Faced with the prospect of liability for violations of Title VII
of the Civil Rights Act of 1964 in its hiring practices, petitioner
employer signed with the Equal Employment Opportunity Commission
(EEOC) a conciliation agreement that conflicted with the seniority
provisions of petitioner's existing collective bargaining agreement
with respondent union. Petitioner sued in Federal District Court to
enjoin arbitration of certain employee grievances under the
collective bargaining agreement. The District Court held that the
conciliation agreement should prevail with respect to layoffs of
employees in conflict with the seniority provisions of the
collective bargaining agreement. The Court of Appeals reversed and
compelled petitioner to arbitrate. Among the grievances arbitrated
were those of two employees who had been laid off pursuant to the
conciliation agreement and in violation of the collective
bargaining agreement. The arbitrator awarded backpay damages
against petitioner under the collective bargaining agreement,
interpreting that agreement as not requiring him to follow a
contrary prior arbitration award involving the same contractual
issue, as providing that the District Court's order did not
extinguish petitioner's liability for its breach, and as not
providing a good faith defense to claims of violation of its
seniority provisions. Petitioner then brought an action to overturn
the award, and the District Court entered summary judgment for
petitioner, finding that public policy prevented enforcement of the
collective bargaining agreement during the period prior to the
Court of Appeals' reversal in the prior action. The Court of
Appeals reversed.
Held: The award in question is properly to be enforced.
Pp.
461 U. S.
764-772.
(a) A federal court may not overrule an arbitrator's decision
simply because the court believes its own interpretation of the
collective bargaining agreement would be the better one. Thus,
here, regardless of what this Court's view might be of the
correctness of the arbitrator's contractual interpretation,
petitioner and respondent bargained for that interpretation, and a
federal court may not second-guess it. The arbitrator's analysis of
the merits of the grievance is entitled to the same deference. Pp.
461 U. S.
764-766.
Page 461 U. S. 758
(b) Enforcement of the collective bargaining agreement as
interpreted by the arbitrator will not compromise the public policy
requiring obedience to a court order. Even assuming that the
District Court's order that the conciliation agreement should
prevail was a mandatory injunction, nothing in the collective
bargaining agreement as interpreted by the arbitrator required
petitioner to violate that order. The arbitrator's award neither
mandated layoffs nor required that layoffs be conducted according
to the collective bargaining agreement, but simply held
retrospectively that the employees were entitled to damages for the
prior breach of the seniority provisions. Petitioner was cornered
by its own actions, and cannot now argue that liability under the
collective bargaining agreement violates public policy. No public
policy is violated by holding petitioner to its collective
bargaining agreement obligations, which bar petitioner's attempted
reallocation to union members of the burden of the losses resulting
from petitioner's employment discrimination. Pp.
461 U. S.
766-770.
(c) Nor will enforcement of the arbitrator's award
inappropriately affect the public policy favoring voluntary
compliance with Title VII. Although petitioner and the EEOC agreed
to nullify the collective bargaining agreement's seniority
provisions, the conciliation process did not include respondent.
Absent a judicial determination, the EEOC, not to mention
petitioner, cannot alter the collective bargaining agreement
without respondent's consent. Pp.
461 U. S.
770-772.
652 F.2d 1248, affirmed.
BLACKMUN, J., delivered the opinion for a unanimous Court.
Page 461 U. S. 759
JUSTICE BLACKMUN delivered the opinion of the Court.
Faced with the prospect of liability for violations of Title VII
of the Civil Rights Act of 1964, as amended, petitioner signed with
the Equal Employment Opportunity Commission (Commission or EEOC) a
conciliation agreement that was in conflict with its collective
bargaining agreement with respondent. Petitioner then obtained a
court order, later reversed on appeal, that the conciliation
agreement should prevail. The issue presented is whether the Court
of Appeals was correct in enforcing an arbitral award of backpay
damages against petitioner under the collective bargaining
agreement for layoffs pursuant to the conciliation agreement.
