Chicago District Council of Carpenters Pension Fund v. K&I Construction, Inc.

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-3973
Chicago District Council of
Carpenters Pension Fund, et al.,
Plaintiffs,
v.
K&I Construction, Inc.,
Defendant/Third-Party
Plaintiff-Appellant,
v.
Chicago and Northeast Illinois
District Council of Carpenters, et al.,
Third-Party Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 C 6769--John A. Nordberg, Judge.
Argued February 21, 2001--Decided February 23, 2001/*
Before Posner, Kanne, and Diane P. Wood,
Circuit Judges.
Diane P. Wood, Circuit Judge. This case
arises out of a dispute between the
Chicago District Council of Carpenters
Pension, Welfare, and Apprentice and
Trainees Program Trust Funds (the Funds)
and K&I Construction, Inc. (K&I) over the
fringe benefits K&I was required to pay
to the Funds on behalf of its employees,
who are members of the Chicago Northeast
Illinois District Council of Carpenters
and its local unions (the Union). The
Funds sued K&I to recover contributions
that were due; when the Union responded
with a strike in support of the Funds,
K&I filed a third-party complaint against
the Union in which it asked for an anti-
strike injunction under the Supreme
Court’s decision in Boys Markets, Inc. v.
Retail Clerks Union, Local 770, 398 U.S.
235 (1970). The district court refused to
grant the injunction, and K&I appealed.
After hearing oral argument, we issued an
order affirming the district court’s
decision. The present opinion explains

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how and why we reached that conclusion.
I
K&I is a subcontractor for homebuilders
in the Chicago area; it and the Union are
parties to a collective bargaining
agreement that requires K&I to pay
certain contributions to the Funds. On
October 17, 2000, the Funds submitted to
K&I an audit report claiming that between
January of 1997 and December of 1999, K&I
failed to forward almost $800,000 in
required fringe benefit contributions.
K&I disputed that it owed the
contributions, and so the Funds filed
suit. On October 31, 2000, the Union went
on strike in support of the Funds’ fringe
benefit claim.
Fearing that the strike would cost it
important contracts, K&I filed its third-
party complaint against the Union and
sought to enjoin the labor action.
Relying on Boys Markets, K&I argued that
it was entitled to an injunction because,
under the terms of the collective
bargaining agreement, the dispute over
fringe benefit contributions was a
mandatory subject of arbitration between
K&I and the Union. The district court
disagreed and denied K&I’s motion, and we
affirmed by order.
II
A preliminary injunction is an
extraordinary remedy that should not be
granted unless the movant, by a clear
showing, carries the burden of
persuasion. Mazurek v. Armstrong, 520
U.S. 968, 972 (1997) (per curiam). In a
typical case, the plaintiff initially
must establish a better than negligible
chance of succeeding on the merits and
the inadequacy of legal remedies. If the
plaintiff carries this burden, then the
district court balances the harm the
injunction would impose on the defendant
against the injury the plaintiff would
suffer without the injunction. Boucher v.
School Bd. of the School Dist. of
Greenfield, 134 F.3d 821, 824 (7th Cir.
1998). In labor cases, however, the rules
are somewhat different, because of
additional statutory restrictions against
the issuance of injunctions.
Two statutes influence the availability
of the kind of injunction K&I wants: the

