United States District Court, N.D. New York
May 17, 2005.
HEALTHCARE ASSOCIATION OF NEW YORK STATE, INC.; NEW YORK ASSOCIATION OF HOMES AND SERVICES FOR THE AGING, INC.; NEW YORK STATE HEALTH FACILITIES ASSOCIATION, INC.; NYSARC, INC.; UNITED CEREBRAL PALSY ASSOCIATIONS OF NEW YORK STATE, INC., Plaintiffs,
GEORGE E. PATAKI, Governor of the State of New York; ELIOT SPITZER, Attorney General of the State of New York; LINDA ANGELLO, Commissioner of Labor of the State of New York, Defendants.
The opinion of the court was delivered by: NEAL McCURN, Senior District Judge
MEMORANDUM-DECISION AND ORDER
Plaintiffs are a group of five health care organizations, whose
members or affiliates provide a broad range of health care
services, such as operating "220 acute care hospitals," "nearly
300 residential health care facilities," and providing services
to individuals "with mental retardation and other developmental
disabilities[.]" Amended Complaint ("Co.") at 4, ¶¶ 6 and 8; and
at 5 ¶ 9. Plaintiffs are suing the Governor, the Attorney General and the
Commissioner of Labor for the State of New York, seeking to
overturn section 211-a of New York's Labor Law (hereinafter
collectively referred to as "the State").
In a nutshell, that statute prohibits the use of "state funds,"
including Medicaid (which provides a substantial portion of the
funding for plaintiffs), from "encourag[ing] or discourag[ing]
union organization[.]" N.Y. LAB. LAW § 211-a (McKinney Supp.
2004). Supporters of the law, such as the AFL-CIO, depict it as a
"`union neutrality law[,]'" 66 BNA Daily Labor Report A-5, 2003,
whereas plaintiffs describe it as an "`Employer Gag Law.'" Co. at
11, ¶ 28.
Given the chasm between labor and management with respect to
the impact of § 211-a on labor relations in the workplace, it is
not surprising that several groups moved to appear as amicus
curiae in this action. The court assumes familiarity with its
May 27, 2004, decision granting amicus status to the Business
Council; the Coalition and the Brennan Center.
In this declaratory judgment action, plaintiffs allege that the
National Labor Relations Act ("NLRA") and the Labor Management
Reporting and Disclosure Act ("LMRDA") preempt section 211-a.
Plaintiffs are also mounting several constitutional challenges to
section 211-a, claiming that it violates their rights under the
First and Fourteenth Amendments.
In its original form, section 211-a of the New York State Labor
Law read as follows:
Notwithstanding any other provision of law, no monies
appropriated by the state for any purpose shall be
used or made available to employers to train
managers, supervisors or other administrative
personnel regarding methods to discourage union organization.
N.Y. LAB. LAW § 211-a (McKinney 2002) (emphasis added). Effective
December 29, 2002, the scope of that statute was greatly
expanded. Under the amended version of section 211-a,
organizations that receive state funding, including Medicaid, are
barred from using such monies to either encourage or
discourage union organizing. Prohibited activities include the
hiring of attorneys or consultants or the training of managers or
hiring employees "to encourage or discourage union organization,
or to encourage or discourage an employee from participating in a
union organizing drive[.]" Id. § 211-a(2) (McKinney Supp.
2004). In addition, § 211-a contains detailed reporting
requirements "sufficient to show that state funds were not used
to pay for . . . activities [prohibited thereunder.]" Id. §
211-a(3). The statute goes on to grant the State Attorney General
enforcement powers in the form of seeking the "return of
unlawfully expended funds?" and the imposition of civil
penalties. See id. at § 211-a(4). Finally, in its amended
form § 211-a directs the State Labor Commissioner to, inter
alia, promulgate regulations pertaining to the financial
recordkeeping requirements thereunder. See id. at § 211-a(5).
As noted at the outset, the parties have widely divergent views
of section 211-a. The plaintiff health care associations which
allegedly are "either currently facing union organizing campaigns
or reasonably expect to be subjected to [same] in the near
future[,]" refer to it as the "`Employer Gag Law.'" Co. at 10, ¶
23; and at 11, ¶ 28. In their view section 211-a is nothing more
than an "ill-conceived statute," which the State has enacted
"[i]n its fervor to defeat employer opposition to union
organization[.]" Pl. Memo. at 1.
Conversely the State refers to section 211-a as a "labor
neutrality bill[,]" which, according to Governor Pataki, "will protect taxpayers by
ensuring that State tax dollars are used for their intended
purpose, instead of being diverted to promote or discourage union
organizing activities[.]" Co., exh. B thereto at 1. Despite being
touted as labor "neutral," unions clearly view section 211-a as
sending a pro-union message. In the Governor's press release
announcing the amendment of section 211-a, the President of New
York State's AFL-CIO proclaimed that that statute "`ensures that
taxpayer dollars will not be used to interfere with a worker's
constitutional right to join a union.'" Id. Another supporter
of section 211-a claims that that statute will "`provide much
needed protection for workers seeking to organize unions.'" Id.
I. Rule 12(c) Conversion
There is one minor procedural issue which needs to be
clarified. In its Notice of Motion, arguing that plaintiffs have
failed to state a claim upon which relief may be granted, the
State is moving for dismissal pursuant to Fed.R.Civ.P.
12(b)(6). Alternatively, in their opposition memorandum, in
accordance with Fed.R.Civ.P. 12(c), the State is seeking to
have its Rule 12(b)(6) motion converted to a motion for summary
judgment. As alluded to during oral argument, the court views the
preemption issues which these motions present as "predominately
legal," and hence it sees no need to convert the State's motion
to one for summary judgment. See Pac. Gas & Elec. v. St.
Energy Resources Conserv., 461 U.S. 190, 201, 103 S.Ct. 1713,
1720 (1983). Consistent with the foregoing, in deciding
plaintiffs' cross-motion for summary judgment the court will take
into account only those documents which would be otherwise
permissible in connection with a Rule 12(b)(6) motion. II. Scope of Record
Clearly the court's decision to treat the State's motion as a
Rule 12(b)(6) motion rather than a Rule 56 motion, limits the
scope of the record herein. Included in the State's supporting
papers is the affidavit of an attorney representing UNITE, a
labor union which "organizes and represents employees employed by
agencies which receive funding from" New York State. Affidavit of
Brent Garren (Dec. 17, 2003), at 1-2, ¶¶ 1 and 2. Currently UNITE
is involved in litigation before the National Labor Relations
Board ("NLRB"). In that matter the employer, Independent
Residences, Inc. ("IRI"), alleges "that the [union] election
should be overturned because New York State Labor Law Sec. 211-A
interfered with its ability to campaign against UNITE." Id. at
2, ¶ 5. Attached to the Garren affidavit are a number of
documents pertaining to that NLRB matter.
