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Second Airlines for America Letter to Sean Burton, Airport Commission President.
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OGLETREE, DEAKINS, NASH,
SMOAK & STEWART, P.C.
Attorneys at Law
1909 K Street NW, Suite 1000
Washington, DC 20006
Telephone: 202.887.0855
Facsimile: 202.887.0866
www.ogletreedeakins.com
Elizabeth S. Dougherty
202.263.0270
April 25, 2014
Sean Burton
President
Board of Airport Commissioners
Los Angeles World Airports
Room 115
1 World Way
Los Angeles, CA 90045-5803
RE: LAWAs Proposed Labor Harmony Provision
Dear Mr. Burton:
I am writing on behalf of Airlines for America (A4A)1 to express its strong opposition to a labor harmony provision proposed by Los Angeles World Airports (LAWA) for vendors providing contract services to airlines (airline service providers) at Los Angeles International Airport (LAX). The provision would effectively mandate union representation and require bargaining and binding arbitration with un-elected union representativesall of which is preempted by federal labor statutes.
I. Introduction
A4A is the principal trade and service organization of the U.S. scheduled airline industry. It is
the nations oldest and largest airline trade association, and its members account for more than 90 percent of the passenger and cargo traffic carried by U.S. airlines. All airlines use outside
vendors to perform various services at airports in their networks. The airline service providers employees work alongside airline employees and perform services that are integral to the air
transportation system and relied upon by airline passengers and cargo customers.
As you are aware, the LAWA Board of Airport Commissioners (BOAC) previously agreed to the terms of a Certified Service Provider Program (CSPP) for LAX. LAWA has reopened the terms of the CSPP to add a significantly altered labor harmony provision (the Labor Harmony Provision), which A4A understands to incorporate a proposal advanced by the Service
1 A4A members are: Alaska Airlines, American Airlines, Atlas Air, Inc., Delta Air Lines, Inc., Federal Express
Corporation, Hawaiian Airlines, Inc., JetBlue Airways Corp., Southwest Airlines Co., United Airlines, Inc., and
United Parcel Service Co. Air Canada is an associate member.
Sean Burton
April 25, 2014
Page 2
Employees International Union-United Service Workers West (SEIU-USWW). The provision impermissibly regulates the labor relations of private companies and their employees in conflict
withand preempted byboth the National Labor Relations Act (NLRA) and Railway Labor Act (RLA).
It is fundamental to federal labor law that a union cannot be designated as the representative of a
group of employees without first obtaining the consent of the majority of the workers within an
appropriate workgroup classification. It is equally fundamental that employers must be able to
engage in free collective bargaining constrained only by the exclusive boundaries prescribed in
the RLA and NLRA. In addition, the RLA and NLRA give the National Mediation Board
(NMB) and the National Labor Relations Board (NLRB), respectively, sole jurisdiction to determine questions of union representation and administer the statutory processes for collective
bargaining. LAWAs Labor Harmony Provision runs afoul of these principles and is exactly the type of local action that federal labor law preemption is intended to prevent.
The fact that the Labor Harmony Provision does not explicitly require election by card check
does not save it from preemption. For federal labor law preemption purposes, it is sufficiently
intrusive that the provision requires agreement with a union (with certain required terms) and
binding arbitration, which can mandate provisions on employers. The very real prospect that an
arbitrator might impose card check, neutrality, or other prohibited provisions only makes the
Labor Harmony Provision all the more objectionable.
Federal courts have repeatedly invalidated state or local regulations that intrude into areas
preempted by the NLRA and RLAas the Labor Harmony Provision does. Airports, acting under the guise of their proprietary powers, cannot invade the federal labor relations rights of private companies, such as airline service providers, who provide services to airlines, not
airports. Local government entities face significant financial liability for ignoring these federal
rights, and they violate them at their peril.
