Ohio State Building & Construction Trades Council v. Cuyahoga County Board of Commissioners

[Cite as Ohio State Bldg. & Constr. Trades Council v. Cuyahoga Cty. Bd. of Commrs., 98 Ohio
St.3d 214, 2002-Ohio-7213.]
OHIO STATE BUILDING & CONSTRUCTION TRADES COUNCIL ET AL.,
APPELLANTS, v. CUYAHOGA COUNTY BOARD OF COMMISSIONERS ET AL.,
APPELLEES.
[Cite as Ohio State Bldg. & Constr. Trades Council v. Cuyahoga Cty. Bd. of
Commrs., 98 Ohio St. 3d 214, 2002-Ohio-7213.]
Labor and industry — Public construction projects — Sections 8(e) and (f) of
the National Labor Relations Act preempt R.C. Chapter 4116 —
Enforcement of R.C. Chapter 4116 enjoined.
(No. 2001-2036 — Submitted September 25, 2002 — Decided December 27,
2002.)
APPEAL from the Court of Appeals for Cuyahoga County, Nos. 77242 and 77262,
2001-Ohio-4228.
_______________
SYLLABUS OF THE COURT
Sections 8(e) and (f) of the National Labor Relations Act, as enacted by the 1959
Landrum-Griffin Act, Sections 158(e) and (f), Title 29, U.S.Code, preempt
R.C. Chapter 4116, as enacted by Am.H.B. No. 101 of the 123rd General
Assembly, which flatly prohibits public authorities from entering into or
enforcing project labor agreements on public construction projects.
_______________
ALICE ROBIE RESNICK, J.
{¶1} This action for declaratory and injunctive relief challenges the
constitutionality of R.C. Chapter 4116, which was enacted by Am.H.B. No. 101 of
the 123rd General Assembly, effective October 11, 1999, “to prohibit public
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authorities from imposing certain labor requirements as a condition of performing
public works.” Preamble to 1999 Am.H.B. No. 101.
{¶2} The following facts, though gleaned from scant evidence, are
sufficient for purposes of the present inquiry. Between September 1998 and July
1999, defendant-appellee Cuyahoga County Board of Commissioners (“board”)
held several meetings with Loree Kenneth Soggs, executive secretary to plaintiff-
appellant Cleveland Building & Construction Trades Council (“CBCTC”), to
discuss the propriety of establishing a project labor agreement (“PLA”) to govern
construction of the county’s proposed new juvenile detention center.
{¶3} As proposed by Soggs, the PLA for the detention center would be
typical of PLAs that CBCTC had negotiated on other construction projects, which
generally contain union security clauses, provisions establishing standard work
rules and prohibiting strikes, lockouts, slowdowns, and other work stoppages
during the course of construction, a provision regarding the use of CBCTC’s
hiring halls to supply the project’s labor force, and possibly a requirement that the
various contractors on site become signatory to individual collective bargaining
agreements with the affiliated local unions of the CBCTC. The board would then
impose a requirement, presumably through its bid specifications and subsequent
agreements with individual contractors, that “successful bidders agree to enter into
a project labor agreement * * * [and] that contractors and/or subcontractors on the
Project agree to abide by [its terms].”
{¶4} In his testimony at the preliminary injunction hearing, Soggs
indicated that the board was “very receptive” to the idea of developing such an
agreement for the detention center project and stated that “the commissioners
individually * * * told me they were in favor of the project labor agreement.” As
the board was considering the issue, however, Am.H.B. No. 101 was winding its
way through the legislative process. The bill was passed by the Ohio House of
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Representatives on May 12, 1999, and by the Ohio Senate on June 23, 1999.
When Governor Bob Taft’s intention neither to sign nor veto the bill was
announced in a release dated June 30, 1999, it was clear that Am.H.B. No. 101
would become law without his signature pursuant to Section 16, Article II of the
Ohio Constitution.
{¶5} Accordingly, in a letter dated July 2, 1999, the county’s deputy
administrator, Lee A. Trotter, informed Soggs as follows:
{¶6} “As you know the County had been working toward developing a
Project Labor Agreement for its proposed new Juvenile Detention Center since
1998. We have had several meetings and exchanged information geared toward
identifying the key benefits of such an agreement for both the County and The
Cleveland Building and Construction Trades Council.
{¶7} “We have recently been informed of the passage of H.B. 101,
prohibiting a public authority from requiring that a bidder, contractor, or
subcontractor become a party to a project labor agreement as a condition of being
awarded a public improvement project. The passage of H.B. 101 prohibits the
County from pursuing the development and execution of the proposed agreement.
Should conditions change allowing Project Labor Agreements we will
immediately revisit this issue.”
{¶8} On September 9, 1999, CBCTC, along with plaintiffs-appellants
Ohio State Building & Construction Trades Council and International Union of
Operating Engineers, Local 18, commenced the present action by filing a verified
complaint in the Cuyahoga County Court of Common Pleas against the board and
defendant-appellee state of Ohio. The complaint essentially charges that Am.H.B.
No. 101, as codified at R.C. Chapter 4116, is preempted by the National Labor
Relations Act (“NLRA”), Section 151 et seq., Title 29, U.S.Code, and, therefore,
violates the Supremacy Clause of the United States Constitution.
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{¶9} Finding that the NLRA leaves the responsibility for “the
negotiation and administration of * * * prehire collective bargaining agreements
[to] labor organizations” and that “[t]hat responsibility * * * is precluded by
Amended House Bill 101,” the trial court declared R.C. Chapter 4116 invalid
under the Supremacy Clause and permanently enjoined its enforcement.
{¶10} In a split decision, the court of appeals reversed the judgment of
the trial court. In so doing, the court of appeals found that R.C. 4116.02 “does not
on its face or by its application prohibit a public authority from entering into a
PLA.” Instead, the statute prohibits a public authority only “from entering into a
PLA with objectionable terms,” as set forth in R.C. 4116.02(A) and (B).
According to the appellate court, “a PLA can be drafted without these terms and
still be valid and enforceable.” Thus, the court concluded, “there is no real
controversy that warrants declaratory relief.”
{¶11} The court of appeals also considered whether the statute would be
preempted by the NLRA if it were interpreted to preclude a public authority from
entering into a PLA. The court concluded that even under this interpretation, “the
statute is not * * * preempted by the NLRA because the State is not acting as a
market regulator but rather is acting as a market participant.” The gist of the
court’s reasoning is that the state, acting as proprietor, may choose whether to
enter into a PLA without running afoul of the NLRA, and that this choice need not
be made on a project-by-project basis. Instead, the state may do as it has done in
R.C. Chapter 4116, which is “to choose, in a summary manner, never to enter into
a PLA on any public construction project when it acts as a market participant.”
And since “[t]he statute does not impinge on the rights of any [private] entity to
enter into a PLA * * *, it does not frustrate the intent of Congress to permit the
use or non-use of PLAs to be ‘controlled by the free play of economic forces.’ “
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{¶12} The cause is now before this court pursuant to the allowance of a
discretionary appeal.
{¶13} When Governor Taft announced his intention to allow Am.H.B.
No. 101 to become law without his signature, he explained:
{¶14} “I am concerned that this legislation would not survive a
constitutional challenge based on the supremacy clause of the U.S. Constitution.
Our legal research shows the courts have, in the past, found that the regulation of
project labor agreements is a federal responsibility under the National Labor
Relations Act and that the state is therefore preempted from legislating in this
area.” Communications Release (June 30, 1999), Office of the Governor.
{¶15} For the reasons that follow, we agree with the Governor’s
assessment of Am.H.B. No. 101’s constitutionality and hold that Sections 8(e) and
(f) of the NLRA, as enacted by the 1959 Landrum-Griffin Act, Sections 158(e)
and (f), Title 29, U.S.Code, preempt R.C. Chapter 4116’s blanket prohibition
against the enforcement of PLAs on public works.
