New York Telephone Company v. New York Department of Labor – Oral Argument – October 30, 1978

Media for New York Telephone Company v. New York Department of Labor

Audio Transcription for Opinion Announcement – March 21, 1979 in New York Telephone Company v. New York Department of Labor

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Warren E. Burger:

We’ll hear arguments first this morning in 961, New York Telephone Company against the New York State Department of Labor.

David D. Benetar:

Mr. Chief Justice —

Warren E. Burger:

Benetar, you may proceed whenever you’re ready.

David D. Benetar:

Mr. Chief Justice, may it please the Court.

This case brings up for review a judgment of the Court of Appeals for the Second Circuit, reversing United States District Court for the Southern District, judgment, after a trial, nine-day trial, holding that the York State Statute granting unemployment compensation to strikers was unconstitutional, the reversal reinstated the statute.

Under the statute, payments are made to strikers after seven weeks waiting period plus the one week required of all claimants for compensation.

The cost of unemployment insurance or compensation is borne by the employer against whom the strikers called.

After this trial, the District Court, and I’ll briefly, very briefly sketch the outstanding holdings or findings of the District Court.

The statute, he held, was in direct and substantial conflict with the national policy of neutrality on the part of the Government in so far as economic contest are concerned in the field of collective bargaining.

He held that the state intervention, on behalf of strikers causing employers to finance strikes against themselves.

Therefore, he held that the law was preempted by the National Labor Relations Act as amended, under the Supremacy Clause of the Constitution.

The substantial impact of New York’s law on bargaining and strikes was evidenced if indeed it is itself evident.

By documentary proof emanating in considerable measure from involved unions, those involved in the strike and major unions generally in the country.

From economic data, from expert opinion, and from employers’ views, and perhaps most concretely it was evident or evidenced, from the fact that $49 million in unemployment compensation was paid out in the course of the particular strike which led up to this lawsuit.

Now, the Second Circuit accepted the findings of the District Court.

They acknowledged the conflict, which the District Court found between the National Policy of Neutrality, and the state statute in question.

Nevertheless, although they said in their words that a positive expression of congressional intent is lacking, nevertheless they said we will reverse because by resorting to inference, we find that Congress intended to tolerate this conflict.

And that they saw this wholly area of payment to strikers as one inviting to state experimentation, on a state by state basis.

Uncertain and unambiguous legislative history, which we contend is all there is in this case, falls far short of the standard of clarity that’s required to justify an invasion of the neutrality principle.

The direct opposite of what the second —

William H. Rehnquist:

Mr. Benetar.

David D. Benetar:

Sorry.

William H. Rehnquist:

Would your position be the same if this were unemployment benefits for a lock out that was called by the employer?

David D. Benetar:

I think that on principle, the position would have to be the same.

But in the case of a lock out, I don’t — I’m not aware of the same kind of statistics concerning impact, concerning frequency for example, strikes and lock outs are just not comparable in numbers.

So, I would want to look into that question, because we in this case develop impact very thoroughly.

But on principle, as I said at the opening of my answer, I think they would both have to be controlled by the same considerations.

Warren E. Burger:

Would you think the same would be true of the welfare payments, which are financed by the taxpayers generally rather than the employer?

David D. Benetar:

No, I would not sir, I would not.

I see welfare —

Warren E. Burger:

How does it differ and that is — how does it differ in its impact on the neutrality principle that you were discussing?

David D. Benetar:

In a few ways, and what happened in this case sort of dramatizes the difference, because with 33,000 workers who collected unemployment compensation and 1,000 who applied for welfare.

Now, the difference that I see, the differences are manifold.

Number one, unemployment insurance is fixed, certain, and promised.

You know that it’s coming after a certain number of weeks.

You know the amount.

Number two, there is no needs test, because unemployment compensation wasn’t intended in this origins.

People — the Congress wasn’t thinking in these origins about needs, except those created by the great depression, when people were looking for work and couldn’t find it.

So, there was no — there’s no needs test and finally, if the Court pleases, welfare is not subsidized, paid for by the very employer against whom the strike is being called and maintained.

Warren E. Burger:

But its impact, how do you distinguish its impact on the neutrality principle?

David D. Benetar:

Well, it may — well, in our case, as Your Honor can see from the figures, the impacts of welfare and unemployment insurance were nowhere nearly equal.

The unemployment compensation far outweighed the impact of welfare.

And I think that there’s another aspect to this and that is that in the case of welfare, one would have to consider perhaps and weigh the interest of this state.

If it was out in out trying to protect welfare, not other the guise of unemployment insurance, but I do not see and I’ve never seen any proof to indicate impact to the extent that I have described to the Court in these few opening sentences.

If there were such proof, perhaps the situation might be changed.

But as far as I know and as far as I read the situation, they do stand on a different fitting — footing welfare and unemployment compensation.

John Paul Stevens:

Mr. Benetar, to distinguish welfare, what would you do if you had unemployment compensation financed by the state, $49 million paid by the state, instead of the employer?

David D. Benetar:

If it was what?

John Paul Stevens:

If it was financed by the state for general revenues rather than by the employer, would your case be different?

David D. Benetar:

It would be different but not in any way basically ordered.

It would be different because the direct subsidy by the employer involved, of course, underscores and emphasizes the extent of the invasion of the principle of neutrality.

You’re not only helping the striker, but you’re putting the burden on it — of it on the man against whom the strike is being called.

