ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEES:
JAMES BOPP, JR. Counsel for Governor
BARRY A. BOSTROM JEFFREY A. MODISETT
Bopp, Coleson & Bostrom Attorney General of Indiana
Terre Haute, Indiana
A. SCOTT CHINN
DORIS ANNE SADLER GEOFFREY SLAUGHTER
Legal Counsel Special Counsels to the Attorney General
Indianapolis, Indiana Indianapolis, Indiana
Counsel for Unity Team
BARRY A. MACEY
Macey, Macey and Swanson
Counsel for AFSCME
MARY JANE LAPOINTE
RICHARD J. DARKO
Lowe Gray Steele & Darko, LLP
CONNIE NASS, AUDITOR OF THE STATE ) OF INDIANA, ) ) Appellant-Defendant, ) ) vs. ) ) STATE ex rel. UNITY TEAM, LOCAL 9212, ) INTERNATIONAL UNION, UNITED ) AUTOMOBILE, AEROSPACE AND ) No. 49A04-9901-CV-34 AGRICULTURAL IMPLEMENT WORKERS ) OF AMERICA (UAW ) and AMERICAN ) FEDERATION OF TEACHERS (AFT ), and, ) pursuant to Trial Rule 19, FRANK O'BANNON, )
(2) did the trial court err in declaring legal and enforceable the fair share provision contained
in the settlement agreements; and (3) were the voluntary wage assignments authorized by
statute. We affirm in part and reverse in part.
proceeded to negotiate with the State Personnel Director and other executive branch
department heads extensive and detailed labor agreements which the parties refer to as
"Settlements." The Settlements covered wages, hours, and other terms and conditions of
employment. They applied to union and non-union members alike. In 1994, the Settlements
were approved by Governor Bayh through Executive Orders 94-1 and 94-2. Those
Settlements expired by their terms at midnight June 30, 1997. Thereafter the Settlements
were renegotiated and on October 1, 1997, were approved by present Governor Frank
O'Bannon through Executive Order 97-33. Among other things the Settlements contain what
is commonly referred to as a "fair share" provision.See footnote
In relevant part the provision dictates:
[a]ll employees hired after October 1, 1997 must begin paying to the Union,
on January 1, 1998, their fair share of the costs of providing Union
representation, in an amount not exceeding eighty-five percent (85%) of the
dues required to be paid by employees who are members of the Union. The
amounts required of nonmembers shall not include fees, charges, and
assessments involving political contributions. Employees required to pay fair
share may make such payments by paycheck withholding. . . . All monies
collected by the Union pursuant to this provision must be held in escrow until
it is determined by a court of general jurisdiction that this fair share provision
R. at 44, 102-03 (emphasis added). In October 1997, the Unions began submitting to the Auditor authorization forms referred to as wage assignments. The forms were signed by State employees requesting that their fair share assessment be withheld from their wages. However, in April 1998, Morris Wooden, the State Auditor at the time, began printing the following notation on the pay stubs of State employees: THE AUDITOR OF STATE WILL
NOT HONOR A UNION FAIR SHARE DEDUCTION. IF YOU HAVE AN ERRONEOUS
FAIR SHARE DEDUCTION, PLEASE CONTACT YOUR PAYROLL CLERK TO HAVE
THE DEDUCTION STOPPED. R. at 23. The Auditor thus refused to honor the wage
assignments. This policy has continued under Connie Nass, the current State Auditor.
Joining the Governor as a necessary party under Ind. Trial Rule 19, on May 8, 1998, the Unions filed a complaint for mandate seeking to compel the Auditor to process the wage assignments. The Unions also sought damages on its mandate action. In addition, the Unions filed a request for declaratory judgment asking the court to declare that the fair share provision in the Settlements was lawful and thus entitled to enforcement. Thereafter the Unions filed a motion for partial summary judgment reserving only the issue of damages. The Auditor filed a cross motion for summary judgment. After a hearing, the trial court granted the Unions' motion and entered judgment mandating the Auditor to process voluntary wage assignments from State employees who are subject to the Settlements. The trial court also declared that the fair share provision contained in the Settlements is legal and enforceable. This appeal followed.
damages has not yet been resolved. As a result, the judgment before us is not final and may
be pursued only as an interlocutory appeal. Troyer v. Troyer, 686 N.E.2d 421, 424 (Ind. Ct.
App. 1997) (When less than all of the parties' claims, rights, and liabilities have been
adjudicated, then the order or judgment is interlocutory.). The authority to pursue an
interlocutory appeal before this court is controlled by Ind. Appellate Rule 4(B). Only Rules
4(B)(6) and (4)(B)(1) are potentially applicable here. Rule (4)(B)(6) requires trial court
certification. The Auditor did not seek certification and accordingly the trial court did not
enter an order of certification. Thus, unless Rule 4(B)(1) applies to the facts of this case,
then this appeal is not properly before us.
