Merk v. Jewel Food Stores Division of Jewel Companies, Inc.

CUDAHY, Circuit Judge.

This case involves application of the par-ol evidence rule to the unique context of collective bargaining agreements. Specifically, we must determine the legal significance of secret oral negotiations between union officials and company management that modify central terms of a collective bargaining agreement which was submitted to the union membership for ratification without any notice that it would be conditioned by additional terms.

I.

The relevant facts are as follows. Jewel Food Stores (Jewel) operates approximately 180 supermarkets in and around Chicago, employing over 15,000 workers who are represented by Local 881 of the United Food and Commercial Workers Union (the Union). In September 1982, Jewel and the Union began negotiating a new collective bargaining agreement (the CBA) to run *891from September 15, 1982 to June 15, 1985. Negotiations culminated in a contract which was reduced to writing and ratified by the Union membership on January 27, 1983. The CBA established wage rates, vacation leave and other terms of employment for the duration of the contract. Section 4.1 of the CBA, in particular, specified that “During the term of this Agreement, the Employer agrees to pay not less than the minimum wage rates set out in Appendix A.”

Had the CBA embodied the entire agreement between the parties, this case would have been easily resolved. But the outcome of negotiations was not so straightforward. Anxious about the potential entry into the Chicago market of warehouse competitors such as Cub Foods, Jewel insisted that the CBA contain a “most favored nations” clause, a provision that would allow it to match the wages of unionized competitors opening in the Chicago market after the start of the contract term. The Union refused this demand throughout the negotiations, and the final compact did not include a most favored nations clause. Just before the CBA was approved, however, Union president Fred Burki and two Jewel representatives — Neil Petronella, chief negotiator, and Marsh Collins, corporate vice president — forged a secret deal at an informal hallway meeting late in the evening of January 23, 1983. The precise terms of that deal are in dispute: Union officials claim that all they promised was to “sit and discuss” Jewel’s competitive position once Cub Foods entered the Chicago market whereas Jewel executives contend that they agreed to “an economic reopener with full reservation of rights.” An economic reopener provision permits the company to reopen all economic terms of the CBA upon occurrence of the condition precedent. Negotiations may then proceed as if the parties were bargaining over a totally new contract, and both sides retain their respective economic weapons, including the Union’s right to strike and the company’s right to lock out or unilaterally implement a final offer after bargaining to impasse. Whatever the terms of the secret oral agreement between Union officials and Jewel management, both sides affirm that it was never disclosed to or ratified by the Union rank and file even though ratification is required under the Union constitution and bylaws.

Cub Foods’ entry into the Chicago market in 1983 precipitated this dispute. Shortly thereafter, Jewel announced the reopening of contract negotiations. On February 26, 1984, when negotiations reached impasse, Jewel unilaterally implemented its final offer, cutting the wages of its employees below levels mandated by the CBA. Jewel slashed wages by as much as $1.25 an hour and reduced vacation and personal day benefits as well. The Union immediately filed an unfair labor practice complaint and sued to compel arbitration. The district court ordered Jewel to arbitrate. After an arduous course of negotiations, the Union and Jewel finally resolved their longstanding dispute on the eve of expiration of the CBA: Jewel agreed to award backpay to its current employees while the Union pledged to relinquish its unfair labor practice complaint and the district court suit. At Jewel’s insistence, however, the settlement abandoned the plaintiffs in this case — a class comprising approximately 2,000 Jewel employees who retired, quit or were fired during the protracted 15-month battle.

Claiming the back wages to which they believed they were rightfully entitled under the CBA, plaintiffs filed suit against the Union for breach of its duty of fair representation and against Jewel for breach of contract. The district court granted summary judgment for the Union, ruling that the Union owed no duty of fair representation to former employees. 641 F.Supp. 1024 (N.D.Ill.1986). In an interlocutory appeal, this Circuit upheld the district court’s ruling, 848 F.2d 761 (7th Cir.1988), and the Supreme Court denied certiorari, 488 U.S. 956, 109 S.Ct. 393, 102 L.Ed.2d 382 (1988).

