In The Building Industry Electrical Contractors Association v. The City of New York, 2012 U.S. App. Lexis 9160, 193 L.R.R.M. 2177, The Second Circuit recently upheld the dismissal of an action brought on by two contractor associations, challenging the validity of a Project Labor Agreement (“PLA”) entered between the City of New York and the Building and Construction Trades Council of Greater New York and Vicinity (“BCTC”).
The PLA at issue is estimated to cover about half of all City of New York construction projects between 2009 and 2014 and provided for the BCTC and its affiliates to be the sole bargaining representative for all construction workers on PLA-covered projects. The BCTC is affiliated with Local Union No. 3, International Brotherhood of Electrical Workers, AFL–CIO (“Local 3”). The Building Industry Electrical Contractors Association (“BIECA”) and United Electrical Contractors Association (“UECA”) filed suit, claiming that the PLA regulated the labor market and was therefore preempted by the federal National Labor Relations Act (the “NLRA”). BIECA and UECA argued that the State cannot regulate activity that the NLRA protects or prohibit. It is argued that the PLA interferes with BIECA and UECA’s rights and ability to collectively bargain for its union members.
The Court looked at the case Building and Construction Trades Council of Metropolitan District v. Associated Builders and Contractors of Massachusetts/Rhode Island Inc., 507 U.S. 218 (1993) (“Boston Harbor ”) and found it to be virtually indistinguishable. In Boston Harbor, contractors who did not use union labor challenged a project labor agreement covering public works and environmental projects to clean up Boston Harbor worth $6.1 billion over ten years. 507 U.S. at 221–23. In analyzing Boston Harbor, the Court stated:
The nonunion contractor plaintiffs argued that the PLA was preempted by, among other statutes, the NLRA. However, the 1959 amendments to the NLRA, Sections 8(e) and 8(f), indisputably permitted private parties to enter into prehire agreements with the same restrictions and effects on nonunion contractors. Id. at 230. The Court noted that the amendments authorizing PLAs were enacted to accommodate the specific needs of the construction industry. Id. at 231. The Court found “no reason to expect [the] defining features of the construction industry to depend upon the public or private nature of the entity purchasing contracting services.” Id. Therefore, the Court concluded that Congress could not have intended to forbid public entities from entering precisely the same agreements that a private developer could. Id. at 231–32. Because the state agency was acting precisely as a private developer would to efficiently obtain services for its construction projects, the Court held that preemption was simply inapplicable—the state was purchasing, not regulating. See id. at 232–33 (“There is no question but that [the state agency] was attempting to ensure an efficient project that would be completed as quickly and effectively as possible at the lowest cost.”).
The Second Circuit clearly recognized the dividing line between when the State acts as a regulator, and when the State acts as an end-user. Accordingly, the Second Circuit held that the PLA was not preempted by the NLRA, and upheld the dismissal of BIECA and UECA’s claim.