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Federal Court Enjoins Michigan's Amended Project Labor Agreement Statute

By Thomas P. Brady / Nov 20, 2012

On November 15, 2012, United States District Court Judge Victoria A. Roberts issued a preliminary injunction, in Michigan Building and Construction Trades Council, AFL-CIO v. Richard Snyder, Case No. 12 - 13567, ( Council II ).  She enjoined the enforcement of Michigan's amended Fair Open Competition in Government Construction Act, MCL §408.871 et seq .  The court's decision in Council II allows local units of government the option of requiring contractors and subcontractors to sign project labor agreements when bidding on public projects.

Last year, Michigan enacted 2011 PA 98, the Fair and Open Competition in Governmental Construction Act.  Several union trade groups successfully challenged the law in Michigan Building and Construction Trade Council v Richard Snyder (Council I) , 192 LRRM 3320 (2012).  In that case, Judge Roberts held that 2011 PA 98 effectively prevented contractors and subcontractors, who signed project labor agreements, from bidding on public projects.  She held that the Act was preempted by the National Labor Relations Act (NLRA).  Governor Richard Snyder appealed the injunction and is awaiting a decision from the United States Court of Appeals for the Sixth Circuit.

While waiting on the appeal, the Michigan Legislature enacted and Governor Snyder signed 2012 PA 238 (Act) into law on June 29, 2012.  It amended 2011 PA 98 by adding a new Section 2 to the Act.  Section 2 attempts to clarify that the State is acting in its proprietary capacity and not attempting to regulate labor issues.  It also attempted to avoid the preemption argument by amending Section 5 of the original Act to remove the restriction on the use of PLAs by private actors like the trade groups.

The trade groups brought another action against Governor Snyder and sought a preliminary injunction to prevent the enforcement of the amended Act.  Ruling on their motion for a preliminary injunction, Judge Roberts found that the trade groups were likely to succeed on the merits of the case.  According to Judge Roberts, the amended Act was preempted under the United States Supreme Court's decision in San Diego Building Trades Council v. Garmon , 359 U.S. 244 (1959) because it "effectively constricts the right of employees to negotiate and enter into PLAs."  The court also found that the amended Act was preempted under the Supreme Court's decision in Lodge 76 International Association of Machinists and Aerospace Workers v. Wisconsin Employment Relations Commission , 427 U.S. 132 (1976), because it prohibited activity allowed by sections 8(e) and 8(f) of the NLRA, regulating an area of labor law that Congress intended to be left unregulated and controlled by the free play of economic forces.  The court rejected the Governor's argument that Section 2 of the amended Act demonstrated that the State was acting in its proprietary capacity and not attempting to regulate labor activity.

Because the trade groups were likely to succeed on the merits of their claim, the court found that the trade groups would suffer irreparable harm if the injunction was not granted. The court found that no one would suffer harm if the preliminary injunction was issued and that the public interest was fulfilled by correctly applying federal constitutional and statutory law.  The court issued a preliminary injunction preventing the enforcement of the amended Act.

The court's decision in Council II , allows local units of government the option to require contractors and subcontractors to sign project labor agreements on public construction projects.

If you have any questions about the decision or project labor agreements, you may contact Thomas P. Brady at (313) 965-8192 or tbrady@clarkhill.com , Marshall W. Grate, (616) 608-1103 or mgrate@clarkhill.com or another member of Clark Hill's Labor and Employment, Municipal and School, and Construction groups.