage in most of JWI’s property and the property’s proceeds. According to Stepp, the security agreement and the conditional assignment were signed only in connection with the capital loan application. FMCC, however, argues that the security agreement was not dependent upon the approval of the capital loan application.

On July 1, 1979, Mueller apparently got cold feet and decided not to invest in JWI. Mueller stated that he feared continuing dealership losses and believed that without financing from FMCC the dealership could not be turned around.

On July 2, Stepp told Barrett of Mueller’s decision, and requested the return of the security agreement and assignment. Barrett refused, and on July 2, FMCC filed the financing statement with the Wisconsin Secretary of State in Madison. The filing gave FMCC a secured interest in all of JWI’s assets and effectively prevented Stepp from applying to other lenders for temporary financing.

Stepp began looking for another buyer for JWI. Initially, Ford Motors’ representative David Marston introduced Stepp to Francis Auffenberg, who prepared an offer to purchase JWI. The offer included a provision under which Stepp would retain part ownership and continue as general manager. On August 7, 1979, White, Stepp and Auffenberg met to discuss the offer, but during the meeting Stepp received a call from Marston, who told him not to sign anything because FMCC had found another potential buyer, Russell Darrow, Jr.

FMCC was enthusiastic about Darrow, and took steps to expedite the sale. During this time, JWI was without wholesale financing and could not order new Ford products for stock customers. The inability to order prevented JWI’s compliance with its Ford Motor franchise agreement. The stock of JWI was sold to Russell Darrow on August 29, 1979.

The main contentions of Stepp’s complaint involve the allegation that FMCC’s actions were motivated by a desire to coerce him to cause JWI to give FMCC more of its retail paper. If Stepp would not comply, FMCC wished to replace him with another dealer who would. Stepp’s complaint also alleges that JWI’s inability to fulfill the franchising agreement with Ford Motor Company stemmed from the financial control that FMCC held over JWI through the wholesale financing plan. This financial control forced Stepp to make the sale to Russell Darrow on disadvantageous terms. FMCC has moved for summary judgment on each of Stepp’s 17 claims.

II. Standing

Initially, FMCC once again challenges the plaintiff’s standing to bring this action. FMCC contends that plaintiff lacks standing to raise his claims under the Sherman Act, the Clayton Act, the federal Dealers Day-in-Court Act, Wisconsin Statutes § 133.03 and § 218.01, and common law. I previously ruled that Stepp had standing to pursue his claims. See my decision of June 18, 1981. At defendant’s behest, I will reconsider my previous decision.

I believe that my original decision on the standing issue under the Sherman Act was correct. Under the criteria established by Associated General Contractors of California v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), Stepp has standing to pursue his Sherman Act claims. The Associated General Contractors case teaches that in determining whether a plaintiff has antitrust standing the court must examine (1) the causal connection alleged between the injury and the defendant’s conduct, (2) the nature of plaintiff’s injury, (3) the nature of the damages alleged, (4) the directness of the injury claimed, and (5) the existence of more direct victims of the defendant’s conduct. In this case, a direct causal connection is alleged between plaintiff’s injury, being driven out of business and subsequent financial loss, and defendant’s alleged misconduct, a tie-in between retail and wholesale financing, monopolization, and retributive acts. Plaintiffs injury is of the type intended to be redressed by the antitrust laws. Plaintiff suffered a loss in his business and property: he lost his employment as the head of JWI and the value of his JWI stock. His damages are not speculative, nor is his injury indirect.

Similarly, Stepp has standing under the Dealers Day-in-Court Act, 15 U.S.C. § 1221, et seq. FMCC argues that Stepp does not have standing because he was not a person under the Dealers Day-in-Court Act and any rights under 15 U.S.C. § 1221, et seq. accrued to JWI rather than Stepp, its majority stockholder. Originally, I pierced the veil of corporate entity because it was clear that the purposes of the Dealers Day-in-Court Act would not be furthered by permitting FMCC to hide behind the corporate structure of JWI, now defunct. This decision, I believe, was correct.

FMCC now asserts that a credit company cannot be said to be a manufacturer, nor is it a distributor of automobiles, and therefore it is an improper defendant under 15 U.S.C. § 1222. Where there is an inference of control over the credit subsidiary by the parent company, however, a credit company is a proper defendant. See, e.g., Colonial Ford, Inc. v. Ford Motor Co., 592 F.2d 1126 (10th Cir.1979), cert. den., 444 U.S. 837, 100 S.Ct. 73, 62 L.Ed.2d 48; De Valk Lincoln-Mercury, Inc. v. Ford Motor Co., 550 F.Supp. 1199, 1202-03 (N.D.Ill.1982); Imperial Motors, Inc. v. Chrysler Corp., 559 F.Supp. 1312, 1315 (D.Mass.1983). Control is established by showing that the credit company was a wholly owned subsidiary and that its involvement with the plaintiff was exclusively for the purpose of facilitating the distribution of automobiles manufactured by the parent company. It is quite clear that FMCC’s involvement with Robert Stepp was exclusively for the purpose of selling Ford automobiles. An allegation of agency may be inferred from the complaint, and therefore, I hold that FMCC is a proper defendant under 15 U.S.C. § 1221, et seq.

Similarly, my original decision as to Stepp’s standing to pursue his claim under Wisconsin Statutes § 218.01 was correct. I note but at this point I am unmoved by FMCC’s argument regarding the Wisconsin Transportation Commission’s decision in the Matter of the Revocation or Suspension of the Distributor’s License of Volkswagen of America, Inc., Case No. H-108 (August 11, 1981).

Lastly, my prior decision regarding plaintiff’s standing to assert his common law claims was also correct. Therefore, I will proceed to review the merits of FMCC’s motion for summary judgment.

III.

Stepp’s Antitrust Claims

Stepp has raised five antitrust claims: monopolization and attempted monopolization under § 2 of the Sherman Act, a tie-in violating § 3 of the Clayton Act, and conspiracy to monopolize in violation of § 2 of the Sherman Act and Wis.Stats. § 133.03.

The offense of monopolization under § 2 of the Sherman Act requires two elements: the offending corporation must possess monopoly power in the relevant market; and the corporation must have wilfully acquired or maintained that power. United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1703-04, 16 L.Ed.2d 778 (1966). The initial problem in analyzing any antitrust claim is the definition of the correct market. Here, the appropriate geographic market is the Milwaukee metropolitan area. Defining the relevant product market, however, is a hotly disputed issue.

Two product markets are involved in this case: the wholesale financing credit market and the retail financing credit market. Stepp asserts that FMCC has monopolized the wholesale financing credit market for Ford automobile dealers. He also argues that FMCC has attempted to monopolize the retail financing credit market for Ford automobiles and has effected an unlawful tie-in violating § 3 of the Clayton Act by tying the provision of wholesale financing to its ability to purchase retail installment contracts from automobile dealers.

Stepp contends that the relevant product markets are the wholesale financing credit for Ford automobile dealers and the retail financing of Ford automobiles. In contrast, FMCC claims that the appropriate product market is the entire credit market, encompassing all forms of credit. FMCC’s expert, John Nevin, stated that because credit is fungible and sellers move in and out of segments of the market, all credit constitutes a single market.

The controlling concept for market definition in this case is that of cross-elasticity or reasonable substitutability. Where different products may be substituted easily for each other, they are part of the same product market. Cross-elasticity varies according to many factors including price, uses, barriers to entry by new firms, physical characteristics, public or economic recognition of submarkets, distinct customers, or specialized vendors. See Brown Shoe Co. v. United States, 370 U.S. 294, 326, 82 S.Ct. 1502, 1524, 8 L.Ed.2d 510 (1962); P. Areeda and D. Turner, II Antitrust Law, §§ 525, 526 (1978). Cross-elasticity differs depending upon the buyer’s or seller’s point of view. A product may have a great amount of cross-elasticity for a seller who regards the producers of slightly different products as competitors, but little cross-elasticity for certain buyers who, regardless of price, must continue to use a specific product. The exact measure of cross-elasticity is determined by the number of buyers who, at a specified price, will shift and buy a different product. The greater the number of reasonable substitutes, the higher the measure of cross-elasticity.

FMCC relies on a concept of cross-elasticity solely based on the credit seller’s perspective, and urges that the entire credit market is the correct product market. The United States Court of Appeals for the Seventh Circuit has frequently stated that a market definition which focuses on sellers and ignores buyers is not meaningful. Sargent-Welch Scientific Co. v. Ventron Corp., 567 F.2d 701, 710 (7th Cir.1977), cert. denied, 439 U.S. 822, 99 S.Ct. 87, 58 L.Ed.2d 113. Credit sellers such as FMCC correctly regard banks, finance companies and other special credit providers as competitors. Credit buyers, however, have more limited options; they are constrained by the amount of credit which they may require, as well as the type of collateral which they can offer. Barriers to entry in the credit market further limit buyer’s options.

