Operating Engineers Local No. 12

National Labor Relations Board - Board Decisions

Jun 28, 1974

212 N.L.R.B. 343 (N.L.R.B. 1974)

OPERATING ENGINEERS LOCAL NO. 12
International Union of Operating Engineers, Local
Union No. 12 and Griffith Company; J. W. Nicks
Construction Co.; Security Paving Co., Inc.; Sukut-
Coulson, Inc.; and V & L Construction Co., Inc.
International Union of Operating Engineers, Local
Union No. 12 and Griffith Company; J. W. Nicks
Construction Co.; Security Paving Co., Inc.; and Su-
kut-Coulson, Inc. and Associated General Contrac-
tors of California, Inc.; Building Industry
Association of California, Inc.; and Engineering and
Grading Contractors Association, Inc., Parties to the
Contract. Cases 21-CC-14,51 and 21-CE-126
June 28, 1974
DECISION AND ORDER
On September 17, 1973 , Administrative Law Judge
Maurice M . Miller issued the attached Decision in
this proceeding . Thereafter, the General Counsel and
the Charging Parties filed exceptions and supporting
briefs, the Respondent Union and the Intervenors
filed answering briefs, and the Intervenors filed a
brief in support of the Administrative Law Judge's
Decision.
The Board has considered the record and the at-
tached Decision in light of the exceptions and briefs
and has decided to affirm the rulings , findings, and
conclusions of the Administrative Law Judge and to
adopt his recommended Order with the following
modifications and additions.
In this case the General Counsel has alleged that
the Respondent Union violated Sections 8(e) and
8(b)(4)(ii)(B) of the Act by entering into , maintaining,
and enforcing certain provisions in its Master Labor
Agreement, more specifically set forth in the attached
Administrative Law Judge 's Decision, whereby the
contracting employers agree not to subcontract work
to any subcontractor whose name appears on a
monthly list of employers delinquent in their pay-
ments to the several fringe benefit trust funds jointly
maintained and administered by the Union and the
signatory Employers.
The General Counsel contends that Urban Pacific,
the delinquent subcontractor , is the only employer
with which the Union has a legitimate , primary labor
dispute and the Charging Parties, who are not them-
selves in default in their payments to the trust funds,
are neutral, secondary employers entitled to the pro-
tection of the statute . In support of this contention the
General Counsel points out that these employers are
required under the challenged contract to pay not
only the delinquency incurred by Urban Pacific on
their jobs, but all preexisting amounts owed the trust
funds from previous jobs with other contractors.
343
It may be conceded on this record that the above
contractual provisions and the trust fund
administrator's efforts to enforce them with respect to
Urban Pacific contemplate that contractors, signato-
ry to the Union's Master Labor Agreement, would
cease doing business with that delinquent subcontrac-
tor. While it is clear that Urban Pacific is a primary
employer, subject to the thrust of the Union's contrac-
tual and economic force, it does not follow that con-
tractors doing business with Urban Pacific are, as the
General Counsel asserts, neutral employers unin-
volved in the Union's dispute over delinquent pay-
ments to its trust funds.
The critical question-to be determined in this case
is not the degree or nature of the Union's restraint
against the Charging Parties or Urban Pacific's status
as a primary employer, but whether in the circum-
stances of this case it can fairly be held that the agree-
ment subscribed to be all contracting employers was
substantially in the interest and for the protection of
the employees of those employers. Accepting, as we
di, the Administrative Law Judge's conclusion that
the record will not support a finding of a single, indus-
trywide bargaining unit,' the answer to this question
must be in relation to multiple units of employees
whose employers have bound themselves to a volun-
tary union-employer procedure for the collection of
delinquent payments to the trust funds. We agree with
the Administrative Law Judge that this question
should be answered in the affirmative.
It is by now well established that every bargaining
contract with a "cease doing business" objective, al-
though literally within the proscription of Section 8(e)
of the Act, is not necessarily unlawful. The Board and
the courts have held that a union may lawfully require
a contracting employer to cease or refrain from doing
business with another employer if the union's objec-
tive properly falls within certain carefully delineated
exceptions, such as "work preservation"2 and mainte-
i In this respect we do not adopt the Administrative Law Judge's com-
ments and appraisal of the Decision of the Administrative Law Judge mJoint
Council of Teamsters No 42, IBT (Merle Riphagen, 212 NLRB No. 5 (1974).
2 National Woodwork Manufacturers Association v. N L.R B, 386 U.S. 612
(1967); Orange Belt District Council of Painters No 48, AFL-CIO v. N.L.R.B.,
328 F 2d 534 (C.A.D.C., 1964). Contrary to our dissenting colleagues, the
Supreme Court has held that the issue of voluntarism with respect to a proper
interpretarion of Sec. 8(e) is relevant and material. In National Woodwork,
supra, the Court specifically pointed out that the legislative history of Sec.
8(e) was silent with respect to a congressional purpose of "curtailing the
ability of labor and management voluntarily to negotiate for solutions" to the
problems of automation and onrushing technology (Emphasis supplied.) In
the absence of this history the Court concluded that Sec 8(e) did not prohibit
voluntary agreements directed to work preservation This is the clear and
explicit language of the Supreme Court, which has not been altered by
Congress.
To suggest, as our dissenting colleagues do, that there is a material distinc-
tion between voluntary work preservation agreements and voluntary second-
ary boycott agreements, so far as the effect on the secondary employer is
Continued
212 NLRB No. 4
344 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
nance of "union standards."3 Such cases, unlike the
instant case, have generally involved attempts to pre-
vent a contracting employer from doing business with
a nonunion subcontractor. The difference here is that
all involved employers are signatory to the Union's
contract and have agreed not to do business with each
other if one of them is delinquent. While the context
is unusual, it should not diminish our examination of
the Union's objective with respect to each unit of
employees whose employer has been required to cease
doing business with a delinquent subcontractor.
In concluding that the General Counsel has not
established a violation of the statute in this case the
Board has been cognizant of the great strides made by
unions and employers in the area of fringe benefits for
employees, such as the health and welfare, pension,
vacation, and apprenticeship programs in this case.
As the Supreme Court noted in National Woodwork
Manufacturers Association v. N.L.R.B., supra, with re-
spect to the efforts of unions and employers to treat
the problems of technology and automation, the
Board should not lightly impute to Congress in Sec-
tion 8(e) an intent to hinder or impede such necessary
and commendable efforts to guarantee employees
these ancillary benefits. We need not and do not pass
on the validity of restrictive agreements in industries
other than the construction industry or in circum-
stances different from those in this case. Here at least
it is clear that a substantial number of the Union's
members work from job to job and from contractor
to contractor with no certainty that they will remain
employed in any particular unit for any period of
time. Without a trust fund arrangement encompass-
ing the interests of employees of all employers in-
volved, no unit of employees can be assured that
funds will be available for medical emergencies or for
retirement. Surely, this is not a case where the Union
has sought to protect the interests of union members
concerned , reduces the argument to a question of semantics Clearly, in both
situations enforcement of the agreement results in a cessation of business
between two employers, one of whom may be considered secondary The
Supreme Court went to great lengths in the National Woodwork case to point
out that the legality of such an agreement cannot and does not depend upon
the literal language of Sec 8 (e) In that case the Court upheld the legality of
a voluntary agreement requiring an employer, at the insistence of a union
representing carpenters, to cease doing business with neutral suppliers of
prefabricated doors The Court was gravely concerned with the impact of
automation on the ability of union craftsmen to earn a living at their tradi-
tional craft and largely for that reason held that Sec 8(e) should not be
interpreted to prohibit such voluntary agreements between a union and a
contracting employer We believe the same reasoning should apply in the
instant case, particularly where , as here , all employers affected have signed
the same restrictive agreement relating directly to the pension and welfare
benefits of their own employees as well as the employees of others
J International Union, United Mine Workers of America ( Dixie Mining Com-
pany), 188 NLRB 753 (1971); Meat and Highway Drivers, Dockmen , Helpers
and Miscellaneous Truck Terminal Employees, Local Union No 710, Teamsters
[Wilson & Co / v NLRB , 335 F 2d 709 (C A D C, 1964), Truck Drivers
Union Local No 413, Teamsters [Brown Transport Corporation] v N L R B.,
334 F 2d 539 (C A D C, 1964)
generally, whether or not employed by a contracting
employer. This agreement and its maintenance is ad-
dressed solely to the labor relations of the contracting
employers vis-a-vis their own employees. As such, it
satisfies the touchstone of legality set forth by the
Supreme Court in National Woodwork, supra. It may
be argued that the delinquency of a single subcontrac-
tor, such as Urban Pacific, is not such an impediment
to the existence or solvency of the trust funds to war-
rant the drastic procedure of a restrictive covenant
operating against all other contractors. But the way is
not open to disregard the delinquency of one subcon-
tractor without disregarding the delinquencies of all
others. Totaled together, the impact of many delin-
quent subcontractors doing business with impunity in
this industry would be destructive of the entire trust
fund plan. The administrator for the trust funds testi-
fied that inability to collect funds for the health and
welfare fund at one time sharply affected the solvent
status of that fund. The trustees were required to bor-
row $2 million, change carriers, cut medical benefits,
and reduce costs in every possible manner. Thereaf-
ter, benefits available under this plan were improved
as a result of stepped-up collection procedures, in-
cluding enforcement of the restrictive covenants
against delinquent contractors.
On the basis of the foregoing we conclude that the
agreement of the Charging Parties not to do business
with delinquent subcontractors and the trust fund
administrator's invocation of that agreement with re-
spect to Urban Pacific was primary conduct, relating
directly and immediately to the interests and condi-
tions of employment of the employees in each unit of
contracting employers involved in this case. We shall
therefore dismiss this complaint in its entirety.4
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the complaint herein be, and it hereby is,
dismissed in its entirety.
CHAIRMAN MILLER AND MEMBER KENNEDY, dissenting:
For the reasons set forth in our dissent in Joint
Council of Teamsters No. 42, et al. (Merle Riphagen),
212 NLRB No. 5, issued today, we dissent from our
colleagues ' dismissal of the 8(b)(4)(ii)( B) and 8(e)
complaint herein, and would find the alleged viola-
tions of the Act.
Member Jenkins concurs in dismissing the complaint herein for the rea-
sons stated by him in Joint Council of Teamsters No 42, International Brother-
hood of Teamsters (Merle Riphagen ), 212 NLRB No 5
OPERATING ENGINEERS LOCAL NO. 12 345
DECISION
STATEMENT OF THE CASE
MAURICE M. MILLER, Administrative Law Judge: Upon
charges and amended charges filed and duly served, the
General Counsel of the National Labor Relations Board
has issued a consolidated complaint and notice of hearing
against International Union of Operating Engineers, Local
Union No. 12, designated as Respondent Union herein,
under Section 10(b) of the National Labor Relations Act, as
amended. Griffith Company, designated as Griffith herein-
after, J. W. Nicks Construction Co., Security Paving Co.,
Inc., Sukut-Coulson, Inc., and V & L Construction Co.,
Inc., all collectively designated as Five Contractors herein-
after, had filed their initial CC and CE charges on March
8, 1973. Thereafter, amended charges in Case 21-CE-126
had been filed on April 26 and May 4 respectively. General
Counsel's consolidated complaint and notice of hearing is-
sued May 7, 1973; copies thereof were, subsequently, duly
served. Within General Counsel's consolidated complaint,
Respondent Union has been charged with unfair labor
practices affecting commerce under Section 8(b)(4)(ii)(B)
and 8(e), and Section 2(6) and (7) of the statute. (61 Stat.
136, 73 Stat. 519.) Respondent Union's answer, duly filed,
concedes certain factual matters set forth within General
Counsel's consolidated complaint; Respondent Union has,
however, denied the commission of unfair labor practices.
Pursuant to notice, a hearing with respect to the issues
was held at Los Angeles, California, on June 21 and 22,
1973, before me. The General Counsel and Respondent
Union were represented by counsel. When the hearing con-
vened, counsel representing 21 trustees of the Operating
Engineers health and welfare, pension, vacation-holiday,
and apprentice training trust funds filed a motion to inter-
vene. The motion was granted; thereafter, Intervenor's
counsel participated actively throughout the hearing. Each
party was afforded a full opportunity to be heard, to exam-
ine and cross-examine witnesses, and to introduce evidence
pertinent to the issues. Since the hearing's close, briefs have
been received from General Counsel's representative, to-
gether with Intervenor's and Respondent Union's counsel.
These briefs have been duly considered.
FINDINGS OF FACT
Upon the entire testimonial record, documentary evi-
dence received , and my observation of the witnesses, I make
the following findings of fact:
I JURISDICTION
Respondent Union has raised no question herein with
respect to General Counsel's jurisdictional claims. Upon the
consolidated complaint's relevant factual declarations, I
make the following factual determinations.
