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EHW Constructors, J.V. v. International Union of Operating Engineers Local 302

United States District Court, W.D. Washington, Seattle

August 29, 2014

EHW CONSTRUCTORS, J. V. et al., Plaintiffs,


JAMES L. ROBART, District Judge.


Before the court is Defendant International Union of Operating Engineers Local 302's ("the Union") motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). (Mot. (Dkt. # 10).) The Union argues that the court lacks subject matter jurisdiction under Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. ( See generally id. ) The court has considered the motion, all submissions filed in support of the motion and in opposition thereto, the balance of the record, and the applicable law. In addition, the court heard the argument of counsel on August 21, 2014. ( See Dkt. # 25.) Being fully advised, the court GRANTS the Union's motion and DISMISSES this matter without prejudice.


On March 31, 2014, Plaintiffs EHW Constructors, J.V. ("EHW") and Nova Group, Inc. ("Nova Group") (collectively, "Plaintiffs") filed a complaint requesting that the court vacate an arbitration award. ( See Compl. (Dkt. # 1).) EHW is a joint venture formed by three companies, one of which is Nova Group, to bid on the MCON P-990 Explosives Handling Wharf Project # 2 ("Project") and to perform the Project contract if it was awarded to EHW. ( Id. ¶ 4.) Nova Group is a U.S.-owned company that performs boat operations for the Project and has "historically done [federal work] on a non-union basis." ( Id. ¶ 5.)

The Naval Facilities Engineering Command ("NAVFAC") solicited bids for the Project, awarded the Project contract to EHW on May 9, 2012, and ensures compliance with the assistance of an Administration Contract Officer ("ACO"), Mona Carlson. ( Id. ¶¶ 7-8, 10.) Neither NAVFAC nor ACO Carlson is a party to this lawsuit. ( See generally id. )

The Project contract includes a Project Labor Agreement ("PLA"), and also incorporates the requirements of the Davis-Bacon Act, 40 U.S.C. §§ 3141-48, and the Copeland Act, 40 U.S.C. § 3145 and 18 U.S.C. § 874, within its terms and conditions. (Compl. ¶ 8.) The PLA is a labor agreement to which both EHW and the Union are signatories. ( Id. ) NAVFAC is not a party to the PLA. ( Id. ¶ 10.) The PLA is limited to construction work at the Project site. ( Id. ¶ 8.)

At the start of the Project, the parties to the Project contract determined that the Jones Act required that a U.S.-owned company own and operate any vessels involved in the Project. ( Id. ¶ 11.) As a result, Nova Group, which is a U.S.-owned company, handles operation of the boats involved in the Project. ( Id. ) Initially, Nova Group understood that "Boat Work" was covered under the PLA. ( Id. ¶ 12.) Accordingly, Nova Group signed a letter of assent to be bound as an individual employer to the PLA for construction work on the Project. ( Id. ¶ 13.) Nova Group also paid wages and benefit contributions at rates directed by the Union based on the understanding that Boat Work was covered by the PLA.[1] ( Id. ) In addition, Nova Group deducted Union dues and fees from the pay of employees doing Boat Work on the Project as a condition of employment with Nova Group. ( See id. )

Plaintiffs' payroll records classified Boat Work as construction work under the PLA. ( Id. ¶ 14.) The Project contract between EHW and NAVFAC, however, did not provide a Davis-Bacon Act classification for Boat Work. ( Id. ¶ 14.) In December 2012, ACO Carlson raised the issue of the appropriate classification of employees engaged in Boat Work. ( Id. ¶ 15.) Plaintiffs allege that the discrepancy between the Project contract and payroll classification required Plaintiffs to initiate a conformance process under 48 C.F.R. § 22.406-3. (Compl. ¶ 15.) As a part of the conformance process, Plaintiffs, in conjunction with ACO Carlson, submitted a Request for Authorization of Additional Class or Rate, commonly referred to as an SF-1444. to the Department of Labor ("DOL"). ( See id. ¶¶ 15-16, Ex. 1 at 5.) Nova, EHW, and NAVFAC worked together to prepare the SF-1444 to submit to DOL. (Nova Resp. (Dkt. # 14) at 4 ("At the Navy's request, Nova prepared a conformance request [i.e., SF-1444] for boat work and submitted it to EHW who, in turn, submitted the documentation to NAVFAC for review before it went to DOL."); Compl. ¶ 16.)

The DOL found that Boat Work (i.e., Passenger Boat Operator, Push Boat Operator, Deckhand) was not building or construction work and so Boat Work did not require Davis-Bacon classification. ( Id. ¶ 17.) As a result of DOL's determination, ACO Carlson ordered Plaintiffs to cease requiring employees conducting Boat Work to join a union or to remit union fees. ( Id. ¶ 23.) Nova Group therefore announced that the work in question was not covered by the PLA. (Compl. Ex. 1 at 2.) Nova Group also sent a letter to the Union on May 31, 2013, disbanding itself from the Union and withdrawing its recognition of the Union's jurisdiction over the employees in question. (Nova Resp. at 5; see Compl. Ex. 1 at 2.) Plaintiffs allege that failure to follow ACO Carlson's orders could result in termination of the contract and possible prosecution under the Copeland Act, 40 U.S.C. § 3145 and 18 U.S.C. § 874. (Compl. ¶ 24.)

