Decker Coal Co. v. Hartman

• Decision Date: 28 February 1989
• Docket Number: No. CV 87-304-BLG-JFB.,CV 87-304-BLG-JFB.
• Citation: 706 F. Supp. 745
• Parties: DECKER COAL COMPANY, a Joint Venture, Plaintiff, v. The Honorable Mary Margaret (Peg) HARTMAN, Commissioner of the Montana State Department of Labor and Industry, Defendant. United Mine Workers of America, Local Union No. 1972, representing 244 individual claimants, Intervenors.
• Court: U.S. District Court — District of Montana

706 F. Supp. 745

DECKER COAL COMPANY, a Joint Venture, Plaintiff, v. The Honorable Mary Margaret (Peg) HARTMAN, Commissioner of the Montana State Department of Labor and Industry, Defendant United Mine Workers of America, Local Union No. 1972, representing 244 individual claimants, Intervenors.

No. CV 87-304-BLG-JFB.

United States District Court, D. Montana, Billings Division.

September 30, 1988.

On Motion for Reconsideration February 28, 1989.

Paul D. Miller, Donna K. Davis, Holland & Hart, Billings, Mont., Jeffrey T. Johnson, Holland & Hart, Denver, Colo., for plaintiff.

Elizabeth L. Griffing, Dept. of Labor and Industry, Com'rs Office, Helena, Mont., for defendant.

Thomas E. Towe, Towe, Ball, Enright & Mackey, Billings, Mont., for intervenors.

MEMORANDUM OPINION AND ORDER

BATTIN, Chief Judge.

Presently pending before the Court is plaintiff's Motion for Judgment on the Pleadings. For the reasons stated below, plaintiff's motion is granted.

FACTS AND PROCEDURAL BACKGROUND

Plaintiff filed this action on December 3, 1987, seeking a declaratory ruling that Mont.Code Ann. § 39-51-2305(3) is unconstitutional, as preempted by the National Labor Relations Act, 29 U.S.C. § 151 et seq. (NLRA). The subsection in question allows a striking worker, ordinarily disqualified from receiving unemployment benefits under § 39-51-2305(1), to receive benefits when the Montana State Department of Labor and Industry finds that the labor dispute is caused by an employer's failure to conform to the provisions of federal or state labor law. Plaintiff contends that jurisdiction to make a determination of unfair labor practices by an employer rests solely in the National Labor Relations Board (NLRB) under the provisions of the NLRA. To the extent that the Montana standard for eligibility for benefits is based upon the making of such a determination by a state agency, it is preempted. The defendants, on the other hand, argue that the statute in question is valid since it does not regulate or prohibit any conduct which is within the sphere of the NLRA, but, instead, serves only as a criteria for determining eligibility.

This Court previously denied motions to dismiss filed by the defendant and intervening defendants and reserved ruling on plaintiff's Motion for Judgment on the Pleadings until such time as the pleadings were closed. See, Memorandum Opinion and Order of March 29, 1988. All necessary pleadings having been filed, and the issues having been fully briefed and argued, the Court is prepared to issue its ruling at this time.

DISCUSSION

As a preliminary matter, the Court considers it instructive to review the standards for grant or denial of a motion for judgment on the pleadings. To prevail, plaintiff must establish that "no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law." McGlinchy v. Shell Chemical Co., 845 F.2d 802 (9th Cir.1988) (citing Doleman v. Meiji Mutual Life Insurance Co., 727 F.2d 1480, 1482 (9th Cir.1984)). In this case, no material issues of disputed fact are raised by the pleadings. The legal issues involved are, therefore, appropriately addressed through the vehicle of a motion for judgment on the pleadings pursuant to Rule 12(c), Fed.R.Civ.P.

I. Preemption

In enacting the NLRA, Congress evidenced an intent that the regulation of unfair labor practices in this nation be entrusted exclusively to the NLRB, "a centralized administrative agency, armed with its own procedures, and equipped with its specialized knowledge and cumulative experience ..." San Diego Building Trades Council v. Garmon, 359 U.S. 236, 242, 79 S.Ct. 773, 778, 3 L.Ed.2d 775 (1959). Congress, in doing so, "largely displaced state regulation of industrial relations ... although some controversy continues over the Act's preemptive scope ..." Wisconsin Department of Industry v. Gould, 475 U.S. 282, 286, 106 S.Ct. 1057, 1061, 89 L.Ed.2d 223 (1986). It is, however, well established "that states may not regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits." Id. "That rule is designed to prevent `conflict in its broadest sense' with the `complex and interrelated federal scheme of law, remedy, and administration.'" Id. (citing Garmon, 359 U.S. at 243, 79 S.Ct. at 778).

