Orange Belt District Council of Painters No. 48, Petitioner-appellee, v. Maloney Specialties, Inc., a Corporation, Respondent-appellant, 639 F.2d 487 (9th Cir. 1981)

This appeal is from an order of the district court confirming an arbitration award. We hold that it was proper for the district court to exercise jurisdiction in this matter and to enforce the award. Although the district court should not have addressed the defense of contractual illegality, it made clear that the issue did not affect the result in the current proceeding. We therefore affirm.

Maloney Specialties, Inc. (Maloney) is a drywall contractor in Southern California. Maloney executed a collective bargaining agreement with Orange Belt District Council of Painters No. 48 (Orange Belt), a labor organization of journeymen and apprentice painters and drywall finishers. In addition to provisions relating to wages, hours, working conditions, and required contributions to Orange Belt Painters Trust Funds based upon the number of hours worked, the agreement provided: that Maloney would not subcontract any work covered by the agreement unless the subcontractor was a signatory to the agreement; that Maloney would be liable if the subcontractor failed to pay wages or fringe benefits under the agreement; that a "Joint Judicial Committee" composed of employee and employer representatives or an arbitrator would arbitrate any disputes or grievances, with a provision for appeal from that committee to an "Administrative Office" under the direction of an employees' organization; and that liquidated damages would be assessed against any party who violated the agreement.¹ 

McKellar & Associates (McKellar), a general contractor and developer, awarded a drywall contract to Maloney. Without any notice to Orange Belt, Maloney subcontracted the work to M.G. Plaster & Drywall Company (M.G.), a firm which Maloney knew had not signed the collective bargaining agreement. Orange Belt sent journeymen to the jobsite to work for Maloney but the workers instead were assigned to work for M.G. M.G. became indebted to these employees (members of Orange Belt) for approximately $8,000 in wages and approximately $7,600 in benefits payable to the Orange Belt Trust Funds. Upon learning that the employees were working for M.G., and that M.G. was not a signatory to the collective bargaining agreement, Orange Belt directed its members to cease work until the debt was paid.

McKellar, the general contractor, then executed a separate collective bargaining agreement with Orange Belt and paid the back wages due. The work on the project was completed, although the trust fund contributions remain unpaid.

In December 1976 Orange Belt filed a grievance against Maloney. Following a hearing, the Joint Judicial Committee assessed damages against Maloney for the $7,447.02 due the trust funds, plus $2,865.40 in liquidated damages. Maloney did not appeal.

On May 19, 1977 Maloney filed charges against Orange Belt for unfair labor practices in violation of § 8(e) of the National Labor Relations Act (the Act.)²  While that case was pending before the National Labor Relations Board (the Board or NLRB), Orange Belt initiated a state action under § 301(a) of the Labor Management Relations Act (LMRA) to enforce the arbitration award.

The enforcement suit was removed to federal district court, which granted Orange Belt's motion for summary judgment. The district court accorded deference to the arbitration award and noted that the charges pending before the NLRB did not preclude relief because the Board and the federal courts had concurrent jurisdiction over the matter. The lower court also concluded that a subsequent NLRB determination that Orange Belt had engaged in unfair labor practices would not change the result in the current proceeding and that Orange Belt had not acted contrary to the principles stated in Connell Construction Co. v. Plumbers Local No. 100, 421 U.S. 616, 95 S. Ct. 1830, 44 L. Ed. 2d 418 (1975). The court ordered Maloney to pay the amount due the union trust funds as well as the liquidated damages assessed by the Joint Judicial Committee. Maloney appeals from that decision.

Maloney argues that the district court should have stayed the arbitration confirmation proceedings pending resolution of the unfair labor practice proceedings before the NLRB. The cases Maloney cites for this proposition, however, uphold the exercise of the district court's discretion in granting such a stay and note that the district court and the Board have concurrent jurisdiction in some instances.³ 

Where Congress has affirmatively granted jurisdiction to the district court, as in § 301 cases, the district court and the NLRB share concurrent jurisdiction. Amalgamated Ass'n of Street, Electric Railway & Motor Coach Employees of America v. Lockridge, 403 U.S. 274, 297-301, 91 S. Ct. 1909, 1923-1925, 29 L. Ed. 2d 473 (1971); Smith v. Evening News Ass'n, 371 U.S. 195, 83 S. Ct. 267, 9 L. Ed. 2d 246 (1962). The primary jurisdiction of the NLRB over unfair labor practice charges does not preclude the district court from exercising jurisdiction over an action to confirm an arbitrator's award based upon a collective bargaining agreement, even where such award presents a potential conflict with an NLRB decision. Waggoner v. R. McGray, Inc., 607 F.2d 1229 (9th Cir. 1979).

Here, because the union sought confirmation of the arbitrator's award by instituting a § 301 action, the district court had concurrent jurisdiction with the NLRB. We cannot say that it was an abuse of discretion for the district court to refuse to stay the proceedings.

