Appendix — Foster Wheeler Corp. v. Laborers' International Union of North America
Supreme Court brief1994
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§
Supreme Court, U.S,
’inps DP
94 312 AUC 1 819%
OFFICE OF THE CLERK
No.
IN THE
SUPREME COURT OF THE UNITED STATES
October Term - 1994
FOSTER WHEELER ENERGY CORPORATION.
Petitioner.
Vv.
LABORERS’ INTERNATIONAL UNION OF NORTH
AMERICA, AFL-CIO, Respondent.
APPENDIX TO
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT ON BEHALF OF
FOSTER WHEELER ENERGY CORPORATION
STUART ROTHMAN
Counsel of Record
DAVID D. DIBARI
ROGERS & WELLS
607-i4th Street, N.W., Suite 1000
Washington, D.C. 20005
(202) 434-0700
Attorneys for Petitioner,
Foster Wheeler Energy Corporation
TABLE OF CONTENTS
(Appendix)
May 20, 1994, USCA 3d Cir.,
SO ee ee
NLRB Region 16 ULP Dismissal letter
to LIUNA, September 19, 1985 ........
NLRB Region 23 ULP Dismissal letter
to LIUNA, September 20, 1985 ........
NLRB Region 22 ULP Dismissal letter
to LIUNA, September 26, 1985 ........
November 18, 1985, NLRB Decision and
Direction of Election ...............
December 4, 1985, NLRB General Counsel
Decision Letter Denying Appeal
Oy NN Ns
December 9, 1985, D.N.J., Transcript of
weoceogmems, OOMEOR . 2 6. ck. kk ke es
December 9, 1985, D.N.J.. Order .......
January 27, 1986, D.N.J. Transcript
of Proceedings, Decision...........
Sla
134a
January 29, 1986, D.N.J., Order.........
May 1, 1986, USCA 3d Cir., Order.......
October 7, 1987, D.N.J., Transcript of
Penounies, GME «gon ei See ee
November 17, 1987. D.N.J., Order .......
May 26, 1988, D.N.J., Order of
ee re tt en
February 22, 1989, USCA 3d Cir., Opinion... .
February 22, 1989, USCA 3d Cir., Judgment .. .
March 21, 1989, USCA 3d Cir.,
Decision on Sur Petition for Rehearing .....
June 22, 1992, D.N.J., Trial Opinion ......
June 22, 1992, D.N.J., Trial Order .......
March 11, 1993, D.N.J., Opinion & Order
March 29, 1993, D.N.J. letter to Litigants .. .
il
gt
Page
« nee
July 8, 1994, USCA 3d Cir., Decision on Sur
Petition for Panel Hearing With
Suggestion for Rehearing inbanc........... 287a
August 5, 1994, USCA 3d Cir..
I 289a
a 290a
August 28, 1985, D.N.J., Complaint ........ 295a
Excerpts from 1982 National
Pre-hire Agreement Between FWEC and LIUNA . 304a
January 30, 1985, LIUNA letter to
counsel authorizing litigation (draft) ......... 306a
February 28, 1985, LIUNA letter to
counsel authorizing litigation ............. 307a
lll
Filed May 20, 1994
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
#
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.
Vi
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)
Argued: December 10, 1993
Before: BECKER and NYGAARD, Circuit Judges,
and YOHN, District Judge. *
(Filed May 20, 1994)
THEODORE T. GREEN, Esquire
(ARGUED)
MICHAEL BARRETT, Esquire
International Laborers Union of
North America
905 16th Street, N.W.
Washington, D.C. 20006
Attorneys for Laborers’
International Union of
North America
VINCENT J. APRUZZESE, Esquire
(ARGUED)
FRANCIS A. MASTRO, Esquire
Apruzzese, McDermott, Mastro &
Murphy
3a
25 Independence Boulevard
Somerset Hills Corporate Center
Liberty Corner, New Jersey 07938
Attorneys for Foster Wheeler
Corporation
* Honorable William H. Yohn, Jr.. United States District Court for the
Eastern District of Pennsylvania, sitting by designation.
da
STUART ROTHMAN, Esquire
(ARGUED)
DAVID D. DIBARI, Esquire
Rogers & Wells
607 14th Street, N.W., 9th Floor
Washington, DC 20005-20011
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 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,’ it is
‘ See 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.
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.5. 1375
(1987), enf’d sub nom. Iron Workers, Local 3 v. NLRB, 843
F.2d 770 (3d Cir.) (per curiam), ce/T. denied, 488 U.S. 889,
109 S. Ct. 222 (1988). A host of 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 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.
6a
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 enters 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 iongterm expansion plan,
FWC reorganized its commercial operations and became a
holding company. Among FWC’s motives for reorganizing
was to become a double-breasted 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
Ta
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 wholly-owned 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.
8a
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 Jonas near
lt
9a
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 division 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.’
_
2 As 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
10a
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 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 contacting 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 Serappo, 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, Serappo approved the
lla
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 goings-on, made numerous inquiries to the
selection of EPC to supplant Ortloff in all it 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 FWEC 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 EWIC/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
oniy under the qualification that FWC guarantee EPC’s performance.
FWC willingly executed the requested guarantee.
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 I, 1984. In a separate contract, EPC
nominally sublet the engineering work on the project to FWEC.
eS
12a
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.° Seemingly
unaware of MBTC’s discrimination, EPC - itself not a
signatory to the 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
3. Testimony 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
—— ll
— nn in
LLL
l3a
hiring office accepted them. EPC hired all the construction
workers it employed on the MOEPSI project either through
the applications that were submitted at the 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 non-union contractors.
4. The Dispute
On April 9, 1985, LIUNA sent out a formal
grievance letter to the various entities related to FWC
‘nvolved 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 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
l4a
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 constructicn 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") or 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
LSa
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 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 6-8 n.2).*
4. About 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 § a), see id. § 159(a), collective bargaining agreement. That
sonversion 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.
l6a
By letter dated May 15, 1986, FWEC validly
epudiated the entire (National) Agreement according to its
terms effective July 15, 1986.