Associated General Contractors of California, Inc., here-
in called AGC; Building Industry Association of California,
Inc., herein called BIA; and Engineering and Grading Con-
tractors Association, Inc., herein called EGCA, are trade
associations of contractors, comprised of numerous em-
ployer members, which exist for, and engage in, collective
bargaining; they negotiate collective-bargaining contracts
on behalf of their respective employer members with vari-
ous labor organizations, including Respondent Union here-
in. Throughout the period with which this case is concerned,
Griffith, Nicks, and Security, California corporations, have
been AGC employer-members. The various contractor
members of AGC, BIA, and EGCA, for whom these trade
associations have jointly negotiated and signed a multiem-
ployer, multiassociation contract with Respondent Union
herein-which group includes Griffith, Nicks, and Security
previously noted-are currently engaged in business within
southern California as building and construction industry
contractors. They maintain their principal offices and
places of business within the State of California; taken as
a group, they purchase and receive supplies valued in excess
of $50,000 annually, which come to them directly from out-
of-state suppliers.
Sukut-Coulson and V & L Construction, California cor-
porations, likewise maintain their principal offices and
places of business within that State; they are likewise en-
gaged in business as southern California building and con-
struction industry contractors. Each purchases and receives
supplies valued in excess of $50,000 annually, directly from
out-of-state suppliers.
Urban Pacific Corp. and Gary M. Budd, Jim Comaianni
Construction Co., a joint venture; Urban Pacific Construc-
tion Co., Inc.; Urban Pacific Construction Co.; Jim Co-
maianni Construction Co; Jim Comaianni Construction
Company & Urban Pacific Const. Co., Inc., a joint venture;
Urban Pacific Corp.; Lark Construction Co., Inc.; Jim Co-
maianni Construction Co., and Urban Pacific Construction
Co., a joint venture; Urban Pacific Construction Co., Inc.
and Jim Comaianni Construction Co., et al; Urban Pacific
Construction Co., Inc. and Jim Comaianni, a joint ven-
ture-collectively designated as Urban Pacific herein-are,
and have been, at all times material herein, engaged in
business as southern California underground piping and
sewer-laying contractors, serving the building and construc-
tion industry. At various times, during the period with
which this case is concerned, the Five Contractors previous-
ly designated have subcontracted to Urban Pacific the per-
formance of underground piping and sewer-laying work at
several southern California construction projects.
With matters in this posture, I conclude and find that the
various employer members of AGC, BIA, and EGCA, in-
cluding Griffith, Nicks, and Security particularly, together
with Sukut-Coulson and V & L Construction, are, and have
been, at all times material, employers engaged in commerce
or in a business affecting commerce within the meaning of
Section 8(e) of the Act, and persons engaged in commerce
or in an industry affecting commerce within the meaning of
Section (b)(4)(ii)(B) of the statute. Likewise, I conclude and
find that Urban Pacific is, and has been, at all times materi-
al, a person engaged in commerce or in an'^industry affecting
commerce within the meaning of these designated statutory
provisions. With due regard for presently applicable juris-
dictional standards, I find the proposed assertion of Board
jurisdiction, in this case, warranted and necessary to effec-
tuate statutory objectives.
346 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
II RESPONDENT UNION
International Union of Operating Engineers, Local
Union No. 12, designated as Respondent Union within this
decision , is, and at all times material herein has been, a
labor organization within the meaning of Section 2(5) of the
Act, as amended, which admits to membership certain em-
ployees of various AGC, BIA, and EGCA employer-mem-
bers, Sukut-Coulson, V & L Construction, and Urban
Pacific respectively.
III THE UNFAIR LABOR PRACTICES
A. Issues
General Counsel charges Respondent Union with unfair
labor practices, bottomed on certain provisions of Respon-
dent Union's current contract with the particular contractor
associations previously designated, together with certain
conduct, purportedly undertaken in Respondent Union's
behalf, consistent with those provisions.
The contractual clauses in question are characterized as
violative of Section 8(e) of the statute, per se, because their
thrust, realistically considered, is purportedly secondary in
nature, and because they cannot be considered privileged
by the designated section's construction industry proviso.
Further, General Counsel charges Respondent Union with
responsibility for a demand-purportedly made by repre-
sentatives of the Operating Engineers health and welfare
fund, pension trust, vacation-holiday fund, and Southern
California Operating Engineers apprentice training trust,
collectively designated as trust funds herein, functioning in
Respondent Union's behalf-that the Five Contractors
should pay the trust funds certain pro rata sums sufficient
to cover delinquent contributions which various Urban Pa-
cific enterprises purportedly owe these funds. Within his
complaint General Counsel charges that Respondent
Union, through its statutory agents, more particularly, the
trust funds noted, threatened to strike and shut down all
southern California construction projects of these Five Con-
tractors where employee members of Respondent Union
were then working, should these Five Contractors fail to
proffer the contributions specified. Respondent Union's de-
mand, coupled with its purported threat, is characterized as
violative of Section 8(b)(4)(ii)(B) of the statute.
Respondent Union contends that the contractual provi-
sions herein challenged should be considered primary in
nature; that they were drafted and negotiated by spokesmen
for the contractors associations and Respondent Union
merely to protect the work and fringe benefit standards
previously established for workers compassed within the
questioned contract's so-called "principal work unit" par-
ticularly; and that both the challenged contract provisions
and consequent trust fund efforts to invoke or enforce them
should, therefore, be considered lawful. No significant con-
flicts have been presented for Board resolution with respect
to the actual situation giving rise to the present controversy;
the present record, therefore, presents nothing more than a
legal question.
B. Facts
1. The master labor contract
The contract with which we are presently concerned is
designated the master labor agreement between southern
California general contractors and Respondent Union. It
was negotiated and signed with a July 1, 1969, effective date,
to remain in effect until July 1, 1974, with a conventional
renewal provision calling for its continuation, under certain
circumstances, from year to year thereafter. The contractor
members of the various trade groups privy thereto, previ-
ously noted generally, are engaged in construction, survey
work, and asphalt production within 11 contractually speci-
fied southern California counties, exclusive of San Diego
County; the master contract purports to cover persons
working for these contractors, within Respondent Union's
recognized jurisdiction, both on construction jobsites and
within the particular contractors' yards and shops. Its work-
er coverage includes a wide variety of job classifications,
defined and compassed within nine contractually specified
groups. With respect to persons performing work within
these given job classifications, the master contract contains
detailed provisions governing their wages, hours, and work-
ing conditions, together with union recognition, strike-lock-
out, and jurisdictional dispute clauses, grievance settlement
provisions, and certain further provisions conventionally
found in collective-bargaining contracts. The agreement,
likewise, provides various fringe benefits for covered work-
ers; specifically, these fringe benefits compass a health and
welfare plan, pensions, and pay for vacations and holidays.
Since many workmen, within the building and construc-
tion industry, frequently shift their employment from one
contractor to another as various construction projects start
and finish, a method has been provided whereby such work-
men may receive proper credit for their earned fringe bene-
fits. This is currently being done, pursuant to several
separate agreements and declarations of trust previously
negotiated, by requiring each contractually covered em-
ployer to file regular monthly reports, listing the hours
worked by his employees within contractually designated
job classifications; and to pay separately computed sums
calculated with regard for the total number of monthly
hours which such employees may have worked into trust
funds which Respondent Union and the various contractors
associations maintain and jointly administer. In turn, these
trust funds are required, pursuant to their respective trust
agreements previously noted, to credit their records, sepa-
rately maintained for each workman listed, with the total
monthly working hours which his employer may have re-
ported, and to disburse earned benefits pursuant to the
terms and conditions defined therein.
Should any contractor bound by the southern California
master labor agreement become delinquent with respect to
trust fund contributions, the concerned fund or funds must
report such a delinquent contractor to each contractors as-
sociation and Respondent Union, monthly. Preliminarily,
however, the master labor agreement provides, within arti-
cle I, paragraph B-14, that the trustees of the trust funds,
through their administrator regularly retained:
OPERATING ENGINEERS LOCAL NO. 12 347
... shall give written notice to a delinquent Contrac-
tor or Subcontractor, with a copy to the Union, advis-
ing him to correct a delinquency within ten (10) days
of the giving of such notice. The Union shall withhold
services from any or all jobs of such delinquent Con-
tractor or Subcontractor after said ten (10) day period
if the delinquency is not corrected... .
The trust funds administrator, likewise, may, following a
failure of negotiations or consultation with any contractor
looking toward the collection of his purportedly delinquent
payments, commence legal proceedings against such a de-
linquent contractor. The master labor agreement, however,
provides further that trustees of the trust funds, through
their administrator duly designated, may initiate procedures
whereby contractually committed contractors may become
liable for various accrued or current delinquencies of their
subcontractors, likewise covered by the master labor agree-
ment with which we are now concerned. The relevent claus-
es in this connection are the clauses which General Counsel
has, herein, challenged; they read in full as follows:
Article I, Paragraph B-15. The Trustees of the Trust
Funds, through their Administrator, shall furnish each
Contractors Association and the Union, with a list of
delinquent Contractors each month. The Contractor
agrees that he will not subcontract any portion of his
job to any Contractor whose name appears on the de-
linquent list until such Contractor has paid all delin-
quent monies to the various Trust Funds.
(a) Any disputes between the parties concerning the
payment or nonpayment of monies due the Trust
Funds are not subject to Article V [procedure for settle-
ment of grievances and disputes] of the Agreement.
16. In the event the Contractor subcontracts to any
such delinquent Subcontractor , in violation of the fore-
going, the Contractor shall be liable to the Trustees for
all accrued delinquencies of the Subcontractor and
shall withhold sufficient funds from monies due or to
become due such Subcontractor and shall pay the sums
over to the Trust Funds. If a Subcontractor becomes
delinquent after commencing work for the Contractor,
the Contractor shall be liable for all delinquencies in-
curred on the job after ten (10) days following the date
of the delinquency list on which the Subcontractor's
name first appeared . The Contractor shall terminate
the contract of the Subcontractor who fails to properly
correct his delinquency.
(a) Where the Contractor fails or refuses to make
payments required under the above provisions, the
Union shall have the right to withhold services from
any or all jobs of such Contractor:
On their face , these clauses seemingly require a prime or
general contractor to refrain from subcontracting any por-
tion of his current project or projects with another contrac-
tor-likewise bound by the master labor agreement here-
in-listed as delinquent within any previously disseminated
trust fund delinquency list, unless such a listed contractor
has, since the list's dissemination, settled his trust fund de-
linquencies. Should the prime or general contractor, never-
theless, negotiate a subcontract with a previously listed
delinquent firm, that prime or general contractor will, essen-
tially, become a guarantor for his newly engaged
subcontractor's previously "accrued" delinquencies. When
a previously nondelinquent subcontractor, however, be-
comes delinquent after commencing his work for a prime or
general contractor, the latter may become liable merely for
"delinquencies incurred on the job" following a contractu-
ally defined grace'period.
These quoted contractual provisions are clearly designed
to serve a dual purpose. First: They define the means where-
by the trust funds administrator, together with concerned
prime contractors, may put pressure on some delinquent
subcontractor to remedy his own delinquency, whereby the
possible loss of his current subcontract may be forestalled.
Second: They promote compliance with certain procedural
steps reasonably calculated to safeguard the fringe benefit
eligibility prospects of the particular subcontractor's con-
cerned employees, while promoting the financial integrity of
the trust funds involved by insuring that, if such a subcon-
tractor cannot or will not settle his contribution delinquen-
cies, another responsible party will in his stead provide the
trust funds with the requisite sums due.
The General Counsel essentially contends, herein, that
these contractual provisions, by virtue of their specific lan-
guage or those foreseeable consequences which would nec-
essarily follow their projected implementation with respect
to particular situations, have a secondary thrust, since they
expressly require a prime or,general contractor to "cease
doing business" with the subcontractor with whom Respon-
dent Union may have a primary dispute, and since they
penalize him financially should he thereupon fail to termi-
nate their business relationship.
2. The short-form contracts
All contractor members of the three trade associations
previously noted are concededly bound by the master labor
agreement's provisions with respect to work performed
within the 11-county southern California territory which
that contract covers. In addition to such contractors associ-
ation members, however, other persons-likewise engaged
in building and construction industry work with this self-
same southern California territory-may become parties to
the master labor agreement by signing so-called "Short
Form" contracts. These substantially paraphrase most of
the master labor agreement's provisions, or may adopt them
by reference. Signatory contractors, thereby, recognize Re
spondent Union as the statutory representative of their em-
ployees, and agree to be bound by most of the master labor
agreement 's terms ; their commitments , inter alia, compass
a contractual obligation to make required monthly reports
and submit contributions, payable to the trust funds, for
their employees' vacation and holiday pay, health, and wel-
fare coverage and pension benefits.
348 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
3. The trust funds
a. The structure of the funds
Though the master labor agreement refers to the trust
funds and contains provisions dealing with the handling of
delinquencies , the Operating Engineers health and welfare
fund , pension trust , vacation -holiday savings trust, and
Southern California Operating Engineers apprentice train-
ing trust were each created by separately executed agree-
ments and declarations of trust signed by Respondent
Union , the three trade associations previously noted or their
predecessors , and several additional contractor groups.
