Metro Milwaukee v. Milwaukee County ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-2292
METROPOLITAN MILWAUKEE
ASSOCIATION OF COMMERCE,
Plaintiff-Appellant,
v.
MILWAUKEE COUNTY,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 01-C-0149—Lynn Adelman, Judge.
____________
ARGUED NOVEMBER 8, 2002—DECIDED APRIL 8, 2003
____________
Before POSNER, ROVNER, and WILLIAMS, Circuit Judges.
WILLIAMS, Circuit Judge. The Milwaukee County Board
of Supervisors enacted an ordinance that requires cer-
tain contractors doing business with the County to, among
other things, negotiate “labor peace agreements” with
unions that seek to organize their workplaces. The Metro-
politan Milwaukee Association of Commerce (MMAC)
sued the County, alleging that the ordinance is preempted
by the National Labor Relations Act, 29 U.S.C. §§ 151et seq., and violates the First Amendment. The district
court granted summary judgment in favor of the County,
finding that the case is not ripe for judicial review. Be-
2 No. 02-2292
cause we find that the controversy is fit for judicial re-
view and MMAC would suffer concrete hardship if adju-
dication of its claims were delayed, we vacate the opinion
of the district court and remand the case for considera-
tion of the merits.
I. BACKGROUND
On September 28, 2000, the Milwaukee County Board
of Supervisors adopted Chapter 31 of the General Ordi-
nances of Milwaukee County, which applied to more than
sixty contracting agencies that provide certain services to
the County’s Departments of Human Services, Aging, and
Public Works. See MILWAUKEE COUNTY, WIS., GEN. ORDI-
NANCES ch. 31.02(a). The ordinance requires that, when a
union seeks to conduct a campaign to represent a contrac-
tor’s employees, the contractor must enter into a “labor
peace agreement” with the union. See id. at § 31.03(a). This
agreement must include, among other things, the follow-
ing provisions: (1) the employer will not “express to em-
ployees false or misleading information that is intended
to influence the determination of employee preference
regarding union representation”; (2) the union will not
“misrepresent to employees the facts and circumstances
surrounding their employment”; (3) the employer will
provide the union “with a complete and accurate list of
the names, addresses, and phone numbers of the employ-
ees”; (4) the employer will provide the union’s “members
and representatives timely and reasonable access to the
workplace for the purpose of providing employees with
information about the organization”; and (5) the union
will agree to forgo economic action against the employer
at the work site. Id. at § 31.02 (f)(1)-(6). All disputes over
the application of the “labor peace agreement” must
be submitted to final and binding arbitration. Id. at
§ 31.02(f)(5). If the employer fails to correct any viola-
No. 02-2292 3
tions found by an arbitrator, the County must either
terminate the employer’s contract or notify the employer
of the County’s intent to refuse to award future contracts
to that contractor during the next request for proposal
process. Id. at § 31.05(a)(1)-(2). The contractor must in-
clude in any contract with the County a pledge to abide
by the requirements of Chapter 31 even before a union
approaches an employer. Id. at § 31.03(a).
MMAC is a non-profit business association whose mem-
bers include contractors for the County whose contracts
are subject to the requirements of Chapter 31. No MMAC
member has been contacted by a union seeking to organ-
ize, and thus the “labor peace agreement” provisions of
Chapter 31 have not yet come into play with a MMAC
employer. Nevertheless, MMAC members have received
contract renewal offers from the County since the enact-
ment of Chapter 31, and those offers have required the
employers to agree to abide by the provisions of Chapter
31 and to provide for such an agreement in their con-
tracts with the County.
MMAC brought suit on behalf of its members, alleging
that Chapter 31 is preempted by the National Labor
Relations Act, 29 U.S.C. §§ 151 et seq., and violates its
members’ rights under the First Amendment. Both MMAC
and the County filed motions for summary judgment,
and the district court ruled in favor of the County, finding
that MMAC’s claims are not ripe for judicial review.
MMAC appeals.
II. ANALYSIS
MMAC suggests that the district court’s determination
that its claims are not ripe, which we review de novo, was
error because the ordinance is already being enforced
against its members. However, we do not agree with
MMAC’s characterization of the facts here. MMAC primar-
4 No. 02-2292
ily challenges the substantive provisions of Chapter 31,
requiring, among other things, negotiation of “labor peace
agreements” and restricting dissemination of false or
misleading information. Yet the provision of the ordinance
MMAC claims has been enforced against it—a requirement
that employers include an agreement to abide by Chapter
31 in their contracts with the County—is not germane to
the merits of MMAC’s underlying claim. No union has
approached a MMAC employer seeking to conduct an
organizing campaign, so the provisions of the ordinance
requiring them to take actions in response to such an
event have not been enforced against MMAC members.
