Opinion ID: 568502
Heading Depth: 2
Heading Rank: 1

Heading: The Ironworker's and Sheet Metal Worker's Appeals

Text: 36 The key to these cases lies in the interaction of the NLRB's decision and the arbitration awards. Eichleay argues that the NLRB's decision precludes enforcement of the arbitration awards. 8 The Unions concede 9 that the portion of the arbitration award that grants back pay and benefits to workers at the Pitcal site conflicts with the NLRB's finding that those workers are not part of the bargaining unit and that AMK and ECI/Eichleay were not a single-employer. However, the Unions insist that the remainder of the award involves contract damages and may be enforced despite the NLRB ruling. 37 The Unions rely on Building Materials & Construction Teamsters v. Granite Rock, 851 F.2d 1190 (9th Cir.), cert. denied, 488 U.S. 986, 109 S.Ct. 543, 102 L.Ed.2d 573 (1988) for the proposition that, even after the NLRB had ruled that AMK was not the alter ego of Eichleay/ECI, the arbitration panel's award could also be read as including an award of contract damages for Eichleay's breach of the NMAs in establishing ECI. 38 Granite Rock involved a concrete manufacturer which had signed a collective bargaining agreement with the Teamsters. The concrete manufacturer activated an assetless subsidiary, loaning it large amounts of cash, and the subsidiary in turn established a new, non-union concrete ready-mix plant. The union then sought arbitration, alleging both that the union concrete company and its non-union subsidiary were alter egos, and that the union company's actions in setting up the non-union subsidiary breached an implied covenant in its collective bargaining agreement. 39 The company successfully sought unit clarification from the NLRB, with the NLRB holding that the union company and its non-union subsidiary were not alter egos and that the non-union subsidiary could not be bound to its parent company's collective bargaining agreement. The union nevertheless sought to arbitrate its contractual claim that the parent company had breached an implied covenant not to establish a non-union subsidiary. 40 The court in Granite Rock distinguished the union's claim that the unionized company and its non-union subsidiary were alter egos from the union's claim that the unionized company had breached an implied covenant in the collective bargaining agreement. The court noted: 41 The union's contractual claim, in contrast [to its alter ego claim], is based on the allegation that Granite Rock promised in the agreement to refrain from establishing a separate company unless the economic standards provided in the agreement were applied to the separate company's employees. These claims are clearly distinct; the first alleges a breach of an ongoing legal duty to apply the provisions of the agreement to [the non-union subsidiary's] employees, while the second alleges a completed breach of a contractual duty to refrain from establishing a separate company. 42 Granite Rock, 851 F.2d at 1195-96. 43 The Unions argue that, even if the arbitration panel's award of back pay and benefits to AMK employees at the Pitcal site cannot stand in the face of the NLRB's finding that Eichleay/ECI and AMK are not a single employer, its award also granted breach of contract damages that are not affected by the NLRB decision. We agree with the Granite Rock court that arbitration awards may be divided into contract based awards and representation based awards. We must therefore determine in this case whether the Unions submitted a contractual claim to the arbitration panel. 44 The grievance itself (identical for all the Unions) claimed that Eichleay was in violation of each and every, all and singular of the provisions of those agreements since the date of the commencement of their work on the project. The grievance was directed against Eichleay d/b/a ECI, and/or AMK International, and/or under any other name and/or style under which it does business. The NMAs, which were essentially identical for all the Unions, provide that [t]his Agreement covers all work assigned by the Owner to the Contractor and performed by the Employees of the contractors covered by this Agreement. NMA, Article IV, sec. 1. The Management Clause, Article XXIII, affords Eichleay considerable latitude to hire and fire and to control the operation of all his work. This clause however, reserves to the Unions the right to utilize the grievance procedures if in its judgement [sic] the spirit and intent of this Agreement has been violated. NMA, Article XXIII, sec. 1 (emphasis supplied). 45 The grievance submitted by the Unions was broad enough to encompass a claim that Eichleay had violated the NMAs by directing work to its alter ego ECI in an effort to avoid its collective bargaining responsibilities. The Unions could argue based on that grievance that an implied covenant not to set up a non-union competitor existed in the NMAs and that Eichleay breached that implied covenant by creating ECI and directing the Pitcal work to it. 46 The arbitration panel's award is susceptible to such a reading. The NMPAC's arbitration award granted to the Unions:the payment of wages and trust fund contributions to and on behalf of each of the workers who have been employed by the contractor and any of it's [sic] subcontractors at any tier, and the payment of wages and trust fund contributions to and on behalf of all those workers who would have been dispatched to the work in question ... had the Agreement been complied with. 47 App. p. 453 (emphasis supplied). The highlighted portion of the award clearly is representational in nature and must fall in the face of the contrary NLRB decision. Thus, we will affirm the district court to the extent that it vacated the arbitration panel's award of back pay and benefits to Pitcal workers. See A. Dariano & Sons, 869 F.2d at 517. 48 The second portion, however, does not implicate a representational issue. Instead, we agree with the Unions that it is compensation for Eichleay's breach of the Agreement by creating a corporation to which it transferred work to avoid the collective bargaining agreement. Ironworkers Brief at p. 29. 