The opinion of the court was delivered by: BROTMAN
For the second time in several years,
this court is asked to restrain application of certain provisions of the New Jersey Casino Control Act, L. 1977, c. 110, § 1 et seq., as amended by L. 1978, c. 7, § 1 et seq., N.J. Stat. Ann. § 5:12-1 et seq. (West Supp. 1984) ("the Act") to the Hotel and Restaurant Employees and Bartenders International Union Local 54 ("the Union"). The Union and its President, Frank Gerace, seek a preliminary injunction, damages and a declaration that the New Jersey Casino Control Commission ("the Commission") may not enforce sections 93 and 86 of the Act
against them. In their complaint plaintiffs challenge two orders by the Commission, the first of which issued on September 28, 1982 and disqualified Frank Gerace and two others as officers of the Union, and the second of which issued on September 12, 1984 and directed the Union to remove the three individuals from their positions as Union officers. Plaintiffs' amended complaint asserts claims based on the federal labor laws, causes of action under the due process clauses of the Fifth and Fourteenth Amendments, various claims under the First and Fourteenth Amendments and a claim based on 42 U.S.C. § 1983. For the purposes of this motion, plaintiffs allege only that the qualification requirements of Section 86(f) of the Act, as applied to two of the Union's officers, violate the First, Fifth and Fourteenth Amendments.
The defendants in this action include the Casino Control Commission, the chairman and other members of the Commission, the New Jersey Division of Gaming Enforcement ("the Division"),
the director of the Division and the Governor of the State of New Jersey. Frank Gerace, Frank Materio and Karlos LaSane, the three union officers facing the removal sanction, have petitioned to intervene in this action as plaintiffs in their individual capacity. The intervenor-applicants propose to challenge the validity of section 86(f) of the Act as applied and on its face, on the ground that it violates First Amendment guarantees of freedom of association. The intervenor-applicants also seek to assert claims that section 86(f) is impermissibly vague, in violation of the First, Fifth and Fourteenth Amendments.
The history of this litigation is complex. At various times, the case has involved proceedings before the federal courts, the state courts and the Commission, a state regulatory agency. This matter originated with recommendations by the Division of Gaming Enforcement to the Commission to hold hearings as to the Union's compliance with sections 93 and 86 of the Act.
The Union and its President then presented this court with a motion for injunctive and declaratory relief in which plaintiffs sought an order prohibiting the Commission from conducting hearings as to the qualifications of Gerace and others to serve as officers of the Union. Plaintiffs argued that sections 93 and 86 of the Act were preempted by the federal labor laws and in violation of the First, Fifth and Fourteenth Amendments to the United States Constitution.
The court denied plaintiffs' motion. Hotel & Restaurant Employees & Bartenders International Union Local 54 v. Danzinger, 536 F. Supp. 317 (D.N.J. 1982).
Plaintiffs appealed this court's ruling and then sought a stay pending the outcome of the appeal, pursuant to Fed. R. App. P. 8(a). Initially, they were turned down by this court and the Court of Appeals. As a result, the Commission proceeded with disqualification hearings. Subsequently, the commission declared Frank Gerace, Frank Materio and Karlos LaSane to be disqualified as officers of the Union and decided to bar the Union from collecting dues from its members unless the three individuals left their posts. Plaintiffs returned to this court for a stay of the sanctions imposed by the Commission and received such relief from the court pending resolution of their appeal.
The Court of Appeals ruled that the federal labor laws, in particular section 7 of the National Labor Relations Act ("NLRA") and section 504 of the Labor Management Reporting and Disclosure Act ("LMRDA"), preempt the field of regulation of qualification of union officials. Hotel & Restaurant Employees & Bartenders International Union Local 54 v. Danziger, 709 F.2d 815 (3rd Cir. 1983). Accordingly, the court remanded the case for "entry of an order enjoining the Commission and the Division from taking any action, pending final hearing, to enforce section 93 against the casino." 709 F.2d at 833. Having resolved the appeal on federal statutory grounds, the court found it unnecessary to reach plaintiffs' constitutional claims based on vagueness and overbreadth. Id.
even a finding that § 7 prohibits imposition of the dues collection sanction need not imply that New Jersey's disqualification standards are not otherwise enforceable by the Commission. The Act, for example, apparently grants broad powers to the Commission to impose sanctions directly on disqualified persons and to limit or restrict a labor organization's registration. See N.J. Stat. Ann. § 5:12-64 (Supp. 1983-1984).
