Chamber of Commerce of U.S. v. Lockyer, 03-55166.
| Decision Date | 20 April 2004 |
| Docket Number | No. 03-55169.,No. 03-55166.,03-55166.,03-55169. |
| Parties | CHAMBER OF COMMERCE OF the UNITED STATES; California Chamber of Commerce; Employers Group; California Healthcare Association; California Manufacturers and Technology Association; California Association of Health Facilities; California Association of Home & Services for the Aging; Bettec Corporation; Marksherm Corporation; Zilaco Inc., Zilaco; Del Rio Healthcare, Inc.; Beverly Health & Rehabilitation Services, Inc. dba Beverly Manor Costa Mesa; Internext Group, Plaintiffs-Appellees, American Federation of Labor and Congress of Industrial Organizations, Plaintiff-Appellant, AFL-CIO & Wholesale Delivery Drivers; California Labor Federation, AFL-CIO, Intervenors-Appellants, v. Bill LOCKYER, Attorney General, in his capacity as Attorney General of the State of California; Department of Health Services; Frank G. Vanacore, as the Chief of the Audit Review and Analysis Section of the California Department of Health Services; Diana M. Bonta, Diana M. Bonta, R.N., Dr., P.h.D, as the Director of the California Department of Health Services, Defendants. Chamber of Commerce of the United States; California Chamber of Commerce; Employers Group; California Healthcare Association; California Manufacturers and Technology Association; California Association of Health Facilities; California Association of Home & Services for the Aging; Bettec Corporation; Marksherm Corporation; Zilaco Inc., Zilaco; Del Rio Healthcare, Inc.; Beverly Health & Rehabilitation Services, Inc. dba Beverly Manor Costa Mesa; Internext Group, Plaintiffs-Appellees, and AFL-CIO & Wholesale Delivery Drivers; California Labor Federation, AFL-CIO, Intervenors, v. Bill Lockyer, Attorney General, in his capacity as Attorney General of the State of California; Department of Health Services; Frank G. Vanacore, as the Chief of the Audit Review and Analysis Section of the California Department of Health Services; Diana M. Bonta, Diana M. Bonta, R.N., Dr., P.h.D, as the Director of the California Department of Health Services, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Suzanne M. Ambrose, Deputy Attorney General, Sacramento, CA, for the defendants-appellants.
Scott A. Kronland, Altshuler, Berzon, Nussbaum, Rubin & Demain, San Francisco, CA, and Jonathan P. Hiatt, Washington, D.C., for the intervenors-appellants.
Bradley W. Kampas, Jackson Lewis LLP, San Francisco, CA, Mark E. Reagan, Hooper, Lundy & Bookman, Inc., San Francisco, CA, and Stephen A. Bokat, National Chamber Litigation Center, Inc., Washington, D.C., for the plaintiffs-appellees.
Daniel V. Yager, McGuiness Norris & Williams, LLP, Washington, D.C., for the amicus curiae LPA, Inc., and Maurice Baskin, Washington, D.C., for the amicus curiae Associated Builders and Contractors, Inc.
John H. Ferguson, Associate General Counsel, National Labor Relations Board Division of Enforcement Litigation, Washington, D.C., for the amicus curiae National Labor Relations Board.
Appeal from the United States District Court for the Central District of California Gary L. Taylor, District Judge, Presiding. D.C. No. CV-02-00377-GLT.
Before: BEEZER and FISHER, Circuit Judges, and ENGLAND, JR., District Judge.*
This case presents a convergence of two important governmental interests: the ability of states to control the uses of state funds and the federal government's national labor policy, expressed through the National Labor Relations Act ("NLRA"). The question is whether these two interests conflict here, such that the NLRA overrides California's interest. Specifically, a California statute forbids employers who receive state grants or funds in excess of $10,000 from using such funding to advocate against or in favor of union organizing. We are constrained to conclude that California — acting as a regulator, not a proprietor in imposing these restrictions — has acted in such a way as to undermine federal labor policy by altering Congress' design for the collective bargaining process. Therefore, we hold that the California statute as written is preempted by the NLRA under Lodge 76, International Association of Machinists & Aerospace Workers v. Wisconsin Employment Relations Commission, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396 (1976) ("Machinists").