I
A
In October, 1973, after a lengthy investigation, the EEOC's
District Director determined that there was reasonable cause to
believe that petitioner W. R. Grace and Company (Company) had
violated Title VII of the Civil Rights Act of 1964, 78 Stat. 253,
as amended, 42 U.S.C. §§ 2000e to 2000e-17 (1976 ed. and
Supp. V), by discriminating in the hiring of Negroes and women at
its Corinth, Miss., plastics manufacturing facility. App. 2. In
addition, the Director found that the departmental and plantwide
seniority systems, mandated by the Company's collective bargaining
agreement with respondent Local Union No. 759 (Union), were
unlawful because they perpetuated the effects of the Company's past
discrimination. The Company was invited, pursuant to § 706(b)
of the Act, 42 U.S.C. 2000e-5(b), to conciliate the dispute.
Although the Commission also invited the Union to participate, the
Union declined to do so.
B
A collective bargaining agreement between petitioner and
respondent expired in March, 1974, and failed negotiations led to a
strike. The Company hired strike replacements, some
Page 461 U. S. 760
of whom were women who took Company jobs never before held by
women. The strike was settled in May with the signing of a new
agreement that continued the plant seniority system specified by
the expired agreement. The strikers returned to work, but the
Company also retained the strike replacements. The women
replacements were assigned to positions in the Corinth plant ahead
of men with greater seniority. Specifically, the Company prevented
men from exercising the shift preference seniority (to which they
were entitled under the collective bargaining agreement) to obtain
positions held by the women strike replacements. The men affected
by this action filed grievances under the procedures established by
the collective bargaining agreement.
The Company refused to join the ultimate arbitration. Instead,
it filed an action under § 301 of the Labor Management
Relations Act of 1947, 61 Stat. 156, 29 U.S.C. § 185, in the
United States District Court for the Northern District of
Mississippi. The Company sought an injunction prohibiting
arbitration of the grievances while the Company negotiated a
conciliation agreement with the Commission. The Union
counterclaimed to compel arbitration.
Before the District Court took any action, the Company and the
Commission signed a conciliation agreement dated December 11, 1974.
App. 10. In addition to ratifying the Company's position with
respect to the shift preference dispute, the conciliation agreement
provided that, in the event of layoffs, the Company would maintain
the existing proportion of women in the plant's bargaining unit.
Id. at 15-16. The Company then amended its § 301
complaint to add the Commission as a defendant and to request an
injunction barring the arbitration of grievances seeking relief
that conflicted with the terms of the conciliation agreement. The
Commission cross-claimed against the Union and counterclaimed
against the Company for a declaratory judgment that the
conciliation agreement prevailed, or, in the alternative, for a
declaratory judgment that the seniority provisions were not a
Page 461 U. S. 761
bona fide seniority system protected by § 703(h) of the
Civil Rights Act, 78 Stat. 259, 42 U.S.C. § 2000e-2(h).
[
Footnote 1]
While cross-motions for summary judgment were under
consideration, the Company laid off employees pursuant to the
conciliation agreement. Several men affected by the layoff, who
would have been protected under the seniority provisions of the
collective bargaining agreement, filed grievances. In November,
1975, with the Company still refusing to arbitrate, the District
Court granted summary judgment for the Commission and the Company.
It held that, under Title VII, the seniority provisions could be
modified to alleviate the effects of past discrimination.
Southbridge Plastics Division, W. R. Grace Co. v. Local
759, 403 F.
Supp. 1183, 1188 (1975). The court declared that the terms of
the conciliation agreement were binding on all parties and that
"all parties . . . shall abide thereby." App. 44. [
Footnote 2] The Union appealed, and no party
sought a stay.
With the Union's appeal pending before the United States Court
of Appeals for the Fifth Circuit, the Company, following the terms
of the conciliation agreement, laid off more employees. Again,
adversely affected male employees filed
Page 461 U. S. 762
grievances. In January, 1978, over two years after the District
Court's decision, the Court of Appeals reversed.
Southbridge
Plastics Division, W. R. Grace & Co. v. Local 759, 565
F.2d 913. Applying
Teamsters v. United States,
431 U. S. 324
(1977), which was decided after the District Court's decision, the
Court of Appeals held that, because the seniority system was not
animated by a discriminatory purpose, it was lawful and could not
be modified without the Union's consent. 565 F.2d at 916. The court
granted the Union's counterclaim, compelling the Company to
arbitrate the grievances.
In response to this decision, the Company reinstated the male
employees to the positions to which they were entitled under the
collective bargaining agreement. The pending grievances, seeking
backpay, then proceeded to arbitration. The first to reach
arbitration was that of a male employee who had been demoted while
the District Court order was in effect. Arbitrator Anthony J.
