Chamber of Commerce of the United States v. Lockyer

SCHROEDER, Before MARY M. Chief Judge, REINHARDT, STEPHEN BEEZER, R. ROBERT ALEX KOZINSKI, KLEINFELD, ANDREW J. HAWKINS, THOMAS, R. SIDNEY SILVERMAN, BARRY G. M. McKEOWN, oppose port KIM unionization while those MARGARET on WARDLAW, performing are work RAYMOND C. McLANE PAEZ, FISHER, state contract. RICHARD A. RAWLINSON, RICHARD B.

JOHNNIE Notes, Statutory Historical and M. R. CLIFTON CONSUELO Stats.2000, c. Section 1 of CALLAHAN, Judges. Circuit statute, provisions Two of the California 16645.7, sections 16645.2 and issue FISHER; Opinion by Judge Dissent 16645.2(a) appeal.1 this bars Section Judge BEEZER. private employers “recipients] who are FISHER, Judge. Circuit “us[ing] of state funds” from assist, promote, funds deter question before us is whether 16645.7(a) organizing.” bars “[a] Section sovereign power of its state’s exercise private employer receiving funds in of its funds control the use conflicts [$10,000] year excess of calendar in the policy expressed national participation account of its in a state (“NLRA”), Act National Relations Labor gram” using program funds “to as- Specifically, §§ two 29 U.S.C. 151-169. sist, promote, organizing.” or deter union provisions in a California statute forbid “assist, phrase promote, or deter un- The employers grant receive state or who attempt ion organizing” “any by includes $10,000 using in from gram funds excess an to employer influence decision of its assist, promote those funds to or deter state or those of employees this organizing. union hold that We Califor- ... regarding subcontractors to [w]hether program nia’s fund and restrictions support oppose organization or a labor not policy, do undermine federal labor are to represents represent or seeks those and pre-empted the NLRA do not .... employees to become a [or][w]hether violate the First Amendment. any organization.” member FACTUAL BACKGROUND 16645(a)(l)-(2). § specifies The statute as “any prohibited expense, including legal 28, 2000, September On California enact- consulting supervi- and fees and salaries of Assembly ed Bill No. Cal. Gov’t Code employees, sors and incurred for research 1889”). §§ “AB (collectively, 16645-16649 for, preparation, planning, or or coordina- preamble The of the statute declares: out, of, carrying activity tion or an It is policy the state to inter- assist, promote, organiz- or deter union an employee’s fere with choice about 16646(a). ing.” exempted § Expressly join represented by whether to or to be from the statute’s reach are “activities] reason, For labor union. this the state performed” or “expense[s] incurred” in should not subsidize efforts an em- “[a]ddressing grievance connection with assist, ployer promote, or deter union or negotiating administering or a collective organizing. Legis- It is intent of the agreement” and bargaining “[negotiating, enacting prohibit lature in act to an this into, carrying entering voluntary or out a employer from state and using funds recognition agreement organi- with a labor influencing for the purpose facilities (d). 16647(a), § zation.” employees support oppose or union- ization employer employers and to prohibit requires The covered seeking sup- to influence or to certify sections 16645.2 16645.7 parties stipulated appellate prompt 1. The to the district court's review of the district court's entry partial judgment preemp- preemption ruling regarding final these two sec- § only. § tion of 16645.2 and 16645.7 to facilitate tions assist, attorney’s no state funds used to recover reasonable fees will and 16645.8(d). § costs.”3 organizing. deter promote 16645.7(b). 16645.2(c), It requires §§ also (collec- April plaintiffs-appellees expenditures who to as- make Commerce”) tively, “Chamber sist, promote organizing or deter union to brought injunctive an action for and de- provide request “rec- upon maintain claratory challenging relief the statute fa- that state cially grounds, ords sufficient to show funds on numerous including NLRA expendi- preemption. not been used for those AFL-CIO have “AFL-CIO”) 16645.7(c).2 (collectively, others 16645.2(c), inter- §§ If an tures.” In May vened. the Chamber of commingles other summary judgment. Commerce moved for funds, presumes the statute ex- Defendants, who are California De- assist, or deter un- penditures promote of Health partment Services and state offi- part organizing ion derive in from state (collec- capacity cials sued in their official 16646(b). funds. tively, “California”), filed cross motions for Employers who violate sections 16645.2 summary judgment August subject 16645.7 fines penal- September On the district ties, disgorgement include the partial summary judgment court granted prohibited pur- funds used for the favor of the Chamber of Commerce. paid and a civil to the state poses penalty The district court determined that equal amount of that is to twice the those NLRA 16645.2 sections 16645.7(d). 16645.2(d), §§ Suspect- funds. 16645.7 under the Court’s Ma- may ed violators be sued the state provisions chinists because the doctrine Attorney any private General or tax- “regulate[d] employer speech about union 16645.8(a)-(e). § Prevailing plain- payer. circumstances, organizing specified under tiffs, and prevailing taxpayer intervenors though Congress even intended free de- make substantial contributions to an Lockyer, who Chamber v. bate.” Commerce of section, (C.D.Cal.2002); are 225 F.Supp.2d action under this “entitled to 1205 controls,” any Despite finding by accounting procedures impose and 2. the absence of 16645.2(c) § district court that and greater no burden than numerous other com- onerous, 16645.7(c) § the dissent insists grant "appear mon fact restrictions and in provisions these that entail “burdensome and significantly less burdensome than the de- record-keeping,” impose "seemingly detailed requirements grant recipi- tailed for federal impossible compliance burdens” and are ents. ...” (Dissent 1103.) "daunting.” The suggests provisions even that these dissent significant The dissent that the finds it stat- require create "an and main- [to] private taxpayers suspected ute allows to sue completely separate accounting tain two and (Dissent 1102.) respect, In this violators. (Dissent 1103.) systems.” payroll any the statute is no different from number of statute, however, require "employers does not qui other federal and state laws tarn causes form,” any particular to maintain records in private attorneys general help that enable design employers § and leaves free to detect, punish wrongdoing. deter and systems accounting payroll their and however § (e.g., 4 contrast to some such statutes wish, they they provided only have "rec- Act, 15), §. Clayton 15 U.S.C. which encour- sufficient to state funds have ords show that age private plaintiffs by permitting to be suits assist, promote not been used” to or deter damages, AB 1889 awarded treble allows 16645.7(c). 16645.2(c), organizing. §§ More- over, private litigants attorney’s to recover fees and only expert testimony in the record damages go to the state. provisions they costs—the See provide these states 16645.8(d). employers "flexibility establishing proper 1082 Sullivan, 173, 183, 111 Ass’n Machinists v. 500 U.S. Lodge Int’l

see of (internal (1991) Comm’n, quotation Relations Employment Wisc. omitted). and 49 L.Ed.2d 396 marks citation judg court entered The district DISCUSSION in 2003 January and issued ment and junction prohibiting California Participant Exception I. Market to en taking actions AEL-CIO from pre- addressing Before the merits of against sections 16645.2 16645.7 force issue, we must first decide wheth- emption Cali any employer subject the NLRA. of er California’s condition on the use its appealed. AFL-CIO fornia “regulation.” “A prereq- funds constitutes of court af three-judge panel A our pre-emption [under NLRA] uisite to court, panel but firmed district finding state or action in a that the local opinion upon then withdrew regulation of labor re- question constitutes panel rehearing. for appellants’ petition of employ- lations between Lockyer, v. Chamber Commerce Newspapers, Inc. v. City ees.” Alameda (9th Cir.2004), withdrawn and F.3d (9th Oakland, 95 F.3d Cir. Cir.2005). (9th reh’g granted, 408 F.3d 590 1996). “does preempt The NLRA ac- panel issued a rehearing, On divided ... acts as tions taken a state when it opinion, second Chamber Commerce proprietor mere participant.” market (9th Cir.2005), Lockyer, F.3d N.A., Dillingham County Constr. Inc. v. vacated withdrawn which was in turn (9th Sonoma, F.3d Cir. en publication reconsideration 1999) (citing Bldg. & Constr. Trades Coun- v. Lock See Chamber Commerce banc. cil the Metro. Dist. Associated Build- (9th Cir.2006); Chamber yer, 435 F.3d 999 Mass./R.I., Inc., ers & Contractors (9th Lockyer, F.3d 890 Commerce v. 122 L.Ed.2d Cir.2006). now the district We reverse (1993) (“Boston Harbor”)). We con- judgment preempts that the court’s NLRA regu- has clude acted as California and vacate the California enacting lator 16645.2 sections injunctive court’s order. 16645.7, participant and that market exception apply. does STANDARD OF REVIEW Two Court cases define the de a district We review novo scope exception: market participant summary judgment court’s Industry Department Wisconsin analysis. See Winterrowd Inc., Gould 475 U.S. Co., Ins. Annuity Am. Gen. 321 F.3d (1986), Harbor, L.Ed.2d and Boston (9th T, Cir.2003); Ting v. AT & 319 218, 113 Gould, S.Ct. 1190.4 (9th Cir.2003). “A F.3d facial the Court addressed a Wisconsin ... challenge legislative to a Act is procurement agents forbade state challenge difficult success most mount using prod funds to purchase fully, challenger since the must establish ucts manufactured or sold “labor that no set circumstances exists under law violators,” i.e., had which the Act would be valid.” Rust v. who violated (9th Cir.1992) age, 4. Our discussion here limited to context 952 F.2d 1177-79 exception participant exception (discussing participant of the market under the market context). participant exception A We NLRA. market exists the dormant Commerce Clause contexts, opine applicability a do not on the of our rea- in number of other such as cases See, soning exception e.g., Big participant under the Commerce Clause. the market Foods, Countiy v. Bd. Anchor- these contexts. Inc. other of Educ. of five-year three within a effectively possible the NLRA times as at the lowest cost.” 283-84, 106 Id. period. S.Ct. 1057. The Court also noted that “the chal- lenged conceded that it did not action in litigation Wisconsin have this specifi- was cally power doing particular to “bar its residents from tailored to one job, the Boston repeat cleanup project,” business with violators of Harbor and that there was no NLRA.” Id. at It reason to S.Ct. 1057. believe that however, government argued, statutory that its was motivated anything scheme purely other than proprietary was not unlawful because the statute interests. Id. merely regulated spending power of its

procurement officers. Id. The Court applied We have these cases in a found this to be a “distinction without a number of contexts without formulating a difference” because the Wisconsin statute general rule about when the market partic plainly as a means of enforcing “serve[d] ipant exception applies. We have held “concede[d], the NLRA.” Id. Wisconsin that the market participant exception did must, thought] Court it point [the apply to a California law that permit statute is to deter labor [its] law viola ted in state-approved appren fidelity tions and to reward to the law.” ticeship programs to receive than less (internal omitted). quotation Id. marks prevailing wage, required but employees in emphasized “rigid The Court un non-approved apprenticeship programs to discriminating manner in which the statute prevailing receive the wage. Dillingham, operate[d],” and concluded that other “[n]o 190 F.3d at (noting ap 1037-38 that the purpose credibly could be ascribed” to the prenticeship standards were not “based statute than creating remedy an additional upon unique needs that the ... project for violations of the NLRA. Id. at 106 presented” and that the state was not mo by “management tivated concerns” in im Harbor, hand, In Boston on the other standards). plementing the On the other the Court held that the Massachusetts Wa- hand, we have applied exception ter Authority, agency, Resources a state City held that the of Oakland was a mar participant acted as market it when re- ket participant when it newspa canceled a quired working contractors cleanup per subscription and refused to continue to of Boston agree Harbor to to the terms pay advertising during dispute. labor a project agreement negotiated by Newspapers, Alameda 95 F.3d at 1415-16. project manager construction and a labor And we that a city may require have held union. 507 U.S. at 113 S.Ct. 1190. private contractors to adhere to the terms The Court concluded that there was “no bargaining of a collective agreement when question that agency] but state [the was doing city. business with- the Associated attempting project Contractors, to ensure an efficient City Builders & Inc. v. of Seward, (9th Cir.1992).5 that completed quickly would be as 966 F.2d Seward, City which was decided may offending before and that “a State act without of Harbor, Boston creates some confusion about pre-emption principles the of the NLRA when participant excep- the relation of the market proprietor.” it acts as a 507 U.S. at tion to other NLRA doctrines. 229-30, Harbor, 113 S.Ct. 1190. Boston City Seward concluded that “action taken therefore, of clear that a ac- makes once state’s by participant the state as a market is not participant” tion falls the within "market ex- automatically preemp- immune from NLRA ception, it is not under the NLRA. Harbor, tion.” 966 F.2d at 495. Boston how- City To the extent Seward states other- of ever, explicitly preemp- held that the "[NLRA] wise, we hold it overruled. apply regulation,” tion doctrines to state in the a vate often enter into teach that when cases

