ION CONST. v. DIST. COUNCIL OF PAINTERS NO. 16

• Decision Date: 28 August 1984
• Docket Number: No. C-83-5279.,C-83-5279.
• Citation: 593 F. Supp. 233
• Parties: ION CONSTRUCTION, Petitioner, v. DISTRICT COUNCIL OF PAINTERS NO. 16, et al., Respondents.
• Court: U.S. District Court — Northern District of California

593 F. Supp. 233

ION CONSTRUCTION, Petitioner, v. DISTRICT COUNCIL OF PAINTERS NO. 16, et al., Respondents.

No. C-83-5279.

United States District Court, N.D. California.

August 28, 1984.

Robert M. Lieber, Richard N. Hill, Wendy L. Tice-Wallner, Littler, Mendelson, Fastiff & Tichy, San Francisco, Cal., for petitioner.

David A. Rosenfeld, VanBourg, Allen, Weinberg & Roger, San Francisco, Cal., for respondents.

ORDER

AGUILAR, District Judge.

The general rule in labor-management relations is that a union and an employer may not enter into an agreement until a majority of the employees in a unit have selected the union as their exclusive bargaining agent. Section 7 of the National Labor Relations Act ("NLRA" or the "Act"), 29 U.S.C. § 157, grants employees the right to choose their representative for the purposes of collective bargaining. Section 9(a) of the Act provides that the bargaining representative for the employees in a unit must be the representative "designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes." 29 U.S.C. § 159(a).

Based on the guarantees contained in sections 7 and 9(a), "the Supreme Court has held that both the union and the employer commit unfair labor practices when they sign a collective bargaining agreement recognizing the union as the exclusive bargaining agent when in fact only a minority of the employees have authorized the union to represent their interests." NLRB v. Iron Workers ("Higdon"), 434 U.S. 335, 344, 98 S.Ct. 651, 657, 54 L.Ed.2d 586 (1978). Further, it is an unfair labor practice for either an employer or a union to interfere in any way with the employees' selection of their bargaining representative. See 29 U.S.C. § 158(a)(1, 2) and (b)(1)(A).

The scheme established in sections 7 and 9(a) does not, however, work effectively in all industries. In particular, the exigencies of the construction industry are such that the procedures contemplated in sections 7 and 9(a) are inapt. Recognizing the peculiar needs of the construction industry, Congress enacted section 8(f) of the Act to specifically address the problem.

Section 8(f) provides:

It shall not be an unfair labor practice under subsections (a) and (b) of this section for any employer engaged primarily in the building and construction industry to make an agreement covering employees engaged (or who, upon their employment, will be engaged) in the building and construction industry with a labor organization of which building and construction employees are members ... because (1) the majority status of such has not been established under the provisions of section 159 of this title prior to the making of such agreement .... Provided ... That any agreement which would be invalid, but for clause (1) of this subsection, shall not be a bar to a petition filed pursuant to section 9(c) or 9(e).

As summarized in the Supreme Court's recent decision in Jim McNeff v. Todd, 461 U.S. 260, 103 S.Ct. 1753, 1756, 75 L.Ed.2d 830 (1983), "§ 8(f) allows construction industry employers and unions to enter into agreements setting the terms and conditions of employment for the workers hired by the signatory employer without the union's majority status first having been established in the manner provided for under § 9 of the Act."

By enacting § 8(f), Congress attempted to satisfy various interests within the construction industry. Without the § 8(f) exception, construction workers have a difficult time gaining the benefits of a collective bargaining agreement because the workers may not be on a job long enough to elect a union as a bargaining representative. See S.Rep. No. 187, 86th Cong., 1st Sess., 55-56 (1959), U.S.Code Cong. & Admin.News 1959, p. 2318. In addition, § 8(f) is of great importance to construction industry employers because it allows an employer to "know his labor costs before making the estimate upon which his bid will be based" and it gives the employer a "supply of skilled craftsmen for quick referral." See H.R.Rep. No. 741, 86th Cong., 1st Sess., 19 (1959), U.S.Code Cong. & Admin. News 1959, p. 2318.

While § 8(f) provides for the establishment of pre-hire agreements, it contains no provision with respect to their repudiation. Under the Act, a pre-hire agreement may be terminated if either the union or the employer petition the NLRB for a representative election. 29 U.S.C. § 158(f). In Higdon, the Supreme Court affirmed that § 8(f) was not intended to impinge on employees' § 7 right to select their own bargaining representative. Thus, if the employees select a bargaining representative, then the pre-hire agreement expires.

