1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-20-1994

Laboreres' Internat'l Union v. Foster Wheeler

Corp., et al.

Precedential or Non-Precedential:

Docket 93-5208

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UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

_______________________________________________ 

NOS. 93-5208, 93-5233, 93-5243 

_______________________________________________ 

LABORERS' INTERNATIONAL UNION OF 

NORTH AMERICA, AFL-CIO, 

 Appellant in No. 93-5208

v. 

FOSTER WHEELER CORPORATION; 

FOSTER WHEELER ENERGY CORPORATION 

____________________ 

LABORERS' INTERNATIONAL UNION OF 

NORTH AMERICA, AFL-CIO, 

v. 

FOSTER WHEELER CORPORATION; 

FOSTER WHEELER ENERGY CORPORATION, 

 Foster Wheeler Energy Corporation

 Appellant in No. 93-5233

____________________ 

LABORERS' INTERNATIONAL UNION OF 

NORTH AMERICA, AFL-CIO, 

v. 

FOSTER WHEELER CORPORATION; 

FOSTER WHEELER ENERGY CORPORATION, 

 Foster Wheeler Corporation

 Appellant in No. 93-5243

______________________________________________________ 

On Appeal From the United States District Court 

For the District of New Jersey 

(D.C. Civ. No. 85-04240) 

______________________________________________________ 
2 

Argued: December 10, 1993 

Before: BECKER and NYGAARD, Circuit Judges, and 

YOHN, District Judge.

0

(Filed May 20, 1994) 

 THEODORE T. GREEN, Esquire (ARGUED) 

 MICHAEL BARRETT, Esquire 

 International Laborers Union of 

 North America 

 905 16th Street, N.W. 

 Washington, DC 20006 

 Attorneys for Laborers' International Union of North America

 VINCENT J. APRUZZESE, Esquire (ARGUED) 

 FRANCIS A. MASTRO, Esquire 

 Apruzzese, McDermott, Mastro & Murphy 

 25 Independence Boulevard 

 Somerset Hills Corporate Center 

 Liberty Corner, New Jersey 07938 

 Attorneys for Foster Wheeler Corporation

 STUART ROTHMAN, Esquire (ARGUED) 

 DAVID D. DIBARI, Esquire 

 Rogers & Wells 

 607 14th Street, N.W., 9th Floor 

 Washington, DC 20005-2011 

 Attorneys for Foster Wheeler Energy 

Corporation

________________________________________ 

OPINION OF THE COURT

________________________________________ 

BECKER, Circuit Judge. 

 This appeal arises out of bitterly contested litigation 

over the applicability of a national "prehire" labor agreement to a 

worksite in Alabama. At ultimate issue is the defendant employers' 

failure to hire the employees engaged at the site from the plaintiff 

 

0Honorable William H. Yohn, Jr., United States District Court for the 

Eastern District of Pennsylvania, sitting by designation. 
3 

union's hiring hall. The parties have been ceaselessly embroiled in 

this matter for over eight years. During this time they have 

appeared before the district court thrice and an arbitrator once; 

they are now before this Court for the third time. Given what 

appears to us to be the relatively modest stakes and the fact that 

the primary point of contention in the case will probably never 

recur,0 it is unfortunate that their litigation strategies have 

prevented them from settling. We can only hope that the opinion that 

follows will edge them toward a swift resolution of their remaining 

disputes instead of propelling them back to the arbitrator for 

another round of pugnacious battle. 

 The principal question before us, one we will answer in 

the affirmative, is whether the district court erred in not applying 

retrospectively the National Labor Relation Board's decision in John 

Deklewa & Sons, Inc., 282 N.L.R.B. 1375 (1987), enf'd sub nom. Iron 

Workers, Local 3 v. NLRB, 843 F.2d 770 (3d Cir.) (per curiam), cert. 

denied, 488 U.S. 889, 109 S. Ct. 222 (1988). A host of other 

questions is also before us, but many of them are rendered 

extraneous by our resolution of the retrospectivity question. As to 

those we need reach, we first conclude that the district court 

properly referred the issue of damages to the arbitrator, but should 

also have referred the question of breach as well. In addition, we 

will clarify the mandate we issued the last time the parties 

appeared before this Court --specifically, we will describe its 

effect on two factual findings which an arbitrator had made and the 

 

0See Letter from John D. Burgoyne, Assistant General Counsel, 

National Labor Relations Board, to Stuart Rothman, Esq., Counsel to 

Foster Wheeler Energy Corp. (Aug. 4, 1993), in Reply Br. of FWEC, 

App. A. 
4 

district court had adopted prior to the parties' second rendezvous 

here -- and comment on the employers' contention that no damages may 

flow from their alleged breach of the prehire agreement because the 

union operated an illegal hiring hall in contravention of the 

prehire agreement as well as state and federal law. 

 In the end, we will instruct the district court to modify 

its Order of June 22, 1992, as modified on March 11 and 31, 1993, 

and to direct the parties to arbitrate the issue of breach of their 

pre-hire agreement in addition to the issue of damages, if any, 

flowing therefrom. 

I. BACKGROUND

A. Facts

1. The Parties

 Foster Wheeler Corporation ("FWC") is a major international construction firm with its principal place of business in Livingston, New Jersey. For a long time it was an exclusively union shop 

employer. It entered into its first National Agreement with the 

Laborers' International Union of North America, AFL-CIO ("LIUNA") in 

1973, agreeing thereby, among other things, to recognize and 

acknowledge LIUNA as the exclusive bargaining representative for all 

field construction workers it would employ. LIUNA, in return, 

guaranteed that the terms of the agreement would govern irrespective 

of locale. 

 In 1974, in pursuit of a longterm expansion plan, FWC 

reorganized its commercial operations and became a holding company. 

Among FWC's motives for reorganizing was to become a double-breasted 
5 

contractor, that is, to establish the capability to compete in both 

the open shop and the union shop markets. On November 11, 1974, FWC 

notified LIUNA that it had transferred its domestic engineering, 

manufacturing, and construction activities to Foster Wheeler Energy 

Corporation ("FWEC"), a newly formed, wholly-owned subsidiary, and 

that it had correspondingly assigned to FWEC all labor agreements 

covering the affected employees. Since then FWC has neither 

performed field construction work nor entered into field construction labor agreements; instead, FWEC (but not FWC) was listed as the 

employer in each subsequent National Agreement with LIUNA. FWEC 

itself was segmented into independently operated divisions, 

including Foster Wheeler World Services ("FWWS"), which performed 

all of FWEC's field construction work on a union basis, and Houston 

Engineering Center ("HEC"), which performed FWEC's engineering and 

procurement services. 

 Four years later, FWC furthered its 1974 reorganization 

plan and spawned Energy Plant Constructors, Inc. ("EPC"), a whollyowned subsidiary which FWC formed and designed as the open shop 

counterpart to FWEC. To implement its open-shop policies, EPC hired 

its own employees and administered its own labor relations policies. 

EPC discontinued business operations in 1987. 

 LIUNA is the parent body of LIUNA Local 70 of Mobile, 

Alabama. The Local, in accordance with its constitution and bylaws, 

is affiliated with a regional building and trades council, Mobile 

Building Trades Council ("MBTC"). MBTC represents and acts on 

behalf of LIUNA Local 70 with regard to the negotiation and 

administration of labor agreements. 
6 

2. The Agreement

 On April 20, 1982, FWEC and LIUNA entered into the 

National Agreement (the "Agreement") at issue here. The Agreement 

applied to all construction projects "performed by the Employer or 

by any person, firm or corporation owned or financially controlled 

by the Employer" within the political boundaries of the United 

States, except for those performed in one of three states (not 

including Alabama) already subject to a Tri-State Agreement. 

 On covered projects, the Agreement imposed several 

noteworthy requirements on FWEC: to hire employees through the 

referral systems of LIUNA's local affiliates; to recognize LIUNA as 

the exclusive bargaining agent for those employees; to adhere to 

certain requirements regarding wages, fringe benefits, and overtime; 

and to compel its subcontractors to comply with the substantive 

terms of the Agreement. The Agreement, however, expressly relieved 

FWEC of any obligation to recruit laborers through any local area 

hiring hall whose procedures violated state or federal laws or 

discriminated for or against laborers on the basis of their union 

membership. 

3. The Project

 At approximately the same time as FWEC was entering into 

its new agreement with LIUNA, Mobil Oil Exploration & Producing 

Southeast, Inc. ("MOEPSI") began the process of selecting a general 

contractor to oversee the engineering and construction of a sour gas 

treatment and sulfur recovery facility it wanted built at Bayou 
7 

Jonas near Mobile. The project consisted of an offshore platform and 

natural gas production facility, a pipeline to carry the gas 

onshore, and a sour gas treatment and sulfur recovery plant (the 

only portion of the project to which this case relates). Through a 

rather convoluted set of developments, MOEPSI eventually nominally 

awarded the construction contract for the gas processing plant to 

EPC in October 1984, with FWC guaranteeing EPC's performance and EPC 

nominally subletting the engineering work to HEC (a divison of 

FWEC). This arrangement as depicted by the documents was suffused 

with subterfuge, however, for it is quite clear from the record, as 

both the district court and the arbitrator independently found, that 

in reality FWEC was the actual prime contractor on the MOEPSI 

project and EPC its subcontractor.0

 

0As the first step in its selection process, MOEPSI sent detailed 

questionnaires to 21 companies, including FWC. Since it no longer 

had any engineering or construction capabilities of its own, FWC 

referred the questionnaire to FWEC. Although neither FWEC nor FWC 

had ever engineered or constructed the precise type of facility 

MOEPSI specified, FWC forwarded the questionnaire to FWEC and not 

EPC, because only FWEC (which had worked on many more projects than 

had EPC) had the experience MOEPSI demanded. 

 During 1982 and 1983, MOEPSI twice reviewed and pared down 

the initial solicited applications, and on August 22, 1983 MOEPSI 

revealed a "short" list of five contractors which it asked to submit 

comprehensive bids. FWEC did not make the "short" list, but Ortloff 

Corporation ("Ortloff"), a Midland, Texas contractor with close ties 

to FWEC, did. Ortloff and FWEC had earlier reached an understanding 

that each would consider bringing the other one in on projects in 

the $10-$150 million range that it was awarded or was pursuing. 

That option appealed to Ortloff when FWEC suggested they jointly 

pursue the MOEPSI project because it did not wish to individually 

take on the risks involved. The two agreed to cooperate on 

preparation of a joint bid, but MOEPSI conditioned consideration of 

a joint bid on a single entity taking overall responsibility for the 

project. As a result of Ortloff's equivocations, FWEC agreed to 

serve as the prime contractor for the project and Ortloff assumed 

responsibility for the construction work and certain specialized 

engineering services. 

 In the course of preparing its proposal for a joint bid 

with Ortloff, FWEC apparently determined that MOEPSI wanted to use 
8 

 

non-union labor on the Bayou Jonas project, and therefore FWEC 

arranged with Ortloff to have Foster Wheeler Intercontinental 

Corporation ("FWIC") -- an international subsidiary of FWC with no 

employees in the United States but subject to no union obligations 

-- substitute as the prime contractor. The only practical effect of 

having FWIC rather than FWEC be the contracting party was that a 

non-union entity would bid on the construction work. There ensued a 

campaign of subterfuge directed at MOEPSI and LIUNA, only a portion 

of which we will recount here, which entailed FWEC holding out FWIC 

as the non-union bidder, whereas in fact only FWEC, a signatory to 

the Agreement, was working on the project. 

 On February 8, 1984, John Sarappo, Vice President of FWEC, 

sent the joint bid to MOEPSI on FWIC letterhead, in which he 

proposed that FWEC's engineering and procurement services division, 

HEC, manage the project and engineer the utility and supporting 

facilities, and that Ortloff engineer the process units and 

construct all the facilities. MOEPSI promptly agreed, whereupon the 

staff of FWEC (rather than that of FWIC) began preparing the bid 

documents. 

 Shortly before the bid package was to be submitted, 

however, MOEPSI in a sudden about-face determined that Ortloff 

lacked the capacity to construct the project, placing FWEC under 

significant time constraints to find an acceptable replacement 

subcontractor. Following a quick review of three alternative open 

shop companies, including EPC, FWEC's open-shop sibling construction 

company, Sarappo approved the selection of EPC to supplant Ortloff 

in all its responsibilities except for those in connection with 

certain specialized engineering technologies. FWIC, in keeping with 

its disguised role as the prime contractor, submitted the bid 

package to MOEPSI on May 1, 1984, designating FWEC and EPC -- the 

actual work engines -- as its subcontractors. The bid was signed by 

W. Robert Campbell, who falsely identified himself as the area sales 

manager for FWIC whereas in fact FWEC employed him as an account 

sales engineer. 

 MOEPSI negotiated with the five qualified bidders and 

scrutinized their bid packages over the next five months. It 

eventually narrowed the candidate pool down to two, of which the 

FWIC/FWEC/EPC/Ortloff combined bid earned the highest marks. In the 

final days before the bid was to be awarded, however, MOEPSI's legal 

counsel determined that the prime contractor should have an Alabama 

general contractor's license. As FWIC -- an international contractor -- was not in possession of the requisite license, MOEPSI 

decided it could no longer serve as even the nominal prime 

contractor. To preserve the FWIC/FWEC/EPC/Ortloff bid package, 

MOEPSI assented to EPC, which did hold an Alabama general contractor's license, replacing FWIC as the prime contractor (FWC, of 

course, preferred substituting EPC instead of FWEC for FWIC so that 

it could continue its pretense about the prime contractor being open 

shop), but only under the qualification that FWC guarantee EPC's 

performance. FWC willingly executed the requested guarantee. 
9 

 The local press widely publicized MOEPSI's award of the 

contract to EPC -- as well as EPC's open-shop policy -- during the 

fall and winter of 1984. LIUNA officials, suspicious of the goingson, made numerous inquiries to the defendants concerning the application of the Agreement to the MOEPSI project. Apparently in each 

instance the defendants informally told the LIUNA officials that EPC 

was a non-union contractor not bound by the Agreement, and that, 

accordingly, the project would be completed by non-union labor. 

There is disputed evidence regarding whether FWEC affirmatively 

misrepresented to LIUNA its part in the project and its relationship 

to EPC. 

 As already mentioned, the Agreement required signatory 

employers to comply with the hiring provisions of local affiliates, 

but only if they were operated legally and did not discriminate 

against non-union laborers. MBTC, LIUNA's local affiliate, operated 

a hiring hall for construction workers, but, to LIUNA's chagrin, it 

discriminated against non-union members.0 Seemingly unaware of 

MBTC's discrimination, EPC -- itself not a signatory to the 

 

 With this final obstacle overcome, MOEPSI awarded the 

contract to EPC during the last week of September, 1984. The 

contract was formally executed on October 1, 1984. In a separate 

contract, EPC nominally sublet the engineering work on the project 

to FWEC. 

