Appeals court affirms dismissal of suit challenging California labor code amendment

By Elizabeth Alt | Aug 2, 2018

The 9th U.S. Circuit Court of Appeals recently affirmed a U.S. District Court for the Southern District of California ruling dismissing a contractor’s complaint challenging an amendment to the California labor code that permits employers to take a wage-credit only with employee consent, ruling that the bill does not infringe upon the plaintiff’s 1st Amendment Rights.

The 9th U.S. Circuit Court of Appeals recently affirmed a U.S. District Court for the Southern District of California ruling dismissing a contractor’s complaint challenging an amendment to the California labor code that permits employers to take a wage-credit only with employee consent, ruling that the bill does not infringe upon the plaintiff’s 1st Amendment Rights.

U.S. Appeals Judge Consuelo M. Callahan wrote the opinion filed July 30, with Judges Jacqueline H. Nguyen and Robert W. Pratt on the panel. “ABC-CCC (Associated Builders and Contractors of California Cooperation Committee Inc.) lacks standing to press its equal protection claim, and because we hold that SB 954 is neither preempted by the NLRA (National Labor Relations Act) nor infringes ABC-CCC’s 1st Amendment rights, we affirm the district court’s judgment dismissing appellants’ action.”

Interpipe Contracting Inc. and ABC-CCC filed a suit against California Attorney General Xavier Beccera, Director of the California Department of Industrial Relations Christine Baker, California Labor Commissioner Julie A. Su and other state officials claiming Senate Bill 954 enacted in 2017 violates their constitutional rights by discriminating against open-shop policies

Interpipe and ABC-CCC claim “the law regulates in an area Congress intended to leave to the free play of market forces and is preempted by the NLRA’s prohibition on regulating non-coercive labor speech.” ABB-CCC alleged “SB 954 infringes its 1st Amendment right to free speech and violates the Equal Protection Clause.”

In 2004, the California labor code allowed employers to take credits for industry advancement funds (IAFs) and collective bargaining agreement fees if workers approved through a collective bargaining agreement. SB 954 allows employers to take a wage-credit for IAF contributions only if the employees agree through a union bargaining agreement. ABB-CCC argues that SB 954 “restricts the way private parties obtain private funding for their speech.”

The district court dismissed Interpipe and ABB-CCC’s action in January 2017, stating that SB 954 is not preempted by the NLRA, that SB 954 does not infringe upon 1st Amendment rights and that ABB-CCC lacked standing to purse an equal protection claim. The district court further stated that the bill “does not regulate non-coercive labor speech because it does not prevent employers or employees from speaking about any issue.”

In the appeals court opinion, Callahan stated that the plaintiffs misconstrue the purpose of the law. “SB 954 is part of a larger statutory scheme setting a wage floor for employees on public works projects,” Callahan said. The appeals judge stated that SB 954 does not single out pro open-shop IAFs, that it “only indirectly affects one possible revenue source for IAFs.” 

Callahan noted that simply because ABB-CCC “may now need to explore alternative means of raising funds to finance its speech does not somehow transform a minimum wage law into a regulation of expressive conduct.” The opinion stated further that “SB 954 leaves ABC-CCC and other IAFs – regardless of viewpoint –free to engage in whatever speech they like … SB 954 merely trims a state subsidy of speech and does so in a viewpoint-neutral way.”

Callahan said that regardless of the 2004 labor code amendment allowing IAF credits, the state has no duty to subsidize speech and pointed to the Supreme Court ruling in Ysura, which dictates that state entitlement can be restricted without scrutiny. “Put simply, what the government giveth it can taketh away.”

Interpipe is represented by David Wolds of San Diego.

ABB-CCC is represented by Anastasia P. Boden of Sacramento.

Xavier Beccera is represented by  Seth Goldstein of Sacramento.

Christine Baker and Julie A. Su  are represented by Ken Lau of Oakland.

9th U.S. Circuit Court of Appeals case number 17-55248

Want to get notified whenever we write about U.S. Court of Appeals for the Ninth Circuit ?

Sign-up Next time we write about U.S. Court of Appeals for the Ninth Circuit, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

U.S. Court of Appeals for the Ninth Circuit

More News

The Record Network