Building Trades Employers' Ass'n v. McGowan

• Decision Date: 20 November 2002
• Docket Number: Docket No. 01-7775.
• Citation: 311 F.3d 501
• Parties: BUILDING TRADES EMPLOYERS' EDUCATIONAL ASSOCIATION; Action Electrical Contracting Co., Inc.; Blake Electric Contracting Co., Inc.; Eaton Electric, Inc.; Eugene Iovine, Inc.; Ferrara Electrical Corp.; Gilston Electrical Contracting Corporation; Global Electrical Cont. of Westchester, Inc.; Granna Electric Inc.; Interphase Electric Corp.; Star Brite Electric Corp.; Tap Electrical Contracting Service Inc.; Walton Electrical Construction Corp. and Building Trades Educational Benefit Fund, Plaintiffs-Appellants, v. James J. McGOWAN, Commissioner of Labor of the State of New York and the New York State Department of Labor, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

311 F.3d 501

BUILDING TRADES EMPLOYERS' EDUCATIONAL ASSOCIATION; Action Electrical Contracting Co., Inc.; Blake Electric Contracting Co., Inc.; Eaton Electric, Inc.; Eugene Iovine, Inc.; Ferrara Electrical Corp.; Gilston Electrical Contracting Corporation; Global Electrical Cont. of Westchester, Inc.; Granna Electric Inc.; Interphase Electric Corp.; Star Brite Electric Corp.; Tap Electrical Contracting Service Inc.; Walton Electrical Construction Corp. and Building Trades Educational Benefit Fund, Plaintiffs-Appellants, v. James J. McGOWAN, Commissioner of Labor of the State of New York and the New York State Department of Labor, Defendants-Appellees.

Docket No. 01-7775.

United States Court of Appeals, Second Circuit.

Argued: March 11, 2002.

Decided: November 20, 2002.

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Alan M. Pollack, New York, NY (Felicia S. Ennis, Pollack & Greene, LLP, New York, NY; Steven Goodman, Roger Kaplan, Jackson, Lewis, Schnitzler & Krupman, Woodbury, NY, of counsel), for Plaintiffs-Appellants.

M. Patricia Smith, Assistant Attorney General, Labor Bureau, New York, NY, (Eliot Spitzer, Attorney General of the State of New York, Michael S. Belohlavek, Deputy Solicitor General, New York, NY, of counsel), for Defendants-Appellees.

Before: CARDAMONE, LEVAL, and SOTOMAYOR, Circuit Judges.

CARDAMONE, Circuit Judge.

In this appeal, we consider the impact of two federal labor law doctrines of preemption on the regulatory activities of a state agency. In April 1999 plaintiffs, an association of electrical contractors, its member contractors, and its educational benefit fund filed an application with the defendants, the New York State Department of Labor and its Commissioner (collectively defendant or State Labor Department), for registration of their apprenticeship training program (apprenticeship program or program). Defendant refused to process plaintiffs' application because in its view the application presents a legal question that can only be answered by the National Labor Relations Board (Board). Defendant believes, in other words, that federal labor law preempts it from taking any action at all.

In response to defendant's inaction, plaintiffs filed the instant suit in the United States District Court for the Southern District of New York (Mukasey, C.J.), under the federal Constitution's Supremacy Clause, U.S. Const. art VI, cl. 2, and 42 U.S.C. § 1983, seeking a declaratory judgment that defendant's failure to process plaintiffs' apprenticeship program application unlawfully interferes with plaintiffs' continuing negotiations with their employees' union over a collective bargaining agreement; and also seeking an injunction forcing defendant to process plaintiffs' application; and asking for compensatory and punitive damages, prejudgment interest, and attorneys' fees.

The State Labor Department thought it faced a dilemma in which either choice was not entirely satisfactory: acting will violate one labor law doctrine and failing to act will violate another. Defendant's solution was to take no action. There may be legal problems presented to a party for which sitting on one's hands waiting for nature to take its course is the best solution. This case is not one of them.

BACKGROUND

A. Apprenticeship Training Programs in General

An apprenticeship training program prepares individuals for jobs in certain skilled trades, including the electrical trade, where competence is acquired through hands-on experience, through training and work on the job. See N.Y. Comp.Codes R. & Regs. tit. 12, § 601.3(b), (d)(1). Such programs benefit apprentices and employers alike. Trainees learn needed skills, while employers gain access to a relatively cheap labor pool because apprentices are paid less than experienced journeymen. Taxpayers also benefit indirectly because public works contracts are awarded to the contractor that submits the lowest responsible bid, and contractors can reduce their labor costs by hiring apprentices. Lower labor costs lead to lower responsible bids which in turn lead to savings for the public fisc. New York's public policy officially recognizes the importance of apprenticeship training programs in meeting the state's labor needs and expanding the state's industrial economy. See N.Y. Lab. Law § 810 ("To these ends, it is the declared public policy of the state of New York to develop sound apprenticeship training standards and to encourage industry and labor to institute training programs.").

