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BROWN v. HOTEL & RESTAURANT EMPLOYEES & BARTENDERS INTERNATIONAL UNION LOCAL 54 ET AL.

decided*fn*: July 2, 1984.

BROWN, DIRECTOR, DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF GAMING ENFORCEMENT, STATE OF NEW JERSEY, ET AL
v.
HOTEL & RESTAURANT EMPLOYEES & BARTENDERS INTERNATIONAL UNION LOCAL 54 ET AL.



APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT.

O'connor, J., delivered the opinion of the Court, in which Burger, C. J., and Blackmun and Rehnquist, JJ., joined. White, J., filed a dissenting opinion, in which Powell and Stevens, JJ., joined, post, p. 513. Brennan and Marshall, JJ., took no part in the decision of the cases.

Author: O'connor

[ 468 U.S. Page 493]

 JUSTICE O'CONNOR delivered the opinion of the Court.

In 1976, the citizens of New Jersey amended their State Constitution to permit the legislative authorization of casino

[ 468 U.S. Page 494]

     gambling within the municipality of Atlantic City.*fn1 Determined to prevent the infiltration of organized crime into its nascent casino industry and to assure public trust in the industry's integrity, the New Jersey Legislature enacted the Casino Control Act (Act), N. J. Stat. Ann. § 5:12-1 et seq. (West Supp. 1983-1984), which provides for the comprehensive regulation of casino gambling, including the regulation of unions representing industry employees. Sections 86 and 93 of the Act specifically impose certain qualification criteria on officials of labor organizations representing casino industry employees. Those labor organizations with officials found not to meet these standards may be prohibited from receiving dues from casino industry employees and prohibited from administering pension and welfare funds. The principal question presented by these cases is whether the National Labor Relations Act (NLRA), as amended, 29 U. S. C. § 141 et seq., precludes New Jersey from imposing these criteria on those whom casino industry employees may select as officials of their bargaining representatives. We hold that it does not.

I

A

The advent of casino gambling in New Jersey was heralded with great expectations for the economic revitalization of the

[ 468 U.S. Page 495]

     Atlantic City region, but with equally great fears for the potential for infiltration by organized crime. The state legislature conducted extensive hearings and, in cooperation with the Governor, commissioned numerous studies on how best to prevent infiltration by organized crime into the casino industry.*fn2 These studies confirmed the fact that the vast amount of money that flows daily through a casino operation and the large number of unrecorded transactions make the industry a particularly attractive and vulnerable target for organized crime. The New Jersey Commission of Investigation (NJCI), for example, found that there was a "well-organized highly functional organized crime network in [New Jersey]" which had become more interested in investing funds in legitimate enterprises.*fn3 The NJCI feared that such an incursion by organized crime into the Atlantic City casinos might also be accompanied by extortion, loansharking, commercial bribery, and tax and antitrust violations. It was on the basis of these hearings and empirical studies that New Jersey finally adopted the Act, a comprehensive statutory scheme that authorizes casino gambling and establishes a rigorous system of regulation for the entire casino industry.

In order to promote "public confidence and trust in the credibility and integrity of the regulatory process and of

[ 468 U.S. Page 496]

     casino operations," the Act "[extends] strict State regulation to all persons, locations, practices and associations related to the operation of licensed casino enterprises and all related service industries." N. J. Stat. Ann. § 5:12-1(b)(6) (West Supp. 1983-1984). The Casino Control Commission (Commission), an independent administrative body, possesses broad regulatory authority over the casinos and other related industries, §§ 5:12-63 to 5:12-75. The Division of Gaming Enforcement (Division), a part of the Attorney General's Office, is charged with the responsibility for investigating license and permit applicants and for prosecuting violators of the Act, §§ 5:12-76 to 5:12-79.

The Act imposes strict licensing requirements on any business seeking to own and operate a casino hotel, §§ 5:12-84(a)-(c); on suppliers of goods and services to casino hotels, §§ 5:12-12, 5:12-92; on all supervisory employees involved in casino operations, §§ 5:12-9, 5:12-89; and on all employees with access to the casino floor, §§ 5:12-7, 5:12-90. The Act requires registration, rather than licensing, for employees of casino hotels. Casino hotel employees include those performing "service or custodial duties not directly related to operations of the casino, including, without limitation, bartenders, waiters, waitresses, maintenance personnel, kitchen staff, but whose employment duties do not require or authorize access to the casino." § 5:12-8. Most relevant to this litigation, § 93(a) of the Act also requires labor organizations that represent or seek to represent persons employed in casinos or casino hotels to register annually with the Commission, § 5:12-93(a).

