2014 WI 99
SUPREME COURT OF WISCONSIN
CASE NO.: 2012AP2067
COMPLETE TITLE: Madison Teachers, Inc., Peggy Coyne, Public
Employees
Local 61, AFL-CIO and John Weigman,
Plaintiffs-Respondents,
v.
Scott Walker, James R. Scott, Judith Neumann and
Rodney G.
Pasch,
Defendants-Appellants.
ON CERTIFICATION FROM THE COURT OF APPEALS
OPINION FILED: July 31, 2014
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: November 11, 2013
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Dane
JUDGE: Juan B. Colas
JUSTICES:
CONCURRED: CROOKS, J., concurs. (Opinion filed.)
DISSENTED: BRADLEY, J., ABRAHAMSON, C.J., dissent. (Opinion
filed.)
NOT PARTICIPATING:
ATTORNEYS:
For the defendants-appellants, there were briefs by J.B.
Van Hollen, attorney general, and Kevin St. John, deputy
attorney general, Steven P. Means, executive assistant attorney
general, and Steven C. Kilpatrick, assistant attorney general.
Oral argument by J.B. Van Hollen and Kevin St. John.
For the plaintiff-respondents, there was a brief by Lester
A. Pines, Lee Cullen, Tamara B. Packard, Susan M. Crawford, and
Cullen Weston Pines & Bach LLP, Madison; and M. Nicol Padway,
Aaron A. DeKosky, and Padway & Padway, Ltd., Milwaukee; and oral
argument by Lester A. Pines, Tamara B. Packard, and M. Nicol
Padway.
An amicus curiae brief was filed by Michael P. May, city
attorney, and John W. Strange, assistant city attorney, on
behalf of the City of Madison.
An amicus curiae brief was filed by Bruce F. Ehlke, Katy
Lounsbury, and Ehlke, Bero-Lehmann & Lounsbury, S.C., Madison,
on behalf of Laborers Local 236 and AFSCME Local 60.
An amicus curiae brief was filed by Grant F. Langley, city
attorney, Rudolph M. Konrad, deputy city attorney, Stuart S.
Mukamal, assistant city attorney, and Donald L. Schriefer,
assistant city attorney, on behalf of the City of Milwaukee.
An amicus curiae brief was filed by Milton L. Chappell,
Nathan J. McGrath, and National Right to Work Legal Defense
Foundation, Inc., Springfield, VA; and Richard M. Esenberg,
Thomas C. Kamenick, Brian McGrath, and Wisconsin Institute for
Law & Liberty, Milwaukee; and Bruce N. Cameron, Regent
University School of Law, Virginia Beach, VA; on behalf of
Elijah Grajkowski, Kristi Lacroix, and Nathan Berish.
An amicus curiae brief was filed by Timothy E. Hawks and
Hawks Quindel, S.C., Milwaukee; and Marianne Goldstein Robbins
and The Previant Law Firm S.C., Milwaukee; and Stephen Pieroni,
Madison; and Peggy A. Lautenschlager and Bauer & Bach, LLC,
Madison; and Aaron N. Halstead and Hawks Quindel, S.C., Madison;
and Barbara Zack Quindel and Hawks Quindel, Milwaukee; and
Jeffrey Sweetland and Hawks Quindel, S.C., Milwaukee; and Mark
A. Sweet and Sweet and Associates, LLC, Milwaukee; on behalf of
the Wisconsin Education Association Council, AFSCME District
Councils 24, 40, and 48, AFT-Wisconsin, SEIU Healthcare
2
Wisconsin, Wisconsin Federation of Nurses and Health
Professionals, and State of Wisconsin AFL-CIO.
An amicus curiae brief was filed by Andrew T. Phillips,
Daniel J. Borowski, Jacob J. Curtis, and Phillips Borowski S.C.,
Mequon, on behalf of Wisconsin County Mutual Insurance
Corporation and Community Insurance Corporation.
3
2014 WI 99
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2012AP2067
(L.C. No. 2011CV3774)
STATE OF WISCONSIN : IN SUPREME COURT
Madison Teachers, Inc., Peggy Coyne, Public
Employees Local 61, AFL-CIO and John Weigman,
Plaintiffs-Respondents,
FILED
v.
JUL 31, 2014
Scott Walker, James R. Scott, Judith Neumann
and Rodney G. Pasch, Diane M. Fremgen
Clerk of Supreme Court
Defendants-Appellants.
APPEAL from a judgment and order of the Circuit Court for
Dane County, Juan B. Colas, Judge. Reversed.
¶1 MICHAEL J. GABLEMAN, J. In March 2011, the Wisconsin
Legislature passed Act 10,1 a budget repair bill proposed by
Governor Scott Walker. Act 10 significantly altered Wisconsin's
1
Provisions of Act 10 were reenacted without amendment in
2011 Wisconsin Act 32 ("Act 32"), the 2011-13 state budget,
which reestablished collective bargaining rights for some
municipal transit employees. For ease of discussion, we refer
to the Municipal Employment Relations Act, as amended by Acts 10
and 32, as "Act 10."
No. 2012AP2067
public employee labor laws. Act 10 prohibits general employees
from collectively bargaining on issues other than base wages,
prohibits municipal employers from deducting labor organization
dues from paychecks of general employees, imposes annual
recertification requirements, and prohibits fair share
agreements requiring non-represented general employees to make
contributions to labor organizations.
¶2 In August 2011, Madison Teachers, Inc. and Public
Employees Local 61 sued Governor Walker and the three
commissioners of the Wisconsin Employment Relations Commission
challenging several provisions of Act 10. The plaintiffs
alleged, among other things, that four aspects of Act 10——the
collective bargaining limitations, the prohibition on payroll
deductions of labor organization dues, the prohibition of fair
share agreements, and the annual recertification requirements——
violate the constitutional associational and equal protection
rights of the employees they represent. The plaintiffs also
challenged Wis. Stat. § 62.623 (2011-12),2 a separate provision
created by Act 10, which prohibits the City of Milwaukee from
paying the employee share of contributions to the City of
2
All subsequent references to the Wisconsin Statutes are to
the 2011-12 version unless otherwise noted.
2
No. 2012AP2067
Milwaukee Employes'3 Retirement System, alleging it violates the
home rule amendment to the Wisconsin Constitution. The
plaintiffs argued, in the alternative, that if Wis. Stat. §
62.623 does not violate the home rule amendment, it nevertheless
violates the constitutionally protected right of parties to
contract with each other.
¶3 The Dane County Circuit Court, Judge Juan B. Colas,
presiding, invalidated several provisions of Act 10, including
the provisions relating to collective bargaining limitations,
union recertifications, and the prohibitions on fair share
agreements and payroll deductions of labor organization dues.
The court of appeals certified the case to this court, pursuant
to Wis. Stat. § 809.61. We now uphold Act 10 in its entirety.
I. BACKGROUND AND PROCEDURAL HISTORY
¶4 Plaintiff-Respondents are Madison Teachers, Inc.
("MTI"), Public Employees Local 61 ("Local 61"), and their
3
"Employes" is an alternate spelling for "Employees."
Webster's Third New International Dictionary 743 (3d ed. 2002).
"Employe" was once the common spelling in English. Bryan A.
Garner, A Dictionary of Modern Legal Usage, 312 (2d ed. 2001)
(citing Hull v. Philadelphia & R.R., 252 U.S. 475, 479 (1920)
("We need hardly repeat the statement . . . that in the
Employers' Liability Act Congress used the words 'employé' and
'employed' in their natural sense, and intended to describe the
conventional relation of employer and employé.")). In fact, H.W.
Fowler, an ardent advocate of the "–ee" suffix, notes in the
first edition of A Dictionary of Modern English Language (1926)
that in the late 19th century the Oxford English Dictionary
"labelled employee 'rare exc. U.S.'"").
We will use the more contemporary spelling, "employee,"
unless the alternative spelling, "employe" appears in quoted
language or in a party's name.
3
No. 2012AP2067
respective representatives, Peggy Coyne and John Weigman. MTI
is a labor organization representing over 4,000 municipal
employees of the Madison Metropolitan School District. Local 61
is a labor organization representing approximately 300 City of
Milwaukee employees.4
¶5 The Defendant-Appellants are Governor Walker and the
three commissioners of the Wisconsin Employment Relations
Commission ("WERC"), James R. Scott, Judith Neumann, and Rodney
G. Pasch (collectively, "the defendants"). Governor Walker and
the commissioners of WERC are sued in their official capacities.
Governor Walker has responsibility under Wisconsin law to
implement and enforce state legislation through the agencies of
the State's executive branch. The commissioners of WERC are
responsible for administering Wisconsin's labor laws.
¶6 Wisconsin has two principal labor laws, the Municipal
Employment Relations Act ("MERA"), Wis. Stat. § 111.70 et seq.,
and the State Employee Labor Relations Act ("SELRA"), Wis. Stat.
4
Act 10 creates two primary categories of public employees:
"general employees" and "public safety employees." MTI and
Local 61 represent "general employees," as defined under Act 10.
Under Act 10, "general employees" is a catch-all term for public
employees who are not "public safety employees." See, e.g., Wis.
Stat. § 111.70(fm). Employees classified as "public safety
employees" are not affected by Act 10's modifications to the
Municipal Employment Relations Act and the State Employee Labor
Relations Act. The United States Court of Appeals for the
Seventh Circuit recently held, under a rational basis standard
of review, that the public employee classifications created by
Act 10 did not violate equal protection. See Wis. Educ. Ass'n
Council v. Walker, 705 F.3d 640, 656 (7th Cir. 2013). The
public employee classifications are not at issue in this appeal.
4
No. 2012AP2067
§ 111.80 et seq., which govern employment relations and
collective bargaining for public employees and labor
organizations.
¶7 In 2011, the Wisconsin Legislature enacted 2011
Wisconsin Act 10, a budget repair bill proposed by Governor
Walker. Act 10, among other things, modified MERA to prohibit
general employees from collective bargaining on issues other
than "base wages," prohibited fair share agreements, imposed
annual recertification requirements, and prohibited municipal
employers from deducting labor organization dues from the
paychecks of general employees.5
¶8 MTI and Local 61 (together with the individual
plaintiffs, "the plaintiffs") filed the instant action in Dane
County Circuit Court in August 2011 seeking declaratory and
injunctive relief, alleging that certain portions of Act 10
violated the Wisconsin Constitution.
¶9 In November 2011, the plaintiffs sought summary
judgment on the following claims: (1) that Act 10 violates the
plaintiffs' right to free association guaranteed by Article I,
Sections 3 and 4 of the Wisconsin Constitution through the
combined effect of (a) prohibiting general employees from
5
The plaintiffs argue that specific provisions of MERA, as
amended by Act 10, are unconstitutional. SELRA, which is the
counterpart legislation affecting state employees, is not being
challenged. However, as the court of appeals observed in its
certification to this court, any decision on the provisions
affecting municipal employees under MERA would appear to be
dispositive with respect to state employees under SELRA as well.
5
No. 2012AP2067
collective bargaining on issues other than "base wages," and
requiring any base wage increase exceeding a cost of living
adjustment to be approved by a municipal voter referendum, (b)
prohibiting municipal employers from deducting labor
organization dues from the paychecks of general employees, (c)
prohibiting fair share agreements,6 and (d) requiring mandatory
recertification elections; (2) that Act 10 violates the
plaintiffs' right to equal protection of the laws guaranteed by
Article I, Section 1 of the Wisconsin Constitution by
impermissibly creating classifications that disadvantage
represented general employees based on the exercise of their
rights to associate; (3) that certain provisions of Act 10 were
enacted in a manner that violated Article VI, Section 11 of the
Wisconsin Constitution, which governs special sessions of the
legislature, by not being related to the stated purpose of the
special session; (4) that Act 10 violates the home rule
amendment to the Wisconsin Constitution by mandating that City
of Milwaukee employees make certain contributions to the City of
Milwaukee Employes' Retirement System ("Milwaukee ERS") and, in
doing so, interfering with the City of Milwaukee's home-rule
6
Fair share agreements, also commonly referred to as
"agency-shop agreements," are negotiated arrangements between
governmental employers and certified labor organization
representatives that require all public employees, including
employees who do not wish to join or support a labor
organization, to pay the proportional share of the cost of
collective bargaining and contract administration. See, e.g.,
Ronald D. Rotunda & John E. Nowak, 5 Treatise on Constitutional
Law, Substance and Procedure, § 20.41(p), at 439 (5th ed.).
6
No. 2012AP2067
authority; (5) that Act 10 violates the Contract Clauses of the
United States and Wisconsin Constitutions by unconstitutionally
impairing Local 61's vested contractual right to the City of
Milwaukee funding the employee share of contributions to the
Milwaukee ERS; and (6) that Act 10 violates due process by
shifting the responsibility for pension contributions from the
City of Milwaukee to members of Local 61, which is a deprivation
of property without due process of law.
¶10 In January 2012, the defendants moved for judgment on
the pleadings, arguing the circuit court should deny the
plaintiffs' motion for summary judgment and dismiss the suit
with prejudice. On September 14, 2012, the circuit court issued
a decision and order that denied the defendants' motion for
judgment on the pleadings and granted partial summary judgment
to the plaintiffs. The circuit court held that Act 10 violated:
(1) the plaintiffs' rights of association, free speech, and
equal protection under both the United States and Wisconsin
Constitutions; (2) the home rule amendment to the Wisconsin
Constitution; and (3) the Contract Clause of the Wisconsin
Constitution. Further, the circuit court held that Act 10 did
not violate the special session limiting clause of the Wisconsin
Constitution or the constitutional prohibition against taking a
property interest without due process of law. Accordingly, the
7
No. 2012AP2067
circuit court concluded that those sections of Act 10 found to
be unconstitutional are void and without effect.7
¶11 On September 18, 2012, the defendants filed a notice
of appeal. On April 25, 2013, the court of appeals certified
the case to this court.
¶12 On June 14, 2013, this court accepted the
certification.
II. STANDARD OF REVIEW
¶13 The issue before this court is whether certain
provisions of Act 10 violate the United States and Wisconsin
Constitutions. The constitutionality of a statute is a question
of law that we review de novo. State v. Randall, 192 Wis. 2d
800, 824, 532 N.W.2d 94 (1995). All legislative acts are
presumed constitutional and we must indulge every presumption to
sustain the law. Id. Any doubt that exists regarding the
constitutionality of the statute must be resolved in favor of
its constitutionality. State ex rel. Hammermill Paper Co. v. La
Plante, 58 Wis. 2d 32, 47, 205 N.W.2d 784 (1973). Consequently,
it is insufficient for a party to demonstrate "that the
statute's constitutionality is doubtful or that the statute is
probably unconstitutional." Wis. Med. Soc'y, Inc. v. Morgan,
2010 WI 94, ¶37, 328 Wis. 2d 469, 787 N.W.2d 22 (citing State v.
7
On October 10, 2013, the circuit court amended the
September 14, 2012 Order to add the third sentence of Wis. Stat.
§ 111.70(2) to the statutes the court concluded were
unconstitutional. That sentence states: "A general municipal
employee has the right to refrain from paying dues while
remaining a member of a collective bargaining unit."
8
No. 2012AP2067
Smith, 2010 WI 16, ¶8, 323 Wis. 2d 377, 780 N.W.2d 90).
Instead, the presumption can be overcome only if the party
establishes the statute's unconstitutionality beyond a
8
reasonable doubt. Id.
¶14 This case also presents questions of statutory
interpretation, which this court reviews de novo. Covenant
Healthcare Sys., Inc. v. City of Wauwatosa, 2011 WI 80, ¶21, 336
Wis. 2d 522, 800 N.W.2d 906.
III. DISCUSSION
¶15 This appeal presents four issues: (1) whether Act 10
impermissibly infringes on the associational rights of general
employees; (2) whether Act 10 impermissibly infringes on the
equal protection rights of represented general employees when
compared to non-represented general employees; (3) whether Act
10 violates the home rule amendment to the Wisconsin
Constitution by prohibiting the City of Milwaukee from paying
the employee share of pension contributions to the Milwaukee
ERS; and (4) whether Act 10 violates the Contract Clause of the
8
As this court explained in Ferdon ex rel. Petrucelli v.
Wisconsin Patients Comp. Fund, 2005 WI 125, ¶68 n.71, 284 Wis.
2d 573, 701 N.W.2d 440:
The constitutionality of a statute is an issue of law, not
fact. The "beyond the reasonable doubt burden of proof"
language is, however, reminiscent of an evidentiary burden
of proof in criminal cases. The beyond a reasonable doubt
burden of proof in a constitutional challenge case means
that a court gives great deference to the legislature, and
a court's degree of certainty about the unconstitutionality
results from the persuasive force of legal argument.
9
No. 2012AP2067
Wisconsin Constitution by significantly impairing the
contractual rights of City of Milwaukee employees.
¶16 We address each issue in turn. However, because
terminology is critical to interpreting the parties' arguments,
it is important that we review certain relevant terms before
beginning our analysis.
A. Terminology
¶17 The heart of this appeal centers on unions, collective
bargaining, and the right to associate with others to
collectively engage in protected First Amendment activities.
These issues are always emotionally charged, especially in
turbulent times, but perhaps nowhere are these topics more
controversial or sensitive than in the State of Wisconsin. The
importance of these questions demands clarity on what precisely
is before the court, which in turn requires specificity on our
part in the terminology upon which we rely.
¶18 With respect to the term "collective bargaining," we
agree with the court of appeals that the following discussion
provided by an amicus effectively highlights an important
definitional distinction:
Historically, in the United States the term
"collective bargaining" has been used to describe two
legally different activities . . . . The first way in
which the term has been used has been to describe an
activity that is an element of the right of individual
citizens to associate together for the purpose of
advocating regarding matters of mutual interest or
concern, including matters concerning wages and
employment conditions. When used in this way the term
"collective bargaining" is descriptive of a collective
effort and refers to an activity where the party that
10
No. 2012AP2067
is the object of the advocacy, the employer, has no
legal obligation to respond affirmatively to the
advocacy, but may do so voluntarily.
. . . . [This type of "collective bargaining"] is a
fundamental right that constitutionally is protected.
The second way in which the term "collective
bargaining" has been used is to refer to a statutorily
mandated relationship between an association of
employees and their employer, by the terms of which an
employer and its employees are obligated to negotiate,
in "good faith," for the purpose of reaching an
agreement regarding the employees' wages and
conditions of employment.
Such statutorily recognized "collective bargaining" is
subject to legislative modification, for the purpose,
at least heretofore, of protecting the employees'
fundamental right to bargain with their employer.
Brief for Laborer's Local 236 and AFSCME Local 60 as Amici
Curiae at 3, 6–7 (some citations omitted). As the court of
appeals did in its certification to this court, we use the term
"collective bargaining" in the latter sense; that is, to refer
to the statutorily established relationship between an
association of public employees and their employer.
¶19 This definition of "collective bargaining" is
consistent with the language of Act 10, which defines
"collective bargaining" to mean "the performance of the mutual
obligation of a municipal employer . . . and the representative
of its municipal employees in a collective bargaining unit, to
meet and confer at reasonable times, in good faith, with the
intention of reaching an agreement, or to resolve questions
arising under such an agreement," with respect to wages for
general employees. Wis. Stat. § 111.70(1)(a). A "collective
11
No. 2012AP2067
bargaining unit" is a "unit consisting of municipal employees"
that has been recognized by WERC, pursuant to statute, as
qualified for the purpose of collective bargaining. Stat.
§ 111.70(1)(b).
¶20 Further, under Act 10, for the purpose of collective
bargaining, a "representative" may be chosen "by a majority of
the municipal employees voting in a collective bargaining unit
[and] shall be the exclusive representative of all employees in
the unit . . . . " Wis. Stat. § 111.70(4)(d)1. This
"representative" could potentially be a "labor organization,"
which is defined as "any employee organization in which
employees participate and which exists for the purpose, in whole
or in part, of engaging in collective bargaining with municipal
employers . . . ." Wis. Stat. § 111.70(1)(h).
¶21 Unlike the term "labor organization," "union" is not
defined under Act 10, though as the court of appeals noted, the
parties use the term in two distinct ways. First, the term
"union" may refer to what the parties in this case agree is a
constitutionally protected association that individuals have the
right to form and employers have the right to disregard.
However, the term "union" may also refer to the "representative"
of a "collective bargaining unit" in the statutorily established
relationship between an association of public employees and
their employer. For this reason, we follow the practice of the
court of appeals and generally avoid use of the term "union."
Instead, when referring to the "exclusive certified bargaining
agent" of a collective bargaining unit, as that term is
12
No. 2012AP2067
understood within the statutory framework established by Act 10,
we use the term "certified representative."
¶22 Finally, we refer to a general employee that has
chosen to participate in collective bargaining within the
statutory framework established by Act 10 as a "represented
general employee," and in contrast, the term "non-represented
general employee" to refer to a general employee who has
declined to participate.
B. Associational Claims
¶23 The plaintiffs' central argument on appeal is that the
following provisions of Act 10 violate the associational rights
of general employees and their certified representatives that
are guaranteed under Article I, Sections 3 and 4 of the
Wisconsin Constitution:9
9
The plaintiffs submit that Article I, Sections 3 and 4 of
the Wisconsin Constitution may be interpreted to provide greater
protection than the First Amendment to the United States
Constitution. We agree with the court of appeals, however, that
the plaintiffs fail to present a developed argument to support
their suggestion that Article I, Sections 3 and 4 of the
Wisconsin Constitution should confer more expansive protection
than its federal counterpart under the particular facts in this
case. Accordingly, in our analysis of the plaintiffs'
associational rights claims, we treat the rights protected under
the Wisconsin and United States Constitutions to be coextensive.
See Lawson v. Hous. Auth. of Milwaukee, 270 Wis. 269, 274, 70
N.W.2d 605, 608 (1955). (holding that Article I, Sections 3 and
4 of the Wisconsin Constitution "guarantee the same freedom of
speech and right of assembly and petition as do the First and
Fourteenth [A]mendments of the United States [C]onstitution.");
see also Cnty. of Kenosha v. C & S Mgmt., Inc., 223 Wis. 2d 373,
388, 588 N.W.2d 236 (1999) ("Wisconsin courts consistently have
held that Article I, § 3 of the Wisconsin Constitution
guarantees the same freedom of speech rights as the First
Amendment of the United States Constitution").
13
No. 2012AP2067
1. The provision prohibiting collective bargaining
between municipal employers and the certified
representatives for municipal general employee
bargaining units on all subjects except base wages.
Wis. Stat. § 111.70(4)(mb)1.
2. The provisions limiting negotiated base wage
increases to the increase in the Consumer Price Index,
unless a higher increase is approved by a municipal
voter referendum.10 Wis. Stat. §§ 66.0506,
111.70(4)(mb)2., and 118.245.
3. The provisions prohibiting fair share agreements
that previously required all represented general
employees to pay a proportionate share of the costs of
collective bargaining and contract administration.
