McKinstry Company v. Sheet Metal Workers' International Association, Local Union 16, Defendant
Docket: 87-3865, 87-4025
Court: Court of Appeals for the Ninth Circuit; October 20, 1988; Federal Appellate Court
McKinstry Company appealed the district court's summary judgment favoring the Sheet Metal Workers' International Association, Local Union #16, in McKinstry's attempt to vacate an arbitration award. The Ninth Circuit affirmed the lower court's decision.
The collective bargaining process in the sheet metal and air conditioning industry involves national negotiations between the Sheet Metal Workers' International Association (SMWIA) and the Sheet Metal and Air Conditioning Contractors National Association (SMACNA), which creates a standard agreement template. Local unions and employers then negotiate based on this template, with the local parties signing the final agreement.
McKinstry, a mechanical contractor in Seattle, had assigned its bargaining rights to SMACNA of Western Washington and signed a collective bargaining agreement with Sheet Metal Workers' Local Union No. 99 on June 1, 1983, incorporating certain articles without modification.
In 1985, McKinstry's bid for a mechanical contract in Portland, Oregon, relied on a subcontractor bid from Columbia Mechanical Co. Local 16, which represents sheet metal workers in Portland, contested McKinstry's subcontracting of work to Columbia, claiming it violated the agreement between McKinstry and Local 99, which prohibits subcontracting with non-signatory firms. Despite Local 16's request for a grievance meeting, McKinstry asserted it had no obligations to Local 16. Subsequently, Local 16 notified McKinstry of a Local Joint Adjustment Board meeting concerning the grievance, to which McKinstry responded by disputing the board's jurisdiction, claiming its agreement was limited to Washington.
McKinstry was found in violation of its contract with Local 99 by the Local Joint Adjustment Board, which awarded Local 16 approximately $19,000 in damages. McKinstry appealed to the National Joint Adjustment Board, which upheld the local board's decision but reduced the damages to about $1,900, placing the remaining fine in abeyance contingent on future violations. McKinstry subsequently filed an action in district court under Section 301 of the National Labor Relations Act to vacate the arbitration award. Both parties moved for summary judgment, with the district court ruling in favor of Local 16, leading McKinstry to appeal.
The standard of review highlights that arbitration is based on contract principles, emphasizing that parties can only be compelled to arbitrate disputes they agreed to submit. If a contract includes an arbitration clause, disputes are presumed arbitrable unless clearly stated otherwise. However, if a party seeking arbitration is not a signatory to the agreement, it must demonstrate that the signatories intended for it to benefit from the agreement for arbitration to be proper.
The court, not the arbitrator, ultimately decides on arbitrability based on the contract, and it should conduct an independent review without deferring to the arbitrator's conclusions. In this case, the district court's conclusion that arbitration was appropriate was upheld, despite potential missteps in its review process. The court confirmed that the agreement had extraterritorial effects that provided enforceable benefits to Local 16, citing specific provisions of the agreement that ensure journeymen sheet metal workers hired outside the contract's jurisdiction would receive compensation and conditions aligned with local agreements where the work occurs.
When the Employer requires work to be performed outside the area covered by the Agreement but within another union's jurisdiction under the Sheet Metal Workers' International Association, they may send a maximum of two qualified sheet metal workers from their home jurisdiction. Any additional workers must be sourced from the area where the work is being conducted. Journeymen sent outside the Agreement's area must receive at least the minimum wage specified in the Agreement but no less than the wage scale of the local agreement governing the work site, along with necessary travel and living expenses. If there is no local agreement in the visited area, the minimum conditions of the home local union apply.
The language in this section is ambiguous regarding whether it pertains solely to Local 99 workers or includes local workers from the visited area. The district court interpreted it to apply to workers from both groups, emphasizing that the Agreement aims to extend benefits to all workers, not just those represented by Local 99. Other sections of the Agreement support this interpretation, indicating it covers the employment conditions of all the Employer's employees, including those hired outside the Agreement's jurisdiction.
Ultimately, Section 6 is designed to benefit workers from local unions other than Local 99, establishing a non-competition agreement among affiliated locals. If the Employer were to send more than two workers into another local's area, it would be that local, not Local 99, that would have grounds for grievance, confirming that the visited-area locals are intended to receive benefits under the Agreement.
Local 16 is challenged by McKinstry regarding its standing to enforce the Agreement, as it is not a signatory to it. McKinstry cites precedents indicating that only signatory parties may bring grievances under collective bargaining agreements, specifically referencing Local 13 and Martin Marietta cases. However, these cases are deemed not applicable to the current situation because they involved conflicts between locals and their parent unions. In contrast, Local 16 operates without such a conflict, and the Agreement aims to foster cooperation among affiliated locals of SMWIA.
The interpretation of the grievance procedure in Article X is pivotal, as it references grievances from the Employer or Union but not explicitly against them. Nonetheless, evidence suggests a reciprocal interpretation was intended, as indicated by affidavits from negotiators Russell L. Smith and Edward J. Carlough, which assert that the grievance procedures apply to both employers and local unions in cases of disputes. The provision is thus interpreted to allow grievances to be filed by local unions against employers, even when those employers operate outside their geographic area. Denying such access would create an unbalanced situation not likely intended by the parties involved.
