120 Lab.Cas. P 10,972
Kelly MERK, Joseph Staszewski, and Vickie Menagh et al., on
Behalf of Themselves and all Others Similarly
Situated, Plaintiffs-Appellants,
v.
JEWEL FOOD STORES DIVISION OF JEWEL COMPANIES, INCORPORATED,
American Stores Company, Incorporated, and United Food and
Commercial Workers Union Local No. 881, Chartered by United
Food and Commercial Workers International Union, AFL-CIO and
CLC, Defendants-Appellees.
No. 90-2184.
United States Court of Appeals,
Seventh Circuit.
Argued Dec. 13, 1990.
Decided Sept. 27, 1991.
Rehearing and Rehearing In Banc
Denied Dec. 20, 1991.
Daniel R. Formeller, William Cremer (argued), Francis Spina, David W. Groundwater, Tressler, Soderstrom, Maloney & Priess, Chicago, Ill., for plaintiffs-appellants.
Max G. Brittain, Jr. (argued), Marcia E. Goodman, John J. Murphy, Jr., Kovar, Nelson, Brittain, Sledz & Morris, Chicago, Ill., for Jewel Food Stores Div. of Jewel Companies, Inc. and American Stores Co., Inc.
Jairus M. Gilden, Neal D. Rosenfeld, Jonathan D. Karmel, Rosenfeld & Karmel, Chicago, Ill., for United Food and Commercial Workers Union Local No. 881, chartered by United Food and Commercial Workers Intern. Union, AFL-CIO and CLC.
Before CUDAHY, EASTERBROOK and RIPPLE, Circuit Judges.
CUDAHY, Circuit Judge.
This case involves application of the parol evidence rule to the unique context of collective bargaining agreements. Specifically, we must determine the legal significance of secret oral negotiations between union officials and company management that modify central terms of a collective bargaining agreement which was submitted to the union membership for ratification without any notice that it would be conditioned by additional terms.
I.
The relevant facts are as follows. Jewel Food Stores (Jewel) operates approximately 180 supermarkets in and around Chicago, employing over 15,000 workers who are represented by Local 881 of the United Food and Commercial Workers Union (the Union). In September 1982, Jewel and the Union began negotiating a new collective bargaining agreement (the CBA) to run from September 15, 1982 to June 15, 1985. Negotiations culminated in a contract which was reduced to writing and ratified by the Union membership on January 27, 1983. The CBA established wage rates, vacation leave and other terms of employment for the duration of the contract. Section 4.1 of the CBA, in particular, specified that "During the term of this Agreement, the Employer agrees to pay not less than the minimum wage rates set out in Appendix A."
Had the CBA embodied the entire agreement between the parties, this case would have been easily resolved. But the outcome of negotiations was not so straightforward. Anxious about the potential entry into the Chicago market of warehouse competitors such as Cub Foods, Jewel insisted that the CBA contain a "most favored nations" clause, a provision that would allow it to match the wages of unionized competitors opening in the Chicago market after the start of the contract term. The Union refused this demand throughout the negotiations, and the final compact did not include a most favored nations clause. Just before the CBA was approved, however, Union president Fred Burki and two Jewel representatives--Neil Petronella, chief negotiator, and Marsh Collins, corporate vice president--forged a secret deal at an informal hallway meeting late in the evening of January 23, 1983. The precise terms of that deal are in dispute: Union officials claim that all they promised was to "sit and discuss" Jewel's competitive position once Cub Foods entered the Chicago market whereas Jewel executives contend that they agreed to "an economic reopener with full reservation of rights." An economic reopener provision permits the company to reopen all economic terms of the CBA upon occurrence of the condition precedent. Negotiations may then proceed as if the parties were bargaining over a totally new contract, and both sides retain their respective economic weapons, including the Union's right to strike and the company's right to lock out or unilaterally implement a final offer after bargaining to impasse. Whatever the terms of the secret oral agreement between Union officials and Jewel management, both sides affirm that it was never disclosed to or ratified by the Union rank and file even though ratification is required under the Union constitution and bylaws.
