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Sheet Metal Workers International Association Local Union No. 27, AFL-CIO v. E.P. Donnelly

December 3, 2009

SHEET METAL WORKERS INTERNATIONAL ASSOCIATION LOCAL UNION NO. 27, AFL-CIO, PLAINTIFF,
v.
E.P. DONNELLY, INC., AND SAMBE CONSTRUCTION CO. INC., DEFENDANTS.



The opinion of the court was delivered by: Bumb, United States District Judge

FOR PUBLICATION

[Dkt. Ents. 90, 91, & 92]

OPINION

This case arises from a dispute over the assignment of roofing work in the construction of Egg Harbor Township's community center. Plaintiff Sheet Metal Workers International Association Local Union No. 27, AFL-CIO ("Local 27") alleges that by assigning work to a competing union, defendant-contractors E.P. Donnelly, Inc. ("Donnelly") and Sambe Construction Co. Inc. ("Sambe") committed common-law breach of contract and violated New Jersey's statute authorizing project labor agreements, N.J. Stat. Ann. 52:38-1, et seq. This matter now comes before the Court upon motions for summary judgment by all three parties. Donnelly and Sambe have opposed Local 27's motion, and Local 27 has likewise opposed the motions of Donnelly and Sambe. For the reasons stated herein, the Court will grant-in-part and deny-in-part all three motions.

LEGAL STANDARD

Summary judgment shall be granted if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c); Hersh v. Allen Products Co., 789 F.2d 230, 232 (3d Cir. 1986). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "At the summary judgment stage the judge's function is not . . . to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. "In making this determination, a court must make all reasonable inferences in favor of the non-movant." Oscar Mayer Corp. v. Mincing Trading Corp., 744 F. Supp. 79, 81 (D.N.J. 1990) (citing Meyer v. Riegel Products Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983)). However, "the party opposing summary judgment 'may not rest upon the mere allegations or denials of the . . . pleading'; its response, 'by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.'" Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001) (quoting Fed. R. Civ. P. 56(e)).

BACKGROUND

The facts underlying this litigation are largely undisputed. At the center of this complex case is a simple dispute regarding the assignment of work in the construction of a public community center in Egg Harbor Township, New Jersey ("the Township"). The Township required that all parties participating in the construction project be signatories to a Project Labor Agreement ("PLA"),*fn1 which the Township had adopted as authorized by state law. See N.J. Stat. Ann. § 52:38-1, et seq. Sambe Construction Company ("Sambe") was the general contractor on the project and, as required, was a signatory to the PLA. Sambe subcontracted to E.P. Donnelly Inc. ("Donnelly") the work of installing prefabricated standing seam metal roofing, soffit, fascia, and related trim. Donnelly, as part of its deal with Sambe, signed a letter of assent (the "Letter of Assent") binding it to the PLA, and agreeing that any party to which it subcontracted work would likewise be required to assent to the PLA.

Contrary to the Letter of Assent, however, Donnelly subcontracted with a non-signatory to the PLA, the Brotherhood of Carpenters and Joiners of America Local Union No. 623 ("Local 623"), to perform standing seam metal roofing work on the project. Donnelly apparently hired Local 623 because it had a collective bargaining agreement with that union. However, as mentioned, Local 623 was not a signatory to the PLA and refused to execute the PLA. In other words, Donnelly, by assenting to both the PLA and Local 623's collective bargaining agreement, had created for itself conflicting contractual obligations.*fn2

Another union, Sheet Metal Workers International Association Local 27, AFL-CIO ("Local 27"), which was a PLA signatory, protested Donnelly's wrongful assignment of work to Local 623. Invoking the PLA's provision for settling jurisdictional disputes between unions, Local 27 scheduled a hearing before arbitrator Stanley Aiges. Donnelly then filed an unfair labor practice charge with the National Labor Relations Board against Local 623, which had threatened to picket the project if Donnelly reassigned the roofing work to Local 27. (Local 623, citing its position that the PLA is invalid, declined to participate in the arbitration.) Arbitrator Aiges ultimately awarded the disputed work to Local 27. Local 27 then sought confirmation of the arbitration award by the Local Joint Adjustment Board ("JAB"), which determined that Donnelly and Sambe had violated the PLA and Local 27's collective bargaining agreement, and, further, that Sambe and Donnelly would be responsible for Local 27's wages and benefits in the amount of $428,319.26 if Local 27 was not ultimately awarded the work.*fn3

Local 27 then filed this action against Donnelly and Sambe, as well as Local 623,*fn4 seeking a preliminary injunction to enforce the awards of Arbitrator Aiges and the JAB. The Court, finding no irreparable injury, declined to issue the preliminary injunction.*fn5 The parties proceeded to conduct discovery on the merits of Local 27's allegations.

