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International Association of Machinists District Ten and Local Lodge 873 v. Allen

United States Court of Appeals, Seventh Circuit

September 13, 2018

International Association of Machinists District Ten and Local Lodge 873, Plaintiff-Appellee,
Ray Allen, in his capacity as Secretary of the Wisconsin Department of Workforce Development, et al., Defendants-Appellants.

          Argued September 15, 2017

          Appeal from the United States District Court for the Western District of Wisconsin. No. 16-CV-77 - William M. Conley, Judge.

          Before Manion, Rovner, and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge.

         Wisconsin's Act 1 of 2015, codified at Wis.Stat. § 111.01 et seq., changed many provisions of that State's labor laws. This case deals with a narrow provision of Act 1 that attempts to change the rules for payroll deductions that allow employees to pay union dues through dues-checkoff authorizations.

         A dues-checkoff authorization is a contract between an employer and employee for payroll deductions. These are "arrangements whereby [employers] would check off from employee wages amounts owed to a labor organization for dues, initiation fees and assessments." Felter v. Southern Pacific Co., 359 U.S. 326, 330-31 (1958). By signing an authorization, the employee directs the employer to deduct union dues or fees routinely from the employee's paycheck and to remit those funds to the applicable union. Many of these authorizations are irrevocable for a specified period-often one year-for reasons of administrative simplicity. See Dkt. 43 at 2 (Eli-zondo Aff.); see also N.L.R.B. v. Atlanta Printing Specialties and Paper Prods. Union 527, 523 F.2d 783, 786 (5th Cir. 1975). The union itself is not a party to the authorization, which is effective if and only if the employee wishes. Federal law has long provided, however, that unions can bargain collectively with employers over the standard terms of dues-checkoff authorizations.

         The Taft-Hartley Act imposes three limits on dues-checkoff authorizations: the authorization must be (1) individual for each employee, (2) in writing, and (3) irrevocable for no longer than one year. See 29 U.S.C. § 186(a)(2), (c)(4). Wisconsin's Act 1 attempts to shorten this maximum period to thirty days. See 2015 Wis. Act 1, § 9, codified at Wis.Stat. § 111.06(1)(i).

         The district court found that Wisconsin's attempt to impose its own time limit on dues-checkoff authorizations is preempted by federal labor law, and the court issued a permanent injunction barring enforcement of that provision. International Ass'n of Machinists District 10 v. Allen, No. 16-cv-77, 2016 WL 7475720, at *7 (W.D. Wis. Dec. 28, 2016). We affirm. This case is controlled by the Supreme Court's summary affirmance in a case finding a nearly identical State law preempted. Sea Pak v. Indus., Tech. & Prof. Employees, Div. of Nat'l Maritime Union, 400 U.S. 985 (1971) (mem.). We reject Wisconsin's effort to undermine the precedential force of Sea Pak, which is fully consistent with more general federal labor law preemption principles. See, e.g., Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 140-42, 153 (1976). Wisconsin's attempt to short-circuit the collective bargaining process and to impose a different dues-checkoff standard is preempted by federal law.

         I. Factual and Procedural History

         A. Wisconsin Act 1

         Before Act 1 was enacted in 2015, Wisconsin law had allowed so-called union security agreements in which unions and employers would agree that employees would be required either to join the union or pay fair-share fees. That changed with Act l's "right-to-work" provisions, which prohibit employers from requiring their employees to pay dues or fees to a union. See International Union of Operating Engineers Local 139 v. Schimel, 863 F.3d 674, 676-77 (7th Cir. 2017), excerpting 2015 Wis. Act 1, § 5, codified at Wis.Stat. § 111.04(3)(a). Act 1 provides in part: "No person may require, as a condition of obtaining or continuing employment, an individual to ... Pay any dues, fees, assessments, or other charges ... to a labor organization." § 111.04(3)(a)(3). This also meant that Wisconsin employers and unions could no longer enter into an enforceable mandatory union security agreement-a term in a collective bargaining agreement where an employer promises the union that, as a condition of employment, it will require its employees to maintain membership in the union. We held in Schimel that this "right-to-work"/mandatory union security agreement portion of Act 1 is not preempted by federal law. 863 F.3d at 677.[1]

