Carpenters Southern California Administrative Corp. v. J.L.M. Const. Co., Inc.

• Decision Date: 04 February 1987
• Docket Number: No. 85-6338,85-6338
• Citation: 124 LRRM (BNA) 2561,809 F.2d 594
• Parties: 124 L.R.R.M. (BNA) 2561, 55 USLW 2445, 105 Lab.Cas. P 12,185 CARPENTERS SOUTHERN CALIFORNIA ADMINISTRATIVE CORP., Plaintiff-Appellant, v. J.L.M. CONSTRUCTION CO., INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 594

809 F.2d 594

124 L.R.R.M. (BNA) 2561, 55 USLW 2445,

105 Lab.Cas. P 12,185

CARPENTERS SOUTHERN CALIFORNIA ADMINISTRATIVE CORP., Plaintiff-Appellant, v. J.L.M. CONSTRUCTION CO., INC., Defendant-Appellee.

No. 85-6338.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 10, 1986.

Decided Feb. 4, 1987.

Karen L. Holliday, Los Angeles, Cal., for plaintiff-appellant.

Walter C. Appling, San Pedro, Cal., for defendant-appellee.

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

Before ANDERSON, POOLE and THOMPSON, Circuit Judges.

DAVID R. THOMPSON, Circuit Judge:

The administrator of six employee benefit trust funds brought this action under the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1132(a)(3) (1982). The Trusts were established between the United Brotherhood of Carpenters and Joiners of America (Union) and various multi-employer

                associations in the Southern California construction industry pursuant to Section 302(c) of the Labor Management Relations Act, 29 U.S.C. Sec. 186(c).  The administrator sought to recover allegedly delinquent employer trust contributions from the J.L.M. Construction Company (JLM).  The district court held that by its conduct JLM had provided sufficient notice to the Union to repudiate its contractual obligations, and dismissed the action. 1   We affirm
                

I FACTS AND PROCEEDINGS

In August 1977, JLM was completing a carpentry subcontracting job (the Bendix job) when the Union threatened to picket JLM because it lacked Union affiliation. A Union representative, Mr. Riviezzo, visited the Bendix job site and informed the JLM president, James Mann, that the Union would not picket the Bendix site if JLM signed the Master Labor Agreement between the Union and Southern California General Contractors.

On August 10, 1977, Mann met Riviezzo and signed two short-form agreements with the Union, which incorporated by reference the terms and conditions of the Master Labor Agreement. Mann neither read nor received copies of the short-form agreements or the Master Labor Agreement. These agreements constituted a pre-hire agreement under Section 8(f) of the National Labor Relations Act, 29 U.S.C. Sec. 158(f) (1982). ²

Under this pre-hire agreement, JLM agreed to make contributions to the Trusts for each hour worked by any employees who performed covered carpenter work. JLM was also required to submit monthly report forms to the Trust specifying the hours worked and the amount of contributions earned by each covered employee.

JLM fulfilled its obligations under the pre-hire agreement until it finished the Bendix job in late August or early September 1977. Susan Mann, JLM's vice president and office manager, completed the Employer's Monthly Report to Trustees for August 1977 and sent a check to the Trusts for the employer contributions for the hours worked by the two JLM Carpenter employees on the Bendix job. JLM also paid the $300 union initiation fees for these two employees.

In September 1977, after receiving another Employer's Monthly Report form, Susan Mann called the Trust office to request that no additional forms be sent because JLM no longer wished to be bound by the Union agreements. She was told to check the appropriate box and return the form if no carpenters worked during the month. Despite Susan Mann's request, JLM continued to receive the monthly report forms. Susan Mann telephoned the Trust office several times to inquire why JLM was continuing to receive the forms. She told the Trust office personnel that JLM no longer was bound or wished to be bound to any agreements with the Union, that JLM did not feel it was obligated to make contributions, and that JLM did not want to receive any more forms. She did not call the Union nor communicate with it. JLM's monthly report form submitted to the Trusts for November, 1977 bears the notation: "PLEASE DO NOT SEND US THESE FORMS ANY MORE. PUT US ON THE INACTIVE LIST. THANK The Union never achieved majority status among JLM's employees. Thus, either party was entitled to terminate the agreement at any time. On July 20, 1982, JLM sent a letter to the Union, giving formal written notice that JLM was repudiating the pre-hire agreement. ⁴ The parties stipulated that this letter terminated the agreement unless a repudiation had previously been effected by JLM's conduct.

