Opinion
No. 97 C 8973
June 16, 2000
MEMORANDUM OPINION
Before the court is the Motion for Summary Judgment of Defendant National Electrical Contractors Association. For the reasons that follow, the motion for summary judgment is denied in its entirety.
BACKGROUND
In the business of electrical contracting, electricians are organized and represented by the International Brotherhood of Electrical Workers ("the IBEW"). The union is organized by geographical area into local shops which represent union members in their designated area.
Likewise, electrical contractors are represented by the National Electrical Contractors Association ("NECK"), an incorporated trade association. NECA has roughly 118 local chapters whose jurisdictional area is matched up with that of a local branch of the IBEW.
The National NECA and the International IBEW do not negotiate collective bargaining agreements. Rather, CBA's are directly negotiated between the local NECA chapter and the local union shop. By paying a monthly fee into a NECA fund and signing a letter of assent authorizing the local NECA chapter to represent it in collective bargaining negotiations with the local union shop, an individual electrical contractor avails itself of the benefits of the CBA and correspondingly becomes bound by its restrictions and obligations. While every CBA must be approved by the International IBEW, the National NECA does not hold any such veto power.
On November 9, 1988, Plaintiff Amp-Rite Electric Company, Inc. ("Amp-Rite") signed a letter of assent binding itself to the CBA ("the CBA") negotiated between the National Electrical Constructors Association, Eastern Illinois Chapter ("NECA Illinois") and Local 701 of the IBEW ("Local 701"). The events at issue occurred primarily within the geographic area occupied by Local 176 of the IBEW ("Local 176") and thus are governed by the CBA executed between Local 176 and Illinois NECA covering the period between June 1, 1996 and May 31, 1998.
The CBA incorporates a so-called portability provision in Section 3.11, which was originally negotiated and agreed to by NECA and the International IBEW in early 1993. Section 3.11 permits a contractor who is bound to an agreement with a local IBEW other than Local 176, who is working within the territory covered by Local 176, to transport up to four union members from its local electrician's union into the jurisdiction of Local 176 to perform the contracted-for work, and two union members for specialty or service and maintenance work. The provision facilitates the bidding, planning, and execution of job bids by traveling electrical contractors (those contractors who operate outside of the jurisdiction of their local union shop).
Section 3.11 also incorporates a provision negotiated and agreed upon in July 1994 by NECA and the International IBEW. The language, known as "Category I language," permits the Council on Industrial Relations ("the CIR") to review portability decisions made by local labor-management committees ("the local committee"). The review may be initiated by the offending electrical contractor requesting NECA to conduct a review of the committee's decision. The CIR's review is in turn triggered by the recommendation of either the appropriate NECA Regional Executive Director, or IBEW's International Vice-President, if one of them should determine that the actions of the local committee violates the intent of the national agreement on portability.
The dispute at issue arose in October 1996 when Local 176 filed a grievance against Amp-Rite alleging that Amp-Rite violated the portability agreement by using within its jurisdiction five electricians from outside Local 176's jurisdiction, one more than the four permitted by the CBA. On October 25, 1996, the local committee restricted Amp-Rite to one-man portability for the period of one year. Amp-Rite promptly sought assistance from Richard Parenti, the Executive Director of NECA's Midwest Region Office, who undertook an investigation of the situation, the thoroughness of which is in dispute. Thereafter, Parenti decided that the local committee's decision was not contrary to the intent of the parties to the National Agreement on Portability, but was within the authority of the local committee. Hence, he did not recommend that the CIR examine its decision.
Amp-Rite filed a grievance in April 1997, alleging that it was unable to complete electrical work because Local 176 refused to refer foremen, journeymen, and apprentices to Amp-Right and instructed another contractor not to work for Amp-Rite. Local 176 took this action because Amp-Rite was not fully complying with prior decisions by the local committee. When the Labor-Management Committee met on May 22, 1997 to consider the grievance, it was unable to reach a decision.
On October 3, 1997, the local committee permanently restricted Amp-Rite to one-man portability, which NECA recommended be reviewed by CIR. On November 17, 1997, CIR ruled that Local 176 could not use the employee referral procedures under the CBA as a method of enforcing prior local committee decisions. On February 12, 1998, the CIR reversed the Labor-Management Committee's ruling of October 3, restoring Amp-Rite's portability rights as of March 1, 1998.
Amp-Rite filed suit, bringing inter alia breach of contract claims against NECA and NECA Illinois under Section 301 of the Labor-Management Relations Act of 1947, as amended, 29 U.S.C. § 185 ("LMRA"). NECA subsequently filed this summary judgment motion.
