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May 9 — An Indiana manufacturer was bound by a collective bargaining agreement it negotiated with an International Brotherhood of Teamsters local even though employees signed a decertification petition before the employer signed the contract, the U.S. Court of Appeals for the Seventh Circuit held.
The ruling underlines the importance to negotiators of pinpointing when and how discussions about a union contract develop into a final agreement that can't be repudiated.
Polycon Industries Inc. claimed it never reached a “meeting of the minds” with International Brotherhood of Teamsters Local 142. However, Judge Richard A. Posner wrote for the court May 9 that the National Labor Relations Board was “clearly correct” in finding the company illegally repudiated its agreement with the union.
The NLRB ordered Polycon to sign the negotiated agreement and to comply with its terms until the contract expires. Polycon's challenge of the board order “borders on the frivolous,” Posner wrote.
According to the decision and NLRB records (363 N.L.R.B. No. 31, 204 LRRM 1957 (2015)), Polycon had largely agreed with Local 142 on the terms of a contract by January 2013 but had not yet signed an agreement.
In March, the employer's attorney asked that the proposed agreement be revised in light of Indiana's adoption of a right -to-work statute. The union drafted language that a union shop clause in the agreement would not be implemented “as long as the Indiana Right-To-Work statute remains in effect,” and the company lawyer responded on May 3, 2013, that the language was “fine.”
The lawyer asked Local 142 to prepare a final version of the contract and said Polycon would sign as long as it was “consistent with our agreement.”
On May 7, the union e-mailed the requested contract text, but the employer two days later refused to sign the contract, relying on a decertification petition that was then being circulated by employees.
The petition was eventually filed with the NLRB on May 22, but it was blocked by the union's filing of an unfair labor practice charge, which challenged the company's refusal to sign the contract.
Posner said “[t]he decertification petition may have been signed by a majority of the employees as early as May 9, and by May 22 clearly commanded a majority, but either date was too late for Polycon to repudiate a collective bargaining agreement to which the company had agreed on May 3.”
The court rejected contention of the employer's attorney that a final agreement required additional approvals by the company, stating there was no evidence the attorney lacked authority to speak for the company.
Finding the collective bargaining agreement created a conclusive presumption that Local 142 had the support of a majority of Polycon's employees, the court agreed with the NLRB that refusing to recognize the local and honor the agreed contract violated the National Labor Relations Act.
Judges William J. Bauer and Joel M. Flaum joined in the opinion.
Steven A. Johnson of Johnson, Stracci & Ivancevich, LLP, in Merrillville, Ind., argued for Polycon Industries Inc. NLRB attorney Kyle A. deCant in Washington argued for the board.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/Polycon_Indus_Inc_v_NLRB_No_153675_153859_2016_BL_146668_7th_Cir_.
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