Contempo Design v. Chi. IL Council Carpenters

• Decision Date: 15 August 2000
• Docket Number: No. 98-3206,DEFENDANT-APPELLANT,PLAINTIFF-APPELLEE,98-3206
• Citation: 226 F.3d 535
• Parties: (7th Cir. 2000) CONTEMPO DESIGN, INCORPORATED,, v. CHICAGO AND NORTHEAST ILLINOIS DISTRICT COUNCIL OF CARPENTERS,
• Court: U.S. Court of Appeals — Seventh Circuit

Page 535

226 F.3d 535 (7th Cir. 2000)

CONTEMPO DESIGN, INCORPORATED, PLAINTIFF-APPELLEE, v. CHICAGO AND NORTHEAST ILLINOIS DISTRICT COUNCIL OF CARPENTERS, DEFENDANT-APPELLANT.

No. 98-3206

U.S. Court of Appeals, Seventh Circuit

Argued March 30, 1999

Reargued En Banc December 14, 1999

August 15, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 96 C 4513--James F. Holderman, Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Flaum, Chief Judge, and Posner, Coffey, Easterbrook, Ripple, Manion, Kanne, Rovner, Diane P. Wood, Evans and Williams, Circuit Judges.

Ripple, Circuit Judge.

Contempo Design, Inc. ("Contempo") filed an action under sec. 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. sec. 185, against the Chicago and Northeast Illinois District Council of Carpenters ("the Union") for striking in violation of their collective bargaining agreement. The Union, believing it was not bound by the collective bargaining agreement, had instituted a strike against Contempo to force it to agree to a new collective bargaining agreement. Contempo acquiesced due to its own economic situation.

The district court granted partial summary judgment to Contempo. It first held that the Union was bound to the original collective bargaining agreement and then concluded that the Union had breached that collective bargaining agreement by violating its no-strike provision. The remaining issues proceeded to trial before the court. After the trial, the district court awarded Contempo damages for (1) Contempo's "catch-up" costs and (2) the difference in costs to Contempo between the original collective bargaining agreement and the second collective bargaining agreement. The Union appeals both the grant of summary judgment and the award of damages. For the reasons set forth in the following opinion, we affirm the judgment of the district court.

I BACKGROUND

A. Facts

Contempo is in the business of constructing, storing, setting up, and taking down exhibits and displays at conventions and trade shows and therefore employs carpenters who are represented by the Union. However, the Union does not bargain with Contempo to reach a collective bargaining agreement. Instead, the Union bargains with the Woodworkers Association of Chicago, Inc. ("the Woodworkers Association"), a multiemployer bargaining unit, to form a collective bargaining agreement. Although Contempo is not a member of the Woodworkers Association, the collective bargaining agreement between the Union and the Woodworkers Association ("the WAC CBA") provides the basis for Contempo's own agreement with the Union. Specifically, Contempo agreed to adopt and be bound by the WAC CBA and by any successive agreements between the Woodworkers Association and the Union by what is known as a "hard card agreement."

Contempo's agreement with the Union provides as follows:

The EMPLOYER and the UNION do hereby agree as follows:

1. The EMPLOYER recognizes the UNION as the sole and exclusive bargaining representative for and on behalf of the employees of the EMPLOYER within the territorial and occupational jurisdiction of the UNION.

2. The parties adopt, and the EMPLOYER agrees to be bound by the terms and conditions of a Collective Bargaining Agreement dated June 1, 1979, between the UNION and Woodworkers Association of Chicago Inc. as bargaining agent for their members . . . .

* * * * * 4. This agreement, and the agreement adopted by reference as aforesaid, shall be in effect as of June 1, 1979, and remain in effect to and including the expiration date of the agreement adopted by reference. This agreement shall continue in effect from year to year thereafter and the parties specifically adopt any agreement entered into between the UNION and Woodworkers Association of Chicago Inc., bargaining agent for their members, subsequent to the expiration date of the agreement adopted by reference as aforesaid, unless notice of termination or amendment is given in the manner provided herein.

5. Either party desiring to amend or terminate this agreement must notify the other with an acknowledgment in writing, at least three calendar months prior to the expiration of the then agreement adopted by reference.

R.1-1, Ex. A at 1.

Contempo entered into this hard card agreement with the Union in 1980. The parties continued to be bound by successive WAC CBAs through the automatic renewal provision of the hard card agreement. In 1993, the Woodworkers Association and the Union entered into a CBA to be effective through May 31, 1995, ("the 1993 WAC CBA"). Pursuant to Contempo's hard card agreement, Contempo and the Union automatically adopted and became bound by this 1993 WAC CBA.

