Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
8-9-2006
Local 827 v. Verizon NJ Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-4706
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-4706
LOCAL 827 INTERNATIONAL BROTHERHOOD
OF ELECTRICAL WORKERS, AFL-CIO;
VIRGINIA J. FISHER; FREDERICK D. MAZZARO;
RICHARD F. EICHEL; LAWRENCE COOPER
v.
VERIZON NEW JERSEY, INC.;
VERIZON SERVICES CORPORATIONS;
VERIZON INCOME SECURITY PLAN
FOR MID-ATLANTIC ASSOCIATES
Verizon New Jersey, Inc; Verizon Services Corporations,
Appellants
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 02-cv-1019)
District Judge: Honorable Robert B. Kugler
______________
Argued January 25, 2006
Before: RENDELL and STAPLETON, Circuit Judges
and POLLAK,* District Judge.
(Filed August 9, 2006)
*
Honorable Louis H. Pollak, Senior District Judge for the United States District Court
for the Eastern District of Pennsylvania, sitting by designation.
Nicholas J. Sanservino, Jr.
Thomas M. Beck [ARGUED]
Jones Day
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
Mary B. Rogers
Pitney Hardin
P.O. Box 1945
Morristown, NJ 07962
Counsel for Appellants
Mark E. Belland [ARGUED]
Steven J. Bushinsky
O’Brien, Belland & Bushinsky
2111 New Road, Suite 101
Northfield, NJ 08225
Counsel for Appellees
OPINION OF THE COURT
_______________
POLLAK, District Judge.
Verizon 1 and its employees, represented by Local 827, entered into a Collective
Bargaining Agreement (“CBA”) for the purpose of regulating certain work-related issues.
Article VII, Section 1 of that CBA contemplates the process by which employee benefits
packages are offered when Verizon determines that a workforce surplus exists. In March
1
Defendants-Appellants Verizon New Jersey, Inc., Verizon Services Corporation, and
Verizon Income Security Plan for Mid-Atlantic Associates are collectively described as
“Verizon.”
2
of 2002, Local 827 and a number of Verizon employees brought this suit under the Labor
Management Relations Act and the Employee Retirement Income Security Act. The
plaintiffs assert that Verizon breached the CBA by making benefit offers to surplus
employees in a manner inconsistent with Article VII, Section 1. Both sides moved for
summary judgment on all claims. In an opinion issued November 23, 2004, the District
Court agreed with Local 827's interpretation of the CBA, granted partial summary
judgment to the plaintiffs, and enjoined Verizon from interpreting the CBA in a manner
inconsistent with the court’s opinion. Verizon now brings this interlocutory appeal. We
agree with the District Court’s construction of Article VII, Section 1 of the CBA and will
affirm.2
I. Overview
Plaintiff Local 827 represents the non-supervisory employees at Verizon New
Jersey, Inc. On October 27, 2000, Local 827 and Verizon entered into a CBA, which,
inter alia, provides for the procedure to be followed in the event that Verizon declares a
surplus of employees exists in its workforce. Specifically in issue is the process by which
benefit offers are made to employees in a non-layoff context when a surplus has been
identified by Verizon. The relevant section of the CBA, Article VII, Section 1, reads:
1. If during the term of this Agreement, the Company notifies the
Union in writing that technological change (defined as changes in
equipment or methods of operation) has or will create a surplus in
2
28 U.S.C. § 1292(a)(1) confers our jurisdiction over this appeal.
3
any job title in a work location which will necessitate layoffs or
involuntary permanent reassignments of regular employees to
different job titles involving a reduction in pay or to work locations
requiring a change of residence, or if a force surplus necessitating
any of the above actions exists for reasons other than technological
change and the Company deems it appropriate, regular employees
who have at least one (1) year of net credited service may elect, in
the order of seniority, and to the extent necessary to relieve the
surplus, to leave the service of the Company and receive Income
Security Plan (ISP) and if applicable, during the term of this
Agreement, Enhanced Income Security Plan (Enhanced ISP) benefits
described in this Section, subject to the following conditions.
