BUILDING AND CONST. TRADES DEPT., AFL-CIO v. Reich

• Decision Date: 23 February 1993
• Docket Number: Civ. A. No. 91-2731.
• Citation: 815 F. Supp. 484
• Parties: BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AFL-CIO, et al., Plaintiffs, v. Robert B. REICH, United States Secretary of Labor, Defendant.
• Court: U.S. District Court — District of Columbia

815 F. Supp. 484

BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AFL-CIO, et al., Plaintiffs, v. Robert B. REICH, United States Secretary of Labor,¹ Defendant.

Civ. A. No. 91-2731.

United States District Court, District of Columbia.

February 23, 1993.

Terry R. Yellig, Martin J. Crane, Sherman, Dunn, Cohen, Leifer & Yellig, Gary L. Lieber, Scott Robins, Schmeltzer, Aptaker & Shepard, P.C., Judith E. Rivlin, Sheet Metal Workers' Intern. Ass'n, Washington, DC, Stephen J. Burton, Felhaber, Larson, Fenlon & Vogt, St. Paul, MN, for plaintiffs.

Sandra M. Schraibman, Raymond M. Larizza, Dept. of Justice, Civ. Div., Washington, DC, for defendant.

Maurice Baskin, Venable, Baetjer, Howard & Civiletti, Washington, DC, for Associated Builders & Contractors, Inc.

MEMORANDUM OPINION

REVERCOMB, District Judge.

Plaintiffs appeal from an adverse decision of the Department of Labor's Wage Appeals Board. Before the Court are cross-motions for summary judgment as well as two miscellaneous motions, a motion by plaintiffs to strike a memorandum filed by the National Right to Work Committee, and a motion to intervene filed by Associated Builders & Contractors, Inc. The motions have been fully briefed, and oral argument was heard on November 25, 1992. For the reasons stated herein, the motion to intervene shall be denied, the motion to strike shall be granted, and summary judgment shall be entered in favor of the defendant.²

I. Background

The Building and Construction Trades Department, AFL-CIO, certain local labor organizations, and certain contractor associations (collectively, the "plaintiffs") challenge an affirmance by the Department of Labor's Wage Appeals Board of "a determination by the Administrator of the Wage and Hour Division that job targeting programs, generally, and International Brotherhood of Electrical Workers Local 595's job targeting program, specifically, violate the Secretary's regulations at 29 C.F.R. Part 3." Building and Construction Trades Unions Job Targeting Programs, Wage App.Bd. Case No. 90-02 (June 13, 1991) hereinafter "WAB Decision".

A. Facts

The material facts are not in dispute.³ Job targeting programs ("JTPs"), alternatively called market recovery programs, are union initiated schemes designed to maintain and improve the unions' share of certain construction markets by subsidizing contractors who bid on targeted projects. See Statement of Material Facts as to Which Pls. Contend There Is No Genuine Issue at ¶¶ 3-4, 8, 13-14 hereinafter Pls.' Statement; Def.'s Statement of Material Facts As to Which There Is No Genuine Issue at ¶ 3 hereinafter Def.'s Statement. These programs reduce labor costs for government contractors operating under terms of a collective bargaining agreement by providing a "wage subsidy" either to the contractor or directly to employees. Pls.' Statement at ¶¶ 17, 19-20, 26, 27-28; Def.'s Statement at ¶¶ 3-4. "These subsidies are financed by payroll deductions authorized by the membership of the union and paid into a fund managed by the union." Def.'s Statement at ¶ 3; see also Pls.' Statement at ¶¶ 5-6, 9. The unions unilaterally decide what jobs to "target" and then determine what wage concessions will be made. Pls.' Statement at ¶¶ 16-18, 24-27; Def.'s Statement at ¶ 3.

B. Statutes and Regulation

Upon review of the Wage Appeals Board, these JTPs were held to violate "the Davis-Bacon prevailing wage rate requirements and the regulations contained at 29 C.F.R. 3.5." WAB Decision at 9.⁴ The relevant language of the Davis-Bacon Act of March 3, 1931, ch. 411, § 1, 46 Stat. 1494, as amended, 40 U.S.C. § 276a(a), is as follows (emphasis added):

The advertised specifications for every contract in excess of $2,000 to which the United States or the District of Columbia is a party, for construction, alteration, and/or repair ... of public buildings or public works ... shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing ...; and every contract based upon these specifications shall contain a stipulation that the contractor or his subcontractor shall pay all mechanics and laborers employed directly upon the cite of the work, unconditionally and not less than once a week, and without subsequent deduction or rebate on any account....

