Volume 1 of 2

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHAMBER OF COMMERCE OF THE 

UNITED STATES; CALIFORNIA

CHAMBER OF COMMERCE;

EMPLOYERS GROUP; CALIFORNIA

HEALTHCARE ASSOCIATION;

CALIFORNIA MANUFACTURERS AND

TECHNOLOGY ASSN.; CALIFORNIA

ASSOCIATION OF HEALTH FACILITIES;

CALIFORNIA ASSOCIATION OF HOME

& SERVICES FOR THE AGING; BETTEC

CORPORATION; MARKSHERM

No. 03-55166 CORPORATION; ZILACO INC., ZILACO;

DEL RIO HEALTHCARE, INC.;  D.C. No.

BEVERLY HEALTH & REHABILITATION CV-02-00377-GLT

SERVICES, INC. dba Beverly Manor

Costa Mesa; INTERNEXT GROUP,

Plaintiffs-Appellees,

CALIFORNIA LABOR FEDERATION,

AFL-CIO; AMERICAN

FEDERATION OF LABOR AND

CONGRESS OF INDUSTRIAL

ORGANIZATIONS,

Intervenors-Appellants,

v. 

11765
BILL LOCKYER, Attorney General, 

in his capacity as Attorney

General of the State of California;

DEPARTMENT OF HEALTH SERVICES;

FRANK G. VANACORE, as the Chief

of the Audit Review and Analysis  Section of the California

Department of Health Services;

DIANA M. BONTA, R.N., Dr., Ph.D,

as the Director of the California

Department of Health Services,

Defendants. 

CHAMBER OF COMMERCE OF THE 

UNITED STATES; CALIFORNIA

CHAMBER OF COMMERCE;

EMPLOYERS GROUP; CALIFORNIA

HEALTHCARE ASSOCIATION;

CALIFORNIA MANUFACTURERS AND

TECHNOLOGY ASSN.; CALIFORNIA

ASSOCIATION OF HEALTH FACILITIES; No. 03-55169

CALIFORNIA ASSOCIATION OF HOME D.C. No.

& SERVICES FOR THE AGING; BETTEC  CV-02-00377-GLT

CORPORATION; MARKSHERM OPINION CORPORATION; ZILACO INC., ZILACO;

DEL RIO HEALTHCARE, INC.;

BEVERLY HEALTH & REHABILITATION

SERVICES, INC. dba Beverly Manor

Costa Mesa; INTERNEXT GROUP,

Plaintiffs-Appellees,

and 

11766 CHAMBER OF COMMERCE v. LOCKYER
CALIFORNIA LABOR FEDERATION, 

AFL-CIO; AMERICAN

FEDERATION OF LABOR AND

CONGRESS OF INDUSTRIAL

ORGANIZATIONS,

Intervenors-Appellants,

v.

BILL LOCKYER, Attorney General,

in his capacity as Attorney

General of the State of California; 

DEPARTMENT OF HEALTH SERVICES;

FRANK G. VANACORE, as the Chief

of the Audit Review and Analysis

Section of the California

Department of Health Services;

DIANA M. BONTA, R.N., Dr., Ph.D,

as the Director of the California

Department of Health Services,

Defendants-Appellants. 

Appeal from the United States District Court

for the Central District of California

Gary L. Taylor, District Judge, Presiding

Argued and Submitted

March 21, 2006—San Francisco, California

Filed September 21, 2006

Before: Mary M. Schroeder, Chief Judge, Stephen Reinhardt,

Robert R. Beezer, Alex Kozinski, Andrew J. Kleinfeld,

Michael Daly Hawkins, Sidney R. Thomas,

Barry G. Silverman, M. Margaret McKeown,

Kim McLane Wardlaw, Raymond C. Fisher,

Richard A. Paez, Johnnie B. Rawlinson, Richard R. Clifton

and Consuelo M. Callahan, Circuit Judges.

CHAMBER OF COMMERCE v. LOCKYER 11767
Opinion by Judge Fisher;

Dissent by Judge Beezer

11768 CHAMBER OF COMMERCE v. LOCKYER
COUNSEL

Bill Lockyer, Tom Greene, Richard T. Waldow, Angela

Sierra (argued), Sacramento, California, for the defendantsappellants. 

CHAMBER OF COMMERCE v. LOCKYER 11771
Stephen P. Berzon, Scott A. Kronland (argued), Stacey M.

Leyton, Altshuler, Berzon, Nussbaum, Rubin & Demain, San

Francisco, California, for the intervenors-appellants. 

Bradley W. Kampas (argued), D. Gregory Valenza, Scott

Oborne, Jackson Lewis LLP, San Francisco, California, for

the plaintiffs-appellees. 

John H. Ferguson, Division of Enforcement Litigation, Washington, DC, for amicus curiae National Labor Relations

Board. 

Daniel V. Yager, McGuiness Norris & Williams, LLP, Washington, DC, for amici curiae Associated Builders and Contractors, Inc. and LPA, Inc. 

Fran M. Layton, Shute, Mihaly & Weinberger LLP, San Francisco, California, for amicus curiae South Coast Air Quality

Management District. 

OPINION

FISHER, Circuit Judge: 

The question before us is whether a state’s exercise of its

sovereign power to control the use of its funds conflicts with

national labor policy as expressed in the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 151-169. Specifically, two

provisions in a California statute forbid employers who

receive state grant or program funds in excess of $10,000

from using those funds to assist, promote or deter union organizing. We hold that California’s grant and program fund

restrictions do not undermine federal labor policy, are not preempted by the NLRA and do not violate the First Amendment.

11772 CHAMBER OF COMMERCE v. LOCKYER
FACTUAL BACKGROUND

On September 28, 2000, California enacted Assembly Bill

No. 1889, Cal. Gov’t Code §§ 16645-16649 (collectively,

“AB 1889”). The preamble of the statute declares:

It is the policy of the state not to interfere with an

employee’s choice about whether to join or to be

represented by a labor union. For this reason, the

state should not subsidize efforts by an employer to

assist, promote, or deter union organizing. It is the

intent of the Legislature in enacting this act to prohibit an employer from using state funds and facilities for the purpose of influencing employees to

support or oppose unionization and to prohibit an

employer from seeking to influence employees to

support or oppose unionization while those employees are performing work on a state contract. 

§ 16645, Historical and Statutory Notes, Section 1 of Stats.

2000, c. 872. 

Two provisions of the California statute, sections 16645.2

and 16645.7, are at issue in this appeal.1 Section 16645.2(a)

bars private employers who are “recipient[s] of a grant of

state funds” from “us[ing] the funds to assist, promote, or

deter union organizing.” Section 16645.7(a) bars “[a] private

employer receiving state funds in excess of [$10,000] in any

calendar year on account of its participation in a state program” from using program funds “to assist, promote, or deter

union organizing.” The phrase “assist, promote, or deter union

organizing” includes “any attempt by an employer to influence the decision of its employees in this state or those of its

1The parties stipulated to the district court’s entry of a partial final judgment as to preemption of § 16645.2 and § 16645.7 to facilitate prompt

appellate review of the district court’s preemption ruling regarding these

two sections only. 

CHAMBER OF COMMERCE v. LOCKYER 11773
subcontractors regarding . . . [w]hether to support or oppose

a labor organization that represents or seeks to represent those

employees . . . . [or] [w]hether to become a member of any

labor organization.” § 16645(a)(1)-(2). The statute specifies

as prohibited “any expense, including legal and consulting

fees and salaries of supervisors and employees, incurred for

research for, or preparation, planning, or coordination of, or

carrying out, an activity to assist, promote, or deter union

organizing.” § 16646(a). Expressly exempted from the statute’s reach are “activit[ies] performed” or “expense[s]

incurred” in connection with “[a]ddressing a grievance or

negotiating or administering a collective bargaining agreement” and “[n]egotiating, entering into, or carrying out a voluntary recognition agreement with a labor organization.”

§ 16647(a), (d). 

The statute requires employers covered by sections 16645.2

or 16645.7 to certify that no state funds will be used to assist,

promote or deter union organizing. §§ 16645.2(c), 16645.7(b).

It also requires employers who make expenditures to assist,

promote or deter union organizing to maintain and provide

upon request “records sufficient to show that state funds have

not been used for those expenditures.” §§ 16645.2(c),

16645.7(c).2 If an employer commingles state and other funds,

2Despite the absence of any finding by the district court that

§ 16645.2(c) and § 16645.7(c) are onerous, the dissent insists that these

provisions entail “burdensome and detailed record-keeping,” impose

“seemingly impossible compliance burdens” and are “daunting.” (Dissent

at 11815, 11816, 11817.) The dissent even suggests that these provisions

require “an employer [to] create and maintain two completely separate

accounting and payroll systems.” (Dissent at 11817.) The statute, however, does not require “employers to maintain records in any particular

form,” § 16648, and leaves employers free to design their accounting and

payroll systems however they wish, provided only that they have “records

sufficient to show that state funds have not been used” to assist, promote

or deter organizing. §§ 16645.2(c), 16645.7(c). Moreover, the only expert

testimony in the record on these provisions states that they provide

employers “flexibility in establishing proper accounting procedures and

controls,” impose no burden greater than numerous other common grant

restrictions and in fact “appear to be significantly less burdensome than

the detailed requirements for federal grant recipients . . . .” 

11774 CHAMBER OF COMMERCE v. LOCKYER
the statute presumes that any expenditures to assist, promote

or deter union organizing derive in part from state funds.

§ 16646(b). 

Employers who violate sections 16645.2 or 16645.7 are

subject to fines and penalties, which include the disgorgement

of the state funds used for the prohibited purposes and a civil

penalty paid to the state that is equal to twice the amount of

those funds. §§ 16645.2(d), 16645.7(d). Suspected violators

may be sued by the state Attorney General or by any private

taxpayer. § 16645.8(a)-(c). Prevailing plaintiffs, and prevailing taxpayer intervenors who make substantial contributions

to an action under this section, are “entitled to recover reasonable attorney’s fees and costs.”

3

 § 16645.8(d). 

In April 2002, plaintiffs-appellees (collectively, the “Chamber of Commerce”) brought an action for injunctive and

declaratory relief challenging the statute facially on numerous

grounds, including NLRA preemption. The AFL-CIO and

others (collectively, the “AFL-CIO”) intervened. In May

2002, the Chamber of Commerce moved for summary judgment. Defendants, who are the California Department of

Health Services and state officials sued in their official capacity (collectively, “California”), filed cross motions for summary judgment in August 2002. 

On September 16, 2002, the district court granted partial

summary judgment in favor of the Chamber of Commerce.

The district court determined that the NLRA preempted sec3The dissent finds it significant that the statute allows private taxpayers

to sue suspected violators. (Dissent at 11815-16.) In this respect, the statute is no different from any number of other federal and state laws or qui

tam causes that enable private attorneys general to help detect, punish and

deter wrongdoing. In contrast to some such statutes (e.g., § 4 of the Clayton Act, 15 U.S.C. § 15), which encourage private suits by permitting

plaintiffs to be awarded treble damages, AB 1889 only allows private litigants to recover attorney’s fees and costs — the damages go to the state.

See § 16645.8(d). 

CHAMBER OF COMMERCE v. LOCKYER 11775
tions 16645.2 and 16645.7 under the Supreme Court’s

Machinists doctrine because the provisions “regulate[d]

employer speech about union organizing under specified circumstances, even though Congress intended free debate.”

Chamber of Commerce v. Lockyer, 225 F. Supp. 2d 1199,

1205 (C.D. Cal. 2002); see Lodge 76, Int’l Ass’n of Machinists v. Wisc. Employment Relations Comm’n, 427 U.S. 132

(1976). The district court entered judgment in January 2003

and issued an injunction prohibiting California and the AFLCIO from taking any actions to enforce sections 16645.2 and

16645.7 against any employer subject to the NLRA. California and the AFL-CIO appealed. 

A three-judge panel of our court affirmed the district court,

but the panel then withdrew its opinion upon the grant of

appellants’ petition for panel rehearing. Chamber of Commerce v. Lockyer, 364 F.3d 1154 (9th Cir. 2004), withdrawn

and reh’g granted, 408 F.3d 590 (9th Cir. 2005). On rehearing, a divided panel issued a second opinion, Chamber of

Commerce v. Lockyer, 422 F.3d 973 (9th Cir. 2005), which

was in turn vacated and withdrawn from publication for

reconsideration en banc. See Chamber of Commerce v. Lockyer, 435 F.3d 999 (9th Cir. 2006); Chamber of Commerce v.

Lockyer, 437 F.3d 890 (9th Cir. 2006). We now reverse the

district court’s judgment that the NLRA preempts the California statute and vacate the court’s injunctive order. 

STANDARD OF REVIEW

We review de novo a district court’s grant of summary

judgment and preemption analysis. See Winterrowd v. Am.

