Petition for Writ of Certiorari — Prescott v. County of El Dorado
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ND, FILED
No.99- 8 #o 519 SEP 23 9
ai OFFICE OF THE CLERK
N_1H
Supreme Court of the United States
OCTOBER TERM, 1999
STEVEN PRESCOTT; ROBERT F. BERRY; CHERYL JONES:
KAREN PIERCE; AND CHRISTINE M. TURNEY,
Petitioners,
V.
COUNTY OF EL DORADO; KATHY LIBICKI: AND EL DORADO
COUNTY EMPLOYEES ASSOCIATION, LOCAL NO. i,
Respondents.
On Petition for Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit
PETITION FOR WRIT OF CERTIORARI
W. JAMES YOUNG*
c/o National Right to Work Legal
Defense Foundation, Inc.
8001 Braddock Road, Suite 600
Springfield, Virginia 22160
(703) 321-8516
ATTORNEY FOR PETITIONERS
*Counsel of Record
September 1999
q2¢°
II.
QUESTIONS PRESENTED
Do public employees possess standing to challenge, as void as
against Federal constitutional law and public policy, the legality
of one of the terms of the collective bargaining agreement
governing their terms and conditions of employment, in an
action under 42 U.S.C. § 1983 (West Supp. 1999)?
Is a collective bargaining agreement indemnifying a public
employer from liability arising from its enforcement of a forced-
unionism agreement absent compliance with “the constitutional
requirements for the ... collection of agency fees,” Teachers
Local No. | v. Hudson, 475 U.S. 292, 310 (1986), void as
against Federal constitutional law and public policy?
aa
PARTIES TO THE PROCEEDINGS BELOW
There were no parties to the proceedings in the court whose
judgment is sought to be reviewed other than the parties named in the
caption.
ait.
TABLE OF CONTENTS
Page
dag Valk w a a-ke ake wede oe i
PARTIES TO THE PROCEEDINGS BELOW ................... il
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CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED... 2
I WOM oc cc cede nenewasceasdeeceeues 2
oad heh cbs sha SAKE AN SD AeA ee OS 3
ih. MO sda na anecessedsedacouaenns 5
REASONS FOR GRANTING THE WRIT..............0000000: 9
I. THE IMPORTANT QUESTION AS TO EMPLOYEES’ STANDING
DIRECTLY ADDRESSES THE POWER OF INDIVIDUALS TO
PROTECT THEMSELVES AGAINST THE GOVERNMENT’S
IMPOSITION OF UNLAWFUL TERMS AND CONDITIONS OF
eee hae LoS bs wwe daikne hw eX 9
A. The Conflict With This Court’s “Standing”
TS cal Cc ce bh wily death etn Sins ss 10
B. The Conflict With This Court’s Decisions Specifying
Governmental Responsibilities When Enforcing An
Agency Shop Scheme .... 0... ccc cece ccesnes 15
«ty
TABLE OF CONTENTS — CONTINUED
C. The Conflict Among The | rrr rrr ey ee 18
Il. THERE IS WIDESPREAD CONFLICT AMONG THE CIRCUITS
AS TO WHETHER UNIONS MAY INDEMNIFY STATE AND
LOCAL GOVERNMENTS FOR THEIR CONSTITUTIONAL
TORTS WHEN ILLEGALLY ENFORCING FORCED-UNIONISM
(*. ..* 0 3, Sr ere ee ee ee ee a 22
A. The Pr rrr errr rrr rr er 22
B. The Importance Of The Issue .........-..--++--: 26
eile tree rea rere e rae Ce toe hk 28
APPENDICES
A. Decision of the United States Court of Appeals for the
Ninth Circuit (12 May 1999), reported at 177 F.3d
1102 (9th Cir. 1999)... .. cece eee eee e cence la
B. Final Judgment in a Civil Case Entered by the United
States District Court for the Eastern District of
California (1 April 1998) ..............- ee eee 20a
C. Opinion and Order Denying Defendants’ Motion to
Dissolve or Modify the Preliminary Injunction, and
Granting in Part and Denying in Part Plaintiffs’
Motion for Summary Judgment Entered by the United
States District Court for the Eastern District of Cali-
fornia (26 January 1998) ........-... sees eee 21a
TABLE OF CONTENTS — CONTINUED
Page
Order of the United States Court of Appeals for the
Ninth Circuit Denying Plaintiffs-Appellants’ Petition
for Rehearing and Suggestion for Rehearing En Banc
NTN és k tradndg bea 37a
United States Constitution, Article III ........... 38a
United States Constitution, First Amendment ..... 39a
United States Constitution, Fourteenth
etistun-oncesesac Ht RE Te ee Pee PP een 40a
Civil Rights Act of 1871, 42 U.S.C.
§ 1983 (West nna 4la
Meyers-Milias-Brown Act,
Cal. Gov’t Code § 3502.5(a) .............. 42a
- Vi -
TABLE OF AUTHORITIES
Cases Page
Abood v. Detroit Board of Education,
Rt Se ree ere 17, 22
Air Line Pilots Association v. Miller,
$23 U.S. O66, 116 G. Ch; PACT och cas nccsseccas 16
Allen v. Wright,
SGRUS.. Toe CUS 5 6 660640605 ckka keer 9
Bowman v. Loperena,
SUS DB. Bee CTE 0 a ohn thane tansecasevasnevaniabs 2
Bowsher v. Synar,
STB US; FRC 6 v6 bcs ces ulonties este wesete 17
Brewer v. Lewis,
SOP F286 162 COUR CO. FUSE cc eccwencvesaseccaceus 2!
Carey v. Piphus,
GBS TB Be res oo ab 6055.65 25854 004 ss A ee 24
City of Newport v. Fact Concerts, Inc.,
GSS ULB. DOr Ce ovine 6050-40 s eas skh ackeneeteees 24
Clements v. Fashing, ae
SST US, SEP si 6 CR 6 Cae hs 0h SS ices seenseuces 12 ;
Clinton v. City of New York,
524 U.S. 417, 118 S. Ct. 2091 (1998) ........... = 08, 37
ec S™~—
- Vil -
TABLE OF AUTHORITIES — CONTINUED
Page
Cramer v. Matish,
924 F.2d 1057 (table), 1990 WL
Pe Gils PID oo ois occ cvinnecencacea 20, 24, 25
District of Columbia v. Carter, |
ee ET ch vb dese seer ne scdedeneaenenaes 23
Dixon v. City of Chicago,
Se ee Se CS BED Gakcc uc dndeddpaveaewenna 24
Ellis v. Railway Clerks,
Fi Bs Pere Aron ree 18, 23, 26, 27
Federal Election Commission v. Akins,
SN ss che eK nkA CeO ROKW RR HERE R Ce )
Hohe v. Casey,
re Gk SED vv avn cone wane ontnaws passim
Hohe v. Casey,
740 F. Supp. 1092 (M.D. Pa. 1989), rev'd in
SE Fae Oe Fe ae es NMED 65 bin cceccdedacdnaas 19
Jordan v. City of Bucyrus,
754 F. Supp. 554 (N.D. Ohio 1991) ............... 20, 25
Knight v. Kenai Peninsula Borough School District,
131 F.3d 807 (9th Cir. 1997), cert.
denied sub nom. Anchorage Education
Association v. Patterson, 523 U.S. ___,
Es Ey RE SNOOE 6 6S65s sa rcccosdscus 13, 14, 19, 21
- Vili -
TABLE OF AUTHORITIES — CONTINUED
: Page
Lehnert v. Ferris Faculty Association,
ace CUED ck oc vhwae Dien eheswewea bees 17, 18
Los Angeles v. Lyons,
ee Ae I os i os deb RRdotad Amedeo oe 9, 10, 18
Lujan v. Defenders of Wildlife,
pA ee errr reer 9, 14, 20, 21
Ex parte McCardle,
FE o's cc aA ORO RA Rt ae ed 21
Mitchum v. Foster,
ee I o's sb OU adore eae eee nace eed 23
Monroe v. Pape,
ee EE oc aa pCR KW ee eee e eek cle 23, 27
National Law Center on Homelessness & Poverty v. Kantor,
ee By foe || Csr ane 21
National Organization for Women v. Scheidler,
Oe eT re a Pere Tree Peer 21
Northeastern Florida Chapter of the Associated General
Contractors of America v. Jacksonville,
Pee ae I og Ra aa tae chad cansekns 11,12
O’Shea v. Littleton,
St aes Ee ib ka ok a ado kaoda cho anaeene 10
“1X «
TABLE OF AUTHORITIES — CONTINUED
Page
Patterson v. American Tobacco Co.,
535 F.2d 257 (4th Cir.), cert.
GORE, GE I: TROIS) ov vk cece senenensennes 10
Prescott v. County of El Dorado,
DiS F. Supp. 1000 (ED. Cal. 1996)... wn ccc ccc. 4,5
Regents of University of California v. Bakke,
SE id eas de ee eid dns enue aS 12
Sierra Club v. Morton,
ee cy eee Chaves Aaa Rae 9
Simon v. Eastern Kentucky Welfare Rights Organization,
EE So eS eee Leak 4 on k CREO SOO 9
Stamford Board of Education v. Stamford Education
Association,
ine & fe le) - : See 10, 24, 25, 26
Steel Co. v. Citizens for a Better Environment,
Jad Wd. OS, LISS. Ce. 1OGS CISFE) 2. ccc cccens 9, 21
Teachers Local No. 1 v. Hudson,
I EE GK NAN AG EAG KOR KAN ES AS passim
Turner v. Fouche,
OS Ro Ee an ee ane 12
Valley Forge Christian College v. Americans United for
Separation of Church & State,
454 U.S. 464 (1982) ..... CRRENSR AAR SR GARE K EMEA OES 9
TABLE OF AUTHORITIES — CONTINUED
Page
Ex parte Virginia,
At APOE 6.2 55 ke eeR Raed ee hee 23
Warth v. Seldin,
eg OR) er ie akacunmeees 9
Weaver v. University of Cincinnati,
970 F.2d 1523 (6th Cir. 1992), cert. denied sub nom.
Weaver v. Steger, 507 U.S. 917 (1993) ............ passim
Weaver v. University of Cincinnati,
764 F. Supp. 1241 (S.D. Ohio 1991), aff'd in part,
970 F.2d 1523 (6th Cir. 1992), cert. denied
sub nom. Weaver v. Steger, 507 U.S. 917 (1993) ....... 20
Wilson v. Garcia,
eG Sis UE 6 ho adda doen aces heencauee 23, 27
Wyatt v. Cole,
POT CCT TOPE TT Terr TT eee 24
-Xi-
TABLE OF AUTHORITIES — CONTINUED
Constitutions, Statutes, and Rules Page
United States Constitution, “
CESS AREY FAA ea Pee ar eH eA Rr 4,11
Ee Sik hs Rb kee heel aa wan oew eka was passim
ET ka Sibekvdaanhinn euch atk. kbs vee cas 2,17
Line Item Veto Act,
STG Beek. 1200, 2 UBC. 6 GPl Ob 00g, cin oo 5 ok ci as 11
es ee EE Fas RA eT Sess 2
ES ED 5-0 0 ok. ok as dK RA eee wees 3
National Labor Relations Act,
gk Se RD reer ree re erie eee ererere 16
29 U.S.C. § 186(c) ...... CE Taner er kee pee en ee 16
Civil Rights Act of 1871,
42 U.S.C. § 1983 (West Supp. 1999) .............. passim
Civil Rights Attorney’s Fees Award Act, 1976,
42 U.S.C. § 1988 (West Supp. 1999) .............. 23, 25
EE eee ry eae Te eee eT Tee eee Tere eee ee 2
Meyers-Milias-Brown Act,
ee 8 ee ere er ee 3
eR ge Perr ee errr re errr rer Te 3
Cal. Gov’t Code § 3502.5(a) .......eccceeceeeeeeee 2,4
-Xli-
TABLE OF AUTHORITIES — CONTINUED
Other Authorities Page
Milton L. Chappell, Seeking a New Foundation:
Legislative and Practical Alternatives to the Current
Monopoly Bargaining Model that Will Enhance the
Viability of Independent Teacher Groups, 16 GOV’T
Sg a 8, rr ee re er 26
1A MARTIN A. SCHWARTZ & JOHN E. KIRKLIN,
SECTION 1983 LITIGATION: CLAIMS AND DEFENSES § 1.3
CRBGE. TOE ota scarcsasccccsaceneateeespenineee 23
IN THE
Supreme Court of the United States
OCTOBER TERM, 1999
No. 99-
STEVEN PRESCOTT; ROBERT F. BERRY; CHERYL L. JONES:
KAREN PIERCE; AND CHRISTINE M. TURNEY,
Petitioners,
V.
