Carpenters Health and Welfare v. Management Resource Systems In ( 2016 )


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  •                                        PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    ______________
    No. 15-2508
    ______________
    CARPENTERS HEALTH AND WELFARE FUND OF
    PHILADELPHIA AND VICINITY; CARPENTERS
    PENSION AND ANNUITY FUND OF PHILADELPHIA
    AND VICINITY; CARPENTERS SAVINGS FUND OF
    PHILADELPHIA AND VICINITY; CARPENTERS JOINT
    APPRENTICE COMMITTEE; METROPOLITAN
    REGIONAL COUNCIL OF CARPENTERS, UNITED
    BROTHERHOOD OF CARPENTERS AND JOINERS OF
    AMERICA; CARPENTERS POLITICAL ACTION
    COMMITTEE OF PHILADELPHIA & VICINITY;
    EDWARD CORYELL; INTERIOR FINISH
    CONTRACTORS ASSOCIATION OF DELAWARE
    VALLEY INDUSTRY ADVANCEMENT PROGRAM;
    CARPENTERS INTERNATIONAL TRAINING FUND,
    FKA National Apprenticeship and Health and Safety Fund,
    Appellants
    v.
    MANAGEMENT RESOURCE SYSTEMS INC;
    DOUGLAS W. MARION
    ______________
    On Appeal from the United States District Court
    for the Eastern District of Pennsylvania
    (D.C. Civ. No. 2-14-cv-07097)
    District Judge: Hon. Gerald J. Pappert
    ______________
    Argued: June 22, 2016
    Before: McKEE, Chief Judge, FISHER and GREENAWAY, JR.,
    Circuit Judges
    (Opinion Filed: September 13, 2016)
    ______________
    James E. Goodley, Esq.
    Stephen J. Holroyd, Esq. [ARGUED]
    Jennings Sigmond
    1835 Market Street
    Suite 2800
    Philadelphia, PA 19103
    Attorneys for Appellants
    Walter S. Zimolong, III, Esq. [ARGUED]
    Suite 1201
    1429 Walnut Street
    Philadelphia, PA 19102
    Attorney for Appellees
    ______________
    OPINION OF THE COURT
    ______________
    McKEE, Chief Judge
    Plaintiffs collectively appeal the district court’s
    dismissal of their claims against Management Resource
    Systems (“MRS”). The district court rejected Plaintiffs’
    claim that a collective bargaining agreement (“CBA”)
    obligated MRS to make employee benefit contributions and
    submit to audits pursuant to a separate “me-too” agreement
    between MRS and the Plaintiffs. The district court dismissed
    the Plaintiffs’ claims pursuant to Federal Rule of Civil
    Procedure 12(b)(6), agreeing with MRS that the complaint
    did not sufficiently plead that MRS is bound by the CBA.
    Because we disagree, we will reverse the district court’s
    dismissal of the complaint.
    I. FACTS AND PROCEDURAL HISTORY
    Plaintiffs are union and management sponsored trust
    funds and employee benefit plans that represent construction
    2
    industry employees.1 MRS is a corporation that constructs
    commercial buildings.2 At least insofar as this dispute is
    concerned, the relationship between Plaintiffs and MRS
    began in the 1990s. In 1994 and again in 1997, MRS signed
    assent letters (or “me-too” agreements) binding it to CBAs
    bestowing various rights on Plaintiffs. Pursuant to the 1997
    assent letter at issue here, MRS agreed to be bound by a more
    comprehensive agreement (“1997-2001 CBA”), which was
    then in force between the Interior Finish Contractors
    Association (“IFCA”), a multiemployer association, and the
    union (both Plaintiffs/Appellants).
    According to Plaintiffs, by signing the 1997 letter,
    MRS also agreed to be bound by a later CBA (“2012-2015
    CBA”). They claim the 1997 letter contains an “evergreen
    clause” that empowers the union and IFCA to negotiate
    successor agreements that bind MRS. Plaintiffs assert that
    this delegation of negotiating authority remained in force
    because MRS never gave Plaintiffs the notice required to
    terminate the 1997 letter’s evergreen clause. MRS concedes
    that it never gave notice of termination. However, it disputes
    the Plaintiffs’ characterization of the letter agreement. MRS
    denies that the letter continuously granted bargaining rights.
    1
    The district court identified the Plaintiffs as: “Carpenters
    Health and Welfare Fund of Philadelphia and Annuity Fund
    of Philadelphia and Vicinity, Carpenters Savings Fund of
    Philadelphia and Vicinity, Carpenters Joint Apprentice
    Committee, Carpenters Political Action Committee of
    Philadelphia and Vicinity, Carpenters International Training
    Fund, Edward Coryell, Interior Finish Contractors
    Association of Delaware Valley Industry Advancement
    Program, and Metropolitan Regional Council of Carpenters,
    United Brotherhood of Carpenters and Joiners of America.”
    Carpenters Health & Welfare Fund of Phila. & Vicinity v.
    Mgmt. Res. Sys., Inc., No. CIV. A. 14-07097, 
    2015 WL 2395152
    , at *1 n.2 (E.D. Pa. May 19, 2015).
    2
    
