Appeal from the United States District Court for the Central District of Illinois, Springfield Division. No. 86 C 3101 -- Richard Mills, Judge.
Cudahy, Posner and Ripple, Circuit Judges.
This case arises out of picketing conducted by the defendant, Teamsters Local 279 (the "Union"), at a construction site supervised by the plaintiff, Mautz & Oren, Inc. At the time of the picketing the Union was involved in a labor dispute with a non-union subcontractor working at the site, J & B Waste Applicators ("J & B"). Mautz & Oren contends that the Union's picketing was not directed solely at J & B, but was intended to bring economic pressure to bear on "neutral", secondary employers to cease doing business with J & B. Mautz & Oren therefore argues that the Union's picketing had an unlawful secondary objective, in violation of section 8(b)(4) of the National Labor Relations Act (the "NLRA"), 29 U.S.C. section 158(b)(4). Mautz & Oren also alleges that the Union's picketing violated the no-strike clause contained in the collective bargaining agreement between the parties. The district court ruled in Mautz & Oren's favor on both the secondary picketing and breach of contract claims. The Union appeals; we reverse and remand for a new trial.
Mautz & Oren, a general contractor engaged in construction work, is signatory to a collective bargaining agreement with the Union. This agreement apparently requires the company to hire only unionized subcontractors. In early 1985 Mautz & Oren was awarded a contract to modify and enlarge a sewage treatment plant in Shelbyville, Illinois. Mautz & Oren engaged J & B to remove sludge from a lagoon at the Shelbyville plant. J & B began work on the site on September 17, 1985. Beryle Redding, president of the Union, visited the job site on September 20. Redding approached Jim Wolfe, owner of J & B, and asked Wolfe whether he would sign a contract with the Union. When Wolfe refused Redding ordered a picket to patrol the entrance to the site.
Tom Arnold, chief executive officer of Mautz & Oren, attempted to resolve the dispute between the Union and J & B. After his conciliation efforts failed Arnold informed Redding that Mautz & Oren would institute a reserved gate system at the site. Mautz & Oren and other "neutral" employers (i.e. those employers not directly involved in the Union's dispute with J & B) would use the plant's main gate; J & B and its suppliers were to use a separate gate exclusively.
The Union initially respected the reserved gate system, and picketed only the J & B gate. However, two days after the reserved gate system was implemented, Redding determined that the gate system had been "tainted". Redding based this conclusion on two facts: (1) Arnold had repeatedly driven through the gate reserved for J & B; and (2) a fuel truck which serviced J & B equipment had entered the site through the purportedly "neutral" gate. Based on the alleged "taint" resulting from these incidents the Union began picketing both entrances to the site. In response Mautz & Oren filed unfair labor practice charges with the National Labor Relations Board (the "NLRB" or "Board"). An NLRB investigator visited the site and, after being apprised of the facts related above, told the Union that it should remove its pickets or the Board would seek an injunction barring it from picketing. The Union removed the pickets from both gates on October 10.
Mautz & Oren filed the present lawsuit on March 31, 1986. The company sought $100,000 in damages under two alternative theories: (1) the Union's picketing was unlawful "secondary activity," because the Union intended to coerce Mautz & Oren, a neutral secondary employer, to cease doing business with J & B and thereby bring indirect economic pressure to bear on J & B; and (2) the Union had breached the no-strike obligation contained in its contract with Mautz & Oren. The Union's answer alleged, as an affirmative defense to the breach of contract claim, that Mautz & Oren had failed to submit this claim to arbitration as required by the collective bargaining agreement.
After conducting a two-day bench trial the district court ruled in Mautz & Oren's favor on both counts of its complaint. The court stated the basis for its decision as follows:
Looking at the evidence as a whole, it is apparent that the union did attempt at least in part to comply with the [governing legal] standards. However, two key facts tend to rebut the presumption that the pickets were wholly primary in nature. First, on Friday, October 4, pickets remained up at Gate 2 [the neutral gate] despite the fact that J & B Waste did not work that day. . . . It seems difficult for the union to argue that it was engaged in a wholly primary picket against J & B Waste when pickets remained standing in the absence of the primary employer's presence.
Second, once the pickets were removed from Gate #2, the union ceased to picket J & B Waste at Gate #1. We agree with Plaintiff that the fact that after the NLRB halted picketing at the Mautz & Oren gate, the union did not continue to picket the J & B Waste gate, is clear evidence of the primary object of the union's picketing and is even stronger evidence that the real dispute was with Mautz & Oren from the very beginning. Hence, we conclude that the picket did have an illegal secondary objective.
This in turn answers the breach of contract question. If the union's picket had secondary objectives, they were engaging in a picket in violation of the no strike clause of the collective bargaining agreement.
(emphasis added). The court also found that the company had exhausted the contractual grievance procedures in connection with its breach of contract claim. For the Union had filed a grievance alleging that Mautz & Oren had breached the collective agreement by subcontracting work to J & B, and this ...