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CEMENT MASONS' PENSION FUND, LOCAL 502 v. DUKANE P

May 20, 1993

CEMENT MASONS' PENSION FUND, LOCAL 502; CEMENT MASONS' INSTITUTE OF CHICAGO, ILLINOIS LOCAL 502; CEMENT MASONS' SAVINGS FUND, LOCAL 502; and CEMENT MASONS' APPRENTICE EDUCATIONAL AND TRAINING TRUST FUND, LOCAL 502, Plaintiffs,
v.
DUKANE PRECAST, INC., a domestic corporation, Defendant.


Hart


The opinion of the court was delivered by: WILLIAM T. HART

This is an action by several union pension funds for contributions allegedly due under certain collective bargaining and trust agreements. Plaintiffs, Cement Masons' Pension Fund, Local 502; Cement Masons' Institute of Chicago, Illinois; Cement Masons' Savings Fund, Local 502; Cement Masons' Apprentice Educational and Training Trust Fund, Local 502 (collectively the "Funds"), brought this action under Section 301 of the National Labor Relations Act, 29 U.S.C. § 185(a) ("NLRA"), and Sections 502 and 515 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132, 1145 ("ERISA"), against Dukane Precast, Inc. ("Dukane"), an Illinois corporation with its principal place of business in Naperville, Illinois. The plaintiff Funds are all employee benefit plans and trusts with their principal places of business in Illinois. Defendant, Dukane, is in the business of precasting concrete products for commercial and industrial buildings.

 Before the court is Dukane's motion for summary judgment. On a motion for summary judgment, the entire record is considered with all reasonable inferences drawn in favor of the nonmovant and all factual disputes resolved in favor of the nonmovant. Visser v. Packer Engineering Assoc., Inc., 909 F.2d 959, 960 (7th Cir. 1990). Summary judgment is appropriate only where there is "no genuine issue as to any material fact" and movant is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202 ,106 S. Ct. 2505 (1986). Whether or not a fact is material is governed by substantive law. Id. The burden of establishing a lack of any genuine issue of material fact and entitlement to judgment as a matter of law rests on the movant. Jakubiec v. Cities Service Co., 844 F.2d 470, 473 (7th Cir. 1988). Summary judgment is not proper when there is a dispute over facts which might affect the outcome of the suit. Liberty Lobby, 477 U.S. at 248. The dispute must be genuine, that is, the party opposing the motion for summary judgment may not "rest on the mere allegations of his pleading, but must set forth specific facts showing there is a genuine issue for trial." Id. The nonmovant must also make a showing sufficient to establish any essential element for which it will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265 ,106 S. Ct. 2548 (1986).

 Dukane precasts its products at its plant in Aurora, Illinois and ships them to the construction site. During production, shipment or erection, the precast concrete will often become chipped or cracked. Dukane employs between 70 and 105 employees during the height of the construction season. Of those, four "patcher" employees spend between 25% and 90% their time at the construction site with trowels and buckets of concrete, repairing, patching and finishing chips and other irregularities on the precast concrete products once they are in place. The Funds argue that under a collective bargaining agreement, contributions are owing for three of these four "patchers" *fn1" for work performed during the period January 1, 1989 through October 18, 1992. *fn2" Dukane argues the agreement relied on by the Funds is illegal and unenforceable. *fn3"

 In 1981, Dukane signed a Pre-hire Agreement *fn4" presented by Cement Masons' Local 362. The Pre-hire Agreement was also individually signed by the 35 Illinois Cement Masons' Locals, including 362 and 502. The Pre-hire Agreement bound Dukane to the multiemployer collective bargaining agreements between certain employer associations and the Cement Masons. The Pre-hire Agreement only applied to one of Dukane's employees and required submission of reports on that employee's work time and to remit fringe benefits contributions to the relevant Local's funds. During 1981 and 1982, Dukane submitted fringe benefit report forms for work performed by two of its employees.

 In 1982, Local 362, its local funds, and the Cement Masons' Institute of Chicago, Illinois, and others sued Dukane under the Pre-hire Agreement for enforcement on behalf of a member. *fn5" The parties settled and Dukane paid $ 2,500 to Local 362 and its affiliated funds. The settlement agreement states that Dukane "does not admit that it is covered by any collective bargaining agreement with Cement Masons Local 362 or any other Local of the Association or that it has any liability to the Funds for any reason whatsoever." Since the settlement in January 1984, Dukane has made no reports or payments to any Cement Masons' Local trust fund. Plaintiff Funds rely on the Pre-hire Agreement signed in April 1981 as the basis for Dukane's contribution liability. See Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 565, 86 L. Ed. 2d 447 ,105 S. Ct. 2833 (1985); Wyoming Laborers Health & Welfare Place v. Morgen & Oswood, 850 F.2d 613, 621 (10th Cir. 1988).

