N.L.R.B. v. Bufco Corp.

• Decision Date: 04 April 1990
• Docket Number: No. 89-1876,89-1876
• Citation: 899 F.2d 608
• Parties: 134 L.R.R.M. (BNA) 2044, 115 Lab.Cas. P 10,030 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. BUFCO CORP. and Corbett Electric Co., Respondents.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 608

899 F.2d 608

134 L.R.R.M. (BNA) 2044, 115 Lab.Cas. P 10,030

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. BUFCO CORP. and Corbett Electric Co., Respondents.

No. 89-1876.

United States Court of Appeals Seventh Circuit.

Argued Jan. 16, 1990.

Decided April 4, 1990.

Aileen A. Armstrong, Barbara Sapin, N.L.R.B., Appellate Court--Enforcement Litigation, Washington, D.C., Judith A. Dowd, N.L.R.B., Washington, D.C., William T. Little, N.L.R.B., Region 25, Indianapolis, Ind., for petitioner.

Charles L. Berger, Berger & Berger, Evansville, Ind., for intervenor.

William E. Statham, Statham, Johnson & McCray, Evansville, Ind., for respondents.

Before CUMMINGS and EASTERBROOK, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

This petition, brought by the National Labor Relations Board (Board) pursuant to Section 10(e) of the National Labor Relations Act, (Act) 29 U.S.C. Sec. 160(e) (1982), seeks enforcement of its order, dated November 30, 1988, finding Bufco Corp. and Corbett Electric Company, Inc. (Company) to be in violation of Section 8(a)(1) and (5) of the Act for repudiating the pre-hire agreements ¹ entered into with the International Brotherhood of Electrical Workers, Local 16 (Union). Specifically, the Board abandoned its former interpretation of Sec. 8(f) of the Act, 29 U.S.C. Sec. 158(f), which permitted the unilateral repudiation of pre-hire agreements until the union achieved majority support, and retroactively applied to the respondent Company its recent Deklewa decision, which prohibits the repudiation of pre-hire agreements until their expiration. See John Deklewa and Sons, Inc., 282 N.L.R.B. No. 184, 124 LRRM 1190 (1987), enf. sub nom. Intern. Ass'n of Bridge, etc., Local 3 v. NLRB, 843 F.2d 770 (3rd Cir.1988). The Board accordingly ordered the Company to cease and desist from dishonoring its pre-hire agreements. The Board further ordered the respondent to "make whole" employees covered by the agreements for any losses suffered as a result of their failure to adhere to the agreements until their expiration.

Because we find that the Board's recent Deklewa rule is neither contrary to precedent of the Supreme Court nor this court and because we extend the Board deference in fashioning national labor policy, we accept its construction of Sec. 8(f) as articulated in Deklewa. Furthermore, because we find no "manifest injustice" in the Board's retroactive application of this rule to the respondent Company, we grant the Board's petition for enforcement of its order.

I.

Corbett Electric Company is an Indiana Corporation which has been engaged as an electrical contractor in the construction industry for approximately thirty years. Bufco Corp. is basically a shell corporation incorporated in 1970. Both Corporations are closely held by the Corbett family. ² Since 1963, Corbett has been a member of the Evansville Division, Southern Indiana Chapter, of the National Electrical Contractors Association (NECA). In 1973, Corbett signed two Letters of Assent authorizing NECA to be the collective-bargaining representative of Corbett with authority to bind Corbett to certain bargaining agreements entered into with the Union.

In letters to NECA and the Union dated June 28 and July 2, 1982, respectively, Corbett stated that it was terminating its membership in NECA, severing participation in the multi-employer bargaining group and canceling the letters of assent binding Corbett to bargaining agreements entered into between NECA and the Union. At the time Corbett sent these letters, NECA and the Union were parties to a contract covering residential electrical work effective from October 1, 1981, through September 30, 1983 and a contract covering commercial electrical work effective from June 10, 1982, to March 31, 1985. After sending these letters, Corbett dishonored both contracts by failing to make required dues deductions, contribute to various pension and employee benefit funds, and, in some cases, pay contractual wage rates.

On December 9, 1982 the Union filed unfair labor practice (ULP) charges with the Board against Corbett for repudiating and otherwise failing to comply with the terms of the collective bargaining agreements to which they had previously assented. Following an administrative hearing, the Administrative Law Judge found that by virtue of the conversion and merger doctrines the Union enjoyed majority status under Sec. 9(a) of the Act. 29 U.S.C. Sec. 159(a). ³ This finding of majority status not only established the union as the exclusive bargaining representative of the employees during the term of the pre-hire agreement, but also imposed a continuing obligation to bargain between the two parties after the agreement's expiration. Accordingly, the ALJ found the Company to be in violation of Sec. 8(a)(1) and (5) for repudiating the pre-hire agreement and otherwise failing to recognize the Union as the exclusive bargaining representative of those employees described in the pre-hire agreements. After the ALJ's decision, the Board abandoned the conversion and merger doctrines relied on by the ALJ. Instead, the Board held simply that a signatory to a Sec. 8(f) pre-hire agreement is bound to its terms for the duration of the agreement unless the employees covered by the agreement reject the signatory union in a Board conducted election. John Deklewa & Sons, 282 NLRB No. 184, 124 LRRM 1185 (1987), enf. sub nom. Intern. Ass'n of Bridge, etc., Local 3 v. NLRB, 843 F.2d 770 (3rd Cir.1988).