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Norris-LaGuardia Act (NLA), 29 U.S.C.
sec. 101 et seq., which imposes strict
limits on the ability of courts to enjoin
labor disputes; and the Labor Management
Relations Act (LMRA), which establishes a
strong policy in favor of arbitrating
labor-management disputes, 29 U.S.C. sec.
173(d). In Boys Markets, the Supreme
Court addressed the tension that can
arise between these two enactments. The
Court recognized that one of the most
important benefits employers gain when
they agree to mandatory arbitration is
the avoidance of strikes and other
disruptive labor actions. In order to
ensure that employers have an incentive
to agree to arbitration (which, to
theextent it occurs, fosters the social
interest in industrial peace, recognized
by the Supreme Court in N.L.R.B. v.
Seven-Up Bottling Co. of Miami, 344 U.S.
344 (1953)), the Court determined that it
was necessary to recognize a narrow
exception to the NLA’s anti-injunction
provisions. If the employer has
contractually obligated itself to
arbitrate a given dispute, by the same
token that employer must be able to
enjoin the union from striking over that
dispute. Boys Markets accordingly held
that a court may "issue [an] injunctive
order [if] it first holds that the
contract does have [the] effect" of
binding both parties to arbitrate the
dispute at issue and that "an injunction
would be warranted under ordinary
principles of equity." 398 U.S. at 254
(emphasis in original) (quoting Sinclair
Refining Co. v. Atkinson, 370 U.S. 195,
228 (1962) (Brennan, J., dissenting)). It
is in that sense that an employer seeking
to enjoin a labor action is subject to an
extra burden: it must both satisfy the
normal requirements for an injunction and
also demonstrate that the contract
language binds the union to arbitrate the
dispute that precipitated the strike.
After Boys Markets, the Court
underscored that the relevant issue is
not simply whether the labor action
violates the collective bargaining
agreement, but more specifically whether
the dispute that gave rise to the labor
action was also one that the parties
specifically agreed would be the subject
of mandatory arbitration. As the Court
said in Jacksonville Bulk Terminals, Inc.
v. International Longshoremen’s Ass’n,
457 U.S. 702 (1982), "in agreeing to

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broad arbitration and no-strike clauses,
the parties do not bargain for injunctive
relief to restore the status quo pending
an arbitrator’s decision on the legality
of the strike under the collective
bargaining agreement, without regard to
what triggered the strike. Instead, they
bargain only for specific enforcement of
the union’s promise to arbitrate the
underlying grievance before resorting to
a strike." Id. at 723. A sympathy strike,
for example, may be a violation of the
collective bargaining agreement’s no-
strike clause, but it may not be enjoined
pending arbitration of the propriety of
the strike unless the union specifically
obligated itself to arbitrate the issue
that caused the walkout. See Buffalo
Forge Co. v. United Steelworkers, 428
U.S. 397 (1976); Local Lodge 1266,
International Ass’n of Machinists v.
Panoramic Corp., 668 F.2d 276, 280-81
(7th Cir. 1981).
Turning to the merits of K&I’s claim,
our first task is to identify the dispute
that gave rise to the Union’s strike. It
is whether K&I’s alleged failure to
contribute $800,000 to the Funds violated
any duty it had to the Funds or the union
members. To succeed in its quest for an
injunction, K&I must demonstrate that the
CBA requires the Union to arbitrate this
dispute between K&I and the Funds; it is
not enough to show that the CBA prohibits
the Union from striking while K&I and the
Funds are sorting out their differences.
(There is no dispute that if the Union
were obligated to arbitrate trust fund
disputes, the CBA no-strike clause would
prohibit the Union from striking here.)
The question whether K&I has met this
burden turns on the proper interpretation
of the collective bargaining agreement,
which itself is an issue for which our
review is plenary. International Ass’n of
Machinists & Aerospace Workers,
Progressive Lodge No. 1000 v. General
Elec. Co., 865 F.2d 902, 905 (7th Cir.
1989). Only if we concluded that the CBA
requires the Union to arbitrate this
trust fund dispute would we need to
consider whether this case should be
remanded for the district court to
consider the equities of the requested
injunction, or whether we could review
the district court’s decision denying the
injunction under the usual deferential
abuse of discretion standard, if the
record is already clear enough.

