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Truck Drivers Local 807, etc. v. Carey Transportation, Inc.

816 F.2d 82 (1987)

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Truck Drivers Local 807, etc. v. Carey Transportation, Inc.

United States Court of Appeals for the Second Circuit

816 F.2d 82 (1987)

Facts

Carey Transportation, Inc. (Carey) (defendant) employed drivers and other workers who were represented by Truck Drivers Local 807 (Local 807) (plaintiff). In 1982 Carey and Local 807 entered into two collective-bargaining agreements (CBAs) that were set to expire in 1986. However, Carey steadily operated at a loss, necessitating new concessions from Local 807 representatives to save money. In March 1985, Carey sought to extend the CBAs for an additional two years and freeze the union members’ wages and fringe benefits. The union members adamantly rejected the proposal. In April 1985, Carey filed for Chapter 11 bankruptcy protection and continued operations as debtor-in-possession. Carey, which projected an annual loss of $950,000 for 1986, proposed a modification to the CBAs designed to save $1.8 million annually for three years. The proposal included a wage freeze for some drivers and a wage reduction for others, as well as cutbacks to benefits. A Local 807 officer made a counterproposal designed to save $776,000 annually, but this counterproposal did not appear to have the backing of most Local 807 members. Furthermore, Carey rejected the counterproposal, whose projected savings fell below Carey’s break-even amount. The bankruptcy court approved Carey’s rejection. Local 807 then brought the issue to federal district court. The court found that the Local 807 members who worked for Carey were paid more than their counterparts at other companies. The court affirmed the bankruptcy court. Local 807 appealed. The United States Court of Appeals for the Second Circuit granted certiorari.

Rule of Law

Issue

Holding and Reasoning (Altimari, J.)

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