Gen. Annuity Ins. Co., 321 F.3d 933, 937 (9th Cir. 2003);

Ting v. AT&T, 319 F.3d 1126, 1135 (9th Cir. 2003). “A facial

challenge to a legislative Act is . . . the most difficult challenge to mount successfully, since the challenger must establish that no set of circumstances exists under which the Act

would be valid.” Rust v. Sullivan, 500 U.S. 173, 183 (1991)

(internal quotation marks and citation omitted).

11776 CHAMBER OF COMMERCE v. LOCKYER
DISCUSSION

I. Market Participant Exception

[1] Before addressing the merits of the preemption issue,

we must first decide whether California’s condition on the use

of its funds constitutes “regulation.” “A prerequisite to preemption [under the NLRA] is a finding that the state or local

action in question constitutes regulation of labor relations

between employers and employees.” Alameda Newspapers,

Inc. v. City of Oakland, 95 F.3d 1406, 1413 (9th Cir. 1996).

The NLRA “does not preempt actions taken by a state when

it . . . acts as a mere proprietor or market participant.” Dillingham Constr. N.A., Inc. v. County of Sonoma, 190 F.3d

1034, 1037 (9th Cir. 1999) (citing Bldg. & Constr. Trades

Council of the Metro. Dist. v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218, 227 (1993) (“Boston

Harbor”)). We conclude that California has acted as a regulator in enacting sections 16645.2 and 16645.7, and that the

market participant exception does not apply. 

Two Supreme Court cases define the scope of the market

participant exception: Wisconsin Department of Industry v.

Gould Inc., 475 U.S. 282 (1986), and Boston Harbor, 507

U.S. at 218.4 In Gould, the Court addressed a Wisconsin statute that forbade state procurement agents from using state

funds to purchase products manufactured or sold by “labor

law violators,” i.e., employers who had violated the NLRA

three times within a five-year period. 475 U.S. at 283-84.

Wisconsin conceded that it did not have the power to “bar its

4Our discussion here is limited to the context of the market participant

exception under the NLRA. A market participant exception exists in a

number of other contexts, such as cases under the Commerce Clause. See,

e.g., Big Country Foods, Inc. v. Bd. of Educ. of Anchorage, 952 F.2d 1173,

1177-79 (9th Cir. 1992) (discussing market participant exception in the

dormant Commerce Clause context). We do not opine on the applicability

of our reasoning to the market participant exception in these other contexts. 

CHAMBER OF COMMERCE v. LOCKYER 11777
residents from doing business with repeat violators of the

NLRA.” Id. at 287. It argued, however, that its statutory

scheme was not unlawful because the statute merely regulated

the spending power of its procurement officers. Id. The Court

found this to be a “distinction without a difference” because

the Wisconsin statute “serve[d] plainly as a means of enforcing the NLRA.” Id. Wisconsin “concede[d], as [the Court

thought] it must, that the point of [its] statute is to deter labor

law violations and to reward fidelity to the law.” Id. (internal

quotation marks omitted). The Court emphasized the “rigid

and undiscriminating manner in which the statute operate[d],”

and concluded that “[n]o other purpose could credibly be

ascribed” to the statute than creating an additional remedy for

violations of the NLRA. Id. at 287. 

In Boston Harbor, on the other hand, the Court held that

the Massachusetts Water Resources Authority, a state agency,

acted as a market participant when it required contractors

working on the cleanup of Boston Harbor to agree to the

terms of a project labor agreement negotiated by a project

construction manager and a labor union. 507 U.S. at 232. The

Court concluded that there was “no question but that [the state

agency] was attempting to ensure an efficient project that

would be completed as quickly and effectively as possible at

the lowest cost.” Id. The Court also noted that “the challenged

action in this litigation was specifically tailored to one particular job, the Boston Harbor cleanup project,” and that there

was no reason to believe that the government was motivated

by anything other than purely proprietary interests. Id.

We have applied these cases in a number of contexts without formulating a general rule about when the market participant exception applies. We have held that the market

participant exception did not apply to a California law that

permitted employees in state-approved apprenticeship programs to receive less than the prevailing wage, but required

employees in non-approved apprenticeship programs to

receive the prevailing wage. Dillingham, 190 F.3d at 1037-38

11778 CHAMBER OF COMMERCE v. LOCKYER
(noting that the apprenticeship standards were not “based

upon unique needs that the . . . project presented” and that the

state was not motivated by “management concerns” in implementing the standards). On the other hand, we have applied

the exception and held that the City of Oakland was a market

participant when it canceled a newspaper subscription and

refused to continue to pay for advertising during a labor dispute. Alameda Newspapers, 95 F.3d at 1415-16. And we have

held that a city may require private contractors to adhere to

the terms of a collective bargaining agreement when doing

business with the city. Associated Builders & Contractors,

Inc. v. City of Seward, 966 F.2d 492, 496 (9th Cir. 1992).5

[2] These cases teach that when a state uses its spending

power in a manner that is essentially not proprietary, the market participant exception will not apply and the state action

may be subject to NLRA preemption. We draw upon the reasoning of the Fifth Circuit, which asks two discrete questions

to determine when the market participant exception applies:

First, does the challenged action essentially reflect

the entity’s own interest in its efficient procurement

of needed goods and services, as measured by comparison with the typical behavior of private parties in

similar circumstances? Second, does the narrow

scope of the challenged action defeat an inference

5City of Seward, which was decided before Boston Harbor, creates

some confusion about the relation of the market participant exception to

other NLRA preemption doctrines. City of Seward concluded that “action

taken by the state as a market participant is not automatically immune

from NLRA preemption.” 966 F.2d at 495. Boston Harbor, however, held

explicitly that the “[NLRA] preemption doctrines apply only to state regulation,” and that “a State may act without offending the pre-emption principles of the NLRA when it acts as a proprietor.” 507 U.S. at 227, 229-30.

Boston Harbor, therefore, makes clear that once a state’s action falls

within the “market participant” exception, it is not preempted under the

NLRA. To the extent that City of Seward states otherwise, we hold it overruled. 

CHAMBER OF COMMERCE v. LOCKYER 11779
that its primary goal was to encourage a general policy rather than address a specific proprietary problem? Both questions seek to isolate a class of

government interactions with the market that are so

narrowly focused, and so in keeping with the ordinary behavior of private parties, that a regulatory

impulse can be safely ruled out. 

Cardinal Towing & Auto Repair, Inc. v. City of Bedford, 180

F.3d 686, 693 (5th Cir. 1999). 

[3] The first question, which looks to the nature of the

expenditure, protects comprehensive state policies with wide

application from preemption, so long as the type of state

action is essentially proprietary. See, e.g., N. Ill. Chapter of

Associated Builders & Contractors, Inc. v. Lavin, 431 F.3d

1004, 1007 (7th Cir. 2005) (state law requiring recipients of

state grants for the construction of renewable-fuel plants to

enter into a project labor agreement was not preempted, where

the condition was limited to the project financed by the state

grant); Bldg. & Constr. Trades Dep’t, AFL-CIO v. Allbaugh,

295 F.3d 28, 34-36 (D.C. Cir. 2002) (executive order applying

to all federally funded construction projects was not preempted, where the order concerned a project labor agreement

that private employers often enter into in the construction

field). The second question, which looks at the scope of the

expenditure, protects narrow spending decisions that do not

necessarily reflect a state’s interest in the efficient procurement of goods or services, but that also lack the effect of

broader social regulation. See, e.g., Alameda Newspapers, 95

F.3d at 1417-18. Each question constitutes a separate method

of determining whether the state action at issue actually constitutes regulation, and a state need not satisfy both questions

to be deemed to act as a market participant. 

[4] Here, we conclude that sections 16645.2 and 16645.7

are regulatory and are not protected by the market participant

exception. The statute on its face does not purport to reflect

11780 CHAMBER OF COMMERCE v. LOCKYER
California’s interest in the efficient procurement of goods and

services, as measured by the similar behavior of private parties. Rather, the statute’s preamble makes clear that the legislation’s purpose is to prevent “state funds and facilities” from

being used to subsidize an employer’s attempt to influence

employee choice about whether to join a union. See § 16645,

Historical and Statutory Notes, Section 1 of Stats. 2000, c.

872 (“It is the policy of the state not to interfere with an

employee’s choice about whether to join or to be represented

by a labor union. For this reason, the state should not subsidize efforts by an employer to assist, promote, or deter union

organizing.”). 

[5] Nor do sections 16645.2 and 16645.7 have a narrow

scope or other element indicating that the statute is unrelated

to broader regulation. To the contrary, the statute by design

sweeps broadly, applying to all employers in California who

accept any state grant or program funds in excess of $10,000.

§§ 16645.2, 16645.7. It requires any business that accepts

state grant or program funds in excess of $10,000 to maintain

records sufficient to show that these funds were not used to

assist, promote or deter organizing. Id. It contains a provision

for civil penalties and permits private parties to file civil

actions against employers who violate the statute. § 16645.8.

The statute’s scope indicates a general state position of neutrality with regard to organizing, not a narrow attempt to

achieve a specific procurement goal. These considerations

counsel that sections 16645.2 and 16645.7 are regulatory

measures that fall outside the market participant exception.6

6This case is thus distinct from Alameda Newspapers, where we concluded that a city’s proclamation of support in favor of a labor union in

an ongoing strike at a local newspaper, and the city’s decision to refrain

from purchasing advertisements and to cancel its subscriptions as a result

of the strike, did not constitute regulation subject to NLRA preemption.

95 F.3d at 1409. There, we emphasized the merely exhortatory nature of

the proclamation, noting that “[t]he resolution ha[d] no binding force on

anyone.” Id. at 1414. We also concluded that the city’s cancellation of

subscriptions and refusal to advertise did not “have some ‘real effect’ or

practical economic impact on the employer that [wa]s either different from

that of the ordinary customer or . . . otherwise governmental in nature.”

Id. at 1416. 

CHAMBER OF COMMERCE v. LOCKYER 11781
II. NLRA Preemption

[6] That sections 16645.2 and 16645.7 are regulatory does

not mean that they are also preempted by the NLRA. “We are

reluctant to infer pre-emption,” Boston Harbor, 507 U.S. at

224, and any analysis of preemption begins with the “basic

assumption that Congress did not intend to displace state

law.” Maryland v. Louisiana, 451 U.S. 725, 746 (1981). Preemption is a question of congressional intent, and the “ ‘purpose of Congress is the ultimate touchstone’ of preemption

analysis.” Alameda Newspapers, 95 F.3d at 1413 (quoting

Malone v. White Motor Corp., 435 U.S. 497, 504 (1978)).

Although the NLRA contains no express preemption provision, the Supreme Court has articulated two distinct NLRA

preemption doctrines: Machinists preemption, set forth in

Lodge 76, International Ass’n of Machinists v. Wisconsin

Employment Relations Commission, 427 U.S. 132 (1976), and

Garmon preemption, set forth in San Diego Building Trades

Council v. Garmon, 359 U.S. 236 (1959). We hold that sections 16645.2 and 16645.7 are not preempted under either

Machinists or Garmon. 

A. Machinists Preemption

[7] Machinists preemption operates as a form of labor field

preemption. It requires the preemption of any state regulation

of activity that, although not directly regulated by the NLRA,

was intended by Congress “to be controlled by the free play

of economic forces,” Machinists, 427 U.S. at 140 (internal

quotation marks and citation omitted), in a “zone free from all

regulations, whether state or federal.” Boston Harbor, 507

U.S. at 226. The doctrine “is based on the premise that ‘the

use of economic pressure by the parties to a labor dispute is

. . . part and parcel of the process of collective bargaining,’ ”

which means that “neither a state nor the National Labor

Relations Board is ‘afforded flexibility in picking and choosing which economic devices of labor and management shall

be branded unlawful.’ ” Alameda Newspapers, 95 F.3d at

11782 CHAMBER OF COMMERCE v. LOCKYER
1413 (quoting Machinists, 427 U.S. at 144, 149). “Machinists

pre-emption preserves Congress’ intentional balance between

the uncontrolled power of management and labor to further

their respective interests” in an area free from regulation. Boston Harbor, 507 U.S. at 226 (internal quotation marks and

citation omitted). 

[8] Federal courts of appeals have applied Machinists preemption in the context of collective bargaining between organized labor and employers, not in the context of organizing,

which is the subject of AB 1889.7 Machinists itself dealt with

a collective bargaining dispute in which union members

refused to accept overtime assignments during labor contract

renewal negotiations. The Supreme Court held that “state

attempts to influence the substantive terms of collectivebargaining agreements are as inconsistent with the federal

regulatory scheme as are such attempts by the NLRB,” and

that “federal labor policy and the federal Act have pre-empted

state regulatory authority to police the use by employees and

employers of peaceful methods of putting economic pressure

upon one another.” 427 U.S. at 153, 154. In Golden State

Transit Corp. v. City of Los Angeles, 493 U.S. 103, 110-11

(1989), the Court stated that “[i]n Machinists, we reiterated

that Congress intended to give parties to a collectivebargaining agreement the right to make use of ‘economic

weapons,’ not explicitly set forth in the Act, free of governmental interference.”

