Developer accuses two construction unions of engaging in racketeering and extortion
A Los Angeles real estate developer has filed a lawsuit accusing two labor unions of violating federal racketeering and antitrust laws as they attempted to block the approval of a mixed-use complex in the San Fernando Valley.
The Icon Co., which is seeking to build a $150-million project in Panorama City, said in its lawsuit that the Southwest Regional Council of Carpenters and Local 300 of the Laborers International Union of North America engaged in predatory and extortionist conduct as they filed environmental challenges over the development.
In the months leading up to a City Council vote, the two unions warned that the project would have negative effects on traffic, air quality and other issues. Yet behind the scenes, union officials offered to drop their environmental challenge if the Icon Co. agreed to hire only unionized construction workers, the developer’s lawsuit states.
The company refused to sign, in part out of a concern over the increased cost, said Karl Tilleman, an attorney for Icon.
“The union defendants’ sole purpose in filing [environmental] challenges was to delay the project and coerce, intimidate and pressure Icon to agree to use exclusively union labor, otherwise Icon would suffer significant cost increases to the project,” said the lawsuit, which was filed Wednesday.
A lawyer for the two unions dismissed the allegations, saying his clients identified valid issues with the city’s review of the Panorama City project, which is planned for Roscoe Boulevard just west of Van Nuys Boulevard.
Richard Drury, who represents the carpenters and the laborers, also said there would have been nothing improper about his clients engaging in discussions about work for their members on a specific project.
“Unions are allowed to talk about hiring union labor any day of the week. That’s what they do for a living,” Drury said. “But they’re also allowed to participate in the [state’s environmental review] process and get projects built clean.”
Neighborhood groups and homeowner associations have long been seen as a major obstacle to the approval of housing and shopping centers in L.A. But union organizations have become equally aggressive on development matters, testifying at public hearings, filing procedural objections and making arguments based on provisions of the California Environmental Quality Act.
Unite Here, which represents hotel and restaurant workers, has filed objections in recent years over real estate projects stretching from downtown to Playa del Rey. And since August, the carpenters’ union has filed three anti-development lawsuits — one opposing Icon and two others targeting projects in Chinatown and in downtown’s Arts District.
In its lawsuit, Icon said it had identified roughly a dozen projects that are facing pushback from the construction unions. Those types of challenges are making it more expensive for companies to build housing in Southern California, the developer argued.
The City Council unanimously approved the Icon Panorama project in August, clearing the way for the construction of shops, restaurants and 623 apartments on a site previously occupied by a Montgomery Ward store. The Montgomery Ward closed its doors in 2001 and the site had been vacant for several years, according to the lawsuit.
The two construction unions sued in October, saying the city failed to assess the project’s “true impacts” on greenhouse gas emissions, traffic congestion and government services. The lawsuit also claimed city officials did not properly examine the issue of contaminated soil on the site.
“We’ve got a very legitimate environmental case here, and I think we should win on the merits,” said Drury, the lawyer for the unions.
The two construction unions are seeking to have a Superior Court judge overturn the council’s decision. Icon, for its part, is seeking financial damages and an injunction blocking the unions from proceeding with their lawsuit.
Councilwoman Nury Martinez, whose district includes Panorama City, said in a statement saying the council backed the Icon project because of “the support and enthusiasm” that came from the surrounding community.
”It’s disappointing that Panorama City residents will have to continue to wait to see this part of the community revitalized while the differences are resolved,” she said.
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