The Starbucks Union Vote: a Pyrrhic Victory for Labor?

Last week, employees at a Buffalo, New York, Starbucks voted to be represented by the Service Employees International Union (SEIU). Labor unions – and their supporters – celebrated the victory.  While the vote is historic, at least for Starbucks, and could represent a wave of similar votes it poses a great risk to the labor movement. What we have in Buffalo is a real-time experiment that will yield results regarding which side is correct regarding the benefits and detriments of unionization.

To understand the experiment, we need to step back and examine what happened. Workers at one Starbucks location voted to be represented by the SEIU. (Unionization votes at two other locations were apparently unsuccessful.) This means workers currently employed or who will become employed at that one store only are represented by the SEIU.

Voting to be represented by a union does not result in a change in automatic change in benefits to the newly unionized employees. There is a myth that a vote for unionization instantly results in better wages and benefits based on a union scale. But federal law only requires that employer bargain in good faith with a union regarding terms of employment (which include wages and benefits). Sometimes that yields better wage and sometimes it does not. Meanwhile, federal labor prohibits, with limited exception, an employer from changing the terms and conditions of employment during negotiations. Generally, this means that the wages and benefits of the newly unionized workforce are frozen until the union and the employer can agree on a collective bargaining agreement.

Starbucks has over 9,000 locations. In certain places, these locations are only a few blocks apart. So, the first issue that arises is whether a potential employee would apply for a job at a location undergoing collective bargaining negotiations where wages and benefits are frozen (and there is the potential for a strike) rather than seeking work at the non-union Starbucks down the road.

Now, lets assume that the negotiations result in a collective bargaining agreement. Again, there is no requirement that the negotiations result in an agreement in a certain duration. The law only requires that the parties bargain in good faith. That agreement will transparently show what the employees receive per hour in wages, what benefits they get, and what other workplace polices they are subject to. But what happens if Starbucks offers better terms and conditions to the non-union workforce down the road? Will someone seeking employment with Starbucks work at the union store where the terms of employment are worse than the non-union store?

Therein lies the risk to labor. They must obtain a collective bargaining agreement from Starbucks that results in wages and benefits that are markedly better than what Starbucks offers non-union employees in the same town. Otherwise, Starbucks will point to the results in Buffalo in persuading employees to vote against unionization at other locations. All Starbucks would have to say is – look what happened in Buffalo, that could happen here.

Of course, Starbucks knows this and will grind the SEIU during negotiations. And then what will the employees do? Strike? Or would they quit and go work for the non-union Starbucks down the street?

Piercing the Corporate Veil in Construction Defect Cases

Plaintiffs in construction defect case are often presented with a frustrating paradox.  Their claims for liability are clear.  There is usually little dispute that failure to follow the building code or industry standards caused their damages.  Conversely, the ability to collect for that liability is murky.  The defendants in many cases are single purposes entities, which were established for the sole purpose of developing the project and which hold no assets once the project is complete.  Without the ability to liquidate a judgment, a judgment is worthless and a plaintiff is afforded no redress.

One way attorneys attempt to address this problem is bringing an action against the individual principals, or owners, of the entity that developed the project under a theory of “piercing the corporate veil.”  Typically, the individual shareholders, partners, or members of a corporate entity cannot be held personally liable for wrongdoing committed by the corporate entity.  However, in certain circumstance courts will “pierce the corporate veil” and hold an individual liable for corporate harms to prevent fraud, illegality, or injustice.

Pennsylvania courts has indicated a willingness to hold individual owners of single purpose entities personally liable in construction defect cases.  Masterpiece Homes

Recently, the Pennsylvania Superior Court issued a published opinion that should give plaintiffs seeking to litigate claims against single purpose entities hope and owners of those entities pause.  In Sereda v. Center City Acquisitions, LLC, the Superior Court affirmed a trial court that held the owner of a single purpose entity personally liable for damages arising out of a defective construction of a home in Center City Philadelphia.

According to the opinion, Noah Ostroff was the “president, acting officer, and sole shareholder” of defendant Center City Acquisitions, LLC.  The LLC was the developer of a newly built home located in Philadelphia.  The LLC entered into an agreement of sale with the LLC to purchase the home.  During a pre-settlement walk through, the plaintiffs notice gaps in the hard wood floors.  The gaps were placed on a punch list which the defendant LLC agreed to resolve.  The agreement also contained a “builder’s warranty.”  Under the warranty, if the plaintiffs gave notice to the defendant of defects covered by the warranty, the defendants agreed to repair or replace the defective work.

Shortly after settlement, the plaintiffs emailed Ostroff and notified him that the issue with the floors had not been resolved.  Ostroff stated that the issue would resolve itself over time as the floor became acclimated.  After a year, the issue was still present and Ostroff visited the property to observe the condition.  Ostroff instructed his contractor to replace some flooring.  But, the issue persisted.  The parties then tried to negotiate a resolution.  The plaintiffs wanted their floors replaced and Ostroff was only willing to sand the floors and fill the gaps or provide a $2500 credit.

