Double Breasted Suits

Observers report that double-breasted has become the fashion in the construction industry recently. However, the style may be in some trouble.

"Double breasted" is used to refer to a reputed practice of some union contractors who establish non-union related businesses to provide greater flexibility in the competitive market. It is claimed that owners have set up dual shops, one union and one non-union, intending to thus be able to bid or negotiate work more competitively.

The alleged practice has naturally drawn the ire of many construction trade unions who view double breasted operations as threats to the availability of work for their membership. Consequently, numerous suits have been initiated by unions attacking double breasted operations.

Until quite recently courts declined to interfere with double breasted arrangements unless two conditions co-existed:

(1) a very close relation ship between the union and non-union firms, and

(2) a National Labor Relations Board (NLRB) determination that the two companies actually constituted a single appropriate bargaining unit (essentially one employer) for labor-management relationship purposes.

The two-pronged test was established by the noted Peter Kiewit case decided by the United States Supreme Court in 1916.

However, a recent double breasted suit ruling by a United States Circuit Court of Appeals out of New Orleans has cast a long shadow over so-called double breasted operations-at least for the time being. The case is Carpenters Local Union No. 1864 v. Pratt-Farnsworth, Inc., 690 F.2d 489 (5th Cir. 1982).

That 40-page exhaustive decision ruled that the trial court could deter mine whether allegedly dual operations violated

(1) a collective bargaining agreement (union contract),

(2) provisions of Federal Employees Retirement Investment Securities Act (ERISA), or

(3) antitrust laws, or

(4) constituted conspiracies among employers belonging to Associated General Contractors ("AGC") chapters. Prior involvement of the NLRB was held to be unessential.

The Federal Appeals Court (which covers the states of Louisiana, Texas, Mississippi and the Canal Zone) appeared to adopt a different test, the "alter ego" test. Under its test the principal question is whether the non union operation is simply another personality established and controlled by the union firm predominantly for the purpose of obtaining jobs. The court dropped NLRB involvement, ruling that the trial court was equally able to decide the bargaining unit issue.

The New Orleans court decision is probably not the last word. The actual ruling in the case established a test and directed that the case be returned to the trial court for decision. That result may again be subject to appellate court review, likely all the way to the United States Supreme Court.

An interesting sidelight to the Pratt-Farnsworth case is that not only were the two allegedly double breasted companies sued, but the local Associated General Contractors chapter and the national Associated General Contractors Association were also named as defendants. It was claimed that the AGC associations were guilty of wrongdoings as well. Some, but not all claims, against the associations were dropped by the appeals court.

The important lesson from the Louisiana double breasted suit is that unions in some areas are mounting legal attacks against dual shop arrangements and these attacks might become more widespread. Also, at least one court has taken a new approach to the issue-one seemingly more favorable to union organizations.

If anyone out there has gone or is going double breasted, they should be aware that the fashion may be changing.