Federal policy generally favors arbitration of labor disputes. See, e. g., Gateway Coal Co. v. United Mine Workers, 414 U.S. 368, 377, 94 S. Ct. 629, 636, 38 L. Ed. 2d 583 (1974). This policy would be undermined "if courts had the final say on the merits of the awards." United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 80 S. Ct. 1358, 1360, 4 L. Ed. 2d 1424 (1960). Thus, courts should decline to review the merits of arbitration awards under collective bargaining agreements. Id.; Alyeska Pipeline Service Co. v. International Brotherhood of Teamsters, 557 F.2d 1263, 1267 (9th Cir. 1977). An arbitrator's award is legitimate when "it draws its essence from the collective bargaining agreement," and is unenforceable "when the arbitrator's words manifest an infidelity to (the agreement)." United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. at 597, 80 S. Ct. at 1361; Alyeska Pipeline Service Co. v. International Brotherhood of Teamsters, 557 F.2d at 1267.

Maloney does not contend that the arbitrator's award went beyond the scope of the collective bargaining agreement. Instead, Maloney argues: (1) that there was no "bona fide arbitration" because Maloney was not given the opportunity to negotiate the terms of the contract and because Maloney had no voice in the selection of the Joint Judicial Committee and (2) that the subcontracting clauses upon which the award was based are invalid under § 8(e) of the Act, 29 U.S.C. § 158(e).

Maloney asserts that it was forced to sign a short form of the collective bargaining agreement by "a Union threat of shutting down a job." Maloney also asserts that it was denied representation in the arbitration proceedings because the employer representatives on the Joint Judicial Committee were drawn from the contractors' association, of which Maloney was not a member.

Maloney makes these assertions without having adduced evidence to support them. While the agreement consisted of a "short form" supplied by Orange Belt, there is nothing to suggest that Orange Belt threatened to shut down a job or that Maloney could not have negotiated a separate agreement had it so desired. The agreement provides that "(e)mployers signed to this Agreement who are not members of the employer association shall be entitled to select one (1) representative and one (1) alternate to the Joint Judicial Committees." Again, Maloney has produced no affidavit or other evidence that the members of the Joint Judicial Committee were not selected in accordance with this provision. We will not overturn the arbitration award on these grounds without some factual bases for them.

Section 8(e) of the Act, 29 U.S.C. § 158(e)⁴ , provides in part:

(e) It shall be an unfair labor practice for any labor organization and any employer to enter into any contract or agreement, express or implied, whereby such employer ceases or refrains or agrees to cease or refrain from handling, using, selling, transporting or otherwise dealing in any of the products of any other employer, or to cease doing business with any other person, and any contract or agreement entered into heretofore or hereafter containing such an agreement shall be to such extent unenforcible (sic) and void: Provided, That nothing in this subsection shall apply to an agreement between a labor organization and an employer in the construction industry ....

Maloney contends that Article IV, paragraph 9(C), of the collective bargaining agreement⁵  violates section 8(e) of the Act in that the subcontracting provisions have a secondary rather than a primary objective and are not within the construction industry proviso.

We have held that "the NLRB's primary jurisdiction precludes federal courts from acting as the initial arbiters of unfair labor practice charges in section 301 actions," even where the unfair labor practice is offered as a defense to enforcement of a collective bargaining agreement. Waggoner v. R. McGray, Inc., 607 F.2d at 1231. Other circuits similarly have held that the defense of illegality may not be interposed in actions seeking enforcement of a collective bargaining agreement. See Mullins v. Kaiser Steel Corp., 642 F.2d 1302, 105 L.R.R.M. 2579 (D.C. Cir. 1980); Huge v. Long's Hauling Co., 590 F.2d 457 (3d Cir. 1978), cert. denied, 442 U.S. 918, 99 S. Ct. 2840, 61 L. Ed. 2d 285 (1979). We agree with the District of Columbia Circuit that "(i)f an employer were allowed to interpose the section 8(e) defense in any suit to enforce a collective bargaining agreement, there would be nothing left of the Board's primary jurisdiction for section 8(e) cases." 105 L.R.R.M. at 2588.

A challenge to the validity of the subcontracting provisions must lie in unfair labor practice proceedings before the NLRB, not in a § 301 action in the district court. Any conflict arising between the NLRB decision and the arbitrator's decision could be resolved at a later date. See Cannery Warehousemen v. Haig Berberian, Inc., 623 F.2d 77 (9th Cir. 1980).

Thus, it was improper for the district court to consider this defense in the proceedings below. However, inasmuch as the district court concluded that a decision that Orange Belt had engaged in unfair labor practices⁶  would not have changed the result, it is not necessary for us to remand this matter. Maloney has failed to demonstrate that the arbitrator's award is contrary to the collective bargaining agreement. The district court's order confirming the award is AFFIRMED.