Appellants Brief — DANZIGER v. HOTEL AND RESTAURANT (Nos. 83-573, 83-498)

Supreme Court brief1983

Ask Donna

What actually matters in this document.

Text

NO. 83-573

Supreme Court of the United States. ones

Ocroser Term, 1983 nee

MARTIN DANZIGER, ACTING CHAIRMAN, DON THOMAS, COM-

rem te 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 EES AND

On Appeal from the United States Court of Appeals

= for the Third Circuit

ROBERT. J. GENATT*

OHN R. ZIMMERMAN

ior Assistant Counsel

Trenton, N 08625

(Op) wee

Attorneys for Appellants

* Counsel of Record

Dated: January, 1984

Adams Press Corp, 50 Park Place, Newark, New Jersey 07102—(201) 623-8611

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

QvESTIONS PRESENTED ........

nn ila pecbneesateriais

Opinions BELow ...

JURISDICTION

CONSTITUTIONAL ProvIsIONS AND STATUTES INVOLVED

STATEMENT OF THE CASE ............

SuMMARY OF ARGUMENT .

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-

missed ae

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 ................

ConcLusiIon

TABLE OF CONTENTS

Appendix

The following items are contained in appellants’

appendix to their jurisdictional statements:

A—Opinion of United States Court of Appeals

Sow Ce Tie CIUIG ceccicicsscicsimenaicernces

B—Opinion of United States District Court for

the District of New Jersey ...............c.ccccesceceese

C—Order of United States District Court for

the District of New Jersey .............ceccceeseseeee

D—Opinion of New Jersey Casino Control

COMMONER, bnncccsicisicminanial

E—Order of New Jersey Casino Control Com-

MORGUBOTE cccninssiscdccsntinasianraiedecenianiagaeitaaaicc anne

F—Supplemental Opinion of New Jersey Casino

Control Commission ..............

G—Judgment of United States Court of Ap-

peals for the Third Circuit ....................ccscssee

H—Order on Rehearing of United States Court

of Appeals for the Third Cireuit 0000000...

I—Notices of Appeal to Supreme Court of the

United States

J—The National Labor Relations Act, §7, 29

UG, SRR (IBV G) ccccccsseeelatenicnee

K—The Labor-Management Reporting and Dis-

closure Act of 1959, §504, 29 U.S.C. $504

(1976)

L—The Employee Retirement Income Security

Act of 1974, §411, 29 U.S.C. §1111 (1976) -..

PAGE

. 208a

224a

236a

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) 0. .. 24la

N—N.J. Stat. Ann. §5:12-93 (West Supp. 1983-

lain ncniadienisieieasiaisitiniiinteiniielssaetinteian 246a

O—N.J. Stat. Ann.. §5:12-86 (West Supp. 1983-

a ... 248a

The following items are contained in the parties’

joint appendix to the briefs on the merits:

A—Chronological List of Relevant Docket En-

ge Sale SE eee Cee la

B—Verified Complaint ..................cscccecsssesssescesseseseee 4a

C—Amended Complaint .000...........ccecccecsesscesssseeeeeesees 20a

D—Answer on Behalf of Defendants Martin

Danziger, et al. ............. 38a

E—Answer on Behalf of Defendants G. Michael

io ceds cemnnnciinnsaesnanipeninmeennen 4la

F—Order to Show Cause and Motion for Pre-

CE eee 49a

G—Motions for Dismissal and Judgment on the

Pleadings ....... , 55a

H—Orders of United States Supreme Court Not-

ing Probable Jurisdiction ... 57a

I—N.J. Stat. Ann. §5:12-78 (West Supp. 1983-

1984) 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) asiens Supp.

TDBB-19BA) .n.ccasccersrsceaseseesesesvscequosssessoeosoweconesecesesee 62a

L—N.J. Stat. Ann. 5:12-117 (West sel 1983-

TOBE) cccccserreecssssiincenmemunescovcenserensese 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) .......c.ccccecseseseees 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

SEE iotenthanndnieinsepsadinininastaditihssinins 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) oe 40

Belknap v. Hale, —— U.S. ——, 103 S.Ct. 3172

GRPIND. \sedetedenhscibsbcnpslicthiecisctinionsenenssdpakieal 35

Cal. Retail Liquor Dealers Ass’n v. Mideal ae

A II caicdasees enspabssanssededcatnscnssbiapanmapelianieseicodape 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) ...............0000 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

Wistrict of Columbia Court of Appeals v. Feldman,

— U. 8. —, 103 S.Ct. 1303 (1983) 15

El Dorado, Ine., 151 N.L.R.B. 579 (1965) 2200 .. 46, 47

1x 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) wee 13

Fitzgerald v. Catherwood, 388 F.2d 400 (2 Cir.

