INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA v. ZF BOGE ELASTMETALL LLC (August 19, 2011)

Prior to 2007, ZF Boge operated two manufacturing facilities in the United States. The one in Paris, Illinois was unionized. The workers were represented by the UAW. The company's second facility was in Hebron, Kentucky and was non-union. In early 2007, ZF Boge began to consider closing one facility and consolidating its operations in the other. The Paris plant manager approached the UAW and requested renegotiation of several provisions of the Collective Bargaining Agreement then in effect. The request was couched in terms of maximizing the long-term viability of the Paris facility. The company and the Union reached an agreement in mid-2007. The agreement took the form of a chart, with the CBA provisions in one column and the negotiated amendments in another. The agreement provided that the changes would not take effect unless Paris became the surviving facility and that, if it did not, it would continue to operate under the original CBA. ZF Boge announced its decision to close the Hebron facility and to consolidate its operations at the Paris facility. Before the consolidation was complete, ZF Boge and the UAW began to negotiate a new CBA, since the then-current one was due to expire in April 2008. The parties were unable to agree on a new CBA. The UAW members went on strike. ZF Boge reversed its decision and closed the Paris facility, consolidating its operations in Kentucky. The Union filed an action pursuant to § 301 of the Labor Management Relations Act, alleging that ZF Boge breached the midterm agreement. It sought damages and specific performance. Chief Judge McCuskey (C.D. Ill.) granted summary judgment to ZF Boge, concluding that the midterm agreement was a CBA modification that expired with the CBA in April 2008. The UAW appeals.

In their opinion, Seventh Circuit Judges Ripple, Kanne, and Sykes affirmed. The Court recited several familiar rules of contract construction: contract interpretation is normally a matter of law, CBAs are interpreted like other contracts, the starting point is the contract's language, and a document should be read as a whole with consideration to its structure. The Court found the contract's structure very significant in interpreting its meaning, particularly given that it had no independent expiration date. It was clear to the Court that the chart simply listed those CBA terms that were modified, identifying the original and amended approaches. It clearly was not meant to modify any unidentified terms, including an expiration date. The fact that the contract precluded any renegotiation of the amended terms in a future CBA is not inconsistent with that conclusion. The Court therefore concluded, as did the district court, that the midterm agreement was a CBA modification that did not change the expiration date. The Court also rejected the UAW's view that, even if the amendment expired, it created some vested rights. Although the Court acknowledged that a contract can create obligations that survive its expiration, it noted that courts are reluctant to interpret contracts that way without clear language illustrating the intent of the parties. It found no such clear language in the midterm agreement. Finally, the UAW presented extrinsic evidence in an effort to show that there was a latent ambiguity in the contract. The Court found the proffered evidence insufficient to create such an ambiguity.