During oral argument the court directed the State to provide a
copy of the exceptions filed to the Administrative Law Judge's
decision in IRI. See Transcript (Sept. 13, 2004) ("Tr.") at
46. It also directed the State to provide the court with a copy
of the transcript of the argument. Id. at 76. The State
complied, but in its post-argument submissions it included 20
additional documents which the court did not request. Among
those documents are newspaper articles, excerpts from several
books and articles as well as the State Comptroller's 2003-04
Budget Analysis. Plaintiffs and one of the amici, the Chamber
of Commerce of the United States ("the Chamber"), objected to
these additional documents being made a part of the record on
these motions. Thereafter, the court informed the parties that
insofar as those objections were concerned, it would "advise
the[m] . . . as to its determination in due course." Dkt. # 61.
Having had the opportunity to carefully consider the State's
post-hearing submissions and the objections to same as to whether such should
be made a part of the record herein, the court sustains the
objections to same.
The court will address NLRA preemption first. If the court
finds that the NLRA preempts section 211-a, then there is no need
to address the issue of LMRDA preemption, see Tr. at 62, and
there would be no need to address the constitutionality of that
statute. See Piazza's Seafood World, LLC v. Odom, No. Civ.A.
04-690, 2004 WL 1375306, at *4 (E.D.L.A. June 17, 2004) ("In
light of the Court's finding that federal law preempts [a
Louisiana State statute,] the constitutional challenges are now
moot and need not be decided."); see also Greater NY
Metropolitan Food Council v. Giuliani, 195 F.3d 100, 110 (2d
Preemption has its origins in the Supremacy Clause of the
United States Constitution, which provides in pertinent part that
"the Laws of the United States which shall be made in Pursuance
thereof . . . shall be the supreme Law of the Land[.]" U.S.
Const. Art. VI, cl. 2. "Although not a source of a federal right
by itself, th[is] . . . Clause secure[s] federal rights by
according them priority whenever they come in conflict with state
law." Rondout Electric, Inc. v. NYS Dept. of Labor,
335 F.3d 162, 166 (2d Cir. 2003), cert. denied, 540 U.S. 1105 (2004)
(internal quotation marks and citations omitted).
Preemption can be either explicit or implicit. "State law is
preempted explicitly where Congress states an intent to occupy a
field and to exclude state regulation." Id. Implicit preemption
results "where the federal interest in the subject matter
regulated is so pervasive that no room remains for state action, indicating an implicit intent to occupy the field, or where the
state regulation at issue conflicts with federal law or stands as
an obstacle to the accomplishment of its objectives." Id.
(citing, inter alia, Pac. Gas & Elec. Co. v. State Energy Res.
Conservation & Dev. Comm'n, 461 U.S. 190, 203-04 (1983)).
"Preemption, whether express or implied, may partially, as well
as totally, displace state law." Drake v. Laboratory Corporation
of America Holdings, 290 F.Supp.2d 352, 364 (E.D.N.Y. 2003).
The NLRA, 29 U.S.C. §§ 151-169 (2002), which governs
labor-management relations in the private sector, contains no
express pre-emption provision. Bldg. & Const. Trades Council of
the Metro. Dist. v. Associated Builders & Contractors of
Mass./R.I., Inc., 507 U.S. 218, 224, 113 S.Ct. 1190, 1194
(1983)) ("Boston Harbor"). Nonetheless in 1986 the Supreme
Court declared, "It is by now a commonplace that in passing the
NLRA Congress largely displaced state regulation of industrial
relations." Wisconsin Dept. of Industry v. Gould Inc.,
475 U.S. 282, 286, 106 S.Ct. 1057 (1986)). This is consistent with the
presumption under the Supremacy Clause "in favor of preemption in
fields that are inherently federal in character and that the
states have not traditionally occupied." Drake, 290 F.Supp.2d at 363-64 (citing Buckman Co.
v. Plts' Legal Comm., 513 U.S. 341, 347 (2001)). Two distinct
lines of preemption jurisprudence have emerged under the NLRA. At
this juncture only a brief outline of the two strands of NLRA
preemption is necessary.
1. Garmon Preemption
The first line of NLRA preemption, Garmon preemption,
"developed from a line of cases that focused on the primary
jurisdiction of the NLRB." New England Health Care, Employees
Union, District 1199, SEIA/AFL-CIO v. Rowland,
221 F.Supp.2d 297, 324 (D.Conn. 2002) (citation omitted). It "corresponds to
the `actual conflict category of general preemption theory[.]"
Aeroground, Inc. v. City and County of San Francisco,
170 F.Supp.2d 950, 955 (N.D.Cal. 2001) (citation omitted). "Sections
7*fn2 and 8*fn3 of the [NRLA] regulate `concerted activities' and `unfair labor practices,' respectively, seeking
to protect the former and stamp out the latter." Building Trades
Employers' Ass'n v. McGowan, 311 F.3d 501, 508 (2d Cir. 2002)
(citing 29 U.S.C. §§ 157, 158 (codifying § 7 and § 8 of the
NLRA)) (footnotes added). "`Garmon pre-emption,' . . . forbids
state and local regulation of activities that are `protected by §
7 of the [NLRA], or constitute an unfair labor practice under §
8." Boston Harbor, 507 U.S. at 224, 113 S.Ct. at 1194 (internal
quotation marks and citations omitted). Garmon preemption is
relatively broad in that it "prohibits regulation even of
activities that the NLRA only arguably protects or prohibits."
Id. (citation omitted). The purpose of Garmon pre-emption is
"to prevent conflict between, on the one hand, state and local
regulation and, on the other, Congress' integrated scheme of
regulation, . . . embodied in §§ 7 and 8 of the NLRA, which
includes the choice of the NLRB, rather than state or federal
courts, as the appropriate body to implement the Act." Id. at
225, 113 S.Ct. at 1194-95 (internal quotation marks and citations
2. Machinists Preemption I
The second line of NLRA pre-emption is known as Machinists
pre-emption after the case of the same name. See Machinists v.
Wisconsin Employment Relations Comm'n, 427 U.S. 132,
96 S.Ct. 2548 (1976). Machinists preemption is "analogous to the theory
of field preemption," Aeroground, 170 F.Supp.2d at 955
(citation omitted), and "prohibits state and municipal regulation
of areas that have been left to be controlled by the free play of
economic forces." Boston Harbor, 507 U.S. at 225-26,
113 S.Ct. at 1195 (internal quotation marks and citations omitted). Machinists preemption "protects against
interference with policies implicated by the state of the [NLRA]
itself, by preempting state law and state causes of action
concerning conduct that Congress intended to be unregulated."
Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 749,
105 S.Ct. 2380, 2394 (1985). In other words, "states may not `deny?
one party to an economic contest a weapon that congress meant him
to have available.'" District 1199, 221 F.Supp.2d at 324
(quoting Machinists, 427 U.S. at 150, 96 S.Ct. at 2558 (other
quotation marks omitted)). "Courts have generally held that
Machinists preemption protects against the unsettling of the
`balance of interests established in the NLRA.'" Alcantara v.
