U.S. Appeals Court Forces State Teachers Unions to Comply

For over 40 years, labor unions in this country have had to file annual reports disclosing how they raise and spend money.  These requirements are a basic, if too often insufficient, safeguard against corruption by union officials, office employees and anyone on the outside who might do business with them.  But one class of unions from the start has been exempt – purely public-sector unions.  At least that was the prevailing interpretation.  On August 1, the U.S. Court of Appeals for the District of Columbia took a major step in clearing away the legal fog.  The court ruled that the Department of Labor had not erred in issuing rules that would subject wholly public-sector labor organizations to the financial filing requirements of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), also known as the Landrum-Griffin Act.  The DOL, a panel of judges added, now must develop a justifiable rationale for imposing requirements.        


The case was known as Alabama Education Association et al. v. Chao (D.C. Circuit No. 05-5218).  More than three dozen state teacher organizations, led by the Alabama Education Association and the Delaware Federation of Teachers, challenged the Department of Labor’s recent view that LMRDA applied to their respective organizations.  Since 1963, when the DOL put into effect Landrum-Griffin reporting requirements, purely public employee unions did not have to file.  As state public employees unions have not been immune to corruption – e.g., the recent guilty plea by a secretary with the Michigan Education Association – the imposition of filing requirements may have long-run significance.  


Specifically, President Bush’s Labor Secretary, Elaine Chao, believed LMRDA Section 3(j)(5) should apply in all instances.  In December 2002 the DOL proposed amending reporting instructions to include “any conference, general committee, joint or system board, or joint council” that is subordinate to a national or international labor organization.  The department understood that Congress did intend to exempt wholly public-sector unions from LMRDA coverage.  But it argued in the pages of the Federal Register that “an intermediate labor organization is not ‘wholly public sector’ and exempt from the Act when it is subordinate to a parent organization that meets the definition of a labor organization engaged in an industry affecting commerce.”  State teacher union affiliates didn’t see things that way, and sued to enjoin enforcement under the new interpretation.  A lower court sided with them.  The Department of Labor appealed, successfully.  The circuit court concluded that LMRDA Section 208 explicitly had conferred upon DOL the authority to promulgate rules “prevent[ing] the circumvention or evasion of [the statutory] reporting requirements.”  The Labor Department, wrote Judge Douglas H. Ginsburg, was authorized to resolve legal ambiguities. 


Yet the decision was not a complete victory for Secretary Chao and her staff.  The circuit court conveyed to her department that its explanation of how it came to reverse the longstanding interpretation needed more detail.  “In sum, we cannot say the Department’s interpretation of Section 3(j)(5) is impermissible, but neither can we say its decision to revise its reading of the Act is supported by reasoned analysis,” wrote Judge Ginsburg.  The court remanded the case back to the department.  (Daily Labor Report, 8/4/06).