(a) The Company shall determine the job titles and work
locations in which a surplus exists, the number of employees
in such titles and locations who are considered to be surplus,
and the period during which the employee may, if he or she so
elects, leave the service of the Company pursuant to this
Section. Effective until August 2, 2003, the Companies will
offer Enhanced ISP in the circumstances described in Section
2 (a) of this Article and may also offer Enhanced ISP in other
circumstances if they choose to do so. The Companies may
limit acceptances to the number of surplus and this Enhanced
ISP offer would be in lieu of obligations, if any, the
Companies may have to offer regular ISP. Neither such
determinations by the Company nor any other part of this
Section shall be subject to arbitration.
(b) The number of employees who may make such an election
shall not exceed the number of employees determined by the
Company to be surplus.
(c) An employee’s election to leave the service of the Company
and receive ISP or Enhanced ISP payments must be in writing
and transmitted to the Company within thirty (30) calendar
days from the date of the Company’s offer in order to be
effective and it may not be revoked after such thirty (30)
calendar day period.
Verizon argues that the above language describes a system by which the directors
4
and managers of Verizon’s various internal “work groups” identify surpluses within the
work groups they manage at a work location.3 Once a surplus has been declared within
that work group, Verizon claims that Income Security Plan (ISP), and, where applicable,
the Enhanced Income Security Plan (EISP), is offered to all employees who are both
within the work group and who have the job title identified to be in surplus. If more
employees within a work group accept this offer than there is surplus, the employees with
the most seniority receive the benefits until the surplus no longer exists. Verizon states
that this system has the practical effect of Verizon offering ISP/EISP to fewer than all of
the employees with the same work title at a work location because there are typically
many work groups operating at a work location.
Verizon also offers evidence extrinsic to the CBA that it believes supports its
interpretation. The company notes that from 1990 until 2001, it has operated its ISP/EISP
program for non-layoff employees in the manner described above without complaint from
Local 827. Verizon further claims that Local 827 was aware of the way the ISP/EISP
program was being administered because the company sent a letter to the union each time
a surplus was identified and an ISP/EISP offer made. Between 1990 and 2001,
approximately thirty such notices were sent to Local 827.
Local 827 argues that Article VII, Section 1 is not ambiguous in requiring Verizon
3
The term “organization,” an apparent synonym for “work group,” is also in use; for
clarity’s sake, only the term “work groups” will be employed in this opinion.
5
to offer ISP/EISP benefits in non-layoff situations to all employees who have the same
job title and are employed at the same work location. The union argues that the plain
language of the CBA supports its understanding, and that any other reading would
substantially undercut the contractually conferred seniority rights of Verizon employees
when ISP/EISP offers are made. Moreover, the union argues that the extrinsic evidence
presented by Verizon does not create ambiguity in the plain meaning of the contractual
language.
For the reasons given below, we agree with Local 827's position and conclude that
Article VII, Section 1 of the CBA is without ambiguity in its language limiting Verizon to
making non-layoff ISP/EISP offers to all employees that have the same job title and are
employed at the same work location.
II. The Contractual Language
We undertake a plenary review of the question whether contractual language is
clear or ambiguous, and we will affirm a summary judgment grant on an issue of contract
interpretation only if the contractual language is “subject to only one reasonable
interpretation.” Local Union No. 1992, Int’l Bhd. of Elec. Workers v. Okonite Co., 189
F.3d 339, 341 (3d Cir. 1999) (citations omitted). In determining whether contractual
language is ambiguous, we will consider “the contract language, the proffer of the parties,
and the extrinsic evidence offered in support of each interpretation.” Id. at 343 (citation
omitted). Beginning with the CBA’s language, we can identify no ambiguity in Article
6
VII, Section 1's discussion of how ISP/EISP offers must be made to employees in a non-
layoff situation.
