Chamber of Commerce of the United States v. Brown

• Decision Date: 19 June 2008
• Docket Number: No. 06–939.,06–939.
• Parties: CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA et al., Petitioners, v. Edmund G. BROWN, Jr., Attorney General of California, et al.
• Court: U.S. Supreme Court

08 Cal. Daily Op. Serv. 7548

128 S.Ct. 2408

155 Lab.Cas. P 11,043

171 L.Ed.2d 264

184 L.R.R.M. (BNA) 2385

2008 Daily Journal D.A.R. 9098

21 Fla. L. Weekly Fed. S 405

554 U.S. 60

76 USLW 4482

CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA et al., Petitioners,

v.Edmund G. BROWN, Jr., Attorney General of California, et al.

No. 06–939.

Supreme Court of the United States

Argued March 19, 2008.Decided June 19, 2008.

Preempted

West's Ann.Cal.Gov.Code §§ 16645.2, 16645.7.

Syllabus ^*

Organizations whose members do business with California sued to enjoin enforcement of “Assembly Bill 1889” (AB 1889), which, among other things, prohibits employers that receive state grants or more than $10,000 in state program funds per year from using the funds “to assist, promote, or deter union organizing.” Cal. Govt.Code Ann. §§ 16645.2(a), 16645.7(a). The District Court granted the plaintiffs partial summary judgment, holding that the National Labor Relations Act (NLRA) pre-empts §§ 16645.2 and 16645.7 because they regulate employer speech about union organizing under circumstances in which Congress intended free debate. The Ninth Circuit reversed, concluding that Congress did not intend to preclude States from imposing such restrictions on the use of their own funds.

Held: Sections 16645.2 and 16645.7 are pre-empted by the NLRA. Pp. 2412 – 2419.

(a) The NLRA contains no express pre-emption provision, but this Court has held pre-emption necessary to implement federal labor policy where, inter alia, Congress intended particular conduct to “be unregulated because left ‘to be controlled by the free play of economic forces.’ ” Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 140, 96 S.Ct. 2548, 49 L.Ed.2d 396. Pp. 2412 – 2413.

(b) Sections 16645.2 and 16645.7 are pre-empted under Machinists because they regulate within “a zone protected and reserved for market freedom.” Building & Constr. Trades Council v. Associated Builders & Contractors of Mass./R. I., Inc., 507 U.S. 218, 227, 113 S.Ct. 1190, 122 L.Ed.2d 565. In 1947, the Taft–Hartley Act amended the NLRA by, among other things, adding § 8(c), which protects from National Labor Relations Board (NLRB) regulation noncoercive speech by both unions and employers about labor organizing. The section both responded to prior NLRB rulings that employers' attempts to persuade employees not to organize amounted to coercion prohibited as an unfair labor practice by the previous version of § 8 and manifested a “congressional intent to encourage free debate on issues dividing labor and management.” Linn v. Plant Guard Workers, 383 U.S. 53, 62, 86 S.Ct. 657, 15 L.Ed.2d 582. Congress' express protection of free debate forcefully buttresses the pre-emption analysis in this case. California's policy judgment that partisan employer speech necessarily interferes with an employee's choice about union representation is the same policy judgment that Congress renounced when it amended the NLRA to preclude regulation of noncoercive speech as an unfair labor practice. To the extent §§ 16645.2 and 16645.7 actually further AB 1889's express goal, they are unequivocally pre-empted. Pp. 2412 – 2415.

(c) The Ninth Circuit's reasons for concluding that Machinists did not pre-empt §§ 16645.2 and 16645.7—(1) that AB 1889's spending restrictions apply only to the use of state funds, not to their receipt; (2) that Congress did not leave the zone of activity free from all regulation, in that the NLRB still regulates employer speech on the eve of union elections; and (3) that California modeled AB 1889 on federal statutes, e.g., the Workforce Investment Act—are not persuasive. Pp. 2414 – 2419.

463 F.3d 1076, reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which ROBERTS, C.J., and SCALIA, KENNEDY, SOUTER, THOMAS, and ALITO, JJ., joined. BREYER, J., filed a dissenting opinion, in which GINSBURG, J., joined, post, p. 2419.

Willis J. Goldsmith, New York, NY, for petitioners.

Thomas G. Hungar, for the United States as amicus curiae, by special leave of the Court, supporting the petitioners.

