GOLDEN STATE TRANSIT CORPORATION, PETITIONER V. CITY OF LOS ANGELES No. 84-1644 In the Supreme Court of the United States October Term, 1985 On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit Brief for the National Labor Relations Board as Amicus Curiae Supporting Petitioner TABLE OF CONTENTS Interest of the National Labor Relations Board Statement Introduction and summary of argument Argument: The court of appeals erred in affirming the grant of summary judgment in favor of the city on the basis that the City's refusal to renew the taxicab franchise of am employer unless it resolved its labor dispute is a matter of peripheral concern under the NLRA A. Congress protected the right of parties to collective bargaining disputes to resolve their differences through the free play of economic forces B. The invocation of the City's legitimate concern with transportation is not sufficeint in itself to except its actions from the operation of the preemption doctrine Conclusion QUESTION PRESENTED Whether the court of appeals correctly affirmed summary judgement in favor of a municipality on a claim that its refusal to renew an employer's taxicab franchise unless the employer settled a labor dispute with its striking employees was preempted by the National Labor Relations Act, 29 U.S.C. 151 et seq. INTEREST OF THE NATIONAL LABOR RELATIONS BOARD The question presented in this case is whether the National Labor Relations Act, 29 U.S.C. 151 et seq., preempts a city from conditioning renewal of an employer's taxicab franchise solely on the employer's settlement of a collective bargaining dispute with its striking employees. The court of appeals held that the city's action was not preempted because it was "concerned with transportation" and therefore "d(id) not implicate or conflict with (the) federal labor policy" that collective bargaining disputes be resolved by the free play of economic forces between the parties (Pet. App. 7a). The system of free collective bargaining is at the core of the Act. See Sections 7 and 8(d), 29 U.S.C. 157 and 158(d). As the agency assigned by Congress the responsibility for administering the Act and implementing the national labor policy expressed therein, the National Labor Relations Board has a significant interest in the proper application of the preemption doctrine, which is designed in part to preclude direct state and local interference with private collective bargaining conduct that Congress intended to leave unregulated. STATEMENT 1. Petitioner Golden State Transit Corporation was the owner of a taxicab franchise granted by respondent City of Los Angeles. Upon acquiring the franchise in 1977, Golden State entered into a collective bargaining agreement covering its drivers with Teamsters Local 572. In March 1980, Golden State applied to the City for renewal of its franchise; that franchise, as well as those of the City's other taxicab operators, was due to expire on March 31, 1981. In the interim, the City studied its taxicab industry, and various legislative and administrative bodies, including the City Council's Transportation and Traffic Commitee, recommended that Golden State's franchise be renewed for a four-year term. Pet. App. 2a, 27a-28a. The City Council scheduled action on ordinances renewing the franchises of Golden State and other operators for February 11, 1981. Shortly before that meeting, on February 5, the Union informed the City Council that it was involved in a labor dispute with Golden State, the collective bargaining agreement having expired in October 1980. On the day of the City Council meeting, Golden State's drivers went out on strike. A Union representative appeared before the City Council on February 11 and urged the Council not to approve Golden State's franchise because of the labor dispute. The Council voted on February 11 to renew the franchise of the other operators that had been recommended for long-term renewal, but it postponed consideration of Golden State's franchise until February 17. Pet. App. 2a, 15a, 28a. At the Council's meeting on February 17, 1981, the Union again opposed Golden State's renewal application on the basis of the labor dispute (J.A. 117). The same day, the Union told Golden State that if it "'doesn't settle (its) labor dispute, (it is) going to have a lot of trouble renewing (its) franchise'" and later told the employer, "We are going to see that the City revokes or does not renew your franchise if you do not meet our demands" (J.A. 52, 117; citation omitted). The Council conditionally extended Golden State's franchise only until April 30, 1981, provided that the Council found on or before March 27 that this 30-day extension was "in the best interest of the City." No other franchise was made subject to this condition. Pet App. 2a, 15a, 28a. The City Council next met on March 23, 1981 to consider renewal of Golden State's franchise. At that meeting, union representatives accused Golden State of intransigence and bargaining in bad faith, and again asked that the franchise not be renewed. The Union stated that it hoped its drivers would be hired by Golden State's successor and that one operator had assured them that the drivers would be hired if its franchise were extended to cover Golden State's service area. J.A. 42-53, 60, 62; Pet. App. 16a. Following presentations by the parties, the President of the City Council stated that "'it will be very difficult to get this ordinance passed to extend this franchise if the labor dispute is not settled by the end of the week.'" (Pet. App. 29a). Councilman Cunningham, referring to Golden State's striking drivers, stated (J.A. 66-67): I still think that what they are saying to us they don't intend to continue to be wage slaves or continue to be jacked around and jerked around at the whim and caprice of the owner or operator of that facility. I think it would be wise for us as members of this Council to clearly make a statement by turning down this extension(.) (A)s soon as