As the text above touched upon, EPC for its part on August |,
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 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.
17a
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 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
18a
id. § 159(a).° Next, it resolved that since EPC’s employees
at MOEPSI had not yet elected a bargaining representative
5. The 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 typicaily 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, unworkabie.
Responding to the particularized needs of the construction
industry and recognizirg 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., Ist 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 11-12 n.4.
19a
and since LIUNA did not even claim majority status at the
MOEPSI site, the Agreement had not yet been converted into
4 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
vy. Foster Wheeler Corp., Nos. 86-5079, 86-5080 (3d Cir.
May 1, 1986).
20a
2. Round 2
On November 10, 1986, after a lengthy hearing and
extended briefing, Arbitrator Sam Kagel issued a decision 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.
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 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 II) was invalid and refused to acquiesce in the rule
it announced. This cleared the way for the court to find that
2la
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
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).*
6. Cf 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)
22a
-——
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 /nternational Ass’n of Iron Workers, Local 3 v.
NLRB, 843 F.2d 770 (3d Cir.), cert. denied, 488 U.S. 889,
109 §. Ct. 222 (1988)[, and enforcing Deklewa, supraj.” 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 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 thai the
Deklewa rule did not apply, but, since Jron 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 /ron 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,
23a
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 determine 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 circumvented 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 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 withdraw from its earlier position and
found that EPC’s June 3, 1985 letter to LIUNA, in which
ithad 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 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 §1 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).’
7. Although 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 issue of whether there has been any breach of the
— ae ——— —— ———— —
agreement and what damages might flow from that shall, as prov ided in
the National Agreement and as | 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.
95-4240 (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, Cou isel 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 tay 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.
See Zosky v. Bover, 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
26a
Il. 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 of Operating
Engineers v. NLRB, 480 F.2d 1186 (D.C. Cir. 1973) and
Ruttman Construction Co., 191 N.L.R.B. 701, 701 (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 obiained
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 repudiation. See NLRB
v. Local Union No. 103, Int’l Ass'n of Iron Workers (Higdon
Ins. Co. v. Patterson, 953 F.2d 44, 45-46 (3d Cir. 1991): Patten Sec.
Corp. v. Diamond Grevhound & Genetics, Inc. 819 F.2d 400, 443 (3d
Cir. 1987)
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,
982 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.°
8. LIUNA contends that the retrospectivity analysis at work here is
affected by the decisions in James B. Beam Distilling co. v. Georgia, 50}
U.S. 529. 111 S. Ct. 2439 (1991) and Harper v. Virginia Department of
Taxation, 113 S. Ct. 2510 (1933), which worked a major suostantive
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.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); of 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’ 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.
28a
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 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 (Sth
Cir. 1992); May v. Hobart Corp., 889 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) (pre-dating 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), ceri. 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. Ill, § 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
29a
this Court adjudicates only "cases" and "controversies." See
U.S. Const., Art. Il, § 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 chocses which of many similarly situated
defendants 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, \11
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 agency adjudications 1s questionable."), cert. denied, | 13 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 &
30a
Commercial Workers Int’l Union, Local No. 150-A v. NLRB, | 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), primaiily 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 decision making."):
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, 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."); Jron 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 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.’" (quoti
Maislim Indus. , U.S., Inc. v. Primary Steel, Inc., 497 U.S._, _, 1108S.
Ct. 2759, 2768 (1990) (emphasis added)).
3la
A second, fundamental difference between agencies and Article Ill
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
7179. 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
ght jacked would be counterproductive.
—
them, a retrospective strai
32a
Thus, the consideration 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, 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 . .. ."):
of. 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-or-law analysis the Dekelewa rule applies retrospectively, we need
not definitively decide this question
We also do not think that the fact that this Court in Jron 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 /ron Workers, Local 3 on the other, in that in Jron 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 Jron 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
33a
Applying what the district court believed to be the
proper test, it decided not to apply Deklewa retrospectively.
——
effectively iabor 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 supplies lest manifest injustice would result..We do not
doubt that legislative rules may within bounds incorporate come forms of
selective prospectivity. See, ¢€.8., 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"); ¢ Bradley v. School Bd., 416
{1} 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)
9. The question whether in a particular instance the retrospective
application by a district court of a rule of law announced in an agency
adjudication will cause manifest injustice 1s a question of law, not one o!
equity, notw ithstanding the fact that some “equitable” considerations ma)
play a role in the outcome. See In re Graham, 973 F.2d 1089, 1095 | 3d
Cir. 1992) (holding that we exercise plenary review over the district
court's retrospective application of a Supreme Court decision); ¢ Gruber
Price Waterhouse, 911 F.2d 960, 965 (3d Cir 1990)(deciding de nove
whether a decision by this Court applied retrospectively); Gatto
Meridian Medical Assocs., Inc., 882 F.2d 840, 842-44, (3d Cir. 1959
(same). cert. denied, 493 U.S. 1080, 110 S Ct. 1136 (1990); Hill
Equitable Trust co., $51 F.2d 691. 696-99 (3d Cir. 1988) (same), cert
denied. 488 U.S. 1008, 409 S. Ct. 79! (1989): see also Iron Workers
Local 3. 843 F.2d at 780-8} (holding review oF the Board's decision to
apply a new rule of law retrospectively is deferential and that the Board
ruling will be disturbed only if it. wreaks manifest injustice); Harper \
Virginia Dep't of Taxation, 113> Ct. 2510, 2516 n.9 (1993\(not
34a
See Mem. Op. 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 vy. 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 Jron
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.!°
’
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.
10. In Jron Workers, Local 3 we mentioned the equivalency of the
Chevron Oil and Chenery analyses on the facts then before us. See 843
F.2d at 780 n.12 ("[O]n this record an independent analysis unde: 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 Qil analysis would not
countenance retrospective application of Deklewa to this case (although
lt
35a
that is doubtful considering Jron 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"); cof. Beam, 11: 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),
36a
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
retrospectively; the roster is set forth in the margin."!
cert. denied, 479 U.S. 984, 107 S. Ct. 573 (1986): McDonald v. Watt.
