• Seventh Circuit Upholds Act 10 In Its Entirety
  • March 20, 2013 | Authors: JoAnn M. Hart; Michael J. Julka; Nicole J. Thibodeau; Richard F. Verstegen; Steve Zach
  • Law Firm: Boardman & Clark LLP - Madison Office
  • On Friday, January 18, 2013, a three-judge panel of the United States Court of Appeals for the Seventh Circuit upheld 2011 Wisconsin Act 10 in its entirety in the appeal of WEAC v. Walker.  This case was originally decided by Judge William Conley of the United States District Court for the Western District of Wisconsin in March 2012.  In his decision, Judge Conley struck several provisions of Act 10 including (1) the Act’s requirement for general municipal employee unions to seek annual recertification by an affirmative vote of a majority of all bargaining unit members and (2) the Act’s prohibition on collection of union dues through payroll deductions for general municipal employees.  Judge Conley issued an injunction that prohibited annual recertification elections from being conducted and that prohibited employers from refusing to deduct union dues.  As a result of Judge Conley’s injunction, school districts were required to facilitate voluntary payroll deductions for union dues and the WERC was prohibited from conducting Act 10 annual recertification elections.  The Seventh Circuit’s ruling on appeal overturns Judge Conley’s decision in striking down parts of Act 10.

    The Seventh Circuit Decision.  On appeal to the Seventh Circuit, WEAC and other unions (the Unions) challenged three different parts of Act 10:  (1) the limitation on subjects of collective bargaining for general employees; (2) the stricter recertification requirements for general employee unions; and (3) prohibition on the voluntary payroll deduction of union dues for general employees.  The Unions alleged that all three provisions violated the Equal Protection Clause of the United States Constitution because of the Act’s differential treatment of public safety and general employees.  Additionally, the Unions alleged that the prohibition on payroll deduction of union dues for general employees violated the First Amendment on several grounds, including the claim that the prohibition on dues deductions targeted employees who had not provided political support for Governor Walker when he ran for office in 2010.

    As noted above, the Seventh Circuit panel upheld Act 10 in its entirety.  With regard to the claim that the treatment of payroll deductions violated the First Amendment, the Court held that statements that Act 10 would affect the 2012 presidential election (made by then-Senate Majority Leader Scott Fitzgerald) did not invalidate an otherwise constitutional viewpoint neutral law.  The Court held that a singular comment by a state legislator does not reveal the intent of the Legislature as a whole when it enacted Act 10.  Further, the Court found no evidence that Act 10 discriminates on the basis of viewpoint.  It held that the Act was neutral on its face and did not tie employee’s use of the state payroll system to speech on any particular viewpoint.  The Court held that the mere fact that two categories of unions may express different viewpoints does not render the Act viewpoint discriminatory.

    The Court also analyzed whether Act 10 violated the Equal Protection Clause of the U.S. Constitution.  On this issue, the Court applied a rational basis analysis, which requires that a law must only bear a rational relationship to a legitimate government interest.  Notably, the Court pointed out that under rational basis review, it will not search for the Legislature’s motive.  In its decision, the Court agreed with the district court that it was reasonable for the Legislature to conclude that Act 10’s passage would result in widespread labor unrest and that public safety employees filled too critical a role to risk a labor stoppage.  The Court reiterated previous Supreme Court decisions that held that labor peace was a legitimate state interest, and held that it was constitutional for Wisconsin to distinguish between public safety unions and general employee unions, applying its reasoning to each of the distinctions drawn by Act 10. 

    Reaction to Seventh Circuit Decision.  Based on this federal court decision, Act 10 complies with the requirements of the U.S. Constitution.  The Unions can still request a review of the case by the entire panel of the Seventh Circuit, and, thus, the Seventh Circuit’s decision is not yet final.  In addition, the issue of whether Act 10 complies with the Wisconsin Constitution is still being decided in the state courts.  As we recently indicated in another Legal Update, the case decided by Dane County Circuit Court Judge Juan Colas in September 2012, which held that several provisions of Act 10 were unconstitutional under the Wisconsin Constitution, is still pending at the Wisconsin Court of Appeals.  The Wisconsin Court of Appeals recently asked for additional briefs from the parties on the motion to stay Judge Colas’ decision pending appeal.  That briefing should be complete this month and we anticipate that the Court of Appeals would make a decision sometime in February.  The federal court decision should be influential to the Wisconsin Court of Appeals as it considers similar issues under the Wisconsin Constitution.

    Despite the Seventh Circuit ruling, we continue to recommend that school districts wait until the Wisconsin Court of Appeals’ decision on whether it will issue a stay before making any decision concerning their duty to bargain.  While the Seventh Circuit found Act 10 to be constitutional under the U.S. Constitution, Judge Colas’ ruling was also based on the Wisconsin Constitution and held that Wis. Stat. § 111.70(4)(mb) (which prohibits bargaining on anything other than base wage rates) was unconstitutional.  Until the Court of Appeals issues its decision on the stay, school districts should continue to be cautious and seek legal counsel before considering bargaining with unions and/or modifying any handbook provisions regarding wages.

    In addition, Judge Colas found both Wis. Stat. § 111.70(3g) (which prohibits voluntary dues deductions) and Wis. Stat. § 111.70(4)(d)3 (which requires annual certification elections) to be unconstitutional under the Wisconsin Constitution.  Because the Seventh Circuit decision is not final and because the applicability of the Colas decision for districts is still in question, school districts that have employees who are not subject to a pre-Act 10 collective bargaining agreement should wait for the Court of Appeals’ decision on the stay before ceasing any voluntary dues deductions.  Additionally, school districts should await guidance from the Wisconsin Employment Relations Commission as to the status of recertification elections.