                    United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 01-2363
                                   No. 01-2764
                                   ___________

McKenzie Engineering Company,         *
                                      *
      Petitioner - Cross-Respondent, *
                                      * Petitions for Review or
      v.                              * Enforcement of an Order of the
                                      * National Labor Relations Board.
National Labor Relations Board,       *
                                      *
      Respondent - Cross-Petitioner. *
                                 ___________

                             Submitted: April 15, 2002

                             Filed: September 12, 2002 (Corrected: 10/04/02)
                                   ___________

Before WOLLMAN, LOKEN, and MURPHY, Circuit Judges.
                          ___________

LOKEN, Circuit Judge.

       In late 1996, McKenzie Engineering Co. (“McKenzie”) was in a dispute with
the United Brotherhood of Carpenters and Joiners (the “Carpenters”) after McKenzie
fired four members of Carpenters Local 410 and replaced them with non-union
workers on a project to repair a dam in Keokuk, Iowa. In December, McKenzie
began work on an unrelated project to repair part of the Crescent Bridge that crosses
the Mississippi River between Rock Island, Illinois, and Davenport, Iowa. Angry at
Local 410 over the Keokuk dispute, McKenzie’s president, Robert McKenzie,
rejected a request by Carpenters Local 166 that its members be assigned carpenters’
work on the Crescent Bridge project. Instead, McKenzie entered into a “one trade”
agreement with Local 150 of the International Union of Operating Engineers (the
“IUOE”). For background regarding both disputes, see McKenzie Eng’g Co. v.
NLRB, 182 F.3d 622, 624-26 (8th Cir. 1999), and Carpenters Fringe Benefit Funds
v. McKenzie Eng’g, 217 F.3d 578 (8th Cir. 2000).

       Carpenters Local 166 filed an unfair labor practice charge with the National
Labor Relations Board. After an evidentiary hearing, the Board ruled that McKenzie
violated Sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act (NLRA),
29 U.S.C. § 158(a)(1), (5), by repudiating a “pre-hire” agreement with Local 166.
McKenzie petitions for review of this decision; the Board cross-petitions to enforce
its order. We conclude the Board’s General Counsel failed to prove that McKenzie
either repudiated or unilaterally modified a pre-hire agreement. Thus, there was no
unfair labor practice, and we decline to enforce the Board’s order.

                                 I. Background.

       McKenzie is a marine construction firm based in Fort Madison, Iowa. It is a
union contractor and has entered into pre-hire agreements with most of the craft
unions whose members work on marine construction projects in McKenzie’s trade
areas. Each craft union claims a traditional work jurisdiction -- for example,
carpenters work with wood, and operating engineers operate machinery. The claims
are broad and frequently overlap, triggering contentious work assignment issues. The
Crescent Bridge project involved both a demolition and a construction phase. The
demolition phase began in December 1996. McKenzie employed a crew of five to
seven for this phase. All but one had worked for McKenzie on the earlier project in
Keokuk. The crew included members of the IUOE and the Laborers Union but no
carpenters. This dispute does not involve the demolition phase work.




                                        -2-
      In mid-December, with the demolition phase underway, business agents for
Carpenters Local 166 and the Laborers Union local visited the Crescent Bridge site
and told Robert McKenzie that he had collective bargaining agreements with both
unions and they expected him to employ union members and pay the negotiated fringe
benefits for any laborer or carpenter work. Robert McKenzie replied that he did not
need any laborers on this project; the record reflects no further contacts between
McKenzie and the Laborers Union. Carpenters Local 166's business agent, Paul
Delcourt, claimed all pile driving and timber-replacement work during the
construction phase of the project. Robert McKenzie told Delcourt about McKenzie’s
on-going dispute with Carpenters Local 410. Mr. McKenzie said he would not start
the construction phase before mid-January and would decide then whether to assign
Local 166 members to the project crew.

        Delcourt visited the job site in mid-January and observed work being done that
he considered within the jurisdiction of the Carpenters. At a January 31 meeting,
Robert McKenzie told Local 166 representatives, “I want to deal with you. I want to
get this thing resolved,” but “[l]et’s try to get [the Local 410 dispute] resolved first.”
On February 5, Robert McKenzie met again with Local 166 representatives, who for
the first time showed him a copy of a 1988 contract between McKenzie and the
Northwest Illinois District Council of Carpenters covering a trade area that included
the Illinois side of the Crescent Bridge. Mr. McKenzie passed the document back to
the union representatives without comment, and the February 5 meeting ended
without a resolution of Local 166’s demands.

