Chicago Dist. Council of Carpenters Pension Fund v. Yonan

• Decision Date: 06 December 1982
• Docket Number: No. 81 C 2429.,81 C 2429.
• Citation: 553 F. Supp. 653
• Court: U.S. District Court — Northern District of Illinois
• Parties: CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, Chicago District Council of Carpenters Welfare Fund, Chicago District Council of Carpenters Apprentice & Trainee Program and the Chicago District Council of Carpenters, George Vest, Jr., Wesley Isaacson, Milton Holzman, Thomas E. Ryan, Richard S. Pepper, Albert Kaufman, Dominic J. Velo and Herbert S. Church, Jr., as Trustees of the Chicago District Council of Carpenters Pension and Welfare Funds, Richard S. Pepper, Wesley Isaacson, George Vest, Jr., Thomas D. Coleman, Jack Bornhoeft, Dominic J. Velo, Edward Ellis and Kenneth Borg, as Trustees of the Chicago District Council of Carpenters Apprentice & Trainee Program, Plaintiffs, v. Samuel M. YONAN, Individually and d/b/a Yonan Carpets, Defendants.

553 F. Supp. 653

CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, Chicago District Council of Carpenters Welfare Fund, Chicago District Council of Carpenters Apprentice & Trainee Program and the Chicago District Council of Carpenters George Vest, Jr., Wesley Isaacson, Milton Holzman, Thomas E. Ryan, Richard S. Pepper, Albert Kaufman, Dominic J. Velo and Herbert S. Church, Jr., as Trustees of the Chicago District Council of Carpenters Pension and Welfare Funds Richard S. Pepper, Wesley Isaacson, George Vest, Jr., Thomas D. Coleman, Jack Bornhoeft, Dominic J. Velo, Edward Ellis and Kenneth Borg, as Trustees of the Chicago District Council of Carpenters Apprentice & Trainee Program, Plaintiffs, v. Samuel M. YONAN, Individually and d/b/a Yonan Carpets, Defendants.

No. 81 C 2429.

United States District Court, N.D. Illinois, E.D.

December 6, 1982.

Hugh J. McCarthy & Associates, Chicago, Ill., for plaintiffs.

Randall T. Mitchell, Adams, Fox, Marcus, Adelstein & Gerding, Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Plaintiff, Chicago District Council of Carpenters Pension Fund ("the Fund"), brought this action against defendants, Samuel Yonan and Yonan Carpets ("Yonan"), to collect fringe benefit payments allegedly due the Fund under an agreement entered into in 1975. Jurisdiction is based upon § 502 of the Employee Retirement Income Security Act, 29 U.S.C. § 1132 (1976). The matter is presently before the Court on cross-motions for summary judgment. For the reasons set forth below, each party's motion will be granted in part and denied in part.

I.

The undisputed facts are as follows. Yonan, a seller of floor coverings, entered into an agreement with the Chicago District Council of Carpenters ("the Union") in 1975. As part of the agreement, Yonan promised, inter alia, to be bound by the terms of current and subsequent collective bargaining agreements between the Union and Mid-America Regional Bargaining Association ("MARBA"), an employers' bargaining agent. Yonan also promised to abide by the terms of the trust agreements creating the Fund and to make contributions to the Fund as specified in the collective bargaining agreements. Either party could terminate or amend the agreement upon notice as specified.¹

At the time the agreement was signed, Yonan had three or four employees who installed carpets. Yonan made employee contributions from June, 1976, through October, 1976. After October, 1976, Yonan submitted no monthly contribution reports and made no contributions. Having audited Yonan's books for the period of October, 1978, through March 30, 1980, the Fund contends that Yonan did in fact employ workers covered by the agreement and that contributions are due for the audit period.

II.

The first issue to be addressed is whether the 1975 agreement is permissible under § 8 of the National Labor Relations Act ("the Act"), 29 U.S.C. § 158. Generally, both a union and an employer commit unfair labor practices under § 8(a) of the Act, 29 U.S.C. § 158(a), if they sign a pre-hire agreement, which is a labor agreement entered into before all employees have been hired and before the union's membership encompasses a majority of the employees. See Garment Workers v. NLRB, 366 U.S. 731, 81 S.Ct. 1603, 6 L.Ed.2d 762 (1961). However, § 8(f) of the Act, 29 U.S.C. § 158(f), provides an exception to this rule. Employers "engaged primarily in the building and construction industry" may enter into pre-hire agreements covering employees that are or will be engaged in construction even if the union has not attained majority status at the time the agreement is executed. See generally N.L.R.B. v. Local Union No. 103, International Association of Bridge, Structural and Ornamental Iron Workers, 434 U.S. 335, 344, 98 S.Ct. 651, 657, 54 L.Ed.2d 586 (1978).

