Laborers Health and Welfare Trust Fund for Northern California v. Westlake Development

Citation53 F.3d 979
Decision Date25 April 1995
Docket NumberNos. 93-16584,93-16666,s. 93-16584
Parties149 L.R.R.M. (BNA) 2138, 63 USLW 2684, 130 Lab.Cas. P 11,318, 19 Employee Benefits Cas. 1351, Pens. Plan Guide P 23910J LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA; Laborers Vacation-Holiday Trust Fund for Northern California; Laborers Pension Trust Fund for Northern California; Laborers Training and Retraining Trust Fund for Northern California, Plaintiffs-Appellants, v. WESTLAKE DEVELOPMENT, a corporation; First Doe; Second Doe; Third Doe; Black Corporation; White Corporation; Blue Co.; and Grey Company, a corporation, Defendants-Appellees. WESTLAKE DEVELOPMENT COMPANY, INC., Petitioner-Counter-respondent-Appellee, v. LOCAL 389 LABORERS UNION; Northern California District Council of Laborers, Respondents-Counter-petitioners-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Sandra Rae Benson, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, CA, for plaintiffs-appellants.

Nick A. Boodrookas, Adam P. Siegman, Leland, Parachini, Steinberg, Flinn, Matzger & Melnick, San Francisco, CA, Richard Alaniz, Terry Schraeder, Alaniz & Schraeder, Houston, TX, for defendants-appellees.

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

Before: GOODWIN, CANBY, and T.G. NELSON, Circuit Judges.

T.G. NELSON, Circuit Judge:

In case number 93-16584, Laborers Health and Welfare Trust Fund for Northern California and related trust funds (the Trust Funds) appeal the district court's summary judgment in favor of Westlake Development Company, Inc. (Westlake), in the Trust Funds' action under the Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185, and the Employee Retirement and Income Security Act (ERISA), 29 U.S.C. Sec. 1132(a)(1)(B), (e)(1), seeking pension contributions required by Westlake's 29 U.S.C. Sec. 158(f) pre-hire collective bargaining agreement (CBA). In case number 93-16666, consolidated for appeal, Laborers Local Union 389 and related entities (the "Union") appeal the district court's grant of Westlake's petition to vacate an arbitration award issued by an arbitration panel pursuant to the provisions of the CBA. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291, and we affirm.

A. The Trust Funds Case

The Trust Funds brought an action in state court seeking money damages for allegedly delinquent fringe benefit contributions based upon a pre-hire CBA executed by employer Westlake. 1 Westlake removed the action It is undisputed that on October 12, 1977, Westlake and the Union entered into the CBA which bound it to the Laborers' Master Agreement. The master agreement establishes, inter alia, wages, hours and working conditions, and requires Westlake to make fringe benefit contributions to the Trust Funds on behalf of employees covered by the agreement, and further binds Westlake to the provisions of the Trust Agreements establishing the Trust Funds. Westlake paid contributions for fringe benefits to the Trust Funds from February 1967 until July 1990.

to federal court. The parties entered into a stipulation of settlement which provided for an audit of Westlake's records. After the audit the parties were unable to reach a settlement, and the Trust Funds filed an amended complaint seeking to enforce the CBA by requiring Westlake to pay contributions in the amount of $22,325.46, plus interest, liquidated damages, attorneys' fees and costs.

By letter dated September 24, 1990, Westlake notified the Union that it considered the CBA unenforceable and would no longer abide by the agreement because for the past three years it had "never employed more than one individual performing laborer's work," and had "no plans to hire employees in this classification in the future." Westlake's cancellation and repudiation of the CBA was thus based on the "one-employee unit rule," which provides that employers need not participate in collective bargaining if they have only a single employee who falls within the collective bargaining unit. 2

The district court granted Westlake's motion for summary judgment and denied the Trust Funds' motion for summary judgment. The court determined that Westlake had lawfully repudiated the CBA and therefore was not obligated to pay the fringe benefit contributions claimed by the Trust Funds. The Trust Funds timely appeal.

B. The Union Case

This case arose subsequent to the filing of a grievance by the Union on August 24, 1992, alleging violation of the CBA by Westlake for its use of non-union employees for work covered by the CBA. Westlake appeared only for the purposes of contesting jurisdiction. An arbitrator entered an award in favor of the Union. Westlake then filed a petition in district court to vacate the arbitration award, alleging that the CBA was no longer enforceable because of the one-employee unit rule. The Union filed a cross-petition to confirm the award.

