Laborers' International Union of North America, Local 169 v. The Penta Building Group, Inc.

— 2 — 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 eae 6 || LABORERS’ INTERNATIONAL UNION Case No. 3:19-cv-00401-MMD-CLB OF NORTH AMERICA, LOCAL 169, 7 ORDER Applicant/Counter-Respondent, V. THE PENTA BUILDING GROUP, INC., Respondent/Counter-Claimaint. 12 || I. SUMMARY 13 This case concerns an agreement subject to section 9{a) of the National Labor 14 || Relations Act (“NLRA”), 29 U.SC. § 159. Applicant/Counter-Respondent Laborers’ 15 || International Union of North America, Local 169 (“Union”) has filed an application to 16 || confirm an award entered by Arbitrator John M. Caraway (“Arbitrator”) on May 31, 2019 17 || (“Award”). (ECF Nos. 1, 8-2.) Respondent/Counter-Claimant The Penta Building Group, 18 || Inc. (“Penta”) moves to vacate the award (“Motion”). (ECF No. 14.) Finding no basis for 19 || vacatur, the Court will deny the Motion and confirm the Award. 20 |] Il. BACKGROUND 21 The material underlying facts of this matter are not in dispute. 22 The Motion stems from Penta’s belief that confirmation of the Award would 23 || unlawfully force it to recognize the Union. (E.g., ECF No. 14 at 2.) As relevant to this 24 || Motion, the parties had a collective bargaining agreement between the Nevada Chapter 25 || of Associated General Contractors of America Inc. (“AGC”) and Laborers [International 26 || Union of North America, A.F.L.-C.1.0. (“LMA”). (ECF No. 2 at 2; see also ECF No. 6-1 at 27 |) 11.) The LMA had an effective date of July 16, 2015, through and including July 15, 2018. 28 fif 1 |) (ECF No. 2 at 2; ECF No. 6-1 at 8.) It appears that Penta was only one of various 2 || employers bound by the LMA through the AGC. 3 On May 2, 2018, Penta served notice upon the Union to terminate the LMA, as to 4 | it, pursuant to section 39 of LMA then in effect (“May 2nd Notice”). (ECF No. 8-2 at 2; ECF 5 || No. 14 at 107.) Later the same month—on May 11, the Union gave notice that it wished 6 || to open multi-employer negotiations for a successor agreement to the LMA. (ECF No. 87 || 2 at 6.) On May 22, 2018, the Union specifically responded to Penta’s May 2nd Notice, 8 || contending that such notice was deficient and not in compliance with the requirements of 9 || the LMA. (ECF No. 14 at 110.) 10 In a letter dated June 12, 2018, Penta informed the Union of Penta’s belief that it 11 || was entitled to withdraw recognition of the Union because Penta “no longer has any 12 || employees in a bargaining unit represented by [the Union].” (/d. at 112.) In the same letter, 13 || Penta offered to meet and confer regarding a “new contract,” albeit suggesting that the 14 || Union may determine that such is “not appropriate” given that Penta employed no Union15 || represented individuals at the time. (/¢.) Penta also maintained that it was not waiving its 16 || asserted right to withdraw recognition of the Union by its offer to meet and confer. (/d.) A 17 || few days later, the Union rejected Penta’s offer to meet and confer or to discuss Penta’s 18 || potential withdrawal, providing that the offer was untimely and noting that Penta continued 19 || to ignore the notice requirements in the LMA. (/d. at 116-17.) Penta gave notice to the 20 || Union that it was withdrawing its recognition of the Union on June 22, 2018. (/d. at 119— 21 || 20.) On July 3, 2018, the Union filed a grievance regarding Penta’s May 2nd Notice and 22 || formalizing its contention that the notice was deficient and did not comply with the LMA. 23 || (/d. at 122-23.) The parties ultimately decided to arbitrate whether Penta had complied 24 || with the LMA, although Penta otherwise maintained that it lawfully withdrew recognition of 25 || the Union. (ECF No. 8-2 at 3; ECF No. 14 at 125-26.) 