Road Sprinkler Fitters Local Union v. Continental Sprinkler Co.

• Decision Date: 28 July 1992
• Docket Number: P,No. 91-2532,AFL-CI,91-2532
• Citation: 967 F.2d 145
• Parties: 140 L.R.R.M. (BNA) 2991, 122 Lab.Cas. P 10,331, 23 Fed.R.Serv.3d 681 ROAD SPRINKLER FITTERS LOCAL UNION, a/k/a United Association of Journeymen,laintiff-Appellant, v. CONTINENTAL SPRINKLER COMPANY, et al., Defendants, Universal Sprinkler Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 145

967 F.2d 145

140 L.R.R.M. (BNA) 2991, 122 Lab.Cas. P 10,331,

23 Fed.R.Serv.3d 681

ROAD SPRINKLER FITTERS LOCAL UNION, a/k/a United Association

of Journeymen, AFL-CIO, Plaintiff-Appellant, v. CONTINENTAL SPRINKLER COMPANY, et al., Defendants, Universal Sprinkler Corporation, Defendant-Appellee.

No. 91-2532.

United States Court of Appeals, Fifth Circuit.

July 28, 1992.

William W. Osborne, Jr., David L. Neigus, Helene D. Lerner, Beins, Axelrod, Osborne & Mooney, Washington, D.C., Eric H. Nelson, Nelson, Locke & Fowler, Houston, Tex., for plaintiff-appellant.

John E. Underwood, Lilburn, Ga., Louis B. Trenchard, III, Olson & Olson, Houston, Tex., for Universal.

Appeal from the United States District Court for the Southern District of Texas.

Before WILLIAMS and WIENER, Circuit Judges, and LITTLE, ^* District Judge.

JERRE S. WILLIAMS, Circuit Judge:

The District Court for the Southern District of Texas granted summary judgment in favor of defendant-appellee Universal Sprinkler Corporation ("Universal") in a suit brought by plaintiff-appellant Road Sprinkler Fitters Local Union No. 669 ("Union"). This action against defendant Continental Sprinkler Company ("Continental") sought to enforce the substantive provisions of a collective bargaining agreement ("Agreement") between the Union and Continental and compel arbitration under that Agreement. The Union lost the arbitration against Continental. The district court ultimately granted Continental's unopposed motion to confirm the arbitration award in favor of Continental and dismissed all remaining counts against it. The Union now undertakes to enforce collective contract obligations against Universal on the ground that Universal is an alter ego of Continental. The court, in granting the summary judgment, denied alleged obligations on the part of Universal to the Union under the Agreement with Continental. The denial of this summary judgment is the basis of the appeal.

The summary judgment does not dispose of the entire case before the district court. The Trustees of the National Automatic Sprinkler Industry Pension, Welfare, and Educational Funds ("NASI Funds" or "Funds") sued Continental and Universal to recover delinquent contributions owed by Continental under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461. The suit was originally filed in district court in Maryland and was transferred to the district court in Texas and consolidated. The claims by the Funds against Universal are still pending. The Funds ask for the same remedy as the claims of the Union, a decision that Universal and Continental are a single business, a single employer, or alter egos, and that Universal is liable for all contributions owed under the Agreement made by Continental. Also pending is a motion for summary judgment by Universal against the Funds on the same grounds as the successful summary judgment motion against the Union.

We conclude that we have no jurisdiction to hear this appeal of the summary judgment granted Universal against the Union because issues in the case remain pending and there is no Rule 54(b) certification by the district court.

I. FACTS AND PRIOR PROCEEDINGS

Continental was formerly a fire sprinkler contractor headquartered in Houston, Texas, unionized and bound to successive collective bargaining agreements, including the Agreement at issue, between the National Fire Sprinkler Association ("NFSA") and Local 669. In September 1988, Continental faced financial problems and ceased operations. The ostensible reason for the sudden discontinuance of operation was an inability to obtain suitable bonding for its construction business. Without proper bonding, Continental could not compete for the larger, more profitable jobs. The Union alleged that Continental management officials then established a new nonunion business, Universal, to perform bargaining unit work at terms and conditions that violated the Agreement.

In November 1988, Universal commenced operations after purchasing Continental's assets, hiring the same upper-level management and some of the same supervisors, producing the same sprinkler product, and continuing with similar jobs. Nonetheless, Universal did not purchase most of Continental's inventory or take over its facilities. Further, Universal's workforce differed substantially from Continental's workforce. Universal did not agree to assume Continental's obligations under the Agreement nor did it execute a collective bargaining agreement nor any agreement requiring contributions to the NASI Funds.

