Roseburg Forest Products Co. v. Employment Division

835 P.2d 889, 313 Or. 301, 1992 Ore. LEXIS 112

• Court: Oregon Supreme Court
• Decided: June 18, 1992
• Docket: EAB 89-AB-1080, 89-AB-1081, 89-AB-1082; CA A62148; SC S37783
• Status: Published

Opinions

UNIS, J.

The issue presented in this case is whether a collective bargaining agreement (agreement) entered into between International Woodworkers of America, Local 3-3346 (union) and Roseburg Forest Products (employer) was in effect in January 1989, when employer unilaterally reduced the wages of its employees. Resolution of this issue determines whether the employees were entitled to unemployment benefits after going on strike in response to the employer’s unilateral reduction in wages. The Employment Appeals Board (EAB) awarded unemployment compensation benefits. The Court of Appeals affirmed. Roseburg Forest Products Co. v. Employment Div., 104 Or App 448, 802 P2d 73 (1990). We affirm.

We take the following undisputed facts from the Court of Appeals’ opinion, as supplemented by the information in brackets:

“This case arises from a labor dispute involving the [union] at employer’s plant in Roseburg (Plant 3). Employer is a large forest products company. In 1983, employer and [union] signed a collective bargaining agreement that was to be effective from June 1,1983, to June 1, 1986. * * *

U* * * * *

“In December, 1985, employer and [union] modified the agreement and extended it for two more years, through May 31, 1988. [The agreement contained an automatic renewal clause with separate provisions for changing and terminating the agreement.] On March 28, 1988, more than 60 days, but fewer than 90 days, before June 1, [1988,] employer notified [union] that it intended to revise and amend the agreement. On the same day, [union] notified employer that [union] also wished to amend it. Neither [union] nor employer gave notice of intent to terminate it. On January 5, 1989, the parties agreed that they had bargained to an impasse. On January 10, employer announced that, at the start of the day shift on January 11, [1989,] employer would unilaterally implement its final offer to the union. The new wage scale provided for a reduction in wages and fringe benefits at Plant 3. [Union] announced that it intended to strike and established pickets around Plant 3.

“[Union] members applied for unemployment benefits, but [the Employment] Division denied their applications. [Union] requested a hearing, and the referee affirmed the denial. The referee found that [Union] members were disqualified under ORS 657.200(1), which provides:

“ ‘An individual is disqualified for benefits * * * [if] the unemployment of the individual is due to a labor dispute which is in active progress at the * * * establishment * * * at which the individual is or was last employed or at which the individual claims employment rights by union agreement or otherwise.’

“[Union] then sought review by [the] EAB, arguing that its members were eligible for benefits under ORS [657.176(5)]:

“ ‘An individual shall not be disqualified from receiving benefits * * * [under ORS 657.200] if the individual ceases work or fails to accept work when a collective bargaining agreement between the individual’s bargaining unit and the individual’s employer is in effect and the employer unilaterally modifies the amount of wages payable under the agreement, in breach of the agreement.’

“[The] EAB reversed the referee’s decision and held that employer’s * * * notice of intent to revise and amend [given on March 28,1988,] was insufficient to terminate the agreement between [union] and employer, because, by operation of Article XXIV [of the agreement], the contract had already automatically been renewed and extended to June 1, 1989. [The] EAB concluded that employer had, therefore, unilaterally modified wages payable under the agreement.”

Roseburg Forest Products Co. v. Employment Div., supra, 104 Or App at 450-51.

If employer’s unilateral modification of the amount of wages payable under the agreement was a breach of the agreement that was in effect at the time of the strike, then the striking employees are not disqualified from receiving unemployment benefits under ORS 657.200. ORS 657.176(5). If there was no agreement in effect at the time of the strike, or if the employer’s unilateral reduction in wages was nota breach of the agreement, then the striking employees are disqualified from receiving unemployment benefits.