Plaintiffs’ breach of contract action against Jewel, however, proceeded to a one-week jury trial. After the jury returned a verdict in favor of Jewel, plaintiffs moved for judgment notwithstanding the verdict and, in the alternative, for a new trial. The *892district court denied both motions, examining and rejecting each of plaintiffs’ arguments in turn. Invoking the parol evidence rule, plaintiffs first contested the district court’s admission of extrinsic evidence regarding the oral reopener to modify the provisions of the written CBA. But the district court submitted the parol evidence issue to the jury because it was not clear from the face of the CBA whether it was intended to embody the parties’ entire agreement. The jury determined that the CBA was not integrated and the district court apparently agreed with this conclusion, upholding the jury’s verdict as supported by the evidence. The district court also dismissed plaintiff's second argument, ruling that oral modifications to a written CBA do not violate national labor policy. Finally, it held that lack of ratification did not render the oral reopener agreement invalid. The jury found waiver of the ratification requirement based upon evidence of a past practice of adherence to unrati-fied side agreements. The district court agreed .with the jury’s conclusion but broadly declared that, in any event, Jewel had a right to rely on the unratified oral reopener absent clear notice that the Union was acting in bad faith against the interests of its members.

On appeal, plaintiffs challenge the verdict against them on the following grounds. First, they claim that the district court improperly admitted evidence of the oral reopener agreement in violation of the par-ol evidence rule. Second, they argue that the oral reopener agreement should not have been enforced because it violated the Union’s constitutional requirement that significant terms of the labor contract be ratified by union members. Third, they contend that section 8(d) of the Labor Management Relations Act (LMRA) and national labor policy militate against enforcement of a clandestine oral reopener agreement that contradicts the terms of the written and ratified CBA. Fourth, they maintain that the district court committed numerous evi-dentiary errors, entitling them to a new trial. Finally, they contest the district court’s dismissal of their claim for punitive damages.

II.

We review the district court’s denial of judgment notwithstanding the verdict de novo, applying federal common law (rather than the law of any state) to this suit for breach of a collective bargaining agreement. See Mohr v. Metro East Mfg. Co., 711 F.2d 69 (7th Cir.1983). For Congress has accorded labor contracts a special status, authorizing the courts to fashion a body of federal common law governing their enforcement. See Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456, 77 S.Ct. 912, 917-18, 1 L.Ed.2d 972 (1957) (“[Tjhe substantive law to apply in [breach of contract] suits under § 301(a) is federal law, which the Courts must fashion from the policy of our national labor laws.”). This special solicitude reflects the fact that the collective bargaining agreement is more than a mere contract — it is “the charter instrument of a system of industrial self-government.” United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 570, 80 S.Ct. 1343, 1347, 4 L.Ed.2d 1403 (1960) (Brennan, J., concurring). Ordinary common law contract principles, therefore, cannot simply be imported whole into the labor context and mechanistically applied to collective bargaining agreements. To foster industrial peace and stability, we must instead read collective bargaining agreements with sensitivity to considerations of national labor policy.

A. The Parol Evidence Rule

We must first determine whether the parol evidence rule bars the admission of testimony regarding the secret oral agreement. The parol evidence rule provides that evidence of prior or contemporaneous agreements or negotiations may not be introduced to contradict the terms of a partially or completely integrated writing. See Restatement (Second) of Contracts § 215. A writing is deemed fully integrated if the parties intend it to be the expression of their entire agreement. If they intend the writing to be the final expression of the terms it contains but not a complete expression of all the terms agreed *893upon — some terms remaining unwritten— the agreement is termed partially integrated. See E. Farnsworth, Contracts 452 (1982). If a writing is only partially integrated, evidence of prior or contemporaneous agreements is admissible to supplement its terms though not to contradict it. If an agreement is completely integrated, however, not even evidence of a “consistent additional term” may be introduced to elucidate the writing. See id.; Restatement (Second) of Contracts § 215.

