New Jersey Regional Council of Carpenters v. Jayeff Construction Corp.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 11-3872
__________
NEW JERSEY REGIONAL COUNCIL OF CARPENTERS; NEW JERSEY
CARPENTERS FUNDS and the TRUSTEES THEREOF,
Appellants
v.
JAYEFF CONSTRUCTION CORPORATION
__________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 3:11-cv-00903)
District Judge: Hon. Joel A. Pisano
__________
Submitted under Third Circuit LAR 34.1(a)
September 10, 2012
Before: SMITH, CHAGARES and ALDISERT, Circuit Judges.
(Filed: September 12, 2012 )
__________
OPINION OF THE COURT
__________
ALDISERT, Circuit Judge.
The New Jersey Regional Council of Carpenters, the New Jersey Carpenters
Funds and the Trustees thereof (collectively, “the Funds”) appeal an order from the
1
United States District Court for the District of New Jersey, which denied the Funds’
motion to confirm an arbitration award and granted Appellee’s motion to vacate the same
award. Appellants contend that the District Court erred by: (1) usurping the role of the
arbitrator by interpreting the terms of the collective bargaining agreement (“CBA”) and
(2) holding that Appellee was not bound by the CBA through its execution of remittance
reports. For the reasons that follow, we will affirm the District Court’s order.
I.
Because we write primarily for the parties, who are familiar with the facts and the
proceedings in the District Court, we will revisit them only briefly.
Jayeff Construction Corporation (“Jayeff”) is a commercial construction
contracting company that hires subcontractors to work on its projects. Jayeff utilizes an
open-shop work force, meaning it does not require employees to join or financially
support a union as a condition to employment, and Jayeff has not entered into a statewide
CBA with the Funds. It has, however, employed members of the Carpenters’ Union and
has, at individual employees’ requests, remitted payment of their benefits to the Funds so
that the employees could maintain their union benefits status. Between 2003 and 2009,
Jayeff voluntarily remitted fringe benefits for five employees who were members of the
Carpenters’ Union. None of these individuals performed carpentry work for Jayeff but
were, instead, employed in managerial positions.
Jayeff used the remittance forms required by the Funds, which are standard fill-in-
the-blank forms. Each form listed the names of the employees for whom amounts were
being remitted. The forms also contained the following statement in fine print:
The Employer hereby acknowledges his or its agreement to the Collective
Bargaining Agreement which requires the payment of the fringe benefits
forwarded herewith. The Employer further agrees to the Agreements and
Declarations of Trust governing the New Jersey Carpenters’ Fringe
2
Benefits Funds. Both Collective Bargaining Agreement and the
Agreements and Declarations of Trust are hereby incorporated by reference
and the Employer agrees to abide by said agreements.
App. 00082. 1 The remittance forms were signed and submitted by Jayeff’s personnel
manager, Eloise DiGuglielmo, and not by the president of Jayeff.
In June 2003, the Funds instigated a payroll compliance audit of Jayeff for the
period beginning January 1, 2009, and ending March 31, 2010. On August 16, 2010, the
auditor issued a report stating that Jayeff should have remitted payments for additional
non-union employees. As a result, on December 8, 2010, the Funds notified Jayeff that a
delinquency in the amount of $246,181.67 had been assessed against it. Jayeff took the
position that, because it was not a signatory to the CBA with the Funds, no additional
payment was due. Thereafter, the Funds communicated their intent to arbitrate the
dispute. On December 21, 2010, Jayeff informed the Funds that it would not participate
in the arbitration proceedings and, moreover, could not be compelled to participate in the
proceedings because it had never signed the CBA or any arbitration agreement.
The arbitrator conducted the proceedings without Jayeff on December 30, 2010.
The arbitrator determined that Jayeff was bound to the CBA with the New Jersey Council
of Carpenters and issued an order on January 3, 2011, directing Jayeff to pay $392,178.71
to the Funds. After Jayeff failed to pay the amounts awarded, the Funds filed a motion in
the District Court for the District of New Jersey requesting that the District Court confirm
the award. Jayeff filed a cross-motion to vacate the award. On October 11, 2011, the
District Court issued an order denying the Funds’ motion to confirm the award and
granted Jayeff’s motion to vacate. The Funds timely appealed.
1
The parties separated the page numbers of the Appendix into two groups: pages
1-14 in Volume I and pages 1-157 in Volume II. We have combined the volumes
to provide one, continuous pagination: App. 00001-00171.
3
II.
