A. Dariano & Sons, Inc. v. District Council of Painters No. 33

• Decision Date: 08 March 1989
• Docket Number: No. 87-2799,87-2799
• Citation: 869 F.2d 514
• Parties: 130 L.R.R.M. (BNA) 2890, 111 Lab.Cas. P 11,036 A. DARIANO & SONS, INC., a California corporation, Plaintiff-Appellant, v. DISTRICT COUNCIL OF PAINTERS NO. 33, and Northern California Painters Administrative Fund, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 514

869 F.2d 514

130 L.R.R.M. (BNA) 2890, 111 Lab.Cas. P 11,036

A. DARIANO & SONS, INC., a California corporation, Plaintiff-Appellant, v. DISTRICT COUNCIL OF PAINTERS NO. 33, and Northern California Painters Administrative Fund, Inc., Defendants-Appellees.

No. 87-2799.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 12, 1988.

Decided March 8, 1989.

Roger M. Mason, Ellen S. Lewis, Thierman, Cook, Brown & Mason, San Jose, Cal., for plaintiff-appellant.

Robert E. Jesinger, Mark S. Renner, Wylie, McBride, Jesinger & Sure, San Jose, Cal., for defendants-appellees.

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

Before ALDISERT ^*, BRUNETTI and LEAVY, Circuit Judges.

ALDISERT, Circuit Judge:

The question arising here is whether a determination by the Regional Director of the National Labor Relations Board ("NLRB" or "the Board") that A. Dariano & Sons, Inc. ("A. Dariano") and Dariano Brothers, Inc. ("Dariano Brothers") were not common, single or joint employers, precluded an arbitrator in a subsequent proceeding from concluding that Dariano Brothers was the alter ego of A. Dariano for the purpose of employee representation. In Carpenters Local Union No. 1478 v. Stevens, 743 F.2d 1271 (9th Cir.1984), cert. denied, 471 U.S. 1015, 105 S.Ct. 2018, 85 L.Ed.2d 300 (1985) we held that when a Regional Director had determined that two employer entities were neither alter egos nor single employers, the supremacy doctrine precluded a subsequent arbitration proceeding from holding to the contrary. Id. at 1278-79 (citing Carey v. Westinghouse Elec. Corp., 375 U.S. 261, 272, 84 S.Ct. 401, 409, 11 L.Ed.2d 320 (1964)). In this case we must decide whether the teaching and holding of Stevens apply where the Regional Director decided in favor of the employer on only the single or joint employer doctrine and in ipsis verbis did not address the alter ego doctrine. We hold that, under the facts here, the distinction does not make a difference and that the Stevens holding applies. The district court held otherwise. The employer has appealed and we now reverse.

Jurisdiction was proper in the district court, 29 U.S.C. Sec. 185 and 28 U.S.C. Sec. 1331. Jurisdiction on appeal is proper, 28 U.S.C. Sec. 1291. The appeal was timely filed under Rule 4(a), F.R.App.P.

I.

A. Dariano is a painting contractor owned by Anthony Dariano (51%) and Gene Dariano (49%). Employees of A. Dariano have been represented by the District Council of Painters Local 33 (hereinafter "Union") for the past 35 years. Prior to 1984, Gene Dariano worked for A. Dariano as an estimator. Since that time his only association with the company has been his ownership interest.

In 1985, Anthony and Gene jointly purchased assets of J.D.J. Painting Co., a separate entity owned by their brother, John. Assets from this company were transferred to a new corporation, Dariano Brothers, Inc., d/b/a Gene Dariano Painting. There is no evidence in the record that J.D.J. Painting Co. or Dariano Brothers was ever a signatory to a labor agreement with the Union. The capital stock of Dariano Brothers is held in equal shares by Gene and Anthony. Anthony contributed one half of the start-up capital, but other than that has had no involvement in Dariano Brothers. The two companies operate completely independently.

In March 1986, Dariano Brothers was working at Stanford University. In early April, a Union representative complained to Anthony Dariano that employees were performing the Stanford work in violation of A. Dariano's labor agreement. Anthony responded that the Stanford workmen were not A. Dariano employees and therefore were not covered by the agreement. After initial skirmishes, the NLRB Regional Director acted on an employee unit clarification petition. The petition, filed by A. Dariano, requested the NLRB to clarify whether employees of Dariano Brothers were employees of a distinct and separate company and therefore not covered by A. Dariano's labor contract with the Union.

In the NLRB proceedings, as before us, the Union contended that "Dariano Brothers' painting employees constitute[ ] an accretion to the Employer's [A. Dariano's] contractual bargaining unit." A. Dariano & Sons, Inc. v. District Council of Painters, Local No. 33, No. 32-UC-179 and 32RM-491, slip op. at 4 (NLRB Sept. 22, 1986) (hereinafter "Dariano I "). On September 22, 1986, the Director rejected the Union's interpretation and made the following findings of fact:

[A]part from the indicium of common ownership, there is no evidence of any common or joint control of the management of the two companies or their labor relations, of any integration of operations, or of any interchange of employees or equipment such that the Employer and Dariano Brothers may be considered a single and/or joint employer. See Laerco Transportation and Warehouse, 269 NLRB 324, 325 (1984); Consolidated Dress Carriers, Inc. et al., 259 NLRB 627 (1981). Accordingly, the Union's accretion-based contention that Dariano Brothers' Painting employees should be covered by the Employer's contract with the Union is rejected.

