Opinion ID: 3011336
Heading Depth: 1
Heading Rank: 6

Heading: jurisdiction

Text: Before we apply the principles of NLRA preemption to the case at hand, we consider first a question raised by the intervenors, joined by the government, with respect to the standing of the associations to challenge the WDA as preempted by conflict with S 7 of the NLRA. The issue of standing is jurisdictional. A declaratory judgment or injunction can issue only when the constitutional standing requirements of acase or controversy are met. See U.S. Const., Art. III, S 2; Maryland Casualty Co. v. Pacific Coal & Oil Co. , 312 U.S. 270, 272 (1941). Although declaratory judgments are frequently sought in advance of the full harm expected, they must still present a justiciable controversy rather than abstract, hypothetical or contingent questions. Alabama State Fed'n of Labor v. McAdory, 325 U.S. 450, 461 (1945). We have explained that these standing requirements are satisfied when there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. Step-Saver Data Sys., Inc. v. Wyse Tech., 912 F.2d 643, 647 (3d Cir. 1990) (quoting Maryland Casualty, 312 U.S. at 273 (1941)). That there is a substantial controversy between the parties here sufficient to meet the constitutional requirement of standing is evident. When the complaint was filed, the WDA was being enforced in the Virgin Islands. Employees had filed claims with the Department of Labor seeking relief under the Act. Hearings had been scheduled for April 6, 1999, and at least 12 employers scheduled for April hearings were members of the St. Thomas-St. John Hotel and Tourism Association. As a 12 consequence of the enforcement of the WDA, the employers' ability to freely discharge their employees or to contract for terms of discharge was limited as they would be subject to liability if they discharged their employees for reasons other than those stated in the challenged act. The associations, representing the interests of employers in the Virgin Islands, seek declaratory and injunctive relief from enforcement of the statute on the ground that the WDA is unenforceable because it is preempted by the NLRA,3 and seek prospective injunctive relief under 42 U.S.C. S 1983 against the Commissioner of Labor in her official capacity, alleging that by enforcing the WDA the Commissioner is violating their federal rights. The parties' interests in this action could not be more adverse, as the government and employees, both defendants here, seek to enforce the protections provided by the WDA, and the employers, through the associations, seek to avoid enforcement of those protections. The intervenors and the government do not question the associations' organizational standing to bring a cause of action challenging the statute on behalf of their member employers. Instead, the intervenors challenge the associations' ability to argue that the WDA is preempted based on conflict with S 7. The appellants claim that because employers, unlike employees, have no substantive rights under S 7, they are precluded from relying on S 7 for their preemption claim. Section 7 provides: Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to _________________________________________________________________ 3. The associations also allege that supervisors cannot be covered by the [WDA] pursuant to the Supreme Court's decision in Beasley v. Food Fair of North Carolina, Inc., 416 U.S. 653, 662 (1974). Compl. P 13. The District Court declined to decide that claim, and it is therefore not before us on appeal. 13 refrain from any or all such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title. 29 U.S.C. S 157. It is indeed evident, as the appellants argue, thatS 7 confers rights on employees rather than employers, but that is not determinative of the associations' standing to raise that issue. We know of no governing authority to the effect that the federal statutory provision which allegedly preempts enforcement of local legislation by conflict must confer a right on the party that argues in favor of preemption. On the contrary, a state or territorial law can be unenforceable as preempted by federal law even when the federal law secures no individual substantive rights for the party arguing preemption. See, e.g., California Fed. Sav. & Loan Assoc. v. Guerra, 479 U.S. 272 (1987) (action for declaratory and injunctive relief brought by employers arguing that California state law was preempted by the Pregnancy Discrimination Act of 1978, which gives rights to pregnant employees under Title VII); Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978) (action brought by a tanker company arguing that Washington Tanker Law was preempted by conflict with the Ports and Waterways Safety Act of 1972, which imposes operation, safety, and environmental requirements on tanker companies). But our conclusion that the associations have standing to bring this action challenging enforcement of the WDA does not end the jurisdictional inquiry, for the District Court must also have subject matter jurisdiction over the associations' claims. See 48 U.S.C. S 1612(a) (providing that the District Court of the Virgin Islands shall have the jurisdiction of a District Court of the United States); see generally Estate of Thomas Mall, Inc. v. Territorial Court of the V.I., 923 F.2d 258, 260-64 (3d Cir. 1991) (explaining jurisdictional system for civil actions in the Virgin Islands). Jurisdiction is established in this case under 28 U.S.C. S 1331. The associations seek injunctive and declaratory relief from enforcement of a territorial regulation on the 14 ground that the regulation is preempted by the NLRA, a federal statute which grants employers as well as employees substantive federal rights. See Golden State Transit Corp. v. City of L.A., 493 U.S. 103, 108-12 (1989) (Golden State II) (holding that the NLRA confers a substantive right on employers and employees to be free of governmental regulation within the zone of Machinists preemption).4 The Supreme Court has recognized that such a challenge presents a federal question which the federal courts have jurisdiction under 28 U.S.C. S 1331 to resolve. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983); see also Lawrence County v. Lead-Deadwood Sch. Dist. No. 40-1, 469 U.S. 256, 259 n.6 (1985). 5 C. Application of Preemption Principles to the WDA The associations argue, and the District Court agreed, that the WDA is preempted by the NLRA under the Machinists doctrine because it regulates conduct that Congress meant to leave unregulated. That argument is _________________________________________________________________ 4. The associations assert that, in addition to the right conferred by the NLRA under Machinists preemption, the NLRA also confers a substantive right of voluntary unionism on employers. Our research uncovered no case in which a court has recognized such a right. Moreover, even if such a right were to exist, we find questionable the District Court's assertion that the right would enure in the text ofS 7, see slip op. at 14 (stating that section 7 . . . guarantee[s] rights to employers as well as to employees), rather than its being implicit in the structure and goals of the NLRA as a whole. In any event, we do not reach that issue in this case. 5. In finding federal jurisdiction under 28 U.S.C. S 1331 we do not decide whether territorial officials in their official capacities are persons under S 1983 when sued solely for prospective injunctive relief. Cf. Ngiraingas v. Sanchez, 495 U.S. 182, 192 (1990) (holding that plaintiff who sought damages against territory of Guam and its officials in their official capacities could not state a S 1983 claim because the territory and its officials are not persons under the section). Nor do we decide whether the federal Declaratory Judgment Act, 28 U.S.C.S 2201, applies to the Virgin Islands. Cf. 28 U.S.C. S 2201 (authorizing such relief by any court of the United States). 15 foreclosed by the Supreme Court's decisions in Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985), and Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1 (1987). At issue in Metropolitan Life was a Massachusetts statute that required that specified minimum mental health care benefits be provided to a state resident who was insured under a general insurance policy, an accident or sickness insurance policy, or an employee health-care plan that covered hospital and surgical expenses. Metropolitan Life Insurance Co. brought suit for declaratory and injunctive relief, arguing, inter alia, that the Massachusetts law was preempted by the NLRA under the Machinists doctrine because Congress intended to leave the choice of terms in collective-bargaining agreements to the free play of economic forces. Metropolitan Life, 471 U.S. at 748. After examination of the congressional concerns behind the enactment of the NLRA, the Court rejected the argument that state regulations imposing minimum substantive standards on contract terms are preempted under Machinists. As the Court explained: The NLRA is concerned primarily with establishing an equitable process for determining terms and conditions of employment, and not with particular substantive terms of the bargain that is struck when the parties are negotiating from relatively equal positions. . .. The evil Congress was addressing thus was entirely unrelated to local or federal regulation establishing minimum terms of employment. . . . No incompatibility exists, therefore, between federal rules designed to restore the equality of bargaining power, and state or federal legislation that imposes minimal substantive requirements on contract terms negotiated between parties to labor agreements, at least so long as the purpose of the state legislation is not incompatible with the[ ] general goals of the NLRA. Id. at 753-55. The Court addressed a similar argument two years later in Fort Halifax. The state statute at issue in Fort Halifax required employers in Maine to provide a one-time severance payment to employees in the event of a plant 16 closing, unless the employee was covered by a contract that deals with the issue of severance pay. 482 U.S. at 5. Employees of a closed packing plant, as well as the Maine Director of the Bureau of Labor Standards, brought suit in state court for enforcement of the statute. On certiorari to the Supreme Court, the owner of the closed plant, like the insurer in Metropolitan Life, argued that preemption of the state statute was necessary under Machiniststo further Congress' intent that the conduct involved be unregulated because [it should be] left to be controlled by the free play of economic forces. Id. at 19-20 (internal quotations omitted). It argued that its case was not controlled by Metropolitan Life because the statutory obligation under the Maine statute applied only in the absence of an agreement between an employer and its employees. The Fort Halifax Court confirmed its holding in Metropolitan Life that a state law establishing a minimum employment standard is not preempted by the NLRA, adding that there is no preemption even when the state law permits parties to an employment agreement to contract out of the protections provided by the law. See id. at 22. The Court