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Healy v. International Brotherhood of Electrical Workers

United States District Court, N.D. Illinois, Eastern Division

July 31, 2014

JOSEPH HEALY, TOM O'DRISCOLL, ALAN PORTER, JAMES RYAN, JAMES B. HOWLAND, KARL DIEDE, and JIM TIMOTHY, on behalf of themselves and all others similarly situated, Plaintiffs,


MATTHEW F. KENNELLY, District Judge.

Plaintiffs Joseph Healy, [1] Tom O'Driscoll, Alan Porter, James B. Howland, Karl Diede, Jim Timothy, and John Ryan, as representatives of a class, have sued International Brotherhood of Electrical Workers, Local Union No. 134 (the union), Freeman Electrical, Inc., Global Experience Specialists, Inc. (GES), and the Metropolitan Pier and Exposition Authority (MPEA). The union has a collective bargaining agreement (CBA) to which Freeman, GES, and MPEA are all subject. The CBA provides that the union is to be the sole and exclusive source of referral of electricians for employment by CBA signatories, and it sets up a hiring-hall procedure to accomplish this. The CBA also prohibits employers from loaning or borrowing employees, a provision likely aimed at preventing employers from end-running the hiring hall referral process.

Plaintiffs contend that for a period starting in 2011, Freeman and GES, while performing work at the Chicago convention center McCormick Place, obtained electricians not from the union's hiring hall but rather from a pool of electricians that MPEA had more or less informally established, consisting of workers who were purportedly experienced in performing work at McCormick Place. (Plaintiffs contend that this pool actually was established by inside connections and favoritism, but that contention is not directly at issue on the current motions.) This practice, plaintiffs contend, constituted a breach of the CBA's term establishing the union as the exclusive source of electrician referrals as well as its prohibition against loaning or borrowing employees. Plaintiffs also contend that the union, by agreeing to this arrangement, breached its duty of fair representation to the plaintiffs, who were laid off by Freeman and GES once the challenged arrangement went into effect.

Plaintiffs have moved for summary judgment on these claims, and the union and Freeman have cross-moved for summary judgment.[2] For the reasons stated below, the Court denies both sides' motions but makes certain factual findings pursuant to Federal Rule of Civil Procedure 56(g).


A. Hiring procedures before the MPEA Act amendments

Freeman, GES, and MPEA are all parties to a CBA between the union and the Electrical Contractors' Association of the City of Chicago. The CBA is not limited to work for contractors at McCormick Place; it also covers, for example, electrical contractors that perform work in the construction industry.

The CBA states that "[t]he Union shall be the sole and exclusive source of referral of applicants for employment" with members of the electrical contractors' association. Pls.' Ex. E § 4.02. To this end, the CBA states that "[t]he loaning and borrowing of journeymen between contractors shall not be tolerated." Id. § 2.18.

To ensure that employers who adopt the CBA hire electricians exclusively through the union, the CBA requires them to use a neutral referral procedure. Id. Art. IV. Under this procedure, unemployed union members sign up on out-of-work lists maintained at the union's hiring hall. An employer calls the hiring hall for a particular number of electricians for any given job. The hall then refers that number of electricians to the employer based on the order of names on the out-of-work list. Employers may also make "specialty" calls to the hiring hall, meaning that they may request electricians who possess a specific skill. Id. § 4.17.

To facilitate the hiring of union members by parties to the CBA, the union has used supplementary written referral procedures. These procedures permit referral of electricians for "short calls" and "long calls, " with short calls consisting of jobs lasting ten days or less (excluding weekends and holidays) and long calls consisting of jobs exceeding ten days. Pls.' Ex. F at 00467.

MPEA is a local governmental entity that owns and operates McCormick Place, a convention center in Chicago. Historically, MPEA provided all of the electrical services at McCormick Place. Unlike other parties to the CBA, MPEA eschewed the use of short or long calls in favor of "tradeshow calls, " a term used for jobs lasting the length of a specific show at McCormick Place. The CBA and the supplementary referral procedures do not mention tradeshow calls. But plaintiffs and defendants agree that the union has recognized tradeshow calls for many years.

There is a group of electricians called the "McCormick Place pool." It consists of electricians who were referred to the MPEA on a tradeshow call but were converted by MPEA to long-term employees. Defendants state that MPEA created the McCormick Place pool because "there were times when there were not enough electricians on the out of work list to cover a show" and "many electricians elect to pass up a show call' because the nature of electrical work for a trade show is different than electrical work in the regular construction industry." Defs.' Opening Br. at 6-7. Defendants maintain that "not all electricians have the necessary rigging experience or like to work high off of the ground" and that "[e]lectricians were selected for entry into the McCormick Place based upon their experience and performance." Id. at 7.

