Amicus Curiae Brief — Friedrichs v. Cal. Teachers Ass'n, 135 S. Ct. 2933 (2015) (No. 14-915)

No. 14-915

In the Supreme Court of the Bnited States

eee

REBECCA FRIEDRICHS; SCOTT WILFORD; JELENA

FIGUEROA; GEORGE W. WHITE, JR.; KEVIN ROUGHTON;

PEGGY SEARCY; JOSE MANSO; HARLAN ELRICH; KAREN

CUEN; IRENE ZAVALA; AND CHRISTIAN EDUCATORS

ASSOCIATION INTERNATIONAL, PETITIONERS,

Vv.

CALIFORNIA TEACHERS ASSOCIATION, ET AL.,

RESPONDENTS.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF OF AMICI CURIAE STATE OF

MICHIGAN AND EIGHT OTHER STATES FOR

PETITIONERS

Bill Schuette

Michigan Attorney General

Aaron D. Lindstrom

Solicitor General

Counsel of Record

P.O. Box 30212

Lansing, Michigan 48909

LindstromA@michigan.gov

(517) 373-1124

Kathryn M. Daizell

Assistant Solicitor General

Attorneys for Amicus Curiae

State of Michigan

QUESTION PRESENTED

Whether Abood v. Detroit Board of Education,

431 U.S. 209 (1977), should be overruled and public-

sector “agency shop” arrangements invalidated

under the First Amendment.

TABLE OF CONTENTS

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I. In the public sector, core collective-

bargaining topics implicate policy matters of

BIER et Oe SOOO 3

A. The State coerces political speech when it

requires government employees to pay

for public-sector bargaining........................0+5 4

B. The policy debates in public-sector

bargaining concern more than just topics

incidental to the core mission of

ENTS ET A 6

C. Collective bargaining affects public policy

in ways not meaningfully different from

AES TCI SE Ree 8

II. The policy consequences of public-sector

bargaining are direct and significant. ................. g

A. Collective bargaining was a contributing

cause of Detroit’s municipal bankruptcy. ... 11

B. Collective bargaining can also create

roadblocks impeding environmental

IN ciacidiastiniensdantatensintepinlaniaibonentnices 17

SALLIE ELE IOS TOE IE RET RET 24

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TABLE OF AUTHORITIES

Cases

Abood v. Detroit Bd. Of Ed.,

ee ee TI cctccntciticnsssidedimaisdindmmante passim

Harris v. Quinn,

a er I ccciccectenititiiddiidaione passim

Knox v. Serv. Employees Int'l Union, Local 1000,

oe RR, eee oo. 6.9

Lehnert v. Ferris Faculty Ass'n,

og ee 6, 10, 16, 23

Senior Accountants, Analysts & Appraisers Ass'n

uv. City of Detroit,

553 N.W.2d 679 (Mich. App. 1996)................... 13

United States v. City of Detroit,

No. 77-71100, 2011 WL 4014409 (E.D. Mich.

ee 19, 20

Other Authorities

John Wisely, Detroit water department to cut 81%

of workers under new proposal, Detroit Free

EB, Fe i iitcescesiatinntercetiitnhndendadiigaiatdntiniais 17

Stephen Henderson, Intolerable waste in Detroit's

Water Department, Detroit Free Press, Aug.

INTEREST OF AMICI CURIAE'

Does collective bargaining in the public sector

implicate matters of public concern, or does it

“pertain[{] mostly to private concerns” involving only

the government's interests as an employer, rather

than as a sovereign? Harris v. Quinn, 134 S. Ct.

2618, 2654 (2014) (dissent). The answer to that

question is significant to the states, and it is simple:

it does implicate matters of public concern. Consider,

for example, Detroit’s recent bankruptcy: Detroit's

$3.5 billion in unfunded pension liabilities was a

matter of great public concern not just for the city,

but for all of Michigan.

In Abood, the Court concluded that state

interests in labor peace and preventing free-riding,

which purportedly justified allowing a private

employer to coerce private-employee speech on

matters that largely have no _ public policy

implications, equally justified allowing’ the

government to coerce public-employee speech on

matters with significant public policy implications.

