The Chamber of Commerce sued the State of California challenging the legality of a California labor law. The California statute at issue prevented employers from spending "state funds" on union-related speech. Specifically, the California statute prohibits a “recipient of a grant of state funds,” or an employer who receivies more than $10,000 of state funds in a calendar year, from “us[ing] the funds to assist, promote, or deter union organizing.” The Chamber of Commerce argued that the California statute was preempted by federal labor law, specifically, the National Labor Relations Act (NLRA). The Chamber of Commerce argued that the NLRA explicitly protects the right of employers to express their views about unions and union organizing
efforts, provided they do so in a non-coercive manner, and further, that Congress had entrusted labor matters to a centalized administration. California argued that it may spend its funds in a manner that it sees fit, even if that requires some state interference with the NLRA. The district court ruled in favor of the Chamber of Commerce.
The full Ninth Circuit Court of Appeals affirmed, finding that the NLRA preempted the California statute under two different theories of preemption. First, the California statute chills employers from exercising free speech rights that are explicitly protected under the NLRA and thus undermines the "delicate balance" of speech rights between labor unions and employers established by the NLRA . Second, the NLRA gave exclusive jurisdiction to the National Labor Relations Board (“NLRB”) for the adoption and enforcement of representation election rules, and the California statute interferes with that jurisdiction.
Is the State of California’s regulation of noncoercive employer speech about union organizing, California Assembly Bill 1889, Cal. Gov’t Code §§ 16645.2, 16645.7, preempted by federal labor law?