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Non-union employees can’t recoup pre-‘Janus’ ‘agency’ fees

Joining others, 1st Circuit rejects retrospective relief

State workers who refused to join the public employees’ union were not entitled to recoup union “agency fees” that they were compelled to pay before the U.S. Supreme Court ruled that such arrangements were unconstitutional, the 1st U.S. Circuit Court of Appeals has ruled.

In its 2018 decision in Janus v. American Federation of State, County & Municipal Employees, Council 31, the Supreme Court held that the extraction of agency fees from public workers who have opted out of their union and thus do not pay dues — but still purportedly benefit from union bargaining efforts — violates such workers’ First Amendment rights.

In so holding, the Supreme Court overruled its 1977 Abood v. Detroit Board of Education decision, in which it found that non-members could be required to pay agency fees as a condition of employment so long as such funds were used for collective bargaining purposes and not for political purposes.

The 1st Circuit case involved a claim brought by New Hampshire state workers who argued that they suffered a constitutional violation regardless of when the fees were assessed and that they were therefore entitled to retrospective relief under §1983, the federal statute empowering individuals to sue public entities for civil rights violations.

A federal District Court judge dismissed the action for failure to state a claim, which the 1st Circuit affirmed.

“[The plaintiffs] develop no argument — nor does any occur to us — why close attention to the values and purposes of the First Amendment right against compelled speech and association supports the conclusion that the Congress that enacted §1983 must have meant to create a claim for damages for its retroactive violation when the violation results in payments made pursuant to a lawful-when-invoked, state-backed process,” Judge David J. Barron wrote for the court.

In affirming, Barron added, the 1st Circuit aligned itself with every other circuit to address whether “such a backward-looking, Janus-based claim is cognizable under §1983.”

The 22-page decision is Doughty v. State Employees’ Association of New Hampshire, SEIU Local 1984, CTW, CLC.

‘Eminently fair’

Patrick Semmens, vice president of the National Right to Work Foundation, which litigated the case on the plaintiffs’ behalf, said in an emailed statement that the decision was disappointing and his organization anticipated filing an appeal.

“It is vital that the Supreme Court take up this issue to disabuse all lower court judges of this flawed argument and to ensure that the victims of union officials’ First Amendment violations finally get some justice.”

— Patrick Semmens, National Right to Work Foundation

“We’ve always expected this issue to be ultimately decided at the Supreme Court,” Semmens added. “The so-called ‘good faith’ defense, which permits union bosses to continue ignoring an established Supreme Court precedent, has already been rejected by two federal judges. It is vital that the Supreme Court take up this issue to disabuse all lower court judges of this flawed argument and to ensure that the victims of union officials’ First Amendment violations finally get some justice.”

Leon Dayan of Washington, D.C., who represented the union, could not be reached for comment.

But labor attorney Dennis M. Coyne of Southborough, Massachusetts, described the decision as “eminently fair.”

“The alternative, as noted by the District Court below, would have been to penalize unions for complying with the Supreme Court’s pre-Janus black-letter law, which certainly would have been unjust,” Coyne said, adding that because §1983 allows for attorneys’ fees and punitive damages, a decision against the union could have resulted in a “particularly harsh outcome.”

Coyne also noted that while the action in the case was brought against the union, employers should be pleased with the ruling, too.

“The employer is typically the party that withholds fees and dues from a worker’s paycheck,” Coyne explained. “Thus, it seems that public employers are similarly not subject to suit for pre-Janus agency fee deductions.”

Edward C. Roy Jr., a labor lawyer in North Kingstown, Rhode Island, also thought the decision made sense.

“The key fact is that the union was required under the applicable Supreme Court guidance to deduct agency fees from the pay of non-union employees,” Roy said. “It would be illogical to ‘break the bank’ of unions that merely followed the law.”

North Kingstown practitioner Marc B. Gursky pointed out that the five other federal circuits to consider whether “free riders” (non-union workers enjoying the fruits of union bargaining efforts) could make retroactive Janus-based claims for §1983 damages concluded that they could not.

“These folks are like Rudy Giuliani looking for voter fraud,” Gursky quipped in reference to organizations funding and litigating such claims. “Unfortunately, anti-union organizations will continue to make these claims as long as there’s dark money available to finance them.”

Compelled payments

Under New Hampshire state law, unions that serve as the exclusive representative of a bargaining unit for public employees must also fairly represent non-union employees of the unit during the bargaining process.

Before Janus overruled Abood in 2018, the New Hampshire Supreme Court held that state law impliedly permitted unions and public employers to negotiate collective bargaining agreements that called for non-union employees to pay agency fees.

The state Supreme Court also held that, under Abood, public employers did not violate the First Amendment by making payment of agency fees in connection with such agreements a condition of employment.

The State Employees’ Association of New Hampshire, which represented employees at the respective workplaces of plaintiffs Patrick Doughty and Randy Severance, received agency fees from workers who, like the plaintiffs, had opted out of the union.

The employer collected the fees through paycheck deductions, which ended after the Supreme Court decided Janus.

Nonetheless, on Jan. 14, 2019, the plaintiffs brought a class action against the union in U.S. District Court, requesting retroactive application of Janus. They claimed that principles of justice and equity entitled them under §1983 to compensatory damages, refunds or restitution.

The union moved to dismiss the action for failure to state a claim.

Judge Paul J. Barbadoro granted the motion, expressing skepticism that the union should be required to pay damages for acting consistently with state-law requirements and Supreme Court precedent at the time.

Specifically, the judge analogized the §1983 claim in the case to the common-law tort of abuse of process, which defendants can challenge by showing that they were acting in good faith. The judge found that Doughty and Severance failed to rebut the defense with a showing of malice.

The plaintiffs appealed.

No retrospective application

On appeal, the plaintiffs argued that §1983 is “absolute and unqualified” on its face, with no mention of any “privileges, immunities, or defenses that may be asserted.”

Thus, they contended, there was no basis to deny them a damages remedy for the federal constitutional violation they suffered.

The 1st Circuit rejected that argument, pointing out that a number of other circuits had likened retroactive Janus-based damages claims under §1983 to common-law abuse-of-process claims, which require a plaintiff to show malicious or improper use of process by the defendant.

In those other cases, Barron observed, the courts rejected such claims because Abood was still in force at the time the agency fees were collected.

“[T]hus the malicious- or improper-use-of-process element … could not be satisfied,” he said.

Meanwhile, Barron continued, the plaintiffs’ attempts to distinguish their claim from common-law abuse-of-process claims “might have force” if they could show that the common law was “as indifferent to reliance interests” as the plaintiffs suggested.

However, the judge said, “Doughty and Severance’s attempt to make that case with reference to the common-law tort of conversion — which does not require a showing of malice and which they contend supplies a more apt analogy to their Janus-based claim — is not convincing.”

Accordingly, the court concluded, the District Court’s judgment should be affirmed.

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