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Building v. the City of New York and the Building and

August 5, 2011

BUILDING INDUSTRY ELECTRICAL CONTRACTORS ASSOCIATION AND THE UNITED ELECTRICAL CONTRACTORS ASSOCIATION, PLAINTIFFS,
v.
THE CITY OF NEW YORK AND THE BUILDING AND CONSTRUCTION TRADES COUNCIL OF GREATER NEW YORK, DEFENDANTS.



The opinion of the court was delivered by: Robert P. Patterson, Jr., U.S.D.J.

OPINION AND ORDER

On December 13, 2010, Defendant the Building and Construction Trades Council of Greater New York and Vicinity ("BCTC") moved to dismiss Plaintiffs' complaint in its entirety pursuant to Rule 12(b)(6) and 12(b)(1) of the Federal Rules of Civil Procedure. On December 23, 2010, Defendant the City of New York similarly moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and (b)(6), or, in the alternative, for summary judgment under Rule 56. On March 4, 2011, Plaintiffs filed a joint brief in opposition to these motions along with a motion to amend their complaint. On April 15, 2011, the Defendants filed reply briefs in support. Oral argument was held on June 1, 2011.

BACKGROUND

I. The Parties

Plaintiff the Building Industry Electrical Contractors Association ("BIECA") is a trade association of twenty-seven contractors, of which 16 perform publicly financed projects for the city. (Pls.' Mem. in Opp. at 2.) "The object and purpose of BIECA is . . .

to further the interests of its members and those in any way related to the construction industry, to do anything necessary, suitable and proper, including the institution of legal proceedings, consistent with the public interest as well as the interest of this industry and trade, to bargain collectively for the members of this association and to strive to secure labor peace and tranquility in the construction industry." (Id.)

BIECA, on behalf of its member contractors, has entered into a collective bargaining agreement ("CBA") with Local 363 United Electrical Workers of America, IUJAT ("Local 363"). (Id.) The pertinent sections of the CBA between BIECA and Local 363 are:

1. Article I requires BIECA and its contractors to recognize Local 363 as the "sole and exclusive bargaining representative of all of the electrical workers who are or may hereinafter become employed" by any BIECA contractor.

2. Article 2 requires all employees, who are employed by BIECA contractors, to become members of Local 363 by paying dues and initiation fees.

3. Article 25 requires all contractors that participate in the BIECA to contribute to the Building Trades Welfare Fund, Building Trades Annuity Fund, The Building Trades Educational Benefit Fund, and the Electrician's Retirement Fund (collectively the "Building Trades Funds"), as well as the United Service Workers Union Security Fund, on behalf of their employees who work on job classifications covered by the CBA.

(Id. at 2; Compl. ¶¶ 6-8.)

"Plaintiff United Electrical Contractors Association ("UECA") is a trade organization and not-for-profit corporation formed in 1965." (Pls.' Mem. in Opp. at 2-3.) UECA currently consists of thirteen contractor-members, of which five perform publicly financed projects for the City of New York. (Id. at 3.) "The object and purpose of the UECA is . . . to further the interests of its members and those in any way related to the construction industry, to do anything necessary, suitable and proper, including the institution of legal proceedings, for the accomplishment of its lawful objectives, and to bargain collectively for its members." (Id.)

Since 1995, the UECA has been engaged in ongoing collective bargaining negotiations with Local Union No. 3, International Brotherhood of Electrical Workers ("Local 3"). (Id.) Local 3 is a member of the BCTC. (Id.) To date, UECA and Local 3 have not successfully negotiated a CBA. (Id.) Pursuant to a December 7, 1995 Settlement Agreement with the National Labor Relations Board, UECA contractors are required to contribute to the Building Trades Funds on behalf of their eligible employees. (Id.)

Defendant BCTC is an umbrella organization of approximately fifty construction industry trade unions, representing over 100,000 New York City construction workers. (Affidavit of Gary LaBarbera ("LaBarbera Aff.") at ¶ 4.) "The BCTC provides coordination and support to its affiliated local unions in order to achieve a unified effort on behalf of organized construction workers with respect to governmental affairs, improvement of working conditions, and community and economic development." Id.

The BCTC's affiliates have CBAs with twenty-eight union contractor associations which represent approximately 1,700 construction managers, general contractors and trade contractors. (Id. at ¶ 8.)

