Hamidi v. Service Employees International Union Local 1000 ( 2019 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 KOUROSH KENNETH HAMIDI, et al., No. 2:14-cv-00319 WBS KJN 13 AND THE CLASS THEY SEEK TO REPRESENT, 14 Plaintiffs, MEMORANDUM AND ORDER RE: 15 CROSS-MOTIONS FOR SUMMARY v. JUDGMENT, MOTION TO DECERTIFY 16 THE CLASS, AND MOTION TO SERVICE EMPLOYEES INTERNATIONAL AMEND CLASS CERTIFICATION 17 UNION LOCAL 1000, ORDER 18 Defendant. 19 20 ----oo0oo---- 21 Plaintiffs Kourosh Kenneth Hamidi et al., and the class 22 they represent (“the Employees”), brought this class action 23 against defendants Service Employees International Union Local 24 1000 (“Local 1000”) and the California state controller,1 25 26 1 After this court dismissed plaintiffs’ claims for declaratory and injunctive relief, plaintiffs had no claims 27 remaining against the state controller. The court thus dismissed the party from this lawsuit. (See June 18, 2019 Order at 16 28 (Docket No. 139).) 1 alleging that Local 1000’s ‘opt-out’ system for collecting 2 optional union fees violates the Employees’ First Amendment 3 rights. In light of the Supreme Court’s recent decision in Janus 4 v. AFSCME, Council 31, 138 S. Ct. 2448 (2018), requiring 5 employees’ affirmative consent prior to any collection of union 6 fees, the court is now presented with the parties’ cross-motions 7 for summary judgment, defendant’s motion to decertify the class, 8 and plaintiffs’ motion to amend the class certification order. 9 I. Factual and Procedural Background 10 On June 27, 2018, the Supreme Court decided Janus and 11 held that payment to a union may not be collected from an 12 employee without the employee’s affirmative consent. 138 S. Ct. 13 at 2486. The decision overruled Abood v. Detroit Board of 14 Education, 431 U.S. 209 (1977), and its progeny, which 15 established that unions may require nonmembers to pay a fee to 16 the union that would be used to fund expenditures germane to 17 collective bargaining. 18 Plaintiffs are employees of the State of California. 19 (Local 1000 Resp. to Statement of Undisputed Material Facts 20 (“SUMF”) at 7, ¶ 6 (Docket No. 152-1).) Local 1000 is the 21 exclusive representative for collective bargaining purposes of 22 plaintiffs and other state employees. (Id. at 8, ¶ 8). 23 Before Janus, employees represented by Local 1000 could 24 either join the union as dues-paying members (id. at 11, ¶ 12) or 25 remain nonmembers and pay Local 1000 a ‘fair share’ fee. (Id. at 26 11, ¶ 12). Nonmembers could choose to pay the “full” fair share 27 fee, which Local 1000 used to fund expenditures both germane and 28 1 not germane to collective bargaining, or a “reduced” fair share 2 fee, which defendant used to fund only expenditures that were 3 germane to collective bargaining. (See Decl. of Brian Calderia 4 (“Caldeira Decl.” ¶ 3 (Docket No. 37).) Non-germane 5 expenditures, also known as non-chargeable expenditures, 6 included, for example, contributions to “political or ideological 7 causes only incidentally related to the terms and conditions of 8 employment.” (Local 1000 Resp. to SUMF at 12, ¶ 13 (Docket No. 9 152-1)). 10 Under that pre-Janus system, in deciding whether to 11 charge a nonmember the full or reduced fair share fee, Local 1000 12 had, with the state’s authorization and assistance, implemented 13 an ‘opt-out’ system. (Id. at 3-4, ¶ 1). Prior to each annual 14 fee cycle, Local 1000 sent nonmembers, a notice (“Hudson notice”) 15 informing them that they will be charged the full fair share fee 16 for the upcoming cycle unless they opt out by sending back a 17 written statement stating that they wish to be charged only the 18 reduced fair share fee. (Local 1000 Resp. to SUMF at 11-12, ¶ 19 13.) Employees who did not object were charged the full fair 20 share fee. (Pls.’ Mot. in Sup. Summ. J. at 3-4 (Docket No. 149- 21 1).) The day after Janus was decided, the California State 22 Controller’s Office cancelled the deduction of agency fees from 23 all nonconsenting public employees. (See June 18, 2019 Order at 24 5 (Docket No. 139).) 