Court Opinion

ID: 9610592
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:43:29.186852+00
Date Added: 2024-06-11T18:03:02.219785
License: Public Domain

GIBSON, C. J.
The State of California brought this action for declaratory relief to determine the validity of a contract entered into by respondent brotherhoods and the Board of *414State Harbor Commissioners respecting the rates of pay and working conditions of employees of the State Belt Railroad. This appeal was taken from a judgment in favor of respondents declaring the contract valid.
The Belt Railroad is owned and operated by the state, and its management and control are committed by statute to the Board of State Harbor Commissioners. (Harb. & Nav. Code, §§ 3150-3165.) The railroad parallels the waterfront of San Francisco harbor, extending to some 45 wharves and directly serving approximately 175 industrial plants, and it has track or freight-car ferry connections with three interstate railways. The Belt line facilitates the freight traffic of the harbor by moving freight ears between the various steamship companies, industrial plants and railroad carriers with which it has connections, and it serves as a link in the through transportation of interstate freight shipped to or from points in San Francisco over the connecting carriers. It is settled that the Belt Railroad is engaged in interstate commerce. (United States v. State of California, 297 U.S. 175 [56 S.Ct. 421, 80 L.Ed. 567]; State of California v. Anglim, 129 F.2d 455; Maurice v. State of California, 43 Cal.App.2d 270 [110 P.2d 706].)
The railroad employs between 125 and 225 persons, the number depending upon the volume of business. The Constitution of California provides that these employees are members of the state civil service, and under the Civil Service Act the appointment, classification, promotion, salary ranges, hours and general working conditions of all members of the civil service are governed by provisions of that act and by regulations of the State Personnel Board. (Cal. Const., art. XXIV, §4; Gov. Code, §§ 18500-19765.) Compensation of employees within the ranges set by the State Personnel Board may be fixed by the Harbor Board (Harb. & Nav. Code. §1705), subject to approval by the state Department of Finance. (Gov. Code. § 18004.)
On September 1. 1942. the Board of State Harbor Commissioners and respondent brotherhoods, representing the railroad employees, entered into the contract here involved. In general, the contract fixes matters relating to pay and working conditions which are normally governed by civil service statutes and regulations, and certain of its provisions conflict in substance with civil service laws on the subjects of promotions, lay-offs, leaves of absence, accumulation of sick leave and procedures for dismissal, demotion and suspension. *415The contract was the result of collective bargaining between respondent brotherhoods and the Harbor Board, and the parties concede that it has never been approved by the Department of Finance.
The state contends that the contract is invalid because the employees affected are members of the state civil service and that their pay and working conditions are to be governed exclusively by legislation or administrative rules and not by collective bargaining contract. A similar contention is made by the intervenor, a Belt Railroad employee, who claims that his benefits and privileges are less under the provisions of the contract than under the state Civil Service Act, and that he is entitled to protection of the laws governing state employment. It is respondents’ position, however, that the state, as owner of the Belt Railroad, is subject to the federal Railway Labor Act which secures to employees of railroads engaged in interstate commerce the right to enter into collective bargaining agreements with their employer concerning rates of pay, rules and working conditions. (45 U.S.C.A. §§ 151, 152.) Accordingly, respondents argue, the contract is valid and supersedes all provisions of the state Constitution, the Civil Service Act, and rules and regulations of the State Personnel Board which are inconsistent therewith.
The Railway Labor Act requires all common carriers by railroad, their officers, agents, and employees “to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules and working conditions, and to settle all disputes, whether rising out of the application of such agreements or otherwise, in order to avoid any interruption to commerce. ...” (45 U.S.C.A. § 152.) It provides that employees shall have the right to organize and bargain collectively through representatives of their own choosing, and it sets up a procedure for the settlement of disputes by conference of representatives of employer and employees and, failing solution there, by reference to the National Railroad Adjustment Board, the National Mediation Board, or arbitration. (45 U.S.C.A. §§ 152-155, 157.) Orders of the National Railroad Adjustment Board may be enforced by action in United States District Courts, and judgment may be entered on awards which are the result of arbitration. (45 U.S.C.A. §§ 153p, 159.) The act fixes the procedure employers must follow in changing rates of pay, rules or working conditions, requiring thirty days’ notice and conference with employee representatives; it further provides that no such changes shall be effective until *416final action by the National' Mediation Board, if the board offers its services or either party requests them. (45 U.S.C.A. § 156.) Punishment in the form of fines and imprisonment is prescribed for employers who fail to obey provisions of the act. (45 U.S.C.A. § 152 tenth.)
