United States District Court, N.D. Illinois, Eastern Division
August 1, 2005.
CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, et al. Plaintiff,
REINKE INSULATION COMPANY and K. REINKE, JR. & COMPANY, Defendant. REINKE INSULATION COMPANY and K. REINKE, JR. & COMPANY, Counter-Plaintiffs, v. CHICAGO AND NORTHEAST ILLINOIS DISTRICT COUNCIL OF CARPENTERS and UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, LOCAL 1307 Joined Counter-Defendants.
The opinion of the court was delivered by: WAYNE ANDERSEN, District Judge
MEMORANDUM OPINION AND ORDER
Before the Court is the motion of Chicago and Northeast
Illinois District Council of Carpenters and United Brotherhood of
Carpenters and Joiners of America, Local 1307 for summary
judgment. For the following reasons, the motion is granted.
The defendants, K. Reinke and Reinke Insulation, both Illinois
corporations under common ownership and control (collectively
referred to as "Reinke"), are in the business of installing
insulation at residential construction projects. Reinke employed
insulation workers who were members of the United Brotherhood of Carpenters and
Joiners of America, Local 1307, which was affiliated with and
operated under the Northeast Illinois District Council of
Carpenters (Local 1307 and the Northeast Council are collectively
referred to as the "Union"). Between July 31, 1997 and July 13,
1998, Reinke entered into certain agreements with the Residential
Construction Employers Council ("RCEC"), which had negotiated
collective bargaining agreements with the Union.
Reinke's agreement with the RCEC bound it to the terms of three
collective bargaining agreements, which applied to all work
performed by Reinke insulators within Cook, Lake, DuPage, Kane,
Kendall, McHenry and Will Counties between July 1, 1998 and June
30, 2001. Among other things, the agreements provided that
individual RCEC members would pay monthly fringe benefit
contributions to the Chicago District Council of Carpenters'
Trust Funds, including its apprentice and trainee program, and
pension and welfare funds (collectively referred to as the "Trust
Funds"). The Trust Funds could also cause the books and records
of individual RCEC members to be reviewed and audited to confirm
that the benefit contributions were properly remitted. On January
26, 2001, Reinke resigned from the RCEC and communicated its
intention to negotiate a new collective bargaining agreement with
In the spring of 2001, the Trust Funds exercised their right to
audit Reinke's records and retained the accounting firm of James
Egan & Associates ("Egan") to review the company's books for the
period of July 1998 through June 2001. In October 2001, Egan
prepared a preliminary compliance audit report, which concluded
the company had underpaid its required contributions by $142,441.
Egan determined that Reinke failed to pay its insulators for
"drive time" in accord with the working rules of the residential
insulation industry adopted in the collective bargaining agreements. Reinke carpenters who installed
preformed batts of insulation were paid for drive time that
depended on how far the job site was from the employer's
supplier. Workers who drove to and from their supplier to pick up
batts of insulation were paid for drive time, but carpenters who
commuted from home were paid only for time at the installation
sites. Under the collective bargaining agreement, every employee
was required to complete and sign a "Uniform Daily Time Sheet"
that separated actual time at work from drive time. The auditor
concluded that most of the delinquent contributions came from
Reinke's failure to remit contributions for travel time. Based on
the final audit report, the Trust Funds sought $211,002 in
On October 22, 2001, the Trust Funds and their trustees filed
this lawsuit for the alleged underpayment. On November 13, 2001,
Reinke answered the complaint and filed a counterclaim. In
October 2001, at the same time plaintiffs filed their lawsuit,
District Council Business Representative Bill Rabinak authorized
the commencement of picketing. From October 2001 to May 2002, the
Union picketed at company job sites accusing Reinke of a "failure
to pay fringe benefit contributions." (Union Facts ¶ 9.) On May
16, 2002, U.S. District Judge Philip Reinhard entered an
injunction against the picketing pursuant to a request by the
National Labor Relations Board. (Id. ¶ 12.) After the picketing
stopped, the Union engaged in handbilling. The handbills read:
"The HARD working employees of Reinke have been cheated on their
MEDICAL and RETIREMENT contributions!" (Id. ¶ 16.)