How to Get Your Business Reopened During the COVID-19 Pandemic

The answer is very simple – take action. I have bad news for anyone who is sitting back waiting for Governors around the country to voluntarily declare the all clear – it is not happening.  Unless you are prepared to remain closed for eighteen months, you have two options: litigation and grassroots action.  On the litigation end, the orders of Governor Wolf and others like him are unconstitutional.  They are completely arbitrary.  There is simply no medical evidence to support their claims that certain businesses or more or less likely to spread the virus. Grocery stores remain open, but construction sites do not? Governors should be forced in Court to support the absurd suggestion that shutting down construction sites will slow the spread of the virus but keeping beer distributors open will not.

Also, state government should be forced to pay compensation to the businesses they have ruined through their arbitrary actions.  The 5th Amendment to the United States Constitution and most state constitutions require the government to pay just compensation to property the government seizes. The most familiar example of this is eminent domain, which is when the government pays compensation to a property owner for property that is appropriated for public use, like the construction of a road or school.  But it is well settled the 5th Amendment right to compensation applies to regulatory actions that render a business owner incapable using his business in anyway possible.

In addition to litigation, business owners must exercise their First Amendment right, which apparently has not been suspended by fiat – at least yet, to pressure elected officials for a more rational approach. One that is grounded in science and facts. Here is another idea – business owners should demand that any Governor requiring a shut down should forgo his or her salary until the shutdown is over – likewise for any public health officials that are guiding them.

There is also another reason to pressure elected officials. The longer the public allows their conduct to go unchallenged the more likely these same same officials will use emergency powers in the future for any host of reason of more dubious emergencies – global warming is one that immediately comes to mind.

I do not know if sitting back and waiting for a bunch of bureaucrats to let you know when to open you business will  “flatten the curve,” but I do know it will hasten your march to bankruptcy.  These officials are not kings. The governor at the consent of the governed.  Its time the governed start reminding them of that.

The Pennsylvania Home Improvement Contractors Act

What is HICPA and when does it apply?

73 P.S. § 517.1, et. seq. is known as the Home Improvement Consumer Protection Act (“HICPA”).   73 P.S. § 517.1 (“This act shall be known and may be cited as the Home Improvement Consumer Protection Act.”)  HICPA was enacted to regulate home improvement contracts and to prohibit certain acts in the home improvement industry.  Act 2008 Pa. Legis. Serv. Act 2008-132 (S.B. 100).  HICPA applies to contractors performing home improvements which costs $500 or more. HICPA defines a “contractor” as “Any person who owns and operates a home improvement business or who undertakes, offers to undertake or agrees to perform any home improvement. The term includes a subcontractor or independent contractor who has contracted with a home improvement retailer, regardless of the retailer’s net worth, to provide home improvement services to the retailer’s customers.”  73 P.S. § 517.2 HICPA defines a home improvement as “[r]epair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting. The cost of which totals $500 or more.”  Id. HICPA defines a home improvement contract as “[a]n agreement between a contractor, subcontractor or salesperson and an owner for the performance of a home improvement which includes all agreements for labor, services and materials to be furnished and performed under the contract. Id.

A home improvement contract is void if it does not comply with HICPA

Under Section 517.7(a) of the Act, if a construction contract fails to contain any of the enumerated items set forth in Section 7(a), the contract is void and unenforceable.  See 73 P.S. § 517.7(a); Shafer Elec. & Const. v. Mantia, 626 Pa. 258, 96 A.3d 989 (2014)(“Section 517.7(a), speaks to enforceable and valid home improvement contracts, and provides that for a contract to be enforceable and valid, it must comply with the thirteen clauses of subsection (a).”)

73 P.S. § 517.7(a) states in relevant part and subpart:

“No home improvement contract shall be valid and enforceable against an owner unless it:

(1)       is in writing and contains the home improvement contractor registration number of the performing contractor;

(6)   Contains the approximate starting date and completion date;

(8)  Includes a description of the work to be performed, the materials to be used and a set of specifications that cannot be changed without a written change order signed by the owner and the contractor;

(12)  Includes the toll-free telephone number under section 3(b);

(13)  Includes a notice of the right of rescission under subsection (b).

73 P.S. § 517.7(a)(1), (6), (8), (12), and (13)

Under HICPA, an award of triple damages and attorneys fees is mandatory

HICPA is a strict liability statute. Under HICPA, “[a] violation of any of the provisions of this act shall be deemed a violation of the act of December 17, 1968 (P.L. 1224, No. 387),¹ known as the Unfair Trade Practices and Consumer Protection Law. 73 P.S. § 517.10.”   73 P.S. § 517.10 (emphasis added). Under the UTPCPL, plaintiffs are awarded trebel (triple) damages and attorneys fees.

The Finality of Arbitration Awards

You obtained an award in an arbitration. The arbitrator directed your adversary to pay. But the deadline has passed and you have not received payment. Now what? The award must be confirmed by a state or federal court so that you can use judicial execution practice to collect on the award.  Under Section 9 of the Federal Arbitration Act, 9 U.S.C. 9, “the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.”

