Office & Prof'l 95 v. Wood County Telephon

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-3689
OFFICE & PROFESSIONAL EMPLOYEES
INTERNATIONAL UNION, LOCAL 95,
Plaintiff-Appellant,
v.
WOOD COUNTY TELEPHONE COMPANY,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 04-C-383-S—John C. Shabaz, Judge.
____________
ARGUED APRIL 13, 2005—DECIDED MAY 10, 2005
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Before EASTERBROOK, KANNE, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. An evergreen clause in the
collective bargaining agreement between Wood County
Telephone Company and one of its unions provided that the
CBA “shall automatically continue in full force and effect
after [its original expiration date] until terminated by sixty
(60) day written notice given by either party”. The expira-
tion date was July 5, 2003. By a letter dated May 1, 2003,
the Union notified the Employer of its “desire to reopen this
2 No. 04-3689
Agreement and to negotiate on wages, hours and conditions
of employment for a successor agreement.” Negotiations
lasted for a year, and on May 4, 2004, the parties ratified a
new agreement.
This litigation arises from events in March 2004, when
the Employer fired one member of the bargaining unit and
disciplined another. The Union filed grievances, which were
handled under the terms of the old agreement. When the
grievances could not be resolved to mutual satisfaction, the
Union proposed to arbitrate; the Employer refused, as-
serting that the old agreement (which like the new one con-
tained an arbitration clause) had expired on July 5, 2003.
This surprised the Union, for until then both sides had
acted as if the old agreement remained in force: the Em-
ployer paid the wages and fringe benefits provided by the
old agreement, deducted union dues under the old agree-
ment’s union-security clause, paid union stewards for the
time they devoted to adjusting grievances, and so on. A
dues checkoff is lawful only when expressly authorized in
writing. 29 U.S.C. §158(a)(3), §186(c)(4). We have treated a
continuing dues checkoff as an employer’s acknowledgement
that a collective bargaining agreement remains in force. See
United States Can Co. v. NLRB, 984 F.2d 864, 869-70 (7th
Cir. 1993). The Union filed this suit seeking an order that
would require the Employer to arbitrate. Without discussing
the significance of the dues checkoff, the district court
granted summary judgment to the Employer, stating that
a proposal to reopen an agreement is the same thing as a
notice to terminate that agreement.
“Reopen” and “terminate” are different ideas as well as dif-
ferent words. Preserving that difference enables parties to
negotiate a new bargain while the old one remains in force.
Allowing an agreement to persist is the point of an evergreen
clause (which is to say, an automatic rollover clause). The
parties’ old agreement had a no-strike, no-lockout clause.
Keeping that CBA in force while the parties negotiate for a
No. 04-3689 3
replacement reduces the risk of labor strife and lost prod-
uctivity. If the Employer thought that this would afford the
Union too cushy a position—for while the old agreement
lasted labor could hold out for better terms without a risk
that the employer would demand givebacks—it had only to
give its own notice of termination. What we cannot see is
any reason why this evergreen clause should be read to
prevent dickering while the old terms continue. Yet that is
the upshot of the district court’s approach: even if neither
side wants the old agreement to end, it does so automati-
cally whenever negotiations for a replacement begin.
Using the word “reopen” instead of “negotiate” does not
convey a desire to end the current deal now, as opposed to
later when the bargaining has been concluded. Some CBAs
allow mid-term renegotiation at either side’s request; such
a provision is called a “reopener.” For example, if such a
CBA had a four-year term, with a reopener that could be
exercised at the end of two years, then either side would be
obliged to bargain on the other’s demand—but the exercise
of this privilege would not bring the whole agreement to an
end after two years. See NLRB v. Cook County School Bus,
Inc., 283 F.3d 888, 894 (7th Cir. 2002); Air Line Pilots
Association v. UAL Corp., 897 F.2d 1394, 1396 (7th Cir.
1990). Terms and conditions of employment in years three
and four of the agreement would remain as provided, unless
the parties agreed to a change. Just so here, when the Union
wanted to reopen at the time the agreement specified an
automatic extension. Unless one side gave notice of ter-
mination, they could engage in negotiation, with the new
terms to replace the old only when a new understanding
had been reached.
