BE&K Const. Co. v. United Broth. of Carpenters and Joiners of America, AFL-CIO

• Decision Date: 18 July 1996
• Docket Number: AFL-CIO,Nos. 95-1886,AFL-CI,D,95-1944,s. 95-1886
• Citation: 90 F.3d 1318
• Parties: 152 L.R.R.M. (BNA) 2833, 132 Lab.Cas. P 11,631, 35 Fed.R.Serv.3d 1438 BE & K CONSTRUCTION CO., Plaintiff-Appellee, v. UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA,; United Paperworkers International Union,, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1318

90 F.3d 1318

152 L.R.R.M. (BNA) 2833, 132 Lab.Cas. P 11,631,

35 Fed.R.Serv.3d 1438

BE & K CONSTRUCTION CO., Plaintiff-Appellee, v. UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA AFL-CIO; United Paperworkers International Union AFL-CIO, Defendants-Appellants.

Nos. 95-1886, 95-1944.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 10, 1996.

Decided July 18, 1996.

James E. Youngdahl, Birmingham, AL, argued (Erin B. Ahearn, on brief), for appellants.

Andrew D. Roth, Washington, DC, argued in No. 95-1886 (Robert M. Weinberg, on brief), for appellant United Brotherhood of Carpenters.

E. Mabry Rogers, Birmingham, AL, argued (F. Keith Covington, C. Tab Turner and Robert S. Shafer, on brief), for appellee.

Before WOLLMAN, CAMPBELL, ^* and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

This case involves claims brought by BE & K Construction Company (BE & K) against the United Paperworkers International Union (Paperworkers) and the United Brotherhood of Carpenters and Joiners of America (Carpenters). BE & K alleged that the unions had violated federal labor law and tortiously interfered with its contractual relations under Arkansas law. After a jury awarded BE & K $20,000,000 in punitive damages and $125,000 in compensatory damages, the district court denied motions for judgment as a matter of law, for a new trial, and for remittitur. The unions appeal from the order denying their post-trial motions and from the final judgment. We reverse and remand.

I.

BE & K is a non-union merit shop construction contractor headquartered in Birmingham, Alabama. It performs in-plant and construction work for various industries throughout the country. BE & K was hired by Potlatch Corporation as the general contractor on a construction project scheduled to begin in February 1992 at the Potlatch Cypress Bend mill in McGehee, Arkansas. Potlatch is a paper manufacturing company headquartered in San Francisco, California that operates a number of mills in northern Idaho, northern Minnesota, and southern Arkansas.

In early 1991 the Cypress Bend mill solicited bids for installation of a piece of equipment called a top former, or Bel Bond. Four bids were received, including BE & K's bid of $582,000. ¹ George Hight, the Potlatch Project Engineer responsible for selecting a contractor for the Bel Bond project, contacted a BE & K manager on October 10, 1991 and informed him that Potlatch had decided to award the project to BE & K. BE & K began preparations for the project.

Potlatch employees at the Cypress Bend paper mill are represented by two local Paperworkers unions, a maintenance local and a production local. ² The Paperworkers are an international union that represents in-plant production and maintenance workers at paper mills throughout the United States. The evidence at trial indicated that the local unions and the company maintain a cooperative relationship. Potlatch management meets regularly with representatives of the local unions and the Paperworkers to discuss issues of mutual interest concerning the operation of the Cypress Bend plant.

One such mutual interest meeting took place at the Cypress Bend plant on October 24, 1991, soon after Potlatch had hired BE & K for the Bel Bond construction project. The meeting was attended by thirteen Potlatch officials, including John Richards, the president and chief operating officer who was based in San Francisco but was in Arkansas to attend meetings, George William Morton, the Cypress Bend plant manager, and Beverly Burchfield, the Cypress Bend employee relations manager; ten local union officials, including Paperworkers Local 1532 President Bob Barber; and two international Paperworkers representatives, Joe Bradshaw and Tommy McFalls. The meeting lasted approximately two hours and covered a variety of topics.

