Last night, in a comment to my post from Tuesday, “Do‘Right to Work’ Laws Violate the Constitution Contracts Clause?”, reader PJR
wrote:
wrote:
To a non-lawyer, it kinda looks
like SCOTUS rejected the contracts argument in 1949, so unions would have to
find someway to get the court(s) to reconsider–or is this wrong? If wrong, why
the heck haven’t unions tried this? ( http://supreme.justia.com/cases/federal/us/335/525/case.html)
like SCOTUS rejected the contracts argument in 1949, so unions would have to
find someway to get the court(s) to reconsider–or is this wrong? If wrong, why
the heck haven’t unions tried this? ( http://supreme.justia.com/cases/federal/us/335/525/case.html)
I began writing a response that I planned to post in the
Comments section, but then realized that the post would be too long (wayyy too long) for that,
and that the issue was important enough to post directly as a blog post, in
follow-up to the initial post. So, here’s
the follow-up in response to PJS’s comment:
Comments section, but then realized that the post would be too long (wayyy too long) for that,
and that the issue was important enough to post directly as a blog post, in
follow-up to the initial post. So, here’s
the follow-up in response to PJS’s comment:
—-
Hmm.
The opinion PJS links to, Lincoln
Union v. Northwestern Co., from 1949, says that the Court earlier decided
that the ‘right to work’ laws at issue in that case don’t violate the Contracts
clause, but the opinion doesn’t elaborate except to cite, without comment, to a
1934 opinion, Home Building & Loan
Assn. v. Blaisdell.
The opinion PJS links to, Lincoln
Union v. Northwestern Co., from 1949, says that the Court earlier decided
that the ‘right to work’ laws at issue in that case don’t violate the Contracts
clause, but the opinion doesn’t elaborate except to cite, without comment, to a
1934 opinion, Home Building & Loan
Assn. v. Blaisdell.
But Home Building & Loan Assn. had
nothing to do with labor contracts. In that case, the Court upheld the
constitutionality of a Minnesota law that required mortgage holders to grant
homeowners longer periods of time to begin again to repay their mortgages after
missing payments, before the mortgage company could foreclose on the house.
The Court said this didn’t violate the Contracts clause because states
must be allowed to address severe emergencies by requiring an altered “remedy”
for completion of the contract—in that case, a longer time in which to repay
the mortgage—as long as the legislation didn’t alter the ultimate amount owed.
nothing to do with labor contracts. In that case, the Court upheld the
constitutionality of a Minnesota law that required mortgage holders to grant
homeowners longer periods of time to begin again to repay their mortgages after
missing payments, before the mortgage company could foreclose on the house.
The Court said this didn’t violate the Contracts clause because states
must be allowed to address severe emergencies by requiring an altered “remedy”
for completion of the contract—in that case, a longer time in which to repay
the mortgage—as long as the legislation didn’t alter the ultimate amount owed.
The
opinion recites the economic devastation of the Depression, and says that the Contracts
clause must be interpreted to allow states some leeway to protect the state’s
residents as long as the leeway wasn’t so great as to deprive the mortgage
holder permanently of a property right—the right to eventual full payment of
the mortgage. Then, after discussing two 1870s Supreme Court opinion that
interpret the Contracts clause as absolute, the opinion says that it really is
not, as long as the change is just temporary and in response to a real emergency. (This is apart from the state’s right to
permanently bar contracts or provisions in contracts that violate criminal or
civil law—a separate “public policy” exemption that has existed since the
founding; people (including corporate people) can’t simply contract away the
criminal law or certain types of civil law.
