Road Sprinkler Fitters Local Union No. 669 v. Independent Sprinkler Corp.

• Decision Date: 07 January 1994
• Docket Number: No. 91-3271,AFL-CI,P,91-3271
• Citation: 10 F.3d 1563
• Parties: 145 L.R.R.M. (BNA) 2152, 127 Lab.Cas. P 10,965 ROAD SPRINKLER FITTERS LOCAL UNION NO. 669, affiliated with the United Association of Journeymen & Apprentices of the Plumbing & Pipefitting Industry of the United States and Canada,laintiff-Counterclaim-Defendant-Appellee, v. INDEPENDENT SPRINKLER CORP., Defendant-Counterclaim-Plaintiff-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1563

10 F.3d 1563

145 L.R.R.M. (BNA) 2152, 127 Lab.Cas. P 10,965

ROAD SPRINKLER FITTERS LOCAL UNION NO. 669, affiliated with

the United Association of Journeymen & Apprentices of the

Plumbing & Pipefitting Industry of the United States and Canada, AFL-CIO, Plaintiff-Counterclaim-Defendant-Appellee, v. INDEPENDENT SPRINKLER CORP.,

Defendant-Counterclaim-Plaintiff-Appellant.

No. 91-3271.

United States Court of Appeals, Eleventh Circuit.

Jan. 7, 1994.

Peter Reed Corbin, Corbin, Dickinson & Duvall, Jacksonville, FL, for Moore Pipe.

William W. Osborne, Jr. and Helene D. Lerner, Beins, Axelrod, Osborne, Mooney & Green, Washington, DC, for Road Sprinkler.

Appeal from the United States District Court for the Middle District of Florida.

Before KRAVITCH, Circuit Judge, GODBOLD and OAKES ^*, Senior Circuit Judges.

GODBOLD, Senior Circuit Judge:

This case concerns the successorship doctrine of labor law. Pursuant to that doctrine an employer found to be a "successor" to a predecessor employer may be bound to collectively bargain with the union that previously had a collective bargaining relationship with the predecessor, and in some circumstances the successor may even be bound by specific provisions of a collective bargaining agreement preexisting between the predecessor and the union.

On stipulated facts the district court granted the union's motion for summary judgment against an employer, Independent II, and denied Independent II's motion for summary judgment. ¹ It applied the successorship doctrine, found Independent II to be a successor to employer Independent I, and ordered Independent II to arbitrate a dispute with the union. Because the successorship doctrine does not apply under the facts and circumstances of this case we reverse and direct that the district court enter judgment in favor of Independent II.

The union, Road Sprinkler Fitters Local No. 669, represented the employees of Moore Pipe & Sprinkler Co., a union contractor with which the union had a collective bargaining agreement. A grievance arose over whether Moore Pipe was improperly diverting work to Independent Sprinkler & Fire Protection Co. (Independent I), a non-union contractor. The union filed a Sec. 301 suit ² against Moore Pipe to compel it to arbitrate the grievance as provided in the collective bargaining agreement. A settlement was reached, signed by representatives of the union, Moore Pipe, and Independent I (though it was not a party to the suit). Its stated purpose was "to protect and preserve for the employees covered by this Agreement all work historically and traditionally performed by them." It provided that all work in the union's territory would be performed by Moore Pipe employees represented by the union. The agreement stated that it was binding on Moore Pipe, Independent I, and "the successors, assigns, trustees and administrators of any party hereto." It provided that any unresolved issue arising out of the settlement agreement would be referred to arbitration.

Independent Sprinkler Corporation (Independent II) was subsequently organized and operated as a non-union shop, performing the same type of work as Independent I. Allegedly it was awarded contracts for work within the union's territory. The union objected and demanded that Moore Pipe, Independent I, and Independent II submit to arbitration pursuant to the arbitration provision of the settlement agreement. All three companies declined, and the union filed this suit to require arbitration, alleging that Independent II was "an alter ego and/or a successor" of Independent I. It also claimed breach of contract damages for alleged breach of the settlement agreement and asked specific performance of the agreement as well. The district court dismissed the contract claims and granted summary judgment in favor of the union requiring all three companies to arbitrate. Whether the settlement agreement had been breached was described by the court as an issue left to the arbitrator. All three defendants appealed. Moore Pipe and Independent I have since participated in arbitration, which has been completed, and they have withdrawn their appeals. Left in question is whether the district court correctly held that the successorship doctrine requires Independent II to arbitrate pursuant to the provisions of the settlement agreement. We hold that the successorship doctrine has no application to this case and reverse the grant of summary judgment in favor of the union and against Independent II.