LEGAL STANDARD
Summary judgment is appropriate if the pleadings, answers to interrogatories, admissions, affidavits and other materials show that "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(b). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment."Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The party seeking summary judgment carries the initial burden of showing that no such issue of material fact exists. Pursuant to Rule 56(b), when a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue of material fact and that the moving party is not entitled to judgment as a matter of law. See Anderson, 477 U.S. at 250.
In making our determination, we are to draw inferences from the record in the light most favorable to the non-moving party. We are not required to draw every conceivable inference, but only those that are reasonable.See DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir. 1987). The nonmovant may not rest upon mere allegations in the pleadings or upon conclusory statements in affidavits; rather, the party must go beyond the pleadings and support his contentions with proper documentary evidence. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Rule 56 mandates the entry of summary judgment against a party who fails to establish the existence of an element essential to that party's cause of action. See Celotex, 477 U.S. at 422. It is with these principles in mind that we conduct our analysis of the parties' briefs.
DISCUSSION
I. Section 301 Liability
NECA initially argues that it did not owe a duty to Amp-Rite under Section 301 of the Labor-Managment Relations Act of 1947, as amended, 29 U.S.C. § 185 ("the LMRA"). However, NECA made this very same argument in its motion to dismiss, and we had already ruled that as a matter of law, NECA may be sued under Section 301, and the complaint was sufficient to state such a claim. See Amp-Rite Electric Co., Inc. v. International Brotherhood of Electrical Workers, 97 C 8973, 1999 WL 33896 at *5 (N.D. Ill. Jan. 15, 1999). In that opinion we noted that the relationship between NECA and NECA Illinois, as plead in the complaint, was the key factor permitting NECA to be sued under Section 301. See id. Given that our opinion was in response to a motion to dismiss where our ruling was not a final determination of this issue, but was based solely on the pleadings, for this summary judgment determination we will analyze whether the uncontested evidence establishes that NECA Illinois was NECA's agent. Put another way, does the undisputed evidence show that the relationship between NECA and NECA Illinois still show that NECA was sufficiently foreign to the labor agreement to warrant summary judgement in its favor. Because Amp-Rite addresses the agency issue in its brief, it has not waived the issue of whether NECA may be sued under Section 301.
Our determination of whether NECA and NECA Illinois had an agency relationship sufficient to impose liability upon NECA under Section 301 first requires us to determine whether to apply federal agency law, as NECA argues, or Illinois law, as utilized by Amp-Rite. It is undisputed that for agency determinations under the LMRA, courts utilize federal agency common law. See Moriarity v. Glueckert Funeral Home, 155 F.3d 859, 866, n. 15 (7th Cir. 1998) (citing Textile Workers Union of America v. Lincoln Mills of Alabama, 353 U.S. 448, 456-67 (1957)). Thus, we will look to federal law to determine whether Illinois NECA was an actual or apparent agent of NECA. See Moriarity, 155 F.3d at 865-66.
NECA argues that it is entitled to summary judgment because it is a separate and autonomous entity from NECA Illinois, and it is not the entity that negotiates collective bargaining agreements (NECA Illinois does). NECA also argues that it does not possess sufficient control over NECA Illinois, or its other chapters, to impose upon it an agency relationship. Finally, NECA contends that NECA Illinois is not its agent merely because it voluntarily adopted the Category I language. We believe that Amp-Rite has tendered evidence sufficient to demonstrate that the nature of the relationship between NECA and NECA Illinois is not so readily defined, but is a factual issue precluding summary judgment.
The determination of whether a party had the authority to bind another to its actions hinges on whether the party was an actual or apparent agent of the other. Actual authority may be express or implied. See Moriarity, 155 F.3d at 866. The determination of whether implied authority exists is conducted from the vantage point of the third-party:
Implied authority is that authority which is inherent in an agent's position and is, simply, actual authority proved through circumstantial evidence. Actual authority "to do an act can be created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal's account." In contrast, "apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him." In other words, apparent authority is created by the same method as that which creates actual authority, except that the manifestation of the principal is to the third person rather than to the agent.Moriarity, 155 F.3d at 866 (citations omitted).
Courts should look beyond any written instrument to determine whether an agency relationship exists, and should focus on the actual practices and conduct of the entities. See U.S.C.C. Mgmt. Co. v. Ogden Allied Security Svcs., Inc., 90 C 1389, 1991 WL 274445 (N.D. Ill. Dec. 13, 1991).
