UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
filed: February 15, 1977.
AMALGAMATED TRANSIT UNION, DIVISION 819; DIVISION 820, AMALGAMATED TRANSIT UNION; DIVISION 821, AMALGAMATED TRANSIT UNION; DIVISION 822, AMALGAMATED TRANSIT UNION; DIVISION 823, AMALGAMATED TRANSIT UNION; DIVISION 824, AMALGAMATED TRANSIT UNION; DIVISION 825, AMALGAMATED TRANSIT UNION; DIVISION 880, AMALGAMATED TRANSIT UNION; DIVISION 1248, AMALGAMATED TRANSIT UNION; DIVISION 1276, AMALGAMATED TRANSIT UNION; DIVISION 1317, AMALGAMATED TRANSIT UNION; DIVISION 1358, AMALGAMATED TRANSIT UNION; DIVISION 1478, AMALGAMATED TRANSIT UNION; DIVISION 1530, AMALGAMATED TRANSIT UNION; DIVISION 1541, APPELLANTS,
BYRNE, BRENDAN T., INDIVIDUALLY AND IN HIS CAPACITY AS GOVERNOR OF THE STATE OF NEW JERSEY; ALAN SAGNER, INDIVIDUALLY AND IN HIS CAPACITY AS COMMISSIONER OF TRANSPORTATION OF THE STATE OF NEW JERSEY AND AS CHAIRMAN OF THE COMMUTER OPERATING AGENCY; AND THEIR AGENTS, ASSIGNS, AND SUCCESSORS
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. Civil No. 76-698)
Before: ALDISERT and WEIS, Circuit Judges, and HUYETT, District Judge*fn*
ALDISERT, Circuit Judge.
The question for decision is whether a complaint filed by 15 local unions of the Amalgamated Transit Union [ATU] stated a claim upon which relief could be granted. The complaint charged that New Jersey officials impermissibly interfered in the collective bargaining process between the local unions and various transit companies by threatening to withdraw state subsidies from any transit company which provided in its collective bargaining agreement for an uncapped cost of living clause or for a wage increase for union employees higher than that given to state employees. The unions sought declaratory and injunctive relief against state interference in the negotiations. Pursuant to Fed. R. Civ. P. 12(b)(6), the district court dismissed the complaint for failure to state a claim. We reverse.
On a Rule 12(b)(6) motion, the factual allegations of a complaint should be accepted by the court as true, see Estelle v. Gamble, 45 U.S.L.W. 4023 (U.S. Nov. 30, 1976); Radovich v. Nat'l Football League, 352 U.S. 445, 448 (1957), and the complaint should be dismissed only if it appears to a certainty that no relief could be granted under any set of facts which could be proved in support of its claims. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). These oft-stated precepts are consistent with the simplified pleading requirements of the Federal Rules of Civil Procedure, whose purpose is "to facilitate a proper decision on the merits." Conley, supra, 355 U.S. at 48.
The present complaint alleged that for at least 25 years, plaintiff-appellant local unions engaged in collective bargaining with various privately owned transit companies in New Jersey, and that on January 9, 1976, during the parties' negotiations over new labor contracts to succeed those soon to expire, Alan Sagner, New Jersey's Commissioner of Transportation, called a meeting of union officials involved in the negotiations to announce that "the State would not continue its policy of subsidizing troubled private transit companies if the unions insisted on retaining the 'uncapped cost of living' clause in their contracts...." Further, it alleged that on February 6, 1976, Sagner and Lewis Kaden, Counsel to New Jersey Governor Brendan Byrne, met with union officials in Washington; that at this meeting, Kaden informed the union representatives that New Jersey "objected to the cost of living principle as it existed in current contracts and was going to 'destroy' it"; and that both Kaden and Sagner reiterated that any transit company agreeing to such cost of living clauses in the present negotiations would not receive state subsidies.
The local unions also averred that in March, 1976, transit company negotiators informed union negotiators that state officials had instructed their companies to abandon the cost of living clauses and to hold any wage increases at the level of that granted state employees, lest the state withdraw subsidy assistance from the company; that the unions objected to these positions, and negotiations reached an impasse, as a result of which strikes occurred at four transit companies; that during the strikes, Governor Byrne stated publicly that New Jersey would not subsidize any transit company which retained a cost of living clause in its labor agreements; and that Alan Sagner distributed to the negotiating parties a statement indicating that the state would not subsidize any company which granted salary and benefit increases beyond those granted state employees. Finally, it was averred that at a bargaining session occurring during the strikes, a representative of Governor Byrne stated to negotiators that "a new contract could not contain the uncapped cost of living clause as it existed in the current contract."*fn1
These proceedings emphasize the tension between the state's legitimate concern for conserving limited finances used to underwrite New Jersey transit companies and the keystone of our national labor policy, embodied in the original National Labor Relations Act of 1935 [NLRA], 29 U.S.C. § 151:
It is declared to be the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, selforganization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.
