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LIVADAS v. AUBRY

October 12, 1990

KAREN LIVADAS, Plaintiff,
v.
LLOYD W. AUBRY, JR., in his official capacity as Labor Commissioner of California, Defendant



The opinion of the court was delivered by: HENDERSON

 THELTON HENDERSON, UNITED STATES DISTRICT JUDGE

 The defendant, in a countermotion for summary judgement, alleges that, rather than interfering with the plaintiff's rights under federal law, the state's policy actually encourages collective bargaining and arbitration, and that furthermore, federal preemption doctrine prevents the defendant from providing the contested benefits to the plaintiff.

 The parties' motions for summary judgement came on for hearing on September 24, 1990 at 10:00 a.m., the Honorable Thelton E. Henderson presiding. The plaintiff was represented by Davis, Cowell, & Bowe and Michael T. Anderson. The defendant was represented by H. Thomas Cadell, Jr., Chief Counsel, Division of Labor Standards Enforcement. The Court would like to thank the parties, and especially Mr. Anderson, for their excellent work in briefing the very difficult issues presented in these motions. After careful consideration of the parties' written and oral arguments, it appears to the satisfaction of the Court therefrom that the plaintiff's motion for summary judgement should be GRANTED and that the defendant's motion for summary judgement should be DENIED.

 BACKGROUND

 The plaintiff, Karen Livadas, is a member of United Food and Commercial Workers, Local 373, AFL-CIO ("Local 373"). Ms. Livadas worked at Safeway Stores ("Safeway") in Napa County, California until January 2, 1990, when she was notified through her union that she had been terminated from the job. Ms. Livadas alleges that on the day she was terminated she requested all pay due her. The store manager informed Ms. Livadas that Safeway would mail her a check. Safeway did not pay the plaintiff until January 5, 1990. Ms. Livadas alleges that this delay in payment violated California Labor Code § 201, which requires employers to remit unpaid wages to discharged employees immediately upon termination. Labor Code § 203 provides penalties for employer non-compliance with § 201.

 On January 3, 1990, Ms. Livadas called the Napa office of the California Division of Labor Standard Enforcement (DLSE) to file a claim regarding the outstanding wages. The plaintiff allegedly spoke to two officers who told her that the DLSE could not process her claim. On January 8, 1990, the plaintiff went in person to the DLSE's Napa office. Once again, the officer on duty refused to process her claim and told Ms. Livadas that she must process her claim through her union, and that if her union refused to handle her wage claim, she should contact the National Labor Relations Board (NLRB).

 Karen Livadas filed a complaint against the defendant, Lloyd Aubry, Jr., in his official capacity as Labor Commissioner for the State of California, seeking injunctive and declaratory relief and damages flowing from an alleged agency policy of discrimination in the enforcement of the California Wage and Hour Law against employees who work under collective bargaining agreements which have arbitration clauses. The parties agree that the defendant provides certain valuable protections and benefits to all California employees except those who work under collective bargaining agreements (CBA's) containing arbitration clauses. The plaintiff alleges that the defendant's policy denied her access to the investigatory, prosecutorial, and remedial resources provided under California Labor Code sections 79 through 104 for the sole reason that she is an employee with a CBA containing an arbitration clause. The plaintiff alleges that DLSE's denial of benefits interferes with her federal rights under the NLRA, and therefore violates 42 U.S.C. § 1983.

 Both of the parties agree that the policy of the DLSE is to enforce Labor Code §§ 201 and 203 for all employees except for those whose work is governed by CBA's containing binding arbitration clauses. Ms. Livadas argues that on this basis alone, the Court can resolve her motion for summary judgement in her favor.

 The plaintiff alleges that her participation in a labor union and in collective bargaining constitute federally protected rights, and that the defendant's denial to the plaintiff of benefits under California law on the basis of her exercise of her federally created rights violates 42 U.S.C. § 1983. The plaintiff argues that the NLRA establishes a system under which employers and employees are each provided with economic weapons which they may use against each other. One of the rights granted to employees is the right to bargain collectively. The state's denial to employees working under a CBA with an arbitration clause of the valuable benefit at issue upsets the balance of power established by the NLRA. The plaintiff argues that the provision of such a valuable state benefit cannot be conditioned upon the employees relinquishment of the federally created right of collective bargaining.