In its instructions to the court below, the Supreme Court ordered this court to consider on remand the factual issue of whether a dues collection ban would seriously conflict with the Union's "statutory functions as bargaining representative." 104 S. Ct. at 3192.
Since the Supreme Court announced its decision in June 1984, the Commission has taken several steps which have altered the posture of the case before this court. First, in its order of September 12, 1984, effective September 28, 1984 ("the 1984 Order"), the Commission withdrew its decision to impose the dues collection sanction. Second, the Commission chose to employ another sanction; that is, it ordered the Union to remove Gerace, Materio and LaSane from their positions. Commission Brief in Opposition to Application for a Temporary Restraining Order at 7; Appendix to Brief in Opposition at A2-A3, citing transcript of the Commission's 1984 Order.
Plaintiffs have again invoked the jurisdiction of this court after the intervenor-applicants exhausted their opportunities to obtain a stay of the Commission's 1984 Order in the state courts. On September 26, 1984, Judge Robert A. Matthews of the New Jersey Superior Court, Appellate Division, granted a stay of the Commission's 1984 Order as to Frank Gerace and Frank Materio. A stay was denied as to Karlos LaSane. Brief of Commission, Appendix at 10. On October 5, 1984, the Supreme Court of New Jersey dissolved the stay as to Gerace and Materio and denied an application for a stay by LaSane. Commission's Brief in Opposition to Application a Preliminary Injunction, Appendix at A2-A3.
Both the Union and Frank Gerace challenged the Commission's Order of September 28, 1982 ("the 1982 Order") in the Superior Court of New Jersey, Appellate Division. When the Third Circuit issued its decision staying the 1982 Order and invalidating sections 93(a) and 93(b), the Union and Gerace petitioned the Appellate Division to stay its proceedings in this matter, or, in the alternative, to dismiss the pending appeal without prejudice. On July 8, 1983, the Appellate Division denied the motions for a stay and dismissed the appeals without prejudice. The Union and the intervenor-applicants have recently requested the Appellate Division to reinstate their appeals of the Commission's 1982 Order and to consolidate them with those recently filed by them challenging the Commission's 1984 Order. As of the date of this opinion, the Appellate Division has not yet ruled on these motions.
The plaintiffs' allegations asserting denial of their rights guaranteed by the First, Fifth and Fourteenth Amendments properly invoke this court's jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1343 (West Supp. 1984). The individuals applying to intervene also predicate jurisdiction on the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, to the extent that they seek a declaration that section 86(f) of the Casino Control Act is facially invalid.
Defendants challenge the authority of the court to consider the merits of this motion on several grounds. Initially, the Division asserts that the Union lacks standing to challenge section 86(f) of the Act as applied to Gerace and Materio. According to the Division, no cognizable injury has been suffered by the Union due to the disqualification of its officers and it is inappropriate for the court to permit the Union to seek redress for injuries to third parties independently represented by counsel.
Next, the Commission and the Division contend that the court should abstain from rendering a decision in this matter on either of two grounds.
Defendants urge the court to dismiss the instant motion on the basis of the doctrine established by Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971), which limits the authority of the federal judiciary to enjoin state administrative and judicial proceedings. In the alternative, defendants request the court to stay its hand pending resolution of outstanding state law questions now on appeal in state court. This position is founded on the principles expressed in Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 85 L. Ed. 971, 61 S. Ct. 643 (1941). As this court explained in its earlier opinion, the major premises of Pullman abstention is the notion that the state courts should
have the opportunity to construe the Casino Control Act in a way which might obviate the necessity for a decision of the constitutional issues facing the court.
536 F. Supp. at 325. Under Pullman, the court would retain jurisdiction over all constitutional claims asserted in this case.