II. The Project Labor Agreement ("PLA") 'Project labor agreement' shall mean a pre-hire collective bargaining agreement between a contractor and a bona fide building and construction trade labor organization establishing the labor organization as the collective bargaining representative for all persons who will perform work on a public work project, and which provides that only contractors and subcontractors who sign a pre-negotiated agreement with the labor organization can perform project work.

N.Y. Labor Law § 222.

In 2008, the New York State Legislature passed New York Labor Law § 222. See Labor Law § 222. This law was passed as part of a 2008 reform package, and sought to reform section 101 of the General Municipal law (known as the "Wicks Law"). See Bill Jacket to Labor Law § 222, City's Mem. in Supp. at Appendix 2. The Wicks Law imposes a number of requirements for public projects, including that local governments prepare separate specifications for the electrical, plumbing and mechanical portions of the work. The Wicks Law requires four prime contractors to be involved in the construction or rehabilitation of a municipal project: electrical, plumbing, and mechanical contractors, as well as a general contractor. Pertinent to this litigation, New York Labor Law § 222 exempts from the coverage of Wicks Law all projects where a locality operates under a PLA.

On November 24, 2009, Mayor Michael R. Bloomberg, along with the president of the BCTC, publicly announced that the City and the BCTC had agreed to enter into three PLAs to be in force through 2014. (Declaration of Marla G. Simpson, ("Simpson Decl.") Ex. C.) These three PLAs are: (1) "Citywide Rehabilitation and Renovation of City Owned Structures," which applies to projects that predominantly involve the renovation, repair, alteration, rehabilitation or expansion of existing structures for designated City agencies on City-owned property within City limits (Simpson Decl., Ex. E); (2) "New Construction" for the Department and Design and Construction ("DDC"), which applies to eight new construction projects (Simpson Decl., Ex. H); and (3) "New Construction" for the New York City Department of Sanitation ("DSNY"), which applies to three new construction projects. (Simpson Decl., Ex. U.)

Subsequent to the November announcement, the City and the BCTC executed three additional PLAs: (1) a Renovation and Rehabilitation PLA for the New York City Department of Environmental Protection ("DEP") (Simpson Decl., Ex. R); (2) a New Construction PLA for the Department of Parks and Recreation ("DPR") (Simpson Decl., Ex. Z); and (3) a Renovation and Rehabilitation PLA for the New York City Department of Housing Preservation & Development ("HPD"), which applies to the renovation, repair, alteration, rehabilitation or expansion of existing City-owned residential buildings that are part of the Tenant Interim Lease ("TIL") Program. (Simpson Decl., Ex. CC.)

Prior to entering into the PLAs with the BCTC, the City commissioned studies from four consultants to evaluate any potential cost savings and efficiencies that might result from the use of a PLA in conjunction with these projects. (Simpson Decl. ¶ 13-16.) These consultancies included Hill International, the LiRo Group, the Turner Construction Company and Tishman Construction. (Id. ¶ 13.) The Director of the Mayor's Office of Contract Services ("MOCS"), together with a construction official from the relevant City agency, prepared a Report and Recommendation to each of the agencies executing the PLAs. (Id. ¶ 14.) "[E]ach study concludes that by obtaining certain union concessions, including standardizing work hours, overtime time hours, work shift rules and holidays for each of the various construction trades along with 'no strike' provisions and common grievance procedures, the City would realize substantial cost savings on projects covered by these PLAs." (Pl.'s Mem. in Opp. at 9; see also Simpson Decl. ¶¶ 5-7 and 63-82.)

There are many similar provisions among the PLAs in question. The most pertinent among these provisions are that the PLAs: (1) provide for pre-hire recognition of the BCTC and its affiliates as the bargaining representatives of all construction workers working on PLA projects; (2) incorporate the affiliates' CBAs, including union security clauses; (3) require most contractors to secure a minimum of eighty-eight percent (88%) of their labor through the BCTC union referral systems; (4) prohibit unions from discriminating in referrals to the projects on the basis of union affiliation; (5) require contractors to contribute to the unions' fringe benefit funds on behalf of all workers in the bargaining unit; (6) provide for uniform work rules and standardized hours of work; and (7) include a broad no-strike clause and dispute resolution mechanisms for all job site disputes. (LaBarbera Aff. at ¶ 28.)

