Appellants Brief — Brown v. Hotel Employees
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NO. 83-573
Supreme Court of the Unitek States. eves
Ocroszr Tzrm, 1983 —
MARTIN DANZIGER, ACTING CHAIRMAN, DON THOMAS, COM-
MISSIONER; MADELINE McWHINNEY, COMMISSIONER;
CARL ZEITZ, COMMISSIONER, CONSTITUTING EY CASINO
CONTROL COMMISSION, STATE OF NEW JERSEY,
Appellants,
HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS
INTERNATIONAL UNION LOCAL 54 and FRANK GERACE,
PRESIDENT, HOTEL AND RESTAURANT EMPLOYEES AND
BARTENDERS INTERNATIONAL UNION LOCAL 54,
Appellees.
On Appeal from the United States Court of Appeals
for the Third Circuit
BRIEF FOR APPELLANTS
ROBERT J. GENATT*
General Counsel
Dated: January, 1984
‘Adame Prose Corp, 50 Park Place, Newark, New Jersey O7102—2a@01) eavectt
Questions Presented
1. Should the federal courts abstain from exercising
jurisdiction over a suit seeking to enjoin an ongoing
state administrative proceeding, where the state proceed-
ing was brought by the New Jersey Attorney General in
furtherance of New Jersey’s vital interest in maintaining
the integrity of its casino industry?
2. Does the National Labor Relations Act preempt sec-
tion 93 of the New Jersey Casino Control Act which, as
part of a pervasive and intensive system of casino industry
regulation, excludes persons from serving in positions of
authority in casino industry labor unions where those
persons have been convicted of certain crimes or have been
found to conduct union affairs under the influence of or-
ganized crime?
1 The following are the parties to the United States Court of
Appeals proceeding from which this appeal is taken: Hotel and
Restaurant Employees and Bartenders International Union Local
54; Frank Gerace, President, Hotel and Restaurant Employees
and Bartenders International Union Local 54; New Jersey Casino
Control Commission; Martin Danziger, Acting Chairman; Don
Thomas, Commissioner; Madeline McWhinney, Commissioner;
Carl Zeitz, Commissioner; State of New Jersey Department of
Law and Public Safety, Division of Gaming Enforcement; G.
Michael Brown, Director, Department of Law and Public Safety,
Division of Gaming Enforcement; Thomas Kean, Governor, State
of New Jersey. The International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America, Section 331,
were permitted to intervene in the District Court, but did not
participate in the proceedings before the Circuit Court.
TABLE OF CONTENTS
QUESTIONS PRESENTED .......----0-00.-.- rene
NEPAD TOLL ALCL!
- Oprnions BELow ...... SEY SENN WR? OOP ONAN EP ILE wh
JURISDICTION ..... Bieeh chee eee.
CONSTITUTIONAL Provisions AND Statutes INVOLVED
OU IMIN Bip ONIN CRIT act ncecencetcenenesmernsnmniniemrimesticiin
| a Nee OT
ARGUMENT:
Point I—In view of the ongoing state proceed-
ings in this matter, the Court of Appeals
should have abstained from exercising juris-
diction and ordered that the complaint be dis-
I ites kcniccdapeansintcnsalins ekiembiibubcieia aeaiaihaes
Point II—The ruling below, that New Jersey
is powerless to prevent the subversion of its
casino industry through criminal infiltration
of the industry’s labor organizations, is based
on a misapprehension of the doctrine of fed-
eral preemption .................
GROLIER TOE ATE
PAGE
10
13
49
TABLE OF CONTENTS iii
PAGE
Appendix
The following items are contained in appellants’
appendix to their jurisdictional statements:
A—Opinion of United States Court of Appeals
ak Bt PEE ea ewe la
B—Opinion of United States District Court for
the District of New Jersey ....0...........::sceeceseeee 78a
C—Order of United States District Court for
the District of New Jersey -................cccceeeeeees 129a
D—Opinion of New Jersey Casino Control
SINR 5, scccchaicasetedaserneeineindaicconmicistaanains 13la
E—Order of New Jersey Casino Control Com-
RR EET an WANED SO ba 206a
F—Supplemental Opinion of New Jersey Casino
Control Commission .................:.1-000-+- 208a
G—Judgment of United States Court of Ap-
peals for the Third Circuit ....... 217a
H—Order on Rehearing of United States Court
of Appeals for the Third Cireuit .........0...... 220a
I—Notices of Appeal to Supreme Court of the
United States ... vats .. 224a
J—The National Labor Relations Act, §7, 29
Peale OE OREO TED pencninssumeetiicunachgeatiiptneacdeiacees 235a
K—The Labor-Management Reporting and Dis-
closure Act of 1959, §504, 29 U.S.C. $504
(1976) ‘ 236a
L—The Employee Retirement Income Security
Act of 1974, §411, 29 U.S.C. $1111 (1976) .... 238a
iv TABLE OF CONTENTS
PAGE
M—The Employee Retirement Income Security
Act of 1974, §514, 29 U.S.C. $1144 (1976),
as amended by Act of Jan. 14, 1983, Pub.
L. No. 97-473, §301(a), §302(b), 96 Stat.
2611, 2613 (1983) ................ 24la
N—N.J. Stat. Ann. §5:12-93 (West Supp. 1983-
1984) scenipinhinannhhipabniak sedaidcnpinicementeabitiegnceae 246a
O—N.J. Stat. Ann.. §5:12-86 (West Supp. 1983-
BIE iaibbhapisdabichchiseuniGieahiereie 248a
b
The following items are contained in the parties
joint appendix to the briefs on the merits:
A—Chronological List of Relevant Docket En-
RINE saith saab ctadinescechciiasiresinnon tiie a la
B—Verified Complaint ........................--s+-0+e0-0 4a
C—Amended Complaint .220............e.ececceceseseeeeecenees 20a
D—Answer on Behalf of Defendants Martin
Danziger, e# al. .......... 38a
E—Answer on Behalf of Defendants G. Michael
Eh _ Sgeseibera ta elena iron a 4la
F—Order to Show Cause and Motion for Pre-
liminary Injunction ...... 49a
G—Motions for Dismissal and Judgment on the
Pleadings ...... 5da
H—Orders of United States Supreme Court Not-
ing Probable Jurisdiction 57a
I—N.J. Stat. Ann. §5:12-78 (West Supp. 1983-
TOD shcieiicanssaisinabiiedcitiplmantbiatbciheigsiaieticndbiials . 59a
J—N.J. Stat. Ann. §5:12-80 (West Supp. 1983-
1984) 60a
TABLE OF CONTENTS Vv
PAGE
K—N.J. Stat. Ann. 5:12-107(c) (West Supp.
IE \ seek Rladsihcsiiadaitehnatiachintecdiaivnehieaien 62a
L—N.J. Stat. Ann, 5:12-117 (West Supp. 1983-
| 1984) ..... nienintbacatengnonsicinreclestiaie voile 63a
vi TABLE OF AUTHORITIES
PAGE
Table of Authorities
Cases Cited
Abney v. United States, 431 U.S. 651 (1977) .............. 24
Amalgamated Association v. Wisconsin Employment
Relations Board, 340 U.S. 383 (1951) 23
Anonymous v. Association of the Bar of City of N.Y.,
515 F.2d 427 (2 Cir. 1975), cert. den., 423 U.S. 863
(1975) 19
Bally Manufacturing Corp. v. N.J. Casino Control
Commission, 85 N.J. 325, 426 A.2d 1000 (Sup. Ct.
1981), appeal dism., 454 U.S. 804 (1982) -....0.0.0.202.... 40
Belknap v. Hale, —— U.S. ——, 103 S.Ct. 3172
(1983) 35
Cal. Retail Liquor Dealers Ass’n v. Midcal Alum.,
445 U.S. 97 (1980) 37
Capitol Service, Inc. v. NLRB, 347 U.S. 501 (1954) .. 23
Chicago & N.W. Transp. Co. v. Kalo Brick & Tile
Co., 450 U.S. 311 (1981) ........ wai 37
City of New Orleans v. Dukes, 427 U.S. 297 (1976) 2,3
Cuyler v. Adams, 449 U.S. 433 (1981) 33
Deckert v. Independence Shares Corp., 311 U.S. 282
(1940) 2
DeVeau v. Braisted, 363 U.S. 144 (1960) ........ 28-31, 33, 34,
37, 38, 46
District of Columbia Court of Appeals v. Feldman,
— U.S. ——, 103 S.Ct. 1303 (1983) 15
El Dorado, Inc., 151 N.L.R.B. 579 (1965) .........22.....- 46, 47
Ex parte Young, 209 U.S. 123 (1908) 13
TABLE OF AUTHORITIES vii
PAGE
Farmer v. Carpenters Local 25, 430 U.S. 290 (1977) 35, 36
Fenner v. Boykin, 271 U.S. 240 (1926) -..0000... 13
Fitzgerald v. Catherwood, 388 F.2d 400 (2 Cir.
1968), cert. den., 391 U.S. 934 (1969) .....................0. 34
Florida Board of Business Regulation, Ete. v. NL
RB, 686 F.2d 1362 (11 Cir. 1982) .. 47
Garner v. Teamsters Local 776, 346 U.S. 486 (1953) 36
Geiger v. Jenkins, 401 U.S. 985 (1971) -.0000222 2... 16
Gibson v. Berryhill, 411 U.S. 564 (1973) 20... 16,18
Genosick v. Richmond United School District, 479
F.2d 482 (9 Cir. 1973) ......... ae 2
Hill v. Florida, 325 U.S. 538 (1945) 26-28, 34
Holy Spirit Ass’n. v. Town of New Castle, 480 F.
Supp. 1212 (S.D.N.Y. 1979) : 18
Huffman v. Pursue, Ltd., 420 U.S. 592 (1975) ........ 13, 14, 20
Hurwitz v. Directors Guild of America, Ine., 364
F.2d 67 (2 Cir. 1966), cert. den., 385 U.S. 971
(1966) .... 2
In re Green’s Petition, 369 U.S. 689 (1962) 0.00002... 23
In Re Martin, et al., 90 N.J. 295, 447 A.2d 1290
(Sup. Ct. 1982) 40
Inter. Longshoremen’s ete. v. Waterfront Com’n,
ete., 495 F. Supp. 1101 (S.D. N.Y. 1980), aff’d in
part and rev’d in part on other grounds, 642 F.2d
666 (2 Cir. 1981), cert. den., 454 U.S. 966 (1981) 46
Inter. Longshoremen’s Ass’n. v. Waterfront Com’n,
85 N.J. 606, 428 A.2d 1283 (Sup. Ct. 1981) ....... 28, 29
viii TABLE OF AUTHORITIES
PAGE
Juidice v. Vail, 430 U.S. 327 (1977) 13, 14
Kershner v. Mazurkiewicz, 670 F.2d 440 (3 Cir.
1982) (in banc) 2
Knight v. City of Margate, 86 N.J. 374, 431 A.2d
833 (Sup. Ct. 1981) .............. 40, 41
Lang v. Berger, 427 F.Supp. 204 (S.D.N.Y. 1977) 18
Local 824 v. Waterfront Com’n., 16 Mise. 2d 632,
182 N.Y.S. 2d 481, (Sup. Ct. 1958), aff’d, 7 A.D.
2d 630, 179 N.Y.S. 2d 843 (App. Div. 1958), app.
dism., 6 N.Y. 2d 861, 188 N.Y.S. 2d 562, 160 N.E.
2d 93 (Ct. App. 1959), cert. den., 361 U.S. 835
(1959) 32
Local 926, Inter. Union of mii: Eng. v. Jones, ——
U.S. ——, 103 S.Ct. 1453 (1983) ne eeeeeeeee 35, 45
Machinists v. Gonzales, 356 U.S. 617 (1958) ............ 40
MacRea v. Motto, 543 F. Supp. 1007 (S.D.N.Y.
TE DIG ee 18
Marina Associates v. Casino Police and Security
Officers, Local 2, 267 N.L.R.B. No. 163 (1983) ...... 44
McCune v. Frank, 521 F.2d 1152 (2 Cir. 1975) ........ 18
McDonald v. Metro-North Commuter R.R. Div., 565
F.Supp. 37 (S.D.N.Y. 1983) ... 18
Middlesex County Ethics Committee v. Garden State
Bar Association, 457 U.S. 423 (1982) 000000... 14, 20
Moore v. Sims, 422 U.S. 415 (1979) 2222.2........ccccsoeee 13
‘New Jersey-Philadelphia Presbytery v. New Jersey
State Bd. of Ed., 654 F.2d 868 (3 Cir. 1981) ....... 22, 23
New York State Dep’t of Social Serv. v. Dublino,
413 U.S. 405 (1973) 37
TABLE OF AUTHORITIES ix
PAGE
NLRB vy. Nash-Finch Co., 404 U.S. 188 (1971) .......... 23, 24
New York Racing Ass’n v. NLRB, 708 F. 2d 46
oe i ARES NER RR REPEC eaie me neeorely Sr mneoe 48
New York Racing Association v. NLRB, 110 L.R..
ee aS Ey Ae) ee er 48
Niglio v. New Jersey Racing Commission, 158 N.J.
Super. 182, 188, 385 A.2d 925 (App. Div. 1978) 41
Ohio Bureau of Employment Services v. ‘Hodory,
431 U.S. 471 (1977) 16
Prentis v. Atlantic Coast Line, 211 U.S. 210 (1908) 15
Rosko v. Pagano, 466 F. Supp. 1364 (D.N.J. 1979) 18
Rucker v. Wilson, 475 F. Supp. 1164 (E.D. Mich.
1979) 18, 19
San Diego Building Trades Council v. Garmon, 359
U.S. 236 (1959) me 35
Schachter v. Whalen, 445 F.Supp. 1376 (S.D.N-.Y.
1978), aff’d on other grounds, 581 F.2d 35 (2 Cir.
1978) ae
Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180
(1978) 35
Semmes Motors, Ine. v. Ford Motor Co., 429 F.2d
1197 (2 Cir. 1970) ....... 2
Simopoulis v. Virgina State Board of Medicine, 644
a le REP ite ccchiiastictctenopibaniinitanniinliincsietinn nie 17
State v. Rosenthal, 93 Nev. 36, 559 P.2d 830 (Sup.
Ct. 1977), appeal dism., 434 U.S. 803 (1977) .......... 38
Trainor v. Hernandez, 431 U.S. 434 (1977) 00202000... 13, 14
x TABLE OF AUTHORITIES
PAGE
United States ex rel. Webb v. Court of Common
Pleas, 516 F.2d 1034 (3 Cir. 1975) ow. 24
United States v. Fabrizio, 385 U.S. 263 (1966) ........ 39
United States Steel Corp. v. Multistate Tax Com’n.,
434 U.S. 452 (1978) ... 33
Uston v. Resorts International Hotel, Inc., 89 N.J.