Since these trust funds were established at various times
between 1954 and 1964 , the contractors association parties
initially privy to their agreements and declarations of trust
vary. Most were established by Respondent Union in con-
junction with contractors association groups which includ-
ed, but were not limited to, those privy to the master labor
agreement with which we are herein concerned . The parties
have stipulated that the trust funds in question were created,
pursuant to 29 U .S.C. § 186(c)(5) and (6), to receive and hold
in trust fringe benefit contributions payable under various
collective-bargaining contracts , including the southern Cali-
fornia master labor agreement currently in force . Each fund
is controlled by a board of trustees , with equal numbers of
union and contractors association members. The several
trustees are appointed by the contractors associations and
Respondent Union respectively . They serve until death, in-
capacity , resignation , or removal . Trustees may, however,
be removed at will, with or without cause, by the party
responsible for their designation . Substantially , the several
trust declarations vest each designated board of trustees
with power and responsibility for "the continuing supervi-
sion, control and direction of [the designated fund ] for the
uses, purposes , and duties set forth" therein . The several
boards, therefore , are responsible for collections, invest-
ments, settlement of benefit schedules , and disbursements
thereunder.
The four boards, since September 1, 1972, specifically,
have (so the record shows) contracted with a tax exempt,
nonprofit service corporation, designated as Southern Cali-
fornia Operating Engineers Benefits Administration, Inc.,
for the diurnal conduct of trust funds operations . In turn,
that corporation currently hires a trust fund administrator,
together with his required staff personnel-some 70 in num-
ber-for the purpose of conducting the trust funds day-to-
day business . The corporation has a board of trustees which
consists of trust fund trustees. All trust fund trustees are
"members" of the corporation . The administrator provides
services of a ministerial nature to the several boards of
trustees , whereby their regular functions can be discharged.
Inter aha, the Administrator is responsible , subject to the
discretionary authority and supervision of a committee of
trustees , called the point contribut ion committee , repre-
senting the several boards of trustees concerned , for the
collection of regular payments from those employers who
are collectively committed to make trust fund contributions,
pursuant to their collective-bargaining contracts with Re-
spondent Union herein.
b. The coverage of the funds
As previously noted, the trust funds were created by a
number of contractors associations , with AGC, BIA or its
predecessor, and EGCA constituting merely a portion of the
total number of employer groups concerned. Currently, so
the record shows, the trust funds receive contributions pur-
suant to various collective -bargaining contract commit-
ments-totalling approximately $5 million per
month-from some 2,500 general and specialty contractors.
The collective-bargaining contracts mentioned specifically
obligate the contractors privy thereto to "abide by" the
provisions of the several trust agreements , and to pay contri-
butions at hourly rates stated therein. On July 1, 1973, the
contribution rates per employee totalled $2.57 per hour
worked, distributed as follows: $.75 to the health and wel-
fare fund; $1.50 to the pension trust ; $.30 to the vacation-
holiday savings trust ; and .02 to the apprentice training
trust . A substantial number of these contractors-not speci-
fied for the record-are contractually committed through
some 11 general contractors associations , which represent
and bargain for firms doing business throughout San Diego
County, i I other southern California counties, and south-
ern Nevada specifically. Others are contractually commit-
ted through their membership in, and representation by,
various specialty contractors associations. Many contrac-
tors are committed to make trust fund contributions, how-
ever, by virtue of their contractual privity with Respondent
Union pursuant to "Short Form" contracts separately nego-
tiated.
The record reflects a purportedly "informed" guess that
some 40 ,000 workmen , represented for collective -bargain-
ing purposes by Respondent Union herein, currently hold
hourly "credits" recorded in separately maintained ac-
counts with the Operating Engineers health and welfare,
pension, and vacation-holiday trust funds, by virtue of their
work histories with contributing contractors ; they consti-
tute , therefore , these fund 's current and prospective benefi-
ciaries. Not all such workmen, however, are currently
employed with southern California or Nevada firms. Dur-
ing an average month the trusts receive reports and contri-
butions on some 25,000 workmen. Some are normally
peripatetic, and may at various times work both within and
without the geographical territory with which we are con-
cerned; other workers, who may have worked in southern
California previously, may have since left the territory, or
given up positions within the southern California building
and construction industry, without accumulating sufficient
hourly work credits to qualify for those fringe benefits
which the trust funds provide. Their records are maintained
by the various trust funds, nevertheless.
Under the particular master labor agreement with which
we are presently concerned, some 17-18,000 southern Cali-
fornia workers are represented and may qualify for trust
fund coverage. The record provides no basis for a determi-
nation with respect to how many of these may be acquiring
hourly work "credits" recorded by the various trust funds
through current employment with AGC, BIA, or EGCA
member contractors. Leo A. Majich, the trust funds admin-
istrator , declared his belief , however , that some 60 percent
of the contributions received for work done within the 11-
OPERATING ENGINEERS LOCAL NO. 12 349
county territory covered by the master labor agreement are
received form AGC, BIA, and EGCA members contractors
who do most of southern California's major construction
work , with most of the remaining 40 percent being received
from "Short Form" signatory firms.
c. Procedures with respect to delinquency collections
One function of the trust funds administrator necessarily
relates to the collection of delinquent contributions. Con-
tractors bound to provide contributions pursuant to collec-
tive-bargaining contracts (designated, throughout the
present record, as signatory contractors) receive blank
forms mailed monthly from the trust funds office, wherein
they may report the names of their "operating engineer"
workers, and their hours worked, during the previous
month. These forms, properly completed, must be re-
turned-with the concerned contractor's contribution
check-not later than the 20th day following the conclusion
of the month covered thereby; reports are considered delin-
quent if they have not been received by that date. Contribu-
tion payments, when received, are deposited, for each trust,
within that particular trust's "common pool" bank savings
account; no separate records are maintained regarding the
total contributions thereto made by particular contributing
employers. Should a contractor neglect or fail to file his
report, submit it late, fail to report correctly the hours
worked by his employees, or fail to attach his properly
computed payment for the full contribution amount re-
quired, the administrator's office will seek to resolve any
possible "clerical errors" or "minor problems" through a
telephone contact. Should such a contact, however, reveal
a problem more substantial than clerical error, which the
contractor may not be prepared to resolve, the trust funds
will issue a so-called "Ten Day Delinquency Notice" direct-
ed to him, with a copy to Respondent Union herein. Should
the contractor, thereafter, fail to remove his delinquency
within the designated,10-day period, his firm will be placed
on the funds' official delinquency list, dispatched to the
concerned contractors associations, Respondent Union and
other interested signatory employers, pursuant to article I,
paragraph B-15 of the master labor agreement, previously
noted. The master labor agreement requires the publication
of a delinquency list monthly; in practice, however, such
lists are currently being prepared and published weekly.
When the health and welfare fund was initiated (1954),
hourly contributions were quite low; over the years, with
new trusts established and contribution rates raised, they
have increased substantially. The record warrants a deter-
mination , which I make, that the degree of delinquency with
respect to various trust fund contributions, and the total
sums involved, have become "bigger problems" with the
passage of years, as fringe benefit contributions have be-
come a larger and larger part of the total "cost package"
which contributing contractors have been required to sus-
tain. By June 14, 1973, the total known delinquencies of 177
so-called "active" contractors amounted to $295,000 mini-
mally; further known delinquencies totalling $534,000 were
considered chargeable to 174 so-called "inactive" contrac-
tors.
Administrator Majich, summoned as Intervenor's wit-
ness, further testified, credibly and without contradiction,
that "Short Form" contract signatories regularly constitute
a substantial majority of listed delinquents; that such con-
tractors frequently change their business name or the legal
form in which they transact business; that many, likewise,
change their "official" headquarters or place of business
frequently; and that quite a few provide no address infor-
mation beyond a post office box number through which
communications may reach them. The trust funds June 14,
1973, delinquency list for contractors currently "active"
within the southern California building and construction
industry contains the names of 177 delinquents; of this
number, 131 purportedly were "Short Form" contract sign-
ers. A concurrently published compilation, with respect to
currently "inactive" contractors, lists 174 delinquents; of
this number, 135 are coded as committed to "Short Form"
contracts. Many firms, on both lists, show P. O. box number
addresses , merely. With matters in this posture, so the re-
cord shows, the trust funds administrator may, in many
cases, experience difficulty with respect to locating delin-
quent contractors, and with respect to determining the na-
ture, size, and reason for their delinquencies. To assist him
in locating contractors directly responsible for payments
withheld, verifying their delinquencies, and maximizing col-
lections, the Administrator maintains a staff of some 15
field representatives, responsible directly to his office. Addi-
tionally, he hires auditors, or may engage independent certi-
fied public accounting firms, for the purpose of conducting
regular, periodic, or random payroll audits; these may cover
both reporting and nonreporting contractors with known or
newly discovered places of business.
Once a given contractor's delinquency is determined, the
trust funds administrator, functioning on behalf of whatev-
er trust or trusts may be concerned, may demand and seek
the prompt removal of such a delinquency, through negotia-
tions or legal process. When such procedures produce posi-
tive results, leading to a complete settlement of the
delinquency by the contractually committed firm directly
responsible-either through payment in full or by install-
ment remittances-no further corrective steps need be tak-
en.
When, however, delinquent contractors cannot be locat-
ed, persuaded, or compelled to proffer their contractually
required contribution payments, the trust funds administra-
tor may-pursuant to article I, paragraph B'-16 of the mas-
ter labor agreement herein-seek other contractors,
likewise committed to make fund contributions, for whom
such delinquent enterprises may have performed services
under subcontracts. This search for prime or general con-
tractors, for whom a delinquent firm may have performed
subcontract work, may frequently present difficulties. The
trust funds have no ready access to data, records, or reports
which reveal where particular delinquent contractors may
have been performing subcontracts. The administrator may
receive relevant information with respect thereto, however,
from his field representatives, union business representa-
tives, or workmen previously employed by delinquent
subcontractors on some prime - contractor's construction
jobsite-complaining that particular trust fund benefits for
which they should be considered qualified have been, with-
out reason , questioned, reduced, or denied. Further, such
350 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
information may, sometimes, become available through
"haphazard, hit-or-miss" discoveries by trust fund auditors
when checking the records of contributing employers. Nor-
mally, these auditors merely review a contributing
employer's payroll records. These records, ordinarily, do
not reveal the jobsite location where particular employees
may have worked; neither do such records, ordinarily, re-
veal the names of those prime or general contractors for
whom the enterprise being checked may have performed
subcontract work. Administrator Majich, within a sworn
statement proffered and received for the record, declared
that it would be "highly unusual" for trust fund auditors to
procure such information, though the particular employer
whose records were being checked might voluntarily pro-
vide it. Whenever the trust funds discover prime or general
contractors for whom known delinquents have performed,
or currently are performing, subcontract work, such con-
tractors are notified regarding their possible responsibility
for the settlement of their former or current subcontractor's
trust fund delinquency. Under normal circumstances, so
Administrator Majich testified, discussions then begin-
between trust fund representatives, spokesmen for the prime
or general contractors, and, possibly, the delinquent sub-
contractors concerned-looking toward the development of
some mutually satisfactory consensus regarding the
delinquency's removal. Should the prime or general con-
tractor commit himself to settle his subcontractor 's delin-
quency, completely or partially, he may-consistently with
article 1, paragraph B-16 of the master labor agreement
previously noted-withhold sufficient funds from any mon-
eys due or to become due his subcontractor , and remit
whatever sums may be required directly to the trust funds
concerned. All payments proffered with respect to delin-
quencies, whether made by the contractor directly responsi-
ble therefore, or by some guarantor contractor, become part
of the "common [fund] pool" which each concerned trust
maintains , while notations regarding the working hours cov-
ered by such contribution payments are recorded and cred-
ited, separately, for the various workmen entitled thereto.
4. The Urban Pacific delinquency
When delinquencies with respect to reports or payments
by contractors are first noted, the problems posed with re-
spect to such contractors are reviewed by a bipartite sub-
committee of trust fund trustees known as the joint
contributions committee . That committee , some time dur-
ing 1971, directed that the payroll records of Lark Construc-
tion Co., Inc., and Urban Pacific Company, a
successor-two "Short Form" contract signatory members
of the Urban Pacific group-should be checked. The resul-
tant audit disclosed a substantial amount of trust fund con-
tributions due and unpaid. Field representatives of the trust
funds administrator could not locate the firms in question,
thereafter, working on some active construction project.
Their disclosed delinquencies were, thereupon, referred to
legal counsel; the firms, however, could not be located for
the purpose of serving summons and complaint. Thus, for
some time , no specific collection efforts could be made.
The trust funds delinquent employers list for April 20,
1972, contained the name of one firm within the so-called
Urban Pacific group, Urban Pacific Construction Co., Inc.,
which was listed with a Long Beach, California, business
address. That firm, designated as privy to trust commit-
ments through a labor contract with Respondent Union
purportedly negotiated and signed by the Underground
"Eng. Cnt" Association, wherein the firm purportedly held
membership was listed as delinquent because it was alleged-
ly failing to submit trust fund contributions, despite its sub-
mission of monthly reports pursuant to which such
contributions would have been required. With respect there-
to, January 12, 1972, was shown as the date on which the
trust funds 10-day delinquency notice had been dispatched.
