On June 21, 2012, the U.S. Supreme Court decided Knox v. Service Employees International Union, Local 1000, No. 10-1121, holding that when a union representing public-sector employees imposes a special assessment or increases dues to meet expenses that were not disclosed when the original assessment was set, the union must provide a new notice under Teachers v. Hudson, 475 U.S. 292 (1986). In this notice, the union must provide an estimate of the portion of its expenses that relate to nonpolitical services such as collective bargaining, so that nonmembers do not pay the union for political, ideological, and other purposes not related to collective bargaining.
States may establish "agency shop" arrangements for their public-sector employees, under which the employees may elect by majority vote that all employees will be represented by a union. Employees are not required to formally join the union; the union will represent all employees' interests in collective bargaining whether they formally join the union or not. All employees, whether they formally join the union or not, are charged dues to compensate the union for its work on behalf of the employees.
The Supreme Court held in Abood v. Detroit Board of Education, 431 U.S. 209 (1977), that a public-sector union may charge nonmembers for "chargeable expenses" related to collective bargaining but may not require nonmembers to fund the union's political and ideological activities. In Teachers v. Hudson, 475 U.S. 292 (1986), the Court established procedural requirements that a union must meet to collect fees from nonmembers without violating their First Amendment rights not to be compelled to fund speech with which they disagree. These procedures require the union to give employees a notice informing them of the union fee for the year ahead and an estimate of the portion of the union's total expenditures in the coming year that will be dedicated to chargeable collective-bargaining activities, as opposed to nonchargeable political or ideological activities. If an employee who is not a member of the union objects to payment of the full amount of union dues, that employee is required to pay only the proportion of the dues that relate to chargeable collective-bargaining activities. This notice is known as a "Hudson notice."
In this case, the public-sector union sent the required Hudson notice to the employees in 2005, informing them of the union fee for the year ahead. It estimated that 56.35% of the total dues were attributable to collective-bargaining activities and stated that the fee was subject to increase at any time without further notice. Nonunion employees had 30 days to object to payment of the full amount of the dues, in which case the objecting employee would have to pay only 56.35% of the total dues.
Shortly after sending the Hudson notice, the union joined a coalition of public-sector unions in opposing certain ballot propositions in California. Just after the 30-day objection period for the Hudson notice ended, the union proposed a temporary 25% increase in employee fees, which the union said was needed to achieve the union's political objectives, and sent employees a letter that increased previous caps on the amount of dues that employees would be required to pay. Employees who had objected to the previous Hudson notice were required to pay only 56.35% of the new assessment, but employees who had not objected to the previous notice had to pay the entire assessment and were not given an opportunity to object to it.
A class of nonunion employees sued the union, arguing that the union improperly required the employees who had objected to the original Hudson notice to pay 56.35% of an assessment that was devoted to political expenditures they found objectionable, and improperly denied employees who had not objected to the original Hudson notice a chance to object to the special assessment. The District Court granted summary judgment for the employees, finding that the union intended to use the entire special assessment for political purposes. The Ninth Circuit reversed, holding that a court must engage in a balancing test to determine whether the procedure that the union implemented reasonably accommodated the interests of the union, the employer, and the nonmember employees.
The Supreme Court reversed. The Court began by rejecting the union's argument that the case was moot because the union had offered a full refund to all class members after the Supreme Court granted certiorari to review the case. The Court held that the voluntary cessation of challenged conduct does not render a case moot when a party could resume the challenged conduct as soon as the case was dismissed on mootness grounds. The Court then reiterated that under the First Amendment, the government cannot (except in rare circumstances) compel people to endorse ideas that the government approves, including mandating the funding of the speech of other private speakers and groups. The Court held that a ruling for the union in this case would impermissibly require nonmembers to pay an additional fee for a union's political activities without giving them a chance to opt out of it and would require nonmembers who previously opted out to pay part of the fee despite the fact that they had previously indicated their desire not to fund the union's political activities. The Court therefore held that the union had to provide a "fresh Hudson notice" before imposing the special assessment, so that nonmembers who had not previously opted out would have a chance to do so with respect to the new assessment, and had to refrain from automatically charging a new assessment for political activities to nonmembers who previously objected to paying for the political activities.
Justice Alito delivered the opinion of the Court, in which Chief Justice Roberts and Justices Scalia, Kennedy, and Thomas joined. Justice Sotomayor filed a concurring opinion, in which Justice Ginsburg joined. Justice Breyer filed a dissenting opinion, in which Justice Kagan joined.