49 Having concluded that the arbitration panel awarded breach of contract as well as representational damages, we must determine if the nonrepresentational part of the award should have been confirmed by the district court. The district court concluded that, in the absence of an alter ego relationship between ECI/Eichleay and AMK, the entire arbitration award must fall. This is incorrect. To find that Eichleay used ECI to bid on the Pitcal project to avoid Eichleay's collective bargaining agreements requires only a finding that Eichleay and ECI were alter egos. 50 The district court refused to defer 10 to the arbitration panel's finding of alter ego status. 11 Although the district court properly concluded that the broad grievance clause of the NMA, which calls for arbitration of all grievances, could incorporate alter ego issues, see e.g. Local No. 6, Bricklayers Int'l Union of America v. Boyd G. Heminger, Inc., 483 F.2d 129 (6th Cir.1973) (issue of whether company which was signatory to a collective bargaining agreement had created a sham or alter ego company to avoid its obligations was arbitrable), it erred by concluding that the NMAs specifically exempted alter ego questions from arbitration. The district court relied on Article VI, sec. 2 of the NMA which provides: 51 The arbitrator shall only have jurisdiction and authority to interpret, apply or determine compliance with the provisions of this Agreement. 52 The Supreme Court instructs us that, if an issue is to be excluded from arbitration, it should be expressly excluded, or if not expressly excluded, only the most forceful evidence of a purpose to exclude the claim from arbitration will suffice to exclude the claim. AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 1419-20, 89 L.Ed.2d 648 (1986) (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 584-85, 80 S.Ct. 1347, 1353-54, 4 L.Ed.2d 1409 (1960)). We do not read the NMAs to exclude alter ego issues from arbitration. The article of the NMAs relied upon by the district court merely defines the arbitration panel's duties: to interpret the contract. 53 The NMAs do in fact expressly exclude some issues from arbitration. Article VI of the NMAs expressly excludes grievances pertaining to jurisdictional disputes or general wage rate disputes. This indicates that the parties knew how to remove issues from arbitration when they wanted to. In the absence of an express exclusion or very definite evidence that the parties intended to remove alter ego issues from arbitration, we conclude that the arbitration panel properly considered whether Eichleay created an alter ego company to avoid Eichleay's responsibilities under the collective bargaining agreement. 12 54 The arbitration panel's determination that Eichleay and ECI were alter egos at the time ECI bid on the Pitcal project should have been confirmed by the district court. Court review of arbitration awards is extremely deferential. See, e.g., Tanoma Mining, 896 F.2d at 748-49. An award must be confirmed unless it is irrational. Roberts & Schaefer Co., 812 F.2d at 885. In this case, there is support for a panel finding of an alter ego relationship between Eichleay and ECI. 55 The elements necessary for a finding of alter ego status are substantial identity of management, business purpose, operation, equipment, customers, supervision and ownership between the two corporations. NRLB v. Al Bryant, Inc., 711 F.2d 543, 553 (3d Cir.1983), cert. denied, 464 U.S. 1039, 104 S.Ct. 699, 79 L.Ed.2d 165 (1984). This inquiry is essentially the same as that used for a finding of single employer status. Al Bryant, 711 F.2d at 551 (In determining single employer status, four elements are considered: interrelation of operations, common management, centralized control of labor relations, and common ownership). The ultimate focus of alter ego analysis, however, is the existence of a disguised continuance or an attempt to avoid the obligations of a collective bargaining agreement through a sham transaction or a technical change in operations. Ibid (quoting Carpenters Local Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489 at 508 (5th Cir.1982)). 56 In this case, there was ample evidence from which the arbitration panel could conclude that ECI and Eichleay were alter egos. ECI and Eichleay were both wholly owned subsidiaries of Eichleay Holdings, Inc. There was evidence that ECI and Eichleay shared office space and clerical staff. High ranking corporate officers were transferred between Eichleay and ECI. The companies shared common services for estimating, sales, accounting, data processing, check writing, invoice processing and payment, and computer services. Eichleay set up and guaranteed a line of credit for ECI, and loaned ECI cash without a written agreement or set date for repayment. Eichleay guaranteed ECI's portion of the Pitcal job. There was evidence that ECI and Eichleay were both controlled by Geoff Eichleay, and that Geoff Eichleay made the major decisions for both companies, including the decision that Eichleay should drop out and ECI should bid on the Pitcal job. 57 The finding of the NLRB that Eichleay and ECI were a single employer further supports the arbitration panel's determination of an alter ego relationship between the two companies. The elements for a finding of single employer status are closely analogous to the elements for a finding of alter ego status. See Al Bryant, supra. The additional finding required for alter ego status, that the second company be formed to avoid the responsibilities of the first company's collective bargaining agreement, is also supported in this case. At the hearing on the temporary restraining order on July 22, 1987, John Nunez, Eichleay's then president, admitted that ECI was formed to avoid Eichleay's collective bargaining agreements. 13 58 Because the contractual damages portion of the arbitration award does not directly conflict with the NLRB unit clarification decision, and because the finding that ECI and Eichleay were alter egos is not irrational, the district court erred by vacating that portion of the award. Thus we will reverse the district court in part and remand with instructions that that portion of the award be confirmed. 14