 In his answer, the defendant affirmatively alleges, among other defenses, that the terms of the plaintiff's employment at Safeway were governed by a CBA which contains a mandatory and binding arbitration clause, and that the DLSE properly investigated and dismissed the plaintiff's claim on the grounds that federal labor law preemption doctrine precludes the Commissioner from interpreting or applying the terms of the CBA to determine damages allegedly due to the plaintiff. The DLSE argues that federal preemption doctrine makes the interpretation of CBA's a matter for the labor arbitrator and the NLRB. Since damages under § 203 are determined in terms of wages, which are established by the CBA, the defendant argues that enforcement of the statute would entail interpretation of the CBA, which is preempted. The defendant claims that the plaintiff should have the dispute resolved through the grievance arbitration scheme established by the CBA. The defendant claims that this policy actually encourages labor arbitration.

 The plaintiff claims that the policy discourages collective bargaining and arbitration because it denies to employees working under a CBA containing an arbitration clause the benefit of state enforcement procedures, which are granted to all others employees. A union employee may not vindicate the right at issue in this case through arbitration because the arbitrator is allowed to enforce only those rights which stem from the CBA. Since the right at issue in this case stems from state law, rather than from the CBA, the arbitrator can not enforce it. The result is that union employees are forced to bargain for a valuable benefit which all other employees receive automatically. Also, since the right to payment of wages upon termination and for penalties for non-compliance stems from state law rather than from the CBA, enforcement of the law does not require interpretation of the CBA, and so is not subject to federal preemption doctrine.

 PROCEDURAL POSTURE

 The precise questions at issue here have previously been before the Court. In its May 15, 1990 Order, this Court cancelled oral argument and denied both parties' motions for summary judgement on the ground that there were genuine disputes as to material facts in the case. In its June 27, 1990 Order, the Court granted the plaintiff's motion for reconsideration of the Court's May 15, 1990 Order on the ground that the defendant's basis for disputing certain facts which the Court held to be at issue in its earlier Order, were not sufficient to create genuine issues for trial under Fed.R.Civ.P. 56(e); were questions of law rather than of fact; or were immaterial to the resolution of the case. In its August 24, 1990 Order, the Court sua sponte again rescheduled hearing to allow the parties to address the threshold issue of whether the NLRA creates a private right in this instance actionable by the plaintiff under 42 U.S.C. § 1983.

 Legal Standard for Summary Judgement

 Summary judgement is appropriate when there is no genuine dispute as to material facts and the moving party is entitled to judgement as a matter of law. Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir. 1985); Fed.R.Civ.P. 56(c). Material facts are those which may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). A dispute as to a material fact is "genuine" if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. To oppose a motion for summary judgement on the ground that there is a genuine issue of material fact in dispute a party, ". . . may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).

 DISCUSSION

 Private Right of Action

 The threshold issue is whether the NLRA right at issue in this case is actionable under 42 U.S.C. § 1983. We hold that it is. In Golden State Transit Corp. v. City of Los Angeles, (Golden State II), 493 U.S. 103, 107 L. Ed. 2d 420, 110 S. Ct. 444 (1989), the Supreme Court held that the NLRA gives employees and employers a private right, enforceable under 42 U.S.C. § 1983, to engage in free collective bargaining without penalty or restraint by the State.

 Golden State Transit Corp. v. City of Los Angeles, (Golden State I), 475 U.S. 608, 89 L. Ed. 2d 616, 106 S. Ct. 1395 (1986) and Golden State II involved the labor negotiations of the Golden State Transit Corp., a taxicab company. At the time that Golden State's operating franchise license expired, and was subject to a renewal decision by the City of Los Angeles, Golden State was in the midst of a strike by its workers. The City refused to renew Golden State's operating license so long as the company remained in a labor dispute with its workers.

