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AFSCME Iowa Council 61 v. State

Supreme Court of Iowa

May 17, 2019

AFSCME IOWA COUNCIL 61, JOHNATHAN GOOD, RYAN De VRIES, TERRA KINNEY, and SUSAN BAKER, Appellants,
v.
STATE OF IOWA and IOWA PUBLIC EMPLOYMENT RELATIONS BOARD, Appellees.

          Appeal from the Iowa District Court for Polk County, Arthur E. Gamble, Judge.

         Public employee union and several members appeal summary judgment dismissing constitutional challenges to 2017 amendments to Iowa Code chapter 20, the Public Employment Relations Act.

          Mark T. Hedberg and Sarah M. Baumgartner of Hedberg & Boulton, P.C., Des Moines, for appellants.

          Matthew C. McDermott, Michael R. Reck, Kelsey J. Knowles, and Espnola F. Cartmill of Belin McCormick, P.C., Des Moines, for appellees.

          WATERMAN, JUSTICE.

         This appeal, submitted with Iowa State Education Ass'n v. State, ___ N.W.2d___ (Iowa 2019), also filed today, presents constitutional challenges to the 2017 amendments to the Public Employment Relations Act, Iowa Code chapter 20. The amendments ended payroll deductions for union dues and narrowed the scope of mandatory collective bargaining topics for bargaining units comprised of less than thirty percent "public safety employees," defined to include most police officers and firefighters. The new classifications result in many public employees losing significant statutory bargaining rights compared to other public employees with arguably similar jobs. A public employee union and several of its members filed this action against the State of Iowa and the Public Employment Relations Board (PERB) seeking injunctive and declaratory relief. The plaintiffs allege the amendments violate the equal protection clause of the Iowa Constitution and violate their right to freedom of association. The district court granted the defendants' motion for summary judgment dismissing the action, and we retained the plaintiffs' appeal.

         Our role is to decide whether constitutional lines were crossed, not to sit as a superlegislature rethinking policy choices of the elected branches. We conclude the 2017 amendments withstand the constitutional challenges. The plaintiffs concede there is no constitutional right to public-sector collective bargaining or payroll deductions. The parties agree the equal protection claims are reviewed under the rational basis test. The legislature could reasonably conclude that the goal of keeping labor peace with unions comprised of at least thirty percent public safety employees, and the greater risks faced by emergency first responders, justified the classification. We hold the legislative classifications are not so overinclusive or underinclusive as to be unconstitutional under our highly deferential standard of review. We further hold the amendments do not violate constitutional rights of freedom of association. Public employees remain free to belong to the same unions. Accordingly, we affirm the district court's summary judgment.

         I. Background Facts and Proceedings.

         We begin by reviewing the statute in place before the 2017 amendments to put the constitutional challenges in context.[1] In 1974, after public employees engaged in multiple strikes, the Iowa legislature enacted the Public Employment Relations Act (PERA), codified at Iowa Code chapter 20. See generally Waterloo Educ. Ass'n v. Iowa Pub. Emp't Relations Bd., 740 N.W.2d 418 (Iowa 2007) (detailing the history of public sector collective bargaining). PERA sought to create an orderly system of collective bargaining for public employees by establishing rules and procedures and by prohibiting strikes.[2] Iowa Code §§ 20.6, .9, .10 (2017). PERA permitted, but did not require, public employees to join a public employee organization (union).[3] Id. § 20.8. Employees could vote to select a union to represent them. Id. An employee who joined a union had the option to pay dues through automatic payroll deductions. Id. § 20.9; id. §§ 70A.17A, .19.

         Once employees selected a union, PERA required the union and public employer to bargain in good faith on these topics:

wages, hours, vacations, insurance, holidays, leaves of absence, shift differentials, overtime compensation, supplemental pay, seniority, transfer procedures, job classifications, health and safety matters, evaluation procedures, procedures for staff reduction, in-service training and other matters mutually agreed upon.

Id. § 20.9.