B. The MPEA Act amendments

In 2009, several conventions, exhibition managers, and exhibitors announced that they did not plan to return to McCormick Place because "union labor work rules and electric and food service costs make it uneconomical for the show managers and exhibitors to use McCormick Place as a convention venue...." 70 ILCS 210/5.4(a)(9). In response, Illinois amended the MPEA Act to provide, among other things, that MPEA "shall not serve as the exclusive provider of electrical services" at McCormick Place. 70 ILCS 210/5.4(f)(2).

Following this amendment to the MPEA Act, MPEA entered into "Utility Service Agreements" with Freeman and GES, which allowed those entities to provide certain electrical services at McCormick Place. In November 2010, Freeman and GES also signed letters of assent to the CBA. Pls.' Ex. D. In February 2011, both Freeman and GES began providing electrical services at McCormick Place, competing with MPEA for contracts with vendors. Plaintiffs state that "[d]uring that time, each of the class members was hired from the referral hall by Freeman or GES on a long-term basis (either on a long call or a foreman call)." Pls.' Opening Br. at 6.

Plaintiffs and defendants dispute what happened next. Plaintiffs contend that MPEA decided to withdraw from the business of providing electrical services at McCormick Place because it was unable to compete with Freeman and GES. Plaintiffs also contend, however, that MPEA sought to ensure that well-connected members of the McCormick Place pool would retain their jobs even after MPEA bowed out. According to the defendants, the problem was not that MPEA had trouble competing with Freeman or GES, but rather that the electricians who possessed the skills needed to provide electrical services at McCormick Place were already employed by MPEA as members of the McCormick Place pool. Defendants contend that this left Freeman and GES with a relatively unskilled and inexperienced labor pool. As a result, defendants says, the electricians whom Freeman and GES retained to work at McCormick Place experienced safety and economic problems, including electrical shocks, equipment damage, other accidents, and longer installation times. Defendants argue that these "disasters" resulted in "more bad publicity for McCormick Place and once again raised the very real possibility that more shows would leave Chicago, " prompting the defendants to contemplate ways to better serve the McCormick Place vendors. Defs.' Opening Br. at 3.

C. Alleged subcontracts and joint ventures

Whatever defendants' motivations, the parties agree that the defendants entered into the following arrangements in or about the summer of 2011. Freeman and GES continued to sell electrical contracting services to McCormick Place vendors pursuant to the MPEA Act amendments, but the actual work was performed by electricians who were members of the McCormick Place pool, who were on MPEA's payroll. During his deposition, Freeman's director of electrical services admitted that Freeman "exercise[d] control over what those employees would be doing on a day-to-day basis, " provided all of the "management supervision" for the pool members, and "decide[d] how many hours those employees would work." Pls.' Ex. C at 135-36. Defendants do not dispute this but suggest that this did not constitute supervision of the pool members by Freeman or GES, a duty that defendants say fell to MPEA. Defs.' Opening Br. at 17. Another aspect of the arrangement was that MPEA billed Freeman and GES for the work performed by pool members, who as indicated remained on MPEA's payroll. Although Freeman and GES could dismiss a pool member from a particular job, only MPEA had the authority to permanently discharge the electrician, in other words remove the electrician from the pool.

In June 2011, defendants memorialized the new arrangement in identical "Interpretive Side Letters, " one between the union and Freeman and the other between the union and GES. The side letters required Freeman and GES "not to perform any electrical work included in the scope of work in the existing Letters of Assent at any location owned, operated or controlled by the MPEA with its own employees... without securing the labor through MPEA...." Pls.' Ex. K at 000036, 0059.

Around the same time, Freeman and GES each entered into an identical agreement with MPEA called "McCormick Place Utility Service Agreements." These agreements provided, among other things, that MPEA:

agrees to name ten (10) individuals from the Pool exclusively for Contractor's Work at the Facilities, and Contractor has the first right of call for these individuals. Contractor shall have the right to call or exclude additional labor by name from the Pool, including without limitations, rejecting any laborer for any non-discriminatory reason. Contractor also has the right to designate all foreman [sic] and work assignments for all electricians selected from the Pool. Electricians from the Pool may also, at Contractor's sole option, perform Work related to the Facilities at Contractor-owned storage and operational facilities.

Pls.' Ex. L § 2.4. In other words, MPEA agreed to designate certain pool members for Freeman or GES projects at McCormick Place, leaving Freeman and GES the option of rejecting or accepting pool members on non-discriminatory bases. Freeman and GES were free to determine who the foreman of any particular project would be and what sort of work each electrician would perform. MPEA agreed that pool members could work on Freeman or GES projects outside of McCormick Place. The utility service agreements also stated that Freeman and GES would pay commissions to MPEA based on predetermined percentages of their gross receipts. Id. § 5.2.

Plaintiffs contend that this arrangement bypassed the contractual hiring hall requirements and constituted prohibited loaning and borrowing of employees. Defendants say the arrangement enabled them to ensure that relatively skilled and experienced electricians worked on McCormick Place shows. They contend that the arrangement constituted a subcontract permitted ...

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