Chamber of Commerce v. Brown
171 L. Ed. 2d 264, 128 S. Ct. 2408 (2008)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A state law that uses spending restrictions to prohibit employers who receive state funds from using those funds to assist, promote, or deter union organizing is pre-empted by the National Labor Relations Act (NLRA) because it regulates conduct Congress intended to leave to the free play of economic forces.
Facts:
- California enacted Assembly Bill 1889 (AB 1889), which prohibited employers receiving state grants or over $10,000 in state program funds from using that money to 'assist, promote, or deter union organizing.'
- The law's stated purpose was to ensure the state did not subsidize employer efforts to influence employee decisions about unionization.
- The law defined prohibited expenses broadly to include legal fees and the salaries of supervisors and employees for time spent on activities intended to influence employees' unionization decisions.
- AB 1889 expressly exempted certain pro-unionization activities, such as allowing a union access to company property or voluntarily recognizing a union.
- To ensure compliance, the law required employers to maintain detailed records proving no state funds were used for prohibited purposes.
- The law presumed that if state and private funds were commingled, any spending on union-related advocacy was paid for on a pro-rata basis by state funds.
- Violators were subject to penalties including repayment of the funds plus a civil penalty of double that amount, and could be sued by the state attorney general or any private taxpayer.
Procedural Posture:
- Several organizations, led by the Chamber of Commerce, sued the California Department of Health Services in the U.S. District Court for the Central District of California, seeking to enjoin the enforcement of AB 1889.
- The AFL-CIO intervened in the lawsuit to defend the statute's validity.
- The District Court granted partial summary judgment for the Chamber of Commerce, holding that two key provisions of the law were pre-empted by the National Labor Relations Act (NLRA).
- The State appealed to the U.S. Court of Appeals for the Ninth Circuit.
- After a three-judge panel affirmed the District Court, the Ninth Circuit granted a rehearing en banc.
- The en banc Court of Appeals reversed the District Court's decision, finding the statute was not pre-empted.
- The U.S. Supreme Court granted the Chamber of Commerce's petition for a writ of certiorari.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the National Labor Relations Act (NLRA) pre-empt a California law that prohibits employers receiving state funds from using those funds to assist, promote, or deter union organizing?
Opinions:
Majority - Justice Stevens
Yes, the National Labor Relations Act (NLRA) pre-empts the California law. The law is pre-empted under the Machinists doctrine, which forbids states from regulating conduct that Congress intended to be left to the 'free play of economic forces.' Congress, through § 8(c) of the NLRA, explicitly protected noncoercive employer speech regarding unionization to encourage 'uninhibited, robust, and wide-open debate in labor disputes.' California's law attempts to regulate in this zone. The state's argument that it is merely restricting the use of its own funds, rather than regulating, is a 'distinction without a difference.' California is acting as a regulator, not a market participant, because the law's purpose is to implement a broad labor policy, not to manage a specific project or ensure efficient procurement. The statute's onerous recordkeeping requirements and severe litigation risks effectively chill protected employer speech, thereby interfering with the balance struck by Congress in the NLRA.
Dissenting - Justice Breyer
No, the NLRA does not pre-empt the California law's operative provisions. The statute does not constitute impermissible 'regulation' because it does not forbid any activity; it merely represents California's decision not to subsidize certain employer speech. Employers remain free to use their own funds to advocate for or against unionization. This differs from prior pre-emption cases where states attempted to directly compel or enforce labor-related activity. Furthermore, Congress itself has enacted nearly identical spending restrictions in federal programs like Head Start, suggesting such laws are not inconsistent with federal labor policy. While the compliance provisions could potentially be so burdensome as to chill the use of private funds, the record is insufficient to make that determination, and the case should be remanded for the lower courts to consider that specific issue.
Analysis:
This decision significantly reinforces the scope of Machinists preemption, clarifying that states cannot use their spending power as an end-run around the NLRA's protection of a 'free play of economic forces' in labor relations. It establishes that even 'use' restrictions on state funds are pre-empted if they are regulatory in nature and designed to alter the balance of power in labor disputes that Congress intended to leave unregulated. The case solidifies the 'regulator' versus 'market participant' distinction, making it more difficult for states to impose labor-related conditions on funding recipients unless those conditions are narrowly tailored to a specific proprietary interest, like efficient procurement for a particular project.
