Alaska Employment Law

Introduction

The United States Supreme Court recently struck down a California law purporting to prohibit employers receiving state funds from using any of those funds to assist, promote, or deter union organizing. The case is Chamber of Commerce v. Brown. This summary briefly reviews the case and its significance.

California passed Assembly Bill 1889, a law that prohibited employers receiving state funds from using those funds to “assist, promote, or deter union organizing.” Although the law was pitched as being merely a neutral prohibition on the use of state funds for any expressive activity, in point of fact AB 1889 permitted use of state funds for some expressive activity that promoted unions (activity such as giving unions workplace access or voluntarily recognition of unions with no election). Thus, it was more a restriction on employers than on unions. Employer associations filed suit challenging the law. Labor unions intervened to argue in the law’s support. The district court held that the law was pre-empted by federal labor law because it sought to control or restrict free speech. Under § 8(c) of the Taft-Hartley Act, employers and unions may engage in non-threatening and non-coercive speech so long as “such expression contains no threat of reprisal or force or promise of benefit.” The district court analyzed AB 1889 as conflicting with § 8(c) and thus determined that AB 1889 was unenforceable.

Initially, the Ninth Circuit affirmed. The unions asked an en banc panel of the court to review the case. Appeals are heard by a panel of three judges. But in certain relatively rare cases, an appeal will be reviewed by an en banc panel of 11 judges (11 in the Ninth Circuit). Such review is discretionary, and not common. However, the court granted en banc review. The en banc panel recognized that, speaking generally (no pun intended), states could not purport to restrict permissible expressive activity in labor relations. Nevertheless, the Ninth Circuit perceived a difference when states were only placing restrictions on the use of their own funds. The court, therefore, upheld AB 1889.

The Court reversed 7-2, with Justice Stevens writing for the majority. The majority concluded that California’s law was pre-empted by federal labor law because it sought to control activity expressly and impliedly allowed under Taft-Hartley; specifically, non-coercive free speech by unions or employers. The majority rejected the Ninth Circuit’s analysis because it confused the distinction between a state acting as a market participant (where states are traditionally given more latitude to place restrictions on use of fund) and a state acting as a regulator (where states cannot exercise their customary powers in derogation of protected rights). It was clear to the majority that California was acting as a regulator and not as a market participant.

The Ninth Circuit reached its conclusion, in part, because it construed § 8(c) rights as falling more in the sphere of election-related activity, and not more generalized ongoing speech. The Supreme Court majority saw no reason in law or policy to accept such a limitation on the otherwise clear provision. The Ninth Circuit had also relied on the fact that Congress had passed three spending measures with substantially similar spending restrictions. The majority, however, found this reasoning unpersuasive because Congress, unlike the states, had every right to construct narrow exceptions to otherwise generally applicable federal policy, and that is all that Congress had done (from the majority’s perspective). Put differently, three spending measures do not amount to a substantial shift in federal policy when one considers the hundreds or thousands of such measures that receive Congressional attention.

Justice Breyer dissented, joined by Justice Ginsburg. The dissent saw nothing in AB 1889 that undercut federal labor law or policy. From the dissent’s view, the law was neutral in scope and did not restrict or limit expressive activity. Instead, it merely prohibited use of state funds to support that activity.

In broader terms, and following from the Davenport decision from last Term, this may be further evidence that the Roberts Court is interested in placing its own stamp on federal labor law doctrine. At present, two more cases will be up for review next Term and these will also examine spending-related issues.

Many would characterize this case as being the “flip side” of Beck/Hudson restrictions on how unions may use agency dues. Although not precisely accurate, this characterization may not be too far off base in concept. From a lay perspective, it does appear as if restrictions on union receipt and allocation of agency dues may be subject to a greater range of restrictions than employer or management use of state funds. One key difference, however, is that the union allocation of agency funds implicates third party rights (the rights of objecting agency fee members).

Lawyers will want to review this opinion for the Court’s discussion on Garmon and Machinists pre-emption principles. The Wagner and Taft-Hartley Acts are protected from state interference through similar yet different preemption doctrines. Garmon pre-emption prohibits states from interfering with NLRB interpretation and enforcement of federal labor law. See San Diego Building Trades Council v. Garmon, 359 U.S. 235 (1959). Machinists pre-emption prohibits both the NLRB and states from regulating conduct that Congress impliedly or expressly intended to remain unregulated and controlled by free market principles. See Machinists v. Wisconsin Employment Relations Comm’n, 427 U.S. 132 (1976). The majority here relied on Machinists pre-emption principles, and did not address Garmon arguments that had also been raised.

Conclusion

This legal summary is for informational purposes and is not intended as legal advice. Employers with questions or seeking additional information should confer with counsel.