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Crockett v. NEA-Alaska

United States District Court, D. Alaska

March 14, 2019

Tracey Crockett, et al., Plaintiffs,
v.
NEA-Alaska, et al., Defendants.

          ORDER AND OPINION [RE: MOTIONS AT DOCKET 49, 53]

          JOHN W. SEDWICK SENIOR JUDGE, UNITED STATES DISTRICT COURT

         I. MOTIONS PRESENTED

         At docket 49, Defendants NEA-Alaska, National Education Association, and Matanuska-Susitna Education Association ("Union Defendants") move to dismiss all of Plaintiffs' claims against them. They argue that Plaintiffs' claim for prospective relief with respect to compulsory payments to unions must be dismissed pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction. They argue that Plaintiffs' § 1983 claim and Alaska tort claims for retrospective monetary relief in relation to these compulsory payments must be dismissed under Rule 12(b)(6) for failure to state a claim. They argue that Plaintiff Kathryn McCollum's claim challenging Alaska's system of exclusive representative collective bargaining and asking for prospective relief and treble damages must also be dismissed under Rule 12(b)(6).

         At docket 53, Defendant Matanuska-Susitna Borough School District ("School District") joins the Union Defendants' motion to the extent it addresses the more limited claims against it. Plaintiffs only seek prospective relief against the School District with respect to its collection of compulsory union payments and with respect to its exclusive collective bargaining activities.

         Plaintiffs[1] respond at docket 56. Plaintiffs concede that the court lacks jurisdiction over their claims for prospective relief with respect to compulsory union payments, but they maintain that they are entitled to retrospective monetary relief for the past collection of these payments. Plaintiff McCollum concedes that Supreme Court precedent bars her constitutional challenge to exclusive representative collective bargaining but maintains her challenge to such a system based on federal antitrust laws.

         The Union Defendants reply at docket 58. The School District replies at docket 59. Oral argument was heard February 15, 2019.

         II. BACKGROUND

         Alaska's Public Employment Relations Act ("PERA") authorizes bargaining units of public employees to choose to be exclusively represented by a labor union for purposes of bargaining with public employers as to employment terms.[2] To cover the costs of union representation, PERA authorized public employers and unions to agree that all represented employees would pay their proportionate share of the costs of representation, regardless of union membership.[3] That is, a union could require through its collective bargaining agreement that public employers collect "fair share fees" from non-union members that would be remitted to the union to apply towards its bargaining activities. In the event an employee qualified as a religious objector to union activities under PERA, a bargaining agreement could nonetheless require that the employee pay a fair-share fee to the union, but the union had to donate the am ount of that fee to a charity of its choosing.[4] Until recently, such fair-share fees were explicitly authorized by Supreme Court precedent, Abood v. Detroit Board of Education.[5] Abood held that public employees may be required to pay their proportionate share of the costs of union representation for collective bargaining purposes.[6]

         Matanuska-Susitna Education Association ("MSEA") is the union that represents a bargaining unit of the School District's employees. Plaintiffs McCollum and McKee are employees in that bargaining unit. The agreement between the School District and the employees includes a fair-share provision that required the School District to deduct fees from its payments to non-union members and remit them to MSEA. Plaintiff McCollum was not a union member at the time Plaintiffs filed their complaint; therefore, she was required to pay fair-share fees. Plaintiff McKee was a union member at the time. She alleges that she has long opposed the union but chose to remain in it because she otherwise would have had to pay a fair-share fee "and the difference in money between the full membership dues and the [fair-share fees] would not have been worth the loss of [her] vote and . . . influence . . . in collective-bargaining matters."[7]

         The other plaintiffs are current or former public school teachers that worked in other school districts and were represented by NEA-Alaska affiliate unions for collective bargaining purposes. Plaintiffs Ness and Christopherson were compelled to pay non-union member fair-share fees to their representative union. Plaintiff Carmen was not a union member but was compelled, as a religious objector under AS 23.40.225, to pay fees to the union for charitable purposes. Plaintiff Liston is a retired teacher who had been a union member during his career but, like Plaintiff McKee, alleges that he only became one because he otherwise would have been required to pay fair-share fees.

