Project Posner

Lead opinion by POSNER

   MEMORANDUM AND ORDER

   RICHARD A. POSNER, UNITED STATES CIRCUIT JUDGE, SITTING BY DESIGNATION

   This order disposes of eleven motions made in anticipation of trial, and resolves the two remaining questions of damages.

1. JEWEL'S MOTION FOR SUMMARY JUDGMENT AS TO COUNT V

   I have reviewed JEWEL'S motion for Summary Judgment as to Count V, and MERK'S response, and will GRANT that motion dismissing Count V. The issue of punitive damages in Section 301 cases is an impo rtant one, and I will address the question in depth in a written opinion to be released.

2. JEWEL'S MOTION TO BIFURCATE ISSUES FOR TRIAL

   In light of my ruling on JEWEL'S motion for summary judgment, and my rulings on the two damages issues in point 11 below, JEWEL'S motion to bifurcate the trial is moot. The trial commencing on Monday, January 29, 1990 will focus exclusively on the question of liability. If MERK prevails on liability, I will enter judgment according to the stipulated damages entered December 19, 1989, subject to the rulings on damages below.

3. JEWEL'S MOTION TO EXCLUDE ANY EVIDENCE OF EVENTS OCCURRING AFTER FEBRUARY 15, 1984; MERK'S MOTION TO EXCLUDE ANY EVIDENCE OF MEETINGS BETWEEN THE UNION AND 2 JEWEL SUBSEQUENT TO OCTOBER, 1983.

   My ruling on summary judgment reduces the issues for trial to these: whether there was an oral reopener, and if there was, the scope and effect of that reopener. Both of these motions concern the scope of testimony relevant to these issues.

   The parties may introduce any evidence tending to make more or less probable the existence of a reopener. Such evidence may include evidence of events occurring after the alleged reopener was concluded so long as those events make more or less probable the existence of a reopener. JEWEL claims that it made explicit reference to the oral reopener when asking the Union to renegotiate the collective bargaining agreement, and that the Union did not contradict that representation before commencing mid-term negotiations. If believed, that is evidence of conduct consistent with the existence of a reopener, and is admissible to establish its existence. See Hellenic Lines Limited v. Gulf Oil Co, 340 F2d 398, 401 (2d Cir 1965); Apex Oil Co v. Vanguard Oil & Service Co, 760 F2d 417, 422 (2d Cir 1985); Moridge Mfg v. Butler, 451 NE2d 677, 680 (Ind App 3 Dist 1983). While it is true as MERK points out that silence 3 in the face of an offer will not ordinarily be construed as an acceptance, Acme Markets v. International Ass'n, 506 F Supp 92, 99 (ED Pa 1980), the silence relied upon by JEWEL is not offered as evidence of the Union's acceptance of the oral reopener, but instead of its existence.

   MERK relies upon a footnote in an earlier opinion by Judge Aspen in this case to support its argument that this evidence should be excluded. There Judge Aspen wrote:

"JEWEL also contends that the Local's participation in negotiations after Cub Foods entered the market and JEWEL unilaterally reduced wages and benefits is itself evidence that the Local ratified the alleged reopener agreement or entered into one later. We reject this position. That the Local sought negotiations rather than a lawsuit is consistent with the federal labor policy to encourage the extrajudicial resolution of disputes rather than a reflexive rush to the courts. The Local did not accept to the courts. The Local did not accept a modification to the collective bargaining agreement merely by discussing it."

Merk v. Jewel Food Stores, 702 F Supp 1391, 1401 n.10 (ND Ill 1988).

Certainly the mere fact that the Union 4 entered mid-term negotiations does not establish that there was an agreement executed at the same time as the collective bargaining agreement to enter such mid-term negotiations. Nor does the fact that the Union entered negotiations entail that it accepted a modification of the agreement, or that it accepted at that time an agreement to reopen the contract. The evidence JEWEL intends to offer does not make any of these leaps. While evidence that the Union entered mid-term negotiations does not show that there was a reopener, evidence that the Union did not object to JEWEL'S assertion that there was a reopener certainly suggests that a reopener had been agreed to. JEWEL'S evidence makes the existence of the reopener more likely, and evidence does not have to be conclusive to be admissible.

