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SCOTUSwiki Preview: Locke v. Karass

Below, Georgetown 3L and 2008 Akin Gump summer associate Michael Bonsignore previews Locke v. Karass, scheduled to be the second of three cases heard by the Court on Monday, October 6th. Please check back with SCOTUSwiki following oral argument for additional updates.


This case addresses whether a public-sector union may include litigation costs, funded through pooling arrangements with other unions, in the service fee it charges nonmembers.  The Maine State Employees Association (“MSEA”) is a union designated by the State of Maine as the exclusive bargaining agent for certain employees of its executive branch.  Petitioners are twenty current or former executive branch employees who do not belong to, but are nonetheless represented in collective bargaining by, the MSEA.  Under MSEA’s collective bargaining agreement with the state, MSEA provides certain administrative services and benefits for all employees, including nonmembers, and can charge nonmembers a “service fee” or an “agency fee” that includes costs arising from bargaining and contract administration.  Expenditures unrelated to contract administration and bargaining, such as political contributions or member-only benefits, may not be included in the service fee charged to nonmembers. 


In 2005, MSEA notified the nonmembers that their biweekly service fee would be $8.94, approximately forty-nine percent of the dues paid by members.  The service fee included the affiliation fee MSEA pays to the Service Employees International Union (“SEIU”) to maintain its affiliate relationship and the proportion of its affiliation fee that “represented the expenditures incurred by SEIU for chargeable activities.”  MSEA also included in the service fee both its own litigation costs and those of SEIU that were germane to collective bargaining.  As a practical result, therefore, MSEA nonmembers contributed not only to litigation undertaken for their own bargaining unit but also to litigation for the benefit of other units or national affiliates. 


Petitioners challenged the service fee.  The matter went to arbitration, and in December 2005, an arbitrator issued a decision upholding MSEA’s calculation of the service fee.  Petitioners also filed this case in federal district court pursuant to 42 U.S.C. § 1983, seeking class action status, injunctive and declaratory relief, damages, and restitution.  They argued that the inclusion of extra-unit litigation costs violated their rights under the First, Fifth, and Fourteenth Amendments.  After discovery, the district court granted summary judgment in favor of the respondent union and state officials, finding that “the inclusion of the cost of extra-[unit] litigation d[id] not violate[] Plaintiffs’ constitutional rights.”


In an appeal to the U.S. Court of Appeals for the First Circuit, petitioners raised two issues: first, that extra-unit litigation is not properly chargeable to nonmembers; and second, that the district court erred in holding that the Constitution “imposes no obligation to calculate an adequate reduction of the fee.”  The First Circuit rejected these arguments and affirmed.  In the court’s view, the question of whether the extra-unit litigation could be charged to nonmembers lies “lies at the intersection of the” Supreme Court’s decisions in Ellis v. Brotherhood of Railway Clerks (1984) and Lehnert v. Ferris Faculty Association (1991).


The First Circuit considered several relevant distinctions between the Ellis decision and the Lehnert decision.  In Ellis, the Supreme Court held that to meet the “germane” test, litigation costs charged to nonmembers must be related to the bargaining process for that particular unit.  Therefore, in accordance with Ellis, extra-unit litigation could not be chargeable to nonmembers.  In Lehnert, the Court expanded the standard of germaneness to include activities that would “ultimately inure to the benefit of the members of the local union.” It also enunciated a three-part test to determine the chargeability of a union or affiliate’s expenditure to nonmembers that considers (1) whether the activity is “germane to collective bargaining activity”; (2) whether it is justified by “the government’s vital policy interest in labor peace and avoiding ‘free riders’”; and (3) the extent to which it burdens free speech.  The Court, however, failed to reach agreement on the chargeability of extra-unit litigation to non-union members.  Justice Blackmun, garnering only four votes for his paragraph discussing extra-unit litigation, concluded that extra-unit litigation not involving the nonmembers’ own bargaining unit was not germane. 


