Mark Gilmore v. Kate Gallego

IN THE

SUPREME COURT OF THE STATE OF ARIZONA

MARK GILMORE, * ET AL.,
Plaintiffs/Appellants,
v.
KATE GALLEGO, ET AL.,
Defendants/Appellees.

No. CV-23-0130-PR
Filed July 31, 2024

Appeal from the Superior Court in Maricopa County
The Honorable Daniel G. Martin, Judge
No. CV2019-009033
REVERSED AND REMANDED

Opinion of the Court of Appeals, Division One
255 Ariz. 169 (App. 2023)
VACATED

COUNSEL:

Jonathan Riches (argued), Timothy Sandefur, Scharf-Norton Center for
Constitutional Litigation at the Goldwater Institute, Phoenix, Attorneys for
Mark Gilmore and Mark Harder

John Alan Doran (argued), Matthew A. Hesketh and Carli J. Simkin,
Sherman & Howard, L.L.C., Phoenix, Attorneys for Kate Gallego, Jeff
Barton and the City of Phoenix

* Counsel for Petitioner Mark Gilmore notified this Court of Gilmore’s
death during the pendency of this case. The claims survive as to Petitioner
Mark Harder.
 GILMORE, ET AL. V. GALLEGO, ET AL.
Opinion of the Court

Daniel L. Bonnett (argued), Jennifer Kroll, Martin & Bonnett, P.L.L.C.,
Phoenix, Attorneys for American Federation of State, County and
Municipal Employees, (AFSCME), Local 2384

Gerald Barrett, Ward, Keenan & Barrett, P.C., Phoenix; Leon Dayan, Joshua
A. Segal and Bruce Lerner, Bredhoff & Kasier, P.L.L.C., Washington, D.C.,
Attorneys for Amicus Curiae Heidi Shierholz

Kristin K. Mayes, Arizona Attorney General, Alexander W. Samuels,
Principal Deputy Solicitor General, Luci D. Davis, Senior Litigation
Counsel, Phoenix, Attorneys for Amicus Curiae State of Arizona

Drew C. Ensign, Brennan Bowen, Holtzman Vogel Baran Torchinsky &
Josefiak PLLC, Phoenix, Attorneys for Amici Curiae Arizona Free
Enterprise Club and Grand Canyon Legal Center

Grant H. Frazier, Dustin D. Romney, Frazier Law, PLLC, Scottsdale;
Bernard Zamaninia, National Right to Work Legal Defense Foundation,
Inc., Springfield, Virginia, Attorneys for Amicus Curiae National Right to
Work Legal Defense Foundation, Inc.

Dennis I. Wilenchik, John “Jack” D. Wilenchik, Garo V. Moughalian,
Phoenix, Attorneys for Amicus Curiae Freedom Foundation

Jacob H. Huebert, Liberty Justice Center, Chicago, Illinois, Attorneys for
Amicus Curiae Liberty Justice Center

_______________

JUSTICE BOLICK authored the Opinion of the Court, in which CHIEF
JUSTICE TIMMER, VICE CHIEF JUSTICE LOPEZ, and JUSTICES
BRUTINEL, BEENE, MONTGOMERY, and KING joined.
_______________

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JUSTICE BOLICK, Opinion of the Court:

¶1 We consider here the constitutionality of “release time”
provisions in a memorandum of understanding (“MOU”) between the City
of Phoenix (the “City”) and the American Federation of Federal, State and
Municipal Employees, Local 2384 (the “Union”). The provisions permit
certain employees, while paid by the City, to be released from the duties for
which they were hired to instead perform “lawful union activities” and
other tasks under the Union’s direction.

¶2 We conclude that the release time provisions do not violate
the free-speech or free-association guarantees of the First Amendment or
article 2, section 6 of the Arizona Constitution, or the right-to-work
protections of article 25 of the Arizona Constitution or A.R.S. § 23-1302,
because the City, and not the employees, pays for the release time.
Therefore, the employees are not compelled to subsidize speech with which
they disagree, nor are they required to make a mandatory union
contribution. See Janus v. Am. Fed’n of State, Cnty., & Mun. Emps., Council 31,
585 U.S. 878, 929–30 (2018); Am. Fed’n of State, Cnty. & Mun. Emps., AFL-CIO
Loc. 2384 v. City of Phoenix, 213 Ariz. 358, 366 ¶ 29 (App. 2006). However,
we conclude that the provisions violate the Gift Clause of article 9, section
7 of the Arizona Constitution for the reasons detailed below.

