Petition for Writ of Certiorari — Jadair, Inc. v. Allied Colloids, Inc.

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supreme Cour, U.8,

PILED

BSB gO Ju 71998

No. OeFIC® OF THE CLERK

In The

Supreme Court of the United States

October Term, 1997

}.A. CROSON COMPANY,

Petitioner,

).A. GUY aN SE AL,

Respondents.

On Petition For A Writ Of Certiorari

To The Supreme Court Of Ohio

PETITION FOR A WRIT OF CERTIORARI

Ronatp L. Mason*

THoMAS M.L. MetzGer

Patrick M. O’Nei1

Kecier, Brown, Hitt & Ritter

65 East State Street, Suite 1800

Columbus, Ohio 43215

(614) 462-5400

Counsel for Petitioner

“Counsel of Record

July 7, 1998

COCKLE LAW BRIEF PRINTING CO., (800) 225-6954

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Whether federal law preempts the State of Ohio's

exercise of its traditional police powers to enforce its

prevailing wage law prohibiting the rebate to employers

of employee wages earned on state construction projects,

where such rebates are used to fund union “job targeting

programs.”

PARTIES TO THE PROCEEDING

The parties to the proceedings below and before this

Court are the Petitioner, J. A. Croson Company,! and the

Respondents, J.A. Guy, Inc. and The United Association

of the Plumbers and Pipe Fitters Industry of the United

States and Canada Local 189 (“Local 189”).

The State of Ohio, Ohio Bureau of Employment Ser-

vices; the Associated Builders and Contractors, Inc; The

National Electrical Contractors Association and National

Electrical Contractors Association, Ohio Conference; The

Building and Construction Trades Department, AFL-CIO

and The Ohio State Building and Construction Trades

Council, AFL-CIO; and The Mechanical Contractors

Association, Ohio Chapter, each participated as amicus

curiae in the proceedings below.

! Petitioner J.A. Croson Company has no parent or subsid-

lary company.

ill

TABLE OF CONTENTS

Page

eS ARETE GPIROE FEU obs sx ov ks eee eweweeeies Vv

EE EP ies Fed www ake ata edeneent anes 1

aE I Ua ein ieee are a nent ter 1

CONSTITUTIONAL AND STATUTORY PROVI-

EE oC ee pas sah dave e 30 ewe y eee 2

PEPE OIEE SPE EEE GAD ook oe cee ei cee ee wees ~ 3

en Ce Se OS aie ce Ke eee hnbi ae wees 6

A. The Job Targeting Program.................. 6

ee RE SUB ERUICUIOND SLOWNITACNS oo ices ccc eee es 7

REASONS FOR GRANTING THE WRIT ........... 9

A. The Supreme Court Of Ohio’s Decision In This

Case Is In Direct Conflict With Decisions Of This

Court And The Circuit Courts, And The Question

Presented Is Of National Importance. .......... 9

B. The Question Presented Is National In Scope

Dealing With Millions Of Dollars That Are Ille-

gally Refunded To Contractors Each Year .... 11

THE DECISION OF THE OHIO SUPREME COURT IS

IN DIRECT CONFLICT WITH DECISIONS OF THIS

COURT AND THE CIRCUIT COURTS............. 13

A. Job Targeting Programs Are Not Absolutely

Protected Under The National Labor Relations

AE RP er rd a De ge eS ek en Ws k Mia ak eiee A 13

1. This Court’s Decision In Dillingham War-

rants That The State Of Ohio’s Effort To

Exercise Its Police Power Pursuant To Its

Prevailing Wage Law Is Not Preempted

soi i eis ew webs Bo 14

TABLE OF CONTENTS —- Continued

Page

2. The Federal Circuit Courts Disagree With

The Conclusion That Job Targeting Pro-

grams Are Absolutely Protected Under The

a EERE ET eer re etn ere yee Pe tere 16

B. QOhio’s Imposition Of Minimum Labor Stan-

dards Is Not Preempted Under The National

Fe es reper ree ry oe a ee 19

1. Garmon Does Not Preempt The Establishment

Of State Or Federal Minimum Labor Stan-

dards, Including Ohio’s Prevailing Wage Law

Or Claims Made Thereunder............... 20

A Proper Analysis Would Have Used The

“Arguably Protected” Standard Under Gar-

IE a SESE se aR ed Has oe aaa 25

3. This Matter Is Not Preempted Under Gar-

mon Because The Controversy Presented To

The State Court Is Not Identical To That

Which Could Have Been Presented To The

TABLE OF AUTHORITIES

Page

Cases

Building and Construction Trades Department v.

Reich, 40 F.3d 1275 (D.C. Cir. 1994) .... 225.05 passim

Building and Construction Trades Council of Metro.

Dist. v. Associated Builders and Contractors of

Mass./Rhode Island, Inc., 507 U.S. 218 (1993) ....... 14

California Div. of Labor Standards Endorcement of

Dillingham Construction, 519 U.S. 316 (1997) ... passim

Communication Workers of America v. Beck, 487 U.S.

Sy | Meee ee patrs Pe eee er mn ea 17

Dillingham Construction, Inc. v. County of Sonoma,

SF Fe FE CO OE BO ak Sy his is Ke Keene 15

Dillingham Construction, Inc. v. County of Sonoma,

778 F. Supp. 1522 (N.D. Calif., 1991).............. 15

Farmer v. United Broth. of Carpenters and Joiners of

America, Local 25, 430 U.S. 290 (1977). .o05 senses 20

Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1

CE sss heed a eee eke ee es 15, 22

General Elec. Co. v. New York State Dept. of Labor,

698 F. Supp. 1093 (S.D.N.Y. 1968) .......-..---.063- 23

Int'l Broth. of Elec. Workers et al. v. Aubry, 41 Cal.

App. 4th 1632, 49 Cal. Rptr. 2d 759 (Calif. App.,

SOM ckad se een Opes F359 eS bes aha oe kw ne Ree eS 18, 29

International Broth. of Elec. Workers v. Brock, 68 F.3d

ye eS BB 3) PEER rE ree Pare eee 10, 11, 17

TABLE OF AUTHORITIES — Continued

Page

J.A. Croson Co. v. J.A. Guy, Inc., 81 Ohio St. 3d 346

pres SNE ra Coy Cie aes cet es ia, ta, 20

Linn v. Plant Guard Workers, 383 U.S. 53 (1966)...... 18

Manno Electric, Inc. NLRB Case No. 15-CA-11891

CSR WE re oawvav ees Ch ee eee 13, 17, 29

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S.

Fie ARTOOEs R45 ce Gad ASR EGE REDS RAR ERO EER CP ORRASD passim

Metropolitan Life Insurance Co. v. Massachusetts, 471

Go Fae COOL 18 oad a he eS eee Ee Cea ernie: 19

Michigan United Food and Commercial Workers

Unions v. Baerwaldt, 767 F.2d 308 (6th Cir. 1984) .... 23

New York State Conference of Blue Cross and Blue

Shield Plans v. Travelers Ins. Co., 514 U.S. 645

5 § Papen ee CR Me enh er enue Gre RAT ge a Ere 14

San Diego Building Trades Council v. Garmon, 359

SS eke: BO UOT ha owas vane een hha nine Dewees passim

Sears Roebuck & Co. v. San Diego Dist. Council of

Carpenters, 436 U.S. 180 (1978)

TW aay arIUe ee RELL N REAP aC EEC WE Sh Reet, bh Mt $3; 18; 25. 27

Stratrutes/ REGULATIONS

DO A Oe ATOR, ck a hae ca ee Vo ee eee | Fe

AD SA Me A na No eed in ke WA Eee ae 2

Be eS BOs ccs NKR So 0 RARE ea eee ee 2

Vil

TABLE OF AUTHORITIES - Continued

Page

Ohio Administrative Code § 4101:9-4-07(B)(6) ...3, 4, 5

Ohio Administrative Code § 4101:9-4-07(C)(2) ......3, 4

Corin Series Ce SRI SOS is oie og ons Sa a oes 4

Chie Reviees Cote $4215 07 5 o.5..55 is se ccedieer es 2, 4

Ohio Revised Code § 4115.10(D).............. a i

Ohio Revised Code § 4115.16(A)..................... 8

OTHER AUTHORITY

Northrup, Herbert R. & Augustus T. White, Subsidiz-

ing Contractors To Gain Employement: Construction

Union “Job Targeting”, 17 Berkeley Journal of Employ-

ment and Labor Law 62 (1996)............. 12, 18, 24, 28

CONSTITUTIONAL PROVISION

Supremacy Clause, Article VI, Clause 2.............. 2

]

PETITION FOR A WRIT OF CERTIORARI

The Petitioner J.A. Croson Company respectfully

prays that a writ of certiorari issue to review the judg-

ment of the Supreme Court of Ohio which entered its

Decision on April 8, 1998.

OPINIONS BELOW

In this matter there are three decisions and/or orders

from the state courts below, each of which is reproduced

in the accompanying appendices. The March 28, 1995,

Opinion of the Court of Common Pleas, Pickaway

County, Ohio, and accompanying Judgment Entry of

April 8, 1995 granting summary judgment against Peti-

tioner J.A. Croson Company, are reproduced in Appendix

C. (App. 80a) and Appendix D. (App. 87a), respectively.

The October 4, 1996, Decision and Judgment Entry of the

Court of Appeals of Ohio, Fourth Appellate District

reversing the decision of the Court of Common Pleas, is

reproduced in Appendix B. (App. 24a). Lastly, the April 8,

1998 Decision of the Ohio Supreme Court is reproduced

in Appendix A. (App 1a).

JURISDICTION

The Decision of the Ohio Supreme Court was entered

on April 8, 1998, reversing the Decision of the Court of

Appeals of Ohio, Fourth Appellate District. Pursuant to

Rule 13.1 of the Rules of the Supreme Court of the United

States, Petitioner J.A. Croson Company has filed this

Petition for Writ of Certiorari within ninety calendar days

after the Judgment Entry of the Supreme Court of Ohio.

The jurisdiction of this Court is invoked pursuant to

28 U.S.C. § 1257(a).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Supremacy Clause, Article VI, Clause 2 of the

Constitution of the United States provides that:

This Constitution, and the Laws of the United

States which shall be made in Pursuance thereof

and all Treaties made, or which shall be made,

under the Authority of the United States, shall

be the supreme Law of the Land...

Additionally, 28 U.S.C. § 1257(a) (“State courts; cer-

tiorari”) provides as follows:

(a) Final judgments or decrees rendered by

the highest court of a State in which a decision

could be had, may be reviewed by the Supreme

Court by a writ of certiorari where the validity

of a treaty or statute of the United States is

drawn in question or where the validity of a

statute of any State is drawn in question on the

ground of its being repugnant to the Constitu-

tion, treaties, or laws of the United States, or

where any title, right, privilege, or immunity is

specially set up or claimed under the Constitu-

tion or the treaties or statutes of, or any commis-

sion held or authority exercised under, the

United States.

Ohio Revised Code § 4115.07, provides, in part, that

all contractors working on a public contract who are

obligated pursuant to Ohio’s prevailing wage law to pay

not less than the prevailing rate of wages “shall make full

payment of such wages in legal tender, without any

deduction for food, sleeping accommodations, transpor-

tation, use of small tools, or any other thing of any kind

or description.”

In addition, Ohio Revised Code § 4115.10(D) pro-

vides, in part, that where the prevailing wage rate

applies:

no person, either for himself or any other per-

son, shall request, demand, or receive, either

before or after such workman is engaged, that

such workman pay back, return, donate, con-

tribute, or give any part or all of said work-

man’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 such workman

from procuring or retaining employment, and

no person shall, directly or indirectly, aid,

request, or authorize any other person to violate

this section.

Finally, Ohio Administrative Code § 4101:9-4-07(B)(6)

provides that deductions from an employee's pay do not

include union “special assessments.” Ohio Administra-

tive Code § 4101:9-4-07(C)(2) provides that in order for a

union special assessment to be lawful,

The employer does not make a profit or benefit

directly or indirectly from the deduction in any

form, including, but not limited to, commissions

or dividends.

STATEMENT OF THE CASE

This action concerns a State’s ability to exercise its

police power to enforce its prevailing wage requirements

with respect to union and non-union contractors. On June

15, 1993, Petitioner J.A. Croson Company (“Croson”) filed

a complaint in the Pickaway County, Ohio, Court of Com-

mon Pleas asserting that Respondent J.A. Guy, Inc. (“J.A.

Guy”) unlawfully deducted money from employees’

wages above and beyond regular union dues in order to

fund a union “job targeting” program run by Respondent,

The United Association of the Plumbers and Pipe Fitters

Industry of The United States and Canada Local 189

(“Local 189”). The job targeting deduction lowers the

wages paid by J.A. Guy below the mandatory minimum

prevailing wage established pursuant to Ohio’s prevail-

ing wage law, Ohio Revised Code, Chapter 4115, and the

accompanying regulations. The job targeting deduction

also causes employees to rebate wages to their employer in

violation of Ohio Administrative Code §§ 4101:9-4-07(B)(6)

and (C)(2).

Croson alleged in its Complaint that J.A. Guy vio-

lated Ohio’s prevailing wage law, Ohio Revised Code

§ 4115.01 et seq., where it requires all contractors working

on a public contract who are obligated pursuant to the

prevailing wage law to pay not less than the prevailing

rate of wages, “shall make full payment of such wages.”

O.R.C. § 4115.07. The basis for Croson’s allegation was

that, pursuant to the job targeting program, the

employees of J.A. Guy had two percent of their gross

wages deducted, and this money was ultimately returned

to J.A. Guy, and not the employees. Therefore, the

employees were paid less than the required prevailing

wage.

In addition, Croson alleged that J.A. Guy violated

O.R.C. § 4115.10(D)(6). That Section provides, in part,

that where the prevailing wage rate applies:

no person, either for himself or any other per-

son, shall request, demand, or receive, either

before or after such workman is engaged, that

such workman pay back, return, donate, con-

tribute, or give any part or all of said work-

man’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 such workman

from procuring or retaining employment, and

no person shall, directly or indirectly, aid,

request, or authorize any other person to violate

this section.

O.R.C. § 4115.10(D).

Finally, Croson alleged that J.A. Guy violated

regulations to Ohio’s prevailing wage law, O.A.C.

§§ 4101:9-4-07(B)(6) and (C)(2). Those regulations estab-

lish that “special assessments,” which would include job

targeting deductions, are specifically excluded from the

list of permissible deductions, and that employers may

not profit or benefit directly or indirectly from any spe-

cial assessment taken from employees’ wages. Id.

On March 28, 1995, the Court of Common Pleas,

Pickaway County, Ohio, held that Croson could not pro-

ceed with its complaint because federal law preempted

those portions of Ohio’s prevailing wage law upon which

Croson relied. (App. 80a).

Croson appealed from the trial court’s decision to the

Fourth District Court of Appeals, Pickaway County, Ohio.

The Court of Appeals reversed the trial court’s decision,

finding that Ohio’s prevailing wage law was not pre-

empted by federal law. (App. 24a) The court reasoned

that “ ‘[t]he state is simply attempting to define what

counts as payment of prevailing wages for purposes of its

own competitive bidding statutes. This is surely a process

which is both innocuous and necessary.’ “ (App. 77a)

Thereafter, J.A. Guy and Local 189 filed Notices of

Appeal with the Ohio Supreme Court and also requested

the Court of Appeals to certify a conflict based upon two

prior Ohio appellate court decisions. The Court of

Appeals certified a conflict to the Ohio Supreme Court.

