Appeal from the United States District Court for the Western District of Pennsylvania; D.C. Civil No. 86-1284.
Sloviter, Chief Judge, and Greenberg and John Minor Wisdom,*fn* Circuit Judges. Sloviter, Chief Judge, concurring in part and dissenting in part.
Limbach Company (Limbach) is a mechanical contracting company with principal offices in Pittsburgh, Pennsylvania, and additional offices in Woburn, Massachusetts (Boston), Compton, California (Los Angeles), Pontiac, Michigan (Detroit), and Columbus, Ohio.
Prior to the events underlying this case, Limbach was a union contractor and was a member of a multi-employer bargaining association in each of the metropolitan areas where it operates. The Pittsburgh, Detroit and Los Angeles offices were represented by the local chapters of the Sheet Metal and Air Conditioning Contractors National Association (SMACNA), while the Boston office was covered by the Sheet Metal and Air Conditioning Contractors Association of the Building Trades Employers Association (BTEA). Through its membership in these bargaining organizations, Limbach had a collective bargaining relationship with the sheet metal workers' union - Local No. 12 in Pittsburgh, Local No. 17 in Boston, Local No. 80 in Detroit, Local No. 98 in Columbus, and Local No. 108 in Los Angeles.
In 1982-83, Limbach was reorganized and became a wholly-owned subsidiary of Limbach Constructors, Inc. and, as part of this reorganization, Jovis Construction, Inc. was formed as a sister-company to Limbach Company. A purpose of the reorganization and the formation of Jovis. was so that the Limbach organization could acquire nonunion operations in new geographic areas. Thus, in July 1983, Jovis purchased Harper Plumbing & Heating Company, Inc. in Florida. Harper had been a nonunion contractor for 30 years and, after its acquisition by Jovis, continued to be nonunion.
After Edward Carlough, the General President of the International Union, learned of this acquisition, he wrote a letter on August 10, 1983, to Walter Limbach, the president of Limbach until 1983, and the president of Limbach Constructors, Inc. from 1983 to 1988, stating:
I want to congratulate you on your company's takeover of Harper Plumbing and Heating in Orlando, Florida. We have been attempting to organize this contractor for a good number of years, and it was very thoughtful of you to have us organize this firm through your purchase of it.
The letter suggested a meeting between Lonnie Bassett, the International's Director of Organization, or Larry Cassidy, Carlough's assistant, to "consummate a labor agreement with your new shop." Walter Limbach gave this letter to Charles Prey, his successor as President of Limbach, who wrote to Carlough informing him that Limbach had not acquired Harper.
In October 1983, Cassidy and Walter Limbach met at Limbach's Pittsburgh office. Cassidy told Walter Limbach that Carlough expected Limbach to have Harper sign a collective bargaining agreement with a union affiliate and stated that the Harper nonunion operation violated existing collective bargaining agreements between Limbach and Locals 12, 17, 80, 98 and 108.
Walter Limbach disagreed with Cassidy's characterization of the situation, maintaining that Jovis, not Limbach, had acquired Harper, that Harper was a separate employer from Limbach and that Limbach had no authority over Harper labor relations matters. Cassidy told Walter Limbach that if Harper did not sign a labor agreement, contract violation grievances would be filed and if they did not result in Harper's unionizing, Limbach would face serious labor problems.
Carlough, Cassidy and Walter Limbach met on November 23, 1983, to discuss the Harper situation. Carlough asserted that Limbach was in violation of its local collective bargaining agreements by virtue of the Harper operation and he told Walter Limbach that the Union would file grievances alleging these violations. Walter Limbach maintained his position that Limbach and Harper were separate and that Limbach had no authority to sign a collective bargaining agreement on behalf of Harper. Carlough told Walter Limbach that if the situation were not resolved, the locals would disclaim interest in representing Limbach employees upon the expiration of their existing collective bargaining agreements.
The local unions filed grievances in the summer of 1984, alleging that Limbach was in violation of its collective bargaining agreements with them by virtue of its sister-relationship with Harper. The grievances of Locals 12, 17 and 108 ultimately came before the National Joint Adjustment Board for the Sheet Metal Industry (NJAB), the final decision maker under the collective bargaining agreements, a board composed of an equal number of union and employer representatives.