COUNTY OF EL DORADO; KATHY LIBICKI;
AND EL DORADO COUNTY EMPLOYEES ASS’N, LOCAL NO. 1,
Respondents.
ON PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
Petitioners Steven Prescott, Robert F. Berry, Cheryl L. Jones,
Karen Pierce, and Christine M. Turney respectfully pray that a writ
of certiorari issue to review the judgment and opinion of the United
States Court of Appeals for the Ninth Circuit, entered on 12 May
1999.
OPINIONS BELOW
The panel opinion sought to be reviewed (Appendix (“App.”) A,
infra, \a) is reported at 177 F.3d 1102. The judgment of the United
a
States District Court for the Eastern District of California (App. B,
infra, 20a) is unreported. The opinion and order of the United States
District Court for the Eastern District of California on Petitioners’
and Respondents’ Cross-Motions for Summary Judgment (App. C,
infra, 21a) is unreported. The court of appeals’ unreported order
denying the Petition for Rehearing and Suggestion of Rehearing En
Banc appears in App. D, infra, 37a.
JURISDICTION
The court of appeals entered its judgment on 12 May 1999.
Petitioners’ timely Petition for Rehearing and Suggestion of
Rehearing En Banc was denied on 25 June 1999 (App. D, infra, 37a).
The time for petitioning for a writ of certiorari runs from the latter
date. Bowman v. Loperena, 311 U.S. 262, 266 (1940). This petition
is timely under Supreme Court Rule 13.1. This Court’s jurisdiction
is invoked under 28 U.S.C. § 1254(1) (West 1993).
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
This case involves Article III, and the First and Fourteenth
Amendments, of the United States Constitution, Title I of the Civil
Rights Act of 1871, 42 U.S.C. § 1983 (West Supp. 1999), and
§ 3502.5(a) of the California Government Code. Their pertinent text
is set out in Appendices E-I, infra, 38a-42a.
STATEMENT OF THE CASE
This case involves: (1) the standing of public employees to
challenge provisions of the collective bargaining agreement (“CBA”)
governing their terms and conditions of employment; and (2) whether
a public employer may enter into and enforce an indemnification
agreement that contracts away its liability, including even the costs
of its own defense, when it enforces the agency shop scheme without
complying with “the constitutional requirements for the Union’s
x
collection of agency fees.” Teachers Local No. | v. Hudson, 475
U.S. 292, 310 (1986).
This is a civil rights action pursuant to 42 U.S.C. § 1983 (West
Supp. 1999), seeking declaratory and other relief to prevent and
redress the deprivation under color of California law of Petitioners’
rights, privileges, and immunities under the United States Constitu-
tion. Petitioners Steven Prescott, ef al. (“the employees”), contend
that the district court had jurisdiction under 42 U.S.C. § 1983 over all
of their claims, including the allegation that the indemnification
provisions of the CBA between Respondents County of El Dorado
(“County”) and El Dorado County Employees Association, Local No.
1 (“EDCEA”) are void as against public policy and unenforceable
(Record (“R.”) 1, Complaint, f] 14 and 31, and Exhibit A, Article 4,
§ 3(J)), under 28 U.S.C. § 1331. The district court and court of
appeals decided most of the employees’ civil rights claims and
entered judgment largely in their favor, but not on the claim pre-
sented in this Petition. See App. A at 5a-13a, 177 F.3d at 1106-11;
App. C at 23a-33a, 35a.!
I. The Facts.
Petitioners are five individuals employed by the County in a
bargaining unit for which the collective bargaining representative is
EDCEA. EDCEA is a “recognized employee organization” and the
County is a “public agency” within the meaning of California’s
Meyers-Milias-Brown Act, Cal. Gov’t Code § 3501(b) & (c). The
employees are not ufion members, and were not members when
' The lower courts also rejected the employees’ request for restitution of
fees illegally seized in the absence of compliance with Hudson’s requirements.
See App. A at lla-12a, 177 F.3d at 1109-10; App. C at 35a. Because
Respondents have agreed to refund all fees illegally seized from the employees
in lieu of a trial as to the properly chargeable fee, id. at 11a-12a, 177 F.3d at
1111, that issue is moot, and is not raised in this Petition.
i@-
“agency fees” were seized from their pay. App. A at 2a-3a. EDCEA
is affiliated with Public Employees Union, Local No.1. App. A at 2a.
Pursuant to the Meyers-Milias-Brown Act, Cal. Gov’t Code
§ 3502.5(a), EDCEA and the County executed a Memorandum of
Understanding (“MOU”), or CBA, which included a “UNION
RIGHTS” article. Within that article was a section entitled “Fair
Share,” by which the County agreed to deduct for the benefit of
EDCEA agency fees from the wages of all bargaining unit employees
who failed or refused to join EDCEA as voluntary members. /d.
Concerned that it might be sued by nonunion employees for
violation of their constitutional rights, the County, as part of the
“Fair Share” section of the “UNION RIGHTS” article, included an
indemnification provision, providing as follows:
Local | shall defend, indemnify and hold harmless, release
and save the County and its agents and employees against
any and all claims, demands, suits, orders, judgements or
other forms of liability that shall arise out of or by reason
of, action taken or not taken by the County under this
Agreement. This includes but is not limited to the collec-
tion and procedures for collection of fair share fees and
reasonable cost of County’s attorney fees and costs along
with reasonable cost of management preparations time as
well.
R. 1, Complaint, Exhibit A, Article 4, § 3(J).
Beginning on 12 May 1995, the County seized initiation fees
and agency fees from each employee’s bi-weekly salary, and
forwarded the fees to EDCEA’s affiliate, PEU. However, Respon-
dents failed to comply with all of the procedural protections required
by this Court’s decision in Teachers Local No. 1 v. Hudson, 475 U.S.
292 (1986), before these fee seizures began. Prescott v. County of El
Dorado, 915 F. Supp. 1080, 1091-92 (E.D. Cal. 1996). Respondents
County and Kathy Libicki (the County’s Director of Human
Resources) took no steps whatsoever to comply with Hudson’s
~ e
requirements, relying wholly upon EDCEA’s representations that it
had complied with Hudson’s requirements. The County and Libicki
undertook no independent review to confirm that EDCEA had done
so prior to seizing agency fees from the employees. R. 23, Plaintiffs’
Statement of Undisputed Material Facts in Support of Their Motion
for Summary Judgment, Exhibit 3, page 2, Admission No. 3.
II. Proceedings Below.
The employees filed their Complaint against the County,
Libicki, and EDCEA (collectively, “Respondents”) in October 1995.
They sought a declaratory judgment; injunctive relief; nominal,
punitive, and compensatory damages; and costs and attorneys’ fees,
on the grounds that Respondents were enforcing the County/EDCEA
“agency shop” scheme in violation of Hudson, and that the indemni-
fication provision of their MOU is void as against public policy,
invalid, and unenforceable. Simultaneously, the employees success-
fully sought a preliminary injunction to stop all fee seizures, based
upon the deficiencies of EDCEA’s notice and procedures. R. 6,
Plaintiffs’ Motion for a Preliminary Injunction; 915 F. Supp. at 1092.
After conducting limited discovery, the parties filed cross-
motions for summary judgment, and EDCEA filed a motion to
dissolve the preliminary injunction. R. 20, Plaintiffs’ Motion for
Summary Judgment; R. 32, Defendants’ Motion for Summary
Judgment; R. 35, Defendants’ Motion to Dissolve or Modify the
Preliminary Injunction. The district court then entered its order on
26 January 1998, App. C at 21a-36a, and judgment in accord with
that order on 1 April 1998. App. B at 20a.
The employees, inter alia, had sought a final declaratory
judgment that the indemnification provision of the County/EDCEA
MOU was void as against public policy and unenforceable. The
district court denied this claim in its entirety. While Respondents
had addressed the merits of the employees’ argument in their
Opposition to Plaintiffs’ Motion for Summary Judgment (R. 31), and
me
had attacked the employees’ claim on the merits in their own Motion
for Summary Judgment (R. 32), the Record in the district court is
absolutely devoid of argument on the issue of the employees’
standing to raise this element of their claim! Not once did Respon-
dents suggest that the employees lacked standing to challenge the
indemnification clause, and the district court likewise asked not a
single question about the employees’ standing at hearing on the
pending motions. R. 51, Hearing Transcript, 15 November 1996. In
fact, the indemnification provision was not even discussed at those
proceedings.
-In its summary judgment decision, the district court sua sponte
raised the standing issue for the first time, finding that the employees
lacked standing to challenge this term of the CBA governing their
terms and conditions of employment. App. C at 33a-34a. Specifi-
cally, the district court found that the employees had “not demon-
strated any of the three prerequisites to standing,” reasoning that the
employees’ injury “is the result of the Union’s [sic] conduct, and is
traceable to the hold harmless agreement in only the most indirect
fashion.” App. C at 34a. Therefore, the district court entered
judgment for Respondents on this element of the employees’ claim.
Id.
The employees timely appealed, R. 54, Notice of Appeal,
seeking, inter alia, reversal of the district court’s sua sponte
determination that they lacked standing to challenge a term of the
CBA governing their terms and conditions of employment. Specifi-
cally, they attacked the district court’s ruling that the employees
lacked “standing to object to the provision which required EDCEA
to indemnify the County from any liability which arises out of
deductions of fees from employee wages, and to provide a defense
against any claims.” App. A at 15a; 177 F.3d at 1111.
Unlike the district court, the court of appeals’ panel acknowl-
edged “that (the employees] suffered some injury when the fees were
deducted from [their] paycheck[s].” App. A at 16a, 177 F.3d at
1112; compare App. C at 34a (identifying injury as failure to comply
i
with Hudson’s standards and finding that to be the result of the
union’s conduct). However, it otherwise affirmed the district court’s
standing ruling in all of its particulars. App. A at 16a-18a; 177 F.3d
at 1112. Notwithstanding that the indemnification provision appears
within the “Fair Share” section of the “UNION RIGHTS” article and
contains specific language applying it to the County’s enforcement
of the forced-unionism provisions, the panel declared that Prescott:
cannot show any connection between the indemnification
agreement and [his] injury. The agreement does no more
than place the ultimate cost of any impropriety in the
notice and the procedures where it belongs—on the union,
which seeks the fees. Just how any injury can be traced to
the indemnification provision itself is entirely unclear, but
for Prescott’s claim that the provision will somehow cause
the County to ignore its own duties. But that argument is
no more than rank speculation, and any breach of the
County’s duty can hardly be said to be traceable to the
indemnification provision itself.
App. A at 16a; 177 F.3d at 1112. In short, both the district court and
the panel discerned no nexus between the indemnification provision
and the County’s decision to seize fees from the employees.
However, the panel then “switched gears,” suggesting—like the
district court, App. C at 34a—that the employees’ injury was not in
the illegal seizure of fees in the absence of compliance with Hudson,
but because “fee deduction procedures were [not] properly fol-
lowed.” The panel said:
Speaking of speculation, it can hardly be said that our
striking down of the provision would lead to some irenic
world wherein all fee deduction procedures were properly
followed because someone would finally have an incentive
to assure that they were. As EDCEA points out, some-
one—the union—already has that incentive in a powerful
form. A failure to perform its duties properly “may result
in its being unable to retain a portion of the fair share fee.”
t.
Hohe [v. Casey], 956 F.2d [399] at 412 [(3d Cir. 1992)].’
A failure to comply may also involve the union in substan-
tial and expensive litigation, witness this case which has
been in progress for over three years and will not be over
for some time yet. Moreover, Prescott can suffer no
ultimate damage to his interests because nothing in the
indemnification agreement will prevent him from colle-t-
ing any costs, expenses or losses imposed upon him by
reason of the defective procedure.
In short, it simply cannot be said that any injury
suffered by Prescott is fairly traceable to the agreement,
nor is the claim that our striking of the agreement would
redress or prevent the injuries that he has suffered anything
but speculative. ;
” It should be noted that in Hohe the court suggested
that there was standing, but did not decide the issue. /d. at
411.
