Amicus Curiae Brief — Livadas v. Bradshaw

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No. 92-1920 MAR 5 1994

OFFIOE CF Tie CLens

IN THE conidia

Supreme Court of the United States

OCTOBER TERM, 1993

KAREN LIVADAS,

Petitioner,

LLoyp AUBRY, LABOR COMMISSIONER

FOR THE STATE OF CALIFORNIA,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF FOR THE

AMERICAN FEDERATION OF LABOR AND

CONGRESS OF INDUSTRIAL ORGANIZATIONS

AS AMICUS CURIAE IN SUPPORT OF PETITIONER

MARK SCHNEIDER

*% 9000 Machinists Place

! Upper Marlboro, Maryland 20772

MARSHA S. BERZON

177 Post Street, Suite 300

San Francisco, California 94108

LAURENCE GOLD

(Counsel of Record)

WALTER KAMIAT

815 16th Street, N.W.

Washington, D.C. 20006

(202) 637-5390

WILSON - Eres PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

® out. 60

TABLE OF CONTENTS

SUMMARY OF ARGUMENT .0u...............cecececceceeeseeeees

ARGUMENT

I, FEDERAL LABOR POLICY DOES NOT RE-

QUIRE STATES TO EXCLUDE UNIONIZED

WORKERS FROM THE PROTECTIONS OF

THEIR MINIMUM STANDARD EMPLOY-

MENT LAWS scniaeacieteiineiainegmacnsinenianaemmeectens

II. SECTION 229 AS APPLIED BY THE LABOR

COMMISSIONER IS PREEMPTED BY THE

NATIONAL LABOR RELATIONS ACT ..........

CONCLUSION

TABLE OF AUTHORITIES

CASES Page

Alexander v. Gardner-Denver Co., 415 U.S. 36

|, | ne ann 20-21

Allis-Chalmers v. Lueck, 471 U.S. 202 (1985)........ passim

Atchinson T. & S.F. R. Co. v. Buell, 480 U.S. 557

}) | a ee 17

Babler Brothers, Inc. v. Roberts, 995 F.2d 911

(Bit Cle. 196B) ......ecccccecececeescnesenseosesessccsonnscsssssonsees 29

Barrentine v. Arkansas-Best Freight System, Inc.,

rohit eS 2) eee ee 5,17

Belknap v. Hale, 463 U.S. 491 (1983) ..................... 27

Brown & Southwestern Bell Telephone Co., 901

F.2d 1250 (Gth Cir. 1900) ..............cccccccsseesceseeess--- 14

Building and Construction Trades Council v. Asso-

ciated Builders and Contractors, 61 U.S.L.W.

A) EEE 26

Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987) ..9, 11, 17

Collyer Insulated Wire, 192 NLRB 837 (1971)... 24

Connell Construction Co. v. Plumbers, 421 U.S.

| 8), | nn 22, 23

Corning Glass Works v. Brennan, 417 U.S. 188

) , , | EEE Se 22

Darr v. NLRB, 801 F.2d 1404 (D.C. Cir. 1986).... 20

Dowd Box v. Courtney, 368 U.S. 502 (1962) -.......... 19

Electrical Workers v. Hechler, 481 U.S. 851

) | SS non 9,11

England v. Louisiana State Board of Medical Ex-

aminers, 375 U.S. 411 (1964) ...................---------.-- 25

Fort Halifax Packing Co. v. Coyne, 479 U.S. 1052

)) | Ee ee 28

Franchise Tax Board v. Laborers Vacation Trust,

ht SS, ae 10

Galvez v. Kuhn, 933 F.2d 773 (9th Cir. 1991) -....... 15

Gilmer v. Interstate/Johnson Lane Corp., 111

oS) 62) a eee 21

Golden State Transit Corp. v. Los Angeles, 475

of St 6, 28

Goodman v. Lukens Steel Co., 482 U.S. 656

CBB annecccsncrecenstecanininntiastsimmsicien 22

Hanks v. General Motors Corp., 906 F.2d 341

(GRa GOR. BGGD) ...nnceccccccececensecerscncsnnenenneennesnennneninans 14

iii

TABLE OF AUTHORITIES—Continued

Page

Hillsborough Tp. v. Cromwell, 326 U.S. 620

EES AS. A 24

Jackson v. Conrail, 717 F.2d 1045 (7th Cir. 1983) .. 24

Jackson v. Liquid Carbonic Corp., 863 F.2d 111

ees 13

Johnson v. Anheuser Busch, Inc., 876 F.2d 620

ee 18, 14

Johnson v. Beatrice Foods Co., 921 F.2d 1015

te 13, 14

Kaiser Steel v. Mullins, 455 U.S. 72 (1982) _........ 23

Krashna v. Oliver Realty, Inc., 895 F.2d 11 (3rd

es 14

Laws v. Calmat, 852 F.2d 430 (9th Cir. 1988) . “atl 13

Lingle v. Norge Division of Magic Chef, Inc., 486

ET passim

Machinists v. Wisconsin Employment Relations

Commission, 427 U.S. 182 (1976) 0. 26

Magerer v. John Sexton & Co., 912 F.2d 525 (1st

ie ner 13

McCormick v. AT&T Technologies, Inc., 934 F.2d

531 (1991), cert. denied, 112 S. Ct. 912

ee 14

McCulloch v. Maryland, 4 Wheat. 316 (1819)... 26

Metropolitan Life Insurance Co. v. Massachusetts,

EE passim

Mineworkers v. Pennington, 381 U.S. 657 (1965) .. 8

Nash v. Florida Industrial Commission, 389 U.S.

235 (1967) .............. 26

Operating Engineers v. Wilson, 915 F.2d 535 (9th

Cir. 1990), cert. denied, 112 S.Ct. 3013 (1991). 13

O’Shea v. Detroit News, 887 F.2d 683 (6th Cir.

Ge 14

Pennsylvania Federation of BMWE v. National

Railroad Passenger Corp., 989 F.2d 112 (3rd

eT 18

Railroad Commissioner v. Pullman, 312 U.S. 496

it iacetibreeeatiliontidcindatentdecntieccmesnernenesasmnasun 24

Republic Steel Corp. v. Maddox, 379 U.S. 335

CO EEE re 20

TABLE OF AUTHORITIES—Continued

Page

San Diego Building Trades Council v. Garmon,

ee 22, 26

Schlacter-Jones v. General Telephone, 936 F.2d

[OY (Sl ee 13

Smith v. Evening News Association, 371 U.S. 195

LE SETTER RITE: BEE TAD ee ee ON Se 23

Steelworkers v. Enterprise Wheel & Carriage

Corp., 368 U.S. 598 (1960) .............2....-.--0c--ccseeee- 19

Steelworkers v. American Manufacturing Co., 363

U.S. 564 (1960) .. nse eee 19

Steelworkers v. Rawson, — “U. Ss. —., 110

8 RE re _.....9, 11, 18

_ Steelworkers v. Warrior & Gulf Navigation Co.,

OM Es 19

Strikes v. Chevron USA, Inc., 914 F.2d 1265 (9th

OI, TID nscas tactiesiarntrtenintinpeemntiadteeiaiemmmainiaeliimai 13

Teamsters v. Lucas Flour Co., 369 U.S. 95 (1962). 5, 18

Textile Workers v. Lincoln Mills, 353 U.S. 448

$ALE T ALLTEL ALISON NN ETON 4,5

Trans World Airlines v. Hardison, 432 U.S. 63

TET TESTS AE TT TED 22

United Technologies, 268 NLRB 557 (1984) ....... 24

Utility Workers v. Southern California Edison,

852 F.2d 1083 (9th Cir. 1988) .......................... 13

Weber v. Anheuser-Busch, 348 U.S. 468 (1955) .. 29

STATUTORY MATERIALS

So conee passim

Equal Pay Act, 29 U.S.C. § 206 2.0... 22

Federal Arbitration Act, 9 U.S.C. § 2........................ 19, 21

Labor Management Relations Act, § 301, 29 U.S.C.