Allied Properties, LLC, 334 F.Supp.2d 336, 341 (E.D.N.Y. 2004)
(quoting McGowan, 311 F.3d at 508) (other citation omitted).
The underlying rationale for Machinists preemption is that it
"preserves Congress' intentional balance between the uncontrolled
power of management and labor to further their respective
interests." Boston Harbor, 507 U.S. at 226, 113 S.Ct. at 1195
(internal quotation marks and citation omitted). "In the design
and enactment of th[e] [NLRA], Congress assumed that employers
and unions would engage in economic self-help to the extent that
such conduct is not expressly prohibited [under that Act.]"
McGowan, 311 F.3d at 509 (citation omitted).
Before addressing either or both of these preemption doctrines,
however, it is necessary to consider whether section 211-a is
sheltered from such preemption analysis because it comes within
the market participant exception to same.
a. Market Participant Exception
In Boston Harbor the Supreme Court fashioned what has come to
be known as the "market participant exception" to Garmon and
Machinists preemption. This exception requires courts to
distinguish "between government as regulator and government as proprietor?" when deciding whether the NLRA
preempts a given local statute, regulation or action. See
Boston Harbor, 507 U.S. at 227, 113 S.Ct. at 1196 (emphasis
added). Making this distinction is critical because "[t]he NLRA
does not preempt actions taken by a state when it . . . acts as a
mere proprietor or market participant." Chamber of Commerce v.
Lockyer, 364 F.3d 1154, 1161 (9th Cir. 2004) (internal
quotation marks and citations omitted). The underlying basis for
the Boston Harbor exception is the concept that "the NLRA was
intended to supplant state labor regulation, [but] not all
legitimate state activity that affects labor," and that
"[p]ermitting the States to participate freely in the marketplace
is consistent with NLRA pre-emption principles." Boston Harbor,
507 U.S. at 227 and 230, 113 S.Ct. at 1197. "As the [Supreme]
Court explained, if a state is acting just as a private
contractor would act, and, in doing business with other parties,
places labor conditions on those parties in a manner that a
private contractor lawfully could, then the state is not
regulating the workings of the market." Stephen F. Befort, Bryan
N. Smith, At the Cutting Edge of Labor Law Preemption: A
Critique of Chamber of Commerce v. Lockyer. 20 LAB. LAW 107, 115
(Summer, 2004) (emphasis added).
Moreover, "[a] State does not regulate, . . . simply by acting
within one of these protected areas [i.e., market freedom or
NLRB jurisdiction.] When a State owns and manages property, for
example, it must interact with private participants in the
marketplace. In so doing, the State is not subject to pre-emption
by the NLRA, because pre-emption doctrines apply only to state
regulation." Boston Harbor, 507 U.S. at 226-27,
113 S.Ct. at 1196 (emphasis added by Boston Harbor Court).
The State contends that it is acting as a market participant
under section 211-a, and thus the NLRA does not preempt that statute. According
to the State it is a market participant because, for example,
through the Medicaid program, it is "not regulat[ing] health care
as through a licensing statute, or rules governing health care
providers' relationship with patients but [it is] buy[ing]
services for low-income consumers much as an insurer or an
employer providing employee benefits might buy health services."
State Memo. at 20-21. As further support for its position, the
State notes that under section 211-a it is "not regulat[ing] the
activity in which the Complaint alleges that plaintiffs wish to
engage, `to communicate with their employees about the advantages
and disadvantages of unionization (Par. 44) or, for that
matter, any other activity." Id. at 15. Further, contends the
State, its "[m]ere refusal to fund" what it characterizes as "the
narrowly limited activities to which § 211-a applies a refusal
[which] applie[s] equally whether employers are pro- or
anti-union, and leaving them free to engage in even these narrow
activities with non-state funds is not `regulating.'"
Memorandum of Law in Opposition to Plaintiffs' Cross-Motion for
Summary Judgment and Reply Memorandum of Law in Support of
Defendants' Motion to Dismiss at 3.
The Brennan Center amicus, which is aligned with the State in
this litigation, takes a slightly different tack focusing on what
it views as the State's permissible restriction on the use of its
own funds. The Center argues that because "the restriction here
is limited to the contractual relationship i.e., it applies
only to the use of state funds[,]" that "condition is
proprietary." Brief of Amici Curiae Brennan Center for Justice
("Brennan Memo") at 16 (footnotes omitted). Further, the Brennan
Center views section 211-a as an important tool to maintain
accounting procedures and to ensure the proper use of scarce
public funds. Finally, the Brennan Center contends that § 211-a serves a
"compelling state interest" by "ensur[ing] that scarce state
resources are used for their intended purpose of delivering
urgently needed care to needy New Yorkers." Id. at 3 and 2.
Conversely, plaintiffs assert that under § 211-a the State is
regulating in that it is "curtail[ing] an employers' ability to
exercise the economic weapon of hiring consultants or attorneys
to encourage or discourage unionization or effectively
communicating the advantages or disadvantages of unionization."
Pl. Memo. at 8. Plaintiffs further reason that "section 211-a is
not a restriction on state spending?" because "[i]t has no
effect upon what goods or services are purchased by the State,
nor how much the State pays for those goods and services." Id.
at 3-4. Plaintiffs continue: Section 211-a "only regulates how
much money private employers can spend on purely private
activities." Id. at 4.
The Chamber, as amicus, enumerates four reasons as to why
section 211-a is regulatory, and thus subject to NLRA preemption.
First the Chamber contends that the "proper focus" here is on
"the conduct being regulated by the state[.]" Chamber Memo. at 9.
And, in the Chamber's opinion, that conduct "is an employer's
ability to express its views, arguments and opinions regarding
union organization by prohibiting the use of state funds by
employers to train its management and administrative staff on the
`do's [sic] and don't's' [sic] of union organization campaigns,
hiring attorneys, consultants or other contractors for legal and
other advice, and hiring employees whose "principal job duties
are to encourage or discourage union organization.'" Id.
(quoting LAB. LAW § 211-a(2)) (footnote omitted).
Second, from the Chamber's perspective "§ 211-a does not
address any employer conduct related to the performance of its
duties." Id. (citations omitted). To further support its argument that section 211-a is regulatory
as opposed to proprietary, the Chamber notes the "broad
application" of that statute in that it "applies to all state
contracts, regardless of amount[.]" Id. at 10. Last, the
Chamber opines that as a result of section 211-a "any employer
wishing to do, or to continue to do, business with the state will
`think twice' before opposing any organizational campaigns."
Id. at 11 (citation omitted).
The Coalition, as an amicus which also supports the
plaintiff's view of section 211-1, points out that Congress has a
"clear interest" in encouraging employer free speech in the area
of labor relations[.]" Amicus Curiae Brief in Opposition to
Motion to Dismiss and in Support of Plaintiffs' Motion for
Summary Judgment ("Coalition Memo.") at 6. According to the
Coalition, section 211-a establishes a "contrary policy" by
supposedly favoring employer "neutrality" regarding unionization.
