Circuit Upholds City Pacts With Construction Unions

A slightly different version of this story appeared in the May 7 edition of the New York Law Journal.

NEW YORK CITY-A Second Circuit panel has ruled that agreements between New York City and a group representing some 50 construction unions do not violate federal labor law, affirming an August 2011 ruling by Southern District Judge Robert Patterson. The disputed project labor agreements affect $6 billion in current and future city projects, according to a statement from the city's Law Department.

The decision from the US Court of Appeals for the Second Circuit affirmed the dismissal of a suit filed last year by the Building Industry Electrical Contractors Association and the United Electrical Contractors Association, two groups representing contractors. It alleged the city's "project labor agreements," or PLAs, with the Building and Construction Trades Council of Greater New York, which represents about 50 unions, ran afoul of the National Labor Relations Act. The agreements set terms for the employment of over 30,000 construction workers on city projects through 2014.

The plaintiffs, who are not members of the trade council, argued that the city was putting unions that did not belong to the council at a disadvantage because those unions may already have agreements with the city that are inconsistent with the PLAs. They said the city was acting as a regulator rather than a market participant. The panel in Building Industry Electrical Contractors Association v. City of New York, 11-3590, rejected this argument in a May 4 opinion.

"The PLAs challenged here represent the City's permissible proprietary choice; the City has behaved just as any other major landowner or developer might to secure labor for many of its construction projects," the panel wrote. "Because the PLAs are market activity and not regulation, the preemption claim must fail."

The panel consisted of Judges Amalya Kearse, John Walker and Gerard Lynch.