Cub Foods' entry into the Chicago market in 1983 precipitated this dispute. Shortly thereafter, Jewel announced the reopening of contract negotiations. On February 26, 1984, when negotiations reached impasse, Jewel unilaterally implemented its final offer, cutting the wages of its employees below levels mandated by the CBA. Jewel slashed wages by as much as $1.25 an hour and reduced vacation and personal day benefits as well. The Union immediately filed an unfair labor practice complaint and sued to compel arbitration. The district court ordered Jewel to arbitrate. After an arduous course of negotiations, the Union and Jewel finally resolved their longstanding dispute on the eve of expiration of the CBA: Jewel agreed to award backpay to its current employees while the Union pledged to relinquish its unfair labor practice complaint and the district court suit. At Jewel's insistence, however, the settlement abandoned the plaintiffs in this case--a class comprising approximately 2,000 Jewel employees who retired, quit or were fired during the protracted 15-month battle.
Claiming the back wages to which they believed they were rightfully entitled under the CBA, plaintiffs filed suit against the Union for breach of its duty of fair representation and against Jewel for breach of contract. The district court granted summary judgment for the Union, ruling that the Union owed no duty of fair representation to former employees.
Plaintiffs' breach of contract action against Jewel, however, proceeded to a one-week jury trial. After the jury returned a verdict in favor of Jewel, plaintiffs moved for judgment notwithstanding the verdict and, in the alternative, for a new trial. The district court denied both motions, examining and rejecting each of plaintiffs' arguments in turn. Invoking the parol evidence rule, plaintiffs first contested the district court's admission of extrinsic evidence regarding the oral reopener to modify the provisions of the written CBA. But the district court submitted the parol evidence issue to the jury because it was not clear from the face of the CBA whether it was intended to embody the parties' entire agreement. The jury determined that the CBA was not integrated and the district court apparently agreed with this conclusion, upholding the jury's verdict as supported by the evidence. The district court also dismissed plaintiff's second argument, ruling that oral modifications to a written CBA do not violate national labor policy. Finally, it held that lack of ratification did not render the oral reopener agreement invalid. The jury found waiver of the ratification requirement based upon evidence of a past practice of adherence to unratified side agreements. The district court agreed with the jury's conclusion but broadly declared that, in any event, Jewel had a right to rely on the unratified oral reopener absent clear notice that the Union was acting in bad faith against the interests of its members.
On appeal, plaintiffs challenge the verdict against them on the following grounds. First, they claim that the district court improperly admitted evidence of the oral reopener agreement in violation of the parol evidence rule. Second, they argue that the oral reopener agreement should not have been enforced because it violated the Union's constitutional requirement that significant terms of the labor contract be ratified by union members. Third, they contend that section 8(d) of the Labor Management Relations Act (LMRA) and national labor policy militate against enforcement of a clandestine oral reopener agreement that contradicts the terms of the written and ratified CBA. Fourth, they maintain that the district court committed numerous evidentiary errors, entitling them to a new trial. Finally, they contest the district court's dismissal of their claim for punitive damages.
II.
We review the district court's denial of judgment notwithstanding the verdict de novo, applying federal common law (rather than the law of any state) to this suit for breach of a collective bargaining agreement. See Mohr v. Metro East Mfg. Co.,
A. The Parol Evidence Rule
We must first determine whether the parol evidence rule bars the admission of testimony regarding the secret oral agreement. The parol evidence rule provides that evidence of prior or contemporaneous agreements or negotiations may not be introduced to contradict the terms of a partially or completely integrated writing. See Restatement (Second) of Contracts § 215. A writing is deemed fully integrated if the parties intend it to be the expression of their entire agreement. If they intend the writing to be the final expression of the terms it contains but not a complete expression of all the terms agreed upon--some terms remaining unwritten--the agreement is termed partially integrated. See E. Farnsworth, Contracts 452 (1982). If a writing is only partially integrated, evidence of prior or contemporaneous agreements is admissible to supplement its terms though not to contradict it. If an agreement is completely integrated, however, not even evidence of a "consistent additional term" may be introduced to elucidate the writing. See id.; Restatement (Second) of Contracts § 215.