The first sentence (which is also the first paragraph) of Article VII, Section 1 of
the CBA contemplates the provision of ISP and/or EISP benefits in the event “the
Company notifies the Union in writing that technological [or other] change . . . has or will
create a surplus in any job title in a work location.” The parties agree that there is no
ambiguity in the meanings of “job title” or “work location.” The “job title” of a Verizon
employee describes her or his function within the company, such as a technician or an
analyst. The “work location” describes the building where the employees work. Thus,
Article VII, Section 1 begins by unambiguously describing the Company’s power to
identify a surplus in the context of (1) a job title and (2) a work location.
Once the company identifies a surplus in “any job title in a work location,”
Verizon may make ISP/EISP offers. However, the CBA states that these offers will be
“subject to the following conditions.” These conditions are given in subsections (a) – (c)
of Section 1. Subsection (a) provides, inter alia, that Verizon “shall determine [1] the job
titles and work locations in which a surplus exists,” (2) “the number of employees in such
titles and locations who are considered to be surplus,” and (3) “the period during which
the employee may, if he or she so elects, leave the service of the Company pursuant to
this Section.” With respect to the EISP offers, subsection (a) empowers Verizon to “limit
acceptances to the number of surplus.” Subsection (b) states that “[t]he number of
7
employees who may make such election shall not exceed the number of employees
determined by the Company to be surplus.” Subsection (c) recites the an employee must,
within thirty days of Verizon’s offer, transmit in writing his or her desire to leave Verizon
and receive ISP or EISP benefits.
The above language makes clear that Verizon’s discretionary power to make
ISP/EISP offers is limited to “job title” and “work location.” The opening sentence of
Article VII, Section 1describes Verizon’s discretionary powers in the context of job title
and work location without making any mention of a “work group.” This power is then
conditioned in subsection (a)(1) on Verizon identifying surpluses in a “job title[]” and
“work location[],” which reiterates that these are the parameters of Verizon’s discretion.
And, in subsection (a)(2), the parties state that Verizon shall have the power to determine
the number of employees within “such titles and locations” who are considered surplus.
Thus, again, Verizon’s discretionary powers are discussed only in the context of being
“condition[ed]” on identifying a job title and work location.
Verizon nonetheless argues that it has unhampered discretion to locate a surplus as
it sees fit. In particular, Verizon claims that the contractual language does not inhibit the
company from making non-layoff ISP/EISP offers by the “work group” that is housed
within a work location. As described above, however, this position is not compatible
with the text of Article VII, Section 1. First, Verizon does not argue that “job title” or
“work location” actually means “work group.” Therefore, if the CBA language
8
describing Verizon’s discretionary powers was meant to extend to “work groups” within a
job title and location, we would expect to find this language in Article VII, Section 1.
Nor can Verizon argue that the drafters of the CBA were unfamiliar with discussing the
distribution of employee benefits in the context of these sub-units because the very next
section of the CBA – Article VII, Section 2(a) – contemplates locating a surplus within a
“work group” when EISP offers are made in layoff situations.4
Also contradicting Verizon’s reading of Article VII, Section 1 is the consistent use
of the “job title” and “work location” terminology in the context of “conditions” placed
on ISP/EISP offers, which indicate that they are indeed limiting factors on Verizon’s
power to make such offers. And the condition placed on Verizon’s discretion –
essentially making Verizon treat all similarly skilled employees at a location in the same
way – is the type of condition one would expect a collective bargaining unit to demand of
an employer so as to ensure that all of its equivalently skilled employees are treated
equally.
In addition to arguing that there is no limiting language in the CBA, Verizon
argues that certain words and phrases in Article VII, Section 1 could be read affirmatively
to support the company’s interpretation of that provision. Again, we cannot agree.
4
Article VII, Section 2(a) of the CBA recites that “prior to proceeding to a layoff
resulting from a surplus in any particular title, location, and work group the Companies
will offer an Enhanced ISP Termination Allowance equal to two (2) times the normal ISP
Termination Allowance (e.g., up to a maximum of $66,000) in surplus title and work
location.” (Emphasis added.)
