RHODE ISLAND HOSPITALITY ASSOCIATION; PRI I, L.P.; PRI XVIII, L.P., Plaintiffs, Appellants, v. CITY OF PROVIDENCE, by and through its Treasurer, James J. LOMBARDI, III, Defendant, Appellee.
No. 11-1415.
United States Court of Appeals, First Circuit.
Decided Dec. 2, 2011.
Heard Oct. 4, 2011.
17
Anthony F. Cottone, Deputy City Solicitor, with whom Jeffrey M. Padwa, City Solicitor, was on brief, for appellee.
Michael T. Anderson, with whom Murphy Anderson PLLC, Amato A. DeLuca, Jeffrey A. Mega, and DeLuca & Weizenbaum Ltd. were on brief, for Hospitality Employees and Community Organizations, amicus curiae.
Before LYNCH, Chief Judge, BOUDIN and STAHL, Circuit Judges.
This case presents the issue of the constitutionality of an ordinance of the City of Providence requiring that, when there is a change in the identity of a hospitality employer, that employer must retain its predecessor‘s employees, subject to some conditions, for a three-month period. Plaintiffs, in their request for a pre-enforcement declaratory judgment that the ordinance is unlawful, contend that the ordinance is pre-empted under the National Labor Relations Act (NLRA), and violates the Equal Protection Clause and the Contract Clause. The district court rejected plaintiffs’ claims. R.I. Hospitality Ass‘n v. City of Providence, 775 F.Supp.2d 416 (D.R.I.2011). We affirm.
I.
This suit arises out of Ordinance 467, which was enacted by the City of Providence and regulates segments of the hospitality industry. The initial version of the Ordinance was passed on October 26, 2009; it was substantially amended on November 1, 2010. Providence, R.I., Ordinance 334 (Nov. 1, 2010) (codified at
The preamble to the Ordinance states that it was enacted in response to “the wholesale displacement of emрloyees through transfers of hotel operations in New England in the recent past,” which “has caused great public outcry, and has caused immeasurable damage to the reputation of the tourist industry in the regional economy.” Providence, R.I., Ordinance 334, pmbl. (Nov. 1, 2010). The stated purpose of the Ordinance is “to bolster Providence as a tourist destination, and to promote the stability of Providence‘s hospitality and tourism businesses.”
The Ordinance regulates the “hospitality business,” which includes:
any hotel, motel, resort, boarding house, or bed and breakfast which is kept, used or advertised as, or held out to the public as, a place where sleeping or housekeeping accommodations are supplied for pay to guests ... which is operating within the City of Providence with at least 25 rooms, and any in-house component thereof, including housekeeping services, front desk, laundry, room service, valet, bell desk, restaurant, food and/or beverage service or other operation facilitating guest services....
The triggering condition for operation of the Ordinance is a “change in the identity of the hospitality employer,”
The Ordinance requires that
[i]n the event of a change in the identity of the employer at a hospitality business, the new employer (whether the hospitality business owner or its manager) shall retain for at least three (3) months after the commencement of operation of the hospitality business under the new hospitality business employer, those employees who were employed for at least two (2) months preceding the date on which the previous hospitality business employer‘s status as employer terminated.
This three-month retention of those previously employed for two months or more is subject to three qualifications. First, such employees3 need not be retained (or may be discharged during the three-month period) if “the new hospitality business employer determines that fewer employees are required for its full operation,” in which case the employer need only “retain that number of employees needed for its new operations.”
The Ordinance contains two other provisions of note. First, it contains a “preservation of rights” section, which provides that “[n]o provision of this Ordinance shall be construed to impair, prohibit, or provide for any right of recovery for, that lawful exercise of employees’ or employers’ right to engage in strike or lockout,” and that “[n]othing in this Ordinance shall impose any obligation, direct or indirect, on any instrumentality of the State of Rhode Island.”
II.
The plaintiffs are PRI I, L.P., PRI XVIII, L.P., and the Rhode Island Hospitality Association. PRI I does business as the Hilton Providence and PRI XVIII does business as the Westin Providence. The Westin‘s workforce is unionized; the Hilton‘s is not. The Rhode Island Hospitality Association is a trade group of the food service, lodging, restaurant, and tourism industry in Rhode Island, and includes eight hotels within Providence (including the two individual plaintiffs), all of which are hospitality businesses within the meaning of the Ordinance.
The parties submitted a set of stipulated facts and agreed that the case would be decided on the merits. After the parties briefed the issues and a hearing was held, the district court rejected plaintiffs’ claims and entered judgment for the defendant. R.I. Hospitality, 775 F.Supp.2d 416. This appeal followed.
III.
Because the parties agreed to have the case decided on the merits on a set of stipulated facts, we review the district court‘s factual inferences for clear error and any purely legal rulings de novo. See García-Ayala v. Lederle Parenterals, Inc., 212 F.3d 638, 643-45 (1st Cir.2000); United Paperworkers Int‘l Union, Local 14 v. Int‘l Paper Co., 64 F.3d 28, 31-32 (1st Cir.1995). Here, the parties do not dispute any facts and the only questions presented are legal, so review is de novo.
