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ASSOCIATED BUILDERS & CONTRS. v. BACA

June 21, 1991

ASSOCIATED BUILDERS & CONTRACTORS, GOLDEN GATE CHAPTER INC., Plaintiff,
v.
JEFFREY BACA, et al., Defendants, BUILDING AND CONSTRUCTION TRADES COUNCIL OF SAN MATEO COUNTY, Intervenor; CHAMBER OF COMMERCE OF THE UNITED STATES, Plaintiff, v. HARVEY BRAGDON, et al., Defendants, NORTHERN CALIFORNIA AND NORTHERN NEVADA PIPE TRADES DISTRICT COUNCIL # 51 and CONTRA COSTA BUILDING AND CONSTRUCTION TRADES COUNCIL, Intervenors



The opinion of the court was delivered by: LEGGE

 CHARLES A. LEGGE, UNITED STATES DISTRICT JUDGE

 Plaintiffs in these two cases, the Associated Builders and Contractors ("ABC") and the Chamber of Commerce of the United States ("Chamber"), challenge resolutions passed by the cities of San Bruno and South San Francisco ("Cities") and an ordinance passed by Contra Costa County ("County"). The Building and Construction Trades Council of San Mateo County, the Northern California and Northern Nevada Pipe Trades Council and the Contra Costa County Building and Construction Trades Council ("Councils") have intervened on behalf of defendants. The Pacific Legal Foundation ("Amicus") is participating as Amicus Curiae on behalf of plaintiffs. The two cases were related pursuant to Local Rule 205-2, and are before the court on cross-motions for summary judgment. Because the issues are substantially identical, both cases are addressed in this opinion and order.

 I.

 The basic issue is the validity of "prevailing wage rate" legislation affecting private industry, an issue not previously addressed by any nationally reported case.

 The Cities' resolutions set conditions for the issuance of building permits for private construction projects. Briefly summarized, in order to receive a permit a builder must either: (1) post a bond guaranteeing timely completion; or (2) agree to pay the general prevailing per diem wages (as determined by the California Department of Industrial and Labor Relations pursuant to California Labor Code § 1770 et seq.) to construction workers on projects costing more than $ 250,000. *fn1" The County's ordinance also requires the payment of prevailing per diem wages on certain private construction projects that cost more than $ 500,000. *fn2" The resolutions and the ordinance contain discretionary waiver provisions. *fn3"

 ABC challenges the Cities' resolutions on the grounds that they: (1) are preempted by the National Labor Relations Act ("NLRA"), 29 U.S.C. § 151 et seq., (2) are preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (1982) ("ERISA"), (3) constitute a taking in violation of the 5th Amendment, (4) discriminate based on race or gender, and (5) violate the right to travel. Chamber challenges the County's ordinance on the grounds that it: (1) is preempted by the NLRA, (2) is preempted by ERISA, and (3) violates the Contract Clause of the U.S. Constitution. Defendants and intervenors seek a declaratory judgment that the resolutions and the ordinance are valid.

 The parties agree that these issues are one of law, and that there are no genuine issues of material fact in dispute.

 II.

 The court must initially determine whether the exercise of jurisdiction by this court is proper. The Cities and Councils move for summary judgment, arguing that ABC lacks standing to challenge the resolutions, and that the issues are not ripe for adjudication. *fn4"

  A.

 ABC alleges standing as a trade association of builders, developers and owners in the construction industry. ABC's members conduct business in South San Francisco, San Bruno and elsewhere. ABC's members allegedly advocate that a free market should set the prices for construction and construction-related services.

 An association may have standing to assert the claims of its members, even if it has suffered no injury from the challenged activity. See Warth v. Seldin, 422 U.S. 490, 511, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (1975). In Hunt v. Washington State Apple Advertising Com., 432 U.S. 333, 343, 53 L. Ed. 2d 383, 97 S. Ct. 2434 (1977), the U.S. Supreme Court set forth the requirements for an association to establish standing under Article III of the U.S. Constitution:

 
. . . an association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

 See also California Rural Legal Assistance, Inc. v. Legal Services Corp., 917 F.2d 1171, 1174 (9th Cir. 1990).

 Defendants do not contest that ABC meets the second and third requirements of the test: the interests of ABC in free enterprise wage rates are opposed to the prevailing wage rate legislation and are germane to the purpose of ABC. In addition, there is no need for individual members of ABC to participate in this action, since ABC's challenge is based on the alleged facial invalidity of the resolutions. Thus, the standing issue turns on whether ABC's members would otherwise have standing to sue in their own right.

 ABC must show concrete injury to itself or its members. Warth v. Seldin, 422 U.S. at 498-99; Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976). The injury must be "distinct and palpable," Gladstone, Realtors v. Bellwood, 441 U.S. 91, 100, 60 L. Ed. 2d 66, 99 S. Ct. 1601 (1979). And a plaintiff must show "an injury to himself that is likely to be redressed by a favorable decision." Simon, 426 U.S. at 38. The requirement of injury is a "rough attempt to put the decision as to whether review will be sought in the hands of those who have a direct stake in the outcome . . ." Sierra Club v. Morton, 405 U.S. 727, 734-35, 31 L. Ed. 2d 636, 92 S. Ct. 1361 (1972) (recreational use of a valley by members sufficient for standing to challenge Forest Service approval of a ski resort).

 The Cities argue that no specific showing of injury has been made. They claim that contingencies in the resolutions, such as the waiver provisions, make the economic consequences on ABC's members uncertain. However, at least one ABC member has filed a declaration stating that it is the apparent low bidder for a construction project in South San Francisco that is subject to the resolution. The member alleges that application of the prevailing wage provision will result in substantial economic costs. The member apparently cannot or does not intend to apply for a waiver.