App. A at 16a-17a; 177 F.3d at 1112 & n.72
A timely Petition for Rehearing and Suggestion of Rehearing En
Banc was denied on 25 June 1999. App. D at 37a.
? The panel’s description of this incentive as “powerful” is somewhat
curious, since it was denying to the union only the nonchargeable portion of the
fee, that to which it was not entitled in the first instance. App. A at 10a-12a;
177 F.3d at 1109.
.
REASONS FOR GRANTING THE WRIT
I. THE IMPORTANT QUESTION AS TO EMPLOYEES’ STANDING
DIRECTLY ADDRESSES THE POWER OF INDIVIDUALS TO
PROTECT THEMSELVES AGAINST THE GOVERNMENT'S
IMPOSITION OF UNLAWFUL TERMS AND CONDITIONS OF
EMPLOYMENT.
At first blush, the first issue presented appears to be a routine
standing question, an issue addressed many times by this Court. See
Clinton v. City of New York, 524 U.S. 417, 118 S. Ct. 2091 (1998);
Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 118
S. Ct. 1003 (1998); Federal Election Comm'n v. Akins, 524 U.S. 11
(1998); Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992); Allen
v. Wright, 468 U.S. 737 (1984); Los Angeles v. Lyons, 461 U.S. 95
(1983); Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26
(1976); Warth v. Seldin, 422 U.S. 490 (1975); Sierra Club v. Morton,
405 U.S. 727 (1972). In these cases, among many others, this Court
has repeatedly stated the familiar tripartite showing required to
establish a litigant’s standing: “A plaintiff must allege [1] personal
injury [2] fairly traceable to the defendant’s allegedly unlawful
conduct and [3] likely to be redressed by the requested relief.” Allen
v. Wright, 468 U.S. at 751, citing Valley Forge Christian College v.
Americans United for Separation of Church & State, 454 U.S. 464,
471-76 (1982).
However, the standing issue in this case is not routine. By
ignoring the important interest of public employees in the govern-
ment’s responsibility to refrain from violating their constitutional
rights, the panel below failed to apply the standards set forth by this
Court. As a consequence, in addition to the increased risk of future
violations of their constitutional rights by illegal agency fee seizures
in the absence of compliance with the “constitutional requirements
for the ... collection of agency fees,” Teachers Local No. | v.
Hudson, 475 U.S. 292, 310 (1986), these employees will be
compelled to subsidize the public employer’s defense against their
-10-
meritorious lawsuit to vindicate their constitutional rights for
violations that already have occurred.
A. The Conflict With This Court’s “Standing” Decisions.
Insofar as the employees seek prospective declaratory relief that
Respondents’ indemnification scheme is void as against public
policy, the panel failed appropriately to analyze the employees’
standing under this Court’s decision in Los Angeles v. Lyons, 461
U.S. 95, 111 (1983), which holds that litigants seeking such relief
satisfy standing requirements when they show a “real or immediate
threat that [they] will be wronged again—a ‘likelihood of substantial
and immediate irreparable injury.’” /d., quoting O'Shea v. Littleton,
414 U.S. 488, 502 (1974).
Surely this standard is satisfied by at least four of the
employees, who remain County employees subject to the
County/EDCEA MOU, and its forced-unionism provisions.’ In
Stamford Board of Education v. Stamford Education Association,
697 F.2d 70, 74 (2d Cir. 1982), the court struck down a similar
indemnification agreement, citing the fact that the union’s payment
of the public employer’s damages for entering into an unlawful CBA
will be derived from, “at least in part, funds collected as dues from
the plaintiffs themselves or from members of the plaintiff class.” /d.,
citing Patterson v. American Tobacco Co., 535 F.2d 257, 269 (4th
Cir.), cert. denied, 429 U.S. 920 (1976) (union may not bargain away
minority employees’ right to equal treatment). Similarly, the
employees here face the very real prospect of subsidizing the
’ Certainly, the prospect that the employees will be subjected to illegal fee
seizures is more concrete than the prospect that Mr. Lyons would again be
stopped for a traffic violation and subjected to a chokehold by a Los Angeles
police officer. Lyons, 461 U.S. at 98, 100.
atts
Opposition to their own lawsuit, when EDCEA indemnifies Respon-
dents County and Libicki, and attempts to charge bargaining unit
employees for those costs.
The prospect that the employees’ will be forced to subsidize the
County’s defense is akin to the “contingent liability” found sufficient
by this Court to confer standing upon the City of New York and the
Snake River farmers’ cooperative in Clinton v. City of New York, 524
U.S. 417, __, 118 S. Ct. 2091, 2099-2100 (1998). There, in a
challenge to the constitutionality of the Line Item Veto Act, 110 Stat.
1200, 2 U.S.C. § 691 et seq., the United States Government argued
that there was no “actual injury [to the City] because the claims are
too speculative,” 524 U.S. at__s, 118 S. Ct. at 2099, citing the
Government’s failure to take certain actions necessary to obtain the
benefit sought by the City. This Court rejected that argument,
comparing the complained-of action (the President’s exercise of his
authority under the Act) to an appellate court’s setting aside of a
defense verdict, with remand for a new trial of a multibillion dollar
damage claim. As the Court noted, “Even if the outcome of the
second trial is speculative, the reversal, like the President’s cancella-
tion, causes a significant immediate injury by depriving the defen-
dant of the benefit of a favorable final judgment.” /d.
Similarly, the panel below was confronted with the allegation
that the indemnification clause was void as against public policy
because it created disincentives to the public employer’s protection
of the employees’ constitutional rights, and the uncontroverted fact
that the public employer had done nothing to ensure that its employ-
ees’ constitutional rights were not violated. This Court in Clinton
discussed those cases where “denial of a benefit in the bargaining
process can itself create an Article III injury, irrespective of the end
result.” 524 U.S. ats n.22, 118 S. Ct. at 2101 1.22, citing
Northeastern Florida Chapter of the Associated Gen. Contractors of
America v. Jacksonville, 508 U.S. 656, 666 (1993).
As this Court noted in Jacksonville, a showing that, but for the
challenged action, a plaintiff would have received the benefit sought
he.
is not required to overcome a challenge to his standing. 508 U.S. at
664-65. This Court has repeatedly rejected imposition of such a
requirement. /d., citing Turner v. Fouche, 396 U.S. 346, 361 (1970)
(non-property owning plaintiff need not show that he would have
been appointed to school board but for requirement that members be
property owners, only that he would have been considered for the
position); Clements v. Fashing, 457 U.S. 957 (1982) (rejecting claim
that dispute was “merely hypothetical” because litigants could not
show they actually would have been elected, but for “automatic
resignation” provisions of Texas state constitution); Regents of
University of California v. Bakke, 438 U.S. 265, 281 n.14 (1978)
(requisite injury shown by refusal of state to allow litigant to
compete for benefit sought). Similarly, the employees here need not
show that Respondents County and Libicki would have eschewed fee
seizures in the absence of the indemnification provision. Indeed, the
principle of res ipsa loquitor would seem to apply to a clause which
appears within the “Fair Share” section of the “UNION RIGHTS”
article of the MOU, and contains language specifically stating that its
terms apply to “the collection and procedures for collection of fair
share fees.” R. 1, Complaint, Exhibit A, Article 4, § 3(J). To hold,
as the panel did, that the employees must make an additional showing
is to hold that the clause is virtually devoid of meaning and effect.
The panel below required the employees to make a showing
never required by this Court to establish standing, stating that the
employees were required to show that the relief granted “would lead
to some irenic world wherein all fee deduction procedures were
properly followed because someone would finally have an incentive
to assure that they were.” App. A at 16a, 177 F.3d at 1112.4 A
* In condemning the employees’ “speculation,” the panel misstated the
“irenic world” sought by them. The world envisioned by the employees is not
one “wherein all fee deduction procedures were properly followed.” App. A at
16a; 177 F.3d at 1112. Rather, it is a world wherein a public employer will
decline to enforce—on behalf ofa union—the agency shop provision of its CBA
(continued...)
-13- :
showing that the County would not have illegally seized the fees but
for the disincentives represented by the indemnification clause is a
showing never before required by this Court to establish standing.
It is enough that the employees show that Respondents County and
Libicki would have been forced to consider their own potential
financial liability for unlawful fee seizures in the absence of the
clause.* This, of course, Respondents County and Libicki would
have been required to do, if the indemnification clause were not in
the County/EDCEA MOU’ s agency shop provision, or if it were void
as against public policy.
* (...continued)
when the constitutionally-adequate notice and procedures are not provided.
While it is not unreasonable to recognize that the obligation to provide the notice
and procedures falls mainly on the union, the duty to avoid constitutional harm
by seizing fees or threatening termination upon non-payment falls squarely upon
the public employer, a fact previously recognized by the Ninth Circuit, Knight
v. Kenai Peninsula Borough School District, 131 F.3d 807, 817 (9th Cir. 1997),
cert. denied on other grounds sub nom. Anchorage Education Association v.
Patterson, 523 U.S.__, 118 S. Ct. 2060 (1998), based upon its reading of this
Court’s decision in Hudson, 475 U.S. at 307 n.20.
* The panel took great solace in EDCEA’s argument that the union
“already has that incentive in a powerful form,” insofar as it might be denied “‘a
portion of the fair share fee,” viz., the portion to which it was not entitled
anyway, and that it faces “substantial and expensive litigation.” _Unmentioned
by the panel was record evidence that EDCEA and its affiliate, PEU, collected
agency fees from 484 other similarly-situated nonmembers (including 98 others
in the County bargaining unit), yielding as much as $197,472.00 in 1995 alone.
R. 24, Plaintiffs’ Statement of Undisputed Material Facts in Support of Their
Motion for Summary Judgment, Exhibit 1 (Defendant Public Employees Union,
Local #1’s Responses to Plaintiffs’ Interrogatories), page 17 and Exhibits B and
C. Clearly, the rewards enjoyed by EDCEA and its affiliate in defying Hudson's
mandate greatly outweigh even the most charitable estimate of their exposure in
this lawsuit over the years for these five individuals.
» BE
Finally, the lower courts’ shifting justifications for the conclu-
sion that the employees lack standing to challenge the indemnifica-
tion clause mean, as a practical matter, that the employees had no
real opportunity to make the requisite showing, thus raising serious
due process questions.
As noted supra, the district court’s determ:*ation that the
employees lacked standing was made sua sponte, without any
warning whatsoever. Respondents had not raised it as a defense to
the employees’ challenge, R. 13, Defendants’ Answer, and had not
argued it in their various summary judgment papers. R. 31 & 33.
Likewise, the indemnification clause was not discussed at oral
argument on the pending motions for summary judgment. R. 51,
supra. Similarly, the panel rooted its holding in an assertion that the
injury—that “fees were deducted from [the employees’] pay-
check[s],” App. A at 16a; 177 F.3d at 1112—-was somehow “indi-
rect,” and that the employees had failed to show the necessary link
between the indemnification clause and the County’s failure to fulfill
its duty “to evaluate the sufficiency of the union’s notice at the time
the union seeks to take action against a nonmember for failure to pay
the agency fee.” Knight, 131 F.3d at 817.
Of course, the panel reached this new conclusion without
mention of the manner in which the issue was decided by the district
court, which as a practical matter amounted to an “ambush,” denying
the employees the opportunity to make the necessary showing.
These shifting justifications for finding that the employees lacked
standing strongly suggest that the conclusions of the courts below
were rooted not so much in doubts as to the employees’ standing as
they were in the courts’ unwarranted desire to avoid deciding the
issue. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)
(discussing burden at various stages in litigation).
oe
B. The Conflict With This Court’s Decisions Specifying
Governmental Responsibilities When Enforcing An
Agency Shop Scheme.
Underlying the panel’s novel conclusion that employees lack
Standing to challenge the legality of one of the terms of the CBA
governing their terms and conditions of employment? is: (1) a
disregard for the government’s duty to refrain from unconstitutional
conduct, and its culpability for its unconstitutional seizure of “agency
fees” from nonunion public employees for the benefit of a monopoly
bargaining representative; at.d (2) confusion over the injury suffered
by nonunion employees subjected to unlawful enforcement of a
forced-unionism scheme.