Sabella, in August, 1978, concluded that, although the grievant was
entitled to an award under the collective bargaining agreement, it
would be inequitable to penalize the Company for conduct that
complied with an outstanding court order. App. 45. He thus denied
the grievance.
Id. at 47. Instead of filing an action to
set aside that award, the Union chose to contest Sabella's
reasoning in later arbitrations.
C
The next grievance to be arbitrated resulted in the award in
dispute here.
Id. at 48. Arbitrator Gerald A. Barrett was
presented with the complaints of two men who had been laid off
before, and one man who had been laid off after, the entry of the
District Court order. [
Footnote
3] Acknowledging that the Sabella arbitration resolved the same
contractual issue,
id.
Page 461 U. S. 763
at 51, Barrett first considered whether the collective
bargaining agreement required him to follow the Sabella arbitration
award. He concluded that it did not. The collective bargaining
agreement limited the arbitrator's authority, Barrett found, to
considering whether the express terms of the contract had been
violated. [
Footnote 4] Because
Sabella had considered the fairness of enforcing the terms of the
contract, he had acted outside his contractually defined
jurisdiction.
Id. at 55-56. Barrett determined that the
finality clause of the collective bargaining agreement [
Footnote 5] therefore did not require
him to follow Sabella's award.
Ibid.
Arbitrator Barrett then turned to the grievances before him. The
Company did not dispute that it had violated the seniority
provisions of the collective bargaining agreement, [
Footnote 6]
id. at 56, and Barrett
also accepted the Company's contention that it had acted in good
faith in following the conciliation agreement. He found, however,
that the collective bargaining agreement made no exception for good
faith violations of the seniority provisions, and that the Company
had acted at
Page 461 U. S. 764
its own risk in breaching the agreement. The Company, he held,
could not complain that the law ultimately had made this out to be
an unfortunate decision.
Ibid. In essence, Barrett
interpreted the collective bargaining agreement as providing that
the District Court's order did not extinguish the Company's
liability for its breach.
D
The Company then instituted another action under § 301 of
the Labor Management Relations Act to overturn the award. The
United States District Court for the Northern District of
Mississippi entered summary judgment for the Company, finding that
public policy prevented enforcement of the collective bargaining
agreement during the period prior to the Court of Appeals'
reversal. App. 58-69. The United States Court of Appeals for the
Fifth Circuit reversed. 652 F.2d 1248 (1981). We granted certiorari
to decide the important issue of federal labor law that the case
presents. 458 U.S. 1105 (1982).
II
The sole issue before the Court is whether the Barrett award
should be enforced. Under well-established standards for the review
of labor arbitration awards, a federal court may not overrule an
arbitrator's decision simply because the court believes its own
interpretation of the contract would be the better one.
Steelworkers v. Enterprise Wheel & Car Corp.,
363 U. S. 593,
363 U. S. 596
(1960). When the parties include an arbitration clause in their
collective bargaining agreement, they choose to have disputes
concerning constructions of the contract resolved by an arbitrator.
Unless the arbitral decision does not "dra[w] its essence from the
collective bargaining agreement,"
id. at
363 U. S. 597,
a court is bound to enforce the award and is not entitled to review
the merits of the contract dispute. This remains so even when the
basis for the arbitrator's decision may be ambiguous.
Id.
at
363 U. S.
598.
Under this standard, the Court of Appeals was correct in
enforcing the Barrett award, although it seems to us to have
�
4 and S. 765�
taken a somewhat circuitous route to this result. [
Footnote 7] Barrett's initial conclusion that
he was not bound by the Sabella decision was based on his
interpretation of the bargaining agreement's provisions defining
the arbitrator's jurisdiction and his perceived obligation to give
a prior award a preclusive effect.
See nn.
4 and |
4
and S. 757fn5|>5,
supra. Because the authority of
arbitrators is a subject of collective bargaining, just as is any
other contractual provision, the scope of the arbitrator's
authority is itself a question of contract interpretation that the
parties have delegated to the arbitrator. Barrett's conclusions
that Sabella acted outside his jurisdiction, and that this deprived
the Sabella award of precedential force under the contract, draw
their "essence" from the provisions of the collective bargaining
agreement. Regardless of what our view might be of the correctness
of Barrett's contractual interpretation, the Company and the Union
bargained for that interpretation. A federal court may not
second-guess it.
