International Broth. of Elec. Workers, Local 357, AFL-CIO v. Brock

• Decision Date: 20 October 1995
• Docket Number: AFL-CI,No. 94-16131,P,94-16131
• Citation: 68 F.3d 1194
• Parties: , 131 Lab.Cas. P 33,307, 2 Wage & Hour Cas.2d (BNA) 1633, 95 Cal. Daily Op. Serv. 8206, 95 Daily Journal D.A.R. 14,133 INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 357,laintiff-counter-defendant-Appellee, v. Ronnie J. BROCK; Charles Brush, Jr.; Dennis Chapman; Kenneth N. Harvey; James E. Herndon; Michael F. Jordan; Gilbert Medina; Joseph N. Merritt; Wendell K. Reynolds; Jerry B. Spencer; Robert W. Thomas, Defendants-counter-claimants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1194

68 F.3d 1194

64 USLW 2279, 131 Lab.Cas. P 33,307,

2 Wage & Hour Cas.2d (BNA) 1633,

95 Cal. Daily Op. Serv. 8206,

95 Daily Journal D.A.R. 14,133

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 357 AFL-CIO, Plaintiff-counter-defendant-Appellee, v. Ronnie J. BROCK; Charles Brush, Jr.; Dennis Chapman Kenneth N. Harvey; James E. Herndon; Michael F. Jordan Gilbert Medina; Joseph N. Merritt; Wendell K. Reynolds Jerry B. Spencer; Robert W. Thomas, Defendants-counter-claimants-Appellants.

No. 94-16131.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 12, 1995.

Decided Oct. 20, 1995.

Steven G. Biddle, O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, Phoenix, Arizona, argued (Peter C. Prynkiewicz, O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, Phoenix, Arizona, on brief), for defendants-counter-claimants-appellants.

Patricia S. Waldeck, Las Vegas, Nevada, for plaintiff-counter-defendant-appellee.

Terry R. Yellig, Sherman, Dunn, Cohen, Leifer & Yellig, Washington, D.C., for amicus.

Appeal from the United States District Court for the District of Nevada.

Before: CHOY, BEEZER, and THOMPSON, Circuit Judges.

CHOY, Circuit Judge:

In this appeal, appellants ("Workers"), who are members of the International Brotherhood of Electrical Workers ("IBEW"), challenge appellee IBEW Local 357's ("Local 357") requirement that they pay a two percent gross wage assessment to support Local 357's Jobs Targeting Program ("JTP"). The Workers contend that this assessment violates the Davis-Bacon Act, 40 U.S.C. Sec. 276a(a). We agree and reverse the district court's grant of summary judgment in favor of Local 357.

I.

The Workers are not members of Local 357, but are members of other IBEW locals (their "home locals"). The Workers were employed within Local 357's jurisdiction as "travelers" on a project covered by the Davis-Bacon Act. Local 357's Bylaws require members of the local and travelers alike to pay "working dues" to Local 357. Bylaws of Local Union No. 357 ("Bylaws"), Art. XI, Sec. 6(d). In addition to the working dues that each worker pays to Local 357, Local 357 also requires each IBEW member working within its jurisdiction under an "inside" collective bargaining agreement to pay an additional two percent of his or her gross wages directly to Local 357's JTP. Bylaws Art. XI, Sec. 6(a). ¹ The Workers were employed under an "inside" agreement.

The JTP at issue, called the Electrical Industry Advancement Fund, was established in mid-1986. Local 357's JTP, like JTPs in general, is designed to assist union contractors financially by subsidizing their labor costs on certain targeted projects where it is anticipated that competition from non-union contractors would effectively prevent union contractors from bidding low enough to win the bid if they were required to pay the full collectively bargained rate.

Travelers working within Local 357's jurisdiction are not permitted to vote on Local 357 matters. Hence, the Workers have never had an opportunity to accept or reject Local 357's JTP.

The Workers learned that the Department of Labor's Wage and Hour Division ruled that the JTP of IBEW Local 595 violated the Davis-Bacon Act. The information was based on a case involving the Building and Construction Trades Department of the AFL-CIO. See Letter of Administrator (Jan. 24, 1989), clarified by Letter of Administrator (Sept. 5, 1989) ("Supplemental Letter Ruling"), aff'd sub nom. In re Building & Constr. Trades Unions Job Targeting Programs, Wage App.Bd. Case No. 90-02 (Wage App.Bd. June 13, 1991) ("WAB Decision"), aff'd sub nom. Building & Constr. Trades Dep't v. Reich, 815 F.Supp. 484 (D.D.C.), modified, 820 F.Supp. 11 (D.D.C.1993), and aff'd, 40 F.3d 1275 (D.C.Cir.1994) (Building Trades ). Believing this ruling to apply to Local 357's JTP, the Workers stopped paying the two percent gross wage assessment to Local 357's JTP.