Wis. Stat. § 111.70(1)(f) and the third sentence of
Wis. Stat. § 111.70(2).
4. The provision prohibiting municipal employers from
deducting labor organization dues from the paychecks
of general employees. Wis. Stat. § 111.70(3g).
5. The provision requiring annual recertification
elections of the representatives of all bargaining
units, requiring 51% of the votes of the bargaining
unit members (regardless of the number of members who
vote), and requiring the commission to assess costs of
such elections. Wis. Stat. § 111.70(4)(d)3.
¶24 Whether the plaintiffs' First Amendment challenge to
these provisions has any merit is the lynchpin of this appeal.
The core of our review is determining whether there is a
cognizable First Amendment interest, which establishes the
attendant level of scrutiny applied to the legislative judgment
behind the requirement. If Act 10 does not infringe on the
10
Act 10 defines "consumer price index change" as "the
average annual percentage change in the consumer price index for
all urban consumers, U.S. city average, as determined by the
federal department of labor, for the 12 months immediately
preceding the current date." Wis. Stat. § 111.70(1)(cm).
14
No. 2012AP2067
plaintiffs' First Amendment rights, it will be upheld if any
rational basis can be found for the contested provisions. See
Ysursa v. Pocatello Educ. Ass'n, 555 U.S. 353, 359 (2009).
i. Freedom of Association Doctrine
¶25 The freedom of association doctrine has two
analytically distinct categories: "intrinsic" freedom of
association, which protects certain intimate human relationships
under the Substantive Due Process component of the Fourteenth
Amendment, and "instrumental" freedom of association, which
protects associations necessary to effectuate First Amendment
rights. See Roberts v. U.S. Jaycees, 468 U.S. 609, 617-18
(1984). The second category of association is the type of
freedom of association right the plaintiffs assert has been
infringed upon in this case. Regarding this form of
association, the United States Supreme Court has "recognized a
right to associate for the purpose of engaging in those
activities protected by the First Amendment——speech, assembly,
petition for the redress of grievances, and the exercise of
religion. The Constitution guarantees freedom of association of
this kind as an indispensable means of preserving other
individual liberties." Roberts, 468 U.S. at 618; see also
Merrifield v. Bd. of Cnty. Comm'rs, 654 F.3d 1073, 1080-81 (10th
Cir. 2011); Weber v. City of Cedarburg, 129 Wis. 2d 57, 68, 384
N.W.2d 333 (1986) (noting that "[f]reedom of association is an
implied incident of the first amendment guarantees").
ii. Overview of the Plaintiffs' Associational Arguments
15
No. 2012AP2067
¶26 The plaintiffs' argument that Act 10 violates the
constitutional right of general employees and their certified
representatives to freely associate is premised on a novel legal
theory. Therefore, in order to properly address their
arguments, we find it helpful to first outline their claims.
¶27 The plaintiffs begin by stressing that no contention
is being made that public employees have a constitutional right
to collectively bargain.11 Instead, the plaintiffs argue that,
while the State may statutorily restrict the obligation to
collectively bargain in good faith, the State may not
constitutionally withhold benefits or penalize public employees
for exercising their associational rights to self-organization
or to select a certified representative for collective
bargaining purposes.
¶28 In framing this argument, the plaintiffs rely heavily
on Lawson v. Housing Authority of Milwaukee, 270 Wis. 269, 70
N.W.2d 605 (1955). In Lawson, this court held that a federal
housing regulation was unconstitutional because it required
tenants to relinquish their right to associate with
organizations designated as subversive by the United States
11
The plaintiffs' emphasis on this point is prudent. It is
well-established law that no constitutional right to collective
bargaining exists. See, e.g., Smith v. Ark. State Highway Emp.,
Local 1315, 441 U.S. 463, 465 (1979) (holding "the First
Amendment does not impose any affirmative obligation on the
government to listen, to respond or, in this context, to
recognize the association and bargain with it"). It is
undisputed the State could eliminate collective bargaining
entirely without violating the constitutional rights of the
plaintiffs.
16
No. 2012AP2067
Attorney General in order to remain eligible to continue living
in federally aided housing projects. Lawson, 270 Wis. at 288.
This court concluded that a government agency could not
condition the privilege of subsidized housing, which lies within
the agency's discretion to grant or withhold, on the
relinquishment of the constitutionally protected right to
associate. Id. at 275.
¶29 Lawson is representative of a body of case law that
applies the doctrine of unconstitutional conditions. This
doctrine embodies the principle that freedom of speech would be
rendered a hollow right if the government was permitted to
place, as a condition on the receipt of a governmental benefit,
any restrictions on speech it pleased. Justice Potter Stewart
forcefully expressed the importance of this principle in Perry
v. Sindermann:
For at least a quarter-century, this Court has made
clear that even though a person has no 'right' to a
valuable governmental benefit and even though the
government may deny him the benefit for any number of
reasons, there are some reasons upon which the
government may not rely. It may not deny a benefit to
a person on a basis that infringes his
constitutionally protected interests——especially, his
interest in freedom of speech. For if the government
could deny a benefit to a person because of his
constitutionally protected speech or associations, his
exercise of those freedoms would in effect be
penalized and inhibited. This would allow the
government to 'produce a result which (it) could not
command directly.' Speiser v. Randall, 357 U.S. 513,
526 . . . . Such interference with constitutional
rights is impermissible.
17
No. 2012AP2067
408 U.S. 593, 597 (1972); see also United States v. Scott, 450
F.3d 863, 866 (9th Cir. 2006) ("The 'unconstitutional
conditions' doctrine . . . limits the government's ability to
exact waivers of rights as a condition of benefits, even when
those benefits are fully discretionary."); Rumsfeld v. Forum for
Academic and Institutional Rights, Inc., 547 U.S. 47, 59 (2006)
("[T]he government may not deny a benefit to a person on a basis
that infringes his constitutionally protected . . . freedom of
speech even if he has no entitlement to that benefit.")
(internal citations omitted). The purpose of the doctrine is to
prevent the government from indirectly restricting a
constitutional right that it may not otherwise directly impair.
¶30 The plaintiffs raise two related, but allegedly
distinct, arguments that, under the unconstitutional conditions
doctrine, Act 10 violates their constitutional rights to freedom
of association. First, the plaintiffs argue that Act 10
violates the constitutional right to freedom of association by
conditioning the receipt of a "benefit"——here, the potential for
a general employee or group of general employees to negotiate
all issues with the municipal employer, including matters
affecting wages and hours——on the relinquishment of the general
employees' ability to choose to have a certified representative
act on their behalf. Second, the plaintiffs claim that several
provisions of Act 10, through cumulative effect, impose
organizational and financial penalties on general employees who
choose the statutory "privilege" of participating in collective
18
No. 2012AP2067
bargaining for the purpose of requiring their municipal employer
to bargain in good faith on base wages.
¶31 Regarding the second argument, the plaintiffs
emphasize they are not asserting that each of the contested
provisions of Act 10, standing alone, violates associational
rights. Instead, the plaintiffs argue it is the impact of the
contested provisions of Act 10, taken together, that creates a
constitutional violation.
iii. Limitations on Permissible Collective Bargaining
Subjects
¶32 Before the enactment of Act 10, general employees were
permitted under MERA to collectively bargain over a broad array
of subjects, including wages, working conditions, work hours,
and grievance procedures. Act 10 limits collective bargaining
between municipal employers and the certified representatives of
general employees to the single topic of "total base wages and
excludes any other compensation . . . . " Wis. Stat.
§ 111.70(4)(mb)1. Moreover, Act 10 prohibits collective
bargaining for base wage increases that exceed an increase in
the Consumer Price Index unless approved in a municipal voter
referendum. Wis. Stat. §§ 111.70(4)(mb)2., 66.0506, and
118.245.
¶33 The plaintiffs argue this limitation penalizes general
employees who choose to be represented by a certified
representative because Act 10 imposes no limitations whatsoever
on the terms that non-represented general employees may
negotiate with their municipal employers. Consequently, the
19
No. 2012AP2067
plaintiffs contend, Act 10 unconstitutionally burdens the
associational rights of general employees because they must
surrender their association with a certified representative in
order to negotiate anything beyond base wages.
¶34 The plaintiffs' argument does not withstand scrutiny.
As discussed above, the plaintiffs cite to this court's holding
in Lawson, 270 Wis. 269, for the general proposition that the
government may not condition the receipt of a discretionary
benefit on the relinquishment of a constitutionally protected
right. In essence, the plaintiffs rely on Lawson as an
illustration of our court applying the unconstitutional
conditions doctrine. Beyond Lawson, the plaintiffs cite to
numerous cases that support the same doctrinal principle: it is
impermissible for the government to condition the receipt of a
tangible benefit on the relinquishment of a constitutionally
protected right. See, e.g., Agency for Int'l Dev. v. Alliance
for Open Soc'y Int'l Inc., 133 S. Ct. 2321, 2328 (2013).
¶35 We do not dispute the existence of the
unconstitutional conditions doctrine or its robustness in our
jurisprudence. The problem lies in the doctrine's
inapplicability to this case, and consequently, the absence of
support it provides the plaintiffs' argument.
¶36 Comparing Lawson to the facts of this case swiftly
illustrates the problem. In Lawson, this court held that it was
unconstitutional for the government to condition the receipt of
a benefit (living in a federally aided housing project) on the
relinquishment of a constitutionally protected right (the right
20
No. 2012AP2067
to associate with organizations that engage in constitutionally
protected speech). Here, the plaintiffs argue that it is
unconstitutional for the government, through Act 10, to
condition the receipt of a benefit (to participate in collective
bargaining on the lone topic of base wages) on the
relinquishment of a constitutionally protected right (the right
to associate with a certified representative in order to
collectively bargain on any subject).
¶37 The plaintiffs' logical fallacy rests in the false
analogy between the respective rights being relinquished in
Lawson and in this case. Without question, in Lawson, the right
being relinquished for a benefit——the right to associate with
organizations that engage in constitutionally protected speech——
is fundamental in nature and protected under the First
Amendment. Here, however, the "right" the plaintiffs refer to——
the right to associate with a certified representative in order
to collectively bargain on any subject——is categorically not a
constitutional right.
¶38 General employees have no constitutional right to
negotiate with their municipal employer on the lone issue of
base wages, let alone on any other subject. As the United
States Supreme Court made clear:
[While t]he public employee surely can associate and
speak freely and petition openly, and he is protected
by the First Amendment from retaliation for doing
so. . . . [,] the First Amendment does not impose any
affirmative obligation on the government to listen, to
respond or, in this context, to recognize the
association and bargain with it.
21
No. 2012AP2067
Smith v. Ark. State Highway Emps., Local 1315, 441 U.S. 463, 465
(1979) (citations omitted).
¶39 The plaintiffs have insisted at every stage of
litigation in this case that they are not arguing a
constitutional right exists to collectively bargain. It is
evident, however, that they really are, for without such a
constitutional right, their challenge fails. The plaintiffs'
reliance on Lawson hinges on the defendants conditioning the
receipt of a benefit on the relinquishment of a constitutional
right, but as the plaintiffs acknowledge, collective bargaining—
—no matter the specific statutory limitations at issue——is not
constitutionally protected.
¶40 Put differently, general employees are not being
forced under Act 10 to choose between a tangible benefit and
their constitutional right to associate. Instead, Act 10
provides a benefit to represented general employees by granting
a statutory right to force their employer to negotiate over base
wages, while non-represented general employees, who decline to
collectively bargain, have no constitutional or statutory right
whatsoever to force their employer to collectively bargain on
any subject. For this reason, the plaintiffs' argument must be
rejected.
¶41 This point is vital and bears repeating: the
plaintiffs' associational rights are in no way implicated by Act
10's modifications to Wisconsin's collective bargaining
framework. At issue in this case is the State's implementation
of an exclusive representation system for permitting public
22
No. 2012AP2067
employers and public employees to negotiate certain employment
terms in good faith. It is a prerogative of a state to
establish workplace policy in a non-public process in
consultation with only select groups——here, an organization
selected by the affected workforce itself——and not others.
Minn. State Bd. for Cmty. Colls. v. Knight, 465 U.S. 271, 286
(1984) ("[a]ppellees thus have no constitutional right as
members of the public to a government audience for their policy
views").
¶42 Not at issue in this case is the plaintiffs'
constitutional right to associate to engage in protected First
Amendment activities. The plaintiffs remain free to advance any
position, on any topic, either individually or in concert,
through any channels that are open to the public. See City of
Madison v. Wis. Emp't Relations Comm'n, 429 U.S. 167, 175 (1976)
(represented municipal employees have First Amendment right to
speak "[w]here the State has opened a forum for direct citizen
involvement"). Represented municipal employees, non-represented
municipal employees, and certified representatives lose no right
or ability to associate to engage in constitutionally protected
speech because their ability to do so outside the framework of
statutory collective bargaining is not impaired. Act 10 merely
provides general employees with a statutory mechanism to force
their employer to collectively bargain; outside of this narrow
context, to which the plaintiffs freely concede public employees
have no constitutional right, every avenue for petitioning the
government remains available.
23
No. 2012AP2067
¶43 General employees may feel inclined to collectively
bargain under Act 10 in order to compel their employer to
negotiate on the issue of base wages, but this creates no
unconstitutional inhibition on associational freedom. See,
e.g., Knight, 465 U.S. at 289-90 ("Appellees may well feel some
pressure to join the exclusive representation in order to give
them . . . a voice . . . on particular issues. . . . Such
pressure is inherent in our system of government; it does not
create an unconstitutional inhibition on associational
freedom"). The defendants are not barring the plaintiffs from
joining any advocacy groups, limiting their ability to do so, or
otherwise curtailing their ability to join other "like-minded
individuals to associate for the purpose of expressing commonly
held views . . . ." Knox v. Serv. Emps. Int'l Union, Local
1000, 132 S. Ct. 2277, 2288 (2012).
¶44 Thus, we conclude that the plaintiffs' reliance on
Lawson and the unconstitutional conditions doctrine to be
misplaced. The limitations on permissible collective bargaining
subjects imposed by Act 10 do not force general employees to
choose between their constitutional right to associate and the
benefit of collective bargaining. Therefore, we hold that Wis.
Stat. §§ 111.70(4)(mb), 66.0506, and 118.245 do not violate
Plaintiffs' right to freedom of association.
¶45 The dissent suggests we mischaracterize the
plaintiffs' argument: "Rather than addressing plaintiff's issue
that Act 10 infringes on their constitutional right to organize
into a collective bargaining unit, the majority erroneously
24
No. 2012AP2067
asserts that plaintiffs are claiming a right to bargain as a
collective bargaining unit." Dissent, ¶194. In doing so, the
dissent argues we "ignore over a century's worth of
jurisprudence and undermine[] a right long held sacred in our
state." Dissent, ¶199.
¶46 This sweeping allegation is disappointing, not only
because it misconstrues our analysis, but also because it shows
confusion over an important area of the law.
¶47 The dissent contends the actual issue presented in
this case is whether Act 10 infringes on the associational
rights of public employees to organize, as if collective
bargaining is a peripheral matter.12 Having framed the "actual"
12
It is unclear whether the dissent uses the term
"collective bargaining unit" as it is defined under Act 10, or
if the term is meant to encompass a broader meaning. We assume
the dissent does not contend that there is always a
constitutional right to organize as a "collective bargaining
unit" in a statutory framework created by the state. This would
mean the state is constitutionally obligated to create such a
framework, which is clearly not true. See Smith, 441 U.S. at
464-65. It is more likely the dissent means that, if a
statutory framework has been created by the state for collective
bargaining purposes, state employees have a constitutional right
to organize within that framework as a "collective bargaining
unit."
25
No. 2012AP2067
issue, the dissent contends employees have a "constitutional
right to organize as a collective bargaining unit." Dissent,
¶198. But for what purpose?
¶48 Without more information (ascertaining the purpose of
the association), it is impossible to determine the argument's
validity. The right to associate is not derived from some
ethereal notion that individuals be granted the right to
organize for organization's sake. Associational rights are
rooted in the First Amendment's protection of freedoms of speech
and assembly. NAACP v. Alabama, 357 U.S. 449, 460 (1958).
Stated differently, the right to engage in activities protected
by the First Amendment drives the corresponding right to
associate with others in order to engage in those activities.
Roberts, 468 U.S. at 622. Thus, the dissent's assertion that
employees have an associational right to organize in a
collective bargaining group is neither true nor false, because
Even adopting this understanding, however, it is unclear
how its reliance on NLRB v. Jones & Laughlin Steel Corp., 301
U.S. 1 (1937) is appropriate. In support of its proposition that
"it has long been established there is a constitutional right to
organize as a collective bargaining unit," id., the dissent
quotes, with emphasis added, language from Jones & Laughlin:
"the right of employees to self-organization and to select
representatives of their own choosing for collective bargaining
or other mutual protection without restraint or coercion by
their employer . . . is a fundamental right." 301 U.S. at 33.
Jones & Laughlin does not support the dissent's argument,
however, because the case concerned private, as opposed to
public, employers. Thus the "right" referred to by the Supreme
Court could not have been constitutional. See Laborers Local 236
v. Walker, 2014 WL 1502249, at *8 (citing The Civil Rights
Cases, 109 U.S. 3, 17-18 (1883)).
26
No. 2012AP2067
it is unclear whether, under the dissent's framing of the issue,
the employees are associating for the purpose of engaging in a
constitutionally protected activity.
¶49 Needless to say, this ambiguity is purposeful, because
to complete the thought would necessarily reveal it is an
erroneous statement of the law. The dissent knows the First
Amendment does not grant state employees the constitutional
right to collectively bargain with their state employer. Thus,
in framing its argument, the dissent chooses to ignore that the
right to associate is derived from the constitutionally
protected activity the group of individuals wants to engage in.
No one disputes that the plaintiffs have a constitutional right
to organize with others in pursuit of a variety of political,
educational, religious, or cultural ends. Id. But this is
obviously not what the plaintiffs, or the dissent, seek to
establish.
¶50 The plaintiffs seek the right to organize with others
to pursue something far more specific: collective bargaining
with their employer on a range of issues. And at the risk of
belaboring the point, this is not a constitutional right.
Smith, 441 U.S. at 464-65.
¶51 The dissent sidesteps this fact by asserting there is
a constitutional right to organize in a collective bargaining
unit, but leaves unanswered whether the employees are
associating for the purpose of engaging in an expressive
activity accorded First Amendment protection. This approach
does not imbue the plaintiff's claim with merit.
27
No. 2012AP2067
¶52 Of course employees have a constitutional right to
organize together for expressive purposes, including for the
purpose of speaking to their employer on a range of issues. As
we explained, supra ¶¶42-43, municipal employees have the
constitutional right to form groups, meet with others, organize
as one, and speak on any topic. We have emphasized repeatedly
that Act 10 does not prohibit any of these things. On the
contrary, the State explicitly safeguards these activities.13
¶53 It is undisputed that collective bargaining is not
constitutionally protected. Indeed, Wisconsin is under no
constitutional obligation to collectively bargain at all.
Smith, 441 U.S. at 464-65. But the dissent nevertheless
maintains that Act 10 has so discouraged participation in
Wisconsin's statutory collective bargaining process that it is
unconstitutional and accuses us of dodging the question of
13
See Wis. Stat. § 111.70(2) ("Municipal employees have the
right of self-organization, and the right to form, join, or
assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in lawful,
concerted activities for the purpose of collective bargaining or
other mutual aid or protection").
28
No. 2012AP2067
whether Act 10 "impermissibly punish[es] the exercise of the
right to associate."14 Dissent, ¶207.
¶54 The dissent's accusation is misplaced. Act 10
certainly presents meaningful difficulties for certified
representatives, but these difficulties have no bearing on our
analysis of the Act's constitutionality. The First Amendment
does not require Wisconsin to "maintain policies that allow
certain associations to thrive." Laborers Local 236 v. Walker,
749 F.3d 628, 639 (7th Cir. 2014). Likewise, "[a]n organization
cannot come up with an associational purpose——even a purpose
that involves speech——and then require support from the state in
order to realize its goal." Id.
iv. Fair Share Agreements, Certification Elections, and
Payroll Deductions
¶55 As noted above, the plaintiffs argue that several
provisions of Act 10, through cumulative effect, impose
14
Implicit in the dissent's accusation is the belief that
statutory frameworks that are based on a model of exclusive
representation are unconstitutional if any limits are placed on
the subjects upon which employees may collectively bargain. At
present, forty-one states have adopted the federal model of
exclusive representation. See, e.g., Brief for the States of
New York, Arkansas, et. al. as Amici Curiae in Support of
Respondents, Harris v. Quinn, (2013) (No. 11-681) 2013 WL
6907713, at *8. Of these, a significant number have imposed
limitations on the subjects of collective bargaining. See,
e.g., Ind. Code 20–29–6–4.5; Mich. Comp. Laws § 380.1248; 115
Ill. Comp. Stat. 5/4.5; 2011 N.J. Laws ch. 78; see also Martin
H. Malin, Does Public Employee Collective Bargaining Distort
Democracy? A Perspective from the United States, 34 Comp. Lab.
L. & Pol'y J. 277, 285-88 (2013). We note that adopting the
dissent's constitutional argument would effectively repeal a
vast amount of legislation in states across the nation.
29
No. 2012AP2067
organizational and financial penalties on general employees who
choose the statutory "privilege" of collective bargaining for
the purpose of requiring their employer to negotiate in good
faith on base wages. Specifically, the plaintiffs contend the
following provisions of Act 10, taken together, impose a
constitutionally impermissible burden on general employees: (1)
the prohibition of fair share agreements; (2) the requirement of
mandatory annual certification elections; and (3) the
prohibition on payroll deductions of labor organization dues
from the wages of general employees. The plaintiffs argue these
features of Act 10 unconstitutionally interfere with
associational rights by burdening and penalizing general
employees who elect to collectively bargain. The plaintiffs
claim that general employees will eventually surrender the
exercise of their associational rights rather than suffer the
burdens placed upon them.
¶56 The plaintiffs cite to no authority supporting their
contention that constitutional analysis functions in this
manner; i.e., that courts must consider several, otherwise
constitutional, statutory provisions to determine if they
collectively amount to a constitutional infirmity.
Nevertheless, we indulge the plaintiffs in this instance and
separately consider the constitutionality of Act 10's
"cumulative impact and effect." We first examine each contested
provision in isolation. After assessing each challenged part,
we examine the contested provisions operating as a whole.
a. Fair Share Agreements
30
No. 2012AP2067
¶57 Fair share agreements are negotiated arrangements
between municipal employers and certified representatives that
require all general employees, including non-represented general
employees, to pay the proportional share of the cost of
collective bargaining and contract administration. Act 10
prohibits these agreements. See Wis. Stat. § 111.70(1)(f), (2).
