Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Hotel and Restaurant Employees and Bartenders International Union Local 54 v. Danziger

decided: June 6, 1983.

HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION LOCAL 54, AND FRANK GERACE, PRESIDENT HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION LOCAL 54 AND INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA, LOCAL 331, INTERVENOR
v.
MARTIN DANZIGER, ACTING CHAIRMAN, DONALD THOMAS, COMMISSIONER, MADELINE MCWHINNEY, COMMISSIONER, CARL ZEITZ, COMMISSIONER, CONSTITUTING THE CASINO CONTROL COMMISSION, STATE OF NEW JERSEY, G. MICHAEL BROWN, DIRECTOR DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF GAMING ENFORCEMENT, STATE OF NEW JERSEY, DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF GAMING ENFORCEMENT, STATE OF NEW JERSEY, AND THOMAS KEAN, GOVERNOR, STATE OF NEW JERSEY, HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION LOCAL 54 AND FRANK GERACE, PRESIDENT, HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION LOCAL 54, APPELLANTS IN NO. 82-5210 THE CASINO CONTROL COMMISSION, APPELLANT IN NO. 82-5234 G. MICHAEL BROWN, DIRECTOR, DEPT. OF LAW AND PUBLIC SAFETY, DIVISION OF GAMING ENFORCEMENT, AND THOMAS KEAN, GOVERNOR, APPELLANTS IN NO. 82-5260



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY -- CAMDEN.

Gibbons, Higginbotham and Becker, Circuit Judges. Becker, Circuit Judge, concurring in part and dissenting in part.

Author: Gibbons

Opinion OF THE COURT

GIBBONS, Circuit Judges:

Hotel and Restaurant Employees and Bartenders International Union No. 54 (the Union) and its president, Frank Gerace appeal from an order of the district court denying their motion for a preliminary injunction against enforcement of certain provisions of the New Jersey Casino Control Act, N.J. Stat.Ann. 5:12-1 to -152 (West Supp. 1982).*fn1 The defendants are members of the New Jersey Casino Control Commission (the Commission) and officials of the New Jersey Department of Law and Public Safety, Division of Gaming Enforcement (the Division). The Commission and the Division cross-appeal from the denial of their motions to dismiss the complaint. We hold that we lack appellate jurisdiction over the cross-appeals. With respect to the Union's appeal we vacate the denial of the motion for a preliminary injunction and remand for further proceedings consistent with this opinion.

I.

Parties and Proceedings in the District Court

The Union is an unincorporated labor organization within the meaning of section 2(5) of the National Labor Relations ACT (NLRA) as amended. 29 U.S.C. § 152 (1976). It has approximately 12,000 members of whom over 8,000 are employed as waiters, waitresses, bartenders, cooks, kitchen helpers, housekeepers and other hotel service employees in those establishments in Atlantic City, New Jersey, licensed to operate gambling casinos. The Union has been duly certified by the National Labor Relations Board (the Board), pursuant to section 9 of the NLRA, 29 U.S.C. § 159 (1976), as the representative of those employees for purposes of collective bargaining. It is similarly certified for employees of other businesses in southern New Jersey which do not hold gambling casino licenses. The Union participates on behalf of its members in the Hotel and Restaurant Employees and Bartenders International Union Pension Fund, and its Health and Welfare Fund. Both of these funds are employee benefit plans within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. 29 U.S.C. §§ 1001-1381 (1976). President Frank Gerace is a trustee of those funds.