The Railway Labor Act does not expressly apply to state-oivned railroads (45 U.S.C.A. § 151), and it is well settled that statutes which in general terms divest preexisting rights or privileges will not be applied to a sovereign, in the absence of express words to that effect, unless there are extraneous and affirmative reasons for believing that the sovereign was intended to be affected. (United States v. United Mine Workers, 330 U.S. 258, 272-273 [67 S.Ct. 677, 686, 706, 91 L.Ed. 884]; United States v. Wittek, 337 U.S. 346, 359 [69 S.Ct. 1108, 1115, 93 L.Ed. 1406]; Parker v. Brown, 317 U.S. 341, 350-351 [63 S.Ct. 307, 313, 87 L.Ed. 315]; Balthasar v. Pacific Elec. Ry. Co., 187 Cal. 302, 305-306 [202 P. 37, 19 A.L.R. 452]; cf. United States v. State of California, 297 U.S. 175, 186 [56 S.Ct. 421, 425, 80 L.Ed. 567].) In United States v. State of California, supra, 297 U.S. 175 [56 S.Ct. 421, 80 L.Ed. 567], which also involved the Belt Railroad, the Supreme Court found reasons for believing that Congress intended to include states within the operation of the federal Safety Appliance Act. The court stated that the purpose of the statute there involved was to protect employees, the public and commerce from injury because of defective appliances on interstate carriers and that no convincing reason had been advanced why it should not apply to all carriers, whether private or state owned. The Belt Railroad has also been held subject to the federal Employers’ Liability Act and the federal Carriers Taxing Act. (Maurice v. State of California, 43 Cal.App.2d 270 [110 P.2d 706]; State of California v. Anglim, 129 F.2d 455.)  However, considerations which may justify the application of general safety and taxing measures to state-owned carriers are not controlling in determining' the intended scope of a statute which purports to regulate and supervise employer-employee relationships.  We must look to the subject matter of a particular statute and to the terms of the enactment in its total environment in order to determine legislative intent, and there are, we believe, affirmative reasons which indicate that Congress did not intend the Railway Labor Act to apply to state-owned carriers.
It is most significant that, while one of the major purposes of the Railway Labor Act is to secure the right of employees *417to bargain collectively with their employer with respect to rates of pay, rules and working conditions, the terms and conditions of government employment are traditionally fixed by legislation and administrative regulation, not by contract. (See Railway Mail Ass’n. v. Corsi, 326 U.S. 88, 95 [65 S.Ct. 1483, 1488, 89 L.Ed. 2072]; Nutter v. City of Santa Monica, 74 Cal.App.2d 292, 298 [168 P.2d 741]; City of Springfield v. Clouse, 356 Mo. 1239 [206 S.W.2d 539, 542-544].) A concise statement of the characteristics distinguishing public from private employment in this regard appears in a letter from President Roosevelt to the National Federation of Federal Employees, dated August 16, 1937: “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.” (Quoted in City of Springfield v. Clouse, 356 Mo. 1239 [206 S.W.2d 539, 542-543]; C.I.O. v. City of Dallas, (Tex.Civ.App.) 198 S.W.2d 143, 144-145.)
