City of Lansing v. Carl Schlegel, Inc.

• Decision Date: 18 September 2003
• Docket Number: Docket No. 238839.
• Citation: 257 Mich. App. 627,669 N.W.2d 315
• Parties: CITY OF LANSING, Respondent-Appellee, v. CARL SCHLEGEL, INC. and Associated Builders and Contractors of Michigan, Charging Parties-Appellants.
• Court: Court of Appeal of Michigan — District of US

669 N.W.2d 315

257 Mich. App. 627

CITY OF LANSING, Respondent-Appellee, v. CARL SCHLEGEL, INC. and Associated Builders and Contractors of Michigan, Charging Parties-Appellants.

Docket No. 238839.

Court of Appeals of Michigan.

Submitted July 9, 2003, at Lansing.

Decided July 24, 2003, at 9:05 a.m.

Released for Publication September 18, 2003.

James D. Smiertka, Lansing City Attorney, and Jack C. Jordan, Chief Deputy City Attorney, Lansing, for the city of Lansing.

Masud, Patterson & Schutter, P.C. (by David John Masud and Kraig M. Schutter), Saginaw, for Carl Schlegel, Inc., and Associated Builders and Contractors of Michigan.

Before NEFF, P.J., and O'CONNELL and FORT HOOD, JJ.

NEFF, P.J.

Charging parties Carl Schlegel, Inc. (Schlegel), and Associated Builders and Contractors of Michigan (ABCM) appeal by right from an order entered by the Michigan Employment Relations Commission (MERC) dismissing their unfair labor practice charge against respondent city of Lansing for lack of subject-matter jurisdiction. We affirm.

I

At issue in this case is whether the public employment relations act (PERA), M.C.L. § 423.201 et seq., governs a claim of unfair labor practice alleged against respondent city on behalf of a private subcontractor working on a municipal construction project. We hold that PERA does not govern the alleged claim, and therefore MERC properly concluded that it lacked subject-matter jurisdiction in this matter.

II

Respondent was engaged in providing the infrastructure for a new plant on the site of a large-scale construction project involving the overhaul of an existing General Motors plant. Schlegel, a nonunion trucking subcontractor, was hired by the project's general contractor, Angelo Iafrate Construction Company (Iafrate), to deliver aggregate to the project site and to haul away waste and recyclables. When hired by respondent, Iafrate was required to abide by a project labor agreement (PLA), which required unionization of all employees involved in the construction project. Similarly, Iafrate required Schlegel to sign the PLA at respondent's behest. Schlegel refused, and Iafrate removed Schlegel from the job. Schlegel and ABCM alleged that respondent violated PERA by requiring Schlegel to sign the PLA. MERC held it did not have subject-matter jurisdiction to hear Schlegel's charges that respondent violated M.C.L. § 423.210(1)(b) and (c) of PERA, because PERA grants MERC jurisdiction over disputes between public employers and their employees; whereas Schlegel was a private employer asserting the rights of its employees to be free to choose whether to join a union.

III

MERC decisions "are reviewed on appeal pursuant to Const. 1963, art. 6, §28, and M.C.L. § 423.216(e)...." Grandville Muni. Executive Ass'n v. Grandville, 453 Mich. 428, 436, 553 N.W.2d 917 (1996). MERC's findings of fact "are conclusive if they are supported by competent, material, and substantial evidence on the record considered as a whole." Id. "This evidentiary standard is equal to `the amount of evidence that a reasonable mind would accept as sufficient to support a conclusion. While it consists of more than a scintilla of evidence, it may be substantially less than a preponderance.'" St. Clair Co. Ed. Ass'n v. St. Clair Co. Intermediate School Dist., 245 Mich.App. 498, 512-513, 630 N.W.2d 909 (2001), quoting In re Payne, 444 Mich. 679, 692, 514 N.W.2d 121 (1994). Legal conclusions made by MERC "may not be disturbed unless they violate a constitutional or statutory provision or they are based on a substantial and material error of law." Grandville Muni. Executive Ass'n, supra at 436, 553 N.W.2d 917. MERC must "give due deference to the review conducted by the referee, in particular with respect to the findings of credibility." Detroit v. Detroit Fire Fighters Ass'n, Local 344, IAFF, 204 Mich.App. 541, 554, 517 N.W.2d 240 (1994).

On appeal, Schlegel and the ABCM first argue that MERC erred by deciding it lacked subject-matter jurisdiction to hear the instant matter. "The PERA governs public sector labor law...." Kent Co. Deputy Sheriffs' Ass'n v. Kent Co. Sheriff, 238 Mich.App. 310, 313, 605 N.W.2d 363 (1999), aff'd in part 463 Mich. 353, 616 N.W.2d 677 (2000), citing Rockwell v. Crestwood School Dist. Bd. of Ed., 393 Mich. 616, 629, 227 N.W.2d 736 (1975). "The MERC is the sole state agency charged with the interpretation and enforcement of this highly specialized and politically sensitive field of law." Id.

