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CHICAGO DIST. COUNCIL OF CARPENTERS v. YONAN

United States District Court, Northern District of Illinois, E.D


December 6, 1982

CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, CHICAGO DISTRICT COUNCIL OF CARPENTERS WELFARE FUND, CHICAGO DISTRICT COUNCIL OF CARPENTERS APPRENTICE & TRAINEE PROGRAM AND THE CHICAGO DISTRICT COUNCIL OF CARPENTERS, GEORGE VEST, JR., WESLEY ISAACSON, MILTON HOLZMAN, THOMAS E. RYAN, RICHARD S. PEPPER, ALBERT KAUFMAN, DOMINIC J. VELO AND HERBERT S. CHURCH, JR., AS TRUSTEES OF THE CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION AND WELFARE FUNDS, RICHARD S. PEPPER, WESLEY ISAACSON, GEORGE VEST, JR., THOMAS D. COLEMAN, JACK BORNHOEFT, DOMINIC J. VELO, EDWARD ELLIS AND KENNETH BORG, AS TRUSTEES OF THE CHICAGO DISTRICT COUNCIL OF CARPENTERS APPRENTICE & TRAINEE PROGRAM, PLAINTIFFS,
v.
SAMUEL M. YONAN, INDIVIDUALLY AND D/B/A YONAN CARPETS, DEFENDANTS.

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

MEMORANDUM OPINION AND ORDER

Plaintiff, Chicago District Council of Carpenters Pension Fund ("the Fund"), brought this action against defendants, Samuel Yonan and Yonan Carpets ("Yonan"), to collect fringe benefit payments allegedly due the Fund under an agreement entered into in 1975. Jurisdiction is based upon § 502 of the Employee Retirement Income Security Act, 29 U.S.C. § 1132 (1976). The matter is presently before the Court on cross-motions for summary judgment. For the reasons set forth below, each party's motion will be granted in part and denied in part.

I.

The undisputed facts are as follows. Yonan, a seller of floor coverings, entered into an agreement with the Chicago District Council of Carpenters ("the Union") in 1975. As part of the agreement, Yonan promised, inter alia, to be bound by the terms of current and subsequent collective bargaining agreements between the Union and Mid-America Regional Bargaining Association ("MARBA"), an employers' bargaining agent. Yonan also promised to abide by the terms of the trust agreements creating the Fund and to make contributions to the Fund as specified in the collective bargaining agreements. Either party could terminate or amend the agreement upon notice as specified.*fn1

At the time the agreement was signed, Yonan had three or four employees who installed carpets. Yonan made employee contributions from June, 1976, through October, 1976. After October, 1976, Yonan submitted no monthly contribution reports and made no contributions. Having audited Yonan's books for the period of October, 1978, through March 30, 1980, the Fund contends that Yonan did in fact employ workers covered by the agreement and that contributions are due for the audit period.

II.

The first issue to be addressed is whether the 1975 agreement is permissible under § 8 of the National Labor Relations Act ("the Act"), 29 U.S.C. § 158. Generally, both a union and an employer commit unfair labor practices under § 8(a) of the Act, 29 U.S.C. § 158(a), if they sign a pre-hire agreement, which is a labor agreement entered into before all employees have been hired and before the union's membership encompasses a majority of the employees. See Garment Workers v. NLRB, 366 U.S. 731, 81 S.Ct. 1603, 6 L.Ed.2d 762 (1961). However, § 8(f) of the Act, 29 U.S.C. § 158(f), provides an exception to this rule. Employers "engaged primarily in the building and construction industry" may enter into pre-hire agreements covering employees that are or will be engaged in construction even if the union has not attained majority status at the time the agreement is executed. See generally N.L.R.B. v. Local Union No. 103, International Association of Bridge, Structural and Ornamental Iron Workers, 434 U.S. 335, 344, 98 S.Ct. 651, 657, 54 L.Ed.2d 586 (1978).