    Id. at *1
    n.1. Douglas Marion, Vice President of MRS, is
    also charged in the Plaintiffs’ complaint. Plaintiffs claim that
    Marion assumed guarantor liability by signing the agreements
    on behalf of MRS.
    3
    Thus, according to MRS, it is not bound by the 2012-2015
    CBA.
    Under the 2012-2015 CBA and its predecessor 1997-
    2001 CBA, employers must make specified contributions to
    various funds of the Plaintiffs and they must permit audits of
    records relevant to their obligations to employees. For
    instance, the contested 2012-2015 CBA states that the
    “Employer shall . . . pay . . . a sum . . . for each hour worked
    for a Pension and Annuity contribution.”3 With respect to
    audits, the CBA provides that the
    Employer shall . . . permit such
    agent during regular business
    hours to inspect and make copies
    of any and all records of the
    Employer          pertaining      to
    compensation paid to employees,
    hours worked by employees,
    monies withheld from employees
    for taxes . . . . The Parties hereto
    recognize and agree that the
    [union] has an obligation and
    right to collect monies owed the
    Fringe Benefit Funds by the
    Employer and/or owed to the
    [union] . . . .4
    Plaintiffs sent MRS several requests for audits because they
    believed that MRS had failed to make contributions required
    by the 2012-2015 CBA.5 They filed this suit when MRS did
    not comply. Plaintiffs asked for (1) injunctive relief requiring
    3
    App. at A61.
    4
    
    Id. at A74-75.
    5
    Plaintiffs allege in their complaint that they are “without
    sufficient information or knowledge to plead the precise
    nature, extent and amount of the Defendants’ delinquency
    since the books, records and information necessary to
    determine this liability are in the exclusive possession,
    custody and control or knowledge of the Defendants.”
    Plaintiffs Complaint at 5 ¶17.
    4
    MRS to submit to an audit; (2) a post-audit judgment for any
    amount due with liquidated damages, interest, and costs; (3)
    post-audit relief under 29 U.S.C. § 1145 for any unpaid
    ERISA contributions; and (4) a permanent injunction
    compelling MRS to comply with the 2012-2015 CBA and any
    subsequent CBAs.6
    MRS moved to dismiss pursuant to Federal Rule of
    Civil Procedure 12(b)(6) based on its conclusion that the
    complaint did not state a claim upon which relief could be
    granted.7 MRS argued that it obviously did not sign the
    2012-2015 CBA and claimed that the assent letter could not
    bridge the critical gap. MRS also challenged the complaint
    on the ground that it failed under Luterbach, a test the NLRB
    created to determine when an employer that does not sign a
    CBA can nevertheless be bound by the results of
    multiemployer bargaining.8 The district court agreed with
    MRS on both fronts and dismissed the Plaintiffs’ complaint.9
    This appeal followed.10
    II. JURISDICTION AND STANDARD OF REVIEW
    6
    
    Id. at 6-10.
    7
    According to statements made by Plaintiffs’ counsel during
    oral argument, Plaintiffs did not request an opportunity to
    amend their complaint. In any event, as we explain below,
    even without amendment the complaint was sufficient.
    8
    James Luterbach Constr. Co., Inc., 
    315 N.L.R.B. 976
    (1994).
    9
    Because of its conclusion that the complaint could not
    proceed, the district court declined to reach the issue of
    Marion’s personal liability as Vice President of MRS.
    Carpenters Health & Welfare Fund of Phila. & Vicinity v.
    Mgmt. Res. Sys., Inc., No. CIV. A. 14-07097, 
    2015 WL 2395152
    , at *4 n.7 (E.D. Pa. May 19, 2015).
    10
    The district court had jurisdiction under ERISA, 29 U.S.C.
    §§ 1132, 1145, and Labor Management Relations Act, 29
    U.S.C. § 185(a). We have jurisdiction over this appeal
    pursuant to 28 U.S.C. § 1291.
    5
    Our review of the district court’s 12(b)(6) dismissal is
    de novo.11 Thus, we employ the same standard as the district
    court. Federal Rule of Civil Procedure 8(a)(2) instructs us
    that a complaint need not amount to more than a “short and
    plain statement.” In turn, Rule 12(b)(6) provides that a party
    may move to dismiss for “failure to state a claim upon which
    relief can be granted.”
    The Supreme Court’s analysis in Bell Atlantic v.
    Twombly12 and Ashcroft v. Iqbal guides our inquiry.13
    Accordingly, we first outline the elements a plaintiff must
    plead to state a claim for relief.14 We then “peel away those
    allegations that are no more than conclusions and thus not
    entitled to the assumption of truth.”15 Finally, we look for
    well-pled allegations, assume their veracity, and determine
    whether they plausibly give rise to a right to relief.16 This
    plausibility standard requires more than a “sheer possibility
    that a defendant has acted unlawfully,” but it is not akin to a
    “probability requirement.”17 In assessing plausibility, we
    construe the complaint in the light most favorable to the
    plaintiff.18
    III. DISCUSSION
    The resolution of our inquiry turns on the answers to
    two questions: (1) Did the complaint sufficiently plead that
    the letter’s evergreen clause binds MRS to the 2012-2015
    CBA? (2) Does the NLRB’s holding in Luterbach nullify the
    2012-2015 CBA with respect to MRS?
    11
    See Phillips v. Cty. of Allegheny, 
    515 F.3d 224
    , 230 (3d
    Cir. 2008).
    12
    Bell Atl. Corp. v. Twombly, 
    550 U.S. 544
    (2007).
    13
    Ashcroft v. Iqbal, 
    556 U.S. 662
    (2009).
    14
    Bistrian v. Levi, 
    696 F.3d 352
    , 365 (3d Cir. 2012).
    15
    
