An important ruling by the Supreme Court - Knox v. SEIU

The Supreme Court seems to have decided that they will put off announcing their rulings on “Obamacare” and the Arizona law on illegal immigrants to the very end of the session — another week to go, therefore. But I was not aware that there was another case before them that was extremely important, and they ruled just yesterday on that one. When Scott Walker got through the recall election, it was a big victory over Big Labor, and this decision, in a case called Knox v. Service Employees Int’l Union, Local 1000, is equally significant.

To provide the background, the best thing I can do is to quote Ed Whelan's “bench memo” from National Review Online:

For decades now, the Supreme Court has “countenanced a significant impingement on First Amendment rights” of employees who choose not to join the union that represents the bargaining unit in which they’re employed. Specifically, the Court has ruled that the government may compel nonmembers of a union (under so-called “union shop,” “agency shop,” or other “union security” arrangements) to pay fees to the union to support the union’s activities related to collective bargaining, and that the government may place the burden on objecting nonmembers to affirmatively opt out of paying the costs of the union’s political and ideological activities.

The passage quoted in the first sentence of this post is, in fact, from a nearly unanimous Supreme Court ruling in 1984 that stated that “[i]t has long been settled that such interference with First Amendment rights is justified by the governmental interest in industrial peace” (emphasis added)—and that leveraged that existing “interference with First Amendment rights” to justify additional interference with those rights.

Today’s ruling in Knox v. SEIU is significant less for its specific holding than for the Court’s long-overdue awakening to what it aptly calls “the critical First Amendment rights at stake.” Unions, which have benefited massively from coerced funding, will be screaming about what that reawakening may portend in future cases.

Here’s a quick summary of the legal and factual background to Knox: Under Supreme Court precedent, the government may authorize a union to charge nonmembers a fee that covers the costs both of collective-bargaining activities and of political and ideological activities, so long as nonmembers are informed of, and allowed to deduct from their payment (under an “opt out”), the portion of the costs estimated to be attributable to the union’s political and ideological activities. In June 2005, the SEIU local in California sent out its annual fee statement, which set monthly dues of 1% of gross salary, capped at $45, and estimated that some 56% of its costs would be attributable to collective-bargaining activities. Some two months later, the SEIU local, in order to generate funds to help oppose ballot propositions, raised the monthly dues for a limited period to 1.25% and removed the $45 cap. The union maintained that only those nonmembers who had objected to the annual fee statement could object to the special assessment. Further, despite the fact that the entire increase was intended for political activities, the union maintained that even those nonmembers whose objections it would recognize would have to pay 56% of the increase.

Justice Alito’s excellent majority opinion in Knox (joined by the Chief Justice and Justices Scalia, Kennedy, and Thomas) holds that the First Amendment does not allow the government to authorize a public-sector union to require objecting nonmembers to pay a special fee for the purpose of financing the union’s political activities. Here is a summary of his reasoning:

1. “[W]e do not revisit today whether the Court’s former cases have given adequate recognition to the critical First Amendment rights at stake.” The free-rider arguments that those cases have relied on (i.e., preventing nonmembers from free-riding on the union’s collective-bargaining activities) “are generally insufficient to overcome First Amendment objections” and are “something of an anomaly.” “Similarly, requiring objecting nonmembers to opt out of paying the nonchargeable portion of union dues—as opposed to exempting them from making such payments unless they opt in—represents a remarkable boon for unions.” It’s difficult to see the justification for an opt-out rule. Indeed, the Court seems to have accepted the opt-out approach “more as a historical accident than through the careful application of First Amendment principles.”

“By authorizing a union to collect fees from nonmembers and permitting the use of an opt-out system for the collection of fees levied to cover nonchargeable expenses, our prior decisions approach, if they do not cross, the limit of what the First Amendment can tolerate.” (Slip op. at 14.)

2. The SEIU “asks us to go farther.” It seeks approval of a procedure under which (a) a special assessment billed for use in electoral campaigns failed to provide a new opportunity for nonmembers to object, and (b) those nonmembers who had previously opted out were nonetheless required to pay more than half of the amount of the special increase, even though the purpose of the increase was to mount a political campaign. This procedure is “indefensible.”

(a) A nonmember can’t make an informed choice about a special assessment that is unknown when the annual notice is sent. It would have been an easy matter for the union to give the nonmember a choice. A refund the following year would not have been fully compensatory, nor would it undo the violation of First Amendment rights.

(b) The special assessment was slated for political purposes, so nonmembers should have been able to avoid paying the entire amount of the increase. The SEIU’s claim that objecting nonmembers ended up with a windfall rests on dubious statistics. Further, the risk that objecting nonmembers might pay too much or too little should be borne by “the side whose constitutional rights are not at stake”—the union. The union “has no constitutional right to receive any payment from these employees.”