In 1977 the New Jersey legislature passed the Casino Control Act (the Act), which authorizes the licensing of hotels in Atlantic City for casino gambling. That act establishes a Casino Control Commission with broad regulatory authority over casinos and related industries. N.J.Stat. Ann. 5:12-63 to -75 (West Supp. 1982) It also establishes in the Department of Law and Public Safety, which the Attorney General heads, a Division of Gaming Enforcement, charged with responsibility for investigating all applicants for licenses, certificates, or permits, and prosecuting before the Commission or in the state criminal courts all proceedings for violation of the Act or regulations promulgated under it. N.J.Stat. Ann. 5:12-76 to -79 (West Supp. 1982). The Act requires licensing not only of casinos, but of casino key employees (supervisors), N.J.Stat. Ann. 5:12-89 (West Supp. 1982), and of casino employees. N.J.Stat. Ann. 5:12-90 (West Supp. 1982). Casino hotel employees include those performing "service or custodial duties not directly related to operations of the casino, including, without limitations, bartenders, waiters, waitresses, maintenance personnel, kitchen staff, but whose employment duties do not require or authorize access to the casino." N.J.Stat. Ann. 5:12-8 (West Supp. 1982). For casino hotel employees the Act requires registration. N.J.Stat. Ann. 5:12-91 (West Supp. 1982). Section 86 of the Act lists criteria for the disqualification of casino licensees, and the section dealing with registration of casino hotel employees authorizes the Commission to revoke, suspend, limit or otherwise restrict the registration of any such employee who would be disqualified for a license. N.J.Stat. Ann. 5:12-86, -91(b)(West Supp. 1982). All industries offering goods or services to the casinos must also be licensed and are subject to the disqualification criteria of section 86. N.J.Stat. Ann. 5:12-92 (West Supp. 1982).

Particularly relevant to this case is the provision in section 93 of the Act, requiring that every labor organization seeking to represent employees licensed or registered under the Act and employed at a casino hotel register with the Commission annually. N.J.Stat. Ann. 5:12-93(a)(West Supp. 1982). Section 93 also provides:

No labor organization, union or affiliate registered or required to be registered pursuant to this section and representing or seeking to represent employees licensed or registered under this act may receive any dues from any employee licensed or registered under this act and employed by a casino licensee or its agent, or administer any pension or welfare funds, if any officer, agent, or principal employee of the labor organization, union or affiliate is disqualified in accordance with the criteria contained in section 86 of this act. The commission may for the purposes of this subsection waive any disqualification criterion consistent with the public policy of this act and upon a finding that the interests of justice so require.

N.J.Stat. Ann. 5:12-93(b) (West Supp. 1982). Thus section 93 cross-references to the disqualification criteria in section 86. The criteria include convictions of a list of designated offenses or "any other offense which indicates that licensure of the applicant would be inimical to the policy of this act and to casino operations." N.J.Stat. Ann. 5:12-86(c) (4) (West Supp. 1982). They also include:

The identification of the applicant or any person who is required to be qualified under this act as a condition of a casino license as a career offender or a member of a career offender cartel or an associate of a career offender or career offender cartel in such a manner which creates a reasonable belief that the association is of such a nature as to be inimical to the policy of this act and to gaming operations. For purposes of this section, career offender shall be defined as any person whose behavior is pursued in an occupational manner or context for the purpose of economic gain, utilizing such methods as are deemed criminal violations of the public policy of this State. A career offender cartel shall be defined as any group of persons who operate together as career offenders.

N.J.Stat. Ann. 5:12-86(f) (West Supp. 1982). A union may be disqualified under section 93, therefore, if an officer, agent or principal employee is an "associate of any person whose behavior is pursued in an occupational manner or context for the purpose of economic gain, utilizing such methods as are deemed criminal violations of the public policy of [New Jersey]."

In 1978 the Union filed with the Commission the annual registration statement required by section 93(a). Thereafter the Division of Gaming Enforcement conducted an investigation, and reported to the Commission that in its view Frank Gerace, President, Robert Lumino, Secretary-Treasurer, and Frank Materio, Grievance Manager, were disqualified under the criteria of section 86. The Division requested the Commission to prevent the Union from collecting dues from or administering pension or welfare funds on behalf of employees in the casino hotels. The Commission determined to hold a hearing on the Division's report. At a prehearing conference on June 1, 1981 counsel for the Union raised objections to the constitutionality of sections 86 and 93. The Commission requested briefing on the question of its authority to rule upon such objections, and on August 5, 1981 it ruled that since it was not a court it lacked competence to consider them. The Commission then fixed September 9, 1981 as the date for commencement of an evidentiary hearing on disqualification. Counsel for the Union advised the Commission of his client's intention to file a challenge to the constitutionality of sections 86 and 93 in the federal court before that date.