In this case, a number of factors .are appropriately considered in determining the product market. First, credit is fungible; money is, after all, only money. Credit differs, however, as to the terms upon which it is provided, the quantities in which it is available, and the regularity of its availability. Stepp has presented evidence that FMCC, along with GMAC and Chrysler Credit were the steadiest and most generous sources of automobile dealership financing. Second, automobile dealers are distinct customers, requiring large amounts of credit with limited collateral and, often, low cash reserves. Third, FMCC, GMAC, and Chrysler Credit are specialized vendors. They provide credit in order to facilitate the sale of their parent company’s automobiles, although they apparently provide other types of loans as well.

Evidence has been presented which shows that the primary sources of wholesale financing are the automobile manufacturer’s subsidiary credit corporations. Ford dealerships, for example, receive the bulk of their wholesale financing from FMCC, while General Motors dealers receive most of their financing from GMAC. There are, however, other sources for wholesale financing. Certain banks are able and willing to extend certain amounts of wholesale financing; JWI received $250,-000 of wholesale financing‘from the M & I Bank in the 1970s in order to finance its recreational vehicle line. The amount of wholesale financing available from banks and independent finance companies is disputed in this case and, indeed, appears to vary according to economic conditions. No convincing figures have been presented by either party as to the amount of credit which banks are or are not willing to extend to automobile dealerships. It seems clear, however, that in periods of tight credit, banks generally tend to withdraw from the extension of wholesale financing. Furthermore, banks may be unwilling to extend the total amount of wholesale financing credit required by large automobile dealerships such as JWI. It thus appears that there is a submarket of steady wholesale financing available to automobile dealers which is provided by FMCC, GMAC, and Chrysler Credit, as well as certain banks and independent finance companies. See Kaiser Aluminum & Chem. Corp. v. FTC, 652 F.2d 1324, 1332 (7th Cir.1981).

FMCC asserts that wholesale financing is not a relevant product market because credit supplied to one buyer may move to another segment of the market due to economic changes. This, however, further indicates that wholesale financing for automobile dealers is a distinct sub-market for antitrust analysis. If only three major financers are regularly in the business of financing wholesale credit for automobile dealers, then the market for wholesale financing is a limited one. Both the distinct character of automobile dealers as buyers and the specialized nature of FMCC as a vendor support the notion of a submarket consisting of wholesale financing for automobiles. Based on the facts presented thus far I hold that the correct product market in this case is wholesale financing available to automobile dealers. In doing so, I reject Stepp’s proposed sub-market of wholesale financing to Ford dealers. A Ford dealer competes with other auto dealers for non-Ford financing. Plaintiff’s proposed market definition is too narrow to encompass the variables of antitrust analysis.

Moreover, I also believe that there is a distinct submarket for the retail financing of automobiles to consumers. This market consists, as does wholesale financing, of banks, independent finance companies, and FMCC, GMAC, and Chrysler Credit. Credit available to consumers in the financing of retail contracts is very different from that available to automobile dealers or other credit purchasers. Therefore, two sub-markets exist for the purposes of this case: the wholesale financing for automobile dealers submarket and the retail financing for consumers submarket.

Having defined the relevant markets, the next issue is whether FMCC may be said to have successfully monopolized the relevant submarket in violation of § 2 of the Sherman Act. As a matter of law, a successful monopolization claim requires a very large market share of the relevant market. Generally, a 75-80% share of the market is required in order to make out a successful monopolization finding under § 2. United, States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir.1945). FMCC’s share of the wholesale financing market for Ford dealers is estimated at 69%. FMCC’s share of wholesale financing for all new vehicles (a market comparable to the submarket which I defined), however, is estimated at between 13.4% and 27.3%. Even accepting the figure of 27.3% as correct, Stepp has failed to demonstrate the existence of a monopoly within the automobile wholesale financing market. Therefore, FMCC’s motion for summary judgment is granted as to the Third cause of action.

Similarly, Stepp’s Fourth cause of action for the attempted monopolization of retail financing must be dismissed. A successful claim for attempted monopolization has three requirements: the specific intent to monopolize, predatory or unlawful conduct in furtherance of the monopolization, and the dangerous probability of success. Swift & Co. v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 279, 49 L.Ed. 518 (1905); Photovest Corp. v. Fotomat Corp., 606 F.2d 704 (7th Cir.1979), cert. den., 445 U.S. 917, 100 S.Ct. 1278, 63 L.Ed.2d 601 (1980).

The market which FMCC is accused of attempting to monopolize is the retail financing credit market for automobiles. Intent is sufficiently demonstrated by plaintiff’s affidavits as to the alleged tying activity which, if it occurred, could also constitute the unlawful or predatory conduct required for an attempt claim. There is a dispute of material fact as to whether a tie-in occurred; conflicting testimony has been presented by both sides as to whether FMCC employees attempted to condition the receipt of wholesale financing upon the sale of retail paper. Because there is evidence of tying which if proven at trial could manifest the necessary predatory conduct, I have found it necessary to examine whether FMCC possessed the dangerous probability of success.

Most courts and commentators are agreed that where a company’s absolute market share is small, it may not be liable for attempts to monopolize because there is no dangerous probability that it will succeed. See, e.g., Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d 480, 490-91 (5th Cir.1984); White & White, Inc. v. Amer. Hospital Supply Corp., 723 F.2d 495, 507-08 (6th Cir.1983); Dimmit Agri. Indus., Inc. v. CPC Int’l Inc., 679 F.2d 516, 529 (5th Cir.1982), cert. denied, 460 U.S. 1082, 103 S.Ct. 1770, 76 L.Ed.2d 344; Transource Int’l Inc. v. Trinity Indus. Inc., 725 F.2d 274 (5th Cir.1984); Yoder Bros., Inc. v. California-Florida Plant Corp., 537 F.2d 1347 (5th Cir.1976), cert. denied, 429 U.S. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540; Mullis v. Arco Petroleum Corp., 502 F.2d 290 (7th Cir.1974); Areeda & Turner, III Antitrust Law, ¶ 835 at 350 (1978). There is some evidence that FMCC has successfully increased its market share of retail financing. This evidence, however, is insufficient as a matter of law to withstand FMCC’s summary judgment motion. FMCC’s expert’s figures indicate that between 1977 and 1979 FMCC’s share of the retail paper market doubled from 4.3% in 1977 to 8.5% in 1979. Although this is a considerable increase in market share for a two-year period, FMCC’s absolute market share is so small that it cannot be held responsible for attempted monopolization.

Stepp’s claim for violation of § 3 of the Clayton Act must also be dismissed. Stepp’s Seventh cause of action is that FMCC used its market power in the tying product market, wholesale financing, to obtain power in the tied product market, retail financing. The Clayton Act is applicable as regards this case to commodities, rather than services or intangibles. See L. Sullivan, Handbook of the Law of Antitrust, § 151 (1977). Although I previously held in my June 18, 1981 decision that credit was a commodity within the scope of the Clayton Act, I have some doubts now about that decision and am inclined to hold that credit is not a commodity triggering the application of § 3. Id. Bouldis v. U.S. Suzuki Motor Corp., 711 F.2d 1319, 1330 (6th Cir.1983). However, I need not bite into that apple today, as a number of other deficiencies are present in this claim.

First, FMCC has not tied the sale of one of its products (wholesale financing) to the “sale” of another of its products. Here, Stepp claims that FMCC would not sell its product unless JWI sold its retail paper. The claim here does not fit the traditional tying pattern. See Holleb & Co. v. Produce Terminal Cold Storage Co., 532 F.2d 29, 32 (7th Cir.1976). Also, Stepp’s factual allegations do not satisfy the policy behind the tying prohibition found in the Clayton Act.

Furthermore, no tying in fact has occurred here nor has a significant amount of interstate commerce been affected. Accordingly, the Seventh cause of action is dismissed.

FMCC has moved for summary judgment on Stepp’s Fifth and Sixth claims for relief, claims for conspiracy to monopolize the retail financing market under § 2 of the Sherman Act and § 133.03 Wis.Stats.

The Supreme Court recently held in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 952, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), that a parent company may not conspire with its wholly owned subsidiary to violate § 1 of the Sherman Act. Section 1 of the Sherman Act is intended to reach unreasonable restraints of trade which are affected by conspiracy between separate entities but does not reach wholly unilateral conduct. Id., 104 S.Ct. at 2740. In this case the only remaining defendant is FMCC; Ford Motor Company has been dismissed from the action. The Supreme Court held in the Copperweld case that a corporation may not conspire with its wholly owned subsidiary to violate § 1 of the Sherman Act. Although this claim is made under § 2 of the Sherman Act, I can see no distinguishing factor; there are no allegations against a party other than FMCC and Ford Motor, who has since been dismissed. Section 133.03 Wis. Stats, is comparable to the Sherman Act. Independent Milk Producers Co-op v. Stoffel, 102 Wis.2d 1, 298 N.W.2d 102 (Ct. App.1980). Therefore, defendant’s motion for summary judgment is granted as to Stepp’s Fifth and Sixth causes of action.

