Petition for Writ of Certiorari — Interpipe Contracting, Inc., Petitioner v. Xavier Becerra, Attorney General of California, et al.

App. 1

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

INTERPIPE CONTRACTING, INC.;

ASSOCIATED BUILDERS AND

CONTRACTORS OF CALIFORNIA

COOPERATION COMMITTEE, INC.,

Plaintiffs-Appellants,

v.

XAVIER BECERRA, in his official

capacity as Attorney General

of the State of California;

CHRISTINE BAKER, in her official

capacity as Director of the

California Department of

Industrial Relations; JULIE A. SU,

in her official capacity as

California Labor Commissioner,

Division of Labor Standards

Enforcement,

Defendants-Appellees.

No. 17-55248

D.C. No.

3:16-cv-02247BEN-NLS

App. 2

INTERPIPE CONTRACTING, INC.,

No. 17-55263

Plaintiff-Appellant,

and

ASSOCIATED BUILDERS AND

CONTRACTORS OF CALIFORNIA

COOPERATION COMMITTEE, INC.,

D.C. No.

3:16-cv-02247BEN-NLS

OPINION

Plaintiff,

v.

XAVIER BECERRA, in his official

capacity as Attorney General

of the State of California;

CHRISTINE BAKER, in her official

capacity as Director of the

California Department of

Industrial Relations; JULIE A. SU,

in her official capacity as

California Labor Commissioner,

Division of Labor Standards

Enforcement,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of California

Roger T. Benitez, Senior District Judge, Presiding

Argued and Submitted February 5, 2018

Pasadena, California

Filed July 30, 2018

App. 3

Before: Consuelo M. Callahan and Jacqueline H. Nguyen,

Circuit Judges, and Robert W. Pratt,* District Judge.

Opinion by Judge Callahan

COUNSEL

David Wolds (argued), San Diego, California, for Plaintiff-Appellant Interpipe Contracting, Inc.

Anastasia P. Boden (argued), Sacramento, California,

for Plaintiff-Appellant Associated Builders and Contractors of California Cooperation Committee, Inc.

Seth Goldstein (argued), Sacramento, California, for

Defendant-Appellee Xavier Becerra.

Ken Lau (argued), Oakland, California, for Defendants-Appellees Christine Baker and Julie A. Su.

Elizabeth D. Parry, Littler Mendelson P.C., Walnut

Creek, California; Maurice Baskin, Littler Mendelson

P.C., Washington, D.C.; for Amicus Curiae Associated

Builders and Contractors.

Scott A. Kronland and Rebecca C. Lee, Altshuler Berzon LLP, San Francisco, California, for Amicus Curiae

State Building and Construction Trades Council of

California.

* The Honorable Robert W. Pratt, United States District

Judge for the Southern District of Iowa, sitting by designation.

App. 4

OPINION

CALLAHAN, Circuit Judge:

California’s labor code requires employers on public works projects to pay their employees a “prevailing

wage.” To comply with this requirement, employers

must either pay the prevailing wage itself or pay a

combination of cash wages and benefits, such as contributions to healthcare, pension funds, vacation,

travel, and other fringe benefits. In 2004, the California legislature expanded the list of eligible “benefits”

to include employer payments to third-party industry

advancement funds (“IAFs”). But there’s a catch. Since

2017, employers may take a wage-credit for IAF contributions only if their employees consent to doing so

through a collective bargaining agreement (“CBA”) negotiated by a union.

Plaintiffs-Appellants Interpipe Contracting, Inc.

(“Interpipe”) and Associated Builders and Contractors

of California Cooperation Committee, Inc. (“ABCCCC”) challenge an amendment to the labor code that

imposed the 2017 wage-credit limitation on these types

of contributions. They argue that the amendment, SB

954, 2016 Leg., 2015–2016 Reg. Sess. (Cal. 2016), violates their constitutional rights because, they contend,

it discriminates against pro-open shop advocacy.

Appellants’ challenges require us to answer two

questions. First, we must decide whether SB 954 is

preempted by the National Labor Relations Act

(“NLRA”) because it regulates an aspect of labor relations that Congress intended to leave to market forces,

App. 5

or because it regulates non-coercive labor speech. Second, if SB 954 is not preempted, we must decide

whether it violates the First Amendment and the Fourteenth Amendment’s Equal Protection Clause by limiting the ability of certain IAFs to raise funds to

finance their speech. Because we conclude that ABCCCC lacks standing to press its equal protection claim,

and because we hold that SB 954 is neither preempted

by the NLRA nor infringes ABC-CCC’s First Amendment rights, we affirm the district court’s judgment

dismissing Appellants’ action.

I.

A.

Since 1931, California has required contractors

on public works projects to pay their employees a “prevailing wage.” Cal. Lab. Code § 1770; State Bldg. &

Constr. Trades Council of Cal., AFL-CIO v. City of Vista,

54 Cal. 4th 547, 554 (2012). “[P]revailing wage laws are

based on the . . . premise that government contractors

should not be allowed to circumvent locally prevailing

labor market conditions by importing cheap labor from

other areas.” State Bldg. & Const. Trades Council, 54

Cal. 4th at 555 (internal quotation marks omitted). “In

satisfying the prevailing wage, employers can either

pay all cash wages or pay a combination of cash wages

and benefits, like contributions to pension funds,

healthcare, vacation, travel, and other fringe benefits.”

Gomez v. Rossi Concrete, Inc., 270 F.R.D. 579, 584 (S.D.

Cal. 2010); see also Cal. Lab. Code § 1773.1. These

App. 6

“[e]mployer payments are a credit against the obligation to pay the general prevailing . . . wages.” Cal. Lab.

Code § 1773.1(c).

Section 1773.1 allows certain employer contributions to count toward the prevailing wage. Beginning

in 2004, that provision provided that

Per diem wages . . . shall be deemed to include

employer payments for the following:

(1)

Health and welfare.

(2)

Pension.

(3)

Vacation.

(4)

Travel.

(5)

Subsistence.

(6) Apprenticeship or other training programs . . . so long as the cost of training is reasonably related to the amount of the

contributions.

(7) Worker protection and assistance programs or committees . . . to the extent that the

activities of the programs or committees are

directed to the monitoring and enforcement of

laws related to public works.

(8) Industry advancement and [CBA] administrative fees, provided that these payments are required under a [CBA] pertaining

to the particular craft, classification, or type of

work within the locality or the nearest labor

market area at issue.

App. 7

(9) Other purposes similar to those specified

in paragraphs (1) to (8), inclusive.

Id. § 1773.1(a) (2004). Prior to 2004, employers could

credit contributions only to numbers (1) through (6)

above. Id. § 1773.1(a) (2003). The 2004 version expanded the credit to include contributions to IAFs—

number (8)—subject to approval under a CBA.

The added IAF wage-credit option sparked controversy when employers began interpreting subsection

(9) as allowing them to wage-credit contributions to

IAFs without employee consent, so long as the recipient

IAFs were similar to, but not covered by, a CBA, as set

forth in subsection (8). To close this loophole, in 2016

the state legislature amended § 1773.1 with SB 954—

the law at issue here. SB 954 clarifies that subsection

(9) allows wage crediting only for “other purposes similar to those specified in paragraphs (6) to (8), inclusive,

if the payments are made pursuant to a [CBA] to which

the employer is obligated.” Id. § 1773.1(a)(9) (2017)

(emphasis added). Thus, since SB 954 went into effect

on January 1, 2017, it has been clear that employers

may reduce payments to employees to support their

contributions to IAFs only if doing so is approved by

their employees through a CBA.

Interpipe is a plumbing and pipeline contractor

that favors “open shop” employment arrangements

and opposes project labor agreements (“PLAs”) on public works projects. “Open shop” is labor vernacular for

projects involving an employer that has no formal contracts with a labor union, and where both unionized

App. 8

and non-unionized labor is permitted. Del Turco v.

Speedwell Design, 623 F. Supp. 2d 319, 326 (E.D.N.Y.

2009); Ray Angelini, Inc. v. City of Philadelphia, 984

F. Supp. 873, 875 (E.D. Pa. 1997). A PLA, by contrast,

is a type of collective bargaining relationship involving

multiple employers and unions that agree to abide by

a uniform labor agreement in their bids on public

works projects. Bldg. & Constr. Trades Dep’t, AFL-CIO

v. Allbaugh, 295 F.3d 28, 30 (D.C. Cir. 2002).

Before SB 954 took effect, Interpipe took a wage

credit for its contributions to ABC-CCC—an IAF that

opposes PLAs and supports open shop arrangements.

Since SB 954 went into effect, Interpipe has ceased

making payments to ABC-CCC.

B.

Interpipe and ABC-CCC brought this action

against California state officials (“Appellees” or “the

State”)1 in federal district court challenging SB 954 on

constitutional grounds. Appellants claimed that SB

954 violates the Supremacy Clause by frustrating the

purposes of the NLRA, 29 U.S.C. § 151 et seq. They argued that the law regulates in an area Congress intended to leave to the free play of market forces, and is

preempted by the NLRA’s prohibition on regulating

non-coercive labor speech. ABC-CCC alone brought

1

Appellants named as Defendants Xavier Becerra, the Attorney General of California, Christine Baker, the Director of the

California Department of Industrial Relations, Julie A. Su, the

California Labor Commissioner, and other state officials.

App. 9

two additional claims: that SB 954 infringes its First

Amendment right to free speech and violates the Equal

Protection Clause. Appellants filed a motion for preliminary injunction and Appellees filed motions to dismiss and a motion for judgment on the pleadings.

On January 27, 2017, the district court denied

Appellants’ motion for a preliminary injunction and

dismissed their action. Associated Builders & Contractors of Cal. Cooperation Comm., Inc. v. Becerra, 231

F. Supp. 3d 810, 828 (S.D. Cal. 2017). The court held

that the NLRA does not preempt SB 954, that SB 954

does not infringe ABC-CCC’s First Amendment rights,

and that ABC-CCC lacked standing to bring its equal

protection claim. Id. at 820–28. As to the NLRA claim,

the court held that Machinists2 preemption—a doctrine deeming preempted conduct that “ ‘Congress intended be unregulated,’ ” id. at 820 (quoting Chamber

of Commerce of U.S. v. Brown, 554 U.S. 60, 65 (2008)),

such as collective bargaining—did not apply because

the NLRA preserves States’ authority to set minimum

labor standards, and SB 954 is such a standard. Id. at

821–24. The court further held that SB 954 does not

regulate non-coercive labor speech because it “does

not prevent employers or employees from speaking

about any issue.” Id. at 823. Finally, the court held that

Garmon3 preemption—a doctrine deeming preempted

state laws regulating matters governed by the

2

Machinists v. Wis. Emp’t Relations Comm’n, 427 U.S. 132

(1976).

3

San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236

(1959).

App. 10

NLRA—did not apply because SB 954 “places no substantive restrictions on the terms of [CBAs] and does

not regulate or preclude speech about unionization or

labor issues.” Id. at 825.

As to ABC-CCC’s First Amendment claim, the district court found that SB 954 operates as a state subsidy of speech and does not restrict anyone’s right to

speak. Id. at 825–27. Because “nothing requires government ‘to assist others in funding the expression of

particular ideas, including political ones,’ ” id. at 825

(quoting Ysursa v. Pocatello Educ. Ass’n, 555 U.S. 353,

358 (2009)), the court held that “ ‘[the] legislature’s decision not to subsidize the exercise of a fundamental

right does not infringe the right, and thus is not subject

to strict scrutiny,’ ” id. (quoting Regan v. Taxation With

Representation of Wash., 461 U.S. 540, 549 (1983)). The

court also rejected ABC-CCC’s claim that SB 954 is

viewpoint discriminatory. The court found that “the

statute is neutral and does not favor, target, or suppress any particular speaker or viewpoint.” Id. at 826.

Accordingly, it applied rational basis review and held

SB 954 to be a permissible exercise of California’s police powers to regulate employee wages. Id. at 827.

Finally, the court held that ABC-CCC lacked

standing on its equal protection claim because SB 954

“does not discriminate against ABC-CCC—if it does

discriminate, it discriminates against employers not

subject to CBAs, like Interpipe.” Id. at 819.

Interpipe and ABC-CCC filed timely, separate appeals, which were consolidated.

App. 11

II.

Appellants bring a facial challenge to SB 954 as

they seek a declaration that SB 954 is unconstitutional

in all circumstances. Our review therefore focuses on

whether SB 954 is per se unlawful. See Cal. Coastal

Comm’n v. Granite Rock Co., 480 U.S. 572, 579 (1987).

We “review de novo a district court’s order granting a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6),” L.A.

Lakers, Inc. v. Fed. Ins. Co., 869 F.3d 795, 800 (9th Cir.

2017), and apply the same standard of review to a district court’s order granting a motion for judgment on

the pleadings under Federal Rule of Civil Procedure

12(c). Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir.

2009). We “will affirm a dismissal for failure to state a

claim where there is no cognizable legal theory or an

absence of sufficient facts alleged to support a cognizable legal theory.” L.A. Lakers, 869 F.3d at 800 (internal

quotation marks omitted). We must “accept the factual

allegations of the complaint as true and construe them

in the light most favorable to the plaintiff.” Id. (internal quotation marks omitted). Where the district court

has considered documents attached to the complaint,

we review facts in those documents together with the

complaint itself. United States v. Ritchie, 342 F.3d 903,

908 (9th Cir. 2003); Durning v. First Boston Corp., 815

F.2d 1265, 1267 (9th Cir. 1987). We also review the district court’s denial of Appellants’ motion for a preliminary injunction de novo because the court’s conclusion

was based solely on conclusions of law. Save Our

App. 12

Sonoran, Inc. v. Flowers, 408 F.3d 1113, 1121 (9th Cir.

2005).

III.

A.

The NLRA codifies employees’ right to bargain collectively, seeks to equalize bargaining power between

employers and employees, and preempts state laws

that frustrate the accomplishment of these goals. Fort

Halifax Packing Co. v. Coyne, 482 U.S. 1, 20–21 (1987);

Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747–

48, 753–54 (1985); NLRB v. City Disposal Sys., Inc., 465

U.S. 822, 835 (1984). “The NLRA’s declared purpose is

to remedy ‘[t]he inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract, and employers

who are organized in the corporate or other forms of

ownership association.’ ” Metro. Life Ins., 471 U.S. at

753 (quoting NLRA § 1, 29 U.S.C. § 151); see also Livadas v. Bradshaw, 512 U.S. 107, 117 & n.11 (1994) (explaining that the NLRA is a “statutory scheme

premised on the centrality of the right to bargain collectively” and preempts “a State’s penalty on those who

complete the collective-bargaining process”). Thus, the

statute stresses the “desirability of ‘restoring equality

of bargaining power,’ among other ways, ‘by encouraging the practice and procedure of collective bargaining. . . .’ ” Metro. Life Ins., 471 U.S. at 753–54 (quoting

NLRA § 1, 29 U.S.C. § 151).

App. 13

While the NLRA contains no express preemption

provision, two categories of state action are implicitly

preempted: (1) laws that regulate conduct that is either protected or prohibited by the NLRA (Garmon

preemption), and (2) laws that regulate in an area Congress intended to leave unregulated or “ ‘controlled by

the free play of economic forces’ ” (Machinists preemption). Brown, 554 U.S. at 65 (quoting Machinists v. Wis.

Emp’t Relations Comm’n, 427 U.S. 132, 140 (1976)) (internal quotation marks omitted). Interpipe argues that

SB 954 is preempted under a Machinists theory.4

Machinists preemption “protects against state interference with policies implicated by the structure of

the [NLRA] itself, by pre-empting state law and state

causes of action concerning conduct that Congress intended to be unregulated.” Metro. Life Ins., 471 U.S. at

749. The doctrine bars states from interfering with the

collective bargaining process and from regulating noncoercive labor speech by an employer, employee, or an

employee’s union. See id. at 751; Brown, 554 U.S. at 67–

68. Interpipe argues that SB 954 constitutes state interference with its labor speech supporting pro-open

shop advocacy by IAFs like ABC-CCC.

B.

Virtually any labor standard—e.g., wage and hour

requirements—will affect the terms of a CBA, but the

4

Interpipe abandoned its Garmon preemption claim by stating in its opening brief that it would focus “exclusively on how

Machinists preempts SB 954.”

App. 14

pertinent question under Machinists is whether such

a standard interferes with the collective bargaining

process. Metro. Life Ins., 471 U.S. at 756. The Supreme

Court has explained that

there is no suggestion in the legislative history of the [NLRA] that Congress intended to

disturb the myriad state laws then in existence that set minimum labor standards, but

were unrelated in any way to the processes of

bargaining or self-organization. To the contrary, we believe that Congress developed the

framework for self-organization and collective

bargaining of the NLRA within the larger

body of state law promoting public health and

safety. . . . “States possess broad authority under their police powers to regulate the employment relationship to protect workers

within the State. Child labor laws, minimum

and other wage laws, laws affecting occupational health and safety . . . are only a few examples.”

