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(A version of this article will appear in the California
Construction Law Reporter, published by the West Group.)
By James E. Acret
Roy
Allan Slurry Seal (RASS), a non-union contractor, for many
years supplied slurry under subcontract to R.J. Noble Company
and Southern Pacific Milling Company, both of which were
union contractors. Two unions contended that RASS was bound
by a Master Labor Agreement because RASS' subcontracts with
R.J. Noble and S.P. Milling incorporated the master agreement
by reference.
The
master agreement required signatory employers to contribute
to union fringe benefit trust funds. The union filed grievances
against RASS, and an arbitrator ordered RASS to pay back
wages and back contributions for fringe benefits to the
trust funds.
RASS filed an action to vacate the award, and the union
and the trusts filed counterclaims to confirm the award.
The District Court vacated the award, and RASS then moved
for attorney fees, relying on a reciprocal attorney fees
provision in the master agreement and on California Civil
Code §1717. The trial court awarded $119,500.50 in
attorney fees.
The
Court of Appeals reversed. Roy Allan Slurry Seal v. Laborers
International Union of North America Highway and Street
Stripers/Road and Street Slurry Local Union 1184, AFL-CIO,
et al., ___ F.3d ___, 2001 DJDAR 2229 (9th Cir. 2001).
It
would anomalous to award attorney fees under the master
labor agreement because RASS showed that it was not bound
by the agreement, relying on California law that a subcontract
does not incorporate a collective bargaining agreement by
reference unless the subcontract points specifically to
such an agreement.
RASS
argued, though, that because the union and the trust could
have recovered if they prevailed, it should be awarded attorney
fees under §1717 because it successfully argued that
it was not bound by the master agreement. The Labor Management
Relations Act has broad pre-emptive effect because federal
labor law must be uniform, and collective bargaining agreements
should be interpreted uniformly nationwide. Pre-emption
applies against §1717 because uniformity would be defeated
by applying 50 different state laws on the issue of attorney
fees.
Furthermore,
to apply §1717 would violate a second major goal of
the act, which is to enforce the parties' intent as expressed
in their negotiated agreement. The act assumes the parties
negotiate from positions of equal strength while §1717
takes the opposite approach by assuming an inequality in
bargaining power and rewriting the terms of the contract
in an effort to mitigate that inequality. Since RASS sought
to use a state statute to modify the express terms of the
act, the court reversed the fee award.
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To learn more about Thelen Reid's Construction and Government Contracts Department, click here. For more information about books and other legal materials written by James Acret, click here and enter "Acret" in the Search Products Field. To learn more about topics covered in this article, contact Paul Berning at (415) 369-7229 or at pwberning@thelen.com.
©2001 Thelen Reid Brown Raysman & Steiner LLP
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