861 F.2d 1124 (9th Cir. 1988), 85-1665, Mesa Verde Const. Co. v. Northern California Dist. Council of Laborers

Docket Nº:85-1665, 85-2074.
Citation:861 F.2d 1124
Case Date:November 15, 1988
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1124

861 F.2d 1124 (9th Cir. 1988)








Defendant- Appellant.

Nos. 85-1665, 85-2074.

United States Court of Appeals, Ninth Circuit

November 15, 1988

Argued En Banc and Submitted March 16, 1988.

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Victor J. Van Bourg, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, Cal., for defendants-appellants.

Mark R. Thierman, Thierman, Cook, Brown & Mason, San Francisco, Cal., for plaintiff-appellee.

Patrick J. Syzmanski, Washington, D.C., for amicus N.L.R.B.

Lawrence Gold, Washington, D.C., for amicus Dist. Council of Carpenters of Seattle, King County & Vicinity, and Local 3 Intern. Union of Operating Engineers.

G. Brockwell Heylin, Washington, D.C., for amicus Associated General Contractors of America, Inc.

Douglas N. Friefield, San Francisco, Cal., for amicus W.B. Skinner, Inc.

Judd H. Lees, Williams, Kastner & Gibbs, Bellevue, Wash., for amicus Ken Hash Const.

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


WIGGINS, Circuit Judge:

The Northern California District Council of Laborers and the Carpenters 46 Northern California Counties Conference Board (together Laborers) appeal from the district court's declaratory judgment that Mesa Verde Construction Company (Mesa Verde) effectively repudiated pre-hire collective bargaining agreements between the parties. Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of Laborers, 598 F.Supp. 1092 (N.D.Cal.1984). A panel of this court affirmed, 820 F.2d 1006 (9th Cir.1987), but the Laborers' suggestion for rehearing en banc was subsequently granted. 832 F.2d 1164 (9th Cir.1987). We hold that the decision of the National Labor Relations Board (NLRB) in Deklewa v. International Ass'n of Bridge, Structural and Ornamental Ironworkers, Local 3, 282 N.L.R.B. No. 184, 1986-87 NLRB Dec. (CCH) p 18,549 (Feb. 20, 1987), enforced 843 F.2d 770 (3rd Cir.1988), determining that pre-hire collective

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bargaining agreements may not be unilaterally repudiated prior to a Board-certified election or termination of the contracts, applies in this circuit. We remand to the panel to determine whether to apply Deklewa retroactively under the principles of Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 355-56, 30 L.Ed.2d 296 (1971).


The panel summarized the facts of the case:

Mesa Verde is a general contractor, specializing primarily in constructing shopping centers in Arizona, California, and Colorado. Mesa Verde typically subcontracts out most of its work except for some carpentry and odd jobs. In 1979 it reached its first agreement with the Laborers, and on June 26, 1980 it signed the contract with the Laborers that is here in dispute. The contract was to remain in effect until June 15, 1983 and would continue thereafter from year to year absent written notice by either party. By the contract's terms Mesa Verde agreed to "comply with all wages, hours, and working conditions set forth in the Laborers' Master Agreement for Northern California." That agreement is a sixty-seven-page contract between the Laborers, the Associated General Contractors of California, Inc. and the Bay Counties General Contractors Association. It sets wage rates for numerous jobs and provides for arbitration, with certain exceptions, of "any dispute concerning the interpretation or application of the agreement." On November 17, 1982 Mesa Verde and the Laborers agreed in writing that their 1980 contract would continue in effect until June 15, 1986.

Mesa Verde first entered into a collective bargaining agreement with the Carpenters in August 1979. Through a memorandum agreement Mesa Verde and the Carpenters accepted the Carpenters Master Agreement for Northern California, a forty-nine-page contract between the Carpenters, the Building Industry Association of Northern California, the California Contractors Council, Inc. and the Millwright Employers Association. That agreement sets rates for numerous jobs and provides for arbitration of "[a]ny dispute concerning the relationship of the parties, any application or interpretation of this Agreement." Through a subsequent memorandum agreement executed in June 1980 the parties accepted the new June 16, 1980 to June 15, 1983 Carpenters Master Agreement. On September 8, 1982 Mesa Verde and the Carpenters early extended the master agreement to June 15, 1986, with certain modifications limiting wage increases and providing more flexible working conditions for Mesa Verde.

Mesa Verde informed the unions of its intent to abrogate its agreements with them in May of 1984. At the time Mesa Verde was working on a project in Hercules, California, at which it employed members of both unions. Mesa Verde notified the Carpenters of its repudiation through a May 8, 1984 letter and notified the Laborers through a May 15, 1984 letter. In late May or early June of 1984, after its notice to the unions, Mesa Verde started another project in Orland, California without union workers, in contravention of the collective bargaining agreements, if they were still in effect. Both unions gave Mesa Verde notice of grievance and requested arbitration regarding Mesa Verde's contractual obligations for the Orland project.

