Chamber of Commerce of United States v. Brown

(Slip Opinion) OCTOBER TERM, 2007 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

CHAMBER OF COMMERCE OF THE UNITED STATES

OF AMERICA ET AL. v. BROWN, ATTORNEY GENERAL

OF CALIFORNIA, ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

No. 06–939. Argued March 19, 2008—Decided June 19, 2008

Organizations whose members do business with California sued to en-

join enforcement of “Assembly Bill 1889” (AB 1889), which, among

other things, prohibits employers that receive state grants or more

than $10,000 in state program funds per year from using the funds

“to assist, promote, or deter union organizing.” Cal. Govt. Code Ann.

§§16645.2(a), 16645.7(a). The District Court granted the plaintiffs

partial summary judgment, holding that the National Labor Rela-

tions Act (NLRA) pre-empts §§16645.2 and 16645.7 because they

regulate employer speech about union organizing under circum-

stances in which Congress intended free debate. The Ninth Circuit

reversed, concluding that Congress did not intend to preclude States

from imposing such restrictions on the use of their own funds.

Held: Sections 16645.2 and 16645.7 are pre-empted by the NLRA.

Pp. 4–16.

(a) The NLRA contains no express pre-emption provision, but this

Court has held pre-emption necessary to implement federal labor pol-

icy where, inter alia, Congress intended particular conduct to “be un-

regulated because left ‘to be controlled by the free play of economic

forces.’ ” Machinists v. Wisconsin Employment Relations Comm’n, 427

U. S. 132, 140. Pp. 4–5.

(b) Sections 16645.2 and 16645.7 are pre-empted under Machinists

because they regulate within “a zone protected and reserved for mar-

ket freedom.” Building & Constr. Trades Council v. Associated

Builders & Contractors of Mass./R. I., Inc., 507 U. S. 218, 227. In

1947, the Taft-Hartley Act amended the NLRA by, among other

2 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Syllabus

things, adding §8(c), which protects from National Labor Relations

Board (NLRB) regulation noncoercive speech by both unions and em-

ployers about labor organizing. The section both responded to prior

NLRB rulings that employers’ attempts to persuade employees not to

organize amounted to coercion prohibited as an unfair labor practice

by the previous version of §8 and manifested a “congressional intent

to encourage free debate on issues dividing labor and management.”

Linn v. Plant Guard Workers, 383 U. S. 53, 62. Congress’ express

protection of free debate forcefully buttresses the pre-emption analy-

sis in this case. California’s policy judgment that partisan employer

speech necessarily interferes with an employee’s choice about union

representation is the same policy judgment that Congress renounced

when it amended the NLRA to preclude regulation of noncoercive

speech as an unfair labor practice. To the extent §§16645.2 and

16645.7 actually further AB 1889’s express goal, they are unequivo-

cally pre-empted. Pp. 5–8.

(c) The Ninth Circuit’s reasons for concluding that Machinists did

not pre-empt §§16645.2 and 16645.7—(1) that AB 1889’s spending re-

strictions apply only to the use of state funds, not to their receipt; (2)

that Congress did not leave the zone of activity free from all regula-

tion, in that the NLRB still regulates employer speech on the eve of

union elections; and (3) that California modeled AB 1889 on federal

statutes, e.g., the Workforce Investment Act—are not persuasive.

Pp. 8–16.

463 F. 3d 1076, reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which ROBERTS,

C. J., and SCALIA, KENNEDY, SOUTER, THOMAS, and ALITO, JJ., joined.

BREYER, J., filed a dissenting opinion, in which GINSBURG, J., joined.

Cite as: 554 U. S. ____ (2008) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 06–939

_________________

CHAMBER OF COMMERCE OF THE UNITED STATES

OF AMERICA, ET AL., PETITIONERS v. EDMUND G.

BROWN, JR., ATTORNEY GENERAL OF

CALIFORNIA, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[June 19, 2008]

JUSTICE STEVENS delivered the opinion of the Court.

A California statute known as “Assembly Bill 1889” (AB

1889) prohibits several classes of employers that receive

state funds from using the funds “to assist, promote, or

deter union organizing.” See Cal. Govt. Code Ann.

§§16645–16649 (West Supp. 2008). The question pre-

sented to us is whether two of its provisions—§16645.2,

applicable to grant recipients, and §16645.7, applicable to

private employers receiving more than $10,000 in program

funds in any year—are pre-empted by federal law mandat-

ing that certain zones of labor activity be unregulated.

I

As set forth in the preamble, the State of California

enacted AB 1889 for the following purpose:

“It is the policy of the state not to interfere with an

employee’s choice about whether to join or to be repre-

sented by a labor union. For this reason, the state

should not subsidize efforts by an employer to assist,

promote, or deter union organizing. It is the intent of

the Legislature in enacting this act to prohibit an em-

2 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

ployer from using state funds and facilities for the

purpose of influencing employees to support or oppose

unionization and to prohibit an employer from seeking

to influence employees to support or oppose unioniza-

tion while those employees are performing work on a

state contract.” 2000 Cal. Stats. ch. 872, §1.

AB 1889 forbids certain employers that receive state

funds—whether by reimbursement, grant, contract, use of

state property, or pursuant to a state program—from

using such funds to “assist, promote, or deter union orga-

nizing.” See Cal. Govt. Code Ann. §§16645.1 to 16645.7.

