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American Steel Erectors, Inc. v. Local Union No. 7

United States Court of Appeals, First Circuit

February 25, 2016

AMERICAN STEEL ERECTORS, INC.; AJAX CONSTRUCTION COMPANY, INC.; AMERICAN AERIAL SERVICES, INC.; BEDFORD IRONWORKS, INC.; AND D.F.M. INDUSTRIES, INC., Plaintiffs-Appellants/Cross-Appellees,
v.
LOCAL UNION NO. 7, INTERNATIONAL ASSOCIATION OF BRIDGE, STRUCTURAL, ORNAMENTAL & REINFORCING IRON WORKERS, Defendant-Appellee/Cross-Appellant, RONALD BEAUREGARD, D/B/A INDEPENDENT WELDING SERVICES INDUSTRIES, INC., Plaintiffs, CHARLES WRIGHT; STEEL ERECTION AND ORNAMENTAL IRON INDUSTRY ADVANCEMENT FUND, Defendants.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Richard G. Stearns, U.S. District Judge]

Michael E. Avakian, with whom Wimberly, Lawson & Avakian, Thomas M. Triplett, Schwabe Williamson & Wyatt, Geoffrey R. Bok, and Stoneman, Chandler & Miller LLP were on brief, for appellants/cross-appellees.

Indira Talwani, with whom Paul F. Kelly, Jasper Groner, and Segal Roitman, LLP were on brief, for appellee/cross-appellant.

Maurice Baskin and Littler Mendelson, PC on brief for Associated Builders and Contractors, Inc., amicus curiae in support of appellants/cross-appellees.

Before Howard, Chief Judge, Stahl and Lipez, Circuit Judges.

HOWARD, Chief Judge.

On December 2, 2004, five structural steel contractors filed a complaint against a local union alleging antitrust law violations under the Sherman Act, labor law violations under the Labor Management Relations Act ("LMRA"), and other violations under state law. Over the intervening decade, the case has evolved in complex ways. Although we reviewed this matter once before, Am. Steel Erectors, Inc. v. Local Union No. 7, Int'l Ass'n of Bridge, Structural, Ornamental & Reinforcing Iron Workers ("ASE I"), 536 F.3d 68 (1st Cir. 2008), we found elements pertaining to the federal claims undeveloped and remanded for further proceedings. The case now reaches us again following trial, with both parties appealing and cross-appealing aspects of the final judgment. After considerable reflection, and for the reasons set forth below, we affirm.

I. Background

A. Factual History

As we explained in ASE I, the structural steel industry is comprised of steel fabricators, who manufacture steel products to meet design specifications, and steel erectors, who assemble the fabricated steel. When a developer or owner taps a general contractor to lead the construction of a building, that general contractor typically solicits bids for a combined "fab and erect" package, which is submitted by the fabricator and includes the combined price for both the fabrication and erection of the structural steel. As such, the steel fabricators must themselves solicit bids for the erection work from the steel erectors in order to finalize their combined bid price. And, in turn, the erection companies must incorporate the significant costs associated with paying their laborers into their own steel erection price.

In New England, at the time of the complaint, there were relatively few fabricators (around twenty) and many erectors (over 200). The plaintiffs in this case are five nonunionized steel erector companies, [1] and the defendant is Labor Union No. 7 of the International Association of Bridge, Structural, Ornamental & Reinforcing Iron Workers ("Local 7"), a teamsters local union for member iron workers (including steel erector laborers) in eastern Massachusetts. Local 7 has a collective bargaining agreement ("CBA") with the Building Trades Employers' Association of Boston and Eastern Massachusetts ("BTEA"), which is an entity that represents hundreds of construction companies. Among the "union signatory" firms that have agreed to the CBA are numerous erector companies with whom the plaintiffs compete.

