United States District Court, Northern District of Illinois, E.D
July 19, 1985
LOCAL 705, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA, PLAINTIFF,
WILLETT, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Local 705, International Brotherhood of Teamsters, Chauffeurs,
Warehousemen & Helpers of America ("Local 705") charges The
Willett Company ("Company"), Willett, Inc. ("Willett"), Willett
Interstate System, Inc. ("Interstate") and Railhead Cartage, Inc.
("Railhead") violated the collective bargaining agreement ("CBA")
between Local 705 and Company by subcontracting cartage work out
to persons not represented by Local 705. Willett, Interstate and
Railhead (collectively "Movants") now seek to be dismissed under
Fed.R.Civ.P. "Rule" 12(b)(1) and 12(b)(6). For the reasons stated
in this memorandum opinion and order, their motion is denied.
Willett is the sole owner of the other defendants. All
defendants are affiliated enterprises with common ownership and
management, centralized control of labor relations and sharing of
equipment, employees and other assets. Company and Local 705 are
signatories to a CBA covering local cartage drivers, under which
cartage work performed by or assigned to Company employees cannot
be subcontracted out or assigned to any other drivers. None of
the Movants is a CBA signatory.
In November 1984 Movants did subcontract out cartage work that
belonged to Company's employees. Some or all that work (the
Complaint is unclear) was contracted out to Railhead, whose stock
Willett had purchased "to circumvent or evade" the CBA.
Local 705 asserts this Court has jurisdiction under Section
301(a) of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a).
Complaint Count I's prayer for relief:
requests the court to declare defendants a single
employer or joint employer for purposes of this
action and to grant such relief as is appropriate,
Count II's prayer:
requests the court to declare Railhead an alter ego
of The Willett Company for
purposes of this action and to grant such relief as
is appropriate, including damages.
1. This Court has no jurisdiction over them under
Section 301 because they are not signatories to the
2. All issues raised by Local 705's Complaint are
within the exclusive jurisdiction of the National
Labor Relations Board ("NLRB" or simply the "Board").
Those contentions will be dealt with in turn.
Section 301 Jurisdiction over Non-Signatories
Section 301(a) provides:
Suits for violation of contracts between an employer
and a labor organization representing employees in an
industry affecting commerce as defined in this
chapter, or between any such labor organizations, may
be brought in any district court of the United States
having jurisdiction of the parties without respect to
the amount in controversy or without regard to the
citizenship of the parties.
Movants' contention of a lack of Section 301 jurisdiction because
they are not signatories or parties to the CBA really begs the
question. Plainly the gravamen of the Complaint is that Movants
are to be treated as parties to the CBA by virtue of their
identity with Company.
Courts considering whether defendants are a "single employer"*fn2
have regularly exercised jurisdiction over all the defendants to
resolve that issue. Carpenters Local No. 1846 of the United
Brotherhood of Carpenters and Joiners of America, AFL-CIO v.
Pratt-Farnsworth, Inc., 690 F.2d 489 (5th Cir. 1982), cert.
denied, 461 U.S. 942, 103 S.Ct. 2118, 77 L.Ed.2d 1299 (1983);
Brotherhood of Teamsters, Local No. 70 v. California
Consolidators, Inc., 693 F.2d 81 (9th Cir. 1982) (per curiam),
cert. denied, ___ U.S. ___, 105 S.Ct. 263, 83 L.Ed.2d 199 (1984).
That applies to the alter ego count too. Penntech Papers, Inc. v.
NLRB, 706 F.2d 18, 23-24 (1st Cir. 1983). Movants have failed to
cite even one single employer or alter ego case holding the
Section 301 Jurisdiction over Representational Issues
But scotching that spurious jurisdictional issue shifts
attention to a real one — that stemming from the nature of the
issues raised by the Complaint:
1. Movants claim the relief sought by Local 705
requires a decision as to representational issues
within NLRB's exclusive jurisdiction.
2. Local 705 counters this Court need dispose of
only the narrow single employer issue for the time
being, leaving consideration of the representational
issues for another day.
Evaluation of those arguments must take account of the dual
nature of the prayer for relief — as already indicated, Count I
asks (a) a declaratory judgment on the single employer question
and (b) appropriate relief, including damages.*fn4
Conventional wisdom teaches that the Declaratory Judgment Act,
28 U.S.C. § 2201
et seq., is not itself a source of jurisdiction. But once
jurisdiction has otherwise been conferred (in this case by
Section 301(a)), the Declaratory Judgment Act clearly empowers
this Court to adjudicate the single employer issue by a
declaration on that score.
