NLRB v. Somerville Construct ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-1838
National Labor Relations Board,
Petitioner,
v.
Somerville/1 Construction Company,
Respondent.
Petition for Summary Enforcement of an Order
of the National Labor Relations Board
25-CA-25276
Argued January 19, 2000--Decided March 8, 2000
Before Bauer, Cudahy, and Evans, Circuit Judges.
Bauer, Circuit Judge. An administrative law
judge determined that Somerville Construction
Company ("Somerville") violated section 8(a)(5)
of the National Labor Relations Act, 29 U.S.C.
sec. 158(a)(5), by refusing to abide by a
collective bargaining agreement. Hearing no
objections from Somerville, the National Labor
Relations Board entered an order adopting the
ALJ’s decision with slight modifications.
Although it never filed any exceptions to the
ALJ’s ruling, Somerville refused to comply with
the order. The NLRB now petitions this court for
summary enforcement of its order and Somerville
has filed an opposition to the petition.
Somerville’s arguments are too late; we grant the
petition and summarily enforce the NLRB’s order.
I. Background
Somerville is a sole proprietorship owned by
Homer Somerville/2 that operates as a masonry
contractor. Somerville employs approximately
twenty workers and has its offices in
Indianapolis, Indiana. During mid-summer 1995,
the Trademark Construction Company solicited
Somerville to bid for masonry work at a
construction site in Portage, Indiana. After
collecting bids, Trademark awarded the work to
Somerville and the company began the project late
that summer. Somerville had been on the job 30 to
45 days when two representatives of the
International Union of Bricklayers & Allied
Craftsmen Local No. 4 of Indiana and Kentucky,
Merrillville Chapter visited the Portage
construction site and realized that the people
performing the masonry work were not Union
members. The Union’s representatives then
requested a meeting with officials of Trademark
and Somerville.
On October 31, 1995, Homer Somerville met with
Union representatives and an officer from
Trademark. During the meeting, the Union’s
representatives said that they wanted Somerville
to sign a collective bargaining agreement ("CBA")
that the Union had with the Indiana Mason
Contractors Statewide Association. Although he
appears to have done so begrudgingly, Homer
Somerville eventually signed a Memorandum of
Agreement on behalf of his company in which the
company "recognize[d] the Union as the sole and
exclusive collective bargaining representative
for and on behalf of the employees of
[Somerville] now or hereinafter employed within
the territorial or occupational jurisdictions of
the Union." The Memorandum further stated:
The parties do hereby adopt the latest Agreement,
and all approved amendments thereto, between the
Union and the Indiana Statewide Association, and
agree to be bound by all of the terms and
conditions thereof for the duration of such
Agreement and for the period of any subsequent
extensions including any amendments which may be
subsequently made and any subsequent Agreements.
The Union’s Field Representative, Dale Johnsen,
signed the Memorandum on the Union’s behalf.
Additionally, Homer Somerville and Johnsen also
executed a document which memorialized
Somerville’s assent to participate in the
Association’s fringe benefits and apprenticeship
training program.
Even though Homer Somerville signed the
Memorandum, Somerville later refused to recognize
the Union or honor the CBA between the Union and
the Association. In response, the Union
complained to the NLRB and the Regional Director
in Indianapolis issued a Complaint and Notice of
Hearing charging Somerville with unfair labor
practices in violation of the National Labor
Relations Act. Specifically, the Regional
Director alleged that Somerville violated section
8(a)(5) of the NLRA, 29 U.S.C. sec. 158(a)(5), by
refusing to abide by the CBA to which it became
bound when Homer Somerville executed the
Memorandum of Agreement. Somerville filed an
Answer to the Complaint and a hearing was held
before an NLRB administrative law judge.
Following the hearing, the ALJ issued a decision
finding that Somerville had violated the NLRA as
charged and recommended that the NLRB enter an
appropriate remedial order.
