BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
MILWAUKEE AND SOUTHERN WISCONSIN
DISTRICT COUNCIL OF CARPENTERS
HALLMARK DRYWALL, INC.
Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C., Attorneys at Law,
by Mr. Matthew R. Robbins, on behalf of the Milwaukee and
Southern Wisconsin District Council of Carpenters.
Lee, Kilkelly, Paulson & Younger, S.C., Attorneys at Law, by Mr. Jeffrey
W. Younger, on behalf of Hallmark Drywall, Inc.
Milwaukee and Southern Wisconsin District Council of Carpenters, hereinafter the
requested that the Wisconsin Employment Relations Commission appoint a staff arbitrator to
and decide the instant dispute between the Union and Hallmark Drywall, Inc., hereinafter
in accordance with the grievance and arbitration procedures contained in the parties' labor
Hallmark subsequently concurred in the request and the undersigned, David E. Shaw, of the
Commission's staff, was designated to arbitrate in the dispute. A hearing was held before
undersigned on April 30, 2001, in Madison, Wisconsin. There was no stenographic
of the hearing. The parties' post-hearing briefing schedule was completed by July 3, 2001.
upon the evidence and the arguments of the parties, the undersigned makes and issues the
The parties were unable to agree on a statement of the issues and agreed the
frame the issues to be decided.
The Union would state the issues as follows:
Did the Employer violate the labor agreement by entering into an
agreement for work to be
performed by Midwest Drywall? If so, what is the remedy?
Hallmark states the issues as being:
Did Hallmark Drywall, Inc. violate Article 14 of the collective
bargaining agreement by subletting
work on the Hawthorn Suites to a non-union contractor?
The Arbitrator concludes that the issues are as follows:
Did Hallmark Drywall, Inc., violate the collective bargaining
agreement by entering into an
agreement whereby it gave up work which was then to be performed by Midwest Drywall?
what is the remedy?
The following provision of the parties' Agreement is cited:
It is agreed that any work sublet
and to be done at the site of the construction, alteration, painting
or repair of a building, structure, or other work and when a portion of said work to be sublet
is under the jurisdiction of this Agreement, the work shall be sublet to a subcontractor
signatory to an Agreement with the Milwaukee & Southern Wisconsin District Council
Carpenters or any of its affiliates.
When situations arise wherein the
low bidder is not signatory to this Agreement and before the letting
of such work, the Contractor must notify the Union in order that the Union has an
opportunity to meet with the Contractor and subcontractor in an attempt to work toward a
solution of having the work in question done by members of the bargaining unit.
If the Contractor does not notify
and meet with the Union paragraph (a) applies and paragraph (b)
The Union and Hallmark are signatory to a collective bargaining agreement that has
effect at all relevant times. The work in question involves the Hawthorn Suites project in
Hallmark is one of the largest drywallers in this area and has always been a union
The number of employees it has depends on the number and size of the projects it is working
having approximately 170 employed doing drywall work or installing studs at time of
Grosse is the President and he and his spouse, and another party, are the owners of
DL Designs, hereinafter Design, is owned by Art Sandridge and is a builder and
contractor. Design is the general contractor on the Hawthorn Suites project and was
of the owners of the Hawthorn project. Work on the project commenced in May of 2000
completion date of late April of 2001.
In July of 2000, Hallmark contracted to do the following work on the Hawthorn
PROVIDE ALL LABOR, MATERIAL
AND EQUIPMENT NECESSARY TO COMPLETE THE SCOPE OF
LISTED IN DIVISION 05400 LIGHT GAUGE METAL FRAMING, PORTION OF
DIVISION 06100 ROUGH
CARPENTRY, DIVISION 07202 BUILDING INSULATION, DIVISION 09250 GYPSUM
INCLUDING THERMAL AND SOUND INSULATION WITHIN STEEL STUD
CAVITIES, STEEL STUD,
EXTERIOR GYPSUM SHEATHING, INTERIOR WALLS HUNG, TAPED AND
FINISHED WITH A ORANGE
PEEL TEXTURE, CEILINGS TO HAVE A POPCORN TEXTURE, IN ACCORDANCE
WITH PLANS AND
SPECIFICATIONS PREPARED BY STRANG, INC. AND D/L DESIGN BLDRS. OF WIS.