8

 And in Metropolitan Life Insurance Co.

7The dissent contends that Machinists preempts AB 1889 because the

California statute “specifically targets and substantially affects the NLRA

bargaining process.” (Dissent at 11822 (emphasis added).) But AB 1889

applies only to organizing, not collective bargaining. 

8

In the Court’s 1989 Golden State Transit Corp. decision, it held that

the taxi company was entitled to maintain a § 1983 action against Los

Angeles for the city’s violation of the company’s right (as stated in the

Court’s 1986 decision, Golden State Transit Corp. v. City of Los Angeles,

475 U.S. 608 (1986) (“Golden State I”)), to be free from interference with

its choice and use of economic weapons in the collective bargaining process. In Golden State I, the Court had held that the city’s refusal to renew

the taxi company’s franchise because the company’s employees were on

strike was preempted under Machinists. 

CHAMBER OF COMMERCE v. LOCKYER 11783
v. Massachusetts, where a state statute mandating minimum

healthcare benefits was held not to be preempted, the Court

explained:

[Machinists] cases rely on the understanding that in

providing in the NLRA a framework for selforganization and collective bargaining, Congress

determined both how much the conduct of unions

and employers should be regulated, and how much

it should be left unregulated: The States have no

more authority than the Board to upset the balance

that Congress has struck between labor and management in the collective-bargaining relationship. For a

state to impinge on the area of labor combat

designed to be free is quite as much an obstruction

of federal policy as if the state were to declare picketing free for purposes or by methods which the federal Act prohibits. All parties correctly understand

this case to involve Machinists pre-emption. 

471 U.S. 724, 751 (1985) (internal quotation marks and citation omitted). 

We have also held that “Machinists preemption prohibits

states from imposing restrictions on labor and management’s

‘weapon[s] of self-help’ that were left unregulated in the

NLRA because Congress intended for tactical bargaining

decisions and conduct ‘to be controlled by the free play of

economic forces.’ ” Associated Builders & Contractors of S.

Cal. v. Nunn, 356 F.3d 979, 987 (9th Cir. 2004) (alteration in

original) (quoting Machinists, 427 U.S. at 140, 146); see also

St. Thomas-St. John Hotel & Tourism Ass’n., Inc. v. Gov’t of

U.S.V.I. ex rel. V.I. Dep’t of Labor, 357 F.3d 297, 302 n.4 (3d

Cir. 2004) (“Machinists preemption is a form of conflict preemption under which state regulation of the bargaining conduct of private parties is displaced because it conflicts with

the purpose of Congress in enacting the NLRA to leave that

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

11784 CHAMBER OF COMMERCE v. LOCKYER
(internal quotation marks and citation omitted)); McNealy v.

Caterpillar, Inc., 139 F.3d 1113, 1117 n.1 (7th Cir. 1998)

(“The Machinists doctrine similarly preempts state regulation

of the economic weapons that Congress intended to leave

available to unions and employers.”); Glenwood Bridge, Inc.

v. City of Minneapolis, 940 F.2d 367, 370-71 (8th Cir. 1991)

(invoking Machinists preemption in a “state’s intrusion into

the bargaining process” between organized labor and an

employer); Derrico v. Sheehan Emergency Hosp., 844 F.2d

22, 29 (2d Cir. 1988) (“Our analysis of the [Machinists] preemption issues similarly accords with the principle that the

parties’ intent must govern the duration of their collectively

bargained agreements.”). Insofar as all these cases concern

collective bargaining, they suggest that Machinists’ principal

and native application is limited to that sphere of activity,

where Congress enacted an “intentional balance between the

uncontrolled power of management” and organized labor to

advance their respective interests in negotiating the terms and

conditions of employment. Boston Harbor, 507 U.S. at 226

(internal quotation marks and citation omitted). Correspondingly, these cases strongly suggest that the Machinists doctrine is not likely to apply to organizing, a conclusion that the

Chamber of Commerce conceded during oral argument when

it acknowledged that interference with organizing is “typically” analyzed under the Garmon doctrine.9

We need not resolve whether Machinists extends to preempting a state action that potentially affects organizing,

because even if it did, AB 1889 would not be preempted

9Secondary sources also discuss Machinists in the context of collective

bargaining, not organizing. See, e.g., N. Peter Lareau, 2 Labor and

Employment Law 36.11-36.17 (2005); Robert A. Gorman, Labor Law

1103-10 (2004); Patrick Hardin et al., 2 The Developing Labor Law 2192-

99 (2002); Robert Rachal, Machinists Preemption Under the NLRA: A

Powerful Tool to Protect an Employer’s Freedom to Bargain, 58 La. L.

Rev. 1065, 1065 (1998) (“To protect the collective bargaining process

from [attempts by government to alter collective bargaining], the Supreme

Court developed Machinists preemption.”). 

CHAMBER OF COMMERCE v. LOCKYER 11785
under the Machinists doctrine. In enacting a restriction on the

use of state grant and program funds with the purpose of

remaining neutral in labor disputes, California has not

intruded on conduct meant to be left to the free play of economic forces, an area free from all governmental regulation.

Indeed, it is implausible that Congress intended the use of

such funds to be an area “unregulated because left to be controlled by the free play of economic forces,” Machinists, 427

U.S. at 140 (internal quotation marks omitted), when the

state’s choices of how to spend its funds are by definition not

controlled by the free play of economic forces. See Boston

Harbor, 507 U.S. at 225-26. 

[9] In any event, AB 1889’s restrictions on the use of grant

and program funds do not interfere with an employer’s ability

to engage in “self-help” in the sense protected by Machinists.

Unlike in Gould and Golden State I, the state has not engaged

in a naked attempt to use its spending power to “introduce

some standard of properly balanced bargaining power” or to

alter employers’ private spending decisions. Machinists, 427

U.S. at 149-50 (internal quotation marks and citation omitted). In restricting the use of state funds, California has not

made employer neutrality or the substantive terms of employment between employer and employee a condition for the

receipt of state funds. Under AB 1889, an employer has and

retains the freedom to spend its own funds however it wishes;

it simply may not spend state grant and program funds on its

union-related advocacy. In contrast, had California enacted a

statute that required neutrality as a condition of receiving state

funds, the employer’s use of its own funds would thereby

have been curtailed. See infra pp. 11800-03. 

The National Labor Relations Board (“NLRB”), which

filed an amicus curiae brief in support of the Chamber of

Commerce, nonetheless urges that Machinists does preempt

the California statute. It cites Alto Plastics Manufacturing

Corp., 136 N.L.R.B. 850, 851 (1962), for the proposition that

in a representation election, “employees may select a ‘good’

11786 CHAMBER OF COMMERCE v. LOCKYER
labor organization, a ‘bad’ labor organization, or no labor

organization, it being presupposed that employees will intelligently exercise their right to select their bargaining representative.” The NLRB contends that AB 1889 works at cross

purposes with such a policy because it limits the flow of

information to employees by regulating employer speech in

an area — an organization election — that Congress did

intend to be controlled by the free play of economic forces.

We disagree with the way in which the NLRB characterizes

AB 1889 and invokes Machinists. As explained above, the

California statute does not prevent an employer from using

non-state funds to assist, promote or deter organizing; it only

restricts a recipient’s use of state grant and program funds (in

excess of $10,000) for that purpose. Consequently, the California statute does not impede the flow of information to

employees by regulating employers’ speech. Employers

remain free to convey their views regarding unionization, and

thus to exercise their First Amendment rights, provided only

that they do not use state grant and program funds to do so.10

For example, even if an employer made a business decision

to fund its operations entirely through the receipt of state

grants, such that the statute effectively prevented that

employer from spending any portion of its revenues to advocate during an organization election, that effect would be incidental and solely the consequence of the employer’s freemarket choice. Nothing prevents the employer from raising

additional funds from a non-state source and using those

funds for advocacy purposes. It is well established that a legislature may attach “reasonable and unambiguous” conditions

to funds that a recipient is not obligated to accept. Rumsfeld

10The statute’s effect is therefore indirect and incidental, not unlike the

Massachusetts law upheld in Metropolitan Life. See 471 U.S. at 755

(“Minimum state labor standards . . . neither encourage nor discourage the

collective-bargaining processes that are the subject of the NLRA. Nor do

they have any but the most indirect effect on the right of self-organization

established in the Act.”). 

CHAMBER OF COMMERCE v. LOCKYER 11787
v. Forum for Academic & Institutional Rights, Inc., 126 S. Ct.

1297, 1306 (2006) (internal quotation marks omitted); see

also Lavin, 431 F.3d at 1006 (citing Rust, 500 U.S. at 173;

Nat’l Endowment for the Arts v. Finley, 524 U.S. 569 (1998);

Buckley v. Valeo, 424 U.S. 1 (1976)). We “cannot declare preempted all local regulation that touches or concerns in any

way the complex interrelationships between employees,

employers, and unions; obviously, much of this is left to the

States.” Metro. Life, 471 U.S. at 757 (internal quotation marks

omitted). 

More fundamentally, the NLRB is simply incorrect to suggest that Machinists preempts the California statute. As the

NLRB acknowledges elsewhere in its brief, Machinists

applies solely to zones of activity left free from all regulation.

See Boston Harbor, 507 U.S. at 226. The NLRB’s own extensive regulation of organizing activities demonstrates that

organizing — and employer speech in the context of organizing — is not such a zone. See, e.g., Peoria Plastic Co., 117

N.L.R.B. 545, 547-48 (1957) (NLRB barring interviews with

employees in their homes immediately before an election);

Peerless Plywood Co., 107 N.L.R.B. 427, 429 (1953) (NLRB

barring employers and unions alike from making election

speeches on company time to massed assemblies of employees within 24 hours of an election). See also NLRB v. A.J.

Tower Co., 329 U.S. 324, 330 (1946) (“Congress has

entrusted the Board with a wide degree of discretion in establishing the procedure and safeguards necessary to insure the

fair and free choice of bargaining representatives by employees.”).11 Indeed, section 9 of the NLRA affirmatively grants

11Like the NLRB, the dissent undermines its own argument when it

cites Board decisions as examples of the NLRB’s regulation of the organizing process. (Dissent at 11820.) Machinists applies only to zones free

from all regulation, and the NLRB decisions show that organizing is not

such a zone. “A state law that both explicitly targets and directly regulates

processes controlled by the NLRA” might be preempted under Garmon,

see infra p. 11791, but is surely not preempted “under the Machinists doctrine.” (Dissent at 11820.) 

11788 CHAMBER OF COMMERCE v. LOCKYER
the NLRB power to regulate employer and union conduct,

including speech, that is prejudicial to a fair election. 29

U.S.C. § 159. In Linn v. United Plant Guard Workers of Am.,

Local 114, 383 U.S. 53, 60 (1966), the Supreme Court

observed that the NLRB can set aside an election where a

material fact has been misrepresented in the representation

campaign, opportunity for a reply was lacking and the misrepresentation had an effect on the free choice of voting employees. The Court likewise noted that in a number of cases, the

NLRB had even determined that use of “epithets such as

‘scab,’ ‘unfair,’ and ‘liar,’ ” though not so indefensible as to

remove them from the protection of section 7, could lead the

NLRB to set aside an election if such epithets had “been

uttered with actual malice, a deliberate intention to falsify or

a malevolent desire to injure.” Id. at 60-61 (citing Bettcher

Mfg. Corp., 76 N.L.R.B. 526 (1948); Atl. Towing Co., 75

N.L.R.B. 1169, 1170-73 (1948) (internal quotation marks

omitted)). See also Midland Nat’l Life Ins. Co., 263 N.L.R.B.

127, 133 (1982) (“[W]e will set an election aside not because

of the substance of the representation, but because of the

deceptive manner in which it was made . . . .”). 

Significantly, the spending restrictions challenged by the

Chamber of Commerce and NLRB are modeled precisely on

those that Congress has enacted when prohibiting the use of

federal funds to assist, promote or deter organizing. See, e.g.,

Workforce Investment Act, 29 U.S.C. § 2931(b)(7) (“Each

recipient of funds . . . shall provide to the Secretary assurances that none of such funds will be used to assist, promote,

or deter union organizing.”); National and Community Service State Grant Program, 42 U.S.C. § 12634(b)(1)

(“Assistance provided under this title shall not be used by program participants and program staff to . . . assist, promote, or

deter union organizing.”); Head Start Programs Act, 42

U.S.C. § 9839(e) (“Funds appropriated to carry out this subchapter shall not be used to assist, promote, or deter union

organizing.”); see also Medicare Act, 42 U.S.C.

§ 1395x(v)(1)(N) (“In determining such reasonable costs,

CHAMBER OF COMMERCE v. LOCKYER 11789
costs incurred for activities directly related to influencing

employees respecting unionization may not be included.”).

