Retail Clerks Union, Local 428 v. L. Bloom Sons Co.

California Court of Appeal Sep 17, 1959 No. Civ. 18518Published

Before: Donnell

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Holding. The court held that a dispute over whether a third-party corporation is the alter ego of a contracting party must be determined by a court of law rather than an arbitrator, as the third party is not bound by the arbitration agreement.

Issues

Whether the issue of whether a third-party corporation is the alter ego of a contracting party must be determined by arbitration.
Whether a third party can be compelled to participate in arbitration proceedings to which it did not consent.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The proper forum for that determination is, of course, a court of law.”

“Appellant is, in effect, urging the patently absurd proposition that two parties can by contract effectively stipulate for the mode of determination of the rights of a third party who has not only not assented to such a mode of determination”

[702]

O ’DONNELL, J. pro tem.

This is an appeal from an order dismissing without prejudice appellant’s petition under section 1282 of the Code of Civil Procedure for an order directing arbitration.

The petition alleges that appellant is a labor organization and respondent is the owner and operator of several retail shoe stores located in Santa Clara County; that appellant, as the representative of respondent’s employees, entered into a collective bargaining contract with respondent establishing the wages, hours and conditions of employment of respondent’s employees; and that the contract by its terms covered all persons employed by respondent within the county of Santa Clara. The petition proceeds to allege that at the time of the execution of the collective bargaining contract, respondent owned and operated three shoe stores in Santa Clara County; that thereafter respondent opened a fourth store in Valley Pair, Santa Clara County, but that respondent refused to recognize and apply the provisions of the contract to the employees working at the new Valley Pair store. The petition then alleges that a controversy exists between appellant and respondent respecting respondent’s refusal to bring its Valley Pair employees within the contract; that appellant has requested respondent to arbitrate the controversy in accordance with the arbitration clause of the contract but that respondent has refused to do so. The petition closes with the prayer that respondent be directed to proceed with arbitration of the controversy.

Respondent filed an affidavit in answer to the petition in which the allegations of the petition were admitted excepting those relating to the Valley Pair store. With respect to that store the affidavit denied that respondent had any connection therewith or that any of its employees was employed there and averred that such store was wholly owned and operated by another corporation, to wit, Bloom’s Salinas, Inc.

Bloom’s Salinas, Inc., was not made a party to this proceeding.

The issue presented was, in the language of appellant’s opening brief, this: “Did L. Bloom Sons Co. Inc. operate the new store at Valley Pair Shopping Center, as it told the public of San Jose it did, and were its employees accordingly subject to the existing collective bargaining agreement? Or, was the new store controlled by a separate corporate entity

Retail Clerks Union, Local 428 v. L. Bloom Sons Co.

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