Maui Trucking, Inc. Decoite Trucking, Inc. And T.J. Gomes Trucking Co., Inc., and General Contractors Labor Association and Labor Association of the Building Industry Association of Hawai'i, Plaintiffs-Intervenors-Appellees v. Operating Engineers Local Union No. 3 International Union of Operating Engineers Afl-Cio Douglas Sado Dba Doug's Trucking Doug's Trucking Equipment & Repair, Inc. Sado Trucking, Inc. Dba Sado Trucking Co. And Charles Barton Dba C & N Trucking
Docket: 92-15321
Court: Court of Appeals for the Ninth Circuit; September 23, 1994; Federal Appellate Court
The case involves Maui Trucking, Inc. and other plaintiffs challenging the legality of Section 24E of a Master Agreement between the Operating Engineers Local Union No. 3 and the General Contractors Labor Association. Section 24E stipulates that general contractors can only subcontract off-site work to subcontractors who comply with specific wage, hours, payroll, and grievance procedure requirements. Independent nonunion truckers, concerned that this provision would eliminate their business opportunities, threatened legal action against the union and the associations. This led the associations to refrain from implementing Section 24E due to potential legal issues. Consequently, Local No. 3 sought a declaratory judgment to affirm the legality of Section 24E under federal labor and antitrust laws. The ruling by Judge David A. Ezra determined that Section 24E was valid and did not violate Section 8(e) of the National Labor Relations Act, recognizing it as a lawful union standards clause. The appellate court later denied petitions for rehearing and en banc review, amending the original opinion but maintaining the validity of the lower court's decision.
In **Associated Builders Contractors v. N.L.R.B.**, Judge Ezra referenced **General Teamsters Local 386** to establish that union-imposed restrictions aim to protect employee work opportunities and standards from subcontractors not adhering to prevailing wages and benefits. However, he acknowledged that if a union's standards clause seeks to regulate employment practices of firms dealing with the employer, rather than safeguarding the unit's employees, it may be deemed secondary and unlawful. He cited **Building Materials and Construction Local 216**, where similar restrictions on subcontractors were invalidated because they did not pertain to preserving unit work. Judge Ezra deferred determining the validity of the restrictions' application to future factual developments.
He concluded that the disputed clause did not infringe upon Section 8(c) and was a legitimate subcontracting restriction, also finding it compliant with federal antitrust laws, which exclude traditional union activities from antitrust scrutiny. The independent nonunion truckers, dissatisfied with the outcome, initiated a lawsuit against Local No. 3, later allowing the Associations to join as plaintiffs to challenge the legality of Section 24E. Judge Samuel King ultimately ruled in favor of the Associations and Local No. 3, affirming that Section 24E was valid as applied, serving to maintain union work standards effectively.
The independent truckers have appealed a ruling, and the court affirms its jurisdiction under 28 U.S.C. Sec. 1291, reversing and remanding for further proceedings. The key issue is whether the work preservation analysis should encompass the entire State of Hawaii, as argued by the Associations and Local No. 3, or be limited to Maui, as contended by the independent truckers. Judge King determined that the relevant work universe is the entire state, a conclusion the court supports, noting that many General Contractors operate across all Hawaiian islands, making it impractical to analyze the islands separately.
The court then addresses whether Section 24E is valid when considering Hawaii as a whole. The inquiry focuses on whether the clause primarily aims to protect unit work or standards, or whether it serves broader union objectives. Judge King posited that if Maui were the sole focus, factual disputes about relevant work would arise. However, he concluded that statewide analysis indicated Association members performed a significant portion of off-site hauling work, thereby supporting Section 24E’s legitimate work preservation purpose. The court respectfully disagrees, noting that on Maui, only three of sixty-seven General Contractors engage in the relevant work, and a similar situation exists on Oahu. This suggests that the disputed work has not been traditionally performed by General Contractors in Hawaii, paralleling a prior ruling where a clause was deemed secondary and in violation of Sec. 8(e) due to lack of a genuine work preservation objective.
The fabrication of items by unit employees has not been a customary practice, occurring only in exceptional cases to meet specific needs. Contractors may occasionally fabricate round pipes and fittings, but the Associations acknowledge a decline in their involvement over time. General Contractors prefer not to invest in large quantities of metal that may remain unused. A genuine issue of material fact exists regarding whether Section 24E legitimately aims to preserve relevant work, as the Associations' claimed work appears insufficient to justify Section 24E's application as a valid means of addressing labor relations between the contracting employer and employees.
An individualized factual analysis is necessary to determine the validity of Section 24E, leading to the decision to vacate the district court's summary judgment favoring the Associations and Local No. 3 concerning alleged violations of the Sherman Act and Clayton Act. The case of Richards v. Neilsen Freight Lines is referenced, highlighting that while union activities may face scrutiny, not all violations of labor laws automatically lead to antitrust implications. The independent truckers argue that Richards is distinguishable due to its limited scope compared to their case, but the court opts to remand the issue for further examination rather than making a determination at this stage. Additionally, a valid subcontracting clause in a collective bargaining agreement cannot serve as a basis for an antitrust claim unless it is part of an antitrust conspiracy.
The court addressed the validity of Section 24E, which aims to preserve union standards, asserting that it does not require the existence of work to preserve. Judge King differentiated between work preservation and union standards, suggesting that protecting union wages is a legitimate union goal, independent of specific work preservation. However, the court disagreed with this reasoning, arguing that without substantial work or competition, the preservation of union standards alone does not justify the clause, as it would simply aim to meet union goals elsewhere. The court found reliance on precedents, particularly Sheet Metal Workers Local 91, misplaced, as the justification in that case centered on protecting unit work. It acknowledged that while not all work preservation agreements violate the National Labor Relations Act, a union standards clause must specifically inhibit subcontracting of work that would otherwise be performed by bargaining unit members. Clauses serving broader union interests without direct ties to unit work are deemed unlawful under Section 8(e). Additionally, the court noted the existence of a doctrine that could validate claims for work similar to traditional unit work, but this was not considered by the district court, which left the issue unresolved. The decision was reversed and remanded for further proceedings, emphasizing that any agreement violating Section 8(e) is unenforceable and void.