Nonetheless, MMAC may still have a claim ripe for
review if it meets the requirements established by the
Supreme Court for a “pre-enforcement” suit, even though
the “labor peace agreement” provisions of Chapter 31 have
not yet been enforced against its members. See Abbott
Labs. v. Gardner, 387 U.S. 136, 149 (1967). In Abbott Lab-
oratories, drug manufacturers contested regulations
promulgated by the Food and Drug Administration that
required companies to print on their labels or other
printed materials the generic name of a prescription drug.
Id. The companies’ pre-enforcement challenge to the
rules was not based on actual damage incurred as a re-
sult of the regulations, but on the dilemma of having to
risk suspension or comply with the rules. Id. at 152. The
Court found the claims to be ripe and articulated that
ripeness determinations depend on “the fitness of the
issues for judicial decision and the hardship to the parties
of withholding court consideration.” Id. at 149.
MMAC easily establishes the first of the Abbott Laborato-
ries requirements—that the issues be fit for judicial re-
view. The merits of the case turn on whether Chapter 31
is preempted by federal law or violates the First Amend-
ment. The district court found, and we agree, that the
challenge raises “almost purely legal issues” that are
No. 02-2292 5
“quintessentially fit . . . for present judicial resolution.” 201
F. Supp.2d, 942, 949-50 (E.D.Wis. 2002) (quoting Com-
modity Trend Serv., Inc. v. Commodity Futures Trading
Comm’n, 149 F.3d 679, 687 (7th Cir. 1998)). The County
argues that Chapter 31’s application must be more clearly
fleshed out before it is fit for judicial review. Although
it would be useful to have the benefit of the County’s
interpretation of the terms or reach of the ordinance, the
absence of this information will not preclude judicial
review of the legal preemption and First Amendment
issues. Pac. Gas & Elec. Co. v. State Energy Res. Conserva-
tion & Dev. Comm’n, 461 U.S. 190, 201 (1983) (finding
preemption challenge fit for judicial review even though
the state had not yet interpreted the application of the
statute’s terms).
We next consider the hardship to MMAC of delaying
adjudication of its claims. See Abbott Labs., 387 U.S. at
149. MMAC may show hardship by demonstrating either
that: (1) enforcement is certain, only delayed, Texas v.
United States, 523 U.S. 296, 300 (1998); Crosetto v. State
Bar of Wisconsin, 12 F.3d 1396, 1403 (7th Cir. 1993); or
(2) even though enforcement is not certain, the mere threat
of future enforcement has a present concrete effect on
MMAC’s day-to-day affairs and “irremediably adverse
consequences” would flow from a later challenge. Reno v.
Catholic Social Servs., 509 U.S. 43, 57-58 (1993). The
County argues that it is impossible to determine whether
a union will ever seek to organize a MMAC-member work-
place, that enforcement of the ordinance is not certain,
and that Chapter 31 has no effect on the contractors’ day-to-
day affairs. MMAC points to the requirement that its mem-
bers acquiesce to Chapter 31 in order to receive County
contracts as a hardship sufficient to create a ripe claim.
Chapter 31, and the County’s actions following the
ordinance, plainly have had an “immediate and practical
impact” on MMAC employers. See Frozen Food Express v.
6 No. 02-2292
United States, 351 U.S. 40, 44 (1956).1 MMAC employers
must include in County contracts an agreement to abide
by Chapter 31 in order to maintain preexisting contracts
with the County or be considered for new contracts. The
County has refused to enter into contracts with MMAC
members that expressed their objection to Chapter 31 by
amending or striking Chapter 31 language from their
contract offers. In one instance, the County mistakenly
accepted a contract modified by a MMAC member to omit
the Chapter 31 language. When the strike-through of the
Chapter 31 language was discovered, the County advised
the contractor that it would not be paid for services ren-
dered under the original contract unless it signed a new,
unmodified contract as-is. In addition, in several cases
the County has delayed payment for services already
rendered by MMAC contractors under a preexisting con-
tract because that member refused to sign a new contract
containing Chapter 31 language. According to affidavits
signed by MMAC members Lutheran Social Services of
Wisconsin and Upper Michigan, Inc., Transit Express, Inc.,
and Lad Lake, Inc., after members refused to enter into
contracts with Chapter 31 terms, the County withheld
payment for services rendered under preexisting contracts.
As a result of these actions, MMAC employers have
been faced with a Hobson’s choice: accept Chapter 31 with
its future burdens or give up lucrative County contracts
that, in some cases, are the lifeline of their businesses.
