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March 11, 2005

Key Pro-Labor Court Decision in Milwaukee

A number of court decisions in recent years have attacked the power of state and local governments to require that contractors working for government have decent labor relations with those workers.

However, labor scored a crucial court decision in a Milwaukee federal court upholding a local government ordinance that required companies providing care to the elderly or disabled sign "labor peace" agreements with unions seeking to organize their workers.

Under those agreements, contractors are limited in what they can say about the union, must provide unions employees' names, addresses, and telephone numbers access to the workplace to let unions talk to workers. In exchange, the union must agree not to engage in strikes, picketing, or boycotting.

Because the ordinance serves the city's "proprietary interest" in providing uninterrupted services to a vulnerable population, the court ruled that federal labor law does not preempt the decision.

The big question is whether higher courts uphold the decision, but it's a decision worth celebrating.

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BNA Article

DAILY LABOR REPORT
March 11, 2005, Friday

JUDGE UPHOLDS MILWAUKEE COUNTY LAW REQUIRING CERTAIN CONTRACTORS TO STAY NEUTRAL

AUTHOR: By Susan J. McGolrick

A federal judge Feb. 11 upheld a Milwaukee County ordinance requiring certain contractors that provide care, treatment, or transportation services for elderly or disabled persons to sign labor peace agreements with unions seeking to organize their employees who perform county-funded work (Metropolitan Milwaukee Ass'n of Commerce v. Milwaukee County, E.D. Wis., No. 01-C-0149, 2/11/05).

Granting summary judgment to Milwaukee County, Judge Lynn Adelman of the U.S. District Court for the Eastern District of Wisconsin held that the ordinance is not preempted by the National Labor Relations Act and does not violate contractors' free speech and due process rights. The Metropolitan Milwaukee Association of Commerce challenged the ordinance, which was signed into law in late October 2000.

The ordinance is not preempted by the NLRA, Adelman decided, because it reasonably advances the county's proprietary goal of ensuring that the delivery of county-funded services to vulnerable residents is not interrupted as a result of union organizing and contractors' response to organizing.

MMAC failed to show that the ordinance is facially unconstitutional -- that every application of the law would violate contractor's free speech rights, Adelman said. She also found that the association failed to show that the ordinance violated due process by being unconstitutionally vague.

The National Labor Relations Board filed an amicus brief in the case arguing that the ordinance is preempted by the NLRA.

Ordinance Applies to Contracts Over $ 250,000.

The ordinance, which is titled "Responsibility of Certain County Contractors to Reduce the Likelihood of Labor Disputes," applies to contracts worth at least $ 250,000 to provide care, treatment, or transportation services for elderly or disabled residents in the county. Such contractors must enter into a labor peace agreement with a union that seeks to organize the contractor's county-funded employees and requests an agreement.

The labor peace agreement must provide that the contractor will not "express to employees false or misleading information that is intended to influence the determination of employee preference regarding union representation" and that the union will not "misrepresent to employees the facts and circumstances regarding their employment."

The contractor must agree to provide the union with employees' names, addresses, and telephone numbers and to give the union reasonable access to the workplace for the purpose of providing union information. The union must agree not to engage in strikes, picketing, or boycotting.

The agreement must include procedures to prevent the parties from coercing employees into supporting or opposing union representation. The parties may not require employees to attend a meeting or event intended to influence their views. Disputes arising under the agreement must be arbitrated. The county has the right to terminate contracts with contractors that refuse to sign a labor peace agreement or are found by an arbitrator to have violated one.

Adelman initially granted summary judgment to Milwaukee County in April 2002, finding that MMAC's challenge to the ordinance was not ripe for judicial review because it had not been enforced against any contractor. However, the U.S. Court of Appeals for the Seventh Circuit reversed in April 2003, ruling that the mere threat of future enforcement already had impacted the contractors (325 F.3d 879, 172 LRRM 2134 (7th Cir. 2003); 69 DLR A-1, 4/10/03).

Proprietary Exception to NLRA Preemption Applied.

