Project Labor Agreements Continue to Cause Controversy

The Legal Intelligencer

(by John McCreary and Benjamin Wright)

The Community College of Allegheny County (CCAC) recently decided to proceed with construction on its campus. In order to facilitate this project, CCAC entered into a project labor agreement (a PLA) with the Pittsburgh Regional Building and Construction Trades Council of Pittsburgh, AFL-CIO on Feb. 15, 2011. The Associated Builders Association of Western Pennsylvania (ABC) filed a lawsuit on behalf of multiple contractors who operate open shop in Western Pennsylvania seeking to enjoin the CCAC from enforcing the PLA. This suit is the latest in a long series of contentious disputes regarding the utilization of PLAs in the public sector.

In its complaint, the ABC alleges that the terms of the PLA effectively preclude nonunion workers and workers who belong to unions other than those affiliated with the Pittsburgh Regional Building Trades Council from performing construction work, and that the PLA compels workers to associate, join or pay dues to these unions as a condition of employment.

Specifically, the ABC alleges that all contractors have a right under the First and Fourteenth Amendments to determine whether or not to unionize and with which unions to associate. The complaint alleges that the PLA’s requirement that contractors hire their employees through the signatory unions’ hiring halls is a violation of these constitutionally protected rights. The ABC also alleges that this requirement violates the National Labor Relations Act as Section 7 of the Act, 29 U.S.C. Section 157, gives employees the right to decide whether they want union representation. It alleges that the PLA violates the National Labor Relations Act because it requires nonunion members to become union members as the unions will not refer nonmembers through their hiring halls, effectively creating a compulsory union shop in violation of 29 U.S.C. Section 158(a)(3). Finally, the ABC alleges the PLA violates 29 U.S.C. Section 158(e)—the so called “hot cargo” prohibition—which forbids unions and employers from entering into contracts whereby the employer agrees to refrain from ceasing doing business with any other person. The sole exception to this rule is for employers engaged primarily in the building and construction industry, however the ABC alleges this exception does not apply to CCAC. Finally, the ABC alleges that the PLA violates Pennsylvania Competitive-Bidding Laws including Section 3911(a) of the Commonwealth Procurement Code and Article III, Section 22 of the Pennsylvania Constitution because contractors already signatory to agreements with unions affiliated with the Pittsburgh Regional Building Trades Council will be able to use their current workforce and collective bargaining agreements, while open shop contractors would be forced to hire new employees through the unions’ hiring halls. The ABC alleges that this amounts to a violation of the requirement that bidders for a public contract be on equal footing and enjoy the same opportunity for open and fair competition. On these grounds, the ABC seeks declaratory and injunctive relief against the enforcement of the PLA.

Pennsylvania courts have already considered numerous challenges to various project labor agreements in the commonwealth. In A. Pickett Construction v. Luzerne County Convention Center Authority, 738 A.2d 20 (Pa. Cmwlth. 1999), the Luzerne County Convention Center Authority commissioned one O’Neill to evaluate whether to include a PLA in the bidding process for the construction of a civic arena-convention center. O’Neill recommended the inclusion of PLA for multiple reasons, including the avoidance of delays caused by labor disputes, the promotion of labor harmony and the necessity to adhere to an inflexible construction schedule and completion deadline. The PLA required all contractors submitting bids to agree to employ a certain number of union laborers at union wages, regardless of whether the contractor was unionized. Nonunion contractors sought a declaratory judgment that the PLA was invalid under Pennsylvania competitive bidding statutes. The Commonwealth Court upheld the PLA on the grounds it was within the authority’s discretion to consider and take steps to assure the timely completion of the project. The court found that the PLA did not discriminate against nonunion contractors because it permitted the winning bidder to employ its own core personnel, did not contain provisions requiring discrimination based on union affiliation, and opened the bidding process to all union and open shop contractors. The court also determined that the appellants could not establish that the authority abused its discretion in relying upon the O’Neill report in adopting the PLA.