there is an agreement, we can certainly reopen the matter and be able to extend the franchise. The general manager of the City's Department of Transportation testified at the meeting that he had not received an increased number of complaints about cab service since the strike began (J.A. 69-70). Councilman Yaroslavsky, after noting that a refusal to renew the license might create a more healthy taxicab market, concluded, "my intuition tells me in this case that (Golden State) has not made every effort to (n)egotiate. * * * I just don't like the attitude, * * * I don't like the negotiating posture, * * * we have a responsibility to do justice, * * * and that is why my inclination is to vote * * * to withdraw their franchise" (J.A. 71-72). The City Council then refused to extend Golden State's franchise beyond March 31, 1981 by a vote of 11 to 1 (Pet. App. 3a, 16a). "It is undipusted that the sole basis for refusing to extend (Golden State's) franchise was its labor dispute with its Teamster drivers" (id. at 29a). 2. Golden State brought this action in the United States District Court for the Central District of California alleging, inter alia, that the City's action was preempted by the National Labor Relations Act (NLRA or the Act), 29 U.S.C. 151 et seq. The district court granted a preliminary injunction preserving Golden State's franchise (Pet. App. 26a-32a). After finding that the City refused to renew the franchise solely because of the labor dispute (id. at 29a), the district court reasoned (id. at 32a): By threatening to allow (Golden State's) franchise to terminate unless it entered into a collective bargaining agreement with the Teamsters, the City Council effectively denied (Golden State) of its most basic weapon(,) the economic strength of an on-going franchise. Since Congress has sanctioned the self-help measures taken by (Golden State) here in resisting the signing of a new contract with the Union, the City Council is precluded by the Supremacy Clause from taking legislative action which would frustrate the purposes of the N.L.R.A. The court of appeals reversed (Pet. App. 18a-25a). Although it upheld the district court's finding that "the city deprived (Golden State) of an economic weapon -- the opportunity simply to outlast the strikers" (id. at 20a), the court of appeals concluded that Golden State had not demonstrated a likelihood of success on the merits because the regulation of taxicabs is a matter of local interest that Congress did not intend to preempt in the NLRA (id. at 21a). 3. On remand, the district court granted summary judgement in favor of the City (Pet. App. 11a-17a). With respect to the preemption issue, the district court relied solely on the court of appeals' decision reversing the grant of a preliminary injunction to Golden State (id. at 17a). The court of appeals affirmed the grant of summary judgement, although for different reasons than those given on the earlier appeal (Pet. App. 10a). The court of appeals upheld the district court's findings that the City "insisted upon resolution of the (labor) dispute as a condition to franchise renewal" (id. at 8a) and that this insistence "altered the balance of economic power" between the parties (id. at 4a n.1). It concluded, however, that "(n)othing in the record indicates that the City's refusal to renew or extend Golden State's franchise until an agreement was reached and operations resumed was not concerned with transportation" (id. at 7a). This concern with transportation was, in the court's view, a matter peripheral to the NLRA and therefore excepted from the preemption doctrine (Pet. App. 4a). /1/ The court noted the ubiquity of local regulation of public utilities and the impact such regulation may have on labor disputes (id. at 7a-8a). In light of the necessity for this regulation, the court determined that "only actions seeking to directly alter the substantive outcome of a labor dispute should be preempted" (id. at 8a). Because it concluded that "(t)he City did not attempt to dictate terms of the collective bargaining agreement or alter the substantive outcome of the dispute," the court of appeals held that "(t)he City's refusal to renew Golden State's franchise is * * * not preempted by the NLRA" (ibid.). /2/ INTRODUCTION AND SUMMARY OF ARGUMENT The court of appeals held that the actions of the City Council in respect to petitioner's franchise renewal were not preempted because they dealt with "transportation," a matter of local concern only "peripheral" to the policies of the National Labor Relations Act. The court properly invoked the City's legitimate interests, but did so in so wholly conclusory a fashion and with so little reference to the sparse record developed below on summary judgment that it is not possible to determine what meaning the court ascribed to these general concerns or how it supposed they applied to the facts of this case. Before turning to the merits of our argument, it is important to understand the nature and scope of the federal labor laws, and how they mesh with the backdrop of local regulation of matters of local concern that Congress did not intend to displace. 