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UNITED FOOD & COMMERCIAL WORKERS LOC. 99 v. BREWER
817 F.Supp.2d 1118 (2011)
UNITED FOOD AND COMMERCIAL WORKERS LOCAL 99 et al., Plaintiffs, and
Arizona Education Association, et al., Plaintiff-Intervenors,
v.
Jan BREWER, in her capacity as Governor of the State of Arizona, et al., Defendant.
No. CV-11-921-PHX-GMS.
United States District Court, D. Arizona.
September 23, 2011.
Michael L. Artz, AFL-CIO, Alice O'Brien, Jason Walta, National Education Ass'n, Jessica R. Robinson, AFSCME, David J. Strom, American Federation of Teachers, Washington, DC, Samantha Elizabeth Blevins, Alice Finn Gartell, Arizona Education Ass'n, Roopali H. Desai, Coppersmith Schemer & Brockelman PLC, Stanley Lubin, Lubin & Enoch PC, Phoenix, AZ, P. Casey Pitts, Michael Rubin, Jennifer Sung, Jonathan Weissglass, Altshuler Berzon LLP, San Francisco, CA, for Intervenor Plaintiffs.
ORDERG. MURRAY SNOW, District Judge. Pending before this Court are Plaintiffs' Motion for Preliminary Injunction and Plaintiff-Intervenors' Motion for Preliminary Injunction. (Docs. 14, 77). For the reasons stated below, Plaintiff-Intervenors' Motion is granted and Plaintiffs' Motion is dismissed as moot. BACKGROUNDAn employee in the state of Arizona may authorize his or her employer to withhold certain amounts from the employee's pay and to transfer those funds to a separate entity. Through such payroll deduction programs, employees pay their health care or other welfare benefit premiums to insurance companies, invest for retirement with banks and financial institutions, make donations to charitable organizations, and pay dues to their unions. All of these organizations are permitted to engage in political activity, including lobbying, by using money in their general operating fund. See Citizens United v. FEC, ___ U.S. ___, 130 S.Ct. 876, 904, 175 L.Ed.2d 753 (2010).1 On April 18 and 19, 2011, the Arizona House and Senate passed Senate Bill 1365, the "Protect Arizona Employees' Paychecks from Politics Act," 2011 Arizona Session Laws, Chapter 251, which Governor Janice K. Brewer signed into law on April 26, 2011. The law amended Title 23, Chapter 2, Article 7 of the Arizona Revised Statutes ("A.R.S.") by adding section 23-361.02. The statute requires that organizations collecting funds through checkoff payroll deductions either affirm to the employers who process the deductions that none of their general fund is used for "political purposes," or specify the percentage of their general fund so used. A.R.S. § 23-361.02(B). The law defines "political purposes" to mean "supporting or opposing
any candidate for public office, political party, referendum, initiative, political issue advocacy, political action committee, or other similar group." Id. § 23-361.02(I). Employers may not deduct the percentage of an employee's contribution used for political purposes without written authorization from the employee; consent must be reauthorized each year. Id. § 23-361.02(B), (C). An organization receiving funds from payroll deduction that spends more of its operating fund on political purposes than the percentage it reported to the employer is subject to a minimum civil fine of $10,000. Id. § 23-361.02(D). While the law is written to have general application to all payroll deductions, it explicitly exempts a number of types of deductions from its scope, including, among others, deductions for the benefit of charitable organizations and organizations that provide employee health care, retiree, or welfare benefits. Id. § 23-361.02(E). In addition, SB 1365 excludes from its definition of employee "any public safety employee, including a peace officer, firefighter, corrections officer, probation officer or surveillance officer." Id. § 23-361.02(H). As a result, no public safety employee union would be obliged to comply with the statute to obtain its dues through payroll deductions from public safety employees. The law is scheduled to go into effect on October 1, 2011. Id. § 23-361.02(A).
1. Charitable organizations may lose their federal tax-exempt status if a "substantial part" of their activities include "carrying on propaganda, or otherwise attempting, to influence legislation." 26 U.S.C. § 501(c)(3). Although there is no statutory or regulatory definition of what constitutes a "substantial part" of an organization's activities, courts have found that less than 5% of an organization's activity is not substantial, while over 16.6% is substantial. See Seasongood v. Comm'r, 227 F.2d 907 (6th Cir.1955); Haswell v. U.S., 500 F.2d 1133 (Ct.Cl.1974).
2. No injunction is sought against SB 1363.
3. In their Motion to Dismiss, State Defendants further argue that Governor Brewer, Secretary of State Bennett, and Director of the Labor Department Maruca are immune from suit under the Eleventh Amendment. (Doc. 40). Because Plaintiff-Intervenors have only sought a preliminary injunction against Attorney General Horne, it is not yet necessary to determine whether immunity protects the other parties. (Doc. 77).
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