Chamber of Commerce v. Brown

As labor activism swells on both coasts with the ongoing writers' strike in Hollywood and the stagehands' strike in New York, the Supreme Court has agreed to decide what role the states should play in calibrating the delicate balance between employers and unions.

In the case accepted earlier this month, Chamber of Commerce v. Brown, No. 06-939, a consortium of California companies are challenging a law that prohibits the use of state funds to "assist, promote, or deter union organizing." Cal. Gov't Code Secs. 16645.2, 16645.7. Companies that accept state funds are permitted to use their own money for labor-oriented speech, but must keep careful records documenting that they segregated the public money.

The companies argue that the state law is preempted by a provision of the National Labor Relations Act. The NLRA Sec. 8(c) provides that companies' anti-labor speech cannot be considered evidence of an unfair labor practice so long as it does not threaten or coerce workers. The companies contend that California's law violates the NLRA's safe harbor for anti-union speech, and is therefore preempted.

California urged the Court not to grant review, arguing that its law did not alter the rights of companies to discourage unionization, but merely guaranteed that such speech would be privately funded. Moreover, the state argued, the challenge was premature as there was little evidence how the law would work in practice.

The issue of state participation in the labor relations scheme is a controversial one. The Ninth Circuit entered two panel opinions, both holding the California law preempted, before the court issued a split en banc opinion holding that it was not. The Second Circuit Court of Appeals reached a different conclusion when passing on a substantially similar law.

In addition, states have become increasingly active in the labor relations field. More than a dozen states are considering adopting legislation similar to the California law.Questions presented: Whether a state law prohibiting employers from using state funds to encourage or discourage union organization is preempted by the National Labor Relations Act

A provision of the National Labor Relations Act preempts a California law that prohibits employers from using state money to influence employees' views on unions in their workplace, the Supreme Court ruled on June 19.

In the case, Chamber of Commerce v. Brown, No. 06-939, a consortium of California companies are challenging a law that prohibits the use of state funds to "assist, promote, or deter union organizing." Cal. Gov't Code Secs. 16645.2, 16645.7. Companies that accept state funds are permitted to use their own money for labor-oriented speech, but must keep careful records documenting that they segregated the public money.

The companies argue that the state law is preempted by a provision of the National Labor Relations Act. The NLRA Sec. 8(c) provides that companies' anti-labor speech cannot be considered evidence of an unfair labor practice so long as it does not threaten or coerce workers. The companies contend that California's law violates the NLRA's safe harbor for anti-union speech, and is therefore preempted.

California urged the Court not to grant review, arguing that its law did not alter the rights of companies to discourage unionization, but merely guaranteed that such speech would be privately funded. Moreover, the state argued, the challenge was premature as there was little evidence how the law would work in practice.

The issue of state participation in the labor relations scheme is a controversial one. The Ninth Circuit entered two panel opinions, both holding the California law preempted, before the court issued a split en banc opinion holding that it was not. The Second Circuit Court of Appeals reached a different conclusion when passing on a substantially similar law.

In addition, states have become increasingly active in the labor relations field. More than a dozen states are considering adopting legislation similar to the California law.

The Supreme Court overturned the lower court's holding.

"Unlike the States, Congress has the authority to create tailored exceptions to otherwise applicable federal policies, and (also unlike the States) it can do so in a manner that preserves national uniformity without opening the door to a 50-state patchwork of inconsistent labor policies," Justice John Paul Stevens wrote for the majority."Consequently, the mere fact that Congress has imposed targeted federal restrictions on union-related advocacy in certain limited contexts does not invite the States to override federal labor policy in other settings."

Justice Stephen Breyer, joined by Justice Ruth Bader Ginsburg, dissented.