1. Since the earliest days of the NLRA this Court has emphasized that Congress intended that Act to be a comprehensive scheme governing the major aspects of labor-management relations within its scope. /3/ Not only were the terms of the Act itself intended to provide the general and uniform framework for labor relations throughout the nation, but the National Labor Relations Board was to have comprehensive and plenary authority to interpret those terms and to develop national labor policy within the discretion those general terms necessarily implied. /4/ In this respect the NLRA differs both from federal regulatory schemes which are not intended to be fully comprehensive, such as the environmental laws, /5/ and also from schemes like the antitrust laws, the administration of which is not entrusted exclusively to a single agency to the exclusion of private actions outside of the regulatory framework. /6/ Indeed, the Board not only administers the Act and adjudicates disputes under it, but with few exceptions actions regarding its provisions can only be initiated by the Board's General Counsel. It is this congressional purpose to legislate comprehensively, early recognized by this Court and continuously reaffirmed through the various revisions of the original Act, which must be the touchstone of any preemption analysis. Though the Act is comprehensive, this Court has always recognized in various formulations two implicit limitations on its reach, limitations that must reasonably be inferred from Congress's purpose to legislate within our federal system, where not only does residual sovereignty reside in the States, but also as a vivid reality large responsibilities for governing the day-to-day activities of ordinary people's lives are assumed by state and local governments. Thus, first of all, local authority over the urgent matters of public welfare and safety and the basic relations expressed in the common law are not lightly to be presumed to have been displaced. Hence the decision affirming continued local authority to assure freedom from violence /7/ and destruction of reputation, /8/ and to guarantee the sanctity of promises made to third parties. /9/ In none of these instances is the state purporting to alter, affect, or even supplement the regulation of labor relations as such, but rather it acts out of its residual responsibility to maintain the background structures of civil peace and legality which the national scheme must assume but cannot assure. Second, this Court has recognized that local governments as they legislate for the general welfare of their citizens cannot help but affect indirectly the situation from which the participants in the economic struggle structured by the labor laws wage their bargaining battles. Child welfare laws or workplace safety laws of general applicability deal with matters which may be the subjects of collective bargaining. A statute requring that any health plan offered in the state, whether or not by an employer, whether or not pursuant to a collective bargaining agreement, must have certain minimum features, has the incidental effect of setting the floor for a matter which has traditionally been the subject of hard bargaining. /10/ Hospital cost containment legislation may limit the revenues available to an employer and thus the employer's ability to make concessions in collective bargaining; /11/ If such incidental effects on collective bargaining were held to be preempted there would be little indeed that a state might do in pursuit of nonlabor-related welfare or regulatory goals. The recognition of these considerations, inevitably raised in our federal system if local responsibilities are not to be automatically overwhelmed whenever Congress enacts, as here, a comprehensive scheme for a limited though crucial subject matter, has given rise to the concepts of local interest, peripheral concern, and incidental effect, concepts which the court of appeals employed in this case. Yet as these concepts have been invoked by this Court, it has always been with a searching and sensitive analysis of the particular circumstances, of the actual purposes served by the local regulation and its actual effect on labor relations. Such an inquiry, if indulged in simply to determine the reasonableness in general of state regulation, would be uncomfortably reminiscent of substantive due process analysis, but here it is driven by a need to relate the state's action to Congress's intent in the NLRA, and thus is inevitable if terms such as "local interest" are not to become mere talismans justifying any and all state impingements on nationally regulated labor relations. This inquiry is not, moreover, so particularistic as itself to constitute a mere substitution of judicial judgments of the overall wisdom of local legislation. Rather, more general guidelines are available. To begin with, whatever its justification, local action cannot be allowed to affect the central reaches of the federal labor laws. /12/ Nor is the list of local concerns requiring special deference infinitely expandable. Rather, it is limited to central areas of local concern (see page 9, supra). And while additions to this list may be contemplated, they cannot be casually admitted. Furthermore, where local action does have an affect on the balance of forces between employers and employees, the Court has sought to assure itself that this effect was indeed incidental, i.e., a side-effect of a measure general in scope and palpably directed at non-labor-related ends. /13/ Finally, even where these conditions are met, the state purpose cannot be one which could be readily accomplished by means less intrusive on values protected by national labor policy. /14/ 2. With these considerations in mind, it is clear that the court of appeals' narrow focus on the conclusory and undifferentiated statement that the City's concern was with transportation services obscured proper analysis of the preemption issue in this case. This issue depends on Congress's intent in the National Labor Relations Act. In the Act, Congress protected the right of employers and employees to rely on their respective economic power in settling collective bargaining disputes. Neither the Board nor state or local governments may regulate those aspects of a labor dispute that Congress intended to be governed by the free play of economic forces. Such state and local regulation is preempted. Lodge 76, Int'l Ass'n of Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132 (1976). The mere invocation by the City of an interest in transportation cannot exclude its regulation from the preemption doctrine. Indeed since petitioner was in the taxi business any regulation of it had something to do with transportation; yet the taxi business is not exempt from the