Steelworkers v. Enterprise Wheel & Car
Corp., 363 U.S. at
363 U. S.
599.
Barrett's analysis of the merits of the grievances is entitled
to the same deference. He found that the collective bargaining
agreement provided no good faith defense to claims of violations of
the seniority provisions, and gave him no authority to weigh in
some other fashion the Company's good faith. Again, although
conceivably we could reach a different result were we to interpret
the contract ourselves, [
Footnote
8] we cannot say
Page 461 U. S. 766
that the award does not draw its essence from the collective
bargaining agreement.
III
As with any contract, however, a court may not enforce a
collective bargaining agreement that is contrary to public policy.
See Hurd v. Hodge, 334 U. S. 24,
334 U. S. 34-35
(1948). Barrett's view of his own jurisdiction precluded his
consideration of this question, and, in any event, the question of
public policy is ultimately one for resolution by the courts.
See International Brotherhood of Teamsters v. Washington
Employers, Inc., 557 F.2d 1345, 1350 (CA9 1977);
Local 453
v. Otis Elevator Co., 314 F.2d 25, 29 (CA2),
cert.
denied, 373 U.S. 949 (1963); Kaden, Judges and Arbitrators:
Observations on the Scope of Judicial Review, 80 Colum.L.Rev. 267,
287 (1980). If the contract as interpreted by Barrett violates some
explicit public policy, we are obliged to refrain from enforcing
it.
Hurd v. Hodge, 334 U.S. at
334 U. S. 35.
Such a public policy, however, must be well defined and dominant,
and is to be ascertained "by reference to the laws and legal
precedents and not from general considerations of supposed public
interests."
Muschany v. United States, 324 U. S.
49,
324 U. S. 66
(1945).
A
It is beyond question that obedience to judicial orders is an
important public policy. An injunction issued by a court acting
within its jurisdiction must be obeyed until the injunction is
vacated or withdrawn.
Walker v. City of Birmingham,
388 U. S. 307,
388 U. S.
313-314 (1967);
United States v. Mine Workers,
330 U. S. 258,
330 U. S.
293-294 (1947);
Howat v. Kansas, 258 U.
S. 181,
258 U. S.
189-190 (1922). A contract provision the performance
Page 461 U. S. 767
of which has been enjoined is unenforceable.
See
Restatement (Second) of Contracts §§ 261, 264 (1981).
Here, however, enforcement of the collective bargaining agreement
as interpreted by Barrett does not compromise this public
policy.
Given the Company's desire to reduce its workforce, it is
undeniable that the Company was faced with a dilemma: it could
follow the conciliation agreement as mandated by the District Court
and risk liability under the collective bargaining agreement, or it
could follow the bargaining agreement and risk both a contempt
citation and Title VII liability. The dilemma, however, was of the
Company's own making. The Company committed itself voluntarily to
two conflicting contractual obligations. When the Union attempted
to enforce its contractual rights, the Company sought a judicial
declaration of its respective obligations under the contracts.
During the course of this litigation, before the legal rights were
finally determined, [
Footnote
9] the Company again laid off employees and dishonored its
contract with the Union. For these acts, the Company incurred
liability for breach of contract. In effect, Barrett interpreted
the collective bargaining agreement to allocate to the Company the
losses caused by the Company's decision to follow the District
Court order that proved to be erroneous. [
Footnote 10]
Page 461 U. S. 768
Even assuming that the District Court's order was a mandatory
injunction, [
Footnote 11]
nothing in the collective bargaining agreement as interpreted by
Barrett required the Company to violate that order. Barrett's award
neither mandated layoffs [
Footnote 12] nor required that layoffs be conducted
according to the
Page 461 U. S. 769
collective bargaining agreement. The award simply held,
retrospectively, that the employees were entitled to damages for
the prior breach of the seniority provisions. [
Footnote 13]
In this case, the Company actually complied with the District
Court's order, and nothing we say here causes us to believe that it
would disobey the order if presented with the same dilemma in the
future. Enforcement of Barrett's award will not create intolerable
incentives to disobey court orders. Courts have sufficient contempt
powers to protect their injunctions, even if the injunctions are
issued erroneously.
See Walker v. City of Birmingham, 388
U.S. at
388 U. S. 315.
In addition to contempt sanctions, the Company here was faced with
possible Title VII liability if it departed
Page 461 U. S. 770
from the conciliation agreement in conducting its layoffs. The
Company was cornered by its own actions, and it cannot argue now
that liability under the collective bargaining agreement violates
public policy.