Mesa Verde, 820 F.2d at 1007-08.

Mesa Verde sought a declaratory judgment that it was not obligated to arbitrate

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the grievances which arose after it gave notices of termination. The district court stayed arbitration of the grievances pending resolution of the declaratory judgment action. The court then granted Mesa Verde summary judgment against both the Carpenters and the Laborers. Mesa Verde, 598 F.Supp. at 1094. The court held that the collective bargaining agreements at issue were construction industry "pre-hire" agreements and that, therefore, under 29 U.S.C. Sec. 158(f) (section 8(f) of the National Labor Relations Act (NLRA)), Mesa Verde's May 1984 letters were sufficient to repudiate their agreements with respect to future projects. Mesa Verde, 598 F.Supp. at 1101. The court denied a subsequent motion by the Laborers to vacate the court's judgment and to grant the Laborers additional discovery to demonstrate the existence of a core group of employees. Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of Laborers, 602 F.Supp. 327, 330 (N.D.Cal.1985).

A panel of this court affirmed. It followed circuit precedent and held that unilateral repudiation by an employer of a pre-hire collective bargaining agreement was permitted. Mesa Verde, 820 F.2d at 1012; see also International Bhd. of Elec. Workers, Local 441 v. KBR Elec., 812 F.2d 495, 497-98 (9th Cir.1987); NLRB v. Pacific Erectors, Inc., 718 F.2d 1459, 1462-63 (9th Cir.1983). A majority of this court voted to rehear the Laborers' appeal en banc. 832 F.2d 1164 (9th Cir.1987). En banc review was limited to: (1) whether Deklewa should be applied retroactively to this case, and (2) whether the rule of Royal Dev. Co., Ltd. v. NLRB, 703 F.2d 363, 369 (9th Cir.1983), that a panel may not overrule prior panels' interpretations of the NLRA even when intervening NLRB cases decide differently, should be overruled.

Background--Judicial History of Section 8(f).

The NLRA generally requires that a union possess majority support before it may act as the bargaining representative for a group of employees. Sections 8(a)(1), (2) and 8(b)(1)(A), 29 U.S.C. Sec. 158(a), (b), collectively require that a union possess majority support before a collective bargaining agreement can be negotiated. See ILGWU v. NLRB, 366 U.S. 731, 737, 81 S.Ct. 1603, 1607, 6 L.Ed.2d 762 (1961) [hereinafter Garment Workers ]. Historically, however, the construction industry had established its own unique collective bargaining practices. One such practice was the use of pre-hire agreements between construction unions and employers that allowed the industry's employers to obtain a guaranteed work force before a particular job was begun. In 1948, the NLRB first asserted jurisdiction over the construction industry. See, e.g., Carpenters Local 74, 80 N.L.R.B. 533 (1948); Ozark Dam Constructors, 77 N.L.R.B. 1136 (1948); cf. In Re Johns Manville Corp., 61 N.L.R.B. 1 (1945). The Board refused to make any exceptions to its general rule that minority contracts were illegal and unenforceable. In a number of cases, the Board rejected the "general custom and practice in the construction industry" and held that pre-hire collective bargaining agreements were illegal and unenforceable. See, e.g., Daniel Hamm Drayage Co., 84 N.L.R.B. 458, 460 (1950) ("custom and practice" argument better directed to Congress than to the Board); Chicago Freight Car, 83 N.L.R.B. 1163 (1949). In response, Congress, recognizing the longstanding use of pre-hire agreements in the construction industry, added subsection (f) to section 8 of the NLRA. S.Rep. No. 187, 86th Cong., 1st Sess. 27 (1959), U.S.Code Cong. & Admin.News 1959, p. 2318, reprinted in I Legislative History of the Labor-Management Reporting and Disclosure Act of 1959, at 397, 423-24 1959) [hereinafter Leg.Hist.]. 1

Following the enactment of section 8(f), the Board first held that the majority status

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of a union executing a pre-hire agreement may not be challenged in an unfair labor practice proceeding. Bricklayers Local 3, 162 N.L.R.B. 476, 477-79 (1966), enforced 405 F.2d 469 (9th Cir.1968); Oilfield Maintenance Co., 141 N.L.R.B. 1384, 1387 and n. 10 (1963). See NLRB v. Local Union No. 103, Int'l Ass'n of Bridge Structural & Ornamental Ironworkers, 434 U.S. 335, 350-51, 98 S.Ct. 651,...

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