Id. at 7. In the Coalition's view, this results in the State
impermissibly "substitut[ing] its own policy for the federal
labor policy established in the NLRA[.]" Id.
As the foregoing makes clear, the first preemption issue is
whether section 211-a is proprietary or regulatory. Resolution of
this issue is essential to the court's preemption analysis
because if the court finds that under that statute the State is
acting as a proprietor, rather than a regulator, then there will
be no need to address the issue of whether section 211-a "runs
afoul of the principles established in Garmon and
Machinists[.]" Building and Construction Trades Department,
AFL-CIO v. Allbaugh, 295 F.3d 28, 34 (D.C. Cir. 2002). If, on
the other hand, the court deems section 211-a to be regulatory,
it will be "necessary to determine the applicability of Garmon
. . . and Machinists preemption to the present set of facts and
circumstances." See Hudson County Building and Construction
Trades Council, AFL-CIO, 960 F.Supp. 823, 833 (D.N.J. 1996).
I. Cardinal Towing v. Sage Hospitality
The Fifth Circuit in Cardinal Towing & Auto Repair, Inc. v.
City of Bedford, 180 F.3d 686 (5th Cir. 1999), adopted a
two-part test to decide the applicability of the Boston Harbor
market participant exception:
First, does the challenged action essentially reflect
the entity's own interest in its efficient
procurement of needed goods and services, as
measured by comparison with the typical behavior of
private parties in similar circumstances? Second,
does the narrow scope of the challenged action defeat
an inference that its primary goal was to encourage a
general policy rather than address a specific
Id. at 693 (emphasis added). The purpose of this inquiry is "to
isolate a class of government interactions with the market that
are so narrowly focused, and so in keeping with the ordinary
behavior of private parties, that a regulatory impulse can be
safely ruled out." Id. "Both prongs are methods of determining
whether the state action at issue in fact constitutes
regulation." Lockyer, 364 F.3d at 1163.
During oral argument, when specifically asked about the
applicability of the Cardinal Towing test, the State responded
that "basically" that is the "proper test" for the court to apply
here. See Tr. at 52. At that time the Ninth Circuit in
Lockyer, in a case addressing the issue of whether a statute
similar to section 211-a fell within the market participant
exception to NLRA preemption, "drew upon the reasoning" of the
Fifth Circuit's test in Cardinal Towing test. See Lockyer,
364 F.3d at 1162-63. Further, although the issue in Sprint
Spectrum L.P. v. Mills, 283 F.3d 404 (2d Cir. 2002), was
preemption under the Telecommunication Act, the Second Circuit cited Cardinal Towing with approval. Id.
at 420; see also Rowland, supra, 221 F.Supp.2d at 326-28
(applying Cardinal Towing "standard for distinguishing" whether
a state's payment of Medicaid subsidies to nursing homes
conflicted with the NRLA rights of union members).
Since oral argument, however, two decisions have been issued
Metropolitan Milwaukee Association of Commerce v. Milwaukee
County, 359 F.Supp.3d 749 (E.D. Wis. 2005) ("MMAC"); and
Hotel Employees & Restaurant Employees Union, Local 57 v. Sage
Hospitality Resources, LLC, 390 F.3d 206 (3rd Cir. 2004),
cert. denied, 2005 WL 585248, 73 USLW 3557 (April 25, 2005)
which the parties contend cast doubt as to how to define the
first factor to be used in deciding whether section 211-a is
regulatory or proprietary. In Sage Hospitality the Third
Circuit articulated the first of its two-step analysis as
follows: "First, does the challenged funding condition serve to
advance or preserve the state's proprietary interest in a project
or transaction, as an investor, owner, or financier?
390 F.3d at 216 (citation omitted).*fn4 Unlike Cardinal Towing, among
other things, absent from this inquiry is any suggestion that
courts should consider the government's actions "as measured by
comparison with the typical behavior of private parties in
similar circumstances[.]" See Cardinal Towing,
180 F.3d at 693.
Applying the Third Circuit Sage Hospitality test, the
district court in MMAC held that in "determin[ing] whether the
government has advanced a proprietary justification for its action[,] . . . the government
is not required to prove that the action in question is typical
of the actions of private entities." MMAC, 359 F.Supp.2d at 759
(emphasis added) (footnote omitted). Instead, the Court there
held that the government "need only show that it has a reasonable
basis for concluding that the challenged action will serve its
proprietary interest." Id. This view finds support in Sage
Hospitality wherein the Third Circuit opined, inter alia, that
it did not read "Boston Harbor and its progeny [as] requir[ing]
. . . a survey of what private parties do in like circumstances."
390 F.3d at 216 n. 7 (citation omitted).
In the present case plaintiffs contend that the Sage
Hospitality test, which the MMAC court employed, is
"significantly different" than the Cardinal Towing test. Letter
from James A. Shannon to Court of 3/28/05, at 2. From plaintiffs'
standpoint, the "important difference is while the [Cardinal
Towing] test. . . . reviewed the interest of the government's
action as measured by comparison with the typical behavior of
private parties in similar circumstances, . . ., the court in
MMAC specifically held that the government is not required to
prove that the action in question is typical of the actions of
private entities." Id. (internal quotation marks and citations
The court agrees with the State's response that there is no
"significant? difference" between the two tests. Letter from
Seth Kupferberg to Court of 3/30/05, at 1. The contrast between
the Cardinal Towing and Sage Hospitality is not as stark as
it might appear at first glance. First, although the Courts in
Cardinal Towing and Lockyer recited the "comparison to a
private party" language, neither actually applied it. Second,
despite plaintiffs' assertion to the contrary, nothing in
Cardinal Towing mandates that the government prove that its conduct is "typical behavior of private parties in similar
circumstances[.]" See Cardinal Towing, 180 F.3d at 693. To be
sure, the Fifth Circuit in Cardinal Towing opined that the
purpose of the two-step inquiry "is to isolate a class of
government interactions with the market [is] so narrowly focused,
and so in keeping with the ordinary behavior of private parties,
that a regulatory impulse can be safely ruled out[.]" Id. That
is not the same, however, as requiring the government "to
prove that the action in question is typical of the actions of
private entities." See MMAC, 359 F.Supp.2d at 759 (footnote
omitted) (emphasis added).
Especially persuasive in this regard is the court's reasoning
in MMAC. There the court acknowledged that "[a]lthough a
government's showing that its action is typical of the actions of
similarly situated private entities would be strong evidence that
its action is proprietary, it is unlikely that Congress intended
to require state . . . governments to make such a showing." Id.
at 759, n. 9. As the MMAC court soundly reasoned, such a
showing is not required "because state and local governments
often act in areas [and on a scale] that private parties do not."