         If a public employer and union were unable to reach an agreement on these mandatory topics, PERA established a procedure for resolving the impasse through mediation and binding arbitration. Id. §§ 20.20, .22. If an impasse reached arbitration, each party submitted a final offer to an arbitrator. Id. § 20.22(3). The arbitrator was required to consider the following factors:

a. Past collective bargaining contracts between the parties including the bargaining that led up to such contracts.

         b. Comparison of wages, hours and conditions of employment of the involved public employees with those of other public employees doing comparable work, giving consideration to factors peculiar to the area and the classifications involved.

c. The interests and welfare of the public, the ability of the public employer to finance economic adjustments and the effect of such adjustments on the normal standard of services.

         d. The power of the public employer to levy taxes and appropriate funds for the conduct of its operations.

Id. § 20.22(7). After considering the proposals and the relevant factors, the arbitrator "select[ed] . . . the most reasonable offer, in the arbitrator's judgment, of the final offers on each impasse item submitted by the parties." Id. § 20.22(9).

         PERA imposed harsh penalties for engaging in strikes. Id. §§ 20.10(3)(h), .12. PERA authorized courts to issue injunctions to restrain any actual or imminently threatened strike. Id. § 20.12(3). Anyone who failed to comply with an injunction faced contempt sanctions and punishment including up to six months in jail, fines, and automatic discharge from employment for an employee, or immediate decertification as a union. Id. § 20.12(3)-(6). See generally Iowa Code ch. 665 (contempt). There have been no strikes by public employees in Iowa since PERA's enactment in 1974. The University of Iowa Labor Center, "To Promote Harmonious and Cooperative Relationships": A Brief History of Public Sector Collective Bargaining in Iowa, 1966 to 2016, 7 (2016), https://www.iowaaflcio.org/system/files/history_of_ia_public_ sector_bargaining.pdf.

         In February 2017, the Iowa legislature enacted House File 291, amending PERA. 2017 Iowa Acts ch. 2 (codified in part at Iowa Code ch. 20 (2018)). On February 17, the Governor signed House File 291 into law. The amendments altered the scope of mandatory collective bargaining and arbitration and eliminated payroll deductions for all union dues. See generally Iowa Code ch. 20.

         Collective bargaining laws for public employees vary by state, with some states allowing collective bargaining rights for police and firefighters not shared by other public employees.[4] House File 291 gave public employees different bargaining rights depending on whether they are part of a bargaining unit with at least thirty percent "public safety employees." Public safety employees are defined to include

a. A sheriff's regular deputy.
b. A marshal or police officer of a city, township, or special-purpose district or authority who is a member of a paid police department.
c. A member, except a non-peace officer member, of the division of state patrol, narcotics enforcement, state fire marshal, or criminal investigation, including but not limited to a gaming enforcement officer, who has been duly appointed by the department of public safety in accordance with section 80.15.
d. A conservation officer or park ranger as authorized by section 456A.13.
e. A permanent or full-time fire fighter of a city, township, or special-purpose district or authority who is a member of a paid fire department.
f. A peace officer designated by the department of transportation under section 321.477 who is subject to mandated law enforcement training.

Iowa Code § 20.3(11). Not included in the statutory definition of public safety employees are university police, probation or parole officers, fraud bureau investigation officers, airport firefighters, corrections officers, and emergency medical service providers.

         If a union represents a bargaining unit with at least thirty percent public safety employees, it may exercise broad bargaining rights on behalf of all of its members, including those who are not public safety employees. Id. § 20.9(1). The union continues to have the right to bargain and, in the event of an impasse, the right to mediate and arbitrate with public employers on the following mandatory topics:

wages, hours, vacations, insurance, holidays, leaves of absence, shift differentials, overtime compensation, supplemental pay, seniority, transfer procedures, job classifications, health and safety matters, evaluation procedures, procedures for staff reduction, in-service training, grievance procedures for resolving any questions arising under the agreement, and other matters mutually agreed upon.

Id.

