NLRB v. Cook County School ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-2510
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
and
LOCAL 744, INTERNATIONAL BROTHERHOOD OF
TEAMSTERS,
Intervening Petitioner,
v.
COOK COUNTY SCHOOL BUS, INC.,
Respondent.
Petition for Enforcement of an Order of the
National Labor Relations Board
Nos. 13-CA-38108 and 13-CA-38310
Argued December 6, 2001--Decided March 20, 2002
Before CUDAHY, EASTERBROOK, and EVANS,
Circuit Judges.
EVANS, Circuit Judge. The Cook County
School Bus company provides
transportation for several school
districts northwest of Chicago. Its 60 or
so bus drivers are represented by a local
teamsters union. The Company and the
Union have gotten into more than a
schoolyard scuffle over the Company’s
termination of their most recent
collective bargaining agreement.
We pick up the story on September 23,
1998, when the Union informed the Company
that it wished to negotiate a new
collective bargaining agreement to
replace the one scheduled to expire on
November 30. A series of negotiations
ensued in late October and November.
During negotiations, the Company
advocated a 3-year contractual term,
while the Union wanted a 2-year term. A
3-year term eventually was included in
the first synopsis of a proposed
agreement which was presented to the
Union membership. The membership
overwhelmingly rejected the contract.
During a second round of negotiations,
the Company and the Union again haggled
over the contract term, but the Company
wouldn’t budge from its 3-year demand,
which again made its way into a synopsis
of the agreement. An even thornier issue
arose over charters. In addition
tooffering transportation to and from
school, the Company provides charters for
schools (for things like athletic events
and field trips) and for private groups.
Although drivers like charters since they
mean more chances to earn money, charters
soak up a lot of the Company’s
administrative time and account for only
8 percent of its gross revenues.
Moreover, the method by which drivers bid
on available charters could stump
Pythagoras. The process attempts to
reconcile factors such as a driver’s
seniority, the size and location of the
requested charter, and whether it
conflicts with a driver’s normal route.
With regard to seniority, junior and
senior drivers have different interests,
and both the Union and the Company
disagree over which seniority lists--
company or district-wide--govern.
John McGinn, the Union’s chief
negotiator, eventually proposed language
that bypassed the charter morass. The
second synopsis presented to the
membership included the following
language underneath the term:
Local 744 may notify Cook County School
Bus in writing of its desire to reopen
this Agreement for negotiations, but
provided further, however that such
negotiations shall be limited to bidding
on charters in Article 12. This Agreement
and all other Articles and Sections of
this Agreement shall remain in full force
and effect as herein above set forth.
This reopener shall not extend past
November 30, 2000.
The Company did not object to the
provision. The membership still rejected
the second proposal.
The parties hammered out yet another
agreement. Neither the reopener nor the
contract term was discussed during these
negotiations, so the 3-year term and
reopener remained. The Union membership
ratified this proposal. Because the
parties had negotiated a number of labor
agreements over the years, preparing a
final version meant editing the most
recent contract, which the Union saved on
its computer. That task fell to Ted
Bania, the Union’s office accountant who
doubled (regrettably) as a typist. When
Bania typed in the changes, the following
language in Article 23 ("Contract Term")
appeared before the reopener clause:
This contract shall become effective the
1st day of December, 1998 and shall
remain in full force and effect through
November 30, 2001 and continue in full
force and effect from year to year
thereafter, unless terminated by mutual
consent of the parties hereto, or unless
either party shall notify the other,
sixty (60) days prior to November 30,
1999, or November 30th of any year
thereafter, of its desire to terminate or
amend this agreement.
We have italicized some of this language
to foreshadow its importance down the
road. For now it suffices to note that
nobody mentioned the November 30, 1999,
date when the parties signed the
agreement in February 1999.
Life went on as normal around the
Company until mid-July when three
employees approached Robert Smith, the
general manager, and expressed their
dissatisfaction with the Union. Smith
told them he could not discuss the matter
and that they should contact the National
Labor Relations Board. Then a few times
in August a group of employees showed
Smith a list of workers who were
dissatisfied with the Union. According to
Smith, he told the employees he could not
get involved.
