J.A. Croson Co. v. J.A. Guy, Inc.
| Decision Date | 08 April 1998 |
| Docket Number | 97-14,Nos. 96-2578,s. 96-2578 |
| Citation | 81 Ohio St.3d 346,691 N.E.2d 655 |
| Parties | , 158 L.R.R.M. (BNA) 2012 J.A. CROSON COMPANY, Appellee, v. J.A. GUY, INC. et al., Appellants. |
| Court | Ohio Supreme Court |
SYLLABUS BY THE COURT
Section 7 of the National Labor Relations Act preempts state regulation under Ohio Adm.Code 4101:9-4-07(B)(6) and R.C. 4115.10(D) to the extent that those provisions could be construed to restrain or inhibit the federally protected use of job targeting programs.
This action arises out of a claim by J.A. Croson Company ("J.A. Croson") that the successful bidder on two public improvement projects, J.A. Guy, Inc. ("J.A. Guy"), violated Ohio prevailing wage law by cooperating with the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 189 ("Local 189") with respect to a "job targeting" program.
J.A. Guy placed successful bids on two public improvement projects, one involving plumbing for a new Following completion of the jail project, it became necessary to install a water softening system. J.A. Guy bid on and received the construction contract for the water softening project. Local 189 did not target the water softening project Pursuant to R.C. 4115.16(B), J.A. Croson, an unsuccessful bidder on both the jail project and the water softening project, filed a complaint in common pleas court alleging that J.A. Guy had violated Ohio's prevailing wage law. Specifically, the complaint alleged that J.A. Guy made a "special assessment" prohibited by Ohio Adm.Code 4101:9-4-07(B)(6) when it withheld two percent of employee gross earnings on both the jail and water softening projects for placement in the Industry Advancement Program Fund under the dues checkoff clause of its collective bargaining agreement with Local 189. Additionally, as the issues developed, J.A. Croson argued that J.A. Guy had violated the antikickback provision of Ohio's prevailing wage law (R.C. 4115.10[D] ) by receiving job targeting grants from the union.
jail in Pickaway County and the other, following completion of the jail project, involving construction of a water softening system for the jail. Before submitting its bid on the jail project, J.A. Guy made a request to Local 189 that the union "target" the jail project by permitting any successful bidder on the project that was also a signatory to a collective bargaining agreement with Local 189 to participate in the Plumbers and Pipe Fitters Local 189 Industry Advancement Program ("Industry Advancement Program"). Local 189 agreed to target the jail project and informed union contractors bidding on the project that, under its Industry Advancement Program, it would pay the successful bidder a $9 grant per man-hour worked by Local 189 members on the project. J.A. Guy calculated its bid accordingly and submitted the lowest bid on the jail project and, consequently, did not pay J.A. Guy any funds under its Industry Advancement Program for the project.
J.A. Guy made Local 189 a third-party defendant to the action, asserting that all employee wage deductions under the collective bargaining agreement were remitted to Local 189 and, therefore, any use of those sums in violation of the prevailing wage law was caused by the union's acts or omissions. J.A. Guy, Local 189, and J.A. Croson all moved for summary judgment on the basis of their respective claims and defenses.
The trial court concluded that, pursuant to San Diego Bldg. Trades Council v. Garmon (1959), 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775, federal law preempted J.A. Croson's state claims and granted summary judgment in favor of J.A. Guy and Local 189. On appeal, the Pickaway County Court of Appeals reversed the trial court decision, holding federal preemption inapplicable.
The Pickaway County Court of Appeals certified to this court a conflict between its judgment and the judgments of the Hamilton and Madison County Courts of Appeals in Indep. Electrical Contrs. of Greater Cincinnati, Inc. v. Hamilton Cty. Div. of Pub. Works (1995), 101 Ohio App.3d 580, 656 N.E.2d 18, and J.A. Croson Co. v. Cent. Ohio Joint Vocational School Dist. (1995), 104 Ohio App.3d 146, 661 N.E.2d 250. Upon consideration of the certified issue and contemporaneous discretionary appeals filed by J.A. Guy and Local 189, we determined that a conflict exists, accepted the discretionary appeals, and directed the parties to brief the following issue:
"Whether federal labor law preempts a claim that a union employer's deduction of union dues for a union 'Industry Advancement' or 'job targeting' fund violates Ohio's Prevailing Wage Law, R.C. 4115.01 et seq., and state regulations adopted thereunder."
The cause is now before this court for consideration of the discretionary appeals and resolution of the certified conflict.
Kegler, Brown, Hill & Ritter, Ronald L. Mason and Thomas M.L. Metzger, Columbus, for appellee.
