J.L. Foti Construction Co., Inc. v. Laborers' International Union of North America, Building and Construction Laborers' Union, Local No. 310

742 F.2d 994, 117 L.R.R.M. (BNA) 2264, 1984 U.S. App. LEXIS 18811

• Court: Court of Appeals for the Sixth Circuit
• Decided: September 7, 1984
• Docket: 83-3430
• Status: Published

Opinions

GEORGE CLIFTON EDWARDS, Jr., Circuit Judge.

This appeal involves the validity of a unanimous arbitration award which had the result of replacing one laborer by another — the latter being one who was also the Laborers’ Local Union’s designated steward. The job at issue lasted for a period of 30 days. The displaced laborer was transferred by Foti to another job where he worked more hours than the steward did. Nonetheless, the case involves some of the important legal concepts of this country’s labor relations law.

The Facts

This dispute began at a construction project for an addition to the Slovene Home for the Aged. Demshar Builders, Inc. was the name of a joint venture that became general contractor for the project. The two parties to the joint venture were Demshar Builders, Inc. and Foti Construction Co. Each venturer contributed $20,000 toward the project, and they shared both costs and profits equally. The general contractor, Demshar (Venture), also sub-contracted with Foti Construction for the masonry work on the project. During the arbitration hearing, sub-contractor Foti acknowledged, “We did enter into a joint venture agreement.” (Tr.Arb. p. 45.) At one time Foti employed the superintendent for the entire project on its payroll, because it had the most workers at the site. Foti agreed that it also had an obligation to employ a union steward designated by Local 310. Local 310 wanted a steward, Anthony Ricotta, at the job site before Foti had started work on the Slovene project. Ricotta then worked on the Demshar payroll until that firm completed its share of the project. The following account of the facts presented in Foti’s brief to this court reveals that Foti fully staffed its work crew and then refused to accept Ricotta, the project steward, who no longer was employed by Demshar.

The facts appear to be stated with reasonable accuracy (if occasionally slanted) in appellant Foti’s brief and we accept them as follows for purposes of this appeal. In what follows, there are two deletions (of Foti’s legal arguments) which are marked by stars.

The facts surrounding the refusal of Foti to accept a particular steward at the job site in question are relatively simple and undisputed. Anthony Saitta, a business representative for the Union, testified that he first visited the job site in question in August and found that the only contractor performing work was Demshar. (Tr. Arb. p. 18.) At the time, Saitta requested that Demshar Construction take the assignment of a particular steward appointed by the Union. A representative of Demshar Construction indicated that there was no need then for any laborers on the job and that when such a need arose, a steward could be appointed. (Tr.Arb. p. 19.)

There was a second meeting at the job site on September 16, at which Saitta was present together with Eddy Demshar and Bob Fazio of Demshar, and Joe Foti of Foti. (Tr.Arb. p. 20.) At that time, Foti had not commenced performance and thus had no employees working at the job. Demshar was the only employer with laborers at the job. (Tr.Arb. pp. 68-69.) Knowing that within 7 to 10 days thereafter it would have laborers on the job, Foti requested that the Union wait until Foti manned the job at which time Foti would carry the steward on its payroll. * * * Foti further suggested that the steward the Union had appointed to Foti at Barshaw Chemical, a job of Foti’s that was due to end within three to four days, could simply be transferred to The Slovene Home for the Aged job and in doing so, be continued on Foti’s payroll. (Tr.Arb. pp. 69, 71.) Saitti rejected, or in his words ‘disregarded,’ this proposal and instead insisted that Demshar take the steward the union wished to assign to the job immediately. (Tr.Arb. pp. 21, 69.)

Eventually, due to the nature of the work being performed, Demshar reached a point when it temporarily had no work for laborers and made the decision to lay them off, including the steward. At the time this occurred, Foti had had The Slovene Home for the Aged job fully manned by laborers for over six weeks. (Tr.Arb. pp. 155-156.) When informed of the lay-off, Saitta insisted that Anthony Ricotta, the steward he had previously assigned to Demshar and who was laid-off along with all other laborers, be hired by Foti, and thus placed on Foti’s payroll. (Tr.Arb. pp. 22, 27, 36-37.) The Union’s position was not that it wanted a steward on the job, but it wanted Anthony Ricotta, a particular steward, on the job. When Foti requested that the Union appoint one of its then current employees who was a member of the Union as steward, the Union refused to do so and insisted upon the appointment of Anthony Ricotta. * * * When Foti refused to hire the particular steward designated by the Union, because such hiring would cause the lay-off of one of Foti’s employees (a member of the Union already working at the construction project), the Union engaged in an unlawful work-stoppage. As a result, Foti, on December 18, filed a Complaint and Motion for Temporary Restraining Order, Civil Action No. C81-2525, in the United States District Court for the Northern District of Ohio, Eastern Division. On December 18, the District Court issued a Temporary Restraining Order enjoining and restraining the Union, and others from, among other things, engaging in any unauthorized strike at the job site of The Slovene Home for the Aged.