The Court thus held that it is constitutional to

require a public-sector employee to fund union

collective bargaining. At the same time, however, the

Court recognized that it is unconstitutional to

require the employee to fund the union's other

political activities. This distinction assumes either

that the core subjects addressed in public-sector

bargaining lack any public-policy implications, or

that sufficient state interests exist to justify over-

riding public employees’ First Amendment rights.

1 Consistent with Rule 37.1, the amici States provided notice to

the parties’ attorneys more than ten days in advance of filing.

Neither premise is true. It is time to abandon the

meaningless distinction between collective bargain-

ing and other political activity. In the public sector,

core collective bargaining topics such as wages,

pensions, and benefits inherently implicate public

policy, and in ways that matter. 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. In the public

sector, it is taxpayers, not business owners and

consumers, who foot the bill—and the bill is often

steep.

The issue preséhted in the petition merits this

Court’s review. It is significant to the states, and

amici States support Petitioners’ arguments. Amici

States have a vital interest in protecting the First

Amendment rights of public employees, and in the

fiscal health of state and local governments. But

rather than re-urge Petitioners’ arguments here,

amici States limit their discussion to the direct and

substantial public impact that public-sector

bargaining has regarding core employment issues,

and to the illusory nature of Abood’s distinction

between that activity and other political or

ideological activity, as illustrated by recent examples

from the State of Michigan. As these and countless

other examples make clear, collective bargaining in

the public sector is at core a political activity with

direct and significant implications for the public at

large—not merely a “private concern[]” between

employer and employees. The constitutional analysis

should reflect the reality of public-sector bargaining.

ARGUMENT

I. In the public sector, core collective-

bargaining topics implicate policy matters

of great public concern.

In Abood v. Detroit Board of Education, 431 U.S.

209 (1977), this Court drew a line between, on one

hand, union expenditures for political or ideological

purposes unrelated to collective bargaining, and, on

the other, expenditures for collective bargaining,

contract administration, and grievance adjustments.

Id. at 225-37. The Abood Court held it unconstitu-

tional to force public-sector employees to contribute

to the former category of union expenditures,

reasoning that “in a free society one’s beliefs should

be shaped by his mind and his conscience rather

than coerced by the State.” Jd. at 234. Citing the

principle that the state cannot compel an individual

to associate with a political party as a condition of

public employment, the Court held that the First

Amendment likewise prohibits a state “from

requiring [public employees] to contribute to the

support of an ideological cause he may oppose as a

condition of holding a [public] job[.]” Id. at 235.

In contrast, the Abood Court held that the First

Amendment is not offended by requiring public

employees to subsidize a union’s collective bargain-

ing activity. While the Court noted several distinc-

tions between collective bargaining in private versus

public employment, the Court ultimatety héld that a

public employee dues’ not have “a weightier First

Amendment-interest than a private employee in not

being compelled to contribute to the costs of exclusive

union representation.” Jd. at 229.

A. The State coerces political speech when

it requires government employees to

pay for public-sector bargaining.

As this Court recognized both in Abood and

recently, however, public- and _ private-sector

bargaining are not analogous. For one, it is the state,

not a private employer, that is directly forcing

subsidization of union speech in the public sector. Id.

at 250 (Powell, J., concurring); Harris v. Quinn, 134

S. Ct. 2618, 2632 (2014). For another, the public

significance of coerced speech differs in the private

and public sectors, though the core bargaining topics

may at first blush appear to be the same.

It is largely undisputed that collective bargaining

in both the public and private sectors touches on hot-

button political issues. As Abood recognized, “[tjo

compel employees financially to support their

collective-bargaining representative has an impact

upon their First Amendment interests.” Abood, 431

U.S. at 222. “An employee may very well have

ideological objections to a wide variety of activities

undertaken by the union in its role as exclusive

representative”:

His moral or religious views about the

desirability of abortion may not square wiith

the union’s policy in negotiating a medical

benefits plan. One individual might disagree

with a union policy of negotiating limits on

the right to strike, believing thet to be the

road to serfdom for the working class, while

another might have economic or political

objections to unionism iteelf.... The

examples could be multiplied. [/d.]

The Abood Court noted that under Railway

Employees’ Department v. Hanson, 351 U.S. 225

(1956), and Machinists v. Street, 367 U.S. 740 (1961),

the problems of labor peace and free-riding justified

compelling private employees to contribute to the

costs of exclusive union representation. And the

Abood Court reasoned that such rationales applied

equally in the public sector. Jd. at 222—30.

