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Wisconsin right-to-work law’s ban on union security agreements upheld

By Ronald Miller, J.D.

A union’s challenge to a provision in Wisconsin “Right-to-Work” law, Act 1, which prohibits union-security agreements that require employees to pay any dues, fees, or assessments to a labor organization, fell based on the Seventh Circuit’s ruling in Sweeney v. Pence . Here, the appeals court found that its decision in Sweeney remained good law and controlled the preemption analysis in this case, and dictated an outcome in favor of Wisconsin. The union did not provide any “compelling reason” to revisit Sweeney with an eye towards overturning that decision. Importantly, with respect to the union’s “Takings Clause” argument, the appeals court found that the district court got it right in ruling that the claim was ripe, and dismissed the claim with prejudice in light of Sweeney (International Union of Operating Engineers Local 139 v. Schimel, July 12, 2017, Flaum, J.).

In Sweeney v. Pence, the Seventh Circuit determined that the NLRA did not preempt Indiana’s right-to-work law, even though the law prohibited the payment of any dues or fees to unions. The appeals court also determined that the enactment of Indiana’s law did not effect a “taking” in violation of the Fifth Amendment. After Sweeney issued, Wisconsin enacted Act 1, a nearly identical law.

The union, which had entered into several conditional union-security agreements with employers, filed suit against various Wisconsin officials seeking to void the provision of Act 1 that prohibits forming union-security agreements of any kind. The union argued that Act 1was preempted by the same NLRA provisions at issue in Sweeney, and that Act 1 unconstitutionally takes the affected unions’ property without just compensation. Finding that Sweeney controlled in this case, the district court entered judgment on the pleadings in favor of Wisconsin. These cross-appeals followed.

“Compelling reason.” Before the district court, the union conceded that Sweeney controlled the preemption analysis in this case and dictated an outcome in favor of Wisconsin. On appeal, the union argued that Sweeney was wrongfully decided and should be overturned. Overturning circuit precedent requires a “compelling reason” to do so. A strong dissent, like Chief Judge Wood’s in Sweeney, coupled with a close vote to rehear Sweeney en banc, were not “compelling reasons” to overturn a recent decision. Further, the union pointed to no intervening developments in statutory, Supreme Court, or even intermediate-appellate-court law that undermined Sweeney’s validity.

Takings clause. Next, the Seventh Circuit turned to the union’s argument that Act 1takes the affected unions’ property without just compensation in violation of the Fifth Amendment. Here, the appeals court noted that the union brought its “takings” claim in federal court without first seeking just compensation in state court. Generally, such claims are regarded as unripe under Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City. However, the district court determined that the union’s “takings” claim was nevertheless ripe because it had made a pre-enforcement facial challenge to Act 1, and dismissed the complaint with prejudice. On cross-appeal, Wisconsin argued that the district court should have ruled that this claim was unripe and should have dismissed it without prejudice.

Generally, “if a state provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.” However, the Seventh Circuit has recognized two exceptions to Williamson’s ripened requirement: “one for pre-enforcement facial challenges and one for situations in which relief is not available in state court.” In this case, the appeals court found that the union’s claim that Act 1 works an unconstitutional taking from all affected unions, and the relief that it sought—invalidation of parts of Act 1—both clearly reached beyond its particular circumstances.

The appeals court noted that the panel’s discussions of the Takings Clause issue in Sweeney indicated that an unconstitutional taking would arise, if at all, from the statutory language of the right-to-work statutes or the NLRA. In this case, the union asserted that the provision of Act 1 forbidding all union-security agreements amounted to an unconstitutional taking on its face. Thus, the district court correctly construed this claim as a “pre-enforcement facial challenge” to Act 1, and determined that the takings claim was ripe under that Williamson exception, and dismissed the claim with prejudice in light of Sweeney. Accordingly, the appeals court affirmed the judgment of the district court.