Washington — The Supreme Court is set to hear a case that could overturn a longstanding precedent about union fees out of Detroit and effectively dismantle the public-sector labor-relations system that has grown up around it.

The story starts nearly 40 years ago, when a group of Detroit public schoolteachers cited free speech rights in refusing to pay compulsory service fees that, in part, subsidized their union for political activities with which they disapproved.

A unanimous Supreme Court in 1977 agreed the school workers had First Amendment rights not to support the union’s politics. The justices ruled public-sector unions could charge nonmember employees fees to compensate the union only for costs related to representing workers on wage and workplace conditions – not for non-bargaining activities such as lobbying.

Now, another group of schoolteachers – this time from California — is revisiting the issue in Abood v. Detroit Board of Education, arguing that the “agency fees” are an unconstitutional form of coerced speech because everything that government-related unions do is political.

States such as Michigan concur, pointing to multiple municipal bankruptcies in which public-employee benefits played a role — illustrating how collective bargaining affects spending and public policy. The high court is scheduled to hear oral arguments in the case on Jan. 11.

Labor advocates worry that a ruling for the teachers could drain union coffers and lead to a free-rider problem in which some employees decide no longer to contribute to the union but still benefit from union representation.

“The union has a legal obligation to represent everyone,” said Lynn Rhinehart, general counsel for the AFL-CIO, which filed a friend of the court brief in the case, Friedrichs v. California Teachers Association.

“Under that system, it’s only fair that everybody who benefits from the collective bargaining agreement share in the costs of negotiating and administering that collective bargaining agreement.”

In Michigan and 24 other states with right-to-work laws, employees don’t have to join a union or pay agency fees.

Still, Farmington Hills labor attorney Frank T. Mamat says the Friedrichs case could have wide-reaching ripple effects, potentially depleting union treasuries by hundreds of millions of dollars.

Unions could stem the potential losses if they did a better job convincing employees why they’re worth the investment, he added.

“The unions, candidly, for 70 years haven’t had to be salesmen. They haven’t had to re-convince people every year that the money that they’re giving in dues was worthwhile,” said Mamat, who was involved in drafting Michigan’s right-to-work law.

“It’s not the death of the unions at all, if they get off their rear ends and go remind people why they’re there.”

Rationale ‘remains solid’

The 1977 decision known as Abood held that government had an interest in promoting “labor peace” and preventing free-riding by employees who don’t pay dues but benefit from union representation.

Abood said a union may constitutionally spend money for expressing political views, such as the support of political candidates, but the spending must be financed from charges paid by employees who do not object to advancing the political ideas.

In its brief, the AFL-CIO says, “so long as the fee payer is given a reasonable opportunity to express dissent and refrain from subsidizing the non-chargeable activity, the First Amendment is satisfied.”

“We think the rationale underlying Abood remains solid today, and there’s no reason for the court to disturb it,” said Rhinehart of the AFL-CIO. Overturning Abood “would basically constitutionalize right to work for the public sector.”

The Supreme Court led by Chief Justice John Roberts has criticized Abood’s reasoning in at least two cases in the last four years but has so far declined to overturn the precedent.

Abood case questioned

In a case last year, Justice Samuel Alito said Abood was questionable, noting that under the First Amendment, “no person in this country may be compelled to subsidize speech by a third party that he or she does not wish to support.”

Seventeen state attorneys general signed a friend of the court brief by the Michigan Attorney General’s Office, which urges the justices to abandon the “meaningless distinction between collective bargaining and other political activity.”

The states compare the requirement of public employees to subsidize union activities to “forced subsidization of a political party.”

“Like lobbyists, public-sector unions obtain binding agreements from the government that have enormous public impact — all without the natural counterweight of a financial market that exists in the private sector,” the brief states.

“In the public sector, it is taxpayers, not business owners and consumers, who foot the bill — and the bill is often steep.”

Clients are ‘nervous’

Michigan points to expensive, inflexible union contracts in Detroit as contributing to the city’s record-setting bankruptcy, which was driven in part by its controversial pension fund practices and relatively high labor costs. Roughly $3.5 billion worth of unfunded pension liabilities comprised about a fifth of Detroit’s debt at the time of its bankruptcy filing in July 2013.

Some municipalities, however, argue the court needs to understand the destabilizing effect from invalidating agency fees. It would jeopardize thousands of contract relationships that local governments have made based on decades of established case law stemming from Abood, they say.

“My clients are very, very nervous and concerned about what they would do if Abood were overturned,” said Samuel Bagenstos, who teaches labor and constitutional law at the University of Michigan Law School.

He represents 27 cities and counties, and 28 additional public officials, including Ann Arbor Mayor Christopher Taylor, who say, as public employers, they often draw on the expertise of union members who point out inefficiencies in municipal operations and save taxpayers money.

For instance, a worker has the confidence to step forward and suggest how something could be done better — even if it might offend his immediate supervisor — because he is protected from retaliation as a result of his union representation, Bagenstos said.

Mackinac Center analysis

F. Vincent Vernuccio, director of labor policy for the Mackinac Center for Public Policy in Midland, says unions use their dues to lobby for better taxpayer-funded benefits for their members, “which is inherently political.”

The Mackinac Center analyzed U.S. Bureau of Labor Statistics data and found that, over 14 years, union membership among private-sector workers covered by collective-bargaining agreements was 93 percent in states with agency fees and 84 percent in right-to-work states.

The center also looked at public-sector union statistics in eight right-to-work states and found membership rates in the 80 percent range, with no significant pattern of decline.

In Michigan, where the right-to-work law took effect in March 2013, union membership among state and local government employees covered by labor agreements fell to 95.7 percent last year from a high of 98.4 percent in 2008, according to another Mackinac analysis.

“The sky is not going to fall,” Vernuccio said. “As we’ve seen in right-to-work states across the country, union members who see the value in their unions continue to support it.”

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