Nor is placing the Company in this position with respect to the
court order so unfair as to violate public policy. Obeying
injunctions often is a costly affair. [
Footnote 14] Because of the Company's alleged prior
discrimination against women, some readjustments and consequent
losses were bound to occur. The issue is whether the Company or the
Union members should bear the burden of those losses. As
interpreted by Barrett, the collective bargaining agreement placed
this unavoidable burden on the Company. By entering into the
conflicting conciliation agreement, by seeking a court order to
excuse it from performing the collective bargaining agreement, and
by subsequently acting on its mistaken interpretation of its
contractual obligations, the Company attempted to shift the loss to
its male employees, who shared no responsibility for the sex
discrimination. The Company voluntarily assumed its obligations
under the collective bargaining agreement and the arbitrators'
interpretations of it. No public policy is violated by holding the
Company to those obligations, which bar the Company's attempted
reallocation of the burden.
B
Voluntary compliance with Title VII also is an important public
policy. Congress intended cooperation and conciliation
Page 461 U. S. 771
to be the preferred means of enforcing Title VII.
Alexander
v. Gardner-Denver Co., 415 U. S. 36,
415 U. S. 44
(1974). Critical to the compliance scheme is the Commission's role
in settling Title VII disputes through conference, conciliation,
and persuasion before a Title VII plaintiff or the Commission may
bring suit.
See § 706(b) of the Act, 42 U.S.C. §
2000e-5(b).
Enforcement of the Barrett award will not inappropriately affect
this public policy. In this case, although the Company and the
Commission agreed to nullify the collective bargaining agreement's
seniority provisions, the conciliation process did not include the
Union. Absent a judicial determination, the Commission, not to
mention the Company, cannot alter the collective bargaining
agreement without the Union's consent.
See Alexander v.
Gardner-Denver Co., 415 U.S. at
415 U. S. 44
(Commission's power to investigate and conciliate does not have
coercive legal effect). Permitting such a result would undermine
the federal labor policy that parties to a collective bargaining
agreement must have reasonable assurance that their contract will
be honored.
Charles Dowd Box Co. v. Courtney, 368 U.
S. 502,
368 U. S. 509
(1962). Although the ability to abrogate unilaterally the
provisions of a collective bargaining agreement might encourage an
employer to conciliate with the Commission, the employer's added
incentive to conciliate would be paid for with the union's
contractual rights.
Aside from the legality of conferring such power on the
Commission and an employer, it would be unlikely to further true
conciliation between all interested parties. Although an innocent
union might decide to join in Title VII conciliation efforts in
order to protect its contractual position, neither the employer nor
the Commission would have any incentive to make concessions to the
union. The Commission and the employer would know that they could
agree without the union's consent, and that their agreement would
be enforced.
In fact, enforcing the award here should encourage conciliation
and true voluntary compliance with federal employment
discrimination law. If, as in this case, only the employer
Page 461 U. S. 772
faces Title VII liability, the union may enter the conciliation
process with the hope of obtaining concessions in exchange for
helping the employer avoid a Title VII suit. If, however, both the
union and the employer are potentially liable, it would be in their
joint interests to work out a means to share the burdens imposed by
the Commission's demands. On this view, the conciliation process of
Title VII and the collective bargaining process complement each
other, rather than conflict.
IV
For the foregoing reasons, the Barrett award is properly to be
enforced. The judgment of the Court of Appeals is therefore
affirmed.
It is so ordered.
[
Footnote 1]
The Company's amended complaint, unlike the Commission's
pleadings, did not expressly request a declaratory judgment under
28 U.S.C. §§ 2201 and 2202.
See App. in
Southbridge Plastics Division, W. P. Grace & Co. v. Local
759, No. 75-4416 (CA5), pp. 98, 123-124, 129-130. The United
States Court of Appeals for the Fifth Circuit, however, viewed the
Company's complaint as seeking a declaration of its obligations
under the respective contracts.
See 565 F.2d 913, 915
(1978).
