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    Act 10: Federal Appeals Court Rules on Budget Repair Bill, Downs Challenge by Unions

    Joe Forward
    Legal Writer

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    Act 10: Federal Appeals Court Rules on Budget Repair Bill, Downs Challenge by UnionsJan. 23, 2013 – Seven public sector unions recently lost a challenge to 2011 Wisconsin Act 10, the controversial “budget repair bill” that curtailed the collective bargaining rights of public employees, as a federal appeals court recently upheld the law “in its entirety.”

    In April 2012, the U.S. District Court for the Western District of Wisconsin, Judge William Conley, struck down provisions of Act 10 that force “general employee” unions to annually recertify by an absolute majority of union members, and prohibit automatic payroll deductions to pay union dues. However, Judge Conley upheld Act 10’s restrictions on collective bargaining.

    In Wisconsin Education Association Council, et al. v. Walker, et al., Nos. 12-1854, 12-211 & 12-2058 (Jan. 18, 2013), a three-judge panel for the U.S. Court of Appeals for the Seventh Circuit upheld Act 10’s restrictions on collective bargaining subjects beyond “base wages.”

    The panel also reversed the lower district court on the payroll deduction and recertification provisions, rejecting the unions’ challenges based on free speech and equal protection grounds. Judge David Hamilton dissented on the payroll deduction issue, citing free speech concerns.

    Reportedly, the unions are weighing whether to appeal the decision. Any appeal could be heard by an en banc Seventh Circuit Court of Appeals, the U.S. Supreme Court, or both.

    Collective Bargaining Restrictions

    The unions challenged Act 10’s collective bargaining restrictions on “general employees,” arguing that “public safety workers” are exempt from Act 10’s restrictions, and the U.S. Constitution grants people “equal protection of the laws” under the Fourteenth Amendment.

    The panel, in an opinion by Judge Joel Flaum, noted that a law subject to equal protection claims survives if it is rationally related to a legitimate governmental interest.

    “According to the Unions, the only explanation for the legislation is the extension of ‘rank political favoritism’ towards the unions that supported the governor’s campaign,” Flaum wrote.

    However, the panel noted that laws with a rational basis can still survive constitutional challenge despite the existence of alleged political favoritism. “Indeed, under rational basis review, we cannot search for the legislature’s motive,” Judge Flaum explained.

    The exemption for public safety workers had a rational basis because the legislature could have believed that not exempting that group could lead to work stoppages, placing the public’s safety at risk, the panel explained. It noted that following the passage of Act 10, some Wisconsin schools closed as teachers descended on the Capitol Square in protest.

    “Wisconsin was free to determine that the costs of potential labor unrest exceeded the benefits of restricting the public safety unions,” Judge Flaum wrote.

    Payroll Deduction Prohibition

    For the same “rational basis” reasons, the panel ruled that Act 10’s prohibition on collecting union dues through payroll deductions does not violate constitutional rights. Act 10 does not prohibit payroll deductions for public safety worker unions, only general employee unions.

    The district court ruled that the payroll deduction policy violated the First Amendment because dues money is generally used to fund protected speech and Act 10 unlawfully abridged that right. However, the appeals panel did not find a First Amendment violation.

    The unions offer several free speech theories “to rebut the compelling deference of rational basis review required under the applicable law,” Judge Flaum wrote. “Ultimately, none apply because the Supreme Court has settled the question: use of the state’s payroll systems to collect union dues is a state subsidy of speech that requires only viewpoint neutrality.”

    The unions offered evidence of viewpoint discrimination, unsuccessfully. In legislative debates, Senate majority leader Scott Fitzgerald said limiting unions’ fundraising ability would hinder President Barack Obama’s chances of winning Wisconsin in the 2012 presidential election.

    “While Senator Fitzgerald’s statement may not reflect the highest of intentions, his sentiments do not invalidate an otherwise constitutional, viewpoint neutral law,” Judge Flaum wrote.

    The panel noted that prohibiting general employee unions from using state payroll systems to collect union dues does not infringe the right to still collect them, states are not obligated to help union groups raise funds, and states can be selective in subsidizing speech.

    “Act 10 simply subsidizes the speech of one group, while refraining from doing so for another,” Judge Flaum wrote, referring to public safety workers and general public employees. “Nothing in the Constitution requires the government to subsidize all speech equally.”