On August 17, 1981 the Union and Mr. Gerace filed a verified complaint. The complaint alleged that the Division was seeking to have the Commission impose the sanctions set forth in section 93(b) of the Act, but that section 93 was an attempt to regulate areas which are preempted by the NLRA and by ERISA. It alleged, further, that section 93 impermissibly interferes with federally guaranteed rights of employees of the casino and casino hotel industries with respect to the selection of their exclusive collective bargaining agent. An amended complaint alleged that sections 93 and 86 are preempted by the Labor Management Reporting and Disclosure Act of 1959 (LMRDA), as amended. 29 U.S.C. §§ 401-531 (1976). The complaint also alleged that section 86(f) is both unconstitutionally overbroad and unconstitutionally vague and thus violates the first, fifth and fourteenth amendments of the Constitution. The plaintiffs sought a declaratory judgment that both sections are void, as well as temporary and permanent injunctive relief against the enforcement of section 93. Plaintiffs also filed a motion seeking preliminary injunctive relief, supported by an affidavit alleging that it would be irreparably injured by being forced to participate in proceedings in violation of section 7 of the NLRA.

The Commission acceded to a request by the district court that it defer commencement of its disqualification hearing until the motion for a preliminary injunction was decided. On December 1, 1981 a hearing was held on that motion. At the hearing the Union presented affidavits together with supporting exhibits which were accepted in evidence as uncontroverted by the Commission or the Division. Defendants also placed certain exhibits in evidence. Thereafter both the Commission and the Division moved to dismiss the complaint "on the ground of abstention." On March 22, 1982 the district court considered both motions in an opinion containing findings of fact and conclusions of law. The court's findings of fact are quoted in the margin.*fn2

In support of their motions to dismiss, the Commission and the Division relied upon Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971), and Burford v. Sun Oil Co., 319 U.S. 315, 87 L. Ed. 1424, 63 S. Ct. 1098 (1943). Although their motions sought an outright dismissal of the complaint, they also relied on Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 85 L. Ed. 971, 61 S. Ct. 643 (1941). The district court stated that neither the Younger nor the Burford doctrines applied and that the nature of the Union's challenges to sections 93 and 86 precluded Pullman abstention. No order was entered denying the defendants' motions.

In ruling on the motion for a preliminary injunction the district court opined that the plaintiffs were not likely to succeed on the merits of their claim that section 93 of the Act is preempted by the LMRDA. The court had more difficulty with the contentions that the NLRA and ERISA were preemptive, but concluded that because of the discretion vested in the Commission by virtue of the last sentence in section 93(b), in actual application no conflict might arise between that section and those federal statutes.*fn3 The court was also skeptical of the merits of the Union's contentions that section 86, incorporated by reference in section 93, was unconstitutionally overbroad or unduly vague. Summarizing, the court concluded:

In view of all of these considerations, the court concludes that plaintiffs are not likely to succeed on the merits of their vagueness claim. Nor are they likely to succeed on the merits of their related overbreadth and First Amendment claims. The absence of any irreparable harm pendente lite has already been discussed in connection with the discussion of plaintiffs' preemption claims, as has the conclusion that the balance of equities and the public interest weigh against the issuance of a preliminary injunction.

536 F. Supp. at 338. An order was entered on March 22, 1982 denying the motion for a preliminary injunction. The plaintiffs appealed. Their application, pursuant to Fed. R. App. P. 8(a), for an injunction pending appeal was initially denied in the district court and here.

Because no preliminary injunction was entered, the Commission went forward with a disqualification hearing. Its subsequent actions were called to the attention of the district court in a motion, pursuant to Fed. R. Civ. P. 62(c), for reconsideration of the issuance of an injunction pending this appeal. On September 28, 1982 the Commission issued an opinion in which it found that President Frank Gerace, Executive Board member Frank Materio and Business Agent Karlos LaSane were disqualified under the criteria of section 86. Gerace and Materio were held to be disqualified under section 86(f) because they were associated with members of organized crime in a manner inimical to the policy of the Act and to gaming operations. LaSane was disqualified under section 86(c) because he had been convicted in 1973 of extortion from persons doing business with Atlantic City while he was a City Commissioner. The Commission concluded that the Union should be barred from collecting dues from its members employed in the casino industry. The district court ordered that the Commission be enjoined, pending this appeal, from taking any steps to enforce section 93 or its September 28, 1982 decision. That order did not prohibit the Commission from rendering an opinion interpreting section 93(b) with respect to the Union's administration of pension and welfare funds. On October 12, 1982 the Commission issued an opinion holding that the dues collection prohibition and the welfare fund prohibition could be applied singly or jointly, but that in this instance it would not invoke the latter sanction.*fn4