    Id. 16 Id.
    17
    
    Iqbal, 556 U.S. at 678
    .
    18
    Phillips v. Cty. of Allegheny, 
    515 F.3d 224
    , 233 (3d Cir.
    2008).
    6
    A. The Evergreen Clause
    We think it is clear that the assent letter at issue here
    functions as a me-too agreement. Such agreements are
    “common and generally enforceable”19 contracts whereby an
    employer that is not a member of a multiemployer association
    agrees to be bound by the terms of CBAs entered into by the
    association.20 There is no distinction between actual and
    “me-too” signatories to a CBA.21 This allows individual
    employers to benefit from the terms of an association’s CBAs
    without actually having to get involved in the collective
    bargaining process.22
    MRS disputes the “me-too” characterization of the
    1997 letter. But it does not offer any explanation as to why
    that label is a “misnomer,” and we can find none. 23 The
    objection is meritless. There is no doubt that the 1997 me-too
    letter attached to the complaint bound MRS to CBAs between
    the IFCA multiemployer association and the union even
    though MRS was not a party to CBA negotiations. However,
    the question before us is which CBAs are covered by the me-
    19
    Int’l Union of Bricklayers & Allied Craftworkers, Local 5
    v. Banta Tile & Marble Co., Inc., 344 F. App’x 770, 772 (3d
    Cir. 2009) (unpublished); see Constr. Teamsters Health &
    Welfare Tr. v. Con Form Constr. Corp., 
    657 F.2d 1101
    , 1103
    (9th Cir. 1981) (“It is clear that a signatory to a [me-too]
    Agreement can agree to be bound by future modifications,
    extensions and renewals of [a CBA].”).
    20
    See Berwind Corp. v. Comm’r of Soc. Sec., 
    307 F.3d 222
    ,
    237 n.18 (3d Cir. 2002).
    21
    See Shenango Inc. v. Apfel, 
    307 F.3d 174
    , 188 n.9 (3d Cir.
    2002).
    22
    See Ariz. Laborers, Teamsters & Cement Masons Local
    395 Health & Welfare Tr. Fund v. Conquer Cartage Co., 
    753 F.2d 1512
    , 1518 (9th Cir. 1985) (noting that “the basic
    purpose of a ‘me-too agreement’ is to allow . . . employers to
    obtain all the benefits of the master collective bargaining
    agreement that is negotiated by the principal employers in the
    industry without having to participate in the industry
    negotiations”).
    23
    MRS Br. at vii n.3.
    7
    too letter. Put another way, we must decide how long the
    contractual obligations in that letter bound the signatories.
    Plaintiffs claim that the “evergreen clause” in the me-too
    letter extends the 1997-2001 CBA to the 2012-2015 CBA.
    Courts generally regard evergreen clauses as creating a
    perpetual agreement24 that can only be terminated with notice.
    “[I]f neither party terminate[s] the contract, it w[ill] be
    renewed automatically.”25 Here, Plaintiffs point to the
    following language in the me-too letter that they claim
    triggers automatic renewal:
    This Agreement shall be effective
    as of the date set forth below and
    shall remain in full force and
    effect for the duration of the
    collective bargaining agreement
    between the [union] and [IFCA]
    that is effective on the date of this
    Agreement and for the duration of
    any addition, modification or
    renewal thereof until one party
    shall provide to the other written
    notice . . . to terminate.26
    According to Plaintiffs, the commitment to be bound to “any
    addition, modification or renewal” is a prototypical evergreen
    clause that strictly binds MRS to all successor CBAs until
    MRS provides “written notice . . . to terminate.” Plaintiffs
    claim that MRS’ failure to give the required notice of
    termination allowed the evergreen clause to continue in effect
    and that clause operated to bind MRS to the 2012-2015 CBA.
    24
    See Holland v. Freeman United Coal Mining Co., 574 F.
    Supp. 2d 116, 123 (D.D.C. 2008) (interpreting an evergreen
    clause as creating a “perpetual obligation to contribute to the
    Trust at rates set forth in all ‘successor’ agreements”).
    25
    Operating Eng’rs Local 139 Health Benefit Fund v.
    Gustafson Constr. Corp., 
    258 F.3d 645
    , 649 (7th Cir. 2001).
    26
    App. at A97 ¶2.
    8
    MRS responds that, although Plaintiffs now rely on the
    fact that the me-too letter states that MRS is bound to
    “addition[s], modification[s], or renewal[s],” there are no
    allegations in the complaint that the 2012-2015 CBA falls
    into any of these categories. Instead, Plaintiffs simply
    attached the CBA and assent letter to the complaint without
    explanation.      MRS adds that even though Plaintiffs
    subsequently attempted to make such allegations in their
    briefing, it is simply too late for such claims. The district
    court agreed. It explained: “It is axiomatic that the complaint
    may not be amended by the briefs in opposition to a motion to
    dismiss.”27
    However, that mistakenly ignores the fact that
    although the complaint did not specifically allege the
    existence of the evergreen clause in so many words, when the
    complaint is read in context with the attachments, the nature
    of the claim for relief is obvious. A complaint need only
    contain allegations to give “the defendant fair notice of what
    the . . . claim is and the grounds upon which it rests.”28 Here,
    the complaint states: “At all times relevant to this action,
    Defendants were party to, or otherwise bound by, [CBAs]
    with the Union.”29 In stating that MRS was “otherwise
    bound” to CBAs, Plaintiffs were clearly putting MRS on
    notice that the suit was based on the attached me-too
    agreement by the operation of the evergreen clause contained
    therein.30
    Ironically, MRS’ Rule 12(b)(6) motion to dismiss
    illustrates the sufficiency of this notice. There, MRS argued
    that “attached to the CBA are . . . letter agreements . . . which
    27
    Carpenters Health & Welfare Fund of Phila. & Vicinity v.
    Mgmt. Res. Sys., Inc., No. CIV. A. 14-07097, 
    2015 WL 2395152
    , at *4 (E.D. Pa. May 19, 2015) (quoting Pa. ex rel.
    Zimmerman v. PepsiCo, Inc., 
    836 F.2d 173
    , 181 (3d Cir.
    1988)).
    28
    Bell Atl. Corp. v. Twombly, 
    550 U.S. 544
    , 555 (2007)
    (internal quotation marks omitted) (emphasis added) (quoting
    Conley v. Gibson, 
    355 U.S. 41
    , 47 (1957)).
    29
    App. at A23 ¶13 (emphasis added).
    30
    