The District Court had jurisdiction under § 301(a) of the Labor Management
Relations Act (“LMRA”), 29 U.S.C. § 185(a) and § 520 of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1132. We have jurisdiction pursuant to 9
U.S.C. § 16(a). We exercise plenary review over the District Court’s legal conclusions
concerning the applicability and scope of an arbitration agreement. See Harris v. Green
Tree Fin. Corp., 183 F.3d 173, 176 (3d Cir. 1999) (citing Pritzker v. Merrill Lynch, 7
F.3d 1110, 1113 (3d Cir. 1993)). “Despite the liberal policy in favor of enforcing
arbitration agreements . . . , a party cannot be forced to arbitrate unless ‘that party has
entered into a written agreement to arbitrate that covers the dispute.’” U.S. Small Bus.
Admin. v. Chimicles, 447 F.3d 207, 209 (3d Cir. 2006) (quoting Bel-Ray Co. v. Chemrite
(Pty) Ltd., 181 F.3d 435, 440 (3d Cir. 1999)).
III.
The Funds first contend that it was error for the District Court to vacate the
arbitration award because the Court impermissibly usurped the role of the arbitrator by
interpreting the terms of the CBA. Jayeff, however, is not challenging the validity of the
CBA nor the meaning of any of its provisions. Rather, the issue is whether a contract to
arbitrate was ever entered into by the parties. In such a case, the court—not the
arbitrator—has the power to adjudicate the issue. See Buckeye Check Cashing v.
Cardegna, 546 U.S. 440, 444 n.1 (2006).
The Federal Arbitration Act (“FAA”) creates a strong presumption in favor of
enforcing arbitration awards. See Brentwood Med. Assocs. v. United Mine Workers of
Am., 396 F.3d 237, 241 (3d Cir. 2005). Pursuant to the FAA, a district court may vacate
an arbitration award only under a limited number of circumstances, including:
4
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or
either of them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone
the hearing, upon sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; or of any other misbehavior by
which the rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly executed
them that a mutual, final, and definite award upon the subject matter
submitted was not made.
9 U.S.C. § 10(a)(1)-(4). “As long as the arbitrator’s award ‘draws its essence from the
collective bargaining agreement,’ and is not merely ‘his own brand of industrial justice,’
the award is legitimate.” United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 36
(1987) (quoting United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593,
597 (1960)). Thus, “as long as the arbitrator is even arguably construing or applying the
contract and acting within the scope of his authority, that a court is convinced he
committed serious error does not suffice to overturn his decision.” Misco, 484 U.S. at 38.
It is well-settled, however, that “arbitration is a matter of contract and a party
cannot be required to submit to arbitration any dispute which he has not agreed so to
submit.” United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574,
582 (1960). “Unless the parties clearly and unmistakably provide otherwise, the question
of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.”
AT&T Techs. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986).
IV.
Because courts—not arbitrators—must determine whether the parties ever agreed
to arbitrate, we must now analyze whether the District Court erred by vacating the award
after finding that Jayeff did not intend to enter into the CBA. To determine whether a
dispute is arbitrable, “a court must address two issues: (1) whether the parties formed an
agreement to arbitrate; and (2) whether the dispute in question falls within the scope of
5
that agreement.” Nationwide Mut. Ins. Co. v. Cosenza, 258 F.3d 197, 202 (3d Cir. 2001)
(citation omitted); see also Medtronic AVE, Inc. v. Advanced Cardiovascular Sys., Inc.,
247 F.3d 44, 54-55 (3d Cir. 2001).
It is undisputed that Jayeff was not a signatory to the CBA. The lack of a signed
CBA does not, however, end our inquiry. Although, “[o]rdinarily, binding a non-
signatory to a CBA runs afoul of the fundamental premise that ‘a party cannot be
required to submit to arbitration any dispute which he has not agreed [to so] submit,’”
Local Union No. 38, Sheet Metal Workers’ Int’l Ass’n v. Custom Air Sys., Inc., 357 F.3d
266, 268 (2d Cir. 2004) (alteration in original) (quoting Warrior & Gulf Navigation, 363
U.S. at 582), “‘a collective bargaining agreement is not dependent on the reduction to
writing of the parties’ intention to be bound,’ . . . rather ‘[a]ll that is required is conduct
manifesting an intention to abide and be bound by the terms of an agreement,’”
Bricklayers Local 21 of Ill. Apprenticeship & Training Program v. Banner Restoration,
Inc., 385 F.3d 761, 766 (7th Cir. 2004) (quoting Gariup v. Birchler Ceiling & Interior
Co., 777 F.2d 370, 373 (7th Cir. 1985)). To determine whether a non-signatory may be
bound by a CBA, a court must examine whether there is: (1) a writing that clearly refers
to the CBA and (2) conduct of the defendant that “evidences an intent to be bound by the
[CBA] despite a lack of written consent.” Residential Reroofers Local 30-B Health &
Welfare Fund v. A & B Metal & Roofing, Inc., 976 F. Supp. 341, 344 (E.D. Pa. 1997)
(citation omitted).
