Brogan v. Swanson Painting Co.

682 F.2d 807, 110 L.R.R.M. (BNA) 3229
Court of Appeals for the Ninth Circuit·Decided July 27, 1982·No. No. 79-4226·Published·Cited by 19 cases

Opinion

SCHROEDER, Circuit Judge:

This is an action by trustees of three employee fringe benefit trust funds of the Painting and Drywall Industry in western Washington. The trustees seek contributions from the appellee, Swanson Painting Company, which was signatory to an industry collective bargaining agreement and which subcontracted work to a nonsignato-ry contractor in violation of the subcontractor provisions of those agreements.1 The action was filed under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185.

The district court granted summary judgment for Swanson, holding that because Swanson had already paid directly to the non-union employees amounts equivalent to the trust fund contributions,2 payments to the funds would constitute a “penalty” for dealing with non-union contractors and would violate the secondary activities provisions of § 8(e) of the National Labor Relations Act, 29 U.S.C. § 158(e).3 In support of the district court’s judgment, appellees rely upon Connell Construction Co. v. Plumbers Local No. 100, 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975), and urge that the clause requiring payment of the contributions violates the antitrust laws. We reverse in light of the Supreme Court’s recent decision in Woelke & Romero Framing, Inc. v. NLRB, - U.S. -, 102 S.Ct. 2071, 72 L.Ed.2d 398 (1982), aff’g Pacific Northwest Chapter of Associated Builders [809] & Contractors, Inc. v. NLRB, 654 F.2d 1301 (9th Cir. 1981) (en banc).

There is no dispute in this appeal as to the meaning of the subcontractor clauses in the agreements or their legality under § 302(a)(1) of the Labor Management Relations Act, 29 U.S.C. § 186(a)(1), which forbids payments by employers to employee representatives.4 The parties agree that the subcontractor clauses, even though they do not so state in literal language, mean as a practical matter that if the subcontractor does not make contributions into the funds, the signatory contractor (Swanson) is liable for such contributions. Seymour v. Hull & Moreland Engineering, 605 F.2d 1105, 1114-15 (9th Cir. 1979). See Trustees of Teamsters Local 13 v. Hawg N Action, Inc., 651 F.2d 1384, 1387 (10th Cir. 1981), cert. denied, - U.S. -, 102 S.Ct. 1433-34, 71 L.Ed.2d 652 (1982). Furthermore, the contract may be enforced by the trust funds themselves. Audit Services, Inc. v. Rolfson, 641 F.2d 757, 760 (9th Cir. 1981) (as amended).

Because of the proscription of § 302, the parties also agree that the contributions cannot be “on behalf of” the subcontractor’s employees, but must be “measured by” the number of hours worked by such employees. The contributions would then be valid and enforceable under § 302 as interpreted by the Supreme Court in Walsh v. Schlecht, 429 U.S. 401, 97 S.Ct. 679, 50 L.Ed.2d 641 (1977). Although the factual situation in Walsh is similar to that presented here, and although the Court in Walsh held the contributions valid, the Court there did not concern itself with the fact that the contractor had already paid the non-union employees an amount equivalent to the disputed contributions. The appellees here focus on these prior payments, and would have us characterize the payments to the funds now sought by the trustees as a “windfall” to the trusts and a “penalty” to themselves.

The contractor’s cash payment of equivalent benefits to non-union employees does not, however, in itself, excuse the contractor’s obligation to contribute to the trust funds. The courts have rejected the contractor’s view, finding that the employer’s obligation to pay into the trusts is “exactly what it contracted to do.” Mullins v. Kaiser Steel Corp., 642 F.2d 1302, 1310-11 n.8 (D.C.Cir.1980), rev’d on other grounds, - U.S. -, 102 S.Ct. 851, 70 L.Ed.2d 833 (1982). As this court stated in Audit Services, Inc. v. Rolfson, 641 F.2d 757, 761 (9th Cir. 1981) (as amended),

[t]he payment of cash to nonunion employees, however well-intentioned such payment may have been, does not excuse the obligation to make contributions to the funds. The contract sued upon is between the union and the trustees on the one hand, and the employer on the other. The funds are established for the benefit of all employees covered by their language and are depleted by the amount which the [employer has] refused to contribute.

If the court did not require the employer to make trust fund payments upon the subcontractor’s default, the trustees “would have no remedy for defendant’s undisputed breach of contract.” Hawg N Action, Inc., 651 F.2d at 1387. Accord, Seymour v. Hull & Moreland Engineering, 605 F.2d 1105, 1114-15 (9th Cir. 1979); In re Swanson-Dean Corp., 61 L.A. 682, 686-87 (1977), enforced, 646 F.2d 376 (9th Cir. 1981) (“The [subcontracting] language accepted by the employer is analogous to that used in guarantor agreements, or agreements of indemnification, and it is our conclusion that the parties intended that the employer would pay if the subcontractor did not”).

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Brogan v. Swanson Painting Co., 682 F.2d 807, 110 L.R.R.M. (BNA) 3229 (9th Cir. 1982).

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