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MARTIN v. BENESH & BRUNS

January 6, 1982

WILLIAM F. MARTIN, ET AL., PLAINTIFFS,
v.
BENESH & BRUNS, INC., A CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Marshall, District Judge.

MEMORANDUM OPINION

In this action, plaintiffs seek to compel defendant Benesh & Bruns, Inc. to make the contributions to various pension and welfare funds of the International Union of Operating Engineers, Local 150, which defendant allegedly contracted to make. Defendant claims it need not honor the contract, since the union in question did not enjoy the support of a majority of defendant's employees.

For the purposes of this motion, the relevant facts are as follows. Defendant was party to a contract between the I.U.O.E., Local 150, and certain employer associations. The contract required the defendant to make contributions to the union's Welfare Fund, Pension Trust Fund, Apprenticeship Fund, and Vacation Savings Fund. Defendant has not made the required contributions. As a result, plaintiffs*fn1 filed suit to recover the amounts due and owing on the contract. This court has jurisdiction under § 301(a) of the Labor Management Relations Act, 29 U.S.C. § 185(a)(1976), and § 502(f) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132(f)(1976).

In suits under § 301, a federal common law of labor relations is applied. Textile Workers Union v. Lincoln Mills of Alabama, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957). This common law is formulated by reference to § 301's ultimate purpose of furthering the goals of national labor policy. Id. at 456-57, 77 S.Ct. at 917-18. One of the fundamental goals of national labor policy is protecting the freedom of choice of employees. The National Labor Relations Act is intended to protect the principle that the majority of employees should be free to decide whether they wish to be represented by a union, and, if so, which union will be chosen to provide representation. In order to protect the will of the majority, the Act makes it an unfair labor practice for an employer to sign a labor contract with a nonmajority union. See International Ladies' Garment Workers' Union v. NLRB, 366 U.S. 731, 737-38, 81 S.Ct. 1603, 1607, 6 L.Ed.2d 762 (1961). This result is dictated by the "generally prevailing statutory policy that a union should not purport to act as the collective bargaining agent for all unit employees, and may not be recognized as such, unless it is the voice of the majority of the employees in the unit." NLRB v. Local Union No. 103, International Association of Bridge, Structural & Ornamental Iron Workers, 434 U.S. 335, 344, 98 S.Ct. 651, 657, 54 L.Ed.2d 586 (1978) [hereinafter Higdon]. See Connell Construction Co. v. Plumbers & Steamfitters Union, Local 100, 421 U.S. 616, 632-33, 95 S.Ct. 1830, 1839-40, 44 L.Ed.2d 418 (1975).

However, § 8(f) of the National Labor Relations Act, 29 U.S.C. § 158(f)(1976), is an exception to the general rule requiring majority representation. Higdon, 434 U.S. at 345, 98 S.Ct. at 657; Connell, 421 U.S. at 632, 95 S.Ct. at 1839. Section 8(f) provides:

  It shall not be an unfair labor practice under
  subsections (a) and (b) of this section for an
  employer engaged primarily in the building and
  construction industry to make an agreement
  covering employees engaged (or who, upon their
  employment, will be engaged) in the building and
  construction industry with a labor organization of
  which building and construction employees are
  members (not established, maintained, or assisted
  by any action defined in subsection (a) of this
  section as an unfair labor practice) because (1)
  the majority status of such labor organization has
  not been established under the provisions of
  section 159 of this title prior to the making of
  such agreement, or (2) such agreement requires as
  a condition of employment, membership in such
  labor organization after the seventh day following
  the beginning of such employment or the effective
  date of the agreement, whichever is later, or (3)
  such agreement requires the employer to notify
  such labor organization of opportunities for
  employment with such employer, or gives such labor
  organization an opportunity to refer qualified
  applicants for such employment, or (4) such
  agreement specifies minimum training or experience
  qualifications for employment or provides for
  priority in opportunities for employment

  based upon length of service with such employer,
  in the industry or in the particular geographical
  area: Provided, That nothing in this subsection
  shall set aside the final proviso to subsection
  (a)(3) of this section [relating to invalid
  dismissals pursuant to union security clauses]:
  Provided further, That any agreement which would be
  invalid, but for clause (1) of this subsection,
  shall not be a bar to a petition filed pursuant to
  section 159(c) or 159(e) of this title.

The exception created by § 8(f) allows employers and nonmajority unions to sign contracts, which are commonly referred to as "pre-hire agreements." However, the exception is a limited one. In Higdon, the Supreme Court held that union picketing aimed at requiring an employer to adhere to a pre-hire contract was an unfair labor practice under § 8(b)(7)(C) of the Act, 29 U.S.C. § 158(b)(7)(C)(1976) (prohibiting picketing where an object thereof is forcing an employer to bargain with or recognize a union). Defendant concedes that the holding of Higdon does not reach this case, since Higdon was decided under a statute which prohibits certain forms of picketing, and no picketing is present in this case. However, defendant argues that the free choice rationale of Higdon reaches attempts to enforce contracts made with nonmajority unions under § 301. This is a question on which courts have split.*fn3 It is the view of this court that national labor policy favors the enforcement of pre-hire contracts. Therefore, the motion to reconsider is denied.