As Schlegel and the ABCM note, under Bldg. & Constr. Trades Council, Metro. Dist. v. Associated Builders & Contractors of Mass/RI, Inc., 507 U.S. 218, 231-233, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993) (Boston Harbor), public employers are not prohibited, by principles of preemption under the National Labor Relations Act (NLRA), 29 U.S.C. 151 et seq., from entering into PLAs when they are purchasing services in the private sector. Therefore, Schlegel and ABCM argue, each state must determine whether the enforcement of PLAs by public employers otherwise violates state law, and because MERC has exclusive jurisdiction to decide all matters under PERA, it erred in failing to exercise its jurisdiction to decide the merits of the instant allegation of unfair labor practices under M.C.L. § 423.210 of PERA.

However, PERA addresses the bargaining rights and privileges of public employees, using the term "public employee" to distinguish those individuals covered under PERA from private employees. Hillsdale Community Schools v. Labor Mediation Bd., 24 Mich.App.36, 40-41, 179 N.W.2d 661 (1970). PERA, M.C.L. § 423.201(1)(e), defines a "public employee" as

a person holding a position by appointment or employment in the government of this state, in the government of 1 or more of the political subdivisions of this state, in the public school service, in a public or special district, in the service of an authority, commission, or board, or in any other branch of the public service, subject to the following exceptions:

(i) Beginning March 31, 1997, a person employed by a private organization or entity that provides services under a time-limited contract with the state or a political subdivision of the state is not an employee of the state or that political subdivision, and is not a public employee.¹

Here, respondent was not Schlegel's employer; rather, Iafrate hired Schlegel. Thus, Schlegel was not a public employee under PERA, a fact conceded by Schlegel on appeal. MCL 423.201(1)(e)(i). PERA does not similarly address the rights and privileges of private employees or define a "private employee." As MERC noted in its decision, the legislative history² indicates that subsection 1(e)(i) was enacted³ to further define the limits of PERA's coverage, i.e., to public employees, and to explicitly exclude from coverage workers hired by private entities that contract with the state. Senate Fiscal Agency Bill Analysis, SB 1015, January 30, 1997.

The legislative analysis sets forth the rationale for the amendment:

The public employment relations Act provides a framework establishing the rights and privileges of public employees. In doing so, the Act also provides a definition of who is a public, as opposed to a private, employee....

Attempts to unionize generally are protected under State law if the employees are public employees, or under Federal law for private employees. [Id. at p. 1.]

As MERC correctly noted in its decision, the amendment of PERA was sought because "the State had been named as an employer in a number of cases involving attempts to form a union by employees of private companies that had contracted with the Michigan Department of Community Health to run community mental health homes." See, e.g., AFSCME v. Dep't of Mental Health, 215 Mich.App. 1, 3-5, 545 N.W.2d 363 (1996) (vacating a MERC decision finding that group home employees of contractors with funding ties to the Department of Mental Health were covered under the bargaining provisions of PERA, as joint employees of the department and the contractors). Although the National Labor Relations Board had assumed jurisdiction in some cases, it had not always done so. Senate Fiscal Agency Bill Analysis, SB 1015, January 30, 1997, p. 1. Thus, the amendment would prevent the state from being drawn into collective bargaining with the many private sector employees who work for contractors doing business with the state. Id. We find no substantial or material error of law in MERC's conclusion that PERA's definition of "public employee" does not cover the employees of Schlegel.

Schlegel and the ABCM further argue, in essence, that the use of prehire agreements and PLAs was unlawful before the 1959 amendments to the NLRA, which created the exceptions set forth in 29 USC 158(e) and (f), and because PERA did not adopt exceptions similar to those added to the NLRA, the use of the PLA in this case is unlawful under PERA. They further contend that respondent's use of the PLA violates public policy underlying PERA in that "public employers under the PERA are absolutely prohibited from providing any form of assistance to any unions absent specific, statutory authorization." We find no substantial or material error of law in MERC's rejection of this argument.

MERC found it equally plausible that the Legislature saw no reason to add similar exceptions to PERA because they were not relevant to public employment. Contrary to Schlegel and ABCM's argument, we disagree that precedent from the federal system demonstrates the illegality of a public employer's use of PLAs under state law. See Ohio State Bldg. & Constr. Trades Council v. Cuyahoga Co. Bd. of Comm'rs, 98 Ohio St.3d 214, 217-220, 781 N.E.2d 951 (2002), which discussed the history and context of the adoption of the exceptions in subsections 158(e) and (f). In that case, the Court noted that "the construction-industry proviso to Section 8(e) was inserted to ensure that agreements limiting the contracting of construction site...