Whether a writing is fully integrated is generally a question of law to be resolved by a court. See Calder v. Camp Grove State Bank,
We agree that the parties did not intend the written terms of the CBA to embody their entire agreement, for neither the Union nor Jewel denies the existence of an additional oral term to the contract--they only dispute its content. Union officials claim that all they promised was to "sit and discuss" Jewel's competitive position once Cub Foods entered the Chicago market. Jewel executives maintain, on the other hand, that they agreed to "an economic reopener with full reservation of rights conditioned on the entry of Cub Foods into the Chicago market." Because both sides concede that there was an additional oral term to their contract, it necessarily follows that the written terms of the CBA did not represent a full integration. And once the CBA was found not integrated as a matter of law, it was proper for the jury to resolve the additional factual question of the precise terms of the oral promise. The jury ultimately believed Jewel's version of the story, concluding that the parties had orally agreed to reopen the economic terms of the contract in the event Cub Foods penetrated the Chicago market. The oral reopener, therefore, became an enforceable part of the CBA.1
Mechanical application of the parol evidence rule would thus permit Jewel to introduce testimony regarding the oral side agreement. Yet our analysis of the parol evidence issue cannot proceed in a vacuum, abstracted from the particular setting in which it arose. Because this secret oral reopener undercuts obligations specified in a collective bargaining agreement, it inevitably implicates national labor policy. The critical question before us, then, is whether national labor policy allows enforcement of a clandestine oral side agreement that alters fundamental terms of the written and ratified collective bargaining agreement.
As the Supreme Court has recognized, a collective bargaining agreement is more than just a contract--it erects a system of industrial self-government. See United Steelworkers,
A number of courts have similarly refused on grounds of national labor policy to enforce covert oral side agreements that undermine the written collective bargaining agreement. The seminal case of this genre is Gatliff Coal Co. v. Cox,
Gatliff Coal was followed in Local 509, Missouri -Kansas-Nebraska-Oklahoma District Council, Int'l Ladies Garment Workers Union v. Annshire Garment Co.,
Ignoring this long line of precedent, however, the district court allowed introduction of the oral reopener to vary the terms of the written CBA. The district court relied upon Mohr v. Metro East Mfg. Co.,
The agreement between the association and the international union was deliberately left incomplete in recognition of the diversity of circumstances to which it had to apply, thus allowing individual employers and their local unions to add to the provisions, whether by supplemental written agreements, or oral agreements, or as in this case by both sorts.
Id. at 72-73. Unlike the case at bar, the oral agreement in Mohr was not kept hidden from the Union membership. It dealt, moreover, with a purely peripheral matter regarding the terms of employment for schoolboys. Therefore, parol evidence was admissible in Mohr to supplement the general terms of the industry-wide collective bargaining agreement and to adapt them to local conditions.
We do not hold that a collective bargaining agreement must be in writing to be enforced. On the contrary, section 8(d) of the National Labor Relations Act does not require collective bargaining agreements to be in writing unless one of the parties requests that they be. Central States, Southeast and Southwest Areas Pension Fund v. Behnke,
The real danger posed by this reopener agreement stems from its secrecy and not simply from its oral character. No one disputes that the oral reopener was, at the behest of Union officials, deliberately concealed from the union membership. In a precursor to the present litigation, Jewel filed a counterclaim alleging that the Union had breached the oral reopener agreement in violation of section 301. In denying Jewel's counterclaim, Judge Getzendanner perceptively singled out the vice of this secret side agreement:
[The] oral agreement is inadmissible and unenforceable under the parol evidence rule as a matter of federal law.... Jewel's argument that the written contract is not a complete integration is insufficient to avoid application of the parol evidence rule since even a partially integrated written agreement cannot be contradicted by evidence of a prior oral understanding. This rule is particularly important in the context of labor relations, lest union leaders engage in side agreements unknown to the rank and file membership.
United Food & Commercial Workers Union v. Jewel Food Stores, No. 84 C 1648 (N.D.Ill. April 8, 1985) (Getzendanner, J.). The economic reopener strikes at the heart of the CBA: it throws open the most central provisions governing wages and benefits upon the entry of Cub Foods into the Chicago market. Yet Jewel and the Union explicitly collaborated to keep the oral reopener hidden from the rank and file membership despite its paramount significance. Thus Union members who reasonably believed that they were guaranteed a fixed rate of pay for the duration of the CBA unexpectedly found their wages slashed at mid-term. Under these circumstances, enforcement of an oral reopener that was concealed and withheld from ratification by the membership is certainly in derogation of national labor policy.