1968), cert, den., 391 U.S. 934 (1969) woe 34

Florida Board of Business Regulation, Ete. v. NL

RB, 686 F.2d 1362 (11 Cir. 1982) ...............c0cccececceee 47

Garner v. Teamsters Local 776, 346 U.S. 486 (1953) 36

Geiger v. Jenkins, 401 U.S. 985 (1971) wees 16

Gibson v. Berryhill, 411 U.S. 564 (1973) ow. 16,18

Genosick v. Richmond United School District, 479

F.2d 482 (9 Cir. 1973) ..........escee- caaanecennnnetaaines 2

Hill v. Florida, 325 U.S. 588 (1945) oe 26-28, 34

Holy Spirit Ass’n. v. Town of New Castle, 480 F.

Supp. 1212 (S.D.N.Y. 1979) ............ceccceccccscecsersrsececeres 18

Huffman v. Pursue, Ltd., 420 U.S, 592 (1975) ........ 13, 14, 20

Hurwitz v. Directors Guild of America, Inec., 364

F.2d 67 (2 Cir. 1966), cert. den., 385 U.S. 971

TY, iiaasbcsictndaissaspishedacios i 2

In re Green’s Petition, 369 U.S. 689 (1962) ....0000002.... 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, 425 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

gt | eee 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 cos. Eng. v. Jones, ——

US. » 103 S.Ct. 1453 (1983) 22.02... .ececccecccscseres 35, 45

Machinists v. Gonzales, 356 U.S. 617 (1958)... 40

MacRea v. Motto, 543 F. Supp. 1007 (S.D.N.Y

EERE BE Pe 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) 0. 14, 20

Moore v. Sims, 422 U.S. 415 (1979) oo. 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,

I PID ciesilcneniiecesthacciapinscitemsisaniinssncmtqnescoet 37

TABLE OF AUTHORITIES ix

PAGE.

NLRB v. Nash-Finch Co., 404 U.S. 138 (1971) .......... 23, 24

New York Racing Ass’n v. NLRB, 708 F. 2d 46

Ce Apes MINUET ecscleruinsanasinsiespusiecnipbuncepaesesndaians 48

New York Racing Association v. NLRB, 110 L.R..

Bese Ee EE Dc Ri ROOUED ; ponccbiescetenkedlemauecepnecensans 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) .............. peneepitiliauindaaainnbldans 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 vy. Wilson, 475 F. Supp. 1164 (E.D. Mich.

i: ) 18, 19

San Diego Building Trades Council v. Garmon, 359

U.S. 236 (1959) rae 35

Schachter v. Whalen, 445 F.Supp. 1376 (S.D.N.Y.

1978), aff’d on other grounds, 581 F.2d 35 (2 Cir.

BEE ceticitpnimecinnssiaiannininnncitijeanibtananinnaanntnnediii no 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

F.2d 321 (4 Cir. 1981) 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) ................ 13, 14

x TABLE OF AUTHORITIES

PAGE

United States ex rel. Webb v. Court of Common

Pleas, 516 F.2d 1034 (3 Cir. 1975) 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) m 33

Uston v. Resorts International Hotel, Inc., 89 N.J.

163, 445 A.2d 370 (Sup. Ct. 1982) 40

Vaca v. Sipes, 386 U.S. 171 (1967) ... <i 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

