RR MAINTENANCE LABORERS' v. KELLY RR CONTR.

• Decision Date: 26 June 1984
• Docket Number: No. 82 C 6565.,82 C 6565.
• Citation: 591 F. Supp. 889
• Parties: RAILROAD MAINTENANCE LABORERS' LOCAL 1274 PENSION, WELFARE AND EDUCATION FUNDS, Plaintiff, v. KELLY RAILROAD CONTRACTORS, INC. and The Rails Company, a corporation and Robert Mitchell, Defendants.
• Court: U.S. District Court — Northern District of Illinois

591 F. Supp. 889

RAILROAD MAINTENANCE LABORERS' LOCAL 1274 PENSION, WELFARE AND EDUCATION FUNDS, Plaintiff, v. KELLY RAILROAD CONTRACTORS, INC. and The Rails Company, a corporation and Robert Mitchell, Defendants.

No. 82 C 6565.

United States District Court, N.D. Illinois, E.D.

June 26, 1984.

COPYRIGHT MATERIAL OMITTED

Charles A. Linn, Arnold & Kadjan, Chicago, Ill., for plaintiff.

Roger J. Miller, Nelson & Harding, Omaha, Neb., Arthur Smith, Robert P. Casey, Vedder, Prine, Kaufman & Kammholz, Chicago, Ill., for defendants.

MEMORANDUM AND ORDER

MORAN, District Judge.

This matter is before the court on a motion to dismiss, or in the alternative, for summary judgment brought by defendants Kelly Railroad Contractors, Inc. (Kelly), the Rails Company (Rails) and Robert Mitchell (Mitchell). Plaintiff Railroad Maintenance Laborers' Local 1274 Pension, Welfare and Education Funds (Funds) seeks to enforce the payment of contributions to various fringe benefit trust funds created pursuant to a collective bargaining agreement negotiated between Kelly and Local 1274.

Kelly and Local 1274 executed a collective bargaining agreement on March 7, 1978 which required Kelly to make contributions to the Funds on behalf of certain employees. Kelly made these contributions continuously from March 1978 through May 1982. The Rails was incorporated on February 18, 1979. It purchased all assets and liabilities of the Kelly branch office in Bellevue, Nebraska in January 1982. Rails, operating out of Kelly's Bellevue office, contributed to the Funds from February 1980 through June 1981, although it was not a signatory to the bargaining agreement signed by Kelly and Local 1274. Both companies also filed periodic report forms with Local 1274 in accordance with the bargaining agreement.

Plaintiff seeks damages in the amount due plus interest and asks the court to order defendants to submit their books and records to plaintiff for an audit and to enjoin defendants from wilfully violating the terms of the collective bargaining agreement and the trust instruments by failing to make timely payments to the Funds. Defendants seek dismissal of plaintiff's claim on the ground that plaintiff has failed to state a claim upon which relief can be granted since neither Rails nor Mitchell was a signatory to the bargaining agreement which incorporated the trust instrument. They also maintain that assertion of jurisdiction by this court over the instant case would result in an improper encroachment upon an area of law that is within the exclusive or primary jurisdiction of the National Labor Relations Board (Board), as defined by the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq. Additionally, defendants claim that Mitchell cannot be held personally liable for the alleged obligations of Rails merely because he is an officer of the corporation.

In the alternative, defendants seek summary judgment. Rule 7(b) of the Federal Rules of Civil Procedure require that every motion specify the grounds and the relief, or order sought, "with particularity." Defendants have failed to state the grounds for their summary judgment motion and, therefore, this decision will be limited to a review of the issues raised by defendants' motion to dismiss.

DISCUSSION

I. Jurisdiction

The threshold question in this case is whether this court has subject matter jurisdiction to consider the liability of one corporation for the collective bargaining obligations entered into by another. Plaintiff predicates federal subject matter jurisdiction over this action on Section 301(a) of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a) and Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132.

Section 301(a) of the LMRA¹ gives federal courts jurisdiction over actions based upon violations of labor contracts by parties to such contracts. Section 502 of ERISA authorizes a participant in, or fiduciary of, a welfare or pension benefit trust to bring a civil action in federal district court to recover benefits due him under the Act. 29 U.S.C. § 1132(a)(3)(B)(ii).

A. Section 301 Claims Against Kelly

A Section 301 claim must satisfy three requirements before it can be asserted in federal court: (1) a claim of a violation of (2) a contract (3) between an employer and a labor organization. 29 U.S.C. § 185(a). See also Loss v. Blankenship, 673 F.2d 942 (7th Cir.1982). All three of these requirements seem to be met with respect to Kelly. All the parties to this action agree that Kelly signed the collective bargaining agreement with Local 1274 and that Kelly was an employer of the union's membership. Furthermore, the basis of plaintiff's suit is an allegation that Kelly violated the collective bargaining agreement.