These field). manner power in a spending question, state uses its construction second essentially proprietary, not is of scope expendi- which at the looks apply exception will not participant market ture, protects spending narrow decisions may subject to action be and the state necessarily that do reflect a state’s not upon We preemption. NLRA draw procurement of interest in the efficient Circuit, Fifth asks reasoning of services, but that also lack the goods or to when questions two determine discrete See, regulation. of social effect broader applies: participant exception the market Newspapers, e.g., Alameda 95 F.3d First, challenged action essen does the a question sep- 1417-18. Each constitutes entity’s own interest tially reflect determining arate method of whether needed procurement of its efficient actually state action at issue constitutes services, by as goods measured satisfy a need regulation, and state not typical with the behavior comparison questions to act as a both be deemed to in similar circumstances? private parties market participant. Second, narrow scope does Here, we conclude that sections defeat inference challenged action an and are regulatory 16645.2and 16645.7 encourage was a primary goal that its to protected by market participant rather than a general policy address exception. on its specific problem? Both The statute face does not proprietary a questions gov to seek isolate class purport to reflect California’s interest market ernment interactions procurement goods the efficient and ser focused, narrowly and so that are so vices, measured the similar behavior ordinary with the behavior keeping Rather, private parties. the statute’s im regulatory private parties, preamble legislation’s makes clear that the pulse safely can ruled out. purpose prevent to “state funds and is Towing Repair, & Auto Inc. Cardinal being from used an facilities” subsidize (5th City F.3d Bedford, 180 employer’s attempt employee influence Cir.1999). join a choice union. about whether See to the question, The first which looks Notes, Statutory Historical expenditure, protects com nature of the (“It Stats.2000, c. 872 Section 1 of is the prehensive policies applica with wide an policy of the state not interfere with type tion so preemption, long as the employee’s join whether choice about essentially is proprietary. state action to be a labor For represented union. See, Chapter N. Ill. e.g., Associated reason, this should not subsidize Contractors, Lavin, Inc. Builders & assist, promote, efforts (state (7th Cir.2005) F.3d law organizing.”). or deter union grants of state for the requiring recipients Nor do sections 16645.2 and 16645.7 plants of renewable-fuel construction scope have narrow other element project agreement enter was into indicating that the statute unrelated to preempted, where condition was contrary, To the regulation. broader by the state project limited to the financed by design sweeps broadly, applying Dep’t, grant); Bldg. & Constr. Trades accept to all California who 28, Allbaugh, 295 F.3d 34-36 AFL-CIO any program in excess grant state funds (D.C.Cir.2002) (executive applying order $10,000. 16645.2, §§ of 16645.7. It re- federally projects all funded construction quires any accepts business was where order con pre-empted, agreement program funds excess of project pri- cerned a $10,000 to maintain records sufficient to consin Employment Relations Commis- sion, 132, show that these funds were not used to 427 U.S. 96 S.Ct.

assist, promote organizing. (1976), or deter It Id. L.Ed.2d 396 and Garmon preemp- provision tion, penalties contains for civil set forth in Diego San Building permits private parties Garmon, to file civil actions Trades Council v. 359 U.S. against employers (1959). who violate the statute. 79 S.Ct. 3 L.Ed.2d 775 We scope 16645.8. The statute’s indicates hold that sections 16645.2 and 16645.7 are general position neutrality with not preempted under either Machinists or regard to organizing, attempt not narrow Garmon. a specific procurement goal. achieve A. Machinists Preemption

These considerations counsel that sections 16645.2 and regulatory 16645.7 are meas- Machinists preemption operates as that fall partici- ures outside the market a form of labor field preemption. It re pant exception.6 quires state regula that, activity tion of although not directly Preemption II. NLRA regulated by NLRA, was intended That sections 16645.2 and 16645.7 are Congress “to play be controlled the free regulatory forces,” Machinists, does not mean that they are of economic 427 U.S. (internal preempted by also the NLRA. “We are at 96 S.Ct. quotation reluctant pre-emption,” omitted), infer Boston marks and citation in a “zone Harbor, U.S. S.Ct. free from all regulations, whether state or any analysis preemption begins Harbor, federal.” Boston assumption with the “basic that Congress 113 S.Ct. 1190. The doctrine “is based on displace did not intend to state law.” Ma premise that ‘the pres use of economic Louisiana, 725, 746, 101 451 U.S. parties sure dispute to a labor inland ... part parcel Pre process of col emption question “ is a congressional in bargaining,’” lective which means that tent, ‘purpose Congress and the is the “neither a state nor the National Labor ultimate touchstone’ of preemption analy flexibility Relations Board is ‘afforded sis.” Alameda Newspapers, picking 95 F.3d at choosing which economic de (quoting Malone v. White Motor vices of labor and management shall be ” 497, 504, Corp., 55 branded unlawful.’ Alameda Newspapers, (1978)). L.Ed.2d 443 Although Machinists, the NLRA 95 F.3d at 1413 (quoting 2548). express contains no preemption provision, “Machin Court has pre-emption preserves articulated two ists Congress’ in distinct NLRA preemption doctrines: Ma tentional balance between the uncontrolled preemption, chinists forth in Lodge power management set and labor to further International Ass’n Machinists v. respective Wis- their interests” in an area free 6. This case is proclamation, noting thus distinct from Alameda that "[t]he resolution Newspapers, city’s where we concluded that a binding anyone.” no ha[d] force on Id. at proclamation support in favor of a labor city's We also concluded that the can- ongoing newspa- in an strike at a local subscriptions cellation of and refusal to ad- per, city’s and the decision to refrain from vertise did not "have some 'real effect’ or purchasing advertisements to cancel its practical impact economic on the strike, subscriptions as a result of the did not either [wa]s different from that of the regulation subject pre- constitute to NLRA ordinary govern- customer or ... otherwise There, emption. 95 F.3d at 1409. we em- mental in nature.” Id. at 1416. phasized merely exhortatory nature of the

1086 Harbor, rely cases on the under- [.Machinists ] Boston 507 regulation. from U.S. (internal quotation 1190 standing organization that in and collec- 113 S.Ct. omitted). Congress marks and citation tive determined bargaining, how much the conduct of unions both appeals applied have Federal courts of employers regulated, and should be and in the context of pre-emption Machinists unregulated: it be how much should left organized la- bargaining collective between authority have no than States more context employers, and in the of bor upset the to the balance that Con- Board subject the organizing, of AB which gress has struck between labor and itself with a col- 1889.7 Machinists dealt management collective-bargaining in the bargaining dispute lective accept to overtime as- relationship. impinge members refused For a state to on signments during labor contract renewal to designed the area of labor combat be negotiations. The Court held free is as much an obstruction of quite to the attempts that “state influence sub- if were policy federal the state of collective-bargaining stantive terms declare free picketing purposes for with agreements are as inconsistent prohibits. Act methods which federal regulatory federal are such at- scheme as parties correctly All understand this NLRB,” tempts and that “federal pre-emption. case to involve Machinists pre- have policy and the federal Act labor 724, 751, 85 regulatory authority police empted state (1985) (internal quotation L.Ed.2d 728 by employees the use of and omitted). marks citation putting of peaceful methods economic pre We have also held “Machinists 427 pressure upon one another.” U.S. at emption prohibits imposing states from re 2548. In State Golden management’s strictions on City Corp. Angeles, Transit v. Los ‘weapon[s] self-help’ that left un were 110-11, 110 S.Ct. regulated Congress in the NLRA because (1989), L.Ed.2d stated that Court intended tactical bargaining decisions Machinists, we reiterated that Con- “[i]n ‘to be conduct controlled free parties gress give intended to collec- ” play economic forces.’ Associated agreement right tive-bargaining Nunn, v. Builders & Contractors S. Cal. make use ‘economic not ex- weapons,’ (9th Cir.2004) (alteration 356 F.3d Act, plicitly govern- set forth in the free of Machinists, original) (quoting Metropoli- mental interference.”8 And in 2548); also Massachusetts, S.Ct. see St. tan Insurance Co. Life Ass’n., Thomas-St. John Hotel & Tourism mandating where a state statute minimum Dep’t was Inc. v. healthcare benefits held not Gov’t ex rel. V.I. of U.S.V.I. (3d Labor, Cir.2004) explained: preempted, the Court 357 F.3d 302 n. 4 (as company’s right 7. The dissent contends that Machinists stated in the Court's preempts decision, AB 1889 because the California Corp. Golden State Transit targets “specifically substantially City Angeles, 475 U.S. Los (Dis- bargaining process.” affects the NLRA (1986) ("Golden State added).) (emphasis sent at But /”)), be free interference organizing, applies only not collective bar- weapons choice use of economic gaining. bargaining process. collective In Golden I, city’s State Court had that the held Court's 1989 Golden State Transit company’s refusal to the taxi renew franchise decision, Corp. company it held that taxi company’s employees because were was entitled to maintain a 1983 action against Angeles city's violation strike Los for the was under Machinists. 1087 (“Machinists form of con ment preemption acknowledged is a when it that interfer- regula flict under which state with pre-emption organizing ence is “typically” ana- bargaining private tion of conduct of lyzed under the Gannon doctrine.9 displaced it parties is because conflicts not We need resolve whether Ma Congress enacting with the of purpose chinists to extends pre-empting state the NLRA to leave that conduct to be action potentially that organizing, affects by play the free of controlled economic did, because if even it would 1889 not (internal quotation forces.” marks and cita be under the Machinists doc omitted)); tion McNealy Caterpillar, enacting trine. In a restriction on the use (7th Inc., 1 139 F.3d 1117 n. Cir. state grant program of funds 1998) (“The similarly Machinists doctrine purpose remaining of neutral in labor dis preempts regulation of the economic putes, California has not intruded con weapons Congress that intended to leave duct meant to left play to the of free employers.”); available to unions and forces, an gov economic area free all from Bridge, City Glenwood Inc. v. Minne of regulation. Indeed, ernmental it is im (8th Cir.1991) apolis, 940 F.2d 370-71 plausible Congress intended the use (invoking Machinists in a such “unregulated funds to be an area bargaining pro “state’s into the intrusion left by because to be controlled the free organized cess” between labor and an em Machinists, forces,” play economic 427 ployer); Emergency Derrico v. Sheehan (internal U.S. quota S.Ct. 2548 (2d Cir.1988) (“Our Hosp., 844 F.2d omitted), tion marks when the state’s analysis pre-emption [Machinists ] spend choices of how its funds are similarly principle issues accords with the definition not play controlled the free govern parties’ intent must Harbor, economic forces. See Boston duration collectively bargained of their 225-26, 113 S.Ct. 1190. agreements.”). Insofar as all these cases any event, In AB 1889’s restrictions on they concern bargaining, suggest collective use program funds do not principal appli Machinists’ and native employer’s ability interfere with an to en sphere activity, cation is limited to that gage “self-help” protected the sense Congress where enacted an “intentional Unlike in Machinists. Gould and power balance between uncontrolled I, engaged State the state Golden has not management” organized labor to ad in a attempt spending naked use its respective vance their in negoti interests power “introduce some standard of ating of employ the terms conditions Harbor, properly bargaining power” balanced or to ment. Boston 507 U.S. at (internal employers’ private spending alter deci quotation S.Ct. 1190 marks sions; omitted). Machinists, 149-50, and citation Correspondingly, (internal strongly quotation marks suggest these cases that the Ma omitted). citation use likely apply restricting chinists doctrine funds, organizing, a conclusion that the Chamber California has not made em of Commerce conceded oral during argu- ployer neutrality the substantive terms chai, Secondary Preemption sources also discuss Machinists Machinists Under NLRA: bargaining, in the Employer’s context collective A Tool Protect Free- Powerful See, Lareau, organizing. e.g., N. Bargain, La- dom to 58 La. L.Rev. Peter (2005); (1998) (“To Employment protect bargaining bor and Law 36.11-36.17 the collective Gorman, process [attempts by government Robert A. Labor Law 1103-10 alter (2004); al., Develop- bargaining], Patrick Hardin et 2 The collective Court de- (2002); ing veloped preemption.’’). Labor Law 2192-99 Robert Ra- Machinists employees by regulating employment employer between and em- information receipt speech. Employers state remain

