Int'l Ass'n of Machinists Dist. Ten & Local Lodge 873 v. Allen

• Decision Date: 13 September 2018
• Docket Number: No. 17-1178,17-1178
• Citation: 904 F.3d 490
• Parties: INTERNATIONAL ASSOCIATION OF MACHINISTS DISTRICT TEN AND LOCAL LODGE 873, Plaintiff-Appellee, v. Ray ALLEN, in his capacity as Secretary of the Wisconsin Department of Workforce Development, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

904 F.3d 490

INTERNATIONAL ASSOCIATION OF MACHINISTS DISTRICT TEN AND LOCAL LODGE 873, Plaintiff-Appellee,

v.Ray ALLEN, in his capacity as Secretary of the Wisconsin Department of Workforce Development, et al., Defendants-Appellants.

No. 17-1178

United States Court of Appeals, Seventh Circuit.

Argued September 15, 2017

Decided September 13, 2018

Rehearing and Rehearing En Banc Denied November 21, 2018

Nathan D. Eisenberg, Jill M. Hartley, Attorneys, Previant Law Firm, S.C., Milwaukee, WI, for Plaintiff–Appellee.

Ryan J. Walsh, Kevin Michael LeRoy, Attorneys, Office of the Solicitor General, Wisconsin Department of Justice, Madison, WI, for Defendants–Appellants.

Before Manion, Rovner, and Hamilton, Circuit Judges.

Hamilton, Circuit Judge.

Wisconsin’s Act 1 of 2015, codified at Wis. Stat. § 111.01 et seq., changed many provisions of that State’s labor laws. This case deals with a narrow provision of Act 1 that attempts to change the rules for payroll deductions that allow employees to pay union dues through dues-checkoff authorizations.

A dues-checkoff authorization is a contract between an employer and employee for payroll deductions. These are "arrangements whereby [employers] would check off from employee wages amounts owed to a labor organization for dues, initiation fees and assessments." Felter v. Southern Pacific Co. , 359 U.S. 326, 330–31, 79 S.Ct. 847, 3 L.Ed.2d 854 (1959). By signing an authorization, the employee directs the employer to deduct union dues or fees routinely from the employee’s paycheck and to remit those funds to the applicable union. Many of these authorizations are irrevocable for a specified period—often one year—for reasons of administrative simplicity. See Dkt. 43 at 2 (Elizondo Aff.); see also N.L.R.B. v. Atlanta Printing Specialties and Paper Prods. Union 527 , 523 F.2d 783, 786 (5th Cir. 1975). The union itself is not a party to the authorization, which is effective if and only if the employee wishes. Federal law has long provided, however, that unions can bargain collectively with employers over the standard terms of dues-checkoff authorizations.

The Taft-Hartley Act imposes three limits on dues-checkoff authorizations: the authorization must be (1) individual for each employee, (2) in writing, and (3) irrevocable for no longer than one year. See 29 U.S.C. § 186(a)(2), (c)(4). Wisconsin’s Act 1 attempts to shorten this maximum period to thirty days. See 2015 Wis. Act 1, § 9, codified at Wis. Stat. § 111.06(1)(i).

The district court found that Wisconsin’s attempt to impose its own time limit on dues-checkoff authorizations is preempted by federal labor law, and the court issued a permanent injunction barring enforcement of that provision. International Ass'n of Machinists District 10 v. Allen , No. 16-cv-77, 2016 WL 7475720, at *7 (W.D. Wis. Dec. 28, 2016). We affirm. This case is controlled by the Supreme Court’s summary affirmance in a case finding a nearly identical State law preempted. Sea Pak v. Indus., Tech. & Prof. Employees, Div. of Nat'l Maritime Union , 400 U.S. 985, 91 S.Ct. 452, 27 L.Ed.2d 434 (1971) (mem.). We reject Wisconsin’s effort to undermine the precedential force of Sea Pak , which is fully consistent with more general federal labor law preemption principles. See, e.g., Machinists v. Wisconsin Employment Relations Comm'n , 427 U.S. 132, 140–42, 153, 96 S.Ct. 2548, 49 L.Ed.2d 396 (1976). Wisconsin’s attempt to short-circuit the collective bargaining process and to impose a different dues-checkoff standard is preempted by federal law.