The only relevant inquiry, therefore, as to Kelly, is whether Kelly was in breach of contract by ceasing to make contributions to the Funds. See Oil, Chemical and Atomic Workers v. Standard Oil Co. of Indiana, 529 F.Supp. 184 (N.D.Ill.1981). Section 301 is the statutory mechanism for vindicating contract rights under a collective bargaining agreement. Cappa v. Wiseman, 659 F.2d 957, 959 (9th Cir.1981). See also Todd v. Casemakers, Inc., 425 F.Supp. 1375 (N.D.Ill.1977). Plaintiff claims such a breach. Accordingly, defendants' motion to dismiss as to Kelly is denied.

B. Section 301 Claims Against Rails

Plaintiff concedes that Rails did not sign the collective bargaining agreement at issue in this case. It urges this court, however, to hold that it has stated a claim under Section 301 of the LMRA for breach of the terms of the agreement by Rails, a non-signatory to the agreement, on the basis of the single employer doctrine or the alter ego doctrine as developed by the Board in unfair labor practice proceedings under the NLRA. As noted by plaintiff, a number of courts have used these theories to explore the liability of a non-signatory party for the contractual obligations assumed by a related signatory corporation. See e.g., Carpenters Local Union No. 1846 v. Pratt-Farnsworth, 690 F.2d 489, 505 (5th Cir.1982), reh'g en banc denied, 696 F.2d 996 (5th Cir.1983), cert. denied, ___ U.S. ___, 104 S.Ct. 335, 78 L.Ed.2d 305 (1983) (Pratt Farnsworth); Metropolitan Detroit Bricklayers District Council, International Union of Bricklayers and Allied Craftsmen, v. J.E. Hoetger & Co., 672 F.2d 580, 584-85 (6th Cir.1982); Local Union No. 59, International Brotherhood of Electrical Workers v. Namco Electric, Inc., 653 F.2d 143, 146-47 (5th Cir.1981); Russom v. Sears, Roebuck and Co., 558 F.2d 439 (8th Cir.1977). For the reasons stated below, this court finds that it has jurisdiction over plaintiff's claims based on either of these doctrines.

1. Single Employer Doctrine

Under the single employer doctrine two or more related enterprises are treated as one employer within the meaning of Section 2 of the NLRA. Factors relied on to determine the existence of single employer status are (1) interrelation of operations, (2) common management, (3) centralized control of labor relations, and (4) common ownership. Radio & Television Broadcast Technicians Local Union 1264 v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 256, 85 S.Ct. 876, 877, 13 L.Ed.2d 789 (1965) (per curiam). The focus is on whether there is an absence of an "arm's-length relationship found among unintegrated companies." NLRB v. Don Burgess Construction Corp., 596 F.2d 378, 384 (9th Cir.), cert. denied, 444 U.S. 940, 100 S.Ct. 293, 62 L.Ed.2d 306 (1979), quoting Local 627, International Union of Operating Engineers v. NLRB, 518 F.2d 1040, 1045-46 (D.C.Cir.1975), aff'd on this issue sub nom, South Prairie Construction Co. v. Local 627 International Union of Operating Engineers, 425 U.S. 800, 96 S.Ct. 1842, 48 L.Ed.2d 382 (1976) (Peter Kiewit).

Upon finding that two employers constitute a single employer for the purposes of enforcing a collective bargaining agreement, a further determination as to whether the employees of both employers constitute an appropriate bargaining unit must be made. A union contract signed by one employer will not bind both employers under this doctrine unless the employees of both employers constitute a single bargaining unit. See Pratt-Farnsworth, supra, 690 F.2d at 505; Don Burgess, supra, 590 F.2d at 386.

In most cases the Board has the responsibility and authority to make bargaining unit determinations. The primary motivation of the Board in making this determination is the protection of the employees' rights to bargain collectively with a representative of their own choosing. 29 U.S.C. § 159(b). In most cases such as this, however, where there is a successor employer whose rights and obligations under a collective bargaining agreement to which he is not a party are in question, the Board's exclusive jurisdiction to determine the appropriate unit has been questioned.

The major cases relied on by defendants are among those in which the courts have found the Board to have primary jurisdiction over unit determinations. An analysis of these cases, however, indicates that the facts of those cases in which the court's jurisdiction is denied can be readily distinguished from those in which the court's jurisdiction to determine successorship rights and obligations has been upheld. In Oil, Chemical and Atomic Workers v. Standard Oil Co. of Indiana, 529 F.Supp. 184 (N.D.Ill.1981), the issue was whether a successor union could enforce a collective bargaining agreement. As noted by the court, the issue of union successorship is solely a question of representation. Id. at 185. It does not raise a breach of contract question. In fact, the Standard Oil court even made note of the "well-settled" rule that under Section 301 disputes involving collective bargaining agreements which also raised issues traditionally within the Board's jurisdiction, such as alleged unfair labor practices, could remain in federal court. Id. at 185 n. 2.

In Local No....