NLRA. Rather, the appropriate inquiry is whether Congress can be taken to have intended in the Act to remove particular labor relations conduct from the sphere of local regulation. That the conduct arises in the context of transportation regulation may help to elucidate congressional intent. And proper analysis of that intent must take into account that legitimate local regulatory activity may often have substantial though indirect effects on the outcome of the collective bargaining process so that such effects alone cannot be sufficient to mandate preemption. This Court has also made clear, however, that it is that congressional intent which must control and not some balance of national and local interests struck ad hoc by a reviewing court. Metropolitan Life Ins. Co. v. Massachusetts, No. 84-325 (June 3, 1985), slip op. 24 n.27; Amalgamated Ass'n of Street, Elec. Ry. & Motor Coach Employees v. Wisconsin Employment Relations Board, 340 U.S. 383 (1951). Where the regulation incidentally burdens the exercise of a federally guaranteed right, therefore, it is at least incumbent on the state or locality to demonstrate a sufficiently close and urgent relationship between the burden imposed and the achievement of a legitimate interest that Congress cannot be thought to have preempted the regulation. Judged by this standard, summary judgment in favor of the City was plainly erroneous. The case should be remanded for further proceedings under the correct legal standard. ARGUMENT THE COURT OF APPEALS ERRED IN AFFIRMING THE GRANT OF SUMMARY JUDGMENT IN FAVOR OF THE CITY ON THE BASIS THAT THE CITY'S REFUSAL TO RENEW THE TAXICAB FRANCHISE OF AN EMPLOYER UNLESS IT RESOLVED ITS LABOR DISPUTE IS A MATTER OF PERIPHERAL CONCERN UNDER THE NLRA A. Congress Protected The Right Of Parties To Collective Bargaining Disputes To Resolve Their Differences Through The Free Play Of Economic Forces Employees are guaranteed the right to bargain collectively in Section 7 of the National Labor Relations Act, 29 U.S.C. 157. In Section 8(d) of the Act, 29 U.S.C. 158(d), Congress specified that the duty to bargain "does not compel either party to agree to a proposal or require the making of a concession." This Section permits the employers and employees to rely, within the limits stated in the Act, on their own economic strength in settling collective bargaining disputes. This Court has therefore long held that the Board cannot "regulate what economic weapons a party might summon to its aid." NLRB v. Insurance Agents' Int'l Union (Insurance Agents), 361 U.S. 477, 490 (1960). The reason for this rule is plain (ibid.): (I)f the Board could regulate the choice of economic weapons that may be used as part of collective bargaining, it would be in a position to exercise considerable influence upon the substantive terms on which the parties contract. * * * Our labor policy is not presently erected on a foundation of government control of the results of negotioations. * * * Nor does it contain a charter for the National Labor Relations Board to act at large in equalizing disparities of bargaining power between employer and employee. The ability to rely on one's economic power in resolving collective bargaining disputes, the Court concluded (id. at 489), "is part and parcel of the system that the (NRLA) ha(s) recognized." Thus, for example, unions may strike, /15/ and employers may attempt to continue operating by hiring permanent replacements for the strikers. /16/ State and local governments have no more authority than does the Board to regulate the resort to economic weapons by parties to a labor dispute. In Lodge 76, Int'l Ass'n of Machinists v. Wisconsin Employment Relations Comm'n (Machinisits), 427 U.S. 132 (1976), the Court applied the teachings of Insurance Agents to preempt a state order prohibiting a unions' concerted refusal to work overtime. The Court observed that Congress intended that certain conduct "be controlled by the free play of economic forces" rather than be subjected to governmental regulation (id. at 140; quotation marks omitted). Accordingly, state regulation that upsets the balance struck by Congress "between the uncontrolled power of management and labor to further their respective interest" (id. at 146; quotation marks omitted) must be preempted. Like the Board, states may not "'(enter) into the substantive aspects of the bargaining process to an extent Congress has not countenanced'" (id. at 149, quoting Insurance Agents, 361 U.S. at 498). Similarly, in Local 20, Teamsters Union v. Morton, 337 U.S. 252 (1964), the Court held that a state could not prohibit certain secondary boycott activity that Congress had not prohibited. "The inevitable result" of allowing such state regulation to stand, the Court reasoned (id. at 260), "would be to frustrate the congressional determination to leave this weapon to self-help available, and to upset the balance of power between labor and management expressed in our national labor policy." As the Court recently noted, "(t)hese cases rely on the understanding that in providing in the NLRA a framework for self-organization and collective bargaining, Congress determined both how much the conduct of unions and employers should be regulated, and how much it should be left unregulated." Metropolitan Life ins. Co. v. Massachusetts, No. 84-325 (June 3, 1985), slip op. 25. /17/ B. The Invocation Of The City's Legitimate Concern With Transportation Is Not Sufficient In Itself To Exempt Its Action From The Operation Of the Preemption Doctrine 1. "(A)s in any preemption analysis, (t)he purpose of Congress is the ultimate touchstone." Metropolitan Life Ins. Co., slip op. 22 (quotation marks omitted). In San Diego Building Trades Council v. Gramon, 359 U.S. 236 (1959), the Court addressed in part conduct (arguably subject to Section 7 or Section 8 of the Act" (id. at 245; emphasis added.) In such circumstances, preemption is intended not to protect a federal right but to safeguard the primary