On January 29, 1997, the Ohio Supreme Court

accepted the discretionary appeals and concluded that a

conflict exists. In its Decision dated April 8, 1998, the

Supreme Court of Ohio ruled that Section 7 of the

National Labor Relations Act (“NLRA”) preempts state

regulation through the prevailing wage law under Ohio

Administrative Code 4101:9-4-07(B)(6) and Ohio Revised

Code 4115.10(D) based upon the court’s conclusion that

job targeting programs are absolutely protected under the

NLRA. (App. 1a).

STATEMENT OF FACTS

A. The Job Targeting Program

The primary basis for Croson’s Petition for Writ of

Certiorari is the conflict between the Supreme Court of

Ohio's finding that Ohio’s effort to enforce a minimum

prevailing wage standard is preempted by federal law,

and decisions of this Court as well as decisions of two

Circuit Courts of Appeals that have upheld the enforce-

ment of prevailing wage standards in the face of union

job targeting programs. Job targeting deductions are not

union dues. Separate and distinct from regular union

dues, 2% of the gross wages earned by employees of

union contractors, such as Respondent J.A. Guy, is trans-

ferred to unions, such as Respondent Local 189. Unlike

union dues, Local 189 does not use the money for its own

expenses but gives the money back to the union contrac-

tors. In effect, as a result of this special 2% job targeting

deduction, union workers who work on prevailing wage

jobs receive less than the minimum prevailing wage rate

mandated by Ohto law — and union employers pay out less

than the minimum prevailing wage rate.

By taking money out of union workers’ pockets and

then giving the money to the union contractors, the union

contractors lower their labor costs below the level of non-

union companies who are required to pay the full wage

rate as required by QOhio’s prevailing wage law. In

essence, through these special wage deductions for job

targeting, employees subsidize their employers (unlike

union dues which are used to subsidize the activities of

the union). Because a union contractor can lower its labor

costs at the expense of its employees, it can submit bids

faba bs ST ia nd Win

lower than other contractors. The money received from

Local 189 directly reduces the union contractor’s wage

rate below the prevailing wage rate. And because the

money for job targeting comes out of employees’ pay-

checks, the employees are underpaid compared to the

prevailing wage standards.

The 2% job targeting deduction is separate from and

in addition to union dues (union dues being a deduction

that is never for the benefit of the union contractor). For

example, the collective bargaining agreement between

Respondent J.A. Guy (and other union contractors) and

Respondent Local 189 lists union dues as just 1°/3%, and

then identifies a separate 2% Market Recovery Assess-

ment for job targeting. Consistent with this separate des-

ignation, the 13/:% union dues deduction “pays for the

operation of Local 189” - meaning dues money is used to

pay the operating expenses of Local 189, which includes

wages, fringes, rent, utilities, and real estate taxes for the

union. On the other hand, the money received from the

2% deduction for job targeting is given to the union

contractors. In fact, the job targeting funds are solely

“monies paid by the individual to enhance the targeted

recovery program” and therefore not for the operating

expenses of the union.

B. The Construction Contracts

The State contracts underlying this matter involve

construction of the Pickaway County, Ohio Jail (“Jail Pro-

ject”) and the Water Softening System for the Jail Project.

Both of these jobs were prevailing wage jobs, meaning

that Ohio established minimum wages to be paid to

employees working on the projects. Prior to submitting a

bid on the Jail Project, J.A. Guy requested Local 189 to

target the job. Local 189 agreed to do so and informed the

union contractors bidding on the project that it would

provide a kickback from the job targeting fund in the

amount of $9.00 per hour.

With the knowledge that its labor costs would be

reduced by $8C.000 to $100,000 through the job targeting

kickback, J.A. Guy lowered its bid on the Jail Froject

accordingly. Petitioner Croson’s bid on the Jail Project

was $813,768 — or just $8,768 more than the bid submitted

by J.A. Guy. Due solely to the promised kickback of

money from Local 189, J.A. Guy was the low bidder on

the plumbing contract for the Jail Project, and was

awarded the contract. Over the life of the Jail Project, J.A.

Guy received a total of $89,834 in kickbacks from the

Local 189 job targeting program.

Following the completion of the Jail Project, it

became necessary to install a water softening system at

the facility. On the Water Softener Project, Croson bid

$28,749 — or just $1,249 more than the bid submitted by

J.A. Guy. The contract for the Water Softener Project was

also awarded to J.A. Guy. Although the Water Softener

Project was not a targeted job, J.A. Guy deducted 3%/s%

from its employees’ wages on the Water Softener Project,

and that total deduction included the 2% job targeting

deduction. Moreover, during the months in which J.A.

Guy was working on the Water Softener Project, J.A. Guy

received job targeting checks on two separate targeted

jobs in the amount of $18,679.50.

Pursuant to the Ohio Prevailing Wage Statute, Ohio

Revised Code § 4115.16(A), Croson as an interested party

filed complaints with the State of Ohio, Department of

Industrial Relations. After conducting an investigation,

the State of Ohio issued a determination that the job

targeting deductions for the Water Softener Project vio-

lated Ohio’s prevailing wage statute. (App. 89a) Before

the State of Ohio completed its investigation of the Jail

Project pursuant to the Ohio Prevailing Wage Statute,

Croson filed suit in the Court of Common Pleas, Picka-

way County, Ohio.

9 =

REASONS FOR GRANTING THE WRIT

A. The Supreme Court Of Ohio’s Decision In This

Case Is In Direct Conflict With Decisions Of

This Court And The Circuit Courts, And The

Question Presented Is Of National Importance

In this case, the Supreme Court of Ohio concluded

that the State cannot exercise its traditional police power

to set minimum standards for wages paid to employees

working on state contracts, where those standards pre-

vent the rebate of employee wages to union contractors

under job targeting programs. The Ohio court erro-

neously concluded that, because job targeting programs

have been said to be protected by the NLRA, any effort

by the State to regulate the collection of funds for use in

such programs is preempted by federal law.

The decision for which Petitioner Croson seeks

review by this Court in direct conflict with decisions of

this Court and of at least two Circuit Courts of Appeals,

and the question presented for review is of national

importance. In California Div. of Labor Standards Enforce-

ment v. Dillingham Construction, 519 U.S. 316 (1997), this

Court considered whether the State of California’s pre-

vailing wage law was preempted by federal law pursuant

to the Employee Retirement Income Security Act of 1974

(“ERISA”). As with Ohio’s prevailing wage law, Califor-

nia’s prevailing wage law establishes minimum wage

standards that apply to contractors working on state con-

tracts. Despite the “broad” and “expansive sweep” of

preemption under ERISA, this Court concluded that Cali-

fornia’s prevailing wage law was not preempted under

ERISA because “the wages paid on state public works

have long been regulated by the states,” and prevailing

wage laws are no different than other uses of a state’s

traditional police power “which Congress could not pos-

sibly have intended to eliminate.” Id. at 342. The present

case affords the Court a significant opportunity to

address the States’ ability to enforce minimum standards

for wages in the context of a preemption challenge pur-

suant to the National Labor Relations Act, and to correct

the clear conflict between the decision of this Court in

Dillingham and the decision of the Supreme Court of Ohio

in the present case.

In addition, at least two federal Circuit Court deci-

sions preceding the Dillingham decision reasoned that a

job targeting deduction is not a permissible deduction

under the federal prevailing wage law. The federal pre-

vailing wage law, otherwise known as the Davis-Bacon

Act, is essentially the same as Ohio’s prevailing wage law

with respect to the issues presented in this case. Having

found that job targeting deductions are not permissible,

the courts have concluded that the federal government

may enforce a minimum standard for wages on its con-

tracts despite the impact such regulation may have upon

agreements between unions and union members relating

to job targeting.

Specifically, in Building and Construction Trades

Department v. Reich, 40 F.3d 1275 (D.C. Cir., 1994), the

court concluded that a job targeting deduction was not a

permissible deduction under the federal prevailing wage

law, and therefore the deduction could be prohibited. The

court found that the federal prevailing wage law appro-

priately prohibited the reduction of employees’ wages

below prevailing rates, even when the reduction was the

result of an agreement between union members and their

union. Id. at 1281-1282. Significantly, the court rejected

the union’s contention that job targeting deductions are

protected under the NLRA, and thereby let stand the

government's effort to enforce a minimum prevailing

wage in the face of a special assessment such as a job—

targeting deduction. Id. at 1281-1282.

In International Broth. of Elec. Workers v. Brock, 68 F.3d

1194, 1200 (9th Cir., 1995), the court held that a two

percent job targeting deduction was prohibited under the

federal prevailing wage law because it improperly

required union members to rebate wages for the benefit

of their employer. Consistent with the D.C. Circuit's deci-

sion in Reich, and directly contrary to the decision of the

Supreme Court of Ohio in this case, the court concluded

that “[T]he NLRA does not change this conclusion,” that

job targeting deductions are not protected. Id. at 1203. In

other words, both Reich and Brock addressed whether the

NLRA protected the union job targeting scheme - and

directly contrary to the decision of the Supreme Court of

Ohio in this case, the courts concluded that no such

protection for job targeting deductions could be found

under the federal law.

In light of the decisions in Dillingham, Reich, and

Brock, the decision of the Supreme Court of Ohio in this

case presents a conflict on the critical question of whether

a state may exercise its traditional police power to

enforce minimum standards for wages. This case will

allow the Couft to address this fundamental conflict and

to address for the first time the permissible scope of a

state regulation of minimum standards for wages in the

face of the National Labor Relations Act.

B. The Question Presented Is National In Scope

Dealing With Millions Of Dollars That Are IIle-

gally Refunded To Contractors Each Year

The scope of the issue before this Court extends far

beyond the borders of Pickaway County or the State of

Ohio. Indeed, the issue presented here is of national

concern. As the Supreme Court of Ohio noted in its

decision, “job targeting is a strategy employed nation-

wide by construction unions.” J.A. Croson Co. v. J.A. Guy,

Inc., 81 Ohio St. 3d 346, 348 (Ohio 1998). (App. 5a).

Local urions throughout the country have adopted

job targeting programs. In tact, job targeting programs

have been used by unions in nearly all, if not all, of the

States. Subsidizing Contractors to Gain Employment: Con-

struction Union “Job Targeting” Northrup & White, 17

Berkeley Journal of Employment and Labor Law, 62, 66-76

(1996). Moreover, at least thirty-three states have enacted

prevailing wage laws that, identical to Ohio’s prevailing

wage law, establish minimum wages to be paid to

employees working on state contracts. Id. at 80.

Not only are job targeting programs pervasive, but

the economic impact of each job targeting program is

significant. For instance, the record below indicates that

Respondent Local 189 alone distributed over $450,000

each year in job targeting program monies. Similar distri-

butions occur throughout the country in each job target-

ing program. For example, Local 292 of Minneapolis,

Minnesota paid out over $635,000 each year during one

five year period. “Market Recovery Fund Works!,” IBEW

J., Aug., 1993, at 23. The monies that are kicked back to

union contractors are used to secure hundreds of millions

of dollars worth of contracts each year. Consequently,

the question presenteu in this case, which is in grave

need of clarification, is of Significant national importance.

* See, “Market Recovery Fund Works!,” IBEW J., Aug. 1993,

at 23 (stating that the Local 292’s job targeting program was

responsible for securing $74,239,000 in construction work); See,

“A Bang Up Year,” IBEW J., Mar., 1993 at 29 (stating that Local

569 of San Diego, California had funded forty-three jobs with

job targeting program monies); See, “Market Recovery Success,”

IBEW J., Mar., 1995, at 31 (stating that Local 347 of Des Moines,

lowa had funded fifty-six jobs with job targeting program

monies).

THE DECISION OF THE OHIO SUPREME COURT IS

IN DIRECT CONFLICT WITH DECISIONS OF THIS

COURT AND THE CIRCUIT COURTS.

A. Job Targeting Programs Are Not Absolutely

Protected Under The National Labor Relations

Act

The case concerns the State of Ohio’s permissible

imposition of minimum labor standards to protect

employees working on public contracts, and the State of

Ohio’s effort to enforce such standards as to all contrac-

tors (whether union or not).

The linchpin of the Supreme Court of Ohio’s decision

is the court’s conclusion that job targeting programs are

absolutely protected by the NLRA, as opposed to “arguably

protected” or not protected at all, and that the State of

Ohio’s laws upon which Croson’s claims are based are

preempted. (App. 16-17a). Specifically, the Supreme

Court of Ohio concluded that because job targeting has

been recognized as “protected activity” by the National

Labor Relations Board, “the matter is at an end and states

are ousted of all jurisdiction.” (App. 12a) Citing San Diego

Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct.

773 (1959).3 By following this analysis, the Ohio Supreme

Court avoided addressing the broad exclusions from pre-

emption that would apply because “J.A. Croson could not

have presented the identical controversy to the NLRB.”

(App. 19a). Citing Sears Roebuck & Co. v. San Diego Dist.

Council of Carpenters, 436 U.S. 180 at 202, 98 S.Ct. 1745,

1760 (1978).

+ The Supreme Court of Ohio relied on Manno Electric, Inc.,

NLRB Case No. 15-CA-11891 (July 20, 1994) (NLRB May 22,

1996), (321 NLRB No. 43, 152 LRRM 1107, 1996 WL 276357) to

assert that the act of job targeting is an activity that is protected

conduct under section 7 of the NLRA. J.A. Croson Company v. ].A.

Guy, Inc., 691 N.E. 2d 655, 664 (Ohio 1998) (App. 16-17a).

1. This Court’s Decision In Dillingham War-

rants That The State Of Ohio’s Effort To

Exercise Its Police Power Pursuant To Its

Prevailing Wage Law Is Not Preempted

Under Garmon

Inexplicably, the Ohio Supreme Court’s decision

totally ignored the fact that in February of 1997 this Court

unanimously ruled that a state prevailing wage law is not

preempted by federal law because it is:

“no different from myriad state laws in areas

traditionally subject to local regulation, which

Congress could not possibly have intended to

eliminate.”

California Div. of Labor Standards Enforcement v. Dillingham

Construction, 519 U.S. 316 (1997), quoting New York State

Conference of Blue Cross and Blue Shield Plans v. Travelers

Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 1683 (1997). In

Dillingham Construction the Court considered whether

Calitornia’s prevailing wage law was preempted, not

under the relatively narrow doctrine of NLRA preemp-

tion, but under the far broader and more inclusive pre-

emption doctrine under ERISA, 29 U.S.C. 1144.4 Under

California law, all contractors working on a public con-

tract are required to pay the prevailing wage, however

contractors may pay a lower wage for apprentices so long

* Unlike ERISA, the NLRA does not contain an express

preemption provision. Building and Construction Trades Council

of Metro. Dist. v. Associated Builders and Contractors of Mass./

Khode Island, Inc., 507 U.S. 218, 224, 113 S.Ct. 1190, 1194 (1993).