So in my judgment, if the only thing that was present were the payout of $49 million, I would still say that under unemployment compensation statute, this was an unlawful and preempted statute and that the payment should not be made.

Now, the — in a way I’ve said in my answers, what I’m about to say now, but I think it’s important, this case touches on the core of our national policy, this is no glancing blow.

It goes to the core of our national policy of neutrality, a policy leaving the resolution of economic disputes to the free play of economic forces.

Congress enacted this comprehensive policy because at this — as this Court has said, because of the perceived inadequacy of the states to create a comprehensive and equitable way of dealing with the adjustments between parties to labor disputes, that was the genesis of this, to get a federal law that would wipe out the state differences and they were wide and varied.

And make this principle of neutrality, a principle across the land.

Now, as we see the precise question here then, it is this, can Congress reasonably be said to have intended by the Social Security Act, to invite the states to re-enter through the vehicle of unemployment compensation, the field that Congress had just preempted five or six weeks before in the National Labor Relations Act, that’s the time relationship between the two acts.

And invite, did they intended then within five or six weeks invite the states to re-enter this preempted territory and substitute their several concepts of neutrality and of the balance of economic forces or power in place of the balance struck by Congress?

That’s what we see as the question in the case, and we think too a very considerable extent it answers itself.

David D. Benetar:

Now —

Thurgood Marshall:

Tell me —

David D. Benetar:

Yes, Mr. Justice Marshall?

Thurgood Marshall:

What is the fundamental change between 35 and now?

There’s no change at all, is there?

David D. Benetar:

Between 1935 and now?

Thurgood Marshall:

Yes sir.

David D. Benetar:

Yes, in the New York law, do you mean?

Thurgood Marshall:

No sir, in the whole factual situation, it said that there’s more money involved.

David D. Benetar:

Well, there are changes —

Thurgood Marshall:

But the relationship between New York and the labor market, and the Federal Government and the labor market, is the same as there was in ’35, is it not?

David D. Benetar:

Well, not entirely, because in ’35, we were in the — as Your Honor remembers, we were in a deep depression.

Thurgood Marshall:

Well, what is this we’re in now?

David D. Benetar:

Well, the president has characterized it otherwise, and I think that — I think that all of us feel that regardless of the untoward events that had been happening to us, this is not a deep depression.

Thurgood Marshall:

Well, I’m not selling apples yet.

David D. Benetar:

No, well and the threat is inimminent, for any of us, we don’t feel it the same way.

Thurgood Marshall:

No, that means seriously the relationship, this whole point was considered in ’35.

David D. Benetar:

The point that I’m making?

Thurgood Marshall:

It’s understood.

David D. Benetar:

No sir, with all deference, I would answer you —

Thurgood Marshall:

It wasn’t understood that the management would pick up this bill?

David D. Benetar:

No sir.

Thurgood Marshall:

That wasn’t understood in ’35?

David D. Benetar:

No sir, no.

Thurgood Marshall:

Well, what was understood in ’35?

David D. Benetar:

In 1935, there was no experience rating under the New York law.

In fact, if Your Honor pleases, payouts under the New York law weren’t made for a year or two after 1935, so nobody knew what the extent of the payments were then.

Thurgood Marshall:

All right, so ’36?

David D. Benetar:

Or ’37.

Thurgood Marshall:

Or ’37?

David D. Benetar:

I’m not sure of the date.

But the question of imposing the cost on the employer —

Thurgood Marshall:

Was what year?

David D. Benetar:

— through experience rating was at least ten years later and maybe more.

Thurgood Marshall:

And in that way, ever since?

David D. Benetar:

It has been that way ever since.

Thurgood Marshall:

And Congress has known it?

David D. Benetar:

Well, Congress has known it as a concept —

Thurgood Marshall:

Have you bothered to let Congress know it?

David D. Benetar:

I beg your pardon?

Thurgood Marshall:

Have you bothered to let Congress know it?

David D. Benetar:

Well, I haven’t —

Thurgood Marshall:

Or is your client —

David D. Benetar:

I’m not aware that they have done so, because we are of the belief that this doesn’t require any further congressional action.

We don’t think that Congress ever conceived of the kind of situation that we’re presenting to this Court today, in terms of payout, in terms of double violation of the neutrality concept, I don’t think Congress has the remotest notion of it in 1935.

Warren E. Burger:

In your view, Mr. Benetar, what could Congress do about the statute of the State of New York?

David D. Benetar:

What should it do?

Warren E. Burger:

What could it do?

What could be the scope of the its power, if it did not like —

David D. Benetar:

Well, I think that —

Warren E. Burger:

— that New York State has provided?

David D. Benetar:

I think that the Congress would have the right to change the concept of neutrality, but I don’t think that they would, could or would do that without measuring the effect of so drastic and invasion of the forbidden area under one hand with the desire if there was one on New York’s part to keep using unemployment compensation as a vehicle for paying out money, not on a basis of needs.

I just don’t think that it would happen that way.

Now, a few words about the strike that led to this, before it was over or I should say this, that on July 14th of 1971, a CWA Communication Workers called a nationwide strike against the Bell System Companies who are bargaining with that at that time, including these petitioners.

Four days later, an agreement was reached, the union recommended it to the members, urged ratification, and was ratified on the national basis, except in New York, where it was turned down.

And New York went on strike and ultimately, the National Union sort of joined the strike in the sense that the New York authorities insisted on conducting it, so the National Union went along with it.