Plaintiff calls our attention to our prior decision in U.S.C.C., arguing that its outcome controls our instant determination. U.S.C.C. concerned a breach of contract dispute between a office-building manager and a janitorial and security services' contractor. The contractor filed a counterclaim for breach of contract and unjust enrichment against the building owners, who then moved for summary judgment claiming that they were not parties to the contract, nor did an agency relationship exist between them and the management company. The owners argued that a provision in the management agreement explicitly provided that all of the manager's actions were performed in its role as an independent contractor, and the owners were not liable to anyone retained by the manager. See U.S.C.C., 1991 WL 274445 at *1.
In our analysis, we noted that the management agreement left the owners with a significant amount of control over the manager. See id. at *3. In addition, the managers and the owners had interlocking management. See Id. We additionally found that the language in the management agreement was not dispositive on issues of liability. See id. Thus, we held that a question of fact existed as to whether an actual agency relationship existed between the parties. See id. at *3-4.
As in U.S.C.C., the NECA's bylaws (i.e., the agreement establishing the relationship between the alleged principal and agent, NECA and NECA Illinois), seeks to dispel any notion of agency between the parties. Article III, Section 13 of the bylaws reads that "[n]o local chapter, its employee(s), officer(s), or representative(s) are authorized to act on behalf of the National Association." However, as in U.S.C.C., Amp-Rite tenders evidence that the NECA Illinois acted as NECA's agent in contradiction of the express language, creating an issue of fact as to the true relationship between the parties. Specifically, Amp-Rite points to other bylaws providing that: (1) NECA has approval power over the bylaws of each chapter; (2) NECA may revoke the bylaws of a chapter that submits unacceptable bylaws, violates the bylaws or NECA's constitution in some other fashion; (3) NECA requires its chapters to either incorporate the name "NECA" into their chapter name, or indicate their affiliation in some other fashion; (4) NECA requires the chapters to incorporate certain provisions in their bylaws; (5) NECA compels the chapters to file all collective bargaining agreements upon approval; (6) NECA requires all chapter members to likewise join NECA; (7) NECA designated that the chapters would collect the member dues and service charges for it from the chapter members; and (8) NECA's Board of Governors consists of Governors from each chapter.
While NECA is not a traditional employer, in the sense that a building owner may be, we believe U.S.C.C. is nevertheless analogous because as with the situation in U.S.C.C., Plaintiff seeks to bind NECA to the contractual obligations negotiated by NECA Illinois. The relationship between NECA and its chapters creates at minimum a question of fact regarding any actual agency relationship between the parties. NECA has the power to change the territory size of its chapters. See National Electrical Contractors Ass'n, Inc. v. Kansas Chapter, National Electrical Contractors Ass'n, Inc., 46 F. Supp.2d 1174, 1177-78 (D. Kan. 1999)aff'd, 203 F.3d 835 (10th Cir. 2000). NECA's bylaws indicate that NECA has a significant amount of control over its chapters as enumerated above. As shown in NECA, it has not let that authority lie dormant, but pursuant to NECA's bylaws recently sought to exercise it to place the Kansas NECA chapter in sponsorship. See NECA, 46 F. Supp. 26 at 1186. Specifically, NECA sought to wrest control of the chapter's operations from its members and officers. See id. The court found that such a remedy was provided for under NECA's bylaws, and granted a preliminary injunction to NECA precluding the chapter from interfering with NECA in governing the chapter. See id. at 1184-1187.
Furthermore, NECA's board of governors consists of individuals drawn from its chapters. While we are not suggesting that the board and the chapters are in effect one entity, a factual question remains as to the degree of intertwining of the management of the two entities. Thus, NECA and NECA Illinois have interlocking management to some degree, raising a question of fact for jury determination as to whether an actual agency relationship existed between NECA and NECA Illinois. See U.S.C.C., 1991 WL 274445 at *2. For the same reasons we believe that there are factual issues as to whether NECA Illinios had an apparent agency relationship with NECA. See U.S.C.C. Mgmt. Co., 1991 WL 27445 at *4. Therefore, we deny NECA's motion requesting that we determine as a matter of law that it may not be liable under Section 301 of the LMRA.
II. Section 3.11 of the CBA
NECA next argues that it does not owe Amp-Rite any duties under Section 3.11 of the CBA (the portability provision). Section 3.11 grants both NECA and the IBEW the right to request the CIR to review any potability decisions rendered by a local labor/management committee. The express language of the agreement sets the standard for NECA's decision on whether to recommend that CIR review the portability decision by granting it the right to request review of "any decision of a local labor/management committee that may be contrary to the intent of the parties to the National Agreement on Employee Portability." As part of its Section 301 count against NECA, Amp-Rite also complains that NECA, through regional executive director Parenti, abused its discretion by failing to recommend that the CIR review the October 21, 1996 decision of the labor/management committee restricting Amp-Rite's portability to one worker for a one-year period.
