805 F.2d 1353
105 Lab.Cas. P 55,669
FRESH INTERNATIONAL CORP., Bruce Church, Inc.; Retirement
Administrative Committee of the Fresh International Corp.
Retirement Plan; and Retirement Administrative Committee of
the Bruce Church, Inc. Retirement Plan, Plaintiffs-Appellees,
v.
AGRICULTURAL LABOR RELATIONS BOARD; Casimro U. Tolentino;
Herbert A. Perry; John P. McCarthy; Ronald L.
Ruiz; James Wolpman; United Farm
Workers of America; AFL-CIO,
Defendants-Appellants.
No. 84-6351.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted June 4, 1985.
Decided Dec. 9, 1986.
Kenneth E. Ristau, Jr., Gibson, Dunn & Crutcher, Newport Beach, Cal., Paul J. Goldberg, Susan B. Kaufman, Goldenbock & Barell, New York City, for plaintiffs-appellees.
Daniel G. Stone, Nancy C. Smith, Dep. Sol., Cathy Christian, Agricultural Labor Relations Bd. Sacramento, Cal., for defendants-appellants.
Appeal from the United States District Court for the Southern District of California.
Before SCHROEDER and FLETCHER, Circuit Judges, and ROSENBLATT, District Judge.
FLETCHER, Circuit Judge:
The Agricultural Labor Relations Board of the State of California (ALRB or the Board) appeals from the district court's summary judgment order, holding that California's Agricultural Labor Relations Act, Cal.Lab.Code Secs. 1140-1166.3 (West Supp.1986), is preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001-1461 (1982) (ERISA), to the extent that it may be applied in a way that affects employee benefit plans. We hold that the district court should have abstained from hearing this action on the merits under the doctrine of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971).
I. BACKGROUND
Bruce Church, Inc. (BCI), a subsidiary of Fresh International Corp., is a major farming and agricultural corporation, with its principal operations in California and Arizona. BCI's field workers have been represented by the United Farm Workers (UFW or the Union) since 1977.
BCI and UFW began negotiations for a new collective bargaining agreement in December 1978, to replace the agreement expiring on December 31. The negotiations went poorly, as did the UFW's negotiations with other employers in the industry. In February 1979, several of the other growers declared bargaining impasses and instituted unilateral wage increases. In July, BCI implemented its wage proposal and put into effect its own medical plan, although no formal impasse had been declared in its negotiations with the UFW. Later, in February 1980, BCI implemented all of its pending economic proposals, including wages, cost-of-living adjustments, a retirement plan, and a pension plan.
Beginning in May 1979, the UFW filed a series of unfair labor practice charges against BCI with the Board, alleging bad faith bargaining under California's Agricultural Labor Relations Act, Cal.Lab.Code Sec. 1153 (West Supp.1986). One of the UFW's allegations was that BCI's unilateral inclusion of agricultural employees in its retirement, pension, and medical plans constituted an unfair labor practice. BCI responded that any allegations of unfair labor practices relating to its employee benefit plans were preempted by section 514(a) of ERISA, 29 U.S.C. Sec. 1144(a) (1982).
The Board's general counsel issued a complaint against BCI in July 1979. Between February 2 and June 15, 1981, a state administrative law judge (ALJ) conducted hearings. On May 12, 1982, the ALJ issued his recommended decision, finding that BCI had engaged in bad faith bargaining. He recommended an order requiring BCI to rescind the changes it had made in wages and employee benefits, if the UFW so requested, and to make whole any employees who suffered losses as a result of such changes.
While the hearings before the ALJ were taking place, on February 5, 1981, BCI filed this action in federal district court, seeking a declaration that the ALRA is preempted by ERISA and further seeking an injunction to prevent the Board from taking any action that related to BCI's employee benefit plans. The following day, BCI applied for a temporary restraining order to enjoin the Board from inquiring into the administration or maintenance of BCI's employee benefit plans and to prevent the Board from subpoenaing records relating to BCI's plans. On March 5, the district court denied the request for a temporary restraining order.
The district court action then lay dormant for almost three years. After the ALJ issued his recommended decision, BCI appealed that decision to the full Board. In November 1983, while the state agency appeal was still pending, BCI filed a motion for summary judgment in federal district court. The Board responded to BCI's summary judgment motion, and, in February 1984, filed its own cross-motion for summary judgment.
In the meantime, on December 27, 1983, the Board affirmed the findings and conclusions of the ALJ and adopted his recommended order. On January 24, 1984, BCI petitioned the California Court of Appeal for review of the ALRB's decision and order. See Cal.Lab.Code Sec. 1160.8 (West Supp.1986).
