Walmart Stores, Inc. v. United Food and Commercial Workers International Union

         APPEAL from a judgment of the Superior Court of Los Angeles County No. BC508587. Ernest M. Hiroshige, Judge.

          Weinberg, Roger & Rosenfeld, David A. Rosenfeld, Emily P. Rich, Jannah Manansala, Michael D. Burstein, David Delgado; and George Wiszynski for Defendants and Appellants.

          Steptoe & Johnson, Jason Levin, Dylan Ruga, Steven D. Wheeless, Kirsten Hicks Spira and Douglas D. Janicik, for Plaintiffs and Respondents.

          BIGELOW, P.J.

         In September 2014, the trial court issued a permanent injunction barring defendants United Food and Commercial Workers International Union (UFCW) and Organization United for Respect at Walmart (OUR Walmart; collectively the union) from conducting demonstrations inside stores owned by Wal-Mart Stores, Inc., and affiliated companies (collectively Walmart). On appeal, the union contends the trial court had no jurisdiction to enter the injunction because the matter was preempted by the National Labor Relations Act (29 U.S.C. § 151, et seq.; NLRA). We conclude the NLRA does not preempt Walmart's trespass action.

         FACTUAL AND PROCEDURAL BACKGROUND

         In 2011, the union began organizing and conducting demonstrations at Walmart stores across the United States, including in California. The demonstrations were part of a union campaign designed to induce Walmart to provide its employees better working conditions and pay. The campaign also sought to pressure Walmart to reinstate employees the union alleged Walmart had discharged or disciplined for exercising their rights under the NLRA. The union publicly indicated it was not seeking to act as the representative or bargaining agent for Walmart employees.^[1] During the demonstrations in California, large numbers of people typically assembled outside a store. Groups of demonstrators also entered stores. As many as 30 or 40 demonstrators might enter a store at one time; on at least one occasion, 100 demonstrators silently entered a store in San Lorenzo to memorialize a deceased employee. Inside the stores, demonstrator activities included loud chanting, singing, marching, carrying posters or placards, taking photographs, recording video footage, and distributing written materials or business cards. On some occasions, demonstrators asked to speak with a manager or presented written demands to a supervisory employee. In other cases, the activity was described as a "flash mob, " meaning a group of people entered the store and, at a pre-arranged time, they engaged in coordinated activity such as singing and dancing. Walmart witnesses described one incident in which demonstrators entered a store and released helium balloons bearing campaign-related messages.^[2] According to Walmart's witnesses, demonstrators did not immediately comply when store managers asked them to leave.

         In March 2013, Walmart filed an unfair labor practice charge with the National Labor Relations Board (NLRB). In the charge, Walmart alleged defendants violated Section 8, subdivision (b)(1)(A) of the NLRA (Section 8(b)(1)(A); 29 U.S.C. § 158, subd. (b)(1)(A)) by "planning, orchestrating, and conducting a series of unauthorized and blatantly trespassory in-store mass demonstrations, invasive ‘flash mobs, ' and other confrontational group activities at numerous facilities nationwide... by which the UFCW restrained and coerced employees in the exercise of their Section 7 rights (which includes the right to refrain from supporting the UFCW) by attempting to impose its will on local facility management in front of facility employees through the sheer force of a mass of moving bodies despite requests and direction by local management to leave." The unfair labor practice charge alleged UFCW coerced employees when it blocked ingress and egress from Walmart facilities, filmed employees reacting to the in-store demonstrations, threatened violence, and attempted to make "improper payments to employees to yield to the UFCW's wishes." The charge challenged union conduct across the United States. It also complained of union conduct outside Walmart stores, including picketing and demonstrations near store entrances and in store parking lots.

         The record does not indicate what action, if any, the NLRB took on Walmart's unfair labor practice charge. However, in June 2013, Walmart's counsel represented in an Arkansas court that Walmart had withdrawn the charges with respect to the in-store demonstrations.^[3]

         In May 2013, Walmart filed a complaint in the Los Angeles superior court for trespass, seeking injunctive and declaratory relief against the union.^[4] The complaint alleged the union trespassed inside Walmart stores to engage in "unauthorized activities." These included: "blocking ingress and egress at store entrances; patrolling through the sales floor and soliciting customers and working associates; parading and initiating confrontational demonstrations; shouting through bullhorns and carrying banners and signs; flash mobs; handbilling flyers and business cards to customers and working associates; setting free tens of balloons inside the store; leaving perishable goods in carts and walking away without paying; blocking customer traffic inside the store; and tracking down and confronting store managers on the sales floor to make various demands, and refusing to leave until the manager responds to them." The complaint alleged these activities diverted management from their jobs, and "interfered" with Walmart employees and customers. The complaint described several demonstrations that occurred in Walmart's California stores in 2012 and 2013. Walmart had identified and detailed some of these incidents in the unfair labor practice charge.