The Union disputes Plaintiffs' decision not to pay Boat Work according to Davis-Bacon classifications. After receiving Nova Group's May 31, 2013, letter, the Union filed grievances on June 21 and August 12, 2013, arguing that Boat Work was covered by the PLA.[2] ( Id. ¶ 25.) The Union's grievances were joined for arbitration under the terms of the PLA which provides for final and binding arbitration. ( Id. Ex. 1 at 2; Smith Decl. (Dkt. # 13) Ex. 1 at 9 (stating in Article VII, Section 3, Step 3(a) that "[t]he decision of the arbitrator shall be final and binding on all parties").)

A hearing was held on December 9 and 10, 2013, before Arbitrator Howell Lankford. (4/17/14 Black Decl. (Dkt. # 11) ¶ 7.) The Union, EHW, and a representative of NAVFAC were present and participated. ( Id. ) Nova Group made a special appearance and participated. ( Id. )

The Arbitrator issued an Award on February 21, 2014. ( Id. ¶ 9, Ex. A; Compl. Ex. 1.) The Arbitrator found that withdrawal of recognition of Boat Work as work covered by the Davis-Bacon Act violated the PLA. (Compl. ¶ 27.) The Arbitrator found that Nova Group and EHW improperly relied on the DOL decision that Boat Work was not construction work because EHW, Nova Group, and NAVFAC had submitted a "fundamentally flawed application" to the DOL such that the DOL's decision "cannot excuse the withdrawal of recognition." (4/17/14 Black Decl. Ex. A at 9-10; Compl. Ex. 1 at 9-10.)

In making his ruling, the Arbitrator described the flawed SF-1444 process as follows:

DOL's administrative rules (and DOL's republication of those formal rules as a helpful checklist for contracting officers) make it clear that the SF-1444 process requires just what it seems to require on the face of that form: signatures from the affected employees and union showing whether there is agreement or disagreement with the proposed classification rate. Here, however, the form and the job descriptions were drafted unilaterally by the Contractor with the approval of the Contracting Officer. The Union was never even advised of the intended DOL inquiry, and neither the employees nor the Union were allowed to provide a characterization of their work or to comment on the accuracy of the rates or job descriptions drafted by the Contractor.
It is important to note that the "agree/disagree" character of the SF-1444 is not an odd requirement. Every wage & hour or class/comp procedure I have ever encountered or heard of begins with an attempt to achieve a consensus job description; and no such procedure ever accepts the employer's-or, for that matter, the employees'-unilateral description. If the employees are represented by a union, that union is always involved in the process. If agreement can be achieved, then any rate or class decision can be based on the agreed consensus description without further factfinding; and if not, then the decisional part of the process cannot begin until the factual dispute has been resolved. That principle is encapsulated here by the second check box for the Contracting Officer: if "the interested parties cannot agree..." then "A determination of the question by the wage and hour division is therefore requested." To repeat, it would be astonishing if the SF-1444 "Request for Authorization of Additional Classification and Rate" did not solicit that information. The failure to question the employees and to involve the Union was a fatal procedural error; and both the "Agree" box checked by the Contractor on apparently behalf of the employees and their representative and the "... parties agree..." box checked by the Contracting Officer were false and materially misleading.

(4/17/14 Black Decl. Ex. A at 9-10; Compl. Ex. 1 at 9-10.) The Arbitrator also found that the unilateral job descriptions that Defendants incorporated into the SF-1444 application "were materially incorrect and misleading." (4/17/14 Black Decl. Ex. A at 14; Compl. Ex. 1 at 14.) Accordingly, the Arbitrator found that Nova Group "[could not] justify its withdrawal of recognition from [the Union] on the basis of the resulting DOL determination." ( Id. )

In crafting an appropriate remedy, the Arbitrator deferred addressing "the Union's broader argument-that the Davis-Bacon coverage and the DOL process do not determine the coverage of the PLA, " and instead imposed an "immediate remedy" requiring "the Contractor and the Union to revisit the SF-1444 process... [b]ecause the Contractor's withdrawal of recognition was built on the results of the botched SF-1444 applications (which were substantially falsified both by the Contractor and the [ACO])." (4/17/14 Black Decl. Ex. A at 16; Compl. Ex. 1 at 16.) In addition, the Arbitrator required Plaintiffs and Defendant jointly to request the replacement of ACO Carlson with another ACO. (Compl. ¶ 27.) The Arbitrator also required Plaintiffs to make the Union whole for any loss incurred as a result of the withdrawal of recognition of Boat Work under the prior conformance process. ( Id. )

After detailing his "immediate remedy, " the Arbitrator expressly "retain[ed] jurisdiction in order to resolve issues that may arise in the interpretation and application of the stated remedy... [and] to consider the Union's alternative theory of this case- after further argument-if the dispute has not been resolved by the DOL processes." (4/17/14 Black Decl. Ex. A at 18; Compl. Ex. 1 at 18.)

Plaintiffs have brought this suit to vacate the Arbitrator's Award.[3] ( See generally Compl.) The Union moves to dismiss Plaintiffs' complaint on grounds that the Arbitrator's Award is not final. ( See generally Mot.) Defendants respond that the Award is final, and even if it is not final, the court should still review the Award based on the exceptional circumstances of this case. ( See ...

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