Id. Such is the case here. As in MMAC, "it would probably be
impossible for [the State] to find a similarly situated private
entity and therefore to show that its action is typical of the
actions of such entities." Id.
An additional reason for not requiring the State in the present
case to show that its actions are typical of a similarly situated
private party is that "even where there are private parties in
the same position as the [State,] requiring the [State] to show
that its action is typical of those parties would prevent it from
devising innovative solutions to its proprietary problems." Id.
For all of these reasons, this court will rely upon the Cardinal
Towing framework to determine whether section 211-a is
regulatory or proprietary, and it will not require the State to
prove that its conduct is "typical of similarly situated private
entities." The court hastens to add that simply because a
comparison to the typical behavior of a private parties may not
be particularly helpful here, that does not mean that such a
comparison will never be relevant or useful in deciding whether a
governmental entity is entitled to invoke the market participant
Addressing the Cardinal Towing factors in reverse order, the
court finds that the scope of section 211-a is not sufficiently
narrow to overcome the "inference that its primary goal was to
encourage a general policy rather than address a specific
problem." See Cardinal Towing, 180 F.3d at 693. Given the
similarity between that statute and the California statute at
issue in Lockyer, the Ninth Circuit's decision therein is
particularly instructive. Like section 211-a, the challenged
statute in Lockyer forbade "`recipient[s] of a grant of state
funds' from `us[ing] the funds to assist, promote, or deter union
organizing.'" 364 F.3d at 1159. In a similar vein, that statute
also "bar[red] `[a] private employer receiving state funds in
excess of [$10,000] in any calendar year on account of its
participation in a state program' from using such funds `to
assist, promote, or deter union organizing.'" Id.
In finding that that California statute did not "have a narrow
scope or any other element that would indicate that [it] is
unrelated to broader social regulation[,]" the Ninth Circuit
relied upon several factors. First of all, it pointed out that
that statute "applie[d] to all employers in California who
accept any state grant or funding in excess of $10,000." Id. at
1163 (citation omitted) (emphasis added). Second, the Court noted
that the statute "impose[d] separate accounting requirements on
any business that accepts a state grant or enters into a contract
with the state for more than $10,000." Id. (citation omitted).
Third, the Lockyer Court observed that the statute "contain[ed] a provision for
civil penalties and permit[ted] private parties to file civil
actions against employers who violate [it]." Id. (citations
omitted). In light of the foregoing the Ninth Circuit found that
the California statute "indicates a general state position, not
a narrow attempt to achieve a specific goal." Lockyer,
364 F.3d at 1163 (emphasis added).
The same is true here. Section 211-a does not address a
specific proprietary problem. Section 211-a is broadly drafted to
apply to all State contracts, regardless of amount. In sweeping
language, section 211-a(2) provides:
Notwithstanding any other provision of law, no monies
appropriated by the state for any purpose shall be
made available to employers to: (a) train managers,
supervisors or other administrative personnel
regarding methods to encourage or discourage union
organization, or to encourage or discourage an
employee from participating in a union organization
drive; (b) hire or pay attorneys, consultants or
other contractors to encourage or discourage union
organization, or to encourage or discourage an
employee from participating in a union organizing
drive; or (c) hire employees or pay the salary and
other compensation of employees whose principal job
duties are to encourage or discourage union
organization, or to encourage or discourage an
employee from participating in a union organizing
N.Y. LAB. LAW § 211-a(2) (emphasis added). In this respect
section 211-a is even broader in scope than the Lockyer
statute, which was not implicated unless the state funds were in
excess of $10,000.00. Here, there is no monetary floor.
Section 211-a stands in sharp contrast to those cases such as
Boston Harbor wherein courts have found that a government's
actions were "purely proprietary" because those actions related
to specific projects. See Boston Harbor, 507 U.S. at 231, 113 S.Ct. at 1198. For example, in Boston Harbor a state
agency had been court-ordered to complete the construction of
treatment facilities as part of the Boston Harbor clean-up. "To
prevent time-consuming work stoppages, the agency agreed to
employ a union workforce in exchange for a no-strike guarantee."
Cardinal Towing, 180 F.3d at 692.
In finding that the state agency's actions were not "tantamount
to regulation[,]" and thus not subject to NLRA preemption, the
Supreme Court found several factors significant. Boston Harbor,
507 U.S. at 229, 113 S.Ct. at 1197 (internal quotation marks and
citation omitted). Among those was the fact that the agency's
action was an attempt "to ensure an efficient project that would
be completed as quickly and effectively as possible at the lowest
cost[.]" Id. at 232, 113 S.Ct. at 1198. The Court also found
significant the fact that after completion, the state agency
would own and manage the treatment facilities clearly a
proprietary undertaking. Other cases where courts have found a
government's actions to be proprietary involved a specific
project or narrow proprietary goal, both of which are missing in
the present case. See, e.g., Sage Hospitality,
390 F.3d at 218 (city ordinance "condition[ing] a grant of tax increment
financing upon . . . acceptance of a labor neutrality
agreement?" was a "specifically tailored response to a financial
interest, given the income [to the city] expected from the
development [of a hotel construction project"]); Sprint,
283 F.3d at 420-21 (quotation marks and citation omitted)
(requirement in school district single lease with respect to a
single building that provider of wireless communication
services certify that it was in compliance with . . . FCC
regulations was "plainly proprietary"); Cardinal Towing,
180 F.3d at 689 and 694 (citation omitted) (city's decision to award
single towing contract was proprietary and thus exempt from preemption under the federal motor carrier act).
Furthermore, in language nearly identical to the Lockyer
statute, section 211-a mandates the maintenance and retention of
certain financial records "sufficient to show that state funds
were not used to pay for . . . activities [to encourage or
discourage union organization]." N.Y. LAB. LAW § 211-a(3). Also
as in Lockyer, section 211-a contains a provision for civil
penalties; and although it does not allow for private party
enforcement suits, as the Lockyer statute does, section 211-a
authorizes suits by the attorney general to ensure compliance
with this statute. See id. at § 211-a(4). Given the striking
similarity between section 211-a and the Lockyer statute, this
court finds that section 211-a is "designed to have a broad
social impact, by altering the ability of a wide range of
recipients of state money to advocate about union issues."
Lockyer, 364 F.3d at 1163 (footnote omitted) (emphasis added).
Section 211-a "by its design sweeps broadly to shape policy in
the overall labor market." Id. In fact, as the Brennan Center
acknowledges, section 211-a is like other state statutes [and
regulation] "[s]pending prohibitions[,] . . . [which] play an
important role in the long-standing and extensive regulatory
system aimed at ensuring that funds are used for designated
purposes and not diverted for unauthorized purposes." Brennan
Memo. at 8 (emphasis added). Thus, section 211-a is but one,
"important part of the state's system for safeguarding the
public fisc." Id. at 2 (emphasis added).
