Martin v. Garman Const. Co.

• Decision Date: 17 October 1991
• Docket Number: No. 90-2177,90-2177
• Citation: 945 F.2d 1000
• Parties: 138 L.R.R.M. (BNA) 2666, 60 USLW 2308, 120 Lab.Cas. P 10,981, 14 Employee Benefits Cas. 1750 William F. MARTIN, George F. Hutcheson, Ray Johnson, et al., Plaintiffs-Appellees, v. GARMAN CONSTRUCTION COMPANY, a corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1000

945 F.2d 1000

138 L.R.R.M. (BNA) 2666, 60 USLW 2308,

120 Lab.Cas. P 10,981,

14 Employee Benefits Cas. 1750

William F. MARTIN, George F. Hutcheson, Ray Johnson, et al., Plaintiffs-Appellees, v. GARMAN CONSTRUCTION COMPANY, a corporation, Defendant-Appellant.

No. 90-2177.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 12, 1991.

Decided Oct. 17, 1991.

Louis E. Sigman, Bernard M. Baum, Alan H. Auerbach, James M. Neuman (argued), Baum & Sigman, Walter J. Reum, Reum & Casello, Chicago, Ill., for plaintiffs-appellees.

James V. Daffada, Abramson & Fox, Chicago, Ill., Gerard C. Smetana (argued), Richman, Lawrence, Mann, Greene & Smetana, Chicago, Ill., for defendant-appellant.

Before CUDAHY and RIPPLE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

CUDAHY, Circuit Judge.

This case asks us to determine the preclusive effect of a decision by the National Labor Relations Board (Board or NLRB) on a subsequent district court action under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1132, 1145 (1988) (ERISA). We conclude that on the facts of this case, the Board's decision that the employer had not committed an unfair labor practice does not preclude the district court from later finding that the employer faced liability under ERISA.

I.

In March 1981 Garman Construction Company (Garman), a small general contractor, and Local 150, International Union of Operating Engineers (Union or Local 150), signed a "Memorandum of Agreement" (Agreement), ¹ governing fringe benefit contributions to several pension and trust funds ² (Funds) on behalf of any union members Garman might employ in an operating engineer craft. This "prehire agreement," authorized by section 8(f) of the National Labor Relations Act (NLRA), 29 U.S.C. § 158(f) (1988), ³ bound Garman to the terms and conditions of an earlier agreement between the Union and a multiemployer bargaining unit. ⁴ While the Agreement was in force, Garman employed only one covered engineer.

Garman did not terminate the agreement at the end of its first three years, so it was automatically renewed for the period July 1, 1981 to May 31, 1984. But on September 3, 1981, Garman sent letters to the Union and the Funds declaring the agreement "null and void," disclaiming any bargaining relationship or obligation to Local 150 and pledging to make no further contributions to the Funds. The company then filed representation petitions with the NLRB. The Union informed Garman it would take legal steps to enforce the collective bargaining agreement and that the Funds' trustee ⁵ would take action to enforce Garman's financial obligations.

The legal proceedings then began. Local 150 filed an unfair labor practice charge with the NLRB in October 1981, arguing that Garman committed unfair labor practices under section 8(a)(1) and (a)(5), 29 U.S.C. § 158(a)(1), (a)(5) (1976 & Supp. V), by repudiating the contract and withdrawing recognition of the Union. Garman moved to join the Funds as necessary parties, but this was denied. In February 1982 the General Counsel issued a complaint, alleging that Local 150 had exclusive bargaining authority for Garman's employees and that Garman had illegally repudiated the agreement and refused to bargain. The proposed remedy for the unfair labor practices included compensation to the Funds for the missed contributions.

Meanwhile, the Funds sought payment. In November and December the Funds sent delinquency notices to Garman. The Union and the Funds subsequently filed suit for an alleged violation of ERISA, 29 U.S.C. §§ 1132, 1145. ⁶ Judge Williams stayed the matter on May 2, 1984, pending the outcome of the NLRB proceeding.

The ALJ's September 29, 1983 decision found no unfair labor practice in Garman's repudiation. The opinion recognized the vitality of the Board's rule in John Deklewa d/b/a John Deklewa & Sons, 282 NLRB 1375 (1987), aff'd sub nom. International Ass'n of Bridge, Structural and Ornamental Iron Workers v. NLRB, 843 F.2d 770 (3d Cir.), cert. denied, 488 U.S. 889, 109 S.Ct. 222, 102 L.Ed.2d 213 (1988) ("Deklewa "), prohibiting unilateral termination of a prehire agreement. (Our circuit affirmed Deklewa's principles in NLRB v. Bufco Corp., 899 F.2d 608, 612 (7th Cir.1990).) But the ALJ held that Garman did not violate the principle because of the Board's "one-man rule." This rule, first announced in Foreign Car Center, Inc., 129 NLRB 319 (1960), states that an employer does not violate section 8(a)(5) when the refusal to bargain involves a single-employee unit.

