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

LINEBACK v. IRVING READY-MIX (August 5, 2011)

Irving Ready-Mix has five concrete plants in northern Indiana. For years, its truck drivers have been represented by the Teamsters. The last collective bargaining agreement expired on May 31, 2010. Attempts to negotiate a new agreement failed and the drivers went on strike the next day. Irving announced that it would no longer recognize the union as the employees' bargaining representative and offered jobs directly to the drivers. The union filed unfair labor practice charges with the NLRB. A week after an ALJ heard evidence, but before its decision, the NLRB regional director filed a petition for a section 10(j) injunction. The ALJ then ruled and concluded that Irving was subject to the NLRA unfair labor practice restrictions and that it had violated two of those provisions. In reaching its conclusion, it rejected Irving's contention that it was not bound by the unfair labor practices provisions because it was "engaged primarily in the building and construction industry" under section 8(f). Judge DeGuilio (N.D. Ind.) granted the motion for a preliminary injunction and ordered Irving to recognize the union. Irving appeals.

In their opinion, Seventh Circuit Judges Manion, Wood and Hamilton affirmed. A section 10(j) injunction is an extraordinary remedy and should be granted only when necessary to protect the integrity of the collective bargaining process. Here, Irving does not challenge three of the four requirements for such an injunction -- irreparable harm, balance of harms, and the public interest. It only challenges the assessment of likelihood of success. Its contention is that ready-mix concrete companies are "engaged primarily in the building and construction industry" and not subject to some of the unfair labor practice restrictions. The Court noted that the Board has repeatedly held since 1988 that ready-mix concrete employers are not in the building and construction industry as that phrase is used in the statute. Irving, on the other hand, suggests that the 1988 decision is wrong and cites an earlier Board decision which held that a flooring installer was "primarily engaged." The Court disagreed and found the post-1988 jurisprudence solidly in favor of the Board's position.

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NEMSKY v. CONOCOPHILLIPS COMPANY (August 3, 2009)

George Nemsky had been an engineer at ConocoPhillips’ Wood River Refinery for over twenty years and had a solid reputation. He was represented by Local 399 of the International Union of Operating Engineers (the Union). In 2004, ConocoPhillips adopted a substance abuse policy which provided for random drug and alcohol testing. It also provided that any employee who had a confirmed positive test result would be terminated. Although the Union filed a collective grievance over the company's adoption of the policy as well as an unfair labor practice charge, it eventually entered into a Memorandum of Agreement with the company in which it agreed not to grieve a termination under the policy. In 2006, Nemsky was selected for a random drug and alcohol test shortly after he used solvent to remove cement from his shoes. The test came back as a confirmed positive. ConocoPhillips terminated Nemsky's employment. The Union indicated its intent to arbitrate his termination. Nemsky filed an action against the Union and ConocoPhillips with the NLRB, complaining that the Union and ConocoPhillips never arbitrated his termination. Nemsky filed suit against both ConocoPhillips and the Union. Nemsky alleged that ConocoPhillips breached the Collective Bargaining Agreement and that the Union had breached its duty of fair representation. The district court granted summary judgment to defendants. Nemsky appeals.

In their opinion, Judges Flaum, Wood and Tinder affirmed. The Court identified Nemsky's claim as a "hybrid 301" action. In such an action, Nemsky must prevail on both his claim that the company breached the Collective Bargaining Agreement and his claim that the Union breached its duty of fair representation. The Court first addressed the fair representation claim. In order to prevail on that claim, the Court noted that Nemsky must show that the Union’s conduct was arbitrary or discriminatory or in bad faith. Nemsky argued that the Union acted arbitrarily in agreeing to the Memorandum of Understanding. The Court concluded otherwise. The Union’s unfair labor practice charge had been dismissed and no other union in the country had been successful in challenging the company's policy. The Court did, however, note that there was evidence that the Union failed to arbitrate Nemsky's termination after he filed his charges. The Court concluded that that was enough to preclude summary judgment on the fair representation aspect of Nemsky's claim. With respect to the company's breach however, the Court concluded that the Union’s agreement to the Memorandum of Understanding defeated any allegation that Nemsky's termination was a breach of the Collective Bargaining Agreement. Since he was required to prevail on both aspects of the hybrid claim, the Court affirmed the lower court's ruling.

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SMART v. LOCAL 702 INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS (April 7, 2009)

Ronald Smart’s non-union electrical company was awarded a contract to perform electrical work at a sports complex. He claims that Local 702 threatened the owner of the sports complex and coerced him to replace Smart’s company with union electricians. Smart brought an action against the local under the Illinois Antitrust Act. He also brought state law unwarranted prosecution and malpractice claims against the union’s lawyers (claims arising from earlier legal actions against Smart by the union). The district court dismissed the antitrust claim, concluding that it was preempted by the National Labor Relations Act. It also dismissed the state law claims, holding that the malpractice claim could not be brought against a lawyer who had never represented Smart and that the unwarranted prosecution claim required that he prevailed in the underlying litigation (he did not). Smart appeals

In their opinion, Judges Ripple, Kanne and Tinder affirmed in part, reversed in part and remanded. The Court first addressed its jurisdiction. The Court observed that there was an apparent lack of diversity and lack of a federal question in the complaint. Although the union raised a federal preemption defense, federal preemption does not normally provide a basis for asserting jurisdiction. One exception to that rule is the "complete preemption" doctrine. When an area is completely preempted by federal law and Congress substitutes a federal cause of action, a claim purportedly based on state law is considered a federal claim. Here, the Court first concluded that Smart's state antitrust claim was preempted by federal law. Next, it noted that Congress provided a cause of action in 29 U.S.C. § 187 with respect to injuries resulting from a secondary boycott. The Court found "ample evidence" that Congress intended to convert state common-law antitrust complaints into federal claims. The Court therefore concluded that § 187 completely preempted Smart’s state law antitrust claim and provided an exclusive federal remedy. The Court remanded that part of the case to the district court for further proceedings. The Court agreed with the lower court's analysis of the state law unwarranted prosecution and malpractice claims.

