Sheet Metal Workers Intern. Ass'n, Local No. 359, AFL-CIO v. Arizona Mechanical & Stainless, Inc.

Decision Date07 December 1988
Docket NumberAFL-CI,P,No. 87-2450,87-2450
Parties130 L.R.R.M. (BNA) 2097, 110 Lab.Cas. P 10,871 SHEET METAL WORKERS INTERNATIONAL ASSOCIATION, LOCAL NO. 359,laintiff-Appellant, v. ARIZONA MECHANICAL & STAINLESS, INC., an Arizona corporation, Defendant, and Richwood Metals Corporation, an Arizona corporation, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Michael J. Keenan, Ward & Keenan, Phoenix, Ariz., for plaintiff-appellant.

Peter G. Kline, Jones, Skelton & Hochuli, Phoenix, Ariz., for defendant-appellee.

Appeal from the United States District Court for the District of Arizona.

Before POOLE, WIGGINS and BRUNETTI, Circuit Judges.

WIGGINS, Circuit Judge:

Plaintiff/Appellant Sheet Metal Workers (Union) appeals from summary judgment in Richwood Metals (Richwood) favor. The Union brought suit to enforce an arbitration award claiming that Richwood had breached a collective bargaining agreement (CBA) between the parties by using nonunion labor at a work site. Richwood moved for summary judgment contending that it was not a party to the CBA the Union sought to enforce. The Union cross moved for summary judgment arguing that Richwood was the alter ego or essentially the same employer as the corporation (Arizona Mechanical & Stainless (AMS)) that had signed the CBA. The district court granted Richwood's motion for summary judgment.



Prior to July, 1982, AMS was a party to a CBA with the Union. At that time, AMS notified the Union that it would be going out of business. In August, 1982, two former owners of AMS purchased the assets of AMS and began to operate the business under the name Richwood Metals. Richwood carried on the same type of work at the same facility formerly owned by AMS. It also used many of the same employees and equipment of AMS. However, Richwood did not apply the terms of AMS' CBA to its employees. Nor did Richwood ever sign a CBA with the Union.

Richwood and the Union engaged in bargaining over whether Richwood would apply AMS' CBA. They bargained to impasse without coming to an agreement. In September, 1982, the Union filed an unfair labor practices complaint with the NLRB alleging that AMS, and its alter ego, Richwood, had refused to bargain with the Union and refused to honor the terms of AMS' CBA with the Union. The Regional Director of the NLRB declined to issue a complaint against Richwood. He stated that Richwood was only a successor to AMS and not an alter ego or single or joint employer with AMS. The General Counsel of the NLRB affirmed the Regional Director's decision not to issue a complaint.

In June, 1983, the Union filed a grievance against AMS and Richwood alleging violations of the CBA. Specifically, the Union claimed that Richwood violated an article of the agreement that required the signatory employer to use union labor in any other enterprise it acquired. Pursuant to the CBA, the grievance was first presented to several local adjustment boards. Eventually, the case was taken to the National Joint Adjustment Board for the Sheet Metal Industry (NJAB). On June 21, 1984, the NJAB decided in the Union's favor. It found that the "assets of [AMS] were transferred back to the original owners who then proceeded to operate the identical sheet metal business in the same building. In addition, they retained the same crew of union employees to perform that work." The NJAB noted that the NLRB had dismissed the Union's complaint finding that Richwood was a "successor" to AMS. Even though the NJAB adopted the NLRB's finding that Richwood was a successor to AMS, the NJAB's "conclusion and finding" was "that AMS had the obligation to assure that Richwood understood and undertook to comply with the terms of the agreement then in effect." Accordingly, on June 24, 1985, the NJAB awarded the Union approximately $2,000,000 in damages under the CBA. Richwood did not challenge the award before the NJAB. To date, Richwood has not complied with the NJAB decision. Nor did Richwood bring an action in court to vacate or modify the award. Richwood participated in the grievance procedure but at all times did so stating that it was not bound by the CBA and was not a signatory to the agreement.

On April 7, 1986, the Union filed this section 301(a), 29 U.S.C. Sec. 185(a), action to enforce the arbitrator's award in U.S. District Court. On May 23, 1986, Richwood moved for summary judgment arguing that it was not a party to AMS' CBA. The district court granted Richwood's motion

and denied the Union's cross motion for summary judgment. The court held that the prior NLRB decision not to issue a complaint took precedence over the inconsistent arbitrator's award. The court further held that Richwood was not barred by the statute of limitations from raising its defenses to the arbitrator's award. The Union timely appealed. We have jurisdiction under 28 U.S.C. Sec. 1291.

