Seventh Circuit Issues Two Opinions Limiting Scope of State and Local Authority over Labor Law

02 October 2018 Wisconsin Appellate Law Blog
Authors: Ryan N. Parsons

Over the course of the past two weeks, the Seventh Circuit has issued two separate opinions that limit the ability of state and local governments to craft their own labor law policy. In doing so, the court created a circuit split and raised an interesting question of the ability of the lower courts to disregard Supreme Court summary dispositions when the dispositions have arguably been undermined by later case law.

The first case, International Association of Machinists v. Allen (No. 17-1178), addressed Congress’ power to preempt state legislation even where Congress is silent over the particular rule crafted by the state.  It dealt with one of the provisions of 2015 Wisconsin Act 1, the law that reshaped collective bargaining in Wisconsin (which has subsequently been the subject of at least a dozen legal challenges).  Under federal law, employee authorizations allowing employers to pay a portion of the employee’s paycheck to a union “shall not be irrevocable for a period of more than one year.”  29 U.S.C. § 186(c)(4).  But Act 1 attempted to shorten this period by making it an unfair labor practice to allow such deductions unless the authorization is “terminable by the employee giving to the employer at least 30 days’ written notice of the termination.”  Wis. Stat. § 111.06(1)(i).

Relying on state law, a union employee in Wisconsin sought to revoke her dues authorization in the wake of Act 1.  Her union took the position that the request was untimely because her authorization card provided that her authorization could only be revoked after the one-year period.  She filed a claim with the Wisconsin Department of Workforce Development, who agreed that the union had committed an unfair labor practice.  The union then filed suit seeking injunctive relief against enforcement of the statute.

The Seventh Circuit held that the Wisconsin law was preempted by federal law under the principles of Machinists preemption, which “forbids both the National Labor Relations Board (NLRB) and States to regulate conduct that Congress intended ‘be unregulated because left to be controlled by the free play of economic forces.’” Chamber of Commerce v. Brown, 554 U.S. 60, 65 (2008) (quoting Machinists v. Wisconsin Employment Relations Commʹn, 427 U.S. 132, 140 (1976)).  In doing so, the court relied on a summary disposition memorandum issued in 1971.  Sea Pak v. of Nat’l Maritime Union, 400 U.S. 985 (1971) (mem.).

Judge Manion dissented, arguing that more recent developments in the Supreme Court’s preemption case law undermined the summary disposition and gave the court freedom to disregard the opinion.  In doing so, he relied on the court’s decision in Baskin v. Bogan, 766 F.3d 648 (7th Cir. 2014), where the Seventh Circuit recognized a constitutional right to same-sex marriage despite an existing Supreme Court summary disposition rejecting the same claim.

The second case, International Union of Operating Engineers v. Village of Lincolnshire (No. 17-1300), dealt with local governments’ ability to regulate labor law.  While, as noted above, labor law is generally a field governed by federal law, there are a few exceptions.  One is Congress’ determination that state governments may pass “right to work” laws.  These laws prohibit employers and unions from requiring compulsory union membership (and union dues) as a condition of employment.  (2015 Wisconsin Act 1 was just such a law, and its constitutionality was affirmed by the Seventh Circuit in International Union of Operating Engineers v. Schimel, 863 F.3d 674 (7th Cir. 2017), in one of the many aforementioned legal challenges.)

A recent rise in local governments passing right to work laws of their own has raised the separate question of whether Congress’ statement that it did not intend to interfere with “State” law in this area, 29 U.S.C. § 164(b), extended to subdivisions of the state.  One court of appeals previously so held.  See UAW v. Hardin Cnty., 842 F.3d 407 (6th Cir. 2016).  But the Seventh Circuit created a circuit split by holding that only “states” – and not municipalities – could pass such laws.

While the court could have relied on a plain language analysis – i.e., “states” means “states” and not “subdivisions of states” – Judge Wood expressly refused to decide the case on those grounds.  Instead, the court engaged in a functional analysis to determine that allowing municipal governments to create their own policies would run the risk of creating “a crazy-quilt of regulations” and undermining one of the National Labor Relations Act’s key principles – uniformity.

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