U.S. Supreme Court rules First Amendment does not allow public sector union to require objecting nonmembers to pay special fee to finance union’s political activites
Knox v. Service Employees Int’l Union, Local 1000, No. 10-1121 (U.S. Jun. 21, 2012)
Abstract: In a 7-2 decision, the U.S. Supreme Court reversed the decision of a panel of the U.S. Court of Appeals for the Ninth Circuit (AK, AZ, CA, HI, ID, MT, NV, OR, WA) and held that a California public sector union had violated the First Amendment when it imposed a special assessment on nonmembers to fund solely political activities without providing those members with the opportunity to opt out of paying the fee.
Before ruling on the merits, the Court initially addressed the union’s arguments that the case should be dismissed as moot because the union had sent out a notice offering a full refund of the special assessment to all members of the class action. Ultimately, the Court held that issuing the refund notice did not render the case moot, because the union could resume the conduct after the case was dismissed, and there was still a live controversy as to the adequacy of the union’s refund notice.
On the merits, the seven-justice majority held that when a public sector union imposes a special assessment or dues increase, the union must provide a fresh Hudson notice (i.e., an adequate explanation for the basis for the fees, a reasonably prompt opportunity to challenge the amount of the fee, etc.), as required by the Court’s precedent in Chicago Teachers Union No. 1 v. Hudson, 475 U. S. 292 (1986). A smaller five-justice majority further held that the union cannot require nonmembers to pay the fee unless they opt in by affirmatively consenting to it.
Justice Alito, joined by Chief Justice Roberts and Justices Scalia, Kennedy, and Thomas, delivered the Court’s opinion. Justice Sotomayor, joined by Justice Ginsburg, filed an opinion concurring in the judgment. Justice Breyer, joined by Justice Kagan, filed a dissenting opinion.
Facts/Issues: In June 2005, the Service Employees International Union, Local 1000 (SEIU), a California public sector union, sent its annual Hudson notice informing employees about the agency fee for the coming year, setting and capping monthly dues, and estimating that 56.35% of its total expenditures in the coming year would be chargeable collective-bargaining expenses. This particular Hudson notice also contained a provision that the agency fee was subject to increase at any time without further notice.
In August 2005, after the 30-day objection period for the June Hudson notice had expired, SEIU sent a letter to unit employees (composed of union members and nonmembers) announcing a temporary 25% increase in employee fees and a temporary elimination of the monthly dues cap. The employees were notified that the funds were going to be used to help achieve SEIU’s political objectives in the November 2005 special election and in the November 2006 election.
Nonmembers were not given a choice as to whether they would pay into the political fund. Petitioners, on behalf of nonmembers who were forced to pay into the political fund, brought a class action suit against SEIU alleging that the special assessment violated their First Amendment rights. In 2008, a federal district court granted the Petitioners’ summary judgment motion, ruling that the special assessment was entirely for political purposes. The district court also ordered SEIU to send a new notice giving all class members 45 days to object and to provide those who objected with a full refund of contributions to the political fund.
In 2010, the majority of a divided panel of the Ninth Circuit reversed, concluding that Hudson prescribed a balancing test under which the proper inquiry is whether SEIU’s procedures reasonably accommodated the interests of the union, the employer, and the nonmember employees. The Petitioners appealed that ruling, and the Court granted the petition in 2011.
Ruling/Rationale: The Court reversed the decision of the Ninth Circuit panel. Before reaching the merits of the case though, SEIU initially argued that the Court should dismiss the case as moot, because SEIU sent out a notice to all class members offering a full refund of the special assessment. However, in dismissing SEIU’s motion, the Court stated that SEIU defended the Ninth Circuit’s decision on the merits in opposing the petition for certiorari. Additionally, the Court noted that the refund notice was not sent out until after the Court granted certiorari, stating that “[s]uch postcertiorari maneuvers designed to insulate a decision from review by this Court must be viewed with a critical eye.” The court found that because SEIU “continues to defend the legality of the [political fund], it is not clear why the union would necessarily refrain from collecting similar fees in the future.” The Court also determined that SEIU’s mootness argument failed because there was still a live controversy as to the adequacy of the refund notice. The concurrence and dissent are silent on the mootness issue.