{¶16} Section 8(e) of the NLRA provides:
{¶17} “It shall be an unfair labor practice for any labor organization and
any employer to enter into any contract or agreement, express or implied, whereby
such employer ceases or refrains or agrees to cease or refrain from handling,
using, selling, transporting or otherwise dealing in any of the products of any other
employer, or to cease doing business with any other person, and any contract or
agreement entered into heretofore or hereafter containing such an agreement shall
be to such extent unenforcible [sic] and void: Provided, That nothing in this
subsection shall apply to an agreement between a labor organization and an
employer in the construction industry relating to the contracting or subcontracting
of work to be done at the site of the construction, alteration, painting, or repair of
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a building, structure, or other work.” (Italics sic.) Section 158(e), Title 29,
U.S.Code.
{¶18} Section 8(e) is aimed at so-called “hot cargo” agreements, that is,
agreements between a union and employer that require the employer to boycott the
goods or services of another party. Natl. Labor Relations Bd. v. Internatl.
Longshoremen’s Assn., AFL-CIO (1985), 473 U.S. 61, 74-75, 105 S. Ct. 3045, 87
L. Ed. 2d 47. Prior to 1959, the NLRA provided certain protections against
secondary boycotts, but there were gaps in those protections. In particular,
Section 8(b)(4)(A) prohibited a union from engaging in certain concerted activity
to force an employer to cease doing business with a third party. See 61 Stat. 141.
In Local 1976, United Bhd. of Carpenters & Joiners of Am. v. Natl. Labor
Relations Bd. (1958), 357 U.S. 93, 98-99, 78 S. Ct. 1011, 2 L. Ed. 2d 1186 (“Sand
Door”), the United States Supreme Court indicated that a union was nevertheless
free to persuade an employer to enter into a hot-cargo agreement so long as it
refrained from prohibited concerted activity, and that an employer was legally
permitted to comply with such an agreement as long as compliance was voluntary.
“Section 8(e), which prohibits hot cargo agreements, was designed to eliminate
the loophole created by the Sand Door decision.” Woelke & Romero Framing,
Inc. v. Natl. Labor Relations Bd. (1982), 456 U.S. 645, 655, 102 S. Ct. 2071, 72
L. Ed. 2d 398.
{¶19} However, the construction-industry proviso to Section 8(e) was
inserted to ensure that agreements limiting the contracting of construction site
work remained legal. “To the extent that subcontracting agreements were part of
the pattern of collective bargaining in the construction industry [prior to 1959],
and lawful, Congress wanted to ensure that they remained lawful.” Woelke, 456
U.S. at 657, 102 S. Ct. 2071, 72 L. Ed. 2d 398.
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{¶20} In Woelke, the Supreme Court considered whether the
construction-industry proviso applied to protect two union signatory
subcontracting clauses that were sought or negotiated in the context of a collective
bargaining relationship. One of these clauses would have barred a construction
contractor from subcontracting “any work to be done at the site of construction, *
* * except to a person, firm or corporation, party to an appropriate, current labor
agreement with the appropriate Union, or subordinate body signatory to this
Agreement.” Id., 456 U.S. at 649, 102 S. Ct. 2071, 72 L. Ed. 2d 398, fn. 1. The
other provided that “[e]mployers shall not contract any work covered by this
Agreement to be done at the site of the construction * * * to any person, firm or
company who does not have an existing labor agreement with the Union covering
such work.” Id., 456 U.S. at 650, 102 S. Ct. 2071, 72 L. Ed. 2d 398, fn. 3. Finding
“ample evidence [in the legislative history] that Congress believed that union
signatory contract clauses of the type at issue here were part of the pattern of
collective bargaining in the construction industry,” the court in Woelke affirmed
the decision of the court of appeals “insofar as it holds that the clauses at issue
here were sheltered by the proviso.” Id., 456 U.S. at 666, 102 S. Ct. 2071, 72
L. Ed. 2d 398.
{¶21} Section 8(f), which was also added to the NLRA by the 1959
Landrum-Griffin Act, Section 158(f), Title 29, U.S.Code, states:
{¶22} “It shall not be an unfair labor practice under subsections (a) and
(b) of this section for an employer engaged primarily in the building and
construction industry to make an agreement covering employees engaged (or who,
upon their employment, will be engaged) in the building and construction industry
with a labor organization of which building and construction employees are
members * * * because (1) the majority status of such labor organization has not
been established under the provisions of Section 9 of this Act [Section 159, Title
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29, U.S.Code] prior to the making of such agreement, or (2) such agreement
requires as a condition of employment, membership in such labor organization
after the seventh day following the beginning of such employment or the effective
date of the agreement, whichever is later, or (3) such agreement requires the
employer to notify such labor organization of opportunities for employment with
such employer, or gives such labor organization an opportunity to refer qualified
applicants for such employment, or (4) such agreement specifies minimum
training or experience qualifications for employment or provides for priority in
opportunities for employment based upon length of service with such employer, in
the industry or in the particular geographical area: * * * Provided further, That
any agreement which would be invalid, but for clause (1) of this subsection, shall
not be a bar to a petition filed pursuant to Section 9(c) or 9(e) [Section 159(c) or
(e), Title 29, U.S.Code].” (Italics sic.)
{¶23} Section 8(f) authorizes so-called “prehire” agreements in the
construction industry. “Thus, § 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 majority
status first having been established in the manner provided for under § 9 of the
Act.” Jim McNeff, Inc. v. Todd (1983), 461 U.S. 260, 266, 103 S. Ct. 1753, 75
L. Ed. 2d 830.
{¶24} Although not entirely coincident, there is a corresponding
relationship between the requirements that Section 8(f) permits to be imposed
under a prehire agreement and the union signatory subcontracting clauses that are
sheltered by the construction industry proviso to Section 8(e). On the one hand,
unions often seek protected Section 8(e) subcontracting clauses as part of a
Section 8(f) prehire agreement. Indeed, Section 8(f) agreements are “the most
common and possibly the only effective means by which such [subcontracting
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clauses] may be obtained.” Donald Schriver, Inc. v. Natl. Labor Relations Bd.
(C.A.D.C.1980), 635 F.2d 859, 875. On the other hand, “[w]hen a union obtains a
subcontracting clause from a general contractor, subcontractors frequently attempt
to ensure that they remain eligible for work by entering into a § 8(f) agreement—
known as a prehire agreement—with the union.” Woelke, supra, 456 U.S. at 664,
102 S. Ct. 2071, 72 L. Ed. 2d 398.
{¶25} In Bldg. & Constr. Trades Council of Metro. Dist. v. Assoc.
Builders & Contrs. of Massachusetts/Rhode Island, Inc. (1993), 507 U.S. 218,
230-231, 113 S. Ct. 1190, 122 L. Ed. 2d 565 (“Boston Harbor”), the high court
explained:
{¶26} “In 1959, Congress amended the NLRA to add § 8(f) and modify §
8(e). Section 8(f) explicitly permits employers in the construction industry—but
no other employers—to enter into prehire agreements. Prehire agreements are
collective-bargaining agreements providing for union recognition, compulsory
union dues or equivalents, and mandatory use of union hiring halls, prior to the
hiring of any employees. [Assoc. Builders & Contrs. of Massachusetts/Rhode
Island v. Massachusetts Water Resources Auth.] 935 F.2d [345], at 356 [1991]
[case below]; Jim McNeff, Inc. v. Todd, 461 U.S. 260, 265-266 [103 S. Ct. 1753,
75 L. Ed. 2d 830] (1983). The 1959 amendment adding a proviso to subsection (e)
permits a general contractor’s prehire agreement to require an employer not to hire
other contractors performing work on that particular project site unless they agree
to become bound by the terms of that labor agreement. See Woelke & Romero
Framing, Inc. v. NLRB, 456 U.S. 645, 657 [102 S. Ct. 2071, 72 L. Ed. 2d 398]
(1982). Section 8(f) contains a final provision that permits employees, once hired,
to utilize the NLRB election process under §§ 9(c) and (e) of the Act, 29 U.S.C.
§§ 159(c) and (e), if they wish to reject the bargaining representative or to cancel
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the union security provisions of the prehire agreement. See NLRB v. Iron
Workers, 434 U.S. 335, 345 [98 S. Ct. 651, 54 L. Ed. 2d 586] (1978).
