KNOX v. SERVICE EMPLOYEES INTERNATIONAL UNION
All California state employees are required to pay a fee to the Service Employees International Union for its representation of them, and the union is required to tell employees how the money is spent and how to object. The union wanted to collect a special assessment for a "Political Fight Back Fund" in 2005. But some nonmembers wanted the union to give them a new notice and a new chance to object. They filed a class-action lawsuit seeking declaratory and injunctive relief and equitable restitution for violations of the nonmembers' rights under the First and Fourteenth Amendments. The district court agreed, siding with the nonmembers. However, the U.S. Court of Appeals for the Ninth Circuit reversed.
(1) May a State, consistent with the First and Fourteenth Amendments, condition employment on the payment of a special union assessment intended solely for political and ideological expenditures without first providing a notice that includes information about that assessment and provides an opportunity to object to its exaction?
(2) May a State, consistent with the First and Fourteenth Amendments, condition continued public employment on the payment of union agency fees for purposes of financing political expenditures for ballot measures?
Legal provision: First Amendment
No, No. In his opinion for the 7-2 majority, Justice Samuel A. Alito, Jr., wrote that the structure by which nonmembers of a union have to pay chargeable expenses and must opt out of any others already strains the limits of the First Amendment. The actions of the Service Employees International Union (SEIU) went beyond this allowable extension and infringed upon nonmembers’ First Amendment rights. By failing to provide a new notice and a new chance to opt out, the union did not abide by the established procedure for handling nonmember payment. In order to respect the First Amendment rights of nonmembers, the special assessment should have come with a notice that allowed nonmembers to opt in. The Court held that, while it can be difficult to determine the yearly dues ahead of time, the union should err on the side of having nonmembers pay too little rather than too much and infringe on their constitutional rights.
Justice Sonia Sotomayor concurred in the judgment. She agreed that the union had not satisfied its constitutional obligation to provide nonmembers with notice of the purpose of the special assessment and a chance to opt out. However, she argued that the Court went beyond its authority by specifying that an opt-in system better fits the requirements of the First Amendment when there is no precedent to support such a statement. Justice Ruth Bader Ginsburg joined the concurring opinion.
Justice Stephen G. Breyer dissented and argued that the basic system that the unions uses to charge dues is both constitutional and fair to members and nonmembers. The union uses each year’s ratio of chargeable vs. nonchargeable to determine the next year’s fees, so an objecting nonmember might overpay one year, but will underpay the next and ultimately come out even. In the year in question, even with the special assessment, the objecting nonmembers paid less than what the constitution considers their fair share. The First Amendment does not require the union to provide more than one opportunity for a nonmember to object to the yearly fee. Justice Elena Kagan joined in the dissent.
NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
DIANNE KNOX, et al., PETITIONERS v. SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1000
on writ of certiorari to the united states court of appeals for the ninth circuit
[June 21, 2012]
Justice Alito delivered the opinion of the Court.
In this case, we decide whether the First Amendment allows a public-sector union to require objecting nonmembers to pay a special fee for the purpose of financing the union’s political and ideological activities.I A
Under California law, public-sector employees in a bargaining unit may decide by majority vote to create an “agency shop” arrangement under which all the employees are represented by a union selected by the majority. Cal. Govt. Code Ann. §3502.5(a) (West 2010). While employees in the unit are not required to join the union, they must nevertheless pay the union an annual fee to cover the cost of union services related to collective bargaining (so-called chargeable expenses). See Lehnert v. Ferris Faculty Assn., 500 U. S. 507, 524 (1991) ; Machinists v. Street, 367 U. S. 740, 760 (1961) .
Our prior cases have recognized that such arrangements represent an “impingement” on the First Amendment rights of nonmembers. Teachers v. Hudson, 475 U. S. 292, 307, n. 20 (1986) . See also Davenport v. Washington Ed. Assn., 551 U. S. 177, 181 (2007) (“[A]gency-shop arrangements in the public sector raise First Amendment concerns because they force individuals to contribute money to unions as a condition of government employment”); Street, supra, at 749 (union shop presents First Amendment “questions of the utmost gravity”). Thus, in Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977) , we held that a public-sector union, while permitted to bill nonmembers for chargeable expenses, may not require nonmembers to fund its political and ideological projects. And in Hudson, we identified procedural requirements that a union must meet in order to collect fees from nonmembers without violating their rights. 475 U. S., at 302–311. The First Amendment, we held, does not permit a public-sector union to adopt procedures that have the effect of requiring objecting nonmembers to lend the union money to be used for political, ideological, and other purposes not germane to collective bargaining. Id., at 305. In the interest of administrative convenience, however, we concluded that a union “cannot be faulted” for calculating the fee that nonmembers must pay “on the basis of its expenses during the preceding year.” Id., at 307, n. 18.
Hudson concerned a union’s regular annual fees. The present case, by contrast, concerns the First Amendment requirements applicable to a special assessment or dues increase that is levied to meet expenses that were not disclosed when the amount of the regular assessment was set.B
In June 2005, respondent, the Service Employees International Union, Local 1000 (SEIU), sent out its regular Hudson notice informing employees what the agency fee would be for the year ahead. The notice set monthly dues at 1% of an employee’s gross monthly salary but capped monthly dues at $45. Based on the most recently audited year, the SEIU estimated that 56.35% of its total expenditures in the coming year would be dedicated to chargeable collective-bargaining activities. Thus, if a nonunion employee objected within 30 days to payment of the full amount of union dues, the objecting employee was required to pay only 56.35% of total dues. The SEIU’s notice also included a feature that was not present in Hudson: The notice stated that the agency fee was subject to increase at any time without further notice.
During this time, the citizens of the State of California were engaged in a wide-ranging political debate regarding state budget deficits, and in particular the budget consequences of growing compensation for public employees backed by powerful public-sector unions. On June 13, 2005, Governor Arnold Schwarzenegger called for a special election to be held in November 2005, where voters would consider various ballot propositions aimed at state-level structural reforms. Two of the most controversial issues on the ballot were Propositions 75 and 76. Proposition 75 would have required unions to obtain employees’ affirmative consent before charging them fees to be used for political purposes. Proposition 76 would have limited state spending and would have given the Governor the ability under some circumstances to reduce state appropriations for public-employee compensation. The SEIU joined a coalition of public-sector unions in vigorously opposing these measures. Calling itself the “Alliance for a Better California,” the group would eventually raise “more than $10 million, with almost all of it coming from public employee unions, including $2.75 million from state worker unions, $4.7 million from the California Teachers Association, and $700,000 from school workers unions.” 1
On July 30, shortly after the end of the 30-day objection period for the June Hudson notice, the SEIU proposed a temporary 25% increase in employee fees, which it billed as an “Emergency Temporary Assessment to Build a Political Fight-Back Fund.” App. 25. The proposal stated that the money was needed to achieve the union’s political objectives, both in the special November 2005 election and in the November 2006 election. Id., at 26. According to the proposal, money in the Fight-Back Fund would be used “for a broad range of political expenses, including television and radio advertising, direct mail, voter registration, voter education, and get out the vote activities in our work sites and in our communities across California.” Ibid. The proposal specifically stated that “[t]he Fund will not be used for regular costs of the union—such as office rent, staff salaries or routine equipment replacement, etc.” Ibid. It noted that “all other public worker unions are in the process of raising the extraordinary funds needed to defeat the Governor.” Id., at 27. And it concluded: “Each of us must do our part to turn back these initiatives which would allow the Governor to destroy our wages and benefits and even our jobs, and threaten the well-being of all Californians.” Ibid. On August 27, the SEIU’s General Council voted to implement the proposal.
On August 31, the SEIU sent out a letter addressed to “Local 1000 Members and Fair Share Fee Payers,” announcing that, for a limited period, their fees would be raised to 1.25% of gross monthly salary and the $45-per-month cap on regular dues would not apply. Id., at 31. The letter explained that the union would use the fund to “defeat Proposition 76 and Proposition 75 on November 8,” and to “defeat another attack on [its] pension plan” in June 2006. Ibid. The letter also informed employees that, in the following year, the money would help “to elect a governor and a legislature who support public employees and the services [they] provide.” Ibid.
After receiving this letter, one of the plaintiffs in this case called the SEIU’s offices to complain that the union was levying the special assessment for political purposes without giving employees a fair opportunity to object. An SEIU area manager responded that “even if [the employee] objected to the payment of the full agency fee, there was nothing he could do about the September increase for the Assessment.” Knox v. Westly, No. 2:05–cv–02198, 2008 WL 850128, *3 (ED Cal., Mar. 28, 2008). “She also stated that ‘we are in the fight of our lives,’ that the Assessment was needed, and that there was nothing that could be done to stop the Union’s expenditure of that Assessment for political purposes.” Ibid. As a consolation, however, those employees who had filed timely objections after the regular June Hudson notice were required to pay only 56.35% of the temporary increase.
Petitioners filed this class-action suit on behalf of 28,000 nonunion employees who were forced to contribute money to the Political Fight-Back Fund. Some of the class members had filed timely objections after receiving the regular Hudson notice in June, and others had not. Those who had objected argued that it was wrong to require them to pay 56.35% of the temporary assessment, which had been billed as intended for use in making political expenditures that they found objectionable. Those who had not objected after receiving the June Hudson notice contended that they should have received a new opportunity to object when the SEIU levied the special assessment for its Political Fight-Back Fund.
The District Court granted summary judgment for the petitioners, finding that the union “fully intended to use the 12 million additional dollars it anticipated to raise for political purposes.” 2008 WL 850128, *7. “Even if every cent of the assessment was not intended to be used for entirely political purposes,” the court stated, “it is clear that the Union’s intent was to depart drastically from its typical spending regime and to focus on activities that were political or ideological in nature.” Id., at *8. In light of this fact, the court held that it would be inappropriate for the union to rely on previous annual expenditures to estimate that 56.35% of the new fee would go toward chargeable expenses. The court ordered the SEIU to send out a new notice giving all class members 45 days to object and to provide those who objected with a full refund of their contributions to the Political Fight-Back Fund. Id., at *12.
A divided panel of the Ninth Circuit reversed. Knox v. California State Employees Assn., Local 1000, 628 F. 3d 1115 (2010). According to the panel majority, Hudson prescribed the use of a balancing test. 628 F. 3d, at 1119–1120. The majority therefore inquired whether the procedure that the SEIU employed reasonably accommodated the interests of the union, the employer, and nonmember employees. Id., at 1120–1123. Judge Wallace dissented, arguing that the majority had misinterpreted Hudson and sanctioned the abridgment of the First Amendment rights of nonmembers. 628 F. 3d, at 1123–1139.
We granted certiorari. 564 U. S. ___ (2011).II
The SEIU argues that we should dismiss this case as moot. In opposing the petition for certiorari, the SEIU defended the decision below on the merits. After certiorari was granted, however, the union sent out a notice offering a full refund to all class members, and the union then promptly moved for dismissal of the case on the ground of mootness. Such postcertiorari maneuvers designed to insulate a decision from review by this Court must be viewed with a critical eye. See City News & Novelty, Inc. v. Waukesha, 531 U. S. 278 –284 (2001). The vol-untary cessation of challenged conduct does not ordinarily render a case moot because a dismissal for mootness would permit a resumption of the challenged conduct as soon as the case is dismissed. See City of Mesquite v. Aladdin’s Castle, Inc., 455 U. S. 283, 289 (1982) . And here, since the union continues to defend the legality of the Political Fight-Back fee, it is not clear why the union would necessarily refrain from collecting similar fees in the future.
The union argues that concerns about voluntary cessation are inapplicable in this case because petitioners do not seek any prospective relief. See Motion to Dismiss as Moot 11–12. But even if that is so, the union’s mootness argument fails because there is still a live controversy as to the adequacy of the SEIU’s refund notice. A case becomes moot only when it is impossible for a court to grant “ ‘ “any effectual relief whatever” to the prevailing party.’ ” Erie v. Pap’s A. M., 529 U. S. 277, 287 (2000) (quoting Church of Scientology of Cal. v. United States, 506 U. S. 9, 12 (1992) , in turn quoting Mills v. Green, 159 U. S. 651, 653 (1895) ). “[A]s long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.” Ellis v. Railway Clerks, 466 U. S. 435, 442 (1984) .
The District Court ordered the SEIU to send out a “proper” notice giving employees an adequate opportunity to receive a full refund. 2008 WL 850128, *12. Petitioners argue that the notice that the SEIU sent was improper because it includes a host of “conditions, caveats, and confusions as unnecessary complications aimed at reducing the number of class members who claim a refund.” Brief for Petitioners in Opposition to Motion to Dismiss 19. In particular, petitioners allege that the union has refused to accept refund requests by fax or e-mail and has made refunds conditional upon the provision of an original signature and a Social Security number. Id., at 18–19. As this dispute illustrates, the nature of the notice may affect how many employees who object to the union’s special assessment will be able to get their money back. The union is not entitled to dictate unilaterally the manner in which it advertises the availability of the refund.
For this reason, we conclude that a live controversy remains, and we proceed to the merits.III A
Our cases have often noted the close connection between our Nation’s commitment to self-government and the rights protected by the First Amendment. See, e.g., Brown v. Hartlage, 456 U. S. 45, 52 (1982) (“At the core of the First Amendment are certain basic conceptions about the manner in which political discussion in a representative democracy should proceed”); Buckley v. Valeo, 424 U. S. 1 , n. 127 (1976) (per curiam) (“[T]he central purpose of the Speech and Press Clauses was to assure a society in which ‘uninhibited, robust, and wide-open’ public debate concerning matters of public interest would thrive, for only in such a society can a healthy representative democracy flourish”); Cox v. Louisiana, 379 U. S. 536, 552 (1965) (“Maintenance of the opportunity for free political discussion is a basic tenet of our constitutional democracy”); Whitney v. California, 274 U. S. 357, 375 (1927) (Brandeis, J., concurring); Patterson v. Colorado ex rel. Attorney General of Colo., 205 U. S. 454, 465 (1907) (Harlan, J., dissenting).
The First Amendment creates “an open marketplace” in which differing ideas about political, economic, and social issues can compete freely for public acceptance without improper government interference. New York State Bd. of Elections v. Lopez Torres, 552 U. S. 196, 208 (2008) . See also Hustler Magazine, Inc. v. Falwell, 485 U. S. 46, 51 (1988) ; Mills v. Alabama, 384 U. S. 214 –219 (1966). The government may not prohibit the dissemination of ideas that it disfavors, nor compel the endorsement of ideas that it approves. See R. A. V. v. St. Paul, 505 U. S. 377, 382 (1992) ; Brandenburg v. Ohio, 395 U. S. 444 –448 (1969) (per curiam); West Virginia Bd. of Ed. v. Barnette, 319 U. S. 624 (1943) ; Wooley v. Maynard, 430 U. S. 705 –715 (1977); Riley v. National Federation of Blind of N. C., Inc., 487 U. S. 781, 797 (1988) (The First Amendment protects “the decision of both what to say and what not to say” (emphasis deleted)). And the ability of like-minded individuals to associate for the purpose of expressing commonly held views may not be curtailed. See Roberts v. United States Jaycees, 468 U. S. 609, 623 (1984) (“Freedom of association . . . plainly presupposes a freedom not to associate”); NAACP v. Alabama ex rel. Patterson, 357 U. S. 449 –461 (1958).