By agreement of Foti and the Union, the dispute was submitted to arbitration pursuant to the collective bargaining agreement between the parties. An arbitration hearing was held on December 29.

At the outset of the arbitration proceedings, the parties stipulated that the issue before the Panel was whether, pursuant to Article III, Section 18 of the Collective Bargaining Agreement, Foti was required to hire the particular steward assigned by the business manager to The Slovene Home for the Aged job. (Tr.Arb. pp. 3-4.) The applicable clause at issue, Article III, Section 18, provides in pertinent part as follows:

A. At the discretion of the Business Manager, a Steward will be sent to all jobs when the job first starts. It shall be the responsibility of those listed for the placement of the Steward. Any person, Construction Manager, Prime Contractor, General Contractor, Brokerage Firm, Corporation or Company that employs Laborers directly or indirectly must accept the Steward sent out by the Business Manager ...

B. When there is a General Contractor or Prime Contractor, the employment of the Steward shall be their responsibility with the approval of the Business Manager ... (UX-1)

The Union contended that Foti was obligated to take the steward previously assigned to Demshar Construction, the general contractor on the job, as Demshar no longer employed laborers on The Slovene Home for the Aged job. (Tr.Arb. pp. 5-7.) In addition, the Union contended that Demshar and Foti were engaged as joint venturers on the project and, therefore, both shared an equal obligation to take the steward assigned by the Union. (Tr.Arb. p. 6; Memorandum in Support of Motion to Compel Discovery and in Opposition to Plaintiff’s Motion for Protective Order, ,p. 8.) Thus, as set forth in the above-referenced Memorandum, the Union attempted to prove that Foti and Demshar served as ‘alter egos for each other’ on The Slovene Home for the Aged job, and that the effect of the Award was simply to transfer the steward from one joint venturer’s payroll to another, in accordance with the collective bargaining agreement between the parties.

Foti argued that in order for the Panel to resolve the issue, it was critical that the Panel review not only the language of the collective bargaining agreement but also the bargaining history surrounding the steward clause in the collective bargaining agreement. (Tr.Arb. pp. 8-10.) Foti further contended that, under the clear language of the current collective bargaining agreement and previous collective bargaining agreements, when there is a general or prime contractor on a job, it is the general or prime contractor’s sole responsibility to accept the assignment of a steward by the Union. (Tr.Arb. p. 9.) It was further contended that, under the circumstances of the case, to require Foti to lay-off one of its employees who was a member of the Union already employed at the job in order to hire the steward appointed by the Union, would cause Foti and the Union to violate Section 8(a)(3) and 8(b)(2) of the Labor Management Relations Act, 1947 (29 U.S.C. 158(a)(3) and (b)(2)).⁵ (Tr.Arb. p. 10.) In positing the foregoing contention to the Panel, its attention was specifically directed to The PaintSmiths, Inc. v. National Labor Relations Board, 620 F.2d 1326 (8th Cir., 1980).

On January 6,1982, a copy of the Award was delivered to Foti. In finding for the Union, the Award held the following (Arb. Award, pp. 3-4):

... Thus, it is the finding of the Arbitration panel that:

1. The Union has the right to designate a Steward;

2. Once employed, the Steward must continue to be employed until the job is completed;

3. If the General Contractor has no work available, then the employer employing the most laborers on the job must employ the Steward;

4. If the General or Prime Contractor again employs laborers on the job, the Steward shall revert to the payroll of the General or Prime Contractor;

5. As provided in Paragraph 18.E., the Steward shall also perform the duties as a Laborer;

6. Since the question of the legality of the work stoppage is before Judge Manos, the panel makes no finding with respect to the work-stoppage.

This matter is before the Court as a result of the Complaint filed by Plaintiff-Appellant, J.L. Foti Construction Company, Inc. against Defendant-Appellee, Laborers’ International Union of North America, Building and Construction Laborers’ Union Local No. 310. Foti’s Complaint alleged that a Labor Arbitration Panel exceeded its authority in rendering its decision.

The Union filed a Counterclaim under the U.S.A.A., 9 U.S.C. Section 9, and sought to confirm the Award upon the allegation that the Panel did not exceed its authority in rendering its decision.

A. The Proceedings Below

The case was assigned to the Honorable John M. Manos, who, despite Foti’s objection, held a trial de novo, and on May 17, 1983, issued an Order granting the Union’s Motion for involuntary Dismissal of Foti’s Complaint and entered Judgment on the Union’s Counterclaim to confirm the Award.

Brief of Appellant Foti Construction Co. (emphasis deleted) (footnotes omitted).