Recent authorities hold uniformly that the wages, hours and working conditions of government employees must be fixed by statute or ordinance and that state laws which, in general terms, secure the right of employees to enter into collective bargaining agreements with respect to those matters are not intended to apply to public employment.1 (Nutter v. City of Santa Monica, 74 Cal.App.2d 292 [168 P.2d 741]; City *418of Springfield v. Clouse, 356 Mo. 1239 [206 S.W.2d 539, 545]; Miami Water Works Local No. 654 v. City of Miami, 157 Fla. 445 [26 So.2d 194, 195, 165 A.L.R. 967]; see Mugford v. Mayor and City Council of Baltimore, 185 Md. 266 [44 A.2d 745, 746-747, 162 A.L.R. 1101]; Hagerman v. City of Dayton, 147 Ohio 313 [71 N.E.2d 246, 253, 254]; 1 Teller, Labor Disputes and Collective Bargaining [1940 ed., 1947 Supp.], § 171.) The Labor Relations Acts of several states expressly exclude public employees from their provisions relating to collective bargaining,2 and it has been held that such discrimination does not constitute a violation of equal protection. (Railway Mail Ass’n. v. Corsi, 326 U.S. 88, 95 [65 S.Ct. 1483, 1488, 89 L.Ed. 2072].)
Congress itself has consistently excluded state employment from the operation of other labor relations statutes enacted under the commerce or war power.' The National Labor Relations Act of 1937 and the subsequent Labor Management Relations Act of 1947, which secure the right of collective bargaining to employees of employers engaged in interstate commerce, expressly provide that the term employer as used in the acts does not include the United States or any state or political subdivision. (29 U.S.C.A. §§141, 152(2).) The Fair Labor Standards Act of 1938 likewise expressly excludes governmental employers from its provisions (29 U.S.C.A. §§ 201, 203d), as does the War Labor Disputes Act of 1943. (50 U.S.C.A. §§ 1501, 1502d.) These statutes indicate a uniform congressional policy that the relationship between a state and its employees is not to be controlled by the federal government even where those employees are engaged in interstate commerce, and so closely related in purpose is such labor legislation with the Railway Labor Act that the Supreme Court has characterized collective bargaining provisions of the Railway Act as the “analogue” of similar provisions in the National Labor Relations Act and has given parallel interpretation to sections of the two acts. (National Labor Relations Board v. Jones & Laughlin S. Corp., 301 U.S. 1, 44-45 [57 S.Ct. 615, 627-628, 81 L.Ed. 893, 108 A.L.R. 1352].)
Under all the circumstances, it is obvious that application of the collective bargaining requirements of the Railway *419Labor Act to state employment would constitute an unprecedented interference with a state’s traditional method of fixing the working conditions of its employees, and it seems doubtful that Congress had such an intent.  As stated in Parker v. Brown, 317 U.S. 341, 351 [63 S.Ct. 307, 313, 87 L.Ed. 315], “In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state’s control over its officers and agents is not lightly to be attributed to Congress.”
The legislative history of the act gives no indication that it was intended to affect any but private carriers. Prior to its enactment in 1926, Congress had passed a series of laws designed to bring about peaceful settlement of railroad disputes, but none had the full support of both the carriers and their employees, and arbitration machinery set up under provisions of the 1920 Transportation Act had proven particularly inefféctive. (See 67 Cong. Rec. 4509-4513, 4516; Virginian Ry. Co. v. System Federation No. 40, 300 U.S. 515, 542 [57 S.Ct. 592, 597, 81 L.Ed. 789]; Texas & N.O.R. Co. v. Brotherhood of Ry. & S.S. Clerks, 281 U.S. 548, 562-563 [50 S.Ct. 427, 431, 74 L.Ed. 1034].) In 1925 representatives of some 58 major private railroads and 20 labor organizations met and entered into prolonged negotiations over legislation which would be satisfactory to all interests, and the Railway Labor Bill was the product of these conferences. (See 67 Cong. Rec. 4504-4505, 4522, 4524, 4583, 4652, 8807; Texas & N.O.R. Co. v. Brotherhood of Ry. & S.S. Clerks, supra, 281 U.S. 548, 563 [50 S.Ct. 427, 431, 74 L.Ed. 1034].) Identical bills embodying the proposals of the unions and the railroads were introduced in each House of Congress by the chairman of its committee on interstate commerce, and, after public hearings, the Railway Labor Bill was passed without substantial amendment.' (See 67 Cong. Rec. 4504-4505; Chamberlain, The Railway Labor Act (1926) 12 A.B.A.Jour. 633.) Thus the Railway Labor Act basically represented the agreement of labor organizations with private carriers. We have been cited to no instance in the course of passage of the bill, and have discovered none, in which the question was raised as to whether state-owned railroads were intended to be affected.
