NLRB v. Gen'l Teamsters 662 ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-3699
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
v.
GENERAL TEAMSTERS UNION LOCAL 662,
Respondent.
____________
Application for Enforcement of an Order
of the National Labor Relations Board.
No. 18-CB-4111
____________
ARGUED APRIL 15, 2004—DECIDED MAY 13, 2004
____________
Before FLAUM, Chief Judge, and MANION and ROVNER,
Circuit Judges.
FLAUM, Chief Judge. In 2003, the National Labor Rela-
tions Board (“NLRB”) concluded that the General Team-
sters Union Local 662 (“the Union”) had violated Section
8(b)(3) of the National Labor Relations Act by refusing to
execute a contract it had negotiated with W.S. Darley &
Company (“the Company”). The NLRB then applied to this
Court for enforcement of its order. For the reasons stated
herein, we grant enforcement of the NLRB’s order.
2 No. 03-3699
I. BACKGROUND
The Union is the exclusive bargaining representative for
all of the employees at the Company’s Chippewa Falls
manufacturing facility. In May 2000, the labor agreement
between the Union and the Company expired and the par-
ties began negotiating a new agreement. The parties soon
reached an impasse, and the Union went on strike in
August 2000.
During the strike, seven bargaining unit members crossed
the picket line and returned to work. The future employ-
ment status of these employees, known as “crossovers,”
became yet another point of contention between the Com-
pany and the Union. The Company of course wanted these
employees to be retained after the strike ended, but the
Union disagreed. Negotiations on this and other issues
continued on an irregular basis throughout the strike.
At this point, some of the unit employees began complain-
ing that the Union’s four employee-representatives on the
negotiating committee seemed more attentive to personal
agendas rather than the interests of the group. The Com-
pany also had been having problems with these four
representatives, and therefore expressed concern to the
Union that these employees were detrimental to labor-
management peace.
On the morning of October 3, 2000, the parties began a
negotiation session to attempt to end the strike. The Union
was represented by its international vice president and
its secretary-treasurer. The four employee-representatives
were also available nearby in the Union’s caucus room. In
turn, the Company was represented by its attorney. Both
the Union and the Company knew that the Union’s con-
stitution required that any agreement made by the parties
be ratified by a majority vote of the bargaining unit em-
ployees.
At the onset of this negotiation session the parties re-
solved several issues. However, there remained two points
No. 03-3699 3
of disagreement. First, the parties disagreed about what to
do with the crossover employees. During the strike the
Company had subcontracted work out. As a result, there
was insufficient work for more than four employees in the
division where four of the crossovers were currently work-
ing. The Union insisted that four strikers who had more
seniority than the crossovers be given the positions, but the
Company did not want to lay off the crossovers to make
room for strikers. Additionally, the parties disagreed about
how to deal with the four employee-representatives who the
Company believed impaired relations with the Union. In
order to reach a final agreement, the Company proposed a
quid pro quo under which the Company would find work for
all eight employees (both the four crossovers and the four
strikers), and in return the four employee-representatives
would agree to resign their Union positions and not seek
Union positions for the duration of their tenure with the
Company.
When first presented with this proposal, the Union was
hesitant to accept an agreement that required their em-
ployee-representatives to waive their rights to hold Union
positions. The Union subsequently spoke to the employee-
representatives who agreed to consider the proposal if it
was put in writing. The Company added the quid pro quo to
the contract that the parties had been drafting. The rele-
vant provisions stated:
3. The union bargaining committee agrees to resign
their committee positions and agrees further not to run
for or hold any union bargaining unit position during
the remainder of their employment at the W.S. Darley
& Co. The committee will sign individual waivers
confirming this agreement.
4. The company will recall four (4) additional employees
in consideration for the agreement outlined in par-
agraph 3 above.
4 No. 03-3699
The Union took this proposal back to the employee-
representatives and informed them that their agreement
should be voluntary and that it was exclusively for the
purpose of keeping four co-workers employed who would
otherwise be laid off. The four employees agreed to the pro-
posal and stated that they could live with it.
After the employee-representatives agreed, the Union told
the Company that it accepted the offer and would present
the offer for ratification by the Union members. The Union
informed the Company that it would not make a recommen-
dation that the employees either accept or reject the
contract. The representatives of the Union and Company
shook hands and announced to the media that a tentative
agreement had been reached.
The ratification vote was subsequently scheduled for 5:00
p.m. on October 4, 2000. However, between the end of
bargaining and the ratification meeting, two of the em-
ployee-representatives decided that they no longer wanted
to resign their Union positions. The Union therefore decided
that the membership should not vote on the quid pro quo
provisions. When the contract was handed out to employees
it included the quid pro quo provisions, but the Union
instructed employees that they would not be voting on those
issues. The employees then ratified the contract by a vote
of 37-31.