On March 3, 1984, the district court heard oral argument on the cross-motions for summary judgment. On July 6, the court issued its order, granting BCI's motion, denying the Board's, and permanently enjoining enforcement of the Board's decision with respect to any employee benefit plan. The ALRB timely appealed to this court.
In March 1986, while the case still was under submission in this court, the California Court of Appeal held that BCI had not engaged in bad faith bargaining up to February 5, 1980. The court annulled the Board's order, and remanded the case for a factual determination regarding whether the parties had reached impasse on February 27 and on September 1, 1980, when BCI unilaterally changed its employees' wages, hours, and working conditions. The appeals court considered this factual finding critical to a determination of whether BCI's actions constitute a per se violation of the ALRA, and evidence of bad faith bargaining. In June 1986, the California Supreme Court denied the UFW's petition for review of that decision.
II. DISCUSSION
We first inquire whether the district court should have abstained and dismissed the action under the principles of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), thereby giving precedence to the ongoing state enforcement proceeding.
Younger "and its progeny espouse a strong federal policy against federal-court interference with pending state judicial proceedings, absent extraordinary circumstances." Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423, 431, 102 S.Ct. 2515, 2521, 73 L.Ed.2d 116 (1982). "The policy rests on notions of comity and respect for state functions and was born of the concern that federal court injunctions might unduly hamper state criminal prosecutions." Champion International Corp. v. Brown, 731 F.2d 1406, 1408 (9th Cir.1984) (citing Younger v. Harris, 401 U.S. at 44, 91 S.Ct. at 750). These considerations of comity and federalism dictate that "the normal thing to do when federal courts are asked to enjoin pending proceedings in state courts is not to issue such injunctions." Ohio Civil Rights Commission v. Dayton Christian Schools, Inc., --- U.S. ----, 106 S.Ct 2718, 2723, 91 L.Ed.2d 512 (1986) (quoting Younger, 401 U.S. at 45, 91 S.Ct. at 751) (emphasis in Dayton ).
When a case falls within the proscription of Younger, a district court must dismiss the federal action. See Juidice v. Vail, 430 U.S. 327, 337, 97 S.Ct. 1211, 1218, 51 L.Ed.2d 376 (1977). The Supreme Court has stated expressly that "[w]here a case is properly within [the Younger ] category of cases, there is no discretion to grant injunctive relief." Colorado River Water Conservation District v. United States, 424 U.S. 800, 816 n. 22, 96 S.Ct. 1236, 1246 n. 22, 47 L.Ed.2d 483 (1976).
Whether Younger abstention applies is a mixed question of fact and law. The inquiry primarily involves application of an established standard to a set of facts, but also implicates important considerations of federalism and comity. Thus, under United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984), we review de novo a district court's refusal to abstain under Younger. See Goldie's Bookstore, Inc. v. Superior Court, 739 F.2d 466, 468 (9th Cir.1984); accord Traughber v. Beauchane, 760 F.2d 673, 675-76 (6th Cir.1985).
Although Younger involved criminal proceedings, the Supreme Court has stated clearly that concerns of comity and federalism counsel restraint in civil proceedings as well, when important state interests are at stake. Dayton, 106 S.Ct. at 2723; see also Moore v. Sims, 442 U.S. 415, 423, 99 S.Ct. 2371, 2377, 60 L.Ed.2d 994 (1979) ("[t]he basic concern--that threat to our federal system posed by displacement of state courts by those of the National Government--is also fully applicable to civil proceedings in which important state interests are involved."); Trainor v. Hernandez, 431 U.S. 434, 444, 97 S.Ct. 1911, 1918, 52 L.Ed.2d 486 (1977) (federal court should have abstained in light of pending state court proceedings to collect fraudulently obtained welfare benefits; state's interest in protecting the fiscal integrity of its public assistance programs is important); Juidice v. Vail, 430 U.S. 327, 334, 97 S.Ct. 1211, 1217, 51 L.Ed.2d 376 (1977) ("The principles of Younger and Huffman are not confined solely to the types of state actions which were sought to be enjoined in those cases ... 'the more vital consideration' behind the Younger doctrine ... lay not in the fact that the state criminal process was involved but rather in 'the notion of comity' ") (quoting Huffman v. Pursue, Ltd., 420 U.S. 592, 601, 95 S.Ct. 1200, 1206, 43 L.Ed.2d 482 (1975)).