Whether a writing is fully integrated is generally a question of law to be resolved by a court. See Calder v. Camp Grove State Bank, 892 F.2d 629, 631-32 (7th Cir.1990); E. Farnsworth, Contracts 460. A judge and not a jury should ordinarily answer this threshold question because it often requires going beyond the four corners of the written document and scrutinizing the very extrinsic evidence whose admissibility is at issue. See E. Farnsworth, Contracts 456 n. 25 (“[I]f there seems to be some circularity in examining the very evidence whose admissibility is at stake in order to determine its admissibility, it may help to keep in mind that this examination is made as a matter of law in order to determine whether the evidence shall go to the trier of fact.”). But the district court entrusted the issue of integration to the jury because the CBA did not on its face clearly indicate whether it was intended to incorporate all the terms of the contract. The jury accordingly heard testimony regarding the oral agreement and concluded that the CBA was not intended to be a complete integration of all the parties’ understandings. Because the district court concurred in the jury’s verdict that the CBA was not integrated, the parol evidence rule did not apply. Hence the secret side agreement could be introduced to vary or contradict the terms of the written CBA.

We agree that the parties did not intend the written terms of the CBA to embody their entire agreement, for neither the Union nor Jewel denies the existence of an additional oral term to the contract — they only dispute its content. Union officials claim that all they promised was to “sit and discuss” Jewel’s competitive position once Cub Foods entered the Chicago market. Jewel executives maintain, on the other hand, that they agreed to “an economic reopener with full reservation of rights conditioned on the entry of Cub Foods into the Chicago market.” Because both sides concede that there was an additional oral term to their contract, it necessarily follows that the written terms of the CBA did not represent a full integration. And once the CBA was found not integrated as a matter of law, it was proper for the jury to resolve the additional factual question of the precise terms of the oral promise. The jury ultimately believed Jewel’s version of the story, concluding that the parties had orally agreed to reopen the economic terms of the contract in the event Cub Foods penetrated the Chicago market. The oral reopener, therefore, became an enforceable part of the CBA.1

Mechanical application of the parol evidence rule would thus permit Jewel to introduce testimony regarding the oral side agreement. Yet our analysis of the parol evidence issue cannot proceed in a vacuum, abstracted from the particular setting in which it arose. Because this secret oral reopener undercuts obligations specified in a collective bargaining agreement, it inevitably implicates national labor policy. The critical question before us, then, is whether national labor policy allows enforcement of a clandestine oral side agreement that alters fundamental terms of the written and ratified collective bargaining agreement.

As the Supreme Court has recognized, a collective bargaining agreement is more than just a contract — it erects a system of industrial self-government. See United Steelworkers, 363 U.S. at 570, 80 S.Ct. at *8941347. Indeed, certain terms of the collective bargaining agreement are deemed so important that their negotiation is mandated by law. See Ford Motor Co. v. National Labor Relations Bd., 441 U.S. 488, 99 S.Ct. 1842, 60 L.Ed.2d 420 (1979). Yet the laws regulating labor relations would have little substance if the central provisions of the collective compact could be nullified by means of secret side agreements. Union officials and management would then be free quietly to barter away basic guarantees contained in the collective bargaining agreement and relied upon by all union members. In a slightly different context, Judge Easterbrook forcefully emphasized the hazards of oral side agreements that alter the terms of a written contract: “[Defenses based on ... oral side agreements ... are as a class the defenses most likely to breed litigation even when asserted in good faith, and they create manifold opportunities for manipulation by Crafty operators.” Central States Southeast and Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148, 1154 (7th Cir.1989) (en banc). To avert industrial strife, collective bargaining agreements must be more secure than garden variety contracts. Accordingly, we hold that national labor policy forbids introduction of prior or contemporaneous secret agreements to contradict fundamental terms of a ratified collective bargaining contract. This secret oral reopener is, therefore, inadmissible and unenforceable as a matter of federal law.