9
Verizon focuses on the contractual language authorizing it to declare a surplus. The
company calls attention to the phrases “the Company deems it appropriate” and “to the
extent necessary to relieve the surplus.” 5 These phrases, however, do not appear in the
context of Verizon’s power to locate the surplus, which is what the “job title” and “work
location” language does. Rather, the phrases appear in the context of provisions relating
to Verizon’s power to dictate the size of any surplus. That is, if Verizon decides that
there is a “force surplus” and “the Company deems it appropriate,” then that surplus will
be relieved through a seniority system, “to the extent necessary to relieve the surplus.”
The relevant question is not, however, Verizon’s power to declare the existence of a
surplus, which Local 827 does not dispute. Instead, the question before us is Verizon’s
asserted authority unilaterally to locate that declared surplus wherever the company
pleases. And it is on this subject that the CBA places “conditions” on the reach of
Verizon’s power, namely confining to “job title” and “work location” the company’s
authority to locate a surplus.
Finally, Verizon contends that the meaning of “surplus” is ambiguous here because
limiting Verizon’s discretion to make ISP/EISP offers would mean that Verizon would
5
At oral argument, Judge Stapleton reminded Verizon’s counsel that “You have to be
able to say that there is some wording in this contract that should be read differently
because of this extrinsic context.” Verizon’s counsel responded by stating that the
ambiguity lies in the words describing Verizon’s discretionary powers and then
specifically pointed to the “the Company deems it appropriate” and “to the extent
necessary to relieve the surplus” language found in Article VII, Section 1.
10
have to make ISP/EISP offers to “non-surplus” employees. First, this argument only
works if the contractual language could be read as localizing the “surplus” to a work
group because – under that scenario – opening up the ISP/EISP benefits to employees
outside the work group would necessarily mean that those outside employees are “non-
surplus.” But, as shown above, the relevant contractual language never describes
“surplus” in the context of work groups; instead, “surplus” is only deployed in the context
of “job titles” and “work locations.” Second, sub-section (b) of Article VII, Section 1,
authorizes Verizon to limit the number of employees who can accept the ISP/EISP offer
to “the number of employees determined by the Company to be surplus.” This language
granting Verizon complete discretion to determine the size of a surplus would appear to
address Verizon’s concerns about over-eligibility among otherwise qualified candidates
for the ISP/EISP benefits. Lastly, were “surplus” interpreted the way Verizon advances,
the company would be empowered to make ISP/EISP offers narrowly so effectively as to
obviate the Article VII, Section 1 requirement that the offers be made “in the order of
seniority.” Put another way, Verizon’s reading of surplus would contravene the
contractual language by permitting the company to make non-layoff ISP/EISP offers to
individuals with less seniority than others of the same job title at the same work location.
For these reasons, we find no ambiguity in the language of Article VII, Section 1
requiring Verizon make non-layoff ISP/EISP offers to all individuals with the same job
title and at the same work location.
11
III. The Extrinsic Evidence
We next will consider Verizon’s extrinsic evidence. In reviewing this evidence,
however, we will not rely on it to “‘add terms to a contract that is plausibly complete
without them.’” Int’l Union, United Auto., Aerospace & Agric. Implement Workers of
America, U.A.W. v. Skinner Engine Co., 188 F.3d 130, 146 (3d Cir. 1999) (quoting
Bidlack v. Wheelabrator Corp., 993 F.2d 603, 608 (7th Cir. 1993) (en banc)). Instead,
“‘there must be either contractual language on which to hang the label of ambiguous or
some yawning void that cries out for an implied term.’” Skinner Engine Co., 188 F.3d at
146 (quoting Bidlack, 993 F.2d at 108) (ellipsis omitted); see also American Cynamid Co.
v. Fermenta Animal Health Co., 54 F.3d 177, 182 (3d Cir. 1995) (emphasizing that “the
focus must remain on the language chosen by the parties,” and that the “text unambiguous
when accorded the commonly understood meaning of its words cannot be disregarded
unless the extrinsic evidence is such as might cause a reasonable fact finder to understand
the text differently”); Teamsters Indus. Employees Welfare Fund v. Rolls-Royce Motor
Cars, Inc., 989 F.2d 132, 134 (3d Cir. 1993) (holding that “overwhelming and
uncontradicted” extrinsic evidence can be controlling as to a contract’s interpretation).