Matters that are appealable as of right under App. Rule 4(B)(1) involve trial court orders which carry financial and legal consequences akin to those more typically found in final judgments such as payment of money, delivery of securities and so on. Cua v. Morrison, 600 N.E.2d 951, 952 (Ind. Ct. App. 1992). However, our research reveals no Indiana authority where this proposition has been explored in the context of a party having no legal or pecuniary interest in the money ordered to be paid. In this case, the Auditor concedes that she has "no ultimate interest in whether the employees receive these funds as salary, or whether, on proper wage assignments, they are distributed to the Relator Unions in order to satisfy the employee's obligation to pay fair share." Reply Brief of Appellant at 3. Absent such interest we are reluctant to declare that a party may avail itself of App. R. 4(B)(1). However we need not explore that issue today. Even if the Auditor's appeal is not properly before us, we have declined to dismiss improperly brought appeals and retained jurisdiction of the appeal under [Ind. Appellate Rule] 4(E) in cases of a significant public
interest and where the same issue would be raised in a new appeal. Northwestern Mut. Life
Ins. Co. v. Stinnett, 698 N.E.2d 339, 341 (Ind. Ct. App. 1998). This is a case of significant
public interest the merits of which would again be raised in a subsequent appeal. Accordingly
we exercise our discretion to decide this case on its merits.
The Auditor interprets this quote as standing for the proposition that the Legislature must authorize the Governor to enter Settlements with the Unions. The argument continues that because no such authorization was given, the Governor acted without authority, and the resulting contracts are unenforceable against the State in general and the Auditor specifically. Neither the quoted language nor the case itself stands for the proposition the Auditor advances. Rice involved an order of mandate directing the State Auditor to pay a claim owed to William Drapier who had been employed by the Indiana Senate and House of Representatives to report the debates, votes, and proceedings. Responding to Drapier's
invoice for services the Senate passed a resolution ordering the Auditor of State to draw a
warrant in Drapier's favor. Examining applicable statutes for the payment of claims against
the State, the court noted "[a]fter all that has been said, a single proposition may seemingly
be accepted as decisive of this cause, and that is, can a simple resolution of the Senate be
made to amend, modify or vary the operation of a regularly enacted statute?" Id. at 47. The
court answered the question in the negative and concluded the trial court erred in issuing the
writ of mandate. Here, contrary to the Auditor's contention, Rice has no bearing on the facts
of this case. And other than Rice, the Auditor cites no authority to support her contention
that the Governor is without authority to engage in collective bargaining without specific
As a technical point we first observe there is nothing in the record before us demonstrating that the Governor engaged in collective bargaining. The record shows the labor settlement agreements were negotiated by executive branch department heads and thereafter approved by the Governor. On this record the Governor's involvement was restricted to issuing an executive order that provided a framework by which collective bargaining could take place. Thus, the subsequent collective bargaining occurred not between the Governor and the Unions, but rather between executive branch department heads and the Unions. It is true, executive branch personnel act at the Governor's behest, and in that sense it may be argued the Governor engaged in collective bargaining at least by proxy. Indeed it is through executive branch personnel that the State's chief executive ensures that the business of the State is properly transacted. In any event, whether characterized as the Governor engaging in collective bargaining or approving a collective bargaining agreement
negotiated by executive branch personnel, the critical inquiry in this case is whether the
Governor possessed the authority to issue an executive order which set into motion the
bargaining that ultimately took place.
In general an executive order is a command or direction issued by the "President of the United States or the chief executive officer of a State that has the force of law and that is promulgated in accordance with applicable law." 42 U.S.C. § 14616 (defining an executive order in the context of public health and welfare). An executive order must fall within the authority granted to the Governor by the constitution or statutory provision. 81A C.J.S. § States 130 (1977). The question presented is whether the executive order at issue in this case either implemented or gave administrative effect to a provision of Indiana's Constitution or a statutory enactment.
