Can-Am Plumbing, Inc. v. N.L.R.B.

• Decision Date: 28 February 2003
• Docket Number: No. 01-1463.,01-1463.
• Citation: 321 F.3d 145
• Parties: CAN-AM PLUMBING, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 342, AFL-CIO, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

321 F.3d 145

CAN-AM PLUMBING, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 342, AFL-CIO, Intervenor.

No. 01-1463.

United States Court of Appeals, District of Columbia Circuit.

Argued January 23, 2003.

Decided February 28, 2003.

On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

Mark R. Thierman argued the cause for petitioner. With him on the briefs was Michael Avakian.

Joan E. Hoyte-Hayes, Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Arthur F. Rosenfeld, General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong Deputy Associate General Counsel, and Charles Donnelly, Supervisory Attorney.

John L. Anderson argued the cause and filed the brief for intervenor.

Before: GINSBURG, Chief Judge, and ROGERS and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge:

Can-Am Plumbing, Inc. ("Can-Am") petitions for review of the National Labor Relation Board's decision that Can-Am violated sections 7 and 8(a)(1) of the National Labor Relations Act ("the Act"), 29 U.S.C. §§ 157, 158(a)(1) (2000), by filing and maintaining a state court lawsuit concerning a union's job targeting program that was preempted by the Act. Contrary to Can-Am's view, BE & K Construction Co. v. NLRB, 536 U.S. 516, 122 S.Ct. 2390, 153 L.Ed.2d 499 (2002), did not extend the analytical framework of Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 103 S.Ct. 2161, 76 L.Ed.2d 277 (1983), to preempted lawsuits. The Board's determination that the job targeting program was protected by section 7, notwithstanding the fact that it was supported in part by dues unlawfully withheld on federal public works projects under the Davis-Bacon Act, fares less well. The Board's conclusory findings that these moneys did not taint the job targeting program are inadequate to support its determination that the operation of the program as a whole was protected conduct under section 7. Accordingly, we grant Can-Am's petition, deny the Board's cross-petition for enforcement, and remand the case to the Board.

I.

In a complaint filed in the Superior Court of California on October 15, 1996, Can-Am, a nonunion construction contractor, alleged that L. J. Kruse Co., a union competitor, had underbid Can-Am on the Ascend Corporate Campus project, a private project. Can-Am claimed that Kruse's lower bid was the result of an unlawful arrangement between Kruse and the United Association of Journeymen and Apprentices in the Plumbing and Pipefitting Industry of the United States and Canada, Local 342, AFL-CIO ("the Union"). Under the arrangement challenged by Can-Am — commonly called a job targeting program ("JTP") — the Union uses a portion of its members' dues to subsidize Kruse's bids on construction projects in order to compete more effectively with nonunion contractors. The mechanics of the JTP are straightforward. On a particular construction project, a union employer such as Kruse will submit a request to the Union to use the JTP funds, which the Union collects from its members in the form of dues on all of its projects. For a project to be eligible for the JTP, Kruse must face competition from a nonunion contractor for the job. If the Union approves the use of JTP funds, Kruse takes the amount of the subsidy into account in submitting its bid. If Kruse wins the project, it pays the union employees the wages specified in the collective bargaining agreement, and the Union then uses JTP moneys to reimburse Kruse for the difference between the wages under the collective bargaining agreement and those listed in the bid. Can-Am's complaint alleged that Kruse's acceptance of the Union's JTP moneys violates California laws regarding unfair trade practices, prevailing wage levels, and employer kickbacks from employees.

The Union, which was not a party to the lawsuit, responded by filing a charge with the Board that Can-Am's lawsuit violates section 8(a)(1) of the Act because it interferes with protected section 7 rights. The Board's General Counsel issued a complaint against Can-Am, and an Administrative Law Judge ("ALJ") determined after a hearing that Can-Am's state court lawsuit was preempted under the Board's decision in Manno Electric, 321 N.L.R.B. 278, 298, 1996 WL 276357 (1996), enforced mem., 127 F.3d 34 (5th Cir.1997), in which the Board determined that the objectives of JTPs — "to protect employees' jobs and wage scales" — are protected by section 7. The ALJ concluded that "by maintaining and prosecuting" the preempted lawsuit against Kruse for accepting JTP contributions from the Union, Can-Am had "engaged in unfair labor practices affecting commerce within the meaning of Section 8(a)(1)...."

