W.Va. SC says union can challenge construction contract

Jessica M. Karmasek Jun. 28, 2012, 7:30am

Chief Justice Menis Ketchum

CHARLESTON, W.Va. (Legal Newsline) - West Virginia's high court ruled last week that a construction workers union has standing to challenge a highway construction contract.

In its June 21 opinion, the state's Supreme Court of Appeals granted a petition for a writ of prohibition by The Affiliated Construction Trades Foundation, or ACT.

ACT sought a writ barring the Kanawha County Circuit Court from enforcing its order requiring the union, in its declaratory judgment suit, to prove by affirmative evidence that it has standing to sue and add the Federal Highway Administration, or FHWA, as a defendant.

"We grant the writ of prohibition on the indispensable party issue to correct a substantial, clear cut legal error, which would be reversed on appeal if we did not correct the error in advance of trial," the justices wrote in their per curiam ruling.

In ACT's lawsuit, it seeks a declaration that a public highway construction contract awarded to Nicewonder Contracting Inc. by the state Department of Transportation's Division of Highways violated state competitive bidding and prevailing wage laws.

The circuit court dismissed the union's action, finding that it lacked standing to challenge the contract.

ACT appealed that dismissal. On June 22, 2011, the state's high court reversed the circuit court, finding that ACT had representative standing to seek the declarations sought in the declaratory judgment action.

The Court then directed that, on remand, the circuit court was to conduct "further proceeding" consistent with that opinion.

On remand, ACT filed a motion for summary judgment. Nicewonder argued that the union's motion should be denied because the previous ruling had not resolved all issues relevant to ACT's standing.

Nicewonder also asserted that the FHWA was an "indispensable party" to the declaratory judgment lawsuit.

On Nov. 9, 2011, the circuit court entered an order denying ACT's motion for summary judgment. The court determined that the state Supreme Court's previous opinion in the matter did not completely decide the issue of ACT's standing, and that the union must join the FHWA as a party-defendant in the action.

In response, ACT petitioned the Court, hoping to bar the enforcement of the lower court's order.

"Respondents mistakenly argue -- an argument the circuit court adopted -- that in ACT I we did not say, as a matter of law, that ACT had proved standing, or that ACT had proven injury to its union members.

"They contend that any injury to ACT's members is hypothetical because no contractor employing union members was shown to have an interest in bidding on the highway contract," the justices explained in their 13-page opinion.

In siding with ACT, the Court said it agreed that union workers are less likely to be employed when "improper government action" denies union contractors the opportunity to compete on a government contract.

It also noted that ACT is asking only for declaratory relief and an injunction. It does not seek monetary damages.

"Where an association only seeks a declaration, injunction or some other form of prospective relief, the participation of its individual members is not required," the justices wrote.

As to whether the FHWA is an "indispensable party," the Court disagreed.

"The construction contract provides that the agreement is 'made and entered into... by and between the West Virginia Department of Transportation, Division of Highways... and Nicewonder Contracting Inc.'

"The FHWA is not a party to that agreement, any interest it may have is indirect, and it is not indispensable to the resolution of the state law questions raised in the lawsuit," the justices wrote, adding that no relief has been requested from the FHWA.

The Court said the circuit court, on remand, must enter an order that ACT has standing as a matter of law, and that the FHWA is not an indispensable party.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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