If there were doubt about whether the Union had used
the word “reopen” to mean “terminate,” then the district
judge might have turned to parol evidence. (The letter’s
quotation from §2001 of the old contract, which contained
the termination clause, might have been a ground to treat
4 No. 04-3689
the letter as ambiguous.) But there is no need for a trial on
that score, because all of the extrinsic evidence points one
way. The author of the Union’s letter of May 1, 2003, testi-
fied by affidavit that he deliberately avoided the word “ter-
minate” when setting new collective bargaining in motion,
so that the old agreement would persist during the negotia-
tions.
When granting summary judgment for the Employer,
the district court relied principally on Baker v. Fleet
Maintenance, Inc., 409 F.2d 551 (7th Cir. 1969), and Oil,
Chemical & Atomic Workers Union v. American Maize
Products Co., 492 F.2d 409 (7th Cir. 1974), which it read to
establish a rule that any notice sufficient to initiate col-
lective bargaining also terminates the old contract. It is
hard to see why the reading of other clauses that contained
other language should establish a rule of law that super-
sedes what these parties set out to achieve with their chosen
language. Neither Fleet Maintenance nor American Maize
purports to establish such a rule; each treats the question
at hand as the best way to understand a particular contract.
Thus American Maize holds that a demand to negotiate new
terms, under a clause that ends the agreement 60 days after
“notice is given by either party that it desires to amend or
terminate this Agreement”, had the same effect as a notice
of termination. 492 F.2d at 410 (emphasis added). The
agreement in our case, by contrast, does not equate notice
of desire to amend with notice of desire to terminate. (The
contract in American Maize added that a proposal to amend
specified terms would not produce termination; we thought
it significant that the union’s notice referred to all terms
rather than particular sections, a step that would have kept
the remainder in force. Id. at 411-12.)
Fleet Maintenance dealt with an evergreen clause more
like the one in our parties’ contract. It said that the agree-
ment continues “unless written notice of desire to cancel or
terminate the Agreement is served by either party upon the
No. 04-3689 5
other at least sixty (60) days prior to date of expiration.”
409 F.2d at 553. The union sent an ambiguous letter, notify-
ing Fleet Maintenance of a desire to negotiate a “new
contract wage agreement commencing April 1, 1967, modifying
the current contract wage agreement . . . which terminates
March 31, 1967.” Ibid. The notice was ambiguous because
it used the magic word “terminate” (implying that the
expiration date would not roll forward) but could have been
read to emphasize the word “modify” instead. The only prof-
fered extrinsic evidence was to the effect that Fleet Mainte-
nance deemed this letter a termination; the union did not
offer a contrary (contemporaneous) view. The letter sent to
Wood County Telephone lacks a comparable ambiguity: it
uses the word “reopen” but does not say or imply that this
sets a terminal date for the old agreement. And, as we have
mentioned, all parol evidence favors the no-termination
view here (just as parol evidence favored a termination
understanding in Fleet Maintenance).
Let us come back to the Employer’s conduct. It has not
attempted to show any detrimental reliance on a belief that
the agreement ended on July 5, 2003. How could it, after it
had followed the old agreement to the letter, just as if it
remained in force, until rebuffing the Union’s demand for
arbitration? One provision that the Employer implemented
was the union-security clause, under which it deducted the
workers’ union dues from their pay and remitted this money
to the Union. That is lawful only when authorized by
express writings, 29 U.S.C. §158(a)(3), §186(c)(4), so the
agreement must have continued during the negotiations.
The Employer contests this inference, relying on Joint
Executive Board of Las Vegas v. NLRB, 309 F.3d 578 (9th
Cir. 2002), which holds that the rule of labor law freezing
the terms and conditions of employment until the parties
negotiate to impasse—after which the employer may
implement its current offer, see NLRB v. Katz, 369 U.S. 736(1962)—applies to dues checkoffs as well as wages and
fringe benefits.
