Healthcare Ass'n of New York State, Inc. v. Pataki, Docket No. 05-2570-cv.

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Writing for the CourtJohn R. Gibson
PartiesHEALTHCARE ASSOCIATION OF NEW YORK STATE, INC., New York Association of Homes and Services for the Aging, Inc., New York State Health Facilities Association, Inc., NYSARC, Inc. and United Cerebral Palsy Associations of New York State, Inc., Plaintiffs-Appellees, v. George E. PATAKI, Governor of the State of New York, Eliot Spitzer, Attorney General of the State of New York and Linda Angello, Commissioner of Labor of the State of New York, Defendants-Appellants.
Decision Date05 December 2006
Docket NumberDocket No. 05-2570-cv.
471 F.3d 87
HEALTHCARE ASSOCIATION OF NEW YORK STATE, INC., New York Association of Homes and Services for the Aging, Inc., New York State Health Facilities Association, Inc., NYSARC, Inc. and United Cerebral Palsy Associations of New York State, Inc., Plaintiffs-Appellees,
v.
George E. PATAKI, Governor of the State of New York, Eliot Spitzer, Attorney General of the State of New York and Linda Angello, Commissioner of Labor of the State of New York, Defendants-Appellants.
Docket No. 05-2570-cv.
United States Court of Appeals, Second Circuit.
Argued: February 10, 2006.
Decided: December 5, 2006.

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Jeffrey J. Sherrin, Cornelius D. Murray, James A. Shannon, O'Connell and Aronowitz, P.C., for Plaintiffs-Appellees.

Eliot Spitzer, Attorney General of the State of New York, Michelle Aronowitz, Deputy Solicitor General, M. Patricia Smith, Assistant Attorney General in Charge of Labor Bureau, with Seth Kupferberg, Assistant Attorney General, of Counsel, for Defendants-Appellants.

Before: JACOBS, Chief Judge, WESLEY, and JOHN R. GIBSON,* Circuit Judges.

Judge WESLEY concurs in a separate opinion.

JOHN R. GIBSON, Circuit Judge.


George E. Pataki, Eliot Spitzer, and Linda Angello, respectively the Governor, Attorney General, and Labor Commissioner of the State of New York, appeal from the district court's grant of summary judgment

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to the plaintiff associations1 in this suit for declaratory and injunctive relief from enforcement of New York Labor Law § 211-a. Section 211-a restricts employers from spending monies derived from the State to hire employees or contractors to attempt to influence union organizing campaigns. The district court held that enforcement of section 211-a is preempted by the National Labor Relations Act, commonly known as the NLRA. We reverse the grant of summary judgment because we conclude that there are disputed issues of fact.

New York Labor Law § 211-a(2)2 provides: "[N]o monies appropriated by the

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state for any purpose shall be used or made available to employers" to use for three forbidden purposes:

(a) training managers, supervisors or other administrative personnel regarding methods to encourage or discourage union organization or participation in a union organizing drive;

(b) hiring attorneys, consultants or other contractors to encourage or discourage such organization or participation; and

(c) paying employees whose principal job duties are to encourage or discourage such organization or participation.

Subsection 1 of section 211-a memorializes the legislative finding that sound fiscal management requires the state to assure that funds appropriated for the purchase of goods and services are actually expended solely for those goods and services, rather than for the purpose of encouraging or discouraging union organization.

The accounting provision, section 211-a(3), requires "[a]ny employer that utilizes funds appropriated by the state" to maintain for three years financial records sufficient to show that the employer did not spend "state funds" for any of the three restricted purposes.

The enforcement provision, section 211-a(4), empowers the Attorney General of New York to sue for both injunctive relief and the return to the State of monies spent for the three restricted purposes. The Attorney General may also seek a civil penalty of up to $1000 for a first violation or, for a knowing violation or a second violation within two years, the greater of $1000 or three times the money spent in violation of subsection 2.3 New York Labor Law § 213 provides that any person who violates any provision of the labor law is guilty of a misdemeanor; however, the State points out that because section 211-a itself prescribes only fines and no jail time, the offense is actually a non-criminal "violation," rather than a misdemeanor, notwithstanding this language in section 213. See N.Y. Penal Law § 55.10.3 ("Any offense defined outside this chapter which is not expressly designated a violation shall be deemed a violation if: (a) Notwithstanding any other designation specified in the law or ordinance defining it, a sentence to a term of imprisonment which is not in excess of fifteen days is provided therein, or the only sentence provided therein is a fine."); see People v. Star Supermarkets, Inc., 67 Misc.2d 483, 324 N.Y.S.2d 514, 516-17 (N.Y. Monroe County Ct.1971) (sabbath-breaking was a "violation," despite specific language in statute terming offense a misdemeanor), aff'd, 40 A.D.2d 946, 339 N.Y.S.2d 262 (N.Y.App.Div.1972).

Section 211-a(5) instructs the Commissioner of Labor to promulgate regulations describing the form and content of the financial records required, but the Commissioner has not yet done so.

The plaintiffs are various not-for-profit corporations or trade associations involved in providing healthcare or representing

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providers of healthcare. They allege that they or their members receive funds to pay for services rendered, including Medicaid payments, that have at one time been appropriated by New York. In addition to sales of services, they allege that they receive funds from New York to support services they provide, such as training residents and interns and charity health care. Medicaid and other governmental funds represent the great majority of the associations' or their members' income, in some cases making up 90 to 95% of their income.

