Source: https://law.justia.com/cases/federal/appellate-courts/F2/921/350/324933/
Timestamp: 2019-10-16 09:23:20
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Matched Legal Cases: ['§ 151', '§ 158', '§ 158', '§ 152', '§ 160', '§ 159', '§ 185', '§ 160', '§ 160']

C.e.k. Industrial Mechanical Contractors, Inc., et al., Petitioners, v. National Labor Relations Board, Respondent.local Union No. 267 of the United Association of Journeymenand Apprentices of the Plumbing and Pipefittingindustry of the United States Andcanada, Afl-cio, Intervenor, 921 F.2d 350 (1st Cir. 1990) :: Justia
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C.e.k. Industrial Mechanical Contractors, Inc., et al., Petitioners, v. National Labor Relations Board, Respondent.local Union No. 267 of the United Association of Journeymenand Apprentices of the Plumbing and Pipefittingindustry of the United States Andcanada, Afl-cio, Intervenor, 921 F.2d 350 (1st Cir. 1990)
U.S. Court of Appeals for the First Circuit - 921 F.2d 350 (1st Cir. 1990) Heard Oct. 1, 1990. Decided Dec. 17, 1990
The petitioners, C.E.K. Industrial Mechanical Contractors, Inc. ("CEK") and CAM-FUL Industries, Inc. ("Cam-Ful") (together, the "Companies") request this court to review the finding of the National Labor Relations Board ("Board") of unfair labor practices. The Board cross-petitions for enforcement of its order. The major issue presented is whether the Board's finding that the Companies violated the National Labor Relations Act, 29 U.S.C. §§ 151 et seq. ("NLRA"), by failing to apply the terms of a collective bargaining agreement to unit employees is supported by substantial evidence.1 In order to resolve this point we must address several subsidiary issues: (1) whether CEK and Cam-Ful are alter egos; (2) whether the collective bargaining agreement between CEK (through an employers association) and the Union terminated or was automatically renewed; and (3) whether the Companies should be held retroactively to the Board's new position regarding the repudiation of Sec. 8(f) prehire construction agreements.2
Bradley's goal in forming CEK was apparently to run it as a double-breasted operation, parallel with Cam-Ful, enabling him to bid on both union (via CEK) and non-union (via Cam-Ful) contracts.3 Pursuant to this plan, in September 1981, Bradley signed, in the name of CEK, the collective bargaining agreement ("Agreement") between the Master Plumbing Association ("Association"), a multi-employer group, and Plumbers and Gasfitters Local 54 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry ("Union").4 The Agreement was a prehire agreement of the type authorized for the construction industry by Sec. 8(f) of the NLRA, 29 U.S.C. § 158(f). CEK did not become a member of the Association.
The Board disagreed with the ALJ, finding that an alter ego relationship existed between Cam-Ful and CEK based on common ownership, financial management, and business purpose. The Board treated Cam-Ful's prior existence as nondeterminative, because after the creation of CEK, Cam-Ful's incorporation certificate was amended to allow it to perform work similar to that for which CEK was incorporated. Moreover, the nature of Cam-Ful's operations after the closing of CEK demonstrated the existence of an alter ego relationship. The Board also found that the contract had been automatically renewed because CEK itself had sent no termination notice; as a non-member which had not delegated its bargaining authority, CEK was not entitled to rely upon the notice sent by the Association. Based on these conclusions, the Board found that the Companies had committed unfair labor practices in violation of Secs. 8(a) (1) and (5) of the NLRA, 29 U.S.C. §§ 158(a) (1), (5). Finally, the Board held that Bradley's failure to provide information violated Sec. 8(a) (5) (bargaining in bad faith).
