In the
United States Court of Appeals
For the Seventh Circuit
Nos. 09-1383 & 09-1656
S HEEHY E NTERPRIZES, INC.,
Petitioner,
Cross-Respondent,
v.
N ATIONAL L ABOR R ELATIONS B OARD ,
Respondent,
Cross-Petitioner,
and
L ABORERS’ INTERNATIONAL U NION OF
N ORTH A MERICA, S TATE OF INDIANA
D ISTRICT C OUNCIL,
Intervening-Respondent.
Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board.
No. 25-CA-30583
A RGUED JANUARY 21, 2010—D ECIDED A PRIL 20, 2010
2 Nos. 09-1383 & 09-1656
Before E ASTERBROOK, Chief Judge, and C UDAHY and
M ANION, Circuit Judges.
M ANION, Circuit Judge. Without first reading the docu-
ment he was signing, James Sheehy, the president of
Sheehy Enterprizes, Inc., entered a collective bargaining
agreement with the Laborers’ International Union of
North America, State of Indiana District Council. Under
the terms of that agreement, Sheehy Enterprizes became
obliged to pay its employees union wages and make
union benefit fund contributions on their behalf for all
work it performed in Indiana and four counties in Ken-
tucky. In 2007, when confronted by a union representa-
tive, Sheehy claimed that the company was not bound
by the agreement, prompting the union to file an unfair
labor practice charge with the National Labor Relations
Board. The Board’s general counsel then filed a com-
plaint against the company. An administrative law judge
held a hearing and found that Sheehy Enterprizes had
committed an unfair labor practice by repudiating the
collective bargaining agreement, and the Board issued an
order affirming that decision. The company petitions
for review of the Board’s order, and the Board cross-
petitions for enforcement of the same. For the reasons
that follow, we deny the company’s petition for review
and grant the Board’s cross-petition for enforcement.
I.
Sheehy Enterprizes, Inc. (“Company”), is an Indiana
construction business that specializes in concrete installa-
tion. James Sheehy is the Company’s president and co-
Nos. 09-1383 & 09-1656 3
owner and oversees its day-to-day operations. Until 2003,
the Company’s business was limited to non-union jobs.
But in October 2003, the Company began working as a
subcontractor on a student housing project on the Indiana
University-Purdue University, Indianapolis (“IUPUI”)
campus. The general contractor for the project was Wil-
helm Construction, a signatory to a collective bargaining
agreement (“CBA”) between a construction employer
association and the Laborers’ International Union of
North America, State of Indiana District Council (“Un-
ion”). Under the CBA, Wilhelm Construction was en-
couraged to use subcontractors that were signatories to
the CBA and was required to notify the Union if any of
its subcontractors were not. On October 15, 2003, David
Frye, the Union’s local business manager, visited the
IUPUI construction site and noticed that the non-union
Company was working on the project. Frye advised
Wilhelm Construction’s superintendent that this was in
violation of the CBA. The superintendent set up a
meeting between Frye and James Sheehy the next day.
During the meeting, Sheehy signed an agreement that
made the Company a party to the CBA. Sheehy
mistakenly believed that the CBA was limited to the
IUPUI project when, in fact, it covered all concrete work
that the Company would perform in Indiana through
March 31, 2004. Frye told Sheehy that the CBA would not
apply to work that the Company had previously bid. In
accordance with the CBA, the Company paid union
wages and made union benefit-fund contributions for
the duration of the IUPUI project.
4 Nos. 09-1383 & 09-1656
Following the expiration of the CBA on March 31, 2004,
the Company began work on another union project at
IUPUI involving the construction of a parking garage. On
May 21, 2004, Sheehy signed a new agreement binding
the Company to a new CBA (“2004 CBA”)—the one at
issue in this case—that ran from April 1, 2004 until
March 31, 2009. The new CBA was essentially the same
as the prior CBA, covering all work performed by the
Company in Indiana and four counties in Kentucky. But
again, without reading the CBA, Sheehy mistakenly
thought that the Company would be unionized for only
the current IUPUI project rather than for all projects
during the next five years. The Company made union
benefit-fund contributions on behalf of its employees
for the 2004 IUPUI project, the last such contribution
occurring on August 27, 2004.
