Laborers District Council v. Natonal Labor Relations Board , 688 F.3d 374 ( 2012 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 11-2848
No. 11-3115
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Laborers District Council of Minnesota *
and North Dakota, *
*
Petitioner/Cross Respondent, * Petition for Review of
* an Order of the National
v. * Labor Relations Board.
*
National Labor Relations Board, *
*
Respondent/Cross Petitioner. *
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Submitted: May 16, 2012
Filed: August 7, 2012
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Before WOLLMAN, BEAM, and LOKEN, Circuit Judges.
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LOKEN, Circuit Judge.
The Laborers District Council of Minnesota and North Dakota (“the Union”)
petitions for review of a decision of the National Labor Relations Board ordering the
Union to cease and desist violating § 8(b)(4)(ii)(B) of the National Labor Relations
Act (“NLRA”), 29 U.S.C. § 158(b)(4)(ii)(B), by coercing Lake Area Fence, a newly
formed commercial fencing subcontractor, not to do fence installation work for
Century Fence Company, a nonunion contractor. Concluding that the Board’s
decision is a reasonable construction of the statute and is supported by substantial
evidence on the administrative record as a whole, we deny the petition for review and
grant the Board’s cross-petition to enforce its Decision and Order. See 29 U.S.C.
§ 160(e); NLRB v. Pipefitters, 429 U.S. 507, 528, 531 (1977) (standard of review).
I.
As relevant here, § 8(b)(4)(ii)(B) provides: “It shall be an unfair labor practice
for a labor organization or its agents . . . (4) . . . (ii) to threaten, coerce, or restrain any
person . . . where . . . an object thereof is . . . (B) forcing or requiring any person . . .
to cease doing business with any other person.” The statute is part of § 8(b)(4), in
which Congress curbed the use of coercive and disruptive union actions undertaken
to pressure a neutral or secondary employer (here, Lake Area) with the intent of
forcing the neutral to cease doing business with a primary employer (here, Century)
with which the union has an on-going collective bargaining dispute. Ozark Interiors,
Inc. v. Local 978 Carpenters, 957 F.2d 566, 568 (8th Cir. 1992). “Restrictions on
secondary boycotts . . . implement dual congressional objectives of preserving the
right of labor organizations to bring pressure to bear on offending employers in
primary labor disputes and of shielding unoffending employers and others from
pressures and controversies not their own.” Sheet Metal Workers’ Int’l Ass’n v.
NLRB, 989 F.2d 515, 519 (D.C. Cir. 1993) (quotation omitted).
Section 8(b)(4) is a complex statute that “describes and condemns specific
union conduct directed to specific objectives.” Local 1976, United Bhd. of
Carpenters (Sand Door), 357 U.S. 93, 98 (1958). The statutory landscape is even
more complex in cases, such as this, which involve collective bargaining in the
construction industry. In 1959, Congress overruled the Supreme Court’s Sand Door
decision by amending § 8(b)(4) to add subsection (ii) and by enacting § 8(e), the “hot
cargo” provision that prohibits collective bargaining agreements in which an
employer agrees “to cease doing business with any other person,” such as a secondary
employer. 29 U.S.C. § 158(e). But a proviso to § 8(e) states that it does not apply to
agreements “in the construction industry relating to the contracting or subcontracting
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of work to be done at [a construction job] site.” See generally Woelke & Romero
Framing, Inc. v. NLRB, 456 U.S. 645, 652-660 (1982). However, “regardless of
whether an agreement is valid under [the construction industry proviso to] § 8(e), it
may not be enforced by means that would violate § 8(b)(4).” Pipefitters, 429 U.S. at
521. That is the statutory intersection the Board confronted in this case.
II.
The Union, on behalf of seven Minnesota local Laborers unions with 11,000
members, entered into a “pre-hire” Highway-Heavy agreement with a multi-employer
group, the Associated General Contractors of Minnesota.1 As permitted by the
proviso to § 8(e), Article 16 of the Highway-Heavy agreement provides that a
participating employer, “while subletting or contracting out laborers work at the job
site . . . will sublet or contract such work only to a subcontractor who has signed or
is otherwise bound by a written labor agreement” with the Union. Most construction
sites in Minnesota are “union projects” in which the general contractor is a signatory
party.