These restrictions are inconsistent with a congressional belief

that union organizing involves “conduct . . . intended to be

unregulated.” Golden State Transit Corp., 475 U.S. at 614

(internal quotation marks omitted). Instead, because an area

left to the free play of economic forces is a “zone free from

all regulations, whether state or federal,” Boston Harbor, 507

U.S. at 226 (emphasis added), the federal restrictions are compelling evidence that the analogous conditions in AB 1889 do

not intrude in a regulation-free area of labor relations and

thus, contrary to the dissent’s suggestion, do not “operate to

frustrate the purpose” of the NLRA. (Dissent at 11821, quoting Local 20, Teamsters v. Morton, 377 U.S. 252, 258

(1964).) “The fact that Congress itself has . . . imposed the

same type of restriction . . . as [a state] seeks to impose . . .

is surely evidence that Congress does not view such a restriction as incompatible with its labor policies.” De Veau v. Braisted, 363 U.S. 144, 156 (1960) (plurality opinion).12

[10] In sum, the mechanism California has employed to

preserve its neutrality in labor disputes does not affect an

employer’s ability to use its own funds in connection with

union organizing activities; nor do such activities constitute

an area Congress intended to be free from all regulation.

Accordingly, AB 1889 is not preempted under Machinists. 

12The Supreme Court engaged in similar reasoning in Metropolitan Life,

471 U.S. at 754-55. There, the Court held that no incompatibility existed

between national labor policy expressed in federal rules designed to

restore the equality of bargaining power and state legislation that imposed

minimal substantive requirements (in the form of healthcare benefits) on

contract terms negotiated between parties to labor agreements. The Court

reached this conclusion by noting, among other things, that it made no

sense to infer that Congress intended the NLRA to deprive states of the

ability to take such action when Congress itself passed similar federal laws

applying to unionized employers and employees. 

11790 CHAMBER OF COMMERCE v. LOCKYER
B. Garmon Preemption 

[11] Garmon preemption arises when there is an actual or

potential conflict between state regulation and federal labor

law due to state regulation of activity that is actually or arguably protected or prohibited by the NLRA. “When it is clear

or may fairly be assumed that the activities which a State purports to regulate are protected by § 7 of the National Labor

Relations Act, or constitute an unfair labor practice under § 8,

due regard for the federal enactment requires that state jurisdiction must yield.” Garmon, 359 U.S. at 244. Nonetheless,

[w]hile the Garmon formulation accurately reflects

the basic federal concern with potential state interference with national labor policy, the history of the

labor pre-emption doctrine . . . does not support an

approach which sweeps away state-court jurisdiction

over conduct traditionally subject to state regulation

without careful consideration of the relative impact

of such a jurisdictional bar on the various interests

affected. 

Sears, Roebuck & Co. v. San Diego County Dist. Council of

Carpenters, 436 U.S. 180, 188 (1978).

1. Actually protected or prohibited

[12] Section 7 of the NLRA is entitled “Right of employees

as to organization, collective bargaining, etc.” 29 U.S.C.

§ 157. It identifies areas of protected employee conduct and

can be fairly characterized as setting forth those employee

practices that are actually protected by the NLRA. Section 8,

conversely, is entitled “Unfair labor practices.” 29 U.S.C.

§ 158. By its plain terms, it sets forth activities that are actually prohibited by the NLRA. It is easy to see how both section 7 and section 8 can be implicated in a Garmon

preemption analysis: if a state regulates employee activities

that are actually protected under section 7, or activities of

CHAMBER OF COMMERCE v. LOCKYER 11791
either employers or labor unions that are actually prohibited

under section 8, that regulation will be preempted unless it

falls within an exception to Garmon. See 359 U.S. at 243-44.

[13] Section 8(c) prohibits sanctioning employers under the

NLRA for engaging in an unfair labor practice when they

exercise speech rights that are guaranteed by the First Amendment.13 This subsection can be termed the “free speech

exemption” to section 8’s delineation of unfair labor practices, because it carves out noncoercive speech from the category of actually punishable activity. Notwithstanding the

dissent’s mistaken insistence to the contrary, section 8(c) does

not grant employers speech rights. (Dissent at 11824.) Rather,

it simply prohibits their noncoercive speech from being used

as evidence of an unfair labor practice. See, e.g., NLRB v. Gissel Packing Co., 395 U.S. 575, 617 (1969) (stating that section 8(c) “merely implements the First Amendment”); Hotel

Employees, Local 2 v. Marriott Corp., 961 F.2d 1464, 1470

n.9 (9th Cir. 1992) (“[S]ection 8(c) merely states an employer

does not commit an unfair labor practice by expressing its

views regarding unionization.”); UAW-Labor Employment &

Training Corp. v. Chao, 325 F.3d 360, 364-65 (D.C. Cir.

2003) (“Fitting a Garmon claim under the language of § 8(c)

is awkward. . . . [T]he activities described in § 8(c) . . . are

not ‘protected by’ the NLRA, except from the NLRA itself.”);

see also Fiber Indus., Inc., 267 N.L.R.B. 840, 841 (1983)

(“[I]t is well settled that Sec. 8(c) applies only to unfair labor

practice proceedings.”). 

The Chamber of Commerce and dissent argue, however,

that to say an activity is not punishable by the NLRA is to

13Entitled “Expression of views without threat of reprisal or force or

promise of benefit,” § 8(c) provides that “[t]he expressing of any views,

argument, or opinion, or the dissemination thereof, whether in written,

printed, graphic, or visual form, shall not constitute or be evidence of an

unfair labor practice under any of the provisions of this Act, if such

expression contains no threat of reprisal or force or promise of benefit.”

29 U.S.C. § 158(c). 

11792 CHAMBER OF COMMERCE v. LOCKYER
protect that activity. Because AB 1889’s restrictions on grant

and program funds purportedly affect an employer’s ability to

speak against unionization, the Chamber of Commerce and

dissent urge, the statute improperly intrudes on the employer’s implied (yet somehow actually explicit in section 8(c))

NLRA speech right — as distinct from its separate First

Amendment rights — and is therefore preempted under Garmon. 

We reject this peculiar proposition. The Chamber of Commerce and dissent cite no authority to support it, and the

NLRB itself makes no such claim as to section 8(c)’s supposed affirmative grant of speech rights. See NLRB Amicus

Brief at 4, 21-26 (echoing interpretation of NLRA in cases

quoted above, and noting section 8(c)’s “exemption” for noncoercive speech). Rather, some activities in labor relations are

neither protected nor prohibited by the NRLA and are therefore not preempted under Garmon. See, e.g., NLRB v. Ins.

Agents’ Int’l Union, 361 U.S. 477, 492-95 & n.23 (1960)

(finding unpersuasive the argument that because certain union

activities were unprotected under section 7, those activities

should also be deemed unfair labor practices under section 8,

and stating that “[t]here is little logic in assuming that because

Congress was willing to allow employers to use self-help

against union tactics, if they were willing to face the economic consequences of its use, it also impliedly declared

these tactics unlawful as a matter of federal law”).14 If this

were not the case, Machinists preemption would cease to

exist, for Machinists addresses “activity that [i]s neither arguably protected against employer interference by §§ 7 and

8(a)(1) of the NLRA, nor arguably prohibited as an unfair

14See also UAW-Labor Employment & Training Corp., 325 F.3d at 363-

64 (“The dissent makes a similar error when it suggests that the order is

preempted because it conflicts with the ‘regulatory scheme’ the Board has

established. This would be a sound analysis under ‘field’ preemption, but

Garmon works differently, operating only as to activities arguably protected or prohibited, not to ones simply left alone, even if left alone deliberately.” (internal citations omitted)). 

CHAMBER OF COMMERCE v. LOCKYER 11793
labor practice by § 8(b) of that Act.” Metropolitan Life, 471

U.S. at 749. 

[14] California’s refusal to subsidize employer speech for

or against unionization does not regulate an activity that is

actually protected or actually prohibited by the NLRA. It does

not interfere with, much less govern, “the same partisan

employer speech that Congress committed to the jurisdiction

of the NLRB.” (Dissent at 11825.) Nor does it infringe

employers’ First Amendment rights, because employers

remain free to use their own funds to advocate for or against

unionization and are not required to accept neutrality as a condition for receipt of state grant and program funds. See infra

pp. 11800-02; see also Regan v. Taxation with Representation, 461 U.S. 540, 549 (1983) (“We have held in several contexts that a legislature’s decision not to subsidize the exercise

of a fundamental right does not infringe the right.”); Rust, 500

U.S. at 193, 200; Cammarano v. United States, 358 U.S. 498,

513 (1959). 

2. Arguably protected or prohibited

[15] In Sears, the Supreme Court refined its Garmon preemption doctrine in the context of an employer’s common law

trespass suit against picketing union members where the picketing was “arguably — but not definitely — prohibited or protected by federal law.” 436 U.S. at 182. Sears divided the

inquiry into two related but distinct questions: whether the

state court’s jurisdiction over the trespassing claim was preempted (1) by the arguably prohibited nature of the picketing,

or (2) by its arguably protected nature.15

15The dissent argues that we err in considering whether AB 1889 is preempted by interfering unduly with an arguably protected or prohibited

activity because, in the dissent’s idiosyncratic and incorrect view, the real

cause of Garmon preemption is AB 1889’s alleged interference with actually protected conduct — the speech rights purportedly granted under

§ 8(c). (Dissent at 11828.) Insofar as the dissent suggests we apply Sears

11794 CHAMBER OF COMMERCE v. LOCKYER
As to whether the union’s picketing was arguably prohibited by the NLRA, Sears articulated a relatively straightforward “primary jurisdiction” test: if the claim considered by

the state tribunal is identical to one that could be presented to

the NLRB, the state’s jurisdiction is preempted. Id. at 197,

201; see also Belknap, Inc. v. Hale, 463 U.S. 491, 511-12

(1983) (applying primary jurisdiction test to state regulation

of arguably prohibited conduct). As to whether the picketing

was arguably protected by the NLRA, the Court went beyond

the primary jurisdiction test to address additional federal

supremacy concerns: chiefly, whether preemption was warranted — despite the lack of identity between issues the state

court and NLRB might consider — to protect against the “risk

of misinterpretation of [the NLRA] and the consequent prohibition of protected conduct.” Sears, 436 U.S. at 203. We

employed this “primary jurisdiction plus” approach in Radcliffe v. Rainbow Construction Co., 254 F.3d 772, 786 (9th

Cir. 2001), where we held that state jurisdiction over claims

by union members against an employer for false arrest, false

imprisonment and malicious prosecution were not preempted

under Garmon.

16

to avoid addressing whether AB 1889 is preempted by interfering with an

actually protected activity (Dissent at 11826), its claim ignores our express

repudiation of that argument in Section II.B.1 supra. To the extent the dissent contends we err in even analyzing whether AB 1889 interferes with

arguably protected or prohibited conduct (id. at 11826, 11828), it neglects

the Chamber of Commerce’s own contention that the statute does so, and

fails to recognize that such analysis is orthodox in Garmon analysis. See,

e.g., Local 926, Int’l Union of Operating Eng’rs v. Jones, 460 U.S. 669,

676 (1983) (“Our approach to the pre-emption issue has thus been stated

and restated. 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 prohibited by the NLRA. Although the Garmon guidelines [are

not to be applied] in a literal, mechanical fashion, if the conduct at issue

is arguably prohibited or protected otherwise applicable state law and procedures are ordinarily pre-empted.” (internal quotation marks and citations

omitted) (alteration in original) (emphasis added)). 

16In Radcliffe, defendants argued that “the validity of the plaintiffs’

claims . . . turns on whether the union activities carried on by the plaintiffs

were . . . protected by § 7 of the NLRA.” 254 F.3d at 785. 

CHAMBER OF COMMERCE v. LOCKYER 11795
Here, the parties do not dispute that the NLRB has no interest in resolving the central controversy that a state court

would have to resolve in enforcing AB 1889, namely, whether

state funds were used to “assist, promote, or deter union organizing.” Far from being the same as a question the NLRB

might consider, a suit under the California statute would entail

accounting only for the employer’s possible use of state

funds. 

The Chamber of Commerce, however, argues that a state

court enforcing AB 1889 would in some instances need to

determine whether a union was a “labor organization” under

section 16647, an area that it claims is reserved to the NLRB

under Marine Engineers Beneficial Ass’n v. Interlake S.S.