INCLUDING ALL TAXES, PERMITS AND FEES.
Hallmark was to be paid the sum of $736,770.00 for the work with a 5% retainage.
Hallmark commenced work on the project, however, the owners of the project
financial difficulties and had to seek new financing. In the meantime, Hallmark and the
subcontractors on the job were not being paid. Hallmark pulled off the project in September
after it had completed the steel stud work and sheathing for 6½ floors, as well as
No significant amount of drywalling had been done at that point.
Hallmark was owed approximately $200,000.00 for the work it had completed at the
time it ceased
working on the project.
Design and the other owners eventually decided to turn over ownership on the
project to Great Lakes Companies, hereinafter GLC, with Design remaining as the general
on the project. GLC made its proposal to take over ownership in mid-November, 2000, but
to keep the same completion date, even though the subcontractors had not worked on the
approximately 60 days. GLC also wanted to increase the retainage to 15% in order to insure
work would be completed on time. GLC ultimately obtained the required financing and
owner of the project in 2001.
Discussions began with Hallmark and the other subcontractors in late November to
back on the project. Both Sandridge and Grosse testified that Grosse was leery of returning
project because of still being owed $200,000.00 for the work already done and concern
completion date along with the increased retainage GLC wanted. Grosse did not think he
people available to finish the work in the time allotted because of other projects Hallmark
In those discussions and proposals, Hallmark, through its attorneys, proposed that the
time be extended by the amount of time it was off the project and that extension was
agreed to. However, because the land for the project was leased from Dane County, and
required that a hotel be on the site and open by June 1, 2001, the target date for completion
extended to mid-May of 2001, from the original late April date.
Also during the discussions between Grosse and Sandridge in December, when the
indicated Hallmark could not meet the completion time, the subject of giving up the drywall
(hanging and taping) arose. Grosse suggested a number of companies he thought could do
within the time limits, including a Carl Kieth. Grosse indicated that Kieth was non-union
Hallmark could not subcontract the work to him. According to Grosse and Sandridge, that is
only conversation they had regarding Kieth.
Kieth and Grosse have known each other off and on for approximately 20 years, but
contact was 10-12 years ago when Kieth had been a union drywall contractor in Illinois.
to Grosse, approximately a year ago he had contacted a "Tony" about doing some work for
(Grosse), but Tony was non-union and would not unionize. In their conversations, Tony
that he was doing some work for Kieth. Grosse called Kieth and told him about the work
him Sandridge's name and phone number. After contacting Sandridge, Kieth came and
looked at the
Hawthorn project and then informed Sandridge he could do the work within the time limits.
Kieth does not have any regular employees of his own; rather he contracts with
this case, "Tony", to provide people to do the job. Under this arrangement, Kieth (d/b/a
Drywall) pays Tony, who then provides the workers and pays them whatever amount he pays
Kieth is responsible for overseeing their work and is also responsible for the work that is
In December of 2000, Hallmark reached an agreement with Design to return to the
In January, 2001, Hallmark agreed to give up the hanging and taping of drywall on floors 2,
4 or a total of $38,550.00. In February, 2001, Hallmark agreed to give up the taping and
of drywall on floors 5, 6, 7 and 8, an additional total of $57,550.00. In all, Hallmark gave
up a total
of $96,100.00 for the drywall work which was then performed by Midwest Drywall pursuant
contract with Design. Hallmark also received some other additional work on the project.
According to Grosse, Hallmark had 13 other projects going in January of 2001,
Hawthorn Suites, and had approximately 110 employees working at the time. Grosse did not
had the number of employees available that would be needed to complete all of the work in
original contract with Design within the allotted time, especially the drywall work.