   Therefore, I will DENY MERK'S motion to exclude all evidence of meetings with the Union and JEWEL after October, 1983.

   JEWEL'S motion raises a distinct issue. None dispute that in February, 1984, JEWEL unilaterally reduced the wages of its employees. At that point, a dispute between the Union and JEWEL erupted, and JEWEL argues that the events after February are inadmissible by reason of FRE 408. 5

   Rule 408 is not a broad ban on all evidence of events following the birth of a dispute between two parties. By its own terms, the "rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations." The rule permits evidence of offers to compromise or of conduct or statements made in compromise negotiations when "the evidence is offered for another purpose, such as proving bias or prejudice. " Therefore, to the extent JEWEL'S motion seeks simply to ban all evidence after the beginning of this dispute, it seeks too much, but to the extent it seeks to exclude evidence already excluded by Rule 408 it is unnecessary.

   Nonetheless, I will GRANT JEWEL'S motion to the extent that it is understood as covering only that evidence encompassed within the scope of Rule 408. Evidence otherwise admissible because tending to establish the existence or nonexistence of a reopener will be excluded where that evidence derives from offers to compromise the claim, or compromise negotiations, within the scope of Rule 408.

4. JEWEL'S MOTION TO EXCLUDE EVIDENCE OF OUTSTANDING CLAIMS ENTERED INTO BY DEFENDANT AND UNION IN JUNE 6 1985

   The resolution of this motion follows directly from the discussion above. For purposes of liability, Rule 408 excludes evidence of the settlement reached by JEWEL with the Union, since the claims there settled were the identical claims pressed by these plaintiffs. JEWEL'S motion is GRANTED.

   MERK'S concern that the jury will be confused can be addressed without introducing evidence of the settlement. The parties are invited to draft a stipulation or instruction for the start of trial which would allay the concerns MERK expresses.

5. JEWEL MOTION TO EXCLUDE EVIDENCE OF THE RATIFICATION OR LACK THEREOF OF THE REOPENER

   Late in this litigation, MERK has raised ratification as a bar to JEWEL'S reopener defense. MERK claims that even if there was a reopener agreement, it is invalid since not ratified. JEWEL seeks to exclude such evidence on a number of grounds, including the claim that if the failure to ratify the reopener makes the reopener invalid, it likewise makes the whole collective bargaining agreement invalid. JEWEL provides no authority for its novel claim, and it cannot be correct that an entire collective bargaining agreement would be invalid because one part was not ratified. 7 A Union cannot pick and choose which parts of the collective bargaining agreement it wants to enforce by submitting selected sections to its members, but the remedy for this fault does not consist of abandoning the agreement completely.

   The question is immaterial to this motion in any case. JEWEL'S motion is a motion in limine; it seeks to exclude evidence. Whether or not an unratified oral reopener is enforceable, the existence of a ratification requirement is probative of the existence of a reopener. If ratification is required, and no ratification was pursued, that makes it less probable that there was a reopener at all.

   If JEWEL had demonstrated that in no context would the existence of a ratification requirement affect the enforceability of any agreement not ratified, then it would have undermined the probative value of evidence about the ratification requirement. In its motion in limine, JEWEL provides no authority for such a conclusion; however, JEWEL'S other pretrial submissions do address the question. The most that can be derived from the authority that JEWEL cites, however, is that if there is a practice of accepting unratified agreements notwithstanding a ratification 8 requirement, then the failure to ratify will not be fatal to the agreement's enforceability. Central States SE and SW v. Kraftco, Inc, 799 F2d 1098, 1112 (6th Cir 1986). But to establish the predicate of this test, JEWEL would have to introduce evidence of other agreements that were enforceable or enforced even though not ratified. If the ratification requirement would be relevant to establish the enforceability of those other unratified agreements, JEWEL cannot contend that it is irrelevant to the existence or effect of the reopener agreement at issue in this case.

   JEWEL'S motion is therefore DENIED.