The Board's December 14, 1987 decision affirmed the findings of the ALJ with respect to the prehire agreement. ⁷ The Board held:

The [ALJ] ... dismissed the allegation in the complaint because of the "one-man unit" rule. This rule holds that the Board will not find that an employer has violated Section 8(a)(5) when the refusal to bargain involves a single-employee unit. Foreign Car Center, 129 NLRB 319 (1960).

We agree with the judge that under the facts of this case, the allegation of an 8(a)(5) violation concerning the Operating Engineers should be dismissed.

Decision and Order at 5. Local 150 petitioned for review in this court, but the petition was dismissed on a joint motion under Fed.R.App.P. 42(b). (Garman was not an adverse party.) The district court then granted the Funds' motion to reinstate the case.

In her order reinstating the action, Judge Williams indicated that she would give "collateral estoppel effect to the NLRB's determination that a contract existed between July 1, 1981 and May 31, 1984." Mem.Op. and Order (June 23, 1989). On cross motions for summary judgment the district court ruled that the company's unilateral repudiation violated the holding in Deklewa and the company's obligation under ERISA section 515. Mem.Op. and Order (Apr. 5, 1990). The Company was held liable for $19,424.30 in unpaid contributions, $3,884.86 in liquidated damages and $528.00 in audit fees. Garman submitted a motion to reconsider. In its denial of the motion, the court clarified the holding:

Defendant Garman's motion to reconsider is denied. Whatever the effect on the NLRB of the "one-man unit" rule as to the NLRB's power to declare an unfair labor practice, as far as this court is concerned, the April 5, 1990 order states the law to be applied in this ERISA collection case: A collective bargaining agreement bound the parties; Garman is liable for ERISA payments. The court rejects Garman's argument to not apply Deklewa retroactively. Not applying Deklewa would be contrary to ERISA and to the policy considerations underlying ERISA.

Docket Entry (Apr. 27, 1990) (emphasis in original). Garman now contends that the district court failed to afford appropriate preclusive effect to the Board's decision under the doctrines of res judicata and collateral estoppel and failed to defer to the primary jurisdiction of the NLRB. The Funds respond that the NLRB ruled only on the unfair labor practice claim--not the ERISA claim--and that Judge Williams was therefore entitled to find Garman in violation of ERISA.

II.

A. Standard of Review

We review the district court's holding on summary judgment de novo. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Moodie v. School Book Fairs, Inc., 889 F.2d 739, 743 (7th Cir.1989). Garman appeals from the final judgment by the district court. We accordingly do not rule on the merits of the NLRB unfair labor practice proceeding.

B. Preclusive Effect of the Board's Decision

The central question in this case is what effect Garman's repudiation had on its obligations under the NLRA and ERISA. Garman's thesis is that the Board's decision established the parties' rights under both the NLRA and ERISA. The Funds claim that even though the Board found that Garman did not violate the NLRA, the district court was not precluded from finding that Garman had run afoul of ERISA.

1. Res Judicata and Collateral Estoppel

Garman first argues that because the Funds' claim before the NLRB included collection of the allegedly delinquent contributions, the matter should not have been decided anew by the district court. Res judicata, or claim preclusion, bars relitigation of a claim that a party raised or could have raised in a prior adjudication. The Supreme Court has held that agency adjudication of a factual matter can be res judicata in later proceedings. United States v. Utah Construction & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966).

Garman's argument fails because the NLRB lacks jurisdiction to consider the ERISA claim. Enforcement claims by a fiduciary under ERISA may be brought in federal court only. 29 U.S.C. § 1132(e)(1) (1988). Because the NLRB lacked jurisdiction, the claim under ERISA did not merge into the earlier proceeding. Restatement (Second) of Judgments § 26(1)(c); cf. Rockford Mutual Ins. Co. v. Amerisure Ins. Co., 925 F.2d 193, 196-97 (7th Cir.1991) ("Res judicata precludes a party from raising even those issues it failed to raise in a prior action, but only if the issue could have been raised."); Washam v. J.C. Penney Co., 519 F.Supp. 554, 558-59 (D.Del.1981) (NLRB's resolution of unfair labor practice claim not res judicata as to EEOC's race discrimination claim (and vice versa) since neither agency has jurisdiction to consider both claims). Even if the General Counsel's complaint requested, and the Board authorized, compensation to the Funds as a remedy for an unfair labor practice, the Board could not authorize a remedy under ERISA.

Collateral estoppel is a different matter. Garman argues that because the issue of the agreement's enforceability was resolved in the NLRB proceeding, the Funds should be precluded from relitigating the matter. Collateral estoppel prohibits relitigation of an issue of fact or law when the issue is actually litigated, determined by a final judgment and essential to the judgment of a prior...