The plaintiffs argue this creates a financial burden on
certified representatives and represented general employees to
bear the full cost of collective bargaining for the benefit of
the entire bargaining unit, while allowing non-represented
general employees in the bargaining unit to enjoy the benefits
of representation as "free riders." For the certified
representative and its members to choose the statutory
"privilege" of collective bargaining, the plaintiffs argue they
must accept the financial penalty as a condition of their
associational choices to serve as the certified representative
and be represented general employees. The plaintiffs contend
these burdens will dissuade labor organizations from becoming
certified representatives and general employees from becoming
represented general employees, and are therefore
unconstitutional.
¶58 The plaintiffs' argument is unconvincing. First,
labor organizations "have no constitutional entitlement to the
fees of nonmember-employees." Davenport v. Wash. Educ. Ass'n,
551 U.S. 177, 185 (2007). Further, as the United States Supreme
Court recently reaffirmed in Harris v. Quinn, fair share
agreements "unquestionably impose a heavy burden on the First
31
No. 2012AP2067
Amendment interests" of municipal employees who do not wish to
participate in the collective bargaining process. Harris v.
Quinn, 573 U.S. ___, 134 S. Ct. 2618, 2643 (2014); see also
Knox, 132 S. Ct. at 2291 ("By authorizing a union to collect
fees from nonmembers . . . our prior decisions approach, if they
do not cross, the limit of what the First Amendment can
tolerate").15
¶59 Even setting aside the question of whether fair share
agreements are constitutionally permissible,16 it is evident that
15
These observations are not unexpected, considering that
the presence of a right to freedom of association "plainly
presupposes a freedom not to associate." Roberts v. United
States Jaycees, 468 U.S. 609, 623 (1984); see also Hudson v.
Chicago Teachers Union Local No. 1, 743 F.2d 1187, 1193 (7th
Cir. 1984), aff'd sub nom. Chicago Teachers Union, Local No. 1,
AFT, AFL-CIO v. Hudson, 475 U.S. 292 (1986) ("The particular
freedom of association we are speaking of——the freedom that is
ancillary to freedom of speech——has a negative as well as a
positive dimension"). To compel an individual to pay fees to
support an organization that engages in political and economic
activities, which the individual has no interest in supporting,
raises self-apparent First Amendment concerns.
16
The dissent notes that the United States Supreme Court
affirmed in Harris v. Quinn, 573 U.S. ___, 134 S. Ct. 2618, 2638
(2014), that fair share agreements for "full-fledged state
employees" are constitutionally permissible. Dissent, ¶206 n.8.
To say the least, the dissent puts a positive spin on Harris's
impact on the constitutional legitimacy of fair share
agreements. Harris concluded that the First Amendment prohibits
the collection of fees from Illinois home-care personal
assistants who do not want to join or support the labor
organization representing them. It is true Harris is not
directly applicable to this case because the employees at issue
in Harris, while government-funded, were not "full-fledged state
employees." 134 S. Ct. at 2638. Nevertheless, Harris clearly
signals that fair share agreements are constitutionally suspect
beyond the context of quasi-State employees.
32
No. 2012AP2067
the prohibition of fair share agreements does not infringe on
the associational rights of general employees or certified
representatives in any respect. The First Amendment does not
compel the government to subsidize speech. Ysursa, 555 U.S. at
357. By logical extension, the First Amendment does not compel
the government to compel its employees to subsidize speech.
¶60 The plaintiffs' argument that the financial cost
involved in participating in collective bargaining acts as an
unconstitutional "burden" on general employees and certified
representatives is premised on a faulty assumption: if the State
creates a benefit for which there is no constitutional right, it
will nevertheless violate the First Amendment rights of those
In Harris, the State of Illinois pointed to the Supreme
Court's holding in Abood v. Detroit Bd. of Educ., 431 U.S. 209
(1977), to argue the fair share agreement at issue was
permissible. In Abood, the Supreme Court upheld a fair share
agreement requiring public school teachers in Detroit to pay
dues to the labor organization representing them, even though
they opposed public sector collective bargaining. 431 U.S. at
211. Harris illustrates that time has not been kind to Abood.
Since it was decided in 1977, the Supreme Court's criticism of
Abood's holding and underlying rationale has become increasingly
pointed. Two years ago, in Knox v. Serv. Emps. Int'l Union,
Local 1000, the Supreme Court noted that Abood was "something of
an anomaly." Knox, 132 S. Ct. 2277, 2290 (2012). Harris goes
further in expressing disapproval of Abood, explaining at length
why its analysis "is questionable on several grounds." Harris,
134 S. Ct. at 2621. The holding of Abood may be alive in our
jurisprudence, but it is not well. As Justice Alito broadly
stated in concluding the majority's analysis in Harris, "if we
accepted Illinois' argument, we would approve an unprecedented
violation of the bedrock principle that, except perhaps in the
rarest of circumstances, no person in this country may be
compelled to subsidize speech by a third party that he or she
does not wish to support." Id. at 2644.
33
No. 2012AP2067
who accept that benefit if accepting that benefit somehow
"burdens" a non-constitutionally protected activity. A
successful constitutional challenge cannot be rooted in such an
unfounded premise.
¶61 We conclude that Wis. Stat. § 111.70(1)(f) and the
third sentence of § 111.70(2), examined in isolation, do not
violate the plaintiffs' right to freedom of association.
b. Certification Elections
¶62 Prior to Act 10, general employees could petition WERC
to hold an election to designate a labor organization as the
general employees' certified representative. The voting
requirement for certification was a simple majority of employees
in the collective bargaining unit. Once a labor organization
was certified, it would remain the general employees' certified
representative until thirty percent of the employees requested a
decertification election.
¶63 Act 10, however, requires the certified representative
of a collective bargaining unit to undergo an annual
certification election in which the representative must obtain
the vote of an absolute majority of the general employees in the
bargaining unit to retain status as the employees' certified
representative. Wis. Stat. § 111.70(4)(d)3.b. Further, Act 10
requires that the certified representative pay the cost of
administering the related certification elections. Id.
¶64 The plaintiffs allege that the certification election
requirements imposed by Act 10 place "organizational penalties"
34
No. 2012AP2067
on certified representatives and general employees that will
eventually dissuade participation in collective bargaining.
¶65 The plaintiffs' argument again conflates collective
bargaining rights, which are statutorily guaranteed, with
associational rights, which are constitutionally protected. Act
10's certification election provisions merely specify the
statutory requirements a certified representative must satisfy
in order to exclusively negotiate on behalf of the general
employees in its bargaining unit. No plausible argument can be
made that these provisions, or the "burdens" they impose on
certified representatives, infringe on the rights of general
employees to freely associate. The certification election
provisions do not bar or obstruct general employees from joining
other "like-minded individuals to associate for the purpose of
expressing commonly held views." Knox, 132 S. Ct. at 2288.
Instead, the provisions at issue outline the requirements and
rights of certified representatives that wish to, on behalf of
its bargaining unit employees, compel the government to
participate in statutory collective bargaining.
¶66 Certification requirements for certified
representatives have existed in Wisconsin's labor laws since
35
No. 2012AP2067
1959.17 The certification requirements imposed by Act 10 are
certainly more stringent than under the prior laws, but it is
impossible for these increased "organizational penalties" to
violate the plaintiffs' associational rights, when there are no
associational rights at stake. The certification requirements
apply solely to collective bargaining, which is wholly distinct
from an individual's constitutional right to associate.
Therefore, we hold that Wis. Stat. § 111.70(4)(d)3.b., examined
in isolation, does not infringe on the plaintiffs'
constitutional right to associate.
c. Payroll Deductions
¶67 Prior to Act 10, municipal employers could deduct
labor organization dues from the paychecks of general employees
at the employee's request. Act 10 prohibits this practice.
Wis. Stat. § 111.70(3g). The plaintiffs argue this prohibition
hampers certified representatives and general employees both
organizationally and financially, creating an unconstitutional
burden on their associational rights.
¶68 The United States Court of Appeals for the Seventh
Circuit recently considered a separate legal challenge to Act 10
and, in so doing, examined the constitutionality of Act 10's
17
The Wisconsin State Employees Association was organized
in 1932. In 1936, the association evolved into the American
Federation of State, County and Municipal Employees ("AFSCME").
In 1959, the legislature enacted a law giving state municipal
employees the statutory right to bargain collectively with their
employers. This law——Chapter 509, Laws of 1959, as amended over
the years——formed the basis of MERA, which is administered by
WERC.
36
No. 2012AP2067
prohibition on payroll deductions for labor organizations. The
court observed:
The Bill of Rights enshrines negative liberties. It
directs what government may not do to its citizens,
rather than what it must do for them. While the First
Amendment prohibits "plac[ing] obstacles in the path"
of speech . . . nothing requires government to "assist
others in funding the expression of particular ideas,
including political ones," Ysursa, 555 U.S. at 358,
129 S.Ct. 1093. . . . Thus, even though "publicly
administered payroll deductions for political purposes
can enhance the unions' exercise of First Amendment
rights, [states are] under no obligation to aid the
unions in their political activities." Ysursa, 555
U.S. at 359, 129 S.Ct. 1093.
In Ysursa, the Supreme Court squarely held that the
use of a state payroll system to collect union dues
from public sector employees is a state subsidy of
speech. Id. As the Court explained, "the State's
decision not to [allow payroll deduction of union
dues] is not an abridgment of the unions' speech; they
are free to engage in such speech as they see
fit." . . . Like the statutes in these cases, Act 10
places no limitations on the speech of general
employee unions, which may continue speaking on any
topic or subject.
Wis. Educ. Ass'n Council v. Walker, 705 F.3d 640, 645-46 (7th
Cir. 2013). While the Seventh Circuit's analysis of Act 10 is
not binding on this court, we find no reason to disagree with
37
No. 2012AP2067
its clear and rational articulation of the law.18 As explained
by the Seventh Circuit, the prohibition on an employer's
authorization to deduct labor organization dues from the
paychecks of general employees does not infringe on an
employee's constitutional right to associate. Further, this
prohibition does not penalize employees because no
constitutional right exists for the deduction of dues from a
paycheck to support membership in a voluntary organization. See
Bailey v. Callaghan, 715 F.3d 956, 958 (6th Cir. 2013) (noting
the prohibition on payroll deductions "does not restrict the
unions' speech at all: they remain free to speak about whatever
18
The dissent distinguishes Wis. Educ. Ass'n Council, 705
F.3d 640, from this case on the basis that it "examined whether
Act 10 burdened the free speech rights of collective bargaining
units" rather than "the right of individuals to organize in a
collective bargaining unit." Dissent, ¶201, n.7. We are
surprised the dissent finds this distinction meaningful, given
that "[t]he particular freedom of association we are speaking of
[is] the freedom that is ancillary to freedom of speech . . . ."
Hudson v. Chicago Teachers Union Local No. 1, 743 F.2d 1187,
1193 (7th Cir. 1984), aff'd sub nom. Chicago Teachers Union,
Local No. 1, AFT, AFL-CIO v. Hudson, 475 U.S. 292 (1986). In
fact, as we explained supra ¶25, the reason the right to
association is constitutionally protected is because it serves
as a means of preserving other First Amendment activities, such
as free speech. Roberts, 468 U.S. at 618; see also Rumsfeld v.
Forum for Academic and Institutional Rights, Inc., 547 U.S. 47,
68 (2006) (explaining that First Amendment protection extends to
associational rights because "[t]he right to speak is often
exercised most effectively by combining one's voice with the
voices of others").
Regardless, though we view this as a distinction without a
difference, we note that the Seventh Circuit recently held in
Laborers Local 236, 749 F.3d at 639, that "none of Act 10's
proscriptions——individually or cumulatively——infringe" the
associational rights of labor organizations or its members.
38
No. 2012AP2067
they wish. Moreover, nothing in the First Amendment prevents a
State from determining that its political subdivisions may not
provide payroll deductions for union activities . . . .")
(internal quotations omitted).
¶69 Accordingly, we hold that Wis. Stat. § 111.70(3g),
examined in isolation, does not infringe on the plaintiffs'
constitutional right to associate.
d. Cumulative Burden
¶70 We have held that, examined in isolation, each of the
contested provisions of Act 10 does not violate the plaintiffs'
associational rights. While we do not concede that the
cumulative approach advocated by the plaintiffs is either
correct or necessary, we now conclude that, even viewed
together, the contested provisions of Act 10 are not
constitutionally infirm. As we discussed above, each provision
of Act 10 that the plaintiffs contend infringes upon the
associational rights of certified representatives and general
employees does not, in fact, do so, because in each instance,
there is no constitutional associational right implicated.
¶71 Viewing the provisions as a whole does not change our
analysis. Each of the plaintiffs' arguments fails for largely
the same reason: collective bargaining requires the municipal
employer and the certified representative to meet and confer in
good faith. Wis. Stat. § 111.70(1)(a). The Wisconsin
Constitution does not. Indeed, it is uncontested that it would
be constitutional for the State of Wisconsin to eliminate
collective bargaining entirely.
39
No. 2012AP2067
¶72 Thus, the plaintiffs' contention that several
provisions of Act 10, which delineate the rights, obligations,
and procedures of collective bargaining, infringe upon general
employees' constitutional right to freedom of association is
unfounded. No matter the limitations or "burdens" a legislative
enactment places on the collective bargaining process,
collective bargaining remains a creation of legislative grace
and not constitutional obligation. The restrictions attached to
the statutory scheme of collective bargaining are irrelevant in
regards to freedom of association because no condition is being
placed on the decision to participate. If a general employee
participates in collective bargaining under Act 10's statutory
framework, that general employee has not relinquished a
constitutional right. They have only acquired a benefit to
which they were never constitutionally entitled.
¶73 The First Amendment cannot be used as a vehicle to
expand the parameters of a benefit that it does not itself
protect. For the reasons articulated above, we conclude that
Wis. Stat. §§ 111.70(4)(mb), 66.0506, 118.245, 111.70(1)(f),
111.70(3g), 111.70(4)(d)3 and the third sentence of § 111.70(2)
do not violate the plaintiffs' associational rights.
C. Equal Protection
¶74 Having concluded that Act 10 does not violate the
right to freedom of association under the First Amendment, we
next consider whether the Act offends the equal protection
40
No. 2012AP2067
provisions of the Wisconsin or United States Constitutions.19
The plaintiffs also argue that Act 10 violates the equal
protection rights of general employees and certified
representatives through the disparate treatment of general
employees who choose to associate with a certified
representative and general employees who do not. In considering
this argument, we first note that public employees are not a
protected class. We also recognize that this challenge
implicates no fundamental rights because, as explained above,
the right to collectively bargain is not the same as the
plaintiffs' constitutional right to freedom of association.
Accordingly, rational basis review governs in our examination of
19
Article I, Section 1 of the Wisconsin Constitution
provides:
All people are born equally free and independent, and
have certain inherent rights; among these are life,
liberty and the pursuit of happiness; to secure these
rights, governments are instituted, deriving their
just powers from the consent of the governed.
In our analysis of the plaintiffs' equal protection claims,
we treat the rights protected under the Wisconsin and United
States Constitutions as coextensive. See C & S Mgmt., 223 Wis.
2d at 393-94 (noting that Article I, Section 1 of the Wisconsin
Constitution and the Fourteenth Amendment to the United States
Constitution afford "substantially equivalent" limitations on
legislative power).
41
No. 2012AP2067
the plaintiffs' equal protection claims.20 We uphold a
legislative act under that standard if it furthers a legitimate
interest and if the challenged classification is rationally
related to achieving the interest. See Smith, 323 Wis. 2d 377,
¶12 ("When neither a fundamental right has been interfered with
nor a suspect class been disadvantaged as a result of the
classification, the legislative enactment must be sustained
unless it is patently arbitrary and bears no rational
relationship to a legitimate government interest.") (internal
quotation marks omitted).
¶75 As the court of appeals observed, and the plaintiffs
concede, the merit of the plaintiffs' equal protection argument
hinges on the merit of their associational rights claim. Having
rejected the premise that Act 10 implicates a fundamental right,
the plaintiffs' equal protection claim necessarily fails under
rational basis review.
¶76 While courts express various iterations of the
rational basis test, we have often quoted the United States
Supreme Court's articulation in McGowan v. Maryland, 366 U.S.
420, 425-26 (1961):
20
Generally, when considering an equal protection
challenge, this court will uphold the statute if we find that
the legislative classification is supported by a rational basis.
Wis. Prof'l Police Ass'n v. Lightbourn, 2001 WI 59, ¶221, 243
Wis. 2d 512, 627 N.W.2d 807. This court will employ strict
scrutiny in our examination of an equal protection claim only if
the legislative classification interferes with a fundamental
right or "operates to the peculiar disadvantage of a suspect
class." Castellani v. Bailey, 218 Wis. 2d 245, 261-62, 578
N.W.2d 166.
42
No. 2012AP2067
[The Equal Protection Clause] permits the States a
wide scope of discretion in enacting laws which affect
some groups of citizens differently than others. The
constitutional safeguard is offended only if the
classification rests on grounds wholly irrelevant to
the achievement of the State's objective. State
legislatures are presumed to have acted within their
constitutional power despite the fact that, in
practice, their laws result in some inequality. A
statutory discrimination will not be set aside if any
state of facts reasonably may be conceived to justify
it.
This court's presumption that all legislative acts are
constitutional places a heavy burden on a party challenging the
statute's constitutionality under rational basis review. See
Ferdon ex rel. Petrucelli v. Wisconsin Patients Comp. Fund, 2005
WI 125, ¶¶67-68, 284 Wis. 2d 573, 701 N.W.2d 440. If any doubt
exists as to the statute's constitutionality, it must be
resolved in favor of constitutionality. Id. To prevail, a
challenger must establish that the law is unconstitutional
beyond a reasonable doubt. Id.
¶77 We will uphold a statute against an equal protection
challenge if the classification bears a rational relationship to
some legitimate government interest. Smith, 323 Wis. 2d 377,
¶12. Notably, this requires no declaration by the State about
the law's purpose, nor evidence supporting the law's
rationality. The actual motivations of the enacting
governmental body are irrelevant. FCC v. Beach Communications,
508 U.S. 307, 315 (1993). Instead, "[i]n evaluating whether a
legislative classification rationally advances the legislative
objective, 'we are obligated to locate or, in the alternative,
construct a rationale that might have influenced the legislative
43
No. 2012AP2067
determination.'" Ferdon, 284 Wis. 2d 573, ¶74 (citing Aicher ex
rel. LaBarge v. Wisconsin Patients Comp. Fund, 2000 WI 98, ¶57,
237 Wis. 2d 99, N.W.2d 849).
¶78 The plaintiffs' equal protection argument focuses on
two distinct ways in which employees are disparately treated:
first, under Act 10, general employees who choose to associate
with a certified representative are limited to negotiating on
the sole issue of base wages. General employees who do not
associate with a certified representative, however, face no
limitations on what they may negotiate with their employer.
Second, Act 10 prohibits municipal employers from deducting
labor organization dues from the paychecks of general employees
who choose to associate with a certified representative.
General employees that belong to other organizations, however,
face no similar prohibition in having membership dues from those
organizations deducted from their paychecks.
¶79 We will address each challenged classification in
turn.
i. Collective Bargaining Limitations
¶80 The plaintiffs argue that Act 10 violates general
employees' rights to equal protection under the law because the
law limits represented general employees to negotiating base
wages, while non-represented general employees have no
limitations in what they may negotiate with their employer.
¶81 The fact that Act 10 creates two classes of public
employees by whether they elect to have a certified
representative for collective bargaining purposes denies no
44
No. 2012AP2067
employee equal protection under the law. As the defendants
accurately point out, if the plaintiffs were correct in their
argument, any public sector bargaining framework that resulted
in different treatment for represented and non-represented
general employees would be unconstitutional. This means if the
plaintiffs' equal protection argument were correct, any
collective bargaining scheme would be constitutionally infirm.
¶82 Legislative acts must be upheld when this court can
conceive of any facts upon which the legislation reasonably
could be based. Aicher, 237 Wis. 2d 99, ¶66. The Seventh
Circuit determined, and we agree: Act 10's requirement that base
wage increases above the cost of living require a municipal
voter referendum for certified bargaining agents "promote
flexibility in state and local government budgets by providing
public employers more leverage in negotiations." Wis. Educ.
Ass'n Council, 705 F.3d at 654. We conclude this classification
scheme rationally advances the legislative purpose of improving
Wisconsin's fiscal health through enhanced control over public
expenditures.
ii. Payroll Deduction Prohibitions
¶83 The plaintiffs also argue that Act 10 violates general
employees' rights to equal protection under the law because the
law prohibits employers from deducting labor organization dues
from the paychecks of general employees, while permitting
employers to deduct membership dues for other organizations.
¶84 As we noted above, because Act 10's payroll deduction
prohibition does not implicate the plaintiffs' associational
45
No. 2012AP2067
rights, we examine this provision of Act 10 under rational basis
review.
¶85 Act 10's prohibition on deducting labor organization
dues could be founded on the defendants' rational belief that
labor organizations are costly for the State. The State has a
legitimate interest, especially in the current economic climate,
in curtailing costs where possible. The prohibition on paycheck
deductions furthers this interest by imposing a burden that
affects the influence of labor organizations over general
employees who are less enthusiastic about participating in the
collective bargaining process. See Wis. Educ. Ass'n Council,
705 F.3d at 656-57. This provision of Act 10 does not prohibit
general employees from paying labor organization dues; it merely
requires that employees show the initiative to pay them on their
own.
¶86 Accordingly, we conclude Act 10's collective
bargaining limitations and payroll deduction prohibitions
survive the plaintiffs' equal protection challenge under
rational basis review.
46
No. 2012AP2067
D. Wisconsin Stat. § 62.623 and the Home Rule Amendment
¶87 The Milwaukee ERS21 requires that plan members
contribute, or have contributed on their behalf, 5.5% of their
earnable compensation.22 Milwaukee, Wis. Charter Ordinance § 36-
08-7. Prior to the enactment of Act 10, the City of Milwaukee
and participating city agencies funded these member
contributions on behalf of each participating employee hired
prior to January 1, 2010, while employees hired on or after
January 1, 2010, had to contribute 5.5% of their earnable
21
The Milwaukee Employe Retirement System was established
by ch. 396, Laws of 1937. In 1947, the legislature transferred
the governance, funding, and administration of the retirement
system to the City of Milwaukee. Subsequently, pursuant to Wis.
Stat. § 66.0101, the City of Milwaukee enacted Chapter 36 of the
Milwaukee Charter Ordinance, which has served as the governing
law of the Milwaukee ERS. The Milwaukee ERS provides retirement
and disability benefits, counseling and other services to
approximately 27,000 members. The Milwaukee ERS is primarily
responsible for administering retirement and disability benefits
for employees of the City of Milwaukee, Milwaukee Metropolitan
Sewerage District, the Wisconsin Center and the Milwaukee
Housing and Redevelopment Authorities, non-certified staff of
Milwaukee Public Schools and some employees of the Milwaukee
Area Technical College. The ERS pension trust fund is a defined
benefit pension plan that provides a monthly benefit to retirees
after reaching a minimum retirement age depending upon
employment history.