ployee employers’ condition for the employer convey regarding AB an has their views union- funds. Under free ization, spend and the its own and their First retains freedom thus exercise wishes; simply may only funds it it that rights, provided however Amendment spend grant program they grant program state and funds not use do state contrast, advocacy. its union-related if example, funds to do so.10 For even an re- had California enacted a statute that made a decision to fund employer business neutrality as a condition of receiv- quired entirely through receipt its operations funds, ing employer’s use of its grants, that the effec- such thereby have cur- own funds would been from tively prevented that pp. tailed. 1096-98. spending any portion See of its revenues infra election, during organization an advocate The Labor Relations Board National solely that effect be incidental and would (“NLRB”), an which filed amicus curiae consequence employer’s free- in support brief the Chamber of Com- Nothing prevents market choice. the em- merce, that urges nonetheless Machinists from ployer raising additional funds does the California statute. It preempt using source funds for non-state those Manufacturing Corp., cites Plastics Alto advocacy purposes. It is well established (1962), prop- for the N.L.R.B. legislature may that a attach “reasonable election, representation osition that in a unambiguous” conditions to funds that “employees may ‘good’ select a or- labor accept. recipient obligated ganization, organization, a ‘bad’labor or no v. Forum Academic & Insti- organization, being presupposed it Rumsfeld for —Inc., -, Rights, tutional U.S. intelligently that will exercise (2006) S.Ct. 164 L.Ed.2d 156 right their to select bargaining repre- their (internal omitted); quotation marks see The NLRB AB sentative.” contends that Lavin, Rust, (citing also 431 F.3d at 1006 cross purposes 1889 works at with such a 1759; Nat’l S.Ct. it policy because limits the flow informa- v. Finley, Endowment the Arts to employees regulating employer tion U.S. S.Ct. organization in an area —an elec- Valeo, (1998); Buckley Congress tion—that intend to did be con- (1976)). 612, 46 L.Ed.2d We play trolled the free of economic forces. regu- declare pre-empted “cannot all local in disagree way We with the which the any way lation touches or concerns in NLRB characterizes 1889 and invokes complex between interrelationships above, explained As Machinists. the Cali- unions; employees, employers, and obvi- fornia statute does not an prevent employ- ously, much this is left to the States.” assist, using er from non-state funds Life, 471 Metro. 105 S.Ct. 2380 promote it organizing; or deter re- (internal omitted). quotation marks recipient’s stricts a use of state (in $10,000) program fundamentally, funds excess of for More is sim- NLRB purpose. Consequently, ply suggest incorrect to Califor- that Machinists impede nia statute does not preempts flow California statute. As the age collective-bargaining processes statute's effect is therefore indirect incidental, not unlike the Massachusetts subject they of the NLRA. Nor do have upheld Metropolitan law See 471 U.S. right Life. but the most indirect effect on the ("Minimum 105 S.Ct. 2380 state labor Act.''). self-organization established encourage standards ... neither nor discour- acknowledges NLRB elsewhere remove them from protection of sec- brief, applies solely Machinists to zones of tion could lead the NLRB to set aside activity regulation. left free from all See if epithets election such had “been ut- Harbor, Boston 507 U.S. at malice, tered with actual a deliberate in- regula- 1190. The own NLRB’s extensive falsify tention to or a malevolent desire to organizing tion of activities demonstrates injure.” 60-61, Id. at 86 (citing S.Ct. 657 organizing employer speech that in Mfg. Corp., Bettcher 76 N.L.R.B. —and 526 organizing the context of not such a (1948); Co., Atl. Towing 75 N.L.R.B. —is See, Co., e.g., zone. Peoria Plastic (1948) (internal 1170-73 quotation marks (1957) (NLRB N.L.R.B. 547-48 bar- omitted)). See also Midland Nat’l Life ring interviews with their Co., (1982) Ins. 263 N.L.R.B. election); immediately homes before an (“[W]e will set an election aside not be- Co., Plywood Peerless 107 N.L.R.B. cause representa- substance (1953) (NLRB barring employers and tion, but deceptive because of the manner making speeches unions alike from election ”). it which was made.... company time to massed assemblies of Significantly, the spending restrictions election). employees within 24 hours of an challenged by the Chamber of Commerce Co., NLRB v. See also A.J. Tower and NLRB are precisely modeled on those (1946) 324, 330, 67 S.Ct. 91 L.Ed. 322 Congress has enacted prohibit- when (“Congress has entrusted the Board with a ing assist, the use of federal funds to degree wide in establishing discretion See, mote or deter organizing. e.g., Work- the procedure safeguards necessary Act, force Investment 29 U.S.C. insure the fair and free bargain choice of 2931(b)(7) (“Each § recipient of funds ... ing representatives by employees.”).11 In provide shall Secretary assurances deed, section 9 of the affirmatively NLRA that none of such funds will be used to grants power regulate the NLRB em- assist, promote, or organiz- deter union conduct, ployer and union including ing.”); Community National and Service speech, prejudicial that is to a fair election. State Grant Program, 42 U.S.C. § 29 U.S.C. 159. In Linn v. United Plant 12634(b)(1) (“Assistance § provided under Am., Guard Workers Local this title shall not by program be used U.S. participants and program staff to ... as- (1966), Court observed that sist, promote, or deter union organizing.”); the NLRB can set aside an election where Act, Programs Head Start 42 U.S.C. a material fact has misrepresented been 9839(e) (“Funds § appropriated carry representation campaign, opportunity sub-chapter out this shall be used to reply for a was lacking and the misrepre assist, promote, or union organiz- deter sentation had an effect on the free choice ing.”); Act, see also Medicare voting employees. U.S.C. The Court likewise 1395x(v)(l)(N) (“In cases, noted that in a determining number of such costs, NLRB had even determined that reasonable use of costs incurred activi- ‘scab,’ ‘unfair,’ “epithets directly such as influencing and ties related to employ- ” ‘liar,’ though not so respecting indefensible as to may ees unionization not be NLRB, 11. Like the organizing the dissent undermines its is not such a "A state zone. law argument own explicitly targets directly when it cites Board regu- decisions that both examples regulation processes of the NLRB's lates controlled the NLRA” (Dissent 1105.) Garmon, organizing process. might preempted at Ma- under see infra applies only chinists p. surely to zones free from all but is "under regulation, (Dissent 1105.) and the NLRB decisions show that the Machinists doctrine.” Preemption B. included.”). incon- Garmon These restrictions are that un- congressional belief sistent with preemption arises when Garmon ... in- ion involves “conduct organizing potential is or conflict be there an actual State unregulated.” Golden tended to be regulation tween and federal labor Corp., regulation activity law due Transit to state omitted). (internal arguably protected prohib is or or actually quotation marks it ited the NLRA. “When is clear Instead, an area left to the free because may activities fairly be assumed “zone free play forces of economic purports regulate which a State regulations, whether state all fed- § 7 of the National Labor protected by Harbor, eral,” Boston Act, Relations or constitute unfair labor added), the federal (emphasis S.Ct. 1190 8, regard § practice due for the under that compelling evidence restrictions are requires ju federal enactment that state in conditions AB 1889 do not analogous the Garmon, yield.” risdiction must labor regulation-free in a area of intrude 244, Nonetheless, 79 S.Ct. 773. thus, contrary dis- to the relations and the formulation accu- [w]hile Garmon “operate not frus- suggestion, sent’s do rately the basic concern reflects federal (Dissent trate of the NLRA. purpose” the potential with state interference with na- 20, 11821, v. quoting Local Teamsters tional policy, history labor Morton, 377 U.S. S.Ct. labor doctrine ... pre-emption does (1964).) fact that L.Ed.2d 280 “The support away approach sweeps an Congress imposed has ... the same itself jurisdiction over conduct tra- state-court type ... as seeks to [a state] of restriction subject ditionally regulation to state surely impose ... is evidence that Con- rela- without careful consideration of the gress such a not view restriction does jurisdictional tive of such a bar impact policies.” with its labor De incompatible on the various interests affected. Braisted, Veau 363 U.S. Sears, County Diego Roebuck & Co. San (1960) (plurality 4 L.Ed.2d 1109 S.Ct. Carpenters, Dist. Council opinion).12 sum, mechanism California has prohibited 1. Actually protected neutrality its in la- employed preserve 7 of the NLRA Section is entitled not affect disputes employer’s bor does an “Right employees as to organization, funds in ability to use its own connection bargaining, collective etc.” U.S.C. activities; organizing nor do protected § 157. It identifies areas em Congress an such activities constitute area fairly ployee and can be character conduct regulation. to be free from all intended setting employee prac ized as forth those AB 1889 is not Accordingly, preempted actually protected tices that are 8, conversely, NLRA. under Machinists. Section is entitled negotiated parties engaged Court similar terms between to labor 12. Life, Metropolitan reasoning in U.S. at agreements. The Court reached this conclu- 754-55, There, 2380. Court by noting, among things, sion other that it incompatibility held that no existed between Congress made that no sense to infer intended policy expressed national labor in federal deprive ability states NLRA designed equality rules to restore of bar- Congress passed take when such action itself legislation gaining power and state that im- applying similar federal laws to unionized (in posed requirements substantive minimal employers employees. benefits) the form of healthcare on contract 8(c) §in practices.” 29 U.S.C. tivities ... are “Unfair labor described ’ terms, By ‘protected NLRA, it sets forth activities plain except from the actually prohibited by itself.”); the NLRA. Indus., that are NLRA see also Fiber easy Inc., (1983) (“[I]t It is to see how both section 267 N.L.R.B. implicated can be in a Garmon 8(c) section 8 well settled that Sec. applies analysis: regulates if a state unfair labor practice proceedings.”). employee actually that activities are The Chamber of Commerce and tected under or activities of ei- section however, argue, dissent to say an unions that ther are activity punishable by is not the NLRA is actually prohibited under section to protect that activity. Because AB regulation will be unless it falls 1889’s restrictions on program exception within to Garmon. See 359 funds purportedly employer’s affect an 243-44, U.S. at 79 S.Ct. 773. ability against unionization, speak 8(c) prohibits sanctioning Section em Chamber of urge, Commerce and dissent ployers the NLRA engaging under improperly intrudes the em practice they an unfair labor when exercise ployer’s implied (yet actually somehow ex speech rights guaranteed by 8(c)) plicit section NLRA speech right— First This Amendment.13 subsection can as separate distinct from its First Amend exemption” “free speech be termed the rights ment is preempted therefore —and prac section 8’s delineation of unfair labor under Garmon. tices, it because carves out noncoercive reject peculiar We this proposition. The speech category actually pun from the Chamber of Commerce and dissent cite no activity. Notwithstanding ishable the dis it, authority support NLRB contrary, sent’s insistence mistaken itself such makes no claim as section 8(c) employers section not grant does 8(c)’s supposed speech affirmative (Dissent 1107.) speech Rather, rights. at 4, rights. See NLRB Amicus 21- Brief it simply prohibits noncoercive their 26 (echoing interpretation NLRA in speech being used as evidence of an above, cases quoted noting section See, unfair NLRB practice. e.g., labor 8(c)’s “exemption” non-coercive Co., 575, 617, Gissel 395 Packing U.S. 89 Rather, speech). in some activities labor (1969) 1918, (stating S.Ct. 23 L.Ed.2d 547 protected prohib- nor relations are neither 8(c) “merely that implements section ited the NLRA are therefore not Amendment”); Employees, First Hotel See, e.g., under Garmon. Corp., Local 2 v. Marriott 961 F.2d Union, Agents’ NLRB v. Ins. Int’l (9th Cir.1992) (“[Ejection 8(e) 1470 n. 9 U.S. & n. 492-95 S.Ct. an merely not states does com (1960) unpersuasive (finding L.Ed.2d 454 practice mit an unfair labor by expressing argument that because certain union unionization.”); regarding its views UAW- unprotected activities were under section Training Labor & Employment Corp. v. Chao, (D.C.Cir.2003) those should activities also deemed 325 F.3d 364-65 practices unfair labor under (“Fitting a claim under the lan section Garmon 8(c) “[tjhere guage stating §of is is logic [T]he awkward.... ac- that little assum- “Expression practice tute Entitled of views without or be evidence of an unfair labor 13. promise reprisal Act, threat of fit,” or force or of bene- provisions any under if of this such 8(c) § provides expressing that ”[t]he expression reprisal contains no threat of or views, argument, thereof, opinion, or the or dis- promise force 29 U.S.C. or of benefit.” written, print- semination whether in 158(c). § ed, form, graphic, or visual shall not consti- grant and willing receipt condition for of state Congress was ing that because -1097; 1095 self-help against pp. funds. See program to use allow infra tactics, they willing Regan Represen to face v. Taxation with if were see also use, tation, 540, 549, it consequences of the economic U.S. (1983) (“We tactics unlaw- have impliedly