ORS 657.282 provides for judicial review of decisions by the EAB “as provided for review of orders in contested cases in ORS 183.310 to 183.550,” with an exception concerning the timing of petitions. ORS 183.482(8) provides in part:

‘ ‘ (a) The court may affirm, reverse or remand the order. If the court finds that the agency has erroneously interpreted a provision of law and that a correct interpretation compels a particular action, it shall:

“(A) Set aside or modify the order; or

“(B) Remand the case to the agency for further action under a correct interpretation of the provision of law.

sje * * *

“(c) The court shall set aside or remand the order if it finds that the order is not supported by substantial evidence in the record. Substantial evidence exists to support a finding of fact when the record, viewed as a whole, would permit a reasonable person to make that finding.”

On review, we must determine whether the EAB correctly interpreted the collective bargaining agreement, which turns on a question of law. OSEA v. Rainier School Dist. No. 13, 311 Or 188, 194, 808 P2d 83 (1991). The EAB determined that the agreement continued in effect after both parties gave notice of desire to change the agreement more than 60 days but less than 90 days prior to June 1,1988, and then were unable to agree on the changes.

A collective bargaining agreement is one type of contract which, if unambiguous, must be enforced according to its terms. OSEA v. Rainier School Dist. No. 13, supra, 311 Or at 194. Employer argues that the plain language of Article XXIV of the agreement prevents the agreement from renewing automatically once notice of desire to change the agreement has been given. Union counters that the plain language of the automatic renewal clause in Article XXIV resulted in the agreement renewing automatically for another year (through June 1, 1989), notwithstanding notice of desire to change the agreement. Union argues that the provisions for changing and terminating the agreement are separate and distinct, and that they operate independently with different consequences.

Article XXIV of the agreement provides:

“This agreement shall be a continuing agreement and shall remain in full force and effect until the first day of June, 1986, and shall remain in full force and effect to each succeeding June 1 thereafter subject to the following conditions:

“This agreement may be amended or revised at any time by mutual agreement between the parties hereto.

“Either party desiring to change the terms of this agreement shall notify the other party and present the changes desired in writing not less than sixty (60) days prior to June 1, 1986, or any succeeding June 1, and negotiations shall commence within ten (10) days after receipt of such notice by either party.

“Upon completion of negotiations or any or all desired revisions, the agreed-to revisions shall be incorporated into and become a part of this Agreement.

“Either party desiring to terminate this agreement shall notify the other party in writing not less than ninety (90) days prior to June 1 of any year. However, both parties agree to meet in negotiations within ten (10) days after receipt of such notice by either party for purpose of negotiating possible renewal of this Agreement.”

Employer argues that the phrase “subject to the following conditions” in the first paragraph of Article XXIV means that the agreement does not continue in any form if any of the items listed after that phrase occurs. Therefore, employer suggests, because notice of desire to change the agreement was given, the agreement did not continue in any form even though the notice to change the agreement was given less than the 90 days before June 1 required for notice to terminate the agreement. Union argues that the agreement continued in effect because notice of desire to change the agreement does not serve to terminate it.

Employer’s construction of the agreement is contrary to the plain language of the agreement.¹ The fact that Article XXIV establishes conditions to which the agreement is subject does not necessarily mean that the occurrence of any of those conditions terminates the agreement altogether. Rather, the opening paragraph — the automatic renewal clause — more accurately means that the agreement will continue in force in its same form unless something occurs to change it. If the notice-to-change provision which calls for an amendment is satisfied, the agreement continues as amended; if the notice-to-terminate provision which calls for termination is satisfied, the agreement terminates. It is necessary to consider which of these particular provisions is satisfied in order to determine whether its occurrence changes or affects the continuation of the agreement; the particular provision’s placement after the term “subject to” does not by itself mean that the agreement terminates if the condition is satisfied.