As with most other jurisdictions, in Indiana the executive power of the state is vested in the Governor. Ind. Const. art. 5, § 1. In turn, executive power is the "power to execute the laws, to carry them into effect as distinguished from the power to make the laws and the power to judge them." Tucker v. State, 218 Ind. 614, 670, 35 N.E.2d 270, 291 (1941). Although it is intuitive, by express legislation the Governor has the responsibility of ensuring the efficient operation of the executive branch of government. Ind. Code § 4-3-6-3 provides in part that the Governor shall re-examine from time to time the organization of all agencies of State government and determine what changes are necessary to accomplish various purposes including "to promote the better execution of the laws, the more effective management of the executive and administrative branch of the government and of its agencies and functions, and expeditious administration of the public business." In turn, the
Governor's authority to regulate the terms and conditions of employment for executive
branch employees is inherent in a number of statutes. See, e.g., Ind. Code § 4-15-2-11 (pay
plan for State employees recommended by the director of State personnel, approved by the
State Budget Agency, and accepted by the Governor); Ind. Code § 5-10.1-2.5-2 (giving
Governor authority to establish a sick pay plan for state employees); Ind. Code § 5-10-6-1
(hourly State employees may be granted vacation pay and paid holidays by executive order
of the Governor). We conclude that the executive order in this case is a reasonable exercise
of the Governor's responsibility for the efficient operations of the executive branch of
government. The order was within the broad authority granted the Governor by article 5,
section 1 of the Indiana Constitution and gave effect to various statutory enactments. In turn,
the Settlements, which are an outgrowth of the order, gave effect to the order itself. Contrary
to the Auditor's contention no further legislation is required. We find support for this
conclusion in the case of Old Dominion Branch No. 496, Nat'l Assoc. of Letter Carriers v.
Austin, 418 U.S. 264, 94 S. Ct. 2770, 41 L. Ed. 2d 745 (1974). In the context of a
Presidential executive order establishing a labor-management relations system for federal
employees, the Supreme Court observed "Executive Order [11,491] is plainly a reasonable
exercise of the President's responsibility for the efficient operation of the Executive Branch."
418 U.S. at 274 n.5, 94 S.Ct. at 2776 n.5 (concerning an order giving federal employees "the
right, freely and without fear of penalty or reprisal, to form, join, and assist a labor
organization or to refrain from any such activity, and each employee shall be protected in the
exercise of this right.").
The power of the trial court to render declaratory relief is set forth in the Uniform
Declaratory Judgment Act, Ind. Code § 34-4-10-1, et seq. (the "UDJA"). In order to obtain
declaratory relief, the person bringing the action must have a substantial present interest in
the relief sought. Town of Munster v. Hluska, 646 N.E.2d 1009, 1012 (Ind. Ct. App. 1995).
By the same token there must be someone having a real interest in the relief sought who may oppose the declaration. Opposition to a plaintiff seeking declaratory relief must come from a source legally competent to jeopardize the plaintiff's rights. Stated differently "[t]he basis of jurisdiction under the UDJA is 'a justiciable controversy or question, which is clearly defined and affects the legal right, the legal statuses, or the legal relationships of the parties having adverse legal interests.'" Indiana Wholesale Wine & Liquor Co., Inc. v. State ex. rel. Indiana Alcoholic Beverage Comm'n, 662 N.E.2d 950, 955 (Ind. Ct. App. 1996) (quoting Indiana Alcoholic Beverage Comm'n v. Deets, 133 Ind. App. 444, 449-50, 179 N.E.2d 217, 220 (Ind. Ct. App. 1962) (emphasis added), aff'd in part, rev'd in part, 695 N.E.2d 99, 103 (1998).
In the case before us, the Auditor, the person named as the opponent to the Unions' complaint for declaratory relief, has no real interest adverse or otherwise in whether the fair share provision is legal.See footnote 4 Indeed the legality of the provision itself has no bearing on the critical issue here, namely: whether the Auditor is bound to honor voluntary wage assignments. Rather, the persons whose interests are directly affected by a declaration that the fair provision is legal are the non-union members from whose wages fair share fees are
being deducted. Non-union members have not been joined as parties to this action.See footnote 5 The importance of parties with adverse interests appearing on either side of an action for declaratory judgment seeking to declare the legality of a fair share provision cannot be overstated. For example, fair share provisions in general are valid in this jurisdiction. See, e.g., Fort Wayne Educ. Ass'n, Inc. v. Goetz, 443 N.E.2d 364, 369 (Ind. Ct. App. 1982) (recognizing fair share agreements help ameliorate the problem of "free riders," that is, those workers who are not members of a union yet reap the benefits of union representation). However, not all fair share provisions are created equal. See, e.g., Anderson v. East Allen Educ. Assoc., 683 N.E.2d 1355, 1357 (Ind. Ct. App. 1997) (holding that a fair share provision violated the First Amendment because it set a fee without establishing a method to ensure funds would not be used for activities unrelated to collective bargaining; and that setting the fair share fee at the amount of full union dues presumptively charged nonmembers for political and ideological activities); Ford v. Madison-Grant Teachers Ass'n, 675 N.E.2d 734, (Ind. Ct. App. 1997) (finding that a procedure must be in place which ensures that fair share funds collected from non-union members will not be used, even temporarily, for ideological activities); Albro v. Indianapolis Educ. Ass'n, 585 N.E.2d 666, 669 (Ind. Ct. App. 1992), adopted on transfer, 594 N.E.2d 781 (Ind. 1992), reh'g denied (holding that the IEA failed to sustain its burden of affirmatively proving the ratio of its chargeable expenses to
nonchargeable expenses in establishing a fair share percentage by demonstrating a
methodology which simply proves nonchargeable expenses).