Yonan contends that his floor covering business is not part of the construction industry and thus the agreement does not fall within the § 8(f) exception permitting pre-hire agreements. Proof submitted by the Fund, however, indicates that the installation of carpet and other floor coverings is considered by various industry organizations to be part of the construction industry.*fn2 Moreover, the portion of the collective bargaining agreement covering the construction industry explicitly includes as part of the bargaining unit "Wood and Resilient Floor Layers, and Finishers, Carpet Layers. . . ."*fn3

Although we have found no judicial precedent or legislative discussion of the question, inclusion of Yonan's carpet layers in the § 8(f) construction industry exception comports with the congressional intent underlying the provision. The legislative history of the amendment that excepted the building and construction industry from the prohibition against pre-hire agreements acknowledged two purposes behind the signing of bargaining agreements covering employees before they are hired: (1) it is necessary for the employer to know his labor costs before making the estimate upon which his bid will be based; and (2) the employer must be able to have available a supply of skilled craftsmen ready for quick referral. 1959 U.S.Code Cong. & Ad.News pp. 2318, 2344-45. Furthermore, as noted in the Senate Report, "[r]epresentation elections in a large segment of the industry are not feasible to demonstrate . . . majority status due to the short periods of actual employment by specific employers." Id. at 2373, cited in Iron Workers, 434 U.S. at 344, 98 S.Ct. at 657. Although Yonan disavows the agreement, his use of occasional labor for the jobs he procures suggests circumstances addressed by Congress in § 8(f) and justifies the conclusion that the agreement falls within the exception. We therefore reject Yonan's contention that the agreement is invalid as a violation of § 8(a).*fn4

III.

The next issue is whether the agreement is enforceable against Yonan absent attainment by the union of majority status. Yonan contends that a pre-hire agreement is void until the union represents a majority of the employees covered. The Fund argues that the fringe benefit provisions of the agreement are enforceable regardless of whether majority status has been attained.*fn5

Yonan relies upon the Supreme Court's decision in Iron Workers, supra, 434 U.S. 344, 98 S.Ct. at 657. In Iron Workers, the Supreme Court held that it was an unfair labor practice under § 8(a) of the Act for an uncertified majority union to engage in picketing to enforce a pre-hire agreement. Id. at 341, 98 S.Ct. at 655. The Court reasoned that although the Act permits labor and management to enter into pre-hire agreements, the use of picketing may hinder employees' freedom to make an uncoerced choice of bargaining agent. Id. at 346, 98 S.Ct. at 658.

Yonan attempts to interpret the Court's decision in Iron Workers so broadly as to prohibit the legal enforcement of any provision of a pre-hire agreement, including fringe benefit obligations. This Court rejected such an interpretation of Iron Workers in Chicago District Council of Carpenters Pension Fund, et al. v. Vest, et al., 542 F. Supp. 634 (N.D.Ill. 1982), concluding that a distinction exists between the use of tactics that constitute unfair labor practices under § 8(a) of the Act to enforce pre-hire agreements and contract actions to enforce fringe benefit provisions. Id., at 636. Unfair labor practices have the potential to interfere with employees' freedom to choose a bargaining agent, while contract actions to enforce signed agreements do not. Id. at 637.

Moreover, the existence of a pre-hire agreement renders benefits to the employer, e.g., the ability to project labor costs accurately, N.L.R.B. v. Irvin, 475 F.2d 1265, 1267 (3d Cir. 1973), and the guarantee of industrial peace at the employer's work-sites, Contractors, Laborers, Teamsters & Engineers Health & Welfare Fund v. Associated Wrecking Co., 638 F.2d 1128, 1134 (8th Cir. 1981). To refuse to enforce the fringe benefit provisions of a pre-hire agreement would require us to hold all pre-hire agreements unenforceable until majority representation is achieved and would thus permit employers to reap benefits from pre-hire agreements without incurring any reciprocal obligations. Vest, supra at 636-37. Thus, we conclude that the agreement is enforceable against Yonan regardless of the union's lack of majority status.*fn6

IV.

Yonan next argues that even if a pre-hire agreement is not void, it is voidable at the election of the employer until majority status is achieved, as the Ninth Circuit has held in Todd v. Jim McNeff Co., 667 F.2d 800, 803-04 (9th Cir. 1982), cert. granted, ___ U.S. ___, 102 S.Ct. 3508, 73 L.Ed.2d 1382, (1982). Accord, Washington Carpenters' Welfare Fund v. Overhead Door Co., 681 F.2d 1, 3 E.B.C. 1600 (D.C. Cir. 1982). We need not reach this issue, however, because we conclude from the facts before us that Yonan did not repudiate the agreement during the time period in question.

