Federal Appeals Court Upholds Curbs on Wisconsin Public-Sector Unions; Reverses Lower Court

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Wisconsin Gov. Scott WalkerThe ruling might not have eased tension in a state that by now is all too used to it. But it went a long way in clarifying the situation. Last Friday, on January 18, a federal appeals court in Chicago, by a 2-1 margin, upheld the entirety of a Wisconsin law passed in 2011 that repealed most collective bargaining for state and local government employees. In overturning a lower court decision of last March, the three-judge panel concluded the legislation, Act 10, did not violate public-sector unions' constitutional right to free speech or equal protection. The ruling thus removes a major obstacle to Republican Governor Scott Walker's program to improve his state's fiscal condition. "Today's court ruling is a victory for Wisconsin taxpayers," said Walker. The unions that brought forth the original suit, understandably, are less than happy.

Union Corruption Update has covered this evolving, and polarizing, controversy many times in the wake of that fateful week of February 14-18, 2011, when union-led demonstrators stormed the Wisconsin State Capitol in Madison and occupied the building for three weeks. As an act of solidarity, Democratic state senators left the state in unison and decamped to locations unknown, effectively leaving the Senate without a quorum with which to do business. Eventually, the AWOL legislators returned home. But that wasn't enough to prevent passage of Act 10 by the majority-Republican legislature, a law intended to close a projected two-year, $3.6 billion budget deficit. At the heart of the measure were provisions to restrict collective bargaining by state and local employee unions and require higher contributions by workers toward health and pension plans.

The state has been in continuous turmoil ever since. But union tactics have shifted from mass protest to law and politics. Initially, public-sector unions and their allies, on procedural grounds, tried to invalidate Act 10 in court. But the Wisconsin Supreme Court in June 2011 upheld the law by a 4-3 margin. The activists' next step was a recall election of certain lawmakers who supported Gov. Walker's plan. The gambit fell just short of victory. Their next move was to recall Walker himself. Having collected the requisite number of petition signatures, they secured a special June 5, 2012 election. But the governor prevailed, as he had in November 2010, over his challenger, Milwaukee Democratic Mayor Tom Barrett, and by a similar margin.

But the opposition has had its share of successes. Most importantly, last September Wisconsin Circuit Judge Juan Colas (Dane County), an appointee of Walker's immediate Democratic predecessor Jim Doyle, struck down the collective bargaining limits of Act 10 as they applied to municipal, county and school district employees. Certain sections of the law, wrote Judge Colas, "single out and encumber the rights of those employees who choose union membership and representation solely because of that association and therefore infringe upon the rights of free speech and association guaranteed by both the Wisconsin and United States Constitutions." Wisconsin Attorney General J.B. Van Hollen promptly filed an appeal. He also requested that the lower court ruling be put on hold. Judge Colas denied this motion, although a stay still remains possible.

While state legal action was going on, a coalition of seven public-sector labor organizations, led by the Wisconsin Education Association Council (WEAC), during the summer of 2011 filed suit in Madison federal court to overturn the law. The effort would result in a partial victory. In March 2012, U.S. District Judge William Conley, an Obama appointee, while upholding the basic features of the law, struck down two key components. The State of Wisconsin, he concluded, lacked the authority to: 1) prevent union officials from automatically deducting dues from member paychecks; and 2) require annual union recertification votes.

Unsatisfied with partial victory, each side appealed the ruling. And for now, the Walker administration has prevailed. Last Friday the Seventh Circuit Court of Appeals reversed Judge Conley's decision, upholding the constitutionality of the law. "Act 10 places no limitations on the speech of general employee unions, which may continue speaking on any topic or subject...Act 10 simply subsidizes the speech of one group, while refraining from doing so for another," noted the 74-page decision. The ruling also emphasized that it's not for the courts to determine which unions should be covered by the law and which unions shouldn't. The decision concluded: "We cannot, as the unions request, determine precisely which occupations would jeopardize public safety with a strike. Even if we accept that Wisconsin imprudently characterized motor vehicle inspectors as public safety employees or the Capitol Police as general employees, invalidating the legislation on that group would elevate the judiciary to the impermissible role of supra-legislature."

Judges Joel Flaum and William Bauer, respectively, Reagan and Ford appointees, voted to uphold the law in its entirety. Judge David Hamilton, a Clinton appointee, issued a partial dissent, arguing that the state could not prevent most unions from deducting dues, but making an allowance for public safety unions (e.g., police, firefighters) to do so. The 2-to-1 majority thus renders the whole law constitutional. Judge Flaum, writing the majority opinion, put his stamp on it: "We now uphold Act 10 in its entirety."

Governor Walker, for one, is elated. He declared: "Today's ruling is a victory for Wisconsin taxpayers. The provisions contained in Act 10, which have been upheld in federal court, were vital in balancing Wisconsin's $3.6 billion budget deficit without increasing taxes, without massive public employee layoffs, and without cuts to programs like Medicaid." By contrast, WEAC President Mary Bell believes the decision represents a brazen attempt to deny workers their rights. "What is so abundantly clear is that Act 10 was never about addressing the fiscal needs of the state but instead a ploy to eliminate workers' rights to have a voice through their union - political payback for citizens who didn't endorse the governor," she remarked. "This marks a setback, but the fact of the matter is that our members will not give up on their commitment to restoring their rights to negotiate for fair wages and safe working conditions." Missing from the latter statement is an understanding that public-sector unions, in Wisconsin and elsewhere, have created taxpayer-financed wage/salary and (especially) benefit commitments that are unsustainable over the long run. The declaration of bankruptcy last year by the city governments of Stockton and San Bernardino, Calif. may be an omen of worse things to come.

The unions now have two options. They can ask the full Seventh Circuit Court to review the panel's ruling. Or they can appeal to the U.S. Supreme Court. In any event, the state case remains active. Attorneys are divided as to whether the state and federal cases are that connected. Timothy Hawks, one of the union lawyers in the federal case, doesn't think the latest ruling will have any effect on the state case because each advances separate theories about equal protection and free speech. By contrast, Attorney General Van Hollen thinks the federal appeals court ruling may have a major impact on the state case. "While there are no guarantees," he noted, "it is my hope that this decision will pave the way for resolving any remaining challenges in a manner that supports the legislative decisions made by our elected officials."

The unions from the start have framed the issue as one of denial of workers' rights. Restricting collective bargaining, they argue, violates union member freedom of speech and equal protection under law. Yet this view overlooks the fact that the public sector, whether in Wisconsin or any other jurisdiction, operates according to a very different logic than the private sector. Unlike businesses, public-sector employers can't adjust to union demands for higher compensation because they lack the flexibility and financial incentive to do so. And unlike the private sector, public employees take an implicit vow to uphold the public trust. While financial compensation should reflect the nature of the work, it should not take precedence over the need for fiscal solvency. Even in the private sector, the case for collective bargaining as a right is shaky, as it represents a grant of veto power to willing joiners over other workers. All states, not just Wisconsin, would be better off by observing this principle.

Related:

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