{¶27} “* * *
{¶28} “It is evident from the face of the statute that in enacting
exemptions authorizing certain kinds of project labor agreements in the
construction industry, Congress intended to accommodate conditions specific to
that industry. Such conditions include, among others, the short-term nature of
employment which makes posthire collective bargaining difficult, the contractor’s
need for predictable costs and a steady supply of skilled labor, and a long-standing
custom of prehire bargaining in the industry. See S.Rep. No. 187, 86th Cong., 1st
Sess., 28, 55-56 (1959); H.R.Rep. No. 741, 86th Cong., 1st Sess., 19-20 (1959)
[1959 U.S.Code Cong. & Admin. News p. 2318].”
{¶29} The prehire collective bargaining agreement that was held to be a
valid labor contract under Sections 8(e) and (f) in Boston Harbor was a PLA
prescribing the terms and conditions of employment at a public construction site.
That agreement, which was negotiated between the project manager and the
building and construction trades council (“BCTC”) and then incorporated into a
Massachusetts state agency’s solicitation of project bids, contained the following
requirements: “recognition of BCTC as the exclusive bargaining agent for all
craft employees; use of specified methods for resolving all labor-related disputes;
a requirement that all employees be subject to union-security provisions
compelling them to become union members within seven days of their
employment; the primary use of BCTC’s hiring halls to supply the project’s craft
labor force; a 10-year no-strike commitment; and a requirement that all
contractors and subcontractors agree to be bound by the Agreement.” Id., 507
U.S. at 221-222, 113 S. Ct. 1190, 122 L. Ed. 2d 565. Quoting Chief Judge Breyer’s
dissent in the court of appeals, the Supreme Court found that this is “ ‘the very
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sort of labor agreement that Congress explicitly authorized and expected
frequently to find.’ ” Id., 507 U.S. at 233, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶30} This is also the very sort of labor agreement that the board was
attempting to negotiate with CBCTC when Am.H.B. No. 101 was passed by the
General Assembly and forwarded to the Governor. As enacted by Am.H.B. No.
101, R.C. 4116.02 provides:
{¶31} “A public authority, when engaged in procuring products or
services, awarding contracts, or overseeing procurement or construction for public
improvements, shall ensure that bid specifications issued by the public authority
for the proposed public improvement, and any subsequent contract or other
agreement for the public improvement to which the public authority and a
contractor or subcontractor are direct parties, do not require a contractor or
subcontractor to do any of the following:
{¶32} “(A) Enter into agreements with any labor organization on the
public improvement;
{¶33} “(B) Enter into any agreement that requires the employees of that
contractor or subcontractor to do either of the following as a condition of
employment or continued employment:
{¶34} “(1) Become members of or affiliated with a labor organization;
{¶35} “(2) Pay dues or fees to a labor organization.”
{¶36} R.C. 4116.03 provides:
{¶37} “No public authority shall do any of the following:
{¶38} “(A) Award a contract for a public improvement in violation of
section 4116.02 of the Revised Code;
{¶39} “(B) Discriminate against any bidder, contractor, or subcontractor
for refusing to become a party to any agreement with any labor organization on
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the public improvement that currently is under bid or on projects related to that
improvement;
{¶40} “(C) Otherwise violate section 4116.02 of the Revised Code.”
{¶41} Yet the court of appeals found no “real controversy” in this case
because R.C. Chapter 4116 “does not * * * prohibit a public authority from
entering into a PLA.” Instead, the court found that the statute restricts a public
authority only from “entering into a PLA with objectionable terms,” that is, a PLA
that requires a contractor or its employees to do any of those things listed in R.C.
4116.02(A) and (B). The court reasoned that “these very terms are [not] essential
to * * * an effective PLA. On the contrary, a PLA can be drafted without these
terms and still be valid and enforceable.” Thus, “the statute’s restrictions do not
effectively prohibit a public authority from entering into a PLA.”
{¶42} This result is surprising, considering that the sponsor of Am.H.B.
No. 101, Rep. Ron Young (R-Leroy), in his testimony for the bill before the
House Commerce and Labor Committee, specifically maintained that “[t]his
important legislation will prohibit so-called ‘project labor agreements’ in the State
of Ohio” and then proceeded to argue at length as to why “project labor
agreements should be prohibited in Ohio.”
{¶43} In any event, we fail to see the relevance of hypothetical prehire
agreements that neither trigger the prohibitions in R.C. 4116.02 nor require the
shelter of the construction industry exceptions in Section 8 of the NLRA. This
case does not involve some abstract or theoretical PLA that imposes none of the
requirements or restrictions prohibited under R.C. Chapter 4116. In this case, the
board and CBCTC were attempting to negotiate an agreement that would
incorporate the very requirements that the statute prohibits. They are now asking
whether the NLRA preempts the state from prohibiting this specific type of
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agreement and, with all due respect to the court of appeals, it is no answer to tell
them that R.C. Chapter 4116 permits a different type of agreement.
{¶44} As others have observed, the court of appeals’ position in this case
“might be reasonable but for the fact that these ‘objectionable terms’ prohibited
by [R.C. Chapter 4116] * * * are precisely the sorts of outcomes guaranteed to the
construction industry through NLRA 8[f] pre-hire agreements.” John Lund and
Joe Oswald, Public Project Labor Agreements: Lessons Learned, New Directions
(Fall 2001), 26 Lab.Stud.J. 1, 3. Regardless of whether R.C. Chapter 4116 leaves
public authorities free to enforce some hypothetical PLA that is not involved in
the present controversy, the fact remains that the statute expressly prohibits “the
very sort of labor agreement that Congress explicitly authorized and expected
frequently to find.” Boston Harbor, supra, 507 U.S. at 233, 113 S. Ct. 1190, 122
L. Ed. 2d 565. Thus, we find that there is a “real controversy” in this case as to
whether R.C. Chapter 4116 is preempted by the NLRA.
{¶45} Accordingly, it must be decided whether the NLRA precludes state
regulation of PLAs in the construction industry and, if so, whether R.C. Chapter
4116 is tantamount to regulation or constitutes proprietary conduct on the part of
the state.
{¶46} “Congress’ power to pre-empt state law is derived from the
Supremacy Clause of Art. VI of the Federal Constitution.” Allis-Chalmers Corp.
v. Lueck (1985), 471 U.S. 202, 208, 105 S. Ct. 1904, 85 L. Ed. 2d 206. “In any case
concerning preemption, congressional purpose must be the ultimate focus.
Malone v. White Motor Corp. (1978), 435 U.S. 497, 504, 98 S. Ct. 1185, 1189-
1190, 55 L. Ed. 2d 443, 450. The National Labor Relations Act (‘NLRA’) contains
no express preemption provision. ‘Where the pre-emptive effect of federal
enactments is not explicit, “courts sustain a local regulation ‘unless it conflicts
with federal law or would frustrate the federal scheme, or unless the courts discern
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from the totality of the circumstances that Congress sought to occupy the field to
the exclusion of the States.’ “ ‘ Metro. Life Ins. Co. v. Massachusetts (1985), 471
U.S. 724, 747-748, 105 S. Ct. 2380, 2393, 85 L. Ed. 2d 728, 745, quoting Allis-
Chalmers Corp. [supra], 471 U.S. [at] 209, 105 S.Ct. [at] 1910, 85 L.Ed.2d [at]
213-214.” J.A. Croson Co. v. J.A. Guy, Inc. (1998), 81 Ohio St. 3d 346, 350, 691
N.E.2d 655.
{¶47} But deciphering the extent to which national policy under the
NLRA displaces state law requires “a more complicated and perceptive process
than is conveyed by the delusive phrase, ‘ascertaining the intent of the legislature.’
“ San Diego Bldg. Trades Council, Millmen’s Union, Local 2020 v. Garmon
(1959), 359 U.S. 236, 239-240, 79 S. Ct. 773, 3 L. Ed. 2d 775. Congress has
established in the NLRA a comprehensive and integrated regulatory framework.
