Source: http://openjurist.org/156/f3d/13
Timestamp: 2015-04-19 21:19:48
Document Index: 498129410

Matched Legal Cases: ['§ 141', '§ 186', '§ 186', '§ 186', '§ 186', '§ 186', '§ 186']

156 F3d 13 Labor Relations Division of Construction Industries of Massachusetts Inc v. Teamsters Local | OpenJurist
156 F. 3d 13 - Labor Relations Division of Construction Industries of Massachusetts Inc v. Teamsters Local	Home156 f3d 13 labor relations division of construction industries of massachusetts inc v. teamsters local
156 F3d 13 Labor Relations Division of Construction Industries of Massachusetts Inc v. Teamsters Local 156 F.3d 13
158 L.R.R.M. (BNA) 3089, 135 Lab.Cas. P 10,224,22 Employee Benefits Cas. 1689
LABOR RELATIONS DIVISION OF CONSTRUCTION INDUSTRIES OFMASSACHUSETTS, INC., et al., Plaintiffs, Appellees,v.TEAMSTERS LOCAL 379, Defendant, Appellant.
No. 97-2402.
Heard May 6, 1998.Decided Aug. 17, 1998.
Paul F. Kelley, with whom Anne R. Sills and Segal, Roitman & Coleman were on brief, for appellant.
John D. O'Reilly III, with whom O'Reilly & Grosso, P.C. was on brief, for appellees.
Plaintiff, Teamsters Local 379 ("Teamsters" or the "Union"), filed grievances against eight Boston Harbor Project employers on behalf of certain truck drivers on the project who own and drive their own trucks (the "owner-operators") and are engaged in the transportation and removal of fill from the construction site. The Teamsters argued that those drivers were entitled to receive the various fringe benefit payments received by project employees. The subject of the present dispute is whether the owner-operators qualify as "independent contractors" or as "employees" under the Labor Management Relations Act (LMRA), 29 U.S.C. §§ 141, et seq. The arbitrator assigned to this case concluded that the owner-operators are "employees," and thus entitled to receive the benefit payments. The district court reversed this finding, ruling that the owner-operators are "independent contractors," and that any payment of benefits would violate section 302 of the LMRA, 29 U.S.C. § 186. After careful review, we affirm the district court.
Underlying the grievances in this case is the Harbor Project Labor Agreement (the "Project Agreement"), entered into by the Union and various contractors (or "project managers") engaged in the construction of waste water treatment facilities on Deer Island in the Boston Harbor (the "Boston Harbor Project"). After years of using private owner-operators for hauling their construction materials, wastes, and fills on the construction site without making any fringe benefit contributions on their behalf, project managers received complaints from the Union on March 2, 1992, for allegedly violating the Project Agreement. In 1994, this court decided Labor Relations Div. of Constr. Industries of Mass. v. Teamsters Local 379, 29 F.3d 742 (1st Cir.1994) ("Teamsters I "), which stemmed from those grievances. In Teamsters I, we affirmed an arbitrator's finding that the Project Agreement must be read to incorporate certain provisions of the earlier Massachusetts Teamsters' Heavy Construction Agreement ("Teamsters' Agreement") which obligates employers to make health insurance and pension contributions on behalf of the owner-operators.
However, we remanded the case to the arbitrator to determine whether the owner-operators would be considered "independent contractors" or "employees" under the LMRA. If the owner-operators fall into the "independent contractors" category, certain fringe benefit payments on their behalf would violate the LMRA, 29 U.S.C. § 186, which prohibits such payments to labor unions unless the payments are made to trust funds "for the sole and exclusive benefit of the employees of such employer." 29 U.S.C. § 186(c)(5) (emphasis added). Thus, unless the owner-operators are considered "employees," the Project Agreement is unenforceable insofar as it requires illegal benefit payments to be made to a labor union. If the project managers were to make contributions for the benefit of independent contractors, they, and the Union, could be subject to federal criminal prosecution.