25 On January 31, 2014, plaintiffs brought this action 26 under 42 U.S.C. § 1983 alleging that Local 1000’s fee collection 27 system violated nonmembers’ First and Fourteenth Amendment 28 1 rights. (Compl. at 1-2, ¶ 1 (Docket No. 1).) This court first 2 certified plaintiff’s cause of action for class treatment to the 3 extent it is brought as a facial challenge to the 4 constitutionality of Local 1000’s opt-out requirement and 5 procedure. (See May 22, 2015 Order at 3 n.3, 20 (Docket No. 6 53).) Then, evaluating Local 1000’s fee collection system under 7 pre-Janus precedent, this court granted summary judgment in favor 8 of defendants and denied plaintiffs’ challenge to the 9 constitutionality of Local 1000’s opt-out requirement. (See Feb. 10 8, 2017 Order at 14, 18 (Docket No. 94).) After the Court 11 decided Janus, this court dismissed as moot plaintiffs’ claims 12 for declaratory and injunctive relief. (See June 18, 2019 Order 13 at 16 (Docket No. 139).) Plaintiff’s “sole remaining claim” is 14 “for retrospective monetary relief.” (Joint Status Report at 1 15 (Docket No. 143).) 16 II. Defendant’s Motion for Summary Judgment 17 Plaintiff seeks repayment of all fees –- both germane 18 and non-germane to collective bargaining -- collected from 19 nonmembers prior to the Court’s decision in Janus. (Pls.’ Mot. 20 in Supp. Summ. J. at 46 (Docket No. 149-1).) Defendant does not 21 contest that Local 1000’s opt-out system to collect agency fees 22 from nonmembers violates nonmembers’ First Amendment rights under 23 Janus. Defendant instead asserts a good faith defense to § 1983 24 liability because the law at the time of Local 1000’s collection 25 of agency fees permitted such a system. This court agrees that 26 such a defense applies here. 27 A. Section 1983 Good-Faith Defense 28 1 In Wyatt v. Cole, the Supreme Court did not foreclose 2 “the possibility that private defendants faced with § 1983 3 liability . . . could be entitled to an affirmative defense based 4 on good faith.” Wyatt v. Cole, 504 U.S. 158, 169 (1992); see 5 also Richardson v. McKnight, 521 U.S. 399, 413–14 (1997) (“Wyatt 6 explicitly stated that it did not decide whether or not the 7 private defendants before it might assert, not immunity, but a 8 special ‘good-faith’ defense . . . we do not express a view on 9 this last-mentioned question.”). 10 The Supreme Court in Janus “itself did not specify 11 whether the plaintiff was entitled to retrospective monetary 12 relief for conduct the Supreme Court had authorized for the 13 previous forty years.” Cooley v. California Statewide Law Enf't 14 Ass'n, 385 F. Supp. 3d 1077, 1081 (E.D. Cal. 2019) (citing Janus, 15 138 S. Ct. at 2486). The controlling law in the Ninth Circuit, 16 however, recognizes a good faith defense in shielding private 17 defendants from liability in § 1983 actions. In Clement v. City 18 of Glendale, the Ninth Circuit granted summary judgment in favor 19 of defendant –- a towing company -- as to the plaintiff’s § 1983 20 claim because the defendant “did its best to follow the law” in 21 that “the tow was authorized by the police department, conducted 22 under close police supervision and appeared to be permissible 23 under both local ordinance and state law.” 518 F.3d 1090, 1097 24 (9th Cir. 2008). Since Clement, “[t]he threshold question of 25 whether the good faith defense is available to private parties in 26 § 1983 actions has been answered affirmatively by the Ninth 27 Circuit.” Cook v. Brown, 364 F. Supp. 3d 1184, 1190 (D. Or. 28 1 2019). 2 B. Application of Good-Faith Defense 3 1. Legal Standard 4 Plaintiffs construct a five-element good-faith test out 5 of the Ninth Circuit’s decision in Clement to argue that 6 defendant’s actions do not qualify for the defense. No court, 7 however, has read Clement so rigidly. “[T]he [good faith] 8 defense has been applied by the Ninth Circuit without a precise 9 articulation of its contour.” Cook v. Brown, 364 F. Supp. 3d 10 1184, 1192 (D. Or. 2019); see also Carey v. Inslee, 364 F. Supp. 11 3d 1220, 1228–29 (W.D. Wash. 2019) (“The Ninth Circuit has thus 12 far expressed no position regarding the proper standard.”). 