Plaintiffs advance four theories as to why they are entitled to a pre-enforcement declaratory judgment that the Ordinance is prohibited by federal law.4 Their primary argument is that the Ordinance, for several reasons, is pre-empted under the NLRA‘s Machinists pre-emption doctrine. See Lodge 76, Int‘l Ass‘n of Machinists v. Wis. Emp. Relations Comm‘n, 427 U.S. 132 (1976) (hereinafter Machinists). Second, they contend that the ordinance is pre-empted under the NLRA‘s Garmon doctrine. See San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236 (1959). Third, they claim that the Ordinance violates the Equal Protection Clause. Finally, they argue that the Ordinance effects a violation of the Contract Clause.
Each of these claims fails and the Ordinance survives pre-enforcement review. Two other courts have considered similar arguments about similar retention ordinances and reached the same conclusion, albeit over dissenting opinions.5 See
A. Machinists Pre-emption
While the NLRA does not contain an express pre-emption provision, the Supreme Court has developed two pre-emption doctrines applicable to the Act: Garmon pre-emption and Machinists pre-emption. The first to be developed was the Garmon doctrine, which holds that “States may not regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits.” Wis. Dep‘t of Indus., Labor & Human Relations v. Gould Inc., 475 U.S. 282, 286 (1986). Garmon itself foreshadowed what was to become the Machinists doctrine, noting that the NLRB “may decide that an activity is neither protected nor prohibited, and thereby raise the question whether such activity may be regulated by the States.” 359 U.S. at 245.
The foreshadowed issue was squarely presented in Machinists. There, after a collective bargaining agreement had lapsed and the union and employer were negotiating a new agreement, the union adopted a resolution binding union members to refuse to work any overtime, as part of its strategy in the ongoing bargaining negotiations. 427 U.S. at 134. The employer filed a charge with the NLRB, alleging that this resolution violated the NLRA; the NLRB dismissed the charge on the ground that the conduct was neither protected nor prohibited by the Act. Id. at 135. The employer then filed a complaint before a state agency, alleging that the resolution violated state law. Id. The state agency agreed with the employer and held that it could regulate this conduct as the NLRB had held it was neither protected nor prohibited under the NLRA. Id. at 135-36.
In Machinists, the state agency had essentially thrust itself into an ongoing collective bargaining negotiation. The Supreme Court reversed the state agency‘s determination. The Court noted that “the crucial inquiry regarding pre-emption is ... whether ‘the exercise of plenary state authority to curtail or entirely prohibit self-help would frustrate effective implementation of the Act‘s processes.‘” Id. at 147-48 (quoting Bhd. of R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 380 (1969)). The Court explained its rationale in broader terms than the actual test it created, that Congress intended certain conduct “be unregulated because [it was to be] left ‘to be controlled by the free play of economic forces,‘” even where such conduct was neither arguably protected nor arguably prohibited under the Act. Id. at 140 (quoting NLRB v. Nash-Finch Co., 404 U.S. 138, 144 (1971)). The Court stated that this limitation of state authority was a negative implication of the NLRA: “To sanction state regulation of such economic pressure deemed by the federal Act ‘desirabl[y] left for the free play of contending economic forces, is not merely [to fill] a gap [by] outlaw[ing] what federal law fails to outlaw; it is denying one party to an economic contest a weapon that Congress meant him to have available.‘” Id. at 150 (altera-
Under Machinists, the Court has addressed whether a variety of state conduct is pre-empted by negative implication from the NLRA, although not in a case on all fours with this case. For example, breach of contract actions brought by employees who were hired to replace striking workers against employers who promised them permanent employment are not pre-empted under the doctrine. Belknap, Inc. v. Hale, 463 U.S. 491, 500–07 (1983). A law requiring group health plans to provide a minimum level of mental health protection, Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 729-31 (1985), and a law requiring certain employers who cease or relocate operations to provide severance payments to employees, Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 3-4 (1987), have also been upheld against Machinists challenges.
The Court has found other types of conduct which more directly involves the state in ongoing labor negotiations, strikes, or labor actions to be pre-empted. In Golden State Transit Corp. v. City of Los Angeles, 475 U.S. 608, 619-20 (1986), the Court held that a city council‘s conditioning of a taxi cab franchise renewal on resolution of an ongoing labor dispute by a certain date, and consequent expiration of the franchise, was pre-empted. The Golden State Transit Court held that the labor dispute and the franchise renewal issue had become clearly intertwined. Id. at 610. The effect of the city council‘s action was to thwart the ongoing bargaining process by placing a time limit on the company‘s use of its economic power to withstand the strike. Id. at 615. This was a direct violation of Congress‘s intent that the city not use its licensing power to destroy the balance between union and management in the use of economic weapons. Id. at 619.
Most recently, in Chamber of Commerce v. Brown, 554 U.S. 60, 62 (2008), the Court held that a California law prohibiting certain employers that receive state funds from using such funds to assist, promote or deter union organizing was pre-empted, given the “explicit direction from Congress to leave noncoercive speech unregulated.” Id. at 68. Further, the California statute exempted activities that promoted unionization. Id. at 63. Significantly, despite its statement of neutrality, the state law did not operate neutrally as to employers, who were forbidden from using these monies to influence the decisions of employees as to whether to join unions. Id. at 63, 71. It also established a “formidable” enforcement scheme, created presumptions against employers, and permitted suit by the state attorney general and any private taxpayers. Id. at 63-64, 72. This meant that even “a trivial violation of the statute could give rise to substantial liability.” Id. at 72.