         In sharp contrast, for unions representing a bargaining unit with less than thirty percent public safety employees, House File 291 limited mandatory bargaining and, in the event of an impasse, mediation and arbitration, to the subject of "base wages and other matters mutually agreed upon." Id.[5] The amendment specifies that these subjects "shall be interpreted narrowly and restrictively." Id. The amendments allow public employers to voluntarily bargain over formerly mandatory topics. Longevity pay, shift differentials, and overtime compensation are still permissive subjects of bargaining. See Iowa Code § 20.9(1), (3). This leaves it up to the state or local government or school board whether to negotiate on these matters. See Waterloo Educ. Ass'n, 740 N.W.2d at 421. Public employees, like all citizens in our state, have the ability to affect those decisions. A unit of state government, a municipality, or a school board that wishes to negotiate on these matters with the employee organization is free to do so. But the union may not bargain over "insurance, leaves of absence for political activities, supplemental pay, transfer procedures, evaluation procedures, procedures for staff reduction, and subcontracting public services." Iowa Code § 20.9(3).

         During arbitration with a bargaining unit consisting of at least thirty percent public safety employees, the arbitrator considers most of the same factors as before the 2017 amendments. Compare id. § 20.22(7) (2018), with id. § 20.22(7) (2017). The only change House File 291 made is that the arbitrator may no longer consider "[t]he power of the public employer to levy taxes and appropriate funds for the conduct of its operations." Id. § 20.22(7)(d) (2017).

         For all other public employee units, the arbitrator, in reaching a final decision, must consider

(1) Comparison of base wages, hours, and conditions of employment of the involved public employees with those of other public employees doing comparable work, giving consideration to factors peculiar to the area and the classifications involved. To the extent adequate, applicable data is available, the arbitrator shall also compare base wages, hours, and conditions of employment of the involved public employees with those of private sector employees doing comparable work, giving consideration to factors peculiar to the area and the classifications involved.

         (2) The interests and welfare of the public.

(3) The financial ability of the employer to meet the cost of an offer in light of the current economic conditions of the public employer. The arbitrator shall give substantial weight to evidence that the public employer's authority to utilize funds is restricted to special purposes or circumstances by state or federal law, rules, regulations, or grant requirements.

Iowa Code § 20.22(8)(a) (2018). The arbitrator shall not consider,

(1) Past collective bargaining agreements between the parties or bargaining that led to such agreements.

         (2) The public employer's ability to fund an award through the increase or imposition of new taxes, fees, or charges, or to develop other sources of revenues.

Id. § 20.22(8)(b).

         Regardless of the makeup of the bargaining unit, the arbitrator must still determine the most reasonable offer. Id. § 20.22(10)(a). However, if the bargaining unit is made up of less than thirty percent public safety employees and there is an impasse on base wages, the arbitrator is prohibited from selecting an offer, even if it is reasonable, that provides for an increase in base wages that would exceed in any year the increase in a specified consumer price index or three percent, whichever is less. Id. § 20.22(10)(b)(1).

         House File 291 also eliminated the right of all public employees, including public safety employees, to bargain over union dues checkoffs and to pay union dues through payroll deductions. Id. § 20.9(3); id. § 70A.19. Public employees may still make other payments through payroll deductions, such as insurance premiums, charitable contributions, and dues in professional associations. Id. §§ 70A.15A, .17, .17A.

         The plaintiffs in this case are a public employee union and four of its members. Iowa Council 61 of the American Federation of State, County and Municipal Employees (AFSCME) represents public employees throughout Iowa. The individual plaintiffs, Johnathan Good, a corrections officer; Ryan De Vries, a police officer; Terra Kinney, a motor vehicle enforcement officer; and Susan Baker, a drafter, are public employees and members of AFSCME. All of AFSCME's bargaining units in Iowa are comprised of less than thirty percent public safety employees. House File 291 restricted collective bargaining rights for every AFSCME bargaining unit, including those with public safety employees.