Often, the losing party attempts to “appeal” the award to a state or federal court asking it to vacate the award. It well settled that this Court’s review of an arbitration award is “exceedingly narrow” and “highly deferential.”  Egan Jones Ratings Co. v. Pruette, 765 Fed.Appx. 659, 662 (3d Cir. 2019); Liuna v. Molfetta Indus. Co., Inc., 365 Fed.Appx. 347, 350 (3d Cir. 2010)(“Review of arbitration awarded under the FAA is “extremely deferential.”)    As the Third Circuit recently opined, “[t]he sine qua non of judicial review of an arbitration award is a heavy degree of deference to the arbitrator.”  Monongahela Valley Hosp. Inc. v. United Steel Paper & Forestry Rubber Mfg. Allied Indus. & Serv. Workers Int’l Union AFL-CIO CLC, 19-2182, 2019 WL 7286693, at *3 (3d Cir. Dec. 30, 2019).

In Hall St. Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 584 (2008), the Supreme Court resolved a Circuit split involving the grounds on which an arbitration award may be vacated or modified.  In that case, Justice Souter writing for the majority held that sections 9 and 10 of the Federal Arbitration Act (“FAA”) enumerate the exclusive grounds upon which an arbitration award may be vacated or modified.  Id. (“We now hold that §§ 10 and 11 respectively provide the FAA’s exclusive grounds for expedited vacatur and modification.”)  The exclusive grounds for vacating an award are set for in Section 10 of the FAA.  They are: “corruption, fraud, undue means,” “evident partiality or corruption in the arbitrators,” “misconduct,” “misbehavior,” “exceed[ing] … powers.” 9 U.S.C. § 10(a)(1)-(4). Erroneous findings of fact or mistakes of law are insufficient grounds to vacate an arbitration award.  New Jersey Bldg. Laborers Dist. Councils Local 325, Liuna v. Molfetta Indus. Co., Inc., 365 Fed.Appx. 347, 350 (3d Cir. 2010) (“The district court may not vacate an arbitration award merely because it would decide the merits differently.”); Egan Jones Ratings Co., 765 Fed.Appx. at 662 (“It is not proper for a reviewing court to “reexamine the evidence” when reviewing an arbitration award, and errors in factfinding do not justify reversal.”)

As the Third Circuit has held, “exceeding one’s powers, however, is not synonymous with making a mistake. Ross Dress for Less Inc v. VIWP, L.P., 750 Fed.Appx. 141, 144 (3d Cir. 2018).  As the Supreme Court explained in Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013):

“A party seeking relief under [Section 10(a)(4)] bears a heavy burden. It is not enough to show that the arbitrator committed an error—or even a serious error. Because the parties bargained for the arbitrator’s construction of their agreement, an arbitral decision even arguably construing or applying the contract must stand, regardless of a court’s view of its (de)merits. Only if the arbitrator acts outside the scope of his contractually delegated authority—issuing an award that simply reflects his own notions of economic justice rather than drawing its essence from the contract—may a court overturn his determination. So the sole question for us is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong.”

Id. at 569.

Obtaining damages against labor union

Section 303 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 187, provides a private cause of action for a party injured by a union’s conduct defined as an unfair labor practice under Section 8(b) of the National Labor Relations Act (“NLRA”), 29 U.S.C. § 158(b).   Section 8(b)(4)(ii)(B) prohibits a union from inducing a person to refuse to work for a neutral employer with the purpose of compelling that employer from doing business with the primary, offending employer. U.S. Info. Sys., Inc. v. Int’l Bhd. of Elec. Workers Local Union No. 164, AFL-CIO, 500 Fed.Appx. 198, 200 (3d Cir. 2012) Importantly, it is the union’s motive and intent, not conduct, that determines whether it has violated Section 8(b)(4).

Section 8(b) of the NLRA, 29 U.S.C. § 158(b), establishes certain actions that are unfair labor practices when committed by a union.  These provisions of the NLRA are commonly referred to as the secondary boycott provisions.  It is an unlawful labor practice for a union to engage in a secondary boycott.  They are intended “to prevent a union from influencing a neutral third party’s relationship with a primary employer in order to compel the primary employer to consent to the union’s demands.”  U.S. Info. Sys., Inc., 500 F. App’x at 200.  Section 8(b)(4)(ii)(B) prohibits a union from inducing a person to refuse to work for a neutral employer with the purpose of compelling that employer from doing business with the primary, offending employer[1]. Id.

A violation of Section 8(b)(4) involves an examination of both the union’s conduct, intent, and objective.  The intent of a union is unlawful when its “conduct is calculated to force the secondary employer to cease doing business with the primary employer.  Fid. Interior Const., Inc. v. Se. Carpenters Reg’l Council of United Bhd. of Carpenters & Joiners of Am., 675 F.3d 1250, 1259 (11th Cir. 2012)   Under Section 303 of the LMRA, if a union commits a violation of Section 8(b) of the NLRA, a party can bring a private right of action against the union in federal court.