FMCC has moved for summary judgment on Stepp’s Eleventh and Twelfth causes of action, for violations of §§ 218.01 and 218.01(7), Wis.Stats. FMCC contends that there is no evidence of retributory action against Stepp for his failure to provide them with the amount of retail paper which they wished to receive. There is a genuine issue of material fact in dispute as to retribution. For example, Stepp contends that retribution is shown by Patrick Walsh’s deposition testimony; he testified that it would be highly unusual to terminate the wholesale financing credit line of a dealership in the position of JWI. Second, Stepp argues that retribution can be inferred from his conversations with Patrick Barrett regarding FMCC’s desire for retail paper. Third, Stepp argues that certain memoranda indicate retribution; and fourth, that the timing of the termination of the wholesale financing credit line shows retribution. In contrast, FMCC argues that the testimony of FMCC’s Barrett shows that no retribution occurred. There is clearly an issue of disputed fact here as to intent and it must be resolved, on summary judgment, in favor of Stepp.

Similarly, the Ninth cause of action, also based on retributory acts under the federal Dealers Day-in-Court Act, may not be dismissed.

The Thirteenth cause of action, for breach of fiduciary duty in regard to the security agreement and assignment between JWI and FMCC, must be dismissed. No fiduciary duty exists by virtue of a contractual agreement. There is no fiduciary duty between a franchisor and its franchisees. Jack Walters & Sons Corp. v. Morton Building, Inc., 737 F.2d 698, 711 (7th Cir.1984), cert. denied,—U.S.-, 105 S.Ct. 432, 83 L.Ed.2d 359; Murphy v. White Hen Pantry Co., 691 F.2d 350, 354 (7th Cir.1982); St. Joseph Equipment v. Massey Ferguson, Inc., 546 F.Supp. 1245, 1251 (W.D.Wis.1982). This is not to say that every contract does not impose a duty of good faith; however, a fiduciary duty is distinguished from the normal duty of good faith and fair dealing. The law is clear in this regard and, therefore, the Thirteenth cause of action must be dismissed.

Plaintiff’s Fourteenth cause of action is for fraud. Genuine issues of material fact exist as to intent: FMCC argues that it would have suspended JWI’s line of wholesale financing even if JWI had borrowed additional moneys and, therefore, JWI and Mr. Stepp were not harmed by its actions. Stepp disputes this argument and has provided conflicting testimony as to what was expected with respect to the capital loan application, and the security agreement and assignment. Therefore, FMCC’s motion for summary judgment as to the Fourteenth cause of action is denied. For the same reasons, the Fifteenth and Sixteenth causes of action, for misrepresentation and negligent misrepresentation in regard to the security agreement, may not be dismissed.

FMCC has also moved for summary judgment on plaintiff’s Seventeenth cause of action alleging economic duress. The Seventeenth cause of action argues that FMCC’s actions in threatening to suspend their wholesale financing constituted economic duress in that they forced JWI to give over more of its retail paper to FMCC. The complaint also implies that economic duress occurred when FMCC required additional monies to be put into JWI based on the threat of the withdrawal of wholesale financing. Although the criteria to be used in determining duress is a matter of law, the question of whether duress existed is a matter of fact. Wurtz v. Fleischman, 97 Wis.2d 100, 108, 293 N.W.2d 155 (1980). The elements of economic duress to be considered by a trial court are (1) whether the party alleging economic duress can show that he is the victim of a wrongful or unlawful act or threat; (2) the act or threat must deprive the victim of his free will; (3) as a result of the lack of unfettered will and the act or threat, the party must be compelled to make a disproportionate exchange of values or to give up something for nothing; and (4) the party threatened must have no adequate legal remedy. Id. at 109-110, 293 N.W.2d 155. Stepp has alleged wrongful acts in his complaint, and has offered proof of them in affidavits. The issue of lack or presence of unfettered will is fundamentally a question of intent; this question is inappropriate for determination on summary judgment. At the time the alleged duress occurred it does appear indeed that no adequate legal remedy was available; and finally, it is possible that the alleged payment or exchange were not made with hope of obtaining a gain, but rather were made to protect JWI. Therefore, the claim for economic duress may not be dismissed on summary judgment.

FMCC has also moved for summary judgment on Stepp’s Nineteenth and Twentieth causes of action, for conversion and slander of title in the wrongful filing of the security agreement. FMCC argues that these causes of action must be dismissed because no damages were suffered as a result of these actions. This, like the breach of contract claim alleged in the Twenty-fourth cause of action, is subject to a dispute of material fact. Stepp has argued that FMCC’s actions in filing the security agreement were wrongful and contributed to the ultimate loss of JWI. The Nineteenth and Twentieth causes of action may not be dismissed.

The Twenty-first cause of action alleges a tortious interference with prospective contractual relations between JWI, Stepp, and Mueller, a prospective buyer of JWI. The damage alleged from the tortious interference is that Stepp lost his position as Business Manager of JWI, which he would have retained had Mueller bought the outfit. A claim for tortious interference requires that defendant’s acts be wrongful or unprivileged. Restatement, Torts (Second), §§ 766B, 767. Stepp has argued that FMCC’s acts were wrongful based on their intent. This raises a disputed question of fact which may not be resolved on summary judgment. A tortious interference claim must also show that consummation of the prospective contract was reasonably probable. Mueller testified in deposition that he was extremely discouraged from buying JWI because of statements made by FMCC representatives, and their refusal to extend any credit to JWI. Mueller felt that it was not worthwhile to attempt to turn a dealership around when FMCC was unwilling to take any risks. He also testified that he was very surprised at the reluctance to aid a large and formerly successful dealership. Mueller’s testimony raises a genuine issue of material fact as to whether the consummation of the contract was reasonably probable.

Finally, Stepp’s complaint alleges a breach of the wholesale security and financing agreement. Stepp alleges a breach, not of a specific provision, but rather of the duty of good faith and fair dealing inherent in every contract. FMCC first argues that this duty of good faith and fair dealing does not exist because the original contract was signed in 1964. Subsequent resignings of the contract bring it within current law. It is clear that there is a duty of good faith and fair dealing inherent in every contract in the State of Wisconsin. Amoco Oil v. Cardinal Oil Co., Inc., 535 F.Supp. 661, 666 (E.D.Wis.1982). Although the wholesale financing and security agreement does provide that FMCC can decide whether or not to make loans, if FMCC failed to make further loans for the wrong reason, i.e. in bad faith, there was a breach of the duty of good faith and fair dealing. Stepp has raised a genuine issue of material fact in regard to this cause of action and, therefore, it may not be dismissed.

IT IS THEREFORE ORDERED that:

Defendant’s motion for summary judgment is granted as to Stepp’s Third, Fifth, Sixth, and Thirteenth claims for relief, and these claims are hereby DISMISSED.

FMCC’s motion is DENIED as to Stepp’s Fourth, Seventh, Ninth, Eleventh, Twelfth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Nineteenth, Twentieth, Twenty-first, and Twenty-fourth claims for relief.

A status conference is scheduled for January 28, 1986, at 8:30 a.m., at which I expect to set a date for trial. The parties should give some thought as to whether or not the release issue (see my decision of June 18, 1981) should be tried before any of the other claims are presented.

      . In my June 18, 1981, decision here I called Stepp’s 42-page, 154-paragraph complaint "bulky”. In the four years that have passed since that decision, the parties have taken 29 depositions, exchanged 9 sets of interrogatories, presented 7 sets of document production requests, and produced "hundreds of thousands" of documents. Needless to say, the case is getting more bulky every day.

        . Seventeen of the original claims raised in the Amended Complaint remain in this case. They are claims numbered 3 to 7, 9, 11 to 17, 19, 20, 21, and 24.


source: Caselaw Access Project

author: MILLS, District Judge.

license: Public Domain

text:
    M. Orlando BOHLEN, Administrator of the Estate of Virginia A. Bohlen, Plaintiff, v. UNITED STATES of America, Defendant.
    No. 80-3186.
    United States District Court, C.D. Illinois, Springfield Division.
    Dec. 18, 1985.

      Philip H. Corboy, Chicago, 111., Thomas Londrigan, Springfield, 111., for plaintiff.
    Jim Lewis, Asst. U.S. Atty., Springfield, 111., Jeffrey Axelrad, Roger Emerson, U.S. Dept, of Justice, Washington, D.C., for defendant.
   FINAL OPINION

MILLS, District Judge.

