J.W. Peters Inc v. Bridge Structural 1 , 398 F.3d 967 ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-2797
J.W. PETERS, INC.,
Plaintiff-Appellant,
v.
BRIDGE, STRUCTURAL AND REINFORCING
IRON WORKERS, LOCAL UNION 1, AFL-CIO,
ASSOCIATED STEEL ERECTORS OF CHICAGO,
ILLINOIS, and JOINT ARBITRATION BOARD,
established by the International Association
of Brick, Structural, Ornamental and Reinforcing
Iron Workers, Local Union 1 and the Associated
Steel Erectors of Chicago, Illinois,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 04 C 2932—Milton I. Shadur, Judge.
____________
ARGUED JANUARY 4, 2005—DECIDED MARCH 1, 2005
____________
Before FLAUM, Chief Judge, and EVANS and WILLIAMS,
Circuit Judges.
FLAUM, Chief Judge. Plaintiff-appellant J.W. Peters, Inc.
(“Peters”) sought a declaratory judgment that it effectively
repudiated its pre-hire agreement with defendant-appellee
International Association of Bridge, Structural and Rein-
2 No. 04-2797
forcing Iron Workers, Local Unit 1 (“Union”). Peters also
moved to stay arbitration proceedings initiated by the
Union before defendant-appellee Joint Arbitration Board
(“JAB”), a body created by the Union and defendant-
appellee Associated Steel Erectors of Chicago, Illinois
(“Associated Steel Erectors”), a multi-employer bargaining
unit, to resolve grievances arising out of their collective
bargaining agreement. The district court denied Peters’s
requested relief and dismissed the action. For the reasons
stated herein, we vacate the district court’s order.
I. Background
Since 1970, Peters has been a signatory to a pre-hire
agreement between the Union and Associated Steel Erec-
tors governed by § 8(f) of the National Labor Relations Act,
9 U.S.C. § 158(f) (“NLRA” or “Act”).1 The pre-hire agree-
1
A pre-hire agreement is a contract agreed to by a union and an
employer before the workers to be covered by the contract have
been hired or before the union has attained majority status among
the firm’s employees. NLRB v. Bufco Corp., 899 F.2d 608, 609 n.1
(7th Cir. 1990); NLRB v. O’Daniel Trucking Co., 23 F.3d 1144,
1146 n.1 (7th Cir. 1994). These agreements generally are illegal,
except in the construction industry which enjoys a statutory
exemption under § 8(f). Martin v. Garman Constr. Co., 945 F.2d
1000, 1001 n.3 (7th Cir. 1991).
As the Supreme Court has explained, “[o]ne factor prompting
Congress to enact § 8(f) was the uniquely temporary, transitory
and sometimes seasonal nature of much of the employment in
the construction industry. Congress recognized that construc-
tion industry unions often would not be able to establish ma-
jority support with respect to many bargaining units.” Jim
McNeff, Inc. v. Todd, 461 U.S. 260, 266 (1983) (citing legislative
history). “Congress was also cognizant of the construction industry
employer’s need to know his labor costs before making
(continued...)
No. 04-2797 3
ment establishes rates of pay, wages, hours of employment,
fringe benefit contributions and other terms and conditions
of employment for Union members.
On December 12, 2002, Peters executed a compliance
agreement with the Union, which extended the terms of the
existing pre-hire agreement—set to expire on May 31,
2003—through May 31, 2006. The December 12, 2002
compliance agreement provides in relevant part:
The Employer acknowledges the Union’s claim and
evidence that the Union represents an uncoerced
majority of the Employer’s employees in a unit acknowl-
edged and stipulated as appropriate . . ., and therefore
and hereby recognizes the Union as the sole and
exclusive collective bargaining agent for all journeymen
and apprentice iron workers now or hereafter employed
in the bargaining unit with respect to and for the
purpose of establishing rates of pay, hours of employ-
ment, fringe benefit contributions and other terms and
conditions of employment within the geographical
jurisdiction in which the Union is authorized to act or
does act as such representative. . . .