Michael Gottesman, for respondents.Robin S. Conrad, Shane Brennan, Washington, D.C., Of Counsel, Willis J. Goldsmith, Counsel of Record, Jones Day, New York, NY, Steven J. Law, Stephen A. Bokat, Office of Chief Legal Officer and General Counsel, U.S. Chamber of Commerce, Washington, D.C., Of Counsel, Michael A. Carvin, Noel J. Francisco, Luke A. Sobota, Jones Day, Washington, D.C., Bradley W. Kampas, Scott Oborne, Jackson Lewis LLP, San Francisco, CA, Of Counsel, for petitioners.Jonathan P. Hiatt, Washington, D.C., Stephen P. Berzon, Scott A. Kronland, Counsel of Record, Stacey M. Leyton, Altshuler Berzon LLP, San Francisco, CA, for Respondents American Federation of Labor and Congress of Industrial Organizations and California Labor Federation.Edmund G. Brown Jr., Attorney General of the State of California, Janet Gaard, Chief Assistant Attorney General, Manuel M. Medeiros, Solicitor General, Gordon Burns, Deputy Solicitor General, Louis Verdugo, Jr., Senior Assistant Attorney General, Richard T. Waldow, Supervising Deputy Attorney General, Angela Sierra, Supervising Deputy Attorney General, Counsel of Record, Los Angeles, CA, for the State Respondents.Justice STEVENS delivered the opinion of the Court.

A California statute known as “Assembly Bill 1889” (AB 1889) prohibits several classes of employers that receive state funds from using the funds “to assist, promote, or deter union organizing.” See Cal. Govt.Code Ann. §§ 16645–16649 (West Supp.2008). The question presented to us is whether two of its provisions— § 16645.2, applicable to grant recipients, and § 16645.7, applicable to private employers receiving more than $10,000 in program funds in any year—are pre-empted by federal law mandating that certain zones of labor activity be unregulated.

I

As set forth in the preamble, the State of California enacted AB 1889 for the following purpose:

“It is the policy of the state not to interfere with an employee's choice about whether to join or to be represented by a labor union. For this reason, the state should not subsidize efforts by an employer to assist, promote, or deter union organizing. It is the intent of the Legislature in enacting this act to prohibit an employer from using state funds and facilities for the purpose of influencing employees to support or oppose unionization and to prohibit an employer from seeking to influence employees to support or oppose unionization while those employees are performing work on a state contract.” 2000 Cal. Stats. ch. 872, § 1.

AB 1889 prohibits certain employers that receive state funds—whether by reimbursement, grant, contract, use of state property, or pursuant to a state program—from using such funds to “assist, promote, or deter union organizing.” See Cal. Govt.Code Ann. §§ 16645.1 to 16645.7. This prohibition encompasses “any attempt by an employer to influence the decision of its employees” regarding “[w]hether to support or oppose a labor organization” and “[w]hether to become a member of any labor organization.” § 16645(a). The statute specifies that the spending restriction applies to “any expense, including legal and consulting fees and salaries of supervisors and employees, incurred for ... an activity to assist, promote, or deter union organizing.” § 16646(a).

Despite the neutral statement of policy quoted above, AB 1889 expressly exempts “activit[ies] performed” or “expense[s] incurred” in connection with certain undertakings that promote unionization, including “[a]llowing a labor organization or its representatives access to the employer's facilities or property,” and “[n]egotiating, entering into, or carrying out a voluntary recognition agreement with a labor organization.” §§ 16647(b), (d).

To ensure compliance with the grant and program restrictions at issue in this case, AB 1889 establishes a formidable enforcement scheme. Covered employers must certify that no state funds will be used for prohibited expenditures; the employer must also maintain and provide upon request “records sufficient to show that no state funds were used for those expenditures.” §§ 16645.2 (c), 16645.7(b)-(c). If an employer commingles state and other funds, the statute presumes that any expenditures to assist, promote, or deter union organizing derive in part from state funds on a pro rata basis. § 16646(b). Violators are liable to the State for the amount of funds used for prohibited purposes plus a civil penalty equal to twice the amount of those funds. §§ 16645.2(d), 16645.7(d). Suspected violators may be sued by the state attorney general or any private taxpayer, and prevailing plaintiffs are “entitled to recover reasonable attorney's fees and costs.” § 16645.8(d).

II

In April 2002, several organizations whose members do business with the State of California (collectively, Chamber of Commerce), brought this action against the California Department of Health Services and appropriate state officials (collectively, the State) to enjoin enforcement of AB 1889. Two labor unions (collectively, AFL–CIO) intervened to defend the statute's validity.

The District Court granted partial summary judgment in favor of the Chamber of Commerce,¹ holding that the National Labor Relations Act (NLRA or Wagner Act), 49 Stat. 449, as amended, 29 U.S.C. § 151 et seq. pre-empts Cal. Govt.Code Ann. § 16645.2 (concerning grants) and § 16645.7 (concerning program funds) because those provisions “regulat[e] employer speech about union organizing under specified circumstances, even though Congress intended free debate.” Chamber of Commerce v. Lockyer, 225 F.Supp.2d 1199, 1205 (C.D.Cal.2002). The Court of Appeals for the Ninth Circuit, after twice affirming the District Court's judgment, granted rehearing en banc and reversed. See Chamber of Commerce v. Lockyer, 463 F.3d 1076, 1082 (2006). While the en banc majority agreed that California enacted §§ 16645.2 and ...