 In addition, ABC's members will necessarily be forced to increase their bids on projects covered by the resolutions, in order to compensate for the costs of compliance, or they must absorb the increased costs. ABC's members did not previously follow the wage and benefit structure imposed by the Cities' resolutions. Nor were they previously required to post completion bonds for projects covered by the resolutions. Therefore, as a result of the resolutions, they will be required to add to their bids the additional costs of either paying the prevailing wages or posting a completion bond, or they must pay those increased costs themselves. In either event there are direct economic consequence to ABC's members. ABC has also submitted declarations from general contractors who contract with ABC's member subcontractors on their projects. These declarations establish that the contractors now require ABC's member subcontractors to comply with the resolutions in submitting their bids.

 These resolutions directly affect contractors, such as ABC's members, who do not now pay the prevailing wage rates. The economic consequences to ABC's members, both in terms of increased direct costs and reduced competitiveness within the construction industry, satisfies the injury-in-fact requirement.

 There can be no question that the relief requested by ABC will redress the alleged invalidity of the resolutions. If the resolutions are found to be invalid, ABC's members will be relieved of any duty to comply with the resolutions, thereby eliminating the economic harm to them. Thus, both the injury-in-fact and the redressability elements of the standing requirement are met by ABC.

 B.

 The Cities also argue that ABC's challenge is not ripe for judicial determination. Even if the court accepts the Cities' statement that no penalties under the resolutions have yet been applied to an ABC member, they inevitably will in the near future. In addition, because the injury occurs at least in part during the bidding process on a project (because ABC's members must determine their bids at an early stage in the contract-awarding process), it is not necessary to prove that penalties have been applied to an ABC member on a specific project in order to establish ripeness.

 Further, the various factual settings in which the resolutions might be enforced in the future are largely irrelevant to the issues raised in this case. Since plaintiffs bring a facial challenge to the validity of the resolutions, the nuances of specific instances in which the resolutions could be applied will not materially aid the court in determining the validity of the resolutions.

 "Where the inevitability of the operation of a statute against certain individuals is patent, it is irrelevant to the existence of a justiciable controversy that there will be a time delay before the disputed provisions will come into effect." Regional Rail Reorganization Act Cases, 419 U.S. 102, 143, 95 S. Ct. 335, 42 L. Ed. 2d 320 (1974) (citations omitted). Waiting for the further development of a factual record will not aid the court in deciding the merits of ABC's challenge. These cases are ripe for judicial determination.

 III.

 ABC and Chamber seek invalidation of the resolutions and the ordinance on the ground that they are preempted by the National Labor Relations Act, 29 U.S.C. § 151 et seq. (1982) ("NLRA"). Federal preemption is founded on the Supremacy Clause of the Constitution. U.S. Const. art. VI, cl. 2. The NLRA preempts state and municipal laws concerning conduct that Congress intended to be unregulated. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 749, 85 L. Ed. 2d 728, 105 S. Ct. 2380 (1985). The crucial inquiry is "whether Congress intended that the conduct involved be unregulated because it is left 'to be controlled by the free play of economic forces.'" International Asso. of Machinists & Aerospace Workers v. Wisconsin Employment Relations Com., 427 U.S. 132, 140, 49 L. Ed. 2d 396, 96 S. Ct. 2548 (1976) (citing NLRB v. Nash-Finch Co., 404 U.S. 138, 144, 30 L. Ed. 2d 328, 92 S. Ct. 373 (1971)). *fn5" The rationale for this policy is to avoid upsetting "the balance of power between labor and management expressed in our national labor policy." Teamsters v. Morton, 377 U.S. 252, 260, 12 L. Ed. 2d 280, 84 S. Ct. 1253 (1964).

 A.

 ABC and Chamber argue that the resolutions and the ordinance prescribe the wages that must be paid by private employers to their employees, in violation of the rights of both employers and employees to collectively bargain under the NLRA without government interference. 29 U.S.C. § 151. Legislation setting wages at a "prevailing" wage level, plaintiffs contend, improperly removes wages from the bargaining process. *fn6"

 Defendants contend that the resolutions and the ordinance do not interfere with the collective bargaining process, and are valid exercises of the police power. "States possess broad authority under their police powers to regulate the employment relationship to protect workers within the state. Child labor laws, minimum and other wage laws, laws affecting occupational health and safety . . . are only a few examples." Metropolitan Life, 471 U.S. at 756 (citation omitted). A compelling local interest, "deeply rooted in local feeling and responsibility" may provide the basis for permitting state regulation where preemption is claimed. San Diego Building Trades Council v. Garmon, 353 U.S. 26, 1 L. Ed. 2d 618, 77 S. Ct. 607 (1957).

 The U.S. Supreme Court has set some parameters for federal preemption of local regulations. In Metropolitan Life, the Court determined that a mandated minimum-benefit law was not preempted by the NLRA. The state law required that specified minimum mental health care benefits be provided to residents under employee health care plans if those plans covered hospital and surgical expenses. The Court rejected the argument that the state law was preempted, noting that the "NLRA is concerned primarily with establishing 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." Metropolitan Life, 471 U.S. at 753. The Court also stated that:

 
The evil Congress was addressing thus was entirely unrelated to local or federal regulation establishing minimum terms of employment. Neither inequality of bargaining power nor the resultant depressed wage rates were thought to result from the choice between having terms of employment set by public law or having them set by private agreement. No incompatibility exists, therefore, between federal rules designed to restore the equality of bargaining power, and state or federal legislation that imposes minimum substantive requirements on contract terms negotiated between ...

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