Presumably, the trust funds had listed Urban Pacific Con-
struction Co., Inc., as delinquent within the first list pub-
lished 10 or more days thereafter. However, delinquency
lists containing the corporation's name-prepared and pub-
lished between January 22 and April 20 specifically-have
not been proffered for the present record. General Counsel
has submitted limited segments of various delinquency lists
prepared and published between April 20 and December 28,
1972, merely. Beginning April 27, the trust funds changed
their reporting procedure; they prepared and published two
delinquency lists. Within the first, published weekly, delin-
quent employers considered still "active" within the south-
ern California territory with which we are concerned were
listed; with the second, delinquent employers currently con-
sidered "inactive" within the southern California building
and construction industry, for various reasons, were cata-
logued. Urban Pacific's name continued to appear, within
the trust funds so-called "active" delinquency lists, between
April 27 and July 20, 1972. The July 27 compilation, howev-
er, contained no Urban Pacific listing; this situation contin-
ued until the trust funds October 19th delinquency list was
published. Possibly, the firm in question may have been
listed on the so-called "inactive" compilation, which the
trust funds were then preparing and publishing monthly.
Administrator Malich so testified; the record, however, pro-
vides no basis for a determination in this regard. Within the
list last designated , Urban Pacific Construction Co., Inc.,
was again shown as delinquent, this time with a South El
Monte, California, address. The firm was, this time, charac-
terized as committed to make trust fund contributions pur-
suant to a so-called "Short form" contract with
Respondent Union herein; October 9 was designated as the
date on which its relevant 10-day delinquency notice had
been dispatched, purportedly because of the firm' s failure
to file required reports. The record contains a stipulation
that the various business entities collectively designated as
Urban Pacific have been, at all times material herein, parties
to a so-called "Short Form" contract which embodies the
terms of Respondent Union's master labor agreement, in-
cluding the provisions challenged in this proceeding. This
listing remained unchanged through November 30, 1972;
between December 15 and December 28, however, the firm
was listed as delinquent for several different reasons, with
a new November 20, 1972, delinquency notice date
On various dates during the 9-month period which we
have been considering, however, several constituent firms
within the Urban Pacific group procured subcontracts-
nine in number-calling for the performance of under-
ground pipe and sewer work, connected with southern Cali-
OPERATING ENGINEERS LOCAL NO. 12 351
fornia construction projects , with respect to which the five
contractors previously designated were , separately, func-
tioning as prime or general contractors . Specifically, be-
tween May 2 and July 20, Nicks awarded two such
subcontracts, while Security accepted a single Urban Pacif-
ic proposal . Both Sukut-Coulson and V & L Construction
likewise negotiated single subcontracts . Within this deci-
sion, reference has been made , previously, to the fact that
Nicks and Security were , and remain , AGC member con-
tractors . Sukut-Coulson, which maintains no AGC, BIA, or
EGCA membership , has been, throughout the period
through which this case is concerned , privy to a separate
"Short Form" collective-bargaining contract with Respon-
dent Union pursuant to which various terms and conditions
setforth within the master labor agreement , including those
challenged herein , have been adopted by reference. V & L
Construction and Respondent Union have had no direct
contractual relationship . The record warrants a determina-
tion, however, that V & L Construction negotiated for Ur-
ban Pacific's services in connection with a construction
project with respect to which V & L Construction was mere-
ly a subcontractor or so-called "voluntary representative"
for Zurn Corporation ; the latter firm (so counsel have stipu-
lated) held, and currently holds, BIA membership . For pre-
sent purposes , General Counsel , Respondent Union, and
Intervenor agree that Zurn was-throughout the period
with which this case is concerned-the real prime contrac-
tor with which Urban Pacific held subcontracts . During this
period, as previously noted , Urban Pacific Construction
Co., Inc ., was a listed delinquent contractor . The record is
silent with respect to Sukut-Coulson 's knowledge in that
connection . However, the record warrants a determination,
which I make , that weekly trust fund delinquency lists, con-
taining Urban Pacific 's name, were then being supplied,
regularly, to AGC and BIA, the contractors associations
wherein Nicks , Security, and Zurn Corporation held mem-
bership.
On August 1, Griffith subcontracted with Urban Pacific
fora City of Los Angeles street improvement project; when
the subcontract was signed, Griffith 's management had,
most recently, received the trust funds July 20 delinquency
list of so-called "active" contractors ; as previously noted,
Urban Pacific 's name appeared therein . The July 27th list
of so-called "active" delinquents-which did not contain
Urban Pacific 's name-had not yet been received from
Griffith's source. The record reveals, without dispute, that
Griffith normally received its delinquency list copies some
6-8 days following their nominal issuance date. I so find.
Shortly thereafter , on August 3 specifically-during the pe-
riod, previously noted, when Urban Pacific's name was not
being listed in trust funds delinquency lists of presumptively
"active" contractors-Zurn/ V & L Construction granted a
second subcontract to a joint venture comprised of two
firms within the Urban Pacific group . Finally (during De-
cember, 1972, particularly), Urban Pacific received two
more subcontracts , from Zurn/ V & L Construction and
Sukut-Coulson , respectively ; these latter contracts were ne-
gotiated, so the record shows, during a period when Urban
Pacific Construction Co., Inc ., was, once more, being desig-
nated a trust fund delinquent.
During January 1973, a trust funds field representative
discovered a joint venture composed of two Urban Pacific
group members doing subcontract work in connection with
a Nicks construction project. . Further investigation revealed
the joint venture 's additional subcontracts with Security,
Griffith , Zurn , and Sukut-Coulson ; these firms were, there-
upon, notified of their responsibility for the payment of
Urban Pacific 's delinquency . On February 2, 1973 , follow-
ing a conference with the trust fund's administrator , repre-
sentatives of Nicks, Security , and Sukut-Coulson reached a
consensus that each of them, as prime contractors, would
promptly pay one-seventh of Urban Pacific 's total delin-
quency, pending a further search for more contractors who
might possibly be jointly responsible therefore , and that
thereafter each responsible contractor would pay a propor-
tionate share of Urban Pacific 's required contributions.
Griffith and Zurn , though not represented , were , I find, told
of this conference . The record further warrants a determina-
tion , which I make, that they were subsequently told of the
decisions therein reached . Security and Zurn 's representa-
tive , V & L Construction , subsequently paid their commit-
ted one-seventh of Urban Pacific's purported $27,000 plus
delinquency ; they paid approximately $4,000 each . The re-
cord , however, warrants a determination, which I make,
that these were the sole payments which the trust funds
received . Griffith's corporate secretary , summoned as Gen-
eral Counsel's witness , testified that a trust funds represen-
tative subsequently requested his firm to pay one -fifth of
Urban Pacific's total delinquency, which would have ap-
proximated $ 5,400 ; presumably , this trust funds demand
was made because no more prime contractors , beyond the
Five Contractors previously mentioned herein , could be
found jointly responsible . The record does not disclose
whether the requested payment was made ; presumably it
was not. Griffith 's corporate secretary testified , without
contradiction, that, had his firm been considered liable sole-
ly for Urban Pacific's current delinquency with respect to
its August 1, 1972, Griffith subcontract , something less than
$1,000 would have been required to satisfy the firm's con-
tractually mandated derivative or guarantor responsibility
for Urban Pacific's contributions . On or about February 12,
1973, therefore , the trust funds administrator notified Verne
W. Dahnke , Respondent Union's treasurer and a trustee of
three concerned trusts, that, consistently with article I, para-
graph B-16(a) of the master labor agreement, the Respon-
dent Union had the "right to withhold services" from "any
or all jobs" of the Five Contractors herein.
Some further discussion with legal counsel for these Five
Contractors, however , followed . The trust funds records,
when reviewed further , revealed , so the parties have stipu-
lated, that various member firms comprising the Urban Pa-
cific group , when the instant dispute arose, merely owed a
total $18,386 .46 sum in delinquent trust funds contribu-
tions. On or about March 7, 8, 9, and 14 , 1973, the trust
funds counsel declared , during a series of telephone conver-
sations with counsel for the Five Contractors, that should
the latter fail to satisfy Urban Pacific's verified contribution
delinquency, the trust funds Administrator would, pursuant
to the contractual provision previously mentioned, renew
his notice to Respondent Union regarding its right to with-
hold services from various Five Contractors construction
projects.
352 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The record provides no clue with respect to whether the
trust funds administrator did really renew his notice. So far
as the present transcript shows, no work stoppage took
place, thereafter, with respect to Five Contractors' projects.
The record does warrant a determination, which I make,
that when Sukut-Coulson was told about Urban Pacific's
delinquency, that firm hired a number of Urban Pacific's
workmen and, thereafter, directly performed the work
which Urban Pacific would otherwise have performed pur-
suant to subcontracts. With respect to comparable steps
which Nicks, Security, and Zurn may have taken, however,
the record is silent. Urban Pacific's subcontract with Grif-
fith was completely performed several months before Gnf-
fith was told that it would be held responsible for a pro rata
contribution bottomed upon its subcontractor's previously
accrued delinquencies. Nevertheless, the present CC and
CE charges, with which we are now concerned, were filed
on March 8, while counsel for the trust funds and Five
Contractors were reviewing the situation and recapitulating
their respective positions.
C Discussion and Conclusions
1. The basic issues restated
With matters in this posture, we reach the basic question
herein: Whether or not General Counsel has persuasively
demonstrated Respondent Union's participation in statuto-
rily proscribed conduct, directly or vicariously, within the
meaning of Section 8 (e) and 8(b)(4)(n)(B) of the statute.
As previously noted, General Counsel contends that cer-
tain contractual provisions challenged herein possess a for-
bidden secondary thrust. Further, he seeks a determination
that Respondent Union's purported attempt to both effec-
tuate and enforce the provisions in question-through a
course of conduct followed, unilaterally, by that body's al-
leged trust fund surrogates-likewise carried a secondary
thrust, violative of law. More particularly, General Counsel
contends: -
(1) That article I , paragraph B-15 of the master labor
agreement-which reflects a commitment that contractors
privy thereto "will not subcontract" portions of their jobs to
listed delinquent contractors-clearly reveals a statutorily
proscribed "cease doing business" objective.
(2) That paragraph B-16, when read in conjunction with
Paragraph B-15 (more particularly B-16's first sentence,
which purportedly "penalizes" prime or general contractors
who may use delinquent subcontractors, by making them
"liable" for their delinquent subcontractor's previously ac-
crued delinquencies) likewise possesses a forbidden "cease
doing business" thrust.
(3) That paragraph B-16's final sentence, which provides
that contractually committed firms "shall terminate the
contract of the subcontractor who fails to promptly correct
his delinquency" whenever such a delinquency arises fol-
lowing the commencement of the subcontractor's work,
should, likewise, be considered patently proscribed. -
Confronted with General Counsel' s contentions,
Intervenor's counsel counters, with Respondent Union's
concurrence and support, that these challenged contractual
provisions should be considered lawful because their prima-
ry purpose cannot properly be considered statutorily forbid-
den. More particularly, Intervenor's counsel suggests that
these contractual provisions merit construction as designed,
primarily, to protect and maintain union standards-name-
ly, currently viable health and welfare, pension, and vaca-
tion-holiday pay programs negotiated, inter alia, for the
benefit of those "operating engineer" employees who work
for contractually bound contractors.
In this connection, further, Intervenor's counsel, while
presenting a statement supportive of his motion to dismiss
proffered during the hearing's course, noted a contention
that:
[All] of the employees covered by a single trust
have . . . common interests . . . [To] the extent that an
employee of one employer is participating in that trust
and having part of his wages paid to that trust, he
shares an interest with all employees covered by the
trust and has a right to bargain . . . with his own employ-
er, to cover all aspects relating to [the] integrity and the
care and the administration of those trust funds. [Em-
phasis supplied.]
Counsel suggests, therfore, that, regardless of some conceiv-
able "cease doing business" thrust which particular contrac-
tual provisions designed to promote such goals may have,
their susceptibility to such construction should not be con-
sidered sufficient to render those provisions unlawful.
Respondent Union contends, further, that it should not
be considered liable for the 8(b)(4)(ii)(B) violations herein
charged, because the course of conduct which General
Counsel challenges as violative of that statutory provision
should properly be found chargeable to trust funds spokes-
men or representatives functioning in behalf of various
trusts, but not as Respondent Union's surrogates.
The principal legal question thus presented for resolution
has recently been considered, within a proceeding wherein
General Counsel has challenged the validity of certain com-
parable "delinquency" provisions, set forth within a south-
ern California master contract between a Teamster's Union
joint council and the three contractors associations herein
previously designated; Joint Council of Teamsters No. 42,
International Brotherhood of Teamsters, Chauffeurs, Ware-
housemen and Helpers of America (Merle Riphagen), 212
NLRB No. 5. Administrative Law Judge Penfield's Deci-
sion therein presents a comprehensive rationale for his final
determination that several challenged provisions within the
master contract before him-with respect to the rights, re-
sponsibilities and liabilities of contractors who deal or seek
to deal with delinquent subcontractor firms-should be
considered primary in scope and effect rather than second-
ary, and, therefore, beyond the statute's postscriptive reach.