A number of courts have similarly refused on grounds of national labor policy to enforce covert oral side agreements that undermine the written collective bargaining agreement. The seminal case of this genre is Gatliff Coal Co. v. Cox, 152 F.2d 52 (6th Cir.1945), where the court adapted the par-ol evidence rule to the labor context to exclude evidence of an oral agreement that contradicted the terms of the written collective bargaining agreement. In that case, an oral side agreement between Gat-liff Coal and union officials allowed the company to pay lower wages than those specified in the collective bargaining agreement. Upon suit by employees compensated under the orally agreed-upon rates, rather than those mandated by the written compact, the court held that the National Labor Relations Act clearly precluded the company’s reliance upon a prior or contemporaneous oral agreement to modify the terms of the written collective bargaining agreement. See id. at 56 n. I.2

Gatliff Coal was followed in Local 509, Missouri-Kansas-Nebraska-Oklahoma District Council, Int’l Ladies Garment Workers Union v. Annshire Garment Co., 65 L.R.R.M. 2769 (D.Kan.1967), which prophesied that serious evils would ensue from recognition of a secret side agreement negating the terms of the written collective bargaining contract. Invoking national labor policy, the Annshire court declared: “To suppress industrial strife based on this type of controversy, national labor policy requires that the clear and unambiguous requirements of the written collective bargaining agreement be immune from attack founded on a covert side agreement.” Id. at 2772; see also N.D.K. *895Corp. and Food and Commercial Workers, Local 1550 AFL-CIO, 278 N.L.R.B. 151, 122 L.L.R.M. 1258 (1986) (“National labor policy requires that evidence of oral agreements be unavailing to vary the provisions of a written collective-bargaining agreement valid on its face.”); Restaurant Employees, Bartenders and Hotel Service Employees Welfare Fund v. Rhodes, 90 Wash.2d 162, 580 P.2d 611, 99 L.R.R.M. 2868 (1978) (federal labor law forbids parol testimony to vary the terms of a written collective bargaining agreement).

Ignoring this long line of precedent, however, the district court allowed introduction of the oral reopener to vary the terms of the written CBA. The district court relied upon Mohr v. Metro East Mfg. Co., 711 F.2d 69, to buttress its holding. But our decision is not inconsistent with Mohr, which held only that the parol evidence rule does not prevent an individual employer from modifying an industry-wide collective bargaining agreement reached between an employers association and an international union by means of oral agreements with the union local. As the Mohr court observed:

The agreement between the association and the international union was deliberately left incomplete in recognition of the diversity of circumstances to which it had to apply, thus allowing individual employers and their local unions to add to the provisions, whether by supplemental written agreements, or oral agreements, or as in this case by both sorts.

Id. at 72-73. Unlike the case at bar, the oral agreement in Mohr was not kept hidden from the Union membership. It dealt, moreover, with a purely peripheral matter regarding the terms of employment for schoolboys. Therefore, parol evidence was admissible in Mohr to supplement the general terms of the industry-wide collective bargaining agreement and to adapt them to local conditions.

We do not hold that a collective bargaining agreement must be in writing to be enforced. On the contrary, section 8(d) of the National Labor Relations Act does not require collective bargaining agreements to be in writing unless one of the parties requests that they be. Central States, Southeast and Southwest Areas Pension Fund v. Behnke, 883 F.2d 454, 459 (6th Cir.1989); Gariup v. Birchler Ceiling and Interior Co., 777 F.2d 370, 373-74 (7th Cir.1985); Eastern Washington Distributing Co., 216 N.L.R.B. 1149, 1151 (1975). Section 8(d) thus embodies a considered decision to allow oral collective bargaining agreements when both parties prefer them. Hamilton Foundry & Machine Co. v. International Molders and Foundry Workers Union, 193 F.2d 209, 214 (6th Cir.1952). Therefore, a collective bargaining agreement may be partly or wholly oral as well as partly or wholly in writing, and a written collective bargaining agreement may be orally modified. Certified Corp. v. Hawaii Teamsters and Allied Workers, 597 F.2d 1269, 1271-72 (9th Cir.1979).

