Opinion ID: 447575
Heading Depth: 1
Heading Rank: 3

Heading: the termination of the memorandum agreement

Text: 11 A. The National Labor Relations Act as a Bar to Termination of the Memorandum Agreement. 12 Section 8(d)(1) of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 158(d)(1), requires a party seeking to terminate or modify a collective bargaining agreement toserve a written notice upon the other party to the contract of the proposed termination or modification sixty days prior to the expiration date thereof, or in the event such contract contains no expiration date, sixty days prior to the time it is proposed to make such termination or modification. 13 The Trust Funds contend that, because the employer failed to give the requisite 60-day notice under section 8(d)(1), the Memorandum Agreement could not have lawfully terminated in 1976, and thus it remained in effect. Because this argument is based entirely on the allegation that the employer committed an unfair labor practice under the NLRA, we lack jurisdiction to address its merits. 14 In Cement Masons Health & Welfare Trust Fund for Northern California v. Kirkwood-Bly, Inc., 520 F.Supp. 942 (N.D.Cal.1981), affirmed for reasons stated in district court's opinion, 692 F.2d 641 (9th Cir.1982), the district court considered a jurisdictional question similar to the one before us: whether a federal court had jurisdiction over a claim for recovery of delinquent trust fund contributions based on section 8(a)(5) of the NLRA, 29 U.S.C. Sec. 158(a)(5). In Cement Masons, the representatives of several trust funds claimed that the employer violated section 8(a)(5) by unilaterally changing the terms and conditions of employment after expiration of the collective bargaining agreement and during negotiations for a new one. Given the violation of section 8(a)(5), the representatives of the trust funds argued that the employer should be able to recover the delinquent contributions. 520 F.Supp. at 944. 15 The district court based its decision on San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959), in which the Supreme Court held that [w]hen an activity is arguably the subject of Sec. 7 or Sec. 8 of the [NLRA], the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board. 359 U.S. at 245, 79 S.Ct. at 780; see Waggonner v. R. McGray, Inc., 607 F.2d 1229, 1233-36 (9th Cir.1979). After concluding that the trust funds' claim for recovery of the contributions rested on an alleged violation of section 8(a)(5) of the NLRA, 520 F.Supp. at 944, the district court held that under Garmon it did not have jurisdiction to resolve the claim, 6 see, e.g., George Day Construction Co. v. United Brotherhood of Carpenters & Joiners, 722 F.2d 1471, 1480-81 (9th Cir.1984); Glaziers & Glassworkers Local Union # 767 v. Custom Auto Glass Distributors, 689 F.2d 1339, 1342-45 (9th Cir.1982). 16 The Trust Funds' argument basically is that because the Employer did not comply with section 8(d)(1), the Memorandum Agreement could not be terminated. Because that argument is not based on the contract itself but solely on the violation of section 8(d)(1), the case falls squarely within the rule of Cement Masons. 7 Accordingly, we hold that the district court was correct in holding that it lacked jurisdiction to address the Trust Fund's statutory argument. 8 17 B. Reconciling the Two Termination Provisions in the Memorandum Agreement. 18 The district court next proceeded to consider the parties' contract interpretation arguments. The Trust Funds suggest that section 2 of the Memorandum Agreement is controlling and that by virtue of its terms the Agreement remained in force despite the strike in 1976. Section 2 is a termination clause common to many collective bargaining agreements and provides that: 19 Unless the employer gives the unions written notice at least thirty (30) days prior to the expiration or termination of said agreement indicating to the contrary, the Employer agrees to be bound by the terms of the succeeding collective bargaining agreement, including all amendments, extensions and renewals thereof, next negotiated between the associations and the unions. This same provision shall likewise apply thereafter whenever one agreement is expiring and another successive agreement is negotiated. All such successive agreements and their amendments, extensions and renewals will be deemed to be incorporated herein by reference at such time as they are negotiated and become effective by their terms. 20 The Employer bases its argument that the Memorandum Agreement terminated in 1976 on section 3(b) of that agreement. Section 3 provides that: 21 This Memorandum Agreement will automatically terminate as follows: 22 a. Upon the expiration or termination date of the association agreement then in effect if the employer gives the (30) day notice referred to in section 2 above; or 23 b. Upon the expiration or termination date of the association agreement, or any extension thereof, when another successive agreement has not yet been negotiated so as to immediately come into effect. (emphasis added). 