Opinion ID: 4453185
Heading Depth: 2
Heading Rank: 1

Heading: History of Agency Fees

Text: 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 No. 19‐1553 3 (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 em‐ ployees 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 representa‐ tives were (and still are) obligated to represent all employees, 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 (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. In approving agency‐shop arrangements, the Court said, “Con‐ gress endeavored to safeguard against [the possibility that compulsory union membership would impair freedom of ex‐ pression] by making explicit that no conditions to member‐ ship may be imposed except as respects ‘periodic dues, initi‐ ation 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 (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 4 No. 19‐1553 limited purposes of eliminating the problems created by the ‘free rider.’” Id. at 767. The Court reaﬃrmed the lawfulness of agency‐shop arrangements while cautioning that unions could receive and spend nonmembers’ fees only in accord‐ ance with the terms “advanced by the unions and accepted by Congress [to show] why authority to make union shop agree‐ ments was justified.” Id. at 768. Legitimate expenditures were limited to those designed to cover “the expenses of the nego‐ tiation or administration of collective agreements, or the ex‐ penses entailed in the adjustment of grievances and dis‐ putes.” 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. There, a group of public‐school teachers challenged Michigan’s labor relations laws, which were broadly modeled on federal law. Id. at 223. 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. The Court upheld that system, stating that “[t]he de‐ sirability of labor peace is no less important in the public sec‐ tor, 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 impinge‐ ment upon associational freedom created by the agency shop here at issue.” Id. at 225. It recognized that “government may not require an individual to relinquish rights guaranteed him by the First Amendment as a condition of public employ‐ ment.” Id. at 233–34. Nonetheless, it said that a public em‐ ployee has no “weightier First Amendment interest than a pri‐ vate employee in not being compelled to contribute to the No. 19‐1553 5 costs of exclusive union representation,” id. at 229, and thus concluded that “[t]he diﬀerences between public‐ and pri‐ vate‐sector collective bargaining simply do not translate into diﬀerences in First Amendment rights.” Id. at 232. The correct balance, according to Abood, was to “prevent[] compulsory subsidization of ideological activities by employ‐ ees who object thereto without restricting the Union’s ability to require every employee to contribute to the cost of collec‐ tive‐bargaining activities.” Id. at 237. And for four decades fol‐ lowing Abood, courts, state public‐sector employers, and un‐ ions followed this path. See, e.g., Locke v. Karass, 555 U.S. 207 (2009); Lehnert v. Ferris Faculty Ass’n, 500 U.S. 507 (1991); Chi‐ cago Teachers Union v. Hudson, 475 U.S. 292 (1986); Ellis v. Rail‐ way Clerks, 466 U.S. 435 (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 (1988) (“Congress enacted the two provisions for the same purpose, eliminating ‘free riders,’ and that purpose dictates our con‐ struction of § 8(a)(3) … .”); Ellis, 466 U.S. at 447, 452, 456 (re‐ ferring in three places to the free‐rider concern); see also Lehnert, 500 U.S. at 556 (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 (2012), the rhetoric changed. Abood began to be character‐ ized as an “anomaly,” and the Court started paying more at‐ tention 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. Building on Knox, Harris v. Quinn criticized the reasoning in Hanson and Abood as “thin,” “questionable,” and “troubling.” 573 U.S. 616, 631– 6 No. 19‐1553 35 (2014). Harris worried that Abood had “failed to appreciate the conceptual diﬃculty of distinguishing between union ex‐ penditures that are made for collective‐bargaining purposes and those that are made to achieve political ends” and to an‐ ticipate “the practical administrative problems that would re‐ sult.” Id. at 637. The Harris Court also suggested that “[a] un‐ ion’s status as exclusive bargaining agent and the right to col‐ lect an agency fee from non‐members are not inextricably linked.” Id. at 649. Nonetheless, and critically for present purposes, these ob‐ servations did not lead the Court in Harris to overrule Abood. Informed observers thought that Abood was on shaky ground, but it was unclear whether it would weather the storm, be re‐ stricted, or be overturned in its entirety. That uncertainty con‐ tinued after the Court signaled its intention to revisit the issue in Friedrichs v. California Teachers Ass’n, 135 S. Ct. 2933 (2015), which wound up being aﬃrmed by an equally divided Court. 136 S. Ct. 1083 (2016).