The message of Article XXIV with its automatic renewal clause is that the agreement shall be a continuing one. Paragraphs 2-4 are written with the assumption that the agreement will continue. Paragraph 2 states that the agreement may be amended or revised at any time by mutual agreement; paragraph 3 gives a specific procedure requiring negotiations toward reaching agreement on changes; paragraph 4 specifies that the “agreed-to revisions” become a part of the continuing agreement. The result is that if timely notice of desire to change the agreement is given and negotiations proceed, “the agreed-to revisions” become a part of the continuing agreement. Conceivably, negotiations could result in the decision that the agreement is satisfactory and need not be changed. A party’s invocation of only the specific procedure for changing the agreement does not result in termination of the agreement. Rather, the meaning of paragraphs 2-4 is that the agreement may be changed and that the agreement will continue in its same form subject to “the agreed-to revisions.”

The last quoted paragraph of Article XXIV (the notice-to-terminate provision)² operates from a different assumption than do the preceding paragraphs. It assumes that, once timely notice of desire to terminate the agreement is given, the agreement will not continue unless the parties negotiate renewal of the agreement. If a party wants to terminate the agreement altogether, the notice-to-terminate provision must be invoked by giving the required timely notice of desire to terminate. The 90-day notice requirement for termination of the agreement is not supplanted by the 60-day notice requirement for changing the agreement; if it were, the 90-day provision would be surplusage. The procedure for changing the agreement can itself only result in changing the agreement, not in terminating it (unless that is the agreed-upon change of the parties). Put another way, any change (including termination of the agreement) resulting from the provisions for changing the agreement in Article XXTV must be by mutual agreement; termination resulting from the provision for terminating the agreement will result unless there is mutual agreement not to terminate (i.e., termination results from unilateral notice of intent to terminate). Here, only timely notice of desire to change the agreement was given, so any change would require mutual agreement. There is no indication that, upon their failure to agree to changes, the parties agreed to terminate the agreement.

Our reading of Article XXIV does not prevent a party to the agreement from attempting to negotiate changes and then, if negotiations do not succeed, giving notice of desire to terminate the agreement. Notice of desire to change the agreement may be given as few as 60 days prior to the automatic renewal date. At that point, if negotiations do not result in satisfactory changes, it is too late to invoke the procedure for terminating the agreement during that contract year. But the notice of desire to change may be given much earlier. That is, notice of desire to change the agreement may be given early enough so that, if the negotiations do not produce satisfactory changes, there are more than 90 days before June 1 of the contract year and the party can still give timely notice of desire to terminate the agreement.

A collective bargaining agreement “is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. ’ ’ United Steelworkers v. Warrior & Gulf Navigation Co., 363 US 574, 578, 80 S Ct 1347, 4 L Ed 2d 1409 (1960). Employer and the dissent argue that employer’s interpretation of the contract language is consistent with and dictated by federal labor law, particularly in light of external factors which they use to help interpret the agreement. The interpretation proposed by the employer and by the dissent, however, implies termination even where termination was not intended {i.e., where notice of desire to change was given, and no party intended to do more than modify). Employer’s interpretation would force both parties to choose between continuing the current agreement and risking termination of the entire agreement after ineffective negotiations, when only an amendment or revision of the continuing agreement was intended. Further, employer’s interpretation would allow the contractual 90-day notice requirement for termination to be circumvented by a 60-day notice of desire to change. In effect, employer’s interpretation would, as previously stated, render the 90-day notice-to-terminate provision surplusage.

On the other hand, it is entirely consistent with federal labor law to assume, in the interest of labor peace and stability, that in the face of ineffective negotiations to change some terms of the agreement, the party that requested changes would prefer the unmodified agreement to no agreement at all. Even if the parties do prefer no agreement to the unmodified agreement, the mechanism for terminating the agreement is available and allows for negotiations aimed at changing and preserving the agreement.

