903 N.W.2d 141
Wis. Ct. App.2017Background
- In 2015 Wisconsin enacted Act 1 (a right-to-work statute) prohibiting requiring union membership or payment of union dues/fees as a condition of employment and voiding contract provisions that violate this prohibition.
- IAM District 10, Local Lodge 1061, United Steelworkers District 2, and Wisconsin State AFL-CIO (the Unions) sued, claiming Act 1 forces them to represent nonmembers (via the duty of fair representation) without the ability to compel payment, constituting an unconstitutional taking under Wis. Const. art. I, § 13.
- The circuit court granted summary judgment for the Unions, finding they had a property interest in dues/services and that Act 1 effected a facial taking and threatened unions’ economic viability; it enjoined enforcement statewide.
- The State appealed; the issues were reviewed de novo with the presumption of statutory constitutionality (plaintiffs must prove unconstitutionality beyond a reasonable doubt).
- The Supreme Court of Wisconsin treated the challenge as essentially an as-applied (hybrid) challenge focused on the Unions’ burden of representing nonpaying nonmembers and evaluated both categorical takings and regulatory (Penn Central) takings theories.
- The court held Act 1 does not appropriate union funds or force unions to provide services; it simply prohibits conditioning employment on payment. Thus no taking was found and the circuit court judgment was reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Act 1 effects a taking of unions' money/services by compelling unpaid representation | Act 1 compels unions (via duty of fair representation) to expend treasury funds and services for nonmembers who cannot be required to pay — a taking | Act 1 does not appropriate or transfer union property or require provision of services; it only prohibits conditioning employment on payment; unions have no entitlement to nonmember fees | Court: No taking — Act 1 prevents conditioning employment on payment but does not take money or force services |
| Whether Act 1 effects a regulatory taking under Penn Central | Economic impact and interference with investment-backed expectations make Act 1 a severe regulatory taking (confiscatory rate analogy) | Unions lacked reasonable expectation of static regulation; right-to-work laws are longstanding and within legislative authority; unions have discretion to set dues and pursue lawful revenue methods | Court: Penn Central factors do not show a compensable regulatory taking |
| Whether Act 1 created the duty of fair representation (and thereby imposed a new property-backed obligation) | Act 1 redefined labor organization and thus imposed the duty of fair representation tied to the statute, creating a taking when fees are barred | Duty of fair representation predates Act 1 and is imposed on exclusive representatives by federal/state law; Act 1 did not create that duty or an entitlement to nonmember fees | Court: Duty preexisted; Act 1 did not create a new compensable property interest |
| Proper scope of relief — facial vs as-applied challenge | Unions sought statewide injunction and argued no circumstance permits such a taking (facial invalidation) | State argued challenge is properly treated as as-applied; if Act 1 is constitutional as applied to these Unions facial challenge fails | Court: Treated as primarily as-applied/hybrid; decided Act 1 constitutional as applied to the Unions, so facial relief was not warranted |
Key Cases Cited
- Madison Teachers, Inc. v. Walker, 358 Wis. 2d 1 (2014) (presumption of constitutionality; heavy burden to overcome statute beyond reasonable doubt)
- Vaca v. Sipes, 386 U.S. 171 (1967) (exclusive bargaining representatives owe duty of fair representation)
- Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) (plurality and concurrence on limits of Takings Clause for retroactive monetary obligations)
- Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978) (multi-factor regulatory takings framework)
- Sweeney v. Pence, 767 F.3d 654 (7th Cir. 2014) (discussion of right-to-work laws and state authority under Taft-Hartley)