Bldg. Indus. Elec. Contractors Ass'n v. City of N.Y.

Decision Date04 May 2012
Docket NumberDocket No. 11–3590–CV.
Citation678 F.3d 184
PartiesThe BUILDING INDUSTRY ELECTRICAL CONTRACTORS ASSOCIATION, on behalf of itself and its members, United Electrical Contractors Association, on behalf of itself and its members, Plaintiffs–Appellants, v. The CITY OF NEW YORK, on behalf of itself and its various agencies, The Building and Construction Trades Council of Greater New York and Vicinity, on behalf of itself and its signatory affiliated Local Unions, Defendants–Appellees.
CourtU.S. Court of Appeals — Second Circuit

OPINION TEXT STARTS HERE

Jennifer S. Smith (Alan M. Pollack, on the brief), Robinson Brog Leinwand Greene Genovese & Gluck P.C., for PlaintiffsAppellants.

Drake A. Colley, Assistant Corporation Counsel (Edward F.X. Hart, on the brief), for Michael A. Cardozo, Corporation Counsel of the City of New York, New York, NY, for DefendantAppellee the City of New York.

Carol O'Rourke Pennington, Colleran, O'Hara & Mills, L.L.P., Garden City, NY, for DefendantAppellee the Building and Construction Trades Council of Greater New York and Vicinity.

Victoria L. Bor, Terry R. Yellig, Sherman, Dunn, Cohen, Leifer & Yellig, PC, Washington, D.C., for Amicus Curiae Building and Construction Trades Department, AFL–CIO.

Gary Silverman, O'Dwyer & Bernstien LLP, New York, NY, for Amicus Curiae Local 363 United Service Workers Union.

Richard S. Brook, Law Office of Richard S. Brook, Mineola, NY, for Amicus Curiae Local Union No. 3, International Brotherhood of Electrical Workers, AFL–CIO.

Before: KEARSE, JOHN M. WALKER, JR., and LYNCH, Circuit Judges.

GERARD E. LYNCH, Circuit Judge:

PlaintiffsAppellants the Building Industry Electrical Contractors Association (BIECA) and United Electrical Contractors Association (UECA) appeal the dismissal of their complaint challenging a number of agreements entered into by the City of New York with respect to labor conditions on certain City construction projects. Appellants argue that the agreements regulate the labor market and are therefore preempted by the National Labor Relations Act. We find the project labor agreements in this case materially indistinguishable from agreements the Supreme Court found permissible under the market participant exception to preemption in Building and Construction Trades Council of Metropolitan District v. Associated Builders and Contractors of Massachusetts/Rhode Island Inc., 507 U.S. 218, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993) (“Boston Harbor ”). Because the City acted as a market participant and not a regulator in entering the agreements, its actions fall outside the scope of NLRA preemption. We therefore affirm the judgment of the district court.

BACKGROUND

The contracts at issue in this case are project labor agreements (“PLAs”), large-scale contracts common in the construction industry. PLAs typically select a union to represent workers on a project and are often signed before construction begins. Although pre-hire agreements normally violate the National Labor Relations Act's requirement that a collective bargaining representative be selected by a majority vote of workers, see29 U.S.C. § 159(a), Congress created an exception for the construction industry because of the unique conditions of that industry. Construction is characterized by “seasonal work, jobs of brief duration, and employees who typically work for many employers and for none of them continuously.” Building and Construction Trades Department, AFL–CIO Br. at 6 (internal quotation marks and citation omitted). These conditions convinced Congress, as part of the 1959 Landrum–Griffin Act, Pub.L. No. 86–257, to enact special provisions governing the construction industry, which codified and expressly legalized contemporary practice in that industry. See Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645, 652–60, 102 S.Ct. 2071, 72 L.Ed.2d 398 (1982); see also Boston Harbor, 507 U.S. at 230, 113 S.Ct. 1190.

