Argument recap: Mootness could squelch union fees case
on Jan 12, 2012 at 12:24 pm
Knox v. SEIU, argued Tuesday morning, arose because a union representing state employees imposed a mid-year dues increase which was payable by union members and non-members alike. In June 2005, the union sent its annual “Hudson notice” (required by the Supreme Court’s decision in Chicago Teachers Union v. Hudson), and it sent another such notice in June 2006. In September 2005, the union levied a temporary assessment (effectively a dues and fees increase), but it did not issue a Hudson notice. At issue before the Court now is whether the First Amendment required the union to issue a mid-year Hudson notice (as the federal district court held) or whether it was instead sufficient to rely on the next annual notice (as the Ninth Circuit held).
To complicate matters, the union attempted to render the whole case moot in late 2011 by sending a one-dollar bill to all members of the petitioners’ class, along with a promise to refund one hundred percent of the fee increase they paid.
Is a notice required, and what would it say?
Arguing on behalf of the petitioners, W. James Young advocated a bright-line rule. He urged the Court to hold that a new Hudson notice is required whenever the union imposes a material increase in the financial obligations of non-members. This rule would apply whether the increase is intended for political purposes or is instead imposed to cover increased costs of rent or printing. One advantage of such a rule is that courts would not need to inquire into the murky lines between what dues can and cannot properly be charged to objecting non-members. On the other hand, responding to a question from Justice Sotomayor, Mr. Young conceded that a union could take money collected under an earlier Hudson notice and divert it from chargeable activities to non-chargeable ones without sending out a new notice – a suggestion that Justice Breyer characterized as “peculiar” and “totally backwards.” According to Justice Breyer, on this premise the union could divert money that it had already collected to political purposes without a notice, but it would be required to provide a notice for collecting some special assessments that would make potential objectors better off. Justice Scalia, however, couldn’t see how non-members would be better off, as they were being forced to make an interest-free loan; this prompted him to ask why the Court was ” wasting our time?” Justice Breyer suggested that relying on annual Hudson notices might result in forced loans, but it all comes out in the wash, and it is more transparent.
Justices Breyer and Sotomayor both signaled that annual Hudson notices ought to take care of the petitioners’ interests. Justice Breyer phrased it in terms of a “workable system,” asking why Mr. Young’s proposal was “one whit better than the workable system we already have.” And Justice Sotomayor noted that petitioners will in fact be able to object the following year, just not at the moment of the special assessment. Mr. Young pointed out that without a new notice and opportunity to object, any objection would come only after employees had made an interest-free loan. Justice Scalia emphasized that the Hudson case requires a notice before the employees pay the money; by contrast, the union is proposing that they pay first and sort it all out later. Justice Breyer countered that a Hudson notice is always based on the previous year’s financial breakdown.
Justice Sotomayor caught Mr. Young with a question that he did not have time to answer. She pointed out that over a four-year cycle, a typical union will have one election year in which it diverts more of its money to lobbying efforts and then it will go back to normal for three years. Because petitioners don’t challenge that, she questioned why the “loan” in this case was any different.
Jeremiah Collins, arguing for SEIU, also pressed for a bright-line rule: Let non-members object when the next annual Hudson notice is issued. Justice Sotomayor tried to drill down to some practical issues. She wanted to know two things: (1) how frequently unions actually impose special assessments; and (2) what the incremental cost would be if unions were required to give a second Hudson notice. As to her first question, Mr. Collins said he found only one federal district court case and no appellate court cases. Although he said that he had been unable to find out how frequently this happens, he described the situation as “a non-event in the real world.” As to what burden additional Hudson notices would impose on unions, Mr. Collins tried to explain his view that this was really a dues increase rather than an assessment. Then Justice Sotomayor said something no advocate ever wants to hear: “Could you please answer my question?” Mr. Collins then cited increased litigation and disputes that would arise when various types of changes occur.
