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Alexander v. Standard Oil Co.





APPEAL from the Circuit Court of Madison County; the Hon. JOSEPH J. BARR, Judge, presiding.


Plaintiffs appeal from the trial court's order granting defendants' motion for summary judgment. Action was originally brought by 34 plaintiffs on March 1, 1976, alleging that defendants, Standard Oil Company and American Oil Company, had committed a breach of certain employment contracts. Defendants filed a motion to dismiss, alleging that the court lacked subject matter jurisdiction because of preemption by the National Labor Relations Act. The motion to dismiss was denied. On appeal, this court affirmed the denial, finding that the trial court did have jurisdiction of the subject matter. Alexander v. Standard Oil Co. (1977), 53 Ill. App.3d 690, 368 N.E.2d 1010.

On August 16, 1978, defendants filed an amended answer, alleging, inter alia, that for valuable consideration, 24 of the plaintiffs had signed general releases of all causes of action, claims, and liabilities against the defendant, which releases were executed after the accrual of the cause of action set forth in plaintiffs' complaint. The suits of 10 of the plaintiffs who are alleged to have signed releases have been dismissed, and such plaintiffs are not involved in this appeal. Defendants' motions for summary judgment against the 14 plaintiffs who executed the releases and who remained in the suit were granted by the trial court and such plaintiffs appeal.

Parenthetically, at the outset of the employer-employee relationship created between plaintiffs and defendants, the employer was designated as Standard Oil Company, and the employer in subsequent employment dealings with plaintiffs was specified to be American Oil Company, also known as Amoco. This change in designation of the employer has not been explained in the current proceedings in this court; however, such change in designation is not material to this appeal. Therefore, we refer to the employer as "defendant" hereafter.

Dispute between the parties arose from a change in employment relationship, apparently undertaken within the petroleum industry as a result of the energy crisis. Prior to the dispute, plaintiffs had been "commission agent" employees of defendant, pursuant to individual contracts of employment. The contracts set forth the terms and conditions of the employment and the payment of commissions. It also provided for termination of the contracts by either party at will by giving 90 days notice.

Each plaintiff was also a member of the Central States Petroleum Union; and the last union contract executed with defendant incorporated the individual employment contracts by reference. The union contract expired on August 31, 1973, and was extended by agreement until August 31, 1974. It provided, inter alia, that defendant would pay to each plaintiff a percentage commission based on plaintiff's sales of specified products (known as "regular commissions") and a commission based on a percentage of the gross sale price of defendant's direct sales of other products to plaintiffs' customers in each plaintiff's geographic territory (known as "cross-sell commissions").

Negotiations between the union and defendant failed to result in a new contract, and the union brought charges before the National Labor Relations Board, alleging unfair labor practices under section 8 of the National Labor Relations Act (29 U.S.C. § 158). The Board refused to issue a complaint, finding insufficient evidence that defendant failed and refused to bargain in good faith by unilaterally changing terms and conditions of employment and by seeking to implement proposals without bargaining in good faith. The Board noted that the parties had engaged in extensive negotiations for four months, during which time defendant maintained the position that fuel prices of September 1, 1973, as opposed to current market prices, should be employed in computing the distribution commissions of its agents. The Board observed that defendant contended: (1) that the recent extraordinary rise in petroleum prices had resulted in a windfall to its agents through the inflation of commissions based on the prices of the products delivered; and (2) that, as a consequence of such inflation of commissions, undue costs were thereby imposed on the defendant because Federal Energy Office regulations precluded the inclusion of increased distribution commissions in price increases to the customer. Further, the Board noted that the union had presented no alternative to the use of September 1, 1973, fuel prices for the calculation of commissions. Finally, the Board found that since further negotiations appeared fruitless, there was no basis for the union's contention that the parties had not reached impasse on the issue before defendant implemented its proposal.

In the spring of 1975, contemporaneous with the NLRB's refusal to issue a complaint, defendant initiated a nationwide conversion program whereby commission agent employees, including the plaintiffs, would alter their contractual status with defendant to become independent "jobbers" of defendant's products. Commission agent employment status was to be discontinued entirely under the conversion program. As a result, each commission agent was presented with two alternatives; he could execute a "conversion agreement" and become an independent jobber, or he could execute a "final settlement agreement," ending his relationship with the company.

The conversion program was explained to the commission agent employees in a series of meetings arranged by defendant commencing in 1975. Each employee was given a handbook explaining the conversion alternatives.

While the conversion program was being continued, the plaintiffs filed their complaint in the circuit court on March 1, 1976. The complaint alleged breach of employment contracts based on the union contract and individual employment contracts. Damages were alleged to have been suffered by plaintiffs by reason of nonpayment of the cross-sell commissions and the fact that the regular commissions paid were being based on the product price in effect on September 1, 1973, rather than the higher current market price for all sales made after January 1, 1975. Defendant responded by filing its motion to dismiss, alleging that the court lacked jurisdiction of the subject matter. As we have previously stated, the motion to dismiss was denied, and the denial was subsequently affirmed on appeal to this court.

During the interim following filing of the instant suit, each of the plaintiffs named herein except one has executed the conversion agreement, thereby becoming independent jobbers. The single exception, Ralph Billington, executed a final settlement agreement. Both the conversion agreements and the final settlement agreement contained the following release:


(a) With only those exceptions stated in subparagraph (b) of this Paragraph 9, and in consideration of the execution of this Agreement, AMOCO and BUYER mutually and unconditionally release and discharge each other from any and all claims, causes of action, and liabilities, whether known or unknown, arising from any agreement, transaction or cause of dealing between the parties or from AMOCO's policies and practices up to and including the date of this Agreement.

(b) Sub-Paragraph (a) of this Paragraph 9 shall not affect: (i) AMOCO's obligations to BUYER under Company Employee Benefit Plans and the Agent's Severance Allowance Plan as accrued to the Closing Date, (ii) BUYER's obligation to account for AMOCO's funds and merchandise handled by BUYER as an agent, or (iii) AMOCO's and BUYER's performance ...

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