Pursuant to the National Apprenticeship Act of August 16, 1937, ch. 663, 50 Stat. 664 (codified as amended at 29 U.S.C. §§ 50-50(b)), the federal Department of Labor registers those programs that offer training to apprentices in certain skilled trades provided they meet certain eligibility criteria. See Associated Builders & Contractors, Inc. v. Herman, 166 F.3d 1248, 1251 (D.C.Cir.1999). Federal authority over the registration of a proposed apprenticeship training program in New York has been delegated to defendant New York State Labor Department. See Joint Apprenticeship & Training Council of Local 363, Int'l Bhd. of Teamsters v. N.Y. State Dep't of Labor, 984 F.2d 589, 591-92 (2d Cir.1993); see also 29 C.F.R. § 29.12 (2001) (providing for delegation of authority to qualified state agencies). These training programs do not need to be registered, but registration is desirable because it confers financial benefits. Joint Apprenticeship & Training Council, 984 F.2d at 591-92. According to the parties, only contractors who participate in a registered program may submit bids on certain New York public works contracts. Further, the parties have stipulated that a training program registered in New York is eligible for New York State Apprenticeship Related and Supplementary Instruction Program funding, which defrays up to 50 percent of the costs of an apprenticeship program.

Every program has a sponsor. A sponsor may be a single employer, a group of employers, or a joint committee composed of both labor and management representatives. See N.Y. Comp.Codes R. & Regs. tit. 12, § 601.3(b). Even when the workforce is represented by a labor union, that union need not participate in a training program in which the employer participates; that is, an employer with a unionized workforce is not limited to participating in jointly-sponsored programs. But, according to a state regulation, if a labor union is certified to represent an employer's bargaining unit employees, that union must at least be notified of — and in some cases approve — any program that the employer or employers' group seeks to have registered by the State Labor Department. See id. § 601.4(g). The training program at issue in this case is being sponsored by a group of employers whose employees are represented by a single union, so that union must be notified in some manner.

The dispute before us centers on the permissible interpretations of the state's union notification regulation, § 601.4(g) of Title 12 of New York's Compilation of Codes, Rules & Regulations, which states that

[u]nder a program proposed for registration by an employer or employers' association, where the standards, collective bargaining agreement, or other instrument provides for participation by a union in any manner in the operation of the substantive matters of the apprenticeship program, written acknowledgment by the union of the union agreement or "no objection" by the union to the registration is required. Where no such union participation is provided, the employer or employers' association shall simultaneously furnish to the union local if any, which is the collective bargaining agent of the employees to be trained, a copy of its application for registration and of the apprenticeship program. In addition, upon receipt of the application and apprenticeship program, the commissioner shall promptly send by certified mail to such union local another copy of the application and of the apprenticeship program, together with a notice that union comments will be accepted for 30 days after the date of the agency transmittal.

To paraphrase this regulation, the State Labor Department's union notification process depends on whether there exists any agreement or other instrument that provides for participation by a union in any manner in the operation of the apprenticeship program. If such an instrument exists, then the union must approve the registration of any employer-sponsored program; if no instrument exists, the union only needs to be given an opportunity to comment on the program prior to its registration. In the former case, the union essentially has a veto power over the registration of a program sponsored by the employer.

B. History of Plaintiffs' Labor Relations

In many cases, the existence of an instrument that provides for union participation in a training program is obvious. Often, it takes the form of a collective bargaining agreement between the employer and the union that contains a clause regarding program sponsorship. The issue is complicated in the present case because of the particular status of the relations between the plaintiffs and the labor union representing the electricians and other bargaining unit employees.

With the exception of plaintiff Walton Electrical Construction Corp., all of the plaintiff contractors were members of the United Construction Contractors Association (now known as the United Electrical Contractors Association) (Association), a multi-employer association that engaged in collective bargaining on behalf of the member employers. For years the Association was party to a series of bargaining agreements with Local 363, International Brotherhood of Teamsters, Chauffeurs and Warehousemen (Local 363), the union representing the contractors' electricians and bargaining unit employees. The terms of those agreements provided for joint sponsorship of training programs. Thus, before the state could register any Association-sponsored program, the...