At the meeting on October 24, Anna Haney, a Potlatch production superintendent, made a short presentation about the status of various projects in her division and mentioned that BE & K had been awarded a contract on the Bel Bond project. After her presentation, Tommy McFalls, Joe Bradshaw and Bob Barber made brief comments expressing their concern about the decision to hire BE & K and asked the company to reconsider. All three stated that they did not want anything to interfere with the good relationship Potlatch had with the local unions and said that hiring BE & K could lead to problems. They mentioned that BE & K's involvement in the project would likely attract the attention of the Carpenters. The Carpenters are a separate international union that represents workers in various trades and crafts, including carpenters and millwrights who build, renovate, and maintain industrial plants and machinery. They had organized a national publicity campaign to expose disputed labor practices of BE & K and other non-union construction contractors. McFalls explained that the Carpenters might picket and handbill at the site and that it was possible the unionized employees at Potlatch might join in. All the testimony from those present at the meeting, including the union representatives and the Potlatch officers, described the comments as bland and nonthreatening. No member of the Carpenters was present at the meeting.

Potlatch president Richards later testified that he had not been aware that BE & K had been hired for the Bel Bond project until it was disclosed at the meeting. When he heard that Potlatch had contracted with BE & K, he was surprised. He knew that BE & K had a reputation as a confrontational non-union company. He had also read about a riot that had occurred two years earlier in International Falls, Minnesota after a company had hired BE & K as construction manager for a major expansion project. ³ He feared that hiring BE & K could cause his company grief. He was surprised that the reaction of the union representatives was so low key and bland. When they suggested in their remarks that there could be problems, he again thought about the incident at International Falls. There was no evidence that that incident came to mind for any of the other twelve Potlatch officials in attendance or any of the union officials.

After the meeting, Richards told Morton that he was disturbed that BE & K was involved in the construction project. He was concerned that it might interfere with the good relationship between the company and the local unions and present possible problems similar to those at International Falls. He asked Morton to review the situation and attempt to get out of the contract. Richards later called Dick Congrieve, Morton's boss, and asked him to follow through on the situation. After calculating the costs involved, Morton terminated the contract with BE & K ⁴ and hired Boyed Sanders Construction Co., a union contractor, to do the job.

On October 28, a Potlatch official informed Bob Barber, the president of one of the local unions, that the contract with BE & K had been terminated, but that it would be better if that fact were not advertised. In April 1992, The Paperworker, the international union's magazine, published a report on a campaign to oust BE & K and other non-union contractors from paper mills and plants. It included the statement that "[e]fforts by Paperworkers Region Seven prevented BE & K from starting already-scheduled work at Potlatch's McGehee, Ark., mill." (Carpenters Appendix at 345).

There was no evidence that the Carpenters were involved in the October 24 meeting or that they even knew about it at the time or knew that Potlatch had hired BE & K, but there was evidence they were involved in a national publicity campaign directed at disputed labor practices of BE & K and other non-union contractors. In that campaign they sought and obtained substantial cooperation from the Paperworkers. The campaign involved the distribution of leaflets, informational picketing, publicity, speeches, presentations, and communications urging companies not to award contracts to BE & K. Neither party disputes that these activities are protected under federal law. The campaign raised issues concerning employee wages and benefits, job related safety, and the use of non-local workers on its projects. BE & K admits that it has a reputation as a company that is confrontational about union issues and has regularly worked in place of striking union members.

Edward J. Durkin, a leader of the Carpenters publicity campaign, learned after the fact that Potlatch had terminated its contract with BE & K. On November 8, 1991 he described the termination in a letter he sent to Carpenters agents involved in the campaign:

The president of the [Paperworkers], Wayne Glenn, reported last week to the [Carpenters] general president that Potlatch Corporation cancelled a construction project with BE & K at McGee [sic], Arkansas, just two weeks after it began to man the job. Paperworkers Vice-President Joe Bradshaw forcefully presented to Potlatch's CEO the union's concerns about the presence of BE & K at the mill. Within several days of the discussion, BE & K's 200 men were off the site [and] all evidence of BE & K was gone.... Solidarity works.

(Carpenters Appendix at 165).

After the Bel Bond contract was terminated, BE & K brought this action against the Carpenters and Paperworkers. It claimed that the unions had engaged in unlawful secondary boycott activity in violation of § 303(a) of the Labor Management Relations Act (LMRA), 29 U.S.C. § 187(a), by using threats and coercion to force Potlatch to cease doing business with BE & K. It also asserted that the unions had tortiously interfered with its contractual relationship or business expectancy under Arkansas law.

Both the federal and state claims were based on the statements made by Paperworkers McFalls, Barber, and Bradshaw at the October 24, 1991 mutual interest meeting with Potlatch officials. BE & K alleged that those comments amounted to threats of violence or other unlawful union...