13 Courts instead apply “traditional principles of equity and 14 fairness.” Cook, 364 F. Supp. 3d at 1192. Because union 15 defendants relied on 40-year precedent, and because unions cannot 16 retract the bargaining they carried out on plaintiffs’ behalf, 17 district courts have concluded that requiring the unions to 18 refund the collected fees would be inequitable. See, e.g., Babb, 19 378 F. Supp. 3d at 876; Cook, 364 F. Supp. 3d at 1192; Crockett 20 v. NEA-Alaska, 367 F. Supp. 3d 996, 1008 (D. Alaska 2019). 21 In the fair share fee context, “every district court to 22 consider whether unions that collected agency fees prior to Janus 23 have a good-faith defense to § 1983 liability have answered in 24 the affirmative.” Babb v. California Teachers Ass'n, 378 F. 25 Supp. 3d 857, 872 (C.D. Cal. 2019) (collecting cases). Most 26 recently, this court found that, because unions enjoyed Supreme 27 Court and statutory authorization, the unions that followed then- 28 1 valid law were “entitled to the good-faith defense as a matter of 2 law.” Hernandez v. AFSCME California, 2019 WL 2546195, at *2 3 (E.D. Cal. June 20, 2019). 4 Although courts have not articulated a standard to 5 evaluate good faith after Janus, the district courts that have 6 considered the issue have found good faith where the union 7 complied with then-existing Supreme Court precedent and state 8 law. See, e.g., Babb, 378 F. Supp. 3d at 876 (finding good faith 9 where union defendant relied “on a presumptively valid state 10 statute” and “the 40-year-precedent of Abood”); Danielson v. Am. 11 Fed'n of State, Cty., & Mun. Employees, Council 28, AFL-CIO, 340 12 F. Supp. 3d 1083, 1086 (finding good faith where “the Union 13 Defendant followed the then-applicable laws”); Cook, 364 F. Supp. 14 3d at 1192 (finding that “[i]t would be highly inequitable to 15 hold [the union defendant] retroactively liable” where the union 16 collected fees in accordance with state law and Supreme Court 17 precedent); Crockett, 367 F. Supp. 3d 996, 1006 (same). 18 Moreover, the limited circuit-level guidance available 19 concludes that a union’s compliance with previously valid law 20 suffices to grant a good faith defense to § 1983 liability. In 21 Jarvis v. Cuomo, 660 F. App'x 72, (2d Cir. 2016), the Second 22 Circuit considered a union’s § 1983 liability for fair share fees 23 collected before the Supreme Court ruled in Harris v. Quinn, 573 24 U.S. 616 (2014), that unions may not compel personal care 25 providers to pay fair share fees. The Jarvis court found that 26 the union was “not liable for damages stemming from the pre- 27 Harris collection of fair share fees,” because the union “relied 28 1 on a validly enacted state law and the controlling weight of 2 Supreme Court precedent,” such that “it was objectively 3 reasonable for [the union] ‘to act on the basis of a statute not 4 yet held invalid.’” Jarvis v. Cuomo, 660 F. App'x 72, 76 (2d 5 Cir. 2016) (citing Pinksy v. Duncan, 79 F.3d 306, 313 (2d Cir. 6 1996)). 7 This court previously “express[ed] skepticism that the 8 good faith defense depends on more than the union’s actual 9 compliance with then-existing law.” Hamidi v. Serv. Employees 10 Int'l Union Local 1000, 386 F. Supp. 3d 1289, 1300 (E.D. Cal. 11 2019). Today, in reliance on the guidance above, this court 12 makes the standard clear: in the agency fee context, a union’s 13 compliance with then-existing law indeed suffices to find good 14 faith. 15 2. Application to Local 1000’s Opt-Out System 16 Local 1000 is entitled to the good-faith defense 17 because its opt-out system complied with then-valid Supreme Court 18 precedent. Prior to Janus, this court specifically found that 19 Local 1000’s opt-out procedure was consistent with both Ninth 20 Circuit and Supreme Court decisions on agency fee collection. 