Consistent with the concept of protecting its purse, relying
upon Allbaugh, 295 F.3d 28, the State contends that "when it
acts," as it claims to be doing under section 211-a, "to ensure
the most effective use of those funds, it is acting in a
proprietary capacity." Id. at 35; see also Tr. at 32. It is
not that simple though. A state cannot assert that it is a proprietor just by relying upon
a general statement, which section 211-a contains, that its
"proprietary interests" will be "adversely affected" by certain
expenditures. See N.Y. LAB. LAW § 211-a(1). As the court
astutely observed in Aeroground, "simply addressing the
financial interests of a public entity does not make such efforts
those of a market participant. If that were the case, then every
effort by a government entity to increase its revenues could be
characterized as market participation." 170 F.Supp.2d at 958;
cf. Sage Hospitality, 390 F.3d at 216 ("If we treated a
public agency's bare interest in maximizing tax revenue as a
proprietary interest, then preemption analysis would not apply to
any state rule arguably designed to curtail labor strife that
threatens to reduce corporate profits and, therefore, tax
receipts. Expanding the concept of market participation to
embrace so broad a concept of proprietary interest would render
preemption law in this area a nullity.") In short, given its
blanket application, unrelated to a specific goal, under the
second prong of the Cardinal Towing test, section 211-a is
regulatory in nature. That does not end the court's inquiry,
Whether the first Cardinal Towing factor supports a
regulatory finding is a closer call. As discussed above, in
applying the first Cardinal Towing factor to the present case,
the court will focus on whether section 211-a "essentially
reflect's the [State's] own interest in its efficient procurement
of needed goods and services[.]" See Cardinal Towing,
180 F.3d at 693. Because "the statute's preamble [in Lockyer]
ma[d]e clear that the legislative purpose [wa]s not procurement,
but preventing the state from influencing employee choice about
whether to join a union[,]" it is easy to see how that statute
"on its face d[id] not purport to reflect California's interest
in the efficient procurement of goods and services[.]" Lockyer, 364 F.3d at 1163 (citation omitted). In
Lockyer, the State's role as a regulator, as opposed to a
proprietor, was reinforced by this explicit policy statement: "It
is the policy of the state not to interfere with an employee's
choice about whether to join or to be represented by a labor
union." Id. (citation omitted). The legislature continued,
"For this reason, the state should not subsidize efforts by an
employer to assist, promote, or deter union organizing." Id.
(internal quotation marks and citation omitted) (emphasis added
by Lockyer Court). Obviously these statements of legislative
purpose lent significant credence to the view that the Lockyer
statute was regulatory.
In contrast, the Legislative Memorandum addressing the
amendment of section 211-a explicitly sets forth a proprietary,
not a regulatory, purpose. It declares that "[s]ection one of the
bill amends [that statute] to establish a legislative finding
regarding the proprietary interest of the state in ensuring
that scarce public resources are utilized solely for the public
purpose for which they were appropriated[.]" 2002 NY LEGIS. LAWS
MEMO CH. 601 (emphasis added). [cite form for session laws) This
"legislative finding" is specifically incorporated in section
211-a itself. Subsection one of that statute states: "The
legislature finds and declares that when public funds are
appropriated for the purchase of specific goods and/or the
provision of needed services, and those funds are instead used to
encourage or discourage union organization, the proprietary
interests of this state are adversely affected." N.Y. LAB. LAW §
211-a(1) (emphasis added). The State's claimed "proprietary
interest" is echoed again in the "Justification" section of the
Legislative Memorandum, wherein it reiterates that "[i]t is
clearly in the proprietary interests of the state to ensure
that the public funds are not misdirected." 2002 NY LEGIS. LAWS
MEMO CH. 601 (emphasis added). As alluded to in the preceding discussion of the scope of
section 211-a, however, mere recitation of a proprietary purpose
is not, in this court's opinion, sufficient to overcome the
regulatory impact of a given governmental action. This is in
keeping with the view that "courts have gauged the extent of
preemption by the objective effects of the challenged state
action, looking to see whether the action functions to promote a
particular labor policy in general or else to serve legitimate
proprietary needs within a more discrete setting." The Legal Aid
Society v. City of New York, 114 F.Supp.2d 204, 237-38 (S.D.
2000) (citations omitted). And here, despite the proprietary
language of section 211-a and its legislative purpose, section
211-a falls closer to the regulatory end of the continuum than it
does to the proprietary end.
Section 211-a is more regulatory in nature because unlike the
`purely proprietary' interests of the defendants in Boston
Harbor, here, the State "acted within a regulatory scheme that
focused on ensuring the health . . . of the public [fisc,] not on
regulating the bargaining relationship between labor and
management." See Rowland, 221 F.Supp.2d at 328. "Yet," as in
Rowland, "th[is] regulatory scheme, . . . had a clearly
discernible impact on the labor-management relationship?" in
that despite its facially neutral language, section 211-a effects
the policy of neutrality in the labor arena. It does this by in
essence allowing unions to actively participate in union
organization campaigns, while at the same time significantly
curtailing the ability of employers to voice their opposition to
unions. Moreover, unlike Boston Harbor, where the agency's
action was an attempt "to ensure an efficient project that would
be completed as quickly and effectively as possible at the lowest
cost[,]" similar proprietary interests are conspicuously absent
from section 211-a. See Boston Harbor, 507 U.S. at 232, 113 S.Ct. at 11. Accordingly, the court finds that the first
Cardinal Towing criteria also supports a finding that the State
is acting as a regulator under section 211-a.
In light of the foregoing, the next consideration is whether,
nonetheless, the NLRA preempts section 211-a. NLRA preemption is
the next step in this analysis because even though the court has
deemed section 211-a to be regulatory, that "does not mean that
[it is] automatically preempted by the NLRA." See Lockyer,
364 F.3d at 1163; see also Sage Hospitality,
390 F.3d at 213 (internal quotation marks and citations omitted) ("[A]fter
Boston Harbor, preemption analysis only comes into play when
the state's activity in question constitutes regulation.")
3. Machinists Preemption II
"Machinists preemption is grounded in what Congress intended
to be unregulated, and courts decide which areas Congress may
have intended to be left to market forces." Alcantra v. Allied
Properties, LLC, 334 F.Supp.2d 336, 344 (E.D.N.Y. 2004)
(internal quotation marks and citation omitted). As Judge
Weinstein so aptly stated in Alcantra, "[d]eciding on
preemption is an inexact art." Id. The present case exemplifies
In addition to the general Machinists preemption principles
set forth earlier, there are several other such principles which
factor into the court's analysis here. The first is that "not all
state action that affects the labor-management relationship would
`frustrate the effective implementation of the policies of the
[NLRA].'" Rowland, 221 F.Supp.2d at 328 (quoting New York Tel.