The concepts of single employer and alter ego employers are analytically distinct, Penntech Papers, Inc. v. NLRB, 706 F.2d 18, 24 (1st Cir.), cert. denied, 464 U.S. 892, 104 S. Ct. 237, 78 L. Ed. 2d 228 (1983), but both are used in dissecting the legality of a double-breasted operation. A. Dariano & Sons, Inc. v. District Council of Painters No. 33, 869 F.2d 514, 517 (9th Cir. 1989). The single employer doctrine allows the Board to treat related enterprises as one employer within the meaning of Sec. 2(2) of the NLRA, 29 U.S.C. § 152(2). Carpenters Local Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 504 (5th Cir. 1982), cert. denied, 464 U.S. 932, 104 S. Ct. 335, 78 L. Ed. 2d 305 (1983). The doctrine is frequently used so that the Board can assert its jurisdiction over employers which, taken separately, would fall below the Board's self-imposed jurisdictional minimum. E.g., Radio & Television Broadcast Technicians v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 256, 85 S. Ct. 876, 877, 13 L. Ed. 2d 789 (1965) (per curiam). A finding of single employer status does not mean that one business is bound by a union contract signed by another, absent an additional finding that the employees of each constitute a single appropriate bargaining unit. South Prairie Construction Co. v. Local 627, International Union of Operating Engineers, 425 U.S. 800, 96 S. Ct. 1842, 48 L. Ed. 2d 382 (1976).
Alter ego analysis, on the other hand, is typically applied where an employer attempts to avoid its obligations under a collective bargaining agreement, and is particularly common in the context of successor employers, where the successor is "merely a disguised continuance of the old employer." Southport Petroleum Co. v. NLRB, 315 U.S. 100, 106, 62 S. Ct. 452, 456, 86 L. Ed. 718 (1942). In this case, of course, the Board used the alter ego doctrine in a situation where the companies were not successors but rather parallel operations. There is Board precedent for this application. See Z-BRO, Inc., 300 N.L.R.B. No. 14 (1990) (diversion of work); M & J Supply Co., 300 N.L.R.B. No. 45 (1990) (duty of successor to two alter ego companies to bargain); American Pacific Concrete Pipe Company, 262 N.L.R.B. 1223 (1982); Big Bear Supermarkets No. 3, 239 N.L.R.B. 179 (1978); see also Iowa Express Distribution, Inc. v. NLRB, 739 F.2d 1305, 1311 (8th Cir. 1984) (alter ego analysis is appropriate where the second corporation was formed before the first corporation ceased operating), cert. denied, 469 U.S. 1088, 105 S. Ct. 595, 83 L. Ed. 2d 704 (1984).
The parties agree on the factors to consider in determining alter ego status. These are anti-union animus, id., and "substantially identical management, business purpose, operation, equipment, customers, and supervision, as well as ownership,"5 Advance Electric, 268 N.L.R.B. 1001, 1002 (1984). No one factor is controlling, and all need not be present to support a finding of alter ego status. J.M. Tanaka Construction, Inc. v. NLRB, 675 F.2d 1029, 1033 (9th Cir. 1982); NLRB v. Tricor Products, Inc., 636 F.2d 266, 270 (10th Cir. 1980). There is also agreement as to the basic findings of fact made by the ALJ. The parties diverge, however, on the appropriate emphasis and interpretation to give the facts. The Companies argue in favor of the ALJ's finding of mere single employer status, which, absent a finding that the plumbing employees of both Companies constitute a single appropriate bargaining unit, is insufficient to hold both Companies to the terms of the Agreement. The Board argues that its alter ego finding is adequately supported by the record.
It is apparent that reasonable persons could differ--and indeed have differed--as to the appropriate interpretation to give these facts. The question is close. It is, however, a question of fact, and our review of the Board's fact-finding in a typical case is a narrow one. Southport Petroleum Co., 315 U.S. at 106, 62 S. Ct. at 455-56. Section 10(e) of the NLRA provides that "[t]he findings of the Board with respect to questions of fact if supported by substantial evidence on the record as a whole shall be conclusive." 29 U.S.C. § 160(e). It is not for the reviewing court to replace the Board's judgment with its own when the choice is "between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo." Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S. Ct. 456, 465, 95 L. Ed. 456 (1951); Destileria Serralles, Inc. v. NLRB, 882 F.2d 19, 22 (1st Cir. 1989).