This prohibition encompasses “any attempt by an em-

ployer to influence the decision of its employees” regarding

“[w]hether to support or oppose a labor organization” and

“[w]hether to become a member of any labor organization.”

§16645(a). The statute specifies that the spending restric-

tion applies to “any expense, including legal and consult-

ing fees and salaries of supervisors and employees, in-

curred for . . . an activity to assist, promote, or deter union

organizing.” §16646(a).

Despite the neutral statement of policy quoted above,

AB 1889 expressly exempts “activit[ies] performed” or

“expense[s] incurred” in connection with certain undertak-

ings that promote unionization, including “[a]llowing a

labor organization or its representatives access to the

employer’s facilities or property,” and “[n]egotiating, enter-

ing into, or carrying out a voluntary recognition agree-

ment with a labor organization.” §§16647(b), (d).

To ensure compliance with the grant and program re-

strictions at issue in this case, AB 1889 establishes a

formidable enforcement scheme. Covered employers must

certify that no state funds will be used for prohibited

expenditures; the employer must also maintain and pro-

vide upon request “records sufficient to show that no state

funds were used for those expenditures.” §§16645.2(c),

Cite as: 554 U. S. ____ (2008) 3

Opinion of the Court

16645.7(b)–(c). If an employer commingles state and other

funds, the statute presumes that any expenditures to

assist, promote, or deter union organizing derive in part

from state funds on a pro rata basis. §16646(b). Violators

are liable to the State for the amount of funds used for

prohibited purposes plus a civil penalty equal to twice the

amount of those funds. §§16645.2(d), 16645.7(d). Sus-

pected violators may be sued by the state attorney general

or any private taxpayer, and prevailing plaintiffs are

“entitled to recover reasonable attorney’s fees and costs.”

§16645.8(d).

II

In April 2002, several organizations whose members do

business with the State of California (collectively, Cham-

ber of Commerce), brought this action against the Califor-

nia Department of Health Services and appropriate state

officials (collectively, the State) to enjoin enforcement of

AB 1889. Two labor unions (collectively, AFL–CIO) inter-

vened to defend the statute’s validity.

The District Court granted partial summary judgment

in favor of the Chamber of Commerce,1 holding that the

National Labor Relations Act (NLRA), 49 Stat. 449, as

amended, 29 U. S. C. §151 et seq. pre-empts Cal. Govt.

Code Ann. §16645.2 (concerning grants) and §16645.7

(concerning program funds) because those provisions

“regulat[e] employer speech about union organizing under

specified circumstances, even though Congress intended

free debate.” Chamber of Commerce v. Lockyer, 225

F. Supp. 2d 1199, 1205 (CD Cal. 2002). The Court of

Appeals for the Ninth Circuit, after twice affirming the

District Court’s judgment, granted rehearing en banc and

——————

1 The District Court held that the Chamber of Commerce lacked

standing to challenge several provisions of AB 1889 concerning state

contractors and public employers. See Chamber of Commerce v.

Lockyer, 225 F. Supp. 2d 1199, 1202–1203 (CD Cal. 2002).

4 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

reversed. See Chamber of Commerce v. Lockyer, 463 F. 3d

1076, 1082 (2006). While the en banc majority agreed that

California enacted §§16645.2 and 16645.7 in its capacity

as a regulator, and not as a mere proprietor or market

participant, see id., at 1082–1085, it concluded that Con-

gress did not intend to preclude States from imposing such

restrictions on the use of their own funds, see id., at 1085–

1096. We granted certiorari, 552 U. S. ___ (2007), and

now reverse.

Although the NLRA itself contains no express pre-

emption provision, we have held that Congress implicitly

mandated two types of pre-emption as necessary to im-

plement federal labor policy. The first, known as Garmon

pre-emption, see San Diego Building Trades Council v.

Garmon, 359 U. S. 236 (1959), “is intended to preclude

state interference with the National Labor Relations

Board’s interpretation and active enforcement of the ‘inte-

grated scheme of regulation’ established by the NLRA.”

Golden State Transit Corp. v. Los Angeles, 475 U. S. 608,

613 (1986) (Golden State I). To this end, Garmon pre-

emption forbids States to “regulate activity that the NLRA

protects, prohibits, or arguably protects or prohibits.”

Wisconsin Dept. of Industry v. Gould Inc., 475 U. S. 282,

286 (1986). The second, known as Machinists pre-

emption, forbids both the National Labor Relations Board

(NLRB) and States to regulate conduct that Congress

intended “be unregulated because left ‘to be controlled by

the free play of economic forces.’ ” Machinists v. Wisconsin

Employment Relations Comm’n, 427 U. S. 132, 140 (1976)

(quoting NLRB v. Nash-Finch Co., 404 U. S. 138, 144

(1971)). Machinists pre-emption is based on the premise

that “ ‘Congress struck a balance of protection, prohibition,

and laissez-faire in respect to union organization, collec-

tive bargaining, and labor disputes.’ ” 427 U. S., at 140,

n. 4 (quoting Cox, Labor Law Preemption Revisited, 85

Harv. L. Rev. 1337, 1352 (1972)).

Cite as: 554 U. S. ____ (2008) 5

Opinion of the Court

Today we hold that §§16645.2 and 16645.7 are pre-

empted under Machinists because they regulate within “a

zone protected and reserved for market freedom.” Build-

ing & Constr. Trades Council v. Associated Builders &

Contractors of Mass./R. I., Inc., 507 U. S. 218, 227 (1993)

(Boston Harbor). We do not reach the question whether

the provisions would also be pre-empted under Garmon.

