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Indiana Supreme Court upholds state Right to Work Act

By Lisa Milam-Perez, J.D.

Dealing a considerable blow to organized labor in Indiana, the state’s high court has upheld the Right to Work Act, reversing a trial court’s finding that the legislation violated the Indiana Constitution. Rejecting the notion that the statute was an impermissible “demand” by the state that unions provide free services to nonmembers (as it must, pursuant to its federal duty of fair representation), the high court reasoned that “[a]ny compulsion to provide services does not constitute a demand made by the State of Indiana.” The International Union of Operating Engineers Local 150 had mounted a two-pronged legal challenge to the statute in federal and state court. Both efforts have proved unavailing (Zoeller v Sweeney, November 6, 2014, Dickson, B).

Right to Work Act. Under Indiana’s Right to Work Act (IC 22-6-6-8), passed in 2012, an employee may not be compelled, as a condition of employment, to become or remain a union member, pay dues or assessments to a union, or pay an equivalent or pro rata amount to a third party in lieu of dues. IC 22-6-6-10 makes it a criminal misdemeanor to knowingly or intentionally violate this provision. The union sought to invalidate the statute on both federal and state constitutional grounds.

Federal suit fizzled. The federal lawsuit contended that the Right to Work Act violated the Contracts Clause of the U.S. Constitution in that it impaired the union’s ability to enter into contractual relationships. The union also raised an equal protection argument: because the law required it to represent employees who refused to pay dues, dues-paying members unfairly bore the whole cost of providing representation, it argued. Moreover, it claimed the state law was preempted by the NLRA. The federal district court dismissed their claims, and a divided Seventh Circuit affirmed, finding no constitutional infirmities.

Nor did the statute conflict with federal labor law, the appeals court found. Compelling to the court was the fact that state right-to-work laws were in effect in 1947 when Taft-Hartley was passed. In fact, of the 12 state right-to-work statutes in effect at the time, more than half included language similar to Indiana’s challenged law, the court noted. Currently, 24 states have some form of right-to-work law, and the overwhelming majority of jurisdictions have adopted language substantially identical to the Indiana provision. As the Seventh Circuit saw it, the longevity of many of these statutes, with not a whiff of disapproval from the U.S. Supreme Court, suggested that Indiana’s statute fell squarely within the bounds of acceptable law.

After the Seventh Circuit issued its decision in September, the Local 150 signaled it might seek rehearing or appeal to the U.S. Supreme Court. Meanwhile, the union took its case to the Indiana high court.

State constitutional challenge. The union had sought a declaratory judgment that two provisions of the Indiana Right to Work Law in particular, IC 22-6-6-8 and 22-6-6-10, violated Article 1, Section 21 of the Indiana Constitution, which prohibits the state from making a demand for “particular services… without just compensation.” The union had scored an early win after an Indiana trial court ruled that the right-to-work measure was at odds with the constitutional provision. The right-to-work law made it illegal for unions to collect fees for the services they are required to provide all bargaining unit employees — union members or not — under federal law, such as processing grievances and negotiating on their behalf. Traditionally, unions are compensated for these services by member dues, and federal law ensures that nonunion members who obtain the benefits of union representation can be required to pay for them in the form of “fair share” fees. The trial court agreed with Local 150 that the right-to-work law impermissibly demanded that the union provide its federally-mandated services for free to non-dues payers.

High court reversal. But that theory fell flat in the state’s high court. The union urged that, under the Right to Work Act, its services are indirectly demanded by the state because the state is “charged with the knowledge of the existence of the federal law which requires unions to represent every individual employee fairly.” On the face of the statute, though, there is no state demand for services, the supreme court concluded; the law “merely prohibits employers from requiring union membership or the payment of monies as a condition of employment.”

The Indiana Constitution was meant to protect the liberty of the state’s citizens from the reaches of their state government, the high court emphasized, and Article 21 “requires just compensation when the state demands particular services, not when the federal government does so.” Absent the federal law, a union could freely refuse to provide services to nonmembers without incurring criminal liability under IC 22-6-6-10, the court reasoned.

Members-only unions? In any event, the union can choose not to be an “exclusive-agency” union and become a “members only” union, the Indiana Supreme Court suggested. Then there would be no demand for uncompensated services by anyone. And while the union responded that the NLRA forbids it — the NLRB will not process a representation petition seeking a “members only” bargaining unit, and a union has no recourse if the employer refuses to bargain — that was of no concern to the state high court. “The Union’s federal obligation to represent all employees in a bargaining unit is optional,” the court wrote; “it occurs only when the union elects to be the exclusive bargaining agent, for which it is justly compensated by the right to bargain exclusively with the employer.”

Concurrence. Writing separately, Justice Rucker observed that, while the parties “vigorously dispute[d]” whether it was possible for a union to lawfully avoid the costs of its federal duty of fair representation by operating in a members-only capacity, the union made no serious attempt to demonstrate that the Right to Work Law operated in such a way as to have actually eliminated or reduced its compensation from dues or “fair share” payments. Rather, the union endeavored to invalidate the statute on its face, not “as applied.”

The union made no effort to demonstrate that, under the particular circumstances presented here, it was deprived of such compensation by operation of the Right to Work law. Nor did the union show that, upon expiration of a valid union security agreement, it was unable to operate in a manner that would allow it to charge all of its members for services provided. Pondered Rucker: “There may very well exist a set of facts and circumstances that if properly presented and proven could demonstrate that a union has actually been deprived of compensation for particular services by application of the Right to Work Law. And thus as to that union the statute would be unconstitutional as applied. However, this is not that case.”

Reaction. “Any time a new law is passed and then challenged, the parties directly impacted by the law are left to operate in a legal state of limbo,” noted Chuck Baldwin and Todd Nierman of Ogletree Deakins. (They had filed an amicus brief to the Indiana Supreme Court in support of the Indiana law on behalf of the Indiana Legal Foundation.)

“Labor management relations cannot be put on hold. Unions and employers have continued to have to bargain collectively for new agreements during the pendency of the litigation over the constitutionality of the law. This has made for some difficult and at times impossible negotiations. With this issue now settled, unions and employers can come to the bargaining table with a common understanding of the law under which they are negotiating,” they noted. “That is a good thing regardless of one’s perspective on the right to work debate.”