In December, 1988, the Union filed a grievance against Continental and Universal compelling arbitration and alleging violations of Article 3 of the Agreement. Specifically, the Union charged: (1) Continental and Universal were operating as a single and/or joint employer and the Agreement required the wage and fringe benefit provisions be applied to all work performed by Universal; (2) Universal was Continental's successor and, therefore, Continental violated its obligation to assure that Universal assume the Agreement; and (3) Continental used its "sale" or "transfer" to "evade" the terms of the Agreement. Continental and Universal allegedly refused to proceed to arbitration. Consequently, in January 1989, the Union filed a suit against Continental and Universal pursuant to 301 of the Labor Management Relations Act, 29 U.S.C. § 185. The action sought to compel Continental to arbitrate its contractual disputes with the Union and sought a judgment that Continental and Universal were essentially alter egos under federal common law.

Continental ultimately agreed to be bound by the Agreement to which it was a signatory by virtue of its status as a contractor member of the NFSA, and submitted the Union grievance to binding arbitration pursuant to the grievance clause in the Agreement. Universal, however, answered the complaint, denied all liability, and declined to participate in the arbitration on the ground that it was not a signatory to nor bound by the Agreement. The arbitrator rendered his decision in October 1989 and resolved all three issues in favor of Continental. On April 11, 1990, the district court granted Continental's unopposed motion to confirm the arbitration award and dismissed all remaining counts against it.

On April 18, 1990, this action was consolidated with a suit filed by NASI Funds against Continental and Universal. The suit had been filed originally in the United States District Court for the District of Maryland in July 1989, approximately seven months after the Union filed in the Southern District of Texas. ¹ It was transferred to the Southern District of Texas on joint motion of the parties.

On May 10, 1990, Universal filed a motion for summary judgment against the Union asserting res judicata and the collateral estoppel effect of both the arbitration decision and the order confirming that decision. On March 28, 1991, Universal also filed a summary judgment motion against NASI Funds claiming res judicata and collateral estoppel. Universal urged that the dismissals which the district court granted were tantamount to a judgment on the merits that Continental was not liable to either the Union or the Funds. ² Consequently, if Continental, the signatory to the Agreement, was not liable under the Agreement, then Universal whose alleged liability was merely derivative of Continental's, could not be liable. If Continental was not the alter ego of Universal, then ipso facto, Universal could not be the alter ego of Continental.

In opposition, NASI Funds denied the applicability of res judicata and collateral estoppel. At a minimum, NASI Funds were not a party to the arbitration nor were they in privity with the Union. According to NASI Funds, regardless of the Union's diligence in pursuit of its asserted contractual violations, it could not represent adequately the interests of all of NASI Funds' participants. NASI relied upon the consistent holdings by Courts that the funds may pursue actions independent of the actions of any of its sponsoring unions and regardless of the outcome of any union-initiated litigation or grievance. See, e.g., Moldovan v. Great Atlantic &amp Pacific Tea Co., 790 F.2d 894, 899-900 (3rd Cir.1986) (finding that employee benefit fund trustees are not collaterally estopped from relitigating the issues decided in the arbitration between the union and the employer), cert. denied, 485 U.S. 904, 108 S.Ct. 1074, 99 L.Ed.2d 233 (1988); Board of Trustees, Container Mechanics Welfare/Pension Fund v. Universal Enterprises, Inc., 751 F.2d 1177, 1183 (11th Cir.1985) (concluding that an Administrative Law Judge's determination concerning alter ego did not preclude fund trustees from litigating a similar allegation in federal court).

On May 3, 1991, the district court granted summary judgment in favor of Universal as against the Union only. The court rejected Universal's res judicata theory but held that the doctrine of collateral estoppel applied to preclude the Union from pursuing in federal court the question of Universal's alter ego status with Continental. The district court found that the alter ego claim was arbitrable, and that the issues involved in a judicial determination of alter ego status had been presented to the arbitrator. The factors addressed in the "successorship" and "single employer" doctrines had been considered, and "the Union had [had] the opportunity to present all of the evidence that would be necessary for the Arbitrator to make findings on all theories."

In this appeal, the Union does not dispute that the arbitrator's decision fully disposed of the theories of successorship and single employer. It urges, however, that the arbitrator did not address the question of whether Universal and Continental were alter egos and, thus, the district court erred in granting summary judgment in favor of Universal. Universal's primary assertion on this appeal is...