Trustees of Colorado Statewide Iron Workers (ERECTOR) Joint Apprenticeship and Training Trust Fund v. A & P Steel, Inc.

Decision Date02 March 1987
Docket NumberNo. 84-1489,84-1489
Citation124 LRRM 2878,812 F.2d 1518
Parties124 L.R.R.M. (BNA) 2878, 55 USLW 2502, 106 Lab.Cas. P 12,259, 8 Employee Benefits Ca 1434 TRUSTEES OF the COLORADO STATEWIDE IRON WORKERS (ERECTOR) JOINT APPRENTICESHIP AND TRAINING TRUST FUND; Trustees of the Colorado Iron Workers Pension Fund; Trustees of the Iron Workers Welfare Plan of Colorado, Plaintiffs-Appellees, v. A & P STEEL, INC., a Colorado corporation, and the Western Casualty and Surety Company, a Kansas corporation, Defendants-Appellants.
CourtU.S. Court of Appeals — Tenth Circuit

Timothy J. Parsons, Gorsuch, Kirgis, Campbell, Walker and Grover, Denver, Colo., for plaintiffs-appellees.

M. Edward Taylor (James E. Hautzinger with him on brief), Sherman & Howard, Denver, Colo., for defendants-appellants.

Before McKAY, ANDERSON, and BALDOCK, Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

A & P Steel, Inc. ("A & P") appeals from a judgment entered against it by the district court with respect to unpaid contributions to three Union trust funds under two successive collective bargaining agreements. The agreements in question are between (1) Locals 24 and 750 of the International Association of Bridge, Structural, and Ornamental Ironworkers, AFL-CIO ("Union"), and (2) employers who are members of or who have assigned their bargaining rights to the Associated General Contractors of Colorado ("AGC"). The agreements cover two successive three-year periods, from May 1975 through April 1978 and from May 1978 through April 1981. A & P conceded that it became a party to these agreements by virtue of its assignment of its bargaining rights to the AGC in January of 1975 and January of 1978.

The agreements required A & P to make specified contributions, based on the number of hours of "covered work" performed by its employees, to three Union Trust funds: the Colorado Ironworkers Pension Funds, the Ironworkers Welfare Plan of Colorado, and the Colorado Statewide Ironworkers (Erector) Joint Apprenticeship and Training Trust Fund (collectively "Trusts" and "Trustees"). A & P was also required to file monthly reports with the Trustees, which were to include, among other things, an accounting of the hours of covered work performed by employees of A & P. The agreements with the Union expansively defined covered work as "[a]ll work in connection with field fabrication and/or erection of structural, ornamental and reinforcing steel ... on or in all private and public building construction, whether or not classified as utility, heavy engineering, highway, industrial, institutional, commercial or other construction performed in the State of Colorado and portions of the States of Kansas and Nebraska...." Plaintiff's Ex. 2 at 2, 8; Plaintiff's Ex. 4 at 3, 9.

A & P filed the required monthly reports with the Trustees through January 1980, reporting in each instance that no covered work was performed by its employees, although such work was in fact performed. On November 4, 1980, the Trustees filed suit against A & P to collect the unpaid contributions relating to work covered under the agreements but not reported by A & P. On November 14, 1980, ten days after the suit was filed, the President of A & P, Mr. T.G. Pearce, sent letters to the Union informing them that:

A & P Steel, Inc. deems contract void and no effect because the Ironworker Union does not have a majority status with A & P Steel, Inc. who disavows and disaffirms any contract with Ironworkers at the below jobsite: [seven sites specified, one in each of seven letters].

Defendant's Exs. C, D, E, F, G.