But aside from overlooking the significance of the

different actors involved, the Abood Court failed to

account for the difference between the core union

speech—i.e., speech on basic levels of wages.

pensions, and other employment benefits—

involuntarily subsidized by dissenting private-sector

employees and that subsidized by their counterparts

in the public sector. Harris, 134 S. Ct. at 2632. In the

public sector, these bread-and-butter bargaining

topics are important public policy issues because of

their impact on the public fisc and the allocation of

resources, whereas those same topics in the private

sector are generally not of public interest. Id.

When the party on the opposite side of the table

is the government, bargaining is unavoidably about

the use of public resources and about how elected

officials will govern. Bargaining concessions affect

fundamental public policy issues such as wages,

merit pay, pensions, hours, benefits, and other terms

of public employment, the balancing of which affects,

for example, the level of public services, priorities

within state and local budgets, creation of bonded

indebtedness, amd tax rates. Abood, 431 U.S. at 258

(Powell, J., concurring). And “|[pjublic-employee

salaries, pensions, and other benefits constitute a

substantial percentage of the budgets of many States

and their subdivisions.” Knox v. Serv. Employees Intl

Union, Local 1000, 132 S. Ct. 2277, 2295 (2012).

These are topics about which employees as voters

are likely to hold strong personal views. See Section

II. Contra Lehnert v. Ferris Faculty Ass’n, 500 U.S.

507, 521 (1991) (“[U]nlike discussion by negotiators

regarding the terms and conditions of employment,

lobbying and electoral speech are likely to concern

topics about which individuals hold strong personal

views.”). As this Court has recognized, such topics

are “a matter of great public concern” in the public

sector. Harris, 134 S. Ct. at 2642-43. In the public

sector, we are all shareholders. A government

employee might have strong policy objections to a

position advanced by the union on a core collective

bargaining topic, in a way for which there is no

analogy for an employee of a private business. The

government’s relationship to its employees is

inextricably intertwined with issues of public policy.

Thus, the public significance of the collective-

bargaining speech at issue—wages, pensions,

benefits, and other terms and conditions of

employment—is entirely different in the public and

private sectors, though the topics abstracted from

their contexts may appear to be the same.

B. The policy debates in public-sector

bargaining concern more than just

topics incidental to the core mission of

bargaining.

Moreover, the core of collective-bargaining activ-

ity in the public sector strikes at the heart of critical

public policy issues in a way that private-sector

bargaining simply does not. The purpose of collective

bargaining is to reach agreement that is favorable to

employees as employees on such basic topics as the

levels of wages, pensions, benefits, and other terms

and conditions of employment. These matters are the

very essence of bargaining. While working to reach

agreement on these matters may at times require

addressing hot-button political topics such as

abortion or religion, in both the public and private

sectors, those topics often arise as incidents to the

union’s core function in bargaining: to set the basic

levels of wages, pensions, and benefits, and other

terms and conditions of employment.

But in the public sector, intrusion into debated

policy matters ceases to be just a small side effect of

bargaining, but instead becomes the essence of the

activity itself. Setting basic levels of wages, pensions,

benefits, and other terms and conditions of

employment—the very essence of bargaining—is of

great public concern in the public sector. The policy

debates that arise are not merely details, such as

whether company health insurance will cover birth

control, in a larger scheme that lacks public

implications. Instead, the basic question of how

much the State will pay its employees is a public

policy question unto itself.

Even if the interests in labor peace and

preventing free-riding could justify incidental

incursions into employees’ free speech rights, in the

name of fostering the larger, policy-neutral activity

of collective bargaining, those state interests cannot

justify an activity the very essence of which intrudes

on policy beliefs. Cf. Harris, 134 S. Ct. at 2654

(dissent) (“On the one side, Abood decided, speech

within the employment relationship about pay and

working conditions pertains mostly to private

concerns and implicates the government’s interests

as employer; thus, the government could compel fair-

share fees for collective bargaining. On the other side,

speech in political campaigns relates to matters of

public concern and has no bearing on the

government’s interest in structuring its workforce;

thus, compelled fees for those activities are

forbidden.” (emphasis added)).