         On June 27, 2018, the Supreme Court issued its decision in Janus v. AFSCME, [8]which overruled Abood and held that requiring non-union members to pay union fees as a condition of public employment "violates the First Amendment and cannot continue."[9]

         On August 2, 2018, Plaintiffs filed suit under 42 U.S.C. § 1983, Alaska common law, and federal antitrust law. Their complaint can be divided into four different requests: (1) a request for declaratory and injunctive relief to prevent the future collection of fair-share fees, including religious objector fees; (2) a request that the Union Defendants be required to refund all fair-share fees collected prior to Janus; (3) a request that the Union Defendants be required to refund a portion of union membership dues paid by Plaintiffs McKee and Liston; and (4) a request for prospective relief that would make Alaska's exclusive representative collective bargaining system unlawful and prevent its future use, as well as a request for treble damages to public employees who have not been allowed to negotiate on their own behalf.

         III. STANDARD OF REVIEW

         Rule 12(b)(6) tests the legal sufficiency of a plaintiff's claims. In reviewing such a motion, "[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party."[10] To be assumed true, the allegations, "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively."[11] Dismissal for failure to state a claim can be based on either "the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."[12] "Conclusory allegations of law . . . are insufficient to defeat a motion to dismiss."[13]

         To avoid dismissal, a plaintiff must plead facts sufficient to "'state a claim to relief that is plausible on its face.'"[14] "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."[15] "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully."[16] "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'"[17] "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief."[18] "In all cases, evaluating a complaint's plausibility is a 'context-specific' endeavor that requires courts to 'draw on ... judicial experience and common sense.'"[19]

         In deciding whether to dismiss a claim under Federal Rule of Civil Procedure 12(b)(6), the Court is generally limited to reviewing only the complaint, but may review materials which are properly submitted as part of the complaint and may take judicial notice of undisputed matters of public record that are outside the pleadings.[20] Furthermore, documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss.[21]

         IV. DISCUSSION

         A. Prospective relief with respect to compulsory union fees

         Plaintiffs concede in their response brief that they cannot seek injunctive relief against the Union Defendants and the School District to prevent the future collection of compulsory union fees because there is not a current controversy to be resolved on this point.[22] The day Janus was announced, NEA-Alaska sent a letter to all non-union members in bargaining units represented by its local affiliates to inform them that it would cease collecting fair-share fees. It informed them that any such fees that had been collected in advance-to cover the period falling after the Janus decision date up to the end of the fiscal year-would be refunded. Refund checks were mailed the next day. NEA-Alaska local affiliates contacted school districts to notify them to immediately stop deducting fair-share fees. Given that it is undisputed that the collection of fair-share fees ceased immediately after Janus, there is no actual, live controversy sufficient to establish this court's jurisdiction over Plaintiffs' claims for prospective relief with respect to fair-share fees.[23]

         B. Monetary relief with respect to compulsory fees collected pre-Janus

         Plaintiffs ask for monetary damages under § 1983 for the Union Defendants' collection of fair-share fees pre-Janus. They assert that the court's Janus decision is retroactive under Harper v. Virginia Department of Transportation.[24] Consequently, Plaintiffs assert that the Union Defendants' past collection of fair-share fees from them, as non-members, was a constitutional deprivation for which they are entitled to § 1983 damages. The Union Defendants contend that Janus was not meant to have a retroactive effect, but they note that the court need not make an affirmative ruling on the issue because regardless of how the civil retroactivity doctrine applies to the case, the good faith defense excuses them from liability under § 1983. They argue that they are shielded from monetary liability because they collected fair-share fees according to a presumptively valid state statute and as authorized under then-binding Supreme Court precedent, Abood.

         As private defendants acting under the color of state law, the doctrine of qualified immunity from § 1983 suits is not available to the Union Defendants. The Supreme Court in Wyatt v. Cole[25] held as much based on the fact that the rationales justifying the application of qualified immunity to government officials are not transferrable to private parties.[26] However, in so holding, the Court did not foreclose "the possibility that private defendants faced with § 1983 liability . . . could be entitled to an affirmative defense based on good faith."[27] The Court recognized that "principles of equity and fairness may suggest . . . that private citizens who rely unsuspectingly on state laws they did not create and may have no reason to believe are invalid should have some protection from liability."[28] Since Wyatt, several circuit courts, including the Ninth Circuit, have relied upon the defense in shielding private defendants from liability.[29] In Clement v. City of Glendale, the Ninth Circuit relied on the good faith defense when it affirmed that a private defendant, a towing company, was entitled to summary judgment as to the plaintiff's § 1983 claim against it for towing her car in violation of the Fourteenth Amendment. It held that the facts of the case supported the application of the defense: the towing company "did its best to follow the law" in that "the tow was authorized by the police department, conducted under close police supervision and appeared to be permissible under both local ordinance and state law."[30]