    Id. at A97.
    9
    purportedly bind MRS . . . to the CBA.”31 That is to say,
    MRS’ own motion establishes that it understood from the
    complaint that Plaintiffs were alleging that the me-too letter
    bound MRS to the 2012-2015 CBA. MRS could hardly have
    been prejudiced by any lack of specificity in the complaint.
    The complaint also satisfies the demanding
    requirement of plausibility. As we mentioned at the outset,
    me-too letters and evergreen clauses of the kind at issue here
    are common contractual provisions in the construction
    industry. The allegations are therefore all the more credible
    because they are consistent with prevailing collective
    bargaining practices.32 Put simply, this is far from an
    improbable set of allegations.
    Indeed, courts enforce such me-too agreements in the
    very manner the Plaintiffs seek in their complaint. The Court
    of Appeals for the Sixth Circuit’s ruling in Carpenters Local
    Union No. 345 Health & Welfare Fund v. W.D. George
    Construction illustrates this point.33 W.D. George involved a
    dispute in which the employer entered into a me-too
    agreement, the pertinent terms of which mirror the terms in
    the agreement before us. The me-too agreement in W.D.
    George bound the employer to an initial CBA and to “any
    modifications, extensions or renewals thereof.”34 Ironically, a
    Carpenters Health and Welfare Fund in a different locale
    brought suit to enforce the agreement in W.D. George.
    In agreeing with the union and concluding the
    employer was bound to a subsequent CBA that it had not
    signed, the Sixth Circuit rejected the very arguments that
    MRS advances here. The court held that “[t]he [me-too]
    agreement does not merely bind a signatory employer to
    31
    MRS Motion to Dismiss at 5 (emphasis added).
    32
    See, e.g., Jim McNeff, Inc. v. Todd, 
    461 U.S. 260
    , 266
    (1983); NLRB v. Bos. Dist. Council of Carpenters, 
    80 F.3d 662
    , 664 (1st Cir. 1996); Ariz. Laborers, Teamsters & Cement
    Masons Local 395 Health & Welfare Tr. Fund v. Conquer
    Cartage Co., 
    753 F.2d 1512
    , 1518-19 (9th Cir. 1985).
    33
    
    792 F.2d 64
    (6th Cir. 1986).
    34
    
    Id. at 66.
    10
    renewals of the same [CBA], but also binds it to
    modifications thereof.”35 In other words, me-too agreement
    evergreen clauses are to be interpreted broadly, to bind
    employers to successor CBAs even if key terms have changed
    or the prior CBA has expired.36 This reasoning undermines
    MRS’ position that its me-too agreement with Plaintiffs only
    applies to the initial 1997-2001 CBA.
    W.D. George also placed the onus of ending the
    contractual relationship on the employer. In fact, it was
    precisely because the employer did not timely indicate its
    intent to withdraw from the bargaining relationship that the
    Sixth Circuit held that the me-too agreement extended the
    employer’s contractual obligations to the new CBA.37 In
    rejecting the employer’s arguments to the contrary, the Sixth
    Circuit repeatedly emphasized that the employer “did not give
    any notice that that [multiemployer association] no longer had
    any authority to bargain on their behalf.”38 Neither did MRS
    here.39
    MRS incorrectly claims that W.D. George is of little
    value to our inquiry because the Sixth Circuit decided W.D.
    George years before the NLRB released its ruling in
    Luterbach.40 As we explain in more detail below, Luterbach
    is distinguishable. In Luterbach, the NLRB created a two-
    part test for determining when a non-signatory employer is
    35
    