During the next three years, the Company worked
mostly for non-union general contractors and did not
pay union wages or make benefit-fund contributions.
Then, on November 1, 2007, Union business agent
Dwight Smith observed several Company employees
working at a Walmart project site in Indianapolis
that had been bid by a general contractor that was a
signatory to the CBA. Not recognizing the workers or
the Company, Smith contacted Frye and relayed the
information. Frye told Smith that the Company was
indeed a party to the CBA and to sign up any em-
ployees who did not have union cards. As Smith ap-
proached the Company workers, Sheehy met him and
told him that the Company was not a union contractor.
Nos. 09-1383 & 09-1656 5
Sheehy then spoke with Frye by phone, who informed
him that the 2004 CBA was in force between the Union
and the Company. Sheehy denied being bound by the
2004 CBA but indicated he was willing to work something
out for that particular project. Frye responded that there
was nothing to work out because the 2004 CBA was in
effect. On January 24, 2008, the Union filed an unfair
labor practice charge with the National Labor Relations
Board (“Board”).
Based on the Union’s charge, the Board’s general
counsel filed a complaint against the Company on April 30,
2008. Following a hearing, an administrative law judge
(“ALJ”) concluded that the Company had violated
§§ 8(a)(1) and (a)(5) of the National Labor Relations Act
(“Act”), 29 U.S.C. §§ 151 et seq., by repudiating the 2004
CBA. The ALJ ordered the Company to cease and desist
from refusing to adhere to the 2004 CBA and to make
its employees and the Union whole for any wages or
benefits it had failed to pay. The Company filed its ex-
ceptions to the ALJ’s decision with the Board. A two-
member panel of the Board affirmed the ALJ’s deter-
minations and adopted his recommended order with
slight modifications not relevant here.1 The Company
1
The Company argues that the two-member panel of the Board
lacked authority to hear this dispute due to the absence of a
three-member quorum of the entire Board. The Company
recognizes that our decision in New Process Steel, L.P. v. NLRB,
564 F.3d 840 (7th Cir.), cert. granted, 130 S. Ct. 488 (2009),
(continued...)
6 Nos. 09-1383 & 09-1656
petitions for review of the Board’s order, and the
Board cross-petitions for enforcement.2
II.
Initially, the Company argues that the Board lacked
authority to decide the dispute because it did not
involve an unfair labor practice.3 Under § 7 of the Act,
employees have the right to bargain collectively through
representatives of their own choosing. 29 U.S.C. § 157.
Section 9(a) provides that the bargaining agent for
the employees in an appropriate unit must be the rep-
resentative “designated or selected for the purposes of
collective bargaining by the majority of the employees.” Id.
§ 159(a). It is an unfair labor practice under §§ 8(a)(1)
and (b)(1)(A) for an employer or union, respectively, to
interfere with, restrain, or coerce employees in the
exercise of their rights under § 7. Id. §§ 158(a)(1) and
(b)(1)(A). Such a violation occurs when a union and
employer enter a CBA recognizing the union as the ex-
clusive bargaining agent when it does not enjoy the
1
(...continued)
forecloses that argument, but raises it so that the issue is
preserved.
2
The Union has intervened in support of the Board and urges
enforcement of its order.
3
Under § 10(a) of the Act, “[t]he Board is empowered . . . to
prevent any person from engaging in any unfair labor prac-
tice . . . affecting commerce.” 29 U.S.C. § 160(a).
Nos. 09-1383 & 09-1656 7
support of a majority of employees. Int’l Ladies Garment
Workers’ Union v. NLRB, 366 U.S. 731, 737-38 (1961). But
in § 8(f), Congress has carved out an exception to
this general rule for employers in the construction indus-
try. Under that provision, construction employers can
lawfully enter into so-called “pre-hire agreements” with
unions that do not have majority support. 29 U.S.C.
§ 158(f). The parties agree that the 2004 CBA was a § 8(f)
agreement.