[
Footnote 2]
The relevant text of the order is as follows:
"(1) The terms of the conciliation agreement executed on
December 11, 1974, by the plaintiff and the defendant, EEOC, are
binding upon all the parties to this action; and"
"(2) Where the provisions of the collective bargaining agreement
executed by the plaintiff and defendant, Local 759, conflict with
the provisions of the conciliation agreement executed by the
plaintiff and defendant, EEOC, the provisions of the conciliation
agreement are controlling and all parties to this action shall
abide thereby."
App. 44.
[
Footnote 3]
Neither the parties nor the District Court nor the Court of
Appeals attached significance to this distinction between the
grievants.
See Brief for EEOC as
Amicus Curiae 6,
n. 6. Our resolution of the case eliminate any need to consider
it.
[
Footnote 4]
The 1974 collective bargaining agreement and the succeeding 1977
agreement each defined the arbitrator's jurisdiction as
follows:
"The jurisdiction and authority of the Arbitrator of the
grievance and his opinion and award shall be confined exclusively
to the interpretation and application of the express provision or
provisions of this Agreement at issue between the Union and the
Company. He shall have no authority to add to, adjust, change, or
modify any provision of this Agreement."
Art. IV, § 3; App.19, 31.
[
Footnote 5]
The finality clause in each of the 1974 and 1977 collective
bargaining agreements provided in relevant part:
"The decision of the Arbitrator on the merits of any grievance
adjudicated within his jurisdiction and authority as specified in
this Agreement shall be final and binding on the aggrieved employee
or employees, the Union and the Company."
Art. IV, § 4; App. 20, 32.
[
Footnote 6]
The 1974 and 1977 collective bargaining agreements each
provided:
"If it is determined in the grievance procedure that an employee
has been unjustly discharged or suspended the employee shall be
reinstated to his former job and shall be compensated at his
regular hourly earnings for the time lost less any penalty time
decided upon."
Art. IV, § 7(a); App. 21, 32-33.
[
Footnote 7]
Although the court believed that the validity of the Sabella
award was the dispositive issue, 652 F.2d at 1252, the Union raised
and argued the question whether the Barrett award itself was
enforceable. Brief for Appellant in No. 80-3661 (CA5), pp. 18-30.
We disagree with the court's initial premise that the validity of
the Sabella award is relevant. Only the enforceability of the
Barrett award is at issue.
[
Footnote 8]
The 1974 and 1977 collective bargaining agreements each
contained a clause that provided:
"In the event that any provision of this Agreement is found to
be in conflict with any State or Federal Laws now existing or
hereinafter enacted, it is agreed that such laws shall supersede
the conflicting provisions without affecting the remainder of these
provisions."
Art. XIV, § 7; App. 29, 42. Before the Court of Appeals,
the Company argued that under this "legality" clause the seniority
provision was superseded by the District Courts determination that
the provision was illegal. The Court of Appeals responded that its
decision reversing the District Court had retroactive effect
because it declared the law as it always had existed. 652 F.2d at
1255. It seems to us, however, that the Company's argument was that
the court should interpret the legality clause itself, a privilege
not permitted to federal courts in reviewing an arbitral award.
[
Footnote 9]
We do not decide whether some public policy would be violated by
an arbitral award for a breach of seniority provisions ultimately
found to be illegal under
Teamsters v. United States,
431 U. S. 324,
431 U. S.
355-356 (1977). Neither do we decide whether such an
award could be enforced in the face of a valid judicial alteration
of seniority provisions, pursuant to
Franks v. Bowman
Transportation Co., 424 U. S. 747,
424 U. S.
778-779 (1976), to provide relief to discriminatees
under Title VII or other law.
See Dennison v. City of Los
Angeles Department of Water and Power, 658 F.2d 694, 695-696
(CA9 1981);
EEOC v. McCall Printing Corp., 633 F.2d 1232,
1237 (CA6 1980).
[
Footnote 10]
Although Barrett could have considered the District Court order
to cause impossibility of performance, and thus to be a defense to
the Company's breach, he did not do so. Impossibility is a doctrine
of contract interpretation.
See 18 W. Jaeger, Williston on
Contracts §§ 1931-1979 (3d ed.1978). For the reasons
stated in the text, we cannot revise Barrett's implicit rejection
of the impossibility defense. Even if we were to review the issue
de novo, moreover, it is far from clear that the defense
is available to the Company, whose own actions created the
condition of impossibility.
See id. § 1939, p. 50;
Uniform Commercial Code § 2-615(a) and Comment 10, 1A U.L.A.