Courts universally look upon settlements with great favor and encourage their use since it is a peaceable resolution of a dispute arrived at by mutual and voluntary agreement. The cases so holding are myriad.

But the settlement here—regrettably— cannot be enforced since one of the parties to the agreement was not cloaked with adequate authority to bind his client.

Plaintiff asks the Court to enforce a settlement agreement which Defendant denies ever existed. The underlying cause of action alleges a wrongful death resulting from a swine flue vaccine administered in accordance with the National Swine Flu Immunization Program Act, 42 U.S.C. § 247b(j).

In preparation for trial, counsel for Plaintiff, Mr. Thomas F. Londrigan, and counsel for the Government, Assistant United States Attorney James A. Lewis, discussed a possible settlement of the claim. Plaintiffs counsel insists that the Assistant U.S. Attorney agreed to a settlement. The motion to enforce the alleged settlement does not, however, allege that any other official of the United States Department of Justice approved the claimed compromise. Without wading into the conflicting factual allegations, the Court has determined that an Assistant United States Attorney has no authority to settle claims and that any agreement which may have been reached between Mr. Londrigan and Mr. Lewis is unenforceable as a matter of law. Thus, for the purpose of considering Plaintiffs “Motion to Enforce”, the Court accepts Plaintiffs allegations as true but finds no enforceable settlement agreement.

Plaintiff brings this suit pursuant to the Federal Tort Claims Act, 28 U.S.C. § 1346, et seq. Congress has created a method for adjudicating claims against the United States which sound in tort. 28 U.S.C. § 2677-2680 (entitled Tort Claims Procedure). The Tort Claims Procedure specifically provides for the settlement of claims. 28 U.S.C. § 2677. This settlement procedure is exclusive. United States v. Reilly, 385 F.2d 225, 229 (10th Cir.1967). (“[WJhere Congress has set out a statutory procedure for the compromise of matters involving the United States, it implicitly negatives the use of any other procedure.”)

The statutory authority for settlement of tort claims reads: “The Attorney General or his designee may arbitrate, compromise, or settle any claim cognizable under section 1346(b) of this title, after the commencement of an action thereon.” 28 U.S.C. § 2677. By administrative directive, the Attorney General has delegated his authority to compromise cases to his deputies, assistants, branch directors and, in special circumstances, U.S. Attorneys and Assistant U.S. Attorneys. Part 0—Organization of the Department of Justice, Subpart Y— Authority to Compromise and Close Civil Claims, and Appendix to Subpart Y. 28 C.F.R. Ch. 1, § 0.160 et seq.

With respect to United States Attorneys and their assistants, the Attorney General’s directive specifically provides:

... Attorneys-in-Charge of field offices are authorized to:
******
(2) Accept or reject offers to compromise cases and close claims which have been directly referred or delegated to them by the Civil Division, as set forth in sections 4(a) and (b) of this directive, in the same manner and to the same extent as Branch and Office Directors, except that United States Attorneys and Attorneys-in-Charge of field offices cannot accept or reject any offers in compromise of any claim or case against the United States where the principal amount of the proposed settlement exceeds $100,000. Nor can United States Attorneys or Attorneys-in-Charge of field offices close (other than by compromise or by entry of judgment) any claim or case on behalf of the United States where the gross amount involved exceeds $100,000, or accept or reject any offers in compromise of any such claim or ease in which the difference between the gross amount of the original claim and the proposed settlement exceeds $100,000 or 10 percent of the original claim, whichever is greater. United States Attorneys may redelegate this authority to Assistant United States Attorneys who supervise other Assistant United States Attorneys who handle civil litigation.

28 C.F.R. Ch. 1, Part O, Subpart Y, Appendix, Directive No. 145-81 § 1(c) (emphasis added). Thus, United States Attorneys have authority to compromise those claims that have been specifically referred to them. This authority to compromise may be delegated to Assistant United States Attorneys “who supervise other United States Attorneys who handle civil litigation.” Id. at c(2).

In the case at bench, the record is totally devoid of any indication that the Assistant United States Attorney assigned to this matter was cloaked with either supervisory authority or responsibility.

Ergo, the Assistant United States Attorney here could not have been delegated any authority to settle Plaintiff’s claim since he was not acting in any supervisory capacity. In the absence of any cognizable delegated authority, the AUSA could not have entered into an enforceable settlement agreement. Accord United States v. Kates, 419 F.Supp. 846, 858 (E.D.Pa.1976).

A settlement entered upon by an agent of the Government who, lacking actual authority, appears to have authority is, nonetheless, void. See Schweiker v. Hansen, 450 U.S. 785, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981); Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947); United States v. 32.40 Acres of Land, More or Less, 614 F.2d 108 (6th Cir.1980). The federal government cannot be, bound by the unauthorized acts of its agents.

Plaintiff’s motion to enforce a settlement agreement is DENIED.


author: NANGLE, Chief Judge.

text:
    Joseph H. SOLIEN, Regional Director of Region 14 of the National Labor Relations Board, for and on Behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CARPENTERS DISTRICT COUNCIL OF GREATER ST. LOUIS, AFL-CIO, Respondent.
    No. 85-2259C(1).
    United States District Court, E.D. Missouri, E.D.
    Dec. 19, 1985.

      Keltner W. Locke, N.L.R.B., Region 14, St. Louis, Mo., for petitioner.
    Morris J. Levin, St. Louis, Mo., for respondent.
   MEMORANDUM

NANGLE, Chief Judge.

This matter is before the Court on the petition of the Regional Director of the National Labor Relations Board (the Board) for an injunction under Section 10(1) of the National Labor Relations Act, 29 U.S.C. § 160(1) (1982) (NLRA). The Board seeks an injunction pending final disposition of these matters by the Board. The Board alleges that handbilling conducted by the Carpenters District Council of Greater St. Louis, AFL-CIO (the union) violates Section 8(b)(4) of the NLRA, 29 U.S.C. § 158(b)(4) (1982).

On October 1, 1985, a hearing was held before this Court. Having considered the pleadings, the testimony of the witnesses, the documents in evidence, and the stipulations of the parties, and being fully advised in the premises, this Court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. Sometime after October 5, 1984, the union distributed a leaflet at the Port Apartments, located at Baumgartner and Telegraph Roads in St. Louis County, Missouri. These apartments were being constructed by Barnett Range and various subcontractors in its employ. The leaflet mentions an Oklahoma construction company doing “carpenter framing”. The parties agree this reference is to Rinker and Yocham Construction.

2. On or about October 9, 1984, Barnett Range filed with the St. Louis Regional Office of the National Labor Relations Board a charge against the union for violation of Section 8(b)(4) of the NLRA, 29 U.S.C. § 158(b)(4). This charge pertained to the union’s conduct at the Port Apartments.

3. On October 12, 1984, the St. Louis Regional Office of the National Labor Relations Board sought an injunction under Section 10(1) of the NLRA, 29 U.S.C. § 160(1) alleging that the Board had reasonable cause to believe that the union had violated Section 8 of the Act.

4. On or about November 5, 1984, by an informal settlement agreement the union agreed not to picket the Port Apartments job site. The St. Louis Regional Director of the National Labor Relations Board approved this settlement on November 7, 1984.

5. On January 30, 1985, the Honorable Clyde S. Cahill, United States District Judge, dismissed the Board’s petition for a temporary injunction in that matter.

6. Construction has been completed at the Port Apartments job site. Tenants now occupy some apartments, and Barnett Range seeks to rent the remaining apartments. Barnett Range owns and operates the Port Apartments.

7. On or about August 1, 1985, the union began distributing handbills to persons driving in and out of the Port Apartments complex. Individuals were given copies of the handbill which appears as Appendix 1 of this memorandum. As a result of the handbilling, some individuals have turned away without examining or leasing the apartments. Handbilling at the Port Apartments has continued every day since it began, except for Labor Day. This activity arises out of the union’s dispute over wages paid by Rinker and Yocham.

8. On June 8, 1984, Barnett Range filed with the Department of Public Works of St. Louis County, Missouri its application for a building permit for construction of the Port Apartments. The application detailed the construction of the outer perimeter walls of the Port Apartments.

9. Section 1225.5 of the Building Code adopted by St. Louis County provides for the use of anchor bolts in certain construction.

10. By a letter dated October 12, 1984, the architect for Barnett Range sought authorization to use Hilty nails rather than anchor bolts. On October 15, 1984, St. Louis County authorized this modification.

11. On May 2, 1985, an architect for Barnett Range sought approval of another fastner, the Red Head No. 12884 anchor. On May 6, 1985, St. Louis County approved this modification.