Therefore, the Supreme Court has explained that it is “reluctant

to infer pre-emption” under the NLRA. Id. By contrast, since

ERISA contains an express preemption provision, ERISA

preemption “has a ‘broad scope,’ an ‘expansive sweep,’ is

‘broadly worded,’ ‘deliberately expansive,’ and ‘conspicuous

tor its breadth.’ ” Dillingham Construction, 519 US. 316, 117

5.Ct., at 843 (concurring Opinion).

EARS ON 24s ph

eae ed

as the contractor sets up an approved apprenticeship

program. Id. 117 S.Ct., at 835. One of the subcontractors

for Dillingham Construction was said to have violated

the prevailing wage law by paying apprentices the lower

wage rate without approval. The contractors asserted in

the lower courts that the prevailing wage law was pre-

empted under both ERISA and the NLRA.® In Dillingham

Construction, this Court issued a unanimous ruling in

which it reversed the Ninth Circuit and held that ERISA

did not preempt California’s law exempting apprentices

in state-approved apprenticeship programs from the pre-

vailing wage requirement.

In recognizing the province of state regulation con-

cerning prevailing wage statutes, this Court stated:

As is always the case in our pre-emption juris-

prudence, where “federal law is said to bar state

5 Before the district court, the contractors not only argued

that the prevailing wage law was preempted under ERISA, but

also that it was preempted under the NLRA. Their argument

was that the state’s enforcement of the prevailing wage rates

interfered with the collective bargaining process, conflicted

with federal law, and that federal law occupied the field.

Dillingham Construction, Inc. v. County of Sonoma, 778 F. Supp.

1522, 1530-1534 (N.D. Calif., 1991). The district court rejected

every one of the ¢ontractors’ arguments. Id. The district court

ruled that because state enforcement of minimum

apprenticeship standards constituted a valid “minimum

employment standard” they were not preempted by the NLRA

under Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S.

724 and Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1 (1987).

On appeal, the Ninth Circuit Court of Appeals did not even

consider the contractors’ assertion of preemption under the

NLRA. Dillingham Construction, Inc. v. County of Sonoma, 57 F.3d

712 (9th Cir., 1995), and the contractors did not raise the issue of

NLRA preemption before the U.S. Supreme Court. See Briefs of

Petitioner and Respondent Before U.S. Supreme Court, 1996 WL

335251 and 1996 WL 435379.

action in fields of traditional state regula-

tion . . . we have worked on the ‘assumption

that the historic police powers of the States were

not to be superseded by the Federal Act unless

that was the clear and manifest purpose of Con-

gress.” “

Id. 117 S.Ct., at 838, quoting Travelers Ins. Co., 115 S.Ct.

1671, 1683 (emphasis added). A critical piece of the

Court's preemption analysis was “the nature and effect of

the state law.” Id. As for the nature and effect of a state

prevailing wage law, the Court explained that “the wages

paid on state public works have long been regulated by

the States,” and, as noted above, such laws are no differ-

ent than any other local regulation “which Congress

could not possibly have intended to eliminate.” Id. at 842.

Based in large part upon the protection afforded to tradi-

tional areas of local regulation, this Court found that the

prevailing wage law was not preempted even under the

“broad” and “expansive sweep” of ERISA preemption. Id.

at 842. Furthermore, this Court stated, “We could not

hold pre-empted a state law in an area of traditional state

regulation based on so tenuous a relation without doing

grave violence to our presumption that Congress

intended nothing of the sort.” Id.

Knowing that this Court had just ruled that prevail-

ing wage laws were not preempted by federal law, at best

the Ohio Supreme Court should have used the “arguably

protected” analysis under_Garmon. Had it done so, it

would not have found the Ohio laws at issue in this case

to be preempted.

2. The Federal Circuit Courts Disagree With

The Conclusion That Job Targeting Pro-

grams Are Absolutely Protected Under The

NLRA

The Ohio Supreme Court's conclusion that job target-

ing is absolutely protected under the NLRA, and any

attempt to enforce prevailing wage laws against this kick-

back is preempted, is not only in conflict with this

Court’s decision in Dillingham Construction, but it also

conflicts with the federal Circuit Courts of Appeals for

the Ninth Circuit and the District of Columbia Circuit. In

Building and Construction Trades Department v. Reich, (D.C.

Cir., 1994), 40 F.3d 1275, the court concluded that a

union’s two percent job targeting deduction taken from

employees’ paychecks and returned to the union contrac-

tor violated federal prevailing wage law in that the

deduction inured to employers, and caused employers to

pay less than the mandated prevailing wage. In Interna-

tional Broth. of Elec. Workers v. Brock (9th Cir., 1995), 68

F.3d 1194, 1200, the court held that a two percent job

targeting deduction “flaunts the express purpose” of the

federal prevailing wage law in that it results in “reduc-

tion of employee’s wages below the prevailing wage rate

to the benefit of contractors.” The decisions in Reich, and

Brock are contrary to the Ohio Supreme Court's misin-

terpretation of the administrative decision in Manno Elec-

tric, Inc., NLRB Case No. 15-CA-11891, (1996 WL 276357).

Respondents have argued below that Reich and Brock

are distinguishable because they are federal courts ruling

on the issue from a federal statute. However, this Court

has twice stated that when it comes to NLRB jurisdiction

and preemption:

“(T]he states as well as the federal courts must

defer to the exclusive competence of the

National Labor Relations Board.”

San Diego Trades Council v. Garmon, 359 U.S. 236, 245

(1959); and Communication Workers of America v. Beck, 487

U.S. 735, 742 (1988) (emphasis added). The absurd result

of the Ohio Supreme Court's decision is that job targeting

deductions on federal jobs are illegal but those same

deductions on state prevailing wage jobs are not illegal

because the State of Ohio is not allowed to enforce its

laws regarding the minimum labor standard of a prevail-

ing wage rate.®

Buttressing the federal court decisions in Dillingham

Construction, Reich, and Brock, is the state court decision

in Int'l Broth. of Elec. Workers et al. v. Aubry (Calif. App.,

1996), 41 Cal. App. 4th 1632, 49 Cal. Rptr. 2d 759. The

issue in Aubry was whether job targeting deductions

should be treated as regular union dues that count

toward the payment of the prevailing wage or something

other than dues that could not be credited for purposes of

the prevailing wage law. Id. at 1636. The state agency

responsible for enforcing the state's prevailing wage law

concluded that job targeting deductions were nof union

“dues.” The court agreed, emphasizing that unlike all

other uses to which union dues may be put, these funds

“did not go to the union for traditional union purposes,

such as supporting health and welfare of members, fund-

ing union operations, or creating a strike fund.” Id., at

1641. Instead, these job targeting monies “were rerouted

or refunded to employers, with the union simply acting

as a funnel for the payments.” Id. For that reason, the job

targeting deductions could not be credited toward pay-

ment of the prevailing wage law. Id. As this Court has

explained in Linn v. Plant Guard Workers (1966), 383 U.S.

53, where the underlying activity is not protected there is

no risk that permitting a state cause of action to proceed

would result in the state regulation of conduct that Con-

gress intended to be protected. Id., at 61.

prevailing wage law is substantially the same as the state

prevailing wage laws. In fact, the state laws are generally

referred to as “Little Davis-Bacon” statutes. Subsidizing

Contractors to Gain Employment: Construction Union “Tob

largeting,” Northrup & White, 17 Berkeley Journal of Employment

and Labor Law 62 (1996).

—————————

Prior to Dillingham Construction, this Court had

repeatedly recognized that “ ‘[s]tates possess broad

authority under their police powers to regulate the

employment relationship within the State.’ ” Me tropolitan

Life Insurance Co. v. Massachusetts, 471 U.S. 722, 747 (1985),

quoting DeCanas v. Bica, 424 U.S. 351, 356 (1976). The

Court has provided numerous examples of such laws,

and “{c]hild labor laws, minimum and other wage laws,

laws affecting occupational health and safety, and work-

men’s compensation laws are only a few examples.”

DeCanas, 424 U.S., at 356 (emphasis added). With its

decision in Dillingham Construction, this Court has explic-

itly added prevailing wage laws to this list. Consequently,

the Ohio Supreme Court's decision finding that job tar-

geting is absolutely protected under the NLRA and,

therefore, that the state laws invoked by Croson to chal-

lenge the job targeting program are preempted, is wrong

and in conflict with established authority from this Court

and other federal and state courts.

B. Ohio’s Imposition Of Minimum Labor Stan-

dards Is Not Preempted Under The National

Labor Relations Act

Under Garmon, this Court has not prohibited regula-

tion of activity touching upon labor-management rela-

tions, but simply has provided guidelines regarding the

permissible scope of “regulation of activity touching upon

labor-management relations.” Sears, Roebuck and Co. 0.

San Diego County Dist. Council of Carpenters, 436 U.S. 180,

187 (1978). In fact, since Garmon, this Court has repeat-

edly clarified that even where an activity is arguably

subject to § 7 or § 8 of the NLRA, the Court “has been

unwilling to ‘declare pre-empted all local regulation that

touches or concerns in any way the complex interrelation-

ships between employees, employers, and unions . . .

Farmer v. United Broth. of Carpenters and Joiners of America,

Local 25, 430 U.S. 290, 298 (1977), quoting Motor Coach

Employees v. Lockridge, 403 U.S. 274, 289 (1971).

The Court’s reluctance to extend Garmon preemption

over local regulation is an acknowledgment that preemp-

tion is not to be applied indiscriminately, particularly

where the State has a substantial interest in the regula-

tion:

Our cases indicate . . . that inflexible application

of the [Garmon] doctrine is to be avoided, espe-

cially where the State has a substantial interest in

regulation of the conduct at issue and the State's

interest is one that does not threaten undue interfer-

ence with the federal regulatory scheme.

Id., 430 U.S., at 302. The Court in Farmer found that even

where the State regulation results in “a potential for

interference with the federal scheme of regulation,” pre-

emption is not applicable where the State has a “legiti-

mate and substantial interest” in the regulation. Id., 430

U.S., at 303, 97 S.Ct., at 1065. (NLRA does not preempt an

action brought in state court by a union member against

the union for intentional infliction of emotional distress).

1. Garmon Does Not Preempt The Establish-

ment Of State Or Federal Minimum Labor

Standards, Including Ohio’s Prevailing

Wage Law Or Claims Made Thereunder

One type of local regulation that this Court has vigor-

ously protected from claims of preemption is the exact

type of regulation at issue here: minimum labor stan-

dards laws. In Metropolitan Life Ins. Co. v. Massachusetts,

471 U.S. 724 (1985), the Supreme Court declared that

unionized workers and employers are subject to mini-

mum labor standards imposed by both federal and state

law (just as non-union workers and employers are subject

se ee a. aaa ete

to those same standards). Id., 471 U.S., at 755. In Metro-

politan Life Ins. Co., the Court considered whether the

NLRA preempted a state law requiring that minimum

mental health benefits be provided under certain health

insurance policies. Just as is argued here, the party trying

to escape application of the minimum standard asserted

that the right to freely negotiate the terms of their collec-

tive bargaining agreement was deprived, and therefore

preempted under the NLRA. Id. The Court flatly dis-

agreed:

{[T]hese minimum state labor standards affect

union and non-union employees equally, and

neither encourage nor discourage the collective-

bargaining processes that are subject of the

NLRA. Nor do they have any but the most indi-

rect effect on the right of self-organization estab-

lished in the Act.

Id., 471 U.S., at 755. The Court went on to explain that, by

their very nature, federal or state laws that establish

minimum labor standards “are not designed to encourage

or discourage employees in the promotion of their inter-

ests collectively.” Id. Instead, these laws are, in part,

“designed to give specific minimum protections to indi-

vidual workers and to ensure that each employee covered

by the Act would receive” nothing less than the manda-

ted benefit. Id. (emphasis in original). The Court

explained that where the State chooses to establish a

minimum labor standard, it simply allows the employee

to come to the negotiating table with one protection for

which they otherwise might have to bargain — and such

state action is in no way preempted by federal law. Id.,

471 U.S., at 756-57. (“States possess broad authority

under the police powers to regulate the employment rela-

tionship to protect workers within the State.”) (citation

omitted).

Congress has never excluded unionized workers and

employers “from laws establishing federal minimum

employment standards,” and this Court has explained

that “We see no reason to believe that for this purpose

Congress intended state minimum labor standards to be

treated differently from federal minimum standards.”

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 755

(1985). The reason for this is that, “[t]he evil Congress

was addressing [through the NLRA] was entirely unre-

lated to local or federal regulation establishing minimum

terms of employment.” Metropolitan Life Ins. Co. v. Massa-

chusetts, 471 U.S. 724 (1985).

The Supreme Court’s explanation in Metropolitan Life

Ins. Co. that state minimum labor standards do not

intrude impermissibly upon collective bargaining was

followed up by Fort Halifax Packing Co., Inc. v. Coyne, 482

U.S. 1 (1987). In Fort Halifax Packing, the Court again

addressed-a challenge of NLRA preemption to a mini-

mum labor standard, this one involving a state statute

requiring a one-time severance payment to employees in

the event of a plant closing. Fort Halifax Packing, 482 U.S.,

at 20. Again, as in the present case, and as in Metropolitan

Life Ins. Co., the party seeking to escape the state mini-

mum standard argued that the law unlawfully intruded

upon the bargaining activities of the parties because the

standard undercut the parties’ ability to negotiate on

something they otherwise might have to bargain. The

Court explained that this has nothing to do with preemp-

tion:

It is true that the Maine statute gives employees

something for which they otherwise might have

to bargain. That is true, however, with regard to

any state law that substantively regulates

employment conditions. Both employers and

employees come to the bargaining table with

rights under state law that form a ‘backdrop’ for

their negotiations.

Fort Halifax Packing, 482 U.S., at 21 (citation omitted).” As

a result, assertions such as those made by Respondents in

the present case that the state statute pertains to matters

over which the parties are free to bargain “cannot sup-

port a claim of pre-emption.” Id., 482 U.S., at 22. See

Michigan United Food and Commercial Workers Unions v.

Baerwaldt, 767 F.2d 308 (6th Cir., 1984) (state law requiring

minimum substance abuse treatment benefits be provided

under certain health insurance policies is not preempted

under the NLRA or ERISA).

The freedom enjoyed by the states to enforce mini-

mum labor standards is a recognition that “efforts by

states to limit the outcome of [the collective bargaining]

process do not impinge on the jurisdiction of the NLRB to

determine what employer and employee conduct the

NLRA prohibits or permits.” General Elec. Co. v. New York

State Dept. of Labor, 698 F. Supp. 1093 (S.D.N.Y 1988),

vacated on other grounds, 891 F.2d 25 (2d Cir. 1989)

(emphasis added). In General Electric, the company chal-

lenged New York’s prevailing wage statute, claiming that

the statute was preempted by the NLRA. The District

Court rejected General Electric's Garmon preemption

argument, finding that “Garmon is inapplicable since . . .

Sections 7 and 8 of the NLRA are not concerned with the

substantive outcome of the collective bargaining process.”

Id., 698 F. Supp. at 1096 (emphasis added).