(Ex. 3, ¶ 1.) The compliance agreement also sets forth the
following terms for terminating the pre-hire agreement:
This Compliance Agreement shall remain in effect and
shall be governed by Principal Agreements entered into
in the future and covering future time periods unless
and until it has been terminated by either party giving
written notice of termination to the other at least four
(4) months prior to the termination date of the applica-
1
(...continued)
the estimate upon which his bid will be based and that the
employer must be able to have available a supply of skilled
craftsmen for quick referral.” Id.4 No. 04-2797
ble Principal Agreement in which event this Agreement
shall terminate on the last day of the then applicable
Principal Agreement. In the event no such timely notice
is given this Agreement shall remain in effect until
terminated in accordance with its terms. Any such
notice as hereinabove provided for in this article
whether specifying a desire to terminate or to change at
the end of the current contract year shall have the
effect of terminating this agreement at such time.
(Id. ¶ 4.)
On April 2, 2004, Peters sent the Union a letter purport-
ing to repudiate the pre-hire agreement, effective immedi-
ately. Peters asserted that it had “not employed any
Ironworkers since 2003” and, during the past two years,
had “not employed any Ironworkers for a period of more
than 30 days.” (Joint Appendix at 9.) Peters also stated that
it had “no intention of employing any ironworkers . . . in the
future.” (Id.) Peters sought confirmation of this repudiation
from the Union, stating:
While J.W. Peters, Inc. could assume that this letter
effects an end to any and all contractual relationships
between J.W. Peters, Inc. and the Ironworkers Union,
we would appreciate a written confirmation of this
fact from the Union. If we do not receive confirmation
of this fact by April 16, 2004, we will have to assume
that the Ironworkers Union continues to claim to
represent employees of J.W. Peters, Inc. and therefore,
we will be forced to file the appropriate petition with
the NLRB challenging any such claims.
(Id. at 10.)
Peters’s purported repudiation set into motion a series of
actions by both Peters and the Union. The Union initially
responded by letter dated April 9, 2004, insisting that the
pre-hire agreement remained in full force because Peters
failed to submit written notice of termination at least four
No. 04-2797 5
months prior to May 31, 2003.
The Union did not receive a further response from Peters.
On April 14, 2004, the Union filed a grievance and request
for arbitration with the JAB pursuant to § 38 of the pre-hire
agreement. (Ex. 2 at 44.) The arbitration request advised
that “there is a dispute between [the Union] and J.W.
Peters & Sons, Inc. as to whether the Contractor can now
terminate its Compliance Agreement with Iron Workers,
Local 1.” (J.A. at 35.) The Union requested that a hearing
be scheduled before the JAB as soon as possible and that
Peters be notified to appear and participate in that hearing.
(Id.)
The following day, April 15, Peters filed a representa-
tion petition with the Regional Director of the National
Labor Relations Board (“NLRB” or “Board”) in Chicago
pursuant to § 9(c) of the NLRA.2 In response to that peti-
2
Section 9(c) outlines two situations in which the Board may
determine questions of representation. First, an employee, group
of employees, or labor organization may file a petition seeking
to unseat an existing representative. See 29 U.S.C. § 159(c)(1)(A).
Second, an employer may initiate a petition to determine repre-
sentation. The statute provides, in pertinent part:
Whenever a petition shall have been filed . . . by an employer,
alleging that one or more individuals or labor organizations
have presented to him a claim to be recognized as the
representative defined in subsection (a) of this section; the
Board shall investigate such petition and if it has reasonable
cause to believe that a question of representation affecting
commerce exists shall provide for an appropriate hearing
upon due notice. Such hearing may be conducted by an officer
or employee of the regional office, who shall not make any
recommendations with respect thereto. If the Board finds
upon the record of such hearing that such a question of
representation exists, it shall direct an election by secret
(continued...)
6 No. 04-2797
tion, the Regional Director issued notice of a representation
hearing for April 29, 2004. Peters subsequently withdrew
its petition and refiled an identical petition on April 21. The
Regional Director rescheduled the representation hearing
for May 5, 2004.
On April 23, 2004, while the representation petition
was pending, Peters filed a complaint in federal district
court seeking a declaratory judgment that the collective
bargaining agreement between Associated Steel Erectors
and the Union had been repudiated and was no longer
in effect with respect to Peters. The complaint alleged
that through their participation in, and conducting of, a
hearing, “and because there can be no JAB hearing without
the existence of a valid and enforceable collective bargain-
ing agreement,” Associated Steel Erectors and the JAB
“maintain[ ] that there is a collective bargaining agreement
in effect between J.W. Peters, Inc., and the Iron Workers
Union.” (Compl. ¶¶ 12, 13.) Peters further alleged:
Because the Defendants seek to compel the Company to
arbitration, and because, if the Pre-hire Agreement has
been properly repudiated, there is no contrac-
tual obligation to participate in arbitration, Plaintiff,
J.W. Peters, Inc., brings this action seeking a declara-
tion that the Pre-hire Agreement has been properly and
effectively repudiated and is no longer in effect.
