Opinion ID: 799310
Heading Depth: 2
Heading Rank: 1

Heading: Extracontractual Effect on Union Contractors

Text: First, BIECA argues that as an association of union contractors, as opposed to the nonunion contractor plaintiffs in Boston Harbor, the City PLAs interfere with its right to collectively bargain with union workers. When a PLA requires a nonunion contractor to adopt employment terms contrary to its normal practices, it may simply adopt those terms; by contrast, a union contractor is bound by a collective bargaining agreement that cannot be changed unilaterally or at a moment's notice. The PLA therefore has an extracontractual effect on the union contractor: it must alter the CBA that governs all of its projects in order to do work under the PLAs. In support of this argument, BIECA correctly notes that the market participant exception does not immunize from scrutiny any choice a state makes about expending state funds on state projects. A state cannot use its spending power to regulate labor. For example, in Wisconsin Department of Industry, Labor and Human Relations v. Gould Inc., 475 U.S. 282, 287-88, 106 S.Ct. 1057, 89 L.Ed.2d 223 (1986), the Supreme Court held that the NLRA preempted a state law forbidding the state from doing business with repeat NLRA violators, because the uncontroverted purpose of the law was to deter NLRA violationsthe unique province of the federal government. Similarly, in Chamber of Commerce of United States v. Brown, 554 U.S. 60, 62, 69, 128 S.Ct. 2408, 171 L.Ed.2d 264 (2008), the Court struck down a state law prohibiting recipients of state funds from using that money to to assist, promote, or deter union organizing. The law did not fall within the market participant exception because it was neither `specifically tailored to one particular job' nor a `legitimate response to state procurement constraints or to local economic needs,' id. at 70, 128 S.Ct. 2408, quoting Boston Harbor, 507 U.S. at 232, 113 S.Ct. 1190, and its legislative purpose was not the efficient procurement of goods and services, but the furtherance of a labor policy, id. BIECA may also be correct that a state law or contract with profound effects outside of the state's market interest in the transaction would be preempted. See Healthcare Ass'n, 471 F.3d at 102 ([A] State cannot leverage its money to affect the contractor's protected activity beyond the contractor's dealings with the State.); Cardinal Towing & Auto Repair, Inc. v. City of Bedford, Tex., 180 F.3d 686, 693 (5th Cir.1999) (holding that a state's action is more likely to be proprietary than regulatory when the narrow scope of the challenged action defeat[s] an inference that its primary goal was to encourage a general policy rather than address a specific proprietary problem). [2] But the supposed extracontractual effect of the City PLAs that Appellants point to in this casethe requirement that they renegotiate their CBAsis entirely self-inflicted. BIECA is free to renegotiate its CBA with Local 363 and its other signatory unions. BIECA is equally free to decline work on City PLA projects and continue to work under its existing CBAs on other private projects, or on City projects not covered by the PLAs. BIECA resists this conclusion by analogizing its CBA to the NLRA-violator status of contractors in Gould. It argues that just as the Gould law affected extracontractual NLRA violations, these PLAs affect extracontractual union affiliation decisions. But this argument misses the point of Gould, which centered on regulatory purpose rather than effect. The Gould law did not essentially reflect the entity's own interest in its efficient procurement of needed goods and services. Cardinal Towing, 180 F.3d at 693. Instead, the law represented a policy of discouraging NLRA violations. See Gould, 475 U.S. at 287-88, 106 S.Ct. 1057 (The State concedes, as we think it must, that the point of the statute is to deter labor law violations and to reward fidelity to the law. (internal quotation marks omitted)). The Supreme Court reasonably found that Congress intended such policy decisions to be an exclusively federal matter. Id. at 291, 106 S.Ct. 1057. Moreover, BIECA's extracontractual effect argument is plainly foreclosed by Boston Harbor, decided several years after Gould and factually indistinguishable from this case. The Boston Harbor PLA surely put pressure on the plaintiff contractors' extracontractual decision to employ nonunion workers. But preemption is a matter of Congress's intent, and the Court found it implausible that Congress intended to foreclose that type of so-called extracontractual effect in public sector construction, given that it had expressly ratified identical effects in the private sector by enacting Sections 8(e) and (f). Boston Harbor, 507 U.S. at 230-32, 113 S.Ct. 1190. In sum, we see no reason to distinguish Boston Harbor simply because it dealt with nonunion contractors. We recognize that, as compared to nonunion contractors, it may be more difficult for BIECA's members to comply with the PLAs' terms where those terms differ from their usual practice. But this difference does not alter the market participant analysis. The effects that BIECA complains of are entirely ordinary consequences of PLAs, in private as well as public contracts. Project labor agreements create winners and losers among contractors and labor unions. Congress foresaw and weighed these consequences when it expressly legalized construction industry PLAs. See generally Woelke & Romero Framing, 456 U.S. at 654-60, 102 S.Ct. 2071 (discussing legislative history of § 8(e)'s exception for the construction industry). Or, as explained by then-Chief Judge Breyer of the First Circuit, dissenting from the en banc ruling that the Supreme Court reversed in Boston Harbor, [W]hen the [state], acting in the role of purchaser of construction services, acts just like a private contractor would act, and conditions its purchasing upon the very sort of labor agreement that Congress explicitly authorized and expected frequently to find, it does not regulate the workings of the market forces that Congress expected to find; it exemplifies them. 935 F.2d 345, 361 (1st Cir.1991) (Breyer, C.J., dissenting), quoted in Boston Harbor, 507 U.S. at 233, 113 S.Ct. 1190. [3]