Sept. 9, 2010 − The U.S. Court of Appeals for the Seventh Circuit today affirmed an arbitrator’s decision to overrule the objections of three State Bar of Wisconsin members who objected to the use of mandatory State Bar dues to fund an attorney public image campaign in 2007.

In Kingstad, et al. v. State Bar of Wisconsin, No. 09-4080, the three-judge panel held that “to withstand scrutiny under the First Amendment, State Bar expenditures funded by mandatory dues must be germane to the legitimate purposes of the State Bar” and concluded that “the State Bar’s public image campaign was germane to the Bar’s constitutionally legitimate purpose of improving the quality of legal services available to the Wisconsin public.”

The objectors – Wisconsin State Bar members Jon Kingstad, Steven Levine and James Thiel – argued that the public image campaign was not germane to the purpose of regulating the legal profession or improving the quality of legal services available to the Wisconsin public.

Departing from Thiel 

The panel’s decision was a departure from an earlier ruling in Thiel v. State Bar of Wisconsin, 94 F.3d 399, 405 (7th Cir. 1996), which centered on whether membership dues were used to finance ideological or political activities.

The panel concluded that “the State Bar may use mandatory dues of objecting members to fund “only those activities that are reasonably related to the State Bar’s dual purposes of regulating the profession and improving the quality of legal services, whether or not those same expenditures are also non-ideological and non-political.”

The panel overruled the first alternative holding in Thiel − that compelled bar dues may fund non-germane activities − and held that the “First Amendment prohibits the Wisconsin State Bar from funding non-germane activities with compelled dues.”

The court determined that “its unanimous assessment of the actual germaneness of these activities remains sound,” even though it overruled the alternative holding in Thiel.

“There is no meaningful difference between the public image campaign at issue here and several of those expenditures we approved in Thiel,” the panel found. “We do not believe the reasonableness test requires federal courts to engage in closer parsing of the State Bar’s expenditures.”

History

In 1990 the U.S. Supreme Court held in Keller v. State Bar of California, 496 U.S. 1 (1990), that a mandatory state bar may not use compulsory dues of any member who objects to political or ideological activities which are not reasonably germane to the purpose of regulating the legal profession or improving the quality of legal services.

The Wisconsin Supreme Court revised Wisconsin Supreme Court Rule (SCR) 10.03 in 1993 to adhere to the Keller ruling. Thus, State Bar members receive a dues reduction option on their yearly dues and assessments statement. For instance, the fiscal year 2011 Keller reduction was set at $10.25 by the Board of Governors at its February 2010 meeting.

A Keller determination arbitration process was also established by SCR 10.03, which provides, in part, that “A member of the state bar who contends that the state bar incorrectly set the amount of dues that can be withheld may deliver to the state bar a written demand for arbitration.”

In this case, the objectors argued that expenditures of mandatory dues on a public image campaign for lawyers should have been included by the State Bar in the Keller dues reduction.

The arbitrator concluded in December 2008 that the association “persuasively demonstrated that the public image campaign is within the language and intent of SCR 10.02 and 10.03, such as to make its costs chargeable to objectors.”

On March 11, 2009, the objectors filed an action for review of the arbitration decision in Dane County Circuit Court pending a January 2009 petition seeking original review by the Wisconsin Supreme Court, which was later rejected.

The State Bar removed the state case to the U.S. District Court for the Western District of Wisconsin. In November 2009, the federal district court ruled in favor of the State Bar. The parties consented to having their case heard by Magistrate Judge Stephen Crocker, who upheld the arbitrator’s determination. The petitioners then appealed to the Seventh Circuit.

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Seventh Circuit Court of Appeals hears oral argument in case challenging State Bar’s public image campaign – April 16, 2010