26 F.3d 375 (3rd Cir. 1994), 93-5208, Laborers' Intern. Union of North America, AFL-CIO v. Foster Wheeler Energy Corp.

Docket Nº:Appellant in No. 93-5208
Citation:26 F.3d 375
Case Date:May 20, 1994
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 375

26 F.3d 375 (3rd Cir. 1994)


Appellant in No. 93-5208


FOSTER WHEELER CORPORATION; Foster Wheeler Energy Corporation.




Corporation, Foster Wheeler Energy Corporation

Appellant in No. 93-5233.




Corporation, Foster Wheeler Corporation Appellant

in No. 93-5243.

Nos. 93-5208, 93-5233 and 93-5243.

United States Court of Appeals, Third Circuit

May 20, 1994

Page 376

[Copyrighted Material Omitted]

Page 377

Argued Dec. 10, 1993.

Theodore T. Green (argued), Michael Barrett, Intern. Laborers Union of North America, Washington, DC, for Laborers' Intern. Union of North America.

Vincent J. Apruzzese (argued), Francis A. Mastro, Apruzzese, McDermott, Mastro & Murphy, Liberty Corner, NJ, for Foster Wheeler Corp.

Stuart Rothman (argued), David D. Dibari, Rogers & Wells, Washington, DC, for Foster Wheeler Energy Corp.

Before: BECKER and NYGAARD, Circuit Judges, and YOHN, District Judge. [*]

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BECKER, Circuit Judge.

This appeal arises out of bitterly contested litigation over the applicability of a national "prehire" labor agreement to a worksite in Alabama. At ultimate issue is the defendant employers' failure to hire the employees engaged at the site from the plaintiff union's hiring hall. The parties have been ceaselessly embroiled in this matter for over eight years. During this time they have appeared before the district court thrice and an arbitrator once; they are now before this Court for the third time. Given what appears to us to be the relatively modest stakes and the fact that the primary point of contention in the case will probably never recur, 1 it is unfortunate that their litigation strategies have prevented them from settling. We can only hope that the opinion that follows will edge them toward a swift resolution of their remaining disputes instead of propelling them back to the arbitrator for another round of pugnacious battle.

The principal question before us, one we will answer in the affirmative, is whether the district court erred in not applying retrospectively the National Labor Relation Board's decision in John Deklewa & Sons, Inc., 282 N.L.R.B. 1375 (1987), enf'd sub nom. Iron Workers, Local 3 v. NLRB, 843 F.2d 770 (3d Cir.) (per curiam), cert. denied, 488 U.S. 889, 109 S.Ct. 222, 102 L.Ed.2d 213 (1988). A host of other questions is also before us, but many of them are rendered extraneous by our resolution of the retrospectivity question. As to those we need reach, we first conclude that the district court properly referred the issue of damages to the arbitrator, but should also have referred the question of breach as well. In addition, we will clarify the mandate we issued the last time the parties appeared before this Court--specifically, we will describe its effect on two factual findings which an arbitrator had made and the district court had adopted prior to the parties' second rendezvous here--and comment on the employers' contention that no damages may flow from their alleged breach of the prehire agreement because the union operated an illegal hiring hall in contravention of the prehire agreement as well as state and federal law.

In the end, we will instruct the district court to modify its Order of June 22, 1992, as modified on March 11 and 31, 1993, and to direct the parties to arbitrate the issue of breach of their pre-hire agreement in addition to the issue of damages, if any, flowing therefrom.


  1. Facts

    1. The Parties

      Foster Wheeler Corporation ("FWC") is a major international construction firm with its principal place of business in Livingston, New Jersey. For a long time it was an exclusively union shop employer. It entered into its first National Agreement with the Laborers' International Union of North America, AFL-CIO ("LIUNA") in 1973, agreeing thereby, among other things, to recognize and acknowledge LIUNA as the exclusive bargaining representative for all field construction workers it would employ. LIUNA, in return, guaranteed that the terms of the agreement would govern irrespective of locale.

