J.A. Croson Co. v. J.A. Guy, Inc.

• Decision Date: 04 October 1996
• Docket Number: 96-LW-3380,95 CA 10
• Parties: J.A. CROSON COMPANY, Plaintiff-Appellant v. J.A. GUY, INC., Defendant-Appellee CASE
• Court: Ohio Court of Appeals

J.A. CROSON COMPANY, Plaintiff-Appellant v. J.A. GUY, INC., Defendant-Appellee

No. 95 CA 10.

96-LW-3380 (4th)

Court of Appeals of Ohio, Fourth District Pickaway

October 4, 1996

COUNSEL FOR APPELLANT: Ronald L. Mason, Thomas M.L. Metzger & Timothy T. Tullis, Emens, Kegler, Brown, Hill & Ritter, L.P.A., 65 East State Street, Suite 1800, Columbus, Ohio 43215.

COUNSEL FOR APPELLEE J.A. GUY, INC.: Felix C. Wade & Edwin L. Skeens Schottenstein, Zox & Dunn, L.P.A., 41 South High Street Columbus, Ohio 43215.

COUNSEL FOR APPELLEE LOCAL 189:^[1] N. Victor Goodman, Orla E. Collier Mark D. Tucker & Rex A. Littrell, Benesch, Friedlander, Coplan & Aronoff, 88 East Broad Street, Suite 900, Columbus, Ohio 43215-3506.

DECISION

ABELE P.J.

This is an appeal from a judgment entered by the Pickaway County Common Pleas Court denying the motion for summary judgment filed by J.A. Croson Company, plaintiff below and appellant here in, and granting the motions for summary judgment filed by J.A. Guy, Inc. and the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, Local No. 189, defendants below and appellees herein.

Appellant assigns the following errors:

FIRST ASSIGNMENT OF ERROR:

"THE TRIAL COURT ERRED IN GRANTING APPELLEES J.A. GUY, INC.'S AND LOCAL 189'S MOTIONS FOR SUMMARY JUDGMENT."

SECOND ASSIGNMENT OF ERROR:

"THE TRIAL COURT ERRED IN OVERRULING APPELLANT J.A. CROSON COMPANY'S CROSS-MOTION FOR SUMMARY JUDGMENT."

THIRD ASSIGNMENT OF ERROR:

"THE TRIAL COURT ERRED IN FAILING TO DETERMINE THAT THE JOB TARGETING DEDUCTION TAKEN FROM EMPLOYEES' WAGES BY APPELLEE J.A. GUY, INC. IS A SPECIAL `ASSESSMENT' PROHIBITED UNDER O.A.C. SECTION 4101:9-4-07."

FOURTH ASSIGNMENT OF ERROR:

"THE TRIAL COURT ERRED IN FAILING TO DETERMINE THAT APPELLEE J.A. GUY, INC. VIOLATED R.C. SECTION 4115.10(D)."

FIFTH ASSIGNMENT OF ERROR:

"THE TRIAL COURT ERRED IN FAILING TO DETERMINE THAT THE JOB TARGETING PROGRAM IN WHICH APPELLEES J.A. GUY, INC. AND LOCAL 189 PARTICIPATE IS CONTRARY TO PUBLIC POLICY."

SIXTH ASSIGNMENT OF ERROR:

"THE TRIAL COURT ERRED IN DETERMINING THAT R.C. SECTION 4115.07 AND O.A.C. SECTION 4101:9-4-07 ARE PREEMPTED BY FEDERAL LAW UNDER SECTION 8 OF THE NATIONAL LABOR RELATIONS ACT UNDER SAN DIEGO BLDG. TRADES COUNCIL V. GARMON, 359 U.S. 236 (1959)."

On June 15, 1993, appellant filed the instant complaint against Appellee J.A. Guy, Inc. pursuant to R.C. Chapter 4115, Ohio's prevailing wage law. In the complaint, appellant alleged that it unsuccessfully bid on two contracts that Appellee J.A. Guy, Inc. won. The contracts were for the construction of the new Pickaway County Jail and for the installation of a water softening system for the jail. Appellant further alleged in pertinent part as follows that relative to those contracts, Appellee J.A. Guy, Inc. entered into an agreement with Appellee Local 189 whereby Appellee J.A. Guy, Inc. would deduct two percent from the workers' wages, pay that two percent to Appellee Local No. 189, and then Appellee Local 189 would return that two percent to Appellee J.A. Guy, Inc. in violation of Ohio's prevailing wage law:

"10. Pursuant to R.C. Section 4115.07, J.A. Guy, Inc. is required to make full payment of the prevailing wage, and is prohibited from making any deduction not specifically permitted by R.C. Chapter 4115 or the regulations promulgated under R.C. Section 4115.12.

11. Ohio Administrative Code (`O.A.C.') Section 4101:9-4-07 allows certain deductions from wages, including deductions to pay regular union initiation fees and membership dues. Pursuant to O.A.C. Section 4101:9-4-07(B)(6), union fines or special assessments are specifically excluded from the list of permissible deductions.

12. Pursuant to an agreement between J.A. Guy, Inc. and Plumbers and Pipefitters Local Union No. 189, J.A. Guy, Inc. deducted 2% of the gross wages paid to its employees on the [construction of the new Pickaway County Jail and the]^[2] Water Softening System for Pickaway County Jail as a `Market Recovery Assessment.'