In Building Trades, the Administrator of the Wage and Hour Division of the Department of Labor (the "Administrator") ruled that Local 595's JTP violated the Department's regulations under the Davis-Bacon Act. In Local 595's JTP, contractors governed by the Davis-Bacon Act deducted a percentage of workers' wages, which they forwarded to Local 595 for use in subsidizing bids for targeted contractors. The deductions forwarded to Local 595's JTP were purportedly made for "vacation allowances," but were then allocated to the JTP. In her Supplemental Letter Ruling, the Administrator reaffirmed and clarified her prior ruling. The Administrator further held:

With regard to your statement that our ruling does not prohibit payments, which you characterize as union dues, made directly by members to their union to finance a JTP, we disagree if the source of such payments is attributable to wages required to be paid on a Davis-Bacon covered project. Therefore, direct payments used to fund a JTP made by a union member while working on a Davis-Bacon project would be considered a subsequent deduction or rebate prohibited by the Davis-Bacon Act and 29 C.F.R. Sec. 5.5(a)(1) if and to the extent that the payment has the effect of the employee receiving less than the prevailing wage, free and clear.

Supplemental Letter Ruling at 2.

In early 1992, Local 357's Trial Board charged the Workers with violating the IBEW Constitution and Local 357's Bylaws. The Workers were subsequently found guilty of failing and refusing to pay the two percent gross wage assessment and were fined the unpaid amount plus a twenty percent penalty. The Trial Board also suspended the Workers, and one of the Workers was expelled from the union altogether. The Trial Board's judgment also notified the Workers that if it became necessary for Local 357 to pursue court action to collect the monies adjudged due, the Workers would be held responsible for Local 357's attorney's fees and for interest on the amount due.

When the Workers refused to pay the amounts assessed, Local 357 filed a complaint in Nevada state court to collect the amounts it claimed were due, including attorney's fees and costs. The Workers removed the complaint to the United States District Court for the District of Nevada and sought a declaratory judgment that Local 357 was not entitled to collect the assessments and penalties because they were illegal. ²

The district court granted Local 357's cross-motion for summary judgment and denied the Workers' motion for summary judgment, upholding the Trial Board's decision and awarding Local 357 the two percent assessments in arrears, a twenty percent fine, and the attorney's fees and interest requested in the amount of $42,827.19. In so doing, the district court summarily held that Local 357's JTP was lawful and that the Building Trades rulings were inapplicable to the case.

II.

The Workers argue that Local 357's JTP violates the purpose of the Davis-Bacon Act, 40 U.S.C. Sec. 276a(a), the Department of Labor's implementing regulations of the Act, 29 C.F.R. Part 5, and the Department of Labor's interpretation of its regulations in the Building Trades case. The Workers further maintain that even if the JTP does not violate the Davis-Bacon act, the district court erred in permitting Local 357 to collect a twenty percent penalty from each worker, plus interest, costs, and attorney's fees because no provision of either the IBEW Constitution or Local 357's Bylaws in effect at the time permitted these sanctions. Moreover, the Workers maintain that the award of attorney's fees was improper.

Local 357 responds with a series of interrelated arguments. It contends that neither the Davis-Bacon Act nor the Copeland Act applies to this case. In particular, Local 357 maintains that the "without subsequent deduction or rebate" language in the Davis-Bacon Act was only intended to create a contractual remedy for the same "kickback" practices prohibited by the Copeland Anti-Kickback Act, 18 U.S.C. Sec. 874. Moreover, Local 357 argues that even if the Davis-Bacon Act prohibited activity broader than kickbacks, the Davis-Bacon Act does not apply to union activity. Local 357 also implicitly contends that, even if the Davis-Bacon Act applied to union activity, the two percent gross wage assessment constitutes "membership dues," which are permissible deductions within the meaning of 29 C.F.R. Sec. 3.5(i). Finally, Local 357 argues that the penalty assessed on the Workers was authorized by the IBEW Constitution and Local 357's Bylaws and that the attorney's fee award was appropriate under the common benefit theory.

We review a grant of summary judgment de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). Because there are no genuine issues of material fact in dispute, this court's task in this appeal is to determine whether the district court properly applied the relevant law to the undisputed facts. Building Trades, 40 F.3d at 1279.

A. Local 357's Two Percent Gross Wage Assessment Violates the Davis-Bacon Act.

1. The Scope of the Davis-Bacon Act is Broader than the Copeland Act's Prohibition on Kickbacks.

Local 357 and the amicus curiae, Building and Construction Trades Department, AFL-CIO, first contend that the Davis-Bacon Act's prohibition of "subsequent deduction or rebate" is narrow, merely coextensive with the Copeland Act's anti-kickback provisions. Implicitly, they claim that Local 357's JTP does not involve kickbacks, which are "the coerced return of a portion of a worker's wages to his employer." Building Trades, 40 F.3d at 1279. ³ Accordingly, Local 357 and the amicus curiae contend that the Davis-Bacon Act does not apply to Local 357's JTP.

This exact argument was recently rejected by the Court of Appeals for the District of Columbia Circuit in Building Trades. Building Trades, 40 F.3d at 1279-1280. The D.C. Circuit held that "both the language and the goals" of the Davis-Bacon Act are broader than that of the Copeland Act, and that the ...