“Read First, Sign Second” . . .
By Guest Author Joseph G. Schmitt, Esq.
Nilan Johnson Lewis P.A.
Canadian Pacific Plaza
120 South Sixth Street, Suite 400
Minneapolis, MN 55402
The Eighth Circuit Court of Appeals recently reminded employers of the importance of reading union agreements before signing on the dotted line.
In T.E A.M. Scaffolding Systems, Inc. v. United Brotherhood of Carpenters and Joiners of America, 29 Fed. Appx. 414, 2002 U.S. App. LEXIS 1029 (Jan. 24, 2002), the Court of Appeals held that an employer would be bound by a union agreement because its representative signed that agreement even though neither the representative nor the employer ever read the document.
This case arose when T.E.A.M. wished to obtain subcontracting on a union job. The union informed T.E.A.M. that it would be required to sign an agreement to obtain this work. T.E.A.M.’s representative arrived prepared to sign the agreement, and was presented with a quarter inch stack of documents by the union. The representative simply signed at signature lines designated by the union without reading any of the documents. The employer also never received copies of any of the executed documents. The union placed a document entitled the “Number One Agreement” in the quarter-inch stack of documents. This agreement was a one page, two-sided comprehensive agreement requiring T.E.A.M. to provide union wages and terms of employment on all work completed within the union’s national jurisdiction for the next three years. The representative never read this document and never intended to agree to its terms.
The Court Enforces the Union Contract
Two years later, T.E.A.M. discovered the terms of the Agreement. T.E.A.M. asked the Court to strike down the contract as unenforceable, while the union brought a claim for damages. T.E.A.M. argued that it had never read the Agreement, and that the union had obtained the Agreement through fraud. The Court of Appeals rejected these arguments. The Court of Appeals held that it was irrelevant that the representative had not read the contract before signing it. The Court also concluded that T.E.A.M.’s failure to receive a copy of the contract did not render the contract unenforceable. Instead, the Court of Appeals held that T.E.A.M. had chosen its risks and that T.E.A.M. would now be bound by the terms of the written Agreement.
Lessons for Employers
One of the first principles of good business practice is never to sign an agreement before you have read that document. The Court of Appeals’ decision in T.E.A.M. merely reaffirms the importance of “read first, sign second.” In the union context, employers are often pressured to sign lengthy, complicated documents without time to appreciate or understand those documents. Employers are strongly encouraged to obtain legal advice before signing any union document, no matter how innocuous that document may appear.