Laborers Health and Welfare Trust Fund for Northern California v. Kaufman & Broad of Northern California, Inc.

• Decision Date: 01 June 1983
• Docket Number: I-X,No. 81-4466,81-4466
• Citation: 707 F.2d 412
• Parties: 113 L.R.R.M. (BNA) 2995, 97 Lab.Cas. P 10,176, 4 Employee Benefits Ca 1627 LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA; Laborers Vacation Holiday Trust Fund for Northern California; Laborers Pension Trust Fund for Northern California; and Laborers Training and Retraining Trust Fund for Northern California, Plaintiffs-Appellants, v. KAUFMAN & BROAD OF NORTHERN CALIFORNIA, INC., aka Kay Building Co.; Kay Building Co.; Does, inclusive, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 412

707 F.2d 412

113 L.R.R.M. (BNA) 2995, 97 Lab.Cas. P 10,176,

4 Employee Benefits Ca 1627

LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA; Laborers Vacation Holiday Trust Fund for Northern California; Laborers Pension Trust Fund for Northern California; and Laborers Training and Retraining Trust Fund for Northern California, Plaintiffs-Appellants, v. KAUFMAN & BROAD OF NORTHERN CALIFORNIA, INC., aka Kay Building Co.; Kay Building Co.; Does I-X inclusive, Defendants-Appellees.

No. 81-4466.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 15, 1982.

Decided June 1, 1983.

Robert M. Hirsch, Van Bourg, Allen, Weinberg & Rodger, San Francisco, Cal., for plaintiffs-appellants.

Robert W. Tollen, Bronson, Bronson & McKinnon, San Francisco, Cal., for defendants-appellees.

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

Before WALLACE, KENNEDY, and NELSON, Circuit Judges.

KENNEDY, Circuit Judge:

Kaufman & Broad of Northern California, Inc. ("the Company") is a general contractor and home builder. The Company is a member of the Northern California Home Builders Conference, and through that organization is a party to the 1977-1980 Laborers' Master Agreement ("the Agreement") between construction industry employers and the Northern California District Council of Laborers ("the Union").

The Agreement sets the terms and conditions for all "Laborers' work," defined by a detailed list of construction related tasks. The Union has jurisdiction over all jobs that constitute Laborers' work, and the Agreement contains a union security clause which requires all such work to be performed by union employees. The Agreement also continues four employee benefit trust funds ("Trust Funds" or "Funds") established under prior agreements. ¹ Section 28(a) of the Agreement requires signatory employers to contribute fixed amounts to each fund for every hour spent on work within the Union's jurisdiction.

In late 1980 the Fund trustees audited the Company to determine compliance with the Agreement's pension contribution provisions. The audit revealed the Company used nonunion labor for "callback work," and that no pension contributions were made for such labor. "Callback work" is work performed by unskilled crews on completed home sites. The crews correct minor deficiencies on new homes, clean the sidewalks, pick up lumber scraps, etc. The Company typically uses labor hired on an occasional basis for this work.

The trustees decided callback work was within the Union's jurisdiction and subject to the pension contribution provisions of section 28(a). They claimed $131,887.68 in unpaid pension contributions and liquidated damages from the Company, which in turn denied that callback work was within the Union's jurisdiction. The Funds brought this suit in state court to collect.

The case was removed to the federal district court on the basis of original federal jurisdiction under section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185 (1976). Once in federal court, the Company moved for summary judgment. It based its motion on two grounds. Primarily, it contended that the district court lacked jurisdiction over the action because the underlying dispute was one of union representation, and thus within the exclusive jurisdiction of the National Labor Relations Board under Local No. 3-193 International Woodworkers of America v. Ketchikan Pulp Co., 611 F.2d 1295 (9th Cir.1980). The Company also insisted it had never understood callback work to be covered by the Agreement, and submitted affidavits to that effect.

The Funds opposed the Company's jurisdictional argument on the ground that the parties had agreed to the bargaining unit definition contained in the Agreement, making the issue primarily one of contract interpretation and thus within the district court's Sec. 301 jurisdiction. They also filed a cross-motion for summary judgment that callback work is covered by the Agreement.

The district court found no material facts were in dispute, and held that callback work was not within the Union's jurisdiction under the Agreement. ² We note that the district court necessarily assumed jurisdiction over interpretation of the contract in granting summary judgment for the Company on the work coverage issue. We affirm the assumption of jurisdiction, but vacate the grant of summary judgment and remand the contract interpretation issue for determination at trial.

