UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
February 27, 1985
IN RE: BITUMINOUS COAL WAGE AGREEMENTS; TRUSTEES OF THE UNITED MINE WORKERS OF AMERICA HEALTH AND RETIREMENT FUNDS, APPELLANTS, IN NOS. 84-3166 & 84-3220; INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, APPELLANT IN NOS. 84-3167 & 84-3237; DUQUESNE LIGHT COMPANY AND ASSOCIATED ELECTRIC COOPERATIVE, INC., APPELLANTS IN NOS. 84-3371 & 84-8067
Appeal From The United States District Court For The Western District Of Pennsylvania (D.C. Civil No. Misc. 9604-536).
Hunter and Weis, Circuit Judges, and Thompson, District Judge.*fn*
Opinion OF THE COURT
WEIS, Circuit Judge.
The United Mine Workers Union has incorporated a "purchased-coal" clause in its collective bargaining agreements. By its terms, a signatory employer must contribute to the union Health and Retirement Funds an equal amount per ton of coal whether it mines the mineral or purchases if from a non-signatory. The district court enjoined enforcement of the clause because it was union signatory on its face. However, we conclude that the legality of the provision must be resolved in the circumstances affecting each purchase. Accordingly, we will vacate the summary judgment in favor of the employers and remand. Because resolution of these issues may moot the employers' antitrust claims, we will remand them as well.
This litigation consists of twenty-four cases that the Judicial Panel on Multidistrict Litigation consolidated and transferred to the district court for pre-trial proceedings. Common to all is the legality of a clause in three successive multi-employer collective bargaining agreements between the United Mine Workers and the Bituminous Coal Operators Association. In most of the suits the Trustees of the UMW Health and Retirement Funds seek to recover allegedly delinquent contributions from signatory employers, who in turn defend on the basis that the clause violates § 8(e) of the National Labor Relations Act. 29 U.S.C. § 158(e)(1982). Several employers brought other complaints seeking either declaratory relief or damages under the labor and antitrust laws.
The district court held that on its face the purchased-coal violated § 8(e) and entered summary judgment against the trustees. Having enjoined enforcement of the clause, the court did not consider claims for injunctive relief under the Sherman Act. However, in two cases employers sought antitrust damages. In those suits the court concluded that the rule of reason applied, and that unresolved questions of fact precluded summary judgment.*fn1 Because the orders in these latter two cases were not final, the court certified for appeal under 28 U.S.C. § 1291(b) the question whether the per se rule applied to the antitrust claims.
In their collective bargaining agreements of 1974, 1978, and 1981, the United Mine Workers and the Bituminous Coal Operators and Association included Article XX(d)(1)(v), which is now familiar as the purchase-coal clause. It reads in pertinent part:
". . . each signatory employer shall . . . contribute to the Trusts . . . in the amounts shown below based on cents per ton . . . of bituminous coal after production by another operator, procured or acquired by such Employer for use or sale on which contributions to the appropriate Trusts as provided for in this Article have not been made. . . ."
When read in conjunction with the "produced-coal clause,"*fn2 the effect is to require an employer-signatory to pay an identical contribution to the Health and Retirement Funds whether the coal was extracted from the employer's mines or was bought from an operator that had not already paid the contribution on the assessed tonnage.
After the suits were consolidated but before discovery commenced, a number of the employers filed motions for summary judgment, contending that the clause on its face violated § 8(e) of the NLRA. The district court stayed discovery pending disposition of the motions. In opposition to the motions, the union and trustees submitted evidence to show that as a result of the negotiated wage rates for union members, the signatory-employers had higher labor costs than did non-signatory employers. Consequently, unless the wage differential was offset, signatory operators would have an incentive to meet at least part of their customers' needs by purchasing coal at favorable prices from non-signatories.
The union saw this practice as a threat to the jobs of its members and, to discourage subcontracting, the purchased-coal clause was devised to narrow the gap between the labor costs of signatories and non-signatories -- generally, nonunion operators.*fn3 As such, the trustees and the union contend that the provision is a union standards or work preservation clause.
The employers, however, characterize the clause as "union signatory," reasoning that it imposed a "penalty" or "tax" on Coal purchased from non-signatories. From that standpoint, the employers assert that the clause was intended to encourage or compel other operators to enter into collective bargaining agreements with the UMW.
The employers point out that their signatory group includes not only commercial operators who sell the tonnage they produce but "captive" mines such as utilities which consume all of their own output. In addition, some of the signatories are "preparers" who do not mine but simply process supplies bought from others.