Some collective bargaining agreements clearly provide that notice of intent to change the agreement does not serve to terminate the agreement. See, e.g., KCW Furniture, Inc. v. N.L.R.B., 634 F2d 436, 437-38 (9th Cir 1980) (interpreting agreement which contained a duration clause which expressly provided that “ ‘Notice of Opening’ is in nowise intended by the parties as a termination of this Agreement * * * nor as forestalling automatic renewal ***.”). Some collective bargaining agreements make it clear that either notice of intent to modify or notice of intent to terminate the agreement terminates the agreement. See, e.g., Pullman, Inc. v International Bro. of Boilermakers, Etc., 354 F Supp 496, 497 n 1 (ED Pa 1972) (Agreement provided that it “shall continue in effect from year to year thereafter unless either party hereto gives the other party written notice * * * of its desire to terminate or modify this Agreement. ”). Some collective bargaining agreements make it clear that notice of intent to terminate the agreement can only be sent after notice of intent to modify has been sent and negotiations do not produce agreement. See, e.g., Labor Board v. Lion Oil Co., 352 US 282, 286, 77 S Ct 330, 1 L Ed 2d 331 (1957) (Agreement contained provision for modifying agreement, followed by provision that “[i]f an agreement with respect to amendment of this agreement has not been reached within the [time limit provided], either party may terminate this agreement [by following the specified procedure].”). Some courts have interpreted ambiguous agreements to mean that notice of intent to modify the agreement serves to terminate the agreement; others interpret them to mean that notice of intent to modify the agreement does not serve to terminate the agreement. See Annot, 57 ALR Fed 393, 395 (1982) (“[T]he implicit import of the above cases is that any effect that a notice given pursuant to the [National Labor Relations Act] may have on the termination or renewal of a collective bargaining contract must arise from the terms of the contract and not by force of the [National Labor Relations Act].”); Annot, 17 ALR2d 754,755 (1951) (“It is difficult to formulate general rules for the construction of automatic renewal clauses, since the wording in them varies and must necessarily govern the interpretation which the courts will place on them.”).

Federal labor law policies and goals, therefore, do not dictate a particular interpretation of the agreement. The parties to an agreement may choose, consistent with fostering labor peace and stability, to provide either that a notice of intent to change does or that it does not serve to terminate the agreement. The key is the language used by the parties in the agreement.

We have analyzed the language of the agreement ante, and we have concluded that a notice of desire to change the agreement does not serve to terminate the agreement. The dissent argues that the plain language of the agreement dictates the opposite conclusion and argues that, if the agreement is ambiguous, the ambiguity should be resolved by resort to a consideration of the practical construction given to the language by the parties.³ Specifically, the dissent points to a letter from the union which stated that “if no recommended settlement is reached up to and including January 4, 1989 that a legal impasse will be reached.” The dissent argues that an impasse can only exist in the absence of a collective bargaining agreement, so the parties must have assumed that the agreement was terminated after the notice of intent to modify was given.

“ ‘Impasse’ is[, however,] an imprecise term of art.” Laborers Tr. Fund v. Advanced Lightweight Conc., 484 US 539, 543 n 5, 108 S Ct 830, 98 L Ed 2d 936 (1988) (quoting with approval the Court of Appeals for the Ninth Circuit). The only way that the use of the term “impasse” in the communication between the parties can suggest that the parties understood the agreement to mean that notice of desire to change terminates the agreement is if the parties understood that impasse could only be reached in the absence of an agreement and used the term in that sense. There is no evidence that this is the case; in fact, the employer, while it quotes the union’s letter with the term “impasse,” does not in its arguments to this court draw significance from the use of that term. The significance of the term is ascribed by the dissent.

It appears that the parties understood the term “impasse” to mean the point at which their negotiations toward changing the agreement had failed, which says nothing about whether or not the agreement was still in existence. It is appropriate to use the term “impasse” in this manner.⁴ Parties to an agreement in which the notice of intent to change did not terminate the agreement have used the term “impasse” in this same context, as has the National Labor Relations Board. KCW Furniture Co., 247 NLRB 541, 542, 103 LRRM 1194, enforced 634 F2d 436 (9th Cir 1980) (“Having found that the contract automatically renewed itself on April 1, we[, the National Labor Relations Board,] find that Respondent had no right to make unilateral changes in that contract after ‘impasse’ was reached in the bargaining for a new contract.”). It is improper to base an interpretation of the agreement on the parties’ use of the term “impasse” by ascribing a particular meaning to the term and then by assuming, in the absence of any evidence suggesting it to be true, that that is what they meant.⁵