    Id. at 69.
    36
    
    Id. 37 Id.
    at 69-70.
    38
    
    Id. at 69;
    see also 
    id. at 67.
    39
    We see no reason to interpret the termination requirement
    here any differently than the one the court enforced against
    the employer in W.D. George. In both cases, the agreements
    endure absent notice of cancellation. 
    Id. at 66
    (The W.D.
    George termination provision stated in relevant part: “This
    Agreement shall remain in full force and effect from June 17,
    1974 to April 30, 1975, and shall continue in full force and
    effect from year to year thereafter unless written notice of a
    desire to negotiate a change is given by one party . . . .”).
    40
    
    315 N.L.R.B. 976
    (1994).
    11
    bound to a CBA.41 However, the dispute in Luterbach did not
    involve an evergreen clause granting continuing bargaining
    authority, and the NLRB’s test does not account for such an
    agreement. Indeed, the NLRB stressed that the Luterbach test
    only applies to resolve ambiguity about the employer’s
    commitment to be bound.42 No such ambiguity exists here.
    MRS also argues that the employer/union relationship
    in W.D. George was markedly different than the relationship
    here.    However, the purported differences are simply
    insignificant for our purposes. Whether the employer in W.D.
    George was aware of successor agreements or received notice
    of negotiations was not dispositive.43 Rather, the contractual
    terms were determinative in W.D. George. As noted earlier,
    those terms are not only analogous to the pertinent terms
    here; they are nearly identical. Accordingly, we find W.D.
    George is very helpful to our analysis. The district court did
    not even consider W.D. George in its dismissal—apparently,
    the case was never brought to its attention.
    W.D. George is not only helpful because its reasoning
    is persuasive; we also note that the case is no anomaly. In
    Local 257, International Brotherhood of Electrical Workers,
    AFL-CIO v. Grimm, for instance, the Court of Appeals for the
    Eighth Circuit held that a me-too letter’s evergreen clause
    bound the employer to successor CBAs.44 It found that the
    letter provided a “continuous delegation” of the employer’s
    bargaining rights until proper termination, and no such
    termination notice was given.45 That is precisely the situation
    here.
    41
    
    Id. at 979-80.
    42
    
    Id. at 978.
    43
    See also Cowboy Scaffolding, Inc., 
    326 N.L.R.B. 1050
    ,
    1051 (1998) (“Finally, that the Union did not notify the
    Respondent that successor agreements had been entered into,
    and did not furnish it with copies of those agreements,
    indicates only that the Union did not think it necessary to act
    as the Respondent’s agent in these matters.”).
    44
    
    786 F.2d 342
    , 345-46 (8th Cir. 1986).
    45
    
    Id. 12 Undeterred
    by contrary precedent, MRS presses on
    and argues that the text of the 2012-2015 CBA controverts
    Plaintiffs’ claim. In MRS’ view, if the CBA included MRS,
    it would simply say so. MRS insists that by the express terms
    of the CBA, it only applies to the union and to the IFCA and
    its members who authorized it to bargain. MRS reminds us
    that it is not a member of the IFCA and claims it never
    delegated negotiating power to the association. However,
    MRS’ claim that the 2012-2015 CBA does not cover it
    because this CBA does not mention it by name is belied by
    the 1997-2001 CBA. That CBA contains nearly identical
    terms about the extent to which other parties are bound.46 It
    does not mention MRS by name either.47 Yet, MRS admits
    that it was bound by that earlier CBA.
    Finally, MRS makes a policy argument about the
    importance of protecting employers’ rights to bargain on their
    own behalf. The argument rings hollow. The Supreme Court
    has explained that “[n]either party is compelled to enter into a
    [construction industry] agreement.        But when such an
    agreement is voluntarily executed, both parties must abide by
    its terms until it is repudiated.”48 Nothing here suggests that
    MRS was somehow coerced or duped into entering into the
    me-too agreement clearly binding it to future CBAs. The
    agreement was voluntarily executed, and MRS does not argue
    to the contrary. MRS failed to terminate or properly
    repudiate the agreement according to its express terms. We
    are therefore confident that enforcement of the me-too
    agreement in no way vitiates MRS’ rights.
    B. Luterbach
    As we noted earlier, the district court swept aside the
    contractual language in the me-too agreement in the belief
    that Luterbach required that result.49 The NLRB created the
    46
    App. at A107.
    47
    
    Id. at A105-37.
    48
    Jim McNeff, Inc. v. Todd, 
    461 U.S. 260
    , 271 (1983).
    49
    
    315 N.L.R.B. 976
    (1994).
    13
    Luterbach test in the context of “section 8(f) relationships.”50
    That section of the NLRA regulates pre-hire agreements
    between construction industry employers and unions.51
    Luterbach states that a non-signatory employer is bound by
    multiemployer bargaining with a union only if the employer:
    (1) was “part of the multiemployer unit prior to the dispute”
    and (2) “has, by a distinct affirmative action, recommitted to
    the union that it will be bound.”52 Failure to satisfy either
    element is dispositive. Here, the district court found that
    neither requirement was satisfied.53 That is not surprising
    since MRS was not a member of the multiemployer unit and
    it did not perform any “distinct affirmative action”
    demonstrating its recommitment to a later CBA.54
    Nevertheless, the district court’s reliance on Luterbach
    was misplaced. Though the district court may well be correct
    that the 2012-2015 CBA does not pass the Luterbach test, that
    does not resolve this dispute because Luterbach does not
    apply here.
    First, Luterbach is hardly binding on us. As far as we
    can tell, in the decades since the NLRB decided Luterbach,
    we have only cited Luterbach once, and did so then only in
    passing. In Sheet Metal Workers’ International Association
    Local 19 v. Herre Bros., we referenced Luterbach to
    distinguish 8(f) and 9(a)55 relationships.56 But because we
    50
    CBA relationships involving construction employers are
    presumed to fall under § 8(f). See Sheet Metal Workers’ Int’l
    Ass’n Local 19 v. Herre Bros., Inc., 
    201 F.3d 231
    , 240 (3d
    Cir. 1999) (describing the 8(f) presumption). Neither party
    challenges this presumption.
    51
    29 U.S.C. § 158(f); see Herre 
    Bros., 201 F.3d at 239
    .
    52
    