In Dayton, the Supreme Court confirmed that Younger principles also apply to pending state administrative proceedings that involve important state interests. 106 S.Ct. at 2723 & n. 2; see also Middlesex, 457 U.S. at 433-34, 102 S.Ct. at 2522 (abstaining in favor of bar disciplinary proceedings because Court found them to be "judicial in nature"); Williams v. Red Bank Board of Education, 662 F.2d 1008, 1016-17 (3d Cir.1981) (abstaining in favor of administrative proceedings); McDonald v. Metro-North Commuter Railroad Division, 565 F.Supp. 37, 40 (S.D.N.Y.1983) (same).
The Supreme Court in Dayton expressly criticized this court's holding in Martori Brothers Distributors v. James-Massengale, 781 F.2d 1349 (9th Cir.) amended, 791 F.2d 799 (9th Cir.1986), on this point. In Martori, we posited that a district court need not abstain in deference to administrative proceedings before the ALRB, because such proceedings are not "judicial" in nature. Martori, 781 F.2d at 1354. We further concluded that, even assuming that the proceedings were judicial, abstention would be inappropriate because the ALRB could not consider the parties' preemption arguments. Id. n. 9.
In Dayton, 106 S.Ct. at 2723 & n. 2, the Supreme Court held the opposite, and observed that "[t]he lower courts have been virtually uniform in holding that the Younger principle applies to pending state administrative proceedings in which an important state interest is involved (citations omitted). Only the recent case of Martori Bros...., departs from this position, and it does so without analysis."
The Dayton court was unpersuaded by the argument that the state administrative agency, the Ohio Civil Rights Commission, was without authority to consider the federal constitutional claims raised. The Court held that "it is sufficient ... that constitutional claims may be raised in state court judicial review of the administrative proceeding." Id. at 2724.
Thus, Dayton clearly establishes that state administrative proceedings, such as those of the ALRB, are entitled to the same deference from the federal courts as are state judicial proceedings, provided that the traditional prerequisites for application of the Younger doctrine have been met.
Under the three-pronged test announced by the Supreme Court in Middlesex, 457 U.S. at 432, 102 S.Ct. at 2521, and applied in Dayton, 106 S.Ct. at 2723-24, abstention is appropriate in favor of a state proceeding if (1) the state proceedings are ongoing; (2) the proceedings implicate important state interests; and (3) the state proceedings provide an adequate opportunity to raise federal questions. Middlesex, 457 U.S. at 432, 102 S.Ct. at 2521.
A. Ongoing State Proceedings
Abstention is required only when the state proceedings have been initiated "before any proceedings of substance on the merits have taken place in federal court." Hicks v. Miranda, 422 U.S. 332, 349, 95 S.Ct. 2281, 2292, 45 L.Ed.2d 223 (1975); See Adultworld Bookstore v. City of Fresno, 758 F.2d 1348, 1350 (9th Cir.1985).
In this case, the state proceedings were underway before initiation of the federal proceedings. The UFW filed unfair labor practice charges against BCI with the Board. The Board's general counsel issued a complaint against BCI in July 1979. The state ALJ conducted hearings between February and June 1981. It was not until February 1981 that BCI filed its action in federal district court.
It was more than three years later, in March 1984, that the court heard arguments on the cross-motions for summary judgment, which constituted the first proceedings of substance on the merits in federal court. See Doran v. Salem Inn, Inc., 422 U.S. 922, 929, 95 S.Ct. 2561, 2566, 45 L.Ed.2d 648 (1975) (abstention required because, when state action began, "the federal litigation was in an embryonic stage and no contested matter had been decided").
Accordingly, we conclude that the state proceedings were underway before the federal proceeding was initiated and had moved beyond the "embryonic stage." See Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 238, 104 S.Ct. 2321, 2328, 81 L.Ed.2d 186 (1984) (issuance of a preliminary injunction after a hearing was a ("substantial federal court action"); Adultworld Bookstore, 758 F.2d 1350-51 (extended evidentiary hearing on preliminary injunction motion was a substantial proceeding).
B. Important State Interests
Younger abstention is appropriate only where important state interests would be affected by the federal action. Dayton, 106 S.Ct. at 2723. We must decide whether the protection of collective bargaining for California's farm laborers is an important state interest. The Supreme Court has noted that the federal labor laws were "framed with an awareness that refusals to confer and negotiate had been one of the most prolific causes of industrial strife." Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 211, 85 S.Ct. 398, 403, 13 L.Ed.2d 233 (1964). Collective bagaining is a " 'valuable prophylatic,' " against such strife. Ford Motor Co. v. NLRB, 441 U.S. 488, 502 n. 14, 99 S.Ct. 1842, 1852 n. 14, 60 L.Ed.2d 420 (1979) (quoting Westinghouse Electric Corp. v. NLRB, 369 F.2d 891, 895 (4th Cir.1966)). The ALRA, which was patterned after the National Labor Relations Act, see Thomas S. Castle Farms, Inc. v. Agricultural Labor Relations Board, 140 Cal.App.3d 668, 673, 189 Cal.Rptr. 687, 690 (1983), represents an equally strong policy favoring collective bargaining in agriculture, an area excluded from coverage of the NLRA, see 29 U.S.C. Sec. 152(3) (1982).
