TENNEY ENGINEERING, Inc. v. UNITED ELECTRICAL RADIO & MACHINE WORKERS OF AMERICA, (U.E.) LOCAL 437, 207 F.2d 450

MARIS, Circuit Judge. The plaintiff, a manufacturing corporation, brought an action in the District Court for the District of New Jersey under

Section 301 of the Labor Management Relations Act, 1947, 29 U.S.C. A. § 185, commonly called the Taft-Hart-ley Act, against the defendant, a labor union, for damages for breach of contract. The breach alleged was a strike of the plaintiff’s employees called by the defendant in violation of a collective bargaining agreement between the parties. The agreement contained an arbitration clause and the defendant moved for a stay of the suit pending arbitration, pursuant to

Section 3 of title 9, United States Code, entitled “Arbitration”. The parties stipulated that the plaintiff is engaged in the manufacture of goods for sale in interstate commerce and that its employees, represented by the defendant, are all engaged in such manufacture and incidental plant maintenance. The district court denied the stay and the defendant thereupon took the appeal now before us. This appeal presents the question whether

Section 3 of title 9 is applicable to a collective bargaining agreement between parties in the situation of those in this suit. For if the

section is not so applicable the action of the district court in denying a stay under it was right. The answer to this question in turn depends upon the construction which is to be placed upon the final clause of

Section 1 of title 9 which reads “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” It has been held that the “contracts of employment” to which this clause refers include collective bargaining agreements and that the clause is a limitation upon the operation of all the sections of title 9. The majority of the court would not disturb this holding.

The answer to the question accordingly turns upon whether the plaintiff’s employees, who are engaged in the manufacture of goods for commerce and plant maintenance incidental thereto, are to be regarded as a “class of workers engaged in foreign or interstate commerce” within the meaning of the exclusionary clause. The Arbitration Act, which was codified and enacted as title 9 of the United States Code in 1947, was originally enacted by the Act of February 12, 1925.

Our problem, therefore, is to determine the meaning which Congress in 1925 intended to give to the phrase “workers engaged in foreign or interstate commerce”. Was it intended to include only those employees actually engaged in the channels of interstate or foreign commerce or did it comprehend all those engaged in activities affecting such commerce, such as the production of goods destined for sale in it? The legislative history furnishes little light on the point. The bill was drafted by the Committee on Commerce, Trade and Commercial Law of the American Bar Association and sponsored by the Association.

The only reference to the-clause in question appears in a report of the Bar Association committee in which it was stated: “Objections to the bill were urged by Mr. Andrew Furuseth as representing the Seamen’s Union, Mr. Furuseth taking the position that seamen’s wages came within admiralty jurisdiction and should not be subject to an agreement to arbitrate. In order to eliminate this opposition, the committee consented to an amendment to

Section 1 as follows: ‘but nothing herein contained shall apply to contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce.’ ” It thus appears that the draftsmen of the Act were presented with the problem of exempting seamen’s contracts. Seamen constitute a class of workers as to whom Congress had long provided machinery for arbitration. In exempting them the draftsmen excluded also railroad employees, another class of workers as to whom special procedure for the adjustment of disputes had previously been provided.

Both these classes of workers were engaged directly in interstate or foreign commerce. To these the draftsmen of the Act added “any other class of workers engaged in foreign or interstate commerce.” We think that the intent of the latter language was, under the rule of ejusdem generis, to include only those other classes of workers who are likewise engaged directly in commerce, that is, only those other classes of workers who are actually engaged in the movement of interstate or foreign commerce or in work so closely related thereto as to be in practical effect part of it.

The draftsmen had in mind the two groups of transportation workers as to which special arbitration legislation already existed and they rounded out the exclusionary clause by excluding all other similar classes of workers. It must be remembered that the Arbitration Act of 1925 was drawn and passed at a time when the concept of Congressional power over individuals whose activities affected interstate commerce had not developed to the extent to which it was expanded in the succeeding years.