    Luterbach, 315 N.L.R.B. at 980
    .
    53
    Carpenters Health & Welfare Fund of Phila. & Vicinity v.
    Mgmt. Res. Sys., Inc., No. CIV. A. 14-07097, 
    2015 WL 2395152
    , at *3 (E.D. Pa. May 19, 2015).
    54
    
    Id. 55 Under
    § 9(a) of the NLRA, 29 U.S.C. § 159(a), a union
    may become the exclusive bargaining representative of a unit
    of employees if a majority of employees designate the union.
    An employer with a 9(a) relationship to a union has an
    14
    determined that the agreement at issue there did not result in
    an 8(f) relationship, we did not actually apply Luterbach.57
    The jurisprudence of other circuit courts of appeals is not to
    the contrary. The few circuit courts that mention Luterbach
    place no more reliance on it than we now do.58
    Even if Luterbach were generally authoritative, it still
    would not decide this dispute because Luterbach is
    inapposite. The Luterbach test determines the obligations of
    an employer “in a multiemployer unit,” whereas here, MRS
    was never a formal member of the IFCA.59 Furthermore, as
    Plaintiffs note, Luterbach itself expressly disclaims
    application to agreements supported by ongoing bargaining
    authority. To make this point, Luterbach singles out other
    NLRB cases where an employer “obligate[d] itself to abide
    by a successor agreement” and explains that such scenarios
    are beyond its scope.60 These other cases are analogous to the
    one at hand.
    In Kephart Plumbing, an agreement was binding
    because an employer had previously authorized an association
    to negotiate with a union on its behalf.61 Here, the me-too
    obligation to negotiate a successor contract with the union in
    good faith. See Herre 
    Bros., 201 F.3d at 239
    . No such duty
    exists in the § 8(f) context. There are no claims that the
    relationship underlying the CBA here arises under § 9(a).
    56
    Herre 
    Bros., 201 F.3d at 239
    -40.
    57
    
    Id. at 242.
    58
    See, e.g., Haas Elec., Inc. v. NLRB, 
    299 F.3d 23
    , 27 n.4 (1st
    Cir. 2002) (noting but not reaching Luterbach); NLRB v.
    Triple C Maint., Inc., 
    219 F.3d 1147
    , 1152 (10th Cir. 2000)
    (citing Luterbach as background but not applying it); Local
    Union 48 Sheet Metal Workers v. S.L. Pappas & Co., 
    106 F.3d 970
    , 975 (11th Cir. 1997) (“We decline to reach the
    issue of whether Luterbach [is] viable in this circuit.”).
    59
    James Luterbach Constr. Co., Inc., 
    315 N.L.R.B. 976
    , 979
    (1994) (“The issue posed here is whether an 8(f) employer, in
    a multiemployer unit, is bound, by inaction, to the successor
    multiemployer contract.” (emphasis added)).
    60
    
    Id. at 978
    (emphasis in original).
    61
    
    285 N.L.R.B. 612
    , 612-13 (1987).
    15
    letter provided that authority. Similarly, in Reliable Electric,
    an employer that had not withdrawn bargaining authority
    previously given to an association was bound to the
    association contract.62 Likewise, it is undisputed here that
    MRS did not revoke the negotiating power it had delegated
    through the me-too letter.
    We appreciate that some of the particulars of the cases
    Luterbach distinguishes differ from the facts before us.
    These are distinctions without a difference. For instance, in
    Reliable Electric the contested CBA went into effect directly
    upon the expiration of the prior CBA.63 That supports
    characterization of the second CBA as a “renewal.” Here, in
    contrast, there was a gap of more than a decade between the
    first CBA (1997-2001) and the second (2012-2015).
    However, courts generally do not conclude that such an
    intervening interval undercuts an evergreen clause’s power of
    renewal.64 And rightly so; evergreen clauses keep agreements
    in force despite the passage of time.65 Ultimately, this dispute
    neatly fits Luterbach’s description of cases that fall outside its
    purview because they involve an employer “clearly and
    unmistakably [binding] itself to a successor contract.”66
    62
    
