Int'l Union of Operating Eng'rs v. Daley

• Decision Date: 17 December 2020
• Docket Number: Nos. 20-1672 & 20-1724,s. 20-1672 & 20-1724
• Parties: INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 139, AFL-CIO, et al., Plaintiffs-Appellants, Cross-Appellees, v. James J. DALEY, Defendant-Appellee, and Wisconsin Legislature, Cross-Appellant, Proposed Intervenor.
• Court: U.S. Court of Appeals — Seventh Circuit

983 F.3d 287

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 139, AFL-CIO, et al., Plaintiffs-Appellants, Cross-Appellees,

v.James J. DALEY, Defendant-Appellee,andWisconsin Legislature, Cross-Appellant, Proposed Intervenor.

Nos. 20-1672 & 20-1724

United States Court of Appeals, Seventh Circuit.

Argued November 13, 2020

Decided December 17, 2020

Brian C. Hlavin, Attorney, Patrick Nolan Ryan, Attorney, Baum, Sigman, Auerbach, Neuman, LTD., Chicago, IL, for Plaintiffs-Appellants.

Clayton P. Kawski, Attorney, Steven C. Kilpatrick, Attorney, Office of the Attorney General, Wisconsin Department of Justice, Madison, WI, for Defendants-Appellees.

Sean T.H. Dutton, Attorney, Kevin Michael LeRoy, Attorney, Misha Tseytlin, Attorney, Troutman Pepper Hamilton Sanders Llp, Chicago, IL, Lisa M. Lawless, Attorney, Husch Blackwell LLP, Milwaukee, WI, for Cross-Appellant, Proposed Intervenor.

James C. Devereaux, Attorney, Milton L. Chappell, Attorney, National Right To Work Legal Defense Foundation, Springfield, VA, for Amicus Curiae.

Before Flaum, Rovner, and Brennan, Circuit Judges.

Flaum, Circuit Judge.

This First Amendment case represents the third constitutional challenge to Wisconsin's Act 10 to reach this Court. We previously addressed Act 10 in Wisconsin Education Association Council v. Walker (WEAC ), 705 F.3d 640 (7th Cir. 2013), and Laborers Local 236 v. Walker (Laborers ), 749 F.3d 628 (7th Cir. 2014). Act 10 significantly altered Wisconsin's public-employee labor laws. The Act separated public employees into two classes—a select group of "public safety employees" with the remainder classified as "general employees." It then made it more challenging for general-employee unions to retain certification as exclusive bargaining agents, prohibited public-sector employers from collectively bargaining with their general employees over anything except base wages, and prohibited public employers from deducting union dues from general employees’ paychecks.

Plaintiffs-appellants, a public-employee labor union and two of its individual members, challenged these three provisions—the annual recertification requirement, the limitations on collective bargaining, and the prohibition on payroll deduction of union dues—arguing that the provisions infringe on their First Amendment rights. The chairman of the Wisconsin Employment Relations Commission (WERC) moved to dismiss. Shortly thereafter, the Wisconsin Legislature moved to intervene. In two separate orders, the district court dismissed plaintiffs-appellants’ complaint in part for lack of standing and in part for failure to state a claim. The district court also denied the Legislature's motion to intervene. Plaintiffs-appellants appeal the dismissal of their complaint. The Legislature cross-appeals the denial of its motion to intervene. We now affirm.

I. Background

A. Act 10's Statutory and Legal History

Wisconsin grants public-sector employees the right to bargain collectively through two principal laws: the State Employment Labor Relations Act (SELRA) and the Municipal Employment Relations Act (MERA). These statutes define the rights of public employees and their unions as well as their relationship with state and municipal employers. Prior to 2011, public-sector unions enjoyed broad protections and privileges under SELRA and MERA. Governmental employers were obligated to bargain in good faith with employee representatives over a wide range of subjects, including wages and conditions of employment. Public-sector unions could petition WERC for an election to certify the union as the employees’ exclusive bargaining agent. This certification required only a simple majority of those voting, and the union remained the employees’ exclusive agent until 30% of the employee union members petitioned for a decertification election. Unions could also utilize the state and municipal payroll systems to automatically collect membership dues.

In 2011, however, the Wisconsin Legislature amended SELRA and MERA with the passage of Act 10. See 2011 Wis. Act 10, 2011 Wis. Sess. Laws 23. Act 10 divided Wisconsin state and municipal employees into two classes: "[p]ublic safety employee[s]," which includes police officers, firefighters, and deputy sheriffs, and "general municipal employee[s]," i.e., everyone else. See Wis. Stat. § 111.70(1)(fm), (mm). A subsequent amendment created a third class of "[t]ransit employee[s]." See id. § 111.70(1)(fm). Public safety and transit employees and their unions continue to operate under the pre-Act 10 scheme.

