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10 B.C. Indus. & Com. L. Rev. 728 (1968-1969)
Wage Earner Plans: Wage Deduction Orders and the Employer's Power to Discharge

handle is hein.journals/bclr10 and id is 738 raw text is: WAGE EARNER PLANS: WAGE DEDUCTION ORDERS AND THE EMPLOYER'S POWER TO DISCHARGE I. In Re Jackson1 Jackson, an employee of the Farmall Works of International Harvester Company, filed a petition for relief under Chapter XIII of the Bankruptcy Act.2 On April 14, 1967, the referee in bankruptcy entered an order confirming the Wage Earner Plan, which provided for monthly payments to a trustee, and appointing a trustee who was to disburse the funds to Jackson's creditors ac- cording to the plan. The debtor failed to make regular payments to the trus- tee; and on January 24, 1968, at the request of the trustee, the referee entered an order requiring International to make weekly deductions from the wages of the debtor and to pay the same to the trustee. International complied with the order. But, invoking a provision in the collective bargaining agreement giving it the right to discharge any employee who does not obtain a release of any outside demand against his wages, International notified Jackson that his employment would be suspended and eventually terminated, unless the wage deduction order was released. On February 12, 1968, the debtor filed a petition with the referee request- ing that International be enjoined from suspending or terminating his em- ployment. A temporary injunction ensued, International moved to dissolve the injunction, and on June 27, 1968, the referee permanently enjoined Inter- national. A petition for review was then filed by International.3 International admitted the authority of the referee to order it to make the deduction from wages but denied his authority to enjoin it from terminating or suspending the employment of the debtor solely because of such order. International contended that the referee lacked the authority to enjoin it from exercising its contractual right because of the policy of the Labor-Man- agement Relations Act' favoring collective bargaining agreements. Further- more, under Supreme Court cases interpreting and applying that Act,5 the grievance procedure under a collective bargaining agreement is the exclusive course open to an employee covered thereby who is suspended or discharged, or threatened with either. Since International's collective bargaining agree- ment provided for arbitration of grievances, Jackson had no right to petition the Bankruptcy Court for an injunction.6 International also contended that the referee lacked authority to issue the injunction because, in view of the availability of an alternative order against the employee-debtor himself, the injunction was not really necessary for the enforcement of the plan as re- quired by the Bankruptcy Act.7 The court held that the referee in bankruptcy does have the legal authority under these circumstances to enjoin International 1 290 F. Supp. 872 (S.D. Ill. 1968). 2 11 U.S.C. §§ 1001-86 (1964). 3 290 F. Supp. at 874. 4 29 U.S.C. §§ 141-87 (1964). 5 See Republic Steel Corp. v. Maddox, 379 U.S. 650 (1965); Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95 (1962); United Steel Workers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960). 6 290 F. Supp. at 875. 7 Id.

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