On the other side of the equation, the Court found that the NLRA itself embodies a “First Amendment right of employers to engage in noncoercive speech about unionization.” Id. at 67. That Congressional judgment was reinforced with the enactment of the Labor Relations Act of 1947, 61 Stat. 136,
Plaintiffs sound three themes under Machinists. The first two are more closely related: (1) The Ordinance creates a major risk that a business whiсh undergoes a change in identity under the Ordinance will trigger the NLRB‘s “successorship doctrine,” whereby businesses deemed to be “successors” to prior businesses they have taken over are required to recognize and bargain with the union that represented the employees of the predecessor employer. See Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (1987). Because the Ordinance requires new employers to hire their predecessors’ employees for three months, plaintiffs argue this makes it much more likely, or even certain, the NLRB will conclude an employer is a successor and required to bargain with any incumbent union; and (2) that the Ordinance accordingly improperly enhances the bargaining power of unions. The final claim is (3) that an employer has a “right” to make its own hiring decisions upon acquiring a new business and that right falls within the zone of conduct Congress intended to leave unregulated by the states. These claims are, to a degree, interrelated.7
1. The NLRB Successorship Doctrine
Plaintiffs’ primary Machinists claim involves the relationship of the Ordinance‘s three-month mandatory retention period to the NLRB‘s successorship doctrine. This doctrine deals “with the issue of a successor employer‘s obligation to bargain with a union that had represented the employees of its predecessor.”8 Fall River Dyeing, 482 U.S. at 36. A finding of successorship imposes an obligation on the successor “to bargain with the union” of its predecessor. Id. at 40. However, even a successor “is ordinarily free to set initial terms on which it will hire the employees of a predecessor,” and it is not bound by the substantive provisions of the predecessor‘s collective-bargaining agreement.9 Id.
Under this doctrine, determining whether a new company is a successor “is primarily factual in nature and is based upon the totality of the circumstances of a given situation.” Fall River Dyeing, 482 U.S. at 43. “[T]he focus is on whether there is ‘substantial continuity’ between the enterprises,” and involves assessment of a variety of factors:
whether the business of both employers is essentially the same; whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors; and whether the new entity has the same production process, produces the same products, and basically has the same body of customers.
While the doctrinal test involves a multitude of factors, typically the new employer must “hire a majority of its employees from the predecessor” to be denominated a successor by the NLRB. Fall River Dyeing, 482 U.S. at 41; see also Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 263 (1974) (to find successorship requires finding “substantial continuity in the identity of the work force across the change in ownership“).
Plaintiffs argue that because the Ordinance mandates retention of the predecessor‘s employees, and because the composition of the workforce is an important factor in determining whether a new employer is a “successor,” the Ordinance has an impermissible impact on the succes-
sorship determination, and it is pre-empted under Machinists.
Plaintiffs’ argument rests on two premises: (1) that if the NLRB reached such a conclusion, the state law would be pre-empted, and (2) that the risk that the NLRB might adopt such a conсlusion is, of itself, sufficient to render the Ordinance pre-empted. The first situation is not before us. The NLRB has not to date reached such a conclusion. This challenge necessarily rests on the second premise. We will assume arguendo that, at least in some circumstances, a strong risk of an NLRB decision could result in Machinists pre-emption, even though there is a presumption against pre-emption. See Bldg. & Constr. Trades Council v. Associated Builders & Contractors, 507 U.S. 218, 224 (1993) (explaining that the courts are “reluctant to infer pre-emption“). Even on that assumption, the degree of risk present here is insufficient to result in Machinists pre-emption.
There are two reasons for this. The first is that the Supreme Court case-law on successorship stresses the voluntary and conscious decisionmaking by the new employer and the consequent effect on employees’ views of their employment. The Supreme Court has explained that the successorship doctrine is based on the “conscious decision” of the new employer “to maintain generally the same business and to hire a majority of its employees from the predecessor.” Fall River Dyeing, 482 U.S. at 41 (emphasis added). “This makes sense when one considers that the employer intends to take advantage of the trained work force of its predecessor.”
Secondly, the NLRB has not to date clearly moved in the direction plaintiffs posit, and it is far from clear that it will. Indeed, the one NLRB administrative law judge (ALJ) to address this matter in depth, in an opinion which went unreviewed by the full board, reached a conclusion directly opposite to plaintiffs’ hypothesis. M & M Parkside Towers LLC, No. 29-CA-27720, 2007 WL 313429 (N.L.R.B. Jan. 30, 2007) (ALJ opinion). There, the ALJ explained that, under a similar 90-day retention ordinance, the appropriate time to make the successorship determination was not when the employees were initially hired pursuant to the ordinance, nor at the end of the 90-day mandatory employment term, but rather on “the date that offers of employment are actually made, or if not made, at a reasonable time after the expiration of the 90 day period.”
While the ALJ‘s opinion in M & M Parkside does not bind the agency, the NLRB‘s General Counsel (at least as of the date of M & M Parkside) has adopted a similar position: that the successorship determination should be made at the end of the three-month retention period.