explained: It is true that the Maine statute gives employees something for which they otherwise might have to bargain. That is true, however, with regard to any state law that substantively regulates employment conditions. Both employers and employees come to the bargaining table with rights under state law that form a backdrop for their negotiations. Id. at 21 (quoting Metropolitan Life, 471 U.S. at 757). Metropolitan Life and Fort Halifax clearly stand for the proposition that, in enacting the NLRA, Congress did not intend to prevent states from establishing minimum substantive requirements for contract terms. See generally Metropolitan Life, 471 U.S. at 754-55 (discussing goals of the NLRA). Although the associations insist that the WDA is not a minimum substantive requirement like the ones at issue in Metropolitan Life or Fort Halifax, they provide no principled basis for distinguishing the WDA from the statutes upheld in those cases. 17 The associations attempt to draw support from two cases decided in the Court of Appeals for the Ninth Circuit. In the first, the court held that a wrongful discharge claim brought by an employee under the Montana Wrongful Discharge from Employment Act, Mont. Code Ann. SS 39-2- 901 et seq. (providing that discharge must be for good cause), was preempted by the NLRA. See Barnes v. Stone Container Corp., 942 F.2d 689 (9th Cir. 1991). A look at the facts of Barnes reveals, however, that it is of little value here. The collective-bargaining agreement between Barnes's employer, Stone Container Corp., and his union expired and, after its extension for unsuccessful negotiations, the employer exercised its right to terminate the agreement and hired a number of replacement workers. Two of those new employees were sprayed with water at the work site, and Stone Container charged Barnes with the harassment of those employees and fired him. The union filed an unfair labor practice charge on behalf of Barnes, asserting that the stated reason for his discharge was pretextual and that Stone Container fired him for his union activity. After investigation, the NLRB found no basis for the retaliation charge and the union withdrew the complaint. Barnes then filed an action under the Montana wrongful discharge act, alleging dismissal without just cause. After Barnes had been discharged, the bargaining between his employer and union reached an impasse. The employer sought summary judgment from the federal court to which the action had been removed, arguing preemption under Machinists, because the wrongful discharge act would impose a just cause term where one did not exist. The district court denied summary judgment but the court of appeals reversed. The court held that permitting a wrongful discharge action during the period after contract expiration but before a bargaining impasse is the sort of entanglement Machinists sought to avoid, as it altered significantly the incentives to negotiate. The court did not invalidate the state statute but merely held its use in those unique circumstances was preempted. That the Barnes decision is limited to a narrow set of circumstances was made clear by the Ninth Circuit itself 18 the following year in National Broad. Co., Inc. v. Bradshaw, 70 F.3d 69, 73 (9th Cir. 1995) (holding that because a state statutory remedy was not invoked until after bargaining impasse was reached, the type of interference with negotiations frowned upon in Barnes did not occur). That set of circumstances is not present in this case. The second case out of the Ninth Circuit relied on by the associations, Chamber of Commerce of United States v. Bragdon, 64 F.3d 497 (9th Cir. 1995), is also distinguishable from this case. There, the court held that a county ordinance that required private employers to pay prevailing wages to employees on certain types of private industrial projects costing over $500,000 was preempted by the NLRA under Machinists preemption. See id. at 498. The court noted that imposition of such substantive requirements affects the bargaining process and could dictate the results of a contract, id. at 501, an undue governmental interference with the collective bargaining processes protected by the NLRA, id. at 504. Even if we were to agree with the Ninth Circuit that Metropolitan Life and Fort Halifax permit the extension of Machinists preemption to displace state law that imposes substantive minimum requirements for contract terms rather than regulates the use of economic bargaining weapons, see id. at 501, the county ordinance at issue in that case is remarkably different from the WDA. In establishing nine statutory bases for lawful discharge in the Virgin Islands, the WDA neither regulates the process of bargaining nor upsets the balance of power of management on one side and labor on the other that is established by the NLRA. Instead, the WDA is directed to limiting the permissible bases for discharge of an employee to a broad list, including, inter alia: engaging in conflicting business; engaging in insolent or offensive conduct; using intoxicants or controlled substances that affect the employee's work; disobeying reasonable rules or instructions; being negligent, incompetent, inefficient, dishonest, or unable to work with others; and, regardless of the employee's behavior, economic hardship of the employer. See V.I. Code 19 Ann. tit. 24, S 76. This appears to be a comprehensive list, covering all or almost all legitimate reasons for discharge. The associations also argue that the WDA cannot be a minimum employment standard because it treats union and non-union employees differently by permitting