jurisdiction of the Board and thereby to avoid the potential for conflict between state and federal regulation. While preemption presumptively follows from the potential for conflict, state regulation may stand where it addresses activity that is "a merely peripheral concern" of the NLRA (id. at 243) or is "deeply rooted in local feeling and responsibility" (id. at 244). A balancing test to determine whether "(t)he state interests involved * * * outweigh any possible interference with the Board's function" has therefore been established under this branch of the preemption doctrine. Belknap, Inc. v. Hale, 463 U.S. 491, 511 (1983); see Local 926, Int'l Union of Operating Eng'rs v. Jones, 460 U.S. 669, 676 (1983). This form of balancing, however, is not directly relevant to preemption under the Machinists doctrine: If the state law regulates conduct that is actually protected by federal law, * * * pre-emption follows not as a matter of protecting primary jurisdiction, but as a matter of substantive right. Where * * * the issue is one of an asserted substantive conflict with a federal enactment, then "(t)he relative importance to the State of its own law is not material . . . for the Framers of our Constitution provided that the federal law must prevail." Brown v. Hotel & Restaurant Employees Int'l Union Local 54, No. 83-498 (July 2, 1984), slip op. 11, quoting Free v. Bland, 369 U.S. 663, 666 (1962). Where Congress intended that activity be left unregulated by the States, the Supremacy Clause requires that its intent prevail, regardless of the relative strengths of the federal and local interests at stake. /18/ The Court recently explained the appropriate inquiry in Metropolitan Life Ins. Co. v. Massachusetts, supra. Referring to the Machinists line of cases, the Court noted that "(s)uch preemption does not involve in the first instance a balancing of state and federal interests, * * * but an analysis of the structure of the federal labor law to determine whether certain conduct was meant to be unregulated" (slip op. 24 n.27). The Court explained, however, that "(a)n appreciation of the State's interest in regulating a certain kind of conduct may still be relevant in determining whether Congress in fact intended the conduct to be unregulated" (ibid.). Thus, Congress surely intended to leave the states room to pursue legitimate local regulatory purposes notwithstanding an incidental effect on labor relations. The court of appeals erred, however, in resting its conclusion on the mere fact of the City's concern with transportation (see Pet. App. 6a-7a). /19/ To the extent that the court of appeals concluded that the City was entitled to regulate the labor relations of Golden State and its employees merely because the employer provided transportation services, this Court long ago laid that notion to rest. In Amalgamated Ass'n of Street, Elec. Ry. & Motor Coach Employees v. Wisconsin Employment Relations Board, 340 U.S. 383 (1951), the Court rejected a similar argument in holding that a state law prohibiting strikes by employees of public utilities, including those providing transportation, was preempted by the NLRA. The State's argument "stress(ing) the importance of gas and transit service to the local community and urg(ing) that predominantly local problems are best left to local governmental authority for solution" (id. at 397) was unavailaing because Congress's protection of the right to strike "occupied th(e) field and closed it to state regulation" (id. at 390; quotation marks omitted). 2. Resolution of whether the City's action in this case was preempted by the NLRA requires an analysis of whether and in what manner the City burdened a right protected under the NLRA. See, e.g., Belknap, Inc. v. Hale, 463 U.S. at 499 -- 507 (Machinists preemption inapplicable to state breach-of-contract action that did not have substantial impact on conduct that Congress intended to be left unregulated). If the City directly intruded into the parties' labor relations by prohibiting recourse to economic self-help, the matter is at an end under Machinists. If, on the other hand, the City's action indirectly affected the bargaining process, the City must demonstrate that Congress nonetheless must be taken to have intended to permit its action, notwithstanding its ancillary effect of interfering with the collective bargaining process, if that action is not to be preempted. On the City's motion for summary judgment, factual disputes and inference from the facts are resolved against it and in favor of Golden State. E.g., Harlow v. Fitzgerald, 457 U.S. 800, 816 n.25 (1982). a. In determining whether the City burdened a protected right, it is first necessary to identify precisely what the City did. On one view of the case, the City Council voted only to refuse to grant Golden State a 30-day extension of its franchise. Because the City had earlier conditioned that extension on whether it would be in the best interests of the City, the Council's vote may be interpreted simply as a finding that the extension would not in fact serve the City's transportation needs. See pages 3-4, supra. Golden State's labor dispute could have had obvious relevance to the City's concern that an effective level of service be provided to its residents. It would not have been impermissible, therefore, for the City to have conditioned renewal of the franchise upon Golden State's demonstration that it could provide sufficient service to meet the City's needs despite the strike, perhaps by hiring replacements. /20/ This of course could have had an effect on the bargaining process between employer and union, but it would not have directly interfered with Golden State's freedom to rely on its federally protected right to attempt to last out the strike. A finding of preemption under such circumstances would be difficult to support: the preemption doctrine does not grant federal courts a license to engage in substantive due process review of the desirability