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Justices Weigh Public-Sector Unions' Political Fees

The U.S. Supreme Court appeared inclined on Tuesday to rule against public-employee unions by requiring that they provide nonmembers with additional opportunities to object to special assessments or dues increases to fund political goals.

But members of the court also are weighing whether the case before it is moot—a question that dominated roughly half of the oral argument in Knox v. Service Employees International Union, Local 1000 (No. 10-1121).

The case involves the intricate area of labor law involving "agency fees," or service fees, that public-employee unions charge non-union members for collective-bargaining benefits and other permissible costs. Several of the Supreme Court's key precedents in this area involved teachers' unions, though the case argued Tuesday involves a unit of the SEIU that represents California state government employees.

The Supreme Court has sided with anti-union forces on related issues in several recent cases, and the new case could be highly relevant as teachers' unions and other public-employee labor organization gear up to respond to state legislative measures aimed at curbing their collective-bargaining rights. The National Education Association has filed a friend-of-the-court brief on the SEIU's side, as has the AFL-CIO, of which the American Federation of Teachers is a member.

The SEIU case involves a 2005 special assessment—or temporary dues increase, as the union characterizes it—charged to union members and non-members alike for certain political activities, including to fight two anti-union ballot measures backed by then-California Gov. Arnold Schwarzenegger.

The union approved the "Political Fight-Back Fund" for what one union document called "a broad range of political expenses, including television and radio advertising, direct mail, voter registration, voter education, and get out the vote activities in our work sites and in our communities across California."

Those who refuse to join public-employee unions must still pay "fair share" or agency fees because they benefit from collective bargaining. Under a 1986 Supreme Court decision known as Chicago Teachers Union v. Hudson, public-sector unions must provide an accounting to non-members and give them the chance to object to political spending or other non-bargaining-related costs (and thus not pay for them).

In its June 2005 "Hudson notice," the SEIU local reported that those nonmembers who objected to paying for costs that could not properly be charged to them would pay 56.35 percent of the full dues rate as their fair share fee. The union's full dues rate was 1 percent of gross income.

In September 2005, the union approved the temporary dues increase to 1.25 percent of gross income. It did not provide an additional Hudson notice to nonmembers, and it continued to charge objectors the same proportion of dues as before the increase. The union considered that some of the additional money raised would go for political activities and some for collective-bargaining. The next year's accounting under Hudson determined that only about one-quarter of the increase went for chargeable collective-bargaining expenses, meaning that the objectors got some of their money back.

Later that year, some non-members filed a class action backed by the National Right to Work Legal Defense Foundation, based in Springfield, Va. They argued that the special assessment was unconstitutional in the absence of a new Hudson notice and a chance to object to any political spending.

A federal district court ruled largely for the non-members, but a panel of the U.S. Court of Appeals for the 9th Circuit, in San Francisco, held in 2010 that the June 2005 Hudson notice was sufficient to protect nonmembers' First Amendment right of association. The panel also held that not all political expenses would automatically be non-chargeable to objectors, and that one of the California ballot propositions was sufficiently related to collective bargaining to allow the spending to fight it to be chargeable.

After the Supreme Court granted review of that decision last year, the SEIU decided to offer non-members a 100 percent refund of the temporary dues increase. That meant the case was now moot, the union argued, because the class had received all of the relief it had sought in its suit.

Not so fast, said the National Right to Work Foundation. The "eleventh-hour" move "is a classic attempt to manipulate the [Supreme] Court's jurisdiction to insulate a favorable decision from review," the group said in court papers.

The mootness issue was clearly on the minds of several of the justices during oral arguments on Tuesday.

"Why did you give up once the case was granted here?" Chief Justice John G. Roberts Jr. asked of the lawyer representing the union, Jeremiah A. Collins, of Washington. Collins said the union's leadership, which has changed since 2005, "thought about the situation and came to the realization that they have no stake in the procedures that are at issue here. This is a local that had never done a mid-year increase in the past."

William J. Young of the National Right to Work group, says the case is not moot because "the union would be free to return to its old ways.

"The union made this wonderful and meaningful policy change" and "this argument was not raised until we were before this court," Young said.

On the merits, Young said, "We believe a that a new Hudson notice is required whenever there is a material alteration in the obligations that are imposed upon non-members."

Collins said challenges to special dues increases have been rare, and thus the need for special Hudson notices have been a "non-event in the real world."

"What we have here is ... a temporary dues increase which became permanent and which simply increased the total flow of dues and fees into the general treasury and which went for the usual, the kinds of activities the union had always funded," Collins said.

Justice Sonia Sotomayor wondered why an extra Hudson notice would be burdensome for the union. Collins said each notice could lead to disputes and litigation and add to the union's costs.

Justice Samuel A. Alito Jr. flipped the situation on the union, asking Collins what would happen if the proponents of the anti-labor ballot initiatives came to the SEIU seeking an interest-free loan "because we want to use this money to persuade the electorate to enact these, but don't worry, because we're going to pay it back right after the election, when we've achieved our electoral ends. Would the union provide the money because it's all going to come out in the wash?"

Collins appeared dumbfounded, saying, "I really can't answer the question. I don't know."

"Well, gee, I really doubt that it would," Alito said.

Justice Anthony M. Kennedy jumped on Collins as well.

"You're taking someone's money contrary to that person's conscience," Kennedy said. "And that's what the First Amendment stands against."

Kennedy said the high court should consider whether an "opt in" requirement would be preferable to the current system. The idea of reversing the status quo—having non-members opt in to paying fees, rather than requiring objectors to opt out each year—is anathema to public-employee unions. Because the current system requires affirmative action on the part of objecting non-members, it is usually just a minority who object to their agency fees. (Only 10.5 percent of non-members objected to the SEIU local's 2006 Hudson notice.)

Justice Stephen G. Breyer appeared most sympathetic to the union's position.

"The virtue of the present system" is that while it may result in some objectors making "forced loans" to the unions, "it does wash out in the wash, and it ends up being fair to the objectors," he said. "And it's simply hard to think of a better system that doesn't provide more administrative problems than the existing one."

A decision in the case is expected by late June.

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