III

As enacted in 1935, the NLRA, which was commonly

known as the Wagner Act, did not include any provision

that specifically addressed the intersection between em-

ployee organizational rights and employer speech rights.

See 49 Stat. 449. Rather, it was left to the NLRB, subject

to review in federal court, to reconcile these interests in its

construction of §§7 and 8. Section 7, now codified at 29

U. S. C. §157, provided that workers have the right to

organize, to bargain collectively, and to engage in con-

certed activity for their mutual aid and protection. Sec-

tion 8(1), now codified at 29 U. S. C. §158(a)(1), made it an

“unfair labor practice” for employers to “interfere with,

restrain, or coerce employees in the exercise of the rights

guaranteed by section 7.”

Among the frequently litigated issues under the Wagner

Act were charges that an employer’s attempts to persuade

employees not to join a union—or to join one favored by

the employer rather than a rival—amounted to a form of

coercion prohibited by §8. The NLRB took the position

that §8 demanded complete employer neutrality during

organizing campaigns, reasoning that any partisan em-

ployer speech about unions would interfere with the §7

rights of employees. See 1 J. Higgins, The Developing

Labor Law 94 (5th ed. 2006). In 1941, this Court curtailed

the NLRB’s aggressive interpretation, clarifying that

nothing in the NLRA prohibits an employer “from express-

ing its view on labor policies or problems” unless the em-

6 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

ployer’s speech “in connection with other circumstances

[amounts] to coercion within the meaning of the Act.”

NLRB v. Virginia Elec. & Power Co., 314 U. S. 469, 477

(1941). We subsequently characterized Virginia Electric

as recognizing the First Amendment right of employers to

engage in noncoercive speech about unionization. Thomas

v. Collins, 323 U. S. 516, 537–538 (1945). Notwithstand-

ing these decisions, the NLRB continued to regulate em-

ployer speech too restrictively in the eyes of Congress.

Concerned that the Wagner Act had pushed the labor

relations balance too far in favor of unions, Congress

passed the Labor Management Relations Act, 1947 (Taft-

Hartley Act). 61 Stat. 136. The Taft-Hartley Act amended

§§7 and 8 in several key respects. First, it emphasized

that employees “have the right to refrain from any or all”

§7 activities. 29 U. S. C. §157. Second, it added §8(b),

which prohibits unfair labor practices by unions. 29

U. S. C. §158(b). Third, it added §8(c), which protects

speech by both unions and employers from regulation

by the NLRB. 29 U. S. C. §158(c). Specifically, §8(c)

provides:

“The expressing of any views, argument, or opinion, or

the dissemination thereof, whether in written,

printed, graphic, or visual form, shall not constitute or

be evidence of an unfair labor practice under any of

the provisions of this subchapter, if such expression

contains no threat of reprisal or force or promise of

benefit.”

From one vantage, §8(c) “merely implements the First

Amendment,” NLRB v. Gissel Packing Co., 395 U. S. 575,

617 (1969), in that it responded to particular constitu-

tional rulings of the NLRB. See S. Rep. No. 105, 80th

Cong., 1st Sess., pt. 2, pp. 23–24 (1947). But its enact-

ment also manifested a “congressional intent to encourage

free debate on issues dividing labor and management.”

Cite as: 554 U. S. ____ (2008) 7

Opinion of the Court

Linn v. Plant Guard Workers, 383 U. S. 53, 62 (1966). It is

indicative of how important Congress deemed such “free

debate” that Congress amended the NLRA rather than

leaving to the courts the task of correcting the NLRB’s

decisions on a case-by-case basis. We have characterized

this policy judgment, which suffuses the NLRA as a whole,

as “favoring uninhibited, robust, and wide-open debate in

labor disputes,” stressing that “freewheeling use of the

written and spoken word . . . has been expressly fostered

by Congress and approved by the NLRB.” Letter Carriers

v. Austin, 418 U. S. 264, 272–273 (1974).

Congress’ express protection of free debate forcefully

buttresses the pre-emption analysis in this case. Under

Machinists, congressional intent to shield a zone of activ-

ity from regulation is usually found only “implicit[ly] in

the structure of the Act,” Livadas v. Bradshaw, 512 U. S.

107, 117, n. 11 (1994), drawing on the notion that “ ‘[w]hat

Congress left unregulated is as important as the regula-

tions that it imposed,’ ” Golden State Transit Corp. v. Los

Angeles, 493 U. S. 103, 110 (1989) (Golden State II) (quot-

ing New York Telephone Co. v. New York State Dept. of

Labor, 440 U. S. 519, 552 (1979) (Powell, J., dissenting)).

In the case of noncoercive speech, however, the protection

is both implicit and explicit. Sections 8(a) and 8(b) dem-

onstrate that when Congress has sought to put limits on

advocacy for or against union organization, it has ex-

pressly set forth the mechanisms for doing so. Moreover,

the amendment to §7 calls attention to the right of em-

ployees to refuse to join unions, which implies an underly-

ing right to receive information opposing unionization.

Finally, the addition of §8(c) expressly precludes regula-

tion of speech about unionization “so long as the communi-

cations do not contain a ‘threat of reprisal or force or

promise of benefit.’ ” Gissel Packing, 395 U. S., at 618.

