Knox v. SEIU: Sleeper Case Will Have Significant Impact on Political Spending

For those who predicted the Supreme Court would further liberalize campaign finance reform restrictions on private money in politics, the case of Knox v. Service Employees International Union, Local 1000 represents a bit of a curveball. The decision dramatically impacts the ability of unions to spend money on political issues and is the first attempt to reign in spending in the wake of Citizen’s United.

California law permits public-sector employees in a bargaining unit to decide by majority vote to create an “agency shop” arrangement under which all the employees are represented by a union. Even non-union employees must pay an annual fee for “chargeable expenses,” i.e., the cost of union services related to collective bargaining.  However, a public-sector union cannot require non-members to fund its political or ideological projects. Teachers v. Hudson, 475 U. S. 292, 302–311, established the requirements that a union must satisfy in order to collect regular fees from nonmembers without violating their rights. Accordingly, the notice required is often referred to as a ”Hudson notice.”

In June 2005, public-sector union SEIU sent to California employees its annual Hudson notice. After the 30-day objection period ended on the Hudson Notice, the SEIU sent a letter to unit employees announcing a temporary 25% increase in dues and a temporary elimination of the monthly dues cap. It stated the fees were an “Emergency Temporary Assessment to Build a Political Fight-Back Fund” needed to oppose an upcoming special election on two ballot propositions opposed by the SEIU. Nonunion employees were not given any choice as to whether they would pay into the fund and a new Hudson notice was not provided. A group of nonunion employees subsequently brought a class action against the SEIU alleging violation of their First Amendment rights.

In a 7-2 decision, the majority of the Supreme Court held that the First Amendment does not allow a public-sector union to impose a special assessment without first obtaining the affirmative consent of a union member. Under prior precedent, unions were only required to provide members with the opportunity to “opt out” of such special fees.

As the Supreme Court explained, “To respect the limits of the First Amendment, the union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out.”

As the Court reasoned, “Requiring objecting nonmembers to opt out of paying the nonchargeable portion of union dues―rather than exempting them unless they opt in―represents a remarkable boon for unions, creating a risk that the fees nonmembers pay will be used to further political and ideological ends with which they do not agree.” As such, courts must apply “exacting First Amendment scrutiny,” so that “any procedure for exacting fees from unwilling contributors must be ‘carefully tailored to minimize the infringement’ of free speech rights.”

While the Supreme Court’s opinion specifically involved special assessments by unions, many predict that Knox v. SEIU could be used to justify future legal challenges over unions’ political spending and the dues collection process in general as it applies to nonmembers.