B. The Ratification Requirement
Our holding does not rest solely upon Gatliff Coal, which completely eschewed all evidence of prior or contemporaneous agreements modifying the provisions of a collective bargaining agreement. For the facts of this case acquire their significance from the use of secrecy and the failure to seek ratification from the Union membership. We emphasize that non-ratification was coupled here with a deliberate policy of secrecy--a factor which is crucial to our analysis. Federal law does not itself require ratification of a collective bargaining agreement. In this case, however, the Union's own constitution and bylaws mandate that collective bargaining agreements be ratified. Jewel understood, moreover, that the oral reopener had not been ratified by the Union membership in violation of the Union constitution. Failure to ratify under circumstances where an employer is aware both of the ratification requirement and of the failure to comply with it may invalidate an employer's claims under the unratified agreement. See Goclowski v. Penn Central Transportation Co.,
Jewel argues, however, that a past practice of non-ratification of contract terms could establish waiver of the ratification requirement. See Central States Southeast and Southwest Areas Pension Fund v. Kraftco, Inc.,
We decline Jewel's invitation to infer waiver of the ratification requirement from past instances of non-ratification involving contract terms of such trifling magnitude. To do so would be counter to national labor policy. It would encourage unions to submit every issue--no matter how trivial--to the membership for ratification out of fear of waiver. Failure to ratify routine matters, therefore, should not be deemed a blanket waiver of the ratification requirement as to the essence of a collective bargaining agreement.
In its strenuous efforts to establish a past practice of waiver, Jewel can point to only one meaningful instance of non-ratification. An unratified provision of the 1969 collective bargaining agreement between Jewel and the Union allegedly allowed wages to be reopened and renegotiated upwards in the event that the Teamsters Union attempted to organize the workers. But any resemblance between the 1969 reopener and the 1983 reopener stops short at the surface, for the 1969 provision furthered the interests of all parties: Jewel benefited by keeping the Teamsters out of its stores, the Union benefited by retaining its membership and the members benefited by gaining a possible raise in salary. Such a provision, therefore, is hardly analogous to a controversial wage reopener allowing Jewel to cut wages unilaterally in the event that another employer paying lower wages entered the market.
The district court found failure to ratify the reopener immaterial even in the absence of any past practice of non-ratification. Citing Chrysler Workers Ass'n v. Chrysler Corp.,
Shortly after the letter agreement the Union put plaintiffs and other "work opportunity employees" who had transferred to the Lima plant on notice of a meeting to be attended by international union representatives in July of 1982 to "explain the agreement and to answer questions." There was no affirmative act of concealment.
Union officials explicitly enjoined Jewel management to keep the reopener secret. Jewel is hardly an unsophisticated employer. Aware of the secrecy surrounding the oral reopener, it must have drawn the obvious conclusion that the terms of the side agreement would not be submitted for ratification or even disclosed to the Union membership. Jewel now argues that it believed the secrecy was intended solely to keep the reopener hidden from the International Union. But whether concealment was motivated by a desire to keep the side agreement from the membership or from the International is irrelevant: the reopener was in fact kept from the membership and Jewel was on notice of this fact. Subsequently, when it was submitted to the membership in connection with the present plaintiffs' suit against the Union, this same reopener was overwhelmingly voted down. It would not have been difficult for Jewel to predict that such a provision would have been at least highly controversial and might well have been overwhelmingly defeated by vote of the membership. We need not close our eyes to industrial realities.