163, 445 A.2d 370 (Sup. Ct. 1982) 40
Vaca v. Sipés, 386 U.S. 171 (1967) ....................... 36
Volusia Jai Alai, Inc., 221 N.L.R.B. 1280 (1975) ... 47
Watson v. Buck, 313 U.S. 387 (1941) 22
Williams v. Red Bank Board of Education, 502 F.
Supp. 1366 (D.N.J. 1980), aff’d, 662 F.2d 1008
I? aa aa a a 17,19
Younger v. Harris, 401 U.S. 37 (1971) -...202020... Passim
United States Constitution Cited
ee a A See. ~ $1
IS, Wika A OE cechisinientneicbnsitvabdpbaibecss y eiciicneoetiia 1, 3, 25
New Jersey Constitution Cited
rae A RS > | eennomecenn neem teen cnnerae 39
Art. 4, Sec. 7, par. 2D (West Supp. 1983) (1947) 4, 39
Statutes Cited
5 US.C.:
TY ERE rete 20 ol ae Re Oe Pe 29
TABLE OF AUTHORITIES xi
PAGE
15 U.S.C.:
OE RTE TO CCSD ccincnicensisniinninanivcinianinaieciianiniccasiti 39
18 U.S.C.:
ND CITED cctictcchinictterntntstinicetnintsenceicetocnenhsaniin 39
i Ie PI -siinctivraccesilee dpchtinstaciabinbicnsiincstncecinticinon 39
Sees. 1301-1307 (1976 & Supp. V 1981) ................ 39
Sec. 1953 (1976 & Supp. V 1981) .........22.......... 39
Sec.1961 et seq. (West Supp. 1981) —...-.202.. 43
28 US.C.:
UR. TEN | IE eiiteicnatnceeetninisctinnntignepentins _*
See. 1292(a)(1) (West Supp. 1983) 000... 1
Sec. 1331 (West Supp. 1983) ................-...c..csccsee-e 1
Sec. 1337 (West Supp. 1983) .................-.....ccccsce-s 1
Re I eitenceitahsecbeenseinicsennitieetctineinaitiiabenicnonshitinn 24
29 US.C.:
ee Re Ce tetas 44
gt TE SARS nereenY Ro 3, 9, 26
29 U.S.C.:
Re eee nee 28
a TD CRD peilertesicsieenichimnssiiipceinehet teint 28, 29, 47
SO ID (ID ctieciesndesieinseclisentthiticenstamilniienngsninne 28
opm, OGRE CTO) oncecccccesctesctesintienintsonh 9, 26
TABLE OF AUTHORITIES
PAGE
N.J. Stat. Ann. 5:12-1 et seq. (West Supp. 1983) 5
N.J. Stat. Ann. 5:12-1(b) (1)-(17) (West Supp.
1983)
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
Stat.
N.J.
NJ.
N.J.
N.J.
N.J.
N.J,
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
Ann. 5:12-1(b)(6)( West Supp. 1983) ........ 5, 40
Ann, 5:12-1(b)(9) (West Supp. 1983) ...... 5
Ann. 5:12-7 (West Supp. 1983) ................ 5
Ann, 5:12-8 (West Supp. 1983) ................ 5
Ann. 5:12-9 (West Supp. 1983) ................ 5
Ann. 5:12-12 (West Supp. 1983) ................ 5
Ann, 5:12-27 (West Supp. 1983) ................ 42
Ann, 5:12-51 (West Supp. 1983) .................. 16
Ann, 5:12-52(g) (West Supp. 1983) .......... 16
Ann. 5:12-58 (West Supp. 1983) ................ 16
Ann. 5:12-59 (West Supp. 1983) ................ 16
Ann, 5:12-60 (West Supp. 1983) ............... 16
Ann, 5:12-62 (West Supp. 1983) ................ 16
Ann. 5:12-63 (West Supp. 1983) ................
Ann. 5:12-64 (West Supp. 1983) ................ 6
Ann, 5:12-65 (West Supp. 1983) ................ 15
Ann, 5:12-67 (West Supp. 1983) ................ 15
Ann. 5:12-70(k) (West Supp. 1983) .......... 16
Ann. 5:12-76 (West Supp. 1983) ................ 7
Ann. 5:12-82(b) (West Supp. 1983) ........ 5
Ann, 5:12-84(b) (West Supp. 1983) ........ 5, 6
TABLE OF AUTHORITIES
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
NJ.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
N.J.
PAGE
Stat. Ann. 5:12-85(c) (West Supp. 1983) ........ 5, 6
Stat. Ann. 5:12-85(d) (West Supp. 1983) ............ 5
Stat. Ann. 5:12-86 (West Supp. 1983) ............ 6, 14, 18,
29, 45
Stat. Ann. 5:12-86(c) (West Supp. 1983) ........ 6-8
Stat. Ann. 5:12-86(c)(4) (West Supp. 1983) ... 29
Stat. Ann. 5:12-86(f) (West Supp. 1983)........ 6-8
Stat. Ann. 5:12-89 (West Supp. 1983) ............ 5, 6
Stat. Ann. 5:12-90 (West Supp. 1983) ................ 5
Stat. Ann. 5:12-90(b) (West Supp. 1983) ........ 6
Stat. Ann. 5:12-91 (West Supp. 1983) ............ 5
Stat. Ann. 5:12-92 (West Supp. 1983) ............ 5
Stat. Ann, 5:12-92(b) (West Supp. 1983) ........ 6
Stat. Ann. 5:12-92(d) (West Supp. 1983) ........ 6
Stat. Ann. 5:12-93 (West Supp. 1983) ............ passim
Stat. Ann. 5:12-93(a) (West Supp. 1983) ........ 6
Stat. Ann. 5:12-94 (West Supp. 1983) ............ 15
Stat. Ann. 5:12-104(b) (West Supp. 1983) ........ 5, 6
Stat. Ann. 5:12-107 (West Supp. 1983) ................ 1
Stat. Ann. 5:12-107(a)(1) (West Supp. 1983) ..... 17
Stat. Ann. 5:12-107(a)(2) (West Supp. 1983) 15
Stat. Ann. 5:12-107(a)(3) (West. Supp. 1983) 15
Stat. Ann. 5:12-107(a)(4) (West. Supp. 1983) 15
Stat. Ann. 5:12-107(a)(7) (West Supp. 1983) 15
xiv TABLE OF AUTHORITIES
PAGE
N.J. Stat. Ann. 5:12-107(d) (West Supp. 1983) ........ 15
N.J. Stat. Ann. 5:12-108 (West Supp. 1983) ...... 15
N.J. Stat. Ann. 5:12-110 (West Supp. 1983) ........... 16
N.J. Stat. Ann. 5:12-110(a) (West Supp. 1983) ........ 19
N.J. Stat. Ann. 5:12-133(a) (West Supp. 1983) ........ 26
N.J. Stat. Ann, 32:23-68 (1963) 32
N.J. Stat. Ann. 32:23-80 (1963) .........c.ccccccscccecscesescecerse 31
Title 29, N.Y. Unconsol. Laws:
See. 9933 (McKinney 1974) ..... . 29
Sec. 9868 (McKinney 1974) 32
Rules Cited
N.J. Ct. R.:
BR. 2:2-3(a) (1984) .....-ccccececeore 19
R. 26-6 (006) 2. wee 19
Other Authorities Cited
Commission on the Review of the National Policy
Toward Gambling, Hearings in Washington, D.C.
May 10, 1976 41
Final Report of Commission on the Review of the
National Policy Toward Gambling (1976) ............ 38, 39
Gorman, Basic Text on Labor Law Unionization and
Collective Bargaining (1976) ... 35
TABLE OF AUTHORITIES xv
Lawmakers Reveal Casino Guidelines, Newark Star
Ledger, Oct. 1, 1976, at 1 39
9 Moore’s Federal Practice, Sec. 110.25 at 271 (2 ed.
1970) 2
National Institute of Law Enforcement and Criminal
Justice, Law Enforcement Assistance Administra-
tion, The Development of the Law of Gambling:
STE TOIT “sahnsctinninnsisisinsssnctanilasinntdeshitonsmemnntonitaseniane 41
Public Hearing before the Assembly, State Govern-
ment, Federal and Interstate Relations Committee
of New Jersey Legislature on Assembly Bill No.
2366 (December 1976) iplilaitnsidindieincabeaibenstion 39
Public Hearing before the Senate Judiciary Com-
mittee of the New Jersey Legislature on Senate
Bill No. 1780 (March 2, 1977) ........ 39, 40
Report and Recommendation on Casino Gambling by
the Commission of Investigation of the State of
New Jersey (April 1977) s de ....40, 42, 43
Santaniello, Casino Gambling: The Elements of Ef-
fective Control, 6 Seton Hall Legis. J. 23 (1982) 42
Second Interim Report of the State Policy Group on
Casino Gambling (February 17, 1977) .................... 40, 43
Sen. Rep. No. 187, 86th Cong., 1 Sess., April 14,
1959, p. 6, U.S. Code Cong. & Admin. News, p. 2323
(1959) 28
Strongest Law in World Offered for Atlantic City
Casinos, N.Y. Daily News, Oct. 1, 1976, at 40 ........ 39
NO. 83-573
IN THE
Supreme Court of the United States
Ocroper Term, 1983
in
a
MARTIN DANZIGER, ACTING CHAIRMAN; DON
THOMAS, COMMISSIONER; MADELINE MoWHIN-
NEY, COMMISSIONER; CARL ZEITZ, COMMIS-
SIONER, CONSTITUTING THE CASINO CONTROL
COMMISSION, STATE OF NEW JERSEY;
Appellants,
HOTEL AND RESTAURANT EMPLOYEES AND BAR-
TENDERS INTERNATIONAL UNION LOCAL 54; and
FRANK GERACE, PRESIDENT, HOTEL AND RES-
TAURANT EMPLOYEES AND BARTENDERS IN-
TERNATIONAL UNION LOCAL 54,
Appellees.
On Appeal from the United States Court of Appeals
for the Third Circuit
a
=—
BRIEF FOR APPELLANTS
Opinions Below
The opinion of the United States Court of Appeals for
the Third Circuit is reported at 709 F. 2d 815 (3 Cir.
1983) and is reproduced at Ala-A77a.? The opinion of
the United States District Court for the District of New
Jersey is reported at 536 F. Supp. 317 (D.N.J. 1982) and
is reproduced at A78a-A128a. The opinion and supple-
mental opinion of the New Jersey Casino Control Com-
mission are unreported and are reproduced at A13la-
A205a and A208a-A215a.
Jurisdiction
These proceedings involve a claim that section 93 of the
New Jersey Casino Control Act, N.J. Stat. Ann. 5:12-93
(West Supp. 1983), is invalid under the Supremacy Clause
of the United States Constitution, U.S. Const. Art. VI
cel. 2, because it is preempted by federal labor legislation.
The District Court found that federal jurisdiction was
properly invoked under 28 U.S.C. §1331 (West Supp.
1983) and 28 U.S.C. §1337 (West Supp. 1983) (A90a).
Plaintiffs, a labor union and its president, moved in
the District Court for a preliminary injunction against
enforcement of section 93 (J A4Va-J A54a). Defendants, the
New Jersey officials charged with implementation of the
Casino Control Act, moved to dismiss the complaint on the
ground of abstention (JA55a-JA56a). The District Court
denied both motions. Plaintiffs appealed to the United
States Court of Appeals for the Third Circuit pursuant to
28 U.S.C. §1292(a)(1) (West Supp. 1983), and defendants
cross-appealed.
On June 6, 1983, by a two to one vote, the Court of
Appeals declared section 93 invalid (A3la; A33a) and
entered judgment reversing the denial of the preliminary
injunction, remanding for further proceedings, and dis-
missing the cross-appeals for lack of jurisdiction (A217a-
A219a). Although the Court dismissed the cross-appeals,
2 The appendix to appellants’ jurisdictional statements is referred
to as “A-a.” The joint appendix to the parties’ briefs on the
merits is referred to as “JA-a.”
2
it considered the issue raised on the cross-appeals, absten-
tion, as a possible ground for upholding the District Court’s
denial of the preliminary injunction, and determined the
issue on its merits against defendants (Al3a).
The Honorable Edward Becker, Circuit Judge, dis-
sented, contending that section 93 is not preempted. Judge
Becker also contended that the Court had jurisdiction over
the cross-appeals, stating: “Since injunctive relief should
not be granted if abstention is required, it seems quite
clear that the propriety of abstention is inextricably bound
with the review of a decision to grant or to deny pre-
liminary injunctive relief” (A40a, n.2), See also, 9 Moore’s
Federal Practice, §110.25 at 271, 273 (2 ed. 1970) ; Deckert
v. Independence Shares Corp., 311 U.S. 282, 287 (1940) ;
Kershner v. Mazurkiewicz, 670 ¥.2d 440 (3 Cir. 1982) (in
banc); Genosick v. Richmond United School District, 479
F.2d 482, 483 (9 Cir. 1973); Semmes Motors, Inc. v. Ford
Motor Co,, 429 F.2d 1197, 1201 (2 Cir. 1970); Hurwitz,
v. Directors Guild of America, Inc., 364 F.2d 67, 70 (2
Cir. 1966), cert. den., 385 U.S. 971 (1966). However,
Judge Becker agreed with the majority that the District
Court did not err in declining to abstain.
Defendants petitioned for rehearing in banc on June
20, 1983. The petition was denied by an evenly divided
Court on June 30, 1983. Defendants filed notices of appeal
to this Court on July 18 and August 3, 1983 (A224a-A234a).
Plaintiffs filed a motion to affirm. On November 28, 1983,
this Court noted probable jurisdiction.
The jurisdiction of this Court is invoked under 28
U.S.C. §1254(2) (1966). Although the Court of Appeals
remanded for further proceedings, presumably the is-
suance of a permanent injunction, it is clear that the un-
constitutionality of section 93 has been definitely and final-
ly adjudicated, that New Jersey has been enjoined from
enforcing the statute, and thus that the present appeal
lies under §1254(2). City of New Orleans v. Dukes, 427
U.S. 297, 301-302 (1976). The statute having been de-
clared unconstitutional, the entry of the permanent in-
junction by the District Court would be a mere formality.
There are claims in plaintiffs’ complaint which have
not been adjudicated. First, there is a claim that section
3
93 is violative of the First Amendment, which the Court
of Appeals declined to address because it had found the
statute unconstitutional on preemption grounds (A37a).