         The union argued the action was preempted because the NLRA arguably prohibited the union conduct Walmart was seeking to enjoin. The union did not argue its conduct was arguably protected under the NLRA. The trial court rejected the preemption argument in advance of preliminary injunction proceedings. In November 2013, following a seven-day evidentiary hearing, the court found the public had a limited invitation to Walmart's California stores to shop, that the invitation did not transform the stores into a public forum, and the union had unlawfully trespassed inside Walmart's stores across California. The court further concluded the union and its supporters committed and threatened to commit "unlawful acts, " including "blocking ingress and egress and aisle ways and customers' mobility inside the store, littering balloons and flyers throughout stores, and blowing air horns, screaming and conducting flash mobs.... As part of Defendants' use of flash mobs inside Walmart's stores, Defendants have gathered and organized demonstrators who have shown up unannounced and entered Walmart's stores to demonstrate by marching around the store, performing loud songs and yelling chants or slogans and exiting the store." The court found the union's conduct substantially or irreparably harmed Walmart and the store had no adequate remedy at law.

         The trial court issued a preliminary injunction prohibiting the union, and persons acting in concert with the union (excluding Walmart employees), from entering Walmart's stores to engage in "unlawful activities, such as picketing, patrolling, marching, parading, ‘flash mobs, ' demonstrations, handbilling, solicitation, manager confrontations, or customer disruptions...." The injunction does not prohibit union representatives from accompanying a Walmart employee in discussions with a manager to discuss labor conditions.^[5]

         In September 2014, the parties stipulated to the issuance of a permanent injunction with terms identical to those of the preliminary injunction, to expedite appellate review. Pursuant to the parties' stipulation, the trial court entered judgment in favor of Walmart on all causes of action in the complaint. This appeal timely followed. The sole issue on appeal is whether the NLRA preempts Walmart's trespass action.

         DISCUSSION

         I. General Principles of NLRA Preemption

         Section 7 of the NLRA "establishes the right of workers to organize and engage in collective action concerning conditions of employment. (29 U.S.C. § 157.)" (Inter-Modal Rail Employees Assn v. Burlington Northern & Santa Fe Ry. Co. (1999) 73 Cal.App.4th 918, 924.) Section 8 of the NLRA prohibits both employers and labor organizations from interfering with these "Section 7" rights, including the right of employees to refrain from participating in collective action. (29 U.S.C. §§ 157, 158.) Walmart's unfair labor practice charge invoked Section 8(b)(1)(A), which provides it is an unfair labor practice for a labor organization or its agents "to restrain or coerce employees in the exercise of the rights guaranteed in section 157 of this title...."

         As set forth in San Diego Unions v. Garmon (1959) 359 U.S. 236 (Garmon), the NLRB has exclusive jurisdiction over disputes involving unfair labor practices, and "state jurisdiction must yield" when state action would regulate conduct governed by the NLRA. (Id. at pp. 244-245.) While the "‘Garmon guidelines [are not to be applied] in a literal, mechanical fashion, ' [citation], if the conduct at issue is arguably prohibited or protected otherwise applicable state law and procedures are ordinarily pre-empted. [Citation.] When, however, the conduct at issue is only a peripheral concern of the Act or touches on interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, it could not be inferred that Congress intended to deprive the State of the power to act, we refuse to invalidate state regulation or sanction of the conduct." (Operating Engineers v. Jones (1983) 460 U.S. 669, 676 (Jones); Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1813-1814.) The exception for conduct that touches on interests deeply rooted in local feeling has since been referred to as the "local interest" exception.

         Whether the NLRA preempts a cause of action is an issue of law we review de novo. (Hillhaven Oakland Nursing Etc. Center v. Health Care Workers Union (1996) 41 Cal.App.4th 846, 853 (Hillhaven).) A court first determines whether the "conduct that the State seeks... to make the basis of liability is actually or arguably protected or prohibited by the NLRA." (Jones, supra, 460 U.S. at p. 676.) If, despite being arguably protected or prohibited by the NLRA, the conduct at issue involves a deeply-rooted local interest, the question of whether the state action is allowed "involves a sensitive balancing of any harm to the regulatory scheme established by Congress, either in terms of negating the Board's exclusive jurisdiction or in terms of conflicting substantive rules, and the importance of the asserted cause of action to the state as a protection to its citizens." (Ibid.)