also declared these held law”).14 If this ful a matter of federal that a deci legislature’s as contexts several case, Machinists were not the exercise of a sion not subsidize exist, for Machinists ad- would cease to right infringe does not fundamental arguably “activity Rust, 193, 200, neither [i]s dresses right.”); 500 U.S. at against employer States, interference protected 1759; Cammarano v. United S.Ct. 8(a)(1) NLRA, nor by §§ 7 and 3 L.Ed.2d unfair prohibited an arguably 8(b) Metropoli- that Act.”

practice protected prohibited Arguably or 749, 105 Life, tan S.Ct. 2380. Sears, refined its Court employ- to subsidize California’s refusal pre-emption the con- Garmon doctrine unionization does speech against er for or trespass an law employer’s text of common activity actually regulate against picketing suit union members prohibited protected actually picketing “arguably where was with, NLRA. It not interfere much does —but protected by definitely prohibited partisan employer less “the same govern, — law.” 436 U.S. at federal Congress committed to the (Dissent inquiry 1745. Sears divided the into two jurisdiction of NLRB.” 1107.) questions: related but distinct whether the infringe employers’ Nor does it jurisdiction trespass- state court’s over the rights, employ- First Amendment because (1) by argu- claim the ing pre-empted use own funds to was ers remain free to their picketing, nature of the or against ably prohibited for or advocate unionization (2) required accept neutrality by arguably protected are as a its nature.15 not to 1108), (Dissent activity Employment protected & at claim 14. See also UAW-Labor Train- (“The Corp., ing repudiation argu- 325 F.3d at 363-64 dissent ignores express our of that suggests makes a similar error when it that supra. ment in Section II.B.l To the extent preempted is because it the order conflicts analyzing we the dissent err in even contends 'regulatory the has with the scheme’ Board arguably with whether 1889 interferes analysis a sound established. This would be 1108, (id. protected prohibited or conduct preemption, Garmon under 'field' but works 1109), neglects it of Commerce’s Chamber operating only differently, toas activities ar- so, that the own contention statute does prohibited, guably protected not or to ones analysis recognize to that fails such is ortho- alone, simply if left even left alone deliberate- See, 926, analysis. e.g., dox in Garmon Local (internal omitted)). ly.” citations Jones, Eng'rs Operating Union v. 460 Int’l 669, 676, U.S. argues 15. dissent that we err in consider- ("Our (1983) pre-emption approach to the by pre-empted ing AB 1889 is inter- whether has been issue thus stated restated. fering unduly arguably protected with an or First, we determine whether conduct because, prohibited activity in the dissent’s regulate the State seeks to or make view, idiosyncratic incorrect the real liability actually arguably pro- is or basis preemption of Garmon is AB 1889’s cause prohibited by Although or NLRA. tected actually protected alleged interference guidelines applied] to be [are the Garmon rights grant- purportedly conduct—the literal, fashion, 8(c). (Dissent 1109.) in a mechanical if conduct ed under Insofar arguably prohibited protected at issue is suggests apply as the dissent we Sears to applicable procedures addressing otherwise state law and avoid whether AB 1889 is (internal by interfering actually ordinarily pre-empted.” quota- with an picketing accounting only As to the union’s was entail the employer’s whether for NLRA, by the Sears use of arguably prohibited possible state funds. relatively straightforward articulated a Commerce, however, The Chamber of claim jurisdiction” test: if the “primary argues that state court enforcing AB tribunal considered the state is identical 1889 would some instances need to de- presented one that could whether a termine union was a “labor or- NLRB, jurisdiction preempt the state’s ganization” under section an area 1745; ed. Id. at also see it claims is reserved the NLRB Hale, Belknap, Inc. v. 511— under Engineers Marine Ass’n Beneficial (1983) S.Ct. L.Ed.2d 798 Co., Interlake S.S. (applying primary jurisdiction test to state S.Ct. L.Ed.2d 418 But conduct). regulation arguably prohibited even if the state court had make such to whether picketing arguably As was determination, it would be relevant NLRA, protected by the went Court question ultimate of whether beyond jurisdiction primary test spent an employer state federal con supremacy address additional assist, gram funds to promote or deter chiefly, cerns: whether was organizing, to whether the employer’s identity the lack despite be warranted — advocacy violated the NLRA. We have tween issues the court NLRB state previously rejected argument an that the might protect against consider—to incidental determination a state court of misinterpretation “risk of [the NLRA] persons of whether engaged were “in consequent prohibition and the protect activity” lawful union was sufficient to oc- Sears, ed conduct.” casion pre-emption, Garmon where the employed 1745. “primary We this focus proceeding was on

jurisdiction plus” approach Radcliffe of accommodating “state concerns such Co., Rainbow Construction 254 F.3d activity union with the state-law rights of (9th Cir.2001), where we held private Radcliffe, property.” 254 F.3d at jurisdiction over claims Moreover, AB is not compara- against members false ble to the Minnesota statute at issue in arrest, imprisonment false and malicious Engineers, which a Marine under state not prosecution preempted were under that certain groups law determination Garmon.16 organizations permitted were labor court to regulate picketing the state Here, dispute parties the do not other to activities identical those that resolving that the NLRB no interest in has could have been raised before the controversy central that a court the state Eng’rs, NLRB. Marine 370 U.S. at would have to AB enforcing resolve 1237. 1889, namely, whether state funds were “assist, to or union promote, argues used deter of Commerce also Chamber Far AB an organizing.” being employ- the same as that because 1889 restricts consider, question might ability to the NLRB er’s use state funds “influence” 16645(a), § under employees, suit the California statute would its see California omitted) (alteration tion marks and citations whether the union activities carried on the added)). original) (emphasis by § plaintiffs protected were ... 7 of the at NLRA.” F.3d 785. Radcliffe, argued 16. In “the defendants validity plaintiffs’ ... of the claims turns on the jurisdiction and that of state NLRB’s effectively deciding wheth- courts would under acted court. improperly had er 8(a) ] NLRA

section obligated court was de- “restraint state [T]he the in the of exercise coerce was trespass the cide[whether] the of guaranteed law, [section rights actually federal protected (NLRA 158(a)(1) § 29 U.S.C. NLRA].” entail an might determination which 8(a)). con- However, the § were NLRB property of accommodation Sears’ aris- practice charge an unfair labor sider rights. the Union’s In rights and conduct, it would employer’s ing from practice proceeding an unfair labor had inter- employer on whether the focus Union, the Board initiated rights, section 7 employees’ fered to make might required have been used employer regardless whether the same accommodation. contrast, In process. funds in the state 1745. fur- The Court Id. AB court would under the California trespass at issue was ther stated that used only whether determine NLRA, by the arguably protected whereas to influence program funds state to Gar- previously recognized exceptions vio- attempt employees, not whether not “involve [] mon did fo- the NLRA. Because the statute lated Id. at 98 S.Ct. 1745. tected conduct.” funds, solely on the use of state cuses Nevertheless, the Court held that risk claims, identity no and the there is trespass might regulation that a state’s is jurisdiction test not met.17 primary ju- upon the NLRB’s impermissibly trench stat- next assess whether the state We speech rights risdiction over Congress would ute is because unlikely justify usur- members was too jurisdic- in a “prefer[ the costs inherent ] pation prerogative. of the state’s There of national tional hiatus to the frustration “significant prohibition was no risk of might accompany policy which conduct,” was “un- protected so the Court Sears, jurisdiction.” exercise presume willing Congress intended essentially 1745. For arguably protected character explained primary the same reasons in the deprive [regulated] the Califor- conduct that a jurisdiction analysis, there is no risk jurisdiction nia courts of to entertain AB “misin- applying court 1889 could trespass action.” Id. Sears’ ... law.” Id. Not terpret ] federal S.Ct. 1745. claims, subject identity there no but the Sears, poten- is no contrast to there so far re-

matter of an AB 1889 suit is jurisdic- overlap tial between NLRB’s primary focus— moved from the NLRA’s hearing a state a suit tion and that of court determination of what constitutes an However, even if brought under any practice unfair labor rationale —-that risk of California overlap, there were some is preemption for Garmon absent. important legitimate as and a sover- has the case, eign determining recip- In that in how itself is instructive. interest Sears funds hearing grant program in ients of state and use noting after the state interest entertaining in claims, those funds it does tres- trespass the Court identified a as Thus, even if AB 1889 overlap pass actions. had potential clear between the remedy the Com- intended misuse of funds There is merit to the Chamber of to no statute, regardless that the California statute merce’s claim under the of whether remedy NLRA viola- vides an additional for has occurred. NLRAviolation damages provisions The tions. statute's

