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June 20, 2008Client Alert

Supreme Court Strikes Down California Statute Limiting Employer Free Speech Rights

On June 19, 2008, the U.S. Supreme Court issued its long-awaited decision in Chamber Of Commerce v. Brown, No. 06-939 (2008). The Court, reversing a decision of the Ninth Circuit Court of Appeals, held that the National Labor Relations Act ("NLRA") preempted a California law which prohibited employers that receive state grants or program funds from using those funds "to assist, promote, or deter union organizing."

The State of California and the AFL-CIO had argued that the State, in passing the law, was merely acting as "market participant" and should not have to "subsidize" employer speech regarding unionization. The Court disagreed, finding that the law was a not so thinly veiled effort by the State to regulate private-employer labor relations policies that Congress intended to leave unregulated (a violation of the so-called "Machinists" preemption doctrine). The Court noted that a different ruling would open the door "to a 50-state patchwork of inconsistent labor policies."

The Court's 7-2 decision settled a growing conflict between the Ninth Circuit and other federal courts of appeal and dealt a serious blow to organized labor's cross-country efforts to get state and local governments to pass broad laws stripping employers of various rights they have under the National Labor Relations Act. In late 2005, the Seventh Circuit Court of Appeals struck down Milwaukee County's Labor Peace Ordinance, a union-backed law that required certain County service providers to enter into "labor peace agreements" at the request of any union seeking to organize their employees. Metropolitan Milwaukee Association of Commerce v. Milwaukee County, 431 F.3d 277 (7th Cir. 2005). These "labor peace agreements" limited employer free speech rights, required employers to grant workplace access to unions, and required employers to provide unions with the names and addresses of employees.

The Court's decision also reaffirmed the right of employees to oppose unionization and NLRA free-speech principles that have increasingly come under attack. Employers have a First Amendment right to engage in noncoercive speech about unionization. This right is codified in Section 8(c) of the NLRA. The Court characterized the Congressional policy judgment underlying Section 8(c) as "favoring uninhibited, robust, and wide-open debate" about the pros and cons of unionization. The Court held that states cannot use their spending power "to advance an interest that . . . frustrates the comprehensive federal scheme" established by the NLRA.

Organized labor is already decrying the Court's decision. Congressional Democrats will undoubtedly cite the decision as evidence that that the NLRA needs to be overhauled, starting with passage of the Employee Free Choice Act ("EFCA").

Michael Best has been an active participant in these history making decisions. Our own James C. Mallatt and John R. Sapp represented Kearney Trecker Corp. before the Supreme Court in the Machinists case. Jonathan O. Levine and Scott C. Baumbach represented Metropolitan Milwaukee Association of Commerce in the "labor peace" ordinance case.

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