of local regulations of traditional local concerns merely because the affected parties are involved in a collective bargaining dispute. The facts appear to be otherwise, however. Both courts below found that the City had refused to renew Golden State's franchise unless the employer settled its labor dispute. They also found that this refusal had a significant impact on the economic balance of power between the employer and its union. See page 5, supra. Thus, the City's actions appear directly to have regulated Golden State's exercise of its federally protected right to rely on its economic power to last out the strike. If so, its action must be preempted under Machinists (see also note 27, infra). The court of appeals' distinction (Pet. App. 8a) between "attempt(ing) to dictate terms of the collective bargaining agreement" and "insist(ing) upon resolution of the dispute as a condition to franchise renewal" is without substance. Under Section 8(d) of the Act, neither the Board nor state and local governments have any more authority to insist that parties reach an agreement than they do to order them to agree to specified terms. See pages 13-15, supra. Moreover, in this case, the Union had made clear its preference to put petitioner out of business and to rely on assurances that its members would be hired by other operators (see page 3, supra). Thus, the effect and indeed the purpose of the City's coundition was to require Golden State to agree to the Union's terms if it wanted to keep its franchise. b. However, it is not entirely clear on the state of this record that the City's action must be deemed to have been preempted under Machinists. Congress did not intend to preempt the States from pursuing legitimate local regulatory interests even when their actions have an incidental effect on the outcome of collective bargaining agreements, Metropolitan Life Ins. Co., slip op. 22-32 (state mandated-benefit law not preempted by NLRA). Just as "Congress developed the framework for self-organization and collective bargaining of the NLRA within the larger body of state law promoting publis health and safety" (id. at 30), so it must have recognized a wide legitimate sphere of local action with respect to transportation. /21/ Thus, the effect of the City's action on the balance of economic power, while a significant factor, will not always be sufficient to mandate preemption in this area (absent direct intrusion into the labor dispute or bargaining process). If incidental interference with a federally protected right has in fact been shown, however, a presumption of preemption follows, and the burden must rest with the City to demonstrate a congressional intent to permit its regulation, rather than the other way around. /22/ The Court has struggled before with such an inquiry, without offering definitive guideposts for analysis. See New York Tel. Co. v. New York Dep't of Labor, 440 U.S. 519 (1979); note 22, supra. In light of the unusual facts of the present case /23/ and its unsatisfactory procedural posture, /24/ this case does not seem suitable for a detailed clarification of the law without a more thoroughgoing analysis by the courts below of the facts and the law as applied to those facts. The most important criteria to guide the analysis seem fairly clear. In the absence of express statutory direction, the most effective way for the City to carry its burden of showing an intent not to preempt would be for it to point to legislative history showing that Congress had in fact considered the sort of regulation undertaken and had intended to permit it, as in New York Telephone (see note 22, supra). Failing that (and there is no suggestion of it here), the City should be required to demonstrate that its action furthered a legitimate local concern without undue ancillary interference with the protected labor activities of Golden State. Congress must be understood to have intended that states not directly or gratuitously interfere with labor relations while pursuing other goals. By the same token, Congress did not intend in the NLRA to prevent states from regulating in areas of local concern notwithstanding an accompanying incidental effect on labor relations. /25/ See, e.g., Massachusetts Nurses Ass'n v. Dukakis, 726 F.2d 41, 43 (1st Cir. 1984) (footnote omitted) (state hospital cost containment law not preempted partly because the law "affects the labor-management relationship only indirectly through its regulation of the employers' annual gross income"); Amalgamated Transit Union v. Byrne, 568 F.2d 1025 (3d Cir. 1977) (en banc) (state not preempted from announcing that it would not raise a transportation subsidy to cover an uncapped cost-of-living clause that was the subject of ongoing bargaining). 3. Judged by these standards, it is plain that summary judgment in favor of the City was erroneous. Construing the facts in Golden State's favor, the City burdened the employer's right under the NLRA to rely on its own economic strength to last out the strike, and the City's legitimate concerns for the service provided by and economic health of its taxicab industry could apparently have been furthered by routes considerably less restrictive of the employer's collective bargaining conduct. Nor do we believe that summary judgment should be entered for petitioner on the record as it now stands, adjudicating at this juncture that the City's action was preempted. Because of the errors in the court of appeals' analysis in its two opinions, the factual record is incomplete in important respects. First, the courts below failed fully to analyze the regulatory action taken by the City. Although the courts found that the City conditioned renewal of the franchise on settlement on Golden State's labor dispute, it is not clear whether this condition was imposed by the City Council as part of its legislative action or whether it refers simply to Golden State's less formal understanding on the basis of pronouncements of