1095 and effect on peripheral merely peripheral some incidental concern” of the NLRA. Garmon, rights 243-44, arguably protected advocacy 773; the 359 U.S. at 79 S.Ct. given Belknap, the nature mechanics see also employers, and U.S. at (which previously S.Ct. 3172. The recognized of the has no concern for ex- ceptions to Garmon in- speech protected the at issue have whether NLRA, jurisdiction volved exercises state court but on the the focuses universally over recognized law money speech), of the common funding source torts, than, here, as rather the limited is no “significant prohibition there risk of See, exercise state’s spending power. of a protected conduct.” Id. in- California’s Linn, e.g., at S.Ct. strong “pre- is so terest we cannot (“[A] concern with State’s mali- redressing Congress arguably sume that intended the cious is ‘so deeply libel in local rooted character of con- protected [regulated] feeling responsibility’” and it is deprive” ability duct to the state of the to despite arguably overlapping the use of control its fisc this modest jurisdiction NLRB over the is- Id. manner. sue.) Garmon, (quoting Supreme Court has cautioned that 773). But logic S.Ct. that compelled application of “inflexible Garmon [the ] Court to recognize excep- avoided, is to especially doctrine where tion for torts applies just certain power- as reg- has a substantial State interest so, fully, if not more to a to state’s effort ulation conduct at issue ensure that those who accept its State’s interest is one that not threat- does program use funds them for purpose reg- en undue interference with federal they given.18 were ulatory scheme.” Farmer v. United Bhd. Carpenters, 480 U.S. 97 S.Ct. sense, In this a state’s control 1056, 51 L.Ed.2d 338 Our “bal- purse strings its is of at a great least as inquiry anced into such as the na- factors regu concern to state as power its ture of the federal and interests in defamatory speech, violence, trespass, late and the regulation potential for interfer- property obstruction of access to federal regulation,” ence with id. 97 intentional infliction of dist emotional preempt- S.Ct. ensures that we avoid ress.19 Just as the state has a responsi regulation in- ing state of conduct that bility protect citizenry its from such “interests so in local deeply volves rooted torts, responsibility right so it has a that, feeling responsibility the ab- spend largely generated its treasure — of compelling sence di- congressional pockets from the citizens—based rection, we Congress infer that principles guidelines [cannot] its demo deprived power the States of the cratically legislature ha[s] elected deems to be act,” are, activity where regulated appropriate. spending “the Such [is] decisions instance, Linn, 63-64, 657; granted suppose 18. For California 19. See 383 U.S. at hospitals money posi- Inc., nurse to create more Youngdahl Rainfair, 355 U.S. and did not tions want the effectiveness of its 139-40, (1957); 2 L.Ed.2d grants by funding campaign diminished Sears, 1745; U.S. at Int’l long convince nurses not to unionize. So Union, Auto. United Workers America hospitals lobby remained nurses free Russell, 644-46, (UAW-CIO) monies, with their own California would be 932, Farmer, (1958); 2 78 L.Ed.2d 1030 S.Ct. rights grants within its its well to insist that 302-06, 430 97 S.Ct. U.S. at 1056. purpose they be used for the were for which given nursing posi- creation of needed —the tions. 1096 it course, subject long as does not use state supremacy to federal wishes—so has on grant program But the Court funds union-related

concerns. extremely to be cautious advocacy infringe commanded us em- does —AB concluding regulatory that a federal right express before to ployers’ First Amendment a upon scheme intrudes so fundamental they organizing.20 wish on whatever view an risk of prerogative. “Whatever AB on Accordingly, 1889’s effect adjudication ex does erroneous state-court light considered in Rust v. properly the conse outweighed by ist is anomalous Sullivan, 1759, 114 500 U.S. 111 S.Ct. deny the state quence of a rule” that would (1991). Rust, L.Ed.2d In the Court in circum ability to control its fisc the ... “[b]y requiring held that Sears, presented here. 436 U.S. stances activity in grantee engage abortion-related tight In an at era of S.Ct. receiving separately activity from federal com budgets, many important and where funding, ... not it Congress has denied every of a interests vie for dollar peting right engage in ac- abortion-related treasury, impor it is all more state’s tivities.” Id. at 111 S.Ct. 1759. right tant retain their to control that states short, govern- a on the use of restriction the allocation their scarce resources. activity compel an does not ment funds for Thus, if AB on the even 1889’s restriction activity. cessation of the grant program funds in use of state Here, California has not “denied” em- activity arguably an protected truded on ployers “right engage [union]- arguably by the NLRA—and prohibited “merely activity,” related but has refused recog it we hold that does not—Garmon’s to fund such out of the public activities exception nized would save the California fisc.” Id. This conclusion follows from the Garmon, preemption. See Court’s familiar observation about what is 243-44, at 79 S.Ct. 773. U.S. regulation legisla- and what is not. “[A] III. First Amendment ture’s decision not subsidize exercise infringe a ... right right.” does not Although we elsewhere discuss Regan, 461 U.S. S.Ct. 1997 why infringe AB 1889 does not the First (rejecting the “notion that First Amend- rights grant program Amendment rights fully ment are somehow not realized -1089, supra pp. fund recipients, see State”); they unless are subsidized reasoning our here we elaborate on Union, UAW, Lyng also v. Int’l see response the dissent’s contention 360, 368-69, 1184, 99 contrary on largely based its erroneous legislature L.Ed.2d 380 can premise compels “employers that AB 1889 public spent “insist[ ] funds be position neutrality a themselves take authorized,” purposes they for which [a]re (Dissent respect labor relations.” if doing govern- even so forbids the use 1099.) U.A., explained As we Section Rust, other speech. ment funds for supra p. does California statute 1759; see also Unit- impose any receipt condition Ass’n, Library ed States v. Am. Because grant program funds. 156 L.Ed.2d retains the to raise freedom (2003). California, in enacting funds it spend own however instance, agreed during corporation 20. For California oral where the receives those funds as argument nothing prevents capital in AB 1889 contribution a shareholder who corporation legitimately corporate of its closed that receives reinvested distributed 100% receipt using revenues from the state from its own dividend —itself the fruit of the of state assist, promote organizing, program funds to or deter funds. simply has availed itself of that preroga- program funds have been “carefully tive.21 drawn” to mirror the mechanics consti- tutionally sound federal acts. Gooding, Nor is there merit to the dissent’s 1103; U.S. at see also assertion that AB employers’ 1889 violates Regan, 549-50, 461 U.S. at 103 S.Ct. 1997. Rights by “irrevocably First Amendment stamp[ing] dollar bills ‘Property with It is even more implausible that AB ” California’ and “limiting] the items 1889’s grant restrictions on program and employer may purchase specific with these funds “alter [the legal funds’] use as ten- (Dissent 1099.) dollar bills.” at The dis- der” and frustrate the “basic tenets our parade (Dissent sent’s goes beyond horribles far system.” 1099) economic at the scope plaintiffs’ facial challenge to Again, the statute’s text is precisely mod- sections 16645.2 and 16645.7 and rec- eled on language the Congress itself has ord before us. The district court made no used. The Act, Workforce Investment for evidence, findings, nor is there AB example, regulates federal given funds “co-opts payment goods for state boards to be “grants awarded as services profit contracts, realized under a con- basis, on a competitive eligi- (Dissent 1098.)22 tract.” at providers Consistent ble within the State or outlying Rust, statute, the California like vari- area to enable eligible providers acts, requires ous federal only that develop, those implement, and improve adult ed- accept government who grant literacy ucation or activities within the gram funds use them for purpose 9241(a) for § State.” 20 U.S.C. (emphasis they added). were given. Our construction The Workforce Investment Act AB “readily 1889 is apparent,” Gooding requires also recipient “[e]ach of funds ... Wilson, provide [to] ... assurances that none of (1972) (internal quotation assist, such funds will be used to promote, omitted), marks and citation but even were or deter union organizing.” 29 U.S.C. not, 2931(b)(7). it the statute “overly § is not broad and exactly 1889’s analogous (Dissent 1100) unconstitutional” at because requirement hardly can be antithetical to its restrictions on grant the use of monetary concept and the of free tender.23 questions does, legitimacy 21.The dissent legislation of AB why legisla- ates what "sponsored 1889 because the statute was political tors voted it or what coalition Federation, AFL-CIO, the California Labor led to its enactment. This statute does not supported by phalanx of labor unions.” people spurn affect largesse. who the state’s (Dissent 1102.) only Not is this an irrele- added). (emphasis 431 F.3d at 1007 consideration, vant up but it also is not to us previously, supra As noted note judges impugn legisla- the California issue before us is whether AB 1889's ture’s motives. wisely As the Circuit Seventh restrictions, program § fund 16645.2 and observed in Lavin: 16645.7, § (as the NLRA or are likely) If seems Illinois has taken the constitutionally invalid. The statute's restric- approach in this law because state officials funds, 16645.4, tion on the use of contract organized want to assist labor as well as the is not at issue supply grain nor was it addressed farmers who to be made court, implying into ethanol district and the dissent and the owners errs in of ethanol - (Dissent 1100.) plants, surprise that is neither a otherwise. nor a rea- invalidity. legislation son for Most is the disregards 23. The dissent also product the nature of among of coalitions interest programs, groups. public which are up Boston wanted run serve to clean its har- bor, purposes guarantee profit but there can be and need not little doubt that it also (Dissent 1100.) private companies. wanted to shower benefits on workers who For instance, political were the support- program, incumbents’ in the MediCal which the ers .... Federal doctrine evalu- Chamber of Commerce itself discusses in the Bill at Cal. codified Govt.Code