Schottenstein, Zox & Dunn, Felix C. Wade and Edwin L. Skeens, Columbus, for appellant J.A. Guy, Inc.
Benesch, Friedlander, Coplan & Aronoff, L.L.P., N. Victor Goodman, Mark D. Tucker and Rex A. Littrell, Columbus, for appellant Local 189.
Betty D. Montgomery, Attorney General, Michael D. Allen and Daniel P. Jones, Assistant Attorneys General, urging affirmance for amicus curiae, Ohio Bureau of Employment Services.
Venable, Baetjer, Howard & Civiletti, L.L.P., Maurice Baskin and Paul A. Debolt, Washington, DC, urging affirmance for amicus curiae, Associated Builders and Contractors, Inc.
Sherman, Dunn, Cohen, Leifer & Yellig, P.C., Terry R. Yellig and Jonathan D. Newman, Washington, DC, urging reversal for amicus curiae, the Building and Construction Trades Department, AFL-CIO, and the Ohio State Building and Construction Trades Council, AFL-CIO.
Schmeltzer, Aptaker & Shepard, P.C., Robert L. Duston and Gary L. Lieber, Washington, DC, urging reversal for amicus curiae, National Electrical Contractors Association and National Electrical Contractors Association, Ohio Conference.
Bricker & Eckler and Luther L. Liggett, Jr., Columbus, urging reversal for amicus curiae, Ohio Mechanical Contracting Industry.
The legal dispute in this case centers on Local 189's use of a job targeting program. Job targeting is a strategy employed nationwide by construction unions, with the cooperation of unionized contractors, in response to declining union membership and the expanding market penetration of nonunion construction. See Northup & White, Subsidizing Contractors to Gain Employment; Construction Union "Job Targeting" (1996), 17 Berkeley J. Employment & Labor L. 62. The aim of job targeting programs is clear: unions want union contractors to bid successfully on construction projects so that the jobs created by those projects will go to union members. Typically, unions carry out their job targeting programs by selecting projects to target and guaranteeing subsidies to union contractors that submit successful bids. The result is to lower union Local 189 carries on job targeting through its Industry Advancement Program. The union pays its grants to unionized contractors on targeted jobs from a fund specifically created for the program. The fund is maintained through union members' voluntary contributions, which are deducted from employee gross earnings at a rate of two percent and remitted to Local 189 pursuant to the dues checkoff clause of the union's collective bargaining agreements with its unionized contractors. The collective bargaining agreements label the two percent deduction as a "Market Recovery Assessment" and state that the assessment is additional to the 1 3/4 percent deduction for regular checkoff dues. The Market Recovery Assessment is subject to the periodic approval of union members.
contractors' overall costs required to complete targeted projects, enabling[691 N.E.2d 659] union contractors to submit competitive bids.
Accordingly, whether working on a targeted job or not, Local 189 union members have two percent of their gross earnings deducted and remitted to the union for placement in the Industry Advancement Program fund. The union chooses which jobs to target. A unionized contractor may request that the union target a particular job, but the ultimate decision of whether to target a job and how much to pay in grants is made by Local 189 officials.
The prevailing wage statutes, R.C. 4115.03 through R.C. 4115.16, require contractors and subcontractors for public improvement projects to pay laborers and mechanics the so-called prevailing wage in the locality where the project is to be performed. "[T]he primary purpose of the prevailing wage law is to support the integrity of the collective bargaining process by preventing the undercutting of employee wages in the private construction sector." (Plurality opinion.) State ex rel. Evans v. Moore (1982), 69 Ohio St.2d 88, 91, 23 O.O.3d 145, 147, 431 N.E.2d 311, 313.
Two prevailing wage provisions are at issue. The first is Ohio Adm.Code 4101:9-4-07, a regulation that was adopted by the Administrator of the Bureau of Employment Services pursuant to R.C. 4115.12. Ohio Adm.Code 4101:9-4-07(B)(6) makes it a violation of R.C. 4115.07 to deduct union fines or special assessments from employee wages. 1 J.A. Croson seeks to demonstrate that the The second provision at issue is R.C. 4115.10(D), which prohibits any person from demanding, requesting, or receiving any part of a worker's wages upon the statement, representation, or understanding that failure to comply with such demand or request will prevent the worker from procuring or retaining employment. 2 The statute contains an exception for any agent or representative of a labor organization acting in the collection of dues or assessments of that organization. J.A. Croson seeks to demonstrate that J.A. Guy's receipt of job targeting funds violates R.C. 4115.10(D).
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