Closely related to compelled speech and compelled association is compelled funding of the speech of other private speakers or groups. See Abood, 431 U. S., at 222–223. In United States v. United Foods, Inc., 533 U. S. 405 (2001) , we considered the constitutionality of a state scheme that compelled such funding. The subject of the speech at issue—promoting the sale of mushrooms—was not one that is likely to stir the passions of many, but the mundane commercial nature of that speech only highlights the importance of our analysis and our holding.
The federal Mushroom Promotion, Research, and Consumer Information Act required that fresh mushroom handlers pay assessments used primarily to fund advertisements promoting mushroom sales. A large producer objected to subsidizing these generic ads, and even though we applied the less demanding standard used in prior cases to judge laws affecting commercial speech, we held that the challenged scheme violated the First Amendment. We made it clear that compulsory subsidies for private speech are subject to exacting First Amendment scrutiny and cannot be sustained unless two criteria are met. First, there must be a comprehensive regulatory scheme involving a “mandated association” among those who are required to pay the subsidy. Id., at 414. Such situations are exceedingly rare because, as we have stated elsewhere, mandatory associations are permissible only when they serve a “compelling state interes[t] . . . that cannot be achieved through means significantly less restrictive of associational freedoms.” Roberts, supra, at 623. Second, even in the rare case where a mandatory association can be justified, compulsory fees can be levied only insofar as they are a “necessary incident” of the “larger regulatory purpose which justified the required association.” United Foods, supra, at 414.B
When a State establishes an “agency shop” that exacts compulsory union fees as a condition of public employment, “[t]he dissenting employee is forced to support financially an organization with whose principles and demands he may disagree.” Ellis, 466 U. S., at 455. Because a public-sector union takes many positions during collective bargaining that have powerful political and civic consequences, see Tr. of Oral Arg. 48–49, the compulsory fees constitute a form of compelled speech and association that imposes a “significant impingement on First Amendment rights.” Ellis, supra, at 455. Our cases to date have tolerated this “impingement,” and we do not revisit today whether the Court’s former cases have given adequate recognition to the critical First Amendment rights at stake.
“The primary purpose” of permitting unions to collect fees from nonmembers, we have said, is “to prevent nonmembers from free-riding on the union’s efforts, sharing the employment benefits obtained by the union’s collective bargaining without sharing the costs incurred.” Davenport, 551 U. S., at 181. Such free-rider arguments, however, are generally insufficient to overcome First Amendment objections. Consider the following examples:
“If a community association engages in a clean-up campaign or opposes encroachments by industrial development, no one suggests that all residents or property owners who benefit be required to contribute. If a parent-teacher association raises money for the school library, assessments are not levied on all parents. If an association of university professors has as a major function bringing pressure on universities to observe standards of tenure and academic freedom, most professors would consider it an outrage to be required to join. If a medical association lobbies against regulation of fees, not all doctors who share in the benefits share in the costs.” 2
Acceptance of the free-rider argument as a justification for compelling nonmembers to pay a portion of union dues represents something of an anomaly—one that we have found to be justified by the interest in furthering “labor peace.” Hudson, 475 U. S., at 303. But it is an anomaly nevertheless.
Similarly, requiring objecting nonmembers to opt out of paying the nonchargeable portion of union dues—as opposed to exempting them from making such payments unless they opt in—represents a remarkable boon for unions. Courts “do not presume acquiescence in the loss of fundamental rights.” College Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., 527 U. S. 666, 682 (1999) (internal quotation marks omitted). Once it is recognized, as our cases have, that a nonmember cannot be forced to fund a union’s political or ideological activities, what is the justification for putting the burden on the nonmember to opt out of making such a payment? Shouldn’t the default rule comport with the probable preferences of most nonmembers? And isn’t it likely that most employees who choose not to join the union that represents their bargaining unit prefer not to pay the full amount of union dues? An opt-out system creates a risk that the fees paid by nonmembers will be used to further political and ideological ends with which they do not agree. But a “[u]nion should not be permitted to exact a service fee from nonmembers without first establishing a procedure which will avoid the risk that their funds will be used, even temporarily, to finance ideological activities unrelated to collective bargaining.” Hudson, supra, at 305 (internal quotation marks omitted).
Although the difference between opt-out and opt-in schemes is important, our prior cases have given sur-prisingly little attention to this distinction. Indeed, acceptance of the opt-out approach appears to have come about more as a historical accident than through the careful application of First Amendment principles.
The trail begins with dicta in Street, where we considered whether a federal collective-bargaining statute authorized a union to impose compulsory fees for political activities. 367 U. S., at 774. The plaintiffs were employees who had affirmatively objected to the way their fees were being used, and so we took that feature of the case for granted. We held that the statute did not authorize the use of the objecting employees’ fees for ideological purposes, and we stated in passing that “dissent is not to be presumed—it must affirmatively be made known to the union by the dissenting employee.” Ibid. In making that offhand remark, we did not pause to consider the broader constitutional implications of an affirmative opt-out requirement. Nor did we explore the extent of First Amendment protection for employees who might not qual-ify as active “dissenters” but who would nonetheless prefer to keep their own money rather than subsidizing by default the political agenda of a state-favored union.
In later cases such as Abood and Hudson, we assumed without any focused analysis that the dicta from Street had authorized the opt-out requirement as a constitutional matter. Thus in Hudson we did not take issue with the union’s practice of giving employees annual notice and an opportunity to object to expected political expenditures. At the same time, however, we made it clear that the procedures used by a union to collect money from nonmembers must satisfy a high standard.
Contrary to the view of the Ninth Circuit panel major-ity, we did not call for a balancing of the “right” of the union to collect an agency fee against the First Amendment rights of nonmembers. 628 F. 3d, at 1119–1120. As we noted in Davenport, “unions have no constitutional entitlement to the fees of nonmember-employees.” 551 U. S., at 185. A union’s “collection of fees from nonmembers is authorized by an act of legislative grace,” 628 F. 3d, at 1126 (Wallace, J., dissenting)—one that we have termed “unusual” and “extraordinary,” Davenport, supra, at 184, 187. Far from calling for a balancing of rights or interests, Hudson made it clear that any procedure for exacting fees from unwilling contributors must be “care-fully tailored to minimize the infringement” of free speech rights. 475 U. S., at 303. And to underscore the meaning of this careful tailoring, we followed that statement with a citation to cases holding that measures burdening the freedom of speech or association must serve a “compelling interest” and must not be significantly broader than necessary to serve that interest. 3IV
By authorizing a union to collect fees from nonmembers and permitting the use of an opt-out system for the collection of fees levied to cover nonchargeable expenses, our prior decisions approach, if they do not cross, the limit of what the First Amendment can tolerate. The SEIU, however, asks us to go farther. It asks us to approve a procedure under which (a) a special assessment billed for use in electoral campaigns was assessed without providing a new opportunity for nonmembers to decide whether they wished to contribute to this effort and (b) nonmembers who previously opted out were nevertheless required to pay more than half of the special assessment even though the union had said that the purpose of the fund was to mount a political campaign and that it would not be used for ordinary union expenses. This aggressive use of power by the SEIU to collect fees from nonmembers is indefensible.A
First, we see no justification for the union’s failure to provide a fresh Hudson notice. Hudson rests on the principle that nonmembers should not be required to fund a union’s political and ideological projects unless they choose to do so after having “a fair opportunity” to assess the impact of paying for nonchargeable union activities. 475 U. S., at 303. Giving employees only one opportunity per year to make this choice is tolerable if employees are able at the time in question to make an informed choice. But a nonmember cannot make an informed choice about a special assessment or dues increase that is unknown when the annual notice is sent. When a union levies a special assessment or raises dues as a result of unexpected developments, the factors influencing a nonmember’s choice may change. In particular, a nonmember may take special exception to the uses for which the additional funds are sought. 4
The present case provides a striking example. The special assessment in this case was billed for use in a broad electoral campaign designed to defeat two important and controversial ballot initiatives and to elect sympathetic candidates in the 2006 gubernatorial and legislative elections. There were undoubtedly nonmembers who, for one reason or another, chose not to opt out or neglected to do so when the standard Hudson notice was sent but who took strong exception to the SEIU’s political objectives and did not want to subsidize those efforts. These nonmembers might have favored one or both of the ballot initiatives; they might have wished to support the reelection of the incumbent Governor; or they might not have wanted to delegate to the union the authority to decide which candidates in the 2006 elections would receive a share of their money.
The effect on nonmembers was particularly striking with respect to the union’s campaign against Proposition 75 because that initiative would have bolstered nonmember rights. If Proposition 75 had passed, nonmembers would have been exempt from paying for the SEIU’s extensive political projects unless they affirmatively consented. Thus, the effect of the SEIU’s procedure was to force many nonmembers to subsidize a political effort designed to restrict their own rights.
As Hudson held, procedures for collecting fees from nonmembers must be carefully tailored to minimize impingement on First Amendment rights, and the procedure used in this case cannot possibly be considered to have met that standard. After the dues increase was adopted, the SEIU wrote to all employees in the relevant bargaining units to inform them of this development. It would have been a relatively simple matter for the union to cast this letter in the form of a new Hudson notice, so that nonmembers could decide whether they wanted to pay for the union’s electoral project.
The SEIU argues that we should not be troubled by its failure to provide a new notice because nonmembers who objected to the special assessment but were nonetheless required to pay it would have been given the chance to recover the funds in question by opting out when the next annual notice was sent. If the special assessment was used entirely or in part for nonchargeable purposes, they suggest, the percentage of the union’s annual expenditures for chargeable purposes would decrease, and therefore the amount of the dues payable by objecting nonmembers the following year would also decrease. This decrease, however, would not fully recompense nonmembers who did not opt out after receiving the regular notice but would have opted out if they had been permitted to do so when the special assessment was announced. 5 And in any event, even a full refund would not undo the violation of First Amendment rights. As we have recognized, the First Amendment does not permit a union to extract a loan from unwilling nonmembers even if the money is later paid back in full. See Hudson, supra, at 305; Ellis, 466 U. S., at 444. Here, for nonmembers who disagreed with the SEIU’s electoral objectives, a refund provided after the union’s objectives had already been achieved would be cold comfort. 6
To respect the limits of the First Amendment, the union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out. Our cases have tolerated a substantial impingement on First Amendment rights by allowing unions to impose an opt-out requirement at all. Even if this burden can be justified during the collection of regular dues on an annual basis, there is no way to justify the additional burden of imposing yet another opt-out requirement to collect special fees whenever the union desires.
The SEIU’s treatment of nonmembers who opted out when the initial Hudson notice was sent also ran afoul of the First Amendment. The SEIU required these employees to pay 56.35% of the special assessment, just as they had been required to pay 56.35% of the regular annual dues. But the union proclaimed that the special assessment would be used to support an electoral campaign and would not be used for ordinary union expenses. Accordingly, there is no reason to suppose that 56.35% of the new assessment was used for properly chargeable expenses. On the contrary, if the union is to be taken at its word, virtually all of the money was slated for nonchargeable uses.
The procedure accepted in Hudson is designed for use when a union sends out its regular annual dues notices. The procedure is predicated on the assumption that a union’s allocation of funds for chargeable and nonchargeable purposes is not likely to vary greatly from one year to the next. 7 No such assumption is reasonable, however, when a union levies a special assessment or raises dues as a result of events that were not anticipated or disclosed at the time when a yearly Hudson notice was sent. Accordingly, use of figures based on an audit of the union’s operations during an entire previous year makes no sense.
Nor would it be feasible to devise a new breakdown of chargeable and nonchargeable expenses for the special assessment. Determining that breakdown is problematic enough when it is done on a regular annual basis because auditors typically do not make a legal determination as to whether particular expenditures are chargeable. Instead, the auditors take the union’s characterization for granted and perform the simple accounting function of “ensur[ing] that the expenditures which the union claims it made for certain expenses were actually made for those expenses.” Andrews v. Education Assn. of Cheshire, 829 F. 2d 335, 340 (CA2 1987). Thus, if a union takes a very broad view of what is chargeable—if, for example, it believes that supporting sympathetic political candidates is chargeable and bases its classification on that view—the auditors will classify these political expenditures as chargeable. Objecting employees may then contest the union’s chargeability determinations, but the onus is on the employees to come up with the resources to mount the legal challenge in a timely fashion. 8 See, e.g., Lehnert, 500 U. S., at 513; Jibson v. Michigan Ed. Assn., 30 F. 3d 723, 730 (CA6 1994). This is already a significant burden for employees to bear simply to avoid having their money taken to subsidize speech with which they disagree, and the burden would become insupportable if unions could impose a new assessment at any time, with a new chargeability determination to be challenged.2
The SEIU argues that objecting nonmembers who were required to pay 56.35% of the special assessment, far from subsidizing the union’s political campaign, actually received a windfall. According to the union’s statistics, the actual percentage of regular dues and fees spent for chargeable purposes in 2005 turned out to be quite a bit higher (66.26%), and therefore, even if all of the money obtained through the special assessment is classified as nonchargeable, the union’s total expenditures for 2005 were at least 66.26% chargeable. See Brief for Respondent 5, n. 6. This argument is unpersuasive for several reasons.
First, the SEIU’s understanding of the breadth of chargeable expenses is so expansive that it is hard to place much reliance on its statistics. In its brief, the SEIU argues broadly that all funds spent on “lobbying . . . the electorate” are chargeable. See id., at 51. But “lobbying . . . the electorate” is nothing but another term for supporting political causes and candidates, and we have never held that the First Amendment permits a union to compel nonmembers to support such political activities. On the contrary, as long ago as Street, we noted the important difference between a union’s authority to engage in collective bargaining and related activities on behalf of nonmember employees in a bargaining unit and the union’s use of nonmembers’ money “to support candidates for public office” or “to support political causes which [they] oppos[e].” 367 U. S., at 768.
The sweep of the SEIU’s argument is highlighted by its discussion of the use of fees paid by objecting nonmembers to defeat Proposition 76. According to the SEIU, these expenditures were “germane” to the implementation of its contracts because, if Proposition 76 had passed, it would have “effectively permitted the Governor to abrogate the Union’s collective bargaining agreements under certain circumstances, undermining the Union’s ability to perform its representation duty of negotiating effective collective bargaining agreements.” Brief for Respondent 49–50 (internal quotation marks omitted).
If we were to accept this broad definition of germaneness, it would effectively eviscerate the limitation on the use of compulsory fees to support unions’ controversial political activities. Public-employee salaries, pensions, and other benefits constitute a substantial percentage of the budgets of many States and their subdivisions. As a result, a broad array of ballot questions and campaigns for public office may be said to have an effect on present and future contracts between public-sector workers and their employers. If the concept of “germaneness” were as broad as the SEIU advocates, public-sector employees who do not endorse the unions’ goals would be essentially unprotected against being compelled to subsidize political and ideological activities to which they object.
Second, even if the SEIU’s statistics are accurate, it does not follow that it was proper for the union to charge objecting nonmembers 56.35%—or any other particular percentage—of the special assessment. Unless it is possible to determine in advance with some degree of accuracy the percentage of union funds that will be used during an upcoming year for chargeable purposes—and the SEIU argues that this is not possible—there is at least a risk that, at the end of the year, unconsenting nonmembers will have paid either too much or too little. Which side should bear this risk?
The answer is obvious: the side whose constitutional rights are not at stake. “Given the existence of acceptable alternatives, [a] union cannot be allowed to commit dissenters’ funds to improper uses even temporarily.” Ellis, 466 U. S., at 444. Thus, if unconsenting nonmembers pay too much, their First Amendment rights are infringed. On the other hand, if unconsenting nonmembers pay less than their proportionate share, no constitutional right of the union is violated because the union has no constitutional right to receive any payment from these employees. See Davenport, 551 U. S., at 185. The union has simply lost for a few months the “extraordinary” benefit of being empowered to compel nonmembers to pay for services that they may not want and in any event have not agreed to fund.