There is also a claim for money damages, as to which
there is a motion to dismiss on the ground of sovereign
iminunity pending in the District Court. However, it is
clear that the First Amendment question is now moot
and that the damage claim has no bearing on the con-
stitutionality of section 93. Thus, as the Court said in
City of New Orleans vy. Dukes, supra, 427 U.S. at 302, “the
policy underlying $1254(2)—ensuring that state laws are
not erroneously invalidated—will in no way be served by
further delay in adjudicating the constitutional issue pres-
ented.”
It is therefore respectfully submitted that the preemp-
tion issue, and the abstention issue which is inextricably
bound therewith, are properly before this Court.
Constitutional Provision and Statutes Involved
Article VI, cl. 2 of the United States Constitution pro-
vides :
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, and any
Thing in the Constitution or Laws of any State
to the Contrary notwithstanding.
Section 7 of the National Labor Relations Act, 29 U.S.C.
157 (1973), provides:
Employees shall have the right to self-organiza-
tion, to form, join, or assist labor organizations,
to bargain collectively through representatives of
their own choosing, and to engage in other con-
certed activities for the purpose of collective bar-
gaining or other mutual aid or protection, and
shall also have the right to refrain from any or
all of such activities except to the extent that
such right may be affected by an agreement re-
4
quiring membership in a labor organization as a
condition of employment as authorized in section
158(2)(8) of this title.
Section 93 of the New Jersey Casino Control Act, N.J. Stat.
Ann. 5:12-93 (West Supp. 1983), provides, in pertinent
part:
a. Each labor organization, group or affiliate seek-
ing to represent employees licensed or registered
under this act and employed by a casino hotel
or a casino licensee shall register with the com-
mission annually... .
b. No labor organization, union or affiliate reg-
istered or required to he registered pursuant to
this section and representing or seeking to repre-
sent employees licensed or registered under this
act may receive any dues from any employee li-
censed or registered under this act and employed
by a casino licensee or its agent, or administer
any pension or welfare funds, if any officer, agent,
or principal employee of the labor organization,
union or affiliate is disqualified in accordance with
the criteria contained in section 86 of this act.
The commission may for the purposes of this sub-
section waive any disqualification criterion consist-
ent with the publie policy of this act and upon
a finding that the interests of justice so require.
The full text of section 93 is reproduced at A246a-
A247a. Other relevant statutes are reproduced at A235a-
A255a and JA59a-J A64a.
Statement of the Case
In November 1976 the voters of New Jersey approved
an amendment to the state Constitution permitting the
Legislature to authorize casino gambling within the mu-
nicipality of Atlantic City, so long as all state revenues
derived therefrom were dedicated to reducing property
taxes and utility bills of senior citizens and disabled resi-
dents. N.J. Stat. Ann., Const. (1947), Art. IV, §7, par.
2D (West Supp. 1983).* In June 1977 the state Legisla-
% A subsequent amendment, in 1981, permitted revenues to also
be used for health and transportation benefits for senior citizens
and disabled residents.
5
ture adopted the New Jersey Casino Control Act, N.J.
Stat. Ann. 5:12-1 et seg. (West Supp. 1983) (the Act),
which authorized casino gaming in Atlantic City and put
in place an extraordinarily pervasive and intensive sys-
tem of regulation of the nascent casino industry.
The Act declares that it is the public policy of New
Jersey to extend strict regulation to all persons par-
ticipating in the casino industry ‘and related activities,
N.J. Stat. Ann. 5:12-1(b)(6) (West Supp. 1983), and
that it is in the vital interest of New Jersey to prevent
any direct or indirect participation of unsuitable persons
in casino and ancillary operations. N.J. Stat. Ann. 5:12-
1(b)(9) (West Supp. 1983).
In order to implement these legislative goals, the Act
imposes strict licensure and qualification requirements on
companies which own or operate casino hotels, N.J. Stat.
Ann. 5:12-82(b) (West Supp. 1983); officers, directors,
security holders, principal employees, ete. of such com-
panies, N.J. Stat. Ann. 5:12-85(c) and (d) (West Supp.
1983) ; investors and financial backers of such companies,
N.J. Stat. Ann. 5:12-84(b) (West Supp. 1983); persons
involved in the operation of casinos, N.J. Stat. Ann, 5:12-
9 and 89 (West Supp. 1983); other persons employed
in casino hotels.who have access to the casino, N.J. Stat.
Ann. 5:12-7 and 90 (West Supp. 1983); and companies
and individuals which provide goods and services to casino
hotels, N.J. Stat. Ann, 5:12-12 and 92 (West Supp. 1983).
In addition, the Act provides a system of registration
for all persons who work in casino hotels without hav-
ing access to the casino. N.J. Stat. Ann. 5:12-8 and 91
(West Supp. 1983). The Act also requires appellant New
Jersey Casino Control Commission (the Commission) to
review all contracts entered into by casino hotels, on the
basis of, inter alia, the qualification of the persons in-
volved, and to terminate any such contracts which it dis-
approves, N.J. Stat. Ann. 5:12-104(b) (West Supp. 1983).
Furthermore, the Act requires the Commission to assure
that no unqualified, disqualified or unsuitable persons have
any material involvement, direct or indirect, with casino
6
hotel operations. N.J. Stat. Ann. 5:12-64 (West Supp.
1983).
All of the licensure, qualification, registration and other
regulatory provisions described ebove* encompass a series
of disqualification criteria set forth in section 86 of the
Act, N.J. Stat. Ann. 5:12-86 (West Supp. 1983). Among
these disqualification criteria are the commission of cer-
tain designated crimes, N.J. Stat. Ann. 5:12-86(c) (West
Supp. 1983), and identification as a “career offender” or
member of a “career offender cartel,” or as an asso-
ciate of a career offender or member of a career offender
cartel, if the association is found to be “inimical to the
policy of this act and to gaming operations.” N.J. Stat.
Ann. 5:12-86(f) (West Supp. 1983). In most instances,
the regulatory requirements described above also entail
an affirmative burden of satisfying certain suitability eri-
teria, principally good character, honesty and integrity,
set forth in N.J. Stat. Ann. 5:12-89 (West Supp. 1983).
See, N.J. Stat. Ann. 5:12-104(b), -92(b), -92(d), -90(b),
-85(¢), -84(b) and -64 (West Supp. 1983).
The Act, in section 93, N.J. Stat. Ann. 5:12-93 (West
Supp. 1983), also requires labor organizations which rep-
resent or seek to represent persons employed in casinos
or casino hotels to register annually with the Commis-
sion. N.J. Stat. Ann. 5:12-93(a) (West Supp. 1983). Sec-
tion 93 further provides that no labor organization which
is registered or required to register may receive dues
from any casino industry workers, or administer pen-
sion or welfare funds, if any “officer, agent or principal
employee” of such labor organization is found to be
disqualified under section 86, unless the Commission waives
the disqualification consistent with the public policy of the
Act and in the interests of justice. N.J. Stat. Ann, 5:12-
93(b) (West Supp. 1983). Section 93 does not impose any
affirmative suitability criteria.
The Act creates two state agencies, both appellants here-
in: the Commission, which has general responsibility for
*The listing provided is by no means complete, but is merely
illustrative.
7
‘implementing the Act and has adjudicatory and regula-
tory powers, see, N.J. Stat. Ann. 5:12-63 et seq. (West
Supp. 1983); and the Division of Gaming Enforcement
(the Division), within the Office of the Attorney General,
which has investigatory and prosecutorial functions, See,
N.J. Stat. Ann. 5:12-76 et seq. (West Supp. 1983).
Appellee Hotel and Restaurant Employees and Bar-
tenders International Union Local 54 (Local 54) is the
largest union operating in the New Jersey casino indus-
try, and has registered under section 93 of the Act. Ap-
pellee Frank Gerace is the president of Local 54.
Following Local 54’s registration, the Division con-
ducted an investigation and, on May 11, 1981, filed a
report with the Commission in which it alleged that Local
54’s secretary-treasurer, Robert Lumio, and a member of
its exesutive board, Frank Materio, were disqualified
under section 86(¢) by reason of criminal convictions, and
that Lumio, Materio and union president Gerace were
disqualified under section 86(f) by reason of organized
crime associations.
The Commission scheduled a hearing on the allegations
in the Division’s report to commence on September 9,
1981. At a prehearing conference, Local 54 alleged that
sections 86 and 93 were unconstitutional. The Commis-
sion ruled that as an administrative agency it was with-
out authority to entertain facial challenges to the con-
stitutionality of provisions of its enabling statute. There-
after, on August 17, 1981, Local 54 and Gerace filed suit
against the Commission, the Division and the State in
the Federal District Court for the District of New Jer-
sey, seeking a declaratory judgment that sections 86 and
93 are unconstitutional, temporary and permanent injunc-
tive relief, and money damages. At the request of the
District Court, the Commission agreed to postpone the
scheduled hearing until the Court ruled on the motion for
a preliminary injunction.
On March 22, 1982, the District Court denied Local
54’s motion for a preliminary injunction, and also denied
the motion of the Commission and Division, grounded in
the principles of abstention, to dismiss the complaint (A78a-
A128a).
8
Local 54 and Gerace appealed the District Court’s order
denying the preliminary injunction to the United States
Court of Appeals for the Third Circuit, and the Com-
mission and Division cross-appealed, alleging that the
Court erred in refusing to abstain from exercising juris-
diction. Both the District Court and the Court of Appeals
denied motions brought by Local 54 and Gerace seeking
a temporary injunction pending appeal. The Commis-
sion therefore rescheduled the hearing on the allegations
in the Division’s report.
Before the hearing commenced, the Division filed a
second report, in which it alleged that two Local 54 busi-
ness agents, Eli Kirkland and Karlos LaSane, were dis-
qualified under section 86(c) because of criminal convic-
tions. The hearing, which encompassed the allegations in
both of the Division’s reports, began on June 8, 1982,
and continued periodically until September 28, 1982.
On September 28, 1982, the Commission rendered an
opinion (A13la-A205a) in which it analyzed the extensive
testimonial and documentary evidence which had been
presented to it, and concluded that Local 54 president
Gerace and executive board member Materio were dis-
qualified under section 86(f) because they were associated
with members of organized crime and conducted union
affairs under the influence of those criminal associates,
and that union business agent LaSane was disquali-
fied under section 86(c) because of a 1973 criminal con-
viction for interference with commerce (extortion), aiding
and abetting and conspiracy. The Commissioner also
found that business agent Kirkland had a disqualify-
ing conviction, but found evidence ot rehabilitation and
waived the disqualification. The Commission ordered
the removal of the three disqualified officials, and stated
that, if they continued to serve after October 12, 1982,
the union would be prohibited from collecting dues from
workers in the Atlantic City casino industry (A206a-
A207a). The Commission also directed the parties to
submit briefs on the applicability of the addditional statu-
tory remedy of prohibition of pension and welfare fund
administration.
9
Following the Commission’s decision and order, the
United States District Court issued an order enjoining
the Commission and Division from taking any further
steps to enforce section 93 against Local 54 pending reso-
lution of the appeal and cross-appeals pending in the
United States Court of Appeals (A129a-A130a). The in-
junction specifically did not prohibit the Commission from
considering the applicability of the additional section 93
remedy. On October 12, 1982, the Commission issued a
second opinion (A208a-A216), in which it ruled that the
two remedies in section 93 can be applied alterna-
tively, and that the dues prohibition remedy was suffi-
cient to effect the removal of the three disqualified Local
54 officials, which is the statute’s only intent and the
Commission’s only objective. The Commission therefore
determined not to apply the alternative statutory remedy
of prohibition of pension and welfare fund administra-
tion.
On November 11, 1982, Local 54 and Gerace appealed
the Commission’s disqualification order to the Superior
Court of New Jersey, Appellate Division. In due course,
Local 54 and Gerace filed briefs raising, inter alia, the
same issues raised in the then pending appeal in the
United States Court of Appeals. The Commission and
Division filed answering briefs.
On June 6, 1983, the United States Court of Appeals
issued an opinion (Ala-A77a), in which the majority ruled
that the District Court had erred in refusing to grant the
preliminary injunction requested by Local 54 and Gerace.
Specifically, the majority ruled that section 93 is pre-
empted by section 7 of the National Labor Relations Act,
29 U.S.C. §157 (1973), insofar as it empowers the Com-
mission to disqualify elected union officials (A3la), and
is preempted by the Employee Retirement Income Security
Act, 29 U.S.C. §§1001-1381 (1975), insofar as it empowers
the Commission to prohibt administration of pension and
welfare funds (A32a-A33a). The majority also held that
the Court was without jurisdiction over the cross-appeals,
but considered the abstention arguments advanced by the
10 ;
Commission and Division as a possible alternative ground
for upholding the denial of the preliminary injunction.
The majority ruled that the District Court did not err in
declining to abstain (A36a-A37a).
The Honorable Edward Becker, Cireuit Judge, dissented.
Although Judge Becker agreed with the majority that the
section 93 remedy relating to pension and welfare fund
administration is preempted by the Employee Retirement
Income Security Act (A38a), he found that section 93
is otherwise valid. Based on his analysis of congressional
labor policy and “in view of the colossal problems associ-
ated with casino gambling, and New Jersey’s interest in
preventing the incidence of such problems and the poison-
ing of its polity,” Judge Becker concluded that “federal
labor law does not preempt the Casino Control Act’s re-
strictions on the right of casino-industry employees to
select certain individuals as union officials” (A42a-A43a).
Judge Becker also dissented from the ruling that the
Court was without jurisdiction over the cross-appeals
(A40a, n.2), but agreed that abstention is inappropriate
in this case (A42a, n.3).
The Court of Appeals entered a judgment (A217a-
A219a) reversing the judgment of the District Court and
remanding for entry of an order enjoining the Commission
and Division from taking any action, pending final hearing,
to enforce section 93 against Local 54. The judgment also
dismissed the cross-appeals for lack of jurisdiction.
The Commission and Division appealed to this Court.
Local 54 and Gerace moved to dismiss the appeal in the
Superior Court of New Jersey, Appellate Division, without
prejudice, and the requested dismissal was granted.
Summary of Argument
I. Appellant New Jersey Casino Control Commission
contends that, contrary to the ruling of the United States
Court of Appeals, this case should be dismissed on the
basis of the abstention doctrine first enunciated in Young-
er v. Harris, 401 U.S. 37 (1971).
