Opinion ID: 475821
Heading Depth: 2
Heading Rank: 2

Heading: Directed Verdict on Labor Claims

Text: 32 The labor claims under section 301 of the LMRA primarily allege breach of contract by Bechtel and the union defendants. Lucas and Bigbey sued to vindicate their uniquely personal rights to the wages claimed under the allegedly breached agreements, see Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 562, 96 S.Ct. 1048, 1055, 47 L.Ed.2d 231 (1976), and Local 640 invoked an interest on behalf of its members to recover wages claimed under a collective bargaining agreement (the Inside Agreement). See International Union v. Hoosier Cardinal Corp., 383 U.S. 696, 699-700, 86 S.Ct. 1107, 1109-10, 16 L.Ed.2d 192 (1966); see also Lucas I, 633 F.2d at 759-60. The district court denied defendants' motions for summary judgment. At the close of plaintiffs' case, however, the court granted Bechtel's and the union defendants' motions for directed verdicts. It held that the IBEW's interpretation of its constitution as not prohibiting the IBEW President from entering into the Stabilization Agreement was reasonable, the President had apparent authority to execute the agreement, and Bechtel reasonably relied on that authority.
33 The defendants argue that Bechtel and the IBEW, the parties to the Amended Specialty Agreement, had expressly reserved the right to modify the agreement, and that the Stabilization Agreement constitutes such a permissible modification. Local 640 contends that, while it was not a signatory to the Amended Specialty Agreement, no modification could occur without its consent because it was an intended beneficiary of that agreement and its rights under it had vested in the early 1970's when its members worked for Bechtel on other projects. 34 The defendants respond that the parties to the Amended Specialty Agreement did not intend to make Local 640 a third-party beneficiary of that agreement, third-party beneficiary principles have no application in a labor law context, and the agreement gave the signatories the right to modify. The district court did not reach the latter issues, but held, prior to trial, that Local 640 was not an intended beneficiary of the Amended Specialty Agreement. The district court did not otherwise explain the basis for its decision, but we need not remand for further explanation and findings. 35 We assume without deciding that third-party beneficiary principles apply here, and we also accept for purposes of this appeal that the signatories intended Local 640 to be a beneficiary. Even under these assumptions, however, Local 640 cannot prevent the modification of the Amended Specialty Agreement because the agreement expressly reserved to the signatories, Bechtel and the IBEW, the right to modify at any time by mutual consent. Principles of contract interpretation are legal issues subject to our de novo interpretation. Kemmis v. McGoldrick, 767 F.2d 594, 597 (9th Cir.1985). One established principle is that the rights of a third-party beneficiary are limited by the contract between the promisor and the promisee. Punikaia v. Clark, 720 F.2d 564, 570 (9th Cir.1983) (citing 4 A. Corbin, Contracts Secs. 810, 818 (1951); 2 S. Williston, Contracts Sec. 364A (3d ed. 1959)), cert. denied, 469 U.S. 816, 105 S.Ct. 83, 83 L.Ed.2d 30 (1984); see also Montana Bank of Circle, N.A. v. United States, 7 Cl.Ct. 601 (1985). In Punikaia, the parties intended the state's obligation to maintain a leprosarium would expire in twenty-one years. 720 F.2d at 570. Thus, at the end of that time patients who were third-party beneficiaries had no further rights under the agreement. In Montana Bank, a bank's claims as third-party beneficiary were rejected because the signatories of the contract had expressly provided that the contract could be terminated by mutual agreement of [the signatories]. This power was reserved expressly and could be exercised by [the signatories] without regard to its effect on Bank as a third party beneficiary. 7 Cl.Ct. at 611. 36 Here the parties to the Amended Specialty Agreement intended that its provisions were subject to modification when agreed to by the parties. [T]hird-party beneficiaries cannot exercise rights that the parties did not intend them to have. Punikaia, 720 F.2d at 570. Local 640, by accepting the benefits of the Amended Specialty Agreement, also accepted the limitations of the contract. See Trans-Bay Engineers & Builders, Inc. v. Hills, 551 F.2d 370, 378 (D.C.Cir.1976). 37 Local 640 contends that its rights under the Specialty Agreement were vested once it engaged in work for Bechtel on other contracts. Assuming that rights were vested for the purpose of those contracts, there were no vested rights acquired for the Palo Verde project because the Specialty Agreement provided for modification. The Stabilization Agreement constituted such a modification. Local 640 was well aware of the changed terms included in the Stabilization Agreement before any of its members accepted employment at Palo Verde. 38 We conclude that no third-party beneficiary rights of Local 640 were violated. We must next consider whether, by modifying that agreement through the execution of the Stabilization Agreement, the IBEW breached any other contract rights with Local 640 or whether, under its constitution, the IBEW lacked authority to enter into the Stabilization Agreement.