That however is only part of the story, for it is equally clear
no other relief can flow simply from a determination that Movants
and Company are a single employer. Before Movants can be held
bound to the CBA, Local 705 must establish both the existence of
that single-employer group and the propriety of a single
bargaining unit comprising the employees of the same group
(Movants and Company). South Prairie Construction Co. v. Local
No. 627, International Union of Operating Engineers, AFL-CIO,
425 U.S. 800, 805, 96 S.Ct. 1842, 1844, 48 L.Ed.2d 382 (1976) (per
curiam); Pratt-Farnsworth, 690 F.2d at 505, 507; California
Consolidators, 693 F.2d at 82-84; NLRB v. Don Burgess
Construction Corp., 596 F.2d 378, 386 (9th Cir. 1979); Local 17,
International Brotherhood of Teamsters, Chauffeurs, Warehousemen
& Helpers of America v. Coast Cartage Co., 103 LRRM 3053, 3054
(D.Colo. 1980). Pratt-Farnsworth, 690 F.2d at 507 explained the
reason for that two-stage inquiry:
It is clear that the primary motivation of the Board
in making an independent unit determination in a
single employer case is to protect the rights under
section 7 of the NLRA, 29 U.S.C. § 157, of the
employees of each of the subentities constituting the
single employer to bargain collectively with
representatives of their own choosing.
Further, as will be shown in Part II.C.8 of this
opinion, even the fact that the union employer and
the union have stipulated in the agreement as to the
appropriate unit will not preclude an inquiry by the
Board into the appropriateness of the unit comprising
the employees of both the union and nonunion
What is really at issue here is only one of those two
inquiries: the single employer question. And every reported case
that has squarely addressed that subject has held a district
court may resolve that question in a Section 301 suit. See, e.g.,
Northwest Administrators, Inc. v. Con Iverson Trucking, Inc.,
749 F.2d 1338, 1340 (9th Cir. 1984) and cases there cited. Where the
Courts of Appeal are split is at the second level of inquiry:
whether a district court has jurisdiction under Section 301 to
resolve bargaining unit issues. See California Consolidators, 105
S.Ct. at 263-64 (White and O'Connor, JJ. dissenting from denial
of certiorari). Our own Court of Appeals has not addressed that
That second-level split stems from the potentially conflicting
jurisdictional allocations of the LMRA and the predecessor
National Labor Relations Act ("NLRA" or simply the "Act"). NLRA
§§ 7 and 8, 29 U.S.C. § 157 and 158 (as amended by LMRA), grant
employees the right to organize and prohibit unfair labor
practices. It has long been established the NLRB has exclusive
original jurisdiction over cases arising under those sections.
San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245,
79 S.Ct. 773, 779, 3 L.Ed.2d 775 (1959). On the other hand,
Section 301 conferred federal court jurisdiction for the
enforcement of collective bargaining agreements.
But unfair-labor-practice cases and
breach-of-collective-bargaining-agreement cases are heavily
overlapping sets: Many if not most activities that constitute
breaches of bargaining agreements are also unfair labor practices.
Thus district courts adjudicating Section 301 claims frequently face
issues normally decided by the NLRB in the NLRA §§ 7 or 8 context. Of
course that fact alone does not deprive a federal court of
jurisdiction. Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 562,
96 S.Ct. 1048, 1055, 47 L.Ed.2d 231 (1976). Nonetheless courts have
typically declined to exercise jurisdiction (which they possess under
the literal language of Section 301) as to those representational
issues that most require exercise of the NLRB's special
expertise and discretion. Though such declined cases may speak in
terms of want of "jurisdiction," it is unimportant whether that
characterization is conceptually accurate. What matters is that
courts simply will not take and decide such cases. Northwest
Administrators, 749 F.2d at 1339; Local Union 204 of the
International Brotherhood of Electrical Workers, Affiliated with
the AFL-CIO v. Iowa Electric Light and Power Co., 668 F.2d 413,
419 (8th Cir. 1982).
