Wednesday, March 19, 2014

3d Cir. on Severability of Indefinite CBA Termination Clause

The Third Circuit recently issued an interesting non-precedential opinion in the world of collective bargaining: Int'l Union of Op. Engineers, Local Union No. 542 v. Allied Erecting and Dismantling Co. (opinion here).

The setup is pretty simple. Management and the union entered into a CBA with a severability clause and the following termination clause:
[T]his Agreement shall terminate upon [Allied’s] completion of the [Fairless Hills PA dismantling] Project. As to any jobsite to which this Agreement is extended on a jobsite-by-jobsite basis[,] . . . the Agreement and [Allied’s] recognition of the Union for employees employed at such jobsite shall terminate upon the completion of [Allied’s] work at such jobsites.
Can you spot the issue? I've gotta say - this is a tough one (it would make a good bonus question for a labor law prof).

The Third Circuit held that the termination clause afforded the employer the power to extend the CBA to new jobsites at its discretion. Therefore, the agreement was for an indefinite term - a no-no under the NLRA. In the words of the Court, "The agreements are indefinite because one party unilaterally controls the termination event."

So, what did the Court do about it? The Court relied on the agreements severability clause to carve out the language that made the agreement indefinite - i.e. the language extending the agreement on a "jobsite-by-jobsite" basis. The end result being that the agreement would terminate upon completion of the Fairless Hills project.

This is some new ground in the Third Circuit, and they relied heavily on decisions from other circuits.

HT: I get these great emails about once a month from the FBA Labor and Employment Law Section with interesting cases from the Circuit Courts of Appeals. That's where I saw this case.