Second court knocks out Indiana’s labor law on constitutional grounds

Two years after Indiana’s right-to-work law fought its way out of the Statehouse, the measure has suffered another knockout blow in a state court.

Plaintiffs have successfully convinced two courts that the Indiana Constitution has given the controversial statute a glass jaw.

In July, Special Judge George Paras of Lake Circuit Court overturned the state’s labor law in United Steel, et al. v. Zoeller, 45C01-12-7-PL-00071. The judge agreed with the labor organizations that the statute violated Article 1, Section 21 of the Indiana Constitution which bars the state from demanding “particular services” without just compensation.

Paras’ ruling comes a little more than 10 months after Lake Superior Judge John Sedia found Indiana’s right-to-work law violates the same constitutional provision. The state has appealed that decision, and the Indiana Supreme Court is scheduled to hear arguments in Gregory Zoeller, et al. v. James Sweeney, et al., 45S00-1309-PL-596, on Sept. 4.

Legal scholars say the “smart money” is on the justices reversing the Sweeney decision and upholding the right-to-work law. However, there is very little caselaw focusing on the “particular services” portion of the provision to indicate the Supreme Court’s thinking on this issue. And should the court affirm, the solution for right-to-work proponents might be to amend the state constitution.

To date, 24 states have right-to-work laws, according to the National Right to Work Legal Defense Foundation Inc. Many of these laws faced legal challenges when they were enacted, said Anthony Riedel, spokesman for the foundation, but Indiana is a bit of an outlier because of its constitution.

Many states have constitutional prohibitions on taking property without compensation but no other state, with the exception of Tennessee, also includes services in that prohibition.

Pointing to Tennessee and the other states’ courts that have given right-to-work laws the green light, Riedel is confident Indiana’s version will survive.

“From our position, it’s pretty clear right to work is constitutional,” Riedel said. “They’ve been upheld in other states.”

‘Eviscerates the basic right’

James Wieser, co-counsel for the plaintiffs in the United Steel case, believes some may be too quick to disregard the ruling simply because it comes from Lake County, which has a strong reputation for unionism.

Although both Sweeney and United Steel reached the same conclusion, Wieser said the latter ruling is “pretty significant” because the court had a full briefing and considered all the facts, evidence and testimony. In Sweeney, the court made a preliminary determination on the state’s motion to dismiss.

“I think it’s a legal issue. I think it’s a legal matter,” said Wieser, of Wieser & Wyllie in Schererville, explaining the Sweeney ruling was based on fact and not because of political affiliation.

Indiana’s right-to-work law prohibits requiring workers to join or remain a member of a union and making nonmembers pay dues, fees or any kind of charges to the union.

Garrison

Plaintiffs in United Steel noted it cannot exclude workers who do not pay for its service from the bargaining unit because the National Labor Relations Act mandates all unions represent members and nonmembers alike. The federal law does allow for “fair share” by giving labor organizations the ability to collect some compensation from nonmembers.

However, since the Indiana right-to-work statute prevents a union from collecting reimbursements from the nonmembers, the plaintiffs argued the state is essentially demanding the union provide a service for free, which violates the “particular services clause” of the Indiana Constitution.

The state countered, among other things, that right-to-work laws are specifically authorized by Congress, and that the plaintiffs don’t have standing as they failed to show how the law impacts them in such a way to violate Article I, Section 21 of the Indiana Constitution. It is federal law alone that imposes the duty of fair representation on the plaintiffs.

Paras disagreed.

“The RTW Statute eviscerates the basic right that a person be compensated for the good and valuable services that a person provides in commercial endeavors and is the type of law that the Particular Services Clause was intended to bar,” the judge wrote in his ruling.

Few rulings

The constitutional argument made in Sweeney and United Steel was not unexpected by proponents of the measure when the right-to-work bill was signed into law, said Faegre Baker Daniels LLP partner Brian Garrison.

“While the challenge was anticipated,” Garrison said, “I don’t think it was anticipated that the law would be found to be unconstitutional.”

Two labor law scholars, Kenneth Dau-Schmidt, professor at the Indiana University Maurer School of Law, and Robert Brookins, professor at Indiana University Robert H. McKinney School of Law, said the unions in Indiana make a valid argument.

Both noted the conflict created between the state and federal laws will harm the unions because workers will have little incentive to pay for representation they will receive anyway free of charge. Unions will have to expend resources to non-paying members of the bargaining unit, which will hurt revenues and force paying members to subsidize the nonmembers.

“That doesn’t even resemble any kind of fairness,” Brookins said.

The Indiana Supreme Court has examined the particular services clause just a few times – most recently in Bayh v. Sonnenburg, 573 N.E.2d 398 (Ind. 1991), and Cheatham v. Pohle, 789 N.E.2d 467 (Ind. 2003) – and issued narrow opinions finding the clause was not violated.

Chief Justice Brent Dickson dissented in both opinions. He maintained in Sonnenburg the state’s requirement that patients in a state mental health hospital work did violate the particular services clause. But in Cheatham, while he disagreed with other parts of the majority’s reasoning, he agreed the state in that circumstance was not demanding services without just compensation.

In Sonnenburg, the court did establish a two-pronged test to determine whether the state was demanding “particular services” to be rendered. The first prong asks whether the service provided had been compensated in the past, while the second prong asks whether the service that is being required of a party is something that is not required generally of all citizens.

Although the law professors doubt the justices will affirm the Lake County ruling, Dau-Schmidt did see a problem the Supreme Court might have with the law. He speculated the provision that makes it a Class A misdemeanor to require compensation from nonmembers might seem particularly coercive to the court.

If the Supreme Court strikes down the law because of that provision, then the Legislature could fix the wording and keep the law in place, Dau-Schmidt said.

If the Supreme Court finds the statute does violate the state constitution, then the state might have to pass an amendment that removes the services clause. Or, Brookins said, the state could insert an exception into Article 1, Section 21 that excludes unions. In that situation, the IU McKinney professor said it’s likely that attorneys would find a way to use the exception to their clients’ advantage.

Whatever happens, Brookins does not expect the Supreme Court’s ruling to have much impact beyond Indiana’s borders.

“There is a movement afoot in this nation to basically undermine public sector unions. Private sector unions are already struggling,” he said. “I don’t think what is done in this state is going to have any great influence. I believe the movement will continue.”•