Allen v. Santa Clara County Correctional Peace Officers Association

1

2

3

4

5

6

7

8 UNITED STATES DISTRICT COURT

9 EASTERN DISTRICT OF CALIFORNIA

10

11 SEAN ALLEN, et al., No. 2:18-cv-02230-MCE-CKD

12 Plaintiffs,

13 v. ORDER

14 SANTA CLARA COUNTY

CORRECTIONAL PEACE OFFICERS

15 ASSOCIATION, et al.,

16 Defendants.

17

18 Through the present class action, Plaintiffs Sean Allen, Stanley Graham, Bradley

19 Taylor, Juanita Wiggins, James Kirkland, Eric Liddle, and Antonio Richardson

20 (collectively “Plaintiffs”) seek to recover so-called “fair share” fees on behalf of

21 themselves and on behalf of a putative class of all former and current public employees

22 represented by Defendant Santa Clara County Correctional Peace Officers Association

23 (“SCCCPOA” or the “Union”). According to Plaintiffs, those fees were involuntarily

24 collected under Janus v. AFSCME Council 31, 138 S. Ct. 2448 (2018) to pay for

25 collective bargaining activities in violation of the First Amendment of the United States

26 Constitution. In addition, Plaintiff Allen contends his constitutional rights were further

27 violated when, post-Janus, the Union deducted membership dues from two of his

28 paychecks. Finally, Plaintiffs contend that California’s exclusive representation laws

1 further violate their constitutional rights.1 Presently before the Court are Defendants’ two

2 Motions to Dismiss filed pursuant to Federal Rules of Civil Procedure 12(b)(1) and

3 12(b)(6),2 which, for the following reasons, are GRANTED.3 ECF Nos. 32, 38.

4

5 STANDARDS

6

7 A. Rule 12(b)(1)

8 Federal courts are courts of limited jurisdiction, and are presumptively without

9 jurisdiction over civil actions. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,

10 377 (1994). The burden of establishing the contrary rests upon the party asserting

11 jurisdiction. Id. Because subject matter jurisdiction involves a court’s power to hear a

12 case, it can never be forfeited or waived. United States v. Cotton, 535 U.S. 625, 630

13 (2002). Accordingly, lack of subject matter jurisdiction may be raised by either party at

14 any point during the litigation, through a motion to dismiss pursuant to Rule 12(b)(1).

15 Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); see also Int’l Union of Operating

16 Eng’rs v. Cnty. of Plumas, 559 F.3d 1041, 1043-44 (9th Cir. 2009). Lack of subject

17 matter jurisdiction may also be raised by the district court sua sponte. Ruhrgas AG v.

18 Marathon Oil Co., 526 U.S. 574, 583 (1999). Indeed, “courts have an independent

19 obligation to determine whether subject matter jurisdiction exists, even in the absence of

20 a challenge from any party.” Id.; see Fed. R. Civ. P. 12(h)(3) (requiring the court to

21 dismiss the action if subject matter jurisdiction is lacking).

22 ///

23

24 1 Plaintiffs concede this final claim should be dismissed. Accordingly, Defendant’s Motion is

GRANTED as to this cause of action.

25

2 All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless

otherwise noted.

26

3 Given this Court’s disproportionately high case load, and in the interest of conserving judicial

27

resources and expediting a decision in this case, the Court will not recount details with which the parties

are intimately familiar. To be clear, the Court has considered all evidence and arguments in the record,

28 but it limits its written decision to only that which is necessary to resolve the parties’ instant arguments.

1 There are two types of motions to dismiss for lack of subject matter jurisdiction: a

2 facial attack, and a factual attack. Thornhill Publ’g Co. v. Gen. Tel. & Elec. Corp.,

3 594 F.2d 730, 733 (9th Cir. 1979). Thus, a party may either make an attack on the

4 allegations of jurisdiction contained in the nonmoving party’s complaint, or may

5 challenge the existence of subject matter jurisdiction in fact, despite the formal

6 sufficiency of the pleadings. Id.

7 When a party makes a facial attack on a complaint, the attack is unaccompanied

8 by supporting evidence, and it challenges jurisdiction based solely on the pleadings.

9 Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). If the motion to

10 dismiss constitutes a facial attack, the Court must consider the factual allegations of the

11 complaint to be true, and determine whether they establish subject matter jurisdiction.