Id. (quoting DeCanas v. Bica, 424 U.S. 351, 356 (1976)).

Minimum labor standards will necessarily affect employer-employee relations by “form[ing] a backdrop”—

i.e., setting the statutory baseline—for collective bargaining negotiations. Fort Halifax, 482 U.S. at 21 (internal quotation marks omitted). But such effects differ

in kind from a State’s regulation of the bargaining process itself. “[S]tate action that intrudes on the mechanics of collective bargaining is preempted, but state

action that sets the stage for such bargaining is not.”

App. 15

Am. Hotel & Lodging Ass’n v. City of L.A., 834 F.3d 958,

964 (9th Cir. 2016).

This accommodation of state labor law is of a piece

with the NLRA’s structure and generally applicable

preemption principles. It reflects that “[t]he NLRA is

concerned primarily with establishing an equitable

process for determining terms and conditions of employment, and not with particular substantive terms of

the bargain that is struck when the parties are negotiating from relatively equal positions.” Metro. Life Ins.,

471 U.S. at 753; Fort Halifax, 482 U.S. at 20. It is also

consistent with the presumption against preemption

that applies in areas of traditional state regulation,

Wyeth v. Levine, 555 U.S. 555, 565 (2009), as “the establishment of labor standards falls within the traditional

police power of the State,” Fort Halifax, 482 U.S. at 21.

Thus, “preemption should not be lightly inferred in this

area.” Id.

Interpipe and the State agree that SB 954 is a

minimum labor standard. But Interpipe argues that

SB 954 is still preempted under Machinists because, it

reasons, the law favors pro-union, pro-PLA speech over

anti-union, pro-open shop speech. Interpipe asserts

that “SB 954 is a minimum labor standards law that is

inconsistent with the general NLRA policy protecting

labor speech and favoring open and robust debate on

matters dividing unions and employers (including debate regarding ‘top down’ organizing through PLAs).”

Interpipe reasons that unionized employees might consent to wage-crediting that benefits pro-union IAFs,

but would definitely not approve of wage-crediting that

App. 16

benefits pro-open shop IAFs. Such discriminatory effects, Interpipe argues, run afoul of the NLRA’s protection of labor speech.

Interpipe’s argument fails because SB 954 is a legitimate minimum labor standard that regulates no

one’s labor speech. First, in arguing otherwise, Interpipe sails full steam ahead into a flotilla of cases upholding generally applicable labor laws that include

opt-out provisions limited to CBAs.5 Consistent with

the NLRA’s goal of promoting collective bargaining,

courts have long upheld state laws that permit only

unions to opt out of state labor standards. See, e.g., Fort

Halifax, 482 U.S. at 22 (upholding state law requiring

severance payments to laid-off employees but allowing

unionized workers to opt out through a CBA); Viceroy

Gold Corp. v. Aubry, 75 F.3d 482, 489–90 (9th Cir. 1996)

(upholding California law setting a maximum workday

standard for mineworkers but allowing unionized

workers to opt out through a CBA); Am. Hotel & Lodging, 834 F.3d at 965 (upholding county ordinance setting a minimum wage and time-off compensation but

allowing unionized workers to opt out through a CBA);

5

Amicus Associated Builders and Contractors, Inc.’s (“ABC”)

motion to file an amicus brief is GRANTED. ABC asserts that

California is the only State to “impose[ ] . . . [a] discriminatory restrictive limitation on non-union employer contributions to

funds.” We find this statement somewhat misleading based on a

review of ABC’s citation to nine other States’ prevailing wage

laws. In fact, those States do not allow any wage-crediting for contributions made to the particular types of “funds” at issue here—

IAFs. Instead, those States allow wage crediting only for programs that inure directly to the benefit of employees, such as pension plans and health benefit programs.

App. 17

Nat’l Broad. Co. v. Bradshaw, 70 F.3d 69, 73 (9th Cir.

1995) (upholding state law setting minimum overtime

pay requirements but allowing unionized workers to

opt out through a CBA). Opt-out provisions limited to

unions are consistent with Congress’ objectives under

the NLRA because the risk of coercion is low where

bargaining power between employers and employees is

in equipoise. See Metro. Life Ins., 471 U.S. at 753; Fort

Halifax, 482 U.S. at 20.

Second, Interpipe conflates labor standards affecting employers’ ability to fund their speech with unlawful regulations of their speech. The NLRA provides

that

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.

NLRA § 8(c), 29 U.S.C. § 158(c). In enacting § 8(c), Congress sought to encourage “free debate” on labor issues.

Brown, 554 U.S. at 67. To that end, the NLRA prohibits

government policies that frustrate “ ‘uninhibited, robust, and wide-open debate in labor disputes’ ” and also

“precludes regulation of [non-coercive] speech about

unionization.”6 Id. at 68 (quoting Letter Carriers v.

6

Section 8(c) does not protect “coercive” labor speech—i.e.,

speech that “contain[s] a threat of reprisal or force or promise of

App. 18

Austin, 418 U.S. 264, 272–73 (1974)). Interpipe implicitly concedes that SB 954 does not regulate its own

speech, but contends that neither did the law in Brown,

which the Supreme Court invalidated.

Interpipe’s reliance on Brown is misplaced. Brown

stands for the straightforward proposition that § 8(c)

means what it says: the government may not “regulate[ ]” non-coercive labor speech. Id. Brown involved a

California law (AB 1889) that prohibited certain employers from using state financial subsidies “ ‘to assist,

promote, or deter union organizing.’ ” Id. at 63 (quoting

Cal. Gov’t Code §§ 16645.1–16645.7). The Court did

not dispute California’s right to determine how such

state “subsidies” could be used, see id. at 73–74, nor did

it rely on AB 1889’s disparate treatment of certain prounion activities, which were exempt from the law’s restriction,7 see id. at 70–71. Instead, the Court deemed

AB 1889 preempted because its complex and severe enforcement scheme chilled employers’ use of their own

money to engage in protected labor speech. See id. at

71–73. The law required employers to maintain records ensuring segregation of state and private funds,

which was “no small feat” because the law drilled into

virtually every aspect of an employer’s operations. Id.

at 72. Moreover, AB 1889’s “[p]rohibited expenditures

benefit.’ ” Brown, 554 U.S. at 68 (quoting NLRB v. Gissel Packing

Co., 395 U.S. 575, 618 (1969)).

7

To the contrary, the Court made plain that “a State may

‘choos[e] to fund a program dedicated to advance certain permissible goals’ ” over others. Brown, 554 U.S. at 73 (alteration in original) (quoting Rust v. Sullivan, 500 U.S. 173, 194 (1991)).

App. 19

include[d] not only discrete expenses such as legal and

consulting fees, but also an allocation of overhead, including salaries of supervisors and employees, for any

time and resources spent on union-related advocacy.”

Id. (internal quotation marks omitted). Finally, the law

imposed “deterrent litigation risks.” Id. Any person

could bring a civil action seeking injunctive relief, damages, civil penalties, and other relief for a suspected violation. Id. And liable employers could be slapped with

fines trebling the amount of state funds the employer

spent on “ ‘assist[ing], promot[ing], or deter[ring] union

organizing.’ ” Id. at 63, 72 (quoting Cal. Gov’t Code

Ann. §§ 16645.1–16645.7).

The Court found that AB 1889’s draconian enforcement provisions effectively put employers to a coercive choice: “either . . . forgo [their] ‘free speech right

to communicate [their labor] views to [their] employees,’ or else . . . refuse the receipt of any state funds.”

Id. at 73 (internal citation omitted) (quoting NLRB v.

Gissel Packing Co., 395 U.S. 575, 617 (1969)). In other

words, AB 1889 effectively forced employers to either

relinquish their right to engage in NLRA-protected

speech with their own money in order to avoid costly

litigation and recordkeeping requirements, or refuse

the state subsidy, avoid the law’s enforcement scheme

altogether, and be free to exercise their NLRA speech

rights. The Court held that “[i]n so doing, the statute

impermissibly ‘predicat[es] benefits on refraining from

conduct protected by federal labor law,’ and chills one

side of the ‘robust debate which has been protected under the NLRA.’ ” Id. (internal citation omitted)

App. 20

(quoting Livadas, 512 U.S. at 116 and Letter Carriers,

418 U.S. at 275).

SB 954 differs from AB 1889 in a crucial way. Unlike AB 1889, SB 954 does not—either directly or indirectly through coercion—limit employers’ use of their

own funds to engage in whatever labor speech they

like. As the district court observed, SB 954 imposes no

“compliance burdens or litigation risks that pressure

Plaintiffs to forgo their speech rights in exchange for

the receipt of state funds.” Associated Builders & Contractors of Cal. Cooperation Comm., 231 F. Supp. 3d at

823. SB 954 simply bars employers from diverting

their employees’ wages to the employers’ preferred

IAFs without their employees’ collective consent.

SB 954 is also unlike AB 1889 in that it is a minimum labor standard, whereas AB 1889 was not. SB

954 therefore falls into the category of state labor laws

typically saved from preemption, and so the presumption against preemption applies with particular force.

Fort Halifax, 482 U.S. at 21. As the Supreme Court

made clear, “there is no suggestion in the legislative

history of the [NLRA] that Congress intended to disturb the myriad state laws then in existence that set

minimum labor standards, but were unrelated in any

way to the processes of bargaining or self-organization.” Metro. Life Ins., 471 U.S. at 756 (emphasis

added). Thus, absent compelling evidence—lacking

here—that SB 954 impairs Interpipe’s ability to engage in non-coercive labor speech, we cannot invalidate a legitimate exercise of California’s traditional

police power to regulate labor conditions. Accordingly,

App. 21

we hold that SB 954 does not infringe employers’

NLRA-protected right to engage in labor speech and is

not preempted by the NLRA.

IV.

A.

Having determined that SB 954 is not preempted

under Machinists, we proceed to consider whether it is

invalid under the First Amendment.8 ABC-CCC asserts that SB 954 “limits the way private speakers”—

in this case IAFs like ABC-CCC—“may raise money to

fund their speech activities,” and therefore infringes

its right to free speech.9 Notably, ABC-CCC does not

8

The First Amendment provides that “Congress shall make

no law . . . abridging the freedom of speech, or of the press; or the

right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” U.S. Const. amend. I.

9

Because Article III standing is jurisdictional, we must sua

sponte assure ourselves of ABC-CCC’s standing to pursue its First

Amendment claim. Gonzalez v. Thaler, 565 U.S. 134, 141 (2012).

Article III standing requires a party to show that it has (1) suffered a concrete and particularized, actual or imminent injury-infact, (2) which is fairly traceable to the challenged conduct, and

(3) which is likely to be redressed by a ruling in its favor. Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). ABC-CCC

clearly satisfies the first and second prongs because it alleges

facts showing it has suffered an economic injury—diminution in

funding—that is fairly traceable to SB 954. But the redressability

analysis requires more effort because ABC-CCC is not the party

being regulated—SB 954 regulates its benefactors. See id. at 562.

“When, . . . as in this case, a plaintiff ’s asserted injury arises from

the government’s allegedly unlawful regulation . . . of someone

else,” “causation and redressability ordinarily hinge on the response of the regulated (or regulable) third party to the

App. 22

dispute that SB 954 leaves it free to speak and express

itself at will. Nor does ABC-CCC suggest that SB 954

prevents employers (and employees for that matter)

from contributing to ABC-CCC. Instead, it advances a

novel First Amendment theory: that it has a protected

First Amendment right to receive the employeesubsidized funds from Interpipe and other employers.

ABC-CCC claims that “[l]aws that restrict the ability

to fund one’s speech are burdens on speech.”10

ABC-CCC swerves off course straight out of the

gate by equating a contributor’s right to fund an entity’s speech with a recipient’s right to receive another’s financial largesse. The Supreme Court has said

otherwise. In Regan, the Court held that “[a]lthough

[an organization] does not have as much money as it

wants, and thus cannot exercise its freedom of speech

as much as it would like, the Constitution ‘does not

confer an entitlement to such funds as may be

government action or inaction.” Id. (first emphasis in original;

second emphasis added). Even if we were to enjoin enforcement

of SB 954, ABC-CCC’s injury might persist because contributors

like Interpipe could decide not to resume their funding. Nonetheless, because Interpipe and other employers have submitted declarations testifying to their concrete intentions to resume

contributions to ABC-CCC should we enjoin SB 954, ABC-CCC

has shown it to be likely that a favorable decision would redress

its injury. It therefore has standing to press its First Amendment

claim.

10

To be sure, ABC-CCC elsewhere argues that SB 954 violates the First Amendment by allegedly discriminating based on

viewpoint. But ABC-CCC also makes clear its belief that a

broader constitutional right is at stake: an asserted First Amendment right to be free from a legislative “burden” on its “ability to

receive contributions.”

App. 23

necessary to realize all the advantages of that freedom.’ ” 461 U.S. at 550 (quoting Harris v. McRae, 448

U.S. 297, 318 (1980)). In other words, there exists no

standalone right to receive the funds necessary to finance one’s own speech. ABC-CCC’s theory ignores

this bedrock principle and, in so doing, misapplies Supreme Court precedent addressing the First Amendment rights of campaign contributors and charitable

organizations.

i.

It is well-established that “ ‘contribution and expenditure limitations operate in an area of the most

fundamental First Amendment activities.’ ” McCutcheon v. FEC, 134 S. Ct. 1434, 1444 (2014) (quoting Buckley v. Valeo, 424 U.S. 1, 14 (1976) (per curiam)); see also

Randall v. Sorrell, 548 U.S. 230, 247–48 (2006). As concerns political contributions in particular, this First

Amendment right is reflected in the “ ‘symbolic expression of support evidenced by a contribution.’ ”

McCutcheon, 134 S. Ct. at 1444 (quoting Buckley, 424

U.S. at 21). The question in cases challenging contribution limitations is whether the law “infringe[s] the contributor’s freedom to discuss candidates and issues.’ ”

Id. at 1444 (quoting Buckley, 424 U.S. at 21).

ABC-CCC asserts that where monetary contributions are involved, the First Amendment right applies

equally to the contributor and the recipient. In support, ABC-CCC looks to Randall, where the Court

observed that a Vermont campaign finance law

App. 24

diminished candidates’ ability to “ ‘amass[ ] the resources necessary for effective advocacy.’ ” 548 U.S. at

248 (alteration omitted) (quoting Buckley, 424 U.S. at

21). But ABC-CCC wrenches the quote out of context.

Randall is, at bottom, a case about the free speech

rights of contributors; it does not establish an independent constitutional right of recipients to “amass”

funds.

Randall involved a challenge to Vermont’s campaign finance law setting contribution limits. Id. at

238–39. To determine whether the restriction withstood First Amendment scrutiny, the Court applied the

test set forth decades earlier in Buckley. That test requires assessing, among other things, whether the

“ ‘contribution restriction[ ] could have a severe impact

on political dialogue . . . [by] prevent[ing] candidates

and political committees from amassing the resources

necessary for effective advocacy.’ ” Id. at 247 (quoting

Buckley, 424 U.S. at 21). The First Amendment interest

implicated, however, was the right of an individual to

contribute, not the right of a political candidate or organization to amass funds. The question was whether

the restriction impermissibly affected contributors’

First Amendment rights—the determination of which

turned in part on measuring the impact on recipients

of such contributions. See id. An analogous fact pattern

might involve a claim by Interpipe that SB 954 violates

its First Amendment right to contribute to ABC-CCC’s

advocacy, an analysis of which might consider the

App. 25

effect of such a restriction on ABC-CCC’s speech. But

Interpipe brings no such claim.11

Our reading of Randall is confirmed by the

Court’s later decision in Davis v. FEC, 554 U.S. 724

(2008). There, the Court invalidated a federal campaign finance law increasing contribution limits for

non-self-financing political candidates if their selffinancing opponent exceeded a spending threshold in

their own campaign. Id. at 729–30, 736. The Court

found that the self-financing candidate’s First Amendment rights were implicated not because their ability

to receive funds was disproportionately impaired, but

because the law “impose[d] an unprecedented penalty

on any candidate who robustly exercises [her] First

Amendment right [to spend personal funds]”—i.e., it

effectively regulated the self-financing candidate’s own

speech. Id. at 738–40; see also Emily’s List v. Fed. Election Comm’n, 581 F.3d 1, 4–5 (D.C. Cir. 2009) (invalidating limitation on which types of contributions

11

Even if Interpipe did bring a First Amendment claim, it

would still have to show that (1) SB 954 regulates speech, not just

conduct, and (2) that it pares back a state subsidy of speech in a

viewpoint discriminatory way. Nor could ABC-CCC seek to advance Interpipe’s purported First Amendment interests. ABCCCC does not claim third-party standing to assert Interpipe’s

rights, let alone seek to vindicate those rights. Cf. Sec’y of State of

Md. v. Joseph H. Munson Co., Inc., 467 U.S. 947, 955–58 (1984)

(holding that a fundraiser that contracted with charities could assert the charities’ First Amendment rights because it had thirdparty standing to do so); Viceroy Gold, 75 F.3d at 489 (finding no

third-party standing absent a showing of a “genuine obstacle” to

the affected individuals bringing their own claims). ABC-CCC argues only that SB 954 violates its own right to receive funds.