DT passim

National Labor Relations Act, as amended, 29

U.S.C. § 141, et seq. § 7, 29 U.S.C. § 157 ........... passim

MISCELLANEOUS

Note, the Need for a New Approach to Federal

Preemption of Union Members’ State Law

Claims, 99 Yale L.J. 209 (1989) ...................... 14-15

Restatement (Second) of Contracts, § 178 .......... x

In THE

Supreme Court of the Wuited States

OcTOBER TERM, 1993

No. 92-1920

KAREN LIVADAS,

. Petitioner,

LLoyp AuBRy, LABOR COMMISSIONER

FOR THE STATE OF CALIFORNIA,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF FOR THE

AMERICAN FEDERATION OF LABOR AND

CONGRESS OF INDUSTRIAL ORGANIZATIONS

AS AMICUS CURIAE IN SUPPORT OF PETITIONER

This brief amicus curiae is filed by the American Fed-

eration of Labor and Congress of Industrial Organiza-

tions (“AFL-CIO”), a federation of 86 national and in-

ternational labor organizations with a total membership

of approximately 14,000,000 working men and women,

with the consent of the parties, as provided for in the

Rules of the Court.

SUMMARY OF ARGUMENT

In Part I of this brief we consider respondent’s under-

standing that it would be inconsistent with federal labor

policy to extend the coverage of state wage laws to em-

ployees covered by labor agreements with arbitration

clauses. We show that this Court has held that protecting

employees in modern industrial society through state min-

imum labor standard laws is not contrary to, but, instead,

the base upon which the federal collective bargaining laws

rest. Thus, the states, like the federal government, may

establish public law minimum substantive protections for

all employees, including employees covered by collective

bargaining agreements.

We then demonstrate that no policy inherent in § 301

of the Labor Management Relations Act (“LMRA”), 29

U.S.C. § 185, suggests any different result. That provi-

sion was intended to assure that agreements secured

through collective bargaining would be enforceable through

a uniform body of federal law. Nothing in that law, or

in this Court’s previous decisions that consider its pre-

emptive force, supports the view that the need for uni-

form enforcement of labor agreements requires the whole-

sale eradication of state law claims whenever resolution of

those claims requires reference to the terms of a labor

agreement. Neither the federal policy requiring uniform-

ity in interpreting labor agreements, nor the policy favor-

ing arbitration of workplace disputes under collectively

bargained arbitration schemes supports respondent’s

position.

In Part II we discuss the inverse of the proposition

analyzed in Part I: whether a law whose effect is to

deprive unionized workers of the benefits of state mini-

mum standards laws—far from being required by federal

labor policy—so burdens the functioning of the federal

scheme as to be in conflict with that scheme. We demon-

strate that when a state deprives unionized workers of the

benefits of its state minimum labor standards laws on a

mistaken view of the incompatibility of the two systems

of worker protection, the result of its actions is simply to

punish employees who have completed the process of col-

lective bargaining. For that reason, a law like Cal. Code

§ 229 that as applied effectively deprives most unionized

workers the benefit of the state wage laws impermissibly

burdens the federal scheme.

ARGUMENT

I. FEDERAL LABOR POLICY DOES NOT REQUIRE

STATES TO EXCLUDE UNIONIZED WORKERS

FROM THE PROTECTIONS OF THEIR MINIMUM

STANDARD EMPLOYMENT LAWS.

California for many years has had in place wage laws

that require, among other things, that employees be paid

at specified intervals and in a specified manner. Such

laws are the norm in state labor codes. Virtually every

state has made the judgment that employees, especially

employees with limited income, are dependent upon regu-

lar wage payments to meet their basic human needs. The

resulting statutory provisions are a basic component in

our system for regulating employment, a paradigm ex-

ample of a public law minimum substantive protection for

individual employees.’

Respondent nevertheless argues that § 301 of the LMRA

preempts the application of such state wage laws to em-

ployees covered by a collective bargaining agreement with

an arbitration clause, because the remedy provided in the

law requires in every case calculation of the wage due,

which in turn requires “application of a collective bar-

gaining agreement.” Pet. App. 26a, citing Cai. Code

§ 229. Virtually all state wage laws—indeed virtually all

state employment laws of any kind that provide the

standard remedy of backpay—require a similar calcula-

tion. If respondent is correct as to the preemptive scope

of LMRA § 301, most state wage laws as applied to

unionized workers would be preempted.

The AFL-CIO is the last organization to minimize the

benefits of collective bargaining and the efficacy of labor

contract arbitration, or to oppose preemption doctrines

necessary to ensure the effective operation of the collec-

tive bargaining system instituted by the National Labor

1 See Bureau of National Affairs, Labor Relations Reporter,

State Laws, summarizing the regulations of the 48 states that

have adopted such provisions.

Relations Aet of 1935 (“NLRA”), as amended in 1947

by the LMRA. We nevertheless think it clear that re-

spondent’s view of the preemptive force of federal labor

law in this area rests upon a fundamental misunderstand-

ing of that law.

A. It facilitates analysis to begin by fixing LMRA

§ 301’s place within the overall NLRA-LMRA statutory

scheme of which it is a single piece. These federal enact-

ments protect the right of employees “to engage in con-

certed activities for the purpose of collective bargaining

or other mutual aid or protection.” NLRA §7, 29

U.S.C. § 157. Where employees choose to exercise that

right by selecting an exclusive bargaining representative,

NLRA §§ 8(a)(5), 8(b)(3) & 8(d) require the em-

ployer and the employee representative to bargain in good

faith over wages and otier terms and conditions of em-

ployment, and LMRA § 204(a)(i) enjoins the parties

to “exert every reasonable effort to make and maintain

[collective bargaining] agreements.” See 29 U.S.C.

$§ 158(a)(5), (b)(3), (d) & 174(a)(i).

LMRA § 301, in its turn, dictates that where collective

bargaining results in an agreement, that agreement shall

be enforceable in the federal courts:

Suits for violation of contracts between an em-

ployer and a labor organization representing em-

ployees in an industry affecting commerce . . . may

be brought in any district court of the United States

having jurisdiction of the parties... . [29 U.S.C.

§ 185(a).]

Moreover, as this Court explained in Allis-Chalmers v.

Lueck, 471 U.S. 202, 209 (1985),

[iJn Textile Workers v. Lincoln Mills, 353 U.S. 448

(1957), the Court ruled that § 301 expresses a fed-

eral policy that the substantive law to apply in § 301

cases “is federal law, which the courts must fashion

from the policy of our national labor laws.” J/d. at

456. That seminal case understood § 301 as a con-

gressional mandate to the federal courts to fashion

a body of federal common law to be used to address

disputes arising out of labor contracts.

And, in Teamsters v. Lucas Flour, 369 U.S. 95 (1962),

the Court resolved the “choice of law” question inherent

in Lincoln Mills by ruling that these federal common law

principles must apply in all breach of labor contract

cases, whether brought in state or in federal court. Thus

the Court declared fee’eral contract law paramount, and

state contract law preempted, when courts are presented

with labor contract claims.

The federal labor law, then, is an integrated whole

that governs the successive stages of a single process

enabling employees to unionize, and employers and em-

ployees to bargain collectively and reach binding and

enforceable agreements embodying the results of their

bargain.