(Id. ¶ 15.)
On April 26, 2004, Peters filed a separate motion in the
district court to stay the arbitration proceedings before
the JAB, arguing that the JAB lacked jurisdiction.
On April 29, 2004, following a hearing, the district court
(...continued)
ballot and shall certify the results thereof.
§ 159(c)(1)(B).
No. 04-2797 7
denied Peters’s motion to stay the arbitration proceedings
and dismissed the action. Citing this Court’s decision in
NLRB v. Bufco Corp., 899 F.2d 608 (7th Cir. 1990), the
district court concluded that Peters’s purported unilateral
repudiation of the pre-hire agreement was a “nullity and
totally invalid.” (J.A. at 20.) It held that the pre-hire
agreement remained “in full force and effect and is in turn
governed by the most recent Agreement between the
Associated Steel Erectors of Chicago, Illinois and Union
for the period beginning June 1, 2003, and ending May 31,
2006.” (Id. at 20-21.)
On May 4, 2004, the day before the rescheduled represen-
tation hearing, the NLRB Regional Director dismissed
Peters’s representation petition, finding that further
proceedings were not warranted because “there are no
employees employed by the Employer in the bargaining unit
at this time, and there is no evidence that there have been
employees employed during the relevant eligibility period.”
(J.A. at 37.)
On May 13, 2004, Peters filed a Rule 59(e) motion to
amend the district court’s April 29 order, relying in part
on the Regional Director’s May 4 dismissal of its petition as
“new evidence not previously available.” On May 17, Peters
sought review by the Board of the dismissal of
the representation petition. On May 20, Peters sought leave
to file an amended complaint for declaratory judgment in
the district court, incorporating “the particulars relevant to
the Plaintiff’s employment of Defendant Union’s bargaining
unit members.” (J.A. at 24.)
On June 3, 2004, while its motions were pending in the
district court, Peters filed an unfair labor practice charge
against the Union with the NLRB. Peters alleged that
the Union had filed grievances and attempted to en-
force a collective bargaining agreement that Peters had
lawfully repudiated on April 2, 2004, in violation of
8 No. 04-2797
§§ 8(b)(1)(A) and (b)(2) of the NLRA.
On June 14, 2004, the district court denied Peters’s
motion to amend judgment and motion to file an amended
complaint. The court concluded that its prior ruling
would remain in effect “unless and until . . . the Board itself
holds that the unilateral repudiation is effective in this
circumstance.” (J.A. at 72.)
This appeal followed.
II. Discussion
In reviewing a decision to deny declaratory or injunc-
tive relief, we review the district court’s findings of fact
for clear error and its legal conclusions de novo. Bhd.
of Maint. Way Workers v. Union Pac. R.R. Co., 358 F.3d
453, 457 (7th Cir. 2004). The parties raise only legal issues
on appeal.
A. Jurisdiction
We begin with the threshold question of jurisdiction.
Despite the concerns expressed by the district court
about the existence of a live controversy, both parties argue
that the district court had subject matter jurisdiction to
resolve the dispute that was before it. We agree.
Section 301 of the Labor Management Relations Act
(“LMRA”) provides:
Suits for violation of contracts between an employer
and a labor organization representing employees in
an industry affecting commerce as defined in this
chapter, or between any such labor organizations, may
be brought in any district court of the United States
having jurisdiction of the parties, without respect to the
amount in controversy or without regard to the citizen-
No. 04-2797 9
ship of the parties.
29 U.S.C. § 185(a).
In International Brotherhood of Electrical Workers, Local
481 v. Sign-Craft, Inc., this Court held that “under § 301(a)
any disputes about the meaning or validity of collective
bargaining agreements come within the jurisdiction of
the federal courts.” 864 F.2d 499, 502 (7th Cir. 1988)
(holding that district court had jurisdiction over claim filed
by union alleging that employer improperly repudiated
collective bargaining agreement between union and multi-
employer association), overruling NDK Corp. v. Local 1550
of the United Food & Commercial Workers Int’l Union, 709
F.2d 491 (7th Cir. 1983).