In cases such as this one, however, where the Board has reached a conclusion opposite of that of the ALJ, our review is slightly less deferential than it would be otherwise. Litton Microwave Cooking Products v. NLRB, 868 F.2d 854, 857 (6th Cir. 1989); Centre Property Management v. NLRB, 807 F.2d 1264, 1268 (5th Cir. 1987). We "must take into account whatever in the record fairly detracts" from the Board's factual findings, and examine the evidence "in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board's view." Universal Camera, 340 U.S. at 488, 71 S. Ct. at 465.
The circuit courts are divided on the issue of the degree of deference to give to Board interpretations of collective bargaining agreements. Compare, e.g., Local Union 1395, IBEW v. NLRB, 797 F.2d 1027, 1031 (D.C. Cir. 1986) ("the Board's interpretation of contractual provisions is entitled to 'no particular deference' ") with NLRB v. Southern California Edison Co., 646 F.2d 1352, 1362 (9th Cir. 1981) (deference is appropriate). We find, however, that even under a less deferential posture, the Board's analysis of the contract is reasonable and supported by the evidence. Therefore, we agree with the Board's conclusion that the Agreement remained in force with respect to CEK.
If the Agreement at issue here had been a full collective bargaining agreement between a Sec. 9(a), 29 U.S.C. § 159(a), bargaining representative and CEK, our analysis above would lead to the conclusion that the Agreement should also be binding on Cam-Ful. The Agreement, however, was a prehire agreement of the type authorized in Sec. 8(f). The Board has adopted special rules regarding the enforceability and repudiation of Sec. 8(f) prehire agreements. The Companies argue (1) that this court should reject the Board's newly adopted rule regarding repudiation of prehire agreements as an unreasonable construction of the Act, or (2) that this rule should not be applied retroactively.
In John Deklewa and Sons, 282 N.L.R.B. 1375 (1987), enf'd sub nom. International Assoc. of Bridge, Structural and Ornamental Iron Workers v. NLRB (Deklewa), 843 F.2d 770 (3d Cir.), cert. denied, 488 U.S. 889, 109 S. Ct. 222, 102 L. Ed. 2d 213 (1988), the Board announced a new position on the issue of when a party to a Sec. 8(f) contract may repudiate that agreement. Prior to Deklewa, the Board had maintained that either party to a prehire agreement could repudiate that agreement at any time before the union obtained majority status in the appropriate bargaining unit. See R.J. Smith Construction Co., 191 N.L.R.B. 693, enf. denied sub. nom. Operating Engineers Local 150 v. NLRB, 480 F.2d 1186 (D.C. Cir. 1973). The bargaining unit in which majority status was measured was that of all employees in a multi-employer group, rather than merely those of an individual employer, under the "merger" doctrine. Iron Workers v. NLRB (Deklewa), 843 F.2d at 781 and n. 13. The moment at which the union obtained majority status was known as "conversion," because from that moment the union enjoyed full status as a Sec. 9(a) bargaining representative. Mesa Verde Construction Co. v. Northern California District Council of Laborers, 861 F.2d 1124, 1133 (9th Cir. 1988) (en banc) (Mesa Verde I) . The Supreme Court approved this rule as within the power of the Board. Jim McNeff, Inc. v. Todd, 461 U.S. 260, 265-66, 103 S. Ct. 1753, 1756-57, 75 L. Ed. 2d 830 (1983); NLRB v. Ironworkers Local 103 (Higdon Construction Co.), 434 U.S. 335, 350, 98 S. Ct. 651, 660, 54 L. Ed. 2d 586 (1978).
The Deklewa rule provides that Sec. 8(f) imposes an obligation on the parties to a prehire agreement to comply with it. Iron Workers v. NLRB (Deklewa), 843 F.2d at 778. That obligation is enforceable under Secs. 8(a) (5) and 8(b) (3) unless the covered employees vote to reject the union as their bargaining representative in a Board-conducted election. Id. at 779. After expiration of the Sec. 8(f) agreement, however, the signatory union--unlike a full Sec. 9(a) representative--would enjoy no presumption of majority status. At that point, either party could repudiate the Sec. 8(f) relationship. Id.