653 F.2d 1035, 1042-45 (Sth 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).
11. Compare NLRB vy. 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), Jron
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, 688 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. Weifare Plan v. Villa 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
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
retrospectivity)(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.
vy. 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 (Sth 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 (Sth Cir. 1993) (affirming Mar-
Len of La., supra), cert. denied, 114 S. Ct. 1067 (1994), Mesa Verde
Const. 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. 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
38a
FWEC tries to distinguish the cases applying Deklewa
retrospectively from these 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.
status, and that applying the new rule would penalize the employer for
taking action possibly legai 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"). Bur 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.
ee
39a
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 yv. 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
Fa.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 (Sth 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."”
12. FWEC 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. Hl. 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
40a
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 or is at one of the other stages of the
administrative process such as the hearing." Jd., 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.
4la
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
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, 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).
42a
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)."3 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 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
13. The 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 vetrospective 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.
43a
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 25-26 n.10,
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."
14. In 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 24-25 n.9.
Three of these factors can quickly be disposed of.
First, as we are not newly announcing the Deklewa rule in
this case, the 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 20-24
n.8. 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 Jron Workers, Local 3 concurred,
that there was a great Statutory interest in the retrospective
application of Deklewa, even in cases (like Deklewa itself)
45a
where the dispute was purely of historical interest.'° This
factor accordingly weighs in on side of retrospectivity.
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
i986, 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
15. We re 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 (Sth 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’! 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 retrospectively without being moved by that fact, see /ron
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 the position even if
we were inclined to do so.
might grow substantially.'°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 ruie. 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 party
reasonably and justifiably could have relied upon it, see
supra at 25-26 n.10; see also infra at 36-37 n.20.
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
16. LIUNA 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 49-50, suited especially for the experience and expertise
of a labor arbitrator.
47a
bound by the Agreement at that site.'’ In essence, they
perpetrated the deception by pretending that the nominal
contractor FWIC was the prime contractor on the project.'*
Furthermore, the district court found that "the defendants
initially believed they could not repudiate the agreement for
a single project and that they did not want to repudiate the
agreement as a whole," seemingly because they wished to
17. The 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.
18. FWEC 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.
48a
reap the rewards of the Agreement in other regions of the
country where union influence was stronger. Mem. Op. at
a2.
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 9.
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 6-8 n.2), they possibly could have relied on their as
of yet unestablished right to repudiate the Agreement
49a
selectively with respect to a single job site.’” 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 13 n.5 (discussing the
implications of a union obtaining majority status).
We iurn 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
19. Even 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); Trustees for
Mich. Laborers Health Care Fund v. M.M. Vander Veen Constr. Co.,
736 F. Supp. 138, 143-44 (W.D. Mich. 1989).
50a
of Taxation, 113 S. Ct. 2510, 2516 (1993); cf. Hill v.
Equitable 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 p: or precedent. But this factor itself was
considered in Deklewa and, on appeal, in Jron Workers,
Local 3, and neither tribunal found it defeated retrospective
application of the Deklewa rule then.” Indeed, defendants
20. The 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.
Sla
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.
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, ¢.., 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
cate at which the board’s bureaucratic wheels sometimes rotate with the
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 an 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.
41. Because 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
52a
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
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.
53a
matter the election had been mooted). See supra at 11-12
n.4. 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.”
11. THE EFFECT OF THIS COURT’S MANDATE
ON THE ARBITRATOR’S FACTUAL FINDINGS
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 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
22. The 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.
at 15; infra at 43. 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 -
A)
A)
pe)
Arbitrator Kagel 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
plaintiffs 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
retrospectively” 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
23. On 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.
56a
both the findings became res Judicata.** Assuming
24. Assuming 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:
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 [I-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 vy.
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 (Sth 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.2.,
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. 7]
(1992); 1B MOORE ET AL., MOORE’S FEDERAL PRACTICE § 0.303[4.-1], at
I-17; id. | 0.404[10]; 18 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, &
arguendo 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. Nonetheless, 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’ actual 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.
EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 4478, at 792-
94 (1981); of. 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 (ist Cir. 1984)
(affirmance).
58a
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).
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." Jd. 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
59a
perusal of FWC’s 1988 brief finds no argument that helps
FWEC.”
LIUNA concedes that KFWEC 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
vy. Stauffer Chem. Co., 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
25. FWC 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, the 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
aware be vacated, it advanced no arguments addressing why the factual
findings in particular should have been vacated. Fourth, FWC argues
Deklewa should not be retrospectively applied to this case. Jd. at 34-40.
60a
failure to contest those points on appeal renders them res
judicata. See supra at 40-41 n.24.
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.”” We hesitate to construe a carefully crafted
26. The 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.
6la
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." Jd. 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 51 n.32.
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,2” as stated above, we did not vacate the district
27. This 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
62a
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 OR
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’! 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. y. United Steelworkers. 989
F.2d 668, 672 (3d Cir. 1993)(where a collective bargaining
agreement is ambiguous and the parties’ intent is controlling,
straightforward; a party cannot be compelled to arbitrate the arbitrability
issue. See, eB, 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 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.
the scope of review is for clear error). See generally Ram
Constr. Co. v. American States Inc. 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 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 Workers’
Int’] 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."**
Agreement art. XV. Given the jurisprudence in this area,
see, e.g., AT & 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 disputer. Doubts should be resolved
in favor of coverage,’" (quoting United Steelworkers Vv.
Warrior & Gulf Nav. Co., 363 U.S. 574, 582-83, 80 S. Ct.
28. A 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 11 CHARLES J. MORRIS, THE DEVELOPING
LABOR LAW, at 1366-98 (3d ed. Patrick Hardin ed. 1992).