Century, based in Wisconsin, is a nonunion contractor that for many years has
bid on and been awarded fencing contracts or subcontracts on union and nonunion
projects in Minnesota. Century employs no laborers and does not perform fence
installation work. Rather, it procures and delivers fencing materials and serves as
“construction manager” for fencing work at the job site. For projects awarded to
general contractors who are signatories to the Highway-Heavy agreement, Century
1
Recognizing the unique history of bargaining in the construction industry,
where employment at particular job sites tends to be transitory, § 8(f) allows unions
and employers to enter into pre-hire agreements before the union has established
majority status. 29 U.S.C. § 158(f). “Unlike bargaining agreements with majority-
status unions, § 8(f) pre-hire agreements may be unilaterally repudiated after they
expire.” McKenzie Eng’g Co. v. NLRB, 303 F.3d 902, 908 n.3 (8th Cir. 2002).
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uses only union-affiliated subcontractors to do work that is within the jurisdiction of
local Iron Workers and Laborers unions.
Beginning in 2007, Laborers Local 563 began pressuring signatory general
contractors not to enter into subcontracts with Century because it had no union
agreement. Century approached the Union, offering concessions and arguing that its
function as construction manager using union labor did not violate Article 16 of the
Highway-Heavy agreement, but refusing the Union’s demand that Century sign a
union contract if it wished to continue to be awarded subcontracts on union projects
in Minnesota. The Board’s Administrative Law Judge (ALJ) found that, when
Century refused the Union’s demand, “the Union . . . expressed resultant hostility.”2
The Union then turned its attention to neutral subcontractors performing
Century’s fence installation work. In 2008, a Union representative told Century that
if it refused to sign a contract, the Union would not sign or renew § 8(f) agreements
with any subcontractor who did business with Century; subcontractors could work
with Keller Fence if they wished to continue working on union projects. Consistent
with this threat, the Union refused to renew § 8(f) agreements with two Century
subcontractors, Mid-America Fencing and Winslow Fencing. In response, Century
filed a § 8(b)(4)(ii)(B) unfair labor practice charge. As part of a Settlement
Agreement approved by the Board’s Regional Director, the Union agreed:
WE WILL NOT refuse to sign a collective bargaining agreement with
or otherwise threaten coerce or restrain Mid-America Fencing, Winslow
Fencing or any other person to force Mid-America Fencing, Winslow
2
The reason for the Union’s hostility is apparent. A Union witness testified that
Keller Fence company, the largest Union signatory fence contractor, said “it would
be nice” if Century became a signatory contractor because that would increase its
labor costs on nonunion projects, creating a “level playing field” for Keller.
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Fencing or any other person to stop doing business with Century Fence
Company.
Mid-America and Winslow then regained their status as union subcontractors.
That brought the primary dispute between the Union and Century to April
2010, when Lake Area entered the picture. Owner Sharon Roush formed Lake Area
as a fencing subcontractor satisfying minority business enterprise requirements.
Roush had two employees, her son and an experienced union installer; she intended
to work with Century and become a union-affiliated subcontractor because there was
more union than nonunion work available. Roush met with Union representatives,
signed the Highway-Heavy agreement subject to the Union’s approval, and submitted
the Union’s new-contractor processing form. Union representatives appeared
receptive until Roush disclosed that Lake Area intended to work with Century.
Within one hour of this disclosure, the Union notified Lake Area that it would not
sign an agreement. The explanation was that Roush had submitted incomplete
information. Lake Area then filed this § 8(b)(4)(ii)(B) unfair labor practice charge.
The ALJ held an evidentiary hearing at which Roush and representatives of
Century, Mid-America, and the Union testified at length. In a thorough opinion, the
ALJ first credited the testimony of Roush and the Century and Mid-America
representatives, rejecting as pretextual the Union President’s testimony that he did not
sign a contract with Lake Area because Roush had lied to him. On appeal, the Union
does not challenge the ALJ’s credibility findings. The ALJ then concluded:
[T]he evidence demonstrates that the Union’s intent in declining
to allow Lake Area to become signatory to the Agreement was to force
Century to become a signatory contractor by depriving it of
subcontractors to work on union jobsites unless it agreed to a collective-
bargaining agreement with the Union. It is inherent that in this method
of persuading Century to become a union contractor, pressure must first
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be applied to neutral secondary employers such as Lake Area, employers
without the ability to influence the labor relations of Century. As the
Board said in Limbach,3 it is this secondary object -- to enmesh Lake
Area in the Union’s dispute with Century, with the aim of compelling
the latter to become a signatory to a contract with the Union -- that
renders the Union’s otherwise legal refusal to enter into an 8(f)
relationship with Lake Area, unlawful. Limbach, supra at 315. And it
is exactly such neutral secondary employers as Lake Area that Congress,
by enacting Section 8(b)(4)(B), intended to shield from secondary
pressure, such as that imposed by the Union herein.
