Wisconsin Department of Industry, Labor & Human Relations v. Gould Inc.
475 U.S. 282, 89 L. Ed. 2d 223, 1986 U.S. LEXIS 13 (1986)
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Rule of Law:
The National Labor Relations Act (NLRA) preempts a state law that bars the state from purchasing goods or services from companies that have repeatedly violated the NLRA, as such a law functions as a supplemental, regulatory penalty that interferes with the comprehensive federal scheme of labor law enforcement.
Facts:
- Wisconsin enacted a statute requiring its Department of Industry, Labor and Human Relations to maintain a list of firms found by judicially enforced orders of the National Labor Relations Board (NLRB) to have violated the NLRA three times within a five-year period.
- The statute forbade state procurement agents from purchasing any products from firms on this 'violators list' for a period of three years.
- In 1982, Gould Inc., a Delaware corporation, was placed on Wisconsin's list after the judicial enforcement of four separate NLRB orders against various company divisions.
- None of the Gould divisions involved in the violations were located in Wisconsin.
- At the time Gould was placed on the list, it no longer owned the divisions responsible for the underlying NLRA violations.
- Wisconsin informed Gould that it would not enter into new contracts with the company and would only continue existing contracts to avoid contractual penalties.
- At the time of the debarment, Gould held state contracts valued at over $10,000 and had outstanding bids on additional contracts exceeding that amount.
Procedural Posture:
- Gould Inc. filed an action in the United States District Court for the Western District of Wisconsin against state officials, seeking an injunction and a declaration that the state's debarment statute was preempted by the NLRA.
- The District Court granted summary judgment in favor of Gould Inc., finding the statute was preempted, and enjoined the state officials from enforcing it against Gould.
- The state officials (appellants) appealed the decision to the United States Court of Appeals for the Seventh Circuit.
- The Court of Appeals affirmed the judgment of the District Court.
- The Supreme Court of the United States noted probable jurisdiction to review the case.
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Issue:
Does the National Labor Relations Act (NLRA) preempt a Wisconsin statute that prohibits state purchases from companies found to be repeat violators of the NLRA?
Opinions:
Majority - Justice Blackmun
Yes, the National Labor Relations Act preempts the Wisconsin statute. A state may not use its spending power to create a supplemental penalty for violations of the NLRA, as this interferes with the comprehensive regulatory and remedial scheme established by Congress and administered exclusively by the National Labor Relations Board. The Court's reasoning is grounded in the preemption principles established in San Diego Building Trades Council v. Garmon, which prevents states from regulating conduct that is protected or prohibited by the NLRA. Wisconsin's debarment law is not a legitimate exercise of its spending power in this context; rather, it is a regulatory measure designed to deter labor law violations. The Court rejected the argument that this was permissible 'market participation,' holding that the distinction between regulatory power and spending power is irrelevant when a state law's purpose and effect is to enforce the NLRA. Allowing states to create their own penalties would disrupt the uniform, 'integrated scheme of regulation' Congress intended, where the NLRB has exclusive authority to determine remedies.
Analysis:
This decision significantly reinforces the breadth of federal preemption under the NLRA, particularly under the Garmon doctrine. It clarifies that states cannot use their procurement and spending powers as an end-run around federal preemption to create their own enforcement mechanisms for federal labor law violations. By treating the debarment statute as a form of regulation rather than mere market participation, the Court prevented states from creating a patchwork of supplemental penalties that could undermine the NLRB's exclusive authority. The case stands for the proposition that the method of state action (spending vs. direct regulation) is less important than the effect of that action on the federal labor law scheme.
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