if she's the court my name is angela sierra and i represent the lockyer the attorney general of the state of california and the and the california department of health services defendants a palace in this case like to present this afternoon first the question of whether the grant program provisions of california statute a b eight hundred eighty nine are preempted by the national relations act ra well with respect to the provisions that the grass in programs they are very different than a typical commercial transaction and with respect to grants and programs the state in effect it matters because it is california's intention of legislators intention is that as much in one hundred percent of those funds that we are paying for programs and services are being used for those that may be a different question in that the with respect to labor relations the national labor relations act does expressly protect employee actions and employee right does is there anything in eighty nine of the state statute that is prohibiting that employer from seeking alternative sources of funding to engage in the activities that he or she  it for example in the long line of first amendment cases that question has come up when when does a condition on a subsidy or funds become a regulatory become a punishment and time a restrictions the state of california and again if it is not a subterfuge california is not saying that when vendors are providing goods and services there may not be some legitimate overhead expenses in  programs and services and therefore it will not fund whether there may be an alternative way or broader way to ensure that more of its money is going towards the programs and services may be another question provisions in the hands of individuals unions and others well there is a provision that taxpayers have a right to bring an action if after giving notice to the attorney general the train general has not filed an action but this is not a novel concept and do by indirection what they're not able to do by direction and therefore defeating the preemption agreement going to you know i'd be asleep going to elected officials who might be much more interested in getting the vote of labor and preemption why isn't that what's going on here they can't get it amended in congress so then they go to all of the states to get statutes like this well in my view the ultimate question is not who who  good afternoon i know in dispute that the first amendment gives employers the right to express their views about whether their employees should be you know eyes and no one disputes that congress accommodated d and all our way to the first amendment by providing that non coercive speech he's not an unfair labor practice but nothing in the m l r way suggests that congress actually intended to force california to subsidize employers speech about profit organizations there are times when the state pays a couple of hundred thousand dollars for medical research because the state wants a few hundred thousand dollars worth of medical research not because the state wants something specific and if there was a specific program that allowed the reset the end to earn a profit rather than return the unused money to the state or gold over to the following year and we don't know that there is stop money this paid out it might well not be covered by the statute the plaintiffs didn't give the state courts the chance to answer that question there's no indication that these programs or these grants do contain profit component and certainly a typical ground would not involve a profit is there anything in the record to prove the contrary that there's never a profit made by anybody under any arrangement with the state makes under grants and programs now there's certainly nothing to suggest that there's never a profit there is something to suggest that many of the participants are nonprofit organizations and there's nothing to suggest that if the peculiar grant the program allowed for a profit at the end of the day the profit couldn't be paid out and would not be regarded as state funds  know i think what where we're talking about are things like job training grounds that are made to nonprofit organizations like you or not the provisions that are issue here there is a provision of the statute that deals with just some grant programs may be restricted to giving grants to non profits this is a generic statute that would have to be implemented on a grant by grant basis there are certainly some grants that would require that if there's money left it over and the money for profit was paid out it's not clear that that's the money that would be covered by the statute california seems to have modeled this statute on the federal statutes that impose the same restrictions earn a profit from the grant money rather than requiring that all the ground money be spent for the particular activity and that's the question on which a logical interpretation of the statute would be that if there is a profit left money that would have to be used the following year on program expenses that at least is a logical interpretation of the statute the state courts again have not been given any opportunity to interpret the statute but then to a growth your a that speech during the union organizing campaign is an economic weapon in the sense that the words are used in machine this cases and that a union organizing context is like a labor dispute in the sense that it's used in the machinist cases california isn't restricting any conduct at all employers are perfectly free to engage in any activities to a sister guitar union organiz the whole idea that you don't use that money but you can use other services if it's going to count confection right well i don't think congress is regarded as an accounting fiction and they for have it legal real what would you have those do or for what it would be remanded for further proceedings the the district court summary judgment would be reversed in the case would return the employer's made other prohibits the states from interfering with matters within the jurisdiction of the ana larvae and to ask the question quickly because i need to leave time for the attorney general to do rebuttal the state statute wouldn't interfere with anything that the of money spending money to assist or guitar union organizing would be impermissible we guard lists of whether the employers violated or did not violate the national labor relations board national labor so there would be no interference with the board stressed action that we have about three minutes left i will leave the rest of the time to the attorney general f two examples of enforcement action that we submitted to the district court one was involving with you where the state of california and the n f l have sued them for demanding an audit of their records under a b eight hundred eighty nine of this appeal so they have the knowledge that it doesn't matter under the statute whether you have enough money from other sources they're still going after you the second one that we introduce in the record  court now that the trial court stayed the trial date a couple of weeks before trial but we had a stipulated record for the trial where the state of california stipulated as a fact that the employer fountain activities through private funding but the have nonetheless misused grant for a program money provided by the state why why is that hypothetical because if the employer has adequate money from other sources then it doesn't make any difference whether they took money directly from the state and why did to a purpose the state disapproves of the status contending that if you have a bank account and you have a thousand dollars in it and and in this case seventy seven hundred dollars or from private funds and three hundred dollars are from state funds