In its attempt to devise workable NLRA preemption rules, the Supreme Court has
necessarily “been concerned with conflict in its broadest sense; conflict with a
complex and interrelated federal scheme of law, remedy, and administration.” Id.,
359 U.S. at 243, 79 S. Ct. 773, 3 L. Ed. 2d 775.
{¶48} Under this scheme, “Congress has entrusted administration of the
labor policy for the Nation to a centralized administrative agency [the National
Labor Relations Board], armed with its own procedures, and equipped with its
specialized knowledge and cumulative experience.” Id. at 242, 79 S. Ct. 773, 3
L. Ed. 2d 775. Thus, “Congress did not merely lay down a substantive rule of law
to be enforced by any tribunal competent to apply law generally to the parties. * *
* Congress evidently considered that centralized administration of specially
designed procedures was necessary to obtain uniform application of its
substantive rules and to avoid these diversities and conflicts likely to result from a
variety of local procedures and attitudes toward labor controversies.” Garner v.
Teamsters, Chauffeurs & Helpers Local Union No. 776 (1953), 346 U.S. 485,
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490, 74 S. Ct. 161, 98 L. Ed. 228. The rationale for NLRA preemption, therefore,
is based largely on the notion that “when it set down a federal labor policy
Congress plainly meant to do more than simply to alter the then-prevailing
substantive law. It sought as well to restructure fundamentally the processes for
effectuating that policy.” Amalgamated Assn. of Street, Elec. Ry. & Motor Coach
Emp. of Am. v. Lockridge (1971), 403 U.S. 274, 288, 91 S. Ct. 1909, 29 L. Ed. 2d
473.
{¶49} Nevertheless, Congress has neither exercised its full authority to
occupy the entire field in the area of labor relations nor clearly delineated the
extent to which state regulation must yield to this subordinating federal
legislation. See Weber v. Anheuser-Busch, Inc. (1955), 348 U.S. 468, 480-481, 75
S. Ct. 480, 99 L. Ed. 546. As the high court went on to explain in Lockridge,
supra, 403 U.S. at 289-291, 91 S. Ct. 1909, 29 L. Ed. 2d 473:
{¶50} “This has, quite frankly, left the Court with few available options.
We cannot declare pre-empted all local regulation that touches or concerns in any
way the complex interrelationships between employees, employers, and unions;
obviously, much of this is left to the States. Nor can we proceed on a case-by-
case basis to determine whether each particular final judicial pronouncement does,
or might reasonably be thought to, conflict in some relevant manner with federal
labor policy. This Court is ill-equipped to play such a role and the federal system
dictates that this problem be solved with a rule capable of relatively easy
application * * *. Further, it is surely not possible for this Court to treat the
National Labor Relations Act section by section, committing enforcement of some
of its provisions wholly to the NLRB and others to the concurrent domain of local
law. Nothing in the language or underlying purposes of the Act suggests any basis
for such distinctions. Finally, treating differently judicial power to deal with
conduct protected by the Act from that prohibited by it would likewise be
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unsatisfactory. Both areas equally involve conduct whose legality is governed by
federal law, the application of which Congress committed to the Board, not
courts.
{¶51} “* * * In fact, varying approaches were taken by the Court in
initially grappling with this pre-emption problem. Thus, for example, some early
cases suggested the true distinction lay between judicial application of general
common law, which was permissible, as opposed to state rules specifically
designed to regulate labor relations, which were pre-empted. * * * Others made
pre-emption turn on whether the States purported to apply a remedy not provided
for by the federal scheme, * * * while in still others the Court undertook a
thorough scrutiny of the federal Act to ascertain whether the state courts had, in
fact, arrived at conclusions inconsistent with its provisions * * *. For the reasons
outlined above none of these approaches proved satisfactory, however, and each
was ultimately abandoned. It was, in short, experience—not pure logic—which
initially taught that each of these methods sacrificed important federal interests in
a uniform law of labor relations centrally administered by an expert agency
without yielding anything in return by way of predictability or ease of judicial
application.
{¶52} “The failure of alternative analyses and the interplay of the
foregoing policy considerations, then, led this Court to hold in Garmon, 359 U.S.,
at 244 [79 S. Ct. 773, 3 L. Ed. 2d 775]:
{¶53} “ ‘When it is clear or may fairly be assumed that the activities
which a State purports to regulate are protected by § 7 of the National Labor
Relations Act, or constitute an unfair labor practice under § 8, due regard for the
federal enactment requires that state jurisdiction must yield. To leave the States
free to regulate conduct so plainly within the central aim of federal regulation
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involves too great a danger of conflict between power asserted by Congress and
requirements imposed by state law.’ “ (Footnote omitted.)
{¶54} This line of preemption analysis, which is known as “Garmon
preemption,” “protects the primary jurisdiction of the NLRB to determine in the
first instance what kind of conduct is either prohibited or protected by the
NLRA.” Metro. Life Ins. Co. v. Massachusetts, supra, 471 U.S. at 748, 105 S. Ct.
2380, 85 L. Ed. 2d 728. When an activity “is arguably within the compass of § 7 or
§ 8 of the Act, the State’s jurisdiction is displaced.” Garmon, 359 U.S. at 246, 79
S. Ct. 773, 3 L. Ed. 2d 775. States may not, therefore, “regulate activity that the
NLRA protects, prohibits, or arguably protects or prohibits.” Wisconsin Dept. of
Industry, Labor & Human Relations v. Gould, Inc. (1986), 475 U.S. 282, 286, 106
S. Ct. 1057, 89 L. Ed. 2d 223.
{¶55} Garmon preemption does not, of course, apply where the activity
sought to be locally regulated falls beyond the arguable reach of Sections 7 and 8
of the NLRA. But it does not necessarily follow that activities ungoverned by
these sections are, therefore, controllable by the states. The NLRA does more
than indicate Congress’s desire for centralized administration and uniformity in
the application of its provisions. It also reveals that certain concerted activities
were intentionally left unprotected and unrestricted under the Act because
Congress meant for them to be unfettered by the exercise of any governmental or
regulatory power, including that of the NLRB. “By the Taft-Hartley Act, * * *
Congress formulated a code whereby it outlawed some aspects of labor activities
and left others free for the operation of economic forces.” Weber v. Anheuser-
Busch, Inc., supra, 348 U.S. at 480, 75 S. Ct. 480, 99 L. Ed. 546.
{¶56} Thus, the Supreme Court has recognized “a second line of pre-
emption analysis * * * in cases focusing upon the crucial inquiry whether
Congress intended that the conduct involved be unregulated because left ‘to be
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controlled by the free play of economic forces.’ “ Lodge 76, Internatl. Assn. of
Machinists & Aerospace Workers, AFL-CIO v. Wisconsin Emp. Relations Comm.
(1976), 427 U.S. 132, 140, 96 S. Ct. 2548, 49 L. Ed. 2d 396 (“Machinists”), quoting
Natl. Labor Relations Bd. v. Nash-Finch Co. (1971), 404 U.S. 138, 144, 92 S. Ct.
373, 30 L. Ed. 2d 328. This analysis reflects the NLRA’s broader purpose of
restoring an equality of bargaining power between labor and management and is
invoked primarily in cases involving the use of certain self-help economic
weapons to which the parties occasionally resort in an effort to advance their
respective bargaining goals. See Machinists, 427 U.S. 132, 96 S. Ct. 2548, 49
L. Ed. 2d 396 (concerted refusal to work overtime); Gould, supra, 475 U.S. at 290,
106 S. Ct. 1057, 89 L. Ed. 2d 223 (boycott of repeat labor law violators). States are
prohibited from imposing additional restrictions on economic weapons of self-
help such as strikes or lockouts. Golden State Transit Corp. v. Los Angeles
(1986), 475 U.S. 608, 615, 106 S. Ct. 1395, 89 L. Ed. 2d 616 (“Golden State I”);
Local 20, Teamsters, Chauffeurs & Helpers Union v. Morton (1964), 377 U.S.
252, 84 S. Ct. 1253, 12 L. Ed. 2d 280 (peaceful secondary picketing).