The purpose of this statute is the subject of much literature, but was neatly summarized by the Supreme Court in 1981:

The Act was "designed to protect local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area." House Committee on Education and Labor, Legislative History of the Davis-Bacon Act, 87th Cong., 2d Sess. 1 (Comm. Print 1962) (Legislative History). Passage of the Act was spurred by the economic conditions of the early 1930's, which gave rise to an oversupply of labor and increased the importance of federal building programs, since private construction was limited.... In the words of Representative Bacon, the Act was intended to combat the practice of "certain itinerant, irresponsible contractors, with itinerant, cheap, bootleg labor, who have been going around throughout the country `picking' off a contract here and a contract there." The purpose of the bill was "simply to give local labor and the local contractor a fair opportunity to participate in this building program." 74 Cong.Rec. 6510 (1931).

Universities Research Ass'n, Inc. v. Coutu, 450 U.S. 754, 773-74, 101 S.Ct. 1451, 1463, 67 L.Ed.2d 662 (1981).

Two additional enactments by Congress have authorized the Secretary of Labor to promulgate "reasonable regulations for contractors and subcontractors engaged in the construction, prosecution, completion or repair of public buildings or public works...." Copeland Anti-Kickback Act of June 13, 1934, ch. 482, § 2, 48 Stat. 948, as amended, 40 U.S.C. § 276c; see also Reorganization Plan No. 14 of 1950, 5 U.S.C.App. at 242 (empowering Secretary of Labor to issue regulations to "assure coordination of administration and consistency of enforcement of the labor standards provisions" of numerous laws, including the Davis-Bacon Act and the Copeland Act).

Pursuant to this authority, the Secretary of Labor has issued regulations designed to ensure compliance with the Davis-Bacon Act. The regulation found by the Wage Appeals Board to have been violated by JTPs prohibits payroll deductions "made without application to and approval of the Secretary of Labor" except for, inter alia, "Any deductions to pay regular union initiation fees and membership dues, not including fines or special assessments: Provided, however, That a collective bargaining agreement between the contractor or subcontractor and representatives of its employees provides for such deductions and the deductions are not otherwise prohibited by law." 29 C.F.R. § 3.5(i).

C. Wage Appeals Board Decision

In reaching their decision, each of the three members of the Wage Appeals Board panel wrote separately. Member O'Brien, writing for the majority, concluded that JTPs violate the regulation set forth at 29 C.F.R. § 3.5(i) because the wages withheld under the programs are not "`union dues' as that term is ordinarily understood." WAB Decision at 8. Additionally, relying upon the holding in Communications Workers v. Beck, 487 U.S. 735, 108 S.Ct. 2641, 101 L.Ed.2d 634 (1988), Member O'Brien argued that withholding wages under a JTP is "otherwise prohibited by law" under Section 3.5(i) because the funds collected are "unnecessary to `performing the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues.'" Beck, 487 U.S. at 762-63, 108 S.Ct. at 2657 (quoting Ellis v. Brotherhood of Ry. Clerks, 466 U.S. 435, 448, 104 S.Ct. 1883, 1892, 80 L.Ed.2d 428 (1984)).⁵

Member Peters joined Member O'Brien's conclusion that JTPs violate 29 C.F.R. § 3.5(i) because the wages withheld are not "union dues," but she declined to endorse the discussion of Beck, stating that it was unnecessary to rule on the application of that case to the present one. WAB Decision at 10 (Ruth E. Peters, concurring). Finally, Member Rothman argued that the Wage Appeals Board had reached the right decision, but "for the wrong articulated reasons." WAB Decision at 11 (Stuart Rothman, concurring in part and dissenting in part). Like Member Peters, he saw no need to apply Beck to the present case, but he also concluded that JTPs do not violate 29 C.F.R. § 3.5(i) because they involve, in his opinion, neither dues nor assessments. Rather, they call for payments "not provided for in Section 3.5(i)." WAB Decision at 12. Nonetheless, Member Rothman found that JTPs violate the Davis-Bacon Act directly, because they may create different wage standards within the same locality, which he concluded was an abrogation of the clear purpose of the Act. Id. at 14.

This case is an appeal from the decision of the Wage Appeals Board. As such, this Court considers the Board's decision in light of any charges of legal error or factual insufficiency. Because no material fact is in dispute, the only issue to be resolved involves the single conclusion of the Board receiving the vote of a majority of its members — namely, that the wages withheld under JTPs are not "membership dues" and that those programs, therefore, violate 29 C.F.R. § 3.5(i). This conclusion is considered to be the Secretary's interpretation of the Labor Department's own regulation. See 29 C.F.R. § 7.1(d) (Wage Appeals Board acts as the "authorized representative of the Secretary of Labor" and acts with full and final authority in matters over which it has jurisdiction).

II. Discussion

A. Standard of Review

Resolution of this case on cross-motions for summary judgment must proceed along a two-step analysis. First, the Court must determine whether the Labor Department's interpretation of its own regulation is...