The real danger posed by this reopener agreement stems from its secrecy and not simply from its oral character. No one disputes that the oral reopener was, at the behest of Union officials, deliberately concealed from the union membership. In a precursor to the present litigation, Jewel filed a counterclaim alleging that the Union had breached the oral reopener agreement in violation of section 301. In denying Jewel’s counterclaim, Judge Getzendanner perceptively singled out the vice of this secret side agreement:

[The] oral agreement is inadmissible and unenforceable under the parol evidence rule as a matter of federal law_ Jewel’s argument that the written contract is not a complete integration is insufficient to avoid application of the parol evidence rule since even a partially integrated written agreement cannot be contradicted by evidence of a prior oral understanding. This rule is particularly important in the context of labor relations, lest union leaders engage in side agreements unknown to the rank and file membership.

United Food & Commercial Workers Union v. Jewel Food Stores, No. 84 C 1648 (N.D.Ill. April 8, 1985) (Getzendanner, J.). The economic reopener strikes at the heart of the CBA: it throws open the most cen*896tral provisions governing wages and benefits upon the entry of Cub Foods into the Chicago market. Yet Jewel and the Union explicitly collaborated to keep the oral reo-pener hidden from the rank and file membership despite its paramount significance. Thus Union members who reasonably believed that they were guaranteed a fixed rate of pay for the duration of the CBA unexpectedly found their wages slashed at mid-term. Under these circumstances, enforcement of an oral reopener that was concealed and withheld from ratification by the membership is certainly in derogation of national labor policy.

B. The Ratification Requirement

Our holding does not rest solely upon Gatliff Coal, which completely eschewed all evidence of prior or contemporaneous agreements modifying the provisions of a collective bargaining agreement. For the facts of this case acquire their significance from the use of secrecy and the failure to seek ratification from the Union membership. We emphasize that non-ratification was coupled here with a deliberate policy of secrecy—a factor which is crucial to our analysis. Federal law does not itself require ratification of a collective bargaining agreement. In this case, however, the Union’s own constitution and bylaws mandate that collective bargaining agreements be ratified. Jewel understood, moreover, that the oral reopener had not been ratified by the Union membership in violation of the Union constitution. Failure to ratify under circumstances where an employer is aware both of the ratification requirement and of the failure to comply with it may invalidate an employer’s claims under the unratified agreement. See Goclowski v. Penn Central Transportation Co., 571 F.2d 747, 756-58 (3d Cir.1977); Meyerson v. Contracting Plumbers Ass’n, 606 F.Supp. 282 (S.D.N.Y.1985).

Jewel argues, however, that a past practice of non-ratification of contract terms could establish waiver of the ratification requirement. See Central States Southeast and Southwest Areas Pension Fund v. Kraftco, Inc., 799 F.2d 1098, 1113—14 (6th Cir.1986). In Kraftco, the Sixth Circuit suggested in dicta that waiver of the ratification requirement could be imputed from well-entrenched practices and customs amounting to an established history of non-ratification. Yet Jewel has failed to demonstrate any established history of non-ratification of substantial terms of the labor contract. It is true that peripheral terms of the contract involving personal days, fatigue mats and the cluster group seniority system were generally viewed as binding even though unratified. But these provisions do not rise to the level of significance of a reopener that abrogates basic wage provisions upon the occurrence of a specified condition. The reopener involved a matter of fundamental importance—it dealt with the central question whether any of the employees in the bargaining unit could rely upon the level of wages ostensibly guaranteed by the CBA for its duration. It is disingenuous to equate such a provision with the terms regarding fatigue mats or the rollback of paid personal days. In fact, the reopening of labor contracts during their term is deemed so significant that it is expressly forbidden by Section 8(d) of the National Labor Relations Act except when provided by contract. This provision argues strongly against unrati-fied reopeners. See generally Texaco v. National Labor Relations Bd., 722 F.2d 1226 (5th Cir.1984); Meyerson, 606 F.Supp. 282.

