Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Civil No. 86-1284)
Before: Sloviter, Chief Judge, and Becker, Stapleton, Greenberg, Hutchinson, Scirica, Cowen, Nygaard, Alito, Roth, and Wisdom,*fn* Circuit Judges
GREENBERG, Circuit Judge.
This matter is before the court in banc pursuant to our order of August 21, 1991, granting partial rehearing to Sheet Metal Workers International Association, AFL-CIO and Sheet Workers International Association Local Union No. 108 in No. 90-3606. By our opinion of July 9, 1991, a panel of this court disposed of the appeals of these two labor organizations as well as the appeal of Limbach Company (Limbach) in No. 90-3639. While our prior opinion was partially in favor of these two labor organizations and was wholly in favor of three other local unions and thus to that extent was against Limbach, it has not cross-petitioned for rehearing. Thus, we are concerned only with the issues raised in the petition filed by the International and Local 108 which we will hereafter in certain contexts sometimes refer to as the unions to the exclusion of the other locals.
While the background on the case is set forth in the panel's opinion, for purposes of completeness we will repeat it.
Limbach is a mechanical contracting company with offices in Pittsburgh, Pennsylvania, Woburn, Massachusetts (Boston), Compton, California (Los Angeles), Pontiac, Michigan (Detroit), and Columbus, Ohio. Prior to the events underlying this case, Limbach was a union contractor and was a member of multi-employer bargaining associations in the metropolitan areas where it operated. Through its membership in these bargaining organizations, Limbach had collective bargaining relationships with the sheet metal workers' union - Local No. 12 in Pittsburgh, Local No. 17 in Boston, Local No. 80 in Detroit, Local No. 98 in Columbus, and Local No. 108 in Los Angeles.
In 1982-83, Limbach was reorganized and became a wholly-owned subsidiary of Limbach Constructors, Inc. and, as part of this reorganization, Jovis Constructors, Inc. was formed as a sister-company to Limbach. A purpose of the reorganization and the formation of Jovis was so that the Limbach organization could acquire nonunion operations in new geographic areas. Thus, in July 1983, Jovis purchased Harper Plumbing & Heating Company, Inc. in Florida. Harper had been a nonunion contractor for 30 years and, following its acquisition by Jovis, continued to be nonunion.
When Edward Carlough, the General President of the International Union, learned of this acquisition, he wrote a letter dated August 10, 1983, to Walter Limbach, the president of Limbach until 1983, and the president of Limbach Constructors, Inc. from 1983 to 1988, stating:
I want to congratulate you on your company's takeover of Harper Plumbing and Heating in Orlando, Florida. We have been attempting to organize this contractor for a good number of years, and it was very thoughtful of you to have us organize this firm through your purchase of it.
The letter suggested a meeting between Lonnie Bassett, the International's Director of Organization, or Larry Cassidy, Carlough's assistant, to "consummate a labor agreement with your new shop." Walter Limbach gave this letter to Charles Prey, his successor as President of Limbach, who wrote to Carlough informing him that Limbach had not acquired Harper.
In October 1983, Cassidy and Walter Limbach met at Limbach's Pittsburgh office. Cassidy told Walter Limbach that Carlough expected Limbach to have Harper sign a collective bargaining agreement with a union affiliate and stated that the Harper nonunion operation violated existing collective bargaining agreements between Limbach and Locals 12, 17, 80, 98 and 108.
Walter Limbach disagreed with Cassidy, maintaining that Jovis, not Limbach, had acquired Harper, that Harper was a separate employer from Limbach and that Limbach had no authority over Harper's labor relations matters. Cassidy told Walter Limbach that if Harper did not sign a labor agreement, contract violation grievances would be filed and if they did not result in Harper's unionizing, Limbach would face serious labor problems.