Determination of appropriate bargaining units is the
paradigmatic instance of such nonexercise of judicial
jurisdiction. NLRA § 9(b), 29 U.S.C. § 159, delegated that issue
entirely to the discretion of the Board:
The Board shall decide in each case whether, in order
to assure to employees the fullest freedom in
exercising the rights guaranteed by this Act, the
unit appropriate for the purposes of collective
bargaining shall be the employer unit, craft unit,
plant unit, or subdivision thereof. . . .
Other than the general policies animating the LMRA, the statute
provides no guidelines whatever for the Board in making unit
Little wonder, then, that of all the so-called representational
issues the Board decides, that of appropriate bargaining units
has generated the greatest judicial deference to the Board. Local
No. 3-193 International Woodworkers of America v. Ketchikan Pulp
Co., 611 F.2d 1295, 1298 (9th Cir. 1980). In the LMRA context the
benchmark case is Packard Motor Car Co. v. NLRB, 330 U.S. 485, 67
S.Ct. 789, 91 L.Ed. 1040 (1947), which involved review of an NLRB
determination that (1) foremen are protected under the NLRA and
(2) their appropriate bargaining unit is the entire class of
foremen working for a single employer. On the latter question the
Court said (id. at 491-92, 67 S.Ct. at 793):
Section 9(b) of the Act confers upon the Board a
broad discretion to determine appropriate units.
The issue as to what unit is appropriate for
bargaining is one for which no absolute rule of law
is laid down by statute, and none should be by
decision. It involves of necessity a large measure of
informed discretion, and the decision of the Board,
if not final, is rarely to be disturbed. While we do
not say that a determination of a unit of
representation cannot be so unreasonable and
arbitrary as to exceed the Board's power, we are
clear that the decision in question does not do so.
That settled, our power is at an end.
That should be contrasted with the Court's teaching (also under
the LMRA) on the single employer issue. In South Prairie the
Board (sub nom. Peter Kiewit, 206 N.L.R.B. 562 (1973)) had
decided that question in the negative, so it did not reach the
bargaining unit issue. On review, the Court of Appeals for the
District of Columbia reversed the Board on the single employer
issue and then decided the proper bargaining unit as an original
matter, 518 F.2d 1040 (D.C.Cir. 1975). Then the Supreme Court
affirmed on the first question but remanded as to the bargaining
unit determination on the ground that the Court of Appeals had no
power to decide that issue as an initial matter (425 U.S. at
805-06, 96 S.Ct. at 1844-45) (citations omitted):
Whether or not the Court of Appeals was correct [in
its reasoning on the bargaining unit issue], we think
that for it to take upon itself the initial
determination of this issue was "incompatible with
the orderly function of the process of judicial
review." . . . Since the selection of an appropriate
bargaining unit lies largely within the discretion of
the Board, whose decision, "if not final, is rarely
to be disturbed," . . . we think the function of the
Court of Appeals ended when the Board's error on the
"employer" issue was "laid bare."
Though South Prairie is binding precedent only in the NLRA
framework, most post-South Prairie courts have understandably
drawn on its declaration of policy to decline jurisdiction over
issues in Section 301 suits. See, e.g., Iowa Electric Light, 668
F.2d at 416-20; Ketchikan Pulp, 611 F.2d at 1301; Coast Cartage,
103 LRRM at 3054. Only the Court of Appeals for the Fifth Circuit
in Pratt-Farnsworth, 690 F.2d at 521-22 has upheld the power
under Section 301 to decide the appropriate bargaining unit and
other "collateral" issues subsidiary to enforcement of a
collective bargaining agreement. Pratt-Farnsworth, id. at 513-17
held South Prairie (which it called by its NLRB name, Peter
Kiewit) was not controlling in a Section 301 suit, taking its
direction instead from:
1. Textile Workers Union of America v. Lincoln
Mills of Alabama, 353 U.S. 448, 456-57, 77 S.Ct. 912,
917-18, 1 L.Ed.2d 972 (1957), which held federal
courts empowered under Section 301 to create a
federal common law of labor relations "which the
courts must fashion from the policy of our national
2. Hines, 424 U.S. at 562, 96 S.Ct. at 1055, which
The strong policy favoring judicial enforcement of
collective-bargaining contracts [is] sufficiently
powerful to sustain the jurisdiction of the
district courts over enforcement suits even though
the conduct involved [is] arguably or would amount
to an unfair labor practice within the jurisdiction
of the National Labor Relations Board;
3. Connell Construction Co. v. Plumbers Local Union
No. 100, 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418
(1975) and Kaiser Steel Corp. v. Mullins,
455 U.S. 72, 102 S.Ct. 851, 70 L.Ed.2d 833 (1982), each of
which held a district court had jurisdiction in a
suit arising under independent federal laws to decide
collateral issues requiring an interpretation of
NLRA § 8(e).
