Martinsville Nylon Employees Council Corporation v. National Labor Relations Board, E.I. Dupont Denemours and Company, Intervenor

WALD, Circuit Judge,

dissenting:

First, I write separately to express my disagreement with the panel’s dicta in Part II. A. suggesting that “no-oral-modification” clauses in collective bargaining agreements should be strictly enforced. I agree with the panel that in interpreting and enforcing collective bargaining agreements under the federal labor statutes, federal courts are not bound by state common-law rules, but rather may, when necessary, fashion their own rules. Notably, however, the authority for this proposition, Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456-57 , 77 S.Ct. 912, 918 , 1 L.Ed.2d 972 (1957), is emphatic that the “courts must fashion [this federal common law] from the policy of our national labor laws” (emphasis added). The majority’s references to freedom to contract, and the value of certainty, rationales drawn primarily from commercial areas of the law, 1 would mark a departure from that basic principle. My colleagues’ stated preference for strict enforcement of “no-oral-modification” clauses was neither sub *1271 scribed to by the National Labor Relations Board (“Board”) nor even argued to us on appeal. It seems to me to be unwise for the court to express its “confiden[ce] that the UCC rule will better serve the purposes of collective bargaining and of industrial peace,” Majority opinion' (“Maj. op.”) at 1268, without even hearing from the parties or the Board as to whether or not it is likely to facilitate collective bargaining.

My colleagues take issue with the Ninth Circuit decision in Certified Corp. v. Hawaii Teamsters & Allied Workers, Local 996, 597 F.2d 1269, 1271 (9th Cir.1979), positing that “disregard for the parties’ expressed intent that any modification be in writing is more likely to promote industrial strife by encouraging prevarication about who said what to whom, and to create uncertainty about what a court will determine are the actual obligations of the parties.” Maj. op. at 1268. I believe Certified Corp. may have more to offer than my colleagues grant, primarily because, in Justice Goldberg’s words:

[PJarties are free by joint action to modify, amend, and supplement their original collective bargaining agreement.... There are too many unforeseeable contingencies in a collective bargaining relationship to justify making the words of the contract the exclusive source of rights and duties.

Humphrey v. Moore, 375 U.S. 335, 353-54 , 84 S.Ct. 363, 373-74 , 11 L.Ed.2d 370 (1964) (Goldberg, J., concurring). Allowing for flexibility in the performance of collective bargaining contracts, rather than mandating rigid certainty, would certainly seem to contribute to achieving smoother labor-management relationships, an incontrovertible goal of federal labor policies. See, e.g., Vaca v. Sipes, 386 U.S. 171, 182 , 87 S.Ct. 903, 912 , 17 L.Ed.2d 842 (1967). (“federal labor laws seek to promote industrial peace ... by fostering a system of employee organization and collective bargaining”). It is precisely the “unforeseeable contingencies,” which Justice Goldberg recognized are prevalent in the collective bargaining relationship, that lead to the need for side agreements, limited arrangements for a discrete project, or other unanticipated modifications to the collective bargaining agreement. As one court has noted:

[Collective bargaining agreements ... involve the triangle of often diverging interests of employers, unions, and employees covering a wide range of conduct and an enormous variety of problems. The necessary task of filling in the details is inherent. A collective bargaining contract operates prospectively over a substantial period of time and the parties cannot be expected to foresee all the problems that will develop in an industrial establishment within the period of the contract and more scope must be left for decisions made in the course of performing the agreement. The parties to a collective bargaining share a degree of mutual interdependence for the cost of disagreement is great and the pressure to reach agreement is so intense that the parties are willing to contract with the thought in mind of working out the problems of interpreting and amending when the inevitable problems arise.

Watson v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers, 399 F.2d 875, 879 (5th Cir.1968) (emphasis added).

Unanticipated amendments may, for example, be necessary in the context of a bid with a time deadline, or in other constraining situations where flexible procedures will make the difference between failure and success for both labor and management. Requiring that all such impromptu modifications be memorialized in writing (with attendant costs in time, effort, and money), may be counterproductive to the best interests of both sides. Further, union and management may informally agree over an extended period of time to allow seemingly innocuous practices that are not covered in the contract to become part of the settled expectations of the parties, without going through the formality of amending the contract. It may then be downright disruptive to the parties’ bargaining relations to prevent these firmly established expectations from being enforced as part of the agreement.