In John Deklewa & Sons, 282 N.L.R.B. 1375, 1387 (1987),
enforced sub nom. International Association of Bridge, Struc-
tural & Ornamental Workers, Local 3 v. NLRB, 843 F.2d 770
(3d Cir. 1988) (“Deklewa”), the Board held that a § 8(f)
agreement confers a limited § 9(a) representative status
on a union signatory and that an employer signatory
commits an unfair labor practice under §§ 8(a)(1) and
(a)(5) by unilaterally repudiating the agreement while it
is in force.4 A few years later in NLRB v. Bufco Corp., 899
F.2d 608, 611 (7th Cir. 1990), this court approved the
Deklewa rule in enforcing an order of the Board that,
applying Deklewa, found an employer had committed
an unfair labor practice under §§ 8(a)(1) and (a)(5) by
repudiating its § 8(f) pre-hire agreements with a union.
4
Section 8(a)(5) of the Act makes it an unfair labor practice for
an employer “to refuse to bargain collectively with the rep-
resentatives of his employees, subject to the provisions of
section 159(a) of this title.” 29 U.S.C. § 158(a)(5). Where a CBA
is in place, the duty to bargain collectively “mean[s] that no
party to such contract shall terminate or modify such con-
tract.” Id. § 158(d).
8 Nos. 09-1383 & 09-1656
Clearly then, under the law of this circuit, the Board
has the authority to hear an unfair labor practice
dispute that, like this one, concerns the unilateral repu-
diation of a § 8(f) agreement.5
We turn, then, to the merits of the petitions. Our
review of a Board ruling is deferential. We will accept
the Board’s factual findings if they are supported by
substantial evidence in the record considered as a
whole. FedEx Freight E., Inc. v. NLRB, 431 F.3d 1019,
1025 (7th Cir. 2005) (citation omitted). We give special
deference to its credibility determinations and will not
disturb them absent extraordinary circumstances. Id. at
1026. We will uphold the Board’s legal determinations
as long as they are not irrational or inconsistent with the
5
The Company also claims that the Board lacked authority
over this unfair labor practice dispute because § 301 of the
Labor Management Relations Act, 29 U.S.C. § 185(a), creates a
cause of action for unions to sue for violations of a CBA in
federal court. There is no merit to that argument. Although it
is true that the effect of § 301 is that the Board’s authority over
an unfair labor practice “is not exclusive” when the activity
also constitutes a breach of a CBA, “[t]he authority of the
Board to deal with an unfair labor practice which also violates
a collective bargaining contract is not displaced by § 301 . . . .”
Smith v. Evening News Ass’n, 371 U.S. 195, 197 (1962). Thus, in
such cases, the district courts and the Board have concurrent
jurisdiction. William E. Arnold Co. Carpenters Dist. Council of
Jacksonville & Vicinity, 417 U.S. 12, 18 (1974); McNealy v. Cater-
pillar, Inc., 139 F.3d 1113, 1123 (7th Cir. 1998). The choice
between these fora was the Union’s prerogative.
Nos. 09-1383 & 09-1656 9
Act.6 Id. Where, as here, the Board adopted the ALJ’s
findings of fact and conclusions of law, it is the ALJ’s
determinations that we review. Id.
Sheehy admitted that he signed the 2004 CBA on May 21,
2004, on behalf of the Company, without reading it.7
That agreement was effective until March 31, 2009. But
both Frye and Sheehy testified that on November 1, 2007,
the Company, through Sheehy, denied that it was bound
by the CBA. Thus, substantial and uncontroverted evi-
dence in the record supports the ALJ’s finding that the
Company violated the Act by repudiating the 2004 CBA.
In response, the Company argues that the general coun-
sel’s complaint was barred because the Union’s January 24,
2008, charge (upon which the complaint was based) was
filed more than six months after the Union allegedly
learned (in 2004 and 2005) of the Company’s repudiation
of the 2004 CBA. Section 10(b) of the Act provides that
“no complaint shall issue based upon any unfair labor
6
In its briefs, the Company contends that our review of the
Board’s interpretation of the 2004 CBA is de novo. NLRB v. Int’l
Bhd. of Elec. Workers, Local Union 16, 425 F.3d 1035, 1039 (7th
Cir. 2005). Yet the Company does not challenge the Board’s
interpretation of the agreement and does not advance any
specific argument about how the Board’s interpretation was
incorrect. Therefore, we have no occasion to review the
Board’s interpretation of the 2004 CBA.
