ST. PAUL, Minn. (Legal Newsline) -- The U.S. Court of Appeals for the Eight Circuit, St.Paul, Minnesota has denied the petition for review by the Laborers District Council of Minnesota and North Dakota of the order by National Labor Relations Board for the union to cease and desist violating sections of the National Labor Relations Act.
The union allegedly was coercing Lake Area Fence, a newly formed commercial fencing subcontractor, not to do fence installation work for Century Fence Company, a nonunion contractor. The Court concurred that the union unlawfully refused to enter into a pre-hire agreement with a neutral to apply secondary pressure on its primary target, a nonunion general contractor that would have hired the neutral for union jobs.
The union, according to the NLRB report, had a master agreement with numerous contractors that forbade them from engaging in any non-union work. Century was a general contractor that employed no workers but bid on fencing jobs and staffed them with subcontractors. For nonunion jobs, it subcontracted with nonunion contractors; for union jobs, however, it subcontracted to union contractors. The union wanted Century to sign the master agreement and forgo all nonunion work.
Lake Area Fence contacted the union in 2010, to sign the master agreement, intending to subcontract union jobs from Century. The union was initially interested in getting Lake Area Fence to sign, but, after learning that Lake Area intended to work with Century, refused the offer by Lake Fence.
The NLRB dismissed the union's explanations for not signing, finding that "'the union's intent in declining to allow Lake Area to become signatory to the [master agreement] was to force Century to become a signatory contractor by depriving it of subcontractors to work on union jobsites unless [Century] agreed to a collective bargaining agreement with the union.'"
The Court agreed that the union's actions violated federal labor law. First, it rejected the union's claim that it could not violate the Act merely by exercising its right not to enter into a contract. Rather, the Court explained that prior decisions "'have routinely held that the otherwise legal exercise of rights ... can become unlawful when aimed at securing an objective prohibited by Section 8(b)(4).'" The Court noted that the Board's interpretation of coercion, focused here on the effect of the refusal to contract on the neutral employer, was entitled to deference. Finally, the Court upheld the Board's finding that the union's refusal to sign a contract with Lake Fence was "in fact economically coercive," noting that Lake Fence entered the market "with a reasonable expectation of becoming a union fencing contractor," and the union's refusal to allow Lake Fence into that market was "'a powerful economic weapon.'"
"The issue is whether the Union had an unfettered right to refuse a ...contract for a motive the (National Labor Relations Act) declares to be unlawful. We think clearly not," said the Court.