Co., 370 U.S. 173, 178 (1962). But even if the state court had

to make such a determination, it would be relevant only to the

ultimate question of whether an employer spent state grant or

program funds to assist, promote or deter organizing, not to

whether the employer’s advocacy violated the NLRA. We

have previously rejected an argument that the incidental determination by a state court of whether persons were engaged “in

lawful union activity” was sufficient to occasion Garmon preemption, where the focus of the state proceeding was on

“state concerns of accommodating such union activity with

the state-law rights of private property.” Radcliffe, 254 F.3d

at 786. Moreover, AB 1889 is not comparable to the Minnesota statute at issue in Marine Engineers, under which a state

law determination that certain groups were not labor organizations permitted the state court to regulate picketing and other

activities identical to those that could have been raised before

the NLRB. Marine Eng’rs, 370 U.S. at 176. 

The Chamber of Commerce also argues that because AB

1889 restricts an employer’s ability to use state funds to “influence” its employees, see § 16645(a), California courts

would effectively be deciding whether employers had improperly acted under section 8(a) of the NLRA to “restrain[ ] or

coerce employees in the exercise of the rights guaranteed in

11796 CHAMBER OF COMMERCE v. LOCKYER
[section 7 of the NLRA].” 29 U.S.C. § 158(a)(1) (NLRA

§ 8(a)). However, were the NLRB to consider an unfair labor

practice charge arising from the employer’s conduct, it would

focus on whether the employer had interfered with the

employees’ section 7 rights, regardless of whether the

employer used state funds in the process. In contrast, under

AB 1889, the California court would determine only whether

an employer used state grant or program funds to influence

employees, not whether that attempt violated the NLRA.

Because the statute focuses solely on the use of state funds,

there is no identity of claims, and the primary jurisdiction test

is not met.17

We next assess whether the state statute is preempted

because Congress would “prefer[ ] the costs inherent in a

jurisdictional hiatus to the frustration of national labor policy

which might accompany the exercise of state jurisdiction.”

Sears, 436 U.S. at 203. For essentially the same reasons

explained in the primary jurisdiction analysis, there is no risk

that a state court applying AB 1889 could “misinterpret[ ] . . .

federal law.” Id. Not only is there no identity of claims, but

the subject matter of an AB 1889 suit is so far removed from

the NLRA’s primary focus — the determination of what constitutes an unfair labor practice — that any rationale for Garmon preemption is absent. 

Sears itself is instructive. In that case, after noting the state

interest in hearing trespass claims, the Court identified a clear

potential overlap between the NLRB’s jurisdiction and that of

the state court.

[T]he state court was obligated to decide [whether]

17There is no merit to the Chamber of Commerce’s claim that the California statute provides an additional remedy for NLRA violations. The

statute’s damages provisions are intended to remedy the misuse of state

funds under the statute, regardless of whether any NLRA violation has

occurred. 

CHAMBER OF COMMERCE v. LOCKYER 11797
the trespass was not actually protected by federal

law, a determination which might entail an accommodation of Sears’ property rights and the Union’s

§ 7 rights. In an unfair labor practice proceeding initiated by the Union, the Board might have been

required to make the same accommodation. 

Id. at 201. The Court further stated that the trespass at issue

was arguably protected by the NLRA, whereas previously

recognized exceptions to Garmon preemption did not “involve[ ] protected conduct.” Id. at 204. Nevertheless, the

Court held that the risk that a state’s regulation of trespass

might impermissibly trench upon the NLRB’s jurisdiction

over the speech rights of union members was too unlikely to

justify usurpation of the state’s prerogative. There was no

“significant risk of prohibition of protected conduct,” so the

Court was “unwilling to presume that Congress intended the

arguably protected character of the [regulated] conduct to

deprive the California courts of jurisdiction to entertain Sears’

trespass action.” Id. at 207. 

[16] In contrast to Sears, there is no potential overlap

between the NLRB’s jurisdiction and that of a state court

hearing a suit brought under AB 1889. However, even if there

were some risk of overlap, California has as important and

legitimate a sovereign interest in determining how the recipients of state grant and program funds use those funds as it

does in entertaining trespass actions. Thus, even if AB 1889

had some peripheral and incidental effect on the arguably protected advocacy rights of employers, given the nature and

mechanics of the statute (which has no concern for whether

the speech at issue is protected by the NLRA, but focuses

only on the source of the money funding the speech), there is

no “significant risk of prohibition of protected conduct.” Id.

California’s interest is so strong that we cannot “presume that

Congress intended the arguably protected character of the

[regulated] conduct to deprive” the state of the ability to control the use of its fisc in this modest manner. Id.

11798 CHAMBER OF COMMERCE v. LOCKYER
The Supreme Court has cautioned that “inflexible application of [the Garmon] doctrine is to be avoided, especially

where the State has a substantial interest in regulation of the

conduct at issue and the State’s interest is one that does not

threaten undue interference with the federal regulatory

scheme.” Farmer v. United Bhd. of Carpenters, 430 U.S. 290,

302 (1977). Our “balanced inquiry into such factors as the

nature of the federal and state interests in regulation and the

potential for interference with federal regulation,” id. at 300,

ensures that we avoid preempting state regulation of conduct

that involves “interests so deeply rooted in local feeling and

responsibility that, in the absence of compelling congressional

direction, we [cannot] infer that Congress ha[s] deprived the

States of the power to act,” or where “the activity regulated

[is] a merely peripheral concern” of the NLRA. Garmon, 359

U.S. at 243-44; see also Belknap, 463 U.S. at 498. The previously recognized exceptions to Garmon preemption have

involved exercises of state court jurisdiction over universally

recognized common law torts, rather than, as here, the limited

exercise of a state’s spending power. See, e.g., Linn, 383 U.S.

at 62 (“[A] State’s concern with redressing malicious libel is

‘so deeply rooted in local feeling and responsibility’ ” that it

is not preempted despite arguably overlapping NLRB jurisdiction over the speech at issue.) (quoting Garmon, 359 U.S.

at 244). But the logic that compelled the Supreme Court to

recognize the exception for certain torts applies just as powerfully, if not more so, to a state’s effort to ensure that those

who accept its grant and program funds use them for the purpose for which they were given.18

18For instance, suppose California granted money to hospitals to create

more nurse positions and did not want the effectiveness of its grants

diminished by funding a campaign to convince nurses not to unionize. So

long as the hospitals remained free to lobby nurses with their own monies,

California would be well within its rights to insist that its grants be used

for the purpose for which they were given — the creation of needed nursing positions. 

CHAMBER OF COMMERCE v. LOCKYER 11799
In this sense, a state’s control of its purse strings is of at

least as great a concern to the state as its power to regulate

defamatory speech, violence, trespass, obstruction of access to

property or the intentional infliction of emotional distress.19

Just as the state has a responsibility to protect its citizenry

from such torts, so it has a responsibility and a right to spend

its treasure — largely generated from the pockets of its citizens — based on principles and guidelines that its democratically elected legislature deems to be appropriate. Such

spending decisions are, of course, subject to federal supremacy concerns. But the Supreme Court has commanded us to

be extremely cautious before concluding that a federal regulatory scheme intrudes upon so fundamental a state prerogative.

“Whatever risk of an erroneous state-court adjudication does

exist is outweighed by the anomalous consequence of a rule”

that would deny the state the ability to control its fisc in the

circumstances presented here. Sears, 436 U.S. at 206. In an

era of tight budgets, where many important and competing

interests vie for every dollar of a state’s treasury, it is all the

more important that states retain their right to control the allocation of their scarce resources. Thus, even if AB 1889’s

restriction on the use of state grant and program funds

intruded on an activity arguably protected or arguably prohibited by the NLRA — and we hold that it does not — Garmon’s recognized exception would save the California statute

from preemption. See Garmon, 359 U.S. at 243-44. 

III. First Amendment

[17] Although we elsewhere discuss why AB 1889 does not

infringe the First Amendment rights of grant and program

fund recipients, see supra pp. 11786-88, 11794, we elaborate

on our reasoning here in response to the dissent’s contention

19See Linn, 383 U.S. at 63-64; Youngdahl v. Rainfair, Inc., 355 U.S.

131, 139-40 (1957); Sears, 436 U.S. at 207; Int’l Union, United Auto.

Workers of America (UAW-CIO) v. Russell, 356 U.S. 634, 644-46 (1958);

Farmer, 430 U.S. at 302-06. 

11800 CHAMBER OF COMMERCE v. LOCKYER
to the contrary based largely on its erroneous premise that AB

1889 compels “employers themselves to take a position of

neutrality with respect to labor relations.” (Dissent at 11809.)

As we explained in Section II.A., supra p. 11786, the California statute does not impose any condition on the receipt of

state grant and program funds. Because an employer retains

the freedom to raise and spend its own funds however it

wishes — so long as it does not use state grant and program

funds on union-related advocacy — AB 1889 does not

infringe employers’ First Amendment right to express whatever view they wish on organizing.20

Accordingly, AB 1889’s effect on speech is properly considered in light of Rust v. Sullivan, 500 U.S. 173 (1991). In

Rust, the Court held that “[b]y requiring that the . . . grantee

engage in abortion-related activity separately from activity

receiving federal funding, Congress has . . . not denied it the

right to engage in abortion-related activities.” Id. at 198. In

short, a restriction on the use of government funds for an

activity does not compel cessation of the activity. 

[18] Here, California has not “denied” employers the “right

to engage in [union]-related activity,” but has “merely refused

to fund such activities out of the public fisc.” Id. This conclusion follows from the Court’s familiar observation about what

is regulation and what is not. “[A] legislature’s decision not

to subsidize the exercise of a . . . right does not infringe the

right.” Regan, 461 U.S. at 546, 549 (rejecting the “notion that

First Amendment rights are somehow not fully realized unless

they are subsidized by the State”); see also Lyng v. Int’l

Union, UAW, 485 U.S. 360, 368-69 (1988). The legislature

20For instance, California agreed during oral argument that nothing in

AB 1889 prevents a closed corporation that receives 100% of its revenues

from the state from using its own funds to assist, promote or deter organizing, where the corporation receives those funds as a capital contribution

by a shareholder who reinvested a legitimately distributed corporate dividend — itself the fruit of the receipt of state grant or program funds. 

CHAMBER OF COMMERCE v. LOCKYER 11801
can “insist[ ] that public funds be spent for the purposes for

which they [a]re authorized,” even if doing so forbids the use

of government funds for other speech. Rust, 500 U.S. at 196;

see also United States v. Am. Library Ass’n, 539 U.S. 194,

212 (2003). California, in enacting AB 1889, has simply

availed itself of that prerogative.21

Nor is there any merit to the dissent’s assertion that AB

1889 violates employers’ First Amendment Rights by “irrevocably stamp[ing] dollar bills with ‘Property of California’ ”

and “limit[ing] the items an employer may purchase with

these specific dollar bills.” (Dissent at 11809.) The dissent’s

parade of horribles goes far beyond the scope of plaintiffs’

facial challenge to sections 16645.2 and 16645.7 and the

record before us. The district court made no findings, nor is

there evidence, that AB 1889 “co-opts the payment for goods

and services and profit realized under a contract.” (Dissent at

11808.)22 Consistent with Rust, the California statute, like var21The dissent questions the legitimacy of AB 1889 because the statute

was “sponsored by the California Labor Federation, AFL-CIO, and supported by a phalanx of labor unions.” (Dissent at 11816.) Not only is this

an irrelevant consideration, but it also is not up to us as judges to impugn

the California legislature’s motives. As the Seventh Circuit wisely

observed in Lavin: 

If (as seems likely) Illinois has taken the approach in this law

because state officials want to assist organized labor as well as

the farmers who supply the grain to be made into ethanol and the

owners of ethanol plants, that is neither a surprise nor a reason

for invalidity. Most legislation is the product of coalitions among

interest groups. Boston wanted to clean up its harbor, but there

can be little doubt that it also wanted to shower benefits on workers who were the incumbents’ political supporters. . . . Federal

preemption doctrine evaluates what legislation does, not why legislators voted for it or what political coalition led to its enactment. This statute does not affect people who spurn the state’s

largesse. 

431 F.3d at 1007 (emphasis added). 

22As noted previously, supra note 1, the only issue before us is whether

AB 1889’s grant and program fund restrictions, § 16645.2 and § 16645.7,

11802 CHAMBER OF COMMERCE v. LOCKYER
ious federal acts, requires only that those who accept government grant and program funds use them for the purpose for

which they were given. Our construction of AB 1889 is “readily apparent,” Gooding v. Wilson, 405 U.S. 518, 521 (1972)

(internal quotation marks and citation omitted), but even were

it not, the statute is not “overly broad and unconstitutional”

(Dissent at 11812) because its restrictions on the use of grant

and program funds have been “carefully drawn” to mirror the

mechanics of constitutionally sound federal acts. Gooding,

405 U.S. at 522; see also Regan, 461 U.S. at 549-50. 

It is even more implausible that AB 1889’s restrictions on

grant and program funds “alter [the funds’] use as legal tender” and frustrate the “basic tenets of our economic system.”