         The section of Act 1 challenged in this lawsuit attempts a less dramatic change in labor law. It requires employers to terminate dues-checkoff authorizations within thirty days of receiving written notice from the employee. 2015 Wis. Act 1, § 9, codified at Wis.Stat. § 111.06(1)(i). This challenged provision reads:

(1) It shall be an unfair labor practice for an employer individually or in concert with others: ...
(i) To deduct labor organization dues or assessments from an employee's earnings, unless the employer has been presented with an individual order therefor, signed by the employee personally, and terminable by the employee giving to the employer at least 30 days' written notice of the termination. This paragraph applies to the extent permitted under federal law.

         B. The Dispute at the John Deere Plant

         This case stems from a complaint filed with the Wisconsin Department of Workforce Development, the State agency that enforces Wisconsin's wage laws. Lisa Aplin, an assembler at a John Deere plant in Wisconsin, signed a dues-checkoff authorization in November 2002. Her authorization instructed John Deere to deduct union dues from her paychecks and to remit them to the International Association of Machinists District 10 and Local Lodge 873, the plaintiffs-appellees here, which we refer to as the Machinists or the union. Aplin's authorization said that it was "irrevocable for one (1) year or until the termination of the collective bargaining agreement ... whichever occurs sooner." It also provided that it would be automatically renewed for successive one-year periods unless the collective bargaining agreement terminated or Aplin gave notice during a fifteen-day annual period. The authorization also provided that it was "independent of, and not a quid pro quo for, union membership." This arrangement remained in effect until 2015. As the State explains, dues-checkoff authorizations like this are a convenient way for employees to pay their union dues or fair-share fees.

         In the wake of Act 1, John Deere and the Machinists updated their collective bargaining agreement, but they left in place a term making dues-checkoff authorizations irrevocable for one year. In July 2015, Aplin sent a letter to John Deere and the union invoking Act 1 and requesting the termination of her dues-checkoff authorization. The union responded that her request was untimely and could not be granted unless she renewed it during the annual cancellation period that November.

         Aplin then filed a complaint with the State agency claiming that John Deere was violating State wage laws by not honoring within thirty days her attempt to revoke the dues-checkoff authorization. She sought a refund of $65.60 in union dues deducted from her pay after the cancellation would have taken effect. In November 2015, the agency sided with Aplin, finding that Wis.Stat. § 111.06(1)(i) applied and that John Deere had to honor Aplin's cancellation and refund request, or face enforcement action. The company then reimbursed Aplin for the $65.60 deducted from her paycheck. Around the same time, the agency handled another similar dues-checkoff complaint invoking Wis.Stat. § 111.06(1)(i) and concluded that it "must enforce the statute in its current form" unless and until it was found preempted.

         C. This Federal Lawsuit

         In February 2016, the Machinists filed this action in the Western District of Wisconsin and moved to enjoin the State from enforcing Act l's dues-checkoff provision. The union contended that the federal Labor-Management Relations Act of 1947, better known as the Taft-Hartley Act, preempted Act 1 on this score. See Pub. L. No. 80-101, § 302(a), (c)(4), 61 Stat. 157, codified at 29 U.S.C. § 186(a), (c)(4).

         To protect against corruption in the collective bargaining process, the Taft-Hartley Act, as amended, prohibits "any employer or association of employers" from giving "any money or other thing of value" to "any labor organization," § 186(a)(2), unless one of a long list of exceptions applies. § 186(c). The exception relevant here provides:

The [prohibition] provisions of this section shall not be applicable ...
(4) with respect to money deducted from the wages of employees in payment of membership dues in a labor organization: Provided, That the employer has received from each employee, on whose account such deductions are made, a written assignment which shall not be irrevocable for a period of more than one year, or beyond the termination date of the applicable collective agreement, whichever occurs sooner ....