Hallmark employees were working on the project at the same time as Midwest was
but Hallmark did not supervise the work performed by Midwest, nor was it responsible in
for the work that was done. Hallmark did have to coordinate with Midwest to the extent of
Midwest know when Hallmark had completed its insulation and interior framing work on a
that Midwest could commence the drywall work. Kieth had 10-15 people working on the
Midwest and supervised the work and visited the work site daily. Hallmark remained
the clean-up on the floors after the work was done and also supplied the materials required
drywalling pursuant to its original contract with Design.
In February of 2001, Gerry Hollick, Business Representative for the Union, contacted
Sandridge about Midwest working on the Hawthorn Suites project. Hollick testified he asked
Sandridge how he had heard of Midwest, and was told that Grosse had referred Midwest to
(Sandridge) because Grosse wanted out of that part of the work (drywalling). An organizer
Union visited the project site and later reported to Greg Sefcik, the Union's Assistant
Manager and Business Representative, that Midwest was working on the Hawthorn Suites
Sefcik then requested information from Hallmark. After receiving the information, Sefcik
Grosse. According to Sefcik, Grosse said there was nothing to resolve as the general
taken the work out of the contract. Sefcik asked Grosse if he had recommended Midwest to
Sandridge and Grosse answered that he had.
Sefcik also testified that the Union had workers available for referral for drywall
January of 2001 and that Hallmark had requested referrals from the Union in January for
Sefcik further testified that a similar dispute had arose with Hallmark in 1995
verbal agreement between Hallmark and a non-union subcontractor that work would be taken
Hallmark's contract and given to the subcontractor. A grievance was filed and resolved
Hallmark agreed to pay the Union $5000.00.
A grievance was filed in the instant case in February, 2001. The parties attempted to
their dispute, but were unsuccessful and proceeded to arbitrate the grievance before the
POSITIONS OF THE PARTIES
The Union asserts that this case involves an employer who sought to circumvent the
and conditions of its agreement with the Union, particularly, the subcontracting clause.
number of arbitration awards and arbitration texts, the Union notes arbitrators have long
that every labor agreement has an implied covenant of good faith dealing, especially in the
of subcontracting issues. In that regard, an employer violates the agreement when it takes
which subverts the agreement and seeks to deprive the other party of the benefit of their
In this case, other than an explicit confession, there cannot be stronger evidence of
attempt to circumvent the Agreement, Hallmark's sole defense being that "It didn't
work, the owner did." However, the facts show that this is not a case of an owner choosing
subcontract part of the work directly, rather, the entire procedure in this case was at the
of Hallmark. The Union asserts Hallmark and the Union are signatory to a labor agreement
provides for set wages and benefits, and which requires Hallmark to obtain referrals from the
The Agreement also contains a subcontracting provision which provides that work may only
to a union subcontractor. Further, the parties have previously recognized that using the
of having the owner contract for drywall work violated their agreement. In 1995, an
grievance was filed by the Union and Hallmark settled the grievance by paying $5,000.00.
In this case, Hallmark originally contracted with Design to perform steel studs,
drywall work on the Hawthorn project. In fall of 2000, the project was shut down for
and 90 days as a result of financial problems. Before continuing work on the project,
entered into an agreement with Design and the future owner which
assured it would receive past due payments and which also specifically provided that
the time for
Hallmark to perform its work was extended by the same period of time that Hallmark had
the project due to the contractor's failure to make payments. Thus, the time in which
to perform its work was expressly extended by the 60 to 90 days the project was shut down.
However, at the end of January, Hallmark claimed it did not want to do the drywall work
of insufficient labor being available. This was the sole reason offered by Hallmark for its
conduct. However, the Union had numerous drywall employees available for referral, but
did not contact the Union in that regard. This is even though the Union responded
spring of 2001 to other requests from Hallmark for drywall employees, all of which were
Hallmark also made no effort to obtain a union subcontractor to do the drywall work, even
there are numerous union drywall contractors in the area. Hallmark employees continued to
the steel stud, clean-up and insulating work on the project and also additional add-ons of this
More telling is the process by which Midwest came on the project. Grosse advised
to use Midwest. Sandridge had never heard of Midwest and was given a name and phone
to contact by Hallmark. Midwest is not signatory to a union agreement and had in fact come
existence only in the last six months, had no other jobs, and had no regular employees.