22
Earnable compensation is defined as essentially regular
base salary. Milwaukee, Wis. Charter Ordinance § 36-02-12. The
Milwaukee ERS also requires varying levels of contribution
depending on the employee's specific occupation. For general
employees, the required contribution is 5.5%, but for police
officers, fire fighters, and elected officials, it is 7%. Id. §
36-08-7. However, because employees classified as "public
safety employees" under Act 10 are unaffected by Wis. Stat.
§ 62.623, the plaintiffs' argument centers on those plan members
of the Milwaukee ERS classified as "general employees."
47
No. 2012AP2067
compensation on their own behalf. See id. Act 10 created Wis.
Stat. § 62.623, which prohibits the City of Milwaukee from
paying on behalf of a general employee the employee share of
required contributions to the Milwaukee ERS.23
23
Wisconsin Stat. § 62.623 provides, in part:
Beginning on July 1, 2011, in any employee retirement
system of a 1st class city, except as otherwise
provided in a collective bargaining agreement entered
into under subch. IV of ch. 111 and except as provided
in sub. (2), employees shall pay all employee required
contributions for funding benefits under the
retirement system. The employer may not pay on behalf
of an employee any of the employee's share of the
required contributions.
Every Wisconsin city is assigned to one of four classes.
Wisconsin statutes divide cities into the four classes, based on
population, as follows:
- First class cities, with a population of 150,000 or over.
- Second class cities, with a population of at least
39,000, but less than 150,000.
- Third class cities, with a population of at least 10,000,
but less than 39,000.
- Fourth class cities, with a population of less than
10,000.
48
No. 2012AP2067
¶88 The plaintiffs24 argue that Wis. Stat. § 62.623
violates the "home rule amendment," Wis. Const. art. XI, § 3(1).
¶89 Cities are creatures of the state legislature and have
no inherent right of self-government beyond the powers expressly
granted to them.25 See, e.g., Van Gilder v. City of Madison, 222
Wis. 58, 73, 268 N.W. 108 (1936) (citing City of Trenton v. New
Wis. Stat. § 62.05(1). The classes are primarily meant to be
population-based distinctions, but a city does not move to a
higher class automatically if its population increases past a
certain population threshold. In addition to having the
necessary population, the city must make any requisite
modifications in government and a proclamation must be issued by
the mayor or city manager and publish this change according to
law. Wis. Stat. § 62.05(2). For example, Madison has a
sufficient population to meet the first-class city population
requirement, but for purposes of statutes related to cities,
Madison remains a city of the second class. Milwaukee is
currently Wisconsin's only first-class city. Susan C. Paddock,
The Changing World of Wisconsin Local Government, 1997-98
Wisconsin Blue Book 119.
24
Wisconsin Stat. § 62.623 applies to only first-class
cities. Consequently, Local 61 is the sole challenger for the
home rule and contract clause issues. However, for the sake of
consistency, we will still refer to Local 61 as "the plaintiffs"
in Sections 3 and 4 of this opinion.
25
As we explained in City of Trenton v. New Jersey, 262
U.S. 182, 187 (1923):
In the absence of state constitutional provisions
safeguarding it to them, municipalities have no
inherent right of self-government which is beyond the
legislative control of the state. A municipality is
merely a department of the state, and the state may
withhold, grant or withdraw powers and privileges as
it sees fit. However great or small its sphere of
action, it remains the creature of the state
exercising and holding powers and privileges subject
to the sovereign will.
49
No. 2012AP2067
Jersey, 262 U.S. 182, 187 (1923)). Adopted in 1924, the home
rule amendment was intended to provide cities and villages26
with greater autonomy over local affairs.27 The home rule
amendment, Wis. Const. art. XI, § 3(1) provides:
Cities and villages organized pursuant to state law
may determine their local affairs and government,
subject only to this constitution and to such
enactments of the legislature of statewide concern as
with uniformity shall affect every city or every
village. The method of such determination shall be
prescribed by the legislature.
26
Wisconsin's cities and villages are sometimes referred to
as "incorporated" municipalities or "municipal corporations."
This reflects to some extent their legal status. Early in state
history, villages and cities were incorporated by special acts
of the legislature. In 1871 and 1892, constitutional amendments
were adopted prohibiting the legislature from incorporating any
city, village, or town by special act. See Wis. Const. art. IV,
§ 31. As a result, cities and villages are now incorporated
according to general incorporation laws, and the basic outline
of city and village government is set forth in statutes
(sometimes referred to as "general charter" laws). Wis. Stat.
chs. 61 (villages) and 62 (cities).
The home rule amendment does not apply to counties in
Wisconsin. However, counties have home rule protection pursuant
to statute, though it is more limited than the protection
afforded by constitutional municipal home rule. See Wis. Stat.
§ 59.03(1); Jackson Cnty. v. DNR, 2006 WI 96, ¶17, 293 Wis. 2d
497, 717 N.W.2d 713.
27
Generally, a city or village is statutorily required to
enact a charter ordinance in order to override a state law as it
relates to the local affairs and government of the city or
village. See Wis. Stat. § 66.0101. It is uncontested in this
case that the City of Milwaukee properly enacted a charter
ordinance and, consequently, has properly exercised its home
rule authority in governing, funding, and administrating the
Milwaukee ERS. Accordingly, our discussion is limited to the
question of whether the state legislature, by enacting Wis.
Stat. § 62.623, has impermissibly infringed on the City of
Milwaukee's home rule authority.
50
No. 2012AP2067
¶90 As the court of appeals noted in its certification to
this court, the crux of this challenge lies in the parties'
disagreement on the proper legal test to employ in determining
whether a legislative enactment violates the home rule
amendment.
¶91 The defendants argue that our case law holds, as a
threshold matter, that if a legislative enactment applies
uniformly statewide, it cannot violate the home rule amendment.
In other words, the defendants contend the determination of
whether a legislative enactment is primarily a statewide or
local concern is irrelevant, so long as the legislation "with
uniformity shall affect every city or village." Wis. Const.
art. XI, § 3(1).28
¶92 In stark contrast to the defendants' position, the
plaintiffs contend that, in order to comply with the home rule
amendment, a legislative enactment must (1) affect a matter of
statewide concern, and must (2) apply with uniformity statewide.
Further, the plaintiffs argue that if a home rule municipality
has enacted a charter ordinance that relates to a matter of
purely local concern, any conflicting state statute must be
found unconstitutional.
¶93 In short, the parties dispute whether a uniformly
applied state law may permissibly preempt the charter ordinance
28
The conditional phrase in the home rule amendment that
state legislation "with uniformity shall affect every city or
village" is frequently referred to in case law and secondary
authorities as the "uniformity requirement."
51
No. 2012AP2067
of a home-rule city if the ordinance concerns a matter of purely
local affairs.
¶94 Generally, under our analytical framework for home
rule challenges, we first establish the character of the
legislative enactment at issue, and only then consider whether
the uniformity requirement is satisfied if the state law
concerns a matter of primarily local affairs. However, this
home rule challenge is atypical because the heart of the
parties' dispute is not limited to the application of the
relevant law to the facts presented; instead, it centers on the
parties' wildly divergent positions on the applicable analytical
framework. In their certification to this court, the court of
appeals requested that we clarify the proper legal test to apply
in constitutional home rule challenges.
¶95 In order to address the court of appeals' request for
clarity and resolve the parties' arguments, we first outline the
relevant analytical framework. In so doing, we establish that,
under our controlling precedent, no merit exists in the
plaintiffs' contention that the legislative enactment at issue
in a home rule challenge must be a matter of statewide concern
and uniformly applied statewide to withstand constitutional
scrutiny. After clarifying the proper analytical framework, we
apply it to the facts of this case and hold that Wis. Stat.
§ 62.623 primarily concerns a matter of statewide concern and
does not violate the home rule amendment to the Wisconsin
Constitution. Accordingly, we need not go any further to
52
No. 2012AP2067
conclude that Wis. Stat. § 62.623 survives the plaintiffs' home
rule challenge.
i. Analytical Framework
¶96 For the purposes of our home rule analysis, we have
outlined three areas of legislative enactment: those that are
(1) exclusively a statewide concern; (2) exclusively a local
concern; or (3) a "mixed bag." See, e.g., Adams v. State
Livestock Facilities Siting Review Bd., 2012 WI 85, ¶30, 342
Wis. 2d 444, 820 N.W.2d 404 (citing State ex rel. Michalek v.
LeGrand, 77 Wis. 2d 520, 527, 253 N.W.2d 505 (1977)).
¶97 If the legislative enactment concerns a policy matter
that is exclusively of statewide concern, we have held that the
home rule amendment grants no city or village authority to
regulate the matter. Van Gilder, 222 Wis. at 84 (holding that
"[w]hen the Legislature deals with matters which are primarily
matters of state-wide concern, it may deal with them free from
any restriction contained in the home rule amendment").29
¶98 Conversely, if the legislative enactment concerns a
matter of purely local affairs, home rule municipalities may
regulate those local matters and, under the home rule amendment,
state legislation that would preempt or make that municipal
regulation unlawful, unless uniformly applied statewide, is
29
However, the home rule amendment does not prohibit the
legislature from delegating to municipalities the statutory
authority to regulate particular areas that are primarily
matters of statewide concern. See Wisconsin's Environmental
Decade, Inc. v. Dept. of Natural Res., 85 Wis. 2d 518, 533, 271
N.W.2d 69 (1978).
53
No. 2012AP2067
prohibited. Michalek, 77 Wis. 2d at 529 (holding that "[a]s to
an area solely or paramountly in the constitutionally protected
area of 'local affairs and government,' the state legislature's
. . . preemption or ban on local legislative action would be
unconstitutional").
¶99 However, notwithstanding the plaintiffs' assertions to
the contrary, our case law has consistently held that the
legislature may still enact legislation that is under the home
rule authority of a city or village if it with uniformity
"affect[s] every city or every village." Wis. Const. art. XI,
§ 3(1); see, e.g., Adams, 342 Wis. 2d 444, ¶¶29, 36 (noting
that, while municipalities may adopt ordinances regulating
issues of both statewide and local concern, the legislature has
the authority to withdraw this power by creating uniform state
standards that all political subdivisions must follow); City of
West Allis v. Cnty. of Milwaukee, 39 Wis. 2d 356, 366, 159
N.W.2d 36 (1968) (explaining that when "the matter enacted by
the legislature is primarily of local concern, a municipality
can escape the strictures of the legislative enactment unless
the enactment applies with uniformity to every city and
village."); Van Gilder, 222 Wis. at 84 (stating that "when the
Legislature deals with local affairs and government of a city,
if its act is not to be subordinate to a charter ordinance, the
act must be one which affects with uniformity every city");
State v. Baxter, 195 Wis. 437, 449, 219 N.W. 858 (1928)
(explaining that "where legislation of a city enacted within the
scope of its home rule powers comes in conflict with state
54
No. 2012AP2067
legislation, the legislation of the city prevails over the state
legislation, unless the state legislation affects uniformly
every city of the state"). If the state legislation concerning
purely local affairs does not meet the uniformity requirement,
cities and villages may exempt themselves from the law by
adopting a charter ordinance to that effect. See West Allis, 39
Wis. 2d at 367-68.
¶100 Finally, in cases where the legislative enactment
touches on an issue that concerns both statewide and local
government interests (a "mixed bag"), the court must first
determine whether the matter is primarily a matter of statewide
or local concern. After making this determination, the court
then applies the corresponding test. See, e.g., Michalek, 77
Wis. 2d at 528 (concluding the matter at issue was paramountly
local in nature and, accordingly, treating it as being of local
concern for purposes of home rule analysis); State ex rel.
Brelsford v. Ret. Bd. of Policemen's Annuity & Benefit Fund of
Milwaukee, 41 Wis. 2d 77, 86, 163 N.W.2d 153 (1968) (citation
omitted) (reviewing the consistency of two home rule cases and
noting "the court was confronted with a subject of legislation
which partook both of the nature of a 'local affair' and also
that of 'state-wide concern,' but in the former case it held
that the matter was primarily a 'local affair,' while the latter
decision held that the 'state-wide concern' feature was
paramount."); City of Fond du Lac v. Town of Empire, 273 Wis.
333, 338-39, 77 N.W.2d 699 (1956) (explaining that "where a
matter affects the interests of local residents as well as the
55
No. 2012AP2067
interests of the people in other areas of the state, the test to
be applied in resolving the matter is that of paramount interest
. . . .").
¶101 In sum, our home rule case law instructs us that, when
reviewing a legislative enactment under the home rule amendment,
we apply a two-step analysis. First, as a threshold matter, the
court determines whether the statute concerns a matter of
primarily statewide or primarily local concern. If the statute
concerns a matter of primarily statewide interest, the home rule
amendment is not implicated and our analysis ends. If, however,
the statute concerns a matter of primarily local affairs, the
reviewing court then examines whether the statute satisfies the
uniformity requirement. If the statute does not, it violates
the home rule amendment.
ii. The Plaintiffs' Local Affairs Argument
¶102 The plaintiffs, against the great weight of our
precedent, broadly depict the home rule amendment as prohibiting
the State from enacting any legislation that preempts the
charter ordinance of a home-rule city when the ordinance
concerns a matter of exclusively local affairs. To support this
claim, the plaintiffs rely on this court's holdings in Michalek,
77 Wis. 2d 520, and Thompson v. Kenosha Cnty., 64 Wis. 2d 673,
221 N.W.2d 845 (1974).30
30
The plaintiffs also argue that matters of a "purely local
concern" are accorded more protection under the home rule
amendment than matters categorized as "primarily" local in
nature. We are unconvinced. We find nothing in our case law to
support this distinction and the plaintiffs failed to provide
any additional persuasive authority.
56
No. 2012AP2067
¶103 The plaintiffs interpret Michalek to hold that
legislation purporting to preempt a charter ordinance that
concerns a matter of local affairs violates the home rule
amendment. In Michalek, this court upheld a City of Milwaukee
rent-withholding charter ordinance, concluding the ordinance
primarily concerned a matter of local affairs. Michalek, 77
Wis. 2d at 529, 536. In discussing the reach of the home rule
amendment, the court stated that "[a]s to an area solely or
paramountly in the constitutionally protected area of 'local
affairs and government,' the state legislature's delegation of
authority to legislate is unnecessary and its preemption or ban
on local legislative action would be unconstitutional." Id. at
529.
¶104 Relying on this isolated passage, the plaintiffs
construe Michalek to hold that state legislation can never
preempt a municipal charter ordinance regulating issues of
purely local affairs, regardless of whether the legislation
applies uniformly statewide.
¶105 The plaintiffs' reading of Michalek ignores the fact,
however, that the court held the charter ordinance and state
legislation at issue did not actually conflict with one
another.31 Therefore, though Michalek determined the charter
31
"They are not locomotives on a collision course. Rather
each moves on its own track, parallel and not too far apart,
traveling in the same direction. With the ordinance on track to
further a local affairs concern and the statute on track to
advance a matter of statewide concern, we see no constitutional
reason to derail either." State ex rel. Michalek v. LeGrand, 77
Wis. 2d 520, 530, 253 N.W.2d 505 (1977).
57
No. 2012AP2067
ordinance concerned a matter of primarily local affairs, the
court did not need to reach the question of whether the
contested state legislation satisfied the uniformity requirement
of the home rule amendment. In fact, the court in Michalek
clarified this very point:
With no conflict between ordinance and statute, and no
potential for conflict, we do not give consideration
to the undiscussed question whether the home rule
amendment reference to "enactments of legislative and
state-wide concern as shall with uniformity affect
every city and every village," (Art. XI, sec. 3,
Wis.Const.) includes or does not include a statute
applying only to counties with over 100,000
population.
Michalek, 77 Wis. 2d at 530 n.16. Put differently, Michalek
makes plain that if the court had reached a different conclusion
and found the legislation and charter ordinance did, in fact,
conflict, the court would have proceeded by examining whether
the statute applied uniformly statewide. Read in this context,
Michalek does not hold that state legislation that conflicts
with a charter ordinance concerning a matter of local affairs is
per se unconstitutional. The plaintiffs' assertion that
Michalek supports such a proposition is entirely misplaced.
Michalek is in accord with this court's long-held rule that when
the charter ordinance of a home rule city concerns a matter of
local affairs, conflicting legislation must be uniformly applied
statewide to satisfy the home rule amendment.
¶106 The plaintiffs' reliance on Thompson hinges on the
following language: "Sec. 3, art. XI of the constitution places
two limitations on the legislature's power to enact statutes
58
No. 2012AP2067
interfering with city and village affairs: (1) The subject of
the statutes must be a matter of statewide concern; and (2) such
statutes must uniformly affect all cities and villages."
Thompson, 64 Wis. 2d at 683. The plaintiffs argue that this
explicit statement that two limitations exist——statewide concern
and uniformity——demonstrates that the uniformity of legislation,
alone, does not satisfy the home rule amendment.
¶107 We acknowledge the language that the plaintiffs
highlight in Thompson appears, at first blush, to conflict with
this court's prior interpretations of the home rule amendment.
However, a close reading reveals that the implied rule in
Thompson cited to by the plaintiffs——that, in matters concerning
local affairs, the home rule amendment requires state
legislation to concern a matter of statewide concern and be
uniformly applied statewide——is never employed by the Thompson
court and is, in fact, internally inconsistent with the court's
own analysis.
¶108 In Thompson, we examined a challenge to a state
statute that permitted counties to create a county assessor
system. Id. at 676. Specifically, the challengers argued that
the statute violated the home rule amendment because it
impermissibly superseded the assessment powers of cities,
villages, and towns within such counties. Id. at 682-83. After
setting out the language emphasized by the plaintiffs in this
case, the Thompson court then considered whether the state law
at issue violated the home rule amendment. First, the court
determined that the subject matter of the legislation, which
59
No. 2012AP2067
dealt with property tax assessments, was primarily a statewide
concern. Id. at 686. Subsequently, in considering the
uniformity requirement, the Thompson court noted:
th[e] uniformity limitation only applies if the
subject of the statute concerns primarily local
affairs. If the subject of the legislation is of
statewide concern, the uniformity restriction is
inapplicable. . . . Since we have concluded that the
subject of [the state law at issue] was primarily a
matter of statewide concern, the uniformity
requirement of the home rule amendment is not
applicable here. . . . Thus, even if [the state law at
issue] concerns local affairs, and must therefore
affect cities and villages uniformly, we hold that
this uniformity requirement is not violated.
Id. at 686-87 (emphasis added). Thus, Thompson held that, even
had the court decided the state law at issue concerned a matter
of local affairs rather than a statewide concern, the statute
would still be upheld because it "applie[d] with equal force
throughout the state." Id. at 688. We find it significant that
the reasoning and holding in Thompson read as a whole, unlike
the isolated passage relied upon by the plaintiffs, harmonizes
with controlling precedent.
¶109 The reasoning and holdings of Thompson and Michalek
are consistent with the entire body of our longstanding home
rule jurisprudence and we find no conflict in our precedent to
60
No. 2012AP2067
be resolved.32 Consequently, we perceive no merit in the
plaintiffs' broad characterization of the legislative power
conferred to municipalities by the home rule amendment.
Instead, we reaffirm that, while the home rule amendment
authorizes municipal regulation over matters of local concern
and protects that regulation against conflicting state law,
state law will still preempt that municipal regulation if it
"with uniformity . . . affect[s] every city or every village."
Wis. Const. art. XI, § 3(1).
32
In fact, the plaintiffs' interpretation of our home rule
jurisprudence appears to be as novel as it is mistaken. In
surveying the ample scholarship on the topic of state
constitutional home rule, we are unable to find a single
interpretation of our home rule precedent that aligns with the
plaintiffs' argument that no state law may preempt a charter
ordinance that concerns a matter of purely local affairs. See,
e.g., Kerry A. Burchill, Madison's Minimum-Wage Ordinance,
Section 104.001, and the Future of Home Rule in Wisconsin, 2007
Wis. L. Rev. 151, 164-65 ("[Wisconsin's home rule] amendment
does provide an exception which permits the legislature to
regulate an area of local concern if the enactment uniformly
applies to every city or village in the state."); Robert D.
Zeinemann, Overlooked Linkages Between Municipal Incorporation
and Annexation Laws: An in-Depth Look at Wisconsin's Experience,
39 Urb. Law. 257, 266 n.64 (2007) ("Constitutional home rule in
Wisconsin provides only minimal autonomy to cities and villages
because, even in matters of primarily local concern, the
Wisconsin legislature may enact legislation controlling those
issues if the act uniformly applies to every city or village in
the state."); see also 1 Chester James Antieau, Mun. Corp. Law.
§ 3.20 (1995); Douglas A. Yanggen & Leslie L. Amrhein,
Groundwater Quality Regulation: Existing Governmental Authority
and Recommended Roles, 14 Colum. J. Envtl. L. 1, 18 (1989);
Robert W. Hansen, Municipal Home Rule in Wisconsin, 21 Marq. L.
Rev. 2, 82 (1937); Eugene McQuillin, 2 McQuillin Mun. Corp. §
4:82 (3d ed.).
61
No. 2012AP2067
¶110 Having reaffirmed our established analytical framework
for home rule amendment challenges, we now apply that framework
to the legislative enactment at issue, Wis. Stat. § 62.623.
iii. Statewide or Local Concern
¶111 We first address whether Wis. Stat. § 62.623 concerns
a matter of exclusively statewide concern, exclusively local
affairs, or a mix of both statewide and local interests. The
defendants argue that Wis. Stat. § 62.623 addresses a matter of
statewide concern. Specifically, the defendants contend that
the legislature, in enacting Act 10, clearly believed that the
entire State of Wisconsin——including its municipalities——was in
a financial crisis. In order to effectively respond to this
crisis, the legislature deemed it essential to lower the costs
associated with public employees statewide. Further, the
defendants cite to the State's "shared revenue" program and
other state aid provided to counties and municipalities to
62
No. 2012AP2067
bolster the argument that local spending is an issue of
statewide concern.33
¶112 The plaintiffs, on the other hand, argue that Wis.
Stat. § 62.623, by prohibiting the City of Milwaukee and
participating city agencies from paying the employee share of
contributions to the Milwaukee ERS, unconstitutionally infringes
on a matter of purely local concern. Both the plaintiffs and
the dissent34 cite to Van Gilder for the proposition that issues
tied to a municipality's local spending powers——here, the City
of Milwaukee's administration of its own retirement system——is
quintessentially a local affair. 222 Wis. at 81-82 (quoting J.
Cardozo in Adler v. Deegan, 167 N.E. 705, 713 (1929)) ("There
are some affairs intimately connected with the exercise by the
city of its corporate functions, which are city affairs
33
State-generated revenues are distributed to local
governments pursuant to the State's "shared revenue" program.