As we have noted, by allowing unions to collect any fees from nonmembers and by permitting unions to use opt-out rather than opt-in schemes when annual dues are billed, our cases have substantially impinged upon the First Amendment rights of nonmembers. In the new situation presented here, we see no justification for any further impingement. The general rule—individuals should not be compelled to subsidize private groups or private speech—should prevail.
Public-sector unions have the right under the First Amendment to express their views on political and social issues without government interference. See, e.g., Citizens United v. Federal Election Comm’n, 558 U. S. ___ (2010). But employees who choose not to join a union have the same rights. The First Amendment creates a forum in which all may seek, without hindrance or aid from the State, to move public opinion and achieve their political goals. “ First Amendment values [would be] at serious risk if the government [could] compel a particular citizen, or a discrete group of citizens, to pay special subsidies for speech on the side that [the government] favors.” United Foods, 533 U. S., at 411. Therefore, when a public-sector union imposes a special assessment or dues increase, the union must provide a fresh Hudson notice and may not exact any funds from nonmembers without their affirmative consent. 9* * *
The judgment of the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
1 Marinucci & Wildermuth, Schwarzenegger Adds Prop. 75 to His Agenda, San Francisco Chronicle, Sept. 18, 2005, p. A–17.
2 Summers, Book Review, Sheldon Leader, Freedom of Association: A Study in Labor Law and Political Theory, 16 Comparative Labor L. J. 262, 268 (1995).
3 The specific citation was as follows: “See Roberts v. United States Jaycees, [ 468 U. S. 609, 623 (1984) ] (Infringements on freedom of association ‘may be justified by regu-lations adopted to serve compelling state interests, unrelated to the suppression of ideas, that cannot be achieved through means significantly less restrictive of associational freedoms’); Elrod v. Burns, 427 U. S. 347, 363 (1976) (government means must be ‘least restrictiveof freedom of belief and association’); Kusper v. Pontikes, 414 U. S. 51 –59 (1973) (‘[E]ven when pursuing a legitimate interest, a State may not choose means that unnecessarily restrict constitutionally protected liberty’); NAACP v. Button, 371 U. S. 415, 438 (1963) (‘Precision of reg-ulation must be the touchstone’ in the First Amendment context).” Hudson, 475 U. S., at 303, n. 11.
4 The dissent suggests that the union gave fair notice because it announced at the beginning of the year that “ ‘[d]ues are subject to change without further notice to fee payers.’ ” Post, at 12 (opinion of Breyer, J.). But a union cannot define the scope of its own notice obligations simply by promulgating a clause giving itself the power to increase fees at any time for any purpose without further notice.
5 These nonmembers, after paying the full amount of the special assessment, would be required during the subsequent year to pay at least as much as those nonmembers who did opt out when they received the initial Hudson notice.
6 Justice Sotomayor contends that a new Hudson notice should be required only when a special assessment is imposed for political purposes. Post, at 2 (opinion concurring in judgment). But as even the dissent acknowledges, post, at 7, such a rule would be unworkable. First, our cases have recognized that a union’s money is fungible, so even if the new fee were spent entirely for nonpolitical activities, it would free up other funds to be spent for political purposes. See Retail Clerks v. Schermerhorn, 373 U. S. 746, 753 (1963) (noting that particular fee earmarks are “of bookkeeping significance only rather than a matter of real substance”). And second, unless we can rely on unions to advertise the true purpose behind every special fee, it is not clear how a court could make a timely determination of whether each new fee is political in nature. It would be practically impossible to require the parties to litigate the purpose of every fee merely to determine whether notice is required.
7 The SEIU contends that “[s]ignificant fluctuations in the chargeable and nonchargeable proportions of a union’s spending are inevitable,” Brief for Respondent 13, and the dissent appears to agree, post, at 10. But if the Hudson Court had proceeded on this assumption it is doubtful that it would have found it acceptable for a union to rely solely on the breakdown in the most recent year rather than computing the average breakdown over a longer period.
8 The dissent is comforted by the fact that the union “has offered to pay for neutral arbitration of such disputes before the American Arbitration Association,” post, at 9, but the painful burden of initiating and participating in such disputes cannot be so easily relieved.
9 Contrary to Justice Sotomayor’s suggestion, our holding does not venture beyond the scope of the questions on which we granted review or the scope of the parties’ dispute. The second question on which we granted review broadly asks us to determine the circumstances under which a State may deduct from the pay of nonunion employees money that is used by a union for general electioneering. See Pet. for Cert. (i) (“May a State, consistent with the First and Fourteenth Amendments, condition continued public employment on the payment of unionagency fees for purposes of financing political expenditures for ballot measures?”). Our holding—that this may be done only when the em-ployee affirmatively consents—falls within that question. Our holding also addresses the primary remaining dispute between the parties, namely, the particular procedures that must be followed on remand in order to provide adequate assurance that members ofthe class are not compelled to subsidize nonchargeable activities to which they object. See supra, at 7–8. Petitioners argue strenuously that these procedures must be narrowly tailored to minimize intrusion on their free-speech rights. See Brief for Petitioners 11–17. We see no sensible way to address this dispute without confronting the question whether, in the particular context present here, an opt-out regime suffices. Justice Sotomayor would apparently have us proceed on the assumption that an opt-out regime is permitted. She would then have us decide what sort of opt-out procedures would be sufficient if such a regime were allowed at all. But that is a question that simply cannot be answered. It would be like asking what sort of procedural requirements would be required if the government set out to do somethingelse that the First Amendment flatly prohibits—for example, requiring prepublication approval of newspapers. There is also no merit in Justice Sotomayor’s and Justice Breyer’s comments about prior precedent. This case concerns the procedures that must be followed when a public-sector union announces a special assessment or mid-year dues increase. No prior decision of this Court has addressed that question, and Hudson says not one word on the subject.
SUPREME COURT OF THE UNITED STATES
DIANNE KNOX, et al., PETITIONERS v. SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1000
on writ of certiorari to the united states court of appeals for the ninth circuit
[June 21, 2012]
Justice Breyer, with whom Justice Kagan joins, dissenting.
In Teachers v. Hudson, 475 U. S. 292 (1986) , this Court unanimously held that “the Union cannot be faulted for calculating its fee on the basis of its expenses during the preceding year.” Id., at 307, n. 18. That is precisely what the union has done in this case. I see no reason to modify Hudson’s holding as here applied. I consequently dissent.I
In Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977) , the Court held that nonunion public employees have a First Amendment right to prevent a union’s spending a part of their compulsory fees on contributions to political candidates or on “express[ions of] political views unrelated to [the union’s] duties as exclusive bargaining representative.” Id., at 234. A decade later in Hudson, the Court considered the constitutionality of procedures adopted to implement Abood. In particular, the Court considered the procedures adopted by a teachers union “to draw that necessary line and to respond to nonmembers’ objections to the manner in which it was drawn.” 475 U. S., at 294.
The teachers union had calculated the fee it could charge nonmembers during a particular year on the basis of the expenditures the union actually made during the prior year. Those nonmembers who objected to the ap-portionment, believing their fee too high, could lodge an objection with the union, proceed through arbitration, and receive a rebate if they won. The Court found this procedure constitutionally inadequate. It thought that (1) a rebate “does not avoid the risk that dissenters’ funds may be used temporarily for an improper purpose,” (2) the union had not provided the nonmembers in advance with “sufficient information to gauge the propriety of the union’s fee,” and (3) the union did not provide objectors with “a reasonably prompt decision by an impartial decisionmaker.” Id., at 305–307.
The Court then held that the Constitution requires that a union collecting a fee from nonmembers provide “an adequate explanation of the basis for the fee, a reasonably prompt opportunity to challenge the amount of the fee before an impartial decisionmaker, and an escrow for the amounts reasonably in dispute while such challenges are pending.” Id., at 310.
The Court added that it “recognize[d] that there are practical reasons why ‘[a]bsolute precision’ in the calculation of the charge to nonmembers cannot be ‘expected or required.’ ” Id., at 307, n. 18 (quoting Railway Clerks v. Allen, 373 U. S. 113, 122 (1963) ). It said that the union retains the burden of proving that a given expense is chargeable to nonmembers, the “nonmember’s ‘burden’ ” be-ing simply that of making “his objection known.” 475 U. S., at 306, n. 16. And it added that the union “cannot be faulted for calculating its fee on the basis of its ex-penses during the preceding year.” Id., at 307, n. 18.
For the last 25 years unions and employers across the Nation have relied upon this Court’s statements in Hudson in developing administratively workable systems that (1) allow unions to pay the costs of fulfilling their representational obligations to both members and nonmembers alike, while (2) simultaneously protecting the nonmembers’ constitutional right not to support “ ‘ideological causes not germane to [the union’s] duties as collective-bargaining agent.’ ” Id., at 294 (quoting Ellis v. Railway Clerks, 466 U. S. 435, 447 (1984) ). See also Keller v. State Bar of Cal., 496 U. S. 1, 17 (1990) (explaining that Hudson “outlined a minimum set of procedures by which a union in an agency-shop relationship could meet its requirement under Abood”). The Court, in my view, should not depart, or create an exception, from Hudson’s framework here.II
Because the administrative details of the fee collection process are critical, I shall begin by explaining how I un-derstand that process to work. The union here followed a basic administrative system that ensures that the fee charged to objecting nonmembers matches their pro rata share of the union’s chargeable expenditures, but it achieves that match only over a period of several years. At the end of 2004, independent auditors determined the amount of chargeable (e.g., collective-bargaining related) expenditures and the amount of nonchargeable (e.g., non-germane political) expenditures that the union actually made during 2004. The union then used the resulting proportion (which was about 56% chargeable, 44% nonchargeable) as the basis for apportioning the next year’s dues. Thus in June 2005, the union sent all represented employees a Hudson notice setting forth that (roughly) 56 to 44 figure. App. 96–106. It provided time for nonmembers to object or to challenge the figure or underlying data. Id., at 98–104. And it then applied the resulting figure to determine the percentage of the total fee that objecting nonmembers would have to pay during the next fee-year, which ran from July 2005 to June 2006. Id., at 102. At the end of 2005, auditors again examined the union’s actual expenditures made during 2005. And the union then used those newly audited figures to determine the chargeable percentage for the fee-year 2006–2007. Id., at 158. Since political expenditures during calendar year 2005 turned out to be lower than in 2004, the new chargeable share amounted to about 69% of the total fee bill. Ibid.
Simplifying further to illustrate, I shall describe the system as (1) using audited accounts for Year One to determine the proportion of the fee that objectors must pay during Year Two, and (2) using audited accounts for Year Two to determine the proportion of the fee that ob-jectors must pay during Year Three. If Year One’s chargeable share (as applied to Year Two) turns out to be too high, Year Two’s audited accounts will reflect that fact, and the payable share for Year Three will be reduced accordingly.
This system does not put typical objectors to any dis-advantage. If, say, in Year One total expenses were $1 million, collective-bargaining expenses amounted to $600,000, and political expenses amounted to $400,000, then the union cannot charge objecting nonmembers more than 60% of normal dues in Year Two. If in Year Two collective-bargaining expenses turned out to be a lesser share of total expenses, say 30%, then the union cannot charge objecting nonmembers more than 30% of the total fee in Year Three. Normally, what the objecting nonmembers lose on the swings they will gain on the roundabouts.
This kind of basic administrative system is imperfect. The nature of a union’s expenditures, including nonchargeable political expenditures, varies from year to year, for political needs differ at different stages of political cycles. Thus, last year’s percentages will often fail to match this year’s expenditures patterns. And the possibility that an objecting nonmember’s funds will temporarily help the union pay for a nonchargeable political expenditure (say, in Year Two) is always present—though in this case that did not happen. See infra, at 6–7.
Nonetheless this kind of system enjoys an offsetting administrative virtue. It bases fees upon audited accounts, thereby avoiding the difficulties and disagreements that would surround an effort to determine the relevant proportions by trying to measure union expenditures as they occur or by trying to make predictions about the nature of future expenditures. It consequently gives workers reliable information. It gives workers advance notice of next year’s payable charge. It gives nonmembers a “reasonably prompt” opportunity to object. Hudson, 475 U. S., at 310. And, where the chargeable share of next year’s expenses (Year Two) turns out to be lower than last year’s (Year One), it provides offsetting compensation in the form of a lower payable share for the following year (Year Three).
In any event, these features are characteristic of an administrative system that “calculat[es]” shares of a union’s fee “on the basis of its expenses during the preceding year.” Id., at 307, n. 18. Hudson stated specifically that the “[u]nion cannot be faulted for calculating its fee” on that basis. Ibid. And no party here has challenged the constitutional validity of that basic administrative system. See Tr. of Oral Arg. 13.III
If the union’s basic administrative system does not violate the Constitution, then how could its special assessment have done so? In my view, it did not violate the Constitution, and I shall explain my basis for thinking so by considering separately (1) those nonmembers who objected initially to the 2005 Hudson notice, and (2) those nonmembers who did not initially object.A
The special assessment as administered here has worked no constitutional harm upon those nonunion employees who raised a general objection at the beginning of the year. The union has honored their objections by subtracting from their special payments the same 44% that it subtracts from each of their ordinary monthly payments. App. 309. And we know that the special assessment here did not even work temporary constitutional harm. That is because audited figures showed that the union’s total nonchargeable (e.g., political) expenses for that year ended up as a lower percentage of total expenses than the pre-vious year. Hence the objecting nonmembers ended up being charged too little, not too much, even with the special assessment thrown into the mix.
Let me put the point more specifically. The union’s June 2005 Hudson notice said that the union would charge objecting nonmembers roughly 56% of the dues paid by union members. See App. 102. That 56% figure represented the chargeable portion of expenditures according to the audited figures from 2004. Thus, if the fee charged to a union member pursuant to the 2005 notice was $400, the fee charged to an objecting nonmember was $224. The union similarly prorated the special assessment charging objecting nonmembers 56% of the assessment it imposed upon members. Thus, if the special assessment amounted to $50 for a member, it amounted to $28 for an objecting nonmember. And total dues in this example would have amounted to $450 for a member and $252 for a nonmember.
In the event, the union’s chargeable expenses for 2005—including the funds raised pursuant to the special assessment—amounted to more than 56% of its total expenditures. The auditor’s reports show that the union’s total expenditures in 2005 amounted to $40,045,409. Id., at 166. Chargeable expenses amounted to $27,552,746, which works out to 69% of the total budget. Ibid. Thus, a substantially larger portion of the union’s 2005 spending was chargeable (69%) than it had been in 2004 (56%). Objecting nonmembers therefore paid 56% of normal fees, even though the chargeable share that year was 69%. That is to say, they paid less than what the Constitution considers to be their fair share. See Abood, 431 U. S., at 236–237.
Even were the underlying facts different, I can find no constitutional basis for charging an objecting nonmember less than the 56% that the preceding year’s audit showed was appropriate. In general, any effort to send a new notice and then apply special percentages to a special midyear assessment fee runs into administrative difficulties that, as explained above, are avoided with a retrospective system. See supra, at 6. And, of course, requiring the use of some special proportion based on predicted expenditures would contradict Hudson’s determination that prior year, not present year, expenditures can form the basis for the determination of that proportion. See Hudson, supra, at 307, n. 18.