App. 26

non-profits could spend on election-related activities).

SB 954, by contrast, leaves IAFs free to spend their

funds on expressive activities however they wish without incurring a “penalty” for doing so.

ii.

ABC-CCC also searches for support in decisions

addressing laws limiting solicitation of funds by charities. In Schaumburg v. Citizens for a Better Environment, 444 U.S. 620, 623–24 (1980), the Court

invalidated a state law requiring “at least seventy-five

percent of the proceeds of [fundraising] solicitations

[to] be used directly for the charitable purpose of the

organization” if the charity wished to solicit funds in a

public forum. The Court found that solicitation activities were “intertwined” with the charities’ First

Amendment rights because “charitable appeals for

funds, on the street or door to door, involve a variety of

speech interests—communication of information, the

dissemination and propagation of views and ideas, and

the advocacy of causes—that are within the protection

of the First Amendment.” Schaumburg, 444 U.S. at

631–32; see also Riley v. Nat’l Fed’n of the Blind of N.C.,

Inc., 487 U.S. 781, 789 (1988) (“Our prior cases teach

that the solicitation of charitable contributions is protected speech. . . .”); Sec’y of State of Md. v. Munson,

467 U.S. 947, 967 & n.16 (1984) (holding that a law restricting the amount charities could spend on fundraising activities infringed their ability to solicit funds,

and amounted to “a direct restriction on protected

First Amendment activity”); cf. Cornelius v. NAACP

App. 27

Legal Def. & Educ. Fund, Inc., 473 U.S. 788, 799 (1985)

(extending Schaumburg to solicitation activities that

are not “in-person” but are accomplished through dissemination of literature). These cases do not support

ABC-CCC’s claimed First Amendment right, however,

because laws limiting charitable solicitations target

the speaker’s rights, manifested through charities’ solicitation activities. SB 954, by contrast, steers clear of

regulating IAFs’ solicitation of funds.

iii.

ABC-CCC’s reliance on a non-precedential district

court case is similarly unavailing. United Food and

Commercial Workers Local 99 v. Brewer, 817

F. Supp. 2d 1118, 1121–22 (D. Ariz. 2011) (not appealed), concerned an Arizona law restricting some unions’ ability to collect funds from employees through

employer payroll deductions. Before the law took effect, employees could elect to have their employers automatically deduct from their paychecks the amount

needed to pay for health insurance and union dues. Id.

at 1121. But under the challenged law, employees were

barred from doing so unless the unions either certified

to employers that they would not use any of their general funds for “political purposes,” or if they specified

what percentage of their funds would be so used. Id. If

a union spent any funds on politicking after it had forsworn such activities, or if it spent more than the specified percentage, it was subject to a civil fine of $10,000.

Id. at 1122. The court held that the law implicated the

unions’ First Amendment rights and invalidated it as

App. 28

an impermissible viewpoint-based restriction on

speech because it applied only to—and thereby discriminated against—particular unions. Id. at 1125.

At first blush, SB 954 might appear similar to Arizona’s law in United Food. Both laws affect the contribution decisions of third parties—employees in United

Food and employers here—which, in turn, affect another entity’s ability to amass funds. But the constitutional interest in United Food was in the law’s

regulation of the unions, not in the law’s effect of diminishing the funds the unions received. See id. at

1125. Similar to the campaign finance law struck down

in Davis, Arizona’s law limited the unions’ speech by

tying payroll deduction contributions to their political

speech. Id. Moreover, if unions expressed their political

views “too much,” they incurred a fine, which further

evinced an objective to target union speech.12 Id. SB

954, by contrast, does not regulate the recipients of

funds—IAFs—let alone tie the funding IAFs receive to

their own expressive activities.

12

The Supreme Court’s recent decision in Janus v. American

Federation of State, County, & Municipal Employees, 138 S. Ct.

2448 (2018) does not affect our assessment of United Food. Janus

invalidated state agency shop laws requiring nonmembers of a

union to pay a fee in support of the union’s collective bargaining

activities—activities performed on behalf of union members and

nonmembers alike. Id. at 2477–78. The Court did not have occasion to address, nor did it question, unions’ well-established First

Amendment right “to participate in the electoral process with all

available funds other than [ ] state-coerced agency fees lacking affirmative permission.” Davenport v. Wash. Educ. Ass’n, 551 U.S.

177, 190 (2007).

App. 29

***

The cases discussed in this section share a common characteristic: they address laws regulating the

aggrieved party’s speech. But while the First Amendment protects the right of an individual to express herself through the medium of finance, it does not

establish a free-floating right to receive the funds necessary to broadcast one’s speech. Regan, 461 U.S. at

550. Accordingly, we reject ABC-CCC’s theory of a First

Amendment right to amass funds to finance its speech.

B.

Even if ABC-CCC could show that SB 954 targets

its own rights as a speaker rather than as a recipient

of others’ financial contributions, we would find no constitutional violation because the law’s aim is employer

conduct—the payment of wages—that is not inherently expressive.

Conduct-based laws may implicate speech rights

where (1) the conduct itself communicates a message,

see Holder v. Humanitarian Law Project, 561 U.S. 1, 28

(2010); Rumsfeld v. Forum for Academic & Institutional Rights, Inc. (“FAIR II”), 547 U.S. 47, 65–66

(2006); (2) the conduct has an expressive element, see

Clark v. Cmty. for Creative Non-Violence, 468 U.S. 288,

293 (1984); or where, (3) even though the conduct

standing alone does not express an idea, it bears a

tight nexus to a protected First Amendment activity,

see Minneapolis Star & Tribune Co. v. Minn. Comm’r of

Revenue, 460 U.S. 575, 585 (1983). Regardless of the

App. 30

theory, the conduct must be “ ‘inherently expressive’ ”

to merit constitutional protection. Pickup v. Brown,

740 F.3d 1208, 1225 (9th Cir. 2014) (quoting FAIR II,

547 U.S. at 66).

SB 954 does not regulate conduct that communicates a message or that has an expressive element. The

Court’s decision in FAIR II is instructive. FAIR II involved a claim brought by law schools that federal legislation tying funding to their decision whether to

allow military recruiters on campus violated their

First Amendment rights. 547 U.S. at 51, 66. The schools

argued that the law infringed their right to express

disagreement with military policy. Id. at 53. The Court

rejected their argument, reasoning that the law targeted conduct—“treating military recruiters differently from other recruiters”—that was not “inherently

expressive.” Id. at 66; cf. Clark, 468 U.S. at 296 (assuming that sleeping overnight in public parks as part of a

demonstration was an expressive protest in support of

the homeless). Same here. A law regulating wages does

not target conduct that communicates a message nor

does such conduct contain an expressive element.

Nor does regulating wages bear a tight nexus to

ABC-CCC’s right to free speech. In Minneapolis Star,

the Court assessed a Minnesota law imposing a special

use tax on certain paper and ink products. 460 U.S. at

577. Purchasing ink and paper is not expressive conduct, but the law applied to ink and paper products

used exclusively by news publications. Id. at 578. Indeed, the law defined the products taxed as those

“ ‘used or consumed in producing a publication as

App. 31

defined [by law].’ ” Id. at 578 n.2 (quoting Minn. Stat.

§ 297A.14). Because the law “singled out the press for

special treatment” and impaired news publications’

ability to exercise their press freedoms, the law burdened interests protected by the First Amendment. Id.

at 582–85.

SB 954 has none of the hallmarks of the Minnesota tax. Far from taking aim at IAFs’ speech, SB 954

is, instead, a generally applicable wage law that targets employer use of employee wages, does not single

out pro-open shop IAFs, and only indirectly affects one

possible revenue source for IAFs. Indeed, the law

leaves ABC-CCC free to solicit funds from employers,

employees, or anyone else. That ABC-CCC may now

need to explore alternative means of raising funds to

finance its speech does not somehow transform a minimum wage law into a regulation of expressive conduct.

SB 954 is therefore more akin to generally applicable

economic regulations affecting rather than targeting

news publications that the Court has found pass constitutional muster.13 Id. at 581 (“It is beyond dispute

that the States and the Federal Government can subject newspapers to generally applicable economic regulations without creating constitutional problems.”).

13

Indeed, Minneapolis Star observed that the Minnesota

tax’s burden on press freedoms did not, in and of itself, trigger

First Amendment scrutiny. Minneapolis Star, 560 U.S. at 581,

583 (noting that economic regulation of the press through antitrust and other laws does not implicate constitutional freedoms).

The law offended the First Amendment because it “singled out the

press for special treatment.” Id. at 582–85.

App. 32

To be sure, the Supreme Court has not drawn a

bright line distinguishing conduct-based laws that permissibly burden speech from those that do not. But

three considerations back a requirement that, in order

to trigger First Amendment scrutiny, a conduct-based

law must (1) target a particular type of entity for differential treatment, and (2) regulate the ingredients

necessary to effectuate that entity’s First Amendment

rights. First, a law regulating conduct that merely alters incentives rather than restricts the ingredients

necessary for speech does not regulate conduct that is

“inherently expressive”—a necessary trait of an impermissible conduct-based regulation. FAIR II, 547 U.S. at

66; Pickup, 740 F.3d at 1225. Second, applying the First

Amendment to conduct that has only an indirect effect

on speech would task the courts with unwieldy line

drawing exercises: how indirectly related to speech

must a conduct-based restriction be to avoid First

Amendment scrutiny? Third, scrapping conduct-based

laws that have only an attenuated relationship to

speech would have the perverse effect of invalidating

legitimate exercises of state authority to protect the

general health and welfare. A labor standard like SB

954 that ensures employee approval before their wages

are rerouted to third-party advocacy groups would, under ABC-CCC’s theory, be subject to scrutiny simply

because it affects ABC-CCC’s ability to finance its

speech. That cannot be the law. Accordingly, because

SB 954 regulates conduct that is not “inherently expressive,” we hold that it does not regulate ABC-CCC’s

speech.

App. 33

C.

Finally, we consider whether SB 954 limits a state

subsidy on speech in a viewpoint discriminatory way.

“[A] legislature’s decision not to subsidize the exercise

of a fundamental right does not infringe the right. . . .”

Regan, 461 U.S. at 549. Because speech subsidies are

not coated with constitutional protection, the government is typically free to limit or remove speech subsidies at its discretion, and such limitations are

generally subject to rational basis review. Ysursa, 555

U.S. at 358–59. Further, the legitimacy of a State’s limitation on a speech subsidy is all the more apparent

where it withdraws a policy that facilitates compulsory

subsidization of others’ expression. As the Supreme

Court recently made clear, “[c]ompelling a person to

subsidize the speech of other private speakers raises [ ]

First Amendment concerns.” Janus v. Am. Fed’n of

State, Cnty., & Mun. Employees, Council 31, 138 S. Ct.

2448, 2464 (2018) (emphasis in original). On the other

hand, where a State limits a speech subsidy in a viewpoint discriminatory way, we generally apply strict

scrutiny.14 Rosenberger v. Rector & Visitors of Univ. of

Va., 515 U.S. 819, 834–35, 837 (1995) (“Having offered

to pay the third-party contractors on behalf of private

speakers who convey their own messages, the

14

We do not have occasion to decide whether a condition

placed on a state subsidy that remedies a limitation on others’

expression would, if targeted at only certain viewpoints, be subject to strict scrutiny. We need not address that question because

we conclude that SB 954 does not discriminate based on viewpoint.

App. 34

University may not silence the expression of selected

viewpoints.”).

With this framework in mind, we assess first

whether SB 954 limits a state subsidy on speech or instead burdens First Amendment rights. We then evaluate whether SB 954 is viewpoint discriminatory.

i.

ABC-CCC argues that SB 954 burdens its constitutional right to free speech rather than limits a state

subsidy of its speech. ABC-CCC begins with the premise that state subsidies of speech are inherently financial in nature. Because SB 954 “restricts the way

private parties obtain private funding for their speech,

at no cost to the government,” ABC-CCC reasons that

the law is a direct affront to its constitutional rights

and must be subject to strict scrutiny.

ABC-CCC misconceives the nature of state subsidies of speech. A speech subsidy need not be financial;

it may be a non-monetary means of facilitating an entity’s speech—e.g., by creating a mechanism that assists the entity in funding its own speech. Ysursa, 555

U.S. at 358 (2009); see also Rosenberger, 515 U.S. at 835

(rejecting the argument that, “from a constitutional

standpoint, funding of speech differs from provision of

access to facilities”). And because the State has no constitutional duty to subsidize speech in the first place,

it may restrict that assistance without triggering constitutional scrutiny. As the Chief Justice explained in

Ysursa,

App. 35

While in some contexts the government must

accommodate expression, it is not required to

assist others in funding the expression of particular ideas, including political ones. “[A] legislature’s decision not to subsidize the

exercise of a fundamental right does not infringe the right, and thus is not subject to

strict scrutiny.” Regan v. Taxation With Representation of Wash., 461 U.S. 540, 549 (1983); cf.

Smith v. Highway Employees, 441 U.S. 463,

465 (1979) (per curiam) (“First Amendment

does not impose any affirmative obligation on

the government to listen, to respond or, in this

context, to recognize [a labor] association and

bargain with it”).

555 U.S. at 358 (alterations in original). Put simply,

what the government giveth it can taketh away.

Ysursa involved a challenge to an Idaho law barring public employees from authorizing a payroll deduction for contributions to their union’s political

action committee. Id. at 355. In so doing, the law did

not involve any governmental financial subsidy, but it

did restrict a mechanism by which the State facilitated

private funding (by employees) of private speech (by

the unions)—the same factual circumstance ABC-CCC

identifies in the instant matter. The Court held that

Idaho’s law did not violate the First Amendment because,

While publicly administered payroll deductions for political purposes can enhance the

unions’ exercise of First Amendment rights,

Idaho is under no obligation to aid the unions

App. 36

in their political activities. And the State’s decision not to do so is not an abridgment of the

unions’ speech; they are free to engage in such

speech as they see fit. They simply are barred

from enlisting the State in support of that endeavor. Idaho’s decision to limit public employer payroll deductions as it has “is not

subject to strict scrutiny” under the First

Amendment. Regan, 461 U.S., at 549, 103

S. Ct. 1997.

Id. at 359. In a statement that is acutely on point here,

the Court added that “[a] decision not to assist fundraising that may, as a practical matter, result in fewer

contributions is simply not the same as directly limiting expression.” Id. at 360 n.2. Indeed, California’s decision to limit assistance for IAFs’ fundraising

activities under SB 954 “is simply not the same as directly limiting [IAFs’] expression.” Id.; see also Davenport v. Wash. Educ. Ass’n, 551 U.S. 177, 187 (2007)

(approving a law that placed a condition “upon [a] union’s extraordinary state entitlement to acquire and

spend other people’s money” (emphasis in original)); cf.

Janus, 138 S. Ct. at 2464 (“the compelled subsidization

of private speech seriously impinges on First Amendment rights”).

Ysursa relied on the Court’s decision in Davenport

to distinguish speech subsidies from First Amendment

rights. In Davenport, the Court upheld a state ban on

unions using agency fees of non-union members on political activities absent employees’ affirmative approval. 551 U.S. at 182, 188–91. Because unions have

no First Amendment right to collect fees from

App. 37

nonmembers in the first place, the State’s limitation on

unions’ ability to collect those fees merely restricted a

state subsidy. Id. at 185–87. The Court reasoned that

“[w]hat matters is that public-sector agency fees are in

the union’s possession only because Washington and

its union-contracting government agencies”—rather

than the self-executing operation of the First Amendment—“have compelled their employees to pay those

fees.” Id. at 187.

Finally, in Regan, the Court considered a federal

law barring non-profit organizations engaged in lobbying activities from accepting tax-deductible donations.

461 U.S. at 543–44. The Court began by explaining

that “tax-deductibility [is] a form of subsidy that is administered through the tax system.” Id. at 544. It then

considered the challenger’s argument “that the government may not deny a benefit to a person because he

exercises a constitutional right”—there, the right to

lobby. Id. at 545. The Court rejected that argument,

concluding that the government had not denied the

challenger’s right to lobby because he could still do so;

“Congress has merely refused to pay for the lobbying

out of public monies.” Id.