My review of the relevant legal principles which should be
OPERATING ENGINEERS LOCAL NO. 12 353
considered determinative herein, set forth below , reflects a
partial restatement and paraphrase of Judge Penfield's com-
parable recapitutation , which I consider definitive ; my con-
clusions regarding ( 1) the validity of the contractual
provisions challenged herein, and (2) the propriety of chal-
lenged conduct calculated to effectuate those provisions,
derive from that review, plus some further factual and legal
determinations bottomed upon the present record.
2. General principles
Historically , Section 8(b)(4), the statute 's so-called sec-
ondary boycott provision , was designed to limit the scope
of industrial disputes . With due regard for its proscriptive
terms, certain described conduct, chargeable to labor orga-
nizations or their representatives , could be lawfully directed
solely against employers with whom such labor organiza-
tions had primary disputes ; their efforts to enmesh "unof-
fending employers and others" not directly involved with
respect to such primary disputes were forbidden. N.L.R.B.
v. Denver Building Trades Council, 341 U.S. 675, 692. This
Board's subsequent decisions, with judicial concurrence,
left these secondary boycott provisions , however, somewhat
restricted in scope. The Board was considered mandated to
proscribe certain union conduct directly leveled against sec-
ondary, rather than primary, employers; neutral secondary
employers, however, were not considered protected where
some contracting union and such a neutral employer had
negotiated a contractual provision which required the latter
to cease or refrain from doing business with firms which did
not maintain certain union standards , or sign certain union
contracts. Local 1976, United Brotherhood of Carpenters and
Joiners ofAmerica [Sand Door & Plywood] v. N.L.R.B., 357
U.S. 93 (1958). Such so-called "hot cargo" contractual pro-
visions were first proscribed when Congress enacted Section
8(e). This statutory section , in pertinent part , provides that:
(e) It shall be an unfair labor practice for any labor
organization and any employer to enter into any con-
tract or agreement, express or implied, whereby such
employer ceases or refrains or agrees to cease or refrain
from handling , using, selling, transporting or otherwise
dealing in any of the products of any other person, or
to cease doing business with any other person , and any
contract or agreement entered into heretofore or here-
after containing such an agreement shall be to such
extent unenforceable and void : Provided, That nothing
in this subsection (e) shall apply to an agreement be-
tween a labor organization and an employer in the
construction industry relating to the contracting or
subcontracting of work to be done at the site of the
construction , alteration, painting , or repair of a build-
ing, structure , or other work... .
This statutory language, taken literally, seemingly pros-
cribes all contracts whereby employers agree to "cease
doing business" with other persons. This Board , however,
currently considers such a literal construction inconsistent
with the statute 's legislative history; particular contractual
provisions have, therefore , been found permissible-despite
their conceivable "cease doing business" thrust-whenever
they may be considered, essentially, directed toward the
realization of primary , rather than secondary , goals. See
N.L.R.B. v. Joint Council of Teamsters No. 38 [Arden Farms
Co.], 338 F.2d 23, 28 (C.A. 9, 1964). The court of appeals
therein noted its concurrence with a respondent union's
contention that:
... [S]ection 8 (e) is not to be applied literally to pro-
hibit all union-employer agreements limiting subcon-
tracting. More particularly, an agreement which
restricts subcontracting to protect the job opportunities
of the employees of a signatory employer, and not to
apply secondary pressure upon third-party employers,
may be beyond the purpose of Section 8(e) and except-
ed from proscription.
Consistently with this view, the Board has frequently held
that employers may lawfully agree to refrain completely
from contracting out bargaining unit work, since such claus-
es serve, primarily, to protect work being done by employ-
ees of the contracting employer within their bargaining unit,
though they (the clauses) would, necessarily , require the
contractually committed employers, incidentally or second-
arily, to cease dealing with other business enterprises. Ser-
vice and Maintenance Employees' Union, Local No. 399,
AFL-CIO (Superior Souvenir Book Company), 148 NLRB
1033; Ohio Valley Carpenters District Council United Broth-
erhood of Carpenters and Joiners of America, AFL-CIO (Car-
dinal Industries Inc.) 136 NLRB 977, 986; Milk Driver's
Union, Local 753, IBT (Pure Milk Association), 141 NLRB
1237. However , contract clauses which reflect a clear pur-
pose to blacklist some other specified employers, or classes
of employers, because the concerned union considers their
labor policies objectionable, will be found unlawful; such
clauses are considered primarily calculated to limit or dis-
rupt the signatory employer's business relationships with
others, rather than to provide direct benefits and protection
for bargaining unit workers . See District No. 9, 1AM v.
N.L.R.B., 315 F.2d 33, 36-37 (C.A.D.C., 1962); N.L.R.B. v.
Joint Council of Teamsters No. 38, supra at 28-29, in this
connection.
When confronted with specific contract provisions, this
Board has , with judicial guidance and concurrence , defined
several distinctions which it considers determinative
throughout this general field of decisional concern. Within
some cases, for example , distinctions have been drawn be-
tween so-called "work preservation" and "work acquisi-
tion" clauses; within other cases, distinctions have been
drawn between so-called "union standards" and "union sig-
natory" provisions . Where a challenged clause can reason-
ably be considered calculated to protect and preserve
available or prospective work for the contractually commit-
ted employer's represented employees, or to protect the
wages and working conditions of his directly concerned
bargaining unit workers by limiting the contractually com-
mitted employer's subcontractor privilege to business enter-
prises which maintain similar standards, such provisions
will be considered lawful. Meat and Highway Drivers Local
No. 710 [Wilson & Co.] v. N.L.R.B., 335 F.2d 709, 713-716,
(C.A.D.C., 1964); Truck Drivers Local 413, IBT [Brown
354 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Transport Corp. and Patton Warehouse, Inc.] v. N. L. R. B.,
334 F.2d 539, 548 (C.A.D.C., 1964); Orange Belt District
Council of Painters No. 48, AFL-CIO [Calhoun Drywall Co.]
v. N.L.R.B., 328 F.2d 534, 538-539 (C.A.D.C., 1964); High-
way Truck Drivers and Helpers, Local 107, IBT (S & E Mc-
Cormick, Inc.), 159 NLRB 84, 96-102. Where, however,
some contrary determination is found warranted-that a
challenged provision is principally purposed to seek or ac-
quire work for bargaining unit workers which employees of
other business entities have customarily performed, or that
such a provision is calculated to require a contracting em-
ployer to do business solely with other union contract signa-
tones-the provision's thrust, vis-a -vis the particular
contracting employer, will be considered secondary; more
specifically, determination will be considered warranted
that the contractual clause in question seeks to limit the
number of enterprises with whom the contracting employer
can do business, or to disrupt currently maintained business
relationships. See N.L.R.B. v. Joint Council of Teamsters
No. 38, supra; Meat and Highway Drivers Local No. 710 v.
N.L.R.B., supra; Truck Drivers Local 413 v. NLRB, supra,
in this connection.
The relevant decisional principle, relied upon both by this
Board and the courts when these distinctions must be
drawn, has been defined, most cogently, within Orange Belt
District Council No. 48 v. N. L. R. B., supra; therein, the Court
of Appeals for the District of Columbia declared:
The test as to the "primary" nature of a subcontractor
clause in an agreement with a general contractor has
been phrased by scholars as whether it will "directly
benefit employees covered thereby," and "seeks to pro-
tect the wages and job opportunities of the employees
covered by the contract." We have phrased the test as
whether the clauses are "germane to the economic in-
tegrity of the principal work unit," and seek "to protect
and preserve the work and standards [the union] has
bargained for," or instead "extend beyond the [con-
tracting] employer and are aimed really at the union's
difference with another employer."
The challenged provisions of the master labor agreement
herein-likewise compassed, solely by reference, within Re-
spondent Union's numerous "Short Form" contracts-
must , therefore, be reviewed, with due regard for the fore-
going decisional principles, to determine their primary or
secondary character.
3. The "principal work units" herein
When required to determine whether particular subcon-
tractor clauses may properly be considered "germane to the
economic integrity of the principal work unit" this Board
has, within a concededly unique factual context, found the
so-called "work unit" concept synonymous with its well-
defined, statutorily mandated "bargaining unit" concep-
tion.
Note particularly, with respect to this matter, those Board
and court cases wherein the so-called "Protective Wage
Clause" and "80-Cent" provision found in various United
Mine Workers contracts have been considered. Raymond 0
Lewis, et a!. (Arthur J. Galligan), 144 NLRB 228 (1963), 148
NLRB 249 (1964), remanded for further consideration 350
F.2d 801 (C.A.D.C., 1965); International Union, United
Mine Workers of America (Dixie Mining Company), 165
NLRB 467 (1967), remanded for further consideration 399
F.2d 977 (C.A.D.C., 1968); W. A. Boyle, et al. (Arthur J.
Galligan and Dixie Mining Company), 179 NLRB 479 (1969),
reversing 144 NLRB 228 on reconsideration, and dismissing
complaint; International Union, United Mine Workers of
America, (Dixie Mining Company), 188 NLRB 753 (1971),
reversing 165 NLRB 467 on reconsideration and dismissing
complaint; International Union, United Mine Workers of
America v. N.L.R.B., 468 f .2d 1139 (C.A.D.C., 1972), dis-
missing a petition for review with respect to 179 NLRB 479,
for lack of a justiciable case or controversy, and dismissing
review proceedings, which the court had previously initiated
sua sponte with respect to 188 NLRB 753, for want of juris-
diction. During this protracted litigation (see 165 NLRB
467, at 468 particularly) the Board declared, consistently
with certain intervening court of appeals decisions, that:
... [W]e conclude that the units which control the
determination of the primary or secondary nature of
subcontracting clauses are those units found by the
Board under its customary standards to be appropriate
for collective-bargaining purposes, and that such units
in the present case are the single employer and mul-
tiemployer association units for which separate negoti-
ations are conducted... .
The Board was then considering the so-called "80-Cent"
provision within the most recent United Mine Workers con-
tract, finding that it constituted a statutorily proscribed
"union signatory" clause.
Should the Board's preliminary determination within
such a context, regarding the "principal work unit" ques-
tion, be considered determinative, nevertheless, with respect
to the comparable question which this case presents? Con-
cededly, nothing within the specific master labor agreement
provisions with which we are now concerned purports to
proscribe, control, or define permissible business relation-
ships between a contractually committed employer and pos-
sible subcontractors who may not be contract signatories;
article 1, paragraphs B-15 and B-16, rather, set forth certain
contractual rights, responsibilities, liabilities, and privileges
with respect to contract signatory firms dealing with other
contract signatories, solely.
Within their respective briefs, General Counsel's repre-
sentative and Intervenor's counsel have proffered some-
what divergent views regarding the relevance, herein, of the
Board's current "principal work unit" definition, noted.
Their respective positions, however, can hardly be consid-
ered crystal clear.
General Counsel's brief suggests, preliminarily, that the
Board's United Mine Workers language, herein quoted,
should be considered broad enough to provide a definitive
frame of reference within which a required determination
can be made regarding the primary or secondary nature of
the clauses which he challenges Subsequently, however,
General Counsel's representative, still within his brief,
seemingly proffers a different contention:
OPERATING ENGINEERS LOCAL NO. 12 355
Thus, it is submitted, the unit should be limited to
employees of a signatory employer. Under the above-
cited cases, the principal work unit must correspond to
an appropriate unit under Section 9 of the Act; i.e., the
employees of one of the Five Contractors or other signato-
ry employers; by enforcing the clauses against several
signatories to the Master Labor Agreement . . . Re-
spondent is protecting union members generally, and
such is clearly secondary activity. . . . [Emphasis sup-
plied]
Taken at face value, General Counsel' s last submission,
quoted, seems to suggest a contention that "work units"
within the southern California building and construction
industry should be considered limited to the employees of
single contractually committed employers, even though
such employers may be contractually bound solely by virtue
of their membership in contractors associations signatory to
master contracts.
Contrariwise, within their respective briefs, Respondent
Union and Intervenor have suggested, initially, that, with
particular reference to trust fund matters, the so-called
"principal work unit" herein should be construed to com-
pass, within a single industrywide, areawide group, the
workmen employed by all employers, within the 11-county
southern California territory which the master labor agree-
ment covers, contractually committed to make trust fund
contributions, without regard to whether such employers
are contractually bound by virtue of their association mem-
bership or through separately signed "Short Form" con-
tracts. Subsequently, however, intervenor's counsel
seemingly suggests , within his separate brief , that, since we
are dealing herein with contractual provisions clearly de-
signed to protect and maintain "union standards" without
"union signatory" overtones, no determination need pres-
ently be made with respect to whether such provisions cover
"operating engineer" employees within a single industry-
wide, areawide contract unit, or whether they cover such
employees within a congeries of multiemployer and single
employer bargaining units. See, in this connection, W. A.