{¶57} As explained in Machinists, “[T]hese activities, whether of
employer or employees, were not to be regulable by States any more than by the
NLRB, for neither States nor the Board is ‘afforded flexibility in picking and
choosing which economic devices of labor and management shall be branded as
unlawful.’ [Natl. Labor Relations Bd. v. Ins. Agents’ Internatl. Union, AFL-CIO
(1960), 361 U.S. 477, 498, 80 S. Ct. 419, 4 L. Ed. 2d 454.] Rather, both are without
authority to attempt to ‘introduce some standard of properly “balanced”
bargaining power,’ [id. at 497, 80 S. Ct. 419, 4 L. Ed. 2d 454] or to define ‘what
economic sanctions might be permitted negotiating parties in an “ideal” or
“balanced” state of collective bargaining.’ [Id. at 500, 80 S. Ct. 419, 4 L. Ed. 2d
454.]” Machinists, 427 U.S. at 149-150, 96 S. Ct. 2548, 49 L. Ed. 2d 396. Thus,
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January Term, 2002
“[t]he Machinists rule creates a free zone from which all regulation * * * is
excluded.” Golden State Transit Corp. v. Los Angeles (1989), 493 U.S. 103, 111,
110 S. Ct. 444, 107 L. Ed. 2d 420 (“Golden State II”).
{¶58} We are initially urged by the state to find that neither Garmon nor
Machinists provides the appropriate analytic framework for deciding this case.
According to the state, “Garmon preemption does not apply to activity that is
merely permissible under section 8 of the NLRA,” but instead applies only to
“activity protected by section 7 of the NLRA.” Thus, the state reasons, “Garmon
preemption does not preempt R.C. [Chapter] 4116” because “prehire agreements *
* * [are not] protected pursuant to section 7.” We disagree.
{¶59} As our discussion of Garmon and its progeny indicates, the various
references made by the Supreme Court to those activities “protected by § 7” or
“prohibited under § 8” are not by way of limitation. The high court has time and
again varied the language it used to indicate that this form of preemption applies
when an activity is, e.g., “covered” or “governed by” “the subject of,” or
“arguably” or “potentially subject to” or “within the compass of § 7 or § 8.” In
any event, there is certainly nothing that prevents Congress from choosing to
protect an activity by way of exemption under Section 8 rather than by inclusion
in Section 7, and we doubt seriously that the high court would, or could, preclude
Congress from structuring its own legislation. Moreover, it was the very
construction-industry provisions embodied in Section 8 of the NLRA that the high
court was relying on when it stated in Boston Harbor that “Congress explicitly
authorized” PLAs. Id., 507 U.S. at 233, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶60} The state also maintains that “Machinists preemption is completely
inapplicable to R.C. [Chapter] 4116.” According to the state, this form of
preemption applies only where there is a labor dispute, and since appellants “have
never identified a labor dispute * * * involving the negotiation of a PLA for the
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Cuyahoga County Juvenile Detention/Intervention Center * * *, there [is no]
occasion * * * to consider whether Machinists preemption applies to R.C.
[Chapter] 4116.” The state takes the position that the Machinists rule is designed
and applies only to protect against the regulation of “particular economic
weapons, such as strikes and lockouts” and challenges appellants “to explain how
PLAs constitute economic weapons.” Moreover, the state continues, “economic
weapons describe tactics,” whereas “union-only PLAs are not a tactic at all, but
rather an outcome.”
{¶61} The problem with the state’s analysis is that it draws on certain
principles that are ultimately incompatible with its current position. The NLRA’s
stated purpose is to remedy “[t]he inequality of bargaining power between
employees who do not possess full freedom of association or actual liberty of
contract, and employers who are organized in the corporate or other forms of
ownership association.” Section 151, Title 29, U.S.Code. The NLRA seeks to
restore a more equitable balance of bargaining power “by encouraging the practice
and procedure of collective bargaining and by protecting the exercise by workers
of full freedom of association, self-organization, and designation of
representatives of their own choosing, for the purpose of negotiating the terms and
conditions of their employment.” Id. In Sections 7 and 8 of the NLRA (Sections
157 and 158, Title 29, U.S.Code) Congress established a desired balance of
bargaining power by protecting certain labor activities, prohibiting others, and
leaving still others to be controlled by the free play of economic forces. The
Machinists doctrine protects activity in the third category against governmental
regulation so as to preserve the balance of power that Congress has struck
between labor and management in the NLRA.
{¶62} In Machinists, the court explained that “state attempts to influence
the substantive terms of collective-bargaining agreements are * * * inconsistent
20
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with the federal regulatory scheme * * *. And indubitably regulation * * * of ‘the
choice of economic weapons that may be used as part of collective bargaining
[exerts] considerable influence upon the substantive terms on which the parties
contract.’ “ Id., 427 U.S. at 153, 96 S. Ct. 2548, 49 L. Ed. 2d 396, quoting Natl.
Labor Relations Bd. v. Ins. Agents’, supra, 361 U.S. at 490, 80 S. Ct. 419, 4
L. Ed. 2d 454. The Supreme Court has since noted, however, that while “[s]uch
analysis initially had been used to determine whether certain weapons of
bargaining neither protected by § 7 nor forbidden by § 8(b) could be subject to
state regulation * * *, [i]t has been used more recently to determine the validity of
state rules of general application that affect the right to bargain or to self-
organization.” Metro. Life Ins. Co., supra, 471 U.S. at 749, 105 S. Ct. 2380, 85
L. Ed. 2d 728, fn. 27.
{¶63} In determining whether state laws of general application are
preempted under Machinists, the Supreme Court has indeed recognized that a
distinction should be drawn between state regulation that interferes with the
collective bargaining process itself and state regulation that affects only the
substantive terms of collective bargaining agreements. “The NLRA is concerned
primarily with establishing an equitable process for determining terms and
conditions of employment, and not with particular substantive terms of the
bargain that is struck when the parties are negotiating from relatively equal
positions.” Metro. Life, 471 U.S. at 753, 105 S. Ct. 2380, 85 L. Ed. 2d 728. Thus,
there is no inconsistency between the NLRA, which is “designed to restore the
equality of bargaining power, and state or federal legislation that imposes minimal
substantive requirements on contract terms negotiated between parties to labor
agreements, at least so long as the purpose of the state legislation is not
incompatible with these general goals of the NLRA.” Id., 471 U.S. at 754-755,
105 S. Ct. 2380, 85 L. Ed. 2d 728.
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{¶64} These same principles dictate a different result, however, with
regard to the attempted regulation of PLAs in the construction industry. Given the
1959 amendments to the NLRA that added the construction industry exemptions
to Section 8, it cannot be said that Congress is unconcerned with the substantive
terms of construction-industry PLAs. To the contrary, these provisions not only
address and authorize particular terms and conditions of employment, but also
reflect Congress’s intent to strike a slightly different balance of power in order to
accommodate conditions endemic to that industry. In this regard, we are no
longer attempting to ascertain the implications of congressional silence, which is
usually the situation in a Machinists analysis. Instead, we are dealing with an
explicit congressional directive to leave construction-industry PLAs to the
operation of economic forces.
{¶65} Moreover, state laws of general application usually withstand
Machinists scrutiny because “[m]ost significantly, there is no suggestion in the
legislative history of the Act that Congress intended to disturb the myriad state
laws then in existence that set minimum labor standards, but were unrelated in any
way to the processes of bargaining or self-organization.” Metro. Life Ins. Co., 471
U.S. at 756, 105 S. Ct. 2380, 85 L. Ed. 2d 728. In contrast, Congress believed that
PLAs were both lawful and part of the bargaining process in the construction
industry prior to 1959, and enacted the construction-industry exemptions
specifically to preserve this pattern and practice. Any state regulatory action that
interferes with this pattern of collective bargaining in the construction industry
would, therefore, be incompatible with the goals of the NLRA.
{¶66} Thus, it is of little consequence whether a PLA is characterized as
“an outcome” or an “economic weapon,” for it is exactly the sort of practice that
Congress has preserved for the construction industry. And in any event, the
Supreme Court has already indicated that a Machinists analysis would apply in
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January Term, 2002
determining the validity of regulatory prohibitions of public-construction PLAs.