Although the Supreme Court subsequently held in
Textron Lycoming Reciprocating Engine Div. v. United
Automobile Workers, 523 U.S. 653, 657 (1998), that “ ‘[s]uits
for violation of contracts’ under § 301 are not suits that
claim a contract is invalid, but suits that claim a contract
has been violated,” Textron does not foreclose jurisdiction in
this case. In Textron, the union sought a declaratory
judgment that its collective bargaining agreement with
employer Textron was invalid after Textron announced that
it would subcontract out a substantial volume of work,
causing half of the union members to lose their jobs. Id. at
655. The union alleged that Textron had fraudulently
induced it to sign the agreement by concealing its plans to
subcontract work. Id. The union did not allege, however,
that either it or Textron ever violated the terms of the
collective bargaining agreement. Id. The Court concluded:
“Because the Union’s complaint alleges no violation of the
collective-bargaining agreement, neither we nor the federal
courts below have subject matter jurisdiction over this case
under § 301(a) of the Labor-Management Relations Act.” Id.
at 661-62.
The Supreme Court specifically stated, however, that “a
10 No. 04-2797
declaratory judgment plaintiff accused of violating a
collective-bargaining agreement may ask a court to de-
clare the agreement invalid” and emphasized that, in
the case before it, “the Union neither alleges that Textron
has violated the contract, nor seeks declaratory relief from
its own violation.” Id. at 658. In this case, by contrast,
Peters was accused of violating the terms of the collec-
tive bargaining agreement by attempting to terminate
the collective bargaining relationship without providing
proper notice. Peters sought declaratory relief from this
alleged violation. Thus, this is a suit “for violation of
contracts” within the meaning of § 301. Moreover, unlike in
Textron, where the Court found that there was no evidence
of a concrete dispute between the parties over the contract’s
voidability at the time the suit was filed, id. at 660-61, here,
there is undoubtedly a ripe dispute between the parties.
The district court therefore had jurisdiction to resolve the
legal issues and decide whether Peters’s unilateral repudia-
tion was valid, or whether it should allow the case to
proceed to arbitration before the JAB. We now turn to that
question.
B. Unilateral Repudiation
This Court has recognized that, generally, a signatory to a
§ 8(f) pre-hire agreement “is bound to its terms for
the duration of the agreement unless the employees covered
by that agreement reject the signatory union in a Board
conducted election.” Bufco, 899 F.2d at 610 (relying on the
decision of the Board in John Deklewa & Sons, 282 NLRB
184 (1987), enf. sub nom. Int’l Ass’n of Bridge Workers,
Local 3 v. NLRB, 843 F.2d 770 (3d Cir. 1988)). Deklewa
marked a significant change in the policy of the NLRB.
Prior to that decision, the Board interpreted § 8(f) as
permitting the unilateral repudiation of pre-hire agree-
ments until the union achieved majority support. Id. at 609.
In Bufco, we determined that the Board had not been
No. 04-2797 11
precluded by Supreme Court or Seventh Circuit precedent
from reversing its prior policy, and stated that “we must
enforce the Board’s Deklewa rule if we deem it to be based
upon a reasonably defensible construction of the Act.” Id. at
611. Finding it “reasonable and consistent with the Act,” we
joined several of our sister Circuits in accepting the Board’s
Deklewa rule. Id.
The issue before us now is whether this case falls within a
recognized exception to the Deklewa rule in situa-
tions involving bargaining units of one or no employees.3
Peters points to several decisions in which the Board
articulated this so-called “one-man unit” rule. In Stack
Electric, Inc., 290 NLRB 575 (1988), the Board explained:
It is settled that if an employer employs one or fewer
unit employees on a permanent basis that the em-
ployer, without violating Section 8(a)(5) of the Act, may
withdraw recognition from a union, repudiate
its contract with the union, or unilaterally change
employees’ terms and conditions of employment without
affording a union an opportunity to bargain.
Id. at 577 (citations omitted).
The Board first explained the basis for this rule in
Foreign Car Center, Inc., 129 NLRB 319, 320 (1960) (“[T]he
principle of collective bargaining presupposes that there
is more than one eligible person who desires to bargain. The
Act therefore does not empower the Board to certify a one-
man unit.”) (internal citations omitted), quoted in Stack
Electric, 290 NLRB at 577.
The Board also applied the one-man unit rule in Haas
Garage Door Co., 308 NLRB 1186 (1992). In that case, the
employer was a member of a multi-employer association,
3
We noted in Martin that our Bufco holding had not yet been
modified in relation to the one-man unit rule but expressly
declined to address the issue. 945 F.2d at 1005, 1006.