Before the strike was over in New York, seven months had elapsed, $49 million as I’ve said were paid out to some 33,000 strikers, and the unemployment insurance account of Telephone Company alone was depleted by $40 million, which was required to replace and it’s in the process of replacing.

The employers were influenced to settle against their better judgment, this was all in the findings which were accepted on terms in New York, which broke the national pattern.

They didn’t want to do that but they felt that the strikers had several more weeks if not months of unemployment compensation coming and that there just wasn’t any use in carrying the fight any longer.

Contrasted with the $49 million paid out by the companies through vehicle of unemployment compensation was $14 million paid out of the union’s strike fund.

David D. Benetar:

Small wonder under those circumstances that we find the union leader who conducted this strike in New York, bulletenizing his members immediately after the strike was over and saying to them, the fact that we kept out 33 or whatever thousand people it was on strike for 280% of the membership for 218 days he says, that factor is an incredible phenomenon and it’s due to three outstanding causes: 1) dedication and spirit of the strikers; 2) unemployment insurance; 3) the effectiveness of the CWA’s strike fund.

And the strike fund rightfully took third place in view of what I’ve said to you about the comparative figures between them.

The union involved in the strike publicly referred to the strike as our strike weapon.

They saw it very realistically that what this was, was a strike weapon, an economic weapon and that’s what accounted for what they call the phenomenon of the 218-day hold out.

Now, it should not be the — suppose for a moment that this was an isolated instance, according to the New York Labor Department of Statistics, almost 10% of the strikes over a period of some 15 or 20 years, published statistics, almost 10% lasted eight weeks or more.

13.8% of all employees involved in strikes were involved in such lengthy strikes, and 51% of all man days made idle by these lengthy strikes or rather 51% all man days made idle in all strike were attributable to this lengthy, more than eight weeks strikes.

William H. Rehnquist:

Mr. Benetar, what percent of the wages that a person earns is paid by unemployment compensation?

David D. Benetar:

Up to 50%.

William H. Rehnquist:

I beg your pardon.

David D. Benetar:

Up to 50% tax free.

And the testimony at the trial was that what they get from unemployment compensation is enough to take care of the necessities of life.

It’s more than they get from most unions in strike benefits, considerably more.

In fact, this union stopped giving out benefits for food, as soon as unemployment compensation took over.

They were relieved of that burden, which was rightfully theirs if the neutrality principle is to control.

In the brief of the Rochester Telephone Company and others as amicus here, are listed in addition to the statistics I’ve given you, pending actions, where other employers in New York State have been injured by the situation I’ve just been describing.

Now, the guiding principles against which the miscellaneous items of legislative history and I characterized them that way, because I think that’s what they are, strung together miscellaneous items, some pointing in one direction, some pointing in another, but none of them speaking out and saying, “It is Congress’ intent to allow this as an exception to the rule of neutrality.”

John Paul Stevens:

But at that time, Mr. Benetar, had the rule of neutrality ever really been discussed by Congress?Wasn’t that something that Court found a few years later?

David D. Benetar:

Well, I think that the rule of neutrality, of course, was discerned and laid down by this Court, and I presume that this Court discernment went to the question of what Congress intended in the first place by it?

And as I look at the picture —

John Paul Stevens:

But there isn’t much legislative history discussing the rule of neutrality, is there?

David D. Benetar:

Well, but the legislative history summarized in Lockridge, says that Congress acted because of the perceived inability of the states to handle these problems in a uniform coherent manner and to balance the respective equities or strengths of the parties.

Congress was dissatisfied with the way once they would go one way, helping unions in another state, would go another way, helping employers.

And I believe Mr. Justice Stevens, I believe that when you look at the structure of that act and you see how Government access a policeman, but in no place does it come in to the actual bargaining, I believe the doctrine of neutrality was implicit in there from the date the statute was signed in the law by the president.

And I believe that when this Court announced what that case meant, I think they were reading Congress’ mind in the clearest possible way.

Now, these principles which have been discerned in this area, that states may not legislate with the tendency to frustrate the operation of federal law scheme or which creates substantial risk of conflict with policies central to the federal labor law.

Free collective bargaining, dictating Government neutrality and banning strikes, out of state entry into areas left to the free play of economic forces.

And by the way, my remarks are sprinkled with quotations from this Court.

It’s hard to talk about this subject without picking up the phrases that have gone through the decisions here as the Court, through what it calls the process of elucidating litigation has clarified the intent of Congress by the kind of phrases that I’ve been using, they are not mine, most of them are borrowed from Supreme Court decisions.

Free, oh I’ve covered that and Lodge ’76 tells us that this neutrality goes to the very heart of the federal policy.

Now, the use of economic forces by either party is part and parcel of the process and not a grudging exception.

David D. Benetar:

If the parties look for economic combat, they must look to themselves to carry it on.

And this is the catalyst which Congress in this Court looks for to bring about settlements.

Thurgood Marshall:

The Second Circuit relied on that very case, didn’t it?

David D. Benetar:

I’m sorry Mr. Justice —

Thurgood Marshall:

The Second Circuit’s opinion in this case relied on the Lodge ’76 case, did it not?

David D. Benetar:

Well, if they did I don’t recall they’re citing Lodge ’76.

Yes they did, yes they did but one can cite a case, but when you read Lodge ’76, there is no way in my opinion of its supporting with the Second Circuit did, because the case reaffirms in the clearest terms that what I’ve said is true and that the catalyst relied on by Congress and by this Court as seen from the words of the act, the catalyst relied on is the unaided struggle between the parties leading one of them just say, “We’ve had enough”, and the Government is not suppose to enter into that area.