In its counterclaim, Reinke alleges that, as a result of the
Union pickets and the allegedly false allegations on the
picketers' signs and handbills, the company had numerous
contracts with its builders terminated and had been prevented
from performing its existing contracts with builders. It also named Egan in several counts alleging, inter
alia, accounting malpractice and negligent misrepresentation.
From July 9 through July 12, 2002, plaintiffs tried the
underlying benefits case in a bench trial. The Court entered
judgment in favor of Reinke, having found the company made all
contributions to the Trust Funds that were required of it during
the audit period. Chicago District Council, et al. v. Reinke
Insulation Co., et al., No. 01 C 8102 (N.D. Ill. Jan. 14, 2003).
The Seventh Circuit affirmed the decision. Chicago District
Council, et al. v. Reinke Insulation Co., 347 F.3d 262, 266 (7th
However, when this Court notified the parties orally of its
judgment on August 1, 2002, it noted on the record that Reinke's
record keeping raised legitimate questions as to whether it paid
all of its fringe benefit contributions. (Union Facts ¶ 22.) This
Court had noted earlier that Reinke's record keeping as it
related to the Uniform Daily Time Sheets was incredibly
inconsistent. (Id. ¶ 23.) On December 3, 2002, this Court
addressed the inconsistencies in keeping of the time sheets:
. . . Reinke screwed up their bookkeeping, raising in
the minds of the Pension Funds reasonable questions
with respect to what the true compensation was and,
therefore, the contributions ought to be. And Egan
came in, basically drew certain conclusions from
screwed-up records. Actually came in twice.
Ultimately I was persuaded by the testimony that you
presented that your version of the truth was the
truth. But as I sit here today, I do not blame either
the Funds or Egan for feeling that they needed to
audit, given the incredible inconsistencies. . . .
(Tr. at 8, Dec. 3, 2002, Reinke (No. 01 C 8102)).
This Court had also noted that the Trust Funds' auditors acted
in good faith and that the Trust Funds had very reasonable
questions as to whether Reinke paid all required benefit
contributions. (Union Facts ¶¶ 24, 25.) In August 2003, Reinke was granted leave to file a first
amended counterclaim, which eliminated its claims against the
accounting firm, but added others. In its amended counterclaim,
Reinke has filed nine counts, which allege, respectively (1)
civil conspiracy against the Trust Funds and the Union; (2)
defamation against the Union; (3) false light against the Union;
(4) trade libel against the Union; (5) tortious interference with
contract against the Trust Funds and the Union; (6) tortious
interference with prospective economic advantage against the
Trust Funds and the Union; (7) violations of § 303 of the Labor
Management Relations Act against the Union; (8) violations of the
Illinois Consumer Fraud Act against the Union; and (9) violations
of the Uniform Deceptive Trade Practices Act against the Union.
In a stipulation dated September 20, 2004, Reinke agreed to
dismiss count I, the civil conspiracy claim and agreed to dismiss
the Trust Funds from counts V and VI, the tortious interference
with contract and prospective economic advantage actions. As a
result, there are no pending counterclaims against the Trust
Funds. Before the Court is the Union's motion for summary
judgment on the eight remaining counts.
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 56, summary judgment is
proper if "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986). The Court's function is
"`not to weigh the evidence but merely to determine if `there is
a genuine issue for trial.'" Jackson v. Illinois Medi-Car,
Inc., 300 F.3d 760, 764 (7th Cir. 2002) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). A genuine issue
of material fact exists only if a "fair-minded jury could return a verdict
for the [non-moving party] on the evidence presented."
Anderson, 477 U.S. at 252.
In assessing whether a genuine issue of material fact exists in
a case, the Court must construe all facts in the light most
favorable to the non-moving party and draw all reasonable and
justifiable inferences in favor of that party. See id. at 255.