6. JEWEL'S MOTION TO EXCLUDE TESTIMONY OF NAMED PLAINTIFFS

   As I have structured the trial, the only issue before the jury is the existence and effect of the alleged reopener agreement. Only evidence relevant to that question will be admitted. JEWEL has asked me to exclude the testimony of named plaintiffs, since they could offer no evidence relevant to the existence or effect of an oral reopener; JEWEL also argues that the plaintiffs are not representative members of the class since the damages they have suffered is disproportionately large. While this latter argument if true would 9 stand in tension with the determination that these class members would be representative for purposes of class certification, since damages are no longer an issue in the trial, I will ignore that problem here.

   The plaintiffs may of course testify just like any other witnesses if they have relevant evidence to offer. MERK argues that due process entitles them to more, an argument bordering on the sanctionable. Nothing MERK cites stands for the proposition that a plaintiff in a civil case has the right to testify even if he has no evidence to offer. Nor could MERK cite authority for such a position.

   I am uncomfortable, however, with granting JEWEL'S motion unconditionally, for plaintiffs could use these witnesses to establish the fact that JEWEL reduced their wages. Because damages have been stipulated, and because punitive damages are not at issue, the total amount lost by any plaintiff is not relevant. For the sake of clarity for the jury, however, it would be permissible to allow plaintiffs to establish the size of reduction relative to the wages established in the collective bargaining agreement. For example, named plaintiffs could testify that their wages were reduced from $ X/hr 10 to $ Y/hr, but could not testify as to the total amount they thereby lost. I will not hesitate to limit cumulative testimony, so that the need to call more than one named plaintiff to establish these limited facts must be clearly established.

   None of this testimony is of course necessary. The parties could just as easily stipulate to all the facts to which the named plaintiffs could testify. But in the absence of such a stipulation, I will not unconditionally bar the testimony of named plaintiffs. MERK may call them for the limited purpose I have outlined. If, however, the testimony exceeds these limits, upon objection by JEWEL, I will not hesitate to limit further testimony. I want strongly to avoid evidentiary battles before the jury, and urge both parties to keep that in mind when eliciting testimony outside the scope of relevancy.

7. MERK'S MOTION TO EXCLUDE EVIDENCE OF FACTS CONCERNING FRED BURKI'S RETIREMENT.

   MERK asks me to exclude evidence of Fred Burki's involvement in alleged violations of Union rules relating to the purchase of an annuity for his pension. JEWEL responds that such evidence is relevant under Rule 404(b) to establish (1) a motive for Burki to avoid activities 11 that would draw the attention of the Union's International; (2) knowledge of Jewel's chief negotiator of the Union's internal turmoil; (3) evidence of the relationship between Jewel's and the Union's negotiator; and (4) questions of Union reputation relevant to the punitive damages count, a ground made moot by my decision above. JEWEL also asserts that Burki can be cross-examined with the evidence of past acts under Rule 608(b) if the acts are probative of his character of truthfulness. For the reasons that follow, I will conditionally GRANT MERK'S motion, subject to reconsideration upon the presentation of a fuller foundation.

   If (a) the annuity incident did give Burki a motive to avoid review by the Union's International, and (b) weakening the contract by incorporating a "most favored nations clause" or a reopener agreement would have invited International review, then evidence concerning the incident would be at least probative of motive. But these factual predicates must be established. The motion in limine and its response have not presented me with enough to determine precisely the link between the incident involving the annuity and the motive to conceal. If, however, JEWEL 12 is able to demonstrate such a link within the motive exception to Rule 404(b), then I would reconsider my decision to exclude such evidence. I also don't think that the facts surrounding Burki's resignation are necessary to establish JEWEL'S knowledge of Union turmoil, or to establish the strength of the relationship between Jewel's and the Union's negotiators.

   If Burki does testify, then if the events surrounding his resignation bear on Burki's truthfulness, they would be relevant to cross-examination under Rule 608(b) "concerning the witness' character for truthfulness or untruthfulness." But as presented, neither party has given me enough to determine how such facts would bear on his truthfulness. If JEWEL wants to explicate the link more fully, it may do so and I would reconsider the question before Burki testified. But based on the information as submitted, I cannot determine whether the events actually relate to Burki's character for truthfulness.

