The Minnesota Court of Appeals August 26 overturned a decision by a lower court and ruled that a nonunion employer may proceed with its lawsuit against a union claiming that use of a job targeting fund violated state law prohibiting interference with contracts.   

In June 2006, MD Mechanical, Inc. of St. Cloud, Minn., the prime contractor on a school construction project in St. Michael-Albertville, Minn., signed a contract with a nonunion contractor, Midwest Pipe Insulation, Inc. (MPI) of Baxter, Minn., to perform plumbing, pipe and duct insulation work on the project.   

The Pipefitters Union, Local 539 had promised MD Mechanical a subsidy for the project taken out of the union’s Market Recovery Program, a job targeting program that takes money from employee paychecks and places it in a special fund that is used to subsidize union contractors when bidding on projects against nonunion companies.  When Local 539 discovered that the prime contractor had signed a contract with a nonunion employer, it threatened to withdraw the subsidy if the prime contractor continued to work with the nonunion employer on the project.   

MPI brought a lawsuit against Local 539 citing that Minnesota law does not allow interference with a contract.  However, a trial court dismissed the lawsuit based on the union’s claim that it was protected under national labor laws.  

On review, the Minnesota Court of Appeals overturned the dismissal and ruled to allow MPI to proceed with its lawsuit against Local 539.   

For more information, contact Doug Seaton, dseaton@seatonlaw.com, Alec Beck, abeck@seatonlaw.com or Mike McCain, mmccain@seatonlaw.com.