 Golden State sued the City for an injunction and damages under § 1983. In Golden State I, the Supreme Court held that the City's action penalized Golden State for the exercise of rights granted under the NLRA. The Court held that the NLRA gave employers the right to withstand the demands of striking workers, just as it gave workers the right to strike. The City's action imposed a penalty, or additional burden on the cab company for the exercise of its NLRA right, thereby upsetting the power balance between labor and management established in the NLRA. On remand, the district court enjoined the city to reinstate the franchise, but held that the NLRA did not create a private right of action under § 1983. The Ninth Circuit affirmed.

 In Golden State II, the Supreme Court expressly held that the NLRA granted the cab company rights enforceable under § 1983. The Court's analysis begins with the language of § 1983 which provides for a federal remedy for "the deprivation of any rights, privileges, or immunities secured by the Constitution and laws," which, the Court notes, "plainly indicates [that] the remedy encompasses violations of federal statutory as well as constitutional rights." Golden State II, 110 S. Ct. at 448. The Court followed with the two-step analysis of Middlesex County Sewerage Authority v. National Sea Clammers Assn., (Sea Clammers), 453 U.S. 1, 69 L. Ed. 2d 435, 101 S. Ct. 2615 (1981).

 The first step of the Middlesex test requires the Court to determine "whether the provision in question creates obligations binding on the governmental unit or rather 'does no more than express a congressional preference for certain kinds of treatment.'" Golden State II, 110 S. Ct. at 448 (citations omitted). The Court also must determine whether "the provision in question was 'inten[ded] to benefit' the putative plaintiff." Id. (citations omitted). On this issue, the Golden State II Court held:

 
We agree with petitioner [Golden State Cab Co.] that it is the intended beneficiary of a statutory scheme that prevents governmental interference with the collective-bargaining process and that the NLRA gives it rights enforceable against governmental interference in an action under § 1983.
 
Id. at 450.
 
The NLRA creates "rights" in labor and management that are protected against governmental interference.
 
Id. at 449.

 The second part of the Sea Clammers test is that even if there is a federal right, the defendant may show that Congress "'specifically foreclosed a remedy under § 1983,' by providing a 'comprehensive enforcement mechanism for protection of a federal right.'" Golden State II, 110 S. Ct. at 448, (citations omitted). The Court noted that "'We do not lightly conclude that Congress intended to preclude reliance on § 1983 as a remedy' for the deprivation of a federally secured right." Id. at 449, (citations omitted). The Golden State II Court held:

 
a § 1983 action is [not] precluded by the existence of a comprehensive enforcement scheme. Although the National Labor Relations Board has exclusive jurisdiction to prevent and remedy unfair labor practices by employers and union, it has no authority to address conduct protected by the NLRA against governmental interference. There is thus no comprehensive enforcement scheme for preventing state interference with federally protected labor rights that would foreclose the § 1983 remedy.
 
Id. at 449-50 (citations omitted).

 The same analysis must apply in the case of Karen Livadas. The answer to the second question of the Sea Clammers test is clear. The § 1983 remedy is not precluded by a comprehensive enforcement scheme, since the National Labor Relations Board does not have the authority to protect NLRA rights against state interference.

 The answer to the first question of the Sea Clammers test is equally clear, and appears even to be presupposed by the Golden State II opinion. Since the NLRA creates rights in employers enforceable against state interference under § 1983, it must equally vest employees with those rights. The Golden State II Court held:

 
The NLRA, however, creates rights in labor and management both against one another and against the State. By its terms, the Act confers certain rights "generally on employees and not merely as against the employer."
 
(emphasis added, citations omitted).
 
Id. at 450.
 
We have held, based on the language, structure, and history of the NLRA, that the Act protects certain rights of labor and management against governmental interference. (emphasis added).
 
Id. at 451.
 
the interest in being free of governmental regulation of the "peaceful methods of putting economic pressure upon one another," is a right specifically ...

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