C. Collective bargaining affects public

policy in ways not meaningfully

different from lobbying.

The nature of core bargaining speech is not only

different in the public and private sectors, but it is

indistinguishable from “other political or ideological”

speech by unions, the. coerced support of which is

prohibited in Abood. Ig the public sector, both

collective bargaining and “political advocacy and

lobbying” are directed at the government. Harris,

134 S. Ct. at 2632. And, just like lobbying,

bargaining results in binding agreements from the

government on those matters. In either case, “public

employee unions attempt to influence governmental

policy-making.” Abood, 431 U.S. at 231. Indeed,

“t]he collective-bargaining agreement to which a

public agency is a party is not merely analogous to

legislation, it has all of the attributes of legislation

for the subjects with which it deals.” Abood, 431 U.S.

at 252—53 (Powell, J., concurring).

Il. The policy consequences of public-sector

bargaining are direct and significant.

Core public-sector bargaining activity affects

public policy in ways that are direct, concrete, and

.often large—not merely in the indirect sense that

any decision by an elected official affects public

resources. Contra Harris, 134 S. Ct. at 2655 (dissent)

(“[T}his Court has never come close to holding that

any matter of public employment affecting public

spending (which is to say most such matters)

becomes for that reason alone an issue of public

concern.”). As this Court has recognized, a “public-

sector union takes many positions during collective

bargaining that have powerful political and civic

consequences.” Knox, 132 S. Ct. at 2289. The impact

of collective bargaining on matters of public concern

is not merely abstract or theoretical; instead, it has

enormous consequences for, among other things, the

fiscal solvency of state and local governments. These

consequences demonstrate why issues at the heart of

public-sector bargaining are matters of great public

concern, and are not merely employment issues

between employee and employer.

For one thing, while bargaining in the private

sector naturally has the counterweights of supply

and demand and financial self-interest, public-sector

unions and their bargaining partners lack those

constraints. Abood, 431 U.S. at 228 (recognizing that

a public employer “lacks an important discipline

against agreeing to increases in labor costs that in a

market system would require price increases”). In

theory, a government official’s interest in keeping

votes and winning re-election should provide some

counterweight against acceding to unsustainable

10

benefits in response to union demands. But

experience has shown that this often does not occur.

What is more, collective bargaining also has

extreme policy effects in the public sector that

exacerbate the First Amendment problems created

by forcing employees to subsidize such speech. In

many instances, the existence of collective-

bargaining agreements creates a policy bottleneck

that makes it difficult, if not impossible, for elected

officials to address important policy matters through

legislation. Public-sector unions not only take

positions on politically charged issues in the course

of bargaining, but in some cases that bargaining

becomes the only mechanism by which those policy

issues can be addressed. Where public problems are

resolved solely through the collective-bargaining

process, a dissenting employee who disagrees with

his union’s collective-bargaining position not only

has to subsidize the union’s advocacy of that policy

position, but he also has little or no recourse in the

general political process. Forcing the employee to

fund his union’s policy monopoly permits the union

to “use each dissenter as an instrument for fostering

public adherence to an ideological point of view he

finds unacceptable.” Lehnert, 500 U.S. at 522

(internal quotations omitted).

While the examples abound of bargaining

directly implicating hotly debated political issues,

amici States draw this Court’s attention specifically

to occasions in which political positions taken on

central topics in public-sector bargaining have had

direct, intense, and far-reaching public effects.

11

A. Collective bargaining was a

contributing cause of Detroit’s

municipal bankruptcy.

The circumstances in Detroit are extreme in

degree, but not atypical in kind: collective bargaining

and the decisions that state and local governments

make regarding benefits to unionized employees are

key elements of fiscal health for any local

government. The claim that these issues are on the

periphery of public policy or confined to the

employment relationship is belied by the reality of

collective bargaining. Detroit’s experience is a case

study.

For many years, the City of Detroit's workers

enjoyed steady rates of return on their Annuity

Savings Plan investments, regardless of how the

investments actually performed. Under the terms of

the Plan, active city workers could invest a

percentage of their salaries into a_ defined

contribution plan that earned interest based on a

rate of return established at the discretion of fund

trustees. The trustees invested the annuity plan

contributions along with fund pension assets.