Ysursa, Davenport, and Regan are controlling. As

in those cases, SB 954 trims a state subsidy rather

than infringes a First Amendment right. The subsidy

here takes the form of a state-authorized entitlement

allowing employers to reduce their employees’ wages

to support the employers’ favored IAFs. It does not restrict IAFs’ right to free speech. ABC-CCC’s contrary

argument relies on the faulty premise that a state

App. 38

subsidy operates like a one-way ratchet: once California offered wage-crediting for IAFs, the state entitlement became imbued with constitutional protections

and could not be restricted. Not so. As discussed, ABCCCC’s argument flies in the face of the Supreme

Court’s clear statements to the contrary:

While [the wage credit] can enhance [ABCCCC’s] exercise of First Amendment rights,

[California] is under no obligation to aid

[ABC-CCC] in [its expressive] activities. And

the State’s decision not to do so is not an

abridgment of [ABC-CCC’s] speech; [it is] free

to engage in such speech as [it] see[s] fit.

Ysursa, 555 U.S. at 359.

ii.

We turn next to evaluating whether SB 954 targets certain IAFs based on their open shop advocacy. If

it does, then the law is likely subject to strict scrutiny

notwithstanding its limitation on a state subsidy rather than a constitutional right. Rosenberger, 515 U.S.

at 834–35, 837; Davenport, 551 U.S. at 189.

“A regulation engages in viewpoint discrimination

when it regulates speech ‘based on the specific motivating ideology or perspective of the speaker.’ ” First

Resort, Inc. v. Herrera, 860 F.3d 1263, 1277 (9th Cir.

2017), cert. denied, No. 17-1087 (June 28, 2018) (quoting Reed v. Town of Gilbert, 135 S. Ct. 2218, 2230

(2015)) (internal quotation marks omitted); see also

Moss v. U.S. Secret Serv., 572 F.3d 962, 970 (9th Cir.

App. 39

2009) (“[V]iewpoint discrimination occurs when the

government prohibits speech by particular speakers,

thereby suppressing a particular view about a subject.”

(internal quotation marks omitted)). Viewpoint discrimination is the most noxious form of speech suppression. Rosenberger, 515 U.S. at 829. By targeting

not only “subject matter, but particular views taken by

speakers on a subject,” it constitutes “an egregious

form of content discrimination.” Id.

If a law is facially neutral, we will not look beyond

its text to investigate a possible viewpoint-discriminatory motive. See First Resort, 860 F.3d at 1278 (“ ‘[t]he

Supreme Court has held unequivocally that it will not

strike down an otherwise constitutional statute on the

basis of an alleged illicit legislative motive’ ” (quoting

Menotti v. City of Seattle, 409 F.3d 1113, 1130 n.29 (9th

Cir. 2005)) (internal quotation marks omitted)). If,

however, the law includes indicia of discriminatory motive, we may peel back the legislative text and consider

legislative history and other extrinsic evidence to

probe the legislature’s true intent. See, e.g., Sorrell v.

IMS Health Inc., 564 U.S. 552, 565 (2011) (considering

legislative findings where the challenged law favored

some entities over others); cf. Ridley v. Mass. Bay

Transp. Auth., 390 F.3d 65, 87 (1st Cir. 2004) (considering statements by government officials to help determine legislative intent). Two indicia of discriminatory

motive relevant here are underinclusiveness and overinclusiveness. See Williams-Yulee v. Florida Bar, 135

S. Ct. 1656, 1670 (2015); Ridley, 390 F.3d at 87. The

presence of either indicates potential viewpoint

App. 40

discrimination, which would prompt us to consider extrinsic evidence to help determine whether the California legislature did, in fact, act with discriminatory

intent. Cf. Ridley, 390 F.3d at 87–88.

ABC-CCC argues that SB 954 discriminates

against organizations that favor open shop arrangements because it “burdens based on the recipient’s status and viewpoint.” ABC-CCC asserts that “the

requirement that prevailing wage contributions be

made pursuant to a CBA acts as a proxy for unionbacked speech” because unionized employees are

unlikely to approve of a wage credit that benefits an

organization whose purpose is pro-open shop advocacy.15 As evidence, ABC-CCC claims that SB 954 is

overinclusive because it does not allow an employer to

take a wage credit for IAF contributions even if an individual employee approves of doing so. It also argues

that the law is underinclusive because it does not require the consent of all unionized employees, and because it leaves in place wage credits for contributions

that do not require employee consent—e.g., contributions to pension funds and health insurance plans.

We are unpersuaded. First, that only unionized

employers may have an opportunity to take a credit

15

Amicus ABC goes a step further, arguing that SB 954 “allow[s] credits for contributions to union [IAFs], while denying the

same rights to non-union employers.” But SB 954 does no such

thing. The law allows credits to any type of IAF. The fact that prounion IAFs may benefit disproportionately is simply a function of

employees’ decision to spend their money supporting the speech

of certain IAFs over others.

App. 41

against their employees’ wages for IAF contributions

does not facially discriminate against certain recipients of that credit: SB 954 is indifferent to which

IAFs—if any—employees elect to subsidize. Second,

that unionized employees are unlikely to fund an antiunion IAF over a pro-union one is beside the point:

A facially neutral statute restricting expression for a

legitimate end is not discriminatory simply because it

affects some groups more than others. See R.A.V. v. City

of St. Paul, 505 U.S. 377, 385 (1992). That employees

may consent to wage deductions only in support of

pro-union IAFs merely reflects a choice made by employees, not a mandate imposed by the California legislature. For example, “an ordinance against outdoor

fires” is legitimate even though it might affect antigovernment protesters more than pro-government ones

because only the former are likely to engage in the expressive activity of flag burning. Id.

Our decision in First Resort is instructive. There,

we considered a city ordinance prohibiting limited services pregnancy centers (“LSPCs”) from providing

false or misleading statements about their abortionrelated services. 860 F.3d at 1267–68. The record

included evidence that LSPCs misled women into believing they provided abortion services and “unbiased

counseling” when, in fact, they offered no such services

and sought to discourage women from getting abortions. Id. at 1267–69 (internal quotation marks omitted). First Resort, Inc., an LSPC, challenged the

ordinance as discriminating against its anti-abortion

views. Id. at 1277.

App. 42

We rejected First Resort’s theory. We explained

that a law affecting entities holding a particular viewpoint is not viewpoint discriminatory unless it targets

those entities because of their viewpoint. Id. at 1277–

78. The ordinance in First Resort did not cross that line

because it targeted false and deceptive advertising—a

legitimate, non-speech-suppressing purpose—and not

the views held by LSPCs. Id. Indeed, the ordinance

in no way limited LSPCs in expressing their antiabortion views. Id.

Put differently, it may be true that LSPCs

engage in false or misleading advertising concerning their services because they hold antiabortion views. However, the Ordinance does

not regulate LSPCs based on any such antiabortion views. Instead, the Ordinance regulates these entities because of the threat to

women’s health posed by their false or misleading advertising.

Id. at 1278.

Like the ordinance in First Resort, SB 954 targets

a legitimate area of state regulation and does not discriminate based on viewpoint. Just as LSPCs remain

free to express their anti-abortion views however they

wish, SB 954 leaves ABC-CCC and other IAFs—regardless of viewpoint—free to engage in whatever

speech they like.

In fact, SB 954 is planted on even firmer constitutional ground than the ordinance in First Resort for

two reasons. First, whereas the law there regulated the

App. 43

aggrieved party, First Resort, SB 954 does not regulate

ABC-CCC or other IAFs at all. At most, SB 954 indirectly affects ABC-CCC. This fact attenuates any concern that the law targets ABC-CCC’s speech. Second,

whereas First Resort concerned possible infringement

of LSPCs’ First Amendment rights, SB 954 goes some

way toward remedying an encumbrance on the First

Amendment rights of others—namely, employees on

public works projects. Indeed, if ABC-CCC were to prevail here and California’s prevailing wage law reverted

to its pre-SB 954 state—whereby employers could deduct employee wages to support the employers’ favored

IAFs without employee consent—the result would

likely be an infringement of employees’ First Amendment right to contribute to causes of their choosing. “As

Jefferson famously put it, ‘to compel a man to furnish

contributions of money for the propagation of opinions

which he disbelieves and abhor[s] is sinful and tyrannical.’ ” Janus, 138 S. Ct. at 2464 (quoting A Bill for Establishing Religious Freedom, in 2 Papers of Thomas

Jefferson 545 (J. Boyd ed. 1950) (emphasis deleted and

footnote omitted)).

ABC-CCC also argues that discriminatory motive

can be inferred from SB 954’s text because, it asserts,

the law is over-and underinclusive. A showing that a

law regulates a greater or lesser number of entities

than is reasonable to serve its objectives could indicate

such a motive. Williams-Yulee, 135 S. Ct. at 1668.

Whether a law is overinclusive or underinclusive

requires first ascertaining the law’s declared purpose.

See Perry Educ. Ass’n v. Perry Local Educators’ Ass’n,

App. 44

460 U.S. 37, 48–51 (1983) (upholding law restricting

access to teacher mailboxes to a particular union because doing so was “compatible with the intended purpose of the property”). SB 954’s averred objective is to

close a loophole in California’s prevailing wage law by

requiring collective employee consent before an employer may divert employee wages to IAFs. ABC-CCC

argues that SB 954 is overinclusive because it disallows individual employees from agreeing to the IAF

wage-credit.

ABC-CCC’s argument is unavailing because it

loses sight of the law’s purpose. SB 954 is part of a

larger statutory scheme setting a wage floor for employees on public works projects. The prevailing wage

requirement means an employer may not deny an individual employment because she is unwilling to negotiate down a minimum wage and instead hire an

employee who is. Allowing individual employees to negotiate wage credits for employers’ IAF contributions

as ABC-CCC suggests would effectively circumvent

this prohibition. Employers could pit prospective employees against each other and hire only those who

agreed to take the wage deduction, thereby rendering

employee “consent” illusory. That risk is relatively low

under a unionized CBA arrangement because employers in that context cannot coerce individual employees

into agreeing to a below-floor wage. Thus, because the

legislature did not unreasonably determine that individual employees are not similarly situated to unions

App. 45

in negotiating wage credits, SB 954 is not overinclusive.16

A law’s underinclusiveness may also indicate

viewpoint discrimination.17 “Underinclusiveness raises

serious doubts about whether the government is in fact

pursuing the interest it invokes, rather than disfavoring a particular speaker or viewpoint.” Brown v. Entm’t

Merchants Ass’n, 564 U.S. 786, 802 (2011). But while a

“law’s underinclusivity raises a red flag, the First

Amendment imposes no freestanding ‘underinclusiveness limitation.’ ” Williams-Yulee, 135 S. Ct. at 1668

(quoting R.A.V., 505 U.S. at 387) (internal quotation

16

At any rate, SB 954 does nothing to bar individual employees from contributing to ABC-CCC or any other IAF. Just as restricting automatic payroll deductions does not infringe unions’

free speech rights, Ysursa, 555 U.S. at 360–61, neither does limiting a wage deduction infringe IAFs’ free speech rights.

17

ABC-CCC argues that the Court’s recent decision in National Institute of Family & Life Advocates v. Becerra, 138 S. Ct.

2361 (2018) supports its position that SB 954 discriminates based

on viewpoint. National Institute invalidated a California law compelling medical clinics to post information about State-provided

reproductive services. Id. at 2376. ABC-CCC observes that National Institute criticized the law as underinclusive because it applied only to certain clinics and not to others providing some of

the same reproductive services. Id. at 2375–76. ABC-CCC’s reliance on National Institute is misplaced. First, National Institute

expressly did not reach the issue of viewpoint discrimination. Id.

at 2370 n.2. Second, the law there was underinclusive because

exempting some clinics from the information requirement fit

poorly with its objective of “providing low-income women with information about state-sponsored services.” Id. at 2375. As we explain, SB 954 is, by contrast, reasonably tailored to the objective

of ensuring that employer credits taken against employee wages

inure to the benefit of employees.

App. 46

marks omitted). “A State need not address all aspects

of a problem in one fell swoop; policymakers may focus

on their most pressing concerns. We have accordingly

upheld laws—even under strict scrutiny—that conceivably could have restricted even greater amounts of

speech in service of their stated interests.” Id.

ABC-CCC argues that SB 954 is underinclusive

because it (1) fails to ensure all employees’ consent

and (2) does not require employee consent for wage

credits related to pension plans, health insurance, and

other statutorily-enumerated employee benefit programs. ABC-CCC’s arguments are unpersuasive. First,

although SB 954 does not require the unanimous consent of all employees, it certainly ensures a greater degree of consent than if employers could—as they were

doing—freely reduce employees’ wages without any

form of employee consent. Thus, while SB 954 might

not “address all aspects of a problem,” it at least addresses lawmakers’ “most pressing concerns.” Id.

Moreover, the fact that some employees may disapprove of their union’s decision not to agree to a wage

deduction in support of a particular IAF simply reflects

the inherently representative nature of unions. As

with any representative arrangement, if a majority of

employees disagrees with the outcome of a negotiated

CBA, they can vote for a new union representative or

dump the union entirely.

Second, the notion that deductions for pension

plans and the like must be subject to the same consent

requirement fails to account for SB 954’s declared purpose. See id. Pension plans, training programs, and

App. 47

worker assistance programs all share a common denominator: they directly benefit employees. Allowing

wage credits for those programs is therefore reasonably tailored to the purpose of the prevailing wage law:

setting a compensation floor for employee pay. IAFs

like ABC-CCC, by contrast, focus not on programs directly benefitting employees, but on public policy advocacy and, as ABC-CCC puts it, “precedential issues of

importance to the construction industry.” To that end,

ABC-CCC spends funds on distributing mailers to voters, underwriting academic articles, providing testimony to governmental bodies, and hosting seminars

for contractors that promote open shop employment arrangements. These activities, which are geared at promoting the interests of the construction industry, have

only an attenuated relationship to employee interests.

Treating IAFs differently from employee-focused programs therefore makes sense in light of the objectives

of California’s prevailing wage law. Accordingly, requiring employee consent for IAF contributions and not

others fits snugly with SB 954’s purpose and is not underinclusive.18

18

Because SB 954 is neutral on its face, we do not proceed to

consider ABC-CCC’s argument that the legislative record reveals

a discriminatory motive. First Resort, 860 F.3d at 1278. But we

observe that even if we did go the distance, we do not discern a

pro-union motivation by the California legislature in the legislative record. The record shows that proponents of SB 954 in the

legislature were intent on closing a loophole allowing employers

to take a wage credit without their employees’ consent. For example, an analysis by the Senate Rules Committee states that the

bill would

App. 48

V.

“Given that [SB 954 does] not infringe[ ] [ABCCCC’s] First Amendment rights, the State need only

demonstrate a rational basis to justify the ban on

[wage-crediting IAF contributions].” Ysursa, 555 U.S.

at 359. SB 954 easily clears this low bar. California has

a legitimate interest in enacting a prevailing wage law

to protect its workers, and SB 954 is rationally related

to that purpose because it prevents employers from deducting their employees’ wages to support the employers’ preferred IAFs absent their employees’ collective

consent. Because workers have greater negotiating

power when bargaining collectively, California’s decision to allow such wage-crediting only for IAF contributions made pursuant to a CBA is “plainly

reasonable.” See id. at 360.

revise[ ] the definition of acceptable employer payments toward benefits, and thus what counts as payment of the prevailing wage. The author feels that the

current broad definition of these employer payments

allows non-union employees who are not party to a

CBA to have part of their wages deducted for industry

advancement purposes. As such, employers can deduct

and use these wages without the input or consent of the

employees or their labor representatives.

The legislature’s concern with employers reducing their employees’ wages for industry advancement purposes does not plausibly

reflect a discriminatory motive. To the contrary, it supports the

State’s averred objective of closing a loophole in the law’s employee consent provision.

App. 49

VI.

Finally, we address ABC-CCC’s equal protection

claim. “Article III requires ‘a plaintiff [to] demonstrate

standing for each claim he seeks to press and for each

form of relief that is sought.’ ” Or. Prescription Drug

Monitoring Program v. U.S. Drug Enf ’t Admin., 860

F.3d 1228, 1233 (9th Cir. 2017) (alteration in original)

(quoting Davis, 554 U.S. at 734). Thus, ABC-CCC’s

standing to pursue its First Amendment claim is not

determinative of its standing for all purposes, and we

must independently assess its standing to bring an

equal protection challenge.

ABC-CCC argues that it has standing because,

“[b]y permitting some [IAFs] to obtain prevailing wage

payments, but not others, SB 954 discriminates

against funds like ABC-CCC.” ABC-CCC’s argument

flows from the same flawed premise anchoring its First

Amendment claim: a perceived right to “obtain” funding. As discussed in Part IV.A, supra, however, such a

right is alien to the First Amendment. To have standing to press its equal protection claim, ABC-CCC must

instead show that the law deprives it of some cognizable fundamental right guaranteed to other similarly

situated entities. See, e.g., Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508

U.S. 656, 666 (1993) (noting that equal protection

claims derive from a discriminatory policy that impairs the rights of one entity vis-à-vis another); Sang

Yoon Kim v. Holder, 603 F.3d 1100, 1104 (9th Cir. 2010)

(noting that the party bringing the equal protection

claim must “belong to the class of [entities] who are

App. 50

allegedly similarly situated to” the party). But SB 954

neither regulates IAFs nor treats certain IAFs differently. The law applies to employers, and so ABC-CCC

cannot show that SB 954 causes an equal protection

injury to itself.19 We therefore agree with the district

court that ABC-CCC lacks standing to press its equal

protection claim.