BACKGROUND

¶3 The City organizes its employees into units “for the purpose
of choosing an authorized representative to engage, in its behalf, in the meet
and confer process.” Phx., Ariz., Code ch. 2, art. 17 (“PCC”) § 2-210(1). That
is the process through which the City and the authorized representative of
a unit bargain for “wages, hours, and other terms and conditions of
employment” that are binding on all employees in the unit. PCC
§ 2-210(11). The terms agreed to by the City and authorized representative
are memorialized in an MOU. Id. After the City Council approves the
MOU, it becomes effective. PCC § 2-215(C). The maximum term for an
MOU is three years. PCC § 2-215(B).

¶4 Unit II consists of approximately 1,500 skilled tradespeople.
See PCC § 2-212(A)(2)(b). The Union has acted as Unit II’s authorized
representative since 1976. Roughly 671 Unit II employees are members of
the Union.

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¶5 The Union and the City negotiate a new MOU for Unit II
employees every two years. Generally, the MOUs contain “release time”
provisions. While on release time, “employees are released from their
normal job duties but still paid at the same rate(s) of pay by the City,”
Gilmore v. Gallego, 255 Ariz. 169, 173 ¶ 4 (App. 2023), to engage in “lawful
union activities.” The MOU also provides examples of services that may be
performed for the City or the Union on release time.

¶6 The 2014–2016 MOU, however, did not provide for release
time. Under the 2014–2016 MOU, Unit II employees received eight
additional hours of vacation time that they could donate to a bank of hours
to fund release time.

¶7 In 2019, the City and Union agreed to an MOU that included
release time. Specifically, the MOU provided for (1) four full-time, paid
release positions for Union members, including the Union President, “to
engage in lawful union activities”; (2) a bank of 3,183 additional paid
release time hours per year for Union members “to engage in lawful union
activities”; (3) a bank of 150 additional paid release time hours per year for
Union members to attend Union seminars, lectures, and conventions; and
(4) $14,000 in reimbursements to the Union per year to pay for Union
members to attend schools, conferences, workshops, and trainings.

¶8 The MOU states that the four full-time released employees
“agree to participate” in “citywide task forces and committees,
Labor-Management work groups, and a variety of Health and Safety
committees.” The Labor-Management Committee meets “monthly or at
other mutually scheduled times.” The Health and Safety Committee meets
“quarterly or at other mutually scheduled times.” Because serving on these
committees “take[s] time away from [the] expected [Union] tasks” of
released employees, the MOU provides the Union President with 208 hours
in his compensatory time bank and the other three full-time released
employees with eighty hours each in their compensatory time banks per
year. Under such circumstances, the released employees receive both their
salaries and compensatory time, as well as City benefits and pension
eligibility.

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¶9 The MOU authorizes the Union to designate union stewards
to represent Unit II employees in grievance proceedings. The MOU states
employees “have the right to have the Union serve as their ‘meet and
confer’ representative” and to be represented by the Union in grievance
proceedings, regardless of membership in the Union.

¶10 The MOU also provides “examples” of how release time may
be used:

Examples of work performed by the release positions in
support of the City include ensuring representation for
employees during administrative investigations and
grievance/disciplinary appeal meetings with management;
participating in collaborative labor-management initiatives
that benefit the City and the members; serving on City and
departmental task forces and committees; facilitating
effective communication between City and Department
management and employees; assisting members in
understanding and following work rules; and administering
the provisions of the Memorandum of Understanding. Union
release is also used for authorized employees to prepare for
appeals and hearings and attend Union conferences,
meetings, seminars, training classes and workshops so that
employees better understand issues such as City policies and
practices, conflict resolution, labor-management
partnerships, and methods of effective representation.

(Emphasis omitted.) However, in practice, release time is also used for
unlisted activities, like Union recruitment. Although the City ordinarily
controls and supervises employee activities, it does not control or supervise
how released employees spend their time and released employees do not
report their activities to the City.

¶11 The MOU’s release time provisions cost the City
approximately $499,000 per year. The MOU states, “[t]he cost to the City
for these release positions and release hours, including all benefits, has been
charged as part of the total compensation detailed in this agreement.”