Chief Justice Roberts tried to make the point advanced by the petitioners – that the union’s administrative problems are simplified when it is clear that a special assessment will be spent for political purposes. Mr. Collins, consistent with his previous attempt to have the Court see a more complex reality, insisted that the “so-called special assessment is simply a dues increase.” A Hudson notice under such conditions would simply indicate that the union needs more income due to anticipated expenditures of a specified amount for political expenses and another specified amount for bargaining costs, and that the union expects a lot of other changes in costs. Chief Justice Roberts then read from the district court’s opinion, which quotes union materials as saying the assessment will be used for political expenses and not for regular costs. Mr. Collins referred to other union statements indicating that the money would be used for both purposes. He also stressed that when dealing with unsegregated funds in a general union treasury, it is artificial to give legal status to statements that certain amounts will be earmarked for specific purposes.
Justice Alito suggested that the union would be unwilling to make an interest-free loan to the proponents of a ballot measure, to be paid back after the election, and he asked what makes this case any different. Mr. Collins pointed out that the 2005 Hudson notice did indicate that the union might spend millions of dollars on political activities. He then explained that the union had a large increase in bargaining costs it needed to cover, but “for whatever PR purposes” the union told employees that the increase was for political costs. At this point, Justice Kennedy pointed out that a very critical question of constitutional rights is involved, and he suggested that the matter is so confusing that the Court should consider whether an opt-in requirement would be preferable.
Did SEIU render the case moot?
Mr. Collins argued that the case is now moot because petitioners have received everything they were awarded by the district court, did not appeal from the district court judgment, and therefore could not gain more than what that court awarded. He asked that the Ninth Circuit judgment be vacated, and that the district court’s judgment be reinstated.
Chief Justice Roberts was curious why the union “gave up” after the Supreme Court granted certiorari, rather than at an earlier time. Mr. Collins explained that the union now has new officers who realize that “they have no stake” in this case. When asked by Justice Alito what the union will do in the future, Mr. Collins responded that the union has put into place procedures that satisfy petitioners’ concerns, and that these procedures cannot be changed without 180 days’ notice. In any event, he said, the district court award gives no protection for future conduct, and petitioners did not allege an ongoing practice or ask for declaratory or injunctive relief. Justice Kagan suggested that there is a continuing dispute as to whether the union has complied with the district court’s order. Mr. Collins replied that the case is moot at the Supreme Court level, but the district court can still decide whether the union provided the relief that the district court required.
The Chief Justice seemed dismayed that mootness would prevent the Supreme Court from deciding the important question of what the union’s notice would say, and he opined that if the case is moot then the district court has no case either.
Mr. Collins argued that petitioners “are looking a gift horse in the mouth,” explaining that “we have already given them everything they want”; if not, he continued, the district court will do that.
Mr. Young ran into the most trouble arguing against mootness. He barely had a chance to express his main argument – that petitioners did not in fact receive everything to which they were entitled – before Justice Kagan asked him skeptically about his assertion that the union’s letter accompanying the one-dollar bill was inadequate because — as she put it — it was “not apologetic enough” and did not admit that petitioners had a valid claim.
Justice Ginsburg suggested that if the Ninth Circuit judgment is vacated and the district court judgment remains in effect, then the case is moot. Mr. Young stressed that the union would remain free to repeat its conduct, placing the case squarely within the exception to the mootness doctrine for conduct that is capable of repetition yet evading review. To this, Justice Ginsburg said the case is about a completed episode. Responding to Justice Kennedy, Mr. Young admitted that there was no real injunction in this case, but there was an order of an affirmative act. Justice Kagan emphasized the difference between an injunction and a suit for damages, but Mr. Young focused on the fact that there would never be time for an annual Hudson notice to reach the Supreme Court.
There is a strong argument that this case is moot. It could be moot under Article III standards, or instead as a matter of judicial prudence. If so, the Court’s normal course is to vacate the judgment of the lower court — in this case, the Ninth Circuit. Then the issue would be whether the Court would leave the district court judgment in place or declare it moot as well.
If the Court reaches the merits, there is strong inertia in support of allowing the union to rely on annual notices. Those notices are based on the prior year’s audited expenditures, and a mid-year Hudson notice would be based on the union’s unverifiable statement as to how it plans to use the money. The Justices seemed to be looking at the practicalities involved, and nobody seemed able to articulate exactly what a mid-year Hudson notice would say or how that notice would fit in with the annual notice procedure.