In addition to our belief that LAWAs proposal is unlawful, our members are concerned that rather than encourage so-called labor harmony, the proposal, if implemented, would do the opposite. It would foment disruption by effectively imposing on employees representation by a
union that they may not want, as well as imposing terms that neither the employees nor the
employer may find acceptable.
II. LAWAs Labor Harmony Provision Unlawfully Interferes with Private Labor Relations
LAWAs Labor Harmony Provision would impermissibly disrupt private labor relations in several significant ways:
In order to do business at the airport, an airline service provider must enter into an agreement (termed Labor Peace Agreement or LPA) with any union or other entity that desires to represent its employees, regardless of the views of the employees
Sean Burton
April 25, 2014
Page 3
themselves. The agreement must include a union no-strike provision and binding
arbitration provision.
Nothing requires the union to enter into this agreement, but the airline service providers business depends upon it. This gives the union enormous leverage to make
demands. For example, the union could threaten to withhold the no-strike provision
unless the service provider agrees to voluntarily recognize the union, accept a card-check
election process, maintain neutrality during an election, provide the names and addresses
of all employees, change terms and conditions of employment for its employees, and so
on.
Thus, the union effectively becomes the bargaining representative for the service providers employees even though the union has not been elected as the representative of these employees or designated as such by the relevant federal labor agencies with
exclusive jurisdiction. The unions bargaining power has been significantly enhanced through government action, thus disrupting the balance of bargaining power.
The binding arbitration provision forces the airline service providers to agree to let an arbitrator impose limitless agreement terms if the service provider is unable to get a
union to agree to a contract. Since it is highly doubtful a union would agree to a no-strike
provision without obtaining something of value in return, the union likely would ask an
arbitrator to impose card-check, neutrality, or other conditions that run afoul of federal
labor statutes, and the employer must effectively waive, in advance, any objection to the
imposed terms.
Thus, under the language of LAWAs proposal, airline service provider employees would be unilaterally represented, without first having the opportunity to vote on (a) whether they want to
be represented by a union, and (b) if so, which union they want to represent them. LAWAs proposal also mandates certain contract terms and requires that the bargaining process be
resolved through binding arbitration rather than free collective bargaining under the RLA and
NLRA.
It is well settled that state and local authorities cannot intrude into the labor relations of private
companies.2 Courts have consistently held that state or local government action is preempted by
the RLA and/or the NLRA if it regulates activities protected, prohibited, or intentionally left
unregulated by the statutes.3 See San Diego Bldg. Trades Council, Millmens Union, Local 2020
2 As discussed below, localities have limited authority to regulate labor relations when they act as market
participants purchasing goods and services in the marketplaceinstead of as regulators, as LAWA acts here.
3 Neither the RLA nor the NLRA contains an express preemption provision, but courts have found similar
preemption doctrines under both statutes. Preemption law has developed similarly under both statutes, and courts
often cite to NLRA and RLA preemption cases interchangeably. See Hawaiian Airlines, Inc. v. Norris, 512 U.S.
246 (1994). It is important to note, however, that there are provisions particular to the RLA (such as the system-
Sean Burton
April 25, 2014
Page 4
v. Garmon, 359 U.S. 236 (1959); Bensel v. Allied Pilots Association, 387 F.3d 298 (3d Cir.
2004); Lodge 76, Intl Assn of Machinists v. Wisc. Employment Rel. Commn. (Machinists), 427 U.S. 132 (1976); Bhd. of Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369
(1969); Dunn v. Air Line Pilots Assn, Intl, 836 F. Supp. 1574 (S.D. Fla. 1993).
Local labor regulations that set forth standards inconsistent with the substantive requirements of the NLRA [or RLA] by requiring conduct that conflicts with certain options for employers protected by the [statutes] are prohibited. See Aeroground v. City of San Francisco, 170 F. Supp. 2d 950, 956 (N.D. Cal. 2001)(citing Wisc. Dept. of Industry v. Gould, 475 U.S. 282, 286
(1959)). LAWAs Labor Harmony Provision is preempted by both the NLRA and the RLA because it is inconsistent with the following key principles of these statutes.
