U.S. Supreme Court Hears Oral Arguments In Illinois Public Sector Fair Share Case

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U.S. Supreme Court Hears Oral Arguments In Illinois Public Sector Fair Share Case

January 24, 2014

On October 1, 2013, the U.S. Supreme Court accepted an appeal in Harris v. Quinn 656 F.3d 692 (7th Cir. 2011). The Supreme Court heard oral argument on January 21, 2014 for this Illinois case that has potential to change the face of public sector “fair share” provisions. There are two primary questions at issue: (1) whether home health care workers are private sector or public sector employees; and (2) whether public sector employees that are covered by a collective bargaining agreement, but are not members of the Union, may be compelled to pay fair share fees to the union. Below is a synopsis of the Seventh Circuit’s decision, the oral arguments before the Supreme Court, and projections for how the Court will ultimately rule and the impact the decision may have on organized labor in the public sector.

Seventh Circuit Decision in Harris v. Quinn

The U.S. Seventh Circuit Court of Appeals ruled in Harris v. Quinn that the First Amendment did not prohibit state employees who were not union members from being compelled to pay mandatory fair share fees in order to support legitimate, non-ideological union activities apropos to collective bargaining representation. The plaintiffs in the case were represented and unrepresented health care workers that provide in-home care to disabled individuals through Medicaid-waiver programs in Illinois. The plaintiffs included two separate groups: one group consisted of plaintiffs that were not members of the Union, but were part of the bargaining unit and, therefore, subject to a collective bargaining agreement which required them to pay fair share fees; the second group consisted of home health care workers that rejected unionization and were not subject to a collective bargaining agreement, but alleged harm by the mere threat of the agreement which required fair share fees. The plaintiffs presented a two-prong argument. First, they argued that they are not state employees because they are employed by individual Medicaid patients. Therefore, the case does not fall under the line of Supreme Court decisions that permit public sector fair share fees to support collective bargaining representation. Second, they contended that the contractual fair share fees violated their First Amendment rights by compelling association with, and speech through, a Union.

As an initial matter, the Seventh Circuit determined that the home health care workers are indeed “state” employees – at least for collective bargaining purposes – “because of the significant control the state exercises over all aspects of the personal assistants’ jobs. . . .” Therefore, the court rejected the plaintiffs’ First Amendment claims, relying on long standing precedent, including Abood v. Detroit Board of Education, 97 S.Ct. 1782 (1977). As for the second set of plaintiffs, i.e. the individuals that successfully rejected unionization, the Seventh Circuit determined that those employees did not have a claim ripe for ruling.

The Abood decision involved a group of Detroit teachers who challenged fair share provisions in their collective bargaining agreement. In Abood, the Supreme Court determined that public employers and unions may lawfully enter into “fair share” arrangements. These types of arrangements provide that every employee that is represented by a union, even though the employee may not be a union member, must nevertheless pay to the union a service fee, not to exceed the union dues charged to members. However, the Court concluded that First Amendment principles prevented the public sector unions from using fair share fees to fund their political and ideological projects.

In Harris v. Quinn, the Seventh Circuit highlighted that the Supreme Court has continued to rely on precedent and to refine its approach on the appropriateness of collecting fees from non-members. For example, in Chicago Teachers Union v. Hudson, 475 U.S. 292 (1982), the Supreme Court outlined the proper procedures that must be followed in order to protect non-member fees. In Lehnert v. Ferris Faculty Association, 500 U.S. 507 (1991), the Court pronounced specific activities that may and may not be funded with such payments. Therefore, the Seventh Circuit reasoned, because the Supreme Court “has not wavered from its position that, as a general matter, employees may be compelled to support legitimate, non-ideological, union activities germane to collective-bargaining representation[,]” the state may continue to properly collect fair share fees from the plaintiff employees. Harris v. Quinn, 656 F.3d at 697.

Notably, however, the outcome and reasoning in the recent Knox v. Service Employees International Union decision suggests that the Supreme Court may, indeed, now be “wavering.” 132 S.Ct. 2277 (2012). The Knox case is the latest agency fee decision issued by the Supreme Court. In that case, the Supreme Court struck down a special assessment exacted by an SEIU Local from 28,000 non-members in California. Clark Baird Smith LLP’s analysis on the Knox decision is available by clicking here. The significance of that decision is twofold. First, the Court issued a broad opinion, holding that the Union violated non-union members’ First Amendment rights by requiring them to pay additional fair share fees for political activism without giving those individuals additional notice or a chance to object. This was the first time that the Court required public sector, non-union members to “opt-in” rather than “opt-out” of special assessments. The Court noted that “acceptance of the opt-out approach appears to have come about more as a result of historical accident than through the careful application of First Amendment principles.”

Second, the Knox opinion strongly suggested that several Justices have become increasingly skeptical of prior holdings concerning the constitutionality of imposing public sector fair share fees. Therefore, even though the Seventh Circuit emphasized the narrow reach of its Harris v. Quinn decision, stating “[w]e hold simply that the State may compel the personal assistants, as employees – not contractors, health care providers, or citizens – to financially support a single representative’s exclusive collective bargaining representation[,]” it may not be farfetched to consider the likelihood that the Supreme Court will issue a broader, more all-encompassing decision. Such a decision just might alter, or even overturn, Abood and over 35 years of public sector fair share fee precedent.

Oral Argument Recap

On Tuesday, January 21, 2014, the United States Supreme Court heard oral arguments in the Seventh Circuit’s Harris v. Quinn case. William Messenger, of the National Right to Work Committee represented the Petitioners, Paul M. Smith represented the Respondents, and Donald Verrilli, the Solicitor General of the U.S. Department of Justice, argued as amicus curiae in support of the Respondents.