In a presumption case such — pre-emption case such as this, such as Lodge ’76, the crucial inquiry is whether Congress intended this field to be unregulated because it was left to be uncontrolled — to be controlled by the free play of economic forces.

And that’s where Lodge ’76 was cited Mr. Justice Marshall, that’s where it was cited by the Second Circuit.

Thurgood Marshall:

It is that I knew that’s why I asked the question.

David D. Benetar:

Well, I simply want to do confirm —

Thurgood Marshall:

Well, what’s your view of it?

David D. Benetar:

Well, my view of it is that the area below was compounded by their recognition of the principle without giving an effect, that’s my view of it.

I think what they did was to take a principle of great weight and then from these fragments of so-called legislative history, they drew an inference admitting that Congress had not spoken clearly on this.

They drew an inference that Congress intended to violate the very policy which they were quoting from.

And I don’t think that when you take inference from ambiguous, uncertain legislative history which points in two directions and you pitted against the centerpiece of the national scheme that you can come out with a result, which justifies the piercing with a violation or the invasion of the national scheme.

Now, the proven effect of the New York statute, no doubt about it, acknowledged by the Second Circuit, that they acknowledged too that there is this conflict, is the proven effect is to order the balance of power between the parties.

Now, let’s just briefly take a look at that history in an overall sense, because we brief the details of it.

The Court of Appeals as I’ve said acknowledged that there is no positive expression of congressional intent.

The First Circuit in Grinnell went through that whole list of items of congressional history, and reached the conclusion that it was not sufficiently clear to establish congressional intent, either way and prior to the Second Circuit’s decision in this case, every other federal court that considered the matter reach the same conclusion.

And an inconclusive legislative record, we submit is not an adequate basis for permitting New York’s interference with federal policy as found by the courts below and wherein a particularly tender area, as Professor Cox has said, where a state law is based on an accommodation of the special interest of employer’s unions and employees in collective bargaining, the balance struck by Congress among those same interest requires exclusion, unless Congress has provided otherwise.

Well, Congress has not provided otherwise, and there is no reliable indication that it even intended to provide otherwise.

The recent decision of this Court in the Malone case stresses the question of clarity, how much clarity is really needed before one can say that a key tenet is a federal policy has been violated.

Warren E. Burger:

Very well.

Mrs.Marcus.

Maria L. Marcus:

Mr. Chief Justice and may it please the Court.

I’m Maria L. Marcus, Special Assistant Attorney General representing respondents here.

Pre-emption is a doctrine designed to give effect to congressional intent not to overcome it.

And as the unanimous decision of the Second Circuit in this case points out, the key to that intent is in the Social Security Act, not in the National Labor Relations Act.

For the NLRA contains no specific direction, as to the extent to which states are permitted to regulate labor management controversies.

Maria L. Marcus:

Now, when Congress faces up to the pre-emption question, in enacting second law, this Court has looked to the more pertinent federal provision in disposing in pre-emption claims.

Most recent example of this was in Malone versus White Motor Corporation where the employer, like petitioners here, argued that the NLRA’s policy of free collective bargaining was absolute.

And that therefore, the state’s statute there which actually altered the term of a collective bargaining agreement must violate the federal regulatory scheme and be struck down.

But, this Court upheld the state’s right to act, pointing to the welfare of Pension Plans Disclosure Act as a better indicia of congressional intent.

Now, petitioners here say that this Court should simply on the basis of the general pre-emption principles derived from the NLRA hold that the state has no right to give unemployment benefits to strikers.

Now, Congress directly faced this question in enacting the Social Security Act and it decided that with three very narrow exceptions that the state was free to grant such benefits or to refuse to do so.

Social Security Act received its impetus as this Court has recognized from the President’s Committee on Economic Security, whose advisory counsel said, When you enact the Social Security Act, don’t let the states pay unemployment benefits to strikers.

Senator Wagner, who was the sponsor of both NLRA and the Social Security Act and was also the first witness in the hearings on this Social Security Act, took a different view.

He said, there should be practically no restrictions on the states, in the kind of programs that they can write.

Now, Congress ultimately did pass some restrictions, dealing with the payment of unemployment compensation during strikes, but aside from those restrictions, consciously left the rest to the states for determination.

It was extremely important at that time that all the states pass unemployment compensation laws, because if they didn’t, the purpose of the Social Security Act would have been frustrated.

And to make sure that all the states came into the field, Congress enacted extremely strong and elaborate incentives to induce the states to come in.

The Senate Finance Committee report in explaining the approach of Congress passing the Social Security Act said that they wanted the states to proceed without dictation from Washington and they recognized New York, whose statute was already in existence and substantially the same form, as we have it today, as one of the kinds of laws that they sought to encourage the other states to pass.

Now, as far as the experience rating aspect, which counsel has referred, which Mr. Justice Marshall asked about, the fact is that on the face of New York’s law it was already indicated that New York was contemplating passing such a provision, and what’s more important, Congress itself wanted all the states to have experience rating provisions and included incentives to persuade the states to put experience rating into all their law, so they wanted the states to proceed on that basis.

The Social Security Act and the National Labor Relations Act were passed during the same five-week period, by the same Congress sitting in the same session.

Now, there is no pre-emption, there is not a vestige of support in the legislative history of the National Labor Relations Act for any such pre-emption.

