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New York Racing Association Inc. v. National Labor Relations Board and New York State Labor Relations Board

decided: May 10, 1983.

THE NEW YORK RACING ASSOCIATION, INC., PLAINTIFF-APPELLEE,
v.
NATIONAL LABOR RELATIONS BOARD AND NEW YORK STATE LABOR RELATIONS BOARD, DEFENDANTS-APPELLANTS



Appeal from order of the United States District Court for the Eastern District of New York, remanding to the National Labor Relations Board three decisions declining to assert jurisdiction over plaintiff New York Racing Association. Held, the district court was without jurisdiction to review the agency's decisions.

Feinberg, Chief Judge, Lumbard and Kearse, Circuit Judges.

Author: Feinberg

FEINBERG, Chief Judge:

This appeal raises complex questions regarding the jurisdiction of a district court to review a decision of the National Labor Relations Board declining to take jurisdiction over labor disputes in a particular industry.*fn1 Plaintiff-appellee The New York Racing Association Inc. (the Racing Association) challenges decisions of defendant-appellant NLRB declining to assert jurisdiction over the horse racing industry in general and the Racing Association in particular. The United States District Court for the Eastern District of New York, Jack B. Weinstein, Ch. J., held that the NLRB's decisions were not based on adequate factual investigations and findings, and were therefore unlawful. The district court made its own findings of fact and conclusions of law and remanded the case to the Board for further proceedings. For the reasons stated below, we hold that the district court was without jurisdiction to review the NLRB's decisions, and we reverse with instructions to dismiss the complaint.

I. Facts

The Racing Association conducts thoroughbred horse racing and pari-mutuel wagering at three racetracks in New York. There is no dispute that the Racing Association's activities affect interstate commerce and generate hundreds of millions of dollars of gross income. The relations between the Racing Association and its some 1,700 employees are nevertheless regulated by defendant-appellant New York State Labor Relations Board (the State Board) rather than by the NLRB. This is because the NLRB has always declined to take jurisdiction over labor relations in the horse racing and dog racing industries. Indeed, since its creation the NLRB has never exercised all of its broad statutory jurisdiction, which extends to the limits of the commerce clause. See NLRB v. Children's Baptist Home, 576 F.2d 256, 258 n.1 (9th Cir. 1978); NLRB v. Marinor Inns, Inc., 445 F.2d 538, 541 (5th Cir. 1971). Over the years, however, the NLRB has from time to time reconsidered its policy of not regulating a particular industry, and in some instances, it has reversed its position and exercised jurisdiction. E.g., Cornell University, 183 NLRB 329 (1970) (non-profit education). Cf. Volusia Jai Alai, Inc., 221 NLRB 1280 (1975) (jai alai); El Dorado Inc., 151 NLRB 579 (1965) (casino gambling).

In 1975, the NLRB considered such a reversal of its position regarding the horse racing and dog racing industries. Following the informal rule-making procedures of the Administrative Procedure Act, 5 U.S.C. § 553, it announced in the Federal Register its intention to consider promulgating a rule asserting jurisdiction over these industries and inviting comment by interested parties. The NLRB received approximately 90 responses to this notice, the vast majority of which opposed the assertion of jurisdiction by the NLRB. After considering this record, the Board decided to continue to decline jurisdiction, and in April 1973, promulgated Rule 103.3, which provides as follows:

The Board will not assert its jurisdiction in any proceeding under sections 8, 9, and 10 of the act involving the horseracing and dogracing industries.

38 Fed. Reg. 9507 (1973), codified at 29 C.F.R. § 103.3 (1982). The Board noted in an accompanying explanatory statement that the states exercised extensive control over the horse racing and dog racing industries, including some aspects of labor relations. It also found that employment in these industries was generally part-time, short-term, and sporadic, suggesting the impact on commerce was minimal and that national regulation would be difficult and ineffective. Finally, the NLRB mentioned that few labor disputes had occurred in these industries in recent years. Its conclusion was that "the impact of labor disputes in these industries is insubstantial and does not warrant the Board's exercise of jurisdiction." 38 Fed. Reg. 9537 (1973).

In 1979, the Racing Association and the American Totalisator Company, Inc., filed petitions with the NLRB requesting the Board to repeal or amend Rule 103.3 and to assert jurisdiction over the horse racing and dog racing industries. The NLRB denied these petitions and announced its intention to "continue to decline to assert jurisdiction over labor disputes in these industries." 243 NLRB 314, 315 (1979). The NLRB acknowledged that "the operations of the Petitioners herein as a part of the horseracing industry are related to interstate commerce," id., but justified its decision to continue its long-standing policy by Congress' failure to overrule it in the Interstate Horseracing Act of 1978, and by the NLRB's inability to extend its jurisdiction without aggravating its already critical backlog of work. Chairman John H. Fanning and Member John C. Truesdale dissented, stating that the industries' substantial impact on commerce, recognized by Congress in the 1978 Act, as well as predictions in the press of unrest in the industries, warranted the exercise of jurisdiction.

In 1980, the Racing Association again asked the NLRB to take jurisdiction over it, this time by filing a petition under the National Labor Relations Act (the Act), 29 U.S.C. § 159(c)(1)(B), for an investigation and certification of bargaining representatives. Board Case No. 29-RM-635 (1980). In September 1980, the Regional Director denied the request on the grounds that "it would not effectuate the purposes of the Act to assert jurisdiction herein," relying on the Board's consistent policy on the horse racing industry, embodied in Rule 103.3.

The Association thereafter filed this suit for declaratory and injunctive relief against the 1979 decision of the NLRB as well as the 1980 decision of the Regional Director. The complaint demanded, among other things, a writ of mandamus compelling the NLRB to repeal or amend Rule 103.3 and to assert jurisdiction over the Racing Association, and a writ of prohibition forbidding the State Board to exercise any jurisdiction over the Association inconsistent with the NLRB's jurisdiction. The request that the NLRB take jurisdiction is an unusual position for an employer to espouse. It is doubtless relevant that the NLRB, unlike the State Board, hears complaints of unfair labor practices against unions brought by employers as well as the more customary charges brought against employers. Judge Weinstein denied defendants' motions to dismiss, or for summary judgment, for lack of subject matter jurisdiction and failure to state a claim on which relief can be granted. He conducted a bench trial at which the Association presented documentary and testimonial evidence; defendants did not present evidence, maintaining instead that the district court was confined to review of the administrative record.

In July 1982, the judge filed a memorandum and order remanding to the NLRB "the decisions . . . declining jurisdiction" over the Racing Association for reconsideration in light of his findings of fact and law. He set out extensive findings of fact on the dollar amount of business generated by the Association, the nature and number of the Association's work force and the conditions of employment, the NLRB's exercise of jurisdiction over other industries such as jai alai, casino gambling, utilities and hospitals, and figures on attendance and wagering at various sporting events across the country, including racing. He found that 29 U.S.C. §§ 159(c)(1) and 164(c)(1) gave rise to a statutory right of employers to representation hearings unless the NLRB's decision not to assert jurisdiction was based on a proper factual investigation leading to "a reasoned opinion that no labor dispute involving that class or industry will sufficiently impact interstate commerce." The judge found that because they violated this right, the decisions complained of in this action were reviewable by the District Court under Leedom v. Kyne, 358 U.S. 184, 3 L. Ed. 2d 210, 79 S. Ct. 180 (1958). Judge Weinstein concluded:

Neither in promulgating Rule 103.3 nor in denying plaintiff's petition for a representation hearing, did the Board conduct the requisite inquiry into the volume of commerce affected by potential labor disputes involving ...


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