Sweeney v. Pence

Decision Date02 September 2014
Docket NumberNo. 13–1264.,13–1264.
Citation767 F.3d 654
PartiesJames M. SWEENEY, et al., Plaintiff–Appellants, v. Michael PENCE, Governor of the State of Indiana, et al., Defendant–Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

OPINION TEXT STARTS HERE

Dale D. Pierson, Attorney, IUOE Local 150 Legal Department, Countryside, IL, for appellant.

Frances Barrow, Attorney, Grant E. Helms, Attorney, David L. Steiner, Attorney, Office of the Attorney General, Indianapolis, IN, for appellee.

Before WOOD, Chief Judge, and MANION and TINDER, Circuit Judges.

TINDER, Circuit Judge.

PlaintiffAppellants, members and officers of the International Union of Operating Engineers, Local 150, AFL–CIO (“the Union”) appeal the district court's dismissal of their suit, arguing that the Indiana Right to Work Act violates their rights under the United States Constitution and is preempted by federal labor legislation. Because the legislation is not preempted by the scheme of federal labor law and does not violate any constitutional rights, we affirm the district court's dismissal of the suit.

I

After a “rancorous, partisan” month-long fight during which “hundreds of union members crowded, day after day, into the Statehouse halls,” 1 the Indiana legislature passed the Indiana Right to Work Act on February 1, 2012, and Governor Mitch Daniels signed the legislation into law. The law's relevant provisions for this litigation are the following.

Section 8, which spells out the principal prohibitions of the Right to Work Act:

A person may not require an individual to:

(1) Become or remain a member of a labor organization;

(2) Pay dues, fees, assessments, or other charges of any kind or amount to a labor organization; or

(3) Pay to a charity or third party an amount that is equivalent to or a prorata part of dues, fees, assessments or other charges required of members of a labor organization as a condition of employment or continuation of employment.

Ind.Code § 22–6–6–8.

Section 3, which makes clear what substantive provisions of the Right to Work Act are to be construed to apply to the building and construction industry:

Nothing in this chapter is intended, or should be construed, to change or affect any law concerning collective bargaining or collective bargaining agreements in the building and construction industry other than:

(1) a law that permits agreements that would require membership in labor organization; (2) a law that permits agreements that would require the payment of dues, fees, assessments, or other charges of any kind of amount to a labor organization; or

(3) a law that permits agreements that would require the payment to a charity or a third party of an amount that is equivalent to or a pro rata part of dues, fees, assessment, or other charges required of members of a labor organization;

as a condition of employment.

Ind.Code § 22–6–6–3.

And Section 13, which makes clear that Sections 8–12 of the Act apply prospectively:

Sections 8 through 12 of this chapter:

(1) apply to a written or oral contract or agreement entered into, modified, renewed, or extended after March 14, 2012; and

(2) do not apply to or abrogate a written or oral contract or agreement in effect on March 14, 2012.

Ind.Code § 22–6–6–13.

On February 22, 2012, PlaintiffAppellants, officers and members of the International Union of Operating Engineers, Local 150, AFL–CIO (“the Union”), brought suit in federal district court against the Governor of Indiana, the Attorney General of Indiana, and the Commissioner of the Indiana Department of Labor in their official capacities, seeking declaratory relief. They alleged that the Indiana Right to Work Act violates the United States Constitution and the Indiana Constitution. They further argued that the scheme of federal labor law, specifically the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq., preempts §§ 8(2)(3) and 3(2)(3) of the new legislation. On January 17, 2013, the federal district court granted DefendantAppellees' Motion to Dismiss on the preemption claim and the federal constitutional claims. PlaintiffAppellants timely appealed.2

II

On appeal, PlaintiffAppellants raise two varieties of issues: whether the law is preempted by the federal scheme of labor law, and whether the Indiana law violates the United States Constitution. We answer in the negative to both questions.

1. Federal Preemption

PlaintiffAppellants' main argument asserts that the Indiana right-to-work law is preempted by federal legislation on the same topic.

