This petition for review of a Supplemental Decision and Order issued by a divided National Labor Relations Board ("NLRB") arises from a contractually permitted, unilateral change in the delivery terms under an exclusive distributorship agreement, as a result of which the employer's drivers lost work. The drivers' union (the "Union") now petitions for review of the NLRB ruling that its effort to enforce the work preservation clause amounted to a boycott in violation of Section 8(e) of the National Labor Relations Act, 29 U.S.C. § 158(e) ("Section 8(e)"). The Union challenges the finding that it violated § 8(e) and the imposition of attorneys' fees. The NLRB cross-petitions for enforcement.
We conclude that the Union violated Section 8(e), but we reverse the award of attorneys' fees.
The opinion of the court was delivered by: Dennis Jacobs, Chief Judge
Before: JACOBS, Chief Judge, McLAUGHLIN, and PARKER, Circuit Judges.
This petition for review of a Supplemental Decision and Order issued by a divided National Labor Relations Board ("NLRB") arises from an exclusive distributorship agreement that the employer, Peerless Importers Inc. ("Peerless"), entered into with Diageo North America, Inc. ("Diageo"), a supplier of wines and spirits. Six months after the agreement went into effect, Diageo altered its sales terms to include delivery in the price of goods. As a result, Peerless's drivers lost work, and Petitioner Local 917 of the International Brotherhood of Teamsters (the "Union") sought to enforce the work preservation clause of the collective bargaining agreement between Peerless and the Union.
A divided NLRB concluded that the Union's effort to enforce the work preservation clause amounted to a boycott in violation of Section 8(e) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(e) ("Section 8(e)"). The Union now petitions for review of that decision, challenging the finding that it violated Section 8(e) and the imposition of attorneys' fees. The NLRB cross-petitions for enforcement.
We conclude that the Union violated the NLRA, but we reverse the award of attorney's fees.
Peerless distributes alcoholic beverages wholesale to retail liquor stores, hotels, and restaurants in the New York metropolitan area. For a dozen years, a collective bargaining agreement provided that the movement of freight to and from Peerless's warehouse in Greenpoint, Brooklyn, would be performed exclusively by the Union's drivers (subject to inapplicable exceptions).
On July 25, 2002, Peerless entered into a "Distribution Agreement" with Diageo by which Peerless became the exclusive distributor of Diageo products in the New York City area, including Smirnoff Vodka, Cuervo Tequila, Captain Morgan Rum, Goldschlager, Bailey's Irish Cream, Seagram's Canadian Whiskey, and a host of other brand-name spirits. The contract did not expressly allocate responsibility for the delivery of freight; according to the President of Peerless Imports, the issue of delivery was not discussed during contract negotiations. The contract did, however, allow Diageo to fix the sales terms:
Prices and the terms and conditions of sale ("Sales Terms") shall be in accordance with Diageo's then in effect Sales Terms as may be modified from time to time by Diageo without the consent of [Peerless].... § 4(A)(i) (emphasis added). Diageo thus had unilateral power to change the sales terms. In common understanding, the phrase "sales terms" references a bundle of arrangements and provisions, including (among other things) price, quantity, and the means by which the product is delivered. See, e.g., Dictionary of International Business Terms 482 (3d ed. 2004) (defining sales terms generally as "delivery and payment terms in a sales agreement"); see also 17A Am. Jur. 2d Contracts § 190 (2004) (material terms can include "subject matter, price, payment terms, quantity, duration, compensation, and the dates of delivery and production").
The Diageo agreement became effective in October 2002. For the next six months, Peerless's Union drivers continued to pick up and deliver all freight, including Diageo's product. In March 2003, Diageo announced a new national pricing plan called "Delivered Pricing." Diageo representatives scheduled a meeting with officers of Peerless, at which Diageo provided an "operational preview" of the new national pricing plan. Under the new plan--which Diageo was in the process of rolling out to all of its distributors across the nation--the price of goods would increase, but the new price would include the price of delivery to the distributor's warehouse. The Delivered Pricing plan effectively displaced the Peerless drivers (although Peerless's drivers would still deliver products from the warehouse and pick up from other suppliers, and might still make pick-ups from Diageo when Diageo could not make the delivery). The Union was not notified in advance.
In November 2003, soon after the Delivered Pricing plan became effective, a Union grievance charged Peerless with breach of the collective bargaining agreement. Peerless did not respond to the grievance, and the Union filed a demand for arbitration.
The Arbitrator held a hearing on June 28, 2004, and, on September 28, 2004, ruled that Peerless had violated the collective bargaining agreement "by permitting merchandise from Diageo... to be delivered to the Company's warehouse by non-bargaining unit personnel." The Arbitrator retained jurisdiction to fashion a remedy "pending a determination by the NLRB."
On October 6, 2004 (shortly after losing in arbitration), Peerless filed an unfair labor practice charge with the NLRB claiming that the Union had "attempted to coerce and restrain Peerless... with an object of forcing or requiring Peerless to assign work that Peerless does not control to its employees by resorting to arbitration to enforce ...