Pratt-Farnsworth drew from those cases the conclusion that a
district court may resolve the proper bargaining unit in a
Section 301 suit, "at least in the absence of a previous or
pending determination by the Board" (690 F.2d at 521).*fn5
has substantial force, the Pratt-Farnsworth analysis is not
ultimately persuasive. Granted, the cases on which it relies
support a district court's Section 301 exercise of jurisdiction
over a broad range of collateral issues otherwise within Board
domain. Certainly Lincoln Mills and Hines emphasize the
independent force of Section 301 and the importance of not
allowing deference to the NLRB to swallow the federal courts' own
enforcement mission under the LMRA.
But the power of district courts to decide issues that also
implicate LMRA §§ 7 and 8 does not justify the entire usurpation
of Board functions. And the representational concerns inherent in
bargaining unit determinations are at the very core of the
Board's own powers. Ketchikan Pulp, 611 F.2d at 1298; Iowa
Electric Light, 668 F.2d at 418-20.
As Packard stressed, the Act provides no guidelines to courts
for their carving out of appropriate bargaining units. Congress
expressly relegated that function to the discretion and special
expertise of the Board. It goes without saying one tribunal is
incapable of exercising another tribunal's discretion.
Were courts indiscriminately to determine all representational
issues, they would subvert the Board's special status under the
Act. As Iowa Electric Light, 668 F.2d at 420 and even
Pratt-Farnsworth, 690 F.2d at 516 n. 11 recognized, nearly any
collective-bargaining related issue can be cast in terms of
breach of contract as opposed to unfair labor practice.
Forum-shopping litigants could thus establish the courts as
primary arbiters of representational issues. Such a prospect
obviously risks usurpation of the NLRB's role. But more
importantly that threat is not only structural but substantive,
for it would create doctrinal chaos, as inexperienced courts
decided discretionary matters for which the Act provides little
or no guidance.
This Court therefore follows the Eighth and Ninth Circuits,
rather than taking the Fifth. It holds no Section 301
jurisdiction exists to resolve representational issues by
deciding appropriate bargaining units. That holding precludes
this Court from granting the monetary and "other" relief sought
in Count I.
In sum, this Court has jurisdiction to decide the threshold
single employer question. It lacks power to make an initial
bargaining-unit judgment — but Local 705 has not directly asked
for that in this action.
Exercise of Jurisdiction for Declaratory Relief
That set of conclusions poses a different question — not one of
jurisdiction, but rather one of its possible discretionary
nonexercise. In terms of Count I, the inquiry is whether this
Court's inability to confer all the relief asked there should
cause a deferral of all issues to the Board. Local 705 urges a
"no" answer to that question, while Movants really fail to
address the possibility of resolving the single employer issue
here and the bargaining unit issue elsewhere.
This Court does not draw on a clean slate in drafting its
answer to that inquiry. Guidance is afforded by both Northwest
Administrators and California Consolidators.
In Northwest Administrators the assignee of several employee
trust funds sued an employer under Section 301 and ERISA.
Liability was predicated on the employer's being the alter ego of
the signatory to a collective bargaining agreement. At the
district court level the action was dismissed under the primary
jurisdiction doctrine (see n. 5) because resolution of the alter
ego dispute would ultimately require a determination of the
appropriate bargaining unit. But the Court of Appeals reversed
and ordered the district court to decide the non-representational
issues (749 F.2d at 1340):
Before considering the existence of potential
representational issues, the district court should
have decided two potentially dispositive questions
which do not concern representation. First, the court
should have determined whether the Con Iverson
Trucking, Inc. was in fact a successor or alter-ego
which could be bound by the agreement entered by the
Con Iverson sole proprietorship. District courts have
jurisdiction under section 301 to make such
determinations. See Roberts v. Ayala, 709 F.2d 520
(9th Cir. 1983) (per curiam); California
Consolidators, 693 F.2d at 83. Second, if it
concluded the corporation could be bound as a
successor, the court should have determined whether
the corporation ever effectively repudiated the
agreement. Absent an effective repudiation, the trust
funds could recover even if the union did not
represent a majority of the employees in an
appropriate unit. Jim McNeff, Inc. v. Todd
[461 U.S. 260], 103 S.Ct. 1753 [75 L.Ed.2d 830 (1983)]. We
remand to the district court for consideration of
California Consolidators bears even more directly on this case.