6 No. 04-3689
Joint Executive Board of Las Vegas does not persuade us
to abandon our decision in United States Can. The ninth
circuit recognized that it was going against a position long
followed by the National Labor Relations Board—a position
that we discussed and applied in United States Can— but
said that it just could not understand the basis of the
Board’s distinction between dues checkoffs and other terms
and conditions of employment. Why must the checkoff cease
while all other terms and conditions must continue? We
have no similar problem understanding the basis of the
Board’s rule. It is §158(a)(3), which distinguishes between
checkoffs and other terms, subjecting checkoffs alone to an
express-contractual-authorization requirement. The idea
behind this statute is that wages are the employees’ money,
which may be handed over to a third party such as a union
only with the employees’ consent. If the contract expired on
July 5, 2003, the consent expired with it unless the employ-
ees gave or reiterated their permission individually. The
Labor Board has concluded that the required written
consent may be personal as well as collective, and that
personal consent may survive the expiration of a CBA. See
Lowell Corrugated Container Corp., 177 N.L.R.B. 169, 172-73
(1969); Wilkes Telephone Membership Corp., 331 N.L.R.B.
823, 830 & n.16 (2000). But the Employer does not contend
that members of the bargaining unit gave their consent
personally, as opposed to through the CBA. So to maintain
the checkoff is to assert that the CBA itself remained in
force.
If the doctrine requiring employers to afford workers all
terms of the status quo until a new contract (or an impasse)
has been reached were one that extended the length of the
contract, then §158(a)(3) and §186(c)(4) would not come into
play. But this is not how the unilateral-change doctrine of
labor law works. If it did, then all terms of a contract would
carry forward—and, in particular, the arbitration clause of
the old agreement would itself continue to govern in March
No. 04-3689 7
2004. But it does not; the Supreme Court held in Litton
Financial Printing Division of Litton Business Systems, Inc.
v. NLRB, 501 U.S. 190 (1991), that the only terms that
continue are those that the employer may implement on its
own. Because arbitration requires agreement, the obligation
to arbitrate expires with a collective bargaining agreement.
The Court explained that the terms that the employer must
honor under the unilateral-change doctrine “are no longer
agreed-on terms; they are terms imposed by law, at least so
far as there is no unilateral right to change them. . . . [T]he
obligation not to make unilateral changes is ‘rooted not in
the contract but in preservation of existing terms and
conditions of employment and applies before any contract
has been negotiated.’ ” 501 U.S. at 206-07 (citation omitted).
See also Laborers Health & Welfare Trust v. Advanced
Lightweight Concrete Co., 484 U.S. 539 (1988); McNealy v.
Caterpillar, Inc., 139 F.3d 1113, 1119-20 (7th Cir. 1998).
Although an employer must keep in force all terms and
conditions that are within its unilateral power, “other con-
tractual obligations will cease, in the ordinary course, upon
termination of the bargaining agreement.” Litton, 501 U.S.
at 207. But for Litton the Employer would have lost this suit
on the pleadings, because the unilateral-change doctrine
would have kept in force its promise to arbitrate. To avoid
arbitration the Employer must rely on Litton and in doing
so must take the bitter with the sweet. The rationale of
Litton applies to checkoffs, for a dues checkoff no less than
arbitration requires the employees’ assent through a bind-
ing contract. By continuing to remit dues to the Union, the
Employer manifested a belief that it had such assent—in
other words, that the agreement had not been terminated
in July 2003. Whatever ambiguity may lurk in the Union’s
May 1, 2003, letter has been dispelled by ratification of the
agreement’s continuation: the employer ratified it by adher-
ing to all of its terms, and the Union did likewise (not to
mention the Union’s insistence in this litigation that the
8 No. 04-3689
agreement survived until its replacement in May 2004).
Consequently the grievance-resolution machinery applic-
able in March 2004 included the Employer’s promise to
arbitrate.
The judgment is reversed, and the case is remanded with
instructions to enter a judgment requiring the Employer to
arbitrate these grievances.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-10-05