Yonan contends that because he stopped receiving monthly contribution forms in 1978, two years after he ceased submitting completed forms to the Fund, the Fund was "on notice" that Yonan no longer considered himself party to the agreement.*fn7 In effect, he asserts that his noncompliance was repudiation terminating his obligations under the agreement. The Ninth Circuit rejected an identical agreement in McNeff:

  The only act in the record which could possibly
  be argued to be a repudiation is the employer's
  failure to perform its contractual obligations.
  While it is clear that in some circumstances
  noncompliance can be so bald as to put the union
  on notice of the employer's intent to repudiate
  (see, e.g., [Iron Workers]), the behavior here
  falls short. It is precisely this sort of action by
  an employer, enjoying the benefits of a pre-hire
  agreement and misleading the union as to the
  employer's intention of never performing his
  obligations, which has led us to adopt this view of
  voidability [as opposed to unenforceability] of
  these contracts.

667 F.2d at 805.*fn8 We agree with the Ninth Circuit and, thus, conclude that the agreement was not repudiated during the relevant period.*fn9

V.

The remaining issue is whether Yonan owes contributions to the Fund under the 1975 agreement for the period of October 1, 1978, through March 30, 1980. Yonan contends that no contributions are due because under the terms of the agreement he was required to make contributions only for employees, and during the period in question he hired independent contractors rather than employees to install carpet. The Fund argues first that Yonan's installers were, in reality, employees within the coverage of the agreement,*fn10 and second, that even if the installers were independent contractors, Yonan was required to make contributions on their behalf pursuant to §§ 3.4 and 3.5 of the collective bargaining agreement.

To determine whether a worker is an employee or an independent contractor, a court must use common law principles of agency to assess and weigh all incidents of the relationship. N.L.R.B. v. United Insurance Company of America, 390 U.S. 254, 258, 88 S.Ct. 988, 991, 19 L.Ed.2d 1083 (1968). Among the most important of the factors to be considered is the extent of control and supervision retained by the employer. Local Union 777, Democratic Union Organizing Committee, Seafarers International Union of North America v. N.L.R.B., 603 F.2d 862, 874-75 (D.C. Cir. 1978); Associated Independent Owner-Operators, Inc. v. N.L.R.B., 407 F.2d 1383, 1385 (9th Cir. 1969). Upon examination of the uncontested facts respecting Yonan's relationship with his carpet installers, we hold that the workers were independent contractors and not employees.*fn11

The Fund contends that Yonan is nevertheless required to make contributions on behalf of installers who are independent contractors pursuant to §§ 3.4 and 3.5 of the collective bargaining agreement. The collective bargaining agreement in effect at the signing of the 1975 pre-hire agreement contained § 3.4, which requires a signatory employer who subcontracts work to another signatory employer responsible for contributions if the subcontractor does not make payments.*fn12 To establish Yonan's liability for contributions due under § 3.4, then, the Fund would have to show: (1) that the installers to whom work was contracted were signatory employers, and (2) that the installer/subcontractors did not make the contributions required of them as signatory employers. Such facts have been neither alleged nor proven by plaintiff.*fn13 Thus, liability cannot be predicated on § 3.4.

Section 3.5, added to the collective bargaining agreement on June 1, 1979, provides that an employer is liable for payments on behalf of subcontractors whether or not they are signatories to the agreement.*fn14 Yonan contends that he is not bound by this provision, because it was a modification to the collective bargaining agreement adopted by reference in the 1975 pre-hire agreement, and because he never received notice of the modification.

The pre-hire agreement signed by Yonan in 1975 provided that it would remain in effect from year to year absent proper notice by either party, and that it adopted by reference the collective bargaining agreement in effect at the date of signing as well as any subsequent agreement between the Union and MARBA.*fn15 Substantially identical "roll-over" provisions have been upheld and enforced. See, e.g., Construction Teamsters Health & Welfare Trust v. Con Form Construction Corp., 657 F.2d 1101 (9th Cir. 1981); Ted Hicks & Associates, Inc. v. N.L.R.B., 572 F.2d 1024 (5th Cir. 1978). Moreover, the pre-hire agreement does not condition adoption of subsequent collective bargaining agreements on notice to the employer. Yonan cannot now insert a new provision into the pre-hire agreement, i.e., a requirement of notice. Accord, Ted Hicks, supra at 1026. He is obligated to make contributions for the independent contractors he employed during the audit period after § 3.5 was added to the collective bargaining agreement.

For these reasons, we hold that Yonan is entitled to summary judgment in his favor with respect to the Fund's claim for contributions arising from dates prior to June 1, 1979; the Fund's motion for summary judgment is denied with respect to the period prior to June 1, 1979. The Fund's motion is granted, and Yonan's motion is denied, with respect to contributions arising from the period between and including June 1, 1979, and March 30, 1980. It is so ordered.


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