Labor Watch

Lower Union Revenues Lead to Greater Union Harassment

Seeing a threat to its treasury, union mounts a costly legal attack on the Freedom Foundation in Washington State


Summary: With help from politicians they heavily fund, unions have perpetrated a scam in which they force unwitting—and often unwilling—citizens of a state into having union dues taken out of Medicaid payments they receive. The U.S. Supreme Court has ruled these unfortunates have a right to leave a union under such circumstances, and a Washington State think tank has been educating citizens about their rights. Furious at this threat to its ill-gotten gains, a Washington union is conducting warfare-by-lawsuits against the think tank.

It’s difficult to calculate exactly how much money government-employee unions collect in dues from persons who unwittingly become union “members” or who are forced, even when they refuse to become union members, nonetheless to pay “agency fees” to unions in lieu of paying regular dues. It’s also difficult to estimate how much of these two coerced streams of cash ends up flowing from state unions to national unions headquartered elsewhere, to then be distributed across America, including to states where unions are weak, in order to promote policies that will benefit the Left and to oppose policies urged by conservatives—some of whom are among the unwitting and unwilling Americans whose dues and fees are taken by unions at the start of this money-extraction process.

To conclude that this kind of monetary transfer occurs is quite reasonable. Only the unions themselves could confirm it (and the amounts transferred), but they refuse to be transparent. Still, their own behavior provides evidence of the ugly phenomenon.

Take Washington State, for example. One of the strongest of union states, it likely creates a significant funding flow to left-wing causes across the United States. The feisty Freedom Foundation in Olympia, Washington, takes various aggressive actions against unions’ collection of dues from unwitting “members” or from agency-fee payers in Washington. In turn, the harsh union reaction to the Freedom Foundation’s activities reveals that labor sees the group’s effort as a threat to funding for the Left, not only in that state but nationally.

Reduction in revenues

The SEIU (Service Employees International Union) represents more than 50,000 Washingtonians who receive Medicaid payments to care for a disabled loved one. As often happens in strong union states, the union connived with the state government to automatically deduct union dues from the Medicaid payments these caregivers receive.

It’s hard to believe, but some governors—all of them enjoying generous financial support from unions—have colluded with state unions on this scam. First, invent a state shell corporation which you as governor claim is the “employer” of persons who receive state Medicaid payments to care for disabled loved ones. Then have a mail-in “election” in which few persons receiving payments even realized what is happening. Finally, no matter how few persons who received mail-in ballots ever vote on whether to be unionized, declare that the union has won the election, which means every single payment-recipient is now an SEIU member and so must have union dues automatically deducted from the state payment. Many unlucky “members” don’t know any of this has occurred until they receive smaller Medicaid payments. (For more on this underhanded labor strategy, see the November 2012 Labor Watch.)

Dues extracted this way average between $500 and $1,000 annually, providing the Washington State SEIU approximately $25 million per year in forced dues, according to the Freedom Foundation’s best estimate. The Freedom Foundation also estimates that the state SEIU in turns sends somewhere between $7 million and $14 million per election cycle to other SEIU entities around the country.

In 2014, the U.S. Supreme Court held in Harris v. Quinn that individual providers like the Medicaid-subsidized health care providers in Washington State could not be forced to join a union in this way. The “First Amendment prohibits the collection of an agency fee from the plaintiffs in the case, home healthcare providers who do not wish to join or support a union,” the Court ruled.

In the wake of Harris, the Freedom Foundation launched an outreach program that employed dozens of paid canvassers who have gone door to door all across the state and into neighboring Oregon to inform health care providers of their right to opt out of paying dues or fees to SEIU. These citizens were not being informed of their rights by the SEIU, of course, which went even further and fought to have the government suppress the Freedom Foundation and others from informing the unwilling SEIU-payers of their legal rights. Now the Freedom Foundation is expanding its post-Harris project into California, which has 375,000 home health workers in both the SEIU and a sister union—a state-sanctioned scheme of automatic deductions that operates the same as Washington State’s.

The Freedom Foundation estimates that a total of more than 10,000 Washington State health care workers have chosen to opt out from a union since the group’s Harris-rights effort began. This could result in something like a $10 million reduction in SEIU’s revenues—most of which would have been used to fund candidates and causes of the Left in Washington State and, through the SEIU’s national offices in Washington, D.C., the rest of America.

