New York Telephone Company v. New York State Department of Labor

• Citation: 99 S.Ct. 1328,59 L.Ed.2d 553,440 U.S. 519
• Decision Date: 21 March 1979
• Docket Number: No. 77-961,77-961
• Parties: NEW YORK TELEPHONE COMPANY et al., Petitioners, v. NEW YORK STATE DEPARTMENT OF LABOR et al
• Court: United States Supreme Court

440 U.S. 519

99 S.Ct. 1328

59 L.Ed.2d 553

NEW YORK TELEPHONE COMPANY et al., Petitioners,

v NEW YORK STATE DEPARTMENT OF LABOR et al.

No. 77-961.

Argued Oct. 30, 1978.

Decided March 21, 1979.

Syllabus

A New York statute authorizes the payment of unemployment compensation after one week of unemployment, except that if a claimant's loss of employment is caused by a strike in the place of his employment the payment of benefits is suspended for an additional 7-week period. Pursuant to this statute, petitioners' striking employees began to collect unemployment compensation after the 8-week waiting period and were paid benefits for the remaining five months of the strike. Because New York's unemployment insurance system is financed primarily by employer contributions based on the benefits paid to former employees of each employer in past years, a substantial part of the cost of these benefits was ultimately imposed on petitioners. Petitioners brought suit in District Court seeking a declaration that the New York statute conflicts with federal law and is therefore invalid, and injunctive and monetary relief. The District Court granted the requested relief, holding that the availability of unemployment compensation is a substantial factor in the worker's decision to remain on strike and has a measurable impact on the progress of the strike and that the payment of such compensation conflicted "with the policy of free collective bargaining established in the federal labor laws and is therefore invalid under the [S]upremacy [C]lause." The Court of Appeals reversed, holding that although the New York statute conflicts with the federal labor policy, the legislative histories of the National Labor Relations Act (NLRA) and Social Security Act (SSA) indicate that such conflict was one which Congress has decided to tolerate. Held: The judgment is affirmed. Pp. 527-546; 546-547; 547-551.

566 F.2d 388, affirmed.

Mr. Justice STEVENS, joined by Mr. Justice WHITE and Mr. Justice REHNQUIST, concluded that Congress, in enacting the NLRA and SSA, did not intend to pre-empt a State's power to pay unemployment compensation to strikers. Pp. 527-546.

(a) This case does not involve any attempt by the State to regulate or prohibit private conduct in the labor-management field but rather involves a state program for the distribution of benefits to certain members of the public. Local 20, Teamsters, Chauffeurs and Helpers Union v. Morton, 377 U.S. 252, 84 S.Ct. 1253, 12 L.Ed.2d 280, and Lodge 76, Intern. Ass'n of Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396, distinguished. Although the class benefited is primarily made up of employees in the State and the class providing the benefits is primarily made up of employers in the State, and although some members of each class are occasionally engaged in labor disputes, the general purport of the program is not to regulate the bargaining relationship between the two classes but instead to provide an efficient means of insuring employment security in the State. Pp. 527-533.

(b) Rather than being a "state la[w] regulating the relations between employees, their union, and their employer," as to which the reasons underlying the pre-emption doctrine have their "greatest force," Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180, 193, 98 S.Ct. 1745, 1755, 56 L.Ed.2d 209, the New York statute is a law of general applicability. Since it appears that Congress has been sensitive to the importance of the States' interest in fashioning their own unemployment compensation programs and especially their own eligibility criteria, Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 97 S.Ct. 1898, 52 L.Ed.2d 513; Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279; Batterton v. Francis, 432 U.S. 416, 97 S.Ct. 2399, 53 L.Ed.2d 448, it is appropriate to treat New York's statute with the same deference that this Court has afforded analogous state laws of general applicability that protect interests "deeply rooted in local feeling and responsibility." With respect to such laws, "in the absence of compelling congressional direction," it will not be inferred that Congress "had deprived the States of the power to act." San Diego Building Trades Council v. Garmon, 359 U.S. 236, 244, 79 S.Ct. 773, 779, 3 L.Ed.2d 775. Pp. 533-540.

