Taylor Sheet Metal, Inc. v. Smart Local No. 16 ( 2019 )


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  •                                                                             FILED
    NOT FOR PUBLICATION
    MAY 24 2019
    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    TAYLOR SHEET METAL, INC.,                        No.   18-35176
    Plaintiff-Appellee,                D.C. No. 3:17-cv-00753-SB
    v.
    MEMORANDUM*
    INTERNATIONAL ASSOCIATION OF
    SHEET METAL, AIR, RAIL AND
    TRANSPORTATION WORKERS
    UNION, LOCAL NO. 16,
    Defendant-Appellant.
    Appeal from the United States District Court
    for the District of Oregon
    Anna J. Brown, District Judge, Presiding
    Argued and Submitted May 14, 2019
    Portland, Oregon
    Before: N.R. SMITH, WATFORD, and R. NELSON, Circuit Judges.
    The International Association of Sheet Metal, Air, Rail and Transportation
    Workers Union, Local No. 16 (“Union”) appeals the district court’s order granting
    summary judgment and vacating an arbitration award imposed by the National
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by Ninth Circuit Rule 36-3.
    Joint Adjustment Board (“NJAB”) against Taylor Sheet Metal, Inc. (“Taylor”).
    We have jurisdiction under 28 U.S.C. § 1291; we reverse and remand.
    When the parties signed a “prehire” collective bargaining agreement
    (“CBA”), Taylor employed only one statutory employee. The CBA, modeled on a
    template known as the Standard Form of Union Agreement (“SFUA”), contained
    auto-renewal and interest arbitration provisions.1 Ten months after the Union
    notified Taylor it was reopening the CBA, the Union declared an impasse and
    invoked the interest arbitration provision. Taylor then purported to repudiate the
    CBA and objected to the jurisdiction of the NJAB.
    The NJAB ordered the parties to execute a new four-year agreement but
    removed the interest arbitration provision in Article X, Section 8. Taylor then
    asked the district court to vacate the arbitration award for lack of jurisdiction. The
    Union cross-petitioned to enforce the award. The district court vacated the
    arbitration award. We review its order de novo. Teamsters Local Union 58 v.
    BOC Gases, 
    249 F.3d 1089
    , 1093 (9th Cir. 2001); Laborers Health & Welfare Tr.
    Fund for N. Cal. v. Westlake Dev. (“Westlake”), 
    53 F.3d 979
    , 981 (9th Cir. 1995).
    1
    “[A]n interest arbitration clause [is one that] requires the signatories to a
    CBA to submit disputes over new contract terms to arbitration.” Sheet Metal
    Workers Int’l Ass’n, Local 104 v. Simpson Sheet Metal, Inc., 
    954 F.2d 554
    , 555 n.1
    (9th Cir. 1992).
    2
    1.     The district court erred by vacating the arbitration award.
    a.    The district court erred by concluding Taylor could repudiate
    the CBA. We have held that employers can repudiate Section 8(f) prehire
    agreements under the one employee doctrine.2 See 
    Westlake, 53 F.3d at 983
    .
    However, Westlake did not disturb our prior holding that employers may not
    repudiate under the one employee doctrine where there is an interest arbitration
    provision. See Am. Metal Prods., Inc. v. Sheet Metal Workers Int’l Ass’n, Local
    Union No. 104 (“AMP”), 
    794 F.2d 1452
    , 1455 (9th Cir. 1986). Consequently, the
    CBA’s auto-renewal and interest arbitration provisions “trump” the one employee
    doctrine.
    Taylor seeks to distinguish AMP, arguing that case did not address the one
    employee doctrine. We disagree. In AMP, the employer “notified the Union that
    since AMP had no union employees and did not anticipate further hiring, AMP
    would terminate the collective bargaining agreement upon its expiration.” 
    Id. at 1454.
    “AMP argue[d] that its interest arbitration obligations are somehow linked
    2
    The “one employee doctrine” is a statutory interpretation by the National
    Labor Relations Board (“NLRB”) that an employer does not violate its statutory
    duty to bargain under the National Labor Relations Act (“NLRA”) by unilaterally
    repudiating a collective bargaining agreement that covers a bargaining unit
    containing a single employee or no employees. Stack Elec., Inc., 
    290 N.L.R.B. 575
    (1988).
