Mich. Bldg. & Constr. Trades Council v. Snyder

• Decision Date: 29 February 2012
• Docket Number: Case No. 11–13520.
• Citation: 846 F.Supp.2d 766
• Parties: MICHIGAN BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL–CIO, and Genesee, Lapeer, Shiawassee Building and Construction Trades Council, AFL–CIO, Plaintiffs, v. Richard SNYDER, Governor of the State of Michigan, in his official capacity, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

846 F.Supp.2d 766

MICHIGAN BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL–CIO, and Genesee, Lapeer, Shiawassee Building and Construction Trades Council, AFL–CIO, Plaintiffs,

v.Richard SNYDER, Governor of the State of Michigan, in his official capacity, Defendant.

Case No. 11–13520.

United States District Court,

E.D. Michigan,

Southern Division.

Feb. 29, 2012.

Preempted

M.C.L.A. §§ 408.871, 408.873, 408.875, 408.877, 408.879, 408.881, 408.883.

John R. Canzano, Klimist, McKnight, Southfield, MI, for Plaintiffs.

Dennis J. Raterink, Susan Przekop–Shaw, MI Dept. of Attorney General, Danila V. Artaev, Lansing, MI, for Defendant.

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

VICTORIA A. ROBERTS, District Judge.

I. INTRODUCTION

Before the Court is a challenge to the “Michigan Fair and Open Competition in Governmental Construction Act,” 2011 Mich. Pub. Acts 98, M.C.L. § 408.871, et seq. (the “Act”). On October 21, 2011, Michigan Governor Richard Snyder (“Defendant”) filed a motion to dismiss the Amended Complaint, asserting that Plaintiffs lack standing to challenge the Act, and that the Act does not violate federal rights.

On January 4, 2012, the Court held a hearing on Governor Snyder's motion to dismiss. At the hearing, both sides agreed that the Court could render a decision on the merits, and that there was no need for discovery. Further, both parties agreed there were no factual disputes that needed to be resolved. With the consent of the parties, the Court entered an order that same day converting the motion to dismiss into cross–motions for summary judgment under Fed.R.Civ.P. 56.

The parties filed supplemental briefs in support of summary judgment. Prior briefing in connection with Governor Snyder's motion to dismiss was incorporated. The matter is fully briefed and ready for a decision on the merits.

The Court finds that there is no genuine issue of material fact; judgment should enter in favor of Plaintiffs as a matter of law. Plaintiffs' motion for summary judgment is GRANTED. Defendant's motion for summary judgment is DENIED.

II. BACKGROUND

Michigan Building and Construction Trades Council, AFL–CIO, and Genesee, Lapeer, Shiawassee Building and Construction Trades Council, AFL–CIO (collectively “Plaintiffs”), brought suit against Defendant under the Declaratory Judgment Act, 28 U.S.C. §§ 2201–02, and the Civil Rights Act of 1871, 42 U.S.C. § 1983. Plaintiffs seek a declaratory judgment that the Act: (1) is preempted by the Supremacy Clause of the United States Constitution, art. VI, cl. 2, and the National Labor Relations Act, 29 U.S.C. § 151 et seq. (“NLRA”); (2) violates Plaintiffs' rights under the NLRA, and (3) substantially and severely impairs the obligations of contracts to which Plaintiffs are parties in violation of the Contracts Clause of the Constitution, art. I, § 10, cl. 1. In addition to a declaratory judgment that the Act is unenforceable, Plaintiffs seek an order permanently enjoining its enforcement.

A. The Michigan Fair and Open Competition in Governmental Construction Act

On July 19, 2011, Governor Snyder signed into law the Michigan Fair and Open Competition in Governmental Construction Act, 2011 Mich. Pub. Acts 98. The Act controls the types of terms that the State or other “governmental units,” such as cities, towns, counties, school districts, and others, may use in contracts for the construction, repair, or remodeling of government facilities. The key operative provision of the Act, Section 5, states:

A governmental unit shall not enter into or expend funds under a contract for the construction, repair, remodeling, or demolition of a facility if the contract or subcontract under the contract contains any of the following:

(a) A term that requires, prohibits, encourages, or discourages bidders, contractors, or subcontractors from entering into or adhering to agreements with a collective bargaining organization relating to the construction project or other related construction projects.

(b) A term that discriminates against bidders, contractors, or subcontractors based on the status as a party or nonparty to, or the willingness or refusal to enter into, an agreement with a collective bargaining organization relating to the construction project or other related construction projects. M.C.L. § 408.875.

Section 7 of the Act prohibits the State and all governmental units from awarding a grant, tax abatement, or tax credit conditioned upon a requirement that an awardee include a term described in Section 5(a) or 5(b). Id.§ 408.877. Section 9 prohibits a governmental unit, or any construction entity acting on behalf of a governmental unit, from placing any of the terms described in Section 5 in bid specifications, project agreements, or other controlling documents relating to the construction, repair, remodeling, or demolition of a facility. Id.§ 408.879.