While the Court’s previous rulings have substantially impinged upon the First Amendment rights of nonmembers, “we see no justification for any further impingement. The general rule—individuals should not be compelled to subsidize private groups or private speech—should prevail” in the context of this special assessment.

Now that is a powerful statement. And not only was it the opinion of a majority (five members) of the Court, but two more, Justices Sonia Sotomayor and Ruth Bader Ginsburg, agreed with the judgment but Justice Sotomayor wrote a concurring opinion (joined by Justice Ginsburg). So the decision was 7-2 on the main issue. Where Justices Sotomayor and Ginsburg differed from the other five was that the majority would require that nonmembers would only be assessed these charges if they opted in, the two more liberal Justices were willing to keep the current “opt-out” system.

A quote from Fox News' post on the case is relevant:

The court ruled for Dianne Knox and other nonmembers of the Service Employees International Union's Local 1000, who wanted to object and opt out of a $12 million special assessment the union required from its California public sector members for political campaigning. Knox and others said the union did not give them a legally required notice that the increase was coming.

The union, and the 9th U.S. Circuit Court of Appeals, said the annual notice that the union gives was sufficient. The high court disagreed in a 7-2 judgment written by Justice Samuel Alito.

The difference between opting in and opting out was stated in more detail by Trevor Burrus on the Cato Institute's site:

The narrowest question in Knox was whether the notice given by the SEIU Local 100 complied with the Supreme Court’s requirements. There was a broader question, however, pushed by Cato in our brief (joining the Pacific Legal Foundation, the Center for Constitutional Jurisprudence, and the Mountain States Legal Foundation), on whether only having the ability to “opt-out” of political spending (rather than to “opt-in”) violates the First Amendment (Tim Sandefur of PLF offers his thoughts here). Opting-out presumes that the non-members want to engage in the union’s political advocacy, and this seems to place the burden on free speech on the wrong party.

In a decision that rings with a chastising tone directed at the union, Justice Samuel Alito affirmed that opting-out can be a First Amendment violation. In his words: “Our cases have tolerated a substantial impingement on First Amendment rights by allowing unions to impose an opt-out requirement at all.” Justice Alito also adopts our argument that balancing the rights of individuals with the “rights” of unions is the wrong way to look at the issue. Unions have long argued that complying with administrative requirements to give notice to non-union members impinges on their ability to be effective political advocates. Moreover, the unions argue, sometimes it is not possible to accurately determine what percentage of their funds will be used for political advocacy and “there is at least a risk that, at the end of the year, unconsenting nonmembers will have paid either too much or too little.” “Which side should bear the risk?” asks Justice Alito. “The answer is obvious: the side whose constitutional rights are not at stake.”

In this case, the First Amendment violation was particularly troubling because the union exacted money from nonmembers in order to defeat a California proposition that would have bolstered nonmembers rights. “If Proposition 75 had passed,” writes Alito, “nonmembers would have been exempt from paying for SEIU’s extensive political projects unless they affirmatively consented. Thus the effect of the SEIU’s procedure was to force many nonmembers to subsidize a political effort designed to restrict their own rights.”

Although the decision does not go so far as to require that unions must always use an opt-in procedure when extracting political war-chest money from nonmembers, it takes a very strong step in that direction, as Justice Stephen Breyer argues in dissent. Opting-in will only be required for such “special assessments” as in this case or for a general “dues increase.”

Finally, one of the most interesting posts I saw was by Noah Kristula-Green, who posts on the Daily Beast, because it shows that this may presage a ruling on “Obamacare.” After quoting part of Ed Whelan's posting earlier mentioned, he writes:

The mandate in Obamacare is all about the free rider problem. Further, opting out of the market for insurance sure sounds like this. We will know soon but the language in this union dues case does not bode well for Obamacare.

I think that Knox v. SEIU is one of the most important cases decided this year by the Court. And the SEIU must be particularly unhappy for one reason. As Becket Adams said in a post on The Blaze:

... although the SEIU was able to convince California’s left-leaning Ninth Circuit that because the original notices said assessments were “subject to change” that they were in the clear, the Supreme Court disagrees.

Justices Sotomayor and Ginsburg agreed with the judgment, written by Justice Alito, and ruled in favor of Knox. The final ruling was 7-2; Breyer dissented, joined by Kagan, according to SCOTUS blog.

Wait – Justices Sotomayor and Ginsberg ruled against the SEIU?

Whoa.

“All that money spent electing Obama, and his first SCOTUS pick rules against #SEIU,” the Washington Examiner’s David Freddoso tweeted when news of the decision broke.

The SEIU was all for Justice Sotomayor, when President Barack Obama proposed her. But even she realized the union was overstepping!