Instead of crediting to employees’ accounts the

actual or assumed rate of return, however, the fund

trustees “essentially operated the Annuity Savings

Plan as a guaranteed investment contract with a

guaranteed floor investment return approaching

7.9%.” (City of Detroit, No. 13-53846, Bankr. E.D.

Mich., Dkt. 4391, Fourth Am. Discl. Stmt. (“Disc.

Stmt.”), May 5, 2014, at 106; Union testimony,

MERC Hrg., Feb. 8, 2013 (“MERC Hrg.”), at 14-15.)

In 2009, for example, the General Retirement

12

System fund lost 24.1% of the value of its assets, yet

it credited Annuity Savings Plan accounts with a

positive investment return of approximately 7.9%.

(Disc. Stmt. at 106.) The fund paid the inflated rates

by diverting hundreds of millions of dollars from

fund assets that were intended to support the

traditional defined pension benefits. (Bankr. Dkt. 13,

Charles Moore Decl., Jul. 18, 2013 (“Moore Decl.”),

q 18.)

On the flip side of this coin, in years when fund

investments outperformed annual expectations,

instead of retaining and reinvesting the “excess,” the

City’s general pension fund paid out a portion of the

excess to retired pensioners and to the annuity

accounts of active employees. These bonus checks

became known as the “13th check” program, because

the additional check was in excess of the twelve

monthly pension checks the retiree would normally

receive in one year. (Discl. Stmt. at 106.) Unlike a

healthy investment system in which gains one year

make up for losses in the last, Detroit’s pension

practices “ensur[ed] that the net performance of the

[fund] would never exceed the assumed rate of return

in any given year and that [unfunded liabilities]

would continue to increase.” Id. These practices

“deprived the [fund] of assets that would be needed

to support liabilities[.]” (Jd.; Moore Decl. 4 19.)

Alarmed, Mayor Dennis Archer tried in the mid-

1990s to amend the “13th check” program through

the political process. The City proposed a charter

revision that would have altered the program, but

city unions obtained an injunction on the ground

that such action “represented unilateral changes in

13

the collective bargaining agreements ... concerning

matters that are mandatory subjects of collective

bargaining.” Senior Accountants, Analysts &

Appraisers Ass’n v. City of Detroit, 553 N.W.2d 679,

682 (Mich. App. 1996). While the injunction was

later reversed because “all parties agree[d] that the

challenged provisions [could not] be implemented,

even if enacted by the voters, without bargaining,”

id. at 683, the ballot proposal ultimately failed.

In November 2011, the City Council banned the

13th checks and ceased to guarantee minimum

interest rates for annuity accounts after an outside

statistician estimated that the practices had cost the

City $1.9 billion. (Bankr. Dkt. 1066-1, Joseph

Esuchanko Rep., Mar. 8, 2011, at 9.) But city unions

again fought the action, citing Michigan law that

pension plans are mandatory subjects of collective

bargaining. The Michigan Employment Relations

Commission agreed, but the City filed for bankruptcy

in the interim and the matter was stayed.

The public impact of the pension fund practices—

a mandatory collective bargaining topic—is clear. In

addition to the cost of the practice to the City of

almost $2 billion, the decades-long bonus and

annuity payments increased the amount the City

needed to contribute each year to keep the pension

fund solvent, and in 2005 the City borrowed $1.44

billion at high interest to plug the unfunded pension

liabilities gap. (Bankr. Dkt. 11, Kevyn Orr Decl., Jul.

18, 2013 (“Orr Decl.”), 94 45—48.)

Detroit’s unfunded pension liabilities ballooned

to one-fifth of its total debt at the time of its

bankruptcy filing in July 2013—the largest

14

municipal bankruptcy in this nation’s history. Of

over $18 billion in accrued obligations, the City’s $3.5

billion in unfunded pension liabilities topped its list

of the 20 largest unsecured claims. (Bankr. Dkt. 15,

List of Creditors Holding 20 Largest Unsecured

Claims, Jul. 18, 2013; Orr Decl. Ex. J, at 3;

Eligibility Op. at 8.) In addition, the City had

between $5.7 to $6.4 billion in other _post-

employment benefit liabilities, almost entirely

unfunded. (Orr Decl. Ex. J, at 3—4; Eligibility Op. at

16.)

