Pearson Candy Co. v. Waits

TRAYNOR, J. Plaintiff is a candy manufacturer engaged in interstate commerce. On October 27, 1941, plaintiff and defendant union signed a closed shop agreement to remain in force until April 30, 1942, and from year to year thereafter unless terminated by either party upon written notice at least thirty days before April 30th of any year. None of plaintiff’s employees was a member of the union before the execution of the agreement, but all of them joined thereafter. Neither of the parties ever gave the notice required by the agreement for its termination.

In October, 1942, plaintiff rejected the union’s demand that it discharge nine employees who had lost good standing in the union, and in January, 1943, defendant union initiated proceedings in the National War Labor Board to determine whether the agreement governed the conditions of employment in plaintiff’s business. On May 25, 1943, the Tenth Regional Board of the National War Labor Board, after a hearing, issued a directive order “that the parties to this case comply with the terms of the contract of October 27, 1941, until such time as it shall have been terminated in accordance with its provisions, or by agreement of the parties, or until the contract shall have been held invalid by the final decision of a competent tribunal. This Board, while not expressly decid[617]ing that it is without jurisdiction to determine the legality of the contract, concludes, for reasons of policy, that the determination of legality should he made by the National Labor Relations Board or other tribunal of competent authority, the issues in dispute being meanwhile resolved through the Board’s direction that the contract shall be observed.” Plaintiff’s petition to the National War Labor Board for review of this order was denied on July 16, 1943.

On August 25, 1943, plaintiff brought this action for declaratory relief, asking that the closed shop agreement be declared invalid as in violation of the National Labor Relations Act. On September 8, 1943, before the case was tried, the National War Labor Board assumed jurisdiction over the dispute under section 7 of the War Labor Disputes Act of June 25, 1943 (50 U.S.C.A. App. §1501 et seq.) “being of the opinion that the said labor dispute has become so serious that it may lead to a substantial interference with the war effort.” The proceedings resulted in a directive order reading in part; “the National War Labor Board hereby decides the dispute and orders that the terms and conditions of employment to govern the relations between the parties shall be those set forth in their collective bargaining agreement dated October 27, 1941.” While these proceedings were pending, the trial court dismissed plaintiff’s action for lack of jurisdiction over the controversy. Plaintiff appeals.