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Jayeff Construction Corp v. (Jei/Kmw) Laborers' International Union of North America

July 27, 2012

JAYEFF CONSTRUCTION CORP.,
PLAINTIFF,
v.
(JEI/KMW) LABORERS' INTERNATIONAL UNION OF NORTH AMERICA, ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Joseph E. Irenas

OPINION PURSUANT TO FED.R.CIV.P. 52(a)(1)

IRENAS , Senior District Judge:

In this declaratory judgment action, Plaintiff seeks to void a short form agreement that incorporates a statewide collective bargaining agreement ("CBA") by reference. Upon becoming a signatory to a statewide CBA, a contractor must hire only union laborers and remit union benefits for all New Jersey projects.

There are three ways a contractor can become a union shop:

(1) the contractor can "give their bargaining rights to the building contractors of New Jersey or the masons contracting association;" (2) the contractor can sign the full statewide CBA; or (3) the contractor can sign a short form agreement that incorporates the statewide CBA by reference. (Trial Tr. 120:6-10, July 10, 2012) On the other hand, for a more limited collective bargaining agreement, a contractor can enter into a "project only" agreement that will bind the contractor to hire and pay union benefits on a project specific basis. (Trial Ex. J-1) The dispute here revolves around the interplay between the short form and project only agreements.

On July 9, 2012, this Court held a two day bench trial solely on the issue of liability. Although Plaintiff originally advanced several contract formation defenses, Plaintiff briefed and raised only fraud in the execution at trial.

I. Findings of Fact

1. Plaintiff is a commercial construction general contracting company that has been in business since 1987. (Stip. Fact ¶ 1) *fn1 Jayeff directly employs relatively few employees, instead electing to subcontract to specialized companies. (Trial Tr. 8:1-7, July 9, 2012) This work is also known as construction management. (Trial Tr. 8:20, July 9, 2012)

2. Defendants New Jersey Building Laborers Statewide Benefit Funds and the Trustees thereof are trust funds and employee benefit plans and their respective fiduciaries. (Stip. Fact ¶ 2)

3. Throughout its existence, Jayeff utilized an open shop labor force, which means that Jayeff hired and subcontracted without regard to union affiliation. *fn2 (Stip. Fact ¶ 3; Trial Tr. 8:1-7, July 9, 2012) Approximately 75% of Jayeff's business has been non-union. (Trial Tr. 93:22, July 9, 2012)

4. Prior to 2001, Jayeff occasionally hired one or two union laborers on big projects to "make [the union representative] look good." (Trial Tr. 9:11-12, July 9, 2012) Although Jayeff would pay union benefits, Jayeff refused to sign the statewide CBA. (Trial Tr. 56:14-15, July 9, 2012) For fifteen years, Jayeff and the local unions interacted without a written contract. (Trial Tr. 9:5-12, July 9, 2012)

5. In 2001, Plaintiff began construction on the Wyndham Hotel in Elizabeth, New Jersey. (Trial Tr. 10:10-11, July 9, 2012) This was a high profile project, and Jayeff employed several union laborers. (Trial Tr. 11:16-20, July 9, 2012) Due to the large number of laborers, the union requested that Jayeff sign an agreement. (Trial Tr. 12:10-14, July 9, 2012) For the first time in the parties' relationship, Plaintiff entered into a project only agreement with Local No. 394, which was affiliated with the Laborers International Union of North America and Affiliated District Council and Local Unions (collectively "LIUNA"). (Stip. Fact ¶ 5)

6. The Wyndham Hotel project only agreement was memorialized on a preprinted union form entitled "Short Form Agreement, Project Only Form" and dated October 12, 2001. (Stip. Fact ¶ 6; Trial Ex. J-1) Chief Financial Officer Kenneth Schwarz signed the agreement on behalf of Jayeff. ( Id.

7. The project only agreement, like the short form agreement, incorporated the full statewide CBA by reference, which bound Jayeff to employ or subcontract only to union laborers and companies for the duration of the CBA in New Jersey. (Trial Exs. J-2 to J-4) The project only agreement, however, unlike the short form agreement, limited the scope of the CBA to just one project. ( See Trial Exs. J-1 to J-2)

8. Before completing the Wyndham Hotel project, Plaintiff began construction on the International Trade Center ("ITC") shopping center in Mount Olive, New Jersey. (Stip. Fact ¶ 7)

9. At the end of January, 2002, a representative from Local No. 593, Carmen Perry, approached Plaintiff's project manager, Russell Bosco, to add union laborers for cleanup duty. (Stip. Fact ¶ 8)

10. Bosco informed Perry that Jayeff would hire union workers and pay all the benefits, but would not sign a full statewide CBA. ( ...


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