Accordingly, in reviewing the ALJ's decision, the Board applied its recent Deklewa rule retroactively and held that the Company had violated the Act by repudiating its Sec. 8(f) agreements with the Union. The Board accordingly entered a cease and desist order and a make whole remedy.

On petition for enforcement of this order, we address the following three issues: (1) Whether the Board's new Deklewa rule contradicts Supreme Court or this Circuit's precedent; (2) Whether this Circuit accepts the Board's Deklewa rule as a reasonable construction of the Act; and (3) Whether it is manifestly unjust to apply the Deklewa rule retroactively.

II.

Before determining whether the Board's Deklewa, rule is sufficiently well-reasoned to enjoy our acceptance, we must address the respondent's assertion that even if Deklewa is a reasonable interpretation of Sec. 8(f), indeed even if the "correct" interpretation, we are precluded from accepting it because it "is contrary to decisions of the Supreme Court and this Court." Specifically, the Company contends that under the Supreme Court's decisions in N.L.R.B. v. Ironworkers Local 103 (Higdon Construction Co.), 434 U.S. 335, 98 S.Ct. 651, 54 L.Ed.2d 586 (1978) and Jeff McNeff, Inc. v. Todd, 461 U.S. 260, 103 S.Ct. 1753, 75 L.Ed.2d 830 (1983), and our decisions in Intern. Ass'n of Bridge, Structural v. Higdon Const., 739 F.2d 280 (7th Cir.1984) and Gould v. Lambert Excavating, Inc., 870 F.2d 1214 (7th Cir.1989) the Supreme Court and this court adopted the Board's R.J. Smith rule which, contrary to Deklewa, held that Sec. 8(f) agreements are voidable until the union reaches majority support. ⁴ Therefore, the Company concludes, the Board and this court are constrained by stare decisis from promulgating a rule contrary to R.J. Smith.

The company's argument, even if theoretically tenable, is not supported by a reading of the relevant case law. After a careful reading of McNeff and Higdon we believe that in both cases the Court was "merely reviewing the Board's [R.J. Smith ] interpretation of Sec. 8(f) and not substituting its own judgment or prescribing its own interpretation of the statute." ⁵ Intern Ass'n of Bridge, etc., Local 3 v. NLRB, 843 F.2d 770, 776 (3rd Cir.1988). Accord, N.L.R.B. v. W.L. Miller, Co., 871 F.2d 745, 748, (8th Cir.1989); Mesa Verde Const. v. N. Cal. D. Council of Laborers, 861 F.2d 1124, 1129 (9th Cir.1988). Indeed, specific language in Higdon demands this conclusion.

We have concluded that the Board's construction of the Act, although perhaps not the only tenable one, is an acceptable reading of the statutory language and a reasonable implementation of the purposes of the relevant statutory sections.

Higdon, 434 U.S. at 341, 98 S.Ct. at 656 (emphasis added).

McNeff further supports this position. Though not explicitly disclaiming independent construction of Sec. 8(f) as was done in Higdon, the McNeff Court "relies very heavily upon Higdon which did make it clear that the Court was doing no more than holding that the Board's reading of the act was reasonable." Intern. Ass'n of Bridge, Etc. Local 3 v. N.L.R.B, 843 F.2d 770, 776 (3rd Cir.1988). Accordingly, since we agree with the Third, Eighth, and Ninth Circuits that the Supreme Court never independently construed Sec. 8(f), but merely accepted the R.J. Smith repudiation doctrine as a reasonable construction of Sec. 8(f), we conclude that no case precedent precludes the Board from departing from its prior interpretation of the Act and fashioning a new rule which it believes will better serve the interests of labor and management.

III.

Having determined that the Board has not been precluded by Supreme Court or Circuit precedent from reversing its prior policy, we must enforce the Board's Deklewa rule if we deem it to be based upon a reasonably defensible construction of the Act. Higdon, 434 U.S. at 351, 98 S.Ct. at 660-61; Accord, NLRB v. Action Automotive, Inc., 469 U.S. 490, 496, 105 S.Ct. 984, 988, 83 L.Ed.2d 986 (1985). See also, Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). As we recently stated in Sheet Metal Workers Local 20 v. Baylor Heating, 877 F.2d 547, 554 (7th Cir.1989),

we think that the Board, in Deklewa, aptly traced the historical development of the laws governing pre-hire agreements and identified some of the underlying policy considerations that are pertinent here--labor stability...