In the particular example before us these general problems are camouflaged by the fact that the union itself said that the assessment was to be used for political purposes. Hence it is tempting to say that 100% of the assessment is not chargeable. But future cases are most unlikely to be so clear; disputes will arise over union predictions (say, that only 20% of the special assessment will be used for political purposes); and the Court will then perhaps understand the wisdom of Hudson’s holding. In any event, we have made clear in other cases that money is fungible. Retail Clerks v. Schermerhorn, 373 U. S. 746, 753 (1963) . Whether a particular expenditure was funded by regular dues or the special assessment is “of bookkeeping significance only rather than a matter of real substance.” Ibid. And, the Court’s focus on the announced purposes of the special assessment, rather than yearly expenditures taken as a whole, is beside the point.
The Court’s response to these problems, particularly the administrative calculation problems, is apparently to de-part yet further from the Court’s earlier holdings. It seems to say that an objector can withhold 100%, not simply of a special assessment made for political purposes, but of any special assessment whatsoever, including an assessment made solely for the purpose of paying for extra chargeable costs, such as extended contract negotiations, pension plan experts, or newly assessed contributions to replenish a national union’s collective-bargaining assistance funds. See ante, at 21–22. Although this rule is comparatively simple to administer, it cannot be reconciled with the Court’s previous constitutional holdings. Abood, along with every related case the Court has ever decided, makes clear that the Constitution allows a union to assess nonmembers a pro rata share of fees insofar as they are used to pay for these kinds of collective-bargaining expenses. See 431 U. S., at 234–236; see also Lehnert v. Ferris Faculty Assn., 500 U. S. 507, 524 (1991) ; Machinists v. Street, 367 U. S. 740, 760 (1961) ; Ellis, 466 U. S., at 447; Davenport v. Washington Ed. Assn., 551 U. S. 177, 181 (2007) ; Locke v. Karass, 555 U. S. 207, 210 (2009) . How could the majority now hold to the contrary?
If there are good reasons for requiring departure from the basic Hudson-approved administrative system, they are not the reasons the Court provides. It suggests that the basic Hudson administrative system gives the union the freedom to misclassify, arguing, for example, that the union has adopted an overly broad definition of charge-ability. See ante, at 20–21. The 2005 proportion, however, rested upon audited 2004 accounts. While petitioners argue in this Court that the union misclassified parts of the special assessment (which was not imposed until 2005), no brief filed in this case (and certainly no court below) has challenged the accuracy of the 2004 figures or the resulting chargeable/nonchargeable allocation. Indeed, the 2004 accounts were audited before the special assessment at the center of this case was even imposed. Compare App. 108 (reflecting that the audit of the 2004 budget was completed by April 25, 2005) with id., at 25 (reflecting approval of the special assessment on July 30, 2005).
More specifically, the Court suggests that the Consti-tution prohibits the union’s classification of money spent “ ‘lobbying . . . the electorate’ ” as a chargeable expense. See ante, at 20. But California state law explicitly permits the union to classify some lobbying expenses as charge-able. See Cal. Govt. Code Ann. §3515.8 (West 2010) (a nonmember’s fair share includes “the costs of support of lobbying activities designed to foster policy goals and collective negotiations and contract administration”); see also Lillebo v. Davis, 222 Cal. App. 3d 1421, 1442, 272 Cal. Rptr. 638, 651 (1990) (construing §3515.8 narrowly, but explaining that “[w]e cannot fathom how a union’s lobbying the Legislature for improvement of the conditions of employment of the members of its bargaining unit . . . could not be considered to be part of its role as representative . . .”). No one has attacked the constitutionality of California’s law; no brief argues the question; and this Court does not normally find state laws unconstitutional without, at least, giving those who favor the law an opportunity to argue the matter.
The Court further complains that the basic administrative system requires an objecting nonmember to “come up with the resources to mount” a “legal challenge” to the union’s allocation “in a timely fashion.” Ante, at 19. That concern too is misplaced. The union has offered to pay for neutral arbitration of such disputes before the American Arbitration Association. App. 103–104. And, again, insofar as the Court casts doubt on the constitutional validity of the basic system, the Court does so without the benefit of argument.
Finally, the Court argues that (Step 1) Hudson is “predicated on the assumption that a union’s allocation of funds for chargeable and nonchargeable purposes is not likely to vary greatly from one year to the next,” ante, at 18; that (Step 2) this assumption does not apply to midyear assessments; hence (Step 3) what appears binding precedent (namely Hudson) does not bind the Court in its interpretation of the Constitution as applied to those assessments. Ibid.
I must jump this logical ship, however, at Step 1. I cannot find in Hudson the “assumption” of uniform expenditures that the Court says underlies it. The assumption does not appear there explicitly. And it is hard to believe any such assumption could implicitly lurk within a case involving a union’s political expenditures. Those expenditures inevitably vary from political season to season. They inevitably depend upon the number and kind of union-related matters currently visible on the political agenda. Cf., e.g., App. 102, 158, 223 (union’s chargeability proportion varies significantly over three years, from 56.35% in 2004, to 68.8% in 2005, to 60.3% in 2006). And it is hard to believe that the Members of this Court, when deciding Abood, were not fully aware of these obvious facts.B
A stronger case can be made for allowing nonmember employees who did not object at the beginning of the dues year to object (for the first time) to a special assessment. That is because, unlike the nonmember who objected initially, the union will not permit that initially nonobjecting nonmember to withhold anything from the special assessment fee. Nonetheless, there are powerful reasons not to allow the nonmember who did not object initially to the annual fee to object now for the first time to the midyear special assessment.
For one thing, insofar as a new objection permits the new objector to withhold only the portion of the fee that will pay for nonchargeable expenses (as the logic of the concurring Justices would suggest), the administrative problems that I earlier discussed apply. See supra, at 6. That is to say, unions, arbitrators, and courts will have to determine, on the basis of a prediction, how much of the special assessment the new objector can withhold. I concede that many administrative problems could be overcome were the new objector allowed to withhold only the same 44% of the fee that the union here permitted initial objectors to withhold (a figure based on 2004 audited accounts). But no Member of the Court takes that approach.
For another thing, as I have previously pointed out, the Court would permit nonmembers who did not object at the beginning of the year (like those who did then object) to object to (and to pay none of) every special assessment, including those made to raise money to pay additional collective-bargaining expenses. This approach may avoid the uncertainty and resulting disputes inherent in an ef-fort to limit withholding to the nonchargeable portion of the fee. But the price of avoiding those disputes is to reduce the financial contribution the union will receive even when a special assessment pays only for unexpected but perfectly legitimate collective-bargaining expenses. See supra, at 8–10.
Moreover, to provide a new opportunity to object requires providing for explanations, potential challenges, the development of separate accounts, and additional administrative procedures. That means providing extra time and extra money. By definition, however, special assessments are special; time may matter; and unlike the annual dues payment, the union is unlikely to be able to provide what is here a 6-month delay (between the close of the 2004 audited year and the beginning of the next mid-2005 dues year) that can be used to examine accounts and process objections. In a word, a new opportunity to object means time, effort, and funds set aside to deal with a new layer of administrative procedure.
I recognize that allowing objections only once a year is only one possible way to administer a fee-charging system. In principle, one might allow nonmembers to pose new objections to their dues payments biannually, or quarterly, or even once a month, as actual expenses do, or do not, correspond to initial union predictions. But for constitutional purposes the critical fact is that annual objection is at least one reasonably practical way to permit the principled objector to avoid paying for politics with which he disagrees. See Hudson, 475 U. S., at 307, n. 18. And that is so whether ordinary or special assessments are at stake.
Further, the nonmember who did not object initially is not likely to be a nonmember who strongly opposes the union’s politics. That many unions take political posi-tions and that they spend money seeking to advance those positions is not exactly a secret. All those whom this union represents know from history that it spends money each year for nonchargeable purposes. And any nonmember who has significant negative views about such matters is likely to have objected in advance. Those who did not object initially (but do so later) likely include many whose objection rests, not upon constitutionally protected political grounds, but simply upon a desire not to pay a higher fee. And those who withhold fees for that reason are not entitled to constitutional protection in doing so. Here, the nonobjector cannot even claim that an increase in the total fee (by the amount of the special assessment) took him by surprise, for in its initial Hudson notice the union said that “[d]ues are subject to change without further notice to fee payers.” App. 98.
Finally, if the union will not let a nonmember object to a special assessment, that nonmember has an easy remedy. He or she can simply object the first time around. After all, the possibility of a special assessment is known in advance; the possibility that some, or all of it, will help the union make political expenditures is known in advance; the fact that the union will spend a significant amount of ordinary dues upon political matters is known in advance. To obtain protection all a nonmember who believes he might object to some future political expenditure has to do is to object in advance. His or her fees will decline from the beginning. And, if the nonmember forgets to object, there is always next year—when the chargeable amount of the fee will be based on this year’s actual expenditures.
Given these considerations, I do not believe the First Amendment requires giving a second objection opportu-nity to those nonmembers who did not object the first time.IV
The Court also holds that, “when a public-sector union imposes a special assessment or dues increase,” it “may not exact any funds from nonmembers without their affirmative consent.” Ante, at 22. In other words, the Court mandates an “opt-in” system in respect to the payment of special assessments.
Justice Sotomayor’s concurring opinion explains why the Court is wrong to impose this requirement. See ante, at 2–6 (opinion concurring in judgment). It runs directly contrary to precedent. No party asked that we do so. The matter has not been fully argued in this Court or in the courts below. I agree with her about this matter.
The decision is particularly unfortunate given the fact that each reason the Court offers in support of its “opt-in” conclusion seems in logic to apply, not just to special assessments, but to ordinary yearly fee charges as well. At least, its opinion can be so read. And that fact virtually guarantees that the opinion will play a central role in an ongoing, intense political debate.
The debate is generally about whether, the extent to which, and the circumstances under which a union that represents nonmembers in collective bargaining can require those nonmembers to help pay for the union’s (constitutionally chargeable) collective-bargaining expenses. Twenty-three States have enacted “right to work” laws, which, in effect, prevent unions from requiring nonmembers to pay any of those costs. See Dept. of Labor, Wage and Hour Division, State Right-to-Work Laws (Jan. 2009), online at http://www.dol.gov/whd/state/righttowork.htm (as visited June 18, 2012, and available in Clerk of Court’s case file). Other States have rejected the “right to work” approach and permit unions to require contributions from nonmembers, while protecting those nonmembers’ right to opt out of supporting the union’s political activities. E.g., Cal. Govt. Code Ann. §§3502.5(a), 3515.8. Still others have enacted compromise laws that assume a nonmember does not wish to pay the nonchargeable portion of the fee unless he or she affirmatively indicates a desire to do so. See Wash. Rev. Code §42.17A.500 (2010) (providing that a union cannot use a nonmember’s agency fee for political purposes “unless affirmatively authorized by the individ-ual”). The debate about public unions’ collective-bargaining rights is currently intense.
The question of how a nonmember indicates a desire not to pay constitutes an important part of this debate. Must the union assume that the nonmember does not intend to pay unless he affirmatively indicates his desire to pay, by “opting in”? Or, may the union assume that the nonmember is willing to pay unless the nonmember indicates a desire not to pay, by “opting out”? Where, as here, nonchargeable political expenses are at issue, there may be a significant number of represented nonmembers who do not feel strongly enough about the union’s politics to indicate a choice either way. That being so, an “opt-in” requirement can reduce union revenues significantly, a matter of considerable importance to the union, while the additional protection it provides primarily helps only those who are politically near neutral. See generally Sunstein & Thaler, Libertarian Paternalism is not an Oxymoron, 70 U. Chi. L. Rev. 1159, 1161 (2003) (explaining that default rules play an important role when individuals do not have “well-defined preferences”). Consequently, the Court, which held recently that the Constitution permits a State to im-pose an opt-in requirement, see Davenport, 551 U. S., at 185, has never said that it mandates such a requirement. There is no good reason for the Court suddenly to enter the debate, much less now to decide that the Constitution resolves it.
Of course, principles of stare decisis are not absolute. But the Court cannot be right when it departs from those principles without benefit of argument in a matter of such importance.
For these reasons, with respect, I dissent.
SUPREME COURT OF THE UNITED STATES
DIANNE KNOX, et al., PETITIONERS v. SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1000
on writ of certiorari to the united states court of appeals for the ninth circuit
[June 21, 2012]
Justice Sotomayor, with whom Justice Ginsburg joins, concurring in the judgment.
When a public-sector union imposes a special assessment intended to fund solely political lobbying efforts, the First Amendment requires that the union provide nonmembers an opportunity to opt out of the contribution of funds. I therefore concur in the Court’s judgment.
I concur only in the judgment, however, because I cannot agree with the majority’s decision to address unnecessarily significant constitutional issues well outside the scope of the questions presented and briefing. By doing so, the majority breaks our own rules and, more importantly, disregards principles of judicial restraint that define the Court’s proper role in our system of separated powers.I
The Political Fight-Back Fund was to be used by Service Employees International Union, Local 1000 (SEIU), “specifically in the political arenas of California” to defeat perceived antiunion initiatives and to elect a sympathetic Governor and legislature. App. 25; see also id., at 31. As the majority explains, such political efforts are not “germane” to the union’s function as a bargaining representative, and accordingly are not chargeable to objecting nonmembers. See Lehnert v. Ferris Faculty Assn., 500 U. S. 507, 519 (1991) ; see also Locke v. Karass, 555 U. S. 207, 211 (2009) (“[N]onchargeable union activities [include] political, public relations, or lobbying activities”). While the union is free to pursue its ideological goals in the political arena, it may not subsidize its efforts with objecting nonmembers’ funds, lest the objector be used as “ ‘an instrument for fostering public adherence to an ideological point of view he finds unacceptable.’ ” Lehnert, 500 U. S., at 522 (plurality opinion) (quoting Wooley v. Maynard, 430 U. S. 705, 715 (1977) ).
Accordingly, when a union levies a special assessment or dues increase to fund political activities, the union may not collect funds from nonmembers who earlier had objected to the payment of nonchargeable expenses, and may not collect funds from other nonmembers without providing a new Hudson notice and opportunity to opt out. See Teachers v. Hudson, 475 U. S. 292 (1986) . Because SEIU failed to follow these procedures, it did not satisfy its constitutional obligations. That holding should end this case; it is all petitioners asked this Court to decide. 1II
The majority agrees that SEIU’s actions were at odds with the First Amendment. Yet it proceeds, quite unnecessarily, to reach significant constitutional issues not contained in the questions presented, briefed, or argued. Petitioners did not question the validity of our precedents, which consistently have recognized that an opt-out system of fee collection comports with the Constitution. See Davenport v. Washington Ed. Assn., 551 U. S. 177, 181, 185 (2007) ; Hudson, 475 U. S., at 306, n. 16; Abood v. Detroit Bd. of Ed., 431 U. S. 209, 238 (1977) ; see also ante, at 12–13. They did not argue that the Constitution requires an opt-in system of fee collection in the context of special assessments or dues increases or, indeed, in any context. Not surprisingly, respondents did not address such a prospect.
