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Idaho Building and Construction Trades Council, Afl-Cio, and v. Lawrence G. Wasden

July 1, 2011

IDAHO BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL-CIO, AND SOUTHWEST IDAHO BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL-CIO
PLAINTIFFS,
v.
LAWRENCE G. WASDEN, IN HIS OFFICIAL CAPACITY AS ATTORNEY GENERAL FOR THE STATE OF IDAHO, DEFENDANT.



The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it a motion for preliminary injunction filed by Plaintiffs Idaho Building and Construction Trades Council, AFL-CIO and Southwest Idaho Building and Construction Trades Council, AFL-CIO (Dkt. 2).

Plaintiffs move the Court for a restraining order and injunction barring Attorney General Lawrence Wasden from implementing and enforcing Idaho Senate Bill 1007, enacted as Idaho Code § 44-2012 and known as the "Fairness in Contracting Act." On July 1, 2011, the statute will become effective. The Fairness in Contracting Act is codified as a portion of the "Right to Work Act," which Congress has expressly exempted from the preemptive effect of federal labor law. But, Plaintiffs argue, the Fairness in Contracting Act has nothing to do with the right to work statute, and instead purports to regulate a form of collective action known as market recovery plans. Plaintiffs contend that the National Labor Relations Act preempts the Fairness in Contracting Act and that its implementation and enforcement will cause irreparable harm to Plaintiffs and the local building trade unions they represent. Defendant Attorney General Lawrence G. Wasden opposes the motion. In addition, the Inland Pacific Chapter of Associated Builders and Contractors, Inc., with leave of Court, filed an amicus curiae brief opposing Plaintiffs' motion for a preliminary injunction.

The Court heard oral argument on June 21, 2011, and took the matter under advisement. For the reasons set forth below, the Court will grant Plaintiffs' motion for a preliminary injunction.

BACKGROUND

Plaintiffs are two building and construction trade councils affiliated with the Building and Construction Trades Department, AFL-CIO. Both trade councils are unincorporated associations comprised of local unions that represent building trade workers throughout southern Idaho. Clay Decl. ¶ 2, Dkt. 2-2; Moore Decl. ¶ 2, Dkt. 2-3. The trade councils exist for the purpose of advancing the interests of building trade unions and their members, advancing generally the union sector of the construction market, and improving working conditions for workers in the building trades. Clay Decl. ¶ 3, Dkt. 2-2; Moore Decl. ¶ 3, Dkt. 2-3.

MEMORANDUM DECISION AND ORDER

Construction industry workers face unique problems in comparison to most private sector workers represented by unions. Most laborers, both skilled and unskilled, are employed by a single employer for a substantial period of time. For this reason, the law does not permit most unions to negotiate a collective bargaining agreement with an employer until the union has demonstrated that it represents a majority of the company's current employees. 29 U.S.C. §159. In contrast, skilled workers in the construction industry may only be hired for a single construction project. Clay Decl. ¶ 6, Dkt. 2-2. To account for this difference, building and construction industry workers are permitted to negotiate "pre-hire" agreements, which apply to all work performed by that employer within the union's geographic jurisdiction. 29 U.S.C. § 158(f). The agreements do not guarantee employment for any particular members but instead provide that if a contractor has work that requires the skilled trade a particular local represents, the contractor will hire the workers through a hiring hall operated by the local. Clay Decl. ¶ 6, Dkt. 2-2.

Because workers represented by building trade unions only secure employment when employers that have signed pre-hire agreement are awarded contracts and subcontracts on a project, building trade unions and their members have a vested interest in encouraging signatory employers to aggressively pursue as many public and private construction contracts and subcontracts as possible. Most large-scale construction contracts are awarded through some form of competitive bidding process. Clay Decl. ¶ 8, Dkt. 2-2. Prospective bidders evaluate the project specifications and estimate their costs to perform the contract. These estimates include an assessment of the cost of skilled and unskilled labor needed to complete the project. Moore Decl. ¶ 5, Dkt. 2-3. To aid signatory employees in this competitive bidding process, building trade unions and their members, including many in Idaho have created "market recovery programs."

Unions began adopting market recovery programs, also known as "job targeting programs," in the early 1980's to enable signatory employers to compete for "targeted" jobs. Typically, unions carry out their market recovery programs by selecting projects to target and guaranteeing subsidies to union contractors who submit successful bids. The purpose of the subsidies is to reduce the unionized contractor's labor costs while allowing the union to maintain its collectively-bargained wage scale on the job and secure additional employment opportunities for its members. Clay Decl. ¶ 3, Dkt. 2-2; Moore Decl. ¶ 3, Dkt. 2-3.

All market recovery programs in Idaho are maintained through voluntary contributions, which are deducted from the gross earnings of workers represented by the unions that operate the programs. Clay Decl. ¶ 11, Dkt. 2-2; Moore Decl. ¶ 5, Dkt. 2-3; Oveson Decl. ¶ 3; White Decl. ¶ 3. In some instances, such contributions are paid directly by union members to the union. Moore Decl. ¶¶ 5, 6. By allocating the contributions among all members, local building trade unions seek to spread the economic concessions over the entire union membership in an equitable fashion. Id.

The Fairness in Contracting Act aims to prohibit three types of conduct by labor organizations and contractors in the competitive bidding process:

 "No contractor or subcontractor may directly or indirectly receive a wage subsidy, bid supplement or rebate on behalf of its employees, or provide the same to its employees, the source of which is wages, dues or assessments collected by or on behalf of any labor organization(s), whether or not labeled as dues or assessments."  "No labor organization may directly or indirectly pay a wage subsidy or wage rebate to its members in order to directly or indirectly subsidize a contractor or subcontractor, the source of which is wages, dues or assessments collected by or on behalf of its members, whether or not labeled as dues or assessments."  "It is illegal to use any fund financed by wages collected by or on behalf of any labor organization(s), whether or not labeled as dues or assessments, to subsidize a contractor or subcontractor doing business in the state of Idaho."

The Act creates two enforcement routes: Misdemeanor liability consisting of fines up to $100,000 depending upon the number of offenses; and a private right of action for any "bidder, offeror, contractor, subcontractor or taxpayer . . . to challenge any bid award, specification, project agreement, controlling document, grant or cooperative agreement" that violates the statute.

Plaintiffs challenge the Act, arguing that it is preempted by the NLRA, and its enforcement will cause irreparable harm to Plaintiffs and the local building trade unions they represent.

ANALYSIS

The United States Supreme Court, in Winter v. Natural Resources Defense Council, Inc., 129 S.Ct. 365, 374 (2008) , clarified the applicable standard for the issuance of a preliminary injunction. A plaintiff seeking a preliminary injunction must establish: (1) that it is likely to succeed on the merits; (2) that it is likely to suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in its favor; and (4) that an injunction is in the public interest. All four elements must be shown, but a stronger showing of one element may offset a weaker showing of another. See, e.g., Alliance for the Wild Rockies v. Cottrell, 622 F.3d 1045, 1052-53 (9th Cir. 2010)

A preliminary injunction is "an extraordinary remedy never awarded as of right." Id. at 376. The standard for issuing a preliminary injunction is identical to that for issuing a temporary restraining order. Lockheed Missile & Space Co., Inc. v. Hughes Aircraft Co., 887 F.Supp. 1320, 1323 (N.D. Cal. 1995).

Here, Plaintiffs have satisfied all four elements necessary for issuance of a ...


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