NECA-IBEW Rockford Local Union 364 Health & Welfare Fund v. a & a Drug Co.
736 F.3d 1054
7th Cir.2013Background
- NECA-IBEW Health and Welfare Fund challenged Sav-Rx’s invoicing under a Local Agreement without arbitration.
- National Agreement offered better pricing/services and contains a mandatory arbitration clause; locals could opt in.
- Fund trustees never voted on adopting the National Agreement; Sav-Rx began applying National terms anyway.
- Fund accepted (and benefited from) National-Agreement pricing and audits for eight years without repudiation.
- District court held the Fund bound to the National Agreement by ratification; Fund appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Fund had actual authority to bind itself to the National Agreement | Fund lacked a vote/authorization for the National Agreement | Sav-Rx relied on implied or ratified authority | Not bound by actual authority |
| Whether Eschen had implied authority to bind the Fund to the National Agreement | Eschen’s actions bound the Fund; chair's authority extends to major contracts | Implied authority does not extend to extraordinary contracts | Not bound by implied authority |
| Whether Sav-Rx could bind the Fund through apparent authority | Trustees impliedly held Eschen out as authorized | No evidence trustees held Eschen out as having such authority | Not bound by apparent authority |
| Whether the Fund ratified the National Agreement by accepting its benefits | Acceptance of benefits does not equal ratification without knowledge | Knowledge of benefits imputable to Fund; benefits accepted constitute ratification | Yes; the Fund ratified the National Agreement by accepting its benefits and not repudiating them |
Key Cases Cited
- Fyrnetics Ltd. v. Quantum Group, Inc., 293 F.3d 1023 (7th Cir. 2002) (unsigned-contract binding by conduct; agency principles apply)
- Orix Credit Alliance, Inc. v. Taylor Mach. Works, Inc., 125 F.3d 468 (7th Cir. 1997) (implied authority limits for binding contracts)
- Wasleff v. Dever, 550 N.E.2d 1132 (Ill. App. Ct. 1990) (implied authority considerations in agency)
- Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060 (7th Cir. 2000) (agency knowledge imputation and authority)
- Sphere Drake Ins. Ltd. v. Am. Gen. Life Ins. Co., 376 F.3d 664 (7th Cir. 2004) (ratification and knowledge in agency context)
- George F. Mueller & Sons, Inc. v. Northern Ill. Gas Co., 299 N.E.2d 601 (Ill. App. Ct. 1973) (agency knowledge and ratification principles)
- Nat'l Prod. Workers Union Ins. Trust v. Cigna Corp., 665 F.3d 897 (7th Cir. 2011) (knowledge imputation to corporate principal)
- United States v. One Parcel of Land, 965 F.2d 311 (7th Cir. 1992) (knowledge of employees imputed to principal)