The City’s Emergency Manager, Kevyn Orr,

explained the central role that collective bargaining

played for the City. Orr informed the bankruptcy

court that “the negotiation of changes to pension and

retiree benefits” was “critical to any restructuring,”

given the “approximately $9 billion owed to these

constituencies,” and that such changes were

impracticable, “if not impossible,” outside of

bankruptcy. (Orr Decl. 4 106.)

In addition to the pension problems specifically,

Detroit's high labor costs in general—also a subject

of collective bargaining—contributed to its

bankruptcy. Labor costs for General Fund active

employees (i.e., wages, pension, and benefits)

represented more than 41% of the City’s estimated

gross revenues for 2013. And onerous work rules

enshrined in bargaining agreements hampered the

City’s efficient functioning, including staffing based

on seniority rather than merit; “bumping” rights

based again on seniority; limitations on management

rights that impaired the City’s ability to manage

policies, goals, and the scope of operations for City

15

departments; arbitration rights that allowed

arbitrators to uphold future grievances based on

expired bargaining agreements or past practice; and

lack of reimbursement rights from unions. (Discl.

Stmt. at 116—17.)

Far from being analogous to a _ private

employment matter, issues at the heart of Detroit’s

collective bargaining contributed directly and

significantly to the City’s financial distress. Detroit's

financial shortfalls and inefficiencies—of which

pension and other employment-related debts

constituted a large percentage—had enormous public

impact on the people of Detroit, the State of

Michigan, and beyond.

As Bankruptcy Judge Steven Rhodes found,

Detroit's financial situation “causfed] its nearly

700,000 residents to suffer hardship” and “danger'[].”

(Eligibility Op. at 139.) Detroit's municipal taxes

were at the highest legal limit, yet Detroiters

received greatly diminished public services as the

City diverted money away from such basics as

maintaining street lights and emergency response

times. (Bankr. Dkt. 1, Petition, Jul. 18, 2013, Ex. A,

at 3; Orr Decl. {4 29-30.) In 2013, for example, the

average response time for top-priority emergency

calls was 58 minutes, compared to the national

average of 11 minutes. (Eligibility Op. at 21.) Forty

percent of the City’s streetlights were not working.

(id. at 20.) The crime rate was five times the

national average, and equipment for police, EMS,

and fire services was outdated and inadequate. (Jd.

at 20, 139.)

16

The State also felt the effects of Detroit's

collective-bargaining shortfalls specifically, pledging

$350 million to cover the City’s pension shortfalls.

(Bankr. Dkt. 8272, Order Confirming Eighth

Amended Plan, Nov. 12, 2014, App. 1, at 55.)

The City of Detroit’s dispute with unions about

controversial pension fund practices illustrates the

direct and far-reaching public consequences of policy

topics at the heart of collective bargaining. Contra

Harris, 134 S. Ct. at 2655 (dissent) (“[T]his Court has

never come close to holding that any matter of public

employment affecting public spending (which is to

say most such matters) becomes for that reason

alone an issue of public concern.”). Because of their

significant fiscal impact, the public, including public

employees, might well have strong views about the

City’s pension practices. Contra Lehnert, 500 U.S. at

521 (“(Ujnlike discussion by negotiators regarding

the terms and conditions of employment, lobbying

and electoral speech are likely to concern topics

about which individuals hold strong personal

views.”). Compulsory agency fees force public

employees to fund very specific points of view on

these deeply important questions of fiscal policy. In

short, collective bargaining affects public policy no

less than does the supporting of candidates or

parties.

But as daunting as $3.5 billion in unfunded

public liabilities is, collective bargaining’s impact on

the public interest is not limited to financial matters.

17

B. Collective bargaining can also create

roadblocks impeding environmental

compliance.

The Detroit Personnel Department provides the

following job description for the official Horseshoer of

the city water department: “Under general

supervision, to shoe horses and to do general

blacksmith work in connection therewith”; “[h]aving

charge of a small blacksmith shop where horse

shoeing is the most important work done;

individually performing such work as removing old

shoes; forging, shaping, hardening, tempering, fitting

and setting shoes to horses; welding corks to shoes;

trimming up hooves before and after shoeing;

making repairs to stable equipment, saddles, bridles

and other equipment requiring blacksmith work.”