Carlough, Cassidy and Walter Limbach met on November 23, 1983, to discuss the Harper situation. Carlough asserted that Limbach was in violation of its local collective bargaining agreements by virtue of the Harper operation and he told Walter Limbach that the Union would file grievances alleging these violations. Walter Limbach maintained his position that Limbach and Harper were separate and that Limbach had no authority to sign a collective bargaining agreement on behalf of Harper. Carlough told Walter Limbach that if the situation were not resolved, the locals would disclaim interest in representing Limbach employees upon the expiration of their existing collective bargaining agreements.
The local unions filed grievances in the summer of 1984, alleging that Limbach was in violation of its collective bargaining agreements with them by virtue of its sister-relationship with Harper. The grievances of Locals 12, 17 and 108 ultimately came before the National Joint Adjustment Board for the Sheet Metal Industry, the final decision maker under the collective bargaining agreements. This board was composed of an equal number of union and employer representatives.
The unions' grievances alleged that the operation of Harper on a nonunion basis was a breach of the Standard Form of Union Agreement, negotiated by the International Union and the Sheet Metal and Air Conditioning Contractors National Association which represented Limbach. The agreement serves as a model for local collective bargaining agreements. It was the unions' belief that the Standard Form of Union Agreement prohibited "double-breasting," meaning that a company owns both union and nonunion shops. Carlough believed he could force Harper to recognize the union through the grievance process by claiming that Limbach was in violation of its agreements through its affiliation with Harper. On February 8, 1985, the National Joint Adjustment Board issued its decision on the grievances but was deadlocked on whether Limbach had violated any of the provisions of its bargaining agreements. It did, however, find that the agreement between Limbach and Local 17 was not valid and binding and was of no force or effect.
Faced with the failure of the grievances against Limbach, Carlough met with the International Union's General Executive Council to develop an alternate method to combat double-breasting and this led to the development of the so-called "Integrity Clause."*fn1 The Integrity Clause obligated an employer to notify the union if it became affiliated through common ownership with a nonunion shop and gave local unions the power to rescind their labor agreements upon an employer's becoming so affiliated. In a letter dated March 22, 1985, Carlough instructed the local unions to have the Integrity Clause negotiated into their local agreements as soon as possible. Furthermore Carlough met on April 15, 1985, with the Executive Committee of the Sheet Metal and Air Conditioning Contractors National Association in Washington to discuss the Integrity Clause. At the same time, the International attempted to dissuade union members from working for double-breasting contractors, including Limbach, doing this with written appeals promoting union loyalty and changes in withdrawal card rights and pension benefits for members who continued working for companies affiliated with nonunion operations.
In the spring and summer of 1986, Locals 12, 17 and 108 did not renew the collective bargaining agreements as they expired and the locals issued disclaimers terminating their representation of Limbach employees.*fn2 Local 98 disclaimed the following year when its agreement expired. By June 1988, Limbach's operations were 100% nonunion.
In the summer of 1986, Carlough spoke at the convention of Sheet Metal Workers' International Association. He said, in part:
Limbach used to be with [the Sheet Metal and Air Conditioning Contractors National Association] years ago. You ought to understand the union thinking in the union man's mind. To me it's never too late. The door in this union is open.
If the man wants to come back and operate the right way I know both our people, both in Los Angeles and in Pittsburgh, and Walsh and the gang in Boston, if the man wants to straighten out the situation, who knows. He is a very smart fellow.
He wants to straighten the situation out. He will find out he is welcome back in this family. We want them union. . . .
App. at 2858 (emphasis added).
