847 F.3d 800
6th Cir.2017Background
- Michigan amended its Campaign Finance Act in 2015 to bar corporations and unions from using corporate/organizational resources to administer payroll-deduction programs that collect contributions for another entity’s PAC, while allowing payroll deductions only for PACs the organization itself (or a nonprofit of which it is a member) establishes.
- Prior practice: unions routinely obtained employer agreements (PAC check-off) in collective bargaining agreements and reimbursed employers’ administrative costs to facilitate payroll deductions to union PACs.
- The 2015 amendments eliminated advanced payments/reimbursements as a cure and criminalized in-kind contributions for providing collection/transfer services to another entity’s PAC; the statute retained payroll deductions to an organization’s own PAC or to a nonprofit-member’s PAC.
- Four labor unions and two union members sued the State of Michigan, asserting Contracts Clause and First Amendment claims; the district court granted a preliminary injunction on both grounds.
- The Sixth Circuit affirmed the injunction as to the Contracts Clause (preventing enforcement against existing collective-bargaining PAC check-offs through their terms) but reversed as to the First Amendment claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contracts Clause: Does the 2015 amendment substantially impair existing collective bargaining agreements that provide for PAC check-offs? | Amendment obliterates contractual expectation to use employer-administered PAC check-off during the agreed term. | Contracts lack explicit reimbursement clauses; State argues no enforceable impairment and law can be construed to apply only prospectively. | Held for plaintiffs: substantial impairment like Toledo Area AFL-CIO Council v. Pizza; injunction preventing enforcement against pre-existing agreements during their terms. |
| First Amendment: Does banning third-party administration of PAC check-offs burden unions’ speech by removing an important fundraising mechanism? | Eliminating PAC check-off is a viewpoint/First Amendment burden because it makes political fundraising materially harder. | Eliminating employer/corporate-subsidized payroll deduction does not restrict unions’ speech; they remain free to solicit and collect funds by other modern means. | Held for State: no First Amendment violation; Ysursa, Pizza, Bailey control—removal of a subsidized fundraising mechanism is not a speech abridgment. |
| Scope of relief: May relief extend beyond existing contracts to prospectively enjoin enforcement? | Unions sought a wider injunction. | State argued amendment should be read to affect only future agreements. | Held: relief limited to entities with pre-existing PAC check-off obligations through the end of their collective-bargaining terms; no judicially created prospectively limited construction of statute. |
| Available alternatives: Do modern fundraising methods mitigate any constitutional harm? | Unions acknowledge efficiency loss but stress practical impact on member donations. | State emphasizes alternative channels (bank withdrawals, credit cards, digital payments) reduce any First Amendment significance. | Held: availability of sufficient alternative fundraising methods undercuts First Amendment claim. |
Key Cases Cited
- Ysursa v. Pocatello Educ. Ass’n, 555 U.S. 353 (2009) (elimination of public payroll-deduction for union political funds does not violate First Amendment)
- Toledo Area AFL-CIO Council v. Pizza, 154 F.3d 307 (6th Cir. 1998) (state ban on payroll deductions for political purposes substantially impaired existing collective-bargaining expectations)
- Bailey v. Callaghan, 715 F.3d 956 (6th Cir. 2013) (removal of PAC check-off did not restrict unions’ speech)
- Citizens United v. FEC, 558 U.S. 310 (2010) (corporate speech restrictions implicate direct restraints on political expenditures; distinguishable from bans on subsidized fundraising)
- Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) (modern test for substantial impairment of contracts)
- Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400 (1983) (state impairment of contracts may survive if reasonable and appropriate to legitimate public purpose)
- Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398 (1934) (permissive example of state power limiting contractual obligations in emergency)
- Trs. of Dartmouth Coll. v. Woodward, 17 U.S. 518 (1819) (Contracts Clause protects private charters and contractual obligations)
- Sweeney v. Pence, 767 F.3d 654 (7th Cir. 2014) (decision not to subsidize union fundraising does not infringe First Amendment rights)
- Hamilton’s Bogarts, Inc. v. Michigan, 501 F.3d 644 (6th Cir. 2007) (standard of review for appellate review of preliminary injunctions)