(Detroit Personnel Dep’t, Code 71-31-31. See also

Master Agmt. between the City of Detroit and

Michigan Council 25, AFSCME and AFL-CIO, Jul. 1,

2008—Jun. 30, 2012, at 137 (listing horseshoer

position).)

The water department has no horses. Yet city

unions objected to the elimination of the Horseshoer

and other superfluous positions in 2012, following an

audit report that recommended cutting 81% of the

department’s work force over a five-year period and

outsourcing billing, maintenance, and other

functions. See John Wisely, Detroit water department

to cut 81% of workers under new proposal, Detroit

Free Press, Aug. 9, 2012, available at http://

archive.freep.com/article/20120809/N EWS05/308090

260/Detroit-water-department-to-cut-81-of-workers-

under-new-proposal (last visited Feb. 25, 2015).

18

The outside audit firm found staggering levels of

inefficiency and waste in the Detroit Water and

Sewerage Department (“DWSD”), including an

average cost of $86,135 per employee for close to

2,000 employees, when fewer than 400 would suffice.

The report also concluded that the Department’s 257

job classifications—containing three to five skill

levels per classification—could be reduced to 31.

Auditors estimated that the recommended reduction

and outsourcing measures would save _ the

Department roughly $900 million over a decade.

(Brian Hurding & Denise O’Berry, Organization

Assessment Presentation of Results, EMA, Aug.

2012, slides 26, 32, 35, 38.)

The DWSD’s inefficiencies, combined with the

department’s backlog in needed maintenance and

upgrades, and debt (the service of which took up 44%

of revenues), all led to dramatically inflated water

rates for the residents of the Detroit metropolitan

area. (Jd. at slides 4-6; Stephen Henderson,

Intolerable waste in Detroit’s Water Department,

Detroit Free Press, Aug. 9, 2012, available at

http://www.freep.com/article/20120809/COL33/30809

0096/Stephen-Henderson-Intolerable-waste-in-

Detroit-s-Water-Department (last visited Feb. 25,

2015).)

But the public impact of this waste was not

merely financial. In a September 9, 2011 order,

United States District Judge Sean Cox found that

the DWSD’s collective bargaining-induced

inefficiencies were preventing it from meeting its

minimum environmental requirements under the

federal Clean Water Act. Noting that the department

19

had remained in a recurring cycle of non-compliance

for over thirty years, Judge Cox listed several “root

causes” for the continued non-compliance, including:

“excessive and unnecessary delays in hiring qualified

personnel”; “the DWSD’s required use of the City’s

Human Resources Department, resulting § in

significant delays in filling critical positions at the

DWSD”; “the City’s personnel policies, civil service

rules, and union rules and agreements, restricting

the compensation, recruitment and prompt hiring of

necessary personnel”; and “obsolete job descriptions

and qualifications.” United States v. City of Detroit,

No. 77-71100, 2011 WL 4014409, at *22 (E.D. Mich.

Sept. 9, 2011).

Finding specifically that “certain CBA [collective

bargaining agreement] provisions and work rules”

were “impeding the DWSD from achieving and

maintaining both short-term and _ long-term

compliance with its NPDES permit and the Clean

Water Act,” the court struck and enjoined then-in-

force CBA provisions or work rules that threatened

compliance and prohibited future CBAs from

containing terms that threaten long-term

compliance. United States v. City of Detroit, No. 77-

71100, Dkt. 2410, at *4—6 (E.D. Mich. Nov. 4, 2011).

In particular, the court:

e enjoined CBA provisions regarding “bumping”

rights (i.e., “any provisions in current CBAs

that allow an employee from outside the

DWSD to transfer (‘bump’) into the DWSD

based on seniority”);

e struck prohibitions on subcontracting or

outsourcing;

20

e limited excused hours for union activities to

attending grievance hearings and union

negotiations;

e ordered a review of employee classifications to

reduce their number and increase workforce

flexibility;

e ordered promotions to be based on skill,

knowledge, and ability, before taking

seniority into account; and

e enjoined provisions that prevented

management from assigning overtime work to

the most capable employees.

Id. at 7. Put simply, the court found that without

“fundamental corrective measures ... to address the

institutional and bureaucratic barriers to

compliance,” environmental compliance “will simply

not occur.” Jd. at 2.