Under this Court’s Rule 14.1(a), “[o]nly the questions set out in the petition, or fairly included therein, will be considered by the Court.” “[W]e disregard [that rule] ‘only in the most exceptional cases,’ where reasons of urgency or economy suggest the need to address the unpresented question in the case under consideration.” Yee v. Escondido, 503 U. S. 519, 535 (1992) (quoting Stone v. Powell, 428 U. S. 465 , n. 15 (1976)). The majority does not claim any such exceptional circumstance here. Yet it reaches out to hold that “when a public-sector union imposes a special assessment or dues increase, the union must provide a fresh Hudson notice and may not exact any funds from nonmembers without their affirmative consent.” Ante, at 22 (emphasis added); see also ante, at 17 (“[T]he union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out”). The majority thus decides, for the very first time, that the First Amendment does require an opt-in system in some circumstances: the levying of a special assessment or dues increase. The majority announces its novel rule without any analysis of potential countervailing arguments and without any reflection on the reliance interests our old rules have engendered.
The majority’s choice to reach an issue not presented by the parties, briefed, or argued, disregards our rules. See Yee, 503 U. S., at 535. And it ignores a fundamental premise of our adversarial system: “ ‘that appellate courts do not sit as self-directed boards of legal inquiry and research, but essentially as arbiters of legal questions presented and argued by the parties before them.’ ” NASA v. Nelson, 562 U. S. ___, ___, n. 10 (2011) (opinion for the Court by Alito, J.) (slip op., at 11, n. 10) (quoting Carducci v. Regan, 714 F. 2d 171, 177 (CADC 1983) (opinion for the court by Scalia, J.)); see also Jefferson v. Upton, 560 U. S. ___, ___ (Scalia, J., joined by Thomas, J., dissenting) (slip op., at 8) (The majority’s “refusal to abide by standard rules of appellate practice is unfair to the . . . Circuit,” which did not pass on this question, “and especially to the respondent here, who suffers a loss in this Court without ever having an opportunity to address the merits of the . . . question the Court decides”). The imperative of judicial restraint is at its zenith here, with respect to an issue of such constitutional magnitude, for “[i]f there is one doctrine more deeply rooted than any other in the process of constitutional adjudication, it is that we ought not to pass on questions of constitutionality . . . unless such adjudication is unavoidable.” Clinton v. Jones, 520 U. S. 681, 690, n. 11 (1997) (internal quotation marks omitted). 2
To make matters worse, the majority’s answer to its unasked constitutional question is not even clear. After today, must a union undertaking a special assessment or dues increase obtain affirmative consent to collect “any funds” or solely to collect funds for nonchargeable expenses? May a nonmember opt not to contribute to a special assessment, even if the assessment is levied to fund uncontestably chargeable activities? Does the majority’s new rule allow for any distinction between nonmembers who had earlier objected to the payment of nonchargeable expenses and those who had not? What procedures govern this new world of fee collection?
Moreover, while the majority’s novel rule is, on its face, limited to special assessments and dues increases, the majority strongly hints that this line may not long endure. The majority pronounces the Court’s explicit holding in Machinists v. Street, 367 U. S. 740, 774 (1961) —that “dissent is not to be presumed[,] it must affirmatively be made known to the union by the dissenting employee”—nothing but an “offhand remark,” made by Justices who did not “pause to consider the broader constitutional implications of an affirmative opt-out requirement,” ante, at 12. The reader is told that our precedents’ “acceptance of the opt-out approach appears to have come about more as a historical accident than through the careful application of First Amendment principles.” Ibid. And that “[b]y authorizing a union to collect fees from nonmembers and permitting the use of an opt-out system for the collection of fees levied to cover nonchargeable expenses, our prior decisions approach, if they do not cross, the limit of what the First Amendment can tolerate.” Ante, at 14 (emphasis added); see also ante, at 21–22 (“[B]y allowing unions to collect any fees from nonmembers and by permitting unions to use opt-out rather than opt-in schemes when annual dues are billed, our cases have substantially impinged upon the First Amendment rights of nonmembers”); ante, at 11–12 (“Once it is recognized . . . that a nonmember cannot be forced to fund a union’s political or ideological activities, what is the justification for putting the burden on the nonmember to opt out of making such a payment? Shouldn’t the default rule comport with the probable preferences of most nonmembers?”).
To cast serious doubt on longstanding precedent is a step we historically take only with the greatest caution and reticence. To do so, as the majority does, on our own invitation and without adversarial presentation is both unfair and unwise. It deprives the parties and potential amici of the opportunity to brief and argue the question. It deprives us of the benefit of argument that the parties, with concrete interests in the question, are surely better positioned than we to set forth. See NASA, 562 U. S., at ___, n. 10 (opinion for the Court by Alito, J.) (slip op., at 11, n. 10) (“It is undesirable for us to decide a matter of this importance in a case in which we do not have the benefit of briefing by the parties and in which potential amici had little notice that the matter might be decided”). Not content with our task, prescribed by Article III, of answering constitutional questions, the majority today decides to ask them as well.
1 See Pet. for Cert. (i) (questions presented); Brief for Petitioners (i) (same); id., at 39 (“The Court should hold that . . . when a union imposes a forced-fee increase primarily or solely for political purposes between notices, it may not collect the increase from nonmembers who have already objected, and it must not collect the increase from other nonmembers until it has ascertained their wishes by providing them with a new notice about the increase’s purpose and an opportunity to opt out”); see also App. 18–19 (complaint).
2 The majority contends that its holding “does not venture beyondthe scope of the questions on which we granted review,” pointing to the second question presented. Ante, at 22, n. 9. The majority is mistaken. That question concerns the chargeability of political and lobbying activities under Lehnert v. Ferris Faculty Assn., 500 U. S. 507, 522 (1991) , not the procedures by which a union may collect fees. SeePet. for Cert. (i); id., at 20–27 (describing scope of second question presented); id., at 23 (“There is a serious split, and confusion, among the circuits on the chargeability of union political and lobbying activities”). Indeed, it is only petitioners’ first question presented that deals with fee-collection procedures. And in that question, petitioners ask this Court to hold that SEIU may not collect its special assessment without providing a Hudson notice that offers “an opportunity to object to” the deduction of fees for the assessment. Id., at (i) (emphasis added). The phrase “opt in” appears not once in petitioners’ briefing. The majority protests that it cannot but hold that an opt-in regime is required, seeing as the opt-out regime the petitioners advocate is, in the majority’s view, unconstitutional. But if the Court was dissatisfied with the scope of the questions presented here it should not have granted certiorari in this case. Or having granted it, the Court should have asked for supplemental briefing on the question whether an opt-in regime is constitutionally required. What it should not have done—cannot do under our rules—is decide that question without having provided the parties and potential amici an opportunity to weigh in with their own considered views.
ORAL ARGUMENT OF WILLIAM J. YOUNG ON BEHALF OF THE PETITIONERS
Chief Justice John G. Roberts: We'll hear argument first this morning in Case 10-1121, Knox v. the Service Employees International Union.
Mr. Young: Mr. Chief Justice, and may it please the Court:
Before addressing SEIU's motion to dismiss for mootness, it is important to remember the underlying facts of this case.
For 10 months in 2005 and 2006, more than 36,000 nonmembers, or nearly 40 percent of those employees represented by SEIU employed by the State of California, were compelled to contribute to the SEIU's $12 million Political Fight-Back Fund without being provided the opportunity to challenge the amount of the fee, and to object to its exaction required by the First Amendment.
Adding insult to that injury, the Ninth Circuit said that nonmembers could never say no to contributing to SEIU's political expenditures for ballot propositions, at least Proposition 76.
They have no right to refuse to bankroll that element of SEIU's political speech.
This defies this Court's decisions, distorting the political process on a massive scale.
Justice Elena Kagan: Mr. Young, could I ask you to speak to the mootness question first?
Mr. Young: I was just addressing that.
Justice Elena Kagan: As -- as I understand your brief, you're -- you're essentially saying that it's impossible to moot a claim for nominal damages.
Is -- is that a correct reading of your position?
Mr. Young: I'm not sure I would go that far, Justice Kagan.
I think in this case, the wishy-washiness, as it were, of the language used by SEIU when it distributed this pasted-on dollar to the class -- or dollars, more accurately -- was inadequate because it failed to represent the importance of the judgment that the nonmember class had won.
Justice Elena Kagan: So that's a different point, right, which is that the notice was inadequate--
Mr. Young: That would be correct.
Justice Elena Kagan: --And when you say "inadequate", I read you to be saying sort of not apologetic enough.
And -- in other words, not saying, look, you had a claim against us, we think you're right; it was a valid claim; here is your judgment in satisfaction of that claim; that it didn't forthrightly say that.
But do you think if it had forthrightly said that, we would be living in a different Article III universe?
Mr. Young: Not in this case, Justice Kagan.
Turning to the adequacy of the notice, of the financial disclosure, that did not comply with the district court's judgment, either.
If -- if the only question were the distribution of nominal damages, then perhaps we would be living in that different Article III universe.
But this case is about the judgment of the district court that the SEIU was attempting to comply with.
They failed to do so in virtually all of its elements.
Justice Elena Kagan: And how is that?
How did they fail to comply, other than the question of whether they were forthright enough about the fact that they were satisfying the claim?
Mr. Young: The -- the district court had ordered -- described the type of notice that it anticipated.
The district court specifically determined that SEIU's subsequent 2006 financial disclosure was inadequate to cure the problem that was caused by the seizure of fees starting in September 2005.
And that is on 73a of the petition appendix B.
The union in this case merely sent the same financial disclosure in the notice that it sent -- to try to moot the case, that it had sent in June of 2006.
Well, the district court had already said this is inadequate.
That seems to me to end the inquiry.
Obviously, the district court did not contemplate that the notice that was sent in June 2006 satisfied the obligations of its judgment; else it hardly could have ordered a useless act in ordering a new type of notice go out.
Chief Justice John G. Roberts: And the reason that's important in terms of the content of the notice, the inadequacy, is what?
Mr. Young: The reason that is important, Justice -- Mr. Chief Justice, excuse me -- is that the SEIU is asserting that the case has become moot because it has now complied with the district court's judgment.
Chief Justice John G. Roberts: I thought -- I thought your argument was that the -- a different type of notice would have resulted in more members electing to opt out, to demand the refund of their assessments?
Mr. Young: And that's certainly one of the possible consequences.
Obviously, I -- we would -- that is speculative to some extent.
But since the purpose of the notice is to provide the information necessary to -- to object, one of the purposes, then we certainly anticipate that there would be more objectors were there to be an -- an adequate notice that complies with the district court's judgment.
Justice Samuel Alito: If the special assessment requires a different kind of notice, and possibly a different kind of opt-in or opt-out regime, would the case be moot?
Mr. Young: If the notice -- I'm sorry, I didn't understand.
Justice Samuel Alito: Well, we're not dealing here with the kind of notice -- with the typical Hudson notice given at the beginning of the year, when the annual dues are collected.
We're dealing with a special assessment.
Now, if a different kind of notice is constitutionally required in that context, would this case be moot?
Mr. Young: No, it would not.
Obviously, we have -- we have -- still have the nominal damages question, and the adequacy of the payment--
Justice Samuel Alito: My question is whether the -- the different requirements, which presumably were not met here in the context of the special assessment, if there are different requirements in that context, would that be enough to preserve this case as a live controversy?
Mr. Young: --So long as the union failed to provide them, and at least in this case, the district court's judgment, we believe, provides an adequate respect for Hudson's underlying requirement, Justice Alito.
Justice Ruth Bader Ginsburg: Mr. -- Mr. Young--
Mr. Young: Yes, Justice--
Justice Ruth Bader Ginsburg: --as I understand, the union recognizes that a consequence of mootness would be that the Ninth Circuit judgment is vacated.
Now, if the union would also recognized that that means the district court judgment stays in place, so if the Ninth Circuit judgment is worked out and you're left with the district court judgment as the law of the case, then I think it is moot, isn't it?
Mr. Young: --No, Justice Ginsburg, and this is why: The union would remain free to return to its old ways -- the very type of reason that this Court declined to find mootness in W.T. Grant.
The union has made much -- much of a showing -- or much of a show, more accurately, of the fact that it has changed its internal policy.
It won't do this for 180 days.
But that can hardly be sufficient for this Court to find mootness in this case.
The union made this wonderful and -- and meaningful policy change on 6 days' notice.
Justice Ruth Bader Ginsburg: But it wasn't -- this case is about a completed episode.
It's about the special assessment that is wrong or right.
Mr. Young: That is true, Justice Ginsburg.
But it is also about the declaratory relief that was ordered by -- that was entered by the district court.
It is about the -- which was virtually injunctive relief in this case.
It is also about the effect of that judgment for future activities, and how that will affect the way SEIU operates.
Justice Ruth Bader Ginsburg: Does it have--
Justice Anthony Kennedy: Well, are you saying that it's capable of repetition, yet aiding review?
I'm not quite sure.
Mr. Young: It would certainly be so in this case, Justice Kennedy.
The union set a very short time -- well, a relatively short time period, given the length of time a case comes up from the courts as a rule in this Court.
Justice Anthony Kennedy: Does the injunction have future -- future terms?
Is it a permanent injunction or is it just an injunction that relates to the notice that is required in this case?
Mr. Young: Just -- just to be clear, there is -- I'm talking about something that's tantamount to an injunction, Justice Kennedy.
It wasn't actually phrased as an injunction.
It was an affirmative, ordering an affirmative act.
Justice Elena Kagan: But isn't that important, Mr. Young, because usually where we've talked about capable repetition, or where we've talked about the same thing could happen again, it's where an injunction has been before us rather than a suit for damages as to a past act.
Mr. Young: Yes, Justice Kagan, I think that has been generally the case.
I -- in my research, I could find very few cases where it wasn't clear to me that this Court was addressing injunctive relief.
Hudson itself it seems to me did not specifically discuss the entry of injunctive relief in the lower court, and Hudson itself addressed a mootness issue.
If we -- if we talk about these cases in their -- in their strictest sense, the union's notices are all annual, so by the theory that it becomes moot when those notices expire, or potentially moot when those notices expire, this Court would never address these issues, because it would -- I can't imagine one of these cases ever getting up to this Court in as little as a year.
But, the -- this Court in Hudson, in I believe it was footnote 12, said that:
"This Court reviews the policy, the procedure, the acts as they were defended in the district court. "
And the union's policy and procedure and acts here were defended in the district court.
And therefore, cases like this should not become moot, because it is capable of repetition and would be evading review simply by the mere limits of how long these policies and procedures are in effect.
Justice Anthony Kennedy: Do you make that argument in your opposition?
Mr. Young: It -- it seems to me, Justice Kennedy, it is implicit in our argument, although clearly our main point in that argument is that this is a -- a paradigm case of voluntary cessation of allegedly unlawful activity.
Until cert was granted in this case, until the Petitioner's merits brief was filed, SEIU was vigorously defending its practice.
It remained free to impose that practice.
Justice Ruth Bader Ginsburg: --But that's another -- something quite different than the capable of returning to old ways, because here we do have a discrete episode that's over.
And there was no question that, even though -- what was this, in 2005 -- that the period in 2005-2006, when the special assessment was in effect, that was long over, but you were continuing to litigate it.
And nobody suggested that it would become moot simply because the period was over.
Mr. Young: That's -- that's true, Justice Ginsburg.
This argument -- this argument was not raised until we were before this Court, the union's argument that the case had somehow become moot, and until it issued a notice--
Justice Ruth Bader Ginsburg: Well, they said that it had become moot because they gave you all the relief you requested, so there was nothing left to the case.
Mr. Young: --Well, "all the relief", Justice Ginsburg, implies that they had complied with the district court's judgment.
As to the notice, we -- we believe that they have not, and -- and we believe that's clear because of the very fact that the district court rejected the 2006 financial disclosure as adequate.
Chief Justice John G. Roberts: Maybe it's a good point for you to move to the merits.