In Sossong v. Shaler Area School District, 945 A.2d 788 (Pa. Cmwlth. 2008), the Shaler Area School District required the successful bidder to execute a PLA with the Pittsburgh Building Trades and argued the PLA was designed to maintain the expeditious completion of the project on-time and on-budget. A contractor sought a preliminary injunction alleging that the PLA prevented nonunion contractors from effectively bidding on the project. The Commonwealth Court cited Pickett and denied the injunction because the PLA contained a “time is of the essence clause” and was related to the need for prompt completion of the project. It also found that there was no need for an expert recommendation of the PLA.

In Glenn O. Hawbaker v. Commonwealth, No. 405 M.D. 2009 (Pa. Cmwlth. 2009), the Commonwealth Court again upheld the inclusion of a PLA, relying on Pickett and Sossong. The court held that the inclusion of the PLA did not violate the requirement to award the contract to the lowest responsible bidder or illegally discriminate against nonunion contractors.

Most recently, the Pennsylvania Commonwealth Court examined the use of a PLA in Allan Myers v. Department of Transportation, 202 A.3d 205 (Pa. Commw. Ct. 2019). In Allan Myers, PennDOT issued bid solicitations for the second phase of a project involving improvements to Markley Street in Montgomery County. The first phase of the Project had no PLA requirement and had been completed ahead of schedule and on budget by a nonunion contractor. For Phase II of the project, however, a report prepared for PennDOT by the Keystone Research Center recommended the use of a PLA. Accordingly, PennDOT’s bid solicitation required contractors to sign a PLA with the Building and Construction Council. Unusually, the PLA provided that if the successful bidder already had a collective bargaining agreement with United Steelworkers (USW), that bidder was not subject to the hiring requirements under the PLA and was permitted to use its United Steelworkers workforce. Allan Myers filed a bid protest and argued that the PLA was discriminatory and unduly favored contractors affiliated with USW. PennDOT dismissed the protest and Allan Myers appealed to the Commonwealth Court.

The Commonwealth Court examined the history of PLA jurisprudence in Pennsylvania and concluded that USW and Building Trades contractors did not bid on equal footing with nonunion contractors. The court also determined that the project did not have a critical deadline, despite the presence of the boilerplate “time is of the essence” language. Thus, the court concluded that “the use of a PLA is permitted where the contracting agency can establish extraordinary circumstances, and PennDOT did not make that demonstration in this case.” On these grounds, the court found that the bid violated Pennsylvania’s competitive bidding laws and cancelled PennDOT’s solicitation.

Based upon this jurisprudence, it is expected that CCAC will raise numerous defenses in its response to the ABC’s complaint. Specifically, CCAC will allege that that the PLA is actually necessary to ensure that the project is completed on time and on budget. CCAC will have to demonstrate that the “time is of the essence” language contained in Article II, Section II of the PLA is more than mere boilerplate and that there exists an actual critical deadline. Further, CCAC will likely attempt to rely upon Article VI, Section 9 of the PLA regarding the exception for “core employees” to bring its PLA into the Pickett line of cases differentiate itself from the PLA in Allan Myers. Notably, however, the CCAC PLA allows a contractor to utilize “core employees” for up to ten percent of its workforce, while the PLA in Pickett permitted between twenty and fifty percent. Finally, CCAC will likely rely on Article VI, Section 8 of the PLA, which contains a “nondiscrimination” provision regarding union membership, as proof that the PLA allows all contractors to bid on equal footing. ABC’s complaint acknowledges this provision but dismisses it as “disingenuous.” Moving forward, ABC will attempt to rely upon the decision in Allan Myers whereas CCAC will look to earlier decisions such as Pickett and Sossong.

As of the date of this article, ABC’s complaint has been filed. Defendants have not yet filed responses to the complaint. Although civil litigation can often last years, the complaint seeks injunctive relief and therefore it is possible the court may conduct a hearing and issue a preliminary ruling on the merits of the plaintiffs’ claims within the next few months.

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Reprinted with permission from the May 28, 2020 edition of The Legal Intelligencer© 2020 ALM Media Properties, LLC. All rights reserved.