13. The `Market Recovery Assessment' is an unlawful `special assessment' deduction prohibited by O.A.C. Section 4101:9-4-07(B)(6)."

On July 21, 1993, Appellee J.A. Guy, Inc. filed an answer and third-party complaint against Appellee Local 189. In the answer, Appellee J.A. Guy, Inc. alleged, inter alia, that appellant's claims are preempted by federal law. In the third-party complaint, Appellee J.A. Guy, Inc. alleged that if any violations of R.C. Chapter 4115 occurred, those violations were caused by acts or omissions of Appellee Local 189, including the use it made of union dues remitted by Appellee J.A. Guy, Inc.

On August 10, 1993, Appellee Local 189 answered the third-party complaint. Appellee Local 189 asserted various defenses to the third-party complaint, including the defenses that: (1) the claims in appellant's complaint are preempted by federal law; and (2) Ohio Adm. Code 4101:0-4-07,^[3] to the extent that it is construed as prohibiting deductions of union dues or assessments, is inconsistent with R.C. Chapter 4115.^[4]

On October 19, 1993, Appellee Local 189 filed a motion for summary judgment. In support of the motion, Appellee Local 189 argued that: (1) because R.C. 4115.10(D) expressly permits the deduction of union dues from employee wages, the complaint fails to state a claim upon which relief can be granted; (2) even if appellant has stated a claim upon R.C. 4115.16(A) and (B), appellant's claims are preempted by federal law as explained in San Diego Bldg. Trades Council v. Garmon (1959), 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 [hereinafter Garmon]; and (3) even if appellant's claims are not preempted by federal law, the deduction of dues from employee wages is expressly authorized by the collective bargaining agreement between the parties and by R.C. Chapter 4115 and accompanying regulations.

In a memorandum in support of the motion for summary judgment and in an accompanying affidavit, Appellee Local 189 explained as follows that its "Industry Advancement Program" results in money withheld from employees' paychecks going to the union and then back to the contractor:

"Local 189, with the approval of its membership, has established a program called `The Plumbers and Pipe Fitters Local 189 Industry Advancement Program.' The program was first established in 1988 and is based on similar programs adopted throughout the United States and approved by the National Labor Relations Board. The program is exclusively operated by Local 189. The purpose of the program is to promote the Organized mechanical Construction Industry within the jurisdiction of Local 189 by such means as bid supplements on selected projects and for advertising educational programs, productivity studies and related activities. The essential elements of the Industry Advancement Program are as follows:

a)

Local 189 determines a list of jobs to target. Contractors may request a job to be targeted but are not involved in the actual determination of jobs to be targeted;

b)

Any approved contractor who is either a signatory to the collective bargaining agreement or who agrees to sign a contract with the union may participate in the program;

c)

The program is funded entirely by union dues;

d)

If a grant is approved, the contractor is paid monthly only on the amount of hours actually worked and based on the estimate of hours provided;

e)

There is no agreement to reduce wages or fringes as established in the collective bargaining agreement. Only targeted jobs are provided a subsidy in the form of a grant to specific, approved contractors."

Appellee Local 189 argued that the money deducted from the employees' paychecks was for union dues, not for a special assessment. Appellee Local 189 cited Garmon for the proposition that states may not regulate activities which federal labor law either permits or prohibits, and cited Wisconsin Department of Industry, Labor and Human Relations v. Gould, Inc. (1986), 475 U.S. 282, 106 S.Ct. 1057, 89 L.Ed.2d 223, for the proposition that it is now firmly established that federal labor law has largely displaced state regulation of labor relations. Appellee Local 189 noted that in the National Labor Relations Board (NLRB) Region 9 Director's July 21, 1993 joint decision in International Bhd. of Electrical Workers, AFL-CIO-CLC (Wagner-Smith Company), Case No. 9-CB-8493, The Fred DeBra Co., (Case No. 9-CA-30588), and International Bhd. of Workers, Local 82, AFL-CIO (The Fred B. DeBra Co., Case No. 9-CB-8511), the NLRB Regional Director approved the allocation of union dues to a job-targeting program. Appellee Local 189 quoted from the Region 9 director's July 21, 1993 decision as follows:

"Inasmuch as the job targeting program `deductions' are not an additional assessment, but are merely a reallocation of periodic dues which are uniformly required of members, Local 82 did not violate the Act by securing them through checkoff authorization and the Employer did not engage in any unlawful conduct by effectuating the checkoff."

Appellee Local 189 noted that in International Bhd. of Electrical Workers Local 48, Case No. 36-CB-1299, decided April 22, 1987, Local 48, IBEW (Midway Electric, Bonneville Power), Case No. 36-CB-1302, decided April 28, 1987, the NLRB Region 19 Director reached a similar conclusion with regard to union dues collected for a "Market Recovery Program."

On November 1, 1993, Appellee J.A. Guy, Inc. filed a motion for summary judgment. In a memorandum in support of the motion Appellee J.A. Guy, Inc. argued, inter alia, that it lawfully deducted union dues from the wages it paid to employees. Appellee J.A. Guy, Inc. cited United States Department of Justice opinion 22 LRRM (BNA) 4...