                YOU."    On December 9, 1977, JLM sent the Trusts a trust form letter indicating that JLM was "inactive." 3
                

In October 1983, the Trusts filed a complaint seeking to recover delinquent Trust contributions. On August 28, 1985, after a bench trial, the court entered judgment in favor of JLM and dismissed the action. The court, in accordance with Rule 52(a) of the Federal Rules of Civil Procedure found the following facts:

Following December 1, 1977 [JLM] acted as a general contractor on various projects and hired both subcontractors and employees. [JLM] bid as a nonunion general contractor and was awarded construction work between August 1977 and early 1982 in a gross amount of eighteen to twenty million dollars. [JLM] never represented that it had a contract with the Union in bidding for that construction work. [JLM] never used the Union's hiring hall to obtain employees. [JLM] did not pay its employees in accordance with union wage scales and did not pay fringe benefit contributions to the trusts.

The district court also found that "[f]ollowing December 1, 1977 [JLM] engaged in activity overtly and completely inconsistent with putative contractual obligations." Based on these findings of fact, the district court concluded that JLM's conduct between 1977 and 1982 "imparted notice to any reasonable person that defendant did not intend to be bound by any pre-hire agreement and intended to repudiate and terminate the pre-hire agreements."

II ANALYSIS

A. Introduction

A pre-hire agreement is a labor contract under Section 8(f) of the National Labor Relations Act, 29 U.S.C. Sec. 158(f) between a union and an employer engaged primarily in the construction industry. Section 8(f) of the Act is a statutory exception to the general labor policy that an employer can only enter into a collective bargaining relationship with a union that represents a majority of the employer's employees. Orange Belt District Council of Painters v. Kashak, 774 F.2d 985, 987-88 (9th Cir.1985); Todd v. Jim McNeff, Inc., 667 F.2d 800, 801-02 (9th Cir.1982), aff'd, 461 U.S. 260, 103 S.Ct. 1753, 73 L.Ed.2d 1382 (1983).

Although a pre-hire agreement is legally binding by virtue of Section 8(f), it does not mature into a full collective bargaining agreement until a majority of the employer's employees join the union. Jim McNeff v. Todd, 461 U.S. 260, 271, 103 S.Ct. 1753, 1759, 73 L.Ed.2d 1382 (1983). Until the union achieves majority status, the employer retains the right to repudiate a Section 8(f) pre-hire agreement. Id. The issue we decide in this case is whether JLM, the employer, provided sufficient notice to the Union by its conduct to repudiate the pre-hire agreement.

B. Standard of Review

Whether an employer's conduct is sufficiently overt and inconsistent with the terms of a pre-hire agreement to put a union on notice of an employer's repudiation involves an essentially factual inquiry. See, e.g., Contractors, Laborers, Teamsters & Engineers Health & Welfare Plan v. Harkins Construction & Equipment Co. ("Harkins"), 733 F.2d 1321, 1326 (8th Cir.1984) ( [this raises a] question of fact that requires an examination of the conduct of all the parties). Accord Suburban Teamsters v. Callaghan Paving, Inc., 583 F.Supp. 105 (N.D.Ill.1984).

In United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.) (en banc), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984), we stated that "if application of the rule of law to the facts requires an inquiry that is essentially factual the district court's determination should be reviewed under the clearly erroneous standard." Because we believe the underlying inquiry here is essentially factual, the district court's conclusion that JLM's conduct was sufficient to repudiate the pre-hire agreement is reviewed under the clearly erroneous standard. See also Anderson v. The City of Bessemer, 470 U.S. 564, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (Title VII case); U.S. v. Lembke Construction Co., Inc., 786 F.2d 1356 (9th Cir.1986); Lads Trucking Co. v. Board of Trustees, 777 F.2d 1371 (9th Cir.1985).

C. Repudiation by Conduct

There are three distinct methods by which an employer can repudiate a pre-hire agreement: (1) by calling for a repudiation election to show that the union does not enjoy majority support; (2) by giving actual notice (written or oral) to the union; or (3) by engaging in conduct so overtly inconsistent with contractual obligations that it is sufficient to put the union on notice of the employer's intent to repudiate. See, e.g., Harkins, 733 F.2d at 1326; Suburban Teamsters, 583 F.Supp. at 109. This court has previously recognized the first two "types" of repudiation. See, e.g., Operating Engineers Pension Trust v. Beck Engineering & Surveying Co., 746 F.2d 557, 564-66 (9th Cir.1984). Today we conclude that an employer may also repudiate a pre-hire agreement by conduct.

While no precedent directly addresses the efficacy of repudiation by conduct of a pre-hire agreement, both Supreme Court and Ninth Circuit decisions suggest that conduct completely inconsistent with the contractual obligations of a pre-hire agreement may effect a repudiation. The Supreme Court has stated:

It is not necessary to decide in this case what specific acts would effect the repudiation of a pre-hire agreement--sending notice to the union, engaging in activity overtly and completely inconsistent with contractual obligations, or, as respondent suggests, precipitating a representation election pursuant to the final proviso in Section 8(f) that shows the union does not enjoy majority support.

McNeff...