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LINEBACK v. SPURLINO MATERIALS  (October 8, 2008)

Spurlino Materials (“Spurlino”) produces and sells concrete. In 2005, several employees began a union representation effort. Spurlino management allegedly campaigned heavily against the union. Notwithstanding those efforts, the company employees voted to be represented by the union. The NLRB certified the union and it began negotiating its first contract with Spurlino in early 2006. The parties continued to negotiate through early 2007, but were unable to agree on contract terms (and apparently still have not). Attendance at union meetings declined during this period, possibly because of fears of retaliation by Spurlino. Spurlino management allegedly continued an intense harassment campaign against the union.

Spurlino historically used a seniority-based dispatch procedure. Spurlino sent out each of its drivers in order of seniority until each had been given one assignment. The rest of the assignments for each day were dispatched in order of each driver’s return from his or her original assignment.  In December of 2005, Spurlino was awarded a large contract to provide concrete for the construction of a new football stadium for the Indianapolis Colts. A separate labor agreement covered the stadium project. Stadium contractors paid higher wages under the separate agreement than Spurlino normally paid its employees. Thus, Spurlino drivers preferred the stadium work over other Spurlino assignments. The union alleges that Spurlino used the opportunities provided by the stadium contract to retaliate and discriminate against the leaders of the union movement. It claims that Spurlino a) manipulated the seniority dispatch system to keep the union leaders from the preferred jobs at the stadium, b) changed the way work was assigned when it built a temporary, portable plant, and c) instituted a thirteen-factor performance review to discriminate against union leaders. In August of 2006, the union filed a series of unfair labor practice charges against Spurlino. They were consolidated into an NLRB complaint that alleged that Spurlino: a) discriminated against union leaders because of their activities, b) changed pre-existing work assignment policies without negotiation, and c) implemented an evaluation procedure without negotiation. The ALJ commenced a hearing. During a hearing recess, in May of 2007, the NLRB requested injunctive relief from the district court pending a final Board decision. In June, the court entered an order enjoining Spurlino from a) retaliating against union members, b) acting unilaterally to change the terms and conditions of employment, c) refusing to bargain in good faith, and d) interfering with employees’ exercise of their rights. Spurlino appeals. Shortly after Spurlino’s appeal, the ALJ issued its order. It concluded that Spurlino had discriminated against union leaders and had unilaterally changed the terms and conditions of employment. That order is on appeal before the NLRB.

In their opinion, Judges Bauer, Ripple, and Manion (concurring) affirmed. The Court noted that the National Labor Relations Act authorizes injunctive relief, pending resolution of an NLRB claim, in “just and proper” circumstances. The factors are the same as those that apply to injunctive relief in other contexts: a) no adequate remedy at law, b) irreparable harm that outweighs harm to the employer, c) the public interest, and d) likelihood of success on the merits. The Court addressed each in turn. NLRB proceedings are frequently slow, potentially allowing time for employers to “chill” union activities. Especially in the case of new union representation, there is a risk that no remedy at law will adequately address the harm. On the issue of irreparable harm, the lower court had clear evidence of Spurlino’s hostility toward the union and continued discrimination toward the union and its leaders. The public interest was served by an order prohibiting an unfair labor practice. The district court had found “strong showings” of likelihood of success on the discrimination and unilateral changes in the terms of employment charges and “at least a substantial showing” on the good faith bargaining charge. The Court concluded that the district court considered the right factors and it found no error in its evaluation of them. It did not abuse its discretion.

The Court next addressed the scope of the injunction entered by the district court. Spurlino argued that each of the four paragraphs of the injunction was overbroad. The Court addressed each paragraph in turn under the FRCP 65(d) requirement that injunctions be specific and “describe in reasonable detail” the acts enjoined. The Court also noted that a court may enjoin acts a) which are similar to acts it has found to be unlawful and b) whose commission, if not enjoined, can fairly be anticipated from the defendant’s past conduct. Spurlino argued that paragraphs 1 and 2 were overbroad. Paragraph 1 enjoins retaliation against “all” union members, even though the complaint alleges retaliation against a few named leaders. Paragraph 2 enjoins “all” unilateral actions to change terms and conditions of employment, though the complaint’s allegations were less broad. The Court relied on the district court’s finding of a “continuous and deliberate” effort by Spurlino to undermine the union in holding that these paragraphs were not overbroad. Paragraph 3 enjoins Spurlino from refusing to bargain in good faith. The complaint’s allegation of refusal to bargain was limited to the portable plant. The Court also upheld this paragraph, relying on the district court’s finding that Spurlino engaged in a pattern of refusals to bargain and that further refusals were likely to occur, if not enjoined. Paragraph 4 of the injunction broadly enjoined Spurlino from “in any like manner interfering with, restraining, or coercing employees’ exercise of their rights.” The Court observed that the provision was similar to a provision struck by the Supreme Court in NLRB v. Express Pub. Co.. However, it relied on the addition of the word “like,” not present in the Express injunction, to uphold the paragraph as within the power of the court to enjoin related unlawful acts.

Judge Manion concurred. He wrote separately to emphasize that the injunction against refusing to bargain in good faith does not enjoin “any” refusals to bargain. It only enjoins refusals that are similar to the refusals alleged by the NLRB and found by the district court.

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