See Boston Harbor, supra, 507 U.S. at 232, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶67} The state also argues that even if the NLRA is deemed to authorize
certain kinds of PLAs in the construction industry, there is no indication that the
1959 amendments “were intended to codify any activity other than labor
organizations’ direct dealings with private sector contractors and subcontractors.”
Similarly, amicus curiae Ohio Associated Builders & Contractors, Inc., argues that
“[b]ecause §§ 8(e) and 8(f) apply only to ‘employers,’ and public entities are not
‘employers’ under the NLRA, the provisions applicable to ‘employers in the
construction industry’ found in §§ 8(e) and (f) simply do not apply [to] the State
of Ohio and its political subdivisions.”
{¶68} However, as the high court explained in Boston Harbor, “Of
course, the exceptions provided for the construction industry in §§ 8(e) and (f),
like the prohibitions from which they provide relief, are not made specifically
applicable to the State. This is because the State is excluded from the definition
of the term ‘employer’ under the NLRA, see 29 U.S.C. § 152(2) * * *.
Nevertheless, the general goals behind passage of §§ 8(e) and (f) are still relevant
to determining what Congress intended with respect to the State and its
relationship to the agreements authorized by these sections.” Id., 507 U.S. at 230-
231, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶69} At this juncture, we must conclude that Section 8(f) and the
construction-industry proviso to Section 8(e) are clear manifestations of
Congress’s intent to preclude the states from regulating PLAs in the construction
industry. Whether Congress also intended to preclude the NLRB from doing so is
not an issue we need to decide. The jurisdiction of the NLRB to regulate
construction-industry PLAs is not implicated in the present controversy. Thus, it
makes no further difference whether we engage in a Garmon or Machinists
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analysis. The application of either rule necessitates a withdrawal of state power,
except where the state acts as a market participant.
{¶70} This brings us to the final and decisive issue in this case, which is
whether R.C. Chapter 4116 amounts to government regulation or constitutes
proprietary conduct on the part of the state.
{¶71} In Boston Harbor, the Supreme Court held that the NLRA does not
prevent a state agency from enforcing a PLA covering a particular public project.
In so holding, the court explained:
{¶72} “When we say that the NLRA pre-empts state law, we mean that
the NLRA prevents a State from regulating within a protected zone, whether it be
a zone protected and reserved for market freedom, see Machinists, or for NLRB
jurisdiction, see Garmon. A State does not regulate, however, simply by acting
within one of these protected areas. When a State owns and manages property, for
example, it must interact with private participants in the marketplace. In so doing,
the State is not subject to pre-emption by the NLRA, because pre-emption
doctrines apply only to state regulation.” (Emphasis sic.) Id., 507 U.S. at 226-
227, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶73} The Supreme Court found that its “decisions in this area support
the distinction between government as regulator and government as proprietor.”
Id. at 227, 113 S. Ct. 1190, 122 L. Ed. 2d 565. The high court also found that the
differences between private and state action “are far less significant when the
State acts as a market participant with no interest in setting policy.” Id. at 229,
113 S. Ct. 1190, 122 L. Ed. 2d 565. The court then posed the question “whether a
State may act without offending the pre-emption principles of the NLRA when it
acts as a proprietor and its acts therefore are not ‘tantamount to regulation’ or
policymaking.” Id.
{¶74} Answering this question in the affirmative, the court explained:
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January Term, 2002
{¶75} “Permitting the States to participate freely in the marketplace is not
only consistent with NLRA pre-emption principles generally but also, in these
cases, promotes the legislative goals that animated the passage of the §§ 8(e) and
(f) exceptions for the construction industry.
{¶76} “* * *
{¶77} “There is no reason to expect these defining features of the
construction industry to depend upon the public or private nature of the entity
purchasing contracting services. To the extent that a private purchaser may
choose a contractor based upon that contractor’s willingness to enter into a prehire
agreement, a public entity as purchaser should be permitted to do the same.
Confronted with such a purchaser, those contractors who do not normally enter
such agreements are faced with a choice. They may alter their usual mode of
operation to secure the business opportunity at hand, or seek business from
purchasers whose perceived needs do not include a project labor agreement. In
the absence of any express or implied indication by Congress that a State may not
manage its own property when it pursues its purely proprietary interests, and
where analogous private conduct would be permitted, this Court will not infer
such a restriction.” (Emphasis sic.) Id., 507 U.S. at 230 and 231-232, 113 S. Ct.
1190, 122 L. Ed. 2d 565.
{¶78} Critically, however, Boston Harbor suggests that a state would be
acting as a regulator or policymaker, rather than as a purchaser, proprietor, or
market participant, were it to impose an across-the-board rule that either requires
or prohibits the use of PLAs on all public construction projects. Thus, the court
carefully noted, on the one hand, that “the challenged action in this litigation was
specifically tailored to one particular job, the Boston Harbor cleanup project,” and
indicated, on the other hand, that “denying an option to public owner-developers
that is available to private owner-developers itself places a restriction on
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Congress’ intended free play of economic forces identified in Machinists.”
Boston Harbor, 507 U.S. at 232, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶79} Several courts considering this issue have reached similar
conclusions. In United States Chamber of Commerce v. Reich (C.A.D.C.1996),
74 F.3d 1322, the court held that the NLRA preempted a 1995 executive order
issued by former President Clinton that barred the contracting agencies of the
federal government from contracting with employers who permanently replace
lawfully striking workers. The district court had upheld the executive order,
finding that NLRA preemption is inapplicable because the government was acting
in a proprietary capacity. According to the appellate court, the district court had
interpreted Boston Harbor “as suggesting that if a private contractor were
permitted to refuse to buy goods from an employer who permanently replaced
strikers—which ordinarily he would be—then so should the federal government.”
Id., 74 F.3d at 1336. The government, in its arguments, had referred by analogy to
two executive orders that were issued by former President Bush in 1992, one of
which barred government contractors from entering into Section 8(f) prehire
agreements, but neither of which had ever been challenged in court.
{¶80} In dealing with these contentions, the appellate court explained as
follows:
{¶81} “The premise on which the [Boston Harbor] Court’s * * * analysis
[of the character of the state’s actions] rested, then, was that the Massachusetts
governmental entity [the Water Resources Authority], was not seeking to set
general policy in the Commonwealth; it was just trying to operate as if it were an
ordinary general contractor whose actions were ‘specifically tailored to one
particular job, the Boston Harbor clean-up project.’ Id. at 232, 113 S.Ct. at 1198,
122 L. Ed. 2d 565. Surely, the result would have been entirely different, given the
Court’s reasoning, if Massachusetts had passed a general law or the Governor had
26
January Term, 2002
issued an Executive Order requiring all construction contractors doing business
with the state to enter into collective bargaining agreements with the BCTC or its
Massachusetts-wide counterpart containing § 8(e) pre-hire agreements.
Accordingly, we very much doubt the legality of President Bush’s Executive
Order 12,818—since revoked, but upon which the government relies—that
banned government contractors from entering into pre-hire agreements under §
8(f).
{¶82} “It does not seem to us possible to deny that the President’s
Executive Order [in this case] seeks to set a broad [labor] policy * * *. The
President has, of course, acted to set procurement policy rather than labor policy.
But the former is quite explicitly based—and would have to be based—on his
views of the latter. * * * Whatever one’s views on the issue, it surely goes to the
heart of United States labor relations policy. It cannot be equated to the ad hoc
contracting decision made by MWRA in seeking to clean up Boston Harbor.”
(Footnotes omitted.) Id., 74 F.3d at 1336-1337.
