Court Takes on Union Assessment Rules in Knox

The usual First Amendment rule for public-sector union fee assessments for non-members is that unions have to provide notice and an opportunity to opt out of those portions of the fees that go to non-bargaining, political activities.  These are called "non-chargeable" expenses.  (Non-union members can't opt out of that portion of the fees that goes to collective bargaining activities--the "chargeable" expenses.  This rule prevents non-members from free-riding on the union's regular, collective-bargaining activities.)  The Court crafted the rule in Teachers v. Hudson.

The case today, Knox v. SEIU, however, dealt with a special assessment--not a regular, annual assessment--that the union initially said would go entirely to non-chargeable expenses, that is, the union's political opposition to California's proposed measures to clamp down on unions.  The case thus tested Hudson's applicability to special assessments.

Justice Alito's majority opinion said that the First Amendment requires that unions provide notice and an opportunity to opt in to special union assessments that are used for non-bargaining, political purposes.  Relative to the Hudson opt-out rule, the holding puts a thumb on the scale against unions in collecting special assessments--because it means that non-members have to affirmatively elect to pay for special assessments, rather than allowing the unions to issue notice and opportunity to opt out.  This was a significant, if narrow, holding.

But Justice Alito's opinion did much more.  In particular, it took direct aim at the traditional rule for regular, annual assessments, the Hudson rule, that unions have to provide notice and an opportunity to opt out.  The opinion all but said that this rule violated the First Amendment.

If so, this would deal a significant blow to public-sector unions in agency shops and their non-bargaining activities.

Justice Alito's opinion is rife with references to the "extraordinary" benefit that unions get under the Hudson rule at the expense of non-members' associational rights, strongly suggesting that the rule is unconstitutional--and that five on the Court are ready to revisit it.

For example, Justice Alito writes that "Our cases to date have tolerated this "impingement," [the Hudson process] and we do not revisit today whether the Court's former cases have given adequate recognition to the critical First Amendment rights at stake."  Op. at 10.  More: "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."  Op. at 14.  And:

Acceptance of the free-rider argument as justification for compelling nonmembers to pay a portion of union dues represents something of an anomaly--one that we have found to be justified by the interest in furthering "labor peace."  But it is an anomaly nevertheless.

Op. at 11.

In the context of special assessments, but with reasoning that would seem to apply equally to regular assessments, Justice Alito wrote:

Once it is recognized, as our cases have, that a nonmember cannot be forced to fund a union's political or ideological activities, what is the justification for putting the burden on the nonmember to opt out of making such a payment?  Shouldn't the default rule comport with the probable preferences of most nonmembers?  And isn't it likely that most employees who choose not to join the union that represents their bargaining unit prefer not to pay the full amount of union dues?  An opt-out system creates a risk that the fees paid by nonmembers will be used to further political and ideological ends with which they do not agree. . . . .

Op. at 11 to 12.

In short, the opinion seems to tee up the next case, dealing with the regular assessment, Hudson process--and similarly putting a thumb on the scale against the unions there.

Justice Sotomayor wrote a concurrence, joined by Justice Ginsberg, that called the majority on its overreach with regard to the regular assessment Hudson rule.  Justice Sotomayor also called the Court on its creation of the new opt-in rule for special assessments.  

The concurrence underscores the fact that there was a way to rule against the union special assessment here, while still stopping short of the sweeping majority approach and taking aim at the long-settled Hudson rule.  

In other words, the availability of Justice Sotomayor's narrower approach tells us that each of the five in the majority could have elected to rule more narrowly.  But they didn't.  In other words, each of the five in the majority seems to be on board with the strong signal that the Hudson rule itself is unconstitutional.

Justice Breyer wrote a dissent, joined by Justice Kagan.  Justice Breyer wrote that the process in this case complied with Hudson.  That is, the union provided adequate notice and opportunity to opt-out under the circumstances--even if that opportunity came late.  In other words, given the variances in union spending from year-to-year, unions can only estimate future assessments based on past expenditures.  (This system ensures that objecting nonmembers can recoup the offending expenditures over time.)  Thus in the next regular assessment--the one immediately after the special assessment--the union has to estimate expenditures based on total prior year expenditures (including the special assessment).  The notice and opportunity to opt out in the next year covers those nonmembers who objected to the special assessment.  And in this case, that worked out to their benefit; they even got a little windfall.  Justice Breyer said that this process, while "imperfect," satisfied Hudson and satisfied the First Amendment.

SDS