The explicit direction from Congress to leave noncoer-

cive speech unregulated makes this case easier, in at least

8 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

one respect, than previous NLRA cases because it does not

require us “to decipher the presumed intent of Congress in

the face of that body’s steadfast silence.” Sears, Roebuck

& Co. v. Carpenters, 436 U. S. 180, 188, n. 12 (1978).

California’s policy judgment that partisan employer

speech necessarily “interfere[s] with an employee’s choice

about whether to join or to be represented by a labor

union,” 2000 Cal. Stats. ch. 872, §1, is the same policy

judgment that the NLRB advanced under the Wagner Act,

and that Congress renounced in the Taft-Hartley Act. To

the extent §§16645.2 and 16645.7 actually further the

express goal of AB 1889, the provisions are unequivocally

pre-empted.

IV

The Court of Appeals concluded that Machinists did not

pre-empt §§16645.2 and 16645.7 for three reasons: (1) the

spending restrictions apply only to the use of state funds,

(2) Congress did not leave the zone of activity free from all

regulation, and (3) California modeled AB 1889 on federal

statutes. We find none of these arguments persuasive.

Use of State Funds

In NLRA pre-emption cases, “ ‘judicial concern has

necessarily focused on the nature of the activities which

the States have sought to regulate, rather than on the

method of regulation adopted.’ ” Golden State I, 475 U. S.,

at 614, n. 5 (quoting Garmon, 359 U. S., at 243; brackets

omitted); see also Livadas, 512 U. S., at 119 (“Pre-emption

analysis . . . turns on the actual content of [the State’s]

policy and its real effect on federal rights”). California

plainly could not directly regulate noncoercive speech

about unionization by means of an express prohibition. It

is equally clear that California may not indirectly regulate

such conduct by imposing spending restrictions on the use

of state funds.

Cite as: 554 U. S. ____ (2008) 9

Opinion of the Court

In Gould, we held that Wisconsin’s policy of refusing to

purchase goods and services from three-time NLRA viola-

tors was pre-empted under Garmon because it imposed a

“supplemental sanction” that conflicted with the NLRA’s

“ ‘integrated scheme of regulation.’ ” 475 U. S., at 288–289.

Wisconsin protested that its debarment statute was “an

exercise of the State’s spending power rather than its

regulatory power,” but we dismissed this as “a distinction

without a difference.” Id., at 287. “[T]he point of the

statute [was] to deter labor law violations,” and “for all

practical purposes” the spending restriction was “tanta-

mount to regulation.” Id., at 287–289. Wisconsin’s choice

“to use its spending power rather than its police power

d[id] not significantly lessen the inherent potential for

conflict” between the state and federal schemes; hence the

statute was pre-empted. Id., at 289.

We distinguished Gould in Boston Harbor, holding that

the NLRA did not preclude a state agency supervising a

construction project from requiring that contractors abide

by a labor agreement. We explained that when a State

acts as a “market participant with no interest in setting

policy,” as opposed to a “regulator,” it does not offend the

pre-emption principles of the NLRA. 507 U. S., at 229. In

finding that the state agency had acted as a market par-

ticipant, we stressed that the challenged action “was

specifically tailored to one particular job,” and aimed “to

ensure an efficient project that would be completed as

quickly and effectively as possible at the lowest cost.” Id.,

at 232.

It is beyond dispute that California enacted AB 1889 in

its capacity as a regulator rather than a market partici-

pant. AB 1889 is neither “specifically tailored to one

particular job” nor a “legitimate response to state pro-

curement constraints or to local economic needs.” Gould,

475 U. S., at 291. As the statute’s preamble candidly

acknowledges, the legislative purpose is not the efficient

10 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

procurement of goods and services, but the furtherance of

a labor policy. See 2000 Cal. Stats. ch. 872, §1. Although

a State has a legitimate proprietary interest in ensuring

that state funds are spent in accordance with the purposes

for which they are appropriated, this is not the objective of

AB 1889. In contrast to a neutral affirmative requirement

that funds be spent solely for the purposes of the relevant

grant or program, AB 1889 imposes a targeted negative

restriction on employer speech about unionization. Fur-

thermore, the statute does not even apply this constraint

uniformly. Instead of forbidding the use of state funds for

all employer advocacy regarding unionization, AB 1889

permits use of state funds for select employer advocacy

activities that promote unions. Specifically, the statute

exempts expenses incurred in connection with, inter alia,

giving unions access to the workplace, and voluntarily

recognizing unions without a secret ballot election.

§§16647(b), (d).

The Court of Appeals held that although California did

not act as a market participant in enacting AB 1889, the

NLRA did not pre-empt the statute. It purported to dis-

tinguish Gould on the theory that AB 1889 does not make

employer neutrality a condition for receiving funds, but

instead restricts only the use of funds. According to the

Court of Appeals, this distinction matters because when a

State imposes a “use” restriction instead of a “receipt”

restriction, “an employer has and retains the freedom to

spend its own funds however it wishes.” 463 F. 3d, at

1088.

California’s reliance on a “use” restriction rather than a

“receipt” restriction is, at least in this case, no more conse-

quential than Wisconsin’s reliance on its spending power

rather than its police power in Gould. As explained below,

AB 1889 couples its “use” restriction with compliance costs

and litigation risks that are calculated to make union-

related advocacy prohibitively expensive for employers

Cite as: 554 U. S. ____ (2008) 11

Opinion of the Court

that receive state funds. By making it exceedingly diffi-

cult for employers to demonstrate that they have not used

state funds and by imposing punitive sanctions for non-

compliance, AB 1889 effectively reaches beyond “the use of

funds over which California maintains a sovereign inter-

est.” Brief for State Respondents 19.

