Sheet Metal Division of Capitol District Sheet Metal, Roofing & Air Conditioning Contractors Ass'n v. Local 38 of the Sheet Metal Workers International Ass'n

208 F.3d 18
Court of Appeals for the Second Circuit·Decided March 21, 2000·No. Docket Nos. 99-7393(L), 99-7437(CON)·Published·Cited by 11 cases

Opinion

FEINBERG, Circuit Judge:

Plaintiffs-appellees brought this action alleging that a -provision of defendants-appellants’ current three-year collective bargaining agreement violated the Sherv [20] man Antitrust Act, 15 U.S.C. §§ 1, 2 (the Sherman Act); the National Labor Relations Act (the NLRA), 29 U.S.C. §§ 158(b)(4)(B) and 158(e), and the antitrust statutes of New York, New Jersey, and Connecticut. The United States District Court for the Northern District of New York (Thomas J. McAvoy, C.J.) granted plaintiffs-appellees’ motion for a declaratory judgment, and denied defendant-appellants’ motion to dismiss the complaint. See Memorandum-Decision and Order dated March 24, 1999. Because too many of the facts in this case remain unresolved, and because the district court made several errors of law, we reverse and remand.

I. Background

A. The collective bargaining agreement

The focus of this appeal is a provision in a July 1998 collective bargaining agreement (the Agreement), between defendant-appellant Local Union 38 of the Sheet Metal Workers International Association (Local 38) and defendant-appellant Sheet Metal and Roofing Employers Association of Southeastern New York, Inc. (SENY Contractors). Local 38 is an unincorporated association of union sheet metal workers in several counties north of New York City (Westchester, Putnam, Dutchess, Orange, Rockland, Sullivan, and Ulster) and two counties in Connecticut (Fairfield and Litchfield). SENY Contractors is a multi-employer bargaining agent that represents sheet metal contractors in the counties covered by Local 38. SENY Contractors fabricate and install sheet metal duct work and related sheet metal products.

Plaintiffs-appellees Sheet Metal Division of Capitol District Sheet Metal, Roofing & Air Conditioning Contractors Association, Inc., Associated Sheet Metal and Roofing Contractors of Connecticut, and Sheet Metal Contractors Association of Northern New Jersey are multi-employer bargaining agents that represent union sheet metal contractors in, respectively, counties in upstate New York outside Local 38’s jurisdiction, Connecticut, and New Jersey. Because plaintiffs-appellees represent contractors in counties outside Local 38’s jurisdiction, we shall refer to them as the “Outside Contractors.” Like the SENY Contractors, the Outside Contractors fabricate and install sheet metal duct work.

On June 30, 1998, the day before the Agreement between Local 38 and SENY Contractors was to go into effect, the Outside Contractors brought suit contending that a clause in the Agreement violates the Sherman Act, the NLRA, the Donnelly Act, N.Y. Gen. Bus. Law § 340; the Connecticut Antitrust Act, Conn. Gen.Stat. § 35-26, and the New Jersey Antitrust Act, N.J. Stat. Ann. § 56:9-3. The clause in question (hereafter “the Clause”) provides:

To protect and preserve for the Building Trades employees covered by this Agreement all work they have performed and all work covered by the Agreement, and to prevent any device or subterfuge to avoid the protection and preservation of work; it is agreed that all the work requiring sketching and fabrication shall be performed by employees hereunder, either in the shop or on the job site within the geographical jurisdiction of [Local 38].

Agreement, Art. II, § 1. The Clause does not prohibit contractors from outside Local 38’s jurisdiction from contracting to work on projects within Local 38’s jurisdiction, but it does require that any sketching or fabrication work for such projects be performed by Local 38’s members.

Defendants Local 38 and SENY Contractors characterize this provision as a work preservation clause. They explain that because Local 38’s jurisdiction includes an area with a relatively high cost of living, the wages and fringe benefits paid by SENY Contractors are among the highest in the country. Contractors outside Local 38’s jurisdiction pay roughly $12.00 per hour less to their employees [21] than the SENY Contractors, who work in Local 38’s jurisdiction. This disparity has led contractors within Local 38’s jurisdiction to consider moving their shops out of Local 38’s area to take advantage of the lower rates, performing their fabrication work at off-site shops rather than at job sites within Local 38’s jurisdiction. Local 38’s parent union typically advised its affiliates to negotiate a wage equalization clause, which required that when fabrication work was done in one area (outside of Local 38’s jurisdiction) and installed in a different area (within Local 38’s jurisdiction), the contractor would pay its employees the higher wage rate of the two areas.

Local 38, however, believed that such a clause did not achieve the desired effect because non-local contractors either did not have similar clauses in their collective bargaining agreements, or were apparently able to ignore such a clause if it was in their agreements. Under these circumstances, contractors in Local 38’s jurisdiction would still be tempted to move out of Local 38’s area to take advantage of the lower rates to bid on work that might otherwise be performed by Local 38 members. Thus, appellants Local 38 and SENY Contractors argue, they negotiated the Clause at issue in this case, which requires contractors in Local 38’s jurisdiction to have fabrication work done by employees within Local 38’s jurisdiction. The prior version of the Clause prohibited contractors in Local 38’s jurisdiction from using outside subcontractors to do any work “normally handled” by Local 38. Local 38 and SENY Contractors maintain that the Clause binds only those contractors who are parties to the Agreement (the SENY Contractors), and that they never intended to try to enforce the Clause directly against outside contractors.

The Outside Contractors contend that the Clause imposes an unlawful boycott of sheet metal products fabricated outside Local 38’s jurisdiction. They claim that they have supplied sheet metal duct work for projects located within Local 38’s jurisdiction for over 40 years. If the Clause is permitted to go into effect, the Outside Contractors maintain, they will lose business opportunities in the millions of dollars. The Outside Contractors assert that the Clause binds them, even though they are not parties to the Agreement, because the terms of their own collective bargaining agreements require them to comply with Local 38’s work rules when performing work for projects in Local 38’s jurisdiction.

B. District court and National Labor Relations Board proceedings

Free access — add to your briefcase to read the full text and ask questions with AI

Sheet Metal Division of Capitol District Sheet Metal, Roofing & Air Conditioning Contractors Ass'n v. Local 38 of the Sheet Metal Workers International Ass'n, 208 F.3d 18 (2d Cir. 2000).

208 F.3d 18 (Sheet Metal Division of Capitol District Sheet Metal, Roofing & Air Conditioning Contractors Ass'n v. Local 38 of the Sheet Metal Workers International Ass'n) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related