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October Term, 2008

January 21, 2008

Today the Supreme Court issued a decision, described below, of interest to the business community.

Locke v. Karass, No. 07-610 (previously discussed in the February 19, 2008 Docket Report).

In a series of prior cases, the Supreme Court had addressed the First Amendment implications of "union shops," where the government requires union membership, or payment of a service fee, as a condition of employment. The Supreme Court had previously held that unions can charge nonmembers a service fee to cover expenses related to collective bargaining and contract administration, but cannot charge nonmembers to support political or ideological expression. A circuit split developed regarding whether a union local can charge nonmembers for litigation expenses incurred by the union's national affiliate. Today, in Locke v. Karass, No. 07-610, the Supreme Court held that a union can impose such charges provided that two conditions are met: "(1) the subject matter of the (extra-local) litigation is of a kind that would be chargeable if the litigation were local, e.g., litigation appropriately related to collective bargaining rather than political activities, and (2) the litigation charge is reciprocal in nature, i.e., the contributing local expects other locals to contribute similarly to the national's resources used for costs of similar litigation on behalf of the contributing local if and when it takes place." Slip op. at 2.

Justice Breyer wrote for a unanimous Court. He depicted the Court's opinion as flowing directly from the holdings in two previous cases. In Ellis v. Brotherhood of Railway Clerks, 466 U.S. 435, 453 (1984), the Court had held that a local union could charge nonmembers for litigation expenses incidental to the local union's collective-bargaining activities. In Lehnert v. Ferris Faculty Ass'n, 500 U.S. 507, 524 (1991), the Court had held that a local union could charge nonmembers for a national affiliate's collective-bargaining activities. Two aspects of these opinions had generated the circuit split. First, Ellis declared that litigation expenses unconnected with the local bargaining unit could not be charged. 466 U.S. at 453. Second, Lehnert failed to find a majority on the issue before the Court in Locke, the chargeability of national litigation expenses. The Court split into three factions, with a plurality declaring "extraunit litigation" to be "akin to lobbying." 500 U.S. at 428.

Justice Breyer's opinion brushed off the concerns that had divided the circuits: "We can find no significant difference between litigation activities and other national activities the cost of which this Court has found chargeable." Slip op. at 10. Addressing Ellis's statement that it was improper to charge expenses unconnected with the bargaining unit, the Court explained that when such expenses are charged as part of a reciprocal arrangement they do ultimately benefit the local union. Id. at 11. The Court then fashioned its two-part test based upon the core holdings in Ellis and Lehnert and determined that the national litigation expenses at issue were chargeable. Id. at 11-12.

In a brief concurrence, Justice Alito, joined by Chief Justice Roberts and Justice Scalia, emphasized that the Court did not reach the question of what reciprocity means. Slip op. at 1 (concurring opinion). The petitioners had argued that nonmembers can never be assessed any portion of a national's litigation expenses. The concurrence understood the Court as finding the expenses chargeable "only because the parties assumed that the benefit of any such expenses would be reciprocal." Id. at 1-2. Justice Alito suggested that it might be appropriate, as the United States had argued in an amicus brief, to place the burden of proving reciprocity on a union if nonmembers objected to a charge. Id. at 2.

In another decision today, a unanimous Supreme Court handed a victory to Mayer Brown and its clients in Fitzgerald v. Barnstable School Committee, No. 07-1125, a case argued by Charles Rothfeld in which the Court held that Title IX of the Education Amendments of 1972 does not preclude a § 1983 action alleging unconstitutional gender discrimination in schools.

Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).


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