Verizon points to the following extrinsic evidence: The company has provided
testimony from Verizon managers that, from 1990 until 2001, it has operated its ISP/EISP
program for non-layoff employees by declaring surpluses within work groups without
complaint from Local 827. Verizon further asserts that Local 827 was aware of the way
12
the ISP/EISP program was being administered because the company sent a letter to the
union each time a surplus was identified and an ISP/EISP offer made. Between 1990 and
2001, approximately thirty such notices were sent to Local 827. The specificity of these
letters varied a great deal. Generally the ISP letters stated that the offer would go to job
titles at work locations without specifying that the offers would be limited to individuals
within identified work groups.6 The EISP letters tended to be more specific and typically
had either an attachment listing the employees within a work group who are to receive a
benefits offer, or, alternatively, the letter would state the number of employees within a
particular work group who are eligible to receive the offers. 7 Having reviewed this
6
One illustrative example is an ISP letter sent to Local 827's president on March 28,
1995. In it the company writes:
This is to inform you that force surplus exists in the Computerized Billing
Operation Organization. It is intended to offer ISP to Associates in the
following titles and locations: [Job Title – Service Analysts (29 Employees)
and General Clerks (11 Employees); Location – 1100 Orange Ave.,
Cranford].
Excerpts of Record (“E.R.”) at 671.
7
The following is an example of a typical letter detailing an EISP offer:
[June 19, 1995] This is to advise you that a force surplus exists in the
Information Systems, Process Management district located in Madison,
New Jersey. The Company will be offering [EISP] to one (1) Associate in
the Service Analyst title. The name, social security number and NCS date
of the effected [sic] employee are attached for your information.
If surplus still exists at the conclusion of the offer, it is the
Company’s intention to proceed to layoff to alleviate the surplus. . . .
E.R. at 673.
13
evidence, we conclude Verizon’s proffer does not create ambiguity in the plain meaning
of Article VII, Section 1.
Because the extrinsic evidence is only useful insofar as it illuminates the parties’
understanding of the contractual language, we focus on the letters that purport to show
that for over a decade Local 827 was aware of and continually acquiesced in Verizon’s
directed benefit offers to individuals within a work group. These letters, while helpful to
Verizon, do not indicate either “contractual language on which to hang the label of
ambiguous or some yawning void that cries out for an implied term,” Skinner Engine Co.,
188 F.3d at 146 (quoting Bidlack, 993 F.2d at 108) (ellipsis omitted).
It is clear from many of the letters that had the union leadership paid better
attention to the letters, the leadership would have understood that the company was at
least potentially interpreting the language of Article VII, Section 1 in a manner
inconsistent with the union’s own understanding of that language. To be sure, the ISP
letters are not models in clarity. Though the letters identify that a surplus exists in a
particular work group, they then go on to state that ISP offers would be made pursuant to
“Job Title” and “Location.” This latter description, of course, accords with the union’s
reading of Article VII, Section 1.8 Nonetheless, given the many letters over the ten-year
8
It is also unclear from the record that a work group is necessarily a subset of a work
location in all instances. If there are work locations that house a single work group, Local
827 would be unable to discern from the letters that benefit offers localized to a work
group necessarily meant that other nonparticipating work groups were also housed at the
same work location.