However, neither "the mere existence of some alleged factual
dispute between the parties," id. at 247, nor the existence of
"some metaphysical doubt as to the material facts," Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986), is sufficient to defeat a motion for summary judgment.
See also Skorup v. Modern Door Corp., 153 F.3d 512, 514 (7th
I. Counts II Defamation
In Count II, Reinke alleges that the Union's assertions on its
pickets and handbills of Reinke's failure to pay fringe benefits
constitutes publication of false and defamatory statements. It
asserts the Union published the false and defamatory statements
with knowledge of their falsity, or with reckless disregard for
the truth. (Countercl. ¶¶ 50-55.)
State defamation claims arising from statements made in labor
disputes are preempted by federal labor law unless those
statements are made with knowledge of their falsity or with
reckless disregard for the truth. Linn v. United Plant Guard
Workers of America, 383 U.S. 53, 61 (1966). In Linn, the
Supreme Court fashioned limits on defamation claims because of
concerns for "unwarranted intrusion upon free discussion
envisioned" under federal labor laws. Id. The Court imposed a
malice requirement that a plaintiff prove that a publication was
made "with knowledge that it was false or with reckless disregard
of whether it was false or not." Old Dominion Branch No. 496 v. Austin, 418 U.S. 264, 281 (quoting New York Times
Co. v. Sullivan, 376 U.S. 254, 280 (1964)).
On a summary judgment motion in a defamation action in which
the actual malice standard applies, the plaintiff is not only
required to produce evidence creating a genuine issue of material
fact, but is additionally required to produce evidence that a
jury could find is clear and convincing evidence that the
defendant acted with knowledge that the statements were false or
with reckless disregard for the statements' truth or falsity.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252-53 (1986)
("[W]here the First Amendment mandates a "clear and convincing"
standard, the trial judge in disposing of a directed verdict
motion should consider whether a reasonable fact-finder could
conclude, for example, that the plaintiff had shown actual malice
with convincing clarity.") Thus, in this case, Reinke bears the
burden of demonstrating by clear and convincing evidence that the
Union acted with actual malice, i.e., that it knew, at the
beginning of its picketing in October 2001, that the preliminary
audit was false or acted with a reckless disregard for whether
the audit was false. Masson v. New Yorker Magazine,
501 U.S. 496, 508 (1991).
Here, the Court finds that Reinke cannot meet this standard.
When the Union began picketing in October 2001, it knew (1) the
preliminary audit stated that Reinke owed $142,441 in delinquent
contributions; (2) the Trust Funds had filed a lawsuit in federal
court to seek those contributions; and (3) the Trust Funds and
Egan desired additional information from Reinke's books and
records that was not forthcoming. At the start of the handbill
campaign in May 2002, the Union knew the Trust Funds continued to
seek the audit discrepancies. Reinke alleges the Union acted with
actual malice because it rejected an offer made by the company to
place the disputed funds in escrow pending resolution of the dispute.
However, the Union maintains that it rejected the offer because
the money could not be applied to employees for purposes of
pension and health insurance eligibility and did not address the
outstanding request for books and records. In addition, Union
Business Representative Bill Rabinak, who authorized the
picketing, was unaware of the offer. (Union Facts ¶ 11.)
Indeed, this Court determined during the underlying benefits
trial that the Trust Funds had very reasonable questions as to
whether Reinke paid all required benefit contributions. (Id. ¶¶
24, 25.) No facts have been presented, upon this Court's careful
review of the record, which suggest that the Union knew, at the
beginning of its picketing in October 2001, that the preliminary
audit was false or that it acted with a reckless disregard for
whether the audit was false.
The Union had the clear right under federal labor law to engage
in peaceful strike activities under § 13 of the National Labor
Relations Act ("NLRA"), 29 U.S.C. § 163. Employees' rights under
the NLRA to engage in peaceful strike activity against employers
includes the right to picket the employer. See N.L.R.B. v.