0Testimony at trial from the secretary-treasurer of MBTC, who was 

responsible for making referrals, casts substantial doubt on the 

equality of the hall's treatment of non-union members. The evidence 

led the district court to find that the procedures MBTC employed to 

fulfill work requests favored union over non-union workers, and 

hence to conclude that MBTC ran an illegal hiring hall. Because at 

the time LIUNA had placed the local into trusteeship, LIUNA was 

responsible for the discrimination. No evidence was proffered, 

however, showing that any of the defendants knew about this practice 

(or that LIUNA officials in fact knew about it) during the period 

the MOEPSI project underwent construction. 
10 

Agreement --opened its own hiring office for the MOEPSI project on 

January 29, 1985. Since the local press had widely publicized the 

available job opportunities, EPC received over 5,000 applications in 

the three days the hiring office accepted them. EPC hired all the 

construction workers it employed on the MOEPSI project either 

through the applications that were submitted at that office or at 

the entrance to the job site. On April 2, 1985, the day EPC hired 

its first laborer for the project, the local union had over 200 

union supporters on the local hiring hall's out-of-work list, 

although some unspecified number of them were busy working for nonunion contractors. 

4. The Dispute

 On April 9, 1985, LIUNA sent out a formal grievance letter 

to the various entities related to FWC involved with the MOEPSI 

project -- namely, FWC, FWIC, FWEC, and EPC -- claiming that each of 

them was in violation of the Agreement as a result of its 

participation in the MOEPSI project (insofar as the laborers had not 

been hired out of LIUNA's affiliate's, MBTC's, hiring hall). FWEC's 

counsel responded about one month later that FWEC would sometime in 

the future formally address the matters raised in LIUNA's letter, 

but that in the meanwhile he would meet informally with LIUNA 

representatives to discuss any difficulties clouding their relationship. Approximately one month after that, on June 3, 1985, EPC 

through its president also answered LIUNA's letter by denying any 

contractual obligation toward LIUNA and, in the alternative, 

providing notice of termination of any collective bargaining 
11 

agreement it may have been a party to, whether by operation of law 

or otherwise. When several subsequent meetings between FWEC and 

LIUNA failed to resolve the matter, FWEC formally responded to 

LIUNA's grievance in a letter dated July 11, 1985, reiterating its 

previous position and stating: 

 Since the work in question is presently being 

undertaken by a company over which FWEC does not have and 

can exert no control, the LIU[NA]/FWEC National Agreement 

is not applicable. There is a different bargaining unit 

there with a different employer who, as we have very 

recently been given to understand, is proceeding pursuant 

to its agreement with the owner. FWEC employs no field 

construction laborers or mechanics at Mobile. There is 

nothing FWEC could do to make local labor agreements 

applicable. 

 Less than one month later, EPC filed a Petition for 

Election with the National Labor Relations Board ("NLRB" or "Board") 

to elect a union representative for all EPC's field construction 

employees at the MOEPSI project, or, more precisely, to dispel any 

doubts or reservations concerning whether the Agreement applied to 

the project at all by demonstrating LIUNA's lack of majority support 

amongst the workers. The Board failed to reach a decision on EPC's 

petition for several months and never completed the election. 

 In the meantime FWEC formally modified its stance toward 

LIUNA: although it still maintained that the Agreement did not 

pertain to its activities on the MOEPSI project, on August 9, 1985 

it expressly repudiated the Agreement to the extent that the 

Agreement was found to apply to the MOEPSI project. It identified 

Painters Local Union No. 64 of Brotherhood of Painters v. Epley, 764 

F.2d 1509 (11th Cir. 1985), cert. denied, 475 U.S. 1120, 106 S. Ct. 

1636 (1986) as establishing its right to limit its repudiation of an 

area-wide prehire agreement to a single job site. The Eleventh 
12 

Circuit Court of Appeals, the court exercising jurisdiction over the 

situs of the MOEPSI project, had handed down Epley a scant month 

earlier. At that time, of course, FWEC had already committed itself 

internally to using non-union labor, and, furthermore, had 

contractually bound itself to MOEPSI to use EPC as the non-union 

construction subcontractor (although, as structured on paper, EPC 

was the (nominal) prime contractor and FWEC the (nominal) 

subcontractor, see supra at Error! Bookmark not defined. n.Error! 

Bookmark not defined.).0

 

0About this time the parties became enmeshed in some collateral 

litigation before the Board, litigation which does not directly 

affect the outcome here but which helps set the stage. Coincidentally on the same day that FWEC notified LIUNA of its limited 

repudiation, LIUNA filed separate unfair labor practices actions 

against FWC, FWEC, and EPC for their failure to provide it with 

information it alleged § 8(a)(5) of the National Labor Relations Act 

("NLRA"), 11 U.S.C.A. § 158(a)(5) (1973), gave it a right to. Each 

action was in turn dismissed by three different Regional Directors 

of the NLRB, principally on the ground that the Agreement was a 

prehire agreement pursuant to § 8(f), id. § 158(f), but that LIUNA 

had not demonstrated that it had achieved majority status at the 

work site as was necessary to convert the § 8(f) prehire agreement 

into a § 9(a), see id. § 159(a), collective bargaining agreement. 

That conversion was crucial to the charges LIUNA levelled against 

FWC, FWEC, and EPC, because only a collective bargaining agreement 

imposes on the employer the statutory duty to bargain with the 

employees' union representative and derivatively to supply that 

representative with information. The three regional decisions were 

joined for purposes of appeal and thereafter affirmed by the Board's 

General Counsel for substantially the reasons given by the Regional 

Directors. 

 As the text above touched upon, EPC for its part on August 

1, 1985, filed a petition in Region 15 of the NLRB (encompassing 

Mobile) to hold a representation election, in which EPC requested an 

election among all its field construction employees at the MOEPSI 

project. NLRB Petition 15-RM-387. LIUNA moved to dismiss the 

petition, asserting that the election was slated to poll all of 

EPC's field construction workers whereas it had disclaimed any 

interest in representing all those employees because traditionally 

it represented only some categories of workers at the site -- the 

construction workers but not the skilled craftspersons and their 

associates. On November 18, 1985, over LIUNA's objection, the 

Regional Director issued a Decision and Direction of Election in 
13 

 By letter dated May 15, 1986, FWEC validly repudiated the 

entire (National) Agreement according to its terms effective July 

15, 1986. 

B. Procedural History

1. Round 1

 On August 29, 1985, LIUNA filed this action on behalf of 

itself, its local, and its membership against FWEC and FWC under 

§301(a) of the Labor Management Relations Act ("LMRA"), 29 U.S.C.A. 

§185(a) (1978). LIUNA sought to compel FWEC and FWC to submit to 

arbitration LIUNA's grievance concerning the applicability of the 

Agreement to the MOEPSI project. The Complaint alleged that FWEC, 

FWC, FWIC, and EPC were alter egos and/or a single employer, and 

hence that all of them were bound by the Agreement. The Complaint 

further alleged that EPC, FWC, and FWIC each had breached the Agreement in connection with the MOEPSI project. 

 Upon considering defendants' alternative motions to 

dismiss, change venue, and stay the proceedings pending the outcome 

 

response to EPC's petition. Among other conclusions, he resolved 

that 1) the Agreement constituted a prehire agreement under § 8(f); 

2) the work unit could not be split into different sub-units for 

election purposes; 3) LIUNA had not demonstrated it had achieved 

majority status at the work site; and 4) EPC's filing of the Petition for Election would allow it to repudiate any prehire agreement 

which might have been in effect between EPC and LIUNA if the vote 

demonstrated that LIUNA lacked majority status among all the field 

construction workers at the work site. Based on these conclusions, 

the Director ordered an election involving all the field 

construction employees, and apparently one was held. LIUNA appealed 

from that decision, however, and when the appeal was granted the 

ballots were impounded. The Board remanded the matter to the 

Regional Director, but since another election was never held before 

FWEC and EPC completed the project, the Board on June 1, 1988 

vacated its remand order and dismissed the petition as moot. 
14 

of the representation election scheduled at the MOEPSI site as well 

as plaintiff's motion for summary judgment, the district court on 

December 9, 1985 granted plaintiff's motion and ordered FWC and FWEC 

to submit LIUNA's grievance to arbitration. The court decided first 

that the Agreement as signed was a prehire agreement pursuant to § 

8(f) of the National Labor Relations Act ("NLRA"), 29 U.S.C.A. § 

158(f) (1973), not a collective bargaining agreement pursuant to § 

9(a) of the NLRA, see id. § 159(a).0 Next, it resolved that since 

EPC's employees at MOEPSI had not yet elected a bargaining 

 

0The distinguishing feature of a prehire agreement as compared to a 

collective bargaining agreement is that an employer and a union 

enter into it before the workers to be covered by the agreement and 

represented by the union have even been hired. The basic provisions 

of the NLRA forbid the employer from bargaining with a union which 

has not been "designated or selected by the majority of the employees in a unit appropriate for such purposes." 29 U.S.C.A. § 159(a) 

(1978). Although other methods exist, designation or selection is 

best accomplished by the cumbersome and time-consuming instrument of 

election by secret ballot. See id. § 159(c)(1) (providing for 

certification as the employees' representative). Prehire agreements 

developed in the fluctuant construction trade because the typically 

short duration and seasonal variation of employment in that industry 

make designating a union representative using the procedures 

developed for the more stable industries, such as manufacturing, 

unworkable. 

 Responding to the particularized needs of the construction 

industry and recognizing the practices prevailing prior to the 

Board's invalidation of prehire agreements (the Board disapproved of 

prehire agreements shortly after obtaining jurisdiction over the 

construction industry in 1947, see NLRB v. Irvin, 475 F.2d 1265, 

1267 (3d Cir. 1973)), Congress engrafted § 8(f) onto the NLRA in 

1959. That amendment allowed a union to act as the bargaining 

representative for employees before the Board certified it as 

enjoying majority status. See Iron Workers, Local 3, 843 F.2d at 

772-74; S. REP. No. 187, 86th Cong., 1st Sess. (1959), reprinted in

1959 U.S.C.C.A.N. 2318, 2344; I CHARLES J. MORRIS, THE DEVELOPING LABOR 

LAW, at 48, 714-15 (3d ed. Patrick Hardin ed. 1992). Once the union 

has attained majority status, the § 8(f) prehire agreement is 

converted into a § 9(a) collective bargaining agreement. See NLRB 

v. Local Union No. 103, Int'l Ass'n of Iron Workers (Higdon Constr. 

Co.), 434 U.S. 335, 349-50, 98 S. Ct. 651, 660 (1978); see also

supra at Error! Bookmark not defined. n.Error! Bookmark not 

defined.. 
15 

representative and since LIUNA did not even claim majority status at 

the MOEPSI site, the Agreement had not yet been converted into a 

collective bargaining agreement under § 9(a). 

 The court then ordered arbitration solely on the issue of 

whether the Agreement applied to the MOEPSI site vel non, reasoning 

that LIUNA had raised a colorable claim that EPC was FWEC's alter 

ego and that the question of the application of the Agreement to any 

specific project fell within the scope of the Agreement's capacious 

arbitration clause. The court reserved for itself, however, the 

questions of LIUNA's majority representation, the size and 

composition of the appropriate bargaining units, and defendants' 

alleged repudiation of the Agreement. We dismissed the defendants' 

appeal from the district court's arbitration order as interlocutory. 

See Laborer's Int'l Union v. Foster Wheeler Corp., Nos. 86-5079, 86-

5080 (3d Cir. May 1, 1986). 

2. Round 2

 On November 10, 1986, after a lengthy hearing and extended 

briefing, Arbitrator Sam Kagel issued a decison in LIUNA's favor. 

The arbitrator found that FWEC and FWC were alter egos and that EPC 

was a joint or single employer with FWEC. Based on these findings, 

he concluded that EPC (through FWEC) was a party to the Agreement 

and consequently that both FWC and FWEC had breached the Agreement. 

He additionally determined that, contrary to the arrangements as 

they existed on paper, FWEC was the prime contractor and EPC the 

subcontractor at the MOEPSI site, and that the defendants had listed 

EPC as the prime contractor with the express intent to delude LIUNA. 
16 

3. Round 3

 Just over a year later, the district court entered an 

order confirming the arbitrator's award insofar as he had found that 

the Agreement applied to the MOEPSI project, but rejecting as an 

improper and unnecessary appendage beyond the scope of the reference 

that portion of the arbitrator's decision which found that FWC and 

FWEC had breached the Agreement. After rejecting numerous 

contentions raised by the defendants, the district court turned to 

the date of defendants' alleged repudiation of the Agreement. 

Because of Deklewa's supposed deviation from the decision reached by 

the Supreme Court in Jim McNeff, Inc. v. Todd, 461 U.S. 260, 103 S. 

Ct. 1753 (1983) (approving the pre-Deklewa rule), the district court 

held that Deklewa (discussed at length infra Part 21) was invalid 

and refused to acquiesce in the rule it announced. This cleared the 

way for the court to find that FWC and FWEC had effectively 

repudiated the Agreement on June 6, 1985, the date LIUNA had 

received EPC's June 3 letter repudiating any agreement which may 

have existed between them. 

 The court wrapped up its decision with the observation 

that only the issues of defendants' breach and liability for damages 

accruing before June 6, 1985 remained. The parties thereafter 

stipulated to $18,500 in damages so as to expedite their appeal to 

this Court. 

4. Round 4
17 

 On February 22, 1989, this Court partially vacated the 

district court's order, holding that the district court had erroneously allowed the arbitrator to decide whether FWC was FWEC's alter 

ego. The district court's error in ordering arbitration of the 

alter ego issue lay in its failure to realize that the question of 

the duty to arbitrate is one for judicial resolution, and therefore 

that "it is the role of the district court, not the arbitrator, to 

pierce the corporate veil and require a parent corporation to 

participate in arbitration of a contract to which a subsidiary is 

formally a party." Laborer's Int'l Union v. Foster Wheeler Corp., 

868 F.2d 573, 576-77 (3d Cir. 1989) (per curiam).0

 Accordingly, we remanded for the district court to determine whether the two corporations were alter egos. In the process, 

we vacated all of the district court's orders subsequent to the one 

allowing discovery on the alter ego issue which were "predicated on 

the assumption that FWEC was FWC's alter ego," and instructed the 

district court that it "may reconsider the[ vacated orders] in light 

of our recent decision in International Ass'n of Iron Workers, Local 

3 v. NLRB, 843 F.2d 770 (3d Cir.), cert. denied, 488 U.S. 889, 109 

S. Ct. 222 (1988)[, and enforcing Deklewa, supra]." Id. at 577. 

5. Round 5

 After the district court's proceedings recommenced, FWC 

and FWEC conceded in open court on January 22, 1991 that FWC was 

 

0Cf. United Ass'n of Journeymen & Apprentices of Plumbing & 

Pipefitting Indus. Union, Local 342 v. Valley Eng'rs, 975 F.2d 611, 

614-15 & n.7 (9th Cir. 1992) (holding that a district court must 

usually stay its proceedings if the Board is in the process of 

determining an employer's alter ego or single employer status). 
18 

FWEC's alter ego. After presiding over a two-day bench trial, the 

district court filed the opinion and order now under review on June 

22, 1992. 