Among other things, a union carries the burden of showing that it has used the appropriate methodology in setting a fair share fee. Flosenzier v. John Glenn Education Ass'n, 656 N.E.2d 864, 867 (Ind. Ct. App. 1995). For example, a union carries the burden of demonstrating the amount of the fair share fee, and it does so by establishing the ratio of chargeable expenses to total expenses. Once established, the ratio, expressed as a percentage, is multiplied by the amount of a union member's dues to determine a non-union member's fair share fee. Id. In the case before us, the Settlements provide in part that the amount of a non-union members fair share fee will not exceed 85% of the dues paid by Union members and that the amounts required of non-union members shall not include fees, charges, and assessments involving political contributions. R. at 44, 102. However, nothing in the record shows that the fees will not be used for ideological activities. See Albro, 585 N.E.2d at 670. And nothing in the record shows how the Unions arrived at the 85% figure. See Flosenzier, 656 N.E.2d at 869. In the context of their motion for summary judgment, the Unions have not demonstrated they are entitled to judgment on this issue as a matter of law. More importantly for our purposes here, lacking any interest in the fair share fees or how they may have been calculated, the Auditor did not challenge the Unions' Rule 56 materials on this point or attempt to put the Unions to their proof. In essence, the Unions and the Auditor did not have sufficient adverse legal interests regarding the fair share provision. Accordingly, the trial court erred by granting summary judgment in favor of the Unions
declaring the fair share provision legal and enforceable. On this issue the judgment of the
trial court is reversed.
is valid provided specific content and formalistic requirements are met and is made to pay
one of eleven listed purposes, including:
(5) Dues to become owing by the employee to a labor organization of which the employee is a member.
. . . .
(9) Payment to any credit union, nonprofit organization, or association of employees of such employer organized under any law of this state or of the United States.
Ind. Code § 22-2-6-2 (b). The Auditor does not challenge the content or formal structure of the wage assignments here. By statute the assignments must be in writing, signed by the employee personally, and are revocable at any time by the employee upon written notice. Ind. Code § 22-2-6-2(a). Rather, the Auditor argues that because section (b)(5) specifically addresses labor unions and makes an assignment of wages valid only for union member employees, section (b)(9) cannot be interpreted also to include labor unions which would allow an assignment of wages for non-union member employees. The Auditor insists "[o]bviously, the legislature decided to deal with unions in section (5), and all other employee organizations in section (9)." Brief of Appellant at 21.
When reviewing a statute our main objective is to ascertain and implement the intent of the legislature. State Employees' Appeals Comm'n v. Barclay, 695 N.E.2d 957, 961 (Ind. Ct. App. 1998), trans. denied. To effectuate legislative intent, we read the sections of an act together in order that no part is rendered meaningless if it can be harmonized with the remainder of the statute. Murray v. Hamilton County Sheriff's Dep't, 690 N.E.2d 335, 339 (Ind. Ct. App. 1997). We are required to construe the statute in such a way as to prevent absurdity and hardship and to favor public convenience. In re E.I., 653 N.E.2d 503, 507
(Ind. Ct. App. 1995). In doing so, this court should consider the objects and purposes of the
statute, as well as the effect and consequences of such an interpretation. State v. Windy City
Fireworks, Inc., 600 N.E.2d 555, 558 (Ind. Ct. App. 1992), adopted on transfer 608 N.E.2d
699 (Ind. 1993).
We disagree with the Auditor's reading of the statute. Although section (b)(5) "deals" with unions, that does not compel a conclusion that unions are thereby excluded from section (b)(9). Among other things, (b)(9) concerns any association of employees "organized under any law of this state or of the United States." Id. There is no question that AFSCME and the Unity Team, although unions, are certainly associations of employees organized pursuant to federal and state law. Thus we see no reason why they would not be included within the ambit of section (b)(9). Further, section (b)(9) specifically refers to wage assignments for "payments" to associations of employees. By contrast section (b)(5) refers to wage assignments for "dues." Fair share fees, which are the subject of the assignments at issue in this case, are not dues within the meaning of the statute. See supra note 2. Rather, they can only be considered "payments" as the term is used in section (b)(9). In essence our reading of Ind. Code § 22-2-6-2 leads us to conclude the Legislature intended that an employee may voluntary assign her wages to an association of employees for the payment of fair share fees. Accordingly, assuming the content and formalistic requirements are otherwise satisfied, the Auditor is bound to honor such wage assignments.See footnote 6
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