Here, the Court is concerned with a statute which, on its face, does not attempt nor purport to regulate or prohibit activities governed by the NLRA. Cf., Gould, 475 U.S. 282, 106 S.Ct. 1057. Instead, the statute was apparently intended simply to serve as a standard for determining eligibility for state unemployment benefits. However, eligibility hinges upon a finding (by the state agency) that the employer has committed an unfair labor practice. Because such a finding has financial and other consequences to defendant, the Court must go beyond the express statutory language and consider whether the statute, in effect, accomplishes what the state cannot do directly—namely, the regulation or prohibition of conduct within the sphere of the NLRA.

Congressional purpose is "`the ultimate touchstone' of pre-emption analysis." Gould, 475 U.S. at 290, 106 S.Ct. at 1063 (quoting Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208, 105 S.Ct. 1904, 1909, 85 L.Ed.2d 206 (1985). One of Congress' primary goals, in passing the NLRA and vesting jurisdiction over labor disputes in the NLRB, was to "obtain uniform application of its substantive rules and to avoid the diversities and conflicts likely to result from a variety of local procedures and attitudes toward labor controversies ... A multiplicity of tribunals and a diversity of procedures are quite as apt to produce incompatible or conflicting adjudications as are different rules of substantive law." Garmon, 359 U.S. at 242-43, 79 S.Ct. at 778 (quoting Garner v. Teamsters Union, 346 U.S. 485, 490-91, 74 S.Ct. 161, 165-66, 98 L.Ed. 228). At the outset, it is obvious that any determination by the Montana State Department of Labor and Industry as to whether or not plaintiff has or has not engaged in unfair labor practices under § 8 of the NLRA would greatly infringe upon this purpose. Should the state agency reach a finding contrary to the NLRB's decision on the same matter, the uniformity and consistency of substantive labor law would be jeopardized, creating the exact sort of disparity which Congress sought to prevent. In this respect, the statute is defective.

Further, the Court agrees with plaintiff that although the statute may have been designed to function solely as an eligibility standard by drawing a distinction between workers voluntarily unemployed and those unemployed involuntarily through no fault of their own, the effect of the statute is to regulate or prohibit plaintiff's conduct. A finding by the agency that plaintiff did engage in unfair labor practices would result in certain consequences, financial and otherwise, to plaintiff. Plaintiff's contribution obligation to the state unemployment fund would increase, and subsequent activities would inevitably be colored by that finding. The Supreme Court has recognized that regulation of conduct "can be as effectively exerted through an award of damages as through some form of preventive relief", Garmon, 359 U.S. at 246-47, 79 S.Ct. at 780, and the Court believes that the same may be said in this case. The fact that any such regulation is indirect and consequential in nature, rather than intentional, does not lessen the regulatory effect.

In so deciding, the Court acknowledges the broad freedom generally accorded states to design and implement an unemployment compensation program reflecting their own policy choices. See, New York Telephone Co. v. New York Department of Labor, 440 U.S. 519, 537, 99 S.Ct. 1328, 1339, 59 L.Ed.2d 553 (1979). However, this freedom is not unlimited and must defer to the larger Congressional purpose behind the NLRA. The Court believes that the State of Montana exceeded its bounds by enacting legislation requiring state agency determination of a matter subject to the sole regulatory jurisdiction of the NLRB. Cf., id. As such, the statute must be declared unconstitutional.

This does not say that the commission of an unfair labor practice by an employer may not ever be used as a criteria for determining benefit eligibility. However, that determination must be made in the first instance by the NLRB, the federal agency entrusted by Congress with the sole jurisdiction to make such a finding.

II. Abstention

Defendants ask the Court to abstain from ruling in this action under the principles of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). Under Younger and its progeny, federal-court interference with ongoing state judicial proceedings is discouraged, absent extraordinary circumstances, based on "notions of comity and respect for state functions." Fresh International v. Agricultural Labor Relations Board, 805 F.2d 1353 (9th Cir.1986). Younger principles apply to pending state administrative proceedings where important state interests are involved. Ohio Civil Rights Commission v. Dayton Christian Schools, Inc., 477 U.S. 619, 106 S.Ct. 2718, 2723 and n. 2, 91 L.Ed. 2d 512 (1986).

The Supreme Court has established a three-part test for determining whether abstention in favor of a state proceeding is appropriate in a given situation. Abstention is proper if:

(1) the state proceedings are ongoing;

(2) the proceedings implicate important state interests; and

(3) the state proceedings provide an adequate opportunity to raise federal questions.

Fresh, 805 F.2d at 1358 (citing Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982). In this case, it is the second factor which is contested.

Defendants contend that the State of Montana has an important interest in enforcing its unemployment benefits law. Plaintiff, relying heavily on the Ninth Circuit's decision in Champion International...