 The court first reaffirmed its prior ruling that the 

Deklewa rule did not apply, but, since Iron Workers, Local 3 had 

approved of the Deklewa rule, did so on a revised basis. 

Specifically, it adjudged that it would be manifestly unjust to 

apply the rule retrospectively to these defendants, and concluded 

that this Court's decision in Iron Workers, Local 3 did not dictate 

the automatic retrospective application of Deklewa but instead 

required a case-by-case evaluation of the justice of so doing. Mem. 

Op. at 27-29, 37-38. Analyzing the three Chevron Oil factors for 

guidance on whether or not to apply Deklewa's new rule of law 

retrospectively, see Chevron Oil Co. v. Huson, 404 U.S. 97, 106-08, 

92 S. Ct. 349, 355-56 (1971), the court concluded that its 

application of the rule would further the rule's underlying 

principles, but that the rule clearly departed from prior precedent 

and that its application would lead to an inequitable result. As 

part of its analysis of this issue, the court determined that 

LIUNA's unclean hands, due to the discriminatory referral practices 

of MBTC's hiring hall, equitably estopped it from arguing that FWEC 

and FWC (which had cirumvented the Agreement's hiring procedures) 

were barred (by equitable estoppel) from justifying their 

repudiation of the Agreement by reason of LIUNA's lack of majority 

support at the MOEPSI work site. 

 Next, the court rescinded its earlier finding of a June 3, 

1985 repudiation date, finding instead that the defendants had not 
19 

repudiated the Agreement until three months later on August 9, 1985. 

It explained that FWEC's repudiation could not have occurred before 

June 3, 1985 because before then FWEC and EPC had simply claimed 

that the Agreement did not apply to the MOEPSI project. Moreover, 

due to its conclusion that the defendants' scheme involving FWIC was 

designed to deceive LIUNA regarding the applicability of the 

Agreement, the court withdrew from its earlier position and found 

that EPC's June 3, 1985 letter to LIUNA, in which it had repudiated 

any agreement with LIUNA to which it may have been a party, did not 

suffice to repudiate the Agreement. It reasoned that EPC's June 3 

repudiation did not extend to FWEC, despite the facts that FWEC and 

EPC were alter egos and that LIUNA had suspected that EPC was bound 

by the Agreement, because the defendants' calculated deception 

prevented LIUNA from being certain that EPC intended its repudiation 

to apply to FWEC as well. Finally, the court concluded that FWEC's 

August 9, 1985 single-site repudiation was effective. Thus, the 

court held that FWEC would be liable for damages LIUNA sustained up 

to August 9, 1985. 

 Having disposed of the main issue of liability, the court 

ordered the parties to notify it within twenty days if they could 

settle on LIUNA's damages, or else to submit to it the issue of 

damages. Upon LIUNA's Motion for Reconsideration and Clarification, 

the court on March 11, 1993 modified its prior order and directed 

the parties to submit the issue of damages to arbitration. On March 

31, the court denied defendants' application to file a Motion for 

Reconsideration of the court's March 11 Order. It is from the June 
20 

22, 1992 Order, as modified on March 11 and 31, 1993, that the 

parties appeal. 

6. Round 6

 This appeal followed. The district court had original 

jurisdiction to determine whether the defendants are obligated to 

arbitrate a grievance arising under a § 8(f) prehire agreement 

pursuant to 29 U.S.C.A. § 185 (1978), see Jim McNeff, Inc. v. Todd, 

461 U.S. 260, 271-72, 103 S. Ct. 1753, 1759 (1983), and we have 

appellate jurisdiction pursuant to 28 U.S.C.A. § 1291 (1993).0

 

0Although the district court referred the question of damages to the 

arbitrator without designating its order as "final," we are 

satisfied that we have jurisdiction pursuant to § 1291. On March 

31, 1993, the district court by letter denied defendants' second 

Motion for Reconsideration, explaining that "[t]he issues of whether 

there has been any breach of the agreement and what damages might 

flow from that shall, as provided in the National Agreement and as I 

ruled on March 15, be resolved through arbitration." Letter from 

Honorable Harold A. Ackerman, U.S. District Judge, to Litigants in 

Laborer's Int'l Union v. Foster Wheeler Corp., No. 85-4240 (D.N.J. 

Aug. 24, 1985) (Mar. 29, 1993) (emphasis added). 

 In its complaint, LIUNA had sought a variety of relief in 

addition to an order compelling arbitration. But it submitted in 

its letter defending this Court's jurisdiction that "[a]lthough the 

remedy portion of the complaint also sought the alternative relief 

of a money judgment from the court, the plaintiff has not pursued 

that remedy. Instead, the plaintiff has consistently maintained that 

the damages are an issue for the arbitrator . . . ." Letter from 

Theodore T. Green, Counsel for LIUNA, to P. Douglas Sisk, Clerk, 

U.S. Court of Appeals for the Third Circuit, at 2-3 (Apr. 29, 1993). 

The defendants have not disputed this assertion, see Letter from 

Francis A. Mastro, Counsel for FWC, to P. Douglas Sisk, Clerk, U.S. 

Court of Appeals for the Third Circuit, at 4 n.4 (April 30, 1993), 

and we have not found anything in the record to the contrary. 

 Thus, the order compelling arbitration is the "full 

relief" LIUNA seeks, and no substantial issue remains outstanding 

for the district court to decide after the arbitration. Although 

the district court may still need to issue an order enforcing any 

arbitration award LIUNA may secure -- a fact which obtains virtually 

whenever a court orders a recalcitrant party to arbitrate a dispute 

-- the cases make clear that such a limited potential future 

undertaking does not torpedo an appeal prior to the arbitration. 
21 

II. THE RETROSPECTIVITY OF DEKLEWA

 In Deklewa, the Board abruptly reversed seventeen years of 

precedent established by R.J. Smith Construction Co., 191 N.L.R.B. 

693, 695 & n.5 (1971), enforcement denied sub nom. Local No. 150, 

International Union of Operating Engineers v. NLRB, 480 F.2d 1186 

(D.C. Cir. 1973) and Ruttman Construction Co., 191 N.L.R.B. 701, 702 

(1971), and held that construction industry prehire agreements 

negotiated under §8(f) of the NLRA, 29 U.S.C. § 158(f), are no 

longer subject to unilateral repudiation by either the employer or 

the union. See Deklewa, 282 N.L.R.B. at 1377-78. The Board held 

instead that both parties must observe such contracts until "the 

employees vote, in a Board-conducted election, to reject (decertify) 

or change their bargaining representative." See id. at 1385. This 

represented a complete about-face: before that decision, under the 

reign of the R.J. Smith rule, the employer was free to repudiate a 

prehire agreement at any time unless the union obtained majority 

status. The union's attainment of majority status at any time 

subsequent to the parties' entering into the prehire agreement would 

"convert" the § 8(f) pre-hire into a § 9(a) collective bargaining 

agreement and thereby consummate a full bargaining relationship, 

regardless of whether the union had majority support at the time of 

 

See Zosky v. Boyer, 856 F.2d 554, 558-60 (3d Cir. 1988), cert. 

denied, 488 U.S. 1042, 109 S. Ct. 868 (1989) (discussing cases); cf.

Goodall-Sanford, Inc. v. United Textile Workers, 353 U.S. 550, 551-

52, 77 S. Ct. 920, 921 (1957) ("A decree under § 301(a) ordering 

enforcement of an arbitration provision in a collective bargaining 

agreement is . . . a `final decision' within the meaning of 28 

U.S.C. § 1291."). If any substantial issues remained for the 

district court to resolve after the arbitration, of course, there 

would have been no final order and we would lack jurisdiction. See, 

e.g., Zosky, 856 F.2d at 557-58; Nationwide Ins. Co. v. Patterson, 

953 F.2d 44, 45-46 (3d Cir. 1991); Patten Sec. Corp. v. Diamond 

Greyhound & Genetics, Inc., 819 F.2d 400, 403 (3d Cir. 1987). 
22 

repudiation. See NLRB v. Local Union No. 103, Int'l Ass'n of Iron 

Workers (Higdon Constr. Co.), 434 U.S. 335, 345, 349-50, 98 S. Ct. 

651, 657-58, 660 (1978); Deklewa, 282 N.L.R.B. at 1378; Ruttman 

Constr. Co., 191 N.L.R.B. at 702. 

 The controlling question presented by this appeal is 

whether this new rule (issued on February 20, 1987) -- which turned 

the old rule on its head -- should be retrospectively applied to 

conduct by the parties transpiring in mid-1985. The Board for its 

part determined to apply the rule retrospectively to all cases 

pending before it. See Deklewa, 282 N.L.R.B. at 1389. 

Nevertheless, the district court correctly determined that 

retrospectivity must be decided on a case-by-case basis: in 

affirming Deklewa, this Court applied the new rule retrospectively 

to the parties before it only after engaging in a case-sensitive 

review of the parties' circumstances. See Iron Workers, Local 3, 

843 F.2d at 780.0

 

0LIUNA contends that the retrospectivity analysis at work here is 

affected by the decisions in James B. Beam Distilling Co. v. 

Georgia, 501 U.S. 529, 111 S. Ct. 2439 (1991) and Harper v. Virginia 

Department of Taxation, 113 S. Ct. 2510 (1993), which worked a major 

substantive change in the federal law of retrospectivity. Both 

decisions ruled that the Constitution outlaws selective prospectivity of Supreme Court decisions, that is, the practice of applying a 

new rule of law promulgated by the Court to some but not all parties 

in pending cases. See Harper, 113 S. Ct. at 2516 n.9, 2517-18; 

James B. Beam, 111 S. Ct. at 2447-48 (Souter, J., plurality 

opinion); id. at 2451 (Scalia, J., concurring); cf. id. at 2449 

(White, J., concurring); id. at 2451-53 (O'Connor, J., dissenting); 

see also id. at 2451 (Scalia, J., concurring) (finding "both `selective prospectivity' and `pure prospectivity' beyond [the Court's] 

power"). James B. Beam produced a fragmented decision of five 

opinions, with no opinion garnering more than three votes, so in our 

discussion we will focus on Harper, the majority opinion of which 

attracted five votes. 

 Although both opinions dealt with decisions issued by the 

Supreme Court, given the ratio decidendi of both cases, we suspect 

that other courts are probably correct that there is no cogent basis 
23 

 

for distinguishing decisions handed down by the inferior federal 

courts. See Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1128 

(7th Cir. 1993), cert. denied, 114 S. Ct. 883 (1994); Newport News 

Shipbuilding & Dry Dock Co. v. Garrett, 6 F.3d 1547, 1554 (Fed. Cir. 

1993); United States v. Goodner Bros. Aircraft, Inc., 966 F.2d 380, 

385 (8th Cir. 1992), cert. denied, 113 S. Ct. 967 (1993); Sterling 

v. Block, 953 F.2d 198, 200 (5th Cir. 1992); May v. Hobart Corp., 

839 F. Supp. 309, 318 (E.D. Pa. 1993); Hebert v. Manchester, N.H., 

Sch. Dist., 833 F. Supp. 80, 84 (D.N.H. 1993). But see, e.g., 

Gruber v. Price Waterhouse, 911 F.2d 960, 965 (3d Cir. 1990) (predating Harper and Beam) ("the determination of retroactivity vel non

involves a balancing which must be done on a case by case basis"); 

Gatto v. Meridian Medical Assocs., Inc., 882 F.2d 840, 842-43 (3d 

Cir. 1989) (applying a case-by-case selective prospectivity analysis 

under Chevron Oil), cert. denied, 493 U.S. 1080, 110 S. Ct. 1136 

(1990). However, we do believe that there are cogent grounds for 

distinguishing administrative agencies from federal courts, meaning 

that the Supreme Court likely would not extend the doctrine disapproving of "selective prospectivity" to agencies or Article I 

courts. 

 Both Beam's and Harper's rejection of selective prospectivity turned on principles of stare decisis and equal treatment of 

those appearing before the Court; those Justices who rejected pure 

prospectivity additionally invoked the Cases or Controversies 

Clause, see U.S. CONST. art. III, § 2, cl. 1. Harper placed heavy 

emphasis on Griffith v. Kentucky, 479 U.S. 314, 107 S. Ct. 708 

(1987), overruling Linkletter v. Walker, 381 U.S. 618, 85 S. Ct. 

1731 (1965), which "eliminated limits on retroactivity in the 

criminal context." Harper, 113 S. Ct. at 2516. Griffith reasoned 

that the 

failure to apply a newly declared constitutional rule to 

criminal cases pending on direct review violates basic 

norms of constitutional adjudication. First, it is a 

settled principle that this Court adjudicates only "cases" 

and "controversies." See U.S. Const., Art. III, § 2. 

Unlike a legislature, we do not promulgate new rules of 

constitutional criminal procedure on a broad basis. 

Rather, the nature of judicial review requires that we 

adjudicate specific cases . . . . But after we have decided a new rule in the case selected, the integrity of 

judicial review requires that we apply that rule to all 

similar cases pending on direct review. 

 . . . 

 Second, selective application of new rules violates 

the principle of treating similarly situated defendants 

the same. . . . As we pointed out in United States v. 

Johnson, [457 U.S. 537, 102 S. Ct. 2579 (1982),] the 

problem with not applying new rules to cases pending on 

direct review is "the actual inequity that results when 

the Court chooses which of many similarly situated defen-
24 

 

dants should be the chance beneficiary" of a new rule. 

457 U.S., at 556, n.16, 102 S. Ct., at 2590, n. 16 (emphasis in original). 

Griffith, 479 U.S. at 322-23, 107 S. Ct. at 713; see Beam, 111 S. 

Ct. at 2444, 2446 (plurality) (Souter, J.) (raising the equality and 

stare decisis rationales); id. at 2450 (Blackmun, J., concurring) 

(stressing the equality rationale derived from the integrity of the 

judicial process and referring to the stare decisis rationale); id.

at 2450-51 (Scalia, J., concurring) (referring to the stare decisis

rationale). 

 These rationales do not apply analogously to administrative agency adjudications, cf. Atlantic Richfield Co. v. United 

States Dep't of Energy, 977 F.2d 611, 614 (Temp. Emer. Ct. App. 