         Plaintiffs argue that Clement contradicts a prior Ninth Circuit case, Howerton v. Gabica.[31] They assert that Howerton makes "good-faith defenses . . . categorically inapplicable to private parties who violate section 1983."[32] Howerton, which came before Clement, held only that a private party cannot invoke the doctrine of qualified immunity from suit-a holding that the Supreme Court would later endorse in Wyatt. As noted above, the Court in Wyatt left open the possibility that private defendants could avail themselves of an affirmative defense based on good faith, a concept which the Court recognized as separate and distinct from qualified immunity.

         Plaintiffs also argue that only private individuals, as opposed to private companies, can invoke good faith to protect themselves from § 1983 liability. They base such an argument on the fact that qualified immunity only applies to individual officials, not government entities. Again, however, qualified immunity is not the same as a good-faith affirmative defense. The rationale for qualified immunity-protecting individual officers from the threat of personal monetary liability for carrying out their duties-is admittedly not transferrable to private entities. However, other rationales, such as principles of equity and fairness, support the application of the defense to private entities in certain circumstances.[33] Moreover, Clement, the controlling case law in this circuit allowed a private entity to assert the good-faith defense.

         Plaintiffs alternatively argue that if the defense is indeed available to private defendants in § 1983 cases, its application is nonetheless limited. They argue that under Wyatt the defense can only be applied to a constitutional claim if the claim is analogous to a common law tort that would have conferred similar defenses when § 1983 was enacted. They argue that the most analogous tort in this situation is conversion, and because conversion does not include an intent element, the good faith defense cannot apply. Like the other three district courts in the Ninth Circuit to consider this argument, the court disagrees with Plaintiffs' construction of the defense.[34]

         Clement did not interpret the defense in this limited manner. It applied the defense to a § 1983 claim without considering whether the common law would have conferred the defense with respect to an analogous tort. The court was clearly more "concerned about the inequities of holding the private towing company liable" when it subjectively and reasonably believed it was following the law.[35] Indeed, the impetus for such a defense is rooted in concerns about the unfairness that would result from holding private parties retrospectively liable under § 1983 for following the law. When the Supreme Court held that private parties using a process established by state statute can be considered state actors for purposes of § 1983, it recognized that private individuals could unfairly be held liable if the state law is later held to be unconstitutional and suggested that the "problem should be dealt with . . . by establishing an affirmative defense."[36] As noted by the Union Defendants, the approach propounded by Plaintiffs "would increase the potential for unfairness by permitting some defendants that rely on presumptively valid state laws to assert the defense while others could not, based solely on the elements of various nineteenth-century common law torts."[37]

         Even if the court must find a common law analogue, conversion is not the most closely related tort. "The core element of Plaintiffs' First Amendment claim . . . is not that the Unions acquired property. Instead, [it] is premised upon their right not to be compelled by the government to associate with the Unions' expressive activities."[38]That is, their claim stems from the dignitary harm that comes from being compelled to support speech with which they disagree, not the taking of their property.

         There are other common law torts with scienter elements that can be analogized to Plaintiffs' claim. Tortious interference with a contract is one such cause of action:

The wages from which Plaintiffs' agency fees were deducted were a contractual debt owed to Plaintiffs by their employer under the collective bargaining agreement. In 1871, such a debt could not provide the basis for a conversion claim. Instead, a plaintiff would have had to pursue a claim based on the third party's interference with the employer's satisfaction of its contractual obligations--- and malice or lack of justification was an element of [that tort] at common law.[39]

         Abuse of process is also analogous to Plaintiffs' First Amendment claim. It is a "cause of action against private defendants for unjustified harm arising out of the misuse of governmental processes."[40] Here, Plaintiffs' claim against the Union Defendants depends on the use of governmental processes: their "invocation of Alaska statutes authorizing deduction of agency fees from employees' paychecks and transmission of those fees to the [Union Defendants]."[41] At common law, an abuse of process claim requires the plaintiff to establish that the defendant acted with malice or without probable cause. Given the array of common law torts with scienter elements that can be analogized to Plaintiffs' claim, the good-faith defense would be available to the Union Defendants under Plaintiffs' approach.