See, e.g., Wis. Stat. ch. 79. In 2011, the legislature
allocated $824,825,715 for distribution to counties and
municipalities in fiscal year 2011 and $748,075,715 for
distribution "in 2012, and each year thereafter." Wis. Stat.
§ 79.01(2). The plaintiffs vehemently disagree with the
defendants' depiction of the State's shared revenue program,
noting that under the program a municipality is unable to
increase expenditures in order to receive more funding from the
State. The plaintiffs are correct that nothing in the record
supports the defendants' implication that the shared revenue
program contributes to, or is affected by, the administration of
the Milwaukee ERS. Accordingly, the defendants' reference to
the shared revenue program merely provides us with an
illustration of the uncontested fact that there are
intergovernmental transfers between the state and its
municipalities.
34
Dissent, ¶223.
63
No. 2012AP2067
only . . . . Most important of all perhaps is the control of the
locality over payments from the local purse").
¶113 This court has long recognized that the terms "local
affairs" and "statewide concern" in the home rule amendment are
problematically vague. See, e.g., Van Gilder, 222 Wis. at 73
(observing that the phrases "local affairs" and "statewide
concern" are "practically indefinable"). Further, the terms
"local affairs" and "statewide concern" carry the risk of
oversimplifying reality: the "functions of state and local
governments necessarily overlap," Van Gilder, 222 Wis. at 64,
and, moreover, the nature of governmental functions can change
over time.35 Consequently, home rule challenges are, by
necessity, fact-specific inquiries, and determinations are made
on an ad hoc basis. See, e.g., California Fed. Sav. & Loan
Ass'n. v. City of Los Angeles, 812 P.2d 916, 925 (Cal. 1991)
(noting that a "municipal affair" and "statewide concern"
represent "legal conclusions rather than factual descriptions").
¶114 Here, the public policy matter at issue
unquestionably touches on matters of both statewide and local
concern. The administration of a city's retirement system,
entirely self-reliant in both its management and funding,
certainly concerns a matter of local affairs. As the plaintiffs
correctly observe, the regulation of local budgetary policy and
35
See, e.g., Helmer v. Superior Court of Sacramento Cnty.,
191 P. 1001, 1001 (Cal. 1920) (noting that "[t]he term
'municipal affairs' is not a fixed quantity, but fluctuates with
every change in the conditions upon which it is to operate").
64
No. 2012AP2067
spending have long been considered matters of purely local
concern. See, e.g., Van Gilder, 222 Wis. 58. Further, the
enactment of Act 10 negatively impacts the City of Milwaukee's
sensible interest in offering greater employee benefits in order
to attract personnel. In fact, the initial legislative purpose
in authorizing the establishment of the Milwaukee ERS was to
"strengthen the public service in cities of the first class by
establishing the security of such retirement benefits."
§ 31(1), ch. 441, Laws of 1947.
¶115 Conversely, the statewide regulation of public sector
employee expenditures during a period of economic recession
unquestionably involves a matter of statewide importance. The
terms of the public employer-employee relationship have long
been the subject of statewide legislation in Wisconsin. In
fact, Wisconsin was the first state in the nation to establish a
framework for public employees to engage in collective
bargaining.36 Since that time, the state legislature has enacted
numerous statutes dealing with a broad range of issues relating
to the public employer-employee relationship. See, e.g., Wis.
Stat. § 111.01 (governing standards regarding employment peace);
Wis. Stat. § 111.321-325 (prohibiting employment
discrimination); Wis. Stat. § 111.70 (governing statewide
collective bargaining framework); Wis. Stat. ch. 230
36
See, Todd C. Dvorak, Heeding "The Best of Prophets":
Historical Perspective and Potential Reform of Public Sector
Collective Bargaining in Indiana, 85 Ind. L.J. 701, 707-08
(2010).
65
No. 2012AP2067
(establishing civil service protections for state employees).
Further, statewide legislation aimed at improving the fiscal
health of the state budget is indisputably a general state
concern.
¶116 Having concluded the conflict between Wis. Stat.
§ 62.623 and the Milwaukee Charter Ordinance implicates both
statewide and local concerns, we apply the "test of
paramountcy." As explained supra ¶100, when a challenged
legislative enactment impacts both statewide and local
interests, we must determine whether the legislation "is
primarily or paramountly a matter of 'local affairs and
government' under the home rule amendment or of 'state-wide
concern' under the exception thereto . . . ." Michalek, 77 Wis.
2d at 528.
¶117 Our home rule jurisprudence instructs this court, in
confronting the "heavy burden of developing the lines" between
matters of statewide and local concern, to consider whether the
conflict between the charter ordinance and the statute at issue
more greatly concerns the people of the entire state or the
66
No. 2012AP2067
people in the municipality.37 See, e.g., Michalek, 77 Wis. 2d at
527 (noting "that many matters while of 'state-wide concern,'
'affecting the people and state at large somewhat remotely and
indirectly, yet at the same time affect the individual
municipalities directly and intimately, can consistently be, and
are, 'local affairs'. . . .'") (quoting State ex rel. Ekern v.
City of Milwaukee, 190 Wis. 633, 640, 290 N.W. 860 (1926));
Brelsford, 41 Wis. 2d at 86-87 (reasoning that a charter
ordinance regarding the regulation of pension benefits for
Milwaukee police officers who teach upon retirement is of more
interest to Milwaukee than the state at large); Fond du Lac, 273
Wis. at 338-39 (explaining that "where a matter affects the
interests of local residents as well as the interests of the
people in other areas of the state, the test to be applied in
resolving the matter is that of paramount interest . . . .").
37
This is a rational approach considering that, in weighing
conflicts between state and local regulation, the policy matter
at issue in a local ordinance will not always equate to the
policy matter at issue in the state legislation. Though this is
unavoidable, it is also decidedly problematic, given that the
label affixed to the matter at issue often governs whether there
is a constitutional violation. The considerable significance
this analytical approach ascribes to the box a policy matter is
placed in exacerbates the risk of a cavalier, mechanistic
jurisprudence. Accordingly, given that the policy matters of
conflicting state and local regulations often diverge in scope
and purpose, and their categorization is of substantial
consequence, we conclude that our established approach of
categorizing the policy matters of conflicting regulations by
examining whether the concern arising from the conflict is
greatest within the municipality or the state to be sensible.
67
No. 2012AP2067
¶118 Under this approach, while we recognize that the
impact of Act 10 on both the Milwaukee ERS and the City of
Milwaukee is significant and unquestionably touches on a matter
of local affairs, we conclude the Act primarily implicates a
matter of statewide concern. The State has a substantial
interest in maintaining uniform regulations on public pension
plans in order to reduce the fiscal strain caused by state and
local expenditures for public employee compensation. Further,
the State is obligated to maintain a functioning civil service
system. Public employees work in areas of fundamental
importance, ranging from education and public health, to housing
and sanitation. Without question, the State has an interest in
seeking to safeguard the vitality of these essential services in
times of economic uncertainty and duress.38
¶119 We do not suggest that the City of Milwaukee
mismanaged its retirement system or that Governor Walker and
state legislature enacted a law that has been or will be
effective in fulfilling its purported objectives. Such
political inquiries are beyond the purview of this court. The
legislature has broad latitude to experiment with economic
38
The dissent suggests that our conclusion rests primarily
on the fiscal concerns underlying and leading up to the
enactment of Act 10. Dissent, ¶219. Wisconsin's considerable
financial interest in alleviating a massive budget shortfall is
certainly a meaningful factor in our analysis. But, as
discussed supra ¶¶115, 118, we also take into account several
other factors, including the scope of the legislation, the
State's interest in maintaining essential public services, and
its historic role in regulating matters affecting the employer-
employee relationship.
68
No. 2012AP2067
problems and we do not presume to second-guess its wisdom. See
Ferguson v. Skrupa, 372 U.S. 726 (1963). Instead, our review is
limited to determining whether the policy matter at issue
between the conflicting state and local regulation is best
described as involving a local affair or a statewide concern.
¶120 Here, the state legislation at issue, Act 10, was
enacted by the legislature during a period of intense fiscal
uncertainty.39 The National Association of State Budget Officers
noted that 2010 "presented the most difficult challenge for
states' financial management since the Great Depression. . . . "
Nat'l Governors Ass'n & Nat'l Ass'n of State Budget Officers,
The Fiscal Survey of States vii (June 2010). At the time Act 10
was enacted, the Department of Administration was predicting
39
The dissent takes issue with our review of the policy
concerns underlying Act 10 as a whole, rather than "the specific
statute at issue, Wis. Stat. § 62.623(1)." Dissent, ¶¶226, 231.
The dissent's position illustrates the importance of how one
frames the policy matter at issue. The dissent defines the
issue by looking solely at the local ordinance. This technique
demonstrates what happens when one adopts a results-driven
approach. As we explained supra note 37, we conclude the more
sensible approach is to balance the interests of both the state
legislation and the charter ordinance at issue. The inquiry is
not simply whether there is an interest of local affairs.
Indeed, we acknowledge repeatedly that the interests of the City
of Milwaukee are heavily implicated here. Rather, we hold the
appropriate inquiry is whether the concern arising from the
conflicting regulation is greatest within the municipality or
the state.
69
No. 2012AP2067
Wisconsin was facing a $3.6 billion dollar budget deficit.40
Nationwide, analysts projected that states would face close to
$300 billion in budget shortfalls between fiscal years 2009 and
2012.
¶121 Enacted during an emergency legislative session, and
referred to broadly as the Budget Repair Bill, the scope of Act
10 is extraordinary. It addresses a broad range of subjects,
including health insurance premiums, collective bargaining of
state employees, retirement contributions for public employees
statewide, and modifications to the earned income tax credit.
¶122 It is significant that Act 10 impacts the entire
state. Act 10 is not narrow and particularized in its
application; rather, it is a broad and comprehensive law that
applies, not just to City of Milwaukee employees, but to every
general employee in the State of Wisconsin. Governor Walker and
the legislature determined that, considering the challenges
presented by the grim economic climate, it was imperative to
make drastic public policy changes, in several areas of the law,
spanning the entire state.
¶123 We find that, given the facts presented in this case,
the conflicting state and local regulations are of more
paramount concern within the state as a whole than in the City
40
Wisconsin Department of Administration, State of
Wisconsin 2011-13 Executive Budget in Brief,
http://www.doa.state.wi.us/Documents/DEBF/Budget/Biennial%20Budg
et/Biennial%20Budget%20Archives/2011-
13%20Biennial%20Budget/2011-13_BIB.pdf, (last visited June 19,
2014).
70
No. 2012AP2067
of Milwaukee. Accordingly, we conclude that Wis. Stat. § 62.623
and related statutes are primarily a matter of statewide
concern.
¶124 We note the plaintiffs insist this conclusion cannot
be reached without ignoring the deference owed to a statement of
intent included in a 1947 legislative amendment pertaining to
the Milwaukee ERS.41 We find this argument unpersuasive. The
statement of intent referenced by the plaintiffs provides:
For the purpose of giving to cities of the first class
the largest measure of self-government with respect to
pension annuity and retirement systems compatible with
the constitution and general law, it is hereby
declared to be the legislative policy that all future
amendments and alterations to this act are matters of
local affair and government and shall not be construed
as an enactment of state-wide concern.
§ 31(1), ch. 441, Laws of 1947. The plaintiffs argue that this
statement of intent preserved the City of Milwaukee's autonomy
in managing the Milwaukee ERS and precluded future state
legislative enactments that infringe on that autonomy.
¶125 The plaintiffs overstate their case. To be sure, this
court has held that legislative determinations regarding whether
a policy matter constitutes a "statewide concern" or a matter of
"local affairs," is entitled great weight when categorizing
legislative acts. See, e.g., Van Gilder, 222 Wis. at 73-74
(noting that "[e]ven though the determination made by [the
41
In 1937, the legislature enacted a law that authorized
the City of Milwaukee to create the Milwaukee ERS. See ch. 396,
Laws of 1937. In 1947, the legislature amended that act and
included the statement of intent referenced above. § 31, ch.
441, Laws of 1947.
71
No. 2012AP2067
legislature] should be held not to be absolutely controlling,
nevertheless it is entitled to great weight because matters of
public policy are primarily for the legislature").
¶126 However, we reject the plaintiffs' contention that the
legislature's declaration in 1947 that the Milwaukee ERS is a
matter of local concern is an immutable determination. While
the legislature in 1947 may have intended to block future
legislatures from regulating public sector pension funds in the
City of Milwaukee, it unquestionably lacked that power through
direct legislative action, let alone through a general statement
of legislative intent. Wisconsin case law has long held that
"[o]ne legislature may not bind a future legislature's
flexibility to address changing needs. Thus, one legislature
may not enact a statute which has implications of control over
the final deliberations or actions of future legislatures."
Flynn v. Dep't of Admin., 216 Wis. 2d 521, 543, 576 N.W.2d 245
(1998) (internal quotation marks omitted).
¶127 Further, the nature of public policy matters is not
static,42 and as a result, the character of governmental
functions can change over time. Plainly, the legislature's
42
See, e.g., Kenneth E. Vanlandingham, Municipal Home Rule
in the United States, 10 Wm. & Mary L. Rev. 2, 291 (1968);
Robert W. Hansen, Municipal Home Rule in Wisconsin, 21 Marq. L.
Rev. 2, 77 (1937) ("What is quite local in character today may
not be so tomorrow. In the 'horse-and-buggy' days of an earlier
era it is quite conceivable that maintenance of village streets
could be placed in the category of local affairs. Today when
trucks and busses drive from city to city, village to village is
it still so?").
72
No. 2012AP2067
determination in 1947 that pension and retirement plans are a
local concern does not mean it is an accurate portrayal of how
pension and retirement plans impact the fiscal realities of
Wisconsin in 2014. See, e.g., 1 Chester James Antieau,
Municipal Corporation Law § 3.40, at 3-108 (1995) ("The danger[]
to be avoided [is] . . . a temptation to consider something
'state' or 'local' because it was so denominated fifty years
ago").43
¶128 The ultimate determination whether a legislative
enactment is primarily a matter of local or statewide concern
rests with this court and not the legislature. Van Gilder, 222
Wis. 58. Thus, while we give deference to the legislature's
1947 proclamation, it is not conclusive in our home rule
analysis of Wis. Stat. § 62.623.
¶129 Therefore, for the reasons explained above, we hold
that Wis. Stat. § 62.623 concerns a matter of primarily
statewide concern. Accordingly, we need not go any further to
conclude that Wis. Stat. § 62.623 survives the plaintiffs' home
rule challenge.
43
Act 10 did not provide an express legislative declaration
that the apportionment of contributions to the Milwaukee ERS is
a matter of statewide concern. The defendants argue, however,
that Act 10 contained an implicit determination that it was a
matter of statewide concern because of the restrictions Wis.
Stat. § 62.623 imposed. The plaintiffs counter that no case law
supports the notion that implicit legislative determinations are
relevant in home rule analysis. Because we decide the parties'
statewide concern arguments on other grounds, we do not need to
address the issue of whether arguably implicit legislative
determinations should be accorded weight.
73
No. 2012AP2067
E. Wisconsin Stat. § 62.623 and the Contract Clause
¶130 Having determined that Wis. Stat. § 62.623 does not
violate the home rule amendment, we turn to whether the statute
violates the constitutionally protected right of parties to
contract with each other.
¶131 As we explained supra ¶87, the Milwaukee ERS44 requires
that plan members contribute, or have contributed on their
behalf, 5.5% of their earnable compensation. Prior to the
enactment of Act 10, the City of Milwaukee funded the member
contributions of each municipal employee hired prior to January
1, 2010. Wisconsin Stat. § 62.623, created by Act 10, prohibits
the City of Milwaukee from making these contributions to the
Milwaukee ERS on the plan member's behalf.
¶132 Chapter 36 of the Milwaukee Charter Ordinance
("Chapter 36") establishes the framework of the Milwaukee ERS.
The plaintiffs argue these provisions contractually guarantee
that the City of Milwaukee will fund the member contributions to
the Milwaukee ERS on behalf of each participating employee hired
prior to January 1, 2010, and that, consequently, Wis. Stat.
§ 62.623 constitutes an unconstitutional impairment of
contractual obligations. The defendants counter that Wis. Stat.
44
The Milwaukee ERS is a defined benefit plan. Defined
benefit plans consist of a general pool of assets, rather than
individual dedicated accounts, and provide plan members, upon
retirement, a fixed periodic payment. See, e.g., Comm'r v.
Keystone Consol. Indus., Inc., 508 U.S. 152, 154 (1993).
Generally, the asset pools of defined benefit plans may be
funded by employee contributions, employer contributions, or a
combination of both. Id.
74
No. 2012AP2067
§ 62.623 impairs no contractual rights between the City of
Milwaukee and its employees. In the alternative, the State
argues that even if an impairment of contractual rights exists,
a significant and legitimate public purpose justifies the
impairment and the legislation is narrowly tailored to serve
that purpose.
i. General Contract Clause Principles
¶133 The Wisconsin Constitution prohibits the State from
impairing its contractual obligations. Dairyland Greyhound
Park, Inc. v. Doyle, 2006 WI 107, ¶51, 295 Wis. 2d 1, 719
N.W.2d 408. The Contract Clause of the Wisconsin Constitution
provides: "[n]o bill of attainder, ex post facto law, nor any
law impairing the obligation of contracts, shall ever be
passed. . . . " Wis. Const. art. I, § 12.45
¶134 In evaluating a claim brought under the Contract
Clause, we first consider whether the contested state
legislation has "operated as a substantial impairment of a
contractual relationship." Allied Structural Steel Co. v.
Spannaus, 438 U.S. 234, 244 (1978). This inquiry has three
components: (1) whether there is a contractual relationship, (2)
45
Similarly, the Contract Clause of the United States
Constitution provides, in relevant part: "No State shall . . .
pass any Bill of Attainder, ex post facto Law, or Law impairing
the Obligation of Contracts . . . ." U.S. Const. art. I, § 10,
cl. 1. Although our interpretation of the Contract Clause of
the Wisconsin Constitution need not parallel federal
interpretations of the Contract Clause of the United States
Constitution, our prior decisions have relied upon the decisions
of the United States Supreme Court for guidance. Chappy v.
LIRC, 136 Wis. 2d 172, 186, 401 N.W.2d 568 (1987).
75
No. 2012AP2067
whether a change in law impairs that contractual relationship,
and (3) whether the impairment is substantial. Dairyland, 295
Wis. 2d 1, ¶261 (Prosser, J., concurring in part/dissenting in
part).
¶135 The inquiry does not end when the reviewing court
finds a contractual relationship exists and that the change in
law constitutes a substantial impairment of that contractual
relationship. If the legislative act constitutes a substantial
impairment to a contractual relationship, it will still be
upheld if a significant and legitimate public purpose for the
legislation exists. Id., ¶56. "Although the public purpose
need no longer address an emergency or temporary situation, it
should be directed towards remedying a broad and general social
or economic problem" as opposed to benefiting a narrow special
interest. Chappy v. LIRC, 136 Wis. 2d 172, 188, 401 N.W.2d 568
(1987); see also Energy Reserves Grp., Inc. v. Kansas Power &
Light Co., 459 U.S. 400, 412 (1983).
¶136 Finally, if a significant and legitimate purpose
exists for the challenged legislation, "the question becomes
whether the legislature's impairment of the contract is
reasonable and necessary to serve an important public purpose."
Wis. Prof'l Police Ass'n v. Lightbourn, 2001 WI 59, ¶149, 243
Wis. 2d 512, 627 N.W.2d 807.
¶137 As the court of appeals explained in its
certification, under the established framework for Contract
Clause analysis, the plaintiffs' challenge presents two issues:
(1) whether Chapter 36 of the Milwaukee Charter Ordinance
76
No. 2012AP2067
contains a contractual guarantee that the City of Milwaukee will
fund the member contributions on behalf of each participating
employee hired prior to January 1, 2010, and (2) if a
contractual right exists, whether there has been an
impermissible impairment of the contract.46
ii. Contractual Rights Under Milwaukee ERS
¶138 A legislative enactment is presumed not to create
"contractual or vested rights but merely declares a policy to be
pursued until the legislature shall ordain otherwise." Nat'l
R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470
U.S. 451, 466 (1985) (internal quotation marks omitted); see
also U.S. Trust Co. v. New Jersey, 431 U.S. 1, 17 n.14 (1977) (a
statute is "treated as a contract when the language and
circumstances evince a legislative intent to create private
46
The defendants raise a separate argument that
municipalities are not empowered to enter into contracts that
are not subject to subsequent amendments by the legislature.
The defendants misconstrue our case law by inaccurately framing
the point of law they are actually contesting. The question
presented is whether a municipality is empowered to enter into
contracts with third parties that create a vested contractual
relationship that is protected by the constitution. Our case
law is clear on this point. Municipalities may "lawfully
enter[] into contracts with third persons which . . . will be
protected by the constitution . . . ." Douglas Cnty. v. Indus.
Comm'n, 275 Wis. 309, 315, 81 N.W.2d 807 (1957) (quoting Town of
Holland v. Village of Cedar Grove, 230 Wis. 177, 189, 282 N.W.
111 (1938); see also Superior Water, Light & Power Co. v. City
of Superior, 263 U.S. 125, 135-37 (1923) (in interpreting
Wisconsin law, holding that municipalities may enter into
contracts where rights are acquired or liabilities incurred and
the state legislation impairing those rights is
unconstitutional); State ex rel. O'Neil v. Blied, 188 Wis. 442,
447, 206 N.W. 213 (1925). The defendants' assertion to the
contrary is unfounded.
77
No. 2012AP2067
rights of a contractual nature enforceable against the State").
Thus, courts employ a "very strong" presumption that
"legislative enactments do not create contractual rights." Dunn
v. Milwaukee Cnty., 2005 WI App 27, ¶8, 279 Wis. 2d 370, 693
N.W.2d 82.
¶139 The threshold requirement to recognize public
contracts has been referred to as the "unmistakability
doctrine." Parker v. Wakelin, 123 F.3d 1, 5 (1st Cir. 1997).
The unmistakability doctrine is a canon of construction rooted
in the belief that "legislatures should not bind future
legislatures from employing their sovereign powers in the
absence of the clearest of intent to create vested rights
protected under the Contract Clause . . . ." Id. ("'[N]either
the right of taxation, nor any other power of sovereignty, will
be held . . . to have been surrendered, unless such surrender
has been expressed in terms too plain to be mistaken.'" Id.
(quoting United States v. Winstar Corp., 518 U.S. 839, 874-75
(1996)). "The requirement that 'the government's obligation
unmistakably appear thus served the dual purposes of limiting
contractual incursions on a State's sovereign powers and of
avoiding difficult constitutional questions about the extent of
State authority to limit the subsequent exercise of legislative
power.'" Id. (quoting Winstar, 518 U.S. at 875).
