431 F.3d 1004 (7th Cir. 2005), 05-2174, Northern Illinois Chapter of Associated Builders and Contractors, Inc. v. Lavin

Docket Nº:05-2174.
Citation:431 F.3d 1004
Party Name:NORTHERN ILLINOIS CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, Inc., and Loberg Excavating, Inc., Plaintiffs-Appellants, v. Jack LAVIN, Director of the Illinois Department of Commerce and Economic Opportunity, Defendant-Appellee.
Case Date:December 09, 2005
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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431 F.3d 1004 (7th Cir. 2005)

NORTHERN ILLINOIS CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, Inc., and Loberg Excavating, Inc., Plaintiffs-Appellants,

v.

Jack LAVIN, Director of the Illinois Department of Commerce and Economic Opportunity, Defendant-Appellee.

No. 05-2174.

United States Court of Appeals, Seventh Circuit.

December 9, 2005

Argued Oct. 28, 2005.

Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 04 C 50357 – Philip G. Reinhard, Judge.

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Rachel B. Cowen (argued), Connelly, Sheehan & Harris, Chicago, IL, for Plaintiffs-Appellants.

Mary E. Welsh (argued), Office of the Attorney General, Civil Appeals Division, Chicago, IL, for Defendant-Appellee.

Eric M. Madiar, Freeborn & Peters LLP, Springfield, IL, Ryan A. Hagerty, Asher, Gittler, Greenfield & D'Alba, Chicago, IL, for Amici Curiae.

Before EASTERBROOK, MANION, and ROVNER, Circuit Judges.

EASTERBROOK, Circuit Judge.

Illinois subsidizes the construction or renovation of renewable-fuel plants – principally facilities that make ethanol. One condition of a grant is that the recipient "enter into a project labor agreement". 20 ILCS 689/15(a)(3). The agreement must establish wages and benefits and must include a no-strike clause. 20 ILCS 689/25(a). As a practical matter such agreements can be achieved only by employers that recognize and bargain with labor unions. An association of non-union contractors (and one of its members) filed this suit under 42 U.S.C. §1983, seeking a declaratory judgment that the requirement of a project labor agreement is preempted by federal law. See Golden State Transit Corp. v. Los Angeles, 493 U.S. 103 (1989). Relying on Building & Construction Trades Council v. Associates Builders & Contractors of Massachusetts, 507 U.S. 218 (1993) (Boston Harbor), the district court entered judgment for Illinois.

Boston required its contractors to negotiate project labor agreements under which all workers would be referred by union hiring halls and would be obliged to pay dues under union-security clauses; in exchange the unions would agree to forego strikes. Federal law permits such prehire agreements in the construction industry. See 29 U.S.C. §158(e), (f). See also Jim McNeff, Inc. v. Todd, 461 U.S. 260 (1983); Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645 (1982). Boston Harbor holds that a public owner has the same entitlement as a private owner to decide how it will manage a construction project. Federal law preempts all state regulation of those aspects of labor relations that are arguably protected, arguably prohibited, or left to the domain of market forces. See San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959); Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132 (1976). A city or state acting as proprietor, however, is a market participant rather than a market regulator. Boston Harbor, 507 U.S. at 230-31.

The district court concluded that Illinois is acting as a proprietor in its renewable-fuels program. The problem with this

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view is that the state is not the proprietor of anything. It does not own any renewable-fuels project, either before or after granting a subsidy. The project's owner, not the state, is its proprietor. Boston hired the general contractors for the project; Illinois does not hire contractors. Nor does it invest in the projects through bonds. Contrast Hotel Employees v. Sage Hospitality Resources, LLC, 390 F.3d 206 (3d Cir. 2004). All it has done is set a condition on grants to private proprietors.

To say that Illinois is not acting as a proprietor is not, however, to resolve the main question. Boston Harbor holds that if a state acts as a proprietor, then it may insist on the sort of prehire agreements that federal labor law permits private owners to adopt. It does not hold that only if a state acts in this capacity is its decision compatible with federal law. The Court stated the rule this way: "[T]he NLRA prevents a State from regulating within a protected zone, whether it be a zone protected and preserved for market freedom, see Machinists, or for NLRB jurisdiction, see Garmon...

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