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Several provisions of the CBA are
relevant here. Article XVIII, titled
"Settlement of Disputes," states:
18.1 Except as provided in Sections 12.13,
13.11, 14.11, 27.1, 28.2, 33.1, 34.1,
35.1, and 36.1 of the Agreement, any
dispute as to the proper interpretation
of this Agreement shall be handled in the
first instance by a Representative of the
UNION and the EMPLOYER, and if they fail
to reach a settlement . . . it shall be
referred to a Board of Arbitration
composed of one (1) person appointed by
each party, the two (2) so appointed to
select a third member.
18.2 Except as provided in Sections
12.13, 13.11, 14.11, 27.1, 28.2, 33.1,
34.1, 35.1, and 36.1 of this Agreement,
the Board of Arbitration shall have
jurisdiction over all questions involving
the interpretation and application of any
Section of this Agreement.
18.3 . . . There shall be no work stoppage
during arbitration.
Each of the relevant exempted sections
to which Sections 18.1 and 18.2 refer
(e.g., 12.13, 13.11, etc.) is contained
within CBA articles that pertain to K&I’s
duty to make contributions to the Funds.
So, for example, Article XII relates to
the Health and Welfare Fund and Article
XIII relates to the Pension Fund. Each of
the referenced sections is at the end of
its article and contains essentially the
same language. Section 12.13 is typical:
The collection of amounts due under this
Article shall not be subject to the
Settlement of Disputes procedure
established in Article XVIII.
Each of the cited articles also contains
language to the effect that "the EMPLOYER
agrees to be bound by the Agreement and
Declaration of Trust establishing the
[Trust Fund]" and that contributions
"shall be made on the dates and in the
manner prescribed by the Trust
Agreement." See, e.g., Article XII,
Sections 12.2 & 12.3. (Neither party
considered it necessary to include the
trust agreements in the record; they
factor into our analysis only insofar as
we can deduce the relevant terms from
other evidence properly before us; as we

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note later, K&I bears the risk of any re
maining uncertainty about the terms.)
Before we interpret this contractual
language, there are two questions of law
that we need to address. The first is
what legal standard a court considering a
Boys Markets injunction should apply when
the parties dispute whether the mandatory
arbitration provision covers the dispute
that gave rise to the strike. The
district court followed the Sixth
Circuit’s rule, which is that no Boys
Markets injunction may issue if the union
makes a "colorable claim" that the
contract language excludes the underlying
dispute from arbitration. See Allied
Systems Ltd. v. Teamsters Nat’l Auto.
Transporters Indus. Negotiating Comm.,
Local Union 327, 179 F.3d 982, 988-89
(6th Cir. 1999). K&I argues that the
district court should have interpreted
the CBA according to established
principles of labor contract law and made
a determination whether the underlying
dispute was subject to arbitration.
We agree in principle with K&I. To see
why, we begin with three legal
propositions that are not in dispute.
First, as a rule, whether a labor-
management dispute is a mandatory subject
of arbitration is a question for the
courts. First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995); AT&T
Technologies, Inc. v.
CommunicationsWorkers, 475 U.S. 643, 649
(1986) ("Unless the parties clearly and
unmistakably provide otherwise, the
question of whether the parties agreed to
arbitrate is to be decided by the court,
not the arbitrator."); Local Union 1393
Int’l Bhd. of Elec. Workers v. Utilities
Dist. of W. Ind. Rural Elec. Membership
Coop., 167 F.3d 1181, 1183-84 (7th Cir.
1999). Second, courts determine whether
to compel parties to arbitrate by
interpreting the relevant language of
their collective bargaining agreement in
light of well-worn principles of labor
contract interpretation, including the
rule that where the agreement contains a
mandatory arbitration provision, there is
generally a presumption in favor of find
ing arbitrability. Local Union 1393, 167
F.3d at 1183. Finally, from Boys Markets
and Buffalo Forge, we know that once a
court holds that an issue that gave rise
to a strike is a subject of mandatory
arbitration, the employer is entitled to

