After Right to Work Takes Effect in Indiana, Unions Seek a Judicial Bailout

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 Amidst a series of setbacks at both the ballot box and the court house, the fate of the compulsory union movement may depend in large measure on the outcome of two lawsuits currently pending in Indiana.  In early 2012, Governor Mitch Daniels signed into law a bill that made Indiana the nation’s twenty-third right-to-work state.  Unions have filed two challenges to that law, one each in state and federal court.  The outcome of those lawsuits will help to determine whether Indiana remains a right-to-work state and whether other states follow Indiana’s lead.

Indiana became a right-to-work state after a protracted two-year struggle in the state legislature.  In 2011, under the direction by Minority Leader Pat Bauer, Democratic state representatives fled to Illinois for several weeks to deny Republicans a quorum in the state house.  The Democrats’ departure generally sat poorly with the public, which sympathized with Republican arguments that the Democrats should do their jobs.  Republicans also ran a series of amusing attacks, including a radio commercial entitled, “Won’t You Come Home, Pat Bauer?” (sung to the tune of “Won’t You Come Home, Bill Bailey.”  Nevertheless, the tactic worked as Governor Daniels ultimately acceded to the Democrats’ demands to table the right-to-work bill for the rest of 2011, in order to secure passage of his education reform agenda.

In 2012, the legislature again took up right-to-work legislation.  This time, the Democratic state representatives walked off the floor for a few days, largely as a symbolic measure. The Democrats knew that the public had lost its tolerance for legislative shenanigans.  Democrats also knew that they faced re-election later that year.  Perhaps most importantly, in early 2012, Hoosiers were much more concerned with serving as hospitable hosts to the Super Bowl than to refereeing protracted policy disputes.  Not coincidentally, Governor Daniels signed the right-to-work bill into law on February 1, 2012 – four days before the Super Bowl.

Under the right-to-work law, individuals are neither required to join, nor prohibited from becoming members of, a union. The law makes it a Class A misdemeanor to require an individual to become or remain a member of a labor organization, or pay dues, fees, or other charges to a labor organization, as a condition of employment. The law also establishes a private right of action for violations, including the ability to obtain damages, civil penalties, and attorneys’ fees.

In its first few months of operation, the right-to-work law has, by almost any measure, helped to attract new businesses to Indiana.  Indiana has only 2.2 percent of the nation’s population.  In April, the first full month after the law took effect, more than one in eight jobs created around the country were created in Indiana – more than in states several times the size of Indiana.  According to the state’s economic development arm, almost fifty out-of-state companies cited the right-to-work law as one reason that they were considering opening a location in Indiana.

Nevertheless, the right-to-work law is now facing legal challenges in state and federal court, both from affiliates of the AFL-CIO.  The federal lawsuit throws a number of charges at the law, most focused on alleged violations of the U.S. Constitution.  The union argues that the law violates the First Amendment, Equal Protection Clause, Ex Post Facto Clause, Contracts Clause, Takings Clause, a federal statute, and the state constitution.  Among other complaints, the union alleges that the law interferes with existing contracts and restricts its ability to spread its message.

The union’s primary complaint, however, is that the law reduces its revenues.  In a revealing affidavit, a union organizer explained that, in light of the right-to-work law, union members would have the freedom to pursue their own self-interest, to the detriment of the union:  “I believe the ability to cease paying dues completely may prove too attractive for some of our members to resist.  If just 10 percent of the Union’s Indiana members resign, the Union will lose at least $600,000 in annual revenues.”  Remarkably, the union essentially concedes that a significant portion of its members would leave the union if they were free to pursue their own self-interest.

The state lawsuit has a narrower focus.  That lawsuit alleges that the right-to-work law forces unions to represent non-members for free, in violation of state law.  By way of background, the National Labor Relations Act (NLRA) requires a certified union to represent all members of a bargaining unit, including non-members.  As a result, a certified union must handle grievances and other matters for non-members, even if those non-members refuse to pay dues.  The unions complain that the NLRA thereby allows some employees to “free ride” off of the union’s efforts.  (One response to this complaint is that non-members are denied the right to negotiate their own terms and conditions of employment, and may not want the union’s “representation,” so they are actually better characterized as “forced riders.”  Another response to this complaint is that the union’s duty to represent non-members should be viewed as a “cost of doing business” – because a certified union has the extraordinary power to represent even non-members, and because that monopoly power enhances the union’s bargaining position, the union therefore also must have the responsibility to represent the non-members).

In any event, state law comes into the picture through the backdoor.  Indiana’s constitution forbids the government from demanding that anyone provide services, without just compensation.  For example, if the state requires an attorney to represent an indigent defendant, the state’s constitution requires that the attorney receive just compensation.  According to the union, by enacting the right-to-work law, Indiana has denied unions the ability to require fees from non-members, and therefore improperly “demanded” that unions serve non-members without compensation.

In moving to dismiss both lawsuits, the state pointed out that the right-to-work law does not require unions to do anything.  As the state explained, it is the NLRA, a federal law, that requires a union to service non-members.  The union is not “required” to service anyone – if a union does not want to represent non-members for free, it need not seek to become the exclusive  representative for a bargaining unit that includes non-members.  Unions are free to advocate to employers for their members, and to engage in lobbying and other activities, whether or not they are exclusive bargaining representatives.

With the help of the National Right to Work Legal Defense Foundation, several employees have filed amicus briefs in support of the state.  These employees point out that courts have upheld similar laws in other right-to-work states.  The employees also argue that federal law preempts the union’s argument.  In other words, if the state’s constitution mandated that non-members must pay dues, then the state constitution would be preempted by federal law, which gives employers the option not to agree to forced unionism requirements, employees the option to deauthorize such requirements, and states the option to prohibit them.

The outcomes of the two lawsuits in Indiana, both pending in trial courts, will help determine the future of the union movement.  Indiana lies in the heart of the central Midwest – a/k/a the “Rust Belt” – the historical heart of the union movement.  Other Midwestern states, including Ohio and Michigan, are already considering right-to-work legislation.  Moreover, unions are already on the defensive on multiple fronts across the country.  In the aftermath of the unions’ failed effort to recall Governor Walker in Wisconsin, several other states are now considering ways to restrict public sector collective bargaining.  In its recent decision in Knox v. SEIU, the Supreme Court questioned the “free rider” rationale for forced unionism and sent a strong signal that, in the near future, public unions will have to persuade non-member employees to affirmatively “opt in” to fund the unions’ political speech, as opposed to the current system, in which non-member employees have to affirmatively “opt out” of funding such speech.  Another loss in Indiana could prove the straw that broke the (unionized) camel’s back.