California Supreme Court turns a blind eye to pro-union favoritism


Author: Timothy Sandefur

The California Supreme Court today issued its decision in California Grocer’s Association v. Los Angeles. The case centers around a Los Angeles ordinance that forces businesses that buy grocery stores to retain certain employees on their payroll for three months, even though they don’t want to. There’s an exception in the law for companies that have a collective bargaining agreement with a union. Thus the ordinance is little more than a tax on non-union employers—a restriction that exists for no other reason than to make it more expensive to operate a non-union grocery store. As I explained in an earlier blog post, it’s basically a kind of “featherbedding”—an old union practice which forced union employers to keep unnecessary employees on their payroll—except in reverse: it forces non-union employers to keep unnecessary employees on their payroll. Thus it gives a preference to unions at the expense of workers and consumers. It’s plain, old-fashioned, special-interest lawmaking in the service of a politically powerful, greedy corporation—a corporation called a labor union.

Sadly, the California Supreme Court upheld the law today in a 6-1 decision that relied heavily on the hoary notion of “rational basis scrutiny.”

This is the rubber-stamp style of scrutiny that allows government to deprive people of their freedom of economic choice virtually at will. This legal standard is so lenient toward the government that it blinds courts to the realities behind laws like the Los Angeles Ordinance. As the justices wrote,

the City elected to impose temporary job retention requirements on large grocery stores, but not on, e.g., restaurants or membership clubs that also sell food. The City believed supermarkets function as community anchors, a judgment it is not our role to question. Given their perceived significance, the City rationally could conclude it was more important to ensure stability and continuity at such entities than at restaurants or members-only stores that arguably do not serve a similarly crucial function…. [C]oncerning the Ordinance’s opt-out provision…affording employers and unions the right to opt out and negotiate their own terms increases the likelihood a given regulation will be found not preempted by the [National Labor Relations Act]. An opt-out provision thus is rationally related to the desire to enact valid (nonpreempted) legislation, as well as to the legitimate goal of “balanc[ing] the desirability of a particular substantive labor standard against the right of self-determination regarding the terms and conditions of employment.”

Given that kind of superficial analysis, it’s no wonder that laws that arbitrarily deprive one group of their economic liberty in order to benefit another—all the while stifling economic growth and job creation—are so common. In dissent, Justice Elizabeth Grimes had a much more realistic view of the way this ordinance works:

the ordinance itself is an economic weapon—not a weapon wielded by either of the parties to a labor dispute, but one superimposed by the City that necessarily upsets the balance that Congress has struck between labor and management in the collective-bargaining relationship. An ordinance that dictates whom a new employer must hire denies that new employer the ability to choose the employees it deems most suited to ensuring the success of its enterprise, and does so during the critical first 90 days of its operation. This is a matter of considerable moment to new owners with their own management styles, the implementation of which depends on selecting employees one by one…. [T]he first 90 days of a new grocery owner’s operation are the most important to establish the new owner’s image and to deliver to new customers…. The ordinance, stripping away the new employer’s choices in hiring during the critical first 90 days, operates as an economic weapon and directly affects the economic activities of the employer. To say that it is not a form of economic pressure that alters the collective bargaining relationship is, in my view, fundamentally erroneous.

The economic pressure is not imposed by the employees as union members during collective bargaining, but it is government-imposed on their behalf during a time when they are free to engage in the process of self-organization…. The ordinance mandates which individuals are to comprise the work force that will decide how or whether to bargain with the employer. To deny that an economic weapon is in play between contending economic forces as a result of the ordinance is to ignore the fundamental relationship between labor and management upon which the NLRA is constructed. The requirement to hire a specific bloc of employees, it seems to me, necessarily has altered the economic balance between labor and management. Work force selection is perforce one of the most basic economic power realities.

It’s particularly sad to see the court cover its eyes to such realities and to these fundamentally arbitrary intrusions on economic liberty during a time of economic crisis. Not only do laws like this ordinance harm California’s economy in order to benefit the members of a specific business—the labor union—but they set a precedent for more and more arbitrary restrictions on the freedom of economic choice that is the essence of our economy and our constitutional liberty.

You can read PLF’s brief here.