All those entities and persons required to be licensed or registered are subject to the disqualification criteria set forth in § 86 of the Act. Section 86 specifically lists criteria for the disqualification of casino licensees. The Commission is authorized to revoke, suspend, limit, or otherwise restrict the registration of any casino hotel employees who would be disqualified for a casino license. N. J. Stat. Ann. §§ 5:12-86, 5:12-91(b) (West Supp. 1983-1984). All industries offering

[ 468 U.S. Page 497]

     goods or services to the casinos are also subject to the disqualification criteria of § 86. § 5:12-92.

Section 93(b) directly subjects registered labor organizations to the § 86 disqualification criteria and imposes two express penalties for noncompliance:

"No labor organization, union or affiliate registered or required to be registered pursuant to this section and representing or seeking to represent employees licensed or registered under this act may receive any dues from any employee licensed or registered under this act and employed by a casino licensee or its agent, or administer any pension or welfare funds, if any officer, agent, or principal employee of the labor organization, union or affiliate is disqualified in accordance with the criteria contained in section 86 of this act. The commission may for the purposes of this subsection waive any disqualification criterion consistent with the public policy of this act and upon a finding that the interests of justice so require."

The disqualification criteria referred to in § 86 include convictions for a list of enumerated offenses or "any other offense which indicates that licensure of the applicant would be inimical to the policy of this act and to casino operations." N. J. Stat. Ann. § 5:12-86(c)(4) (West Supp. 1983-1984). Disqualification may also result if an individual is identified "as a career offender or a member of a career offender cartel or an associate of a career offender or career offender cartel in such a manner which creates a reasonable belief that the association is of such a nature as to be inimical to the policy of this act and to gaming operations." § 5:12-86(f).*fn4

[ 468 U.S. Page 498]

     B

Appellee Hotel and Restaurant Employees and Bartenders International Union Local 54 (Local 54) is an unincorporated labor organization within the meaning of § 2(5) of the NLRA, 29 U. S. C. § 152(5). Local 54 represents in collective bargaining approximately 12,000 employees, 8,000 of whom are employed in casino hotels in Atlantic City. All of Local 54's casino hotel employees work in traditional hotel and restaurant service-related positions; none are employed in direct gambling operations. Appellee Frank Gerace is the president of Local 54.

In 1978, Local 54 began filing with the Commission the annual registration statement required by § 93(a) of the Act. Following a lengthy investigation, the Division in 1981 reported to the Commission that, in its view, Local 54's President Gerace, Secretary-Treasurer Robert Lumio, and Grievance Manager Frank Materio were disqualified under the criteria of § 86. Pursuant to that section, the Commission scheduled a hearing on the Division's allegations. When Local 54 raised objections to the constitutionality of § 86 and § 93, the Commission ruled that it lacked the authority to consider such challenges to its enabling statute. In response, appellees filed a complaint in District Court,*fn5 seeking declaratory and injunctive relief on the grounds that § 86 and § 93 impermissibly regulate areas which are preempted by the NLRA, the Employee Retirement Income Security Act (ERISA), 29 U. S. C. § 1001 et seq., and the Labor-Management Reporting and Disclosure Act of 1959

[ 468 U.S. Page 499]

     (LMRDA), 29 U. S. C. § 401 et seq., and that § 86(f) violates the Constitution because it is both overbroad and vague. Appellees also filed a motion for preliminary injunctive relief alleging irreparable injury from being forced to participate in further Commission proceedings.

After a hearing, the District Court denied the motion for a preliminary injunction, concluding that appellees were unlikely to succeed on the merits of their claims.*fn6 536 F.Supp. 317 (NJ 1982). Since no preliminary injunction was entered, the Commission went forward with its disqualification hearing. The Commission concluded that Gerace and Materio were disqualified under § 86(f) because they were associated with members of organized crime in a manner inimical to the policy of the Act and to gaming operations. Local 54's Business Agent, Karlos LaSane, was also held disqualified under § 86(c) because he had been convicted in 1973 of extortion from persons doing business with Atlantic City while he was a City Commissioner.*fn7 On the basis of its findings, the Commission ordered that these individuals be removed as officers, agents, or principal employees of Local 54, failing which Local 54 would be barred from collecting dues from any of its members who were licensed or registered employees under the Act. See App. to Juris. Statements 206a-207a. The Commission later issued a supplemental decision, determining that the ...


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