Orange Belt Dist. Council of Painters No. 48 v. Kashak

Citation774 F.2d 985
Decision Date24 October 1985
Docket NumberNo. 84-6387,84-6387
Parties120 L.R.R.M. (BNA) 3036, 54 USLW 2279, 104 Lab.Cas. P 11,755 ORANGE BELT DISTRICT COUNCIL OF PAINTERS NO. 48, et al., Plaintiffs-Appellees, v. Dave KASHAK dba Dave Kashak Painting Co., Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Stuart Libicki, Terri A. Tucker, Schwartz, Steinsapir, Dohrmann & Sommers, Los Angeles, Cal., for plaintiffs-appellees.

Richard C. Binder, Pasadena, Cal., for defendant-appellant.

Appeal from the United States District Court for the Central District of California.

Before SNEED, NELSON and NORRIS, Circuit Judges.

SNEED, Circuit Judge:

Kashak appeals from a judgment of the United States District Court for the Central District of California that confirmed an arbitration award in favor of the plaintiffs (the Union). Kashak contends that the matter was not properly before the arbitration panel and that the arbitration process was defective. We affirm.

I. FACTS

In May 1975, Kashak, who operates a painting company, entered into an agreement with the Union. The agreement required Kashak to make fringe benefit contributions to several trust funds on behalf of his employees and to submit his books and records to the trustees of the fund for examinations and audits upon demand. The 1975 agreement was renewed twice; the most recent contract covered Kashak's relation with the Union from 1980 to 1985. Kashak apparently complied with the contribution requirements through June 1982. E.R. at 153-54, 205.

On July 26, 1982, pursuant to the agreement, the Union asked Kashak to produce his books and records for audit. Id. at 179. On July 30, 1982, Kashak responded by sending a certified letter to the Union that purported to "serve as notice that [Kashak] does hereby repudiate and terminate any and all collective bargaining agreements which might exist between employer and your labor organization." Id. at 171. The Union received the letter on August 2.

On September 20, 1982, the Union, following procedures prescribed in its May 14, 1975 agreement with Kashak, filed a charge against Kashak with the Joint Judicial Committee (the Committee), an informal tribunal established by article 11 of the agreement. The Union charged that Kashak had violated the agreement by failing to produce his books and records for examination by the Union. Kashak was ordered by the Committee to produce his books and records for the period covering May 1975 through September 1982 or to pay $7,500 in liquidated damages to the trust fund.

In accordance with the terms of the agreement, Kashak appealed the Committee's order to a properly authorized arbitrator. The agreement empowered arbitrators to resolve "any disputes whether such have arisen under this or previous agreements." Id. at 82-83. At the hearing in April 1983, the arbitrator proposed that the parties stipulate that "this dispute is properly in arbitration pursuant to the terms of the ... agreement." Id. at 144. Kashak agreed to that stipulation, but he added that he would "reserve all [his] rights to object to the arbitration based upon any defenses [he] might have to the collective bargaining agreement itself." Id. at 145. The attorney for the Union was satisfied with this, noting: "[I]t is my understanding that the employer ... reserves any defenses that it has and that the arbitrator is in power to determine those defenses in the first instance." Id. (emphasis added). Kashak's attorney made no objection to the Union's understanding of his reservation. That each perfectly understood the other is not certain.

On the merits, Kashak argued in arbitration that the Committee's award violated California's statute of limitation for contract actions. More importantly, however, he insisted that the agreement had been repudiated by his letter of July 30, and that he therefore had no further obligations under the agreement. The Union argued that the repudiation was ineffective because the Union had achieved majority support among Kashak's employees before Kashak's letter of repudiation. The arbitrator accepted the Union's evidence of majority support and found for the Union. Id. at 206-07. The arbitrator therefore ordered Kashak to submit his books and records to the Union for inspection and audit. He also assessed liquidated damages against Kashak in the amount of $1,000, as provided in the agreement.

Kashak refused to comply with the arbitration award. The Union then filed a petition in the district court to have the award confirmed. The arbitration award was confirmed. Kashak in a timely fashion filed this appeal.