8. MERK'S MOTION TO EXCLUDE EVIDENCE OF UNION REPRESENTATION OF PLAINTIFFS

   MERK moves to exclude any evidence by JEWEL of the Union's representation of the plaintiffs during the negotiations leading to the settlement between the 13 Union and JEWEL. JEWEL claims that such evidence is relevant in the damages stage of the trial, to show that JEWEL reasonably relied upon the Union 's apparent authority to represent the interests of the employees who had left JEWEL'S employ. JEWEL concedes that the law of this case is that the Union had no duty to represent the employees; but argues that they nonetheless purported to represent the employee s, and that that purported representation excuses JEWEL from liability.

   I will GRANT MERK'S motion. The trial is framed by JEWEL in its trial brief does not reach the common law agency issue. It is not, therefore, an issue that will be tried by this Court. Even if it had raised this as an issue for trial, the likelihood that former employees agreed that the Union would represent them in settlement negotiations following the wage cut is slight at best. JEWEL'S reliance on dicta from the Seventh Circuit suggesting the possibility of this agency relationship is misplaced, and it has failed to present or preserve the issue for trial.

9. MERK'S MOTION TO EXCLUDE EVIDENCE OF A PRIOR ORAL AGREEMENT

   MERK has asked that no evidence of a prior oral agreement between Jewel and the Union be 14 admitted; JEWEL has responded that it intends only to introduce evidence that (1) Petronella had participated in mid-term negotiations pursuant to what he understood was an oral reopener agreement; (2) those negotiations resulted in a change in the wage scale in 1970; (3) and Petronella was aware of those facts when he negotiated the agreement in 1983.

   So long as the evidence is limited as indicated, I will DENY MERK'S motion.

10. MERK'S MOTION TO EXCLUDE ANY EVIDENCE SUGGESTING THE EXISTENCE OF AN ORAL REOPENER AGREEMENT

   Finally, MERK asks me to exclude any evidence of the existence of an oral reopener agreement entered into at the time JEWEL and the Union signed the collective bargaining agreement in 1983. Granting such a motion would essentially obviate the need for any trial at all. But for the reasons that follow, I will DENY the motion.

   MERK claims JEWEL should be barred from introducing evidence about the reopener since (1) the reopener was not pled as an affirmative defense; (2) the reopener did not give JEWEL a right unilaterally to implement changes if and when the renegotiations failed; (3) the agreement is unenforceable since not ratified; (4) the agreement is prohibited 15 by Federal Labor policy.

(1) MERK'S first argument is frivolous. If there was an agreement to reopen the contract upon the happening of certain events, and those events happened, then the actions pursuant to that reopener do not constitute a breach of the collective bargaining agreement. An affirmative defense is a "yes but" defense: "yes" there was a breach, "but" I should not be held liable. JEWEL'S argument is that there was no breach, and is not an affirmative defense.

(2) MERK'S second argument is little more than frivolous. As JEWEL points out, the scope of any reopener is an issue of interpretation; its uncertainty is not grounds for excluding evidence about a reopener.

(3) Next MERK argues that even if there was an agreement, it is unenforceable since unratified. This argument is potentially very strong, though not strong enough to foreclose the admission of evidence of a reopener agreement.

There is strong authority for the proposition that an employer who knows of a ratification requirement, and who knows that a provision has not been ratified, cannot rely upon an unratified agreement. Texaco v. NLRB, 722 F2d 1226, 1236 (5th Cir 1984). Compare Deboles v. TWA, 16 552 F2d 1005, 1018 (3d Cir 1977); Meyerson v. Contracting Plumbers Ass'n, 606 F Supp 282, 287 (SD NY 1985). However, if there is a practice or understanding that the Union's agent may bind the Union without ratification, despite the requirement of ratification in the Union constitution, then the agreement may still be enforced against the Union. Central States Southeast and Southw est Areas Pension Fund v. Kraftco, 799 F2d 1098, 1112 (6th Cir 1986); NLRB v. Brother of Painters, 334 F2d 729, 731 (7th Cir 1964). JEWEL claims that it will show that the practice of the Union was to ignore the ratification requirements, and that it did that for a number of agreements.

