Justices Hear Arguments in Union Fees Showdown

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Lawrence E. Dubé

Jan. 11 — Jan. 11 — The U.S. Supreme Court Jan. 11 considered whether the First Amendment prohibits public employers from entering “fair share” or agency-shop agreements that unions depend on to finance their representation of public sector workers .

“All eyes and ears were on” Justice Antonin Scalia, attorney Ilyse W. Schuman of Littler Mendelson P.C. told Bloomberg BNA after the argument. Schuman said she considers Scalia the critical “swing vote” in this case and believes he will join four other justices to overrule a 1977 decision that permits agency fee provisions in public sector labor agreements.

The court also weighed whether public employees may be required to “opt out” of contributing to a union's nonrepresentational expenditures or whether the U.S. Constitution mandates that employees affirmatively opt into such financial commitments.

Rebecca Friedrichs and nine other public school teachers contend that they should not be required to opt out of paying nonrepresentational charges to the California Teachers Association, and they also insist they should not be required to provide any support to public employee unions whose bargaining with government is, by its very nature, political.

Lawyers for the teachers, the union, the state of California and the U.S. addressed the justices in a packed courtroom while teachers, nurses and other groups rallied their supporters in front of the Supreme Court building. Several comments made after the arguments indicate labor groups are pessimistic about their chances before the high court.

Latest Round on Public Sector Unions

The Friedrichs case is the latest round in a series of major cases on fair-share agreements.

Abood v. Detroit Board of Education , 431 U.S. 209, 95 LRRM 2411 (1977), held that such agency-shop arrangements in the public sector pass muster under the First Amendment if nonmembers' agency fees go solely toward the costs of bargaining, contract administration and grievance adjustment.

In Knox v. Service Employees Local 1000, 132 S. Ct. 2277, 193 LRRM 2641 (U.S. 2012) (120 DLR AA-1, 6/21/12), the court held that while public sector employees are generally given an opportunity to opt out of nonchargeable expenses, they have to be given an opt-in system for special assessments and dues increases.

In Harris v. Quinn, 134 S. Ct. 2618, 199 LRRM 3741 (U.S. 2014) (125 DLR AA-1, 6/30/14), the court held that personal care assistants paid by the state of Illinois but mostly supervised by the home care recipients they serve were not “full-fledged” public employees who could be compelled to pay union dues or fees.

Harris v. Quinn was seen as a close call by unions. Justice Samuel Alito wrote the court's majority opinion in Harris and said the reasoning of Abood is “questionable on several grounds,” but the court stopped short of overturning its almost 40-year-old precedent.

Legal Challenge Moved Quickly to High Court

Taking criticism of Abood a step further, the Friedrichs plaintiffs filed a lawsuit in the U.S. District Court for the Central District of California against the California Teachers Association and other defendants.

The teachers, who were not union members, alleged that “requiring Plaintiffs to make any financial contributions in support of any union, California's agency shop arrangement violates their rights to free speech and association under the First and Fourteenth Amendments to the United States Constitution.” The district court said Abood foreclosed their argument, and it granted judgment on the pleadings to the defendants (No. SACV 13-676, 2013 BL 372909 (C.D. Cal. 2013))

The U.S. Court of Appeals for the Ninth Circuit summarily affirmed the lower court judgment (No. 13-57095, 2014 BL 453683 (9th Cir. 2014)), clearing the teachers' path to seek Supreme Court review. The high court agreed last June to hear the case (125 DLR A-1, 6/30/15).

Friedrichs Questions Compelling Union Support

Michael A. Carvin of Jones Day in Washington, representing Friedrichs, opened the arguments, and he went straight to the teachers' contention that the First Amendment prohibits compelling public employees to provide financial aid to a labor union.

Justice Ruth Bader Ginsburg quickly asked whether the plaintiffs concede that a public employer can have an exclusive bargaining relationship with a union. Carvin said there was no question it can, but he argued public employees don't have to subsidize the union.