39 Before the district court directed a verdict in the defendants' favor, it made several procedural rulings and excluded certain evidence offered by plaintiffs. 11 Most significantly, the court refused to admit testimony offered to impeach the official minutes of the 1974 and 1978 IBEW International conventions; the minutes show that the delegates defeated Local 640's efforts to curtail the International President's authority to enter into multi-craft project agreements, and confirmed his authority to bind local unions to such agreements. Plaintiffs, in a footnote, ask us to reverse. Our review of rulings on evidence is limited to abuse of discretion, even in the context of appeals from a directed verdict. M.A.P. Oil Co. v. Texaco Inc., 691 F.2d 1303, 1310 (9th Cir.1982); see also Clady v. County of Los Angeles, 770 F.2d 1421, 1433 (9th Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 1516, 89 L.Ed.2d 915 (1986). We find no abuse of discretion. Our review of the record suggests that any probative value of such impeaching testimony was substantially outweighed by dangers of confusing the issues and misleading the jury, and considerations of waste of time. See Fed.R.Evid. 403. Generally, official minutes of meetings are considered the best evidence of business transacted, see Farber v. Servan Land Co., 662 F.2d 371, 379 (5th Cir.1981) (corporate minutes), and plaintiffs' proffered testimony would only contend the delegates' votes were incorrectly polled. This collateral attack would have little or no probative value.
40 Plaintiffs argued that the IBEW constitution did not give the International President authority to enter into multi-craft project agreements and that the execution of the Stabilization Agreement constituted a breach of contract. At the conclusion of plaintiffs' case-in-chief, the district court granted defendants' motion for a directed verdict. Holding that the interpretation of the IBEW constitution was a question of contract interpretation, treated as a matter of law, the court found that the constitution gave both apparent and actual authority to the President. The court also held that federal courts should not interfere with union officials' interpretation of their constitution unless that interpretation is unreasonable or in bad faith and that, even if the issue were not one of law, the plaintiffs had failed to adduce substantial evidence that could support a finding, by reasonable jurors, that defendant IBEW's interpretation of its Constitution was unreasonable or in bad faith.A directed verdict is appropriate where the evidence permits only one reasonable conclusion as to the verdict.... It is inappropriate if there is substantial evidence to support a verdict for the non-moving party.... We consider all of the evidence in the light most favorable to the non-moving party.... Peterson v. Kennedy, 771 F.2d 1244, 1256 (9th Cir.1985) (citations omitted), cert. denied, --- U.S. ----, 106 S.Ct. 1642, 90 L.Ed.2d 187 (1986). Nevertheless, the non-moving party must offer substantial evidence, that is, more than a mere scintilla. Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938). 41 We consider the directed verdict in the context of federal law and national labor policy: The dimensions of Sec. 301 require the conclusion that substantive principles of federal labor law must be paramount ... [and] issues raised in suits of a kind covered by Sec. 301 [are] to be decided according to the precepts of federal labor policy. Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 103, 82 S.Ct. 571, 576, 7 L.Ed.2d 593 (1962). Two precepts guide our decision in this internal union dispute. One is that judicial interference [in intra-union affairs] should be undertaken only with great reluctance. Stelling v. IBEW, 587 F.2d 1379, 1387 (9th Cir.1978), cert. denied, 442 U.S. 944, 99 S.Ct. 2890, 61 L.Ed.2d 315 (1979). A related precept is that when union officials have offered a reasonable construction of the constitution, and no bad faith on their part has been shown, the courts should not disturb the union officials' interpretation. Id. at 1389; see also Busch v. Givens, 627 F.2d 978, 981 (9th Cir.1980). Viewing the record with these precepts in mind, we agree that the plaintiffs failed to carry their burden of producing substantial evidence to support their contentions. 42 The controversy before us is a legal one: was the IBEW's interpretation that the President had authority under the IBEW constitution to sign a project agreement reasonable and made in good faith? We must decide whether, [v]iewing the constitution as a whole, ... 'there was arguable authority for the officer's act from the officer's viewpoint at the time, not from a court's more sophisticated hindsight.'  Stelling, 587 F.2d at 1388, 1389 n. 10 (quoting Leslie, Federal Courts and Union Fiduciaries, 76 Colum.L.Rev. 1314, 1319 (1976)). 