In the event that the court determines that it has the power to decide this case, defendants claim that the court is nevertheless barred from granting this motion for preliminary injunctive relief on grounds of res judicata and collateral estoppel. Defendants contend that this motion presents issues previously decided by the Supreme Court of New Jersey, and that "collateral review" or "relitigation" of such matters is impermissible.
There is no dispute that individual officers of the Union have standing to contest the Commission's order directing their removal from positions within the Union. The same actions by the Commission, however, are alleged to be an insufficient basis for a cause of action by the Union itself. According to the Division of Gaming Enforcement, the Union and its membership have no right to be led by specific persons regardless of the circumstances. The Division implies that the Union would thus suffer no legally cognizable injury as a result of the removal of Gerace and Materio. The Division argues that the Union is also an improper party to raise claims for Gerace and Materio, based on a theory of third-party standing, because the two individuals have independent counsel.
Such arguments have a superficial appeal, but upon closer review, they are without substance. The Division is correct that the Supreme Court declared in its opinion in this case that the states may impose certain qualification requirements which limit the right of unions to select particular persons for leadership positions. However, the fact that a right is qualified rather than absolute does not eliminate a party's capacity to challenge unlawful restrictions of that right. Generally, it is clear that both the membership and the institutional structure of a union suffers some injury when its elected officers cease to perform their assigned duties. In this case, where the Union is the object of the order directing removal of Gerace and Materio, the challenged actions plainly have a direct impact on the Union itself. The court finds that the Union and its President allege a threatened injury distinct from that which is alleged by Gerace, Materio and LaSane as individuals. Consequently, the court finds without merit and need not address the Division's objections concerning the Union's possible claims to third-party standing.
In Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971), the Supreme Court announced a rule of equitable restraint with respect to federal court intervention in state criminal prosecutions. Justice Black based his majority opinion on the notion of "comity." He declared that respect for the role of the state governments in the federal system requires federal courts to refrain from enjoining state criminal proceedings absent "special circumstances." 401 U.S. at 43-45. See generally 17 Wright, Miller & Cooper, Federal Practice and Procedure §§ 4251-4255 (1983 ed.); Johnson v. Kelly, 583 F.2d 1242, 1245-46 (3rd Cir. 1978). The Younger doctrine has been extended to certain state civil proceedings, both judicial and administrative. Huffman v. Pursue, Ltd., 420 U.S. 592, 43 L. Ed. 2d 482, 95 S. Ct. 1200 (1975) (civil counterpart to Younger created); Williams v. Red Bank Board of Education, 662 F.2d 1008, 1014-17 (3rd Cir. 1981) (applicability of Younger to some state administrative proceedings). Although Younger has been applied in many contexts to bar federal intervention in state administrative enforcement proceedings, strict limits on the Younger doctrine remain.
The initial task defendants face in urging application of Younger is to convince this court to deviate from its analysis earlier in this case rejecting such a result. When first faced with this issue, the court stated that
The rule which restricts the federal courts' power to enjoin state proceedings is applicable only to those proceedings which are initiated by the state. Johnson v. Kelly, 583 F.2d 1242, 1247, 1249 (3rd Cir. 1978); Bally Manufacturing Corp. v. Casino Control Commission, 534 F. Supp. 1213, 1218-20 (D.N.J. 1982); Santiago v. City of Philadelphia, 435 F. Supp. 136, 145 (E.D. Pa. 1977). It is recognized that on this motion the plaintiffs seek to restrain the hearings which were, in fact, scheduled at the instance of the Casino Control Commission. Nevertheless, the entire registration procedure is one which is initiated by the applicant, and it is the validity of the entire procedure which is in question in this case.
536 F. Supp. at 325. In support of their contention that the court's prior ruling on Younger abstention is not controlling, defendants argue that the Court of Appeals rejected the court's reasoning while sustaining the court's decision not to abstain. Defendants appear to concede that this action is not "state-initiated"; however, they allege that changes in the procedural posture of this case now demand a different result in light of the Third Circuit's different view of Younger abstention. Defendants further note that the validity of the Commission disqualification proceedings are no longer in doubt after the Supreme Court's ruling and that plaintiffs' claims are now being considered in state court. Consequently, they argue, the way is clear for this court to abstain under Younger.