Although lately the Supreme Court, in a series of 5-4 opinions, does
pretty much allow corporate people to
do exactly that.)
opinion recites the economic devastation of the Depression, and says that the Contracts
clause must be interpreted to allow states some leeway to protect the state’s
residents as long as the leeway wasn’t so great as to deprive the mortgage
holder permanently of a property right—the right to eventual full payment of
the mortgage. Then, after discussing two 1870s Supreme Court opinion that
interpret the Contracts clause as absolute, the opinion says that it really is
not, as long as the change is just temporary and in response to a real emergency. (This is apart from the state’s right to
permanently bar contracts or provisions in contracts that violate criminal or
civil law—a separate “public policy” exemption that has existed since the
founding; people (including corporate people) can’t simply contract away the
criminal law or certain types of civil law.
Although lately the Supreme Court, in a series of 5-4 opinions, does
pretty much allow corporate people to
do exactly that.)
Yet, in Home Building & Loan Assoc., the
Court interpreted Lincoln Union as
allowing states to declare exempt from the Contracts clause pretty much
anything it wants, simply by declaring it public policy in the interest of the
state’s citizens. Here’s the extent of
what that opinion says about the Contract clause issue:
Court interpreted Lincoln Union as
allowing states to declare exempt from the Contracts clause pretty much
anything it wants, simply by declaring it public policy in the interest of the
state’s citizens. Here’s the extent of
what that opinion says about the Contract clause issue:
Second. There is a suggestion though not
elaborated in briefs that these state laws conflict with Art. I, 10, of the
United States Constitution, insofar as they impair the obligation of contracts
made prior to their enactment. That this contention is without merit is now too
clearly established to require discussion. See Home Bldg. & Loan Ass’n v.
Blaisdell, 290 U.S. 398, 436 -439, 239, 240, 88 A.L.R. 1481, and cases [335
U.S. 525 , 532] there cited. And also Veix v. Sixth Ward Building & Loan
Ass’n, 310 U.S. 32, 38 , 794; East New York Savings Bank v. Hahn, 326 U.S. 230, 232 , 70, 160 A.L.R. 1279.
elaborated in briefs that these state laws conflict with Art. I, 10, of the
United States Constitution, insofar as they impair the obligation of contracts
made prior to their enactment. That this contention is without merit is now too
clearly established to require discussion. See Home Bldg. & Loan Ass’n v.
Blaisdell, 290 U.S. 398, 436 -439, 239, 240, 88 A.L.R. 1481, and cases [335
U.S. 525 , 532] there cited. And also Veix v. Sixth Ward Building & Loan
Ass’n, 310 U.S. 32, 38 , 794; East New York Savings Bank v. Hahn, 326 U.S. 230, 232 , 70, 160 A.L.R. 1279.
After “seeing” Home Building, I can say that that
conclusory statement is clearly a deeply distorted interpretation of Lincoln Union. Read Home
Building. You be the justice, er,
the judge, about what it says.
conclusory statement is clearly a deeply distorted interpretation of Lincoln Union. Read Home
Building. You be the justice, er,
the judge, about what it says.
Ditto, and then some, for
the other two referenced opinions. Viex v. Sixth Ward Building & Loan Assoc.,
decided in 1940, begins:
the other two referenced opinions. Viex v. Sixth Ward Building & Loan Assoc.,
decided in 1940, begins:
In 1928 and 1929 appellant
purchased prepaid shares of the appellee, a New Jersey building and loan
association, paying the pay value of $200 per share. At that time the applicable New Jersey statutes
provided that shares in such an association could be withdrawn by giving such
written notice as the constitution or by-laws of the association provided, not
to exceed 30 days; that withdrawals should be paid in the order in which
notices were received, with not more than one-half of the receipts of any month
being required to be used for payment of withdrawals, without the consent of
the board of directors, until the oldest unpaid claim of withdrawal had been on
file for six months; that no payment should be postponed for longer than six
months from the date of notice; and that any member who had given notice could
sue and recover the withdrawal value if it was not paid within six months of
the notice. 1
purchased prepaid shares of the appellee, a New Jersey building and loan
association, paying the pay value of $200 per share. At that time the applicable New Jersey statutes
provided that shares in such an association could be withdrawn by giving such
written notice as the constitution or by-laws of the association provided, not
to exceed 30 days; that withdrawals should be paid in the order in which
notices were received, with not more than one-half of the receipts of any month