Actions involving claims that a union violated Section 8(b)(4) of the NLRA are particularly ill-suited for a Rule 12(b)(6) motion to dismiss because they are fact sensitive and require a determination of the union’s intent.  In Section 8(b)(4) cases, the union’s motive and intent are “a question of fact to be determined by an examination of the totality of [the] union’s conduct in [a] given situation.” U.S. Info. Sys., Inc., 500 F. App’x at 200; F.A. Wilhelm Const. Co., Inc. v. Kentucky State Dist. Council of Carpenters, AFL-CIO, 293 F.3d 935, 940 (6th Cir. 2002) (“The question is a factual one as to the union’s intent.”); NLRB v. Int’l Bhd. of Elec. Workers, Local 265, 604 F.2d 1091, 1097–98 (8th Cir.1979).

The decisive question in a secondary boycott case is whether the intent or object of the union’s activity is directed at the primary employer alone or at secondary employers, with the intention of pressuring the secondary (neutral) to curtail business with the primary employer or to pressure the primary to agree to the union’s demands. Circle Grp., L.L.C. v. Se. Carpenters Reg’l Council, 836 F. Supp. 2d 1327, 1360-61 (N.D. Ga. 2011).  A union’s objective are unlawful “so long as one of the union’s objectives was to influence the secondary employer to bring pressure to bear on the primary.” R.L. Coolsaet Constr. Co. v. Local 150, Int’l Union of Operating, 177 F.3d 648, 655 (7th Cir.1999);  Fid. Interior Const., Inc. v. Se. Carpenters Reg’l Council of United Bhd. of Carpenters & Joiners of Am., 675 F.3d 1250, 1259-60 (11th Cir. 2012)(“If any object of the picketing is to subject the secondary employer to forbidden pressure then the picketing is illegal. It need not be the sole or even main purpose.”)  Additionally, “[i]f the union acts with ‘mixed motives,’ partially primary and partially secondary, its conduct is unlawful under section 8(b)(4); it is not necessary to find that the sole object of the strike was secondary so long as one of the union’s objectives was to influence the secondary employer to bring pressure to bear on the primary.” Mautz & Oren, Inc. v. Teamsters, Local No. 279, 882 F.2d 1117, 1120–21 (7th Cir.1989).

Encouraging employees of neutral employers to refuse to work or strike is a violation of Section 8(b)(4). Limbach Co. v. Sheet Metal Workers Intern. Ass’n, 949 F.2d 1211, 1219 (3d. Cir. 1991)(“The proscribed methods used to achieve the objectives include inducing or encouraging employees of the secondary employer to strike or refuse to perform services in the course of employment and threatening, coercing, or restraining the secondary employer.”)  F.A. Wilhelm Const. Co., Inc., 293 F.3d at 940.  (“Encouraging employees to engage in a concerted activity against their employer in order to have that employer refuse to deal with the primary employer is illegal.”); R.L. Coolsaet Const. Co. v. Local 150, Int’l Union of Operating Engineers, 177 F.3d 648 (7th Cir. 1999)  These Courts have also held that a union violates Section 8(b)(4) even when its conduct is a protected sympathy strike.  Id.

In Limbach Co., the Third Circuit recognized that inducing or encouraging union members to refuse to work for a union contractor during within the scope of their employment is a violation of Section 8(b)(4).  Limbach Co., 949 F.2d at 1219.  Limbach Co. involved a case of a union contractor who became embroiled in a labor dispute with the Sheet Metal Union, which was the union that represented its employees and with whom it maintained a collective bargaining agreement. Id. at 1213-1214.  The gravamen of the dispute was Limbach’s relationship -through a parent company – with a non-union contractor, Harper Plumbing & Heating Company, Inc.  Id. at 1213.  The Sheet Metal Union believed that Harper should be a union company and demanded that Limbach obtain a collective bargaining agreement with the Sheet Metal Union from Harpers.  Id. at 1213-1214.  However, Limbach refused.  Id.

Thereafter, the Sheet Metal Union attempted to dissuade union contractors, including Limbach, from doing business with Harpers.  Id. at 1215.  As part of these efforts, among other things, the Sheet Metal Union and its agents sent written correspondence to Limbach’s union employees encouraging them to quit Limbach’s employ or to walk off certain jobs on which Limbach was working after the collective bargaining agreement expired.  Id. at 1220.

A jury found that the union’s conduct violated Section 8(b) and awarded Limbach $2.8 million in damages.  Id. at 1217.  The Sheet Metal Union appealed and the Third Circuit overturned the jury’s verdict.  Id. at 1220.  However, importantly, it did so because under Section 8(b)(4)(i) “quitting is not a refusal to perform services within the course of employment as proscribed by that section.”  Id. at 1220.  Thus, if the union employees had simply refused to work then a Section 8(b)(4) violation could have been found.  Moreover, its analysis of the union’s conduct provides an outline of what Section 8(b)(4) prescribes.

First, the Third Circuit held that the words “induce and encourage” as used by Section 8(b) are “broad enough to include every form of influence and persuasion.”  Id.  And, that the Sheet Metal Union’s conduct “no doubt . . . was intended to encourage and induce Limbach employees.”  Id.

Second, the Third Circuit held Section 8(b) “prohibits inducement of employees to refuse, in the course of their employment, to perform certain work.”  Id. (emphasis added).  The Court went on to hold that since quitting was different that refusing to work “in the course of their employment” the union did not violate Section 8(b).

