International Union of Operati v. Brad Schimel

• Court: Court of Appeals for the Seventh Circuit
• Decided: July 12, 2017
• Docket: 16-3736
• Status: Published

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ Nos. 16-3736 & 16-3834 INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 139 and INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 420, Plaintiffs-Appellants / Cross-Appellees,

v.

BRAD D. SCHIMEL and JAMES R. SCOTT, Defendants-Appellees / Cross-Appellants. ____________________

Appeals from the United States District Court for the Eastern District of Wisconsin. No. 16-CV-590-JPS — J.P. Stadtmueller, Judge. ____________________

ARGUED JUNE 2, 2017 — DECIDED JULY 12, 2017 ____________________

Before FLAUM, EASTERBROOK, and KANNE, Circuit Judges. FLAUM, Circuit Judge. The International Union of Operat- ing Engineers, Local 139 and Local 420 (“IUOE”), challenged Wisconsin’s right-to-work law. The district court determined that this Court’s decision upholding Indiana’s nearly-identical law, Sweeney v. Pence, 767 F.3d 654 (7th Cir. 2014), controlled 2 Nos. 16-3736 & 16-3834

in this case, and the court dismissed IUOE’s complaint with prejudice. For the following reasons, we affirm. I. Background A. The Sweeney Decision In 2012, Indiana passed a right-to-work law that prohibits agreements requiring people to: (1) become or remain a member of a labor or- ganization; [or] (2) pay dues, fees, assessments, or other charges of any kind or amount to a labor organization … as a condition of employment or continuation of employment. Ind. Code § 22–6–6–8. Union members in Indiana challenged this right-to-work law as preempted by the National Labor Relations Act (“NLRA”).1 However, after a comprehensive

1 The NLRA provides: It shall be an unfair labor practice for an employer … to encourage or discourage membership in any labor organ- ization: Provided, That nothing in this subchapter, or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organ- ization … to require as a condition of employment mem- bership therein … . 29 U.S.C. § 158(a)(3). The Act also states: Nothing in this subchapter shall be construed as author- izing the execution or application of agreements requir- ing membership in a labor organization as a condition of Nos. 16-3736 & 16-3834 3

discussion of the NLRA’s legislative history and relevant Su- preme Court precedent, this Court determined that the NLRA did not preempt Indiana’s right-to-work law, even though that law prohibits the payment of any dues or fees to unions. See Sweeney, 767 F.3d at 661 (The NLRA’s “express allowance of state laws prohibiting agreements requiring membership in a labor organization as a condition of employment necessarily permits state laws prohibiting agreements that require em- ployees to pay Representation Fees”) (quotation marks omit- ted); see generally id. at 658–665. We also determined that the enactment of Indiana’s law did not effect a taking in violation of the Fifth Amendment: Although the NLRA requires unions to provide fair representation to non-paying members of the bargaining unit, the unions are “justly compensated by fed- eral law’s grant to [unions] the right to bargain exclusively with … employer[s].” Id. at 666. B. Wisconsin Act 1 After Sweeney issued, Wisconsin enacted Act 1, which states: No person may require, as a condition of obtain- ing or continuing employment, an individual to do any of the following: …

employment in any State or Territory in which such exe- cution or application is prohibited by State or Territorial law. 29 U.S.C. § 164(b). In Sweeney, we discussed the effect of the NLRA’s preemption framework on right-to-work laws prohibiting the formation of any union-security agreements. See generally 767 F.3d at 658–665. 4 Nos. 16-3736 & 16-3834

2. Become or remain a member of a labor organ- ization [or] 3. Pay any dues, fees, assessments, or other charges or expenses of any kind or amount, or provide anything of value, to a labor organiza- tion. Wis. Stat. § 111.04(3)(a). IUOE—which had entered into sev- eral conditional union-security agreements with employers— filed suit against various Wisconsin officials (“Wisconsin”), seeking to void the provision of Act 1 that prohibits forming union-security agreements of any kind. IUOE argued that Act 1 was preempted by the same NLRA provisions at issue in Sweeney and that Act 1 unconstitutionally takes affected un- ions’ property without just compensation. The district court entered judgment on the pleadings in favor of Wisconsin and dismissed the case with prejudice. These cross-appeals fol- lowed. II. Discussion We review de novo the district court’s order granting judgment on the pleadings. Barr v. Bd. of Trs. of W. Ill. Univ., 796 F.3d 837, 839 (7th Cir. 2015) (citations omitted). A. Sweeney Remains Good Law IUOE acknowledged before the district court and con- cedes on appeal that Sweeney controls the preemption analysis in this case and dictates an outcome in favor of Wisconsin. Sweeney dealt with, and disposed of, IUOE’s preemption and Takings Clause arguments with respect to a substantively- identical Indiana law. Thus, IUOE’s only remaining argument on appeal is that Sweeney was wrongly decided and should be overturned. “We do not take lightly suggestions to overrule Nos. 16-3736 & 16-3834 5