{¶83} In Colfax Corp. v. Illinois State Toll Hwy. Auth. (C.A.7, 1996), 79
F.3d 631, the court determined that the NLRA does not prevent the Authority
from entering into a multiproject labor agreement that requires successful bidders
to become parties to areawide collective bargaining agreements with the unions
having jurisdiction over the relevant work. Despite the scope of these agreements,
the court found them to be more akin to the job-specific agreement allowed in
Boston Harbor than the debarment statute struck down in Gould. “The case
before us * * * is much more like ‘Boston Harbor.’ Illinois has not enacted a
statute [requiring PLAs on all public projects]. The Authority has not passed
[such] a general rule.” Id., 79 F.3d at 634. The court cautioned, however, that it
would refrain from questioning the Authority’s motives in these kinds of cases
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only “[s]o long as * * * the frontier is pushed no farther from ‘Boston Harbor’
than it is here.” Id., 79 F.3d at 635.
{¶84} In Assoc. Builders & Contrs., Inc. v. San Francisco Airports
Comm. (1999), 21 Cal. 4th 352, 87 Cal. Rptr. 2d 654, 981 P.2d 499, the Supreme
Court of California held that the Airports Commission did not violate that state’s
statute declaring the right of self-organization when it entered into a PLA in order
to complete an expansion and renovation project involving the San Francisco
International Airport. In so holding, the court explained that “ABC’s argument
fails to come to terms with the supremacy of federal labor law, embodied in 29
United States Code section 158(f), which permits prehire agreements in the
construction industry. Any California law purporting to bar such agreements
would raise serious questions of preemption under Machinists * * *, which
prohibits state and municipal regulation of areas that have been left ‘ “to be
controlled by the free play of economic forces.” ’ ” Id., 21 Cal.4th at 379, 87
Cal. Rptr. 2d 654, 981 P.2d 499.
{¶85} In Assoc. Builders & Contrs. of Rhode Island, Inc. v. Providence
(D.R.I.2000), 108 F. Supp. 2d 73, the court found the NLRA to preempt a city
ordinance giving favorable tax treatment only to developers who execute PLAs on
private construction projects with certain affiliated unions. The city claimed that
it was acting as a co-developer of the projects by making a contribution in the way
of tax stabilization and that because its motives were labor-neutral, it should be
found to have acted in a proprietary capacity pursuant to Boston Harbor. After
declining to “adopt the novel position that the City’s alleged labor policy-neutral
motive can somehow transform its action into a form of market participation
worthy of Boston Harbor protection,” 108 F. Supp. 2d at 83, the court went on to
explain:
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January Term, 2002
{¶86} “Even if the grant of favorable tax treatment may in some
circumstances be considered participation in the marketplace or if a labor-neutral
motive may save some non-proprietary governmental action from preemption, this
case is not a good candidate for the application of those propositions. The City’s
action in this case is not limited to one particular project, but is rather a policy to
be implemented on several projects. This distinction has been important to courts
refusing to apply the market participant exception, because a policy, regardless of
the motive behind it, is more ‘regulatory’ than ‘proprietary’ in nature than a single
contracting or, in this case, taxing decision.” Id., 108 F.Supp.2d at 83-84.
{¶87} Thus, as one writer succinctly stated, “state procurement law that
does not allow project labor agreements on public works projects at all is a flat
prohibition and thus takes state agencies out of any function as private purchasers
of services and is ‘tantamount to regulation.’ ” Henry H. Perritt, Jr., Keeping the
Government Out of the Way: Project Labor Agreements Under the Supreme
Court’s Boston Harbor Decision (1996), 12 Lab.Law. 69, 88.
{¶88} On the other hand, two cases have held to the contrary. In George
Harms Constr. Co., Inc. v. New Jersey Turnpike Auth. (1994), 137 N.J. 8, 644
A.2d 76, the Supreme Court of New Jersey found that the NLRA does not
preempt a state from prohibiting PLAs on public projects. The court reasoned:
{¶89} “Thus, under Boston Harbor, federal labor law does not prohibit a
state entering the construction market from using the same construction-industry
exception regarding project-labor agreements that private purchasers of
construction labor use. However, a state’s laws may prohibit a project-labor-
agreement specification in public contracts without running afoul of the NLRA.
Garmon preemption does not apply because a state-law prohibition of project-
labor agreements on public projects is merely one way in which a state may
choose to act as a market participant in the construction industry. In other words,
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a state may choose to enter or not to enter a project-labor agreement just like any
other purchaser of construction services. Machinists preemption also does not
apply because a state-law prohibition of project-labor agreements on public
projects does not constitute impermissible regulation of an area that the NLRA
contemplated would be left to the free play of economic forces. Such a
prohibition amounts to nothing more than the public equivalent of a corporation’s
by-law regarding the purchase of construction services. In short, when a state uses
project-labor agreements on public projects, it is not acting as a regulator of
private actors; rather, it is merely defining its role as a proprietor/purchaser of
labor in the construction industry.” Id., 137 N.J. at 26-27, 644 A.2d 76.
{¶90} Similarly, in Bldg. & Constr. Trades Dept., AFL-CIO v. Allbaugh
(C.A.D.C. 2002), 295 F.3d 28, petition for certiorari filed Oct. 2, 2002, 71
U.S.L.W. 3283, No. 02-527, the court held that the NLRA does not preempt
Executive Order 13,202, 66 F.R. 11225, issued by President George W. Bush on
February 17, 2001, which prohibits federal agencies or recipients of federal
funding from requiring or prohibiting PLA’s in the bid specifications or other
authorizing documents for construction projects. In so holding, the court never
explained the obvious inconsistency between this decision and its previous
discussion in Reich, supra, 74 F.3d at 1336-1337, regarding the legality of former
President Bush’s Executive Order 12,818. Instead, the court essentially reasoned,
as did the New Jersey high court in George Harms Constr. Co., Inc., that the
government acts as a proprietor, rather than a regulator, when it makes “just ‘the
type of decision regarding the use of labor agreements that a private project owner
would be free to make.’ ” Allbaugh, 295 F.3d at 35, quoting the government’s
brief. According to the court, the government has acted in a propriety capacity
despite the “blanket, across-the-board” prohibition of Executive Order 13,202 “
because “ ‘the only decisions governed by the executive order are those that the
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January Term, 2002
federal government makes as [a] market participant.’ ” Id., quoting the
government’s brief.
{¶91} This reasoning, we believe, places the proverbial cart before the
horse. These courts assume that a state acts as a market participant by doing what
a private actor may do under the NLRA. But the gist of Boston Harbor is that a
state may act as a private contractor would act when it acts as a market
participant. Otherwise, the state would be permitted to regulate within a
protected zone because a private actor may do so. As the New Jersey Supreme
Court points out, for example, a private corporation may in its bylaws or
elsewhere decide as a matter of policy never to utilize a PLA when purchasing
construction services without running afoul of the NLRA. But this is not because
such a decision is inherently indicative of proprietary activity. Indeed, the private
contractor-developer in this situation would be acting not as a typical contractor
would act in the furtherance of its proprietary interests, but as a “regulator” of the
construction market. Instead, a private corporation or other legal entity may make
such a policy decision without violating the NLRA because the NLRA does not
preclude a private actor from attempting to regulate in an area reserved for market
freedom or NLRB jurisdiction.
{¶92} Thus, as the Supreme Court explained in Boston Harbor:
{¶93} “The conceptual distinction between regulator and purchaser exists
to a limited extent in the private sphere as well. A private actor, for example, can
participate in a boycott of a supplier on the basis of a labor policy concern rather
than a profit motive. * * * The private actor under such circumstances would be
attempting to ‘regulate’ the suppliers and would not be acting as a typical
proprietor. The fact that a private actor may ‘regulate’ does not mean, of course,
that the private actor may be ‘pre-empted’ by the NLRA; the Supremacy Clause
does not require pre-emption of private conduct. Private actors therefore may
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‘regulate’ as they please, as long as their conduct does not violate the law. As the
above passage in Gould [475 U.S. 282, 106 S. Ct. 1057, 89 L. Ed. 2d 223] makes
clear, however, states have a qualitatively different role to play from private
parties. [Id.] When the State acts as regulator, it performs a role that is
characteristically a governmental rather than a private role, boycotts
notwithstanding. Moreover, as regulator of private conduct, the State is more
powerful than private parties. These distinctions are far less significant when the
State acts as a market participant with no interest in setting policy.” Id., 507 U.S.
at 229, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶94} We cannot conceive of R.C. Chapter 4116 as anything but
regulation. R.C. Chapter 4116 is all about labor policy. Its stated purpose is “to
prohibit public authorities from imposing certain labor requirements as a
condition of performing public works.” Preamble to 1999 Am.H.B. No. 101.