(B Che, TOG) ncsecinsesievecscernnnncnnintesnctascannitmettcmssssiaiiali 17,19

Younger v. Harris, 401 U.S. 37 (1971) .....0.020020..... Passim

United States Constitution Cited

Art. I, cl. 10 ...... 31

het, V5, 0D coe 1, 3, 25

New Jersey Constitution Cited

Art. 4, Sec. 7, par. 2 (1944) ........ 39

Art. 4, Sec. 7, par. 2D (West Supp. 1983) (1947) 4,39

Statutes Cited

5 U.S.C.:

Sec. 7120 (1978) ....... nl 29

TABLE OF AUTHORITIFS xi

PAGE

15 U.S.C.:

Sees, 1171-1178 (1976) ceecscsscssntsnssntsnianenrineenen 89

18 U.S.C.:

Sees, 1082-1083 (1976) oe.cececccccceccsesesesemeneeeseteeeeneenees 39

EEC RIOD scvotescctnteineynseconssovepeneensentusbsesenscesevobens 39

Sees. 1301-1307 (1976 & Supp. V 1981) 00. 39

Sec. 1953 (1976 & Supp. V 1981) cocccccccceeee 39

Sec.1961 et seq. (West Supp. 1981) oe. 43

28 U.S.C.:

Sec. 1254(2) (1966) ........ccccccccccccecsceseceredeccccsesecerecees 2

See, 1292(a)(1) (West Supp. 1983) occ. 1

See. 1331 (West Supp. 1983) oocccccccceeseeeseeeee 1

See. 1837 (West Supp. 1988) o..cceccccccccceseseeeeees 1

RPI SUITED -scxnsinssesenivenonguetsseennsttanstieccumevscessnesiones 24

29 U.S.C.:

IID IIE carucsnstervessosmnenssucensteoscsoscuenssisneistiets 44

SN HI TITEED | pengettnsvnecersctensconase sattidneninabiaaiei 3, 9, 26

29 U.S.C.:

Sees. 401-530 (1976) ...... = : 28

a 28, 29, 47

ES A 28

EEE IID cirtncinccineasnsscdinsnovuneninncetstionstees 9, 26

xii TABLE OF AUTHORITIES

PAGE

N.J. Stat. Ann. 5:12-1 et seg. (West Supp. 1983) 5

N.J. Stat. Ann. 5:12-1(b) (1)-(17) (West Supp.

IMEI snhidshendusniepcsieitelanentaaanibo 40

N.J. Stat. Ann. 5:12-1(b)(6)( West Supp. 1983) ........ 5, 40

N.J. Stat. Ann, 5:12-1(b)(9) (West Supp. 1983) ...... 5

N.J. Stat. Ann. 5:12-7 (West Supp. 1983)... 5

N.J. Stat. Ann. 5:12-8 (West Supp. 1983)... 5

N.J. Stat. Ann. 5:12-9 (West Supp. 1983) .....0.0........ 5

N.J. Stat. Ann. 5:12-12 (West Supp. 1983) ................ 5

N.J. Stat. Ann. 5:12-27 (West Supp. 1983) ................ 42

N.J. Stat. Ann. 5:12-51 (West Supp. 1983) ......0........... 16

N.J. Stat. Ann, 5:12-52(g) (West Supp. 1983) .......... 16

N.J. Stat. Ann, 5:12-58 (West Supp. 1983) ................ 16

N.J. Stat. Ann. 5:12-59 (West Supp. 1983) ................ 16

N.J. Stat. Ann, 5:12-60 (West Supp. 1983) ................ 16

N.J. Stat. Ann, 5:12-62 (West Supp. 1983) ................ 16

N.J. Stat. Ann. 5:12-63 (West Supp. 1983) ....0.000.0..... 7

N.J. Stat. Ann. 5:12-64 (West Supp. 1983) ......00....... 6

N.J. Stat. Ann. 5:12-65 (West Supp. 1983) ................ 15

N.J. Stat. Ann. 5:12-67 (West Supp. 1983) ....00.0.02.... 15

N.J. Stat. Ann. 5:12-70(k) (West Supp. 1983) .......... 16

N.J. Stat. Ann. 5:12-76 (West Supp. 1983) ................ 7

N.J. Stat. Ann. 5:12-82(b) (West- Supp. 1983). ........ 5

N.J. Stat. Ann. 5:12-84(b) (West Supp. 1983) ........ 5, 6

TABLE OF AUTHORITIES xiii

N.J.

N.J,

N.J.

NJ.

N.J.

Stat.

PAGE

Ann, 5:12-85(¢) (West Supp. 1983) ........ 5, 6

Ann, 5:12-85(d) (West Supp. 1983) ............ 5

Ann, 5:12-86 (West Supp. 1983) ............ 6, 14, 18,

29, 45

Ann. 5:12-86(¢) (West Supp. 1983) ........ 6-8

Ann. 5:12-86(¢)(4) (West Supp. 1983) .... 29

Ann, 5:12-86(f) (West Supp. 1983)........ 6-8

Ann. 5:12-89 (West Supp. 1988) ............ 5, 6

Ann. 5:12-90 (West Supp. 1983) .....0.00... 5

Ann. 5:12-90(b) (West Supp. 1983) ........ 6

Ann. 5:12-91 (West Supp. 1983) ............ 5

Ann, 5:12-92 (West Supp. 1983) ............ 5

Ann, 5:12-92(b) (West Supp. 1983) ........ 6

Ann, 5:12-92(d) (West Supp. 1988) ........ 6

Ann. 5:12-93 (West Supp. 1983) ............ passim

Ann. 5:12-93(a) (West Supp. 1983) ........ 6

Ann. 5:12-94 (West Supp. 1983) ............ 15

Ann. 5:12-104(b) (West Supp. 1983) ........ 5, 6

Ann, 5:12-107 (West Supp. 1983) ................ ?

