The opinion
[This opinion has been published in Ohio Official Reports at 81 Ohio St.3d 346.]
J.A. CROSON COMPANY, APPELLEE, v. J.A. GUY, INC. ET AL., APPELLANTS.
[Cite as J.A. Croson Co. v. J.A. Guy, Inc., 1998-Ohio-621.]
Labor and industry—Public works—Prevailing wage law—Section 7 of National
Labor Relations Act preempts state regulation under Ohio Adm.Code
4101:9-4-07(B)(6) and R.C. 4115.01(D) to the extent those provisions could
be construed to restrain or inhibit federally protected use of job targeting
programs.
Section 7 of the National Labor Relations Act preempts state regulation under Ohio
Adm.Code 4101:9-4-07(B)(6) and R.C. 4115.10(D) to the extent that those
provisions could be construed to restrain or inhibit the federally protected
use of job targeting programs.
(Nos. 96-2578 and 97-14—Submitted January 13, 1998—Decided April 8, 1998.)
APPEAL from and CERTIFIED by the Court of Appeals for Pickaway County, No.
95-CA-10.
__________________
{¶ 1} This action arises out of a claim by J.A. Croson Company (“J.A.
Croson”) that the successful bidder on two public improvement projects, J.A. Guy,
Inc. (“J.A. Guy”), violated Ohio prevailing wage law by cooperating with the
United Association of Journeymen and Apprentices of the Plumbing and Pipefitting
Industry of the United States and Canada, Local 189 (“Local 189”) with respect to
a “job targeting” program.
{¶ 2} J.A. Guy placed successful bids on two public improvement projects,
one involving plumbing for a new jail in Pickaway County and the other, following
completion of the jail project, involving construction of a water softening system
for the jail. Before submitting its bid on the jail project, J.A. Guy made a request
to Local 189 that the union “target” the jail project by permitting any successful
SUPREME COURT OF OHIO
bidder on the project that was also a signatory to a collective bargaining agreement
with Local 189 to participate in the Plumbers and Pipe Fitters Local 189 Industry
Advancement Program (“Industry Advancement Program”). Local 189 agreed to
target the jail project and informed union contractors bidding on the project that,
under its Industry Advancement Program, it would pay the successful bidder a $9
grant per man-hour worked by Local 189 members on the project. J.A. Guy
calculated its bid accordingly and submitted the lowest bid on the jail project.
{¶ 3} Following completion of the jail project, it became necessary to install
a water softening system. J.A. Guy bid on and received the construction contract
for the water softening project. Local 189 did not target the water softening project
and, consequently, did not pay J.A. Guy any funds under its Industry Advancement
Program for the project.
{¶ 4} Pursuant to R.C. 4115.16(B), J.A. Croson, an unsuccessful bidder on
both the jail project and the water softening project, filed a complaint in common
pleas court alleging that J.A. Guy had violated Ohio’s prevailing wage law.
Specifically, the complaint alleged that J.A. Guy made a “special assessment”
prohibited by Ohio Adm.Code 4101:9-4-07(B)(6) when it withheld two percent of
employee gross earnings on both the jail and water softening projects for placement
in the Industry Advancement Program Fund under the dues checkoff clause of its
collective bargaining agreement with Local 189. Additionally, as the issues
developed, J.A. Croson argued that J.A. Guy had violated the antikickback
provision of Ohio’s prevailing wage law (R.C. 4115.10[D]) by receiving job
targeting grants from the union.
{¶ 5} J.A. Guy made Local 189 a third-party defendant to the action,
asserting that all employee wage deductions under the collective bargaining
agreement were remitted to Local 189 and, therefore, any use of those sums in
violation of the prevailing wage law was caused by the union’s acts or omissions.
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J.A. Guy, Local 189, and J.A. Croson all moved for summary judgment on the basis
of their respective claims and defenses.
{¶ 6} The trial court concluded that, pursuant to San Diego Bldg. Trades
Council v. Garmon (1959), 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775, federal law
preempted J.A. Croson’s state claims and granted summary judgment in favor of
J.A. Guy and Local 189. On appeal, the Pickaway County Court of Appeals
reversed the trial court decision, holding federal preemption inapplicable.
