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Amalgamated Transit Union v. Byrne

filed: September 22, 1977.


Appeal from the United States District Court for the District of New Jersey.

Argued: Aldisert and Weis, Circuit Judges, and Huyett, District Judge. Reargued in banc: Seitz, Chief Judge, Van Dusen, Aldisert, Adams, Gibbons, Rosenn, Hunter, Weis and Garth, Circuit Judges. Aldisert, Circuit Judge, dissenting, with whom Weis, Circuit Judge, joins, and with whom Hunter, Circuit Judge, also joins except for part IV. B. Adams, Circuit Judge, dissenting.

Author: Seitz


SEITZ, Chief Judge

This case poses the question of whether officials of the State of New Jersey violated the federal policy of allowing the content of collective bargaining agreements to be determined "by the free play of economic forces" when they threatened to withdraw State subsidies of private transportation companies which agree with their unions to include unlimited cost of living increases in their collective bargaining agreements. NLRB v. Nash-Finch Co., 404 U.S. 138, 144, 30 L. Ed. 2d 328, 92 S. Ct. 373 (1971). The district court concluded that the complaint filed by the plaintiffs-appellants, who are 15 local unions of the Amalgamated Transit Union representing the employees of various transportation companies, failed to state a claim on which relief could be granted. In determining the soundness of the district court's decision, we are thus obligated to accept the allegations of the complaint as true.

The State of New Jersey provides subsidies to certain privately owned transportation companies under the following statute:

The Department of Transportation is hereby authorized to contract with any motor bus carrier operating bus or rail transit service in the State which is in imminent danger of terminating all bus services or all rail transit services provided by said motor bus companies to insure the continuance of that portion of the bus and rail transit services which is essential. Payment by the department under such a contract shall not exceed the actual cost to the motor bus carrier for providing such services and shall not include any return on investment. 27 N.J. Stat. Ann. § 1A-28.7 (Supp. 1977).

During late 1975, individual contract negotiations began between representatives of certain transportation companies and the relevant plaintiff unions, looking toward new labor contracts to succeed those which were about to expire. The complaint asserts that:

In the midst of these negotiations the defendant Commissioner of Transportation, Alan Sagner, injected the State into these negotiations. Specifically, he called a meeting on January 9, 1976 of those local union officials involved in negotiations. He announced on that occasion 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 [whereby wages are periodically adjusted to fully reflect increases in the cost of living as calculated by the Department of Labor] in their contracts with such companies. The defendant Sagner and Lewis Kaden, Counsel to Governor Byrne and his authorized representative, next met with the International President and other union officials . . . in Washington, D.C. on February 6, 1976. Kaden stated to them that the State of New Jersey objected to the cost of living principle as it existed in current contracts and was going to "destroy" it. Further, Kaden and Sagner said that the State would not assist by way of subsidy those private transit companies that agreed to such cost of living increases in any contracts which might result from the then ongoing negotiations.

The complaint also asserts that:

In March, 1976, company negotiators told their Union counterparts at the bargaining table that their companies had been instructed by state officials that the current cost of living clauses in their contracts could not be retained in future contracts. In at least one instance a company official said that he had also been told by state officials that any wage increases for employees of the companies could not exceed those granted State employees or else there would be no further state subsidy assistance for those financially troubled companies. The unions in each case vigorously objected to such positions and negotiations reached an impasse. As a result, strikes occurred [at the companies in March of 1976].

During the strikes the defendant Brendan T. Byrne, Governor of New Jersey, publicly reiterated the prior statements of the defendant Alan Sagner . . . that the State would not assist a private transit company which retained the cost of living clause in its labor agreements. In addition, the defendant Sagner distributed to both management and labor a written statement which indicated that increases in salaries and benefits beyond those granted State employees would not be permissible if the companies desired to continue receiving state financial assistance.*fn1

Plaintiffs request a judgment declaring that the conduct of defendants Byrne and Sagner violated the Supremacy Clause of the Constitution because it infringed on federal labor policy as embodied in the National Labor Relations Act. They also seek parallel temporary and permanent injunctive relief.

We note preliminarily that the allegations of the complaint are sufficient to sustain subject matter jurisdiction under 28 U.S.C. § 1337, since the NLRA is an "Act of Congress regulating Commerce." Our conclusion is supported by American Federation of Labor v. Watson, 327 U.S. 582, 90 L. Ed. 873, 66 S. Ct. 761 (1946), where the Court took § 1337 jurisdiction of a case in which the plaintiffs alleged "a conflict between the Florida law and the National Labor Relations Act." 327 U.S. at 591, 66 S. Ct. at 765.

Turning to the legal sufficiency of the claims, we first note that plaintiffs do not contend that the defendants have violated the specific terms of any provision of the NLRA. Consequently, we consider whether their claim can be said to be otherwise incompatible with the NLRA.