(Dissent at 11809, 11811) Again, the statute’s text is precisely

modeled on language the Congress itself has used. The Workforce Investment Act, for example, regulates federal funds

given to state boards to be awarded as “grants or contracts,

on a competitive basis, to eligible providers within the State

or outlying area to enable the eligible providers to develop,

implement, and improve adult education or literacy activities

within the State.” 20 U.S.C. § 9241(a) (emphasis added). The

Workforce Investment Act also requires “[e]ach recipient of

funds . . . [to] provide . . . assurances that none of such funds

will be used to assist, promote, or deter union organizing.” 29

U.S.C. § 2931(b)(7). AB 1889’s exactly analogous requirement can hardly be antithetical to the monetary concept of

free tender.23

are preempted by the NLRA or are constitutionally invalid. The statute’s

restriction on the use of contract funds, § 16645.4, is not at issue nor was

it addressed by the district court, and the dissent errs in implying otherwise. (Dissent at 11808-12.) 

23The dissent also disregards the nature of state programs, which are run

to serve public purposes and need not guarantee a profit to private companies. (Dissent at 11811.) For instance, in the MediCal program, which the

Chamber of Commerce itself discusses in the context of nursing homes

that are “entirely dependent on state funds,” state funding is designed only

to cover the costs of services performed. Notably, allowable costs under

CHAMBER OF COMMERCE v. LOCKYER 11803
CONCLUSION

Because sections 16645.2 and 16645.7 of AB 1889 are not

preempted under either Machinists or Garmon and do not on

their face infringe plaintiffs’ First Amendment rights, the

judgment of the district court is REVERSED and its injunction is VACATED. We remand for further proceedings consistent with this opinion.

MediCal are also based on federal Medicare cost reporting standards,

which provide that “[i]n determining such reasonable costs, costs incurred

for activities directly related to influencing employees respecting unionization may not be included.” 42 U.S.C. § 1395x(v)(1)(N) (emphasis

added). 

11804 CHAMBER OF COMMERCE v. LOCKYER
Volume 2 of 2

CHAMBER OF COMMERCE v. LOCKYER 11805
BEEZER, Circuit Judge, with whom KLEINFELD and CALLAHAN, Circuit Judges, join in dissent: 

May a state leverage its spending power to induce an

employer to adopt a neutral policy toward labor union organizing? The First Amendment, the National Labor Relations

Act (“NLRA” or “the Act”), and well-established doctrines of

preemption, demand an answer in the negative. 

By extending the definition of “state funds” to include any

monies received by a private employer as a result of contracting with the state, AB 1889 strikes at the heart of the First

Amendment. AB 1889 prohibits not just the use of state

money granted to an employer for and under a specific program but also co-opts the payment for goods and services and

profit realized under a contract (undoubtedly not state funds).

AB 1889’s gag rules prevent any employer from spending its

own funds in direct violation of the First Amendment. 

The NLRA extends to employees the opportunity to render

a free and informed choice about union representation. In

doing so, the Act allows for robust debate of union representation issues by employers and employees alike. California

Assembly Bill 1889, codified at Cal. Govt. Code §§ 16645-

49, (“AB 1889” or “the statute”), stifles employers from fully

participating in organizing and exercising the rights that are

explicitly granted to them by Congress under the NLRA. The

statute rides roughshod over the delicate balance established

by Congress between labor unions and employers. In addition,

the California statute interferes with the NLRA’s extension of

exclusive jurisdiction to the National Labor Relations Board

(“NLRB”) for the adoption and enforcement of representation

11808 CHAMBER OF COMMERCE v. LOCKYER
election rules. I would hold the federal preemption of the relevant provisions of the California statute to be complete.

I

AB 1889 is far from a neutral enactment that simply

restricts use of undefined “state funds.” It abrogates the First

Amendment rights of employers to speak out and discuss

union organizing campaigns. Under the guise of preserving

state neutrality, the statute operates to impel employers themselves to take a position of neutrality with respect to labor

relations, in direct conflict with employers’ rights under the

First Amendment. 

AB 1889 applies to any vendor of goods or services who

receives payouts from the State of California “in excess of ten

thousand dollars in any calendar year on account of its participation in a state program.” “State program” is not defined in

the statute and this broad language brings under the auspices

of the statute every purveyor of goods or services unlucky

enough to cross the magic $10,000 threshold in its annual

contracting with the state.1 AB 1889’s speech regulations and

presumption that “state funds” have been spent on unionrelated expenditures allows the state to irrevocably stamp dollar bills with “Property of California,” alter their use as legal

tender and limit the items an employer may purchase with

those specific dollar bills. All this, despite the fact that the

employer has fully performed under a contract and the state

has received every item it is entitled to under the terms of the

contract. AB 1889 writes a neutrality provision into every

1The term contracting may suggest a more narrow application than that

intended by AB 1889. AB 1889, as written, takes a programmatic

approach to controlling the labor-managment arena through its extensive

reach to all businesses who have a financial involvement in state regulated

activities. For example, hospitals or nursing homes that accept Medi-Cal

patients (a state program) are likely to receive over $10,000 in payments

from California. The acceptance of these state payments subjects those

payments and that vendor to the strictures of AB 1889. 

CHAMBER OF COMMERCE v. LOCKYER 11809
contract the state enters into without requiring the state to bargain or pay for such a pricey concession. The statute also fails

to state where an employer may turn to recover any compliance costs that a labor organization may recover in a suit

authorized by the Act — another unbargained for benefit

gained by the state. 

A statutory blanket prohibition on employers advocating

for or against unions would blatantly violate the First Amendment as the state has no legitimate interest in prohibiting

employers from speaking on union issues. Even the opinion

of the court recognizes that the statute only passes constitutional muster if it is read to only apply to state funds. Opinion

of the Court at 11794 (“Nor does it interfere with employers’

exercise of their First Amendment rights, because employers

remain free to use their own funds to advocate for or against

unionization and are not required to accept neutrality as a condition for receipt of state funds.”). Just because the majority

closes it eyes and wishes it were so cannot alter the economic

fact that AB 1889 both explicitly and implicitly does unconsitutionally require neutrality as a condition for contracting with

the state. A state could not terminate a contract due to the

contractor’s speech, nor could it decide not to contract based

on the employer’s speech as either decision would violate the

employer’s First Amendment Rights. Board of County

Comm’rs v. Wabaunsee County, Kansas, 518 U.S. 668 (1996)

(Government cannot retaliate against independent contractors

for exercising First Amendment Rights). 

Once the state has chosen to award a contract to the lowest

responsible bidder, the state’s interest in the funds it pays for

the contracted goods and services is at end. It has made a bargain for the provision of a limited set of benefits and the vendor has agreed to provide those goods and services, including

labor, in exchange for money. Once the exchange has been

made and payment has been received, that money can no longer be considered “state funds.” The state has no interest in

how those funds are spent by the vendor and the state has no

11810 CHAMBER OF COMMERCE v. LOCKYER
right or reason to limit an individual who engages in a labor

dispute from using its own money for any lawful purpose.

Upon payment to the employer those funds became free tender and any attempt by the state to undermine the buying

power of free tender by limiting the types of goods that can

be purchased with funds in which the state is not vested with

a residual interest is fundamentally opposed to the basic tenants of our economic system and the First Amendment. 

Every reasonable employer will also have built into its contract a measure of profit. This profit is the earned compensation of the employer upon completion of its contractual duties.

AB 1889 seeks to condition the uses to which an employer

may put these specific funds. The problems with this profittaking are most stark when considering the case of employers

who conduct all of their business with the state. These

employers can offer their employees bonuses, pay for allinclusive vacations to Tahiti, throw extravagant parties with

champagne and caviar, or simply bank their profits to save for

a rainy day. What they cannot do, according to AB 1889, is

hold a mandatory meeting to discuss unionization (either the

benefits or burdens) with their employees. Employers who

receive all of their revenue from the state have no other option

but to cease all union-related speech. The opinion of the court

has no mercy for these employers as it concludes that they

have made their own bed through their “free-market choice.”

Simply because a business or individual chooses to contract

with the state, or even accept employment from the state, does

not mean that the state may abrogate First Amendment rights.

See, e.g. United States v. National Treasury Employees

Union, 513 U.S. 454 (1995). Free market choice or not, these

employers retain their First Amendment right to spend their

own funds, as they undoubtedly earn by contracting with the

state, as they see fit. 

Because AB 1889 commandeers private employers own

funds, in addition to regulating the use of state funds, I would

CHAMBER OF COMMERCE v. LOCKYER 11811
hold that the statute is overly broad and unconstitutional

under the First Amendment.

II

The NLRA is a comprehensive scheme designed to balance

the rights and interests of both employers and employees and

provides an administrative mechanism to resolve questions

concerning union representation. Recognizing the extreme

importance of the free flow of information, the NLRA explicitly protects rights of employers to express their views on

union organizing efforts. The opinion of the court recognizes

the importance of unrestricted speech and the free flow of

information to the proper enactment of the Act but blithely

and naively concludes that the California statute does not

impede the flow of information to employees by regulating

employers’ speech. It ignores the application of AB 1889 to

employers own funds, the intensely burdensome and onesided regulatory scheme and the actual impact of the statute

as amply demonstrated in the record. 

A.

Congress’ intent to protect the free-flow of information

between employers and employees is embodied in Section

8(c) of the Act, which permits employers to articulate, in a

non-coercive manner, their views regarding union organizing

efforts: 

The expressing of any views, argument, or opinion,

or the dissemination thereof, whether in written,

printed, graphic, or visual form, shall not constitute

or be evidence of an unfair labor practice under any

of the provisions of this subchapter, if such expression contains no threat of reprisal or force or promise

of benefit. 

29 U.S.C. § 158(c). Congress added Section 8(c) of the

NLRA in 1947, “to insure both to employers and labor orga11812 CHAMBER OF COMMERCE v. LOCKYER
nizations full freedom to express their views to employees on

labor matters . . . .” S. Rep. 80-105, at 23 (1947). Indeed, the

explicit purpose of Section 8(c) was “to protect the right of

free speech when what the employer says or writes is not of

a threatening nature or does not promise a prohibited favorable discrimination.” H.R. Rep. No. 80-510 (1947), reprinted

in 1947 U.S. Code Cong. Serv. 1135, 1151. 

The United States Supreme Court recognizes that “the

enactment of § 8(c) manifests a congressional intent to

encourage free debate on issues dividing labor and management.” Linn v. United Plant Guard Workers, Local 114, 383

U.S. 53, 62 (1966). The Court also holds that “an employer’s

free speech right to communicate his views to his employees

is firmly established and cannot be infringed by a union or the

Board.” NLRB v. Gissel Packing Co., 395 U.S. 575, 617

(1969). The Congressional enactment of Secion 8(c), the

Court explains, in conjunction with the First Amendment,

allows employers to express “any of [their] general views

about unionism or any of [their] specific views about a particular union” in a non-coercive manner. Id. at 618. 

Our case law has also consistently emphasized the importance of an employer’s freedom of speech in labor relations

matters. “Freedom of speech is an essential component of the

labor-management relationship. Collective bargaining will not

work, nor will labor disputes be susceptible to resolution,

unless both labor and management are able to exercise their

right to engage in ‘uninhibited, robust, and wide-open’

debate.” Steam Press Holdings v. Haw. Teamsters & Allied

Workers Union, Local 996, 302 F.3d 998, 1009 (9th Cir.

2002) (quoting New York Times v. Sullivan, 376 U.S. 254,

270 (1964)). For a concise and accurate statement of the rule,

we adopted the principle of free speech in union representation matters as crafted by the Fifth Circuit:

The guaranty of freedom of speech and assembly to

the employer and to the union goes to the heart of

CHAMBER OF COMMERCE v. LOCKYER 11813
the contest over whether an employee wishes to join

a union. It is the employee who is to make the choice

and a free flow of information, the good and the bad,

informs him as to the choices available.

NLRB v. TRW-Semiconductors, Inc., 385 F.2d 753, 760 (9th

Cir. 1967) (quoting Southwire Co. v. NLRB, 383 F.2d 235,

241 (5th Cir. 1967)). 

Our opinions have faithfully reiterated a “commit[ment] to

the principle that debate in union campaigns should be vigorous and uninhibited,” so long as the debate is free of coercion

and retaliatory threats. NLRB v. Lenkurt Elec. Co., 438 F.2d

1102, 1108 (citing NLRB v. TRW-Semiconductors, Inc., 385

F.2d 753, 759-60 (9th Cir. 1967)). “The exercise of free

speech in these campaigns should not be unduly restricted by

narrow construction. It is highly desirable that the employees

involved in a union campaign should hear all sides of the

question in order that they may exercise the informed and reasoned choice that is their right.” Id.; accord, Montgomery

Ward & Co. v. NLRB, 385 F.2d 760, 763 (8th Cir. 1967)

(“[T]he right of free speech guaranteed by the First Amendment and § 8(c) of the Act should not be defeated by narrow

or strained construction.”). 