As to the first question, this Court unambiguously declared that
“the government and union have a responsibility to provide
procedures that minimize th[e] impingement [on First Amendment
rights] and that facilitate a nonunion employee’s ability to protect his
rights” when they enter into and attempt to enforce a forced-union-
ism provision. Hudson, 475 U.S. at 307 n.20 (emphasis added). The
panel discarded that definitive statement of government responsibil-
ity to validate an agreement which it viewed as “plac[ing] the
ultimate cost of any impropriety in the notice and the procedures
where it belongs—on the union, which seeks the fees.” App. A at
16a; 177 F.3d at 1112.
Moreover, the panel misstated the public employer’s responsi-
bility when entering into forced-unionism agreements, i.e., to decline
to enforce them when the notice and procedural safeguards required
* Save for those cases finding claims barred for failure to exhaust
contractual remedies, the employees have found no other authority holding that
employees lack standing to challenge the legality of the contract establishing
their terms and conditions of employment. Certainly, the panel below cited
none. Hence, its conclusion was nothing if not “novel.”
-16-
by Hudson and its progeny have not been satisfied.’ Underlying the
panel’s decision is confusion over the nature of a nonmember’s
injury. The panel failed to recognize that a nonmember is not only
injured by a failure to comply with Hudson, but also by the seizure
of agency fees in the absence of “the constitutional requirements for
the ... collection of agency fees.”* 475 U.S. at 310; cf Air Line Pilots
Ass'n v. Miller, 523 U.S. 866, _-n.4, 118 S. Ct. 1761, 1767 n.4
(1998) (rejecting the argument that “[i]llegality depends on the
spending of compelled agency fees for ideological purposes, ... not
simply the initial collection of those fees”) (emphasis omitted).
Additionally, the panel ignored the very real threat of palpable
and direct injury upon enforcement of or compliance with the
indemnification agreement. Owing to the forced-unionism agree-
ment, the employees are forced to subsidize EDCEA’s expenditures.
Thus, contrary to the panel’s dismissal of the employees’ injury and
prospective injury as “speculative,” the prospect of additional
financial injury (beyond the County’s past illegal seizures of agency
fees) is both real and imminent, insofar as the employees remain
” Two methods of enforcement are available. Where, as here, the state’s
wage assignment law authorizes involuntary fee deductions, the public employer
seizes the fee from the employee’s wages and forwards it to the union. Other
regimes bar union dues and fee deductions absent explicit written authorization
by the employee, and require employers to discharge employees refusing to
comply with union demands for payment of dues or fees. See, e.g., 29 U.S.C.
§ 186(c) (governing wage assignments under National Labor Relations Act, 29
U.S.C. § 151 et seq.
* The panel seems to have assumed that a union always will bring itself
into compliance with “the constitutional requirements for the Union’s collection
of agency fees,” Hudson, 475 U.S. at 310, notwithstanding the financial or
administrative burden, or other barriers to compliance.
x
subject to the County/EDCEA forced-unionism agreement.’ Indeed,
given the renewal of agency fee seizures after the district court’s
order of January 1998, App. C, they might already have suffered that
injury.
This Court has unequivocally recognized that a union may not
charge objecting nonmembers for “the expenses incident to [an
-illegal] strike.” Lehnert v. Ferris Faculty Ass'n, 500 U.S. 507, 531
(1991); accord id. at 562 (opinion of Scalia, J.). As the Court said,
“{w]e can imagine no legitimate governmental interest that would be
served by compelling objecting employees to subsidize activity that
the State has chosen to disallow.” /d. at 531. Similarly, no legiti-
mate governmental interest can be served by compelling objecting
employees to subsidize a public employer’s costs of defending itself
against those employees’ valid claims that it violated their First and
Fourteenth Amendment rights by seizing agency fees in the absence
of compliance with Hudson.
From its first public-sector agency fee case, this Court has:
recognized that requiring nonunion employees to support
their collective-bargaining representative “has an impact
upon their First Amendment interests,” ... and may well
“interfere in some way with an employee’s freedom to
associate for the advancement of ideas, or to refrain from
doing so, as he sees fit.”
Hudson, 475 U.S. at 301, quoting Abood v. Detroit Bd. of Educ., 431
U.S. 209, 222 (1977); see also id. at 255 (Powell, J., concurring in
® While not reflected in the record, Petitioner Karen Pierce left her
bargaining unit employment during the pendency of this lawsuit, and therefore
does not face the prospect of compelled subsidization of EDCEA’s indemnifica-
tion expenditures. However, because the other employees possess standing on
this basis, this Court need not consider whether Pierce also possesses standing
on this theory. Clinton, 524 U.S. at___n.19, 118 S. Ct. 2100 n.19, citing
-~ Bowsher v. Synar, 478 U.S. 714, 721 (1986).
ss
the judgment); Lehnert, 500 U.S. at 517-19; see also Ellis v. Railway
Clerks, 466 U.S. 435, 447, 455-56 (1984) (“[B]y allowing the union
shop at all, we have already countenanced a significant impingement
on First Amendment rights”; “[t]he First Amendment does limit the
uses to which the union can put funds obtained from dissenting
employees”). Thus, the coerced subsidization that occurs through the
indemnification provision in a case such as this not only serves no
legitimate governmental interest; it violates the employees’ First
Amendment rights.
When it shifted from the district court’s “injury because Hudson
was not followed” justification (App. C. at 34a-35a), to an “injury in
the fee seizures but no connection to indemnification” justification
(App. A at 16a) for denying the employees’ standing, the panel
below ignored that the employees face the prospective of real
economic injury in EDCEA’s indemnification of the County and
Libicki from their actions in enforcing the MOU’s agency shop
provisions, and in defending this lawsuit. The County/EDCEA MOU
thus adds the insult of requiring objecting nonmembers (among all
represented employees) to subsidize the County’s injury of them by
EDCEA’s assumption for all financial liability arising out of illegal
County seizures of agency fees. Certainly, the very real prospect of
that concrete injury is sufficient to confer standing upon the
employees here to challenge the legality of that agreement in their
suit for declaratory relief. Los Angeles v. Lyons, 461 U.S. 95, 111
(1983).
C. The Conflict Among The Circuits.
In addition to the Ninth Circuit in this case, at least two other
courts of appeals have faced the indemnification issue in the context
of forced-unionism agreements. See Weaver v. University of Cin-
cinnati, 970 F.2d 1523, 1536-38 (6th Cir. 1992), cert. denied sub
nom. Weaver v. Steger, 507 U.S. 917 (1993); Hohe v. Casey, 956
F.2d 399, 411-12 (3d Cir. 1992). Another panel of the Ninth Circuit
likewise faced nonunion employees’ challenge to an indemnification
. #9.
provision. Knight v. Kenai Peninsula Borough Sch. Dist., 13\ F.3d
807, 817 (9th Cir. 1997). None has eluded the merits by adopting the
position of the panel in this case.
The Third Circuit was the first court of appeals to address the
merits of the issue in a published opinion, expressly holding that
similarly-situated employees possess standing to challenge an
indemnification agreement in Hohe, 956 F.2d at 411-12. There, the
district court had rejected an employee’s challenge to the indemnifi-
cation provision at the same time it rejected a challenge to a statute
requiring the public employer (the Commonwealth of Pennsylvania)
to withhold agency fees “even if the necessary procedural safeguards
have not been implemented.” Hohe v. Casey, 740 F. Supp. 1092,
1098 (M.D. Pa. 1989), rev'd in pertinent part, 956 F.2d 399, 412 (3d
Cir. 1992). As to that question, the district court held that even if the
union’s procedure were held to be constitutionally defective, “[t]he
fact that the Commonwealth might not have earlier barred fee
collection would not make the plaintiffs more victorious,” and that
“under the facts of this case it is unnecessary to consider the plain-
tiffs’ challenge to [the statute].” 740 F. Supp. at 1099. In a footnote,
the district court went on to state that, “For the same reasons we also
reach that conclusion with respect to the indemnification clause in
the collective bargaining agreement.” /d. atn.5. -
On appeal, the nonmembers in Hohe only made the same
arguments on the merits as the employees made here, i.e., that the
indemnification clause “is void as against public policy.” 956 F.2d
at 411. And the Third Circuit explicitly held that employees subject
to the CBA possess standing to challenge its terms: “We find
ourselves in disagreement with the ruling of the district court that it
need not decide this issue. We say so because we think the theory
-
advanced by the plaintiffs’ attack on the clause raises a cognizable
legal issue.” /d. at 411."°
Shortly thereafter, the Sixth Circuit issued its published decision
on the issue, becoming the first appellate court to declare such
clauses void as against public policy in the context of forced-
unionism agreements. Weaver, 970 F.2d at 1536-38.'' That decision
is devoid of any suggestion whatsoever that employees lacked
standing to sustain their successful challenge to the indemnification
provision, finding it sufficient that the clause “protect[s] the
University from any financial consequences of going along with
'° As the Third Circuit recognized, the district court in Hohe had found
it unnecessary to decide the issue because it “found no independent legal
consequences flowing from the indemnification clause in the collective
bargaining agreement.” 956 F.2d at 411. This is a virtually explicit reference
to the second of the three requirements necessary to establish “standing,” i.e.,
that “there must be a causal connection between the injury and the conduct
complained of—the injury has to be ‘fairly ... trace[able] to the challenged
action of the defendant, and not ... th{e] result [of] the independent action of
some third party not before the court.’"” App. A at 16a; 177 F.3d at 1111-12,
citing Lujan, 504 U.S. at 560-61. On the merits, the Third Circuit held that the
indemnification clause was not void. Hohe, 956 F.2d at 411-12.
'' Another panel of the Sixth Circuit had issued an earlier decision
declaring such clauses void as against public policy, but that decision was
unpublished. Cramer v. Matish, 924 F.2d 1057 (table), 1990 WL 169640 (6th
Cir. 1990). In that case, too, there was no question that employees possessed
standing to challenge one of the provisions of the CBA governing their terms
and conditions of employment. Other district courts in the Sixth Circuit,
including the lower court in Weaver, had previously issued decisions declaring
such clauses to be void as against public policy. Weaver v. University of
Cincinnati, 764 F. Supp. 1241, 1247-48 (S.D. Ohio 1991), aff'd in pertinent
part, 970 F.2d 1523 (6th Cir. 1992), cert. denied sub nom. Weaver v. Steger, 507
U.S. 917 (1993); Jordan v. City of Bucyrus, 754 F. Supp. 554, 558-59 (N.D.
Ohio 1991).
7
procedures selected by the union that fail to comply with the
constitutional standards enunciated in Hudson.” Weaver, 970 F.2d
at 1538 (other citations omitted).
Implicit in any federal court’s merits determination is a finding
that the parties before the court possess the requisite standing,
National Organization for Women v. Scheidler, 510 U.S. 249, 255
(1994) (standing is open to review at all stages of the litigation); cf.
. Brewer v. Lewis, 989 F.2d 1021, 1025 (9th Cir. 1993) (standing is a
jurisdictional question that must be addressed at the threshold of any
case), for it is “an indispensable part of the plaintiff's case.” Lujan,
504 U.S. at 561. Indeed, when the party before the court lacks
Standing, there is no case or controversy, and the court lacks
jurisdiction. As this Court recently has reaffirmed, “‘Jurisdiction is
the power to declare the law, and when it ceases to exist, the only
furretron remaining to the court is that of announcing the fact and
dismissing the cause.’” Steel Co. v. Citizens for a Better Environ-
ment, 523 U.S. 83, __, 118 S. Ct. 1003, 1012 (1998), quoting Ex
parte McCardle, 7 Wall. 506, 514 (1868); see also National Law
Center on Homelessness & Poverty v. Kantor, 91 F.3d 178, 180
(D.C. Cir. 1996).
Thus, implicit in the Sixth Circuit’s merits determination is the
conclusion that it possessed jurisdiction to decide the issue presented
to it.
Perhaps the most apt authority disregarded by the court of
appeals, though, was its own. Less than two years earlier, another
panel of the court addressed the merits of a challenge to the enforce-
ment of a similar indemnification provision brought by: similarly-
situated employees. Knight v. Kenai Peninsula Borough School
District, 131 F.3d at 817. There was no question but that the
employees had standing to challenge the enforceability of the
indemnification provision in that case; the district court had “quickly
disposed of” the argument that employees “are not a proper party to
sue on a contract of indemnity and that they have met their constitu-
tional duty and are therefore not negligent.” Petition for a Writ of
2.
