Human Services Council of New York v. City of New York

Background

Human Services Council of New York and ten nonprofit member organizations that provide social services under contracts with New York City challenged Local Law 87, New York City Administrative Code § 6-145. The law requires covered human-services contractors, as a condition of receiving or renewing a City contract, to either enter into a labor-peace agreement with a labor organization or attest that no union currently represents, or has sought to represent, the covered employees. The required labor-peace term concerns uninterrupted delivery of services under the City contract and refraining from actions intended to interrupt those services.

The law also requires certain labor-relations certifications, permits investigations by the City Comptroller, and allows agencies to impose various remedies for violations, including requiring disclosures, allowing the contractor to cure a violation, withdrawing subcontractor approval, or terminating a contract. The law applies to awards and renewals after November 16, 2021. The City had not promulgated implementing rules, and the amended complaint did not allege that Local Law 87 had been enforced against any plaintiff.

Claims and Motions

The plaintiffs alleged that Local Law 87 was preempted—meaning displaced or overridden—by the National Labor Relations Act and the Labor Management Relations Act. They also alleged violations of the First Amendment’s speech and association protections, the Contracts Clause, the Due Process Clause, the Equal Protection Clause, the Takings Clause, and unspecified New York State and New York City laws.

The City, Mayor Eric Adams, and Comptroller Brad Lander moved to dismiss under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim. District Council 37, which had intervened as a defendant, filed a separate motion to dismiss.

Federal Labor-Law Preemption

The court rejected the National Labor Relations Act preemption claims. It applied the market-participant exception, under which a government generally is not treated as regulating labor relations when it acts as a purchaser or proprietor in the marketplace. The court concluded that Local Law 87’s required labor-peace term was tied to the City’s proprietary interest in avoiding interruptions in services provided under City contracts.

The court found that the law was limited on its face to City contracts and did not directly regulate work performed under non-City contracts. Any effects on other work were incidental consequences of voluntarily contracting with the City. The court also concluded that the law’s citywide scope, legislative history, enforcement mechanisms, and the unusual features of the human-services market did not make the law regulatory rather than proprietary. The complaint therefore did not plausibly allege that Local Law 87 was preempted by the National Labor Relations Act.

The court also rejected the Labor Management Relations Act § 302 preemption claim. That provision prohibits certain payments or transfers of value between employers and labor organizations and is aimed at corruption, bribery, and extortion in collective bargaining. The court held that negotiating and reporting a labor-peace agreement to comply with Local Law 87 did not plausibly constitute that type of conduct or conflict with § 302.

Constitutional Claims

The court held that the complaint did not plausibly allege a First Amendment speech violation. Local Law 87 requires negotiation of a labor-peace agreement and submission of an attestation, but it does not require contractors to remain neutral about unionization, express support for unions, or refrain from expressing views about unionization.

The court also rejected the First Amendment association claim. It characterized the required relationship between a nonprofit contractor and a labor organization as an arm’s-length commercial relationship concerning City services, rather than protected intimate or expressive association.

The court rejected the Contracts Clause claim because Local Law 87 states that it does not apply to awards or renewals before its effective date. The complaint did not identify any enforcement against a preexisting contract. The court also found that the allegations concerning contract registration and renewals were insufficient to plausibly show retroactive application.

The plaintiffs did not respond to the defendants’ arguments concerning due process, equal protection, and takings claims. The court treated those claims as abandoned and dismissed them. The court likewise dismissed the state and local law claims because the complaint did not identify which laws had been violated or explain the basis for the alleged violations.

Disposition

The court granted the City defendants’ motion to dismiss and District Council 37’s motion to dismiss. The court did not state that the dismissal was with or without prejudice. It allowed the plaintiffs to seek leave to amend by December 2, 2024, while stating that amendment appeared unlikely to be productive because the rulings primarily involved statutory interpretation.