A. Only Employees and the Proper Federal Agencies Can Determine Union
Representation, Not Local Governments and Arbitrators
LAWAs proposed language requires airline service providers to enter into an LPA with any union
4 that requests one (or allow an arbitrator to impose the terms of an agreement) as a
condition of doing business at LAX. Thus, LAWA, unspecified unions (and possibly an
arbitrator) are empowered to decide whether employees will have union representation and
which union will represent them. This is in direct conflict with the NLRA and the RLA, both of
which reserve representation decisions expressly for employees and the appropriate federal
agencies, the NLRB and NMB. As a side note, many of the vendors providing services to
airlines at LAX may be covered by the RLA as derivative carriers, but even if they are covered by the NLRA, the outcome is the same. The supremacy of the federal statutory scheme for
determining employee representation is unquestioned under both statutes.
A bedrock principle of federal labor law is that American workers should have full and informed
freedom of choice whether to be unionized and, if so, by which union. For example, the RLA
gives employees "the right to organize and bargain collectively through representatives of their
own choosing. The majority of any craft or class of employees shall have the right to determine
who shall be the representative of the craft or class. 45 U.S.C. 152, Fourth (emphasis added). The NLRA contains similar rights for employees in Section 1(a): Representatives designated or selected for the purpose of collective bargaining by the majority of the employees in a unitshall be the exclusive representative of all the employees in the unit (29 U.S.C. 152) (emphasis added). Courts have held that these rights include the rights of employees not to be represented
wide bargaining requirement and strike restrictions) that create even stronger limitations on state intrusion into labor
relations.
4 The vagueness of the Labor Harmony Provision also creates the possibility that service providers may have to
enter into LPAs with more than one union. The provision merely states that the provider must have an agreement
with any organization . . . which requests a Labor Peace Agreement (emphasis added). This language does not limit the service providers obligation to only one union and one LPA. Thus, the service providers could be in the unlawful position of having to bargain with competing unions at once over the same group of employees. This is yet
another way in which the provision conflicts with federal labor laws.
Sean Burton
April 25, 2014
Page 5
by a union, and employees must have complete independence to organize or not to organize.5 Railway Clerks v. Assn for Benefit of Non-Contract Employees, 380 U.S. 650, 669 n.5 (1965); Russell v. NMB, 714 F.2d 1332, 1343 (5
th Cir. 1983).
RLA and NLRA protections extend to companies/employers, as well as to the workers. Under
both the RLA and the NLRA, companiesas well as employeeshave the right to insist upon a secret ballot election or a particular showing of interest from a majority of the employees to
determine union representation matters. 29 U.S.C. 159 (NLRAgranting right to secret ballot election); 45 U.S.C. 152, Twelfth (RLArequiring a showing of interest from not less than 50 percent of the employees in the craft or class before an election can take place). See Aeroground, 170 F. Supp. 2d at 955 (discussing employer rights to insist on secret ballot
election). Congress recently re-affirmed its active engagement in protecting employee choice in
matters of union representation when it added the above-referenced showing of interest provision
to the RLA in 2012. FAA Modernization and Reform Act of 2012 1003, 45 U.S.C. 152,
Twelfth. Under the new provision, Congress dictated that a union election (or certification by any other means) cannot take place without a showing of support from at least 50 percent of the employees in the relevant work group. Id.
Moreover, Congress has delegated to the NMB and the NLRB the exclusive jurisdiction to
investigate and determine the representatives of employees under their respective statutes. 29
USC 159 (NLRB); 45 U.S.C. 152, Ninth (NMB). The exclusivity of the NMBs jurisdiction is particularly sacrosanct and has been affirmed several times by the United States Supreme
Court. See General Comm. of Adjustment v. Missouri-Kan.-Tex., 320 U.S. 323, 336 (1943);
Switchmens Union v. NMB, 320 U.S. 297 (1943).