      Later that day, Robert McKenzie contacted Jack Schadt, the business agent for
IUOE Local 150, and offered to sign a one-trade agreement assigning all marine
construction work on the Crescent Bridge project to Local 150. The agreement was
signed that day in the form of an addendum to McKenzie’s Dredge Maintenance
Agreement with the IUOE. Local 150 then granted IUOE permits to the members of
McKenzie’s crew who were not IUOE members. This permitted McKenzie to

                                           -3-
complete the Crescent Bridge project using the crew he had brought from Iowa, while
paying wages and fringe benefits in accordance with McKenzie’s agreement with the
IUOE. The project was completed in late March. No member of Carpenters Local
166 worked on the project.

       Local 166 began picketing the Crescent Bridge work site on February 6 but
ceased picketing because of McKenzie’s agreement with IUOE Local 150. Paul
Delcourt and Jack Schadt met to discuss the situation shortly after Local 150 entered
into the one-trade agreement. Each advised the other that his union had a pre-hire
contract with McKenzie. Schadt testified that Delcourt wanted Carpenters union
members to do the pile driving work on the Crescent Bridge project. But when
Schadt offered to let one or two carpenters work on the project under the IUOE
contract if McKenzie would agree, Delcourt responded, “well, [it] doesn’t make a lot
of difference, McKenzie’s done any way, he’s out of business any way.” The
Carpenters then filed this unfair labor practice charge.

                    II. The Nature of Pre-Hire Agreements.

       To guarantee employees freedom of choice and majority rule, the NLRA
prohibits an employer and a union from entering into a collective bargaining
agreement granting exclusive representational status if the union was not chosen by
a majority of the employees in the bargaining unit. See Int’l Ladies’ Garment
Workers’ Union v. NLRB, 366 U.S. 731, 737-38 (1961). In 1959, Congress enacted
§ 8(f) of the NLRA, 29 U.S.C. § 158(f), to modify this rule for the construction
industry. As the Supreme Court explained in Jim McNeff, Inc. v. Todd, 461 U.S.
260, 266 (1983) (citations omitted):

      [Section] 8(f) allows construction industry employers and unions to
      enter into agreements setting the terms and conditions of employment
      for the workers hired by the signatory employer without the union’s


                                        -4-
      majority status first having been established in the manner provided for
      under § 9 of the Act. One factor prompting Congress to enact § 8(f) was
      the uniquely temporary, transitory, and sometimes seasonal nature of
      much of the employment in the construction industry. Congress
      recognized that construction industry unions often would not be able to
      establish majority support with respect to many bargaining units.
      Congress was also cognizant of the construction industry employer’s
      need to “know his labor costs before making the estimate upon which
      his bid will be based” and that “the employer must be able to have
      available a supply of skilled craftsmen for quick referral.”

        For many years, the Board held that a construction industry employer could
unilaterally repudiate a § 8(f) pre-hire agreement any time prior to the union attaining
majority status. The Supreme Court upheld this rule as “a defensible construction of
the statute” in NLRB v. Local Union No. 103, Int’l Ass’n of Bridge Workers, 434
U.S. 335, 350 (1978). However, the Board overturned its rule permitting repudiation
in John Deklewa & Sons, Inc.,1 holding that an employer violates § 8(a)(5) by
repudiating a § 8(f) pre-hire agreement before its expiration, unless employees have
voted to reject the union in a Board-conducted election. At the start of the hearing
in this case, the General Counsel’s attorney invoked the Deklewa principle, defining
the issue as whether McKenzie “repudiated its [pre-hire] contract with” Carpenters
Local 166 when McKenzie refused to apply the contract to employees performing
work on the Crescent Bridge project that was within the scope of that agreement.2




      1
       282 N.L.R.B. 1375 (1987), enforced sub nom. Int’l Ass’n of Bridge Workers,
Local 3 v. NLRB, 843 F.2d 770 (3d Cir. 1988), cert. denied, 488 U.S. 889 (1988).
      2
       The Deklewa rule has prompted a conflict in the circuits that the Supreme
Court has not yet resolved. See the cases cited in 1 THE DEVELOPING LABOR LAW
962 n.1120 (Hardin et al. eds., 4th ed. 2001). But this court has expressly upheld the
rule. See NLRB v. W.L. Miller Co., 871 F.2d 745, 747-48 (8th cir. 1989).

