genuine issue of material fact as to whether their work is more than a very small fraction of Dukane's business incidental to the sale of its precast products.
The N.L.R.B. has determined that precast cement manufacturers who deliver their product to the construction site and do patching work there are not "engaged primarily in the building and construction industry." See Forest City, 209 N.L.R.B. at 870. In Forest City, a rival union challenged the § 8(f) pre-hire agreement entered into by Forest City, a precast concrete company. The Board's opinion examined Forest City's operations at its precast concrete plant, despite the fact that the larger company also performed architectural, general and subcontracting work. After an extensive review of the legislative history surrounding § 8(f), the Board determined that the precast company, with business operations almost identical to Dukane's, was not entitled to the exemption despite the fact that certain employees might do patching or repair of construction already completed. Forest City, 209 N.L.R.B. at 868. The Forest City, Board rejected a broad interpretation of § 8(f) to include any employer "connected with/or a part of the building and construction business." The Board determined that the statute only applied to manufacturers whose employees "are working essentially in construction or related work, . . . installing [product] . . . [but that] it does not apply to an employer who has only a negligible involvement in the actual construction process." Id. at 870 (emphasis added). The Funds fail to show any meaningful distinction between Forest City and Dukane.
Dukane and the Funds argue Dukane's operations are similar to asbestos removal, which has been held to be subject to § 8(f). See U.S. Abatement, 303 N.L.R.B. 73 (1991). U.S. Abatement is inapposite because the asbestos work involved is performed almost entirely at the building site, unlike the manufacturing done by Dukane.
Because Dukane is not engaged primarily in the building and construction industry, it is not entitled to enter into pre-hire agreements such as the 1981 Pre-hire Agreement with all 35 Cement Masons' Locals.
The parties have failed to address one very important aspect of defendant's illegality defense; whether it is a valid defense to an ERISA claim. Congress added § 515 to ERISA in 1980, 29 U.S.C. § 1145, in an effort to eliminate many contract defenses involving formation and course of performance that significantly complicated pension fund collection cases. See Central States, Southeast and Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148, 1152-56 (7th Cir. 1989). Pension and welfare plans are like third-party beneficiaries of the collective bargaining and participation agreements. Id. at 1151. The Seventh Circuit has interpreted the text of § 515, that such promises are enforceable "to the extent not inconsistent with law," strictly. "Defenses based on fraud in the inducement, oral side agreements, course of performance, want of consideration, [and] failure of the union to have majority support" are not cognisable defenses to an ERISA claim. Id. at 1154 (rejecting employer's defense that the employer and local union had an oral agreement different from the written agreement). The Seventh Circuit's decision in Central States makes employer liability in ERISA collection cases tantamount to strict liability. Id. at 1153 ("Whether or not the plans are obligated to Gerber Truck's workers, nothing in ERISA makes the obligation to contribute depend on the existence of a valid collective bargaining agreement."); see also id. at 1157-58 (Cudahy & Wood, JJ., concurring in part and dissenting in part). Compare Martin v. Garman Construction Co., 945 F.2d 1000, 1004-06 (7th Cir. 1991) ("Defenses to the validity of a labor contract and liability under ERISA's section 515 present distinct issues.").
This court has not found any case law addressing the specific issue of whether an employer who is not "engaged primarily in the building and construction industry" may nonetheless be liable under a § 8(f) pre-hire agreement for ERISA contributions. But see Mo-Kan Teamsters Pension Fund v. Creason, 716 F.2d 772, 775 (10th Cir. 1983) (district court determined that employer was not in building and construction industry but also that the agreement was not a pre-hire agreement). In Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 79-83 ,70 L. Ed. 2d 833 ,102 S. Ct. 851 (1982), an action to collect pension contributions, the Supreme Court held that illegality of the § 8(e) hot-cargo agreement under the Sherman Act and the NLPA was a valid defense to the ERISA claim. Although the Kaiser funds argued that "employers' contributions to union welfare funds are not, in themselves and standing alone, illegal acts and that ordering [defendant] to pay would therefore not demand conduct that is inherently contrary to public policy," id. at 79, the Court noted that the payment and amount of the contributions themselves were tied to conduct which violated the Sherman Act. In the Kaiser case, the Court determined that it was the payment of the contributions which was illegal under the Sherman Act because the amounts of those payments were tied to restrictions in coal purchase agreements. Id. at 79-82. Therefore, the court upheld defendant's illegality defense.