The unions' grievances alleged that the operation of Harper on a nonunion basis was a breach of the Standard Form of Union Agreement (SFUA), negotiated by the International Union and SMACNA. The agreement serves as a model for local collective bargaining agreements. It was the unions' belief that the SFUA prohibited double-breasting, meaning that a company owns both union and nonunion shops. Carlough believed he could force Harper to recognize the union through the grievance process by claiming that Limbach was in violation of its agreements through its affiliation with Harper. On February 8, 1985, the NJAB issued its decision on the grievances but, as it deadlocked, it did not find that Limbach had violated any of the SFUA provisions of its bargaining agreements. It did, however, find that the agreement between Limbach and Local 17 was not valid and binding and was of no force or effect.
Faced with the failure of the grievances against Limbach, Carlough met with the International Union's General Executive Council to develop an alternate method to combat double-breasting and this led to the development of the so-called "Integrity Clause."*fn1 The Integrity Clause obligated an employer to notify the union if it became affiliated through common ownership with a nonunion shop and gave local unions the power to rescind their labor agreements upon an employer's becoming so affiliated. In a letter dated March 22, 1985, Carlough instructed the local unions to have the Integrity Clause negotiated into their local agreements as soon as possible.
On April 14, 1985, the Executive Committee of SMACNA and some of its other personnel met in Washington, D.C. to consider the Integrity Clause and on the following day Carlough met with the Executive Committee in Washington. SMACNA was particularly concerned about the Integrity Clause and its meaning, as it had put the sheet metal industry, in the words of a SMACNA officer, "in an uproar and SMACNA had received numerous inquiries about it. Carlough spoke to the Committee about the clause.
In an April 16, 1985, memo to Carlough, Russell Smith, SMACNA's Director of Labor Relations, referring to the meeting of April 15, stated in relevant part:
it is our understanding that the following items were discussed and agreed upon at the above meeting:
1. That the 'Integrity Clause' is a permissive subject of collective bargaining.
6. That local unions would not furnish union members to double-breasted union general contractors or others if union sheet metal contractors had been bidders on a job.
7. That SMWIA and its local unions would cooperate to see that union members would not work for non-union contractors and would not 'moonlight' to the detriment of union contractors.
App. at 2793-94. [Emphasis added].
At the same time, the International attempted to dissuade union members from working for double-breasting contractors, including Limbach, doing this with written appeals promoting union loyalty and changes in withdrawal card rights and pension benefits for members who continued working for companies affiliated with nonunion operations.
In the spring and summer of 1986, Locals 12, 17 and 108 did not renew the collective bargaining agreements as they expired and the locals issued disclaimers terminating their representation of Limbach employees.*fn2 Local 98 disclaimed the following. year when its agreement expired. By June 1988, Limbach's operations were 100% nonunion.
The Integrity Clause was ultimately incorporated into a number of collective bargaining agreements. In the summer of 1986, Carlough spoke at the convention of Sheet Metal Workers' International Association. He said, in part:
Limbach used to be with SMACNA years ago. You ought to understand the union thinking in the union man's mind. To me it's never too late. The door in this union is open.
If the man wants to come back and operate the right way I know both our people, both in Los Angeles and in Pittsburgh, and Walsh and the gang in Boston, if the man wants to straighten out the situation, who knows. He is a very smart fellow.
He wants to straighten the situation out. He will find out he is welcome back in this family. We want them union.. . .
App. at 2858. [Emphasis added].
On June 17, 1986, Limbach Bled its complaint in the district court against the International Union, and Locals 12, 17 and 108, and on January 12, 1988, it filed an amended complaint joining Local 98 as a defendant. The complaint asserted unfair labor practice claims under section 303 of the Labor Management Relations Act, (LMRA), 29 U.S.C. § 187, which allows a damages action for violations of the secondary boycott provisions of section 8(b)(4) of the National Labor Relations Act, (NLRA), 29 U.S.C. § 158(b)(4) In addition, Limbach asserted antitrust claims under section 4 of the Clayton Act, 15 U.S.C. § 15.*fn3
The case was bifurcated for trial between the liability and damages issues with the initial phase involving liability. At this phase, the jury was instructed on alternate theories of liability on the unfair labor practices claims. Thus, it was told that it could find an unfair labor practice based either on the unions' inducing Limbach employees to refuse to perform services in the course of their employment or on the unions' coercion of Limbach, by disclaiming representation of Limbach with the objective to force Harper to negotiate with the union or to have Limbach disassociate itself from Harper. On June 29, 1990, the jury returned three special verdicts on the liability issues under section 303. In Special Verdict No. 1 the jury found that Limbach and Harper were separate employers within the meaning of the NLRA, 29 U.S.C. § 151 et. seq. In Special Verdict No. 2 the jury found that the International Union and each of the four affiliated local unions had committed an unfair labor practice under section 303. However, Special Verdict No. 2 did not reveal whether the jury's finding of an unfair labor practice was based on the unions' inducing Limbach employees to refuse to work, or whether it was based on the unions' coercion of Limbach. Special Verdict No. 3 asked:
Was the violation of Section 303 of the Labor Management Relations Act committed by any of the union defendants listed below a substantial factor in bringing about harm to plaintiffs business or property?