The area in which Congress then generally legislated is illustrated by the Federal Employers’ Liability Act of 1908 which applied to a railroad employee injured “while he is employed by such carrier [by railroad] in such [interstate or foreign] commerce”. This language had been construed by the Supreme Court to include only employees engaged in interstate transportation or in work so closely related to it as to be practically a part of it.

In incorporating almost exactly the same phraseology into the Arbitration Act of 1925 its draftsmen and the Congress which enacted it must have had in mind this current construction of the language which they used. Moreover when Congress later proceeded to exercise power under the commerce clause in the expanded area, to which we have referred, it continued to use the phrase “engaged in commerce” in the narrower sense while using other and more precise language to include activities merely affecting commerce.

Thus Congress made the Fair Labor Standards Act applicable not only to employees “engaged in commerce” but also to those engaged “in the production of goods for commerce”. Congress, as the Supreme Court pointed out in McLeod v. Threlkeld, 1943, 319 U.S. 491, 63 S.Ct. 1248, 87 L.Ed. 1538, has thus used precise language in this field to carry out its intentions. We think it did so in the Arbitration Act of 1925. In the case before us the plaintiff’s employees are engaged in the production of goods for subsequent sale in interstate commerce.

Thus while their activities will undoubtedly affect interstate commerce they are not acting directly in the channels of commerce itself. They are, therefore, not a “class of workers engaged in * * * interstate commerce” within the meaning of

Section 1 of title 9. In this respect the present case is distinguishable from the two Pennsylvania Greyhound Lines cases decided by this court, the bus line employees in those cases being directly engaged in the channels of interstate transportation just as are railroad workers. By the same token the present decision is consistent with our earlier decisions in Donahue v. Susquehanna Collieries Co., 3 Cir., 1943, 138 F.2d 3, 149 A.L.R. 271; Watkins v. Hudson Coal Co., 3 Cir., 1945, 151 F.2d 811, certiorari denied 327 U.S. 777, 66 S.Ct. 522, 90 L.Ed. 1005; Donahue v.

Susquehanna Collieries Co., 3 Cir., 1947, 160 F.2d 661, and Evans v. Hudson Coal Co., 3 Cir., 1948, 165 F.2d 970; in all of which the employees involved were engaged in the production of coal for later sale in interstate commerce. The collective bargaining agreement here involved, not being excluded by

Section 1, undoubtedly is within the purview of

Section 3 of title 9. For it is settled that

Section 3, being a purely procedural section, applies to all contracts for arbitration which may be involved in suits properly brought in the federal courts and not merely to those maritime transactions or contracts evidencing transactions involving interstate, foreign or territorial commerce the arbitration clauses of which are made valid and enforceable by the substantive provisions of

Section 2 of title 9. We, therefore, do not have to decide whether the collective bargaining agreement between the present parties is a contract evidencing a transaction involving interstate commerce within the meaning of

Section 2. It may well be, however, that the concept of a “transaction involving commerce” contained in that

section was intended to be broader in its scope than that of “workers engaged in * * * commerce”, the language of the exclusionary clause of

Section 1 which we have considered. It would seem reasonable to assume that Congress intended the benefits of

Section 2 to apply to all contracts within its power to regulate under the Commerce Clause of the Constitution. We conclude that the defendant is entitled to a stay of proceedings under

Section 3 of title 9, United States Code, if the collective bargaining agreement between the parties, properly construed and applied, provides for arbitration of the issues raised by the complaint and if the defendant is itself not in default in proceeding with such arbitration. Since these questions cannot be determined on the present record the case must be remanded for their determination and the entry of an appropriate stay order if the defendant is found to be entitled to it. Our conclusion that

Section 3 is applicable makes it unnecessary for us to consider whether the defendant would be entitled to the relief it seeks, by way of a counterclaim for specific performance of the arbitration clause of the agreement, under

Section 301 of the Labor Management Relations Act. In this connection see the well considered opinion of Judge Wyzanski in Textile Workers Union of America, C. I. O., v. American Thread Co., D.C.Mass.1953, 113 F. Supp. 137, which holds that such a remedy is afforded by that Act. The order of the district court will be vacated and the cause will be remanded for further proceedings not inconsistent with this opinion. . Ҥ 3.