The present status of the case, therefore, is that the district court denied a preliminary injunction against enforcement of section 93 and denied a Rule 8(a) motion for such an injunction pending appeal, but on a Rule 60(b) motion reconsidered the Rule 8(a) motion and granted an injunction pending appeal, which will expire by its terms upon the entry of a judgment disposing of the Union's appeal. Except for that injunction, the Union would now be prohibited from collecting dues from its casino hotel members unless it replaced its President, its Business Agent, and a member of its Executive Board.

II.

The Cross-Appeals

Neither the Commission nor the Division contends that the denial of a Rule 12(b)(6) motion is anything but an interlocutory order. Both contend, however, that they can appeal by virtue of 28 U.S.C. § 1292(a)(1). Their theory is that "an appeal from an injunctive order supports review of an order denying a motion to dismiss for failure to state a cause of action, for improper venue, for lack of jurisdiction, and for lack of standing." 9 Moore's Federal Practice para. § 110.25, at 271 (2d ed. 1970) (footnotes omitted). There are several difficulties with applying that theory in this case. In the first place, the Commission and the Division are the prevailing parties in the district court. They simply are not aggrieved by the denial of the preliminary injunction. Moreover no order has been entered on the motions to dismiss. The trial court's opinion discussed these motions, but appeals do not ordinarily lie from opinions. See Fed. R. Civ. P. 54(a), 58. Finally, even if we were to treat the opinion as if it were an order, in this circuit it would not be reviewable in conjunction with an appeal from even the grant of a preliminary injunction. Kershner v. Mazurkiewicz, 670 F.2d 440 (3d Cir. 1982). Thus the Union's contention that the cross-appeals should be dismissed must prevail. Neither section 1291 nor section 1292(a)(1) provides for appellate jurisdiction over them, and they must be dismissed.

We can, of course, consider the contention that the district court should have dismissed the complaint on the authority of Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971), or Burford v. Sun Oil Co., 319 U.S. 315, 87 L. Ed. 1424, 63 S. Ct. 1098 (1943), as an alternative ground for affirmance of the denial of preliminary injunctive relief. See New Jersey Education Association v. Burke, 579 F.2d 764, 766 (3d Cir.), cert. denied, 439 U.S. 894, 58 L. Ed. 2d 239, 99 S. Ct. 252 (1978). Thus no significant prejudice to the state's interests occurs in this instance from its inability to appeal at this time from the trial court's inaction on its motion to dismiss.

III.

New Jersey Regulation of Gambling

Prior to 1844 New Jersey, like many states, was so tolerant of gambling that it regularly authorized lotteries as a means of raising revenues for public or charitable purposes.*fn5 The Constitution adopted that year, however, included the provision that "no lottery shall be authorized by this state; and no ticket in any lottery not authorized by a law of this state shall be bought or sold within the state. . . ." N.J. Const. of 1844, art. 4, § 7, P2. That provision was amended in 1897 to read:

No lottery shall be authorized by the legislature or otherwise within this state, and no ticket in any lottery shall be bought or sold within this state, nor shall pool-selling, book-making or gambling of any kind be authorized or allowed within this state, nor shall any gambling device, practice or game of chance now prohibited by law be legalized, or the remedy, penalty or punishment now provided therefor be in any way diminished.

From 1897 to 1939 the flat prohibition against legalizing any form of gambling was the constitutional public policy of the state. In 1939, however, New Jersey, looking covetously at the potential state revenue which might be derived from pari-mutuel betting, amended art. 4, § 7, P2 so as to make it lawful "to hold, carry on, and operate in this State race meetings whereat the trotting, running or steeplechase racing of horses only may be conducted between the hours of sunrise and sunset on week days only and in duly legalized race tracks, at which the pari-mutuel system of betting shall be permitted." 1939 N.J. Laws at 1063. The 1939 amendment put the state in the position of having an interest in gambling revenues for the first time since prior to 1844.

When the Constitution of 1947 was adopted it included the general provision that

"no gambling of any kind shall be authorized by the Legislature unless the specific kind, restrictions and control thereof have been heretofore submitted to, and authorized by a majority of the votes cast by the people at a special election or shall hereafter be submitted to, and authorized by a majority of the votes cast thereon by the legally qualified voters of the State voting at a general election. . . ."