circuit precedent,” Chi. Truck Drivers, Helpers & Warehouse Un- ion (Indep.) Pension Fund v. Steinberg, 32 F.3d 269, 272 (7th Cir. 1994), and therefore “require a ‘compelling reason’” to do so, United States v. Kendrick, 647 F.3d 732, 734 (7th Cir. 2011) (quoting Santos v. United States, 461 F.3d 886, 891 (7th Cir. 2006)). Beyond re-arguing the merits of the Sweeney decision, IUOE notes that Chief Judge Wood published a strong dissent in that case, see Sweeney, 767 F.3d at 671–85 (Wood, C.J., dis- senting), and that this Court’s vote to rehear Sweeney en banc was close, see Sweeney v. Pence, No. 13-1264 (7th Cir. Jan 13, 2015). Such facts, however, are not “compelling reasons” to overturn a recent decision. See Santos, 461 F.3d at 894 (“the previous decision [having been] upheld by a 5–5 vote” was not a compelling reason to overturn it); Kendrick, 647 F.3d at 734 (“a solid defense of the arguments that we rejected in [prior cases] … does not amount to a compelling reason to re- visit” those cases) (citation omitted). Furthermore, IUOE points to no intervening developments in statutory, Supreme Court, or even intermediate-appellate-court law between Sweeney and today that undermine Sweeney’s validity. In sum, IUOE does not provide any compelling reason to revisit Sweeney, and we decline to do so. B. Takings Clause Ripeness IUOE argues that Act 1 takes affected unions’ property without just compensation in violation of the Fifth Amend- ment. IUOE brought this claim in federal district court with- out first seeking just compensation in the state courts. The dis- trict court acknowledged this fact and noted that such claims are generally unripe under Williamson County Regional Plan- ning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 6 Nos. 16-3736 & 16-3834

195 (1985). It determined that IUOE’s takings claim was nev- ertheless ripe because IUOE had made a pre-enforcement fa- cial challenge to Act 1, and dismissed the complaint with prej- udice. On cross-appeal, Wisconsin argues that the district court should have ruled that this claim was unripe and should have dismissed it without prejudice. Generally, “if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.” Id. Though the record reveals no regulatory procedure for han- dling Act 1-based takings claims—Wisconsin asserts that the Act does not create a takings issue in the first place—we have determined that the state courts can provide an adequate route for seeking just compensation, see Sorrentino v. Godinez, 777 F.3d 410, 413–14 (7th Cir. 2015) (Illinois Court of Claims an adequate forum for takings claim though incapable of grant- ing the equitable relief sought); see also Forseth v. Vill. of Sussex, 199 F.3d 363, 372–73 (7th Cir. 2000) (noting a variety of availa- ble Wisconsin state-court review mechanisms), and thus must be utilized, when available, before seeking relief in federal court. However, this Court has recognized two exceptions to Williamson’s ripeness requirement: “one for pre-enforcement facial challenges and one for situations in which relief is not available in state court.” Muscarello v. Ogle Cty. Bd. of Comm'rs, 610 F.3d 416, 422 (7th Cir. 2010).2

2 IUOE also urges this Court to acknowledge a third exception to Wil- liamson: that takings for a private use do not need to be litigated in state court first. However, Muscarello clearly states that this Court recognizes the facial-challenge and futility exceptions, and does not allude to any other possible exceptions. The case on which IUOE relies, Peters v. Village Nos. 16-3736 & 16-3834 7

IUOE argues that it has satisfied both of these exceptions and that its takings claim was ripe when it filed suit in the district court. With respect to the facial-challenge exception, Wisconsin responds that IUOE could not have been making such a challenge to Act 1, since IUOE’s complaint contained the phrase “as applied.” However, the complaint reads, “[a]s applied to unions covered by the NLRA, [Act 1] effects an uncon- stitutional taking.” (emphasis added). In context, it is clear that the phrase “as applied” was not meant to limit IUOE to making an as-applied challenge to Act 1; IUOE used this phrase to invoke the rights of all unions covered by Act 1 and the NLRA. Regardless, the Supreme Court has instructed that, in determining whether a challenge is facial or as-ap- plied, “[t]he label is not what matters. The important point is