These letters point to a central legal consideration in this case, i.e., whether the agreements were prehire agreements with respect to A & P under section 8(f) of the National Labor Relations Act ("NLRA"), 29 U.S.C. Sec. 158(f) (1982). As the letters reflect, either all or a substantial majority of A & P's employees were not members of the Ironworkers' Union. Section 8(f) of the NLRA "allows construction industry employers and unions to enter into agreements setting the terms and conditions of employment for the workers hired by the signatory employer without the union's majority status first having been established in the manner provided for under Sec. 9 of the Act." Jim McNeff, Inc. v. Todd, 461 U.S. 260, 266, 103 S.Ct. 1753, 1756, 75 L.Ed.2d 830 (1983). As McNeff noted, (1) "[a] Sec. 8(f) prehire agreement is subject to repudiation until the union establishes majority status," (2) "when such an agreement is voluntarily executed, both parties must abide by its terms until it is repudiated," and (3) "monetary obligations assumed by an employer under a prehire contract may be recovered in a Sec. 301 [of the National Labor Management Act] action brought by a union prior to the repudiation of the The district court referred the case to a special master for determination of the hours of "covered" work plus computation of contributions and damages. The special master found that during the period from May 1975 through December 1980 employees of A & P performed 27,929.5 hours of covered work. The district court subsequently adopted the report of the special master and entered judgment against A & P as follows: $62,580.07 in delinquent contributions; $52,513.02 in interest on the delinquent contributions to the day of trial; $52,513.02 in liquidated damages; $68,462.70 in attorneys' fees; and $5,144.12 in costs. The court also ordered A & P to pay interest on the $62,580.07 at 18% per annum from the day of trial to the date of payment, and interest on the remainder of the judgment at the statutory rate of 9.93% from the date of judgment. 1 R.Vol. I at 118-19.

                contract."   Id. at 271-72, 103 S.Ct. at 1759.  When monetary recovery was sought by the Union, A & P contended, among other things, that it had repudiated what it considered to be prehire agreements.  The Union, in turn, maintained that A & P's assignment of its bargaining rights to the AGC shifted the determination of majority status under the agreements to a determination of majority union representation with respect to all employees in the AGC, a multi-employer bargaining unit ("MEBU"), and not just with reference to an individual employer, i.e., A & P
                

On appeal A & P makes four arguments: (1) that under the doctrine of frustration of purpose it was not obligated under the agreements because the Union delivered no benefits to A & P, (2) that in any event these collective bargaining agreements were only prehire agreements with respect to A & P, which A & P legally repudiated under the authority of McNeff, (3) that the defense of laches applied, and (4) that there were errors in the special master's determination of the scope of work covered by the agreements and therefore in the size of the award to the Trustees.

The district court found that jurisdiction and venue had been admitted by the parties and were proper "under section 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185 and section 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Sec. 1132, as amended." Id. at 112. Although neither party raises any jurisdictional issue on appeal, we take note sua sponte of the major jurisdictional issue of whether the federal courts, rather than the National Labor Relations Board ("NLRB"), have authority to determine what the relevant bargaining unit is. If they do, we can then decide whether the collective bargaining agreements in this case constituted voidable prehire agreements with respect to A & P. In Section II of this opinion, we hold that we have such jurisdiction. We also affirm the district court's rulings on A & P's arguments (1), (3), and (4). We further decide that A & P, not the AGC, was the relevant bargaining unit for assessing union majority status and that, therefore, these agreements were prehire agreements with respect to A & P. Therefore, A & P successfully repudiated the agreements on November 14, 1980, and we remand under issue (2) for a recalculation of damages.

I.

FRUSTRATION OF PURPOSE

(Breach of Contract; Failure of Consideration)

From the outset of this case A & P has argued strenuously that it is not obligated to pay contributions to the Trusts because it received no benefit from the Union under either of the agreements in question. In particular, it argues that the Union did not respond to its requests for qualified ironworkers pursuant to the "Union Referral System" provided for by the agreements. It points out that "[a]lthough the record As an underpinning to its "no benefit" argument, A & P directs our attention to the following language from the Supreme Court's 1983 decision in Jim McNeff, Inc. v. Todd, 461 U.S. 260, 103 S.Ct. 1753, 75 L.Ed.2d 830 (1983):

                contains no express statement that the anticipated receipt of Union referrals was A & P's sole purpose in executing the agreements, the facts compel this conclusion."    Reply Brief for Appellant at 3.  Pursuing the point, A & P argues that its "employees were not unionized and had never displayed any desire to become so;  A & P did not enter the agreements in order to remain on any union job sites;  A & P did not experience labor unrest, from either internal or external sources, before or after the agreements were expressly repudiated.  Thus, the only logical inference is that A & P executed the agreements to obtain Union referrals, which it never received."    Id. at 3.  The record, however, is not developed with respect to these assertions
                

Nothing in the legislative history of Sec. 8(f) indicates Congress intended employers to obtain free the benefits of stable labor costs, labor peace, and the use of the union hiring hall. Having had the music, he must pay the piper.

By the same token, the union cannot simply accept the employer's performance under a prehire contract without upholding its end of the bargain. Neither party is compelled to enter into a Sec. 8(f) agreement. But when such an agreement is...

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