The National Labor Relations Board choose the agency in charge of interpreting and enforcing the law, said that there is no pre-emption here, as does the United States of America, who has come in on the same brief, as amicus curiae in this Court.

The question of pre-emption is not as counsel has been indicating a constitutional principle.

This Court said in Retail Clerks versus Schermerhorn that pre-emption is merely a rationalization of the co-existence of federal and state agencies in the same labor relations field, it’s not a constitutional principle at all.

William H. Rehnquist:

Well, the supremacy —

Potter Stewart:

Well, pre-emption generally is a constitutional principle stemming from the Supremacy Clause of the Constitution, isn’t it?

Maria L. Marcus:

It becomes a constitutional matter by virtue of the fact that if the two laws are inconsistent, —

Potter Stewart:

The federal law prevails.

Maria L. Marcus:

–then the federal law is stronger, but what the Court — I believe what this Court —

Potter Stewart:

And that’s because of the Constitution of the United States, specifically the Supremacy Clause?

Maria L. Marcus:

Right, the Supremacy Clause of the Constitution, but this what this Court meant in stating, directly stating, and I’m quoting from the decision of that pre-emption is not a constitutional principle, it simply meant that the idea of not having the states in the field at all is not part of the pre-emption concept.

The pre-emption concept simply points to what Congress had in mind, Congress, the ultimate top stone of deciding whether in fact it wishes to have some states regulation, have a great deal or to have none at all.

Now, in the Social Security Act, the incentives that I referred to were a really very strong either/or, and to give you the idea of what that either/or was.

For the states that refused to pass a law, this is what would happen.

Their employers would have to pay a 3% payroll tax on a portion of the salaries of all their employees and that money would never be returned to the states in any form, but would simply go to the Federal Government, in fact support unemployment insurance programs in other states.

Maria L. Marcus:

That’s what would happen if the state refuse to pass an unemployment compensation law.

On the other hand, if it passed one, each employer would receive a 90% tax credit, which he would receive merely by virtue of paying the state tax, whatever that state tax was, when the state tax was at the maximum that the state set or nothing at all, he would still receive that 90% tax credit.

And the other 10%, which was not wiped out by the credit, would in any event be returned to the states either to support federal benefits or to help administer the program.

So, that was an extremely pervasive kind of incentive, in fact so much so that the law was challenged.

As usurping state powers, as coercing the states to come into the field.

And this Court considered that question in Steward versus Machine Company and it decided that yes, these were very pervasive incentives, but because of the latitude given to the states in developing their own program, that Congress what entitled to keep those incentives in the law.

So that Congress has from the very inception of both the NLRA and the Social Security Act considered the interrelation of unemployment insurance and the economics of labor disputes —

Potter Stewart:

Now, you say as though that statement followed from what you told us, it doesn’t seem to me that it does.

Maria L. Marcus:

Well, from the very beginning, they had what was a strong and flat out recommendation by the very group that was the impetus for the passage of the law.

Don’t let the states pay and what Congress did at that point was say, “Well, we’re going to look into that area and we will put down some restrictions which they did but —

Potter Stewart:

Well, what were those restrictions?

Maria L. Marcus:

Those restrictions for example were that if a worker refused to seek new work, to accept new work at a struck job that he couldn’t be denied unemployment benefits.

Also —

Potter Stewart:

That if he failed to seek new work he could be denied, that’s what you mean?

Maria L. Marcus:

Well, in other words, the question as to what kind of new work, under all unemployment plans, under all state laws, a person is obliged to seek other work.

Potter Stewart:

To seek new comfortable work.

Maria L. Marcus:

Right.

Potter Stewart:

Yeah.

Maria L. Marcus:

And the — what Congress want to make sure of is that the state didn’t say to this worker, you’ve got a possible job, you can go and work at X plant, which is being struck by its employees.

And Congress said no.

Potter Stewart:

Yeah, right.

Maria L. Marcus:

You can’t deny benefits to somebody because they refuse to work for an employer who was involved in a labor controversy.

Potter Stewart:

Right.

Maria L. Marcus:

And the other restrictions involved such things as not permitting denial of benefits for somebody who refused to work for less than the prevailing wage in an area.

Potter Stewart:

Right.

Maria L. Marcus:

And refused to join a place where they were not allowed to be union members.

So, those were some of the restrictions which Congress did impose, and which were in the area of labor management controversy, but they refused to go along where the recommendation of the President’s Committee, despite its pre-eminent position as the actual impetus of the whole act.

Potter Stewart:

To prevent any state plans from allowing —

Maria L. Marcus:

To prevent any state plan —

Potter Stewart:

–on employment compensation to strikers.

Maria L. Marcus:

— from paying under the various options that already exist from paying unemployment compensation.

And —

William H. Rehnquist:

To the extent that Congress required the states to pay unemployment compensation to an unemployed person who refused to cross a picket line, they did then insert themselves in a certain extent into the or perhaps a better way to put it is, they required the states to insert themselves into the economic warfare.

Maria L. Marcus:

Yes, they certainly were thinking along the lines that the President’s Committee asked them to think along and what they said was we will put this restriction on the states, but we will not put down the flat restrictions that the President’s Committee asked us to do.

We will do this, we will put in this, that has to do with labor management controversies, but we won’t go as far as we’re asked to do and flatly prevent the state from developing its own programs.

William H. Rehnquist:

Well, they moved the other way from the recommendation of the President’s Committee.

Maria L. Marcus:

Yes.

William H. Rehnquist:

But, they moved only a slight way.

