Court set incredibly easy standard in agricultural labor dispute case

In Gerawan Farming, Inc. v. Agricultural Labor Relations Board, 2017 DJDAR 11179 (Nov. 27, 2017), the California Supreme Court unanimously upheld the constitutionality of California's "mandatory mediation and conciliation" process for labor disputes between agricultural employers and unions, Cal. Labor Code Sections 1164-1164.13. The high court ruled that the process' "compulsory interest arbitration" -- whereby a "mediator" can unilaterally impose all of the terms of a collective bargaining agreement -- does not, at least on its face, violate the equal protection rights of agricultural employers. The court also ruled that this labor relations regime -- unique in the United States with respect to private sector workers -- does not constitute an impermissible delegation of legislative power to an administrative agency.

Gerawan is a family-owned fruit packing business based in the Central Valley. In 1990, Gerawan's employees voted for representation by the United Farm Workers. After the Agricultural Labor Relations Board upheld the election, the union and Gerawan entered, in 1994, into initial negotiations for a labor contract. Those quickly went nowhere, and the parties had no communication for nearly 20 years.

In late 2012, the union, without explanation, renewed its request for a labor agreement, triggering several months of intense but unfruitful negotiations. At their conclusion, the union exercised its right under the mandatory mediation and conciliation process to proceed to compulsory interest arbitration. Ultimately, an arbitrator issued a collective bargaining agreement which the board upheld over Gerawan's objections. Gerawan then successfully sought review in the 5th District Court of Appeal, which overturned the board on constitutional and statutory grounds. The California Supreme Court granted review shortly thereafter.

Among its constitutional arguments, Gerawan contended that mandatory mediation and conciliation violates the equal protection clause of the U.S. Constitution because the process lacks any mechanism to ensure that the labor agreements produced during negotiations will treat similarly situated agricultural employers fairly. This risk of arbitrary individualized treatment invites equal protection review. Although the equal protection clause traditionally has been used to invalidate laws that improperly single out discrete groups of persons, in Village of Willowbrook v. Olech, 528 U.S. 562 (2000) (per curiam), the U.S. Supreme Court ruled that equal protection also precludes irrational or arbitrary regulation of individuals as individuals. Such unfair targeting is precisely what mandatory mediation and conciliation enables: It subjects individual agricultural employers to the arbitrator's whim, without any guarantee that the contractual terms imposed on one employer will be consistent with those imposed on other employers.

No matter. Even assuming that such "class-of-one" protection applies to mandatory mediation and conciliation (a point that the board and United Farm Workers sharply contested), the California Supreme Court concluded that Gerawan's class-of-one claim still would fail. The trouble for Gerawan, explained the court, was that it had challenged the mandatory mediation and conciliation statute on its face. Thus, Gerawan had to show that the process necessarily would produce (or at least very frequently would produce) arbitrary or irrational labor agreements. Such outcomes, the court admitted, are possible under mandatory mediation and conciliation -- but they are not inevitable, which is the showing required to prevail on a facial claim.

In upholding the use of mandatory mediation and conciliation, the court placed great stress on the statutory factors that guide the mediator's decision, which include the "financial condition of the employer" and the "wages, benefits, and terms and conditions of employment" prevailing in other collective bargaining agreements or comparable firms. See Labor Code Section 1164(e). Although mandatory mediation and conciliation merely provides that the mediator "may" -- not must -- consider the enumerated factors, the absence of a clear textual command did not concern the high court. Whether the mediator may or must consider any factor is irrelevant, the court explained, because what matters is that mandatory mediation and conciliation and its factors do not necessarily preclude rational outcomes. This is an incredibly easy constitutional standard for legislation to meet but one sadly consistent with the court's great indulgence for laws pertaining to "social and economic policy."

The court also rejected Gerawan's argument that mandatory mediation and conciliation violates the California Constitution's non-delegation doctrine. Derived from the principle of the separation of powers, the doctrine reserves exclusively to the Legislature the power to make fundamental policy decisions, and requires the Legislature to give administrative agencies sufficient direction to carry out those policies. Rejecting Gerawan's non-delegation argument, the Supreme Court ruled that the Legislature had made the fundamental policy decision of authorizing compulsory interest arbitration, and merely left the carrying out of that policy to the agricultural labor board and its mediators. The court also reemphasized that the Legislature had provided arbitrators with "a nonexclusive list of factors for the mediator to consider when developing a fair and reasonable agreement based on the parties' individualized circumstances." That the Legislature may not have required arbitrators to consider any of those factors was just water over the precedential dam, as the court had "previously rejected the argument that such a 'listing of factors does not adequately inform [the administrative authority] just how the presence of the factors under particular circumstances is to be translated.'" (Quoting Birkenfeld v. City of Berkeley, 17 Cal. 3d 129, 168 (1976)).

That the mandatory mediation and conciliation statute says nothing about such basic aspects of employment as how high wages should be or what kinds of benefits should be offered, is of no constitutional moment in the court's estimation. What is of such moment is that the arbitrator can only impose terms related to employment. That limitation is evidently narrow enough to satisfy the constitutional separation of powers.