{¶ 7} The Pickaway County Court of Appeals certified to this court a
conflict between its judgment and the judgments of the Hamilton and Madison
County Courts of Appeals in Indep. Electrical Contrs. of Greater Cincinnati, Inc.
v. Hamilton Cty. Div. of Pub. Works (1995), 101 Ohio App.3d 580, 656 N.E.2d 18,
and J.A. Croson Co. v. Cent. Ohio Joint Vocational School Dist. (1995), 104 Ohio
App.3d 146, 661 N.E.2d 250. Upon consideration of the certified issue and
contemporaneous discretionary appeals filed by J.A. Guy and Local 189, we
determined that a conflict exists, accepted the discretionary appeals, and directed
the parties to brief the following issue:
“Whether federal labor law preempts a claim that a union employer’s
deduction of union dues for a union ‘Industry Advancement’ or ‘job targeting’ fund
violates Ohio’s Prevailing Wage Law, R.C. 4115.01 et seq., and state regulations
adopted thereunder.”
{¶ 8} The cause is now before this court for consideration of the
discretionary appeals and resolution of the certified conflict.
__________________
Kegler, Brown, Hill & Ritter, Ronald L. Mason and Thomas M.L. Metzger,
for appellee.
Schottenstein, Zox & Dunn, Felix C. Wade and Edwin L. Skeens, for
appellant J.A. Guy, Inc.
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Benesch, Friedlander, Coplan & Aronoff, L.L.P., N. Victor Goodman, Mark
D. Tucker and Rex A. Littrell, for appellant Local 189.
Betty D. Montgomery, Attorney General, Michael D. Allen and Daniel P.
Jones, Assistant Attorneys General, urging affirmance for amicus curiae, Ohio
Bureau of Employment Services.
Venable, Baetjer, Howard & Civiletti, L.L.P., Maurice Baskin and Paul A.
Debolt, urging affirmance for amicus curiae, Associated Builders and Contractors,
Inc.
Sherman, Dunn, Cohen, Leifer & Yellig, P.C., Terry R. Yellig and Jonathan
D. Newman, urging reversal for amicus curiae, the Building and Construction
Trades Department, AFL-CIO, and the Ohio State Building and Construction
Trades Council, AFL-CIO.
Schmeltzer, Aptaker & Shepard, P.C., Robert L. Duston and Gary L. Lieber,
urging reversal for amicus curiae, National Electrical Contractors Association and
National Electrical Contractors Association, Ohio Conference.
Bricker & Eckler and Luther L. Liggett, Jr., urging reversal for amicus
curiae, Ohio Mechanical Contracting Industry.
__________________
COOK, J.
JOB TARGETING
{¶ 9} The legal dispute in this case centers on Local 189’s use of a job
targeting program. Job targeting is a strategy employed nationwide by construction
unions, with the cooperation of unionized contractors, in response to declining
union membership and the expanding market penetration of nonunion construction.
See Northup & White, Subsidizing Contractors to Gain Employment; Construction
Union “Job Targeting” (1996), 17 Berkeley J. Employment & Labor L. 62. The
aim of job targeting programs is clear: unions want union contractors to bid
successfully on construction projects so that the jobs created by those projects will
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go to union members. Typically, unions carry out their job targeting programs by
selecting projects to target and guaranteeing subsidies to union contractors that
submit successful bids. The result is to lower union contractors’ overall costs
required to complete targeted projects, enabling union contractors to submit
competitive bids.
{¶ 10} Local 189 carries on job targeting through its Industry Advancement
Program. The union pays its grants to unionized contractors on targeted jobs from
a fund specifically created for the program. The fund is maintained through union
members’ voluntary contributions, which are deducted from employee gross
earnings at a rate of two percent and remitted to Local 189 pursuant to the dues
checkoff clause of the union’s collective bargaining agreements with its unionized
contractors. The collective bargaining agreements label the two percent deduction
as a “Market Recovery Assessment” and state that the assessment is additional to
the 1 3/4 percent deduction for regular checkoff dues. The Market Recovery
Assessment is subject to the periodic approval of union members.
{¶ 11} Accordingly, whether working on a targeted job or not, Local 189
union members have two percent of their gross earnings deducted and remitted to
the union for placement in the Industry Advancement Program fund. The union
chooses which jobs to target. A unionized contractor may request that the union
target a particular job, but the ultimate decision of whether to target a job and how
much to pay in grants is made by Local 189 officials.
OHIO’S PREVAILING WAGE LAW
{¶ 12} The prevailing wage statutes, R.C. 4115.03 through R.C. 4115.16,
require contractors and subcontractors for public improvement projects to pay
laborers and mechanics the so-called prevailing wage in the locality where the
project is to be performed. “[T]he primary purpose of the prevailing wage law is
to support the integrity of the collective bargaining process by preventing the
undercutting of employee wages in the private construction sector.” (Plurality
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opinion.) State ex rel. Evans v. Moore (1982), 69 Ohio St.2d 88, 91, 23 O.O.3d
145, 147, 431 N.E.2d 311, 313.