In this case, however, the agreement to make pension contributions was independent of the illegal recognition of the Cement Masons' Locals as the bargaining representatives of the patchers. Recognition of the agreement's obligation to make contributions does not involve recognition of the Union as the employees' bargaining representative. Having ignored this issue, Dukane has not shown how recognition of the contribution obligation is inconsistent with the law. See id. at 86 (the illegality defense must not be to a collateral matter, but must go to the portion of the contract for which enforcement is sought). Therefore, the fact that Dukane is not primarily engaged in the construction and building industry has not been shown to be a defense to this ERISA action and summary judgment based on the illegality of the Pre-hire agreement will be denied.
Dukane next argues that it repudiated the Pre-hire Agreement in a number of ways, relieving it of any contribution obligations. The law had been that an employer could unilaterally repudiate a § 8(f) agreement at any time prior to the union's achieving majority status. See Jim McNeff, Inc. v. Todd, 461 U.S. 260, 75 L. Ed. 2d 830 ,103 S. Ct. 1753 (1963). In John Deklewa & Sons, Inc., 282 N.L.R.B. 1375 (1987), aff'd sub nom. Iron Workers v. NLRB, 843 F.2d 770 (3d Cir.), cert. denied, 488 U.S. 889 (1988), the board changed its interpretation of § 8(f). Under Deklewa, an employer may no longer unilaterally repudiate the agreement unless the collective bargaining agreement has expired or until the employees vote to reject or change their representative. The Deklewa decision purported to apply retroactively and the Seventh Circuit has upheld its retroactive application. See NLRB v. Bufco Corp., 899 F.2d 608 (7th Cir. 1990).
Defendant argues that it repudiated the Pre-hire agreement in three different ways. First, Dukane argues that during the litigation of the 1982 suit by Local 362, Dukane repudiated the agreement by letter of March 7, 1983 to Local 362 notifying it that Dukane was terminating the Pre-hire agreement when the underlying collective bargaining agreement expired on May 31, 1983. Secondly, Dukane argues it repudiated the Pre-hire agreement in the January 31, 1984 settlement agreement, to which Cement Masons' Institute of Chicago, Illinois was a party, and that this served to repudiate the agreement as to all the Locals of the Operative Plasterers' and Cement Masons' International Association. Finally, Dukane argues that its conduct of not paying wages set forth in the Cement Masons' contract, not paying benefits or sending Trust Fund reports to the Funds, not participating in negotiations with any Local, and not contacting the Union requesting employees since May 31, 1983 constitutes a repudiation of the Pre-hire Agreement.
The Board determined in Deklewa that "upon the expiration of such [§ 8(f) agreements], the signatory unions will enjoy no presumption of majority status, and either party may repudiate the 8(f) bargaining relationship." There is a genuine issue of material fact as to whether the three forms of repudiation claimed by Dukane did or reasonably should have put Local 502 on notice of the repudiation.
Dukane argues that Local 502 must have known of the 1982 litigation because half of Local 502's officers are funds trustees. However, this unsupported argument does not necessarily mean that those officers were involved with the 1982 litigation or that they knew of Dukane's repudiation. Summary judgment is therefore inappropriate.
IT IS THEREFORE ORDERED that the motion of defendant Dukane Precast, Inc. for summary judgment [3l] is denied.
William T. Hart
UNITED STATES DISTRICT JUDGE
Dated: MAY 20, 1993