Yonan contends that his floor covering business is not part of the construction industry and thus the agreement does not fall within the § 8(f) exception permitting pre-hire agreements. Proof submitted by the Fund, however, indicates that the installation of carpet and other floor coverings is considered by various industry organizations to be part of the construction industry.² Moreover, the portion of the collective bargaining agreement covering the construction industry explicitly includes as part of the bargaining unit "Wood and Resilient Floor Layers, and Finishers, Carpet Layers...."³

Although we have found no judicial precedent or legislative discussion of the question, inclusion of Yonan's carpet layers in the § 8(f) construction industry exception comports with the congressional intent underlying the provision. The legislative history of the amendment that excepted the building and construction industry from the prohibition against pre-hire agreements acknowledged two purposes behind the signing of bargaining agreements covering employees before they are hired: (1) it is necessary for the employer to know his labor costs before making the estimate upon which his bid will be based; and (2) the employer must be able to have available a supply of skilled craftsmen ready for quick referral. 1959 U.S.Code Cong. & Ad.News pp. 2318, 2344-45. Furthermore, as noted in the Senate Report, "representation elections in a large segment of the industry are not feasible to demonstrate ... majority status due to the short periods of actual employment by specific employers." Id. at 2373, cited in Iron Workers, 434 U.S. at 344, 98 S.Ct. at 657. Although Yonan disavows the agreement, his use of occasional labor for the jobs he procures suggests circumstances addressed by Congress in § 8(f) and justifies the conclusion that the agreement falls within the exception. We therefore reject Yonan's contention that the agreement is invalid as a violation of § 8(a).⁴

III.

The next issue is whether the agreement is enforceable against Yonan absent attainment by the union of majority status. Yonan contends that a pre-hire agreement is void until the union represents a majority of the employees covered. The Fund argues that the fringe benefit provisions of the agreement are enforceable regardless of whether majority status has been attained.⁵

Yonan relies upon the Supreme Court's decision in Iron Workers, supra, 434 U.S. 344, 98 S.Ct. at 657. In Iron Workers, the Supreme Court held that it was an unfair labor practice under § 8(a) of the Act for an uncertified majority union to engage in picketing to enforce a pre-hire agreement. Id. at 341, 98 S.Ct. at 655. The Court reasoned that although the Act permits labor and management to enter into pre-hire agreements, the use of picketing may hinder employees' freedom to make an uncoerced choice of bargaining agent. Id. at 346, 98 S.Ct. at 658.

Yonan attempts to interpret the Court's decision in Iron Workers so broadly as to prohibit the legal enforcement of any provision of a pre-hire agreement, including fringe benefit obligations. This Court rejected such an interpretation of Iron Workers in Chicago District Council of Carpenters Pension Fund, et al. v. Vest, et al., 542 F.Supp. 634 (N.D.Ill.1982), concluding that a distinction exists between the use of tactics that constitute unfair labor practices under § 8(a) of the Act to enforce pre-hire agreements and contract actions to enforce fringe benefit provisions. Id., at 636. Unfair labor practices have the potential to interfere with employees' freedom to choose a bargaining agent, while contract actions to enforce signed agreements do not. Id. at 637.

Moreover, the existence of a pre-hire agreement renders benefits to the employer, e.g., the ability to project labor costs accurately, N.L.R.B. v. Irvin, 475 F.2d 1265, 1267 (3d Cir.1973), and the guarantee of industrial peace at the employer's worksites, Contractors, Laborers, Teamsters & Engineers Health & Welfare Fund v. Associated Wrecking Co., 638 F.2d 1128, 1134 (8th Cir.1981). To refuse to enforce the fringe benefit provisions of a pre-hire agreement would require us to hold all pre-hire agreements unenforceable until majority representation is achieved and would thus permit employers to reap benefits from pre-hire agreements without incurring any reciprocal obligations. Vest, supra at 636-37. Thus, we conclude that the agreement is enforceable against Yonan regardless of the union's lack of majority status.⁶

IV.

Yonan next argues that even if a pre-hire agreement is not void, it is voidable at the election of the employer until majority status is achieved, as the Ninth Circuit has held in Todd v. Jim McNeff Co., 667 F.2d 800, 803-04 (9th Cir.1982), cert. granted, ___ U.S. ___, 102 S.Ct. 3508, 73 L.Ed.2d 1382, (1982). Accord, Washington Carpenters' Welfare Fund v. Overhead Door Co., 681 F.2d 1, 3 E.B.C. 1600 (D.C.Cir.1982). We need not reach this issue, however, because we conclude from the facts before us that Yonan did not repudiate the agreement during the time period in question.

Yonan contends that because he stopped receiving monthly contribution forms in 1978, two years after he ceased submitting completed forms to the Fund, the Fund was "on notice" that Yonan no longer considered himself party to the agreement.⁷ In effect, he asserts that his noncompliance was repudiation terminating his obligations under the agreement. The Ninth Circuit rejected an identical agreement in McNeff:

The only act in the record which could possibly be argued to be a repudiation is the employer's failure to perform its contractual obligations. While it is clear that in some circumstances noncompliance can be so bald as to put the union on notice of the employer's intent to repudiate (see, e.g., Iron Workers), the behavior here falls short. It is precisely this sort of action by an employer, enjoying the benefits of a pre-hire agreement and misleading the union as to the employer's intention of never performing his obligations, which has led us to adopt this view of voidability as opposed to unenforceability

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