the union to contract its members out of the protections provided by the WDA but not permitting non-union employees to contract out of the protections. They argue that this opt-out for union employees forces unionization, triggering preemption by conflict with S 7 and the Machinists doctrine. Our analysis of this alternative argument is guided by the Supreme Court's discussion in Livadas v. Bradshaw, 512 U.S. 107 (1994). A California state law guaranteed to all California workers immediate payment of wages upon discharge. Livadas, an employee of Safeway supermarket, was covered by a collective-bargaining agreement which provided for binding arbitration for disputes as to the interpretation or application of the agreement, including grievances arising from allegedly unjust discharge or suspension. Id. at 110. When Livadas was discharged, she demanded her payment immediately, but the store manager refused, instead sending her payment by mail. Livadas filed an administrative claim against Safeway for a statutory penalty for the three-day delay caused by the mailing, but the Commissioner of Labor refused to enforce the claim because Livadas was covered by a collective-bargaining agreement containing an arbitration clause. Livadas then filed suit, asserting that the Commissioner's nonenforcement policy was preempted. The Supreme Court agreed, holding that the Commissioner's policy was preempted by the NLRA because it forced Livadas to choose between exercising her state law right to immediate payment and exercising her right to enter into a collective bargaining agreement with an arbitration clause. See id. at 117. In doing so, the Court distinguished Fort Halifax, which involved a minimum employment standard with an opt-out provision, in part on the ground that the minimum protections of Maine's plantclosing law were relinquished not by the mere act of signing an employment contract (or collective-bargaining 20 agreement), but only by the parties' express agreement on different terms. Id. at 131. The Court stated: While the Commissioner and her amici call our attention to a number of state and federal laws that draw distinctions between union and nonunion represented employees, virtually all share the important second feature observed in [Fort Halifax], that union-represented employees have the full protection of the minimum standard, absent any agreement for something different. These `opt out' statutes are thus manifestly different in their operation (and their effect on federal rights) from the Commissioner's rule that an employee forfeits his state-law rights the moment a collective-bargaining agreement with an arbitration clause is entered into. Hence, our holding that the Commissioner's unusual policy is irreconcilable with the structure and purposes of the Act should cast no shadow on the validity of these familiar and narrowly drawn opt-out provisions. Id. at 131-32 (citations omitted). In a footnote, the Court added: Nor does is seem plausible to suggest that Congress meant to pre-empt such opt-out laws, as `burdening' the statutory right of employees not to join unions by denying nonrepresented employees the `benefit' of being able to `contract out' of such standards. Id. at 132 n.26. The Supreme Court's discussion in Livadas thus supports a conclusion that the WDA is not preempted by the NLRA even though it provides an opt-out by express terms of union contract. Like the Maine statute at issue in Fort Halifax, and unlike the California Commissioner's policy in Livadas, the WDA does not force an employee to choose between collective bargaining and the protections of state law; rather, it protects all Virgin Islands employees, but gives employees the option of relinquishing the territorial statutory protections through the terms of a collective-bargaining agreement. We are not alone in our conclusion that state minimum employment requirements are not inconsistent with the NLRA even when they provide for a union contract opt-out. 21 We have seen no case in which a court of appeals has decided otherwise. Indeed, there are several cases in which the Court of the Appeals for the Ninth Circuit held that an opt-out provision for union contracts did not trigger preemption by the NLRA. See Viceroy Gold Corp. v. Aubry, 75 F.3d 482, 490 (9th Cir. 1996) (holding that statute limiting mine workers to an 8-hour day unless otherwise provided in a collective bargaining agreement is not preempted); National Broadcasting Co., 70 F.3d at 73 (holding that state regulations requiring employers to pay double time for all hours worked over 12 hours in a day unless the employees were covered by a collective bargaining agreement providing specified minimum overtime benefits are not preempted). Underlying the associations' argument and the District Court's opinion in this case is the unsettling supposition that by enacting the WDA the Virgin Islands legislature is regulating in an area that has traditionally been left to the freedom of contract between an employer and an employee. The Supreme Court has made clear that Machinists preemption does not extend into the realm of establishment of minimum employment standards like that established by the WDA. Moreover, the Court has cautioned that[i]n labor pre-emption cases . . . our office is not to pass judgment on the reasonableness of state policy. Livadas, 512 U.S. at 120. It appears that the determination of the Virgin Islands legislature that its citizens are in need of minimum employment protections falls within the precedent established by the Supreme Court that such legislation is not preempted by the NLRA.