26 The parties participated in an arbitration hearing on January 22, 2019. (ECF No. 827 || 2 at 3.) The Arbitrator was specifically authorized to decide the following: “Was Penta’s 28 || notice deficient and not in compliance with he terms of [the LMA]? If not, what shall be the 1 |} appropriate remedy?” (/d. at 3-4.) The Arbitrator found for the Union and concluded that 2 || Penta was effectively bound to a successor agreement that had been reached. (/d. at 9.) 3 |} The Union filed to confirm the Award on July 17, 2019 (ECF No. 1 at 1) and Penta 4 || thereafter filed the instant Motion (ECF No. 14). 5 || Ill. LEGAL STANDARD 6 Review of an arbitration award is “both limited and highly deferential’. Comedy 7 || Club, Ine. v. improv W. Assocs., 553 F.3d 1277, 1288 (9th Cir. 2009). Upon application for 8 || confirmation of an arbitration award, “the court must grant such an order unless the award 9 || is vacated, modified, or corrected... ..” 9 U.S.C. § 9 . “The Federal Arbitration Act 10 || enumerates limited grounds on which a federal court may vacate, modify, or correct an 11 || arbitral award. Neither erroneous legal conclusions nor unsubstantiated factual findings 12 || justify federal court review of an arbitral award.” Kyocera Corp. v. Prudential~Bache Trade 13 |} Serv. Inc., 341 F.3d 987 , 994 (9th Cir. 2003) (internal citations omitted). Among other 14 || things and as relevant here, vacatur is permitted “where the arbitrator[] exceeded [his] 15 || powers, or so imperfectly executed them that a mutual, final, and definite award upon the 16 || subject matter submitted was not made.” 9 U.S.C. § 10 (a)(4). An arbitrator exceeds his 17 || powers “not when [he] merely interpret[s] or app![ies] the governing law incorrectly, but 18 || when the award is compietely irrational, or exhibits a manifest disregard of law.” Kyocera, 19 |} 341 F.3d at 997 (internal citations omitted}. However, “if, on its face, the award represents 20 || a plausible interpretation of the contract, judicial inquiry ceases and the award must be 21 || enforced.” McKesson Corp. v. Local 150 IBT, 969 F.2d 831, 833 (9th Cir. 1992). 22 || IV. DISCUSSION 23 On the face of the Motion, Penta argues that the Award should be vacated 24 || particularly because: (1) the Arbitrator exceeded the boundaries of the issues submitted 25 || to him; (2) for that reason, the Award is contrary to public policy; and/or (3) for the same 26 || reason, the Arbitrator showed manifest disregard for the law. (ECF No. 14 at 10.) The 27 || underlying basis for Penta’s Motion, however, is its claim that National Labor Relations 28 || Board (“NLRB”) law permitted it to unilaterally withdraw its recognition of the Union under 1 || the one-employee exception, thereby repudiating the LMA. (E.¢., id. at 2, 16-17.) As to 2 || this withdrawal issue, Penta further argues that the Arbitrator lacked jurisdiction, 3 |] contending the Union failed to timely challenge Penta’s purported unilateral withdrawal 4 || and that that is an issue for the NRLB to decide. (/d. at 9-10; ECF No. 28 at 6 n.7.) The 5 || Court finds that the Arbitrator’s ruling granting the Award was within the bounds of his 6 || authority and the LMA. 7 A. Timeliness 8 As to the threshold issue of timeliness, the Arbitrator appears to have concluded 9 || that the Union’s grievance of the May 2nd Notice was timely under a continuing violation 10 || theory’ and because the Arbitrator concluded that Penta did not properly/clearly repudiate 11 || the LMA. (ECF No. 8-2 at 6-7.) Penta does not challenge the Arbitrator’s specific 12 || timeliness finding and, in light of the Court's conclusion infra, whether the Union discretely 13 || grieved the unilateral withdrawal is a moot point. That is to say that the issue regarding 14 || whether the Union grieved (or timely grieved) the specific unilateral withdrawal issue is 15 || apparently subsumed in the Arbitrator’s determination that the Union’s July 3 grievance of 16 || the May 2nd Notice was timely, considering the Arbitrator’s ultimate ruling. The Court now 17 || addresses that ruling. 