Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

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ROUGHNECK CONCRETE DRILLING & SAWING CO. v. PLUMBERS’ PENSION FUND (April 7, 2011)

Roughneck Concrete Drilling & Sawing Co. is a Chicago-based construction company. Its concrete drilling services are used in the building construction industry. Sometimes its services are used in connection with a building's plumbing, sometimes in connection with a building’s electrical system, and sometimes in connection with other aspects of a building’s construction. Roughneck employs union plumbers or electricians or laborers, depending on the purpose of its work. It has collective bargaining agreements with unions representing each. The pension fund representing the plumbers union conducted an audit and concluded that Roughneck had done plumbers work without employing plumbers. They concluded that Roughneck owed $2.2 million in contributions. They filed grievances with the Joint Arbitration Board pursuant to the collective bargaining agreement. Roughneck responded by filing its own grievance. Several days before the scheduled JAB hearing, Roughneck wrote to the administrator of the National Plan, an agreement between employers and the national unions. Roughneck claimed that the Fund's grievances were "impediments to job progress" and that the dispute should therefore be resolved by the Joint Conference Board. The JCB resolves jurisdictional disputes between different crafts. The Fund disagreed but the National Plan administrator scheduled a hearing for the day before the JAB hearing. At the JCB hearing, an arbitrator ruled that the dispute was in fact beyond the authority of the JAB and ordered the JAB hearing canceled. No one told the JAB about the order, so it went forward with the hearing. Roughneck did not attend. The JAB found for the Fund and ordered Roughneck to pay over $3.3 million. Roughneck filed two actions -- one to vacate the JAB order and one to enforce the JCB order. Judge Lefkow (N.D. Ill.) found for the Fund, concluding that Roughneck had waived its objection to the JAB's jurisdiction, both by submitting a grievance and by not appearing at the hearing. It was therefore bound by the JAB order and could not avail itself of the JCB order. Roughneck appeals.

In their opinion, Judges Bauer, Posner, and Williams reversed and remanded. The Court first concluded that the Fund's failure to bring suit to set aside the JCB order did not prevent it from raising a defense in Roughneck's suit to set aside the JAB order. It could have sued to set aside that order but it would be redundant to require it to file its own suit when it raised a timely challenge in Roughneck’s suit. On the merits, the Court concluded that Roughneck did not waive any rights. Roughneck could have handled things better -- it could have invoked the jurisdiction of the National Plan earlier, it could have informed the JAB of the JCB decision, it could have shown up at the JAB hearing. Nevertheless, it did withdraw its consent to the JAB arbitration before any order was issued. It was entitled to do so. Finally, the Court noted that judicial review of arbitration awards is so limited that multiple, inconsistent awards can be enforced. Here, however, it is impossible for the parties to comply with both orders. The Court reversed with instructions to vacate the JAB order and enforce the JCB order.