Mr. Young: --Yes, thank you, Mr. Chief Justice.
Justice Sonia Sotomayor: Could I ask you a question about the merits?
Mr. Young: Yes, certainly, Justice Sotomayor.
Justice Sonia Sotomayor: Are you attacking the normal system of basing assessments moving forward, based on past accounting and chargeability and non-chargeability?
Or are you just attacking the special assessment?
Mr. Young: I -- I appreciate the question, Justice Sotomayor.
No, we are not attacking the normal Hudson procedures.
Justice Sonia Sotomayor: All right.
So articulate for me -- what's -- borrowing a phrase from one of my colleagues yesterday, how do we write this opinion?
When is a second Hudson notice required?
Let's presume for the sake of argument that the union had cost overruns.
Labor salaries went up; printing costs went up, not for lobbying; but generally there was a 10 percent increase in their expenses across the board because various contracts that they were involved in required it.
Would you require a second notice in that circumstance?
Mr. Young: --Yes, Justice Sotomayor.
We would -- we believe -- pardon me -- that a new Hudson notice is required whenever there is a material alteration in the obligations that are imposed upon nonmembers.
The values that--
Justice Sonia Sotomayor: Articulate that again?
A material change--
Mr. Young: --A material increase -- or increase in general terms, in the obligation imposed upon the nonmembers.
In this case I don't think anybody would dispute the 25 percent--
Justice Antonin Scalia: A material new assessment?
Mr. Young: --A material new assessment, yes, Justice Scalia.
Justice Antonin Scalia: Okay.
So we are talking about money here, right?
Mr. Young: Yes, we are.
Justice Antonin Scalia: Okay.
Chief Justice John G. Roberts: But without regard to the reason for the assessment?
Mr. Young: --I think as a matter of principle I would have to say yes, Mr. Chief Justice.
Chief Justice John G. Roberts: Well, I'm not sure that -- that -- this may just simply be repeating Justice Sotomayor's question, but if they say we have to raise the assessment 10 percent because, as she said, you know, we estimated the printing costs for the union newsletter, whatever, was going to be this and it turns out they raised it, it's going to be that, so we know we are going to have to get additional money for things that are indisputably chargeable, why do you need special procedures in that case?
Mr. Young: --Well, it wouldn't be so much a special procedure as a new opportunity to object and challenge the amount of the fee, Mr. Chief Justice.
Certainly one of the elements -- and we recognize, of course, that the primary reason individuals object is political expenditures -- but this Court said very clearly in Abood that people can object for any reason, for no reason, for a good reason, for a bad reason; nobody can inquire as to, why someone objects.
And certainly when a material -- there has been a material increase in the obligation imposed upon nonmembers, they may choose to make an economic decision that heretofore they chose not to make.
They may choose to minimize, particularly the non-objectors, they may choose that they want to minimize the financial obligations they are paying to the union at that time.
Justice Stephen G. Breyer: It's -- it's peculiar, because in the circumstance where the extra assessment is all going to go to chargeable activities, in fact that means economically speaking the following year the objector will be better off, not worse off, because there is a higher percentage of the total fee that's being paid to chargeable activities.
So this special assessment that Justice Sotomayor and the Chief Justice were talking about is one that will benefit the objector, if he keeps quiet and says nothing.
So it's a little hard to imagine the frame of mind that would say, I need the notice because now I might object whereas I wouldn't have before.
Mr. Young: Justice Breyer, the reason for the notice is these people may not trust the union.
They -- they may choose to challenge the amount of the fee.
Justice Stephen G. Breyer: I see that point.
Can I ask you -- oh, are you -- you want to pursue that further, or are we--
Chief Justice John G. Roberts: Go ahead.
Justice Stephen G. Breyer: --All right.
Let me give you this example.
Mr. Young: Sure.
Justice Stephen G. Breyer: And now I -- but I think I see what your answer is.
Imagine it's year 2.
In year 1 expenditures broke down so that it was 70 percent chargeable, 30 percent not chargeable.
Mr. Young: Yes, sir.
Justice Stephen G. Breyer: And normally under Hudson that means in year 2 the deal is, the objectors pay 70 percent, right?
Mr. Young: Yes.
Justice Stephen G. Breyer: In the middle of year 2, surprisingly, something comes up.
Something comes up, a surprise to the union, and they want to have a special assessment.
And you're saying they just can't without going through this procedure all over again?
Mr. Young: That would be correct, Justice Breyer.
And now talking about--
Justice Sonia Sotomayor: --Can they take the money that they collected?
Mr. Young: --I'm sorry?
Justice Sonia Sotomayor: Can they take the money that they collected under the first notice and, instead of doing a special assessment, in the middle of it this campaign gets announced by the governor, and can they then divert the chargeable amount that they have predicted and spend it on the non-chargeable amount?
Or are you -- or does that require a second Hudson notice, without a special assessment?
Mr. Young: I understand, Justice Sotomayor.
And no, under that case I don't believe it would.
Justice Stephen G. Breyer: All right, so this is a peculiar rule that you have asked us to adopt.
The rule is that where there is a special assessment and it will make all the objectors better off, they have to have a special notice that they can object.
But where the rule is that we are going to take money we already collected from them and spend it for a totally political purpose, we don't give them a special notice and they don't have to object.
Now, that seems totally backwards, but I understand why you get there, and my suspicion is, which you can confirm, is that's the only administrable system you can think of.
Justice Antonin Scalia: Do you concede that it is going to make them better off?
I would -- I would assume that that's your principal objection.
They don't know whether this new assessment is indeed going to be divided the way the original one was or not.
They might want to challenge--
Mr. Young: That's--
Justice Antonin Scalia: --whether -- whether it's all going to be used for -- for assessable activities or not.
And they have no -- you are telling me they--
Justice Stephen G. Breyer: Right.
But in my--
Justice Antonin Scalia: --At the very least, they have to make a -- an interest-free loan to the -- to the union until such time as they can challenge it.
Mr. Young: --Well, that's exactly correct, Justice Scalia.
Justice Stephen G. Breyer: --Yes, but the hypothetical, if I could continue with it, is -- is perhaps unrealistic, but they have 20 bishops and the 14 most honest people in the United States, and they have all absolutely guaranteed and everybody agrees that this goes to chargeable activity.
And where I was going with my question, which you see where I was -- you are with me on this, right?
Mr. Young: Yes.
Justice Stephen G. Breyer: And combine the two.
What I'm trying to point out and get your response is that you have been forced into this position to create a workable system.
Now, why is that workable system one whit better than the workable system we already have, which is all this washes out in a fair manner the following year, that there is an inevitable year's lag, it doesn't work perfectly, but it's as good as any other, and all we have to say is it's better than yours?
Now, why is yours better than that?
Mr. Young: Well, I recall the bishops from the last time I was here, Justice Breyer.
I think they made an appearance then.
Justice Stephen G. Breyer: They are useful to me.
Mr. Young: They are, I'm sure.
Justice Antonin Scalia: I assume we wouldn't need a Hudson notice at all, if -- if bishops affirmed all of these things, right?
Mr. Young: You anticipate my next point, Justice Scalia.
These -- these aren't bishops and, with due respect to our litigation opponents in this case, these are people that nonmembers don't trust.
These are people with whom nonmembers do not wish to affiliate.
And these are people that the nonmembers do not wish to support, and--
Justice Sonia Sotomayor: The problem is in this system, going back to Justice Breyer's practicality, they will get a chance to object; it just won't be at the moment of the special assessment; it will be the following year.
So when the union gives its new notice, it's going to set forth its chargeable and non-chargeable amounts as audited, and it will say, as it did -- as it's done in the briefs before us: On Proposition 76 we are going to take 50 percent as chargeable.
And the union members can come in and give a Lehnert objection, those who want to.
Those who don't know it's happened and they agree to it.
Isn't that correct?
They do get a chance to object; the question is the timing.
Mr. Young: --Then the problem is, Justice Sotomayor, understanding the practice--
Justice Sonia Sotomayor: Is there an answer to that?
They will get a chance to object then?
Mr. Young: --They will get a chance to object after they have already paid the interest-free loan.
Justice Sonia Sotomayor: But that's true of the first example I gave you.
If something happens in the middle of the year and the union needs to divert already-assessed funds to challenge a election, they can do it and you said that's okay.
Mr. Young: And the nonmembers would have the chance to challenge that, but it would be within the normal system of ordinary union dues.
We, and I believe this Court in Hudson, presume that any reasonably competent union management would -- would have relatively stable expenditures over the years.
Justice Antonin Scalia: Isn't -- isn't the premise of Hudson that you give the notice before, before you -- you receive the notice before you have to cough up the money?
Mr. Young: Yes.
Justice Antonin Scalia: And what's now proposed is, well, for -- if there is an additional assessment, you cough up the money first and then later you straighten it out.
Do you get -- do you get the interest?
Mr. Young: That seems to me to be the problem, Justice Scalia.
The people who got the June 2005 notice were left in the dark -- indeed, the union may have been in the dark -- as to this special assessment.
But once the union agreed to, decided to impose the special assessment, the union was required by Hudson's principles to shed some light.
Perhaps it is less predictive, less accurate, to say: We intend to spend the money this way.
But when you have an assessment which is purely intended for politics, and that's what the union said, to create a Political Fight-Back Fund, that's not--
Justice Stephen G. Breyer: Does your Hudson notice tell you about what is going to happen next year?
I thought your Hudson notice told you this was the breakdown for last year and as far as we can tell that's what it will be next year, but things should change.
What does the Hudson notice tell you?
Mr. Young: --The Hudson notice provides you with an opportunity to object and some assurance, because of the audit requirement--
Justice Stephen G. Breyer: But am I right in my description of it?
Mr. Young: --I think that would be a fair description, Justice Breyer.
Chief Justice John G. Roberts: Do they carry over from 1 year to the next, or do you have to refile your objection to the union expenditures every year?
Mr. Young: Most unions, Mr. Chief Justice, require an annual objection.
Now, of course there would be nothing -- we find nothing wrong with an annual challenge requirement if you choose to challenge that year's figures, because obviously it's a specific event.
But most unions seem to require annual objection, so you have to say again and again: I don't want to pay for your politics.
But that's not raised in the--
Justice Sonia Sotomayor: But going back to the -- forget about special assessments.
I think in one of the briefs, I know in one of the briefs, someone says: Elections happen every 4 years, so in the normal cycle of union activities in an election year they are going to divert more of whatever accessible moneys they have to their lobbying efforts and the following year they will go back to normal for 3 years.
You're not challenging that normal variation in the -- in the distribution of the moneys, correct?
Mr. Young: --Correct, Justice Sotomayor.
And that, too, may vary from union to union, from State to State even.
As some of the Justices I'm sure know, Virginia--
Justice Sonia Sotomayor: So I guess my problem is I don't see how that, given your argument, is any less alone than this special assessment where the labor -- where the objecting members at the end of the year will get notice of what has happened that year, will have an opportunity to place their Lehnert challenges and get them ruled upon, and will, as Justice Breyer said, have a benefit because they are going to either pay more if the Lehnert -- pay less if the Lehnert challenges are upheld or pay more if -- if they're not.
But I'm not quite sure how this is a different loan.
Mr. Young: --Well, we disagree with the union's characterization of its supposed benefit.
But, Justice Sotomayor, I see my time has expired and I would like to reserve a balance for rebuttal.
I will try address your question more thoroughly when I stand up again.
Chief Justice John G. Roberts: Thank you, counsel.
ORAL ARGUMENT OF JEREMIAH COLLINS
Jeremiah Collins: Mr. Chief Justice and may it please the Court:
Justice Ginsburg is absolutely correct that what we have suggested to the Court is that the court of appeals decision be vacated, with the consequence of reinstating the district court judgment.
Chief Justice John G. Roberts: Why did you give up once the case was granted here?
You didn't consider that until the case came before this Court.
Jeremiah Collins: That's correct, Your Honor, and the reason for that is when the events in this matter were new and the then union officers' actions were being challenged, the instinct was: We are going to defend the case.
And as time went on there was no rethinking of that situation.
When the case was granted here over our opposition, noting that we didn't think the questions presented were really presented, the officers of the union, who were not the ones involved in the original case, thought about the situation and came to the realization that they have no stake in the procedures that are at issue here.
This is a local that had never done a mid-year increase in the past.
What was contemplated as a temporary increase here turned into a permanent increase.
The dues went up to 1.5 percent of salary a year after this increase ended.
Justice Samuel Alito: What is this local, and what will the other locals do in the future when special assessments are made?
Will they provide notice or will they go back to the old system?
Jeremiah Collins: This local -- and I won't belabor the term "special assessment" at the moment, but when we get to the merits I think there is a misunderstanding around that, Justice Alito.
But this local has put in a procedure which frankly would satisfy the Petitioner s' concerns for the future if future conduct was legitimately at issue here.
But it is not, for two reasons.
First, when we state that the district court judgment would be reinstated, that's a judgment that was not appealed by the Petitioners.
That defines the limits of what they can attain from this case, whatever this Court may decide, and that decision gives whatever protection it gives against future conduct.
Now, it gives essentially none for a very good reason.
This was a case that has been noted, brought only about a one-time event.
There were no allegations of an ongoing practice, there was no request for declaratory or injunctive relief.
Justice Elena Kagan: Mr. Collins, as I understand Mr. Young's argument, there is a serious dispute about the adequacy of this notice, and it might be a dispute about whether it was clear enough, about that it was satisfying claims, or it might be a dispute about whether it allowed refunds easily enough, but that Mr. Young is contesting whether the notice complied with the district court's order.
Now, as long as that's true, don't we have a live case before us?
Somebody has to answer that question about whether your notice complied with the order, and if it's the case that a court has to answer that question, doesn't that depend on the questions presented here, the substantive questions?
Jeremiah Collins: No, it doesn't, Justice Kagan.
The Court's explained in a number of cases, beginning I think with Walling v. Ruder, and also obviously Munsingwear, and U.S. Bank Corp., a case can be in a posture where this Court in disposing of it needs to grant certain relief, clarification of the status of prior orders, and yet the case is moot on the merits such that the Court cannot appropriately reach the merits.
That's what we have here.
If there is a dispute -- and I will explain in a moment why there really isn't.
But if there is a dispute, for example, as to whether an individual failed to get their refund because the notice was inadequate, that dispute is not affected by and requires no decision of this court.
If the district court judgment is reinstated then the question of whether we have fully provided all relief called for by that judgment, which we believe we have, would be before the district court's decision.
Chief Justice John G. Roberts: But this is not -- this is not an incidental matter.
The whole point of your friend's argument with the Hudson notice is they want people to understand what's happening with their union money.
And they say this notice didn't let people know that.
And if the case is not moot and if they prevail, they will have a right to be heard on what the notice should say.
And that will make a difference in how many people opt out or how many people don't.
And I guess I'm following up on Justice Kagan's question.
That's a very important part of this case, what the notice is going to say, and if we accept your view that it's moot, that issue goes by the wayside.
Jeremiah Collins: I think that's incorrect, Mr. Chief Justice, for two reasons.
First of all, the district court required a certain kind of notice to be given.
We are stating the district court judgment should be reinstated.
If the notice we have given does not comport with what the district court judgment which was not appealed by the Petitioners requires, it will be provided by the district court.
We are -- we are not contesting -- the Petitioners are looking a gift horse in the mouth.
Chief Justice John G. Roberts: I'm sorry, I don't see how that -- I don't see how that works.
The notice is only required by the district court if the case is not moot.
If the case is moot by the notice you sent out, the district court doesn't have a case on the basis of which to order a different notice.
