PAINTERS DIST. COUNCIL NO. 3 PEN. FUND v. Johnson

• Decision Date: 15 June 1983
• Docket Number: No. 78-0558-CV-W-4-9.,78-0558-CV-W-4-9.
• Citation: 566 F. Supp. 592
• Parties: PAINTERS DISTRICT COUNCIL NO. 3 PENSION FUND, et al., Plaintiff, v. Tom JOHNSON, d/b/a De Be Painting Company, Defendant.
• Court: U.S. District Court — Western District of Missouri

566 F. Supp. 592

PAINTERS DISTRICT COUNCIL NO. 3 PENSION FUND, et al., Plaintiff, v. Tom JOHNSON, d/b/a De Be Painting Company, Defendant.

No. 78-0558-CV-W-4-9.

United States District Court, W.D. Missouri, W.D.

June 15, 1983.

Michael Arnold, Yonke, Shackelford & Arnold, Kansas City, Mo., for plaintiff.

Michael Delaney, Spencer, Fane, Britt & Browne, Kansas City, Mo., for defendant.

MEMORANDUM OPINION AND ORDER

BARTLETT, District Judge.

Pursuant to § 301 of the National Labor Relations Act (NLRA), 29 U.S.C. § 185, and § 502 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132, three employee benefit funds seek payment of allegedly unpaid contributions and other related relief. There is no dispute that the plaintiffs are employee benefit funds as defined by ERISA, 29 U.S.C. § 1002(1), (2), and that the defendant engaged in business affecting commerce within the meaning of the NLRA, 29 U.S.C. §§ 151 and 185.

On July 5, 1973, Painters District Council No. 3 (union) and the Builders Association of Kansas City, Missouri (association) executed a collective bargaining agreement to be in effect from April 17, 1973, to March 31, 1976. Under Article VII of this agreement, each employer agreed "to pay for each hour worked in the area covered by this agreement" specified amounts to jointly administered fringe benefit funds.

On July 16, 1974, defendant signed a Contract Stipulation by which he "agrees with the Union to be bound by the terms of such collective bargaining agreement, subsequent collective bargaining agreements, and all fringe benefit agreements." The Contract Stipulation provided for termination as follows:

This stipulation which expressly applies to each and every term of the above agreements, shall be valid and effective when approved by the union and the proper undersigned Board of Trustees and shall remain in effect until five years from this date and thereafter shall automatically renew itself for a three-year period and at regular three-year intervals thereafter, unless either the employer or the union gives written notice of desire to terminate to the other party and to the proper Board of Trustees, no more than 90 days and no less than 60 days prior to any such three-year anniversary date.

At the same time that defendant signed the Contract Stipulation, he also signed a copy of the 1973 labor contract in effect at the time. A copy of this labor contract was "probably" mailed to him after he signed it. Defendant knew that he was agreeing to abide by the labor contract when he signed the Contract Stipulation. He knew that the labor agreement provided for fringe benefit contributions.

Before March 31, 1976, the anticipated expiration date of the 1973 collective bargaining agreement, the association and the union negotiated a new collective bargaining agreement effective September 5, 1975. Defendant was not notified that the association and the union were negotiating a new contract and defendant did not sign the 1975 collective bargaining agreement. However, defendant was notified that a new collective bargaining agreement had been executed by the association and the union. In defendant's September, 1975, monthly remittance report to plaintiff funds, the newly negotiated wage rates were shown.

From July 16, 1974, to March 31, 1976, the defendant did not pay his union and non-union employees on the same basis. He paid his union employees on the union scale including fringe benefit contributions. Defendant did not pay fringe benefit contributions on behalf of his non-union employees. However, all of his employees performed painting work in the Kansas City area.

Despite several visits to his jobsites by union representatives during 1974, 1975, and 1976, no grievance was ever filed objecting to the different wage rates or to defendant's failure to pay fringe benefits for non-union workers.

On January 5, 1976, Johnson drafted and personally put in the mail the following letter to the union:

Because we are a small business, we find it a hardship to keep good union men working during the slack season, and when we are busy and need men it seems none are available. Therefore, we are not extending our contract or bond for the next contract period.

Defendant wrote this letter because the painters sent by the union at defendant's request were not qualified. The union was not helping him in any way. Defendant intended by this letter to terminate his agreement with the union. Defendant did not notify the trustees of the plaintiff funds of his desire to terminate the agreement on March 31, 1976.

