U.A. Local 342 v. Babcock & Wilcox Construction Co. ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
U.A. LOCAL 342 APPRENTICESHIP & 
TRAINING TRUST; LARRY BLEVINS,
No. 03-16018
Trustee,
Plaintiffs-Appellees, D.C. Nos.
v.  CV-01-04327-TEH
CV-02-00098-TEH
BABCOCK & WILCOX CONSTRUCTION
OPINION
CO., INC.,
Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of California
Thelton E. Henderson, District Judge, Presiding
Argued and Submitted
December 9, 2004—San Francisco, California
Filed February 1, 2005
Before: Alex Kozinski, William A. Fletcher and
Jay S. Bybee, Circuit Judges.
Opinion by Judge Kozinski
1305
U.A. LOCAL 342 v. BABCOCK & WILCOX CONSTRUCTION 1307
COUNSEL
Nancy Winkelman, Philadelphia, Pennsylvania; Stephen H.
Dye, Schnader Harrison Segal & Lewis LLP, San Francisco,
California, for the defendant-appellant.
William J. Flynn, Neyhart, Anderson, Freitas, Flynn & Gros-
boll, San Francisco, California, for the plaintiffs-appellees.
OPINION
KOZINSKI, Circuit Judge:
Seven and a half cents doesn’t buy a helluva lot,
Seven and a half cents doesn’t mean a thing,
But give it to me ev’ry hour,
Forty hours ev’ry week,
That’s enough for me to be
Livin’ like a king.1
Facts
Babcock & Wilcox Construction Co. entered into the
National Industrial Maintenance Agreement (“NIMA”), a col-
lective bargaining agreement, with the United Association of
1
Richard Adler & Jerry Ross, Seven and a Half Cents, in The Pajama
Game (1954).
1308 U.A. LOCAL 342 v. BABCOCK & WILCOX CONSTRUCTION
Journeymen and Apprentices of the Plumbing and Pipe Fitting
Industry of the United States and Canada (“U.A.”). Whenever
local U.A. unions work on projects that fall within the scope
of the NIMA, the terms of any local labor agreements to
which the unions may also be parties apply only to the extent
that the NIMA incorporates them.
One area in which the NIMA refers to local agreements is
benefit fund contribution obligations. For example, the NIMA
incorporates required apprentice training fund contributions:
Welfare Funds, Pension Funds, Apprentice Train-
ing Funds and other monetary funds called for in the
Local Union Labor Agreement shall be paid in
accordance with the Local Union Labor Agreement
....
NIMA, art. IX ¶ 34. Industry promotion fund contributions,
however, are not mandatory:
Industry Advancement or Promotion Funds called
for in the Local Union Labor Agreement may be
paid at the discretion of the Employer.
Art. IX ¶ 36.
The local agreement at issue here provides for a variety of
fund contributions, including 75 cents per hour of work to the
U.A. Local No. 342 apprentice training fund and 25 cents to
industry promotion funds. It also requires employers who do
not contribute to industry promotion funds to pay an equal
amount into the apprentice training fund. See Master Labor
Agreement Between Local Union 342 and Northern Califor-
nia Mechanical Contractors Association (“local agreement”),
art. X ¶ 81(E), (I), (J).
Babcock properly exercised its discretion under article IX
¶ 36 of the NIMA and declined to pay the 25 cents into the
U.A. LOCAL 342 v. BABCOCK & WILCOX CONSTRUCTION 1309
industry promotion funds. However, it did not contribute an
equal amount into the apprentice training fund, as required by
the local agreement. The apprentice training fund sued. The
district court granted the fund’s motion for summary judg-
ment and referred the remaining matters, including damages,
to a magistrate judge. The parties agreed to a stipulated judg-
ment in conformity with the district court’s order. Babcock
appeals.
Discussion
1. Stipulated judgments are usually not appealable. See Sla-
ven v. Am. Trading Transp. Co., Inc., 146 F.3d 1066, 1070
(9th Cir. 1998). However, both parties agree that the purpose
of the stipulated judgment was to set an amount of damages
to facilitate Babcock’s appeal. We therefore have appellate
jurisdiction because it is clear that Babcock “intended to pre-
serve its right of appeal.” See Christian Sci. Reading Room
Jointly Maintained v. City & County of S.F., 784 F.2d 1010,
1017 (9th Cir. 1986).
[1] 2. The text of the NIMA supports the fund’s position.
The local agreement requires employers who do not pay a
quarter into the industry promotion funds to turn that quarter
over to the apprentice training fund. Babcock’s choice not to
contribute to the industry promotion funds—a choice pro-
tected by the NIMA, which makes such contributions
discretionary—thus created a requirement under the local
labor agreement to contribute to the apprentice training fund.
That requirement is incorporated into the NIMA, which pro-
vides that “Apprentice Training Funds . . . shall be paid in
accordance with the Local Union Labor Agreement.” Art. IX
¶ 34.
[2] 3. Babcock suggests that we defer to the judgment of
the NIMA Policy Committee, which considered this same
question and concluded that requiring employers to pay into
apprentice trust funds as an alternative to paying into industry
1310 U.A. LOCAL 342 v. BABCOCK & WILCOX CONSTRUCTION
promotion funds would be “contrary to the spirit and intent”
of the NIMA. This is not, strictly speaking, a statement that
the NIMA does not require such contributions. However, even
if we were to interpret it as such, the Policy Committee’s
determination is not entitled to deference in this case.
[3] One function of the Policy Committee is to adjudicate
grievances between parties. Art. VI ¶ 28. We generally afford
great deference to the decisions of arbitrators in disputes
between parties to a collective bargaining agreement who,
after all, agreed to the arbitrator’s authority. See, e.g., Gram-
mer v. Artists Agency, 287 F.3d 886, 890-91 (9th Cir. 2002);
Haw. Teamsters & Allied Workers Union, Local 996 v. UPS,
241 F.3d 1177, 1183 (9th Cir. 2001). But appellees, as non-
parties to the agreement, have never agreed to submit to the
decisions of the Policy Committee.
[4] Even without their consent, appellees could nonetheless
be required, as third-party beneficiaries of the NIMA, to go to
arbitration, in which case the Policy Committee’s interpreta-
tion of the contract would be binding on them. But an intent
to subject third-party beneficiaries to arbitration is not pre-
sumed; it must appear from “the language of the contract, or
the circumstances under which it was executed.” See Schnei-
der Moving & Storage Co. v. Robbins, 466 U.S. 364, 371
(1984). No such intent appears here: The NIMA does not give
the Policy Committee authority to interpret the NIMA in the
context of disputes with non-parties.2
We don’t doubt the benefits of delegating interpretive
power over a complex collective bargaining agreement to an
expert body in the way Babcock suggests, but the NIMA here
didn’t actually grant the Policy Committee such power.
AFFIRMED.
2
We do not give any weight to the Policy Committee secretary’s state-
ment that “[t]he Committee has exclusive authority to administer and
interpret” the NIMA. This is a legal opinion about the interpretation of a
contract, not a fact.