The primary jurisdiction of the National Labor Relations Board in particular areas of labor management relations law is well-established. San Diego Building Trades Council v. Garmon, 359 U.S. 236, 242-44, 79 S.Ct. 773, 778-779, 3 L.Ed.2d 775 (1959). The threshold issue in the case before us is whether the primary jurisdiction rule requires dismissal of this suit, which has been brought under section 301 of the LMRA, 29 U.S.C. Sec. 185 (1976). The district court's jurisdiction under section 301 to entertain suits upon a collective bargaining agreement generally survives an objection based on primary jurisdiction, and in such cases the district court and the Board have concurrent jurisdiction. Smith v. Evening News Ass'n, 371 U.S. 195, 196-97, 83 S.Ct. 267, 268-269, 9 L.Ed.2d 246 (1962); Motor Coach Employees v. Lockridge, 403 U.S. 274, 300-01, 91 S.Ct. 1909, 1924-1925, 29 L.Ed.2d 473 (1971); Northern California District Council of Hod Carriers v. Opinski, 673 F.2d 1074, 1075 (9th Cir.1982). There are cases, however, where deference to the Board's expertise requires recognition of its primary jurisdiction notwithstanding that the suit is based on section 301. We so held in Ketchikan Pulp, supra. There we stated:

Congress did not intend by enacting Section 301 to vest in the courts initial authority to consider and pass upon questions of representation and determination of appropriate bargaining units.

Ketchikan Pulp, 611 F.2d at 1301.

The Company invokes the Ketchikan rule in this case, claiming that primary jurisdiction applies and that the section 301 suit must be dismissed. In aid of its argument, the Company contends that the instant suit raises questions of representation and determination of the appropriate bargaining unit, so that the primary jurisdiction rule of Ketchikan is applicable. We find it unnecessary to inquire whether the question raised here is of the same character as that in Ketchikan. Cf. Cappa v. Wiseman, 659 F.2d 957 (9th Cir.1981). This action was commenced by a trustee, who is not a party to the collective bargaining agreement, and who cannot apply to the Board for relief. In our view, this makes Ketchikan inapplicable.

At oral argument before us, all acknowledged that the Trust Funds could not have brought this case before the Board. As the Trust Funds are neither parties to the Agreement nor employees, they have no standing to petition the Board for unit clarification or for an accretion of callback workers. Carpenters Local Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 516 n. 11 (5th Cir.1982).

The Trust Funds assert that because they cannot proceed before the Board, the district court suit is necessary for the proper fulfillment of their fiduciary duties under the Trust Agreements and under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1001 et seq. (1976 & Supp. V 1981), and that they are entitled to proceed to trial on the merits of the case. We agree. There is authority for holding that the primary jurisdiction rationale is inapplicable where the injured party bringing the suit has no acceptable means to invoke the Board's jurisdiction and cannot induce its adversary to do so. Sears, Roebuck & Co. v. San Diego County District Council of Carpenters, 436 U.S. 180, 201-02, 98 S.Ct. 1745, 1759-1760, 56 L.Ed.2d 209 (1978). In such circumstances, the action is ordinarily cognizable in an otherwise appropriate judicial forum.

In Sears, which arose in the context of a preemption challenge to a state court action, the Court noted that there might be additional circumstances requiring a finding of preemption despite the injured party's lack of access to Board adjudication. That, however, is not the case before us here. The question here is whether the federal judicial forum should be displaced by the Board's authority, and we think there is ample support for the view that Congress did not intend such a result in suits brought by trustees of a pension fund.

ERISA governs the establishment and administration of employee benefit trust funds. 29 U.S.C. Sec. 1001 et seq. In enacting ERISA, Congress expressly recognized that the "continued well-being and security of millions of employees and their dependents are directly affected by these plans," and declared that the express policy of the Act is to protect "interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by ... establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts." 29 U.S.C. Sec. 1001 (1976 & Supp. V 1981). To that end, 29 U.S.C. Sec. 1132(e)(1) (1976) confers jurisdiction upon federal district courts over actions by a trust fiduciary to enforce the terms of a plan or enjoin their violation.

We are persuaded by both the structure and purpose of ERISA that Congress would not impose upon the Funds' trustees a fiduciary duty to maintain the fiscal integrity of the trusts without providing them a forum in which to do so. 29 U.S.C. Sec. 1104 (1976 & Supp. V 1981) sets forth the statutory fiduciary duty of pension plan trustees. ³ In defining the scope of that duty, the Third Circuit has held that employee benefit plan trustees have a fiduciary obligation to take action, although not necessarily formal legal action, against all employers who fail to contribute to the trust as...