(LABOR) Commercial Developers and Unions’ “Political Pull”

Threat to File a Formal Proceeding Seeking State Action

Commercial developer (Developer) is developing a shopping center in X Township (Township). Developer is considering non-union general contractor (Non-U) to build the shopping center (Project). Developer files applications for the necessary zoning and other permits from Township.

Shortly thereafter, Local Union (Union) called Developer and informed him that Union would not be happy with the selection of Non-U as general contractor, because Non-U is not signatory to contracts with Union. Union also stated that, if Developer contracted Non-U as general contractor for the Project, Union had the “political pull” with Township to get Township to engage in a land development review. This would delay obtaining the necessary permits for the Project for a long time. 

Township ordinances provide that Township, at its discretion, may conduct land development reviews for projects such as the one at issue here, before granting the permits. The ordinances also provide that any citizen could request that such review be conducted.

Was Union’s Threat Unlawful Secondary Boycott?

It depends. If Union’s threat is not followed by the actual filing of a formal petition to Township for a land development review, the threat would not be “incidental” to “filing a lawsuit or some other similar conduct.” The NLRB has made clear that, in the absence of the actual filing of a lawsuit or formal proceeding, a threat to sue or to invoke a formal proceeding leading to state action is not “incidental” to the lawsuit or formal proceeding. The threat, therefore, may be found to constitute an unfair labor practice (violation of NLRA, 29 U.S.C., Sec. 151, et seq.; hereinafter, “The Act”), since “an object” of the threat is to cause Developer to cease doing business with Non-U.^[1]

Alternatively, if, following the threat, the Union actually petitions for a formal land development review proceeding, the threat would become “incidental” to the filing of a formal proceeding leading to state action. In such circumstance, the Union’s threat is not likely to constitute unlawful secondary boycott under the principles enunciated in Bill Johnson’s Restaurant v. NLRB.^[2]

Under current NLRB law, “the filing and maintenance of a ‘reasonably based’ lawsuit does not violate the Act, regardless of whether the lawsuit is on-going or is completed, and regardless of the motive for initiating the lawsuit.”^[3] Since Township ordinances provide that any citizen may request that a land development review be conducted by Township for projects such as the one at issue, Union’s petition to Township would likely be considered “reasonably based.” Accordingly, the threat and the formal petition to initiate the proceeding would not violate the Act. 

Developer and Union Sign a Project Labor Agreement

After learning of Union’s “political pull,” and in order to obtain the Union’s “assistance” in obtaining the necessary permits for the Project from Township, Developer and Union sign a Project Labor Agreement (PLA). The PLA provides that all of the construction work at the Project would be performed by contractors and sub-contractors signatory to the appropriate construction trade local union agreement. 

Developer asks Non-U to enter into a contract with Union in order to comply with the PLA. Non-U declines and files an unfair labor practice charge with the NLRB.

Is the PLA Unlawful?

Non-U’s argument to the NLRB is that the PLA was not negotiated in a collective bargaining context. Developer did not have any construction employees and did not intend to employ any such employees for the Project. The purpose of the PLA was not to establish terms and conditions of employment for construction workers. Rather, its purpose was to obtain Union’s “political pull” in obtaining the necessary permits from Township.

Under this scenario, it is very likely that the NLRB would find merit to Non-U’s argument. Based on Supreme Court authority,^[4] the NLRB has held that agreements between owners and/or developers and labor unions that are not negotiated in “the context of a collective bargaining relationship” are unlawful, unenforceable “hot cargo” agreements.^[5]

Conclusion

Entering into agreements or arrangements with construction trade unions in order to obtain the unions’ support (i.e., political pull) before governmental bodies is pregnant with legal consequences. Commercial developers should consult labor counsel before entering into such arrangements.

Jerry Morales is Of Counsel in the Phoenix office of Snell & Wilmer. His practice is concentrated in labor, employment and construction law.

____________________
Notes

[1] See NLRA Section 8(b)(4)(ii)(B), 29 U.S.C. 158 (b)(4)(ii)(B) See also, Postal Service, 350 NLRB 125 (2007); DHL Express, Inc., 355 NLRB 680 (2010); Networks Dynamics Cabling, 351 NLRB 1423 (2007). [Back]

[2] Bill Johnson’s Restaurant v. NLRB, 461 U.S. 731 (1983) [Back]

[3] BE&K Construction Co., 351 NLRB 451 (2007) [Back]

[4] Connell Construction Co. v. Plumbers Local 100, 421 U.S. 616 (1975) [Back]

[5] Glenn Falls Building and Construction Trades Council, 350 NLRB 417 (2007) [Back]

Source: Snell & Wilmer