Jeremiah Collins: No, I don't think that's correct, Your Honor.
A case can be moot in this Court and this is what I believe Munsingwear, Walling v. Reuter and the other cases, U.S. Bancorp more recently, explained.
At first it seems paradoxical, but it is not paradoxical.
A case -- there can be remaining issues potentially in the district court, such as whether the check that the plaintiff paid bounced or not, that could potentially have to be resolved by a district court.
And it -- but it means, at least in terms of prudential mootness, there is not a substantive merits issue remaining for the court to be deciding.
And it's really quite simple.
The Petitioners, as I say.
Are looking a gift horse in the mouth.
The apex, the acme that they can achieve in this case, is what they got from the district court and it was reversed.
We are saying: Give it back to them.
Take back the reversal, reinstate the judgment.
Whatever they won they will have.
We believe we have already given them everything they want.
If we have not, the district court will do that.
But let me explain the second point, if I may, Mr. Chief Justice, which is that there is no legitimate issue here about whether the notice was adequate.
Mr. Young stated quite incorrectly that the notice we have provided is the same as the notice the district court struck down.
That's absolutely incorrect.
The district court said that the 2005 notice issued before the dues increased obviously did not give specific notice of the dues increase, although it stated that dues could be increased.
The district court specifically held at petitioner appendix 73a that the 2006 notice which described the so-called fund and the dues increase and the purposes of it was completely adequate.
And the notice the district court -- one also has to realize, the district court was requiring the union to refund only the non-chargeable portion of activities attributed to this increase.
A certain kind of notice would be needed for that to justify how the union was computing what it was saying with the chargeable portion to refund.
But what the union has done here is provide greater relief than the district court ordered.
We have refunded every penny that anyone who requests had paid during the increase.
So there is no serious question that the notice that the union sent out, which explained what the increase had been spent on, sufficiently informed individuals as to whether they now want to get back every penny, as we have offered them, of what they paid under the increase.
Chief Justice John G. Roberts: I want you to move to the merits.
It may be a good time to do that.
Jeremiah Collins: All right.
Turning to the merits--
Justice Sonia Sotomayor: Can I clarify a point?
I thought I heard and maybe I just didn't look at the union regulations, the new ones.
Is it limited to 180 days?
I thought I heard your adversary say that the--
Jeremiah Collins: --No, it has a provision that it can't be repealed without a 180-day notice.
There can't, can't be a sudden repeal of the new procedure.
Justice Sonia Sotomayor: --I see.
Jeremiah Collins: But I do want to make clear, we think nothing -- our position on mootness is not dependent on the Court determining that the new procedure will be in effect forever.
Justice Sonia Sotomayor: Could you tell me what the burden is on the union to give a second Hudson notice whenever there is a special assessment?
Meaning do you happen to know how frequently unions impose special assessments and what the incremental cost is to the union of giving such notice?
Jeremiah Collins: --That requires a fairly extensive answer, I believe, Justice Sotomayor, partly because--
Justice Sonia Sotomayor: Try to summarize it.
I wasn't looking to monopolize you.
Jeremiah Collins: --I believe -- I believe the word "special assessment" is being used here with a meaning that doesn't correspond to what this union did.
I can say this much: There has never -- there's been only one other case in any Federal court that I am aware of, and only in a district court, there's been no other appellate court, dealing with any kind of assessment, temporary dues increase and how it affects Hudson rights.
So this is a non-event in the real world.
There are no challenges that have been made previously to any kinds of assessments or increases.
But unions use assessments in two -- in many different ways.
And let me contrast one way with what happened here, and I think it will show why there is no serious question here about a need for a notice.
Some unions have a dues structure which covers only certain kinds of activities.
And they contemplate a new kind of activity that they would not normally pay for out of dues or fees.
They say often with a vote, which was not required here.
There was no vote required or taken here of bargaining unit members for what occurred in this instance.
But you may have a union that says: We want to make the kind of expenditure that's really unanticipated.
It's not what we normally do with our dues.
We are going to put it to a vote.
If you approve it, we will collect it, we'll probably put it in a segregated fund separate from our treasury.
That kind of an assessment can raise potential issues, I would acknowledge, under Hudson.
It's worlds away from what we have here because all that happened in this case was that the union increased from 1 percent to 1.25 percent of salary, the regular membership dues, and the fees based on those dues that were deducted by employers and paid into the union's general treasury--
Justice Samuel Alito: Is it incorrect that this was for what was termed a "Political Fight-Back Fund"?
Jeremiah Collins: --It was -- some union communications described it as having that sole -- that purpose.
The October 27th letter, which was the most detailed explanation, said it had two purposes, basically to fight back at the bargaining table and to fight back politically.
But what's essential, Justice Alito, it was never suggested nor was it ever the case that this money would be in any way segregated or treated as a separate entity so to speak.
So we have the Schermerhorn problem here.
Basically, Petitioners' position is based on the fallacy exposed in Schermerhorn of trying to take part of a unified general treasury and treat it as if it were a distinct entity, because--
Justice Samuel Alito: Well, let me give you this example and maybe you will say that this is different from your case and the rules should be different in these two cases.
The annual dues for a particular -- for members of this union are 1 percent of their salaries and let's say that amounts to -- or it's a certain percentage of their salaries, and let's say that amounts to $500 annual dues.
And let's say that in the prior year 90 percent of the money collected by the union was used for chargeable purposes, 10 percent for non-chargeable purposes.
So someone who objected, a nonmember who objected, would be able to get back $50.
Now, during the course of the year the union levies a special assessment or whatever you want to call it, and for this 90 -- the percentages are exactly reversed.
90 percent is for non-chargeable, 10 percent is for chargeable.
So now a member who potentially wants to object has $450 at stake.
Now, in that situation, why shouldn't there be separate notice?
Aren't the economic incentives quite different?
Jeremiah Collins: --If I understand the hypothetical, there could be a problem there if the assumption is then that the union really is beginning a kind of spending that's really foreign to the way it's spent money in the past.
What needs to be explained here, though, Justice Alito, is I don't think one would guess from anything that has been said today that we are talking about a period of time when the union's chargeable spending increased and its non-chargeable spending decreased.
We are talking about a period of time when objecting nonmembers did not even pay their pro rata share of the concededly chargeable expenditures, meaning they did not pay one penny for any political activities.
Justice Samuel Alito: Well, as I said, my hypothetical may be very different from what happened here, and maybe it's an unrealistic hypothetical and you can answer that.
But if it were to occur, should there not be Hudson notice?
Jeremiah Collins: Well, the problem -- it would be a closer question, but I think not, because again it would be caught up in the subsequent year.
Justice Samuel Alito: But what if the money is going to be used for an election campaign?
What if it is going to be used to weigh in, in favor of one gubernatorial candidate against another, in favor of one slate of legislative candidates against another.
And on those issues, the nonmembers may have very strong partisan and ideological objections.
So why should they not be given a notice at that time--
Jeremiah Collins: It would depend--
Justice Samuel Alito: --and given the opportunity not to give what would be at a minimum an interest-free loan for the purposes of influencing an election campaign?
Jeremiah Collins: --It would depend, Justice Alito.
I think in your hypothetical, one might be able to say -- there might be more facts needed, but one might be able to say that what is occurring is something that could not be anticipated reasonably by the person who got the notice.
In this case, however -- and this is crucial to this case -- the notice in 2005 told every nonmember that, of our $38 million budget, we spent 43.6 percent of it last year on non-chargeable activities.
And if you do not object, we will spend whatever amount out of our roughly $40 million budget in the coming year on various activities as we perceive the need, including specifically ballot initiatives, which were specifically mentioned in the notice as one of the things the union spent its money on.
Chief Justice John G. Roberts: I thought your point, though, was this was a very special ballot initiative.
That's what the literature suggests, that this was not sort of the normal run in the courts every two years, every election cycle we spend something.
That's why it's a special assessment.
Jeremiah Collins: --Well, I don't -- I wouldn't call it a special assessment if one uses that term as it is usually used, to mean a very short-term assessment apart from general union functions for a new kind of function.
Chief Justice John G. Roberts: That's not short-term; it's just until November 7th or whatever.
Jeremiah Collins: But it's nothing new under the sun, Mr. Chief Justice.
And we can see that, for example, the record reflects the audit for 2005 shows us that in addition to the money that was attributed to the dues increase and spent in opposing these ballot propositions, additional money, approximately $2 million, was spent on those same purposes from the pre-increase dues.
So ballot -- opposing ballot initiatives is nothing new for this scenario -- 17--
Justice Stephen G. Breyer: Can you think for a second to go back to Justice Sotomayor.
Now, I would like you to see, I think, why she asked the question.
As I understand it, the way it works now is at the beginning of, say, September.
September of year 2 we look back to year 1, and we see what the percentages were.
And now we in the union calculate a budget for year 2.
And we go and get approval or opt-outs on that basis.
Now what I thought coming in here is that the problem was going to be, if you have to have a new notice in the middle of the year for special political assessments, you are going to discover that half the time you don't know if they are special political assessments.
It's an impossible line to draw.
It's really tough.
You are making the argument that however you draw the line, we are on the right side of it, not the wrong side.
Isn't that what basically what you are saying, it's not a special assessment, it wasn't really accepted.
Now, but there is a new argument that's come along that I hadn't focused on.
If we can avoid the administrative problem by saying all special assessments require a new notice, whether they are for political purposes or not.
Hence the question that I was trying to get -- I was very interested in your answer.
If we had that rule which avoids the problem of saying which is which, how does that affect the union?
Not necessarily yours but unions in general.
How often is it that you draw up your budget for year 2 in September, put it into effect, and during the year you discover you need more money from people for any reason, and, therefore, you change what you thought they were going to contribute.
How often, if you can give us an estimate, and you are in a better position than I.
Does it happen a lot, rarely, a little?
What do you want to say?
Jeremiah Collins: --I -- I--
Justice Sonia Sotomayor: And a footnote.
And it happens a lot, how burdensome is it?
Jeremiah Collins: --I will get to that, Justice Sotomayor.
I have tried to determine how frequent it is, and I have been unable.
All I've been able to determine is, there is no litigation over it.
How often -- and I have been able to determine that so-called assessments take many different forms from -- and I think there are crucial distinctions from funding what would -- a kind of charge that would not otherwise be funded out of dues for some short period of time to the opposite extreme.
What we have here and what I don't think would be called an assessment frankly by anything I've read, a temporary dues increase which became permanent and which simply increased the total flow of dues and fees into the general treasury and which went for the usual, the kinds of activities the union had always funded.
And in that regard, there is one--
Justice Sonia Sotomayor: Could you please answer my question?
Jeremiah Collins: --The burden.
Justice Sonia Sotomayor: All right.
Jeremiah Collins: The burden consists of two things, Justice Sotomayor.
The -- if a union has to give a new Hudson notice in a situation like this whereas I have been trying to explain the spending that went on is really not different from what one would have reasonably anticipated given the notice, then we have litigation and disputes about the need for new notices whenever any number of things happen.
Because one thing that happened here that is undisputed but hasn't been discussed is that collective bargaining costs were up six-fold in 2005 over 2004, and they were up six-fold in 2006 over 2005.
Chief Justice John G. Roberts: One reason -- I mean we are dealing with a situation where the union is compelling nonunion members to give them money for political activities.
We allow, as I understand Hudson as I read it, because you can't figure out what that is, you wait until the end of the year.
In other words, it's a compromise for administrative convenience.
Normally you wouldn't allow it at all, as I -- at least under the law as I read it, you would not allow people to take money -- you would not allow the union to take money from people who don't want to spend it on political activities so the union could spend it on political activities.
But we allow it during the course of the year because it's impossible as you go on to sort these things out.
I thought the argument on the other side was when you have a special assessment, an additional charge, there you don't have the administrative problem.
You can tell, it's.25 %.
So you can't take that until you tell them, do you want to object or are you happy -- are you fine with having this spent on political purposes?
Jeremiah Collins: The reason, Mr. Chief Justice, that it isn't that straight forward is quite simply that all of these questions about it's a special assessment, we can figure out what it is, we can treat it separately, flounder when one realizes that so-called special assessment is simply a dues increase.
Because if I were to try to imagine -- let's try to imagine the notice that could have been given.
If I were giving a new notice in the fall of 2005 to explain to all nonmembers how things look now compared to what they -- how they may have looked when the Hudson notice was given, I would say the following, completely consistent with all the facts of record in this case as revealed in the audit.
I would say: We've determined we need more income.
Part of this is because we anticipate $3.7 million in fight-back expenses this year.
Another part is we expect more than $3-1/2 dollars of additional bargaining costs this year, and we expect a lot of other changes on our costs.
On the Petitioner's theory, and this is why Schermerhorn is the complete answer to their theory, there is a constitutional violation if the union says: We are going to view this increase as paying for our additional political costs, and it's going to free up our bargaining -- our general treasury for the bargaining.
That's a violation.
But if you say: We are going to treat this increase as covering those new bargaining costs we told you about, that's going to free up our general treasury for the political costs.
Chief Justice John G. Roberts: But, I mean -- I'm reading from the district court opinion.
It said that this assessment would be used, and they are quoting from union material,
"for a broad range of political expenses, including television, radio advertising, direct mail, voter registration, voter education, and get-out-the-vote activity in our work sites and in communities across California. "
And it further said,
"The fund will not be used for regular costs of the union such as office rent, staff salaries, or routine equipment replacement. "
Jeremiah Collins: But two points, Mr. Chief Justice.
First, as the Court of Appeals pointed out, there were other statements that said the money would be used for both purposes.
But as Schermerhorn points out, Schermerhorn says even if you specifically say this part of our dues income is going to be earmarked for this purpose, it's artificial when you're dealing with a general union treasury, not a separate segregated fund, to give that separate legal status.
And that -- because that is why -- my point to you, Mr. Chief Justice, is nothing in the world would have changed here.
Justice Samuel Alito: Suppose -- suppose that the proponents of Propositions 75 and 76 had come to the union and said, would you please give us an interest-free loan for money, because we want to use this money to -- to persuade the -- the electorate to enact these, but don't worry, because we're going to pay it back right after the election, when we've achieved our electoral ends.
Would -- would the union provide the money because it's all going to come out in the wash?
Jeremiah Collins: I -- I really can't answer that question.
I don't know.
Justice Samuel Alito: Well, I -- gee, I really doubt that you -- that they would.
But what's the difference?
If you look at this from the perspective of a nonmember who doesn't want those ballot initiatives to be defeated, saying that we're going to give you your money back.
We're going to use your money to achieve a political end that you oppose, but don't worry, because we're going to give it back to you next year after we've achieved our political end.
How does that solve the problem?
Jeremiah Collins: That's not the situation here, Justice Alito.
The nonmembers were told in June 2005 in the Hudson notice that if you don't object, we may spend millions of dollars on political activities, including ballot initiatives.
If a person didn't want to support that, they merely needed to object.
But what then happened -- and this is what gets lost in the messaging about the dues increase -- what actually happened in the real world in the period that followed is that compared to the numbers in the 2004 Hudson notice, the union spent less on nonchargeable matters and more on chargeable matters, and the only reason there's a case here in the Court is that the union, for whatever PR purposes, whatever it may have been, instead of saying, we're going to treat the increase as covering our vastly increased bargaining costs, thereby freeing up money for politics, we're instead going to describe this increase as being attributable to our political costs, thereby freeing up money for bargaining.
But what the union is spending its money on is bargaining.
