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Hudson rests on the principle that nonmembers should not be required to fund a union's political and ideological projects unless they choose to do so after having a fair opportunity to assess the impact of paying for nonchargeable union activities. Giving employees only one opportunity per year to make this choice is tolerable if employees are able at the time in question to make an informed choice. But a nonmember cannot make an informed choice about a special assessment or dues increase that is unknown when the annual notice is sent. When a union levies a special assessment or raises dues as a result of unexpected developments, the factors influencing a nonmember's choice may change. In particular, a nonmember may take special exception to the uses for which the additional funds are sought.
In June 2005, respondent, the Service Employees International Union, Local 1000 ("SEIU"), sent to California employees its annual Hudson notice, setting and capping monthly dues and estimating that 56.35% of its total expenditures in the coming year would be chargeable expenses. A nonmember had 30 days to object to full payment of dues but would still have to pay the chargeable portion. After the end of the 30-day objection period for the union's initial Hudson notice regarding monthly dues, the union announced a temporary increase in employee fees, seeking to use the special assessment in an electoral campaign designed to defeat two ballot initiatives and to elect sympathetic candidates. Nonunion employees were not given any choice as to whether they would pay into the fund. Petitioners, on behalf of nonunion employees who paid into the fund, brought a class action against the SEIU alleging violation of their First Amendment rights. The Federal District Court granted petitioners summary judgment. Ruling that the special assessment was for entirely political purposes, it ordered the SEIU to send a new notice giving class members 45 days to object and to provide those who object a full refund of contributions to the fund. The Ninth Circuit reversed, concluding that Hudson prescribed a balancing test under which the proper inquiry was whether the SEIU's procedures reasonably accommodated the interests of the union, the employer, and the nonmember employees. Certiorari was granted. After certiorari was granted, SEIU sent out a notice offering a full refund to all class members, and it then promptly moved for dismissal of the case on the ground of mootness.
The Court determined that the case was not moot because although the union sent out a post-certiorari notice offering a full refund to all class members, there was still a live controversy as to the adequacy of the union's refund notice. Anent the second issue, the Court held that the union's procedure impinged on nonmembers' First Amendment rights. The Court noted that under the First Amendment, when a union imposed a special assessment or dues increase levied to meet expenses that were not disclosed when the regular assessment was set, it must provide a fresh notice and may not exact any funds from nonmembers without their affirmative consent; and thus, the union should have sent out a new Hudson notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out. According to the Court, when a state established an agency shop that exacted compulsory union fees as a condition of public employment, the dissenting employee was forced to support financially an organization with whose principles and demands he may disagree. This form of compelled speech and association imposed a significant impingement on First Amendment rights.