The Third Circuit panel in this case was unanimous in upholding the court's decision not to invoke Younger. Neither opinion discussed the concept of "state initiation." The majority and minority opinions differed substantially in their treatment of the question. An understanding of these differences is essential to an evaluation of the effect of the circuit court's ruling on this court's "state initiation" analysis.
Judge Gibbons, writing for himself and Judge Higginbotham, stated that in spite of Younger, the federal courts have the power to intervene in state agency proceedings which implicate federal preemption interests such as maintenance of rights guaranteed by the federal labor laws. 709 F.2d at 832-833. He concluded that various decisions interpreting Younger in the context of labor relations
suggest that when the issue tendered to a federal district court is the very power, as a matter of federal law, to entertain a threatened proceeding, the principles of comity and federalism which apparently animate the Younger v. Harris rule are totally inapplicable. Certainly we cannot hold that the district court committed an abuse of discretion in holding a hearing on the Union's motion for a preliminary injunction.
709 F.2d at 833. This portion of the majority opinion followed the court's detailed discussion of preemption and preceded the court's brief explanation that its holding on the issue of preemption made it unnecessary to reach plaintiffs' First Amendment claims. Id.
The majority's silence on the "state initiation" issue and its focus on the validity of the Commission's proceedings both seem to follow from the court's great attention to preemption. The absence of any discussion of the district court's treatment of Younger may also reflect a view on the part of the majority that Younger did not pose a serious barrier to its power to review the case. By contrast, this courts prior opinion considered Younger abstention as a threshold question to be decided in light of all claims raised by the plaintiffs. Contrary to defendants' assertions, there is no evidence that the majority implicitly rejected the district court's "state initiation" rationale, and there is every indication that the circuit did not reach the issue because of other compelling reasons not to apply Younger.
Like the majority opinion, Judge Becker's opinion concentrates on abstention in the context of preemption and does not explicitly reject the "state initiation" rationale. Furthermore, Judge Becker disagreed with the majority's interpretation of Younger in many respects. In particular, he did not consider Younger "totally inapplicable." At most, Judge Becker's opinion, well-reasoned as it was, is a minority view on the question of "state initiation" as it applies to Younger abstention. It is far more likely that Judge Becker's decision is consistent with the "state initiation" rationale, because one of the cases cited in his discussion of Younger supports the "state initiation" rule. Williams v. Red Bank Board of Education, 662 F.2d 1008 (3rd Cir. 1981). The Williams court rejected an invitation to erode the "state initiation" doctrine. 662 F.2d at 1019-20.
The "state initiation" rule was first enunciated as the law of this circuit in Johnson v. Kelly, 583 F.2d 1242 (3rd Cir. 1978), and has been consistently applied since then. Williams, supra; Kennecott Corp. v. Smith, 637 F.2d 181, 186, n.4 (3rd Cir. 1980). The same rule has been followed in at least two other circuits.
Finally, defendants argue that the court should reconsider its characterization of the state agency proceedings in this case as not "state initiated." The court rejects this suggestion based on another of its opinions which set forth in detail the rationale behind the finding that Casino Control Commission enforcement proceedings against casino industry registrants are not "state initiated" for Younger purposes. Bally Mfg. Corp. v. Casino Control Commission, 534 F. Supp. 1213, 1218-20 (D.N.J. 1982). In light of the uninterrupted application of the "state initiation" rule as a bar to Younger abstention in this circuit, the court believes it would be unwarranted to read into the Third Circuit decision an implicit rejection of the "state initiation" rule.
In short, nothing has changed in this case to alter the fact that the absence of state initiation of the proceedings sought to be enjoined bars application of Younger. Accordingly, the motion will not be dismissed under the Younger doctrine.
Having decided that this action will not be dismissed, and before proceeding to consider other issues concerning the subject matter properly presented for review, the ...