Hallmark claiming that it could not do the work because of a labor shortage, then advised the
contractor to give the work to a company that had just come into existence and had no
employees or other jobs. Further, Hallmark provided all of the tools and materials for the
be performed by Midwest. Midwest was simply a conduit, and it was only after Kieth
job that he contacted a labor broker, or a "coyote", to provide drywall workers. Kieth
those employees directly, instead paying the labor broker.
Hallmark's deep involvement in the process is demonstrated by the change orders
specifically refer to Midwest performing the work. The net result was that Hallmark was
able by this
method to obtain a low wage source of drywall labor. Hallmark made no mention of this
to the Union, and it was only after an organizer visited the job site that the evasion was
The instant grievance was filed shortly thereafter, the grievance identical to that which was
of the 1995 settlement. During a meeting on the grievance Grosse admitted to Assistant
Manager Sefcik that he had told the owner to use Midwest.
While Hallmark portrays itself as simply returning work to the owner that it was not
perform, it is clear that it was deeply involved in the arrangement of subcontracting the work
Midwest. While Grosse said he had known Kieth for 10 to 15 years previously, but had not
him in many years, the question arises as to why he would recommend someone he had not
from in years, and was not even certain whether they were still in the business. The Union
why he would recommend someone who had no regular
employees, and whose company had been incorporated less than a year previously.
provided all of the materials and tools to perform the work, and used its own employees to
the more difficult parts of the remaining work, simply substituting the labor broker's
the union workforce for the drywall work.
The Union asserts that if Hallmark was really worried about manning the job, it
contacted the Union and inquired about referrals, or it could have contacted the Union about
availability of union drywall subcontractors. Instead, Hallmark engaged in this arrangement
to reduce labor costs on the project. It was an evasion of the Agreement that Grosse had
and which had been recognized as a violation of the Agreement. To not sustain the instant
would fatally undermine the entire collective bargaining agreement, allowing Hallmark to
low wage labor and evade the wage and fringe benefit provisions of the Agreement, as well
subcontracting provision, by simply arranging for the owner at any time during the project to
subcontract and issue a change order.
The Union concludes that this is a textbook violation of the duty of good faith
Hallmark engaging in an arrangement to evade the subcontracting provision in the
conduct should not be countenanced and the Arbitrator should sustain the grievance and order
Hallmark to make the Union employees on the Union's out-of-work list whole for all losses.
According to Hallmark, the allegation is that it has violated Section 14.1(a) of the
agreement. It notes that it had obligations under a principal contract with Design and asserts
it to "sublet" within the meaning of Section 14.1(a), Hallmark must enter into a contract with
entity to perform some or all of Hallmark's obligations under its contract with Design. If
does so, it remains ultimately responsible to Design for performance for all of its obligations
the principal contract, and assumes the risk that its subcontractor will perform Hallmark's
in a timely and workmanlike manner. If there is any failure in performance by the
Design must look to Hallmark to remedy the problem. Hallmark, having privity of contract
subcontractor, would then be able to pursue its own remedy against the subcontractor. If
sublets all or portions of its obligations, there are financial implications. Under its contract
Design, Hallmark must perform its obligations for a set price, and while expecting to make a
risks a loss if the cost is greater than the contract price. In a sublet situation, Hallmark
financial risks and rewards, and remains responsible for the work performed by itself and by
Hallmark asserts that it did not sublet any work to any entity. There is no dispute
Hallmark entered into a principal contract with Design and that it did not actually enter into a
subcontract with Midwest, or any other entity. The evidence is uncontroverted that Hallmark
to no one. Hallmark had a contract with Design, and that contract was amended with change
agreed to by Hallmark and Design, and motivated by the unusual circumstances associated
project. Design entered into a separate contract with Midwest. These facts are
the record. It is axiomatic that if Hallmark did not sublet to any subcontractor, the grievance
that Hallmark sublet the work to a non-union contractor must be dismissed.