         In February 2017, the plaintiffs filed this civil action for declaratory and injunctive relief. The defendants, the State of Iowa and PERB, answered, and the parties filed cross-motions for summary judgment. The plaintiffs' motion for summary judgment argued House File 291 violates article I, section 6, the equal protection clause of the Iowa Constitution because it unconstitutionally deprives some public employees of rights guaranteed to other, similarly situated public employees. The plaintiffs also argued that House File 291 deprives all AFSCME-represented state public safety employees of the right to meaningful collective bargaining, violating their fundamental right to freedom of association, and the court should therefore evaluate the law under a strict scrutiny standard.

         The district court denied the plaintiffs' motion for summary judgment and granted the defendants' motion for summary judgment. The court rejected the plaintiffs' freedom of association argument. With regard to the equal protection challenge, the court applied the rational basis test and ruled that House File 291 is constitutional. The court concluded that while the amendments distinguish between similarly situated people, the State's desire to avoid public safety employee strikes was a realistically conceivable purpose and was based in fact, and the relationship between the classification and the purpose was not so weak as to be viewed as arbitrary.

         The plaintiffs appealed, and we retained their appeal.

         II. Scope of Review.

         "We review summary judgment rulings for correction of errors at law." Baker v. City of Iowa City, 867 N.W.2d 44, 51 (Iowa 2015). "We view the entire record in the light most favorable to the nonmoving party, making every legitimate inference that the evidence in the record will support in favor of the nonmoving party." Bass v. J.C. Penney Co., 880 N.W.2d 751, 755 (Iowa 2016).

         We review constitutional claims de novo. State v. Groves, 742 N.W.2d 90, 92 (Iowa 2007). Our standard of review with regard to constitutional challenges to statutes is well established.

We review constitutional challenges to a statute de novo. In doing so, we must remember that statutes are cloaked with a presumption of constitutionality. The challenger bears a heavy burden, because it must prove the unconstitutionality beyond a reasonable doubt. Moreover, "the challenger must refute every reasonable basis upon which the statute could be found to be constitutional." Furthermore, if the statute is capable of being construed in more than one manner, one of which is constitutional, we must adopt that construction.

State v. Seering, 701 N.W.2d 655, 661 (Iowa 2005) (quoting State v. Hernandez-Lopez, 639 N.W.2d 226, 233 (Iowa 2002)), superseded by statute on other grounds, 2009 Iowa Acts ch. 119, § 3 (codified at Iowa Code § 692A.103 (Supp. 2009)), as recognized in In re T.H., 913 N.W.2d 578, 587-88 (Iowa 2018).

         III. Analysis.

         The plaintiffs argue that House File 291 amendments to Iowa Code chapter 20 fail rational basis scrutiny under article I, section 6 of the equal protection clause of the Iowa Constitution. Additionally, the plaintiffs argue that the amendments violate their right to freedom of association. We address each challenge in turn.

         A. Iowa's Equal Protection Analysis.

         The plaintiffs argue that the amendments to Iowa Code chapter 20 violate their right to equal protection under the Iowa Constitution because the defendants' asserted rationale is unsupported by the legislative facts and further because House File 291's extreme degrees of overinclusiveness and underinclusiveness render the amendments arbitrary. We conclude the plaintiffs' equal protection challenge fails because the plaintiffs cannot meet their burden of refuting every reasonable basis upon which the classification could be sustained.

         Article I, section 6 of the Iowa Constitution is referred to as the equal protection clause and provides, "All laws of a general nature shall have a uniform operation; the general assembly shall not grant to any citizen, or class of citizens, privileges or immunities, which, upon the same terms shall not equally belong to all citizens." Iowa Const. art. I, § 6.