On September 28, 2000, California enacted Assembly Bill No. 1889, Cal. Gov't Code §§ 16645-49.1 The preamble of the statute declares:
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.
§ 16645, Historical and Statutory Notes, Section 1 of Stats.2000, c. 872.
Two provisions of the California statute are at issue on this appeal — sections 16645.2 and 16645.7. Section 16645.2(a) bars private employers who are "recipient[s] of a grant of state funds" from "us[ing] the funds to assist, promote, or deter union organizing." Section 16645.7(a) bars "[a] private employer receiving state funds in excess of [$10,000] in any calendar year on account of its participation in a state program" from using such funds "to assist, promote, or deter union organizing."
The phrase "assist, promote, or deter union organizing" includes § 16645(a)(1)-(2). The statute specifies as prohibited "any expense, including legal and consulting fees and salaries of supervisors and employees, incurred for research for, or preparation, planning, or coordination of, or carrying out, an activity to assist, promote, or deter union organizing." § 16646(a). Expressly exempted from the statute's reach are "activit[ies] performed" or "expense[s] incurred" in connection with, inter alia, "[a]ddressing a grievance or negotiating or administering a collective bargaining agreement" and "[n]egotiating, entering into, or carrying out a voluntary recognition agreement with a labor organization." § 16647(a), (d).
The statute requires employers covered by sections 16645.2 or 16645.7 to certify that no state funds will be used to assist, promote or deter union organizing. §§ 16645.2(c), 16645.7(b). The statute also requires employers who make expenditures to assist, promote or deter union organizing to maintain and provide upon request "records sufficient to show that state funds have not been used for those expenditures." §§ 16645.2(c), 16645.7(c).2 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. § 16646(b).
Employers who violate sections 16645.2 or 16645.7 are subject to fines and penalties, which include the return of the state funds used for the prohibited purposes and 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. § 16645.8(a)-(c). Prevailing plaintiffs, and prevailing taxpayer intervenors who make substantial contributions, are "entitled to recover reasonable attorney's fees and costs." § 16645.8(d).
In April 2002, plaintiffs-appellees (collectively the "Chamber of Commerce") brought an action for injunctive and declaratory relief challenging the statute on numerous grounds, including NLRA preemption. The AFL-CIO and others (collectively the "AFL-CIO") intervened. In May 2002, the Chamber of Commerce moved for summary judgment. Defendants, who are the California Department of Health Services and state officials sued in their official capacity (collectively "California"), filed motions for summary judgment in August 2002.
On September 16, 2002, the district court granted partial summary judgment in favor of the Chamber of Commerce, holding that the NLRA preempts sections 16645.2 and 16645.7 under the Supreme Court's Machinists decision, because they "regulate[] employer speech about union organizing under specified circumstances, even though Congress intended free debate." The district court entered judgment in January 2003. It also issued an injunction prohibiting California and the AFL-CIO from taking any actions to enforce sections 16645.2 and 16645.7 against any employer covered by the NLRA.
We review de novo both a district court's grant of summary judgment, Winterrowd v. American General Annuity Ins. Co., 321 F.3d 933, 937 (9th Cir.2003), and its preemption analysis, Ting v. AT & T, 319 F.3d 1126, 1135 (9th Cir.2003).
Before addressing the merits of the preemption issue, we first must decide whether California's conditioning the use of its funds constitutes "regulation." "A prerequisite to preemption [under the NLRA] is a finding that the state or local action in question constitutes regulation of labor relations between employers and employees." Alameda Newspapers, Inc. v. City of Oakland, 95 F.3d 1406, 1413 (9th Cir.1996). The NLRA "does not preempt actions taken by a state when it ... acts as a mere proprietor or market participant." Dillingham Constr. N.A.,...
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