Many of the purposes stated in the Railway Labor Act are similar to some of the purposes of the Norris-La Guardia Act which were discussed in United States v. United Mine Workers, *420330 U.S. 258, 274 [67 S.Ct. 677, 687, 91 L.Ed. 884]. It was there held that the United States as an employer was not intended to be affected by statutes limiting the use of injunctions in labor disputes, and the opinion of the court, delivered by Chief Justice Vinson, states, “The purpose of the [Norris-La Guardia] Act is said to be to contribute to the worker’s full freedom of association, self-organization, and designation of representatives of his own choosing, to negotiate the terms and conditions of Ms employment, and that he shall be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives . . . for the purpose of collective bargaining. ...” The court then observed, “These considerations, on their face, obviously do not apply to the government as an employer or to relations between the Government and its employees.” In a separate concurring opinion Justices Black and Douglas added the following, “Congress never in its history provided a program for fixing wages, hours, and working conditions of its employees by collective bargaining. Working conditions of Government employees had not beén the subject of collective bargaining, nor been settled as a result of labor disputes. It would require specific congressional language to persuade us that Congress intended to embark upon such a novel program or to treat the Government employer-employee relationship as giving rise to a ‘labor dispute’ in the industrial sense.” (330 U.S. at 328-329, 67 S.Ct. at 713.)
Those provisions of the Railway Labor Act which fix a method for the settlement of disputes by conference of employer and employee representatives, and, thereafter, by reference to federal adjustment or mediation boards or to arbitration, are equally inappropriate to the relationship between a state and its employees. Normally, a state provides methods for the settlement of disputes and grievances of its employees within the framework of its own government,3 and a general Congressional provision for the handling of disputes between employers and employees would, we think, be intended to apply only to private individuals or corporations, and not to a sovereign state.
We can find no legitimate reason for making any distinction in the present case between governmental and pro*421prietary functions of the state. The fact that operation of the Belt Railroad may be described as a proprietary activity (see People v. Superior Court, 29 Cal.2d 754, 763 [178 P.2d 1]) is immaterial in considering the characteristics of public employment or the intended scope of congressional legislation regulating interstate commerce. (United States v. State of California, 297 U.S. 175, 183 [56 S.Ct. 421, 424, 80 L.Ed. 567]; City of L. A. v. Los Angeles etc. Council, 94 Cal.App.2d 36, 45-46 [210 P.2d 305]; Nutter v. City of Santa Monica, 74 Cal.App.2d 292, 302 [168 P.2d 741]; see Rhyne, Labor Unions and Municipal Employe Law [1946 ed.] § 7, p. 53-56; Rhyne, id., Supp.Rep. [1949] §7, p. 31-32; 1 Teller, Labor Disputes and Collective Bargaining [1940 ed., 1947 Supp.] § 171, pp. 117, 118.)
In view of our conclusion that Congress did not intend the Railway Labor Act to apply to state-owned and operated carriers, we need not consider whether Congress could constitutionally undertake to regulate the relationship between a state and its employees, and we likewise need not determine whether application to a state of provisions for enforcement of orders of the Railroad Adjustment Board and arbitration awards in federal courts would constitute a violation of the Eleventh Amendment to the federal Constitution.