¶12 At all relevant times, Petitioners Mark Gilmore and Mark
Harder (the “Employees”) worked in Unit II but did not belong to the
Union. Gilmore, 255 Ariz. at 174 ¶ 6. The Employees sued the City, arguing
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the MOU’s release time provisions violate their free-speech,
free-association, and right-to-work rights. Id. The Employees also alleged
the release time provisions violate the Gift Clause. Id. The Union
intervened as a defendant. Id. We refer to the City and the Union
collectively as the “Respondents.” The Employees and the Respondents
filed motions for summary judgment on all claims. Id. ¶ 7. The trial court
granted the Respondents’ motion for summary judgment. Id. The trial
court determined release time did not violate the Employees’ free-speech,
free-association, and right-to-work rights because the Employees do not
pay for release time. Id. The trial court also determined the release time
provisions did not violate the Gift Clause because they serve a public
purpose and are supported by adequate consideration. Id.

¶13 The Employees appealed. Id. ¶ 8. The court of appeals, in a
split opinion, affirmed the trial court’s grant of summary judgment in favor
of the Respondents. Id. at 182 ¶ 45. Like the trial court, the court of appeals
held that the release time provisions did not violate the Employees’
free-speech, free-association, and right-to-work rights because the
Employees do not pay for release time. Id. at 176 ¶ 19. The court of appeals
also held the release time provisions did not violate the Gift Clause because,
under Cheatham v. DiCiccio, 240 Ariz. 314 (2016), the provisions serve a
public purpose and are supported by adequate consideration. Gilmore, 255
Ariz. at 179–81 ¶¶ 29–41.

¶14 Although all three judges concurred in the majority’s
free-speech, free-association, and right-to-work analysis, one judge
disagreed with the majority’s Gift Clause analysis. Id. at 182–84 ¶¶ 46–53
(Bailey, J., concurring in part and dissenting in part). The dissent reasoned
that Cheatham was not controlling because, unlike in Cheatham, the release
time provisions here were not part of Unit II members’ compensation
package. Id. at 183 ¶ 48. The dissent observed that “the release time
provisions were not negotiated for in lieu of wages and benefits but were
negotiated separately.” Id. Thus, it was proper to analyze the release time
provisions separately, rather than the MOU as a whole, because they were
part of a separate agreement. Id. ¶ 50. The dissent concluded that the
release time provisions, standing alone, were not supported by adequate
consideration because any benefits to the City were “anticipated indirect
benefits at best,” which are valueless under the consideration prong of the
Gift Clause analysis. Id. at 183–84 ¶ 51.

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¶15 The Employees petitioned this Court for review. We granted
review on the following issues: (1) whether the release time provisions
violate the Employees’ free-speech, free-association, and right-to-work
rights; and (2) whether the release time provisions violate the Gift Clause.
As release time is a widespread practice, the legal issue is one of statewide
concern. We have jurisdiction under article 6, section 5(3) of the Arizona
Constitution.
DISCUSSION

¶16 “We review de novo a grant of summary judgment, ‘viewing
the evidence in the light most favorable to the party against whom
summary judgment was entered.’” S. Ariz. Home Builders Ass’n v. Town of
Marana, 254 Ariz. 281, 284 ¶ 16 (2023) (quoting Dabush v. Seacret Direct LLC, 250 Ariz. 264, 267 ¶ 10 (2021)). We interpret constitutional provisions de
novo. State v. Anderson, 547 P.3d 345, 349 ¶ 13 (Ariz. 2024).

¶17 The Employees argue their case in the alternative, depending
on who pays for release time. If the Employees pay for release time through
reduced and diverted compensation, they contend it compels them to
support views with which they disagree, in violation of their freedom of
speech, freedom of association, and right-to-work rights. If the City pays
for it, the Employees contend such payments violate the Gift Clause. The
Employees acknowledge that this Court upheld similar release time
provisions against a Gift Clause challenge in 2016 in Cheatham, but they
argue that Cheatham misapplied Gift Clause principles in light of past and
subsequent decisions and that the release time provisions here differ
materially for Gift Clause purposes from those upheld in Cheatham.

A. Free-Speech, Free-Association, And Right-To-Work Claims

¶18 The Employees’ First Amendment arguments are predicated
primarily on Janus, which the U.S. Supreme Court decided after Cheatham.
The Court held in Janus that requiring public employees to provide
financial support for union activities, including collective bargaining,
violated the First Amendment because the practice impermissibly
compelled speech. 585 U.S. at 930. In doing so, it overturned a
longstanding contrary prior precedent, Abood v. Detroit Board of Education,
431 U.S. 209 (1977). Janus, 585 U.S. at 929.

