Cases & Deals

U.S. Chamber of Commerce and private employers prevail in U.S. Supreme Court ruling that California law was preempted by NLRA

Clients United States Chamber of Commerce

Jones Day represented the United States Chamber of Commerce and a group of private employers challenging portions of a 2000 California law that prevented employers from using state funds to "assist, promote or deter union organizing." In a 7-2 decision, the U.S. Supreme Court struck down key provisions of the law, holding that the law was preempted by the National Labor Relations Act (NLRA).

The law was challenged on the ground that it conflicted with federal labor policy favoring unfettered employer speech regarding union organization. The Supreme Court, reversing an en banc Ninth Circuit opinion, agreed with the Chamber of Commerce, holding that the law is preempted "because [it] regulate[s] within 'a zone protected and reserved for market freedom.'"

Although the NLRA contains no express preemption provision, the Court relied upon its prior decision in Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 140 (1976), which forbids both the National Labor Relations Board (NLRB) and the States to regulate conduct that Congress has left to the free play of economic forces. The Court held that the California law sought to silence conduct that Congress intended to encourage; that is, noncoercive employer speech. Citing, among other things, the explicit protection for noncoercive employer speech in section 8(c) of the Act, the Court found that the Act "manifested a 'congressional intent to encourage free debate on issues dividing labor and management.'" Because the California law had the purpose and effect of inhibiting that debate, it was held preempted.

The Court's decision is likely to have significant practical effects. In recent years, unions have made a concerted effort to lobby state legislatures to enact laws that facilitate unionization. The California law, for example, was drafted and sponsored by the California Labor Federation. At least a dozen states were awaiting the outcome of the Court's decision before enacting similar legislation - the Court's decision should now prevent them from doing so.

Chamber of Commerce, et al. v. Brown, No. 06-939, slip op. (U.S., June 19, 2008)