{¶ 13} Two prevailing wage provisions are at issue. The first is Ohio
Adm.Code 4101:9-4-07, a regulation that was adopted by the Administrator of the
Bureau of Employment Services pursuant to R.C. 4115.12. Ohio Adm.Code
4101:9-4-07(B)(6) makes it a violation of R.C. 4115.07 to deduct union fines or
special assessments from employee wages.1 J.A. Croson seeks to demonstrate that
the Market Recovery Assessment withheld by J.A. Guy from its employees’ wages
pursuant to its collective bargaining agreement with Local 189 is prohibited as a
special assessment under the regulation. Also under J.A. Croson’s theory, J.A.
Guy’s deduction of the Market Recovery Assessment reduces employee wages
below the prevailing wage, constituting a violation of the prevailing wage law.
{¶ 14} The second provision at issue is R.C. 4115.10(D), which prohibits
any person from demanding, requesting, or receiving any part of a worker’s wages
upon the statement, representation, or understanding that failure to comply with
such demand or request will prevent the worker from procuring or retaining
employment.2 The statute contains an exception for any agent or representative of
1. Ohio Adm.Code 4101:9-4-07(B)(6) states:
“(B) The following deductions from wages may be made only if, prior to commencement
of work by the employee on any project, employers procure and maintain, in writing, proof of
voluntary deductions signed by the employee:
“* * *
“(6) Any deductions to pay regular union initiation fees and membership dues, not
including fines or special assessments, provided that a collective bargaining agreement between the
employer and representatives of its employees permits such deductions and such deductions are not
otherwise prohibited by law.”
2. R.C. 4115.10(D) provides:
“Where persons are employed and their rate of wages has been determined as provided in
section 4115.04 of the Revised Code, no person, either for self or any other person, shall request,
demand, or receive, either before or after the person is engaged, that the person so engaged pay
back, return, donate, contribute, or give any part or all of the person’s wages, salary, or thing of
value, to any person, upon the statement, representation, or understanding that failure to comply
with such request or demand will prevent the procuring or retaining of employment, and no person
shall, directly or indirectly, aid, request, or authorize any other person to violate this section. This
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January Term, 1998
a labor organization acting in the collection of dues or assessments of that
organization. J.A. Croson seeks to demonstrate that J.A. Guy’s receipt of job
targeting funds violates R.C. 4115.10(D).
PREEMPTION UNDER THE NLRA
{¶ 15} In any case concerning preemption, congressional purpose must be
the ultimate focus. Malone v. White Motor Corp. (1978), 435 U.S. 497, 504, 98
S.Ct. 1185, 1189-1190, 55 L.Ed.2d 443, 450. The National Labor Relations Act
(“NLRA”) contains no express preemption provision. “Where the pre-emptive
effect of federal enactments is not explicit, ‘courts sustain a local regulation “unless
it conflicts with federal law or would frustrate the federal scheme, or unless the
courts discern from the totality of the circumstances that Congress sought to occupy
the field to the exclusion of the States.” ’ ” Metro. Life Ins. Co. v. Massachusetts
(1985), 471 U.S. 724, 747-748, 105 S.Ct. 2380, 2393, 85 L.Ed.2d 728, 745, quoting
Allis-Chalmers Corp. v. Lueck (1985), 471 U.S. 202, 209, 105 S.Ct. 1904, 1910, 85
L.Ed.2d 206, 213-214. In determining whether state regulation should yield to
subordinating federal authority, the United States Supreme Court has been
concerned with potential conflict regarding substantive law, remedies, and
administration. The potential for conflict arises when two law-enforcing
authorities, with the disharmonies inherent in two systems, one federal the other
state, are required to apply inconsistent standards of substantive law and/or
differing remedial schemes. Garmon, 359 U.S. at 241-242, 79 S.Ct. at 778, 3
L.Ed.2d at 781.
{¶ 16} The Supreme Court articulated two distinct NLRA preemption
principles in Metro. Life, supra. “The first, ‘Garmon pre-emption,’ see San Diego
Building Trades Council v. Garmon, supra, forbids state and local regulation of
activities that are ‘protected by § 7 of the [NLRA], or constitute an unfair labor
division does not apply to any agent or representative of a duly constituted labor organization acting
in the collection of dues or assessments of such organization.”