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enjoin the strike -- provided that the
equities favor an injunction.
These three propositions leave little
room for the Sixth Circuit’s "colorable
claim" rule. That rule would require
courts to apply a different standard of
labor contract interpretation when
deciding arbitrability for purposes of a
Boys Markets injunction from the standard
applied when deciding whether to issue an
order to arbitrate. A court could only
"hold" that a dispute must be arbitrated
for purposes of Boys Markets if no
colorable claim to the contrary could be
made, while whether the parties were
actually ordered to arbitrate would be
determined in light of established
principles of labor contract
interpretation. We can find no evidence
that the Supreme Court has created such
inconsistent standards. On the contrary,
in Gateway Coal Co. v. United Mine
Workers, 414 U.S. 368 (1974), the Court
applied standard principles of labor
contract interpretation, including the
presumption in favor of arbitrability, in
concluding that the Third Circuit erred
in reversing the grant of a Boys Markets
injunction. 414 U.S. at 380 n. 10. That
the Court took this approach is not
surprising when one considers the
practical consequences of having
inconsistent standards. Because the
"colorable claim" test is considerably
less favorable to arbitration, courts,
for reasons other than the equitable ones
recognized in Boys Markets, would
sometimes be required to deny employers
the benefit of their bargain to arbitrate
by requiring arbitration but permitting
unions to continue striking.
Allied Systems relies for its rule upon
an earlier Sixth Circuit opinion, Waller
Bros. Stone Co. v. United Steelworkers,
620 F.2d 132 (6th Cir. 1980), in which
the court explained that no Boys Markets
injunction could issue where the
arbitrability of the dispute was a
"threshold question[ ] pos[ing] difficult
problems of contract interpretation," be
cause in Buffalo Forge the Supreme Court
warned against using Boys Markets
injunctions to "usurp" the role of
thearbitrator. Waller Bros. Stone Co.,
620 F.2d at 136. The problem with this
argument, and the reason that the
usurpation discussion in Buffalo Forge is
not on point, is that the district court,

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and not the arbitrator, is normally the
entity charged with deciding the question
whether the dispute that gave rise to the
strike is subject to arbitration. (That
is the case with this CBA; we express no
opinion on the more unusual situation in
which the parties have given the
arbitrator the authority to determine
arbitrability as well, though we note
that the Supreme Court has imposed a
significantly different standard of
certainty on courts before they are to
come to such a conclusion. See First
Options, 514 U.S. at 945.) There is thus
no threat of usurpation when the court is
deciding only whether a certain issue is
arbitrable; even if the issue of
arbitrability raises a difficult question
of labor contract interpretation, that is
not enough to deny a Boys Markets
injunction.
Others among our sister circuits are
less reluctant to evaluate the merits of
the contract interpretation dispute when
a Boys Markets injunction is at issue.
They require the court to conduct a
"preliminary interpretation" of the
collective bargaining agreement in light
of the surrounding circumstances.
National Rejectors Industries v. United
Steelworkers, 562 F.2d 1069 (8th Cir.
1977); Elevator Mfrs’ Ass’n v. Local 1,
Int’l Union of Elevator Constructors, 689
F.2d 382 (2d Cir. 1982). We think it is
appropriate to go even a step further and
require that, to the extent possible on
the record before it, the district court
should resolve the arbitrability issue if
that can be done purely as a matter of
law. If there are contractual ambiguities
that would require further proceedings,
then the court should conduct the kind of
preliminary interpretation used by the
Second and Eighth Circuits. Under Boys
Markets, the burden is on the employer to
show that the issue is arbitrable.
The second issue raised by the parties
concerns the relevance of the presumption
in favor of arbitrability to the dispute
in this case. The Union cites Schneider
Moving & Storage Co. v. Robbins, 466 U.S.
364 (1984) for the proposition that there
is no presumption that trust fund
disputes are subject to mandatory
arbitration. K&I contends that
Schneider’s holding was narrower,
negating the presumption only with
respect to the question whether trust

