Contractor Lawfully Repudiated 8(f) Agreement During Contract Term
The U.S. Court of Appeals for the Seventh Circuit (IL, IN, WI) has held that a contractor lawfully repudiated its pre-hire agreement with the Iron Workers despite failure to give the contractually required notice, where the company employed fewer than two covered workers during the relevant period.
The contractor, J.W. Peters, Inc. (Peters), had been signatory to a § 8(f) pre-hire agreement between a contractors association and Iron Workers Local 1 since 1970. In December 2002, Peters signed a compliance agreement with Local 1 extending the terms of the existing association agreement, which was due to expire on May 31, 2003, through May 31, 2006. The compliance agreement provided for automatic renewal absent written notice of termination at least four months prior to the expiration date. On April 2, 2004, Peters sent Local 1 a letter repudiating the pre-hire agreement effective immediately. The letter stated that Peters had not employed any Iron Workers since 2003, had not employed any Iron Workers for a period of more than 30 days in the past two years, and had no intention of employing any ironworkers in the future. Local 1 replied that the pre-hire agreement remained in effect because Peters failed to submit notice of termination at least four months prior to the May 31, 2003, deadline.
Local 1 filed a grievance and request for arbitration under the pre-hire agreement. Peters then filed a petition with the National Labor Relations Board (NLRB) to determine representation. While the petition was still pending, Peters also filed a complaint in federal district court seeking a declaratory judgment that Peters properly repudiated the pre-hire agreement. In addition, Peters later filed a motion in the district court to stay the arbitration proceedings, arguing that the arbitrator lacked jurisdiction over the company. The district court denied Peter’s motion and dismissed the action, holding that the pre-hire agreement remained in full force and effect. Days later, the NLRB regional director dismissed Peter’s representation petition, finding that further proceedings were unwarranted 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.”
Peters successfully appealed the district court decision to deny declaratory relief. The appeals court noted that the NLRB’s 1987 Deklewa decision established that a party that is signatory to a pre-hire agreement may not unilaterally repudiate the agreement during the term of the contract unless the covered employees reject the union in an NLRB-conducted election. The issue in this case is whether the “one-man unit” exception to the Deklewa rule applies. By that exception, an employer that employs one or fewer unit employees on a permanent basis may lawfully withdraw recognition from a union and repudiate its pre-hire agreement during the term of the agreement. The court concluded that if, in fact, Peters employed fewer than two iron workers during the relevant period, then the company lawfully repudiated its agreement and had no contractual duty to arbitrate the union’s grievance. The court vacated the district court’s decision and remanded for determination of whether the one-man unit rule is applicable.
J.W. Peters, Inc. v. Bridge, Structural, and Reinforcing Iron Workers Local 1, Case No. 04-2797 (7th Cir., 3/1/05).
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