Lockyer

Opinion by Judge FISHER; Dissent by Judge BEEZER.

The question before us is whether a state’s exercise of its sovereign power to control the use of its funds conflicts with national labor policy as expressed in the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 151-169 . Specifically, two provisions in a California statute forbid employers who receive state grant or program funds in excess of $10,000 from using those funds to assist, promote or deter union organizing. We hold that California’s grant and program fund restrictions do not undermine federal labor policy, are not pre-empted by the NLRA and do not violate the First Amendment.

FACTUAL BACKGROUND

On September 28, 2000, California enacted Assembly Bill No. 1889, Cal. Gov’t Code §§ 16645-16649 (collectively, “AB 1889”). The preamble of the statute declares:

§ 16645, Historical and Statutory Notes, Section 1 of Stats.2000, c. 872.

Two provisions of the California statute, sections 16645.2 and 16645.7, are at issue in this appeal. 1 Section 16645.2(a) bars private employers who are “recipients] of a grant of state funds” from “us[ing] the funds to assist, promote, or deter union organizing.” Section 16645.7(a) bars…

join in dissent:

May a state leverage its spending power to induce an employer to adopt a neutral policy toward labor union organizing? The First Amendment, the National Labor Relations Act (“NLRA” or “the Act”), and well-established doctrines of preemption, demand an answer in the negative.

By extending the definition of “state funds” to include any monies received by a private employer as a result of contracting with the state, AB 1889 strikes at the heart of the First Amendment. AB 1889 prohibits not just the use of state money granted to an employer for and under a specific program but also co-opts the payment for goods and services and profit realized under a contract (undoubtedly not state funds). AB 1889’s gag rules prevent any employer from spending its own funds in direct violation of the First Amendment.

The NLRA extends to employees the opportunity to render a free and informed choice about union representation. In doing so, the Act allows for robust debate of union representation issues by employers and employees alike. California Assembly Bill 1889, codified at Cal. Govt.Code §§ 16645-49, (“AB 1889” or “the statute”), stifles employers from fully participating in…

Volume 1 of

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHAMBER OF COMMERCE OF THE 

UNITED STATES; CALIFORNIA

CHAMBER OF COMMERCE;

EMPLOYERS GROUP; CALIFORNIA

HEALTHCARE ASSOCIATION;

CALIFORNIA MANUFACTURERS AND

TECHNOLOGY ASSN.; CALIFORNIA

ASSOCIATION OF HEALTH FACILITIES;

CALIFORNIA ASSOCIATION OF HOME

& SERVICES FOR THE AGING; BETTEC

CORPORATION; MARKSHERM

CORPORATION; ZILACO INC., ZILACO; No. 03-55166 DEL RIO HEALTHCARE, INC.;  D.C. No.

BEVERLY HEALTH & REHABILITATION CV-02-00377-GLT

SERVICES, INC. dba Beverly Manor Costa Mesa; INTERNEXT GROUP, Plaintiffs-Appellees,

CALIFORNIA LABOR FEDERATION,

AFL-CIO; AMERICAN

FEDERATION OF LABOR AND

CONGRESS OF INDUSTRIAL

ORGANIZATIONS,

Intervenors-Appellants, v. 

11765 11766 CHAMBER OF COMMERCE v. LOCKYER

BILL LOCKYER, Attorney General,  in his capacity as Attorney General of the State of California;

DEPARTMENT OF HEALTH SERVICES;

FRANK G. VANACORE, as the Chief of the Audit Review and Analysis Section of the California  Department of Health Services; DIANA M. BONTA, R.N., Dr., Ph.D, as the…