Stay of proceedings where issue therein referable to arbitration “If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.” . “§ 1. ‘Maritime transactions’ and ‘commerce’ defined; exceptions to operation of title “ ‘Maritime transactions,’ as herein defined, means charter parties, bills of lading of water carriers, agreements relating to wharfage, supplies furnished vessels or repairs to vessels, collisions, or any other matters in foreign commerce which, if the subject of controversy, would be embraced within admiralty jurisdiction; ‘commerce,’ as herein defined, means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation, but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” .

Gatliff Coal Co. v. Cox, 6 Cir., 1944, 142 F.2d 876; International Union United Furniture Workers v. Colonial Hardwood Flooring Co., 4 Cir., 1948, 168 F.2d 33; Amalgamated Ass’n, etc. v. Pennsylvania Greyhound Lines, 3 Cir., 1951, 192 F.2d 310; Pennsylvania Greyhound Lines v. Amalgamated Ass’n, 3 Cir., 1952, 193 F.2d 327. . 43 Stat. 883, 9 U.S.C. (1946 Ed.) § 1 et seq. . H.R. Rep. No. 96, 68th Cong., 1st Sess., p. 1. . 48 Am. Bar Assn. Rep. 287 (1923). . See Sec. 4554, R.S., 46 U.S.C.A. § 651, providing for arbitration by shipping commissioners. . Transportation Act, 1920, Title III, 41 Stat. 469.

And see See. 7 of Railway Labor Act, enacted May 20, 1926, 45 U.S. C.A. § 157, providing for boards of arbitration. . Compare Hammer v. Dagenhart, 1918, 247 U.S. 251, 38 S.Ct. 529, 62 L.Ed. 1101; Child Labor Tax Case, 1922, 259 U.S. 20, 42 S.Ct. 449, 66 L.Ed. 817; with National Labor Relations Board v. Jones & Laughlin, 1937, 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893; United States v. Darby, 1941, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609. . 35 Stat. 65, 45 U.S.C.A. § 51 et seq. . Shanks v. Del., L. & W. R. Co., 1936, 239 U.S. 556, 558, 38 S.Ct. 188, 60 L.Ed. 436. . 29 U.S.C.A. § 206. . Amalgamated Ass’n, etc. v.

Pennsylvania Greyhound Lines, 3 Cir., 1953, 392 E. 2d 310; Pennsylvania Greyhound Lines v. Amalgamated Ass’n, 3 Cir., 1952, 393 F. 2d 327. . Donahue v. Susquehanna Collieries Co., 3 Cir., 1943, 138 F.2d 3, 149 A.L.R. 271; Agostini Bros. Bldg. Corp. v. United States, 4 Cir., 1944, 142 F.2d 854; International Union v. Colonial Hardwood Flooring Co., 4 Cir., 1948, 168 F.2d 33. . This question would arise only if the arbitration provision of the collective bargaining agreement here involved was invalid under the law of New Jersey where it was made and was to be performed. For in that case

Section 2 of title 9 would make the provision valid and enforceable if it was a contract within the purview of the federal commerce power as defined in

Section 2. If so, the federal rule of substantive law laid down by

Section 2 would determine its validity. The fact is, however, that the provision for arbitration contained in the agreement here in question is not invalid or unenforceable under the law of New Jersey, N.J.S.A. 2A:24-1, which is substantially similar to

Section 2 of title 9 U.S. O. No reference to

Section 2 of title 9 need, therefore, be made. . Agostini Bros. Building Corp. v. United States, 4 Cir., 1944, 142 F.2d 854.