Ohio’s prevailing wage law sets a minimum standard

that applies to everyone. Union contractors and unions

are still free to collectively bargain, however, there are

certain outcomes of that bargaining that simply are not

7 The Court in Fort Halifax expressly considered Garmon

preemption — and rejected it. Fort Halifax Packing, 482 U.S., at 23,

note 16.

allowed. The fact of the matter is that “[t]he union parties

remain free to deduct as much as they will . . . however,

[the contractor] should [not] expect credit toward pay-

ment of the prevailing wage under the present Ohio

statute.” Subsidizing Contractors to Gain Employment: Con-

struction Union “Job Targeting,” Northrup and White, 17

Berkeley Journal of Employment & Labor Law, 62, 81 (1996).

It is incontrovertible that states may set limits on the

outcome of the collective bargaining process, and that

such limits do not impinge upon the National Labor

Relations Board. Id. At 523. As the Court explained in

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724

(1985), the NLRA is not concerned with the “terms of the

bargain that is struck” through the collective bargaining

process. Id., 471 U.S., at 753.

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. The minimum labor standard

expressed through Ohio’s prevailing wage law neither

encourages nor discourages the collective bargaining pro-

cess that is the subject of the NLRA. The law applies

equally to all employers, union and non-union alike. The

law gives specific minimum protections to all individual

employees, union and non-union alike. There simply is

no basis upon which to argue that a minimum labor

standard such as this is preempted under the NLRA.

Ohio is in no way regulating union dues, check-off, or

bargaining. In fact, the job targeting deductions at issue

have repeatedly been ruled to be something other than

union dues. See Reich, Brock, and Aubry. To the contrary,

Ohio is simply operating in an area “traditionally subject

to local regulation, which Congress could not possibly

have intended to eliminate.” Dillingham Construction, 117

S.Ct., at 842.

ae ee

ae pi

2. A Proper Analysis Would Have Used The

“Arguably Protected” Standard Under Gar-

mon

The Ohio Supreme Court did not apply the correct

standard under Garmon to the facts in this case. At best,

the Ohio Supreme Court should have applied the portion

of Garmon analysis which asks whether the activity in

question is “arguably protected” under Section 7 of the

NLRA. Under this analysis, the Ohio Supreme Court

could not have avoided the rule of law established in

Sears Roebuck and Co. v. San Diego County Dist. Council of

Carpenters, 434 U.S. 180 (1978) that federal preemption

does not occur if the controversy presented to the state is

not “identical” to that which could have been presented

to the NLRB. The Ohio Supreme Court’s holding that it is

“not important that J.A. Croson could not have presented

the identical controversy to the NLRB” is based upon the

utterly unfounded conclusion that job targeting deduc-

tions are protected regardiess of the impact of such

deductions on employee wages. (App. 16-17a).

The problem with the Ohio Supreme Court's analysis

is that there is a fundamental lack of understanding of

basic NLRB concepts such as “protected activity.” Clearly,

picketing is protected activity. But simply because picket-

ing is protected activity does not mean that some types of

picketing may be illegal and, therefore, not protected.

That is in essence the Sears case. In Sears, the Court

analyzed whether the activity of picketing was “arguably

protected,” and the Court concluded that since the identi-

cal issue (trespass) could not be presented to the NLRB, it

was not preempted.

In the matter sub judice, the concept of deductions

from wages is also, like picketing, potentially a “pro-

tected activity.” However, this does not mean that ail! job

targeting programs are absolutely protected regardless of

their requirements or content. However, that is in essence

the Ohio Supreme Court's ruling. Under the Ohio

Supreme Court's analysis, if tomorrow a union proposed

that union employees must give up not 2% but 100% of

their money to a job targeting program, the State of Ohio

would be powerless to stop this deduction no matter

what its local or state minimum labor standards were.

Had the Ohio Supreme Court followed the established

precedent that job targeting deductions are not absolutely

protected, it would have concluded that the state regula-

tions at issue are not preempted because the issue pre-

sented to the state court is not identical to the controversy

that could be presented to the NLRB.

In this case, the issue Petitioner presented to the trial

court concerned the permissibility of lowering an

employee’s pay on a public construction project below the

minimum labor standard set in the Ohio prevailing wage

law. There was no blanket request to ban job targeting

programs or even to find that these deductions were

illegal on private construction projects. Rather, all that

was asked of the Ohio Supreme Court was to let the case

go forward to determine if this deduction violated the

Ohio prevailing wage law.

3. This Matter Is Not Preempted Under Gar-

mon Because The Controversy Presented To

The State Court Is Not Identical To That

Which Could Have Been Presented To The

NLRB

The Ohio Supreme Court recognized that Petitioner

“1A. Croson could not have presented the identical con-

troversy to the NLRB” as was raised in Croson’s Com-

plaint (App. 19a). Having found that Petitioner could not

have presented the issue to the NLRB, the Supreme Court

of Ohio’s decision is in direct conflict with this Court’s

ruling that a matter is preempted under the NLRA only if

the issue is identical to the matter that could be ruled

upon by the NLRB. Sears, Roebuck v. San Diego County

District Council of Carpenters., 436 U.S. 180:

The critical inquiry . . . is not whether the State

is enforcing a law relating specifically to labor

relations or one of general application but

whether the controversy presented to the state

court is identical to... or different from... that

which could have been, but was not, presented

to the Labor Board. For it is only in the former

situation that a state court’s exercise of jurisdic-

tion necessarily involves a risk of interference

with the unfair labor practice jurisdiction of the

Board which the arguably prohibited branch of

the Garmon doctrine was designed to avoid.

Sears, 436 U.S., at 197 (emphasis added). In Sears, this

Court considered whether the NLRA preempted enforce-

ment of state trespass laws against picketing. The Court

noted that the primary jurisdiction rationale for preemp-

tion only applied when the “aggrieved party has a rea-

sonable opportunity either to invoke the NLRB’s

jurisdiction itself or to induce his adversary to do so.”

Sears at 201. In other words, where the aggrieved party

such as Croson cannot “directly obtain a Board ruling” on

the issue it has raised, then Garmon preemption does not

apply. Id.

As the Court of Appeals in this matter appropriately

observed, “the controversy [Croson] presents is very dif-

ferent from the controversy [J.A. Guy and Local 189]

allege is subject to NLRB jurisdiction.” (App. 57a). The

Court of Appeals went on to state that Croson is “an

outsider to the collective bargaining agreement [and

Croson, therefore] has no acceptable means of presenting

the dues-deduction issue to the NLRB.” (App. 58a). Nei-

ther J.A. Guy nor Local 189 has committed an unfair labor

practice against Petitioner. Petitioner has nothing to com-

plain about before the NLRB. Petitioner has nothing to

complain about under the NLRA. Petitioner’s complaint

is that Respondents have undermined a state law requir-

ing that contractors on state contracts pay a certain pre-

vailing wage. Petitioner is not complaining about any

activity that invokes the jurisdiction of the NLRB. In fact,

the present controversy has nothing to do with the NLRB

or its jurisdiction over the NLRA. As explained in “Subsi-

dizing Contractors to Gain Employment: Construction

Union ‘Job Targeting,’” Northrup & White, 17 Berkeley

Journal of Employment and Labor Law 62 (1996), the State of

Ohio:

[iJs not attempting to regulate dues check-off. It

is not calling into question the underlying col-

lective bargaining agreements. It is not adjudi-

cating a dispute properly before the National

Labor Relations Board (NLRB) or interfering in

the zone left by Congress to the free play of

economic forces. The state is simply attempting

to define what counts as payment of prevailing

wages for purposes of its own competitive bid-

ding statutes. This is surely a process which is

both innocuous and necessary.

Id., at 81. The essence of the issue that Croson seeks to

present to the state court concerns whether monetary

contributions from union employees to contractors

should be considered an impermissible rebate, or at least

not counted toward the contractor’s obligation to pay the

prevailing wage. Id. This is in no way identical to matters

to be raised before the NLRB. Id. at 80-82.

Ohio’s regulation has nothing to do with union dues,

check-off, or collective bargaining, but, rather, with the

enforcement of a minimum labor standard. Ohio certainly

can regulate schemes that reduce union (or non-union)

employees’ compensation below the level that all others

are supposed to be paid pursuant to the local prevailing

wage law without impermissibly intruding upon federal

law. See Int'l Broth. of Elec. Workers et al. v. Aubry (Calif.

App., 1996), 41 Cal. App. 4th 1632, 49 Cal. Rptr. 2d 759.

Reliance by the Supreme Court of Ohio upon Manno

Electric, Inc., NLRB Case No. 15-CA-11891 (July 20, 1994)

(NLRB May 22, 1996), (321 NLRB No. 43, 152 LRRM 1107,

1996 WL 276357) is misplaced. That avenue of analysis

inappropriately accepts the status of job targeting as

some kind of absolute right and ignores that Ohio’s pre-

vailing wage law does not regulate dues check-off, does

not call into question the underlying collective bargaining

agreement, and does not concern a dispute properly

before the NLRB. Because the matter in controversy is not

an identical issue which can be presented to the state and

the NLRB, ar © ‘e Ohio Supreme Court has recognized

the matter as wuch, there can be no federal preemption.

CONCLUSION

Ohio’s effort to establish and enforce minimum labor

standards through its prevailing wage law is not pre-

empted by federal law. Under the modern analysis of

labor law preemption, this Court has clarified time and

time again that the States may establish and enforce

minimum labor standards without impermissibly entan-

gling with federal law. Not only has this Court ruled that

a state prevailing wage law is not preempted under fed-

eral labor law, but several state and federal courts have

reached precisely the same conclusion in a variety of

contexts involving job targeting deductions.

Not only is Ohio’s prevailing wage law a permissible

exercise of the state’s power to enforce minimum labor

standards, but the dispute at issue in this matter is not

identical to that which could have been presented to the

NLRB, and Petitioner has no reasonable opportunity to

invoke the jurisdiction of the NLRB. Ohio’s prevailing

wage law, and the claims made thereunder, simply are

not preempted.

For the toregoing reasons, this Court should grant

Petitioner ].A. Croson Company's petition for a writ of

certiorari

Respectfully submitted,

RONALD L. Mason”

PHOomMaAS M.L. Merzcer

Parrick M. O’Nens

Kecier, Brown, Hit. & Rirrer

65 East State Street, Suite 1800

Columbus, Ohio 43215

(614) 462-5400

Counsel for Petitioner

a cae e

Counsel of Record

APPENDIX A

J}.A. CROSON COMPANY, Appellee,

J.A. GUY, INC. et al., Appellants.

Nos. 96-2578, 97-14.

Supreme Court of Ohio.

Submitted Jan. 13, 1998.

Decided April 8, 1998.

Syllabus by the Court

Section 7 of the National Labor Relations Act pre-

empts 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.

This action arises out of a claim by J.A. Croson Com-

pany (“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.

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 comple-

tion 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 suc-

cesstul bidder on the project that was also a signatory toa

collective bargaining agreement with Local 189 to partici-

pate in the Plumbers and Pipe Fitters Local 189 Industry

Advancement Program (“Industry Advancement Pro-

gram”). 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.

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.

Pursuant to R.C. 4115.16(B), J.A. Croson, an unsuc-

cessful 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 prevail-

ing 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 per-

cent 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 provi-

sion of Ohio’s prevailing wage law (R.C. 4115.10[D]) by

receiving job targeting grants from the union.

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. J.A. Guy, Local 189, and J.A.

Croson all moved for summary judgment on the basis of

their respective claims and defenses.

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, hold-

ing federal preemption inapplicable.

The Pickaway County Court of Appeals certified to

this court a conflict between its judgment and the judg-

ments 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 } A. Guy and Local 189, we determined that a conflict

exists, accepted the discretionary appeals, and directed

the parties to brief the following issue:

oad Or

EPG eM NE g

“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 regula-

tions adopted thereunder.” <

The cause is now before this court for consideration

of the discretionary appeals and resolution of the certi-

fied conflict.

Kegler, Brown, Hill & Ritter, Ronald L. Mason and

Thomas M.L. Metzger, Columbus, for appellee.

Schottenstein, Zox & Dunn, Felix C. Wade and Edwin

L. Skeens, Columbus, for appellant J.A. Guy, Inc.

Benesch, Friedlander, Coplan & Aronoff, L.L.P., N.

Victor Goodman, Mark D. Tucker and Rex A. Littrell,

Columbus, 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, Washington, DC, urging affir-

mance for amicus curiae, Associated Builders and Con-

tractors, Inc.

Sherman, Dunn, Cohen, Leifer & Yellig, P.C., Terry R.

Yellig and Jonathan D. Newman, Washington, DC, urging

reversal for amicus curiae, the Building and Construction

Trades Department, AFL-CIO, and the Ohio State Build-

ing and Construction Trades Council, AFL-CIO.

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Schmeltzer, Aptaker & Shepard, P.C., Robert L.

Duston and Gary L. Lieber, Washington, DC, urging

reversal for amicus curiae, National Electrical Contractors

Association and National Electrical Contractors Associa-

tion, Ohio Conference.

Bricker & Eckler and Luther L. Liggett, Jr., Columbus,

urging reversal for amicus curiae, Ohio Mechanical Con-

tracting Industry.

COOK, Justice.

JOB TARGETING

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 cre-

ated by those projects will go to union members. Typ-

ically, 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.

Local 189 carries on job targeting through its Indus-

try Advancement Program. The union pays its grants to

unionized contractors on targeted jobs from a fund speci-

tically 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°/s percent deduction for

regular checkoff dues. The Market Recovery Assessment

is subject to the periodic approval of union members.

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

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

ve alin ADR AS IT OO RIL ik CORAL ROR eA ES es PER oh EER

de DEN Ce RE et AN EM Meanie

integrity of the collective bargaining process by prevent-

ing the undercutting of employee wages in the private

construction sector.” (Plurality opinion.) State ex rel. Evans

v. Moore (1982), 69 Ohio St.2d 88, 91, 23 O.0.3d [sic] 145,

147, 431 N.E.2d 311, 313.

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 Employ-

ment 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.! 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.

The second provision at issue is R.C. 4115.10(D),

which prohibits any person from demanding, requesting,

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.”

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 representa-

tive of 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 target-

ing funds violates R.C. 4115.10(D).

PREEMPTION UNDER THE NLRA

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

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 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 organi-

zation.” ~

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atl Aa nb Cahine aioe aetiSe nc eal de Nae

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Bee ah i UES ete we

(“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 con-

cerned with potential conflict regarding substantive law,

remedies, and administration. The potential for conflict

arises when two law-enforcing authorities, with the dis-

harmonies inherent in two systems, one federal the other

state, are required to apply inconsistent standards of

substantive law and/or differing remedial schemes. Gar-

mon, 359 U.S. at 241-242, 79 S.Ct. at 778, 3 L.Ed.2d at 781.

The Supreme Court articulated two distinct NLRA

preemption principles in Metro. Life, supra. “The first,

‘Garmon pre-emption,’ see San Diego Building Trades Coun-

cil v. Garmon, supra, forbids state and local regulation of

activities that are ‘protected by § 7 of the [NLRA], or

constitute an unfair labor 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 reg-

ulation even of activities that the NLRA only arguably

10a

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, 105 S.Ct. at

2393-2394, 85 L.Ed.2d at 745-746, and fn. 26.