Under the CBA, the signatory erectors must pay Local 7 workers a union scale wage. Nonunion erectors, on the other hand, are not bound to the CBA and can negotiate their own labor costs with their employees. Because labor expenditures account for approximately half of the total steel erection costs, nonunion erectors are often able to submit lower bids for erection contracts to fabricators looking to formulate a combined "fab and erect" bid. Over time, not unexpectedly, that can lead to nonunion erectors and laborers gaining market share from union erectors and laborers.

In order to prevent such erosion in its labor market share, Local 7 incorporated a "Market Recovery Program" ("MRP") into its 2000-2006 CBA. Under the MRP, signatory erectors withheld a fraction of each union laborer's paycheck, which was then paid into a target fund (the "Fund") operated by Local 7. Local 7 could then identify construction projects likely to draw competition from nonunion erectors and, on a case-by-case basis, send "blast faxes" or "project alerts" to its signatory union erectors with an offer to subsidize their bids and make them more competitive with nonunion bids. In the event that a union signatory won the subcontract, Local 7 (sometimes in conjunction with other regional unions) would enter into a job targeting fund agreement with that erector company governing the terms of the MRP subsidy for that specific project ("JTF agreement").

B. Procedural History

In 2004, the plaintiffs filed a complaint in federal district court in Massachusetts alleging, in addition to state law claims, that actions of Local 7 violated both (1) the LMRA, which provides civil liability for damages resulting from unfair labor practices, 29 U.S.C. §§ 158, 187; and (2) Sections 1 and 2 of the Sherman Act, which forbid practices that unlawfully impair competition, 15 U.S.C. §§ 1, 2. In general, the complaint alleged that Local 7 employed coercion and unlawful economic pressure to ensure that contracts were awarded to signatory erectors, rather than plaintiffs, and to foreclose nonunion erectors from a large portion of the structural steel erection market in the greater Boston area.

After the district court granted Local 7's request for summary judgment on all claims, we reversed in part. See ASE I, 536 F.3d at 76-85. We agreed that the plaintiffs' state claims were preempted, but remanded the surviving federal labor and antitrust claims for further proceedings. The district court set the plaintiffs' LMRA claims for trial and reserved the antitrust claims to be addressed after several of the factual disputes underlying both claims had been resolved by the jury.

At trial on the LMRA claims, the court limited the plaintiffs to presenting evidence about union conduct relating to four particular construction projects: two, referred to as Cardi's Furniture and Archstone Apartments, involved plaintiff Ajax; the other two projects, Fox 25 and Brickworks, involved plaintiff DFM. The jury found for the plaintiffs on each of the four projects, awarding Ajax $211, 956.00 in damages and awarding DFM $78, 757.60. The district court denied Local 7's motion for judgment as a matter of law or a new trial, see Fed. R. Civ. P. 50(b), 59, which challenged the sufficiency of the evidence supporting liability and the damages calculations.

Following the jury verdict, the district court relied on the evidence presented at trial in its subsequent consideration of the antitrust issues, as the plaintiffs had represented earlier in the litigation that identical evidence undergirded both the LMRA claims and the antitrust claims. Ultimately, the court entered judgment on the Sherman Act claims in favor of Local 7, concluding that the plaintiffs' evidence failed to give rise to antitrust liability as a matter of law. See Am. Steel Erectors, Inc. v. Local Union No. 7, Int'l Ass'n of Bridge, Structural, Ornamental & Reinforcing Iron Workers ("ASE II"), 932 F.Supp.2d 240, 252 (D. Mass. 2013).

II. Analysis

The plaintiffs appeal from the summary judgment decision on their antitrust claims. Local 7 cross-appeals the court's decision to keep in place the jury's verdict on the LMRA claims. We address the appeals in reverse order, review the merits de novo, and consider all trial evidence in the light most favorable to the plaintiffs. See Long v. Fairbank Reconstruction Corp., 701 F.3d 1, 3 (1st Cir. 2012).