The California Legislature's own words leave no doubt concerning the magnitude of the state's interest:
Sec 1. In enacting this legislation the people of the State of California seek to ensure peace in the agricultural fields by guaranteeing notice for all agricultural workers and stability in labor relations.
This enactment is intended to bring certainty and a sense of fair play to a presently unstable and potentially volatile condition in the state. The Legislature recognizes that no law in itself resolves social injustice and economic dislocations.
However, in the belief the people affected desire a resolution to this dispute and will make a sincere effort to work through the procedures established in this legislation, it is the hope of the Legislature that farm laborers, farmers, and all the people of California will be served by the provisions of this Act.
Agricultural Labor Relations Act of 1975, Cal.Stats.1975, Third Extraordinary Session, c. 1 Sec. 1 at 4013. See also Martori, 791 F.2d at 800 (recognizing the substantial nature of the state's interest in agricultural labor relations).
In Martori, we noted that "the Supreme Court ha[d] not yet provided any type of analytical framework for determining whether, for abstention purposes, a vital state interest is present." 781 F.2d at 1354. Based on our analysis of the Supreme Court's and this circuit's precedents, we were hesitant to expand the Younger doctrine beyond those cases in which the state proceedings were either criminal or quasi-criminal in nature, or which involved "the fundamental operation of the state's court system." Id. 781 F.2d at 1354-55; 791 F.2d at 800. Our reluctance was premised upon our perception of this court's "unflagging obligation" to exercise federal jurisdiction. Id. at 791 F.2d at 800 (quoting Miofsky v. Superior Court, 703 F.2d 332, 338 (9th Cir.1983)).
In Dayton, 106 S.Ct. at 2723, the Supreme Court held that the district court should have abstained in light of the ongoing state proceedings of the Ohio Civil Rights Commission. The Court stated unequivocally that "[w]e have no doubt that the elimination of prohibited sex discrimination is a sufficiently important state interest to bring the present case within the ambit of [cases that have required abstention]."
Thus, Dayton has provided this court with some critical guidance that was unavailable to the Martori court. The administrative proceedings that the Ohio Civil Rights Commission initiated to eradicate sex discrimination in employment clearly fall outside of the narrow abstention categories that we articulated in Martori. In addition, Dayton cited with approval other courts' decisions that have held important state interests to exist under a much broader range of circumstances than Martori approved. See Williams v. Red Bank Board of Education, 662 F.2d at 1018 (abstaining in deference to teacher tenure termination proceedings; state's interest in education is important); McDonald, 565 F.Supp. at 40 (state interest in police officer disciplinary proceedings for making false statements).
California's interest in ensuring peaceful collective bargaining and in protecting farm laborers' freedom of association, is entitled to the same respect and recognition as a state's interest in promoting fair employment practices, teacher discipline and police integrity.
In view of the Supreme Court's holding in Dayton, and its language that expressly questions Martori 's soundness, we conclude that California's interest in protecting the collective bargaining process in the agricultural arena through enforcement of the ALRA is substantial within the meaning of Younger.
BCI counters that no important state interest is involved because the ALRA is preempted by ERISA, and a state cannot have a substantial state interest in enforcing an invalid law. BCI relies primarily on our decision in Champion International Corp. v. Brown, 731 F.2d 1406 (9th Cir.1984).
In Champion, the Montana Human Rights Commission found that portions of Champion's pension plans violated Montana's age discrimination laws because the plans did not provide pension credit for service up to age seventy; Champion permitted credit only to age sixty-five. The Commission ordered Champion to credit retirees' accounts for service after age sixty-five and to cease administering the plan in violation of Montana law. Champion filed suit in federal court, seeking a declaration that the Montana law and the Commission's order were preempted by ERISA, and an injunction against enforcement of the administrative order. The district court dismissed the action under the Younger doctrine in favor of a parallel appeal of the administrative order in state court. We reversed. Id. at 1408-09.