As Justice Frankfurter stated in International Ass'n. of Machinists v. Gonzales, 356 U.S. 617, 619, 2 L. Ed. 2d 1018, 78 S. Ct. 923 (1958): "the statutory implications concerning what has been taken from the States and what has been left to them are of a Delphic nature, to be translated into concreteness by the process of litigating elucidation." Moreover, Supreme Court cases on preemption in the labor field do not seem precisely on point here because they have apparently all involved direct state regulation of private conduct, whereas in the present case New Jersey has not directly commanded or prohibited the conduct of third parties but has merely sought to influence private conduct by threatening to withhold discretionary subsidies.

Nevertheless, the Supreme Court's statements on the preemption question, within and without the field of labor relations, do provide a framework for the resolution of the question before us. The Court recently addressed the scope of preemption in the labor field in Lodge 76, International Ass'n. of Machinists v. Wisconsin Employment Relations Commission, 427 U.S. 132, 49 L. Ed. 2d 396, 96 S. Ct. 2548 (1976). The Court stated that its preemption cases fall into two categories - cases involving the primary jurisdiction of the NLRB, where the concern is that "one forum would enjoin, as illegal, conduct which the other forum would find legal," and cases in which state law has infringed upon "rights guaranteed by the Federal Acts" even though the state may not have attempted to regulate conduct which is specifically protected or prohibited under federal law. Automobile Workers v. Russell, 356 U.S. 634, 644, 2 L. Ed. 2d 1030, 78 S. Ct. 932 (1958), quoted in Lodge 76, International Ass'n. of Machinists v. Wisconsin Employment Relations Commission, 427 U.S. at 138.

Plaintiffs' argument here rests on the second line of cases.*fn2 Their contention is, in essence that New Jersey has endeavored to dictate the substantive terms of collective bargaining agreements when the NLRA envisages that the substance of such agreements will be determined "by the free play of economic forces." NLRB v. Nash-Finch Co., 404 U.S. 138, 144, 30 L. Ed. 2d 328, 92 S. Ct. 373 (1971); see NLRB v. Insurance Agents, 361 U.S. 477, 4 L. Ed. 2d 454, 80 S. Ct. 419 (1960). It cannot be doubted that New Jersey would be barred under the Supremacy Clause from prohibiting private parties from agreeing to unlimited cost of living clauses in their collective bargaining agreements. But New Jersey has merely threatened to withdraw subsidies from companies that grant such clauses, and this circumstance requires us to scrutinize more closely the nature of the rights guaranteed plaintiffs under the NLRA, and the question of whether the State's action stands as an impermissible obstacle to the full realization of these rights.

In Florida Lime and Avocado Growers v. Paul, 373 U.S. 132, 142, 10 L. Ed. 2d 248, 83 S. Ct. 1210 (1963), the Supreme Court stated that there is a presumption that state authority has not been ousted by Congressional action:

Federal regulation . . . should not be deemed preemptive of state regulatory power in the absence of persuasive reasons - either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained.

The Court further elaborated its view on preemption of state regulation in DeCanas v. Bica, 424 U.S. 351, 47 L. Ed. 2d 43, 96 S. Ct. 933 (1976). State authority will, of course, be preempted if Congress has clearly intended to oust states of their power in the area in question. But the NLRA does not explicitly call for preemption of all state authority - indeed, as Justice Frankfurter remarked, the statutory implications concerning the extent of remaining state authority are "Delphic." The Act certainly does not address the permissibility of New Jersey's action in the present case. On the other hand, state authority will also be preempted if the nature of the subject matter requires exclusive federal authority, or if a particular state law "stands as an obstacle to the accomplishments and execution of the full purposes and objectives of Congress" in enacting the legislation in question. Hines v. Davidowitz, 312 U.S. 52, 67, 85 L. Ed. 581, 61 S. Ct. 399 (1941).

We believe that the touchstone of these bases of preemption must also be Congressional intent to preempt, though this intent is inferred or presumed from the nature of the federal action rather than made explicit in the statute or legislative history. That a presumption as to Congressional intent is fundamental to preemption in cases where the nature of the subject matter is thought to require exclusive federal authority is evident from the opinion in DeCanas v. Bica, supra : the Court said that Congressional "intent" to preempt state authority could not be "derived" from the comprehensiveness of the federal scheme involved, the Immigration and Nationality Act. 424 U.S. at 359. With respect to cases where it is alleged that specific state legislation "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," we again conclude that it must be reasonable to presume that Congress would have intended to preclude the state action in question. Cases which have involved state mandatory regulation of private conduct, as opposed to subsidies, have not necessitated that this question be directly addressed, since any time state legislation establishes requirements which conflict with the federal scheme, state law must inevitably be preempted to effectuate the aims of the federal scheme.*fn3 But it would make little sense to preempt state law in order to serve the purposes underlying federal legislation if Congress itself would not require or admit of preemption of state authority.

