At the Cutting Edge of Labor Law Preemption: A Critique of Chamber of Commerce v. Lockyer

This article analyzes the contours of federal labor law preemption through the lens of the Ninth Circuit Court of Appeals recent decision in Chamber of Commerce v. Lockyer, 364 F.3d 1154 (9th Cir. 2004). This case involves a constitutional challenge brought by the U.S. Chamber of Commerce and several other organizations to California Assembly Bill 1889 (AB 1889), enacted by the California legislature effective in 2001. This statute prohibits certain public employers, state grant recipients, and state contractors from using state-provided funds or property to assist, promote, or deter union organizing efforts. The Ninth Circuit, in a decision issued in April 2004, ruled that the sections of AB 1889 at issue are regulations that do not fall within the market participant exception to labor law preemption and that AB 1889 is preempted by what is known as the Machinists strand of preemption. The topic of federal labor law preemption presents one of the densest thickets in all of labor and employment law. The Supreme Court, for example, has decided more cases touching on federal preemption than on any other legal issue in the field of collective bargaining. These cases have yielded two distinct theories of labor law preemption. The Garmon strand of preemption precludes the states from regulating conduct that is arguably protected or prohibited by the National Labor Relations Act (NLRA). The Machinists strand, meanwhile, preempts state law that intrudes on areas that Congress intended to leave to the free play of economic forces. These preemption theories, in turn, are subject to a variety of exceptions, the most significant being the market participant exception. Under this exception, state and local governmental action is saved from preemption when the government entity acts in a proprietary rather than a regulatory capacity. The Lockyer litigation stands at the cutting edge of today\u27s labor law preemption jurisprudence. The case implicates both labor law preemption theories, as well as the increasingly important market participant exception. The significance of the case is underscored by the broad array of intervenors and amici that participated on each side of the case, including, most notably, the National Labor Relations Board\u27s General Counsel, who argued in favor of the Ninth Circuit\u27s preemption conclusion. The ultimate outcome of Lockyer, particularly if the Supreme Court chooses to review this case, likely will provide an important milepost in demarcating the proper boundary between federal and state interests in establishing labor policy. This article undertakes a review and critique of the Lockyer litigation. In a nutshell, the Ninth Circuit erred in deciding that federal labor law preempts AB 1889. In one respect, the Ninth Circuit\u27s analysis was correct: because AB 1889 imposes a blanket rule with respect to state-funded union avoidance activities, the statute acts as a form of regulation that likely does not qualify for the market participant exception. Nonetheless, the California statute does not violate the core principles and purposes of either the Garmon or Machinists doctrines. AB 1889 is not preempted under the Machinists doctrine because it does not regulate conduct in an area that Congress intended to be left to the free play of economic forces. The statute also survives Garmon analysis since AB 1889 does not interfere with or frustrate the primary jurisdiction of the NLRB. In conclusion, we urge the Supreme Court to take review of this case and to correct the Ninth Circuit\u27s mistake