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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1998
- **Citation:** 525 U.S. 872

## Text

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

S

}.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

7

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

iv

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

N

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

Vi

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).

2

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.”

3

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

4

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,

7

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

6

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

7

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

8

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

10

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

11

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

12

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).

13

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).

14

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

15

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.

16

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

17

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

18

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.

© The result is even more absurd because the federal
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).

—————————

19

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 . . .

4

20

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

21

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

22

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

23

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.

24

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

25

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

26

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

|
4
2
4
4

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

28

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

a
a
4

29

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

30

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

la

APPENDIX A
J}.A. CROSON COMPANY, Appellee,
v.

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

2a

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

3a

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

da

“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.

6a

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

7a

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.”

8a

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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(“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.

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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,

oe

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

a

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.’

ee

“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

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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.

(C) Any deduction from wages not specifically permitted
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

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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.

(C) Ifafter investigation pursuant to section 4115.13 of the
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

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3a

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

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1253%3A1. Public record. Not legal advice.