California Case Summary
March 1, 2000
CALIFORNIA SUPREME COURT APPROVES PROJECT STABILIZATION AGREEMENTS ON PUBLIC
CONTRACTS
Like Massachusetts, the California Supreme Court recently upheld the use of
project labor agreements or project stabilization agreements (PSAs) by public
agencies. (See Massachusetts Case Summaries on page 2.) Associated Builders
& Contractors v. San Francisco Airports Commission, 87 Cal.Rptr. 2d 654 (Ca.
1999). The Associated Builders and Contractors, Golden State Chapter (ABC) sued
the San Francisco Airports Commission, challenging the legality of a PSA between
the commission and a local union trade council on a $2.5 billion airport
expansion project. The PSA contained, among other things, a no-strike pledge by
the union and a pledge by the commission to require contractors to use the union
for any new hires beyond the contractor's core work force and to pay union wages
and benefits. ABC claimed the PSA violated California's competitive bidding
laws, the U.S. First Amendment protection of free expression and free
association, and the Fourteenth Amendment guarantee of equal protection.
The California Supreme Court disagreed and ruled that the competitive bidding
laws were enacted for the benefit of the public and not for the enrichment of
bidders. The court held there was substantial evidence reflecting that the PSA
furthered legitimate governmental interests including the prevention of labor
strife and costly delays and assuring access to skilled craft workers. There was
no evidence the PSA would increase the cost of the work, and the PSA did not
exclude nonunion contractors from bidding. Moreover, the court found that the
PSA did not infringe on ABC's right to express its "merit shop"
philosophy and opposition to unions. Of note, the California Supreme Court, like
the Massachusetts high court in Callahan v. City of Malden, did not rule that
PSAs are, ipso facto, valid. The court indicated it would review on a
case-by-case basis whether such agreements are consistent with the competitive
bidding laws.