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funds intended to be bound to arbitrate
their disputes with employers under the
terms of a collective bargaining
agreement. We need not take sides on the
proper interpretation of Schneider in the
present situation, because even if it
were available, the arbitrability
presumption would not help K&I here.
No court would need to resort to the
arbitrability presumption unless it found
the contractual language genuinely
ambiguous--ambiguous in the same sense
that would entitle the parties to present
external evidence to shed light on the
parties’ true intentions. Moriarty v.
Svec, 164 F.3d 323, 331 (7th Cir. 1998).
And there is nothing about an arbitration
clause or any applicable presumptions
that changes the initial process of
deciding whether the contract is or is
not ambiguous. An employer’s initial
burden under Boys Markets is thus just
the same as the initial burden faced by
any party who wishes to convince a court
that the plain language of a contract
cannot stand on its own: it must show
that the language of the arbitration
clause is susceptible to more than one
reasonable interpretation, including an
interpretation under which it covers the
dispute that gave rise to the labor
action. As we will now explain, K&I has
not met this burden.
K&I contends that the language from
Article XVIII can reasonably be read to
require the Union to arbitrate a dispute
over trust fund contributions. It
interprets the language in Sections 18.1
and 18.2 as covering all fund
contribution disputes except those over
"[t]he collection of amounts due" to the
Funds, which it thinks means only
disputes over the process of collecting
fringe benefit contributions. Under this
approach, disputes over the determination
of the amount due, in contrast, must be
arbitrated under the broad language of
Article XVIII. (Evidently K&I thinks that
ascertaining the amount one must pay is
not part of the collection process.) The
Union, on the other hand, finds these
distinctions unworkably fine; it contends
that Article XVIII’s arbitration clause
was not intended to apply to any trust
fund contribution disputes and that the
exemption language can only reasonably be
interpreted as a statement of this
intention.

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We recognize that in some cases a
collective bargaining agreement,
reasonably interpreted, may require a
union to arbitrate trust fund disputes,
see Jaffee v. Shanin Co., 763 F.Supp. 286
(N.D.Ill. 1991), but this is not such a
case. It is easiest to see why if we
start with the fact that the CBA
incorporates by reference the terms of
the Funds’ trust agreements. As a result,
even though only K&I and the Union are
signatories to the CBA, the CBA
contractually establishes K&I’s
relationship to both the Union and the
Funds. Any proposed interpretation of the
CBA must therefore take account of this
fact.
And it is here, already, that K&I’s
proposed interpretation of the CBA
becomes problematic. K&I is litigating
with the Funds over the same $800,000
dispute that it insists must be
arbitrated with the Union under the CBA.
K&I conceded the validity of that suit at
oral argument. It is necessarily arguing,
therefore, that the CBA (including the
Funds’ incorporated trust agreements) can
reasonably be interpreted as requiring
the Union to arbitrate the dispute with
K&I while permitting the Funds
simultaneously to litigate the same
dispute in federal court. The exemption
language of Article XVIII suggests that
the agreement did no such thing, and we
see no other evidence in the CBA that the
parties intended to create a bifurcated
system of dispute resolution and to run
the risk of inconsistent, legally binding
outcomes. At the least, we would not
interpret a contract to require such a
cumbersome and potentially chaotic
outcome absent a clear expression of
intent. Cf. Pipe Fitters’ Welfare Fund,
Local Union 597 v. Mosbeck Indus.
Equipment, Inc., 856 F.2d 837, 840 (7th
Cir. 1988) (requiring clear expression of
intent to have union arbitrate on behalf
of trust funds).
This point would have less force if it
were possible for the Funds to
participate in the arbitration, but
nothing before us suggests that this can
occur. Article XVIII makes no provision
for the Funds to be a party to an
arbitration between K&I and the Union,
and we see no evidence elsewhere of any
such agreement on the part of the Funds.
Excluding the Funds from the arbitration

