Judge Sides With Unions in Blocking Political Donation Law

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By Michael J. Bologna

July 5 — Michigan labor organizations won a preliminary injunction to halt enforcement of a state law that permits corporations but not unions to collect, via payroll deduction, donations to political action committees ( Michigan AFL-CIO v. Johnson, E.D. Mich., No. 16-cv-11454, order 6/30/16 ).

The “PAC checkoff” portion of Public Act 269 of 2015 likely effectuates “viewpoint discrimination” and thus infringes on workers' First Amendment rights to engage in political speech, Judge Linda Parker of the U.S. District Court for the Eastern District of Michigan ruled June 30.

“The Court finds that by enacting PA 269, Michigan has placed an obstacle—bolstered by the threat of a felony charge—in the path of organizations’ and employees’ efforts to solicit and raise funds necessary to engage in political speech. The Court further finds that this obstacle does not apply evenhandedly,” Parker said.

The statute “is unconstitutional” unless it furthers a compelling government interest, a burden the state had failed to demonstrate to the court, Parker said.

She found that a preliminary injunction is appropriate in light of state and national election activities during 2016.

“Plaintiffs establish that unions named in this lawsuit are losing substantial PAC contributions as a result of PA 269, which they cannot otherwise collect in time for the current election cycle,” Parker wrote. “Thus the statute is negatively impacting Plaintiffs’ ability to fund their political activities this election cycle and thereby have their opinions heard.”

Andrew Nickelhoff, who represents the Michigan State AFL-CIO, called the ruling “a big win for working people.” The injunction “halts the unfair and unequal treatment of union members under P.A. 269 and protects the constitutional rights of union members to speak up together and participate in our elections,” he told Bloomberg BNA July 5.

The State AFL-CIO and several labor unions challenged the law.

A spokesperson for Michigan Attorney General Bill Schuette (R), who is representing the state in the matter, didn't respond to Bloomberg BNA's request for comment.

Legislative History Shows Partisan Battle

P.A. 269, originally crafted as Senate Bill 571, started as a series of bipartisan adjustments to the Michigan Campaign Finance Act.

A Republican lawmaker amended S.B. 571 on the final day of the 2015 legislative session. The measure passed the legislature with several Democratic lawmakers later complaining they didn't understand the implications of the amended bill.

Gov. Rick Snyder (R) signed the legislation Jan. 6.

A crucial provision of the law affects employers' administration of “separate segregated funds” (SSFs), generally used for PAC check-off purposes. P.A. 269 permits employers to use payroll deductions for contributions to its own SSFs and the SSFs of certain nonprofit organizations.

But the law expressly prohibits employers from using payroll deductions for contributions to any other SSFs. It treats violations as felonies subject to a fine of up to $5,000 and a three-year prison term.

Union officials argued that the provision has the practical effect of barring payroll deductions only to union-directed PACs.

Republican lawmakers' clear purpose was to “target unions and disable unions” from political expression, said Nickelhoff, a partner with Sachs Waldman PC in Detroit. The unions will seek a permanent order voiding the PAC checkoff provisions of P.A. 269, he said.

Gag-Order Provisions

Parker's ruling marks the second time a federal judge has voided a provision of P.A. 269, Nickelhoff said.

Judge John Corbett O'Meara, also of the Eastern District of Michigan, signed a permanent injunction April 28 barring Michigan from administering a portion of the law imposing pre-election “gag orders” on school districts and other local units of government ( Taylor v. Johnson, E.D. Mich., No. 5:16-cv-10256, consent judgment 4/28/16 ).

The provision, challenged by a dozen Michigan municipalities, prohibited governmental units from providing informational mass communications to voters during the 60 days leading up to a ballot proposal. O'Meara voided the provision, finding it to be unconstitutionally vague.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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