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In these turbulent times, it is quite amazing how rapidly the fortunes of the political wars can shift, especially on matters of labor law. Earlier this year, the question before the United States Supreme Court in Friedrichs v. California Teachers Association was whether teachers had a constitutional First Amendment right to steer clear of mandatory union membership. During the oral argument it was clear that five members of the Supreme Court believed that the association improperly forced unit workers to contribute to a cause in which they did not believe. Four members believed that the traditional accommodation under Abood v. Detroit Board of Education (1977), made it permissible for the state to distinguish between economic matters for which dues had to be paid, and political matters on which union members could opt out. The cases ended, without a decision in a 4 to 4 vote, after the death of Justice Antonin Scalia. Left standing until another day was the decision in the Ninth Circuit that rejected the First Amendment challenge.
As this matter remains unresolved, a new thunderbolt has come from Dane County, WI where Judge C. William Foust held at the request of three unions that the Wisconsin right-to-work law was unconstitutional because it deprived unions of the property in their own labor without just compensation, “[b]y prohibiting the unions from charging nonmembers who refuse to pay for representation services which unions continue to be obligated to provide by law.”
In reaching this conclusion, Judge Foust first noted that the union was constrained by a duty of fair representation to treat all the workers “without hostility or discrimination,” but what he does not note is that any effort to reach this particular result has proved an abject failure in all cases that do not involve matters of race or sex discrimination. In dealing with economic claims of different workers, be it by seniority or by work classification, there is simply no metric by which anyone can tell whether that duty has been discharged, so that no one who is short-changed can maintain a viable claim.
Indeed, one case that he cites for this duty, Vaca v. Sipes showed the weakness of this conclusion, which was apparent to me when I wrote about the decision in a student note at the Yale Law School. The statutory framework of the National Labor Relations Act made it clear that individuals had control over their own grievances, with the union allowed to observe to protect its long-term contract interest. By recasting the decision as one in which the union had a duty to represent the aggrieved worker in good faith, Vaca stripped away the individual’s ability to press personal grievances that the National Labor Relations Act sought to preserve under Section 9(a), showing in graphic forms the weakness of this duty, which is far from a cure-all for the legitimate grievances of individual workers. There are all sorts of reasons for workers to prefer nonunion status even if they were offered membership for free. Unions often adopt high-risk bargaining strategies that could result in contracts that make long-term survival of the firm questionable. Unions also place upper bounds on worker advancement, and they make it impossible for workers to form direct relationships with their employers, which is one reason why the First Amendment claims under Friedrichs resonate so strongly with many workers. This agency relationship is rife with conflicts, yet Judge Foust writes as though the case presents “a clear free-rider problem.” As I have written elsewhere, nothing could be further from the truth.
Judge Foust never addresses these fundamental workplace complexities. Instead he insists that the matter should be resolved by asking first whether the union has a property interest, second whether that interest has been taken, third whether it was for a public use, and last whether it was without just compensation. In dealing with this effort he insists that the services provided by unions count as an interest in property that has constitutional protection, as does the money that comes into the union treasury from worker’s dues. But he does not push the implications of this theory. So long as money is property, why do they not receive compensation from the union for the dues that they are forced to pay for the services that they do not want, also on a takings theory?
Turning next to the question of whether the property interest was taken, Judge Foust relies on what Penn Central Transportation Co. v. New York City first developed in connection with landmark preservation statutes that is by design extremely deferential to legislation that is in its view. “A ‘taking’ may more readily be found when the interference with property can be characterized as a physical invasion by government, than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.” There is of course no physical invasion in this case, so that the case is one where there is an adjustment of benefits and burdens, which in this case includes the initial decision to impose collective bargaining in the first place. In my view, Penn Central was wrongly decided on its facts, given that it allowed the City of New York, without compensation, to take away the air rights of Penn Central, which were fully vested under New York State property law. But the line between physical takings and regulatory takings, which is solidified in Penn Central, so dominates this area that it is only a rare action that falls under current law to constitutional challenges. The point is doubly true because it is universally understood that these “ad hoc” claims are routinely denied under the rational basis test that is satisfied so long as any one can find even a conceivable rationalization for the outcome. That test is surely satisfied given that Congress could easily choose to respect the claims of dissident workers. But the standard of review is wholly ignored in this opinion.
Next, the defects of his opinion run far deeper, given that Judge Foust enters into the middle of the issue and assumes without argument the constitutionality of collective bargaining agreements. In so doing he misunderstands the entire logic in this area. Before the New Deal revolution of 1937, the US Supreme Court had struck down collective bargaining arrangements at both the federal and the state level on the ground that they coerce employers to enter into transactions against their will if they wish to remain in business. This interference with economic liberty should be regarded as a taking by the union from the employer without his consent, for the situation is no different from one in which the employer is forced to pay $100 for a package of goods and services that he values at only $50. By Foust’s economic logic, the employer, who no longer can keep the union off his premises, and must pay out money for services that he does not want, and cannot bargain directly with workers who want to bargain with it, should be able to resist the claim of the union to be the exclusive representative of the worker, at which point his takings theory strikes down the agency shop arrangement that Foust defends.
In addition, as I have written elsewhere, there is a hot debate of whether the free rider arguments apply with respect to workers, given that many of them not only resent the union dues, but resent that the union can interfere with the direct relationships that they would prefer to establish with their employer. They don’t want a union even if they were never charged a dime in dues. The free rider argument is one way to look at the situation, but the “compelled rider” argument in these contexts is every bit as persuasive, at which point again the entire structure should fall on First Amendment grounds.
While individual workers can rely on the First Amendment argument, the union cannot.
At this point, Foust is caught on the horns of a dilemma. If he thinks that the level of constitutional scrutiny should be high, then he should strike down the entire National Labor Relations Act, at which point the union cannot obtain by majority vote the right of exclusive representation. But if he accepts that the NLRA’s deviation from common law rights is not a taking, he has to accept the right-to-work law as yet another economically permissible permutation allowable under law.
In dealing with this issue, Judge Foust ignores the huge advantages that right-to-work laws give to states that are now in a far better position to compete for businesses, knowing that they will be able to have better employment regulations. Unions like to make it appear that their representation is the heart and soul of the middle class, but the record is otherwise. Unions are the source of massive inefficiency in the states in which they operate, which is why the migration of jobs to nonunion states takes place with such rapidity. Right-to-work laws help stem that flow, which is why they are benefit to both employers and employees in the state. The greatest protection for workers lies in a strong competitive economy, in which the demand for labor provides workers with additional options that they cannot get when heavy union contracts fetter individual choice. Union leaders need to face serious competition, which is what they get when right-to-work laws are in place. At this point in order to attract worker support, they have to lower their own salaries and increase their union benefits. The rules of competition are as conducive to labor unions as to anyone else. The retrograde decision of Judge Foust should not stand in the way of a stronger and more vital labor market.