64a
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
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 unions’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." Jd. 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 bargaiing
agreement. Br. of FWEC at 48-49. Without giving any
reason for so doing, the defendants attempt 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." Jd. 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 § 5( 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.
vy. Bakery & Confectionary Workers Union, 430 U.S. 243,
66a
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 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.”
29. However, 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-a-vis LIUNA.
67a
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 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 non-discriminatory 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
68a
reasonable opportunity to cure by bringing its hiring hall into
compliance with the law and the terms of the Agreement.*°
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
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).
30. Although 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.
a
69a
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 FWC and
FWEC were alter egos*’ was critical to the determination
31. The 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).
70a
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’! 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.”
V. CONCLUSION
32. We 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 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.
_
Tla
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 membership*® 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.
33. We 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.
72a
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
P
73a
UNITED STATES GOVERNMENT
NATIONAL LABOR RELATIONS BOARD
REGION 16
F. Edward Hebert Federal Building - Room 600
600 South Maestro Place 504-589-6396
New Orleans, LA 70130
19 September 1985 Re: _ Foster Wheeler Energy
Corporation
Metairie, Louisiana
Case No. 15-CA-9738
Orrin Baird, Esquire
Connerton, Bernstein & Katz
1899 L Street, N.W., Suite 800
Washington, DC 20036
Dear Mr. Baird:
The above-captioned case charging a violation under Section
8 of the National Labor Relations Act, as amended, has been
carefully investigated and considered.
As a result of the investigation, it appears that further
proceedings on the charge are not warranted inasmuch as the
investigation disclosed that the National Agreement between
Foster Wheeler Energy Corporation (herein called NEC) and
the Union is an 8(f) contract and the Union has failed to
demonstrate that it has, at any time material herein, achieved
74a
the required majority status in an appropriate unit as
envisioned by Section 9(a) of the Act to warrant a finding
that FWEC has violated Section 8(a)(5) and (1) of the Act by
not providing the Union with the information it requested.
R. J. Smith Construction Co., Inc., 191 NLRB 693 (1971),
enforcement denied sub nom. Local 150, International
Union of Operating Engineers, AFL-CIO v. NLRB, 480 F.
2d 1186 (C. A. D.C. 1973), on remand, 208 NLRB 615;
Ruttman Construction Co.,191 NLRB 701; Dee Cee Floor
Covering, Inc., 232 NLRB 421 (1977); cf. NLRB vy. Iron
Workers, Local 103 (Higdon Contracting Co.), 434 U. S.
335 (1978); Acme Marble & Granite Co., Inc., 271 NLRB
No. 147 (1984). I am, therefore, refusing to issue a
complaint in this matter. The procedure for filing an appeal
in this matter is enclosed.
Very truly yours,
/s/ Hugh Frank Malone
Hugh Frank Malone
Regional Director
CERTIFIED MAIL 96117
Return Receipt Requested
Enclosures
cc: Laborers’ International Stuart Rothman,
Union of North America, Esquire
AFL-CIO Rogers & Wells
905 - 16th Street, N.W. 1737 H Street, N.W.
Washington, DC 20006 Washington, DC
75a
20006
Foster Wheeler Energy
Corporation
2626 North Armoult, Suite 201
Metaire. Louisiana 70002
76a
NATIONAL LABOR RELATIONS BOARD
REGION 23
Bob Casey Federal Building/Courthouse
515 Rusk Street Room 4014
Houston, Texas 77002 Telephone 229-3726
September 20, 1985
Connerton, Bernstein & Katz
Attn: Orrin Baird, Esquire
1899 L Street, N. W., Suite 800
Washington, D. C. 20036
Re: Energy Plant Constructors, Inc.
Case 23-CA-10131
Dear Mr. Baird:
The above-captioned case charging a violation under Section
8 of the National Labor Relations Act, as amended, has been
carefully investigated and considered.
As a result of the investigation it does not appear that further
proceedings on the charge are warranted inasmuch as the
evidence charged employer in this matter, has any collective-
bargaining relationship with the Laborers International Union
or any obligation to recognize and bargain with the Union.
While the Union alleges that Energy Plant Constructors is an
alter ego, a joint employer, a single employer with or a
controlled company of Foster Wheeler Energy Corporation,
which does have a collective bargaining relationship with the
Tla
Union, the evidence fails to establish that such relationships '
exist or that Energy Plant Constructors has incurred any
obligation to bargain with the Union as a result of any
relationship it may have with Foster Wheeler Corporation or
Foster Wheeler Energy Corporation. Moreover, the contract
between Foster Wheeler Energy Corporation and the Union
appears to be a pre-hire agreement permitted by Section 8(f)
of the Act. Even assuming that that contract could be said
to have applied to Energy Plant Constructors, the Employer
effectively repudiated the agreement. As the Union has not
demonstrated that the pre-hire contract was converted to a
Section 9(a) relationship it cannot be argued that a
bargaining obligation was established. In any event, if such
an obligation were to exist based on the contract with Foster
Wheeler Energy Corporation, any refusal to supply
information allegedly in violation of Section 8(a)(5) should
be pursued in charges against that entity. I am, therefore,
refusing to issue complaint in this matter.
Sursuant to the National Labor Relations Board Rules and
Regulations, you may obtain a review of this action by filing
an appeal with the General Counsel addressed to the Office
of Appeals, National Labor Relations Board, Washington,
D.C.. 20570, and a copy with the Regional Director. This
appeal must contain a complete statement setting forth the
facts and reasons upon which it is based. The appeal must
be received by the General Counsel in Washington, D.C., by
the close of business on October 3, 1985. Upon good cause
shown. however, the General Counsel may grant special
permission for a longer period within which to file. Any
request for extension of time must be submitted to the Office
7Ra
of Appeals in Washington, and a ccny of any such request
should be submitted to the Regional Director
If you file an appeal, please complete the notice form I have
enclosed with this letter and send one copy of the form to
each of the other parties. Their names and addresses are
listed below. The notice form should be mailed at the same
time you file the appeal, but mailing the notice forms does
not relieve you of the necessity for filing the appeal itself
with the General Counsel and a copy of the appeal with the
Regional Director within the time stated below.