B. This is not the first time that this Court has con-

sidered how this federal law of collective bargaining was

intended to relate to state minimum labor standards laws.

In Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S.

724 (1985), the Court considered the claim that the

NLRA system of free collective bargaining preempts such

state laws. In this regard, the appellants argued that Con-

gress “intended to prevent the states from establishing

minimum employment standards that labor and manage-

ment would otherwise have been required to negotiate

from their federally protected bargaining position.” /d.

at 751. The Metropolitan Life Court unanimously re-

jected that argument. In so doing, the Court emphasized

four propositions critical to the instant case.

First, regulation of the employment relationship, in the

form of public law minimum labor standards embodied

in countless legislative enactments at both the federal and

state levels, dates back a hundred years. Such enactments

include, for example, “[cJhild labor laws, minimum and

other wage laws, laws affecting occupational health and

safety, . . . [s]tate laws requiring that employers con-

tribute to unemployment and workmen’s compensation

funds, laws prescribing mandatory state holidays, and

those dictating payments to employees for time spent at

the polls or on jury duty.” 471 U.S. at 756 (internal

quotations omitted ).

Second, both federal and state minimum labor standard

laws have governed “union and nonunion employees

equally,” 471 U.S. at 755, and have done so by estab-

lishing public law norms that operate “independent of the

collective-bargaining process,” and that “devolve on [em-

ployees}] as individual workers, not as members of a

collective organization,” id. (quoting Barrentine v. Arkan-

sas-Best Freight System, Inc., 450 U.S. 728, 745 (1981)).

Third, Congress “developed the framework for self-

organization and collective bargaining of the NLRA

within th[is] larger body of state law promoting public

health and safety” and did not “intend[] to disturb the

myriad state laws then in existence that set minimum

labor standards, but were unrelated in any way to the

processes of bargaining or self-organization.” 471 U.S.

at 756. Accordingly, Congress conceived of the collective

bargaining system as one that enables workers, through

collective action, to enhance their employment conditions,

above minimum public law standards. “No incompati-

bility exists, therefore, between federal rules designed to

[protect collective bargaining] and state or federal legis-

lation that imposes minimal substantive requirements on

contract terms negotiated between parties to labor agree-

ments, at least as long as the purpose of the state legis-

lation is not incompatible with the[] general goals of the

NLRA.” 7d. at 754-756. Indeed, Congress has reaffirmed

this judgment repeatedly over the years, as Congress

“has .. . [nJever seen fit to exclude unionized workers

and employers from laws establishing federal minimal

employment standards.” Jd. at 755. And, the Court has

noted that there is “no reason to believe that for this

purpose Congress intended state minimum labor standards

to be treated differently from minimum federal standards.”

Id.

Finally, the Court noted that the federal collective bar-

gaining scheme would be endangered if individual work-

ers were to be denied state minimum labor standards

protections should those workers choose to unionize and

engage in collective bargaining: “It would turn the policy

that animated the Wagner Act on its head to . . . pe-

nalize[] workers who have chosen to join a union by pre-

venting them from benefiting from state labor regulations

imposing minimal standards on nonunion employees.”

471 US. at 756.

C. Metropolitan Life settles the proposition that the

federal labor laws do not preempt state minimum labor

standards laws during the organizing process governed

by NLRA-LMRA scheme or during the collective bar-

gaining process, also governed by that scheme. The re-

maining question—and the one presented here—is whether

once collective bargaining negotiations result in an agree-

ment, the mechanism for the enforcement of the agree-

ment—LMRA § 301—trequires the very same laws to give

way. The logic of the situation all but compels the con-

clusion that the answer is “No.”

First, as we have noted, the Metropolitan Life Court,

after canvassing the NLRA-LMRA legislative materials,

concluded that Congress developed the federal labor laws

“within the larger body of state law promoting health

and safety” and did not by enacting the federal labor laws

“intend to disturb the myriad state laws then in existence

that set minimum labor standards.” 471 U.S. at 756.

Nothing in the LMRA § 301 legislative materials shows

a different intent. So far as we can find, there is not a

word in § 301 or in the reports and floor statements

pertaining to that provision so much as suggesting that

the federal law of labor contracts would displace state

minimum labor standards laws. That parallel is precisely

what one would expect; § 301, after all, is not a free-

standing provision animated by a set of purposes and

concerns separate from those that animate the NLRA-

LMRA scheme as a whole, but an integral part of that

scheme.

Second, LMRA § 301’s particular office in the federal

labor law is not one that supports, much less requires, the

preemption of state minimum labor standards laws. The

point of § 301 is to make collective bargaining agree-

ments enforceable. The means to that end is a grant of

jurisdiction to the federal courts over suits for violation

of such agreements, and a charge to develop a uniform

federal labor contract law to govern such suits.

No principles of law are better settled than that

private agreements are negotiated against the background

of the applicable public law and that such private agree-

ments are supplemental or subordinate to, not paramount

over, public law. E.g., Mineworkers v. Pennington, 381

U.S. 657, 665 (1965) (because unions have a right to

“bargain does not mean that the agreement reached may

disregard other laws”). See generally, Restatement (Sec-

ond) of Contracts, § 178, comment a (a “court is bound

to carry out the legislative mandate with respect to the

enforceability of [any] contract term”). Indeed, this

Court has already ruled that § 301 conforms to these prin-

ciples: “Clearly, § 301 does not grant the parties to a

collective bargaining agreement the ability to contract for

what is illegal under state law.” Allis-Chalmers Corp. v.

Lueck, 471 U.S. 202, 212 (1985).

Given these principles, and Metropolitan Life’s recog-

nition that the federal law governing the negotiation of

collective bargaining agreements does not preempt state

minimum standard laws, it is all but inconceivable that

the federal law governing the enforcement of the resulting

collective bargaining agreements would have that more

far-reaching preemptive effect.”

2 The Metropolitan Life Court was well aware of the § 301 pre-

emption issue. That case was decided later in the same term the

D. Four times in recent years, the Court has con-

fronted the question presented here: when does the § 301

federal common law of labor contracts preclude state

causes of action from going forward where the plaintiff

is an employee covered by a collective bargaining agree-

ment. Allis-Chalmers Corp. v. Lueck, supra, Electrical

Workers v. Hechler, 481 U.S. 851 (1987); Caterpillar,

Inc. v. Williams, 482 U.S. 386 (1987); Lingle v. Norge

Division of Magic Chef, Inc., 486 U.S. 399 (1988). See

also Steelworkers v. Rawson, USS. , 110 S.Ct.

1904 (1990). None of these cases, fairly understood,

support respondent’s view of § 301 preemption.

In Allis-Chalmers, supra, the Court for the first time

considered the preemptive force of § 301 in a case that

was not styled as a suit to enforce a labor agree-

ment. In that case, the plaintiff, an employee covered

by a collective bargaining agreement, brought what he

labelled a state tort action for breach of the duty of good

faith in failing to honor an insurance provision in the

agreement. Analyzing the state law, the Court deter-

mined that in substance the state tort was nothing more

than a breach of contract claim pleaded in tort. Had the

matter been pleaded as a breach of contract, the plaintiff

would have been required to arbitrate the claim pursuant

to the contract’s arbitration clause, and—had a breach

been established—would have been awarded contractual

damages. By pleading the claim as a tort, plaintiff sought

to avoid the arbitral process and the limited contract dam-

ages that would have otherwise applied.