PROCEDURAL HISTORY AND THE PANEL OPINION
On June 17, 1986, Limbach filed its complaint in the district court against the International Union, and Locals 12, 17 and 108, and on January 12, 1988, it filed an amended complaint joining Local 98 as a defendant. The complaint asserted unfair labor practice claims under section 303 of the Labor Management Relations Act, 29 U.S.C. § 187, which allows a damages action for violations of the secondary boycott provisions of section 8(b)(4) of the National Labor Relations Act, (NLRA), 29 U.S.C. § 158(b)(4). In addition, Limbach asserted antitrust claims under section 4 of the Clayton Act, 15 U.S.C. § 15.*fn3
The case was bifurcated for trial between the liability and damages issues with the initial phase involving liability. At this phase, the jury was instructed on alternate theories of liability on the unfair labor practices claims. Thus, it was told that it could find an unfair labor practice based either on the unions' inducing Limbach employees to refuse to perform services in the course of their employment or on the unions' coercion of Limbach, by disclaiming representation of Limbach with the objective to force Harper to negotiate with the union or to have Limbach disassociate itself from Harper. On June 29, 1990, the jury returned three special verdicts on the liability issues under section 303. In Special Verdict No. 1 the jury found that Limbach and Harper were separate employers within the meaning of the NLRA, 29 U.S.C. § 151 et seq. In Special Verdict No. 2 the jury found that the International Union and each of the four affiliated local unions had committed an unfair labor practice under section 303. However, Special Verdict No. 2 did not reveal whether the jury's finding of an unfair labor practice was based on the unions' inducing Limbach employees to refuse to work, or whether it was based on the unions' coercion of Limbach. Special Verdict No. 3 asked:
Was the violation of Section 303 of the Labor Management Relations Act committed by any of the union defendants listed below a substantial factor in bringing about harm to plaintiff's business or property?
In response the jury answered "yes" as to the International Union and Local 108 (Los Angeles) but "no" as to Locals 12, 17 and 98. The antitrust claim was not submitted to the jury as, on July 3, 1990, the district court granted the unions' motion for a directed verdict on that claim.
On July 9, 1990, the district court, in the light of Special Verdict No. 3, ruled that Limbach could present evidence of damages on the secondary boycott claim as to its Los Angeles operation but not as to those in Pittsburgh, Boston, and Columbus. On July 13, 1990, after the trial was resumed and additional testimony presented, the jury returned a special verdict on damages awarding Limbach $2,823,000 against the International Union and Local 108 on the secondary boycott claim. The district court thus entered judgment in favor of Limbach and against the International Union and Local 108 for $2,823,000, but it also entered judgment in favor of Locals 12, 17 and 98, against Limbach. On August 3, 1990, the court denied motions of Limbach, the International and Local 108 for judgments notwithstanding the verdict and, in addition, it denied a motion by Limbach for a new trial. The International Union, Local 108, and Limbach filed timely appeals invoking our jurisdiction under 28 U.S.C. § 1291.
In our panel determination we held that the district court's order entering judgment against the International and Local 108 could not stand, as the verdict may have been predicated on an impermissible basis. We reached this conclusion because while the unions may have induced the employees to quit their employment, we concluded that this would not be a refusal to work in the course of employment within section 8(b)(4)(i) of the NLRA, and the verdict may have been predicated on this basis. This ruling is not before this in banc court as Limbach has not petitioned for rehearing. We held, however, by a divided vote that the unions may have been appropriately held liable under section 8(b)(4)(ii) of the secondary boycott provisions of the NLRA and thus we reversed and remanded for a new trial under that section. We affirmed the district court's order entering judgment in favor of Locals 12, 17 and 98 on the secondary boycott claims, because we found that the jury's determination that Limbach suffered no damages in the applicable areas could not be disturbed under the appropriate standard of review and this determination is not presently before us. Finally, we affirmed the district court's grant of the directed verdict against Limbach on its antitrust claim against the unions because we found that there was insufficient evidence in the record to support Limbach's claim of a conspiracy, a ruling which also is not before us. We directed that on remand the issue of whether Limbach and Harper are separate employers would not be retried.