“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 regula-

tion 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 1);

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 Il). Machinists pre-emption preserves Congress’

‘intentional balance “ ‘between the uncontrolled power of

management and labor to further their respective inter-

ests.’ ” ’ Golden State I, 475 U.S., at 614 [106 S.Ct. at 1399,

89 L.Ed.2d at 623-624] (citations omitted).” Bldg. & Constr.

as ss

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Trades Council of Metro. Dist., 507 U.S. at 225-226, 113 S.Ct.

at 1195, 122 L.Ed.2d at 575.

GARMON PREEMPTION

“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 Con-

gress 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 pro-

phylactic rule concerning activity that is only arguably

subject to the protections found in Section 7 or the prohi-

bitions found in Section 8 of the NLRA. Id.

CLEARLY PROTECTED OR

CLEARLY PROHIBITED ACTIVITY

“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

12a

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.

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.

ARGUABLY PROHIBITED OR PROTECTED ACTIVITY

Where conduct only arguably falls under the protec-

tions 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 leit

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 adminis-

trative agency [the NLRB].” Gould, 475 U.S. at 289-290,

106 S.Ct. at 1063, 89 L.Ed.2d at 230.

In enacting the NLRA,

“ “Congress did not merely lay down a substan-

tive rule of law to be enforced by any tribunal

z ——

13a

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 judi-

cial 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 diver-

sities 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 adjudica-

tions 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.

PROHIBITED CONDUCT VERSUS

PROTECTED CONDUCT

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 neces-

sarily 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

l4a

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

‘Ic]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 funda-

mental 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.

“Apart from notions of ‘primary jurisdiction,’ there

would be no objection to state courts’ and the NLRB’s

exercising concurrent jurisdiction over conduct prohib-

ited 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 suprem-

acy, however, are implicated to a greater extent where

conduct is protected under Section 7 of the NLRA. Id.

Where conduct is protected, “[t]he danger of permitting

local adjudications is not that timing or form of relief

might be different from what the Board would adminis-

ter, but rather that the local court might restrain conduct

that is in fact protected by the Act.” Sears, 436 U.S. at 221,

15a

98 S.Ct. at 1770, 56 L.Ed.2d at 240. (Brennan, J., dissent-

ing.) 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 pro-

tected 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.

Where state regulation would, in fact, inhibit feder-

ally 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.) Accord-

ingly, 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 jurisdic-

tion of the National Labor Relations Board, although the

two are often not easily separable.” (Citations omitted.)

loa

THE NLRB HAS HELD THAT JOB TARGETING

IS PROTECTED CONDUCT UNDER

SECTION 7 OF THE NLRA

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.

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 impermissi-

ble wage reduction or an illegal subsidy to union contrac-

tors, 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 activ-

ity” 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.

17a .

Because the NLRB has held that job targeting is actu-

ally 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 Assoctated 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

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 Carpeniers &

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.

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

18a

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.

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 differ-

ing 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.

“In the latter situation, a presumption of federal pre-

emption applies even when the state law regulates con-

duct only arguably protected by federal law. Such a pre-

emption rule avoids the potential for jurisdictional con-

flict 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 excep-

tion 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

19a

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.

“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.

Because job targeting is actually protected under Sec-

tion 7 of the NLRA, the above exceptions are inapplica-

ble. 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 pre-

emption. See Sears, 436 U.S. at 202, 98 S.Ct. at 1760, 56

L.Ed.2d at 228.

MACHINISTS PREEMPTION

1.A. Croson and the court below rely heavily cn the

following Supreme Court reasoning as a basis to avoid

preemption:

20a

“The NLRA is concerned primarily with estab-

lishing 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 orga-

nized in the corporate or other forms of owner-

ship association.’ § 1, 29 U.S.C. § 151. The same

section notes the desirability of ‘restoring equal-

ity of bargaining power,’ among other ways, ‘by

encouraging the practice and procedure of col-

lective 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 nego-

tiating the terms and conditions of their employ-

ment 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 dis-

favored.’ 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 Wag-

ner Act on its head to understand it to have

penalized workers who have chosen to join a

union by preventing them from benefiting from

Ae Pe AES CR Nd RD PO MN Ec iad eS,

OT ah ace A hi i Pet

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healed dei iti Mae a ieee Yani

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2la

state labor regulations imposing minimal stan-

dards on nonunion employers.” (Citations omit-

ted.) Metro. Life, 471 U.S. at 753-756, 105 S.Ct. at

2396-2397, 85 L.Ed.2d at 749-750.

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.” There-

fore, 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.

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 dis-

cussed, Machinists preemption does not pertain to con-

duct 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.

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 col-

lective bargaining. These cases, however, do not extend to

aspects of state regulation directly impinging on the fed-

erally protected right of union employees to engage in

concerted activity. The concern here is not that state

regulation will undermine the collective bargaining pro-

cess; it is that state regulation will restrain union mem-

bers from exercising a federally protected right.

Accordingly, the cases upon which J.A. Croson relies that

explore the nuances of Machinists preemption are of lim-

ited value to our inquiry.

CONCLUSION

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 tar-

geting programs.* Accordingly, we reverse the judgment

of the appellate court.

* 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

23a

Judgment reversed.

MOYER, C.J., and DOUGLAS, RESNICK, FRANCIS E.

SWEENEY, Sr., PFEIFER and LUNDBERG STRATTON,

JJ., concur.

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.

24a

APPENDIX B

IN THE COURT OF APPEALS OF OHIO

FOURTH APPELLATE DISTRICT

PICKAWAY COUNTY

].A. CROSON COMPANY, :

Plaintiff-Appellant, ee No. 95 CA 10

VS.

.A. GUY, INC.,

J DECISION AND

Defendant-Appellee. — : JUDGMENT ENTRY

(Filed October 4, 1996)

APPEARANCES:

COUNSEL FOR Ronald L. Mason, Thomas M.L.

APPELLANT: Metzger & Timothy T. Tullis, Emens,

Kegler, Brown, Hill & Ritter, L.P.A.,

65 East State Street, Suite 1800, Col-

umbus, Ohio 43215

COUNSEL FOR Felix C. Wade & Edwin L. Skeens,

APPELLEE Schottenstein, Zox & Dunn, L.P.A.,

J.A. GUY, INC:: 41 South High Street, Csiumbus,

Ohio 43215

COUNSEL FOR N. Victor Goodman, Orla E. Collier,

APPELLEE Mark D. Tucker & Rex A. Littrell,

LOCAL 189:! Benesch, Friedlander, Conlan &

Aronoff, 88 East Broad Street, Suite

900, Columbus, Ohio 43215-3506

' The full name of this appellee is United Association of

Journeymen and Apprentices of the Plumbing and Pipe Fitting

Industry of the United States and Canada, Local No. 189.

ABELE, PJ.

This is an appeal from a judgment entered by the

Pickaway County Common Pleas Court denying the

motion for summary judgment filed by J.A. Croson Com-

pany, plaintiff below and appellant herein, and granting

the motions for summary judgment filed by J.A. Guy, Inc.

and the United Association of Journeymen and Appren-

tices of the Plumbing and Pipe Fitting Industry of the

United States and Canada, Local No. 189, defendants

below and appellees herein.

Appellant assigns the following errors:

FIRST ASSIGNMENT OF ERROR:

“THE TRIAL COURT ERRED IN GRANT-

ING APPELLEES J.A. GUY, INC.’S AND

LOCAL 1895S MOTIONS FOR SUMMARY

JUDGMENT.”

SECOND ASSIGNMENT OF ERROR:

“THE TRIAL COURT ERRED IN OVER-

RULING APPELLANT J.A. CROSON COM-

PANY’S CROSS-MOTION FOR SUMMARY

JUDGMENT.”

THIRD ASSIGNMENT OF ERROR:

“THE TRIAL COURT ERRED IN FAILING

TO DETERMINE THAT THE JOB TARGET-

ING DEDUCTION TAKEN FROM

EMPLOYEES’ WAGES BY APPELLEE J.A.

GUY, INC. IS A SPECIAL ‘ASSESSMENT’

PROHIBITED UNDER 0O.A.C. SECTION

4101:9-4-07.”

26a

FOURTH ASSIGNMENT OF ERROR:

“THE TRIAL COURT ERRED IN FAILING

TO DETERMINE THAT APPELLEE J.A.

GUY, INC. VIOLATED R.C. SECTION

4115.10(D)”

FIFTH ASSIGNMENT OF ERROR:

“THE TRIAL COURT ERRED IN FAILING

TO DETERMINE THAT THE JOB TARGET-

ING PROGRAM IN WHICH APPELLEES

J.A. GUY, INC. AND LOCAL 189 PARTICI-

PATE IS CONTRARY TO PUBLIC POLICY.”

SIXTH ASSIGNMENT OF ERROR:

“THE TRIAL COURT ERRED IN DETER-

MINING THAT R.C. SECTION 4115.07

AND 0O.A.C. SECTION 4101:9-4-07 ARE

PREEMPTED BY FEDERAL LAW UNDER

SECTION 8 OF THE NATIONAL LABOR

RELATIONS ACT UNDER SAN DIEGO

BLDG. TRADES COUNCIL V. GARMON, 359

U.S. 236 (1959).”

On June 15, 1993, appellant filed the instant com-

plaint against Appellee J.A. Guy, Inc. pursuant to R.C.

Chapter 4115, Ohio’s prevailing wage law. In the com-

plaint, appellant alleged that it unsuccessfully bid on two

contracts that Appellee J.A. Guy, Inc. won. The contracts

were for the construction of the new Pickaway County

Jail and for the installation of a water softening system

tor the jail. Appellant further alleged in pertinent part as

follows that relative to those contracts, Appellee J.A. Guy,

Inc. entered into an agreement with Appellee Local 189

whereby Appellee J.A. Guy, Inc. would deduct two per-

cent from the workers’ wages, pay that two percent to

Appellee Local No. 189, and then Appellee Local 189

27a

would return that two percent to Appellee J.A. Guy, Inc.

in violation of Ohio’s prevailing wage law:

“10. Pursuant to R.C. Section 4115.07, J.A.

Guy, Inc. is required to make full payment of the

prevailing wage, and is prohibited from making

any deduction not specifically permitted by R.C.

Chapter 4115 or the regulations promulgated

under R.C. Section 4115.12.

11. Ohio Administrative Code (‘O.A.C.’)

Section 4101:9-4-07 allows certain deductions

from wages, including deductions to pay regu-

lar union initiation fees and membership dues.

Pursuant to O.A.C. Section 4101:9-4-07(B)(6),

union fines or special assessments are speci-

fically excluded from the list of permissible

deductions.

12. Pursuant to an agreement between J.A.

Guy, Inc. and Plumbers and Pipefitters Local

Union No. 189, J.A. Guy, Inc. deducted 2% of the

gross wages paid to its employees on the [con-

struction of the new Pickaway County Jail and

the]? Water Softening System for Pickaway

County Jail as a ‘Market Recovery Assessment.’

13. The ‘Market Recovery Assessment’ is

an unlawful ‘special assessment’ deduction pro-

hibited by O.A.C. Section 4101:9-4-07(B)(6).”

On July 21, 1993, Appellee J.A. Guy, Inc. filed an

answer and third-party complaint against Appellee Local

2 Paragraphs 10-13 of the complaint relate to the

installation of the water softening system for the jail. In

paragraphs 27-30 of the complaint, appellant repeated the above

allegations in relation to the construction of the new Pickaway

County fail.

28a

189. In the answer, Appellee J.A. Guy, Inc. alleged, inter

alia, that appellant's claims are preempted by federal law.

In the third-party complaint, Appellee J.A. Guy, Inc.

alleged that if any violations of R.C. Chapter 4115

occurred, those violations were caused by acts or omis-

sions of Appellee Local 189, including the use it made of

union dues remitted by Appellee J.A. Guy, Inc.

On August 10, 1993, Appellee Local 189 answered the

third-party complaint. Appellee Local 189 asserted var-

ious defenses to the third-party complaint, including the

defenses that: (1) the claims in appellant’s complaint are

preempted by federal law; and (2) Ohio Adm. Code

4101:0-4-07,5 to the extent that it is construed as prohibiting

* Ohio Adm Code 4101:9-4-07 provides as follows:

4101:9-4-07 Permissible payroll deductions.

(A) The following deductions from wages may be made

without application to and approval of the department of

industrial relations:

(1) Any deduction from wages required by federal, state,

or local law;

(2) Any deduction of amounts required by court order,

process, or judgment to be paid to another unless collusion or

collaboration exists between the employer and the employee for

whose benefit the deduction is made;

(3) Any deduction which constitutes a contribution by the

employee to funds, plans, or programs established by the

employer or representatives of employees, or both, for the

purpose of providing either from principal or income, or both,

medical or hospital care, pensions or annuities on retirement,

death benefits, compensation for injuries in addition to that

required by Chapters 4121. and 4123. of the Revised Code,

compensation for illness, accidents, sickness, or disability, or for

insurance to provide any of the foregoing, or unemployment

benefits in addition to those required by Chapter 4141. of the

Revised Code or vacation pay.

(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:

of ; ;

(1) Savings accounts or similar savings plans for the

benefit of employees, their families and dependents;

(2) Any deduction constituting a contribution toward the

purchase of United States defense stamps or savings bonds;

(3) Any deduction enabling the employee to repay loans

to or purchase shares in credit unions organized and operated in

accordance with federal and state credit union statutes;

(4) Any deduction for the making of contributions to

governmental or quasi-governmental agencies;

(5) Any deduction for the making of contributions to

legitimate charitable institutions;

(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.

(7) Any deduction for the making of contributions to a

state or federal political action committee.

in paragraphs (A) and (B) of this rule shall be permitted only

upon approval of the public authority and the director and must

meet the following criteria:

(1) The deduction is not otherwise prohibited by law;

(2) The employer does not make a profit or benefit directly

or indirectly from the deduction in any form, including, but not

limited to, commissions or dividends;

30a

deductions of union dues or assessments, is inconsistent

with R.C. Chapter 4115.4

(3) The deduction is either voluntarily consented to by the

employee in writing, prior to the period in which the work is to be

done, where such prior consent is not a condition for obtaining or

continuing employment, or is provided for in a bona fide collective

bargaining agreement between the employer and representatives of

its employees; and

(4) The deduction serves the convenience and interest of the

employee, his family or beneficiaries.

(D) Failure to provide evidence of voluntary deductions

pursuant to paragraphs (B) and (C) of this rule constitutes a

violation of section 4115.07 of the Revised Code.

(E) Failure to attain the approval of the public authority and

the director for any deduction taken pursuant to paragraph (C) of

this rule constitutes a violation of section 4115.07 of the Revised

Code.

(F) Anemployer withholding a permissible payroll deduction

pursuant to paragraph (A), (B) or (C) of this rule shall maintain

complete records of the wages withheld, including any and all

receipts for donations, contributions, fees, and dues paid on behalf

of the employee, from the deductions withheld by the employer.

{G) Failure to comply with paragraph (F) of this rule

constitutes a violation of section 4115.07 of the Revised Code.

(H) Any records required to be maintained by this rule shall

be made available to the public authority and the department of

industrial relations upon request.

(Emphasis added.)