Jewel now argues, however, that the reopener may not have been ultimately to the detriment of the membership. Perhaps the oral reopener stood in place of the most favored nations clause initially sought by Jewel, a provision which might have been even more onerous to the membership. Or perhaps Jewel would not have agreed to as high a wage level as it did had it not been able to obtain the oral reopener. But it is not for us to decide whether the reopener would have ultimately benefited or harmed the Union membership. All that is clear is that the reopener was a matter of critical concern that should have been disclosed to the membership and submitted for ratification. Union leaders may actually comprehend the needs of their members better than the members do themselves. This type of paternalism, however, is hardly consonant with the accepted principles of union democracy enshrined in the federal labor laws. Accordingly, we hold as a matter of federal law that Jewel was not entitled to rely upon a reopener that it knew was not ratified, or even disclosed to the union membership, in violation of the Union constitution.3
The dissent concedes that an agreement by an agent without actual or apparent authority is empty under the law. As the dissent points out, union officials lacked actual authority to agree to an unratified reopener and they lacked apparent authority because Jewel knew of the ratification requirement but acquiesced in a deliberate policy of secrecy. The dissent attempts to avoid the logical consequences of its concessions, however, by reiterating Jewel's argument that a past practice of non-ratification of contract terms demonstrated waiver of the ratification requirement. In particular, the dissent focuses upon the unratified 1969 reopener. According to the dissent, the nub of our argument is that "[r]eopeners are OK when they help the employees ... but not when they help the employer." Infra at 906. But the dissent obviously mischaracterizes our holding. Non-ratification of the 1969 reopener is unproblematic not because it might have benefited the membership but rather because it would clearly have been ratified. The 1969 reopener was not a burden but a benefit whose ratification would have gone unquestioned. For surely no one would or could complain of concealment of a benefit. This is tantamount to being pleasantly surprised by a gift.
The 1983 reopener, on the other hand, concealed a burden (a potential wage reduction) from the membership against whom it was later enforced. Purporting to evenhanded treatment of both sides, the dissent maintains that secret side agreements should be enforced equally whether they redound to the benefit of the employer or the employee. Despite its seductive symmetry, however, the dissent's argument is substantively flawed. For with respect to information, employers stand in a position radically different from employees. Employers are apprised of every facet of the collective bargaining agreement--oral or written, secret or publicized to all the world. Thus no aspect of the collective bargaining agreement--whether it is beneficial or detrimental--catches the employer by surprise.
The dissent insists for unexplained reasons upon the dubious proposition that labor is a commodity of the same order as coal, a view that is definitively refuted by the law: "The labor of a human being is not a commodity or article of commerce." Section 6 of the Clayton Act, 15 U.S.C. § 17; see also Transportation-Communication Employees v. Union Pacific R.R.,
C. Punitive Damages
Finally, plaintiffs' request for punitive damages must fail. The district court properly concluded that punitive damages should not be awarded in this suit for breach of a collective bargaining agreement. As the district court cogently reasoned, if punitive damages are not available for breach of the duty of fair representation, see International Brotherhood of Electrical Workers v. Foust,
III.
The district court apparently examined each of plaintiffs' arguments in isolation, overlooking their combined significance. One by one, the court addressed the parol evidence rule, the Union's ratification requirement and national labor policy. Taken individually, as the district court did here, none of plaintiffs' arguments may be dispositive. Read together, however, they clearly illuminate the grave dangers posed by a backroom deal that is secretly negotiated between union officials and company management without the knowledge or consent of the union rank and file. The district court's decision is therefore REVERSED and REMANDED for further proceedings consistent with this opinion.
EASTERBROOK, Circuit Judge, dissenting.
An employer, fearing a rival with a reputation for low wages (more to the point, low prices) demands a most-favored-nations clause, under which it would receive the benefit of any concessions the union makes to the rival. Unions prefer not to make such bargains. A strike looms: the employer will not sign a contract without a most-favored-nations clause, and the union will not sign a contract with one.