CONCLUSION (“AB statute”), 16645-49, §§ or “the 1889” and of 16645.2 16645.7 Because sections fully employers participating from stifles under either AB 1889 are not exercising rights in organizing and the not their and do on Machinists or Garmon explicitly by that to them Con- granted are. First Amendment infringe plaintiffs’ face gress under the NLRA. The statute rides district is judgment of the court rights, the over the delicate balance estab- roughshod injunction and is VA- REVERSED its unions by Congress between labor lished proceed- further remand for CATED. We addition, and employers. the California opinion. ings with this consistent statute interferes with the NLRA’s exten- jurisdiction to Nation- sion of exclusive the BEEZER, Judge, Circuit with whom (“NLRB”) for al Relations Board Labor CALLAHAN, and Circuit KLEINFELD adoption represen- and of enforcement in dissent: Judges, join I tation election rules. would hold provi- federal of the relevant leverage May spending power a state statute to be com- sions California a employer adopt an to neutral to induce plete. organizing? The policy toward labor union Amendment, Re- First the National Labor I (“NLRA” Act”), or “the lations Act AB is far from a neutral enactment preemption, doctrines of well-established simply restricts use of undefined negative. demand an answer abrogates First “state funds.” It By extending the definition “state rights employers speak Amendment any funds” include monies received a out cam- organizing and discuss union contracting as a private employer result paigns. guise preserving Under the state, AB strikes at the neutrality, with the statute operates state impel employers posi- themselves to take a heart of First AB 1889 Amendment. neutrality respect tion of to labor just prohibits money the use of state relations, in with employers’ direct conflict granted employer for and a under rights under the First Amendment. specific co-opts pay- but also program applies any goods AB 1889 vendor of goods ment for and profit services payouts or services who receives from the (undoubtedly realized under contract State of California “in excess of ten thou- funds). gag prevent state AB 1889’s rules year ac- any sand dollars calendar spending its own funds in a participation count of its in direct violation of the First Amendment. gram.” program” “State is not defined employees The NLRA extends to language brings statute this broad opportunity to render a free and informed auspices every under representation. choice about union In do- unlucky purveyor goods or services so, ing Act allows for robust debate $10,000 magic thresh- enough cross the union representation issues old contracting in its annual with the Assembly regulations alike. AB California state.1 1889’s nursing “entirely encing employees respecting may that are context of homes unionization funds,” dependent funding 1395x(v)(l)(N) on state included." 42 U.S.C. not be designed only to added). cover the costs services (emphasis Notably, performed. allowable costs under may contracting suggest 1. The term more MediCal are also based on federal Medicare standards, application AB narrow than intended provide reporting cost 1889, written, costs, determining program- takes "[i]n such reasonable costs directly approach controlling incurred for activities related to matic the labor-man- influ- that “state funds” have been presumption speech, the contractor’s nor could it decide expenditures spent on union-related allows not to contract employer’s based on the irrevocably stamp the state to dollar bills speech as either decision would violate the California,” “Property of alter their with employer’s First Rights. Amendment legal tender and limit the items an use as Comm’rs, County Board Wabaunsee specific employer may purchase with those Umbehr, County, Kansas v. this, despite dollar bills. All the fact that (1996) employer fully performed has under a (Government against cannot retaliate inde- every contract and the state has received pendent contractors for exercising First it item is entitled to under the terms of the Amendment Rights). AB neutrality pro- contract. 1889writes a Once the state has chosen to award a every vision into contract the state enters bidder, contract to the responsible lowest requiring bargain into without the state to the state’s interest in pays the funds it for pay pricey for such a concession. The goods the contracted and services is at fails to employ- also state where an end. It has a bargain made for provi- may any compliance er turn to recover sion of a limited set of benefits and the that a organization may costs recov- agreed vendor has provide those goods in a er suit authorized the Act—another services, labor, including in exchange unbargained gained by for benefit money. for Once exchange has been state. payment received, made and has been statutory A blanket prohibition on em- money longer can no be considered “state ployers advocating against for or unions funds.” The state has no interest in how blatantly

would violate the First Amend- those funds are spent by the vendor and ment as the state has no legitimate inter- the state has no right or reason to est in prohibiting employers from speaking limit an individual engages who in a labor on union opinion issues. Even the of the dispute using from money own for court recognizes that the statute only purpose. lawful Upon payment to the em- passes constitutional muster if it is read to ployer those funds became free tender and apply Opinion state funds. any attempt by the state to undermine the (“Nor Court at 11794 does it interfere with buying power of free by limiting tender employers’ exercise of their First Amend- types goods purchased can be rights, ment employers because remain with funds which the state is not vested free to use their own funds to advocate for fundamentally with residual interest or against unionization and are not re- opposed to the basic tenants our eco- quired accept neutrality as a condition system nomic and the First Amendment. funds.”). receipt of state Just because Every majority eyes employer it reasonable closes and wishes it will also have into were so cannot alter the economic fact that built its contract a measure of profit. AB 1889 both explicitly implicitly profit compen- This is the earned does unconstitutionally require neutrality employer as a sation of the upon completion of condition for contracting with the state. A its contractual duties. 1889 seeks to state could not terminate a contract due condition the uses to which an $10,000 agement through arena payments its extensive reach to to receive over all businesses who have a financial involve- acceptance pay- California. The of these state regulated

ment in state activities. For exam- subjects payments ments those and that ven- ple, hospitals nursing (a accept homes that dor to the strictures of AB 1889. patients program) likely MediCal prob- recognizes importance court unre- specific funds. these may put stark are most profit-taking with this the free flow infor- lems stricted considering the case when of the Act proper mation to enactment all of conduct their business who blithely naively concludes that the but employers can offer their These state. impede the flow statute does California bonuses, for all-inclusive pay to employees regulating of information Tahiti, par- extravagant to throw vacations the speech. ignores applica- It employers’ caviar, simply or champagne and with ties funds, AB own employers tion of 1889 to day. rainy for a profits their save bank intensely and one-sided burdensome do, according to they cannot What impact the actual regulatory scheme and of meeting to dis- 1889, mandatory a is hold in as demonstrated amply (either benefits or unionization cuss record. burdens) Employ- employees. with their all of revenue from ers who receive their A. to cease option have no other but the state Congress’ protect intent to free-flow speech. opinion The of all union-related employers and of information between em- employ- mercy has no for these the court 8(c) in of ployees is embodied Section they have it concludes that made ers as Act, articulate, permits employers through own bed their “free-market their manner, in their a non-coercive views re- in- Simply or choice.” because business garding organizing union efforts: state, chooses to contract with the dividual state, accept employment from the views, or even argument, expressing The abrogate may mean that does not the state thereof, or opinion, or the dissemination See, e.g. United rights. Amendment First written, graphic, in printed, whether or Employees Treasury States v. National form, visual shall not constitute or be Union, practice of an evidence unfair labor un- (1995). market choice L.Ed.2d Free any of of this provisions der sub- not, employers their these retain First if chapter, expression such contains no right their own spend Amendment reprisal promise threat of or force or funds, by con- they undoubtedly as earn benefit. state, they tracting see fit. 158(c). § added Congress 29 U.S.C. Sec private AB 1889 Because commandeers 8(c) in “to tion NLRA insure funds, regu- employers own in addition employers organizations both and labor funds, I lating the use would hold express full freedom to their views to em and uncon- overly that the statute is broad ” Rep. ployees on labor matters.... S. 80- under the First Amendment. stitutional (1947). Indeed, explicit at 23 8(c) protect “to purpose Section was II speech of free what the right when em is a scheme comprehensive The NLRA says or not of a ployer writes is threaten and inter- designed rights to balance the promise prohibit ing nature does not employers employees of both ests favorable H.R.Rep. ed discrimination.” provides an mechanism to administrative in reprinted (1947), No. 80-510 repre- questions concerning union resolve 1135, 1151. Cong. U.S.Code Serv. im- Recognizing the extreme sentation. The Court rec- United States information, portance of the free flow 8(c) ognizes that “the man- enactment protects of em- explicitly rights the NLRA congressional encourage intent to ifests express their views on union ployers dividing efforts. debate on labor and organizing opinion The free issues NLRB, management.” Linn v. Plant United Southwire Co. v. 383 F.2d Workers, 53, 62, (5th Local Guard Cir.1967)). (1966). The Our opinions faithfully have reiterated a employer’s Court also holds that “an free to the principle “commit[ment] that debate speech right to communicate his views to campaigns vigorous should be firmly his established and uninhibited,” long so as the debate is free cannot infringed by a union or the retaliatory coercion and threats. Co., NLRB Packing

Board.” v. Gissel Co., NLRB v. Lenkurt Elec. 438 F.2d 23 L.Ed.2d Congressional enactment (citing NLRB v. TRW-Semiconduc 8(c), explains, of Secion Court con tors, Inc., (9th 385 F.2d 759-60 Cir. junction Amendment, with the First allows 1967)). “The exercise of free express “any gener of [their] these campaigns unduly should be re al any views about unionism or of [their] by stricted narrow construction. It is specific particular views about a union” in highly desirable employees in a non-coercive manner. Id. at 89 volved in a campaign union should hear all S.Ct. 1918. question sides of the in they order that consistently Our case law has also em may exercise the informed and reasoned phasized importance of an employer’s Id.; accord, choice that is right.” their of speech freedom in labor mat relations NLRB, Montgomery Ward & v.Co. 385 speech ters. “Freedom of is an essential (8th Cir.1967) (“[T]he F.2d 763 right component labor-management of the rela speech guaranteed by free the First tionship. bargaining Collective will not 8(c) § Amendment and of the Act should work, nor will disputes susceptible labor by not be defeated narrow or strained resolution, to unless both labor and man construction.”). agement are able to exercise right their to ‘uninhibited, robust, in engage and wide- protection speech This of the of both open’ debate.” Steam Press Holdings employees employers and is the heart of Union, Haw. Teamsters Allied & Workers Congress’ design protect to and enhance (9th Local 302 F.3d 1009 Cir. union organizing. The NLRB supports 2002) (quoting New York Times v. Sulli congressional this policy speech, of free van, holding “that it will not right restrict (1964)). L.Ed.2d 686 For a concise and any party employees inform of the rule, accurate adopted statement of the we advantages disadvantages and of unions principle of speech repre free union joining long and of them as as such infor- by sentation matters as crafted the Fifth imparted mation employees in a non- Circuit: Co., coercive manner.” Trent Tube guaranty The freedom of (1964) (internal NLRB quotation assembly to employer and to the omitted); marks see also United Technolo- goes union to the heart of the contest (1985) gies Corp., NLRB employee join over whether an wishes to (“[A]n employer has a fundamental right, employee a union. It is the who is to 8(c) protected by Act, make the choice and a free Section of the flow of infor- mation, bad, good and the informs communicate with employees its concern- him as to the choices available. ing position collective-bargaining ne- gotiations TRW-Semiconductors, Inc., negotia- NLRB and the course of those (9th Cir.1967) (footnote omitted)). F.2d (quoting tions.” (i.e., damages treble amount of