that if you spent two hundred  the accounts where you put the source security funds say gee i busy i can't go to the bank today we're going to use that money to to buy a computer file cabinet or is that correct it was only in part the commingling trap with evidence that this was intended as a fern on employer exercise of speech on the national labor relations  prohibited correct that is one aspect of garman as outlined in the amicus brief for the national labor relations board there's a separate aspect of garman that comes in the play beyond whether it's protected or perhaps even under section seven and eight and that is that the preemption is there to protect not only the substantive law of the an alarm a but also the administration and the national labor relations board has a responsibility under section nine any to conduct elections to ensure employee free choice under section seven they have developed an entire body of law under the national labor relations act which utilizes employer for free speech  union rhetoric during campaigns what would you help me out just point to the portion of the district court record any state that is to court decision that is predicated speaking with some counsel for you know rb and they raise that issue good general matter how is this different from the situation the supreme court dealt with a couple of months ago to take it with the restriction as a general concept how is this different because constitutional analysis is different than preemption analysis and the supreme court has specifically stated in the gould case that we will not allow the courts under the guise of spending power to regulate conduct which is covered under the national labor relations act under either garment or machinist preemption and so spending power cannot be a pretext for regulation not machine is preemption the district court was wrong to rely on machine we think that this is a very difficult issue and the cases that you see by our own supreme court they typically address it from both garment and machinist standpoint because they all the while of from an underlying premise of conflict preemption and therefore a lot of the principles are equally applicable to market participation doctrine so if you make this thing there are decisions dealing with not necessarily appellate court decisions but there are decisions dealing with card check requirements that counties have imposed the district court in the northern district had one of those as preemption and the collective bargain side i am not familiar with one applying it typically when they're interfering in organizing it's much more of a garmin issue the question here becomes is this regulation obviously much principles get blurred in practice and the courts typically analyze from both sides and but i do believe that it's one or the other garment and it depends on whether you look at the underlying issue of whether or not employer speech is directly protected under the national labor relations act or is not a protected right i think that's part of  the fact in this case that this is the state concerned about the use of its own funds i am not aware of cases outside of the labor context dealing with the state funny issue other than the pure constitutional cases such as a i do think that there were some helpful cases cited in some of the amicus that were filed at the point where they note that some of the provisions in the statute strongly suggest this is elation because if it was not regulation why would there be civil penalties if it was not regulation why would there be third party enforcement of a breach of contract claim by unions in this case when they're not parties t contract in the guise of being tax payers those indicate that this is regulation this is not something different which list what was suggested by the n f l in their briefs is recall as private right of problem because it goes to the issue of whether or not the state conduct is regulation or not now whether or not there should be a private cause or national if it is regulation because this regulation it falls within the machinist doctrine because of the record is filled with examples that we submitted that there are at least five hundred members of the california association of health facilities one of the other points that are one hundred percent the pundit on the medicare program for their funding and they are headed from  content that the state does not have the right through this statute to either for hiv it were chill employer speech when it's essential to our national labor relations policy well it's actually though you have to say that it's one aspect statute that deals with official picture meant of services but it's unrelated to regulating federal liquor policy and so if that was their purpose they could have done it they did not do it in this case they specifically focused on federal labor policy they specifically focused on employer speech they say it's the purpose of this statute in the preamble not to interfere with employer choice and the employer speech interferes with that and they don't want to subsidize the national labor relations board says employer speech is part and parcel of our federal labor policy it's not up to the state to make that policy decision well you take the preamble  of neutrality by the state don't end preemption analysis you must still look at it from a program chain analysis standpoint under machinist's such as boston harbor cases is this regulation and does it fall in the market participation exception  zation you know the statute doesn't say that you can use profit it says any state funds and they follow it all the way down so you're taking a position you think that would be that would be a violation i'm taking a position different that you will be inclined compliance at a future date whether the organizing ever occurs you must set up your separate bank accounts at this time even if organizing never occurs to prevent the possibility that funds will be c right because if you're not if you've engaged and in speech you must show that they were done from separate accounts including employee salaries and other expenses and to the extent that that payment came out of a single account the statute there was an air of a presumption that you've used funds and appropriately in proportion to the monastery funds you receive and therefore must pay back been introduced three different interpretations of the employee wage component in opposition to the summary judgment first they said employees salaries were covered and in a letter to an employer on enfor then in opposition to the summary judgment they are produced another letter that said it was not going to be unless the employer was using encouraging employees during work time to engage in that activity and raising issues and whether or not the employees and gates and surveillance under the national labor relations act so they are they are trying to use a shifting discussion of the very wording of the statute in an employee employers in litigation t district court in reliance on the first panel's decision by judge fisher found that the new york statute was similarly preempted and they have similar legislation in this many as nineteen other states in varying degrees so they are tempting to totally rewrite the national labor relations act and federal labor policy through state statutes and local ordinances your time ha programs that the city california is funding one can be a provider of grants or programs for california while at the same time engaging in activities related to the providers of programs and services are engaging in as long as doing that outside our project with other fun but it's different you're not saying i'm only giving you this money to build a bridge and we're giving this money to do such and such you're saying