In response the jury answered "yes" as to the International Union and Local 108 (Los Angeles) but "no" as to Locals 12, 17 and 98. The antitrust claim was not submitted to the jury as, on July 3, 1990, the district court granted the unions' motion for a directed verdict on those claims.
On July 9, 1990, the district court, in the light of Special Verdict No. 3, ruled that Limbach could present evidence of damages on the secondary boycott claim as to its Los Angeles operation but not as to those in Pittsburgh, Boston, and Columbus. On July 13, 1990, after the trial was resumed and additional testimony presented, the jury returned a special verdict on damages awarding Limbach $2,823,000 against the International Union and Local 108 on the secondary boycott claim. The district court thus entered judgment in favor of Limbach and against the International Union and Local 108 for $2,823,000, but it also entered judgment in favor of Locals 12, 17 and 98, against Limbach. On August 3, 1990, the court denied motions of Limbach, the International and Local 108 for judgments notwithstanding the verdict and, in addition, it denied a motion by Limbach for a new trial. The International Union, Local 108, and Limbach have filed timely appeals and we have jurisdiction under 28 U.S.C. § 1291.
We hold that the district court's order entering judgment against the International and Local 108 cannot stand, as the verdict may have been predicated on an impermissible basis. Accordingly, we will reverse and remand for a new trial on the issue of their liability under section 8(b)(4)(ii) of the secondary boycott provisions of the NLRA. We will affirm the district court's order entering judgment in favor of Locals 12, 17 and 98 on the secondary boycott claims, because we find that the jury's determination that Limbach suffered no damages in the applicable areas cannot be disturbed under the appropriate standard of review. Finally, we will affirm the district court's grant of the directed verdict against Limbach on its antitrust claims against the unions because we find that there is insufficient evidence in the record to support Limbach's claim of a conspiracy. On the remand the issue of whether Limbach and Harper are separate employers will not be retried.
APPEAL OF THE INTERNATIONAL UNION AND LOCAL 108
The appeal of the International Union and Local 108 (hereafter sometimes called the "unions" to the exclusion of the other locals) focuses on the alleged violations of the secondary boycott provisions of the NLRA. They argue that based on the charge the jury returned a general verdict on the secondary boycott violations founded on two independent grounds, so that we cannot ascertain which was the basis for the verdict. The unions then argue that, as a matter of law, there can be no secondary boycott violation for the disclaimer of the bargaining agreements with Limbach upon their natural expiration, regardless of their motives for the disclaimer. Accordingly, they contend that as the verdict might have rested on that disclaimer, it cannot stand. The unions further contend that they cannot be liable for the actions of the employees in refusing to work, as the employees simply lawfully quit their employment. Therefore, they contend that the verdict cannot stand as it may have been based on that conduct. The unions also contend that the district court erred in denying their motions for a directed verdict and judgment notwithstanding the verdict on the secondary boycott violations, urging that Limbach and Harper are not separate employers within the meaning of the NLRA. Of course, if they were not separate employers, there could be no secondary boycott.
We agree with the unions that the verdict was general and may have been based on the circumstance that they induced the employees to quit. This finding compels us to reverse the liability judgment against them because the secondary boycott provisions prohibit a union from inducing employees to refuse to perform services during the course of employment but do not preclude inducements to quit, as quitting is not a refusal to perform services during the course of employment. Under this court's jurisprudence, we must set aside a general verdict if it was based on two or more independent grounds one of which was insufficient, and we cannot determine whether the jury relied on the valid ground. Carden v. Westinghouse Elec. Co., 850 F.2d 996, 1000 (3d Cir. 1988). Thus, regardless of our view of the other ground, we must reverse.