Certiorari, Anchorage Educ. Ass'n, et al. v. Patterson, et al., No. 97-
1454, Appendix C at 47a. However, recognizing that Knight
presumed that employees possess standing to challenge an indemnifi-
cation provision in the CBA governing their terms and conditions of
employment, the panel here suggests that the decision was rendered
in some unidentified context other than a similarly-situated em-
ployee’s challenge to the enforceability of the indemnification
provision. App. A at 15a; 177 F.3d at 1111.
In sum, then, the Court should grant certiorari to settle the
conflict among the circuits as to whether employees subject to a
forced-unionism provision agreement possess standing to challenge
the legality of an indemnification clause in that agreement.
II. THERE IS WIDESPREAD CONFLICT AMONG THE CIRCUITS AS
TO WHETHER UNIONS MAY INDEMNIFY STATE AND LOCAL
GOVERNMENTS FOR THEIR CONSTITUTIONAL TORTS WHEN
ILLEGALLY ENFORCING FORCED-UNIONISM AGREEMENTS.
A. The Conflict.
Like this, Teachers Local No. I v. Hudson was a case brought
pursuant to 42 U.S.C. § 1983. 475 U.S. 292, 298 n.3 (1986). There,
this Court addressed “whether the [agency shop] procedure used by
[a union] and approved by [a public employer] adequately protects
the basic distinction drawn in Abood,” between “devis[ing] a way of
preventing compulsory subsidization of ideological activity by
employees who object thereto without restricting the Union’s ability
to require every employee to contribute to the cost of collective-
bargaining activities.” 475 U.S. at 302, quoting Abood v. Detroit Bd.
of Educ., 431 U.S. 209, 237 (1977). “[{AJnalyz[ing] the problem
from the perspective of the First Amendment concerns,” 475 U.S. at
304 n.13, the Court determined that “the constitutional requirements
for the Union’s collection of agency fees include an adequate
explanation of the basis of the fee, a reasonably prompt opportunity
to challenge the amount of the fee before an impartial decisionmaker,
x &
and an escrow for the amounts reasonably in dispute while such
challenges are pending.” /d. at 310. The Court specifically stated
that, in this context, both “the government and union have a responsi-
bility to provide procedures that minimize that impingement [on First
Amendment rights] and that facilitate a nonunion employee’s ability
to protect his rights.” Jd. at 307 n.20, citing Ellis, 466 U.S. at 455.
It logically follows from this explicit statement of government
responsibility that public employers may not, without running afoul
of constitutional norms, collect agency fees from nonmember
employees on behalf of the labor organization representing bargain-
ing units of those employees absent strict adherence to these
“constitutional requirements,” Hudson, 475 U.S. at 310, and that they
are liable to the employees from whom they collect such fees if they
do so.
Section | of the Civil Rights Act of 1871, 42 U.S.C. § 1983,
created a remedy “against those who representing a State in some
capacity were unable or unwilling to enforce a state law,” Monroe v.
Pape, 365 U.S. 167, 176 (1961) (original emphasis); see also District
of Columbia v. Carter, 409 U.S. 418, 426 (1973), in order to “protect
the people from unconstitutional action under color of state law
‘whether that action be executive, legislative, or judicial.’” Mitchum
v. Foster, 407 U.S. 225, 242 (1972), quoting Ex parte Virginia, 100
U.S. 339, 346 (1879). The catalyst for this statutory enactment was
widespread violence against blacks and their supporters by the Ku
Klux Klan. Wilson v. Garcia, 471 U.S. 261,276 (1985); see also lA
MARTIN A. SCHWARTZ & JOHN E. KIRKLIN, SECTION 1983 LITIGA-
TION: CLAIMS AND DEFENSES § 1.3 (3d ed. 1997). It was rooted in
a grave distrust of state and local officials to enforce federal
constitutional rights against—and perhaps in league with-—powerful
local interests committed to the violation of the federal constitutional
rights possessed by individuals.
Thus, in a broad sense, State and local governments bear
responsibility for their “constitutional torts.” 42 U.S.C. §§ 1983 and
1988 (West Supp. 1999). The purpose of the Civil Rights Act of
-
1871,42 U.S.C. § 1983, is “to deter state actors from using the badge
of their authority to deprive individuals of their federally guaranteed
rights.” Wyatt v. Cole, 504 U.S. 158, 161 (1992), citing Carey v.
Piphus, 435 U.S. 247, 254-57 (1978); see also City of Newport v.
Fact Concerts, Inc., 453 U.S. 247, 268 (1981) (deterrence of future
abuses of power is an important purpose of this section).
Yet surprisingly, the United States Courts of Appeals are in
deep conflict over whether public employers may negotiate and
enforce agreements by which a labor organization indemnifies a
public employer for any liabilities arising out of the unlawful
enforcement of compulsory unionism provisions.
While the Ninth Circuit avoided the question in this case, at
least three other courts of appeals have faced this issue, two in this
specific context.'? One, the Third Circuit, found that such agree-
ments are permissible, and enforceable. Hohe v. Casey, 956 F.2d
399, 411-12 (3d Cir. 1992). Another Circuit, the Sixth, takes a
directly contrary position. Weaver v. University of Cincinnati, 970
F.2d 1523, 1536-38 (6th Cir. 1992)(holding that “[a] clause that
relieves the employer of all consequences for its failure to assume
and conscientiously carry out its duties, including even the cost of
defending legal actions, is against public policy”). A third Circuit,
the Second, agrees with the Sixth in a related context. Stamford Bd.
of Educ. v. Stamford Educ. Ass'n, 697 F.2d 70, 73-75 (2d Cir. 1982).
While the Third Circuit’s decision was the first to address this
controversial issue in a published opinion, the Sixth Circuit ad-
dressed it earlier in an unpublished opinion in Cramer v. Matish, 924
F.2d 1057 (table), 1990 WL 169640 (6th Cir. 1990). Citing Stam-
ford, Cramer reversed a district court judgment and remanded the
case, directing the lower court to “strike [this] ... void provision[]
from the policy.” Jd. at *4. The provision was void as against public
'2 Another, the Seventh Circuit, enforced such an agreement on the facts
of the case, but did not address the public policy issue raised herein. Dixon v.
City of Chicago, 948 F.2d 355, 359-60 (7th Cir. 1991).
Se
policy because, “[u]nder Hudson, the public employer, not the union,
has the primary duty to ensure that the plan is constitutionally valid,”
and “clauses in collective bargaining agreements which purport to
relieve public employers from liability for violations of federal
constitutional and civil rights are void as against public policy.”
Cramer, 1990 WL 169640 at *4, citing Stamford, 697 F.2d at 73-75.
Cramer concluded that “[w]ithout such a role, public employe[r]s
would have no incentive to fulfill their constitutional duties.” /d.
(emphasis added). Cramer thus held that indemnification of a public
employer by the union receiving the fees in this context is void as
against public policy.
The Third Circuit acknowledged in Hohe that it was departing
from the Sixth Circuit’s unpublished Cramer decision, as well as a
subsequent district court decision in the Sixth Circuit. 956 F.2d at
411, citing Cramer and Jordan v. City of Bucyrus, 754 F. Supp. 554,
559 (N.D. Ohio 1991). The Third Circuit declined to follow the
Sixth Circuit’s reasoning. The court noted the employees’ conces-
sion that the Commonwealth and its high executive officials sued in
their official capacity in the suit are immune from damages. The
court then rejected the argument that the clause would encourage the
public employer to violate the employees’ constitutional rights by
allowing it to escape liability for costs and attorneys’ fees pursuant
to 42 U.S.C. § 1988, because “the clause (does not] explicitly
provide that [the union] will indemnify the Commonwealth for the
costs or fees involved in defending any claim based upon its
deduction of fair share fees.” 956 F.2d at 411-12." Even if it did,
because the monopoly bargaining agent nas a significant incentive
“to ensure that its procedures comply with the Constitution,” i.e., that
“(flailure to do so may result in its being unable to retain a portion
of the fair share fee,” the Third Circuit held that “invalidation of the
'. This distinguishes Hohe from this case, where the indemnification
clause specifies that indemnification includes the “reasonable cost of County’s
attorney fees and costs.” R. 1, Complaint, Exhibit A, Art. 4, § 3(J).
es
indemnification clause is not required by the First Amendment.” Jd.
at 412.
The Sixth Circuit’s decision in Weaver was the latest to decide
this issue. This decision directly conflicts with that of the Third
Circuit, and adopts virtually every argument rejected by the Third
Circuit. The Sixth Circuit engaged in a detailed analysis of Stam-
ford, as well as Hohe, concluding that the former was more persua-
sive than the latter. The Sixth Circuit declared that “the indemnifica-
tion agreement in the present case was repugnant to public policy,
and therefore, invalid,” for two reasons. First, although “facially
neutral,” the clause “protect[s] the university from any financial
consequences of going along with procedures selected by the union
that fail to comply with the constitutional standards enunciated in
Hudson.” Second, the court recognized that “the university as a
public employer had duties separate and apart from those of the
union.” Weaver, 970 F.2d at 1538 (other citations omitted). The
Sixth Circuit, therefore, concluded that a “clause that relieves the
employer of al! consequences for its failure to assume and conscien-
tiously carry out its duties, including even the cost of defending legal
actions, is against public policy.” Jd.
B. The Importance Of The Issue.
This question manifestly is important, both in practice and
principle, as this Court previously recognized by granting certiorari
in cases such as Ellis v. Railway Clerks and Teachers Local No. | v.
Hudson.
It is important in practice, because the Court’s resolution of this
question will affect employees subject to a large number of such
agreements. Public-sector compulsory unionism agreements are
lawful in at least twenty (20) states and the District of Columbia.
Milton L. Chappell, Seeking a New Foundation: Legislative and
Practical Alternatives to the Current. Monopoly Bargaining Model
that Will Enhance the Viability of Independent Teacher Groups, 16
ee
a
GOv’T UNION REV. 1, 23-28 (table) (Summer 1995). As the cases
above illustrate, public employee unions often are willing to assume
the risk of the employer’s liability in order to obtain and enforce
forced-unionism agreements, and many such clauses thus contain
indemnification provisions.
Whether public employers may be indemnified by labor unions
from “any and all claims, demands, suits, orders, judgements or other
forms of liability that shall arise out of or by reason of, action taken
or not taken” pursuant “to the collection and procedures for collec-
tion of fair share fees,” R. 1, Complaint, Exhibit A, Article 4, § 3(J),
is important in principle, too, because a requirement that public
employees support their monopoly bargaining representative
implicates fundamental constitutional rights. Because the impair-
ment of the First Amendment rights of public employees is implicit
in any forced-unionism agreement, Hudson, 475 U.S. at 301 n.3; see
also Ellis, 466 U.S. at 455, “the government and union have a
responsibility to provide procedures that minimize that impingement
and that facilitate a nonunion employee’s ability to protect his
rights.” 475 U.S. at 307 n.20. Questions, such as that presented
here, of how that responsibility is to be enforced against State and
local complicity in the efforts of discrete, locally-powerful groups to
violate the constitutional rights of another discrete, less-politically
powerful group, see Wilson v. Garcia, 471 U.S. at 276, necessarily
are important. Indeed, they are at the core of the fundamental
congressional policy to create a remedy “against those who repre-
senting a State in some capacity [a]re unable or unwilling to enforce
a state law,” Monroe v. Pape, 365 U.S. at 175-75, represented by the
Civil Rights Act of 1871, 42 U.S.C. § 1983.
This Court’s intervention is necessary to establish conclusively
nationwide that public employers that have surrendered their
employees’ unfettered right to choose whether to support their
monopoly bargaining representative cannot avoid their “responsibil-
ity to provide procedures that facilitate a nonunion employee’s
ability to protect his rights” Hudson, 475 U.S. at 307 n.20, and
cannot without economic consequence, in league with a labor union,
~.
“subject, or cause[] to be subjected, any citizen of the United States
... to the deprivation of any rights, privileges, or immunities secured
by the Constitution and laws.” 42 U.S.C. § 1983 (West Supp. 1999).
CONCLUSION
For the reasons stated above, this petition for a writ of certiorari
should be granted, and the case set for plenary briefing and argument
on the important questions presented herein. __
Respectfully submitted,
W. JAMES YOUNG*
c/o National Right to Work Legal
Defense Foundation, Inc.