11
The primary relief sought in plaintiffs’ complaint was
an injunction against ongoing state administrative pro-
ceedings. Those proceedings were instituted by the New
Jersey Attorney General in vindication of the State’s
vital interest in protecting the integrity of its casino
industry. Although the proceedings were administrative
in nature, in view of their importance to the State and
the fact’ that full due process rights were accorded to
the parties, they merit the same deference due state
judicial proceedings. Admittedly, the administrative pro-
ceedings did not provide a forum for resolution of a
constitutional attack on the statute under which they
were instituted, but resort to the state appellate courts,
either on an interlocutory basis or at the conclusion of
the administrative hearing, was always available. At
the conclusion of the hearing Local 54 and Gerace did
appeal to the New Jersey Superior Court, Appellate Di-
vision, and raised the same constitutional issues present-
ed in this federal suit.
Under the principles of federalism and comity devol-
oped in Younger and its progeny, the injunction ordered
by the Court of Appeals is clearly inappropriate. The
Court has enjoined ongoing state proceedings of vital
interest to New Jersey and has substituted itself for
the New Jersey appellate courts. In deference to the
State and its institutions, the federal courts should ab-
stain from exercising jurisdiction in this case, and the
ease should be dismissed.
The Court of Appeals declined to abstain on the the-
ory that Younger is inapplicable because plaintiffs chal-
lenged the right of the State to maintain the pending
administrative proceedings. However, the Younger Court
ruled that the conducting of state proceedings does not
constitute irreparable harm justifying federal equitable
relief, and thus there is no reason why a challenge to
the validity of such proceedings should render Younger
inapplicable. The Court of Appeals has thus announced
a novel and ill-conceived exception to Younger and the
Commission respectfully submits that this Court should
12
reverse the judgment of the Court of Appeals and re-
mand to the District Court for entry for an order dis-
missing the complaint.
Il. The United States Court of Appeals, by a vote
of two to one, found that section 93 of the New Jersey
Casino Control Act is preempted by section 7 of the
National Labor Relations Act, and is therefore uncon-
stitutional under the Supremacy Clause.
The majority of the Court of Appeals ruled that sec-
tion 93 limits the right of employees to bargain col-
lectively through representatives of their own choosing,
as guaranteed by section 7 of the NLRA, and there-
fore that section 93 is “absolute{ly]” preempted (A27a-
A28a). However, as the applicable Supreme Court case
law makes clear, and as the dissent in the Court of
Appeals stated, the validity of section 93 cannot be ad-
judged without considering the deeply-rooted local inter-
ests which lead to its passage, as well as the minimal
disruption of federal labor policy which it entails. The
majority of the Court of Appeals specifically declined
to engage in any such weighing and balancing of the
state and federal interests at stake. The dissent did
engage in this balancing process, and concluded that sec-
tion 93 is valid. Indeed, this conclusion is manifest
in light of the vulnerability of New Jersey’s casino in-
dustry to criminal infiltration, and the history of such
infiltration of the industry in other jurisdictions, as well
as the slight intrusion on federal labor policy repre-
sented by New Jersey’s efforts to keep persons with
criminal records and organized crime associations out
of its casino industry labor unions.
The Court of Appeals therefore erred in ruling’ that
section 93 of the Casino Control Act is preempted by
section 7 of the National Labor Relations Act. If this
Court reaches the merits of the preemption issue, the
Commission respectfully submits that the judgment of the
Court of Appeals invalidating section 93 should be re-
versed.
13
ARGUMENT
I. In view of the ongoing state proceedings in this
matter, the Court of Appeals should have abstained
from exercising jurisdiction and ordered that the com-
plaint be dismissed.
The Commission and Division moved the District Court
to dismiss the complaint in this matter on the ground
of abstention, raising, inter alia, the abstention doctrine
first enunciated in Younger v. Harris, 401 U.S. 37 (1971).
The Court denied the motion (A91a). The Commission and
Division raised the argument again on cross-appeal to
the Circuit Court. The Court ruled, and the dissent agreed,
that the District Judge was correct in declining to ab-
stain.
In Younger v. Harris this Court reversed a District
Court order enjoining a pending state criminal prosecu-
tion. The Court grounded its decision on the traditional
doctrine that, absent extraordinary circumstances, a court
of equity will not restrain a criminal prosecution, and on
the “even more vital consideration” of “Our Federalism,”
i.e., the principle of comity between the federal and state
governments. The Court explained that this notion of com-
ity includes “a proper respect for state functions, a rec-
ognition of the fact that the entire country is made up
of a Union of separate state governments, and a con-
tinuance of the belief that the National Government will
fair best if the States and their institutions are left to
perform their separate functions in separate ways.” Id.
at 45; see also, Fenner v. Boykin, 271 U.S. 240 (1926);
Ex parte Young, 209 U.S. 123 (1908).
Although Younger dealt with a state criminal prose-
cution, subsequent cases have established that “Our Fed-
eralism” also prohibits federal court intervention in state
civil proceedings which involve the vindication or enforce-
ment of “important state interests.” See, e.g., Huffman v.
Pursue, Ltd., 420 U.S. 592 (1975); Juidice v. Vail, 430
U.S. 327 (1977) ; Trainor v. Hernandez, 431 U.S. 434 (1977) ;
Moore vy. Sims, 442 U.S. 415 (1979). As this Court stated
14
in Middlesex County Ethics Committee v. Garden State
Bar Association, 457 U.S. 423 (1982): “the policies un-
derlying Younger are fully applicable to noncriminal ju-
dicial proceedings when important state interests are in-
volved.”
As discussed at length in Point Two of this brief,
the state interests embodied in N.J. Stat. Ann, 5:12-93
and -86 (West Supp. 1983) are vital to New Jersey’s
struggle to assure the continuing viability and integrity
of its casino industry. The Commission’s hearing re-
garding Local 54 was conducted in furtherance of the
State’s compelling interest in attempting to prevent cri-
minal involvement from strangling this fledgling indus-
try. When compared to the interests at stake in the
state proceedings involved in cases such as Huffman
(action to enforce nuisance statute against pornographic
theater), Juidice (contempt action for failure to appear
at supplemental proceeding brought by judgment credi-
tors), and Trainor (action seeking return of welfare pay-
ments and attachment of defendants’ property), it is be-
yond dispute that the state interests involved here are
sufficient to justify invoking the Younger doctrine in a
civil context.
Nor should the fact the hearing which Local 54 sought
to enjoin was before a state administrative agency rath-
er than a court render the Younger abstention doctrine
inapplicable.
Although the Casino Control Commission is not a court,
it obviously acted in a judicial capacity in conducting
the hearing in question in this case. The Commission
adjudicated an action instituted by the state Attorney
General against certain officials of Local 54. In so do-
ing, the Commission accepted testimonial and document-
ary evidence, found facts, applied those facts to exist-
ing statutory law, and issued an appropriate order. This
Court has consistently held that “the nature of a pro-
ceeding depends not on the character of the body but
on character of the proceedings,” and that a proceed-
ing which “investigates, declares and enforces liabilities
15
as they stand on present or past facts and under laws
supposed already to exist” is judicial. District of Col-
umbia Court of Appeals v. Feldman, —— US. —,
103 S. Ct. 1303, 1312 (1983), quoting Prentis vy. Atlantic
Coast Line, 211 U.S. 210, 226 (1908). Clearly, the hear-
ing involved here was judicial in nature.
In adopting the Casino Control Act, the New Jersey
Legislature took great pains to assure that adjudicative
hearings before the Commission, such as the one involved
here, would be held in a trial-type atmosphere and with
the full panoply of due process protections. As pre-
viously noted, the Act creates two agencies, and thus
separates the investigatory and prosecutorial functions,
which are placed in the Division, from the adjudicative
function, which is placed in the Commission.
With regard to Commission hearings, the Act provides
procedures for the filing and service of complaints and
answers, N.J. Stat. Ann. 5:12-108 (West Supp. 1983),
and requires that the hearings be transcribed, N.J. Stat.
Ann. 5:12-107(a)(2) (West Supp. 1983), and that evi-
dence be taken under oath. N.J. Stat. Ann. 5:12-107
(a)(3) (West Supp. 1983). The Act also requires that
parties be afforded the right to call witnesses, produce
documentary evidence, cross-examine opposing witnesses,
impeach witnesses, produce rebuttal evidence, N.J. Stat.
Ann. 5:12-107(a)(4) (West Supp. 1983), and enter into
stipulations. N.J. Stat. Ann, 5:12-107(a)(7) (West Supp.
1983). There are provisions relating to judicial notice,
N.J. Stat. Ann. 5:12-107(d) (West Supp. 1983), and re-
hearings on the basis of newly discovered evidence. N.J.
Stat. Ann, 5:12-107(d) (West Supp. 1983). The Com-
mission is granted the power to issue subpoenas, admini-
ster oaths, and serve its process in the manner provided
in the rules of court, N.J. Stat. Ann. 5:12-65 (West
Snpp. 1983), and the right to grant testimoniai immunity.
N.J. Stat. Ann. 5:12-67 (West Supp. 1983). The Com-
mission is also required, if it denies an application, to
issue an order and a statement of reasons therefor, N.J.
Stat. Ann. 5:12-94 (West Supp. 1983), and the right of
16
direct appeal to the New Jersey appellate courts is guar-
anteed. N.J. Stat. Ann. 5:12-110 (West Supp. 1983).
The Act guarantees the independence of the Commission
members and staff through pre-employment restrictions,
N.J. Stat. Ann. 5:12-58 (West Supp. 1983), post-employ-
ment restrictions, N.J. Stat. Ann. 5:12-60 (West Supp.
1983), and a variety of ethical constraints. N.J. Stat.
Ann. 5:12-52(g)-59 and -62 (West Supp. 1983). The Act
also has provisions assuring the separation of the Com-
mission from the political process. N.J. Stat. Ann. 5:12-
51 and -70(k) (West Supp. 1983). In short, the Com-
mission functions very much in the manner of a court
and its hearings are very much in the nature of trials.
This Court first dealt with Younger in the context of a
trial-type administrative proceeding in Geiger v. Jenkins,
401 U.S. 985 (1971). There the Court summarily affirmed
a District Court’s dismissal of an action seeking to en-
join on constitutional grounds a license revocation hear-
ing before a State Board of Medical Examiners.
In Gibson v. Berryhill, 411 U.S. 564 (1973), in which
plaintiff sought to enjoin a license revocation hearing
before a State Board of Optometry, this Court observed
that “administrative proceedings looking toward the
revocation of a license to practice medicine may in proper
circumstances command the respect due court proceedings.
. 2? Id. at 576-577.
In Ohio Bureau of Employment Services v. Hodory, 431
U.S. 471 (1977), plaintiff, whose unemployment compensa-
tion claim was pending before the state Board of Review,
filed a federal suit challenging the state unemployment
compensation statute on the ground that, inter alia, it
was preempted by the federal statutory law. Before this
Court, the state authorities did not seek a dismissal on
the basis of Younger, and when that possibility was raised
at oral argument they “resisted the suggestion.” Jd. at 479.
This Court did not dismiss, noting that, when a state
voluntarily submits to a federal forum, principles of comity
17
and federalism do not require federal courts to “force
the case back into the State’s own system.” Jd. at 481.°
However, the Younger abstention issue was raised in
Hodory in one of the amicus briefs, and the Court chose
to discuss it. The Court said that Younger “reflects ‘a
system in which there is sensitivity to the legitimate in-
terests of both State and National Governments, and in
which the National Government, anxious though it may
be to vindicate and protect federal rights and federal
interests, always endeavors to do so in ways that will not
unduly interfere with legitimate activities of the States.’ ”
The Court added that Younger and its progeny are “de-
signed to allow the State an opportunity to ‘set its own
house in order’ when the federal issue is already before
a state tribunal.” Jd. at 480-481.
In Simopowis v. Virginia State Board of Medicine, 644
F. 2d 321, 326-327 (4 Cir. 1981), the Fourth Circuit com-
mented that “[t]he term ‘state tribunal’ in Hodory was
undoubtedly used advisedly and clearly would comprehend
a state administrative proceeding, particularly if the deci-
sion of the state administrative agency were subject to
appeal to the state courts under procedures permitting the
assertion of constitutional claims.”
In Williams v. Red Bank Board of Education, 662 F. 2d
1008, 1016 (3 Cir. 1981), the Third Circuit upheld a dis-
missal of a federal action by a teacher who was the sub-
ject of a pending tenure termination proceeding, stating:
. the fact that the pending state proceeding
is administrative rather than judicial should not
by itself foreclose the application of the Younger
doctrine. Administrative regulation often forms
a crucial aspect of a state’s implementation of its
laws, and to bar Younger abstention simply on
5As previously noted, the extarordinary regulatory apparatus
created to control the Atlantic City casino industry consists of two
separate state agencies, the Commission and the Division. Although
the Division now requests a determination by this Court of the
preemption issue, the Commission, which is the state adjudica-
tive agency whose process has been stayed by the federal courts,
asserts that a dismissal on the bases of Younger is appropriate.
18
the ground that the pending proceedings are ‘ad-
ministrative’ could easily undermine important
state policies and concerns. Such a result would
not respect the Supreme Court’s repeated admoni-
tions that the more vital consideration underlying
Younger is the notion of comity.
The Second Circuit has likewise stated that Younger is
applicable to state administrative proceedings. McCune
v. Frank, 521 F.2d 1152, 1157-1158 (2 Cir. 1975), and the
federal district courts have applied Younger in a variety
of administrative contexts. See, e.g., McDonald v. Metro-
North Commuter R.R. Div., 565 F.Supp. 37 (S.D.N-Y.
1983) (police disciplinary proceedings) ; MacRea vy. Motto,
543 F.Supp. 1007 (S.D.N.Y. 1982) (firefighter disciplinary
proceeding) ; Holy Spirit Ass’n y. Town of New Castle, 480
F. Supp. 1212 (S.D.N.Y. 1979) (zoning board hearing) ;
Rucker v. Wilson, 475 F. Supp. 1164 (E.D. Mich. 1979)
(medical board proceeding) ; Rosko v. Pagano, 466 F. Supp.
1364 (D.N.J. 1979) (police disciplinary proceeding) ;
Schachter v. Whalen, 445 F. Supp. 1376 (S.D.N.Y. 1978),
aff'd on other grounds, 581 F.2d 35 (2 Cir. 1978) (medi-
cal board hearing); Lang v. Berger, 427 F.Supp. 204
(S.D.N.Y. 1977) (medicaid disqualification hearing).
At least where, as here, an administrative tribunal is
adjudicating matters of vital concern to the State, and
affords the litigants the full panoply of due process rights,
there is no reason for Younger to be any less applicable
than it is where court proceedings are involved.
Another prerequisite for a Younger dismissal is that
the state proceedings provide “the opportunity to raise
and have timely decided by a competent state tribunal
the federal issnes involved.” Gibson v. Berryhill, supra,
at 577. Local 54 clearly has an adequate state forum in
which to raise its federal issues, Admittedly, the Com-
mission refused to rule on the constitutionality of N.J.