The NLRB’s General Counsel filed limited
exceptions to the ALJ’s finding and
recommendation, but Somerville did not file any
exceptions to the adverse ruling. After
considering the General Counsel’s exceptions, the
NLRB issued an order adopting the ALJ’s findings
and recommendations with minor modifications.
Since Somerville still refused to bargain with
the Union or honor the CBA, the NLRB applied for
summary enforcement of its order with this court.
Somerville then filed an opposition to the NLRB’s
petition.
II. Analysis
Somerville first challenges the NLRB’s order on
the basis that the NLRB never had subject matter
jurisdiction over this case. The ALJ found
subject matter jurisdiction because Somerville
"annually performs services in excess of
$50,000/3 in States other than Indiana."
Somerville Constr. Co., 327 NLRB No. 99, slip op.
at 2, 1999 WL 64716 at *2 (Jan. 29, 1999). Based
on this finding, the ALJ concluded that
Somerville was "an employer engaged in interstate
commerce within the meaning of Section 2(2), (6),
and (7) of the Act." Id.Although Somerville never presented this
argument to the NLRB, it now insists that the
ALJ’s jurisdictional conclusion is flawed because
there were no facts in evidence to demonstrate
that it annually engages in more than $50,000 in
business outside the state of Indiana. To support
this contention, Somerville points us to Homer
Somerville’s following testimony:
Q: All right. And these employees are engaged in
work in the State of Indiana are they not?
A: Yes.
Q: And they are, in fact they are all engaged in
Bricklaying or Masonry work in the State of
Indiana?
A: Yes.
Q: And they have been engaged in - - -
A: Now sometimes we have gone out of State.
Q: What percentage of your work would you say
has been out of State?
A: Very small, real small, I doubt if it is one
(1%) percent.
Q: All right. So ninety-nine (99%) percent of
the time you have been working in Indiana?
A: Right.
Q: And your employees have been working in
Indiana?
A: Right.
While Somerville is correct that this testimony
alone might not form an adequate basis for
subject matter jurisdiction, these are not the
only facts in the record that relate to the
NLRB’s jurisdiction. Specifically, paragraph 2(b)
of the NLRB’s Complaint and Notice of Hearing
made the factual allegation that "[d]uring the
twelve-month period ending March 31, 1997,
[Somerville], in conducting its business
operations . . . performed services valued in
excess of $50,000.00 in states other than the
State of Indiana." In its Answer to this
allegation, Somerville stated, "Respondent admits
the allegations contained in paragraph 2(b) of
the Board’s Complaint." And, most importantly,
the ALJ expressly noted and relied on
Somerville’s admission in finding that subject
matter jurisdiction was proper. See Somerville
Constr. Co., 327 NLRB No. 99, slip op. at 2, 1999
WL 64716 at *2 ("The Respondent admits and I
conclude that he is an employer engaged in
interstate commerce within the meaning of Section
2(2), (6), and (7) of the Act.").
Section 10(e) of the NLRA provides in pertinent
part:
No objection that has not been urged before the
Board, its member, agent, or agency, shall be
considered by the court, unless failure to urge
such objection shall be excused because of
extraordinary circumstances.
29 U.S.C. sec. 160(e). Based on this provision,
we have consistently held that "a party which
fails to raise an exception before the Board is
jurisdictionally barred from raising that
exception in an enforcement proceeding before the
court of appeals." NLRB v. Howard Immel, Inc.,
102 F.3d 948, 951 (7th Cir. 1996); NLRB v. Alwin
Mfg. Co., Inc., 78 F.3d 1159, 1162 (7th Cir.
1996).
However, because a party never waives the right
to contest subject matter jurisdiction, the
NLRB’s assertion of jurisdiction over a
particular case requires a slightly different
analysis. See Polynesian Cultural Center, Inc. v.
NLRB, 582 F.2d 467, 472 (9th Cir. 1978).