§ 186(c)(4). The union argued that this year-long dues-checkoff exception in federal labor law is incompatible with, and thus preempts, the corresponding thirty-day provision of Wisconsin's Act 1.

         The district court granted the union's motion for summary judgment and permanently enjoined enforcement of Wis.Stat. § 111.06(1)(i). 2016 WL 7475720, at *7-8. The district court found that this issue was "relatively straightforward, since its resolution is controlled by the United States Supreme Court's decision" in Sea Pak. Id. at "3, citing 400 U.S. 985 (1971).

         II. Analysis

         We review the legal conclusions of summary judgment rulings de novo, construing all facts and drawing all reasonable inferences in favor of the non-moving parties. See Wisconsin Central Ltd. v. Shannon, 539 F.3d 751, 756 (7th Cir. 2008). Here, however, because there are no genuine issues of material fact, we must decide only whether the union is entitled to a judgment as a matter of law. Id.; Fed. R. Civ. P. 56(c). The main issue in this appeal is whether Wis.Stat. § 111.06(1)(i) is preempted by Taft-Hartley's § 302(c)(4), codified at 29 U.S.C. § 186(c)(4). We also must address whether Taft-Hartley's § 14(b) exception to preemption for State "right-to-work" laws-codified at 29 U.S.C. § 164(b)-allows Wisconsin to do what it attempted to do here.

         We conclude that the Taft-Hartley Act preempts Wisconsin's attempt to set new rules for dues-checkoff authorizations governed by § 186(c)(4). Because the challenged portion of Act 1 regulates an employee's optional dues-checkoff authorization rather than an employee's obligation to pay dues as a condition of employment, it falls outside the scope of the § 164(b) "right-to-work"/union security agreement exception. We explain in Part II-A that we agree with the district court that the Supreme Court's summary affirmance in Sea Pak controls this case. In Part II-B, we explain why Sea Pak fits comfortably with broader preemption principles of labor law. In Part II-C, we address and reject further arguments by the State for recognizing an exception from those principles here.

         A. Sea Pak's Continuing Force

         The procedural history of the Sea Pak decision was a bit unusual, but the district court correctly found that the Supreme Court's summary affirmance in Sea Pak controls here. The Supreme Court has instructed that "the lower [federal] courts are bound by summary decisions by this Court 'until such time as the Court informs (them) that (they) are not, '" because "votes to affirm summarily ... are votes on the merits of a case," just like those accompanied by fully reasoned Court opinions. Hicks v. Miranda, 422 U.S. 332, 344-45 (1975) (brackets and citation omitted).

         To understand the effect of a summary affirmance, it is usually necessary to look closely at the decision that was summarily affirmed. In Sea Pak, the Southern District of Georgia found a Georgia law very similar to Act 1 preempted. A Georgia law required employers to treat dues-checkoff authorizations as revocable at will. The district court found that provision was "completely at odds" and "in direct conflict" with 29 U.S.C. § 186(c)(4), which, as noted, permits dues-checkoffs to be irrevocable for up to one year. 300 F.Supp. 1197, 1200 (S.D. Ga. 1969).[2] "A union is thus permitted to bargain for and receive a checkoff of dues under authorizations which may be irrevocable for as long as one year." Id. This Taft-Hartley provision meant "that no room remains for state regulation in the same field." Id.[3]

         The district court in Sea Pak also noted that Judge Noland of the Southern District of Indiana had reached the same conclusion on the same preemption question, holding that § 186(c)(4) preempted an Indiana wage assignment law requiring assignments to be revocable at will. Id. at 1198-99, citing International B'hood of Operative Potters v. Tell City Chair Co., 295 F.Supp. 961, 965 (S.D. Ind. 1968) (§ 186 "specifies the conditions necessary for a valid check-off, and ... is sufficiently pervasive and encompassing" to preempt State wage assignment laws).