12 No. 04-2797
through which it signed a § 8(f) agreement effective from
1990 through 1993. Id. at 1186. At some point during that
period, the employer refused to execute the collective
bargaining agreement despite explicit requests from the
union that it do so. Id. The employer also refused to furnish
information requested by the union, arguing that it was not
bound by the agreement because it had no employees doing
unit work. Id. The administrative law judge (“ALJ”) found
that the employer had violated §§ 8(a)(5) and (1) of the Act.
Id. Relying on the one-man unit rule, the Board reversed
the ALJ’s decision, stating: “[W]e disagree with the judge’s
finding that even if an employer has no employees do-
ing unit work it cannot repudiate an 8(f) contract.” Id. at
1187. Because the Board found no evidence that the
employer had more than one employee performing unit
work at all material times, it concluded that the em-
ployer “did not violate Section 8(a)(5) and (1) by repudiating
the contract, by refusing to execute the contract, or
by refusing to furnish information to the Union.” Id.; see
also Searls Refrigeration Co., 297 NLRB 133, 135 (1989)
(upholding ALJ’s conclusion that employer’s mid-term
repudiation of a § 8(f) agreement did not violate NLRA
because the “appropriate unit consisted of no employees
for approximately 2 years”); Garman Constr. Co., 287 NLRB
88, 89 (1987) (relying on one-man unit rule to affirm ALJ’s
dismissal of allegations that employer violated §§ 8(a)(5)
and (1) by repudiating a § 8(f) contract and withdrawing
recognition from union).
Appellees argue that these NLRB decisions stand for
the limited proposition that an employer’s unilateral
repudiation of a collective bargaining agreement appli-
cable to a one or no-man bargaining unit would not be
a violation of the employer’s statutory duty to bargain.
According to appellees, these cases do not speak to the
continued validity of the collective bargaining agree-
ment itself, or to the employer’s contractual obligations
thereunder. The Board’s decisions do not support appellees’
No. 04-2797 13
argument. While many of its decisions specifically ad-
dressed the statutory duty to bargain, the Board has
not limited the one-man unit rule to excusing an em-
ployer from this particular duty. Rather, the Board’s
decisions explicitly allow an employer, more generally, to
repudiate a pre-hire agreement and discontinue its
duties under the agreement where it employs no more than
one employee in the relevant unit. See, e.g., Sunray Ltd.,
258 NLRB 517, 518 (1981) (“[T]he Board will not enforce a
contract covering a single-person unit. Nor will we certify or
find appropriate a single-person unit in a representation
proceeding.”); SAC Constr. Co., Inc., 235 NLRB 1211, 1220
(1978) (where employer had a unit consisting of only one
employee, it “did not violate Section 8(a)(1) and (5) of the
Act by discontinuing payments to the health and welfare,
apprenticeship, and pension fringe benefit plans”), enforce-
ment denied on other grounds, NLRB v. SAC Constr. Co.,
Inc., 603 F.2d 1155 (5th Cir. 1979).
Peters urges this Court to recognize explicitly the one-
man unit exception to the Board’s Deklewa rule and apply it
to this case. We have traditionally extended the Board
deference in fashioning national labor policy and find no
reason to proceed otherwise in this case. See Bufco, 899
F.2d at 609. The Board’s decisions applying the one-man
unit rule accord with the principles of collective bargaining
and the terms of the NLRA. See, e.g., 29 U.S.C. § 159(a)
(“Representatives designated or selected for the purposes of
collective bargaining by the majority of the employees in a
unit appropriate for such purposes, shall be the exclusive
representatives of all the employees in such unit for the
purposes of collective bargaining in respect to rates of pay,
wages, hours of employment, or other conditions of employ-
ment”) (emphases added). Moreover, as a matter of common
sense, it seems illogical to continue to bind Peters to a pre-
hire agreement simply because it has no employees who
could reject the Union as their bargaining representative in
14 No. 04-2797
a Board-conducted election. We therefore conclude that
Peters’s unilateral repudiation of the pre-hire agreement
was lawful under the one-man unit rule and hold that
Peters’s repudiation of the contract relieved it of its contrac-
tual obligation to arbitrate before the JAB.