Turning first to the compliance burdens, AB 1889 re-

quires recipients to “maintain records sufficient to show

that no state funds were used” for prohibited expendi-

tures, §§16645.2(c), 16645.7(c), and conclusively presumes

that any expenditure to assist, promote, or deter union

organizing made from “commingled” funds constitutes a

violation of the statute, §16646(b). Maintaining “suffi-

cient” records and ensuring segregation of funds is no

small feat, given that AB 1889 expansively defines its

prohibition to encompass “any expense” incurred in “any

attempt” by an employer to “influence the decision of its

employees.” §§16645(a), 16646(a). Prohibited expendi-

tures include not only discrete expenses such as legal and

consulting fees, but also an allocation of overhead, includ-

ing “salaries of supervisors and employees,” for any time

and resources spent on union-related advocacy. See

§16646(a). The statute affords no clearly defined safe

harbor, save for expenses incurred in connection with

activities that either favor unions or are required by fed-

eral or state law. See §16647.

The statute also imposes deterrent litigation risks.

Significantly, AB 1889 authorizes not only the California

Attorney General but also any private taxpayer—

including, of course, a union in a dispute with an em-

ployer—to bring a civil action against suspected violators

for “injunctive relief, damages, civil penalties, and other

appropriate equitable relief.” §16645.8. Violators are

liable to the State for three times the amount of state

funds deemed spent on union organizing. §§16645.2(d),

16645.7(d), 16645.8(a). Prevailing plaintiffs, and certain

12 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

prevailing taxpayer intervenors, are entitled to recover

attorney’s fees and costs, §16645.8(d), which may well

dwarf the treble damages award. Consequently, a trivial

violation of the statute could give rise to substantial liabil-

ity. Finally, even if an employer were confident that it

had satisfied the recordkeeping and segregation require-

ments, it would still bear the costs of defending itself

against unions in court, as well as the risk of a mistaken

adverse finding by the factfinder.

In light of these burdens, California’s reliance on a “use”

restriction rather than a “receipt” restriction “does not

significantly lessen the inherent potential for conflict”

between AB 1889 and the NLRA. Gould, 475 U. S., at

289. AB 1889’s enforcement mechanisms put considerable

pressure on an employer either to forgo his “free speech

right to communicate his views to his employees,” Gissel

Packing, 395 U. S., at 617, or else to refuse the receipt of

any state funds. In so doing, the statute impermissibly

“predicat[es] benefits on refraining from conduct protected

by federal labor law,” Livadas, 512 U. S., at 116, and chills

one side of “the robust debate which has been protected

under the NLRA,” Letter Carriers, 418 U. S., at 275.

Resisting this conclusion, the State and the AFL–CIO

contend that AB 1889 imposes less onerous recordkeeping

restrictions on governmental subsidies than do federal

restrictions that have been found not to violate the First

Amendment. See Rust v. Sullivan, 500 U. S. 173 (1991);

Regan v. Taxation With Representation of Wash., 461 U. S.

540 (1983). The question, however, is not whether AB

1889 violates the First Amendment, but whether it

“ ‘stands as an obstacle to the accomplishment and execu-

tion of the full purposes and objectives’ ” of the NLRA.

Livadas, 512 U. S., at 120 (quoting Brown v. Hotel Em-

ployees, 468 U. S. 491, 501 (1984)). Constitutional stan-

dards, while sometimes analogous, are not tailored to

address the object of labor pre-emption analysis: giving

Cite as: 554 U. S. ____ (2008) 13

Opinion of the Court

effect to Congress’ intent in enacting the Wagner and Taft-

Hartley Acts. See Livadas, 512 U. S., at 120 (distinguish-

ing standards applicable to the Equal Protection and Due

Process Clauses); Gould, 475 U. S., at 290 (Commerce

Clause); Linn, 383 U. S., at 67 (First Amendment). Al-

though a State may “choos[e] to fund a program dedicated

to advance certain permissible goals,” Rust, 400 U. S., at

194, it is not “permissible” for a State to use its spending

power to advance an interest that—even if legitimate “in

the absence of the NLRA,” Gould, 475 U. S., at 290—

frustrates the comprehensive federal scheme established

by that Act.

NLRB Regulation

We have characterized Machinists pre-emption as

“creat[ing] a zone free from all regulations, whether state

or federal.” Boston Harbor, 507 U. S., at 226. Stressing

that the NLRB has regulated employer speech that takes

place on the eve of union elections, the Court of Appeals

deemed Machinists inapplicable because “employer speech

in the context of organizing” is not a zone of activity that

Congress left free from “all regulation.” See 463 F. 3d, at

1089 (citing Peoria Plastic Co., 117 N. L. R. B. 545, 547–

548 (1957) (barring employer interviews with employees in

their homes immediately before an election); Peerless

Plywood Co., 107 N. L. R. B. 427, 429 (1953) (barring

employers and unions alike from making election speeches

on company time to massed assemblies of employees

within the 24-hour period before an election)).