The following Monday, October 9, the strikers returned to
work. Included in this group were the four strikers whose
employment was provided for in the quid pro quo provisions
of the contract. That same day, the Company called the
Union to find out why one of the employee-representatives
who should have resigned was signing Union grievances. At
this point, the Union informed the Company that the Union
did not submit the quid pro quo provisions to the employees
for ratification. The Company protested that the Union
could not amend the contract by ratifying what it wanted
No. 03-3699 5
and rejecting what it did not want. The Company insisted
that the parties had an agreement that included the quid
pro quo provisions.
The Union subsequently sent several letters to the
Company referring to the contract between the parties as
valid. None of these letters mentioned that the quid pro quo
provisions had been removed from the contract, nor did the
letters indicate that the employees’ ratification
was incomplete or ineffective. On January 8, 2001, the
Company sent a copy of the contract including the quid pro
quo provisions to the Union for execution. The Union never
signed it.
On April 2, 2001, the Company filed an unfair labor
practice charge with the NLRB, alleging that the Union
violated the National Labor Relations Act by refusing to
execute the parties’ contract. The Administrative Law
Judge (“ALJ”) agreed that the Union had violated Section
8(b)(3) of the National Labor Relations Act, and the NLRB
affirmed the ALJ’s rulings, findings, and conclusions. The
NLRB now asks this Court to enforce its order.
II. DISCUSSION
In reviewing an order of the NLRB, this Court gives sub-
stantial deference to both the NLRB’s findings of fact and
conclusions of law. See Lincoln Park Zoological Soc’y v.
NLRB, 116 F.3d 216, 218 (7th Cir. 1997). The NLRB’s fac-
tual findings must be upheld as long as they are supported
by substantial evidence on the record as a whole. See id.The NLRB’s legal conclusions will be upheld unless they are
irrational or inconsistent with the National Labor Relations
Act. See id. It is undisputed that Section 8(d) of the Na-
tional Labor Relations Act requires parties to execute
contracts that incorporate agreements reached by the
parties. See NLRB v. Local 554, Graphic Communications
Int’l Union, 991 F.2d 1302, 1305-06 (7th Cir. 1993).
6 No. 03-3699
Whether the parties have reached an agreement is a factual
question to be decided by the NLRB. See NLRB v. Burkart
Foam, Inc., 848 F.2d 825, 829 (7th Cir. 1988).
In this case, the NLRB found that an agreement be-
tween the Company and the Union was reached when the
representatives of each group shook hands after agreeing on
the quid pro quo provisions. However, the Union argues
that such an agreement does not rise to the level of a
binding contract because: (1) employee ratification was a
condition precedent to contract formation; (2) without rati-
fication there was no meeting of the minds; and (3) the
employee-representatives’ written waivers constituted a
condition precedent to contract formation.
We begin with the Union’s arguments that ratifica-
tion was a condition precedent to contract formation
and that without ratification there could be no meeting of
the minds. At the outset, the Union must prove that the
parties agreed that ratification was necessary to contract
formation. See NLRB v. Roll & Hold Div. Area Transp. Co.,
Inc., 957 F.2d 328, 331 (7th Cir. 1992); see also NLRB v.
Truckdrivers, Chauffeurs & Helpers, Local Union No. 100,
532 F.2d 569 (6th Cir. 1976). As this Court has previously
held, the fact that a union has bylaws that require all
agreements to be ratified does not automatically result in
a condition precedent to contract formation. See Roll &
Hold, 957 F.2d at 331. Neither does the fact that the
company negotiating with the union knows that the bylaws
require ratification. See id. Therefore we seriously doubt, as
did the NLRB, that the Union could establish that a
condition precedent existed in this case. At most, the Union
can show that it advised the Company that there would be
a ratification meeting. The Union does not provide any
credible evidence to show that the Union representatives
informed the Company that they lacked authority to bind
the Union.
No. 03-3699 7
But even if the Union could prove that such a condition
precedent existed, it would still not prevail. It is a well-
known precept of contract law that when the occurrence of
a condition precedent is totally within the control of one of
the parties, that party has a duty to act in good faith and
with reasonable efforts to bring about its occurrence. See,
e.g., E.B. Harper & Co., Inc. v. Nortek, Inc., 104 F.3d 913,
919 (7th Cir. 1997). Here, as soon as the Union accepted the
Company’s proposal (which included the quid pro quo
provisions), it informed the Company that a ratification
vote would be scheduled and that the Union would not
make a recommendation as to whether the employees
should accept or reject the contract. What the Union ac-
tually did, however, was schedule a ratification vote and
then instruct the employees that they could not vote on the
quid pro quo provisions. Now the Union attempts to avoid
the contract on the basis of improper ratification of the quid
pro quo provisions. This Court will not sanction such unfair
and dilatory tactics. See NLRB v. Local 554, Graphic
Communications Int’l Union, 991 F.2d 1302, 1307 (7th Cir.
