Mulvaney Mechanical, Inc. v. Sheet Metal Workers

• Decision Date: 24 April 2002
• Docket Number: Docket No. 00-7546.
• Citation: 288 F.3d 491
• Parties: MULVANEY MECHANICAL, INC., Plaintiff-Appellee, v. SHEET METAL WORKERS INTERNATIONAL ASSOCIATION, LOCAL 38, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

288 F.3d 491

MULVANEY MECHANICAL, INC., Plaintiff-Appellee, v. SHEET METAL WORKERS INTERNATIONAL ASSOCIATION, LOCAL 38, Defendant-Appellant.

Docket No. 00-7546.

United States Court of Appeals, Second Circuit.

Argued December 12, 2000.

Decided April 24, 2002.

COPYRIGHT MATERIAL OMITTED

Jeffrey S. Dubin, Law Offices of Jeffrey S. Dubin, Huntington, NY, for Defendant-Appellant.

Robert B. Mitchell, Bridgeport, Connecticut (David J. Kelly, Durant, Nichols, Houston, Mitchell & Sheahan, PC, Bridgeport, CT, of counsel), for Plaintiff-Appellee.

Margery E. Lieber, Washington, D.C. (Arthur F. Rosenfeld, John E. Higgins, Jr., John H. Ferguson, Nancy E. Kessler Platt, Jennifer R. Taylor, Special Litigation Branch, National Labor Relations Board, Washington, D.C., of counsel), filed a letter brief for the National Labor Relations Board as Amicus Curiae.

Mark S. Renner, San Jose, California (Wylie, McBride, Jesinger, Sure & Platten, San Jose, California; Patrick J. Riley, Sheet Metal Workers' International Association, Washington, D.C., of counsel), filed a brief for Sheet Metal Workers' International Association as Amicus Curiae.

Before: FEINBERG, CARDAMONE, and F.I. PARKER, Circuit Judges.

CARDAMONE, Circuit Judge.

Plaintiff Mulvaney Mechanical, Inc. (Mulvaney, employer, or company) brought suit to vacate an arbitration award that required it as an employer to execute a new collective bargaining agreement with defendant, the Sheet Metal Workers International Association, Local 38 (Local 38, union, or appellant). Mulvaney had contracted originally with Local 38 through a multi-employer bargaining group, until the union decided in 1997 that it preferred to bargain with the employers individually. Local 38 and Mulvaney thereafter attempted to negotiate a new labor contract but, when they reached an impasse, the union authorized a strike upon the expiration of the existing collective bargaining agreement (agreement). Several months after the commencement of the work stoppage, Local 38 invoked the agreement's interest arbitration provision so that an arbitration panel could establish the terms of a new contract between it and the employer, thereby precipitating the present litigation.

On this appeal we deal with the issue of whether a breach by a union of a no-strike clause in a collective bargaining agreement repudiated that agreement and thereby justified the employer in rescinding the entire agreement. The doctrine in contract law that a material breach by one party to a contract constitutes such a repudiation as to justify the other party's unilateral rescission of the entire contract is not a legal concept that readily is transposed into the context of national labor law — as though the notion "one size fits all" applies in the law. On the contrary, in labor law there are other policies to consider, in particular the strong presumption in favor of arbitrability, which in this case preclude giving the employer the right to terminate the collective bargaining agreement solely on account of the union's breach.

BACKGROUND

Up until 1997 Mulvaney, a Connecticut-based sheet metal contractor, was a member of a multi-employer bargaining group, the Associated Sheet Metal and Roofing Contractors of Connecticut, Inc. (Association). The Association secured workers for its member-employers by contracting with appellant, Local 38. The collective bargaining agreement between the Association and Local 38 was for a term of one year, but was automatically renewed on an annual basis unless a party requested that it be reopened. Article XIV of the agreement provides that if a party should elect to reopen the agreement at the end of the yearly term, the agreement should nevertheless remain in effect until the conclusion of "interest arbitration" before the National Joint Adjustment Board (National Adjustment Board or Board), an arbitration board comprised equally of employer and union members. "Interest arbitration" involves referring a dispute to an arbitration panel in order for it to establish the terms and conditions of a future collective bargaining agreement. It differs from the more typical grievance arbitration, which involves interpreting an existing employment contract to determine whether its conditions have been breached. See Chicago Typographical Union No. 16 v. Chicago Newspaper Publishers' Ass'n, 853 F.2d 506, 509 n. 6 (7th Cir.1988).

