The U.S. Court of Appeals for the Third Circuit (DE, NJ, PA, VI) recently upheld the National Labor Relations Board’s conclusion that Sheet Metal Local Union No. 27 violated Section 8(b)(4)(ii)(D) of the National Labor Relations Act when it pursued a federal lawsuit against a general contractor that complied with the Board’s 10(k) order instead of the contractual work assignment provisions of a project labor agreement.
In 2006, Egg Harbor Township, NJ, authorized the construction of a community center, and adopted a project labor agreement to govern the terms of the project’s construction. All contractors working on the project were required to become signatory to the PLA and to become bound by the incorporated local collective bargaining agreements for any work performed on the project. A dispute arose when a subcontractor, E.P. Donnelly, Inc. (“Donnelly”), selected the Carpenters union to perform the roofing work on the project even though the Carpenters were not one of the unions signatory to the PLA. Sheet Metal Local 27, which was a signatory union to the PLA, protested Donnelly’s use of a union that was not signatory to the PLA to perform work on the project, and informed Donnelly that the Carpenters could not complete the work because it did not sign the PLA. Sheet Metal Local 27 also initiated arbitration under the PLA seeking an award requiring Donnelly to assign the disputed work to Sheet Metal Local 27. The Carpenters immediately threatened to picket the project if Donnelly reassigned the work, prompting Donnelly to file an unfair labor practice charge with the NLRB seeking a 10(k) hearing to resolve the jurisdictional dispute between the Carpenters and Sheet Metal Local 27. Before the NLRB could issue a 10(k) order, Sheet Metal Local 27 obtained an arbitration award that assigned the work to the Sheet Metal workers and awarded contractual damages in the nature of unpaid wages and benefits equaling $428,319.26. Sheet Metal Local 27 thereafter filed a federal lawsuit under Section 301 of the Labor Management Relations Act seeking the enforcement of the arbitrator’s award.
Approximately five months later, the Board issued its 10(k) order, finding that the work in question should be assigned to the Carpenters. Since Board orders take precedence over conflicting arbitration decisions, Donnelly complied with the Board’s 10(k) order and assigned the work to the Carpenters. Unfortunately, the 10(k) order did not stop Sheet Metal Local 27 from pursuing its Section 301 action against Donnelly for the contractual damages it incurred when Donnelly breached the PLA. Donnelly responded by filing another unfair labor practice charge, asserting that Sheet Metal Local 27’s continued pursuit of its Section 301 lawsuit after the Board issued its 10(k) order violated the National Labor Relations Act because the lawsuit continued to seek the reassignment of the work in contravention of the superior 10(k) order. The Board rejected Sheet Metal Local 27’s argument that the lawsuit was permissible because it sought damages only for breach of the PLA, not pay-in-lieu of the assignment of the work, and ordered Sheet Metal Local 27 to withdraw its lawsuit.
The Third Circuit upheld the Board’s decision, first explaining that the Board had jurisdiction to enter the 10(k) order. The Board will only schedule a Section 10(k) hearing when the parties have not voluntarily agreed upon an alternative method of resolving the dispute. Sheet Metal Local 27 claimed that the PLA’s arbitration provisions met this requirement. The Third Circuit rejected this argument, noting that the PLA’s arbitration provisions were not binding on all parties to the dispute because the Carpenters never signed the PLA.
The Third Circuit then turned to the merits of the case and held that the Board’s interpretation of the NLRA – i.e., treating the pursuit of a lawsuit for pay-in-lieu of work in the face of a contrary work assignment order of the Board as an unfair labor practice – was a reasonable one. The court reconfirmed its holding in Local 30, Roofers v. NLRB, 1 F.3d 1419 (3d Cir. 1993) (“Gundle II”) that a union that seeks pay-in-lieu of work based upon a breach of contract claim is actually attempting to seek the work in dispute. The Gundle II court noted:
The valuable part of a right to a particular job is the right to be paid for it. Thus, a jurisdictional dispute between two groups of employees as to which is entitled to certain work is in essence a dispute as to which shall receive compensation for that work. The opportunity sought to perform labor is significant only as a means of obtaining compensation.
The union’s attempt to camouflage its claim as only seeking contractual damages was a distinction without a difference. The Third Circuit clarified, however, that its holding applies only to suits for damages against the employer that made the disputed work assignment, and is subject to the conflicting demands of a Section 301 lawsuit on the one hand and the Board’s 10(k) order on the other.
Sheet Metal Local Union No. 27 v. E.P. Donnelly, Inc., Case No. 10-2325 (3rd Cir., 12/13/13).
Editor’s Note: This article was originally published in the Labor Law Blog of the law firm Susanin Widman & Brennan, PC, and is reprinted here with permission.