Allen v. Santa Clara County Correctional Peace Officers Association ( 2019 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 SEAN ALLEN, et al., No. 2:18-cv-02230-MCE-CKD 12 Plaintiffs, 13 v. ORDER 14 SANTA CLARA COUNTY CORRECTIONAL PEACE OFFICERS 15 ASSOCIATION, et al., 16 Defendants. 17 18 Through the present class action, Plaintiffs Sean Allen, Stanley Graham, Bradley 19 Taylor, Juanita Wiggins, James Kirkland, Eric Liddle, and Antonio Richardson 20 (collectively “Plaintiffs”) seek to recover so-called “fair share” fees on behalf of 21 themselves and on behalf of a putative class of all former and current public employees 22 represented by Defendant Santa Clara County Correctional Peace Officers Association 23 (“SCCCPOA” or the “Union”). According to Plaintiffs, those fees were involuntarily 24 collected under Janus v. AFSCME Council 31, 138 S. Ct. 2448 (2018) to pay for 25 collective bargaining activities in violation of the First Amendment of the United States 26 Constitution. In addition, Plaintiff Allen contends his constitutional rights were further 27 violated when, post-Janus, the Union deducted membership dues from two of his 28 paychecks. Finally, Plaintiffs contend that California’s exclusive representation laws 1 further violate their constitutional rights.1 Presently before the Court are Defendants’ two 2 Motions to Dismiss filed pursuant to Federal Rules of Civil Procedure 12(b)(1) and 3 12(b)(6),2 which, for the following reasons, are GRANTED.3 ECF Nos. 32, 38. 4 5 STANDARDS 6 7 A. Rule 12(b)(1) 8 Federal courts are courts of limited jurisdiction, and are presumptively without 9 jurisdiction over civil actions. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 10 377 (1994). The burden of establishing the contrary rests upon the party asserting 11 jurisdiction. Id. Because subject matter jurisdiction involves a court’s power to hear a 12 case, it can never be forfeited or waived. United States v. Cotton, 535 U.S. 625, 630 13 (2002). Accordingly, lack of subject matter jurisdiction may be raised by either party at 14 any point during the litigation, through a motion to dismiss pursuant to Rule 12(b)(1). 15 Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); see also Int’l Union of Operating 16 Eng’rs v. Cnty. of Plumas, 559 F.3d 1041, 1043-44 (9th Cir. 2009). Lack of subject 17 matter jurisdiction may also be raised by the district court sua sponte. Ruhrgas AG v. 18 Marathon Oil Co., 526 U.S. 574, 583 (1999). Indeed, “courts have an independent 19 obligation to determine whether subject matter jurisdiction exists, even in the absence of 20 a challenge from any party.” Id.; see Fed. R. Civ. P. 12(h)(3) (requiring the court to 21 dismiss the action if subject matter jurisdiction is lacking). 22 /// 23 24 1 Plaintiffs concede this final claim should be dismissed. Accordingly, Defendant’s Motion is GRANTED as to this cause of action. 25 2 All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless otherwise noted. 26 3 Given this Court’s disproportionately high case load, and in the interest of conserving judicial 27 resources and expediting a decision in this case, the Court will not recount details with which the parties are intimately familiar. To be clear, the Court has considered all evidence and arguments in the record, 28 but it limits its written decision to only that which is necessary to resolve the parties’ instant arguments. 1 There are two types of motions to dismiss for lack of subject matter jurisdiction: a 2 facial attack, and a factual attack. Thornhill Publ’g Co. v. Gen. Tel. & Elec. Corp., 3 594 F.2d 730, 733 (9th Cir. 1979). Thus, a party may either make an attack on the 4 allegations of jurisdiction contained in the nonmoving party’s complaint, or may 5 challenge the existence of subject matter jurisdiction in fact, despite the formal 6 sufficiency of the pleadings. Id. 7 When a party makes a facial attack on a complaint, the attack is unaccompanied 8 by supporting evidence, and it challenges jurisdiction based solely on the pleadings. 9 Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). If the motion to 10 dismiss constitutes a facial attack, the Court must consider the factual allegations of the 11 complaint to be true, and determine whether they establish subject matter jurisdiction. 12 Savage v. Glendale High Union Sch. Dist. No. 205, 343 F.3d 1036, 1039 n.1 (9th Cir. 13 2003). In the case of a facial attack, the motion to dismiss is granted only if the 14 nonmoving party fails to allege an element necessary for subject matter jurisdiction. Id. 15 However, in the case of a factual attack, district courts “may review evidence beyond the 16 complaint without converting the motion to dismiss into a motion for summary judgment.” 