B. for expended in state funds that were violation grantees private prohibits statute, plus penalty equal a civil from using funds received funds). amount of those twice assist, un- promote, the state or deter “to 16445.7(d). 16445.2(d), Attorney §§ The which is defined to include organizing,” ion California, tax- any private or General employer an to influence “any attempt may against suspect- a lawsuit payer, file employees in this state the decision of its relief, injunctive damages, violator ed “for regarding those of its subcontractors equi- penalties, appropriate civil and other a labor support oppose ... [w]hether 16645.8(a). § table relief.” The statute organization [w]hether ... or to become prevailing plaintiff, or certain awards organization.” Cal. any member intervenors, attorney’s prevailing taxpayer 16645.2(a), 16645(a), §§ Gov’t Code 16645.8(d). fees costs. The statute 16645.7(a). prohibited expenditures any attorney’s does not award fees or costs employer payments include creating a prevailing employer. By consulting relating fees to union legal burdens, seemingly compliance impossible organizing as well as the salaries of efforts accounting require- means of onerous supervisors and related lawsuits, stat- ments the threat respect organizing efforts. essentially ute mandates neutral- exempts § 16646. The statute several ity. effectively employer The statute halts types pro-union expenses activities and campaigns organizing to defeat labor activ- prohibition, including from the “[aiddress- or grievance ity employer’s ability a even an to offer ing negotiating or or adminis- opinion a merits union tering bargaining agreement” collective on the of one into, carry- “[njegotiating, neutrality or entering versus another. Similar recognition a ing voluntary agreement agreements, out are sought often 16647(a), organization.” §§ a employers, labor unions from stat- California (d). a pushes employers ute of neu- policy trality, helps which in turn facilitate union The and de- statute entails burdensome organizing. surprise It is no that the Cali- record-keeping. tailed re- The statute sponsored fornia statute was the Cali- certify quires employers that and grantees Federation, AFL-CIO, fornia Labor in advance that the will not state funds be unions. supported by phalanx of labor used for activities Comm, Relations, Sen. on Industrial 16645.2(c), organizing. §§ related to union Rep. B. Comm. for 1999 Cal. Assemb. No. 16645.7(b). addition, In employers and Sess., (June 28, Reg. at 1 1999-00 maintain grantees must detailed records 2000). Equally telling, a firm which law showing that none of the funds have been represented largest itself as “the Union- speech regarding used labor relations. side labor law firm on the Coast” West 16645.7(c). 16645.2(c), §§ Those records Attorney in a wrote letter to the California Attorney must be available made to the 1889, if that AB General not halted upon request. General Id. The statute court, significant positive would “have a that, presumes where are commin- funds organization effect various [union] assist, gled, were funds used to ” mote, drives.... organizing. deter union 16646(b). The carries a air of even- statute false purports employ- handedness. It to limit provisions heavy place enforcement “pro- funds employers. using on affected The stat- ers to either burdens employers grantees organizing ute renders mote” union liable “deter” 16645.7(a). 16645.2(a), systems. §§ organizing. This necessary becomes because understood, course, must What be requires California statute employ- few, any, employers if will wish for public er to monitor and private funds and their to vote for union repre- ensure that the statute’s mandate of fund Rare, indeed, sentation. will the circum- separation addition, is fulfilled. actually stance be where an will requires the employer engage encourage dedicate resources to its em- virtually impossible task of allocating ployees to unionize. The California Team- every single employer expense related to impact legis- sters revealed the true union organizing activity, including super- lation in a letter to certain members of the time, visor time and employee which must legislature California when 1889 was meticulously logged and tracked. under consideration. The California The record before us shows Teamsters Public Affairs “urged Council leveraged unions have significant com- ‘aye’ vote on AB [an] 1889” because it pliance burdens of the statute to enhance “prohibit[s] who receive state their bargaining position against em- using funds from those funds discour- ployers. After AB passed, unions age unionization” and will affect the “all began writing to the California Attorney practice” “employer too common cam- office, General’s alleging violations of the paigns organizing to defeat labor activity.” statute in an effort to coerce employers to added). (emphasis distributing literature, abstain from retain- The compliance provisions are daunting. ing counsel, legal consultants and or other- Employers must maintain records demon- communicating wise with employees about strating a complete separation of state the advantages and disadvantages of em- identify funds. These records must every ployment in a union shop. One union expense at all organizing related to union Attorney wrote the alleged General and campaign, for a pro-union excep- save few employer that an violated the statute be- tions, prove conclusively and that such ex- cause attending who were penses do not derive from state funds. mandatory meeting about union organizing 16645.2(c), 16445.7(c), 16646, §§ 16647. were not paid separate paycheck with a The statute a presumption creates that the employee time that each spent at employer used state funds for unionization meeting. Another alleged union a viola- purposes proven unless otherwise. statute, tion of the sup- little factual 16646(b). presumption applies This port, but offered to alleged “settle” the employer even when an has sufficient pri- violation if employer agreed to enter vate funds such that no state funds were neutrality agreement into a with the union. actually expended. Id. The statute’s docu- alleged Yet another union employ- that an demands, require employ- mentation er violated AB hiring attorney an every to track employee ers moment of to represent during organizing it an drive every expense time and that somehow re- arranging pay without legal for these efforts, deterring lates to union organizing conclusively services from funds that were operate employers to inhibit from opposing derived from a source other than the state. representation drives at all. AFL-CIO, attempts by The in briefs filed in comply appeal, downplay To this the decid- with the statute and continue oppose edly pro-union impact unionization or of AB 1889 are be- speak out on the another, merits of one union versus lied the record before the court. What must create and maintain two record teaches is that the unions’ have completely separate accounting payroll and and will aggressively gain use 1889 to disputes power ance the uncontrolled in labor and between special advantage power management be- and labor further their

thereby alter the balance employers. respective unions Trades Bldg. tween interests.” & (“Boston Associated Council v. Builders light In burdens this record these 218, Harbor”), 226, 507 U.S. 113 S.Ct. straight face that it cannot be said with (1993) (internal quo- an employer’s not affect the statute “does omitted). cast Although tation marks ability to use funds connection its own an effort to state neu- nominally as ensure activity.” Opinion organizing with union statute, trality, by stifling the California significant The of the Court at 1090. abili- speech rights employers and their impact employ- AB 1889 has on undeniable in a ty to about participate debate that not speech rights ers’ means employ- Amendment, generally value of unions or advise it violate First but it does oper- preferable, ees as to which union is undoubtedly the NLRA. significantly empower ates to labor unions Ill so, against employers. doing as preemption doc Court’s destroys the delicate balance be- they trines as relate to the NLRA have tween unions and as man- long reinforcing been centered around by Congress through dated the NLRA. Aet[, was to obtain “purpose which] reason, For initial AB 1889 is this application’ of its ‘uniform substantive NLRA, to Ma- preempted by pursuant rules and avoid the ‘diversities and con Rela- Employment v. Wisconsin chinists likely to a variety flicts result from of local Commission, tions 427 U.S. and attitudes toward labor con procedures 2548, 49 L.Ed.2d 396 ” Co., NLRB v. Nash-Finch troversies.’ Machinists based on the “is 30 L.Ed.2d premise pressure that ‘the use economic (1971) (quoting Garner Teamsters by the to a labor is ... parties dispute Union, S.Ct. process part parcel of collective (1953)). The articu L.Ed. 228 Court has ” bargaining,’ which means that “neither a “two NLRA pre-emption lated distinct state nor the National Labor Relations Diego principles” expressed San flexibility Board picking is ‘afforded Garmon, Building Trades Council choosing which economic of labor devices L.Ed.2d and shall be unlaw- management branded (1959) (“Garmon preemption”), and Ma ” Newspapers, City ful.’ v. Alameda Inc. Employment chinists Wisconsin Rela (9th Cir.1996) 1406, Oakland, 95 F.3d 1413 Commission, 427 tions U.S. 96 S.Ct. Machinists, 144, 149, 427 (quoting at U.S. (1976) (“Machinists 2548, 49 L.Ed.2d 396 2548). 96 S.Ct. preemption”). Metropolitan Ins. Co. Life Massachusetts, 724, 748, 471 pre- U.S. 748- Under the doctrine Machinists (1985). 105 S.Ct. L.Ed.2d emption, cannot “deny[ party a state one ] ... Congress that him to weapon meant I would that the hold doc- available,” reg- have because such a state and trines established in Garmon Machin- ulation the ac- “stands as obstacle to completely preempt provi- ists the relevant complishment and the full execution of sions of the statute. California

purposes objectives Congress.” and A. Machinists, 150, 151, 96 S.Ct. (internal omitted). quotation “Machinists marks pre-emp- doctrine of preserves Congress’ Employers tion intentional have a of tools bal- number H05 disposal exercising weapon their in their to seeking Section those unionize 8(c) rights creating their on union an ever express present views threat of consum- ing expensive An organizing per litigation efforts. is should an em- mitted, ployer deign to example, express opinion its views offer its on the merits of unionization. The representation about masses of statute ties mandatory management financially in hands employees, meetings, on pro-union time, groups reign.2 allows free company long so as such does not occur within hours of an elec Preemption prevail will over the applica- Co., Plywood tion. See Peerless 107 tion of local law even when federal law (1953); NLRB Livingston Shirt does not expressly protect the conduct at Em Corp., 107 NLRB if application issue “the of state ... law ployers may dispatch supervisors to en operate purpose would frustrate the gage during in one-on-one discussions legislation.” the federal Teamsters v. employees nega work time with about the Morton, 252, 258, 260, 377 U.S. see, representation, tive effects of union (1964) 1253, 12 (noting L.Ed.2d 280 also Co., e.g., Lenkurt Elec. 438 F.2d at 1107- that a conflicting state law cannot per- be may disseminate written anti-un congressional mitted to “frustrate the de- materials, Beverly ion Enterprises-Ha termination weapon to leave th[e] self- (1998) waii, Inc., 326 NLRB available, help upset and to the balance of (holding [ejmployer that “the did en power management between labor and ex- objectionable gage conduct when its su pressed in policy”). our national pervisors flyers handed out at a [even] notion, Machinists affirms this holding when [e]mployer enforcing time was particular activity might “a pro- its otherwise valid no-distribution rule tected federal law not when it [is against employees”). NLRA], explicitly protected by the but also it an activity Congress when was A explicitly state law that both targets intended to be unrestricted [a]ny gov- directly regulates processes controlled power regulate.” ernmental by the NLRA under the (internal quotation 96 S.Ct. 2548 Machinists doctrine. Because AB omitted). marks face, directly on regulates the union organizing process imposes itself and sub- overriding principle An of the NLRA is stantial compliance litigation costs and risk bargaining process that the collective can- employers participate who not function unless both using statutorily protected cess self- ability have the engage mechanisms, help it interferes with an area open concerning and robust debate union- Congress intended to leave free ization. NLRB v. Laughlin See Jones & regulation. The statute Corp., hands coercive Steel 435-36, 565, (1967).