individual Council members. Nor is the extent to which this condition remained in force at the time the Council voted to deny Golden State a 30-day extension of its franchise clear on the record (see note 20, supra). These facts may be significant for determinign whether the City did in fact directly burden Golden State's protected labor rights. /26/ Second, the City has not yet been required to come forward with evidence explaining what legitimate transportation interests were served by its actions and the extent to which any incidental impairment of Golden State's bargaining power was necessary to accomplish those interests. While it may be difficult at this stage to conceive of a permissible construction of the City's regulatory conduct, which appears to have imposed settlement of the labor dispute as the sine qua non of franchise renewal, /27/ the City should be required to make its case in the lower courts. A generalized reference to transportation cannot be enough. CONCLUSION The judgment of the court of appeals should be vacated and the case remanded for further proceedings. Respectfully submitted. CHARLES FRIED Acting Solicitor General LAWRENCE G. WALLACE Deputy Solicitor General BRUCE N. KUHLIK Assistant to the Solicitor General ROSEMARY M. COLLYER General Counsel JOHN E. HIGGINS, JR. Deputy General Counsel ROBERT E. ALLEN Associate General Counsel NORTON J. COME Deputy Associate General Counsel LINDA SHER Assistant General Counsel ROBERT C. BELL, JR. Attorney National Labor Relations Board AUGUST 1985 /1/ The court of appeals reversed its earlier determination that transportation activities are matters of local concern that cannot be preempted under the NLRA (Pet. App. 5a-6a). /2/ Judge Norris concurred separately. Although he "perceive(d) * * * serious deficiencies" in the majority's preemption analysis (Pet. App. 10a. n.1), he concluded that there was no evidence that the City's actions had an impermissible purpose or effect (id. at 10a). /3/ See, e.g., Garner v. Teamsters Local Union No. 776, 346 U.S. 485 (1953); see generally NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937). /4/ See San Diego Building Trades Council v. Garmon, 359 U.S.236 (1959). /5/ See, e.g., 42 U.S.C. 7604(e). /6/ Certain private actions with respect to labor relations matters are permissible under Sections 301 and 303 of the Labor-Management Relations Act, 29 U.S.C. 185 and 187. These Sections do not bear on the analysis of this case. /7/ United Construction Workers v. Laburnum Construction Corp., 347 U.S. 656 (1954). /8/ Linn v. United Plant Guard Workers, Local 114, 383 U.S. 53 (1966). /9/ Belknap, Inc. v. Hale, 463 U.S. 491 (1983). /10/ Metropolitan Life Ins. Co. v. Massachusetts, No. 84-325 (June 3, 1985). /11/ Massachusetts Nurses Ass'n v. Dukakis, 726 F.2d 41 (1st Cir. 1984). /12/ See, e.g., Nash v. Florida Industrial Comm'n, 389 U.S. 235 (1967). /13/ See, e.g., Lodge 76, Int'l Ass'n of Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132 (1976). The mere fact that a law is general in scope, however, will not save it from preemption in appropriate circumstances. See Amalgamated Ass'n of Street, Elec. Ry. & Motor Coach Employees v. Lockridge, 403 U.S. 274, 292 (1971); Garmon 359 U.S. at 244. /14/ In New York Tel. Co. v. New York Dep't of Labor, 440 U.S. 519 (1979), for example, although the State's purpose was the general and acceptable one of ensuring income to unemployed workers, even this purpose was not sufficeint in itself to avoid preemption in the face of the seriously unbalancing effect of the unemployment compensation law as applied to striking workers on the competitive situation of labor and management: congressional intent to permit such a law to stand in the face of this effect was necessary to permit it to stand. See pages 22-23 note 22, infra. /15/ Amalgamated Ass'n of Street, Elec. Ry. & Motor Coach Employees v. Wisconsin Employment Relations Board, 340 U.S. 383 (1951). /16/ NLRB v. Mackay Radio & Tel. Co., 304 U.S. 333 (1938). /17/ Although Machinists and Morton addressed preemption of state regulation of union and employee activities, it is clear that resort to economic strength of self-help (such as hiring replacement workers) is a right of an employer as well as of its employees. Thus, "(w)hether self-help economic activities are employed by employer or union, the crucial inquiry regarding preemption is the same: whether 'the exercise of * * * state authority to curtail or entirely prohibit self-help would frustrate effective implementation of the Act's process()'" of free collective bargaining. Machinists, 427 U.S. at 147-148, quoting Brotherhood of R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 380 (1969). /18/ As Metropolitan Life Ins. Co makes clear (slip op. 24 n.27), the distinction between those rights that Congress affirmatively protected in the NLRA and those activities that it intended to be left unregulated is irrelevant in this context. The determinative factor is Congress's intent, not how it expressed that intent: "'(T)he failure of Congress to prohibit certain conduct warrant(s a) negative inference that it was deemed proper, indeed desirable * * * to be left for the free play of contending economic forces.'" Machinists, 427 U.S. at 140 n.4, quoting Lesnick, Preemption Reconsidered: The Apparent Reaffirmation of Garmon, 72 Colum. L. Rev. 469, 478 (1972). /19/ It is irrelevant the court of appeals' approach is predicated on the "peripheral concern" (see Pet. App. 4a) or the "local interest" (see id. at 21a) exceptions to Garmon preemption. Whether transportation is viewed as peripheral to the NLRA or as an important local interest, the court of appeals' approach is fundamentally flawed because it fails accurately to assess Congress's intent. The court of appeals "confuse(d) preemption which is based on actual federal protection of the conduct at issue from that which is based on the primary jurisdiction of the National Labor Relations Board" (Brown, slip