At the last minute they agree to replace the contested clause with a reopener. Although the contract is to run for three years, if the dreaded competitor enters the market sooner either side may renew negotiations with the usual privileges: after good faith bargaining to impasse, the employer may implement its final offer, the union may strike, or both. Electrical Workers Local 47 v. NLRB,
The rival entered; the employer exercised the right to reopen; union and employer bargained to impasse, and the employer implemented its final offer. When the dust settled the union retained the fundamental terms of the contract (including wages) and won back pay for its members. But it did not seek back pay for employees who left the firm before that settlement. These employees tried to tax the union with breach of its duty of fair representation but lost. Merk v. Jewel Companies, Inc.,
The reason this case went to a jury at all is that the reopener was oral, while the bulk of the pact was written. But as the union conceded that there had been an oral side agreement, disputing only the employer's description of its content, the parol evidence rule did not prevent the jury from determining whose version is correct. My colleagues agree with the trial judge,
But not when the commodity is labor, the majority says. If my colleagues thought there was some problem with the feeble enforcement of the parol evidence rule in modern litigation, I would share their concern. The parol evidence rule and the statute of frauds reduce the costs of fabrication, litigation, and error--at the expense of making the bargaining process less flexible and withholding enforcement of some bargains. Most courts today think the costs of strict insistence on written instruments excessive. Whether they are right in believing this is an interesting question. What the majority does, however, is not signal a revival of the writing requirement; it maintains, instead, that labor law is different. What, then, is the source of the difference?
My colleagues point to "national labor policy", which they say mandates that "collective bargaining agreements must be more secure than garden variety contracts."
Flexibility is a commodity negotiators value, and not only because it is impossible to write down all of the understandings and practices (even all of the "important" understandings and practices) that make up the terms and conditions of employment. Collective bargaining agreements are relational contracts. They do not settle all important terms; rather they establish a framework within which the parties compose their differences.
It is perverse to say that the contracting process in labor must be more formal than the contracting process in shipping or construction or natural resources. You can define how much coal to sell and where to deliver it; you can set the duration of a charter party. Labor agreements govern the ongoing relations among thousands of persons and affect matters not so easy to specify. Rigidity backfires. Competitive conditions and technology change. Labor relations must change too, even over so short a period as three years. Failure to adjust to new developments means failure in product markets (look at the automobile and railroad industries), and when the employer slips in product markets labor takes the fall. If a low-price rival enters and siphons business, a firm bound to pay high wages will lay off many workers. Layoffs hurt the employees with the shortest tenure--that is, the persons who are plaintiffs in this case. Greater flexibility promotes responses in the marketplace that may benefit both sides.
Ongoing accommodation is a hallmark of labor relations. Representatives of labor and management meet continually to discuss both individual grievances and more general questions. Changes may ensue, with or without written agreements. "[T]he parties to a CBA [collective bargaining agreement] may tacitly acquiesce to an amendment of the agreement through their course of dealing." Matuszak v. Torrington Co.,
The Supreme Court has said repeatedly that labor relations require more flexibility than the common law allows--not, as my colleagues hold, more formality. E.g., Transportation--Communication Employees v. Union Pacific R.R.,
Flexibility entails giving labor and management the option of having a fully integrated agreement, of banning oral side agreements, as well as the option of coming to partially-written, partially-oral understandings. My colleagues concede that this agreement, which lacked an integration clause, did not ban oral understandings. Our question is whether labor law forbids such side agreements even when the parties decide against an integrated writing. A handful of cases say that it does; the majority relies on Gatliff Coal Co. v. Cox,
This sets up the majority's argument that the union did choose to exclude oral agreements, by requiring ratification of the pact by the membership. Technically, the argument is that the union's negotiators lacked actual authority to agree to a reopener, because the union's constitution requires ratification, and they lacked apparent authority because Jewel not only knew about this requirement but also understood that the union's negotiating team was not going to tell the membership about the reopener. Notice that this argument does not supply any reason to differentiate labor law from other bodies of law. "Agreement" by an agent lacking both actual and apparent authority is empty in all corners of the law. Claims about how labor law is special melt away if, in the end, this case is about the negotiators' lack of authority.