Article X, Section 8 of the agreement delineates the interest arbitration procedures to be followed upon the failure of the parties to negotiate the renewal of the existing contract. That section also prohibits the parties from engaging in a work stoppage, unless and until the National Adjustment Board formally notifies the parties that it was unable to reach a unanimous compromise decision:

[A]ny controversy or dispute arising out of the failure of the parties to negotiate a renewal of this Agreement shall be settled as hereinafter provided:

. . . .

The dispute shall be submitted to the National Joint Adjustment Board pursuant to the rules as established and modified from time to time by the National Joint Adjustment Board. The unanimous decision of said Board shall be final and binding upon the parties.... There shall be no cessation of work by strike or lockout unless and until said Board fails to reach a unanimous decision and the parties have received a written notification of its failure.

The Strike by Local 38

By letter of January 8, 1997 Local 38 informed the Association that the agreement between them was due to expire six months later on June 30, 1997 and that the union had elected to terminate its bargaining relationship with the multi-employer Association as of that date. This letter satisfied the requirement of § 8(d)(1) of the National Labor Relations Act (NLRA), 29 U.S.C. § 158(d)(1) (1994), that required Local 38 to give Mulvaney at least 60 days advance notice of its intention to modify or terminate the agreement. The union planned thereafter to negotiate exclusively with the Association's individual member employers. As required by § 8(d)(3) of the NLRA, 29 U.S.C. § 158(d)(3), Local 38 sent a "Notice to Mediation Agencies" on January 21, 1997, apprising both the Federal Mediation and Conciliation Service and the New York State Employment Relations Board of its intention to terminate the collective bargaining agreement. Unfortunately, the union's notice identified the Association as the relevant party to the dispute rather than the individual employer, even though both parties had agreed to negotiate on an individual basis. In addition, the union failed to notify in a timely fashion the Connecticut Board of Mediation and Arbitration, which it was required to do since the Board qualified under the NLRA as a "State ... agency established to mediate and conciliate disputes within the State ... where the dispute occurred." Id.

Local 38 thereafter met with individual employers regarding the terms of a new collective bargaining agreement. It negotiated unsuccessfully with Mulvaney between May and June 1997. On June 19, 1997 the union informed Mulvaney that the employer's latest proposal was unacceptable, that the employees' position was "No Contract, No Work," and that Mulvaney would be subject to a work stoppage if the parties did not reach an accord prior to the June 30th expiration of the agreement. The Association, responding for its member employers, reminded Local 38 of the interest arbitration provision of the agreement and of the union's obligation not to strike until the National Adjustment Board deadlocked following a petition by the parties.

On June 25, 1997 Local 38 informed its members that the negotiations with the employers had failed and that a strike was authorized for July 1, 1997, one day after the expiration of the agreement. On July 1, 1997 members of Local 38 struck several sheet metal contractors, including Mulvaney, where six union members failed to report for work.

Related Proceedings Following the Work Stoppage

Although Local 38 and Mulvaney continued to negotiate the conditions of a renewal agreement during the work stoppage, Mulvaney hired nine workers to replace its striking employees and allegedly ceased to honor the terms of the expired agreement. On July 2, 1997 the Association brought suit in the United States District Court for the District of Connecticut (Covello, J.) in an unsuccessful attempt to enjoin the strike and enforce the interest arbitration provision of the agreement. During the course of hearings on the order to show cause, counsel for Local 38 took the position that the union had terminated its contract with the Association earlier and thus the interest arbitration provision did not apply:

We terminated [the collective bargaining] agreement under its terms, and under the terms of article 14 even, it says that ... if there's an article 10 section 8 provision in the contract, which there was, it would go to the [National Adjustment Board], which is the normal course of events.

But not in this case, because there are no negotiations for a renewal agreement, so article 10 section 8 does not apply. What does apply is the termination notice which we gave in January, and this contract ended two days ago, or three days ago.

Local 38 took a similar position when it filed a petition for election with the National Labor Relations Board (NLRB) on October 30, 1997. Until the petition, Mulvaney's employees had maintained their relationship with Local 38 under § 8(f) of the NLRA, 29 U.S.C. § 158(f) (1994). That section provides that only in the building and construction industry may an employer enter into a collective bargaining agreement with a union even though the union has not been elected as a bargaining unit by a majority of the employer's workers. See id. At the conclusion of the term of the agreement, both the employer and the union can unilaterally repudiate the § 8(f) bargaining relationship. See John Deklewa & Sons, ...