I. Statute of Limitations.

The Union, below and on appeal, argued that Richwood was barred by the statute of limitations from raising any defenses to the arbitrator's award. The district court held that Richwood was not barred. A ruling on the appropriate statute of limitations is a question of law reviewed de novo. In Re Swine Flu Prods. Liab. Litig., 764 F.2d 637, 638 (9th Cir.1985).

Congress has not enacted a statute of limitations governing actions brought pursuant to section 301(a) of the Labor Management Relations Act. 29 U.S.C. Sec. 185(a). Therefore, as a matter of federal law, the timeliness of a section 301 case is determined by reference to the appropriate state statute of limitations. United Parcel Serv., Inc. v. Mitchell, 451 U.S. 56, 60, 101 S.Ct. 1559, 1562, 67 L.Ed.2d 732 (1981) (quoting Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 704-05, 86 S.Ct. 1107, 1112-13, 16 L.Ed.2d 192 (1966)); Local 1020 United Bhd. of Carpenters and Joiners of Am. v. FMC Corp., 658 F.2d 1285, 1289 (9th Cir.1981). Cf. DelCostello v. International Bhd. of Teamsters, 462 U.S. 151, 165, 103 S.Ct. 2281, 2291, 76 L.Ed.2d 476 (1983) (in straightforward breach-of-contract suit under section 301, state vacation of arbitration award statute applies; in "hybrid" section 301 suit other statutes of limitations may better serve federal labor policy). Richwood did not challenge the NJAB award until some eleven months after the arbitrator's decision when it filed its summary judgment motion. The Union argues that the appropriate Arizona statute of limitations requires that Richwood file a motion to modify or vacate the award within 90 days of the arbitrator's decision. Ariz.Rev.Stat.Ann. Sec. 12-1513(A). 1 Richwood argues that two other sections of Arizona law apply which do not contain any statutes of limitation. Ariz.Rev.Stat.Ann. Secs. 12-1511, 1512. 2

In an arbitration case, statutes of limitations apply to defenses as well as suits. Sheet Metal Workers' Int'l Assoc., Local No. 252 v. Standard Sheet Metal, Inc., 699 F.2d 481, 483 (9th Cir.1983); Chauffeurs, Teamsters, Warehousemen and Helpers, Local Union No. 135 v. Jefferson Trucking Co., 628 F.2d 1023, 1027 (7th Cir.1980), cert. denied, 449 U.S. 1125, 101 S.Ct. 942, 67 L.Ed.2d 111 (1981). The Arizona Court of Appeals has held that sections 12-1511 and 1512 delineate the procedure for judicial confirmation of an arbitration award. Section 12-1513, on the other hand, provides for modification, correction or vacation of an award and application for vacation must be made in 90 days. Hatch v. Double Circle Ranch, 22 However, even if Richwood is time barred from raising its defenses to the award, the court must still determine "arbitrability" in the first instance. The court must still determine the threshold issue whether the parties agreed to arbitrate the subject in dispute. AT & T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 1418-19, 89 L.Ed.2d 648 (1986); Sheet Metal Workers, 699 F.2d at 483 (where party did not move to vacate arbitrator's award, all defenses except for "arbitrability" are time barred). Richwood's contention that it is not bound by AMS' CBA because it was not a party to it goes to the heart of the "arbitrability" issue. Therefore, we now address whether the district court properly deferred to the NLRB in vacating the arbitrator's award.

Ariz.App. 124, 524 P.2d 958, 959 (1974). Thus, it would seem that Richwood's summary judgment motion and its associated defenses effectively seeking to vacate the arbitrator's award is time barred.

II. Deference to NLRB's Decision.

The Supreme Court has held that although a "successor" employer may have a duty to bargain with the union recognized by its predecessor, it is not bound by the substantive terms of its predecessor's CBA unless it assumes or adopts those obligations. NLRB v. Burns Int'l Sec. Servs. Inc., 406 U.S. 272, 284, 92 S.Ct. 1571, 1580, 32 L.Ed.2d 61 (1972); see also Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 264-65, 94 S.Ct. 2236, 2244-45, 41 L.Ed.2d 46 (1974) (arbitration provision does not survive where there is no substantial continuity of work force from predecessor to successor employer and where there was no express or implied assumption of the agreement to arbitrate); Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 107 S.Ct. 2225, 2232-35, 96 L.Ed.2d 22 (1987) (discussing and reaffirming Burns ). However, a non-signatory employer may be held to the terms of a CBA signed by another employer under either the "alter ego" doctrine or the "single employer" doctrine. Under the alter ego or single employer doctrines, a non-signatory successor employer will be bound to the terms of its predecessor's CBA if the transaction transferring ownership to the successor is a sham designed to avoid the obligations of a CBA or if the entities comprise an integrated enterprise. Howard Johnson, 417 U.S. at 259 n. 5, 94 S.Ct. at 2242 n. 5. 3 The courts look to such factors as...

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