To have allowed such a result, the Court concluded,

“would elevate form over substance and allow parties to

evade the requirements of § 301 by re-labeling their con-

Court decided the seminal §301 preemption case, Allis-Chalmers

Mfg. Co. v. Lueck, supra. Indeed, Metropolitan Life cited the

Lueck decision for the proposition that federal law could not be

understood to have sanctioned penalizing workers who choose to

join a union by depriving them of the benefits of state minimum

labor standard laws. 471 U.S. at 756.

tract claims as claims for tortious breach of contract.” 471

U.S. at 211. See also Franchise Tax Board v. Laborers

Vacation Trust, 463 U.S. 1, 22-23 (1983). As the Allis-

Chalmers Court explained, “questions relating to what

the parties to a labor agreement agreed, and what legal

consequences were intended to flow from breaches of that

agreement must be resolved by reference to uniform fed-

eral law.” 471 US. at 211.

Lest it be misinterpreted as having uncovered some

more expansive preemptive intent in § 301, the Court

also added:

Of course, not every dispute concerning employment,

or tangentially involving a provision of a collective-

bargaining agreement, is preempted by § 301... . In

extending § 301 beyond suits for breach of contract,

it would be inconsistent with congressional intent

under that section to preempt state rules that pro-

scribe conduct, or establish rights and obligations,

independent of a labor contract. [471 U.S. at 212.]

This Court’s subsequent decisions reiterate the same

principle: Section 301 preemption is designed to assure

that if the parties to collective bargaining negotiate for

certain contract rights, and as well negotiate for arbitra-

tion. of claims arising out of those bargained-for-rights,

they will be assured the benefit of their collective bargain

through application of a uniform body of federal law. A

state law claim, whatever its label, that states in substance

that the defendant denied the plaintiff a contract right,

does nothing more than give force to a private contractual

agreement. Such a law is not a law “independent of a

labor contract,” but in substance a contract law that § 301

preempts.

At the same time, Allis-Chalmers and its progeny con-

firm that nothing in § 301 draws into questions state laws

that are independent of the labor agreement; viz., laws

that grant employees a public law right and employers

a corresponding public law obligation—whether or not

the employee is covered by a collective bargaining agree-

ment. An employee filing a claim under such a state law

makes out his substantive case without having to show

that the employer breached a collective bargaining agree-

ment, or any other private agreement. And, such an

agreement comes into play only to provide a subsidiary

fact (for example, in this wage case, the time at which

wages were to be paid or the amount of the wages) or

if the employer-defendant so chooses as a defense. Such

tangential references to a labor contract cannot be said

to change the independent nature of the state min-

imum labor standards law or of the employee’s claim

founded on that law. See, e.g., Hechler, 481 U.S. at 859

(§ 301 preemption turns upon whether the state law

duty relied upon “was one without existence independent

of the collective-bargaining agreement”); Caterpillar, 482

U.S. at 395 (“a plaintiff covered by a collective bargain-

ing agreement is permitted to assert [in state court] legal

rights independent of that agreement”) (emphasis in orig-

inal). See also, Rawson, 110 §S. Ct. at 1911 (“questions

relating to what the parties to a labor agreement agreed,

and what legal consequences were intended to flow from

breaches of that agreement, must be resolved by reference

to uniform federal law”) (citing Allis-Chalmers); id. at

1915 (Kennedy, J., dissenting) (agreeing that “a State

cannot circumvent our decisions in Lingle, Hechler, and

Allis-Chalmers, by the mere ‘relabeling’ as a tort claim

an action that in law is based upon the collective bargain-

ing process”).

E. To be sure, as the decision below shows, the lower

courts have tended to read this Court’s § 301 preemption

decisions—and most particularly the Lingle decision—as

standing for a different and broader principle. That prin-

ciple is that when employees covered by a collective bar-

gaining agreement (or, as in the instant case, an agree-

ment with an arbitration clause) assert a claim based upon

what is alleged to be a state minimum labor standards

public law right, to determine whether the claim is pre-

empted, the court looks, not to the independence of the

State public law right asserted from any labor contract

right, but instead to whether resolution of the claim that

rests on the public right entails some specified quantum

of contract interpretation. On this theory, if resolution

of the employee’s minimum labor standards law claim

entails more than that quantum of contract interpretation,

the claim is preempted, without regard to whether the

public law right asserted is independent of any contract

right, or is instead, in essence, a contract right.

The quantum of contract interpretation said to trigger

§ 301 preemption varies wildly. In its most modest form,

a state minimum labor standards law claim is said to be not

preempted unless the validity of the claim turns on the

contract interpretation question. At the other extreme,

such a claim is said to be preempted whenever a defend-

ant asserts as an affirmative defense that there is a con-

tractual justification for its action, regardless of the merits

of that defense. In its most modest formulation, then,

the same state law claim may be preempted or not de-

pending on the facts that are in dispute in a particular suit

brought under the state law. In its strongest form, as in

the instant case, £301 is said to require preemption

of state minimum labor standards law claims when a ques-

tion turning on the labor contract is present even though

there is no dispute over the contract’s meaning. But in

all of its forms, the “quantum of contract interpretation”

test looks to whether contract interpretation questions are

at least conceivably present in cases brought under the

State minimum labor standards law, rather than to

whether the state law is a “contract” law, viz., a law

concerned with the enforcement of private contract rights.

At the least, these decisions require unionized em-

ployees to pursue remedies through labor arbitration under

analogous provisions in their collective bargaining agree-

ment. But, as in this case, the doctrine typically has a far

greater substantive effect. Labor contracts do not neces-

sarily include provisions that create contract rights analo-

gous to rights provided by state minimum labor standard

laws. And, as we discuss in more detail, infra, labor con-

tract arbitration is typically limited to resolution of con-

tract claims, and is not intended by the contracting parties

to be a vehicle to resolve claims derived from other

sources of law.

Thus, as we noted at the outset, in most cases the

“quantum of contract interpretation” approach has the

practical effect of depriving unionized employees of the

protection of a wide variety of substantive state public

law rights of general applicability that do not derive from

any private contractual agreement *—e.g., rights of pri-

vacy,* rights against wrongful discharge,’ rights against

retaliatory discharge," rights against defamation,’ and, as

here, rights derived from wage laws."

The courts of appeals, for example, are now split

on whether state intentional infliction of emotional dis-

tress claims should be preempted when the alleged inva-

sion took place in a unionized workplace, if the employer

* While by far the greatest danger of “contract interpretation”

preemption is that it preempts claims that should not be preempted,

we observe as well that the doctrine is also underinclusive. For

example, at least one court has found not preempted a state law

fraud claim based upon the fraudulent negotiation of a labor agree-

ment, reasoning that it need not interpret the labor agreement to

resolve the case under state law. See Operating Engineers v.

Wilson, 915 F.2d 535 (9th Cir. 1990), cert. denied, 112 S.Ct. 3013

(1991).

* Jackson v. Liquid Carbonic Corp., 863 F.2d 111 (1st Cir. 1988) ;

Schlacter-Jones v. General Telephone, 936 F.2d 435 (9th Cir. 1991) ;

Strikes v. Chevron USA, Inc., 914 F.2d 1265 (9th Cir. 1990);

Utility Workers v. Southern California Edison, 852 F.2d 1083,

1086-87 (9th Cir. 1988); Laws v. Calmat, 852 F.2d 430 (9th Cir.

1988).

5 Johnson v. Anheuser Buach, Inc., 876 F.2d 620 (8th Cir. 1989).

* Magerer v. John Sexton & Co., 912 F.2d 525 (ist Cir. 1990).