Most of the courts of appeals that have confronted Deklewa have approved the rule, although they have split on whether to apply Deklewa retroactively. See United Brotherhood of Carpenters v. Mar-Len of Louisiana, 906 F.2d 200, 203-04 (5th Cir. 1990) (declining to adopt or reject Deklewa, but holding that it should not apply retroactively in the case before it); NLRB v. Bufco Corp., 899 F.2d 608, 609 (7th Cir. 1990) (adopting Deklewa and applying it retroactively); Mesa Verde Construction Co. v. Northern California District Council of Laborers, 895 F.2d 516, 518-19 (9th Cir. 1989) (Mesa Verde II) (refusing to apply Deklewa retroactively), cert. denied, --- U.S. ----, 111 S. Ct. 209, 112 L. Ed. 2d 169 (1990); NLRB v. W.L. Miller Co., 871 F.2d 745, 749-50 (8th Cir. 1989) (adopting Deklewa and applying it retroactively, except for an interest award); Mesa Verde I, 861 F.2d at 1131-34 (adopting Deklewa) ; Iron Workers v. NLRB (Deklewa), 843 F.2d at 779-80 (enforcing Deklewa and applying it retroactively). See also R.W. Granger & Sons, Inc. v. Eastern Massachusetts Carpenters Local 275, 686 F. Supp. 22, 29 (D. Mass. 1988) (applied retroactively); Trustees of the National Automatic Sprinkler Industry Pension Fund v. American Automatic Fire Protection, 680 F. Supp. 731, 734-35 (D. Md. 1988) (no retroactive application); Construction Industry Welfare Fund of Rockford v. Jones, 672 F. Supp. 291, 293-94 (N.D. Ill. 1987) (no retroactive application). This court has not yet considered the issue.
We agree with our fellow circuits in holding that (1) Supreme Court precedent is not an obstacle to adoption of Deklewa, because in Jim McNeff, Inc., 461 U.S. 260, 103 S. Ct. 1753, and Higdon, 434 U.S. 335, 98 S. Ct. 651, the Court was merely accepting the old R.J. Smith rule as within the Board's authority and not adopting the rule based on the Court's independent analysis; (2) the legislative history of Sec. 8(f) supports the Deklewa non-repudiation rule better than the R.J. Smith approach; and (3) the Deklewa rule is an improvement over R.J. Smith in furthering the NLRA's policies of labor stability and employee free choice. See Mesa Verde I, 861 F.2d at 1128-34. We therefore adopt Deklewa as the law in this circuit.
The import of Deklewa in this case is clear. Pre-Deklewa, CEK would have been acting fully within its rights in repudiating the prehire agreement, provided that the Union had not achieved majority status under the conversion and merger doctrines. Under Deklewa, CEK would have had to conduct an election to ensure that the Union lacked a majority before repudiating the contract with impunity. Therefore, we must address the issue of whether it is appropriate to impose Deklewa retroactively against the Companies. "According a newly adopted rule retroactive effect is proper unless 'manifest injustice' results." NLRB v. New Columbus Nursing Home, Inc., 720 F.2d 726, 729 (1st Cir. 1983) (citing Bradley v. School Board of Richmond, 416 U.S. 696, 711, 94 S. Ct. 2006, 2016, 40 L. Ed. 2d 476 (1974)).7
Considering these factors, we find that this dispute is one in which manifest injustice would result from a retroactive application of Deklewa. There is no evidence that the Union had achieved a majority within the relevant bargaining unit. Moreover, as CEK is no longer in operation, the dispute is purely an historical one at this point. Applying Deklewa retroactively would subject the Companies to a penalty for having taken action which was entirely lawful under pre-Deklewa law. Mesa Verde II, 895 F.2d at 519 (quoting National Automatic Sprinkler, 680 F. Supp. at 735).