July 5, 1935, c.372, § 1, 49 Stat. 449; June 23, 1947, c.120, Title I, § 101, 61 Stat. 136.
As originally passed and as amended in 1947, the NLRA reflects a careful balancing of the differing powers and viewpoints of labor and management. See Local 1976, Carpenters v. NLRB, 357 U.S. 93, 99-100 (1958). Concerned that the inequality of bargaining power between employers and employees threatened the national economy and industrial peace, Congress encouraged "practices fundamental to the friendly adjustment of industrial disputes arising out of differences as to wages, hours, or other working conditions...." 29 U.S.C. § 151.
In enacting the NLRA, Congress acknowledged that the legislation "preempts the field that the act covers insofar as commerce within the meaning of the act is concerned." H.R. Rep. No. 245, 80th Cong., 1st Sess. 44 (1947). But the Act was "more noticeable for its generality than for its precise prescriptions," H. K. Porter Co. v. NLRB, 397 U.S. 99, 100 (1970), and the limitations on state authority to regulate conduct in the labor sector emerged gradually as the courts construed the purpose of the statute. See Garner v. Teamsters Local 776, 346 U.S. 485, 488 (1953); Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 771-72 (1947).
A state may not impinge on conduct which is protected under section 7 of the Act, 29 U.S.C. § 157, nor may a state sanction conduct which is prohibited as an unfair labor practice under section 8, 29 U.S.C. § 158. See Motor Coach Employees v. Lockridge, 403 U.S. 274, 292 (1971); Hanna Mining Co. v. Marine Engineers, 382 U.S. 181, 187 (1965); San Diego Building Trades Council v. Garmon, 359 U.S. 236, 244-45 (1959). Nor may state law interfere with rights implicitly guaranteed by the NLRA, even though the state conduct is not expressly prohibited, or the activity specifically protected, by the Act. The congressional intent, as perceived by the Supreme Court, was that certain conduct "'be controlled by the free play of economic forces,'" and thus "'privileged against state regulation.'" Lodge 76, International Association of Machinists v. Wisconsin Employment Relations Commission, 44 U.S.L.W. 5026, 5028-29 (U.S. June 25, 1976), quoting NLRB v. Nash-Finch Co., 404 U.S. 138, 144 (1971); Hanna Mining Co. v. Marine Engineers, 382 U.S. 181, 187 (1965).
"An appreciation of the true character of the national labor policy expressed in the NLRA and the LMRA indicates that in providing a legal framework for union organization, collective bargaining, and the conduct of labor disputes, Congress struck a balance of protection, prohibition, and laissez-faire in respect to union organization, collective bargaining, and labor disputes that would be upset if a state could enforce statutes or rules of decision resting upon its views concerning accommodation of the same interests." Id. at 5028 n.4, quoting Cox, Labor Law Preemption Revisited, 85 HARV L. REV. 1337, 1352 (1972). State attempts to regulate these same interests must fall if they disturb the balance contemplated by Congress. See Teamsters Local 20 v. Morton, 377 U.S. 252, 259-60 (1964); discussion in section II B, infra.
Appellants' right to collectively bargain with the employer transit companies, a crucial part of the "balance" and guaranteed under section 7 of the Act, 29 U.S.C. § 157, is accompanied by a duty to bargain in good faith, as defined in section 8, 29 U.S.C. § 158(d). But this good faith obligation "does not compel either party to agree to a proposal or require the making of a concession...." Id. Congress added this specific amendment in 1947 to prevent the National Labor Relations Board [NLRB] from forcing negotiating parties to accept terms rather than face unfair labor practice charges based on inferences of bad faith. The section was designed to return the Board to its originally intended administrative role,*fn2 and the Supreme Court subsequently held, as it had even prior to the amendment, see NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45 (1937), that the Board is "without power to compel a company or a union to agree to any substantive contractual provision of a collective-bargaining agreement." H. K. Porter Co. v. NLRB, 397 U.S. 99, 102 (1970). See also NLRB v. Insurance Agents, 361 U.S. 477, 490 (1960); NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 287 (1972).
This understanding that collective bargaining must be free from governmental control is applicable to the states as well as to the NLRB. The Supreme Court has given directions in this regard, and has not hesitated to vindicate the supremacy clause when state interests collide with the federal labor policy announced in the NLRA. Thus, upholding the NLRB's primary jurisdiction, the Court could teach that "[the] ordering and adjusting of competing interests through a process of free and voluntary collective bargaining is the keystone of the federal scheme to promote industrial peace. State law which frustrates the effort of Congress to stimulate the smooth functioning of that process thus strikes at the very core of federal labor policy." Teamsters Local 174 v. Lucas Flour Co., 369 U.S. 95, 104 (1962).