What Smith did do was write a letter to
the Union on September 10. Including the
language in Article 23’s first paragraph,
he expressed the Company’s intent of
terminating the agreement. On September
13 Smith received a petition signed by 46
drivers stating that they no longer
wanted to be represented by the Union.
Smith wrote another letter to the Union,
stating that the termination would take
effect on November 30, 1999, (remember
the italics) and that the Company would
cease to recognize the Union as the
employees’ collective bargaining unit as
of December 1.
True to its word, on December 1 the
Company provided the employees with a
"Management Update." It announced the
termination of the labor contract, the
withdrawal of recognition for the Union,
and the fact that the Company would no
longer be subtracting union dues from the
drivers’ paychecks. Smith also heralded a
new lottery drawing to spice things up
around the workplace. Every month the
Company would award $1,400 at random
drawings where 14 employees would be
chosen to receive $100 apiece. The
Company informed the drivers that the
$1,400 was the amount that it previously
had deducted every month in Union dues.
Drawings were eventually held and winners
had their pictures taken and put on a
sign saying "I’m a $100 winner!"
Feeling decidedly unlike a $100 winner,
the Union filed various administrative
charges with the National Labor Relations
Board. The Chicago regional office filed
a complaint alleging that the Company had
engaged in unfair labor practices under
sections 8(a)(1) and 8(a)(5) of the
National Labor Relations Act. 29 U.S.C.
sec. 158(a)(1), (5). After a hearing, an
administrative law judge sustained the
complaint and recommended an order
forcing the Company to cease and desist
from its unlawful practices. Both parties
filed exceptions to the ALJ’s decision
and the Board affirmed the ALJ’s rulings,
findings, and conclusions with minor
modification to the remedial order. The
Board has now petitioned for enforcement
of its order, a proceeding over which we
have jurisdiction pursuant to 29 U.S.C.
sec. 160(e).
The alleged unfair labor practices here
boil down to one issue: whether the
Company could terminate the agreement as
of November 30, 1999. Although the
precise date when a contract ends might
be a mundane matter in some situations,
it has considerable importance in labor
relations because of something known as
the contract bar doctrine. Among other
effects, this rule, adopted by the Board,
prohibits an employer from repudiating a
collective bargaining agreement or
withdrawing recognition of a union during
the agreement’s term, even if it has a
good-faith belief that a union does not
enjoy majority support. NLRB v.
Dominick’s Finer Foods, Inc., 28 F.3d
678, 683 (7th Cir. 1994). The rule is not
under attack here, so if the Company
could not terminate the agreement as of
November 30, 1999, it committed unfair
labor practices by withdrawing
recognition from the Union and by not
applying the agreement’s terms after
December 1. Moreover, if the agreement
was still valid, the Company committed
unfair labor practices by announcing and
implementing its lottery without first
bargaining with the Union.
So to the termination date issue we
turn. Hopefully our recitation of the
parties’ negotiations will seem less like
a boring field trip to the museum of
bargaining history when we note that the
Board (via the ALJ) weighed that history
in finding that the Company and the Union
had agreed to a 3-year term and that the
"November 30, 1999" notification date was
a typing error that should have read
"November 30, 2001."/1 The Board
reformed the contract to read accordingly
and found that the Company did not have
the right to terminate the agreement when
it did.
Our usual review in unfair labor
practices cases has two prongs. First,
per statutory command, we review the
Board’s factual findings for substantial
evidence. 29 U.S.C. sec. 160(e). Second,
we review the Board’s legal conclusions
to determine if they have a reasonable
basis in law. Multi-Ad Servs., Inc. v.
NLRB, 255 F.3d 363, 370 (7th Cir. 2001).