They further allege that some of the associations are currently undergoing unionization drives or expect to undergo such campaigns in the near future. They allege that "Labor Law § 211-a will encourage union organizing campaigns against Plaintiff Associations because the statute impairs the ability of these employers to communicate with their own employees regarding the benefits and disadvantages of unionization."

The complaint alleges, "The prohibitions of New York Labor Law § 211-a apply to monies the ownership and control of which have already been transferred to the recipient." The associations contend that even after they or their members have provided a service and have been paid for it, the strictures of section 211-a follow the money and prevent the associations and their members from using their own money to communicate with their employees regarding whether it is desirable to unionize. They further allege that monies that they receive from local governments may be considered covered by section 211-a because the local governments received the money from the State: "[T]here is no limitation in the statute as to when in the funding `chain,' the funds cease to retain and lose their character as state-appropriated monies." They also allege that federal monies are disbursed through the State, so that federal monies are also covered by section 211-a. "It is, therefore, impossible to determine what funds, no matter how tenuously connected to state appropriations, are subject to the prohibitions of section 211-a."

They further allege that the State Attorney General has interpreted section 211-a to restrict their use of Medicaid funds, including the portion of such funds contributed by the federal government. According to the Amended Complaint, the State Attorney General has investigated one or more members of the plaintiff associations for their use of Medicaid funds to oppose unionization.

The associations allege that but for the prohibitions of section 211-a, they would spend proceeds derived from their dealings with the State to pay for the three kinds of expenses restricted by section 211-a.

The associations sought a declaration that section 211-a is preempted by the National Labor Relations Act (the "NLRA") and the Labor Management Relations Disclosure Act and that it violates their First Amendment and Due Process rights.

The three State officials (whom we will call collectively "the State") filed a Fed. R.Civ.P. 12(b)(6) motion to dismiss the complaint, and the associations filed a cross-motion for summary judgment. The State sought to convert its Rule 12(b)(6) motion to a motion for summary judgment, but because the district court viewed the issue as "predominately legal," the court treated both the associations' and the State's motions as motions for judgment on the pleadings, taking into account only those documents that would be considered on a Rule 12(b)(6) motion. Healthcare Ass'n of New York State, Inc. v. Pataki, 388 F.Supp.2d 6, 9 (N.D.N.Y.2005).

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The district court quite reasonably relied extensively on the Ninth Circuit's decision of a very similar case in Chamber of Commerce v. Lockyer, 364 F.3d 1154 (9th Cir.2004). After the district court's decision, the panel in Lockyer granted rehearing and issued a superseding opinion, 422 F.3d 973 (9th Cir.2005). The Ninth Circuit then vacated the panel opinion and granted rehearing en banc, 437 F.3d 890 (9th Cir.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 banc).

The district court held that section 211-a is preempted by the NLRA under the Machinists4 doctrine, under which state laws are preempted if they unsettle the balance of interests between employers, employees and unions established by the NLRA. 388 F.Supp.2d at 12. The district court held that the restrictions section 211-a places on an employer's ability to communicate distort the union organizing process instituted by the NLRA. Id. at 23. The court held that the threat of an enforcement proceeding by the Attorney General and of the penalties, including a fine of treble the amount wrongfully spent, would tie employers' hands during union-organizing campaigns, thus depriving employers of an economic weapon the NLRA reserved to them. Id. at 24. The record-keeping requirement was also sufficiently onerous to affect employers' ability to communicate as allowed by the NLRA. Id. The district court...

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    ...employers to present an alternative view andPage 14information that a union would not present." Healthcare Ass'n of N.Y. State v. Pataki, 471 F.3d 87, 98 (2d Cir. 2006).8 Although § 8(c) precludes the Board from finding noncoercive employer speech to be an unfair labor practice, or evidence......
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    ...Cir.2002) (employer has no legal standing to assert Section 7 rights belonging to its employees); Healthcare Assoc. of New York v. Pataki, 471 F.3d 87, 97 (2d Cir.2006) (employers had no standing to assert rights arising under Section 7 because such rights belonged to employees alone); Bran......
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50 cases
  • U.S. v. Amerson, Docket No. 05-1423-cr.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • April 4, 2007
    ...has been upheld. Under the circumstances, the reasonableness balance can only come out one way. See Nicholas, 430 F.3d at 670; Cassidy, 471 F.3d at 87. CONCLUSION Taking and storing samples of DNA under the restrictions of the DNA Act fulfills many important governmental interests, only som......
  • Frohnapfel v. Arcelormittal Weirton LLC, Civil Action No. 5:14–CV–45.
    • United States
    • United States District Courts. 4th Circuit. Northern District of West Virginia
    • April 22, 2015
    ...245, 79 S.Ct. 773. Garmon preemption presents an issue of law which we review de novo. See Healthcare Ass'n of N.Y. State, Inc. v. Pataki, 471 F.3d 87, 94 (2d Cir.2006). We “begin by identifying whether any specific provision of sections 7 or 8 of the NLRA actually or arguably prohibits or ......
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    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • May 7, 2013
    ...employers to present an alternative view andPage 14information that a union would not present." Healthcare Ass'n of N.Y. State v. Pataki, 471 F.3d 87, 98 (2d Cir. 2006).8 Although § 8(c) precludes the Board from finding noncoercive employer speech to be an unfair labor practice, or evidence......
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    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • March 27, 2014
    ...Cir.2002) (employer has no legal standing to assert Section 7 rights belonging to its employees); Healthcare Assoc. of New York v. Pataki, 471 F.3d 87, 97 (2d Cir.2006) (employers had no standing to assert rights arising under Section 7 because such rights belonged to employees alone); Bran......
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