7 Johnaon v. Anseuser Busch, Inc., supra.

* Pennsylvania Federation of BMWE v. National R.R. Passenger

Corp., 989 F.2d 112 (8rd Cir. 1993).

defendant asserts as an affirmative defense that its conduct

can arguably be justified by the “management rights”

clause of the labor agreement. In finding such a claim to

be preempted on this rationale, the Fourth Circuit majority

in McCormick v. AT&T Technologies, Inc., 934 F.2d 531

(1991) (en banc), cert. denied, 112 S. Ct. 912 (1992),

did not feel the need to consider whether the management

rights clause did in fact justify the conduct, whether, if

the clause did so, the state law protection could in any

event be negated through negotiation of such a clause, or

whether the state law protection is, in fact, waived. In-

stead, invocation of the collective bargaining agreement

in the defense was, without more, enough to deprive un-

ionized workers the protections of Virginia’s tort law, on

the theory that § 301 mandated such a result.”

The litigating elucidation of the “quantum of contract

interpretation” standard has served to demonstrate that it

is sO contrary to normal contract concepts, so devoid of

any basis in federal labor policy, and so evanescent in its

formulation that it cannot be held in the mind. The lower

court decisions relying upon this test have resulted in a set

of ad hoc decisions that purport to accommodate both the

“quantum of contract interpretation” test and an exception

for “incidental” contract interpretation that are in hope-

less conflict.”

® Accord, Brown & Southwestern Bell Telephone Co., 901 F.2d

1250, 1256 (5th Cir. 1990); Johnson v. Beatrice Foods Co., 921

F.2d 1015 (10th Cir. 1990) ; Johnson v. Anheuser Busch, Inc., supra,

876 F.2d 620 (8th Cir. 1989). Contra, Krashna v. Oliver Realty,

Inc., 895 F.2d 11 (3rd Cir. 1990); O’Shea v. Detroit News, 887

F.2d 683 (6th Cir. 1989) ; Hanks v. General Motors Corp., 906 F.2d

341 (8th Cir. 1990). See also McCormick v. AT&T Technologies,

934 F.2d at 538 (Phillips J., dissenting).

1 As the Ninth Circuit has observed, LMRA § 301 preemption

has become “one of the most confused areas of federal court

litigation :”

[S]jection 301 has been the precipitate of a series of often

contradictory decisions, so much so that “federal preemption

of state labor law has been one of the most confused areas of

federal court litigation.” Note, The Need for a New Approach

F. We do not believe that this “quantum of contract

interpretation” preemption standard is fairly derived from

this Court’s decisions. As courts applying such a standard

typically rely on language from this Court’s decision in

Lingle, we turn to consider the Court’s formulation of the

§ 301 preemption test in that decision.

At the outset, we acknowledge that it is no easy matter

to formulate a reasonably succinct rule of law that cap-

tures the distinction between a state minimum labor stand-

ards law that is independent of a collective bargaining

agreement, and a state law that rests on a collective bar-

gaining agreement right. State minimum labor standard

laws are typically stated in general terms—that employees

shall not work more than a set number of hours, that

employees shall not be discriminated against on a stated

basis, etc.—while the specifics of the employment rela-

tionship are worked out in a set of understandings promul-

gated unilaterally by the employer in unorganized work-

places, or in a collective bargaining agreement in union-

ized workplaces. As this case shows, it is all but inevitable

that a state minimum labor standards case will require

some reference to those concrete understandings. Thus,

while the basic distinction here is between “state rules

that proscribe conduct or establish rights and obligations

independent of a labor contract,” Allis-Chalmers, 471

U.S. at 212, and state rules that rest on a contract right,

the word “independent” cannot mean totally without any

relation to any labor contract. Instead, the phrase em-

bodies the concept of a state law that creates a substantive

public right that stands on its own, and does not require

a claimant in order to prevail to prove a “contract right”

or that a defendant-employer breached a contract in any

way. As the Court recognized in Lingle:

[A]s a general proposition, a state-law claim may

depend for its resolution upon both the interpretation

of a collective-bargaining agreement and a separate

to Federal Preemption of Union Members’ State Law Claims,

99 Yale L.J. 209 (1989). [Galvez v. Kuhn, 933 F.2d 773 (9th

Cir. 1991).]

state-law analysis that does not turn on the agree-

ment. In such a case, federal law would govern the

interpretation of the agreement, but the separate

state-law analysis would not be thereby pre-empted.

As we said in Allis-Chalmers Corp. v. Lueck, 471

U.S. at 211, “not every dispute . . . tangentially in-

volving a provision of a collective-bargaining agree-

ment, is pre-empted by $301 ... .” [471 US. at

413, n.12.]

The Court has therefore essayed a number of formula-

tions of the governing § 301 preemption rule which the

Lingle opinion collects. The Lingle Court thus summar-

ized Allis-Chalmers as holding “if the resolution of a state-

law claim depends upon the meaning of a collective-bar-

gaining agreement, the application of state law (which

might lead to inconsistent results since there could be as

many state-law principles as there are States) is pre-

empted and federal labor-law principles . . . must be em-

ployed to resolve the dispute.” 486 U.S. at 405-06. And

to clarify what kind of “dependence” was at issue, the

Court then quoted that portion of the Allis-Chalmers de-

cision that analyzed and identified the dependent nature

of the state tort claim at issue in that case: “We then

analyzed the Wisconsin tort remedy, explaining that it

‘exists for a breach of a ‘duty devolv[ed] upon the insurer

by reasonable implication from the express terms of the

contract,” the scope of which, crucially, is ‘ascertained

from a consideration of the contract itself’'’” 486 U.S. at

405 (quoting Allis-Chalmers, 471 U.S. at 216, quoting

in turn Wisconsin law).

In a footnote to that passage, Hechler, supra, was said

to have “applied this same principle of § 301 pre-

emption and to have resulted in a judgment that a Florida

law was preempted because it was contract based. “Our

analysis of Florida law revealed that ‘[t)he threshold in-

quiry for determining if a [state tort] cause of action exists

is an examination of the contract to ascertain what duties

were accepted by each of the parties and the scope of

those duties.” 486 U.S. at 406, n.4.

Later the Lingle Court quoted from Caterpillar Inc.,

supra, as follows:

Section 301 governs claims founded directly on rights

created by collective-bargaining agreements, and also

claims “substantially dependent on analysis of a col-

lective-bargaining agreement.” . . . [CJontrary to Cat-

erpillar’s assertion, . . . respondents’ complaint is

not substantially dependent upon interpretation of the

collective bargaining agreement. It does not rely

upon the collective agreement indirectly, nor does it

address the relationship between the individual con-

tracts and the collective agreement. As the Court has

stated, “it would be inconsistent with congressional

intent under [§ 301] to pre-empt state rules that

scribe conduct, or establish rights and obligations,

independent of a labor contract.” Allis-Chalmers

Corp., supra, at 212. [486 U.S. at 410, n.10.]

And, finally in this regard, the Lingle Court found the fol-

lowing passage from Atchinson, T. & S.F.R. Co. v. Buell,

480 U.S. 557, 564-565 (1987), instructive:

This Court has, on numerous occasions, declined

to hold that individual employees are, because of the

availability of arbitration, barred from bringing

claims under federal statutes. Although the analysis

of the question under each statute is quite distinct,

the theory running through these cases is that not-

withstanding the strong policies encouraging arbitra-

tion, “different considerations apply where the em-

ployee’s claim is based on rights arising out of a stat-

ute designed to provide minimum substantive guar-

antees to individual workers.” Barrentine, supra,

[450 U.S.] at 737. [486 U.S. at 411-12 (emphasis in

original ).}

Lingle sums up all the foregoing by stating that “§ 301

preemption merely ensures that federal law will be the

basis for interpreting collective bargaining agreements, and

says nothing about the substantive rights a State may pro-

vide to workers when adjudication of those rights does

not depend upon the interpretation of such agreements,”

486 U.S. at 409 (emphasis added), and “an application

of state law is preempted by § 301 of the Labor Manage-

ment Relations Act of 1947 only if such application re-

quires the interpretation of a collective-bargaining agree-

ment,” id. at 413 (emphasis added).