This JEWEL needs to show. For if there was a requirement of ratification known by JEWEL, unless there was also an understanding that agreements would be enforceable notwithstanding the requirement, the oral reopener would not be enforceable.

The proper handling of this question of ratification, however, is not to exclude evidence of an unratified reopener. Rather, it is to require that the jury make specific findings about the ratification process. The jury will be asked, therefore, whether there was a ratification 17 requirement, and if there was, whether the Union and JEWEL had a practice of ignoring that requirement so that agreements outside the requirement were nevertheless enforceable. Obviously, MERK bears the burden on the first question; JEWEL on the second.

(4) Finally, MERK argues that an oral reopener is contrary to the policy of the NLRA, Section 8(d), 29 USC 158(d) and contrary to the parol evidence rule. This argument, like the others, must fail.

As JEWEL suggests, it is beyond dispute that nothing in the NLRA precludes a written reopener agreement. NLRB v. Red Lion Oil Co, 353 US 282 (1957). Oral reopener agreements, made as a part of the original contract, may be bad policy for both Union and company alike. (As this case evidences. See also Central States Southeast and Southwest Areas Pension Fund v. Gerber Truck Service, Inc, 854 F2d 1074, 1078 (7th Cir 1988).) But there is no federal policy requiring that all parts of a collective bargaining agreement be in writing. Certified Corp v. Hawaii Teamsters, 597 F2d 1269, 1272 (9th Cir 1979). The parties are free to structure their agreement as they wish.

Nonetheless, plaintiffs argue that admission of the oral reopener 18 is contrary to the parol evidence rule. There is no doubt that there is a parol evidence rule for collective bargaining agreements, Mohrv.Metro East Mfg, 711 F2d 69, 72 (7th Cir. 1983), and no doubt that the evidence and the agreement is parol. But the rule does not bar all parol evidence: parol evidence is only suppressed where the contract makes clear that the parties intended the written agreement to be a "complete expression of the agreement that they had reached, to the exclusion of all prior negotiations, whether oral or written." Farnsworth, Contracts 451 (1982).

In this case, there is no clear indication that the parties intended the written agreement to be a complete expression of all prior negotiations, and therefore that remains an issue for trial. The clause closest to an integration clause differs in an important respect from ordinary integration clauses. It states

This agreement is subject to amendment, alteration or addition only by a subsequent written agreement between and executed by the employer and the union.

Unlike the traditional integration clause, there is no representation that the agreement represents the complete understanding of the parties, and 19 merges all prior and contemporaneous understandings. Therefore, there is no clear predicate for applying the parol evidence rule to exclude evidence of an oral agreement.

   The motion to exclude evidence of an oral reopener agreement is DENIED. The parties are directed to present evidence on the ratification requirement sufficient to allow the jury to answer the qu estions outlined above.

11. REMAINING QUESTIONS ON DAMAGES

   Left are two issues concerning damages if the jury finds JEWEL breached the collective bargaining agreement. The parties have stipulated as to compensatory damages. MERK has asked for prejudgment interest; JEWEL has asked that the class be reduced to exclude those employees who were hired at the lower wage rate.

   Neither party has moved for summary judgment on these questions, but I believe it would be helpful for me at this stage to rule on the questions, subject to reconsideration following briefing after the trial. Therefore, I rule that

(1) the plaintiffs are entitled to prejudgment interest as a matter of law. Gorenstein Enterprises v. Quality Care-USA, 874 F2d 431, 436 (7th Cir 1989).

(2) the plaintiff class should be reduced by excluding those employees 20 who were hired after the unilateral wage reduction.

I will address more fully the reasoning behind this second conclusion in a written opinion to be issued before the end of trial. Again, I will reconsider either ruling upon motion after the conclusion of the trial, if in fact plaintiffs prevail, and after each side has had an opportunity to fully brief the questions raised.

Date: January 25, 1990