The judgment in the present case must be reversed for the further reason that, assuming the state is subject to the Railway Labor Act and that state civil service regulations are superseded by provisions of that act, the Harbor Board could not properly enter into the contract with the brotherhoods and bind the state without the approval of the Department of Finance, as required by section 18004 of the Government Code.4
                   There is no inconsistency between section 18004 and the provision in section 1705 of the Harbors and Navigation Code authorizing the Board of State Harbor Commissioners to fix the salary of its employees.5
                   The *422Department of Finance is given general powers of supervision over ail matters concerning the financial and business policies of the state. (Gov. Code, § 13070, based on former Pol. Code, § 654.) The purpose of such legislation is to conserve the financial interests of the state, to prevent improvidence, and to control the expenditure of state .money by any of the several departments of the state. (Ireland v. Riley, 11 Cal.App.2d 70, 72 [52 P.2d 1021].)  Since sections 18004 and 1705 may be harmonized, they should be construed together and with reference to the whole system of which they form a part. (See Cohn v. Isensee, 45 Cal.App. 531, 536-537 [188 P. 279]; Ireland v. Riley, supra, 11 Cal.App.2d 70, 74-76 [52 P.2d 1021]; Chilson v. Jerome, 102 Cal.App. 635, 641 [283 P.862].)  Moreover, even if we were to accept the argument that the requirement of approval of salaries by the Department of Finance is tantamount to transferring to the department the power to “fix” compensation of Harbor Board employees, the legislative intent to create supervisory powers in the department is so clear and unmistakable that section 18004 must be regarded as modifying all earlier legislation authorizing specific state agencies to fix the salaries of their employees.
The judgment is reversed.
Shenk, J., Edmonds, J., Traynor, J., Schauer, J., and Spence, J., concurred.

It should be noted that we aie not here concerned with the right of public employees to join or form labor organizations or to urge the proper exercise of discretionary authority by executive and administrative officers. (See City of Springfield v. Clouse, 356 Mo. 1239 [206 S.W.2d 539, 542-543]; City of L. A. v. Los Angeles etc. Council, 94 Cal.App.2d 36, 45 [210 P.2d 305]; 1 Teller, Labor Disputes and Collective Bargaining [1940 ed., 1947 Supp.] $171, p. 113-119; Rhyne, Labor Unions and Municipal Employe Law [1946 ed.] $ 1, p. 21-33; Rhyne, id., Supp. Rep. [1949] $1, p. 8-15; 54 Harv.L.Rev. 1360 [1941]; cf. C.I.O. v. City of Dallas, (Tex.Civ.App.) 198 S.W.2d 143, 145-147; Seattle High School Chap. No. 200 v. Sharples, 159 Wash. 424 [293 P. 994, 72 A.L.R. 1215].)

Fla., Stat.Ann., ch. 453, $ 453.17; Mass., Ann. Laws, ch. 150 B $ 2; Minn., Stat. Ann. ch. 179, § 179.01, suhd. 3; N.Y., Consol. Laws, ch. 30, art. 20, § 715; Penn., Stat.Ann., title 43, $ 211.3; R.I., Laws 1941, ch. 1066, $ 16; Tex., 15 Civ.St., art. 5154c; Utah, Code Ann. 1943, 49-1-10(2); Wis., Stats. 1939, c. 57.

file California Civil Service Act provides for investigations or hearings by the State Personnel Board of disputes and other matters arising under the Civil Service Act and administrative rules. (Gov. Code, §§ 18670-18681, 18714, 18803, 18851, 19578-19587, 19541, 19576, 19583.5.)

Seetion 18004 provides: “Unless the Legislature specifically provides that approval of the Department of Finance is not required, whenever any State agency or court fixes the salary or compensation of an employee or officer, which salary is payable in whole or in part out of State funds, the salary is subject to the approval of the Department of Finance before it becomes effective and payable.” (As added in 1945, based on former Pol. Code, § 675.1.)

Section 1705 provides, “. . . The Board shall fix the compensation of its officers and employees other than the commissioners. ...” (As amended in 1945.) Prior to 1945 the section read as follows: “. . . The salaries of [certain specified officers] shall be fixed by the board with the approval of the Director of Finance. The board shall fix the compensation of other employees. ...”