Boyle, et al. (Arthur J. Galligan and Dixie Mining Company),
supra at 480, particularly Member Jenkins' concurrence.
Intervenor's counsel would, naturally, have this Board con-
clude that article I, paragraphs B-15 and B-16 of the master
labor agreement constitute permissible "union standards"
provisions, designed to protect and preserve the "economic
integrity" of those fringe benefit programs with respect to
which Respondent Umon, AGC, BIA, and EGCA have
bargained. The trust funds, however , seem to suggest, within
their brief, that such a determination can be made, upon this
record, regardless of whether the provisions in question are
construed to cover employees separately represented within
closely related multiemployer and single employer bargain-
ing units, or whether the concerned contractor employers
are considered a single "work unit" with respect to trust
fund matters.
With due regard for this Board's prior decisional an-
nouncements, however, I conclude that multiple bargaining
units, defined in conformity with well-established principles
which the statute mandates-rather than a single southern
California industrywide unit coterminous with trust funds
coverage--constitute the several "principal work units"
with respect to which Respondent Union may properly ne-
gotiate to preserve and protect fringe benefit programs and
work standards . Throughout the United Mine Workers liti-
gation previously noted, the Board has consistently so de-
termined. Note, in this connection, Raymond O. Lewis, et al.
(Arthur J. Galligan), 148 NLRB 249, 253-254; International
Union, United Mine Workers of America (Dixie Mining Com-
pany) 165 NLRB 467, 475-476; W. A. Boyle, et al. (Arthur
J. Galligan and Dixie Mining Company), supra at 483-484;
International Union, United Mine Workers of America (Dixie
Mining Company), 188 NLRB 753. Within these decisions,
the Board held initially that certain challenged contract
provisions which it first characterized as so-called "union
signatory" clauses carried a secondary thrust which Section
8(e) proscribes, when generally applied within a multiplicity
of bargaining units rather than a single industrywide unit.
Later, following two judicially decreed remands, the Board
concluded that both of these selfsame contract provisions
should be considered permissible "union standards" claus-
es; nevertheless, it reaffirmed its prior determination that
the contractually defined congeries of bargaining units, for
which the disputed clauses had been separately negotiated,
provided the context within which their 8(e) validity would
have to be demonstrated. True, the master labor agreement
provisions challenged herein clearly purport to protect and
maintain current fringe benefit standards solely; the present
record, considered in totality, clearly dictates a conclusion
that\they are purposed to preserve the financial stability and
functional capability of contractually mandated employee
benefit programs. This Board's currently viable decisional
doctrines, however, clearly require a determination that the
so-called "work units" within which Respondent Umon and
concerned contractors may negotiate such work standards
protection cannot be wider than their several "bargaining
units" separately considered.
Some cogent arguments , conceivably, can 'be made that
equating "work" and "bargaining" units for '8(e) purposes
would, under some circumstances, be unrealistic. For exam-
ple: The record, herein, reveals that Respondent Union's
master labor agreement, negotiated with AGC, BIA, and
EGCA jointly, and thereafter renegotiated, with various
"Short Form" contract signatories separately,does establish
genuinely uniform work terms and conditions of employ-
ment for the workmen employed by contractors privy there-
to. Respondent Union really has negotiated a consensus
which, in effect, provides for uniform industrywide, ar-
eawide conditions, despite, its embodiment within numerous
documents, nominally negotiated "unit by unit" and sepa-
rately signed. Further, record testimony herein warrants a
determination, which I make, that, when the concerned con-
tractors associations and Respondent Union negotiatedthe
particular master labor agreement provisions' which we' are
presently considering, they were looking beyond the strict
confines of their own multiemployer AGC, BIA, EGCA
bargaining unit. Both Respondent Umon's negotiators and
their counterparts within the contractor's group were clearly
mindful of their mutually felt need to deal with the wider
problem of trust fund contribution delinquencies. Certainly,
some reasonable arguments can be proffered , then, that
when these negotiators last met to revise their master con-
356 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tract they were, particularly in this connection, bargaining
for so-called "delinquency" provisions which would, even-
tually, cover all contractually committed firms , both those
bound by virtue of their association membership, and like-
wise those who would later signify their concurrence by
signing "Short Form" separate contracts.
However, this Board's current decisional doctrine-see
Raymond O. Lewis et al. (ArthurJ. Galligan), 148 NLRB 249,
253-254, particularly-presently forecloses a determina-
tion , herein, that, with respect to trust fund matters, the
various contractors associations and single contractors sig-
natory to separate contracts have manifested some common
purpose to create or recognize a single multiemployer bar-
gaining unit within their 11-county southern California ter-
ritory. Any such contention, proffered in Respondent
Union's behalf, must, for the present at least, be rejected.
4. The purpose of the challenged clauses
a. General Counsel's position
With this determination that Respondent Union's master
contract provisions herein really cover multiple bargaining
units, which must be considered separable, within the south-
ern California building and construction trade, we confront
General Counsel's contention that article I, paragraphs
B-l5 and B-16, compassed within cognate contracts for
these separable bargaining entities , possess a secondary
thrust.
Substantially, General Counsel suggests that these provi-
sions cannot reasonable be considered purposed to protect
contractually mandated working conditions for covered
employees within some single "bargaining unit" merely;
more particularly, they cannot be considered "addressed to
the labor relations of the contracting employer vis-a-vis his
own employees" despite their presence within a contract
which defines their wages, hours, and conditions of work.
See National Woodwork Manufacturers Association v.
N.L.R.B., 386 U.S. 612, 645 (1967). Rather, General Coun-
sel contends , the challenged clauses within each of the
numerous contracts must be considered "aimed really at
the union's difference with another employer" (Local No.
636 of the United Association of Journeymen and Apprentices
of the Plumbing and Pipefitting Industry, AFL-CIO [Detroit
Edison Co.] v. N.L.R.B., 278 F.2d 858, 864 (C.A.D.C.,
1960) ), since they provide methods whereby pressure may
be brought, when required, upon the latter, with whom
Respondent Union may have a primary dispute.
With these propositions constituting his major premise,
General Counsel characterizes Respondent Union's pre-
sumptive concern with Urban Pacific's delinquent trust
fund contributions as the so-called "primary" dispute here-
in. Within his brief, then, he proceeds as follows:
The [challenged] clauses specifically hold a [prime]
contractor responsible for the delinquencies of a sub-
contractor, thereby discouraging the doing of business
with the subcontractor . . . [The] language provides
that the contractor may limit his liability under the
agreement by terminating the subcontract. The subsec-
tions permit Respondent [Union], although engaged in
a primary dispute over unpaid, fringe benefits with a
signatory subcontractor, to enmesh a neutral general
contractor in the dispute, shift all liability to the latter,
and, in effect, make it the guarantor of the
subcontractor's obligations.
Thus, General Counsel notes, the contractual provisions
now in question have enmeshed Five Contractors, charac-
terized as neutral contractors herein; they have been treated
as guarantors for Urban Pacific's trust fund liability. Re-
spondent Union, so General Counsel contends, would have
them penalized, thus, for having done business with Urban
Pacific, despite their receipt of notice regarding that busi-
ness entity's contribution delinquency. With these proposi-
tions for predicate, General Counsel suggests that the
challenged contractual clauses have a secondary, statutorily
proscribed purpose and thrust.
b. Discussion
When proffered in these categorical terms, however, Gen-
eral Counsel's contentions within my view beg the basic
question presented herein. In connection therewith, General
Counsel has provided no persuasive rationale for his decla-
ration that, regardless of circumstances, prime contractors,
privy to Respondent Union's master contract, should be
considered "neutral" parties with relation to controversies
bottomed upon trust fund contribution delinquencies
chargeable to their subcontractors. In regard to controver-
sies premised upon such delinquencies, I am persuaded that
prime contractors-whether privy to Respondent Union's
master labor agreement by virtue of their contractors associ-
ation membership or their "Short Form" contract signatory
status-cannot reasonably be thus regarded.
The provisions challenged herein, concededly, govern a
definable, limited category of business relationships; they
cover situations wherein prime contractors privy to Respon-
dent Union's master labor agreement have dealt, or propose
to deal, with other signatory contractors, solely. With re-
spect to situations described thus generally, however, sever-
al distinguishable variations remain conceivable. These
include:
1. Cases in which prime contractors, privy to Respondent
Union's master contract through their contractors associa-
tion membership, subcontract with other AGC, BIA, or
EGCA members.
2. Cases wherein contractors association members sub-
contract with business enterprises singly privy to Respon-
dent Union's master labor agreement by virtue of their
concurrent "Short Form" contracts, separately signed.
3. Cases in which prime contractors privy to separately
signed "Short Form" labor agreements hold subcontracts
with contractors association members.
4. Cases wherein "Short Form" contract signatories ne-
gotiate subcontracts with other business enterprises singly
bound, likewise, through labor contracts with Respondent
Union separately signed.
Regarding situations which would fall within the first
category described, General Counsel herein presumably
takes no discernable position; though he calls article I, para-
graphs B-15 and B-16 generally "secondary in thrust" with-
OPERATING ENGINEERS LOCAL NO. 12 357
in his brief, their conceivable applicability with respect to
business relationships between prime contractors and sub-
contractors jointly bound thereby, through privity within a
single "multiemployer" bargaining group, has not herein
been considered. The possibility that prime contractor-sub-
contractor relationships may be negotiated between busi-
ness enterprises so situated cannot be gainsaid; the present
record, however, reflects no such situation. General Counsel
does, however, press his contention with respect to situa-
tions compassed within the second and fourth categories. I
note, in this connection, that Griffith, Nicks, Security, and
Zurn/V & L Construction have all been, throughout the
period with which this case is concerned, contractually com-
mitted with respect to Respondent Union's master labor
agreement by virtue of their contractors association mem-
bership; Urban Pacific's subcontracts with these business
enterprises, therefore, presumably fall within the second
category. Sukut-Coulson's contractual commitment derives
from its separately signed "Short Form" contract; this
prime contractor's several subcontracts, therefore, would
seem to fall within the category last noted, since Urban
Pacific's various business entities have been, likewise, sepa-
rate contract signatories. These particular prime contractor-
subcontractor situations, then, provide the factual context
with respect to which relevant determinations herein must
be made.
Respondent Union's master contract, with respect to
which these designated business enterprises are, jointly or
severally, committed, purports to set standards governing
wages, hours, and working conditions for "operating engi-
neers" hired by signatory contractors throughout a defined
southern California territory. The AGC, BIA, and EGCA
contractor members privy thereto, together with numerous
"Short Form" contract signatories, comprise a multifarious
group of business enterprises which, separately or conjoint-
ly, provide needed services within the building and con-
struction trade. The various business enterprises noted have
all,been, throughout, bound equally to pay contract wages,
and to provide funds for various contractually specified
fringe benefits through required trust fund contributions.
Respondent Union's contract-within articles VIII, IX, X,
and XI particularly-commits the contractors bound there-
by "to abide by" the various agreements and declarations
of trust previously noted, and to make monthly contribu-
tions of certain fixed sums "per straignt time or overtime
hours worked" by their workmen contractually covered.
Counsel have stipulated, herein, that, throughout the period
with which this case is concerned, the various prime con-
tractors with whom we are concerned, Griffith, Nicks, Se-
curity, Zurn, and Sukut-Coulson, have had on their
respective worker payrolls one or more members of Respon-
dent Union, subject to their current collective-bargaining
contract's terms. With matters in this posture, determina-
tion seems clearly warranted that these contractors-
though their several commitments with respect to Trust
Fund contributions may be set forth within discrete docu-
ments-necessarily share parallel concerns regarding their
trust funds' financial integrity and-functional capacity to
provide, for their workmen, the contractually mandated
fringe benefits noted. Intervenor's witnesses have, substan-
tially, so testified; I so find.
I note, further, that many building and construction in-
dustry workmen, characteristically, find repeated short-
term employment with numerous "area" contractors
throughout their respective work histories, since divers con-
struction projects within a given territory are constantly
being commenced and concluded, contractors are con-
stantly transferring their business operations from one com-
pleted project site to another where new construction will be
required, and construction crew complements must conse-
quentially be changed, augmented, or reduced frequently,
consistent with work requirements.
This being found, the creation of multiple trust funds with
broadly defined industrywide, areawide jurisdiction, for the
purpose of collecting contributions and disbursing contrac-
tually mandated fringe benefits, clearly provides a practical
method whereby covered employees with largely transient
employment histories may be qualified for fringe benefits
earned, regardless of the number of contractors for whom
they may have worked. Such qualified employees will re-
ceive the same fringe benefits which the trust funds dis-
burse, regardless of whether they have worked for one or
more contractors, and, likewise, without regard to whether
their particular contractor employers may have been privy
to Respondent Union's master labor agreement by virtue of
some contractors association membership or by virtue of
their status as separate "Short Form" contract signatories.