Schwab Foods, Inc., 858 F.2d 1285, 1289 (7th Cir. 1998);
29 U.S.C. §§ 157, 158(a)(1), 163. Furthermore, a union is given
"license to use intemperate, abusive, or insulting language
without fear of restraint or penalty if it believes such rhetoric
to be an effective means to make its point." Linn v. United
Plant Guard Workers of America, 383 U.S. 53, 60-61.
The Union's peaceful strike activities in this case were
triggered by its legitimate belief that Reinke was delinquent in
making benefit contributions. When the Union learned of this
Court's ruling on August 1, 2002 that Reinke was not delinquent
in making its contributions, the Union immediately ceased its
activities. This Court finds, therefore, that, after careful review of
undisputed facts in this case, Reinke cannot bear its burden of
demonstrating at trial that the Union acted with actual malice.
We also hold that the use of the word "cheating" in its
handbilling was rhetorical hyperbole that Illinois courts have
deemed non-actionable. See Pease v. Int'l Union of Operating
Engineers, 567 N.E.2d 614, 619 (2d Dist. 1991). Because we find
that there are no genuine issues of material fact as to whether
the Union acted with actual malice, Reinke's state defamation
suit is preempted and, therefore, we grant the Union's motion for
summary judgment on Count II.
II. Counts III and IV False Light and Trade Libel
In Count III, Reinke alleges it was placed in a false light
before the public as a result of the statements about Reinke that
were recited in the Union's pickets and handbills. (Countercl. ¶
61.) As was required for an actionable defamation claim, Reinke
is required in Count III to prove that the Union, in addition to
placing Reinke in a false light before the public, acted with
actual malice. Sullivan v. Conway, 959 F. Supp. 877 (N.D. Ill.
1997); Aroonsakul v. Shannon, 664 N.E.2d 1094 (2d Dist. 1996).
(Id. ¶ 67.)
In Count IV, Reinke has filed a trade libel action alleging the
statements published by the Union on its pickets and handbills
disparaged Reinke and held it out to be unfit to operate its
business. A plaintiff bringing a trade libel action also must
prove actual malice, that is, the defendant published defamatory
statements "with knowledge of their falsity or with reckless
disregard of whether they were true or false." Lowe Excavating
Co. v. Operating Eng., 765 N.E.2d 21, 30-31 (2d Dist. 2002)
(quoting Linn, 383 U.S. at 65).
Because we have already determined that Reinke cannot prove
that the Union knew the Egan audits were false or acted with
reckless disregard for whether the audits were false, we also find that it cannot show the Union acted with the requisite
malice to succeed under its false light and trade libel claims.
We believe there is no evidence that the Union "entertained
serious doubt" about whether the Egan audits were correct. See,
e.g., Lowe, 765 N.E.2d at 30-31.
III. Counts V, VI, and VIII Preempted State Law Claims
Counts V, VI, and VIII are state law claims that are preempted
by federal labor law. In Count V, Reinke alleges a claim of
tortious interference with a contract. In this count, the company
alleges the picketing and handbilling campaign constituted
wrongful and tortious conduct and that, as a result, one or more
of the builders and general contractors with which Reinke
conducted business terminated their contracts. (Countercl. ¶ 73.)
In its closely related Count VI, Reinke makes a similar
allegation of tortious interference with a prospective economic
advantage, maintaining it was under consideration for a number of
construction projects and, as a result of the picketing and
handbilling campaign, lost prospective business. (Id. ¶ 79-80.)
In Count VIII, Reinke brings another state law claim for
violations of the Illinois Consumer Fraud and Deceptive Business
Practices Act, 815 ILCS 505/1, et seq. In this count, Reinke
claims the Union's allegedly defamatory statements were directed
to various builders with whom Reinke did business, other
contractors and laborers in other building trades, and the public
at large. (Id. ¶ 91.)
Claims of tortious interference with contractual relations or
prospective economic advantage and claims for violations of the
Illinois Consumer Fraud and Deceptive Business Practices Act,
when based on conduct that is regulated by the Labor-Management
Relations Act, 29 U.S.C. § 141, et seq., are subject to federal preemption.
