May 2015

Labor leaders, who were among the strongest supporters of the citywide minimum wage increase approved last week by the Los Angeles City Council , are advocating last-minute changes to the law that could create an exemption for companies with unionized workforces.

Source: www.latimes.com

Rules for thee, not me.  Big Labor seeks an exemption to minimum laws that effect the rest of us.  #fightfor15 

We recently obtained a dismissal of a complaint brought by the Philadelphia Carpenter’s Union against a contractor that sought to obtain an audit of that contractor’s books and records for the purpose of determining an alleged ERISA liability owed to the Carpenters under a collective bargaining agreement.  A copy of the opinion can be found here.

In its complaint, the Union alleged that a letter of assent, signed in 1997, that bound the contractor to a collective bargaining agreement between a multiemployer organization and the Union also bound the carpenter to the current 2015 CBA between the organization and the Union.  The 1997 letter of assent contained language commonly found in such documents that said the contractor would be bound by “any additions, modifications, extensions, or renewals” of the CBA between the multiemployer group and the Union.  Accordingly, the Union argued, our client was bound by the current CBA between the multiemployer group and the Union.

We filed a motion to dismiss the complaint because our client was not and had never been a member of the multiemployer organization that entered into the CBA with the Union and never authorized that organization to bargain on its behalf.  The District Court for the Eastern District of Pennsylvania agreed and dismissed the Union’s complaint.

The is an important decision for contractors that sign letters of assent binding themselves to a CBA for a particular project.  For a variety of reasons, it is common practice for a non-signatory contractors to sign a letter of assent – or limited project agreement as they are sometimes called – with a union whereby the contractor agrees to be bound to a CBA for a particular project.  The CBA is usually an existing agreement negotiated between a union and a multiemployer organization to which contractor signing the letter of a assent does not belong. The Federal Court made clear that contractors are not bound successor agreements unless they specifically authorize that multiemployer group to bargain on its behalf for future agreements.

There are two important takeaways.  First, although typically only one page, a letter or assent or limited project agreement is a loaded document that may contain language that binds the signing contractor to obligations well beyond the duration of a project.  Therefore, contractors need to know what they are agreeing to when signing such agreements. Second, if a union is seeking an audit of a contractor’s books and records based on a letter of assent, before agreeing to such an audit, the language of the letter should be reviewed carefully.

 

In a recent NLRB Advice Memorandum, the Board’s Division of Advice dismissed an unfair labor practice complaint and held that before a union can request information from a non-union affiliated entity it must “present objective facts that support their belief that a [union and non-union entity] constitute a single employer.”   Importantly, the Board held that a mere suspicion of a alter ego or single employer relationship is not enough to justify requiring the union employer to provide the union with information regarding its non-union affiliate.

In recent years – and as chronicled on this blog – businesses and prosecutors have slowly chipped away  at the belligerent tactics Philadelphia labor unions have for years employed to achieve their objective of monopolizing work for their members (and ultimately enriching fat cat union bosses).   The first blow came when an apartment developer dared build a project in Philadelphia utilizing a non-union workforce.  In its wake, many developers, who for years refused to build in the City of Philadelphia because of Philadelphia’s building trade unions, are now constructing projects throughout the City using a non-union workforce.

The second blow came when the United States Department of Justice indicted 10 members of Philadelphia Ironworkers’ Union, which ultimately led to 9 guilty pleas and jury verdict finding the head of the Ironworker, Joseph Daugherty, guilty of charges of extortion and other charges. The Ironworkers that have been sentenced have received federal prison terms of 2-8 years.

The third blow came when the Pennsylvania Convention Center signed an agreement with electrical, laborers’, and riggers’ unions, which the Philadelphia Carpenters’ Union refused to sign.  The Convention stood their ground and refused to allow the Carpenters’ Union to work in the Convention Center after the deadline for signing the agreement passed.

Now, the Convention Center has stricken a potential death blow to union tactics, as we known them, in Philadelphia by filing a civil RICO complaint against the Carpenters’ Union and its Executives, including head of the Philadelphia Building Trades, Edward Coryell, Sr.  A copy of the complaint – which is must read – is available here (COMPLAINT.)  (For good reason, civil RICO has been described a thermonuclear device of civil litigation.)

In previous posts, I predicted that the Ironworkers’ conviction would pave the way for civil RICO actions like the one filed by the convention center because labor union no longer enjoyed protection from Hobbs Act violations.  The Hobbs Act makes it a federal crime to conspire to commit extortion.  Past civil RICO complaints against labor unions have typically failed because the plaintiff was unable to demonstrates a predicate under the RICO statute.  Violating the Hobbs Act is a predicate act.   Indeed, the predicate act that the Convention Center relies upon to support its RICO claim against the Carpenters’ Union is the Hobbs Act.

Previously, labor unions successfully had civil RICO actions dismissed early in the litigation because for many years labor union enjoyed immunity from Hobbs Act violations so long as they were furthering “legitimate union objectives.”  However, courts have slowly eroded that long standing protection and many commentators, including myself, believe it no longer exists.  Now, that theory will be put to the test with the Convention Center’s complaint.  The Carpenters’ Union will certainly file a motion to dismiss arguing that their actions were furthering legitimate union objectives and, therefore, are not violations of the Hobbs Act.  How the federal court decides that motion will shape labor relations in the City of Philadelphia and perhaps across the nation for years to come.

If the Court, which I predict, denies the motion, then anyone subject to the same tactics the Carpenters’ Union can safely file a civil RICO complaint against labor unions and be fairly certain that the case will reach the trial stage.  (To the uninitiated, the actions of the Carpenter’s Union as described in the complaint probably appear salacious, however, to anyone that performs construction work in Philadelphia they are actually quite de rigueur.) With a viable civil RICO claim, the only option for those suffering from outrageous union tactics will no longer be going to the National Labor Relations Board (a friend of organized labor to begin with) hat in hand to ask for a toothless unfair labor complaint. If the Court grants the motion and dismisses the Convention Center’s complaint, then labor unions will only have to fear the RICO act when it is used by federal prosecutors and it will be business as usual for Big Labor.

It’s full speed ahead for union organizing efforts thanks to the new NLRB’s “ambush elections” rule; more than 140 petitions for workplace elections have been filed under the new rule, which went into effect three weeks ago.

Source: www.bizjournals.com

On the bright side 15 ambush decertifications have been filed as well and several have already been successful.

With construction going on around the city and building projects on the rise, six of Philadelphia’s building-trades unions settled contracts Thursday designed to make them more marketable in the suburbs.

Source: www.philly.com

Prediction – the building trades will continue to lose market share both within the City and in the suburbs.  Wages rates are only part of the problem.