+ R.C. 4115.10 provides as follows:

(A) No person, firm, corporation, or public authority that

constructs a public improvement with its own forces, the total

overall project cost of which is fairly estimated to be more than

the amounts set forth in division (B)(1) or (2) of section 4115.03

of the Revised Code, adjusted biennially by the administrator of

employment services pursuant to section 4115.034 [4115.03.4] of

Sd PT Noe eh arate wees

nat RL Iie ED: sia alas it Sea ae Mrs of -

ee ee eae eee

a 9 Bo ae a ol

3la

On October 19, 1993, Appellee Local 189 filed a

motion for summary judgment. In support of the motion,

the Revised Code, shail violate the wage provisions of sections

4115.03 to 4115.16 of the Revised Code, or suffer, permit, or

require any employee to work for less than the rate of wages so

fixed, or violate the provisions of section 4115.07 of the Revised

Code. Any employee upon any public improvement, except an

employee to whom or on behalf of whom restitution is made

pursuant to division (C) of section 4115.13 of the Revised Code,

who is paid less than the fixed rate of wages applicable thereto

may recover from such person, firm, corporation, or public

authority that constructs a public improvement with its own

forces the difference between the fixed rate of wages and the

amount paid to him and in addition thereto a sum equal to

twenty-five per cent of that difference. The person, firm,

corporation, or public authority who fails to pay the rate of

wages so fixed also shall pay a penalty to the administrator of

seventy-five per cent of the difference between the fixed rate of

wages and the amount paid to the employees on the public

improvement. The administrator shall deposit all moneys

received from penalties paid to him pursuant to this section into

the penalty enforcement fund, which is hereby created. The

penalty enforcement fund shall be in the custody of the

treasurer of state but shall not be part of the state treasury. The

administrator shall use the fund for the enforcement of sections

4115.03 to 4115.16 of the Revised Code. The employee may file

suit for recovery within sixty days of the administrator’s

determination of a violation of sections 4115.03 to 4115.16 of the

Revised Code or is barred from further action under this

division. Where the employee prevails in a suit, the employer

shall pay the costs and reasonable attorney's fees allowed by the

court.

(B) Any employee upon any public improvement who is

paid less than the prevailing rate of wages applicable thereto

may file a complaint in writing with the bureau of employment

services upon a form furnished by the administrator. At the

written request of any employee paid less than the prevailing

rate of wages applicable, the administrator shall take an

32a

Appellee Local 189 argued that: (1) because R.C.

4115.10(D) expressly permits the deduction of union dues

assignment of a claim in trust for the assigning employee and

bring any legal action necessary to collect the claim. The

employer shall pay the costs and reasonable attorney's fees

allowed by the court if the employer is found in violation of

sections 4115.03 to 4115.16 of the Revised Code.

Revised Code, the administrator determines there is a violation

of sections 4115.03 to 4115.16 of the Revised Code and a period

of sixty days has elapsed from the date of the determination,

and if:

(1) Noemployee has brought suit pursuant to division (A)

of this section;

(2) Noemployee has requested that the administrator take

an assignment of a wage claim pursuant to division (B) of this

section.

The administrator shall bring any legal action necessary to

collect any amounts owed to employees and the bureau. The

administrator shall pay over to the affected employees the

amounts collected to which the affected employees are entitled

under division (A) of this section. In any action in which the

administrator prevails, the employer shall pay the costs and

reasonable attorney's fees allowed by the court.

(D) Where workmen are employed and their rate of wages

has been determined as provided in section 4115.04 of the

Revised Code, no person, either for himself or any other person,

shall request, demand, or receive, either before or after such

workman is engaged, that such workman pay back, return,

donate, contribute, or give any part or all of said workman’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 such

workman from procuring or retaining employment, and no

person shall, directly or indirectly, aid, request, or authorize any

other person to violate this section. This division does not apply

to any agent or representative of a duly constituted labor

is tbe SIND al OS iia ai 2 i se Det Cans

ELEC ADE RA A ERR PO

LARPS aL I,

SA i eh RR Sei HT.

from employee wages, the complaint fails to state a claim

upon which relief can be granted; (2) even if appellant

has stated a claim upon R.C. 4115.16(A) and (B), appel-

lant’s claims are preempted by federal law as explained

in San Diego Bldg. Trades Council v. Garmon (1959), 359 U.S.

236, 79 S.Ct. 773, 3 L.Ed.2d 775 [hereinafter Garmon]; and

(3) even if appellant’s claims are not preempted by fed-

eral law, the deduction of dues from employee wages is

expressly authorized by the collective bargaining agree-

ment between the parties and by R.C. Chapter 4115 and

accompanying regulations.

In a memorandum in support of the motion for sum-

mary judgment and in an accompanying affidavit, Appel-

lee Local 189 explained as follows that its “Industry

Advancement Program” results in money withheld from

employees’ paycheck going to the union and then back to

the contractor:

“Local 189, with the approval of its mem-

bership, has established a program called ‘The

Plumbers and Pipe Fitters Local 189 Industry

Advancement Program.’ The program was first

organization acting in the collection of dues or assessments of

such organization.

(E) The bureau shall enforce sections 4115.03 to 4115.16 of

the Revised Code.

(F) For the purpose of supplementing existing bureau

resources and to assist in enforcing division (E) of this section,

the administrator may contract with a person registered as a

public accountant under chapter 4701, of the Revised Code to

conduct an audit of a person, firm, corporation, or public

authority.

34a

established in 1988 and is based on similar pro-

grams adopted throughout the United States

and approved by the National Labor Relations

Board.

The program is exclusively operated by Local

189. The purpose of the program is to promote

the Organized Mechanical Construction Indus-

try within the jurisdiction of Local 189 by such

means as bid supplements on selected projects

and for advertising educational programs, pro-

ductivity studies and related activities. The

essential elements of the Industry Advancement

Program are as follows:

a) Local 189 determines a list of jobs to

target. Contractors may request a job to

be targeted but are not involved in the

actual determination of jobs to be tar-

geted;

b) Any approved contractor who is either

a signatory to the collective bargaining

agreement or who agrees to sign a con-

tract with the union may participate in

the program;

c) The program is funded entirely by

union dues;

d) Ifa grant is approved, the contractor is

paid monthly only on the amount of

hours actually worked and based on the

estimate of hours provided;

e) There is no agreement to reduce wages

or fringes as established in the collec-

tive bargaining agreement. Only tar-

geted jobs are provided a subsidy in the

form of a grant to specific, approved

contractors.”

35a

Appellee Local 189 argued that the money deducted from

the employees’ paychecks was for union dues, not for a

special assessment. Appellee Local 189 cited Garmon for

the proposition that states may not regulate activities

which federal labor law either permits or prohibits, and

cited Wisconsin Department of Industry, Labor and Human

Relations v. Gould, Inc. (1986), 475 U.S. 282, 106 S.Ct. 1057,

89 L.Ed.2d 223, for the proposition that it is now firmly

established that federal labor law has largely displaced

state regulation of labor relations. Appellee Local 189

noted that in the National Labor Relations Board (NLRB)

Region 9 Director’s July 21, 1993 joint decision in Interna-

tional Bhd. of Electrical Workers, AFL-CIO-CLC (Wagner-

Smith Company), Case No. 9-CB-8493, The Fred DeBra Co.,

(Case No. 9-CA-30588), and International Bhd. of Workers,

Local 82, AFL-CIO (The Fred B. DeBra Co., Case No.

9-CB=8511), the NLRB Regional Director approved the

allocation of union dues to a job-targeting program.

Appellee Local 189 quoted from the Region 9 director’s

July 21, 1993 decision as follows:

“Inasmuch as the job targeting program ‘deduc-

tions’ are not an additional assessment, but are

merely a reallocation of periodic dues which are

uniformly required of members, Local 82 did

not violate the Act by securing them through

checkoff authorization and the Employer did

not engage in any unlawful conduct by effec-

tuating the checkoff.”

Appellee Local i189 noted that in International Bhd. of

Electrical Workers Local 48, Case No. 36-CB-1299, decided

April 22, 1987, and Local 48, IBEW (Midway Electric, Bon-

neville Power), Case No. 36-CB-1302, decided April 28,

1987, the NLRB Region 19 Director reached a similar

36a

conclusion with regard to union dues coilected for a

“Market Recovery Program.”

On November 1, 1993, Appellee J.A. Guy, Inc. filed a

motion for summary judgment. In a memorandum in

support of the motion, Appellee J.A. Guy, Inc. argued,

inter alia, that it lawfully deducted union dues from the

wages it paid to employees. Appellee J.A. Guy, Inc. cited

United States Department of Justice opinion 22 LRRM

(BNA) 46 (1948) tor the proposition that union “initiation

fees and assessments, being incidents of membership,

should be considered as falling within the classification

Appellee J.A. Guy, Inc. further

argued that employer deductions used by unions to

, on

of ‘membership dues.

finance job targeting programs fall within the category of

“membership dues.”

The parties conducted discovery during the next

year. On August 31, 1994, the trial court gave appellant

until that date to file a cross-motion for summary judg-

ment.

On August 31, 1994, appellant filed a joint brief in

opposition to appellees’ motion for summary judgment

and cross-motion for summary judgment. In the joint

brief and motion, appellant contended that “at its core,

Local 189’s job targeting program is a kickback scheme, in

which money earned by union members is transferred by

the union contractor to the union, which then funnels the

money back to the union contractor as a subsidy.” When

describing the scheme in detail, appellant referred to

depositions of Appellee Local 189’s financial secretary

and treasurer Charles Gronbach, Appellee Local 189’s

Se ADS Ak

Sanity nai te engi at Bt

WMG dt Rede 5

37a

business manager Eugene Minix, and Appellee J.A. Guy,

Inc.’s president John A. Guy, II.

Appellant argued, inter alia, that the doctrine of fed-

eral labor law preemption is not applicable to the case sub

judice. In support of this argument, appellant cited Pipefit-

ters Local 392 v. Kokosing Constr. Co., Inc. (1993), 90 Ohio

App.3d 560, 630 N.E.2d 28, in which the First District

held that the NLRA did not preempt a pipefitters union’s

claim seeking to insure that the higher prevailing wage

for pipefitters was paid to laborers who performed proc-

ess-piping work at a water treatment plant. Appellant

distinguished the type of preemption contemplated in

Garmon from the type of preemption appellees seek to

apply in the case sub judice. Appellant argued that the

Garmon preemption only applies to matters within the

jurisdiction of the NLRB.

Appellant also argued that because the state, when

administering the prevailing wage law, acts not as

regulator but rather as a market participant, federal labor

laws do not preempt the Ohio prevailing wage law. In

support of this argument, appellant quoted Building and

Constr. Trades Council of the Metro. Dist. v. Associated

Builders and Contractors of Massachusetts/Rhode Island, Inc.

(1993), 507 U.S. 218, 226-227, 113 S.Ct. 1190, 1196, 122

L.Ed.2d 565, 575-576, as follows:

“When we say that the NLRA preempts

state law, we mean that the NLRA prevents a

State from regulating within a protected zone,

whether it be a zone protected and reserved for

market freedom, see Machinists, or for NLRB

jurisdiction, see Garmon. A State does not regu-

late, however, simply by acting within one of

38a

these protected areas. When a State owns and

manages property, for example, it must interact

with private participants in the marketplace. In

doing so, the State is not subject to preemption by

the NLRA, because preemption doctrines apply only

to state regulation.”

(Emphasis added.)

Appellant reasoned that Ohio’s prevailing wage law sets

forth the requirements for the performance of contracts

for the construction of public improvements, and thus is

an exercise of the state’s power to manage public prop-

erty rather than an attempt by the state to regulate either

within a zone protected and reserved for market freedom

or for NLRB jurisdiction.

On September 30, 1994, Appellee J.A. Guy, Inc. and

Appellee Local 189 each filed a reply to appellant’s cross-

motion tor summary judgment. They argued, inter alia,

that Ohio Adm. Code 4104:9-4-07(B)(6) is preempted by

tederal law. In support of this argument, they cited two

unreported common pleas court decisions, Independent

Electrical Contractors of Greater Cincinnati, Inc. v. Cty. of

Hamilton (Aug. 6, 1993), Hamilton C.P. Case No.

A-9209065, unreported, and ].A. Croson Co. v. Cent. Ohio

Joint Vocational School Dist. (Apr. 11, 1994), Madison C.P.

No. 94CV-03-039, unreported, in which, appellees argue,

the courts held that Ohio Adm. Code 4101:9-4-07(B)(6)

directly conflicts with Section 302(C)(4) of the Labor Man-

agement Relations Act. Appellees further argued that the

money deducted from employees’ paychecks constituted

dues, not a special assessment, and thus Appellee Local

189’s job targeting program does not violate Ohio’s pre-

vailing wage law, R.C. Chapter 4115.

ead Bie ey pian RA EA et Heh ee

39a

On October 17, 1994, appellant filed a reply mem-

orandum in support of its cross-motion for summary

judgment. In the memorandum, appellant again argued,

inter alia, that the doctrine of federal labor law preemp-

tion is not applicable to the case sub judice. In support of

this argument, appellant again cited Pipefitters Local 392 v.

Kokosing Constr. Co., Inc. (1993), 90 Ohio App.3d 560, 630

N.E.2d 28. Appellant also argued again that the job tar-

geting money deducted from the employees’ paychecks is

a special assessment prohibited by R.C. Chapter 4115.

Between December 2, 1994, and March 15, 1995, the

parties filed ten supplemental memoranda arguing about

the impact of several cases on the case sub judice. Those

cases included Manno Elec. Inc. (July 20, 1994), NLRB

Case No. 15-CA-11891, and Independent Electrical Contrac-

tors of Greater Cincinnati, Inc. v. Hamilton Cty. Div. of Pub.

Works (1995), 101 Ohio App.3d 580, 656 N.E.2d 18, motion

to certify overruled in (1995), 73 Ohio St.3d 1410, 651

N.E.2d 1308. In Manno Elec, Inc., the NLRB wrote that the

NLRA preempts a state court lawsuit charging that a job

targeting program injured and restrained the non-union

electrical contractor’s business. In Independent Electrical

Contractors of Greater Cincinnati, Inc., the First District,

when affirming the common pleas court’s decision citea

by appellees in earlier memoranda in the case sub judice,

concluded that: (1) deductions from employees’ pay-

checks used to fund union job targeting programs are not

special assessments but are merely a reallocation of peri-

odic dues; and (2) because the interests protected by the

National Labor Relations Act (hereinafter NLRA) and

R.C. Chapter 4115 do not involve “discrete concerns,” the

job targeting issue is preempted by federal law.

40a

On March 28, 1995, the trial court issued an opinion

finding that federal law preempts the job targeting issue

in the case sub judice. In the opinion, the trial court wrote

in pertinent part as follows:

“In San Diego Bldg. Trades Council v. Garmon,

(1959), 359 U.S. 236, the U.S. Supreme Court

held:

‘[w]hen an activity is arguably subject to

(section) 7 or (section) 8 of the [National

Labor Relations] Act, the States as well as

the federal courts must defer to the exclu-

sive competence of the National Labor Rela-

tions Board if the danger of state

interference with the national policy is to be

averted.’ Id. at 245.

The Garmon doctrine is designed to prevent

conflict between state and local regulations and

Congress’s ‘integrated scheme of regulation,

embodied in the National Labor Relations Act,

Sections 157 and 158, Title 29, U.S. Code. In

passing the NLRA, Congress ‘largely displaced

state regulation of industrial relations.’ Wiscon-

sin Dept. of Industry, Labor & Human Relations v.

