Turner Indus. Grp., LLC v. Int'l Union of Operating Eng'rs

• Decision Date: 16 April 2015
• Docket Number: CIVIL ACTION H-13-0456
• Parties: TURNER INDUSTRIES GROUP, LLC, Plaintiff, v. INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 450, Defendant.
• Court: U.S. District Court — Southern District of Texas

TURNER INDUSTRIES GROUP, LLC, Plaintiff, v. INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 450, Defendant.

CIVIL ACTION H-13-0456

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

April 16, 2015

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The above referenced action seeks damages and a declaratory judgment pursuant to 28 U.S.C. § 2201 and Federal Rule of Civil Procedure 57 that Plaintiff Turner Industries Group, LLC ("TIG") has an enforceable labor contract with Defendant International Union of Operating Engineers ("IUOE"), Local 450 ("Local 450") and that Local 450 is and has been in an ongoing material breach of that agreement by failing to clear in members of IUOE Local 406 to work on certain construction projects that TIG had in Texas. Alternatively, if the Court finds that either the agreement had never been consummated or that Local 450 terminated the contract on January 28, 2013, TIG seeks damages for tortious interference with its prospective business relations under Texas common law.

This case was tried to the bench from May 27^th-29^th, 2014. The Court now enters the following finding of facts ("FF") andconclusions of law ("CL").¹

Findings of Fact on Liability

1. TIG is a Louisiana Limited Liability Company based in Baton Rouge, Louisiana, with geographical jurisdiction over the whole of Louisiana under the Constitution of the IUOE,² and licensed to do business in Texas. TIG had for over thirty years provided industrial construction and maintenance/turnaround services, involving inter alia large crane operators through its Equipment and Rigging Division, to the Gulf Coast petrochemical, refining, and paper pulp industry, including to job sites in and near Houston, Texas. TIG uses experienced crane operators certified by the National Commission for Certification of Crane operators, because when operated unsafely, large cranes can cause substantial damage. TIG's crane operators were members of IUOE Local 406 ("Local 406"), Defendant Local 450's Louisiana sister union, with which TIG had a longstanding collective bargaining relationship.

That relationship and agreements between the two local unions governed TIG's employment of Local 406 members for jobs in Texas until they entered into the July 1, 2012 "Master Crane Rental Evergreen Project Labor Agreement Between Turner Industries Group, LLC Equipment Division and the International Union of Operating Engineers Local 450 for __________" (the "July 2012 Agreement" or "CBA")," at issue here.

2. Defendant Local 450 is a local union of the IUOE, with offices in Dayton, Texas, and with geographical jurisdiction over 101 Texas counties,³ including the Houston area. It represents crane operators and other operating engineer employees with respect to their wages, hours, and other terms and conditions of employment with a number of employers, including TIG.

3. Between 1995-2010, Local 450 and Local 406 entered into two Clear-In Agreements, the first in 1995 and the second in March 2010, to permit each Local's members to work in Texas and/or Louisiana for contractors like TIG. See Plaintiff's Second Amended Exhibit List ("Plaintiff's Ex.") #4, 2010 Clear-In Agreement between Local 406 and Local 450 permitting freedom of movement into Local 450's jurisdiction. See also Pl.'s Ex. 2, letter from Local406's Business Manager Roy L. Serpas, Jr. to TIG's Morain,⁴ confirming that TIG "is accorded 'freedom of movement' with respect [to] bargaining unit employees covered by the collective bargaining agreement(s) ["CBAs"] between the parties." Under these Clear-In Agreements, traveling union members were responsible for contacting either their home local union or the local union where the work was to be performed to inform that local union about the details of their out-of-state work assignment. In actual practice, Local 406 members relied on TIG to email information to Local 406's Business Manager, Carlos Benoit ("Benoit"), about Local 406 members who were to work on job sites in Texas, and Benoit would then relay that information to Local 450's representatives. The two Clear-In Agreements provided that TIG would make apprenticeship contributions and pay union dues to Local 450 for the Local 406 members whom Local 450 cleared to work in Texas on jobs lasting for at least four days.

4. During the spring of 2009, Local 450 was placed under the supervision of the International Union, with Mike Wall ("Wall") as its supervisor. Wall then challenged TIG's right to employ Local 406 members for jobs in Texas without a labor agreement with Local 450. IUOE's Constitution states, "Members of one Local Union shallnot seek employment, be employed, or remain at work at the craft within the territorial jurisdiction of another Local Union without the consent of such other Union." Local 450's Ex. #3 at p. 47.⁵ Thereafter, the two Locals entered into two Project Labor Agreements ("PLAs"), each for a specific job site, the first in January 2010 for a job at Huntsman Chemical in Port Neches (Def.'s Ex. 33), the other in August 2011 for a job at Exxon's Baytown facility (Pl.'s Ex. 23). While both PLAs had required TIG to employ Local 450 members, TIG primarily used Local 406 operators and hired Local 450 members only when it could not fill positions with the Louisiana Local's members. A growing discord developed between members of the two Local unions.