12. By letter of May 6, 1985, an architect for Barnett Range notified St. Louis County that washers had not been installed along with the Red Head anchors and requested that St. Louis County approve the installation of the anchors without washers. On June 5, 1985, St. Louis County approved the anchors which had already been installed. St. Louis County has not brought suit against any party for violations of its building code as a result of the construction practices used at the Port Apartments. When each apartment was rented, St. Louis County issued occupancy permits and the county has never denied such a permit.

13. Rinker and Yocham left the Port Apartments project in mid-July, 1985 and began working for Barnett Range at another job site approximately 32 miles away.

14. On August 13, 1984, a meeting was attended by Russell Barnett, President of the Midwest Division of Barnett Range; Ollie W. Langhorst, Executive Secretary-Treasurer of the Carpenters’ District Council of Greater St. Louis; Morris J. Levin, attorney for the union; and Timothy L. Stalnaker, attorney for Barnett Range. At the meeting Russell Barnett discussed past problems with Rinker and Yocham and his company’s intention to use Rinker and Yocham for framing or rough carpentry work. Barnett explained that though Rinker and Yocham would bring in Oklahoma workers and pay lower wages, Barnett Range would hire union carpenters for finish carpentry work.

15. Of the 35 subcontractors used by Barnett Range at the Port Apartments, 27 subcontractors had offices in Missouri and used Missouri, mostly St. Louis, employees.

CONCLUSIONS OF LAW

This Court has jurisdiction under Section 10(1) of the NLRA, 29 U.S.C. § 160(1). Respondent is a labor organization as defined by Sections 2(5), 8(b), and 10(1) of the NLRA.

In deciding whether to grant an injunction under Section 10(1), the court need not decide whether an unfair labor practice occurred, only whether there is reasonable cause to believe that an unfair practice occurred. To carry its burden, the Board must establish that the legal issues involved are substantial and non-frivolous. Hendrix v. International Union of Operating Engineers Local 571, 592 F.2d 437, 442 (8th Cir.1979). If the Court finds reasonable cause to believe that an unfair labor practice occurred, it must then determine whether equitable relief is just and proper. Injunctive relief is just and proper when the circumstances of the ease create a reasonable apprehension that the remedial purposes of the statute will be frustrated in the absence of such relief. Wilson v. Milk Drivers and Dairy Employees Union Local 471, 491 F.2d 200, 203 (8th Cir.1974) (citing Minnesota Mining & Manufacturing v. Meter, 385 F.2d 265, 272 (8th Cir.1967)).

To obtain equitable relief, the Board must prevail on three issues. First, the Board must establish a violation of Section 8—that is, that the union threatened, coerced, or restrained Barnett Range with the object of forcing or requiring Barnett Range to cease doing business with Rinker and Yocham. Second, the Board must overcome the union’s defense based on the publicity proviso contained within Section 8(b). Third, the Board must adequately answer the union’s claim of First Amendment protection.

I.

As the Board argues, the union’s hand-billing violates Section 8(b), because through the handbilling the union attempts to inflict economic harm on Barnett Range, a secondary employer. The union argues that peaceful and orderly distribution of handbills, which informed consumers of substandard wages and construction flaws, cannot be considered a violation of Section 8(b).

Section 8(b) provides that it shall be an unfair labor practice for a labor organization or its agents to force or require any person to cease using or otherwise dealing in the products of any other producer or to cease doing business with any other person.

The statute does not prohibit all actions by unions at secondary employer sites. In NLRB v Fruit & Vegetable Packers Local 760, 377 U.S. 58, 84 S.Ct. 1063, 12 L.Ed.2d 129 (1964) (Tree Fruits), the union picketed outside a grocery store to persuade consumers not to purchase a product offered for sale by the store and produced by an employer with whom the union had a dispute. Finding no violation of the statute, the Supreme Court held that when consumer picketing is employed only to persuade customers not to buy the struck product, the union’s appeal is closely confined to the primary dispute. The secondary employer’s purchases from the struck firm are decreased only because the public has diminished its purchases of the struck product. In contrast, when a union pickets to persuade customers not to trade at all with the secondary employer, the latter stops buying the struck product, not because of a falling demand, but in response to pressure designed to inflict injury on its business generally. This pressure creates a separate dispute with the secondary employer, a result the statute seeks to avoid. 377 U.S. at 72, 84 S.Ct. at 1071.

The Tree Fruits doctrine has limited application in construction cases. Unlike the products at a grocery store, the work of a subcontractor merges with the work of the general contractor and developer. Consequently, publicity directed against a subcontractor embroils the general contractor and developer in the labor dispute.

In Hoffman v. Cement Masons Union Local 337, 468 F.2d 1187 (9th Cir.1972), cert. denied, 411 U.S. 986, 93 S.Ct. 2269, 36 L.Ed.2d 964 (1973), .the Ninth Circuit granted the Board’s petition for enforcement and held union picketing and handbilling, designed to publicize the payment of substandard wages by the general contractor to be unlawful. Whitney, the general contractor and primary employer, built subdivision homes owned and sold by Shuler, the developer and secondary employer. These homes were Shuler’s sole product at the site of the union’s activity. The union’s signs did not identify Whitney as the primary employer. The Ninth Circuit found the union’s actions unprotected by the Tree Fruits doctrine. Since Shuler offered only one product at the site of the picketing, consumers who supported the union could respond only by refusing to transact any business whatsoever with Shuler. As a result, Shuler would cease doing business with Whitney. Though the court recognized the interests of the union in its dispute with the general contractor, the court found that the statute favored the interest of the secondary employer. When a union’s interest in picketing a primary employer at a single product site conflicts with the need to protect neutral employers from the labor disputes of others, the interests of the neutral employer prevail. 468 F.2d at 1191. Similarly, in K & K Construction Company v. NLRB, 592 F.2d 1228 (3rd Cir.1979), the Third Circuit vacated an order of the Board upholding picketing at the sales office of a housing developer. Unlike Cement Masons, the signs used by the picketers clearly identified the union’s dispute as one with the subcontractor and not the housing developer. Nevertheless, the Third Circuit found the Tree Fruits exception unavailable where the sole product of the secondary employer contains the product of the primary employer, the so-called merged product doctrine. When the consumer cannot separate the struck product from the secondary employer, courts find the union activity coercive toward the secondary employer. 592 F.2d at 1232. See C. Morris, The Developing Labor Law 1119-24 (2d Ed.1983); see also NLRB v. Retail Store Employees Local 1001, 447 U.S. 607, 100 S.Ct. 2372, 65 L.Ed.2d 377 (1979) (Safeco) (finding coercion where the struck product accounted for 90% of the secondary’s business).

.At the Port Apartments, Barnett Range sells only apartments on which Rinker and Yocham performed rough carpentry work. Therefore, consumers can respond to the union’s handbills only by refusing to rent an apartment at the Barnett Range development. If the union succeeds, Barnett Range will stop using Rinker and Yocham in response to pressure designed to inflict injury on the business of Barnett Range generally. Because consumers cannot separate the product of the primary and secondary employers, the union creates a separate dispute with Barnett Range, the secondary employer. Indeed, the facts indicate that the handbills succeeded in dissuading some customers from examining or leasing the apartments. See Findings of Fact No. 7. Moreover, during the hand-billing Rinker and Yocham were working at another site miles away. See Findings of Fact No. 13. By handbilling at the Port Apartments, the union sought to force Barnett Range to stop using Rinker and Yocham on the other construction project. Thus, the union’s activities violate § 8(b) unless protected by the publicity proviso of that section of the Act.

II.

The union argues that its activities are protected by the publicity proviso of Section 8(b). The Board denies that the union’s activities fall within the exemption of the publicity proviso, because the handbills contain untruthful information, do not identify the dispute with the primary employer and the secondary employer’s relationship to it, and contain information unrelated to the primary dispute.

The publicity proviso applies to communications, other than picketing, that are truthful and do not produce either an interference with deliveries or work stoppage by employees of any person other than the firm engaged in the primary labor dispute. Edward J. Debartolo Corp. v. NLRB, 463 U.S. 147, 155, 103 S.Ct. 2926, 2932, 77 L.Ed.2d 535 (1983). Also, the publicity proviso requires that handbills advise the public that a product is produced by an employer with whom the labor organization has a primary dispute and is distributed by another employer. The parties do not dispute that the union’s handbilling constitutes an activity other than picketing or that the handbilling did not interfere with deliveries or produce a work stoppage. Nor do they dispute that Rinker and Yocham produced a product distributed by Barnett Range.

The publicity proviso protects only truthful information. This limitation requires the Court to inquire into the factual basis of the handbill’s claims. A handbill is truthful so long as it does not substantially depart from fact or intend to deceive. Central Industrial Building and Constructions Trades Council (K-Mart Corp.), 257 N.L.R.B. 86, 88, 107 L.R.R.M. 1463 (1981). The union need only establish a reasonable basis for the information contained in its handbills. See Allentown Racquet Ball & Health Club v. Building and Construction Trades Council of Le-high, 525 F.Supp. 156, 162-63 (E.D.Pa.1981) (unions which appeal to the public based upon an alleged violation of area standards must have a reasonable basis for believing that the standards are being violated).