It is true that a second ALJ addressed this question more than fifteen years ago
in United States Service Industries, Inc., No. 5-CA-24575, 1995 WL 1918207 (N.L.R.B. Dec. 13, 1995) (ALJ opinion), and reached a different conclusion. The ALJ rejected the new employer‘s argument that Fall River Dyeing‘s discussion of a conscious decision to hirе the employees had any impact on the successorship determination. U.S. Serv., 1995 WL 1918207. Instead, the ALJ held that “[b]ecause the Board has never formally adopted a requirement that a successor employer must consciously decide to avail itself of its predecessor‘s trained workforce in order to be considered a Burns’ successor employer,” the fact that the hiring was pursuant to a compulsory retention ordinance (similar to the one at issue in this case) did not alter the application of the successorship doctrine.
Nevertheless, it is possible that the NLRB, in exercising its “considerable authority to interpret the provisions of the NLRA,” Fall River Dyeing, 482 U.S. at 42, might adopt another rule, causing the Ordinance to have a dramatic impact on the successorship determination.10 Cf. Sahara Las Vegas Corp., 284
The remedy for such a determination, if it should ever be made, does not lie in this pre-enforcement suit. Nothing would prohibit a successor from raising the pre-emption question in an appeal from the NLRB successorship determination based on the involuntary continuation of employment under the Ordinance or in a state court action11 enforcing the Ordinance. Indeed, the latter situation is the most usual format in which Machinists issues have been resolved. See Fort Halifax, 482 U.S. at 5-6 (appeal from state court enforcement of severance pay statute); Metro. Life, 471 U.S. at 734-38 (appeal from state court action seeking declaratory and injunctive enforcement of state law); Belknap, 463 U.S. at 496-97 (appeal from state breach of contract judgment); Machinists, 427 U.S. at 135-36
(appeal from state commission cease and desist order).
Alternatively, a new action for declaratory relief regarding the Ordinance could be brought in federal court, should the NLRB do what plaintiffs fear. See Brown, 554 U.S. at 64-65 (suit requesting injunctive relief preventing state statute‘s enforcement); Golden State Transit, 475 U.S. at 611-13 (declaratory action challenging city‘s intervention in labor dispute); N.Y. Tel. Co. v. N.Y. State Dep‘t of Labor, 440 U.S. 519, 525-27 (1979) (declaratory action challenging unemployment benefits provided to striking workers).
As a result, in this request for pre-enforcement declaratory relief, we are unable to conclude that the Ordinance “would frustrate effective implementation of the Act‘s processes” with respect to the successorship determination. Machinists, 427 U.S. at 148 (quoting Jacksonville Terminal Co., 394 U.S. at 380) (internal quotation marks omitted); see also Livadas v. Bradshaw, 512 U.S. 107, 119 (1994) (explaining that NLRA pre-emption analysis “turns on the actual content” оf the state policy and “its real effect on federal rights“).12 The cases in which the
2. The Claim That Employees Are Given Benefits For Which They Would Otherwise Have Had To Bargain
Plaintiffs’ second Machinists claim is that, by providing the employees with benefits for which they otherwise would have had to bargain, the Ordinance impermissibly enhances employee and union bargaining power, rendering it pre-empted. This particular logic was rejected by the Supreme Court in Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985), and Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987), and we reject it here.
The Court in Fort Halifax rejected a Machinists challenge to a Maine law requiring certain employers to provide severance pay to employees when the employer relocated or ceased operations. The Court explained that:
It is true that the Maine statute gives employees something for which they otherwise might have to bargain. That is true, however, with regard to any state law that substantively regulates employment conditions. Both employers and employees come to the bargaining table with rights under state law
likely that a new employer would be required to retain workers during the renovation period, as either the employer would not have “commenced” operations, or if it were deemed to have commenced operations, the provision of the Ordinance allowing it to discharge employees if “fewer are required for its full operation than were required by the previous hospitality business employer” would likely apply, as the “full operation” at the time would simply be the renovation project.
However, it is unclear whether in such a circumstance the new emрloyer would not be
that form a ‘backdrop’ for their negotiations.
Fort Halifax, 482 U.S at 21 (quoting Metro. Life, 471 U.S. at 757).
The Court concluded by holding that “the mere fact that a state statute pertains to matter over which the parties are free to bargain cannot support a claim of pre-emption.” Id. The plaintiffs’ argument provides no basis to distinguish this case from Fort Halifax.13
It is true that the Court in Metropolitan Life and Fort Halifax upheld what it characterized as “[m]inimum state labor standards” that were “not inconsistent with the general legislative goals of the NLRA.” Metro. Life, 471 U.S. at 755, 757. There may be an outer boundary beyond which a state law can no longer be deemed a “minimum labor standard,” and there may be certain minimum labor standards that are inconsistent with the goals of the NLRA. The Supreme Court has not indicated what differentiates a “minimum labor standard” from other labor standards, nor has it explained why such standards are by virtue of that status not usually inconsistent with the goals of the NLRA. It is far from clear that use of the phrase helps achieve clarity as to the boundaries of permissible state regulation.
required to retain the employees at all, or would be obligated to retain them for three months once renovation activities ceased. This is a question of interpretation of local law for the state courts. Any pre-emption issues arising from such an interpretation can be addressed should such an interpretation be made.
3. The “Right” to Hire and Fire
Plaintiffs next contend that the Machinists doctrine protects a new employer‘s “right” to make its own determinations of both which employees to hire and to fire, and that state laws cannot interfere with this “right.”