APPEAL OF THE INTERNATIONAL UNION AND LOCAL 108
Subsequently, the International Union and Local 108 petitioned for rehearing in No. 90-3606 and by our order of August 26, 1991, we granted rehearing in banc and vacated the panel opinion solely as it pertains to these unions' appeals. Thus, as Limbach has not petitioned for rehearing in banc, we now focus only on the alleged violation of the secondary boycott provisions of the NLRA recognized as viable by the panel. The unions challenge the panel's opinion and argue that, as a matter of law, they cannot be liable for a secondary boycott violation for the disclaimer of the bargaining agreements with Limbach upon their natural expiration, regardless of their motives for the disclaimer. Accordingly, they contend that, as the verdict could have rested only on that disclaimer, or on their alleged conduct in inducing the employees to quit their employment, which the panel determined was not actionable, rather than remanding for a new trial we should remand for entry of a judgment in their favor. The unions also contend that the district court erred in denying their motions for a directed verdict and judgment notwithstanding the verdict on the secondary boycott violations as they contend that, notwithstanding the verdict, Limbach and Harper are not separate employers within the meaning of the secondary boycott provisions of the NLRA. Of course, if they were not separate employers, there could be no secondary boycott.
We agree with the opinion of the panel. Thus, we hold that the disclaimer scheme could be the basis for the finding of a secondary boycott violation under section 8(b)(4)(ii) and further hold that the district court did not err in denying the unions' motions for a directed verdict and judgment notwithstanding the verdict which the unions grounded on the contention that Limbach and Harper are not separate employers within the secondary boycott provisions of the NLRA. Rather, we find that the jury's conclusion in Special Verdict No. 1, that Limbach and Harper are separate employers, is supported in the record and is justified by our established law and, therefore, we hold that the district court correctly denied the unions' motions grounded on this argument. Pursuant to Childers v. Joseph, 842 F.2d 689, 699 (3d Cir. 1988), we find that the separate employer issue is distinct and separate and need not be an issue for the jury on the retrial. See also 6A Moore's Federal Practice para. 59.06 (2d ed. 1989). We find that there will be no injustice if the jury is informed that, for purposes of its determination of whether the unions violated section 8(b)(4)(ii), Limbach and Harper are separate employers. Accordingly, we will reinstate the panel opinion and will remand this case to the district court for a trial on the issue of whether the union's actions violated the secondary boycott provisions of section 8(b)(4)(ii).
a. Section 8(f) Agreements in the Construction Industry
An understanding of this case requires a description of some basic labor law principles. In general, under the NLRA an employer and a union can engage in collective bargaining only if a majority of the employees in the bargaining unit choose the union. See 29 U.S.C. § 159. However, section 8(f) of the NLRA contains an exception to this rule applicable to the construction industry which permits employers and unions to enter into voluntary section 8(f) collective bargaining agreements, commonly called "pre-hire agreements," without regard for the union's majority status.*fn4 29 U.S.C. § 158(f). A pre-hire agreement is a contract between an employer and a union before the workers to be covered by the contract have been hired. See International Ass'n of Bridge, Structural and Ornamental Iron Workers, Local 3 v. NLRB, 843 F.2d 770, 773 (3d Cir.), cert. denied, 488 U.S. 889, 109 S. Ct. 222, 102 L. Ed. 2d 213 (1988). Under section 8(f), employers and unions in the construction industry are permitted to enter into pre-hire agreements, designating the union as the exclusive representative of a company's employees without testing the unions' majority status. Iron Workers, 843 F.2d at 773. Since Limbach is involved in the construction industry, its agreements with the local unions were section 8(f) agreements.*fn5
b. Secondary Boycott Restrictions
Section 303 of the Labor Management Relations Act, 29 U.S.C. § 187, creates a cause of action for damages for violations of section 8(b)(4) of the NLRA, 29 U.S.C. § 158(b)(4).*fn6 Section 8(b)(4) of the NLRA provides, in part:
it shall be an unfair labor practice for a labor organization or its agents -
(i) to engage in, or to induce or encourage any individual employed by any person engaged in commerce or in an industry affecting commerce to engage in, a strike or a refusal in the course of his employment to use, manufacture, process, transport, or otherwise handle or work on any goods, articles, material, or commodities or to perform any services; or (ii) to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce, where in either case an object thereof is -
(A) forcing or requiring any employer or self-employed person to join any labor or employer organization or to enter into any agreement which is prohibited by subsection (e) of this section;
(B) forcing or requiring any person to cease using, selling, handling, transporting, or otherwise dealing in the products of any other producer, processor, or manufacturer, or to cease doing business with any other person, or forcing or requiring any other employer to recognize or bargain with a labor organization as the representative of his employees unless such labor organization has been certified as the representative of such employees under the provisions of section 159 of this title. . . .