 Ordinarily, the NLRA prohibits employers and unions from entering into collective bargaining agreements unless the union is backed by a majority of the relevant bargaining unit's employees. See NLRA §§ 8(a), (b), 29 U.S.C. §§ 158(a), (b). An exception to this requirement is NLFA § 8(f), 29 U.S.C. § 158(f), which allows certain employers and unions to enter into "pre-hire" agreements before the union achieves majority status. *fn6" This exception allows union representation in the building and construction industry where employment may be of a short duration and employers obtain employees on a project-by-project basis. See Forest City/Dillon-Tecon Pacific, 209 N.L.R.B. 867, 868-70 (1974). This exception is only available for an employer "engaged primarily in the building and construction industry." 29 U.S.C. § 158(f).

 Many cases have dealt with the determination of whether a certain employer is "engaged primarily in the building and construction industry." See e.g., Forest City, 209 N.L.R.B. 867; 8 Theodore Kheel, Labor Law, § 40.04[1] (1987 & Supp. Jan. 1993) [hereinafter Labor Law] and cases cited therein. General contractors and subcontractors who perform their work at the construction site are engaged primarily in the building or construction industry. See McLeod v. Local 3, IBEW (Derby Electric Corp.), 57 L.R.R.M. 2052 (S.D.N.Y. 1964) (electrical contractors); Barwise Sheet Metal Co., 199 N.L.R.B. 372 (1972). What is less clear is whether employers who sell and deliver building and construction products and who provide incidental construction site services are primarily engaged in the building and construction industry under § 8(f) and entitled to its exemption. See 8 Labor Law, supra, at § 40.04[1].

 Absolute rules are difficult to draw from the heavily fact-laden cases on this issue. However, the touchstone of those cases involving products suppliers seems to be whether or not the supplier's revenues come from installation of the products at the jobsite. See Central Arizona Dist. Council of Carpenters (Wood Surgeons, Inc. ), 175 N.L.R.B. 390 (1969) (installation only a fraction of receipts); Painters Local 1247 (Indio Paint and Rug Center), 156 N.L.R.B. 951 (1966) (93% gross revenues from installation and sale of floor coverings); Frick Co., 141 N.L.R.B. 1204 (1963) (only 1% of income from installation of refrigeration equipment at construction site, not entitled to § 8(f)); N.L.R.B. v. W.L. Rives Co., 328 F.2d 464, 468-69 (5th Cir. 1964) (the statute does not exempt employers who manufacture and sell products subsequently installed by others at the construction site); see also 8 Labor Law, supra, at § 40.04[1]. But see A.L. Adams Constr. Co. v. Georgia Power Co., 733 F.2d 853 (11th Cir. 1984) (power company involved in primarily nonconstruction industries entitled to § 8(f) exemption where it was building its own power plant).

 Dukane argues that it neither installs nor participates in the erection of its products at the construction site. Dukane also argues that, notwithstanding the characterization of the construction site work performed by its patchers, Dukane is not engaged "primarily" in the building and construction industry.

 The Funds only seek contributions for three of the four patchers whom the Funds claim spend a substantial portion of their day performing cement masons' work at construction sites. The Funds argue that the three patchers do participate in the installation and erection of the products at the construction site. In addition to the cosmetic patching work performed, the Funds note that at the construction site, the patchers may insert steel plates used in connecting the precast to the superstructure. At deposition, patcher Timothy Hart testified that the steel plates used to connect the precast are normally installed when the precast is manufactured, but that if the plates are missing or need to be added, the patcher will perform this work at the construction site also. Hart dep. pp. 36-37. The field work performed by the field patchers comprises between 2% and 3% of Dukane's labor and material costs. (Ripper affid. P 5). Dukane does not bill its customers for repair work performed by the patchers. Any repair work is part of the cost of the finished product to the customer. Def. 12(m) P 8.

 Even construing all facts and inferences in favor of the Funds, Dukane is not "engaged primarily in the building and construction industry" for purposes of § 8 (f). Although the Funds argue that the four patchers are primarily engaged in field construction, the statute requires that the employer itself be primarily so engaged. See Operating Engineers Pension Trust v. Beck Engineering & Surveying Co., 746 F.2d 557, 562 (1984). "An employer whose involvement in construction work is only a negligible part of his business is not entitled to enter pre-hire agreements." Id. Even if the patchers are considered to be doing "construction" work, plaintiffs have not shown that there is a 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. *fn7" Because Dukane is not engaged primarily in the building and construction industry, it is ...


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