CONCLUSION

SB 954 does not frustrate the objectives of the

NLRA and is not preempted under the Machinists doctrine. By setting a floor for employee pay while allowing unionized employees to opt-out of a particular

provision, California has acted well within the ambit

of its traditional police powers.

SB 954 also does not violate ABC-CCC’s alleged

First Amendment rights. Contrary to its assertion,

ABC-CCC has no free-floating First Amendment right

to “amass” funds to finance its speech. And to the extent SB 954 implicates ABC-CCC’s speech interests at

all, those interests are not constitutional in nature because SB 954 merely trims a state subsidy of speech,

and does so in a viewpoint-neutral way. The law is

therefore subject to rational basis review. Under that

lenient standard, because SB 954 is rationally related

to a legitimate government purpose—ensuring meaningful employee consent before employers contribute

19

Interpipe might have standing to bring an equal protection

claim based on SB 954’s disparate treatment of unionized employers, but Interpipe brings no such claim.

App. 51

portions of their wages to third-party advocacy

groups—it easily withstands scrutiny.

AFFIRMED.

App. 52

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ASSOCIATED BUILDERS

AND CONTRACTORS OF

CALIFORNIA COOPERATION COMMITTEE, INC.

and INTERPIPE

CONTRACTING, INC.,

Plaintiffs,

v.

Case No.:

3:16-cv-02247-BEN-NLS

ORDER:

(1) GRANTING

DEFENDANT

BECERRA’S

MOTION TO DISMISS

[ECF No. 6];

XAVIER BECERRA in his (2) DENYING

official capacity as Attorney PLAINTIFFS’ MOTION

General of the State of

FOR PRELIMINARY

California; CHRISTINE

INJUNCTION

BAKER in her official

[ECF No. 11]; and

capacity as Director of the (3) GRANTING

California Department of

DEFENDANT SU’S

Industrial Relations; and

MOTION TO DISMISS

JULIE SU in her official

AND DEFENDANT

capacity as California Labor BAKER’S MOTION

Commissioner, Division of FOR JUDGMENT

Labor Standards

ON THE PLEADINGS

Enforcement,

[ECF No. 17]

Defendants.

(Filed Jan. 27, 2017)

This case concerns the constitutionality of California Senate Bill (“SB”) 954, a law that amends part

of California’s prevailing wage law. Before passage of

the law, both unionized and non-union employers

were entitled to the same benefit. However, with the

App. 53

enactment of SB 954, the Legislature of the State of

California made a political decision to take away that

benefit from non-union employers. Unionized employers retain the benefit. The fight over the constitutionality of SB 954 continues the ongoing fight between

unions and open shops in this state.

Unlike the California Legislature, this Court is

not a political institution. It does not act politically or

personally. It is a court of law bound by prior precedent. As such, upon consideration of the issues and

controlling authority, the Court is compelled to grant

Defendants’ motions and dismiss Plaintiffs’ complaint.

BACKGROUND

This case involves California’s prevailing wage law.

See Cal. Labor Code §§ 1770 et seq. That law requires

contractors on public works construction projects to

pay the general prevailing rate of per diem wages for

work of a similar character in the locality in which

the work is performed. Id. § 1771. The Director of the

California Department of Industrial Relations (“California DIR”) determines the general prevailing rate of

per diem wages. Under the law, the “general prevailing

rate of per diem wages includes . . . [t]he basic hourly

wage rate . . . [and] employer payments,” i.e., benefits.

Id. § 1773.9. In other words, employers can satisfy the

prevailing wage by either paying all cash wages or a

mix of cash wages and benefits that add up to the prevailing wage rate. California Labor Code section

1773.1 defines what “employer payments” are included

App. 54

in per diem wages. “Employer payments are a credit

against the obligation to pay the general prevailing

rate of per diem wages.” § 1773.1(c). SB 954 amends

the definition of employer payments under section

1773.1.

Under section 1173.1, per diem wages include employer payments for traditional benefits like “health

and welfare,” “pension,” and “vacation.” Previously,

section 1773.1 also provided that employer payments

include:

(8) Industry advancement and collective

bargaining agreements administrative fees,

provided that these payments are required

under a collective bargaining agreement pertaining to the particular craft, classification,

or type of work within the locality or the nearest labor market area at issue.

(9) Other purposes similar to those specified

in paragraphs (1) to (8), inclusive.

Id. § 1773.1 (citing law before SB 954 became effective).

Thus, an employer making payments to an industry advancement fund could receive prevailing wage

credit under § 1773.1(a)(8) if the payment was required

under a collective bargaining agreement (“CBA”).

An employer making a similar payment to an industry

advancement fund, but which was not required by a

collective bargaining agreement, could receive prevailing wage credit under § 1773.1(a)(9). This arrangement changed on January 1, 2017.

App. 55

Plaintiff Associated Builders & Contractors of

California Cooperation Committee, Inc. (“ABC-CCC”)

is a § 501(c)(6) tax exempt trade association representing the interests of open shop employers in the building and construction industry. (Compl. ¶ 4.) It is

recognized by the California DIR as an industry advancement fund. (Id.) It received employer payments

that qualified for credit under section 1773.1(a)(9). (Id.

¶ 14.) Plaintiff Interpipe Contracting, Inc. (“Interpipe”)

is a California contractor that “has made prevailing

wage payments to ABC-CCC on a regular basis in the

past, and has received prevailing wage credit under

California Labor Code section § 1773.1(a)(9) for those

payments.” (Id. ¶ 5.)

Effective January 1, 2017, SB 9541 amends what

qualifies as “employer payments” under subsections (8)

and (9) as follows:

(8) Industry advancement and collective

bargaining agreements administrative fees,

provided that these payments are made pursuant to a collective bargaining agreement to

which the employer is obligated.

(9) Other purposes similar to those specified

in paragraphs (1) to (5), inclusive; or other

purposes similar to those specified in paragraphs (6) to (8), inclusive, if the payments

1

SB 954 was sponsored by the State Building and Construction Trades Council of California (“Building Trades Council”).

(Pls. Mot., Broyles Decl. ¶ 4.) According to Plaintiffs, the Building

Trades Council engages in pro-union advocacy. (Pls. Mot. at 3;

Broyles Decl. ¶ 8; Dayton Decl. ¶¶ 9–10.)

App. 56

are made pursuant to a collective bargaining

agreement to which the employer is obligated.

(SB 954, Compl. Ex. A.) Therefore, according to Plaintiffs, under the new law, employers making payments

to industry advancement funds will not receive prevailing wage credit unless the payment is required by

a collective bargaining agreement.

Plaintiffs allege that the “loss of employer payment credits under SB 954 will cause Interpipe and

other open shop employers to reduce or eliminate their

payments to industry advancement funds like ABCCCC.” (Compl. ¶ 15.) ABC-CCC alleges that it will “suffer severe financial harm in the form of lost revenues

as a result of reduced employer payments resulting

from the loss of ” the credit, and those lost revenues

will force ABC-CCC to “curtail or discontinue its advocacy on behalf of open shop employers.” (Id. ¶ 18.) And

Interpipe will be harmed because it “will lose some or

all of the industry advocacy and financial assistance

previously provided by ABC-CCC.” (Id. ¶ 19.)

Plaintiffs’ complaint seeks declaratory and injunctive relief on three claims for relief: (1) a claim that SB

954 is preempted by the National Labor Relations Act

(“NLRA”) under the Supremacy Clause; (2) a claim

that SB 954 violates ABC-CCC’s First Amendment

speech rights; and (3) a claim that SB 954 violates

ABC-CCC’s equal protection rights. (Compl. ¶¶ 22–34.)

They have sued Xavier Becerra, in his official capacity

App. 57

as Attorney General of the State of California;2 Christine Baker, in her official capacity as Director of the

California DIR; and Julie Su, in her official capacity as

California Labor Commissioner. Becerra is represented

separately from Baker and Su.

Becerra and Su have moved to dismiss the complaint and Baker has moved for judgment on the

pleadings. (Becerra Mot., ECF No. 6; Su & Baker Mot.,

ECF No. 17.) Plaintiffs have moved for a preliminary

injunction to prevent SB 954 from going into effect on

January 1, 2017. (Pls. Mot., ECF No. 11.) The Court

held a hearing on Becerra’s and Plaintiffs’ motions on

December 14, 2016. The Court takes Su and Baker’s

motion under submission without oral argument, pursuant to Civil Local Rule 7.1.d.1.

LEGAL STANDARDS

I.

Motions to Dismiss and for Judgment on

the Pleadings

“[A] complaint must contain sufficient factual

matter, accepted as true, to state a claim to relief that

is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,

677–78 (2009). “A claim is facially plausible ‘when the

plaintiff pleads factual content that allows the court to

2

When Plaintiffs originally filed suit, Kamala Harris was

California’s Attorney General. Since that time, Harris has been

elected and sworn in to the United States Senate and Xavier

Becerra has been sworn in as the 33rd Attorney General of the

State of California. Under Federal Rule of Civil Procedure 25(d),

a public officer’s successor is automatically substituted as a party.

The Court therefore substitutes Becerra for Harris.

App. 58

draw the reasonable inference that the defendant is

liable for the misconduct alleged.’ ” Zixiang Li v. Kerry,

710 F.3d 995, 999 (9th Cir. 2013) (quoting Iqbal, 556

U.S. at 678). When considering a Federal Rule of Civil

Procedure 12(b)(6) motion to dismiss,3 the court must

“accept as true facts alleged and draw inferences from

them in the light most favorable to the plaintiff.” Stacy

v. Rederiet Otto Danielsen, 609 F.3d 1033, 1035 (9th Cir.

2010) (citing Barker v. Riverside Cnty. Office of Educ.,

584 F.3d 821, 824 (9th Cir. 2009)). “Threadbare recitals

of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.” Iqbal, 556 U.S.

at 678. Dismissal may be based on either the lack of a

cognizable legal theory or on the absence of sufficient

facts alleged under a cognizable legal theory. In re

Tracht Gut, LLC, 836 F.3d 1146, 1151 (9th Cir. 2016)

(internal citations omitted). The same standard applies to motions for judgment on the pleadings under

Federal Rule of Civil Procedure 12(c).4 Cafasso, U.S. ex

3

Defendants Becerra and Su bring motions to dismiss under

Rule 12(b)(6).

4

Defendant Baker brings a motion for judgment on the

pleadings under Rule 12(c). Plaintiffs contend that Baker’s motion should be denied as premature because the pleadings have

not closed. Rule 12(c) permits a motion for judgment on the pleadings “after the pleadings are closed,” Fed. R. Civ. P. 12(c), and

generally this means after all defendants have filed an answer.

See Noel v. Hall, No. CV 99-649, 2005 WL 2007876, at *1 (D. Or.

Aug. 16, 2005). Only Defendant Baker has filed an answer. However, “courts have exercised their discretion to permit a motion on

the pleadings before all defendants have filed an answer where

no prejudice to any party would result.” Id. (internal citations

omitted). Because Plaintiffs bring the same purely legal claims

against all Defendants, and because the same questions are

App. 59

rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055

n.4 (9th Cir. 2011).

Documents attached to or incorporated by reference in the complaint or matters of judicial notice

may be properly considered under Rule 12(b)(6) and

Rule 12(c) without converting the motion into one

for summary judgment. See Fortuna Enters., L.P. v.

City of Los Angeles, 673 F.Supp.2d 1000, 1004 (C.D.

Cal. 2008); Rose v. Chase Manhattan Bank USA, 396

F.Supp.2d 1116, 1119 (C.D. Cal. 2005). Here, SB 954 is

attached as an exhibit to Plaintiffs’ complaint and its

terms are uncontested. Defendants request that the

Court take judicial notice of the legislative history of

SB 954 and a copy of the General Prevailing Wage Determination made by the California DIR. These documents are available on government websites. Under

Rule 201 of the Federal Rules of Evidence, a court

may take judicial notice of the legislative history of

state statutes and government documents available on

reliable sources on the Internet. Louis v. McCormick &

Schmick Rest. Corp., 460 F.Supp.2d 1153, 1155 n.4

(C.D. Cal. 2006) (citing cases); U.S. ex rel. Dingle v.

BioPort Corp., 270 F.Supp.2d 968, 972 (W.D. Mich.

2003). Accordingly, the Court takes judicial notice of

these documents.

before the Court in Defendants Becerra’s and Su’s motions as in

Defendant Baker’s motion, no prejudice would result from considering Baker’s Rule 12(c) motion now. Accordingly, the Court exercises its discretion to rule on Baker’s motion.

App. 60

II.

Motion for a Preliminary Injunction

“A preliminary injunction is an extraordinary and

drastic remedy.” Pom Wonderful LLC v. Hubbard, 775

F.3d 1118, 1124 (9th Cir. 2014) (quoting Munaf v.

Geren, 553 U.S. 674, 689 (2008)). To obtain a preliminary injunction, a plaintiff “must establish that he is

likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of hardships tips in his favor, and

that an injunction is in the public interest.” Winter v.

Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).

The Winter factors are considered in conjunction with

the Ninth Circuit’s “sliding scale” approach, which provides that “the elements of the preliminary injunction

test are balanced, so that a stronger showing of one element may offset a weaker showing of another.” Vanguard Outdoor, LLC v. City of Los Angeles, 648 F.3d

737, 739 (9th Cir. 2011).

DISCUSSION

I.

Ripeness and Standing

The Court asked the parties to address why the

case was ripe for adjudication and why Plaintiff ABCCCC has standing. After hearing the parties’ arguments at the hearing, the Court finds that the case is

ripe but that ABC-CCC does not have standing to bring

its equal protection claim.

The ripeness doctrine seeks to separate matters

that are premature for judicial review because the injury is speculative and may never occur, from those

App. 61

cases that are appropriate for federal court action.

E. Chemerinsky, Federal Jurisdiction § 2.4.1 (4th ed.).

The Court’s “role is neither to issue advisory opinions

nor to declare rights in hypothetical cases, but to adjudicate live cases or controversies consistent with the

powers granted the judiciary in Article III of the Constitution.” Thomas v. Anchorage Equal Rights Comm’n,

220 F.3d 1134, 1138 (9th Cir. 2000).

Ripeness has a constitutional and prudential component. Id. at 1138. Under the constitutional component, the court “considers whether the plaintiffs face ‘a

realistic danger of sustaining a direct injury as a result

of the statute’s operation or enforcement,’ or whether

the alleged injury is too ‘imaginary’ or ‘speculative’ to

support jurisdiction.” Id. at 1139.5 The constitutional

5

Thomas articulated three factors to evaluate the constitutional component of a pre-enforcement challenge. Those factors

are (1) whether the plaintiffs have articulated a concrete plan to

violate the law in question, (2) whether the prosecuting authorities have communicated a specific warning or threat to initiate

proceedings, and (3) the history of past prosecution or enforcement under the challenged statute. Id. at 1139.

Several reasons compel this Court not to apply the Thomas

factors strictly. First, the Thomas factors are inapplicable to ABCCCC. The Ninth Circuit has found that the “familiar pre-enforcement challenge analysis articulated in Thomas” does not apply

when the plaintiffs “are not the target of enforcement.” San Luis

& Delta-Mendota Water Authority v. Salazar, 638 F.3d 1163, 1173

(9th Cir. 2011). Here, while Interpipe would be the target of any

enforcement action for violating SB 954, ABC-CCC would not be.

When the plaintiff is not the target of enforcement, “the consideration of ‘whether the plaintiff [ ] ha[s] articulated a concrete plan

to violate the law in question’ has little meaning.” Id. Further, the

last factor—the history of past enforcement—is inapplicable to

both parties because the statute is new. Wolfson v. Brammer, 616

App. 62

component of ripeness is the same or similar to the

injury in fact prong of standing. See id. Prudential

ripeness involves “two overarching considerations: the

fitness of the issues for judicial review and the hardship to the parties of withholding court consideration.”

Id. at 1141.

Here, the Court is satisfied that this case is ripe

for review. The constitutional components of ripeness

are met. First, Interpipe has been injured as a result

of SB 954 because, due to SB 954, ABC-CCC had to refuse Interpipe financial assistance (i.e., ABC-CCC’s advocacy resources) to oppose a particular bond measure.