of Clifton, 498 F.3d 727 (7th Cir. 2007), does not support its argument. In that case, we elaborated on the futility exception, and noted that, “[d]es- pite the strong presumption that damages, not injunctive relief, is the ap- propriate remedy in a Takings Clause action, our case law does acknowledge that there are limited circumstances in which injunctive re- lief is available. For instance, it is well accepted that, when the government has taken property for a private, rather than a public, use, injunctive or declaratory relief may be appropriate.” Id. at 732 (citing Daniels v. Area Plan Comm'n of Allen Cty., 306 F.3d 445, 457 n.11 (7th Cir. 2002)). However, neither Peters nor Daniels states that potential injunctive relief for private- use takings is sufficient by itself to relieve litigants of Williamson’s exhaus- tion requirement. In Daniels, we observed that “the district court should accept jurisdiction over takings claims for injunctive relief in the few cases where a Claims Court remedy is so inadequate that the plaintiff would not be justly compensated.” 306 F.3d at 457 n.11 (emphasis added) (quoting Transohio Sav. Bank v. Dir., Office of Thrift Supervision, 967 F.2d 598, 613 (D.C. Cir. 1992)) (internal quotation marks omitted). Daniels’s focus on the inadequacy of remedies indicates that the futility exception to Williamson would cover a valid takings claim seeking non-monetary relief, not a new, standalone exception. 8 Nos. 16-3736 & 16-3834

that plaintiffs’ claim and the relief that would follow … reach beyond the particular circumstances of these plaintiffs.” John Doe No. 1 v. Reed, 561 U.S. 186, 194 (2010).3 In this case, IUOE’s claim that Act 1 works an unconstitutional taking from all af- fected unions, and the relief IUOE seeks—invalidation of parts of Act 1—both clearly “reach beyond [IUOE’s] particular circumstances.” Id. Further, the panel’s discussions of the Tak- ings Clause issue in Sweeney indicate that an unconstitutional taking would arise, if at all, from the statutory language of the right-to-work statutes or the NLRA, see 767 F.3d at 665–66 (re- jecting a remedy of “strik[ing] down Indiana's right-to-work statute”) (emphasis added); id. at 683 (Wood, C.J., dissenting) (noting that “plaintiffs have argued throughout that the Indi- ana statute is unconstitutional,” and describing “the confisca- tory nature of the Indiana statute”) (emphases added), a the- ory to which a facial challenge would have been well-suited.

3 Wisconsin argues that IUOE cannot be making a facial challenge to Act 1, as IUOE does not seek to invalidate every provision of Act 1. How- ever, Reed undercuts that line of argument. In that case, the parties disa- greed as to whether a First Amendment-based challenge to Washington State’s Public Records Act (“PRA”) was facial or as-applied. 561 U.S. at 191. As here, the complaint alleged that the law “violates the First Amend- ment as applied to referendum petitions.” Id. at 194 (emphasis added). De- spite the use of the phrase “as applied,” the Supreme Court reasoned that the complaint “obviously has characteristics of both [facial and as-applied challenges]: The claim is ‘as applied’ in the sense that it does not seek to strike the PRA in all its applications, but only to the extent it covers refer- endum petitions. The claim is ‘facial’ in that it is not limited to plaintiffs’ particular case, but challenges application of the law more broadly to all referendum petitions.” Id. As a result, the plaintiffs in Reed had to “sat- isfy … standards for a facial challenge to the extent of that reach.” Id. Like- wise, IUOE’s claim is facial, and thus ripe for adjudication, in that it chal- lenges Act 1 as it affects all unions elected to represent bargaining units. Nos. 16-3736 & 16-3834 9

Likewise, in this case, IUOE asserts that the provision of Act 1 that forbids all union-security agreements amounts to an un- constitutional taking on its face. Thus, the district court cor- rectly construed this claim as a “pre-enforcement facial chal- lenge” to Act 1, Muscarello, 610 F.3d at 422,4 determined that the takings claim was ripe under that Williamson exception,5 and dismissed the claim with prejudice in light of Sweeney. III. Conclusion For the foregoing reasons, we AFFIRM the judgment of the district court.

4 To the extent IUOE’s takings claim challenges Act 1 as not “substan-

tially advanc[ing] legitimate state interests,” the Supreme Court has de- termined that such a challenge is properly understood as a due-process inquiry that “has no proper place in … takings jurisprudence.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 540 (2005) (citations omitted). 5 Because we hold that IUOE’s claim was ripe as a pre-enforcement facial challenge to Act 1, we need not decide whether adequate relief would have been available in the Wisconsin state courts.