The district court determined that Westlake had lawfully repudiated the CBA and vacated the arbitration award because the repudiation eliminated the contractual basis for arbitration, and thus the arbitration panel was without jurisdiction. The Union timely appeals.


A grant of summary judgment is reviewed de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). Our review is governed by the same standard used by the trial court under Federal Rule of Civil Procedure 56(c). Id. We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Id.

Whether certain contract defenses are available in an action to recover delinquent trust fund contributions is a question of law reviewed de novo. Southwest Adm'rs, Inc. v. Rozay's Transfer, 791 F.2d 769, 773 (9th Cir.1986), cert. denied, 479 U.S. 1065, 107 S.Ct. 951, 93 L.Ed.2d 999 (1987).

A. Repudiation in the One-Employee Unit Situation

The Trust Funds argue Westlake's repudiation was ineffective because unilateral repudiation of pre-hire agreements was rejected by this court in Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of Laborers, 861 F.2d 1124 (9th Cir.1988) (en banc). The district court rejected this argument, as do we.

In Mesa Verde we held that the decision of the National Labor Relations Board in Deklewa v. International Ass'n of Bridge, Structural and Ornamental Ironworkers, Local 3, 282 NLRB 1375, 1987 WL 90249 (1987), enforced, 843 F.2d 770 (3d Cir.1988), cert. denied, 488 U.S. 889, 109 S.Ct. 222, 102 L.Ed.2d 213 (1988), "determining that pre-hire collective bargaining agreements may not be unilaterally repudiated prior to a Board-certified election or termination of the contracts, applies in this circuit." Mesa Verde, 861 F.2d at 1126. However, as the district court pointed out, and as Westlake reiterates on appeal, Mesa Verde did not address repudiation under the one-employee unit rule. Both Mesa Verde and Deklewa involved the typical bargaining unit involving more than one member, in which a decertification election is readily available to allow employees to reject the contract. See Mesa Verde, 861 F.2d at 1126; Deklewa, 1987 WL 90249 at * 3; compare Northern Cal. Dist. Council of Laborers v. Strauss Constr. Co., 672 F.Supp. 430, 435 (N.D.Cal.1987) (holding that a "single-employee employer" could repudiate a pre-hire agreement by giving actual notice that the agreement was terminated), aff'd, 897 F.2d 533 (9th Cir.1990).

We hold that Mesa Verde, which did not involve a one-employee unit, did not affect our prior holding in Operating Eng'rs Pension Trust v. Beck Eng'g & Surveying Co., 746 F.2d 557 (9th Cir.1984), which did involve a one-employee unit. There we held that "a construction industry employer who employs a single employee pursuant to a Section 8(f) pre-hire agreement is entitled to repudiate the agreement by conduct sufficient to put the union and the employee on notice that the agreement has been terminated." Id. at 566. Our decision in Beck was "specifically shaped to respond to the unique circumstances of a single-employee bargaining unit in the construction industry." Id. at 565. The district court was thus in line with both Beck and Mesa Verde when it observed that "[s]ince [the one-employee unit] rule essentially dissolves the bargaining unit ... it seems appropriate to treat repudiation under the single employee unit rule as equivalent to a repudiation resulting from decertification of the bargaining representative."

In this case, the evidence from the Trust Funds' own audit of Westlake's records demonstrates that Westlake was a "one-employee employer" during the relevant time period. 3 Westlake gave actual notice of repudiation in its letter of September 24, 1990, and the district court therefore properly concluded that Westlake lawfully repudiated the pre-hire agreement.

This conclusion is bolstered by the Board's post-Deklewa adherence to the rule allowing unilateral repudiation in single employee unit situations. In Mesa Verde we adopted the Board's "reasonable and tenable construction of section 8(f)" in Deklewa. Mesa Verde, 861 F.2d at 1131; see also id. at 1130-33. Thus, we will not here ignore the Board's post-Deklewa allowance of unilateral repudiation in single employee unit situations.

In Haas Garage Door Co., 308 NLRB 1186 (1992), 1992 WL 277382, a construction industry employer who had signed an 8(f) agreement attempted to repudiate it at a time when it employed only one employee. The administrative law judge (ALJ) ruled merit in the [employer's] defense that it is not bound to the contract because it has no employees doing unit work. Initially, we disagree with the judge's finding that even if an employer has no employees doing unit work it cannot repudiate an 8(f) contract. Rather,...

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