43 Our starting points are sections 3(12) and (13) of Article IV of the IBEW constitution. Section 3(12) grants wide authority to the International President to enter into national agreements, but section 3(13) prohibits the President from entering into agreements where a local agreement already exists, without the consent of the local. Because of uncertainty whether a local agreement as envisioned by section 3(13) existed between Local 640 and Bechtel for the Palo Verde project, we must look beyond the literal reading to determine the parties' intent. There was evidence that section 3(13) was not intended to address multi-craft project agreements but rather single-craft international agreements with major individual employers. Additionally, present and former IBEW officers testified that project agreements were not within the scope of section 3(13). Multi-craft agreements are negotiated by the BCTD on behalf of the affiliated international unions. It is not feasible for such agreements to be subject to the veto of every local. 44 The actual and apparent authority of the President is bolstered by other provisions of the IBEW constitution and past practice. Article IV grants broad power to the President to carry out the objectives of the IBEW, which include securing employment. Article XV gives the President the right and power to divide or change the territory or jurisdiction covered by any [local union], or to take charge of and direct certain jobs or projects in or passing through any territory, when in the judgment of the [International President] such should be done. IBEW witnesses testified that the President had previously executed several multi-craft project agreements binding local unions. The debate at the 1974 IBEW International Convention concerning whether the International President's power to enter into multi-craft project agreements should be curtailed indicates that the delegates assumed the President did have that power. This assumption adds to the President's apparent authority, and the fact that the delegates rejected any restrictions on that power adds to the actual authority. 45 Further, the overriding authority of the president of this international has been recognized judicially, adding credence to the [defendants'] interpretation. Stelling, 587 F.2d at 1389. Both this circuit, see id., and the Fourth Circuit, see Parks v. IBEW, 314 F.2d 886 (4th Cir.), cert. denied, 372 U.S. 976, 83 S.Ct. 1111, 10 L.Ed.2d 142 (1963), have concluded after reviewing the structure and constitution of the IBEW that effective control of IBEW activities is entrusted to the [International President].... He is empowered ... to enter into agreements with national or international labor organizations or associations of employers. 314 F.2d at 893. These cases suggest the President has actual authority and strengthen the IBEW's argument that its interpretation is reasonable. 46 Local 640 relies on our decision in Parish v. Legion, 450 F.2d 821, 827 (9th Cir.1971), and a note in Stelling referring to the Parish holding, 587 F.2d at 1389 n. 11, for the proposition that a union's construction of its constitution is not binding on the courts where there is a dispute. The cases note, nevertheless, that the construction should be considered and accorded some weight, Parish, 450 F.2d at 827, and is persuasive, especially when no evidence of bad faith is presented. Stelling, 587 F.2d at 1389 n. 11. Even under a disputed interpretation, therefore, because no bad faith has been alleged, the international union's interpretation of the President's authority to enter into project agreements should be accorded some weight. 47 More importantly, both cases stress that the dispute which reduces the authority of the union's interpretation must be more than a single disagreement by a few disaffected locals or members. Under Parish, a union interpretation was held not to control only when that construction repeatedly has been questioned by other parties.... 450 F.2d at 827. Stelling distinguished Parish because in Stelling the plaintiffs demonstrated no repeated past history of controversy surrounding the interpretation of the sections disputed here. 587 F.2d at 1389 n. 11. Local 640 can only point to an unsuccessful attempt at the 1974 International Convention as evidence of dispute. This does not show a repeated past history of controversy and thus, the international union's interpretation is entitled to great, if not controlling, weight. Parish, 450 F.2d at 827. We are unable to find that interpretation unreasonable, and no bad faith has been shown. Further, Local 640 has proffered only a mere scintilla of factual evidence to support its interpretation of the constitution.
48 The district court directed a verdict for Bechtel, concluding that because the IBEW President had been found to have actual authority, then Bechtel was also relieved of liability. Because we affirm the district court's judgment that the union's interpretation of the President's constitutional authority should not be reversed, we also affirm the directed verdict for Bechtel. 12