Malls' Limits on Speech That Are Unconstitutional Under California Charter Also Violate NLRA

A federal appeals court in San Francisco, disapproving of a California shopping mall operator’s rules banning various speech-related activities on mall property for violating the state constitution, has held that the operator also ran afoul of the National Labor Relations Act. The U.S. Court of Appeals for the Ninth Circuit enforced, in part, the NLRB’s order finding that the property manager had engaged in unfair labor practices in seeking to halt union picketing and handbilling. However, it refused to back the NLRB’s ruling that certain of the mall’s rules were lawful time, place and manner restrictions on speech. United Bhd. of Carpenters and Joiners of Am., Local 848 v. NLRB, No. 05-75295 (9th Cir. Aug. 25, 2008).

A mall property manager, who operated two malls in California, promulgated six rules regarding expressive activity at the malls:

  1. a prohibition against activities identifying the mall owner, manager, or tenants;
  2. a prohibition against signage and written materials that interfered with a mall’s commercial purpose;
  3. a prohibition against the carrying or wearing of signs;
  4. an “application requirement” for pre-submission of written materials;
  5. a “designated areas rule” excluding certain exterior mall areas from expressive activities; and
  6. a prohibition against expressive activities during “peak traffic days.”

The property manager asserted that the rules were necessary to safeguard the commercial activity of the malls, to provide a pleasant shopping experience, and to protect shoppers’ safety.

Representatives of Local 586 distributed handbills near one of the stores in the malls, protesting the use of a non-union contractor to build a new store at a different location. Security guards asked the union representatives to leave. When they refused, the guards called the police and one of the union representatives was arrested. A similar incident occurred when union representatives distributed handbills and picketed at the other mall, protesting the use of a non-union contractor to build a new store in the mall as well as engaging in “area standards” picketing. The union filed unfair labor practice charges against the property manager, alleging that the operator had violated § 8(a)(1) of the Act (which makes it an unfair labor practice to interfere with protected union activity). The NLRB General Counsel consolidated the charges in a complaint.

Following a hearing, an administrative law judge concluded that the property manager had engaged in unfair labor practices by maintaining and enforcing the rules and by ejecting union representatives from mall property for engaging in protected activity. Affirming in part the ALJ’s decision, the Board determined that the malls' identification ban and the commercial purpose rules were unlawful content-based restrictions on speech, and that the application requirement was unlawful when applied to ensure compliance with the identification ban and the commercial purposes rules. However, the Board determined that the remaining rules were reasonable time, place, or manner restrictions under state law. The parties petitioned for review.

On appeal, the Ninth Circuit noted first that the rights of non-employee union representatives to access an employer’s property are based in state law. Thus, whether the property manager engaged in unfair labor practices turned on whether California state law granted union representatives the right to access mall property. Under California law, privately-owned shopping centers must respect individual free speech rights to the same extent that government entities must observe state and federal free speech rights. The level of scrutiny applied to restrictions on a free speech activity depends on whether the restriction is a content-neutral restriction or a content-based restriction. A content-neutral restriction is subject to intermediate scrutiny to determine whether it is narrowly tailored, serves a significant government interest, and leaves open ample alternative avenues of communication. A content-based restriction is analyzed under strict scrutiny to determine whether the regulation is necessary to serve a compelling interest and narrowly drawn to achieve that end.

Applying these tests, the court determined that the identification ban was content-based because the property manager had to determine whether the proposed expression named any tenant, owner, or manager. The court noted that the property manager’s reason for the rule – to protect the reputation of the mall and its tenants – reflected its “hostility toward messages which were critical of it or its tenants.” The court found that suppressing such criticism was not a compelling interest and thus the identification ban did not survive strict scrutiny.

The court applied the same analysis to the commercial purpose rule and determined that it was content-based. The property manager’s reason for the rule – to limit negative publicity and to prevent lost sales – again reflected hostility toward critical messages and thus was not a compelling interest. Accordingly, the commercial purpose rule did not survive strict scrutiny. The court then found the otherwise lawful application requirement “becomes unlawful when used as a tool to ferret out objectionable content.” Thus, this rule also failed.

Addressing the signage ban, the court noted that the union conceded the restriction was content-neutral. However, the ban was not narrowly tailored. The rule’s ban against wearing or carrying signs eliminated most visual speech and did not provide alternate avenues of communication. Accordingly, this rule failed under the intermediate scrutiny standard.

Similarly, the court found that the sidewalk ban was content-neutral, but overbroad. The property manager asserted that the rule was necessary for pedestrian safety. However, the ban did not simply limit obstacles on sidewalks or in mall entrances. Rather, it restricted all expressive conduct on exterior sidewalks. Further, the rule did not provide ample alternatives for communication and, as a result, cut off the union’s access to its intended audience.

Lastly, the court found that the peak traffic rule was overbroad because it, too, failed to leave open ample alternatives for communication. The court noted that limiting expressive activity to non-peak times restricted the union’s ability to reach its target audience. The peak traffic rule, therefore, was not a “reasonable time, place or manner” restriction.

Accordingly, the court held that the rules impermissibly infringed on the free speech rights under the California Constitution and that the property manager violated § 8(a)(1) of the Act by enforcing the rules against the union representatives and excluding them from mall property.

“This decision emphasizes the need for employers to analyze carefully their policies for compliance with both state law and the National Labor Relations Act in this area,” Brad Kampas, a partner in Jackson Lewis’ San Francisco office, observes. While the NLRA often trumps or “preempts” state law, in these cases, state law must be reckoned with. The decision here also emphasizes concerns with “forum shopping” by unions, Mr. Kampas points out, since the Ninth Circuit panel of judges disagreed not only with the NLRB, but also with prior California State Court decisions upholding similar restrictions. Jackson Lewis deals regularly with a wide variety of labor relations law matters, including representing employers before the NLRB and the courts, advising employers on their legal rights in preparing for and responding to corporate campaigns and other union organizing and advocacy initiatives, and training managers and supervisors to further employer interests in labor relations lawfully.