It is undisputed that under Section 3.11 NECA had the discretion to request CIR review. However, Amp-Rite claims tat Section 3.11 also incorporated an implied covenant of good faith and fair dealing, which Parenti/NECA breached by failing to conduct a proper investigation. The implied covenant of good faith and fair dealing between contracting parties mandates that a party vested with discretion may not exercise that discretion in an arbitrary and capricious fashion, but must act reasonably. See Oil Express National, Inc. v. Burgstone, 958 F. Supp. 366, 369 (N.D. Ill. 1997). If the discretion-holder exercises it in bad faith it may give rise to an independent cause of action. See id.
Illinois law includes an implied covenant of good faith and fair dealing into the obligations and duties contained in every contract. See Beraha v. Baxter Health Care Corp., 956 F.3d 1436, 1443 (7th Cir. 1992). As such, in appropriate circumstances the implied covenant of good faith and fair dealing may "support a cause of action," so long as the claim is in tandem with a breach of an express contract provision. See Scottsdale Ltd. Pship v. Plitt Theatres, Inc., 97C8484, 1999 WL 281085 at *7 (N.D. Ill. Mar. 31, 1999). However, the lack of good faith by itself is never a separate and independent basis of duties for contracting parties, nor may it be an independent cause of action. See id.
Amp-Rite argues that the evidence shows that Parenti should have decided that the October 21, 1996 decision was contrary to the intent of the National Portability Agreement. The portability provision was negotiated for two purposes. First, to permit electrical contractors to bid for and obtain work within geographic areas outside of the jurisdiction of the local union shop from which they regularly drew workers. Amp-Rite argues that the October 21, 1996 decision is contrary to permitting portability.
Amp-Rite asserts that Parenti failed to conduct an adequate investigation on its behalf Specifically, Amp-Rite alleges that Parenti conducted four reviews of portability decisions by local labor/management committees, and Amp-Rite's situation is the only one in which he failed to appoint a field investigator. It also contends that Parenti never communicated with Amp-Rite regarding his decision or his reasoning for not making the necessary recommendation to the CIR. Furthermore, Amp-Rite asserts that because Parenti believed his role was solely to determine whether Amp-Rite received due process and whether the committee exceeded its authority, Parenti misconstrued his mission. It is well-settled that judgment errors do not rise to the level of bad faith. See Oil Express, 958 F. Supp. at 369. Whether Parenti acted in good faith in his review and actions surrounding the portability restrictions is very much a matter of material dispute. There are sufficient facts present, when viewed in the light most favorable to Amp-Rite, to preclude an award of summary judgment at this time.
III. Plenary Review
Finally, NECA argues that the October 1996 decision of the local committee and the February 1998 decision of the CIR are binding, and its action against NECA improperly seeks plenary review of said decisions. As we previously ruled in our opinion on the motions to dismiss Amp-Rite's third amended complaint:
also unpersuasive is NECA Illinois' third argument that CIR's failure to award damages to Amp-[Rite] in Amp-[Rite]'s disputes with the Union precludes an award of damages in this case. The CIR had before it only the issues of damages in the portability and referral disputes between Amp-[Rite] and the Union. The dispute between Amp-[Rite] and NECA Illinois is based on an entirely different theory and was not before the CIR. More importantly NECA Illinois was not even a party to that matter.See Amp-Rite Elec. Co., Inc. v. Int'l Brotherhood of Electrical Workers, 97C8973, 1999 WL 33896 at *7 (N.D. Ill. Jan. 15, 1999). Thus, we held that CIR's decision had no preclusive effect upon the current dispute.See id.
In its reply brief, NECA drops its assertion that the CIR's decision has a preclusive effect, instead limiting its fire on the October 1996 decision of the local committee. We reiterate our view that the CIR's decision has no preclusive effect upon this case. The local committee was solely reviewing Amp-Rite's alleged violation of the portability provision. The dispute between Amp-Rite and NECA is grounded on an entirely different theory that was not before the local committee, and NECA was not a party to that matter. Indeed, its involvement occurred after the decision of the local committee. Consequently, the argument that Amp-Rite is seeking plenary review of the CIR decision is misplaced.
CONCLUSION
The defendants motion for summary judgment is denied in full.