being required to be used for payment of withdrawals, without the consent of
the board of directors, until the oldest unpaid claim of withdrawal had been on
file for six months; that no payment should be postponed for longer than six
months from the date of notice; and that any member who had given notice could
sue and recover the withdrawal value if it was not paid within six months of
the notice. 1
On April 22, 1932, these
statutes were amended in four respects: (1) ‘total receipts’ of an association,
one-half of which were required to be used for the payment of withdrawals and
which had not been previously defined, were defined as income on authorized
investments, dues on shares of the association which were pledged with it to
secure loans, and repayments from loans; (2) if in any one month the funds required
to be payable for withdrawals were insufficient to pay all requested
withdrawals, withdrawing members were to receive $500 each in the order of
priority until the fund for withdrawals was exhausted; (3) no withdrawals were
to be paid if the funds available for payment of matured shares were
insufficient to pay all matured shares, the payment of which had been requested
within thirty days after maturity; (4) so long as the funds of an association
were applied as required by the amendment, no member who had filed his
withdrawal notice should have a right to sue for the withdrawal value of his
shares. 2 In 1935 another amendment was passed providing
that one-third of the ‘net receipts’ of an association were to be payable for
withdrawals, with ‘net receipts’ defined as monies, other than borrowed monies,
received by the association less operating expenses, payments on creditor
obligations, payments for protecting the property of the association and
reserves for any of these purposes. At the same time payments of withdrawals in
the order in which notices had been received was continued but the payments
were limited to $50 per member.
statutes were amended in four respects: (1) ‘total receipts’ of an association,
one-half of which were required to be used for the payment of withdrawals and
which had not been previously defined, were defined as income on authorized
investments, dues on shares of the association which were pledged with it to
secure loans, and repayments from loans; (2) if in any one month the funds required
to be payable for withdrawals were insufficient to pay all requested
withdrawals, withdrawing members were to receive $500 each in the order of
priority until the fund for withdrawals was exhausted; (3) no withdrawals were
to be paid if the funds available for payment of matured shares were
insufficient to pay all matured shares, the payment of which had been requested
within thirty days after maturity; (4) so long as the funds of an association
were applied as required by the amendment, no member who had filed his
withdrawal notice should have a right to sue for the withdrawal value of his
shares. 2 In 1935 another amendment was passed providing
that one-third of the ‘net receipts’ of an association were to be payable for
withdrawals, with ‘net receipts’ defined as monies, other than borrowed monies,
received by the association less operating expenses, payments on creditor
obligations, payments for protecting the property of the association and
reserves for any of these purposes. At the same time payments of withdrawals in
the order in which notices had been received was continued but the payments
were limited to $50 per member.
And here’s its holding, and
the explanation for it:
the explanation for it:
In Home Building & Loan
Association v. Blaisdell 10 this Court considered the authority retained by the
state over contracts ‘to safeguard the vital interests of its people.’ The rule
that all contracts are made subject to this paramount authority was there
reiterated. Such authority is not limited to health, morals and safety. 11 It
extends to economic needs as well. 12 Utility
rate contracts give way to this power, 13 as do contractual arrangements between
landlords and tenants. 14
Association v. Blaisdell 10 this Court considered the authority retained by the
state over contracts ‘to safeguard the vital interests of its people.’ The rule
that all contracts are made subject to this paramount authority was there
reiterated. Such authority is not limited to health, morals and safety. 11 It
extends to economic needs as well. 12 Utility
rate contracts give way to this power, 13 as do contractual arrangements between
landlords and tenants. 14
The cases cited in the
preceding paragraph make repeated reference to the emergency existing at the
time of the enactment of the questioned statutes. Many of the enactments were
temporary in character. We are here considering a permanent piece of
legislation. So far as the contract clause is concerned, is this significant?