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¶19 The Court began with the well-established proposition that
“[c]ompelling a person to subsidize the speech of other private speakers”
implicates the First Amendment. Id. at 893 (emphasis in original). Noting
that mandatory union dues were justified to support “labor peace,” id.
at 895, the Court declared that “the First Amendment does not permit the
government to compel a person to pay for another party’s speech just
because the government thinks that the speech furthers the interests of the
person who does not want to pay.” Id. at 897. The Court’s holding was
categorical: “Neither an agency fee nor any other payment to the union may be
deducted from a nonmember’s wages . . . unless the employee
affirmatively consents to pay.” Id. at 930 (emphasis added); cf. Brush & Nib
Studio, LC v. City of Phoenix, 247 Ariz. 269, 284 ¶¶ 54–55 (2019)
(post-Cheatham decision citing Janus in striking down compelled speech
under the First Amendment and article 2, section 6 of the Arizona
Constitution).

¶20 If the Employees paid for release time through reduced or
diverted compensation, it would present colorable claims under Janus and
Arizona’s right-to-work laws because the Employees would be required,
against their will, to support union activities (including collective
bargaining) with which they might disagree. But we need not resolve this
issue because we agree with the court of appeals that the City, not the
Employees, pays for release time under this MOU.1 See Gilmore, 255 Ariz.
at 175–76 ¶¶ 12–18.

¶21 Arguing to the contrary, the Employees rely primarily on an
MOU provision stating that “[t]he cost to the City for these release positions
and release hours . . . has been charged as part of the total compensation
detailed in this agreement.” But undisputed testimony indicated that “total
compensation” means the City’s total expenditure under the MOU, not the

1 The court of appeals appears to contradict itself on this point when
discussing consideration for purposes of the Gift Clause. See Gilmore, 255
Ariz. at 180–81 ¶ 38 (stating that “the record shows that the release time
provisions were bargained for as a part of the Unit II compensation”;
specifically, “in lieu of eight additional hours of vacation time”). Either the
City or the Employees pay for release time; it cannot be one thing for First
Amendment purposes and another for Gift Clause analysis. We conclude
that release time is not part of employee compensation under the MOU
before us.
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sum entitlement of the Employees. Total compensation includes employee
wages, tool allowances, and expenditures for equipment and infrastructure.

¶22 The Employees also point to the fact that they received more
vacation time under the 2014–2016 MOU, which did not provide for release
time. However, even if the additional vacation time under that MOU was
converted to release time under the MOU at issue in this case, the
Employees do not have a right to hypothetical vacation hours just because
the older MOU provided for them. See Paczosa v. Cartwright Elementary Sch.
Dist. No. 83, 222 Ariz. 73, 77 ¶ 15 (App. 2009) (holding a school district’s
governing board was allowed to decrease fringe benefits offered to
employees under a new contract); Abbott v. City of Tempe, 129 Ariz. 273,
277–78 (App. 1981) (holding a city was entitled to decrease firefighters’ rate
of holiday pay and accrual of vacation credits under new contract where
the older contract did not provide for future employment with old benefits);
Bennett ex rel. Ariz. State Pers. Comm’n v. Beard, 27 Ariz. App. 534, 537 (1976)
(holding a state employee had no “contractual right to continue his past
leave benefits into future employment”).

¶23 Further, no evidence suggests that, absent release time, the
Employees’ pay or benefits would necessarily be commensurately
increased. By contrast, as the court of appeals pointed out, the agreement
in Cheatham provided that release time was “charged as part of the total
compensation contained in this agreement in lieu of wages and benefits.”
Gilmore, 255 Ariz. at 176 ¶ 17 (quoting Cheatham, 240 Ariz. at 319 ¶ 14)
(emphasis in original). No such provision appears in this MOU, and the
trial court concluded that it was undisputed that the City paid for release
time. Id. at 175 ¶ 12. We see no reason to disturb the trial court’s predicate
ruling on that issue. Because we conclude that release time is not a
substitute for compensation, we hold that the Employees here do not have
a colorable compelled speech or right to work claim, and therefore proceed
to determine whether the release time provisions violate the Gift Clause.