Our analysis is essentially in two parts. First, in suits to enforce pre-hire agreements, there is present a strong national labor policy favoring enforcement of labor contracts, which was not at issue in Higdon. Second, we find that the national labor policy favoring free choice which was at the core of Higdon is not present in this case.

It is beyond doubt that there is a strong national labor policy favoring the enforcement of labor contracts and the removal of defenses to enforcement. See Lewis v. Benedict Coal Co., 361 U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960); Textile Workers Union of Lincoln Mills of Alabama, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957); Pennington v. United Mine Workers, 325 F.2d 804, 819 (6th Cir. 1963), rev'd on other grounds, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); Trustees of the Atlanta Iron Workers Local 387 Pension Fund v. Southern Stress Wire Corp., 509 F. Supp. 1097, 1100-01 (N.D.Ga. 1981). Moreover, basic fairness dictates that these contracts should be enforced; employers should not be allowed to break their promises with impunity. See Contractors, Laborers, Teamsters & Engineers Health & Welfare Fund v. Associated Wrecking Co., 638 F.2d 1128, 1134 (8th Cir. 1980) ("An employer who accepts the benefits of such an agreement must also honor the obligations under that agreement").*fn4 The strength of the national labor policy favoring enforcement of contracts is heightened in this case for two reasons. First, this case involves contributions to various welfare funds, and the national labor policy favoring enforcement of contracts applies "with even greater force to protecting the interests of beneficiaries of the welfare fund, many of whom may be retired, or may be dependent. . . ." Lewis v. Benedict Coal Co., 361 U.S. at 470, 80 S.Ct. at 496. Second, the policy is especially relevant here because of the risk of unjust enrichment. If the defense of nonmajority status is allowed, defendant will be relieved of having to pay money due and owing to the various pension funds. However, this money is not rightfully the defendant's. Rather, these "payments are really another form of compensation to the employees, and as such the obligation to pay royalty might be thought to be incorporated into the individual employment contracts." Id. at 469, 80 S.Ct. at 495, see Huge v. Long's Hauling Co., 590 F.2d 457, 464-65 (3d Cir. 1978) (Adams, J., concurring); Lewis v. Seanor Coal Co., 382 F.2d 437, 441 (3d Cir. 1967), cert. denied, 390 U.S. 947, 88 S.Ct. 1035, 19 L.Ed.2d 1137 (1968). Defendant's obligation was really to its individual employees, who were the ultimate beneficiaries of the contract, and it is unfair that they should lose past compensation due and owing because of the union's status.

Higdon simply did not involve these considerations. There, the Court was addressing the question of whether picketing to enforce a pre-hire agreement by a minority union was the sort of coercion forbidden by § 8(b)(7)(C). The national labor policy favoring enforcement of contracts was not at issue, because Higdon was not an enforcement action. Higdon was a case about picketing, which Congress has specifically labelled as unduly coercive in § 8(b)(7)(C). Higdon was decided in a context very different from the context of this case. See Associated Wrecking, 638 F.2d at 1132-33; Southern Stress, 509 F. Supp. at 1103-04; Eastern District Council of the United Brotherhood of Carpenters & Joiners of America v. Blake Construction Co., 457 F. Supp. 825, 829 (E.D.Va. 1978).*fn5 Defendant relies on Higdon's statement that "[t]he employer's duty to bargain and to honor the contract is contingent on the union's attaining majority support at the various construction sites," 434 U.S. at 345, 98 S.Ct. at 657, and that prior to that point the agreement is "voidable and does not have the same stature as a collective bargaining contract entered into with a union actually representing a majority of the employees. . . ." Id. at 341, 98 S.Ct. at 655. However, defendant ignores the context in which this language appears. The Court's holding was that the pre-hire agreement was "voidable" only for purposes of the National Labor Relations Act.

  It does not necessarily follow, however, that the
  absence of majority status leaves the union
  without a remedy for breach of contract on any
  provision of the section 8(f) agreement. To say
  that an employer may challenge the majority status
  of a union in an unfair labor practice proceeding
  is not to say that the employer may assert the
  union's lack of majority status as a defense in a
  breach of contract action on a type of contract
  specifically authorized by the act. Associated
  Wrecking, 638 F.2d at 1133.

In fact, the Higdon Court itself termed pre-hire agreements "comparable" to hot-cargo clauses, which are unenforceable for purposes of the NLRA, but which can be enforced in a breach of contract action under § 301. See id. at 349 n. 11, 98 S.Ct. at 659 n. 11.*fn6 Moreover, the Court has specifically held that the § 301's definition of "contracts" which can be sued on under its provisions is broader than the term "collective bargaining contract" which is enforceable for the purposes of the NLRA. Retail Clerks v. Lion Dry Goods, Inc., 369 U.S. 17, 25, 82 S.Ct. 541, 546, 7 L.Ed.2d 503 (1962). Thus, there is no reason to assume that what is considered an invalid contract for one act should also be considered invalid under the other.

In short, the context of Higdon is much different than that of the instant case. Higdon arose in the context of picketing under the NLRA, a practice which Congress felt was especially coercive. See 434 U.S. at 346-48, 98 S.Ct. at 658-59. This case arises under ยง 301. Here, the special concern with picketing is not present; instead a set of policies favoring the enforcement of contracts free of defenses ...


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