Chicago District Council of Carpenters Fund v. K&I Construction

• Decision Date: 23 February 2001
• Docket Number: No. 00-3973,00-3973
• Citation: 270 F.3d 1060
• Parties: (7th Cir. 2001) Chicago District Council of Carpenters Pension Fund, et al., Plaintiffs, v. K&I Construction, Inc., Defendant/Third-Party Plaintiff-Appellant, v. Chicago and Northeast Illinois District Council of Carpenters, et al., Third-Party Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1060

270 F.3d 1060 (7th Cir. 2001)

Chicago District Council of Carpenters Pension Fund, et al., Plaintiffs, v. K&I Construction, Inc., Defendant/Third-Party Plaintiff-Appellant, v. Chicago and Northeast Illinois District Council of Carpenters, et al., Third-Party Defendants-Appellees.

No. 00-3973

United States Court of Appeals Seventh Circuit

Argued February 21, 2001

Decided February 23, 2001^*

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 00 C 6769--John A. Nordberg, Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Posner, Kanne, and Diane P. Wood, Circuit Judges.

Diane P. Wood, Circuit Judge.

This case arises out of a dispute between the Chicago District Council of Carpenters Pension, Welfare, and Apprentice and Trainees Program Trust Funds (the Funds) and K&I Construction, Inc. (K&I) over the fringe benefits K&I was required to pay to the Funds on behalf of its employees, who are members of the Chicago Northeast Illinois District Council of Carpenters and its local unions (the Union). The Funds sued K&I to recover contributions that were due; when the Union responded with a strike in support of the Funds, K&I filed a third-party complaint against the Union in which it asked for an anti- strike injunction under the Supreme Court's decision in Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235 (1970). The district court refused to grant the injunction, and K&I appealed. After hearing oral argument, we issued an order affirming the district court's decision. The present opinion explains how and why we reached that conclusion.

I

K&I is a subcontractor for homebuilders in the Chicago area; it and the Union are parties to a collective bargaining agreement that requires K&I to pay certain contributions to the Funds. On October 17, 2000, the Funds submitted to K&I an audit report claiming that between January of 1997 and December of 1999, K&I failed to forward almost $800,000 in required fringe benefit contributions. K&I disputed that it owed the contributions, and so the Funds filed suit. On October 31, 2000, the Union went on strike in support of the Funds' fringe benefit claim.

Fearing that the strike would cost it important contracts, K&I filed its third- party complaint against the Union and sought to enjoin the labor action. Relying on Boys Markets, K&I argued that it was entitled to an injunction because, under the terms of the collective bargaining agreement, the dispute over fringe benefit contributions was a mandatory subject of arbitration between K&I and the Union. The district court disagreed and denied K&I's motion, and we affirmed by order.

II

A preliminary injunction is an extraordinary remedy that should not be granted unless the movant, by a clear showing, carries the burden of persuasion. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam). In a typical case, the plaintiff initially must establish a better than negligible chance of succeeding on the merits and the inadequacy of legal remedies. If the plaintiff carries this burden, then the district court balances the harm the injunction would impose on the defendant against the injury the plaintiff would suffer without the injunction. Boucher v. School Bd. of the School Dist. of Greenfield, 134 F.3d 821, 824 (7th Cir. 1998). In labor cases, however, the rules are somewhat different, because of additional statutory restrictions against the issuance of injunctions.

Two statutes influence the availability of the kind of injunction K&I wants: the Norris-LaGuardia Act (NLA), 29 U.S.C. § 101 et seq., which imposes strict limits on the ability of courts to enjoin labor disputes; and the Labor Management Relations Act (LMRA), which establishes a strong policy in favor of arbitrating labor-management disputes, 29 U.S.C. § 173(d). In Boys Markets, the Supreme Court addressed the tension that can arise between these two enactments. The Court recognized that one of the most important benefits employers gain when they agree to mandatory arbitration is the avoidance of strikes and other disruptive labor actions. In order to ensure that employers have an incentive to agree to arbitration (which, to the extent it occurs, fosters the social interest in industrial peace, recognized by the Supreme Court in N.L.R.B. v. Seven-Up Bottling Co. of Miami, 344 U.S. 344 (1953)), the Court determined that it was necessary to recognize a narrow exception to the NLA's anti-injunction provisions. If the employer has contractually obligated itself to arbitrate a given dispute, by the same token that employer must be able to enjoin the union from striking over that dispute. Boys Markets accordingly held that a court may "issue [an] injunctive order [if] it first holds that the contract does have [the] effect" of binding both parties to arbitrate the dispute at issue and that "an injunction would be warranted under ordinary principles of equity." 398 U.S. at 254 (emphasis in original) (quoting Sinclair Refining Co. v. Atkinson, 370 U.S. 195, 228 (1962) (Brennan, J., dissenting)). It is in that sense that an employer seeking to enjoin a labor action is subject to an extra burden: it must both satisfy the normal requirements for an injunction and also demonstrate that the contract language binds the union to arbitrate the dispute that precipitated the strike.

