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UAW-Labor Employment and Training Corporation v. Chao

January 2, 2002

UAW-LABOR EMPLOYMENT AND TRAINING CORPORATION, ET AL., PLAINTIFFS
v.
ELAINE L. CHAO, DEFENDANT



The opinion of the court was delivered by: Henry H. Kennedy, Jr. United States District Judge

MEMORANDUM OPINION

Executive Order 13,201 ("Executive Order" or "Order") requires employers who have federal government contracts to post notices informing their employees of their rights not to join a union or pay certain union fees. Federal government contractors who do not comply face cancellation of their contracts and debarment from future government contracts. Contending that the Order is preempted by the National Labor Relations Act, 29 U.S.C. § 151 et seq., ("NLRA"), and was issued without authority, plaintiffs seek a declaration that the Order is invalid and to enjoin its continued implementation. Before the court are defendant's motion to dismiss and the parties' cross-motions for summary judgment. Upon consideration of the motions, the opposition thereto, and the record of the case, this court concludes that defendant's motions to dismiss and for summary judgment must be denied. Also, because the Executive Order is preempted by the National Labor Relations Act, plaintiffs' motion for summary judgment and request for injunctive and declaratory relief must be granted.

I. FACTUAL BACKGROUND

Executive Order 13, 201 was signed into law by the President on February 17, 2001, and became effective on April 18, 2001. The Order operates by requiring "all Government contracting departments and agencies" to include a number of clauses in "every Government contract" worth over $100,000 solicited after the Order's effective date. Order § 2(a). The first required clause mandates that the contractor post at its workplaces a notice that includes the following information:

NOTICE TO EMPLOYEES

Under Federal law, employees cannot be required to join a union or maintain membership in a union in order to retain their jobs. Under certain conditions, the law permits a union and an employer to enter in a union-security agreement requiring employees to pay uniform periodic dues and initiation fees. However, employees who are not union members can object to the use of their payments for certain purposes and can only be required to pay their share of union costs relating to collective bargaining, contract administration, and grievance adjustment.

If you do not want to pay that portion of dues or fees used to support activities not related to collective bargaining, contract administration, or grievance adjustment, you are entitled to an appropriate reduction in your payment. If you believe that you have been required to pay dues or fees used in part to support activities not related to collective bargaining, contract administration, or grievance adjustment, you may be entitled to a refund and to an appropriate reduction in future payments.

For further information concerning your rights you may wish to contact the National Labor Relations Board (NLRB) either at one of its Regional Offices or at the following address ... [address printed]. Order § 2(a)(1).

The second and third contract clauses required by the Order authorize the Secretary of Labor to impose substantial penalties on those employer-contractors who do not post the above notice, including canceling their current government contracts and debarring them from obtaining future government contracts. See Order § 2(a)(2) & (3). The fourth required clause applies the notice requirement to subcontractors and "those who sell goods to" prime contractors (i.e., vendors), and requires prime contractors to "take such action ... as may be directed by the Secretary" towards subcontractors and vendors, including imposing sanctions for noncompliance with the Order. Order § 2(a)(4).

Although the Order authorizes the Secretary to exempt from the notice requirement those facilities of covered employers which "are in all respects separate and distinct from activities related to the performance of the contract," it states that "in the absence of an exemption all facilities shall be covered." Order § 3(c). The Secretary has not provided for any exemptions, and thus all the facilities of covered employers, even those without employees working under a federal contract covered by the Order, are required to post the notice.

As the source of its authority, the Order cites the Federal Property and Administrative Services Act, 40 U.S.C. §§ 471 et seq. ("Procurement Act"), which provides the President with the authority to issue executive orders to promote "economy and efficiency" in government procurement. The Order states its relationship to this goal as follows: "When workers are better informed of their rights, including their rights under the Federal labor laws, their productivity is enhanced. The availability of such a workforce from which the United States may draw facilitates the efficient and economical completion of its procurement contracts." Order § 1(a).

Challenging the Order are a non-profit corporation and three unions. The bylaws of the corporate plaintiff, UAW-Labor and Employment Training Corporation, states that its purpose is to "provide job training and jobs for eligible economically disadvantaged persons; ... to obtain participation from private industry employers; and ... to meet the specific needs of such employers." The Corporation claims it is an "employer" within the meaning of the NLRA and that it is party to several contracts with the federal government. The Corporation is also party to a collective bargaining agreement with the Office and Professional Employees International Union Local 537 ("OPEIU Local 537"), one of the union plaintiffs. This collective bargaining agreement is subject to a "union-security agreement," an agreement between an employer and a union providing that employees represented by the union are required to pay certain dues to the union as a condition of retaining employment.

Plaintiff International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America ("UAW") is an international labor organization that claims a membership of over 800,000 employees. UAW represents employees of federal government contractors, such as General Motors Corporation and Ford Motor Corporation, with which it has collective bargaining agreements that are subject to union-security agreements. Plaintiff OPEIU is an international labor organization that claims a membership of over 140,000 employees worldwide. Like UAW, it represents employees of federal government contractors with whom it has ...


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