The Arizona Supreme Court holds that the release-time provisions in a memorandum of understanding between the City of Phoenix and the American Federation of Federal, State, and Municipal Employees, Local 2384 do not violate free-speech or free-association guarantees or right-to-work protections, but do violate the Gift Clause of Article 9, Section 7 of the Arizona Constitution.

The City of Phoenix and the Union for a unit entered a memorandum of understanding (“MOU”) that included a provision governing release time and compensating City employees for their engagement in lawful union activities. Non-union-member City employees of that unit sued the City. The Employees argued that, if the Employees pay for the release time, the MOU’s release time provisions violate their free-speech, free-association, and right-to-work rights. In the alternative, the Employees argued that, if the City pays for the release time, the provisions violate the Gift Clause. The Union intervened as a defendant. The superior court granted summary judgment in the City and the Union’s favor, determining that the release-time provisions did not violate the Employees’ free-speech, free-association, and right-to-work rights or the Gift Clause. The Employees appealed. The Arizona Court of Appeals affirmed. The Employees petitioned the Arizona Supreme Court, which granted review.

The Arizona Supreme Court reversed the decision of the court of appeals and remanded the matter to the trial court. In its opinion, the Court first addressed the Employees’ free-speech and right-to-work arguments by acknowledging that U.S. Supreme Court in Janus v. American Federation of State, County, and Municipal Employees, Council 31, held that requiring public employees to provide financial support for union activities violates the First Amendment. However, the Court determined that Janus was not applicable under the circumstances, because the City, not the Employees, paid for the release time under the MOU. In support of its finding that the City paid for the release time, the Court cited undisputed testimony interpreting the MOU. Simultaneously, the Court rejected the Employees’ argument that the payment burden fell on Employees, because the prior MOU, which lacked a release-time provision, provided the Employees more vacation benefits than the operative MOU. In doing so, the Court noted that no evidence suggested that, absent the release-time provisions, the Employees’ benefits would be commensurately increased. Having determined that release time was not a substitute for Employee compensation, the Court concluded that the Employees lacked a colorable compelled-speech or right-to-work claim.

The Court then turned to the Employees’ Gift Clause argument—scrutinizing the MOU’s discrete release-time provision separately from the MOU as a whole—to determine whether it (1) served a public purpose and (2) was supported by adequate consideration.  Though its ruling did not rise or fall on the first prong, the Court found the public-purpose prong “problematic” for the City and the Union, despite the deferential standard. Particularly, the Court expressed concern that the provisions at issue release employees from the City’s direct control and supervision—an essential criterion in determining public purpose. Nevertheless, the Court based its invalidation of the release time provisions on their clear failure to meet the adequacy-of-consideration prong, explaining that the City’s significant costs substantially outweighed the benefits, which the Court characterized as “negligible” and “largely illusory.” Specifically, the significant annual cost to the public entity—the City—for release time, estimated at $499,000, was not triggered by any performance of any obligations by the private entity. Rather, the Court concluded that the primary benefits to the public entity—promotion of cooperative labor relations and facilitation of open dialogue about employment issues—were merely anticipated indirect benefits that did not count as enforceable obligations for consideration purposes.

Justice Bolick authored the opinion, which Chief Justice Timmer, Vice Chief Justice Lopez, and Justices Brutinel, Beene, Montgomery, and King joined.  

Posted by: BriAnne Illich Meeds