Carpenters' Local Union No. 1478 v. Stevens

Decision Date04 October 1984
Docket Number83-6145,Nos. 83-6144,s. 83-6144
Citation117 LRRM 2023,743 F.2d 1271
Parties117 L.R.R.M. (BNA) 2023, 117 L.R.R.M. (BNA) 3095, 101 Lab.Cas. P 11,139 CARPENTERS' LOCAL UNION NO. 1478, Petitioner-Appellee, v. Neal STEVENS, Respondent-Appellant. Neal STEVENS, Plaintiff-Appellant, v. CARPENTERS' LOCAL UNION NO. 1478; Southern California Conference of Carpenters, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

John T. DeCarlo, DeCarlo & Connor, Los Angeles, Cal., for petitioner-appellee.

James T. Winkler, Atkinson, Andelson, Loya, Ruud & Romo, Long Beach, Cal., for respondent-appellant.

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

Before SNEED and BOOCHEVER, Circuit Judges, and SOLOMON *, District Judge.

SNEED, Circuit Judge:

Neal Stevens appeals from the district court's enforcement of an arbitration award for $4706.26 in favor of Carpenters' Local Union No. 1478 (the union). Stevens contends that the arbitrator's award is inconsistent with earlier findings made by the National Labor Relations Board (the Board) in an election proceeding. We agree, and because the arbitrator's award is contrary to applicable principles of labor law, we reverse.


This case arises out of the operation of two entities: EOS Enterprises, Inc. (EOS) and Neal Stevens Contracting (NSC), a sole proprietorship. EOS commenced operations in 1975 and is engaged in the concrete construction business. It is wholly owned by Neal Stevens and his wife, Jean Stevens, and employs an average of four to seven carpenters. The union and EOS have never entered into a collective bargaining agreement. NSC also is involved in the construction business. When NSC began operations in 1977 Stevens signed a memorandum agreement with the union on behalf of NSC that incorporated the master labor agreement between the Southern California General Contractors and the United Brotherhood of Carpenters and Joiners. Apparently this was done to assure that an individual whom EOS wished to hire as a superintendent would continue to receive union fringe benefits. E.R. 45. In 1980, Stevens executed a second memorandum agreement that incorporated the 1980-83 master labor agreement. The other party to the memorandum agreements was the Southern California Conference of Carpenters, which represents the district councils and local unions of the United Brotherhood of Carpenters and Joiners in eleven southern California counties.

The memorandum agreements generally obligated NSC to comply with the terms of the master labor agreement. Paragraph 9 of the 1980-83 memorandum agreement, about which the parties in this case vigorously dispute, provides:

This Memorandum Agreement shall be binding upon the heirs, executors, administrators, purchasers and assigns of the Contractor and shall be binding upon the Contractor regardless of a change of entity, name, or association or joint venture and shall bind any entity or venture that is a principal, financially associated with the Contractor.

The master labor agreement required NSC to pay union wages and benefits to its carpenter employees and to employ union carpenters for all work performed by NSC.

On March 2, 1982, the union filed a grievance with a contract adjustment board alleging that NSC had violated provisions of the labor agreements. The grievance arose because EOS, not NSC, had employed non-union carpenters at a jobsite. However, NSC, the union's grievance alleged, "is the alter-ego, single employer, and/or joint venture of EOS." That is, allegedly what EOS had done was done by NSC and vice versa. The Conference of Carpenters on March 11, 1982, sent NSC a letter that noted the pending arbitration regarding "the application of the master labor agreement to EOS, a non-union entity, which is failing to comply with the terms and conditions of the master labor agreement." This letter sought information from NSC pursuant to the National Labor Relations Act in order to proceed to arbitration on the grievance.