18 B. Merits 19 The Arbitrator concluded that Penta’s May 2nd Notice to terminate the LMA failed 20 || to comply with the terms of the LMA. (ECF No. 8-2 at 7-9.) Penta concedes that the 21 || Arbitrators award should be confirmed to the extent of this determination. (E.g., No. 14 at 22 || 20 (“Penta does not challenge the ruling that tts May 2nd Notice did not comply with the 23 || LMA.”).) Penta’s position appears to be that the Arbitrator should have stopped there and 24 || fi 25 'See, e.g., Al Bryant, Inc., 260 NLRB 10 , 12 (1982) (explaining that under a continuing violation theory, an employer is not absolved of a continuing violation which 26 || inured from its continuing failure to abide by a collective bargaining agreement), overruled in some aspects by A&L Underground and Plumbers Local Union No. 8 of United Ass’n of 27 || Journeymen and Apprentices of Plumbing and Pipefitting Industry of USA and Canada, AFL-CIO, 302 NLRB No. 467 , 468 (1991) (“[W]e have concluded that the continuing 28 |} violation theory as defined and applied in A/ Bryant cannot properly apply fo a clear and total contract repudiation.”) (emphasis added). 1 || said nothing more. In fact, as an alternative to vacating the Award, Penta proposes that 2 || the Award be confirmed subject to its withdrawal of recognition. (/d.) The Court cannot 3 || agree with this alternative. 4 Here, upon finding that Penta failed to comply with the terms of the LMA, the 5 || Arbitrator concluded that the consequences for Penta’s noncompliance is that Penta’s 6 || June 12 offer to negotiate was rendered invalid and its June 22 withdrawal was nullified. 7 || (ECF No. 8-2 at 8.) Penta contends that the Arbitrator was not authorized to make these 8 || determinations and that the Arbitrator’s statements amounted to dicta. (E.g., ECF No. 14 9 |} at 10-11, 19.) The Union argues that these determinations fell within the scope of the 10 || second question the Arbitrator decided: “If not, what shall be the appropriate remedy?” 11 || (ECF No. 27 at 13-14). 12 To be sure, the Arbitrator did not expressly address the specifics of Penta’s 13 || contention here—that it was entitled to unilaterally withdraw its recognition of the Union 14 || based on NLRB caselaw.? (E.g., ECF No. 14 at 16-17.) Instead, as noted, the Arbitrator 15 || read the LMA to: (1) nullify any such withdrawal by virtue of Penta’s noncompliance and 16 || (2) expressly waive the possibility of such withdrawal. 17 As to the first finding, section 39 of the LMA (ECF No. 6-1 at 8-11) provides: 18 || // 19 | ——. 2As indicated, this is Penta’s key argument (see generally ECF Nos. 14, 28), which 20 || this Court concludes is not supported by caselaw. Contrary to Penta’s position and as the Union argues, no authority supports that the relied upon unilateral withdrawal rule applies 21 || to cases involving section 9{a) of the NLRA—as opposed to section 8 (see, e.g., ECF No. 27 at 17). In fact, after the Union pointed this out in its response (id.) Penta seemingly 22 || misleads the Court, contending that D&B Masonry, 275 NLRB 1403 (1985) and Inf! Transp. Serv., Inc. v. NLRB, 449 F.3d 160, 164 (D.C. Cir. 2006) support that the unilateral 23 || withdrawal rule also applies in section 9{a) cases. (See ECF No. 28 at 4-5.) These cases offer no such support. Both cases involve section 8 of the NLRA. See, e.g., D&B Masonry, 24 || 275 NLRB at 1409 (citations omitted) (“It is settled that if an employer employs one or fewer unit employees on a permanent basis that the employer, without violating Section 25 || 8(a)(5) of the Act, may withdraw recognition from a union, repudiate its contract with the