Very truly yours,
/s/ Louis V. Baldovin, Jr
Louis V. Baldovin, Jr.
Regional Director
Enclosures
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Cc: General Counsel, National Labor Relations Board,
Washington, D.C. 20570
Darby & Danner, Attn: Willis C. Darby, Jr., 200
St. Anthony Street, P.O. Box 2365, Mobile,
Alabama 36652
Energy Plant Constructors, Inc., Attn: E. O. Self,
9700 Richmond Avenue, Suite 300, P. O. Box
42999-MS597, Houston, Texas 77042
Laborers’ International Union of North America,
AFL-CIO, 905 16th Street, N. W. Washington,
D.C. 20006
Laborers’ International Union of North America.
AFL-CIO, Attn: R. P. Vinall, Vice-President,
1324 Park Place Boulevard, Suite 210, Hurst.
Texas 76053
Foster Wheeler Energy Corporation, Attn: Mr.
Orson Zinglersen, 2626 No. Arnoult, Suite 201,
Metairie, Louisiana /U0002
80a
Foster Wheeler Corporation, Attn: Mr. Harold
Kennedy, 110 So. Orange Avenue, Livingston,
New Jersey 07039
Rogers & Wells, Attn: Stuart Rothman, 1737 H.
Street, N.W., Washington, D.C. 20006
Sla
UNITED STATES GOVERNMENT
NATIONAL LABOR RELATIONS BOARD
REGION 22
Peter D. Rodino Jr. Federal Building - Room 1600
970 Broad Street
Newark, NJ 07102
September 26, 1985
Orrin Baird, Esq.
Connerton, Bernstein & Katz
1899 L. Street, N.W., Suite 800
Washington, D. C. 20036
Re: Foster Wheeler Corporation
Case 22-CA-13975
Dear Mr. Baird:
The above-captioned case alleging a violation under Section
8(a)(5) and (1) of the National Labor Relations Act, as
amended, has been carefully investigated and considered.
As a result of the investigation, it appears that further
proceedings on the charge are not warranted inasmuch as the
investigation disclosed that Foster Wheeler Corporation is
not a party to any collective bargaining agreement with the
Union. A request for information concerning an alleged
double-breasted operation must be made to an entity that has
recognized the Union, and where the Union has majority
status, and thus Foster Wheeler Corporation is not the proper
82a
entity from which to seek information. In addition, the
National Agreement between Foster Wheeler Corporation,
and the Union is an 8(f) contract and the Union has failed to
demonstrate that it has, at any time material herein, achieved
the required majority status in an appropriate unit as
envisioned by Section 9(a) of the Act to warrant a finding
that Foster Wheeler Corporation, in the guise of FWEC, has
violated Section 8(a)(5) and (1) of the Act by not providing
the Union with the information it requested. R. J. Smith
Construction Co., Inc., 191 NLRB 693 (1971); enforcement
denied sub nom. Local 15 International Union of Operating
Engineers, AFL-CIO v. NLRB, 480 F. 2d 1186 (C.A.D.C..,
1973), on remand, 208 NLRB 615; Ruttman Construction
Co., 191 NLRB 701; Dee Cee Floor Covering, Inc., 232
NLRB 421 (1977); cf. NLRB v. Iron Workers, Local 103
(Higdon Construction Co.), 434 U.S. 335 (1978); Acme
Marble & Granite Co., Inc., 271 NLRB No. 147 (1984). I
am, therefore, refusing to issue a complaint in this matter.
In the event you wish to file an appeal form this
determination, your attention is directed to the attached
NLRB Form 4938 which provides instructions for the filing
of an appeal within 13 days from the date of this letter.
Very truly yours,
/s/ Arthur Eisei:berg
Regional Director
83a
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Enclosures
General Counsel, NLRB
Washington, D. C. 20570
Laborers’ International Union
of North America, AFL-CIO
905 - 16th Street, N. W.
Washington, D. C. 20006
Foster Wheeler Corporation
110 S. Orange Avenue
Livingston, New Jersey 07039
84a
rae
(7 82)
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR
RELATIONS BOARD
ENERGY PLANT CONSTRUCTORS, INC.
Employer/Petitioner
and
LABORERS’ INTERNATIONAL UNION OF NORTH
AMERICA, AFL-CIO and
LOCAL UNION NO. 70, LABORERS’
INTERNATIONAL UNION OF NORTH AMERICA,
AFL-CIO”
Union
Case No. 15-RM-387
DECISION AND DIRECTION OF ELECTION
Upon a petition duly filed under Section 9(c) of the
National Labor Relations Act, as amended, a hearing was
had before a hearing officer of the National Labor Relations
Board; hereinafter referred to as the Board.
85a
Pursuant to the provisions of Section 3(b) of the Act,
the Board has delegated its authority in this proceeding to the
undersigned
Upon the entire record”in this proceeding, the
undersigned finds:
l. The hearing officer’s rulings made at the
hearing are free from prejudicial error and are hereby
affirmed.*
Zi The Employer is engaged in commerce within
the meaning of the Act and it will effectuate the purposes of
the Act to assert jurisdiction herein.”
<3 The labor organization(s) involved claim s to
represent certain employees of the Employer.*
4. A question affecting commerce exists
concerning the representation of certain employees of the
Employer within the meaning of Section 9(c)(1) and Section
2(6) and (7) of the Act.°
a The following employees of the Employer
constitute a unit appropriate for the purpose of collective
bargaining within the meaning of Section 9(b) of the Act:
All field construction employees including
craftsmen, helpers, and laborers* employed
by the Employer at its MOESPI, South
Mobile County, Alabama, jobsite; excluding
all other employees, including material clerks,
86a
quality control, warehouse, office clerical,
technical and professional employees® guards
anu upervisors” as defined in the Act.