B. Gift Clause Claim

¶24 We begin with the language of the Gift Clause, which
provides that neither the state nor its subdivisions “shall ever give or loan
its credit in the aid of, or make any donation or grant, by subsidy or
otherwise, to any individual, association, or corporation.” Ariz. Const. art.
9, § 7. Adopted from the constitutions of other states, the Gift Clause was

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“designed primarily to prevent the use of public funds raised by general
taxation in aid of enterprises apparently devoted to quasi public purposes,
but actually engaged in private business.” Day v. Buckeye Water
Conservation & Drainage Dist., 28 Ariz. 466, 473 (1925) (quoting Thaanum v.
Bynum Irrigation Dist., 232 P. 528, 530 (Mont. 1925)); accord Turken v. Gordon, 223 Ariz. 342, 346 ¶ 10 (2010). Accordingly, this Court has consistently
applied the rule that “[p]ublic funds are to be expended only for ‘public
purposes’ and cannot be used to foster or promote the purely private or
personal interests of any individual.” See, e.g., Town of Gila Bend v. Walled
Lake Door Co., 107 Ariz. 545, 549 (1971). To satisfy the Gift Clause, a public
expenditure must (1) serve a public purpose and (2) be supported by
adequate consideration. Schires v. Carlat, 250 Ariz. 371, 374–75 ¶ 7 (2021).

¶25 This Court first confronted a Gift Clause challenge to release
time in Wistuber v. Paradise Valley Unified School District, 141 Ariz. 346 (1984).
In Wistuber, a school district agreed to either release a teacher who served
as union president from some of her teaching duties or permit her to forego
them altogether. In either circumstance, the district would pay a portion of
her teacher salary in exchange for specified responsibilities to “aid the
District in performing its obligations.” Id. at 348 & n.2. In assessing a
potential Gift Clause violation, the Court instructed that “[t]he reality of the
transaction both in terms of purpose and consideration must be considered.
A panoptic view of the facts of each transaction is required.” Id. at 349.

¶26 By that language, we take that the Wistuber Court meant we
should overlook neither the forest nor the trees. On the one hand, we
should consider the totality of the circumstances of the contract (the
“panoptic view”). On the other hand, an illegal subsidy cannot be sheltered
from scrutiny merely because it is embedded within an otherwise valid
contract (the “reality of the transaction”). See State v. N.W. Mut. Ins. Co., 86
Ariz. 50, 54 (1959) (instructing that we should “strive for a panoptic view of
the constitutional facts of a particular transaction and to consider the
significance of incidental features according to their appearance in proper
perspective” (emphasis added)); see also Turken, 223 Ariz. at 352 ¶ 47
(“Northwestern Mutual used the term ‘panoptic’ in rejecting the contention
that the initial [insurance] premium payments violated the Gift Clause. The
language was thus meant to reject an overly technical view of the
transaction.” (internal citation omitted)).

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¶27 Applying the public purpose and consideration criteria, the
Wistuber Court examined the release time provisions of the
collective-bargaining agreement and found them constitutional. 141 Ariz.
at 349-50. The Court concluded that “the duties imposed upon [the union
president] by the proposal [were] substantial, and the relatively modest
sums required to be paid by the District [were] not so disproportionate as
to invoke the constitutional prohibition.” Id. at 350.

¶28 Three decades later, in Cheatham, a divided Court upheld
much more extensive release time provisions in a police union contract,
encompassing multiple full-time release positions and a bank of thousands
of release time hours. 240 Ariz. at 316 ¶ 1, 317 ¶¶ 3–5. The majority
concluded that release time objectives—such as harmonious working
relationships and an efficient and readily available point of contact for
resolving union-management concerns—along with examples of how
release time could be used, constituted an adequate public purpose. Id.
at 320 ¶ 23, 321 ¶ 26. The majority further found that “release time [was] a
component of the overall compensation package” negotiated between the
city and the union, and that “if the City had not agreed to pay for release
time, the corresponding amounts would have otherwise been part of the
total compensation available.” Id. at 318–19 ¶ 14; see also id. at 323 ¶ 40
(“The MOU acknowledges that the costs to the City associated with release
time were in lieu of wages and benefits . . . .”). Hence, applying a “panoptic
view,” the majority viewed release time against the overall value of services
provided by the officers. Id. at 320 ¶ 18. According “due deference to the
decisions of elected officials” on adequacy of consideration, the majority
concluded that the City’s payments for release time were not grossly
disproportionate to the value of the obligations. Id. at 322–23 ¶¶ 33, 35.