Acknowledging the Union’s freedom not to enter into a § 8(f) agreement with new
employer Lake Area unless its motive is unlawful, the ALJ rejected the General
Counsel’s request that the Union be ordered “to implement contractual terms that it
has not agreed to.” Instead, the ALJ recommended that, consistent with the remedy
in Limbach, the Board order the Union to “cease and desist from threatening,
coercing, or restraining Lake Area Fence, Inc. . . . with an object of forcing or
requiring Lake Area Fence . . . to cease doing business with Century Fence
Company.” The Board, one member dissenting, agreed with the ALJ that Limbach
“is not meaningfully distinguishable from this case.” It affirmed the ALJ’s findings
and conclusions and adopted the cease-and-desist order recommended by the ALJ.
III.
On appeal, the Union first argues that the Board’s Order is contrary to a labor
organization’s freedom of contract, a fundamental policy of the National Labor
Relations Act recognized in H.K. Porter Co. v. NLRB, 397 U.S. 99, 108 (1970). We
agree with the Union that freedom of contract is an important right reserved to
3
Local Union No. 80, Sheet Metal Workers (Limbach Co.), 305 NLRB 312(1991), enf’d in relevant part, Sheet Metal Workers Int’l Ass’n v. NLRB, 989 F.2d
515 (D.C. Cir. 1993).
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employers and unions in the federal labor laws. For that reason, earlier in these
proceedings, a district court denied the Regional Director’s request for a preliminary
injunction under § 10(l) of the Act, 29 U.S.C. § 160(l), that would have “force[d] the
Union to enter into and abide by an agreement that it did not make” with Lake Area.
Osthus v. Laborers Dist. Council, 742 F. Supp. 2d 1042, 1048 (D. Minn. 2010). But
freedom of contract is not an absolute right. “Various practices in enforcing the Act
may to some extent limit freedom to contract as the parties desire.” H.K. Porter, 397
U.S. at 108 n.6. The issue is whether the Union had an unfettered right to refuse a
§ 8(f) contract for a motive the Act declares to be unlawful. We think clearly not.
The NLRA’s secondary boycott provisions do not require that the coercive
conduct itself be unlawful. “Indeed, courts have routinely held that the otherwise
legal exercise of rights afforded by a collective bargaining agreement can become
unlawful when aimed at securing an objective prohibited by section 8(b)(4).” Brown
& Root, Inc. v. La. State AFL-CIO, 10 F.3d 316, 323-24 (5th Cir. 1994) (collecting
cases). “[A]n improper motive may make unlawful what is otherwise unassailable
conduct.” Limbach Co. v. Sheet Metal Workers Int’l Ass’n, 949 F.2d 1241, 1255 (3d
Cir. 1991) (en banc). “The right of a union unilaterally to terminate a contractual
relationship for legitimate reasons . . . does not extend to terminating for a purpose
of applying economic coercion to achieve a prohibited secondary objective.”
Gottfried v. Sheet Metal Workers’ Int’l Ass’n, 876 F.2d 1245, 1251 (6th Cir. 1989).
Therefore, the Board and reviewing courts “look to the intention of parties in coercing
neutral parties, not to the general rights of parties to take particular actions.” Taylor
Milk Co. v. Int'l Bhd. of Teamsters, 248 F.3d 239, 245 (3d Cir.), cert. denied, 534
U.S. 1055 (2001). For example, lawful union actions such as striking and picketing,
filing grievances, withholding discretionary concessions, and peaceful group
shopping have all been condemned as violating § 8(b)(4) when employed for the
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purpose of putting coercive economic pressure on a neutral employer to further the
union’s proscribed secondary objective.4
Alternatively, the Union argues that the Board’s remedy in this case violates
the fundamental policy because it “amounts to a directive . . . that the Union cannot
continue to exercise its freedom of contract.” But the order contains no such
directive. As in Limbach, the Board and the ALJ rejected the NLRB General
Counsel’s request for such a remedy, instead ordering only that the Union cease and
desist from the coercion of a secondary employer made unlawful by § 8(b)(4)(ii)(B).
The Board’s remedy gives Lake Area a fresh opportunity to become a signatory
subcontractor, while recognizing the Union’s right to reject a § 8(f) agreement with
Lake Area for any lawful reason. Given its repeated practice of coercing Century
subcontractors, Union officials may find it difficult to refuse to enter into or to renew
§ 8(f) agreements with fencing subcontractors who meet objective standards of
acceptable contracting parties. But if so, that will be the result of the Union’s prior
unlawful actions, not a violation of the fundamental policies of the NLRA.