The district court found that the clause was not within the "union standards" definition because the contribution was imposed indiscriminately on a non-signatory "without taking into account that the non-union operator may have the same or better working conditions." 580 F. Supp. at 681. The "work preservation" label was rejected because the clause was intended to preserve the "work of the entire multi-employer bargaining unit." "The impact of the purchased-coal clause reaches beyond any case-defined 'work unit,' i.e., single employer, and seeks to benefit all Union members." Accordingly, the court concluded that the clause was not "addressed to the labor relations of the contracting employer vis-a-vis his own employees" and hence was an illegal "union signatory" provision. 580 F. Supp. at 680.
In the antitrust damage suits, the court concluded that the purchased-coal clause was not "a classic group boycott [and] therefore [not] a per se violation." It was not "an effort to exclude or cause disadvantage to one or more competitors by cutting them off from trade relationships which are necessary to any firm trying to compete." 580 F. Supp. at 686. Finding insufficient facts in the record to conduct a rule of reason analysis, the court refused to grant summary judgment in favor of the employers on their antitrust claims. All parties have appealed.
The purchased-coal clause has a lengthy history. A predecessor, the protective wage clause, prohibited signatories from purchasing from operators whose employees mined coal under conditions less favorable than those in the 1958 agreement. After the National labor Relations Board held the clause invalid, Raymond O. Lewis, 144 N.L.R.B. 228 (1963), the Court of Appeals for the District of Columbia vacated and remanded. Lewis v. NLRB, 122 U.S. App. D.C. 18, 350 F.2d 801 (D.C. Cir. 1965). About four years later, the Board upheld the clause. W.A. Boyle, 179 N.L.R.B. 479 (1969), appeal dismissed, 468 F.2d 1139 (D.C. Cir. 1972). The protective wage clause also figured prominently in a number of antitrust suits. See Ramsey v. United Mine Workers, 401 U.S. 302, 28 L. Ed. 2d 64, 91 S. Ct. 658 (1971); South East Coal Co. v. Consolidation Coal Company, 434 F.2d 767 (6th Cir.), cert. denied, 402 U.S. 983, 29 L. Ed. 2d 149, 91 S. Ct. 1662 (1971); Tennessee Consolidated Coal Co. v. United Mine Workers, 416 F.2d 1192 (6th Cir.), cert. denied, 397 U.S. 964, 25 L. Ed. 2d 256, 90 S. Ct. 999 (1970).
In the meantime, the parties had substituted the "80-cent clause." It required a signatory to pay 80 cents per ton on coal purchased from a non-signatory, but only 40 cents if the source was a signatory. The Board held this clause violated § 8(e) only to be reversed once again by the Court of Appeals. UMWA v. NLRB, 399 F.2d 977 (D.C. Cir. 1968). On remand, the Board found the clause to be valid. UMWA (Dixie Mining), 188 N.L.R.B. 753 (1971).
In an unrelated suit brought by an operator, the Court of Appeals for the Sixth Circuit found the 80-cent clause invalid. Riverton Coal Co. v. UMWA, 453 F.2d 1035 (6th Cir.), cert. denied, 407 U.S. 915, 32 L. Ed. 2d 690, 92 S. Ct. 2439 (1972). Following that decision, the present purchased-coal clause was substituted.
The current clause has not been reviewed in any appellate proceeding, but did appear in the background in Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 70 L. Ed. 2d 833, 102 S. Ct. 851 (1982). There, the Court held that an employer may raise the legality of the provision as a defense to a trustees' suit for past due contributions. The clause's validity was not an issue before the Court and was not decided.
The purchased-coal provision must be tested against the pertinent prohibitions of § 8(e):
"It shall be an unfair labor practice for any labor organization and any employer to enter into any contract or agreement ... whereby such employer ceases or refrains or agrees to cease or refrain from ... dealing in any of the products of any employer, or to cease doing business with any other person...."
29 U.S.C. § 158(e)(1982). The Supreme Court has held that the statute reaches only "secondary" pressures, National Woodwork Manufacturers Ass'n. v. NLRB, 386 U.S. 612, 638, 87 S. Ct. 1250, 18 L. Ed. 2d 357 (1967). Thus, "primary" activity, such as work preservation, is not prohibited, even though secondary effects may be present.
If the purpose is to benefit the employees of the bargaining unit, the agreement is "primary" and does not run afoul of § 8(e). If, however, the aim is to put pressure on an outside employer to submit to union objectives, the provision is secondary and prohibited. A. Duie Pyle, Inc. v. NLRB, 383 F.2d 772 (3d Cir. 1967), cert. denied, 390 U.S. 905, 19 L. Ed. 2d 871, 88 S. Ct. 819 (1968). The issue is
"whether the boycott was 'addressed to the labor relations of the contracting employer vis-a-vis his own employees,' National Woodwork, supra at 645, and is therefore primary conduct, or whether the boycott was 'tactically calculated to satisfy union objectives elsewhere', 386 U.S. at 644, in which event the boycott would be prohibited secondary activity."
