An employee who protested the deduction of “fair-share” union fees from his paycheck is not entitled to damages in recovery for the amount he paid, despite the Supreme Court of the United States’ decision that requiring such fees violates the First Amendment. Because the fees were paid before that decision, the union successfully invoked a “good faith” defense that it had reasonably relied on established law, according to a federal circuit court.
In the 1977 decision of Abood v. Detroit Board of Education, the Supreme Court “authorized state-government entities and unions to enter into agreements under which the unions could receive fair-share fees from nonmembers to cover the costs incurred when the union negotiated or acted on their behalf over terms of employment,” in the circuit court’s words. Those same fees, however, “could not support any of the union’s political or ideological activities,” in recognition of nonmembers’ First Amendment rights. For the next 41 years, the decision in Abood stood as binding precedent.
In 2018, the Supreme Court overturned Abood. The lawsuit in Janus v. American Federation of State, County, and Municipal Employees, Council 31 challenged the Illinois Public Labor Relations Act, which authorized public employers and unions to enter into collective bargaining agreements that include fair-share fee provisions. The plaintiff was a child-support specialist at the Illinois Department of Healthcare and Family Services. The American Federation of State, County and Municipal Employees, Council 31 (AFSCME) was the exclusive representative of the plaintiff’s employee unit. The plaintiff exercised his right not to join the union and objected to the $44.58 in fair-share fees that his employer deducted from his paycheck each month.
The plaintiff argued that the state’s compulsory fair-share system violated the First Amendment. Although the lower courts rejected that argument, the Supreme Court took the case and overturned Abood. Specifically, the Court held that fair-share fee arrangements that “‘subsidize private speech on matters of substantial concern’ are inconsistent with the First Amendment rights of objectors, no matter what interest the state identifies in its authorizing legislation,” according to the circuit court. The Supreme Court remanded the case to the district court for further proceedings, including those related to remedy.
Relying on 42 U.S.C. § 1983, the plaintiff requested damages from AFSCME in the amount of all fair-share fees he paid before the Supreme Court’s 2018 decision. The U.S. District Court for the Northern District of Illinois entered summary judgment for AFSCME, observing that “the statute on which defendant relied had been considered constitutional for 41 years,” and it was therefore entitled to an affirmative defense based on good faith. The plaintiff appealed, and the U.S. Court of Appeals for the Seventh Circuit affirmed.
The Seventh Circuit recognized that “every federal appellate court to have decided the question has held that, while a private party acting under color of state law does not enjoy qualified immunity from suit, it is entitled to raise a good-faith defense to liability under section 1983.” These courts include the Second, Third, Fifth, Sixth, and Ninth Circuits. Ultimately, the Seventh Circuit followed suit.
The Supreme Court’s 2018 decision in Janus “completely changed the landscape for unions in terms of financial support” looking forward, notes Jeffrey Brodin, Phoenix, AZ, cochair of the ABA Section of Litigation’s Employment & Labor Relations Committee. But while that decision did not come as a surprise, now there is a “second blow, which is still developing for the unions, which is nonmembers suing to recoup their dues paid prior to the decision.” This money, adds Brodin, has already been spent by the unions, “so it could have been financially crippling to the unions if the decision went the other way.”
“The remedy for these cases is declaratory and injunctive relief,” suggests Marco A. Pulido, Costa Mesa, CA, newsletter editor for the Section of Litigation’s Appellate Practice Committee. “In terms of retrospective monetary liability for the fees that were paid before, there was something that the union was doing on behalf of both union members and non-union members,” observes Pulido. “In other words, the money didn’t just go nowhere—it had some purpose, and that purpose was representing both union and non-union members.”
“Six circuit courts have looked at the issue of the good faith defense in a section 1983 damage action, and they’ve all ruled the same as Janus; there isn’t one circuit that’s ruled the other way,” notes Brodin. Despite this trend, section 1983 lawsuits to recover payments may continue.
The possibility of a case that declines to apply the good faith defense will depend on the facts, adds Pulido. In Janus, “it was undisputed that as soon as the Supreme Court decision was issued, the fees were no longer being collected by the union,” he says. But in a future case, “if a public sector union didn’t stop collecting the fees, I think the good faith defense question would be different.”
If a union finds itself defending a lawsuit, Brodin suggests considering the cost of litigating when contemplating a possible early settlement. “On one hand, from the unions’ perspective, this is something you’d want to take to court and defend vigorously,” he opines. “But on the other hand, that’s costly, and some of these lawsuits are probably small amounts to settle.”