1993) (holding that where a contract between an employer
and a union is conditioned upon the union obtaining
approval from its international headquarters, the union
cannot avoid the contract by failing to submit the contract
to its international headquarters). There was a meeting of
the minds when the parties shook hands agreeing to the
contract terms and the Union promised it would have a
ratification vote on those terms. The fact that the Union
later broke its promise does not invalidate the original
agreement.
Moreover, the Union may be bound to the agreement
under an estoppel theory. See id. After the Company in-
formed the Union that it could not pick and choose contract
terms and the Company asserted that the parties had an
agreement including the quid pro quo provisions, the Union
sent multiple letters confirming ratification and requesting
8 No. 03-3699
that the Company provide it with a copy of the contract.
The strike ended, as planned, and the Company employed
the four workers provided for under the quid pro quo
provisions. The Company did not know that the Union had
changed its mind about the quid pro quo provisions until it
discovered the employee-representatives still acting on
behalf of the Union. In sum, the Union acted consistently
with a theory of total ratification and accepted the benefit
of the quid pro quo provisions but now argues that ratifica-
tion of those provisions never occurred. These factors, added
to those already discussed, provide substantial evidence
supporting the NLRB’s conclusion that a valid agreement
was reached in spite of the lack of employee ratification.
Similarly, we are not persuaded by the Union’s argu-
ments that the employee-representatives’ written waivers
were a condition precedent to contract formation. The quid
pro quo provisions stated that the “committee will sign
individual waivers confirming this agreement.” This indi-
cates that the agreement had already been reached and
that the signatures were a mere formality. This does not
indicate that the written waivers were a necessary condi-
tion before an agreement could be reached. Under the law,
all that is required for an employee to waive the right to
hold union office is a clear and unmistakable statement of
intent to waive this right. Cf. Metropolitan Edison Co. v.
NLRB, 460 U.S. 693, 707-08 (1983). Moreover, a union may
waive its members’ rights. See id. at 706-07; Merillat
Indus., Inc., 252 N.L.R.B. 784, 786 (1980). Considering the
plain language of the contract, as well as the fact that the
employee-representatives clearly and unequivocally orally
waived their rights and agreed to the contract provisions,
there was substantial evidence supporting the NLRB’s
conclusion that written waivers were not a condition pre-
cedent to contract formation.
Even if the NLRB correctly determined that a contract
existed between the parties, the Union argues that the quid
No. 03-3699 9
pro quo provisions contained an illegal bargaining subject
and therefore the Union was not required to execute the
contract. Subjects of collective bargaining contracts fall into
one of three categories—they may be either mandatory,
permissive, or illegal. See Hill-Rom Co. v. NLRB, 957 F.2d
454, 457 (7th Cir. 1992). Mandatory subjects may be
unilaterally determined by the employer, permissive
subjects may not be implemented unilaterally, and illegal
subjects are those that may not be included in a contract at
all. See id.; see also Eddy Potash, Inc., 331 N.L.R.B. 552,
559 (2000). The first problem with the Union’s argument is
that it was made for the first time to the NLRB. As we have
previously held, a party waives the right to appeal an issue
to the NLRB if it did not raise the issue below. See, e.g.,
Barton Brands, Ltd. v. NLRB, 529 F.2d 793, 801 (7th Cir.
1976). The Union argued before the ALJ that the quid pro
quo provisions contained a permissive subject of bargaining.
Thus, the NLRB properly refused to consider the Union’s
new argument that the quid pro quo provisions were an
illegal subject of bargaining. In any event, the Union’s
argument should not have prevailed because an employee’s
waiver of his right to hold union office is a permissive
subject of bargaining and not an illegal one. See Southwest-
ern Portland Cement Co., 289 N.L.R.B. 1264, 1280 (1988)
(stating that who can be on the union grievance committee
is a permissive subject of bargaining); Merillat Indus., Inc.,
252 N.L.R.B. 784, 786 (1980) (stating that “a union may
contract away its freedom to choose its representatives by
specifying, in a collective-bargaining agreement, who they
are to be”).
Finally, the Union argues that the NLRB’s decision ex-
ceeds the scope of the NLRB’s authority because it imper-
missibly intrudes into the Union’s internal affairs. We con-
clude that this issue was not internal because it involved
the Union’s relationship with the Company. See Service
Employees Local 254, 332 N.L.R.B. 1118, 1125 n.20 (2000).
10 No. 03-3699
Cases involving the formation or validity of a union agree-
ment are well within the NLRB’s authority, even when they
also involve a union’s discipline of its members. See Pattern
Makers’ League of North America v. NLRB, 473 U.S. 95, 100
(1985); Bethenergy Mines, 308 N.L.R.B. 1242, 1244-45
(1992). The Union’s argument to the contrary is therefore
without merit.
III. CONCLUSION
Substantial evidence supports the NLRB’s finding that
the Union violated the National Labor Relations Act when
it refused to execute the agreement it had reached with the
Company. Therefore, we ENFORCE the NLRB’s order in full.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-13-04