1992) ("Whether Beam has any application to agency adjudications is 

questionable."), cert. denied, 113 S. Ct. 1256 (1993); District 

Lodge 64, Int'l Ass'n of Aerospace Workers v. NLRB, 949 F.2d 441, 

447 (D.C. Cir. 1991) ("Whether Beam should apply to agency adjudications is unclear." (emphasis in original)); United Food & Commercial 

Workers Int'l Union, Local No. 150-A v. NLRB, 1 F.3d 24, 35 (D.C. 

Cir. 1993) (same), cert. granted sub nom. Dubuque Packing Co. v. 

United Food & Commercial Workers, Local No. 150-A, 62 U.S.L.W. 3657 

(U.S. Apr. 4, 1994) (No. 93-1103), primarily because the doctrine of 

stare decisis is far less rigorous in that context, see NLRB v. 

Curtin Matheson Scientific, Inc., 494 U.S. 775, 787, 110 S. Ct. 

1542, 1549 (1990) ("[A] Board rule is entitled to deference even if 

it represents a departure from the Board's prior policy."); NLRB v. 

Local 103, Int'l Ass'n of Iron Workers, 434 U.S. 335, 351, 98 S. Ct. 

651, 660-61 (1978) ("An administrative agency is not disqualified 

from changing its mind; and when it does, the courts still sit in 

review of the administrative decision and should not approach the 

statutory construction issue de novo and without regard to the 

administrative understanding of the statutes."); NLRB v. J. 

Weingarten, Inc., 420 U.S. 251, 265-66, 95 S. Ct. 959, 967-68 (1975) 

("The use by an administrative agency of the evolutional approach is 

particularly fitting. To hold that the Board's earlier decisions 

froze the development of this important aspect of the national labor 

law would misconceive the nature of administrative 

decisionmaking."); NLRB v. Wyman-Gordon Co., 394 U.S. 759, 766, 89 

S. Ct. 1426, 1429 (1969) (plurality) (referring to the "qualified 

role of stare decisis in the administrative process"); NLRB v. 

Seven-Up Co., 344 U.S. 344, 349, 73 S. Ct. 287, 290 (1953) ("The 

constant process of trial and error, on a wider and fuller scale 

than a single adversary litigation permits, differentiates perhaps 

more than anything else the administrative from the judicial 

process."); Iron Workers, Local 3, 843 F.2d at 776 ("As decisional 

law has made clear, it is not the function of the courts to 

interpret § 8(f), nor is any initial interpretation of one act made 

by the Board to be deemed `frozen in concrete.'"); see also

Lechmere, Inc. v. NLRB, 112 S. Ct. 841, 847-48 (1992) ("`Once we

have determined a statute's clear meaning, we adhere to that 
25 

 

determination under the doctrine of stare decisis, and we judge an 

agency's later interpretation of the statute against our prior 

determination of the statute's meaning.'" (quoting Maislim Indus., 

U.S., Inc. v. Primary Steel, Inc., 497 U.S. --, --, 110 S. Ct. 2759, 

2768 (1990) (emphasis added)). 

 A second, fundamental difference between agencies and 

Article III courts is that an agency boasts both judicial and 

legislative powers. When an agency exercises its legislative 

powers, neither the "cases" or "controversies" prerequisite, nor the 

rule of stare decisis, rears its head. And, as Chenery illustrates, 

agencies are free to exercise their legislative powers in adjudications. See SEC v. Chenery Corp., 332 U.S. 194, 202-03, 67 S. Ct. 

1575, 1580 (1947) ("[A]ny rigid requirement [that the agency fill 

interstices in its organic statute through rulemaking] would make 

the administrative process inflexible and incapable of dealing with 

many of the specialized problems which arise. . . . Not every 

principle essential to the effective administration of a statute can 

or should be cast immediately into the mold of a general rule. Some 

principles must await their own development, while others must be 

adjusted to meet particular, unforeseeable situations. In performing its important functions in these respects, therefore, an 

administrative agency must be equipped to act either by general rule 

or by individual order. . . . There is thus a very definite place 

for the case-by-case evolution of statutory standards."); NLRB v. 

Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267, 293, 94 S. 

Ct. 1757, 1771 (1974). Although arguably an agency endowed with 

rule-making powers may not announce purely prospective rules in 

adjudications, the restriction is not of constitutional origin. See

Wyman-Gordon Co., 394 U.S. at 761-64, 89 S. Ct. at 1427-29 

(plurality of four) (stating that the Board cannot circumvent the 

rule-making procedural provisions of the NLRA with purely 

prospective adjudications); id. at 779, 89 S. Ct. at 1436 (Douglas, 

J., dissenting) ("I would hold the agencies governed by the rule 

making procedure strictly to its requirements . . . ."); id. at 781, 

89 S. Ct. at 1437 (Harlan, J., dissenting) ("[T]he Labor Board has 

promulgated a rule in violation of the governing statute . . . ."). 

 Finally, some agencies lack rulemaking powers, and requiring them to always apply each of their new rules retrospectively 

would effectively deny them the flexibility which is the cornerstone 

of administrative action and the sine qua non of administrative 

responsiveness. Especially as to them, a retrospective straightjacket would be counterproductive. 

 Thus, the considerations prompting the Beam and Harper

decisions cannot simply be transposed to the administrative context. 

In recognition of these important distinguishing characteristics, 

courts insulated from the dynamic political pressures agencies face 

should jealously guard their protective power to watch over agencies, so that agencies' retrospective changes to the law do not 

brand conduct that was legal when performed illegal when challenged 

when to do so would cause "manifest injustice." See NLRB v. 

Majestic Weaving Co., 355 F.2d 854, 860 (2d Cir. 1966) (Friendly, 
26 

 Applying what the district court believed to be the proper 

test, it decided not to apply Deklewa retrospectively.0 See Mem. Op. 

 

J.) ("Although courts have not generally balked at allowing 

administrative agencies to apply a rule newly fashioned in an 

adjudicative proceeding to past conduct, a decision branding as 

`unfair' conduct stamped `fair' at the time a party acted, raises 

judicial hackles . . . ."); cf. Landgraf v. USI Film Prods., 62 

U.S.L.W. 4255, 4262 (U.S. Apr. 26, 1994) ("[R]etroactive statutes 

raise particular concerns. The Legislature's . . . responsivity to 

political pressures poses a risk that it may be tempted to use 

retroactive legislation as a means of retribution against unpopular 

groups or individuals."). But agencies should retain their power to 

administer their organic statutes flexibly. Expansion of Beam and 

Harper to the administrative agency context is, in short, far from a 

foregone conclusion, and because we conclude that even under a 

choice-of-law analysis the Dekelwa rule applies retrospectively, we 

need not definitively decide this question. 

 We also do not think that the fact that this Court in Iron 

Workers, Local 3 applied the Deklewa rule retrospectively implies 

that Beam and Harper require this Court to apply it retrospectively 

again to this case. There exists a substantial distinction between 

Beam and Harper on the one hand and Iron Workers, Local 3 on the 

other, in that in Iron Workers, Local 3 this Court deferred to the 

Board's revised construction of its organic statute; it did not 

construe the statute for itself. See Iron Workers, Local 3, 843 

F.2d at 776 (noting that while the Supreme Court had twice applied 

the pre-Deklewa rule, that rule was not stare decisis because the 

Court was merely reviewing the Board's interpretation and not 

announcing its own). Were a court's application of law as 

proclaimed by an agency binding in subsequent cases before that 

court, agencies would effectively labor under the same stringent 

stare decisis doctrine which binds courts, and this has never been 

the case. See supra. To the extent that here the agency was 

exercising its legislative powers, moreover, Iron Workers, Local 3

construed the law as expounded by the agency to be that the new rule 

applies lest manifest injustice would result. We do not doubt that 

legislative rules may within bounds incorporate some forms of 

selective prospectivity. See, e.g., 28 U.S.C.A. § 2074(a) (Supp. 

1993) (granting the Supreme Court the authority to fix the extent to 

which a newly promulgated rule of civil procedure or evidence shall 

apply to pending proceedings, but only "to the extent that, in the 

opinion of the court in which such proceedings are pending, the 

application of such rule . . . would not . . . work injustice"); cf.

Bradley v. School Bd., 416 U.S. 696, 716-21, 94 S. Ct. 2006, 2019-21 

(1974) (determining whether retrospective application of a newly 

enacted procedural statute in that case would breed manifest 

injustice). 

0The question whether in a particular instance the retrospective 

application by a district court of a rule of law announced in an 
27 

at 26-29. That court erred, however, when it departed from 

Chenery's "manifest injustice" analysis appropriate for agency

adjudications and instead applied the three-prong Chevron Oil

analysis once appropriate for judicial adjudications. See Chevron 

Oil v. Huson, 404 U.S. 97, 106-08, 92 S. Ct. 349, 355-56 (1971) 

(setting forth the test for retrospective application of new rules 

of law announced in "judicial decisions"). As we explained in Iron 

Workers, Local 3, while SEC v. Chenery Corp., 332 U.S. 194, 67 S. 

Ct. 1575 (1947) "has been applied exclusively to administrative 

agency adjudications," Chevron Oil "appears to have been applied 

exclusively to judicial adjudications." 843 F.2d at 780 n. 12. 

Thus, to the extent that the Chenery inquiry differs from the 

Chevron Oil test, the district court committed legal error.0

 

agency adjudication will cause manifest injustice is a question of 

law, not one of equity, notwithstanding the fact that some 

"equitable" considerations may play a role in the outcome. See In 

re Graham, 973 F.2d 1089, 1093 (3d Cir. 1992) (holding that we 

exercise plenary review over the district court's retrospective 

application of a Supreme Court decision); cf. Gruber v. Price 

Waterhouse, 911 F.2d 960, 965 (3d Cir. 1990) (deciding de novo

whether a decision by this Court applied retrospectively); Gatto v. 

Meridian Medical Assocs., Inc., 882 F.2d 840, 842-44, (3d Cir. 1989) 

(same), cert. denied, 493 U.S. 1080, 110 S. Ct. 1136 (1990); Hill v. 

Equitable Trust Co., 851 F.2d 691, 696-99 (3d Cir. 1988) (same), 

cert. denied, 488 U.S. 1008, 109 S. Ct. 791 (1989); see also Iron 

Workers, Local 3, 843 F.2d at 780-81 (holding review of the Board's

decision to apply a new rule of law retrospectively is deferential 

and that the Board's ruling will be disturbed only if it wreaks 

manifest injustice); Harper v. Virginia Dep't of Taxation, 113 S. 

Ct. 2510, 2516 n.9 (1993) (not deciding whether Chevron Oil v. 

Huson, 404 U.S. 97, 92 S. Ct. 349 (1971) was a "choice-of-law 

principle" or "a remedial principle for the exercise of equitable 

discretion"). A court of law is not blind to injustice. Hence 

although we pay deference to an agency's ruling on the retrospectivity of a rule it announces in an adjudication unless to do so 

would cause a manifest injustice, we apply plenary review to a 

district court's determination whether retrospective application of 

such a rule would indeed cause manifest injustice. 

0In Iron Workers, Local 3 we mentioned the equivalency of the Chevron 

Oil and Chenery analyses on the facts then before us. See 843 F.2d 
28 

 The numerous other courts to have considered the 

retrospectivity of the Deklewa rule have divided over the issue, 

with the slight majority of the cases not applying it 

 

at 780 n.12 ("[O]n this record an independent analysis under either 

test would reach the same result here."). Given that the factors in 

Chevron Oil and Chenery vary in their emphasis, the same may not 

hold in all cases, and, in particular, it may be that the district 

court was correct when it decided that a Chevron Oil analysis would 

not countenance retrospective application of Deklewa to this case 

(although that is doubtful considering Iron Workers, Local 3). 

 The key discrepancy between the two inquiries is that, 

whereas Chevron Oil focuses on the reasonable expectations of the 

class of persons who will be adversely affected by retrospective 

application of the newly announced rule of law, Chenery concentrates 

on the actual reliance on the prior rule by the particular adversely 

affected party before the court. That means that the Chevron Oil

analysis needs only be done once, in the decision first recognizing 

the new rule; by contrast, the Chenery analysis must be repeated in 

each case where the rule may be retrospectively applied. 

 This difference in application flows from the elemental 

dissimilarity between the two doctrines: Chevron Oil dealt with the 

question of pure prospectivity -- i.e., whether the rule should have 

future effect as to all parties, see Chevron Oil, 404 U.S. at 105-

08, 92 S. Ct. at 355-56 (holding that the new rule of law "should 

not be applied retroactively in the present case"); cf. Beam, 111 S. 

Ct. at 2445 (plurality) (Souter, J.) ("selective prospectivity 

appears never to have been endorsed in the civil context"); id. at 

2449 (White, J., concurring) -- whereas Chenery dealt with the 

question of selective prospectivity -- i.e., roughly, whether a rule 

otherwise applied retrospectively should not apply retrospectively 

to the particular parties before the court, see Chenery, 332 U.S. at 

202-03, 67 S. Ct. at 1580-81; e.g., Ryan Heating Co. v. NLRB, 942 

F.2d 1287, 1288-89 (8th Cir. 1991) (considering the adversely 

affected parties' actual reliance on the discarded rule); Fox 

Painting Co. v. NLRB, 919 F.2d 53, 56 (6th Cir. 1990) (same); Ballbe 

v. INS, 886 F.2d 306, 310 (11th Cir. 1989) (same), cert. denied, 495 

U.S. 929, 110 S. Ct. 2166 (1990); Ewing v. NLRB, 861 F.2d 353, 362 

(2d Cir. 1988) (same); Southwestern Public Serv. Co. v. FERC, 842 

F.2d 1204, 1208-09 (10th Cir. 1988) (same); Oil, Chem. & Atomic 

Workers Int'l Union, Local 1-547 v. NLRB, 842 F.2d 1141, 1145 (9th 

Cir. 1988) (same); NLRB v. Wayne Transp., Div. of Wayne Corp., 776 

F.2d 745, 751 n.8 (7th Cir. 1985) (same); NLRB v. Ensign Elec. Div. 

of Harvey Hubble, Inc., 767 F.2d 1100, 1102 n.2 (4th Cir. 1985) 

(same), cert. denied, 479 U.S. 984, 107 S. Ct. 573 (1986); McDonald 

v. Watt, 653 F.2d 1035, 1042-45 (5th Cir. Unit A Aug. 1981) (same); 

Standard Oil Co. v. Department of Energy, 596 F.2d 1029, 1063-65 

(Temp. Emer. Ct. App. 1978) (same); Retail, Wholesale & Dep't Store 

Union v. NLRB, 466 F.2d 380, 390 (D.C. Cir. 1972) (same). 
29 

retrospectively; the roster is set forth in the margin.0 FWEC tries 

 

0Compare NLRB v. Viola Indus.-Elevator Div., 979 F.2d 1384, 1396-97 

(10th Cir. 1992) (applying Deklewa retrospectively) (using the 

"manifest injustice" standard and noting in passing that the union 

had achieved majority status prior to the employer's repudiation), 

Iron Workers, Local 3, 843 F.2d at 781 (same), NLRB v. Bufco Corp., 

899 F.2d 608, 611-12 (7th Cir. 1990) (using the "manifest injustice" 

standard and relying on the union's attainment of majority status to 

find no manifest injustice), NLRB v. W.L. Miller Co., 871 F.2d 745, 

748-50 (8th Cir. 1989) (same, but due to the Board's incredible 

delay finding manifest injustice with respect to the interest the 

Board assessed), appeal after remand, 988 F.2d 834 (8th Cir. 1993) 

(denying enforcement), R.W. Granger & Sons, Inc. v. Eastern Mass. 