We conclude that the EAB correctly applied the law in determining that the agreement was not terminated because neither party had given the required timely notice of desire to terminate the agreement and because notice of desire to change the agreement does not operate as notice of desire to terminate the agreement. Under this interpretation, the collective bargaining agreement had automatically been renewed, as the EAB held, and, therefore, was still in effect between the parties at the time of the strike in January 1989, and there is substantial evidence in the record to support EAB’s finding that the agreement was breached by the employer’s unilateral reduction in wages at that time. Union members were not, therefore, disqualified from receiving unemployment benefits under ORS 657.176(5).

The decision of the Court of Appeals is affirmed. The order of the Employment Appeals Board is affirmed.

1 Employer is essentially arguing, as does the dissent, that “subject to the following conditions” means “unless.” This is illogical. For example, the second paragraph of Article XXIV could have stated: “If the cost of living increases in a given year by more than 10 percent, the base wage under this agreement for the following year will increase by that percentage.” Clearly, the agreement would not terminate if this condition occurred. If the cost of living increased in a given year by more than 10 percent, the agreement would continue with the modification in the base wage. If, however, the second paragraph had stated that “if the cost of living increases in a given year by more than 10 percent, this agreement will not be renewed for the following year,” then if the condition occurred, the agreement would terminate. If the term “subject to the following conditions” is used, the conditions and their consequences follow. If the term “unless” is used, only the conditions follow, the consequences having already been established.

2 There is one additional paragraph which appears to be part of Article XXIV which has not been considered in the arguments of the parties and which does not change our analysis. It provides: “The above provisions notwithstanding, this initial Agreement shall be closed to June 1,1986.”

3 There is no evidence of the bargaining history of the language in question available in the record.

4 See Gorman, Basic Text on Labor Law — Unionization and Collective Bargaining 463-64 (West 1976), where it is stated:

“When the employer announces an intention to change the status quo on a mandatory subject, [wages, hours and other terms and conditions of employment,] sections 8(a)(5) and 8(d) [of the National Labor Relations Act] do play an important role. On occasion, the employer will accompany its announcement with an offer to the union to bargain; the change in working conditions is made only after the union refuses to bargain or after bargaining has reached an impasse. Whether such a post-impasse change is lawful depends once again upon whether the subject is ‘contained in’ an existing labor agreement.

“If the subject is ‘contained in’ the agreement, it is illegal for the employer to alter working conditions in midterm — even if it has given notification to the union and to the appropriate mediation agencies and even if it has bargained to impasse. Section 8(d) clearly affords the union protection for the life of the contract against ‘any modification’ against its will of provisions which it managed to have expressly embodied in the written agreement. To permit the employer to implement such modifications, after impasse or after a union refusal to bargain on that matter at all, would make a mockeiy of the directive in section 8(d) that neither party shall be required ‘to discuss or agree to’ any proposal for midterm modification of ‘terms and conditions contained in a contract.’ C & S Indus., Inc.[, 158 NLRB 454] (1966) (unlawful to introduce incentive wage plan provisions, even assuming employer first made a sufficient offer to bargain). In short, the employer may modify a term ‘contained in’ a labor contract only if it secures the consent of the union to do so; it is insufficient that it bargain to impasse with a union which remains intransigent and it is irrelevant that the employer asserts that the modifications are compelled by dire economic necessity. Oak Cliff-Golman Baking Co.[, 207 NLRB 1063] (1974) (midterm wage reductions after notice to and discussions with union).”

5 There are points of practical construction which also weigh against employer’s position. For example, while employer was obligated by the status quo doctrine to maintain the status quo during bargaining, the employer did not do so, but instead continued to follow the terms of the agreement by increasing wages as required by the agreement.