Carpenters Health and Welfare v. Management Resource Systems In

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