NLRB v. Enterprise Association of Steam, Hot Water, Hydraulic Sprinkler, Aneumatic Tube, Ice Machine & General Pipefitters of New York and Vicinity, Local 638 (Pipefitters), 429 U.S. 507, 511, 51 L. Ed. 2d 1, 97 S. Ct. 891 (1977). As the Court remarked, "This will not always be a simple test to apply." National Woodwork, 386 U.S. at 645.
Two well recognized primary provisions have emerged -- work preservation and union standards clauses. If the union's objective is to retain work that is traditionally performed by employees represented by the union and also within the contracting employers' power to assign, § 8(e) is not a bar. NLRB v. International Longshoremen's Ass'n., AFL-CIO, 447 U.S. 490, 504, 65 L. Ed. 2d 289, 100 S. Ct. 2305 (1980). So long as the union has no forbidden secondary purpose to affect the the employment relations of an outside purpose to affect the agreement is valid even though it adversely affects the employment opportunities of non-represented workers. Id. at 507 n.22.
A union standards clause is designated to inhibit subcontracting of work that would otherwise be performed by members of the bargaining unit. This court described such an agreement in A. Duie Pyle as "the exaction of requirements designed to protect union standards against substandard competition which might be an incentive for an employer to deprive his unionized employees of work." A provision of that nature serves "a primary rather than a secondary objective, especially in light of the now prevalent view that union standards clauses are valid primary regulations." 383 F.2d at 777. Clauses "merely requiring that subcontractors observe the equivalent of union wages, hours and like" fall within the definition of "union standards" and are "thus outside § 8(e)'s prohibitions." Truck Drivers Union Local No. 413 v. NLRB, 118 U.S. App. D.C. 149, 334 F.2d 539, 548 (D.C. Cir.), cert. denied, 379 U.S. 916, 13 L. Ed. 2d 186, 85 S. Ct. 264 (1964).
Falling on the other side of the line and violative of § 8(e) are "union signatory clauses." In A. Duie Pyle, we held that a collective bargaining agreement may not prohibit an employer from contracting with enterprises or individuals that are not unionized.
"As in the case of secondary boycotts generally, a union may not employ a collective bargaining agreement with one employer as a means of effectuating its object to coerce another employer to unionize. Nor may it by this means seek to coerce self-employed persons to become union members."
383 F.2d at 777.
In a later case, Amax Coal Co. v. NLRB, 614 F.2d 872, 887 (3d Cir. 1980), reversed on other grounds, 453 U.S. 322, 69 L. Ed. 2d 672, 101 S. Ct. 2789 (1981), we found invalid a clause restricting Amax's ability to license-out coal operations.
" . . . the clause forces the licensee-employer to abide by the union recognition portion of the contract. It serves only the union's organizing interests and does not protect the Amax employees' work standards. . . . Amax would be obliged to discontinue the licensing agreement if the licensee ever stopped recognizing the Union . . . ."
See also, Truck Drivers' Union Local No. 413, 334 F.2d at 548. (distinction between union standards and union signatory clauses is vital).
Thus, if the collective bargaining agreement requires the employer to subcontract only with firms that observe union standards, § 8(e), has not been violated. Such a clause permissibly protects the employer's own workers since the non-union firm will not be able to offer lower prices based on sub-union wage and benefit standards. However, if an employer is prohibited from subcontracting except with unionized firms, the clause cannot be enforced, even though the employer's own workers receive the same protection afforded by a union standards provision.
The distinction between the two is based on the premise that the union signatory clause is designed to affect the labor relations of the non-union subcontractor is secondary. An argument may be made that a union standards clause has such effects to some lesser degree, but the distinction is firmly established.
With this brief exposition of the complexity surround the primary and secondary dichotomy under 8(e), we turn to the clause at issue in this case. The initial question which a court must decide is whether a violation of § 8(e) appears on the face of the collective bargaining agreement. To find that the clause is prohibited, the court must determine the provision is "secondary in [its] purpose as well as [its] result." A Duie Pyle, Inc. v. N.L.R.B., 383 F.2d at 777. That may be apparent, for example, when the clause's "necessary effect is to make the continuance of the relationship between the [signatory] employer and an independent contractor depend upon the latter's decision to become a member of the union's "tactical object," Woodwork Manufacturer's Association, 386 U.S. at 645, or "design," Amax Coal, 614 F.2d at 886. More than the document itself is generally needed for that analysis.*fn4 In A. Duie Pyle we noted that it is "undesirable to determine the conscious objective of a union in obtaining the inclusion of a challenged provision . . . on a bare stipulation of facts." 383 F.2d at 777. Moreover, even if invalidity is not apparent because on its face the clause seems to comply with § 8(e), an "as applied" violation may surface after more detailed factual development. Building Material & Constr. Teamsters Union Local No 216 v. N.L.R.B., 171 U.S. App. D.C. 440, 520 F.2d 172 (D.C. Cir. 1975).