12 Savage v. Glendale High Union Sch. Dist. No. 205, 343 F.3d 1036, 1039 n.1 (9th Cir.

13 2003). In the case of a facial attack, the motion to dismiss is granted only if the

14 nonmoving party fails to allege an element necessary for subject matter jurisdiction. Id.

15 However, in the case of a factual attack, district courts “may review evidence beyond the

16 complaint without converting the motion to dismiss into a motion for summary judgment.”

17 Safe Air for Everyone, 373 F.3d at 1039.

18 In the case of a factual attack, “no presumptive truthfulness attaches to plaintiff’s

19 allegations.” Thornill, 594 F.2d at 733 (internal citation omitted). The party opposing the

20 motion has the burden of proving that subject matter jurisdiction does exist, and must

21 present any necessary evidence to satisfy this burden. St. Clair v. City of Chico,

22 880 F.2d 199, 201 (9th Cir. 1989). If the plaintiff’s allegations of jurisdictional facts are

23 challenged by the adversary in the appropriate manner, the plaintiff cannot rest on the

24 mere assertion that factual issues may exist. Trentacosta v. Frontier Pac. Aircraft Ind.,

25 Inc., 813 F.2d 1553, 1558 (9th Cir. 1987) (quoting Exch. Nat’l Bank of Chi. v. Touche

26 Ross & Co., 544 F.2d 1126, 1131 (2d Cir. 1976)). Furthermore, the district court may

27 review any evidence necessary, including affidavits and testimony, in order to determine

28 whether subject matter jurisdiction exists. McCarthy v. United States, 850 F.2d 558, 560

1 (9th Cir. 1988); Thornhill, 594 F.2d at 733. If the nonmoving party fails to meet its

2 burden and the court determines that it lacks subject matter jurisdiction, the court must

3 dismiss the action. Fed. R. Civ. P. 12(h)(3).

4 B. Rule 12(b)(6)

5 On a motion to dismiss for failure to state a claim under Federal Rule of Civil

6 Procedure 12(b)(6), all allegations of material fact must be accepted as true and

7 construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins.

8 Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) “requires only ‘a short and plain

9 statement of the claim showing that the pleader is entitled to relief’ in order to ‘give the

10 defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell

11 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41,

12 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require

13 detailed factual allegations. However, “a plaintiff’s obligation to provide the grounds of

14 his entitlement to relief requires more than labels and conclusions, and a formulaic

15 recitation of the elements of a cause of action will not do.” Id. (internal citations and

16 quotations omitted). A court is not required to accept as true a “legal conclusion

17 couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

18 Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief

19 above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright &

20 Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the

21 pleading must contain something more than “a statement of facts that merely creates a

22 suspicion [of] a legally cognizable right of action”)).

23 Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket

24 assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n.3 (internal citations and

25 quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard

26 to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of

27 the nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing Wright &

28 Miller, supra, at 94, 95). A pleading must contain “only enough facts to state a claim to

1 relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have not nudged their

2 claims across the line from conceivable to plausible, their complaint must be dismissed.”

3 Id. However, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge

4 that actual proof of those facts is improbable, and ‘that a recovery is very remote and

5 unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

6 C. Leave to Amend

7 A court granting a motion to dismiss a complaint must then decide whether to

8 grant leave to amend. Leave to amend should be “freely given” where there is no

9 “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice

10 to the opposing party by virtue of allowance of the amendment, [or] futility of the

11 amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v.

12 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to

13 be considered when deciding whether to grant leave to amend). Not all of these factors

14 merit equal weight. Rather, “the consideration of prejudice to the opposing party . . .

15 carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183,

16 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that

17 “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group,

18 Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006,

19 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir.

20 1989) (“Leave need not be granted where the amendment of the complaint . . .

21 constitutes an exercise in futility . . . .”).

22

23 ANALYSIS

24

25 Plaintiffs’ first cause of action for refund of unconstitutionally compelled payments

26 fails because Defendants are entitled to a good faith defense. See Hernandez v.