Four issues precede the question whether defects in the ratification process prevent enforcement of the reopener. First: do provisions of a union's constitution affect the validity of labor agreements? The National Labor Relations Board thinks not. McLaughlin & Moran, Inc., 299 N.L.R.B. No. 7 (1990), holds that once the responsible officials of a union report to the firm that the union has approved an agreement, it is binding--even if the union did not follow prescribed procedures. The Board wrote that "it is none of the Employer's business how (or even whether) the [Union] obtains the employees' approval" of the agreement, and that "it is for the union, and not the employer, to construe the meaning of the union's internal requirements for ratification." Any other approach, the Board thought, would make it "difficult, if not impossible, for the parties to a collective-bargaining agreement to arrive at a final settlement without the fear of being forced into protracted litigation regarding the union's compliance with its own procedures, clearly a collateral issue. The encouragement of such industrial instability could not have been with the intendment of the Act." McLaughlin & Moran reiterates a doctrine the Board has applied for decades. E.g., NLRB v. M & M Oldsmobile, Inc.,
Second: if contrary to McLaughlin & Moran the union's procedures matter, did Jewel know that the union's rules required ratification term-by-term, and that the local's officers would keep one term under wraps? Unless Jewel knew, the union's officers acted with apparent authority. Jewel denies having this knowledge, and the jury's verdict hardly resolves this question against it. The majority distinguishes McLaughlin & Moran because that employer lacked knowledge of union's internal rules while ignoring Jewel's protest that it was in the same position. At all events this factor plays no role in the Board's analysis or that of other circuits.3 Third: does a defect in ratification apply exclusively to the oral portions of the agreement? Why should Jewel be bound by the provisions favorable to the union (those the union's officers told the members about) but be unable to avail itself of the provisions favorable to itself? Ratification, one would think, is an all-or-nothing business. Fourth: why is Jewel, as opposed to the union, answerable to persons injured by defects in the ratification process? As the majority paints this picture, the union's officers set out to hoodwink the members by keeping under wraps a reopener agreement that the members would oppose. Such a wrong sounds distinctly like a breach of the duty of fair representation. Yet three years ago this court held that these plaintiffs may not recover from this union on such a theory.
Nothing in the union's constitution requires the officers to submit written documents to the members for perusal before a vote. This local does not circulate agreements to its members. Once the negotiating team reaches an agreement with management, the officers call a meeting at which they recount the terms they think significant. They are free under both the international union's constitution and their own practices to trumpet the features they deem salient while overlooking concessions to management. Of course members may ask questions during debate, but there is no indication in this record that anyone asked whether the agreement included a reopener, let alone that the officers answered falsely. Treating a ratification requirement as if it were a writing requirement is a serious misstep.
Practice illuminates how the union understood the meaning of ratification. The jury found--as the parties agree--that union and management routinely left matters including the number of personal days off and details of the seniority system to oral agreements that were not described to the members before ratification. Judge Posner asked the jury to decide whether under the parties' practice an agreement had to be written in order to be valid. The jury determined that writing was unnecessary. My colleagues deem details such as seniority and days off to be trivial--questionable as an original matter, but no ground for upsetting the jury's contrary decision on the same point.
Especially not when one of the examples presented to the jury was--another oral reopener agreement! The trial judge wrote:
Merk's argument from triviality is contradicted by the evidence of a reopener agreed to in 1969. That agreement was premised upon a raid, not by Cub Food, but by the Teamsters, and allowed the contract to be reopened to renegotiate higher wages. If the jury concluded that there was an agreement to reopen the contract in 1969, as it could have, and that that agreement was not ratified, then the agreement in this case was no more significant to Jewel than the 1969 reopener was to the Union, and could be valid even if unratified.
Disposing of a raft of oral agreements on the ground that they are trivial, and of a vital oral agreement on the ground that it could propel wages upward, supports a decision for these plaintiffs only at substantial damage to other values. Recall that the majority started from the premise that "collective bargaining agreements must be more secure than garden variety contracts."
Consider again the position of the parties when Jewel was insisting on the most-favored-nations clause. What options had they?
. They could have reached impasse, followed by Jewel's implementation of its final offer (including the most-favored-nations clause), which might have precipitated a strike. All workers either would have been subject to the most-favored-nations clause (if they continued to work on Jewel's terms) or would have lost wages during the struggle. Jewel might or might not have been able to "break" the union during a strike.
. They could have signed an agreement with a most-favored-nations clause. The membership might have ratified this (with results less favorable to the employees than what actually happened) or might have rejected it (with the same results as impasse).
. They could have signed an agreement with a written reopener. The membership might have ratified this (with results less favorable to the employees than what actually occurred--recall that uncertain enforceability of the oral reopener led Jewel to compromise with the union) or might have rejected it (with the same results as impasse).