Montana asserted two states interests in Champion: "(1) regular operation of the state's administrative and judicial processes, and (2) enforcement of state laws against age discrimination." Id. at 1408. We rejected both. We concluded that any interference with Champion's federal court action was not substantial, because "[Champion] challenge[d] only one commission order, not the whole procedure." Id. We further held that Montana did not have a substantial interest in enforcing its age discrimination laws, because those laws were preempted by ERISA. Id. at 1408-09.
We did not say in Champion that abstention never is appropriate when a preemption claim is raised. Nor did we hold that a determination of whether to abstain must turn on whether a state law is preempted. See Worldwide Church of God, Inc. v. California, 623 F.2d 613, 616 (9th Cir.1980) (noting that this reasoning, if accepted, "would render Younger a nullity").
Rather, Champion was a case in which preemption was readily apparent. See Baggett v. Department of Professional Regulation, 717 F.2d 521 (11th Cir.1983); cf. Aluminum Co. of America v. Utilities Commission, 713 F.2d 1024, 1029-30 (4th Cir.1983) (holding that Burford abstention, Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), is inappropriate if a challenged state action "clearly conflicts with preemptive federal law" and this is "readily discernible from the pleadings"), cert. denied, 465 U.S. 1052, 104 S.Ct. 1326, 79 L.Ed.2d 722 (1984). Champion was decided shortly after the Supreme Court held in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100, 103 S.Ct. 2890, 2901-02, 77 L.Ed.2d 490 (1983), that New York's Human Rights Law and Disability Benefits Law were preempted by ERISA. Like those laws, the Montana age discrimination laws at issue in Champion imposed direct obligations on pension trusts to pay certain benefits. See 731 F.2d at 1407. Thus, the Montana law at issue in Champion fell squarely within the holding of Shaw, and, just as the Supreme Court had "no difficulty" finding preemption in Shaw, 463 U.S. at 96, 103 S.Ct. at 2899, we had even less difficulty finding preemption in Champion.
In the case before us, preemption is not readily apparent. The Board makes a persuasive argument that the ALRA does not purport to regulate the terms and conditions of employee benefit plans. See Lane v. Goren, 743 F.2d 1337, 1339 (9th Cir.1984); 29 U.S.C. Sec. 1144(c)(2)(1982); see also Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). Unlike previous cases in which ERISA preemption was found, neither the ALRA nor the Board's order directly imposes substantive requirements on employee benefit plans. Moreover, if California's Act were preempted by ERISA, it would create an anamolous situation: industrial employees' rights to bargain collectively concerning employee benefit plans would be protected under the NLRA, but agricultural employees' rights would not be protected under state counterparts to that statute. It would be difficult to conclude that Congress intended this result.
California has an important state interest in this case, and because preemption is not "readily apparent" on this record, we cannot say that California's interest is superseded by preemptive federal law.
C. Opportunity to Raise Federal Claim
Our final concern is whether BCI has or had an adequate opportunity to raise its preemption defense in the state proceeding.
The California Court of Appeal, in a proceeding brought to review an ALRB order, is empowered "to make or enter a decree enforcing, modifying, and enforcing as so modified, or setting aside in whole or in part, the order of the board." Cal.Lab.Code Sec. 1160.8. The statute contains no restrictions on the court's power to hear questions of constitutionality or preemption; it simply states that the court may enter such relief as it deems "just and proper." Id. Thus, under Dayton, the state proceedings in this case easily satisfy this prong of the Middlesex test. Dayton, 106 S.Ct. at 2724 (as long as the federal plaintiff's claims may be raised in state court review of administrative proceeding, the Middlesex test is satisfied).
BCI urges that it has not raised ERISA preemption before the California Court of Appeal. Instead, the parties advised the state court that the Board's order might have to be modified depending on the outcome of the federal litigation. In its opinion, the state court advised that on remand, "[t]he Board may also choose to modify its remedial order to bring it into conformity with Fresh International Corp., et al. v. ALRB, et al., ... as finally resolved" by the federal court. BCI did, however, raise the preemption issue before the ALJ and the Board and it clearly could have presented it to the court of appeal in its petition for review. All that Middlesex requires is an opportunity to present the federal issue, see 457 U.S. at 435, 102 S.Ct. at 2523; see also Juidice v. Vail, 430 U.S. 327, 337, 97 S.Ct. 1211, 1218, 51 L.Ed.2d 376 (1977), BCI has had such an opportunity.III. CONCLUSION
The district court should have abstained in favor of the state judicial proceedings and should have dismissed this action. We reverse and remand to the district court to allow it to do so now.
REVERSED and REMANDED with directions to dismiss.