We do not believe that it is fair to imply that Congress would intend to bar New Jersey's conduct in this case as an impermissible infringement upon the rights guaranteed by the NLRA. In the first place, we do not believe that New Jersey's action here constitutes the governmental attempt to dictate the substance of collective bargaining agreements which is forbidden by NLRB v. Insurance Agents, supra, and other cases. The statutory framework under which the Department of Transportation is authorized to provide "payment[s]" to private transportation companies states twice that the Department may "contract" with the private companies, and also states that the payments shall be "for providing such services." This implies that the private companies are under obligation to deliver the transportation services for which they are paid. Thus, New Jersey's interest in the collective bargaining agreements is similar to that of any private purchaser of services which expresses an interest in the terms of a collective bargaining agreement under consideration by the provider of the services. New Jersey, like the private consumer, is attempting to exert pressure on the parties to the collective bargaining negotiations in order to hold down the costs of purchasing the "essential" transportation services these companies provide.

The NLRA only proscribes the activities of private parties if they are "employer[s]" or "labor organization[s] or [their] agents." New Jersey cannot be described here as a "labor organization." Moreover, even accepting - as we do not - the factual soundness of describing New Jersey as an "employer" when it purchases the transportation services provided by private transportation companies, the statutory definition of the term "employer" specifies that it does not include "any State or political subdivision thereof." 29 U.S.C. § 152 (Supp. 1977). Thus, to the extent that New Jersey is here acting like a private purchaser of services, Congress has explicitly exempted it from the proscriptions of the NLRA.

We do not believe that viewing the State as a private consumer is improper because it would allow unduly broad state interference in labor activity. Even if it should be proved that states have a direct financial stake in a broad range of private concerns, we feel that a determination that states must be treated differently from private companies because of the pervasiveness of their financial interests is itself the type of policy decision which should be made by Congress, especially in view of the presumption in favor of state authority.

But even apart from the argument that New Jersey's conduct is similar to conduct which is permissible when engaged in by private third parties, and accepting the contention that the State is acting in a peculiarly governmental capacity, we do not believe that the State's present conduct, as opposed to state regulation which is mandatory upon private parties, is an impermissible violation of the unions' right to be free of governmental dictate as to the substantive terms of their collective bargaining agreements.*fn4 See NLRB v. Insurance Agents, supra.

New Jersey has asserted an interest in having transportation services provided to the public rather than a broad interest in labor relations per se, as was the case in General Electric Co. v. Callahan, 294 F.2d 60 (1st Cir. 1961), petition for cert. dismissed, 369 U.S. 832, 7 L. Ed. 2d 840, 82 S. Ct. 851 (1962). See also Oil, Chemical & Atomic Workers v. Arkansas Louisiana Gas Co., 332 F.2d 64 (10th Cir. 1964). In Callahan, the Massachusetts' Board of Conciliation and Arbitration had begun to investigate a labor controversy under a statutory framework which authorized the Board to issue a written report as to "which of the parties [to the controversy] is mainly responsible or blameworthy for the existence or continuance" of the controversy; the Board was also authorized to "advise the respective parties what ought to be done or submitted to by either or both to adjust said controversy." In the present instance, however, New Jersey has merely established conditions on how it will spend its own money to insure that transportation services are provided to the public. This fact must be deemed to limit, though admittedly not entirely eliminate the significance of the influence of the State's action, and again, it is important to consider that New Jersey's interest is that of insuring that "essential" transportation services are provided to the public, rather than regulating labor relations per se.

In sum, we cannot conclude that Congress would intend to bar New Jersey from establishing the conditions under which it will pay private transportation companies to provide transportation services to the public. Under our conclusion as to Congressional intent, we need not decide whether Congress could constitutionally legislate with respect to New Jersey's interest in providing "essential" transportation service. See National League of Cities v. Usery, 426 U.S. 833, 49 L. Ed. 2d 245, 96 S. Ct. 2465 (1976).*fn5 Moreover, given our decision that the complaint does not state a claim on which relief can be granted, we also do not confront the problem of whether the Norris-LaGuardia Act would bar declaratory or injunctive relief against the State. Although the Act itself speaks in jurisdictional terms and thus would appear to raise a threshold question which must be discussed before going on to the merits, precedent of this court supports our conclusion that we need not consider the issues raised by the Act, since there is a "distinction between jurisdiction to adjudicate a controversy and power to grant a particular form of relief." Bethlehem Mines Corp. v. United Mine Workers of America, 476 F.2d 860, 863 n.1 (3d Cir. 1973).

The judgment of the district court will be affirmed.

Disposit ...

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