21 (Feb. 8, 2017 Order at 14, 18 (Docket No. 94).) When plaintiffs 22 filed suit, it was well established that unions may require 23 nonmembers to pay the portion of the fair share fees that are 24 used to fund expenditures germane to collective bargaining. 25 Abood, 431 U.S. at 235. Further, this court found that the Ninth 26 Circuit’s finding in Mitchell v. Los Angeles Unified Sch. Dist., 27 namely “that the Constitution does not mandate a system under 28 1 which nonmembers . . . ‘opt in,’” 963 F.2d 258, 260 (9th Cir. 2 1992), was consistent with Supreme Court jurisprudence and was 3 therefore the controlling law in the circuit. (See Feb. 8, 2017 4 Order at 12-13 (Docket No. 94).) Defendants “are entitled to 5 rely” upon the Supreme Court’s binding precedent and Local 1000 6 did so here. See Lee v. Ohio Educ. Ass'n, 366 F. Supp. 3d 980, 7 983 (N.D. Ohio 2019). 8 Local 1000 also complied with then-valid state law. 9 The Dills Act (“the Act”) expressly permitted the collection of 10 fair share fees. See Cal. Gov’t Code § 3513(k). Specifically, 11 the Act permitted Local 1000 to establish procedures for a 12 nonmember employee to object to paying the full fair share fee. 13 Cal. Gov’t Code § 3515.8. Moreover, the Public Employment 14 Relations Board issued a regulation requiring exclusive 15 representatives like Local 1000 to “provide an annual written 16 notice to each nonmember who will be required to pay an agency 17 fee” that includes “procedures for . . . objecting to the payment 18 of an agency fee amount that includes nonchargeable 19 expenditures.” 8 C.C.R. § 32992. Both Supreme Court precedent 20 and then-valid state law authorized Local 1000 to require 21 nonmembers to opt out of payment of non-chargeable fees. Local 22 1000’s compliance with then-valid law therefore entitles 23 defendant to a good-faith defense as a matter of law. 24 3. Local 1000’s Subjective Belief 25 Plaintiffs contend that defendant did not in fact act 26 in good faith because they should have known that the Court would 27 overturn Abood. Plaintiffs are correct that “unions have been on 28 1 notice for years regarding [the] Court’s misgivings about Abood.” 2 Janus, 138 S. Ct. at 2484. But “reading the tea leaves of 3 Supreme Court dicta has never been a precondition to good faith 4 reliance on governing law.” Cook, 364 F. Supp. 3d at 1192. To 5 find otherwise would force defendants to engage in 6 “constitutional gambling” and “decid[e] if they truly agree with 7 the Supreme Court's reasoning to avoid future liability.” Carey, 8 364 F. Supp. 3d at 1231. 9 More importantly, evaluating defendant’s October Term 10 predictions in a good-faith determination would “imperil the rule 11 of law.” Cook, 364 F. Supp. 3d at 1193. Unions that followed 12 what was then the law –- Abood -- would not be entitled to the 13 defense, while those that questioned the Supreme Court’s binding 14 interpretation of the Constitution would walk away unscathed. 15 See also Danielson, 340 F. Supp. 3d at 1086 (concluding that 16 consideration of a union’s “subjective anticipation of an 17 unpredictable shift in the law undermines the importance of 18 observing existing precedent”). Defendant need not engage in 19 telepathy to avail itself of the good faith defense to § 1983 20 liability. See Winner v. Rauner, No. 15-cv-7213, 2016 WL 21 7374258, at *5 (N.D. Ill. 2016). Instead, as stated above, Local 22 1000’s compliance with what was then the law is sufficient for a 23 finding of good faith. 24 IT IS THEREFORE ORDERED that defendant’s Motion for 25 Summary Judgment (Docket No. 148) be, and the same hereby is, 26 GRANTED.2 27 28 2 The court’s ruling here resolves plaintiffs’ “sole D : r 24, 201 □ ated Octobe 019 ak. 3 WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 remaining claim.” (Joint Status Report at 1 (Docket No. 143).) Defendant’s motion to decertify the class and plaintiffs’ motion 28 to amend the class certification order are therefore moot. 11