The NLRB has policed a narrow zone of speech to en-

sure free and fair elections under the aegis of §9 of the

NLRA, 29 U. S. C. §159. Whatever the NLRB’s regulatory

authority within special settings such as imminent elec-

tions, however, Congress has clearly denied it the author-

ity to regulate the broader category of noncoercive speech

encompassed by AB 1889. It is equally obvious that the

14 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

NLRA deprives California of this authority, since “ ‘[t]he

States have no more authority than the Board to upset the

balance that Congress has struck between labor and man-

agement.’ ” Metropolitan Life Ins. Co. v. Massachusetts,

471 U. S. 724, 751 (1985).

Federal Statutes

Finally, the Court of Appeals reasoned that Congress

could not have intended to pre-empt AB 1889 because

Congress itself has imposed similar restrictions. See 463

F. 3d, at 1090–1091. Specifically, three federal statutes

include provisions that forbid the use of particular grant

and program funds “to assist, promote, or deter union

organizing.”2 We are not persuaded that these few iso-

lated restrictions, plucked from the multitude of federal

spending programs, were either intended to alter or did in

fact alter the “ ‘wider contours of federal labor policy.’ ”

Metropolitan Life, 471 U. S., at 753.

A federal statute will contract the pre-emptive scope of

the NLRA if it demonstrates that “Congress has decided to

tolerate a substantial measure of diversity” in the particu-

lar regulatory sphere. New York Telephone, 440 U. S., at

546 (plurality opinion). In New York Telephone, an em-

ployer challenged a state unemployment system that

provided benefits to employees absent from work during

lengthy strikes. The employer argued that the state sys-

tem conflicted with the federal labor policy “of allowing the

free play of economic forces to operate during the bargain-

——————

2 See 29 U. S. C. §2931(b)(7) (“Each recipient of funds under [the

Workforce Investment Act] shall provide to the Secretary assurances

that none of such funds will be used to assist, promote, or deter union

organizing”); 42 U. S. C. §9839(e) (“Funds appropriated to carry out [the

Head Start Programs Act] shall not be used to assist, promote, or deter

union organizing”); §12634(b)(1) (“Assistance provided under [the

National Community Service Act] shall not be used by program par-

ticipants and program staff to . . . assist, promote, or deter union

organizing”).

Cite as: 554 U. S. ____ (2008) 15

Opinion of the Court

ing process.” Id., at 531. We upheld the statute on the

basis that the legislative histories of the NLRA and Social

Security Act, which were enacted within six weeks of each

other, confirmed that “Congress intended that the States

be free to authorize, or to prohibit, such payments.” Id., at

544; see also id., at 547 (Brennan, J., concurring in result);

id., at 549 (Blackmun, J., concurring in judgment). In-

deed, the tension between the Social Security Act and the

NLRA suggested that the case could “be viewed as pre-

senting a potential conflict between two federal statutes

. . . rather than between federal and state regulatory

statutes.” Id., at 539–540, n. 32.

The three federal statutes relied on by the Court of

Appeals neither conflict with the NLRA nor otherwise

establish that Congress “decided to tolerate a substantial

measure of diversity” in the regulation of employer speech.

Unlike the States, Congress has the authority to create

tailored exceptions to otherwise applicable federal policies,

and (also unlike the States) it can do so in a manner that

preserves national uniformity without opening the door to

a 50-state patchwork of inconsistent labor policies. Con-

sequently, the mere fact that Congress has imposed tar-

geted federal restrictions on union-related advocacy in

certain limited contexts does not invite the States to over-

ride federal labor policy in other settings.

Had Congress enacted a federal version of AB 1889 that

applied analogous spending restrictions to all federal

grants or expenditures, the pre-emption question would be

closer. Cf. Metropolitan Life, 471 U. S., at 755 (citing

federal minimum labor standards as evidence that Con-

gress did not intend to pre-empt state minimum labor

standards). But none of the cited statutes is Government-

wide in scope, none contains comparable remedial provi-

sions, and none contains express pro-union exemptions.

16 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

Opinion of the Court

* * *

The Court of Appeals’ judgment reversing the summary

judgment entered for the Chamber of Commerce is re-

versed, and the case is remanded for further proceedings

consistent with this opinion.

It is so ordered.

Cite as: 554 U. S. ____ (2008) 1

BREYER, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 06–939

_________________

CHAMBER OF COMMERCE OF THE UNITED STATES

OF AMERICA, ET AL., PETITIONERS v. EDMUND G.

BROWN, JR., ATTORNEY GENERAL OF

CALIFORNIA, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[June 19, 2008]

JUSTICE BREYER, with whom JUSTICE GINSBURG joins,

dissenting.

California’s spending statute sets forth a state “policy”

not to “subsidize efforts by an employer to assist, promote,

or deter union organizing.” 2000 Cal. Stats. ch. 872, §1.

The operative sections of the law prohibit several classes

of employers who receive state funds from using those

funds to “assist, promote, or deter union organizing.” Cal.

Govt. Code Ann. §§16645–16649 (West Supp. 2008). And

various compliance provisions then require maintenance

of “records sufficient to show that no state funds were

used” for prohibited expenditures, deter the use of com-

mingled funds for prohibited expenditures, and impose

serious penalties upon violators. §§16645.2(c), 16645.7(b)–

(c).

The Court finds that the National Labor Relations Act

(NLRA) pre-empts these provisions. It does so, for it

believes the provisions “regulate” activity that Congress

has intended to “be unregulated because left to be con-

trolled by the free play of economic forces.” Machinists v.