                                          -5-
                                  III. Discussion.

      A. Applicable Breach of Contract Principles. In his decision concluding
that McKenzie committed an unfair labor practice, Administrative Law Judge
William Pannier defined the applicable legal principle more broadly than the
repudiation of a pre-hire agreement:

      Of course, it is indisputable that a party to a collective-bargaining
      contract -- be it employer or union -- “violated Section 8(a)(5) and (1)
      and Section 8(d) of the Act [or Section 8(b)(3), in the case of a union]
      whenever it fails to honor a collective-bargaining contract by applying
      its terms to all employees covered by the contract.” That obligation
      exists no less to collective-bargaining contracts arising under Section
      8(f) of the Act, as is the situation presented here.

For authority, the ALJ cited only his own opinion in Diversified Bank Installations,
Inc., 324 N.L.R.B. 457 (1997). In Diversified, he cited one federal court case for this
proposition, W.R. Grace & Co. v. Local Union 759, Int’l Union of the United Rubber
Workers, 461 U.S. 757, 771 (1983). Grace involved a lawsuit under § 301 of the
Labor Management Relations Act, 29 U.S.C. § 185, for judicial enforcement of an
arbitration award under a collective bargaining agreement. For the general
proposition that collective bargaining agreements must be honored, the Court cited
Charles Dowd Box Co. v. Courtney, 368 U.S. 502 (1962), another § 301 case. In
reviewing the legislative history of § 301, the Court explained in Dowd Box:

      The bill which the Senate originally passed . . . contained a provision
      making a breach of a collective bargaining agreement an unfair labor
      practice subject to the jurisdiction of the National Labor Relations Board
      . . . . In conference, however, it was decided to make collective
      bargaining agreements enforceable only in the courts. “Once parties
      have made a collective bargaining contract,” the conference report

                                         -6-
      stated, “the enforcement of that contract should be left to the usual
      processes of the law and not to the National Labor Relations Board.”

368 U.S. at 510-11 (citations omitted); see Allied Chem. Workers v. Pittsburgh Plate
Glass Co., 404 U.S. 157, 186-87 (1971). In other words, the ALJ’s broad assertion
that the Board has unfair labor practice jurisdiction over all breaches of collective
bargaining agreements was contrary to § 301 as construed by the Supreme Court.

       However, while “the Board has no plenary authority to administer and enforce
collective bargaining contracts . . . . the Board may proscribe conduct which is an
unfair labor practice even though it is also a breach of contract remediable as such by
arbitration and in the courts.” NLRB v. Strong, 393 U.S. 357, 360-61 (1969). In this
regard, the Board does not exceed its jurisdiction by “necessarily construing a labor
agreement to decide [an] unfair labor practice case.” NLRB v. C & C Plywood Corp.,
385 U.S. 421, 428 (1967). In such a case, we review the Board’s interpretation of the
collective bargaining agreement de novo, not deferentially. Litton Fin. Printing v.
NLRB, 501 U.S. 190, 202-03 (1991).

       The Board adopted the ALJ’s conclusion that McKenzie violated §§ 8(a)(5)
and (1) “by failing and refusing to honor” its pre-hire agreement with the Carpenters.
Citing its decision in Deklawa and our decision in Miller, the Board explained, “It is
well settled that an employer may not repudiate an 8(f) agreement during its term.”
Unlike the ALJ, the Board thereby kept its decision within the recognized framework
of § 8(f) precedents. An employer’s repudiation of a collective bargaining agreement
with a majority-status union has long been held to be a violation of the § 8(a)(5) duty
to bargain. See NLRB v. M & M Oldsmobile, Inc., 377 F.2d 712, 715-16 (2d Cir.
1967). Deklawa applied that principle to pre-hire agreements, and we have upheld
that ruling.