Furthermore, in F.A. Wilhelm Construction Co., the Seventh Circuit held that a union violates Section 8(b) when it encourages union members to stop working for a union contractor even where the employees could have acted on their own initiative.  F.A. Wilhelm Construction Co., 293 F.3d at 940.  The F.A. Wilhelm Court considered a factual scenario quite similar to the one before this Court.

In that case, F.A. Wilhelm was a union contractor with a collective bargaining agreement with the Kentucky State District Council of Carpenters, AFL-CIO (the “Carpenters Union”).  Id.  As such, the F.A. Wilhelm’s employees were members of the Carpenters Union.  F.A. Wilhelm was a subcontractor on a construction project at the University of Louisville.  Id.  Another contractor working on the project was Dant Clayton, who was a non-union contractor.  Id.  Despite the Carpenters Union’s efforts Dant refused to enter into a collective bargaining relationship with the Carpenters Union.  Id.

In response, the Carpenters Union told all union workers on the project, including Wilhelm’s employees, that there would be picketing and requested that all union members join the picket line.  Id.  Moreover, like Local 690, the Carpenters Union distributed a wallet card that stated on one side: “GOOD UNION BUILDING TRADESMEN do not work behind banners even with 4 gates.”   The other side read: “Which side are you on? Picketing has been described by the Supreme Court as the “working man’s means of communication.” A picket is a message to you that some of your fellow workers are engaged in a labor dispute and need your help. It is your constitutional right as an American citizen to decide how you will respond to that picket. Under the law your union cannot help you make that decision. You can seek guidance only from your conscience then decide, “Which side am I on?” Id.

A picket line was then established and Wilhelm’s union employees refused to cross it.  Id.  The project was shut down for several days.  Id.  Wilhelm then brought an action under Section 303 of the LMRA for the Carpenters Union’s violation of Section 8(b)(4).  A jury returned a verdict in favor of Wilhelm and the union appealed. In upholding the jury’s verdict that the Carpenters Union had violated Section 8(b)(4) the Seventh Circuit held that the Carpenters Union’s conduct was aimed at keeping Wilhelm’s union employees off the job.  Id. at 940.  The Court further held that this demonstrated that the union’s intent was “to embroil Wilhelm in its labor dispute against Dailey.”  Id.  Importantly, because it was the union’s intent to embroil Wilhelm in a labor dispute involving another employer it need not reach the issue of whether a no-strike clause was violated.  Id.

[1] 29 U.S.C. § 158(b)(4)(ii)(B) states:

(b) Unfair labor practices by labor organization. It shall be an unfair labor practice for a labor organization or its agents—

(4)(i) to engage in, or to induce or encourage any individual employed by any person engaged in commerce or in an industry affecting commerce to engage in, a strike or a refusal in the course of his employment to use, manufacture, process, transport, or otherwise handle or work on any goods, articles, materials, or commodities or to perform any services; … where in either case an object thereof is—

(B) forcing or requiring any person … to cease doing business with any other person, … Provided, That nothing contained in this clause (B) shall be construed to make unlawful, where not otherwise unlawful, any primary strike or primary picketing..

Contesting an Upset Tax Sale

What is an upset tax sale?

Upset tax sales are the process by which Pennsylvania counties sell properties to recover unpaid real estate taxes. Upset sales occur in September each year.  The properties are sold at auction.

What are the notice requirements of the upset tax sale law?

It is well settled that the statutory notice provisions of the Commonwealth Tax Sale Law must be strictly followed. Maya v. County of Erie Tax Claim Bureau, 59 A.3d 50, 55 (Pa.Cmwlth.2013) (citations omitted)(“The statutory notice provisions in the Tax Sale Law must be strictly construed lest a person be deprived of property without due process.”) It is equally well settled that when a taxing authority fails to strictly comply with the Tax Sale Law’s notice provisions the tax sale of a property is void. Sabarese v. Tax Claim Bureau of Monroe County, 451 A.2d 793 (Pa.Cmwlth.1982).

The primary purpose of the Tax Sale Law is to ensure the collection of taxes, not to strip away a citizen’s property rights. Rice v. Compro Distributing, Inc., 901 A.2d 570, 575 (Pa. Cmwlth. 2006). Adequate notice is a prerequisite before the execution of any tax sale. Id. “The statutory notice provisions in the Tax Sale Law must be strictly construed lest a person be deprived of property without due process.” Maya v. County of Erie Tax Claim Bureau, 59 A.3d 50, 55 (Pa.Cmwlth.2013) (citations omitted); Smith v. Tax Claim Bureau of Pike County, 834 A.2d 1247, 1251 (Pa.Cmwlth.2003)(“[T]he focus is not on the alleged neglect of the owner, which is often present in some degree, but on whether the activities of the Bureau comply with the requirements of the statute.”)

