Idaho Bldg. & Constr. Trades Council v. Inland Pac. Chapter Builders & Contractors, Inc.

• Decision Date: 16 September 2015
• Docket Number: 12–35051.,Nos. 11–35985,s. 11–35985
• Citation: 801 F.3d 950
• Parties: IDAHO BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL–CIO; Southwest Idaho Buildings and Construction Trades Council, AFL–CIO, Plaintiffs–Appellees, v. INLAND PACIFIC CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., Applicant–in–Intervention–Appellant, v. Lawrence G. Wasden, in his official capacity as Attorney General of the State of Idaho; Tim Mason, in his official capacity as Administrator of the Division of Public Works, Defendants–Appellees. Idaho Building and Construction Trades Council, AFL–CIO; Southwest Idaho Buildings and Construction Trades Council, AFL–CIO, Plaintiffs–Appellees, v. Lawrence G. Wasden, in his official capacity as Attorney General of the State of Idaho; Tim Mason, in his official capacity as Administrator of the Division of Public Works, Defendants–Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

801 F.3d 950

IDAHO BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL–CIO;

Southwest Idaho Buildings and Construction Trades Council, AFL–CIO, Plaintiffs–Appellees

v.INLAND PACIFIC CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., Applicant–in–Intervention–Appellant

v.Lawrence G. Wasden, in his official capacity as Attorney General of the State of Idaho;

Tim Mason, in his official capacity as Administrator of the Division of Public Works, Defendants–Appellees.

Idaho Building and Construction Trades Council, AFL–CIO;

Southwest Idaho Buildings and Construction Trades Council, AFL–CIO, Plaintiffs–Appelleesv.Lawrence G. Wasden, in his official capacity as Attorney General of the State of Idaho;

Tim Mason, in his official capacity as Administrator of the Division of Public Works, Defendants–Appellants.

Nos. 11–35985

12–35051.

United States Court of Appeals, Ninth Circuit.

Argued May 6, 2013.

Submitted and Filed Sept. 16, 2015.

Judd H. Lees (argued), Williams, Kastner & Gibbs PLLC, Seattle, WA, for Applicant–in–Intervention–Appellant.

James M. Piotrowski (argued), Alan Herzfled, and Marty Durand, Herzfeld & Piotrowski LLP, Boise, ID; Terry R. Yellig, Victoria L. Bor, and Esmerelda Aguilar, Sherman, Dunn, Cohen, Leifer & Yellig, P.C., Washington, D.C., for Plaintiffs–Appellees.

Clay R. Smith, Deputy Attorney General (argued), Steven L. Olsen, Chief of Civil Litigation, Brian P. Kane, Assistant Chief Deputy Attorney General, and Lawrence G. Wasden, Attorney General, Boise, ID, for Defendants–Appellants/Defendants–Appellees.

Judd H. Lees (argued), Williams, Kastner & Gibbs PLLC, Seattle, WA; Maurice Baskin, Venable LLP, Washington, D.C., for Amici Curiae Associated Builders and Contractors, Inc. and Inland Pacific Chapter of the Associated Builders and Contractors, Inc.

William L. Messenger, National Right to Work Legal Defense Foundation, Springfield, VA, for Amicus Curiae National Right to Work Legal Defense Foundation.

Appeal from the United States District Court for the District of Idaho, B. Lynn Winmill, Chief District Judge, Presiding. D.C. No. 1:11–cv–00253–BLW.

Before: STEPHEN REINHARDT, MARSHA S. BERZON, and ANDREW D. HURWITZ, Circuit Judges.

Opinion by Judge BERZON

; Concurrence by Judge BERZON.

OPINION

BERZON, Circuit Judge:

Idaho has banned “job targeting” or “market recovery” programs. Construction unions have developed such programs to increase their members' access to work and stem the long-term decline in the percentage of construction workers represented by unions. Under such programs, a union collects funds from workers it represents and then uses those funds to subsidize bids by union contractors, allowing the contractors to lower their labor costs and so more effectively compete with non-union contractors. The plaintiffs, two Idaho unions, brought suit to enjoin the statute as preempted by the National Labor Relations Act (“NLRA”), 29 U.S.C. § 151 et seq. The district court preliminarily enjoined Idaho's statute and then granted summary judgment to the unions.

It is well settled that most of the conduct prohibited by Idaho's statute is protected by the NLRA. As to the balance of the prohibited conduct—namely, the use of job targeting funds derived in part from wages earned on federal projects governed by the Davis–Bacon Act, 40 U.S.C. § 3141 et seq. —Idaho's proposed enforcement of federal rules governing wages on federal projects, including criminal penalties more onerous than the federal statute's own civil and administrative enforcement provisions, is likely preempted by Davis–Bacon itself. In any event, the decisions of the National Labor Relations Board (the “NLRB” or “Board”) make clear that the distribution of funds derived in part from Davis–Bacon wages is at least arguably protected by the NLRA, and so preempted under one strain of NLRA preemption law. We therefore affirm in relevant part.

I.

The Idaho “Fairness in Contracting Act” (“the Act”) provides in relevant part that:

(2) No contractor or subcontractor may directly or indirectly receive a wage subsidy, bid supplement or rebate on behalf of its employees, or provide the same to its employees, the source of which is wages, dues or assessments collected by or on behalf of any labor organization(s), whether or not labeled as dues or assessments.