On numerous occasions, the NMB has exercised RLA jurisdiction over airline service workers,
including those at LAX. Sample cases include:
Several International Total Services decisions: 20 NMB 537 (1993) (Skycaps at Logan
airport.); 16 MNB 44 (1988) (Baggage handlers and skycaps at San Francisco Airport);
and 11 NMB 67 (1983) (Security, maintenance and janitorial services at Chicago OHare Airport);
Delta Air Lines Global Services (DGS) 28 NMB 456 (2001) (Ramp agents at Philadelphia Airport found to be covered by the RLA and part of a nationwide craft or
class of over 2000 DGS employees then working at 43 airports.); and
Aircraft Services International Group (ASIG), 40 NMB 43 (2012)(NMB reasserted nationwide jurisdiction over contractor performing fueling and ground handling services
and dismissed union application to represent these employees at LAX).
5 Although employers sometimes voluntarily recognize unions without an election or agency certification, this
recognition is subject to RLA and NLRA limitations and can be challenged by employees. Additionally, voluntary
recognition is, by definition, voluntary, on the part of the employerunlike a mandatory LPA with binding arbitration. Thus, voluntary recognition presents a very different scenario from the government-mandated union
representation at issue here.
Sean Burton
April 25, 2014
Page 6
The ASIG decision is particularly noteworthy as it highlights another conflict between the RLA
and any state or local authority seeking to force an agreement with a union at a single location.
Under the RLA, employee units (called crafts or classes) are represented on a system-wide basis. The NMB has exclusive jurisdiction to determine what the system is, and it is usually nationwide. As explained by the NMB in its 2012 ASIG decision:
[The RLA] provides for representation of employees . . . on a craft or class basis.
The Board has consistently held that such representation must be on a system-
wide basis. The craft or class must include all of the employees working in the
classification deemed eligible, regardless of work locations. The Board's practice
is to conduct elections across a carrier's entire system. 40 NMB 43, 48-49
(internal citations and quotations omitted).
The NMB further stated: [T]he proper system for representation under the RLA includes all ASIG's facilities nationwide. ASIG's LAX facility does not constitute a proper
system by itself. Id. at 52 (emphasis added).
Thus, forcing airline service providers to enter into location-specific agreements with unions at
LAX contravenes statutory election procedures, the exclusive jurisdiction of the NMB and
NLRB to determine union representation, and the RLAs system-wide representation requirement. LAWA cannot, under the guise of an airport neutrality policy, violate the statutory rights of employees to choose their representativeor no representative. Nor can LAWA violate employers rights to certain election procedures or supplant the authority exclusively delegated to the NMB and NLRA to determine questions of union representation.
If SEIU-USWW or any other union wishes to represent employees at LAX, the union must file
appropriate applications with either the NMB or the NLRBsupported by an appropriate showing of interest from the affected employeesand seek representation rights under the procedures of the respective agencies. For LAWA (or an arbitrator acting under LAWAs authority) to dictate a different procedure clearly sets forth standards inconsistent with the substantive requirements of federal labor statutes and is preempted. Aeroground, 170 F. Supp. at 956 (quoting Gould 475 U.S. at 286).
B. Employers and Employees Have the Right to Engage in Free Collective
Bargaining, Constrained Only by the NLRA and RLA
The NLRA and RLA provide the exclusive frameworks for negotiating collective bargaining
agreements. The statutes purposefully leave many bargaining decisions to the parties but
regulate certain bargaining behavior through specific statutory procedures. Neither the RLA nor
the NLRA compels employers or unions to agree to particular proposals. 29 U.S.C. 158(d)
(NLRA); 45 U.S.C. 152, First (RLA). In particular, neither statute requires the parties to enter
Sean Burton
April 25, 2014
Page 7
into binding arbitration.6 See Golden State Transit Corp. v. City of Los Angeles (Golden State
I), 475 U.S. 608, 617 (1986).