This protection of the speech of both employees and

employers is the heart of Congress’ design to protect and

enhance union organizing. The NLRB supports this congressional policy of free speech, holding “that it will not restrict

the right of any party to inform employees of the advantages

and disadvantages of unions and of joining them as long as

such information is imparted to employees in a noncoercive

manner.” Trent Tube Co., 147 NLRB 538, 541 (1964) (internal quotation marks omitted); see also United Technologies

Corp., 274 NLRB 1069, 1074 (1985) (“[A]n employer has a

fundamental right, protected by Section 8(c) of the Act, to

communicate with its employees concerning its position in

11814 CHAMBER OF COMMERCE v. LOCKYER
collective-bargaining negotiations and the course of those

negotiations.” (footnote omitted)). 

B.

AB 1889 prohibits grantees and private employers from

using funds received from the state “to assist, promote, or

deter union organizing,” which is defined to include “any

attempt by an employer to influence the decision of its

employees in this state or those of its subcontractors regarding

. . . [w]hether to support or oppose a labor organization . . .

or [w]hether to become a member of any labor organization.”

Cal. Gov’t Code §§ 16645(a), 16645.2(a), 16645.7(a). The

prohibited expenditures include the payments by an employer

for legal and consulting fees relating to union organizing

efforts as well as the salaries of supervisors and employees

related in any respect to union organizing efforts. § 16646.

The statute exempts several types of pro-union activities and

expenses from the prohibition, including “[a]ddressing a

grievance or negotiating or administering a collective bargaining agreement” and “[n]egotiating, entering into, or carrying

out a voluntary recognition agreement with a labor organization.” §§ 16647(a), (d). 

The statute entails burdensome and detailed recordkeeping. The statute requires that employers and grantees certify in advance that the state funds will not be used for speech

and activities that are related to union organizing.

§§ 16645.2(c), 16645.7(b). In addition, employers and grantees must maintain detailed records showing that none of the

funds have been used for speech regarding labor relations.

§§ 16645.2(c), 16645.7(c). Those records must be made available to the Attorney General upon request. Id. The statute presumes that, where funds are commingled, state funds were

used to assist, promote, or deter union organizing. § 16646(b).

The enforcement provisions place heavy burdens on

affected employers. The statute renders employers and grantCHAMBER OF COMMERCE v. LOCKYER 11815
ees liable for treble damages (i.e., the amount of state funds

that were expended in violation of the statute, plus a civil penalty equal to twice the amount of those funds). §§ 16445.2(d),

16445.7(d). The Attorney General of California, or any private taxpayer, may file a lawsuit against a suspected violator

“for injunctive relief, damages, civil penalties, and other

appropriate equitable relief.” § 16645.8(a). The statute awards

a prevailing plaintiff, or certain prevailing taxpayer intervenors, attorney’s fees and costs. § 16645.8(d). The statute does

not award any attorney’s fees or costs to a prevailing

employer. By creating seemingly impossible compliance burdens, by means of onerous accounting requirements and the

threat of lawsuits, the statute essentially mandates employer

neutrality. The statute effectively halts employer campaigns to

defeat labor organizing activity or even an employer’s ability

to offer an opinion on the merits of one union versus another.

Similar to neutrality agreements, which are often sought by

unions from employers, the California statute pushes employers to a policy of neutrality, which in turn helps facilitate

union organizing. It is no surprise that the California statute

was sponsored by the California Labor Federation, AFL-CIO,

and supported by a phalanx of labor unions. Sen. Comm. on

Industrial Relations, Comm. Rep. for 1999 Cal. Assemb. B.

No. 1889, 1999-00 Reg. Sess., at 1 (June 28, 2000). Equally

telling, a law firm which represented itself as “the largest

Union-side labor law firm on the West Coast” wrote in a letter

to the California Attorney General that AB 1889, if not halted

by a court, would “have a significant positive effect on various [union] organization drives . . . .” 

The statute carries a false air of evenhandedness. It purports

to limit employers from using state funds to either “promote”

union organizing or “deter” union organizing. §§ 16645.2(a),

16645.7(a). What must be understood, of course, is that few,

if any, employers will wish for their employees to vote for

union representation. Rare, indeed, will the circumstance be

where an employer will actually dedicate resources to encourage its employees to unionize. The California Teamsters

11816 CHAMBER OF COMMERCE v. LOCKYER
revealed the true impact of the legislation in a letter to certain

members of the California legislature when AB 1889 was

under consideration. The California Teamsters Public Affairs

Council “urged [an] ‘aye’ vote on AB 1889” because it “prohibit[s] employers who receive state funds from using those

funds to discourage unionization” and will affect the “all too

common practice” of “employer campaigns to defeat labor

organizing activity.” (emphasis added). 

The compliance provisions are daunting. Employers must

maintain records demonstrating a complete separation of state

funds. These records must identify every expense at all related

to a union organizing campaign, save for a few pro-union

exceptions, and prove conclusively that such expenses do not

derive from state funds. §§ 16645.2(c), 16445.7(c), 16646,

16647. The statute creates a presumption that the employer

used state funds for unionization purposes unless proven otherwise. § 16646(b). This presumption applies even when an

employer has sufficient private funds such that no state funds

were actually expended. Id. The statute’s documentation

demands, which require employers to track every moment of

employee time and every expense that somehow relates to

deterring union organizing efforts, operate to inhibit employers from opposing union representation drives at all. 

To comply with the statute and continue to oppose unionization or speak out on the merits of one union versus another,

an employer must create and maintain two completely separate accounting and payroll systems. This becomes necessary

because the California statute requires the employer to monitor public and private funds and ensure that the statute’s mandate of fund separation is fulfilled. In addition, the statute

requires the employer to engage in the virtually impossible

task of allocating every single employer expense related to

union organizing activity, including supervisor time and

employee time, which must be meticulously logged and

tracked. 

CHAMBER OF COMMERCE v. LOCKYER 11817
The record before us shows that labor unions have leveraged the significant compliance burdens of the statute to

enhance their bargaining position as against employers. After

AB 1889 passed, unions began writing to the California Attorney General’s office, alleging violations of the statute in an

effort to coerce employers to abstain from distributing literature, retaining consultants and legal counsel, or otherwise

communicating with employees about the advantages and disadvantages of employment in a union shop. One union wrote

the Attorney General and alleged that an employer violated

the statute because employees who were attending a mandatory meeting about union organizing were not paid with a separate paycheck for time that each employee spent at the

meeting. Another union alleged a violation of the statute, with

little factual support, but offered to “settle” the alleged violation if the employer agreed to enter into a neutrality agreement with the union. Yet another union alleged that an

employer violated AB 1889 by hiring an attorney to represent

it during an organizing drive without arranging to pay for

these legal services from funds that were conclusively derived

from a source other than the state. The attempts by the AFLCIO, in briefs filed in this appeal, to downplay the decidedly

pro-union impact of AB 1889 are belied by the record before

the court. What that record teaches is that the unions’ have

and will aggressively use AB 1889 to gain a special advantage

in labor disputes and thereby alter the balance of power

between unions and employers. 

In light of these burdens and this record it cannot be said

with a straight face that the statute “does not affect an

employer’s ability to use its own funds in connection with

union organizing activity.” Opinion of the Court at 11790.

The significant and undeniable impact AB 1889 has on

employers’ speech rights means that not only does it violate

the First Amendment, but it is undoubtedly preempted by the

NLRA.

11818 CHAMBER OF COMMERCE v. LOCKYER
III

The Supreme Court’s preemption doctrines as they relate to

the NLRA have long been centered around reinforcing the

“purpose of the Act[, which] was to obtain ‘uniform application’ of its substantive rules and to avoid the ‘diversities and

conflicts likely to result from a variety of local procedures and

attitudes toward labor controversies.’ ” NLRB v. Nash-Finch

Co., 404 U.S. 138, 144 (1971) (quoting Garner v. Teamsters

Union, 346 U.S. 485, 490 (1953)). The Court has articulated

“two distinct NLRA pre-emption principles” as expressed in

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

(1959) (“Garmon preemption”), and Machinists v. Wisconsin

Employment Relations Commission, 427 U.S. 132 (1976)

(“Machinists preemption”). Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 748, 748-49 (1985). 

I would hold that the preemption doctrines established in

Garmon and Machinists completely preempt the relevant provisions of the California statute.

A.

The doctrine of “Machinists pre-emption preserves Congress’ intentional balance between the uncontrolled power of

management and labor to further their respective interests.”

Bldg. & Trades Council v. Associated Builders (“Boston Harbor”), 507 U.S. 218, 226 (1993) (internal quotation marks

omitted). Although cast nominally as an effort to ensure state

neutrality, the California statute, by stifling speech rights of

employers and their ability to participate in a debate about the

value of unions generally or advise employees as to which

union is preferable, operates to significantly empower labor

unions as against employers. In doing so, the statute destroys

the delicate balance between labor unions and employers as

mandated by Congress through the NLRA. For this initial reason, AB 1889 is preempted by the NLRA, pursuant to

CHAMBER OF COMMERCE v. LOCKYER 11819
Machinists v. Wisconsin Employment Relations Commission,

427 U.S. 132 (1976). 

Machinists preemption “is based on the premise that ‘the

use of economic pressure by the parties to a labor dispute is

. . . part and parcel of the process of collective bargaining,’ ”

which means that “neither a state nor the National Labor

Relations Board is ‘afforded flexibility in picking and choosing which economic devices of labor and management shall

be branded unlawful.’ ” Alameda Newspapers, Inc. v. City of

Oakland, 95 F.3d 1406, 1413 (9th Cir. 1996) (quoting

Machinists, 427 U.S. at 144, 149). 

Under the doctrine of Machinists preemption, a state cannot

“deny[ ] one party . . . a weapon that Congress meant him to

have available,” because such a state regulation “stands as an

obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Machinists, 427 U.S. at

150, 151 (internal quotation marks omitted). Employers have

a number of tools at their disposal in exercising their Section

8(c) rights to express their views on union organizing efforts.

An employer is permitted, for example, to express its views

about union representation to masses of employees, in mandatory meetings, on company time, so long as such speech does

not occur within 24 hours of an election. See Peerless Plywood Co., 107 NLRB 427, 429 (1953); Livingston Shirt

Corp., 107 NLRB 400, 409 (1953). Employers may dispatch

supervisors to engage in one-on-one discussions during work

time with employees about the negative effects of union representation, see, e.g., Lenkurt Elec. Co., 438 F.2d at 1107-08,

and may disseminate written anti-union materials, Beverly

Enterprises-Hawaii, Inc., 326 NLRB 335, 336 (1998) (holding that “the [e]mployer did not engage in objectionable conduct when its supervisors handed out flyers [even] at a time

when the [e]mployer was enforcing its otherwise valid nodistribution rule against employees”). 

11820 CHAMBER OF COMMERCE v. LOCKYER
A state law that both explicitly targets and directly regulates processes controlled by the NLRA is preempted under

the Machinists doctrine. Because AB 1889, on its face,

directly regulates the union organizing process itself and

imposes substantial compliance costs and litigation risk on

employers who participate in that process using the statutorily

protected self-help mechanisms, it interferes with an area

Congress intended to leave free of state regulation. The statute

hands a coercive weapon to those seeking to unionize by creating an ever present threat of consuming and expensive litigation should an employer deign to offer its opinion on the

merits of unionization. The statute ties the hands of management financially and allows pro-union groups free reign.2

Preemption will prevail over the application of local law

even when federal law does not expressly protect the conduct

at issue if “the application of state law . . . would operate to

frustrate the purpose of the federal legislation.” Teamsters v.

Morton, 377 U.S. 252, 258, 260 (1964) (noting also that a

conflicting state law cannot be permitted to “frustrate the congressional determination to leave th[e] weapon of self-help

available, and to upset the balance of power between labor

and management expressed in our national labor policy”).

Machinists affirms this notion, holding that “a particular

activity might be protected by federal law not only when it [is

explicitly protected by the NLRA], but also when it was an

2

I note an additional manner in which AB 1889 alters the balance as

established between labor unions and employers: AB 1889 comes dangerously close to rendering employers’ financial records an open book, which

federal labor law does not allow. Labor unions are permitted to receive

employers’ financial records under the NLRA only after winning an election and only for legitimate collective bargaining purposes. See NLRB v.

Acme Industrial Co., 385 U.S. 432, 435-36 (1967). Under AB 1889, however, unions are able to bypass these federal limits and file lawsuits in

state court, granting them access to employers’ financial records in state

court. With these records in hand, the unions would have additional leverage in advocating for a unionized workforce and place additional pressure

on an employer to simply recognize a given union. 

CHAMBER OF COMMERCE v. LOCKYER 11821
activity that Congress intended to be unrestricted by [a]ny

governmental power to regulate.” 427 U.S. at 141 (internal

quotation marks omitted). 