See Ehredt Underground, Inc. v. Commonwealth Edison Co.,
90 F.3d 238, 240-41 (7th Cir. 1996).
The Supreme Court has held that state law may not encroach upon
the systems of federal laws governing labor relations. Teamsters
v. Morton, 377 U.S. 252, 259-60 (1964). State laws which attempt
to occupy the same or similar ground as the national scheme are
preempted. Id. The essential inquiry is "whether evaluation of
the claims is inextricably intertwined with consideration of the
terms of a labor contract." Lingle v. Norge Div. of Magic Chef,
Inc., 486 U.S. 399 (1988). The exception to the preemption
doctrine for tortious interference claims is when there is
"conduct marked by violence and imminent threats to the public
order." San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236,
In this case, the parties were required to interpret the
collective bargaining agreement to determine whether, under its
terms, Reinke failed to make the required Trust Fund
contributions. The state law claims here are "substantially
dependent upon analysis of the terms of an agreement made between
the parties in a labor contract." Allis-Chalmers Corp. v.
Lueck, 471 U.S. 202, 220 (1985). In fact, this Court conducted a
week long bench trial to make a determination of whether Reinke
paid fringe benefits in accord with the collective bargaining
Because Reinke's state tort claims are inextricably intertwined
with the terms of the labor contract, Counts V, VI, and VIII are
preempted by federal labor law. Furthermore, because Reinke makes
no allegation that the Union engaged in violent conduct or made
improper threats to the public order, Reinke's claims are not
exempt from preemption. For these reasons, we grant the Union's
motion for summary judgment on Counts V, VI, and VIII. IV. Count VII Section 303 of the Labor-Management Relations
In Count VII, Reinke alleges the Union engaged in striking
activity "for the purpose of forcing K. Reinke to rejoin the RCEC
and reassign its collective bargaining rights and
responsibilities to the [Residential Construction Employers
Council]. . . ." (Countercl. ¶ 84.) Under Section 303 of the
Labor-Management Relations Act, 29 U.S.C. § 141, et seq.,
injured parties may sue a labor organization engaged in "any
activity or conduct defined as an unfair labor practice in
section 158(b)(4). . . ." 29 U.S.C. § 187. Section 158(b)(4)
makes it unlawful for labor organizations to engage in strike
activities where the object is "forcing or requiring any employer
. . . to join any labor or employer organization. . . ." Id.
In its brief, Reinke argues that was illegal for the Union,
under the plain terms of § 158(b)(4), to picket if its motive was
to force Reinke to rejoin the Residential Construction Employers
Council. The prohibition set forth in § 158(b)(4), however, is
aimed at striking activities directed at secondary employers, not
primary employers. Mautz & Oren Inc. v. Teamsters, Local No.
279, 882 F.2d 1117, 1120-21 (7th Cir. 1989). When a union has a
grievance against the primary employer, in this case Reinke, it
may picket that employer, but may not exert pressure on an
unrelated, secondary employer to coerce the secondary employer to
cease dealing with the primary employer, thereby advancing the
union's goals indirectly. Id. "The controlling legal principles
are well settled. Only `secondary' conduct is proscribed by §§
8(b)(4)(A) and 8(b)(4)(B) [§§ 158(b)(4)(A) and (B)] . . . Those
provisions are aimed at `shielding unoffending employers and
others from pressures in controversies not their own.'" Hoffman
& Sons, Inc. v. Int. Bhd. of Teamsters, Local No. 627,
617 F.2d 1234, 1241 (7th Cir. 1980) (internal citation omitted). The Supreme Court explained that the § 158(b)(4) provisions
cannot be literally construed, or else the provisions would "ban
most strikes historically considered to be primary activity."
Int'l Union of Elec. Radio & Mach. Workers v. NLRB,
366 U.S. 667, 672 (1961). Indeed, § 303 "renders illegal various forms of
secondary boycotting, while clarifying in its proviso that
primary strikes and pickets are exempt from its terms." J. Pease
Const. Co., et al. v. Local 150, No. 87 C 10515, 1992 U.S. Dist.