5. TIG and Local 450 subsequently entered into a broader CBA, the July 1, 2012 "Master Crane Rental Evergreen Project Labor Agreement Between Turner Industries Group, LLC Equipment Division and the International Union of Operating Engineers Local 450 for __________", covering wages, hours, and working conditions for certain represented employees working more jobs in Texas for TIG. Plaintiff's Second Amended Exhibit List ("Plaintiff's Ex."), #3. Without the help of attorneys, TIG's Dave Lauve ("Lauve"), former president of TIG's equipment division, drew up the contractbased on Local 450's standard labor contract terms and the terms of the Clear-In Agreements between Locals 450 and 406. TT at p. 272. In uncontroverted testimony, Lauve explained the blanks in the title were a solution to TIG's refusal to sign Local 450's master contract that would have covered all of TIG's work in 450's jurisdiction because TIG wanted to retain its ability to do non-union jobs in non-union yards in Texas; the blanks allowed TIG to choose which contract(s) the agreement would apply to. TT at pp. 287-88. The signature page states that the July 2012 Agreement is for a project starting July 1, 2012.

6. The notification procedure for Local 406 workers cleared to work in Texas changed under the July 2012 CBA. The July 2012 CBA required that TIG email Local 450's Business Manager, Mark Maher ("Maher"), directly, about jobs to be worked by Local 406 operators in Local 450's area in Texas, rather than going through Local 406's Business Manager, Benoit. Nevertheless TIG continued its past practice and custom of sending the information to Benoit, who then forwarded it to representatives of Local 450, specifically to Local 450's Business Representative Fred Swift ("Swift"), Maher's assistant, by telephone. Local 450 did not complain about use of this past practice to TIG until Local 450's attorney sent a letter dated January 28, 2013 stating that Local 450 was unilaterally terminating the July 2012 CBA. TT at p. 177, Morain's testimony. Significantly, Local 450 did not file a grievance norseek to arbitrate this notice issue. See trial testimony of Mark Maher, TT at p. 124 (conceding that no grievance was filed, but that if he had filed a grievance on the notification issue, it could have been easily fixed by having TIG send the email notices to him).

7. Meanwhile Local 450's Fred Swift did file a grievance on October 30, 2012 under the July 2012 CBA, objecting only that the pay rate and benefits for Local 406 operators working in Texas should be Texas wages, i.e., the same as those for Local 450 members, under Appendix A of the agreement.⁶ In that grievance, Swift expressly stated that the CBA "was signed on July 1, 2012 and enforceable as of that date." Defendant's Ex. #2.

8. TIG requested referrals from Local 450, but never received any, so TIG never used the wage rates in Appendix A, which were conditioned upon the existence of referrals by Local 450. Instead relying on traveling members of Local 406 to fill its needs in jobs in Texas, TIG continued to pay Local 406 rates, as it had under the two Clear-In Agreements and the two PLAs.

9. The parties failed to resolve the pay dispute at a January18, 2013⁷ "mediation" session before the Federal Mediation and Conciliation Service in Houston, in which Lauve and Morain represented TIG, and Maher and his assistant, Swift, represented Local 450.⁸ The parties did not resolve the pay issue during the meeting. There is a dispute whether or not at the end of the meeting Lauve told Maher that he had to "get back and talk with corporate⁹" and would get back with TIG on a possible resolution. TT at p. 86, 180, 181, 388-89. That disagreement is immaterial because the January 18, 2013 meeting was not a formal mediation and did not resolve the issue, because the parties subsequently did not meet again to further discuss the problem, and because neither party pursued formal mediation of the pay issue. Moreover at trial Maher conceded that he, as well as Local 450, had the right to continue the grievance process and to submit the issue for arbitration, but did not exercise that right. TT at 121-23.

10. In the letter dated January 28, 2013 to TIG's Morain, Local 450's attorney Douglas Selwyn ("Selwyn") stated that Local450's position was that the contract had never been "consummated" because no construction job had ever been identified by TIG in an email to Maher and because no Local 450 workers had been hired by TIG for projects worked in Local 450's jurisdiction. Selwyn further contended that even if the agreement...