Janus v. Am. Fed'n of State, No. 19-1553

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Wood, Chief Judge.
• Citation: 942 F.3d 352
• Parties: Mark JANUS, Plaintiff-Appellant, v. AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, COUNCIL 31; AFL-CIO, et al., Defendants-Appellees, and Kwame Raoul, in his official capacity as Attorney General of the State of Illinois, Intervenor-Defendant-Appellee.
• Docket Number: No. 19-1553
• Decision Date: 05 November 2019

942 F.3d 352

Mark JANUS, Plaintiff-Appellant,
v.
AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, COUNCIL 31; AFL-CIO, et al., Defendants-Appellees,
and
Kwame Raoul, in his official capacity as Attorney General of the State of Illinois, Intervenor-Defendant-Appellee.

No. 19-1553

United States Court of Appeals, Seventh Circuit.

Argued September 20, 2019
Decided November 5, 2019
Rehearing and Rehearing En Banc Denied December 12, 2019^*

William L. Messenger, Attorney, National Right To Work Legal Defense Foundation, Springfield, VA, Jeffrey M. Schwab, Attorney, Liberty Justice Center, Chicago, IL, for Plaintiff-Appellant.

John M. West, Attorney, Bredhoff & Kaiser, PLLC, Washington, DC, Melissa J. Auerbach, Attorney, Stephen Anthony Yokich, Attorney, Dowd, Bloch, Bennett, Cervone, Auerbach & Yokich, Chicago, IL, for Defendant-Appellee American Federation of State, County and Municipal Employees, Council 31, AFL-CIO.

Frank Henry Bieszczat, Attorney, Office of the Attorney General, Civil Appeals Division, Chicago, IL, for Defendant-Appellee Janel L. Forde, In her official capacity as Director of Illinois Department of Central Management.

Frank Henry Bieszczat, Attorney, Office of the Attorney General, Civil Appeals Division, Chicago, IL, for Intervenor-Appellee.

Carl R. Draper, Attorney, Feldman, Wasser, Draper & Cox, Springfield, IL, for Defendant.

Before Wood, Chief Judge, and Manion and Rovner, Circuit Judges.

Wood, Chief Judge.

942 F.3d 354

For 41 years, explicit Supreme Court precedent authorized state-government entities and unions to enter into agreements under which the unions could receive fair-share fees from nonmembers to cover the costs incurred when the union negotiated or acted on their behalf over terms of employment. Abood v. Detroit Bd. of Educ. , 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977). To protect nonmembers’ First Amendment rights, fair-share fees could not support any of the union’s political or ideological activities. Relying on Abood , more than 20 states created statutory schemes that allowed the collection of fair-share fees, and public-sector employers and unions in those jurisdictions entered into collective bargaining agreements pursuant to these laws.

In 2018, the Supreme Court reversed its prior position and held that compulsory fair-share or agency fee arrangements impermissibly infringe on employees’ First Amendment rights. Janus v. AFSCME, Council 31 , ––– U.S. ––––, 138 S. Ct. 2448, 2461, 201 L.Ed.2d 924 (2018). The question before us now is whether Mark Janus, an employee who paid fair-share fees under protest, is entitled to a refund of some or all of that money. We hold that he is not, and so we affirm the judgment of the district court.

I

A. History of Agency Fees

Before turning to the specifics of the case before us, we think it useful to take a brief tour of the history behind agency fees. This provides useful context for our consideration of Mr. Janus’s claim and the system he challenged.

The principle of exclusive union representation lies at the heart of our system of industrial relations; it is reflected in both the Railway Labor Act ("RLA"), 45 U.S.C. §§ 151 – 165 (first enacted in 1926), and the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151 – 169 (first enacted in 1935). In its quest to provide for "industrial peace and stabilized labor-management relations," Congress authorized employers and labor organizations to enter into agreements under which employees could be required either to be union members or to contribute to the costs of representation—so-called "agency-shop" arrangements. See 29 U.S.C. §§ 157, 158(a)(3) ; 45 U.S.C. § 152 Eleventh. Unions designated as exclusive representatives were (and still are) obligated to represent all employees,

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union members or not, "fairly, equitably, and in good faith." H.R. Rep. No. 2811, 81st Cong., 2d Sess., p. 4.

In Railway Employment Dep’t v. Hanson , 351 U.S. 225, 76 S.Ct. 714, 100 L.Ed. 1112 (1956), a case involving the RLA, the Supreme Court held that "the requirement for financial support of the collective-bargaining agency by all who receive the benefits of its work is within the power of Congress under the Commerce Clause and does not violate either the First or the Fifth Amendments." Id. at 231, 76 S.Ct. 714. In approving agency-shop arrangements, the Court said, "Congress endeavored to safeguard against [the possibility that compulsory union membership would impair freedom of expression] by making explicit that no conditions to membership may be imposed except as respects ‘periodic dues, initiation fees, and assessments.’ " Id. Hanson thus held that the compulsory payment of fair-share fees did not contravene the First Amendment.