Ann, 5:12-107(a)(1) (West Supp. 1983) ... 17

Ann. 5:12-107(a)(2) (West Supp. 1983) 15

Ann, 5:12-107(a)(8) (West. Supp. 1983) 15

Ann, 5:12-107(a)(4) (West. Supp. 1983) 15

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) ...........cscccscscscscscsessssseee 32

N.J. Stat. Ann. 82:23-GD (1968) .....ccccocscererecerececscscerenss 31

Title 29, N.Y. Unconsol. Laws:

Sec. 9933 (McKinney 1974) ............cccccscscceccsceseerees 29

See. 9868 (McKinney 1974) ...0.0.0.0.... 32

Rules Cited

N.J. Ct. R.:

i ED CID: cicecsisinicerincicasicniejametintehiennicenstacanitenipei 19

ee ee CD ehicentdceimiiiinnins co

Other Authorities Cited

Commission on the Review of the National Policy

Toward Gambling, Seis in herent D.C,

Bi BO Sarctatieeetipesinnneanviciees 41

Final Report of Commission on the Review of the

National Policy Toward Gambling (1976) ............ 38, 39

Gorman, Basie 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:

I Ca 41

Public Hearing before the Assembly, State Govern-

ment, Federal and Interstate Relations Committee

of New Jersey Legislature on Assembly Bill No.

BE oo SIE CRIDUND cctenpacesntseistinianinicpcietiasinchinistecabiets 39

Public Hearing before the Senate Judiciary Com-

mittee of the New Jersey Leyislature on Senate

Bill No. 1780 (Mareh 2, 1977) .. 39, 40

Report and Recommendation on Casino Gambling by

the Commission of Investigation of the State of

New Jersey (April 1977) .............. 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

Ocroser Term, 1983

MARTIN DANZIGER, ACTING CHAIRMAN; DON

THOMAS, COMMISSIONER; MADELINE McoWHIN-

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

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.2 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

cl. 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 A4Ua-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.”

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 (Al13qa).

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 F.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

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

immunity 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 v. 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-

quiring membership in a labor organization as a

condition of employment as authorized in section

158(2)(3) 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. Kach 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 be 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 A24Ga-

A247a. Other relevant statutes are reproduced at A235a-

A255a and J A59a-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-

3A subsequent amendment, in 1981, permitted revenues to also

be used for health and transportation benefits for senior citizens

and disabled residents.

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 Atlantie 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 Conimission) 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

hotel operations. N.J. Stat. Ann. 5:12-64 (West Supp.

1983).

All of the licensure, qualification, registration and other

regulatory provisions described above* 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-S6(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 cri-

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(c), -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 bé

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.

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 ir -vhich it alleged that Local

54’s secretary-treasurer, Robert Lumio, and a member of

its executive board, Frank Materio, were disqualified

under section 86(¢c) 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-

Al128a).

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 Loeal 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 (A131la-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 of 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.

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 Apjfeals. 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

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, Circuit 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-A48a).

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).

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

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 conelusion 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,

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 (A91la). 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

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

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 v. 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

Supp. 1983), and the right to grant testimonial ,

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

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 unemploygent

compensation statute on the ground that, inter alia, it

was preempted hy 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

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.” /d. 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

the ground that the pending proceedings are ‘ad-

ministrative’ could easily undermine important

state policies and concerns. Such a result would

nt 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 v. Motto,

543 F.Sunp. 1007 (S.D.N.Y. 1982) (firefighter disciplinary

proceed'm:) ; Holy Spirit Ass’n v. 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. 1876 (S.D.N.Y. 1978),

aff’d on other grounds, 581 F.2d 35 (2 Cir. 1978) (medi-

eal 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 issues 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

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 vy. 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 vy. 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

“lw]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

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 vy. 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 y, 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 ‘eclined to apply Younger abstention

in the present case vecause, 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 vy. State Bar Association, supra, 457

U.S. 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 Circuit 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-

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. [A3Ga-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

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.” 7d. 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” (A36a).