LEXIS 5659, at *2-3 (N.D. Ill. Apr. 6, 1992).
To be liable for secondary activity under § 303, a union must
have as its object or purpose the coercion of secondary
employers. Mautz & Oren Inc., 882 F.2d at 1121. The Union in
this case picketed Reinke with signs that protested Reinke's
"failure to pay fringe benefit contributions." (Union Facts ¶ 9.)
These picket signs were used at locations at which Reinke
employees were present at residential projects for the purpose of
installing insulation. (Id. ¶ 33.) Thus, activity directed at
Reinke is deemed primary and is protected.
The analysis of secondary conduct changes when primary and
secondary employers (e.g., subcontractors) share a common work
site, as is common in the construction industry. Despite the
presence of these other secondary employers, the Union may engage
in a lawful picket as long as the focus in on the primary
employer. To evaluate the Union's conduct when other employees
are present, federal courts use the Moore Dry Dock standards.
Sailors' Union of the Pacific (Moore Dry Dock),
92 N.L.R.B. 547, 549 (1950).
Under these standards, a union's picketing is presumed to be
lawful primary activity if: (a) the picketing is strictly limited
to times when the situs of the dispute is located on the
secondary employer's premises; (b) at the time of the picketing
the primary employer is engaged in its normal business at the
situs; (c) the picketing is limited to places reasonably close to
the location of the situs; and (d) the picketing discloses clearly that the
dispute is with the primary employer. Mautz & Oren Inc.,
882 F.2d at 1121.
After carefully reviewing the facts in this case, we conclude
the Union conducted itself in accord with the Moore Dry Dock
standards. First, the Union picketed only construction job sites
where Reinke installed insulation on houses under construction at
times that Reinke employees were present on those sites. Second,
when the picketing occurred, Reinke employees were present for
the purpose of installing insulation on the homes under
construction. Third, the picketing occurred reasonably close to
where Reinke employees were present, including reserve gates
established by owners or general contractors. Finally, the picket
signs clearly protested Reinke's failure to pay fringe benefit
contributions and, thus, the pickets disclosed clearly that the
dispute was with Reinke, the primary employer.
Because the Union cannot be held liable under § 303 for its
picketing of Reinke, the primary employer, and because there are
no genuine issues of material fact left to be decided regarding
the Union's picketing of secondary employers, we grant the
Union's motion for summary judgment on Count VII.
V. Count IX Uniform Deceptive Trade Practices Act
In Count IX, Reinke alleges the Union's statements "disparaged
Reinke's business by false and misleading misrepresentations of
fact, and constituted a deceptive trade practice in violation of
the Illinois Uniform Deceptive Trade Practices Act,
815 ILCS 510/2, et seq. The Uniform Deceptive Trade Practices Act does
not provide a cause of action for damages, but it does permit
private suits for injunctive relief. Greenberg v. United
Airlines, 563 N.E.2d 1031, 1036 (1st Dist. 1990). Accordingly, Reinke's claim under the Uniform Deceptive
Trade Practices Act is moot as injunctive relief is no longer
available due to the absence of continued picketing or
Moreover, Reinke is required to prove the Union knew its
statements were untrue or intended to misrepresent a statement to
the public. Berthold Types Ltd. v. Adobe Sys.,
101 F. Supp. 2d 697, 699 (N.D. Ill. 2000). For the same reasons we concluded the
Union did not act with actual malice in previous claims, the
Union in this count cannot be found to possess the knowledge that
the handbills and pickets, which it believed expressed honest
assertions, would "disparage the goods, services, or business of
[Reinke] by false or misleading representations of fact."
815 ILCS 510/2(a)(8). Accordingly, we grant the Union's motion for
summary judgment on Count IX.
For the foregoing reasons, we grant the Union's motion for
summary judgment [104-1]. This is a final and appealable order.
It is so ordered.
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