II. DISCUSSION
A.

Because this case involves a somewhat complex area of labor law, we begin by stating applicable general principles. An employer violates the National Labor Relations Act, 29 U.S.C. Secs. 151-169 (1982) (the Act), if he enters into an agreement with a labor organization that has not won a representation election sponsored by the National Labor Relations Board or that has not been recognized pursuant to the procedures specified in the Act. International Ladies' Garment Workers' Union v. NLRB, 366 U.S. 731, 81 S.Ct. 1603, 6 L.Ed.2d 762 (1961). Section 9(a) of the Act, 29 U.S.C. Sec. 159(a) (1982), requires that the exclusive bargaining agent for an appropriate group of employees be the union that has been "designated or selected for the purposes of collective bargaining by the majority of the employees." Id. (emphasis added); see R. Gorman, Basic Text on Labor Law: Unionization and Collective Bargaining 203 (1976) [hereinafter cited as R. Gorman].

Section 8(f) of the Act, 29 U.S.C. Sec. 158(f) (1982), however, provides a narrow exception to this general rule. That section permits an employer "engaged ... in the building and construction industry" to negotiate a labor agreement with a union, even if that union has not demonstrated "majority status." Congress added Sec. 8(f) to the Act in 1959, Pub.L. No. 86-257, Sec. 705(a), 73 Stat. 519, 545 (1959), in part because it recognized that construction industry employers typically have different jobs in different localities, complete work projects in a relatively short time, and hire a highly transient workforce organized along traditional craft lines. Because of these circumstances, Congress felt that employees in the construction industry rarely would have a sufficient stake in any one employer to petition for a certification election. See R. Gorman, supra, at 647. Contracts authorized by section 8(f) are usually called "pre-hire" agreements, although they need not be negotiated before a construction employer hires his workforce. A simpler definition is: A section 8(f) agreement is a labor contract negotiated between a construction employer and a "union [that] does not represent a majority [of the employees] at the time of contract execution." Construction Erectors, Inc. v. NLRB, 661 F.2d 801, 804 (9th Cir.1981).

Nonetheless, a section 8(f) agreement does not have the same status as a collective bargaining agreement. An employer, for example, may unilaterally repudiate a section 8(f) agreement; thereafter he is not bound by its provisions. NLRB v. Local Union No. 103, International Association of Bridge, Structural & Ornamental Iron Workers (Higdon), 434 U.S. 335, 341, 98 S.Ct. 651, 655, 54 L.Ed.2d 586 (1978). Nor may a union picket a construction site to force an employer to comply with a section 8(f) agreement. Id.

Section 8(f) agreements are not, however, without any legal significance. Prior to employer repudiation, the monetary obligations of a section 8(f) agreement can be enforced against him in the federal courts. See Jim McNeff, Inc. v. Todd, 461 U.S. 260, 267-72, 103 S.Ct. 1753, 1757-59, 75 L.Ed.2d 830 (1983). Perhaps more significantly, if the union gains the support of a majority of the employees, an employer can no longer repudiate the agreement. It will have ripened into a fully-binding, mature collective bargaining agreement. Id. at 268-69, 103 S.Ct. at 1757-58; Higdon, 434 U.S. at 345-46, 98 S.Ct. at 657-58.

B.

Kashak admits that the original agreement was a valid section 8(f) agreement. He contends only that he had no obligations under the agreement, because the Union did not have majority support when he repudiated the agreement. This argument is wide of the mark. The Union requested the books and records on July 26, 1982, shortly before Kashak repudiated the agreement. Inasmuch as the agreement expressly authorizes such audits, Kashak was bound to make the requested materials available for the period before his attempted repudiation. This obligation was unaffected by his repudiation. To argue that his repudiation released him from any duty to fulfill preexisting obligations under the agreement flies in the face of Jim McNeff, Inc. v. Todd, 461 U.S. 260, 271, 103 S.Ct. 1753, 1759, 75 L.Ed.2d 830 (1983) (allowing a union to enforce "obligations accrued under a prehire agreement prior to its repudiation"). A failure of the Union to attain majority support would not relieve Kashak of the duty to produce the books and records attributable to periods before the date of the attempted repudiation. The arbitrator's decision on this point is clearly correct.

C.

Kashak's claim relating to records for periods after the attempted repudiation fails for a different reason. The agreement had become fully binding. The arbitrator found majority support. Both parties argued the majority support issue to the arbitrator. See E.R. at 148 (oral argument by Kashak's attorney at the arbitration hearing), 175 (brief of Union to arbitrator), 178 (same) & 181-82 (reply brief of Kashak to arbitrator).

Kashak insists, however, that he did not submit this issue to the arbitrator, and that the district court should not have confirmed the arbitration award, but should have made an independent determination on the majority support issue. 1 He relies on his attorney's reservation...

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