(Pls. Mot., Smith Decl. ¶ 8.) With respect to ABC-CCC,

at the hearing, Plaintiffs contended that ABC-CCC

would incur financial damage once the statute went

into effect and that ABC-CCC’s speech rights would be

chilled. Plaintiffs pointed to evidence submitted in support of their motion for a preliminary injunction to sustain ABC-CCC’s claim of economic and non-economic

injuries. In those declarations and attachments, eleven

employers contend that they will cease making contributions to ABC-CCC as of January 1, 2017 because of

F.3d 1045, 1060 (9th Cir. 2010). Next, as discussed in the text, the

statute is now in effect and the Plaintiffs have sufficiently alleged

injury as a result of its operation. Finally, to avoid chilling a plaintiff ’s speech in cases with First Amendment implications, such as

this case, courts apply the requirements of ripeness less stringently

when “the plaintiff is immediately in danger of sustaining[ ] a direct injury as a result of [an executive or legislative] action.” Ala.

Right to Life Political Action Committee v. Feldman, 504 F.3d 840,

851 (9th Cir. 2007) (alterations in original). As explained in the

text, the Court finds that the Plaintiffs satisfy this test.

App. 63

the loss of the prevailing wage credit. (Id. Smith Decl.

¶¶ 6–7; Loudon Decl. ¶ 20, Ex. B.) The statute has now

gone into effect and Court has no reason to doubt that

Plaintiffs’ prior averments have changed. Therefore,

ABC-CCC has sufficiently alleged an injury. Moreover,

Defendants conceded at the hearing that they intend

to enforce SB 954. (Hr’g Tr. at 28, 32, 35, ECF No. 36.)

Thus, based on the parties’ representations, the Court

finds that Plaintiffs face a realistic danger of sustaining a direct injury as a result of SB 954.

The prudential component to ripeness is also

satisfied. First, “the challenge is fit for judicial review

because further factual development would not ‘significantly advance [the Court’s] ability to deal with the

legal issues presented.’ ” San Luis & Delta-Mendota

Water Authority, 638 F.3d at 1173 (internal citations

omitted). Second, Plaintiffs would suffer hardship if

the Court withholds consideration because the statute

is now in effect, depriving ABC-CCC of payments it

would have otherwise received through employer prevailing wage credits. Therefore, the case is ripe for judicial determination.

However, ABC-CCC does not have standing to assert an equal protection claim on behalf of itself.6

6

An association can have standing to bring suit on behalf of

its members. See Associated Builders & Contractors, Golden Gate

Chapter Inc. v. Baca, 769 F.Supp. 1537, 1541 (N.D. Cal. 1991).

That is, an association can raise the equal protection rights of its

members. But the complaint does not plead associational standing on behalf of ABC-CCC’s members. Rather, it is clear that

ABC-CCC sues on its own behalf to challenge violations of its own

rights. (See Compl. ¶¶ 31–34 (equal protection claim captioned

App. 64

Standing is an essential component of Article III’s case

or controversy requirement. One of the three irreducible standing requirements is that the plaintiff must

have suffered an injury in fact. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560–61 (1992). On this requirement, “[t]he Court requires that even if a government

actor discriminates . . . , the resulting injury ‘accords a

basis for standing only to those persons who are personally denied equal treatment.’ ” Carroll v. Nakatani,

342 F.3d 934, 940 (9th Cir. 2003) (internal citations

omitted). ABC-CCC sues for violations of its own equal

protection rights, but SB 954 does not discriminate

against ABC-CCC—if it does discriminate, it discriminates against employers not subject to CBAs, like Interpipe. The legal requirements changed by SB 954 are

directed to employers, and any penalties for noncompliance will be assessed against employers. Thus, ABCCCC lacks standing to pursue an equal protection

claim on its own behalf.7 Accordingly, ABC-CCC’s equal

protection claim is DISMISSED.

“SB 954 Violates ABC-CCC’s Equal Protection Rights”); Pls.

Opp’n to Becerra Mot. at 12, ECF No. 12 (stating that the equal

protection claim “is brought by Plaintiff ABC-CCC as an industry

advancement fund. It is not brought by Plaintiff Interpipe as an

employer.”); Pls. Opp’n to Su & Baker Mot. at 16, ECF No. 34

(emphasizing that ABC-CCC brings equal protection claim “on

behalf of itself.”))

7

Defendants Su and Baker raised the issue of ABC-CCC’s

standing to bring the equal protection claim in their motion. In

response, Plaintiffs failed to offer authority to support why ABCCCC has standing to sue on behalf of itself.

App. 65

II.

Analysis of the Motions to Dismiss

Plaintiffs bring a facial challenge to the constitutionality of SB 954 because they seek a declaration

that SB 954 is unconstitutional under any circumstance. See Am. Hotel & Lodging Ass’n v. City of Los

Angeles, 119 F.Supp.3d 1177, 1194 (C.D. Cal. May 13,

2015) (“Here, the Plaintiffs seek an order enjoining the

City from implementing and enforcing the Wage Ordinance under any circumstance, and therefore they indisputably assert a facial challenge against the Wage

Ordinance.”), aff ’d, 834 F.3d 958 (9th Cir. 2016). Therefore, “there is no need for further development of the

facts” and “this case is capable of resolution at the motion to dismiss stage.” Fortuna Enters., 673 F.Supp.2d

at 1003 (granting motion to dismiss and finding wage

ordinance not preempted by federal labor law and not

in violation of equal protection guarantees).

A. Preemption

Plaintiffs argue that SB 954 is preempted by the

NLRA under the Supremacy Clause of the U.S. Constitution. The NLRA contains no express preemption provision, but the Supreme Court has held that Congress

“implicitly mandated two types of preemption . . . to

implement federal labor law.” Chamber of Commerce v.

Brown, 554 U.S. 60, 65 (2008). Those two doctrines are

known as Machinists and Garmon preemption. Plaintiffs contend that both doctrines apply. At the hearing,

Plaintiffs’ counsel stated that Machinists preemption

is the soul of their complaint. (Hr’g Tr. at 13–14.)

App. 66

Accordingly, this Court will address Machinists preemption first.

1. Machinists Preemption

Machinists preemption forbids the National Labor

Relations Board (“NLRB”) and States from regulating “conduct that Congress intended ‘be unregulated

because [it should be] left to be controlled by the free

play of economic forces.’ ” Brown, 554 U.S. at 65. Generally, a state’s attempt to “influence the substantive

terms of collective-bargaining agreements” is preempted. Chamber of Commerce v. Bragdon, 64 F.3d

497, 500 (9th Cir. 1995). And “the [Supreme] Court has

clearly held that state legislation, which interferes

with the economic forces that labor or management

can employ in reaching agreements, is preempted by

the NLRA because of its interference with the bargaining process.” Id. at 501. The Supreme Court has also

found that Congress intended to leave non-coercive

speech by unions and employers unregulated. Brown,

554 U.S. at 68 (preempting state provision prohibiting

employers from using funds “to assist, promote or deter union organizing” because of the “explicit direction

from Congress to leave [such] noncoercive speech unregulated”).

In contrast, state laws setting minimum labor

standards that are unrelated to the processes of collective bargaining or self-organization are not preempted.

See Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724,

756–57 (1985). Such laws include child labor laws,

App. 67

minimum and other wage laws, and laws affecting occupational health and safety. Id. at 756. “Minimum

state labor standards affect union and nonunion employees equally, and neither encourage nor discourage

the collective bargaining processes that are the subject

of the NLRA. Nor do they have any but the most indirect effect on the right of self-organization established

in the Act.” Id. at 755. The Ninth Circuit recently explained:

Minimum labor standards do technically interfere with labor-management relations and

may impact labor or management unequally,

much in the same way that California’s at-will

employment may favor employers over employees. Nevertheless, these standards are not

preempted, because they do not “regulate the

mechanics of labor dispute resolution.” Concerned Home Care Providers, Inc. v. Cuomo,

783 F.3d 77, 86 (2d Cir. 2015). Rather, these

standards merely provide the “backdrop” for

negotiations. Metropolitan Life, 471 U.S. at

757, 105 S. Ct. 2380 (internal quotations omitted). Such standards are a valid exercise of

states’ police power to protect workers. Fort

Halifax Packing Co. v. Coyne (“Fort Halifax”),

482 U.S. 1, 21–22 (1987).

Am. Hotel & Lodging Ass’n v. City of Los Angeles, 834

F.3d 958, 963 (9th Cir. 2016) (“[S]tate action that intrudes on the mechanics of collective bargaining is

preempted, but state action that sets the stage for such

bargaining is not.”).

App. 68

Moreover, minimum labor standards laws that

provide narrowly tailored “opt outs” for employers

subject to collective bargaining agreements have been

repeatedly upheld. See Viceroy Gold Corp. v. Aubry,

75 F.3d 482, 490 (9th Cir. 1996) (California law that

allowed only union employers to provide twelve-hour

workdays despite general law that required eight-hour

days was a narrowly tailored opt-out and was not

preempted). For instance, in American Hotel & Lodging Association, the Ninth Circuit held that a city hotel

worker wage ordinance that allowed for hotels covered

by a collective bargaining agreement to waive the requirements of the ordinance was not preempted. 834

F.3d at 965. Opt-out provisions are allowed because the

protections of the collective bargaining process permit

unionized employees to forgo the minimum standard

in exchange for another bargained-for benefit. See

Livadas v. Bradshaw, 512 U.S. 107, 131–32 (1994);

Viceroy Gold, 75 F.3d at 489–90. The Ninth Circuit has

explained that opt-outs are not preempted, even

though they might “provide[ ] an incentive to unionize

or to remain non-union” and may have a “potential

benefit or burden in application.” Id. at 490.

Plaintiffs argue that SB 954 regulates ABC-CCC’s

noncoercive labor speech and is therefore preempted

under Machinists. Defendants counter that SB 954 establishes a minimum labor standard, pursuant to the

State’s valid exercise of its traditional police power,

and that it provides a valid “opt out” for employers subject to a collective bargaining agreement.

App. 69

Plaintiffs contend that classifying SB 954 as a

minimum labor standard does not save it from preemption. The Supreme Court has said that “[w]hen a state

law establishes a minimal employment standard not

inconsistent with the general legislative goals of the

NLRA,” it does not conflict with the purposes of the

Act. Metro. Life, 471 U.S. at 757 (emphasis added).

Plaintiffs argue that because SB 954 targets noncoercive labor speech, it is inconsistent with the NLRA under an application of Chamber of Commerce v. Brown.

In Brown, the Supreme Court held that a California

statute, which prohibited employers that received

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

deter union organizing,” was preempted under the Machinists doctrine because Congress intended to leave

non-coercive speech unregulated when it added section

8(c) to the NLRA.8 Plaintiffs argue that ABC-CCC’s industry advancement advocacy is noncoercive labor

speech, which SB 954 regulates by depriving ABCCCC of employer payments that support that advocacy.

Plaintiffs further argue that the minimum labor

standards cases cited by Defendants are inapplicable

because none of them involve labor speech. Rather,

they assert that the most applicable of those cases is

8

Section 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.

29 U.S.C. § 158(c).

App. 70

Chamber of Commerce v. Bragdon, 64 F.3d 497 (9th

Cir. 1995). In Bragdon, the Ninth Circuit found that

Machinists preemption applied to invalidate a Contra

Costa County ordinance that required construction

employers to pay prevailing wages on certain private

industrial construction projects costing over $500,000.

Employers had to agree to pay the state-determined

prevailing wage for public works before the County

would issue a building permit for the private construction project. 64 F.3d at 499. The prevailing wage for

public works contracts, which the ordinance made applicable to private projects, was determined “by reference to established collective-bargaining agreements

within the locality in which the public work [was] to be

performed.” Id.

Applying the Machinists preemption doctrine,

the Ninth Circuit rejected the argument that the

ordinance functioned as a minimum labor standard.

By imposing on private employers a wage “derived

from the combined collective bargaining of third parties,” private employers had to pay a wage that was

“not the result of the bargaining of those employers

and employees actually involved in the selected construction projects in Contra Costa County.” Id. at 502.

Furthermore, the manner in which the ordinance operated “would place considerable pressure on the

contractor and its employees to revise the[ir] labor

agreement to reduce the benefit package and increase

the hourly wages in order to remain competitive and

obtain the contracts and jobs in Contra Costa County.”

Id. Based on these alterations to the “free-play of

App. 71

economic forces,” the court found that the ordinance affected “the bargaining process in a much more invasive

and detailed fashion than” other state labor standards

and was preempted under Machinists. Id.

Plaintiffs contend that SB 954 is similar to the

ordinance preempted in Bragdon because (1) both

are minimum labor standards laws that relate to

California’s prevailing wage law; (2) both are supported by a Building Trades Council; (3) both are narrowly targeted at employers in the construction

industry; (4) both are incompatible with the goals of

the NLRA—the Bragdon ordinance interfered with the

free play of economic forces and SB 954 interferes with

the NLRA-protected non-coercive labor speech of ABCCCC; and (5) both have “tenuous” public policy justifications that mask each bill’s true objectives.

Upon consideration of Brown, Bragdon, and other

cases defining the scope of the Machinists preemption

doctrine, the Court finds that SB 954 is not subject to

Machinists preemption. Plaintiffs read Brown too

broadly. In Brown, the Supreme Court, drawing on its

prior precedent, explained that the addition of section

8(c) manifested “congressional intent to encourage free

debate on issues dividing labor and management.” 554

U.S. at 68 (quoting Linn v. United Plant Guard Workers

of Am., Local 114, 383 U.S. 53, 62 (1966)).9 That is, the

9

In Linn, after stating that the enactment of section 8(c) represented congressional intent to “encourage free debate,” the Supreme Court limited this finding in a footnote. The Court

explained that “[i]t is more likely that Congress adopted this section for a narrower purpose, i.e., to prevent the Board from

App. 72

NLRA protects the rights of employers and employees

to engage in open debate about labor disputes. Id. Such

speech is the type of speech that Congress intended to

leave unregulated. It goes too far to say that Congress

intended to leave unregulated a third party’s speech to

the general public and government agencies. See

Building & Constr. Trades Council v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218, 224

(1993) (explaining that, in the absence of clear congressional intent, a court should be “reluctant to infer

preemption”). Plaintiffs point to no cases extending the

interpretation of section 8(c) that far, and the Court’s

survey of applicable precedent has found none.

SB 954 is distinct from the preempted statute in

Brown. The statute in Brown prohibited employers receiving state funds from using such funds to assist,

promote, or deter union organizing, but then exempted

certain activities that promoted unionization. Unlike

the statute in Brown, SB 954 does not prevent employers or employees from speaking about any issue. And

it expresses no preference about what type of speech is

allowed or prohibited. The statute certainly does not

regulate the mechanics of collective bargaining.

SB 954 also does not impose the same type of burdens on employers that the Court found offensive in

Brown. The statute in Brown established a “formidable” enforcement scheme, “making it exceeding difficult

attributing antiunion motive to an employer on the basis of his

past statements.” 383 U.S. at 62 n.5. This more narrow interpretation of congressional intent further contradicts Plaintiffs’ broad

application of Brown.

App. 73

for employers to demonstrate that they have not used

state funds,” “imposed punitive sanctions for noncompliance,” and permitted suit by the state attorney general and private taxpayers. See id. at 71–72. This

enforcement mechanism “put[ ] considerable pressure

on an employer either to forgo his ‘free speech right to

communicate his views to his employees,’ or else to refuse the receipt of state funds.” Id. at 73. “In so doing,

the statute impermissibly ‘predicat[ed] benefits on refraining from conduct protected by federal labor law.’ ”

Id. In contrast, SB 954 does not establish compliance

burdens or litigation risks that pressure Plaintiffs to

forgo their speech rights in exchange for the receipt of

state funds. It seems quite simple to comply with the

law: Effective January 1, 2017, an employer will not be

able to credit industry advancement fund fees when

calculating the prevailing wage for their workers, unless the employer is required by a CBA to pay them.

The statute does not condition the receipt of state

funds on employers sacrificing their free speech rights.

Plaintiffs remain free to speak.

SB 954 will have an indirect effect on speech, but

Brown did not address how statutes that affect speech

in a more remote way should be treated. Neither party

points to the existence of a case discussing a statute

similar to SB 954—i.e., one that does not directly regulate speech but affects speech. And, as the Court has

explained above, there are important distinctions between SB 954 and the statute preempted in Brown. In

the absence of clear congressional intent, the Court

should be “reluctant to infer preemption.” Building &

App. 74

Constr. Trades Council v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218, 224 (1993)

(“The NLRA contains no express preemption provision.

Therefore, in accordance with settled preemption principles, we should find [the statute] preempted unless it

conflicts with federal law or would frustrate the federal

scheme, or unless we discern from the totality of the

circumstances that Congress sought to occupy the field

to the exclusion of the States. We are reluctant to infer

preemption.”).

Bragdon is similarly unhelpful for Plaintiffs.