This dispute resulted in 1) a work stoppage, 2) an injunction restraining same issued by the District Court, 3) an arbitration proceeding under the management-union contract, 4) a unanimous award by the five man arbitration panel (which panel included two arbitrators designated by Foti), 5) the filing of the instant complaint by the company alleging that the arbitration panel exceeded its authority in rendering its decision, 6) the filing of a counterclaim by the union under the United States Arbitration Act seeking confirmation of the arbitration panel’s award, 7) a trial on the union’s counterclaim before the District Court which included an evidentiary hearing on the question phrased in an Eighth Circuit case, PaintSmiths, Inc. v. National Labor Relations Board, 620 F.2d 1326 (8th Cir. 1980), did the union have a “substantial purpose” in its insistence on choosing and requiring the hiring of its steward, 8) the entry of judgment by the District Court holding that the union did have such a purpose and enforcing the arbitration award, and 9) appellant Foti’s appeal to this Court.

The fundamental law of this case is contained in the United States Arbitration Act, 9 U.S.C. §§ 1-14 (1982), and The Steelworkers Trilogy, United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); United Steelworkers of America v. American Manufacturing Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960).

Section 9 of the Arbitration Act provides: If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in section 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made.

In Enterprise Wheel & Car, the Supreme Court said:

[A]n arbitrator is confined to interpretation and application of the collective bargaining agreement ____ He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement.

363 U.S. at 597, 80 S.Ct. at 1361.

We now affirm the judgment of the District Court in enforcing the award of the arbitration panel. As the District Judge found on ample evidence in this record, the arbitration award did “draw its essence” from the parties’ collective bargaining agreement.

The crucial question involved in this case is whether the union had the right under its contract to demand that the steward, Ricotta, who had been designated by the labor union as steward for the Slovene Home, and had been employed by the general contractor while he was employing laborers on that project, should be transferred to Foti’s payroll. The transfer demanded by the union occurred when two conditions were presented. First, the only steward designated for the Slovene Home project, Ricotta, was laid off by the general contractor because he was no longer employing any laborers at the site. Second, Foti, at that point, was employing laborers on the site, and under the contract, the union had a right to have a steward on the job. Thus, the original conflict was whether the contract should be construed to require the general contractor, who had no work for any laborers at the time, to pay Ricotta for fulltime employment when the record plainly shows that the steward’s duties occupied something less than 25% of his time. Under the contract, the union had no right to demand that a steward be employed by the general contractor under circumstances where the general contractor had no work for him.

The question which was not clearly answered by the labor management contract involved in this case was whether under these circumstances, the union had a right to demand that Ricotta be transferred to Foti’s payroll and be paid by Foti, with the consequent lay off from that particular job of a laborer who was also a union man.

Plainly, under the contract, the designation of a steward was a union privilege since the steward was, by definition, a functionary of the union. The arbitrators, two of whom had been designated by Foti, unanimously decided that the contract should be construed to require Foti to accept steward Ricotta as a laborer on Foti’s job. The man whom Ricotta replaced was actually transferred to another Foti job and lost no time as compared to the work which Ricotta did for Foti.

As we see this matter, these facts are easier to resolve than were the facts before the Eighth Circuit in PaintSmiths, Inc. v. National Labor Relations Board, 620 F.2d 1326 (8th Cir.1980).

PaintSmiths only applies if the union compels an employer to displace another laborer with a union steward. In this case, Local 310 informed Foti before he ever had any laborers at the Slovene project that the union would designate Rieotta to his payroll. He accepted the responsibility for taking a steward, but asked the union to designate a different laborer from another project. When the union insisted on its right to name the steward, Foti proceeded to staff his workforce. He cannot be heard to complain that Local 310 then forced him to bump another laborer. The problem of displacement was created by Foti, not the union.

Moreover, Local 310 conclusively demonstrated in the arbitration hearing that it had a far more substantial purpose than was demonstrated by the union in PaintSmiths. Rieotta was not related to anyone in Local 310 and had been steward at the Slovene project since the start of construction.

Plaintiff-appellant Foti relies upon §§ 8(a)(3) and 8(b)(2) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(3) and (b)(2), quoted above. We cannot appropriately fault the union’s actions insisting upon its designated steward being transferred to the only labor force then working on the construction project. Nor can we appropriately construe the transfer of the laborer who was displaced by Rieotta by being employed by Foti as a violation of the Act.

We believe that the substantial and legitimate purpose of the union’s insistence was clear from the record of the arbitration proceedings. It was also made doubly clear by the evidentiary hearing before the District Judge, if we assume, without deciding, that such was essential to decision of this case.

We find it unnecessary to decide whether the jurisdiction of the District Court depends solely upon the United States Arbitration Act, or solely upon The Steelworkers Trilogy. The United States Arbitration Act and The Steelworkers Trilogy together complement each other in establishing the strong preference in the law of the United States favoring arbitration of labor disputes.

The judgment of the District Court is affirmed.

5 6 Section 8(a)(3) of the Act makes it an unfair labor practice for an employer to discriminate "in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.” Section 8(b)(2) of the Act makes it an unfair labor practice for a labor organization "to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a)(3).”