When a party is faced with the choice between the disad-
vantages of complying with an ordinance or risking the
harms that come with noncompliance, we are satisfied that
1
Although MMAC does not argue that future enforcement of
the “labor peace agreement” provisions of Chapter 31 is certain,
we do find it noteworthy that, since the passage of Chapter 31,
unions have approached three different non-MMAC County
contractors and invoked the provisions of Chapter 31.
No. 02-2292 7
an actual “case or controversy” exists that allows a court
to act. See Smith v. Wisconsin Dept. of Agric., Trade, &
Consumer Prot., 23 F.3d 1134, 1141-42 (7th Cir. 1994)
(“[P]laintiff should not be required to face the Hobson’s
choice between forgoing behavior that he believes to be
lawful and violating the challenged law at the risk of
prosecution.”); see also Whitney v. Heckler, 780 F.2d 963,
968-69 n.6, (11th Cir. 1986) (“It is well established that
an issue is ripe for judicial review when the challenging
party is placed in the dilemma of incurring the disadvan-
tages of complying or risking penalties for noncompli-
ance.”). Now saddled with contracts containing an agree-
ment to abide by the burdensome ordinance, MMAC
members are placed in a worse position than they faced
pre-ordinance, even if, after a legal battle, the contrac-
tors successfully argue that they are not bound by that
agreement. As we have noted in the standing context, the
increased uncertainty and risk that accompanies such a
change constitutes an injury. Cf. Johnson v. Allsteel, 259
F.3d 885, 888-89 (7th Cir. 2001) (finding plaintiff suf-
fered injury when amendment to benefit plan created
increased risk for employee).
Other circuits have reached similar conclusions. In
Employers Association v. United Steelworkers, 32 F.3d
1297, 1299-1300 (8th Cir. 1994), an association of employ-
ers challenged a state statute making it an unfair labor
practice to hire permanent replacements for striking
workers. There, the union, which already had a relation-
ship with the employers, had not yet called a strike against
any member employer. Id. Nonetheless, the Eighth Circuit
found that the mere existence of the statute “permanently
and substantially shifts the terms of bargaining in favor
of the union, even in situations where the possibility of
a strike appears remote.” Id. at 1299. Employer mem-
bers are injured by the statute, the court found, even if
the union did not threaten to strike because “the economic
8 No. 02-2292
weapon of hiring permanent-replacement workers would
no longer form the backdrop to labor-management dis-
cussions.” Id. at 1300. Similarly, in Chamber of Commerce
v. Reich, 57 F.3d 1099, 1100 (D.C. Cir. 1995), the D.C.
Circuit found ripe a challenge to an Executive Order
allowing disqualification of any federal contractor that
permanently replaced striking workers. The court found
that the mere existence of the order “alters the balance
of bargaining power between employers and employees
by creating a disincentive for employers to hire replace-
ment workers and thereby depriving them of a significant
economic weapon in the collective bargaining process.”
Id. As in Employers Association and Chamber of Com-
merce, the presence of a promise to negotiate “labor peace
agreements” with prospective unions fundamentally weak-
ens MMAC members’ positions in the labor market.
Here, we reach the same conclusion as to MMAC’s
claims under the First Amendment. Its facial argument,
that the prohibition against expressing false or mislead-
ing information that is intended to influence an employ-
ee’s union vote violates the First Amendment, may be
addressed without reference to administration of the
ordinance. See Am. Booksellers Ass’n Inc. v. Hudnut, 771
F.2d 323, 327 (7th Cir. 1985). Here, as in Hudnut, “deferred
adjudication would produce tempered speech without
assisting in resolution of the controversy.” Id. We find
MMAC’s claims to be ripe for review.
We remand the case to the district court to consider,
in the first instance, whether Chapter 31 is preempted
by federal law or violates the First Amendment. See
Singleton v. Wulff, 428 U.S. 106, 120 (1976) (federal ap-
pellate court will generally not consider an issue not
passed upon below). Because the district court’s ruling
that the cause is not ripe truncated the development of
the issues in this case, we remand with the suggestion
that the district court encourage the parties to develop
No. 02-2292 9
facts underlying the County’s motivation for enacting the
ordinance. We do not find that “the proper resolution of
th[ese] issue[s] is beyond doubt” and “the benefit of a
district court hearing is minimal because proper resolution
of th[ese] issue[s] is clear,” AAR Int’l, Inc. v. Ninelias
Enters., S.A., 250 F.3d 510, 523 (7th Cir. 2001), so as to
warrant an exception to this general principle.
III. CONCLUSION
The judgment of the district court is VACATED and the
case is REMANDED for proceedings consistent with this
opinion.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-8-03