Wisconsin Employment Relations Comm’n, 427 U. S. 132,

140 (1976) (internal quotation marks omitted and empha-

sis added). The Chamber of Commerce adds that the

2 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

BREYER, J., dissenting

NLRA pre-empts these provisions because they “regulate

activity that the NLRA protects, prohibits, or arguably

protects or prohibits.” Wisconsin Dept. of Industry v.

Gould Inc., 475 U. S. 282, 286 (1986) (summarizing the

pre-emption principle set forth in San Diego Building

Trades Council v. Garmon, 359 U. S. 236 (1959); emphasis

added). Thus the question before us is whether Califor-

nia’s spending limitations amount to regulation that the

NLRA pre-empts. In my view, they do not.

I

The operative sections of the California statute provide

that employers who wish to “assist, promote or deter union

organizing,” cannot use state money when they do so. The

majority finds these provisions pre-empted because in its

view the sections regulate employer speech in a manner

that weakens, or undercuts, a congressional policy, embod-

ied in NLRA §8(c), “ ‘to encourage free debate on issues

dividing labor and management.’ ” Ante, at 6–7 (citing

Linn v. Plant Guard Workers, 383 U. S. 53, 62 (1966)).

Although I agree the congressional policy favors “free

debate,” I do not believe the operative provisions of the

California statute amount to impermissible regulation

that interferes with that policy as Congress intended it.

First, the only relevant Supreme Court case that found a

State’s labor-related spending limitations to be pre-

empted differs radically from the case before us. In that

case, Wisconsin Dept. of Industry v. Gould Inc., 475 U. S.

282, the Court considered a Wisconsin statute that prohib-

ited the State from doing business with firms that repeat-

edly violated the NLRA. The Court said that the statute’s

“manifest purpose and inevitable effect” was “to enforce”

the NLRA’s requirements, which “role Congress reserved

exclusively for the [National Labor Relations Board].” Id.,

at 291. In a word, the Wisconsin statute sought “to compel

conformity with the NLRA.” Building & Constr. Trades

Cite as: 554 U. S. ____ (2008) 3

BREYER, J., dissenting

Council v. Associated Builders & Contractors of Mass./R.

I., Inc., 507 U. S. 218, 228 (1993) (emphasis added).

California’s statute differs from the Wisconsin statute

because it does not seek to compel labor-related activity.

Nor does it seek to forbid labor-related activity. It permits

all employers who receive state funds to “assist, promote,

or deter union organizing.” It simply says to those em-

ployers, do not do so on our dime. I concede that a federal

law that forces States to pay for labor-related speech from

public funds would encourage more of that speech. But no

one can claim that the NLRA is such a law. And without

such a law, a State’s refusal to pay for labor-related speech

does not impermissibly discourage that activity. To refuse

to pay for an activity (as here) is not the same as to compel

others to engage in that activity (as in Gould).

Second, California’s operative language does not weaken

or undercut Congress’ policy of “encourag[ing] free debate

on issues dividing labor and management.” Linn, supra, at

62. For one thing, employers remain free to spend their

own money to “assist, promote, or deter” unionization.

More importantly, I cannot conclude that California’s

statute would weaken or undercut any such congressional

policy because Congress itself has enacted three statutes

that, using identical language, do precisely the same

thing. Congress has forbidden recipients of Head Start

funds from using the funds to “assist, promote, or deter

union organizing.” 42 U. S. C. §9839(e). It has forbidden

recipients of Workforce Investment Act of 1998 funds from

using the funds to “assist, promote, or deter union organiz-

ing.” 29 U. S. C. §2931(b)(7). And it has forbidden recipi-

ents of National Community Service Act of 1990 funds

from using the funds to “assist, promote, or deter union

organizing.” 42 U. S. C. §12634(b)(1). Could Congress

have thought that the NLRA would prevent the States

from enacting the very same kinds of laws that Congress

itself has enacted? Far more likely, Congress thought that

4 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

BREYER, J., dissenting

directing government funds away from labor-related activ-

ity was consistent, not inconsistent, with, the policy of

“encourag[ing] free debate” embedded in its labor statutes.

Finally, the law normally gives legislatures broad au-

thority to decide how to spend the People’s money. A

legislature, after all, generally has the right not to fund

activities that it would prefer not to fund—even where the

activities are otherwise protected. See, e.g., Regan v.

Taxation With Representation of Wash., 461 U. S. 540, 549

(1983) (“We have held in several contexts that a legisla-

ture’s decision not to subsidize the exercise of a fundamen-

tal right does not infringe the right”). This Court has

made the same point in the context of labor law. See Lyng

v. Automobile Workers, 485 U. S. 360, 368 (1988) (holding

that the Federal Government’s refusal to provide food

stamp benefits to striking workers was justified because

“[s]trikers and their union would be much better off if food

stamps were available,” but the “strikers’ right of associa-

tion does not require the Government to furnish funds to

maximize the exercise of that right”).

As far as I can tell, States that do wish to pay for em-

ployer speech are generally free to do so. They might

make clear, for example, through grant-related rules and

regulations that a grant recipient can use the funds to pay

salaries and overhead, which salaries and overhead might

include expenditures related to management’s role in

labor organizing contests. If so, why should States that do

not wish to pay be deprived of a similar freedom? Why

should they be conscripted into paying?

