Gould, Inc. v. Wisconsin Dept. of Industry, Labor and Human Relations

• Citation: 750 F.2d 608
• Decision Date: 13 December 1984
• Docket Number: Nos. 84-1115,84-2075,s. 84-1115
• Parties: 117 L.R.R.M. (BNA) 3337, 53 USLW 2325, 102 Lab.Cas. P 11,298 GOULD, INC., Plaintiff-Appellee, v. WISCONSIN DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, et al., Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 608

750 F.2d 608

117 L.R.R.M. (BNA) 3337, 53 USLW 2325,

102 Lab.Cas. P 11,298

GOULD, INC., Plaintiff-Appellee,

v.

WISCONSIN DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS,

et al., Defendants-Appellants.

Nos. 84-1115, 84-2075.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 17, 1984.

Decided Dec. 13, 1984.

Columbus R. Gangemi, Jr., Winston & Strawn, Chicago, Ill., for plaintiff-appellee.

Charles D. Hoornstra, Asst. Atty. Gen., Wis. Dept. of Justice, Madison, Wis., for defendants-appellants.

Before CUMMINGS, Chief Judge, WOOD, Circuit Judge, and FAIRCHILD, Senior Circuit Judge.

CUMMINGS, Chief Judge.

Gould, Inc. ("Gould") filed suit in the Western District of Wisconsin challenging the constitutionality of Wis.Stat. Secs. 16.75(8), 101.245 (1981), which blacklist labor law violators. Both parties filed motions for summary judgment. The district court granted Gould's summary judgment motion, holding that the National Labor Relations Act, 29 U.S.C. Sec. 151 et seq. (the "NLRA"), preempted the state statutes. In a later hearing, the district court awarded Gould attorneys' fees under 42 U.S.C. Sec. 1988. The individual defendants appeal both decisions of the district court. ¹ We affirm the lower court's grant of summary judgment but reverse as to attorneys' fees.

I

No genuine issues of material fact are in controversy. The parties dispute only the district court's legal conclusions set out in the opinion below, Gould, Inc. v. Wisconsin Department of Industry, Labor and Human Relations, 576 F.Supp. 1290 (W.D.Wis.1983). Section 101.245 of the Wisconsin Statutes provides:

(1) The [Department of Industry, Labor and Human Relations] shall maintain a list of persons or firms that have been found by the national labor relations board, and by 3 different final decisions of a federal court within a 5-year period * * *, if the final decisions involved a cumulative finding of at least 3 separate violations, to have violated the national labor relations act, * * * and of persons or firms that have been found to be in contempt of court for failure to correct a violation of the national labor relations act on 3 or more occasions by a court within a 5-year period * * * if the 3 contempt findings involved a cumulative total of at least 3 different violations.

* * *

* * *

(4) A name shall remain on the list for 3 years. ²

Wis.Stat. Sec. 101.245 (1981).

This list is known as the labor law violators' list. The real bite in the legislation appears in Section 16.75(8), which provides:

The department [of administration] shall not purchase any product known to be manufactured or sold by any person or firm included on the list of labor law violators compiled by the department of industry, labor and human relations under s. 101.245.

Wis.Stat. Sec. 16.75(8) (1981).

Gould is a Delaware corporation with its principal place of business in Illinois. In August 1982, two of its divisions had contracts to provide goods and services to Wisconsin in amounts in excess of $10,000 and expected to continue to bid on and be awarded contracts to provide goods and services exceeding $10,000. Wisconsin's Department of Industry, Labor and Human Relations placed Gould on the labor law violators' list in August 1982, thus under Section 101.245(4) barring Wisconsin from doing business with Gould for three years, until July 1, 1985. Defendant John Driscoll, on behalf of the Wisconsin Department of Administration, advised Gould that its existing contracts would be cancelled as soon as that could be done without penalty. The predicate for these actions was the enforcement of three separate National Labor Relations Board ("NLRB") decisions against various Gould divisions during the preceding five years. Gould no longer owned any of these divisions at the time of being placed on the labor law violators' list, and none of the cited divisions were located in Wisconsin. Gould claims that the two Wisconsin statutes violate the Supremacy Clause, Art. VI, of the Constitution, as well as the due process and equal protection clauses of the Fourteenth Amendment. The district court did not address the Fourteenth Amendment claims due to its disposition of the case on grounds of preemption. The court did, however, hold that Gould's Fourteenth Amendment claims were "sufficiently substantial to support federal jurisdiction and would justify an award of attorneys' fees, even though plaintiff prevailed on another claim [preemption]," citing Maher v. Gagne, 448 U.S. 122, 100 S.Ct. 2570, 65 L.Ed.2d 653. (Order of May 25, 1984.) We have jurisdiction pursuant to 28 U.S.C. Sec. 1291.