The words used in the various formulations of the § 301

test reviewed with approval in Lingle are not uniform, but

each points towards a consideration of the plaintiff's claim

and an analysis of whether that claim is based on a con-

tract right or is instead based upon an independent public

law right. Reviewing the decision as a whole, rather than

pulling from it phrases about “contract interpretation,”

the fair conclusion is that the adjudication of a claim

“depends” on the interpretation of a collective bargain-

ing agreement or “requires” such an interpretation if,

and only if, the right the plaintiff claims is created by

a labor contract, rather than by a substantive state public

law. The Court’s subsequent decision in Rawson, supra,

supports our understanding of Lingle. See Rawson, 110

S.Ct. at 1909. See also id. at 1915 (Kennedy, dissenting).

G. The proponents of the “quantum of contract inter-

pretation” preemption test invoke two policy interests that

underlie § 301. Neither supports the “contract interpreta-

tion” preemption approach.

1. The first of these interests is uniformity, which the

Court in Lucas Flour identified as perhaps the most im-

portant interest furthered by § 301 preemption, necessary

to assure that the negotiation and administration of labor

agreements are not hampered by confusion about the con-

sequences of agreeing to a contract term.

But as Lucas Flour itself made clear, and precisely for

the reasons already given with regard to § 301’s basic

purpose, the uniformity imposed by § 301 is the uniform

application of a single body of federal labor contract

principles to all breach of contract claims. There is no

basis in § 301, in the case law, or in reason for extending

§ 301 preemption beyond the enforcement of contract

rights to the enforcement of public law rights that impli-

cate a labor contract question, regardless of the context

es ee

within which the question arises. See also Dowd Box v.

Courtney, 368 U.S. 502 (1962). So long as federal and

state courts as well as arbitrators apply the uniform § 301

federal common law to labor contract question, as Lucas

Flour requires, there is no danger that the parties will be

subject to local and varying law as to the nature of

their bargain. And such uniformity is all that any con-

tracting party can rationally expect from a uniform sys-

tem of contract law.

2. The second federal interest said to require “quan-

tum of contract interpretation” preemption is a federal

preference for arbitral resolution of labor contract claims.

There is, of course, a strong policy favoring the arbitra-

tion of labor-management disputes, embodied in LMRA

§ 203(d) and in the Steelworkers Trilogy." This pre-

sumption does not, we submit, have the force to oust state

minimum labor standards laws whenever their enforce-

ment arguably requires contract interpretation.

The federal labor policy favoring arbitration covers

disputes concerning the majoritarian decisionmaking proc-

ess embodied in the collective bargaining agreement.

LMRA § 203(d), in terms, prefers contractually-estab-

lished dispute resolution mechanisms as “the desirable

method” only “for the settlement of grievance disputes

arising over the application and interpretation of an ex-

isting collective bargaining agreement”, and not for

the settlement of public-law based disputes."* And, the

Steelworkers Trilogy as well stressed that the policy fa-

voring arbitration:

11 Steelworkers v. Enterprise Wheel & Carriage Corp., 363 U.S.

593, 597 (1960); Steelworkers v. Warrior & Gulf Navigation Co.,

863 U.S. 574 (1960); Steelworkers v. American Mfg. Co., 363

U.S. 564 (1960).

12 The language of the Federal Arbitration Act in contrast is

considerably broader. That Act covers controversies “arising out

of” either the “contract” or the underlying “transaction,” as well

as any controversy involving “the refusal to perform the whole or

any part thereof [of the contract or transaction].” 9 U.S.C. § 2.

is confined to interpretation and application of the

collective bargaining agreement; . . . [The arbitrator]

may of course look for guidance from many sources,

yet his award is legitimate only so long as it draws

its essence from the collective bargaining agreement.

[Steelworkers v. Enterprise Wheel, supra, 363 US.

at 597.]

Thus, many labor arbitrators see public law claims as

beyond their ken, and refuse to adjudicate such claims

even when asked to do so by the parties. See Darr v.

NLRB, 801 F.2d 1404 (D.C. Cir. 1986) (arbitrator “saw

the NLRB and the courts as ultimately charged with the

enforcement of public rights, and arbitrators as responsi-

ble for applying labor agreements to determine private

rights”, and issued an award that he knew to be contrary

to the NLRB but that he believed effectuated the intent

of the parties). See also Alexander v. Gardner-Denver

Co., 415 U.S. 36, 53 (1974).

The limited scope of the presumption favoring labor

arbitration has its roots in the fact that the commitment

to arbitrate contained in collective bargaining agreements

is made by the group, but is binding upon each of the

covered individual employees. Republic Steel Corp. v.

Maddox, 379 U.S. 335 (1965). This commitment makes

eminently good sense where the employment rights being

arbitrated are themselves the product of the contract; in

effect, the substantive employment right was from its

origin combined with a commitment to arbitrate, so that

the individual upon whom the right was conferred has no

basis for claiming that the substantive right should be

enforceable in any other manner or fora. Precisely be-

cause of their origin, the contract rights subject to arbi-

tral resolution also are collective rights, and it is accord-

ingly the union, and not the individual, that controls

access to the arbitration forum.

But where the collective agreement to arbitrate is un-

derstood to reach public law rights not rooted in the

contract, quite different considerations come into play, as

this Court emphasized in Alexander vy. Gardner-Denver,

supra:

= ee et en et ee,

We are unable to accept the proposition that peti-

tioner waived his cause of action under Tit'e VII [by

pursuing an arbitration remedy under the collective

agreement.] . . . It is true, of course, that a union

may waive certain statutory rights related to collec-

tive activity, such as the right to strike. These rights

are conferred on employees collectively to foster the

processes of bargaining and properly may be exer-

cised or relinquished by the union as collective-bar-

gaining agent to obtain economic benefits for union

members. Title VII, on the other hand, stands on

plainly different grounds; it concerns not majoritar-

ian processes but an individual’s right to equal em-

ployment opportunities . . . Of necessity, the rights

conferred can form no part of the collective-bargain-

ing process since waiver of these rights would defeat

the paramount congressional purpose behind Title

VII. [415 U.S. at 51 (citations omitted).]

The same point was reiterated in Gilmer v. Interstate/

Johnson Lane Corp., USS. , 111 S.Ct. 1647, 1657

(1992), where the Court concluded that a more sweeping

policy in favor of arbitration that applies under the Federal

Arbitration Act does not apply in the context of labor

contract arbitration. The Court distinguished the FAA

from the LMRA on the ground that labor arbitration is a

collectively bargained system that functions to vindicate

“rights under a collective bargaining agreement and [not]

individual statutory rights,” and in light of “the limited

authority and power of labor arbitrators.” Jd. at 1657.

Consequently, while the presumption favoring arbitra-

tion of labor contract disputes is a broad one, it is not

limitless; that presumption has force with regard to rights

that are the fruits of the majoritarian decisionmaking

process fostered by the collective bargaining system. It

follows from this that when state courts resolve contract

questions that arise in the course of considering inde-

pendent state minimum labor standards law claims, they

impinge upon no federal arbitration interest, so long as

they apply the federal common law of labor contracts in

resolving any ancillary labor contract question that may

be implicated by the suit.