(3) No labor organization may directly or indirectly pay a wage subsidy or wage rebate to its members in order to directly or indirectly subsidize a contractor or subcontractor, the source of which is wages, dues or assessments collected by or on behalf of its members, whether or not labeled as dues or assessments.

(4) It is illegal to use any fund financed by wages collected by or on behalf of any labor organization(s), whether or not labeled as dues or assessments, to subsidize a contractor or subcontractor doing business in the state of Idaho.

Idaho Code § 44–2012(2)–(4). A violation of the Act is a misdemeanor punishable by a fine of up to $10,000 for a first violation, $25,000 for a second violation, and $100,000 for each additional violation. Id. § 44–2012(5). The Act also establishes a private cause of action available to a range of parties, including any interested taxpayer, to civilly enforce the Act. Id. § 44–2012(6).

The Act prohibits “job targeting” programs, also known as “market recovery” programs. Unions have developed such programs in the face of the dwindling share of the construction market held by union contractors and the associated decline in union membership in the construction industry. The programs' goal is to increase their members' access to employment and spread the benefits of collectively-bargained wages. See generally, Herbert R. Northrup & Augustus T. White, Subsidizing Contractors to Gain Employment:

Construction Union “Job Targeting”,

17 Berkeley J. Emp. & Lab. L. 62 (1996).

The essentials of such job targeting programs are straightforward. A union collects funds from workers, generally a percentage of their wages, and then uses that money to subsidize a union contractor's payment of wages at the collectively bargained rate on a project which the union has “targeted.” So, for example, a union might agree that a union-affiliated contractor may submit a bid based on a $15/hour pay rate to compete successfully against non-union contractors on that particular project. If the contractor's bid is accepted, then the union will pay the difference between the agreed-on rate and the normal union wage; in this example, if the normal wage is $20/hour, the union would pay $5/hour out of its job targeting fund. The result is that the union-affiliated contractor is able to bid successfully on a project that would otherwise go to a non-union contractor; union members accordingly have access to the jobs on that project, which would otherwise go to employees of non-union companies; and the members working on those jobs are paid the ordinary union rate, rather than the lower wage on which the contractor based his bid.

The mechanics of job targeting programs vary, both in how the funds are collected and how they are distributed. Funds are typically collected by the contractor through a mandatory or voluntary deduction from workers' wages and then deposited into a special job targeting fund controlled by the union. See J.A. Croson Co., 359 N.L.R.B. No. 2, 2012 WL 5246914 (2012) ; Int'l Bhd. of Elec. Workers, Local 48, 332 N.L.R.B. 1492 (2000), modified 333 N.L.R.B. No. 122, enforced, 345 F.3d 1049 (9th Cir.2003) (“Kingston Constructors ”). In some cases, however, workers pay the funds directly to the union. See Int'l Bhd. of Elec. Workers, Local 357 v. Brock, 68 F.3d 1194, 1201–02 (9th Cir.1995). As to distribution, the subsidy may be paid to the contractor, with the contractor paying the worker the full union wage; or the subsidy may be paid directly to the worker, with the contractor paying less than the ordinary union wage, and the union's payment making up the balance.¹

II.

Before the Act went into effect, The Idaho Building and Construction Trades Council, AFL–CIO, and Southwest Idaho Building and Construction Trades Council, AFL–CIO (collectively, the “Trades Councils”), brought this facial challenge against the Attorney General of Idaho to enjoin its enforcement.² The district court granted a preliminary injunction against the enforcement of the Act. The parties then filed cross-motions for summary judgment.

The Inland Pacific Chapter of the Associated Builders and Contractors, Inc. (“ABC”), which supported the Act's passage in the legislature, sought to intervene as a defendant in the summary judgment proceedings. The court denied the motion to intervene but permitted ABC to appear as an amicus curiae.

The district court granted summary judgment to the Trades Councils and denied it to the Attorney General, concluding that the Act was preempted by the NLRA. The Attorney General timely appealed.³ After a limited remand and supplemental briefing on jurisdictional issues not pertinent to this portion of the appeal, the case was resubmitted for disposition on the merits as to the Act.

III.

“Although the NLRA itself contains no express pre-emption provision,” the Supreme Court has held that “Congress implicitly mandated two types of pre-emption as necessary to implement federal labor policy.” Chamber of Commerce of U.S. v. Brown, 554 U.S. 60, 65, 128 S.Ct. 2408, 171 L.Ed.2d 264 (2008). With regard to the Act, the Trades Councils urge only one of those two preemption strands: the theory articulated in San Diego Building Trades Council, Millmen's Union, Local 2020 v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959).⁴

“Garmon pre-emption ‘is intended to preclude state interference with the National Labor Relations Board's interpretation and active enforcement of the integrated scheme of regulation established by the NLRA.’ ” Brown, 554 U.S. at 65, 128 S.Ct. 2408 (quoting Golden State Transit Corp. v. City of Los Angeles, 475 U.S. 608, 613, 106 S.Ct. 1395, 89 L.Ed.2d 616 (1986) ) (some internal quotation...