Like Detroit’s pension problems, the DWSD’s

collective-bargaining activities directly created

problems of public concern. The effects of bloating

and bureaucracy in the water department were not

merely private concerns that implicated the

government’s interests as employer—instead, the

waste and inefficiency raised water rates for the

public at large and directly impacted the health of

Lake Erie. And while the optimum staffing levels to

achieve federal environmental compliance remain

subject to debate, there is no question that the

debate is about a matter of great public concern.

21

* * *

These examples show not only that public-sector

unions advocate contentious policy positions on

topics at the heart of collective bargaining, but also

that those bargaining positions often have direct and

far-reaching public consequences. Detroit’s $3.5

billion in unfunded pension liabilities was not merely

a private concern that implicated the City’s interests

as an employer, just as its high water bills and thirty

years of environmental non-compliance were not

merely private concerns. These issues are instead of

great concern to the public at large.

Nor can it be assumed in the public sector that

the policies unions advocate in bargaining provide a

benefit to all employees. While it may seem

elementary in the private sector that a higher salary

or increased pension is an individual good that all

employees would view as a benefit, that is not always

true in the public sector, where such benefits are

inextricably tied up with the public interest. To say

that core collective-bargaining topics like wages and

hours pertain mostly to private concerns minimizes

the public employee’s interest in responsible

government, and it also assumes that every such

employee is only self-interested—i.e., that he

necessarily views a personal pay raise as a benefit. to

the exclusion of any other community-oriented

preferences on how public resources should be

allocated. While it is not uniformly true, many public

servants are motivated by interests beyond their own

individual interests. And ma‘iy would be concerned

about a ballooning $3.5 billion debt and decades-long

pollution of Lake Erie.

22

The above examples also illustrate that, in some

instances, collective bargaining not only involves

contentious policy choices with large consequences—

it also becomes a policy bottleneck as the only

available outlet for addressing a policy problem. The

City of Detroit made multiple attempts to address its

growing pension problem, including through the

political process, but it was stopped every time with

claims that the pensions could only be addressed in

collective bargaining. Similarly, the water depart-

ment tried and failed for thirty years to achieve

environmental compliance, to the point that a federal

judge felt it necessary to free the department from

some of its collective-bargaining obligations. In such

instances, public employees who must pay agency

fees are forced not only to fund policy positions with

which they disagree, on topics that are core to

collective bargaining, and which have enormous

public consequences, but they are also forced to

subsidize the union’s policy monopoly in collective

bargaining, with virtually no other recourse in the

general political process.

In short, given the enormous power of the

modern public-sector union and the often-vast public

policy consequences of its collective bargaining

activities, requiring a public employee to subsidize

those activities is materially indistinguishable from

the forced subsidization of a political party. Abood,

431 U.S. at 256 (Powell, J., concurring) (“[T]Jhe

public-sector union is indistinguishable from the

traditional political party in this country.”); id. at

243—44 (Rehnquist, J., concurring) (“I am unable to

see a constitutional distinction between a

governmentally imposed requirement that a public

23

employee be a Democrat or Republican or else lose

his job, and a similar requirement that a public

employee contribute to the collective-bargaining

expenses of a labor union.”). The Constitution does

not permit this type of coerced political speech.

“Where the subject of compelled speech is the

discussion of governmental affairs, which is at the

core of our First Amendment freedoms, [] the burden

upon dissenters’ rights extends far beyond the

acceptance of the agency shop and is constitutionally

impermissible.” Lehnert v. Ferris Faculty Ass’n, 500

U.S. at 522. That should be the end of the matter.

24

CONCLUSION

This Court shouid grant the petition, overrule

Abood v. Detroit Board of Education, 431 U.S. 209

(1977), and hold that compulsory agency fees to

public-sector unions, including for activities related

to the union's role as _ exclusive bargaining

representative, violate the First Amendment.

Respectfully submitted,

Bill Schuette

Michigan Attorney General

Aaron D. Lindstrom

Solicitor General

Counsel of Record

P.O. Box 30212

Lansing, Michigan 48909

LindstromA@michigan.gov

(517) 373-1124

Kathryn M. Dalzell

Assistant Solicitor General

Attorneys for Amicus Curiae

State of Michigan

Dated: MARCH 2015

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501 Washington Ave.

Montgomery, AL 36130

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