Ultimately, the First Circuit applied Lehnert’s definition of germaneness.  The court reasoned that unlike Ellis, which required a direct source of funding to apply its “germane” test, Lehnert’s definition of germaneness applied to non-direct sources and pooling arrangements.  Because the First Circuit’s case involved extra-unit litigation funded through a pooling relationship, the court reasoned that Lehnert “provide[d] the framework” for resolving the specific question in their case.  Applying the Lehnert tests for chargeability and germaneness, the court concluded that the costs at issue fell within the chargeability test and were therefore valid.  The First Circuit determined that costs in dispute were germane because Lehnert incorporated pooling arrangements into its definition of germaneness.  The court also noted that the second and third prongs of Lehnert were never in dispute.  Furthermore, the First Circuit rejected the contention that Justice Blackmun’s position was controlling, emphasizing that it had garnered only four votes. 

Petition for Certiorari


Petitioners argue first that the First Circuit’s decision is incompatible with Ellis, which held that unions could not extract extra-unit litigation expenditures “from objecting nonunion employees.”  Additionally, although the Court in Lehnert held that unions could charge nonmembers for “general collective bargaining costs of the state or national parent union,” Justice Blackmun’s plurality opinion limited the holding by specifically excluding extra-unit litigation costs.


Second, petitioners contend that there is a division among the federal courts of appeals regarding the chargeability of extra-unit litigation.  Both the Tenth Circuit and a substantial majority of judges of the en banc Fourth Circuit, petitioners explain, have determined that compelling nonmembers to finance extra-unit litigation violates the First and Fourteenth Amendments.  By contrast, in addition to the First Circuit, the Third and Sixth Circuits have held that non-members may constitutionally be charged for extra-unit litigation.


Third, petitioners assert that the First Circuit’s decision conflicts with the highest courts of Indiana and Wisconsin, both of which regard Justice Blackmun’s analysis in Lehnert as persuasive and have held that extra-unit litigation is not chargeable. 


Opposing certiorari, respondents offer three main arguments.  First, respondents contend that four courts of appeals – the First, Third, Sixth, and Seventh Circuits – have all, in accordance with Lehnert, determined that a union’s extra-unit litigation germane to collective bargaining and paid out of pooled resources is chargeable to nonmembers.  Moreover, respondents argue, each of these recent decisions has rejected the petitioners’ contention that Justice Blackmun’s discussion in Lehnert should be controlling. 


Second, respondents dispute petitioners’ argument that the question presented was decided in Ellis.  Instead, they argue, Ellis is not “on point” because the holding in that case was limited to “one particular labor act” and does not apply more generally.  Furthermore – and unlike Lehnert, which addressed pooling arrangements – Ellis did not address whether a bargaining unit could use pooling arrangements. 


Finally, respondents dismiss petitioners’ claim that courts are in conflict on the issue as off the mark, emphasizing that none of the potential conflicts dealt directly with the issue at hand.  In respondents’ view, the Indiana and Wisconsin state court decisions simply “declare that Justice Blackmun’s discussion of extra-unit litigation is ‘persuasive.’”  Furthermore, respondents contend that in treating Ellis as controlling, the Tenth Circuit failed to apply the “underlying logic” of Lehnert.  And because there is “unanimity” among the decisions by the four courts of appeals that are directly on point, petitioners’ claim of conflict is erroneous.

Merits Briefing

In their merits brief, petitioners offer six reasons why a public-sector union may not include extra-unit litigation costs in the service fee it charges nonmembers.  First, they contend, the holding in Ellis prohibits “the use of dissenters’ fees for extra-unit litigation.”  The decision below rests on two erroneous interpretations of Ellis by the First Circuit: contrary to assertions by the court of appeals, Ellis (1) did hold nonchargeable litigation involving negotiation of agreements and settlement of grievances; and (2) did involve pooling arrangements. 

Second, petitioners argue that the First Circuit’s efforts to distinguish Lehnert from the bright-line rule set out in Ellis are unavailing, because (as noted above) Ellis dealt indirectly with a pooling arrangement.  Even if Ellis did not govern this case, however, extra-unit litigation still fails two different prongs of the Lehnert test by placing an undue burden on free speech (the third prong) and because it is not germane to the unions’ duties as the exclusive bargaining agent for the nonmembers (the first prong).