We think not. ‘Emergency does not create (constitutional) power, emergency may
furnish the occasion for the exercise of power.’ 15 We
think of emergencies as suddenly arising and quickly passing. The emergency of
the depression may have caused the 1932 legislation, but the weakness in the
financial system brought to light by that emergency remains. If the legislature
could enact the legislation as to withdrawals to protect the associations in
that emergency, we see no reason why the new status should not continue. When
the 1932 act was passed commercial and savings banks, insurance companies and
building and loan associations were suffering heavy withdrawals. The liquid
portion of their assets were being rapidly drained off by their customers,
leaving the long term investments and depreciated assets as an inadequate
source for payment of the remaining liabilities. An acceleration or a
continuance of this tendency to withdraw available funds threatened a quick end
to the ability of the institutions to meet even normal demands. Such threatened
insolvency demands legislation for its control in the same way that liquidation
after insolvency does. Such legislation may be classed as emergency in one
sense but it need not be temporary. 16
preceding paragraph make repeated reference to the emergency existing at the
time of the enactment of the questioned statutes. Many of the enactments were
temporary in character. We are here considering a permanent piece of
legislation. So far as the contract clause is concerned, is this significant?
We think not. ‘Emergency does not create (constitutional) power, emergency may
furnish the occasion for the exercise of power.’ 15 We
think of emergencies as suddenly arising and quickly passing. The emergency of
the depression may have caused the 1932 legislation, but the weakness in the
financial system brought to light by that emergency remains. If the legislature
could enact the legislation as to withdrawals to protect the associations in
that emergency, we see no reason why the new status should not continue. When
the 1932 act was passed commercial and savings banks, insurance companies and
building and loan associations were suffering heavy withdrawals. The liquid
portion of their assets were being rapidly drained off by their customers,
leaving the long term investments and depreciated assets as an inadequate
source for payment of the remaining liabilities. An acceleration or a
continuance of this tendency to withdraw available funds threatened a quick end
to the ability of the institutions to meet even normal demands. Such threatened
insolvency demands legislation for its control in the same way that liquidation
after insolvency does. Such legislation may be classed as emergency in one
sense but it need not be temporary. 16
And East
New York Savings Bank v. Hahn, issued in 1945, pretty much sums it up:
New York Savings Bank v. Hahn, issued in 1945, pretty much sums it up:
Since Home Bldg. & L. Ass’n
v. Blaisdell, 290 U.S. 398 ,
54 S.Ct. 231, 88 A.L.R. 1481, there are left hardly any open spaces of
controversy concerning the constitutional restrictions of the Contract Clause
upon moratory legislation referable to the depression. The comprehensive
opinion of Mr. Chief Justice Hughes in that case cut beneath the skin of words
to the core of meaning. After a full review of the whole course of decisions
expounding the Contract Clause-covering almost the life of this Court-the
Chief Justice, drawing on the early insight of Mr. Justice Johnson2 in Ogden v. Saunders, 12 Wheat. 213, 286, as reinforced by
later decisions cast in more modern terms, e.g., Manigault v. Springs, 199 U.S. 473, 480 ,
26 S.Ct. 127, 130; Marcus Brown Co. v. Feldman, 256 U.S. 170, 198 ,
41 S.Ct. 465, 466, put the Clause in its proper perspective in our
constitutional framework. The Blaisdell case and decisions rendered since
(e.g., Honeyman v. Jacobs, 306 U.S. 539 ,
59 S.Ct. 702; Veix v. Sixth Ward Ass’n, 310 U.S. 32 ,
60 S.Ct. 792; Gelfert v. National City Bank, 313 U.S. 221 ,
61 S.Ct. 898, 133 A.L.R. 1467; Faitoute Co. v. Asbury Park, 316 U.S. 502 ,
62 S.Ct. 1129), yield this governing constitutional principle: when a widely
diffused public interest has become enmeshed in a network of multitudinous
private arrangements, the authority of the State ‘to safeguard the vital
interests of its people,’ 290 U.S. at page 434, 54 S. Ct. at page 239, 88
A.L.R. 1481, is not to be gainsaid by abstracting one such arrangement from its
public context and treating it as though it were an isolated private contract
constitutionally immune from impairment.