                                         -7-
       So, too, it is well-accepted that an employer violates its § 8(a)(5) statutory duty
to bargain when it unilaterally modifies a term in a collective bargaining agreement
with a majority-status union that relates to a mandatory subject of collective
bargaining. See Allied Chem. Workers, 404 U.S. at 185, construing NLRA § 8(d).
It is reasonable for the Board to apply the same rule if an employer unilaterally
modifies a pre-hire agreement, even if the employer does not otherwise intend to
repudiate the agreement. However, in deciding whether the employer has unilaterally
modified the agreement by refusing to perform a term relating to a mandatory subject
of collective bargaining (such as assignment of work to union members), the Board
must take into account the essential nature of a pre-hire agreement, including the fact
that the union does not yet represent a majority of the construction industry
employees on a particular project. It is to that issue that we now must turn.

      B. Did McKenzie Breach a Pre-Hire Agreement? McKenzie signed a
Carpenters standard form pre-hire agreement in 1988 to avoid a labor dispute at a
small project in Illinois. The contract provided that, absent timely notice of
termination by McKenzie, it would not end until the expiration date of any successor
agreements.3 The ALJ then found that a 1996 “Highway and Heavy” agreement
between the Carpenters and the Associated General Contractors of Illinois was a
successor agreement in effect when McKenzie hired its crew for the Crescent Bridge
project, that this agreement encompassed the Crescent Bridge territory, and that some
(but not all) of the work on the construction phase of the Crescent Bridge project fell
within the occupational scope-of-work provisions of this agreement. The ALJ and
the Board therefore concluded that this 1996 agreement obligated McKenzie to hire


      3
       Unlike bargaining agreements with majority-status unions, § 8(f) pre-hire
agreements may be unilaterally repudiated after they expire. However, the Board has
held that an automatic renewal provision extends the life of a pre-hire agreement,
thereby extending the duration of Deklawa’s no-unilateral-repudiation rule, a holding
we upheld in Cedar Valley Corp. v. NLRB, 977 F.2d 1211, 1219 (8th Cir. 1992), cert.
denied, 508 U.S. 907 (1993).

                                           -8-
members of Carpenters Local 166 for the Crescent Bridge project, and that McKenzie
committed an unfair labor practice “by failing and refusing to honor its collective-
bargaining contract” with the Carpenters. We disagree with the Board’s construction
of the contract.

      First, we find nothing in the record supporting the ALJ’s assumption that
McKenzie was a member of the Associated General Contractors of Illinois bound by
the 1996 agreement. McKenzie’s name does not appear on a list of contractors
appended to the agreement. No witness at the hearing was asked that question. And
the ALJ stated in the fact section of his lengthy opinion (i) that McKenzie “has not
delegated bargaining authority to any other association or individual to sign the
Heavy and Highway Construction Agreement, and . . . has not signed that
agreement”; and (ii) that the General Counsel made no showing that McKenzie had
done any work in the territory covered by the 1988 agreement between 1988 and
1996. On this record, reviewing the 1988 and 1996 agreements de novo, we reject the
Board’s conclusion that the 1996 multi-party Highway and Heavy agreement was a
successor to the one-page 1988 agreement.

      Second, and perhaps more important, the Board’s breach-of-contract analysis
ignores the pre-hire nature of any contractual relationship between McKenzie and
Local 166. The 1996 agreement contains very broad “occupational scope” provisions
covering carpenters, millwrights, and piledrivers, crafts included within the
Carpenters union. But the last paragraph of each scope-of-work provision states:

      The union agrees that the above occupational scopes are claims for
      jurisdictional purposes, and are not intended to conflict with established
      practices.

It is clear from this record that the IUOE also claims a broad array of work on marine
construction projects. With an overlap established, the question is, what are the


                                         -9-
employer’s rights and obligations under its pre-hire agreements when assigning work
that is within the jurisdictional claims of more than one craft union.

      Robert McKenzie testified that he believed he had the right to assign all work
on the construction phase of the Crescent Bridge project to members of one trade
union, the IUOE. Testifying for McKenzie, the IUOE’s Jack Schadt explained that,
on smaller projects, affected craft unions and the contractor may agree on a
“composite” crew, whose members work without regard to jurisdictional lines. Or
the contractor may sign a “one-trade” agreement with one of the competing unions,
as McKenzie and the IUOE did here, in which case that union may agree that the
contractor may use members of other crafts in the one-trade crew. For larger projects,
unless the parties agree upon a composite crew, “the workers from the various trades
would perform the work of their respective trades and not cross jurisdictional lines.”
Mr. Schadt was then asked on cross examination by the Carpenters’ attorney:

      Q: Now, if you went, I know I’m asking a hypothetical, if you went to
      a job and the contractor had a contract with the Carpenters, and a
      contract with the Operating Engineers, is it the contractor who would
      determine what work the individuals would be assigned or are there
      traditional areas that determine who does the work?