Stat. Ann. 5:12-86 and -93 (West Supp. 1983) when
requested to do so by Local 54. Although the Commis-
mission lacks the power as an administrative agency to
rule on the facial constitutionality of its enabling statute,
the state court system is fully competent to address such
19
issues. Pursuant to N.J. Ct. R. 2:5-6, Local 54 could have
applied for leave to appeal froin the Commission’s inter-
locutory decision.
Moreover, Local 54 always had the right, upon the
natural termination of the Commission’s hearing, to a direct
appeal to the New Jersey Superior Court, Appellate Divi-
sion. See, N.J. Stat. Ann. 5:12-110(a) (West Supp. 1983),
N.J. Ct. R. 2:2-3(a). As the District Court stated in Wil-
liams v. Red Bank Board of Education, 502 F. Supp. 1366,
1371 (D.N.J. 1980),
. Whether or not an administrative body can
competently determine sensitive First Amendment
issues, plaintiff’s opportunity to raise her First
Amendment claims in the state forum is adequate
because she has an appeal as of right to the New
Jersey Appellate Division which is a “forum com-
petent to vindicate any constitutional objections”.
In Anonymous v. Association of the Bar of City of
N.Y., 515 F.2d 427 (2 Cir. 1975), cert. den., 423 U.S. 863
(1975), the Court upheld the dismissal of an action seeking
to enjoin an attorney disciplinary proceeding, noting that
“Cw]hatever constitutional questions are involved can cer-
tainly be raised in the state courts. ...” Id. at 482.
Similarly, in Rucker vy. Wilson, 475 F. Supp. 1164 (E.D.
Mich. 1979), the District Court dismissed a federal suit
instituted during the pendency of a hearing before the
State Board of Medicine, stating that the available state
appeal from the administrative determination provided
“more than adequate protection for the constitutional rights
involved.” Jd. at 1166.
Not only has Local 54 always had the right to raise its
constitutional challenge to section 93 of the Casino Con-
trol Act in the New Jersey courts, it has in fact done so.
After the hearing before the Commission terminated, Local
54 and Frank Gerace appealed to the New Jersey Appel-
late Division, and raised the same issues presented in the
then pending appeal to the Third Circuit Court of Appeals.
At the request of Local 54 and Gerace, the state appeal
was dismissed without prejudice after the issuance of
20
the Third Circuit opinion. However, it is clear that the
State has provided “a forum competent to vindicate any
constitutional objections” which Local 54 seeks to raise,
and therefore that federal court intervention is unwar-
ranted. Huffman v. Pursue, Ltd., supra, 420 U.S. at 604.
Moreover, where, as here, the trial phase of the state
proceedings has been completed, federal court intervention
is particularly inappropriate, because it deprives the State
of its legitimate function of providing appellate court
review. The principles of comity and federalism which
under Younger are ill-served when federal courts substi-
tute themselves for state appellate courts. As this Court
noted in Huffman vy. Pursue, Ltd., supra, 420 U.S. at 608-
609, such intervention is even more disruptive and offensive
than pre-trial intervention by federal courts, and is “also
a direct aspersion on the capabilities and good faith of
state appellate courts.”
The District Court declined to apply Younger abstention
in the present case because, in its words, “the state pro-
ceedings have not been initiated by the state itself” (A91a).
On appeal to the Court of Appeals, the Commission and
Division argued that the proceedings against Local 54 clear-
ly were initiated by the State, i.e., by the Division of Gam-
ing Enforcement, and that, in any event, the controlling
consideration is the presence of an important state inter-
est, not initiation by the State. See, e.g., Middlesex County
Ethics Committee v. State Bar Association, supra, 457
USS. at 423.
The Cireuit Court also declined to apply Younger ab-
stention, but did not mention the “state initiation” test
utilized by the District Court. Thus, the Court apparently
rejected the District Court’s rationale. In its place, both
the majority and dissenting opinions of the Cireuit Court
reasoned that the principles of Younger are not applicable
here because Local 54 challenged the validity of the pro-
ceedings before the Commission. In the words of the
majority:
. when the issue tendered to the federal dis-
trict court is the very power, as a matter of fed-
21
eral law, to entertain a threatened proceeding,
the principles of comity and federalism which ap-
parently animate the Younger v. Harris rule are
totally inapplicable. [A5Ga-A37a].
The dissent agreed, stating that, while “at first blush,
this case appears to fall within the class of cases in which
the district courts should abstain from adjudicating the
claims at issue,” abstention is nonetheless inapplicable here
because:
Where an individual who is subject to state pro-
ceedings to which the federal courts would other-
wise defer raises a colorable claim that the pro-
ceedings themselves constitute a violation of a
constitutional or statutory right, the principles of
comity and federalism motivating Younger are
superseded. [A42a, n.3].
In ruling that Younger is rendered inapplicable by the
mere assertion that federal law protects against mainten-
ance of a state proceeding, both the majority and the
dissent overlooked the fact that Younger itself dealt with
a First Amendment challenge to the state statute under
which a criminal prosecution was being conducted. Never-
theless, this Court declared that the mere holding of the
state proceeding did not constitute irreparable harm justi-
fying equitable relief in federal court. Younger v. Harris,
supra, 401 U.S. at 46, 48-49. In the present case the Dis-
trict Court specifically ruled that the holding of the hear-
ing before the Commission would not constitute irrepar-
able harm (A107a-A108a; A125a-A128a), and neither of
the opinions in the Court of Appeals expressed any con-
trary conclusion. It is therefore unclear why the fact of
a challenge to the legitimacy of state proceedings justifies
federal court intervention in a case otherwise within the
purview of Younger.
In fact, the Younger Court said that federal interven-
tion in an ongoing state proceeding would not be justified
by even irreparable injury, unless it was “both great and
immediate.” Id. at 46. The Court went on to conclude
that only in cases where bad faith or harassment had been
demonstrated would federal injunctive relief be called
22
for. Id. at 46-50. Local 54 is not claiming the proceeding
against it was conducted in bad faith, but merely that it
was conducted under an unconstitutional statute.
The Younger Court noted one situation in which irrepar-
able harm could be shown even in the absence of bad
faith or harassment, i.e., where the statute under attack
was “flagrantly and patently violative of express consti-
tutional prohibitions in every clause, sentence and para-
graph, and in whatever manner and against whomever
an effort might be made to apply it.” Jd. at 57, quoting
Watson v. Buck, 313 U.S. 387, 402 (1941). The validity
of section 93 is discussed a length in Point II of this
brief. However, it is clear that section 93 does not fall
within the above-quoted exception to Younger, and neither
of the opinions of the Court of Appeals suggests that it
does. Rather, the Court created a new exception, which
renders Younger inapplicable whenever there is a color-
able claim that the holding of a state proceeding offends
a federal enactment.
In support of its conclusion, the majority below cited
New Jersey-Philadelphia Presbytery v. New Jersey State
Bd. of Ed., 654 F. 2d 868 (3 Cir. 1981), for the propo-
sition that, “absent federal district court intervention,
state agency orders which operate as prior restraints upon
the exercise of federally protected rights may by virtue
of the final judgment rule in 28 U.S.C. §1257 (1966), escape
any federal appellate review for long periods” (A3Ga).
The issue in the New Jersey-Philadelphia Presbytery case
was the applicability of Younger to a federal suit instituted
by persons who were not parties to an ongoing state action.
The Court said that where such persons cannot intervene
in the state action, and can only protect their interests
in a separate action under 42 U.S.C. $1983 (1981), they
might legitimately choose the federal forum because the
Supreme Court can review interlocutory injunctive orders
of lower federal courts but can only review final judg-
ments of state courts. 654 F. 2d at 883-884.
The New Jersey-Philadelphia Presbytery opinion was
issued over a vigorous dissent, which pointed out that
23
the majority misperceived the extent of Supreme Court
appellate jurisdiction. 654 F. 2d at 904-905. At any rate,
even the majority opinion in New Jersey-Philadelphia
Presbytery did not suggest that Younger is inapplicable
whenever it is claimed that an order of a state court or
agency restrains the exercise of some federal right. In
fact, Younger itself concerned a claim that the California
Criminal Syndicalism Act, under which the state criminal
prosecution there involved was instituted, inhibited the
exercise of First Amendment rights, 401 U.S. at 784, and
the Younger opinion does not even mention the possibility
that such an allegation could provide a justification for
a federal court to enjoin an ongoing state proceeding. To
the contrary, Younger denounced the implicit denial of
the equal ability of the state courts to order a fair and
competent determination of federal issues which inheres
in such an assertion.
As additional authority, the majority in the present
ease cited In re Green's Petition, 369 U.S. 689 (1962), and
Amalgamated Association v. Wisconsin Employment Re-
lations Board, 340 U.S. 383 (1951), for the proposition
that “the federal policy of preventing state courts from
eroding rights guaranteed by section 7 is so important
that as a matter of federal law a state court is without
power to hold one in contempt for violating an order it
had no power to enter” (App. A, 36a). These cases did
involve rights under section 7 of the National Labor Re-
lation Act, and did hold that “a state court is without
power to hold one in contempt for violating an injunction
that the state court had no power to enter by reason of
federal preemption.” Zn re Green’s Petition, 369 U.S. at
694; Amalgamated Association v. Wisconsin Employment
Relations Board, 340 U.S. at 386, 399. However, this was
a holding of general applicability and was not related to
any particular significance granted section 7 rights. In
addition, these cases come to this Court on certiorari from
the highest courts of the states involved, and did not en-
tail federal intervention in ongoing state proceedings.
Finally, the majority cited Capitol Service, Inc. v. NLRB,
347 U.S. 501 (1954), and NLRB vy. Nash-Finch Co., 404
24
U.S. 128 (1971), for the proposition that “[e]ven pend-
ing state proceedings may be enjoined on preemption
grounds” (App. A, 36a). Both of these cases involved
attempts by the National Labor Relations Board to re-
strain enforcement of injunctions issued by state courts
against peaceful picketing. In both cases the sole issue
was whether the so-called Anti-Injunction Act, 28 U.S.C.
§2283 (1978), precluded the granting of the requested re-
lief. In neither case was abstention raised or discussed.
The majority of the Court of Appeals stated that the
cases discussed above “suggest” that Younger is inap-
plicable where a federal plaintiff challenges the propriety
of state proceedings (A36a-A37a). It is respectfully sub-
mitted that these cases do not support the conclusion
' reached by the Court, and that Younger itself clearly pre-
cludes that conclusion.
The dissent placed its reliance on cases involving claims
of double jeopardy (A42a, n.3). For example, the dissent
cited Abney v. United States, 431 U.S. 651 (1977), hold-
ing that a denial of a claim of double jeopardy is an
appealable collateral order, and United States ex rel.
Webb v. Court of Common Pleas, 516 F.2d 1034, 1037 (3
Cir. 1975), holding that pretrial habeas corpus relief is
available to a defendant who seeks to avoid trial on the
ground of double jeopardy and whose double jeopardy
claims have been denied by the state’s highest court. These
cases, and the others cited by the dissent, are grounded
on the notion that the prohibition of double prosecution
for a single offense is intended to spare defendants the
embarrassment, expense and ordeal of a second trial.
Abney, 431 U.S. at 661-662; Webb, 516 F.2d at 1040-1041.
In Younger the Court, in discussing the showing of ir-
reparable harm which is necessary to justify federal in-
junctive relief against an ongoing state proceeding, stated:
Certain types of injury, in particular, the cost,
anxiety, and inconvenience of having to defend
against a single criminal prosecution, could not by
themselves be considered “irreparable” in the spe-
cial legal sense of that term. Instead, the threat
to the plaintiff’s federally protected right must
25
be one that cannot be eliminated by his defense
against a single criminal prosecution. [401 U.S.
at 46].
The cases cited by the dissent present a unique situa-
tion in which a trial itself constitutes an injury against
which a defendant is afforded federal constitutional pro-
tection, as contrasted with the Younger case, and the pres-
ent case, in which the holding of the single state pro-
ceeding does not constitute an irreparable injury. The cases
cited by the dissent clearly do not support the conclusion
that a plaintiff is entitled to federal relief whenever there
is a colorable allegation that some federal constitutional
or statutory right entitles him to avoid participating in a
single state proceeding.
In summary, it is respectfully submitted that both the
majority and dissenting opinions have announced a novel,
ill-conceived, and unsupported exception to the Younger
rule. If this exception is allowed to stand, and federal
plaintiffs can avoid the impact of Younger merely by al-
leging that they should not be subjected to state pro-
ceedings, the principles of comity and federalism underly-
ing the Younger abstention doctrine will be rendered mean-
ingless. The Commission therefore urges this Court to re-
mand to the District Court for entry of an order dismiss-
ing the complaint in this matter.
If. The ruling below, that New Jersey is powerless to
prevent the subversion of its casino industry through
criminal infiltration of the industry’s labor organiza-
tions is based on a misapprehension of the doctrine of
federal preemption.
The substantive issue in this case is whether section 93
of the New Jersey Casino Control Act, which seeks to pre-
vent corruption of the Atlantic City casino industry by
imposing certain disqualification standards on officials of
labor unions operating within that industry, so offends
national labor policy as to be invalid under the Supremacy
Clause, U.S. Const., Art. VI, el. 2.
The majority of the Court of Appeals held that section
93 is preempted by section 7 of the National Labor Rela-
tions Act, 29 U.S.C. §157 (1983), (A3la).*° According to
the majority, section 93, by empowering the Commission
to disqualify casino industry union officials, and to pro-
hibit dues collection if the disqualified officials continue
to serve, impermissibly intrudes on the absolute and un-
qualified section 7 right of employees to “bargain collec-
tively through representatives of their own choosing.” The
dissent concluded that section 7 rights are not absolute,
that section 93 does not offend national labor policy, and
that the two enactments can peacefully coexist.
Analysis of the preemption issue must begin with
this Court’s decision in Hill v. Florida, 325 U.S. 538
(1945). Hill involved a Florida statute which required,
in section 4, that union “business agents” obtain a state
license. A license could be denied to any applicant who
had not been a citizen of the United States for ten years,
had been convicted of a felony, or was not of “good moral
character.” The statute also required, in section 6, that
unions pay a $1.00 registration fee and file an annual
report with the Secretary of State of Florida. Violation
of section 4 or 6 was punishable as a misdemeanor.