Increasing intimidation

Last September, to meet this threat to its bottom line, SEIU and its affiliates orchestrated a legal assault on the Freedom Foundation, filing three lawsuits against it almost simultaneously. SEIU hired three separate law firms for the barrage of suits, and those legal guerrillas have been inundating the Freedom Foundation legal team with increasingly intimidating subpoenas, depositions, and discovery demands.

“We have six full-time attorneys and a paralegal,” according to the Freedom Foundation’s managing attorney, Greg Overstreet. “And I mean full doggone time, because of the onslaught. It’s breathtaking, and I’ve been around the block,” added Overstreet, who’s a former special assistant to the Washington State attorney general, regulatory litigator for the international law firm of Perkins Coie, and general counsel for the Building Industry Association of Washington.

The Freedom Foundation has also retained the national law firm of Davis Wright Tremaine, which has offices in Seattle and Bellevue, Wash., and the Allied Law Group of Seattle to help its lawyers on the cases.

An additional front in the attack was opened when the SEIU convinced Washington State Attorney General Bob Ferguson to file lawsuits against the Freedom Foundation. For these cases, the Freedom Foundation has hired campaign-finance lawyers Cleta Mitchell of the national firm of Foley & Lardner LLP and Mark Lamb of the North Creek Law Firm in Bothell, Wash.

At this writing, the actions have cost the Freedom Foundation a total of about $1.4 million to defend against. “We’re surviving,” according to the pleasantly pugilistic president of the Freedom Foundation, Tom McCabe, “but we’ve been under the gun at the Freedom Foundation. They’ve overwhelmed us. We were getting a subpoena a day for a while.”

SEIU 775 v. Freedom Foundation

In one of the cases, SEIU 775 v. Freedom Foundation, the union alleges that the Freedom Foundation committed “tortious interference” with its “business expectancy” by obtaining a list of the union’s members and telling them that they could leave the union and stop paying dues to it.

The Freedom Foundation believes that it was merely exercising its constitutionally guaranteed First Amendment free-speech rights both when it obtained the list—which the Foundation asserts is a public record—from a confidential source and when it informed workers of their rights. The Foundation, which operates a newspaper, has invoked journalistic privilege to protect the source.

Parts of this case are at trial in the King County Superior Court in Seattle. Other parts are on appeal to the Washington Court of Appeals. The SEIU is represented in the matter by Seattle’s Schwerin Campbell Barnard Iglitzin & Lavitt LLP, the Northwest’s largest union-side labor and employment-law firm.

In another case, SEIU Training Partnership v. Freedom Foundation, the SEIU Training Partnership alleges that the Freedom Foundation committed a “civil conspiracy” by obtaining the list of the union’s members in the Partnership from the confidential source. The state trial-level judge issued a rare “writ of replevin,” ordering a return of the list to the union, and assessed the Freedom Foundation almost $200,000 in attorneys’ fees. Parts of this case, for which dozens of depositions have been conducted, remain on trial in King County and parts of it are on appeal.  The SEIU is represented in it by Sirianni Youtz Spoonemore Hamburger, a boutique litigation firm in Seattle.

In the third SEIU case, SEIU 775 v. Elbandagji and Freedom Foundation, the union also alleges that the Freedom Foundation committed a “civil conspiracy” by inducing a former SEIU employee to give a partial list of SEIU-represented home healthcare workers to the Foundation. The Freedom Foundation was not originally a party in this case, but was added later. SEIU is alleging a “civil conspiracy” and replevin claim.

The Freedom Foundation has filed a counterclaim against the SEIU for “abuse of process.” And a rare “special discovery master” has been appointed in the matter, which remains at the trial-court level in King County. The SEIU is represented by the Impact Law Group of Seattle.

***

Filings with the U.S. Department of Labor by SEIU 775 show that the union spent around $1.8 million on legal fees in just 2016, and most of that likely went to fund these three cases.

State of Washington v. Freedom Foundation

In one of the cases brought by Attorney General Ferguson, State of Washington v. Freedom Foundation, his well-funded office is alleging that the Freedom Foundation violated state campaign-finance disclosure laws by offering free legal assistance to residents in municipalities who attempted to use their cities’ local-initiative processes to get right-to-work protections on the ballot, but were thwarted by city councils. The action arose out of a citizen complaint filed by SEIU.

The Freedom Foundation won this case in Thurston County Superior Court. The state supreme court declined to hear Ferguson’s direct appeal to it, and the case is now at the intermediate appellate court.