The Tax Sale Law mandates that the taxing authority provide three types of notice: (1) published notice, (2) mail notice and (3) posted notice. 72 P.S. § 5860.602. For an upset sale to be valid, the County must strictly comply with all three of these statutorily prescribed notices. In re Upset Tax Sale Conducted on September 11, 2014, 2016 WL 916867, at *1 (Pa.Cmwlth. Mar. 8, 2016)(“In Pennsylvania, a valid tax sale requires strict compliance with three statutorily prescribed notice provisions: published notice, mail notice and posted notice.”) The Bureau, not the owner, bears the burden of proving compliance with the notice provisions.  Id. at *3. Additionally, the County must take additional efforts to contact an owner when mail is returned as unclaimed.  Those additional efforts “shall include, but not necessarily be restricted to, a search of current telephone directories for the county and of the dockets and indices of the county tax assessment offices, recorder of deeds office and prothonotary’s office, as well as contacts made to any apparent alternate address or telephone number which may have been written on or in the file pertinent to such property.” 72 P.S. § 5860.607a(a)(emphasis added).

The most common mistake a County makes is not sending mailed notice restricted delivery to an owner. Regarding statutorily required mailed notice, the Tax Sale Law requires that “at least thirty (30) days before the date of the sale, by United States certified mail, restricted delivery, return receipt requested, postage prepaid, to each owner as defined by this act.” 72 P.S. § 5860.602(e)(1)(emphasis added). This requirement applies to mailed notice sent to individuals and business entities like partnerships. Terra Properties, II v. Berks Cty. Tax Claim Bureau, 92 Pa.Cmwlth. 97, 99, 498 A.2d 57, 58 (1985)(holding that the “Personal Addressee Only” requirement applies to equally to partnerships.) The cases are legion that when, as here, a tax claim bureau fails to properly notify an owner by mail a tax sale is invalid.  In Sabarese, the Commonwealth Court affirmed the trial court’s invalidation of a tax sale because the tax sale notices were not marked “personal addressee only.” Sabarese, 451 A.2d at 793. At the time, the Section 602(e)(1) of the Tax Sale Law, required notice “[a]t least thirty (30) days before the date of the sale, by United States certified mail, personal addressee only, return receipt requested, postage prepaid, to each owner as defined by this act.” Former 72 P.S. § 5860.602(e)(1)(emphasis added).8 “Although Section 602(e)’s terminology changed from ‘personal addressee only’ to ‘restricted delivery,’ USPS’s meanings have not.” In re Upset Tax Sale Conducted on September 11, 2014, 2016 WL 916867, at *4 Both services restrict who may sign for receipt of a mailing and are synonymous. Id. Likewise, in Kemler v. Lackawanna County Tax Claim Bureau, 2015 WL 5430360 (Pa.Cmwlth. 2015), the Commonwealth Court reversed the trial court and set aside a tax sale because taxing bureau, like the Bureau here, did not meet its burden of proving that it sent notice via certified mail, restricted delivery to one of the property’s owners. Finally, in Perma Coal-Sales, Inc., the Commonwealth Court overturned a decision of the trial court and directed that an upset sale be set aside where the property was owned by a corporation and mailed notice was sent to the corporations registered address but was signed for by an individual who had no apparent authority to accept mail on behalf of the corporation.  Perma Coal-Sale, Inc., 638 A.2d at 331.

How long do you have to challenge the sale?

Following the sale, the County must file a consolidated return with the court to confirm the sale. The Court will then enter an order stating that all objections to the upset tax sale must be made within thirty days of the date of the order. However, if an owner wishes to challenge a sale after that thirty day period it can request that the Court accept the petition to side aside the sale nunc pro tunc.

The 5 mandatory bid requirements in New Jersey

Section 23.2 of the Local Public Contracts Law list five mandatory requirements that must be submitted at the time of the bid or the bid is deemed fatally defective and unresponsive.  N.J.S.A. 40A:11-23.2:

1. A bid bond;
2. A certificate from a surety;
3. A statement of corporate ownership pursuant ;
4. A listing of subcontractors; and
5. An acknowledge the bidder’s receipt of any notice or revisions or addenda to the advertisement or bid documents

If a bidding contractor fails to submit one of these five items its bid “is deemed a fatal defect that shall render the bid proposal unresponsive and cannot be cured by the governing body.”  Star of the Sea Concrete Corp., v. Lucas Bros. Inc. 850 A.2d 559 (N.J.Super. App. Div. 2004). Section N.J.S.A. 40A:11–23.2 “circumscribed the authority of local contracting agencies to waive bid defects by designating five kinds of defects that cannot be waived under any circumstances.”  Id. at 563.   Indeed, it is “is purely prohibitory; it requires rejection of any bid that does not include all of the mandatory items set forth.”  P & A Const., Inc. v. Twp. of Woodbridge, 365 N.J. Super. 164, 176, 838 A.2d 520, 528 (App. Div. 2004).