8001 Braddock Road, Suite 600
Springfield, Virginia 22160
(703) 321-8510
ATTORNEY FOR PETITIONERS
*Counsel of Record
September 1999
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APPENDIX A
DECISION OF THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
12 May 1999
ira
2
S
Eon oe
- la-
{177 F.3d 1102]
Steven PRESCOTT; Robert F. Berry; Cheryl L. Jones; Karen
Pierce; Christine M. Turney, Plaintiffs-Appellants,
v.
COUNTY OF EL DORADO; Kathy Libicki; Local 1 El Dorado
County Employees Association, Defendants-Appellees.
No. 98-15579.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted March 9, 1999.
Decided May 12, 1999.
kek
[1103]Before: FERNANDEZ and McKEOWN, Circuit Judges,
and WEINER,’ District Judge.
Opinion by Judge FERNANDEZ; Concurrence by Judge
McKEOWN.
[1104]FERNANDEZ, Circuit Judge:
Steven Prescott, an employee of the County of El Dorado,
California, appeals from a determination of the district court that
granted him limited relief on his claim that the assessment of fair-
share agency shop fees against him was not fair.” The fees were for
' Honorable Charles R. Weiner, Senior United States District Judge for the
Eastern District of Pennsylvania, sitting by de gnation.
? Robert E. Barry, Cheryl L. Jones, Karen Pierce and Christine M. Turney also
appeal. What we hold regarding Prescott applies equally to them.
o 2a «
the purpose of supporting the El Dorado County Employees Associa-
tion, Local # 1 (EDCEA), the union which represents him and the
other employees of the County who are in his bargaining unit.
Prescott is not a member of the EDCEA. He objects to the district
court’s approval of the escrow provisions, its failure to order full
restitution of fees, its remanding him to using the union’s arbitration
procedures, and its failure to strike down an indemnification provision
under which the EDCEA protects the County against losses. We
affirm in part, reverse in part, and remand.
BACKGROUND
Prescott, an employee of the County, is covered by a collective
bargaining agreement (CBA) between the County and the EDCEA.
The CBA establishes an agency shop arrangement. Employees in the
bargaining unit must either be members of the union or pay a fair-
share agency fee. Those who are not members, but who must pay the
fair-share fee, are sometimes referred to as nonmembers or fee payers.
EDCEA is an affiliate of the Public Employees Union, Local # |
(PEU), and all dues for the EDCEA are paid to PEU. Members dues
amount to | percent of gross salary, up to a maximum of $34, plus $1
per pay period. It appears that fee payers are not charged the $1, which
EDCEA receives and controls. EDCEA has 570 members and 1 14 fee
payers; PEU has more than 9100 members and 482 fee payers.
In April 1995, EDCEA gave notice to nonmembers that the
County would begin to deduct a fair-share feé from their paychecks,
which amounted to 98 percent of the full union dues. That reflected
PEU's determination that 98 percent of its expenditures were for
chargeable activities, that is, activities which did benefit nonmembers.
It explained that the union uses the fair-share fee to 4efray the costs
incurred for both individual and group representation in employment
relations with the County, and that the actual costs for nonchargeable
expenditures were less than 2 percent. Nonmembers were also subject
to a deduction equivalent to the union initiation fee (variously said to
be $35 or $45). PEU's procedure was to collect the entire agency fee
from all nonmember employees, but to place 2 percent of that fee into
an interest bearing escrow account. The notice provided that if a
nonmember did not agree with the computation "the Union will set
-3a-
aside 4% of the fair-share fee in an interest-bearing trust for each fee
payer who registers his dissent, to be held in an escrow account..." It
further explained that "[o]nce the fee payer has objected to the amount
of the fees paid into escrow, he/she may demand that the fees [2%]
paid to escrow be paid to them and their monthly agency fee reduced
by that amount thereafter.”
The notice included a schedule of PEU's projected expenditures
for the 1995 fiscal year, based upon expenditures for the 1994 fiscal
year. Those were, it was said, reported "on a [PEU] wide basis...."
The fund resulting from the $1 per member fee retained by the
EDCEA, which Prescott estimates at nearly $15,000 annually, was not
_ separately mentioned in this, or other, financial schedules.’ The
projection identified the major categories of expenses and an asterisk
was placed next to those categories which the union identified as
"nonrepresentational expenditures,” including (1) ideological
expenditures, (2) social events, gifts and donations, (3) contributions
to political education fund, and (4) [1105]blood bank. The notice
explained that "[f]air-share fees do not include any expenses incurred
for political action, social activities or organizing expenses. Organiz-
ing expenses are those incurred to bring new bargaining units into
representation by [PEU]." The notice also included a statement of
PEU's revenues and expenses for the 1994 fiscal year, which listed the
major categories of expenses and indicated whether they were paid
from the general operating fund or the political education fund.
According to the 1994 statement, only contribution expenses and bank
charges were paid by the political education fund. Contributions for
political education and social events, gifts, etc., came from the general
fund. The notice also included a letter from a certified public
accountant, which reported that the 1994 statement was reviewed in
accordance with standards established by the American Institute of
Certified Public Accountants, and that it conformed with generally
accepted accounting principles.
> The letter did specify that the fees would be “98% of the 1% of the fee payers
gross salary,” while dues are “1% of gross salary, plus $1 per pay period.”
- 4a - -
The district court agreed with Prescott to the extent that he
objected to certain procedures that PEU had created for the purpose of
challenging the fees. It, therefore, entered a preliminary injunction
prohibiting the collection of fees until the procedures were corrected.
See, Prescott v. County of El Dorado, 915 F. Supp. 1080, 1092 (E.D.
Cal. 1996) (Prescott I). They have been corrected, but the court, upon
cross motions fo: summary judgment, made the injunction
permanent.’ Neither the County nor EDCEA has appealed from that
judgment. The district court did not otherwise agree with Prescott,
and granted summary judgment against him on the other issues. Thus,
he has appealed.
JURISDICTION AND STANDARDS OF REVIEW
The district court had jurisdiction pursuant to 28 U.S.C. §§ 1331
& 1343. We have jurisdiction pursuant to 28 U.S.C. § 1291.
We review the district court's grant of summary judgment de
novo. See Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir.1996).
That, of course, means that we must determine for ourselves whether
"genuine issues of material fact exist and whether the district court
correctly applied the relevant substantive law." Jd. Insofar as Prescott
attacks the indemnification provision between EDCEA and the
County, standing is in question. We review standing questions de
novo. See San Diego County Gun Rights Comm. v. Reno, 98 F.3d
1121, 1124 (9th Cir. 1996).
DISCUSSION
While the district court did grant partial relief to Prescott, it
deflected his attacks on the adequacy of the financial statements
regarding PEU's and EDCEA's income and expenses, about the size
of the required escrow account, about the need for full restitution to
Prescott, about the proper forum to decide whether the fair-share fee
\.
* The parties indicated to the district court that the case could be decided on
summary judgment. Although it was somewhat dubious, the court took them up on
that.
- Sa-
was fair, and about the propriety of the indemnification clause in favor
of the County. In short, Prescott won a skirmish and continues to hold
that piece of ground, but he lost the rest of the engagement. He asks
us to come to his rescue. We shall, in part. In order to do so, we must
survey the contours of the field adumbrated by the Supreme Court.
From the very beginning, the Court has expressed the view that,
while it is appropriate to impinge upon objecting employees’ freedom
of choice in order to require those who share in the benefits of union
representation to help "defray the expenses ... of collective agree-
ments, [and] the expenses entailed in the adjustment of grievances and
disputes," it is not appropriate to take their money "to support
candidates for public office, and advance political programs” of the
union. J/nternational Ass'n of Machinists v. Street, 367 U.S. 740, 768,
81 S.Ct. 1784, 1800, 6 L.Ed.2d 1141 (1961). And it is the union,
[1106]not the employee, that bears the burden of demonstrating just
what proportion of union expenditures is devoted to functions other
than those which can properly be charged to dissenting employees.
See Brotherhood of Ry. and S.S. Clerks v. Allen, 373 U.S. 113, 122, 83
S.Ct. 1158, 1163-64, 10 L. Ed. 2d 235 (1963).
Those earlier cases involved the unique area of railroading, but
when it was called upon to consider the area of public employee
unions, the Supreme Court reached the same conclusions. Again, it
recognized the fact that agency shop provisions do impinge upon an
employee's freedom of choice, but emphasized the more potent fact
that they counteracted the incentive to become a free rider, who
refuses to contribute to the union while happily obtaining the benefits
of union representation. See Abood v. Detroit Bd. of Educ., 431 U.S.
209, 221- 22, 97 S.Ct. 1782, 1792-93, 52 L. Ed. 2d 261 (1977).
Again, it declared that an objecting employee could not be forced to
pay dues or assessments to support or advance the union's political or
ideological causes, which were "not germane to its duties as
collective-bargaining representative." Jd. at 235, 97 S.Ct. at 1800.
Then, in Ellis v. Brotherhood of Ry. Airline & S.S. Clerks, 466 U.S.
435, 448, 104 S.Ct. 1883, 1892, 80 L. Ed. 2d 428 (1984). The court
summed up as follows:
- 6a-
Hence, when employees such as petitioners object to being
burdened with particular union expenditures, the test must
be whether the challenged expenditures are necessarily or
reasonably incurred for the purpose of performing the duties
of an exclusive representative of the employees in dealing
with the employer on labor-management issues. Under this
standard, objecting employees may be compelled to pay
their fair share of not only the direct costs of negotiating and
administering a collective-bargaining contract and of
settling grievances and disputes, but also the expenses of
activities or undertakings normally or reasonably employed
to implement or effectuate the duties of the union as
exclusive representative of the employees in the bargaining
unit.
Id. at 448, 104 S.Ct. at 1892.
So much for the substance, but what about the procedure? The
Court addressed that question in Chicago Teachers Union, Local No.
1 v. Hudson, 475 U.S. 292, 106 S.Ct. 1066, 89 L. Ed. 2d 232 (1986),
where it concluded that "the constitutional requirements for the
_Union's collection of agency fees include an adequate explanation of
the basis for the fee, a reasonably prompt opportunity to challenge the
amount of the fee before an impartial decisionmaker, and an escrow
for the amounts reasonably in dispute while such challenges are
pending.” /d. at 310, 106 S.Ct. at 1078.
It is with these general principles in mind that we turn to the
principal disputes in the agon between Prescott and the EDCEA.
A. Explanation of the Basis of the Fee
There can be little doubt that PEU did give a rather detailed
notice and a goodly amount of explanation of the fee to the nonmem-
ber fee payers. But quantity is not necessarily quality, and Prescott
claims that the notice fell short because the financial schedules were
not properly verified. That the schedules were not audited can hardly
be doubted, but EDCEA asserts that they need not be. The district
court agreed. See Prescott I,915 F.Supp. at 1089-90. We do not.
- Ja-
An accountant or auditor can provide three levels of service: a
compilation, a review, or an audit. A compilation involves the
preparation of a financial statement regarding which the accountant
expresses no assurance of accuracy, completeness, or conformity with
generally accepted accounting principles. Larry P. Bailey, Miller
GAAS Guide 14.19-14.20 (1999). A review constitutes a higher level
of service, resulting in an expression of limited assurance. In a
review, an accountant relies on the representations of [1107]manage-
ment to issue a report "stating that he or she is not aware of any
material modifications that should be made to the financial statement
in order for it to be in conformity with” generally accepted accounting
principles. Jd. at 14.25; see generally, id. at 14.25-14.28. In contrast,
an audit consists of sufficient independent examination to express an
opinion on the fairness, in all material respects, of the financial
statement. Jd. at 1.03, 11.05-11.06. An audit, unlike a review,
generally requires the accountant to assess the organization's internal
control procedures, examine evidence supporting the amounts in the
financial statement using an appropriate sampling frequency, observe
inventories, and confirm accounts receivable. Jd. at 14.25-14.26,
11.05-11.06; see id. at 9.03-9.31 (sampling techniques). Although
audits may vary in procedures and sampling rates, and therefore in
level of audit risk, see id. at 9.05-9.07, an audit, as opposed to a
review, offers at least some verification of the amounts disclosed in
the financial statement.
