Issue
In Southern California Painters & Allied Trade District Council No. 36 v. Best Interiors, Inc., (2004 Daily Journal, D.A.R. 2455, 9th Cir. (Cal.), February 25, 2004), the Ninth Circuit Court of Appeals addressed the issue of whether a district court erred in granting an employer’s motion for summary judgment in a labor organization’s lawsuit which claimed that the employer accepted a joint agreement, which it did not sign, by implementing the agreement’s wage and benefit provisions and negotiating modifications to the agreement.
Facts
Southern California Painters & Allied Trades District No. 36 (Union) is a party to an industry-wide collective bargaining agreement with the Western Wall & Ceilings Contractors Association (WWCCA), of which Best Interiors, Inc. is a member. Best and the Union were signatories to a Joint Agreement (Agreement) from April 1999 to September 2000. Prior to September 2000, Best informed Union that it would not be a party to the agreement after it expired. In spite of this, after the WWCAA negotiated a 2000-2003 Agreement, Best voluntarily complied with the wage and benefit portions of the Agreement. Best also informed Union that it wanted to negotiate some modifications of the terms of the new agreement with respect to certain employees.
Best and the Union met on three occasions to negotiate the modifications. At the third meeting, the parties agreed that the Union would reduce the agreed upon modifications to writing. The Union indicated orally to Best’s president that it felt that the parties had reached an agreement and the president stated, “Okay, we got there, great.” The parties then shook hands and left the meeting. That same day, the Union faxed Best a memorandum of understanding. Best asked the Union to make minor typographical changes, which it did. However, Best never signed the agreement, but instead met with another labor organization and reached an agreement that it would represent the employees previously represented by the Union. Best subsequently notified Union that it was repudiating the collective bargaining agreement.
The Union filed a lawsuit arguing that Best adopted the 2000-2003 Agreement by implementing its terms and then assented to the memorandum of understanding after negotiations. The district court granted summary judgment against the Union on the ground that federal law does not allow parties to adopt a labor agreement by conduct.
Appellate Court Decision
The Court of Appeal held that the district court erred in granting summary judgment because a question of fact remained as to whether Best adopted the Agreement. The Court noted it had previously held that, based on a National Labor Relations Board (NLRB) decision, an employer could not adopt, by its conduct, a collective bargaining agreement (CBA) governed by 29 U.S.C. § 158(f), which covers employees in the building and construction industry. However, the Court noted that a more recent NLRB decision concluded that the adoption-by-conduct doctrine was applicable to section 158(f) agreements. In that case, the NLRB concluded that an employer had adopted a CBA agreement by its conduct because it complied with the terms of a previous CBA by paying union dues and meeting with the union about labor disputes. The Court noted that it must give deference to NLRB’s decisions and decided to adopt the reasoning of the more recent NLRB decision.
The Court concluded that questions of fact remain as to whether Best adopted the Joint Agreement and the memorandum of understanding by its conduct. The Court sent the matter back to the district court so that the Union could proceed with its lawsuit.
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