International Association of Sheet Metal v. A-1 Refrigeration of Hibbing

Background

The dispute concerns whether A-1 Refrigeration of Hibbing, Inc. agreed to be bound by a collective-bargaining agreement that took effect in 2017. The International Association of Sheet Metal, Air, Rail, and Transportation Local Union No. 10 argued that A-1 agreed to the agreement and failed to make required contributions to the union’s fringe-benefit funds. The union filed a grievance, obtained an arbitration award requiring A-1 to pay $140,481.65, and brought this action under Section 301 of the Labor Management Relations Act to enforce the award.

A-1 maintained that it did not agree to the 2017 collective-bargaining agreement. A-1 had signed a 2001 document agreeing to follow the labor agreement then in effect, but it did not sign the 2017 agreement or any written agreement adopting the later collective-bargaining agreements. A-1 also asserted that, around the time of the 2001 document, it and the union made a verbal agreement concerning union membership, dues, and fringe-benefit contributions for A-1’s two co-owners. A-1 did not seek enforcement of that alleged verbal agreement or ask the court to find that it existed; it wanted to use the alleged agreement to explain its conduct.

Evidence concerning the 2017 agreement

The court identified evidence supporting the union’s position. A-1 made some monthly fringe-benefit and dues payments to Local 10 for multiple employees. The payments and contributions were consistent with wage schedules distributed by the employer association. Employee wages were also consistent with those schedules. A-1 co-owner Richard Lees sought and received health-care benefits established by the collective-bargaining agreement. A-1 submitted hours reports, participated in audits conducted under the agreement, provided company information for the funds’ tax filings, and used Local 10’s hiring hall for covered work. A-1 also paid a monthly industry-fund fee to support the employer association.

The court also identified evidence supporting A-1’s position. A-1 never signed the 2017 agreement or another document assenting to it. A-1 did not join the employer association, did not authorize it to bargain on A-1’s behalf, and never participated in bargaining with Local 10. A-1 did not make fringe-benefit payments for co-owner Ernest Aikey. The union did not challenge the sufficiency of A-1’s payments for Aikey until 2016, when an affiliated fund audited A-1 and preliminarily assessed contributions for earlier years. After A-1 objected based on the alleged verbal agreement, the fund did not pursue the assessment.

Analysis

The court explained that arbitration is based on agreement, and a party cannot be required to arbitrate a dispute it did not agree to submit. Under controlling Eighth Circuit law, a collective-bargaining agreement does not always need to be signed. The relevant question is whether the employer’s conduct objectively showed an intention to follow and be bound by the agreement. That is a factual question focused on objective conduct rather than a party’s private beliefs.

The court concluded that a genuine dispute of material fact existed about whether A-1 objectively intended to be bound by the 2017 agreement. Because the evidence could reasonably be interpreted in favor of either the union or A-1, the court could not resolve that question through summary judgment. The court also rejected the union’s reliance on prior Eighth Circuit decisions as establishing that any particular fact controlled the result, noting that the circumstances here differed from those cases.

A-1 separately sought partial summary judgment on whether it could present evidence of the alleged verbal agreement at trial. The court denied that motion because allowing the presentation of evidence was not an appropriate subject for a summary-judgment motion. The court further stated that, for the purpose A-1 described, the alleged verbal agreement appeared immaterial to the objective-conduct inquiry because A-1 proposed using it to show its subjective reason for conducting business as it did.

Disposition

Judge Eric C. Tostrud ordered that the union’s motion for summary judgment was DENIED. He also ordered that A-1’s motion for summary judgment and alternative motion for partial summary judgment was DENIED.