I. Factual and Procedural History

A. Wisconsin Act 1

Before Act 1 was enacted in 2015, Wisconsin law had allowed so-called union security agreements in which unions and employers would agree that employees would be required either to join the union or pay fair-share fees. That changed with Act 1’s "right-to-work" provisions, which prohibit employers from requiring their employees to pay dues or fees to a union. See International Union of Operating Engineers Local 139 v. Schimel , 863 F.3d 674, 676–77 (7th Cir. 2017), excerpting 2015 Wis. Act 1, § 5, codified at Wis. Stat. § 111.04(3)(a). Act 1 provides in part: "No person may require, as a condition of obtaining or continuing employment, an individual to ... Pay any dues, fees, assessments, or other charges ... to a labor organization." § 111.04(3)(a)(3). This also meant that Wisconsin employers and unions could no longer enter into an enforceable mandatory union security agreement—a term in a collective bargaining agreement where an employer promises the union that, as a condition of employment, it will require its employees to maintain membership in the union. We held in Schimel that this "right-to-work"/mandatory union security agreement portion of Act 1 is not preempted by federal law. 863 F.3d at 677.¹

The section of Act 1 challenged in this lawsuit attempts a less dramatic change in labor law. It requires employers to terminate dues-checkoff authorizations within thirty days of receiving written notice from the employee. 2015 Wis. Act 1, § 9, codified at Wis. Stat. § 111.06(1)(i). This challenged provision reads:

(1) It shall be an unfair labor practice for an employer individually or in concert with others: ...

(i) To deduct labor organization dues or assessments from an employee's earnings, unless the employer has been presented with an individual order therefor, signed by the employee personally, and terminable by the employee giving to the employer at least 30 days' written notice of the termination. This paragraph applies to the extent permitted under federal law.

B. The Dispute at the John Deere Plant

This case stems from a complaint filed with the Wisconsin Department of Workforce Development, the State agency that enforces Wisconsin’s wage laws. Lisa Aplin, an assembler at a John Deere plant in Wisconsin, signed a dues-checkoff authorization in November 2002. Her authorization instructed John Deere to deduct union dues from her paychecks and to remit them to the International Association of Machinists District 10 and Local Lodge 873, the plaintiffs-appellees here, which we refer to as the Machinists or the union. Aplin’s authorization said that it was "irrevocable for one (1) year or until the termination of the collective bargaining agreement ... whichever occurs sooner." It also provided that it would be automatically renewed for successive one-year periods unless the collective bargaining agreement terminated or Aplin gave notice during a fifteen-day annual period. The authorization also provided that it was "independent of, and not a quid pro quo for, union membership." This arrangement remained in effect until 2015. As the State explains, dues-checkoff authorizations like this are a convenient way for employees to pay their union dues or fair-share fees.

In the wake of Act 1, John Deere and the Machinists updated their collective bargaining agreement, but they left in place a term making dues-checkoff authorizations irrevocable for one year. In July 2015, Aplin sent a letter to John Deere and the union invoking Act 1 and requesting the termination of her dues-checkoff authorization. The union responded that her request was untimely and could not be granted unless she renewed it during the annual cancellation period that November.

Aplin then filed a complaint with the State agency claiming that John Deere was violating State wage laws by not honoring within thirty days her attempt to revoke the dues-checkoff authorization. She sought a refund of $65.60 in union dues deducted from her pay after the cancellation would have taken effect. In November 2015, the agency sided with Aplin, finding that Wis. Stat. § 111.06(1)(i) applied and that John Deere had to honor Aplin’s cancellation and refund request, or face enforcement action. The company then reimbursed Aplin for the $65.60 deducted from her paycheck. Around the same time, the agency handled another similar dues-checkoff complaint invoking Wis. Stat. § 111.06(1)(i) and concluded that it "must enforce the statute in its current form" unless and until it was found preempted.

C. This Federal Lawsuit

In February 2016, the Machinists filed this action in the Western District of Wisconsin and moved to enjoin the State from enforcing Act 1’s dues-checkoff provision. The union contended that the federal Labor-Management Relations Act of 1947, better known as the Taft-Hartley Act, preempted Act 1 on this score. See Pub. L. No. 80–101, § 302(a), (c)(4), 61 Stat. 157, codified at 29 U.S.C. § 186(a), (c)(4).

To protect against corruption in the collective bargaining process, the Taft-Hartley Act, as amended, prohibits "any employer or association of employers" from giving "any money or other thing of value" to "any labor organization," § 186(a)(2), unless one of a long list of exceptions applies. § 186(c). The exception relevant here provides:

The [prohibition] provisions of this section shall not be applicable ...

(4) with respect to money deducted from the wages of employees in payment of membership dues in a labor organization: Provided , That the employer has received from each employee, on whose account such deductions are made, a written assignment which shall not be irrevocable for a period of more than one year, or beyond the termination date of the applicable collective agreement, whichever occurs sooner....

§ 186(c)(4). The union argued that this year-long dues-checkoff exception in federal labor law is incompatible with, and thus preempts, the corresponding thirty-day provision of Wisconsin’s Act 1.

The district court granted the union’s motion for summary judgment and permanently enjoined enforcement of Wis. Stat. § 111.06(1)(i). 2016 WL 7475720, at *7–8. The district court found that this issue was "relatively straightforward, since its resolution is controlled by the United States Supreme Court’s decision" in Sea Pak . Id . at *3, citing 400 U.S. 985, 91 S.Ct. 452, 27 L.Ed.2d 434 (1971).

II. Analysis

We review the legal...