Therefore, when considering challenges to subject
matter jurisdiction not presented to the NLRB,
courts uniformly hold that while "the Board’s
statutory jurisdiction may be raised at any time,
the facts upon which the Board determines it has
jurisdiction may be challenged only upon timely
exception." NLRB v. Konig, 79 F.3d 354, 360 (3d
Cir. 1996); NLRB v. International Health Care,
Inc., 898 F.2d 501, 506-07 (6th Cir. 1990); The
Red Cross Drug Co. v. NLRB, 419 F.2d 1245, 1248
(7th Cir. 1969); NLRB v. Ferraro’s Bakery, Inc.,
353 F.2d 366, 369 (6th Cir. 1965); NLRB v. Peyton
Fritton Stores, Inc., 336 F.2d 769, 770 (10th
Cir. 1964) (per curiam); NLRB v. Community Motor
Bus Co., Inc., 335 F.2d 120, 121 (4th Cir. 1964);
NLRB v. Associated Musicians of Greater New York,
Local 802, 226 F.2d 900, 907 (2d Cir. 1955).
In this case, Somerville admitted in its Answer
that "[d]uring the twelve-month period ending
March 31, 1997, [Somerville], in conducting its
business operations . . . performed services
valued in excess of $50,000.00 in states other
than the State of Indiana." Because the ALJ
clearly relied upon this specific admission and
these particular facts when determining whether
NLRB jurisdiction was proper, Somerville could
only challenge this finding by filing an
exception to the ALJ’s decision with the NLRB.
Somerville, however, failed to file any
exceptions with the NLRB. Since Somerville never
contested these facts before the NLRB, Somerville
is now barred from disputing the accuracy of
these factual findings. Because it is now unable
to alter the factual basis for the ALJ’s
conclusion, Somerville cannot escape the NLRB’s
jurisdiction. Additionally, Somerville does not
allege the existence of any "extraordinary
circumstances" that would allow us to consider
this argument for the first time. We therefore
reject Somerville’s contention that the NLRB
lacked jurisdiction.
Somerville also contests the sufficiency of the
evidence supporting the ALJ’s conclusion that
Homer Somerville agreed to bind his company to
the CBA when he signed the Memorandum of
Agreement. However, like the jurisdictional
argument, Somerville never filed any exceptions
with the NLRB concerning the ALJ’s finding on
this point. Because Somerville fails to identify
any "extraordinary circumstances" that caused its
omission, this argument is clearly barred by
section 10(e) of the NLRA, 29 U.S.C. sec. 160(e).
See Howard Immel, Inc., 102 F.3d at 951; NLRB v.
Dominick’s Finer Foods, Inc., 28 F.3d 678, 685
(7th Cir. 1994).
III. Conclusion
Because Somerville never presented its arguments
to the NLRB, it is barred from making them for
the first time in this court. We therefore grant
the NLRB’s petition and summarily enforce the
NLRB’s order.
/1 In its brief to this court and its reported
decision on this case, the NLRB spells the name
"Sommerville" with two m’s. In contrast, the
company and its owner, Homer Somerville, spell
"Somerville" with only one m. We presume that Mr.
Somerville and his attorneys spell his name
correctly.
/2 To prevent any possible confusion between the
individual Homer Somerville and the business
entity Somerville Construction Company, we will
refer to the company as "Somerville" and will
always refer to the individual Homer Somerville
by using his entire name.
/3 The $50,000 jurisdictional threshold is a limit
imposed by NLRB rule rather than a congressional
mandate found in the NLRA. See Blankenship and
Assocs. v. NLRB, 999 F.2d 248, 250 (7th Cir.
1993) ("the Board has adopted a rule that it will
not assert jurisdiction over nonretail
enterprises . . . unless they have annual sales
of at least $50,000 to firms engaged in
interstate commerce"); NLRB v. George J. Roberts
& Sons, Inc., 451 F.2d 941, 944 (2d Cir. 1971)
("the Board has, for practical purposes,
restricted its jurisdiction, in the case of
nonretail establishments, to those enterprises
which have an interstate inflow of materials in
excess of $50,000 annually.").