Retroactive application of the Deklewa principle, which involves altered rules of substantive conduct, would also plainly disappoint reasonable private expectations existing at the time of the relevant conduct about the right to repudiate prehire agreements. See note 7, supra. No doubt because the case was litigated before the ALJ as a Sec. 8(a) (5) proceeding prior to the Board's announcement of the new Deklewa rule, the record is not altogether fully developed regarding repudiation. We are, nevertheless, satisfied that Cam-Ful had demonstrated repudiation sufficiently to benefit from pre-Deklewa law. "[A]n employer can repudiate a pre-hire agreement ... by engaging in conduct so overtly inconsistent with contractual obligations that it is sufficient to put the Union on notice of the employer's intent to repudiate." Carpenters Southern California Administrative Corp. v. J.L.M. Construction Co., 809 F.2d 594, 598 (9th Cir. 1987), vacated and reh'g granted, 840 F.2d 723 (9th Cir. 1988), vacated as moot, 872 F.2d 930 (9th Cir. 1989). That is what Cam-Ful did here. Bradley made clear to Union representatives in the spring of 1983 that he was unwilling to sign prehire agreements for Cam-Ful because only a non-union company could be competitive on nonprevailing rate work. Bradley's actions were sufficient to put the Union on notice, well before the commencement of the alleged unfair labor practice, that he repudiated any agreement as comprehensive as that claimed by the Union. An employer may repudiate by "informing the Union in some manner " that the employer did not intend to be bound. Gould v. Lambert Excavating, Inc., 870 F.2d 1214, 1219 (7th Cir. 1989) (emphasis added). Further, an employer is not "obligated to repudiate its agreement for all of its projects in order to repudiate effectively." Wyoming Laborers Health & Welfare Plan v. Morgen & Oswood Construction Co., 850 F.2d 613, 623 (10th Cir. 1988). Nor did Cam-Ful attempt to take advantage of the benefits of a prehire agreement. Cam-Ful "did not perform any of [the] obligations under the pre-hire agreement, and ... never attempted to enjoy any benefits of the agreement." J.L.M. Construction Co., 809 F.2d at 599.
A Sec. 8(a) (5) violation could not be grounded on the failure of CEK to apply the terms of the automatically renewed 1981-1983 Agreement to its employees; CEK adhered to the terms of the Agreement as to those employees until it stopped doing business in the fall of 1983. These operative events took place well before 1987 when the Board announced its new rule as to repudiation of prehire agreements in Deklewa, and were fully consistent, under pre-Deklewa law, with a decision to repudiate any prehire agreement extending beyond CEK to Cam-Ful. We therefore hold that Deklewa should not be applied retroactively to this case, and we decline to enforce the Board's order attempting to do so.
Even in the absence of the repudiation we find here, there are procedural reasons as well which counsel against retroactive application of Deklewa in the context of an unfair labor practice charge. The Board's conclusion that CEK and Cam-Ful committed unfair labor practices in violation of Sec. 8(a) (5) appears to have no basis in Board practice prior to Deklewa. As the Board pointed out in its brief, unrepudiated Sec. 8(f) agreements had previously been enforceable under Sec. 301 of the Labor Management Relations Act, 29 U.S.C. § 185. See generally Jim McNeff, Inc., 461 U.S. at 270, 103 S. Ct. at 1758-59 (retroactively enforcing, under Sec. 301, monetary obligation created by prehire agreement); see also Plumbers & Pipefitters Local Union 72 v. John Payne Co., 850 F.2d 1535, 1539-40 (11th Cir. 1988). But until Deklewa, it was settled that Sec. 8(f) did not "expand the duty of an employer under Sec. 8(a) (5), which is to bargain with a majority representative, to require the employer to bargain with a union with which he has executed a prehire agreement but which has failed to win majority support in the covered unit." Higdon, 434 U.S. at 346, 98 S. Ct. at 658. Thus, it appears a Sec. 8(f) agreement was not generally enforceable under Sec. 8(a) (5). It was, at the very least, arguable that under the R.J. Smith rule in effect when this proceeding was commenced, an employer did not commit an unfair practice under Sec. 8(a) (5) when it refused to honor a Sec. 8(f) contract, unless the union had attained majority support and thereby created a full Sec. 9(a) collective bargaining agreement through conversion. Higdon, 434 U.S. at 345, 98 S. Ct. at 657-58.
