We recently obtained a dismissal of a complaint brought by the Philadelphia Carpenter’s Union against a contractor that sought to obtain an audit of that contractor’s books and records for the purpose of determining an alleged ERISA liability owed to the Carpenters under a collective bargaining agreement. A copy of the opinion can be found here.
In its complaint, the Union alleged that a letter of assent, signed in 1997, that bound the contractor to a collective bargaining agreement between a multiemployer organization and the Union also bound the carpenter to the current 2015 CBA between the organization and the Union. The 1997 letter of assent contained language commonly found in such documents that said the contractor would be bound by “any additions, modifications, extensions, or renewals” of the CBA between the multiemployer group and the Union. Accordingly, the Union argued, our client was bound by the current CBA between the multiemployer group and the Union.
We filed a motion to dismiss the complaint because our client was not and had never been a member of the multiemployer organization that entered into the CBA with the Union and never authorized that organization to bargain on its behalf. The District Court for the Eastern District of Pennsylvania agreed and dismissed the Union’s complaint.
The is an important decision for contractors that sign letters of assent binding themselves to a CBA for a particular project. For a variety of reasons, it is common practice for a non-signatory contractors to sign a letter of assent – or limited project agreement as they are sometimes called – with a union whereby the contractor agrees to be bound to a CBA for a particular project. The CBA is usually an existing agreement negotiated between a union and a multiemployer organization to which contractor signing the letter of a assent does not belong. The Federal Court made clear that contractors are not bound successor agreements unless they specifically authorize that multiemployer group to bargain on its behalf for future agreements.
There are two important takeaways. First, although typically only one page, a letter or assent or limited project agreement is a loaded document that may contain language that binds the signing contractor to obligations well beyond the duration of a project. Therefore, contractors need to know what they are agreeing to when signing such agreements. Second, if a union is seeking an audit of a contractor’s books and records based on a letter of assent, before agreeing to such an audit, the language of the letter should be reviewed carefully.