DIRECTION OF ELECTION
An election by secret ballot shall be conducted by the
undersigned among the employees in the unit(s) found
appropriate at the time and place set forth in the notice of
election to be issued subsequently, subject to the Board’s
Rules and Regulations. Eligible to vote are those in the
unit(s) who were employed during the payroll period ending
immediately preceding the date of this Decision, including
employees who did not work during that period because they
were ill, on vacation, or temporarily "__" off. Also eligible
are employees engaged in an economic strike which
commenced less than 12 months before the election date and
who retained their status as such during the eligibility period
and their replacements. Those in the military services of the
United States may vote if they appear in person at the poiis.
Ineligible to vote are employees who have quit or been
discharged for cause since the designated payroll period,
employees engaged in a strike who have been discharge for
cause since the commencement thereof and who have not
been rehired or reinstated before the election date, and
employees engaged in an economic strike which commenced
more than 12 months before the election date and who have
been permanently replaced. Those eligible shall vote
whether or not they desire to be represented for collective
bargaining purposes by LABORERS’ INTERNATIONAL
UNION OF NORTH AMERICA, AFL-CIO and LOCAL
87a
UNION NO. 70, LABORERS’ INTERNATIONAL UNION
OF NORTH AMERICA, AFL-CIO
LIST OF VOTERS
In order to ensure that all eligible voters may have
the opportunity to be informed of the issues in the ex"__"
statutory right to vote, all parties to the election should have
access to a list of voters and their addresses which may be
__" communicate with them. Excelsior Underwear, Inc..,
156 NLRB 1236 (1966); N.L.R.B. v. Wyman Gordon
Company, 394 U.S. 759 (1969) Accordingly, it is hereby
directed that within 7 days of the date of this Decision, 2
copies of an election eligibility list, containing the names and
addresses of all the eligible voters, shall be filed by the
Employer with the undersigned Officer-in-Charge of the
Subregion who shall make the list available to all parties to
the election. In order to be timely filed, such list must be
received in the Regional Ofc., F. Edward Herbert Bldg. , 600
S.Ma"__""__"., 6th Floor, New Orleans, LA 70130 on or
before 25 November 1985. No extension of time "__" be
granted except in extraordinary circumstances, nor shall the
filing of a request for review operate to stay the request "__"
here imposed.
RIGHT TO REQUEST REVIEW
Under the provisions of Section 102 67 of the Board’s
Rules and Regulations "__" for review of this D" __" be filed
with the National Labor Relations Board, addressed to the
Executive Secretary, 1717 Pennsylvania Avenue, NW
—
88a
Washington D.C. 20570. This request must be received by
the Board in Washington by 2 December 19"__".
Date 18 November 1985
at New Orleans. Louisiana
Regional Director, Region 15
Ith
89a
The Union’s name appears as amended at the
hearing.
After the close of the hearing, the Employer moved
to supplement the record by including a letter dated
17 July 1985 from Angelo Fosco, General President
of the Union, to E. O. Self, President of the
Employer. This document was apparently
inadvertently omitted from the Union’s motion to
dismiss the petition for lack of a question concerning
representation. Inasmuch as the Union has filed no
opposition to the inclusion of this document in the
record and receipt of said document is necessary to
fully understand the Union's motion to dismiss, I
grant the Employer's motion to include this document
in the record.
After the hearing closed, Counsel for the
Union moved for a second time to introduce into the
record copies of the construction agreement between
Mobil Oil and Employer/Petitioner for construction
of the MOEPSI gas plant and a deposition of Stanley
C. Smith, project manager for Mobil’s gas plant,
concerning negotiations between Employer/Petitioner,
Foster Wheeler, and Mobil about the gas plant
construction. During the hearing, Counsel contended
that these documents would allegedly show the alter
ego and/or single employer status of Foster Wheeler
and Employer/Petitioner and thus prove the existence
of a contract bar preventing the processing of the
instant petition. At no point during the hearing did
Counsel for the Union request that the record be left
open for receipt of these documents. Based upon this
omission and more importantly the fact that the issue
ie
90a
of alter ego and/or single employer, as discussed
below, is irrelevant to determining whether there is
a contract bar or question concerning representation
I am denying the Union’s motion to include these
documents in the record.
The Union contends that it was denied due process
by the hearing officer’s refusal to enforce certain
subpoenas directed against the Employer/Petitioner,
FWC and FWEC. These subpoenas were issued
prior to the hearing and relate to the alleged single
employer/alter ego status of said employers and the
application of the national agreement to
Employer/Petitioner. Inasmuch as the national
agreement was clearly a Section &(f) prehire
agreement, I find that it is not necessary to determine
whether the employers were a single employer or
alter ego because even assuming the fact, the national
agreement would nonetheless not act as a contract
bar. Accordingly, I find that the hearing officer’s
granting of a motion to revoke subpoenas was proper
and did not constitute a denial of due process.
Regarding the Union’s request that the petition
be held in abeyance pending disposition of its charges
before the Board’s Office of Appeals in Case Nos.
15-CA-9738, 23-CA-10131 and 22-CA-13975, I find
no reason to grant such request inasmuch as there is
no reason to believe that any of these charges will
prevail on appeal and the substance of these charges
as revealed by the Union’s motion relate to the same
information requested and found herein to be
irrelevant to the issue of contract bar. Accordingly,
I am denying this request I also hereby deny the
9la
Union’s motion to stay these proceedings pending
resolution of the arbitration issues presently before
the Federal District Court in New Jersey. Counsel
for the Union failed to cite any Board or court
precedent to mandate or justify this request.
Moreover, I find that it would not serve the interests
of justice in this case to withhold processing of the
instant petition when obviously, contrary to the
Union’s assertion, it is demanding recognition by the
Employer/Petitioner through the guise of contract
enforcement.