    The panel also found that Act 10’s payroll deduction prohibition on general employee unions does not discriminate by viewpoint, which would be unconstitutional, despite the unions’ argument that public safety worker unions have a different viewpoint than general workers.

    “Maybe they do. But this argument merely recycles the Unions’ earlier assertion that speaker-based discrimination in the subsidy context requires heightened scrutiny. It does not,” Flaum wrote. “The mere fact that, in practice, the two categories of unions may express different viewpoints does not render Act 10 viewpoint discriminatory.”

    The majority also rejected the Unions’ argument that Act 10’s payroll deduction policy is a product of invidious discrimination based on political endorsements.

    “These arguments require peering past the text of the statute to infer some invidious legislative intention. We decline this invitation,” Judge Flaum wrote, noting that Act 10 exempts some unions that did not support Gov. Walker in his bid for governor.

    Discharging the unions’ First Amendment challenge against payroll deductions for dues, the panel also struck down the unions’ equal protection argument.

    “Wisconsin’s differential treatment of general and public safety unions is supported by its concern for labor peace among the public safety employees,” Judge Flaum wrote. “Consequently, the payroll dues prohibition survives rational basis review.”

    Recertification Process

    Before Act 10, unions elected by a simple majority remained the exclusive bargaining agent unless 30 percent of employees petitioned for “decertification.” Now, every union must secure “recertification” every year by an absolute majority (51 percent) of the votes of all employees.

    Again, the unions argued that the recertification provision violates equal protection rights because it irrationally exempts public safety worker groups and not others.

    The district court ruled this “onerous recertification provision” did not have a rational basis. “[I]t seems irrational to impose this unique burden on a voluntary union with highly restrictive bargaining rights while maintaining far less burden on public safety unions in which involuntary membership and monetary support continue to be mandated by law,” Conley wrote.

    The panel disagreed: “The provision may tend to weaken unions, and Wisconsin rationally feared backlash – either immediate or eventual (in the event a public safety union later failed to garner recertification support) – if it applied the provision to the public safety unions.”

    Hamilton Concurs, Dissents

    Judge David Hamilton wrote separately and concurred that rational basis review required the panel to uphold Act 10 against the unions’ equal protection challenges. But he also dissented, arguing that Act 10’s selective prohibition on payroll deductions violates free speech rights.

    “After close examination of the relevant evidence, the district court correctly found that Wisconsin’s new law amounts to unconstitutional viewpoint discrimination,” he wrote.

    Hamilton said a close correlation between exemptions and political endorsements, the “flimsiness” of distinctions between general and public safety workers, and the “overtly partisan political explanation” for Act 10 in legislative debates, evidenced discrimination.

    Hamilton pointed out that many unions that endorsed Walker for governor are exempt from Act 10, and only some that did not endorse him are exempt. Meanwhile, there are many workers in public safety positions who are excluded from the “public safety” classification, including police officers at the University of Wisconsin, Capitol Police, and correctional officers.

    “Instead, those employees, whose unions did not endorse Governor Walker, are treated as general employees, and their unions do not benefit from payroll deductions,” Hamilton wrote.

    Judge Hamilton noted that “state motor vehicle inspectors” are considered public safety employees under Act 10, and inspectors are part of the Wisconsin Troopers Association, the only lobbying group within the Wisconsin Law Enforcement Association (WLEA) to endorse Walker. Other groups within WLEA, including corrections workers, are general employees.

    “Perhaps a strike by motor vehicle inspectors might threaten the breakdown of public order and state government, but it’s hard to see how,” Judge Hamilton wrote.

    “It’s especially hard to see how the threat of a strike by motor vehicle inspectors could reasonably be deemed more significant than a strike by, say, correctional officers or many other law enforcement officers excluded by the new law,” he continued.

    Fitzgerald’s on-record comments about payroll deduction policy as a barrier to Obama’s presidential bid was further evidence of viewpoint discrimination, Hamilton argued.

    “[I]t would be difficult to find a First Amendment violation based solely on that one speech,” Judge Hamilton wrote. But he said that U.S. Supreme Court jurisprudence does not “require that we wear blinders to block our view of reality when we examine a serious claim that the legislature chose to engage in unconstitutional viewpoint discrimination.”


    All three judges concluded that restricting “general employees” and not “public safety workers” from bargaining on subjects other than base wages did not violate equal protection rights. All three judges also upheld Act 10’s “recertification” process for general employee unions. A 2-1 majority upheld the prohibition on collecting union dues through payroll deductions.