Associated Builders and Contractors, Inc. v. Southern Nevada Water Authority

• Decision Date: 07 June 1999
• Docket Number: No. 30535,30535
• Citation: 979 P.2d 224
• Parties: 161 L.R.R.M. (BNA) 2537 ASSOCIATED BUILDERS AND CONTRACTORS, INC., Southern Nevada Chapter, a Nevada Not-for-Profit Corporation; American Asphalt & Grading Company, a Nevada Corporation; Richard C. Kehres, Individually; and Jesse J. Pipkin, Individually, Appellants, v. SOUTHERN NEVADA WATER AUTHORITY, a Nevada Political Subdivision, Respondent.
• Court: Nevada Supreme Court

Page 224

979 P.2d 224

161 L.R.R.M. (BNA) 2537

ASSOCIATED BUILDERS AND CONTRACTORS, INC., Southern Nevada

Chapter, a Nevada Not-for-Profit Corporation; American

Asphalt & Grading Company, a Nevada Corporation; Richard C.

Kehres, Individually; and Jesse J. Pipkin, Individually, Appellants, v. SOUTHERN NEVADA WATER AUTHORITY, a Nevada Political

Subdivision, Respondent.

No. 30535.

Supreme Court of Nevada.

June 7, 1999.

Hunterton & Associates, and Thea Marie Sankiewicz, Las Vegas, for Appellants.

Stewart L. Bell, District Attorney, Clark County; Haney, Woloson & Mullins, Las Vegas; Charles K. Hauser, General Counsel, Southern Nevada Water Authority, Las Vegas; Morgan, Lewis & Bockius, and Bradford W. Coupe and James P. Philbin, New York, New York, for Respondent.

McCracken, Stemerman, Bowen & Holsberry, Las Vegas; Sherman, Dunn, Cohen, Leifer & Yellig, P.C., and Victoria L. Bor, Washington, D.C., for Amici Curiae Building and Construction Trades Department, AFL-CIO, and Building and Construction Trades Council of Southern Nevada.

Hicks & Walt, and Neil M. Alexander and James T. Winkler, Reno, for Amici Curiae the National Association of Manufacturers and the United States Chamber of Commerce.

Before the Court En Banc.

OPINION

PER CURIAM:

This suit arises from respondent Southern Nevada Water Authority's (Water Authority) adoption of a project labor agreement (PLA). Appellant American Asphalt bid on a Water Authority project, noting that it would not comply with the PLA, and its bid was rejected. Thereafter, appellants Associated Builders and Contractors and American Asphalt, along with two individual American Asphalt employees, filed a suit in district court. The district court upheld the validity of the PLA. This appeal followed.

FACTS

In 1993, the United States Supreme Court held that federal law would not pre-empt a state authority from enforcing a PLA requirement. Building and Constr. Trades Council v. Associated Builders and Contractors of Mass./R.I., Inc., 507 U.S. 218, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993). Thereafter, on April 14, 1994, former Nevada Governor Robert Miller issued an executive order directing all state boards, authorities, and agencies to provide for the negotiation of PLAs in public works contracts unless the board, authority, or agency makes a written determination that the benefits of proceeding without a PLA exceed the benefits of a PLA.

A PLA is an agreement between a construction project owner and a labor union that a contractor must sign in order to perform work on the project. The union is designated the collective bargaining representative for all employees on the project and agrees that no labor strikes or disputes will disrupt the project. The contractor must abide by certain union conditions, such as hiring through union hiring halls and complying with union wage rules.

In late 1994, the Southern Nevada Water Authority determined it was not bound by the Executive Order. The Water Authority is a political subdivision of the State of Nevada created to address the water needs of southern Nevada residents on a regional basis. Pursuant to an agreement entered into by the Clark County municipal water and sewer districts and the urban cities of Clark County, the Water Authority is empowered to acquire, develop, and maintain water supplies for the benefit of southern Nevada consumers. Included in the agreement is the preparation and implementation of the Capital Improvements Plan, which is committed, over a thirty-year period, to developing a reliable and demand-responsive municipal water system to supplement the existing system. The immediate objective is the "1999 Facilities" phase, which involves work on water distribution facilities.

In 1993, the Water Authority awarded a contract to Ralph M. Parsons Company (Parsons) for program management of the Capital Improvements Plan. The contract specifies that Parsons is responsible for planning, design management, environment and construction management, and start-up services.

After PLAs were brought to the Water Authority's attention in late 1994, Douglas Selby, the Water Authority's Director of Engineering, asked Patricia Mulroy, the Water Authority's General Manager, if she wanted to pursue using a PLA. Although the Water Authority began to investigate the use of PLAs, Mulroy stated that she was not ready to recommend the use of a PLA to the Water Authority board. In the spring of 1995, Mulroy learned of two labor strikes against a contractor who was working on two Colorado River Commission projects, which were later transferred to the Water Authority. The work stoppages concerned Mulroy, although she was not sure how they affected the projects or their time schedules.

