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County Can Claim “Good Faith” Defense To Employees’ Claim For Refund Of Agency Fees
In 2018, the U.S. Supreme Court held in Janus v. American Federation of State, County, & Municipal Employees, Council that a union’s compulsory collection of agency fees violated the First Amendment. This holding overruled nearly 40 years of case law precedent.
In response to Janus, several public-sector employees filed a class action lawsuit under the federal civil rights law at 42 USC Section 1983 seeking to retroactively recover any agency fees that the Santa Clara County Correctional Peace Officers Association and Santa Clara County took from their salaries. The U.S. district court dismissed the action, holding that the parties’ “good faith” reliance on the law pre-Janus law meant that they need not return the agency fees.
In a subsequent case, Danielson v. Inslee, the Ninth Circuit held that private parties, including unions, may invoke an affirmative defense of good faith to retroactive monetary liability under Section 1983 if they acted in direct reliance on then-binding U.S. Supreme Court precedent and presumptively-valid state law.
However, the question of whether the “good faith” defense applied to municipalities remained open, and this appeal was filed. The Ninth Circuit concluded that, because unions get a good faith defense under Danielson to a claim for a refund of pre-Janus agency fees, and municipalities’ tort liability for proprietary actions is the same as private parties, Santa Clara County was also entitled to a good faith defense to Section 1983 liability for collecting pre-Janus agency fees.
Rejecting the employees’ arguments, the court noted that the County was only an intermediary that merely facilitated the collection of agency fees from the employees’ paychecks and transferred the funds to the Union at the Union’s request. Given the County’s limited role, the court declined to hold the municipality to a different standard than the Union.
Moreover, the County’s conduct to collect and transfer agency fees had been directly authorized under both state law and decades of U.S. Supreme Court jurisprudence. The very purpose of a “good faith” defense is to allow private parties to rely on binding judicial pronouncements and state law without concern that they will be held liable retroactively due to changing precedents. The Ninth Circuit concluded that same principles of equity and fairness applied to municipalities. Accordingly, it affirmed the lower court’s dismissal of the case.
Allen v. Santa Clara County Correctional Peace Officers Association, 38 F.4th 68 (9th Cir. 2022).