Sections 11 and 13 limit the scope of the Act. Section 11(b) states that the requirements of the Act do not “[a]pply to construction contracts executed before the effective date of this act.” M.C.L. § 408.881. Section 13 acts as a savings clause, dictating that the Act be construed so as not to interfere with rights protected under the NLRA. Id.§ 408.883. It reads:

Sec. 13. This act does not do either of the following:

(a) Prohibit employers or other parties from entering into agreements or engaging in any other activity protected by the national labor relations act, 29 USC 151 to 169.

(b) Interfere with labor relations of parties that are protected under the national labor relations act, 29 USC 151 to 169.

B. What is a Project Labor Agreement (PLA)?

Of particular interest is the effect the Act has upon a particular type of collective bargaining agreement common in the construction industry, so-called project labor agreements, or PLAs. A PLA is a “pre-hire agreement between a construction project owner and a union or unions that a contractor must agree to before accepting work on the project and that establishes the terms and conditions of employment for the project.” Johnson v. Rancho Santiago Comm. College Dist., 623 F.3d 1011, 1017 n. 1 (9th Cir.2010). It sets the terms and conditions of employment for all contractors, subcontractors, and all construction workers who will operate at a job site for the duration of the project. Lynch Decl. ¶ 5. Among the terms often included in PLAs are no-strike clauses, grievance procedures, and resolution of jurisdictional disputes. Id.

A PLA requires all contractors and subcontractors who perform work on a project to agree to adhere to its terms. Often, the requirement that a winning bidder on a project agree to adhere to a PLA is incorporateddirectly into the bid specifications. See, e.g., Associated Gen. Contractors v. Metro. Water Dist. of S. Cal., 159 F.3d 1178, 1180 (9th Cir.1998) (“Of course, the PLAs would not have much efficacy if they did not bind the contractors and subcontractors who work on the projects. Thus, the bid specifications for the projects require all contractors and subcontractors to agree to the terms of the PLAs.”). In addition, the PLA itself will usually have a term requiring all contractors and subcontractors to agree to enter into or adhere to it before beginning work. See, e.g., Rancho Santiago, 623 F.3d at 1016 (PLA required “that all contractors and subcontractors working on covered projects agree to the project labor agreement and to the master labor agreement negotiated by the union for each craft.”). In describing the comprehensive nature of PLAs, one court opined that they “effectively unionize[ ] an entire construction project because all union and non-union contractors must comply with certain union protocol and procedure.” Central Iowa Bldg. and Const. Trades Council, AFL–CIO v. Branstad, No. 11–00202, 2011 WL 4004652 at *1 (S.D.Iowa, Sept. 7, 2011).

A PLA can come into effect on a given construction project through several different scenarios. See Lynch Decl. ¶¶ 6–9; Pls.' Suppl. Br. re: Def's Mot. to Dis., Doc. 19. In one scenario, a union building trades council (such as one of the Plaintiffs here) negotiates and enters into a PLA covering a particular project with a construction manager, who acts as agent to the owner. Then, the owner incorporates a requirement into the bid specifications that successful bidders agree to adhere to or enter into the PLA. This is the scenario described in the seminal Boston Harbor case. See Bldg. and Const. Trades Council of the Metro. Dist. v. Associated Bldrs. and Contractors of Mass./R.I. Inc., 507 U.S. 218, 221–22, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993) (“Boston Harbor”). In a related scenario, trades councils negotiate a PLA directly with an owner, who subsequently incorporates the PLA requirement into the bidding specifications. See, e.g., Ohio St. Bldg. & Constr. Trades Council v. Cuyahoga Cnty. Brd. of Commis, 98 Ohio St.3d 214, 781 N.E.2d 951, 953 (Ohio 2002). Another possibility is that a public entity may directly negotiate a PLA with trades councils covering a series of projects over a fixed time period. See, e.g. Rancho Santiago, 623 F.3d at 1016–18. Lastly, if an owner decides to use a general contractor, the general contractor may independently negotiate a PLA with trades councils either before or after being awarded the work.

C. The Michigan Act's Effect on Plaintiffs' PLAs

Plaintiffs say the Act prohibits all of these scenarios. In addition, Plaintiffs say the Act impacts their ability to enforce already-consummated PLAs on public works projects. Plaintiffs labeled the Act the “Anti–PLA Act” in their briefs.

Plaintiffs say the Act had a direct and immediate effect on at least three PLAs they had already consummated or were in the process of negotiating. First, the Genesee, Lapeer, Shiawassee Building and Construction Trade Council (“GLS”) is party to a PLA with the Flint Mass Transportation Authority (“MTA”) negotiated in early 2011. Lynch...