It is important to note the context in which plaintiffs’ challenge is raised. The Ordinance does not impose an absolute limitation on an employer‘s ability to hire or to fire. Rather, it imposes a limited requirement that a new employer retain for three months those of its predecessor‘s employees with at least two months’ employment, after which the Ordinance no longer imposes obligations. Even during the three-month period, the Ordinance allows the new employer to (1) set the terms and conditions of employment, (2) discharge employees for good cause, and (3) discharge employees if fewer arе needed for its full operation. Still, it does impose
The resulting impact on the hiring and firing decisions of new employers will vary with circumstances and individual facts. Some of the retained employees will choose not to stay in light of any new terms and conditions of employment, or even the prospect of new management. Of those who choose to stay, it is likely some will have been at-will employees who can under the Ordinance be terminated only for good cause. The employees, however, may already have individual contracts or collective bargaining contracts giving them greater protections than at-will employees. And some new management as a matter of their own choice might choose regardless of the Ordinance to ensure continuity by retaining employees and/or discharging employees only for good cause during this period. At this pre-enforcement stage there is no data on the Ordinance‘s actual effect on new employers’ decisions. In this factual context, plaintiffs’ assertion is unsupported.
Plaintiffs’ argument that there is a “right not to hire” largely relies on two carefully chosen quotes from the Supreme Court‘s precedent in the successorship context. In Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249 (1974), the Court remarked that Burns, 406 U.S. 272, the Court‘s first successorship case, “establishes that Howard Johnson had the right not to hire any of the former Grissom employees, if it so desired.” Howard Johnson, 417 U.S. at 262. And in Fall River Dyeing, the Court, again citing to Burns, explained that “the successor is under no obligation to hire the employees of its predecessor, subject, of course, to the restriction that it not discriminate against union employees in its hiring.” Fall River Dyeing, 482 U.S. at 40.
These cases do not support plaintiffs’ argument that there is a “right” protected under Machinists for a new employer to make independent hiring or termination determinations, much less that any such “right,” if it existed, would be impaired by compliance with the Ordinance. Rather, the statements simply indicated that, as a matter of federal labor law, the new employers were not compelled by the successorship doctrine to hire their predecessor‘s employees. Plaintiffs do not claim that this is a right grounded in the Constitution like the First Amendment right at issue in Brown, nor that the NLRB has recognized such a general right to hire and fire. Rather, they attempt to derive such a “right” from the language in Supreme Court opinions.
The language in the Burns opinion makes it clear that the Court was not establishing a Machinists protected right to hire new employees, but rather simply noted that the NLRB “has never held that the [NLRA] itself requires that an employer ... hire all of the employees of the predecessor....” Burns, 406 U.S. at 280 n. 5 (emphasis added). Similarly, the Court in Howard Johnson explained Burns as remarking that “nothing in the federal labor laws ‘requires that an employer who purchases the assets of a business be obligated to hire all of the employees of the predecessor though it is possible that such an obligation might be assumed by the employer.‘” Howard Johnson, 417 U.S. at 261 (alteration in original) (quoting Burns, 406 U.S. at 280 n. 5) (emphasis added).
None of these cases purported to resolve any question remotely similar to the argument advanced by plaintiffs here: that the NLRA pre-empts state regulation mandat-
It is true there is no Supreme Court Machinists case just like this one. Still, to the extent that the NLRA has touched on employers’ hiring and firing abilities, it has largely limited them. Instead it has created rights in individuals as to employment and discharge.16 One good example is the prohibition of discrimination based on union status. See
The Ordinance is also not pre-empted when viewed as a restriction on the ability of an employer to discharge certain employees. As noted above, the restriction is limited, in that it only applies for three months, and during that time employers may still discharge employees for good cause. The limited duration of the Ordinance, its conditions allowing discharge, and the ability of employers to set the terms and conditions of employment are important to our analysis. We do note that restrictions on the ability to fire have been upheld against Machinists claims as permissible labor standards by another circuit. See St. Thomas-St. John Hotel & Tourism Ass‘n v. Virgin Islands, 218 F.3d 232, 246 (3d Cir.2000) (holding Virgin Islands law that restricted the permissible grounds on which employees could be discharged is not pre-empted).17 And it is
B. Garmon Pre-emption
Under the Garmon pre-emption doctrine, “States may not regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits.” Gould, 475 U.S. at 286.19
Garmon “prevents States not only from setting forth standards of conduct inconsistent with the substantive requirements of the NLRA, but also from providing their own regulatory or judicial remedies for conduct prohibited or arguably prohibited by the Act.” Id. When assessing Garmon pre-emption, “[f]irst, we determine whether the conduct that the state seeks to regulate or to make the basis of liability is actually or arguably protected or prohibited by the NLRA.” Local 926, Int‘l Union of Operating Eng‘rs v. Jones, 460 U.S. 669, 676 (1983). “[I]f the conduct at issue is arguably prohibited or protected.... state law and procedures are ordinarily pre-empted.”
Still, there are exceptions where pre-emption will not be found. Garmon “does not pre-empt ‘all local regulation that touches or concerns in any way the complex interrelationships between employees, employers, and unions; obviously much of this is left to the States.‘” Int‘l Longshoremen‘s Ass‘n v. Davis, 476 U.S. 380, 392 (1986) (quoting Amalgamated Ass‘n of Street, Elec. Ry. & Motor Coach Emps. v. Lockridge, 403 U.S. 274, 289 (1971)). Thus, when a matter is “a merely peripheral concern of the [NLRA],” or “where the regulated conduct touched interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that congress had deprived the States of the power to act,” the state law is not pre-empted. Id. (quoting Garmon, 359 U.S. at 243-44) (internal quotation marks omitted).
