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Divided California High Court Rules Union Free Speech Rights Outweigh Mall's Private Property Interests

In a rebuke to California employers facing union campaigns or other disputes with organized labor, the California Supreme Court ruled in a 4-to-3 decision issued on December 24, 2007, that a shopping mall's prohibition against unions and other third parties from urging consumer boycotts of mall tenants was contrary to the state Constitution's right to free speech. The court in Fashion Valley Mall v. National Labor Relations Board plainly summed up its decision, stating, "the right to free speech granted by article I, section 2 of the California Constitution includes the right to urge customers in a shopping mall to boycott one of the stores in the mall."

Facts Giving Rise to the Dispute

Pressroom employees of a California newspaper were involved in a labor dispute with their employer following the expiration of their collective bargaining agreement. As part of the dispute, union representatives began leafleting patrons at the entrance to a retail store within the Fashion Valley Shopping Center in San Diego, California. The shopping center is privately owned. The leaflets described how the newspaper allegedly treated its pressroom employees unfairly, encouraged individuals to call the newspaper's chief executive if "they believed employers should treat employees fairly" and provided the executive's name and telephone number.

The mall had adopted a policy which required third parties to obtain a permit to engage in "expressive activity" and required applicants to request the permit five business days prior to the activity. In addition, the expressive activity had to comply with mall policies, which in part prohibited permit seekers from "impeding, competing or interfering with the business of one or more of the stores or merchants in the shopping center" by "[u]rging, or encouraging in any manner, customers not to purchase the merchandise or services offered by any one or more of the stores or merchants in the shopping center."

Mall security officers arrived shortly after the union began its leafleting. They ejected the union members who were leafleting from the mall property upon threat of arrest or civil liability for trespassing because the union had not obtained the required permit to conduct expressive activity. The union members then retreated to public property and briefly continued their leafleting.

The union thereafter filed an unfair labor practice charge with the National Labor Relations Board, contending the Shopping Center's actions infringed on the union's rights under federal labor law. The NLRB found the mall had violated the National Labor Relations Act. The case was reviewed by the federal Circuit Court of Appeals in Washington, D.C. It ruled the union's activities were protected under federal labor law unless the shopping mall had a constitutional right under California law to exclude the union employees from the mall's premises. It asked the California Supreme Court to determine under state law whether the mall had the right to maintain and enforce against the union its rule prohibiting expressive activity on mall property where the activity urges a boycott of one its tenants.

California Supreme Court's Opinion

The state Supreme Court's decision first noted that article I, section 2 of the California Constitution permits a person to "freely speak, write and publish his or her sentiments on all subjects, being responsible for the abuse of this right. A law may not restrain or abridge liberty of speech or press." It then reviewed a prior decision which held that a public shopping mall was a "public forum", notwithstanding its private ownership, in which public expression had to be permitted but could be subject to reasonable time, place and manner restrictions.

Reiterating its prior finding that shopping centers are today's equivalent of the public sidewalks and streets of days gone by, the Court majority recounted a number of its prior decisions upholding protestors' rights to distribute literature inside privately-owned rail stations, union picketing of a store in a shopping mall and union distribution of handbills on a privately-owned sidewalk immediately outside the employer's business, and students' rights to obtain signatures in a shopping center opposing a United Nations resolution against Zionism (the much-publicized "Pruneyard" case). The court found these rights extended to situations even where the activity was unrelated to the shopping center's business activity.

The Court majority then applied a strict scrutiny analysis to the mall's policy because the policy distinguished among activities based on their content. Under the strict scrutiny standard, the mall's policy, according to the majority, must be "necessary to serve a compelling state interest, and . . . narrowly drawn to achieve that end." The Court concluded the mall policy did not satisfy the standard since the purpose of the policy, maximizing profits of the mall's tenants, was not "compelling" when compared to the union's right to exercise free speech.

Three judges filed a vigorous dissent. They noted that California had become increasingly isolated in its expansive view on free speech rights on private property, such as malls. They also took particular issue with the majority's view that protestors could come on private property specifically to interfere with the commercial purpose of the owner's enterprise.

Practical Implications for Employers

In light of this decision, privately-owned shopping centers and similar "public" fora in California should review their policies on access and expressive activity as soon as possible to assure that they are limited to time, place and manner restrictions, or that a justification sufficient to pass strict judicial scrutiny can be provided for any content-based restriction (this will be rare). Employers -- especially retailers with stores in shopping malls -- involved in corporate campaigns should recognize that this decision provides organized labor with another significant tool to generate pressure on a target company.