A common mistake is a contractor failure to list the names of its subcontractors that will perform electrical, plumbing, and structural steel work. This runs afoul of New Jersey’s Anti-Bid Shopping Act, N.J.S.A. 40A:11-16. “The requirement that a bidder submit a list of subcontractors with each bid prevents a general contractor from negotiating or renegotiating with subcontractors after it is awarded the contract. If a bidder were able to substitute unlisted subcontractors, he could wait until after being awarded the bid and negotiate for a lower price, the savings from which would accrue to him and not to the public.” Applied Landscape Techs., Inc. v. Borough of Florham Park, 2013 WL 2371704, at *1 (N.J. Super. Ct. App. Div. June 3, 2013)

The Appellate Division’s decision in Hall Const. Co. v. New Jersey Sports & Exposition Auth., 295 N.J. Super. 629, 685 A.2d 983 (App. Div. 1996), provides further guidance on the importance of strictly and precisely following the instructions contained in bid documents.  In that case, the Appellate Division upheld a trial court grant of injunctive relief to a second low bidder on a state construction project, where the apparent low bidder failed to fully complete a bid form.  There, the New Jersey Sports & Exposition Authority (“Sports Authority”) solicited bids for the construction of luxury suites at Giants Stadium.  Id. at 631. The instructions to bidders required the bidders to list a lump sum price for the work and the price for three alternates.  Id.  Alternate 1 was for landscaping on the north side of the stadium.  Id.  Alternate 2 was for lighting protection.  Alternate 3 was for signage.  Id.  The Sports Authority received for bids.  Id.  At the time the Sports Authority received the four bids it had decided it would not pursue the work required under Alternate 1.  Id. at 632.

The apparent low bidder left the space next to Alternate 1, where it was to include its price for Alternate 1, blank.  Id.  It included a price in the blanks next to Alternate 2 and Alternate 3.  Id.  The second low bidder filed a protest arguing that the low bidders bid should be rejected because it failed to include a price for Alternate 1 in violation of the instructions to bidders.  Id.  The low bidder argued that the failure to include a price for Alternate 1 was immaterial because the Sports Authority had already decided that the Alternate 1 work would not be performed.  Id. at 635.  The trial court rejected this argument and the Appellate Division affirmed holding “failure to insert a figure for Alternate 1 rendered its bid incomplete.  Id. at 639.  As the Court explained “all bids must comply with the terms imposed.”  Id. at 635.

When a apparently low bidder submit a bid that omits one of these five required items a second (or third) low bidder can obtain an injunction prohibiting the award of the contract to the apparent low bidder. Advance Elec. Co. v. Montgomery Twp. Bd. of Educ., 351 N.J. Super. 160, 167, 797 A.2d 216, 220 (App. Div. 2002).

The Pennsylvania Contractor and Subcontractor Payment Act

Background

73 P.S. § 501, et. seq. is known as the Contractor and Subcontractor Payment Act (“CASPA”)  is a statute that was enacted in 1994 “to cure abuses within the building industry involving payments from contractors to subcontractors and to encourage fair dealing among the parties to a construction contract.” Zimmerman v. Harrisburg Fudd I, L.P., 984 A.2d 497, 500–501 (Pa.Super.2009). CASPA is a remedial statute and it is accorded “liberal construction to effect its objects and to promote justice.” Id., at 502 n. 8.  CASPA applies to all construction projects in Pennsylvania involving the construction, except for residential construction of six or less units.  73 P.S. § 503(a).  CASPA requires that contractors pay subcontractors within fourteen days of receiving the subcontractor’s invoice. Recent amendments to CASPA, require that if a contractor is refusing to pay a subcontractor within fourteen days, it must give written notice to a subcontractor within that fourteen-day period. If a contractor fails to give written notice to the subcontractor within that fourteen-day timeframe, it waives all defenses to payment and payment is immediately owed. To further incentivize contractors to promptly pay their subcontractors, CASPA imposes 1% interest per month and 1% penalty per month on the amounts outstanding.  Finally, CASPA mandates the award of attorneys’ fees and expenses to a subcontractor that successfully pursues a claim under CASPA.

CASPA mandates payment within fourteen days

Section 507(b) of CASPA mandates that before a subcontract is executed, a contractor is required to disclose to a subcontractor the due date for receipt of payments from the owner of the Project.  73 P.S. § 507(b). If a contractor fails to disclose those due dates to a subcontractor then the contractor is deemed to have received payment from the owner.  Id.  Section 507(b) states, in relevant part, “if a contractor or subcontractor fails to accurately disclose the due date to a subcontractor, the contractor or subcontractor shall be obligated to pay the subcontractor as though the due dates established in section 5(c)1 were met by the owner.” 73 P.S. § 507(b). This means that when a contractor fails to disclose those due dates to a subcontractor the contractor cannot use lack of payment from the owner as an excuse for non-payment to its subcontractor.

Section 507(c) of CAPSA, mandates that a contractor shall pay a subcontractor within fourteen days of it receiving or being deemed as  receiving payment from the project owner. 73 P.S. § 507(c). In sum, if a contractor fails to disclose the dates it expects payment form the project owner, CASPA requires payment within fourteen days, whether a contractor has received a payment or not from its client.