Courts have held that state and local authorities may not place additional limits on collective
bargaining beyond those in the NLRA or RLA because it would alter the balance of power
between labor and management struck by Congress in enacting the statutes. Lindsay v. Assn of Prof. Flight Attendants, 581 F.3d 47, 59 (2d Cir. 2009); Golden State I, 475 U.S. at 616-17;
Machinists, 427 U.S. at 153. Specifically, state and local governments cannot attempt to restrict
access to procedures guaranteed by the statutes or tools permitted by the statutes. Id. And they
may not influence the substantive terms of collective bargaining agreements. Machinists, 427
U.S. at 153. The right to free collective bargaining belongs to employers, not just employees,
and the Supreme Court has held that local governments may not add to an employers federal legal obligations in collective bargaining. Id. at 148.
LAWAs Labor Harmony Provision requires agreement with a union on specific proposalsa no-strike clause and binding arbitration provision. The employer must submit to binding
arbitration to reach agreement with the union and is not permitted to deploy any traditional
economic bargaining tools or go to the NMB for help reaching an agreement. These
requirements take away freedoms permitted to employers by the NLRA and RLA and place
additional burdens on airline service providers that go beyond the requirements in the statutes.
Additionally, the Labor Harmony Provisions binding arbitration requirement is in direct conflict with the dispute resolution mechanisms in the statutes. LAWA cannot substitute its collective
bargaining agenda and processes for those enactedor purposefully left unregulatedby Congress in the NLRA and RLA.
III. Binding Arbitration is Likely to Result in Imposition of Additional Preempted
Terms
Under LAWAs Labor Harmony proposal, arbitrators have broad latitude to impose a reasonable Labor Peace Agreement on airline service providers. Labor Peace Agreements often include provisions requiring a card-check election, neutrality during an organizing
campaign, or increased union access. An arbitrator could easily consider these terms
reasonable even though such agreements are by no means standard for private employers, such as airline service providers. These requirements, and many others the arbitrator might impose,
are clearly in conflict with the NLRA and RLA (as demonstrated in the case law below), and the
likelihood that an arbitrator would impose them significantly strengthens the already compelling
preemption arguments against LAWAs proposal.
6 For example, the process for reaching a contract under the RLA is governed by Section 6 of the Act, 45 U.S.C.
156, and subject to the mediation authority and procedures of the NMB. 45 U.S.C. 155. Under these procedures,
the NMB can offer binding arbitration, but the parties do not have to accept. 45 U.S.C. 155. Even when interstate
commerce is substantially threatened and the President of the United States convenes a Presidential Emergency
Board (PEB)(pursuant to 45 U.S.C. 160), the PEB has authority only to recommend terms of an agreement, not impose them as LAWAs proposal would require.
Sean Burton
April 25, 2014
Page 8
IV. Case Law Uniformly Confirms LAWAs Proposal Is Preempted
No court has upheld a labor peace requirement for private employers. On the contrary, federal
courts have repeatedly found that attempts to (i) mandate agreements with unions; (ii) force
binding arbitration with unions; (iii) require unionization as a condition of doing business; (iv)
require neutrality in union elections; and (v) otherwise regulate private labor relations are
impermissible and preempted by NLRA and RLA. The following cases are particularly relevant
to LAWAs Labor Harmony Provision.
Golden State Transit Corp. v. City of Los Angeles (Golden State I): The City of Los Angeles refused to grant a taxi franchise to Golden State unless they entered into an
agreement with a union to resolve a labor dispute. 475 U.S. 608 (1986). The Supreme
Court of the United States said the citys action was preempted because requiring agreement with a union directly interfered with the bargaining processa central concern of the NLRA. The Court stated: A city cannot condition a franchise renewal in a way that intrudes into the collective bargaining process. Id. at 619. As discussed further below, the city suffered significant financial liability under Section 1983 from its
illegal imposition of the labor requirement and ultimately settled for $12.5 million.