      In 1974, in pursuit of a long-term expansion plan, FWC reorganized its commercial operations and became a holding company. Among FWC's motives for reorganizing was to become a double-breasted contractor, that is, to establish the capability to compete in both the open shop and the union shop markets. On November 11, 1974, FWC notified LIUNA that it had transferred its domestic engineering, manufacturing, and construction activities to Foster Wheeler Energy Corporation ("FWEC"), a newly formed, wholly-owned subsidiary, and that it had correspondingly assigned to FWEC all labor agreements covering the affected employees. Since then FWC has neither performed field construction work nor entered into field construction

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      labor agreements; instead, FWEC (but not FWC) was listed as the employer in each subsequent National Agreement with LIUNA. FWEC itself was segmented into independently operated divisions, including Foster Wheeler World Services ("FWWS"), which performed all of FWEC's field construction work on a union basis, and Houston Engineering Center ("HEC"), which performed FWEC's engineering and procurement services.

      Four years later, FWC furthered its 1974 reorganization plan and spawned Energy Plant Constructors, Inc. ("EPC"), a wholly-owned subsidiary which FWC formed and designed as the open shop counterpart to FWEC. To implement its open-shop policies, EPC hired its own employees and administered its own labor relations policies. EPC discontinued business operations in 1987.

      LIUNA is the parent body of LIUNA Local 70 of Mobile, Alabama. The Local, in accordance with its constitution and bylaws, is affiliated with a regional building and trades council, Mobile Building Trades Council ("MBTC"). MBTC represents and acts on behalf of LIUNA Local 70 with regard to the negotiation and administration of labor agreements.

    2. The Agreement

      On April 20, 1982, FWEC and LIUNA entered into the National Agreement (the "Agreement") at issue here. The Agreement applied to all construction projects "performed by the Employer or by any person, firm or corporation owned or financially controlled by the Employer" within the political boundaries of the United States, except for those performed in one of three states (not including Alabama) already subject to a Tri-State Agreement.

      On covered projects, the Agreement imposed several noteworthy requirements on FWEC: to hire employees through the referral systems of LIUNA's local affiliates; to recognize LIUNA as the exclusive bargaining agent for those employees; to adhere to certain requirements regarding wages, fringe benefits, and overtime; and to compel its subcontractors to comply with the substantive terms of the Agreement. The Agreement, however, expressly relieved FWEC of any obligation to recruit laborers through any local area hiring hall whose procedures violated state or federal laws or discriminated for or against laborers on the basis of their union membership.

    3. The Project

      At approximately the same time as FWEC was entering into its new agreement with LIUNA, Mobil Oil Exploration & Producing Southeast, Inc. ("MOEPSI") began the process of selecting a general contractor to oversee the engineering and construction of a sour gas treatment and sulfur recovery facility it wanted built at Bayou Jonas near Mobile. The project consisted of an offshore platform and natural gas production facility, a pipeline to carry the gas onshore, and a sour gas treatment and sulfur recovery plant (the only portion of the project to which this case relates). Through a rather convoluted set of developments, MOEPSI eventually nominally awarded the construction contract for the gas processing plant to EPC in October 1984, with FWC guaranteeing EPC's performance and EPC nominally subletting the engineering work to HEC (a division of FWEC). This arrangement as depicted by the documents was suffused with subterfuge, however, for it is quite clear from the record, as both the district court and the arbitrator independently found, that in reality FWEC was the actual prime contractor on the MOEPSI project and EPC its subcontractor. 2

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      The local press widely publicized MOEPSI's award of the contract to EPC--as well as EPC's open-shop policy--during the fall and winter of 1984. LIUNA officials, suspicious of the goings-on, made numerous inquiries to the defendants concerning the application of the Agreement to the MOEPSI project. Apparently in each instance the defendants informally told the LIUNA officials that EPC was a non-union contractor not bound by the Agreement, and that, accordingly, the project would be completed by non-union labor. There is disputed evidence regarding whether FWEC affirmatively misrepresented to LIUNA its part in the project and its relationship to EPC.

      As already mentioned, the Agreement required signatory employers to comply with the hiring provisions of local affiliates, but only if they were operated legally and did not discriminate against non-union laborers. MBTC, LIUNA's local affiliate, operated a hiring hall for construction workers, but, to LIUNA's chagrin, it discriminated against

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      non-union members. 3 Seemingly unaware of MBTC's discrimination, EPC--itself not a signatory to the Agreement--opened its own hiring office for the MOEPSI project on January 29, 1985. Since the local press had widely publicized the available job opportunities, EPC received over 5,000 applications in the three days the hiring office accepted them. EPC hired all the construction workers it...

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