The Petitioners’ attorney, as expected, argued that the state is not the home health care workers’ employer because individual patients hire and fire the aides. He also argued that bargaining over economic benefits in the public sector, per se, involves a political issue and, therefore, non-members cannot be forced to pay fair share fees. In fact, a few minutes into arguments, the Petitioners’ attorney urged the Court to overrule Abood, arguing that anything a public employer union does is political in nature and, therefore, shapes matters of public concern. In other words, the attorney argued that the home health care workers “are being forced to support” speech or expression that they do not agree with when they are compelled to pay fair share fees.

Justices Anthony M. Kennedy and Samuel A. Alito Jr. focused upon and questioned the parties about how the government could force unwilling employees to pay fair share fees. For instance, Justice Kennedy questioned the Respondent’s attorney as to how “a union can take money from an employee who objects to the union’s position on fundamental political grounds.” Particularly, Justice Kennedy suggested that a union’s policy pursuits in the public sector necessarily affect the size of government, which raises a question of fundamental political beliefs. In light of his hypotheticals and line of questioning throughout the argument, Justice Kennedy appears willing to at least augment the long standing First Amendment precedent. Interestingly, Justice Kennedy is generally considered to be the Court’s swing vote.

Justice Alito, keeping in line with his decision in Knox v. SEIU, sharply questioned the basic concept of public employee unionism. At one point, Justice Alito questioned the Union’s attorney as to why employees in the Federal Government are not assessed a fair share fee to provide and ensure “high morale, sufficient salary, [and] sufficient benefits”; however, in state and local government, these reasons are often cited in support of fair share provisions.

Justice Antonin Scalia’s line of questioning suggests that, as one of the more conservative Justices on the Court, he may not yet be ready to overturn Abood and its progeny. Specifically, Justice Scalia stated that “what our cases say is you can be compelled not to be a free rider.” Members and non-members of the bargaining unit benefit from things like higher wages, but there are certain things that “you can argue are not part of the representation for which [non-members] should be charged and they should get their money back for those things if they’re actually not getting any benefit from them.”

The newest Justice to join the Court, Justice Elena Kagan, seemed alarmed by the arguments made by the Petitioners’ attorney, labeling them as “radical.” Justice Kagan suggested that adopting the Petitioners’ reasoning “would radically restructure the way workplaces across the country are run.” Pushing the envelope, Justice Kagan questioned whether he was in fact arguing that “a right-to-work law is constitutionally compelled.” To this, the Petitioners’ attorney responded “[i]n the public sector, yes…”

How Will the Court Rule?

What is clear from Tuesday’s oral argument is that the Supreme Court remains divided. Therefore, there are a number of ways that the Court may decide this case. In the narrowest of ways, the Court may conclude that the home health care workers are not state employees; rather they are private employees, employed only by the individuals who hire them. Therefore, there was no authority under which to require fair share payments. The Court may draw distinctions between situations where bargaining over benefits in the public sector may produce civic tension, and those situations that do not. Therefore, perhaps, employees should be reimbursed for the amount of fair share fees spent by the Union to produce such civic tension – as Justice Scalia suggested at one point. On what is likely to be the broadest of potential rulings, a majority of the Supreme Court may ultimately decide to address and overturn the Abood decision.

Potential Impact of the High Court’s Decision

There is no concrete indication from the oral argument as to how the Court will ultimately rule. However, if the Supreme Court rules broadly, this decision may potentially turn the public sector into an “open shop.” Under this scenario, non-members would pay no “fair share” fees, which may lead some to abandon their union membership – “why pay for something when you can get it for free?” At the same time, certain public employees may be less affected than others. For example, in certain areas, such as public safety, employees may be more inclined to join or remain members of a union due in large part to the camaraderie and “peer pressures” exhibited by those employees.

The Court’s decision may also affect the labor movement because a majority of union employees work in the public sector. In recent years, overall union membership in the U.S. has been on a decline. The 2012 and 2013 U.S. Bureau of Labor Statistics union density reports are telling. In 2012, nationwide union membership rates fell by 400,000 to 14.3 million. Overall, the percent of workers who belong to labor organizations dropped to 11.3 percent – the lowest union density rate since 1916. In the public sector, union membership fell to 35.9 percent in 2012, from 37 percent the year prior. In 2013, overall Union membership remained the same as in 2012. However, public sector union membership fell slightly to 35.3 percent. In total, 7.2 million public sector employees belonged to a union in 2013, compared to 7.3 million in 2012. If Abood is overruled, even more public sector employees may abandon union membership.

The Court’s decision in this case also has the potential to impact the balance of political power. Labor unions have become a major source of campaign funding. For instance, in Illinois, IUOE Local 150’s PAC is a major financial supporter of Governor Quinn’s reelection campaign. Sun-Times (Jan. 7, 2014). Loss of union membership may, in turn, lead to further erosion of union funds for such political purposes.

This case is sure to be one of the year’s most anticipated decisions. The Supreme Court’s opinion is expected to be released sometime in June 2014.

The CBS LLP Legal Advisory is prepared for general information purposes only. The summaries of recent court opinions and other legal developments are not necessarily inclusive of all the recent legal authority of which you should be aware when making your legal decisions. Thus, while every effort has been made to ensure accuracy, you should not act on the information contained herein without seeking more specific legal advice on the application and interpretation of these developments to any particular situation.
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