Only one other appellate court has applied the one-
man unit rule in a similar case. See Laborers Health &
Welfare Trust Fund v. Westlake Dev., 53 F.3d 979 (9th Cir.
1995). Noting “the unique circumstances of a single-em-
ployee bargaining unit in the construction industry,” the
court held in Westlake that “[a] construction industry
employer who employs a single employee pursuant to a
Section 8(f) pre-hire agreement is entitled to repudiate
the agreement by conduct sufficient to put the union
and the employee on notice that the agreement has
been terminated.” Id. at 982 (quoting Operating Eng’rs
Pension Trust v. Beck Eng’g & Surveying Co., 746 F.2d 557,
565-66 (9th Cir. 1984)). Reviewing the relevant
NLRB authority, the Ninth Circuit concluded:
Clearly these post-Deklewa decisions by the Board
speak not only in terms of the standard application
of the one-employee unit rule (where there is no statu-
tory obligation to bargain in a representation proceed-
ing), but also directly in terms of lawful unilateral
repudiation of section 8(f) agreements where there is a
single (or no) employee unit. We adopt the Board’s
reasoning in concluding that Westlake, a “one-employee
employer,” lawfully repudiated the CBA.
Id. at 983.
Because the employer had lawfully repudiated the
collective bargaining agreement, the court held that the
employer was relieved of all of its obligations there-
under, including its duties to pay into a trust fund and
to arbitrate disputes arising out of the agreement. Id. at
No. 04-2797 15
984 (concluding that the employer’s repudiation rendered
the collective bargaining agreement “void, not merely
voidable”). Thus, the Ninth Circuit explicitly rejected
the argument appellees make here—that the one-man
unit rule relieves an employer of its statutory duty to
bargain but does not allow it to invalidate the agree-
ment itself.
Appellees take issue with the Ninth Circuit’s reasoning in
Westlake, arguing that there is a “critical distinction”
between the statutory duty to bargain under § 8(a)(5) of the
Act and an employer’s contractual obligations under a pre-
hire agreement. Appellees rely primarily on the following
statement by the Supreme Court in Jim McNeff, Inc. v.
Todd:
There is a critical distinction between an employer’s
obligation under the Act to bargain with the representa-
tive of the majority of its employees and its duty
to satisfy lawful contractual obligations that ac-
crued after it enters a prehire contract.
461 U.S. 260, 267 (1983). Appellees read too much into
this language. In McNeff, the Court was discussing its prior
decision in NLRB v. Local 103, International Association of
Bridge Workers (Higdon), 434 U.S. 335 (1978), in which it
affirmed the Board’s view that a pre-hire agreement does
not make a union the “representative of an employer’s
employees” under § 8(b)(7)(C) of the NLRA.4 McNeff, 461
U.S. at 266-67. The Court explained that only the former
obligation—the duty to bargain—was treated in Higdon,
and that different concerns animated its analysis in the
case before it. Id. at 267.
4
Section 8(b)(7)(C) prohibits a union from picketing an em-
ployer unless it is the certified representative of the employer’s
employees. See 29 U.S.C. § 158(b)(7)(C).
16 No. 04-2797
The Court held in McNeff that monetary obligations
assumed by an employer under a pre-hire agreement
could be recovered in a § 301 action brought by the union
prior to the repudiation of the contract. Id. at 271-72.
That decision did not address whether an employer
who employs one or no employees may lawfully repudiate a
pre-hire agreement. McNeff was decided several years prior
to the Board’s decision in Deklewa, and the Court assumed
without deciding that a party to a § 8(f) agreement could
repudiate such an agreement.5 Significantly, in McNeff, the
employer “never manifested an intention to void or repudi-
ate the contract,” and the record showed conclusively that
the employer “accepted the benefits of the prehire agree-
ment and misled the union of its true intention never to
fulfill its contractual obligations.” Id. at 270. This decision
does not support appellees’ argument that repudiation of
the pre-hire agreement leaves unaffected an employer’s
contractual obligations under the agreement.
Appellees also argue that Westlake is contrary to this
Court’s decision in Martin v. Garman Construction Co., 945
F.2d 1000 (7th Cir. 1991). Our opinion in Martin followed
an earlier decision by the Board in Garman Construction
Co., 287 NLRB 88. In that case, the parties had entered into
a collective bargaining agreement in 1978 governing fringe
benefit contributions to several pension and trust funds on
behalf of the union members that Garman employed. Id. at
89. Because Garman did not provide timely notice of
termination, that agreement was automatically extended
from 1981 to 1984. Id. at 89 & n.6. During the relevant
5
See McNeff, 461 U.S. at 271 n.13 (“We need not consider in
this case whether considerations properly cognizable by a court
under § 301 might prevent either party, in particular circum-
stances, from exercising its option under § 8(f) to repudiate
a prehire agreement before the union demonstrates majority
status.”).