Plaintiffs ignore that the Ninth Circuit has retreated

from its holding in Bragdon, cautioning that it “must

be interpreted in the context of Supreme Court authority and . . . other, more recent, rulings on NLRA

preemption.” Associated Builders & Contractors of S.

Cal., Inc. v. Nunn, 356 F.3d 979, 990 (9th Cir. 2004). In

Nunn, the Ninth Circuit limited Bragdon to “extreme

situations, when [substantive labor standards] are ‘so

restrictive as to virtually dictate the results’ of collective bargaining.” Id. The Ninth Circuit also effectively

reversed Bragdon to the extent the opinion was based

on a concern that the ordinance targeted particular

workers. Id. The court explained that “[i]t is now clear

in this Circuit that state substantive labor standards,

including minimum wages, are not invalidated simply

because they apply to particular trades, professions, or

job classifications rather than to the entire labor market.” Id.

This case is not such an “extreme situation”

where the terms of SB 954 “virtually dictate the results

App. 75

of collective bargaining.” In Bragdon, Contra Costa

County went beyond the exercise of its traditional

police power in setting minimum wage standards by

intruding on how private industry negotiates its labor

agreements. Here, SB 954 may ultimately “alter[ ]

the backdrop” of labor-management negotiations, but

it does not “intrude[ ] on the mechanics of collective

bargaining.” Am. Hotel & Lodging Assoc., 834 F.3d at

964–65. Employers and employees will come to the

bargaining table and no employer, unionized or open

shop, will be able to take prevailing wage credit under

SB 954. See Fort Halifax, 4832 U.S. at 21 (explaining

that employers and employees come to the bargaining

table with rights under state law that form a “backdrop” for their negotiations”). Only an employer that

agrees with its employees in a collective bargaining

agreement to divert the workers’ wages to an industry

advancement fund may take the credit. Unionized employers that fail to reach an agreement with their

workers on this issue may not take the credit. Thus, SB

954 sets a standard applicable to all employers but provides an opt-out for employers that are obligated to

make the payments under collective bargaining agreements. Under Ninth Circuit precedent, opt-out provisions are not preempted, even if there is a “potential

benefit or burden in [their] application.” Viceroy Gold,

75 F.3d at 490.

When plaintiffs lack a cognizable legal theory,

dismissal of their complaint is appropriate. Fortuna

Enters., 673 F.Supp.2d at 1003. Here, Plaintiffs have

failed to allege a cognizable legal theory. They

App. 76

interpret Brown too broadly and ignore the import of

the minimum labor standards and opt-out cases. Machinists preemption does not apply to SB 954. Rather,

the statute constitutes a minimum labor standard

with an opt-out for employers required to pay industry

advancement fund fees pursuant to collective bargaining agreements. Plaintiffs’ claim based on Machinists

preemption is DISMISSED.

2. Garmon Preemption

Garmon preemption “is intended to preclude state

interference with the NLRB’s interpretation and active enforcement of the ‘integrated scheme of regulation’ established by the NLRA.” Brown, 554 U.S. at 65.

“To this end, Garmon preemption forbids States to ‘regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits.’ ” Id. (internal citations

omitted). Specifically, a state statute is subject to Garmon preemption when the statute’s terms regulate

matters within the scope of sections 7 or 8 of the NLRA.

Fortuna Enters., 673 F.Supp.2d at 1004. Section 7 of

the NLRA protects the rights of employees in collective

bargaining, including the right to strike, their right to

picket, and their right to join or not join a union. See

29 U.S.C. § 157. Section 8 regulates unfair labor practices, and generally prohibits employers and labor organizations from interfering with employee rights that

are protected under section 7 of the Act. See id. § 158.

In their complaint, Plaintiffs argue SB 954 is

preempted under Garmon because it “interferes with

App. 77

employer speech rights guaranteed under § 8(c) of the

NLRA.” (Compl. ¶ 22.) However, Plaintiffs appear to

have abandoned this particular argument. They do not

raise Garmon preemption in their oppositions to Defendants’ motions and, in their motion for a preliminary injunction, they set forth a different basis for

Garmon preemption. Plaintiffs’ new Garmon preemption argument is that the “NLRB regulates payments

to industry advancement funds” and therefore “the

statute intrudes in an area reserved for the exclusive

regulation by the NLRB.” (Pls. Mot. at 14.)

No matter which argument Plaintiffs promote,

both fail. As established above, SB 954 represents a

minimum labor standard with an opt-out provision for

employers subject to collective bargaining agreements

and, as a “minimum employment standard and an optout provision, there is no Garmon preemption.” Viceroy

Gold, 75 F.3d at 490 (“The establishment of a minimum

labor standard does not impermissibly intrude upon

the collective bargaining process. The fact that the

parties are free to devise their own arrangements

through the collective bargaining process strengthens

the case that the statute works no intrusion on collective bargaining.”). The statute places no substantive

restrictions on the terms of collective bargaining

agreements and does not regulate or preclude speech

about unionization or labor issues. Plaintiffs’ cases

about industry advancement funds are inapposite—

those cases do not stand for the proposition that the

NLRB actually regulates industry advancement funds

or payments to them. Therefore, Plaintiffs fail to allege

App. 78

a cognizable legal theory that SB 954 is subject to

Garmon preemption. Plaintiffs’ claim on this ground is

DISMISSED.

B. First Amendment

The foundational question that the Court must

answer is whether ABC-CCC has pled a plausible

claim that SB 954 impinges on the exercise of its First

Amendment rights. The Court concludes that ABCCCC has not satisfied the plausibility standard.

SB 954 operates as a state subsidy of speech. Employers receiving public funds for construction projects

are allowed to credit payment of industry advancement fund fees against the obligation to pay the prevailing wage if they are obligated by a collective

bargaining agreement to pay those fees. Thus, the

Court’s analysis is controlled by the Supreme Court’s

speech subsidy cases, particularly Regan v. Taxation

with Representation, 461 U.S. 540 (1983) and Ysursa v.

Pocatello Education Association, 555 U.S. 353, 358–59

(2009). In those cases, the Supreme Court explained

that “although government may not place obstacles in

the path of a person’s exercise of freedom of speech,”

Regan, 461 U.S. at 549, nothing requires government

“to assist others in funding the expression of particular

ideas, including political ones,” Ysursa, 555 U.S. at 358.

“[A] legislature’s decision not to subsidize the exercise

of a fundamental right does not infringe the right, and

thus is not subject to strict scrutiny.” Regan, 461 U.S.

at 549.

App. 79

ABC-CCC argues that SB 954 is an obstacle to

speech because it burdens the ability of industry advancement associations with a pro-open shop perspective to fund their political activity. (Opp’n to Becerra

Mot. at 7; Compl. ¶ 26.) The statute thus discriminates

against certain speakers and viewpoints, and restricts

speech based on speaker and viewpoint. (Opp’n to

Becerra Mot. at 7–8; Compl. ¶¶ 25, 27–28.)

ABC-CCC’s argument fails for several reasons.

First, SB 954 “erects no barrier to speech.” Wisc. Educ.

Ass’n Council v. Walker, 705 F.3d 640, 646 (7th Cir.

2013) (upholding state statute prohibiting payroll deductions for certain types of unions against First

Amendment challenge). Employers that cannot take

advantage of the wage credit are not restricted from

speaking, nor are the industry advancement funds

that might receive fees from employers which cannot

take the credit. SB 954 says nothing about particular

speakers or viewpoints. It does not deny access to the

state subsidy depending on who the speaker is or what

he, she, or it might say. The statute is thus facially neutral.

ABC-CCC predicates its claim of speaker and

viewpoint discrimination on the assertion that it will

receive less “funding for [its] pro-open shop speech activities.” (Compl. ¶ 26.) But that assertion is tenuous

and speculative. The complaint assumes that ABCCCC will not receive any contributions from employers

who are now precluded from prevailing wage credits

and that the only industry advancement speakers that

will receive contributions will be funds with a

App. 80

viewpoint contrary to ABC-CCC. However, ABC-CCC

speaks on many issues that benefit the construction industry as a whole. (See Compl. ¶ 16.) Open shop employers and employees can still contribute to their

preferred industry advancement organizations. In fact,

non-union employees may continue to independently

contribute to ABC-CCC. Moreover, as a result of the

law, open shop employers can market that their employees bring home more wages than unionized employees, even though both open shop and closed shop

employers will be paying the same prevailing wage.

The open shop employers might be able to hire better

workers. Consequently, with improved quality and performance, open shop employers might win more public

works contracts and have more money to contribute to

industry advancement funds like ABC-CCC. Of course,

this chain of events is also hypothetical, but the point

is that the economic effects of the statute are unknown.

The statute is neutral and does not favor, target, or

suppress any particular speaker or viewpoint. “The

mere fact that, in practice, [industry advancement

funds receiving wage credits pursuant to a CBA] may

express different viewpoints [than industry advancement funds not receiving the credits] does not render

[SB 954] viewpoint discriminatory.” Walker, 705 F.3d

at 648.

The only obstacle to speech set forth by ABC-CCC

is the ability to fund its speech. Thus, “the ‘obstacle’ to

speech here is the cost of speaking, an obstacle the

state itself has not created.” Walker, 705 F.3d at 646.

App. 81

The Supreme Court has rejected such a burden as a

basis to apply strict scrutiny:

Although [ABC-CCC] does not have as much

money as it wants, and thus cannot exercise

its freedom of speech as much as it would like,

the Constitution does not confer an entitlement to such funds as may be necessary to realize all the advantages of that freedom.

Regan, 461 U.S. at 550 (internal quotation marks

omitted). SB 954 does not erect affirmative burdens or

requirements on speech. Rather, the California Legislature has at most expressed a preference to continue

to provide the subsidy for some groups, while refraining from doing so for others. A legislature’s “selection

of particular entities or persons for entitlement to” government largesse is a “matter of policy and discretion,”

that it “can, of course, disallow . . . as it chooses.” Id. at

549.

“What [ABC-CCC is] left with, then, is an argument that [the Court] should look past [SB 954’s] facial

neutrality as to viewpoint and [speaker] identity, and

conclude nevertheless that the [statute’s] real purpose

is to suppress speech by” open shops. Bailey v. Callaghan, 715 F.3d 956, 960 (6th Cir. 2013) (holding that

state statute prohibiting payroll deductions for public

school union dues did not violate First Amendment or

Equal Protection Clause). ABC-CCC contends that the

“legislative history reveals that SB 954’s true purpose

is to facilitate closed-shop advocacy and discourage

open-shop advocacy.” (Pls. Mot. at 18.) ABC-CCC’s arguments again fail. To begin, “[i]t is a familiar principle

App. 82

of constitutional law that this Court will not strike

down an otherwise constitutional statute on the basis

of alleged illicit legislative motive.” Bailey, 715 F.3d

at 960 (refusing to “peer past” the text of statute

“to infer some invidious legislative intention”). That

principle binds the Court here. The Court has taken

judicial notice of the legislative history and finds it

implausible that the Legislature had such an illicit

purpose. Rather, the legislative history reveals that the

Legislature was concerned about employers “credit[ing

industry advancement fund] payments towards their

prevailing wage obligation without the input or consent of the employees or their labor representatives.”

(Becerra Mot., Goldstein Decl., Ex. B.) That SB 954

might have the effect of burdening open-shop advocacy

“does not transform its facially neutral language into

an invidiously discriminatory statute.” Walker, 705

F.3d at 651. Similarly, the fact that SB 954 was sponsored by the Building Trades Council, a pro-union

group, “reveals little of the intent of the legislature as

a whole when it enacted” the statute. Id. at 652.

Thus, because the statute does not interfere with

a fundamental right or proceed along suspect lines, it

is subject to rational basis review. Regan, 4651 U.S. at

547–48; Fortuna Enters., 673 F.Supp.2d at 1013. Under

this standard, a law is upheld as long as it bears a rational relationship to a legitimate government interest. Heller v. Doe, 509 U.S. 312, 320 (1993). Rational

basis review requires the Court to “determine whether

there is any reasonably conceivable state of facts that

could provide a rational basis for the classification.” Id.

App. 83

“A legislative choice is not subject to courtroom factfinding and may be based on rational speculation unsupported by evidence or empirical data.” Id.

Here, it is clear that there is a rational basis for

SB 954. The Legislature was concerned that workers’

wages were being reduced without their consent. The

State has a legitimate interest in ensuring that workers are paid the amounts they are owed. The statute

now protects individual workers from being underpaid

in this manner. The law’s exception for “workers party

to a collective bargaining agreement could rationally

arise from the expectation that unionized workers are

better able to protect their interests with regard to

wages than non-unionized workers.” Fortuna Enters.,

673 F.Supp.3d at 1014 (citing Viceroy Gold, 75 F.3d at

490–91). Therefore, SB 954 satisfies rational basis review and the Court accordingly DISMISSES ABCCCC’s First Amendment claim.10

10

ABC-CCC’s equal protection claim relies on its contention

that it has a fundamental right to speak. However, the Court

finds that ABC-CCC has not pled a plausible claim that SB 954

interferes with the exercise of its First Amendment rights. The

Court concludes that the statute satisfies rational basis review.

Therefore, ABC-CCC’s equal protection claim also fails on the

merits for the same reasons discussed in the text. See, e.g., Armour v. City of Indianapolis, 132 S. Ct. 2073, 2080 (2012) (“As

long as the City’s distinction has a rational basis, that distinction

does not violate the Equal Protection Clause. This Court has long

held that ‘a classification neither involving fundamental rights

nor proceeding along suspect lines . . . cannot run afoul of the

Equal Protection Clause if there is a rational relationship between the disparity of treatment and some legitimate government

purpose.’ ”).

App. 84

III. Preliminary Injunction

Because Plaintiffs have not shown that they are

likely to succeed on the merits, the Court declines to

issue a preliminary injunction. Winter, 555 U.S. at 20.

CONCLUSION

The Court DISMISSES all three claims for relief

and GRANTS Becerra’s motion to dismiss (ECF No.

6), Su’s motion to dismiss (ECF No. 17), and Baker’s

motion for judgment on the pleadings (ECF No. 17.)

The Court DENIES Plaintiffs’ motion for a preliminary injunction. (ECF No. 11.)

IT IS SO ORDERED.

Dated: January 27, 2017

/s/ Roger T. Benitez

Hon. Roger T. Benitez

United States District Judge

App. 85

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

INTERPIPE CONTRACTING, No. 17-55248

INC. and ASSOCIATED

D.C. No.

BUILDERS AND CONTRAC- 3:16-cv-02247TORS OF CALIFORNIA

BEN-NLS

COOPERATION COMMITEEE, Southern District

INC.,

of California,

Plaintiffs-Appellants,

San Diego

v.

ORDER

XAVIER BECERRA, in his

official capacity as Attorney

General of the State of

California; et al.,

(Filed Sep. 21, 2018)

Defendants-Appellees.

App. 86

INTERPIPE CONTRACTING,

INC.,

Plaintiff-Appellant,

and

No. 17-55263

D.C. No.

3:16-cv-02247BEN-NLS

ASSOCIATED BUILDERS

AND CONTRACTORS OF

CALIFORNIA COOPERATION

COMMITEEE, INC.,

Plaintiff,

v.

XAVIER BECERRA, in his

official capacity as Attorney

General of the State of

California; et al.,

Defendants-Appellees.

Before: CALLAHAN and NGUYEN, Circuit

Judges, and PRATT,*District Judge.

The panel has voted to deny Interpipe’s petition

for panel rehearing and Judges Callahan and Nguyen

vote to deny Interpipe’s petition for rehearing en banc.

Judge Pratt recommends denying Interpipe’s petition

for rehearing en banc.

Judges Callahan and Nguyen vote to deny ABCCCC’s petition for rehearing en banc. Judge Pratt

* * The Honorable Robert W. Pratt, United States District

Judge for the Southern District of Iowa, sitting by designation.

App. 87

recommends denying ABC-CCC’s petition for rehearing en banc.

The full court has been advised of the petitions for

rehearing en banc and no judge has requested a vote

on whether to rehear the matter en banc. Fed. R. App.

P. 35. The petition for panel rehearing and the petitions for rehearing en banc are DENIED.

App. 88

U.S.C.A. Const. Art. VI cl. 2

Clause 2. Supreme Law of Land

This Constitution, and the Laws of the United States

which shall be made in Pursuance thereof; and all

Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law

of the Land; and the Judges in every State shall be

bound thereby, any Thing in the Constitution or Laws

of any State to the Contrary notwithstanding.