    286 N.L.R.B. 834
    , 836 (1987).
    63
    
    Id. at 834.
    64
    See, e.g., Cedar Valley Corp. v. NLRB, 
    977 F.2d 1211
    ,
    1220 (8th Cir. 1992) (“[W]e find no link between periods of
    inactivity among the parties and the enforceability of the
    agreements. Rather, the decisive issue is whether Cedar
    Valley affirmatively, and in compliance with the terms of the
    1978 agreements, revoked Associated Contractor’s authority
    to bind it to successive agreements.”).
    65
    To the extent that the in perpetuity nature of an evergreen
    clause may be a concern, the signatories can easily add
    language clearly stating that the continuing authority arising
    under the agreement will automatically cease after a defined
    time frame, with no need for formal notice of termination.
    No such language appears in the agreement between MRS
    and Plaintiffs. We will not judicially amend the agreement by
    adopting MRS’ argument.
    66
    James Luterbach Constr. Co., Inc., 
    315 N.L.R.B. 976
    , 979
    (1994).
    16
    This limitation on Luterbach makes eminent sense. As
    the Plaintiffs point out, requiring a “distinct affirmative
    action” pursuant to Luterbach’s second prong in cases like
    this would void evergreen clauses.            They would be
    transformed into mere surplusage because they are intended
    to bind parties into the future without additional acts. Indeed,
    Luterbach recognizes that applying the second part of its test
    to cases like this one would be like trying to fit a round peg
    into a square hole.         Luterbach explains that “[s]ome
    affirmative act is necessary to establish [the employer’s]
    consent” to be bound.67 In the same pronouncement,
    Luterbach recognizes that “there can be cases where the
    employer has expressly given continuing consent to bargain a
    successor contract on a multiemployer basis. . . . However,
    there is no such consent here.”68 In contrast, in the dispute
    before us the evergreen clause was the consent. That is
    precisely why Luterbach does not apply.
    Subsequent NLRB cases confirm Luterbach’s
    boundaries.69 As the Plaintiffs mention, Baker Electric, for
    67
    
    Id. at 981.
    68
    
    Id. at 981
    n.11.
    69
    See, e.g., Taylor Ridge Paving & Constr. & Local Union
    No. 309, Laborers Int’l Union of N. Am., 25-CA-135372,
    
    2015 WL 5564621
    (N.L.R.B. Div. of Judges Sept. 21, 2015)
    (“However, unlike in James Luterbach Construction,
    Respondent here agreed to bind itself to successor agreements
    by the operation of the [me-too letter]. Therefore, I find
    James Luterbach Construction distinguishable from this
    case.”); HCL, Inc. & Laborers Int’l Union of Am., AFL-CIO,
    Local 576, 
    343 N.L.R.B. 981
    , 982 (2004) (“Luterbach, relied
    on by the judge, is inapposite . . . . This is not a case in which
    the respondent was a member of a multiemployer bargaining
    unit. Nor is this a case of an employer who did nothing to
    bind itself to a successor 8(f) agreement.”); Cowboy
    Scaffolding, Inc., 
    326 N.L.R.B. 1050
    , 1050 (1998) (basing its
    holding on a finding that a me-too agreement “clearly states
    that the 1990-1993 contract . . . will automatically renew on a
    yearly basis thereafter unless either of the parties gives timely
    17
    instance, rejected application of Luterbach in circumstances
    much like theirs.70 Baker Electric held that an employer was
    bound to a successor CBA pursuant to a me-too letter with an
    evergreen clause.71 In doing so, Baker Electric rebuffed the
    employer’s assertion that Luterbach freed it from future
    obligations. On the contrary, the NLRB explained:
    In Luterbach, the Board made
    clear that “there can be cases
    where the employer has expressly
    given continuing consent to
    bargain a successor contract on a
    multiemployer basis” . . . . Here . .
    . Respondent affirmatively bound
    itself to successor agreements . . .
    by the express terms of the [me-
    too letter].72
    This classification of evergreen clauses as a dividing line
    between Luterbach and non-Luterbach cases illustrates why
    the district court erred in relying on Luterbach here.
    MRS urges us to reject Baker Electric for one reason:
    Whereas Baker Electric involved an absolute delegation of
    bargaining authority, there is no such provision here. MRS
    claims it simply agreed to join a particular, and now expired,
    CBA. There is no support for MRS’ position. Baker Electric
    described the grant of authority in terms that do not vary in
    any meaningful way from those in the me-too agreement
    here. Baker Electric portrayed its me-too agreement as
    “authoriz[ing] the [multiemployer association] as the
    employer’s collective-bargaining representative for all
    matters pertaining to the current ‘Inside’ labor agreement
    with [the union.]”73 The me-too letter here reads: “The
    employer shall be and is hereby, bound by all of the terms and
    notice of an intent to modify or terminate” without reaching
    Luterbach).
    70
    
    317 N.L.R.B. 335
    (1995).
    71
    
    Id. at 335,
    340-42.
    72
    
    Id. at 335
    n.2.
    73
    
    Id. at 340.
    18
    conditions of employment contained in the collective
    bargaining agreement between the [union] and the
    [multiemployer association].”74 For present purposes, the
    effect of each of these provisions is the same: The employer
    is bound by agreements between the multiemployer
    association and the union. Baker Electric thus applies
    squarely here.
    Moreover, there is nothing novel about our reliance on
    Baker Electric’s logic. The Court of Appeals for the Fourth
    Circuit enforced the NLRB’s order in Baker Electric without
    even mentioning Luterbach.75 In addition, as we noted
    earlier, even before Baker Electric the Court of Appeals for
    the Eighth Circuit emphasized that an employer may bind
    itself to future CBAs through an evergreen clause. 76 The
    Courts of Appeals for the Fifth,77 Sixth,78 and Ninth79 Circuits
    have likewise found that an evergreen clause persists in the
    absence of notice of termination.
    MRS’ primary support for its claim that Luterbach
    applies—Iron Workers Tri-State Welfare Plan v. Carter
    Construction80—does not make Luterbach relevant either.
    First, there is the obvious point that Iron Workers is a district
    court opinion and therefore not binding on us. Second, Iron
    Workers relied on Luterbach because the employer provided
    notice of termination, thereby freeing itself from its
    74
    App. at A97 ¶1.
    