There as here a union sought a Section 301 declaration an
employer was bound by a collective bargaining agreement because
it and the signatory company were a single employer. As in
Northwest Administrators, the district court dismissed the entire
action for lack of jurisdiction because of the bargaining unit
issue it would ultimately have to face. There too the Court of
Appeals disagreed, remanding for "further proceedings and an
evidentiary hearing" as to whether the two companies were a
single employer (693 F.2d at 84).
Although neither Northwest Administrators nor California
Consolidators articulated reasons for their remands, their
approach is preferable to shunting this entire case onto the
NLRB. Any federal court considering a stay or abstention must
begin from the premise that "[a]bstention from the exercise of
federal jurisdictional is the exception, not the rule." Colorado
River Water Conservation District v. United States, 424 U.S. 800,
813, 96 S.Ct. 1236, 1244, 47 L.Ed.2d 483 (1976). In the same
vein, Director, Office of Workers' Compensation Programs, United
States Department of Labor v. Peabody Coal Co., 554 F.2d 310, 323
(7th Cir. 1977) quoted Willcox v. Consolidated Gas Co.,
212 U.S. 19, 40, 29 S.Ct. 192, 195, 53 L.Ed. 382 (1909):
When a Federal court is properly appealed to in a
case over which it has by law jurisdiction, it is its
duty to take such jurisdiction. . . .
In this situation, the presumption in favor of exercise rather
than nonexercise of jurisdiction is reinforced by the strong
congressional intent expressed in Section 301 to give the victims
of labor contract breaches access to the federal courts. Though
this Court cannot give full relief to Local 705, it can grant at
least the declaratory judgment sought in Count I.
Two considerations are arguably countervailing. They are not
(singly or in combination) strong enough to outweigh the
presumption in favor of exercising jurisdiction.
First, it is true the Board may have more experience than this
Court in deciding whether multiple entities are a single
employer. But the cases already discussed plainly teach that
1. within the competence of district courts; and
2. not among the representational issues that call
significantly on the special expertise or discretion
of the Board.
Second, it is possible the adjudication of one issue here and
the second issue before the NLRB could cause some overlapping.
But there is no way to predict at this early stage whether resort
to the Board will be necessary at all. If this Court resolves the
single employer claim against Local 705, Count I will be disposed
of entirely. Neither the Board nor anyone else would have to
decide the appropriate bargaining unit. Any assertion at this
stage that abstention in favor of the NLRB would be more
economical (or how much so) is entirely speculative.
Alter Ego Issue
No difficulty is posed by Count II in jurisdictional terms.
This Court unquestionably has jurisdiction to resolve the alter
ego count in its entirety. Northwest Administrators, 749 F.2d at
1340; Local Union No. 59, International Brotherhood of Electrical
Workers, ALF-CIO v. Namco Electric, Inc., 653 F.2d 143, 146-47
(5th Cir. 1981).
Unlike single employer cases, alter ego cases generally do not
require a separate determination of the appropriate bargaining
unit. Finding one company to be the alter ego of a labor contract
signatory is alone sufficient in most cases to bind that company
to the agreement. Penntech Papers, 706 F.2d at 24;
Pratt-Farnsworth, 690 F.2d at 508-09. At most the only additional
inquiry that might be made is the "far more limited determination
whether the stipulated unit is repugnant to any policy embodied
in the NLRA" (id. at 509).
No reason has been suggested, and this Court is aware of none,
for nonexercise of its jurisdiction over the alter ego claim in
all its aspects. And that in turn fortifies the conclusion
already reached as to Count I. Because:
1. this Court may (and should) adjudicate the alter
ego count and grant any requested relief; and
2. the alter ego inquiry overlaps materially with
the inquiry whether Movants and Company are a single
judicial economy will be well served by adjudication of the
single employer issue as well in this Court.
This Court has, and will exercise, its jurisdiction over both
counts of the Complaint.
Only if and when Local 705 obtains a favorable determination on
the single employer issue need this Court face the issue whether
to leave determination of the bargaining unit issue to the NLRB.
Movants' motion to dismiss is denied, and they are ordered to
answer the Complaint on or before July 31, 1985.