Justice Elena Kagan raised a question that Carvin also heard from other justices. Hasn't the court allowed state governments more leeway in First Amendment cases where the state's conduct as an employer is in dispute, she asked.

Justice Sonia Sotomayor followed up, saying the courts have allowed state agencies to restrict speech in some cases. If a state establishes a collective bargaining system that provides a role for public sector unions, shouldn't the courts defer to the state's judgment that such representation is workable and beneficial, she asked.

Carvin pressed his argument that the Constitution places constraints on states acting as employers and the court should not defer to the exercise of state power that interferes with the First Amendment.

Kagan said the teachers have a “heavy burden” to convince the justices that Abood should be overruled. She noted that briefs supporting the teachers' union asserted that tens of thousands of contracts and millions of employees would be affected if the court overrules the 1977 decision. What “special justifications” could Friedrichs offer for overruling a 39-year-old decision, she asked.

The attorney argued Abood was wrongly decided and said the court should be prepared to reconsider a ruling that compromised the constitutional rights of employees. But several justices pushed back on the question of stare decisis.

Kagan said she was not persuaded that a precedent should be overruled merely because following it would result in denying an important claim. The court denies claims every year because of respect for its own precedents, she said.

Justice Stephen G. Breyer chimed in, stating the justices often disagree about Fourth and Eighth amendment cases that make it onto the court's docket, but they apply the court's precedents even if they would not have voted in favor of the earlier decision.

Breyer asked if there should be a different approach for labor relations cases.

Effect of Overruling Abood Questioned

Justice Anthony M. Kennedy asked Carvin about contracts that have been negotiated since Abood. “What about the answer to Justice Kagan's questions about the many contracts, perhaps thousands of contracts? Would they suddenly be endangered? Would they all be void? Could you address that?” the justice asked.

Carvin said there is no reliance interest in such contracts and nothing would change. But Kagan responded that unions would likely have bargained for different contract terms or additional benefits if they had been told the Supreme Court would later curtail the enforcement of agency fee agreements in public sector contracts.

Kagan offered the view that Friedrichs's argument is that “Harris and Knox gave indications that the court was not friendly to Abood.” But the justice said that in Harris the court specifically rejected a request to overrule Abood.

“So,” the justice continued, “taking two extremely recent cases, which admittedly expressed some frustration with Abood, but also specifically decided not to overrule Abood, I mean, just seems like it's nothing of the kind that we usually say when we usually say that a precedent has to be overturned because it's come into conflict with an entire body of case law.”

State Defends Interests

California Solicitor General Edward C. DuMont argued for the attorney general of California, pressing what he called the state's “critical interests in being free to manage the public workplace, much like a private employer.”

But Chief Justice John G. Roberts said public sector labor relations are significantly different “when the collective bargaining agreement, itself, has to be submitted for public review and public comment.”

“That suggests that you're doing more than simply regulating the employment relationship,” he said.

The California solicitor general said the state has a vital interest in dealing with a single bargaining agent. Individual public employees may agree or disagree with the union's stance on a variety of issues, “[b]ut once the majority has said this is our representative, then that [organization] is going to represent all employees,” DuMont argued.

Agency Fee Impact on ‘Compelled Riders.'

Citing the argument that employees who didn't pay an agency fee would be “free riders” not sharing in the cost of representation, Kennedy commented that the union is making employees “compelled riders” if they are required to subsidize a union taking positions contrary to their own beliefs.

Kennedy said that even if topics discussed by public sector teachers and managers are employment-related and even if some employees would see the union positions as favorable to employees, “many teachers think that they are devoted to the future of America, to the future of our young people, and that the union is equally devoted to that but that the union is absolutely wrong in some of its positions.”

“Agency fees require … that employees and teachers who disagree with those positions must nevertheless subsidize the union on those very points,” Kennedy said.