(c) The omission of any direction concerning payment of unemployment compensation to strikers in either the NLRA or SSA implies that Congress intended that the States be free to authorize, or to prohibit, such payments, an intention confirmed by frequent discussions in Congress subsequent to 1935 (when both of those Acts were passed) wherein the question of payments to strikers was raised but no prohibition against payments was ever imposed. In any event, a State's power to fashion its own policy concerning the payment of unemployment compensation is not to be denied on the basis of speculation about the unexpressed intent of Congress. New York has not sought either to regulate private conduct that is subject to the National Labor Relations Board's regulatory jurisdiction or to regulate any private conduct of the parties to a labor dispute, but instead has sought to administer its unemployment compensation program in a manner that it believes best effectuates the purposes of that scheme. In an area in which Congress has decided to tolerate a substantial measure of diversity, the fact that the implementation of this general state policy affects the relative strength of the antagonists in a bargaining dispute is not a sufficient reason for concluding that Congress intended to pre-empt that exercise of state power. Pp. 540-546.

Mr. Justice BRENNAN concluded that the legislative histories of the NLRA and SSA provide sufficient evidence of congressional intent not to pre-empt a State's power to pay unemployment compensation to strikers, and that therefore it was unnecessary to rely on any purported distinctions between this case and Teamsters v. Morton, 377 U.S. 252, 84 S.Ct. 1253, 12 L.Ed.2d 280, and Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396. Pp. 546-547.

Mr. Justice BLACKMUN, joined by Mr. Justice MARSHALL, concluded that, under the pre-emption analysis of Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396, the evidence justifies the holding that Congress has decided to permit New York's compensation law notwithstanding its impact on the balance of bargaining power. He would not apply the requirement that "compelling congressional direction" be established before pre-emption can be found, nor would he find New York's law to be a "law of general applicability" under San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775. Pp. 547-551.

David L. Benetar, New York City, for petitioners.

Maria Lenhoff Marcus, New York City, for respondents.

Mr. Justice STEVENS announced the judgment of the Court and delivered an opinion, in which Mr. Justice WHITE and Mr. Justice REHNQUIST joined.

The question presented is whether the National Labor Relations Act, as amended, implicitly prohibits the State of New York from paying unemployment compensation to strikers.

Communication Workers of America, AFL-CIO (CWA), represents about 70% of the nonmanagement employees of companies affiliated with the Bell Telephone Co. In June 1971, when contract negotiations had reached an impasse, CWA recommended a nationwide strike. The strike commenced on July 14, 1971, and, for most workers, lasted only a week. In New York, however, the 38,000 CWA members employed by petitioners remained on strike for seven months.¹ New York's unemployment insurance law normally authorizes the payment of benefits after approximately one week of unemployment.² If a claimant's loss of employment is caused by "a strike, lockout, or other industrial controversy in the establishment in which he was employed," § 592(1) of the law suspends the payment of benefits for an additional 7-week period.³ In 1971, the maximum weekly benefit of $75 was payable to an employee whose base salary was at least $149 per week.

After the 8-week waiting period, petitioners' striking employees began to collect unemployment compensation. During the ensuing five months more than $49 million in benefits were paid to about 33,000 striking employees at an average rate of somewhat less than $75 per week. Because New York's unemployment insurance system is financed primarily by employer contributions based on the benefits paid to former employees of each employer in past years, a substantial part of the cost of these benefits was ultimately imposed on petitioners.⁴ Petitioners brought suit in the United States District Court for the Southern District of New York against the state officials responsible for the administration of the unemployment compensation fund. They sought a declaration that the New York statute authorizing the payment of benefits to strikers conflicts with federal law and is therefore invalid, an injunction against the enforcement of § 592(1), and an award recouping the increased taxes paid in consequence of the disbursement of funds to their striking employees. After an 8-day trial, the District Court granted the requested relief. 434 F.Supp. 810 (1977).

The District Court concluded that the availability of unemployment compensation is a substantial factor in the worker's decision to remain on strike, and that in this case, as in others, it had a measurable impact on the progress of the strike.⁵ The court held that the payment of such compensation by the State conflicted "with the policy of free collective bargaining established in the federal labor laws and is therefore invalid under the supremacy clause of the United States Constitution."⁶ Id., at 819.

The Court of Appeals for the Second Circuit reversed. It did not, however, question...