The Building Tradesman Newspaper

Friday, September 20, 2013

Appeals court strikes down Michigan PLA law

By Marty Mulcahy, Editor

CINCINNATI – A U.S. Court of Appeals panel overturned a lower court’s ruling on Sept. 6, and reinstated a Michigan law that bans state and local governments from entering into project labor agreements.

The 2-1 Appeals Court decision in the case of Building Trades vs. Snyder said that the law was not regulatory, and did not infringe on the National Labor Relations Act (NLRA) as argued by the Michigan Building and Construction Trades Council.

“The law’s effect is limited to forbidding governmental units from entering into PLAs and then forcing the terms and conditions found within on bidders, contractors and subcontractors,” wrote Judge John Rogers, for the majority. “Such a limited action is similar to those found to be proprietary by the Supreme Court, this court and other circuits.”

The majority opinion was written by Judge Rogers, an appointee of President George W. Bush, and signed by Judge Eugene Siler Jr., an appointee of President George H. W. Bush. Judge Karen Nelson Moore, an appointee of President Bill Clinton, dissented. Based on the political makeup of the judges, “we didn’t get a good panel,” said Michigan Building and Construction Trades Council attorney John Canzano. “It was the wrong decision, and it was not well-thought-out.”

Judge Nelson Moore wrote that the “sweeping measure” of the law affects every governmental unit in the state, even those that are privately funded. “By necessary implication,” she continued, “the amended Act also affects all labor organizations or trade councils seeking to enter into a PLA with a government entity. In short, Michigan implemented a statute that regulates collective bargaining.” That would be a no-no under the NLRA, but the two-judge majority of the court essentially said the state wasn’t regulating project labor agreements, just the ability of municipalities to enter into them.

Canzano, who has argued the case throughout the legal system, said the majority ruling was a “simplistic analysis” of the case.  He said the building trades’ appeal options – which haven’t been decided – are to attempt to have the case heard before the full 6th Circuit Court of Appeals, or take it to the U.S. Supreme Court.

“It’s a case of national importance,” Canzano said. “Legislatures in other states are looking at Michigan’s anti-PLA law and are considering passing their own.”

The appeals court ruling is the latest stop for a case that has quite a bit of history. Here’s a synopsis of the political and legal wrangling involving this case:

In 2011, Michigan Republican lawmakers, holding majorities in the state House and Senate, adopted a law preventing counties, cities, townships and school districts from entering into project labor agreements on construction projects they sponsor. The reasoning: the GOP lawmakers alleged that PLAs increase costs, even though the Senate Fiscal Agency found there would be an “indeterminate fiscal impact” with passage of the law, and numerous other studies have found PLAs don’t increase costs to taxpayers.

The Michigan Building and Construction Trades Council appealed the law in federal court, alleging that the state law results in an across-the-board prohibition of project labor agreements, which is prohibited under federal law. U.S. District Judge Victoria Roberts agreed with the building trades, and issued an injunction.

A second, similar law was adopted by the Legislature and signed by Snyder that was intended to “fix” the problems with the first law, but last November, Judge Roberts rejected that argument, too.

The first law was found to be moot and that second ruling is what Michigan Attorney General Bill Schuette appealed, and arguments were heard on June 18 at the 6th Circuit Court of Appeals.  

In his majority opinion, Judge Rogers said the act “forbids governmental units and their agents from entering into PLAs. It does not forbid the use of PLAs on public projects. If a governmental unit uses a general contractor on a project, and that general contractor is responsible for all subcontracting, the general contractor could enter into a PLA that would cover the entire project.”

From a practical standpoint, however, a general contractor hired by the state, a city or school district is extremely unlikely to enter into a PLA without the blessing of the municipality that hired him. And the municipality now has its hands tied because the new state law makes taxpayer-funded PLAs toxic.

That’s one of the issues Judge Nelson Moore pointed out. The first issue in front of this court, she wrote, “is whether the amended Act interferes with an organization’s right to convince a governmental unit to enter into a PLA, not whether the amended Act interferes with a private party’s right to enter into a PLA independently.”

Ignored in all of the legal arguments is the one-stop shopping benefit that Michigan municipalities can no longer get from a PLA. Local hiring requirements. Drug-tested workers certified in safety training. Responsible contractor requirements. Prevailing wage enforcement. Labor, contractor and owner coordination to meet project deadlines.

Those are benefits that numerous cities, townships, school districts and counties sought in past years with the use of PLAs, but are no longer available.