In another State of Washington v. Freedom Foundation case brought by Ferguson, he alleges that the Freedom Foundation violated state campaign-finance disclosure laws by reporting staff-time expenditures on the wrong disclosure forms. This action also arose out of a citizen complaint filed by SEIU. The $1,200 in expenditures at issue went mostly to prepare for an appearance on TVW, the state’s equivalent of C-SPAN, to discuss a state initiative that SEIU ginned up to prevent the Freedom Foundation from ever obtaining any lists of union members in order to inform them of their rights under the Harris decision.

The Freedom Foundation wanted to speak because the union was deviously promoting the I-1501 initiative, aka the “Seniors and Vulnerable Individuals’ Safety and Financial Crimes Prevention Act.” Supposedly, that measure was designed to protect seniors and vulnerable individuals from identity theft and consumer fraud, including by prohibiting the release of any public records that may facilitate such crimes. It passed in November 2016, 71 percent to 29 percent. In April, the Freedom Foundation sued to prevent its implementation, saying it is overbroad and infringes on its free-speech rights.

The stakes, and who understands them

More than 25 states and the District of Columbia have variations on what are called anti-SLAPP statutes, which are meant to deter lawsuit harassment of the kind the Freedom Foundation is experiencing from the SEIU. A SLAPP—short for a “Strategic Lawsuit Against Public Participation”—is filed to intimidate and silence critics by burdening them with a costly legal defense until they abandon their criticism or opposition. Washington State’s anti-SLAPP statute was found unconstitutional by the state supreme court in 2015, however.

With all of the suits together, it is as if “they got a calendar out and figured out what would be due from us and when,” the Freedom Foundation’s Overstreet said. “Every single day, we would have to file something. I’ve never seen that before. I’ve never been in a fight like this before.”

Now that they’ve already incurred $1.4 million in legal costs because of the attack, how do the Freedom Foundation’s McCabe and Overstreet budget for the future? “You don’t. You can’t,” says McCabe. “It’s impossible,” Overstreet adds, “absolutely impossible.”

“I don’t think they filed these suits to be successful in court,” McCabe says. “They did it to harass us and defund us.”

The stakes in this attack are not limited to the Freedom Foundation, or Washington State, or to the home healthcare workers who don’t want to be in the SEIU, or even to the legal precedents that may arise out of these cases. SEIU knows that the real stakes are much higher, namely, the size of its funding the Left across the United States. That’s why it’s attacking with such ferocity.

The Freedom Foundation’s fight with the SEIU in Washington State is national.

Update

In response to the multiple lawsuits and appearance of coordinated legal attacks, the Freedom Foundation filed a counterclaim against the SEIU for “abuse of process” in the SEIU 775 v. Elbandagji case. A rare “special discovery master” has been appointed in the matter, which remains at a trial court in King County. As part of the discovery process, the Foundation requested documents showing how the SEIU handled information about its members, among other things.

The union refused, but on June 16, the discovery master—retired state Judge George A. Finkle—demanded that SEIU respond to the Foundation’s requests by June 30.

In his order, Finkle declared, “I do not find that SEIU has demonstrated` that the Freedom Foundation has wrongfully communicated with SEIU members or used SEIU’s confidential information to harass SEIU members or employees. The Freedom Foundation is entitled to contact SEIU members, and prior restraint of its efforts to do so is impermissible.” Finkle then cited the Supreme Court’s Harris case.

Finkle’s order is just one step in the larger fight for workers’ freedoms across America. But it’s no small victory if you’re one of the Washingtonians who provides in-home health care to a loved one and have had your Medicaid payment cut involuntarily. And it’s no small victory to those, like the Freedom Foundation, trying to vindicate the rights of those workers.

Finally, it just may yield some very interesting discoveries about how unions plot to deny their own members’ rights.


Hartmann is a senior fellow and director of the Center for Strategic Giving at the Capital Research Center in Washington, D.C. He is a former program officer and director of research at The Lynde and Harry Bradley Foundation in Milwaukee, which has supported the Freedom Foundation.

 

Michael E. Hartmann

Hartmann is senior fellow and director of the new Center for Strategic Giving at the Capital Research Center. For more than 18 years, he served on the program staff of…
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  • John McClaughry

    Excellent analysis – but don’t you mean Medicaid, not Medicare? Harris V Quinn was about Medicaid providers.