The Board contends that the handbills contain at least several factual inaccuracies. First, as the handbill states, the Port Apartments were not built under full compliance with the county building codes. The Board attaches great importance to the fact that St. Louis County has not sued Barnett Range for violation of the building code and has issued occupancy permits for each of the apartments in the Port Apartments complex. See Findings of Fact No. 12. In addition, the Board submits that the use of Hilty nails and Red Heads fasteners, rather than anchor bolts, did not violate the building code, because the code permits building officials to approve alternative materials. See Findings of Fact Nos. 9, 10, 11 and 12. In response, the union argues that the construction did not comply with the requirements of the code, because construction workers failed to install a washer necessary when using Hilty nails. As the union argues, the county excused the use of washers by waiving the requirements of the code. In effect, the union argues, the county agreed to approve construction and not sue for violations even though the apartments did not meet the code. Second, the back of the handbill refers to a statement made by Hal Barnett at a meeting with union representatives. The testimony of Russell Barnett established that he, not Hal Barnett, attended the meeting to which the handbill refers. In the only evidence concerning that meeting, Russell Barnett denied making the statement quoted in the handbill. The Court credits his testimony. At the meeting, Barnett discussed past dissatisfaction with the work of Rinker and Yoeham but denied any current problems. Barnett also discussed his desire for union carpenters to perform the finish carpentry work. See Findings of Fact No. 14. Third, as the front of the handbill states, the contractor did not employ St. Louis construction workers but shipped in lower-paid, underskilled workers from Oklahoma. This statement, the Board contends, confuses the general contractor and neutral Barnett Range with the subcontractor Rinker and Yoeham.

Regarding compliance with building code, the proper characterization of the actions of the County is a close question, This Court finds that the union has established a reasonable basis for believing that the apartments were not built in full compliance with the building code. Regarding the other alleged inaccuracies, this Court finds that the union has not satisfied the liberal reasonable basis standard. The union misquoted the statements made by Russell Barnett at the meeting. First, Barnett denies making the statement attributed to him. Second, all parties to the meeting were familiar with the terminology used in the construction industry. They knew that in the context of their discussion “rough work” was not the equivalent of “sloppy work” but instead referred to the framing at the building. Thus, Barnett’s request for union carpenters to cover rough work does not provide a reasonable basis for the quote in the handbill. Regarding the use of Missouri workers, the evidence establishes that Barnett Range used numerous Missouri construction workers. See Findings of Fact No. 15. Though the union may have intended the “contractor” to refer to Rinker and Yocham, when considered in context the reference is misleading and deceptive to the point of being false.

In addition to containing false statements, the union’s handbill fails to satisfy the publicity proviso on other grounds. The only publicity exempted from the prohibition of Section 8 is publicity intended to inform the public that the primary employer’s product is distributed by the secondary employer. 463 U.S. at 155, 103 S.Ct. at 2932. The dispositive factor is the probable effect of the picketing upon the consumer. NLRB v. Twin City Carpenters District Council, 422 F.2d 309, 314 (8th Cir.1970); see Cement Masons, 468 F.2d at 1192. Furthermore, publicity must be exclusively for the purpose of truthfully advising the public. The Ninth Circuit has interpreted this phrase as strictly limiting publicity to that which advises the public of the nature of the dispute and the secondary employer’s relationship to it. Hospital & Service Employees Union Local 399 v. NLRB, 743 F.2d 1417, 1422 (9th Cir.1984). If the handbill contains information unrelated to the primary dispute, the handbill falls outside the protection of the publicity proviso. 743 F.2d at 1424. This limitation applies regardless of whether the unrelated information is truthful or the handbills properly identify the primary dispute.' Thus, to be covered by the proviso, the handbills must (1) identify the dispute with the primary employer and the secondary employer’s relationship to it, and (2) not contain information unrelated to the primary dispute.

First, the front of the handbill does not name the contractor with whom the union has its dispute. The back of the handbill quotes Hal Barnett of Barnett Range as saying that his non-union carpenters are fast but do sloppy work and identifies Barnett Range as a contractor on an apartment project underway in South County. These statements could lead consumers to believe that Barnett Range was the primary employer in the union’s dispute. Though the handbill notes that Rink-er and Yocham intended to pay substandard wages, the handbill does not identify the relationship between Rinker and Yocham and Barnett Range. Therefore, the handbill fails to identify the dispute and the secondary’s relationship to it.

Second, the front of the handbill, in words and pictures, informs consumers that anchor bolts were not used in the construction of the Port Apartments. The back of the handbill discusses the relative load carrying capacities of Hilty nails and anchor bolts and the requirements of the county building code. This material does not relate to the union’s complaint over non-union wages. Therefore, the handbill contains information unrelated to the primary dispute, the substandard wages paid by Rinker and Yocham. Consequently, the publicity proviso does not exempt the union and its handbill from a violation of Section 8.

III.

The union raises the First Amendment in defense of its activities. The union poses the issue for decision as whether the First Amendment permits an absolute ban on non-picketing publicity to inform consumers of substandard construction wages. This misstates the issue. Here, the Court must decide a narrower question—whether applying Section 8(b)(4)(ii)(B) to the hand-billing in this case violates the First Amendment. In particular, this Court must address whether the First Amendment protects a coercive handbill which contains untrue and misleading information. This Court concludes that it does not.

As the Supreme Court held in Safeco, Section 8(b)(4)(ii)(B) imposes permissible restrictions upon constitutionally protected speech when applied to publicity that predictably encourages consumers to boycott a secondary business. 447 U.S. at 616, 100 S.Ct. at 2378. This Court finds no reason to depart from that holding.

A number of factors persuade the Court to reach this conclusion. First, the union’s handbills were directed toward a neutral employer with an intent to force the neutral to cease business with the primary employer. Second, since the handbills turned away some consumers, the handbills achieved the proscribed objective of spreading the dispute to a neutral employer. Third, the handbill contained false and deceptive statements. Given these facts, this Court is reluctant to hold unconstitutional congress’ striking of the delicate balance between union freedom of expression and the ability of neutral employers, employees, and consumers to remain free from coerced participation in industrial strife. See Safeco, 447 U.S. at 617-18, 100 S.Ct. at 2378-79 (Blackmun, J., concurring in judgment).

For the above reasons, this Court enjoins continued distribution of this handbill by the union at the Port Apartments complex.

ORDER

Pursuant to the memorandum filed herein this day,

IT IS HEREBY ORDERED that the respondent, its officers, representatives, agents, servants, employees, attorneys, and all members and persons acting in concert or participation with them be and are enjoined from threatening, coercing, or restraining Barnett Range Corporation or any person engaged in commerce or in an industry affecting commerce by handbilling, picketing, orders, directions, instructions, requests, or appeals at or in the vicinity of the Port Apartments residential apartment complex of Barnett Range Corporation at 2514 Deloak Drive, St. Louis County, Missouri, where an object thereof is to force or to require Barnett Range Corporation to cease using, selling, handling, transporting, or otherwise working on the products of, or to cease doing business with, Oscar Rinker and Gary Yocham, doing business as Rinker and Yocham Construction, pending the final disposition of the matters involved herein by the National Labor Relations Board.

IT IS FURTHER ORDERED that respondent’s motion to reopen the record be and is granted. The exhibits submitted with that motion are hereby admitted.

      . The union argues that its handbilling is not secondary activity. As the union asserts, Barnett Range is not a neutral employer, because Barnett Range served as owner and general contractor of the Port Apartments. This Court disagrees. Essentially, the present activities continue the union’s dispute of 1984. The union’s dispute concerns the wages paid by Rinker and Yocham, not Barnett Range. Thus, Rinker and Yocham is the primary employer. Barnett Range, as the general contractor which hired Rinker and Yocham, is the secondary employer.