In Deklewa, of course, the Board overruled R.J. Smith, thus abandoning the conversion doctrine and deciding that a Sec. 8(f) agrement could be enforced through the mechanism of a Sec. 8(a) (5) proceeding. 282 N.L.R.B. 1375. But we are not inclined to enforce the Board's order here, in part because it is based on the conclusion that CEK violated Sec. 8(a) (5) at a time when the settled avenue for resolving prehire agreement disputes was through a Sec. 301 law suit.
Bradley was required to provide the Union with the information it requested provided that the Union had a reasonable belief that Bradley was operating alter ego companies. See Walter N. Yoder & Sons, Inc. v. NLRB, 754 F.2d 531, 536 (4th Cir. 1985); NLRB v. Associated General Contractors, 633 F.2d 766, 771-72 (9th Cir. 1980), cert. denied, 452 U.S. 915, 101 S. Ct. 3049, 69 L. Ed. 2d 418 (1981). There is little doubt that the Union had adequate grounds to believe that the Companies might be committing unfair labor practices. There is also little doubt, on review of the correspondence, that Bradley was less than forthcoming in his responses to the Union's requests. The evidence appears more than substantial in support of the Board's finding of an unfair labor practice for failing to provide the requested information. Upholding this finding, however, still leaves the Union without a remedy, as the Board's order was directed primarily at remedying the repudiation of the Agreement, and ordering Bradley to supply the requested information at this time is rather pointless. For this reason, we decline to enforce that portion of the Board's order directing the Companies to provide the requested information.
The Companies also raise the statute of limitations for unfair labor practice proceedings, 29 U.S.C. § 160(b), but we find that the Companies waived this affirmative defense by failing to raise it before the Board. 29 U.S.C. § 160(e); Woelke and Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665-66, 102 S. Ct. 2071, 2082-83, 72 L. Ed. 2d 398 (1982)
A double-breasted operation occurs when the same owner owns both a union and a non-union company. The non-union company bids on jobs that do not require a union contractor, while the union company bids on union jobs. Both companies can thus bid more competitively in their respective markets. Double-breasted operations in the construction industry are not inherently illegal under the NLRA. A. Dariano & Sons, Inc. v. District Council of Painters No. 33, 869 F.2d 514, 517 (9th Cir. 1989)
Compare the factors in a single employer analysis: (1) interrelation of operations; (2) common management; (3) centralized control of labor relations; and (4) common ownership. Penntech Papers, 706 F.2d at 25 (citing Radio & Television Broadcast Union v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 256, 85 S. Ct. 876, 877, 13 L. Ed. 2d 789 (1965) (per curiam))
Last term in Kaiser Aluminum & Chemical Corp. v. Bonjorno, --- U.S. ----, 110 S. Ct. 1570, 1577, 108 L. Ed. 2d 842 (1990), the Supreme Court recognized, but did not resolve, an apparent tension between the approach announced in Bradley v. School Board of Richmond, 416 U.S. at 715, 94 S. Ct. at 2018 (court should apply newly enacted law in effect at the time of appellate decision unless retroactive application would result in manifest injustice) and that expressed in Bowen v. Georgetown University Hospital, 488 U.S. 204, 208, 109 S. Ct. 468, 471, 102 L. Ed. 2d 493 (1988) ("[C]ongressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result."). We have recently suggested that the touchstone for deciding the question of retroactivity is whether retroactive application of a newly announced principle would alter substantive rules of conduct and disappoint private expectations. Demars v. First Service Bank for Savings, 907 F.2d 1237, 1239-40 (1st Cir. 1990). See also American Trucking Assns. v. Smith, --- U.S. ----, 110 S. Ct. 2323, 2338, 110 L. Ed. 2d 148 (1990) ("When the Court concludes that a law-changing decision should not be applied retroactively, its decision is usually based on its perception that such application would have a harsh and disruptive effect on those who have relied on prior law ... If the operative conduct or events occurred before the law-changing decision, a court should apply the law prevailing at the time of the conduct.")