After Boys Markets, the Court underscored that the relevant issue is not simply whether the labor action violates the collective bargaining agreement, but more specifically whether the dispute that gave rise to the labor action was also one that the parties specifically agreed would be the subject of mandatory arbitration. As the Court said in Jacksonville Bulk Terminals, Inc. v. International Longshoremen's Ass'n, 457 U.S. 702 (1982), "in agreeing to broad arbitration and no-strike clauses, the parties do not bargain for injunctive relief to restore the status quo pending an arbitrator's decision on the legality of the strike under the collective bargaining agreement, without regard to what triggered the strike. Instead, they bargain only for specific enforcement of the union's promise to arbitrate the underlying grievance before resorting to a strike." Id. at 723. A sympathy strike for example, may be a violation of the collective bargaining agreement's no- strike clause, but it may not be enjoined pending arbitration of the propriety of the strike unless the union specifically obligated itself to arbitrate the issue that caused the walkout. See Buffalo Forge Co. v. United Steelworkers, 428 U.S. 397 (1976); Local Lodge 1266, International Ass'n of Machinists v. Panoramic Corp., 668 F.2d 276, 280-81 (7th Cir. 1981).

Turning to the merits of K&I's claim, our first task is to identify the dispute that gave rise to the Union's strike. It is whether K&I's alleged failure to contribute $800,000 to the Funds violated any duty it had to the Funds or the union members. To succeed in its quest for an injunction, K&I must demonstrate that the CBA requires the Union to arbitrate this dispute between K&I and the Funds; it is not enough to show that the CBA prohibits the Union from striking while K&I and the Funds are sorting out their differences. (There is no dispute that if the Union were obligated to arbitrate trust fund disputes, the CBA no-strike clause would prohibit the Union from striking here.) The question whether K&I has met this burden turns on the proper interpretation of the collective bargaining agreement, which itself is an issue for which our review is plenary. International Ass'n of Machinists & Aerospace Workers, Progressive Lodge No. 1000 v. General Elec. Co., 865 F.2d 902, 905 (7th Cir. 1989). Only if we concluded that the CBA requires the Union to arbitrate this trust fund dispute would we need to consider whether this case should be remanded for the district court to consider the equities of the requested injunction, or whether we could review the district court's decision denying the injunction under the usual deferential abuse of discretion standard, if the record is already clear enough.

Several provisions of the CBA are relevant here. Article XVIII, titled "Settlement of Disputes," states:

18.1 Except as provided in Sections 12.13, 13.11, 14.11, 27.1, 28.2, 33.1, 34.1, 35.1, and 36.1 of the Agreement, any dispute as to the proper interpretation of this Agreement shall be handled in the first instance by a Representative of the UNION and the EMPLOYER, and if they fail to reach a settlement . . . it shall be referred to a Board of Arbitration composed of one (1) person appointed by each party, the two (2) so appointed to select a third member.

18.2 Except as provided in Sections 12.13, 13.11, 14.11, 27.1, 28.2, 33.1, 34.1, 35.1, and 36.1 of this Agreement, the Board of Arbitration shall have jurisdiction over all questions involving the interpretation and application of any Section of this Agreement.

18.3 . . . There shall be no work stoppage during arbitration.

Each of the relevant exempted sections to which Sections 18.1 and 18.2 refer (e.g., 12.13, 13.11, etc.) is contained within CBA articles that pertain to K&I's duty to make contributions to the Funds. So, for example, Article XII relates to the Health and Welfare Fund and Article XIII relates to the Pension Fund. Each of the referenced sections is at the end of its article and contains essentially the same language. Section 12.13 is typical:

The collection of amounts due under this Article shall not be subject to the Settlement of Disputes procedure established in Article XVIII.

Each of the cited articles also contains language to the effect that "the EMPLOYER agrees to be bound by the Agreement and Declaration of Trust establishing the [Trust Fund]" and that contributions "shall be made on the dates and in the manner prescribed by the Trust Agreement." See, e.g., Article XII, Sections 12.2 & 12.3. (Neither party...