Campaign finance law, an overlooked and poorly-understood aspect of Michigan government and politics, has been profoundly altered over the past quarter-century by a low profile attorney to the advantage of business and the detriment of organized labor.
In all started back in the spring of 1994, when Gov. John Engler found both chambers of the Michigan Legislature briefly controlled by Republicans. The majority GOP enacted a bill for the first time extending the 1911 ban on corporate contributions in Section 54 of the Michigan Campaign Finance Act to labor unions.
That legislation, PA 117 of 1994, also banned what is called “reverse check-off” for corporate and union Political Action Committees (PACs). Before PA 117, unions could simply divert mandatory union dues and use those funds for contributions to state and local candidates in Michigan. Before 1977, corporations had no right to form state PACs. When they got that right, corporations have always needed management employees and shareholders to give voluntary consent for PAC contributions.
The Michigan State AFL-CIO immediately challenged that new law in federal district court in Detroit.. The Michigan Chamber of Commerce, after an appeal, was permitted to intervene. After several appearances before the 6th Circuit Court of Appeals, PA 117 was upheld. The Michigan Chamber spent a small fortune in its legal defense.
Flash forward to 2005, when Gov. Jennifer Granholm made a move that backfired on labor and her own political party — the Democratic governor sought to change Civil Service rules to allow the State of Michigan to administer payroll deduction for the six unions representing state employees.
According to Lansing attorney Bob LaBrant, an elections/campaign finance maven, neither he nor his lawyer allies would have ever thought of using another section of PA 117 to challenge the ability of PUBLIC bodies (school districts, colleges and universities, counties, cities and townships) to administer union PAC payroll deduction programs.
But when Granholm asked the Office of State Employer to seek from the Civil Service Commission a new state rule permitting union PAC payroll deduction the same way it was being done for the private sector, LaBrant & Co. sprang into action.
A decade and a half later, the scoreboard reads: LaBrant/Business, 3
Organized Labor/Michigan Democrats, 0.
At the time of Granholm’s initiative, LaBrant was Senior Vice-President for Political Affairs and General Counsel at the Michigan Chamber of Commerce. In 2005-’06, he requested three interpretive campaign finance statements from the Michigan Department of (Secretary of) State (SoS).
The “interpretive” ruling from the SoS on LaBrant’s first request confirmed that, yes, the administration of a PAC payroll deduction program was indeed an “expenditure” as defined under the Michigan Campaign Finance Act (MCFA).
The second interpretative statement LaBrant had requested was whether a “public body” as defined under the MCFA was prohibited under Section 57 of the MCFA from administrating a PAC payroll deduction program for their public employee unions. The SoS responded that, yes again!, it was indeed prohibited and that reimbursement of those expenditures to the public body did not “cure” (or vitiate) the underlying violation of Section 57.
This second SoS “interpretive statement” unleashed a series of declaratory rulings, litigation in circuit court, appeals to the state Court of Appeals and reviews twice before the Michigan Supreme Court that ultimately upheld the department’s original holding in the LaBrant interpretative statement request.
The 2011 Michigan Supreme Court decision was codified in amendments to Section 57 of the MCFA and amendments to the Michigan Wage and Hour Act in 2012. Governor Rick Snyder gave LaBrant a pen at those bill signings.
The third interpretative statement LaBrant requested back in 2005 was whether a corporation under Section 54 of the MCFA makes an illegal in-kind corporate contribution when it administers a union PAC payroll deduction program. The Department of State acknowledged that, unlike under federal law, a labor union has no affirmative right to have an employer corporation administer such a program. SoS said the corporation administering a union PAC payroll program is making an in-kind contribution prohibited by the ban on corporate contributions in Section 54, unless the labor union reimburses the corporation for those expenses. If reimbursed, no violation of Section 54 occurs.
Interestingly, corporate PACs were not any happier than unions with the “annual affirmative consent” requirement in PA 117. When they complained to LaBrant, however, he told them that as long as he was employed at the Michigan Chamber, he would fight against any repeal of that requirement.
Still, a few years later, in 2015, LaBrant — now retired from the Michigan Chamber and working part-time at the Sterling Corporation — told the lobbying community which had consistently favored elimination of PAC annual affirmative consent that its repeal shouldn’t just be “given away” without getting something important in return. He suggested revisiting the third LaBrant interpretative statement from 2006. The 2012 codification — that reimbursement to public bodies does not cure the underlying violation in Section 57 — could be added to Section 54, he said. Corporations would be limited to administering PAC payroll deduction for their own corporate PAC or an association PAC if the corporation was an association member. The strategy worked — SB 571 of 2015 repealed the annual PAC payroll deduction affirmative consent requirement.
So, with the passage of SB 571, the “trifecta” of campaign finance changes that LaBrant had embarked on a decade before, building on the revolutionary success of PA 117 in 1994, was on its way to fruition, but the battle wasn’t truly over until just last month.
Here’s what happened in the past four years:
Before the 2016 election, the Michigan State AFL-CIO sought an injunction against PA 571 in Federal District Court in Detroit before Judge Linda Parker. Judge Parker, an appointee of President Barack Obama, issued an injunction. The state appealed to the 6thCircuit Court of Appeals, which heard the appeal in February, 2017. On a 3-0 vote, the appellate panel reversed Judge Parker, holding that there is no First Amendment right to PAC payroll deduction and reinstated the provisions found in SB 571.
This past August, Andrew Nicklehoff, representing the Michigan State AFL-CIO, asked Michigan’s new Secretary of State, Democrat Jocelyn Benson, for a declaratory ruling or interpretative statement as to whether the AFL-CIO could enter into a collective bargaining agreement with a corporate employer to provide PAC payroll deduction for the union’s PAC.
LaBrant, now fully retired, submitted comments opposing the Nicklehoff request. Behold! The Department of State, in an interpretative statement this past November 13, rejected the AFL-CIO PAC payroll deduction argument, holding that it would violate Section 54(3) of the Michigan Campaign Finance Act.
The union had argued that payroll deductions are far more convenient and effective (and less expensive) for an employee to use than other payment methods, but LaBrant & Co. countered that unions still have access to alternative, legal methods of collecting dues or other donations for political activity from their members. “Today we’ve got cell phones and direct deposits,” LaBrant observes. “They can extract donations without involving the corporation at all. There are lots of ways to raise money. PAC payroll was just one of the ways.”
Much of the history of this remarkable saga has been outlined by LaBrant in his 2014 book PAC MAN: A MEMOIR, but with his most recent success he may have to pen an appendix.
William S. Bishop says
Are you sure you are not a closet lawyer of the highest ability? Remarkable legal analysis coming from a layman from Princeton….