The Supreme Court has emphasized that, "[l]eaving the nonunion
employees in the dark about the source of the figure for the agency
fee—and requiring them to object in order to receive informa-
tion—does not adequately protect” them. Hudson, 475 U.S. at 306,
106 S.Ct. at 1076. In elaborating what sufficient information might
be, the court said that, "[t]he Union need not provide nonmembers
with an exhaustive and detailed list of all its expenditures, but
adequate disclosure surely would include the major categories of
expenses, as well as verification by an independent auditor.” /d. at
307 n. 18, 106 S.Ct. at 1076 n. 18. Later on, the Court returned to that
theme when it spoke of the weight of "a certified public accountant's
verified breakdown of expenditures...." Jd. at 310, 106 S.Ct. at 1077.
And yet again the Court spoke of a determination made "on the basis
- 8a-
of the independent audit," and stated that an escrow figure "must itself
be independently verified." /d. at 310 n. 23, 106 S.Ct. at 1078 n. 23.
Those statements would seem to make it clear enough that what
is required is a real independent verification of the financial data in
question to make sure that expenditures are being made the way that
the union says they are. For example, was an amount supposedly
directed to "x" for negotiation expenses really dispersed to him, or did
it go to "y", who is a union lobbyist? The district court did not believe
that the Supreme Court really meant what it seemed to have said, but
we have no doubt that the Court did understand its own use of
language. This is not the first time that a court has said that.
Indeed, we said as much in Knight v. Kenai Peninsula Borough
School Dist., 131 F.3d 807 (9th Cir.1997), cert. denied, U.S. ,
118 S.Ct. 2060, 141 L. Ed.2d 138 (1998). There we explained that
"(t]he purpose of an audit is to have an independent accountant
determine whether the union has actually spent the amounts of money
it claimed to have spent on the chargeable activities." /d. at 813. We
went on to reject an attempt by the union to rely on figures-when "no
independent accountant has determined whether [the union] actually
spent the amounts it claimed to have spent on chargeable expenses in
the unaudited report." Jd. We held, therefore, that the union's notice
did not satisfy Hudson. The holdings of other courts are to the same
effect. See Gwirtz v. Ohio Educ. Ass'n., 887 F.2d 678, 682 n. 3 (6th
Cir.1989) ("[A]n auditor's role is to verify the expenditures made by
the union so as to ensure that the expenditures that the union claims
it made for particular expenses were actually made for those ex-
penses."); Andrews v. Education Ass'n, 829 F.2d 335, 340 (2nd
Cir.1987) (same). We do not see how a mere review of the union's
records can offer the "verification" that the Supreme Court and we
have spoken of. Audits are often required in the business and public
arenas, where others seek assurance that the reviewed books of an
organization really do reflect the concrete world transactions to which
they refer. It is just that kind of assurance that [1108]nonmembers are
entitled to, even though it may prove somewhat costly to obtain it. As
the Second Circuit has pointed out, it is not a question of balancing the
cost to the union against the First Amendment rights of the fee payers.
"Excessive cost cannot form the basis for allowing the union or the
- 9a -
government to avoid Hudson's requirement that the procedures used
by the union to allocate bargaining and administrative costs be
carefully tailored to minimize the intrusion on the nonmembers’
rights." Andrews, 829 F.2d at 339. In short, a true audit was required.°
A somewhat smaller, yet important, piece of the puzzle is the
district court's reliance on what has been called the local union
presumption. See Prescott 1,915 F.Supp. at 1088-89. That is based on
the assumption that local union units have spent their budgets in at
least as favorable a way from a nonmember's standpoint as the overall
larger union unit with which they are affiliated. That scheme gives no
real information about just how the more local units really did spend
their funds, but it does avoid the need of detailed information at least
at the notice level. See Price v. International Union, United Auto.,
Aerospace & Agric. Implement Workers, 927 F.2d 88, 93-94 (2d
Cir.1991); see also Finerty v. NLRB, 113 F.3d 1288, 1289, 1291-92,
(D.C. Cir.1997), cert. denied, _U.S.__, 118 S.Ct. 558, 139 L.
Ed.2d 400 (1997). Besides the cost savings, it has been said that there
is some justification for the presumption because an objector can
challenge it, whereupon the burden of persuasion on the question of
the local unit's expenditures will fall upon the union. See Price, 927
F.2d at 94. With all due respect, that seems to put the cart before the
horse because the notice is supposed to allow the nonmember to
decide if there is a problem in the first place.
The reason for the presumption seems to be that the larger unit
(here PEV) will certainly spend more on nonchargeable expenses than
the local union (here EDCEA). But we see no reason to assume that
is true. Rather, we agree with the Sixth Circuit "that such a local
union presumption is unconstitutional” because " 'the use of the local
union presumption increases the risk that the reduced fee collection
from the objector would be in excess of what is appropriate.’ "
Lowary v. Lexington Local Bd. of Educ., 903 F.2d 422, 431 (6th
Cir.1990) (citation omitted). As the Third Circuit has said, the point
of the notice is not simply to tell nonmembers how the union went
about its business. It is to provide "nonmembers with information
> We express no opinion on the exact type of audit required under Hudson.
y - 10a -
sufficient to gauge the propriety of the fee." Hohe v. Casey, 956 F.2d
399, 410 (3d Cir.1992). Without conveying to nonmembers: the
information on EDCEA's major categories of expenses but, rather,
assuming that they were the same as those of PEU, nonmembers were
left "in the dark about the portion of the fee attributable to chargeable
expenses and [were] placed ... in the position of having to object to
obtain the information needed to gauge the propriety of the fee." /d.
at 411.
Nor can it be said that the amounts will always be so insignifi-
cant that Hudson's demand for something less than absolute precision
will always be satisfied. After all, in this case the total set aside for
dissenters’ challenges did not exceed 4 percent, and the amount
involved in subventions to the local units was over 2 percent.
Moreover, we see little reason to assume that the local units will use
the same degree of care as the larger unit when it comes to handling
their finances.
We do not decide that each little unit in the PEU firmament must
necessarily be subjected to a separate verified audit of its expendi-
tures, but we do decide that some auditor verifiable methodology
which is more than a presumption is required if PEU and EDCEA are
to fulfill their notice obligations. That methodology must be utilized
with an eye on the purpose of the notice in the first place, that is to
allow Prescott and others a reasonable opportu-[1109]nity to gauge
whether the money taken from them is being spent on chargeable .
expenses.
Because the unaudited schedules attached to the notice were
insufficient, we must turn to consider what steps were then required
to protect Prescott.
B. Restitution
Prescott asserts that he must simply be given full restitution of all
amounts collected from him, even though it must of necessity be true
that some substantial portion of the fee was used for properly
chargeable purposes. With that extreme position we do not agree.
-lla-
As we see it, the court in Hudson did not insist on anything quite
so radical; it did not see complete restitution as apodictic. Rather, it
reflected on the fact that an escrow account would help alleviate the
danger of even temporary use of nonmember fees for improper
purposes. See Hudson, 475 U.S. at 309, 106 S.Ct. at 1077. It pointed
out that the escrow solution alone would not solve the whole problem,
if the notice was insufficient or if the challenge procedure fell short.
But, even then, it did not say that a 100 percent escrow was required,
and it did not hold that the proper remedy was full restitution of all
collected fees. /d. at 310, 106 S.Ct. at 1077-78. Prescott suggests that
we have already decided that the remedy is restitution. We have done
no such thing.
Prescott seeks to support his position by pointing to our decision
in Dean v. Trans World Airlines, Inc., 924 F.2d 805 (9th Cir.1991).
There, an airline pilot was not satisfied with the notice he was given,
so he unilaterally reduced the fee demanded by the union from $36 per
month to $10 per month. /d. at 807. We agreed with him that the
union had failed to institute the proper procedures. Thus, we said,
“the union has no right to enforce an agency shop agreement to collect
fees for use in any union activity beyond collective bargaining” and
its failure to comply with Hudson "can serve as a justification for
Dean's unilateral reduction of fees." Jd. at 809. Nothing in that
determination suggests that a nonmember employee is entitled to full
restitution whenever the union stumbles in its efforts to comply with
Hudson. -
Similarly, in Knight, upon which Prescott also relies, we merely
said that the union's failure to comply with Hudson meant that it "was
not entitled to the fees that it collected." 131 F.3d at 815. We did not
say that meant that the union could not receive any fees whatsoever,
and we went on to say that the employee was entitled to relief, but that
we would "leave the measure of damages and the suitability of other
relief for the district court to determine in the first instance." Jd. Had
we believed that the measure was simply complete restitution, we
could easily have said so, but we did not and we see no reason for
laying down so draconian a rule.
- 12a-
In our opinion, the Seventh Circuit got it just right when it said
that a demand for full restitution was punitive insofar as it sought to
deprive the union of fees to which it was, doubtlessly, entitled. See
Gilpin v. American Fed. of State, County, and Mun. Employees, 875
F.2d 1310, 1315 (7th Cir.1989). It continued:
[T]he union negotiated on behalf of these employees as it
was required by law to do, adjusted grievances for them as
it was required by law to do, and incurred expenses in doing
these things.... The plaintiffs do not propose to give back
the benefits that the union's efforts bestowed on them.
These benefits were rendered with a reasonable expectation
of compensation founded on the collective bargaining
agreement and federal labor law....
Id. at 1316.
In fine, we agree with the district court that full restitution would
be inappropriate, even though PEU did fail to meet all of its Hudson
obligations. Any other rule would tend to suggest that the full
constitutionality of the procedures and results must be established
before fees are deducted. That would, as the Third Circuit [1110]}has
suggested, "render the escrow requirement," contemplated by Hudson,
"completely unnecessary." Hohe, 956 F.2d at 406. That, of course,
underscores an alternate source of protection for nonmember
employees—the interest bearing escrow account itself.
C. The Escrow
The district court determined that the escrow cushion created by
PEU's procedures was sufficient because it appeared that noncharge-
able expenses were only 2 percent and, upon objection, the union
would set aside 4 percent of which half went directly back to the
dissenting fee payer while the other 2 percent remained in escrow
pending adjudication. See Prescott I, 915 F.Supp. at 1091. Prescott
asserts that the size of the escrow is plainly insufficient, and we are
inclined to agree with him. We will explain, although we will not
undertake to determine the proper amount in the first instance.
4
- 13a-
As we have already held, the difficulty here is that the procedure
was flawed at its inception because of the failure to use audited
financial statements. That means that the union's sanguine assumption
that nonchargeable expenses amount to a mere 2 percent is unverified
and provides insufficient notice to those who wish to gauge the
accuracy of the union's representations. Because the district court was
satisfied with the notice, its satisfaction with the size of the escrow
account followed.
Prescott was not able to point to much in the way of specific
errors in PEU's calculations, but, then, if he was not left entirely "in
the dark,” see Hohe, 956 F.2d at 411, he was at least presented with a
fuliginous vista. EDCEA was required to give him more illumination
than it did. In many ways, "[i]t is certainly in the union's interest to
disclose sufficient financial data and other information about the
agency fee prior to objections by non- members. Specific substantia-
tion of the agency fee should reduce objections by non-members.
Ambiguity rarely will have this effect, however...." Tierney v. City of
Toledo (Tierney III), 917 F.2d 927, 938 n. 9 (6th Cir.1990).
Due to its lack of proper verification, PEU's schedules failed in
that respect. But that very failure meant, of necessity, that Prescott
was unable to fully carry his burden of going forward with evidence
of improoer allocations. See Air Line Pilots Ass'n. v. Miller, 523 U.S.
866, _, 118 S.Ct. 1761, 1768, 140 L.Ed.2d 1070 (1998). He did
point to some anomalies, for example, newsletter expenses and
subventions to local units like EDCEA. But who is to say what else -
lies buried beneath the surface of the merely reviewed books?
If a nonmember fee payer has carried the burden of pointing to
questionable a!locations, the burden of persuading the court that an
expenditure was on the correct side of the line is with the union. It has
the burden of persuusion because it is seeking to mulct an unwilling
person for fees and must show its entitlement to them. See Lehnert v.
Ferris Faculty Ass'n., 500 U.S. 507, 524, 111 S.Ct. 1950, 1962, 114
- l4a-
L. Ed.2d 572 (1991); Hudson, 475 U.S. at 306, 106 S.Ct. at 1075-76;
Lowary, 903 F.2d at 431; Price, 927 F.2d at 94.°
Because of the nature of the defect here, the amount in dispute
for the purpose of setting up an escrow account is rather problematic.