On remand, the arbitrator assigned to the case concluded that the owner-operators are employees, and not independent contractors. After a thorough review of case law and agency doctrine, the arbitrator applied a multi-factored test which incorporated common law agency principles and a so-called "economic realities" test (which focused on the financial independence of the workers) in order to determine that the truck owner-operators are significantly similar to other employees on the Boston Harbor Project. This finding was appealed to the district court.
Because an interpretation of a federal criminal statute was involved, the magistrate and district court thoroughly reviewed the arbitrator's findings. See Teamsters I, 29 F.3d at 747-48; Washington Post v. Washington-Baltimore Newspaper Guild, Local 35, 787 F.2d 604, 606 (D.C.Cir.1986). Ultimately, the district court, adopting a lengthy and equally thorough report and recommendation from the magistrate, reversed the arbitrator. The magistrate reported that the arbitrator had seen fit to "disregard uncontradicted evidence and controlling principles of law to reach a result that accorded with his own notions of industrial justice." Now, once again, this case has been appealed to our court.
I. Preliminary Arguments
Before we proceed, we must address two separate arguments put forward by the Union as to why this proceeding is unnecessary. According to both of these arguments, the project managers are required to make the benefit payments at issue even if an application of the common law of agency shows that the owner-operators are independent contractors. Neither argument has merit.
The Union's first argument is premised upon LMRA section 302(c)(2), which explicitly exempts any payments made in satisfaction of an arbitrator's award from section 302(a)'s general prohibition on employers' payments to labor organizations. See 29 U.S.C. § 186(a) & (c)(2). The union claims that the employers in this case would, therefore, not be subject to prosecution under the LMRA since any payments that the project managers would make on behalf of the owner-operators would be made pursuant to the arbitrator's interpretation of the Project Agreement. The Union believes that the concern we expressed in Teamsters I that enforcement of the Project Agreement could subject the employers to federal prosecution, see 29 F.3d at 748, was unwarranted and our remand unnecessary.
The Union, however, fails to take into account the entire text of LMRA section 302(c)(2), which exempts employers' payments to labor organizations from section 302(a) only where those payments are made in satisfaction of an arbitrator's award "in compromise, adjustment, settlement, or release of any claim, complaint, grievance, or dispute...." 29 U.S.C. § 186(c)(2). The arbitrator's decision affirmed in Teamsters I interpreted the Project Agreement as requiring, by its own terms, that project managers make benefit payments on behalf of the owner-operators. Thus, project managers were required by their contract to make the benefit payments on behalf of the owner-operators before the arbitrator ever read the Project Agreement, and are not required to make payments in satisfaction of any settlement, or for release of any claim. LMRA section 302(c)(2) is therefore irrelevant.
Under the Union's flawed interpretation of the LMRA, any employer and union wishing to circumvent section 302's prohibition on direct payments to labor organizations could simply contract to do so in plain terms, and then engage an arbitrator to interpret that contract. We decline to read such an enormous loophole into the statute against its plain language.
The Union's other argument that purportedly moots this appeal is no more useful. According to the Teamsters, the employers may be obligated to contribute to benefit funds for hours worked by subcontractors even when those same subcontractors are legally ineligible to receive those funds, which are "for the sole and exclusive benefit of the employees...." 29 U.S.C. § 186(c)(5). This argument follows from the Supreme Court's logic in Walsh v. Schlecht, 429 U.S. 401, 407-410, 97 S.Ct. 679, 50 L.Ed.2d 641 (1977), which held that if an employer is contractually bound to make trust fund contributions based on the hours worked at a job site by individuals other than its own employees, then, so long as the individuals cannot enjoy those benefits, the employer does not violate section 302 of the LMRA when it performs its obligation. See also Illinois Conference of Teamsters and Employers Welfare Fund v. Mrowicki, 44 F.3d 451, 461 (7th Cir.1994) (extending Walsh to health and welfare benefit contributions). Those funds would then be held in trust by the Union. The Teamsters note that the Project Agreement only requires contributions for owner-operators based upon their hours worked, and argues that the grievance underlyin