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practice under § 8.’ [Garmon] 359 U.S. at 244 [79 S.Ct. at 779, 3 L.Ed.2d at 782].
See also Garner v. Teamsters, 346 U.S. 485, 498-499 [74 S.Ct. 161, 170, 98 L.Ed.
228, 244] (1953) (‘[W]hen two separate remedies are brought to bear on the same
activity, a conflict is imminent’). Garmon pre-emption prohibits regulation even
of activities that the NLRA only arguably protects or prohibits. See Wisconsin
Dept. of Industry v. Gould Inc., 475 U.S. 282, 286 [106 S.Ct. 1057, 1061, 89
L.Ed.2d 223, 228] (1986). This rule of pre-emption is designed to prevent conflict
between, on the one hand, state and local regulation and, on the other, Congress’
‘integrated scheme of regulation,’ Garmon, 359 U.S., at 247 [79 S.Ct. at 781, 3
L.Ed.2d at 784], embodied in §§ 7 and 8 of the NLRA, which includes the choice
of the NLRB, rather than state or federal courts, as the appropriate body to
implement the Act.” (Emphasis sic.) Bldg. & Constr. Trades Council of Metro.
Dist. v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc.
(1993), 507 U.S. 218, 224-225, 113 S.Ct. 1190, 1194-1195, 122 L.Ed.2d 565, 574,
citing Metro. Life, 471 U.S. at 748-749, 195 S.Ct. at 2393-2394, 85 L.Ed.2d at 745-
746, and fn. 26.
{¶ 17} “A second pre-emption principle, ‘Machinists pre-emption,’ see
Machinists v. Wisconsin Employment Relations Comm’n [1976], 427 U.S. [132] at
147 [96 S.Ct. 2548, 2556, 49 L.Ed.2d 396, 407] prohibits state and municipal
regulation of areas that have been left ‘ “to be controlled by the free play of
economic forces.” ’ Id., at 140 [96 S.Ct. at 2553, 49 L.Ed.2d at 403] (citation
omitted). See also Golden State Transit Corp. v. Los Angeles, 475 U.S. 608, 614
[106 S.Ct. 1395, 1398, 89 L.Ed.2d 616, 623] (1986) (Golden State I); Golden State
Transit Corp. v. Los Angeles, 493 U.S. 103, 111 [110 S.Ct. 444, 451, 107 L.Ed.2d
420, 431] (1989) (Golden State II). Machinists pre-emption preserves Congress’
‘intentional balance “ ‘between the uncontrolled power of management and labor
to further their respective interests.’ ” ’ Golden State I, 475 U.S., at 614 [106 S.Ct.
at 1399, 89 L.Ed.2d at 623-624] (citations omitted).” Bldg. & Constr. Trade
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Council of Metro. Dist., 507 U.S. at 225-226, 113 S.Ct. at 1195, 122 L.Ed.2d at
575.
GARMON PREEMPTION
{¶ 18} “In San Diego Building Trades Council v. Garmon, 359 U.S. 236
[79 S.Ct. 773, 3 L.Ed.2d 775], the Court made two statements which have come to
be accepted as the general guidelines for deciphering the unexpressed intent of
Congress regarding the permissible scope of state regulation of activity touching
upon labor-management relations.” Sears, Roebuck & Co. v. San Diego Cty. Dist.
Council of Carpenters (1978), 436 U.S. 180, 187, 98 S.Ct. 1745, 1752, 56 L.Ed.2d
209, 219. The first statement relates to activity which is clearly protected or
prohibited by the federal statute. The second articulated a more sweeping
prophylactic rule concerning activity that is only arguably subject to the protections
found in Section 7 or the prohibitions found in Section 8 of the NLRA. Id.
CLEARLY PROTECTED OR CLEARLY PROHIBITED ACTIVITY
{¶ 19} “When it is clear or may fairly be assumed that the activities which
a State purports to regulate are protected by § 7 of the National Labor Relations
Act, or constitute an unfair labor practice under § 8, due regard for the federal
enactment requires that state jurisdiction must yield. To leave the States free to
regulate conduct so plainly within the central aim of federal regulation involves too
great a danger of conflict between power asserted by Congress and requirements
imposed by state law. * * * Regardless of the mode adopted, to allow the States to
control conduct which is the subject of national regulation would create potential
frustration of national purposes.” Garmon, 359 U.S. at 244, 79 S.Ct. at 779, 3
L.Ed.2d at 782-783.
