Chicago Dist. Coun. of Carpenters v. Reinke Insul.

• Decision Date: 18 September 2006
• Docket Number: No. 05-3555.,05-3555.
• Citation: 464 F.3d 651
• Parties: CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, et al., Plaintiffs, v. REINKE INSULATION COMPANY and K. Reinke, Jr. & Company, Defendants-Appellants, v. Chicago and Northeast Illinois District Council of Carpenters and United Brotherhood of Carpenters and Joiners of America, Local 1307, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

464 F.3d 651

CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, et al., Plaintiffs, v. REINKE INSULATION COMPANY and K. Reinke, Jr. & Company, Defendants-Appellants, v. Chicago and Northeast Illinois District Council of Carpenters and United Brotherhood of Carpenters and Joiners of America, Local 1307, Defendants-Appellees.

No. 05-3555.

United States Court of Appeals, Seventh Circuit.

Argued February 17, 2006.

Decided September 18, 2006.

COPYRIGHT MATERIAL OMITTED

Daniel P. McAnally, Whitfield & McGann, Chicago, IL, for Plaintiffs.

Michael A. Weinberg (argued), Novack & Macey, Joshua D. Holleb, Klein Dub & Holleb, Chicago, IL, for Defendants-Appellants.

Travis J. Ketterman (argued), Whitfield & McGann, Chicago, IL, for Defendants-Appellees.

Before FLAUM, Chief Judge, and KANNE, and WOOD, Circuit Judges.

KANNE, Circuit Judge.

Reinke Insulation Co. and K. Reinke, Jr. & Co. (which we will treat, for purposes of this opinion, as one entity called "Reinke") have been in a longstanding dispute with a local Union ("Union") and the Chicago District Council of Carpenters Pension Fund ("Fund"). This litigation had its inception when the Fund sued Reinke alleging a deficiency in pension and welfare contributions Reinke was required to make according to a collective bargaining agreement. Reinke responded by leveling counterclaims against the Union.

The initial suit by the Fund was resolved in favor of Reinke and affirmed by this court in Chicago Dist. Council of Carpenters Pension Fund v. Reinke Insulation Co., 347 F.3d 262 (7th Cir.2003) ("Reinke I"). Judge Andersen granted the Union summary judgment on all of Reinke's counterclaims. This appeal followed, and we now affirm.

I. HISTORY

Reinke is in the business of installing insulation at construction projects. From about July 1998 to January 2001, it was a member of the Residential Construction Employers Council ("RCEC"). The RCEC is a multi-employer bargaining association. The Union prefers to negotiate with an association such as the RCEC, rather than negotiate with employers individually. The relevant agreement in effect between Reinke and the Union was a product of Reinke's membership in the RCEC.

Reinke decided to withdraw from the RCEC (and then negotiate with the Union individually) and gave the Union notice thereof on January 26, 2001. At or after this time, the Fund decided to audit Reinke's contributions of pension and welfare benefits to ensure compliance with the collective bargaining agreement. The results of the audit were not positive. A preliminary report opined that Reinke was delinquent in the amount of $142,441.24, and that Reinke was in "material noncompliance" with its obligations toward the Fund. The report also noted that the auditor had been unable to retrieve certain essential records because Reinke had "denied . . . access." The auditors also stated, "We believe that our examination provides a reasonable basis for our opinion."

The preliminary report also emphasized what its description indicates; namely, that the report was preliminary and not final. Moreover, it stated that it was intended to be used by the Fund and not to be a legal determination of Reinke's compliance, and that due to the use of alternate procedures its results should be considered "QUALIFIED."

Preliminary or not, the Fund began the lawsuit leading to Reinke I on October 22, 2001, based upon the report. The day after that suit was filed, the Union started to picket Reinke at its various job sites with signs accusing Reinke of failure to make fringe benefits contributions. The Union had never before picketed on the basis of a preliminary report alone, and it had not picketed in the past when preliminary audits of Reinke's books found delinquencies. The Union representative responsible for ordering the picketing against Reinke, Bill Rabinak, had, however, expressed as far back as 1998 his intent to "infiltrate and destroy" companies that cheated on their contributions, companies that Rabinak deemed "bottom feeders." These comments from 1998 were not directed toward Reinke. The picketing was done at Reinke's job sites and initially led to some nonunion workers of Reinke's refusing to work. Another consequence, of which the Union was aware, was that Reinke lost business. Various homeowners terminated their contracts with Reinke because of the picketing.

Reinke tried some attempts to make peace with the Union. It hired its own auditor, who concluded that Reinke owed nothing, but the Union would not consider that report. Reinke also tried to make clear that any of its records were available for review by the Fund's auditor. Moreover, Reinke offered to pay all the disputed contributions in exchange for the cessation of the picketing. That offer was conditioned, however, on Reinke retaining the right to contest the amounts owed in court. The Union rejected that offer and continued picketing.