Aeroground v. City and County of San Francisco: An airport commission tried to impose a labor peace/card check provision on airline service providers.
7 The provision
required agreement with a union, election by card check, and binding arbitration. The
court said the provision was preempted by the NLRA because it conflicted with
employee and employer rights under the NLRA to select or reject a union using certain
NLRA procedures. The court also said the binding arbitration provision conflicted with
NLRA procedures for resolving disputes. The court concluded the rule sets forth standards inconsistent with the substantive requirements of the NLRA by requiring
conduct that conflicts with certain options for employers that are protected by the
NLRA. Id. at 956.
Brown v. Chamber of Commerce: The State of California enacted a law requiring any employer receiving state funds to refrain from using those funds to assist, promote, or deter union organizing (a neutrality provision). 554 U.S. 60, 63 (2008). The Supreme Court of the United States struck the provision as preempted by the NLRA because it
conflicted with explicit rights of employers to engage in non-coercive communication
with their employees and implicit rights of employees to choose not to have a union and
receive information opposing unionization. Id. at 69.
Metropolitan Milwaukee Association of Commerce v. Milwaukee County: Milwaukee County tried to require labor peace agreements for contractors providing transportation
7 Three weeks after the federal court decision, the NMB determined that the Aerogrounds airline service employees
at SFO were covered by the RLA and could only be organized under the NMBs representation procedures. Aeroground, Inc., 28 NMB 510, at 511 (2001).
Sean Burton
April 25, 2014
Page 9
services directly for the county. 431 F.3d 277 (7th
Cir. 2005). The court said it had no doubt that the labor peace provision would be preempted by the NLRA because it regulated activities that were coveredexplicitly and implicitlyby the Act. Id. at 278.
CityIce Cold Storage Co. v. Port of Seattle: A federal district court struck down the Port of Seattles requirement that tenants at the port use unionized labor subject to a collective bargaining agreement for which [the tenants] never bargained. CityIce Cold Storage Co. v. Port of Seattle, Case No. C99-1647R, Order Granting Summary Judgment at 9
(W.D. Wash. June 7, 2000)(CityIce Order). The court found the Ports action preempted by the NLRA because the Port interfered in the protected zone of free collective bargaining. Id. at 17.
Flying Eagle Espresso v. Host Intl Inc.: The Port of Seattle tried to impose a labor harmony provision on airport concessionaires at Seattle-Tacoma International Airport
(SeaTac Airport), and the court recognized the provisions conflict with the NLRA. 2005 WL 2318827 (W.D. Wash. Sept. 22, 2005). The court refused to agree to the
provisions validity, and the Port ultimately settled with the employer who objected to the provision.
Thus, federal courts uniformly consider mandatory labor agreements and bargaining conditions
preempted by the NLRA and RLA, and we believe a court is likely to find LAWAs Labor Harmony Provision similarly objectionable.
8
V. The Airports Proprietary Interests Do Not Justify LAWAs Interference in Private Labor Relations
LAWAs status as an airport owner/operator does not permit it to exercise control over labor relations matters governed by federal labor law. LAWA cannot argue the Labor Harmony
Provision merely protects commercial-like proprietary interests in the marketplace.9 Although a
market participant exception exists under certain circumstances to avoid federal labor
8 Several elements of LAWAs revised CCSP proposal also violate the broad preemption provision of the Airline
Deregulation Act (ADA) that prohibits state or local regulation related to a price, route, or service of an air carrier. 49 U.S.C. 41713(b)(1). The services provided by the airline service providers pursuant to their agreements with airlines are an integral part of commercial air transportation, and location-by-location regulation of
employees providing these services impermissibly impacts airline prices, routes, and services. See Huntleigh Corp.