Co. v. New York St. Dept. of Labor, 440 U.S. 519, 531,
99 S.Ct. 1328, 1336 (1979) (plurality opinion)). Rather, the Second
Circuit has declared that "state action is only preempted if it
regulates the use of economic weapons that are recognized and
protected under the NLRA such that the . . . government has
entered `into the substantive aspects of the bargaining process to an extent
Congress has not countenanced.'" Rondout, 335 F.3d at 161
(quoting Machinists, 427 U.S. at 149).
By the same token, "`[t]o violate Machinists, . . . the state
regulation at issue must do more than incidentally affect the
union organizing process.'" Alcantra, 334 F.Supp.2d at 342
(quoting Lockyer, 364 F.3d at 1167). "The Supreme Court has
consistently distinguished between state laws of general
applicability (such as regulation of labor conditions), which
generally are not preempted by the NLRA, and state regulation
of the NLRA process itself, which generally is preempted.'"
Id. (quoting Lockyer, 364 F.3d at 1167) (emphasis added). To
illustrate, the Lockyer Court noted that "state regulation of
minimum labor conditions is generally not preempted." Lockyer,
364 F.3d at 1166-67 (citations omitted). Likewise, normally the
NLRA does not "preempt ordinary state contract law of general
applicability." Id. (citation and footnote omitted).
The Lockyer Court recognized, however, that there is a
fundamental difference between the foregoing situations and a
situation where "the state regulation directly targets a process
that is central to the union organizing and collective bargaining
system established by the NLRA." Id. at 1167. Further, the
Lockyer Court reasoned, "[t]his is true regardless of whether
the direct state regulation is designed to benefit employers,
employees or even the public at large." Id. Emphasizing
function over form, the Lockyer Court stressed the
"importan[ce]" of a "state's ability to control the use of its
funds[.]" Id. Nonetheless the Court found that "regulation that
specifically targets and substantially affects the NLRA
bargaining process will be preempted, even if such regulation
comes in the form of a restriction on the use of state funds."
Plaintiffs are taking the position that "[s]ection 211-a is
preempted under . . . Machinists . . . because it curtails an employer's ability to
exercise the economic weapons of hiring a consultant or attorney
to encourage or discourage unionization or effectively
communicating the advantages or disadvantages of unionization."
Pl. Memo. at 9. Section 211-a hampers the NLRA bargaining
process, argue the plaintiffs, by "imped[ing] the flow to
employees of information," such as "the possible disadvantages of
unionization that an employer might want to convey[.]" Id. at
10. Thus, in plaintiffs' view section 211-a "[w]ork[s] at
cross-purposes" with the NLRA by prohibiting employers from
conveying such information. See id. As the Coalition more
succinctly puts it, "§ 211-a is preempted by the NLRA because it
regulates employer speech that Congress intended to leave free
from regulation." Coalition Memo. at 11.
The Chamber echoes plaintiffs' arguments, contending that
section 211-a is preempted under Machinists because it
"attempt[s] to regulate an employer's ability to engage in
noncoercive speech to express its views, argument and opinions in
opposition to union organization `conduct that Congress aimed
to be unregulated in furtherance of policies implicated by the
[Act] itself.'" Brief of Amici Curiae Chamber of Commerce of
the United States of America, et al. at 13 (quoting, inter
alia, McGowan, 311 F.3d at 509). Basically it is the position
of plaintiffs and their amici that section "211-a constitutes
`government interference with [an] economic weapon?' that
`upset[s] the delicate balance of interests established in the
NLRA,' McGowan, 311 F.3d at 509,' and hence "it is preempted
under Machinists." Id. at 13-14; see also Coalition Memo.
at 11 (Section "211-a is preempted by the NLRA because it
regulates employer speech that congress intended to leave free
The State responds that the forms of "non-coercive employer communication[,]" such as "employers' training of managers and
hiring of consultants or special employees `to communicate with
their employees about the advantages and disadvantages of
unionization[,]'" State Memo. at 17 (quoting Co. at ¶ 44), which
section 211-a seeks to limit, are communication forms which "are
neither protected by NLRA § 7 nor prohibited by NLRA § 8." Id.
at 17. Therefore, the State maintains that such communications
are "not . . . activit[ies] to which . . . Machinists
preemption applies. Id. at 17 and 18. The State is fully aware
that it "could not prohibit or regulate non-coercive employer
expression about unions[;]" but from the State's perspective, the
source of "this limitation is the First Amendment, not NLRA
preemption." Id. at 18.
As with the market participant exception, given the similarity
between the statute at issue in Lockyer and section 211-a, once
again Lockyer is instructive. Finding that the Lockyer
statute "undermine[d] federal labor policy by altering Congress'
design for the collective bargaining process[,]" the Ninth
Circuit held the same to be preempted by the NLRA based upon the
Machinists doctrine. Lockyer, 364 F.3d at 1159.
In its analysis the Lockyer Court described as "force[ful]
the argument by the State and union that the challenged "statute
merely affect[ed] California's use of its own funds and d[id] not
impermissibly regulate in any area the NRLA intended to be
regulation-free." Id. at 1164. The Court also recognized that
"Machinists preemption on restrictions on economic weapons of
self-help, . . . poses a particular difficulty in the context of
state restrictions on the use of a state's own funds, because
when a state imposes such conditions it is arguably not
restricting self-help by private parties but merely the degree to
which state money is used to fund such self-help." Id.
(citation omitted). Further, the Lockyer Court noted the lack of "directly controlling" Supreme Court cases in
this context "[b]ecause the California statute regulates no more
than the uses to which [its] own funds are put, rather than
imposing a collateral penalty on additional private behavior not
funded by the state[.]" Id. at 1164-65 (citations omitted).
Despite the foregoing, the Ninth Circuit held that "the NLRA
preempt[ed] the California statute." Id. at 1165. The Court
articulated several reasons for its holding. First of all, the
Court pointed out that "[t]he [challenged] statute ha[d] both the
explicit purpose and the substantive effect of interfering with
the NLRA system for organizing labor unions." Id. at 1168. "By
explicitly targeting activity designed to `assist, promote, or
deter union organizing' the statue is on its face designed to
interfere directly with the NLRA's own system for the promotion
or deterrence of union organizing by employers and employees."
Id. Thus, the Court found that "[t]he statute would "alter the
NLRA process of collective bargaining and union organizing,
because an employer who decides against neutrality will incur
both compliance costs and litigation risk." Id.
Second, as to compliance costs, the Ninth Circuit pointed out
an employer's statutory obligation to "maintain separate accounts
for state . . . and non-state funds (it they wish to use any for
speech on union organization)," and an employer's concomitant
duty to "make those records available to the state's attorney
general upon request." Id. (citation omitted). An employer who
fails to comply with those obligations "is automatically subject
to the statute's remedial provisions." Id. (citations omitted).