After sending the January 5, 1976, letter, defendant continued to pay fringe benefit contributions on his union employees until September, 1977, which he testified was the last date that he had a painter working for him who was a member of the union. Defendant felt that he should protect his union employees by paying fringe benefit contributions so long as he had union members employed.

On March 4, 1976, the union wrote defendant stating in part that "we are in the process of bringing our contractors into full compliance and in checking your file we find we are in need of the following items." The union then advised defendant that the wage and fringe benefit bonding requirement had been increased in the September, 1975, labor contract. After the bond expired which defendant had furnished in June, 1975, defendant did not furnish another surety bond to the union and did not comply with the union's request to file a bond in an increased amount.

In the same letter, the union requested that defendant execute one copy of the September, 1975, labor contract and two copies of a new contract stipulation. Defendant did neither.

During 1976 and 1977, the union received certification from defendant's insurance company that he had workmen's compensation insurance and liability insurance. These certificates were sent by the companies automatically and not pursuant to defendant's specific request.

Defendant argues that he is not liable for any unpaid contributions because (1) defendant's 1976 termination was timely notice under the 1973 labor contract of his desire to terminate participation in the collective bargaining agreement; (2) the 1974 Contract Stipulation was not binding on defendant because it was not voluntarily signed by him; (3) plaintiff trust funds cannot enforce the collective bargaining agreements unless they show that a majority of defendant's employees were members of the union; (4) the 1974 Contract Stipulation is unenforceable to the extent that it purports to bind plaintiff to collective bargaining agreements which were not in existence when he signed the 1974 stipulation; (5) plaintiff trust funds are estopped from enforcing the collective bargaining agreements because they had not attempted to do so before filing this lawsuit.

Defendant voluntarily and knowingly entered into the July 16, 1974, contract stipulation

Defendant challenges the validity of the July 16, 1974, Contract Stipulation because he contends that he had no choice but to sign it and the terms of the stipulation were never explained to him. Defendant relies on Caporale v. Mar Less, Inc., 656 F.2d 242 (7th Cir.1981) in support of his argument that he did not objectively intend to be bound by the stipulation. However, the circumstances in this case are significantly different from Caporale. Here, defendant Johnson had been a painting contractor for twenty years and during that time had a continuing relationship with the union. In 1967, and 1969, defendant signed stipulations agreeing to abide by the terms of collective bargaining agreements and to make payments to fringe benefit funds. When defendant signed the Contract Stipulation in July, 1974, he also signed a copy of the July 5, 1973, labor contract which was in effect at the time. A copy of this labor contract was "probably" mailed to him after he signed it. When defendant signed the Contract Stipulation in 1974, he knew that he was agreeing to abide by the labor contract and he knew that the labor contract provided for fringe benefit contributions by employers.

Thereafter, the parties' conduct was consistent with being mutually bound to the terms of the labor contract. Defendant made contributions to plaintiff funds after signing the Contract Stipulation. Defendant raised benefit contributions in September, 1975, when the wage rate was adjusted and began checking off union dues when required to under the labor contract. These facts are sufficient to indicate that defendant voluntarily consented to be bound by the terms of the labor contract in effect on July 16, 1974, when he signed the Contract Stipulation.

Defendant's January 5, 1976, letter effectively terminated the prehire agreement entered into by him on July 16, 1974

Generally, under the NLRA, an employer commits unfair labor practice by dealing with a union that does not have the support of a majority of workers. The underlying policy is to protect employees' freedom of choice. Washington Area Carpenters Welfare Fund v. Overhead Door Co., 681 F.2d 1, 5-6 (D.C.Cir.1982). Section 8(f) of the National Labor Relations Act, 29 U.S.C. § 158(f), provides an exception to this general rule by authorizing "prehire" agreements in the construction industry between an employer and a minority union:

It shall not be an unfair labor practice under § (a) or (b) of this section for any employer engaged primarily in the building and construction industry to make an agreement covering employees engaged (or who upon their employment, will be engaged) in the building and construction industry with a labor organization of which building and construction employees are members ... because (1) the majority status of such labor organization has not been established under the provisions of § 159 of this title prior to the making of such agreement .... provided ... that any agreement which would be invalid, but for claus

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