335, 338 (1976);
Lowenschuss v. Kane, 520 F.2d 255, 265
(CA2 1975).
[
Footnote 11]
As a threshold matter, we doubt that the District Court in this
case ordered specific performance of the conciliation agreement or
granted any other type of injunctive relief. That court, in
"considering the declaratory relief sought," 403 F. Supp. at 1187,
stated that the issue was "whether the terms of the conciliation
agreement override the terms of the bargaining agreement."
Ibid. Both the Company's amended complaint and the Union's
counterclaim invoked only the cause of action provided by §
301 of the Labor Management Relations Act. Although the Commission
filed a counterclaim against the Company alleging that the Company
had violated Title VII, the Court of Appeals treated the case as a
§ 301 action.
See 565 F.2d at 917.
See generally
Airline Stewards & Stewardesses Assn. v. American Airlines,
Inc., 573 F.2d 960, 963 (CA7) (judicial review of Title VII
settlement agreement is not review of judgment of Title VII
liability after trial),
cert. denied, 439 U.S. 876 (1978).
Consistent with this view, the court expressly stated that the
action was not brought under Title VII, 565 F.2d at 917, and
refused to remand to permit individual women employees to meet the
standards set forth in
Teamsters v. United States,
431 U. S. 324
(1977).
See 565 F.2d at 917. Thus, the courts had no
occasion to order injunctive relief under Title VII. The decision
of the District Court instead seems to be a declaration of the
rights and obligations of the parties under the conflicting
agreements, and not a mandatory injunction. Given the ambiguity,
however, we assume for purposes of decision that the District
Court's order constituted an injunction.
[
Footnote 12]
Economic necessity is not recognized as a commercial
impracticability defense to a breach of contract claim. Uniform
Commercial Code § 2-615, Comment 4, 1A U.L.A. 336 (1976)
(increased cost of performance does not constitute impossibility);
18 W. Jaeger, Williston on Contracts § 1931, pp. 7-8 (3d
ed.1978) (same). Thus, while it may have been economic misfortune
for the Company to postpone or forgo its layoff plans, its extant,
conflicting, and voluntarily assumed contractual obligations
exposed it to liability regardless of the layoff procedure it
followed. In order to avoid liability under either contract, the
Company, of course, could have accepted the economic losses of
forgoing its reduction-in-force plans.
This is not to say that, in the face of the economic necessity
of the layoffs, the Company had no way whatsoever to avoid the
injury. Prior to conducting the layoffs, the Company could have
requested a stay from the District Court to permit it to follow the
collective bargaining agreement pending review by the Court of
Appeals. It was the Company, which had sought the declaration of
rights and obligations, and which chose to act before the
determination of its respective contractual obligations was final;
the Union most likely would have preferred that no layoffs occur at
all. Although the Union could have requested a stay, there is no
rule requiring a party to ask for prospective relief from a
possible contractual breach. The Union justifiably relied on its
right to backpay damages. Moreover, the Company, in future contract
negotiations, may seek to bargain for a contract provision
expressly allocating the loss to its employees in a case such as
this one.
[
Footnote 13]
Compensatory damages may be available to a plaintiff injured by
a breach of contract even when specific performance of the contract
would violate public policy. Restatement (Second) of Contracts
§ 365, Comment a (1981). This principle is particularly
applicable here; since the employees' Union had no responsibility
for the events giving rise to the injunction, and entered into the
collective bargaining agreement ignorant of any illegality, the
employees are not precluded from recovery for the breach.
Id. § 180, Comment
a.
[
Footnote 14]
A party injured by the issuance of an injunction later
determined to be erroneous has no action for damages in the absence
of a bond.
Russell v. Farley, 105 U.
S. 433,
105 U. S. 437
(1882);
Buddy Systems, Inc. v. Exer-Genie, Inc., 545 F.2d
1164, 1167-1168 (CA9 1976),
cert. denied, 431 U.S. 903
(1977). Enforcing the Barrett award to compensate the injuries
suffered by the male employees does not violate this principle. The
only party injured by the injunction itself has been the Company;
the proof of this is that, if the Company had done nothing at all,
see n 12,
supra, the economic loss from failing to reduce the
workforce would have fallen on the Company. By an independent and
voluntary act, the Company shifted this loss to its male employees,
and thereby caused the injury remedied by the Barrett award.