We decline Jewel’s invitation to infer waiver of the ratification requirement from past instances of non-ratification involving contract terms of such trifling magnitude. To do so would be counter to national labor policy. It would encourage unions to submit every issue—no matter how trivial—to the membership for ratification out of fear of waiver. Failure to ratify routine matters, therefore, should not be deemed a blanket waiver of the ratification requirement as to the essence of a collective bargaining agreement.

In its strenuous efforts to establish a past practice of waiver, Jewel can point to only one meaningful instance of non-ratification. An unratified provision of the 1969 collective bargaining agreement be*897tween Jewel and the Union allegedly allowed wages to be reopened and renegotiated upwards in the event that the Teamsters Union attempted to organize the workers. But any resemblance between the 1969 reopener and the 1983 reopener stops short at the surface, for the 1969 provision furthered the interests of all parties: Jewel benefited by keeping the Teamsters out of its stores, the Union benefited by retaining its membership and the members benefited by gaining a possible raise in salary. Such a provision, therefore, is hardly analogous to a controversial wage reopener allowing Jewel to cut wages unilaterally in the event that another employer paying lower wages entered the market.

The district court found failure to ratify the reopener immaterial even in the absence of any past practice of non-ratification. Citing Chrysler Workers Ass’n v. Chrysler Corp., 834 F.2d 573, 582 (6th Cir.1987), the court broadly pronounced that Jewel had a right to rely upon its agreement with the Union whether or not it was ratified absent clear notice that the Union was acting in bad faith against the interests of its members. See Merk v. Jewel Food Stores, 734 F.Supp. 330 (N.D.Ill.1990). The district court’s interpretation of Chrysler Workers, however, is inapposite. For Chrysler Workers involved a side letter agreement between a union and a former employer which dealt only with certain workers’ transfer rights. Such an agreement is hardly comparable to a provision which could potentially result in the lowering of the wage level of workers in the bargaining unit across the board. Of even greater importance, moreover, is the fact that the side agreement involved in the Chrysler Workers case was not kept hidden from the union membership. Notice and an explanation of the side agreement were, on the contrary, readily available to all union members:

Shortly after the letter agreement the Union put plaintiffs and other “work opportunity employees” who had transferred to the Lima plant on notice of a meeting to be attended by international union representatives in July of 1982 to “explain the agreement and to answer questions.” There was no affirmative act of concealment.

834 F.2d at 582. By contrast, in the present case the economic reopener was deliberately concealed from the membership and Jewel participated at least passively in this concealment.

Union officials explicitly enjoined Jewel management to keep the reopener secret. Jewel is hardly an unsophisticated employer. Aware of the secrecy surrounding the oral reopener, it must have drawn the obvious conclusion that the terms of the side agreement would not be submitted for ratification or even disclosed to the Union membership. Jewel now argues that it believed the secrecy was intended solely to keep the reopener hidden from the International Union. But whether concealment was motivated by a desire to keep the side agreement from the membership or from the International is irrelevant: the reopen-er was in fact kept from the membership and Jewel was on notice of this fact. Subsequently, when it was submitted to the membership in connection with the present plaintiffs’ suit against the Union, this same reopener was overwhelmingly voted down. It would not have been difficult for Jewel to predict that such a provision would have been at least highly controversial and might well have been overwhelmingly defeated by vote of the membership. We need not close our eyes to industrial realities.

Jewel now argues, however, that the reo-pener may not have been ultimately to the detriment of the membership. Perhaps the oral reopener stood in place of the most favored nations clause initially sought by Jewel, a provision which might have been even more onerous to the membership. Or perhaps Jewel would not have agreed to as high a wage level as it did had it not been able to obtain the oral reopener. But it is not for us to decide whether the reopener would have ultimately benefited or harmed the Union membership. All that is clear is that the reopener was a matter of critical concern that should have been disclosed to the membership and submitted for ratification. Union leaders may actually com*898prehend the needs of their members better than the members do themselves. This type of paternalism, however, is hardly consonant with the accepted principles of union democracy enshrined in the federal labor laws. Accordingly, we hold as a matter of federal law that Jewel was not entitled to rely upon a reopener that it knew was not ratified, or even disclosed to the union membership, in violation of the Union constitution.3