Were there any doubt on this point, it should be re-

solved by consideration of the fact that in analogous situa-

tions, it has never even been suggested that § 301 dictates

arbitral resolution of labor contract questions that arise in

the course of resolving claims based upon other public law

sources. Thus in cases brought under Title VII, courts,

including this Court, have regarded it as beyond question

that the court, in the course of addressing the Title VII

claim, is to resolve such labor contract questions as may

arise. See, e.g., Trans World Airlines v. Hardison, 432

U.S. 63, 83 n.14 (1977) (considering seniority provision

in labor agreement in evaluating anti-discrimination claim ) ;

Goodman v. Lukens Steel Co., 482 U.S. 656, 668 n.13

(1987) (interpreting antidiscrimination clause in labor

agreement). And in a case that provides the closest of anal-

ogies, Corning Glass Works v. Brennan, 417 U.S. 188, 209

n.29 (1974), the Court rejected an employer argument

that the employer had corrected past violation of the

Equal Pay Act, 29 U.S.C. § 206, through negotiation of

certain provisions in a collective bargaining agreement,

and the Court did so only after reviewing the district

court’s analysis of the relevant terms of the labor contract.

There is once again no suggestion in this analysis that

§ 301 concerns made such interpretation problematic.

See also Connell Construction Co. v. Plumbers, 421 U.S.

616, 623, 625 (1975) (interpreting a collective bargain-

ing agreement to determine whether an agreement violated

the Clayton Act).

Indeed, in another analogous area where there plainly

is a federal labor law interest in having one adjudicator

and not another decide a question, the Court has con-

cluded that this interest is not strong enough to overcome

a court’s authority to resolve all issues in a case otherwise

properly before it. In San Diego Trades Council v.

Garmon, 359 U.S. 236 (1959), the Court formulated a

powerful preemption doctrine that requires all disputes

that even arguably involve claims of conduct protected by

§ 7 or prohibited by § 8 of the Act to be resolved by

the National Labor Relations Board. Notwithstanding the

— a

Oe Oe ee ee ee engl ot

primary jurisdiction of the NLRB to consider unfair labor

practice allegations, this Court has ruled consistently that

“the federal courts may decide labor law questions that

emerge as collateral issues in suits brought under inde-

pendent federal remedies.” Connell, supra, 421 U.S. at

626 (considering an antitrust violation). See also Smith

v. Evening News Ass'n, 371 U.S. 195 (1962); Kaiser

Steel v. Mullins, 455 U.S. 72, 87 (1982). The Court’s

judgment has been that while the policy that unfair labor

practice claims be decided by the Labor Board is impor-

tant—and, indeed, is normally paramount—that policy

has to bow to the policy favoring the rational handling

of litigation in a court that has jurisdiction over the claim

before it. Nothing suggests that § 301 embodies a stronger

form of preemption than that stated in Garmon.

Nor can it be that these cases can be distinguished on

the ground that they involve federal, rather than state,

regulation. That argument was advanced and squarely

rejected in Metropolitan Life, supra: “Nor has Congress

ever seen fit to exclude unionized workers and employers

from laws establishing federal minimal employment stand-

ards. We see no reason to believe that for this purpose

Congress intended state minimum labor standards to be

treated differently from federal standards.” 471 U.S. at

755 (emphasis added).

Finally, even if all of this were not so, and there was

a federal interest in having all questions concerning a

labor contract with an arbitration clause wherever the

question arises resolved by an arbitrator, and that in-

terest was stronger than the interest in having the NLRB

resolve questions under the NLRA, to protect that interest

by abolishing state law public rights whenever their reso-

lution implicates a labor contract question is the most

unreasonable of all imaginable results.

In all other situations in which it is imperative that

a second forum decide a question that arises in the course

adjudicating a case properly before the first forum, a doc-

trine of deferral or abstention has been developed, whereby

the first forum holds the claim in abeyance while the

preferred forum considers the ancillary question.“ Thus

under the NLRA, the NLRB will in appropriate cir-

cumstances defer to labor arbitration, always with the

understanding that deferral “is merely . . . a postpone-

ment of the use of the Board’s process.” United Tech-

nologies, 268 NLRB 557, 560 (1984). See generally,

Collyer Insulated Wire, 192 NLRB 837 (1971). And

under the doctrine of Railroad Commissioner v. Pullman,

312 U.S. 496 (1941), federal courts will at times abstain

when presented with questions of state law, with the

same understanding: that the doctrine involves only post-

ponement, not loss, of federal jurisdiction. England v.

Louisiana Staite Board of Medical Examiners, 375 U.S.

411 (1964)."

'S At least one judge has suggested that deferral might be appro-

priate in this context. See Jackson v. Conrail, 717 F.2d 1045, 1060

(7th Cir. 1983) (dissenting) (proposing deferral rather than the

total elimination of the claim because “it would be surprising if

compulsory arbitration of contract disputes was intended to wipe

out the employee’s common law rights other than his right to

enforce the very contracts that are subject to the scheme of com-

pulsory arbitration.”), cert. denied, 104 S.Ct. 1000 (1984). To our

knowledge, no litigant in a state law minimum standard suit has

ever even requested deferral. We suspect this is so because in

truth, the concerns that have led litigants to allege § 301 preemp-

tion have everything to do with its potential to defeat the state law

claim altogeher, and little or nothing to do with the concern that

contract questions are being decided by judges rather than arbi-

trators.

If deferral ever were considered, only the contract issue would

be an appropriate subject of deferral, since a labor arbitrator

generally has no authority to resolve the other issues presented in

state law minimum standard cases. Cf. Hillsborough Tp. v.

Cromwell, 326 U.S. 620, 628 (1946) (abstention inappropriate if

there is doubt about the adequacy of a means to determine the

state law issue in state court).

'* Having said that much, we hasten to add that we are skeptical

of the need for deferral or abstention in this class of cases. In

this case, where no one has suggested that there is a substantial

contract interpretation question involved, and where there has been

no request by any party to submit the question to arbitration,

there is in any event no occasion to consider whether in some

instances the benefits of having arbitrators resolve contract ques-

tions that arise in the course of resolving noncontractual claims

— a a

+ weton—w ia Sl IS ls hese att .

H. The sum of the matter is this. The statutory right

to receive a paycheck on one’s last workday is independ-

ent of any contractual right, though to be sure, it is of no

effect unless there is a paycheck to give, that is, unless

there has been an employment relationship, the employee

has earned wages due, and the employer has terminated

the employee. The essential point is that the “last pay-

check” law does not draw its substance from any labor

contract; the right is a public law right and has full force

and effect whether the parties have negotiated such a rule

or not. The fact that the right is stated in general terms

and there may be disputes about the details of its appli-

cation that call for reference to the understandings that

govern the employment relationship does not make that

public law right a private contract right. The state law

here, moreover, is not one that creates an enhanced pen-

alty for the employer's violation of a collective bargaining

agreement; indeed nothing in the record below suggests

that the labor contract has been violated or even that the

employee claimed that there had been any such breach.

The California wage law is thus an example of the most

common and venerable state minimum standard law, a

law of a kind that the states were enacting long before

the passage of the National Labor Relations Act, and

that has heretofore always been understood to have sur-

vived the enactment of the National Labor Relations Act

and the Labor Management Relations Act.

II. SECTION 229 AS APPLIED BY THE LABOR COM-

MISSIONER IS PREEMPTED BY THE NATIONAL

LABOR RELATIONS ACT.

Respondent incorrectly understood federal law to re-

quire California to exclude most unionized workers from

the protections of its wage laws. The ultimate question

presented in this case is whether such state action which

outweigh the cost and delay inherent in any system of deferral.