The projects covered by PLAs are open to all successful bidders, union or non-union, so long as they agree to be bound by the terms and conditions of the PLA. (Compl. ¶ 23.) Plaintiffs contend, however, that the PLAs favor the signatory contractors and impose conditions that make it cost-prohibitive for other contractors to bid on PLA covered projects. (Pls.' Mem. in Opp. at 4.)

III. Plaintiffs' Complaint

The Complaint alleges that the above listed provisions, among others, of the PLAs between the BCTC and the City effectively exclude the contractor-members of the UECA and the BIECA from the competitive bidding process for City construction projects. (Compl. ¶ 29.) For example, Plaintiffs contend that the PLA's requirement that a contractor must draw 88% of its labor from the signatory BCTC trade union's hiring hall forces a non-BCTC contractor to work with a "stranger" workforce. (Tuerck Aff. at ¶ 25.) Additionally, Plaintiffs assert that the PLAs require participant contractor unions to pay fringe benefits into BCTC union funds, resulting in a BIECA or UECA paying the same fringe benefits twice, once into the BCTC union funds and once into the Building Trades Funds. This, Plaintiffs argue, renders it impossible for BIECA or UECA contractors to compete on price with BCTC signatory contractors. (Compl. ¶ 33-34.) Moreover, Plaintiffs challenge the Letter of Assent provision, which requires each contractor awarded a bid under a City PLA to agree to be bound by the terms of the PLA and to certify that it has no other commitments or agreements that would preclude its full and complete compliance with the PLA. (Compl. ¶¶ 30-31.) This requirement, Plaintiffs argue, would preclude a contractor from bidding on PLA covered work to the extent that contractor has existing collective bargaining obligations. (Id. ¶ 31-32.) Specifically, Plaintiffs argue that the Letter of Assent requirement interferes with the existing CBAs between the BIECA contractors and Local 363, and the ongoing collective bargaining negotiations between UECA and Local 3. (Id.)

Plaintiffs also contend that the cost savings that the City argues support the implementation of PLAs are illusory and speculative. (Id. ¶ 40.) The Complaint asserts that the feasibility studies carried out by the four consultancies are based on flawed methodology and on the erroneous assumption that only BCTC contractors would be employed on a particular City project whether or not the project was performed under a PLA. (Id. ¶ 44.) Plaintiffs argue that the studies prepared ignore the impact of the PLAs limiting the number of contractors that might participate in a competitive bidding process. (Id. ¶ 46.) Moreover, the Complaint alleges that the PLAs are not necessary for labor harmony, and that the PLA studies provide "scant evidence" that the types of projects covered by the challenged PLAs have ever been subject to a strike or work stoppage. (Id. ¶¶ 50; 54-57.)

Plaintiffs' Complaint asserts five causes of action. First, it asserts that the PLAs are preempted pursuant to the National Labor Relations Act, 29 U.S.C. §§ 151-169 ("NLRA"). Second, it asserts a cause of action under 42 U.S.C. § 1983 for interference with Plaintiffs' right, guaranteed by the NLRA, to bargain collectively free of government interference. Third, the Complaint requests declaratory judgment setting forth the "rights duties and responsibilities of the Plaintiffs and Defendants arising from the City's mandate of five (5) unlawful PLAs covering present and future public construction projects." Fourth, Plaintiffs bring a state law claim asserting that the PLAs violate General Municipal Law § 103(1), which provides that "all contracts for public work involving an expenditure of more than thirty-five thousand dollars. . . shall be awarded. . . to the lowest responsible bidder furnishing the required security after advertisement for sealed bids in the manner provided for in this section." Gen. Munic. Law § 103(1). Finally, the Complaint asserts a state law claim for violation of New York Labor Law § 222, which provides in pertinent part that a municipality may require a PLA where it "determines that its interest in obtaining the best work at the lowest possible price, preventing favoritism, fraud and corruption, and other considerations such as the impact of delay, the possibility of cost savings advantages and any local history of labor unrest, are best met by requiring a project labor agreement." Labor Law § 222. Plaintiffs contend that the City has violated Section 222 by enacting overbroad PLAs and not determining the need for a PLA on a case by case basis.

IV. Defendants' Motions to Dismiss or Alternatively for Summary Judgment Defendants the City of New York and the BCTC filed separate motions to dismiss or alternatively for ...


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