v. Blaisdell, 290 U.S. 398 ,
54 S.Ct. 231, 88 A.L.R. 1481, there are left hardly any open spaces of
controversy concerning the constitutional restrictions of the Contract Clause
upon moratory legislation referable to the depression. The comprehensive
opinion of Mr. Chief Justice Hughes in that case cut beneath the skin of words
to the core of meaning. After a full review of the whole course of decisions
expounding the Contract Clause-covering almost the life of this Court-the
Chief Justice, drawing on the early insight of Mr. Justice Johnson2 in Ogden v. Saunders, 12 Wheat. 213, 286, as reinforced by
later decisions cast in more modern terms, e.g., Manigault v. Springs, 199 U.S. 473, 480 ,
26 S.Ct. 127, 130; Marcus Brown Co. v. Feldman, 256 U.S. 170, 198 ,
41 S.Ct. 465, 466, put the Clause in its proper perspective in our
constitutional framework. The Blaisdell case and decisions rendered since
(e.g., Honeyman v. Jacobs, 306 U.S. 539 ,
59 S.Ct. 702; Veix v. Sixth Ward Ass’n, 310 U.S. 32 ,
60 S.Ct. 792; Gelfert v. National City Bank, 313 U.S. 221 ,
61 S.Ct. 898, 133 A.L.R. 1467; Faitoute Co. v. Asbury Park, 316 U.S. 502 ,
62 S.Ct. 1129), yield this governing constitutional principle: when a widely
diffused public interest has become enmeshed in a network of multitudinous
private arrangements, the authority of the State ‘to safeguard the vital
interests of its people,’ 290 U.S. at page 434, 54 S. Ct. at page 239, 88
A.L.R. 1481, is not to be gainsaid by abstracting one such arrangement from its
public context and treating it as though it were an isolated private contract
constitutionally immune from impairment.
The formal mode of reasoning
by means of which this ‘protective power of the state,’ 290 U.S. at page 440,
54 S.Ct. at page 241, 88 A.L.R. 1481, is acknowledged is of little moment. It
may be treated as an implied condition of every contract and, as such, as much
part of the contract as though it were written into it, whereby the State’s
exercise of its power enforces, and does not impair, a contract. A more candid
statement is to recognize, as was said in Manigault v. Springs, supra, that the
power ‘which, in its various ramifications, is known as the police power, is an
exercise of the sovereign right of the government to protect the … general
welfare of the people, and is paramount to any rights under contracts between
individuals.’ 199 U.S. at page 480, 26 S.Ct. at page 130. Once we are in this
domain of the reserve power of a State we must respect the ‘wide discretion on
the part of the legislature in determining what is and what is not necessary.’
Id. So far as the constitutional issue is concerned, ‘the power of the State
when otherwise justified,’ Marcus Brown Co. v. Feldman, 256 U.S. 170, 198 ,
41 S.Ct. 465, 466, is not diminished because a private contract may be
affected.
by means of which this ‘protective power of the state,’ 290 U.S. at page 440,
54 S.Ct. at page 241, 88 A.L.R. 1481, is acknowledged is of little moment. It
may be treated as an implied condition of every contract and, as such, as much
part of the contract as though it were written into it, whereby the State’s
exercise of its power enforces, and does not impair, a contract. A more candid
statement is to recognize, as was said in Manigault v. Springs, supra, that the
power ‘which, in its various ramifications, is known as the police power, is an
exercise of the sovereign right of the government to protect the … general
welfare of the people, and is paramount to any rights under contracts between
individuals.’ 199 U.S. at page 480, 26 S.Ct. at page 130. Once we are in this
domain of the reserve power of a State we must respect the ‘wide discretion on
the part of the legislature in determining what is and what is not necessary.’