Maria L. Marcus:

Yes, that’s correct.

And so we’ve got the Social Security Act, which I think in itself provides a basis for the rejection of the pre-emption claims here.

But in addition, there are others, an independent ground for dismissal of these claims.

Now, petitioners have said that a uniform national standard on the payment of unemployment benefits during industrial controversies is essential to the federal labor scheme.

Now we’ve, Congress thinks otherwise and its views rather than economic theory which are controlling.

Congress’ view has come out in a variety of different statutes.

Now, we’ve noted that the NLRA and the Social Security Act were passed at the same time, by the same Congress sitting in the same session.

In 1947, there was an attempt to amend the National Labor Relations Act.

In fact, the House passed amendments, which said that any employee who receive unemployment compensation, while he was on strike would be deprived of his protection and status as an employee under the NLRA.

Now, House Minority Report in commenting on that interestingly enough pointed to the Social Security Act as the core of Congress’ intent on this question and said, under the Social Security Act, this matter has advisedly been left to the states and that was a criticism of the House Amendments.

The Senate refused to go along with those amendments and they were dropped.

Then in the Railroad Unemployment Insurance Act you have a situation, which has lasted for more than 40 years, where there is a requirement of paying unemployment benefits to striking railway workers.

And that there have been a number of amendments of that original schemes, amendments to raise the benefit levels and increase the duration of paying benefits, but from its inception it has been an all employer financed scheme.

William H. Rehnquist:

But the labor disputes under that are governed by the Railway Labor Act?

Maria L. Marcus:

Yes, they are and while there are some differences in the structure, this Court pointed out in Locomotive Engineers versus Baltimore and Ohio that those differences go to the beginning of the labor dispute, where there are various mediation provisions which must be followed, but that once those initial stages are over, the parties are in the same position as they are under the NLRA, self-helped and collective bargaining.

So, there are obviously similar features in both laws.

William H. Rehnquist:

But one of them that you’ve just point out that’s quite different is that Congress requires the payment of benefit — unemployment benefits to striking railroad workers, whereas it doesn’t to striking workers in other areas.

Maria L. Marcus:

It does not require them Your Honor, but it permits them under the plan of the —

Potter Stewart:

Well, that’s the issue in this case.

William H. Rehnquist:

Yeah, that’s the issue in this.

Maria L. Marcus:

Yes it is.

Under the — under the plan of the Social Security Act, I think it has to be kept in mind what that plan was, the plan was to give permissions to the states, which were plenary and general and to spell out only those few areas, in which the states were restricted, that’s how the law is setup.

Maria L. Marcus:

It wasn’t setup with you may do this, and this, and this, and this, and this but rather because of the need to bring the state into the field, the urgent federal state cooperation that was absolutely essential to the success of the Social Security Act, the plan was to make clear to the states that they had this broad latitude that there would be no dictation from Washington and that they would be restricted in only a few particulars, all of which was set out in the Act.

So, that was how the Act was structured.

Then when Congress considered the question of food stamps, and whether they should be granted to strikers, Congress had another opportunity to look at the relation of the payment of public benefits and the economics of labor disputes, and what they said there was that food stamps must be paid to strikers.

And the reason that they gave was that to deny benefits would be to take sides in labor disputes.

So obviously, the idea of neutrality which petitioners are trying to present here is quite different from Congress’ idea of neutrality.

In AFDC-U, that is Aid to Families of Dependent Children with Unemployed Fathers, uniform definitions were established by Congress but the ATW secretary under a regulation upheld by this Court did preserve local options to the states, who could take their choice as to whether to grant benefits or to refuse to do so.

A contemporary congressional expression about the Social Security Act also occurred when the Nixon administration in the 91st Congress era asked that the Congress supply the bar against striker benefits, which the petitioners are now asking from the judiciary, they said, don’t let the states pay unemployment benefits to strikers.

Now, Congress refused to go along with that recommendation and Representative Mills, who was Chairman of the Ways and Means Committee said in floor debate, Well, for example, there are states that pay unemployment benefits to strikers, I wouldn’t vote for it, but if they want to do it, why shouldn’t they have the latitude to write the program they want.

So, it’s clear for me —

Potter Stewart:

How many states do pay benefits?

Maria L. Marcus:

Well, the vast majority of states —

Potter Stewart:

But then it was your brief but I haven’t read that for a long time.

Maria L. Marcus:

Yes, the vast majority of states Your Honor do pay under a variety of different schemes.

Some for example pay if the employer continues an operation during the strike.

Some pay if there is a strike protesting against hazardous conditions.

Some pay if the employer violates his own labor contract.

Some pay if the employer violates federal labor law, some pay if the employer violates state labor law.

Potter Stewart:

How many pay just indiscriminately to any economic strike?

Maria L. Marcus:

Well, I don’t know of — either they have the provision that we have, which provides a suspension period —

Potter Stewart:

A waiting period, a waiting period, yes.

Maria L. Marcus:

— which eliminates the vast bulk of strikes from consideration altogether or they fix on particular circumstances under which the benefits should be paid, either —

Potter Stewart:

Well, that — my question was how many do not fix on particular circumstances?

Maria L. Marcus:

In other words, how many like New York’s law and have the suspension period.

Potter Stewart:

Like New York, which perhaps with a waiting period, but otherwise this condition.

Maria L. Marcus:

Rhode Island and possibly the Virgin Islands, but Rhode Island has a —

Potter Stewart:

Rhode Island?