      . Section 8(b)(4)(ii)(B) reads in pertinent part: (b) It shall be an unfair labor practice for a labor organization or its agents—____
      (4)(ii) to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce, where in either case an object thereof is-—
      (B) forcing or requiring any person to cease using, selling, handling, transporting, or otherwise dealing in the products of any other producer, processor, or manufacturer ...: Provided, That nothing contained in this clause (B) shall be construed to make unlawful, where not otherwise unlawful, any primary strike or primary picketing; ____

      . The publicity proviso reads in pertinent part: Provided, That nothing contained in this subsection shall be construed to make unlawful a refusal by any person to enter upon the premises of any employer (other than his own employer), if the employees of such employer are engaged in a strike ratified or approved by a representative of such employees whom such employer is required to recognize under this subchapter: Provided further, That for the purposes of this paragraph (4) only, nothing contained in such paragraph shall be construed to prohibit publicity, other than picketing, for the purpose of truthfully advising the public, including consumers and members of a labor organization, that a product or products are produced by an employer with whom the labor organization has a primary dispute and are distributed by another employer, as long as such publicity does not have an effect of inducing any individual employed by any person other than the primary employer in the course of his employment to refuse to pick up, deliver, or transport any goods, or not to perform any services, at the establishment of the employer engaged in such distribution; ____

      . In Debartolo, Debartolo, a mall management company, conceded that Wilson, a mall department store, distributed products produced by High, a construction company. The court inferred that “construction workers, like truck drivers, may perform services essential to the production and distribution of consumer goods.” 463 U.S. at 155, 103 S.Ct. at 2932. Here, the court presumes that the subcontractor, Rinker and Yocham, produces a product— rough carpentry work—distributed by the general contractor, Barnett Range. As the Supreme Court noted in Debartolo, the coverage of the proviso is broad enough to include almost any primary dispute that might result in prohibited secondary activity. 463 U.S. at 155, 103 S.Ct. at 2932. See International Brotherhood of Teamsters Local 537 (Lohman Sales Co.), 132 N.L.R.B. 901, 907 (1961) (congress did not intend the word ‘product’ as a word of special limitation). Thus, regarding the production and distribution requirement of the publicity proviso, this Court finds the facts of this case fall within the requirements of the proviso.

      . Rough and finish are construction terms of art referring, respectively, to the construction of the building frame and the work covering the frame.

      . The Board presented no evidence that the misidentification of Russell Barnett was of any consequence. Therefore, the Court does not rely upon the misidentification in making its findings.

      . Contrary to the union’s concerns, this result does not constitute an absolute ban based upon the content of the handbills. First, the restriction upon union activity depends upon the location of distribution as well as the content of the handbills. Rinker and Yocham finished their work at the Port Apartments before handbilling began. Therefore, the sole object of the hand-billing was to coerce a neutral employer. Second, if the handbilling is not coercive, its contents is limited only to the extent that the information must be true and relevant to the dispute. This limitation comports with the application of the First Amendment to speech pertaining to commercial transactions. Commercial speech that is not false or deceptive and does not concern unlawful activities may be restricted only in the service of a substantial governmental interest and through means that directly advance that interest. Zauderer v. Office of Disciplinary Council of the Supreme Court of Ohio, — U.S. -, -, 105 S.Ct. 2265, 2274, 85 L.Ed.2d 652 (1985). Here, the handbills are both prohibited by statute and false and deceptive. Moreover, the restriction imposed by statute serves the substantial governmental interest of maintaining industrial peace.


author: DONALD J. PORTER, Chief Judge.

text:
    LODGE 862, INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS, AFL-CIO, and Leo Weig, Plaintiffs, v. SAFEGUARD POWERTECH SYSTEMS, a DIVISION OF SAFEGUARD-SCIENTIFICS, INC., Defendant.
    Civ. No. 85-1031.
    United States District Court, D. South Dakota, N.D.
    Dec. 19, 1985.
    Daniel R. Moen, McNeary & Moen Law Offices, Aberdeen, S.D., for plaintiffs.
    Dennis Maloney, Maloney, Kolker & Fritz Law Offices, Aberdeen, S.D., for defendant.
   MEMORANDUM OPINION

DONALD J. PORTER, Chief Judge.

I. BACKGROUND

Plaintiff brought the present action in the Fifth Judicial Circuit of the State of South Dakota to enforce arbitration under a collective bargaining agreement. The action was removed to federal court pursuant to 28 U.S.C. § 1441(b). Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a), confers federal jurisdiction in suits for violation of collective bargaining agreements. Although the complaint was stylized in common law terms, the mere omission of reference to § 301 of the Act does not preclude federal subject matter jurisdiction. Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir.1980) (per curiam). A federal district court has jurisdiction to consider whether a collective bargaining agreement contains terms which bind a union and employer to arbitrate their disputes. Nashville Newspaper Printing Pressmen’s Union v. Newspaper Printing Corp., 399 F.Supp. 593, 600 (M.D.Tenn.1974), aff'd, 518 F.2d 351 (6th Cir.1975).

This case comes before the Court on stipulated facts. In June of 1983 the Union and defendant entered into an integrated Collective Bargaining Agreement concerning the subjects of wages, working conditions and grievance procedures to be followed by the parties. On October 26, 1983 the Union filed Grievance # 125 with defendant, alleging violations of Article XXIII (Jobs, Promotions and Transfers) and Article XXXVI (Management Prerogatives). The substance of Grievance # 125 was an allegation that a certain machine group was incorrectly paid according to the type of operation performed. In response to this grievance, the company alleged that “machine groups as a concept together with appropriate rate of pay was negotiated and agreed to” in the Collective Bargaining Agreement. By letter on March 14, 1984, the Union withdraw its request for arbitration on the grievance, stating that withdrawal would “not constitute a precedent for any future grievances that may arise on the same subject.”

On April 4, 1984 an employee, Leo Weig, and the Union filed Grievance # 133 alleging violations of Article XXIII (Jobs, Promotions and Transfers) and Article XXVII (Complete Agreement). The substance of this grievance involved a similar allegation that the operation of certain machinery was being incorrectly paid. In declining remedy of Grievance # 133 on grounds identical to Grievance # 125, defendant contended that the Union’s prior withdrawal of the previous grievance constituted acceptance of defendant’s position. On May 10, 1984 the Union requested arbitration of Grievance # 133 pursuant to Article XXVI (Arbitration). Defendant has refused.

The issue in this case is the procedural significance of the Union’s withdrawal of Grievance # 125. Although defendant concedes that potentially any subject under the contract would be subject to the grievance and arbitration procedures, it alleges there is no provision compelling arbitration when the parties have reached an agreement pri- or to arbitration. Defendant maintains that since both grievances involved the same issue, it should not be required to relitigate the matter. Plaintiff argues, however, that the preclusive effect of the withdrawal on arbitration is itself a question for arbitration and should not be determined unilaterally by defendant. This Court agrees.

II. DISCUSSION

Because of the strong policy favoring settlement of labor disputes by arbitration, the Supreme Court has indicated that the function of a court is limited:

[T]he judicial inquiry under § 301 must be strictly confined to the question whether the reluctant party did agree to arbitrate the grievance or did agree to give the arbitrator power to make the award he made. An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.

United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409 (1960). Since arbitration is a matter of contract, a court must determine whether the parties have contractually agreed to submit the subject matter of a dispute to arbitration. Automotive, Petroleum & Allied Industries Employees Union v. Town & Country Ford, Inc., 709 F.2d 509, 514 (8th Cir.1983).

Article XXV (Grievance Procedure) of the Collective Bargaining Agreement defines the term “grievance” as “any dispute between the respective Companies and the Union ... concerning the interpretation, application, claim, affect [sic] or breach or violation of this agreement.” If the grievance cannot be resolved according to the delineated procedures “then the respective Companies or the Union has the right and authority to submit each grievance to arbitration.”

Article XXVI (Arbitration) provides a procedure governing arbitration once a party submits a grievance or dispute to arbitration. Like Article XXV on Grievance Procedure, Article XXVI apparently contains no substantive limitation on the exercise of the dispute resolution procedures. Because the specific issue of whether certain machine groups were negotiated under the present Collective Bargaining Agreement is arguably a dispute concerning the application or interpretation of that Agreement, the issue is clearly one the parties are bound to submit to the grievance and arbitration procedures. This the defendant does not dispute, but instead submits that it has no duty to arbitrate since the controversy in Grievance # 133 was settled by the withdrawal of Grievance # 125. It contends that the Union’s withdrawal of Grievance # 125 operates to estop the Union from proceeding on the same or similar grievance.

Initially it is important to note that there are two methods of nonjudicial dispute resolution under a collective bargaining agreement—arbitration and private settlement. “Parties who reach a settlement pursuant to a formal grievance procedure have not bargained for an arbitrator’s construction of the collective bargaining agreement: they have bargained for their own construction.” Bakers Union Factory No. 326 v. ITT Continental Baking Co., Inc., 749 F.2d 350, 354 (6th Cir.1984). In Bakers Union, the court determined that an arbitrator had no authority to reinstate an employee who was dismissed pursuant to the terms of a prior written settlement agreement which was entered into by the parties pursuant to the grievance procedures of the collective bargaining agreement. Similar to the Agreement in the present case, the dispute resolution procedure in Bakers Union provided for arbitration only for disputes that could not be settled in accordance with the Grievance Procedure. 749 F.2d at 356. The present case is factually distinguishable, however, since an express written settlement was not agreed to by the parties on the issue submitted for resolution. Here the center of dispute between the parties is the existence of a settlement itself. Since “settlement” is not defined in the Agreement for purposes of determining when arbitration is proper, the dispute resolution procedures of the contract must be interpreted to determine whether the withdrawal of a grievance prior to arbitration is intended to preclude later arbitration of that issue.