Holding that a state antitrust law could not nullify the negotiated solution of a wage problem because the application of state controls "would wholly defeat the full realization of the congressional purpose," Teamsters Local 24 v. Oliver, 358 U.S. 283, 295-96 (1959), the Court has flatly stated that "there is no room" for a state policy which would limit "the solutions that the parties' agreement can provide to the problems of wages and working conditions." Id. at 296. The same result was reached in Connell Construction Co. v. Plumbers and Steamfitters Local 100, 421 U.S. 616 (1975), in which the Court distinguished between federal and state antitrust laws. The Court reasoned that federal antitrust legislation had been carefully balanced with labor policy; that state antitrust laws generally represent a completely different balance; and, accordingly, that state regulation in this field could upset basic federal policy.
Recently presented with the question of whether Wisconsin could prohibit a union's concerted refusal to work overtime during negotiations for a new contract, the Court has instructed:
Our decisions hold that Congress meant that these activities, whether of employer or employees, were not to be regulable by States any more than by the NLRB, for neither States nor the Board are "afforded flexibility in picking and choosing which economic devices of labor and management would be branded as unlawful." Rather, both are without authority to attempt to "introduce some standard of properly 'balanced' bargaining power.
[State] attempts to influence the substantive terms of collective-bargaining agreements are as inconsistent with the federal regulatory scheme as are such attempts by the NLRB: "[since] the federal law operates here, in an area where its authority is paramount, to leave the parties free, the inconsistent application of state law is necessarily outside the power of the State."
Lodge 76, International Association of Machinists v. Wisconsin Employment Relations Commission, supra, 44 U.S.L.W. at 5031 & 5032 (citations omitted).
The power and authority of a state, therefore, may not be invoked to disturb the balance of bargaining power existing between negotiating partes, nor may it be used in an effort to dictate the substantive terms of a collective bargaining agreement.*fn3
Just as the states are prohibited from legislating contrary to the federal labor policy, the same prohibition extends to actions by the state executive branch. We see no distinction between the legislative and executive actions, and New Jersey does not suggest any in this appeal.
What is beyond the pale of permissible action is official activity that seeks to alter the economic forces at work or to influence the substantive terms of collective bargaining agreements. New Jersey appears to accept this premise. It nevertheless contends that here there was no state interference, that this was simply a case "where the State tells parties to a negotiation that only a certain amount of money is available for subsidization purposes," and that under these circumstances "the State has not provided additional economic weapons to one side and... has not removed the available weapons of the other party." Asserting that "[the] State has determined under what financial conditions it will subsidize the carriers' operations and communicated this fact to all affected parties," the state argues, with much force, that in so doing it was discharging its responsibilities under the New Jersey Transit Subsidy Program:*fn4
The State of New Jersey has carefully designed its motor bus subsidy program to provide for essential transportation needs of its citizens. This program exists outside of the occurrence of a labor dispute and is constructed to last beyond such an event. The determination that a subsidy will be offered to a carrier is discretionary with the State. It depends on various factors some of which may be of significance to collective bargaining negotiations. The fact that there is such an impact is not equivalent to saying that during the term of labor negotiations the law requires that all such considerations by the State shall be deferred.
Appellees' Brief at 19.
What this argument overlooks is that there exists a critical difference between a state communicating to all affected parties the extent of finances it intends to grant for carriers' operations and a state communicating that it will not continue its subsidization if the carriers agree with the unions to retain uncapped cost of living clauses in their employment contracts. The former communication presumably does not constitute interference with negotiations over wages and working conditions, as it is not a state attempt "to influence the substantive terms of collective bargaining agreements." But when the state has "determined under what financial conditions it will subsidize the carriers' operations" and then imposes these conditions as prerequisites to continued subsidization, the state has transformed these conditions into critical limitations on the terms of the collective bargaining agreement, and has moved beyond the pale of permissible activity. It has attempted to dictate, or at least influence, the substantive terms of the collective bargaining agreement.
By brief and at oral argument New Jersey vigorously asserted that it did not, in fact, interfere with the collective bargaining process or prescribe specific substantive terms of the resulting agreements. We cannot agree or disagree with this contention. The jurisprudential posture of this appeal requires us to accept the factual averments of the complaint as true. As averred, and if proved, New Jersey's conduct constituted interference with the collective bargaining process protected by the National Labor Relations Act. To the extent that New Jersey can rebut the factual allegations of the complaint, it may be able to prevail. In the posture of this appeal, however, that is not relevant. The issue here is solely whether the complaint states a claim upon which relief can be granted. We hold that it does.
The judgment of the district court will be reversed and the cause remanded for further proceedings in accordance with the foregoing.