¶140 Hence, in this case, we must consider whether Chapter
36 of the Milwaukee Charter Ordinance evinces a clear intent by
78
No. 2012AP2067
the City of Milwaukee Common Council ("Common Council")47 to
create contractual rights against the modification of
contribution payments to the Milwaukee ERS.
¶141 Wisconsin precedent has held that public pension plans
may create constitutionally protected contractual rights between
the State and public employees that are protected by the
Wisconsin Constitution. See State ex rel. Cannon v. Moran, 111
Wis. 2d 544, 554, 331 N.W.2d 369 (1983) (holding that the
plaintiffs, as plan members of the Milwaukee County Employees'
Retirement System, had a constitutionally protected contract).
¶142 As this court has noted, however, when examining
whether a legislative enactment creates a contractual
relationship, it is imperative to determine whether the
legislature intended to "create private contractual or vested
rights" or "merely to declare[] a policy to be pursued . . . ."
Morrison v. Bd. of Educ. of City of West Allis, 237 Wis. 483,
487, 297 N.W. 383 (1941). For a legislative enactment to be
considered a contract, "the language and circumstances [must]
evince a legislative intent to create private rights of a
contractual nature enforceable against the State." Lightbourn,
243 Wis. 2d 512, ¶145 n.188 (quoting U.S. Trust, 431 U.S. at 17
n.14). This requires us, when reviewing a particular
47
The Common Council exercises all policymaking and
legislative powers for the City of Milwaukee, including the
adoption of ordinances and resolutions and the approval of the
city's annual budget. See City of Milwaukee, Common Council
Members, http://city.milwaukee.gov/CommonCouncil/Council-Member-
Web-Pages.htm#.U8xI3M0_1kg (last visited July 20, 2014).
79
No. 2012AP2067
legislative enactment, to suspend judgment and "'proceed
cautiously both in identifying a contract within the language of
a regulatory statute and in defining the contours of any
contractual obligation.'" Parker, 123 F.3d at 7-8 (quoting
Atchison, 470 U.S. at 466).
¶143 We begin with the language of Chapter 36 of the
Milwaukee Charter Ordinance.48 The parties' arguments rely on
the following ordinance subsections from Chapter 36:
§ 36–08–7–a–1: [T]he city shall contribute on behalf
of general city employes 5.5% of such member's
earnable compensation.
§ 36–13–2–a: Every such member . . . shall thereby
have a benefit contract in . . . . all . . . benefits
in the amounts and upon the terms and conditions and
in all other respects as provided under this
[ordinance] . . . and each member and beneficiary
having such a benefit contract shall have a vested
right to such . . . benefits and they shall not be
diminished or impaired by subsequent legislation or by
any other means without his consent.
§ 36–13–2–c: Every person who shall become a member of
this retirement system . . . shall have a similar
benefit contract and vested right in . . . all . . .
benefits in the amounts and on the terms and
conditions and in all other respects as . . . in
48
"The rules for the construction of statutes and municipal
ordinances are the same." Cnty. of Columbia v. Bylewski, 94
Wis. 2d 153, 169 n.7, 288 N.W.2d 129 (1980). Therefore, if the
"plain meaning of the [ordinance] is clear, a court . . . should
simply apply the clear meaning of the [ordinance] to the facts
before it." Bruno v. Milwaukee Cnty., 2003 WI 28, ¶7, 260 Wis.
2d 633, 660 N.W.2d 656 (quoting UFE Inc. v. LIRC, 201 Wis. 2d
274, 281-82, 548 N.W.2d 57 (1996)).
80
No. 2012AP2067
effect at the date of the commencement of his
membership.
§ 36–13–2–d: Contributions which are made to this fund
. . . by the city . . . as contributions for members
of this system shall not in any manner whatsoever
affect, alter or impair any member's rights, benefits,
or allowances, to which such member under this
[ordinance] is or may be entitled. . . .
§ 36–13–2–g: Every member, retired member, survivor
and beneficiary who participates in the combined fund
shall have a vested and contractual right to the
benefits in the amount and on the terms and conditions
as provided in the law on the date the combined fund
is created.
¶144 Turning to the language of Chapter 36, we find it
unquestionably creates contractual rights in the pension
benefits of Milwaukee ERS plan members.49 Two subsections of
Chapter 36 are particularly germane in reaching this conclusion.
First, § 36–13–2–g provides:
Every member, retired member, survivor and beneficiary
who participates in the combined fund shall have a
vested and contractual right to the benefits in the
amount and on the terms and conditions as provided in
the law on the date the combined fund is created.
(Emphasis added.) Further, § 36–13–2–a provides, in relevant
part:
Every such member . . . shall thereby have a benefit
contract in . . . all . . . benefits in the amounts
and upon the terms and conditions and in all other
respects as provided under this [ordinance] . . . and
each member and beneficiary having such a benefit
contract shall have a vested right to such . . .
benefits and they shall not be diminished or impaired
49
The question of when or to what extent pension benefits
vest for plan members under the Milwaukee ERS is not before us
and, accordingly, we do not address the issue.
81
No. 2012AP2067
by subsequent legislation or by any other means
without his consent.
(Emphasis added.)
¶145 Sections 36-13-2-g and 36-13-2-a unmistakably evince
the clear intention of the Common Council to create a "vested
and contractual right to the [pension] benefits in the amount
and on the terms and conditions" as provided in Chapter 36.
§ 36-13-2-g.
¶146 However, this still leaves unresolved the central
issue before us: whether "contributions" to the Milwaukee ERS
fit within the "benefits" for which plan members have a "vested
and contractual right." § 36-13-2-g.
¶147 The defendants contend that § 36-13-2-g, which the
plaintiffs cite as creating a "contractual right" to the
contributions paid by the City of Milwaukee, can create no such
contractual obligation because the subsection does not refer
explicitly to "contributions."50 Further, the defendants argue §
36-13-2-d demonstrates that, as the terms are used in Chapter
36, contributions to the Milwaukee ERS are not "benefits" or
"terms and conditions."
¶148 The plaintiffs disagree with the defendants' reading
of Chapter 36 and note that the title of § 36-13-2 is "Contracts
to Assure Benefits," and that the subsection guarantees that
50
The defendants also reference a different ordinance
subsection (§ 16-32-2-c) with nearly identical language as § 32-
13-2-g in its briefing, but as the court of appeals observes in
its certification, neither party suggests an independent
analysis of the other subsection would affect the outcome in
this case.
82
No. 2012AP2067
every member shall have a benefit contract and vested right
concerning "[t]he annuities and all other benefits in the
amounts and upon the terms and conditions and in all other
respects as provided under this act [which] shall not be
diminished or impaired by any subsequent legislation or by any
other means." § 36–13–2–a. The plaintiffs contend that the
words "upon the terms and conditions and in all other respects
as provided under this act," incorporate § 36-08-7a-1, which
provides that the City of Milwaukee will contribute 5.5% of its
employees' earnable compensation to the Milwaukee ERS.
¶149 The parties agree that Chapter 36 unambiguously
requires plan members of the Milwaukee ERS to "contribute or
have contributed on their behalf, 5.5% of the member's earnable
compensation." § 36-08-7a-1. Since 1970, and until the
enactment of Act 10, the City of Milwaukee, pursuant to § 36-08-
7-a-1, has paid the employees' contribution share:
Members who are not firemen, policemen or elected
officials shall contribute or have contributed on
their behalf, 5.5% of the member's earnable
compensation. Except as provided in subds. 2 and 3,
subsequent to and commencing with the first pay period
of 1970, the city shall contribute on behalf of
general city employes 5.5% of such member's earnable
compensation. Members employed by city agencies
participating in the system shall contribute 5.5% of
their earnable compensation less any contribution made
on their behalf as determined by the governing bodies
of such agencies.
The plaintiffs argue that the contributions referred to in this
subsection are a "benefit," and accordingly, pursuant to § 36-
13-2-g and § 36-13-2-a, plan members have a contractually vested
83
No. 2012AP2067
right in the contributions paid by the City of Milwaukee on
behalf of all participating plan members.
¶150 Upon a close reading of the language of Chapter 36,
however, we find nothing to suggest that the City of Milwaukee
intended to classify contribution rates as a contractually
protected "benefit." Consequently, there is no indication the
Common Council, and by extension the State, bound itself to
never modifying the contribution rates that fund the Milwaukee
ERS.
¶151 Two sources in particular inform our analysis. In
§ 36-13-2-d, an evident distinction is drawn between
"contributions" used to fund the Milwaukee ERS and the
"benefits" conferred to plan members. Section 36-13-2-d
provides, in part:
Contributions which are made to [the Milwaukee ERS]
. . . by the city . . . as contributions for members
of this system shall not in any manner whatsoever
affect, alter or impair any member's rights, benefits,
or allowances, to which such member under this
[ordinance] is or may be entitled . . . .
(Emphasis added). This subsection unquestionably distinguishes
between the "contributions" paid by the City of Milwaukee and
the contractually protected "benefits" of the plan members. Our
rules of interpretation dictate that Chapter 36 must "be
construed in a manner that no word is rendered surplusage and
every word is given effect." Cnty. of Adams v. Romeo, 191
Wis. 2d 379, 387, 528 N.W.2d 418 (1995). Under § 36-13-2-d, it
is impossible for contributions to be construed as a benefit.
The plaintiffs' argument is premised on the notion that the
84
No. 2012AP2067
contributions paid by the City of Milwaukee impact the benefits
of plan members. Section 36-13-2-d unequivocally refutes that
contention.
¶152 Section 36-05 further belies the plaintiffs' argument
that "contributions" are a "benefit" under Chapter 36. Section
36-05, titled "Benefits," defines the pension, disability, and
death benefits offered under the Milwaukee ERS.51 This section
outlines in detail the scope of the word "benefits" as it is
used in the Charter, listing every benefit of the plan and the
terms and conditions related to those benefits. The City of
51
Section 36-05 addresses a wide range of benefits and
allowances. As an illustration of the breadth of § 36-05, the
benefits and allowances covered in this section include: service
retirement (§ 36-05-1), ordinary disability retirement (§ 36-05-
2), duty disability retirement (§ 36-05-3), accidental death
benefits (§ 36-05-5), separation benefits (§ 36-05-6), optional
benefits (§ 36-05-7), survivorship benefits (§ 36-05-8),
ordinary death benefits (§ 36-05-10), and a lump sum bonus
provision (§ 36-05-11). Each of these enumerated benefits and
allowances contains specific information as to the nature of the
benefit, the eligibility requirements, how the benefit is
calculated, whether the benefit may be transferred or assigned
and to whom it may be transferred or assigned, how the benefit
is affected by cost of living adjustments, and numerous other
terms and conditions.
85
No. 2012AP2067
Milwaukee's self-imposed obligation to pay the employee share of
contributions is conspicuously absent from this section.52
¶153 In sum, no unmistakable indicia exists in Chapter 36
that contributions paid by the city are a defined "benefit" that
is forever impervious to alteration.
¶154 As a defined benefit plan, the Milwaukee ERS
calculates benefits based on years of service multiplied by a
fixed percentage of base salary. See Milwaukee, Wis. Charter
Ordinance ch. 36. The plaintiffs argue that Wis. Stat.
§ 62.623, by requiring plan members to contribute 5.5% of their
earnable compensation, diminishes the value of the benefit
without providing a commensurate gain. So, the plaintiffs
contend, the defendants' position that contributions are not a
"term and condition" effectively excludes the cost of the plan
to the employee as a "term and condition" under Chapter 36,
which is an absurd result.
52
The dissent takes issue with our interpretation of the
term "benefit" under the Milwaukee Charter Ordinance.
Specifically, the dissent points to three subsections of § 36-05
that incorporate § 36-08-7 and argues that, based on these
statutory cross-references and how "fringe benefits" have been
described in select judicial opinions, "contributions" must be a
contractually-vested "benefit" under the Milwaukee ERS. The
dissent's argument is confused by the reach of our holding and
fails to point to any flaw in our analysis. This case does not
require us to address whether accumulated contributions are
contractually-vested "benefits" under the Milwaukee Charter
Ordinance. Instead, our review is limited to determining
whether the term "contributions"——that is, the requirement to
contribute a certain percentage of earnable compensation into
the Milwaukee ERS——constitute a "benefit" under the Ordinance
Charter.
86
No. 2012AP2067
¶155 The plaintiffs' argument conflates the accrued
benefits of plan members, which Wis. Stat. § 62.623 does not
affect, and the funding provisions of Chapter 36, which are not
considered a "benefit" under the Charter. Nothing in Act 10
purports to reduce, impair, or affect in any way benefits that
have already accrued to plan members. Wisconsin Stat. § 62.623
modifies only the method by which the Milwaukee ERS is funded;
the pension, disability, and death benefits that accrue to plan
members, pursuant to the terms and conditions in § 36-05, remain
unaffected.
¶156 The plaintiffs' contention that Wis. Stat. § 62.623
diminishes accrued "benefits" because it is more costly for plan
members misses the point. It is certainly true that the
Milwaukee ERS calculates the benefits for a plan member based on
years of service multiplied by a fixed percentage of their base
salary. To be clear, however, Wis. Stat. § 62.623 does not
modify this benefit. It does not modify the base salary of the
plan member, the amount of benefits received under the plan, or
the plan's overall cost. Rather, Wis. Stat. § 62.623 changes
only the allocation of those costs——that is, the contribution
requirements shared by the City of Milwaukee and the plan
member. We are not overlooking——nor are we unsympathetic to——
the fact that Wis. Stat. § 62.623 increases the cost of
participating in the Milwaukee ERS for general employees. This
increased cost, however, does not constitute a Contract Clause
violation. The plaintiffs may have to contribute more to
receive the same benefit, but "the fact that a state makes a
87
No. 2012AP2067
contract more costly to one of the parties does not establish a
[Contract Clause] violation." Chrysler Corp. v. Kolosso Auto
Sales, Inc., 148 F.3d 892, 894 (7th Cir. 1998).
¶157 Our decision is dictated by the plain language in the
Milwaukee Charter Ordinance. Nothing in the Charter evidences
that the legislature unmistakably intended to create binding
contract rights in the contribution rates established in § 36-
08-7-a-1. Further, even if it were unclear whether the
legislature intended "contributions" to be a contractually
vested "benefit," the very strong presumption employed against
state laws creating contractual rights would still defeat the
plaintiffs' claim.
¶158 We need not reach the question of impairment or
substantiality because the plaintiffs have failed to demonstrate
that the allocation of contribution rates in the Milwaukee ERS
is a contractual "benefit" protected by the Contract Clause. We
conclude that the City of Milwaukee was not contractually
obligated to pay the employee share of contributions into the
Milwaukee ERS. Therefore, we hold that the plaintiffs failed to
establish beyond a reasonable doubt that Wis. Stat. § 62.623
violates the Contract Clause of the Wisconsin Constitution.
IV. CONCLUSION
¶159 We hold the following:
¶160 First, we hold that the plaintiffs' associational
rights argument is without merit. We reject the plaintiffs'
argument that several provisions of Act 10, which delineate the
rights, obligations, and procedures of collective bargaining,
88
No. 2012AP2067
somehow infringe upon general employees' constitutional right to
freedom of association. No matter the limitations or "burdens"
a legislative enactment places on the collective bargaining
process, collective bargaining remains a creation of legislative
grace and not constitutional obligation. The First Amendment
cannot be used as a vehicle to expand the parameters of a
benefit that it does not itself protect. Accordingly, we
conclude that Wis. Stat. §§ 111.70(4)(mb), 66.0506, 118.245,
111.70(1)(f), 111.70(3g), 111.70(4)(d)3 and the third sentence
of § 111.70(2) do not violate the plaintiffs' associational
rights.
¶161 Second, we reject the plaintiffs' equal protection
claim under a rational basis standard of review. We apply
rational basis review to the plaintiffs' argument that the
collective bargaining framework established by Act 10 violates
the constitutional rights of general employees through disparate
treatment of those who choose to collectively bargain and those
who do not. Finding the plaintiffs' argument to be
unconvincing, we hold Act 10 survives the plaintiffs' equal
protection challenge under rational basis review.
¶162 Third, we hold the plaintiffs' home rule amendment
argument fails because Wis. Stat. § 62.623 primarily concerns a
matter of statewide concern. Accordingly, we hold that Wis.
Stat. § 62.623 does not violate the home rule amendment.
¶163 Finally, we hold that the plaintiffs' Contract Clause
claim fails. The City of Milwaukee was not contractually
obligated to pay the employee share of contributions to the
89
No. 2012AP2067
Milwaukee ERS. Further, even if the contributions paid by the
City were a contractual right, we hold the contract was not
substantially impaired by Wis. Stat. § 62.623. Therefore, we
hold that the plaintiffs failed to establish beyond a reasonable
doubt that Wis. Stat. § 62.623 violates the Contract Clause of
the Wisconsin Constitution.
¶164 Therefore, we uphold Act 10 in its entirety.
By the Court.—The decision and order of the circuit court
is reversed.
90
No. 2012AP2067.npc
¶165 N. PATRICK CROOKS, J. (concurring). As a justice of
the Supreme Court of Wisconsin, I join the majority of this
Court in voting to uphold the constitutionality of Act 10. In
answering the legal questions put to us as we must, we affirm a
legislative act that appears to have gone further than needed.
For many public workers, Act 10 effectively ended meaningful
union representation carried out through statutory collective
bargaining. This type of statutory collective bargaining has
long been part of Wisconsin's progressive heritage.
¶166 It is my firm belief that individuals should have the
right to organize and bargain collectively regarding their wages
and the terms of their employment. As thoughtful people from
across the political spectrum and around the world have long
recognized, collective bargaining benefits workers, employers
and society itself. Although Act 10 does not violate either the
United States Constitution or the Wisconsin Constitution, it
erodes longstanding benefits both to public workers and to
public employers. I write separately to make clear what my vote
in this case means and to emphasize the importance of policies
that give rights to workers to organize and bargain
collectively.
I. THE LEGAL FRAMEWORK
¶167 The legal questions in this case can be answered in no
other way than the majority answers them. Because the affected
workers retain "a right to associate for the purpose of engaging
1
No. 2012AP2067.npc
in those activities protected by the First Amendment,"1 Act 10
violates neither their constitutional right of association nor
their right to equal protection.2 The collective bargaining
rights at issue here are statutory, not constitutional rights.
¶168 As I stated in League of Women Voters v. Walker,
another case in which plaintiffs made a purely facial challenge
to the constitutionality of a statute, the limited question
presented and the legal framework prescribed for answering it
demand significant restraint on the part of this court:
With this type of facial challenge, the odds are
against the plaintiffs at every turn. A court is
bound to recognize the presumption that the statute is
constitutional. Here, the plaintiffs must prove
otherwise beyond a reasonable doubt. In considering
such a challenge, a court must resolve any doubt about
the constitutionality of a statute in favor of
upholding the statute.
In short, the question before us in this case is not
whether the [challenged statute] is good policy, not
whether it accomplishes what it sets out to do, and
not whether it is unfair under some circumstances to
some individuals. The question before us in this case
is solely this: starting with a presumption of
constitutionality in its favor, are we persuaded
beyond a reasonable doubt that the statute violates
the Wisconsin Constitution in every circumstance?
. . .
1
Roberts v. United States Jaycees, 468 U.S. 609, 618
(1984).
2
Majority op., ¶75 (recognizing that the equal protection
argument hinges on the merit of the associational rights claim);
see also majority op., ¶24 ("Whether the plaintiffs' First
Amendment challenge to these provisions has any merit is the
lynchpin of this appeal.").
2
No. 2012AP2067.npc
The question here is not whether the [statute] is good
policy, but whether the plaintiffs have proved beyond
a reasonable doubt that the [statute] violates the
Wisconsin Constitution on any of the grounds claimed
by these plaintiffs. Given the framework within which
the question must be answered, I agree with the
holding of the majority that the plaintiffs have not
shown beyond a reasonable doubt that the statute is
unconstitutional, and I join that holding and the
mandate. I can reach no other conclusion than to
uphold [the statute] based on the purely facial
challenge here. I therefore respectfully concur.
League of Women Voters v. Walker, 2014 WI 97, ¶¶62-63, 68, ___
Wis. 2d ___, ___ N.W.2d ___ (Crooks, J., concurring) (internal
citations and quotations omitted).
¶169 As was true in that case, the analysis required here
is straightforward. Under the proper application of the correct
legal standard and the relevant precedent, this is not a close
call. Therefore the plaintiffs' challenge must fail.
II. HISTORICAL RECOGNITION OF COLLECTIVE BARGAINING
AND ITS VALUE TO SOCIETY
¶170 The value and necessity of collective bargaining and
the fair treatment of workers have been recognized by many
thoughtful people. As we considered this case, I recalled the
eloquence of Rerum Novarum, the 1891 encyclical of Pope Leo XIII
that seriously discussed the questions of resolving conflicts
between employers and employees fairly and justly. Though more
than 120 years have passed since his writing, the encyclical
retains a remarkable relevance with its thoughtful comments
about workers, employers, unions and "free agreements" reached
about wages, hours and conditions of employment.
3
No. 2012AP2067.npc
¶171 This lengthy document acknowledges the delicate task
it undertakes, takes care to avoid extremist language and
specifically rejects socialism as a solution to legitimate
concerns of unjust working conditions. Instead, it adopts a
respectful tone, recognizing the necessity of free enterprise to
society, the value of work and the contributions of workers to
their societies:
Now, for the provision of such commodities, the labor
of the working class——the exercise of their skill, and
the employment of their strength, in the cultivation
of the land, and in the workshops of trade——is
especially responsible and quite indispensable. . . .
Justice, therefore, demands that the interests of the
working classes should be carefully watched over by
the administration, so that they who contribute so
largely to the advantage of the community may
themselves share in the benefits which they
create . . . . It follows that whatever shall appear
to prove conducive to the well-being of those who work
should obtain favorable consideration.3
¶172 From such philosophical foundations, the writing turns
to practical considerations:
Let the working man and the employer make free
agreements, and in particular let them agree freely as
to the wages . . . . In these and similar questions
however——such as, for example, the hours of labor in
different trades, the sanitary precautions to be
observed in factories and workshops, etc.——in order to
supersede undue interference on the part of the State,
especially as circumstances, times, and localities
differ so widely, it is advisable that recourse be had
3
Leo XIII, Rerum Novarum: Encyclical of Pope Leo XIII on
Capital and Labor (1891), in Leo XIII, Rerum Novarum, at ¶34
(Catholic Truth Soc'y 2002), available at
http://www.vatican.va/holy_father/leo_xiii/encyclicals/documents
/hf_l-xiii_enc_15051891_rerum-novarum_en.html.
4
No. 2012AP2067.npc
to societies or boards such as We shall mention
presently, or to some other mode of safeguarding the
interests of the wage-earners; the State being
appealed to, should circumstances require, for its
sanction and protection. . . .