Carpenters, 686 F. Supp. 22, 28-30 (D. Mass. 1988) (using the 

"manifest injustice" standard but finding none as a general matter 

because of the uncertainty prevailing under the old rule) and

National Elevator Indus. Welfare Plan v. Viola Indus., Inc., 684 F. 

Supp. 1560, 1561, 1563 (D. Kan. 1987) (deferring to the Board's 

retrospectivity ruling without analysis although the union had 

failed to achieve majority status) with C.E.K. Indus. Mechanical 

Contractors, Inc. v. NLRB, 921 F.2d 350, 357-59 (1st Cir. 1990) (not 

applying Deklewa retrospectively) (using the "manifest injustice" 

standard and finding manifest injustice because there was no evidence the union had achieved majority status, the dispute was purely 

historical, and application of the rule would disappoint reasonable 

private expectations and "penalize" the employer for having taken 

action lawful when taken), Fox Painting Co. v. NLRB, 919 F.2d 53, 56 

(6th Cir. 1990) (using the "manifest injustice" standard and deferring to the Board's rule that it would not apply Deklewa retrospectively to cases where an appellate court had already affirmed a 

finding of liability before Deklewa was decided), United Bhd. of 

Carpenters & Joiners Local Union 953 v. Mar-Len of La., Inc., 906 

F.2d 200, 203-04 (5th Cir. 1990) (applying the Chevron Oil factors 

and finding that the employer relied on the old rule when entering 

into the prehire agreement and when repudiating it, that the work on 

the site had been completed, and that there was no evidence the 

union had obtained majority status), Sheet Metal Workers Local Union 

No. 54 v. E.F. Etie Sheet Metal Co., 1 F.3d 1464, 1472 n.8 (5th Cir. 

1993) (affirming Mar-Len of La., supra), cert. denied, 114 S. Ct. 

1067 (1994), Mesa Verde Constr. Co. v. Northern Cal. Dist. Council 

of Laborers, 895 F.2d 516, 518-19 & n.1 (9th Cir. 1989) (using the 

"manifest injustice" standard and applying the Chevron Oil analysis, 

finding that the employer had relied on the old rule when it repudiated the prehire agreement, that the dispute was "strictly historical," that there was no way to determine if the union had enjoyed 

majority support, and that retrospective application would "penalize" the employer for taking action possibly legal when taken), 

cert. denied, 498 U.S. 877, 111 S. Ct. 209 (1990), Camping Constr. 

Co. v. District Council of Iron Workers, 915 F.2d 1333, 1337 n.2 

(9th Cir. 1990) (affirming Mesa Verde Constr. Co., supra), cert. 
30 

to distinguish the cases applying Deklewa retrospectively from those 

refusing to do so on the grounds that in all the former cases (i) 

the proceedings were pending in the Board at the time Deklewa was 

decided, and (ii) the employer effectively repudiated the agreement 

before Deklewa was decided. The district court tried to distinguish 

the cases on the basis of whether the union had clearly obtained 

majority status or not prior to the employer's repudiation of the 

prehire agreement. See Mem. Op. at 38. We think, however, that 

these attempts to reconcile the cases along the lines of one or 

another singular criterion must fail. 

 

denied, 111 S. Ct. 1684 and 2260 (1991), Trustees for Mich. Laborers 

Health Care Fund v. M.M. Vander Veen Constr. Co., 736 F. Supp. 138, 

141-42 (W.D. Mich. 1989) (applying the Chevron Oil factors, finding 

actual reliance by the employer on the old law, and without explanation disagreeing with the Board that retrospective application of 

Deklewa would promote the purposes of the NLRA), Trustees of Nat'l 

Automatic Sprinkler Indus. Pension Fund v. American Automatic Fire 

Protection, 680 F. Supp. 731, 734-35 (D. Md. 1988) (finding that the 

controversy was strictly historical, which means that, unlike in 

proceedings before the Board, the parties could not hold an election 

to test the union's majority status, and that applying the new rule 

would penalize the employer for taking action possibly legal when 

taken) and Construction Indus. Welfare Fund of Rockford, Ill. v. 

Jones, 672 F. Supp. 291, 293-94 (N.D. Ill. 1987) (using the "manifest injustice" standard and finding that the controversy was 

strictly historical, that the defendant actually relied on the old 

rule, and that application of the new rule would "effectively punish 

the [employer] for doing an act which was legally sanctioned at the 

time it was committed"). But cf. Sheet Metal Workers, Local Union 

#312 v. Action Enters., 136 L.R.R.M. 2743, 2745 (D. Utah 1987) 

(relying on prior Tenth Circuit precedent adopting the R.J. Smith

rule to reject Deklewa altogether). 

 Those courts applying Deklewa retrospectively in cases 

where the union had obtained majority status, especially where that 

factor was stressed, arguably did not truly apply the Deklewa rule 

retrospectively, as under the old R.J. Smith rule those courts would 

have reached the same result. Under the "conversion" doctrine of 

the R.J. Smith rule, once the union had obtained majority status, 

the pre-hire agreement became a collective bargaining agreement, and 

the employer was no longer free to repudiate the agreement at its 

pleasure. 
31 

 First, not every court applies the same standard of 

review: some courts do not defer to the administrative agency's 

determination of retrospectivity at all, whereas this Court in Iron 

Workers, Local 3 held that it would follow the Board's 

retrospectivity ruling absent a manifest injustice. See NLRB v. 

W.L. Miller Co., 871 F.2d 745, 748 & n.2 (8th Cir. 1989) (noting the 

incongruity), appeal after remand, 988 F.2d 834 (8th Cir. 1993) 

(denying enforcement of the NLRB's order). Compare, e.g., Iron 

Workers, Local 3, 843 F.2d at 781 and C.E.K. Indus. Mechanical 

Contractors, Inc. v. NLRB, 921 F.2d 350, 357 (1st Cir. 1990) with, 

e.g., Sheet Metal Workers Local Union No. 54 v. E.F. Etie Sheet 

Metal Co., 1 F.3d 1464, 1472 n.8 (5th Cir. 1993), cert. denied, 114 

S. Ct. 1067 (1994) and Mesa Verde Constr. Co. v. Northern Cal. Dist. 

Council of Laborers, 895 F.2d 516, 519 n.1 (9th Cir.), cert. denied, 

498 U.S. 877, 111 S. Ct. 209 (1990). Moreover, the fact that some 

recurring circumstances have been identified as rendering 

retrospective application of the Deklewa rule manifestly unjust does 

not dictate a similar result in other cases presenting a dissimilar 

coincidence of circumstances. Finally, it appears that the courts 

are inconsistent and somewhat divided over the meaning and application of the "manifest injustice" doctrine.0

 

0FWEC also argues that the Board only intended retrospective 

application in cases pending before the agency, not those pending in 

federal courts. See Construction Indus. Welfare Fund v. Jones, 672 

F. Supp. 291, 293 (N.D. Ill. 1987). In Deklewa, the Board was 

quoting from Deluxe Metal Furniture Co., 121 N.L.R.B. 995, 1006-07 

(1958) when it determined to apply the new rule overruling R.J. 

Smith "`to all pending cases in whatever stage.'" Deklewa, 282 

N.L.R.B. at 1389. The Board, citing administrative efficiency, had 

decided in Deluxe Metal Furniture that it would apply its new rule 

retrospectively "not only [to] the case in which such revisions are 

first announced and applied, but also [to] any other case which has 

not yet been decided, because it has not reached the Board's level 
32 

 

or is at one of the other stages of the administrative process such 

as the hearing." Id., 121 N.L.R.B. at 1006. The Board's reliance 

on Deluxe Metal Furniture, then, seems to indicate to FWEC that the 

Board meant the Deklewa rule to be applied retrospectively only to 

cases before the agency, not to those brought in the district courts 

under § 301 of the LMRA. Cf. Trustees of Nat'l Automatic Sprinkler 

Indus. Pension Fund v. American Automatic Fire Protection, 680 F. 

Supp. 731, 734-35 (D. Md. 1988) (suggesting that a rule different 

from that applied by the Board in unfair labor practice proceedings 

under § 8(f) might apply in § 301 proceedings); Construction Indus. 

Welfare Fund of Rockford, Ill. v. Jones, 672 F. Supp. 291, 293 (N.D. 

Ill. 1987) (intimating the same). 

 We hesitate to read too much into the Board's circumspect 

retrospective application of its new rule, however, because we think 

perhaps the Board was only being politic when it chose not to direct 

federal courts as to which rule of law to apply. In our view, the 

retrospectivity standard should be the same whether the proceeding 

was initiated in a district court or the agency. The whole concept 

of a uniform national law is thwarted if the parties can select the 

substance of federal law by the simple expedient of forum shopping. 

Cf. Harper v. Virginia Dep't of Taxation, 113 S. Ct. 2510, 2516-17 

(1993) (stressing equality of treatment and stating that the 

"`substantive law [cannot] shift and spring' according to `the 

particular equities of [individual parties'] claims'"); see also

Erie R.R. Co. v. Tompkins, 304 U.S. 64, 74-78, 58 S. Ct. 817, 820-22 

(1938) (stressing equality of the law). The defendants' rule would 

raise the spectre, too, that this Court would eventually be placed 

in the compromising and awkward position of applying two irreconcilable rules of law to the same transaction between the same parties, 

one upon appeal from a district court and the other upon appeal from 

the Board. 

 Furthermore, we do not wish thoughtlessly to set in motion 

a practice of interpreting statutes administered by dedicated 

agencies without affording the agency due deference simply because 

the initial forum was a federal district court rather than the 

agency. Not only would the practice unjustifiably undermine the 

effectiveness with which agencies may cultivate their organic 

statutes by adjudication instead of rulemaking, but the paramount 

rationales undergirding deference --agency expertise and 

congressional intent, see Chevron, U.S.A., Inc. v. Natural Resources 

Defense Council, Inc., 467 U.S. 837, 843-45 104 S. Ct. 2778, 2782-83 

(1984) -- are by no means less pressing when the action is initiated 

in a federal district court instead of a federal agency. When a 

federal agency pronounces a rule of law subject to stage two Chevron

deference, see Chevron, 467 U.S. at 842-44 & n.9, 104 S. Ct. at 

2781-82 & n.9 (Congress may impliedly or expressly delegate 

"authority to the agency to elucidate a specific provision of the 

statute by regulation"), assuming the construction is a permissible 

one, the pronouncement essentially defines what the federal law is, 

not merely what the agency considers it to be for its own purposes. 

See, e.g., Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 565-70, 
33 

 As mentioned above, the decision controlling retrospective 

application of a rule of law an agency promulgates in an adjudication and providing the benchmark for the "manifest injustice" 

inquiry remains Chenery. Chenery stated as the general rule that 

the ill effects of retrospectivity 

must be balanced against the mischief of producing a 

result which is contrary to a statutory design or to legal 

and equitable principles. If that mischief is greater 

than the ill effect of the retroactive application of a 

new standard, it is not the type of retroactivity which is 

condemned by law. 

Chenery, 332 U.S. at 203, 67 S. Ct. at 1581. This Court has not had 

many opportunities to apply Chenery, however, and indeed the only 

case we have found decided by this Court that discusses Chenery in a 

helpful way is E.L. Wiegand Div. v. NLRB, 650 F.2d 463 (3d Cir. 

1981), cert. denied, 455 U.S. 939, 102 S. Ct. 1429 (1982).0 There we 

referenced five factors announced by Retail, Wholesale & Dep't Store 

Union v. NLRB, 466 F.2d 380, 390 (D.C. Cir. 1972) to evaluate 

"whether the inequity of retroactive applications is counterbalanced 

 

100 S. Ct. 790, 796-99 (1980) (deferring to the construction of the 

Federal Truth in Lending Act by the Federal Reserve Board's staff in 

a case originally brought in a district court). 

0The reference to NLRB v. Semco Printing Ctr., Inc., 721 F.2d 886, 

892 (2d Cir. 1983) in Iron Workers, Local 3, see 843 F.2d at 780, 

was dicta and also, we think, not fully considered. Semco Printing

relied on a line of cases considering retrospective legislative 

lawmaking or agency rulemaking of procedural rules, not 

retrospective agency adjudication of substantive rules. See Bradley 

v. School Bd., 416 U.S. 696, 709-10, 94 S. Ct. 2006, 2015 (1974) 

(fee-shifting statute enacted by Congress); Thorpe v. Housing Auth. 

of Durham, 393 U.S. 268, 274-77, 89 S. Ct. 518, 522-23 (1969) 

(circular issued pursuant to agency's rulemaking powers); Landgraf 

v. USI Film Prods., 62 U.S.L.W. 4255, 4264-66 (U.S. Apr. 26, 1994) 

(explaining that Bradley and Thorpe dealt with procedural rules and 

that legislation changing substantive rules has a different 

presumption regarding retrospectivity). We have no occasion to 

consider how retrospectivity differs between agency rulemaking and 

agency adjudication, if at all, but insofar as we have not ruled out 

the possibility that the standards may diverge somewhat, we think it 

prudent to draw on precedent dealing with adjudications. 
34 

by sufficiently significant statutory interests." E.L. Wiegand 

Div., 650 F.2d at 471. Although the factors could be characterized 

as dicta insofar as this Court never applied them in that case, they 

originate from the District of Columbia Circuit's landmark decision 

in Retail, Wholesale and appear to be in accord with other courts' 

interpretation of Chenery, see supra at Error! Bookmark not defined.

n.Error! Bookmark not defined., and thus we will adopt those five 

factors and apply them to this case. 

 The five factors we will consider are "(1) whether the 

particular case is one of first impression, (2) whether the new rule 

represents an abrupt departure from well established practice or 

merely occupies a void in an unsettled area of law, (3) the extent 

to which the party against whom the new holding is applied in fact 

relied on the former rule, (4) the degree of the burden imposed, and 

(5) the statutory interest in application of this new rule." E. L. 

Wiegand Div., 650 F.2d at 471 n.5. We determine that the first and 

fourth factors favor neither party, that the third and fifth factors 

militate in favor of the Union, and that the second factor favors 

the defendants. After going through a balancing operation, we 

conclude that Deklewa applies retrospectively to this case.0

 Three of these factors can quickly be disposed of. First, 

as we are not newly announcing the Deklewa rule in this case, the 

 

0In light of our resolution of the "manifest injustice" inquiry, we 

may disregard LIUNA's contention that FWEC and FWC are equitably 

estopped from complaining that retrospective application of Deklewa

to this case would be manifestly unjust because of their deceptive 

conduct and their calculated failure to utilize MBTC's hiring hall. 