17 Safe Air for Everyone, 373 F.3d at 1039. 18 In the case of a factual attack, “no presumptive truthfulness attaches to plaintiff’s 19 allegations.” Thornill, 594 F.2d at 733 (internal citation omitted). The party opposing the 20 motion has the burden of proving that subject matter jurisdiction does exist, and must 21 present any necessary evidence to satisfy this burden. St. Clair v. City of Chico, 22 880 F.2d 199, 201 (9th Cir. 1989). If the plaintiff’s allegations of jurisdictional facts are 23 challenged by the adversary in the appropriate manner, the plaintiff cannot rest on the 24 mere assertion that factual issues may exist. Trentacosta v. Frontier Pac. Aircraft Ind., 25 Inc., 813 F.2d 1553, 1558 (9th Cir. 1987) (quoting Exch. Nat’l Bank of Chi. v. Touche 26 Ross & Co., 544 F.2d 1126, 1131 (2d Cir. 1976)). Furthermore, the district court may 27 review any evidence necessary, including affidavits and testimony, in order to determine 28 whether subject matter jurisdiction exists. McCarthy v. United States, 850 F.2d 558, 560 1 (9th Cir. 1988); Thornhill, 594 F.2d at 733. If the nonmoving party fails to meet its 2 burden and the court determines that it lacks subject matter jurisdiction, the court must 3 dismiss the action. Fed. R. Civ. P. 12(h)(3). 4 B. Rule 12(b)(6) 5 On a motion to dismiss for failure to state a claim under Federal Rule of Civil 6 Procedure 12(b)(6), all allegations of material fact must be accepted as true and 7 construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. 8 Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) “requires only ‘a short and plain 9 statement of the claim showing that the pleader is entitled to relief’ in order to ‘give the 10 defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell 11 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 12 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require 13 detailed factual allegations. However, “a plaintiff’s obligation to provide the grounds of 14 his entitlement to relief requires more than labels and conclusions, and a formulaic 15 recitation of the elements of a cause of action will not do.” Id. (internal citations and 16 quotations omitted). A court is not required to accept as true a “legal conclusion 17 couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 18 Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief 19 above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & 20 Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the 21 pleading must contain something more than “a statement of facts that merely creates a 22 suspicion [of] a legally cognizable right of action”)). 23 Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket 24 assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n.3 (internal citations and 25 quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard 26 to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of 27 the nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing Wright & 28 Miller, supra, at 94, 95). A pleading must contain “only enough facts to state a claim to 1 relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have not nudged their 2 claims across the line from conceivable to plausible, their complaint must be dismissed.” 3 Id. However, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge 4 that actual proof of those facts is improbable, and ‘that a recovery is very remote and 5 unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). 6 C. Leave to Amend 7 A court granting a motion to dismiss a complaint must then decide whether to 8 grant leave to amend. Leave to amend should be “freely given” where there is no 9 “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice 10 to the opposing party by virtue of allowance of the amendment, [or] futility of the 11 amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. 12 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to 13 be considered when deciding whether to grant leave to amend). Not all of these factors 14 merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . 15 carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 16 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that 17 “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, 18 Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 19 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 20 1989) (“Leave need not be granted where the amendment of the complaint . . . 21 constitutes an exercise in futility . . . .”). 