More intriguing questions are raised by the Union’s contention that the Board
erred in concluding that the Union engaged in the requisite coercion.5 The applicable
standard of review controls our resolution of this issue. The Union strives to pose a
question of law, arguing that choosing not to enter into a contract cannot be unlawful
coercion within the meaning of § 8(b)(4)(ii)(B) because § 8(f) agreements are wholly
voluntary. But it is the effect on the secondary employer, not the lawfulness of the
4
See Limbach, 949 F.2d at 1253; Local Union No. 25, Int’l Bhd. of Teamsters
v. NLRB, 831 F.2d 1149, 1153-54 (1st Cir. 1987); Sheet Metal Workers, Local Union
No. 91 v. NLRB, 905 F.2d 417, 424 (D.C. Cir. 1990); Pye v. Teamsters Local Union
No. 122, 61 F.3d 1013, 1024 (1st Cir. 1995).
5
The Union does not challenge the Board’s fact-intensive finding of the other
element of a § 8(b)(4)(ii)(B) violation -- that the Union acted with the intent of
forcing Lake Area to cease doing business with Century.
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underlying action, that is the critical inquiry. The Board has long defined “coercion”
to include “economic retaliation or pressure in a background of a labor dispute,”
defining such conduct to include “refusing to execute a collective-bargaining
agreement or to refer workers.” Sheet Metal Workers Local 91 (Schebler Co.), 294
NLRB 766, 775 (1989), enf’d in relevant part, 905 F.2d 417, 424 (D.C. Cir. 1990);
accord Associated Gen. Contractors of Cal., Inc. v. NLRB., 514 F.2d 433, 438 (9th
Cir. 1975) (coercion includes “any form of economic pressure of a compelling or
restraining nature”). Except where First Amendment concerns may require greater
caution,6 the Board’s interpretation of coercion is entitled to deference. See Pye, 61
F.3d at 1023.
The Union’s legal argument is contrary to the Board’s decision in Limbach that
a union engaged in unlawful coercion by refusing to renew a secondary employer’s
§ 8(f) contract. Because the dispute involved multiple local unions, the Board’s
construction of the statute was ultimately upheld by three of our sister circuits. See
Sheet Metal Workers, 989 F.2d at 520-22; Limbach, 949 F.2d at 1256-57; Gottfried,
876 F.2d at 1251. The Union attempts to distinguish Limbach because it involved the
repudiation or refusal to renew existing § 8(f) agreements with an established
company. We agree with the Board that, in construing the statutory prohibition on
secondary coercion, there is no meaningful legal distinction between refusing to
renew an expired § 8(f) agreement, and refusing to enter into an initial § 8(f)
agreement. We note, too, that the Union in settling Century’s prior § 8(b)(4)(ii)(B)
charge broadly agreed that it would not “refuse to sign a collective bargaining
agreement with . . . Mid-America Fencing, Winslow Fencing or any other person in
order to force” that person to stop doing business with Century.
6
Such as cases involving peaceful picketing or handbilling. See Edward J.
DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568,
577-78 (1988). This case involves the Union’s economic pressure on Century’s
subcontractors, not its earlier efforts to persuade general contractor signatories not to
subcontract with Century.
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The Union also argues that its actions were not in fact economically coercive
because Lake Area had no prior union affiliation, had no right to union affiliation,
and could continue working as Century’s nonunion fencing subcontractor on the one
nonunion project that Lake Area had obtained. This is a serious issue. But it is fact
intensive. Applying the deferential substantial evidence standard of review, we
conclude the Board’s decision must be upheld.
Even though Lake Area had no right to a § 8(f) contract, the record established
that Roush formed the new company with a reasonable expectation of becoming a
union fencing subcontractor. The Union’s control over signatory status is a
“powerful economic weapon” when that status dictates an employer’s access to union
projects and workers. Limbach, 949 F.2d at 1256. Here, because of Article 16 of the
Highway-Heavy agreement, the Union’s refusal barred Lake Area from all union
projects in Minnesota at a time when more union than nonunion work was available.
It also deprived Lake Area of the other benefits of union association, such as a ready
supply of trained labor, and it crippled the fledgling enterprise’s union-oriented
business plan -- a plan the Union should have applauded. In these circumstances, the
Board reasonably concluded that the Union’s refusal went beyond lawfully
persuading Lake Area to cease doing business with Century and reached the level of
unlawful secondary coercion through the application of compelling economic
pressure. See NLRB v. IBEW, 405 F.2d 159, 161-62 (9th Cir. 1968) (Board
reasonably found unlawful economic coercion when threatened § 8(f) contract
termination would make the employer an “ineligible business associate in the eyes
of . . . other [union-affiliated] contractors”), cert. denied, 395 U.S. 921 (1969).
For the foregoing reasons, we deny the Union’s petition for review and grant
the Board’s cross-petition to enforce its Decision and Order.
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