The most important of all [such associations designed
to aid workers] are workingmen's unions, for these
virtually include all the rest. History attests what
excellent results were brought about by the
artificers' guilds of olden times. . . . Such unions
should be suited to the requirements of this our age——
an age of wider education, of different habits, and of
far more numerous requirements in daily life. . . .
[T]o enter into a "society" of this kind is the
natural right of man; and the State has for its office
to protect natural rights, not to destroy them; and,
if it forbids its citizens to form associations, it
contradicts the very principle of its own existence,
for both they and it exist in virtue of the like
principle, namely, the natural tendency of man to
dwell in society.4
¶173 After setting out this template for mutually
respectful relationships between employer and worker, and
explicitly endorsing the value of protective organizations such
as "workingmen's unions," Pope Leo XIII goes on to state,
"[E]very precaution should be taken not to violate the rights of
individuals and not to impose unreasonable regulations under
pretense of public benefit."5
¶174 The encyclical concludes,
We may lay it down as a general and lasting law that
working men's associations should be so organized and
governed as to furnish the best and most suitable
means for attaining what is aimed at, that is to say,
4
Id. at ¶¶45, 49 and 51.
5
Id. at ¶52.
5
No. 2012AP2067.npc
for helping each individual member to better his
condition to the utmost in body, soul and property.6
¶175 This recognition of the critical importance of a
worker's right to collective bargaining was also central to the
political philosophy of one of the most influential public
figures in Wisconsin history, United States Senator Robert M.
La Follette. Identifying the forces arrayed against the working
person in the early twentieth century, La Follette stated at the
outset of the 1912 presidential primaries, in which he was a
candidate, "I demand protection of wage-earners and farmers in
their right to organize and to defend themselves by means of
unions. All other issues are subordinate to this great issue."7
¶176 Interestingly, Ronald Reagan, a United States
President some would consider to be from the other end of the
political spectrum, expressed similar convictions. In 1980, the
year he was elected, Reagan gave an impassioned Labor Day speech
in which he pledged that "American workers will once again be
heeded" and promised to "consult with representatives of
organized labor on those matters concerning the welfare of the
working people of this nation."8
6
Id. at ¶57.
7
Robert M. La Follette, The Republican Party Faces a Crisis
(1912), reprinted in The Political Philosophy of Robert M.
La Follette As Revealed in His Speeches and Writings 408 (Ellen
Torelle, ed., 1920).
8
Ronald Reagan, Labor Day Speech at Liberty State Park,
Jersey City, New Jersey (Sept. 1, 1980), available at
www.reagan.utexas.edu/archives/reference/9.1.80.html (last
visited May 29, 2014).
6
No. 2012AP2067.npc
¶177 He noted his own union affiliation and experiences:
I happen to be the only president of a union ever to
be a candidate for President of the United States. As
president of my union——the Screen Actors Guild——I
spent many hours with the late George Meany,9 whose
love of country and whose belief in a strong defense
against all totalitarians is one of labor's greatest
legacies. One year ago today on Labor Day George
Meany told the American people:
As American workers and their families return from
their summer vacations they face growing
unemployment and inflation, a climate of economic
anxiety and uncertainty.
Well I pledge to you in his memory that the voice of
the American worker will once again be heeded in
Washington and that the climate of fear that he spoke
of will no longer threaten workers and their
families.10
¶178 Reagan went on to focus on the role of unions in
bringing about a dramatic transformation of communist Poland:
These are the values inspiring those brave workers in
Poland. The values that have inspired other
dissidents under Communist domination. They remind us
that where free unions and collective bargaining are
forbidden, freedom is lost. . . . Today the workers
in Poland are showing a new generation not how high is
the price of freedom but how much it is worth that
price.11
9
George Meany was president of the AFL-CIO from 1955 to
1979. See Owen Ullman, George Meany, Labor's "Giant" Is Dead at
85, Nashua Telegraph, January 11, 1980, at 6.
10
Ronald Reagan, Labor Day Speech at Liberty State Park,
Jersey City, New Jersey (Sept. 1, 1980), available at
www.reagan.utexas.edu/archives/reference/9.1.80.html (last
visited May 29, 2014).
11
Id.
7
No. 2012AP2067.npc
III. CONCLUSION
¶179 It is my view that the Wisconsin Legislature and
Governor could have chosen a different way to accomplish a
goal of cost savings that would have left intact meaningful
union representation carried out through statutory
collective bargaining for public employees. It is also my
view that the damage to public employee unions due to Act
10 was unnecessary. It is a departure from Wisconsin's
strong tradition.
¶180 Act 10 embodies policy determinations, and such
questions are not properly addressed to the members of the
Supreme Court of Wisconsin. Such policy questions are for
the Wisconsin Legislature and Governor, and their judgment
on such policy matters is for the people of Wisconsin to
evaluate. I respect the boundaries the judicial branch
must observe and recognize that we cannot substitute our
judgment on questions of policy for that of the Wisconsin
Legislature and Governor.12 Accordingly, I respectfully
concur.
12
"Our duty . . . requires that we uphold the separation of
powers by not substituting judicial policy views for the views
of the legislature or rule making authority." State ex rel.
Griffin v. Smith, 2004 WI 36, ¶19, 270 Wis. 2d 235, 677 N.W.2d
259.
8
No. 2012AP2067.awb
¶181 ANN WALSH BRADLEY, J. (dissenting). In reflecting
on the importance of an independent judiciary as a separate
branch of government, former United States Supreme Court Chief
Justice William Rehnquist called the authority to declare
unconstitutional a law passed by legislature "probably the most
significant single contribution the United States has made to
the art of government."
I believe that the creation of an independent
constitutional court, with the authority to declare
unconstitutional laws passed by the state or federal
legislatures, is probably the most significant single
contribution the United States has made to the art of
government.1
¶182 He emphasized the important role that courts serve in
protecting the rights guaranteed under the Constitution. Courts
serve as guardians of the constitutional rights of all people.
Our challenge as a court is to duly respect the prerogatives of
the legislature as reflected in its legislative acts, while at
the same time honoring our significant role. We must constantly
guard against proper judicial restraint being transformed into
improper judicial acquiescence.
¶183 In this case we are presented with constitutional
challenges to Act 10. The majority aptly sets forth its
1
Chief Justice William Rehnquist, Remarks at the Symposium
on Judicial Independence, University of Richmond T. C. Williams
School of Law (Mar. 21, 2003) (on file with the Public
Information Office, U.S. Supreme Court), available at
www.supremecourt.gov/publicinfo/speeches/viewspeeches.aspx?Filen
ame=sp_03-21-03.html.
1
No. 2012AP2067.awb
results. However, it is difficult to find in the majority's
lengthy opinion a discussion of the actual arguments and issues
presented by the parties.
¶184 An actual issue presented by Madison Teachers is: Does
Act 10 infringe on the associational rights of public employees
to organize?2
¶185 Yet the majority reframes the issue to determine
whether there is a constitutional right to collective bargaining
and whether the State has an obligation to promote First
Amendment rights.
¶186 An actual issue presented by the parties is: Does the
provision in Act 10 prohibiting Milwaukee from making
contributions to its employees' pension plans violate the Home
Rule Amendment?
¶187 Rather than focusing on the provision at issue, the
majority shifts the focus to the purpose behind Act 10 as a
whole. It determines that because Act 10 deals generally with
financial matters, the prohibition on Milwaukee's pension
contributions is a matter of statewide concern.
¶188 An actual issue presented by the parties is: Does the
prohibition on pension contributions violate the Contract Clause
given that benefits are guaranteed by the Milwaukee Charter
Ordinance?
2
For purposes of this dissent I use "Madison Teachers" to
refer to the plaintiffs collectively.
2
No. 2012AP2067.awb
¶189 By twisting the definition of benefits to exclude
pension contributions, the majority thereby avoids any
substantive analysis of the Contract Clause.
¶190 The result of the majority's dodge is the needless
diminution of multiple constitutional rights:
The right of freedom of association to organize is
diluted as the majority has opened the door for the
State to withhold benefits and punish individuals
based on their membership in disfavored groups.
Municipalities' right to self-govern as granted by the
Home Rule Amendment rings hollow as the majority
determines that when the State has budgetary
difficulties, matters dealing with local finances are
now matters of statewide concern, even absent any
showing of an impact on the State budget.
And the right to contract is undermined as the
majority demonstrates its willingness to creatively
interpret a contract in a manner permitting the State
to disregard it.
¶191 I determine that the majority's failure to address the
actual issues presented allows it to substitute analyses
resulting in conclusions that countenance the violation rather
than the protection of constitutional rights. Because I
3
No. 2012AP2067.awb
determine that Act 10 unconstitutionally infringes on protected
rights, I respectfully dissent.
¶192 There are three main issues raised by the parties: (I)
the Right To Associate; (II) the Home Rule Amendment; and (III)
the Contract Clause. I address each in turn.
I. The Right To Associate
¶193 Madison Teachers asserts that Act 10 violates the
First Amendment right of freedom of association by infringing on
its right to organize.3 Given that the State has conceded that
the challenged provisions in Act 10 cannot survive such a
constitutional challenge if a strict scrutiny review is applied,
the majority has to avoid strict scrutiny to arrive at its
result.4 How does it do that? It jettisons the focus of its
analysis.
¶194 Rather than addressing plaintiff's issue that Act 10
infringes on its constitutional right to organize into a
collective bargaining unit, the majority erroneously asserts
3
The First Amendment of the United States Constitution
provides:
Congress shall make no law respecting an establishment
of religion, or prohibiting the free exercise thereof;
or abridging the freedom of speech, or of the press;
or the right of the people peaceably to assemble, and
to petition the Government for a redress of
grievances.
4
Under a strict scrutiny review, State action infringing on
First Amendment rights will be upheld only if it is narrowly
tailored to meet a compelling government interest. Gard v.
State Elections Bd., 156 Wis. 2d 28, 44, 456 N.W.2d 809 (1990).
4
No. 2012AP2067.awb
that plaintiff is claiming a right to bargain as a collective
bargaining unit.5 It then determines that no such right exists.
¶195 In rejecting Madison Teachers' purported claims, the
majority stresses that "[g]eneral employees have no
constitutional right to negotiate with their municipal
employer." Majority op., ¶38. It further states that
"collective bargaining . . . is not constitutionally protected."
Id., ¶39. Accordingly, it determines that "the plaintiffs'
associational rights are in no way implicated by Act 10's
modifications to Wisconsin's collective bargaining framework."
Id., ¶41.
¶196 In one instance, the majority appears to acknowledge
the plaintiff's actual claim but then distorts it. The majority
begins the sentence by correctly referencing "the 'right' the
plaintiffs refer to——the right to associate with a certified
representative." Id., ¶37. So far, so good. However, it then
ends the sentence with a distortion of the claim, describing the
right being asserted as a right "to collectively bargain on any
subject." Id.
¶197 The majority is well aware that the plaintiff has
never asserted that it has a constitutional right to
5
The majority spends an inordinate amount of ink attacking
the dissent rather than attacking the actual associational
issue. Normally the role of the majority opinion is to expound
on the arguments of the parties and the law, giving only brief
attention to the comments of the written dissent. It is unclear
if the majority does this in an attempt to deflect attention
from its failure to address the associational right to organize.
Or, if it is because the majority recognizes that the arguments
of the dissent cannot go unaddressed.
5
No. 2012AP2067.awb
collectively bargain, let alone bargain on any subject. In
fact, elsewhere in its opinion, the majority acknowledges that
the plaintiff is not arguing a constitutional right to bargain:
"The plaintiffs have insisted at every stage of litigation in
this case that they are not arguing a constitutional right
exists to collectively bargain." Id., ¶39. Yet the majority
persists in focusing its analysis on the right to bargain.
¶198 The plaintiff's actual argument is based on the well-
established premise that there is a constitutional right to
organize as a collective bargaining unit. In fact, the United
States Supreme Court has declared it to be a fundamental right:
"the right of employees to self-organization and to select
representatives of their own choosing for collective bargaining
or other mutual protection without restraint or coercion by
their employer . . . is a fundamental right." NLRB v. Jones &
Laughlin Steel Corp., 301 U.S. 1, 33 (1937) (emphasis added).
Likewise, the Court has stated that the First Amendment most
assuredly protects the right of workers to organize: "It cannot
be seriously doubted that the First Amendment[]
guarantees . . . the right [of workers] to gather together for
the lawful purpose of helping and advising one another."
Brotherhood of R.R. Trainmen v. Virginia, 377 U.S. 1, 5-6
(1964).
¶199 As early as 1902, the Wisconsin Supreme Court has
similarly stressed the "sacredness" of the right of employees to
organize. State ex rel. Zillmer v. Kreutzberg, 114 Wis. 530,
541, 90 N.W. 1098 (1902). Against this background, the
6
No. 2012AP2067.awb
majority's failure to squarely address the plaintiff's argument
is remarkable. In reaching its result the majority appears to
ignore over a century's worth of jurisprudence and undermines a
right long held sacred in our State.6
¶200 Madison Teachers' argument that Act 10 violates
associational rights is twofold. First, it focuses on the
provisions in Act 10 requiring collective bargaining units to
hold annual recertification elections, eliminating fair share
agreements, and prohibiting municipalities from withholding dues
from employees' wages. It contends that these provisions
violate its associational rights because they infringe on those
rights by punishing association with a collective bargaining
unit. Second, it argues that the provision in Act 10
prohibiting municipalities from bargaining over anything other
than an increase in base wages up to the amount of inflation is
an unconstitutional condition.
¶201 Rather than considering whether Act 10 discourages the
exercise of the associational right to organize, the majority
6
The majority denies stating that employees do not have a
constitutional right to organize. Majority op., ¶46. However,
its analysis belies this assertion. Madison Teachers argues
that Act 10 unconstitutionally interferes with associational
rights by burdening and penalizing general employees who elect
to organize in a collective bargaining unit. Although the
majority acknowledges that at least one of the provisions
burdens labor organizations, id. ¶80, it determines that the
challenged provisions of Act 10 do not burden associational
rights "because in each instance, there is no constitutional
associational right implicated." Id., ¶70. Indeed, it stresses
this point, stating it "is vital and bears repeating: the
plaintiffs' associational rights are in no way implicated by Act
10's modification to Wisconsin's collective bargaining
framework." Id., ¶41.
7
No. 2012AP2067.awb
pivots to a different issue advanced by the State and then
analyzes that issue. It advances that the State is not required
to subsidize speech, and ultimately concludes that the
challenged provisions regarding fair share agreements, paycheck
dues deductions, and annual recertification do not burden the
exercise of associational rights. Majority op., ¶¶54, 59, 61.7
¶202 By pivoting to the issue of whether the constitution
requires the State to subsidize speech, the majority avoids the
actual argument advanced before this court: whether Act 10
infringes on the associational right to organize by discouraging
membership in a collective bargaining unit. Given the void in
the majority's analysis, I turn to address the actual issue.
¶203 The First Amendment protects not just against State
prohibition of association, but also against State punishment or
penalty for the exercise of associational rights. See Smith v.
Arkansas State Highway Emps., Local 1315, 441 U.S. 463, 464
(1979) ("The government is prohibited from infringing upon
[First Amendment] guarantees either by a general prohibition
against certain forms of advocacy, or by imposing sanctions for
7
The majority relies heavily on Wis. Educ. Ass'n Council v.
Walker, 705 F.3d 640 (7th Cir. 2013), for its position.
Majority op., ¶68. However, that case is distinguishable
because it considered a different issue than is presented here.
Wis. Edu. Ass'n Council examined whether Act 10 burdened the
free speech rights of collective bargaining units. 705 F.3d at
645-53. The petitioners asserted that the prohibition on dues
deductions constituted viewpoint discrimination because it was
imposed only on those collective bargaining units that did not
endorse Governor Walker in the prior election. The court did
not consider whether Act 10 burdened the right of individuals to
organize in a collective bargaining unit.
8
No. 2012AP2067.awb
the expression of particular views it opposes."); Baird v. State
Bar of Ariz., 401 U.S. 1, 6 (1971) ("The First Amendment's
protection of association prohibits a State from . . .
punishing [a person] solely because he is a member of a
particular political organization or because he holds certain
beliefs."). In other words, the State cannot "tak[e] steps to
prohibit or discourage union membership or association." Smith,
441 U.S. at 466 (emphasis added).
¶204 The United States Supreme Court illustrated this
principle in NAACP v. Alabama ex rel. Patterson, 357 U.S. 449
(1958). Patterson involved a State requirement that NAACP
reveal its membership list. The court determined that the State
action was "likely to affect adversely the ability of petitioner
and its members to pursue their collective effort[s] [by] . . .
induc[ing] members to withdraw from the Association and
dissuad[ing] others from joining it." Id. at 462-63. Thus,
because the requirement that NAACP reveal its membership list
was not supported by a compelling government interest, the court
determined that it was unconstitutional. Id. at 466.
¶205 Similarly, the provisions in Act 10 discourage
organizing as a collective bargaining unit by increasing its
cost. Wisconsin Stat. § 111.70(4)(d) requires collective
bargaining units to hold recertification elections annually in
which 51% of all eligible employees must vote in favor of
recertification. In addition to the costs involved in educating
employees about the election and convincing employees to vote,
9
No. 2012AP2067.awb
collective bargaining units must pay a certification fee. Wis.
Stat. § 111.70(4)(d)3.b.
¶206 Further, although collective bargaining units must
provide benefits to all members, Act 10 eliminates fair share
agreements requiring members to pay their proportionate share of
the cost of providing those services.8 Wis. Stat.
§ 111.70(1)(f), (2). Collective bargaining units' finances are
also diminished by Wis. Stat. § 111.70(3g) which prohibits
municipalities from withholding union dues from employees'
wages.9
¶207 By making membership unduly expensive, these Act 10
provisions collectively infringe on the associational right to
organize. There is no doubt that these provisions act to
discourage membership. The majority's narrow focus on whether
the State is required to facilitate free speech shifts the focus
from this issue. In doing so, the majority avoids directly
addressing the question of whether these provisions
impermissibly punish the exercise of the right to associate.
8
Although the majority questions the constitutionality of
fair share agreements, majority op., ¶58, the United States
Supreme Court recently affirmed that fair share agreements for
"full-fledged state employees" are constitutionally permissible.
Harris v. Quinn, 573 U.S. __, *29 (June 30, 2014). Harris dealt
with a challenge to fair share agreements brought by personal
assistants. The court determined that because personal
assistants were not full-fledged public employees they could not
be compelled to make fair share payments.
9
It is notable that the majority recognizes this as a
burden in its discussion of the equal protection claims.
Majority op., ¶78.
10
No. 2012AP2067.awb
¶208 The majority similarly avoids addressing Madison
Teachers' second argument, that Act 10 creates unconstitutional
conditions. Again, it simply reshapes the argument.
¶209 The majority reasons that because negotiating with
employees is not constitutionally required, it cannot be a
constitutional violation to withhold such benefits from members
of collective bargaining units. Majority op., ¶37-38 (emphasis
added). The focus of its analysis is deceptive as the doctrine
of unconstitutional conditions does not look at whether the
benefit is required. Regardless of whether the benefit is
required, the doctrine focuses on whether an individual is
required to give up a constitutionally protected right in order
to obtain the benefit.
¶210 The doctrine of unconstitutional conditions provides
that "the government may not deny a benefit to a person because
he exercises a constitutional right." Koontz v. St. Johns River
Water Mgmt. Dist., 133 S. Ct. 2586, 2594 (2013). This doctrine
reflects the idea that "the Constitution's protection is not
limited to direct interference with fundamental rights." Healy
v. James, 408 U.S. 169, 183 (1972). Freedoms, such as the right
to associate, "are protected not only against heavy-handed
frontal attack, but also from being stifled by more subtle
governmental interference." Bates v. City of Little Rock, 361
U.S. 516, 523 (1960).
¶211 Even though there may be no constitutional right to a
benefit, the State cannot premise receipt of that benefit upon a
person foregoing a constitutionally protected right. Bd. of
11
No. 2012AP2067.awb
Cnty. Comm'rs v. Umbehr, 518 U.S. 668, 674 (1996). Such a
condition effectively punishes the free exercise of
constitutional liberties, accomplishing indirectly what the
State cannot command directly. Sherbert v. Verner, 374 U.S.
398, 406 (1963).
¶212 The seminal Wisconsin case applying this doctrine is
Lawson v. Housing Auth. of Milwaukee, 270 Wis. 269, 70 N.W.2d
605 (1955). In Lawson, the court held that it was impermissible
for a federal statute to condition federal low-income housing on
tenants not being members of "subversive organizations." Id. at
274. This was true despite the fact that there was no
constitutional right to federal low-income housing.
¶213 The court explained that if the government could
defend a statute "on the ground that the plaintiff is being
deprived thereby only of a privilege, and not of a vested right,
there is extreme danger that the liberties of any minority group
in our population, large or small, might be swept away." Id. at
275. In other words, once the government has decided to grant a
benefit, it cannot condition that benefit on relinquishment of a
constitutionally protected right.
¶214 The majority pays lip service to this doctrine, but
then fails to actually apply it. Majority op., ¶¶29, 38. Its
focus on whether the benefit itself is required belies any
suggestion that the majority is following the precedent on
unconstitutional conditions.
¶215 Act 10 is clear: if you have exercised your
associational right to organize as a collective bargaining unit
12
No. 2012AP2067.awb
you lose your ability to negotiate over anything other than an
increase in base wages up to the amount of inflation. Wis.
Stat. §§ 111.70(4)(mb), 66.0506, 118.245. This is the textbook
definition of an unconstitutional condition. By permitting such
a statute to stand, the majority greatly dilutes the First
Amendment protection on the right to freedom of association.
¶216 Because Act 10 infringes on associational rights to
organize by discouraging and punishing membership in collective
bargaining units, it can survive strict scrutiny only if it is
narrowly tailored to meet a compelling government interest. The
State has made no argument that Act 10 is narrowly tailored to
meet a compelling government interest and has conceded that it
cannot meet this standard. Accordingly, I conclude that the
challenged provisions of Act 10 violate the constitutional right
of public employees to organize in a collective bargaining
unit.10
10
Madison Teachers alleges that Act 10 also violates the
equal protection clause. It points to the fact that Wis. Stat.
§§ 111.70(4)(mb), 66.0506, and 118.245 prevent collective
bargaining units from negotiating anything other than base wage
increases up to the amount of inflation. Non-members of
collective bargaining units are not subject to this restriction.
Further, Wis. Stat. § 111.70(3)(g) prohibits municipalities from
withholding dues for collective bargaining units. There is no
similar restriction preventing municipalities from withholding
dues for other types of organizations.
As discussed above, the right to organize in a collective
bargaining unit is encompassed in the fundamental right to
associate protected by the First Amendment. See supra, ¶¶18-19.