With respect to the merits, a seven justice majority agreed, with two concurring only in the judgment, that there was “no justification for the union’s failure to provide a fresh Hudson notice.” However, the Alito-led five-justice majority went further, concluding that in order to “respect the limits of the First Amendment, the union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out.”
The Alito majority found that even if the opt-out burden was justified “during the collection of regular dues on an annual basis, there is no way to justify the additional burden of imposing yet another opt-out requirement to collect special fees whenever the union desires.” As a result, the Alito majority concluded that in this case, “we see no justification for any further impingement [of nonmembers' First Amendment rights]. The general rule — individuals should not be compelled to subsidize private groups or private speech — should prevail.” Thus, the Alito majority held that “when a public-sector union imposes a special assessment or dues increase, the union must provide a fresh Hudson notice and may not exact any funds from nonmembers without their affirmative consent.”
Justice Sotomayor concurred with the judgment of the Alito majority to the extent that nonmembers are provided an opportunity to opt out of contributing to the political fund. However, Sotomayor did not agree with the Alito majority’s “decision to address unnecessarily significant constitutional issues well outside the scope of the questions presented and briefing,” i.e., whether “the Constitution requires an opt-in system of fee collection in the context of special assessments or dues increases….” She stated that the Petitioners did not argue this point, and “[n]ot surprisingly, respondents did not address such a prospect.” According to Sotomayor, “[t]he majority announces its novel rule without any analysis of potential countervailing arguments and without any reflection on the reliance interests our old rules have engendered.”
In his dissent, Justice Breyer stated that the Alito majority departed from “the basic Hudson-approved administrative system.” In Breyer’s view, the Alito majority argues “that (Step 1) Hudson is predicated on the assumption that a union’s allocation of funds for chargeable and nonchargeable purposes is not likely to vary greatly from one year to the next;” “(Step 2) this assumption does not apply to midyear assessments; hence (Step 3) what appears binding precedent (namely Hudson) does not bind the Court in its interpretation of the Constitution as applied to those assessments.” However, Breyer stated that he “cannot find in Hudson the ‘assumption’ of uniform expenditures that the Court says underlies it. The assumption does not appear there explicitly.”
Breyer also stated his belief that the First Amendment does not require “giving a second objection opportunity to those nonmembers who did not object the first time.” As to the imposition of the “opt-in” requirement, Breyer agreed with Sotomayor that it ran “directly contrary to precedent” because the issue had not been “fully argued in this Court or in the courts below.” Breyer pointed out that “the Court, which held recently that the Constitution permits a State to impose an opt-in requirement, …, has never said that it mandates such a requirement,” and he found “no good reason for the Court suddenly to enter the debate, much less now to decide that the Constitution resolves it.”
Knox v. Service Employees Int’l Union, Local 1000, No. 10-1121 (U.S. Jun. 21, 2012)
[Editor's Note: In October 2011, Legal Clips summarized an Associated Press article in Bloomberg Businessweek, which reported that the Michigan Senate was then considering the so-called “right to teach” bill (SB 729) that is opposed by the state’s largest teachers’ union, the Michigan Education Association (MEA). The proposed legislation would prohibit public schools from requiring employees to pay union dues or fees as a condition of employment. It appears that the bill would affect only the MEA because it would apply only to unions that represent at least 50,000 workers. The proposed legislation remains in committee.
In August 2011, Legal Clips summarized an article in the Columbus Dispatch, which reported that a group of teachers, who were receiving legal assistance from the National Right to Work Foundation, had filed a class action suit in federal court alleging that so-called fair-share fees taken from their paychecks by the Ohio Education Association were unlawfully being used to finance campaigns, lobby elected officials, and similar efforts. ]