Opinion ID: 1192930
Heading Depth: 2
Heading Rank: 2

Heading: Validity of the collective bargaining agreement

Text: New Process' argument on the merits consists of two claims. First, they argue that because ratification of the contract was a condition precedent to implementation of the agreement, the agreement between New Process and the union was never final. Second, they argue that if the union believed that the phrase ratification did not mean a straight up-or-down vote by the union's members that there was no meeting of the minds between the union and New Process and thus no valid agreement.
The ALJ rejected New Process' argument that there was never a valid contract between New Process because the union never ratified the contract according to the terms of the parties' agreement. The ALJ found that the three references to ratification during the course of the negotiations were cursory and did not include an agreement on the procedure or method for ratification. In the absence of such an agreement, the ALJ determined that the IAM was allowed to select its own method of ratification and that New Process did not have standing to object to that method. The NLRB has traditionally insisted that the method of ratification a union chooses to employ is a matter between the union and its members and not something the company can question. See Childers Products Co., 276 NLRB 709, 711 (1985) (the method of ratification was within the [u]nion's exclusive domain and control ...); see also Valley Central Emergency Veterinary Hospital, 349 NLRB 1126, 1127 (2007) (Board law is clear that [employer] has no standing to challenge [the union's] ratification process.). Nor is a company allowed to challenge whether a union properly followed its own internal ratification procedures. The litigants with standing to make that challenge are the members of the union themselves, not their employer. See Martin J. Barry Co., 241 NLRB 1011, 1013 (1979). The reason that the union is given such wide latitude is concern for union independence. Federal labor law has a general policy forbidding employers to place conditions on how a union structures its internal relations with its own members, lest a company subvert the union and create a structure whereby it deals with employees directly. See NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 350, 78 S.Ct. 718, 2 L.Ed.2d 823 (1958). New Process now argues that the ALJ's decision was inconsistent with prior decisions from the NLRB, in particular Beatrice/Hunt-Wesson, Inc., 302 NLRB 224 (1991) and Hertz Corporation, 304 NLRB 469 (1991). In Beatrice, the Board dismissed similar allegations against an employer who refused to recognize a collective bargaining agreement. During negotiations over that agreement, the parties explicitly agreed that the contract would have to be ratified by the members of the bargaining unit (as opposed to just the members of the union, a key difference) and set this agreement down in a memorandum. Beatrice, 302 NLRB at 224. The bargaining unit employees repeatedly rejected the contract until the union obtained what it took to be sufficient ratification from the members of the union itself, although the ratification was actually the vote of a single individual. Id. The NLRB held that when the parties have agreed on a method and process for ratification, an employer can rightly insist that the method be followed before it recognizes the collective bargaining agreement. Id. at 225. In Hertz, a union and an employer expressly agreed that a tentative collective bargaining agreement was not effective until it was ratified. Hertz, 304 NLRB at 472. The union, however, never held a ratification vote on the agreement. Id. at 471. The Board held that an employer's refusal to recognize the agreement was not an unfair labor practice where the parties agreed upon ratification as a condition precedent and the union failed to satisfy that condition. Id. at 469. New Process does not contend that the discussions produced an agreement defining ratification, but they claim that the term is well-established within labor relations negotiations, and means a straight up-or-down vote by members of the union. The ALJ and the Board, however, did not agree that the meaning of the term is so obvious nor that it has a prevailing meaning. They found that New Process' definition is not unreasonable, but that it is contrary to the way the IAM and other unions proceed. Indeed, other decisions from the NLRB refer to similar multi-step ratification methods. See Childers Products Co., 276 NLRB at 711. The factual finding here is supported by substantial evidence. The record reflects that three counter-proposals from New Process referred to ratification. [5] None of those counter-proposals, however, referred to a method of ratification. New Process only discussed its desire to make ratification a condition precedent after the parties completed negotiation, and there the discussion was about ratification, full stop, with no discussion of process or method. New Process argues that Chaszar, in his deposition testimony, admitted that he understood ratification to mean a majority vote on the contract and that this condition was not satisfied. However, the phrase he was actually asked about was a vote, which he took to mean majority rule. With respect to ratification, Chaszar testified that he meant how we process our ratification, and that, [i]f it was a positive vote, we had an agreement. If it was a negative vote, we go to the second vote, although he did say that he did not go over this process with the company's representatives. That is not clearly committing to New Process' preferred ratification method. Nor would a union negotiator's tacit understanding necessarily be binding when the union already has a method for ratifying contract proposals. The Board's conclusion that New Process cannot refuse to recognize the contract because the union did not follow the company's definition of ratification also has a reasonable basis in law. Long-standing precedents provide a basis for the Board's ruling that New Process cannot insist on any particular method of ratification. See, e.g., Childers Products Co., 276 NLRB at 711. New Process argues throughout their brief that the Board has essentially overruled Beatrice and Hertz and thus acted arbitrarily. An agency of course has a duty to explain its departure from prior norms, Atchison, T. & S.F.R. Co. v. Wichita Board of Trade, 412 U.S. 800, 808, 93 S.Ct. 2367, 37 L.Ed.2d 350 (1973), but the ALJ's decision below contains a long discussion of the meaning of Beatrice and Hertz and distinguishes them from the present case. New Process relies heavily on a line from a concurring opinion in Beatrice, stating that [i]f indeed the parties have made employee ratification a part of the bargain, it is altogether appropriate that the Board give a measure of protection to the expectancy interests of the parties. Beatrice, 302 NLRB at 227 (Chairman Stephens, concurring). We agree with the Board and the ALJ, however, that this case did not involve an express agreement on a method of ratification, as Beatrice did, and that the union satisfied the ratification condition by following its two-step procedure. [6] In the absence of an express agreement otherwise, the ratification procedure was a matter within the union's control.
New Process argues in the alternative that there was simply no agreement between the company and the union: New Process meant ratification to mean an up or down vote and the IAM apparently meant a different process, and because of this disparity there was no meeting of the minds and thus no contract. The Board argues that a party's subjective understanding of a term cannot prevent a meeting of the minds because in federal labor law, as in common law, an agreement is judged by conduct evidencing an agreement rather than a party's subjective belief. See MK-Ferguson Co., 296 NLRB 776 n. 2. As the Board argues to this court, if New Process wanted a straight up-or-down vote, it should have asked for one. New Process, of course, claims that it did just that when it asked for ratification. The company has difficulty finding evidentiary support for that claim, however. The ALJ discredited Hartz's claim that his unexpressed understanding throughout negotiations was an up-or-down ratification vote, and that credibility determination removed much of the factual support from New Process' claims about the meaning of ratification. Again, there is substantial evidence in the record supporting the ALJ's finding that the parties did not negotiate a meaning of ratification or a process for going about it, and the legal conclusion that the union was free to employ its own method of ratification is reasonable given the Board's precedents. We affirm the Board's order finding that New Process violated § 8(a)(1) and (5) of the NLRA by repudiating the collective bargaining agreement.