868 F.2d 573 (3rd Cir. 1989), 88-5554, Laborers' Intern. Union of North America, AFL-CIO v. Foster Wheeler Corp.

Docket Nº:88-5554, 88-5570 and 88-5571.
Citation:868 F.2d 573
Party Name:LABORERS' INTERNATIONAL UNION OF NORTH AMERICA, AFL-CIO Appellant/Cross Appellee, v. FOSTER WHEELER CORPORATION, and Foster Wheeler Energy Corporation, Appellees/Cross Appellants.
Case Date:February 22, 1989
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 573

868 F.2d 573 (3rd Cir. 1989)


Appellant/Cross Appellee,



Corporation, Appellees/Cross Appellants.

Nos. 88-5554, 88-5570 and 88-5571.

Submitted Under Third Circuit Rule 12(6)

United States Court of Appeals, Third Circuit

February 22, 1989

Dec. 16, 1988.

Rehearing Denied March 21, 1989.

Orrin Baird, David Elbaor, Connerton, Ray & Simon, Washington, D.C., for Laborers' Intern. Union of North America, AFL-CIO.

Albert B. Jeffers, Morristown, N.J., and Perry M. Rosen, Stuart Rothman, Rogers & Wells, Washington, D.C., for Foster Wheeler Energy Corp.

Vincent J. Apruzzese, Francis A. Mastro, Apruzzese, McDermott, Mastro & Murphy, Springfield, N.J., for Foster Wheeler Corp.

Before GIBBONS, Chief Judge, and HUTCHINSON and HUNTER [*], Circuit Judges.

Page 574



1. This case addresses the propriety of a district court's delegation to an arbitrator of the decision whether a nonsignatory corporation was bound by its subsidiary's national labor agreement. Plaintiff-appellant, cross-appellee Laborers' International Union of North America (the "Union") appeals from a judgment entered in the district of New Jersey holding that on June 6, 1985, defendant-appellee, cross-appellants Foster Wheeler Corp. ("FWC") and Foster Wheeler Energy Corp. ("FWEC") unilaterally repudiated a collective bargaining agreement with the Union (the "National Agreement"). The Union contends that the district court erred because FWC and FWEC could not repudiate a collective bargaining agreement unilaterally, and even if they could, did not do so until August 9, 1985.

2. FWC and FWEC, the defendants in the district court, cross-appeal. FWC contends that the district court erred in compelling arbitration because FWC was not a party to the contract at issue. FWEC contends that the district court erred because unilateral repudiation occurred considerably before June 6, 1985.


3. FWC is an international holding company consisting of various subsidiaries involved in construction. The Union is the bargaining agent for laborers employed by one of FWC's subsidiaries, FWEC. The Union and FWEC are parties to the National Agreement whereby FWEC agreed that most of its work, and the work of FWEC's subsidiaries, would be performed pursuant to the National Agreement. The Union, in return, guaranteed that the work would be performed pursuant to the National Agreement regardless of locale. The National Agreement included a grievance procedure covering "any dispute over the application or interpretation of this Agreement." The National Agreement expires annually on July 15 of each year and is automatically renewed unless specifically terminated or amended by the parties. FWC was not a signatory to the National Agreement.

4. In 1979, FWC formed another wholly-owned subsidiary, Energy Plant Constructors, Inc. ("EPC"), to operate as a construction contractor on a nonunion basis. FWC is thus a "double-breasted" contractor--FWEC is its unionized subsidiary and EPC is its nonunionized subsidiary. EPC is not a party to this case.

5. In the fall 1984, EPC won a contract from the Mobil Oil Exploration and Production Southeast, Inc. ("MOEPSI"), to construct a natural gas processing plant near Mobile, Alabama. EPC hired its first field construction employee at the MOEPSI site on April 2, 1985, but did not apply FWEC's National Agreement with the Union at the MOEPSI site. The Union, FWC, and FWEC corresponded back and forth about this situation in the spring of 1985. On June 3, 1985, the president of EPC wrote to the Union and said that EPC "is not and never has been party to any collective bargaining agreement" with the Union. The Union received the letter on June 6, 1985. The Union responded by suggesting arbitration as to the applicability of the National Agreement, but FWEC refused. On July 11, 1985, FWEC informed the Union that FWEC had no control over EPC. On August 9, 1985, FWEC notified the Union that it was repudiating the National Agreement to the extent that the National Agreement was allegedly applicable to the MOEPSI project.

6. On August 29, 1985, the Union filed this action under the Labor Management Relations Act, 29 U.S.C. Sec. 185(a), and ch.11, Labor Management Reporting and Disclosure Procedure, 29 U.S.C.A. Sec. 401 et seq., seeking an order compelling FWC and FWEC to arbitrate. The Union also asked for damages in its representative capacity.

7. FWC moved to dismiss the complaint on the grounds that FWC was not a party to FWEC's National Agreement with the Union and, in any event, that FWC had repudiated the National Agreement. FWEC moved to dismiss the complaint on the grounds that the question presented went to representation and thus was for the National Labor Relations Board. The Union cross-moved for summary judgment.

Page 575

8. On December 9, 1985, the district court held that FWC was bound to arbitrate because the Union had presented sufficient facts which, if proven, would demonstrate an alter ego relationship between EPC and FWC. The district court reserved judgment until after the arbitration on whether the National Agreement had ever been lawfully repudiated. In addition, the district court, over the objections of FWC and FWEC, granted the Union limited discovery on the issue referred to arbitration.

9. FWC and FWEC moved for reconsideration which the district court denied. FWC and FWEC then took an interlocutory appeal to this court which we dismissed for lack of appellate jurisdiction. Laborers' Int'l Union of N. Am. v. Foster Wheeler Corp., Nos. 86-5079, 80 (3d Cir. May 1, 1986).

10. On November 10, 1986, an arbitrator held that FWC and FWEC had violated the National Agreement. The arbitrator stated first that FWC and FWEC were alter egos and consequently that FWC was bound by FWEC's National Agreement with the Union. Second, he held that FWEC was the true contractor at the MOEPSI site and that EPC was nothing more than a subcontractor. Third, the arbitrator characterized FWEC and EPC as joint or common employers and thus both bound by the National Agreement.

11. FWC and FWEC moved for summary judgment in the district court, contending that the National Agreement had been repudiated prior to the commencement of work on MOEPSI and that the arbitrator had misinterpreted the National Agreement. The Union cross-moved for enforcement of the arbitrator's award.

12. On October 7, 1987, the...

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