Hill was a business agent within the meaning of the
Florida statute, but he had not applied for a license as
®The Court of Appeals also held that the section 93 remedy
relating to pension and welfare fund administration is preempted
by the Employee Retirement Income Security Act, 29 U.S.C. §§1001-
1381 (1975). However, this issue need not have been addressed
_by the Court of Appeals and need not be addressed by this Court,
because the pension and welfare fund remedy was not invoked by
the Commission in this case. If this Court does reach the
issue, the Commission adopts the arguments advanced by co-ap-
pellants Division of Gaming Enforcement, et al., in support of
the validity of this portion of the statute. However, the Commis-
sion alsq notes that, in view of the broadly-framed_ severability
clause of the New Jersey Casino Control Act, N.J. Stat. Ann.
5:12-133(a) (West Supp. 1983), it is clear that this remedy, should
it ultimately be found unconstitutional, could be severed without
altering the character or purpose of Section 93.
27
required by section 4, nor had his union registered as
required by section 6. The Florida courts enjoined Hill
from acting as a business agent until he obtained a license
and enjoined his union from functioning as such until it
registered.
This Court reversed, finding the statute preempted by
section 7 of the NLRA. The Court indicated that the filing
and registration provisions of the Florida statute were
valid, but that the criminal and injunctive sanctions had
the effect of denying Florida trade union members the
federally guaranteed “full freedom” to select bargaining
representatives of their own choosing. Jd. at 541-543.
The majority opinion in the present case found Hill
controlling (A3la).7 However, as the dissent recognized,
in view of the distinctions between section 93 of the Casino
Control Act and the statute invalidated in Hill, and the
development of federal statutory and case law since Hill,
section 93 cannot be so easily cast aside.
Hill involved an attempt to regulate all labor unions
in Florida, Seetion 93 only affects unions in a unique,
local industry, which operates in a single municipality.
The Florida statute imposed broad licensing standards,
including “good moral cheracter,” whereas section 93 refers
only to particular facts or circumstances and places the
burden on the State to demonstrate their existence. The
statute struck down in Hill was not grounded in any his-
torically-explained and deeply-felt local concern, but was
merely an attempt to erect a state regulatory system over
labor unions. Section 93 was enacted as part of an over-
all regulatory system designed to address New Jersey’s
deeply-rooted interest in protecting its fledgling casino in-
dustry from criminal infiltration. New Jersey is not at-
7In fact, the majority read Hill as compelling the conclusion
that section 93 is invalid in its entirety, and went so far as to
describe the hearing before the Commission as an “illegal pro-
ceeding” (A34a). As Judge Becker pointed out, even if the
case is read as invalidating the sanction provisions of section 93,
“Hill simply cannot be construed as affecting the validity of the
non-sanction provisions” (A52a, n.5).
28
tempting to regulate labor unions; it is attempting to
regulate casinos, and it is attempting to do so without con-
flicting with legitimate collective bargaining rights. Thus,
Hill is factually inapposite.
With respect to legal developments subsequent to Hill,
in 1959 Congress enacted the Labor Management Report-
ing and Disclosure Act, 73 Stat. 519 (1959), 29 U.S.C.
§§401-530 (1976). Section 504(a) of the LMRDA pro-
hibits individuals convicted of certain felonies from hold-
ing union office for five years thereafter. Congress im-
posed these disqualification criteria largely because state
and local authorities had failed to adopt “effective meas-
ures to stamp out crime and corruption [in unions] and
to guaranty internal union democracy... .” Sen. Rep. No.
187, 86th Cong., 1 Sess., April 14, 1959, p. 6; U.S. Code
Cong. & Admin. News, p. 2322 (1959), quoted in Jntern.
Longshoremen’s etc. v. Waterfront Comm’n, etc., 495 F.
Supp. 1101, 1123 (S.D. N.Y. 1980), aff’d in part and rev, in
part on other grounds, 642 F. 2d 666 (2 Cir. 1981), cert.
den. 454 U.S. 966 (1981).
That the section 504(a) disqualification criteria were
not intended to preclude state enactments in the area is
made clear by section 603(a) of the LMRDA, 29 U.S.C,
§603(a) (1975), which provides that “nothing in this chap-
ter shall reduce or limit the responsibilities of any labor
organization or any officer, agent, shop steward or other
representative of a labor organization ... under the laws
of any State.” Although the majority in the present case
said that section 603(a) only applies to state law remedies
for breach of fiduciary duties by union officials (A24a-
A27a), the dissent pointed out that there is no support
for such a restrictive reading in the legislative history
(A57a-A58a). Moreover, in DeVeau v. Braisted, 363 U.S.
144 (1960), Justice Frankfurter’s plurality opinion, in
which Justice Brennan concurred, declared that, in light
of section 603(a), “no inference could possibly arise that
[a New York statute imposing broader disqualification cri-
teria] is implicitly preempted by section 504(a).” Jd. at
157. Accord, Intern. Longshoremen’s Ass’n vy. Waterfront
29
Com’n, 85 N.J. 606, 613, 428 A.2d 1283, 1287 (Sup. Ct.
1981).
Thus, as of 1959 the “full freedom” of employees to
elect bargaining representatives was no longer absolute,
Congress having imposed limits in section 504(a) of the
LMRDA and having expressly refused to preempt the
the states from taking action to the same effect.®
In DeVeau v. Braisted, supra, this Court upheld, against
a preemption challenge, section 8 of the New York Water-
front Commission Act, Title 29, N.Y. Unconsol. Laws, §9933
(McKinney, 1974), which provides that no person shall
collect dues on behalf of a waterfront union if any officer
or agent of the union has been convicted of a felony and
has not been pardoned or granted a “certificate of good
conduct” from a parole board.
Section 8 of the Waterfront Commission Act is, if
anything, broader in scope than sections 93 and 86 of
the Casino Control Act. Unlike the New Jersey statutes
at issue here, section 8 does not allow waiver of a dis-
qualification or place any temporal limits on a disability.
Compare, N.J. Stat. Ann. 5:12-86(¢c) (4) (West Supp. 1983).
Justice Frankfurter (plurality opinion), noted that un-
der section 8 of the Waterfront Commission Act, water-
front employees do not have complete freedom of choice
in selecting bargaining representatives, because the choice
of a convicted felon would cause the union to be dis-
abled from collecting dues. ZJd. at 152. However, Jus-
tice Frankfurter added that section 8 did not conflict with
or seriously impede section 7 of the NLRA, and that
[t]he fact that there is some restriction due to
the operation of state law does not settle the issue
of pre-emption. The doctrine of pre-emption does
not present a problem in physies but one of ad-
justment because of the interdependence of fed-
SIt should also be noted that in 1978 Congress decreed that
any labor union seeking to represent employees of the federal gov-
ernment must be “free from corrupt influences or influences op-
posed to basic democratic principles,” and imposed substantial regis-
tration and filing requirements on such unions. Pub. L. No. 95-454,
5 U.S.C. §7120 (1978).
30
eral and state interests and of the interaction
of federal and state powers. ([Jd. at 152].
Justice Frankfurter continued:
It would misconceive the constitutional doctrine
of pre-emption—of the exclusion because of fed-
eral regulation of what otherwise is conceded
state power—to decide this case mechanically on
an absolute concept of free choice of representa-
tives on the part of employees, heedless of the
light that Congress has shed for our guidance.
The relevant question is whether we may fairly
infer a congressional purpose incompatible with
the very narrow and historically explained restric-
tions upon the choice of a bargaining representa-
tive embodied in §8 of the New York Waterfront
Commission Act. Would Congress, with a lively
regard for its own federal labor policy, find in
this state enactment a true, real frustration, how-
— dialectically plausible, of that policy? [Jd. at
153]
Upon examining the legislative record preceding the
enaclinent of section 8, Justice Frankfurter concluded that
the statute vindicated “a legitimate, compelling state inter-
est, namely, the interest in combating local crime infest-
ing a particular industry.” Jd. at 154-155. Balancing the
substantial local concern against the incidental infringe-
ment of the freedom of workers to elect representatives,
the Court concluded that section 8 was not preempted by
section 7 of the NLRA.
While DeVeau rejected an inflexible approach to sec-
tion 7 preemption issues in favor of a balancing of the
competing interests, in the present case the majority
of the Circuit Court ruled that, because section 93 in-
fringes upon the right of employees to elect repre-
sentatives of their own choosing, it is “absolute[ly]”
preempted and there is “neither occasion nor justification
for engaging in weighing or balancing” of the state and
federal interests involved (A27a-A28a). Thus, the majority
did exactly what Justice Frankfurter cautioned against,
i.e., misconceived the doctrine of preemption by “decid-
{ing] this case mechanically on an absolute concept of free
31
choice,” and declined to face the despositive question
of whether Congress would consider section 93 “a true,
real frustration” of national labor policy. DeVeau v.
Braisted, supra at 153.
According to the majority below, DeVeau carries no
force as precedent because it turned on congressional
approval of a bi-state compact, and because Justice Frank-
furter wrote only for a plurality. Both reasons are in-
valid.
The bi-state compact involved in DeVeau was an agree-
ment between New York and New Jersey to jointly regu-
late their common waterfront. As required by Art. I,
cl. 10, of the Constitution, the compact was submitted
to Congress, and it was approved. Section 8 of the
Waterfront Act was not part of the bi-state compact,
but was part of the New York implementing legisla-
tion. The New Jersey implementing legislation contained
an identical provision. N.J. Stat. Ann, 32:23-80 (1963).
Both states had enacted the implementing legislation prior
to the approval of the compact by Congress. However,
as Justice Frankfurter explained, in approving the com-
pact
Congress was fully mindful of the specific pro-
visions of §8. Not enly had §8 already been en-
acted by the States as part of the Waterfront
Commission Acts when the compact was submitted
to Congress, but, in the hearings held before
the House Committee on the Judiciary, it was
° specifically urged by counsel for the International
Longshoremens Association, as a ground of oppo-
sition to Congressional consent, that approval of
the compact by Congress would carry with it sanc-
tion of §8, [Citations omitted.] The ground of
objection to the section which is appellant’s pri-
mary reliance here, namely, that it conflicts with
existing federal labor policy, was urged as a
ground for rejection of the compact. [Jd. at 151.]
In light of this legislative background, Congress took
the unprecedented step of expressly consenting to the
implementing legislation, although it was not part of the
compact. Jd. at 151; 154. Thus, Congress expressed its
view that section 8 is compatible with federal labor policy.
32
Coagress did not amend or modify existing labor law,
since the compact itself stated:
This compact is not designed and shall not be
construed to limit in any way any rights granted
or derived from any other statute or any rule
of law for employees to organize in labor organi-
zations, to bargain collectively and to act in any
way individually, collectively, and through labor
organizations or other representatives of their own
choosing. .. .
N.J. Stat. Ann. 32:23-68 (1963); Title 29, N.Y. Unconsol.
Laws, §9868 (McKinney, 1974). Thus, the” compact em-
bodied provisions identical to section 7 of the NLRA. See,
Local 824 v. Waterfront Com’n., 16 Mise. 2d 632, 182
N.Y.S. 2d 481, 484 (Sup. Ct. 1958), aff’d, 7 A.D.2d 630, 179
N.Y.S. 2d 843 (App. Div. 1958), app. dism., 6 N.Y. 2d 861,
188 N.Y.S. 2d 562, 160 N.E. 2d 93 (Ct. App. 1959), cert.
den., 361 U.S. 835 (1959). Necessarily, then, Congress
approved a compact which by its terms embodies and
protects the statutory right of employees to bargain col-
lectively through representatives of their own choosing,
and at the same time expressly consented to implement-
ing legislation precluding convicted felons from serving
as labor union officials. The only conclusion to be drawn
is that Congress did not view the section 8 limitations
as an infringement of rights embodied in section 7 of
the NLRA.
As Justice Frankfurter explained, Congressional ap-
proval of the bi-state compact and the implementing leg-
islation relieved the Court of the task of having to “im-
aginatively summon the likely reaction of Congress to
the state legislation.” Jd. at 153. He concluded that,
in view of Congress’s clear statement on the subject,
“it would offend reason to attribute to Congress a pur-
pose to pre-empt the state regulation contained in 48.”
Id. at 154-55.°
®Clearly, this was the correct understanding of the compact,
for
(Footnote continued on following page)
33
Thus, DeVeau did not pivot on the existence of the
compact. Rather, the plurality opinion makes clear that
a reconciliation of interests is mandated, but that the
search for Congressional intent is paramount. The com-
pact merely provided an extraordinary opportunity for
Congress to directly express its view on the implement-
ing legislation. In short, DeVeau is not a bi-state com-
pact case and cannot be discarded on that basis. As
Judge Becker stated:
“Justice Frankfurter’s formulation strongly implies
that a Court without access to similarly conclusive
extrinsic evidence nevertheless should attempt to
determine whether Congress would have intended
to preclude the particular state legislation at issue.”
[AGlal).
As noted, the majority also saw no precedential value
in DeVeau because Justice Frankfurter’s opinion was only
a purality opinion. The majority said that Justice Bren-
nan, who concurred in the ruling that section 8 was not
preempted, “made it clear that he relied on Congres-
sional-intent in approving the compact” (A29a). On the
contrary, Justice Brennan considered the state interests
behind section 8, and said that he “believe[d] that New
York’s disqualification of ex-felons from waterfront union
offices, on all of the circumstances, and as applied to
this specific area, is a reasonable means for achieving
a legitimate aim... .” Jd. at 160-161.
In summary, DeVeau clearly stands for the proposition
that, in addressing a deeply-rooted and legitimate local
interest, a state may impose disqualification criteria
broader than those in section 504(a) of the LMRDA.
(Footnote continued from preceding page)
. . the requirement that Congress approve a compact is to
obtain its political judgment: Js the agreement likely to
interfere with federal activity in the area, is it likely to
disadvantage other States to an important extent, is it a
matter that would better be left untouched by state and
federal regulation? [Cuyler v. Adams, 449 U.S. 433, 441,
n.8 (1981), quoting United States Steel Corp. v. Multistate,
Tax Com’n., 434 U.S. 452, 485 (1978), White, J. dis-
senting; emphasis added].
34
However, the DeVeau Court also stated that it was not
overruling Hui v. Florida, see, 363 U.S. at 152, which,
of course, was predicated on the “full freedom” of em-
ployees to elect representatives of their own choosing.
Certainly, it cannot be contended that section 8 of the
Waterfront Commission Act, or section 93 of the Casino
Control Act, do not in some measure limit the full free-
dom of certain employees to elect representatives. It thus
must be concluded that DeVeau does to some extent
modify Hill. It is likewise clear that section 504(a) of
the LMRDA limits “full freedom” and therefore modifies
the Hill rule.