{¶ 20} Accordingly, if the National Labor Relations Board (“NLRB”) has
decided, subject to appropriate federal judicial review, that conduct is either
protected by Section 7 or prohibited by Section 8, the matter is at an end and states
are ousted of all jurisdiction. Id. at 245, 79 S.Ct. at 780, 3 L.Ed.2d at 783.
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ARGUABLY PROHIBITED OR PROTECTED ACTIVITY
{¶ 21} Where conduct only arguably falls under the protections of Section
7 or the prohibitions of Section 8 of the NLRA, and the NLRB has not yet passed
on whether the conduct is actually protected or prohibited, and it may not be fairly
assumed that the NLRB would adjudge the conduct to be neither protected nor
prohibited, courts generally must refrain from adjudicating the issue. Id. at 244, 79
S.Ct. at 779, 3 L.Ed.2d at 783. “It is essential to the administration of the Act that
these determinations be left in the first instance to the NLRB.” Id. at 244-245, 79
S.Ct. at 779, 3 L.Ed.2d at 783. Accordingly, the Supreme Court has established the
doctrine of primary jurisdiction to safeguard Congress’s design to “entrust
administration of the labor policy for the Nation to a centralized administrative
agency [the NLRB].” Gould, 475 U.S. at 289-290, 106 S.Ct. at 1063, 89 L.Ed. at
230.
{¶ 22} In enacting the NLRA,
“ ‘Congress did not merely lay down a substantive rule of law to be enforced
by any tribunal competent to apply law generally to the parties. It went on to
confide primary interpretation and application of its rules to a specific and specially
constituted tribunal and prescribed a particular procedure for investigation,
complaint and notice, and hearing and decision, including judicial relief pending a
final administrative order. Congress evidently considered that centralized
administration of specially designed procedures was necessary to obtain uniform
application of its substantive rules and to avoid these diversities and conflicts likely
to result from a variety of local procedures and attitudes towards labor
controversies. * * * A multiplicity of tribunals and a diversity of procedures are
quite as apt to produce incompatible or conflicting adjudications as are different
rules of substantive law.’ ” Garmon, 359 U.S. at 242-243, 79 S.Ct. at 778, 3 L.Ed.2d
at 781-782, quoting Garner, 346 U.S. at 490-491, 74 S.Ct. at 165-166, 98 L.Ed. at
239-240.
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PROHIBITED CONDUCT VERSUS PROTECTED CONDUCT
{¶ 23} Regardless of whether conduct is clearly or only arguably subject to
NLRA regulation, different concerns arise depending on whether the conduct may
be said to be protected or prohibited. When conduct is prohibited, state regulation
concerning the same issue may not necessarily come into direct conflict with the
overt policy of the federal prohibition. Nevertheless, “the Garmon rule prevents
States not only from setting forth standards of conduct inconsistent with the
substantive requirements of the NLRA, but also from providing their own
regulatory or judicial remedies for conduct prohibited or arguably prohibited by the
Act. See [Garmon] 359 U.S., at 247 [79 S.Ct. at 780-781, 3 L.Ed.2d at 787]. The
rule is designed to prevent ‘conflict in its broadest sense’ with the ‘complex and
interrelated federal scheme of law, remedy and administration,’ id., at 243 [79 S.Ct.
at 778, 3 L.Ed.2d at 782] and [the Supreme] Court has recognized that ‘[c]onflict
in technique can be fully as disruptive to the system Congress erected as conflict in
overt policy.’ ” Gould, 475 U.S. at 286, 106 S.Ct. at 1061, 89 L.Ed.2d at 228,
quoting Amalgamated Assn. of Street, Elec. Ry. & Motor Coach Employees of Am.
v. Lockridge (1971), 403 U.S. 274, 287, 91 S.Ct. 1909, 1918, 29 L.Ed.2d 473, 483.
With respect to activity prohibited under Section 8 of the NLRA, the court has
carefully noted that “ ‘the range and nature of those remedies that are and are not
available is a fundamental part’ of the comprehensive system established by
Congress.” Gould, 475 U.S. at 287, 106 S.Ct. at 1061, 89 L.Ed.2d at 228, quoting
Lockridge, 403 U.S. at 287, 91 S.Ct. at 1918, 29 L.Ed.2d at 483.
{¶ 24} “Apart from notions of ‘primary jurisdiction,’ there would be no
objection to state courts’ and the NLRB’s exercising concurrent jurisdiction over
conduct prohibited by the federal Act.” (Emphasis added and footnote omitted.)