         The Sea Pak district court also had to decide whether the Taft-Hartley provision in 29 U.S.C. § 164(b), which permitted States to outlaw "agreements requiring union membership as a condition of employment/' also allowed a State to enact check-off provisions contrary to what is provided in § 186(c)(4). 300 F.Supp. at 1199-1200. The court found that the State's dues-checkoff regulation was not saved by § 164(b): "Checkoff authorizations irrevocable for one year after [their authorization] date do not amount to compulsory unionism as to employees who wish to withdraw from membership prior to that time." Id. at 1201.

         The Fifth Circuit affirmed per curiam, adopting the district court's opinion. 423 F.2d 1229, 1230 (5th Cir. 1970). The Supreme Court affirmed that decision summarily, without opinion. 400 U.S. 985 (1971). Both preemption arguments advanced in this case were "presented and necessarily decided" by the Court's summary affirmance in Sea Pak; they did not "merely lurk in the record." See Illinois State Bd. of Elections v. Socialist Workers Party, 440 U.S. 173, 182-83 (1979) (precedential effect of summary affirmance extends only to "the precise issues presented and necessarily decided," not to questions that "merely lurk in the record"). Sea Pak controls this case.[4]

         The State argues, though, that even if Sea Pak applies, subsequent developments in the Supreme Court's case law on preemption mean that Sea Pak is no longer binding. Language in Hicks v. Miranda may offer a small opening for lower courts to depart from summary decisions "when doctrinal developments indicate otherwise." 422 U.S. at 344, quoting Port Authority Bondholders Protective Comm. v. Port of New York Auth., 387 F.2d 259, 263 n.3 (2d Cir. 1967) (addressing dismissals for lack of substantial federal questions), and citing Doe v. Hodgson, 478 F.2d 537, 539 (2d Cir. 1973) (lower courts should follow summary decisions until Supreme Court says otherwise). We found such an opening in Baskin v. Bogan, 766 F.3d 648, 659 (7th Cir. 2014), finding that a 1972 summary dismissal for want of a substantial federal question rejecting a constitutional claim for same-sex marriage was no longer binding in light of a consistent series of more recent Supreme Court decisions recognizing certain sexual orientation rights under the Constitution. To the extent there might be any theoretical room for departing from the summary affirmance in Sea Pak, it would take much stronger signals from the Court to do so. As we explain in Part II-B, there has been no comparable sea-change in labor-law preemption or preemption more generally that would justify a lower court in departing from Sea Pak.

         In addition, to agree with the State and reverse here, we would have to split with two other circuits. See United Auto., Aerospace & Agric. Implement Workers of Am. Local 3047 v. Hardin County, 842 F.3d 407, 410, 421-22 (6th Cir. 2016) (following Sea Pak to invalidate county ordinance regulating dues-checkoff authorizations); N.L.R.B. v. Shen-Mar Food Products, Inc., 557 F.2d 396, 399 (4th Cir. 1977) (agreeing with NLRB that "the check-off provision was not a Union security device which would be subject to State law under Section 14(b)" of Taft-Hartley); see also N.L.R.B. v. Atlanta Printing Specialties and Paper Products Union 527, 523 F.2d 783, 784, 787-88 (5th Cir. 1975) (enforcing NLRB order to employer and union to honor dues-checkoff cancellations tendered during annual escape period of fifteen days). We agree with the Sixth Circuit that Sea Pak's "authority remains essentially unchallenged" today. Hardin County, 842 F.3d at 421.