         Plaintiffs also assert that the defense is further limited in that it should only protect defendants from legal claims, as opposed to equitable ones. Plaintiffs argue that because they seek repayment from the Union Defendants based on equitable considerations, the defense cannot apply here. Plaintiffs' position is unavailing under the case law. Furthermore, as the Union Defendants persuasively argue in their reply brief:

Plaintiffs had no expectation of receiving the fair share fees paid to the Unions, and Plaintiffs already have received the benefits of collective bargaining representation paid for with those fees. Requiring the Unions to pay those funds to Plaintiffs as an equitable remedy would 'stand[ ] that remedy on its head.'"[42]

         Plaintiffs' argument is also flawed in that the relief they seek does in fact sound in law. Their fair-share fees paid for ongoing costs of representation the Union Defendants provided on their behalf. There is no segregated fund to which Plaintiffs' payments can now be traced, and therefore any relief would be paid from the Union Defendants' general assets. A "personal claim against the defendant's general assets . . . is a legal remedy, not an equitable one."[43]

         Given that the good faith defense is indeed available to private defendants in § 1983 cases, the court must consider whether it in fact shields the Union Defendants from monetary liability here. In line with the three other district courts that have applied the defense under nearly identical facts, the court concludes that it does. As discussed above, "traditional principles of equity and fairness . . . underpin the [good faith] defense."[44] The Union Defendants collected fair-share fees in accordance with PERA and in accordance with then-binding Supreme Court precedent that upheld the constitutionality of such fees. "It would be highly inequitable to hold private parties retroactively liable for § 1983 damages in such a circumstance."[45]

         Plaintiffs argue that the good faith defense should not apply to the facts here because the Union Defendants should have known that the Supreme Court was poised to overturn Abood given dicta in the Court's cases over the past six years. They argue it was beyond question that the Court had "grave misgivings about the constitutionality of public-sector agency shops" and the Union Defendants should not have continued to collect fees pursuant to these arrangements in the face of such uncertainty, which therefore precludes any argument that they collected fees in good faith.[46] But "reading the tea leaves of Supreme Court dicta has never been a precondition to good faith reliance on governing law."[47] Barring the use of the good-faith defense on a private defendant who relied on Supreme Court precedent to justify its conduct based on the likelihood of the Supreme Court overruling that precedent would indeed "imperil the rule of law."[48]

         Plaintiffs argue that, if nothing else, it is improper to dismiss a claim based on the good-faith defense pursuant to Rule 12(b)(6). They assert that the defense is a subjective one that requires evidence of the defendant's actual state of mind. Therefore, they believe they need an opportunity to gather evidence as to what the Union Defendants subjectively believed about the continued lawfulness of such fees; that is, whether they understood such fees to be "constitutionally dubious."[49] Such evidence, they assert, would prove whether the Union Defendants were indeed acting in good faith or whether they were just collecting as much money as they could before the inevitable overruling of Abood. Again, this argument has been considered and correctly rejected as unworkable by the other courts addressing this same issue in these circumstances:

Admittedly, the subjective state of mind of a party asserting good faith is a common inquiry in cases discussing the defense. . . . But applying the subjectivity standard to this case results in a perverse outcome, if followed to its logical conclusion. Assuming that the Union Defendant (or, more accurately, an employee of the union), subjectively believed the Supreme Court would not overrule Abood, the Union Defendant's collection of [fair-share] fees, up until Janus, would be shielded by the good faith defense, but not so if the same employee instead subjectively believed (correctly) that the Supreme Court would overrule Abood. . . . Inviting discovery on the subjective anticipation of an unpredictable shift in the law undermines the importance of observing existing precedent and ignores the possibility that prevailing jurisprudential winds may shift. . . . The good faith defense should apply here as a matter of law.[50]

         It is indisputable that the Union Defendants' collection of fair-share fees was lawful under state statute and then-binding Supreme Court precedent. No amount of discovery would prove otherwise.

         Relatedly, Plaintiffs argue that dismissal is premature because the Union Defendants have not shown that its pre-Janus collection of fees from non-union members complied with Abood's restriction on the use of these fees for non-ideological activities only. They assert that discovery is needed on this compliance issue before the Union Defendants can establish a good-faith defense. Their argument is without merit. As noted by the Union Defendants "Plaintiffs do not allege the Unions failed to comply with Abood. Instead, Plaintiffs seek a refund of all fees the Unions received in reliance on Abood."[51] Their argument that discovery is needed on a different claim for different relief on a different class before the court can apply the good-faith defense simply does not track.

         C. Monetary relief for union dues ...


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