In the fall of 1995, Mulroy decided to seek approval from the Water Authority board to use a PLA on the Capital Improvements Plan. Water Authority officials testified that it was of paramount importance that each phase of the Plan be completed in a timely manner to ensure uninterrupted water delivery to southern Nevadans. The board approved Mulroy's recommendation to begin the development of a PLA. The Water Authority began by meeting with Parsons Constructors Inc., Parsons' construction subsidiary. Selby authorized Parsons to begin informal discussions with union representatives. Before formal negotiations began At a March 21, 1996 meeting, the board passed a resolution approving the application of the PLA to the 1999 Facilities phase of the Capital Improvements Plan. The PLA included provisions that prohibited labor disruptions or strikes, named the national unions as the sole and exclusive bargaining representatives of all craft employees, set uniform work hours and overtime rates, provided access to the projects on the Capital Improvements Plan to both union and non-union contractors, and permitted non-union contractors to use up to seven of their core employees selected on a one-to-one basis with employees referred by the union. Although the PLA requires hiring to be supervised out of the union hall, it does not require individuals to join a union in order to work on any of the 1999 Facilities projects. In addition, the resolution passed by the board requires periodic evaluation of the PLA by Water Authority staff in order to determine whether the anticipated benefits of using a PLA have been realized.

the Water Authority adopted a list of goals and objectives. Parsons entered formal negotiations with the Las Vegas building trade unions in January 1996, and a PLA was drafted and executed by participating local and national unions. Parsons did not execute the agreement until it was reviewed and approved by the Water Authority board.

The bidding for Water Authority contract number 120-A, a mass excavation project located on the shores of Lake Mead, took place in June 1996. On June 27, 1996, the estimator compiling the bid for American Asphalt called the Water Authority and spoke to the Project Engineering Manager. The estimator told the manager that American Asphalt was going to bid on the project, but that it would not comply with the PLA if awarded the contract. The estimator inquired whether under those terms, the bid would be rejected. The manager replied that the bid would likely be rejected.

Despite this discussion, American Asphalt submitted its bid for the project on June 28, 1996, along with five union contractors. The bids ranged from $1,509,314 to $1,744,000, with the lowest bid from American Asphalt. American Asphalt was not awarded the bid and the lawsuit resulting in this appeal followed.

As this case involves questions of law, we review the issues de novo. SIIS v. United Exposition Services Co., 109 Nev. 28, 30, 846 P.2d 294, 295 (1993).

DISCUSSION

Associated Builders argues that the imposition of the PLA violates Nevada's competitive bidding, right-to-work, and freedom of association statutes. We disagree.

The parties also discussed whether the Water Authority was bound by Governor Miller's Executive Order, and, if not, whether it had jurisdiction to impose the PLA. We hold that, regardless of whether the Water Authority was bound by the executive order, the Water Authority has discretion to adopt a PLA as long as the PLA is not in contravention of Nevada law, as discussed below.

Competitive Bidding Statutes

The issue of whether a PLA violates Nevada's competitive bidding statutes is one of first impression before this court. However, three state high courts--New Jersey, New York, and Alaska--have addressed the issue of whether PLAs are valid under their states' competitive bidding laws. See Laborers Local No. 942 v. Lampkin, 956 P.2d 422 (Alaska 1998); Tormee Const. v. Mercer County Imp., 143 N.J. 143, 669 A.2d 1369 (1995); George Harms Const. v. Turnpike Auth., 137 N.J. 8, 644 A.2d 76 (1994); N.Y. State Chapter v. Thruway Authority, 88 N.Y.2d 56, 643 N.Y.S.2d 480, 666 N.E.2d 185 (1996).

The first court to review PLAs in light of competitive bidding laws was the Supreme Court of New Jersey. The court noted that the policy behind the competitive bidding statutes is "to guard against favoritism, improvidence, extravagance and corruption; their aim is to secure for the public the benefits of unfettered competition. " George Harms, 644 A.2d at 91 (emphasis added)(quoting Terminal Construction Corp. v. Atlantic County Sewerage Authority, 67 N.J. 403, 341 A.2d 327 (1975)). The court determined that the PLA at issue violated New Jersey's competitive bidding statutes because the statutes provide that a public entity cannot specify a sole source of construction services or denote a specific union affiliation. Id. at 94. In response to the argument that the bids are open to all bidders, the court noted that a PLA does not represent real competition. Id. Although noting that PLAs "serve important purposes on major long-term construction projects," the court concluded that the policy of New Jersey's statutes is to foster unfettered...