On the other hand, Act 10 subjected general employees to the various restrictions on union activity. First, Act 10 limited the scope of state and municipal employers’ collective-bargaining obligations with respect to these employees. The Act still requires public employers to collectively bargain with general employees over base-wage increases, but it prohibits public employers from bargaining over anything else, including but not limited to other forms of compensation—such as overtime or premium pay—as well as nonwage issues. See id. §§ 111.70(1)(a), 111.70(4)(mb), 111.81(1), 111.91(3). Act 10 further mandates that general-employee unions submit to an annual recertification election to retain their status as the employees’ exclusive agent, instead of allowing unions to remain certified indefinitely. Id. § 111.70(4)(d) 3.b. Certification now requires affirmative votes from an absolute majority—"at least 51 percent"—of all employees in the bargaining unit, not just those voting. Id. §§ 111.70(4)(d) 3.b., 111.83(3)(b). Finally, Act 10 bars public employers from deducting union dues from the earnings of general employees. Id. § 111.70(3g).¹

We have already rejected two challenges to Act 10's constitutionality. The first came in WEAC , where we held that Act 10's prohibition on payroll deductions did not violate the First Amendment. 705 F.3d at 645. We concluded that the unions’ previous use of the payroll system was equivalent to the state subsidizing the unions’ speech. Id. at 646–48. Wisconsin could thus withdraw this subsidy from certain groups so long as it did so on a viewpoint-neutral basis, and Act 10's distinction between public safety and general employees was, in fact, viewpoint neutral. Id. at 648–49. We also upheld Act 10's collective-bargaining limitation, recertification requirement, and payroll-deduction prohibition in the face of the WEAC plaintiffs’ Fourteenth Amendment equal protection challenge, concluding that these provisions survived rational basis review. Id. at 654–57.

We considered a second challenge to Act 10 in Laborers . The plaintiffs there argued that Act 10's collective-bargaining limitation violated their First Amendment right to petition and that its various restrictions, in their cumulative effect, violated their First Amendment association rights. 749 F.3d at 634. They also challenged the collective-bargaining limitation under the Equal Protection Clause, arguing that it impermissibly disadvantaged represented employees compared to nonunion employees. Id. at 639. We held that the challenged provisions did not infringe the plaintiffs’ First or Fourteenth Amendment rights. See id. at 638–41.

In addition, the Wisconsin Supreme Court upheld Act 10 in Madison Teachers, Inc. v. Walker , 2014 WI 99, 358 Wis. 2d 1, 851 N.W.2d 337. The plaintiffs in that case alleged that the collective-bargaining limitation, payroll-deduction prohibition, prohibition of fair-share agreements, and annual recertification requirement violated their First Amendment associational and Fourteenth Amendment equal protection rights. Id. ¶ 2. The state supreme court rejected each challenge, holding that "[n]o matter the limitations or ‘burdens’ a legislative enactment places on the collective bargaining process, collective bargaining remains a creation of legislative grace and not constitutional obligation." See id. ¶ 160–61.

B. Factual and Procedural Background

Plaintiffs-appellants here, Local 139, a general-employee union, and Karen Erickson and Heath Hanrahan, two of its individual members, challenge the three provisions of Act 10 described above: the (1) stricter recertification requirement, (2) limitation on permissible collective-bargaining subjects, and (3) prohibition on payroll deductions of union dues. They filed a three-count complaint against defendant-appellee James Daley, chairman of WERC, in federal district court, alleging that these provisions violate their rights under the First and Fourteenth Amendments and seeking declaratory and injunctive relief. The district court deemed plaintiffs-appellants’ Fourteenth Amendment claims waived below, and plaintiffs-appellants do not raise them here. Therefore, our analysis proceeds along only First Amendment lines. See United States v. Bryant , 750 F.3d 642, 651 (7th Cir. 2014) ("Failure to develop an argument on appeal results in waiver even if the argument was presented to the district court.").

In Count 1, plaintiffs-appellants claimed that the annual recertification requirement violates their First Amendment rights by compelling them to vote "no," contrary to their wish not to vote at all. Specifically, they alleged that the recertification provision "declares that a non-vote is a vote against Union representation" and "[b]y equating not voting with voting no, Act 10 directly infringes on the rights of public employees to not engage in speech." Plaintiffs-appellants asserted that they had been "directly harmed by this provision of Act 10" in an April 2019 election when Local 139 "received 100% of all ballots cast," but because a majority of employees did not vote, and Act 10 counted their nonvotes as no votes, Local 139 "was not recertified as the bargaining unit representative."

In Count 2, plaintiffs-appellants alleged that Daley had unlawfully interpreted Act 10's collective-bargaining limitation to preclude unions and municipal employers from entering into any agreements regarding nonwage issues, even...