Br. of LIUNA at 25-29. We digress to observe, however, that it is 

far from clear that equitable principles apply to the "manifest 

injustice" choice-of-law inquiry. See supra at Error! Bookmark not 

defined. n.Error! Bookmark not defined.. 
35 

issue is not one of first impression. If it were, we would be 

compelled either to apply the new rule retrospectively or to reject 

it, as the prohibition against advisory opinions, see Retail, 

Wholesale, 466 F.2d at 390; NLRB v. Majestic Weaving Co., 355 F.2d 

854, 860 (2d Cir. 1966), assures that "[e]very case of first 

impression has a retroactive effect," Chenery, 332 U.S. at 203, 67 

S. Ct. at 1581. Subsequent cases, on the other hand, do not always 

demand retrospective application of the "new" rule (we speak now 

only of agency adjudications). See supra at Error! Bookmark not 

defined. n.Error! Bookmark not defined.. Second, as all agree, the 

rule "represents an abrupt departure from well-established precedent." This fact cuts against retrospective operation, since the 

parties' reliance interests will more likely be disappointed. 

Third, the Board found, and this Court in Iron Workers, Local 3

concurred, that there was a great statutory interest in the retrospective application of Deklewa, even in cases (like Deklewa itself) 

where the dispute was purely of historical interest.0 This factor 

accordingly weighs in on the side of retrospectivity. 

 

0We are not unaware of the fact that many courts have stressed that 

applying Deklewa retrospectively to a dispute of purely historical 

interest does not further the interests which the new rule was 

fashioned to advance, namely, labor stability and employee freedom 

of choice, see Iron Workers, Local 3, 843 F.2d at 780-81. See

United Bhd. of Carpenters & Joiners Local Union 953 v. Mar-Len of 

La., Inc., 906 F.2d 200, 203, 204 n.4 (5th Cir. 1990); Mesa Verde 

Constr., 895 F.2d at 519; Trustees for Mich. Laborers Health Care 

Fund v. M.M. Vander Veen Constr. Co., 736 F. Supp. 138, 142 (W.D. 

Mich. 1989); Trustees of Nat'l Automatic Sprinkler Indus. Pension 

Fund v. American Automatic Fire Protection, 680 F. Supp. 731, 735 

(D. Md. 1988). But we have already held in a case which was only of 

historical interest that Deklewa applies restrospectively without 

being moved by that fact, see Iron Workers, Local 3, 843 F.2d at 

772, 780-81; Deklewa, 282 N.L.R.B. at 1376, 1385 n.40, 1386, 1389, 

and under our Internal Operating Procedure 9.1 we are not competent 

to retreat from that position even if we were inclined to do so. 
36 

 As to the question of the substantiality of the burden, 

the record is unclear. The parties stipulated that if FWEC's breach 

of the Agreement dated only from April to June 1985, LIUNA's damages 

would come in under $20,000, almost a trifling sum in this context 

even when compared just to the costs and fees presumably expended in 

this 8-year litigation. If the period of the breach is extended to 

July 1986, the damages may not be disproportionately larger, 

although under some remedial theories advanced by LIUNA at oral 

argument, ones obviously different from those upon which the $20,000 

calculation was premised, the damages might grow substantially.0 

Counterbalancing this fact is the defendants' great size and 

considerable wealth, as financial fortitude blunts the blow of 

damages. In sum, this inconclusive factor might favor either side. 

 Finally, as to the weighty factor of actual reliance by 

the adversely affected party, the record convincingly establishes 

that there was no actual reliance by the defendants on the 

superseded rule. While true that an abrupt about-face in the law 

(the second factor) "strongly advises" the conclusion of an 

"inequitable result" under the inapposite Chevron analysis, Gruber 

v. Price Waterhouse, 911 F.2d 960, 968 (3d Cir. 1990), this Chenery

actual reliance factor spotlights the subjective question whether 

the party opposing retrospective application did, in fact, rely upon 

the retracted rule, rather than the objective question whether that 

 

0LIUNA orally argued that it might be entitled to recover the full 

amount of salary lost by (presumably identified) workers who desired 

employment at the MOEPSI project, regardless of mitigation of 

damages. The defendants rejoin that this position is preposterous. 

Neither party cites any authority on the point, but that is of 

little concern to us, as the fashioning of remedies for breach of a 

prehire agreement is, as we explain below at 56, suited especially 

for the experience and expertise of a labor arbitrator. 
37 

party reasonably and justifiably could have relied upon it, see

supra at Error! Bookmark not defined. n.Error! Bookmark not 

defined.; see also infra at Error! Bookmark not defined. n.Error! 

Bookmark not defined.. 

 The district court found that "the defendants tried to 

deceive the union about the applicability of the [Agreement] to the 

MOEPSI project for a long time," Mem. Op. at 37, which strongly 

suggests that the defendants themselves felt bound by the Agreement 

at that site.0 In essence, they perpetrated the deception by 

pretending that the nominal contractor FWIC was the prime contractor 

on the project.0 Furthermore, the district court found that "the 

defendants initially believed they could not repudiate the agreement 

 

0The court determined in this regard: 

[A]s part of their effort to support their claims that the 

National Agreement did not apply to EPC or the MOEPSI 

project, I find the defendants worked to conceal the ample 

evidence of FWEC's extensive involvement in the bidding 

process and in MOEPSI's project management. For instance, 

during the bidding process, FWEC officials and employees 

used FWIC's letterhead to communicate with [MOEPSI]. 

Similarly, although FWEC employees actually prepared the 

bid and Mr. Sarappo suggested conducting the project 

management from FWEC's headquarters at the Houston 

Engineering Center, FWIC and later EPC were technically 

designated as MOEPSI's project managers. These actions 

and the others detailed in the findings of fact convince 

this court that the defendants not only failed to 

repudiate the National Agreement prior to June 3, 1985 but 

that they actively deceived LIUNA regarding its 

applicability. 

Mem. Op. at 44. 

0FWEC attempts to deride the district court's finding of deception by 

focusing on the fact that EPC was openly and notoriously non-union. 

See Br. of FWEC at 29-31. But the trial court's finding was 

predicated on FWEC's surreptitious use of FWIC as a surrogate 

contractor and its subsequent misidentification of EPC as the prime 

contractor rather than as the subcontractor, not on any action taken 

by EPC to conceal the fact that it ran an open shop. 
38 

for a single project and that they did not want to repudiate the 

agreement as a whole," seemingly because they wished to reap the 

rewards of the Agreement in other regions of the country where union 

influence was stronger. Mem. Op. at 32. 

 The defendants' initial belief was justified until they 

learned about Painters Local Union No. 64 of Brotherhood of Painters 

v. Epley, 764 F.2d 1509 (11th Cir. 1985), cert. denied, 475 U.S. 

1120, 106 S. Ct. 1636 (1986), in which the Eleventh Circuit held 

that an employer could repudiate an area-wide prehire agreement with 

respect to a particular job site without affecting the agreement at 

other job sites. Undoubtedly the defendants' early belief that they 

could not selectively repudiate the Agreement with regard to a 

particular site accounts for the deception noted above. But Epley

was handed down on July 12, 1985 (the district court found that FWEC 

explicitly repudiated the Agreement as to the MOEPSI site alone on 

August 9, 1985), months after the defendants had fully committed 

themselves, both internally and contractually, to use non-union 

labor, and saddled themselves with that obligation by opening their 

own hiring hall (in January 1985) and hiring their workers from 

there (commencing on April 2, 1985) instead of from MBTC's hiring 

hall. See supra at 10. 

 Given this state of affairs, we do not see how, measured 

from the moment the defendants reached their decision to "repudiate" 

the Agreement (which we think happened at the time FWEC decided to 

use FWIC as the nominal contractor, sometime before February 1984, 

see supra at Error! Bookmark not defined. n.Error! Bookmark not 

defined.), they possibly could have relied on their as of yet 
39 

unestablished right to repudiate the Agreement selectively with 

respect to a single job site.0 Rather, it is abundantly clear from 

the measures they undertook to conceal FWEC's involvement in the 

project that they in fact believed they had no such right. In 

short, we are persuaded that had Deklewa been decided and entrenched 

long before the defendants ever heard of the MOEPSI project, neither 

FWEC nor FWC would have behaved any differently. At all events, in 

February 1984 -- the date, as noted above, when the defendants chose 

to bypass the Agreement at the MOEPSI site -- the defendants could 

not have been very confident that LIUNA would not enjoy majority 

support at the MOEPSI site. See supra at Error! Bookmark not 

defined. n.Error! Bookmark not defined. (discussing the implications 

of a union obtaining majority status). 

 We turn now to the balancing exercise. We bear in mind 

the backdrop that "when the Board changes a rule and makes it 

retroactive, particularly when the Board assigns as its reasons for 

doing so the furtherance of the fundamental statutory policies of 

employee free choice and labor relations stability, the Board should 

be entitled to exercise its broadest power." Iron Workers, Local 3, 

843 F.2d at 780. We are also reminded of the truism that in the 

context of adjudication, retrospectivity is, and has since the birth 

of this nation been, the norm. See, e.g., Harper v. Virginia Dep't 

of Taxation, 113 S. Ct. 2510, 2516 (1993); cf. Hill v. Equitable 

 

0Even in its brief before this Court, neither FWEC nor FWC cites a 

case predating Epley which approved of a single-site repudiation, 

and our own research has shown Epley to be a ground-breaking case. 

See, e.g., New Mex. Dist. Council of Carpenters & Joiners v. Jordan 

& Nobles Constr. Co., 802 F.2d 1253, 1255-56 (10th Cir. 1986); 

Trustess for Mich. Laborers Health Care Fund v. M.M. Vander Veen 

Constr. Co., 736 F. Supp. 138, 143-44 (W.D. Mich. 1989). 
40 

Trust Co., 851 F.2d 691, 695-96 (3d Cir. 1988) (discussing the 

competing views on retrospectivity), cert. denied, 488 U.S. 1008, 

109 S. Ct. 791 (1989). 

 Although retrospectivity is not mandated, as this case is 

not one of first impression, the sole factor opposing retrospectivity is the fact that the rule signalled an abrupt departure from 

prior precedent. But this factor itself was considered in Deklewa

and, on appeal, in Iron Workers, Local 3, and neither tribunal found 

it defeated retrospective application of the Deklewa rule then.0

 

0The Board in Deklewa abstractly addressed the reliance interest in 

the old rule as follows: 

Some employers probably have relied on R.J. Smith as a 

means of repudiating a prehire agreement. However, that 

reliance interest is not a particularly strong one in 

light of the purposes that Congress sought to achieve 

under Sec. 8(f). The interest that is entitled to protection is the ability of an employer to avail itself of the 

Board processes to determine whether there is continued 

majority support to undergird the union and the agreement. 

The new rule, which affirms the Board's election procedures for resolving that issue, does not seriously detract 

from what an employer should appropriately expect in the 

way of protection under the old rule. 

282 N.L.R.B. at 1389 n.61. The Board is correct that generally an 

employer could not reasonably rely on a right of repudiation that 

was contingent on the union not acquiring majority status, but there 

may be an exception if the employer was realistically confident that 

the union would not obtain majority status. For this reason we have 

focused on the particular evidence of lack of reliance in this case. 

 It may well be true that the repudiator's reliance 

interest is less compelling when the case is still pending before 

the Board, since then the Board could perhaps conduct an election 

"to test the union's majority status." Trustees of Nat'l Automatic 

Sprinkler Indus. Pension Fund v. American Automatic Fire Protection, 

680 F. Supp. 731, 735 (D. Md. 1988). But the Board has applied 

Deklewa retrospectively, found the employer guilty of an unfair 

labor practice, and ordered appropriate remedies without first 

holding an election. See, e.g., MIS, Inc., 289 N.L.R.B. No. 62 

(1988) (ordering an employer to make its employees whole but not 

scheduling an election). Moreover, contrasting the sluggish rate at 

which the Board's bureaucratic wheels sometimes rotate with the 
41 

Indeed, defendants have not in fact relied to their detriment upon 

the discarded rule, a factor of primary importance. Moreover, we 

held in Iron Workers, Local 3 that the statutory interest in 

application of the new rule is substantial. Finally, the burden the 

defendants might bear does not look to be disproportionately large 

given their means. In view of the foregoing, we conclude that the 

factors strongly weigh in favor of retrospective application of the 

Deklewa rule to this case.0

 

rapid turnaround prevalent in the construction industry convinces us 

that even in cases pending before the Board an election will quite 

often be impracticable. For example, in this case the Board had to 

dismiss a petition for election when the sizable MOEPSI project 

terminated before the election could be held. In any event, we 

agreed with the Board in Iron Workers, Local 3, see 843 F.2d at 781, 

so the issue is water over the dam. 

0Because of this disposition we are not called upon to reach the 

question whether the defendants were precluded from repudiating the 

Agreement at their pleasure for purposes of an action under § 301 

notwithstanding the fact that under the R.J. Smith rule it would not 

have been an unfair labor practice for them to do so. That is to 

say, merely because repudiation would not have been an unfair labor 

practice under R.J. Smith would by no means have been conclusive as 

to whether or not the repudiator would have breached the pre-hire 

agreement and the other party would be entitled to damages. The 

parties have approached and argued this case as if the issue of 

whether the Board would consider repudiation an unfair labor 

practice were dispositive of whether there was a breach of the § 

8(f) prehire agreement, and consequently whether the other party 

could recoup damages for said breach. Such assumption was unwise. 

See, e.g., Jim McNeff, Inc. v. Todd, 461 U.S. 260, 267, 103 S. Ct. 

1753, 1757 (1980) (differentiating between duties under the NLRA and 

"contractual obligations that accrued" under a prehire agreement). 