Id. So far as the constitutional issue is concerned, ‘the power of the State
when otherwise justified,’ Marcus Brown Co. v. Feldman, 256 U.S. 170, 198 ,
41 S.Ct. 465, 466, is not diminished because a private contract may be
affected.
In other words, a state can use what is in essence its
police power to limit the state the absolute right to freely contract, but only
“to safeguard the vital interests of its people.” Suffice it to say that none of those three
opinions gave any indication, much less outright held, that a vital interest of
the people of any state was to be able to avoid payment of union dues, much less
to avoid payment of lower union-administration fees, as a union-beneficiary employee
in a union shop.
police power to limit the state the absolute right to freely contract, but only
“to safeguard the vital interests of its people.” Suffice it to say that none of those three
opinions gave any indication, much less outright held, that a vital interest of
the people of any state was to be able to avoid payment of union dues, much less
to avoid payment of lower union-administration fees, as a union-beneficiary employee
in a union shop.
In any event, Lincoln Union, in pretending that Home Building and the other two New Deal
era opinions say things contrary to what they actually say, dealt only with
compulsory union membership, not with
required non-union-member administrative fees paid to unions. That case was decided two years after passage
of the Taft-Hartley Act. And Taft-Hartley
itself bars required union membership, while also requiring that unions
negotiate compensation and working conditions on behalf of all the employees within
unionized categories, irrespective of whether the employee has chosen to join
the union., and also requires the union to represent those employees in controversies
between the individual employee and the employer other just as they do for
union members in other words, to provide all the union benefits even to
employees who opted out of union membership.
era opinions say things contrary to what they actually say, dealt only with
compulsory union membership, not with
required non-union-member administrative fees paid to unions. That case was decided two years after passage
of the Taft-Hartley Act. And Taft-Hartley
itself bars required union membership, while also requiring that unions
negotiate compensation and working conditions on behalf of all the employees within
unionized categories, irrespective of whether the employee has chosen to join
the union., and also requires the union to represent those employees in controversies
between the individual employee and the employer other just as they do for
union members in other words, to provide all the union benefits even to
employees who opted out of union membership.
In return, that law does
allow the non-union employees to be required as a provision of the
collective-bargaining agreement to pay union-administration fees.
allow the non-union employees to be required as a provision of the
collective-bargaining agreement to pay union-administration fees.
I don’t
think the administrative-fee requirement is “materially” (a legalese term of
art) the same as the pre-Taft-Hartley contractual agreements that barred
employers from hiring people who will refuse to join the union. And, certainly,
it does not involve addressing severe long-term emergency that even remotely
brings it within the reach of the Home
Building & Loan Assoc. public-policy exemption from a narrow Contracts Clause interpretation. So, best as I can tell—and I am NOT an expert in labor
law—the Supreme Court has never actually held that state ‘right to work’ laws do
not violate the Contracts Clause.
think the administrative-fee requirement is “materially” (a legalese term of
art) the same as the pre-Taft-Hartley contractual agreements that barred
employers from hiring people who will refuse to join the union. And, certainly,
it does not involve addressing severe long-term emergency that even remotely
brings it within the reach of the Home
Building & Loan Assoc. public-policy exemption from a narrow Contracts Clause interpretation. So, best as I can tell—and I am NOT an expert in labor
law—the Supreme Court has never actually held that state ‘right to work’ laws do
not violate the Contracts Clause.
That said, although the rightwing justices normally are all for upholding the
right of contract, when the shoe is on the pro-Democratic Party foot rather
than the pro-Republican one (or is it the reverse? I’m not sure), they probably
would not uphold that right in this circumstance. These people are the ultimate hypocrites. And stunningly, unabashedly so. And they hold a bare majority on the
Court.
right of contract, when the shoe is on the pro-Democratic Party foot rather
than the pro-Republican one (or is it the reverse? I’m not sure), they probably
would not uphold that right in this circumstance. These people are the ultimate hypocrites. And stunningly, unabashedly so. And they hold a bare majority on the
Court.
For now.