Hallmark also denies that it engaged in any scheme to circumvent the labor
Union has argued that Hallmark engaged in a "subterfuge" to "circumvent" the labor
There are two possible arguments that evolve from this assertion:
Hallmark engaged in sham, whereby Hallmark actually
accomplished a sublet to a non-union
contractor without entering into a direct subcontract; or
Hallmark was prohibited from
entering into a change order to give up a portion of its work under its
original contract with Design Builders, and was instead required to either perform all of the
work itself, or was required to subcontract a portion of the work to a union contractor.
The first argument fails because the material components of a sublet situation do not
Hallmark has no financial risks or rewards associated with Midwest's work performance.
circumstances under which Hallmark gave up the work are also significant. Hallmark did
into its contract with Design with the intent to engage in a sham to avoid the subcontracting
in the labor agreement. Unusual circumstances developed whereby Hallmark gave up a
the work for legitimate business reasons. As a result of financial problems, the general
not pay its subcontractors, including Hallmark, and the project was shut down for two to
months. Hallmark had undertaken the contract with the expectation that the work would be
performed at a time when its regular crew was available. Due to the project's delays,
regular crew became unavailable as Hallmark was committed to a significant number of other
each with their own crew requirements and business risks. Thus, Hallmark needed to give
of the work on the Hawthorn project, and that was a business judgment that Hallmark was
Regarding the second argument, i.e., that Hallmark is not entitled to give up a
work, such an argument is an unfair attempt to revise the language of the Agreement and
business risks on Hallmark. Hallmark has the right to make business judgments regarding
execution, and amendment of contracts, including amendments to
change the amount of work to be performed. Under the circumstances in this case,
business judgment to give up some of the originally-contracted work is warranted, and is not
subterfuge. While the Union may disagree with that business judgment, that judgment is for
to make, as it bears all risks associated with its business judgment. In this case, Hallmark
judgment it should give up a portion of the work rather than perform it under strict time
with untested potential referrals from the Union. There is nothing in the labor agreement to
Hallmark to perform work with the referrals or to subcontract to any entity against its better
judgment. If the Union desires such contractual rights they must negotiate them, as such
does not currently exist in the Agreement.
Hallmark concludes that the Union's real dispute is with Midwest and that those
for another time and place.
In its reply brief, Hallmark asserts that while the amendment to the purchase order
contain an extension of time to finish the project, testimony revealed that there were
circumstances and practical considerations that made it unreasonable for Hallmark to rely on
language. Grosse testified that he was unaware the provision had been included in the
by his attorneys. More significantly, the project's originally scheduled date of completion
respected as the completion deadline in order to accommodate the planned usage of the hotel.
the circumstances, Hallmark and Design were in agreement that the project needed to be
by the originally-scheduled date, and further agreed to change the contract to permit Design
another contractor. These are business decisions and judgments which Hallmark and the
contractor are entitled to make, and were certainly justified under the circumstances.
While the Union states that the labor agreement requires Hallmark to obtain referrals
the Union, Sefcik admitted that was not true in his testimony. The agreement sets forth
for obtaining referrals, but does not require Hallmark to use referrals and give up its right to
what work it will or will not contract to perform.
Hallmark also disputes the assertion that the parties were involved in an "identical
in 1995." The Union provided no facts, circumstances or details regarding that grievance or
motivations for settlement. The previous grievance in fact was much different. If the facts
circumstances were identical, the Union would have provided them. As presented, the 1995
grievance is irrelevant to the issues in this case.
Hallmark also disputes the claim that it provided all the tools for the work to be
by Midwest. While it did supply the materials, testimony revealed that the materials for the
were special-ordered due to their size and had already been ordered by Hallmark. Under the
circumstances, Hallmark's supplying the drywall material was justified.
The Union's statements that employees were bussed in by a "coyote" and were
paid in cash are additional examples of the Union's willingness to presume facts not in
are not relevant to any actions of Hallmark.