The dissent concedes that an agreement by an agent without actual or apparent authority is empty under the law. As the dissent points out, union officials lacked actual authority to agree to an unratified reopener and they lacked apparent authority because Jewel knew of the ratification requirement but acquiesced in a deliberate policy of secrecy. The dissent attempts to avoid the logical consequences of its concessions, however, by reiterating Jewel’s argument that a past practice of non-ratification of contract terms demonstrated waiver of the ratification requirement. In particular, the dissent focuses upon the unratified 1969 reopener. According to the dissent, the nub of our argument is that “[r]eopeners are OK when they help the employees ... but not when they help the employer.” Infra at 906. But the dissent obviously mischaracterizes our holding. Non-ratification of the 1969 reopener is unproblematic not because it might have benefited the membership but rather because it would clearly have been ratified. The 1969 reopener was not a burden but a benefit whose ratification would have gone unquestioned. For surely no one would or could complain of concealment of a benefit. This is tantamount to being pleasantly surprised by a gift.

The 1983 reopener, on the other hand, concealed a burden (a potential wage reduction) from the membership against whom it was later enforced. Purporting to evenhanded treatment of both sides, the dissent maintains that secret side agreements should be enforced equally whether they redound to the benefit of the employer or the employee. Despite its seductive symmetry, however, the dissent’s argument is substantively flawed. For with respect to information, employers stand in a position radically different from employees. Employers are apprised of every facet of the collective bargaining agreement — oral or written, secret or publicized to all the world. Thus no aspect of the collective bargaining agreement — whether it is beneficial or detrimental — catches the employer by surprise.

The dissent insists for unexplained reasons upon the dubious proposition that labor is a commodity of the same order as coal, a view that is definitively refuted by the law: “The labor of a human being is not a commodity or article of commerce.” Section 6 of the Clayton Act, 15 U.S.C. § 17; see also Transportation-Communication Employees v. Union Pacific R.R., 385 U.S. 157, 160-61, 87 S.Ct. 369, 371, 17 L.Ed.2d 264 (1966) (“A collective bargaining agreement is not an ordinary contract for the purchase of goods and services, nor is it governed by the same old common-law concepts which control such private contracts.”). The dissent also trumpets the need for flexibility in labor relations. Flexibility may be a virtue in collective bargaining agreements but it should hardly extend *899to surreptitious downward adjustments of basic wages. Such changes, if concealed, are highly destabilizing, producing strikes and lawsuits which the national labor policy does indeed eschew. The dissent protests overmuch about Gatliff Coal, which takes the common-sense position that paying wages based upon an oral side agreement (presumably undisclosed to the employees) in the face of a written contract for higher wages violates national labor policy because it obviously promotes industrial unrest and bitter controversy. Disparaging Gatliff Coal as old and outmoded, the dissent cites no more recent case on point.4 The dissent is unable to find any case which holds contra to Gatliff Coal. That is probably because the principles of fairness underlying Gatliff Coal are still central to the labor law of the land.

C. Punitive Damages

Finally, plaintiffs’ request for punitive damages must fail. The district court properly concluded that punitive damages should not be awarded in this suit for breach of a collective bargaining agreement. As the district court cogently reasoned, if punitive damages are not available for breach of the duty of fair representation, see International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 99 S.Ct. 2121, 60 L.Ed.2d 698 (1979), then they are surely not available for a simple breach of contract. For astronomical damages might threaten the goal of harmonious resolution of labor disputes which is at the core of national labor policy. At the very least, we should not award punitive damages in this case because it involves at worst a simple breach of contract uncomplicated by evidence of fraud or other tortious misconduct. See Patton v. Mid-Continent Systems, Inc., 841 F.2d 742, 750-51 (7th Cir.1988).