Dariano I, at 4-5.

Meanwhile, the Union filed a grievance against A. Dariano which went to arbitration. One day after the NLRB decision, on September 23, 1986, an arbitration panel decided that A. Dariano had breached its bargaining agreement with the Union on the theory that Dariano Brothers was the alter ego of A. Dariano:

4. Dariano Brothers dba Gene Dariano Painting is the alter ego of the Employer [A. Dariano], and the successor of acquired operation, within the meaning of Article 8, Section 8, 9, and 9(a) of the Collective Bargaining Agreement.

5. The Employer has violated the Collective Bargaining Agreement, ... by not applying the terms and conditions of the Collective Bargaining Agreement to its alter ego, acquired operation Dariano Brothers....

A. Dariano & Sons, Inc., No. 566, slip op. at 1-2 (Sept. 23, 1986) (Ward, Arb.).

A. Dariano then filed the present action in the United States District Court for the Northern District of California asking that the arbitration award be vacated. The Union requested that the arbitration award be affirmed. Both parties filed cross motions for summary judgment. The court decided in favor of the Union:

[A. Dariano] must bear the burden of showing that the arbitrator's decision covers the same issue as was decided by the National Labor Relations Board in its decision. Here, the National Labor Relations Board did not decide the same issue which the arbitrator decided, namely, that Dariano Brothers, Inc., was the "alter ego" of A. Dariano & Son, Inc. Therefore, there is no contradiction or conflict between these two decisions. A. Dariano & Sons, Inc. v. District Council of Painters No. 33, 681 F.Supp. 649 (N.D.Cal.1987). A. Dariano's appeal followed.

II.

The court's role in reviewing arbitration awards has traditionally been very limited. See W.R. Grace & Co. v. Local Union 759, Int'l Union of the United Rubber Workers, 461 U.S. 757, 764, 103 S.Ct. 2177, 2182, 76 L.Ed.2d 298 (1983). However in this case we are asked to decide if the district court's grant of summary judgment was appropriate, rather than whether the decision of the arbitrator was correct, and therefore our review is de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir.1986). In reviewing a grant of summary judgment, evidence is viewed in the light most favorable to the nonmoving party to determine whether there are any genuine issues of material fact and whether the district court correctly applied applicable substantive law. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir.1986).

III.

It is uncontroverted that the supremacy doctrine announced in Carey, 375 U.S. 261, 84 S.Ct. 401, establishes that an NLRB decision on a representational issue overrides an arbitrator's decision on the same issue. Central Valley Typographical Union, No. 46 v. McClatchy Newspapers, 762 F.2d 741, 747 (9th Cir.1985); Stevens, 743 F.2d at 1278; Cannery Warehousemen, Local Union No. 748 v. Haig Berberian, Inc., 623 F.2d 77, 81-82 (9th Cir.1980); cf. Sheet Metal Workers Int'l Ass'n, Local No. 359 v. Arizona Mechanical & Stainless Inc., 863 F.2d 647 (9th Cir.1988) (reconciling the holdings of Stevens and Edna H. Pagel, Inc. v. Teamsters Local Union 595, 667 F.2d 1275 (9th Cir.1982) based upon the distinction between the NLRB's dismissal of a complaint and the NLRB's action on the merits). As stated in McClatchy Newspapers, "two logically inconsistent judgments cannot be enforced when a representational issue is at stake." 762 F.2d at 749. This case involves a representational issue arising out of section 9(b) of the National Labor Relations Act ("NLRA"), 29 U.S.C. Sec. 159(b). Gateway Structures, Inc. v. Carpenters 46 N. Cal. Counties Conference Bd., 779 F.2d 485, 488 (9th Cir.1985); Stevens, 743 F.2d at 1278; see Local 3-193, Int'l Woodworkers of Am. v. Ketchikan Pulp Co., 611 F.2d 1295, 1298 (9th Cir.1980). Therefore, if the NLRB in its September 22, 1986 decision, and the arbitrators, in their September 23, 1986 decision, decided the same issue, the NLRB decision is supreme.

IV.

The underlying issues presented here are not new to this court. They arise from the practice of so-called double-breasted operations, especially prevalent in the construction industry. The conflict between NLRB and arbitrator's decisions is also not new. See, e.g., Arizona Mechanical & Stainless Inc., 863 F.2d at 649; Warehousemen's Union Local No. 206 v. Continental Can Co., 821 F.2d 1348, 1349 (9th Cir.1987); Stevens, 743 F.2d at 1273-75.

A double-breasted operation occurs when owners of one company that is a party to a labor agreement, own a second company that is non-union. The non-union company can bid more 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...