Hallmark does not disagree with the Union's assertion that labor agreements have an
covenant of good faith and fair dealing. However, the cases cited by the Union deal
the issue of subcontracting away all bargaining unit work, and thereby "subverting" the entire
agreement. That situation does not exist here, as the bargaining unit employees of Hallmark
lost any work or opportunities. Hallmark was unable to properly man the project because its
employees were needed on other projects. The suggestion that it engaged in bad faith by
bargaining unit members of employment opportunities is disingenuous. Further, the Union's
discussions of the principles of good faith and fair dealing acknowledge that management
have justification which conforms to those standards. The facts and circumstances in this
provide such justification for Hallmark's business judgments and actions in light of the
Hallmark asserts the Union is basically alleging that Hallmark planned an
perform its work using lower-cost (non-union) labor, implying that Hallmark's profits
because of the lower-cost labor. The fact is that Hallmark did not benefit from lower-cost
performing the work, as its contract with Design was amended and it was no longer
the work removed from its contract. Hallmark lost all profit associated with that work.
unusual circumstances in this case, Hallmark no longer wanted to perform the work,
needed to protect its ability to get paid for the work it had already performed, and therefore
under contract with Design. Hallmark and Design then entered into an agreement whereby a
portion of the work would be removed from Hallmark's contract, and performed by others.
Hallmark referred possible names, it made it clear it could not be otherwise involved with
contractors. The general contractor, Design, took over from there and eventually hired
Hallmark concludes that its actions under the circumstances cannot constitute bad faith and
made legitimate business judgments that it was entitled to make, and requests that the
The issue in this case is whether Hallmark violated the labor agreement by agreeing
up the interior drywall work, which was to then be performed by Midwest, with the amount
agreed to charge for the work to be deducted from the amount Hallmark was to be paid for
it had originally agreed to do for Design on the Hawthorn Suites project. The provisions of
agreement alleged in the original grievance to have been violated are Article VIII, Sec. 7.1,
Hourly Wage Rates; Article VIII, Sec. 8.1., Contributions (fringe benefits); and Article XIV,
Subcontracting, Sec. 1(a) and (b). To find violations of those provisions in this case would
a finding that Hallmark had effectively
sublet the work to Midwest a non-union drywall contractor. The record does
not support such a
finding. As Hallmark notes, there is no privity of contract between itself and Midwest.
contract is with Design, the general contractor. Hallmark did not provide any supervision,
not responsible for the quality or the timeliness of the work performed by Midwest. There is
evidence of any type of agreement, verbal or written, between Hallmark and Midwest. The
agreements in the record are the initial contract between Hallmark and Design, the December
2000 amendment to that contract, the January 31, 2001 contract with GLC, and the change
to Hallmark's contract with Design eliminating certain drywall work from that contract and
the work would be completed by Midwest for a specified amount (which amount was
the original contract amount to be paid Hallmark), and the contract between Design and
the drywall work with the appropriate change orders when more drywall work was given up
Hallmark and added to Midwest's contract. Thus, the evidence in the record establishes that
Hallmark's only contractual relationship was with Design and GLC and that it had no
relationship with Midwest. It follows then that Hallmark cannot be found to have entered
sublet agreement with Midwest in violation of Section 14.1(a) and (b) of the labor
The Union also asserts that every labor agreement contains an implied covenant of
and fair dealing which Hallmark has violated in this case. Hallmark does not dispute such a
exists, but asserts that it did not violate that covenant.
In support of its position, the Union asserts that Hallmark provided the tools and
for the work Midwest performed and that Midwest was only a "conduit", as demonstrated by
specific reference to Midwest in the change orders to Hallmark's contract with Design. The
concludes that the arrangement was masterminded by Grosse as a way to reduce labor costs
circumventing the labor agreement.
The evidence is to the contrary regarding the assertion that Hallmark provided the
by Midwest's workers. Grosse testified that Hallmark provided the drywall materials
but no tools or labor. The original contract between Hallmark and Design required Hallmark
provide "all labor, material and equipment necessary" to complete the work listed. Design's
with Midwest required the latter to provide "all Labor and Equipment necessary. . ." for it to
complete the listed work. Hallmark did provide the drywall material Midwest used, but that
pursuant to its original contract with Design, and does not necessarily infer an arrangement
There is also no evidence that Midwest was a "conduit" as relates to Hallmark. The
infers that Hallmark benefited monetarily from the arrangement. There is not sufficient
the record to establish that is the case. There is no evidence of any monies being passed
Midwest to Hallmark. There is also no evidence in the record of any arrangement between
and Midwest as to the amount the latter agreed to charge
Design to perform the work. The most the Union has in this regard is Grosse's
that Midwest's amount must have been close to the amount Hallmark originally bid on the
as far as the drywall work in question, or he would not have given up the work and agreed
deduct, and that Hallmark's bid would have included both the cost and a profit on the work.