         II. The Trespass Action Is Not Preempted Because the "Local Interest" Exception Applies

         The union does not contend the challenged conduct is arguably protected under the NLRA.^[6] Instead, the union asserts the NLRA "arguably prohibits" the union's challenged conduct, triggering preemption. Although Walmart appears to assert some portions of the union's conduct fall outside of Garmon preemption rules, it too argues at least some of the union's conduct is arguably prohibited under the NLRA. But that the NLRA arguably prohibits the challenged conduct does not end our analysis.^[7]

         Under Garmon guidelines, state action concerning arguably prohibited conduct is "ordinarily pre-empted." (Jones, supra, 460 U.S. at p. 676.) In other words, there is a presumption of preemption. (Belknap, Inc. v. Hale (1983) 463 U.S. 491, 498.) Yet, as noted above, when the "conduct at issue is only a peripheral concern of the Act, " or "touches [on] interests so deeply rooted in local feeling and responsibility" that we cannot infer that Congress intended to deprive the state of the ability to regulate or sanction the conduct, the presumption of preemption is overcome. (Jones, supra, 460 U.S. at p. 676.) We conclude the local interest exception applies in this case.

         A. Sears Governs This Case

         To evaluate this issue, we turn to Sears, Roebuck & Co. v. Carpenters (1978) 436 U.S. 180 (Sears), in which the high court established an analytical framework to determine Garmon preemption issues, including the application of the local interest exception, in the context of a California trespass case. In Sears, the union sought to induce the retailer Sears to use union labor for carpentry work at one of its department stores in Chula Vista. The union established picket lines on Sears's privately-owned walkways next to the store and in the adjacent parking area. The picketing was "peaceful and orderly." (Id. at p. 182.) Sears filed a complaint in superior court seeking injunctive relief for trespass. The trial court issued a preliminary injunction. (Id. at p. 183.)

         The California Supreme Court subsequently concluded the NLRA preempted state court jurisdiction over the trespass claim. The court reasoned the picketing was arguably protected as a concerted activity under Section 7-picketing for employees' mutual aid or protection-and was also arguably prohibited under section 8(b)(7)(C) as unlawful recognitional picketing. (Sears, Roebuck & Co. v. San Diego County Dist. Council of Carpenters (1976) 17 Cal.3d 893, 898-900.) The court rejected the application of the local interest exception. It reasoned the United States Supreme Court had not created a judicial exception to Garmon to "withdraw from the exclusive jurisdiction of the Board those peaceful activities... which, although arguably subject to section 7 or section 8 of the Act, are nevertheless trespassory in nature." (17 Cal.3d at p. 905.) The court noted cases cited in Garmon regarding the local interest exception involved mass picketing and violence. (17 Cal.3d at p. 904.) Following an earlier California Supreme Court case, the court explained: "‘[u]nlike the power to prevent violence and public disorder, the power to prohibit peaceful picketing that trespasses on the premises of employers involved in labor disputes would "leave the States free to regulate conduct so plainly within the aim of federal regulation...."' [Citation.]" (17 Cal.3d at p. 905.) Preemption was therefore required.

         The United States Supreme Court granted certiorari to consider "whether, or under what circumstances, a state court has power to enforce local trespass laws against a union's peaceful picketing." (Sears, supra, 436 U.S. at p. 184, fn. omitted.) The court also framed the question as "whether the arguable illegality of the picketing as a matter of federal law should oust the state court of jurisdiction to enjoin its trespassory aspects." (Id. at p. 190.)

         The Sears court set forth two guides for evaluating preemption, one for conduct the NLRA arguably prohibits, and one for conduct the NLRA arguably protects. We are concerned here with the approach for arguably prohibited conduct. The court affirmed that although a state suit based on arguably prohibited conduct is presumed preempted, the presumption is overcome if the state action "touches ‘interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that Congress had deprived the States of the power to act.' [Citation.]" (Sears, supra, 436 U.S. at pp. 194-195.) The court identified two factors that had warranted application of the local interest exception in prior cases: "First, there existed a significant state interest in protecting the citizen from the challenged conduct. Second, although the challenged conduct occurred in the course of a labor dispute and an unfair labor practice charge could have been filed, the exercise of state jurisdiction over the tort claim entailed little risk of interference with the regulatory jurisdiction of the Labor Board. Although the arguable federal violation and the state tort arose in the same factual setting, the respective controversies presented to the state and federal forums would not have been the same." (Id. at pp. 196-197, fn. omitted.)