. They could have signed a one-year rather than a three-year agreement, with effects fundamentally the same as a three-year agreement plus a reopener.
. They could have signed a three-year agreement without a reopener, but with lower salaries and benefits to compensate Jewel for the risk it was taking.
. They could have signed precisely the agreement they did, without a reopener. After the low-price rival entered, Jewel could have laid off workers on account of lower sales.
None of these is a clear winner for the employees, whose pickle is attributable not to faithless agents but to impending competition in the market. All options are potentially inferior for the employees to the solution the union negotiated. Bargains usually yield benefits for both sides. The union's agents believed that this deal with Jewel was the best one available. It was at the union's behest, not Jewel's, that the reopener was oral rather than written. My colleagues concede all this but reply: "[I]t is not for us to decide whether the reopener would have ultimately benefited or harmed the Union membership."
Neither the parol evidence rule nor the union's ratification requirement vitiates an oral reopener agreement. My colleagues fuse two unsatisfactory theories: "Taken individually ... none of plaintiffs' arguments may be dispositive. Read together, however, they clearly illuminate the grave dangers posed by a backroom deal that is secretly negotiated between union officials and company management without the knowledge or consent of the union rank and file."
Notes
The jury could in theory have reached another conclusion: it could have determined that the CBA represented a partial integration, at least as to basic economic terms such as wage rates and the duration of the contract. The jury could have found that the written CBA embodied the entire agreement of the parties as to these fundamental terms. Had the jury so concluded, parol testimony could not have been admitted to contradict the CBA although it might still have been introduced to supplement the CBA with respect to collateral matters
Elaborating at length upon the problem of secret side agreements, the Gatliff Coal court declared:
In utilizing collective bargaining agreements to implement a National Labor policy designed to remove certain recognized sources of industrial strife by encouraging friendly adjustment of industrial disputes as to wages, hours of work and other conditions of employment, upon a plane of equality of bargaining power between employers and employees, the National Labor Relations Act, in the public interest, has given such collective bargaining agreements a more secure and stable position in our National economy than that of ordinary common law contracts which may be altered at pleasure by rendering ineffectual and unavailable any collateral agreements between individual members of the collective bargaining group designed to obtain a diminution of the obligations of a particular employer or abridgment of the benefits accruing to particular employees under the collective agreement.... To hold otherwise "would reduce the National Labor Relations Act to a mere futility and leave collective agreements no stronger than the weakest members of the union." Statutes requiring collective bargaining would have little substance if what was made collectively could promptly be unmade individually.
McLaughlin & Moran, Inc., 299 N.L.R.B. No. 7 (1990), does not hold otherwise. In McLaughlin, the union sought to escape a collective bargaining agreement on the grounds that it had failed to follow its own procedures for ratification by allowing casual employees to vote. The National Labor Relations Board concluded, however, that the collective bargaining agreement was binding only because the company had no reason to know or suspect that any mistake had been in the ratification process. "That the [union] may have mistakenly followed the wrong procedures," the Board wrote, "does not absolve it from being bound by the representations [the union negotiator] made to [the company], when [the company] had no way of knowing or even suspecting that a mistake may have been made." Ignoring this careful language, the dissent maintains that an agreement approved by union officials is binding regardless whether or not it is ratified. But the dissent's reading of McLaughlin is far too broad: McLaughlin does not go so far as to allow a company to rely upon an agreement made in flagrant violation of a union ratification requirement even when the company is aware both of the requirement and that it has been flouted
The dissent cursorily refers to a string of cases which it claims run counter to Gatliff Coal. But, read closely, these cases hold only that parol evidence may be considered to resolve ambiguities or fill in gaps in a written collective bargaining agreement. E.g., Matuszak v. Torrington Co.,
My colleagues think it significant that I have not found a case disapproving Gatliff by name. Guilty as charged. Plea in mitigation: As other courts take no notice of Gatliff, there are no citations to collect. The Supreme Court has never cited Gatliff. No court of appeals has cited it since 1964, when Lewis v. Owens,
The majority insists,
In Houchens, for example, the union initially told the employer that "any contract proposal or recommendation would be subject to approval by the employees."