Limbach's theory in its section 8(b)(4) claim against the unions was that the unions' actions in encouraging Limbach employees to quit and in disclaiming their section 8(f) agreements with Limbach constituted coercion in violation of the secondary boycott provisions of section 8(b)(4)(i-ii), causing Limbach economic damages. According to Limbach, the unions' actions were intended to coerce Harper into bargaining with a non-certified union or, alternatively, to force Limbach, Limbach Constructors, Inc., Jovis and Harper to disassociate from each other. Of course, as an in banc court we are only concerned with the disclaimer aspect of this claim.*fn7
Section 8(b)(4)(ii) of the NLRA prohibiting secondary boycotts by unions essentially prohibits union conduct designed to force a primary employer (the employer with which the union has a dispute) to bargain with a union or to force a neutral employer (an employer with which the union has no dispute) to cease doing business with the primary employer. The proscribed methods used to achieve the objectives include threatening, coercing, or restraining the secondary employer. See, e.g., Soft Drink Workers Union Local 812 v. NLRB, 212 App. D.C. 10, 657 F.2d 1252 (D.C. Cir. 1980). Coercion can include economic pressure upon the neutral party. Allentown Racquetball & Health Club, Inc. v. Building and Constr. Trades Council of Lehigh and Northampton Counties, 525 F. Supp. 156 (E.D. Pa. 1981). The purpose of the prohibition against secondary boycotts is to shield unoffending employers from pressures in disputes not their own, though preserving the rights of unions to bring pressure to bear on offending employers in primary labor disputes. Anderson v. International Bhd. of Elec. Workers, Local No. 712, AFL-CIO, 422 F. Supp. 1379 (W.D. Pa. 1976).
The unions assert that, as a matter of law, they cannot be liable for a secondary boycott violation under section 8(b)(4)(ii) because they merely repudiated their section 8(f) agreements upon their natural expiration. They therefore urge that they are entitled to judgment in their favor without a retrial as the panel ruled in their favor on the section 8(b)(4)(i) claim. According to the unions, the lawfulness of a repudiation of a section 8(f) agreement upon its expiration is not dependent on the motive of the repudiating party.*fn8 We are, however, not persuaded by the unions' argument on this issue. Rather, we hold that the unions' actions in disclaiming their section 8(f) agreements could be the basis of a secondary boycott violation under section 8(b)(4)(ii). The unions rely on the decision in John Deklewa & Sons, 282 N.L.R.B. 1375 (1987), enf'd sub nom., International Ass'n of Bridge, Structural and Ornamental Iron Workers, Local 3 v. NLRB, 843 F.2d 770 (3d Cir.), cert. denied, 488 U.S. 889, 109 S. Ct. 222, 102 L. Ed. 2d 213 (1988), in support of their argument that they were free, as a matter of law, to disclaim their section 8(f) agreements with Limbach upon their natural expiration. Consequently, in their view, it follows that any proscribed secondary motive is irrelevant.
In Deklewa, the Board considered: (1) whether a section 8(f) agreement is unilaterally revocable during its term or is as binding during that term as any other union agreement and (2) whether, pursuant to section 8(a)(5), a section 8(f) agreement requires an employer to bargain with a union as the employees' exclusive representative after the expiration of the section 8(f) agreement. 282 N.L.R.B. at 1375.
