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Minnesota projects delivered under project labor agreements include U.S. Bank Stadium, shown under construction in 2014. (File photo: Bill Klotz)
Minnesota projects delivered under project labor agreements include U.S. Bank Stadium, shown under construction in 2014. (File photo: Bill Klotz)

Lawsuit targets project labor contracts

A Waconia-based electrical contractor and a construction trade association are suing the Minneapolis Public School District over labor agreements that require union working conditions on school construction projects.

In the lawsuit, Laketown Electric and the Associated Builders and Contractors of Minnesota and North Dakota claim that project labor agreements, or PLAs, stifle competition and violate “freedom of speech and association under the First Amendment” by requiring non-union firms to abide by collectively bargained wage and benefit agreements for the duration of the project.

“A contractor that does not agree to these terms cannot work on a project covered by a project labor agreement, even if the contractor submits the lowest bid,” according to the complaint filed Tuesday in federal court in Minnesota.

The Minneapolis Public School District didn’t immediately respond to a request for comment.

The Minneapolis Building and Construction Trades Council said Tuesday that the lawsuit is “misguided.” In a statement, council business manager Dan McConnell said PLAs have been successfully used on high-profile projects such as U.S. Bank Stadium and the Interstate 35W bridge in Minneapolis.

“Anyone can bid on and work on these jobs under a PLA, both union and non-union,” McConnell said. “PLAs ensure a steady supply of high-quality, well-trained labor. Most of the major projects in Minnesota and around the country are done under PLAs and for good reason because they ensure the quality of labor you need and they ensure the work gets done on time and on or under budget.”

McConnell said previous PLAs have been upheld by the Supreme Court and the Minnesota Court of Appeals.

John Raines, executive secretary-treasurer of the North Central States Regional Council of Carpenters in St. Paul, said in a statement that PLAs are “vital tools for local communities to complete projects on time and on budget. They are good for taxpayers and they are good for middle-class families.

“The ABC should spend less time trying to drive wages and benefits down in the construction industry and more time focused on improving the value they offer to their members.”

But Robert Heise, president of ABC of Minnesota and North Dakota, said unions use PLAs as a “political tool” to reduce competition from non-union or “merit shop” contractors, thus driving up costs for the owner.

“Show me a merit shop contractor that is bidding on one of these projects,” Heise added. “The hurdles are so high, so difficult, that it is virtually impossible.”

The Pacific Legal Foundation, a conservative public-interest law firm based in California, is providing pro bono legal services in support of Laketown Electric and ABC of Minnesota and North Dakota.

At issue is a 2004 project labor agreement, which has been adopted for projects at Marcy Open Elementary School, Patrick Henry High School, and Jefferson Community School in Minneapolis.

Under terms of the PLA, contractors must agree to use union hiring halls and pay into union fringe benefit funds before they can submit a qualified bid on projects in the Minneapolis School District, according to the complaint.

The district, the complaint continues, spends more than $66 million each year on “contracted services, which include building new facilities and servicing the 75 buildings that Minneapolis Public School District currently owns.”

Wencong Fa, an attorney with the Pacific Legal Foundation, said the lawsuit seeks to stop the school district from requiring prospective contractors to use union hiring halls and to pay into union fringe benefit plans.

Fa said he hopes the lawsuit will set a “favorable precedent” to have an impact on a wider range of projects beyond the school district.

At a State Capitol news conference, Laketown Electric CEO Matt Bergmann said his company worked on about 1.2 million square feet of school construction and maintenance projects last year and has a strong track record of success.

Even so, Bergmann said PLA requirements have forced him to sit out certain projects.

Bergmann said he successfully bid on work for the first phase of a big construction program for the Roseville Public Schools. But he declined to bid on the second phase because it was covered by a PLA, he said.

Bergmann said it may be technically true that a non-union contractor can bid on a project covered by a PLA. But that never happens in part because the company would have to hire workers from the union hall instead of using its own crews, he said.

“There is no way anyone in their right mind that is a non-union contractor would ever bid on any of those projects,” he said. “There is way too much red tape and there is no benefit for the workers or the owners.”

ABC of Minnesota and North Dakota has long pushed back against PLAs. Among other things, the organization has backed anti-PLA bills in the Minnesota Legislature, and has urged individual school districts to avoid PLAs.

Most of those efforts have been unsuccessful, Heise said.

About 70 percent of Minnesota construction workers are non-union, he said.

Minnesota projects delivered under PLAs include U.S. Bank Stadium, the I-35W Bridge, TCF Bank Stadium, Target Field, the Hubert H. Humphrey Metrodome, Hennepin County Government Center, Minneapolis Convention Center and others, according to the Minneapolis Building and Construction Trades Council.

This article first appeared in Finance & Commerce, a sister publication of Minnesota Lawyer.

Related:

ABC lawsuit filed in federal court

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