Thus, the employees in question, like their contractor em-
ployers, share a common concern for the continued solven-
cy, sufficiency, and viability of those trust funds from which
their health and welfare, pension, and vacation-holiday pay
benefits derive. The record, within my view, warrants such
a conclusion, and I so find.
Concurrently with their manifest determination to pro-
vide fringe benefits through trust funds specially created for
which their "operating engineer" employees might qualify,
the various employers concerned, whether bound to provide
such benefits through a multiemployer contract or sepa-
rately signed documents, have clearly committed them-
selves to programs and procedures designed to make sure
that their trust funds remain adequately funded, with the
capacity to protect and preserve their continuing solvency,
and thereby to maintain their contractually mandated pro-
grams. The financial integrity and functional capability of
these funds, currently and hereafter, clearly depends, in
significant measure, upon required contributions neither
being evaded nor falling in arrears; delinquencies, should
they be permitted to become long-continued or widespread,
could adversely affect every employee working for contrac-
tors within the territory which the master labor agreement
covers. These "adverse effects" could touch every covered
workman with a current or prospective fringe benefit claim,
regardless of whether his claim had been, or would be,
derived from work "credits" earned with some contractors
association member, some "Short Form" signatory, or num-
erous contractors in both categories.
The hazard noted must be considered more than theoreti-
cal. Intervenor's detailed testimonial presentation herein,
with respect to various trust fund operations past, present,
and future, fully warrants a determination that sustained,
unremedied delinquencies could seriously compromise their
capacity to provide negotiated fringe benefits for all con-
358 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tractually covered employees:
1. With respect to health and welfare fund operations
particularly, the testimonial and documentary record will
support a determination, which I make, that reduced collec-
tions can significantly hamper the trust's ability to provide
a defined schedule of benefits , since the trust 's reserves
could be adversely affected. Within the recent past, devel-
oping financial stringencies have, in fact, forced the fund's
trustees to borrow $2 million, change carriers, and drastical-
ly modify benefit plans; they have dictated the termination
of some substantial medical benefits, and cost-cutting modi-
fications with respect to plan administration and claim pro-
cessing procedures. The fund's difficulties were, so credible
testimony shows, partially caused, and certainly aggravated,
by delinquent contractors whose contribution payments,
required pursuant to collective-bargaining contracts, were
not received. With a stepped-up payroll audit program and
more strenuous collection efforts, the fund's benefits have
been, most recently, improved.
2. The Operating Engineers pension trust program-
which provides both normal, early and disability retirement
pensions for covered workmen and death benefits for their
beneficiaries-must necessarily rest upon funds actually re-
ceived and held for investment, plus whatever earned inter-
est may be derived therefrom. Thus, the trust's proclaimed
uniform plan , with respect to retirement and death benefits
claimable by qualified employees with all signatory employ-
ers, has been, and will be, directly affected, and conceivably
diminished, through contnbution delinquencies chargeable
to particular signatory contractors. Witness Administrator
Mapch noted that collection failures "seriously affect" this
trust fund 's interest earnings . In this connection, further,
Harley Blankenship, vice president of a firm of independent
actuarial consultants which the trust funds retains , testified,
without challenge or contradiction , that , with full collec-
tions and no delinquency problems, the trust could support
measurably "improved" retirement and death benefit pro-
grams for all qualified workmen.
3. The vacation-holiday savings trust , like its companion
funds, deposits contributions received within a single inter-
est-bearing "common pool" bank account, while the specif-
ic sums contributed for particular workmen are reported
and credited within their personal records. Further, hours
which particular employees may have worked, for which
contributions have not been received, when proven to the
trust's satisfaction, are recorded as so-called "unpaid hours"
likewise within their personal records. The sums which have
been received by this designated trust are distributed semi-
yearly to various workmen for whom such contributions
have been proffered. Employees who may have worked
"unpaid hours" do not, however, receive vacation or holi-
day pay, computed with respect thereto, concurrently with
the trust's regular semiyearly distribution. Shortly thereaf-
ter, the workmen credited with such "unpaid hours" may
apply for the payment of benefits based thereon. When
provided with reasonable proof regarding their hours of
work for which contributions were not paid, the fund's
board of trustees will make "vacation-holiday" payments to
the concerned workman, using funds which are derived
from the interest earned during the previous 6 months on
contributions paid by other contractors. Benefit payments
covering "unpaid hours" will be made, normally, solely to
the extent that such interest earnings have become avail-
able; the trust's administrative costs must, likewise, be paid
from such interest earnings. Whenever a balance thereof
remains undistributed, the trust distributes such left over
interest income to covered workmen in the form of supple-
mentary semiyearly dividends. Recently, for several years,
largely because a substantial number of proven "unpaid
hours" have had to be funded, the vacation-holiday savings
trust has been unable to distribute such supplementary divi-
dends; payments were, however, resumed in December
1972 and May 1973, bottomed upon recent surpluses. The
fund's experience has demonstrated, therefore, that when
the payment of benefits bottomed upon proven "unpaid
hours" diminishes the total sum available within its interest
earnings account, the remainder available for dividend pay-
ments to all qualified trust participants is correspondingly
reduced.
4. The southern California Operating Engineers appren-
tice training trust funds and maintains a training program
for apprentices within the operating engineers craft. Admin-
istrator Majich's credible testimony, proffered without chal-
lenge or contradiction in this connection, warrants a
determination, which I make, that, while such program ex-
penditures in previous years have been kept within available
fund limits, this trust has recently begun to experience cur-
rent monthly deficits, largely because of heightened Federal
and state educational requirements with respect to appren-
tice training. The fund's board of trustees currently believes
that its currently required level of training activity cannot
be sustained with the fund's present $.02 contribution rate.
Witness Administrator Majich declared that higher contri-
butions, contractually specified, would provide "one ob-
vious solution" with respect to the fund's current deficit
situation. Such a higher contribution rate for apprentice
training purposes, however, would significantly affect the
total "economic package" with respect to which Respon-
dent Union and the various concerned contractors associa-
tions would be negotiating. The higher rate could,
conceivably, dictate a commensurate increase with respect
to the total package negotiated; of course, such a conse-
quence would, pro tanto, raise every concerned contractor's
business costs. Alternatively, such a contribution rate in-
crease for apprentice training-within a total "economic
package" negotiated with no coequal change-could claim
a proportionately greater share thereof; this would neces-
sarily, reduce the sums left available for higher direct wage
payments, or further fringe benefits for concerned work-
men.
With matters in this posture, there can be no doubt that
the financial integrity and functional capability of these
various trust funds does, to a significant degree, depend
upon required contributions neither falling in arrears nor
being circumvented. Within his brief, Intervenor's counsel
suggests, in this connection, that "the degree of effectiveness
in collecting required contributions from delinquent con-
tractors has a direct economic impact on the amount of
'common pool' funds available" for these various fringe
benefit programs. That suggestion, within in my view, re-
flects a truism. Necessarily, therefore, widespread or long-
sustained delinquencies, should they be permitted, or left
OPERATING ENGINEERS LOCAL NO. 12 359
standing without remedy, could, as previously noted, ad-
versely affect every contractor's employee presumptively
qualified to claim these contractually defined fringe bene-
fits. Such workmen, whether qualified because of their work
histories with contractors association members, with sepa-
rate "Short Form" contract signatories, or with both at
various times, would be equally disadvantaged.
Metaphorically speaking, these trust funds provide a
fringe benefit "umbrella" which covers qualified workmen
in many bargaining units. Whenever that umbrella's protec-
tive canopy is damaged, breached, or constricted, all work-
men nominally eligible for protection thereunder are pro
tanto deprived of that protection-whether they earned
their rights to claim it under contractual provisions within
a master contract or short form document.
Of course, the primary responsibility to provide required
trust fund contributions rests with those business enterpris-
es which directly employ particular covered workmen.
When such business enterprises satisfy their contractual
obligations completely-whether they do so routinely, or
following their receipt of notice reagrding a claimed delin-
quency-nothing further can be required. The contractual
provisions challenged herein, however, reasonably recog-
nize that there may be contractors, most likely those with
less working capital and less productive capacity, who may
not be willing or ready to discharge their primary responsi-
bilities in this connection. Article I, paragraphs B-15 and
B-16 provide that, when this occurs, neither the delinquent
contractor's employees nor those employed by other non-
delinquent contractors will suffer, because the prime con-
tractor can be required to guarantee the removal of accrued
delinquencies, and the continuation of contribution pay-
ments, whenever he has used, or continues to use, a delin-
quent subcontractor's services. Less than 5 years ago, this
Board noted concurrence with a Trial Examiner's decision
that labor organizations could, without violating the statute,
press a bargaining demand that contractors with whom they
were negotiating should participate in, and contribute to,
trust funds which had been created to service craft workers
in several bargaining units beyond the particular circum-
scribed unit which their negotiations concerned. United
Slate, Tile & Composition Roofers, Local No. 220 (Roofing
Contractors Association of Southern California, Inc.), 177
NLRB 632, 649-652. To hold now that employers privy to
such a broad commitment cannot, legitimately, negotiate a
further compact between themselves and with the labor
organization which represents their workmen designed to
preserve and protect their common trust fund's capacity to
service its multiunit beneficial constituency, would be, with-
in my view, highly anomalous. However, General Counsel
suggests that prime contractors should be considered neu-
tral "secondary" firms, under these circumstances, since,
when they are called upon to fulfill "guarantor" commit-
ments, the benefits flowing from their payment of some
other firm's accrued delinquencies do not go to their own
employees. "If [the payment] benefits anyone, it benefits the
employees of the delinquent subcontractor." This conten-
tion, however, derives from a misconception. The record
shows clearly that all contributions received by these trust
funds are deposited in "common pool" accounts . Employ-
ees whose work histories include some service with delin-
quent subcontractors may nevertheless qualify for benefits
from a particular fund's "common pool" by providing their
entitlement to sufficient hourly work credits with contrac-
tors committed to make contributions-through their per-
sonal check stub records, monthly reports which their
delinquent employer or different contributing employers
may have submitted, or payroll audits which trust fund
representatives may have made-whether or not contribu-
tions related thereto have been remitted. Thus, such contri-
butions, when belatedly paid, whether by their own
employer or some other firm which has retained their em-
ployer through a subcontract, merely benefit such employ-
ees to the same degree, and in the same way, that all other
covered workmen are benefited by promoting the solvency
and functional soundness of the funds.
Under these circumstances I conclude, despite General
Counsel's contrary contention, that all "operating engineer"
employees whose wages, hours, and conditions of work are
governed by Respondent Union's master contract-wheth-
er they work for prime contractors within a multiemployer
bargaining unit or for separate "Short Form" contract sig-
natories-share a direct economic interest regarding the
timeliness and completeness of those trust fund contribu-
tions with respect to which their contractor employers have
been committed. Further, I conclude that article I, para-
graphs B-15 and B-16 were specifically designed to protect
and preserve these direct economic interests, within each
separate "bargaining unit" with which we are concerned.
General Counsel's contrary contention, within the context
with which we are now concerned, would create, if found
persuasive, some highly anomalous situations. AGC, BIA,
and EGCA members who subcontract with other members of
their jointly bound brade associations could be held "guaran-
tors" for their subcontractor's trust fund contributions. But
such contractors association members who subcontract
with (a) members of some other trade associations privy to
separately negotiated contracts with Respondent Union
herein, or (b) "Short Form" contract signers, could not be
considered bound by the contractual provisions now in
question. Confronted with such a legal situation, prime con-
tractors holding AGC, BIA, or EGCA membership could
conceivably be encouraged to subcontract with delinquent
firms privy to "Short Form" contracts or separately negoti-
ated multiemployer contracts, thus endangering the "eco-
nomic integrity" of the several trust funds which service
some of their own employees. This Board, within my view,
cannot reasonably conclude that Congress, when it settled
Section 8(e)'s present language, proposed to legislate this
kind of double standard, with respect to "hot cargo" claus-
es, within the building and construction trades. These dis-
puted clauses "directly benefit" the workmen employed by
contractors bound thereby. They protect the fringe benefits
of such workmen, within each separately covered bargain-
ing unit ; they may, therefore, reasonably be considered
"germane to the economic integrity" sought for those fringe
benefit programs for which employees within these "work
units" may qualify. Within his brief Intervenor' s counsel
notes, cogently, that:
When Intervenors are successful or fail in the collec-
tion of payments owed by a delinquent employer, all
360 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
covered employees are benefited or are damaged uni-
formly , regardless of whether they work for the particu-
lar employer and certainly without regard to whether
they are employed by a member of an employer associ-
ation or a "short form" contractor . . . . Any loss of
payments owed to the trusts by employers may rightly
be of substantial concern and primary interest to em-
ployees and employers who are engaging in collective
bargaining regarding the necessity , amount and collec-
tion of such payments to the trust . When Intervenors
expend funds for the collection of delinquent amounts,
or are ultimately unsuccessful in collecting delinquent
contributions , the effect on each and every employee of
the bargaining employer is an immediate and material
drain upon the amounts paid to the trusts by reason of
hours worked by each such employee.