Courts have held that the NLRA preempts state and local laws that regulate activities protected by or prohibited by the NLRA, Adelman explained. However, she said, the U.S. Supreme Court has ruled that when a state or locality "takes action that affects labor relations but does so for the purpose of serving its proprietary as opposed to regulatory interest, the action is not subject to NLRA preemption."

Adelman adopted the approach recently developed by the Third Circuit in Hotel Employees & Restaurant Employees Local 57 v. Sage Hospitality Resources LLC, 390 F.3d 206, 175 LRRM 3328 (3d Cir. 2004); 221 DLR AA-1, 11/17/04, for distinguishing between proprietary and regulatory action. Government action is proprietary if it serves to advance or preserve the government's interest as an investor, owner, or financier in a project or transaction, and if the scope of the funding condition is specifically tailored to the proprietary interest, Adelman said.

The Third Circuit's approach "permits courts to distinguish proprietary from regulatory action based on objective factors and strikes an appropriate balance between Congress's intent to maintain uniformity in labor regulation and its intent to allow state and local governments to act as market participants," Adelman said.

MMAC did not dispute that Milwaukee County has a proprietary interest in ensuring that the delivery of county-funded services to elderly and disabled residents is not interrupted. In considering whether the ordinance reasonably serves that proprietary interest, Adelman observed that "private employers often enter into neutrality agreements like those required by [the ordinance] to reduce the likelihood that union organizing will disrupt their businesses." Witnesses also testified at public hearings that union organizing efforts and employers' responses to those activities have previously delayed the provision of transportation services to the elderly and disabled, the judge said.

Adelman decided that the county "had a reasonable basis for concluding that the risk of service disruption as the result of union organizing was sufficiently serious to justify taking action" and "for concluding that requiring County contractors to enter into labor neutrality agreements would reduce the likelihood of such disruption." She found that "labor neutrality agreements are designed to reduce intimidation of the type that apparently contributed to" the past disruption of transportation services.

The county also showed that the ordinance is specifically tailored to its proprietary goal, Adelman said. She pointed out that the ordinance applies only to employees whose work is tied to the provision of services contracted for by the county and covers only contracts for the provision of care, treatment, or transportation services to the elderly or disabled.

MMAC's Free Speech, Due Process Claims Also Fail.

MMAC also argued that the ordinance violates the First Amendment's free speech clause in all instances, not just as applied to a particular set of circumstances. A government acting as an employer or a contracting entity "has broader authority to restrict the speech of the party with whom it contracts or whom it employs than it does when it acts as a sovereign and restricts the speech of members of the public," Adelman said.

Using the balancing test from Pickering v. Board of Educ. of Township High Sch. Dist. 205, 391 U.S. 563, 1 IER Cases 8 (1968), Adelman said "a contractor must prove that the government terminated his or her contract for speech related to a matter of public concern." Because MMAC alleges that the ordinance is unconstitutional on its face, the association must show that every future application of the ordinance fails the Pickering balancing test, Adelman said. She found that MMAC "made no attempt to do so."

Finally, MMAC argued that the ordinance's requirement that contractors agree not to "express to employees false or misleading information that is intended to influence the determination of employee preference regarding union representation" violates the 14th Amendment's due process clause because the provision is unconstitutionally vague. Adelman said the association's argument focused on the term "misleading."

After considering a dictionary definition of "misleading," Adelman found that a contractor violates a labor peace agreement if the contractor "expresses information to employees that tends to lead the employees in a wrong direction or cause them to take a mistaken action or hold a mistaken belief" and the contractor "expresses such information to its employees with the intent that the information will 'influence the determination of employee preference regarding union representation.' " Adelman decided that the ordinance "is not so unclear that persons of common intelligence must necessarily guess at its meaning."

Gordon P. Giampietro and Jonathan O. Levine of Michael Best & Friedrich in Milwaukee represented MMAC. Marianne Goldstein Robbins of Previant, Goldberg, Uelman, Gratz, Miller & Brueggerman in Milwaukee represented the county.

Posted by Nathan at March 11, 2005 09:15 AM