27 AFSCME California, 386 F. Supp. 3d 1300, 1304 (E.D. Cal. 2019). The thoughtful

28 analysis in Hernandez is directly on point:

1 The Ninth Circuit has held that private parties may be entitled

to a good-faith defense to a claim under Section 1983 where

2 they “did [their] best follow the law and had no reason to

suspect that there would be a constitutional challenge to [their]

3 actions.” See Clement v. City of Glendale, 518 F.3d 1090,

1097 (9th Cir. 2008). In the agency fees context, not only did

4 unions have authorization under state statute, but the practice

of collecting agency fees in this manner had been upheld for

5 decades as constitutional by the United States Supreme

Court. See Abood [v. Detroit Bd. of Educ.], 431 U.S. [209,]

6 222-23 [(1977)]; see also Locke v. Karass, 555 U.S. 207, 213

(2009) (describing Abood’s rule, as reaffirmed in subsequent

7 cases, as “a general First Amendment principle”). Thus, the

union is entitled to the good-faith defense as a matter of

8 law. See Lusnak v. Bank of Am., N.A., 883 F.3d 1185, 1194

n.6 (9th Cir. 2018) (observing that affirmative defenses may be

9 raised on a motion to dismiss where they do not implicate

disputed issues of fact).

10

Faced with this good-faith defense, plaintiffs seek to avoid it by

11 characterizing their demand for a refund as an equitable claim

for restitution rather than a legal claim for damages. (See SAC

12 ¶ 141.) They argue that defenses like qualified immunity and

good faith are categorically inapplicable to claims for equitable

13 relief. See Wood v. Strickland, 420 U.S. 308, 314 n.6

(1975), overruled on other grounds, Harlow v. Fitzgerald,

14 457 U.S. 800, 102 S. Ct. 2727, 73 L. Ed. 2d 396

(1982) (“[I]mmunity from damages does not ordinarily bar

15 equitable relief.”). Even if this distinction is well taken,

plaintiffs’ refund claim fails for two independent reasons.

16

First, plaintiffs cannot simply plead around defenses by

17 labeling the proposed remedy as equitable rather than legal.

Instead, this court must look to “the substance of the remedy

18 sought rather than the label placed on that remedy.” Depot,

Inc. v. Caring for Montanans, Inc., 915 F.3d 643, 661 (9th Cir.

19 2019) (citations and quotations omitted). It is uncontroverted

that plaintiffs’ claim seeks payment out of the general assets

20 of the union defendants. And the Supreme Court has stressed

that recovering money out of a defendant’s general assets, as

21 opposed to a segregated fund, “is a legal remedy, not an

equitable one.” Montanile v. Bd. of Tr. of Nat. Elevator Indus.

22 Health Benefit Plan, ––– U.S. ––––, 136 S. Ct. 651, 658, 193

L. Ed. 2d 556 (2016) (emphasis in original); see also Great-W.

23 Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 212-14,

122 S. Ct. 708, 151 L. Ed. 2d 635 (2002) (same).

24

Plaintiffs do not allege that the union defendants intentionally

25 comingled agency fees with general funds to avoid claims for

restitution. Further, unions dissipated any agency fees on

26 nontraceable items. See Montanile, 136 S. Ct. at 658 (stating

that expenditure on nontraceable items “destroys an equitable

27 lien”). Plaintiffs’ theory under Janus depends on the fact that

the fees and dues collected were expended for expressive

28 activities with which they disagreed. See Babb v. Cal.

1 Teachers Ass’n, No. 2:18-cv-06793 JLS DFM, 378 F. Supp. 3d

857, 876, 2019 WL 2022222, at *8 (C.D. Cal. May 8,

2 2019) (“[I]t is not the case that the agency fees remain in a

vault, to be returned like a seized automobile.”). Accordingly,

3 because plaintiffs’ proposed remedy is legal in nature, the

union defendants’ good faith bars relief.

4

Second, the court would reach the same conclusion in a suit

5 in equity. “The essence of equity jurisdiction” is that federal

courts have the flexibility “to mould each decree to the

6 necessities of the particular case.” Hecht Co. v. Bowles,

321 U.S. 321, 329 (1944). Even in constitutional adjudication,

7 “equitable remedies are a special blend of what is necessary,

what is fair, and what is workable.” Lemon v. Kurtzman,

8 411 U.S. 192, 200 (1973) (plurality). Given these

considerations, “[i]t is well established that reliance interests

9 weigh heavily in the shaping of an appropriate equitable

remedy.” Id. at 203.

10

The reliance interests here are quite compelling. The union

11 defendants relied on Supreme Court precedent and a state

statute that explicitly authorized the challenged

12 practice. See id. at 209, 93 S. Ct. 1463 (“[S]tate officials and

those with whom they deal are entitled to rely on a

13 presumptively valid state statute, enacted in good faith and by

no means plainly unlawful.”). Unions throughout the country

14 collected billions of dollars under Abood’s rule. See Janus,

138 S. Ct. at 2486. Allowing the recoupment of such a large

15 sum of money would have potentially disruptive consequences

that could threaten the operations of unions and significantly

16 deplete their treasuries. See Am. Trucking Ass’ns, Inc. v.