 Waiving the defense that payment is withheld because of defective work

Under Section 504 of CASPA, “[p]erformance by a contractor or a subcontractor in accordance with the provisions of a contract shall entitle the contractor or subcontractor to payment from the party with whom the contractor or subcontractor has contracted.” 73 P.S. § 504. Under Section 511(b)(1) of CASPA, “if a contractor or subcontractor withholds payment from a subcontractor for a deficiency item, the contractor or subcontractor withholding payment must notify the subcontractor and the owner in writing of the good faith reason for the withholding within the time period specified in the construction contract or 14 calendar days of the date after receipt of the notice of the deficiency item.” 73 P.S. § 511(b)(1). CASPA defines a “deficiency item” as “[w]ork performed but which the owner, the contractor or the inspector will not certify as being completed according to the specifications of a construction contract.  73 P.S. § 502. Importantly, if a contractor fails to comply to Section 511(b)(1) it “shall constitute a waiver of the basis to withhold payment and necessitate payment to the subcontractor in full for the invoice.” 73 P.S. § 511(b)(2).

Can you get an injunction against picketing?

One of the most frequent questions I receive concerns whether you can get an injunction against a union picketing a job site. The answer, like most, is that it depends. While no doubt annoying, simply displaying infamous rat, shouting, hand billing, or walking around with banners or signs is not enough to get an injunction. Injunctions against unions for picketing are limited to circumstances where ingress and egress to a structure is blocked, deliveries impeded, where there are dozens of picketers, or where there is property damage.

In Pennsylvania, injunctions against picketing are governed by the Anit-Injunction Act. Under Section 206d of the Anti-Injunction Act, a Court has the equitable power to enjoin mass picketing, violent acts and threats of violence, or any other illegal activity occurring in connection with a labor dispute. Altemose Constr. Co. v. Bldg. and Constr. Trades Council of Phila., 296 A.2d 504 (Pa. 1972) (“The Supreme Court of the United States, both before and after the Taft-Hartley (Labor-Management Relations) Act, has repeatedly held that State Courts have the power, the right and the duty to restrain violence, mass picketing and overt threats of violence, and to preserve and protect public order and safety and to prevent property damage.”) Section 206d(d) provides the Anti-Injunction Act shall not apply when:

“Where in the course of a labor dispute as herein defined, an employee, or employees acting in concert, or a labor organization, or the members, officers, agents, or representatives of a labor organization or anyone acting for such organization, seize, hold, damage, or destroy the plant, equipment, machinery, or other property of the employer with the intention of compelling the employer to accede to any demands, conditions, or terms of employment, or for collective bargaining.”

43 P.S. § 206d(d).

Where, during the course of a labor dispute, a labor organization seizes an employer’s property with the intention of compelling the employer to accede to its demands, § 206d(d) permits a trial court to issue an injunction. Turner Const. v. Plumbers Local 690, 2015 PA Super 257, 130 A.3d 47, 60 (Pa. Super. Ct. 2015)
It is well settled that the term “seizure” as used in Section 206d(d) includes blocking of entrances, mass picketing, and intimidation, and “forcibly den[ying] an owner of property or his agents and employees free access to that property.” Id. at 61. (“This Court and our High Court have consistently recognized that a seizure occurs when demonstrators interfere with the ingress and egress of visitors to the building or site.”); Neshaminy Constructors, Inc. v. Philadelphia, Pa. Bldg. & Const. Trades Council, AFL-CIO, 303 Pa.Super. 420, 424, 449 A.2d 1389, 1391 (1982)(“Whether accompanied by violence or not, picketing which denies access to an employer’s plant or property constitutes a seizure thereof and cannot be permitted.”) Giant Eagle-Markets Co. v. United Food and Commercial Workers Union, Local No. 23, 652 A.2d 1286, 1292 (Pa. 1995). It is of no significance that pickets impede ingress and egress at only one of several entrances to the premises. Neshaminy Constructors, Inc. v. Philadelphia, Pa. Bldg. & Const. Trades Council, AFL-CIO, 303 Pa.Super. 420, 424, 449 A.2d 1389, 1391 (1982). “[T]he holding of even one gateway to a plant [may] constitute[ ] a seizure” Id.

“Mass picketing constitutes a “seizure” under Section 206d when it ceases to perform its lawful purpose of placing the public on notice that a strike is underway, and instead becomes a means of influencing labor negotiations through harassment and intimidation.” Giant Eagle Markets Co. v. United Food & Commercial Workers Union, Local No. 23, 539 Pa. 411, 426, 652 A.2d 1286, 1293 (1995).

Where the labor dispute falls under Section 206d(d) injunctive relief may properly be issued even in an ex parte proceeding. Philadelphia MinitMan Car Wash Corp. v. Bldg. & Constr. Trades Council, 192 A.2d 378 (1963).

Under Section 206i of the Anti-Injunction Act a Court may properly issue an injunction if it finds that the following six factors have been established: (1) unlawful acts are being committed or threatened, and will be committed or continued if not restrained; (2) substantial and irreparable injury to complainant’s property will follow; (3) greater injury will be inflicted upon complainant by the denial of the relief sought than will be inflicted upon defendants by the granting of relief; (4) no item of relief granted is prohibited under section 206f of the Act; (5) complainant has no adequate remedy at law; and (6) the public officers charged with the duty to protect complainant’s property are unable to furnish adequate protection. 43 Pa.C.S.A. § 206i.