*1272 My colleagues’ preferences in interpreting both “no-oral-modification” and “zipper clauses,” 2 may be based on economic theory but do not necessarily rest on any expertise, experience, or empirical data in the labor field. Their predictive difference with the Ninth Circuit, as to which rule would work better for industrial peace, is, at this point, simply a war of words.

Second, I have difficulty following the majority’s rationale and disposition. As I read the Board’s decision, it has pretty much done already what the majority tells it to do on remand. It has said that “we do not suggest that an agreement can never be read as encompassing past practices that are not specifically written into it” and indeed the AU and the Board went through the exercise of seeing whether certain past practices really were “nothing more than implementations of the express terms of the collective bargaining agreement.” Board Decision at 2-3. I am by no means certain, on the other hand, that the Board ever said or necessarily implied that “a practice not inconsistent with the CBA ... is incorporated into the CBA.” Maj. op. at 1268. But even if it did, the line between interpreting contract language in light of past practices and saying that established practices when consistent with contract language, will be deemed covered by the contract is a theoretical one at best. I can only wonder how distinctly it can be applied in practice. See Board Decision at 3, and note 2. I fear the majority plays the bull in a china shop in insisting that no-oral-modification and zipper clauses must be absolutely enforced, despite a history of arbitration rulings to the contrary and no judicial precedent in their favor. The Board seemed to me well within bounds in ruling on the basis of its own precedent that an established practice in carrying out a CBA would be honored or rejected on the basis of its consistency or inconsistency with the contract. 3 I think it is we who are being arbitrary and capricious in imposing our own preferred rationale for interpreting the delicate mix that must exist in the real world of CBAs between understandings, practices, and the written word.

I would affirm the Board.

. I am unpersuaded that bargaining by commercial contractors is sufficiently similar to bargaining by labor and management that application of a rule generated in the commercial context is automatically appropriate for labor contracts. The vast differences between collective labor agreements and the general run of commercial contracts have been the frequent subject of expert comment. See, e.g., Neil Chamberlain and James Kuhn, Collective Bargaining 54-56, 67-71 (1986); Harry Shulman and Neil Chamberlain, Labor Relations 3-7 (1949); Archibald Cox, Rights Under a Labor Agreement, 69 Harv. L.Rev. 601, 606 (1956); George Taylor, The Voluntary Arbitration of Labor Disputes, 49 Mich.L.Rev. 787, 795-98 (1951).

. It should be noted that the panel’s interpretation of the "zipper clause" as forbidding any oral modification is not the only plausible reading of that clause which provides:

This [] constitutes the entire agreement between the parties hereto as of the execution date hereof. However, any supplement which may hereafter be mutually agreed upon between the parties when executed in the same manner as this agreement shall become and be part of this agreement.

The language in the second sentence can be read as mere caveat to the first sentence, indicating that although this is “the entire agreement" for now, it can be amended later. The clause “when executed in the same manner" does not say that the agreement cannot be amended later by oral agreement.

. While I personally disagree with the Board's interpretation that Article XII covered both grievance and bargaining meetings, and thus, would have found the "modification” in practice allowing more than five union representatives to attend bargaining meetings consistent with the collective bargaining agreement, that difference is in the final analysis "small potatoes,” and I would defer to the Board’s expertise on the matter.

Article XII of the collective bargaining agreement is titled "Adjustment of Grievances.” It provides in relevant part:

Section 1. The Union agrees to select an employee Committee of not more than five (5) officials and/or accredited Representatives, including a Chairperson, who shall constitute the Grievance Committee.

Section 4. Meetings between elected officials and/or accredited Representatives of the Union and the Plant Management will be permitted on Company time and Company property in cases where such meetings are for the purpose of conferring with the Plant Management. ... No change in the working hours of an elected official or Representative will be made for the purpose of conducting business of the Union except in cases where a Representative or elected official may make his own arrangements with another qualified employee, subject to the approval of his supervision. ...

The Board determined that the modification in dispute, a past practice of the Company allowing more than five Union Representatives to attend bargaining meetings, was inconsistent with Article XII §§ 1 & 4.