In this respect, the Lockyer Court found "crucial?" the fact
that not only did the statute contain a provision "for
compensatory damages to the state[,]" but it "also ma[d]e
employers who violate the statute liable for a civil penalty of
up to twice the amount of state funds spent on union organizing." Id. (citations omitted). By authorizing
such a civil penalty, the Lockyer Court found that "the statute
imposes not merely a corrective remedy for the misuse of state
funds, but risks imposing an actively punitive sanction on
employers engaged in union organizing disputes." Id. In sum,
because the "California statute, on its face, directly regulates
the union organizing process itself and imposes substantial
compliance costs and litigation risks on employers who
participate in that process," the Court held that that statute
"interfere[d] with an area Congress intended to leave free of
state regulation." Id.
The Ninth Circuit's reasoning in Lockyer applies with equal
force here. As previously discussed, section 211-a and the
Lockyer statute are remarkably similar. Therefore, the same
concerns which the Lockyer Court expressed as to "alter[ing]
the balance of forces in the union organizing processing, [and]
interfering directly with a process protected by the NLRA[,]" are
also present in this case. See id. at 1168. The language of
section 211-a which forbids "encourag[ing] or discourag[ing]
union organization[,]" like the language of the Lockyer
statute, "intefere[d] directly with the NLRA's own system for the
promotion or deterrence of union organizing by employers or
employees." See id. at 1168. For example, section 7 of the
NLRA gives employees a host of rights, including the right to
join a labor union. See supra at n. 4. Basically under that
statute employees also have the right to refuse to join a union.
See id. It is difficult, if not impossible to see, however,
how an employee could intelligently exercise such rights,
especially the right to decline union representation, if the
employee only hears one side of the story the union's. Plainly
hindering an employer's ability to disseminate information
opposing unionization "interferes directly" with the union
organizing process which the NLRA recognizes. See Lockyer, 364 F.3d at 1168.
The court is fully aware that section 211-a is not exactly the
same as the California statute, especially when it comes to the
remedial provisions thereof. As noted earlier, the Lockyer
statute included a state taxpayer suit provision which gives a
union in dispute with an employer an additional, self-help
economic weapon in the form of the right to bring a lawsuit for
violating the statute. Section 211-a lacks such a provision.
However, section 211-a allows the state attorney general to
"apply . . . for an order enjoining or restraining the commission
or continuance of the alleged violation of this section." N.Y.
LAB. LAW § 211-a(4). Depending upon the timing of such an order,
e.g., in the midst of a union campaign, such state action could
have much the same disruptive effect as would the taxpayer
lawsuit in Lockyer. Thus, section 211-a "risks imposing an
actively punitive sanction on employer engage in union organizing
disputes." Lockyer, 364 F.3d at 1168.
Furthermore, jut like Lockyer, section 211-a includes a
substantial financial deterrent to employers contemplating, for
example, mounting an anti-union campaign. Section 211-a(4)
specifically authorizes not only the return to the state of funds
deemed to be "unlawfully expended" thereunder, but also the
imposition of "a civil penalty not to exceed one thousand dollars
or three times the amount of money unlawfully expended,
whichever is greater[.]" N.Y. LAB. LAW § 211-a(4) (emphasis
added). The fact that such penalties are limited to knowing
violations, "or where the employer previously had been found to
have violated subdivision two within the preceding two years[,]"
does not diminish the punitive effect of those penalties. See
Additionally, the mandatory record keeping procedures under
section 211-a are in all material respects identical to those found in the
Lockyer statute. Given these similarities between the Lockyer
statute and section 211-a, the court finds that the Machinists
doctrine operates to preempt the latter under the NLRA. This
result is in keeping with the Supreme Court's "broad?"
construction of Machinists preemption. See McGowan,
311 F.3d at 509 (internal quotation marks and citations omitted).
The State's argument to the contrary, i.e. that the NLRA
neither protects nor prohibits "non-coercive employer
communications," and thus Machinists preemption does not come
into play here, is unavailing. See St. Memo. at 17. This
argument completely disregards the "extensive jurisprudence"
recognized by the Lockyer Court, "emphasizing that open and
robust advocacy by both employers and employees must exist in
order for the NLRA collective bargaining process to succeed."
See Lockyer, 364 F.3d at 1165 (citing Steam Press Holdings,
Inc. v. Hawaii Teamsters & Allied Workers Union, 302 F.3d 998,
1009 (9th Cir. 2002) ("Collective bargaining will not work,
nor will labor disputes be susceptible to resolution, unless both
labor and management are able to exercise their right to engage
in uninhibited, robust, and wide-open debate.") (citing in turn
New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S.Ct. 710
(1964)). Furthermore, adopting the State's reasoning would
undermine "[t]he NLRA's declared purpose of . . . `restor[ing]
equality of bargaining power' by, among other ways, `encouraging
the practice and procedure of collective bargaining and by
protecting the exercise by workers of full freedom of
association, self-organization, and designation of
representatives of their own choosing, for the purpose of
negotiating the terms and conditions of their employment.'" Id.
at 1166 (quoting 29 U.S.C. § 151). Finally, the court notes that
it need not decide, as the State urges, "whether such open debate is an affirmative right that the
NLRA `protects' or `arguably protects,' which would be necessary
predicates for a finding of Garmon preemption[.]" Id. at 1166
n. 6. It is not necessary to decide that issue because the court
endorses the Ninth Circuit's "belief that [section 211-a] is
preempted under Machinists from regulating pro- or
anti-unionization advocacy because such regulation interferes
with the process protected by the NLRA, not any specific right
protected by the statute." Id. (emphasis added by Lockyer
Having determined that based upon the Machinists doctrine,
the NLRA preempts section 211-a, there is no need to address the
issue of whether Garmon also might apply to preempt that
statute. Likewise, there is no need for the court to address the
separate issue of LMRDA preemption. The court's ruling as to
Machinists preemption renders those other arguments moot.
Before concluding, the court stresses that it is not turning a
blind eye to the fact that the State is financially strapped and
that section 211-a was its attempt to ensure that "state funds . . .
intended for providing desperately needed social services"
are not diverted for other purposes. See Brennan Memo. at 1.
Undoubtedly, ensuring "essential state-funded services for the
most vulnerable New Yorkers" is a laudable goal. See id.
However, "[t]he State must take care that, in its zeal to act, it
does not do so unnecessarily and outside the permissible bounds
of its discretion and thereby tread on the federally protected
zone of labor rights." See Rowland, 221 F.Supp.2d at 345.
In sum, the court
(1) DENIES defendants' motion in its entirety;
(2) GRANTS plaintiffs' motion with respect to their first claim
for declaratory relief, and in so doing declares that N.Y. LAB. LAW §
211-a is preempted by the National Labor Relations Act under the
doctrine of Machinists preemption, and accordingly defendants
are permanently enjoined from implementing or enforcing that
(3) DENIES as moot plaintiffs' motion insofar as they are
seeking relief with respect to their second, third, fourth, and
fifth causes of action.
The Clerk of the Court is directed to enter judgment in favor
of the plaintiffs in accordance herewith and to dismiss this
action in its entirety.
IT IS SO ORDERED.