The Funds contend that the parties formed an agreement to be bound by the CBA
when Jayeff executed the remittance forms. 2 The District Court found the language in the
2
Section 302 of the LMRA, 29 U.S.C. § 186, prohibits payments by employers to labor
organizations. The “written agreement requirement,” however, operates as an exception,
making payments to an employee benefit plan lawful where the payments are made
pursuant to a written agreement. Therefore, to legally provide payments to the Funds,
6
forms to be “ambiguous,” adding that “the extent to which the clause purports to bind the
employer is unclear.” App. 00008. The District Court went on to hold that the
surrounding context “clearly shows that Jayeff had no intent to be bound to the entire
CBA as to all of its employees, and that it was reasonable for Jayeff to believe that it was
not so bound merely by submitting the standard remittance forms.” Id.We conclude that the District Court did not err in finding that Jayeff’s conduct did
not indicate an intent to be bound by the CBA. The remittance forms were expressly
limited to “payment of fringe benefits forwarded herewith” for the five designated
employees who requested the contributions. App. 00082. The Funds drafted the
remittance forms to permit payment to the Funds, in accordance with the LMRA, not
only by parties who were signatories to the CBA but also by parties like Jayeff, who were
only contributing for certain employees. There is no precedent to support the Funds’
position that an employer that has not signed a CBA can nevertheless be bound by all of
the provisions of the CBA solely from signing remittance forms. Although a signed
remittance forms is entitled to some weight, it is but one factor that must be examined in
analyzing a defendant’s conduct; the form, alone, is not enough to bind a non-signatory
employer to a CBA. See Operating Eng’rs Local 139 Health Benefit Fund v. Gustafson
Constr. Corp., 258 F.3d 645, 650 (7th Cir. 2001) (“[T]he monthly remittance reports
accompanying these payments contained a declaration signed by the defendant . . . .
Boilerplate it was, but it was entitled to some weight.” (citation omitted)); see also Del
Turco v. Speedwell Design, 623 F. Supp. 2d 319, 346 (E.D.N.Y. 2009) (concluding that
Jayeff must have executed a written agreement detailing the basis for the payments. Here,
the remittance forms satisfy the written agreement requirement. See Moriarty v. Larry G.
Lewis Funeral Directors Ltd., 150 F.3d 773, 775 (7th Cir. 1998). However, the express
language in § 302(c)(5)(B) is silent as to whether the act of making payments pursuant to
the written agreement automatically binds the employer to the CBA.
7
the funds could seek contributions from the employer based on the existence of a signed
CBA as well as remittance reports).
Not only are the remittance forms, by themselves, not enough to bind Jayeff to the
CBA, but moreover its conduct does not evidence an intent to be bound by the CBA:
Jayeff never signed the CBA; it contributed to the funds on behalf of five individuals
only after those individuals requested that it do so; and all other individuals employed by
Jayeff were non-union employees. See Firesheets v. A.G. Bldg. Specialists, Inc., 134
F.3d 729, 731 (5th Cir. 1998) (concluding that employer’s conduct in hiring nonunion
carpenters, setting wages and making contributions to a trust fund “only for those
employees who asked for contributions” was inconsistent with an intent to be bound by
the CBA).
Even looking at the Funds’ interaction (or lack thereof) with Jayeff, there is no
evidence that Funds believed Jayeff was bound by the CBA: for seven years, until the
accounting in 2010, the Funds never attempted to enforce any of the numerous provisions
of the CBA against Jayeff. And even when the Funds tried to enforce the CBA’s
arbitration provision, Jayeff not only contested the arbitrator’s jurisdiction prior to the
arbitration proceedings, but it also refused to appear before the arbitrator. See Bricklayers
Local 21, 385 F.3d at 767-768 (concluding employer was bound by the CBA after
examining numerous factors including evidence that the employer “took no action to
challenge jurisdiction after the Joint Arbitration Board found it guilty of labor violation
charges under the CBA”).
Based on the record, we conclude that the District Court did not err when it found
that Jayeff’s conduct did not indicate an intent to be bound by the CBA. We therefore
reject the Funds’ position and will affirm the District Court’s order vacating the award.
8
*****
We have considered all of the arguments advanced by the parties and conclude
that no further discussion is necessary. The judgment of the District Court will be
AFFIRMED.
9