 Although some language in Jim McNeff may have led the 

parties to believe that to be the proper strategy, the Supreme Court 

there expressly declined to address whether valid § 8(f) 

repudiations under the NLRA are also valid for § 301 purposes. See

461 U.S. at 271 n.13, 103 S. Ct. at 1759 n.13. Because of our 

resolution of the Deklewa issue, we easily conclude, however, that 

FWEC was not at liberty to repudiate the Agreement. We do not 

decide, as we need not, whether our decision as to the continued 

vitality of the Agreement for purposes of § 301 would have been 

different had we concluded that the defendants validly repudiated 

the Agreement for purposes of an unfair labor practice charge before 

the Board. 
42 

 The consequence of our conclusion that Deklewa applies 

retrospectively is that the Agreement at the MOEPSI site was never 

repudiated by the defendants until they rightfully terminated it 

effective July 15, 1986. Under Deklewa, an employer cannot repudiate a prehire agreement unless the Board first conducts an election 

decertifying the union. See 282 N.L.R.B. at 1385. The facts 

indicate that no effective election was ever held (the NLRB did 

conduct an election, but on appeal from the election petition the 

ballots were impounded and by the time the Board remanded the matter 

the election had been mooted). See supra at Error! Bookmark not 

defined. n.Error! Bookmark not defined.. Thus, the parties 

continued to be bound by the Agreement at the MOEPSI site until July 

15, 1986, when FWEC within the window provided therefor properly 

terminated the Agreement in its entirety.0

III. THE EFFECT OF THIS COURT'S MANDATE ON THE

 ARIBTRATOR'S FACTUAL FINDNGS

 The arbitrator made several findings of fact in his 

arbitration decision, a decision which preceded the parties' second 

appeal to this Court. The two important facts found by the 

arbitrator were that (i) FWEC and EPC were a "single employer," and 

(ii) FWEC was the prime contractor at the MOEPSI site, contrary 

representations in the paper trail notwithstanding. The district 

 

0The parties expend much effort debating the precise date of each 

defendant's supposed repudiation of the Agreement. See, e.g., Br. 

of FWC at 38-48; Br. of FWEC at 35-42; Reply Br. of LIUNA at 33-39; 

Reply Br. of FWC at 21-23; Reply Br. of FWEC at 10-16. Since we 

conclude that Deklewa operates retrospectively to this case, the 

issue of what constitutes a repudiation is mooted. 

 This disposition also allows us to avoid the question 

whether as a matter of choice of law we would need to apply the law 

of the Eleventh Circuit as defined by Epley, 764 F.2d at 1513-14 to 

the issue of repudiation. 
43 

court adopted those findings as its own, but then the parties 

appealed to this court, disputing the legality of the district 

court's arbitration order. On appeal we vacated some, but not all, 

of the district court's orders subsequent to the arbitration order. 

See supra at 48; infra at 48. Upon remand, the district court 

concluded that we had vacated all of its post-arbitration orders, 

including the one adopting some of the arbitrator's facts as its 

own. 

 The parties now dispute whether those findings survived 

our vacatur of portions of the district court's orders linked to the 

arbitration. The employers argue that our prior decision vacated 

the district court's entire order, including those factual findings; 

the union, conversely, maintains that those factual determinations 

survived and are now the law of the case. Because the answer lies 

in this Court's prior opinion in this case, we are called upon to 

interpret it. 

 On December 9, 1985, the district court ordered the defendants to "participate in an arbitration of the Plaintiff's grievance 

concerning the applicability of Section 1 of the parties' National 

Agreement [(Scope)] to the construction project." Order at 1-2. 

The court in its accompanying decision explained this order: 

 I warn the parties not to attempt to confuse the 

narrow question I have found arbitrable with other issues 

such as majority representation, bargaining units and 

repudiation. Before anything else is to be determined in 

this suit, the threshold issue of whether the Section 8(f) 

agreement applies must be determined. 

Mem. Op. at 19 (Dec. 9, 1985). After a hotly contested arbitration 

--the arbitrator conducted three days of hearings, reviewed 192 

exhibits, and considered 299 pages of briefs -- Arbitrator Kagel 
44 

concluded, inter alia, that (1) FWEC and FWC were alter egos; (2) 

EPC was a joint or single employer with FWEC; (3) EPC had been 

listed as the prime contractor on the MOEPSI site only to dupe LIUNA 

and that FWEC was the actual prime contractor; and (4) the Agreement 

obligated FWC and FWEC to apply its terms to the MOEPSI project. 

Mem. Op. at 2; see Op. & Dec. at 33-35 (Kagel, Arb.) (Nov. 10, 

1986). 

 One year later, the district court partially granted 

plaintiff's motion to confirm the arbitrator's award. Order at 1 

(Nov. 17, 1987). In its opinion, the court explained that the 

arbitrator's conclusion that FWC and FWEC breached the Agreement 

(derived from finding (4), supra), went beyond the scope of its 

reference and hence it would not defer to that finding, but it let 

stand his other conclusions. Mem. Op. at 7-10 ("Aside from his 

final conclusion regarding breach, the arbitrator's decision falls 

within the four corners of my intended submission."). 

 LIUNA now claims that FWEC in its earlier appeal to this 

Court argued only that Deklewa should not be applied retrospectively0

and that it had repudiated the Agreement on or before June 6, 1985, 

but did not attack finding (2) (to the effect that EPC and FWEC were 

a joint employer) or finding (3) (to the effect that FWEC was 

actually the prime contractor on the MOEPSI site), and submits that 

therefore both the findings became res judicata.

0 Assuming arguendo

 

0On the parties' prior successful appeal we did not resolve that 

question, remanding the issue instead for the district court to 

reconsider in light of Iron Workers, Local 3. See Laborer's Int'l 

Union, 868 F.2d at 577. 

0Assuming the validity of its premise that the defendants did not 

attack the entire judgment on their previous appeal, LIUNA appears 

to be correct on the res judicata point: 
45 

that the defendants appealed from the district court's entire 

judgment rather than simply from some subset of issues, the decision 

would have established the law of the case solely with respect to 

those issues the decision reached explicitly or by necessary 

inference. 

 The parties did not include the initial notice of appeal 

in the record, and neither FWEC nor FWC asserts that it noticed its 

appeal from the entire judgment in its 1988 cross-appeal. Nonethe-

 

 If an appeal is taken from only part of the judgment, the remaining part is res judicata, and the vacation 

of the portion appealed from and remand of the case for 

further proceedings does not revive the trial court jurisdiction of the unappealed portion of the judgment. 

1B JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE ¶ 0.404[4.-3], at II-17 

(2d ed. 1993); see Habecker v. Clark Equip. Co., 942 F.2d 210, 218 

(3d Cir. 1991) (stating that a district court may enter any order or 

reach any decision so long as it was neither disposed of by an 

earlier district court order and not pursued on appeal, nor disposed 

of by the appellate court's mandate in the earlier appeal); Seese v. 

Volkswagenwerk, A.G., 679 F.2d 336, 337 (3d Cir. 1982) (per curiam) 

("The district court is without jurisdiction to alter the mandate of 

this court on the basis of matters included or includable in defendants' prior appeal." (emphasis added)); Aubrey v. Director, Office 

of Worker's Compensation Programs, 916 F.2d 451, 456 (8th Cir. 1990) 

("failure to cross-appeal prohibits an appellee from attempting to 

enlarge her rights or to lessen her adversary's rights" upon remand 

(citing cases)); Payne v. Travenol Lab., Inc., 673 F.2d 798, 816 & 

n.24 (5th Cir.), cert. denied, 459 U.S. 1038, 103 S. Ct. 451 (1982). 

But if the appeal stems from the entire judgment and the judgment is 

reversed or vacated and the case remanded generally for further 

proceedings, the district court, barring some narrow exceptions 

finding no application here, must apply the mandate as established 

explicitly or by necessary inference by the appellate court (though 

it is free to reconsider other issues). See, e.g., United States v. 

Kikumura, 947 F.2d 72, 76 (3d Cir. 1991); Day v. Moscow, 955 F.2d 

807, 812 (2d Cir.), cert. denied, 113 S. Ct. 71 (1992); 1B MOORE ET.

AL., MOORE'S FEDERAL PRACTICE ¶ 0.404[4.-3], at II-17; id. ¶ 0.404[10]; 

18 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & EDWARD H. COOPER, FEDERAL PRACTICE 

AND PROCEDURE § 4478, at 792-94 (1981); cf. In re Resyn Corp. (Resyn 

Corp. v. United States), 945 F.2d 1279, 1281-82 (3d Cir. 1991) 

(holding that issues raised but not reached on a prior appeal are 

not within the law of the case doctrine); Elias v. Ford Motor Co., 

734 F.2d 463, 465 (1st Cir. 1984) (affirmance). 
46 

less, because it is not outcome-determinative, we will give the 

defendants the benefit of the doubt and assume that they noticed 

their appeal from the entire judgment. The defendants' case falters 

because (1) in their briefs on the earlier appeal they did not 

actually attack the district court's adoption of the arbitrator's 

factual findings; (2) this Court did not expressly or by necessary 

implication reverse the district court's earlier validation of the 

arbitrator's two factual findings; and (3) this Court did not vacate 

that portion of the district court's order adopting the factual 

findings. Consequently, the two findings became res judicata after 

the remand -- hence, absent certain extraordinary circumstances, 

they were beyond the authority of the district court to revisit. 

 In the Statement of Issues in its 1988 appellate brief, 

FWEC posed the question "[w]hether the District Court erred in 

compelling Arbitration on any issue and in later failing to set 

aside the arbitrator's decision in its entirety." 1988 Br. of FWEC 

at 2 (emphasis added). But beyond that brief reference it never 

mentioned or developed that issue in its argument section. In fact, 

after asserting in a conclusory fashion that it could establish that 

the district court should have vacated the arbitrator's decision, 

FWEC stated that it "will not, however, address these issues herein 

because, although it would result in a reduction or total vacation 

of damages, it would require remand and trial and/or another 

arbitration which would serve only to prolong a small dispute which 

has been out of control for much too long." Id. at 5 (Statement of 

the Case). 
47 

 To complicate matters, though, FWEC followed its 

disclaimer with the declaration that it would "adopt[] those arguments of . . . FWC which establish why the arbitrator exceeded his 

jurisdiction, why the District Court's refusal to overturn the 

Arbitrator's decision should be vacated and why the court's order 

compelling arbitration should be overturned." Id. at 5-6; see FED.

R. APP. P. 28(i) ("In cases involving more than one appellant or 

appellee, . . . any appellant or appellee may adopt by reference any 

part of the brief of another."). However, a perusal of FWC's 1988 

brief finds no argument that helps FWEC.0

 LIUNA concedes that FWEC addressed the arbitration issue 

in its 1988 reply brief (which was not placed in the record), see

Reply & Opp'n Br. of LIUNA at 31, but argues that by then it was too 

late to do so. We agree. An issue is waived unless a party raises 

it in its opening brief, and for those purposes "a passing reference 

to an issue . . . will not suffice to bring that issue before this 

court." Simmons v. City of Philadelphia, 947 F.2d 1042, 1066 (3d 

Cir. 1991) (plurality opinion) (Becker, J.), cert. denied, 112 S. 

Ct. 1671 (1992); International Raw Materials v. Stauffer Chem. Co. , 

 

0FWC raised four issues on appeal. First, it argued that the 

district court improperly compelled it (FWC) to submit to arbitration since it was not a signatory to the Agreement; FWEC being a 

signatory, the argument did not pertain to it. 1988 Br. of FWC at 

14-24. Second, it argued that if it were bound by the Agreement, 

then FWEC's and EPC's repudiations were effective as to it too. Id.

at 25-31. Third, FWC did argue that the arbitrator's award should 

be set aside, but it did not challenge the arbitrator's factual 

filings, restricting itself to arguing that the arbitrator erred in 

considering "external law" when he construed the Agreement. Id. at 

31-34. Although FWC prayed for relief that the entire arbitration 

award be vacated, it advanced no arguments addressing why the 

factual findings in particular should have been vacated. Fourth, 

FWC argued Deklewa should not be retrospectively applied to this 

case. Id. at 34-40. 
48 

978 F.2d 1318, 1327 n.11 (3d Cir. 1992), cert. denied, 113 S. Ct. 

1588 (1993). Accordingly, unless the 1989 decision reversed that 

portion of the district court's order affirming the arbitrator's 

findings of fact or vacated the corresponding portion of its order, 

FWEC's failure to contest those points on appeal renders them res 

judicata. See supra at Error! Bookmark not defined. n.Error! 

Bookmark not defined.

 Nowhere did the 1989 decision reverse the district court's 

order adopting the facts, although it did vacate the district 

court's orders "predicated on the assumption that FWEC was FWC's 

alter ego." Laborer's Int'l Union, 868 F.2d at 577. We conclude 

that the 1989 decision did not vacate the district court's 

ratification of the arbitrator's two findings of fact (which had to 

do with FWEC and EPC's relationship) because that portion of the 

district court's order was the only portion of the order which both 

was not predicated on the alter ego finding and remained contested.0 

 

0The district court issued three "subsequent orders." First, the 

district court denied defendants' motion to vacate the arbitration 

decision and granted plaintiff's motion to affirm it except insofar 

as the arbitrator found that the defendants breached the Agreement. 

As should be clear, while some of the arbitration decision was 

predicated on the assumption that FWEC was FWC's alter ego, see 868 

F.2d at 577, the two factual findings at issue which the court had 

embraced were not, as they dealt exclusively with the relationship 

obtaining between FWEC and EPC. Second, the court denied 

defendants' motion for summary judgment and partially granted 

plaintiff's motion for summary judgment. This order was obviously 

predicated on the defendants' alter ego status, hence it was 

vacated. Third, the court ordered the parties to stipulate to 

damages within 60 days or the court would hold a further hearing to 

"determine the appropriate forum and procedure by which said issue 

may be resolved." Order at 1-2. Because the parties stipulated to 

damages prior to taking the 1989 appeal, this order had already been 

rendered moot. Thus, by necessary implication, the district court's 

confirmation of the arbitrator's two factual findings must have been 

the portion of the district court's "subsequent orders" which this 

Court did not vacate. 
49 

We hesitate to construe a carefully crafted vacatur as having 

vacated the entire matter under review. This interpretation is 

reinforced by the absence of any reason this Court would have had 

for vacating those particular factual findings and requiring a 

duplication of effort: FWEC was properly compelled to arbitrate 

those factual issues, and an arbitrator eventually would have needed 

to resolve them anyway to settle FWEC's liability. 

 Nevertheless, the district court interpreted this Court's 

1988 mandate to vacate all of the arbitrator's factual findings. 

Mem. Op. at 5 n.3. Therefore, the court decided to "review this 

matter afresh." Id. Unfortunately, that alternative route ignores 

the fact that the parties had contractually agreed to have exactly 

these questions answered by an arbitrator. The moment FWC conceded 

that it was FWEC's alter ego, the central question whether it could 

be compelled to arbitrate the dispute was affirmatively answered, 

and the district court should thereupon have dispatched the parties 

to arbitration as soon as it determined the effective 

repudiation/termination date of the Agreement. See infra at Error! 

Bookmark not defined. n.Error! Bookmark not defined.. 