HI. .

The district court apparently examined each of plaintiffs’ arguments in isolation, overlooking their combined significance. One by one, the court addressed the parol evidence rule, the Union’s ratification requirement and national labor policy. Taken individually, as the district court did here, none of plaintiffs’ arguments may be dispositive. Read together, however, they clearly illuminate the grave dangers posed by a backroom deal that is secretly negotiated between union officials and company management without the knowledge or consent of the union rank and file. The district court’s decision is therefore Reversed and Remanded for further proceedings consistent with this opinion.

. The jury could in theory have reached another conclusion: it could have determined that the CBA represented a partial integration, at least as to basic economic terms such as wage rates and the duration of the contract. The jury could have found that the written CBA embodied the entire agreement of the parties as to these fundamental terms. Had the jury so concluded, parol testimony could not have been admitted to contradict the CBA although it might still have been introduced to supplement the CBA with respect to collateral matters.

. Elaborating at length upon the problem of secret side agreements, the Gatliff Coal court declared:

In utilizing collective bargaining agreements to implement a National Labor policy designed to remove certain recognized sources of industrial strife by encouraging friendly adjustment of industrial disputes as to wages, hours of work and other conditions of employment, upon a plane of equality of bargaining power between employers and employees, the National Labor Relations Act, in the public interest, has given such collective bargaining agreements a more secure and stable position in our National economy than that of ordinary common law contracts which may be altered at pleasure by rendering ineffectual and unavailable any collateral agreements between individual members of the collective bargaining group designed to obtain a diminution of the obligations of a particular employer or abridgment of the benefits accruing to particular employees under the collective agreement.... To hold otherwise "would reduce the National Labor Relations Act to a mere futility and leave collective agreements no stronger than the weakest members of the union.” Statutes requiring collective bargaining would have little substance if what was made collectively could promptly be unmade individually.

152 F.2d at 56 n. 1 (citations omitted).

. McLaughlin & Moran, Inc., 299 N.L.R.B. No. 7 (1990), does not hold otherwise. In McLaughlin, the union sought to escape a collective bargaining agreement on the grounds that it had failed to follow its own procedures for ratification by allowing casual employees to vote. The National Labor Relations Board concluded, however, that the collective bargaining agreement was binding only because the company had no reason to know or suspect that any mistake had been in the ratification process. “That the [union] may have mistakenly followed the wrong procedures,” the Board wrote, "does not absolve it from being bound by the representations [the union negotiator] made to [the company], when [the company] had no way of knowing or even suspecting that a mistake may have been made." Ignoring this careful language, the dissent maintains that an agreement approved by union officials is binding regardless whether or not it is ratified. But the dissent’s reading of McLaughlin is far too broad: McLaughlin does not go so far as to allow a company to rely upon an agreement made in flagrant violation of a union ratification requirement even when the company is aware both of the requirement and that it has been flouted.

. The dissent cursorily refers to a string of cases which it claims run counter to Gatliff Coal. But, read closely, these cases hold only that parol evidence may be considered to resolve ambiguities or fill in gaps in a written collective bargaining agreement. E.g., Matuszak v. Torrington Co., 927 F.2d 320 (7th Cir.1991) (can look to course of dealing to determine whether laid-off employee may receive seniority for time of layoff); Bokunewicz v. Purolator Prod., Inc., 907 F.2d 1396 (3rd Cir.1990) (can look to parol evidence to determine when employees’ benefits vested); Manville Forest Prod., Inc. v. Paper-workers Union, 831 F.2d 72 (5th Cir.1987) (can look to past practices and negotiating history to determine whether company was obliged to fill "broke hustler” position if shut-down paper machine were reactivated); Machinists v. Sargent Indus., 522 F.2d 280 (6th Cir.1975) (can resort to parol evidence to elucidate meaning of term "sound actuarial basis” used in CBA). None of these cases dealt with the problem addressed in Gatliff Coal and presented here — whether to enforce a secret agreement that contradicts fundamental terms of a written CBA.