2. I note an additional manner in which AB 87 S.Ct. 1889, however, 1889 alters the balance as established be- Under AB unions are able to employers: tween labor unions and AB 1889 bypass these federal limits and file lawsuits in dangerously rendering comes close to em- court, granting employ- state access to them book, ployers’ open financial records an ers’ financial records in state court. With which federal labor law does not La- allow. hand, these records in the unions would have permitted employ- bor unions are to receive leverage advocating additional for union- only ers’ financial records under the NLRA place pressure ized workforce and additional winning legiti- after an election and for simply recognize given on an bargaining purposes. mate collective See union. Co., 432, NLRB v. Acme Industrial 385 U.S. 1106 (1937) (“The process Act will theory bargaining of the is fects the NLRA

L.Ed. 893 ... opportunity negotiation regulation for even preempted, that free if such comes and adjustments may bring about of a on the use in the form restriction of Act in itself does which the agreements Metropolitan funds. See Milwaukee NLRA’s compel.”). attempt County, Commerce v. Milwaukee Assn. of equality purpose “restor[e] is to declared Cir.2005). (7th 277, F.3d 278-79 431 among other bargaining power” by, of proce- and B.

ways, “encouraging practice by pro- bargaining dure of collective preemption of ex- The doctrine Garmon of full tecting the exercise workers uphold policy and to ists national association, self-organization, freedom of Congress’ to “entrust[] vindicate decision of their designation representatives policy administration the labor negotiat- choosing, purpose for the own to a Nation centralized administrative terms and conditions of them em- ing the agency, procedures, armed with its own 29 U.S.C. 151. ployment.” equipped specialized with its knowl- By impeding the flow of information edge experience.” and cumulative San Di- unionization, substantive discussion Garmon, Building v. ego Trades Council substantively and dis- regulates the statute U.S. 79 S.Ct. “Congress’ balance be- rupts intentional (1959). L.Ed.2d 775 The California statute manage- power tween the uncontrolled employers’ rights speech stifles which are respective ment and labor further their law, doing so, granted by federal and in Harbor, Boston 507 U.S. interests.” ability uphold impedes the of the NLRB (internal quotation 113 S.Ct. its election rules administer omitted). marks The statute frustrates free and fair I hold that elections. would implementation of the [NLRA’s] “effective AB 1889 is also under the Gar- processes,” rendering pre-emption of mon doctrine. appro- Machinists California under upholding the NLRA from state-law Machinists, priate. dilution, empha- Court has (internal marks omit- quotation S.Ct. 2548 importance “delimiting sized the areas ted). of conduct which be free from must purports through That California to act if regulation policy is to be national left spending power regula rather than its Garmon, unhampered.” tory power, is a “distinction without a dif preemption 79 S.Ct. 773. Garmon fo- Dep’t ference.” Wisconsin Indus. avoiding potential cused “the conflict of Inc., Gould, authorities, law-enforcing two dis- 1057, L.Ed.2d 223 cannot “[W]e systems, harmonies inherent in two one Congress to allow believe intended state, federal the other of inconsistent to interfere ‘interrelated States with the differing standards of substantive law and law, remedy, federal scheme and admin remedial schemes.” Id. at 79 S.Ct. istration,’ they long under the NLRA as through spending did so exercises are two There distinct circumstances un- (quot Id. at power.” 773) Garmon, der Garmon can ing U.S. at Sears, (citation omitted). emerge. Roebuck & Co. San Although a state’s abili County Carpenters, Diego Dist. ty to control the of its funds is an Council use 180, 187, interest, 56 important regulation (1978). targets substantially af- 209 specifically preempts L.Ed.2d The first activity actually protected pro- employer which is speech, compliance .to ensure law, dictating 8(c). hibited federal that with Section See Midland Nat’l Life may fairly it is clear 11823 or “[w]hen Co., (1982) (“[W]e Ins. 263 NLRB assumed that the activities which a State probe will into falsity no[t] the truth or regulate protected [by purports statements, the parties’ campaign and [] NLRA], due for the regard federal enact- will not set elections aside on the basis of jurisdiction requires ment that state must misleading campaign statements.... [But] Garmon, yield.” 359 U.S. at 79 S.Ct. we will protect against continue to other preemp- 773. The second form of Garmon conduct, campaign threats, prom such as merely tion deals with activities that are ises, like, or the with interferes em arguably protected arguably pro- either choice.”). ployee free For example, the Sears, hibited the Act. at 187- NLRB long “time, has enforced various 88, 98 S.Ct. 1745. second and This distinct place, and manner” rules that bar certain application of Garmon holds types campaign speech activities activity arguably sub- “[w]hen vicinity of the polls or the final ject Act], the States as well [to as the hours before an election. See Peerless federal courts must defer to the exclusive Co., Plywood 429-30; NLRB Mil competence of the National Labor Rela- chem, Inc., (1968). 170 NLRB 362-63 tions if danger Board of state interfer- that, The NLRB has held consistent with policy ence with national is to be averted.” 8(c), Section employers may hold mandato Garmon, 359 U.S. at 79 S.Ct. 773 ry meetings employees with about union added). (emphasis efforts, organizing Livingston Corp., Shirt branch of the preemp- first Garmon 107 NLRB supervisors direct issue, doctrine preempts tion is at AB informally representation discuss a cam intent, Congress’ Co., paign employees, Stanley see Oil Court and Ninth precedent Circuit all lead (1974), 213 NLRB and distribute inextricably to thé conclusion that Section anti-union literature to even 8(c) actually of the NLRA grants and when enforcing no-solicitation rule to protects speech rights of employers. See employees, Beverly Enterprises-Hawaii, § supra I. compre- Because the Act is a . 326 NLRB at 336 scheme, regulatory hensive to say that an activity punishable by is not the Act is the regulates The California statute equivalent protecting activity. AB partisan employer same speech that Con- speech rights, 1889 encumbers these gress jurisdiction committed of the so, doing jurisdiction interferes with the so, doing NLRB. In discourages of the NLRB. Congress has directed the employer speech, which works at cross- NLRB to oversee elections and determine purposes with the relaxed election conduct what constitutes an unfair labor rules established Congress NLRB. practice under the Act. See 29 U.S.C. “entrusted ... a [to wide de- NLRB] 158(a)(1). Broadly speaking, and consis- gree of in establishing discretion 8(c) NLRA, tent with Section safeguards necessary cedure and to insure approach NLRB takes a laissez faire bargaining rep- the fair and free choice of employee employer speech, allowing by employees.” NLRB resentatives passionate, partisan proceed debate to dur- Co., A.J. Tower ing organizing a union campaign. See (1946). By 91 L.Ed. Co., discouraging Trent Tube 147 NLRB time, speech, directly At the jurisdic- same the NLRB has California regulate tion to usurps ability certain bandwidth of of the NLRB to adminis- Sears, & 436 U.S. Company, fair and free Roebuck foster elections will ter misunderstanding and a of choice. employee 98 S.Ct. ap- preemption form of Garmon the goal of hewing the NLRA’s Far from AB plies to 1889. of mini policy installing a “national labor strife,” Cap Emporium mizing industrial upon relies opinion The the court Org., 420 Cmty. well Co. v. W. Addition proposition the that Garmon Sears for 50, 62, 43 L.Ed.2d 95 S.Ct. applies only the contro- preemption when (1975), liti AB additional encourages is iden- versy presented the state court allowing and the Califor by unions gation pre- that would be controversy tical to the bring proceedings Attorney nia General to of the opinion to the NLRB. The sented very partisan the in state court attack however, recognize, that this court fails to protects. NLRB employer speech that the applies of identicalness requirement to “en Congress’ defies decision California applied type preemption the of Garmon alone” the criteria to the Board trust] merely argu- activities to those that are necessary representation to conduct fair a by ably prohibited the Act. Because Corp., NLRB v. S.S. election. Waterman Suprem- heightened concerns rooted 493, 84 L.Ed. 309 U.S. Constitu- acy Clause United States tion, requirement identicalness does preemption is ‘intended “Garmon activity arguably if the apply is either the Na- preclude state interference with or, here, actually protected, protected interpreta- tional Labor Relations Board’s readily Act. An by analysis of Sears active of the inte- tion and enforcement misconception uncovers the of the Garmon scheme of grated regulation established expressed opin- doctrine as in the court’s ” Newspapers, NLRA.’ Alameda today. ion filed at 1412 Tran- (quoting F.3d Golden State of a power At issue Sears was the City Corp. Angeles, sit Los 475 U.S. trespass court to hear lawsuit L.Ed.2d 616 brought by an to enforce tres- (1986)); Gould, at 286- see also 475 U.S. against passing picketing. laws displace- 106 S.Ct. 1057. California’s Sears, The 98 S.Ct. 1745. protec- ment of NLRA’s free picket- Court first considered whether the tions and its with the NLRB interference ” “arguably prohibited by federal ing was render under Gar- law, grounds would be possible applies be- mon. Garmon 190-98, Id. at 98 S.Ct. 1745 preemption. AB 1889 conduct so “regulate[s] cause added). (emphasis concluded The Court aim plainly within central of federal that, regard activity argu- which is great too regulation [that involves it] Act, power ably prohibited by pre- of conflict asserted danger between Garmon (and by Congress imposed and requirements risk of emption accompanying law,” “potential thus frus- creating jurisdiction interference with the Garmon, purposes.” tration of national NLRB) emerges “the contro- only when 244, 79 359 U.S. at 773. S.Ct. to ... could versy is identical that which been, not, was to the presented have but opinion general The court avoids Board.” Id. Labor pre-emption and re- principles Garmon in- concluded that the NLRB’s The Court overly them with an narrow view places quiry regarding arguably prohibited inapplicable to the Garmon doctrine that is vastly different prove conduct would to be dispute. critical error of the this opinion misreading inquiry of the court in a state court as lies than 199-200, trespass, protected by and there- the Act. 436 whether there was fore, preemption. to find declined Garmon 98 S.Ct. 1745. question to the

The Court then turned regard At issue with to AB is not a protected character arguably whether the arguable prohibition mere or arguable pro- could lead to picketing of the union’s Gar- Rather, tection granted the NLRA. 199-207, preemption. mon Id. 8(c) Section of the NLRA constitutes an Preliminarily, the Court noted that 1745. explicit, protection explicitly actual which with conduct ac- “state-court interference protects speech rights of employers. tually protected by the act” invokes a “con- All along, the explicitly Sears Court dis- objection” in stitutional rooted the Su- closed that it was addressing a case premacy Clause. Id. at 98 S.Ct. 1745. actually protected involved conduct. Therefore, of federal su- “[considerations Sears, (“The 436 U.S. at ... premacy implicated greater to a not, however, case is one which ‘it is activity extent when labor-related is may fairly clear or be assumed’ that the prohibited.” tected than when it is Id. at subject matter which the state court 200, 98 S.Ct. 1745. The Court concluded sought ... regulate is either prohibited if though peaceful, that even the Union’s Act.”). protected by Federal could trespassory, picketing arguably be light explicit of the speech protections Act, protected under the such a trespass 8(c) NLRA, granted by Section of the likely unprotected “is far more to be than Sears test of strict identicalness does not Sears, protected.” 436 U.S. at apply preemption analysis to a Garmon Therefore, held, 1745. S.Ct. Court AB Simply put, opinion 1889. jurisdiction adju- “the assertion of state [to Sears, court’s reliance on applica- and its alleged trespass] dicate the does not create tion of the test of identicalness between significant prohibition protect- risk of Sears, inquiry NLRB’s and the state court’s ed conduct.” 436 U.S. at inquiry, misplaced. is Notably, regard to the arguably protected picket- conduct of the analysis applies The traditional Garmon ing trespass, did require Court protected explicitly speech free (as respect arguably prohib- it did with rights employers, and because AB 1889 conduct) ited that the controversies before rights interferes with those and under- the NLRB and state court be identical proce- mines the rules and election invoking before preemption. Garmon NLRB, I AB dures of the would hold that indicates, analysis

As this Sears preempted 1889 is under Garmon. preemption applies only rule that Garmon inquiries when the state court and NLRB IV only applies activity are identical which I must respectfully dissent because arguably prohibited is under the Act. With 1889 violates the Amendment and is First regard arguably to conduct that is protect- both under Machinists Act, ed under the standard under properly Garmon. The District Court en-

which found preemption is becomes less summary judgment plain- tered favor of stringent heightened because of federal su- tiffs. premacy Accordingly, com- concerns. pared activity merely arguably Act,

prohibited by Garmon readily activity

is more found relation to arguably protected actually

which is

Case Details

Case Name: Chamber of Commerce of the United States v. Lockyer

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Sep 20, 2006

Citation: 463 F.3d 1076

Docket Number: 03-55166, 03-55169

Court Abbreviation: 9th Cir.