union, or unilaterally change employees’ terms and conditions of employment without 96 || affording a union an opportunity to bargain.”) (emphasis added); Int'l Transp. Serv., Inc. 449 F.3d at 161 (“International Transportation Service, Inc. (“ITS”) petitions for review of 27 || a [NLRA] order finding it in violation of Section 8(a)(3) and (7) of the National Labor Relations Act... ..”) (emphasis added). The Court found no case that applied the unilateral 28 || withdrawal rule/one-employee exception to a section 9(a) case. 1 Any Employer . . . that chooses not to provide written notice or otherwise fails to provide written notice to the Union, as specified in the first paragraph 2 of this section and/or chooses not to participate or otherwise fails to participate in any negotiation process available to them under [the LMA]. . 3 hereby agrees .. . that it has engaged in a distinct affirmative act to recommit to the Union that it wif be bound to the terms of any Agreement reached in 4 negotiations with the Employer(s) that bargain in accordance with [the LMA}. 5 || (id. at 9 (emphasis added).) Notably, the first paragraph of section 39 provides that the 6 || LMA continued through the end of its term unless entities bound by it gave notice in 7 || accordance with its terms to, among other things, terminate the LMA “not more than” 90 8 |; days “nor less than” 60 days before July 15. (/d. at 8.) This supports the Union's rejection 9 || of Penta’s June 12 letter offering to meet and confer for untimeliness, noted supra. As to 10 || the second finding, section 39 states that an employer “waives” its right to “terminate, 11 || abrogate, repudiate, or cancel” the LMA during its terms or to “file or process any petition 12 || before the [NLRB] seeking such .. ..” (/d. at 9.) 13 The Arbitrator determined that in light of this language Penta expressly agreed to 14 || be bound by “whatever agreement was struck in the multi-employer negotiations” and 15 || expressly waived any ability to petition the NLRB regarding withdrawal of recognition. 16 || (ECF No. 8-2 at 8-9.) Applying the relevant legal standard explained supra, the Court finds 17 || that the Arbitrators decision was reasonably drawn from the essence of the LMA and is 18 || thus not completely irrational or contravenes the law—particularly Penta’s unilateral 19 || withdrawal contention, see supra footnote 2. The Award necessitates a conclusion that 20 || the issue of withdrawal was inextricably intertwined with the Arbitrators determination as 21 || to whether Penta failed to comply with the terms of the LMA and the remedy for such 22 || noncompliance. For these reasons, the Court concludes that the Arbitrator did not exceed 23 || the bounds of his authority and Penta’s ancillary arguments thereby fail. 24 In sum, this Court concludes that there is no basis to vacate the Award and will 25 || deny the Motion. The Award is accordingly confirmed. 26 || V. CONCLUSION at The Court notes that the parties made several arguments and cited to several cases 28 || not discussed above. The Court has reviewed these arguments and cases and determines 1 || that they do not warrant discussion as they do not affect the outcome of the issues before 2 |} the Court. 3 It is therefore ordered that Respondent/Counter-Claimant The Penta Building 4 || Group, Inc.’s motion to vacate (ECF No. 14) is denied. The Court confirms Arbitrator John 5 || M. Caraway’s May 31, 2019 award to Applicant/Counter-Respondent Laborers’ 6 International Union of North America, Local 169. 7 The Clerk is directed to enter judgment in accordance with this order and close this 8 || case. 9 DATED THIS 27" day of January 2020. — 10 — — 11 — MIRANDA M. DU 12 CHIEF UNITED STATES DISTRICT JUDGE — 13 — — 14 — — 15 — — 16 — — 17 — — 18 — — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — af — 28 —