Reinke then successfully sought relief from the NLRB, which petitioned to enjoin the Union's picketing. A magistrate judge agreed, and issued a temporary restraining order prohibiting the Union from picketing Reinke. The Union ceased picketing, but began distributing handbills. The handbills included comments such as, "The HARD working employees of Reinke have been cheated on their MEDICAL and RETIREMENT contributions!"

The preliminary report was eventually superseded by a final report, which contained similar findings. Within a few months of that report, Judge Andersen informed the parties of his ruling on the Fund's claims against Reinke. Judge Andersen found that Reinke was not delinquent in any of its contributions (a ruling eventually affirmed in Reinke I). The Union immediately ceased distributing handbills.

II. ANALYSIS

We review the grant of summary judgment de novo, viewing all facts in the light most favorable to Reinke, the nonmoving party. See Moser v. Ind. Dep't of Corr., 406 F.3d 895, 900 (7th Cir.2005). Reinke's claims can be grouped as follows: Counts 2-4, alleging state law claims of defamation, false light and trade libel; Counts 5-6, and 8, alleging tortuous interference and violations of the Illinois Consumer Fraud Act ("ICFA"); Count 7, alleging violations of § 303 of the Labor Management Relations Act; and, finally, Count 9, alleging violations of Illinois's Uniform Deceptive Trade Practices Act ("UDTPA").¹

A. Actual Malice: Counts 2-4

Reinke concedes that it cannot prevail on its defamation claims without first showing that the Union acted with actual malice. See Linn v. United Plant Guard Workers of Am., 383 U.S. 53, 61, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966) (holding as preempted all defamation actions in labor disputes except those published with actual malice). Actual malice, or "New York Times malice," requires that the party making a defamatory statement do so "`with knowledge that it was false or with reckless disregard of whether it was false or not.'" Old Dominion Branch, No. 496 Nat. Assn. of Letter Carriers v. Austin, 418 U.S. 264, 281, 94 S.Ct. 2770, 41 L.Ed.2d 745 (1974) (quoting New York Times Co. v. Sullivan, 376 U.S. 254, 280, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964)). Reinke argues that the Union acted with reckless disregard for the truth when it asserted that Reinke cheated its employees out of benefits. The question for us is not whether a reasonable person would have found it prudent to accuse Reinke of cheating, but whether there is "sufficient evidence to permit the conclusion that the [Union] in fact entertained serious doubts as to the truth of [its] publication," St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 20 L.Ed.2d 262 (1968), or whether there is sufficient evidence to show that the Union had a "`high degree of awareness of . . . probable falsity,'" Harte-Hanks Commc'ns, Inc. v. Connaughton, 491 U.S. 657, 667, 109 S.Ct. 2678, 105 L.Ed.2d 562 (1989) (quoting Garrison v. Louisiana, 379 U.S. 64, 74, 85 S.Ct. 209, 13 L.Ed.2d 125 (1964)). The evidence must be sufficient to "support a reasonable jury finding . . . that the plaintiff has shown actual malice by clear and convincing evidence." Saenz v. Playboy Enters., Inc., 841 F.2d 1309, 1317 (7th Cir.1988) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255-56, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

Reinke relies on a number of pieces of circumstantial evidence to support its case: the Union's reliance on a mere preliminary report that was qualified and based upon incomplete records; the Union's deviation from normal practices (the Union had not previously picketed on the basis of preliminary reports); the Union's refusal to stop picketing after Reinke's auditor determined the company had paid all it was obliged to; the Union's refusal to stop picketing in the face of Reinke's offer to pay all disputed funds; the Union's use of the term "cheating" instead of "under contribution"; and, finally, the Union's ill will toward Reinke.

Reinke is entitled to prove state of mind with circumstantial evidence like that listed above, but "courts must be careful not to place too much reliance on such factors." Id. at 668, 109 S.Ct. 2678. Our review of the record as a whole leads us to the conclusion that there is insufficient evidence to allow a finder of fact to conclude the Union acted with actual malice.²

The Union's reliance on the preliminary report does not evidence actual malice. While preliminary in nature, and stamped "QUALIFIED," there is nothing in the record to suggest any facially obvious errors in its accuracy. To the contrary, the auditors stated their belief that their examination provided a "reasonable basis" for the conclusion. Moreover, the Union knew the Fund thought it was a reliable enough source for initiating a lawsuit. Reliance on a report expressly noting it is incomplete because of the absence of certain records might, in other circumstances, help support a finding of actual malice. But in this case the absence of the records was attributed by...