op. 10). /20/ Similarly, the City could have concluded that the strike demonstrated that the additional service represented by Golden State's fleet was not necessary to provide an adequate level of taxicab service and that reducing the number of taxicabs by that amount would improve the industry's economic health. Conditioning renewal of the franchise on settlement of the labor dispute (if that is in fact what happened), however, would seem to belie this goal: if the additional taxi service were in fact unnecessary, settlement of the labor dispute would have been irrelevant. Moreover, Golden State could not be penalized by the City for its involvement in a labor dispute by discriminatory termination of its franchise. Whether the City subsequently awarded Golden State's franchise to another operator or renewed other franchises would be relevant to these inquiries; the courts below, however, did not make findings in this regard. /21/ For example, a City's regulation of the number of taxicabs on its streets and of the rates they may charge obviously will have a significant effect on collective bargaining agreements reached between employers and drivers, but it can scarcely be contended that such regulation is therefore preempted by the NLRA. Cf. Massachusetts Nursing Ass'n v. Dukakis, 726 F.2d 41 (1st Cir. 1984). /22/ See New York Tel. Co. v. New York Dep't of Labor, 440 U.S. 519, 549 (1979) (Blackmun, J., joined by Marshall, J., concurring in the judgment) (emphasis in original) (under Machinists, "there is pre-emption unless there is evidence of congressional intent to tolerate the state practice"). The three dissenting Justices in New York Telephone agreed that if a state law interferes with conduct that Congress left unregulated in the NLRA, it is preempted unless Congress intended otherwise. See id. at 555-556, 560-561, 566 (Powell, J., joined by the Burger, C.J. and Stewart, J., dissenting). In New York Telephone, the Court upheld a state law granting unemployment compensation benefits to striking employees. The views of the plurality of three Justices failed to gain the acceptance of a majority of the Court, and the case was decided on the narrow ground of Congress's intent with respect to unemployment compensation as expressed in the legislative histories of the NLRA and the Social Security Act, which were passed within a short time of one another. See id. at 540-546 plurality opinion); id. at 546-547 (Brennan, J., concurring in the result); id at 547-551 (Blackmun, J., concurring in the judgment). The case therefore cannot be read as a retreat from the analysis adopted in Machinists. To the contrary, a majority of the Court reaffirmed that analysis. /23/ It is rare to see a union that represents the involved employees attempt to put an employer out of business as was done here, for the obvious reason that the employees have nothing to gain by losing their jobs. Here, however, the Union drivers believed that they would be hired by whichever operator received Golden State's franchise after it expired, and they therefore had no incentive to help their employer to stay in business (see page 3, supra). /24/ The case arises on summary judgment and there do not appear to be factual findings on important issues related to precisely what the City Council legislatively enacted and the extent to which the City may have been furthering legitimate regulatory concerns. See pages 25-26, infra. For these reasons, it is difficult to identify with precision a general rule for determining the leeway that Congress intended to allow states in purusing their regulatory goals while interfering with rights under the NLRA: in the absnece of concrete facts found below, the discussion remains at an unsatisfactorily abstract level. We therefore identify the appropriate concerns in broad outline, rather than attempt to construct a more specific test for ascertaining congressional intent in this area. See generally International Ass'n of Machinists v. Gonzales, 356 U.S. 617, 619 (1958) (Frankfurter, J.) ("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.") /25/ We do not think that it would be appropriate in the context of this case to make this standard any more concrete at this stage of the proceedings (see note 24, supra). In some instances, Congress may have intended that states pursue the regulatory alternative with the very least necessary impact on labor relations. In other situations, Congress may have intended the states to have more freedom to regulate, limited only by the requirement that they not unreasonably affect labor relations. It is unnecessary to reach this question in order to decide this case. /26/ While unavowed pressure tactics on the part of a state or local government might still give rise to preemption in appropriate circumstances, the inquiry is considerably more complex than where the official legislative act bears on its face an improper purpose to put a thumb on the scales of the balancing power between labor and management. In identifying precisely what action the City Council took, it is important to separate the motives of individual Council members from the effect of the City's actions. See generally Pacific Gas & Elec. Co. v. State Energy Resources Conservation & Development Comm'n, 461 U.S. 190, 216 (1983) ("inquiry into legislative motive is often an unsatisfactory venture"); United States v. O'Brien, 391 U.S. 367, 383 (1968) ("(i)nquiries into (legislative) motives or purposes are a hazardous matter"); Dean Milk Co. v. City of Madison, 340 U.S. 349, 354 (1951) (effect of state action, not legislative intent, is determinative under the Commerce Clause). /27/ There would be little doublt, for example, of the invalidity under the NLRA of a general city ordinance or rule specifying that franchise renewal applications will be denied simply because a labor dispute is in progress at the time of, or remains unsettled for a specified period after, expiration of the existing franchise.