A. Labor Law Claims

1. Liability

The LMRA extends a private right of action to those injured in business or property by reason of certain unlawful union practices proscribed by the National Labor Relations Act ("NLRA"). See 29 U.S.C. § 187. As we explained in ASE I, § 8(b)(4)(ii) of the NLRA makes it an unfair labor practice for a union to threaten, coerce, or restrain an employer with an object of forcing the employer (A) to enter into an agreement prohibited by § 8(e) of the NLRA, or (B) to cease doing business with another party. See 29 U.S.C. § 158(b)(4)(ii)(A) & (B); Intercity Maint. Co. v. Local 254, Serv. Employees Int'l Union, 241 F.3d 82, 87 (1st Cir. 2001). An illegal § 8(e) agreement is, in turn, defined in relevant part as an agreement by an employer to cease doing business with any other person. See 29 U.S.C. § 158(e). In other words, a union may incur liability under subparagraph B of § 8(b)(4)(ii) if it coerces an employer to cease doing business with another party or under subparagraph A of § 8(b)(4)(ii) if it coerces an employer to enter into an agreement to cease doing business with another party.

Such an agreement can be express or implied, ASE I, 536 F.3d at 83, and it need not be of a "generalized exclusionary nature to fall afoul of § 8(e); rather, the use of coercive measures by a union to pressure a single neutral employer into a single agreement to cease doing business with a single non-union employer, or the application of such measures on a project-by-project basis" is sufficient to find liability. Id. (citing N.L.R.B. v. Bangor Bldg. Trades Council, 278 F.2d 287, 289–90 (1st Cir. 1960)).

Of course, Local 7 rightfully points out that a neutral employer's mere decision to acquiesce to a union's unlawful coercion and cut ties with the nonunion party is not, standing alone, sufficient to imply the existence of a § 8(e) agreement and incur liability under subparagraph A. Such an interpretation would allow subparagraph B to swallow subparagraph A whole. Local 7 points to the decision of the National Labor Relations Board ("NLRB") in Local Freight Drivers Local 208, 224 N.L.R.B. 1116 (1976), for support.

In Local Freight Drivers, the NLRB held that the union had violated subparagraph B by making the termination of its unlawful picketing contingent upon the neutral party's decision to sever its relationship with a nonunion employer. See 224 N.L.R.B. at 1121. The NLRB stopped short, however, of finding a subparagraph A violation, noting that the union had "specifically made removal of the [nonunion] . . . the quid pro quo for cessation of the picketing, " and that "[n]o other requirement was attributed to [the union] as a condition for cessation of the picketing." Id. at 1123. Because the union did not go one step further and require that the nonunion employer be replaced with a union employer, the NLRB found that the factual elements required for subparagraph A liability were absent from the record. See id. at 1121-23.

In ASE I, we deemed any subparagraph B claims waived due to the plaintiffs' failure to "sort out their allegations and develop their arguments sufficiently." 536 F.3d at 83. On remand, we offered the plaintiffs an opportunity to flesh out "the nature and extent of Local 7's allegedly coercive tactics" and show that "Local 7 through use of those tactics pressured neutral employers into agreements to refrain from using non-union contractors in violation of § 8(e)." Id. at 84 (emphasis added).

The permissible grounds for liability were narrowed even further at trial by jury instructions that required the plaintiffs to show that Local 7 "threatened, coerced, or restrained one or more of the steel fabricators" with an object of "obtaining . . . an agreement, explicit or implicit, from the steel fabricators to cease doing business with the plaintiffs." (emphasis added). Although subparagraph A liability might well have been premised on coercion directed at other neutral employers, such as site owners or general contractors, the plaintiffs failed to object to the jury instructions below. With this somewhat whittled basis for liability in mind, we examine the record to ensure that a sufficient evidentiary foundation exists to prove the allegations.

Although we must ensure that the judgment rests upon more than conjecture and speculation or a mere scintilla of evidence, see Trigano v. Bain & Co., Inc., 380 F.3d 22, 28-29 (1st Cir. 2004), we are mindful that it is not our role to assess witness credibility, resolve evidentiary conflicts, or weigh the evidence, see Gibson v. City of Cranston, 37 F.3d 731, 735 (1st Cir. 1994). In the end, we are compelled to honor the jury's verdict unless the facts and inferences point so strongly and overwhelmingly in favor of Local 7 that a reasonable jury could not have returned the verdict for plaintiffs DFM and Ajax. See Long, 701 F.3d at 3.