      A: Regardless of traditional assignment the contractor can make an
      assignment of work.

Neither the General Counsel nor the Carpenters offered any testimony rebutting Mr.
Schadt’s description of this custom and practice in the industry. Indeed, other parts
of the record support Schadt’s testimony. The Carpenters’ own internal document
regarding inter-union procedures for resolving jurisdictional disputes states that the
process begins with “[a]n assignment of work by the contractor responsible for its
performance,” and further provides that the contractor’s work assignment will
“continue . . . without change unless there is an agreement between the contending


                                        -10-
trades or the Administrator issues a directive or a job decision.” The record also
includes pre-hire agreements between McKenzie and Carpenters locals in Iowa that
contain provisions for resolving jurisdictional disputes. Those agreements expressly
recognize the employer’s right to initially assign the work.

       The 1996 Highway and Heavy agreement made no reference to this work-
assignment issue, other than to except “jurisdictional disputes” from the agreement’s
grievance and arbitration remedies. The 1996 agreement is worded as though the
Carpenters already represented a majority of McKenzie’s employees. But it was
admittedly a § 8(f) pre-hire agreement, and it would violate the NLRA principle of
employee majority rule to construe it as conferring on the Carpenters the exclusive
rights of a majority-status union. Thus, we have a pre-hire, work-assignment issue
the answer to which cannot be found in the four corners of the 1996 Highway and
Heavy agreement. The proper method of resolving such issues under the federal labor
laws is well settled. “Gaps [in collective bargaining agreements] may be left to be
filled in by reference to the practices of the particular industry and of the various
shops covered by the agreement.” United Steelworkers v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 580 (1960); see Int’l Woodworkers v. Weyerhaeuser Co., 7 F.3d
133, 136 (8th Cir. 1993), cert. denied, 511 U.S. 1128 (1994). The Board applied this
principle in ruling against McKenzie in McKenzie Engineering, 182 F.3d at 625-26)
(“the NLRB properly looked beyond the four corners of the [collective bargaining]
agreement to consider the parties’ practice, usage, and custom regarding the
agreement”).

       Here, on the other hand, the ALJ and the Board ignored McKenzie’s
undisputed evidence of custom and practice on the ground that, faced with the
Carpenters’ claim, Robert McKenzie sought out the IUOE and thus there was no
legitimate jurisdictional dispute. But that justification is inadequate. In early 1997,
McKenzie had an on-going pre-hire relationship with the IUOE and already had
IUOE members working on the demolition phase of the Crescent Bridge project. If

                                         -11-
McKenzie’s pre-hire agreement with Carpenters Local 166 reserved the right to
assign the construction-phase work of this project to a competing union, the IUOE
was clearly a legitimate competitor. No jurisdictional dispute resulted because, when
McKenzie made the assignment, Local 166 chose to file a § 8(a)(5) unfair labor
practice charge, rather than invoke the inter-union dispute resolution procedures or
trigger the Board’s authority to resolve jurisdictional disputes under NLRA § 10(k).4

       In these circumstances, given the failure of the General Counsel and the
Carpenters to rebut Mr. Schadt’s uncontradicted testimony as to the relevant custom
and practice, we reject the Board’s conclusion that McKenzie committed the unfair
labor practice of repudiating or breaching any pre-hire collective bargaining
agreement it may have had with the Carpenters when it made a pre-hire assignment
of the construction phase work under a one-trade agreement with the IUOE.

      The Board’s petition to enforce its order is denied.

      A true copy.

             Attest:

                CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




      4
       For cases discussing procedures available to resolve jurisdictional disputes
involving majority-status unions, see NLRB v. Radio & Television Broad. Eng’rs
Union, Local 1212, 364 U.S. 573 (1961), and New Orleans Typographical Union No.
17 v. NLRB, 368 F.2d 755 (5th Cir. 1966).

                                        -12-