N.J. Const. of 1947, art. 4, § 7, P2. An exception authorized bona fide veterans, charitable, educational, religious or fraternal organizations, civic or service clubs, volunteer fire companies and first-aid or rescue squads to conduct bingo or lotto games and to hold raffles. Thus the pre-1844 practice of supporting worthwhile social activities by gambling revenue was substantially restored. In 1969 art. 4 § 7, para. 2 was amended to authorize the conduct of State lotteries "when the entire net proceeds of any such lottery shall be for State institutions, [sic] State aid for education." For the statutory enactments pursuant to this authorization, see N.J.Stat. Ann. 5:9-1 to -25 (West 1973). Other forms of gambling still required approval in a statewide referendum. The voters were generally unreceptive.

In 1976, however, the Constitution was amended once more, permitting the legislature to authorize by law the establishment of gambling houses or casinos in the City of Atlantic City, so long as the authorizing legislation "shall provide [that] the State revenues derived therefrom . . . be applied solely for the purpose of providing reductions in property taxes, rentals, telephone, gas, electric, and municipal utilities charges of, eligible senior citizens and disabled residents, in accordance with such formulae as the Legislature may by law provide." N.J. Const. of 1947, art. 4 § 7, para. 2.D. Pursuant to that authorization the legislature adopted the statute containing sections 93 and 86.

Unlike the State Lottery Law, N.J. Stat. Ann. 5:9-1 to -25 (West 1973 & Supp. 1982), under which the Department of the Treasury is directly in the lottery business, the Casino Control Act authorizes erection of casinos by private investors. The State, however, has a direct financial stake in their operation, since it imposes an annual tax of 8% of gross revenues. N.J. Stat. Ann. 5:12-144 (West Supp. 1982). Moreover the statute regulates the hours of casino operation, N.J. Stat. Ann. 5:12-97(a) (West Supp. 1982), and contains detailed provisions encouraging reinvestment of casino profits in the expansion of the industry. N.J. Stat. Ann. 5:12-146, -147 (West Supp. 1982). Regulation of the industry is financed by license and registration fees. N.J. Stat. Ann. 5:12-139 to -143 (West Supp. 1982). Since the casino hotels are privately owned and managed, the State obviously does not claim that they are exempt under section 2(2) of the NLRA, 29 U.S.C. § 152(2) (1976). Nevertheless the state's interest and those of the employers here involved are closely aligned economically.

IV.

Federal Regulation of Collective Bargaining

Under the regime of Adair v. United States, 208 U.S. 161, 52 L. Ed. 436, 28 S. Ct. 277 (1908), state law interference with efforts of employees to choose their own collective bargaining representatives was largely beyond the reach of congressional enactments, and state law regularly interfered. New Jersey was no exception. See, e.g., Kinane v. Fay, 111 N.J.L. 553, 168 A.724 (S. Ct. 1933); Brennan v. United Hatters of North America, 73 N.J.L. 729, 65 A. 165 (S. Ct. 1906) and cases cited therein. In 1930, however, the Supreme Court in Texas & New Orleans Railroad Co. v. Brotherhood of Railway and Steamship Clerks, 281 U.S. 548, 74 L. Ed. 1034, 50 S. Ct. 427 (1930), effectively overruled Adair when it held that the Railway Labor Act of 1926 was constitutional.*fn6 Not long thereafter Congress began the modern era of the law of labor relations when in section 7(a) of the National Industrial Recovery Act (NIRA) it provided:

Employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.

Pub. L. No. 73-67, § 7(a), 48 Stat. 198 (1933). Borrowed from a similar provision in the Railway Labor Act, section 7(a) was intended to establish a federal law right to choose collective bargaining representatives. The NIRA, however, contained no effective enforcement mechanism, and experience under it led to the adoption in 1935 of the NLRA. In that statute Congress carried forward the federal policy announced in the NIRA. It "declared to be the policy of the United States to eliminate . . . obstructions to the free flow of commerce . . . 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." 29 U.S.C. § 151 (1976). The first clause of section 7(a) of the NIRA was substantially copied in section 7 of the NLRA:

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.