In the meantime, proceedings before the NLRB, which had been initiated by Donnelly, continued. On December 31, 2007, the NLRB ruled that Local 623, rather than Local 27, was entitled to the disputed work. Despite this conclusion, the NLRB's ruling, apparently recognizing that Donnelly had created for itself conflicting contractual obligations, stated that Donnelly "would continue to be bound under the terms of the PLA, and the parties to the PLA would retain any rights they may have under state law to bring a suit for damages . . . for any breach of the PLA." United Brotherhood of Carpenters and Joiners of America, Local Union No. 623 and E.P. Donnelly, Inc., and Sheet Metal Workers'International Assoc., Local 27, AFL-CIO, 351 NLRB 1417, 1419-20 (Dec. 31, 2007) (hereinafter "10(k) Decision"). In spite of this proviso, however, Donnelly filed an Unfair Labor Practice charge with the NLRB, pursuant to section 8(b)(4)(ii)(D) of the National Labor Relations Act, as amended, 29 U.S.C. § 158(b)(4)(ii)(D), alleging that Local 27's lawsuit in this Court, by seeking the reassignment of work in contravention of the NLRB's 10(k) Decision, amounted to an unfair labor practice. Administrative Law Judge Joel P. Biblowitz sustained Donnelly's charge. That decision is still pending for final determination by the NLRB.

In light of the NLRB's 10(k) Decision awarding the disputed work to Local 623, and this Court's decision declining to issue a preliminary injunction, Local 623 proceeded to perform the roofing work. The work has now been completed.

Shortly after this Court denied summary judgment earlier in this litigation,*fn6 the NLRB filed an emergent application [Dkt. No. 08-1896] to enjoin Local 27's prosecution of this suit, pursuant to section 10(l) of the National Labor Relations Act, as amended, 29 U.S.C. § 160(l). The Court, finding no incompatibility between the NLRB's 10(k) Decision and the relief sought by Local 27's Second Amended Complaint, denied the NLRB's emergent application.*fn7 The NLRB has appealed that decision to the United States Court of Appeals for the Third Circuit, which has yet to rule.*fn8

Because Local 27 was not enjoined from prosecuting this action, the parties have continued to litigate it. Local 27, Donnelly, and Sambe all now move for summary judgment.

DISCUSSION

A. Contract Claim

Local 27's Second Amended Complaint asserts two causes of action: common-law breach of contract and violation of New Jersey's statute authorizing project labor agreements, N.J. Stat. Ann. 52:38-1, et seq. The Court begins its analysis with the contract claim.

"To establish a breach of contract claim, a plaintiff has the burden to show that the parties entered into a valid contract, that the defendant failed to perform [its] obligations under the contract and that the plaintiff sustained damages as a result." Murphy v. Implicito, No. L-5998-00, 2005 WL 2447776, *4 (N.J. Super. 2005) (citing Coyle v. Englander's, 199 N.J. Super. 212, 223, 488 A.2d 1083 (1985)). Here, Local 27 alleges that it, Sambe, and Donnelly assented to the PLA, a valid contract; that Sambe and Donnelly breached the PLA by assigning the roofing work to Local 623; and that its damages are equal to the payment it would have received for performing the roofing work.

It is undisputed that Local 27 suffered damages from the assignment of the roofing work to another union. Thus, the only elements of the contract claim at issue are: (1) whether Sambe and Donnelly failed to perform their obligations under the PLA, and (2) whether the PLA is a valid contract.*fn9

1. Failure to Perform PLA Obligations: Preclusive Effect of the Arbitration Award

Turning to the first element, failure to perform PLA obligations, Arbitrator Aiges's ruling specifically found that "Sambe [and] Donnelly violated the . . . PLA by assigning the disputed work to members of . . . Local 623." (Arb. Op. 13-14 [Dkt. Ent. 91:6].) If the Court is bound by this finding, Local 27 will have established that obligations owed under the contract were breached.*fn10

Because Local 27 never sought confirmation of the arbitration award by a court, however, it lacks the status of a judgment. See 9 U.S.C. §§ 9, 13 (establishing the procedure for confirmation of an arbitration award in federal court). Thus, the Court must decide what preclusive effect to give it in this proceeding.*fn11 See Wright, Miller, & Cooper, 18B Federal Practice and Procedure: Jurisdiction § 4475.1 at n.6 (WL 2009) ("Arbitral awards, unreviewed by any court, are not such judgments as are entitled to recognition under the full faith and credit statute, 28 U.S.C.A. § 1738. Any decision to accord preclusive effect thus must be a matter of a judicially fashioned preclusion rule.").

Judicial proceedings ordinarily accord preclusive effect to arbitrations that have already adjudicated the same claims or defenses, even when the award is unconfirmed. See id. at note 8 and accompanying text; see also In re Kaplan, 143 F.3d 807, 815 (3d Cir. 1998) ("Generally applicable res judicata rules must sometimes be adapted to fit the arbitration context."). "If any party dissatisfied with [an arbitration] award were left free to pursue independent judicial proceedings on the same claim or defenses, arbitration would be substantially worthless." Wright, Miller, & Cooper, supra, at ยง 4475.1. Although the Third Circuit has not yet defined the parameters of according preclusive effect to an unconfirmed arbitration award, the Restatement (Second) on Judgments has summarized the judicial consensus that ...


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