         Iowa's equal protection clause "is essentially a direction that all persons similarly situated should be treated alike." Varnum v. Brien, 763 N.W.2d 862, 878-79 (Iowa 2009) (quoting Racing Ass'n of Cent. Iowa v. Fitzgerald (RACI), 675 N.W.2d 1, 7 (Iowa 2004)). In Varnum, we noted,

Even in the zealous protection of the constitution's mandate of equal protection, courts must give respect to the legislative process and presume its enactments are constitutional. We understand that Iowa's tripartite system of government requires the legislature to make difficult policy choices, including distributing benefits and burdens amongst the citizens of Iowa. In this process, some classifications and barriers are inevitable. As a result, courts pay deference to legislative decisions when called upon to determine whether the Iowa Constitution's mandate of equality has been violated by legislative action. More specifically, when evaluating challenges based on the equal protection clause, our deference to legislative policy-making is primarily manifested in the level of scrutiny we apply to review legislative action.

Id. at 879.

         To prove an equal protection violation, the plaintiffs must first establish that the statute treats similarly situated individuals differently. McQuistion v. City of Clinton, 872 N.W.2d 817, 830 (Iowa 2015). Generally, however, determining whether classifications involve similarly situated individuals is intertwined with whether the identified classification has any rational basis. State v. Dudley, 766 N.W.2d 606, 616 (Iowa 2009).

         Here, House File 291 distinguishes first between public safety employees and all other public employees, and second between bargaining units comprised of at least thirty percent public safety employees and all other bargaining units. The parties agree that rational basis review applies to the plaintiffs' equal protection challenge.

         "The rational basis test is a 'very deferential standard.'" NextEra Energy Res. LLC v. Iowa Utils. Bd., 815 N.W.2d 30, 46 (Iowa 2012) (quoting Varnum, 763 N.W.2d at 879). Plaintiffs bear "the heavy burden of showing the statute unconstitutional and must negate every reasonable basis upon which the classification may be sustained." Id. (quoting Bierkamp v. Rogers, 293 N.W.2d 577, 579-80 (Iowa 1980)).

         As we noted in Varnum,

The rational basis test defers to the legislature's prerogative to make policy decisions by requiring only a plausible policy justification, mere rationality of the facts underlying the decision and, again, a merely rational relationship between the classification and the policy justification.

763 N.W.2d at 879.

         "We will not declare something unconstitutional under the rational-basis test unless it 'clearly, palpably, and without doubt infringe[s] upon the constitution.'" Residential & Agric. Advisory Comm., LLC, v. Dyersville City Council, 888 N.W.2d 24, 50 (Iowa 2016) (alteration in original) (quoting RACI, 675 N.W.2d at 8). Nevertheless, the rational basis standard, while deferential," 'is not a toothless one' in Iowa." Varnum, 763 N.W.2d at 879 (quoting RACI, 675 N.W.2d at 9). "[T]his court engages in a meaningful review of all legislation challenged on equal protection grounds by applying the rational basis test to the facts of each case." Id.

         We use a three-part analysis when reviewing challenges to a statute under article I, section 6. "First, we must determine whether there was a valid, 'realistically conceivable' purpose that served a legitimate government interest." Residential & Agric. Advisory Comm., LLC, 888 N.W.2d at 50 (quoting McQuistion, 872 N.W.2d at 831). "To be realistically conceivable, the [statute] cannot be 'so overinclusive and underinclusive as to be irrational.'" Id. (quoting Horsfield Materials, Inc. v. City of Dyersville, 834 N.W.2d 444, 459 (Iowa 2013)). "Next, the court must evaluate whether the 'reason has a basis in fact.'" McQuistion, 872 N.W.2d at 831 (quoting RACI, 675 N.W.2d at 7-8). "[A]lthough 'actual proof of an asserted justification [i]s not necessary, . . . the court w[ill] not simply accept it at face value and w[ill] examine it to determine whether it [i]s credible as opposed to specious." LSCP, LLLP, v. Kay-Decker, 861 N.W.2d 846, 860 (Iowa 2015) (alteration in original) (quoting Qwest Corp. v. Iowa State Bd. of Tax Review, 829 N.W.2d 550, 560 (Iowa 2013)); see also King v. State, 818 N.W.2d 1, ...


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