Third, petitioners contend that imposing extra-unit litigation costs on nonmembers qualifies as compelled speech and therefore must be subject to strict scrutiny.  While acknowledging that the Supreme Court “has not explicitly applied ‘strict scrutiny’ to union forced-fee exactions,” petitioners contend that such a result is dictated by the Court’s “general jurisprudence regarding compelled speech,” including its decisions in Ellis – which, according to petitioners, held that “compelled speech results from the imposition of the ‘agency shop’” – and Abood v. Detroit Board of Education (1977), which (according to petitioners) established that strict scrutiny must be applied when nonmembers are compelled to pay union fees. 

Fourth, petitioners claim that this case will allow the Court to establish a bright-line test regarding nonmembers’ First Amendment rights and compelled speech – a test that, in their view, is sorely needed in light of Lehnert’s confusing holding regarding the chargeability of union expenditures and the disparity among the ways that the lower courts have subsequently applied Lehnert.

Fifth, petitioners claim that the existing Lehnert test must be replaced because it fails to adequately protect nonmembers’ First Amendment rights.  In their view, the Question Presented in this case is narrow compared to the broad standard enunciated in Lehnert, and therefore, the Supreme Court should take this opportunity to implement a new standard with greater applicability.  Petitioners argue that nonmembers cannot protect their First Amendment right against compelled speech because the test “effectively leaves nonmember employees virtually ‘in the dark’ about the classification of properly chargeable union expenditures.”  Additionally, the holding in Lehnert makes it “virtually impossible” for the average nonmember to properly calculate the fees or to learn anything about the units and their activities.

Finally, petitioners urge the Court to establish a bright-line rule that would limit chargeable expenditures to those directly relating to the individual bargaining unit, and the chargeability of union expenditures.  Without such a rule, petitioners claim, unions have “every incentive” to exploit the discrepancies in judicial holdings to charge nonmembers more money.

The United States filed an amicus brief in which it argues that public-sector unions may use compelled extra-unit litigation fees for bona fide pooling arrangements under which a parent union agrees to cover the costs of its affiliates’ germane litigation.  Unlike petitioners, the United States urges the Court not to overrule Lehnert’s endorsement of pooling arrangements; extra-unit litigation costs, it reasons, may permissibly fit within the scope of such pooling arrangements.  However, the United States cautions, a bona fide pooling arrangement must cover only costs “associated with otherwise chargeable activities” and be akin to a risk-sharing agreement.  When expenditures are challenged, the United States emphasizes, the union will bear the burden of proving that its expenditures were made pursuant to a valid pooling arrangement.  The United States contends that the Supreme Court should remand the case for a review of the fees at issue under a standard different from the one applied by the court of appeals.

 Respondents’ merits brief advances three arguments.  Respondents argue first that Lehnert‘s rule on the chargeability of extra-unit expenditures applies to “otherwise chargeable litigation expenditures.”  They claim that the Lehnert rule is congruent with the benefits a local union receives from paying an affiliation fee to a parent union because those benefits allow the union to keep their service fees down, which in turn benefits nonmembers.  Respondents also point out that the United States agrees with this position in its merits brief.   Furthermore, respondents highlight that the United States agrees with their position that there is no basis for excluding litigation expenditures from Lehnert‘s rule.

Second, respondents emphasize that although petitioners argue that Lehnert should be overruled, at the same time they rely on it, without indicating which part of Lehnert should be overruled.  Like the United States, respondents contend that the question whether Lehnert should be overruled is not before the Court in this case.

Next, respondents claim that, contrary to the argument of the United States, there is no valid reason for the Court to remand this case to determine whether the local union utilized the government’s proposed “bona fide pooling arrangement” structure.  In respondents’ view, that issue is also not properly before this Court.  Furthermore, they contend, Lehnert does not require a bona fide pooling arrangement; the United States’s argument to the contrary is incorrect.  Finally, respondents argue that the U.S.’s proposed “bona fide pooling arrangement” structure is nothing more than a prophylactic rule, which (as the United States acknowledges) is not required by the First Amendment.