 In any event, we believe that the district court misconstrued this Court's mandate. Even if this Court meant to vacate the 

order compelling FWEC (as opposed to FWC) to submit to arbitration, 

an issue which was not presented to this Court,0 as stated above, we 

 

0This Court vacated the arbitration order because the district court, 

not the arbitrator, was to decide whether FWC was bound by the 

Agreement, since if it were not bound, it could not be commanded to 

submit to arbitration. See 868 F.2d at 576-77. The reason is 

straightforward: a party cannot be compelled to arbitrate the 

arbitrability issue. See, e.g., Litton Fin. Printing Div. v. NLRB, 

501 U.S. 190, 111 S. Ct. 2215, 2226 (1991). As a signatory to the 

Agreement, FWEC was unquestionably obligated to arbitrate the 
50 

did not vacate the district court's subsequent confirmation of the 

arbitrator's factual findings. Accordingly, the arbitrator's 

findings once adopted by the district court, namely, that FWEC and 

EPC were a single employer and that FWEC was really the prime

contractor at the MOEPSI site, are res judicata, and the district 

court should not have revisited them. 

IV. THE ARBITRABILITY OF THE ISSUES OF BREACH AND DAMAGES

A. Introduction

 Where no factual determinations are involved, this Court 

reviews the district court's decision to send the issues of damages 

and breach to arbitration as a matter of law. See Sheet Metal 

Workers Int'l Ass'n, Local 19 v. 2300 Group, Inc., 949 F.2d 1274, 

1278-79 (3d Cir. 1991) ("We have plenary review on whether the terms 

of the collective bargaining agreements are ambiguous. Moreover, we 

review de novo the district court's construction of the collective 

bargaining agreements, which is a question of law." (citation 

omitted)); cf. Lukens Steel Co. v. United Steelworkers, 989 F.2d 

668, 672 (3d Cir. 1993) (where a collective bargaining agreement is 

ambiguous and the parties' intent is controlling, the scope of 

review is for clear error). See generally Ram Constr. Co. v. 

American States Ins. Co., 749 F.2d 1049, 1052-53 (3d Cir. 1984) 

(comparing when plenary and clear error review is appropriate). Our 

primary guide is the strong federal labor policy favoring arbitration, a policy in large part premised on the arbitrator's superior 

 

dispute. FWC, on the other hand, was not a signatory thereto, and 

hence the court could direct it to arbitration only if the court 

first determined that somehow FWC had become bound by the Agreement. 
51 

expertise in the mechanics of collective bargaining and collective 

bargaining agreements, greater understanding of the law of the shop, 

and greater efficiency in resolving labor disputes. See Luden's 

Inc. v. Bakery, Confectionery & Tobacco Worker's Int'l Union Local 

6, -- F.3d --, -- (3d Cir. 1994). 

 The parties inserted an extremely capacious arbitration 

clause into the Agreement: it provided that "all grievances and 

disputes [over the application or interpretation of this Agreement], 

excluding jurisdictional disputes, shall be handled as hereinafter 

provided."0 Agreement art. XV. Given the jurisprudence in this 

area, see, e.g., A T & T Technologies, Inc. v. Communications 

Workers, 475 U.S. 643, 650, 106 S. Ct. 1415, 1419 (1986) ("`[An] 

order to arbitrate the particular grievance should not be denied 

unless it may be said with positive assurance that the arbitration 

clause is not susceptible of an interpretation that covers the 

asserted dispute. Doubts should be resolved in favor of coverage.'" 

(quoting United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 

574, 582-83, 80 S. Ct. 1347, 1352-53 (1960))), neither defendant 

could plausibly argue that such an inclusive arbitration clause can 

be read to exclude a dispute over whether the agreement applies to a 

certain work site or not, and neither does. 

B. The Enforceability of Arbitration Clauses in Prehire Agreements

 

0A jurisdictional dispute in this context signifies not a dispute 

over the application of the Agreement to a specific construction 

site, but rather a dispute over the proper labor organization to be 

assigned a given job. See id. art. XIV. See generally II CHARLES J.

MORRIS, THE DEVELOPING LABOR LAW, at 1366-98 (3d ed. Patrick Hardin ed. 

1992). 
52 

 Defendants do argue that prehire agreements are not 

subject to arbitration and attempt to anchor this innovative 

argument in Jim McNeff, Inc. v. Todd, 461 U.S. 260, 103 S. Ct. 1753 

(1983). In Jim McNeff a union brought suit under § 301 of the LMRA, 

29 U.S.C.A. § 185 (1978), complaining that the employer had breached 

a prehire agreement by failing to make contributions to the union's 

fringe benefit trust fund. The Court made no mention of an 

arbitration clause, but alluded to the "critical distinction between 

an employer's obligation under the [NLRA] to bargain with the 

representative of the majority of its employees and its duty to 

satisfy lawful contractual obligations that accrued after it enters 

a prehire contract." Jim McNeff, 461 U.S. at 267, 103 S. Ct. at 

1757. Thus, the Court held that while an employer must not bargain

with the union before the union obtains majority status, the 

conditions of § 9(a) of the NLRA not having been fulfilled, when a 

union and employer enter into a prehire agreement, "both parties 

must abide by its terms until it is repudiated." Id. at 271, 103 S. 

Ct. at 1759. We note that Jim McNeff predated Deklewa, and thus at 

the time either party could have unilaterally repudiated a prehire 

agreement without contravening the NLRA (that is, the R.J. Smith

rule was then in effect). Ibid.

 The defendants maintain that McNeff implies quite the 

opposite of what it says. They urge that a signatory to a prehire 

agreement containing an arbitration clause cannot be compelled to 

arbitrate until the § 8(f) prehire agreement has been transmogrified 

into a § 9(a) collective bargaining agreement. Br. of FWEC at 48-

49. Without giving any reason for so doing, the defendants attempt 
53 

to confine Jim McNeff to its narrow holding that "the monetary 

obligations assumed by an employer under a prehire contract may be 

recovered in a § 301 action brought by a union prior to the 

repudiation of the contract, even though the union has not attained 

majority support in the relevant unit." Id. at 271-72, 103 S. Ct. 

at 1759. Based on this niggardly understanding of Jim McNeff, they 

contend that LIUNA is limited to recovering damages in the district 

court. But clearly their reading of Jim McNeff misses its essential 

point that the terms of an operative prehire agreement are 

enforceable despite the union's lack of majority status. The Court 

analyzed the statutory text and purposes of § 8(f) to arrive at this 

preeminently logical conclusion. 

 FWEC additionally attempts to distinguish Jim McNeff on 

the ground that here FWEC repudiated the Agreement before LIUNA 

sought arbitration, whereas in Jim McNeff the prehire agreement 

remained in effect throughout the litigation. Reply Br. of FWEC at 

18. But even if that distinction could hold water, which it cannot, 

see Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 111 S. Ct. 

2215, 2225 (1991) (holding that a postexpiration grievance is 

subject to arbitration if the grievance "involves facts and 

occurrences that arose before expiration"); Nolde Bros., Inc. v. 

Bakery & Confectionary Workers Union, 430 U.S. 243, 255, 97 S. Ct. 

1067, 1074 (1977) ("the parties' failure to exclude from arbitrability contract disputes arising after termination . . . affords a 

basis for concluding that they intended to arbitrate all grievances 

arising out of the contractual relationship"), the retrospectivity 

analysis we engaged in eliminates that distinction: since Deklewa
54 

applies retrospectively, the parties continued to be bound by the 

Agreement at the MOEPSI site until FWEC terminated it effective July 

15, 1986, a long time ago but still almost a full year after LIUNA 

instituted this action to compel arbitration. 

C. Relevancy of the Merits of the Dispute

 The defendants also argue that arbitration is improper in 

this case in particular because no damages can flow from a finding 

they breached the Agreement, as LIUNA operated an illegal hiring 

hall. They are correct that discriminatory hiring halls are 

probably illegal, e.g., NLRB v. International Bhd. of Elec. Workers 

Local 322, 597 F.2d 1326, 1330 (10th Cir. 1979), that they 

apparently violate the Agreement, see Agreement art. V §§ 1-2, that 

the district court found the local hiring hall to be run in a 

discriminatory fashion, see Mem. Op. at 18 n.6, and, the local union 

having been under LIUNA's trusteeship since May 1984, that LIUNA 

cannot distance itself from the illegal conduct. Thus it may very 

well be true that LIUNA is entitled to no damages.0

 We cannot be certain of that, however, as the correct 

answer completely depends on the interpretation to be given the 

Agreement. Because it appears that neither defendant in fact

suspected that the union hiring hall was being run illegally until 

well after the filing of the complaint in this case, and because of 

the defendants' deception described earlier, the arbitrator may have 

to name a winner in the battle of the unclean hands. It may also be 

 

0However, if LIUNA may recover damages on behalf of its injured 

membership, this equitable defense may not aid defendants with 

respect to LIUNA's membership, even if dispositive vis-à-vis LIUNA. 
55 

that, insofar as FWEC never attempted to invoke the Agreement and 

make use of MBTC's hiring hall (i.e., insofar as FWEC never tendered 

performance), it cannot establish LIUNA even breached, much less 

materially breached, the Agreement by not having a nondiscriminatory hiring hall available for its use. 

 The arbitrator may also deem it possible that, had FWEC 

requested referrals from MBTC's hiring hall, the hall would have 

ceased its illicit ways and changed its procedures to bring the 

local into compliance with the Agreement and the law. That is, 

LIUNA's illegal operation of a hiring hall with respect to other 

employers would not necessarily mean it would run the hall the same 

way with FWEC and hence excuse FWEC's non-compliance with the 

Agreement. Alternatively, the arbitrator could perhaps construe the 

Agreement to have forbidden FWEC from repudiating the entire 

Agreement until it had provided LIUNA with a reasonable opportunity 

to cure by bringing its hiring hall into compliance with the law and 

the terms of the Agreement.0

 All this is not to imply LIUNA is entitled to damages, but 

only to show that an arbitrator might award LIUNA damages. It is 

not our place to resolve or even to speculate on the solution to the 

questions we have posed in the preceding paragraph or to others 

which we have not raised, because they are matters of interpretation 

of the parties' pre-hire agreement, and as such are matters the 

 

0Although the district court charged LIUNA with constructive knowledge of the illegality of the local hiring hall's procedures because 

it had placed the local in trusteeship, there is no evidence in the 

record that LIUNA officials actually knew that the hall was being 

run illegally. In fact, the evidence indicates that no party ever 

complained that the hiring hall was discriminating against non-union 

members. Perhaps, given the stakes, LIUNA would have promptly 

remedied the deficiency had someone brought it to LIUNA's attention. 
56 

parties entrusted to the sound judgment of a labor arbitrator. A 

court cannot refuse to order arbitration based on its perception of 

the frivolousness of the claim or the futility of doing so. See, 

e.g., A T & T Technologies, Inc. v. Communications Workers, 475 U.S. 

643, 649-50, 106 S. Ct. 1415, 1419 (1986) ("Whether `arguable' or 

not, indeed even if it appears to the court to be frivolous, the 

union's claim that the employer has violated the collective 

bargaining agreement is to be decided, not by the court asked to 

order arbitration, but as the parties have agreed, by the 

arbitrator."); Beck v. Reliance Steel Prods. Co., 860 F.2d 576, 579 

(3d Cir. 1988). 

 Moreover, as the Supreme Court has explained, the arbitrator's informed judgment is "especially [helpful in reaching a fair 

solution to a problem] when it comes to formulating remedies." 

United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 41, 108 

S. Ct. 364, 372 (1987) (emphasis and internal quotations omitted). 

In light of these considerations, we conclude that the district 

court's finding that LIUNA operated an illegal hiring hall provides 

no reason to deny LIUNA's prayer for relief, compelled arbitration. 

D. What Should Be Arbitrated

 We also conclude that on remand the district court should 

compel both FWEC and FWC to submit to arbitration. FWEC should 

arbitrate the dispute because it is a signatory to the Agreement. 

And as FWEC's admitted alter ego, FWC should also be ordered to 

submit to arbitration. As this Court's opinion in the parties' 

prior appeal made abundantly clear, the defendants' stipulation that 
57 

FWC and FWEC were alter egos0 was critical to the determination of 

the arbitrability of LIUNA's claim against FWC, since unless the 

defendants were alter egos the district court could not compel FWC 

to arbitration under the Agreement. See Laborers' Int'l Union, 868 

F.2d at 576-77 ("The district court erred by letting an arbitrator 

determine whether FWC was an alter ego of FWEC and hence a party to 

the National Agreement. That question is for the district court, 

not an arbitrator."). Accordingly, that concession will now be 

enforced. 

 The validity of the Agreement and the expansiveness of its 

arbitration clause having already been established, once the 

defendants made this concession the district court's role in the 

grievance should have been over. It should not have entertained the 

case beyond establishing those facts necessary to determine that the 

defendants were duty-bound to arbitrate LIUNA's grievance. 

Accordingly, its conclusion that the defendants breached the 

Agreement exceeded its authority -- the broad arbitration clause 

reserved for an arbitrator the power to answer that question.0

 

0The colloquy at trial was as follows: 

THE COURT: It is my understanding . . . that it is the 

defendants' position today that they are going to drop the 

alter ego issue before this Court. Is that correct? 

MR. APRUZZESE: We do not choose to contest it, your 

Honor. 

THE COURT: I assume there's no objection. . . . 

MR. GREEN: . . . The plaintiff has no objection to that 

amendment (sic). 

Tr. at 6 (Jan. 22, 1991). 

0We have assumed throughout this opinion without having expressly 

decided that the court, not the arbitrator, is the proper body to 

decide the date of repudiation insofar as it impacts the extent of 

the parties' duty to arbitrate. Because the parties have not 

briefed the question, and seem to have accepted that as proper, both 
58 

V. CONCLUSION

 Because the Board's ruling in Deklewa applies 

retrospectively to the parties, FWEC never successfully repudiated 

the Agreement as to any location prior to its total termination of 

that agreement in July 1986. The Agreement contains a broad, 

inclusive arbitration clause, one whose reach extends to whether the 

Agreement governs operations at a specific construction site or not. 

Therefore, FWEC must arbitrate the dispute over application of the 

Agreement to the MOEPSI site with LIUNA according to the procedure 

specified in Article XV thereof. Since FWC is FWEC's alter ego, it 

too must comply with Article XV of the Agreement and proceed to 

arbitration alongside its subsidiary. 

 Accordingly, we will reverse the district court's June 22, 

1992 order insofar as it concludes that Deklewa does not apply 

retrospectively to this case, that our earlier mandate vacated the 

arbitrator's two factual findings, and that the defendants breached 

the Agreement. We will remand with instructions that the court 

modify its June 22, 1992 Order, as revised by the orders of March 11 

and 31, 1993, to direct the parties to submit to arbitration the 

issues of breach and the amount of damages allegedly sustained by 

LIUNA, its local, and its membership0 on account of FWEC's alleged 

breach of the pre-hire agreement at the MOEPSI site up to the date 

of FWEC's effective termination of the Agreement, July 15, 1986. 

 

parties have waived the issue, and our treatment of that issue does 

not imply that a court is always the proper forum to address it. 

0We intimate no view whether LIUNA may pursue or recover damages on 

behalf of its local affiliate and/or membership under the facts of 

this case.