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process makes good sense if disputes in
which the Funds have an interest are
exempted from arbitration; that way, any
disputes could be filed in the
appropriate court and all interested
parties would be able to participate in
the litigation.
The specific language of the CBA is no
more helpful to K&I. The reasonableness
of a proposed interpretation of
contractual language requires
consideration of the contract as a whole,
including terms incorporated by
reference. Here, the relevant articles of
the CBA incorporate by reference the
Funds’ trust agreements. One can deduce
from the CBA that those agreements have
something to say about the process of
making trust fund contributions, and that
they may provide insights into how the
parties to the CBA intended to resolve
disputes over such contributions. That is
why in similar situations both the
Supreme Court and this court have
carefully considered the content of both
CBAs and trust agreements in determining
the parties’ intent with respect to the
arbitrability of trust fund disputes.
Schneider, 466 U.S. at 374; Pipe Fitters’
Welfare Fund, 856 F.2d at 840. K&I,
however, failed to make these agreements
part of the record. Given that it was
K&I’s burden to prove the reasonableness
of its position in light of the contract
as a whole, this failure alone strikes a
serious blow against its effort to
qualify for a Boys Markets injunction.
Even assuming away this evidentiary
problem, the plain language of the CBA
does not support K&I’s position. There is
no language specifically stating that the
Union must arbitrate a dispute between
the company and the Funds about trust
fund contributions, and there certainly
is no express indication that it must do
so while the Funds are litigating the
same dispute. (Why the Union would need
to be asserting the Funds’ right in an
arbitration proceeding is an interesting
question, the answer to which also cuts
against K&I’s efforts.) Instead, the CBA
arbitration provisions exclude from
arbitration all trust fund disputes
involving "[t]he collection of amounts
due under" the trust fund-related
articles of the CBA.
K&I has tried to inject ambiguity into

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those words, but we find its efforts
unsuccessful in the end. The key phrase,
in light of the language of the articles
addressing the trust funds, supports the
conclusion that the parties meant to
exclude all trust fund disputes from
arbitration. The trust-fund-related
articles cover all the details (directly
and by incorporation of the trust
agreements) of calculating and making
fund contributions without providing for
any express distinctions between the
various stages of the contribution
process. No distinction is made between
the determination of the amounts due to
the Funds and the process by which those
amounts are to be collected. The natural
reading of the phrase "collection of
amounts due under this Article" is thus
as a general exemption of all funding
disputes arising under the various
articles.
K&I’s proposed reading makes no
practical sense, either. Under K&I’s
interpretation, the exemptions in Article
XVIII in effect would only clarify that
there is no need to arbitrate the
collection of an arbitral award. If K&I’s
reading of the contract is correct, the
parties drafted the exemption language
only to clarify that if, after an
arbitrator determined the fringe benefit
contribution amount owed to the Funds,
K&I refused to pay, or refused to pay in
the manner the arbitrator decreed, the
parties would not need to arbitrate K&I’s
refusal to honor the award. The notion
that this was the parties’ concern
borders on the absurd, especially in
light of the perfectly sensible
alternative conclusion that results from
the Union’s interpretation of Article
XVIII and the phrase "collection of
amounts due under this Article."
In the final analysis, we have no
trouble concluding that the language of
the CBA unambiguously establishes that
the arbitration provisions in Article
XVIII were not intended to cover disputes
between K&I and the Funds. This means
that we need not concern ourselves with
any presumption favoring arbitration, and
we leave further development of that
topic to another day. The only reasonable
interpretation of this agreement is the
one the district court adopted, under
which the phrase "[t]he collection of
amounts due under this Article shall not

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be subject to the Settlement of Disputes
procedure established in Article XVIII"
has the effect of exempting from
arbitration disputes like the one that
gave rise to the Union’s strike.
III
Because the CBA here cannot reasonably
be read to require the Union to arbitrate
the trust fund dispute between K&I and
the Funds, this case does not fall within
the narrow set of circumstances under
which a Boys Markets injunction may be
issued. We thus Affirm the district
court’s denial of a preliminary
injunction against the strike.
FOOTNOTE
/* On February 23, 2001, we issued an order affirm-
ing the district court’s denial of K&I Construc-
tion, Inc.’s motion for a preliminary injunction,
with an indication that an explanation would
follow in due course. This opinion provides that
explanation.

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