First, nothing in the clause operates to the economic disadvantage of a non-union producer in selling his coal to non-union producer in selling his coal to nonsignatories. Those relationships are not affected.*fn5
Second, the amount of the "contribution", "tax", or "penalty", as the parties have chosen to call the exaction payable by the signatory, is the same whether the coal is purchased or produced. On its face this appears to make the payment non-discriminatory and thus an equal burden on both union and non-union producers. On reflection, if may be appreciated that if the non-union producer pays into an independent retirement and benefit fund for his workers, the clause will impose an addition indirect burden on each ton of coal from which the employees of the non-union producers received no benefit.
Third, if the non-union operator's labor costs are lower than a signatory's by an amount greater than the "tax" or "penalty," then he has not been put at a competitive disadvantage with coal produced in a union mine. In this instance, therefore, although the non-union operator cannot offer as attractive a price to a signatory, it would still be better than that which could be presented by another signatory.
Fourth, if the gap between a non-union producer's and a signatory's labor costs is less than the amount of the "penalty," then the differential might create pressure to become a signatory and thus avoid the burden of the "double payment" for employee health and retirement benefits.
Fifth, if the coal purchased is not the kind the signatory has the ability to mine,*fn6 questions arise about whether traditional work of the bargaining unit is at risk, the criterion that justifies the legality of work preservation rules. See, e.g., Building Material & Constr. Teamsters Union Local No. 216 v. N.L.R.B., 171 U.S. App. D.C. 440, 520 F.2d 172 (D.C. Cir. 1975).
Sixth, by emphasizing that the exaction is due when it has not previously been paid, the trustees may use the clause to recover from a conscientious signatory purchaser past due amounts attributable to a delinquent producer. In that situation, the provision may be used for the prohibited ulterior union purpose of "bill collecting" by the trustees. See Griffith Company v. NLRB, 545 F.2d 1194 (9th Cir. 1977).
These factors are variables which may be present in some cases but not in others. Indeed, some of the signatories are preparers who produce no coal of their own and whose own employees' income has no relationship the source from which the coal is secured. The effects of this particular clause will not be uniform and the primary-secondary distinction so important to the resolution of § 8(e) liability is dependent on them.
None of these matters have been resolved on this record. The trustees and the union submitted evidence in the district court that, by and large, the gap between the labor cost of signatories and non-union producers exceeds the amount of the purchased-coal clause exaction. That fact, however, has not been conceded by the signatories nor judicially established.*fn7 The other variables that we have listed also require development, as they apply in a particular case.
In some instances, the use of the clause will not be an inducement to a non-union producer to join the union but may make it less desirable for a signatory to supply its customers with purchased rather than produced coal. In other situations, the economic factors may combine to exert substantial pressure on a non-union producer to recognize the union.*fn8 There may be other factual settings in which none of the justifications for work settings in which none of the justifications for work preservation or union standards exist, and only secondary pressures are present. For these reasons, the signatories are in error in pressing for a "per se" of facial test, rather than an "as applied" rationale. As we see it, this is not an "all or nothing" situation.
The signatory employers rely heavily on Riverton Coal Co. v. UMW, 453 F.2d 1035 (6th Cir.), cert. denied, 407 U.S. 915, 32 L. Ed. 2d 690, 92 S. Ct. 2439 (1972), but in part that decision is actually contrary to their position of facial invalidity. In that case, the district court found on the basis of the evidence presented at trial, that the union designed the 80-cent clause so that the signatory, Riverton Coal, would pressure its affiliates to recognize the UMW. Accordingly, the secondary purpose was established. To that extent, the Riverton decision is not inconsistent with the rationale we adopt here..*fn9
In sum, we believe that the legality of the clause must be decided on the facts applicable to each signatory. Kaiser Steel v. Mullins points the way in holding that signatory may raise the defense of illegality in a suit for contributions by the trustee.
It bears mentioning that the obligation to make contributions is that of each individual signatory. It is not dispute that the Fund's auditors require each signatory to segregate contributions for purchased coal from the amount due on its own production. Since the collections are on an individual signatory basis, the validity of those contributions may likewise be determined on the circumstances present in each case. We recognize that there may be differing results as well when a signatory purchases from several sources and therefore careful accounting may be required. This may be a burden for both signatories and the trustees but we believe that some general standards may be developed with experience. Consideration of the various concerns we have listed necessarily focus on the interests of the employees of the individual signatory and not those of all other signatories.*fn10
Consequently, whether the clause is valid as a surrogate union standards or work preservation clause, or whether it contravenes § 8(e) as a union signatory clause must depend on individualized fact finding. Because that was not done in this case, the summary judgment must be vacated.
The outcome of the individual cases may moot the antitrust claims. We therefore do not meet those issues.
Accordingly, the judgments of the district court will be vacated and the cases will be remanded for proceedings consistent with this opinion.