Sears, 436 U.S. at 199-200, 98 S.Ct. at 1758-1759, 56 L.Ed.2d at 226-227.
Considerations of federal supremacy, however, are implicated to a greater extent
where conduct is protected under Section 7 of the NLRA. Id. Where conduct is
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protected, “[t]he danger of permitting local adjudications is not that timing or form
of relief might be different from what the Board would administer, but rather that
the local court might restrain conduct that is in fact protected by the Act.” Sears,
436 U.S. at 221, 98 S.Ct. at 1770, 56 L.Ed.2d at 240. (Brennan, J., dissenting.) The
court has “frequently applied traditional pre-emption principles to find state law
barred on the basis of an actual conflict with § 7. If employee conduct is protected
under § 7, then state law which interferes with the exercise of these federally
protected rights creates an actual conflict and is pre-empted by direct operation of
the Supremacy Clause.” Brown v. Hotel & Restaurant Employees & Bartenders
Internatl. Union Local 54 (1984), 468 U.S. 491, 501, 104 S.Ct. 3179, 3185, 82
L.Ed.2d 373, 383.
{¶ 25} Where state regulation would, in fact, inhibit federally protected
activity, there is no need to invoke the primary-jurisdiction rationale set forth in
Garmon. “The threshold question in every labor pre-emption case is whether the
conduct with respect to which a State has sought to act is, or may fairly be regarded
as, federally protected activity. Because conflict is the touchstone of pre-emption,
such activity is obviously beyond the reach of all state power.” Garmon, 359 U.S.
at 250, 79 S.Ct. at 783, 3 L.Ed.2d at 786. (Harlan, J., concurring.) Accordingly,
we must heed the court’s caveat in Brotherhood of RR. Trainmen v. Jacksonville
Terminal Co. (1969), 394 U.S. 369, 383, 89 S.Ct. 1109, 1118, 22 L.Ed.2d 344, 357,
fn. 19, that “care must be taken to distinguish pre-emption based on federal
protection of the conduct in question from that based predominantly on the primary
jurisdiction of the National Labor Relations Board, although the two are often not
easily separable.” (Citations omitted.)
THE NLRB HAS HELD THAT JOB TARGETING IS PROTECTED
CONDUCT UNDER SECTION 7 OF THE NLRA
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January Term, 1998
{¶ 26} In Manno Elec., Inc. (1996), 321 N.L.R.B. 278, 152 L.R.R.M. 1107,
1996 WL 276357, the NLRB adopted the following administrative law judge’s
ruling:
“Section 7 provides that employees shall have the right ‘to engage in other
concerted activities for the purpose of . . . other mutual aid and protection.’ The
objectives of the ‘job targeting program’ are to protect employee’s jobs and wage
scales. These objectives are protected by section 7.” 321 N.L.R.B. at 298.
{¶ 27} This ruling elucidates the conflict between the NLRA and the Ohio
regulations as J.A. Croson seeks to have them enforced. Whether characterized as
an impermissible wage reduction or an illegal subsidy to union contractors, the
prohibitions that J.A. Croson seeks to enforce under Ohio law cannot peacefully
coexist with the board’s classification of job targeting as “concerted activity”
protected by Section 7 of the NLRA. Distilled to their elemental purpose, J.A.
Croson’s claims seek to invoke Ohio law to thwart Local 189’s use of its job
targeting program. Preemption analysis turns on the real effect of state policy on
federal rights. Livadas v. Bradshaw (1994), 512 U.S. 107, 119, 114 S.Ct. 2068,
2076, 129 L.Ed.2d 93, 107. “Controlling and therefore superseding federal power
cannot be curtailed by the State even though the ground of intervention be different
than that on which federal supremacy has been exercised.” Weber v. Anheuser-
Busch, Inc. (1955), 348 U.S. 468, 480, 75 S.Ct. 480, 487-488, 99 L.Ed. 546, 557.
{¶ 28} Because the NLRB has held that job targeting is actually protected
by the NLRA, there is no room for state regulation infringing that conduct. J.A.
Croson’s assertion that Manno is distinguishable because it did not involve a
challenge brought under a state’s prevailing wage law is not persuasive. See
Associated Builders & Contractors, Inc. (July 1, 1997), 1997 NLRB LEXIS 535.
Nothing in the Manno decision indicates that the NLRB would limit the NLRA’s
protection of job targeting to the facts of the case before it.
