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Laborers' District Council of Virginia Health and Welfare Trust Fund v. Cleveland Cement Contractors, Inc.

United States District Court, W.D. Virginia, Roanoke Division

March 17, 2014

LABORERS' DISTRICT COUNCIL OF VIRGINIA HEALTH AND WELFARE TRUST FUND, et al., Plaintiffs,
v.
CLEVELAND CEMENT CONTRACTORS, INC., Defendant.

MEMORANDUM OPINION

MICHAEL F. URBANSKI, District Judge.

Plaintiffs, the Laborers' District Council of Virginia Health and Welfare Trust Fund and Laborers' District Council of Virginia Pension Trust Fund (collectively, "the Funds"), bring this declaratory judgment action against defendant Cleveland Cement Contractors, Inc. ("Cleveland Cement") to collect fringe benefit contributions allegedly owed the Funds by Cleveland Cement. The Funds also seek an audit of Cleveland Cement's records and costs and liquidated damages pursuant to an alleged collective bargaining agreement and to section 502(g)(2) of the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. 1132(g).

Presently before the court are cross motions for summary judgment filed by the Funds and Cleveland Cement. The parties have briefed the issues, and oral argument was held on November 8, 2013. For the reasons stated herein, the Funds' motion for summary judgment is DENIED and Cleveland Cement's motion for summary judgment is GRANTED.

I.

Cleveland Cement is an Ohio company which produces a variety of concrete installations. In 1971, after winning a contract to perform concrete work on a tobacco manufacturing plant in Richmond, Virginia, Cleveland Cement opened an office in that city. On June 8, 1971, the company signed an Acceptance of Agreement with the Laborers' District Council of Virginia ("Laborers' District Council") approving the collective bargaining agreement in force between the Laborers' District Council and local contractors. In return, the Laborers' District Council Local Union 351 ("Laborers' Local Union 351") agreed to provide laborers for Cleveland Cement to hire "as needed for [the tobacco plant] contract." Decl. R. Simonetti, Dkt. No. 28-1 at 2.

The Acceptance of Agreement is commonly known in the construction industry as a pre-hire agreement.[1] While generally, an employer who deals with a union which has not attained the support of a majority of his workers commits an unfair labor practice, Garment Workers' Union v. NLRB , 366 U.S. 731, 737-38 (1961), an exception is made for employers in the construction industry. The National Labor Relations Act ("NLRA") permits such employers to make pre-hire agreements with a union regardless of its majority status representation. 29 U.S.C. ยง 158(f). The rationale underlying the construction industry exception was explained by the Ninth Circuit:

As jobs begin and end, construction workers frequently change employers. Due to this, Congress has seen fit to allow so-called pre-hire' agreements in that industry. These agreements may be signed before the union represents a majority of the employer's employees, and may continue in duration through more than one of the employer's jobs, even if the employer goes through a high employee turnover. These agreements allow the employees some of the wage and benefit advantages of union representation, as well as relative wage stability. The employer is assured a qualified pool of workers to choose from when it needs them, protection against labor unrest during the period of the contract, and predictable labor costs, an invaluable tool in the bidding process.

Todd v. Jim McNeff, Inc. , 667 F.2d 800, 802 (9th Cir. 1982), aff'd 461 U.S. 260 (1983).

A pre-hire agreement, however, is not synonymous with a collective bargaining agreement and until a majority of employees indicate a willingness to be represented by a union, the pre-hire agreement is voidable. NLRB v. Iron Workers , 434 U.S. 335, 341 (1978); Clark v. Ryan , 818 F.2d 1102, 1107 (4th Cir. 1987); see also Industrial Turnaround Corp. v. NLRB , 115 F.3d 248, 254 (4th Cir. 1997).

On December 4, 1975, Cleveland Cement signed a second Acceptance of Agreement ("1975 Acceptance of Agreement") which superseded the 1971 Acceptance of Agreement. The 1975 Acceptance of Agreement provides, in part, as follows:

The undersigned Employer has read and hereby approves the collective bargaining Agreement now in effect between the Laborers' District Council of Virginia and the Virginia Association of Contractors, Inc. and hereby accepts the same in its entirety, and becomes one of the parties thereto. The Employer hereby agrees to be bound by any subsequent renewals, modification, replacement, amendments and addenda to the Agreement...unless and until notice is given....
Specifically included in this understanding is that the Employer agrees to pay the fringe benefits payments as outlined in the Agreement between the Laborers' District Council of Virginia and the Virginia Association of Contractors, Inc., and to withhold working dues established by the Union in keeping with the said Agreement.

Cleveland Cement did not have an election under the NLRA, and the NLRB never certified a union majority at the Richmond job site. Decl. R. Simonetti, Dkt. No. 28-1, at 2.

On January 27, 1983, Ronald Simonetti, who purchased Cleveland Cement in 1967 and became its president in 1968, wrote a letter to the Laborers' International Union of North America ("Laborers' International Union") stating that Cleveland Cement was terminating its national agreements. The letter states:

Due to general business conditions, Cleveland Cement Contracting is terminating its national agreements. Please regard this letter as notice of cancellation of our National Agreement with the Laborers' International Union of North America, pursuant to ...

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