The district court's decision was not based on a theory that Independent II is a "successor" to Independent I under contract law principles and is therefore bound by the provision of the settlement agreement which said that the agreement is binding on Moore Pipe and Independent I and "the successors, assigns, trustees and administrators" of any party. Rather the court based its decision on the successorship doctrine of labor law which, as a matter of law and without regard to contract law principles, imposes the status of successor on an employer and places certain obligations upon it as such successor. ³

I. THE UNDERPINNINGS OF THE SUCCESSORSHIP DOCTRINE.

A successor relationship created by labor law principles arises by operation of law and is not dependent upon agreement by the successor that it should have successor status. This labor-law based relationship protects the collective bargaining interests of employees of a predecessor employer who have been employed by a successor employer that has substantial and sufficient continuity with the predecessor. The doctrine is an extension of the presumption in labor law that during the term of a collective bargaining agreement and one year thereafter the certified union is the proper bargaining agent. NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 278-79, 92 S.Ct. 1571, 1577, 32 L.Ed.2d 61 (1972); Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 36-39, 107 S.Ct. 2225, 2232-2234, 96 L.Ed.2d 22 (1987). The successor is, therefore, required to engage in collective bargaining with the union. This continuation of the obligation to bargain tends to stabilize industrial relations by protecting the employees of the predecessor who have joined the work force of the successor at a peculiarly vulnerable time during which labor relations might be disturbed by actions or policies of the successor employer or of the employees themselves. Fall River, 482 U.S. at 38-39, 107 S.Ct. at 2233.

Ordinarily the successor is not bound by substantive provisions of a preexisting collective bargaining agreement between the union and the predecessor. Id. at 40, 107 S.Ct. at 2234. For example, it is not obligated to hire the employees of the predecessor (subject to the requirement that it may not discriminate against union-member employees in hiring); it is free to set initial terms on which it will hire employees of the predecessor; and it is not bound to pay the same wages. Id. The "rightful prerogative of owners independently to rearrange their businesses" is preserved. Id.

The Seventh Circuit has outlined some of the criteria useful in determining whether one employer is the successor of another:

[a] there has been a substantial continuity of the same business operations; [b] the new employer uses the same plant; [c] the same or substantially the same work force is employed; [d] the same jobs exist under the same working conditions; [e] the same supervisors are employed; [f] the same machinery, equipment, and methods of production are used; and [g] the same product is manufactured or the same service [is] offered.

Int'l Union of Operating Engineers v. Centor Contractors, 831 F.2d 1309, 1312 (7th Cir.1987) (footnote omitted).

We do not need to analyze in detail the relations between Independent I and Independent II that might be relevant to the Int'l Union criteria. Even if some of those criteria are present between these two entities, the successorship doctrine has no application to this case. There has been no collective bargaining relationship between the union and Independent I to be "passed on" to Independent II as successor to Independent I. Independent I does not have, and never had, a collective bargaining relationship with the union. The only preexisting collective bargaining relationship was between Moore Pipe and the union, and the union does not contend that Moore Pipe is the predecessor of Independent II. The successorship doctrine may not be utilized to force an alleged successor employer, Independent II, into a collective bargaining relationship in which its alleged predecessor, Independent I, was not a participant.

The union asserts that it is "protect[ing] union-represented Moore Pipe employees from diversion of bargaining unit work to Independent I or its 'successor' [Independent II] during the life of the settlement agreement." The successorship doctrine protects the interests of members of the work force who have transferred from the predecessor employer to the successor employer. Here, in a dispute over allocation of work between employees of a union shop (Moore Pipe) and employees of a non-union shop (Independent II), the doctrine is asserted against the interests of transferred employees (who transferred to Independent II from Independent I, which had no bargaining relationship with the union) and for the benefit of the work force of Moore Pipe (whose employees have not transferred at all). This stands successorship on its head.

Moreover, the duty that the district court imposed on Independent II as a matter of law is a duty to arbitrate, a duty that arises out of contract....