The Board held that section 8(f) agreements are not unilaterally voidable, overturning its earlier ruling which held section 8(f) agreements voidable at will. Id. at 1377. The Board also held that upon the agreement's expiration, the union would not enjoy a presumption of majority status, as under a section 9(a) agreement, and that the employer's obligation to bargain with the union, based on a section 8(f) agreement, expired with that agreement. Id. The union was proscribed from using coercive measures, including strikes and picketing, to compel negotiation and/or adoption of a successor agreement. Id. at 1386. This court upheld the Board's ruling as a reasonable interpretation of the NLRA. Iron Workers, 843 F.2d at 779-80.
The unions also rely on Yellowstone Plumbing, Inc., 286 N.L.R.B. 993 (1987). In Yellowstone, during a period in which a section 8(f) agreement was in effect between a plumbing contractor and a union, the employer unlawfully encouraged an effort to have the union decertified but had not succeeded by the time the contract expired. Once the contract expired, the employer withdrew recognition, refused to bargain, and unilaterally changed the wages and working conditions of bargaining unit employees. General Counsel argued that the employer was precluded from repudiating the bargaining agreement, notwithstanding Deklewa, because the repudiation was tainted by bad faith.
The Board rejected this argument, stating, "although we agree that the [employer] unlawfully encouraged the decertification effort, misconduct does not warrant an exception to our policy under Deklewa." Id. at 993. The unions rely on Yellowstone for the proposition that "motive . . . is irrelevant under Deklewa principles." The unions claim that "the employer's nullification of the § 8(f) collective bargaining relationship is as effective and as unassailable when based upon motives otherwise impermissible under the statute as when undertaken for other reasons."
Similarly, the unions rely on Garman Construction Co., 287 N.L.R.B. 88 (1987), in which the Board reversed an administrative law judge's finding that an employer had violated section 8(a)(5) of the NLRA by refusing to recognize and bargain collectively with certain unions. In Garman, by the time the employer refused to bargain with the union, its section 8(f) agreement had expired. Thus, applying Deklewa, the Board found that the employer was not obligated to bargain with the union. Since the administrative law judge's conclusions regarding the violations turned on whether the employer had bargaining obligations to the union, the Board found the allegations had to be dismissed. 287 N.L.R.B. at 88-89.
The issue in this case differs from that in Deklewa. Here the issue is whether either party may repudiate the bargaining relationship upon the expiration of the agreement where the object of the repudiation is one forbidden by the NLRA itself, an issue the Board clearly did not decide in Deklewa. The unions nonetheless rely on language in Deklewa to the effect that section 8(f) agreements are voluntary, pointing out that Deklewa indicated that "upon the expiration of [a Section 8(f)] agreement . . . either party may repudiate the 8(f) bargaining relationship." Deklewa, 282 N.L.R.B. at 1377-78. According to the unions, this principle is based on the fact that "Congress plainly mandated that 8(f) agreements be voluntary." Id. at 1381.
Despite the unions' effort to fit this case into the holding of Deklewa, that case simply does not address the issue before this court. In Deklewa, there were no allegations that the refusal to bargain was predicated on an improper motive. The issue before the Board in Deklewa was whether the section 8(f) agreement could be unilaterally repudiated during its existence. Simply stated, it assumed that there was no illegal objective to the repudiation other than the repudiation itself.
Further, the unions' argument as to the voluntary nature of the section 8(f) agreement is belied by the decision in Deklewa. The Board did state that section 8(f) agreements are voluntary but the Board further stated that, "it simply does not necessarily follow that because a section 8(f) agreement can only be entered into voluntarily either party to the agreement is unfettered in its right 'voluntarily' to repudiate the agreement." 282 N.L.R.B. at 1381. In fact, it is this limitation which the ...