Chamber of Commerce of U.S. v. Lockyer, No. 03-55166.

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtFisher
Citation463 F.3d 1076
Decision Date21 September 2006
Docket NumberNo. 03-55166.,No. 03-55169.
PartiesCHAMBER OF COMMERCE OF the UNITED STATES; California Chamber of Commerce; Employers Group; California Healthcare Association; California Manufacturers and Technology Assn.; 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, California Labor Federation, AFL-CIO; American Federation of Labor and Congress of Industrial Organizations, 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, R.N., Dr., Ph.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 Assn.; 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 California Labor Federation, AFL-CIO; American Federation of Labor and Congress of Industrial Organizations, 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, R.N., Dr., Ph.D, as the Director of the California Department of Health Services, Defendants-Appellants.
463 F.3d 1076
CHAMBER OF COMMERCE OF the UNITED STATES; California Chamber of Commerce; Employers Group; California Healthcare Association; California Manufacturers and Technology Assn.; 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,
California Labor Federation, AFL-CIO; American Federation of Labor and Congress of Industrial Organizations, 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, R.N., Dr., Ph.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 Assn.; 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
California Labor Federation, AFL-CIO; American Federation of Labor and Congress of Industrial Organizations, 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,

Page 1077

as the Chief of the Audit Review and Analysis Section of the California Department of Health Services; Diana M. Bonta, R.N., Dr., Ph.D, as the Director of the California Department of Health Services, Defendants-Appellants.
No. 03-55166.
No. 03-55169.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted March 21, 2006.
Filed September 21, 2006.

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COPYRIGHT MATERIAL OMITTED

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Bill Lockyer, Tom Greene, Richard T. Waldow, Angela Sierra (argued), Sacramento, CA, for the defendants-appellants.

Stephen P. Berzon, Scott A. Kronland (argued), Stacey M. Leyton, Altshuler, Berzon, Nussbaum, Rubin & Demain, San Francisco, CA, for the intervenors-appellants.

Bradley W. Kampas (argued), D. Gregory Valenza, Scott Oborne, Jackson Lewis LLP, San Francisco, CA, for the plaintiffs-appellees.

John H. Ferguson, Division of Enforcement Litigation, Washington, DC, for amicus curiae National Labor Relations Board.

Daniel V. Yager, McGuiness Norris & Williams, LLP, Washington, DC, for amici curiae Associated Builders and Contractors, Inc. and LPA, Inc.

Fran M. Layton, Shute, Mihaly & Weinberger LLP, San Francisco, CA, for amicus curiae South Coast Air Quality Management District.

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 MARY M. SCHROEDER, Chief Judge, STEPHEN REINHARDT, ROBERT R. BEEZER, ALEX KOZINSKI, ANDREW J. KLEINFELD, HAWKINS, SIDNEY R. THOMAS, BARRY G. SILVERMAN, M.

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MARGARET McKEOWN, KIM McLANE WARDLAW, RAYMOND C. FISHER, RICHARD A. PAEZ, JOHNNIE B. RAWLINSON, RICHARD R. CLIFTON and CONSUELO M. CALLAHAN, Circuit Judges.

Opinion by Judge FISHER; Dissent by Judge BEEZER.

FISHER, Circuit Judge.


The question before us is whether a state's exercise of its sovereign power to control the use of its funds conflicts with national labor policy as expressed in the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151-169. Specifically, two provisions in a California statute forbid employers who receive state grant or program funds in excess of $10,000 from using those funds to assist, promote or deter union organizing. We hold that California's grant and program fund restrictions do not undermine federal labor policy, are not pre-empted by the NLRA and do not violate the First Amendment.

FACTUAL BACKGROUND

On September 28, 2000, California enacted Assembly Bill No. 1889, Cal. Gov't Code §§ 16645-16649 (collectively, "AB 1889"). 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, sections 16645.2 and 16645.7, are at issue in this appeal.1 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 program funds "to assist, promote, or deter union organizing." The phrase "assist, promote, or deter union organizing" includes "any attempt by an employer to influence the decision of its employees in this state or those of its subcontractors regarding . . . [w]hether to support or oppose a labor organization that represents or seeks to represent those employees . . . . [or] [w]hether to become a member of any labor organization." § 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 "[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

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that no state funds will be used to assist, promote or deter union organizing. §§ 16645.2(c), 16645.7(b). It 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 disgorgement of the state funds used for the prohibited purposes and a civil penalty paid to the state that is 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 by any private taxpayer. § 16645.8(a)-(c). Prevailing plaintiffs, and prevailing taxpayer intervenors who make substantial contributions to an action under this section, are "entitled to recover reasonable attorney's fees and costs."3 § 16645.8(d).