App. 89

29 U.S.C.A. § 158

(a)

Unfair labor practices by employer

It shall be an unfair labor practice for an employer –

(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title;

(2) to dominate or interfere with the formation

or administration of any labor organization or contribute financial or other support to it: Provided,

That subject to rules and regulations made and

published by the Board pursuant to section 156 of

this title, an employer shall not be prohibited from

permitting employees to confer with him during

working hours without loss of time or pay;

(3) by discrimination in regard to hire or tenure

of employment or any term or condition of employment to encourage or discourage membership in

any labor organization: Provided, That nothing in

this subchapter, or in any other statute of the

United States, shall preclude an employer from

making an agreement with a labor organization

(not established, maintained, or assisted by any

action defined in this subsection as an unfair labor

practice) to require as a condition of employment

membership therein on or after the thirtieth day

following the beginning of such employment or the

effective date of such agreement, whichever is the

later, (i) if such labor organization is the representative of the employees as provided in section

159(a) of this title, in the appropriate collectivebargaining unit covered by such agreement when

made, and (ii) unless following an election held as

App. 90

provided in section 159(e) of this title within one

year preceding the effective date of such agreement, the Board shall have certified that at least

a majority of the employees eligible to vote in such

election have voted to rescind the authority of such

labor organization to make such an agreement:

Provided further, That no employer shall justify

any discrimination against an employee for nonmembership in a labor organization (A) if he has

reasonable grounds for believing that such membership was not available to the employee on the

same terms and conditions generally applicable to

other members, or (B) if he has reasonable

grounds for believing that membership was denied

or terminated for reasons other than the failure of

the employee to tender the periodic dues and the

initiation fees uniformly required as a condition of

acquiring or retaining membership;

(4) to discharge or otherwise discriminate against

an employee because he has filed charges or given

testimony under this subchapter;

(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title.

(b) Unfair labor practices by labor organization

It shall be an unfair labor practice for a labor organization or its agents –

(1) to restrain or coerce (A) employees in the exercise of the rights guaranteed in section 157 of

this title: Provided, That this paragraph shall not

impair the right of a labor organization to prescribe its own rules with respect to the acquisition

App. 91

or retention of membership therein; or (B) an employer in the selection of his representatives for

the purposes of collective bargaining or the adjustment of grievances;

(2) to cause or attempt to cause an employer to

discriminate against an employee in violation of

subsection (a)(3) or to discriminate against an employee with respect to whom membership in such

organization has been denied or terminated on

some ground other than his failure to tender the

periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining

membership;

(3) to refuse to bargain collectively with an employer, provided it is the representative of his employees subject to the provisions of section 159(a)

of this title;

(4)(i) to engage in, or to induce or encourage any

individual employed by any person engaged in

commerce or in an industry affecting commerce

to engage in, a strike or a refusal in the course

of his employment to use, manufacture, process,

transport, or otherwise handle or work on any

goods, articles, materials, or commodities or to perform any services; or (ii) to threaten, coerce, or restrain any person engaged in commerce or in an

industry affecting commerce, where in either case

an object thereof is –

(A) forcing or requiring any employer or

self-employed person to join any labor or employer organization or to enter into any agreement which is prohibited by subsection (e);

App. 92

(B) forcing or requiring any person to cease

using, selling, handling, transporting, or otherwise dealing in the products of any other

producer, processor, or manufacturer, or to

cease doing business with any other person, or

forcing or requiring any other employer to recognize or bargain with a labor organization as

the representative of his employees unless

such labor organization has been certified as

the representative of such employees under

the provisions of section 159 of this title: Provided, That nothing contained in this clause

(B) shall be construed to make unlawful,

where not otherwise unlawful, any primary

strike or primary picketing;

(C) forcing or requiring any employer to recognize or bargain with a particular labor organization as the representative of his employees

if another labor organization has been certified as the representative of such employees

under the provisions of section 159 of this title;

(D) forcing or requiring any employer to assign particular work to employees in a particular labor organization or in a particular

trade, craft, or class rather than to employees

in another labor organization or in another

trade, craft, or class, unless such employer is

failing to conform to an order or certification

of the Board determining the bargaining representative for employees performing such

work:

App. 93

Provided, That nothing contained in this subsection shall be construed to make unlawful a

refusal by any person to enter upon the premises of any employer (other than his own employer), if the employees of such employer are

engaged in a strike ratified or approved by a

representative of such employees whom such

employer is required to recognize under this

subchapter: Provided further, That for the

purposes of this paragraph (4) only, nothing

contained in such paragraph shall be construed to prohibit publicity, other than picketing, for the purpose of truthfully advising the

public, including consumers and members of

a labor organization, that a product or products are produced by an employer with whom

the labor organization has a primary dispute

and are distributed by another employer, as

long as such publicity does not have an effect

of inducing any individual employed by any

person other than the primary employer in

the course of his employment to refuse to pick

up, deliver, or transport any goods, or not to

perform any services, at the establishment of

the employer engaged in such distribution;

(5) to require of employees covered by an agreement authorized under subsection (a)(3) the payment, as a condition precedent to becoming a

member of such organization, of a fee in an

amount which the Board finds excessive or discriminatory under all the circumstances. In making such a finding, the Board shall consider, among

other relevant factors, the practices and customs

of labor organizations in the particular industry,

App. 94

and the wages currently paid to the employees affected;

(6) to cause or attempt to cause an employer to

pay or deliver or agree to pay or deliver any money

or other thing of value, in the nature of an exaction, for services which are not performed or not to

be performed; and

(7) to picket or cause to be picketed, or threaten

to picket or cause to be picketed, any employer

where an object thereof is forcing or requiring an

employer to recognize or bargain with a labor organization as the representative of his employees,

or forcing or requiring the employees of an employer to accept or select such labor organization

as their collective bargaining representative, unless such labor organization is currently certified

as the representative of such employees:

(A) where the employer has lawfully recognized in accordance with this subchapter any

other labor organization and a question concerning representation may not appropriately

be raised under section 159(c) of this title,

(B) where within the preceding twelve months

a valid election under section 159(c) of this

title has been conducted, or

(C) where such picketing has been conducted without a petition under section 159(c)

of this title being filed within a reasonable period of time not to exceed thirty days from the

commencement of such picketing: Provided,

That when such a petition has been filed the

Board shall forthwith, without regard to the

App. 95

provisions of section 159(c)(1) of this title or

the absence of a showing of a substantial interest on the part of the labor organization, direct an election in such unit as the Board finds

to be appropriate and shall certify the results

thereof: Provided further, That nothing in this

subparagraph (C) shall be construed to prohibit any picketing or other publicity for the

purpose of truthfully advising the public (including consumers) that an employer does not

employ members of, or have a contract with,

a labor organization, unless an effect of such

picketing is to induce any individual employed by any other person in the course of

his employment, not to pick up, deliver or

transport any goods or not to perform any services.

Nothing in this paragraph (7) shall be construed

to permit any act which would otherwise be an unfair labor practice under this subsection.

(c) Expression of views without threat of reprisal or force or promise of benefit

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.

(d)

Obligation to bargain collectively

For the purposes of this section, to bargain collectively

is the performance of the mutual obligation of the

App. 96

employer and the representative of the employees to

meet at reasonable times and confer in good faith with

respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the

execution of a written contract incorporating any

agreement reached if requested by either party, but

such obligation does not compel either party to agree

to a proposal or require the making of a concession:

Provided, That where there is in effect a collective-bargaining contract covering employees in an industry affecting commerce, the duty to bargain collectively shall

also mean that no party to such contract shall terminate or modify such contract, unless the party desiring

such termination or modification –

(1) serves a written notice upon the other party

to the contract of the proposed termination or

modification sixty days prior to the expiration date

thereof, or in the event such contract contains no

expiration date, sixty days prior to the time it is

proposed to make such termination or modification;

(2) offers to meet and confer with the other party

for the purpose of negotiating a new contract or a

contract containing the proposed modifications;

(3) notifies the Federal Mediation and Conciliation Service within thirty days after such notice of

the existence of a dispute, and simultaneously

therewith notifies any State or Territorial agency

established to mediate and conciliate disputes

within the State or Territory where the dispute

App. 97

occurred, provided no agreement has been reached

by that time; and

(4) continues in full force and effect, without resorting to strike or lock-out, all the terms and conditions of the existing contract for a period of sixty

days after such notice is given or until the expiration date of such contract, whichever occurs later:

The duties imposed upon employers, employees, and

labor organizations by paragraphs (2) to (4) of this subsection shall become inapplicable upon an intervening

certification of the Board, under which the labor organization or individual, which is a party to the contract,

has been superseded as or ceased to be the representative of the employees subject to the provisions of section 159(a) of this title, and the duties so imposed shall

not be construed as requiring either party to discuss or

agree to any modification of the terms and conditions

contained in a contract for a fixed period, if such modification is to become effective before such terms and

conditions can be reopened under the provisions of the

contract. Any employee who engages in a strike within

any notice period specified in this subsection, or who

engages in any strike within the appropriate period

specified in subsection (g) of this section, shall lose

his status as an employee of the employer engaged in

the particular labor dispute, for the purposes of sections 158, 159, and 160 of this title, but such loss of

status for such employee shall terminate if and when

he is reemployed by such employer. Whenever the collective bargaining involves employees of a health care

App. 98

institution, the provisions of this subsection shall be

modified as follows:

(A) The notice of paragraph (1) of this subsection

shall be ninety days; the notice of paragraph (3) of

this subsection shall be sixty days; and the contract period of paragraph (4) of this subsection

shall be ninety days.

(B) Where the bargaining is for an initial agreement following certification or recognition, at least

thirty days’ notice of the existence of a dispute

shall be given by the labor organization to the

agencies set forth in paragraph (3) of this subsection.

(C) After notice is given to the Federal Mediation and Conciliation Service under either clause

(A) or (B) of this sentence, the Service shall

promptly communicate with the parties and use

its best efforts, by mediation and conciliation, to

bring them to agreement. The parties shall participate fully and promptly in such meetings as may

be undertaken by the Service for the purpose of

aiding in a settlement of the dispute.

(e) Enforceability of contract or agreement to

boycott any other employer; exception

It shall be an unfair labor practice for any labor organization and any employer to enter into any contract or

agreement, express or implied, whereby such employer

ceases or refrains or agrees to cease or refrain from

handling, using, selling, transporting or otherwise

dealing in any of the products of any other employer,

or to cease doing business with any other person, and

App. 99

any contract or agreement entered into heretofore or

hereafter containing such an agreement shall be to

such extent unenforcible and void: Provided, That

nothing in this subsection shall apply to an agreement

between a labor organization and an employer in the

construction industry relating to the contracting or

subcontracting of work to be done at the site of the construction, alteration, painting, or repair of a building,

structure, or other work: Provided further, That for the

purposes of this subsection and subsection (b)(4)(B) the

terms “any employer”, “any person engaged in commerce or an industry affecting commerce”, and “any

person” when used in relation to the terms “any other

producer, processor, or manufacturer”, “any other employer”, or “any other person” shall not include persons

in the relation of a jobber, manufacturer, contractor, or

subcontractor working on the goods or premises of the

jobber or manufacturer or performing parts of an integrated process of production in the apparel and clothing industry: Provided further, That nothing in this

subchapter shall prohibit the enforcement of any

agreement which is within the foregoing exception.

(f ) Agreement covering employees in the building and construction industry

It shall not be an unfair labor practice under subsections (a) and (b) of this section for an employer engaged

primarily in the building and construction industry to

make an agreement covering employees engaged (or

who, upon their employment, will be engaged) in the

building and construction industry with a labor organization of which building and construction employees

App. 100

are members (not established, maintained, or assisted

by any action defined in subsection (a) as an unfair labor practice) because (1) the majority status of such labor organization has not been established under the

provisions of section 159 of this title prior to the making of such agreement, or (2) such agreement requires

as a condition of employment, membership in such

labor organization after the seventh day following the

beginning of such employment or the effective date

of the agreement, whichever is later, or (3) such agreement requires the employer to notify such labor organization of opportunities for employment with

such employer, or gives such labor organization an

opportunity to refer qualified applicants for such employment, or (4) such agreement specifies minimum

training or experience qualifications for employment

or provides for priority in opportunities for employment based upon length of service with such employer,

in the industry or in the particular geographical area:

Provided, That nothing in this subsection shall set

aside the final proviso to subsection (a)(3): Provided

further, That any agreement which would be invalid,

but for clause (1) of this subsection, shall not be a bar

to a petition filed pursuant to section 159(c) or 159(e)

of this title.

(g) Notification of intention to strike or picket

at any health care institution

A labor organization before engaging in any strike,

picketing, or other concerted refusal to work at any

health care institution shall, not less than ten days

prior to such action, notify the institution in writing

App. 101

and the Federal Mediation and Conciliation Service of

that intention, except that in the case of bargaining for

an initial agreement following certification or recognition the notice required by this subsection shall not be

given until the expiration of the period specified in

clause (B) of the last sentence of subsection (d). The notice shall state the date and time that such action will

commence. The notice, once given, may be extended by

the written agreement of both parties.

App. 102

Cal.Labor Code § 1773.1

§ 1773.1. Employer payments

included in per diem wages

Effective: January 1, 2017

(a) Per diem wages, as the term is used in this chapter or in any other statute applicable to public works,

includes employer payments for the following:

(1)

Health and welfare.

(2)

Pension.

(3)

Vacation.

(4)

Travel.

(5)

Subsistence.

(6) Apprenticeship or other training programs authorized by Section 3093, to the extent that the cost of

training is reasonably related to the amount of the contributions.

(7) Worker protection and assistance programs or

committees established under the federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a),

to the extent that the activities of the programs or committees are directed to the monitoring and enforcement of laws related to public works.

(8) Industry advancement and collective bargaining

agreements administrative fees, provided that these

payments are made pursuant to a collective bargaining

agreement to which the employer is obligated.

App. 103

(9) Other purposes similar to those specified in paragraphs (1) to (5), inclusive; or other purposes similar to

those specified in paragraphs (6) to (8), inclusive, if the

payments are made pursuant to a collective bargaining

agreement to which the employer is obligated.

(b)

Employer payments include all of the following:

(1) The rate of contribution irrevocably made by the

employer to a trustee or third person pursuant to a

plan, fund, or program.

(2) The rate of actual costs to the employer reasonably anticipated in providing benefits to workers pursuant to an enforceable commitment to carry out a

financially responsible plan or program communicated

in writing to the workers affected.

(3) Payments to the California Apprenticeship Council pursuant to Section 1777.5.

(c) Employer payments are a credit against the obligation to pay the general prevailing rate of per diem

wages. However, credit shall not be granted for benefits

required to be provided by other state or federal law,

for payments made to monitor and enforce laws related

to public works if those payments are not made to a

program or committee established under the federal

Labor Management Cooperation Act of 1978 (29 U.S.C.

Sec. 175a), or for payments for industry advancement

and collective bargaining agreement administrative

fees if those payments are not made pursuant to a collective bargaining agreement to which the employer is

obligated. Credits for employer payments also shall not

App. 104

reduce the obligation to pay the hourly straight time

or overtime wages found to be prevailing. However, an

increased employer payment contribution that results

in a lower hourly straight time or overtime wage shall

not be considered a violation of the applicable prevailing wage determination if all of the following conditions are met:

(1) The increased employer payment is made pursuant to criteria set forth in a collective bargaining

agreement.

(2) The basic hourly rate and increased employer

payment are no less than the general prevailing rate

of per diem wages and the general prevailing rate for

holiday and overtime work in the director’s general

prevailing wage determination.

(3) The employer payment contribution is irrevocable

unless made in error.

(d) An employer may take credit for an employer payment specified in subdivision (b), even if contributions

are not made, or costs are not paid, during the same

pay period for which credit is taken, if the employer

regularly makes the contributions, or regularly pays

the costs, for the plan, fund, or program on no less than

a quarterly basis.

(e) The credit for employer payments shall be computed on an annualized basis when the employer seeks

credit for employer payments that are higher for public

works projects than for private construction performed

App. 105

by the same employer, unless one or more of the following occur:

(1) The employer has an enforceable obligation to

make the higher rate of payments on future private

construction performed by the employer.

(2) The higher rate of payments is required by a project labor agreement.

(3) The payments are made to the California Apprenticeship Council pursuant to Section 1777.5.

(4) The director determines that annualization would

not serve the purposes of this chapter.

(f )(1) For the purpose of determining those per diem

wages for contracts, the representative of any craft,

classification, or type of worker needed to execute

contracts shall file with the Department of Industrial

Relations fully executed copies of the collective bargaining agreements for the particular craft, classification, or type of work involved. The collective bargaining

agreements shall be filed after their execution and

thereafter may be taken into consideration pursuant

to Section 1773 whenever they are filed 30 days prior

to the call for bids. If the collective bargaining agreement has not been formalized, a typescript of the final

draft may be filed temporarily, accompanied by a statement under penalty of perjury as to its effective date.

(2) When a copy of the collective bargaining agreement has previously been filed, fully executed copies of

all modifications and extensions of the agreement that

affect per diem wages or holidays shall be filed.

App. 106

(3) The failure to comply with filing requirements of

this subdivision shall not be grounds for setting aside

a prevailing wage determination if the information

taken into consideration is correct.