I can find nothing in the majority’s arguments that

convincingly answers these questions. The majority says

that California must be acting as an impermissible regula-

tor because it is not acting as a “market participant” (a

role we all agree would permit it broad leeway to act like

private firms in respect to labor matters). Ante, at 9. But

the regulator/market-participant distinction suggests a

Cite as: 554 U. S. ____ (2008) 5

BREYER, J., dissenting

false dichotomy. The converse of “market participant” is

not necessarily “regulator.” A State may appropriate

funds without either participating in or regulating the

labor market. And the NLRA pre-empts a State’s actions,

when taken as an “appropriator,” only if those actions

amount to impermissible regulation. I have explained

why I believe that California’s actions do not amount to

impermissible regulation here.

The majority also complains that the statute “imposes a

targeted negative restriction,” one applicable only to labor.

Ante, at 10. I do not find this a fatal objection, because the

congressional statutes just discussed (which I believe are

consistent with the NLRA) do exactly the same. In any

event, if, say, a State can tell employers not to use state

funds to pay for a large category of expenses (say, over-

head), why can it not tell employers the same about a

smaller category of expenses (say, only those overhead

expenses related to taking sides in a labor contest). And

where would the line then be drawn? Would the statute

pass master if California had said, do not use our money

to pay for interior decorating, catered lunches, or labor

relations?

The majority further objects to the fact that the statute

does not “apply” the constraint “uniformly,” because it

permits use of state funds for “select employer advocacy

activities that promote unions.” Ante, at 10. That last

phrase presumably refers to an exception in the California

statute that permits employers to spend state funds to

negotiate a voluntary recognition of a union. But this

exception underscores California’s basic purpose—

maintaining a position of spending neutrality on contested

labor matters. Where labor and management agree on

unionization, there is no conflict.

II

I turn now to the statute’s compliance provisions. They

6 CHAMBER OF COMMERCE OF UNITED STATES

v. BROWN

BREYER, J., dissenting

require grant recipients to maintain “records sufficient to

show that no state funds were used” for prohibited expen-

ditures; they deter the use of commingled funds for prohib-

ited expenditures; and they impose serious penalties upon

violators. Cal. Govt. Code Ann. §§16645.2(c), 16645.7(b)–

(c). The majority seems to rest its conclusions in part

upon its belief that these requirements are too strict, that,

under the guise of neutral enforcement, they discourage

the use of nonstate money to engage in free debate on

labor/management issues. Ante, at 10–11.

I agree with the majority that, should the compliance

provisions, as a practical matter, unreasonably discourage

expenditure of nonstate funds, the NLRA may well pre-

empt California’s statute. But I cannot say on the basis of

the record before us that the statute will have that effect.

The language of the statute is clear. The statute re-

quires recipients of state money to “maintain records

sufficient to show that no state funds were used” for pro-

hibited expenditures. §§16645.2, 16645.7(c). And the

class of prohibited expenditures is quite broad: It covers

“any expense” incurred in “any attempt” by an employer to

“influence the decision of its employees,” including “legal

and consulting fees and salaries of supervisors and em-

ployees” incurred during research for or the preparation,

planning, coordination, or execution of activities to “assist,

promote, or deter” union organizing. §16646(a) (emphasis

added). And where an employer mingles state funds and

non-state funds, (say, to pay a particular employee who

spends part of her time dealing with unionization matters)

the employer must determine “on a pro rata basis,” the

portion of the labor-related expenditure paid for by state

funds, and maintain sufficient supporting documentation.

§16646(b). Any violation of these provisions is then sub-

ject to strict penalties, including treble damages and

attorney’s fees and costs. §16645.8.

What is less clear is the degree to which these provi-

Cite as: 554 U. S. ____ (2008) 7

BREYER, J., dissenting

sions actually will deter a recipient of state funds from

using non-state funds to engage in unionization matters.

And no lower court has ruled on this matter. In the Dis-

trict Court, the Chamber of Commerce moved for sum-

mary judgment arguing that the statute, by placing re-

strictions on state funds, was pre-empted by Machinists

and Garmon and also arguing that the compliance provi-

sions are so burdensome that they would chill even private

expenditures. California opposed the motion. And Cali-

fornia submitted expert evidence designed to show that its

“accounting and recordkeeping requirements . . . are simi-

lar to requirements imposed in other contexts,” are “sig-

nificantly less burdensome than the detailed requirements

for federal grant recipients,” and allow “flexibility in estab-

lishing proper accounting procedures and controls.” App.

282–283.

The District Court granted the Chamber of Commerce’s

motion for summary judgment in part, finding that the

operative sections of the statute were pre-empted for the

reasons I have discussed in Part I, namely, that the opera-

tive provisions interfered with the NLRA’s policy of en-

couraging “free debate.” 225 F. Supp. 2d 1199, 1204 (CD

Cal. 2002). But in doing so, it did not address the Cham-

ber of Commerce’s argument that the California statute’s

compliance provisions affected non-state-funded speech to

the point that the NLRA pre-empted the statute. Neither

did the Court of Appeals address the question whether the

compliance provisions themselves constitute sufficient

grounds for finding the statute pre-empted.

I do not believe that we can, and I would not, decide this

question until the lower courts have had an opportunity to

consider and rule upon the compliance-related questions.

Accordingly, I would vote to vacate the judgment of the

Ninth Circuit and remand for further proceedings on this

issue.

I respectfully dissent.