24 According to the Employer, the short gap in time between the expiration of the 1973-76 Master Labor Agreement and the effective date of the 1976-79 Master Labor Agreement, during which period the union was on strike, served to terminate the me-too agreement for all time. 25 When the operation of an ordinary contract is not clear from its language, a court generally may consider extrinsic evidence to determine the intent of the parties in including that language. See generally 3 Corbin on Contracts Sec. 536, at 27-28 (1960). That principle is applied with even greater liberality in the case of a collective bargaining agreement. In ascertaining the intent of the parties to a collective bargaining agreement, the trier of fact may look to the circumstances surrounding the contract's execution, including the preceding negotiations.... It may also consider the parties' conduct subsequent to contract formation ... and such conduct is to be given great weight. Laborers Health & Welfare Trust Fund v. Kaufman & Broad, 707 F.2d at 418 (citations omitted; emphasis added). A district court should also consider the scope of other related collective bargaining agreements, as well as the practice, usage and custom pertaining to all such agreements. Kemmis v. McGoldrick, 706 F.2d 993, 996 (9th Cir.1983) (citing Transportation-Communication Employees Union v. Union Pacific Railroad Co., 385 U.S. 157, 160-61, 87 S.Ct. 369, 371-72, 17 L.Ed.2d 264 (1966)); see Hendricks v. Airline Pilots Association International, 696 F.2d 673, 676 (9th Cir.1983). As we have emphasized, when an agreement's meaning is not clear on its face and contrary inferences as to intent are possible, there exists an issue of material fact for which summary judgment is ordinarily inappropriate. Laborers Health & Welfare Trust Fund v. Kaufman & Broad, 707 F.2d 412, 418 (9th Cir.1983); see Bower v. Bunker Hill Co., 725 F.2d 1221, 1223 (9th Cir.1984); Schwarzer,Summary Judgment under the Federal Rules, 99 F.R.D. 465, 474 (1984). 9 26 Here, the meaning of the Memorandum Agreement is not clear on its face; the language of the two termination provisions appears to be inconsistent; the interrelationship and ultimate effect of those provisions is not plainly conveyed by the contractual language. Despite the ambiguity created by the existence of the two conflicting provisions, the district court concluded solely on the basis of the language of section 3(b) of the Memorandum Agreement that the agreement terminated pursuant to its terms. It did so without adequately considering the more conventional termination provision in section 2 of the agreement or attempting to reconcile the two apparently conflicting provisions. Most importantly, it did so without the benefit of any evidence as to the intent of the parties in including the two provisions in the agreement. 27 There must, of course, be a rational method of reconciling two apparently conflicting provisions before a court can be required to give meaning to both. Otherwise, the court will have to choose between the two. On summary judgment the first question is: viewing the evidence in the light most favorable to, and making all inferences in favor of, the non-moving party, is it possible to reconcile the two provisions in a manner consistent with that party's claim? 10 If so, the motion must be denied; if not, we continue the inquiry. Here, there is at least one way of reconciling the termination provisions in a manner consistent with the Trust Funds' claim. 28 Preliminarily, we should note that the basic purpose of a me-too agreement is to allow independent, usually smaller, employers to obtain all the benefits of the master collective bargaining agreement that is negotiated by the principal employers in the industry without having to participate in the industry negotiations, or to engage in separate negotiations, every few years. Thus, the independent employer is assured that (1) it will not be subject to a contract containing more onerous conditions than are applicable to its competitors, (2) it will obtain whatever protections or advantages the industry collective bargaining agreement provides other employers, (3) it will be saved the cost of expensive negotiations, and most pertinent here, (4) it will be covered by an agreement whenever the rest of the industry is covered and not subject to an agreement whenever the rest of the industry is not. Me-too agreements generally contain a termination clause which allows the independent employer to terminate its agreement whenever a master labor agreement is about to expire, by giving thirty days notice of its desire to do so. This provision is similar to the termination provision contained in the general run of collective bargaining agreements. 11 29 Read in light of the purposes underlying me-too agreements, section 3(b) of the Memorandum Agreement is susceptible to the construction that while that agreement is rendered without force or effect during a strike, it is automatically revived if a successor Master Labor Agreement is reached. More simply, section 3(b) can be read as permanently terminating the Memorandum Agreement if no successor agreement is subsequently entered into, but only temporarily terminating the agreement if one is. Such a construction would be consistent with section 2 which provides for the automatic application of all successor Master Labor Agreements unless the Employer gives a 30-day termination notice. Thus, the two apparently conflicting sections of the agreement can be reconciled by construing them, together, as providing the following: where no thirty day termination notice is given, the Memorandum Agreement is revived when a new Master Labor Agreement goes into effect. Such a construction of the two provisions would be wholly consistent with the basic purpose of me-too agreements. It would protect the Employer by ensuring that it will not be subject to the terms of the Memorandum Agreement if a new Master Labor Agreement is not reached. It would also fully preserve the Employer's right to terminate the entire me-too agreement at its expiration date, and thus exclude itself from the coverage of the successor Master Labor Agreement: all the Employer need do is give the contractually required 30-days notice. 