Maria L. Marcus:

Yes, has our —

Potter Stewart:

And New York.

Maria L. Marcus:

— suspension period approach.

Potter Stewart:

Right.

Maria L. Marcus:

Which eliminates the vast majority of strikes.

Potter Stewart:

And Hawaii had that — if the employer stays in business with 80% of this.

Maria L. Marcus:

Correct, that Hawaii has the same kind of statute as this Court upheld in the Kimbell case, that is if the employer continues in substantial operation, then the benefits will be paid.

Potter Stewart:

But only New York and Rhode Island, and possibly the Virgin Islands.

Maria L. Marcus:

Have this particular approach.

Potter Stewart:

That is pay out in any economic strike, at least after a waiting period?

Maria L. Marcus:

Yes, but pay nothing no matter what the circumstances —

Potter Stewart:

During the waiting period.

Maria L. Marcus:

During the suspension period, which eliminates most strikes from any payment altogether.

Whereas, the other schemes by enlarge pay at the outset of a strike after —

Potter Stewart:

If it meets certain conditions?

Maria L. Marcus:

–the normal waiting period, after the normal waiting period, if these circumstances are what the statute includes.

Harry A. Blackmun:

Of course, your position here would be the same, whether there were waiting period or not, is it not?

Maria L. Marcus:

Well, our position is that what Congress did in the Social Security Act was to give plenary and general permissions to the states to develop whatever kind of program they wished and what was setout in the Social Security Act where there’s restrictions and not the permissions.

Potter Stewart:

I think your brief retreats from the rational conclusion of that position, i.e. if a state decided to pay double wages to strikers, you’d have a hard time.

Maria L. Marcus:

Well, I think Your Honor that the Congress certainly didn’t prohibit any of the possible options, but it would be unfeasible and unpolitical to have anything like that happen.

And I think if it did, of course Congress would move in as it has left itself room to do by a provision in the Social Security Act that says no vested rights —

Potter Stewart:

But you think there would be no pre-emption of that, if the state decided about economic strikers, we’re going to pay double what they get by working?

Maria L. Marcus:

Well, I think that —

Potter Stewart:

You think there would be no pre-emption problem with the law?

Maria L. Marcus:

There — Congress did not prohibit whatever option the states adopt, however, I think that the wisdom of Congress in supposing that the states will act reasonably, because the example that Your Honor gives is very unreasonable and given that policy but —

Potter Stewart:

Well, I think it’s given in your brief, it’s given in your brief if I’m not mistaken, isn’t it?

Maria L. Marcus:

No, not that particular example, —

Potter Stewart:

Some amicus brief or something.

Maria L. Marcus:

— but I think that Congress — the confidence that Congress had that obviously the states would not do something unreasonable has been justified by the fact that in 40 years in 50 different states —

Potter Stewart:

But sometimes that quite a violent assumption.

Maria L. Marcus:

— nothing like that has ever occurred, no state has ever passed on such unreasonable law and we’ve had 50 jurisdictions to experiment in and more than 40 years for that to have happened, but in fact I think the states have justified Congress’ confidence and not having gone to any such bad policy —

John Paul Stevens:

Well, I think your opponent thinks that New York and Rhode Island have an unreasonable law.

Potter Stewart:

Yes.

Maria L. Marcus:

Yes, but the example that Mr. Justice Stewart had cited is very far from anything that has occurred or I think would occur.

Maria L. Marcus:

Now, we are looking, it’s clear from the examples of all these different statutes that a uniform policy on the payment of unemployment benefits to strikers is not essential to the federal regulatory scheme that Congress has repeatedly said so, and indicated so.

And I want to point out that we are looking in presenting this legislative history to this court at the same kind of documents, the same kind of amendments, refusals to amend, specific legislative reports, floor debate, the exact same kind of documents that this Court considered in Hodory —

Harry A. Blackmun:

But Mrs.Marcus.

Maria L. Marcus:

Yes.

Harry A. Blackmun:

I don’t think your opponent really says that there’s need to be a uniform policy, I think what they’re saying is anything is all right so long as it doesn’t interfere with the overriding policy of neutrality.

Maria L. Marcus:

Well, my understanding of what the petitioner is urging here is that the payment of unemployment benefits during strikes, which includes all the different options that all the different states have adopted can’t be done.

And that therefore, the uniform policy that they’re presupposing is you don’t pay any unemployment benefits during strikes under any possible option or approach.

Now, that is a uniform policy and in fact, the words that used a number of different times, in the petition and in petition’s brief that the Federal Government requires a uniform national policy in the question and that policy is —

Potter Stewart:

In this precise area?

Maria L. Marcus:

Though in this precise area.

Potter Stewart:

Your opponent doesn’t question at all the autonomy of the states to indulge in all the variety they want to in other areas of unemployment compensation.

Maria L. Marcus:

No, in the question of paying unemployment benefits to strikers, no matter what the option is, no matter what the version, no matter what the money, no matter what the circumstances, no pay under any circumstances.

And they have repeatedly used the phrase.

John Paul Stevens:

I’m not sure that’s a fair statement of their position.

They relied very heavily on the trial court findings that here there’s an actual impact on the bargaining positions of their respective parties.

It seems to me that consistently with that view, they admit for example, welfare payments are all right, that there could be lesser amounts of money, something much less than $40 million — $49 million, they would not tip the scales, and I don’t think they’re argument goes to sort of an automatic rule.