The Company contends, citing Litton
Financial Printing Division v. NLRB, 501
U.S. 190 (1991), that because the Board’s
holding involved contractual
interpretation, our standard of review
should be de novo. Presumably the Company
wants us to review both the Board’s
factual findings and legal conclusions de
novo.
That seems half right. When the Board
interprets a collective bargaining
agreement in adjudicating an unfair labor
practice case, its interpretation is
entitled to no special deference. Litton,
501 U.S. at 202-03; Chicago Tribune Co.
v. NLRB, 974 F.2d 933, 937-38 (7th Cir.
1992). We take this to mean two things.
First, federal courts are in charge of
fashioning the federal common law of
collective bargaining agreements, see 29
U.S.C. sec. 185, a subject on which the
Board has no special expertise, Chicago
Tribune, 974 F.2d at 937-38. Therefore we
review the Board’s legal conclusions on
such matters de novo. Second, because
interpretation of language in a
collective bargaining agreement is
characterized as a matter of law, our
review of that interpretation is also de
novo.
But we are still faced with the NLRA’s
command that the Board’s factual findings
are conclusive if supported by
substantial evidence. 29 U.S.C. sec.
160(e). And although the ultimate
interpretation of contractual language
may be a matter of law, much that
surrounds it is not. Where the Board
adopts findings divorced from
interpretation of language found in the
collective bargaining agreement, compare
Litton, 501 U.S. at 205-08 (interpreting
language of collective bargaining
agreement); Chicago Tribune, 974 F.2d at
934-35 (same), we see no reason not to
term those factual findings and review
them for substantial evidence. This
portion of the standard has particular
bite in this case, which hardly taxed the
Board’s interpretive skills. Even a
sleepy-eyed first-grader riding one of
the Company’s school buses would know
that the contract provided notification
of termination by "November 30, 1999."
The fuss is about whether that date
accurately reflected the parties’
agreement. To resolve that dispute the
ALJ had to consider testimony on the
parties’ bargaining history, which he
observed firsthand and as to which he
made credibility determinations. As
normal, we will review factual findings
on these subjects for substantial
evidence and follow the credibility
determinations "absent extraordinary
circumstances." Multi-Ad, 255 F.3d at
370.
After that hubbub, we conclude that the
Board got this one right. We reference
common law contract principles consistent
with federal labor policies. NLRB v.
Burkart Foam, Inc., 848 F.2d 825, 829-30
(7th Cir. 1988). As the Restatement puts
it, "Where a writing that evidences or
embodies an agreement in whole or in part
fails to express the agreement because of
a mistake of both parties as to the
contents . . . of the writing, the court
may at the request of a party reform the
writing to express the agreement."
Restatement (Second) of Contracts sec.
155 (1981). In order to be entitled to
reformation, a party must present clear
and convincing evidence that the
agreement as written does not express the
true intention of the parties and that
there was a mutual mistake./2
Restatement (Second) of Contracts sec.
155 cmt. c (1981); cf. Board of Trustees
v. Insurance Corp., 969 F.2d 329, 332
(7th Cir. 1992) (discussing Restatement
position on reformation and requiring
clear and convincing evidence). Evidence
of such a mistake is admissible despite
the parol evidence rule. Restatement
(Second) of Contracts sec. 214(d) (1981)
(admitting evidence establishing that the
written agreement is a product of
mistake).
The Board found that the written
agreement did not accurately express the
intent of the parties because they
intended the agreement to last for 3
years, but the November 30, 1999,
language in Article 23 mistakenly
provided for early termination. The
evidence is certainly clear that the
parties agreed to a 3-year term. Article
23 states: "This contract shall become
effective the 1st day of December, 1998
and shall remain in full force and effect
through November 30, 2001." Moreover, the
agreement is a book that can be judged by
its cover, which states: "Articles of
Agreement: December 1, 1998-November 30,
2001."/3 Indeed, the Company originally
bargained for the 3-year term and
prevailed on that point. Each of the
three synopses presented to the Union
provided for 3-year duration. McGinn and
Edward Natzke, another business agent
with the Union, both testified that the
agreement was for 3 years. None of the
previous eight agreements between the
Union and the Company provided less than
a 2-year term.
