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The question of whether states can keep their public funds out of contractors’ union spats is apparently a tough one to answer. After striking down a California law preventing state funds from being used to oppose or support union activity last year, a three-judge panel of the 9th U.S. Circuit Court of Appeals withdrew that decision on May 13. The court said the same panel would issue a new opinion at a later date. “We’re cautiously optimistic,” said Angela Sierra, a supervising deputy attorney general defending the state against a challenge by several business groups. While union lawyers were heartened by the decision, there was widespread befuddlement over a related development: On May 17, a federal court in New York threw out a similar state statute there. That opinion, from the Northern District of New York, relied largely on the 9th Circuit’s withdrawn ruling. The New York court apparently did not realize the opinion had been withdrawn. The California case, U.S. Chamber of Commerce v. Lockyer, 364 F.3d 1154, centered on a 2000 law banning contractors from using public funds to support or oppose unions. Employers rarely support unions, so labor organizations supported the bill, arguing that state money should not be used to keep workers from organizing. “Unions believe there are nursing homes, for instance, receiving state money and using state money to oppose unions rather than take care of patients,” said Scott Kronland, a lawyer with Altshuler, Berzon, Nussbaum, Rubin & Demain representing the AFL-CIO, which intervened in the case on behalf of the state. Kronland’s opponents agree that nursing homes and other health care providers are among the businesses most affected by keeping state money out of labor disputes. “The unions wrote this law and are peddling it across the country, and not through altruism over how state funds are spent,” said Bradley Kampas, a partner in Jackson Lewis’ San Francisco office. He is the lead lawyer for the U.S. Chamber of Commerce and several other business groups in the case. “It basically forces employers to be silent in the face of union organizing,” he added. That’s a key issue, Kampas said, because the National Labor Relations Act gives employers the right to actively support or oppose unions; for this reason, he says, the state law is pre-empted. Union lawyers counter that employers are free to use other streams of money to beat back unions. Kampas became involved in the case through his role as a volunteer labor lawyer for the California Association of Health Facilities, a nursing home trade group that is a co-plaintiff in the case. The law is particularly important to health care providers — particularly nursing homes — since they receive a large amount of state funding and are currently the subject of an organizing campaign by California’s biggest union, the SEIU United Healthcare Workers West. “Given time, the UHW will be organizing anywhere from 10 to 30 homes at a time,” said William Sokol, the union’s general counsel and a partner with Weinberg, Roger & Rosenfeld. With less than 200 of the state’s 1,200 homes unionized, Sokol said, the campaign promises to go on for years. “Our assumption,” he said, “is that the state is feeding a steady stream of money to nursing homes that are using some of that money to keep the union out.” Regardless of which way the 9th Circuit eventually rules, there is no clear end in sight for the debate, the lawyers said, since unions and employers feel they have a strong stake in ultimate decision. “It could go to the Supreme Court,” Kampas said.

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