Gould, Inc. (1986), 475 U.S. 282.

In Communication Workers of American [sic] v.

Beck (1988), 487 U.S. 735, the U.S. Supreme

Court noted that section 8(a)(3) of the NLRA

permits an employer and exclusive bargaining

representative to enter into an agreement requir-

ing all employees in the bargaining unit to pay

periodic union dues as a condition of continued

employment. Id. at 738. The Court found that a

challenge to the use of union dues for purposes

other than collective bargaining is subject to

4la

Section 8 and therefore preempted under Gar- .

mon,

The NLRA ‘leaves the substantive terms of

collective bargaining agreements to manage-

ment and union representatives to hammer out

in the collective bargaining process.’ Cannon v.

Edgar (C.A.7, 1994), 33 F.3d 880. Application of

the Prevailing Wage Law as urged by J.A.

Croson Company would allow the state to regu-

late the amount of union dues which could be

withheld from members’ paychecks and the pur-

poses to which those dues could be put. J.A.

Croson Company’s characterization of the case

is irrelevant, see Bldrs. Assn. v. Commercial Piping

Co. (1982), 70 O.St.2d 9 at 14; it actually seeks to

have the state controi matters at the heart of the

collective bargaining process, which is regulated

by the NLRA. Under J.A. Croson Company’s

interpretation, j.A. Guy, Inc. could only comply

; with the prevailing wage law by breaching its

4 duty to remit union dues under the collective

| bargaining agreement, a violation of section 8 of

the NLRA. Therefore, the Court concludes that

the issue is preempted under Garmou.”

—-_

On April 11, 1995, the trial court entered judgment grant-

ing appellees’ motion for summary judgment and deny-

ing appellant’s ¢ross-mection for summary judgment.

Appellant filed a timely notice of appeal.

We note that appellant failed to argue separately each

of the six assignments of error as required by App.R.

16(A)(7). App.R. 12(A)(2) provides in pertinent part as

tollows:

(2) The court may disregard an assignment

of error presented for review if the party raising

it fails to identify in the record the error on

which the assignment of error is based or fails to

argue the assignment separately in the brief, as

required under App.R. 16(A).

In the interest of justice and judicial economy, we will

address appellant’s first, second and sixth assignments of

error jointly. We note that appellant’s first and second

assignments of error challenge the trial court’s disposi-

tion of appellees’ motions for summary judgment and

appellant's cross-motion for summary judgment. We will

consider the first and second assignments of error jointly

with appellant’s sixth assignment of error because the

preemption issue that appellant raises in the sixth assign-

ment of error is central to the resolution of the first and

second assignments of error.

We will not, however, address the merits of appel-

lant’s third, fourth, and fifth assignments of error. Those

assignments of error challenge the fact that the trial court

did not make certain determinations concerning whether

Appellee J.A. Guy, Inc. violated Ohio’s prevailing wage

law. Because we find, infra, that the trial court erred by

determining that federal law preempts the prevailing

wage claim that appellant raises in this action, and

because we accordingly are remanding this cause for

turther proceedings including but not limited to a deter-

mination as to whether any of the parties are entitled to

summary judgment on grounds other than the preemp-

tion issue, we find appellant’s third, fourth and fifth

assignments of error are moot. See App.R. 12(A)(1)(c).

When resolving appellant's first and second assign-

ments of error, we must determine whether the trial court

43a

correctly granted appellees’ motions for summary judg-

ment and denied appellant’s cross-motion for summary

judgment. Summary judgment is appropriate when the

movant demonstrates: (1) there is no genuine issue of

material fact; (2) the moving party is entitled to judgment

as a matter of law; and (3) reasonable minds can come to

but one conclusion, and that conclusion is adverse to the

party against whom the motion for summary judgment is

made, said party being entitled to have the evidence

Y-

i ly in his favor. See Turner v. Turner

construed most strong!

1993), 67 Ohio St.3d 337, 339-340, 617 N.E.2d 1123, 1126;

mner (1988), 37 Ohio St.3d 144, 146, 524 N.E.2¢

881, 884; Hariess v. Willis Day Warehousing Co 978), 54

Ohio St.2d 64, 66, 375 N.E.2d 46, 47. The moving party

bears the burden of proving no genuine issue of material

tact exists. See Dresher v. Burt (1996), 75 Ohio St.3d 280

662 N.E 2d 264 Mitse iT v Wheele? (1983S), 38 Ohio »t 3d

When reviewing a summary judgment, an appellate

court must independently review the record to determine

if summary judgment was appropriate. An appellate

court need not defer to the trial court’s decision in sum-

mary judgment cases. See Morehead v. Conley (1991), 75

Ohio App.3d 409, 599 N.E.2d 786

In the case sub judice, the parties generally do not

dispute the facts. The parties agree on the basics of the

scheme employed by Appellee Local 189 to return two

percent ol employees’ gross wages to Appellee }.A. Guy,

Inc. in apparent violation of Ohio’s prevailing wage law,

R.C. Chapter 4115 and accompanying regulations. The

parties disagree on application of law to the facts in the

case sub judice. Specifically, the parties disagree on

44a

whether federal law prevents the trial court from ruling

on the merits of appellant’s complaint brought pursuant

to Ohio’s prevailing wage law.5

Appellant argues, inter alia, that the prevailing wage

law issue raised in the complaint is not preempted by

federal law. In support of this argument, appellant argues

that the form of preemption discussed in Garmon applies

only when the state regulates an activity protected by the

NLRA, or when the state regulates an activity that would

constitute an unfair labor practice under the NLRA.

Appellant argues that in the case sub judice, there have

been no allegations of activities protected by the NLRA

or activities that constitute unfair labor practices. Appel-

lant, noting that “dues are regulated under the NLRA

only to the extent that the deduction is necessary for

collective bargaining,” argues that the deduction taken

from the employees’ paychecks in the case sub judice and

directed back to Appellee J.A. Guy, Inc., exceeded what

was necessary for Appellee Local 189 to bargain collec-

tively.

Appellant relies upon General Elec. Co. v. New

York State Dept. of Labor (S.D.N.Y.1988), 698 F.Supp 1093,

vacated on other grounds (C.A.2 1989), 891 F.2d 25, in

which the district court rejected the plaintiff’s claim that

New York's prevailing wage statute was preempted by

> The parties also disagree on whether appellees’ scheme

violates the Ohio prevailing wage law. Due to our decision on

the preemption issue and our consesuertial remand of this

cause for further proceedings cons“)! —» 3 "ais opinion, we

do not address the issue of whethe >) es’ heme violates

the Ohio prevailing wage law.

45a

the NLRA. Appellant quotes as follows from the district

court’s decision:

“Garmon is inapplicable since the contested state

action here does not attempt to regulate an

activity which is either protected or prohibited

under the NLRA. Sections 7 and 8 of the NLRA

are not concerned with the substantive outcome

of the collective bargaining process, and efforts

by states to limit the outcome of that process do

not izapinge on the jurisdiction of the NLRB to

determine what employer and employee con-

duct the NLRA prohibits or permits.”

Id., 698 F.Supp. at 1096.

Appellant additionally argues that because Ohio acts

as a market participant and not a regulator when admin-

istering the prevailing wage law, the application of the

doctrine of preemption is inappropriate in the case sub

judice. In support of this argument, appellant cites Build-

ing and Constr. Trades Council of the Metro. Dist. v. Associ

ated Builders and Contractors of Massachusetts/Rhode Island

Inc. (1993), 507 U.S. __, 113 S.Ct. 1190, 122 L.Ed.2d 565,

in which the court wrote that the preemption doctrine

only applies to state regulation, not to state participation

in the market.

In response to appellant’s brief, Appellee J.A. Guy,

Inc. argues that the doctrine of preemption does apply in

the case sub judice. In support of this argument, Appellee

J.A. Guy, Inc. cites Independent Electrical Contractors of

Greater Cincinnati, Inc. v. Hamilton Cty. Div. of Pub. Works

(1995), 101 Ohio App.3d 580, 656 N.E.2d 18, motion to

certify overruled in (1995), 73 Ohio St.3d 1410, 651 N.E.2d

1308, and J].A. Croson Co. v. Central Ohio Joint Vocational

46a

School Dist. (1995), 104 Ohio App.3d 146, 661 N.E.2d 250.

Appellee J.A. Guy, Inc. writes that “this is an easy case

because job targeting programs have already been held to

be protected by Section 7 of the National Labor Relations

Act” in Manno Elec., Inc. (July 20, 1994), NLRB Case No.

15-CA-11891. Appellee J.A. Guy, Inc. notes that appel-

lant’s interpretation of Ohio’s prevailing wage law would

require Appellee J.A. Guy, Inc. to breach its duty to remit

employee dues collected for job targeting programs,

which duty is found in Section 302(C)(4) of the Labor

Management Relations Act and permits the collection of

dues and assessments.

Appellee Local 189, in response to appellant's brief,

argues that “the scope of Garmon preemption is so broad

as to encompass activities which are even arguably subject

to the NLRA.” Appellee Local 189 quotes Garmon as

follows:

“At times it has not been clear whether the

particuiar activity regulated by the States was

governed by Section 7 or Section 8 or was, per-

haps, outside both these sections. But courts are

not primary tribunals to adjudicate such issues.

It is essential to the administration of the Act

that these determinations be left in the first

instance to the National Labor Relations

poe. + *

** * When an activity is arguably subject to

Section 7 or Section 8 of the Act, the States as

well as the federal courts must defer to the

exclusive competence of the National Labor

Relations Board if the danger of state interfer-

ence with national policy is to be averted.”

(Emphasis supplied by Appellee Local 189)

47a

Id., 359 U.S. at 244-245, 79 S.Ct. at 783, 3 L.Ed.2d at 783.

Appellee Local 189 further argues that the central issue in

the case sub judice is whether the State of Ohio may

restrict the type of union dues or union assessments

which employers may deduct from employee paychecks.

Appellee Local 189 notes that Section 302(C)(4) of the

Labor Management Relations Act, 29 U.S.C. 186(C)(4),

permits the deductions that Appellee J.A. Guy, Inc. made

from employee paychecks in the case sub judice. Appellee

Local 189 further notes that 29 U.S.C. 302(C)(4), unlike

Ohio Adm. Code 4101:9-4-07(D), does not forbid the

deduction of “special assessments.” Appellee Local 189

cites various federal cases for the proposition that the

NLRB has held that the term “membership dues” in 29

U.S.C. 302(C)(4) includes assessments used to fund job

targeting programs such as Appellee Local 189’s Industry

Advancement Fund. Appellee Local 189 relies on both the

trial court and the appellate court decisions in Independent

Electrical Contractors of Greater Cincinnati, Inc. v. Hamilton

Cty. Div. of Public Works (1995), 101 Ohio App.3d 580, 656

N.E.2d 18, motion to certify overruled in (1995), 73 Ohio

St.3d 1410, 651 N.E.2d 1308.

Appellant, in reply to appellees’ briefs, cites General

Electric Co. v. New York State Dept. of Labor (S.D.N.Y.1988),

698 F.Supp. 1093, in which the district court, when reject-

ing a Garmon preemption argument, explained that the

contractors could comply with the collective bargaining

agreements and the state minimum wage statute by just

paying more than what the state’s minimum standards

would require. Appellant criticized the decision Indepen

dent Electrical Contractors of Greater Cincinnati, Inc. v. Ham-

ilton Cty. Div. of Pub. Works (1995), 101 Ohio App.3d 580,

48a

656 N.E.2d 18, motion to certify overruled in (1995), 73

Ohio St.3d 1410, 651 N.E.2d 1308, as being based on the

erroneous assumption that the contractor “could only

comply with the prevailing wage law by breaching its

duty to remit union dues under the collective bargaining

agreement,” and as being based on the erroreous

assumption that in IBEW, Local 82 (July 21, 1993),

National Labor Relations Board No. 9-CB-8493, unre-

ported, the NLRB had considered the identical issue.

Appellant notes that in IBEW, Local 82, the NLRB dis-

missed the case, and, when Stating that the conduct did

not violate the NLRA, noted that the conduct might vio-

late the Davis-Bacon Act, the federal equivalent of Ohio's

prevailing wage law. Appellant further argues that /.A.

Croson Co. v. Central Ohio Joint Vocational School Dist.

(1995), 104 Ohio App.3d 146, 661 N.E.2d 250, did not

involve Ohio’s prevailing wage law and thus is inapplica-

ble to the case sub judice. In conclusion, appellant claims

that appellees’ arguments are “grounded entirely upon

erroneous assumptions and conclusions — assumptions

and conclusions that are primarily made at the first level

of review by an administrative agency or by a state trial

court.”

The parties filed numerous notices of supplemental

authority. On August 11, 1995, appellee Local 189 filed a

notice citing cases for the Proposition that prevailing

wage laws are not minimum wage laws. On September

20, 1995, appellant filed a notice citing cases for the

Proposition that prevailing wage laws are minimum wage

laws.

‘

{

49a

On November 15, 1995, appellant filed a notice of a

law review article, Subsidizing Contractors to Gain Employ-

ment: Construction Union “Job Targeting” by Herbert R.

Northrup and Augustus T. White, scheduled to be pub-

lished in the University of California Berkeley Journal of

Employment and Labor Law, Vol. 17, No. 1, in January

1996. On December 27, 1995, Appellee J.A. Guy, Inc. filed

a supplemental brief arguing that the law review article

might be “partially or wholly revised, rewritten or not

even published” as scheduled. On January 12, 1996,

appellant submitted a final draft of the law review article

and admitted that the article had been revised - to

include a footnote mentioning the briefs that appellees

have filed in this appeal. Appellant argued that the

authors of the law review article continue to believe as

follows:

“In truth, it is not easy to see why preemp-

tion is even an issue in this litigation. The state

is not attempting to regulate dues check-off. It is

not calling into question the underlying collec-

tive bargaining agreements. It is not adjudicat-

ing a dispute properly before the National Labor

Relations Board (NLRB).”

On November 17, 1995, appellant filed a notice citing

International Bhd. of Electrical Workers, Local 357 v. Brock

(C.A.9, 1995), 68 F.3d 1194, decided on October 20, 1995.

In that case, the Ninth Circuit decided that a two percent

deduction taken from employee paychecks for a job tar-

geting program did not constitute “dues” as that term is

used in the NLRA and thus violated the Davis-Bacon Act.

~ +e Ninth District, citing Building and Constr. Trades Dept.,

50a

AFL-CIO v. Reich (C.A.D.C.1994), 40 F.3d 1275, wrote in

pertinent part as follows:

“The terms ‘regular * * * membership dues’

and ‘special assessments’ are neither defined in

the Davis-Bacon Act nor in its implementing

regulations. In Building Trades, the Administra-

tor specifically rejected the contention, implic-

itly advanced to us, that deductions from an

employee’s wages to support a union’s JTP con-

stitute ‘membership dues’ within the meaning

of Section 3.5(i). The Administrator so held in

light of a fundamental principle of the Davis-Bacon

Act that wages paid to construction empluyees on

public projects should not revert to contrac-

as Meee a it

(Emphasis added.)

Id., 68 F.3d at 1202-1203.

