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Union attorneys claim Minnesota Supreme Court victory

Brian Johnson
Dolan Media Newswires

Minneapolis — A nationally significant lawsuit that pitted a local pipefitters union against a nonunion contractor has had its day in front of the Minnesota Supreme Court, but the final verdict may arrive until the case reaches the nation’s high court.

The case involves the union practice of using market-recovery money to subsidize union-friendly bids. Late last week, the Minnesota Supreme Court unanimously ruled the matter is preempted by the National Labor Relations Act and should not be before the state courts.

The ruling, which overturned a 2008 Minnesota Court of Appeals decision, was a victory for the Local 539 Pipefitters union and its attorneys, who have long argued the National Labor Relations Board has jurisdiction over such matters.

“We are very happy with the decision,” said Brendan Cummins, an attorney with Minneapolis law firm Miller-O’Brien-Cummins, which represented Local 539 in the case. “We felt like justice was done, and the courts, the Minnesota Supreme Court, got it right.”

Alec Beck, an attorney with Edina-based Seaton, Beck & Peters, which represented pipefitting contractor Midwest Pipe Insulation in the case, said the questions that were raised in the case still need answers.

“It did not get addressed in this case, unfortunately,” he said. “The labor board is saying they don’t want to take it, and the state courts are saying they don’t want to take it. … The labor board has hinted at what its position is, but won’t really say it.

“The U.S. Supreme Court has not taken it up.”

Beck said an appeal to the U.S. Supreme Court is a possibility.

The use of market-recovery money — also known as job-targeting money — is a hot-button topic in the construction industry.

Unions use the money, which comes from union dues, to bridge the gap between union and nonunion labor costs on selected projects. Contractors accepting market-recovery grants agree to use union labor.

Union leaders say the practice is a legitimate way to increase job opportunities for members, but many from the nonunion side argue at least some of the money is illegal and it artificially lowers union bids in an effort to drive nonunion shops out of business.

The case before the Minnesota Supreme Court involved Baxter-based MPI, a nonunion subcontractor that had a deal with MD Mechanical in 2006 to perform pipe-insulation work on a school construction project in the St. Michael-Albertville School District.

MD Mechanical had received an $80,000 market-recovery grant from Local 539. In court papers, MPI said the union threatened to cancel its grant if MD Mechanical used nonunion labor on the school project.

According to court documents, MPI alleged MD Mechanical, under pressure from the union, rescinded the contract with MPI and hired a union contractor to take MPI’s place. The nonunion MPI sued Local 539, claiming “interference with contracts and unfair competition.”

Attorneys for Local 539 countered that federal law protects the union’s actions, and the matter should go before the NLRB rather than a state court. A district court agreed, but last August, the Court of Appeals overturned the ruling.

The Court of Appeals ruling let MPI and its attorneys to proceed with the claim.

Attorneys for MPI argued the market-recovery money partly came from union dues collected on federally backed prevailing-wage projects and that it’s a violation of federal law to “co-mingle” the money.

The union’s attorneys say the market-recovery program is perfectly legal.

“I think the law was very clear here,” Cummins said. “The (Minnesota Supreme Court) just followed the law. They did not want to make policy or decide an issue that was not theirs to decide.”

Beck said these issues have come up in other courtrooms throughout the country and are “going to come up again. Now, the state Supreme Court decision kept this unsettled, essentially, and … someone else has to make a decision.”

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