30 It is not only the language of the two contractual provisions that causes us to conclude that the Memorandum Agreement is susceptible to a construction that would entitle the Trust Funds to relief. In resolving the question of the parties' intent, district courts give great weight to the parties' conduct subsequent to contract formation. Laborers Health & Welfare Trust Fund v. Kaufman & Broad, 707 F.2d at 418. The reconciliation of the two termination provisions in the manner described above would be fully consistent with the parties' conduct subsequent to the time that the 1976-79 Master Labor Agreement came into effect. In fact, that conduct appears strongly to support the conclusion that the me-too agreement remained in effect after the strike. From 1965 until the day that the Trust Funds requested a payroll audit in 1981, see supra p. 4, the Employer honored the provisions of the Memorandum Agreement and the incorporated Arizona Master Labor Agreements. At all relevant times, the Employer paid the employees according to the wage scale provided for in the Arizona Master Labor Agreements. As authorized by those Agreements, the Employer regularly used the Teamsters Local 83 hiring hall. Most significantly, until the audit was requested, the Employer voluntarily contributed to the various Trust Funds on behalf of its employees at the rates provided for in the Arizona Master Labor Agreements. 31 Not until 1981 did the employer take the position that the Memorandum Agreement had terminated in 1976. Only then did the Employer allege that any portion of the trust fund contributions were paid as a result of a mistake of fact, and contend that they should be refunded. Given its consistent adherence to the terms of the Agreement, the record strongly suggests that the employer never doubted its obligations under the Memorandum Agreement, and, in fact, believed, at least until the audit request was made, that it was fully bound by the terms of the Memorandum Agreement. Such a belief is certainly of significant probative value in ascertaining the parties' intent. 32 Of course, there may be other plausible explanations for, or methods of reconciling, the two contract provisions. That is for the district court to decide by carefully scrutinizing the intent of the parties after all the facts are before it. 12 However, the district court should be guided by the principle that technical rules of contract formation do not confine collective bargaining because the parties are obliged by their relationship to deal exclusively with each other and because policies of the [NLRA] dictate that this process not be encumbered by undue formalities. Presto Casting Co. v. NLRB, 708 F.2d 495, 497-98 (9th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 489, 78 L.Ed.2d 684 (1983). Thus, the district court should not give undue weight to the literal language of section 3 of the Memorandum Agreement regardless of how that provision might be interpreted were this an ordinary contract action. 33 After considering all the relevant facts, the district court will be in a position to determine the intent of the parties in including the two termination provisions in the Memorandum Agreement. At the time it made its summary judgment ruling, it did not have all the necessary information before it, and the information it did have was not such as would support an award in favor of the Employer. 13 IV. JOINDER OF THE EMPLOYEES ON WHOSE BEHALF THE 34 EMPLOYER MADE THE CONTRIBUTIONS AS NECESSARY PARTIES 35 The Trust Funds moved to dismiss the counterclaim for failure to join employees on whose behalf the Employer made the trust fund contributions. The district court denied the motion. The Trust Funds contend that the district court abused its discretion in failing to join the employees as necessary parties under Federal Rule of Civil Procedure Rule 19. 14 We disagree. 36 [W]e apply an abuse of discretion standard of review to the district court's decision concerning joinder of parties under Rule 19. United Food & Commercial Workers v. Alpha Beta Co., 736 F.2d 1371, 1381 (9th Cir.1984) (citing Bakia v. County of Los Angeles, 687 F.2d 299, 301 (9th Cir.1982) (per curiam)). Here, the plaintiffs representing the Trust Funds are fiduciaries and thus required to act in the best interests of the employee beneficiaries of the funds. See 29 U.S.C. Sec. 1104 (1982). It has long been the rule that beneficiaries of a trust ordinarily need not be joined as necessary parties under Rule 19. See Sadler v. Sadler, 167 F.2d 1, 2 (9th Cir.1948); C. Wright & A. Miller, Federal Practice & Procedure: Civil Sec. 1618, at 182-93 (1972); see also Walsh v. Centeio, 692 F.2d 1239, 1244 & n. 6. (9th Cir.1982) (distinguishing Sadler but conceding that the weight of authority is probably against dismissal for nonjoinder of all trust beneficiaries.). We see no need to deviate from that rule here. 37 We are unable to understand how, given the fiduciary duty owed by the Trust Funds to the employees, the failure to join the employees will 'as a practical matter' at all impair, or even affect, their ability to protect those interests. United Food & Commercial Workers Union v. Alpha Beta Co., 736 F.2d at 1381. 15 Moreover, because complete relief can be accorded on the counterclaim without joinder of the employees, the district court was not compelled to require joinder under Rule 19. 38 We therefore hold that the district court acted well within its discretion in denying the Trust Funds' motion to dismiss the counterclaim on the ground that affected employees were not joined under Rule 19. Accordingly, we affirm the district court's holding on that issue.