No. 04-2797 17
period, Garman employed only one member of the union,
and until September 1981, made regular, monthly contribu-
tions to the funds on behalf of this employee. Id. at 89. On
September 3, 1981, however, the company sent a letter to
the union stating that the agreement “is null and void as of
the present date.” Id. The union then brought a complaint
before the Board, alleging that Garman violated Sections
8(a)(5) and (1) of the Act by repudiating the contract and
withdrawing recognition from the union. Id. The remedy
sought by the union included compensation to the funds for
missed contributions. The ALJ found that Garman’s
repudiation was not an unfair labor practice and dismissed
the complaint, relying on the one-man unit rule. Id. The
Board affirmed on the same ground. Id.
At issue before this Court in Martin was the preclusive
effect of the Board’s decision on a separate action filed
in district court by the trustee of the funds to recover money
from the employer under ERISA.6 The trustee had filed an
ERISA suit in the district court prior to the Board’s deci-
sion, and the district judge stayed proceedings pending the
outcome of the Board’s action, stating that she would give
“collateral estoppel effect to the NLRB’s determination that
a contract existed between July 1, 1981 and May 31, 1984.”
Martin, 945 F.2d at 1002. Following the Board’s decision,
the district court held Garman liable for unpaid contribu-
tions to the funds during this period, and Garman appealed.
Id. at 1003. This Court affirmed.
6
See Employee Retirement Income Security Act, 29 U.S.C.
§ 1145. That provision states:
Every employer who is obligated to make contributions to
a multiemployer plan under the terms of the plan or under
the terms of a collectively bargained agreement shall, to
the extent not inconsistent with law, make such contributions
in accordance with the terms and conditions of such plan or
such agreement.
18 No. 04-2797
Garman’s argument on appeal was that the Board’s
decision had established the parties’ rights under both
the NLRA and ERISA, and that the district court failed
to afford appropriate preclusive effect to the Board’s
decision. We rejected that argument on the ground that the
Board lacked jurisdiction over the ERISA claim, which
enjoys exclusive jurisdiction in the federal courts. Id. (citing
29 U.S.C. § 1132(e)(1)). We also explained that our decision
rested on the statutory language and unique considerations
present in the ERISA context, concerns that are not at issue
here. See id. at 1005 (“[M]any of the defenses available
under the NLRA or under traditional contract law do not fly
under ERISA. The one-man rule may remain valid for
purposes of unfair labor practice proceedings while counting
for naught when the contract is cognizable under ERISA.”).
As this Court explained in Central States, Southeast &
Southwest Areas Pension Fund v. Gerber Truck Service, Inc.,
Congress added § 515 to ERISA in 1980 to address the
problems that arose when employers repudiated pre-hire
agreements and refused to make pension and wel-
fare contributions. 870 F.2d 1148, 1152-53 (7th Cir. 1989)
(en banc). That statute made employers’ promises to
contribute to such plans “enforceable ‘to the extent not
inconsistent with the law.’ ” Id. at 1153 (quoting 29 U.S.C.
§ 1145). “If the contract provides for the commission of
unlawful acts, it will not be enforced.” Id. (citation omitted).
However, if “the employer simply points to a defect in its
formation—such as fraud in the inducement, oral promises
to disregard the text, or the lack of majority support for the
union and the consequent ineffectiveness of the pact under
labor law—it must still keep its promise to the pension
plans.” Id. (emphasis added), quoted in Martin, 945 F.2d at
1004. In other words, “nothing in ERISA makes the obliga-
tion to contribute depend on the existence of a valid collec-
tive bargaining agreement.” Id.Appellants have not claimed that Peters has refused to
No. 04-2797 19
comply with its obligations under ERISA; they have spoken
solely in terms of Peters’s contractual duty to arbitrate.
Therefore, Martin does not restrict us from applying the
Board’s one-man unit rule in this context.
III. Conclusion
For the foregoing reasons, the order of the district court is
VACATED. We REMAND this case for proceedings consistent
with this opinion.
20 No. 04-2797
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—3-1-05