is not enough to establish that Hallmark benefited financially from Midwest performing the
Things get stickier when it comes to Grosse's involvement in Midwest getting the
Hallmark was agreeing to give up. It is clear in the record that Grosse played a part in
together with Sandridge. He gave Sandridge Kieth's name, among others, as a possible
for the drywall work and contacted Kieth to tell him about the work and gave him
and telephone number. There is, however, no evidence that Grosse had any further
Midwest's getting the work. Both Grosse and Sandridge testified they only had the one
concerning Kieth, and that he was one of a number of possible subcontractors Grosse
The testimony was also that Midwest is noted in the change order to Hallmark's contract
was the subcontractor with whom Design contracted to do the work in question and its
already known at the time.
Hallmark was also able to give a credible explanation for giving up the work in
rather than seeking referrals from the Union or subletting the work itself. Grosse testified
had 13 other projects going at the time he was negotiating with Sandridge to return to the
project, and that he did not believe he could hire enough qualified workers to do the drywall
on that project, given the other projects Hallmark had going. He also testified that he did
consider looking for someone Hallmark could sublet the work to, given the 15% retainage
would be responsible to the general contractor for finishing on time and the quality of the
the fact that Hallmark had only been paid 25% of what it was owed for work already done
project. Those appear to be legitimate business reasons for deciding to give up the work, so
rebut a claim that Hallmark was not acting in good faith in doing so.
The Union also asserts that this case is identical to a situation that occurred with
in 1995. Hallmark agreed to settle that grievance by paying the Union $5000.00. The
whether the facts of that grievance are the same or similar. The evidence in the record as to
grievance is the 1995 grievance and the settlement agreement, as well as Sefcik's testimony.
documents reference subcontracting, albeit the grievance states, "you have subcontracted or
to evade subcontracting provisions. . ." Sefcik testified he had investigated the matter and
there had been a verbal agreement between Hallmark and the subcontractor that the work
taken out of Hallmark's contract and given to the subcontractor. There are no more details
that to make a comparison. The settlement agreement also references both Hallmark and
the latter was the general contractor or owner on that project. To the extent the
settlement of a prior
grievance might be relevant here, 1/ there is not sufficient information with which to
1/ It is noted that the
settlement of a prior grievance is not necessarily considered reliable evidence in discerning
the meaning of a provision.
Fairweather's Practices and Procedures in Arbitration,
3rd Ed., pp.
compare the two situations as to the underlying facts and/or the motives for settling the
It is again noted that while Grosse played a part in getting Kieth and Sandridge
is no evidence that Hallmark benefited from the arrangement, other than getting rid of the
it thought was a risk. Again, there is no evidence establishing that there was any kind of
or arrangement between Hallmark and Midwest, written or verbal. Thus, the 1995 grievance
provides little or no guidance in this case.
In summary, to establish that Hallmark's actions violated such a covenant of good
fair dealing, the Union would have to show in this case that Hallmark's actions circumvented
agreement in that they permitted Hallmark to obtain the benefit (effectively subcontract),
while at the
same time denying the Union the benefit of its bargain (only permit subcontracting work to a
contractor). As concluded above, there was no contractual relationship or demonstration of
arrangement between Hallmark and Midwest and the Union has been unable to establish that
Hallmark received any financial benefit from Midwest performing the work for Design.
For the foregoing reasons, it is concluded that Hallmark did not violate the parties'
agreement by agreeing to give up the drywall work which was then performed by Midwest.
Based upon the above, the evidence, and the arguments of the parties, the
and issues the following
The grievance is denied.
Dated at Madison, Wisconsin this 6th day of December, 2001.