The burden is on the “party asserting pre-emption” to make an “affirmative showing that the activity is arguably subject to the Act.” Id. at 399. Plaintiffs raise several argu-
1. Regulating Mandatory Subjects of Bargaining
Plaintiffs’ primary contention regarding Garmon pre-emption is that, because the Ordinance regulates a mandatory subject of bargaining, it interferes with conduct protected by the
Plaintiffs’ argument misses the mark. As an initial matter, it is clear that states can, and do, regulate numerous subjects that the
Moreover, the Supreme Court hаs rejected this type of argument in the context of severance pay. It is clear that severance pay is a subject of mandatory bargaining. See, e.g., First Nat‘l, 452 U.S. at 677 n. 15 (explaining that “[t]here is no doubt that” employers are “under a duty to bargain about the results or effects of its decision” to shut down a plant, including severance pay); Yorke v. NLRB, 709 F.2d 1138, 1143 (7th Cir.1983) (explaining that there is a “duty to bargain over the effects of a decision to terminate operations,” including “severance pay“); Borden, Inc., 279 N.L.R.B. 396, 396, 398 (1986) (holding that the employer was required to “bargain over the severance pay issue“);
Imposing a minimum standard for a subject that is a mandatory subject of bargaining is not the same as regulating “conduct subject to regulation by the [NLRB],” which is the inquiry relevant to Garmon pre-emption. Id.; see also Brown, 554 U.S. at 69 (“In
Here, the conduct the Ordinance regulates is the retention and firing of employees when there is a change in employer identity. The only regulation of an employer‘s ability to hire and fire in the
Because the
Our decision here accords with our decision in Beckwith v. United Parcel Service, Inc., 889 F.2d 344 (1st Cir.1989), where we rejected a Garmon challenge to a Maine law prohibiting employers from satisfying claims against employees through payroll deductions required as a condition of employment because “‘the conduct’ that Maine seeks to regulate—execution of agreements providing for payroll deductions as a condition of employment—is not subject to the regulatory jurisdiction of the
2. Other Garmon Claims
Plaintiffs raise several other claims that the Ordinance runs afoul of the Garmon doctrine; none of these arguments suffices to render the Ordinance pre-empted.
First, plaintiffs make a bald assertion that the Ordinance somehоw restricts the ability of employees to choose their bargaining representative, in violation of Section 7 of the
Second, plaintiffs contend that the Ordinance functionally effects a three-month suspension of federal labor law, reasoning that, as to new employers in unionized hotels, if the successorship determination is not made immediately, it is unclear what the status of the employee‘s bargaining representative is.23
Plaintiffs are correct in noting that if the successorship determination is made only after the three-month period elapses, it is unclear whether the new employer will ultimately have to bargain with the predecessor union‘s bargaining representative. However, this issue is not uncommon in successorship cases and not a basis for pre-emption. In Fall River Dyeing, the Court held that, even when an employer is found to be a successor, the duty to bargain with the bargaining representative of the employees only attaches when “а substantial and representative complement” of the employees has been hired, and the union has made a demand for bargaining. 482 U.S at 47, 52. In addition, it is far from clear the
Third, plaintiffs argue that the Ordinance‘s attempt to avoid pre-emption through its preservation of rights section, which provides that “[n]o provision of this Ordinance shall be construed to impair, prohibit, or provide for any right of recovery for, that lawful exercise of employees’ or employers’ right to engage in strike or lockout,”
Fourth, plaintiffs argue that because the remedies for violations of the Ordinance—specifically, backpay, treble damages, and attorneys’ fees—are greater than those provided by the
C. Plaintiffs’ Remaining Claims
Plaintiffs raise two final challenges to the validity of the Ordinance: that it violates the Equal Protection Clause and the Contract Clause. These are not serious challenges.
The Ordinance does not classify according to suspect lines or infringe on fundamental rights, and thus “must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” FCC v. Beach Commc‘ns, Inc., 508 U.S. 307, 313 (1993). Plaintiffs bear the burden of demonstrating that the Ordinance is invalid. Bd. of Trs. of the Univ. of Ala. v. Garrett, 531 U.S. 356, 367 (2001).
Plaintiffs’ argument is that the Ordinance impermissibly distinguishes between hotels and other tourism-related industries, and between hotels within and outside of Providence. Plausible justifications, however, exist for both of these distinctions. The preamble to the Ordinance itself explains the City‘s concern with hotels, as opposed to other parts of the tourism industry, and the parties stipulated that Providence accounts for a substantial share (28.4 percent) of the tourism spending in the state. Moreover, the City‘s legislative body is entitled to “leeway to approach a perceived problem incrementally.” Beach Commc‘ns, 508 U.S. at 316. As a result, plaintiffs have not met their burden of demonstrating that the Ordinance is invalid. See Cal. Grocers Ass‘n, 254 P.3d at 1038-39 (rejecting equal protection challenge to similar ordinance).