v. Louisiana Bd. Of Private Sec. Examiners, 906 F. Supp. 357, 363 (M.D. La. 1995)(stating regulation of airport
vendor terminal services would frustrate the intent of the Congress). 9 LAWA also cannot justify labor regulation as an exercise of its proprietary powers as operator of a public
airport. While the ADA expressly recognizes an exception to preemption to permit an airport owner to [carry] out its proprietary powers and rights, 49 U.S.C. 41713(b)(3), that exception has no application to federal labor law preemption under the RLA or the NLRA. Action by LAWA in furtherance of its public interest in operating an
airport is clearly regulatory and not an exercise of market participationthe only recognized proprietary exception under the RLA and NLRA. Moreover, the narrow proprietary powers exception to the ADAs preemption provision typically applies to noise and environmental regulation and has never been used to justify labor regulations.
Sean Burton
April 25, 2014
Page 10
preemption, courts have rejected this argument for labor regulation that reaches beyond
government contractors supplying goods or services to government entities for compensation.
For example, when the court in Aeroground (discussed above) struck down the airports labor peace/card check rule, it rejected the market participant argument in part because the rule was
not an effort by the airport to contract directly with [the airline service providers]. 170 F. Supp. At 957. The court further concluded the airport had exceeded its authority when it
attempted to influence the behavior of certain employers at the airport ostensibly to minimize labor unrest. Id. at 958. In the courts view, the airport labor peace/card check provision was a classic example of regulations, suggesting that defendants intended the rule to encourage a general policy regarding employee-employer relations at the airport. Id. (emphasis added).
The court acknowledged that the enacting resolution cited protection of revenues as a
justification for the check card requirement, but the court responded that:
simply addressing the financial interests of a public entity does not make such
efforts those of a market participant. If that were the case, then every effort by a
government entity to increase its revenues could be characterized as market
participation. Id.
The Supreme Court has explicitly recognized that a direct contracting relationship between the
government and the regulated entity is crucial to the market participant exception. Recapping its
decision in Golden State Taxi I (discussed above) that it was unlawful for the City of Los
Angeles to require a private company to reach agreement with a labor union, the Court noted that
a very different case would have been presented had the city of Los Angeles purchased taxi services from Golden State Taxi in order to transport city employees. Bldg. & Constr. Trades Council of the Metropolitan Dist. v. Assoc. Builders and Contractors of Mass./R.I. (Boston Harbor), 507 U.S. 218, 227 (1993).
Recently, the Supreme Court again emphasized the importance of the government-contractor
relationship to a government entitys demonstration of a valid proprietary interest in market participation. In American Trucking Assn v. City of Los Angeles, the Court struck down regulation by the City of Los Angeles as preempted by the Federal Aviation Administration
Authorization Act (FAAAA) (which is identical to the ADA) and concluded that the FAAAs statutory market participant exception draws a rough line between a governments exercise of regulatory authority and its own contract-based participation in a market. 133 S. Ct. 2096, 2102. The Court gave as an example of acceptable market participation a State (or City or Port) sign[ing] an agreement with a trucking company to transport goods at a specified price. Id. at 2013. Clearly, LAWA has no such relationship with the airline service providers at issue here.
Other courts have also declined to apply the market participant exception where the regulation
was directed at entities that do not contract with the government. In the CityIce case, discussed
above, the judge rejected the market participant argument, relying in part on the fact that the Port was not acting as a purchaser of construction services. CityIce Order at 11. The court
Sean Burton
April 25, 2014
Page 11
reasoned that the Ports authority to impose the terms on its tenants was purely regulatory as the Port was neither purchasing nor selling . . . services. Id. at 13.