It is enough to note respondent’s decision simply to deprive peti-

tioner of a right altogether because its resolution requires contract

interpretation—a decision made as well by many federal courts in

this context—under the guise of protecting “contract interpreta-

tion,” makes no sense at al]

discriminates against the beneficiaries of the federal

scheme of collective bargaining is contrary to federal law.

A. While it is not wholly distinct, this question does

not fit squarely within any of the well-developed doctrines

of federal labor preemption. This case is not in the

class of cases involving the exclusive primary jurisdiction

of the NLRB to resolve unfair labor practice charges.

San Diego Building and Construction Trades v. Garmon,

359 U.S. 236 (1959). Neither is it precisely in the class

of cases that take their name from Machinists v. Wiscon-

sin Employment Relations Commission, 427 U.S. 132,

140 (1976), viz., the class covering the state regulation

of conduct that was meant to be unregulated because left

“to be controlled by the free play of economic forces.”

Although it bears important similarities to the Machinist's

class of cases, it is not in that class because, as we have

just seen, the area of minimum labor standards regula-

tion is not a “no law” area, but an area in which federal

law leaves the states free to regulate.

Analysis must then begin with the first principle of

preemption, grounded in the Supremacy Clause of the

Constitution: that federal law is supreme, and state law

that conflicts with or frustrates federal law must give

way. McCulloch v. Maryland, 4 Wheat. 316, 436

(1819). That principle is the acknowledged starting

point for all labor law preemption analysis. See, @.2.,

Building and Construction Trades Council v. Associated

Builders and Contractors, 113 S.Ct. 1190, 1195 (1993)

(citing cases).

Application of that principle requires consideration of

whether there is indeed a federal interest burdened by

operation of the state law. The easiest case in this regard

is a case in which a state has penalized an employee for

exercising an individual right explicitly guaranteed by

federal law. In Nash v. Florida Industrial Commission,

389 U.S. 235 (1967), for example, the Court had no

difficulty in finding Florida’s decision to withhold benefits

from an employee solely because she filed an unfair labor

practice charge to be an impermissible burden on that

federally created right.

The instant case is like Nash in that the respondent

directly discriminates against individuals covered by labor

contracts containing arbitration clauses; it is different in

that there is no individual right to be covered by such an

agreement, but rather such agreements are the intended

consequence of the operation of the collective right to

bargain. But that difference is not determinative; for the

Machinists line of cases protects just such implicit NLRA

collective rights—viz. the rights of organized employees

and of employers not to be subject to state laws that en-

croach upon the federal scheme’s “no law” area. That

being so, this case involves the same mode of analysis

that animates the Machinist line of cases: whether the

state law burdens the operation of the federal scheme

taken as a whole.

Preemption based upon concerns implied but not ex-

pressed in federal law requires a searching scrutiny of the

nature of the federal interest. As the Court stressed in

Belknap v. Hale, 463 U.S. 491 (1983), to overcome the

presumptive validity of state law, more is needed than

“broad brush assertions” of burdens on federal rights.

Id. at 501. We nevertheless believe that analysis of the

federal interest here can lead to no conclusion other than

that this law, like the law in Machinists, is a law that is

contrary to the federal scheme.

B. The NLRA does not guarantee employees the right

to be covered by labor contracts, or indeed, any guar-

antee of any contractual rights at all. But, as we have

stressed, the entire purpose of the Act is to create a

process through which such agreements may be reached.

The state law here in dispute is a law that discriminates

against members of a group that have successfully com-

pleted the process of collective bargaining provided for

by the federal labor laws. It is difficult to imagine a more

direct burden on the federal scheme. As the Court noted

in Metropolitan Life, “It would turn the policy that ani-

mated the Wagner Act on its head to understand it to

have penalized workers who have chosen to join a union

by preventing them from benefiting from state labor reg-

ulations imposing minimal standards on nonunion em-

ployers.” 471 U.S. at 756.

C. We hasten to add that the states should, in enacting

their laws, take care not to encroach upon areas of ex-

clusive federal concern. But such laws must be based

upon reasonable concerns about encroaching on the fed-

eral scheme, and must in every instance be judged as well

by the effect the regulation has on federally protected

rights." Here, where the concern about § 301 preemp-

tion is fundamentally misconceived, and where the effect of

that misconception is to burden directly the operation of

the federal collective bargaining law, respondent is in no

position to argue that its misunderstanding of the federal

law justifies the burdens it has placed on collective bar-

gaining. Whatever power respondent has to write exclu-

sions into its laws in reliance upon the “penumbra” cast

by the preemptive force of the federal labor law does not

justify excluding unionized workers from the most basic

and longstanding minimum standard laws that orbit well

outside of that half-light.

By the same token, the states may make accommoda-

tions to collective bargaining in their minimum standards

laws. In Fort Halifax Packing Co. v. Coyne, 482 U.S.

1052 (1987), for example, the Court considered a statute

that allows all employers, including unionized employers,

to bargain for an alternative to a state minimum standard

law. The Court rejected an argument that the law was

1% Thus in Golden State Transit Corp. v. Los Angeles, 475 U.S. 608

(1986), a municipality argued that its refusal to renew the license of

a business engaged in a labor dispute was grounded on a desire

to remain neutral] in that dispute, a desire the municipality believed

to be in conformity with federal labor law. Los Angeles further

argued that to judge such a position to be itself preempted by fed-

eral labor law was to place the municipality in a “no win situation,”

since whatever action it took it would “stand accused” of aiding

one side or the other in the dispute. Jd. at 619. The Court, finding

this argument to be based on a misunderstanding of the relevant

federal interests, dismissed it out of hand. /d.

{

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preempted as it applied to unionized employers. It found,

to the contrary, the opt-out “strengthens the case that the

statute works no intrusion on collective bargaining [be-

cause it] balance[s] the desirability of a particular sub-

stantive labor standard against the right of self-determina-

tion regarding the terms and conditions of employment.”

Id. at 22."

The courts have just begun to consider preemption chal-

lenges raised in relation to state minimum standard laws

that distinguish between unionized and nonunionized

workplaces. We doubt that in this case of first impression

it will be possible or prudent to devise a rule intended to

be responsive to every possible permutation that may

arise. This is especially so when the governing principle

requires a careful parsing of the interests involved in each

case. As in other preemption cases, then, “[t]his penum-

bral area can be rendered progressively clear only by the

course of litigation.” Weber v. Anheuser-Busch, 348

U.S. 468, 480-481 (1955).

For present purposes it is enough to note that as ap-

plied, Cal. Code § 229 has not been and cannot be de-

fended on this or any other similar ground. The provision

does not allow unionized workers collectively to decide to

opt out of California’s wage laws in preference to some

other collectively bargained arrangement; it simply ex-

cludes them, thereby putting them to a Hobson’s choice

whereby bargaining for a labor contract with an arbitration

clause costs them a substantive public law protection that

otherwise is vouchsafed to all other employees as a matter

of right. Nor does the state provision further a state in-

terest that parallels a federal labor law interest by increas-

ing the security or well being of workers in some manner;

By a parity of reasoning, a nuanced state law that allows

unionized workers collectively to opt out of a state minimum

standard law if they bargain for similar but not necessarily identi-

cal protections, compare Babler Bros., Inc. v. Roberts, 995 F.2d

911 (9th Cir. 1993), raises different concerns than those raised

here. On analysis a court might conclude that such a law facilitates

collective bargaining rather than punishes its exercise.

instead it bluntly discriminates against those who have

successfully completed the bargaining process created and

encouraged by federal law. Whatever may be said in de-

fense of other laws designed to accommodate the state

and federal schemes, this law should be preempted.

CONCLUSION

For the reasons stated above, the judgment of the

Court of Appeals for the Ninth Circuit should be

reversed.

Respectfully submitted,