An examination of case law suggests that the procedural significance of withdrawal of Grievance # 125 is a question for the arbitrator and not the court to decide. In Little Six Corp. v. United Mine Workers of America, 701 F.2d 26, 29 (4th Cir.1983), the court rejected the argument that a prior arbitration award precluded rearbitration of the grievance, holding that the question of the preclusive effect of the prior arbitration award was itself a question for arbitration. Likewise, in Local 103, Int’l Union of Elec., Radio and Mach. Workers v. RCA Corporation, 516 F.2d 1336, 1339 (3d Cir.1975), the Court determined that it is not the function of a court to decide “whether the ‘same question or issue’ had been the subject of arbitration within the meaning of the collective bargaining agreement.”

Courts have seen no reason to deviate from this policy when the issue is the preclusive effect of a prior withdrawal of a grievance on arbitration instead of the preclusive effect of a prior award. See Bed-ford Printing Specialties and Paper Products Union No. 716 v. Standard Register Co., 387 F.Supp. 1249, 1252 (M.D. Pa.1974) (whether or not the withdrawal of a previous grievance bars subsequent submission to arbitration is a question of construction for the arbitrator); Office and Professional Employees International Union v. Allied Industrial Workers International Union, 397 F.Supp. 688, 692 (E.D.Wis.1975), aff'd, 535 F.2d 1257 (7th Cir.1976) (union’s denial that a settlement had been reached constituted a dispute over the interpretation of the collective bargaining agreement and was therefore a question subject to arbitration).

Because the significance of withdrawal of Grievance # 125 is a question involving the interpretation of the dispute resolution procedures of the Agreement, it is not a question for this Court. Under a collective bargaining agreement “[i]t is the arbitrator’s construction which was bargained for; and so far as the arbitrator’s decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.” United Steelworkers of America v. Enterprise Wheel to Car Corp., 363 U.S. 593, 599, 80 S.Ct. 1358, 1362, 4 L.Ed.2d 1424 (1960).

Accordingly, plaintiff is entitled to submit the issue of whether the withdrawal of Grievance # 125 constituted a settlement as to preclude arbitration. If the union action in withdrawing the grievance is not found to be preclusive of arbitrating Grievance # 133, the plaintiff will then be entitled to a determination on the substantive merits of the grievance.

This opinion constitutes the findings of fact and conclusions of law of this Court.

      . By stipulation, the parties agreed that the Union has fully complied with all procedural prerequisites to arbitration.

      . Article XXV of the present Agreement sets out the grievance procedure according to progressive steps. Step 2 provides that a grievance will progress to Step 3 and finally to arbitration "[i]f no satisfactory settlement can be reached.” For purposes of discussion this language is interpreted as a condition precedent to arbitration under the Collective Bargaining Agreement.


author: WARREN, District Judge.

text:
    UNITED BROTHERHOOD OF CARPENTERS AND JOINERS, LOCAL UNION NO. 1533, AFL-CIO, Plaintiff, v. HAMILTON INDUSTRIES, INCORPORATED, Defendant.
    No. 83-C-1875.
    United States District Court, E.D. Wisconsin.
    Dec. 19, 1985.
    James P. Maloney and George F. Graf, Zubrensky, Padden, Graf & Maloney, Milwaukee, Wis., for plaintiff.
    Mark F. Vetter and James E. Braza, Davis & Kuelthau, S.C., Milwaukee, Wis., for defendant.
   DECISION AND ORDER

WARREN, District Judge.

On November 18, 1983, plaintiff commenced this action by filing a Complaint and Application for Confirmation of a labor arbitration award issued by Arbitrator David B. Johnson on August 4, 1983. This action was commenced pursuant to § 301 of the Labor Management Relations Act of 1947, as amended, 29 U.S.C. § 185(a), and pursuant to the United States Arbitration Act, 9 U.S.C. § 9, for confirmation of the arbitration award.

On December 12, 1983, the defendant answered the complaint and filed two counterclaims, pursuant to 9 U.S.C. §§ 10, 11, seeking to vacate, modify and correct the arbitration award.

Presently pending in this action is plaintiffs motion to confirm the award and its motions to dismiss the counterclaims and all defenses seeking to vacate, modify or correct the arbitration award, on the ground that the answer and counterclaims are barred by the applicable statute of limitations.

BACKGROUND

The plaintiff Union represents certain of defendant’s employees at its plants located in Two Rivers, Wisconsin. The plaintiff and defendant were parties to a Collective Bargaining Agreement (“the Agreement”) which was in effect at all times material hereto. The Agreement provided for the submission of grievances to arbitration.

On June 13, 1981, the plaintiff filed a grievance protesting the company’s establishment and application of a “temporary” incentive rate under the Agreement’s provisions. The parties processed the grievance through the various steps of the grievance procedure without resolution. The parties thereafter submitted the dispute to arbitration and Arbitrator David B. Johnson was selected by the parties via the procedure provided for in the Agreement. Arbitrator David B. Johnson held a hearing concerning the grievance on June 2, 1983, receiving evidence from both sides. Further, each party was provided with the opportunity to present the testimony of witnesses and to cross examine them, as well as to present testimony in written form.

On August 4, 1983, after an exchange of post-hearing briefs by the parties, Arbitrator David B. Johnson issued an award in plaintiff's favor. Defendant refused to abide by the terms of this award and three and one-half months later plaintiff commenced this action seeking judicial confirmation of the award. Defendant counterclaimed by seeking judicial vacation, modification or correction of the award. Plaintiff contends that the Court should dismiss defendant’s counterclaims as untimely, arguing that defendant was obligated to seek to vacate, modify or correct the arbitration award within three months of its issuance.

DISCUSSION

In Chauffeurs, Teamsters, Etc. v. Jefferson Trucking, 628 F.2d 1023 (7th Cir.1980), the Seventh Circuit discussed the timeliness issue present in the instant action. The Seventh Circuit first noted that the Labor Management Relations Act does not provide for a time limitation on actions to vacate an arbitration award in a suit to enforce the award under Section 301. Id. at 1026. The Court then held that “the timeliness of a Section 301 suit is to be determined, as a matter of federal law, ‘by reference to the appropriate state statute of limitations’.” Id. at 1026.

The applicable state statute of limitations is contained in Wis.Stat. § 788.13 which provides:

Notice of a motion to vacate, modify or correct an award must be served upon the adverse party or attorney within 3 months after the award is filed or delivered, as prescribed by law for service of notice of a motion in an action____

In Milwaukee Police Asso. v. Milwaukee, 92 Wis.2d 145, 165, 285 N.W.2d 119, 128 (1979), the Wisconsin Supreme Court held “that the time strictures of Sec. 298.13, Stats., [currently Wis.Stat. § 788.13] are inapplicable when a party who prevails at an arbitration decides to move to confirm the award and the adverse party desires to raise objections by responding with a motion to vacate, modify or correct the award____” Accordingly, it seems clear that Wisconsin law would not preclude the defendant from moving to vacate the arbitration award in the present action because of lack of timeliness.

In its brief to the Court, plaintiff concedes that Wisconsin law would not bar defendant from moving to vacate the award, however plaintiff asks this Court to disregard the Wisconsin Supreme Court's holding in Milwaukee Police Asso., supra. Plaintiff’s position is that the Wisconsin Supreme Court’s reasoning in Milwaukee Police Asso. was erroneous since it was based on precedent subsequently interpreted differently by other courts. This Court is obligated to acknowledge the Wisconsin Supreme Court’s interpretation of a Wisconsin statute as binding. See, e.g., 1A J. Moore, W. Taggart, A. Vestal & J. Wicker, Moore’s Federal Practice ¶ 0.302[3] (2d ed. 1985).

Without assessing the correctness of the Wisconsin Supreme Court’s reasoning, this Court is required by the Seventh Circuit’s clear mandate in Jefferson Trucking, supra, to apply Wisconsin’s statute of limitations. However, the Court opines that the Seventh Circuit’s rule contained in Jefferson Trucking should be modified, see, e.g., Krecun v. Bakery, Cracker, Pie, Yeast Drivers, 586 F.Supp. 545 (N.D.Ill.1984), because of the resulting nonuniformity of the statute of limitations applied in § 301 cases.

Accordingly, the Court holds that the defendant's counterclaims seeking to vacate, modify or correct the award are not barred by the applicable statute of limitations.

A status conference will be held in this matter on Wednesday, January 15, 1985, at 9:45 a.m., in Room 390, Federal Building, 517 East Wisconsin Avenue, Milwaukee, Wisconsin, to set the briefing schedule for the issues remaining in this case.