¶29 The dissenters disagreed that the release time provisions
served a public purpose or provided adequate consideration for the public
funds expended. Id. at 324–26 ¶¶ 45–55 (Timmer, J., joined by Brutinel, J.,
dissenting). They declared that “[n]o public purpose is served by diverting
officers from safeguarding the public to work almost unchecked for [the
union].” Id. at 324 ¶ 46. They noted that the trial court found that release
time was not provided as a benefit or a substitute for employee
compensation, a finding backed by extensive evidence. Id. at 325–26
¶¶ 48–52. Finally, they concluded that consideration was inadequate given
that “[t]he MOU does not obligate [the union] to provide any services to the
City.” Id. at 326 ¶ 54.

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¶30 More recently, this Court clarified its Gift Clause
jurisprudence, resolving inconsistencies that were manifest between
Cheatham and prior cases. See Schires, 250 Ariz. at 376–79 ¶¶ 13–24. In
Schires, we struck down under the Gift Clause a city’s financial incentives
for a private postsecondary institution to relocate there. Id. at 378–79 ¶ 24.
We reiterated the two-prong test from Wistuber requiring a public purpose
and that the public expenditure not far exceed the value received from the
private entity. Id. at 374–75 ¶ 7.

¶31 As in our prior Gift Clause cases, we accorded “significant
deference to the judgment of elected officials” in determining public
purpose, encompassing both “direct and indirect benefits.” Id. at 375
¶¶ 8–9. However, we disapproved Cheatham’s statement that we accord
deference to elected officials on the consideration prong, noting that “the
Court cited no authority” for that proposition and that adequacy of
consideration is an “objective” inquiry that “does not involve subjective
policy decisions.” Id. at 378 ¶ 23.

¶32 Applying long-established Gift Clause principles, we stated
that “[t]he relevant ‘consideration’ consists of direct benefits that are
‘bargained for as part of the contracting party’s promised performance,’
and does not include ‘anticipated indirect benefits.’” Id. at 376 ¶ 14
(quoting Turken, 223 Ariz. at 350 ¶ 33). We held anticipated indirect
benefits did not constitute adequate consideration because the private
parties did not make “an enforceable promise to provide the City with any
particular economic impact.” Id. at 377 ¶ 16. Likewise, there was no
indication in that case that the private parties’ agreement to participate with
the city in economic development activities provided any economic value;
nor was payment by the city conditioned on such performance; nor did the
agreement provide sufficient detail to permit valuation. Id. at 378 ¶ 21. We
concluded that “although economic development activities can fulfill a
public purpose, the public entity must receive a bargained-for benefit as
part of the private party’s performance.” Id. ¶ 24. This case differs in that
the overall contract is one for services, and no one has challenged the
monetary compensation and benefits provided by the City to the employees
in return for their services to the City. Instead, the Employees challenge the
payments by the City to employees to provide services to the Union.

¶33 Citing Cheatham, the Union argues that under a “panoptic
view” of the MOU, the City receives all the benefits of the

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collective-bargaining agreement in exchange for the release time
provisions; that is, Unit II employees agree to provide their services to the
City. However, Cheatham is distinguishable. 2 Unlike in Cheatham, the
release time provisions here are not directed towards the overall purpose
of the collective-bargaining agreement. As the court of appeals dissent
pointed out, “the MOU specifically excludes the union payments from
employee compensation,” Gilmore, 255 Ariz. at 183 ¶ 48 (Bailey, J.,
concurring in part and dissenting in part), and therefore “the release time
provisions were not bargained for as part of the employees’ compensation
package.” Id. at 184 ¶ 52. Indeed, the Union acknowledges that Unit II
employees have received all compensation to which they are entitled, even
without release time. For all these reasons, the benefits provided to the City
by Unit II employees do not constitute consideration for the release time
provisions and are therefore irrelevant to the constitutionality of those
provisions.

¶34 As in all Gift Clause cases, courts must probe the reality of the
transaction. Wistuber, 141 Ariz. at 349. Thus, release time should be
separately scrutinized to determine if it has a public purpose and provides
sufficient tangible, enforceable consideration to the City. We do not suggest
that every provision in every contract must be scrutinized for Gift Clause
purposes; to the contrary, the compensation as a whole provided to Unit II
employees should be viewed in relation to the overall services they provide.
See Cheatham, 240 Ariz. at 326 ¶ 52 (Timmer, J., dissenting) (explaining that
a collective-bargaining agreement containing “[b]enefits such as health
insurance, gym memberships, and emergency child care” may satisfy Gift
Clause requirements if the benefits “substitute for the moneys an employee
would otherwise pay for the benefit” and therefore qualify as employee
compensation).

