High Court Rejects Contractors Suit on Union Hiring

In a victory for labor unions and municipalities, the California Supreme Court ruled Monday that governmental agencies can require municipal projects to be built with union contracts.

The court unanimously rejected a lawsuit by a contractors group opposed to a labor plan for a $2.4-billion expansion of San Francisco International Airport. The contractors employ nonunion workers and wanted to be able to land lucrative airport construction work without union participation. They argued that the labor plan was unconstitutional and violated competitive bidding laws.

But the state high court said the city’s airport commission can lawfully require contractors to abide by union procedures and wage scales in exchange for a no-strike pledge from the unions.

San Francisco officials could reasonably conclude that the plan “offered the most effective way to ensure labor harmony on the project and thereby avoid the undesirable consequences of work disruption,” wrote Justice Kathryn Mickle Werdegar for the court.

The use of such labor agreements has grown nationally in recent years as have legal fights over them. The plans generally require both union and nonunion contractors on large construction projects to follow union grievance procedures and pay union wages and benefits. The workers also must pay union dues, even if they do not join the union.

In return, the unions agree not to strike and to arbitrate jurisdictional disputes among various crafts.

The Metropolitan Water District of Southern California has such labor plans in place for ongoing expansion projects, and a lawsuit challenging them is pending before the California Supreme Court. As a result of Monday’s ruling, the labor plans of the water district are expected to be upheld.

Federal courts have generally permitted such labor agreements, and only one state high court, in New Jersey, has flatly rejected them, according to lawyers in the San Francisco case.

Alice Conway, an attorney for the Associated Builders and Contractors Inc., which filed the lawsuit against the airport, said the ruling will raise the cost of public construction and reduce competition.

“Look at political contributions,” she said. “A lot come from unions. This is a way to keep a supporter very, very happy.”

But Harold J. McElhinny, a lawyer for the San Francisco Airports Commission, said the ruling reaffirms the independence of governmental agencies. “It’s a pretty ringing endorsement of discretion at the local level,” he said.

Union lawyer Sandra Rae Benson predicted that the decision will reduce legal challenges to these pre-hiring agreements.

“This decision is of extreme importance,” Benson said. “Courts all over the U.S. have been waiting for this decision to come out because that is how the rest of the country will go.”

San Francisco’s 10-year airport expansion plan is now about 70% completed. Its centerpiece is a 2.5-million-square-foot international terminal. The project also will provide 10,000 new parking spots, elevated roads from the freeway and a rail system on airport grounds.

John Robinson, executive director of the Golden Gate chapter of Associated Builders, said the Supreme Court decision will particularly hurt construction firms owned by women and minorities because most are not unionized.

He called the labor plans a “sneaky way for unions to get more members and more revenue for their trust funds without having to organize workers.”

“It’s a shame that the California Supreme Court feels union-only construction serves legitimate government interests,” Robinson said. “It’s a travesty for taxpayers and everyone who chooses to work in construction outside a union.”

He said the agreement prevents a contractor from hiring a favored employee unless that worker had been part of its ongoing work force in the time immediately preceding the public project. He also said the plans do not ensure labor peace, noting that a wildcat strike briefly crippled the San Francisco airport construction in May.

But John Martin, director of the airport, said the agreement was critical to getting the workers back on their jobs. “Union leaders stepped in to get the workers back,” Martin said.

“The agreement has worked very well from the airport’s point of view in ensuring labor harmony and ensuring we can complete the project on schedule,” he said.

San Francisco City Atty. Louise Renne called Monday’s ruling a validation of “labor-management cooperation.”

“It means we can move forward on the airport expansion with a mechanism in place to settle differences and keep the work on schedule,” Renne said.

The California Supreme Court has said its ruling in the San Francisco case will decide the legality of the labor plans of the Metropolitan Water District, which are similar to San Francisco’s.

N. Gregory Taylor, general counsel to the district, said its plans have “promoted people getting along with each other on the job and getting the job done with minimum problems.”

The water district established the labor agreement for development of what will be the largest drinking water reservoir in Southern California. The lake, located in southwest Riverside County near Hemet, is scheduled to be completed in the next few months at a cost of $2.1 billion. The district also has a labor plan for construction of a 44-mile water line at a cost of $1.2 billion.