49 Stat. 449, 452 (1947); 29 U.S.C. § 157 (1976). But whereas the clause in section 7(a) of the NIRA dealing with coercion of employees in the choice of collective bargaining representatives was largely precatory, section 8 of the NLRA made all forms of such coercion unfair labor practices. 49 Stat. 449, 453 (1947); 29 U.S.C. §§ 159, 160 (1976). Moreover the NLRA created the National Labor Relations Board, and gave it authority in section 9 to certify designated collective bargaining representatives and power in section 10 to prevent unfair labor practices. 49 Stat. 449, 453 (1947); 29 U.S.C. §§ 159, 160 (1976). Thus ever since the enactment of the NLRA employee self-organization and employee free choice has been a federal statutory right, the interference with which is an unfair labor practice which the National Labor Relations Board has power to prevent. Moreover, as originally enacted the Board's section 10 enforcement power was "exclusive, and . . . not affected by any other means of adjustment or prevention that has been or may be established by agreement, code, law, or otherwise." 49 Stat. 449, 453 (1947).

When the NLRA was under consideration opponents of the legislation called to the attention of Congress the issue of labor racketeering.*fn7 Thus Congress was not unmindful of the generic problem which section 93 of the Casino Control Act now addresses in a specific industry. Despite these rather forceful expressions from opponents of the NLRA, however, the 74th Congress placed no limitations in section 7 or section 8 upon the persons who could be chosen as collective bargaining representatives. Considering the extent to which the criminal law had been used, prior to 1935, against labor organizers, a history of which no member of Congress could have been ignorant, the omission of "racketeering" limitations on qualifications for designation as a collective bargaining representative plainly was a conscious legislative choice both in the 1933 NIRA and in the 1935 NLRA.

Before Congress next turned major attention to the subject of collective bargaining the Supreme Court was presented with the question of whether state law could determine ineligibility of collective bargaining representatives. In 1943, Florida passed a statute providing for the licensing of union business agents and prohibiting the licensing of persons who were not citizens for more than 10 years, who had been convicted of a felony, or who were not of good moral character. 1943 Fla. Laws C. 21968. The Florida statute was enacted after the Supreme Court held in Allen-Bradley Local v. Wisconsin Board, 315 U.S. 740, 86 L. Ed. 1154, 62 S. Ct. 820 (1942), that section 7 of the NLRA did not preempt state prohibition of mass picketing, threats of personal injury, or property damage. When an employer refused to bargain with an unlicensed business agent, the Board held that it committed an unfair labor practice. In the Matter of Eppinger & Russell Co., 56 NLRB 1259 (1944). Meanwhile in a state court the Attorney General of Florida sought injunctive relief against a union and a business agent functioning as such until licenses were obtained. The highest court of Florida enforced the statute. Hill v. State, 155 Fla. 245, 19 So. 2d 857 (1944). On the authority of its classic statement in Hines v. Davidowitz, 312 U.S. 52, 67, 85 L. Ed. 581, 61 S. Ct. 399 (1941), with respect to the preemptive effect of federal legislation, the Supreme Court reversed, holding:

Since the Labor Board has held that an employer must bargain with a properly selected union agent despite his failure to secure a Florida license, it is argued that the state law does not interfere with the collective bargaining process. But here, this agent has been enjoined, and if the Florida law is valid he could be found guilty of contempt for doing what the act of Congress permits him to do. Furthermore, he could, under § 14 of the state law be convicted of a misdemeanor and subjected to fine and imprisonment. The collective bargaining which Congress has authorized contemplates two parties free to bargain, and cannot thus be frustrated by state legislation. We hold that § 4 of the Florida Act is repugnant to the National Labor Relations Act.

Hill v. Florida ex rel. Watson, 325 U.S. 538, 542, 89 L. Ed. 1782, 65 S. Ct. 1373 (1945). The Court also held that, consistent with the NLRA, the Union could not be enjoined from functioning as a collective bargaining representative for failing to obtain a state license and file an annual information return. 325 U.S. at 543. Chief Justice Stone concurring did not agree that the states could not require that labor unions or their agents to obtain licenses or file reports. "But," he observed, "it is quite another matter to say that a state may fix standards or qualifications for labor unions and their officers and agent which would preclude them from being chosen and from functioning as bargaining agents under § 7 of the National Labor Relations Act." 325 U.S. at 545. That is precisely what New Jersey has done in section 93. Thus the Hill Court's holding on the preclusive effect of section 7 is controlling unless it has been modified by subsequent federal legislation or overruled by the Supreme Court.