On February 27, 1995, the attorney for the Woodworkers Association, Karl W. Grabemann, sent a letter to the Union, which stated that the employer-members of the Woodworkers Association desired to terminate their respective agreements with the Union. In a subsequent letter, Grabemann informed the Union that the employer-members of the Woodworkers Association had extricated themselves from their multiemployer bargaining unit in order to bargain on an individual basis with the Union. Contempo was not a member of the Woodworkers Association, nor was it listed on either letter as a participating employer.

Despite the intentions manifested in the above correspondence, the Union and the Woodworkers Association reached an agreement for a successor to the 1993 WAC CBA. This successor agreement, the 1995 WAC CBA, became effective June 1, 1995, and was to remain in effect until May 31, 2000.

From 1980, when Contempo entered into its hard card agreement with the Union, until June 1, 1995, Contempo and the Union never engaged in any collective bargaining negotiations. Also, the Union never requested or required Contempo to bargain with the Union, nor did Contempo request that the Union bargain with Contempo. The Union admits that it did not provide written notice to Contempo of a desire to amend or terminate their hard card agreement at least three months prior to the May 31, 1995, expiration date of the 1993 WAC CBA. Usually, after the Union and the Woodworkers Association entered into a new collective bargaining agreement, the Union mailed a copy to Contempo; after the 1995 negotiations, however, the Union did not provide Contempo with a copy of the new agreement.

On June 1 or 2, 1995, the Union's business agent visited Contempo and gave Contempo's president, Robert Shaw, a copy of a written proposal for a new CBA between Contempo and the Union. The agent informed Shaw that he wanted the contract signed by June 9 and that, if Shaw did not sign by that date, a "work action" might be called.

In a letter dated June 14, Grabemann, now also representing the hard card agreement employers, including Contempo, initiated collective bargaining negotiations with the Union.¹ Grabemann negotiated with the Union on July 12, July 14, and July 17. Following the negotiations on July 17, Contempo claims that Grabemann first discovered that Contempo, as well as the other employers, had entered into hard card agreements with the Union and that these agreements never had been terminated. In a letter dated July 18, Grabemann ended the negotiations with the Union. In his letter, he stated, in pertinent part, as follows:

The employers that I represent have determined that they are contractually and lawfully entitled to adopt by reference the new or successor Collective Bargaining Agreement between your Union and Woodworkers Association of Chicago, the term of which is from June 1, 1995 to May 31, 2000. Of course, these employers need not elect to be so bound--they are so bound contractually and by operation of law.

Each of the employers that I represent are party to a so-called "hard card" Agreement with your Union, copies of which are in your files. Inasmuch as your Union has failed to provide proper and timely notice of the termination of this Agreement, the parties to it are and remain bound to the Agreement and, as a consequence, the employers that I represent are contractually bound by reference to the new or successor Collective Bargaining Agreement between your Union and Woodworkers Association of Chicago.

R.10, Ex.1 at 1. No additional bargaining occurred after July 17.

The 1995 WAC CBA contains the following "no-strike" provision:

5.5 There shall be no strikes, lockouts or stoppage [sic] of work for any causes not covered by this Agreement. The parties will, by lawful means, compel their members to comply with this Agreement.

R.1-1, Ex. G at 4. Nevertheless, on March 4, 1996, the Union engaged in a strike of Contempo, of which Contempo did not have advance notice. At this time, Contempo was pursuing a multimillion dollar contract with Bank of America to construct minibanks in shopping malls. It already had expended significant amounts of time and money to help it secure the contract. According to Contempo, it feared that, in its time-sensitive industry, the strike would cause it to lose Bank of America as a potential client. At the same time, Contempo also had other pressing financial obligations, including a significant bank loan from the purchase of the company several years earlier. This loan had been restructured several times, and, for the year preceding the strike, Contempo had been able to make only interest, and not principal, payments.

Due to its financial situation, the same day the strike began, Contempo entered into negotiations with the Union to settle it. As part of that process, Contempo agreed to a new CBA ("the Contempo CBA"). Pursuant to the settlement between Contempo and the Union, Contempo was required to pay the striking employees' wages for the two days of the strike.²

The 1995 WAC CBA and the Contempo CBA differ in the wage rates and in the cost of...