4/ The parties stipulated, and I find, that the
Employer/Petitioner, a Delaware corporation with its
principal office and place of business in Houston,
Texas, is engaged in the construction of a natural gas
processing plant for Mobil Oil Exploration and
Producing Southeast, Inc. MOEPSI) in South Mobile
County, Alabama, the only facility involved in these
proceedings, During the preceding twelve months, a
representative period, the Employer purchased and
received goods and materials valued in excess of
$50,000 directly from points located outside the State
of Alabama. The parties also stipulated that the
Employer is engaged in commerce within the
meaning of the Act.
5/ The parties stipulated, and I find, that the Union is a
labor organization within the meaning of Section 2(5)
of the Act.
6/ Prior to and during the hearing, the Union moved to
dismiss the petition claiming that there existed no
question concerning representation because the Union
had never claimed majority status, requested
9?a
~
recognition, or engaged in picketing or threats
thereof to achieve recognition by _ the
Employer/Petitioner. The Employer/Petitioner
contends that the Union by its action in seeking to
impose the terms and conditions of its national
agreement with Foster Wheeler Energy Corporation
(FWEC) upon it and its construction employees
working at Mobil Oil Exploration & Producing
Southeast, Inc. (MOEPSI) jobsite has in effect
requested recognition thereby warranting the
processing of this petition. The record shows that by
letters of 9 April 1985 from General President Fosco
the Employer and three other corporate entities,
Foster Wheeler Corporation (FWC), Foster Wheeler
Energy Corporation (FWEC) and Foster Wheeler
International Corporation (FWIC) the Union claimed
that said corporations were bound to, but refusing to
comply with, unspecified collective-bargaining
agreements between the corporations and the Union.
As a remedy for the alleged contract violation Fosco
sought backpay, fringe benefits, and dues payments
for all workers improperly denied employment at the
MOEPSI jobsite. Attached to the 9 April letters,
which the Union described as grievances, were
requests for extensive information about the corporate
structures and operations of each company. On 3
June 1985, by letter to Fosco, Self, on behalf of the
Employer, denied that it was a party to any
collective-bargaining agreement with the Union and
in the alternative stated that if it was bound by any
such agreement the Employer was immediately
cancelling such agreements and reserving its rights to
93a
petition the Board for determinations of majority
status and appropriate units. On 17 July 1985 by
letter to Self, Fosco claimed that the Employer was
a single, joint, or alter ego employer with FWC and
FWEC and that as such it was bound by FWC and
FWEC:s national agreement with the Union inasmuch
as that agreement was not a pre-hire agreement but
rather a fully enforceable Section 9(a) agreement.
On 28 August 1985, the Union filed suit against
FWC and FWEC in the United States District Court
of the District of New Jersey claiming that the
Employer, FWC, FWEC, FWIC were single
employers or alter egos and seeking an order
compelling FWC and FWEC to arbitrate the alleged
contractual violations.
The Union claims that its actions did not
constitute a request or demand for recognition but
were mere attempts to secure information and compel
arbitration of its grievances. Article Il, "Union
Recognition" of the national agreement which the
Union seeks to impose upon the Employer reads as
follows:
The Employer hereby
recognizes and acknowledges
the Union as the exclusive
bargaining representative of all
field construction employees
performing work covered by
this agreement with respect to
wages, hours, and all other
terms and _ conditions of
employment.
94a
This Agreement shall not apply
to executives, superintendents,
assistant superintendents,
timekeepers, messengers,
clerical office workers, guards,
confidential employees or any
employees above _ general
foreman.
While the Union disclaims any attempts at
recognition, its action in seeking to impose the terms
of the national agreement including Article II upon
the Employer are inconsistent with such disclaimers.
Rather the Union’s action in seeking arbitration and
monetary relief for all periods of time prior to and
after any asserted repudiation is tantamount to a
demand for recognition as majority representative
warranting the processing of this petition. See
Construction and General Laborers No. 304 (Paul E.
Iacono Structural Engineers Inc.), 245 NLRB 346
(1979); Petrie’s, 108 NLRB 1318 (1954). Moreover,
the Union’s assertion that the national agreement acts
as a contract bar is inconsistent with its disclaimer.
Doak Aircraft Co. Inc., 110 NLRB 792, 793 (1954).
Accordingly, I deny the Union’s motion to dismiss
and find that its action in attempting to apply the
terms of its national agreement upon the Employer
constitutes a demand for recognition.
The Union, contrary to the Employer,
contends that the national agreement constitutes a
contract bar preventing the undersigned from
processing the instant petition. Article I, "Scope of
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Agreement" of the national agreement reads in
pertinent part as follows:
This agreement shall apply on
all construction projects within
the United States, except for
the state of New Mexico,
Oklahoma and Texas,
performed by the Employer or
any person, firm or
corporation owned or
financially controlled by the
Employer.
The national agreement was signed on 16 February
1977 and amended on 15 July 1981. This agreement
by its terms continued in effect until 15 July 1981
and from year to year thereafter until notice of
termination was given in writing 60-90 days before
its expiration. The contract was clearly negotiated
before the existence of the MOEPSI project which
commenced in 1985. The record contained no
evidence which would establish that at any time since
February 1977 has the Union represented a majority
of the employees of either FWC, FWEC, or
Employer/Petitioner in an appropriate bargaining
unit. Accordingly, I conclude that the National
Agreement constitutes a Section 8(f) pre-hire
agreement under the Act. While such agreements are
permissible in the construction industry under Section
8(f), they may be cancelled by an employer such as
Employer/Petitioner who has petitioned the Board for
a determination of the Union’s majority status.
Under Board law, Section 8(f) agreements clearly do
96a
not act as contract bars. Alburquerque Insulation
Contractor, Inc., 256 NLRB 61, 62-63 (1981). The
Union presented no evidence to show that its national
agreement was anything but a pre-hire agreement.
As noted, there was no evidence to suggest that at
any time the Union represented a majority of the
construction workers in a stable work force at any
site of Employer/Petitioner. Where as in the present
case an employer hires on a job-by-job basis and
does not transfer workers from jobsite-to-jobsite, the
union must establish its majority at each worksite
before it can claim a Section 9(a) contractual status.