The history of the federal legislation in question is important here. Congress enacted the Wagner Act in 1935 and amended it through the Labor Management Relations Act of 1947, better known as the Taft–Hartley Act. The Taft–Hartley Act included several provisions intended to ameliorate perceived imbalances in the NLRA. In particular, Congress was concerned about abuses stemming from the “closed shop,” a union-security agreement whereby an employer agreed to hire only union members. Section 8(3) of the Wagner Act was accordingly amended to ban closed shops. However, the amended Section 8(3) “shield[ed] from an unfair labor practice charge less severe forms of union-security arrangements than the closed or union shop.” NLRB. v. Gen. Motors Corp., 373 U.S. 734, 739, 83 S.Ct. 1453, 10 L.Ed.2d 670 (1963). For example, it permitted “an arrangement ... requiring nonunion members to pay to the union $2 a month ‘for the support of the bargaining unit.’ Id.

Although Congress permitted less restrictive, post-hiring union-security agreements under federal law, it also left states free to ban them. Section 14(b) of the Act provided that Section 8(3) did not protect a union-security agreement if it was “prohibited by State or Territorial law.” By the time Section 14(b) was included in the NLRA, “twelve States had statutes or constitutional provisions outlawing or restricting the closed shop and related devices,” laws “about which Congress seems to have been well informed during the 1947 debates....” Retail Clerks Int'l Ass'n, Local 1625 v. Schermerhorn, 375 U.S. 96, 100, 84 S.Ct. 219, 11 L.Ed.2d 179 (1963) (“ Retail Clerks II ”).

In relevant part, Section 8(a)(3) of the NLRA now reads:

It shall be an unfair labor practice for an employer ... by discrimination in regard to hire or tenure or employment or any term or condition of employment to encourage or discourage membership in any labor organization.

Provided, That nothing in this subchapter, or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in this subsection as an unfair labor practice) to require as a condition of employment membership therein....

29 U.S.C. § 158(a)(3).

And Section 14(b) of the NLRA provides:

Nothing in this subchapter shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.

29 U.S.C. § 164(b).

The Supreme Court has clarified the relationship between these two provisions: § 14(b) was intended to prevent other sections in the NLRA from “completely extinguishing state power over certain union-security arrangements.” Retail Clerks Intern. Ass'n, Local 1625 v. Schermerhorn, 373 U.S. 746, 751, 83 S.Ct. 1461, 10 L.Ed.2d 678 (1963) (“ Retail Clerks I ”). Specifically, [Section 14(b) ] was designed to make certain that § 8(a)(3) could not be said to authorize arrangements of this sort in States where such arrangements were contrary to the State policy.” Id. (citations and internal quotation marks omitted). Thus, we read Section 14(b) as protecting states' authority to enact laws prohibiting union-security arrangements that are permissible under Section 8(a)(3) and other provisions of the NLRA. This reading was underscored by the Supreme Court's decision in Retail Clerks II, which declared that the legislative history “ma[de] clear and unambiguous the purpose of Congress not to preempt the field.” Retail Clerks II, 375 U.S. at 101, 84 S.Ct. 219. The Court concluded “that Congress in 1947 did not deprive the States of any and all power to enforce their laws restricting the execution and enforcement of union-security agreements” and that “it is plain that Congress left the States free to legislate” in the field of union-security agreements. Id. at 102, 84 S.Ct. 219. The freedom reserved to the states is extensive; “even if [a] union-security arrangement clears all federal hurdles, the States by reason of § 14(b) have the final say and may outlaw it.” Id. at 102–03, 84 S.Ct. 219. The Supreme Court could not have been more explicit regarding the broad authority of states to prohibit union-security agreements.

It is against this backdrop of states' extensive authority, reserved to them by the language of the statute and the Supreme Court's interpretation, that we consider PlaintiffAppellants' argument that provisions of the Indiana right-to-work legislation are preempted by federal labor legislation. Their primary argument is that Section 14(b) permits states to ban only union-security agreements “requiring member ship,” or else compelling workers to pay a full membership fee that serves as the functional equivalent of membership. The Indiana statute goes further by prohibiting unions from collecting any fees and dues from unwilling employees. The PlaintiffAppellants assert that this ban is too strict because employees may still be required to pay a fee equal to their “fair share” of the collective bargaining costs—something less than the full membership fee—and not qualify as “members” of the union under Section 14(b). Section 8(a)(3), which permits such arrangements, would then, according to this argument, apply in full force and preempt any state statute barring the union's...

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