Justice Anthony Kennedy: It -- it seems to me that this answer is, it's so confusing that the Court probably should consider whether or not an opt-in requirement is -- is preferable.
I -- we're talking, in the first exchange, you had with Justice Alito, he gave you a very simple question: 90 percent, 10 percent.
Then, it's reversed.
Special assessment for 90 percent political.
And the point there was that you're taking someone's money contrary to that person's conscience.
And that's what the First Amendment stands against.
And you simply wouldn't answer that question.
You would -- and then you say well, maybe it's -- it's fungible, it's hard to -- it seems to me that you're avoiding a very, very critical question on the constitutional rights of these objecting members.
Jeremiah Collins: --I won't avoid the -- I don't believe -- I was not meaning to avoid it, Justice Kennedy.
What I thought I said is, if you are springing something on someone that's not anticipated in the notice that gave them their rights to object, then there's a problem.
My point is very simple.
Anyone reading the 2005 notice -- Hudson notice, if that person was asked -- if I -- if I don't object, might the union spend $3.7 million next year on ballot initiatives that I may not want to oppose?
The answer would be yes.
The notice made it perfectly clear--
Justice Anthony Kennedy: Let me ask you this, just in the way of background: In collective bargaining negotiations, do the unions consider the -- as one factor the importance of ensuring that the government or employer has fiscal stability?
Jeremiah Collins: --That's generally considered, yes.
Justice Anthony Kennedy: Isn't that ultimately a political judgment, so that even collective bargaining involves a core political judgment?
Jeremiah Collins: And that's exactly what the Court said in Abood.
And the reason that exclusivity and agency fees are permitted in -- in serving an important government purpose is that the government has concluded that its interest lies in having an exclusive spokesperson who -- with whom it can negotiate so that it won't have an array of different employment relations or concerns.
Justice Anthony Kennedy: But you -- you concede then in ordinary collective bargaining, there are critical and important significant political judgments that are being made by the union in the course of collective bargaining with chargeable expenses?
Jeremiah Collins: Absolutely.
And Abood explicitly says that.
And Abood then says that nevertheless, the government -- we're talking about a regulatory scheme to promote the government's interest in orderly labor relations -- the government needs to make arrangements and agreements on terms of employment; it has a vital interest in having an exclusive representational arrangement where that can be accomplished.
And that, the Court held in Abood -- and it's not challenged by Petitioners -- that justifies the degree of impingement that is inherent in the fact that, as Your Honor correctly says, all bargaining, particularly in the public sector, has political elements in it.
Chief Justice John G. Roberts: Thank you, counsel.
Mr. Young: Thank you, Mr. Chief Justice.
Justice Antonin Scalia: Mr. Young, I hope this won't use up much of your time, but I do have a pressing question to make sure that we're just not spinning our wheels here.
What if the union here had -- had simply said all this additional assessment will go to bargaining activities, and then simply used its original assessment, the portion that had been anticipated to be used for bargaining, for political activities.
It could do that, couldn't it?
It's not committed to -- to, you know, an 80-20 or whatever the division is, simply because that's what's given out in the first notice.
It can indeed use its -- the anticipated portion for bargaining for political activities?
Mr. Young: It would be free to do so, Justice Scalia.
Justice Antonin Scalia: So why are we wasting our time?
I mean, all the unions are going to do is say this is a general assessment for bargaining purposes, and then use their -- their general funds for the political thing.
Mr. Young: Because the nonmembers still have that right to challenge, Justice Scalia.
Justice Sonia Sotomayor: But they don't lose it; they're going to do it the following September.
The attractive part of your argument from the beginning was that this is somehow a forced loan.
And I understand the attractiveness of that.
But it goes back to what Justice Breyer said from the beginning, which is, given -- as has been recognized, that money is fungible, and that you can't really often predict what's going to happen in the future, it's been developed a system that cyclically gets money to the people back.
Mr. Young: And money is fungible to a degree, Justice Sotomayor -- Sotomayor -- excuse me.
And I respect that argument.
But let's remember the facts as we have them here.
In the facts of this case, it was a segregated fund.
There's a separate portion, a separate line item in the union's notice--
Justice Antonin Scalia: Okay.
So you win and it will never happen again.
It'll never again be called a segregated fund for politics.
Mr. Young: --I lose, Justice Scalia, and it will happen all the time, I'm afraid.
Justice Stephen G. Breyer: Well, but the -- the problem if you win in this case, and then there is this other way of getting to the same -- the same result -- is that the other way of getting to the same -- same result, while permissible, is far less transparent.
And people won't understand it, and it -- it encourages a kind of slyness that seems highly undesirable.
And the virtue of the present system is that it does require some forced loans, that's true, but it does wash out in the wash, and it ends up being fair to the objectors.
And it's simply hard to think of a better system that doesn't provide more administrative problems than the existing one.
Mr. Young: But--
Justice Stephen G. Breyer: So that's -- go ahead.
Mr. Young: --And I thank you, Justice Breyer.
I'm sorry for interrupting.
I understand that, Justice.
And for ordinary union dues, that's why when Justice Sotomayor asked me at the beginning of the argument whether we're challenging the ordinary Hudson system, I answered no, because that system is perfectly adequate for ordinary union dues.
Justice Sonia Sotomayor: The problem is that I am being told by your adversary, and since we don't know, I'm always afraid of writing a decision in a vacuum, okay?
Mr. Young: Sure.
Justice Sonia Sotomayor: That union structure, their business in a myriad number of ways, that some have a very small due each year, and a larger special assessment for special projects.
And I assume there's endless variety.
You're proposing a rule that every single time an assessment outside of annual dues is imposed, that a new Hudson notice can be given.
And you're suggesting Justice Scalia, that all they have to say is we think it's going to be for chargeable effect.
Mr. Young: Well, the issue -- I'm sorry.
Chief Justice John G. Roberts: Briefly, counsel.
Mr. Young: Yes, thank you, Mr. Chief Justice.
So Justice Sotomayor, the answer is that I'm saying it would be brief -- and my friend Mr. Collins is saying that it doesn't happen that often, so the burden is minimal.
Unions have other options than extracting this money from unwitting nonmembers, through interest-free loans.
And I thank the Court.
Chief Justice John G. Roberts: Thank you, counsel.
The case is submitted.
Justice Stephen G. Breyer: I -- I was going to read a bit of the dissent.
Justice Kagan and I do dissent and for the most part, our dissent concerns an issue that normally wouldn't warrant my saying anything from the bench.
And I think Justice Alito correctly stated the issue in this case that union that represents nonmembers in collective bargaining can, in certain States, charge those members a fee for the representation, but the First Amendment says they can't charge an objecting nonmember for certain political expenditures.
So, given that constitutional interpretation, how, in the context of a special midyear assessment, is the union supposed to calculate what's the proper discount to give the objecting nonmember for the political part of what the union is collecting.
Now, that's an administrative question, and it's not easy to answer.
I know how we answer it normally where a yearly fee is involved.
Well, that so, an accounting firm usually goes over the books for Year One, and they figure out -- the union figures out on the basis of the audited accounts, what was the political part, what was the nonpolitical part, and it then collects the political, nonpolitical ratio, whatever that was, for Year Two based upon Year One's accounts.
What happens if it changes during Year Two?
Well, then, that shows up in Year Three because they used Year Two for Years Three and it all works out more or less, not perfectly but more or less.
For example, if 30% of Year One's for union's expenses are political, the union in Year Two can charge the objecting nonmembers only 70% of the basic fees.
But if Year Two's political expenses turned out to be higher, say 40%, then the union can charge the objecting nonmembers in Year Three only 60% and so, it sort of works out.
And Justice Kagan and I think that the same system used for the yearly expenditures should be applied when the union levies a special charge in the middle of the year.
The majority doesn't think this, okay.
So far, what we have looks like an ordinary disagreement in an ordinary case, but there is one thing about the majority's opinion that, in our view, is not ordinary and Justice Sotomayor, joined by Justice Ginsburg, agree with us on this point.
The majority says that in -- where you have a special midyear charge, no objecting nonmember has to pay any of the special charge unless he or she opts-in, i.e., affirmatively he says he wants to.
Now, we are very concerned about that part of the opinion, which, in technical jargon, goes, “You have to opt-in or opt-out.”
For one thing, it seems to me that in such a case, the objecting nonmember, unless they affirmatively agree, wouldn't even have to pay a share of the union's purely collective bargaining expenses, say, suddenly arising union cost to hire experts to help it bargain about pensions.
Prior cases make clear that the nonmembers' First Amendment rights cover the union's political expenses, but not this kind of ordinary collective bargaining expense.
For another thing, the question is to whether objectives are -- was it the opt-in, they're free not to pay, unless they say they want to, unless they opt-in or they have to pay unless they opt-out, that's the opt-in versus opt-out, that that's a very important issue in the minds of many unions, in the minds of many employees and in the minds of many employers as well as others.
How should the law treat the nonmember employee who is basically indifferent?
It isn't carried just to who would like to pay it less.
He's indifferent to the union's political expenditures.
For 50 years, this Court has consistently found constitutional a system that requires the nonmember to opt-out.
You have to care, in other words and they've said that was constitutional in all kinds of different context that, to us, should be the same today, but today the Court takes a different path.
Further, this kind of question has been entwined with words you will recognize, with right to work issues and related issues which approved highly controversial politically.
The Court is answering, at least in this limited special assessment context, matters about which many unions, employees and employers have strong but different views, and it is a matter that different States have resolved differently as a matter of state law.
By holding that the Constitution itself answers the question, the Court has wrongly, in our opinion, prevented States from choosing among a variety of different possible answers.
Finally, the Court has decided this matter, we think, without adequate briefing.
The opt-in versus the opt-out question was not addressed by the lower courts.
It was not presented to this Court for review in our opinion.
The parties did not brief the question.
So, in our view, at a minimum, the Court should not have decided the question without further briefing.
Justice Kagan and I also believe that in any event because of the some of the administrative concerns that the majority identify, we also, the two of us, believe the Court came up with a wrong answer.
Justice Elena Kagan: Justice Alito has the opinion of the Court this morning in Case 10-1121, Knox versus Service Employees Independent Union.
Justice Samuel Alito: This is a case about compelled speech on matters at the heart of the First Amendment.
The question is whether the First Amendment allows a public-sector union to require employees who are not members of the union to pay a special fee to support the union's political and ideological activities, even if those members -- non-members do not choose to do so.
In 2005, the citizens of the State of California were engaged in a wide-ranging political debate regarding state budget deficits and in particular, the budget consequences of growing compensation for public employees backed by public-sector unions.
The Governor called for a special election in November of that year to consider, among other things, two controversial ballot initiatives that would have limited the collection of mandatory union fees and given the Governor the ability to reduce state appropriations.
These measures were vigorously opposed by public-sector unions including the respondent in this case, the Service Employees International Union.
A few months before the special election, the union sent out a notice to all of the employees and its bargaining unit concerning a special fee that would be taken automatically from the employees' paychecks to establish a political Fight-Back Fund.
According to the union's announcement, the multimillion dollar fund was needed to achieve the union's political objectives, both in the special election and in opposing the Governor's reelection the following year.
The union stated that the money would be used as follows: “For a broad range of political expenses, including television and radio advertising, direct mail, voter registrations, voter education and get out the vote activities in our work sites and in communities across California.”
The union specifically stated, “The fund will not be used for regular costs of the union, such as office rents, staff salaries or routine equipment replacement, etcetera.”
It noted that “All other public worker unions are in the process of raising the extraordinary funds needed to defeat the Governor.”
A subsequent letter from the union said that the money from the Political Fight-Back Fund would help “to elect a governor and a legislature who support public employees and the services they provide”.
Covered employees were not given any choice about whether they would pay into the fund.
A group of nonunion employees who were forced to pay the fee filed the present lawsuit alleging a violation of their First Amendment rights.
The Federal District Court granted summary judgment in favor of the employees, but the Ninth Circuit reversed.
We granted certiorari, and we now reverse the judgment of the Ninth Circuit.
The First Amendment not only protects our right to speak out on political issues, it also protects the right not to be forced to say things with which we disagree.
Nevertheless, our prior cases have allowed state and local governments to extract fees from the paychecks of nonunion employees and give that money to a union in order to pay for collective bargaining.
We have recognized that this is a serious impingement, that's the word our cases have used, we recognize that this is a serious impingement on employees' free speech rights because it requires them to subsidize the form of union speech that they might not support, but we have, nevertheless, tolerated this First Amendment impingement on the theory that collective bargaining tends to benefit all employees who are covered by contracts negotiated by the union.
We have drawn the line, however, at union's political and idealogical activities, which include lobbying, supporting political candidates and other types of general election hearing.
These activities go beyond the realm of collective bargaining, and they cannot be forced -- they cannot be financed by compulsory fees.
In a case called Teachers versus Hudson, decided in 1986, we established certain procedures that a union must follow to ensure that unwilling employees are not forced to pay any portion of their regular dues for these political and ideological expenses.
In the present case, we consider a different situation.
Whereas Hudson concerned the procedures that a union must follow when collecting regular fees on an annual basis, the present case concerns the First Amendment requirements applicable to a special fee, levied to meet expenses that were not disclosed when the regular dues notices were sent.
Our precedents make clear that compulsory subsidies for private speech are subject to exacting First Amendment scrutiny.
Thus, as we said in Hudson, unions that exact fees from nonmembers must follow procedures that are "carefully tailored to minimize the infringement of free speech rights”.
Under that standard, the union's conduct in this case is indefensible.
There is no justification for the union's failure to give employees a choice as to whether they wanted to support the Political Fight-Back Fund.
When the controversial new fund was announced, some employees undoubtedly objected to paying into it even though they had failed to object to paying nonchargeable expenses at the start of the year.
The union and the dissent argued that we should not be concerned that nonmembers were required to contribute to a political campaign with which they disagreed because they, in effect, get a refund of this money when they paid -- they got a refund of this money when they paid their annual dues the following year.
This argument is not correct as a factual matter, but even if it were factually correct, nonmembers cannot be compelled to make an involuntary loan to support an election campaign even if this loan is repaid after the election.
What this argument boils down to is the following We're going to take your money now.
We're going to use it to achieve electoral results you oppose and then when we've succeeded in doing that, we will give you your money back.
A loan is obviously a form of financial support and therefore, this argument is flatly contrary to the principle that the First Amendment does not permit the Government to compel people to support political causes with which they disagree.
Public-sector unions have the right under the First Amendment to express their views on political and social issues, but they do not have a right to compel contributions from unwilling donors.
Employees who choose not to join a union also have First Amendment rights, including the right to withhold contributions for political activities they do not support.
Therefore, when a public-sector union wants to impose a special fee, the union must provide a fresh notice and may not exact any funds from nonmembers without their affirmative consent.
It has been suggested that we should not decide the question whether in the context presented in this case, affirmative consent is required.
Instead, it is suggested that we assume that it is sufficient if a union gives nonmembers an opportunity to opt out of making the payment.
With this approach, it would require either this Court or the lower courts to decide a question for which there is no answer, namely, what sort of procedures would make an opt-out scheme consistent with the First Amendment in the context present here?
The answer to that question is that no procedures can make an opt-out scheme constitutional in this context, and therefore, the opt-out versus opt-in question cannot be avoided.
The judgment of the Ninth Circuit is reversed, and the case is remanded for proceedings consistent with this opinion.
Justice Sotomayor has filed an opinion concurring in the judgment, in which Justice Ginsburg has joined.
Justice Breyer has filed a dissenting opinion, in which Justice Kagan has joined.