To assess whether there is a violation of the Cоntract Clause, “we first ask whether the change in state law has ‘operated as a substantial impairment of a contractual relationship.‘” Gen. Motors Corp. v. Romein, 503 U.S. 181, 186 (1992) (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)). “This inquiry has three components: whether there is a contractual relationship, whether a change in law impairs that contractual relationship, and whether that impairment is substantial.” Id. If all three components are satisfied, the question is whether “the impairment is nonetheless justified as ‘reasonable and necessary to serve an important public purpose.‘” Parella v. Ret. Bd. of the R.I. Emps. Ret. Sys., 173 F.3d 46, 59 (1st Cir.1999) (quoting U.S. Trust Co. v. New Jersey, 431 U.S. 1, 25 (1977)).
Plaintiffs point to the collective bargaining agreement between the Westin Providence and Local 217-Unite Here as being impaired by the Ordinance. The only provision they claim is impaired by the Ordinance regards subcontracting and states: “the Employer will not subcontract out any work currently being performed by members of the bargaining unit without first negotiating said subcontract with the Union.” If such negotiations fail, the parties are to “bargain as to the effects of the decision.”
Plaintiffs do not explain how this provision is impaired, much less substantially impaired, by the Ordinance. They are still capable of subcontracting out work under the Ordinance, although the subcontractor might be obligated to hire the previous employees for a three-month period. The terms of the subcontracting provision remain fully operative under the Ordinance. Plaintiffs do not explain how the Ordinance “derogate[s] from substantial contractual rights,” Home Bldg. & Loan Ass‘n v. Blaisdell, 290 U.S. 398, 431 (1934), and their Contract Clause claim thus fails.
IV.
Whether or not this ordinance will in fact protect and enhance tourism in Prоvidence, its stated purpose, is far from clear. The City has leeway to experiment so long as it does not run afoul of federal labor policy and pre-emption under the United States Constitution. At this stage we cannot say it has. See Livadas, 512 U.S. at 120 (“In labor pre-emption26 cases, as in others under the Supremacy Clause, our office is not to pass judgment on the reasonableness of state policy.... It is instead to decide if a state rule conflicts with or otherwise ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives’ of the federal law.” (quoting Brown v. Hotel & Rest. Emps., 468 U.S. 491, 501 (1984))).
We affirm the entry of judgment for the City and award costs to the City.
STAHL, Circuit Judge, concurring.
In my opinion, this Ordinance will do little to accomplish its stated purpose of protecting and promoting tourism in the City of Providence. In fact, I fear that the Ordinance, which interferes with an employer‘s ability to make hiring and firing decisions in the critical first three months of its operations, will negatively affect Providence‘s tourism industry by deterring companies from doing business in the City.26 But our task in this case, as the majority emphasizes at the conclusion of its opinion, is not to pass judgment on the reasonableness of the Ordinance as a policy. See Livadas v. Bradshaw, 512 U.S. 107, 120 (1994). Rather, we must decide whether the Ordinance conflicts with federal law. Id. I join the majority‘s opinion because Plaintiffs have not convinced me that the Ordinance is preempted by the
I begin by noting that Plaintiffs’ claims under the Garmon preemption doctrine, the Contracts Clause, and the Equal Pro
The Machinists doctrine has come to apply when a court can discern, from the text or structure of the
On the other hand, there are two cases of relevance here in which the Supreme Court has declined to find Machinists preemption. Both cases involved state or local laws that regulated particular terms of the employment relationship itself; the Court found these regulations to be permissible “minimum labor standards.” See Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985) (upholding a Massachusetts law requiring that employee health care plans include certain minimum mental health benefits); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987) (upholding a Maine law guaranteeing employees severance payments in the event of a plant closing). Reasoning that the goal of the
Against that legal backdrop, Plaintiffs have alleged that the Ordinance is preempted under Machinists because it interferes with the goals of the
1. Successorship
First, Plaintiffs argue that the Ordinance impermissibly increases the chances that a new employer inheriting a unionized workforce under the Ordinance will be deemed a “successor” and thus forced to recognize and bargain with the union representing its predecessor‘s employees. See Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (1987). I believe that the ma
2. Bargaining Power
Plaintiffs’ next argument is that the Ordinance interferes with the collective bargaining process by skewing the balance of power in favor of employees. Specifically, Plaintiffs argue that the Ordinance grants retained employees a right for which they would otherwise have had to bargain: three months of good cause employment.27 It does seem indisputable that many employees will receive a benefit from the Ordinance for which they would otherwise have had to bargain. That alone, however, does not suffice to support a claim of preemption, “for there is nothing in the
This case is certainly distinguishable from Machinists, Golden State, and Brown, in which the Supreme Court found preemption because a state or locality had directly intervened in an ongoing labor dispute or attempted to regulate speech about union organizing. Those strike me as clear interferences with “substantive aspects of thе bargaining process.” Machinists, 427 U.S. at 149. I therefore believe that this issue turns on whether the Ordinance‘s more subtle effects on the bargaining process make it sufficiently akin to the regulations upheld in Metropolitan Life and Fort Halifax that it, too, can withstand preemption.
Because the
The evil Congress was addressing thus was entirely unrelated to local or federal regulation establishing minimum terms of employment. Neither inequality of bargaining power nor the resultant depressed wage rates were thought to result from the choice between having terms of employment set by public law or having them set by private agreement.