22 23 ANALYSIS 24 25 Plaintiffs’ first cause of action for refund of unconstitutionally compelled payments 26 fails because Defendants are entitled to a good faith defense. See Hernandez v. 27 AFSCME California, 386 F. Supp. 3d 1300, 1304 (E.D. Cal. 2019). The thoughtful 28 analysis in Hernandez is directly on point: 1 The Ninth Circuit has held that private parties may be entitled to a good-faith defense to a claim under Section 1983 where 2 they “did [their] best follow the law and had no reason to suspect that there would be a constitutional challenge to [their] 3 actions.” See Clement v. City of Glendale, 518 F.3d 1090, 1097 (9th Cir. 2008). In the agency fees context, not only did 4 unions have authorization under state statute, but the practice of collecting agency fees in this manner had been upheld for 5 decades as constitutional by the United States Supreme Court. See Abood [v. Detroit Bd. of Educ.], 431 U.S. [209,] 6 222-23 [(1977)]; see also Locke v. Karass, 555 U.S. 207, 213 (2009) (describing Abood’s rule, as reaffirmed in subsequent 7 cases, as “a general First Amendment principle”). Thus, the union is entitled to the good-faith defense as a matter of 8 law. See Lusnak v. Bank of Am., N.A., 883 F.3d 1185, 1194 n.6 (9th Cir. 2018) (observing that affirmative defenses may be 9 raised on a motion to dismiss where they do not implicate disputed issues of fact). 10 Faced with this good-faith defense, plaintiffs seek to avoid it by 11 characterizing their demand for a refund as an equitable claim for restitution rather than a legal claim for damages. (See SAC 12 ¶ 141.) They argue that defenses like qualified immunity and good faith are categorically inapplicable to claims for equitable 13 relief. See Wood v. Strickland, 420 U.S. 308, 314 n.6 (1975), overruled on other grounds, Harlow v. Fitzgerald, 14 457 U.S. 800, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982) (“[I]mmunity from damages does not ordinarily bar 15 equitable relief.”). Even if this distinction is well taken, plaintiffs’ refund claim fails for two independent reasons. 16 First, plaintiffs cannot simply plead around defenses by 17 labeling the proposed remedy as equitable rather than legal. Instead, this court must look to “the substance of the remedy 18 sought rather than the label placed on that remedy.” Depot, Inc. v. Caring for Montanans, Inc., 915 F.3d 643, 661 (9th Cir. 19 2019) (citations and quotations omitted). It is uncontroverted that plaintiffs’ claim seeks payment out of the general assets 20 of the union defendants. And the Supreme Court has stressed that recovering money out of a defendant’s general assets, as 21 opposed to a segregated fund, “is a legal remedy, not an equitable one.” Montanile v. Bd. of Tr. of Nat. Elevator Indus. 22 Health Benefit Plan, ––– U.S. ––––, 136 S. Ct. 651, 658, 193 L. Ed. 2d 556 (2016) (emphasis in original); see also Great-W. 23 Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 212-14, 122 S. Ct. 708, 151 L. Ed. 2d 635 (2002) (same). 24 Plaintiffs do not allege that the union defendants intentionally 25 comingled agency fees with general funds to avoid claims for restitution. Further, unions dissipated any agency fees on 26 nontraceable items. See Montanile, 136 S. Ct. at 658 (stating that expenditure on nontraceable items “destroys an equitable 27 lien”). Plaintiffs’ theory under Janus depends on the fact that the fees and dues collected were expended for expressive 28 activities with which they disagreed. See Babb v. Cal. 1 Teachers Ass’n, No. 2:18-cv-06793 JLS DFM, 378 F. Supp. 3d 857, 876, 2019 WL 2022222, at *8 (C.D. Cal. May 8, 2 2019) (“[I]t is not the case that the agency fees remain in a vault, to be returned like a seized automobile.”). Accordingly, 3 because plaintiffs’ proposed remedy is legal in nature, the union defendants’ good faith bars relief. 4 Second, the court would reach the same conclusion in a suit 5 in equity. “The essence of equity jurisdiction” is that federal courts have the flexibility “to mould each decree to the 6 necessities of the particular case.” Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944). Even in constitutional adjudication, 7 “equitable remedies are a special blend of what is necessary, what is fair, and what is workable.” Lemon v. Kurtzman, 8 411 U.S. 192, 200 (1973) (plurality). Given these considerations, “[i]t is well established that reliance interests 9 weigh heavily in the shaping of an appropriate equitable remedy.” Id. at 203. 