II

The difficulty in labor law preemption analysis is that "the aims and social policy" Congress was implementing "were drawn with broad strokes while the details had to be filled in, to no small extent, by the judicial process." San Diego Building Trades Council v. Garmon, 359 U.S. 236, 240, 79 S.Ct. 773, 777, 3 L.Ed.2d 775. Nonetheless, synthesis of the numerous decisions is possible. Garmon directs us to determine whether the activity the state would regulate is protected or prohibited by Sections 7 or 8 of the NLRA, or arguably so protected or prohibited. Id. at 244-245, 79 S.Ct. at 779-780. When Section 7 or 8 clearly covers the conduct in question, then the NLRA preempts any state action, because to "leave the States free to regulate conduct so plainly within the central aim of federal regulation involves too great a danger of conflict between power asserted by Congress and requirements imposed by state law." Id. at 244, 79 S.Ct. at 779.

Exceptions to this general rule do exist. Courts must make "a balanced inquiry into such factors as the nature of the federal and state interests in regulation and the potential for interference with federal regulation." Farmer v. United Brotherhood of Carpenters & Joiners of America, Local 25, 430 U.S. 290, 300, 97 S.Ct. 1056, 1063, 51 L.Ed.2d 338. State interests that are "a merely peripheral concern" of federal labor law override the federal interest. Garmon, 359 U.S. at 243, 79 S.Ct. at 778. Alternatively, state regulation may escape preemption by being directed at state "interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that Congress had deprived the States of the power to act." Id. at 244, 79 S.Ct. at 779. Examples of this type of permissible state regulation include permitting suits in state court for intentional infliction of emotional distress, Farmer, supra; for malicious libel, Linn v. United Plant Guard Workers, 383 U.S. 53, 86 S.Ct. and for mass picketing and threats of violence, Automobile Workers v. Russell, 356 U.S. 634, 78 S.Ct. 932, 2 L.Ed.2d 1030. ³

The defendants would circumvent this analysis by arguing that, because the Wisconsin legislation seeks to promote compliance with the NLRA and does not penalize conduct that the NLRA would protect, federal interests are not harmed. The defendants also contend that Wisconsin has a deeply rooted interest in compliance with the labor laws, so that its decision not to purchase goods and services from labor law violators should prevail over any possible impingement on the federal regulatory structure. We recognize that Wisconsin's decision to refuse all financial support and reward to those who repeatedly violate national laws reflects a laudable purpose of substantial importance to the people of Wisconsin. But we must balance Wisconsin's interest against the federal interests at stake and the statute's potential for interference with the federal regulatory scheme. Doing so demonstrates that the Wisconsin statutes are preempted.

The problem with the defendants' argument is that it ignores that the NLRA is designed to be a remedial, not a punitive statute. Once an employer or union rectifies its unlawful conduct and makes those harmed whole, for example by reinstating a wrongfully-discharged employee with back pay, federal sanctions cease. Basing a boycott on federal labor law violations, regardless of where the violations occurred and whether they have been rectified, clearly interferes with the federal scheme. ⁴

The problem can be stated in another way. The Wisconsin legislation seeks to prohibit activity also prohibited by the NLRA. Garmon, supra, teaches that state regulation of both activity protected and prohibited by the NLRA is preempted. Defendants would limit Garmon and its progeny to those situations in which a state is attempting to prohibit activity protected by the NLRA. Nonetheless, the cases will not withstand such factual distinctions. The Court clearly stated in Garmon that its rule applied without distinction to a state's attempt to regulate either protected or prohibited activity. The majority emphasized that they necessarily were "concerned with the potential conflict of two law-enforcing authorities, with the disharmonies inherent in two systems, one federal the other state, of inconsistent standards of substantive law and differing remedial schemes." Garmon, 359 U.S. at 242, 79 S.Ct. at 778. Indeed the NLRA was enacted to remedy the varying attitudes of the states toward labor law. Garner v. Teamsters Union, 346 U.S. 485, 490, 74 S.Ct. 161, 165, 98 L.Ed. 228. ⁵ The defendants cannot argue that the Wisconsin statutes are saved from any such conflict between remedial schemes by their addressing the problem of recidivism instead of specific instances of labor law violations. ⁶ While recidivism is conduct that the NLRA has chosen not to prohibit directly, Congress' failure to do so does not necessarily imply that the remedy is thereby left to the states. ⁷

The possibility of other states' adopting Wisconsin's general scheme supports our holding of preemption. The spectre of different states' imposing boycotts for various lengths of time, based on various numbers and types of NLRA violations, is sufficiently real to decline to uphold the Wisconsin legisl...