EXCEPTIONS TO THE GARMON DOCTRINE
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{¶ 29} The Supreme Court has refused “to apply the pre-emption doctrine
to activity that otherwise would fall within the scope of Garmon if that activity ‘was
a merely peripheral concern of the [Act] [or] touched interests so deeply rooted in
local feeling and responsibility that, in the absence of compelling congressional
direction, [courts] could not infer that Congress had deprived States of all power to
act.’ ” Farmer v. United Bhd. of Carpenters & Joiners of Am., Local 25 (1977),
430 U.S. 290, 296-297, 97 S.Ct. 1056, 1061, 51 L.Ed.2d 338, 348, quoting Garmon,
359 U.S. at 243-244, 79 S.Ct. at 779, 3 L.Ed.2d at 782.
{¶ 30} In Farmer, the court concluded that Garmon did not preempt the
plaintiff’s state court action against his union and its officials alleging intentional
infliction of emotional distress, despite that the facts alleged, if true, would also
constitute a Section 8 violation. Id. at 303, 97 S.Ct. at 1065, 51 L.Ed.2d at 352.
The court emphasized, however, that in each case where it has recognized an
exception to Garmon preemption, the conduct underlying the action pending in
state court was not protected by the Act. Id. at 298-302, 97 S.Ct. at 1062-1064, 51
L.Ed.2d at 348-351. In Sears, supra, the court held that California state courts
could properly entertain a cause of action against union members in trespass,
despite the possibility that their picketing activity was protected by Section 7 of the
NLRA. Prior to granting any relief for the trespass, however, the court noted the
state court would have to decide that the trespass was not actually protected by
federal law. Id., 436 U.S. at 201, 98 S.Ct. at 1759, 56 L.Ed.2d at 227-228.
{¶ 31} Preemption exceptions based on local interests are, in fact,
inapplicable where state regulation would restrain or inhibit activity that is actually
protected by Section 7 of the NLRA. This distinction is necessary due to the
differing rationales that underlie preemption based on actual federal protection of
the conduct at issue and that which is based on the primary jurisdiction of the
NLRB.
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{¶ 32} “In the latter situation, a presumption of federal pre-emption applies
even when the state law regulates conduct only arguably protected by federal law.
Such a pre-emption rule avoids the potential for jurisdictional conflict between state
courts or agencies and the NLRB by ensuring that primary responsibility for
interpreting and applying this body of labor law remains with the NLRB. This
presumption of federal pre-emption, based on the primary jurisdiction rationale,
properly admits to exception when unusually ‘deeply rooted’ local interests are at
stake. In such cases, appropriate consideration for the vitality of our federal system
and for a rational allocation of functions belies any easy inference that Congress
intended to deprive the States of their ability to retain jurisdiction over such matters.
[The Supreme Court], therefore, [has] refrained from finding that the NLRA pre-
empts state court jurisdiction over state breach of contract actions by strike
replacements, state trespass actions, or state tort remedies for intentional infliction
of emotional distress.
{¶ 33} “If the state law regulates conduct that is actually protected by
federal law, however, pre-emption follows not as a matter of protecting primary
jurisdiction, but as a matter of substantive right. Where, as here, the issue is one of
an asserted substantive conflict with a federal enactment, then ‘[t]he relative
importance to the State of its own law is not material ... for the Framers of our
Constitution provided that the federal law must prevail.’ Free v. Bland 369 U.S.
663, 666 [82 S.Ct. 1089, 1092, 8 L.Ed.2d 180, 183] (1962).” (Citations omitted.)
Brown, 468 U.S. at 502-503, 104 S.Ct. at 3186, 82 L.Ed.2d at 384.
{¶ 34} Because job targeting is actually protected under Section 7 of the
NLRA, the above exceptions are inapplicable. Accordingly, it is not important that
J.A. Croson could not have presented the identical controversy to the NLRB. That
inquiry is important only when it is the primary-jurisdiction rationale of Garmon
that favors preemption. See Sears, 436 U.S. at 202, 98 S.Ct. at 1760, 56 L.Ed.2d
at 228.
15
SUPREME COURT OF OHIO
MACHINISTS PREEMPTION
{¶ 35} J.A. Croson and the court below rely heavily on the following
Supreme Court reasoning as a basis to avoid preemption:
“The NLRA is concerned primarily with establishing an equitable process
for determining terms and conditions of employment, and not with particular
substantive terms of the bargain that is struck when the parties are negotiating from
relatively equal positions. The NLRA’s declared purpose is to remedy ‘[t]he
inequality of bargaining power between employees who do not possess full freedom
of association or actual liberty of contract, and employers who are organized in the
corporate or other forms of ownership association.’ § 1, 29 U.S.C. § 151. The same
section notes the desirability of ‘restoring equality of bargaining power,’ among
other ways, ‘by encouraging the practice and procedure of collective bargaining
and by protecting the exercise by workers of full freedom of association, self-
organization, and designation of representatives of their own choosing, for the
purpose of negotiating the terms and conditions of their employment or other
mutual aid or protection.’