7
There is no evidence in the record that the Union misrepre-
sented the terms of the CBA to Sheehy or knew of his
alleged misunderstanding of the nature of the agreement.
10 Nos. 09-1383 & 09-1656
practice occurring more than six months prior to the
filing of the charge with the Board.” 29 U.S.C. § 160(b). The
Company, however, did not assert this statute of limita-
tions affirmative defense until it filed its exceptions to
the ALJ’s decision with the Board. The Board did not
consider the defense because it was untimely, having not
been raised in the Company’s answer or at the hearing
with the ALJ. The Board’s refusal to address the Com-
pany’s § 10(b) defense conformed with its usual practice
(not challenged by the Company) of deeming waived
affirmative defenses that are not raised in an answer to
the general counsel’s complaint or at the hearing before
the ALJ. Geske & Sons v. NLRB, 103 F.3d 1366, 1371
n.8 (7th Cir. 1997); NLRB v. Wizard Method, Inc., 897 F.2d
1233, 1236 (2d Cir. 1990) (citing Fed. Mgmt. Co., 264
N.L.R.B. 107, 107 (1982)). Similarly, we will not consider
this argument that was not properly presented in the
administrative proceeding. Id.
The Company did argue to the ALJ—based on what it
termed a “common law waiver theory”—that by waiting
until several years after it first learned of the Company’s
repudiation of the CBA to bring an unfair labor prac-
tice charge, the Union impliedly waived its right to com-
plain of the Company’s actions. In rejecting that argu-
ment, the ALJ chose not to credit Sheehy’s testimony
that he told Frye on two occasions in 2004 and 2005 that
the Company would not follow the CBA for non-union
projects. Instead, the ALJ credited Frye’s testimony that
he did not speak with Sheehy between May 2004
and November 2007 and did not learn that the Company
was not complying with the CBA until November 2007.
Nos. 09-1383 & 09-1656 11
In challenging that finding, the Company does not sug-
gest that extraordinary circumstances exist that would
justify our disregarding the ALJ’s credibility determina-
tion. And where, as here, the ALJ chose between two
conflicting views of the evidence, the substantial evi-
dence standard of review requires us to uphold his
factual finding that the Union did not learn of the Com-
pany’s repudiation until November 2007. New Process
Steel, 564 F.3d at 844 (citation omitted). The ALJ’s rejec-
tion of the Company’s “common law waiver” argument
was thus appropriate.
Last, the Company claims that the Board should have
deferred from hearing this unfair labor practice dispute
in favor of the arbitration procedures provided for in the
CBA, which is its usual policy when such grievance
remedies are available under a CBA. Collyer Insulated
Wire, 192 N.L.R.B. 837, 839 (1971); see also Chicago Tribune
Co. v. NLRB, 974 F.2d 933, 938 (7th Cir. 1992). But the
Company failed to make this non-jurisdictional argument
to the Board, which means that absent extraordinary
circumstances—and none are claimed by the Com-
pany—we may not consider it. 29 U.S.C. § 160(e).
III.
Based on the foregoing reasons, we conclude that
substantial evidence in the record supports the ALJ’s
finding that the Company committed an unfair labor
practice by unilaterally repudiating the 2004 CBA. The
Company waived its affirmative defense that the § 10(b)
statute of limitations bars the Board’s complaint, and the
12 Nos. 09-1383 & 09-1656
ALJ’s rejection of the Company’s common law waiver
argument is supported by substantial evidence. Further-
more, because the Company failed to present to the Board
its argument that the Board should have deferred from
hearing this dispute in favor of arbitration, we cannot
consider it. We have examined all other arguments ad-
vanced by the parties and see nothing that requires com-
ment. Accordingly, the Company’s petition for review is
D ENIED and the Board’s cross-petition for enforcement
of its order is G RANTED .
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