    3
    to and canceled by its claim that it no longer has a statutory duty to bargain under
    the [NLRA]”—i.e., the NJAB was without jurisdiction, because AMP had
    terminated the CBA on the basis that it no longer had a statutory duty to bargain.
    
    Id. at 1455.
    We unequivocally rejected this argument, determining that “AMP’s
    duty to bargain arose from its collective bargaining agreement and not from
    statutory obligations. . . . That the children of the employer were the only
    remaining members of the unit is simply not relevant.” 
    Id. (footnote omitted).
    Thus, AMP held that the statutory right to repudiate can be overcome by interest
    arbitration clauses. 
    Id. Taylor next
    argues that we cannot rely on AMP, because it predated the en
    banc decision in Mesa Verde Construction Co. v. Northern California District
    Council of Laborers (“Mesa”), 
    861 F.2d 1124
    (9th Cir. 1988). We disagree.
    After the AMP court determined that the lack of statutory employees was
    “simply not relevant” to AMP’s contractual duty to bargain, the court proceeded to
    reject AMP’s argument that it could repudiate the interest arbitration provisions on
    account of the CBA’s status as a prehire 
    agreement. 794 F.2d at 1455
    . At that
    time, an employer could repudiate a prehire agreement—they were considered
    “voidable by either party until the union establishe[d] that it represent[ed] a
    majority and an appropriate unit.” 
    Id. at 1456
    (citing Jim McNeff, Inc. v. Todd, 461
    
    4 U.S. 260
    , 269 (1983)). Thus, there may have been a question at the time AMP was
    decided about whether an interest arbitration provision would have “trumped” the
    right to repudiate a “voidable” prehire agreement. However, after AMP, an en
    banc panel decided Mesa, holding that employers generally could not repudiate
    Section 8(f) prehire agreements midterm. 
    Mesa, 861 F.2d at 1137
    . In short, even
    if AMP had involved a Section 8(f) prehire agreement, Mesa would preclude
    midterm repudiation.
    Citing Westlake, Taylor next argues that it could repudiate the entire
    agreement (including the interest arbitration provision) under the one employee
    doctrine. Westlake did hold that an employer could repudiate a Section 8(f) prehire
    agreement under the one employee 
    doctrine. 53 F.3d at 982
    –83. However,
    Westlake did not disturb AMP’s holding that an interest arbitration provision still
    “trumps,” because Westlake did not involve an interest arbitration provision. See
    Sakamoto v. Duty Free Shoppers, Ltd., 
    764 F.2d 1285
    , 1288 (9th Cir. 1985)
    (“[U]nstated assumptions on non-litigated issues are not precedential holdings
    binding future decisions.”). Westlake was decided by a three-judge panel; it
    couldn’t have overruled AMP. See Gonzalez v. Arizona, 
    677 F.3d 383
    , 389 n.4
    (9th Cir. 2012) (en banc) (“[A] published decision of this court constitutes binding
    5
    authority which must be followed unless and until overruled by a body competent
    to do so.” (quotation marks and citation omitted)).
    We stress that Taylor’s interpretation would allow an employer, who
    knowingly and voluntarily entered into a CBA containing an interest arbitration
    clause with no statutory employees, to raise that same lack of statutory employees
    to avoid his contractual obligation to arbitrate over a renewal agreement. The
    Supreme Court and the Ninth Circuit’s en banc panel in Mesa cautioned about such
    an interpretation. See Jim 
    McNeff, 461 U.S. at 271
    (“[I]t strains both logic and
    equity to argue that a party to such an agreement can reap its benefits and then
    avoid paying the bargained for consideration. . . . Having had the music, he must
    pay the piper.” (footnote omitted)); 
    Mesa, 861 F.2d at 1131
    (agreeing with the D.C.
    Circuit’s statement that it could not “conceive of such an exercise in futility on the
    part of Congress as to validate a contract with a union having minority status, but
    to permit its abrogation because of the union’s minority status.” (quoting Local No.
    150, Int’l Union of Operating Eng’rs v. NLRB, 
    480 F.2d 1186
    , 1190 (D.C. Cir.
    1973)).
    b.     The district court erred when it concluded that repudiation was
    a question for the court and not the arbitrator. Generally, when a CBA contains a
    “customary” arbitration clause, acts of repudiation or termination must be
    6
    submitted to arbitration. Camping Constr. Co. v. Dist. Council of Iron Workers,
    
    915 F.2d 1333
    , 1338 (9th Cir. 1990) (quoting Bhd. of Teamsters & Auto Truck
    Drivers Local No. 70 v. Interstate Distrib. Co., 
    832 F.2d 507
    , 511 n.4 (9th Cir.