Clearly, contractual provisions designed to forestall, reme-
dy, or meliorate such a direct , tangible economic conse-
quence , as previously noted , promote a legitimate
"bargaining interest" which all covered "operating engi-
neer" workmen , whether employed by prime contractors or
subcontractors , share . Such provisions , within my view, de-
serve recognition and validation , like those contractual
"work preservation" and putative "union standards" claus-
es which this Board has previously found privileged.
Realistically , the challenged delinquency provisions here-
in do function as permissible "union standards" clauses.
They provide a currently viable method whereby contractu-
ally mandated fringe benefit programs may be protected
and preserved , since : (1) They facilitate the termination of
subcontracts with signatory contractors whose previously
accrued or newly generated contribution delinquencies
could prejudice the maintenance of such programs ; and, (2)
they remove whatever economic motivation a prime con-
tractor may have to negotiate or maintain subcontracts with
delinquent employers , premised upon lower bids proffered
by such delinquents, which have been facilitated by their
failure or refusal to bear contractually mandated fringe ben-
efit costs . Within his brief, Intervenor's counsel notes per-
suasively, with record support, that:
[It] must be recognized that the disputed clauses
function as an important protection of the union stan-
dards and unit work of the employees of the general
contractor . If the general contractors were allowed to
utilize subcontractors who do not pay fringe benefits,
obviously the subcontractor could bid the same work
much more cheaply than the general contractor could
do the work with his own operating engineer employ-
ees. Under such circumstances the general contractor
would be highly motivated to subcontract all operating
engineer 's work , to the detriment of his own operating
engineers employees . In order to deter such conduct,
the disputed clauses impose upon the general contrac-
tor all pre-existing delinquencies of a delinquent sub-
contractor . Without such a deterrent as liability for the
added delinquencies , the unscrupulous general con-
tractor would be encouraged to gamble with the use of
delinquent subcontractors... .
General Counsel suggests , however , that prime contractors
are "penalized" when they are required to cover previously
accrued delinquencies for newly retained subcontractors. I
find the suggestion unpersuasive , for several reasons.
First: Respondent Union 's master contract , with respect
to which both the prime contractor and delinquent subcon-
tractor are consensually committed , reflects their mutual
agreement that prime contractors who make good their
subcontractor 's previously accrued delinquencies "shall
withhold sufficient funds from monies due or to become
due such subcontractor" for work previously performed or
work in progress , satisfying their derivative funds liability
therefrom . This provision , substantially , reflects a general
recognition , necessarily shared by all contractors privy ther-
eto, that prime contractors , when called upon to make trust
fund contributions for their subcontractors , may recoup
payments made . Secondly: Those contributions which a
prime contractor may be required to provide can never
exceed his chosen subcontractor's total trust funds liability,
or some pro rata share thereof . Thus, they can never be
greater than the total cost burden , chargeable for fringe
benefit programs specifically , which the subcontractor has
failed or refused to satisfy . Such contribution payments,
therefore , will necessarily "bear a reasonable relationship"
to those differentials in business costs, between contributing
and noncontributing contractors , which enable the latter to
underbid the former , competitively , when both are seeking
subcontracts . See International Union, United Mine Workers
of America, 188 NLRB 753, in this connection . When one
or more prime contractors are held liable for trust fund
payments , their contributions , roughly speaking , merely
"equalize the differences in [fringe benefit program ] costs"
between their chosen noncontributing subcontractor and
the contributing firm with which they could have subcon-
tracted.
Within this Board 's most recent United Mine Workers
decision just noted-wherein a determination was made
that the labor organization 's contractual "80-Cent" provi-
sion constitutes a so-called "union standards" clause, for
reasons comparable with those herein discussed-the deci-
sional rationale whereby such clauses have been sustained
was summarized . The Board, therein , declared that:
The validity of a union standards clause lies in the fact
that it removes the economic incentive to subcontract
unit work to employers maintaining substandard con-
ditions of employment which enable such employers to
perform the work at cheaper labor costs. By removal of
the economic incentive , a union standards clause pro-
tects and preserves unit work precisely to the extent
that the economic incentive to subcontracting is the
compelling consideration . Under any union standards
clause , the signatory employer is not restrained from
subcontracting work to employers in another bargain-
ing unit covered by similar wage contractual provi-
sions. Such subcontracts may of course be made for
other than economic reasons; however, the fact that
such subcontracting is permitted does not detract from
the fact that the object of such clause is to preserve and
protect unit work. This was as true of the [Protective
Wage Clause] as it is of the 80 -cent clause . Accordingly,
OPERATING ENGINEERS LOCAL NO. 12 361
we find that the existence of a multiplicity of bargain-
ing units does not preclude the 80-cent clause from
functioning as a union standards clause as it was in-
tended to do.
Parallel reasoning, within my view, dictates validation with
respect to the challenged "delinquency" provisions herein.
These provisions, likewise, remove a prime contractor's eco-
nomic motivation to subcontract his unit work with other
contractors, whether within his bargaining unit or sepa-
rately committed, who, despite their parallel commitment to
maintain regular trust fund contribution payments, have
defaulted with respect to that commitment and thereby
have made possible their performance of such work with
"cheaper" labor costs. By removing the prime contractor's
economic motivation, the provisions challenged herein
serve two primary purposes. First: They protect and pre-
serve work-either for the prime contractor's employees or
for employees of some contributing contractor seeking a
subcontract-precisely to the extent that the prime
contractor's economic motivation for subcontracting may
have been his compelling consideration. Secondly: They
protect and preserve the financial integrity and functional
capability of fringe benefit programs contractually mandat-
ed for the prime contractor's employees, which programs
could, conceivably, be prejudiced should such prime con-
tractors find themselves free to subcontract with delinquent
firms without restriction. The contractors governed by these
consensual limitations have not been restrained from sub-
contracting work with business entities within some sepa-
rate bargaining unit, which are, likewise, committed to
make trust fund contributions, and reciprocally committed
to forswear dealing with delinquent contributors or make
good their delinquencies, should such business entities be-
come prime contractors. Rather, signatory contractors, pur-
suant to these clauses, have accepted contractual restraints
and contingent liabilities, which concededly define and/or
limit their subcontract rights, primarily to protect and pre-
serve negotiated fringe benefit programs for their respective
"bargaining unit" workmen. Since the provisions chal-
lenged herein serve the primary purpose noted, within each
separate "bargaining unit" with respect to which their appli-
cability has been stipulated, they must be considered per-
missible "union standards" clauses; I so find.
Whatever secondary consequences compliance with such
provisions might generate when a prime contractor pro-
ceeding consistently therewith ceases doing business with a
delinquent subcontractor should be considered, within my
view, purely incidental; such secondary results cannot, rea-
sonably, be considered sufficiently significant to detract
from the provisions' lawful primary purpose.
5. Purported secondary boycott threats
General Counsel's charge herein, with respect to Respon-
dent Union's purported 8(b)(4)(ii)(B) violation, derives en-
tirely from Respondent Union's supposed effort coercively
to implement the contractual provisions which have, herein,
been considered. Since I have, however, found that these
provisions serve a statutorily permissible primary purpose,
conduct consistent therewith-purportedly chargeable to
Respondent Union herein-would necessarily have a pri-
mary rather than secondary thrust. Such conduct would,
therefore, merit characterization as lawful. With the provi-
sions challenged herein found primary, and with conduct
consistent therewith found lawful, no further consideration
need be given Respondent Union's secondary claim that it
should not, in any event, be held responsible for particular
conduct directly chargeable to Trust Funds Administrator
Majich and counsel, undertaken purportedly in Respondent
Union's behalf. Should the Board, however, disagree with
my basic determination herein, some "side" comments re-
garding the question of the trust funds' putative agency
status-particularly within the specific context with which
this case is concerned-may be warranted. General Coun-
sel contends that the four trust funds with which we are
concerned-or, rather, their several boards of trustees con-
sidered as a group-function generally as surrogates for the
parties designating them, who likewise control their contin-
ued tenure. See Local 80, Sheet Metal Workers International
Association, AFL-CIO, et al. (Turner-Brooks, Inc.), 161
NLRB 229,233-234; Local 138, International Union of Oper-
ating Engineers, AFL-CIO (J. J. Hagerty, Inc.), 139 NLRB
633, 637, enfd. 321 F.2d 130, 137 (C.A. 2, 1963); cf. Local
140, Bedding; Curtain & Drapery Workers Union (The Eng-
lander Company, Inc.), 109 NLRB 326, 329; Raymond O.
Lewis, et al., 144 NLRB 228, 232. However, such a conclu-
sion-particularly with reference to the situation with
which we are presently concerned, might well be consid-
ered unreasonably simplistic. When reviewing the status of
bipartite boards of trustees, this Board has several times
held that their trustee members , whether designated by con-
cerned employers or labor organizations privy to some trust
fund's formation, function as statutory "agents" with re-
spect to both principals. In this case, however, we are deal-
ing, realistically, with agents of the Southern California
Benefits Administration, Inc., more particularly the trust
funds administrator, together with that corporation's re-
tained counsel; clearly, they-have been, and remain, subject
to direction by boards of trustees which must, necessarily,
function pursuant to jointly reached decisions, though their
members, separately considered, may be responsible to dif-
ferent principals. A determination, therefore, that Majich
and his counsel-when they discharge their delegated re-
sponsibilities with respect to the collection of delinquent
contributions-function as surrogates for a single principal
representing their funds' beneficiaries, solely, rather than
for both their settlors and beneficiaries, could be considered
somewhat strained. See American Law Institute, Restatement
of the Law, Second: Agency 2d, § 1, Comment (b), pp. 8-9;
§13, Comments (a)-(c), pp. 58-59; §14 B, Comments
(a)-(c), (f), pp. 62-64; § 14 L (1), Comment (a), pp. 76-77.
See, further, Seavey, Studies in Agency, "The Rationale of
Agency-the Relationship," pp. 75-76; 54 Am. Jur. Trusts
§ 114. Compare John S. Welch and Hugh S. Wilson, "Ap-
plying Traditional Principles of Trust Law to Union and
Management Representatives Administering Taft-Hartley
Trusts," Trusts and Estates, Vol. 111, No. 12 (December
1972), pp. 954 ff., in this connection. Further, it should be
noted that we are concerned herein with fund spokesmen
who have been dealing with a defined group of contractors
compassed within a larger group constituting their trustors
362 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
or settlors . Certainly, this Board could arguably determine,
under these special circumstances , that Trust Funds Ad-
ministrator Maych and retained counsel were representa-
tives, and functioning on behalf of, both trustee groups; that
they were discharging a fiduciary duty or responsibility laid
upon them by concededly bipartite boards of trustees, rath-
er than pursuing some special objective singlemindedly dic-
tated solely by one of their ultimate principals, and
calculated to work toward a coprincipal 's disadvantage. The
Board could , in short, conclude reasonably that when trust
funds spokesmen seek to protect the solvency, integrity, and
functional capacity of their funds , they do so not on behalf
of their trust 's multiple beneficiaries solely, but likewise for
the benefit of their trust 's composite group of settlors. And
the fact that their course of conduct may , inter aha, find
them telling a contractor (settlor) that his continued failure
or refusal to remit contributions-which he is contractually
committed to make, either for his own workers or for those of
his delinquent subcontractor-might ultimately subject him
to so-called "job action" by representatives of his covered
employees (beneficiaries) should not , therefore , dictate a
determination that such trust funds representatives have
been functioning beyond the proper scope of their fiduciary
responsibilities . Further, with Section 8(e)'s generally pros-
criptive language found inapplicable herein, no present de-
termination need be made regarding the applicability or
nonapplicability of the designated section 's construction
jobsite proviso . I shall recommend , therefore , that the pre-
sent complaint be dismissed.
CONCLUSIONS OF LAW
I. The contractor members of AGC, BIA, EGCA, Sukut-
Coulson , and the various business entities collectively desig-
nated as Urban Pacific herein are employers within the
meaning of Section 2 (2) of the Act, engaged in business
activities which affect commerce within the meaning of Sec-
tion 2(6) and (7) of the Act, as amended.
2. International Union of Operating Engineers, Local
Union No. 12, is a labor organization within the meaning
of Section 2(5) of the Act, as amended.
3. Respondent Union has not, as alleged in the com-
plaint , engaged in unfair labor practices proscribed by Sec-
tion 8(e) or 8 (b)(4)(ii)(B) of the Act, as amended.
Upon the foregoing findings of fact and conclusions of
law, and upon the entire record in this case , and pursuant
to Section 10(c) of the National Labor Relations Act, I
hereby issue the following recommended order:
ORDERI
It is hereby ordered that the complaint herein be, and it
hereby is, dismissed in its entirely.
1 In the event no exceptions are filed as provided by Sec 102 46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions and recommended Order herein shall, as provided in Sec 102 48
of the Rules and Regulations, be adopted by the Board, and become its
findings, conclusions, and Order, and all objections thereto shall be deemed
waived for all purposes
In the light of the foregoing findings of fact, and upon the
entire record in this case, I make the following conclusions
of law: