JACKSON PURCHASE RURAL ELECTRIC COOPERATIVE ASSOCIATION, Plaintiff-Appellee, v. LOCAL UNION 816, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, Defendant-Appellant.
No. 79-3472.
United States Court of Appeals, Sixth Circuit.
Argued Dec. 5, 1980. Decided April 24, 1981.
Defendant also asserts that his money was singled out by the DEA for delivery to the state, implying that he has in some sense been discriminated against. There is absolutely no evidence to support the charge that the DEA acted differently in handling defendant‘s money than it typically does. All of the evidence shows that the money was released in accord with a valid levy.
Defendant has not challenged the validity of the levy or the state‘s underlying claim for taxes in this proceeding, nor can he. The validity of the lien and of the state‘s tax claim must be tested by state tax law in a separate proceeding. See Freedman, supra. All other proceedings in this case against the defendant have now been terminated, so there is no reason of judicial economy for those questions to be answered in federal court. Having determined that the DEA did not act unlawfully in turning the money over to the state, no basis remains for the federal court‘s jurisdiction over any challenge to the underlying claim for taxes. Therefore, we hold that the District Court‘s determination that any remaining controversy is between the State of Michigan and defendant is correct.
Accordingly, the judgment of the District Court is AFFIRMED.
Joseph A. Yocum, Yocum & Hahn, Evansville, Ind., Dandridge F. Walton, Frankfort, Ky., for plaintiff-appellee.
Before BROWN and KENNEDY, Circuit Judges, and SPIEGEL, District Judge.*
CORNELIA G. KENNEDY, Circuit Judge.
Local 816 appeals the order of the District Court setting aside a labor arbitration award in its favor. The facts are undisputed, and the case was decided on cross-motions for summary judgment. The issues on appeal are 1) whether it is a violation of
Local 816 is the authorized bargaining representative for Jackson Purchase employees. The written collective bargaining agreement is silent on the issue of checking off union dues, but for 16 years prior to 1978 Jackson Purchase deducted dues from employee paychecks and paid them over to Local 816 without written authorization from the affected employees. Jackson Purchase unilaterally terminated this practice in 1978. Local 816 protested and the matter was submitted to arbitration. The arbitrator found that the practice violated federal law. However, he concluded that the illegality was relevant only between “the federal government and each of the parties separately and should not affect [the] consensual relationship between [employer and union].” As between the parties the arbitrator concluded that the fact that the practice had continued for 16 years created an implied agreement to check off union dues between Jackson Purchase and Local 816, which had become a part of the collective bargaining agreement and was therefore not subject to unilateral termination. He ordered Jackson Purchase to continue to check off union dues upon receipt of proper authorization cards from the employees. The District Court set this arbitration award aside, holding that since the check off violated section 302(a) it could not be enforced.
Section 302(a)(1) of the Labor Management Relations Act,
[i]t shall be unlawful for any employer ... to pay, lend, or deliver, or agree to pay, lend, or deliver, any money or any other thing of value to any representative of any of his employees who are employed in an industry affecting commerce.
Subsection (c)(4) creates an exception with respect to money deducted from the wages of employees in payment of membership dues in a labor organization: Provided, That the employer has received from each employee, on whose account such deductions are made, a written assignment which shall not be irrevocable for a period of more than one year, or beyond the termination date of the applicable collective bargaining agreement, whichever occurs sooner. (Emphasis in the statute)
Subsection (d) makes it a misdemeanor willfully to violate the above provisions.
Local 816 first argues that because subsection (d) makes it a crime willfully to violate § 302, a willful violation is the only violation that Congress contemplated. Because the District Court found that Jackson Purchase and Local 816 did not intend to violate § 302, Local 816 claims that it erred in finding that the Local did violate that section. This argument is devoid of merit. The fact that willful violations of § 302 are to be met with a criminal sanction does not render an unwitting violation lawful. Congress need not prescribe a criminal penalty, or any penalty for that matter, to make an action illegal. As noted above, subsection (a) expresses Congress’ intent that an agreement to check off union dues without written employee authorization “shall be unlawful.” Local 816 has not brought to our attention any legislative history or other evidence that indicates that § 302 does not mean what it so clearly says.1 Thus, the arbitrator and the United States District Court were correct in holding that the past practice in this case violated federal law.
Local 816 next observes that the long-continued practice of checking off union dues necessarily implies an underlying
The next question is what effect, if any, should be given the illegal past practice and past agreement. The Restatement (Second) of Contracts § 320(1) (Tent. Draft No. 12, 1977) states the rule that a promise is unenforceable if legislation so provides, or if the interest in enforcement is clearly outweighed by the public policy against enforcement. Generally, one who has himself participated in an illegal act cannot be permitted to assert in a court of justice any right founded upon or growing out of the illegal transaction. Weil v. Neary, 278 U.S. 160, 174, 49 S.Ct. 144, 149, 73 L.Ed. 243 (1929) (enforcement of an illegal contract is contrary to public policy); Gibbs and Sterrett Mfg. Co. v. Brucker, 111 U.S. 597, 601, 4 S.Ct. 572, 574, 28 L.Ed. 534 (1884); Boatland, Inc. v. Brunswick Corp., 558 F.2d 818, 823 (6th Cir. 1977) (on grounds of public policy clauses in a contract which violate statutory provisions are without legal effect); N.L.R.B. v. Martin Building Material Co., 431 F.2d 1246 (5th Cir. 1970) (the court enforced an NLRB order which did not permit an existing collective bargaining agreement to act as a bar to a new representation election, where the agreement contained a check off provision that violated § 302(c)(4)); Botany Industries, Inc. v. New York Joint Board Amalgamated Clothing Workers of America, 375 F.Supp. 485 (S.D.N.Y.1974), vacated and dismissed as moot, 506 F.2d 1246 (2d Cir. 1974) (a court cannot enforce an invalid collective bargaining agreement, either directly through a declaratory judgment action, or indirectly, by enforcement of an arbitration award).
However, it is not the case that all unlawful agreements are ipso facto void. If the denial of relief is disproportionately inequitable the right to recover will not be denied. 14 Williston on Contracts § 1630A (3d ed. 1972). Factors a court should consider in performing this balancing include: the justified expectations of the parties; the forfeiture that would result from non-enforcement of the agreement; any special public interest in enforcement; the strength of the public policy that the agreement violates, as shown by legislation or court decision; the likelihood that refusal to enforce will further that policy; and the seriousness of the misconduct. Restatement (Second) of Contracts § 320(1) (Tent. Draft No. 12, 1977).
As the authorities cited above make clear, there is a strong presumption that agreements in violation of a statute will not be sanctioned by the courts. That presumption is stronger than usual in this case, as Congress not only made the act of unauthorized checking off of union dues illegal, it also made the agreement to do that act illegal. This is not a case where a party is trying to have an entire contract declared illegal on the basis that a minor provision violates the law, as was the case, for example, in Alston Studios, Inc. v. Lloyd V. Gress & Associates, 492 F.2d 279, 285 (4th Cir. 1974). Local 816 is trying to enforce the illegal agreement itself. There is no specific public interest in enforcing this agreement. Rather, the public‘s interest is promoted by non-enforcement. The public policy advanced by § 302 is to protect employees in dealings between the union and employer. The relief ordered by the arbi-
Arbitration of labor disputes is favored. United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578-583, 80 S.Ct. 1347, 1350-1353, 4 L.Ed.2d 1409 (1960). Judicial review of an arbitrator‘s decision is very limited so long as the arbitrator‘s award is drawn from the collective bargaining agreement. United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597-599, 80 S.Ct. 1358, 1361-1362, 4 L.Ed.2d 1424 (1960). An arbitrator may properly incorporate the past practices of the parties or the “common law of the shop” into the written collective bargaining agreement where that document is silent or ambiguous on a matter, Detroit Coil Co. v. International Ass‘n of Machinists & Aerospace Workers, Lodge No. 82, 594 F.2d 575, 579 (6th Cir.), cert. denied, 444 U.S. 840, 100 S.Ct. 79, 62 L.Ed.2d 52 (1979), but an illegal collective bargaining agreement will not be enforced. Hairston v. McLean Trucking Co., 520 F.2d 226, 235 (4th Cir. 1975); cf. Chattanooga Mailers Union, Local No. 92 v. Chattanooga News-Free Press Co., 524 F.2d 1305 (6th Cir. 1975) (illegality of one clause in a collective bargaining agreement did not render the whole agreement invalid). Because the practice of checking off union dues without written authorization and the implied agreement to check off are illegal, and the Union has not overcome the presumption that illegal acts are without legal effect, the arbitrator exceeded his authority by incorporating the practice or the agreement into the collective bargaining agreement here. The arbitrator‘s award depended on the illegal past practice, thus was not based on the collective bargaining agreement, and the District Court was correct in setting it aside.
For the foregoing reasons, the order of the District Court is affirmed.
SPIEGEL, District Judge, dissenting.
I respectfully dissent. Because the District Court found no intent to violate the law, and because any violation here of
To the facts as set out in the majority opinion, I would add the following: The collective bargaining agreement, in Article IV, contains a union security clause (Record, Ex. A attached to doc. 10). Subsequent to the employer‘s unilateral termination of the check-off practice in 1978, after the current agreement was executed, the union presented written authorizations which the employer refused to honor.
The District Court set aside the arbitration award because it deemed the performance of the agreement to check off to be a violation of federal law. However, the District Court had first determined that the agreement itself was lawful because there was no intent to violate
The issue on appeal, as I see it, is whether a past practice based on a lawful agreement may be enforced by an arbitrator as part of a collective bargaining agreement. I conclude that the check-off practice in this case may be so enforced, so long as written authorizations are submitted, as the arbitrator ordered.
Discussion
There is a strong public policy in the United States in favor of settling labor
While a bargaining agreement is arguably not binding if it is in violation of law, Hairston v. McLean Trucking Co., 520 F.2d 226, 235 (4th Cir. 1975), I do not believe that the agreement here falls under this limitation. The District Court found that there was no intent to violate the statute. The practice of checking off dues was carried out with the implied consent of the employees, even if the consent was not in writing, as the statute literally demands. Clearly, if consent were lacking, the practice would not have continued for 16 years. The collective bargaining agreement does contain a union security clause. A dues check off is a logical corollary to such a clause. Why the dues check off is not contained in the written agreement does not appear in the record. Nevertheless, it may be inferred that the practice was so well-established, over so many years covering several contracts, that the union inadvertently failed to bargain for its inclusion in the written contract.
The purpose of
An arbitration award should not be vacated unless it orders a violation of law or compels conduct contrary to public policy. Washington-Baltimore Newspaper Guild, Local 35 v. Washington Post, 442 F.2d 1234, 1239 (D.C.Cir.1971). The arbitrator in the present case ordered the employer to check off dues prospectively, as written authorizations are received. There is therefore no order compelling a violation of law. Enforcement of the arbitration award in question here will not infringe in any way on rights of management.
Even if the collective bargaining agreement incorporating the check off were considered illegal because originally there were no written authorizations, the illegality of a contract does not automatically render it unenforceable. California Pacific Bank v. Small Business Administration, 557 F.2d 218 (9th Cir. 1977); Restatement of Contracts, §§ 598-609 (1932); 6A A. Corbin, Contracts, chs. 79-90 (2d ed. 1962); 14 S. Williston, Contracts, chs. 48-50A (3d ed. 1972); 15 S. Williston, Contracts, chs. 51-52 (3d ed. 1972). “Out of the muddle of common law rules regarding illegality has come the general principle that illegal contracts are unenforceable only where (1) a statute explicitly provides that contracts contravening it are void or (2) where ‘the interest in [the contract‘s] enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.‘” California Pacific Bank, supra, at 224, citing Restatement (Second) of Contracts § 320(1) at 53 (Tent. Draft No. 12, March 1, 1977).
The statute in this case,
The Majority Opinion
In the majority opinion the Court finds devoid of merit the union‘s argument that the District Court erred in finding a violation of
The majority argues that the agreement, though not willful and therefore not criminal, is “clearly unlawful” under the terms of
We agree that the statute may cover some situations which do not involve conscious wrongdoing. However, International Longshoremen‘s Ass‘n v. Seatrain Lines, Inc., involved an employer making payments directly to the union in lieu of check-off dues when the employees had been laid off, a situation quite different from the facts of the present case. Moreover, Employees’ Independent Union v. Wyman Gordon Co. actually supports the proposition that not all technical violations of
It is obvious that an agreement to check off must have existed prior to and separate from its execution. Otherwise, there would be no conceivable reason for the employer to withhold dues and forward them to the union. The District Court‘s finding of fact that the agreement evidenced no intent to violate the statute must mean that the agreement did not include a decision to check off without written authorization. Thus, it does not follow logically that the agreement to check off, as well as the practice, must be found unenforceable, as the majority holds. I would hold at the very least that the agreement to check off, in and of itself, was perfectly lawful. The fact that the practice continued unopposed for so many years must mean that the agreement to check off also continued. Therefore the agreement to check off can safely be incorporated by implication into the collective bargaining agreement and may be enforced lawfully by the simple expedient of requiring written authorizations to be submitted before dues are checked off again by the employer.
Even assuming that the agreement to check off was unlawful, the majority concedes that not all unlawful agreements are ipso facto void and notes that the equities should be balanced before a decision on enforcement is made. Factors to be considered, the majority observes, are “the justified expectations of the parties; the forfeiture that would result from non-enforcement of the agreement; any special public interest in enforcement; the strength of
The majority argues that there is no specific public interest in enforcing this agreement and that the public‘s interest is actually promoted by non-enforcement. With this assessment I strongly disagree. The public policy advanced by
The specific public interest promoted by enforcement of this agreement is three-fold: (1) public policy favors the peaceful resolution of labor disputes through arbitration, Steelworkers trilogy, supra; (2) public policy encourages the practice and procedure of collective bargaining,
The majority declares that Local 816 did not have a justified expectation that its agreement with Jackson Purchase was lawful, nor was it misled by Jackson Purchase. Arguably, however, the union did have a justified expectation, based on many years’ experience, that the employer would continue the check off practice. We have no way of knowing whether the union was misled by the employer. In all probability, had the employer announced its intention with respect to the dues check off at the time of the last collective bargaining negotiations, the union would have bargained for inclusion of the practice in the written agreement.
As to the seriousness of the misconduct, the majority admits that it was not serious but dismisses that conclusion with the remark that it is entitled to little weight. Opinion at 268. I conclude, however, that relatively minor misconduct such as we have here should not be determinative in the face of the strong public policies which have been outlined.
I do not believe that the public interest or the interests of justice are well-served by the majority decision in this case. Accordingly, I would hold that the District Court erred in refusing to enforce the arbitrator‘s award and would vote to reverse the District Court and to reinstate the arbitration award.
Ruth PANTER et al., Plaintiffs-Appellants, v. MARSHALL FIELD & CO. et al., Defendants-Appellees. Richard WEISS et al., Plaintiffs-Appellants, v. MARSHALL FIELD & CO., Defendants-Appellees.
Nos. 80-1375, 80-1389.
United States Court of Appeals, Seventh Circuit.
Argued Sept. 10, 1980. Decided April 2, 1981. Rehearing and Rehearing En Banc Denied July 6, 1981.