         The court condensed these factors into a single "critical inquiry": "[W]hether the controversy presented to the state court is identical to... or different from... that which could have been, but was not, presented to the Labor Board. For it is only in the former situation that a state court's exercise of jurisdiction necessarily involves a risk of interference with the unfair labor practice jurisdiction of the Board which the arguably prohibited branch of the Garmon doctrine was designed to avoid." (Sears, supra, 436 U.S. at p. 197, fn. omitted; see Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am. (9th Cir. 2014) 768 F.3d 938, 953 (Retail Prop.) [High Court reduced factors warranting a departure from general preemption guidelines in local interest cases to a single test].)

         Applying this test to Sears's challenge to the union's peaceful trespassory conduct, the Court concluded the controversy Sears could have presented to the NLRB was not the same as that presented to the state court. The issue before the NLRB would have been "whether the picketing had a recognitional or work-reassignment objective; decision of that issue would have entailed relatively complex factual and legal determinations completely unrelated to the simple question whether a trespass had occurred." (Sears, supra, 436 U.S. at p. 198, fn. omitted.) The court characterized the dispute in state court as "limited. Sears asserted no claim that the picketing itself violated any state or federal law. It sought simply to remove the pickets from its property to the public walkways, and the injunction issued by the state court was strictly confined to the relief sought. Thus, as a matter of state law, the location of the picketing was illegal but the picketing itself was unobjectionable." (Id. at p. 185.) As a result, "whether the picketing had an objective proscribed by federal law was irrelevant to the state claim. Accordingly, permitting the state court to adjudicate Sears' trespass claim would create no realistic risk of interference with the Labor Board's primary jurisdiction to enforce the statutory prohibition against unfair labor practices." (Id. at p. 198.)^[8]

         The "identical controversy" test has since been applied by numerous courts, including in California. (See Service by Medallion, Inc. v. Clorox Co., supra, 44 Cal.App.4th at pp. 1814-1816; Hillhaven, supra, 41 Cal.App.4th at pp. 856-857; Kelecheva v. Multivision Cable T.V. Corp. (1993) 18 Cal.App.4th 521, 527-528.) For example, in Kaplan's Fruit & Produce Co. v. Superior Court, supra, 26 Cal.3d 60 (Kaplan's), the court considered whether the Agricultural Labor Relations Act (ALRA), which is modeled on the NLRA, preempted claims that union pickets were obstructing ingress and egress to the plaintiff's wholesale facility. (Id. at p. 65.)

         The Kaplan's court concluded the obstruction of access was clearly an unprotected activity, rendering the Sears "arguably prohibited" analysis relevant. (Kaplan's, supra, 26 Cal.3d at pp. 70-71.) The court reasoned the issue that would be presented to the NLRB in an obstruction case is "different from, and far narrower than, the issue which may be presented to the superior court." (Id. at p. 71.) Picketing that obstructs access may be an unfair labor practice to the extent it "restrains or coerces nonstriking employees in the exercise of their right to refrain from concerted activities." (Ibid.) But the court found that while there was some evidence the union's picket line interfered with Kaplan's nonstrking employees, "that obstruction is a minor facet of the controversy; the principal objective of the pickets, and of the alleged interference to access, was to persuade prospective customers not to do business with Kaplan's." (Id. at pp. 71-72, italics and fn. omitted.) The court concluded blockage of customer access is not in itself an unfair labor practice under the ALRA. Local court decisions enjoining obstructions to access thus "do not threaten significant interference with labor board adjudications." (Id. at p. 75; see also Bertuccio v. Superior Court (1981) 118 Cal.App.3d 363, 369-371.)

         As in Sears and Kaplan's, this case presents a state claim challenging union conduct the NLRA arguably prohibits, since engaging in indoor demonstrations could under some circumstances constitute an unfair labor practice. (See District 65, Retail, Wholesale & Department Store Union (1966) 157 NLRB 615 (District 65), enforced NLRB v. District 65, Retail, Wholesale & Dept. Store Union (2d Cir. 1967) 375 F.2d 745.) Yet, Sears indicates peaceful trespass may be an issue deeply rooted in local feeling such that the local interest exception to preemption may apply.

         We reject the union's contention that the local interest exception only applies to violent trespass. This contention is inconsistent with Sears which not only applied the exception to a state action challenging peaceful trespassory picketing, but also implicitly rejected the California Supreme Court's ruling concluding state courts had no power to prohibit peaceful trespassory picketing arising out of a labor dispute and limiting the local interest exception to instances of mass picketing or violence. (See Retail Prop. supra, 768 F.3d at p. 956 ["Sears... confirmed what the Court said in Garmon... Trespass is one ‘threat[] to public order' that is not totally preempted by the NLRA."]; Hillhaven, ...