“* * *
“It would further few of the purposes of the Act to allow unions and
employers to bargain for terms of employment that state law forbids employers to
establish unilaterally. ‘Such a rule of law would delegate to unions and unionized
employers the power to exempt themselves from whatever state labor standards
they disfavored.’ Allis-Chalmers Corp. v. Lueck [471 U.S.] at 212 [105 S.Ct. at
1911-1912, 85 L.Ed.2d at 216]. It would turn the policy that animated the Wagner
Act on its head to understand it to have penalized workers who have chosen to join
a union by preventing them from benefiting from state labor regulations imposing
minimal standards on nonunion employers.” (Citations omitted.) Metro. Life, 471
U.S. at 753-756, 105 S.Ct. at 2396-2397, 85 L.Ed.2d at 749-750.
16
January Term, 1998
{¶ 36} According to J.A. Croson, “Ohio’s prevailing wage law simply does
not prohibit or restrict employers and employees from engaging in collective
bargaining or any other activity protected under the NLRA, but only speaks to
certain outcomes of that negotiating process.” Therefore, argues J.A. Croson, the
law is not preempted. J.A. Croson characterizes Ohio’s prevailing wage law as a
minimum standard of employment and argues that it acts as a backdrop for
negotiation, creating no interference with the negotiating process.
{¶ 37} The problem with J.A. Croson’s analysis is that the above Supreme
Court language is pertinent only with respect to Machinists preemption. As
previously discussed, Machinists preemption does not pertain to conduct that is
either arguably or clearly protected or prohibited under Section 7 or 8 of the NLRA.
Instead, it involves a range of activity that is not expressly regulated under the
NLRA, but that Congress has intentionally left to be controlled by the free play of
economic forces.
{¶ 38} Collective bargaining is an area that Congress left largely to be
controlled by the free play of economic forces. Nevertheless, the Supreme Court
has held in cases such as Metro. Life, supra, and Fort Halifax Packing Co., Inc. v.
Coyne (1987), 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1, that state laws establishing
minimum wages and benefits, and presumably prevailing wage laws, generally do
not conflict with the NLRA policy to promote equitable collective bargaining.
These cases, however, do not extend to aspects of state regulation directly
impinging on the federally protected right of union employees to engage in
concerted activity. The concern here is not that state regulation will undermine the
collective bargaining process; it is that state regulation will restrain union members
from exercising a federally protected right. Accordingly, the cases upon which J.A.
Croson relies that explore the nuances of Machinists preemption are of limited
value to our inquiry.
CONCLUSION
17
SUPREME COURT OF OHIO
{¶ 39} In light of the NLRB’s holding in Manno, Section 7 of the NLRA
preempts state regulation under Ohio Adm.Code 4101:9-4-07(B)(6) and R.C.
4115.10(D) to the extent that those provisions could be construed to restrain or
inhibit the federally protected use of job targeting programs. 3 Accordingly, we
reverse the judgment of the appellate court.
Judgment reversed.
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER and LUNDBERG
STRATTON, JJ., concur.
3. We reject the appellate court’s conclusion that any conflict between the state and federal
regulations can be avoided by requiring the employer to adjust gross wages so that, after deduction
of the Market Recovery Assessment, union employees will still receive the prevailing wage. Aside
from the practical difficulties inherent in the suggestion, such a requirement would seriously hinder
the effectiveness of job targeting programs and, in many instances, disadvantage union contractors
in bidding on public improvement projects. We need not look beyond this case to find an example.
Under the appellate court’s theory, J.A. Guy would have been required to increase
employee gross wages by two percent on the water softening system project to meet the prevailing
wage law, despite the fact that J.A. Guy received no job targeting subsidies. Accordingly, because
of the Market Recovery Assessment, J.A. Guy would have started with a fixed labor cost two percent
above the prevailing wage requirement. This would have seriously hampered J.A. Guy in submitting
a competitive bid. The same scenario would be played out in the vast majority of public
improvement projects where the union contractor is unable to secure job targeting funds. Moreover,
even where job targeting funds are available, the appellate court’s suggestion would largely offset
their intended benefit.
18