Several years later, in Int’l Ass’n of Machinists v. Street , 367 U.S. 740, 81 S.Ct. 1784, 6 L.Ed.2d 1141 (1961), the Court discussed the careful balancing of interests reflected in the RLA, observing that "Congress did not completely abandon the policy of full freedom of choice embodied in the [RLA], but rather made inroads on it for the limited purposes of eliminating the problems created by the ‘free rider.’ " Id. at 767, 81 S.Ct. 1784. The Court reaffirmed the lawfulness of agency-shop arrangements while cautioning that unions could receive and spend nonmembers’ fees only in accordance with the terms "advanced by the unions and accepted by Congress [to show] why authority to make union shop agreements was justified." Id. at 768, 81 S.Ct. 1784. Legitimate expenditures were limited to those designed to cover "the expenses of the negotiation or administration of collective agreements, or the expenses entailed in the adjustment of grievances and disputes." Id. The Court left the question whether state public agencies were similarly empowered under state law to enter into agency-shop arrangements for another day.

That day came on May 23, 1977, when the Supreme Court issued its opinion in Abood . 431 U.S. 209, 97 S.Ct. 1782. There, a group of public-school teachers challenged Michigan’s labor relations laws, which were broadly modeled on federal law. Id. at 223, 97 S.Ct. 1782. Michigan law established an exclusive representation scheme and authorized agency-shop clauses in collective bargaining agreements between public-sector employers and unions. Id. at 224, 97 S.Ct. 1782. The Court upheld that system, stating that "[t]he desirability of labor peace is no less important in the public sector, nor is the risk of ‘free riders’ any smaller," id. , and that "[t]he same important government interests recognized in the Hanson and Street cases presumptively support the impingement upon associational freedom created by the agency shop here at issue." Id. at 225, 97 S.Ct. 1782. It recognized that "government may not require an individual to relinquish rights guaranteed him by the First Amendment as a condition of public employment." Id. at 233–34, 97 S.Ct. 1782. Nonetheless, it said that a public employee has no "weightier First Amendment interest than a private employee in not being compelled to contribute to the costs of exclusive union representation," id. at 229, 97 S.Ct. 1782, and thus concluded that "[t]he differences between public- and private-sector collective bargaining simply do not translate into differences in First Amendment rights." Id. at 232, 97 S.Ct. 1782.

The correct balance, according to Abood , was to "prevent[ ] compulsory subsidization of ideological activities by employees

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who object thereto without restricting the Union’s ability to require every employee to contribute to the cost of collective-bargaining activities." Id. at 237, 97 S.Ct. 1782. And for four decades following Abood , courts, state public-sector employers, and unions followed this path. See, e.g. , Locke v. Karass , 555 U.S. 207, 129 S.Ct. 798, 172 L.Ed.2d 552 (2009) ; Lehnert v. Ferris Faculty Ass’n , 500 U.S. 507, 111 S.Ct. 1950, 114 L.Ed.2d 572 (1991) ; Chicago Teachers Union v. Hudson , 475 U.S. 292, 106 S.Ct. 1066, 89 L.Ed.2d 232 (1986) ; Ellis v. Railway Clerks , 466 U.S. 435, 104 S.Ct. 1883, 80 L.Ed.2d 428 (1984). Agency-shop arrangements, the Court repeatedly held, were consistent with the First Amendment and validly addressed the risk of free riding. See Comm’cns Workers of America v. Beck , 487 U.S. 735, 762, 108 S.Ct. 2641, 101 L.Ed.2d 634 (1988) ("Congress enacted the two provisions for the same purpose, eliminating ‘free riders,’ and that purpose dictates our construction of § 8(a)(3) ...."); Ellis , 466 U.S. at 447, 452, 456, 104 S.Ct. 1883 (referring in three places to the free-rider concern); see also Lehnert , 500 U.S. at 556, 111 S.Ct. 1950 (Scalia, J., concurring).

In time, however, the consensus on the Court began to fracture. Beginning in Knox v. Serv. Emps. Int’l Union , 567 U.S. 298, 132 S.Ct. 2277, 183 L.Ed.2d 281 (2012), the rhetoric changed. Abood began to be characterized as an "anomaly," and the Court started paying more attention to the "significant impingement on First Amendment rights" Abood allowed and less to the balancing of employees’ rights and unions’ obligations. Id. at 310–11, 132 S.Ct. 2277. Building on Knox , Harris v. Quinn criticized the reasoning in Hanson and Abood as "thin,"...