The real issue is whether termination
could occur before the end of this term.
And the evidence is clear that it could
not. The parties negotiated by suggesting
and bargaining over changes to the
previous collective bargaining agreement.
Provisions not amended carried over. The
previous agreement provided that either
party could provide for notification of
termination 60 days prior to November 30,
1998, the end of that agreement’s term.
And recall how our story began: the
Union notified the Company on September
23, 1998, that it wished to renegotiate
the agreement. In fact, with one
exception the last four agreements
(dating back to 1989) provided for
notification of termination 60 days prior
to the end of the term. That exception
was the 1994-1996 agreement, which stated
that the contract could be terminated by
giving notice 60 days prior to November
30, 1994, one day prior to the start of
the contract term, which makes no sense.
Nonetheless, the Union gave notice 60
days prior to November 30, 1996, the end
of the contract term. The Company must
not have thought that practice odd, given
that it negotiated a new agreement. In
sum, the well-established practice of the
parties and the previous agreement
allowed either party to prevent it from
rolling over to the next year by giving
notice of termination 60 days prior to
the end of the term.
Against this bargaining backdrop, the
evidence is clear that the parties never
agreed that the present agreement could
be terminated before that time. McGinn
testified that the Union never agreed to
a November 30, 1999, termination date.
Natzke testified that the November 30,
1999, language was never discussed. The
Company claims that the reopener
accomplished this result. Recall that the
parties were confounded by charter
bidding issues and therefore agreed to a
reopener on the subject. The Company
contends that the clause would have been
meaningless without the corresponding
right of the Union to terminate the
agreement and strike over the issue. The
November 30, 1999, date was intended to
give the Union (and, incidentally, the
Company) the ability to terminate the
contract well in advance of the 3-year
term should negotiations over the charter
bidding system fail.
This argument doesn’t make it out of the
parking lot. First, the evidence
indicates that nobody other than Smith
understood the reopener this way. McGinn,
who suggested the reopener in the first
place, testified that it was not linked
to the 3-year term. This is substantiated
by a copy of the final agreement that
McGinn highlighted after "proofreading"
Bania’s work. McGinn highlighted portions
of the copy that differed from the
previous agreement. Although the reopener
language was highlighted, the November
30, 1999, language with which it was
purportedly linked was not. McGinn
testified that a copy of this highlighted
agreement was sent to the Company.
Second, the reopener clause, which
provides that "[t]his Agreement and all
other Articles and Sections of this
Agreement shall remain in full force and
effect," rebuts the notion that early
termination was possible. In fact, Sharon
Pierluissi, the Company’s assistant
general manager, testified that she
talked with Smith, and they thought the
reopener was "harmless" and was not
"opening up the whole contract." McGinn
had assured her of the same thing. She
believed the agreement expressed the
parties’ simple willingness to discuss
charter bidding. Third, even if there was
a link between the reopener and
termination, the Union never reopened
discussions on charter bidding. The
reopener requires written notice, which
the Union never gave. Thus, early
termination never became an option.
Only Smith’s testimony supports the
Company’s reopener theory. Although Smith
testified that he believed the contract
could be terminated within a year, the
Board discredited his testimony. This
finding seems well-supported even on the
basis of a cold record. One particularly
unenlightening passage is worth quoting
at length:
ALJ: Now, you were bargaining for a three
year contract?
The Witness: Yes, sir.
ALJ: And the union wanted a two year
contract?
The Witness: Uh-huh, yes.
ALJ: And you agreed on a three year
contract, is that correct?
The Witness: Yes.
ALJ: But in effect, the contract is really
a one year contract, correct?
The Witness: It’s a contract that we have
to have language in there where we can
open up to insert another complete
subject that we really didn’t deal with
but needed--that we should have dealt
with in negotiations.
ALJ: Well, the reopener only went to
bidding on charters, correct?
The Witness: Charters is what the subject
that we would have been meeting on, yes.
