Summary
The Second Circuit held that an employer became bound by a multiemployer collective bargaining agreement when it joined an employers’ association whose principal activity was negotiating such agreements and whose longstanding, universally observed practice treated members as bound. The court further held that the employer’s membership created apparent authority, and that private equivocations were insufficient to withdraw that authority absent communication to the union. The judgment for the defendants was reversed and the case remanded for entry of an appropriate damages judgment.
Topics
Practice areas
Questions Presented
- Whether Flame Proofing's membership in the UEA, whose principal activity was negotiating collective bargaining agreements and whose members were universally understood to be bound by those agreements, demonstrated authority for the UEA to bind Flame Proofing to the 1984–87 agreement.
- Whether Flame Proofing's private expressions of concern about the agreement's jurisdictional provisions or its failure to sign the agreement deprived the UEA of actual or apparent authority to bind Flame Proofing.
Holdings
- An employer gives a multiemployer organization actual authority, and thereafter apparent authority, to bind it to collective bargaining agreements when the employer joins an organization whose principal or sole activity is negotiating collective bargaining agreements on behalf of its members and knows of a longstanding, universally observed custom that members are bound by those agreements.
- Once Flame Proofing's UEA membership was communicated to Local 44, Flame Proofing's private doubts or equivocations did not deprive the UEA of apparent authority; only a communication from Flame Proofing to Local 44 withdrawing authority could avoid the binding effect of the UEA's negotiations.
Key quotations
“We hold that an employer creates actual and thereafter apparent authority in a multiemployer organization to bind the employer when that employer: (1) joins an organization whose principal or sole activity is to negotiate collective bargaining agreements on behalf of its members, and (2) knows of a universally observed custom that such members are bound by those agreements.” (828 F.2d at 79)
“Mere membership in an employers’ association, without more, does not necessarily evidence an unequivocal intention to be bound by the collective agreements it negotiates.” (828 F.2d at 83)
“Thereafter, only a communication from Flame Proofing to Local 44 withdrawing authority would avoid the binding effects of the UEA’s negotiations.” (828 F.2d at 84)
Factual background
New York Flame Proofing Co., Inc. and General Drapery Services, Inc. operated as a unified enterprise controlled by Joseph Belmont. Flame Proofing joined the Upholstery Employers Association in 1982, and the association's principal activity was negotiating collective bargaining agreements with Local 44 on behalf of its members. The UEA negotiated and executed the 1984–87 agreement, while Flame Proofing knew of the negotiations, participated through Belmont and an employee, and was aware of the longstanding industry practice that UEA members were bound by agreements negotiated by the association. Flame Proofing did not sign the agreement or make the required benefit contributions, although it continued filing contribution reports.
Procedural history
The trustees sued under 29 U.S.C. §§ 1132 and 1145 to collect delinquent contributions allegedly required by collective bargaining agreements. The district court previously granted partial summary judgment for the trustees on contributions due under the 1981–84 agreement and dismissed the individual claim against Joseph Belmont; those rulings were not appealed. After the complaint against the UEA was withdrawn by stipulation, the court held a bench trial concerning whether Flame Proofing was bound by the 1984–87 agreement and entered judgment for defendants. The Second Circuit reversed and remanded for entry of an appropriate damages judgment.
Remand instructions
Remand for entry of the appropriate judgment for damages, with damages stipulated at $102,297.35.