         B. Labor Law Preemption More Generally

         1. Machinists and Garmon Preemption

         The State urges us to decide this case under more general field or conflict-preemption principles. We conclude, however, that Sea Pak is consistent with the Court's other labor law preemption decisions, which provide quite clear guidance here. In Murphy v. National Collegiate Athletic Ass'n, 138 S.Ct. 1461, 1480 (2018), the Supreme Court explained that all forms of federal preemption "work in the same way: Congress enacts a law that imposes restrictions or confers rights on private actors; a state law confers rights or imposes restrictions that conflict with the federal law; and therefore the federal law takes precedence and the state law is preempted." Most relevant for this case, "field preemption" occurs "when federal law occupies a 'field' of regulation 'so comprehensively that it has left no room for supplementary state legislation.'" Id., quoting R.J. Reynolds Tobacco Co. v. Durham County, 479 U.S. 130, 140 (1986). Federal statutes that preempt a field "reflect[] a congressional decision to foreclose any state regulation in the area, even if it is parallel to federal standards." Murphy, 138 S.Ct. at 1481, quoting Arizona v. United States, 567 U.S. 387, 401 (2012).

         Over the decades since enactment of the National Labor Relations Act and the Taft-Hartley Act, the Supreme Court has applied field preemption in a host of cases interpreting those laws. The resulting body of law reflects many individual applications of the general principles of preemption, and labor-law preemption cases specifically provide the most reliable guidance for us in this case, if any were needed beyond the Court's summary affirmance in Sea Pak.

         Labor law preemption applies, to put it broadly, when a State acts "as regulator of private conduct" with an "interest in setting policy" that is different from the policy of the federal government. Building & Constr. Trades Council v. Associated Builders & Contractors of Mass./R. I., Inc., 507 U.S. 218, 229 (1993) (Boston Harbor). Most relevant here are two forms of field preemption in labor law, known as Garmon preemption and Machinists preemption. The Supreme Court has explained:

The first, known as Garmon pre-emption, see San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959), "is intended to preclude state interference with the National Labor Relations Board's interpretation and active enforcement of the 'integrated scheme of regulation' established by the [National Labor Relations Act (or NLRA, also known as the Wagner Act)]." Golden State Transit Corp. v. Los Angeles, 475 U.S. 608, 613 (1986) (Golden State I). To this end, Garmon pre-emption forbids States to "regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits." Wisconsin Dept. of Industry v. Gould Inc., 475 U.S. 282, 286 (1986). The second, known as Machinists pre-emption, forbids both the National Labor Relations Board (NLRB) and States to regulate conduct that Congress intended "be unregulated because left 'to be controlled by the free play of economic forces.'" Machinists v. Wisconsin Employment Relations Comm'n, 427U.S. 132, 140 (1976) (quoting NLRB v. Nash-Finch Co., 404 U.S. 138, 144 (1971)). Machinists pre-emption is based on the premise that "'Congress struck a balance of protection, prohibition, and laissez-faire in respect to union organization, collective bargaining, and labor disputes.'" 427 U.S., at 140, n. 4 (quoting [Archibald] Cox, Labor Law Preemption Revisited, 85 Harv. L. Rev. 1337, 1352 (1972)).

Chamber of Commerce v. Brown, 554 U.S. 60, 65 (2008); see also 520 South Michigan Ave. Assoc. v. Shannon, 549 F.3d 1119, 1125-26 (7th Cir. 2008) (summarizing Garmon and Machinists preemption doctrines).

         Both the Garmon and Machinists doctrines apply broadly to the Wagner (NLRA) and Taft-Hartley Acts: "the object of labor pre-emption analysis, '' according to the Court, is "giving effect to Congress' intent in enacting" provisions of "the Wagner and Taft-Hartley Acts" as statements of national labor-management policy. Brown, 554 U.S. at 73; see also Belknap, Inc. v. Hale, 463 U.S. 491, 524-25 (1983) (referring to "the Wagner and Taft-Hartley Acts" as a cohesive whole), citing N.L.R.B. v. Insurance Agents, 361 U.S. 477, 489 (1960); Machinists, 427 U.S. at 141 (same).

