WORK WITH US
Unions Are Not Required To Refund Agency Fees Paid Prior To Janus Decision
In Janus v. American Federation of State, County, & Municipal Employees, Council 31, 138 S.Ct. 2448 (2018), the U.S. Supreme Court (USSC) held that mandatory agency fees – fees non-member employees pay to the employee organization for its collective bargaining activities – are unconstitutional. Following the Janus decision, three public sector employees who were not members of their employee organization filed a class-action lawsuit against their union pursuant to 42 U.S.C. section 1983. The lawsuit sought declaratory and injunctive relief and reimbursement of the agency fees the employees had paid to the union. The employees argued that the union should return any agency fees paid prior to Janus because the fees were collected unlawfully and should have always been considered unconstitutional.
The union filed a motion to dismiss the claims for declaratory and injunctive relief as moot based on Janus. The union argued that the court should also dismiss the claim for the reimbursement of the fees because the union had collected them in good faith reliance on state law and then-binding USSC precedent. Prior to Janus, the USSC had concluded that agency fees were permissible. The district court agreed and dismissed the employees’ claims. The employees appealed the dismissal of their claims for reimbursement of the fees paid.
On appeal, the employees argued that the union could not raise “good faith” as an affirmative defense to liability under 42 U.S.C. section 1983. First, they argued that the Court should disregard one of its prior decisions in favor of another, contrary decision. The Court explained why the holdings in its two decisions were consistent.
The employees argued that the good faith defense was inapplicable because they were seeking only restitution of the agency fees they paid and not damages. Again, the Ninth Circuit disagreed. It noted that their constitutional injury was “the intangible dignitary harm suffered from being compelled to subsidize speech they did not endorse. It is not the diminution in their assets from the payment of compulsory agency fees.” On that basis, the Ninth Circuit determined that the employees were in fact seeking compensatory damages, not true restitution of the agency fees they had paid.
Finally, in affirming the district court’s dismissal, the Ninth Circuit held that the union properly relied on both the state law and then-binding USSC precedent. For that reason, the Ninth Circuit determined that the union could use a good faith defense. The Ninth Circuit explained, “We hold that the Union is not retrospectively liable for doing exactly what we expect of private parties: adhering to the governing law of its state and deferring to the Supreme Court’s interpretations of the Constitution. A contrary result would upend the very principles upon which our legal system depends. The good faith affirmative defense applies as a matter of law, and the district court was right to dismiss [the] claim for monetary relief.”
Danielson v. Inslee (2019) 945 F.3d 1096.
The Danielson decision, together with California Government Code section 1159 (which provides public agencies immunity from employee claims for reimbursement of mandatory agency fees paid pre-Janus), effectively relieves public sector unions in California from liability for any pre-Janus agency fee deductions.