While the Commission is not asking this Court to
overrule Hill, it is asking the Court to recognize that
the Hill doctrine of “full freedom” is not absolute,
and that, in light of DeVeauw and 504(a), the doc-
trine admits of an exception in cases where a historically-
explained, deeply-felt local concern has been addressed
by the imposition of certain limited disqualification cri-
teria on trade union officials.*° Moreover, recognition of
such an exception to the notion of “full freedom” would
not, in fact, call upon this Court to do anything other than
to treat this case in accordance with its own established
and often repeated guidelines for dealing with NLRA
preemption issues.
Throughout the existence of the NLRA, Congress
has refrained from giving direction as to its in-
10 Although the majority below stated that the Commission and
Division contended that DeVeau overruled Hill (A28a), the dis-
sent correctly pointed out that no such argument was made (A63a,
n.14). The continuing validity of Hill has been questioned, Fitz-
gerald v. Catherwood, 388 F.2d 400, 460 (2 Cir. 1968), cert.
den., 391 U.S. 934 (1969), but the Commission has never con-
tended that the case has been overruled and does not now con-
tend that it should be overruled. Rather, the Commission be-
lieves that the result in Hill might well be the same today, even
under the balancing principles espoused by this Court in more
recent preemption cases. However, it is the sweeping and abso-
lute language of the Hill decision which must be delimited to
permit the appropriate competing-interest analysis.
35
tended preemptive effect, and thus left the issue of
preemption to the courts. Farmer y. Carpenters Local
25, 430 U.S. 290, 296 (1977), Gorman, Basic Text on Labor
Law Unionization and Collective Bargaining, 776 (1976).
As the Court stated in Garner vy. Teamsters Local 776,
346 U.S. 485, 488 (1953), the NLRA “leaves much to the
states, although Congress has refrained from telling us
how much.”
Faced with Congressional silence, this Court has devel-
oped a preemption doctrine based primarily on two com-
peting considerations—the need for uniform national labor
regulation under the NLRA, and the recognition that state
regulation of activity which is merely a peripheral con-
cern of the NLRA, or which touches interests deeply
rooted in local feeling and responsibility, must be allowed
to stand. San Diego Building Trades Council v. Garmon,
359 U.S. 236, 233-244 (1959); Farmer v. Carpenters Local
25, supra at 295-296; Belknap v. Hale, —— US. —,
103 S.Ct. 3172, 3177 (1983). The ultimate objective is
to discover Congressional intent, a frequently difficult
task which can only be undertaken on a case by case
basis. For this reason, the Court has refused to de-
clare state regulation preempted solely because it in-
volves labor policy in some way. Sears, Roebuck & Co.
v. San Diego County District Council of Carpenters, 436
U.S. 180 (1978).
Recently, in Local 926, Inter. Union of Oper. Eng. v.
Jones, U.S. ——, 103 S. Ct. 1453, 1458-1459 (1983)
the Court reiterated its approach to NLRA preemption
issues as follows:
First, we determine whether the conduct that the
sate seeks to regulate or to make the basis of
liability is actually or arguably protected or pro-
hibited by the NLRA. Garmon, supra, 359 U.S.,
at 245, 79 S. Ct., at 779; [other citations omitted].
Although the “Garmon guidelines [are not to be
applied] in a literal, mechanical fashion”, Sears,
Roebuck & Co. v. Carpenters, [436 U.S. 180] at
188, 98 S. Ct., [1745] at 1752 [(1978)], if the
conduct at issue is arguably prohibited or pro-
36
tected otherwise applicable state law and proced-
ures are ordinarily preempted. Farmer, supra,
430 U.S., at 296, 97 S. Ct., at 1061. When, how-
ever, the conduct at issue is only a peripheral
concern of the Act or touches an interest so deeply
rooted in local feeling and responsibility. that, in
the absence of compelling congressional direction,
it could not be re seme that Congress intended
to deprive the state of the power to act, we re-
fuse to invalidate state regulation or sanction of
the conduct. Garmon, supra, 359 U.S., at 243-
244, 79 S. Ct. at 778.
In the present case the majority of the Court of Appeals
misapprehended the Garmon rule, and established its own
rule of absolute preemption where a state regulation in
any way implicates or restricts activity protected by sec-
tion 7. In order to justify this rule, the majority re-
stricted the Garmon balancing approach to cases where
the State seeks to regulate conduct which is not pro-
tected by section 7, “but is nevertheless federally regu-
lated” (A27a).
Garmon does not establish two preemption doctrines, one
absolute and one relative. Local 926 clarifies that Garmon
establishes a single rule under which state regulation
of matters actually or arguably within the purview of
the NLRA is ordinarily, but not necessarily preempted.
As explained in Farmer v. Carpenters Local 25, supra,
430 U.S. at 296-297:
. the same considerations that underlie the
Garmon rule have led the Court to recognize ex-
ceptions in appropriate classes of cases. We have
refused to apply the pre-emption doctrine to ac-
tivity that otherwise would fall within the scope
of Garmon if that activity “was a merely peri-
pheral concern of the Labor Management Rela-
tions Act . . . [or] touched interests so deeply
rooted in local feeling and responsibility that, in
the absence of compelling congressional direction,
we would not infer that Congress had deprived
oy States of the power to act.” Garmon at 243-
. . . These exceptions “in no way undermine the
vitality of the pre-emption rule.” [Vaca v. Sipes]
37
386 U.S. [171] at 189 [(1967)]. To the contrary,
they highlight our responsibility in a case of this
kind to determine the scope of the general rule
by examining the state interests in regulating the
conduct in question and the potential for inter-
ference with the federal regulatory scheme.
As this Court further explained in Local 926, supra,
103 S.Ct. at 1458:
The question of whether regulation should be al-
lowed because of the deeply-rooted nature of the
local interest involves a sensitive balancing of any
harm to the regulatory scheme established by Con-
gress .. . and the importance of the asserted
cause of action to the state as a protection to
its citizens. See Sears, supra, 436 U.S., at 188-
89, 98 S. Ct., at 1752; Farmer, supra, 430 U.S.,
at 297, 97 S. Ct. at 1061.
The respect for state enactments demonstrated in Gar-
mon, DeVeauw and the other cases cited herein is by
no means unique to NLRA preemption issues. This Court
has consistently held that the “existence of federal su-
premacy is not lightly to be presumed,” New York State
Dep’t of Social Serv. v. Dublino, 413 U.S. 405, 413 (1973),
and, indeed, is not favored i the absence of a persua-
sive showing that the nature of the regulated subject
matter permits no other conclusion or that the Con-
gress has unmistakably so ordered. Chicago & N.W.
Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311 (1981).
Nor is there any basis to conclude, as the majority below
seems to have done, that section 7 rights have somehow
acquired a status which places them outside of the normal
preemption analysis. The Garmon balancing approach
clearly establishes that this is not the case." When
* WIn-Cal. Retail Liquor Dealers Ass'n v. Midcal Alum., 445
U.S. 97 (1980), the Court was faced with a conflict between
the Sherman Act, 15 U.S.C. §1 et seg., which it described as “the
Magna Carta of free enterprise,” id. at 111, and California’s wine
pricing statute. The Court ruled that it was required to “harmo-
(Footnote continued on following page)
38
the required balancing of the federal and state interests
involved in the present case is performed, the result
must be similar to that reached by the Court in DeVeau,
and the same as that espoused by the dissent in the
Court of Appeals, i.e., that section 93 is not preempted
by section 7 of the NLRA.
As Judge Becker concluded, it is beyond dispute that
the concerns of New Jersey’s Legislature and citizenry
embedied in section 93 “cannot be characterized as any-
thing less than ‘deeply rooted in a local feeling and
responsibility’ ” (A64a; A72a). The District Judge had
reached the same conclusion in his opinion (Al06a). In-
deed, this conclusion is manifest in light of the history
and purpose of section 93.
Section 93 is one part, albeit an important part, of
New Jersey’s effort to control gaming and harness its
economic potential for the public welfare. Gambling itself
is distinctively a state problem that is to be governed,
controlled, and regulated by the individual states. State
v. Rosenthal, 93 Nev. 36, 559 P. 2d 830, 836 (Sup.
Ct. 1977), appeal dism., 484 U.S. 803 (1977). For
its part, the federal government has traditionally re-
frained from interferring with the freedom of the states
to determine their own gambling policies. Congress has
generally protected the autonomy of the states, by exempt-
ing state-legalized gambling from the application of the
federal criminal laws. In fact, Congress has justified
its actions as designed to assist the states in the en-
forcement of their gambling laws. See, Final Report
(Footnote continued from preceding page)
nize state and federal powers,” id. at 110, and to reconcile the
“competing state and federal interests” involved. Jd. at 111. Thus,
in dealing with anti-trust statutes, which are certainly as central
to our economic and political system as federal labor laws, this
Court has balanced competing local and national interests, and has
been reluctant to cast aside state enactments which are intended
to control an industry posing unusual regulatory difficulties and
potential harm to the State and its residents.
39
of Commission on the Review of the National Policy
Toward Gambling (1976), at 9, 11.”
In New Jersey gambling was long prohibited by the
State Constitution. See, N.J. Const. of 1844, Art 4, §7,
par. 2 (as amended 1897). In 1939 the Constitution was
amended to allow pari-mutuel wagering in horse races
at legalized tracks. In 1947 New Jersey adopted a new
Constitution, which, in Art. 4, §7, par. 2, prohibited all
gambling, except for bingo games, lotto games and raffles
held by certain charities, unless approved by the citizens
in a general election.
In 1974 the voters of New Jersey rejected a refer-
endum to allow legalized casino gambling throughout the
State. In 1976 they approved a referendum to permit
casinos only in Atlantic City, and thereby authorized
adoption of the Casino Control Act. However, they did so
only after they were promised that New Jersey would
have the “strongest regulation of casinos in the world.”
See, e.g., Strongest Law in World Offered for Atlantic
City Casinos, N.Y. Daily News, Oct. 1, 1976, at 40; Law-
makers Reveal Casino Guidelines, Newark Star Ledger,
Oct. 1, 1976, at 1 (A66a).
Public hearings on the drafting of the Casino Control Act
were held and numerous interested parties offered com-
ments. See, Public Hearing before the Assembly, State
Government, Federal and Interstate Relations Committee
of New Jersey Legislature on Assembly Bill No. 2366
(December 1976); Public Hearing before the Senate Jw
12Federal law imposes no general prohibition of gambling,
although Congress has enacted legislation regulating certain inter-
state aspects of gambling, see, e.g., 15 U.S.C. §§1171-1178 (1976)
(barring interstate shipment of gambling devices); 18 U.S.C.
§§1082-1083 (1976) (prohibiting gambling on certain ships); 18
U.S.C. $1084 (1976) (barring transmission of wagering informa-
tion over interstate wires); 18 U.S.C. §§1301-1307 (1976 and
Supp. V 1981) (regulating lotteries); 18 U.S.C. §1953 (1976
and Supp. V 1981) (barring interstate shipment of gambling para-
phernalia). (A65a, n.15). However, these laws are designed to
aid the states in the suppression of gambling activity which is con-
trary to state policy. United States v. Fabrizio, 385 U.S. 263 (1966).
40
diciary Committee of the New Jersey Legislature on Sen-
ate Bul No. 1780 (March 2, 1977). Reports were also sub-
mitted to the Governor and Legislature by various law en-
forcement entities. See, Second Interim Report of the
State Policy Group on Casino Gambling (February 17,
1977); Report and Recommendation on Casino Gambling
by the Commission of Investigation of the State of New
Jersey (April 1977).
The system of statutory and administrative controls
which emerged has been described by the New Jersey
Supreme Court as “extraordinarily pervasive and intens-
ive,” Knight v. City of Margate, 86 N.J. 374, 381, 431
A.2d 833, 836 (Sup. Ct. 1981), and as designed to regu-
late all aspects of the casino industry with the “utmost
strictness.” Id., 86 N.J. at 392, 431 A.2d at 842; Bally
Manufacturing Corp. v. N.J. Casino Control Commission,
85 N.J. 325, 426 A.2d 1000 (1981), appeal dism., 454
U.S. 804 (1981); In re Martin, et al., 90 N.J. 295, 447
A.2d 1290 (Sup. Ct. 1982), Uston v. Resorts International
Hotel, Inc., 89 N.J. 163, 445 A.2d 370 (Sup. Ct. 1982).
When the Legislature promulgated the Casino Control
Act it emphasized two principal points. First, the pur-
poses of initiating casino gaming were: to enhance the
tourist, resort, recreational and convention industry of
the State; to restore, rehabilitate and redevelop Atlantic
City; and to contribute generally to the economic struc-
ture, general welfare, health and prosperity of New Jer-
sey. N.J. Stat. Ann. 5:12-1(b)(1)-(17) (West Supp. 1983).
Second, and more fundamentally, casinos, no matter
how great their rewards, would only be acceptable if. they
were stringently regulated to preclude criminal infiltration
or influence. Thus, the Casino Control Act demands main-
tenance of “the public confidence and trust in the credi-
bility and integrity of the regulatory process and of casino
operations.” N.J. Stat. Ann, 5:12-1(b)(6) (West Supp.
1983). Directly related to this purpose is the legislative
declaration that “the regulatory provisions ... are designed
18 These reports are part of the record in the District Court,
which has been forwarded to this Court.
41
to extend strict State regulation to all persons . . . prac-
tices and associates related to” casinos and that “compre-
hensive law-enforcement supervision . . . is further de-
signed to contribute to the publie confidence and trust in
the efficacy and integrity of the regulatory process.” Ibid.
Hence, it is the expressed policy of the State of New
Jersey to regulate and contro} all aspects of the casino
industry with the “utmost strictness” to the end that
publie confidence and trust in the honesty and integrity
of the State’s regulatory machinery can be sustained.
Knight vy. City of Margate, supra, 86 N.J. at 392, 431
A.2d at 842. Obviously, the implementation of this public
policy would be seriously deficient if it failed to extend
to those labor unions which represent or seek to repre-
sent employees of the nine casino hotel facilities in At-
lantie City.
Local 54 has asserted in the courts below that there
has never been any finding that the Atlantic City casino
industry is overwhelmed with corruption and crime. Aside
from the fact that the casino industry is in its infancy
aud it is thus impossible for there to have been such
a finding, it has long been recognized that legalized gam-
ing is not only potentially harmful to the public but
extremely sensitive and vulnerable to improper influence.
Niglio v. New Jersey Racing Commission, 158 N.J. Super.
182, 188, 385 A.2d 925, 928 (App. Div. 1978); see also,
National Institute of Law Enforcement and Criminal Jus-
tice, Law Enforcement Assistance Administration, The
Development of the Law of Gambling: 1776-1976 (1977).
The Federal Bureau of Investigation has long maintained
that gambling is the “lifeblood of organized crime.” See,
Testimony of Frederich Fehl, Acting Asst. Dir., FBI,
before the Commission on the Review of the National
Policy Toward Gambling, Hearings in Washington, D.C.,
May 10, 1976 (App. A, 65a).