¶35 By the same token, it would negate the purposes of the Gift
Clause if scrutiny could be avoided merely because a gift is contained
within a larger contract. See Turken, 223 Ariz. at 347–48 ¶¶ 19–20
(describing the “core Gift Clause principle” that “public funds are to be
expended only for public purposes and cannot be used to foster or promote
the purely private or personal interests of any individual” (cleaned up)); see

2 The Employees did not ask us to overrule Cheatham until oral argument.
Because the Employees did not brief the applicable stare decisis principles,
we do not resolve that question here.
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also Cheatham, 240 Ariz. at 324 ¶ 45 (Timmer, J., dissenting) (stating that
“permitting the City to subsidize [a union] simply because the release time
terms are tucked within a collective bargaining agreement” undercuts the
purpose of the Gift Clause); Borgelt v. Austin Firefighters Ass’n, IAFF Loc.
975, No. 22-1149, 2024 WL 3210046 at *9 (Tex. June 28, 2024) (stating in the
context of challenged release time provisions that “refusing to assess
individual provisions would allow a city to make an otherwise
impermissible gift simply by inserting it into a larger contract” (emphasis
in original)); id. at *22 (Busby, J., dissenting in part and concurring in part)
(explaining that analyzing an agreement as a whole, instead of focusing on
the challenged provision, would render the Gift Clause meaningless
because “the City could agree to buy a red Ferrari for the Association
president because another provision of the same agreement obligates
firefighters to provide firefighting services that benefit Austin taxpayers”).
Presumably, examining the “reality of the transaction” is why the Court in
Wistuber so carefully scrutinized the release time provision even though it
was a discrete part of a much larger collective-bargaining agreement. See
141 Ariz. at 347, 349–50.

¶36 As a standalone contract between the Union and the City, the
release time provisions here would plainly violate the Gift Clause for lack
of consideration; including them as part of a larger contract does not
insulate them from review. See Schires, 250 Ariz. at 374 ¶ 7, 377 ¶ 16 (stating
that, when conducting a Gift Clause analysis, “a court asks whether the
challenged expenditure serves a public purpose” and “the adequacy of
consideration under the second prong focuses on the value of ‘what the
private party has promised to provide in return for the public entity’s
payment’” (quoting Turken, 223 Ariz. at 350 ¶ 33) (emphasis added)).
Applying the principles consistently embraced in our earliest cases through
Schires, we conclude that the release time provisions here violate the Gift
Clause.

¶37 As will appear below, the consideration prong of the Gift
Clause is dispositive of our holding, but the public purpose prong is also
problematic for the Respondents’ argument. Our opinions consistently
make clear that we largely defer to the determination of the elected body as
to what constitutes sound public policy. See Wistuber, 141 Ariz. at 349
(stating courts “must give appropriate deference” to the public entity under
the public purpose prong); Cheatham, 240 Ariz. at 320 ¶ 21 (same); Schires,
250 Ariz. at 375 ¶ 9 (same); Turken, 223 Ariz. at 346 ¶ 14 (same). However,

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the public purpose prong is not ephemeral. See, e.g., Turken, 223 Ariz. at 346
¶ 14 (noting that although “courts owe significant deference to the
judgments of elected officials,” determining “whether governmental
expenditures serve a public purpose is ultimately the province of the
judiciary”). After all, the plain language of the Gift Clause aims to prevent
subsidies to private individuals, associations, and corporations. The release
time provisions at issue are precisely that: a “release” from the ordinary
duties for which Unit II employees were hired, to instead perform, in the
main, lawful union activities.

¶38 Moreover, when performing such activities, employees are
released from the City’s direct control and supervision, which is an essential
criterion in determining public purpose. See, e.g., Kromko v. Ariz. Bd. of
Regents, 149 Ariz. 319, 321 (1986) (finding public purpose where the
operations of a recipient of public funds were “still subject to the control
and supervision of public officials,” so “the fear of private gain or
exploitation of public funds envisioned by the drafters of our constitution
[was] absent”); Walled Lake Door Co., 107 Ariz. at 549–50 (holding that public
funding of water line that benefited a private business served a public
purpose because the town retained “ownership and control” over the water
line); Wistuber, 141 Ariz. at 348 (upholding release time provisions where
the released employee recorded and logged her time with the public entity).
Indeed, as the dissenting justices stated in Cheatham, “[n]o public purpose
is served by diverting officers from safeguarding the public to work almost
unchecked for [the union]. The City has no control over how [the union]
directs the officers on release time and is not even told what the officers do
for [the union].” 240 Ariz. at 324 ¶ 46 (Timmer, J., dissenting). The MOU
before us is the same in these material respects.