Rather than constituting proprietary conduct on the part of the state, R.C. Chapter
4116 essentially prohibits the state, its contracting authorities, and any institution
supported in whole or part by public funds from engaging in proprietary activity
when purchasing construction services or directly employing labor by prohibiting
them from entering into or enforcing a PLA on any public construction project
regardless of economic or other proprietary concerns. Indeed, as the Cuyahoga
County Board of Commissioners itself bemoans, the statute “eliminates the
discretion of local authorities to determine whether and when a project labor
agreement would benefit local taxpayers and citizens by providing consistency
and harmony in the vast array of labor and employment issues which arise during
the course of a costly and time expansive public improvement project.”
{¶95} R.C. Chapter 4116 is a blanket, across-the-board prohibition that
precludes any sort of ad hoc determination as to the benefits or advantages of
utilizing a PLA on a particular project. It is, therefore, “ ‘tantamount to
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January Term, 2002
regulation’ or policymaking.” Boston Harbor, 507 U.S. at 229, 113 S. Ct. 1190,
122 L. Ed. 2d 565.1
{¶96} Accordingly, we hold that Sections 8(e) and (f) of the National
Labor Relations Act, as enacted by the 1959 Landrum-Griffin Act, Sections
158(e) and (f), Title 29, U.S.Code, preempt R.C. Chapter 4116, as enacted by
Am.H.B. No. 101 of 123rd General Assembly, which flatly prohibits public
authorities from entering into or enforcing project labor agreements on public
construction projects.
{¶97} For all of the foregoing reasons, we reverse the judgment of the
court of appeals and reinstate the judgment of the trial court declaring R.C.
Chapter 4116 preempted by the NLRA and enjoining its enforcement.
Judgment reversed.
DOUGLAS, F.E. SWEENEY and PFEIFER, JJ., concur.
DOUGLAS, J., concurs separately.
MOYER, C.J., and LUNDBERG STRATTON, J., concur in syllabus and
judgment.
COOK, J., concurs in judgment only.
1
Amici curiae Ohio ABC and National Right to Work Legal Defense Foundation argue that R.C.
4116.02(B) is a “right-to-work” law and, therefore, is saved from preemption by Section 14(b) of
the NLRA, Section 164(b), Title 29, U.S.Code, which permits states, if they so choose, to prohibit
“agreements requiring membership in a labor organization as a condition of employment.” We
find, however, that this is not an issue that has been properly raised in this case. As the state
informs us, it “has not advanced a right-to-work argument in its defense of R.C. [Chapter] 4116”
and has no interest in this “hypothetical” and “academic” debate. Instead, the state urges us to
consider only those “arguments the State has actually made” and “not decide this theoretical
issue.” We point out also that while the court of appeals did briefly discuss Section 14(b), it did so
only to bolster its view that R.C. Chapter 4116 does not “have the effect of prohibiting a public
authority from entering into a PLA.” In any event, we decline the invitation to construe R.C.
Chapter 4116 as some cryptic prohibition of so-called “union shop” or “agency shop” agreements
in Ohio. But even if we did so construe R.C. 4116.02(B), we very much doubt the applicability of
Section 14(b) in the circumstances of this case. See Assoc. Gen. Contrs. of North Dakota v. Otter
Tail Power Co. (C.A.8, 1979), 611 F.2d 684, 692-693.
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SUPREME COURT OF OHIO
__________________
DOUGLAS, J., concurring.
{¶98} I concur with the exhaustive and well-reasoned opinion of Justice
Resnick. I write in support of the majority opinion.
{¶99} When all of the layers of obfuscation of the issue now before us are
peeled away, the core question is whether the state may, within constitutional
limits, enact legislation that prohibits project labor agreements from being entered
on public construction projects. While R.C. Chapter 4116 does just that and, by
so doing, effectively takes away the discretion of local elected officials to look out
for the best interest of local taxpayers and citizens, and that, on its face, is bad
public policy, it is not for us to decide policy. It is our task, however, to test such
legislation by the parameters laid down by case law of the United States Supreme
Court, when applicable, and we are bound to follow and comply with such
pronouncements.
{¶100} In this matter, the pertinent case law, which we are required to
apply and follow, might very well begin and end with Bldg. & Constr. Trades
Council of Metro. Dist. v. Assoc. Builders & Contrs. of Massachusetts/Rhode
Island, Inc. (1993), 507 U.S. 218, 113 S. Ct. 1190, 122 L. Ed. 2d 565 (the “Boston
Harbor” case). Therein, the high court said that “[t]he 1959 amendment adding a
proviso to subsection [8](e) [of the National Labor Relations Act, Section 158,
Title 29, U.S.Code] permits a general contractor’s prehire agreement to require an
employer not to hire other contractors performing work on that particular project
site unless they agree to become bound by the terms of that labor agreement.” Id.
at 230, 113 S. Ct. 1190, 122 L. Ed. 2d 565. In addition, Section 8(f) of the Act
unequivocally permits employers in the construction industry to enter into prehire
agreements. While it is true that the Act excludes the state from the definition of
the term “employer,” Section 2(2), NLRA, Section 152(2), Title 29, U.S.Code, the
34
January Term, 2002
court, nevertheless, went on to say that “the general goals behind passage of §§
8(e) and (f) are still relevant to determining what Congress intended with respect
to the State and its relationship to the agreements authorized by these sections.”
Id. at 231, 113 S. Ct. 1190, 122 L. Ed. 2d 565.
{¶101} It would seem to be axiomatic that what federal law gives to a
person or entity, the state may not take away. To remove from local officials the
right to use a tool that, for the most part, guarantees that a local project will be
completed by well-trained workers, within budget and on time, is short-sighted at
best and devastating at worst. Not much more, I believe, needs to be said to put to
rest the arguments made here by appellees and their amici supporters.
{¶102} Accordingly, I would pronounce as syllabus law in this case that
“Am.H.B. No. 101, a regulation that prohibits public-sector project labor
agreements in Ohio, is preempted by the National Labor Relations Act, Sections
151 et seq., Title 29, U.S.Code, and is, therefore, unlawful.” I respectfully concur
with the majority.
_______________
Benesch, Friedlander, Coplan & Aronoff, L.L.P., N. Victor Goodman,
Mark D. Tucker and Edward Kancler, for appellant Ohio State Building &
Construction Trades Council.
Goldstein & O’Connor and Joyce Goldstein, for appellant Cleveland
Building & Construction Trades Council.
Wuliger, Fadel & Beyer and William I. Fadel, for appellant International
Union of Operating Engineers, Local 18.
William D. Mason, Cuyahoga County Prosecuting Attorney, and Kathleen
A. Martin, Assistant Prosecuting Attorney, for appellee Cuyahoga County Board
of Commissioners.
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SUPREME COURT OF OHIO
Betty D. Montgomery, Attorney General, Michael D. Allen and Peter M.
Thomas, Assistant Attorneys General, for appellee state of Ohio.
Stewart Jaffy & Assoc. Co., L.P.A., Stewart R. Jaffy and Marc J. Jaffy,
urging reversal for amicus curiae Ohio AFL-CIO.
Sherman, Dunn, Cohen, Leifer & Yellig, P.C., Laurence J. Cohen and
Victoria L. Bor, urging reversal for amicus curiae Building & Construction Trades
Dept., AFL-CIO.
Coolidge, Wall, Womsley & Lombard, Fred A. Ungerman Jr. and Jill A.
May, urging affirmance for amicus curiae Ohio Associated Builders &
Contractors, Inc.
Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A., and Susan Carson
Rodgers; National Right to Work Legal Defense Foundation, Inc. and William L.
Messenger, urging affirmance for amicus curiae National Right to Work Legal
Defense Foundation, Inc.
__________________
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