ALJ: But when you wanted to get a three
year contract and the union wanted a two
year contract, didn’t you in effect sign
a contract which you saw was for only one
year?
The Witness: I look to that as a three
year contract that we could open up for
the charters.
ALJ: Well, didn’t you look at it as a
contract that either you or the union
could terminate after one year?
The Witness: Uh-huh, yes.
Smith’s testimony left the ALJ shaking
his head. Ours too. In sum, the reopener
argument is just Tuesday morning/4
quarterbacking (for the opposing team, no
less).
In light of this bargaining evidence, it
is also clear that there was a mutual
mistake because neither party caught the
error in the contract. The ALJ referred
to Bania’s mistake as a "simple typing
error." It seems likely that Bania did
not commit a typographical error in the
narrow sense-- he did not write that
notice of termination could be given 60
days prior to "Bovember 19, 2001," or
"November 40, 2001" or "November 19,
2099"--but rather that he was guilty of
sloppy drafting. McGinn testified that
the contract should have read November
30, 2001. In response to the question of
why McGinn did not catch the error when
he proofread the agreement, McGinn
commendably admitted, "I don’t know. I
goofed." The ALJ called McGinn "a very
credible witness." The 1994-96 agreement
indicates that such mistakes were not
uncommon. Smith alone testified that he
noticed as of the time of signing that
the language provided for early
termination. But, as we have stated, the
ALJ discredited Smith’s testimony and
found that Smith "knew full well" that
the Company had entered into a 3-year
deal (with only a limited reopener) and
that notice of termination should be
given 60 days prior to November 30, 2001.
Substantial evidence supports this
factual finding, and there are no
extraordinary circumstances to challenge
the credibility determination that
undergirds it.
Last, we point out that reformation, an
equitable doctrine, is justified in this
labor setting. The Union membership did
not ratify the actual agreement, which
Bania finalized merely for signature by
the head honchos. The members ratified
the synopsis that preceded it, which
noted changes to the previous agreement
and contained only the 3-year term
alongside the reopener. The synopsis did
not contain the November 30, 1999,
"typo"--too bad, since one of the drivers
might have caught the error. Given the
backdrop of the previous agreement, the
drivers would not have known that early
termination was possible, and it would
hoodwink them to condone the Company’s
actions.
In sum, the Board correctly held that
the parties agreed to a 3-year term in
which termination notice should be given
60 days prior to November 30, 2001, but
that the final agreement did not reflect
that understanding. Accordingly, the
Company committed the unfair labor
practices alleged in the complaint.
Because no other challenge has been made
to the particulars of the Board’s order,
we order that it be enforced.
FOOTNOTES
/1 The ALJ also concluded (as did one member of the
Board panel) that, even assuming the November 30,
1999, date was properly typed, it merely allowed
one of the parties to notify the other 2 years in
advance of termination. Because we enforce the
Board’s order on the first ground, we do not
address this second theory.
/2 It is not altogether clear whether the Board
relied on the doctrine of unilateral mistake or
mutual mistake to justify reformation. The ALJ
discussed both. Mutual mistake is the proper
ground for reformation. Moreover, although the
ALJ did not explicitly reference the "clear and
convincing" standard, it seems obvious that he
applied it. After conducting a 2-day hearing, he
concluded: "It is clear to me that the parties
agreed to a 3-year contract and only when [the
Company] became aware of the circulation of the
decertification petition did it review the con-
tract and seize on, what they well knew, was a
typographical error."
/3 This effectively answers the Company’s argument
that in a contract bar analysis, resort to evi-
dence outside the agreement cannot be had. This
policy, implemented by the Board, allowsdifferent
parties to determine with precision when a peti-
tion for decertification or election should be
filed. Any reader of the present agreement would
know that the contractual term was 3 years.
/4 With the advent of Monday Night Football, "Tues-
day" morning quarterbacking is in vogue today.
See "Tuesday Morning Quarterback" by Gregg
Easterbrook (Universal Publishing).