Smith, 496 U.S. 167, 182-83, 110 S. Ct. 2323, 110 L. Ed. 2d

17 148 (1990) (plurality) (recognizing these as cognizable

equitable interests).

18

Moreover, these plaintiffs presumably received some benefits

19 from the fees they paid, through the representation provided

by the unions. While the Supreme Court held in Janus that

20 those benefits could not withstand First Amendment scrutiny,

the majority did not deny the fact that nonunion members

21 received such benefits. See 138 S. Ct. at 2466-69. It must

also be observed here that “plaintiffs do not propose to give

22 back the benefits that the union’s efforts bestowed on

them.” Gilpin v. AFSCME, 875 F.2d 1310, 1316 (7th Cir.

23 1989). Consequently, granting plaintiffs a full refund would

stand the equitable remedy on its head. See id. Based on

24 these observations, it would be neither fair nor workable to

entertain plaintiffs’ claim.

25

Nevertheless, plaintiffs argue that a defendant is never allowed

26 to enrich itself by keeping property it took in violation of

another’s constitutional rights. See, e.g., United States v.

27 Windsor, 570 U.S. 744, 775, 133 S. Ct. 2675, 186 L. Ed. 2d

808 (2013) (ordering the United States to refund taxes it

28 collected in reliance on the Defense of Marriage Act); United

1 States v. Lewis, 478 F.2d 835, 836 (5th Cir. 1973) (stating that

fines collected under a statute that is subsequently determined

2 to be unconstitutional must be repaid when suit is brought to

recover them). Those cases, however, do not stand for such a

3 sweeping proposition. Unlike in Windsor and Lewis, the union

defendants are private parties who were not responsible for

4 passing the legislation that is now unconstitutional. Instead,

they relied on the type of statute the Supreme Court explicitly

5 approved of in Abood.

6 Id. at 1304-06. This foregoing analysis applies just as forcefully to Plaintiffs’ claims for

7 refunds here, which are materially identical. Accordingly, Plaintiffs’ claims are likewise

8 DISMISSED.

9 Nor is Plaintiff Allen entitled to relief on the second cause of action for violation of

10 California Government Code § 1157.12(b). According to the First Amended Complaint

11 (“FAC”), “[a]fter Janus, the union violated Mr. Allen’s constitutional rights by taking

12 membership dues from his paycheck even though the union knew full well that Mr. Allen

13 was not a member of the union.” FAC, ¶ 55. After being informed that it should cease

14 withholding fees from Mr. Allen’s paycheck, the union purportedly withdrew dues from

15 two of his paychecks before it rectified the situation and refunded those moneys. Id.,

16 ¶ 26. It is unclear to the Court how the union’s de minimis deduction and return of funds

17 from two paychecks—funds that were apparently not expended toward the union’s

18 collective bargaining purposes in any event—give rise to a constitutional violation.

19 Regardless, those funds were returned, and Mr. Allen’s claim is thus moot.4

20 ///

21 ///

22 ///

23 ///

24 ///

25 ///

26

4 Mr. Allen’s general challenge to § 1157.12(b) as unconstitutional on its face likewise fails

because he is no longer a union member and there is no indication in the complaint that he ever intends to

27

resume any union-related deductions. Accordingly, he lacks standing to challenge a statute where there is

no apparent risk it will be enforced against him. Even if that was not the case, however, Plaintiff has failed

28 to identify any constitutional provision actually violated by this statute.

1 CONCLUSION

2

3 For the foregoing reasons, Defendants’ Motions to Dismiss (ECF Nos. 32, 38) are

4 | GRANTED with leave to amend.° Not later than twenty (20) days following the date this

5 | Memorandum and Order is electronically filed, Plaintiffs may (but are not required to) file

6 | an amended complaint. If no amended complaint is timely filed, this action will be

7 | deemed dismissed with prejudice upon no further notice to the parties.

8 IT 1S SO ORDERED.

9 | Dated: September 10, 2019

41 MORRISON C. ENGLAND, J

UNITED STATES DISTRI

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27 8 Because oral argument was not of material assistance, the Court ordered this matter submitted

28 on the briefs. E.D. Cal. Local Rule 230(g).