10 The reliance interests here are quite compelling. The union 11 defendants relied on Supreme Court precedent and a state statute that explicitly authorized the challenged 12 practice. See id. at 209, 93 S. Ct. 1463 (“[S]tate officials and those with whom they deal are entitled to rely on a 13 presumptively valid state statute, enacted in good faith and by no means plainly unlawful.”). Unions throughout the country 14 collected billions of dollars under Abood’s rule. See Janus, 138 S. Ct. at 2486. Allowing the recoupment of such a large 15 sum of money would have potentially disruptive consequences that could threaten the operations of unions and significantly 16 deplete their treasuries. See Am. Trucking Ass’ns, Inc. v. Smith, 496 U.S. 167, 182-83, 110 S. Ct. 2323, 110 L. Ed. 2d 17 148 (1990) (plurality) (recognizing these as cognizable equitable interests). 18 Moreover, these plaintiffs presumably received some benefits 19 from the fees they paid, through the representation provided by the unions. While the Supreme Court held in Janus that 20 those benefits could not withstand First Amendment scrutiny, the majority did not deny the fact that nonunion members 21 received such benefits. See 138 S. Ct. at 2466-69. It must also be observed here that “plaintiffs do not propose to give 22 back the benefits that the union’s efforts bestowed on them.” Gilpin v. AFSCME, 875 F.2d 1310, 1316 (7th Cir. 23 1989). Consequently, granting plaintiffs a full refund would stand the equitable remedy on its head. See id. Based on 24 these observations, it would be neither fair nor workable to entertain plaintiffs’ claim. 25 Nevertheless, plaintiffs argue that a defendant is never allowed 26 to enrich itself by keeping property it took in violation of another’s constitutional rights. See, e.g., United States v. 27 Windsor, 570 U.S. 744, 775, 133 S. Ct. 2675, 186 L. Ed. 2d 808 (2013) (ordering the United States to refund taxes it 28 collected in reliance on the Defense of Marriage Act); United 1 States v. Lewis, 478 F.2d 835, 836 (5th Cir. 1973) (stating that fines collected under a statute that is subsequently determined 2 to be unconstitutional must be repaid when suit is brought to recover them). Those cases, however, do not stand for such a 3 sweeping proposition. Unlike in Windsor and Lewis, the union defendants are private parties who were not responsible for 4 passing the legislation that is now unconstitutional. Instead, they relied on the type of statute the Supreme Court explicitly 5 approved of in Abood. 6 Id. at 1304-06. This foregoing analysis applies just as forcefully to Plaintiffs’ claims for 7 refunds here, which are materially identical. Accordingly, Plaintiffs’ claims are likewise 8 DISMISSED. 9 Nor is Plaintiff Allen entitled to relief on the second cause of action for violation of 10 California Government Code § 1157.12(b). According to the First Amended Complaint 11 (“FAC”), “[a]fter Janus, the union violated Mr. Allen’s constitutional rights by taking 12 membership dues from his paycheck even though the union knew full well that Mr. Allen 13 was not a member of the union.” FAC, ¶ 55. After being informed that it should cease 14 withholding fees from Mr. Allen’s paycheck, the union purportedly withdrew dues from 15 two of his paychecks before it rectified the situation and refunded those moneys. Id., 16 ¶ 26. It is unclear to the Court how the union’s de minimis deduction and return of funds 17 from two paychecks—funds that were apparently not expended toward the union’s 18 collective bargaining purposes in any event—give rise to a constitutional violation. 19 Regardless, those funds were returned, and Mr. Allen’s claim is thus moot.4 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 4 Mr. Allen’s general challenge to § 1157.12(b) as unconstitutional on its face likewise fails because he is no longer a union member and there is no indication in the complaint that he ever intends to 27 resume any union-related deductions. Accordingly, he lacks standing to challenge a statute where there is no apparent risk it will be enforced against him. Even if that was not the case, however, Plaintiff has failed 28 to identify any constitutional provision actually violated by this statute. 1 CONCLUSION 2 3 For the foregoing reasons, Defendants’ Motions to Dismiss (ECF Nos. 32, 38) are 4 | GRANTED with leave to amend.° Not later than twenty (20) days following the date this 5 | Memorandum and Order is electronically filed, Plaintiffs may (but are not required to) file 6 | an amended complaint. If no amended complaint is timely filed, this action will be 7 | deemed dismissed with prejudice upon no further notice to the parties. 8 IT 1S SO ORDERED. 9 | Dated: September 10, 2019 41 MORRISON C. ENGLAND, J UNITED STATES DISTRI 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 8 Because oral argument was not of material assistance, the Court ordered this matter submitted 28 on the briefs. E.D. Cal. Local Rule 230(g).