7/ The parties disagree over the composition of the unit.
The Union would limit the unit to include only
construction laborers. The Employer/Petitioner
would include ali field construction employees
including helpers and craftsmen. The craftsmen
include pipefitters, pipe welders, instrument fitters,
electricians, millwrights, [W-structural/riggers, heavy
and light equipment operators, surveyors, carpenters,
concrete finishers, [W-rebar, mechanics and painters.
The Employer/Petitioner is a wholly owned
subsidiary of Foster Wheeler Corporation with
corporate offices located at 9700 Richmond Avenue,
Houston, Texas. The Employer/Petitioner maintains
a divisional office at LaPorte, Texas where it stores
construction equipment that is not being used on
jobsites. The Employer/Petitioner hires employees
on a project-by-project basis and with the exception
of higher management does not transfer construction
site employees between jobsites. The chairman and
chief executive officer for the Employer/Petitioner is
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Jack H. Kennedy. Kennedy serves as vice president
and group executive for Foster Wheeler Corporation.
Reporting to Kennedy is president and chief operating
officer, E. O. Self and R. D. Harris, controller. Self
is responsible for the overall supervision of
Employer/Petitioner’s construction, management,
business development, commercial, personnel and
safety operations. Reporting to Self are vice
presidents G. W. Talbert, M. R. King, R. D.
Daeschner; general manager W. D. Huff; and
managers Ian Baxter and A. L. Hill.
At the MOESPI jobsite, the only location
involved in these proceedings, the
Employer/Petitioner employs site manager, W. L.
Walker. Walker reports directly to Talbert and is
responsible for the overall construction at the site.
Reporting directly to Walker is project
superintendent, J. B. Watts who is responsible for
supervising the work of civil superintendent, Corral]
Traham;: Charles Windham, mechanical
superintendent; piping superintendent, Art Butler; and
instrument and electrical superintendent, Lloyd
Graves. These superintendents in turn direct the
work of general laborers, riggers, pipefitters,
instrument/electricians, carpenters, foremen plus
rebar and concrete employees, millwrights, and pipe
shop foremen. The general foremen and foremen
direct the work of individual crews consisting of
laborers as well as various craftsmen and their
helpers. As of the hearing date, the Employer
employed 125 craftsmen, 72 helpers, and 82 laborers
or a total complement of 207 employees working
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under the supervision of 6 general foremen and 3]
foremen. Although the work at the "__" was only
25% complete as of the hearing, it is clear from the
record that Emplo" __" Petitioner employed most of
the unit employees that it would need for the
completion of its construction operations.
In March 1985, Seif, Talbert and Walker
determined construction personnel wage rates based
upon a Employer/Petitioner survey of wage rates in
the greater Mobile area. Laborer wage rates range
from $5-$7 per hour. Helpers are paid between $7-
$8.50 per hour. Craft employees on the other hand
are paid between $11-$11.70 per hour. Working
schedules for construction employees consists of four
10 hour days, Monday through Thursday with a
weekend shift of three 13 hour days from Friday
through Sunday.
All construction employees including the
laborers and craftsmen work the same basic work
schedule in composite work crews under the
immediate supervision of 5 general foremen and 4
foremen. In these crews laborers work with
pipefitters, welders, operators, riggers, millwnights,
electricians, instrument me" _" and rebar employees
on designated job assignments. There are no job
descriptions or traditional craft lines observed on the
job. Craftsmen frequently perform work outside of
their immediate craft discipline. Assisting them are
helpers, 30 of whom were promoted from the
position of laborer. Craftsmen have separate sheds
where they store their tools, eat lunch, and use as
Shelters in case of inclement whether. Laborers also
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use these sheds as shelters and places to eat lunch.
All construction employees work under similar work
and safety rules but have no fringe benefits. They
utilize the same entrances, parking lot, bathrooms
and vending machine facilities.
Laborers spend about 80 to 90 percent of their
time digging ditches. On other occasions they work
with the crafts in unloading material and doing
rigging work. In contrast with other crafts, laborers
are unskilled personnel performing essentially
unskilled tasks. While the Employer has no
apprenticeship program for laborers it provides
training for them in the helper classification where
they have the opportunity to work directly with
various craftsmen. From the beginning of the job,
30 laborers, as noted above, have been promoted to
the position of helpers while only two laborers who
possessed prior craft skill were promoted directly to
craft positions as they became vacant. With the
exception of the initial start of construction,
craftsmen have not performed any laborer work.
Also, unlike craftsmen, the Employer hired the
laborers with minimal interviews on a trial basis by
having the personnel clerk select applicants for
interview based upon the date of their application.
From the record however it is clear that all
work performed by craftsmen, helpers, and laborers
is closely coordinated on each job with all
construction workers working under similar working
conditions. While the record shows a considerable
disparity in wages and job skills among unit
employees, it does not show that the laborers have a
Igo
100a
separate "craft" identity or comprise a functionally
distinct group so as to warrant their inclusion in a
separate unit. In the construction industry the Board
has found appropriate separate units of craft
employees and also separate units of clearly
identifiable and functionally distinct groups of
employees including construction laborers thereby
rebutting the presumptive appropriateness of overall
employee units. Brown and Root, Inc., 258 NLRB
1002, 1003 (1981). However, in those cases the
records clearly showed a distinct craft or functional
group identity which is not present in this case. In
this case, the record shows that a substantial number
of helpers have performed laborer work in the past
and that the laborers work closely on teams with
helpers and craftsmen performing unit work under
similar working conditions. Under _ these
circumstances, I find that the union has not overcome
the ; .esumptive appropriateness of an overall unit
consisting of all laborers, helpers, and craftsmen.
Accordingly, I find such a unit to be appropriate and
reject the Union’s request for a more limited unit.
Atlanta Division of S. J. Groves and Sons Company,
267 NLRB 175 (1983).
The parties agree, and I find, that the material clerks,
quality control, warehouse, office clerical, technical
and professional employees should be excluded from
the unit. The record shows that these employee
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