Congress had not yet reentered the field when the Court had a further opportunity to consider its position that the NLRA preempted state law respecting bargaining representatives. The occasion arose because of the Board's discretionary rulings, prior to the decision in Packard Co. v. Labor Board, 330 U.S. 485, 67 S. Ct. 789, 91 L. Ed. 1040 (1947), that although foremen were covered by section 7 they were not, generally speaking, an appropriate bargaining unit. In Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 91 L. Ed. 1234, 67 S. Ct. 1026 (1947), the Court on the authority of Hill v. Florida held that a state labor board could not exercise jurisdiction to consider whether foremen bargaining units would be recognized. Justice Jackson reasoned:

If the two boards attempt to exercise a concurrent jurisdiction to decide the appropriate unit of representation, action by one necessarily denies the discretion of the other. The second to act either must follow the first, which would make its action useless and vain, or depart from it, which would produce a mischievous conflict.

330 U.S. at 776. Just such a mischievous conflict occurs in the instant case, since the Board has certified the Union while the Commission's proposed order will render the union ineffective as a bargaining agent unless it dismisses three key officers. The Board has consistently asserted jurisdiction over the casino industry. El Dorado Club, 151 N.L.R.B. 579 (1965) (Nevada's extensive regulation of gambling industry and concern over criminal infiltration are not reasons for declining jurisdiction under section 14(c)(1) of the NLRA).

In 1947, the Hill and Bethlehem Steel cases were the Court's definitive interpretations of the preemptive effect of sections 7 and 8. Thus, when Congress undertook a major revision of the NLRA, it was presented with an occasion to reconsider these holdings. In the Labor Management Relations Act (LMRA), enacted that year, both section 7 and section 8 were amended. In the former, as amended, Congress carried forward the language from the NIRA and the NLRA establishing federal rights of employees to form unions and to bargain collectively through representatives of their own choosing, but added a correlative "right to 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 recognized in section 8(a)(3)." Labor Management Relations Act of 1947, Pub. L. No. 101, ch. 120, § 7, 61 Stat. 136 (1947). Section 8 was amended by the addition of a subsection dealing with unfair labor practices by unions, and the Board was given jurisdiction over these. Section 10 of the NLRA was amended by the elimination of the exclusive jurisdiction provision, and instead the Act provided that:

[The Board's] power shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, law, or otherwise: Provided, That the Board is empowered by agreement with any agency of any State or Territory to cede to such agency jurisdiction over any cases in any industry (other than mining, manufacturing, communications, and transportation except where predominately local in character) even though such cases may involve labor disputes affecting commerce, unless the provision of the State or Territorial statute applicable to the determination of such cases by such agency is inconsistent with the corresponding provision of this subchapter or has received a construction inconsistent therewith.

29 U.S.C. § 160(a) (1976). Congress also addressed the union racketeering issue, by making it unlawful for employers to pay or labor representatives to receive money or other things of value. That prohibition was made enforceable by federal criminal and civil provisions. Pub. L. No. 101, ch. 120, § 302, 61 Stat. 136 (1947); 29 U.S.C. § 186 (1976). Moreover, certain boycotts and other unlawful combinations were proscribed. Pub. L. No. 101, ch. 120, § 303, 61 Stat. 136 (1947); 29 U.S.C. §§ 186-187 (1976).

The effect of the 1947 legislation was to confirm substantially the Court's interpretation of the preemptive effect of sections 7 and 8. The amendment to section 10, permitting the Board to cede jurisdiction in certain cases to state agencies, addressed the so-called no-man's land problem of NLRB declination of jurisdiction and state agency lack thereof which the Bethlehem Steel case created. Such deferral to state agencies could occur, however, only if the state agency was prepared to apply the standards of federal law. But while dealing explicitly with labor racketeering issues in sections 302 and 303 of the LMRA, and while amending section 7, Congress made no change in the federal law respecting eligibility to act as a bargaining representative. The reenactment of the original section 7 as the first clause in the amended section 7 must be ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.