Nevertheless, we must also consider the unions' claim that the district court erred in denying their motions for a directed verdict and judgment notwithstanding the verdict on the alleged coercion of Limbach under section 8(b)(4)(ii), for if we agreed with the unions on this issue, no remand would be necessary as there would be no possible basis for secondary boycott liability. On this point we reject the unions' contention as we hold that the disclaimer scheme engaged in by the unions could be the basis for the finding of a secondary boycott violation under section 8(b)(4)(ii). Therefore, we will remand this case to the district court for a trial on the issue of whether the unions' actions violated the secondary boycott provisions of section 8(b)(4)(ii).
Finally, we consider and reject the unions' contention that the district court erred in denying their motions for a directed verdict and judgment notwithstanding the verdict on the grounds that Limbach and Harper are not separate employers within the meaning of the NLRA. Rather, we find that the jury's conclusion in Special Verdict No. 1, that Limbach and Harper are separate employers, is supported in the record and, therefore, the district court correctly denied the unions' motions grounded on this argument. Pursuant to Childers v. Joseph, 842 F.2d 689, 699 (3d Cir. 1988), we find that the separate employer issue is distinct and separate and need not be an issue for the jury on the retrial. See also 6A Moore's Federal Practice para. 59.06 (2d ed. 1989). We find that there will be no injustice if the jury is informed that, for purposes of its determination of whether the unions violated section 8(b)(4)(ii), Limbach and Harper are separate employers.
a. Section 8(f) Agreements in the Construction Industry
In general, under the NLRA an employer and a union can engage in collective bargaining only if a majority of the employees in the bargaining unit choose the union. See 29 U.S.C. § 159. However, section 8(f) of the NLRA contains an exception to this rule applicable to the construction industry which permits employers and unions to enter into voluntary section 8(f) collective bargaining agreements, commonly called "pre-hire agreements," without regard for the union's majority status.*fn4 29 U.S.C. § 158(f). A pre-hire agreement is a contract between an employer and a union before the workers to be covered by the contract have been hired. See International Ass'n of Bridge, Structural and Ornamental Iron Workers, Local 3 v. NLRB, 843 F.2d 770, 773 (3d Cir.), cert. denied, 488 U.S. 889, 109 S.Ct 222, 102 L. Ed. 2d 213 (1988). Under section 8(f), employers and unions in the construction industry are permitted to enter into pre-hire agreements, designating the union as the exclusive representative of a company's employees without testing the unions' majority status. Iron Workers, 843 F.2d at 773. Since Limbach is involved in the construction industry, its agreements with the local unions were section 8(f) agreements.*fn5
b. Secondary Boycott Restrictions
Section 303 of the LMRA, 29 U.S.C. § 187, creates a cause of action for damages for violations of section 8(b)(4) of the NLRA, 29 U.S.C. § 158(b)(4).*fn6 Section 8(b)(4) of the NLRA provides, in part:
it shall be an unfair labor practice for a labor organization or its agents
(i) to engage in, or to induce or encourage any individual employed by any person engaged in commerce or in an industry affecting commerce to engage in, a strike or a refusal in the course of his employment to use, manufacture, process, transport, or otherwise handle or work on any goods, articles, material, or commodities or to perform any services; or (ii) to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce, where in either case an object thereof is -
(A) forcing or requiring any employer or self-employed person to join any labor or employer organization or to enter into any agreement which is prohibited by subsection (e) of this section;
(B) forcing or requiring any person to cease using, selling, handling, transporting, or otherwise dealing in the products of any other producer, processor, or manufacturer, or to cease doing business with any other person, or forcing or requiring any other employer to recognize or bargain with a labor organization as the representative of his employees unless such labor organization has been certified as the representative of such employees under the provisions of section 159 of this title: . . .
Limbach's theory in its section 8(b)(4) claim against the unions was that their actions in encouraging Limbach employees to quit and in disclaiming their section 8(f) agreements with Limbach constituted coercion in violation of the secondary boycott provisions of section 8(b)(4)(i-ii), causing Limbach economic damages. According to Limbach, the unions' actions were intended to coerce Harper into bargaining with a non-certified union ...