Maria L. Marcus:

Well, they have repeatedly used the phrase that a uniform national policy is essential, and I think it’s quite clear that —

John Paul Stevens:

To the extent of neutrality act.

Maria L. Marcus:

To the extent that you can’t pay unemployment benefits during strikes.

And that’s what the vast majority of states differ.

John Paul Stevens:

But if they can see welfare benefits are all right, I don’t know why they wouldn’t concede unemployment benefits of no greater amount or something like that wouldn’t also be fair.

Maria L. Marcus:

Well, I think that’s an inconsistency in their position, but I think it’s there that —

John Paul Stevens:

I see.

Well, even if they concede, then we don’t have to decide that much anyway.

Maria L. Marcus:

No.

John Paul Stevens:

All we have to do decide when there is admitted, you don’t deny the finding of a national impact in the bargaining process.

Maria L. Marcus:

Yes indeed we do Your Honor.

Potter Stewart:

Despite the two-court rule?

Maria L. Marcus:

Yes, I think what the Second Circuit was doing.

They didn’t really discuss or consider the facts at all.

Maria L. Marcus:

They simply said that even viewing petitioner’s case in its best light and even assuming there were such a conflict, it wouldn’t matter, because Congress has said that the states may legislate.

And I think that’s absolutely true.

Potter Stewart:

Future findings by the District Court which were not upset by the Court of Appeals and your familiar course with the two-court rule, aren’t you?

Maria L. Marcus:

Yes, I think by large, it doesn’t matter whether there were — in other words, we don’t feel, we feel that the record overwhelmingly refutes the impact, because of the statistics that we evolved.

But that is really irrelevant to the issue here, because the question is what did Congress intend?

And that intention is clear from the legislative history, not only the Social Security Act, but all the other statutes in which Congress has had the opportunity to consider this question.

William H. Rehnquist:

Is what you’re saying that the Court of Appeals said basically assuming for the sake of argument that the District Court’s findings are correct and therefore, we will not review them on a clearly erroneous basis.

We nonetheless find them?

Maria L. Marcus:

I think they weren’t — they were not interested in the facts and properly so, because the question of pre-emption is not one of the economic theory, it’s one of congressional intention.

William H. Rehnquist:

Well, it can be one of economic fact though, can it?

Maria L. Marcus:

But here, the question is did Congress permit, did Congress intend that the states have the latitude that we say that the Social Security Act and these other statutes demonstrated.

And if that is so, then the state has a right to choose whatever option it wishes.

Now, the New York Statute —

Thurgood Marshall:

Could the state of adopt the law that in any strike these unions shall pay for the loss of management?

Maria L. Marcus:

I beg your pardon.

Thurgood Marshall:

That in any strike, during the time of the strike, the union shall pay management its losses, period.

Maria L. Marcus:

Well, that hasn’t to do with unemployment compensation, so I couldn’t say what restrictions there might be on that.

The issue here really is what — did the Social Security Act allow the state to do as far as the payment of unemployment compensation is concerned.

Thurgood Marshall:

I suppose the New York states said that where there is a strike, the management shall contribute to the unemployment insurance, whatever amount there is left over what they lose in the strike.

Maria L. Marcus:

That the employer should contribute to the —

Thurgood Marshall:

Fund.

Maria L. Marcus:

Well, the method of financing, the unemployment —

Thurgood Marshall:

I’m just trying to get something that has something to do with unemployment, and I assume financing is.

Maria L. Marcus:

Yes, the method of — as far as the method of financing —

Thurgood Marshall:

I don’t think you need to take the position of the states, are left free to do whatever they please.

Maria L. Marcus:

Well —

Thurgood Marshall:

And that’s what you keep saying, you don’t need it for this case, do you?

Maria L. Marcus:

Perhaps we don’t, but I believe —

Thurgood Marshall:

Then, why keep pushing for it?

Maria L. Marcus:

It was I believe an answer to a question about what the Social Security Act did and I think it’s clear that its structure was to give this broad permission, but what’s I think equally significant here is that New Yorks law existed at the time that the Social Security Act, the National Labor Relations Act were passed.

Maria L. Marcus:

And so it’s clear that —

John Paul Stevens:

May I take Mr. Justice Marshall’s question —

Maria L. Marcus:

Yes.

John Paul Stevens:

— one step further.

In the briefs the Government filed, they give you the hypothetical example of requiring 100% of the wages during the period of the strike, and they seem to say that would be pre-empted, a statute that provide it, would you agree with that concession by the United States?

Maria L. Marcus:

No, I really wouldn’t, because I think the — as I said the Social Security Act did give a plenary and general permission.

However, that would be unfeasible and politically — it’s a thing that couldn’t happen, but it’s a thing that Congress would have to move in then to prevent as it can and frequently does.

But as I said before, the confidence that Congress visited in us has not been abused by that sort of provision.

In conclusion, I’d like to say that at stake in this case is the state’s right to determine what’s in the best interest of New York citizens.

And Congress has given New York that right, given that right, knowing exactly what New York’s law said at the time that it passed both the statutes that were speaking of.

And it’s rare that you have so many different indications of congressional intent, all pointing in the same direction.

And petitioner’s proffering response only a general pre-emption principle derived from the overall plan of the NLRA, which has never been held to be absolute.

And for this reason, we urge the affirmance of the unanimous decision of the Second Circuit.

Warren E. Burger:

Thank you Mrs. Marcus.

Thank you Mr. Benetar, the case is submitted.

Your time has expired.