John Wiley & Sons, Inc. v. Livingston

Supreme Court of the United States · 1964 · Labor Law
376 U.S. 543 (1964)
Updated
Labor LawsuccessorshiparbitrationSection 301collective bargaining agreementsuccessor employermergersubstantive arbitrability

Facts

District 65 entered into a collective bargaining agreement with Interscience Publishers for a term expiring January 31, 1962, and the agreement did not expressly bind successors. On October 2, 1961, Interscience merged into John Wiley & Sons and ceased doing business as a separate entity; most former Interscience employees continued working for Wiley, which had no unionized employees. The union and Wiley disagreed about whether the merger terminated the agreement and whether former Interscience employees retained rights such as seniority, severance pay, vacation pay, and pension-related contributions under that agreement. One week before the agreement expired, the union sued to compel arbitration.

Issue

Whether a successor corporation that did not sign a collective bargaining agreement must arbitrate under that agreement after the predecessor disappears by merger. If so, whether the court or the arbitrator decides whether contractual grievance steps and other procedural prerequisites to arbitration were satisfied.

Rule

The court must decide whether a party is bound to arbitrate at all, because the duty to arbitrate is contractual and cannot be compelled without judicial determination that the agreement creates that duty. In the labor context, however, the disappearance of a corporate employer by merger does not automatically terminate all employee rights under a collective bargaining agreement, and in appropriate circumstances a successor may be required to arbitrate where there is substantial continuity of identity in the business enterprise and the union has not abandoned its claim. Once substantive arbitrability is established, procedural questions growing out of the dispute and bearing on its final disposition should be left to the arbitrator.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Lakefront Binding, a book-finishing company in Cleveland, had a collective bargaining agreement with Local 212 containing a broad arbitration clause. Lakefront merged into Harbor Pageworks, and Lakefront ceased to exist; nearly all Lakefront employees continued doing the same work at Harbor's Cleveland facility. When Harbor refused to honor claimed seniority rights under the old agreement, the union sued to compel arbitration.

Who should decide whether Harbor is bound to arbitrate under Lakefront's agreement, and what is the most likely result?

Explanation. The court decides substantive arbitrability: whether the party is bound at all and whether the dispute is covered. But in the labor context, the disappearance of the predecessor by merger does not automatically terminate employee rights or the arbitration obligation. Where there is substantial continuity of identity in the business enterprise, a successor may be required to arbitrate under the predecessor's agreement. (Derived from John Wiley & Sons, Inc. v. Livingston (1964).)