The two-tiered national/regional bargaining structure in the industry is reflected in the Agreement, which specifies that it applies to all employees of the Employer, McKinstry, engaged in work under the jurisdiction of the Sheet Metal Workers International Association. This broad language indicates that McKinstry is bound by the Agreement for contracting work beyond Local 99's jurisdiction but within the parent union's authority. Local 16 has the rights to enforce these provisions through grievances.
McKinstry contends that allowing Local 16 to file a grievance would violate public policy, arguing it would effectively impose the Local 16 Collective Bargaining Agreement on employees of Columbia Mechanical, infringing on their right to self-determination under the National Labor Relations Act (NLRA). However, this argument is deemed meritless since the case is distinct from precedents where unions attempted to control new bargaining units. Instead, Local 16 is focused on preventing non-union workers from accessing the Portland Project job site, a situation that does not constitute the establishment of a new bargaining unit.
While the Agreement may pressure Columbia Mechanical workers to join Local 16, the concern is not about the creation of new bargaining units but the risk of secondary boycotts. The Agreement restricts McKinstry from subcontracting to non-signatory employers like Columbia Mechanical, which could create pressure on non-union workers to organize. Secondary boycotts are generally prohibited by the Labor and Management Reporting Disclosure Act (LMRDA), but the construction industry has an exemption under the 'construction industry proviso.' Thus, the union signatory subcontracting clause in the Agreement, which prevents subcontracting to non-signatory employers, is legitimate and enforceable.
However, the situation is complicated because Local 16 is trying to enforce the subcontracting clause beyond the geographical scope typically covered by such agreements, as it involves a 'sister' local union.
Local 16's position in the dispute aligns with established practices in construction contracts, where collective bargaining typically involves a national agreement modified at the local level, especially regarding wages. Congress acknowledged these subcontracting agreements in the construction industry, as seen in Woelke v. Romero, and such agreements do not violate public policy. The interpretation of the SMACNA/SMWIA agreement, which extends the subcontracting clause's applicability, supports labor relations goals by promoting unity among local unions and minimizing fragmentation in collective bargaining.
The discussion contrasts with Connell Constr. Co. v. Plumbers, where a subcontracting agreement was invalidated due to the lack of a collective bargaining relationship. McKinstry's argument, citing Connell, is deemed erroneous since the subcontracting clause in question originates from McKinstry's agreement with Local 99, not imposed by Local 16. Unlike the local in Connell, Local 99's agreement provides benefits to Local 16 as a third-party beneficiary, which is permissible under collective bargaining agreements. There are no prohibitions in Connell against such third-party rights arising from these agreements.
In the event of non-compliance with an award from a Local Joint Adjustment Board or the National Joint Adjustment Board, a local party has thirty days to enforce the award through legal means, including court proceedings, in accordance with applicable state and federal law. The prevailing party is entitled to recover costs and attorney's fees, and the provision does not limit fee awards to only 'the Union' (Local 99), but allows any prevailing 'local party' to receive fees. The district court's determination that Local 16 is entitled to such fees under the contract was upheld, referencing relevant case law.
The McKinstry/Local 99 Agreement grants rights regarding subcontracting to sister locals, like Local 16, in visited areas, allowing them to utilize grievance and arbitration procedures outlined in the Agreement. This Agreement is not considered against public policy, and the award of attorney's fees is deemed appropriate.
Further, McKinstry clarified that it did not undercut local wage scales, but was unable to secure the job due to competitive bidding; the work performed was compliant with the local plumbers and pipefitters agreement. The excerpt discusses the differing burdens of proof for signatories versus nonsignatories in arbitration disputes, emphasizing that nonsignatories do not have the same presumptions of applicability regarding agreements. The parties can agree that enforcement rights lie solely with a signatory party on behalf of a nonsignatory. Additionally, the language in Section 6 of the Agreement suggests that the visited-area local retains rights under its local agreement, making these rights enforceable against McKinstry. Further analysis is required to determine if Local 16 can enforce these rights independently of Local 99.
Article VIII, Section 2 mandates that for all work performed by journeymen, apprentices, and pre-apprentices covered under the Agreement, if the work is fabricated or assembled within the jurisdiction of the Union or for installation in another Local Union affiliated with the Sheet Metal Workers' International Association, the higher wage scale at the job site must be paid to the journeymen, regardless of the wage scale specified in the Agreement.
McKinstry argues that the Local Joint Adjustment Board for Local 16 lacks jurisdiction over it, framing this as a 'proper party' issue, suggesting that Local 16 can only file grievances within its own area. Article X, Section 3 indicates that visiting contractors can have grievances resolved by a Local Joint Adjustment Board, even if they are not a party to the local Agreement, which supports the notion of a grievance procedure accessible to nonsignatories.
Additionally, the local conditions clause may be interpreted to integrate Local 16's grievance process into the Agreement, yielding a similar effect since Local 16 employs the standard SMWIA Article X procedure. Elements of a collective bargaining relationship exist, as Local 16 and Local 99 (with which McKinstry negotiated) are sister locals, both utilizing the same standard form agreement for collective bargaining.
