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High Court’s Union Fee Decision Hasn’t Expanded in Past Year

June 27, 2019, 10:15 AM

Federal courts thus far haven’t been willing to chip further away at union power in the year since the U.S. Supreme Court ruled that public sector unions can’t require nonmembers to pay fees for collective bargaining and other nonpolitical expenses, according to a Bloomberg Law review of decisions.

Unions have faced dozens of lawsuits in the wake of the high court’s ruling last June in Janus v. AFSCME. The cases include class actions for refunds or damages related to previously paid fees, challenges of restrictions on when former members can stop paying dues, and bids to roll back unions’ authority to speak for nonmembers in unionized workplaces. Workers represented by conservative organizations like the National Right to Work Legal Defense Foundation, Freedom Foundation, and Buckeye Institute filed many of the lawsuits.

Courts, however, have roundly rejected claims against unions that rely on Janus. Unions have prevailed in 17 decisions related to fee refunds, 10 involving exclusive representation, and six on ceasing dues payments, a review of decisions showed. The only union losses came in two rulings that revived fee refund claims that had been dismissed prior to the Janus decision, so courts could consider its impact.

Unions have prevailed “because those claims are based on a blatant misreading of Janus,” which is a narrow ruling applying to union fees in the public sector, said Scott Kronland, an Altshuler Berzon attorney who represents unions in several of those cases.

Still, the outlook for expanding Janus could change quickly with a federal circuit court decision or if the Supreme Court grants review of a related case. Many lawsuits remain pending at the district and circuit court level, and there’s at least one Janus-related petition for review awaiting the justices’ attention.

National Right to Work Foundation spokesman Patrick Semmens said the Supreme Court was clear that taking fees from workers absent their consent violates the Constitution, which supports the fee-refund and dues-cessation claims. There was also language in the Janus decision reflecting skepticism about exclusive representation, Semmens said.

Unions have agreed to settle at least two lawsuits seeking fees and three suits challenging restrictions on ending dues payments, Semmens said.

In Janus, the high court’s five conservative justices ruled that the First Amendment bars public sector unions from requiring nonmembers to pay fees. Justice Samuel Alito wrote for the majority that requiring such fees violates “the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern.”

The ruling took away a significant funding source from organized labor, with the four major public sector unions losing more than 380,000 fee payers as a result.

The decision also created a potential free-rider problem for public sector unions, since members can resign and get the benefits of union representation for free. But unions at the national level haven’t seen their membership rolls decline significantly over the past year.

Fees Paid Before Janus

Several unions had faced fee-refund lawsuits even before the Supreme Court declared such mandatory fees unconstitutional.

The high court’s decision gave the existing lawsuits a boost and prompted workers to file more, expanding unions’ financial exposure. Five lawsuits alone filed by the National Right to Work Legal Defense Fund on behalf of workers, for example, seek the refund of more than $150 million in fees.

Thus far, those lawsuits have run up against unions’ good-faith defense. Courts have said unions weren’t at fault by relying on both the Supreme Court’s 1977 ruling in Abood v. Detroit Board of Education, which permitted mandatory agency fees until the high court overturned that ruling in Janus, as well as relevant state laws authorizing those fees.

The initial set of rulings turning aside the fee-refund claims didn’t surprise Maxford Nelsen, labor policy director at the Freedom Foundation, which filed some of those lawsuits.

“These cases are playing out primarily in district courts in states that tend to be sympathetic to unions,” Nelsen said. “They’re the states that allowed mandatory agency fees. They’re used to the Abood framework.”

Despite their early wins, unions “should not be too confident, especially about the chances in the Supreme Court—if it agrees to hear the cases,” said William Baude, a law professor at the University of Chicago.

Exclusive Representation

There also were lawsuits in the works before Janus that challenged unions’ power to act as exclusive bargaining agent for Medicaid-subsidized care providers. Janus further fueled those claims that nonunion workers shouldn’t have to accept a union speaking for them. It also sparked lawsuits aiming to undo exclusive representation in the public sector.

Rolling back exclusive representation would put labor-management relations in new territory, potentially undermining employers’ duty to bargain with unions even as it could spark negotiations with multiple unions or individual workers.

Thus far, courts have turned aside cases making those arguments, invoking the high court’s Supreme Court’s 1984 ruling in Minnesota State Board for Community Colleges v. Knight, which allows states to designate unions to serve as workers’ exclusive bargaining representatives.

The Supreme Court rejected two petitions this spring asking the court to reconsider its Knight ruling. But the court has a third petition that tees up the issue in a case involving care providers. The justices considered that petition in its private conference last week, but they haven’t announced what it will do with the case.

“Until they act on that petition, we won’t know whether there are the votes on the court to go further than what it did in Janus,” said Catherine Fisk, law professor at the University of California-Berkeley.

The high court could find itself with a “line-drawing problem” if it does go further, Fisk said. Striking down exclusive representation for care workers may open the door to eliminating it for public and private sector workers in later cases, she said.

Dues Payments, Right to Work

Lawsuits challenging restrictions on when former union members can stop paying dues make up a third major tranche of lawsuits that followed the Janus decision.

These cases claim the First Amendment prohibits restrictions unions have put on when former members can withdraw their authorization to pay dues, which often come in the form of particular time windows for such revocations.

Courts have rejected those claims so far, saying those workers signed contracts that included the terms for ceasing dues payments and Janus doesn’t let them out of those contractual obligations.

One case in which Janus played a role in a union defeat, however, was the Kentucky Supreme Court’s ruling upholding that state’s so-called right-to-work law, which prohibits from charging nonmembers mandatory agency fees.

Among the arguments that a coalition of unions made to challenge the law was that it forced them to provide services—such as handling grievances, and negotiating and administering contracts—without compensation, making it an unconstitutional taking.

The Janus decision “conclusively refutes” the unions taking claim by pointing out that they’re adequately compensated for providing services to nonmembers by the privileges that come with being designated as an exclusive bargaining representative, the Kentucky Supreme Court said.

A dissenting justice disagreed, saying Janus was irrelevant to the state’s right-to-work law because that ruling dealt with public sector workers only.

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Terence Hyland at thyland@bloomberglaw.com; Cynthia Harasty at charasty@bloomberglaw.com