International Union of Bricklayers & Allied Craftworkers, Local 5 v. Banta Tile & Marble Co.
Docket: No. 08-4135
Court: Court of Appeals for the Third Circuit; September 14, 2009; Federal Appellate Court
Banta Tile and Marble Company, Inc. appeals the District Court's summary judgment favoring the International Union of Bricklayers and Allied Craftworkers, Local 5. Banta contends that the District Court incorrectly ruled that it was obligated to arbitrate a grievance from Local 5 despite Banta terminating its agreement with the union in April 2006. Banta had previously engaged in collective bargaining agreements with Local 5 and was also a signatory to agreements with Local Union No. 1 and the Associated Tile Contractors of Philadelphia, which included “me too” and “evergreen” clauses requiring adherence to area-wide agreements unless a modification notice was provided. No such notices were issued by either party.
In 2004, the Association and Local 1 established a successor agreement that included a “traveling contractors” clause, obligating employers to comply with other local agreements when sending union members outside Philadelphia. Local 5, which holds a standard agreement from May 2006 to April 2010, filed a grievance against Banta in August 2006 for non-compliance, which was arbitrated in Local 5's favor. Banta argued that it was not subject to arbitration because it was not a signatory to Local 5's agreement. However, the District Court determined that Banta's agreement with Local 1 intended to benefit Local 5, allowing the latter to invoke arbitration. Consequently, the court granted summary judgment to Local 5, leading to Banta's appeal regarding the arbitrability of the dispute.
Arbitration arises from contract law, requiring parties to voluntarily agree to submit disputes to arbitration. Courts must assess two main issues to determine arbitrability: the existence of a written arbitration agreement and whether the dispute falls within that agreement's scope. In reviewing arbitrability, courts conduct an independent assessment of the agreement without deferring to the arbitrator's judgment.
For non-signatories seeking arbitration, they must demonstrate that signatories intended for them to benefit from the agreement; if this intent is established, and the arbitration clause allows for their enforcement of benefits, arbitration is deemed appropriate.
"Me too" clauses, like those in the Banta and Local 1 agreement, are recognized as common and enforceable. These clauses enable independent employers to access the benefits of industry-wide collective bargaining agreements without engaging in separate negotiations. Such agreements ensure that independent employers are not subject to less favorable conditions than their competitors, can benefit from protections in the industry agreement, save on negotiation costs, and maintain coverage under agreements that apply to the rest of the industry.
In precedent cases, such as Berwind Corp. v. Comm’r of Soc. Sec., "me too" agreements are characterized as binding agreements for employers to adhere to the terms of a national wage agreement, equating the rights and obligations of "me too" signatories with those of direct signatories. This interpretation aligns with rulings from other circuit courts, reinforcing the validity of "me too" arrangements in collective bargaining contexts.
Banta contends that the “me too” provisions in the contracts it signed in 1997 were intended solely to extend the existing terms of those agreements for the duration of any subsequent area wide contract, essentially viewing them as “evergreen” clauses. However, this interpretation overlooks the explicit commitment Banta made to be bound by area wide negotiated contracts with the Association, indicating that Banta accepted the terms of future agreements, not merely their duration. As a smaller employer, Banta benefitted from the master collective bargaining agreement without engaging in collective bargaining itself. Despite having signed the agreements containing the “me too” provision to gain advantages, Banta now seeks to evade its obligations by disputing the inclusion of a “traveling contractors” clause. The District Court correctly determined that by signing the agreement with Local 1 in 1997 and not altering or terminating it, Banta agreed to be bound by any subsequent master agreements negotiated by the Association and Local 1. The clear language of the 1997 contracts and established legal precedent affirm the enforceability of “me too” clauses, negating Banta’s claim of being bound only to the original terms.
“Traveling contractors” clauses are prevalent in the construction industry, allowing benefits to extend to workers not represented by the local union signatory to the agreement. While there is no local case law on this issue, persuasive rulings from other Circuits support the District Court's decision permitting Local 5 to arbitrate against Banta. The Ninth Circuit, in McKinstry, recognized that such clauses aim to provide benefits to workers outside the local union's representation, while the Eighth Circuit similarly affirmed that these agreements extend benefits beyond the signatory local union. Additionally, the D.C. Circuit has held that traveling contractors clauses bind a non-signatory employer to the collective bargaining agreement effective at a jobsite, reinforcing the broad applicability of these clauses.
The "traveling contractors" clause stipulates that when an employer has work outside the Agreement's coverage area but within the jurisdiction of another affiliate's Collective Bargaining Agreement, it must adhere to the terms of that local Agreement for all employees performing the work, regardless of their hiring location. Employees sent to projects outside the Agreement's area must receive at least the minimum wage established under the Agreement or the local Agreement, along with all required contributions. The key issue is whether Local 5, as a non-signatory, can invoke the arbitration clause; it can, as it demonstrated that the Agreement was intended to benefit unions beyond those directly represented by the signing union. Banta contends that it did not intend for the "traveling contractors" clause to benefit Local 5, but this argument contradicts legal principles regarding "me too" and "evergreen" clauses. Banta agreed to the terms of the collective bargaining agreements negotiated by Local 1 and the Association, including future amendments via the "me too" clause, which remains unmodified since the "traveling contractors" clause was added. Consequently, Banta is now bound by the terms of that clause. The District Court's summary judgment in favor of Local 5 is affirmed, as the court had jurisdiction under 28 U.S.C. 1331 and the appellate jurisdiction under 28 U.S.C. 1291. Banta's affirmative defenses were rejected because it failed to act within the thirty-day period to challenge the arbitration award, resulting in the expiration of the statute of limitations. The appellate review of the district court's summary judgment is conducted under plenary review.