14
time span, a careful examination of these letters might have led the union leadership to
question the company’s implementation of Article VII, Section 1.9
Even as we recognize that the letters lend some support to Verizon’s arguments,
we do not find them so compelling as to require a radical reconstruction of the contract
language negotiated by the union and the company. Prior to 2001, there were no
employee-driven complaints about the way the company made benefit offers. Therefore,
as the union correctly points out, even if the leadership was aware of the company’s
conflicting interpretation of Article VII, Section 1, it had no recourse through which to
formally state its objections until the independent filing of a grievance by a union
member. Since the union cannot compel a member to retire or otherwise leave his or her
employment at the company solely for the purpose of challenging Verizon’s
understanding of the CBA, the union’s failure to protest before 2001 cannot be taken as a
particularly helpful signal of how Local 827 understood the contractual language during
this period.10 Thus, we conclude that Verizon’s evidence in support of its interpretation
9
Verizon argues that the deposition testimony of union steward, Fred Mazzaro,
supports its argument that Local 827 was actively aware that benefit offers were being
made by work group. However, Mr. Mazzaro’s testimony is that a 1996 non-layoff
ISP/EISP offer was “a special offer [made] just for his group,” which indicates that he
understood the offer was not made in accordance with the CBA. E.R. at 293. Further, he
also testified that “if Verizon is going to come in and offer the Enhanced ISP or ISP to its
employees, they should come in by title and location.” E.R. at 295. Thus Mr. Mazzaro’s
testimony does not support Verizon’s claim that the union read Article VII, Section 1 to
empower Verizon to make non-layoff benefit offers by work group.
10
Verizon also points the court to a 1992 letter sent to the president of Local 827 in
which the company states that it will make a one-time offer to a service analyst who was
15
of Article VII, Section 1 is itself ambiguous and, therefore, does not operate to render
ambiguous the plain language of the CBA. Cf. Rolls-Royce Motor Cars, Inc., 989 F.2d at
134.
IV. Conclusion
For the foregoing reasons, we will affirm the order of the District Court.
RENDELL, Circuit Judge, dissenting.
By giving laser-like scrutiny to the phrases “job title” and “location,” and
concluding that the absence of the term “group” or “department” is of critical
significance, see Maj. Op. at 6-9, the majority casts aside a decade of practice that
suggests, indeed, requires, that the concept of a “surplus” as used in Article VI, Section 1
of the CBA, when combined with the statement that Verizon “determines” the surplus,
means or assumes application within a particular functional group or department. The
mischief in which we engage undoes past practice entirely, declaring it verboten.
Whereas Verizon could previously deal with a surplus of analysts in the bookkeeping
not part of the declared surplus. E.R. at 616. This letter does not, however, support
Verizon’s argument that Article VII, Section 1 is ambiguous because it clearly describes
the party receiving the offer as non-surplus. Even if the employee was – as Verizon now
claims – rightly a surplus employee under the plain meaning of Article VII, Section 1, it is
not clear to us that the president of Local 827 would have possessed sufficient
information to make that determination independently of Verizon’s characterization.
Consequently, Local 827's 1992 acceptance of Verizon’s description of the employee as
non-surplus is not compelling evidence in support of the company’s interpretation of the
CBA.
16
department to everyone’s satisfaction by offering ISP benefits solely to analysts within
that department, it now can only remedy the situation by offering ISP benefits to all
analysts, and only if there is a surplus of analysts overall at a given location, which may
house ten or fifteen groups.
The majority’s opinion imposes a radically different business reality on Verizon
and the workers; before we do so, we should make sure that the determination of surplus
without the ability to consider the group or department was clearly contemplated and
agreed upon. In American Cyanamid Co. v. Fermenta Animal Health Co., 54 F.3d 177
(3d Cir. 1995), we noted the importance of language, but also of evidence that could
inform meaning, and stated that “a text unambiguous when accorded the commonly
understood meaning of its words cannot be disregarded unless the extrinsic evidence is
such as might cause a reasonable fact finder to understand the text differently,” id. at 182
(emphasis added). Here, we have such evidence. I, therefore, respectfully dissent, and
would reverse and remand for a determination of the parties’ intent in order to understand
the meaning of the provision in question. I cannot imagine that the meaning ascribed by
the majority would prevail.
17