    75 N.L.R.B. v
    . Baker, 
    105 F.3d 647
    , at *4 (4th Cir. 1997)
    (unpublished) (“Because the Company never effectively
    repudiated the § 8(f) agreement, it may be held liable for
    breaching its terms.”).
    76
    See Local 257, Int’l Bhd. of Elec. Workers, AFL-CIO v.
    Grimm, 
    786 F.2d 342
    , 345 (8th Cir. 1986).
    77
    See NLRB v. Black, 
    709 F.2d 939
    , 940-41 (5th Cir. 1983).
    78
    See Nelson Elec. v. NLRB, 
    638 F.2d 965
    , 966-67 (6th Cir.
    1981).
    79
    See Constr. Teamsters Health & Welfare Tr. v. Con Form
    Constr. Corp., 
    657 F.2d 1101
    , 1103-04 (9th Cir. 1981).
    80
    
    530 F. Supp. 2d 1021
    (N.D. Ill. 2008).
    19
    commitment to be bound.81 Without continuing consent,
    Luterbach poses the right question: Whether the employer
    signaled an intent to be bound through an additional act. But
    because cancellation of consent did not occur here, Iron
    Workers is irrelevant.
    IV. PLAUSIBILITY
    From the preceding it is clear that Luterbach does not
    stand for a rule that all me-too agreements must satisfy its two
    criteria in order to bind non-signatories to future CBAs.
    Rather, Luterbach is limited to cases that do not involve
    evergreen clauses or other continuing grants of bargaining
    authority. Absent the conditions prescribed in Luterbach, we
    need only focus on the plausibility of the complaint under
    contract law principles. As we explained, the district court
    was correct that the complaint leaves something to be
    desired—it does not directly say why the 2012-2015 CBA is
    binding on MRS. However, we are not here to grade the
    complaint, but to determine if it survives a motion to dismiss
    under Rule 12(b)(6). We have little trouble concluding that,
    taken together, the complaint’s allegations and attachments
    put MRS on notice and state a plausible claim for relief. This
    compels us to “unlock the doors of discovery.”82
    V. CONCLUSION
    For the foregoing reasons, we will reverse the district
    court’s order dismissing Plaintiffs’ complaint for failure to
    state a claim upon which relief can be granted. On remand,
    the court can determine whether Plaintiffs sufficiently pled
    the personal liability of MRS’ Vice President, Marion.
    Because of its conclusion that the complaint did not state a
    claim for relief, the district court did not address whether
    Marion bore responsibility, as Plaintiffs allege. Accordingly,
    we will remand for further proceedings consistent with this
    opinion in the district court.
    81
    
    Id. at 1030
    (“When the 2001 agreement was terminated,
    this being a section 8(f) relationship, Carter Construction had
    the option of refusing to bargain for a new contract.”).
    82
    Ashcroft v. Iqbal, 
    556 U.S. 662
    , 678 (2009).
    20
    

Document Info

Docket Number: 15-2508

Judges: McKee, Fisher, Greenaway

Filed Date: 9/13/2016

Precedential Status: Precedential

Modified Date: 10/19/2024

Authorities (21)

Iron Workers Tri-State Welfare Plan v. Carter Construction, ... ( 2008 )

Nelson Electric, Gary C. Nelson, Inc. And Gary C. Nelson ... ( 1981 )

Local 257, International Brotherhood of Electrical Workers, ... ( 1986 )

berwind-corporation-v-commissioner-of-social-security-united-mine-workers ( 2002 )

shenango-incorporated-stelco-usa-inc-stelco-coal-company-mueller ( 2002 )

national-labor-relations-board-v-boston-district-council-of-carpenters ( 1996 )

national-labor-relations-board-v-george-black-an-individual-doing ( 1983 )

arizona-laborers-teamsters-and-cement-masons-local-395-health-and-welfare ( 1985 )

Bell Atlantic Corp. v. Twombly ( 2007 )

Carpenters Local Union No. 345 Health and Welfare Fund v. W.... ( 1986 )

Ashcroft v. Iqbal ( 2009 )

the-construction-teamsters-health-and-welfare-trust-known-more ( 1981 )

Haas Electric, Inc. v. National Labor Relations Board ( 2002 )

No. 99-9500 ( 2000 )

Operating Engineers Local 139 Health Benefit Fund v. ... ( 2001 )

Sheet Metal Workers' International Association Local 19 v. ... ( 1999 )

commonwealth-of-pennsylvania-ex-rel-leroy-s-zimmerman-attorney-general ( 1988 )

Cedar Valley Corporation v. National Labor Relations Board ( 1992 )

local-union-48-sheet-metal-workers-board-of-trustees-sheet-metal-workers ( 1997 )

Conley v. Gibson ( 1957 )

View All Authorities »