Id. at 754. Metropolitan Life stands for the principle that “[w]hen a state law establishes a minimal employment standard not inconsistent with the general legislative goals of the
Unfortunately, the Supreme Court has not provided much guidance as to what distinguishes a minimum labor standard from an unconstitutional regulation of the collective bargaining or self-organization processes. The Court has simply suggested that a minimum labor standard “provides protections to individual union and nonunion workers alike, and thus ‘neither encourage[s] nor discourage[s] the collective-bargaining proсesses that are the subject of the
The Ordinance‘s protections apply equally to unionized and non-unionized workers. That neutrality does seem essential to the Ordinance‘s validity. Cal. Grocers, 254 P.3d at 1031 n. 7. The Ordinance does not tip the balance in favor of one category of workers, or force “employees to choose between exercising their right to enter a collective bargaining agreement and having their state-granted employment rights enforced,” either of which might constitute an unlawful intrusion into the collective bargaining process. Id.
Nor have Plaintiffs convinced me that the Ordinance otherwise encourages or discourages the collective bargaining process in a way that Congress did not countenance. Certainly, when a state enacts a minimum labor standard, the state is at least marginally discouraging collective bargaining by incentivizing employers and employees to lobby the legislature, rather than negotiate with each other, to achieve their goals. But Machinists does not seem to foreclose such a marginal impact on collective bargaining. In Metropolitan Life, the Massachusetts law completely prevented any bargaining on the subject of minimum mental health benefits, but the Court found that mandated-benefit laws are “minimum standards independent of the collective-bargaining process that devolve on employees as individual workers, not as members of a collective organization.” Id. at 755. Similarly, here, the Ordinance provides a benefit to workers in their individual capacities and not based on their membership in a union. Furthermore, as a practical matter, there would be no point in bargaining for the Ordinance‘s specific protections, because those protections are temporary in nature, and a collective bargaining agreement cannot bind a new employer without the new employer‘s assent. Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 261 (1974).
The Ordinance does seem, at first glance, to encourage the collective bargaining process by providing unions with a three-month period in which to quickly organize retained workers, who will have an incentive to unionize because they could be about to lose their jobs. Because Plaintiffs did not make this argument, however, it is waived. United States v. Zannino, 895 F.2d 1, 17 (1st Cir.1990). Furthermore, even if Plaintiffs had made the argument, I
Of course, the Ordinance is distinguishable from the law upheld in Metropolitan Life, which was intended to provide mental health treatment to less wealthy residents of the Commonweаlth and which strikes me as falling more squarely within the state‘s power to promote public health and safety. See Metro. Life, 471 U.S. at 756, 758. And while the majority is correct that Plaintiffs have not helpfully distinguished the Ordinance from the mandatory severance law upheld in Fort Halifax, I can imagine some crucial distinctions. For example, a mandatory severance law does not expose the employer to the possibility of having its workers unionize, file grievances, or file employment discrimination claims. Nor does a mandatory severance law entail the same tax or insurance liabilities for the employer.
Nonetheless, in the final accounting, I believe that the Ordinance has at most a minimal impact on the collective bargaining process and is thus more comparable to the regulations upheld in Metropolitan Life and Fort Halifax than those struck down in Machinists, Golden State, and Brown. I therefore hesitantly conclude that the basic rule of Metropolitan Life applies here: a state or locality can regulate certain terms of the employment relationship, as long as the regulation affects union and non-union workers equally and does not substantively interfere with the self-organization or collective bargaining processes. 471 U.S. at 751-57.
3. Hiring and Firing
A minimum labor standard must not, however, be incompatible with the general goals of the
The Ordinance‘s impact on an employer‘s ability to fire retained employees is similarly significant. Though an employer can discharge retained employees during the three-month period, it can only do so for good cause, which functions as a very real restraint. The majority dismisses this impact as speculative and limited, but it seems to me unquestionable that certain employers who would otherwise have hired employees under an at-will agreement will, under the Ordinance, inherit a workforce that can only be terminated for cause. The three-month duration of the retention period will provide that employer with little comfort, as the employer will face potential challenges to any termination decisions it makes during the three-month period and will have to justify those decisions under the heightened good-cause standard.
Having recognized that the Ordinance‘s impact on an еmployer‘s ability to hire and fire is significant, however, I do agree with the majority that the
There is a general presumption against preemption, which is particularly strong here. See Fort Halifax, 482 U.S. at 21 (“[P]re-emption should not be lightly inferred in this area, since the establishment of labor standards falls within the traditional police power of the State.“) In that context, and considering the employee-focused nature of the
While I ultimately conclude that the Ordinance is a permissible exercise of the City‘s power to regulate the employment relationship and protect its workers, I find this to be a very close case. The Ordinance is not entirely on all fours with any of the regulations that the Supreme Court has upheld in its Machinists decisions. The case law gives us few clear rules to follow, leaving preemption somewhat in the eye of the beholder. Though I must agree with the majority that this particular regulation does not seem to be preempted by the Machinists doctrine under existing precedent, I do hope the Supreme Court will provide some guidance as to just how far a state or locality can go in the name of a “minimum labor standard.”
v.
Carlos DÁVILA-FÉLIX, a/k/a Carlos Moña, Defendant, Appellant.
No. 09-2495.
United States Court of Appeals, First Circuit.
Heard Sept. 15, 2011.
Decided Dec. 13, 2011.