The court's rationale that state spending is somehow immune from preemption challenge is seemingly at odds with precedent established by the United States Supreme Court: "[W]e cannot believe that Congress intended to allow States to interfere with the 'interrelated federal scheme of law, remedy, and administration,' under the NLRA as long as they did so through exercises of the spending power." Wisconsin Dep't of Indus. v. Gould Inc., 475 U.S. 282, 287 (1986).Despite compelling arguments raised in the dissenting opinion, a majority of the en banc panel upheld AB 1889 as a valid exercise of California's state spending power.
and Contrs. of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993) ("Boston Harbor") and Wisconsin Department of Industry, Labor and Human Relations v. Gould Inc., 475 U.S. 282 (1986)The Court of Appeals explained that, although, the Supreme Court in Boston Harbor "recognized a distinction between government as a regulator and government as a proprietor," creating a market participant exception, a state or municipality would be deemed a regulator rendering the exception inapplicable where it used "its bargaining leverage as a means of attaining policy ends." The Court of Appeals, citing Boston Harbor, further stated that for the "market participant" exception to apply, the state must have "no interest in setting policy."
at 231-232. In Wisconsin Dep't of Indus., Labor and Human Relations v. Gould (1986) 475 U.S. 282, 288-289, 106 S.Ct. 1057, the Supreme Court criticized broad application of the market participant doctrine. Gould involved a Wisconsin law that barred contractors with a history of labor violations from contracting with the state.