In response, EOS filed a petition with the Board on April 2, 1982, seeking a representation election among its carpentry employees. The Conference of Carpenters responded by filing a disclaimer of interest stating that it did not wish to represent the employees of EOS. The Regional Director, however, noted that the union had not withdrawn its March 2, 1982, grievance, and concluded that this action was tantamount to a claim that it represented a majority of the EOS employees. On September 22, 1982, the Regional Director issued his decision directing an election among the carpenters employed by EOS. Two findings underlying this decision are particularly relevant. First, he found that the carpentry workers of EOS were a separate bargaining unit from which he specifically excluded NSC's employees. Second, he found that NSC and EOS were neither alter egos nor joint employers. The union did not seek review of these two findings. 1

Thereafter, the arbitrator, on February 18, 1983, announced her decision and award in which she concluded that her jurisdiction was not affected by the earlier Board proceedings. She reasoned that the Regional Director "did not decide whether NSC, by virtue of its alleged relationship with EOS, violated any provisions of the Agreement between NSC and the Union." E.R. 11 (emphasis added). Notwithstanding the previous findings of the Regional Director, the arbitrator held that NSC and EOS "have single employer, alter ego, and joint venture status vis-a-vis each other" and EOS was therefore bound to the terms of the labor agreement. E.R. 12. The failure of EOS to pay union wages and benefits to its employees was therefore equivalent to non-payment by NSC in violation of the 1980-83 memorandum agreement. The arbitrator accordingly awarded damages totalling $4,706.26. The union sought an order in district court pursuant to section 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185(a), to confirm the award. Stevens filed a complaint under section 301 to vacate the award. These actions were consolidated and the district court confirmed the award. Stevens filed a timely notice of appeal.


At the outset we acknowledge that an arbitrator's factual determinations and legal conclusions generally receive deferential review by the courts, and an award will be upheld so long as it draws its essence from the collective bargaining agreement. E.g., Broadway Cab Cooperative v. Teamsters & Chauffeurs Local Union No. 281, 710 F.2d 1379, 1382 (9th Cir.1983). Nonetheless, an arbitrator's decision forfeits this deference if it violates law or an explicit, well-defined and dominant public policy. George Day Construction Co. v. United Brotherhood of Carpenters and Joiners, 722 F.2d 1471, 1477 (9th Cir.1984); see Broadway Cab, 710 F.2d at 1382-85 (reversing award that contradicted Supreme Court precedent and applied incorrect legal standard). Here the arbitrator's award is inconsistent with previous Board findings involving the same parties. Under these circumstances we need not defer and we hold that the district court erred in confirming the award.

A. "Double-Breasted" Operations In General.

This case concerns the circumstances in which the terms of a labor agreement with a signatory company can be applied to employees of a nonsignatory company. This issue frequently arises where, as in this case, a contractor operates one company that is party to a labor agreement and a second company that is non-union. Such "double-breasted" operations allow a contractor to compete for both union and non-union work. 2 The non-union company can bid competitively on jobs that do not require union contractors, while the union company continues to bid on jobs requiring union contractors. This type of operation is not inherently illegal. Moreover, in particular cases the Board has refused either to require the non-union and nonsignatory company to recognize the bargaining representative of the signatory company's employees or to apply the labor agreement to the employees of the non-union, nonsignatory company. See, e.g., Local 627, International Union of Operating Engineers v. NLRB, 595 F.2d 844 (D.C.Cir.1979); A-1 Fire Protection, Inc., 250 N.L.R.B. 217, 220 (1980), aff'd on this issue sub nom. Road Sprinkler Fitters Local Union No. 669 v. NLRB, 676 F.2d 826 (D.C.Cir.1982); Frank N. Smith Associates, 194 N.L.R.B. 212 (1971); Gerace Construction, Inc., 193 N.L.R.B. 645 (1971). 3

Unions have resisted the use of double-breasted operations in the construction industry. 4 Understandably, they would prefer to have the industry completely unionized. One response by unions has been to bring unfair labor practice charges that seek to extend the labor agreement to the employer's non-union operations. Thus, a union will allege that the employer's refusal to apply the agreement to the non-union company violates sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act. 5

B. The "Single Employer" and "Alter Ego" Doctrines.

In evaluating unfair labor practice charges against double-breasted operations, the Board has employed the "single employer" and the "alter ego" doctrines. E.g., NLRB v. Al Bryant, Inc., 711 F.2d 543 (3d Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 699, 79 L.Ed.2d 165 (1984). Under the single employer doctrine, two companies may be bound by a union contract signed by one of them if they are a "single employer" and the employees of each constitute a single bargaining unit. See, e.g., Brotherhood of Teamsters, Local No. 70 v. California Consolidators, Inc., 693 F.2d 81, 82-83 (9th Cir.1982). The following factors are considered in determining whether two or more business entities are a single employer: (1) interrelation of operations, (2) common management, (3) centralized control of labor relations,...

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