In April 2002, plaintiffs-appellees (collectively, the "Chamber of Commerce") brought an action for injunctive and declaratory relief challenging the statute facially 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 cross 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. The district court determined that the NLRA preempted sections 16645.2 and 16645.7 under the Supreme Court's Machinists doctrine because the provisions "regulate[d] 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);

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see Lodge 76, Int'l Ass'n of Machinists v. Wisc. Employment Relations Comm'n, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396 (1976). The district court entered judgment in January 2003 and issued an injunction prohibiting California and the AFL-CIO from taking any actions to enforce sections 16645.2 and 16645.7 against any employer subject to the NLRA. California and the AFL-CIO appealed.

A three-judge panel of our court affirmed the district court, but the panel then withdrew its opinion upon the grant of appellants' petition for panel rehearing. Chamber of Commerce v. Lockyer, 364 F.3d 1154 (9th Cir.2004), withdrawn and reh'g granted, 408 F.3d 590 (9th Cir.2005). On rehearing, a divided panel issued a second opinion, Chamber of Commerce v. Lockyer, 422 F.3d 973 (9th Cir.2005), which was in turn vacated and withdrawn from publication for reconsideration en banc. See Chamber of Commerce v. Lockyer, 435 F.3d 999 (9th Cir.2006); Chamber of Commerce v. Lockyer, 437 F.3d 890 (9th Cir.2006). We now reverse the district court's judgment that the NLRA preempts the California statute and vacate the court's injunctive order.

STANDARD OF REVIEW

We review de novo a district court's grant of...

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19 practice notes
  • Pocatello Educ. Ass'n v. Heideman, No. 06-35004.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • October 5, 2007
    ...that case by granting to qualifying organizations the amount of income taxes they would otherwise owe); Chamber of Commerce v. Lockyer, 463 F.3d 1076, 1080, 1096-97 (9th Cir.2006) (en banc) (California law prohibiting the use of state grant and program funds on activities related to union o......
  • Healthcare Ass'n of New York State, Inc. v. Pataki, Docket No. 05-2570-cv.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 5, 2006
    ...and has just recently decided that the California statute at issue is not preempted by federal labor law. Chamber of Commerce v. Lockyer, 463 F.3d 1076 (9th Cir.2006) (en The district court held that section 211-a is preempted by the NLRA under the Machinists4 doctrine, under which state la......
  • Chamber of Commerce of the United States v. Brown, No. 06–939.
    • United States
    • United States Supreme Court
    • June 19, 2008
    ...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,......
  • Engine Mfrs. Assn v. Scaqmd, No. 05-56654.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 20, 2007
    ...We review de novo the district court's grant of summary judgment, including its preemption analysis. See Chamber of Commerce v. Lockyer, 463 F.3d 1076, 1082 (9th Cir.2006) (en banc). We affirm the district court in part, reverse in part, and remand for further I. Background The Basin is the......
  • Request a trial to view additional results
19 cases
  • Pocatello Educ. Ass'n v. Heideman, No. 06-35004.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • October 5, 2007
    ...that case by granting to qualifying organizations the amount of income taxes they would otherwise owe); Chamber of Commerce v. Lockyer, 463 F.3d 1076, 1080, 1096-97 (9th Cir.2006) (en banc) (California law prohibiting the use of state grant and program funds on activities related to union o......
  • Healthcare Ass'n of New York State, Inc. v. Pataki, Docket No. 05-2570-cv.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 5, 2006
    ...and has just recently decided that the California statute at issue is not preempted by federal labor law. Chamber of Commerce v. Lockyer, 463 F.3d 1076 (9th Cir.2006) (en The district court held that section 211-a is preempted by the NLRA under the Machinists4 doctrine, under which state la......
  • Chamber of Commerce of the United States v. Brown, No. 06–939.
    • United States
    • United States Supreme Court
    • June 19, 2008
    ...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,......
  • Engine Mfrs. Assn v. Scaqmd, No. 05-56654.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 20, 2007
    ...We review de novo the district court's grant of summary judgment, including its preemption analysis. See Chamber of Commerce v. Lockyer, 463 F.3d 1076, 1082 (9th Cir.2006) (en banc). We affirm the district court in part, reverse in part, and remand for further I. Background The Basin is the......
  • Request a trial to view additional results

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