¶39 Nonetheless, we do not rely on the more deferential public
policy prong to invalidate the release time provisions here because they so
clearly flunk the more demanding adequacy of consideration prong. The
consideration equation for the release time provisions here is the converse
of Wistuber: the City costs are substantial, but the benefits are so negligible
as to render them largely illusory. The Union receives four full-time
employees, who are released from their public duties but paid as if they
were performing public work, for the Union to direct as it sees fit; an
additional bank of 3,183 release time hours is established for the Union’s
use; compensatory hours are provided to release-time employees for
assigned duties outside of union activities; 150 hours are provided for

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Opinion of the Court

seminars, lectures, and conventions; and up to $14,000 is made available to
provide training for employee-relations skill development. The annual cost
for release time is estimated at $499,000. In return, the MOU provides
“examples” of the uses of release time, and the City argues that “release
time promotes cooperative labor relations and facilitates an open dialogue
about employment issues.” At best, these are anticipated indirect benefits
that do not count as enforceable obligations for consideration purposes. See
Schires, 250 Ariz. at 376 ¶ 14.

¶40 The Union and City point to a few tangible MOU obligations:
participation on task forces and representation of Unit II employees in
grievance proceedings. As previously noted, the four full-time released
employees who serve on task forces collectively receive 448 additional
hours in their compensatory time bank annually (on top of the salary and
release time hours provided for in the MOU) because time spent serving on
task forces “take[s] time away from [the] expected [Union] tasks” of
released employees. Plus, these obligations are microscopic compared to
the City’s expenditure, see Turken, 233 Ariz. at 351 ¶ 43 (finding it “difficult
to believe” services provided by a private party had “a value anywhere
near” the public expenditure), and the City pays for release time regardless
of the number of grievance proceedings that the Union represents Unit II
employees in. In holding an economic development agreement invalid
under the Gift Clause in Schires, we concluded the contract was “too
indefinite to enforce, much less value,” where the public entity’s payments
were not “triggered by performance of” the private parties’ obligations. 250
Ariz. at 378 ¶ 21. The same principle applies here.

¶41 To the extent that the City values the purposes to which
release time might be devoted, it has not explained why it could not assign
employees, under its direction and control, to perform precisely those tasks
(such as serving on task forces), rather than placing them at the Union’s
disposal. Moreover, as the authorized representative of Unit II, the Union
is already legally obligated to perform certain duties to Unit II employees.
PCC § 2-214(B) (“Public employees shall have the right to be represented
by an employee organization of their own choosing, to meet and confer
through an authorized employee organization with their public employer
in the determination of wages, hours and working conditions, and to be
represented in the determination of grievances arising thereunder.”).
Preexisting legal obligations cannot constitute consideration for Gift Clause
purposes. Cf. Schires, 250 Ariz. at 377 ¶ 18 (rejecting the argument that

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Opinion of the Court

private parties’ preexisting obligation to pay taxes was consideration for
Gift Clause purposes).

¶42 Indeed, the costs and benefits here are so one-sided that it is
difficult to envision how such expansive release time provisions could ever
survive the consideration prong unless the employees genuinely paid for
them through foregone wages or otherwise—which then could give rise to
a possible compelled speech or right to work claim. The court of appeals
noted that between 2014–2016, paid release time was eliminated in favor of
a system in which Unit II employees could voluntarily donate vacation
hours for release time, thus potentially avoiding any Gift Clause violations.
Gilmore, 255 Ariz. at 176 ¶ 18. But that is not the provision before us. The
present MOU, which directs significant public funds and resources to the
Union, represents an impermissible subsidy to a private entity.

¶43 For the foregoing reasons, we conclude that the release time
provisions of the MOU are substantially disproportionate to any benefits
received by the City, and therefore violate the Gift Clause.

ATTORNEY FEES

¶44 The Employees request attorney fees under the private
attorney general doctrine. In the Court’s discretion, the request is denied.

CONCLUSION

¶45 The court of appeals’ opinion is vacated and the outcome
reversed. The trial court’s decision is reversed and the case is remanded to
that court for the entry of judgment in favor of the Employees on the Gift
Clause claim.

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