A pre-hire agreement may also be terminated by either party's repudiation of the agreement. Although the statute does not specifically provide for repudiation, the Supreme Court has repeatedly protected the parties' right to repudiate a pre-hire agreement until such time as the union achieves majority support in the relevant bargaining unit. In Higdon, the Court specially noted the voluntary nature of pre-hire agreements, 434 U.S. at 348 n. 10, 98 S.Ct. at 659 n. 10, and affirmed the NLRB's decision that until and unless the union achieves majority status, "the pre-hire agreement is voidable ..." Id. at 341, 98 S.Ct. at 655.

In the Jim McNeff case the Supreme Court made much stronger statements about the voidability of pre-hire agreements. In its conclusion, the Court stated that, "A § 8(f) pre-hire agreement is subject to repudiation until the union establishes majority status." 103 S.Ct. at 1759. The Court also remarked that "... the voluntary nature of prehire agreements clearly gave petitioner the right to repudiate the contract ..." Id. After making this observation, the McNeff Court found that the employer "had never manifested an intention to void or repudiate the contract." Id. Therefore, the Court held that the § 8(f) agreement was still viable. Id.

In McNeff, the Supreme Court found that "it is not necessary to decide in this case what specific acts would effect the repudiation of a pre-hire agreement — sending notice to the union, engaging in activity overtly and completely inconsistent with contractual obligations, or, as respondents suggest, precipitating a representation election pursuant to the final provision in § 8(f) that shows the union does not enjoy majority support." Id. 103 S.Ct. at 1759 n. 11. Not surprisingly, footnote 11 has spawned a considerable amount of litigation about what constitutes effective repudiation of a § 8(f) pre-hire agreement. See e.g. Contractors, Laborers, Teamsters & Engineers Health & Welfare Plan v. Harkins Construction & Equipment Co., 733 F.2d 1321 (8th Cir.1984); Roberts v. Ayala, 709 F.2d 520 (9th Cir.1983); Painters District Council No. 3 Pension Fund v. Johnson, 566 F.Supp. 592 (W.D.Mo.1983).

The question before this Court is somewhat different. Before determining whether the employer has effectively repudiated the pre-hire agreement, the Court must decide who should make the determination about the effectiveness of the employer's asserted repudiation. The employer argues that the issue of repudiation can only be decided by the courts. The union maintains that the repudiation issue should be resolved in the first instance by an arbitrator, pursuant to the arbitration clause in the collective bargaining agreement that is incorporated in the pre-hire agreement.

Although Higdon and McNeff acknowledge the so-called "right to repudiate" a pre-hire agreement, neither case addresses the question that confronts this Court. Notably, the question is before this Court now in three separate cases, including this one. See also Cacioppo v. Royal Tilt Construction, C-82-6161 RPA; District Council of Iron Workers v. Link-Up Fencing, C-83-20081-RPA.

The Court has found only two cases in which courts have addressed the issue currently before this Court. See McNally Pittsburgh v. Utah Building & Construction Trades Council, ("McNally Pittsburgh") C-83-0842W (D.Ut. April 19, 1984); Northern California District Council of Laborers v. Robles Concrete Co. ("Robles Concrete") 149 Cal.App.3d 289, 196 Cal.Rptr. 776 (1983). These courts arrived at exactly opposite conclusions.

In McNally Pittsburgh, the employer and the union entered into a Project Stabilization Agreement. In addition, they both signed a Memorandum of Understanding that provided that the union would refer members to the various contractors and subcontractors on the project. (Contractors and subcontractors were not required to sign any agreement with the union.) Plaintiff McNally Pittsburgh had signed a prime contract to build a coal processing plant, and signed the Project Stabilization Agreement and the Memorandum of Understanding. Plaintiff thought that signing the Memorandum of Understanding was a mistake and therefore sent a letter to the union rescinding its agreement to the Memorandum of Understanding. The district court found that the Memorandum of Understanding was a pre-hire agreement within the meaning of § 8(f). Slip op. at p. 9.

In McNally Pittsburgh, Judge Winder found that an arbitrator should make the initial determination of whether a purported repudiation of a pre-hire agreement was effective. Judge Winder concluded that the court's role is limited to deciding "whether an enforceable agreement existed prior to the attempt to rescind and, if so, whether the scope of the agreement's arbitration clause is broad enough to require arbitration of a dispute concerning an attempt to rescind the agreement." McNally Pittsburgh, Slip op. at p. 12. The Judge then found that "the Court is persuaded that the question of whether an attempt to rescind the agreement by a party thereto is effective is a dispute which `arises out of the interpretation of application of the Agreement.'" Id. at p. 13-14. Accordingly, Judge Winder referred the repudiation question to an arbitrator. Id. at p. 14.

The California...