Arizona Supreme Court's "Gift" to Unions

Posted by Olivia Grady on Wednesday, September 14th, 2016 at 5:08 pm - Permalink

By Olivia Grady

On September 13, 2016, the Arizona Supreme Court ruled in Cheatham v. DiCiccio that police officers could perform union tasks while being paid by taxpayers for police work.

The opinion was authored by Chief Justice Bales and joined by Vice Chief Justice Pelander and Judge Howard of the Arizona Court of Appeals. Justice Bolick recused himself because he was Vice President for Litigation at the Goldwater Institute, counsel for the plaintiffs. Justices Brutinel and Timmer dissented.

The plaintiffs argued that Arizona’s Constitution, specifically its Gift Clause, which forbids public organizations from “mak[ing] any donation or grant, by subsidy or otherwise, to any individual, association, or corporation,” was violated by “release time” or time police officers receive to support their police union, which is paid for by taxpayers.

In this case, the Phoenix Law Enforcement Association (PLEA) claims to represent the police officers, and since 1977, its bargaining contract between the city and its members allows police officers to take time off and help the union while they are being paid for police work by taxpayers.

This case began in 2011 when the plaintiffs, William Cheatham and Marcus Huey, sued the City of Phoenix as taxpayers, arguing that release time provisions in the 2010 – 2012 contract with the union violated the Gift Clause. These provisions provided for six police officers who only performed work for PLEA, 1,583 release time hours for other officers, and fifteen days for officers to attend PLEA lectures and conventions. The 2012 - 2014 contract allowed for even more release time.

The Trial Court agreed with the plaintiffs and issued a permanent injunction, forbidding the release time because there was no public purpose or adequate consideration. The Court also stopped the city and PLEA from entering into future agreements with release time. The city and PLEA appealed, but the Court of Appeals agreed with the lower court, finding no adequate consideration: the contract does “not obligate PLEA to perform any specific duty or give anything in return for the release time.”

However, the Arizona Supreme Court disagreed with the lower courts and overturned the decision. In its decision, the Supreme Court first gave the test to determine if the Gift Clause had been violated: 1. The expenditure has to have a public purpose and 2. “the consideration received by the government is not ‘grossly disproportionate’ to the amounts paid to the private entity.”

The defendants argued that release time was part of the total compensation package given by the city, and it was a substitute for higher wages. The Arizona Supreme Court agreed, rejecting the Trial Court’s conclusions that the officers couldn’t determine their own compensation package and that release time was not discussed under “Compensation/Wages.” The Court also mentioned that the purpose of release time was for harmonious relationships between the city and officers and that officers had to give advance notice before they took release time. In addition, release time is not unusual and has been included in Phoenix bargaining contracts for many years. Finally, Federal courts have found that release time should be part of collective bargaining agreements because it relates to compensation.

The Court next rejected the lower courts’ conclusion that the $1.7 million value of the release time was a contribution to PLEA. Rather, the Justices believed the value should be compared to the duties imposed on PLEA and the union members in the whole contract.

However, the Court did reject PLEA’s argument that the release time provisions did not relate to the Gift Clause. In determining whether the provisions violated the Gift Clause, the Court stated that it would defer to the political branches of government: “For Gift Clause purposes, a public purpose is lacking ‘only in those rare cases in which the governmental body’s discretion has been unquestionably abused.’”

The Court found that the agreement had a public purpose because it provided police officers for the city and provided a more efficient way to negotiate with officers. The provision also helped solve employee-employer issues, which helps the city. The majority rejected the conclusions of the dissenters, saying that they were looking at the issue too narrowly.

After finding that the agreement did serve a public purpose, the Supreme Court next looked at whether there was sufficient consideration. While normally the Court does not look at consideration, it will in cases involving the Gift Clause, because if there isn’t sufficient consideration, there is more likely to be a subsidy. To answer the consideration question, the Court gave deferrence to public officials and then examined the entire contract, including what the officers had agreed to do. The Court found that the $1.7 million for release time was not grossly disproportionate to the $660 million contract, meaning there was enough consideration.

Finally, in concluding, the Court responded to a number of the dissenters' and plaintiffs' arguments. For example, the Court rejected the dissenters’ argument that there was no proof that there wouldn’t be police officers without the release time. The Court also rejected the dissent’s argument that the release time provisions take police away from their main job. The Court stated that the police might have more vacation time if there wasn’t release time, rather than spending that time fighting crime. The Court further disagreed with the plaintiffs' argument that some of the duties that officers perform during release time don’t relate to PLEA’s representational role, concluding that improper use alone didn’t mean the provisions violated the Gift Clause. The Court therefore ruled that release time is lawful.

Justices Timmer and Brutinel dissented:

By permitting the City to subsidize PLEA simply because the release time terms are tucked within a collective bargaining agreement, the majority undercuts the Gift Clause’s aim “to prevent governmental bodies from depleting the public treasury by giving advantages to special interests . . . or by engaging in non-public enterprises.”

These Justices also found that there was no public purpose because officers are taking time away from their duties as police officers to help the union. In addition, PLEA instructs the officers during release time, and the city has no control over them during this time, even if the activities hurt the city.

The dissenters also responded to a number of the majority’s conclusions. For example, the dissenters stated that just because the city might benefit from collective bargaining does not mean it benefits from the release time provisions. Further, the money for the provisions could have been spent elsewhere, and there is evidence that the provisions were negotiated individually and not as a total compensation package. Also, if release time is allowed to be called compensation, the Gift Clause would be violated all of the time. Finally, the concept of public purpose has been expanded too far. However, some money could go to the union as a public purpose for a specific instance, but not for the broad purpose here.

The dissenters finally concluded that there wasn’t sufficient consideration because the city couldn’t quantify the benefits it receives from release time. PLEA doesn’t have to provide anything to the city for release time. The dissenters therefore supported upholding the lower courts’ decisions.

This ruling is particularly unfortunate given the amount of money taxpayers spend on release time. In Phoenix alone, taxpayers spend almost $4 million each year. However, release time isn’t just a provision in a contract in Phoenix. It is happening across the country and even in the federal government. Taxpayers spend over $1 billion each year on release time in the U.S.