    1987)). “[The general] rule applies whether the dispute between the parties is
    solely over termination or repudiation, or whether, as here, their disagreement over
    that question is a threshold issue that must be resolved before the underlying
    dispute can be reached.” 
    Id. (emphasis added).3
    In order to qualify for a
    “narrow” exception, “at least some of the alleged acts of repudiation [must] occur[]
    before February 20, 1987, when pre-Deklewa law applied.” 
    Id. at 1338–39.
    Here,
    the purported repudiation took place decades after 1987, so repudiation is a
    question for the arbitrator. See 
    id. at 1337
    n.2.
    Taylor argues that we should affirm the district court’s determination that a
    court must determine whether the CBA was repudiated. It relies on a pre-Deklewa
    case, Ion Construction Co. v. District Council of Painters No. 16, which held that
    courts (not arbitrators) must decide the effectiveness of repudiation of a prehire
    agreement. 
    803 F.2d 1050
    , 1051 (9th Cir. 1986) (per curiam). Taylor reads
    3
    A “customary” arbitration clause broadly provides that any dispute arising
    out of the agreement must be arbitrated. 
    Id. 7 Camping
    to confirm that Ion Construction remains good law, but limited to when
    repudiation occurs under the one employee doctrine.
    However, no case applies the Ion Construction exception outside the pre-
    Deklewa Section 8(f) repudiation context. More importantly, Camping was clear:
    the Ion Construction exception only applies when “at least some of the alleged acts
    of repudiation occurred before February 20, 1987, when pre-Deklewa law 
    applied.” 915 F.2d at 1339
    . Taylor is simply advocating for a new exception to the “general
    rule” that, post-Deklewa, the Ninth Circuit enforces customary arbitration clauses.
    Taylor also argues that a court needs to decide repudiation, because the
    “right” to repudiate under the one employee doctrine flows from a statute.
    However, a CBA can limit an employer’s “right” to terminate or repudiate a
    prehire agreement. See Sheet Metal Workers Int’l Ass’n, Local 206 v. R.K. Burner
    Sheet Metal Inc., 
    859 F.2d 758
    , 762 (9th Cir. 1988) (“Whether or not this court
    adopts the Deklewa standard, we agree with the district court that Burner was not
    entitled to repudiate unilaterally the 1983 Agreement as a matter of contract.”
    (citation omitted)). An employer may have a “statutory right to walk away from
    the agreement upon its expiration, without submitting to arbitration[,]” but “[t]he
    contract is another matter.” Beach Air Conditioning & Heating, Inc. v. Sheet Metal
    Workers Int’l Ass’n, Local Union No. 102, 
    55 F.3d 474
    , 477 (9th Cir. 1995); see
    8
    also Sheet Metal Workers Int’l Ass’n, Local No. 162 v. Jason Mfg., Inc., 
    900 F.2d 1392
    , 1396 (9th Cir. 1990); 
    AMP, 794 F.2d at 1455
    . Just as the auto-renewal and
    interest arbitration provisions may limit the post-Deklewa “right” to terminate at
    the end of the contract, see Beach 
    Air, 55 F.3d at 477
    , those same renewal and
    interest arbitration provisions eliminate the “right” to repudiate here. Taylor’s
    explicit waiver of “any right it may have to repudiate this Agreement during the
    term of this Agreement or during the term of any extension, modification or
    amendment to this Agreement” only bolsters our conclusion.
    Taylor lastly argues that its statutory “right” to repudiate under the one
    employee doctrine cannot be waived, because it would be unfair to hold employers
    with no statutory employees “hostage,” since the NLRB cannot decertify the union.
    Our cases preclude this argument. See Simpson Sheet 
    Metal, 954 F.2d at 557
    ;
    Emp. Painters’ Tr. v. J & B Finishes, 
    77 F.3d 1188
    , 1192 (9th Cir. 1996) (per
    curiam) (“Parties to a collective bargaining agreement are conclusively presumed
    to have equal bargaining power, and union agents have no duty to explain to
    employers the terms, conditions, or consequences of a collective bargaining
    agreement.”).
    REVERSED and REMANDED.
    9