Scalia said: “The problem is that everything that is collectively bargained with the government is within the political sphere, almost by definition. Should the government pay higher wages or lesser wages? Should it promote teachers on the basis of seniority ... all of those questions are necessarily political questions. That's the major argument made by the other side.”

Court Questions Burden of ‘Opt-In.'

David C. Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel P.L.L.C. in Washington, representing the union respondents, was the first attorney to receive any detailed questions about the opt-in/opt-out question.

Roberts said, “I think you would at least agree we're dealing with some sensitive and important constitutional issues. What is the burden on the union … of simply requiring opt-in as opposed to opt-out? At least then you ensure that people are making a conscious decision about supporting the union before they're compelled to do that.”

Frederick argued that Abood held that checking a box on a form to opt out of union fees was “basically no burden” on an individual. But the chief justice replied, “It's also easy to check a box saying opt in.”

Solicitor General Pleads Public Employer Interests

Solicitor General Donald B. Verrilli argued for the U.S. as an amicus curiae in the case.

He urged the justices to require a showing of changed circumstances before overruling a precedent that is nearly 40 years old, and he argued that it has been “of great benefit” to public employers to have unions negotiate for workers.

Having union participation in decisions and employment terms supports a perception that employment terms and benefits have been established through fair procedures, Verrilli said. “The union then, in effect, vouches for management with the workforce and prevents disruption.”

“I do think the reliance interests go very deep here,” he told the court.

Responding to the question of whether unions could survive without fair share fees, Verrilli said, “Abood never said, and no case since Abood has ever said, that agency fees are necessary to union survival.”

Verrilli said the Supreme Court's recent First Amendment decisions have distinguished between the state as a sovereign and the state as a public employer.

“I respectfully submit that distinction applies with equal force here,” the solicitor general said, “and especially given the stare decisis considerations that ought to govern this Court's decision in this context, that is more than sufficient to uphold, to reaffirm Abood.”

Scalia Vote Could Establish Majority

Schuman, a shareholder in Littler's Washington office and a co-chair of the firm's Workplace Policy Institute, said Scalia appears to be a swing vote who could join Roberts and Justices Kennedy, Alito and Clarence Thomas to deliver a majority in favor of overruling Abood.

During arguments that were relatively subdued, Scalia did not say a great deal, but Schuman said she believes what Scalia did say was telling.

Scalia's questions about the political nature of public sector union activity indicated he sees a difficulty in distinguishing between chargeable union expenses and lobbying activity that is political. “If you can't distinguish between lobbying and chargeable expenses,” the lawyer predicted, “Abood will fall.”

The justice also questioned Verrilli about distinctions between public and private employers. Scalia said the political nature of public sector bargaining “may require a change of the rule.”

Schuman also said the justices spent little time on the opt-in/opt-out issue compared to the larger Abood issue. If the court overrules Abood, it would not have to address the second issue in the case, she observed.

Ilya Shapiro, senior fellow in constitutional studies at the Cato Institute, also said in a statement after the arguments that Scalia is the likely swing vote in the case. “In other words, to the extent we can predict anything based solely on oral argument—take this with a mine of salt—I'd much rather be us (those who support the teachers) than them (those who support the teachers' union and state and federal governments),” Shapiro wrote.

The American Association of University Professors issued a statement concerning the oral argument. The group did not comment on specific arguments or questions by the justices, but gave an assessment that the case “threatens to reverse decades-old decisions allowing for the collection of fair share fees from public employees.”

Nan Aron, president of Alliance for Justice, which identifies itself as a coalition of progressive organizations, issued a statement that the arguments “demonstrate how little this case is about legal issues and how much of it is simply a camouflaged attack on the economic and political power of working families, public employees, and the broader labor movement.”

A decision in the case is expected before the court's term ends in June.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

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

For More Information 
Text of the oral argument transcript is available at http://src.bna.com/bYm.


Request Labor & Employment on Bloomberg Law