Case Study $5-1$ Good$-$Faith Negotiations

The Company owns and operates a nursing home for the elderly at its facility in Los Angeles,

California. Jeoung Lee $($J$.$ Lee$)$ is president of the Company. Although the Company is a

corporation, witnesses spoke of J$.$ Lee as the $$owner$.$ The Company and the Union were

parties to one collective bargaining agreement that expired on June $30.$ The Company and the

Union conducted six negotiating sessions over the terms of a new agreement. The Union was

represented by Estrada and the Company by Yokoyama and Jarvis, neither of whom had

previously negotiated a collective bargaining agreement for the Company. According to Jarvis,

prior to commencement of negotiations, J$.$ Lee, who speaks broken English, met with him and

Yokoyama. She told them to go to the negotiating meetings and bring back information.

Yokoyama testified that his role was to represent J$.$ Lee at negotiations, to give information

requested by the Union during negotiations, and to collect any information or agreement and

present it to J$.$ Lee.

According to the Union, Jarvis told the negotiating group that Yokoyama had the authority

to negotiate and that J$.$ Lee had empowered Yokoyama with the authority to reach final

agreement for the Company. The Union denied there was any discussion that a final agreement

would need to be approved by J$.$ Lee.

Yokoyama, testifying for the Company, said that Estrada asked at each negotiation session

why J$.$ Lee was not present, and they answered that she was extremely busy and could not attend

but that J$.$ Lee would be the final person to approve any contract.

The last negotiations lasted eight to nine hours and, with a federal mediator$$s help, the

parties reached a final agreement. The parties initialed a six$-$page document entitled

$$Tentative Agreement, Summary of the Agreement,$$ which included an appendix of wage

rates effective July $1.$ According to the Union, the parties discussed the fact that the

bargaining unit employees needed to vote on the provisions before the agreement could be

considered final but there was no discussion about J$.$ Lee or anyone else in management

having to approve any agreement.

According to Yokoyama and Jarvis, after the parties reached a tentative agreement, the

Union asked if the Company was going to sign the contract. Yokoyama told them that he could

not sign the contract without J$.$ Lee signing the contract, that she would be the final person to

approve the contract. Yokoyama testified that he reminded the Union he would initial each point,

but the final approval would have to be made by J$.$ Lee and then the Union asked, $$When is

J$.$ Lee going to look at this?$$ One union bargaining team member confirmed that the Company$$s

representatives said they would have to show J$.$ Lee the agreement.

Yokoyama personally left the draft agreement in J$.$ Lee$$s office in her absence and also gave

a copy to the payroll office, explaining that it was a tentative agreement. On July $1,$ the Company

implemented the wage provisions set forth in the tentative agreement. In early August, upon her

return from Korea, J$.$ Lee told Yokoyama that she did not approve of the wage increases and that

she wanted to change wages back to what they were prior to July $1.$ J$.$ Lee then held a meeting

with employees and told them that the increases were not part of the agreement, that the increase

was too costly$,$ and nobody had told her that they had signed a contract on her behalf. Without

notifying the Union, the Company rescinded the wage increases.

$$mutual$-$gains,$$ or $$integrative$$ approach. The integrative

approach, unlike distributive bargaining, involves seeking

compatible issues by moving beyond stated positions or

demands and instead discussing underlying interests to

reach an agreement, and searching for mutually acceptable

options and logical trade$-$offs. Negotiators generally strive

to develop proposals that meet some interests of both sides

because as Ted Kheel stated in the chapter$-$opening quote$$

unless both sides can receive something more than what the

status quo provides, there is nothing for them to negotiate!

$200$ Part II $$ The Collective Bargaining Process

The Union filed an unfair labor practice for refusing to sign the negotiated agreement and

for not notifying the union that the wage increase was being rescinded. The Union pointed out

that the duty to bargain carries an obligation to appoint a negotiator with genuine authority to

carry on meaningful bargaining on key issues. And while an employer is not required to appoint

an individual possessing final authority to enter into an agreement, the law is clear that an agent

assigned to negotiate a collective bargaining agreement is clothed with apparent authority to

bind the principal unless notice is given to the contrary. Therefore, if the agent does not have

authority to bind his principal, notice of that must be clearly and unambiguously given. If an

employer$$s agent does n