Although public employers such as the City are excluded from the NLRA's coverage, see29 U.S.C. § 152(2), two key provisions of the Landrum–Griffin Act provide important background on the use of prehire agreements in the construction industry. First, the Act added to the NLRA Section 8(f), codified at 29 U.S.C. § 158(f), which permits unions and employers in the construction industry to enter into collective bargaining agreements before the union establishes majority status by vote. Second, the Act amended NLRA Section 8(e), codified at 29 U.S.C. § 158(e), to except the construction industry from the usual prohibition on agreements between an employer and union to refrain from doing business with a third party. The amended Section 8(e) allows unions and employers to agree that only contractors who sign particular contracts, such as a project's PLA, will be permitted to work on a site. Together, Sections 8(e) and 8(f) allow the manager of a construction project to enter into a comprehensive agreement that sets common employment terms to govern the many different trades involved in a construction project. The two provisions help solve the problems otherwise created by the specific conditions in the construction industry, including “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 longstanding custom of prehire bargaining in the industry.” Boston Harbor, 507 U.S. at 231, 113 S.Ct. 1190.

Though large in scope and dollar amount, the PLAs in this case (“City PLAs”) contain terms typical of PLAs. Initially announced in November 2009, they have been estimated to cover about half of the City's construction projects over the five years between 2009 and 2014, and provide that the covered projects will be serviced by contractors recognizing the Building and Construction Trades Council of Greater New York and Vicinity (BCTC) and its affiliates as the sole bargaining representatives for all construction workers on PLA-covered projects. The BCTC is affiliated with Local Union No. 3, International Brotherhood of Electrical Workers, AFL–CIO (“Local 3”), and the PLAs incorporate favorable terms for members of Local 3, which will provide the lion's share of the electrical labor on projects covered by the City PLAs. In addition to the requirement that contractors on PLA-covered projects recognize BCTC affiliates as the collective bargaining representatives for project employees, relevant common terms of the City PLAs include: union security clauses, which require employees on the PLAs to pay dues, or their equivalent, whether or not they join the relevant BCTC-affiliated union; a requirement for any signatory contractor to secure at least 88% of its labor through BCTC affiliates' hiring halls; prohibitions on unions' discriminating in referrals based on union affiliation; requirements that contractors contribute to affiliated union fringe benefit funds; standard work rules and hours; and no-strike clauses and dispute resolution systems. It is undisputed that these terms are not materially different from those in other private and public PLAs. A contractor wishing to obtain work under one of the City PLAs must sign a letter of assent which binds the contractor to the PLA's terms and specifies that where the PLA conflicts with the contractor's collective bargaining agreement (“CBA”), the PLA will govern.

BIECA has a collective bargaining agreement with a different, non-BCTC-affiliated union—Local 363, United Service Workers Union—under which Local 363 has the right to provide labor on BIECA's contracts. This and other terms in BIECA's collective bargaining agreement will make it difficult for BIECA to seek work under the City PLAs. As discussed more fully below, BIECA argues that the PLAs effectively punish BIECA for its bargaining agreement with Local 363. Similarly, UECA has been engaged in an ongoing labor dispute with Local 3, but the PLAs will set the terms under which UECA members can employ Local 3 members on PLA projects. This, UECA argues, improperly interferes with UECA's right to freely negotiate its collective bargaining agreements.1

Plaintiffs BIECA and UECA brought suit in the United States District Court for the Southern District of New York (Robert P. Patterson, J.). They argued principally that the PLAs are preempted by the NLRA, and also asserted related causes of action under federal and state law. Defendants moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and (1). After holding that the PLAs are not preempted, the district court found that the remaining federal claims lacked merit and dismissed them; it then declined to exercise supplemental jurisdiction over the state claims. Building Industry Elec. Contractors Ass'n v. City of New York, No. 10 Civ. 8002, 2011 WL 3427138 (S.D.N.Y. Aug. 5, 2011). This appeal followed.

DISCUSSION

We review de novo the district court's dismissal of an action for failure to state a claim under Rule 12(b)(6), e.g., In re Citigroup ERISA Litig., 662 F.3d 128, 135 (2d Cir.2011), or for lack of jurisdiction under Rule 12(b)(1), see Moore v. PaineWebber, Inc., 189 F.3d 165, 169 n. 3 (2d Cir.1999). Dismissal is appropriate if the complaint fails to state a claim “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In assessing the legal sufficiency of the claim, we must accept factual allegations in the complaint as true and draw all reasonable inferences in favor of the nonmoving party. DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir.2010); see also Citigroup, 662 F.3d at 135. We will consider only the complaint and any documents attached thereto or incorporated by reference and “documents upon which the complaint ‘relies heavily.’ Citigroup, 662 F.3d at 135, quoting DiFolco, 622 F.3d at 111.

Although the complaint asserted five causes of action and the district court dismissed them all, BIECA concedes that the...

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