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Third Circuit Takes Supreme Court Cue and Rejects “Implied” Union Contracts

By Mark Theodore, Joshua Fox & Rachel Kessler on April 4, 2022
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On March 30, 2022, three judge panel of the Third Circuit Court of Appeals unanimously overruled prior precedent allowing “implied” contracts to survive the expiration of a written agreement. The instant panel held, instead, that “implied” contract provisions that “have no durational limit of their own” are “governed by the general durational clauses of the CBAs.”  Pittsburgh Mailers Union Local 22, et al., v. PG Publishing Co. Inc., No. 21-1249 at *9 (3d Cir. 2022) overruling Luden’s Inc. v. Local Union No. 6 of the Bakery, Confectionery & Tobacco Workers International Union 28 F. 3d 347 (3d Cir. 1994). In upholding the District Court’s ruling granting summary judgment in favor of the Company, the panel refused to require the Pittsburgh Post-Gazette (“Post-Gazette”) to arbitrate a grievance with unions for its workers under their expired contract.

Factual and Procedural History

The Post-Gazette and the unions had a CBA which included an agreement to arbitrate disputes on a case-by-case basis. Two months before the contract expiration, the Company sent letters to the unions disavowing all contractual obligations at the CBAs expiration, other than established wages, hour and terms and condition of employment. While bargaining over a new contract, the Post-Gazette refused to cover a yearly increase in the unions’ health care costs, as it had under previous contracts. The unions claimed that the Post-Gazette violated the expired CBA by failing to provide these health benefits and sought to arbitrate the issue, citing Luden to support their claim that the Post-Gazette should still honor the arbitration clause in the expired contract.

After discovery, the unions and the Post-Gazette each moved for summary judgment. The District Court granted Post-Gazette’s motion for summary judgment, holding that the court could not compel the Company to arbitrate. The unions appealed.

The Third Circuit’s Analysis

In 1994, the Circuit held in Luden’s that “an arbitration clause may survive the expiration of termination of a CBA intact as a term of a new implied-in-fact CBA unless (i) both parties in fact intend the term not to survive, or (ii) under the totality of the circumstances either party to the lapsed CBA objectively manifests to the other a particularized intent [], to disavow or repudiate that term.” Luden’s, 28 F.3d at 364.

However, the Supreme Court issued two decisions in 2015 and 2018 undercutting Luden. In both rulings, the Supreme Court held that CBAs do not “infer” lifetime benefits unless the language explicitly says otherwise and that courts should interpret CBAs “according to ordinary principles of contract law.” M&G Polymers USA, LCC v. Tackett, 574 U.S. 427 (2015); CHN Industrial N.V. v. Reese, 138 S. Ct. 761 (2018).

In its decision to overrule Luden, Judge Roth explained that in keeping with these Supreme Court precedents, if a specific provision does not have its own durational clause, the general durational clause of the CBA applies. Further, the Panel reasoned that as a matter of contract law the arbitration provisions had no durational limit, and as such, the obligation to arbitrate expired with the CBA.

Takeaways

This decision—driven by clear rulings from the Supreme Court– is consistent with those in the Eighth, Ninth and Seventh Circuits, indicating that the Circuits are moving towards a general consensus regarding whether provisions in a CBA survive the expiration of the CBA. Employers with operations in other circuits should take note that certain provisions of the expired CBA – such as arbitration provisions – may survive expiration,–until such circuits rule on the issue in light of the Supreme Court precedent.

We will continue to monitor these developments and keep you informed as to any updates in other circuits.

Photo of Mark Theodore Mark Theodore

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S.

Mark has extensive experience representing employers in all matters before

…

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S.

Mark has extensive experience representing employers in all matters before the NLRB, including representation petitions, jurisdictional disputes and the handling of unfair labor practice charges from the date they are filed through trial and appeal. Mark has acted as lead negotiator for dozens of major companies in nearly all industries, including multi-unit, multi-location, multi-employer and multi-union bargaining.

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Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

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Photo of Rachel Kessler Rachel Kessler

Rachel Kessler is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration group.

Read more about Rachel KesslerEmail
  • Posted in:
    Employment & Labor
  • Blog:
    Labor Relations Update
  • Organization:
    Proskauer Rose LLP
  • Article: View Original Source

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