The Board affirmed, rejecting Can-Am's argument that Kingston Constructors, 332 N.L.R.B. No. 161, 2000 WL 1920355 (2000), required a different result. In Kingston, the Board reaffirmed its central holding in Manno Electric that JTPs are clearly protected by section 7, but it further determined that a union may not lawfully support a JTP program with dues exacted from employees working on "Davis-Bacon," or federal prevailing wage, projects. 2000 WL 1920355, at *14. The Board found Kingston to be inapplicable in this case for two reasons. First, the Ascend project was not a Davis-Bacon project, and there was no record evidence that Kruse ever worked on a Davis-Bacon project. Second, the amount of dues unlawfully withheld by the Union was de minimis, because "at most" only two to three percent of the moneys collected for the JTP came from federal or state prevailing wage jobs, and those moneys were not directly traceable to Kruse. Because Can-Am's lawsuit "broadly attack[ed] the entire [JTP] and Kruse's participation in it as unlawful under State law," the Board concluded that it was preempted by the Act from the time it was filed. The Board ordered Can-Am to cease and desist from its unlawful conduct and affirmatively to seek dismissal of the state lawsuit, reimburse Kruse with interest for its expenses, and post copies of a remedial notice. Can-Am now petitions for review, and the Board cross-petitions for enforcement of its order.

II.

Section 8(a)(1) of the Act makes it unlawful for an employer "to interfere with, restrain, or coerce employees in the exercise of rights guaranteed" by section 7 of the Act. 29 U.S.C. § 158(a)(1). Section 7, in turn, protects the rights of employees to engage in union organization and "other concerted activities for the purpose of collective bargaining or other mutual aid or protection...." 29 U.S.C. § 157. In defining the scope of protected activity, the Board must ensure that the concerted activity is linked in some identifiable way to legitimate employee concerns related to employment matters. Eastex, Inc. v. NLRB, 437 U.S. 556, 565-68, 98 S.Ct. 2505, 2512-14, 57 L.Ed.2d 428 (1978). The Act thus protects a wide variety of conduct by employees directed against employers other than their own. 29 U.S.C. § 152(3); Eastex, 437 U.S. at 564, 98 S.Ct. at 2511-12. As determined by the Board, protected employee conduct includes attempts to enhance employment opportunities for unionized employees through programs that lower labor costs for unionized employers. See Manno Elec., 321 NLRB at 298.

Can-Am principally contends that under the doctrine of Bill Johnson's and BE & K Construction, its state court lawsuit against Kruse did not violate section 8(a)(1) because the only motive was to stop a competitor from using illegal funding, whatever its source, to undercut Can-Am's bidding on a major construction project. It further contends that the Union's JTP is not entitled to section 7 protection because it is contrary to public policy. The Board responds that its findings and determinations were reasonable because the JTP falls within the "other mutual aid or protection" clause of section 7; consequently, the lawsuit seeking to dismantle the JTP was not only preempted but also unlawful under section 8(a)(1) because it directly interfered with protected conduct. Can-Am's defense that the Union's JTP is subject to the restrictions of the Davis-Bacon Act and the California Labor Code fails, in the Board's view, because the Ascend project, which involved no federal or state funding, was not subject to those prevailing wage laws, and because the amount of JTP funds originating from public works projects was de minimis.

"Under the Supremacy Clause, U.S. Const. art. VI, cl. 2, state law is preempted when Congress has acted to `occupy the field,' or when state law `stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Washington Serv. Contractors Coalition v. District of Columbia, 54 F.3d 811, 815 (D.C.Cir. 1995) (citations omitted). The form of preemption pertinent here — termed Garmon preemption — arises "[w]hen it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by § 7 of the National Labor Relations Act, or constitute an unfair labor practice under § 8...." San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 244, 79 S.Ct. 773, 779, 3 L.Ed.2d 775 (1959). In such instances, "due regard for the federal enactment requires that state jurisdiction must yield." Id.; see also Brown v. Hotel & Rest. Employees & Bartenders Int'l Union, 468 U.S. 491, 501, 104 S.Ct. 3179, 3185, 82 L.Ed.2d 373 (1984). It is not always clear, however, that the conduct at issue is protected by section 7. Thus, "[w]hen an activity is arguably subject to § 7 or § 8 of the Act, the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national...