Merk v. Jewel Food Stores, 85 C 7876.

CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
Citation734 F. Supp. 330
Docket NumberNo. 85 C 7876.,85 C 7876.
PartiesKelly MERK, et al., Plaintiffs, v. JEWEL FOOD STORES, DIVISION OF JEWEL COMPANIES, INC., Defendant.
Decision Date09 April 1990

Daniel R. Formeller, William J. Cremer and Jacqueline A. Criswell, Tressler, Soderstrom, Maloney & Priess, Chicago, Ill., for plaintiffs.

Max G. Brittain, Jr., Marcia E. Goodman and John J. Murphy, Jr., Kovar Nelson Brittain Sledz & Morris, Chicago, Ill., for defendant.

OPINION

POSNER, Circuit Judge (sitting by designation).

This is a class action by employees of Jewel Food Stores, the grocery chain, against the chain, charging that it reduced their wages below the level fixed in the collective bargaining agreement between the company and the union representing the employees. Jewel contends that at the same time it signed the collective bargaining agreement it made an oral side-agreement with the union, a "reopener" agreement which provided that upon a designated contingency coming to pass (namely the entry of a particular competitor into Jewel's market) the "economic" provisions of the agreement (e.g., wages and hours) would be repealed. The plaintiffs deny that any such agreement was made and further argue that if it was made, still it was invalid for a variety of reasons. The suit is under section 301 of the Taft-Hartley Act, 29 U.S.C. § 185.

Before the trial, I granted partial summary judgment on three issues that, because of their novelty, merit discussion in a published opinion; but I issued no opinion at that time. The trial resulted in a jury verdict for Jewel, and Merk's post-trial motions raise a fourth issue that merits such discussion. The other issues raised by Merk's motions I have resolved in an unpublished order, issued today, in which I direct the entry of judgment for Jewel in accordance with the jury's verdict.

1. The suit is on behalf of all Jewel employees who received the lower wage that the company set in purported reliance on the oral reopener. Originally I ruled that employees who were hired after the lower wage was in place have no cause of action and therefore are not entitled to any of the damages that the plaintiffs have sought even though they are part of the class. I based this ruling on the absence of any evidence that these employees signed on with Jewel in the expectation that they would receive a retroactive raise because the collective bargaining agreement had been violated. This is true but (as both sides now agree) irrelevant. These employees are third-party beneficiaries of the agreement, and they are entitled to its benefits unless there was a valid oral reopener cutting down on those benefits as they appear in the written agreement.

2. The complaint seeks punitive damages for what the plaintiffs describe as Jewel's "outrageous" conduct in fabricating an oral reopener. I agree with Jewel, and with the majority of courts that have addressed the question, Annot., Award of Punitive Damages Under § 301 of Labor Management Relations Act, 71 A.L.R.Fed. 221 (1985), that punitive damages are not available in a section 301 suit. The Supreme Court has so held with regard to union defendants sued for breach of their duty of fair representation, International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 99 S.Ct. 2121, 60 L.Ed.2d 698 (1979), and it would be unreasonable to distinguish between union and employer defendants in this regard, or between suits for breach of contract and suits for breach of the duty of fair representation:

a. When the Taft-Hartley Act was passed in 1947, punitive damages for breach of contract were virtually, perhaps completely, unknown. Section 301 of the Act does not create a complete remedial scheme. Essentially it just makes collective bargaining agreements actionable, and leaves the incidents of the 301 suit—statute of limitations, other defenses, third-party beneficiaries, parol evidence rule, and all the rest, including remedy—to be worked out by the courts in the exercise of their ill-defined but adequate power to make federal common law. In interpreting other statutes that create a federal right without specifying the details of remedy and procedure, notably 42 U.S.C. § 1983, a statute first passed in 1871, the Supreme Court has looked to the common law at the time of enactment. Smith v. Wade, 461 U.S. 30, 103 S.Ct. 1625, 75 L.Ed.2d 632 (1983). If that approach is taken here, it becomes evident that punitive damages are unavailable in section 301 suits.

b. Punitive damages are of course far more common in tort cases than in contract cases. Breach of the duty of fair representation is a form of breach of fiduciary duty, and is therefore a tort. Since punitive damages are not available for breach of the duty of fair representation (Foust), they surely are not available for a simple breach of contract.

c. Partly in explanation of Foust, partly related to the point just made, federal policy aims to promote harmonious labor relations; this is one of the justifications for the mildness of the National Labor Relations Board's remedial powers. 442 U.S. at 52, 99 S.Ct. at 2127; Republic Steel Corp. v. NLRB, 311 U.S. 7, 10, 61 S.Ct. 77, 78, 85 L.Ed. 6 (1940). That aim would be deflected if punitive damages were available in section 301 suits. The possibility on the one side of recovering and on the other side of having to pay potentially astronomical damages would place a cloud over labor negotiations, engendering formality and suspicion inimical to the harmonious resolution of labor disputes.

All three reasons I have just given are independent of whether the defendant is a union or an employer. I am convinced therefore that the Supreme Court would not allow punitive damages to be awarded against employers for violating collective bargaining agreements. At the very least, it would not allow the award of punitive damages in a case such as the present, a case at worst of simple breach of contract (this much the jury's verdict for Jewel makes clear), uncomplicated by evidence of fraud or other tortious misconduct. For even outside the labor field, punitive damages are not awarded for simple breaches of contract. Patton v. Mid-Continent Systems, Inc., 841 F.2d 742, 750-51 (7th Cir.1988).

3. The next question is the force to be ascribed to an oral reopener agreement. To...

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5 cases
  • Merk v. Jewel Food Stores Div. of Jewel Companies, Inc., 881
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • 20 Diciembre 1991
    ...was ratified absent clear notice that the Union was acting in bad faith against the interests of its members. See Merk v. Jewel Food Stores, 734 F.Supp. 330 (N.D.Ill.1990). The district court's interpretation of Chrysler Workers, however, is inapposite. For Chrysler Workers involved a side ......
  • Chicago & North Western Transp. Co. v. Railway Labor Executives' Ass'n, s. 89-3265
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • 21 Agosto 1990
    ...a collective bargaining agreement, as distinct from agreements concerning dues and pension rights, be in writing. Merk v. Jewel Food Stores, 734 F.Supp. 330, 333 (N.D.Ill.1990), and cases cited there. The contrary statement in Shipley v. Pittsburgh & Lake Erie R.R., 83 F.Supp. 722, 741 (W.D......
  • Nitzsche v. Stein, Inc., 92-CV-995.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • 31 Agosto 1992
    ...agreement. The most persuasive reasoning located by this court stems from an opinion in the case Merk v. Jewel Food Stores, Division of Jewel Companies, Inc., 734 F.Supp. 330 (N.D.Ill.1990), rev'd on other grounds 945 F.2d 889 (7th Cir.1991), cert. denied ___ U.S. ___, 112 S.Ct. 1951, 118 L......
  • Edlund v. Montgomery, CIV.A. 04-CV-4515JBL.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • 24 Enero 2005
    ...circuit is reversed on appeal. See, e.g., Merk v. Jewel Food Stores, Div. of Jewel Companies, Inc., 945 F.2d 889 (7th Cir.1991), rev'g 734 F.Supp. 330 (N.D.Ill.1990). Having carefully considered the question, I conclude there is no reason why my "impartiality might reasonably be questioned.......
  • Request a trial to view additional results

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