         Machinists preemption is quite broad. It recognizes that federal labor statutes "specifically conferred on employers and employees" a right to determine certain questions through bargaining and the use of other "permissible economic tactics," and to be free from government fiat in finding solutions. Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 103, 112-13 (1989) (Golden State II) (where Machinists applies, it extends a right enforceable under 42 U.S.C. § 1983). Although "the rule of the Machinists case is not set forth in the specific text of an enumerated section of the NLRA," that statute's "language and structure" offer "a guarantee of freedom for private conduct that the State may not abridge." Id. at 111-12. Machinists instructs that both the NLRB and the States "are without authority to attempt to introduce some standard of properly balanced bargaining power" or to impose "an ideal or balanced state of collective bargaining" because Congress intended to leave such balancing to labor and management. Machinists, 427 U.S. at 149-50 (quotations and citations omitted). "[T]he legislative purpose" as determined from the text and structure of the Wagner and Taft-Hartley Acts "may ... dictate that certain activity neither protected nor prohibited" by federal labor law may "be deemed privileged against state regulation." See id. at 141, quoting Hanna Mining Co. v. Marine Engineers, 382 U.S. 181, 187 (1965).

         For example, we applied Machinists preemption to an Illinois law that required cemeteries and gravediggers to negotiate to establish a pool of workers who would "perform religiously required interments during labor disputes." Cannon v. Edgar, 33 F.3d 880, 882, 885-86 (7th Cir. 1994). Despite the State law's benign purpose to respect certain faiths' beliefs concerning timely burial, the law impermissibly "meddle[d] with the collective bargaining process" by "directly interfering] with the ability of" labor and management "to reach an agreement unfettered by the (labor) restrictions of state law." Id. at 886; see also id. at 885 (finding same statute preempted under Garmon as well). Similarly, we applied Machinists preemption to an Illinois law that required hotels to give custodial workers specified break periods, rather than leave the issue to collective bargaining. We found that the law was not a minimum labor standard but a specific intrusion into collective bargaining in a particular industry. 520 S. Michigan Ave., 549 F.3d at 1121.

         Even State laws with indirect effects on bargaining can be preempted under Machinists. Though Machinists itself was directed at a union's "refusal to work overtime" and the economic pressure that the refusal placed on the employer, see 427 U.S. at 154, 155, it bars State regulation in any "zone protected and reserved for market freedom" by federal labor law. Boston Harbor, 507 U.S. at 226-27 (city governments are "preempted from conditioning renewal of a taxicab operating license upon the settlement of a labor dispute"), citing Golden State I, 475 U.S. at 618. In such zones, the Court observed in Brown, "the States have no more authority than the Board to upset the balance that Congress has struck between labor and management." 554 U.S. at 74 (brackets omitted), quoting Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 751 (1985).

         Before turning to more specific discussion of Garmon and Machinists preemption principles as applied to dues-checkoff authorization, we address the State's broadest argument, which is that the court should apply a much more demanding standard for preemption than was applied in Sea Pak, Garmon, or Machinists. The State cites and quotes Justice Kagan's concurring opinion in Kurns v. Railroad Friction Products Corp., 565 U.S. 625, 638 (2012), which observes that some older preemption cases may seem anachronisms in terms of newer preemption principles and precedents.

         Kurns itself provides the best answer to the argument. Both the Kurns majority and Justice Kagan followed the arguably "anachronistic" decision in Napier v. Atlantic Coast Line Railroad Co., 272 U.S. 605 (1926) (applying field preemption under Locomotive Inspection Act for railroad safety equipment). They did so because Napier had established the preemptive force of that statute decades earlier and Congress had not acted to change that law. 565 U.S. at 633 (majority); id. at 638 (Kagan, J., concurring). As in Kurns, the Supreme Court has often observed that principles of stare decisis take on "special force" on issues of statutory interpretation. They do so precisely because Congress can legislate to correct an erroneous decision by the Court. E.g., Global-Tech Appliances, Inc. v. SEB S.A.,563 U.S. 754, 765 (2011) (patent law); Illinois Brick Co. v. Illinois, 431 U.S. 720, 736 (1977) (antitrust law). A case that makes that point with special force, because Congress ...

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