On December 21, 1995, appellant filed a notice citing

Associated Builders and Contractors of Georgia, Inc. v. City of

Atlanta (N.D.Ga.1995), 2 Wage & Hour Cas.2d (BNA)

1530, decided on August 5, 1995. In that case, the district

court decided that states and localities retain power to

enact lgws establishing minimum employment standards.

The court reasoned that minimum labor standards affect

union and nonunion employees equally, and neither

encourage or discourage the collective bargaining pro-

cesses that are the subject of the NLRA.

On February 9, 1996, appellant filed a notice citing

International Bhd. of Electrical Workers, Locals 11, 302, 340,

441, 569, 595 v. Aubry (Cal.App.1996), ___ Cal. Rptr.2d

—_ 96 Cal. Daily Ops. Serv. 661, decided on January 29,

1996. In that case, the California First District Court of

5la

Appeals held that sums which workers are required to

pay back to employers as wage rebates should not be

counted when calculating the true wage rate “actually

prevailing” for a given job classification under California

law.

On March 12, 1996, appellant filed a notice citing

Kimbree v. Jolog Sportswear, Inc. (S.C.1962), 123 S.E.2d 524.

In that case, the South Carolina Supreme Court held that

the NLRA does not preempt state court jurisdiction

“where the consequences of the conduct involved were of

compelling state interest.” The court thus exercised juris-

diction over a claim by non-union employees that their

employer had wrongfully withheld wages from them and

given the withheld wages to a union which, after retain-

ing a portion of the withheld wages, distributed the

remainder to the non-union employees as “vacation pay.”

On May 13, 1996, appellee filed a notice citing the

United States Supreme Court’s decision denying cer-

tiorari in J.A. Croson Co. v. Central Ohio Joint Vocational

School Dist. (1995), 104 Ohio App.3d 146, 661 N.E.2d 250,

and citing Phoenix Electric Co. v. Natl. Elec. Contractors

Assn. (C.A.6, 1996), __ F.3d __.

On June 26, 1996, appellant filed a notice citing

United States General Accounting Office Report B-272085

dated June 3, 1996 and sent to Congressman William M.

Thomas of the United States House of Representatives. In

the report, the General Accounting Office wrote in perti-

nent part as follows:

“This letter responds to your concerns

about the Department of Labor’s position on job

targeting programs (JTP) under the Davis-Bacon

52a

Act. JIPs are programs in which local union

members agree to contribute a specified percent-

age of their gross wages to a fund administered

by the local union. This fund is then used to

subsidize the bids of union contractors (employ-

ers who are signatories to collective bargaining

agreements or agree to be) on selected construc-

tion contracts. On the basis of your concerns,

you asked that we provide information on (1)

Labor’s interpretation of the Davis-Bacon Act

regarding the use of JTPs on federal construc-

tion projects and (2) the activities Labor has

taken to enforce its position on JTPs.

* * *

in summary, Labor has ruled that JTP pay-

roll deductions from wages of workers

employed on federal construction projects vio-

late Labor regulations that dictate the types of

deductions that can be taken from worker's

wages from their employment on federal pro-

jects. [footnote omitted.] Labor has found that

deductions to fund a JTP are not allowed under

these regulations, regardless of the deduction’s

effect on workers’ wages. The Davis-Bacon Act is

at issue only when JTP deductions reduce the

workers’ wages below prevailing wage levels because

that violate [sic] the act’s requirement that workers

on federal construction projects be paid prevailing

wages without subsequent deductions or rebates.”

(Emphasis added.)

After reviewing the arguments of the parties and the

authorities cited by the parties, we conclude that the trial

court erred by finding that the NLRA preempts state

court jurisdiction over the R.C. Chapter 4115 prevailing

wage claim that appellant raises in this case. We disagree

53a

with the trial court’s characterization of appellant’s claim

as seeking “to have the state control matters at the heart

of the collective bargaining process, which is regulated by

the NLRA.” As we discuss infra, we find that appellant’s

claim, rather than addressing the collective bargaining

process, addresses the substance of the collective bargain-

ing agreement between Appellee J.A. Guy, Inc. and

Appellee Local 189. Further, we disagree with the trial

court’s reasoning that because Appellee J.A. Guy, Inc.

“could only comply with the prevailing wage law by

breaching its duty to remit union dues under the collec-

tive bargaining agreement, a violation of section 8 of the

NLRA,” preemption exists in this case. Compliance with

the prevailing wage law does not necessitate violation of

the collective bargaining agreement. Assuming arguendo

the scheme in the case sub judice violates Ohio’s prevail-

ing wage law, Appellee J.A. Guy, Inc. can comply with the

prevailing wage law and simultaneously avoid liability

for violating the collective bargaining agreement by pay-

ing its employees more money.

We agree with the trial court that in Garmon the court

established an “arguably subject to Section 7 or Section 8

of the [NLRA]” preemption standard. We note that Sec-

tion 7 of the NLRA protects certain concerted activities

and Section 8 of the NLRA prohibits unfair labor prac-

tices. 29 U.S.C. Sections 157 & 158. The Garmon court

wrote in pertinent part as follows:

“When an activity is arguably subject to

Section 7 or Section 8 of the Act, the States as

well as the federal courts must defer to the

exclusive competence of the National Labor

— i £# <———— _

54a

Relations Board if the danger of state interfer-

ence with national policy is to be averted.”

After the Garmon decision, however, the United States

Supreme Court carved exceptions to the “arguably sub-

ject to” preemption standard.

In Connell Constr. Co. v. Plumbers and Steamfitters Local

Union No. 100 (1975), 421 U.S. 616, 626, 44 L.Ed.2d 418,

428, 95 S.Ct. 1830, the court held that “federal courts may

decide labor law questions that emerge as collateral

issues in suits brought under independent federal

remedies, including anti-trust laws.

In Farmer v. United Bhd. of Carpenters and Joiners of

America, Local 25 (1977), 430 U.S. 290, 51 L.Ed.2d 338, 97

S.Ct. 1056, the court recognized the trend away from a

strict Garmon “arguably subject to Section 7 or Section 8

of the Act” standard. The court wrote in pertinent part as

tollows:

“But the same considerations that underlie

the Garmon rule have led to [sic] the Court to

recognize exceptions in appropriate classes of

cases. We have refused to apply the pre-emption

doctrine to activity that otherwise would fall

within the scope of Garmon if that activity ‘was

merely a peripheral concern of the Labor Man-

agement Relations Act 8 * * * ’”

Id., 430 U.S. at 296, 97 S.Ct. at 1061, 51 L.Ed.2d at 347-348. |

Che Farmer court emphasized as follows that courts must

avoid inflexible application of the preemption doctrine:

“Our cases indicate * * * that inflexible

application of the doctrine is to be avoidéd,

especially where the State has a substantial

interest in regulation of the conduct at issue and

55a

the State’s interest is one that does not threaten

undue interference with the federal regulatory

scheme. With respect to Hill’s claims of inten-

tional infliction of emotional distress, we cannot

conclude that Congress intended exclusive juris-

diction to lie in the Board.”

Id., 430 U.S. at 302, 97 S.Ct. at 1064, 51 L.Ed.2d at 351. The

Farmer court held that the NLRA does not preempt an

action brought in state court by a union member against

the union for intentional infliction of emotional distress.

In Sears, Roebuck and Co. v. San Diego County District

Council of Carpenters (1978), 436 U.S. 180, 98 S.Ct. 1745, 56

L.Ed.2d 209, the court made its largest leap away from

the strict Gurmon “arguably subject to Section 7 or Section

8 of the Act” preemption doctrine. The Sears court, quot-

ing and following Farmer, wrote in pertinent part as

follows:

“While the Garmon formulation accurate]

reflects the basic federal concern with potential!

state interference with national labor policy, the

history of the labor pre-emption doctrine in this

Court does not support an approach which

sweeps away state-court jurisdiction over con-

duct traditionally subject to state regulation

without careful consideration of the relative

impact of such jurisdiction bar on the various

interests affected. As the Court noted last Term:

‘Our cases indicate * * * that inflexible appli-

cation of the doctrine is to be avoided, espe-

cially where the State has a substantial

interest in regulation of the conduct at issue

and the State’s interest is one that does not

threaten undue interference with the federal

regulatory scheme.’

56a

Farmer v. Carpenters, 430 U.S. 290, 302, 97 S.Ct.

1056, 1064, 51 L.Ed.2d 338. Thus the Court has

refused to apply the Garmon guidelines in a

literal, mechanical fashion. * * * ”

Id., 436 U.S. at 188, 98 S.Ct. at 1752-1753, 56 L.Ed.2d at

219-220.

The Sears court established an “identical or different”

preemption test to be applied by the courts. Under this

test, courts must determine if a controversy is identical to

or different from the controversy that could have been

presented to the NLRB. The Sears court wrote in pertinent

part as follows:

“The critical inquiry, therefore, is not

whether the State is enforcing a law relating

specifically to labor relations or one of general

application but whether the controversy pre-

sented to the state court is identical to (as in

Garner) or different from (as in Farmer) that

which could have been, but was not, presented

to the Labor Board. For it is only in the former

situation that a state court's exercise of jurisdiction

necessarily involves a risk of interference with the

unfair labor practices jurisdiction of the Board

which the arguably prohibited breach of the

Garmon doctrine was designed to avoid.”

(Emphasis added.)

Id., 436 U.S. at 197, 98 S.Ct. at 1757-1758, 56 L.Ed.2d at

225-226. See, also, Anderson v. U.S. Gypsum Co. (1987), 42

Ohio App.3d 112, 114-115, 536 N.E.2d 1180, 1182. If the

controversy is identical to the controversy that could

have been presented to the NLRB, then preemption

applies. If the controversy is different from the contro-

versy that could have been presented to the NLRB, then

57a

preemption does not apply. The Sears court cautioned,

however, that when the plaintiff has no method of invok-

ing the jurisdiction of the NLRB, preemption does not

apply:

“The primary-jurisdiction rationale unques-

tionably requires that when the same contro-

versy may be presented to the state court or the

NLRB, it must be presented to the Board. But

that rationale does not extend to cases in which

an employer has no acceptable method of invok-

ing, or inducing the Union to invoke, the juris-

diction of the Board. We are therefore persuaded

that the primary-jurisdiction rationale does not

provide a sufficient justification for pre-empting

state jurisdiction over arguably protected con-

duct when the party who could have presented

the protection issue to the Board has not done so

and the other party to the dispute has no accept-

able means of doing so.”

In the case sub judice, we find that the controversy

appellant presents is very different from the controversy

that appellees allege is subject to NLRB jurisdiction.

Appellant, an outsider to the collective bargaining agree-

ment between Appellee Local 189 and Appellee J.A. Guy,

Inc., brings this action pursuant to Ohio’s prevailing

wage law. In response, appellees assert that the NLRA

preempts jurisdiction over this case because this case

involves a collective bargaining agreement dues-deduc-

tion issue that should be litigated before the NLRB. That

collective bargaining agreement dues-deduction issue,

however, does not involve appellant. Appellant is an

58a

outsider to the collective bargaining agreement. As an

outsider to the collective bargaining agreement, appellant

has no acceptable means of presenting the dues-deduc-

tion issue to the NLRB. Hence, pursuant to Sears, appel-

lant’s prevailing wage claim is not preempted by the

NLRA.

The United States Supreme Court’s departure from

the strict Garmon “arguably subject to Section 7 or Section

8 of the NLRA” preemption standard continued in the

1980s. In Metropolitan Life Ins. Co. v. Commonwealth of

Massachusetts (1985), 471 U.S. 724, 85 L.Ed.2d 728, 105

S.Ct. 2380, the court held that the NLRA does not pre-

empt a Massachusetts statute that requires specified mini-

mum mental health benefits. The court, focusing on the

purpose of the NLRA, concluded that the NLRA was not

intended to supplant state or federal legislation that

imposes minimum terms of employment. The court wrote

[sic] pertinent part as follows:

“The NLRA is concerned primarily with

establishing an equitable process for determin-

ing terms and conditions of employment, and

not with particular substantive terms of the bar-

gain that is struck when the parties are negotiat-

ing from relatively equal positions. See Cox,

Recent Developments in Federal Labor Law Pre-

emption, 41 Ohio St. LJ 277, 297 (1980), 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.’ Sec-

tion 1, 29 U.S.C. Section 151 [29 USCS Section

151]. The same section notes the desirability of

59a

‘restoring equality of bargaining power’ among

other ways, ‘by encouraging the practice and

procedure of collective bargaining and by pro-

tecting the exercise by workers of full freedom

of association, self-organization, and designa-

tion of representatives of their own choosing,

for the purpose of negotiating the terms and

conditions of their employment or other mutual

aid protection.’

One of the ultimate goals of the Act was the

resolution of the problem of ‘depress[ed] wage

rates and the purchasing power of wage earners

in industry,’ 29 U.S.C. Section 151 [29 U.S.C.S.

Section 151], and the ‘widening gap between

wages and profits,’ 79 Cong. Rec. 2371 (1935),

(remarks of Sen. Wagner), thought to be the

cause of economic decline and depression. Con-

gress hoped to accomplish this by establishing

procedures for more equitable bargaining.

The evil Congress was addressing thus was

entirely unrelated to local or federal regulation

establishing minimum terms of employment.

Neither inequality of bargaining power nor the

resultant depressed wage rates were thought to

result from the choice between having terms of

employment set by public law or having them

set by private agreement. No incompatibility

exists, therefore, between federal rules designed

to restore the equality of bargaining power, and

state or federal legislation that imposes minimal

substantive requirements on contract terms

negotiated between parties to labor agreements,

at least so long as the purposes of the state

legislation is not incompatible with these gen-

eral goals of the NLRA.

60a

Accordingly, it has never been argued suc-

cessfully that minimal labor standards imposed

by other federal laws were not to apply to union-

ized employers and employees. * * * Nor has

Congress ever seen fit to exclude unionized

workers and employees from laws establishing

federal minimum employment standards. We

see no reason to believe that for this purpose

Congress intended state minimum labor stan-

dards to be treated differently from minimum

federal standards.

Minimum state labor standards affect union

and nonunion employees equally, and neither

encourage nor discourage the collective bargain-

ing processes that are the subject of the NLRA.

Nor do they have any but the most indirect

effect on the right of self-organization estab-

lished in the Act. Unlike the NLRA, mandated-

benefits laws are not laws designed to encour-

age or discourage employees in the promotion

of their interests collectively; rather, they are in

part ‘designed to give specific minimum protec-

tions to individual workers and to ensure that

each employee covered by the Act would

receive, the mandated health insurance cover-

age. * + 2 id

Id., 471 U.S. at 753-755, 85 L.Ed.2d at 749-750, 105 S.Ct. at

2396-2397. The cour: further wrote that “most signifi-

cantly, there is no suggestion in the legislative history of

the Act that Congress intended to disturb the myriad

state laws then in existence that set minimum labor stan-

dards, but were unrelated in any way to the processes of

bargaining or self-organization. Id., 471 U.S. at 756, 85

L.Ed.2d at 750, 105 S.Ct. at 2396-2397.

6la

The trial court in the case sub judice cited Wisconsin

Dept. of Industry, Labor and Human Relations v. Gould, Inc.

(1986), 475 U.S. 282, 106 S.Ct.

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