Casino gaming is unusually attractive to infiltration
by organized crime, for two reasons:
First, a casino contains a vast amount of liquid
assets in the form of cash and gaming chips which
42
are very attractive and susceptible to misappro-
priation. Second, these liquid assets remain un-
counted and unrecorded as the gaming activity
takes place. Casinos are unique because millions
of dollars are continually changing hands among
thousands of people on the casino floor without
any record being made of how much money is
exchanged, how many people are involved, or who
those individuals are.
Santaniello, Casino Gambling: The Elements of Effect-
ive Control, 6 Seton Hall Legis. J. 23, 32 (1982) (foot-
note omitted).
Prior to the enactment of the Casino Control Act,
the New Jersey State Commission of Investigation speci-
fically advised the Governor and members of the Legis-
lature that the nature of the casino industry made it
a “vulnerable target for criminal intrusion.” Report and
Recommendations on Casino Gambling by the Commis-
sion of Investigation of the State of New Jersey, supra,
at p. III. The Commission of Investigation emphasized
that only the “most stringent of gambling control laws can
thwart the infiltration of casino and related services and
suppliers by organized crime.” Jd, at p. IT.
Significantly, the Commission of Investigation noted that
its experience regarding organized crime strongly sug-
gested that there were:
few better vehicles utilized by organized crime to
gain a stranglehold on the entire industry than
labor racketeering. Organized crime control of
certain unions often requires the legitimate busi-
nessmen who employ the services of the union
members to pay extra homage to the representa-
tives of the underworld. Moreover, the ready
source of cash which union coffers provide can
be employed as financing of all sorts of illegiti-
mate or illicit ventures.
Report and Recommendations on Casino Gambling by the
Commission of Investigation of the State of New Jersey,
supra at 1-H.
Casinos are periitted in Atlantic City only in hotels
with at least 500 sleeping rooms. N.J, Stat. Ann, 5:12-27
43
(West Supp. 1983). Investments of hundreds of millions
of dollars are necessary to construct such hotels. Thus
casino hotels, in addition to having the potential to gene-
rate hugh income, also operate under tremendous debt
burdens. In addition, the casino business, within Atlantic
City and among casino jurisdictions, is fiercely competi-
tive. A labor union, such as Local 54, has the ability to
bring a casino hotel, or all Atlantic City casino hotels,
to a halt, or to threaten to do so. The potential for such
a union to exact tribute, in dollars or in influence, in ex-
change for labor peace is obvious",
Accordingly, the State Commission of Investigation
recommended taking steps to insure the integrity of labor
unions affiliated with Atlantic City casino hotel facilities,
Report and Recommendations on Casino Gambling by the
Commission of Investigation of the State of New Jersey,
supra at 1-H and 2-H, as did the Governor’s Staff Policy
Group, Second Interim Report of the Governor’s Staff
Policy Group on Casino Gaming, supra at 46, It is not
surprising that the New Jersey Legislature heeded their
advice. Regulation of the casino industry, which has tra-
ditionally been prohibited throughout the United States,
and which has long been a magnet to organized crime, .
could hardly be expected to succeed if it ignored the in-
dustry’s labor unions. Indeed, in enacting the Racketeer
Influenced and Corrupt Organizations Act, 84 Stat. 941,
18 U.S.C.A. §1961 et seg. (West Supp. 1981), in 1970
In recent testimony before the Senate Permanent Subcom-
mittee on Investigations, the New Jersey Attorney General stated:
Organized labor is in a prime position to exert tremendous
pressure over the casino industry. . .. What would a casino
owner pay for labor peace? How much is it worth to keep
a business that grosses between $500,000 and $1 million
a day free of a strike? A corrupt union could extort out-
right payments or use its power of persuasion to dictate
what firms get the lucrative ancillary service contracts with-
in the casino industry.
Quoted in Court Delay Seen in Casino Dispute, N.Y, Times, Oct.
10, 1982, at 55, col.1.
44
Congress also recognized the explosiveness of the com-
bination of labor racketeering and gambling.”®
In his dissent Judge Becker recognized that, unlike the
New York-New Jersey waterfront, the Atlantie City casino
industry has not been found to be overrun with crime and
corruption, and responded:
But to write into preemption jurisprudence a dis-
tinction between remedial and prophylactic legis-
lation would prevent states from acting until an
industry is so rife with corruption that “criminals,
racketeers, and hoodlums [have] acquired a stran-
glehold,” Hazelton v. Murray, 21 N.J. 115, 120,
121 A.2d 1, 4 (1956) (Brennan, J.) (describing
condition of New York/New Jersey waterfront
prior to compact and sustaining constitutionality
of provision of New Jersey law identical to pro-
vision sustained in DeVeau). The inefficiency of
such a distinction is manifest; to say that fed-
eral labor policy requires it would offend reason.
[A74a-A75a}.
Surely, the Supremacy Clause does not require New Jer-
sey to wait until it worst fears are realized before it can
act.
Local 54 contended in the courts below that there is no
need for section 93 to apply to it, because its members are
not directly involved in gaming operations, i.e., they are
not blackjack dealers, pit bosses, casino managers, etc.
However, all of Local 54’s members who work for casino
hotels come within the licensure or registration provisions
of the Casino Control Act, and are thus subject to the
Commission’s jurisdiction and the disqualification criteria
The recent decision of the National Labor Relations Board
in Marina Associates v. Casino Police and Security Officers, Local
2, 267 N.L.R.B. No. 163 (1983), illustrates the problem of organized
crime infiltration of the casino industry through labor organiza-
tions. Local 2 petitioned for certification as exclusive collective
bargaining representative for the security guards at a Nevada
casino. The Board upheld the ruling of the Regional Director,
who dismissed the petition on the ground that Local 2 was not a
labor organization within the meaning of section 2(5) of the
NLRA, 29 U.S.C. §152(5) (1973), but rather was an organiza-
tion operated by certain underworld figures for their personal profit.
45
of section 86 of the Act. N.J. Stat. Ann. 5:12-86 (West
Supp. 1983). Moreover, Local 54 is the largest union
operating in the Atlantic City casino industry, and its lead-
ers wield a degree of influence which cannot be measured
by the job specifications of its members, The dangers
which section 93 is designed to protect against are clearly
presented by Local 54.
Local 54 has also pointed out that some of its members
work outside of the casino industry. Obviously, New Jer-
sey has no interest in extending its system of casino regu-
lation to persons who are not involved in the industry,
and the section 93 prohibition of dues collection applies
only to workers who are required to be licensed or regis-
tered under the Casino Control Act. In any event, the
fact that the union’s membership includes persons who
do not work in casino hotels does not lessen the need to
insure that it is not controlled by criminal elements.
The danger to the casino industry remains present and
it cannot be effectively negated if the State is unable to
challenge the unfit leaders of the union because not every
member is employed in a casino hotel.
Section 93 is an essential and integral part of New Jer-
sey’s overall effort to regulate its casino industry, and the
policies embodied in section 93 cannot be characterized as
anything less than deeply rooted in local feeling and re-
sponsibility. As Judge Becker put it (A72a),
In sum, New Jersey’s comprehensive regulation of
the casino industry is a matter of intense and
extraordinary local interest. Such regulation is
not only essential to the State’s struggle to main-
tain the integrity of the industry, but the very
rospect of such comprehensive legislation was the
asis upon which New Jersey’s citizens consented
to casino gambling in the first place. Given the
unique nature of the industry—in particular its
tremendous, unmonitored cash flow and its conse-
quent attractiveness to racketeers and organized
crime—the concerns of the legislature and citi-
zenry cannot be characterized as anything less than
“deeply rooted in local feeling and responsibility.”
Local 926 vy. Jones, supra, 103 8, Ct. at 1459,
46
Had the majority of the Court of Appeals considered the
issue, surely it would have reached the same conclusion.
It is equally clear that section 93 does not répresent a
disruption of federal labor policy. Section 93 applies to
a single, unique, local industry. In addition, as the Court
ruled in DeVeau vy. Braisted, supra, 363 U.S. 144, with re-
spect to section 8 of the Waterfront Commission Act, sec-
tion 93 does not contradict any federal labor enactment
and can operate in harmony with federal labor policy.
Like section 8 of the Waterfront Commission Act, section
93 does not deprive workers of the right to choose bar-
gaining representatives, but merely restricts their right
to choose insofar as necessary to protect the sensitive and
vulnerable casino industry from pressure or control by
convicted criminals and persons who conduct union affairs
under the influence of organized crime. Cf. DeVeau v.
Braisted, swpra, 363 U.S. at 152. With respect to the dis-
qualified individuals, section 93, again like section 8 of the
Waterfront Commission Act, does not prevent them from
serving in non-casino unions in Atlantic City, or in any
unions outside of Atlantic City. It merely prevents cor-
rupt union leaders from corrupting or feeding upon At-
lantic City casinos. Cf., International Longshoremen’s
Assoc. v. Waterfront Commission, 642 F.2d 666, 672 (2
Cir. 1981), cert. den. 454 U.S. 966 (1981).
The majority below correctly noted that the National
Labor Relations Board has asserted jurisdiction over the
casino industry (A34a-A35a). El Dorado, Inc., 151 N.L.R.B.
579 (1965). However, as Judge Becker explained (A75a-
A76a, n.26), the majority’s implication that the NLRB’s
assertion of jurisdiction cannot be reconciled with state
regulation under section 93 is incorrect, in view of the
fact that the NLRB continues to exercise jurisdiction over
the New York Waterfront despite the continuing validity
of section 8 of the Waterfront Commission Act.
In addition, as Judge Becker also noted (A76a, n.26),
the NLRB has shown a marked sensitivity to the fact that
gambling activities are subject to strict state regulation,
and a willingness to accommodate state interests in this
47
area. In asserting jurisdiction over the Nevada casino in-
dustry the Board said that it was “fully cognizant of the
unique problems of enforcement existing in the gambling
industry,” and that its experience had been that there was
no conflict between Nevada’s regulation of its casinos and
federal regulation of unions within the casino industry.
The Board specifically said that there was no present or
foreseeable conflict between “contractual tenure” rights of
employees under collective bargaining agreements and the
continuing qualification requirements imposed on those em-
ployees by Nevada’s gaming regulations, On the contrary,
the NLRB concluded: “It clearly appears that all parties
have accommodated themselves successfully to the pattern
of collective bargaining without any demonstrable adverse
effect on supervision of gambling activities.” El Dorado,
Inc., supra, 15 N.L.R.B. at 583.
Thus, the Board has been able to reconcile the rights
of employees under the NLRA and the state regulatory
restrictions on those employees. The right of employees
to elect representatives of their own choosing can like-
wise be reconciled with section 93 of the Casino Con-
trol Act. If section 93 is upheld by this Court, it will
merely prohibit certain persons from holding union office,
much in the same way section 504(a) of the LMRDA does,
and will in no way impede the Board’s ability to en-
force legitimate collective bargaining rights.
The NLRB has also asserted jurisdiction over the Flor-
ida jai alai industry. Volusia Jai Alai, Inc., 221 N.L.R.B.
1280 (1975). However, in so doing it noted Florida’s
extensive regulation of the industry, including a require-
ment that workers give 15 day’s notice prior to any
strike, but apparently did not preceive a conflict of state
and federal regulations. Jd. at 1282-1283. See also,
Florida Board of Business Reaation etc. v. NLRB, 686
F.2d, 1362, 1365-1366 (11 Cir. 1982), upholding the NL
RB’s determination to assert jurisdiction over Florida’s
jai alai industry. There is no reason to anticipate that
there will be any irresolvable conflict between the NLRB’s
jurisdiction over the Atlantic City casino industry and
48
New Jersey's implementation of section 93 of the Casino
Control Act.’
In summary, when the deeply-rooted local concerus
which motivated section 93 are viewed in light of its
minimal effect upon federal labor policy, the constitu-
tional validity of the statute is manifest.
16Tt is also noteworthy that, in declining to exercise jurisdiction
over the horse-racing and dog-racing industries, the NLRB again
demonstrated its sensitivity to state regulation of gambling. The
Board stated:
In prior decisions, the Board declined to assert jurisdiction
over these industries noting, inter alia, the extensive State
control over the industries. It appears that State law sets
racing dates of the tracks; State law determines the per-
centage share of the gross wagers that goes to the State;
and State law determines the percentage of gross wagers
to be retained by the track. In addition, the State licenses
employees, exercises close supervision over the industries
through State racing commissions, and in many States re-
tains the right to effect the discharge of employees whose
conduct jeopardizes the “integrity” of the industry. As the
industries constitute a substantial source of revenue to the
States, a unique and special relationship has developed be-
tween the States and these industries which is reflected by the
States’ continuing interest in and supervision over the in-
dustries.
Declination of Assertion of Jurisdiction, 38 Fed. Reg. 9537 (1973)
(codified at 29 C.F.R. §103.3 (1982)). Although the District Court
ruled that this decision by the NLRB violated its statutory man-
date, because it can only decline jurisdiction over industries not
substantially affecting interstate commerce, New York Racing As-
sociation v. NLRB, 110 L.R.R.M. 3117 (E.D. N.Y. 1983), the
District Court’s decision was vacated on the ground that the
District Court did not have jurisdiction to review the NLRB’s deci-
sion. New York Racing Ass'n v. NLRB, 708 F. 2d 46 (2 Cir.
1983). An appeal has been filed with this Court. (Docket No.
83-120).
49
CONCLUSION
For the reasons herein stated, appellant New Jersey
Casino Control Commission respectfully submits that this
Court should reverse the judgment of the Court of Ap-
peals insofar as it upheld the District Court’s refusal
to abstain from exercising jurisdiction, and should re-
mand to the District Court for entry of an order dis-
missing the complaint. In the alternative, the Commis-
sion respectfully submits that this Court should rule that
section 93 of the Casino Control Act is not preempted
by federal law, and thus, that the Court of Appeals
erred in reversing the District Court’s denial of the pre-
liminary injunction. In the event that this Court de-
termines not to resolve the ultimate issue of the valid-
ity of section 93, it is respectfully requested that the
Court enunciate the proper preemption analysis as be-
ing a balancing of the relative federal and state inter-
ests and remand the matter for appropriate proceedings
in accordance with that standard.
Respectfully submitted,
Rosert J. Genatr*
General Counsel
Joun R. ZimMERMAN
Senior Assistant Counsel
Casino Control Commission
Princeton Pike Office Park
Building No. 5, CN-208
Trenton, New Jersey 08625
(609) 292-7584
Attorneys for Appellants.
* Counsel of Record
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