At trial, DFM president Glen Pisani described how union members regularly filmed job sites where his company's laborers were working and formed picket lines ostensibly protesting DFM's pay scale as being out of step with prevailing wage standards. Pisani testified that he understood that unions might engage in this conduct lawfully in order to place pressure on erectors to sign a CBA. At one point, Pisani made efforts to determine whether his workforce wanted to unionize, and they did not. Even after this, however, members of Local 7 would show up at work sites and, in his words, "harass" his crew. He found it "kind of ironic" that the union picketed publicly funded job sites that were governed by state-regulated pay scales.

Pisani further described that occasionally he hired a union crane laborer to work at a particular job alongside his nonunionized workforce, but the pressure of union picketers would provoke the crane operator to leave the site in order to avoid being "blackballed" by the union. Union picketing intensified when Pisani's company secured erector jobs closer to Boston: "I want to work in the city. Every time I get close, I get picketed and they make problems for me."

The president of Ajax, Donald Morel, also described union picketing at his company's job sites. He further testified about an incident in July 2003 in which about "fifty union iron workers stormed" one of his job sites in downtown Boston at 85 New Market Street, threatening Ajax laborers as not "belong[ing] in downtown." Fights broke out and property was damaged, but no one was ever held responsible for the incident. As of the time of trial, Ajax had not worked in downtown Boston since that incident.

At times, the developing hostilities in the erector labor market ensnared neutral steel fabricators. John Paulding of Cape & Island Steel, a fabricator company, testified that Local 7 had pressured him on several occasions to award bids to union signatories, rather than to nonunion erector companies. He described his first meeting with Eddie Wright, a former president of Local 7, in the early 1990s after Paulding had awarded a job to a nonunion company. Wright "let [him] know [that] the project needed to go union, " and Paulding responded that he "couldn't afford" to carry the "additional costs." After pressure from Wright and the general contractor, Paulding retained a union signatory for the job. Still, Paulding continued to use nonunionized laborers at future job sites while also continuing to feel the heat from Local 7 representatives who at times threatened to picket in order to "stop the job."

In 2003, Paulding again was approached by Local 7 representatives, who told him that they "wanted a lot of work for their people" and that "there [were] opportunities out there with target money." They explained that target money would be provided to the union "installers . . . to give them a leg up on the job" and that "it would ultimately . . . help [Paulding's company] win work." "[I]t actually never quite worked like that, " Paulding explained, "it was sort of a mystery to me, the target fund money, because it was always promised how much it could do for me, but it never really did a thing for me." Paulding continued to resist the union's pressure but acknowledged that there came a time when his company only hired union signatories for all erector work in Boston except for smaller jobs lasting only one or two days.

Another steel fabricator, Ann Gavin of FAMM Steel, also testified about pressure to subcontract with union signatories that her company experienced, more directly from owners and general contractors. Gavin testified that there were several instances in which the general contractor or owner would require her to replace the nonunion erector at the site with a union signatory. She testified, "[M]ost of them were Stop & Sho[p] [supermarkets], . . . depending upon what happened with the union, they would change their mind." "We would put the nonunion erector on notice, because in some cases they had mobilized cranes and . . . were at the site and had done the initial work in the field before the union erector came on board. So we had to get costs for them. We couldn't just cancel them and walk away." Gavin estimated that the same pattern occurred "[p]robably half a dozen [times] . . . if we're talking just about Stop & Shops." She acknowledged her company's participation in deciding "to make a change" and cancel a subcontract commitment due to "pressure or . . . an incentive being offered"; "[i]t was an abuse. It was unethical what we did."

This general gloss informed more particular evidence and testimony that was submitted with respect to four job sites where fabricators cancelled subcontracts with DFM and Ajax during project kickoff and replaced them with union signatories despite a higher subcontract ...


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