An overriding principle of the NLRA is that the collective

bargaining process cannot function unless both employers and

employees have the ability to engage in open and robust

debate concerning unionization. See NLRB v. Jones &

Laughlin Steel Corp., 301 U.S. 1, 45 (1937) (“The theory of

the Act is that free opportunity for negotiation . . . may bring

about the adjustments and agreements which the Act in itself

does not attempt to compel.”). The NLRA’s declared purpose

is to “restor[e] equality of bargaining power” by, among other

ways, “encouraging the practice and procedure of collective

bargaining and by protecting the exercise by workers of full

freedom of association, self-organization, and designation of

representatives of their own choosing, for the purpose of

negotiating the terms and conditions of their employment.” 29

U.S.C. § 151. 

By impeding the flow of information and any substantive

discussion of unionization, the statute substantively regulates

and disrupts “Congress’ intentional balance between the

uncontrolled power of management and labor to further their

respective interests.” Boston Harbor, 507 U.S. at 226 (internal

quotation marks omitted). The statute frustrates “effective

implementation of the [NLRA’s] processes,” rendering preemption of the California statute under Machinists appropriate. Machinists, 427 U.S. at 148 (internal quotation marks

omitted). 

That California purports to act through its spending power

rather than its regulatory power, is a “distinction without a

difference.” Wisconsin Dep’t of Indus. v. Gould, Inc., 475

U.S. 282, 287 (1986). “[W]e cannot believe that Congress

intended to allow States to interfere with the ‘interrelated federal scheme of law, remedy, and administration,’ under the

NLRA as long as they did so through exercises of the spend11822 CHAMBER OF COMMERCE v. LOCKYER
ing power.” Id. at 290 (quoting Garmon, 359 U.S. at 243)

(citation omitted). Although a state’s ability to control the use

of its funds is an important state interest, regulation that specifically targets and substantially affects the NLRA bargaining process will be preempted, even if such regulation comes

in the form of a restriction on the use of state funds. See Metropolitan Milwaukee, 431 F.3d 277, 278-79 (7th Cir. 2005).

B.

The doctrine of Garmon preemption exists to uphold

national labor policy and to vindicate Congress’ decision to

“entrust[ ] administration of the labor policy for the Nation to

a centralized administrative agency, armed with its own procedures, and equipped with its specialized knowledge and

cumulative experience.” San Diego Building Trades Council

v. Garmon, 359 U.S. 236, 242, 246 (1959). The California

statute stifles employers’ speech rights which are granted by

federal law, and in doing so, impedes the ability of the NLRB

to uphold its election speech rules and administer free and fair

elections. I would hold that AB 1889 is also preempted under

the Garmon doctrine. 

In upholding the NLRA from state-law dilution, the

Supreme Court has emphasized the importance of “delimiting

areas of conduct which must be free from state regulation if

national policy is to be left unhampered.” Garmon, 359 U.S.

at 246. Garmon preemption is focused on avoiding “the

potential conflict of two law-enforcing authorities, with the

disharmonies inherent in two systems, one federal the other

state, of inconsistent standards of substantive law and differing remedial schemes.” Id. at 242. 

There are two distinct circumstances under which Garmon

preemption can emerge. Sears, Roebuck & Co. v. San Diego

County Dist. Council of Carpenters, 436 U.S. 180, 187

(1978). The first preempts activity which is actually protected

or prohibited by federal law, dictating that “[w]hen it is clear

CHAMBER OF COMMERCE v. LOCKYER 11823
or may fairly be assumed that the activities which a State purports to regulate are protected [by the NLRA], due regard for

the federal enactment requires that state jurisdiction must

yield.” Garmon, 359 U.S. at 244. The second form of Garmon

preemption deals with activities that are merely either arguably protected or arguably prohibited by the Act. Sears, 436

U.S. at 187-88. This second and distinct application of Garmon preemption holds that “[w]hen an activity is arguably

subject [to the Act], the States as well as the federal courts

must defer to the exclusive competence of the National Labor

Relations Board if the danger of state interference with

national policy is to be averted.” Garmon, 359 U.S. at 245

(emphasis added). 

The first branch of the Garmon preemption doctrine is at

issue, and preempts AB 1889. Congress’ intent, the Supreme

Court and Ninth Circuit precedent all lead inextricably to the

conclusion that Section 8(c) of the NLRA actually grants and

protects speech rights of employers. See supra § I. Because

the Act is a comprehensive regulatory scheme, to say that an

activity is not punishable by the Act is the equivalent of protecting that activity. AB 1889 encumbers these speech rights,

and in doing so, interferes with the jurisdiction of the NLRB.

Congress has directed the NLRB to oversee elections and

determine what conduct constitutes an unfair labor practice

under the Act. See 29 U.S.C. § 158(a)(1). Broadly speaking,

and consistent with Section 8(c) of the NLRA, the NLRB

takes a laissez faire approach to employee and employer

speech, allowing passionate, partisan debate to proceed during

a union organizing campaign. See Trent Tube Co., 147 NLRB

538, 541 (1964). At the same time, the NLRB has jurisdiction

to regulate a certain bandwidth of employer speech, to ensure

compliance with Section 8(c). See Midland Nat’l Life Ins.

Co., 263 NLRB 127, 133 (1982) (“[W]e will no[t] probe into

the truth or falsity of the parties’ campaign statements, and [ ]

will not set elections aside on the basis of misleading campaign statements. . . . [But] we will continue to protect against

other campaign conduct, such as threats, promises, or the like,

11824 CHAMBER OF COMMERCE v. LOCKYER
which interferes with employee free choice.”). For example,

the NLRB has long enforced various “time, place, and manner” rules that bar certain types of campaign and speech activities in the vicinity of the polls or in the final hours before an

election. See Peerless Plywood Co., 107 NLRB at 429-30;

Milchem, Inc., 170 NLRB 362, 362-63 (1968). The NLRB has

held that, consistent with Section 8(c), employers may hold

mandatory meetings with employees about union organizing

efforts, Livingston Shirt Corp., 107 NLRB at 409, direct

supervisors to informally discuss a representation campaign

with employees, see Stanley Oil Co., 213 NLRB 219, 225

(1974), and distribute anti-union literature to employees even

when enforcing a no-solicitation rule to employees, Beverly

Enterprises-Hawaii, 326 NLRB at 336. 

The California statute regulates the same partisan employer

speech that Congress committed to the jurisdiction of the

NLRB. In doing so, AB 1889 discourages employer speech,

which works at cross-purposes with the relaxed election

speech rules established by the NLRB. Congress “entrusted

[to the NLRB] . . . a wide degree of discretion in establishing

the procedure and safeguards necessary to insure the fair and

free choice of bargaining representatives by employees.”

NLRB v. A.J. Tower Co., 329 U.S. 324, 330 (1946). By discouraging employer speech, California directly usurps the

ability of the NLRB to administer elections that will foster

fair and free employee choice. 

Far from hewing to the NLRA’s goal of installing a “national labor policy of minimizing industrial strife,” Emporium

Capwell Co. v. W. Addition Cmty. Org., 420 U.S. 50, 62

(1975), AB 1889 encourages additional litigation by allowing

unions and the California Attorney General to bring proceedings in state court to attack the very partisan employer speech

that the NLRB protects. California defies Congress’ decision

to “entrust[ ] to the Board alone” the criteria necessary to conduct a fair representation election. NLRB v. Waterman S.S.

Corp., 309 U.S. 206, 226 (1940). 

CHAMBER OF COMMERCE v. LOCKYER 11825
“Garmon preemption is ‘intended to preclude state interference with the National Labor Relations Board’s interpretation

and active enforcement of the integrated scheme of regulation

established by the NLRA.’ ” Alameda Newspapers, 95 F.3d at

1412 (quoting Golden State Transit Corp. v. City of Los

Angeles, 475 U.S. 608, 613 (1986)); see also Gould, 475 U.S.

at 286-89. California’s displacement of the NLRA’s free

speech protections and its interference with the NLRB render

AB 1889 preempted under Garmon. Garmon preemption

applies because AB 1889 “regulate[s] conduct so plainly

within the central aim of federal regulation [that it] involves

too great a danger of conflict between power asserted by Congress and requirements imposed by state law,” thus creating

a “potential frustration of national purposes.” Garmon, 359

U.S. at 244. 

The opinion of the court avoids general Garmon preemption principles and replaces them with an overly narrow view

of the Garmon doctrine that is inapplicable to this dispute.

The critical error of the opinion of the court lies in a misreading of Sears, Roebuck & Company, 436 U.S. 180, and a misunderstanding of the form of Garmon preemption that applies

to AB 1889. 

The opinion of the court relies upon Sears for the proposition that Garmon preemption applies only when the controversy presented to the state court is identical to the

controversy that would be presented to the NLRB. The opinion of the court fails to recognize, however, that this requirement of identicalness applies only to the type of Garmon

preemption applied to those activities that are merely arguably prohibited by the Act. Because of heightened concerns

rooted in the Supremacy Clause of the United States Constitution, the requirement of identicalness does not apply if the

activity is either arguably protected or, as here, actually protected, by the Act. An analysis of Sears readily uncovers the

misconception of the Garmon doctrine as expressed in the

court’s opinion filed today. 

11826 CHAMBER OF COMMERCE v. LOCKYER
At issue in Sears was the power of a state court to hear a

trespass lawsuit brought by an employer to enforce trespassing laws against union picketing. Sears, 436 U.S. at 182. The

Court first considered whether the picketing was “arguably

prohibited” by federal law, which would be possible grounds

for preemption. Id. at 190-98 (emphasis added). The Court

concluded that, with regard to activity which is arguably prohibited by the Act, Garmon preemption (and the accompanying risk of interference with the jurisdiction of the NLRB)

emerges only when “the controversy is identical to . . . that

which could have been, but was not, presented to the Labor

Board.” Id. at 197. The Court concluded that the NLRB’s

inquiry regarding the arguably prohibited conduct would

prove to be vastly different than an inquiry by the state court

as to whether there was a trespass, and therefore, declined to

find Garmon preemption. 

The Court then turned to the question whether the arguably

protected character of the union’s picketing could lead to

Garmon preemption. Id. at 199-207. Preliminarily, the Court

noted that “state-court interference with conduct actually protected by the act” invokes a “constitutional objection” rooted

in the Supremacy Clause. Id. at 199. Therefore,

“[c]onsiderations of federal supremacy . . . are implicated to

a greater extent when labor-related activity is protected than

when it is prohibited.” Id. at 200. The Court concluded that

even though the Union’s peaceful, if trespassory, picketing

could arguably be protected under the Act, such a trespass “is

far more likely to be unprotected than protected.” Sears, 436

U.S. at 205. Therefore, the Court held, “the assertion of state

jurisdiction [to adjudicate the alleged trespass] does not create

a significant risk of prohibition of protected conduct.” Sears,

436 U.S. at 207. Notably, with regard to the arguably protected conduct of the picketing and trespass, the Court did not

require (as it did with respect to arguably prohibited conduct)

that the controversies before the NLRB and state court be

identical before invoking Garmon preemption. 

CHAMBER OF COMMERCE v. LOCKYER 11827
As this analysis of Sears indicates, the rule that Garmon

preemption applies only when the state court and NLRB

inquiries are identical only applies to activity which is arguably prohibited under the Act. With regard to conduct that is

arguably protected under the Act, the standard under which

preemption is found becomes less stringent because of heightened federal supremacy concerns. Accordingly, as compared

to activity which is merely arguably prohibited by the Act,

Garmon preemption is more readily found in relation to activity which is arguably protected or actually protected by the

Act. 436 U.S. at 199-200. 

At issue with regard to AB 1889 is not a mere arguable prohibition or arguable protection granted by the NLRA. Rather,

Section 8(c) of the NLRA constitutes an explicit, actual protection which explicitly protects the speech rights of employers. 

All along, the Sears Court explicitly disclosed that it was

not addressing a case that involved actually protected conduct. Sears, 436 U.S. at 187 (“The case is not, however, one

in which ‘it is clear or may fairly be assumed’ that the subject

matter which the state court sought to regulate . . . is either

prohibited or protected by the Federal Act.”). In light of the

explicit speech protections granted by Section 8(c) of the

NLRA, the Sears test of strict identicalness does not apply to

a Garmon preemption analysis of AB 1889. Simply put, the

opinion of the court’s reliance on Sears, and its application of

the test of identicalness between the NLRB’s inquiry and the

state court’s inquiry, is misplaced. 

The traditional Garmon analysis applies to the explicitly

protected free speech rights of employers, and because AB

1889 interferes with those rights and undermines the speech

rules and election procedures of the NLRB, I would hold that

AB 1889 is preempted under Garmon.

11828 CHAMBER OF COMMERCE v. LOCKYER
IV

I must respectfully dissent because AB 1889 violates the

First Amendment and is preempted under both Machinists and

Garmon. The District Court properly entered summary judgment in favor of plaintiffs.

CHAMBER OF COMMERCE v. LOCKYER 11829