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

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

case 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.” Jn re Green’s Petition, 369 U.S. at

694; Amalgamated Association vy. 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,

847 U.S. 501 (1954), and NLRB vy. Nash-Finch Co., 404

U.S. 138 (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

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.

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 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 cffends

national labor policy as to be invalid under the Supremacy

Clause, U.S. Const., Art. V1, 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 vy. 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 also 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.

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

“oderally guaranteed “full freedom” to select bargaining

' presentatives of their own choosing. Jd. at 541-543.

The majority opinion in the present case found Hill

controlling (A3la).’ 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, Section 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 character,” 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 eracted 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-

TIn 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-

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 /ntern,

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

fa New York statute imposing broader disqualification eri-

teria] is implicitly preempted by section 504(a).” Id. at

157. Accord, Intern. Longshoremen’s Ass'n vy. Waterfront

Com’n, 85 N.J. 606, 613, 498 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. Jd. at 152. However, Jus-

tice Frankfurter added that section 8 did not conflict with

or seriously impede section 7 of the NURA, 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-

*It should also be noted that in 1978 Congress decreed that

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? [/d. at

153]

Upon examining the legislative record preceding the

enactment 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 Cireuit 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., miseoneeived the doctrine of preemption by “deeid-

[ing] this ease mechanically on an absolute concept of free

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, DeVeaw 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 only 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°

Congress 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 ryle

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 §8.”

Id. at 154-55."

* Clearly, this was the correct understanding of the compact,

for

(Footnote continued on following page)

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

J udge 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.”

(Abla).

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,

n8 (1981), quoting United States Steel Corp. v. Multistate,

Tax Com’n., 434 U.S, 452, 485 (1978), White, J. dis-

senting; emphasis added].

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 DeVeau 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 “om giving direction as to its in-

1° 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-

tended preemptive effect, and thus left the issue of

preemption to the courts. Farmer vy. 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 v. Teamsters Decal 776,

346 U.S. 485, 488 (1953), the NLRA “leaves noth

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 vy. 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

state seeks to regulate or to make the basis of

liability is actually or arguably protected or pro-

hibited by the NLRA. Garmon, su pra, 359 359 US,

at 245, 79 S. Ct., at 779; [other Prove tad omitted ].

Although the “Garmon "guidelines [are not to be

apptie’) in a literal, mechanical fashion”, Sears,

é Co. v. Carpenters, [436 US. 180] at

188, 98 8. Ct. [1745] at 1752 {(1978)), if the

conduct at issue is arguably prohibited or pro-

tected otherwise applicable state law and proced-

ures are ordinarily preempted. Farmer, supra,

430 U.S., at 296, 97 ¢ 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 inferred 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. e 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 Leber Management Re -

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 Co had deprived

ie Eeaine <5 Sie yee Sa Garmom at 243-

. . . These exceptions “in no way undermine the

vitality of the pre-emption rule.” [Vaca v. Sipes]

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, swpra,

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, DeVeau 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, 418 (1973),

and, indeed, is not favored in-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

In 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)

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

embodied 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., 434 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

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 ane Public Hearing before the Senate Ju-

12 Federal law ‘imposes no general prohibition of gambling,

although Congress has enacted legislation regulating certain inter-

state aspects of gambling, see, ¢.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).

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 Growp 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 vy. 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.

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 public 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 control all aspects of the casino

industry with the “utmost strictness” to the end that

public confidence and trust in the honesty and integrity

of the State’s regulatory machinery can be sustained.

Knight v. 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

and 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

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.

Repori and Recommendations on Casino Gambling by the

Commission of Investigation of the State of New Jersey,

supra at 1-H.

Casinos are permitted in Atlantic City only in hotels

with at least 500 sleeping rooms. N.J. Stat. Ann. 5:12-27

(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

14In 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.

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 Atlantic 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 vy. Murray, 21 NI. 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

18The 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.

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

erime—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 S, Ct. at 1459,

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 represent a

disruption of federal labor policy. Section 93 applies to

@ single, unique, local industry. In addition, as the Court

ruled in DeVeau v. 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

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. a‘ 1282-1283. See also,

Florida Board of Business Reguution 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

New Jersey’s implementation of section 93 of the Casino

Control Act.’

In summary, when the deeply-rooted local concerns

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.

1Tt 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).

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

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.