The challenged provisions of Act 10 implicate those
associational rights because they treat employees that are
members of a collective bargaining unit differently than
employees that are not members of collective bargaining units.
As these provisions of Act 10 implicate the fundamental right to
13
No. 2012AP2067.awb
II. Home Rule
¶217 Next, Madison Teachers challenges the provision in Act
10 which prohibits the City of Milwaukee from making pension
contributions on behalf of its employees, Wis. Stat.
§ 62.623(1).11 It alleges that this provision violates the Home
Rule Amendment.12
¶218 The majority responds by shifting the focus to whether
Act 10 as a whole implicates a matter of statewide concern. It
determines that because the purpose of Act 10 is to alleviate
"fiscal strain," the challenged legislation is primarily a
matter of statewide concern. Based primarily on fiscal
concerns, the majority concludes that Act 10 does not violate
associate, strict scrutiny, rather than rational basis review,
should be applied to evaluate whether Act 10 violates the equal
protection clause.
11
Wisconsin Stat. § 62.623(1) provides:
Beginning on July 1, 2011, in any employee retirement
system of a 1st class city . . . employees shall pay
all employee required contributions for funding
benefits under the retirement system. The employer may
not pay on behalf of an employee any of the employee's
share of the required contributions.
12
The Home Rule Amendment provides:
Cities and villages organized pursuant to state law
may determine their local affairs and government,
subject only to this constitution and to such
enactments of the legislature of statewide concern as
with uniformity shall affect every city or every
village.
Wis. Const. art. XI, § 3, cl. 1.
14
No. 2012AP2067.awb
the Home Rule Amendment.13 Id., ¶¶109, 111-15. Over and over
again the majority emphasizes that legislation implicating
fiscal issues is a matter of statewide concern:
"[S]tatewide legislation aimed at improving the
fiscal health of the State budget is indisputably
a general state concern." Id., ¶115.
"[T]he legislature's determination in 1947 that
pension and retirement plans are a local concern
does not mean it is an accurate portrayal of how
pension and retirement plans impact the fiscal
realities of Wisconsin in 2014." Id., ¶127.
"The legislature has broad latitude to experiment
with economic problems and we do not presume to
second-guess its wisdom." Id., ¶119.
See also id., ¶¶111, 118, 120, 122. In other words, when the
State has budgetary issues local finances are matters of
statewide concerns, even absent any showing of impact on the
State budget.
¶219 This determination is stunning, not just because of
its breadth, but also because it runs counter to the history of
13
I acknowledge that the majority references other
justifications for why Wis. Stat. § 62.623 affects a matter of
primarily statewide concern. However, the discussion that the
majority devotes to these other justifications is minor to that
compared with the repeated and much discussed primary
justification, i.e., the fiscal strain makes this a matter
primarily of statewide interest.
In a single paragraph the majority mentions the State's
historic role in matters affecting the employer-employee
relationship. Majority op., ¶115. In another single paragraph
it touches upon the State's obligation to maintain a functioning
civil service system. Id., ¶118. Finally, it takes two short
paragraphs to mention the scope of Act 10 as justification.
Id., ¶¶121-22.
15
No. 2012AP2067.awb
the Home Rule Amendment and Milwaukee's pension system, ignores
our precedent, and is unsupported by fact. The majority's
result substantially strips municipalities of their right to
self-govern as granted by the Home Rule Amendment because much
of what municipalities do involves "fiscal matters."
¶220 The Home Rule Amendment grants cities and towns the
authority to determine their own local affairs, subject only to
"enactments of the legislature of statewide concern as with
uniformity shall affect every city or every village." Wis.
Const. art. XI, § 3, cl. 1. A review of its history
demonstrates that it was enacted in response to calls "to
decrease the role of the state legislature in establishing
municipal governments and to provide cities and villages with
greater authority to determine their own affairs." Kerry A.
Burchill, Madison's Minimum-Wage Ordinance, Section 104.001, and
the Future of Home Rule in Wisconsin, 2007 Wis. L. Rev. 151,
161-62; Robert W. Hansen, Municipal Home Rule in Wisconsin, 21
Marq. L. Rev. 74, 76 (1937).14
14
Prior to its enactment, the Home Rule Amendment was
touted by multiple newspapers which emphasized the necessity of
local control of local affairs. One journal explained: "the
legislature of Wisconsin is gradually but surely taking away the
rights of municipalities to govern themselves. The matter has
reached the point today where democracy is in danger of being
replaced by imperialism." Gas Tax Wanted Home Rule Too, Stevens
Point Daily Journal, June 14, 1924, at 6.
16
No. 2012AP2067.awb
¶221 Under the Home Rule framework, the funding of a city's
pension plan has historically been viewed as primarily local in
nature. The legislature recognized this when it authorized
Milwaukee to establish its own Milwaukee Employee Retirement
System (MERS). § 31(1), ch. 41, Laws of 1947. It expressly
declared Milwaukee's pension system to be "a local affair" that
should not be construed as a matter of statewide concern:
For purpose of giving to cities of the first class the
largest measure of self-government with respect to
pension annuity and retirement systems compatible with
the constitution and general law, it is hereby
declared to be the legislative policy that all future
amendments and alterations to this act are matters of
local affair and government shall not be construed as
an enactment of state-wide concern.
§ 31(1), ch. 441, Laws of 1947.
Similar sentiments were expressed in other newspapers.
See, e.g., Joseph P. Harris, Questions and Answers, Madison
Capital Times, Jan. 19, 1924, Saturday Afternoon Ed., at 9
("Home rule secures to cities and villages a larger share in the
control over matters of purely local concern. It frees the city
or village from a considerable amount of state interference and
regulation."); Home Rule, Wisconsin Rapids Daily Tribune, Oct.
29, 1924, at 4 ("The meaning of the amendment is briefly stated
by the legislative committee of the Milwaukee common council,
which is working for its adoption, as follows: The home rule
amendment if passed will give villages and cities in Wisconsin
broader self-governing powers and leave local affairs to the
local governing bodies, without first seeking the authority from
the legislature.").
Public statements intended to persuade voters during the
ratification process inform the interpretation of a
constitutional amendment. Appling v. Walker, 2014 WI 96, ¶¶28-
37, ___ Wis. 2d ___, ___ N.W.2d ___; see also Dairyland
Greyhound Park, Inc. v. Doyle, 2006 WI 107, ¶19, 295 Wis. 2d 1,
719 N.W.2d 408.
17
No. 2012AP2067.awb
¶222 The majority's determination that the funding of
Milwaukee's pension system is primarily a matter of statewide
concern also ignores precedent. In State ex rel. Brelsford v.
Ret. Bd. of the Policemen's Annuity & Benefit Fund, 41 Wis. 2d
77, 163 N.W.2d 153 (1968), a constitutional challenge was
brought against a Milwaukee charter amendment that permitted
retired police officers to receive pensions while working as
school teachers. The court determined that pension funds for
Milwaukee police officers "seem[] overwhelmingly to be a matter
of predominate local concern." Id. at 87.
¶223 The court explained that "the state would have little
interest in whether a retired policeman taught school in
Milwaukee or in some other municipality. This is a matter of
unique interest to Milwaukee." Id. Similarly, the court has
described "the control of the locality over payments from the
local purse" as one of a municipality's "most important"
functions. Van Gilder v. City of Madison, 222 Wis. 58, 81-82,
267 N.W. 25 (1936).15
¶224 As discussed in State ex rel Ekern v. City of
Milwaukee, 190 Wis. 633, 641, 209 N.W. 860 (1926), a "local
affair" is one "which much more intimately and directly concerns
15
Van Gilder created an exception to this general rule for
the salaries of police officers, noting that "the preservation
of order, the enforcement of law, the protection of life and
property, and the suppression of crime are matters of state-wide
concern." Van Gilder v. City of Madison, 222 Wis. 58, 76, 267
N.W. 25 (1936). As discussed above, this exception did not
extend to police pension funds. State ex rel. Brelsford v. Ret.
Bd. of the Policemen's Annuity & Benefit Fund, 41 Wis. 2d 77,
87, 163 N.W.2d 153 (1968).
18
No. 2012AP2067.awb
the inhabitants of that community than the casual visitor or the
other parts of the state." The funding of Milwaukee's pension
fund for its city employees fits within this description. The
fund is "entirely self-reliant in both its management and
funding." Majority op., ¶114. Accordingly, its funding has no
demonstrable impact on other parts of the State.
¶225 Our jurisprudence is consistent with that of other
states that have determined that compensating city employees is
primarily a matter of local concern. See, e.g., Bruckshaw v.
Paolino, 557 A.2d 1221, 1224 (R.I. 1989) ("the regulation of
city employee pensions is of local concern"); N. Ohio
Patrolmen's Benevolent Ass'n v. Parma, 402 N.E.2d 519, 525 (Ohio
1980) ("the ability to determine the salaries paid to city
employees is a fundamental power of local self-government.");
City of Colorado Springs v. State, 626 P.2d 1122, 1127 (Colo.
1980) ("Although the establishment of firemen's pension plans is
of statewide concern, the extent to which a home rule city must
provide financial support for such a plan is a question
intimately involving city budgeting and the assessment and
collection of taxes for municipal purposes. These are local and
municipal matters."); Sonoma Cnty. Org. of Public Emps. v. Cnty.
of Sonoma, 591 P.2d 1, 13 (Cal. 1979) ("the wages paid to
employees of charter cities as well as charter counties is a
matter of local rather than statewide concern."); Crawford v.
City of Chicago, 710 N.E.2d 91, 98 (Ill. App. Ct. 1999) ("The
power to extend to its employees both compensation and benefits
19
No. 2012AP2067.awb
is ineluctably essential to the operation of local governmental
units such as the City in the present case.").16
¶226 Further undermining its analysis, the majority relies
on the broad purpose behind Act 10, rather than the purpose
behind the specific statute at issue, Wis. Stat. § 62.623(1).
It does so absent any facts in the record showing that Wis.
Stat. § 62.623(1) does anything to achieve Act 10's purpose or
is in any way related to the State budget. Majority op., ¶¶118-
23.
¶227 The State presented no credible evidence showing that
Milwaukee pension expenditures have any impact on the State
budget. Although the State pointed to its "shared revenue"
program, the amounts provided by the State to a municipality
under that program are not based on the municipality's budget or
expenditures. See Wis. Stat. §§ 79.02, 79.035.
¶228 The shared revenue program does not show a
relationship between city contributions to city employee pension
plans and the State budget. Indeed, even the majority
recognizes that the administration of a city's retirement system
is "entirely self-reliant in both its management and funding."
Majority op., ¶114. There are no facts in the record to
determine that Milwaukee's funding of employee pensions has any
16
See also Rebecca Hanner White, Robert E. Kaplan, &
Michael W. Hawkins, Ohio's Public Employee Bargaining Law: Can
it Withstand Constitutional Challenge?, 53 U. Cin. L. Rev. 1, 31
(1984) ("The establishment of wages, hours, and other terms and
conditions of employment and decisions pertaining to hiring,
promotion, retention, discipline and dismissal of employees are
fundamental aspects of local government.").
20
No. 2012AP2067.awb
effect on statewide financial concerns. Accordingly, the
majority's determination that Wis. Stat. § 62.623 concerns
primarily a statewide matter is unsupported.
¶229 Having determined that Wis. Stat. § 62.623 is
primarily a statewide matter, the majority declines to analyze
what it describes as the second step of a Home Rule challenge:
uniformity. Id., ¶94. After devoting several paragraphs to
expound on uniformity, id., ¶¶91-95, 98-99, 102-09, the majority
makes no attempt to apply its uniformity analysis to the facts
of this case. Without any discussion or explanation the
analysis simply ends. This presents a significant void in the
majority's analysis.
¶230 The issues of when and whether a statute applying to a
specific set or class of cities is uniform requires a nuanced
analysis. State ex rel. Michalek v. LeGrand, 77 Wis. 2d 520,
530 n.16, 253 N.W.2d 505 (1977). The concern of targeting
individual cities is echoed throughout case law as the court has
grappled with the problem of uniformity in the home rule
context. See, e.g., id.; State ex rel. Sleeman v. Baxter, 195
Wis. 437, 448, 219 N.W. 858 (1928); Ekern, 190 Wis. at 642. The
majority opinion cannot simply wave away these concerns by
abruptly ending its analysis. The hole left in the majority's
application on this issue further renders its conclusion infirm.
¶231 By determining that Wis. Stat. § 62.623(1) primarily
concerns a statewide matter because it deals with finances, the
majority ignores the history of the Home Rule and the Milwaukee
pension system, as well as relevant case law, and has greatly
21
No. 2012AP2067.awb
narrowed the scope of the Home Rule Amendment. Further, its
focus on the purpose behind a broad act, absent any evidence
that the specific legislation is actually aimed at affecting
that purpose, gives the legislature more leeway to legislate on
local issues than was intended by the Home Rule Amendment.
¶232 Under the majority's holding it is hard to imagine
what is left for municipalities to govern autonomously.
Accordingly, for the reasons discussed above, I conclude that
the majority has not saved Wis. Stat. § 62.623(1) from its
constitutional challenge.
III. Contract Clause
¶233 Madison Teachers also asserts that the provision in
Act 10 prohibiting Milwaukee from making pension contributions
on behalf of its employees violates the Contract Clause of the
Wisconsin Constitution.17 It argues that the Milwaukee Charter
Ordinance constitutes a contract guaranteeing its right to
benefits. Because Act 10 prohibits the benefit of employer
funded pension contributions, it contends that Act 10 interferes
with its contract rights.
¶234 By twisting the definition of the word "benefit," the
majority determines that employer pension contributions are not
really benefits at all. As a consequence it is able to exclude
the employer contributions, determining that they are not part
17
The Contract Clause provides: "[n]o bill of attainder, ex
post facto law, nor any law impairing the obligation of
contracts, shall ever be passed." Wis. Const. art. I, § 12.
22
No. 2012AP2067.awb
of the benefit contract as provided in the Milwaukee Charter
Ordinance. Accordingly, it concludes that the provision in Act
10 prohibiting Milwaukee from making pension contributions does
not violate the Contract Clause.
¶235 This analysis is problematic in two respects: (1) it
overlooks the language of the Milwaukee Ordinance and (2) it is
contrary to the ordinary meaning of the term "benefit." By
overlooking language in the ordinance and by demonstrating its
willingness to creatively interpret contract terms to avoid
finding a violation of the Contract Clause, the majority
undermines the right to contract.
¶236 Under the Contract Clause, "[n]o . . . law impairing
the obligation of contracts, shall ever be passed." Wis. Const.
art. I, § 12. Although the Milwaukee Charter Ordinance provided
that the city will make pension contributions to MERS on behalf
of its employees, the legislature included in Act 10 provisions
prohibiting Milwaukee from making those contributions. Wis.
Stat. § 62.623. Madison Teachers asserts this statute violates
the Contract Clause.
¶237 Milwaukee's Charter Ordinance provides that Milwaukee
will fund member pension contributions to MERS on behalf of its
employees. Specifically, it states that "the city shall
contribute on behalf of general city employees 5.5% of such
member's earnable compensation." Mil. Ch. Ord. § 36-08-7-a-1.
¶238 Next, the ordinance states that employees shall have a
benefit contract as provided by the ordinance that shall not be
impaired by future legislation:
23
No. 2012AP2067.awb
Every such member . . . shall thereby have a benefit
contract in . . . all . . . benefits in the amounts
and upon the terms and conditions and in all other
respects as provided under this [ordinance] . . . and
each member and beneficiary having such a benefit
contract shall have a vested right to such . . .
benefits and they shall not be diminished or impaired
by subsequent legislation or by any other means
without his consent.
Mil. Ch. Ord. § 36-13-2-a.
¶239 Then, the ordinance states that employees have a
vested contract right to their benefits:
Every member, retired member, survivor and beneficiary
who participates in the combined fund shall have a
vested and contractual right to the benefits in the
amount and on the terms and conditions as provided in
the law on the date the combined fund is created.
Mil. Ch. Ord. § 36-13-2-g.
¶240 The majority acknowledges that those provisions create
a contract right to pensions, but determines that they do not
create a contract right to pension contributions. Majority op.,
¶¶144-45, 156-57. It notes that "[f]or a legislative enactment
to be considered a contract, 'the language and circumstances
[must] evince a legislative intent to create private rights of a
contractual nature enforceable against the State.'" Id., ¶142
(quoting Wisconsin Prof'l Police Ass'n, Inc. v. Lightbourn, 2001
WI 59, ¶145 n.188, 243 Wis. 2d 512). Reasoning that there is no
indication that the city council intended to classify pension
contributions as benefits, the majority determines that there is
no contractual obligation for Milwaukee to make those payments.
Id., ¶¶150, 153, 158.
¶241 The majority supports its strained interpretation of
the term "benefit" with a cursory reading of Milwaukee's Charter
24
No. 2012AP2067.awb
Ordinance. It suggests that the term "benefits" as used in the
ordinance, cannot mean pension contributions because Milwaukee's
obligation to pay employee contributions "is conspicuously
absent from [the section of the Milwaukee Charter Ordinance
titled "Benefits," Mil. Ch. Ord. § 36-05]." Id., ¶152.
¶242 In reaching its result, the majority overlooks the
very first section in the benefits chapter of the Milwaukee
Charter Ordinance. Milwaukee Charter Ordinance § 36-05-1-d
specifically incorporates Mil. Ch. Ord. § 36-08-7, which
requires the city to fund the 5.5% member contributions of its
employees. It states:
The member shall be guaranteed that if the total
benefit in the form of a monthly retirement
allowance . . . does not equal the amount of the
member's contributions as provided for in s. 36-08-7
[requiring the city to fund those 5.5% member
contributions], . . . then the balance of the member's
contributions with interest shall be payable in lump
sum amount to a designated beneficiary or to an estate
entitled thereto.
Mil. Ch. Ord. § 36-05-1-d (emphasis added).18
18
The majority appears to either dismiss or overlook
additional sections of the Ordinance: "Separation Benefits,"
Mil. Ch. Ord. § 36-05-6-6, and "Ordinary Death Benefit," Mil.
Ch. Ord. § 36-05-6-10. Both likewise reference Milwaukee's
contributions to the pension funds. Both reference "accumulated
contributions," which is a defined term that incorporates the
5.5% city funded member contributions as set forth in Mil. Ch.
Ord. § 36-08-7.
25
No. 2012AP2067.awb
¶243 Indeed, the majority's assertion that pension
contributions are not benefits is contrary to the common use of
the term "benefits." See, e.g., State ex rel. City of Manitowoc
v. Police Pension Bd., 56 Wis. 2d 602, 612A, 203 N.W.2d 74
(1973) ("[I]n view of modern day employment inducements, fringe
benefits such as insurance premiums, pension fund contributions
and perhaps others are to be included in the formula for
calculating pension benefits for police and firemen."); Titan
Tire Corp. of Freeport, Inc. v. United Steel, Paper, & Forestry,
Rubber, Mfg., 734 F.3d 708, 731 (7th Cir. 2013) ("They were
also receiving an array of fringe benefits, including health
care and pension contributions."); City of Ft. Wayne v. Ramsey,
The Separation Benefits provision states: "Should a member
cease to be an employee . . . he or she shall be paid his or her
accumulated contributions as they were at date of separation
from service." Mil. Ch. Ord. § 36-05-6-6 (emphasis added).
Similarly, the Ordinary Death Benefit provision states: "Upon
receipt of proper proofs of death . . . his or her accumulated
contributions shall be paid to such person, or such trustee, if
any, as he or she has nominated." Mil. Ch. Ord. § 36-05-06-10
(emphasis added).
"Accumulated contributions" is a defined term in the
ordinance, referring to "the sum of the contributions in the
member's account, as provided for in s. 36-08-7-i." Mil. Ch.
Ord. § 36-02-1. Section 36-08-7-i of Milwaukee's Charter
Ordinance states in relevant part that "[t]he member's account
shall consist of those member contributions deposited in
accordance with pars. . . b." Again, paragraph b requires
Milwaukee to make contributions on behalf of its employees into
their pension account. Mil. Ch. Ord. § 36-08-7-b. Thus, the
majority's reliance on the absence of employer contributions
from the benefits chapter of the Milwaukee Charter Ordinance
appears misplaced.
26
No. 2012AP2067.awb
578 N.E.2d 725, 728 (Ind. Ct. App. 1991) ("employer-paid pension
contributions are in the nature of a fringe benefit").
¶244 Not only is the majority's assertion contrary to the
common use of the term, it is contrary to the majority's common
experience. Every year the State of Wisconsin sends to its
employees a "Statement of Annual Benefits."19 The benefit of
employer pension contributions is among the several benefits
listed. For executive branch employees, pension contributions =
benefits. For legislative branch employees, pension
contributions = benefits. As the majority well knows, for
judicial branch employees, pension contributions = benefits.
Every State of Wisconsin paycheck stub lists an employer paid
pension contribution as a benefit.
¶245 Nevertheless, the majority persists in twisting the
definition of benefit allowing it to creatively interpret a
contract in a manner permitting the State to disregard it. The
majority rests its conclusion that there is no violation of the
Contract Clause on the analytically unsupportable premise that
for Milwaukee, an employer pension contribution is not a
benefit.
¶246 The majority's strained reading of the term "benefit,"
excluding employer pension contributions from its definition, is
contrary to the use of the term "benefit" in the Milwaukee
Charter Ordinance and the common use of the term. Accordingly,
its analysis of whether the prohibition on employer
19
Dep't of Employee Trust Funds, WI Retirement System, Form
No. ET-7365.
27
No. 2012AP2067.awb
contributions in Wis. Stat. § 62.623 violates the Contract
Clause does not withstand scrutiny. Allowing Wis. Stat.
§ 62.623 to stand undermines the protections of the Contract
Clause.
IV.
¶247 In sum, the majority's failure to address the actual
issues presented in this case allows it to reach results that
countenance the needless diminution of multiple constitutional
rights. The right to freedom of association is diluted as the
majority has opened the door for the State to withhold benefits
and punish individuals based on their membership in disfavored
groups. Municipalities' right to self-govern as granted by the
Home Rule Amendment now rings hollow as the majority determines
that when the State has budgetary concerns, anything dealing
with local finances is a statewide matter. And the right to
contract is undermined as the majority demonstrates its
willingness to creatively interpret a contract in a manner
permitting the State to disregard it.
¶248 For the reasons set forth above, I determine that Act
10 unconstitutionally infringes on protected rights.
Accordingly, I respectfully dissent.
¶249 I am authorized to state that Chief Justice SHIRLEY S.
ABRAHAMSON joins this dissent.
28
No. 2012AP2067.awb
29
No. 2012AP2067.awb
1
Madison Teachers, Inc. v. Scott Walker
Court: Wisconsin Supreme Court
Date filed: 2014-07-31
Citations: 358 Wis. 2d 1, 2014 WI 99
Copy CitationsCombined Opinion