The Seventh Circuit also rejected the proprietor/market participant argument in Metropolitan
Milwaukee Association of Commerce v. Milwaukee County. 431 F.3d 277. Finding that the
policy was an attempt to regulate labor policy rather than an exercise in market participation, the
court held that local governments spending power may not be used as a pretext for regulating labor relations. Id. at 279. The court also rejected the market participant argument because the labor peace provision affected the labor relations of employees working on contracts with private
(non-contractor) companies. Id.
The only cases to have relied on protection of revenue as justification for otherwise
impermissible labor regulation involved individual projects in which the government had a
significant financial interest akin to a private investment. Hotel Employees & Rest. Employees
Union, Local 57 v. Sage Hospitality Res., LLC, 390 F.3d 206 (3d Cir. 2004); Hotel Employees &
Rest. Employees Union, Local 2, AFL-CIO v. Marriott Corp., No. 89-2707, 1993 WL 341286
(N.D. Cal. Aug. 23, 1993). These cases are not analogous to LAWAs broad attempt to set labor policy for all airline contractors at the airport.
LAWA does not contract with airline service providers, and its interest in protecting revenue at
the airport is too broad and general to justify labor regulation as market participation.10
LAWAs lack of a valid proprietary interest is underscored by the fact that private entities that do contract
with airline service providers (i.e. airlines) have not acted to impose similar requirements to
protect their legitimate proprietary interests. LAWAs Labor Harmony Provision is not a function of LAWAs participation in the marketplace and is instead a classic exercise of regulatory authority.
VI. LAWA Faces Financial Liability Under Section 1983 For Mandatory Unionization
Provisions
The CCSP and LAWAs Labor Harmony Provision make clear that if an airline service provider does not enter into an agreement with a union, it will be deprived of its opportunity to do
business at LAX. The Supreme Court has held that this type of interference with rights under the
federal labor statutes gives rise to a claim for monetary, declaratory, or injunctive relief under 42
U.S.C. 1983. Golden State Transit Corp. v. City of Los Angeles (Golden State II), 493 U.S.
103, 105 (1989). Monetary damages can include compensation for out-of-pocket loss and injury
to reputation. Memphis Community School Dist. v. Stachura, 477 U.S. 299 (1986). Monetary
recovery can also include interest and attorneys fees, and liability can be substantial. When the
10
One court has also suggested that an airport proprietors monopoly power over businesses at the airport further cuts against finding that an airport proprietor is acting as a market participant in regulating these businesses because
it exercises more economic power than an ordinary consumer would in the marketplace. Air Transp. Ass'n of Am. v.
City & Cnty. of San Francisco, 992 F. Supp. 1149, 1180 (N.D. Cal. 1998), affd and remanded, 266 F.3d 1064 (9th Cir. 2001).
Sean Burton
April 25, 2014
Page 12
City of Los Angeles impermissibly denied a taxi franchise based on the taxi companys failure to reach agreement with a labor union, a jury awarded the taxi company $4.5 million in damages,
and attorneys fees and interest threatened to result in a total award of $14 million. The city ultimately settled for $12.75. See City Settles Yellow Cab Suit for $12.75 Million, LA Times,
Jan. 8, 1992.
VII. Conclusion
The Labor Harmony Provision proposed by LAWA is unlawful. No courts have upheld a labor
harmony provision in a remotely similar context. Airports that have considered the legal issues
associated with labor harmony provisions have rejected them. Specifically, Minneapolis-St. Paul
International Airport and Ft. Lauderdale-Hollywood International Airport recently decided not to
implement virtually identical labor peace provisions after a thorough legal evaluationin spite of strong urging by the SEIU. Union representation of airline service provider employees at
LAX cannot be determined by LAWA, a union, or an arbitrator...but only by the employees,
under the exclusive supervision of the NMB or NLRB. Moreover, only the RLA and NLRAnot LAWAcontrol the terms and procedures for collective bargaining for private airline service providers.
Accordingly, A4A respectfully requests that LAWA not adopt the revised Labor Harmony
Provision.
Sincerely,
Elizabeth S. Dougherty