Of course, it is not satisfactory for a union to fail to make disclosures,
and then comfortably sit back while the entire fee is escrowed and the
nonmember employees are left to strike out at their antagonist like
andabatae. See Grunwald v. San Bernardino City Unified Sch. Dist.,
994 F.2d 1370, 1375 (9th Cir.1993). That, however, does not mean
that an interest bearing escrow procedure is [1111]improper, for there
will be times when it is needed (even up to 100 percent) while the
parties work out their differences. See id. at 1374; Crawford v. Air
Line Pilots Ass'n Int'l, 870 F.2d 155, 161 (4th Cir.1989), adopted en
banc, 992 F.2d 1295, 1302 (4* Cir.1993); Hohe v. Casey, 868 F.2d 69,
72 (3d Cir.1989); Andrews, 829 F.2d at 338; see also Gibson v.
Florida Bar, 906 F.2d 624, 631 (11th Cir.1990).
In this case, the union has not acted with abandon or insouci-
ance; it has, instead, misunderstood the financial statement require-
ments which we now make plain. Nevertheless, it cannot be said that
a mere 4 percent of the union's charges remains in reasonable dispute.
We are dubious about the suggestion that the amount in dispute should
be considered to be as high as 100 percent; surely PEU is using some
substantial amount of the fees charged for plainly proper purposes.
We say this with some trepidation, because it can easily be argued that
unverified financial statements are like no information at all. Again,
that does appear to overstate matters, and we do not think it our place
to attempt to determine precisely how much should be set aside under
the circumstances of this case. That, like other determinations in this
area, is more properly for the district court in the first instance. See
Hudson, 475 U.S. at 310, 106 S.Ct. at 1078.
® No doubt the protesting employee may ultimately have a separate burden of
persuasion on the issue of whether he, himself, actually overpaid. See Harmsen v.
Smith, 693 F.2d 932, 945 (9 Cir. 1982). We suppose that in most instances
resolution of that issue will be parasitic on the determination regarding the union’s
allocation. but do not hold that is necessarily so.
- |Sa-
Once it is recognized that further proceedings are necessary, the
next question is: in what forum should those proceedings take place?
D. The Forum
The district court determined that the disputes between EDCEA
and Prescott over the allocation of expenses between those which
were chargeable and those which are not must be handled through the
arbitration procedure created by PEU pursuant to Hudson. In that it
erred. x -
As we have said previously, "nonmembers are not required to
exhaust union remedies to which they did not agree before challenging
the chargeability determinations in federal court." Knight, 131 F.3d
at 816. Since then, the Supreme Court has also so decreed. There is
"no warrant for blocking dissenting employees from bringing their
claims in federal court in the first instance, if that is their preference."
Miller, 523 U.S. at___, 118 S.Ct. at 1768. Therefore, "unless they
agree to the procedure, agency-fee objectors may not be required to
exhaust an arbitration remedy before bringing their claims in federal
court.” /d.at__, 118 S.Ct. at 1769.
E. Indemnification
Prescott finally complains about the district court's failure to
accord him standing to object to the provision which required EDCEA
to indemnify the County from any liability which arises out of
deductions of fees from employee wages, and to provide a defense
against any claims. We agree with the district court. We have alluded
to this issue before. In Knight, 131 F.3d at 817, we determined that a
public entity did not even have a duty to fee payers until the union
sought to take some action against them for failure to pay the fees.
However, we declined to entertain an attack upon an indemnification
provision because the issue had been waived by the failure to raise it
in the opening brief. Jd.
Here, the issue has not been waived, but Prescott hurdled that
trench only to run into a standing revetment. In order to meet
- 16a -
constitutional standing requirements, a plaintiff must establish three
elements.
First, the plaintiff must have suffered an "injury in fact"—an
invasion of a legally protected interest which is (a) concrete
and particularized ... and (b) "actual or imminent, not
‘conjectural’ or 'hypothetical’....". Second, there must be a
causal connection between the injury and the conduct
complained of—the injury has to be "fairly ... trace[able] to
the challenged action of the defendant, and not ... th[e]
result [of] the independent ac-[{1112]tion of some third party
not before the court." .... Third, it must be “likely,” as
opposed to merely "speculative," that the injury will be
"redressed by a favorable decision.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct.
2130, 2136, 119 L. Ed.2d 351 (1992) (citations omitted); see also,
Bennett v. Spear, 520 U.S. 154, 167-71, 117 S.Ct. 1154, 1163-65, 137
L. Ed.2d 281 (1997); Maricopa-Stanfield Irrigation & Drainage Dist.
v. United States, 158 F.3d 428, 433-35 (9th Cir.1998), petition for
cert. filed, US.___,119S.Ct. 1802, ~L.Ed.2d (1999) (No.
98-1115). Prescott cannot meet these strictures.
While it can be assumed that Prescott suffered some injury when
the fees were deducted from his paycheck, that is all he has shown.
He certainly cannot show any connection between the indemnification
agreement and that injury. The agreement does no more than place
the ultimate cost of any impropriety in the notice and the procedures
where it belongs—on the union, which seeks the fees. Just how any
injury can be traced to the indemnification provision itself is entirely
unclear, but for Prescott's claim that the provision will somehow cause
the County to ignore its own duties. But that argument is no more
than rank speculation, and any breach of the County's duty can hardly
be said to be traceable to the indemnification provision itself.
Speaking of speculation, it can hardly be said that our striking
down of the provision would lead to some irenic world wherein all fee
deduction procedures were properly followed because someone would
finally have an incentive to assure that they were. As EDCEA points
- 17a-
Out, someone—the union—already has that incentive in a powerful
form. A failure to perform its duties properly "may result in its being
unable to retain a portion of the fair share fee." Hohe, 956 F.2d at
412.’ A failure to comply may also involve the union in substantial
and expensive litigation, witness this case which has been in progress
for over three years and will not be over for some time yet. Moreover,
Prescott can suffer no ultimate damage to his interests because nothing
in the indemnification agreement will prevent him from collecting any
costs, expenses or losses imposed upon him by reason of the defective
procedure.
In short, it simply cannot be said that any injury suffered by
Prescott is fairly traceable to the agreement, nor is the claim that our
striking of the agreement would redress or prevent the injuries that he
has suffered anything but speculative.
CONCLUSION
In cases like this, the desire of unions to assure that everyone in
the bargaining unit pays for the c»sts of the benefits conferred upon
him runs up against the desire of employees to join and support what
they like when they like. Thus, cases of this type can generate high
emotions and lend themselves to philippics—the nonmember employ-
ees are sometimes called radicals or free riders and the unions are
sometimes said to be insincere hypocrites who simply seek more
money to manipulate. Here, however, no one claims that we face
either sansculottes on the one hand or pecksniffians on the other.
Rather, it is clear that we are dealing with individuals who have an
honest dispute over what the Constitution requires.
There is nothing new about the requirement that PEU and
EDCEA must send out a proper notice to all nonmember employees,
but we now make it clear that the financial statements accompanying
the notice must be audited (not merely reviewed) in order to assure
” It should be noted that in Hohe the court suggested that there was standing,
but did not decide the issue. /d. at 411.
- 18a-
that "the union has actually spent the amounts of money it claimed to
have spent on the chargeable activities." Knight, 131 F.3d at 813.
In the meantime, all disputed fees, and absent an audited
statement that could be a very substantial portion of what the union
has charged, must be deposited into an interest bearing escrow
account. The district court must then determine just what is charge-
able and what is not. However, full restitution of the fees is not
required if, as we think will surely be the case, at least some portion
will be allocated to properly chargeable expenses.
AFFIRMED in part, REVERSED in part, and REMANDED. The
parties shall bear their own costs on appeal.
McKEOWN, Circuit Judge, concurring:
Although I agree that the PEU's notice does not satisfy the
requirements of Chicago Teachers Union, Local No. 1. v. Hudson, 475
U.S. 292, 306, 106 S.Ct. 1066, 89 L.Ed.2d 232 (1986), and that
remand is therefore necessary, I write separately because I believe that
the majority unnecessarily reaches the issue of the constitutionality of
the local union presumption.
We all agree that the PEU's failure to provide audited verification
of its expenses violates Hudson. Because it is clear that the local
affiliate, FOCEA, cannot rély on the parent union's (PEU's) constitu-
tionally insufficient data, we need not decide the issue of the constitu-
tionality of the local union presumption. While the majority properly
interprets the Supreme Court's decision in Hudson, it ignores the
Supreme Court's strong warning against premature adjudication of
constitutional questions:
As we have explained: If there is one doctrine more deeply
rooted than any other in the process of constitutional
adjudication, it is that we ought not to pass on questions of
constitutionality ... unless such adjudication is unavoid-
able.... It has long been the Court's considered practice not
... to decide any constitutional question in advance of the
necessity of its decision ... or to formulate a rule of constitu-
- 19a -
tional law broader than is required by the precise facts to_
which it is to be applied.
Clinton v. Jones, 520 U.S. 681, 690 n. 12, 117 S.Ct. 1636, 137 L.
Ed.2d 945 (internal quotation marks and citations omitted).
If the notice based on the parent union's data is legally deficient,
then the derivative data is similarly tainted for notice purposes. The
"doctrine of avoidance," id. at 690, requires that we not reach out to
decide whether the local union presumption passes constitutional
muster as a general matter when, on the facts presented here, the
EDCEA's reliance on the PEU's data is itself constitutionally deficient.
In light of our reversal, at this point, the majority is only speculating
as to what local union data the EDCEA and the PEU might bring
before the district court on remand.
In addition, I have no doubt about the good faith of the parties
in presenting this case, and do not join in the majority's gratuitous
(and, by its own recognition, inapt) commentary regarding the conduct
of other litigants in "cases of this type.”
APPENDIX B
FINAL JUDGMENT IN A CIVIL CASE
ENTERED BY THE UNITED STATES
DISTRICT COURT FOR THE
EASTERN DISTRICT OF CALIFORNIA
1 April 1998
- 20a -
[Clerk’s Stamp Omitted in Printing}
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF CALIFORNIA
JUDGMENT IN A CIVIL CASE
STEVEN H PRESCOTT
v. CASENUMBER: CIV S-95-1859 LKK JFM
COUNTY OF EL DORADO, et al
XX - - Decision by the Court. This action came to trial or hearing
before the Court. The issues have been tried or heard and a decision
has been rendered.
IT IS ORDERED AND ADJUDGED
THAT JUDGMENT IS HEREBY ENTERED IN AC-
CORDANCE WITH THE COURT’S ORDER OF
1/26/98.
Jack L. Wagner,
Clerk of the Court
ENTERED: April 1, 1998 by: /s/
K Carlos, Deputy Clerk
APPENDIX C
OPINION AND ORDER OF
THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF CALIFORNIA
Filed 26 January 1998
-2la-
[Clerk’s Stamp Omitted in Printing]
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF CALIFORNIA
STEVEN H. PRESCOTT, et al.,
NO. CIV. S-95-1859 LKK/JFM
Plaintiffs,
v. ORDER
COUNTY OF EL DORADO, et al.,
Defendants.
/
The Plaintiffs, non-union employees of El Dorado County (the
“County”), challenge the right of the El Dorado County Employees
Association (“EDCEA” or the “Union”), as a local affiliate of the Pro-
fessional Employees Union, Local #1 (“PEU”), to collect fees
pursuant to the agency shop provisions of the collective bargaining
agreement entered into between the Union and plaintiffs’ employer.
In its previous order the court preliminarily enjoined the Union
from collecting a fair share agency fee until it provided a challenge
procedure which allowed for the dispute to be resolved within 120
days from the date on which the fee was seized from the nonmembers’
paychecks. See Prescott v. County of El Dorado, 915 F. Supp. 1080
(E.D. Cal. 1996). The court also ordered the Union not to impose
upon nonmembers the “under penalty of perjury” and specificity
requirements for challenging the fee. Jd. The court, however, denied
the balance of plaintiffs’ motion. First, the court found that the notice
provided an adequate basis for the fee because it identified PEU’s
iwajor expense categories and provided nonmembers with sufficient
information to ascertain which of those categories the Union deemed
chargeable to nonmembers. The court reasoned that under Chicago
Teachers Union, Local No. 1, AFL-CIO v. Hudson (“Hudson’’), 475
U.S. 292, 306, n.18 (1986), the Union is only required to provide the
nonmember with sufficient information to decide whether to challenge
the legitimacy of the Union’s fee, and did not require that the Union
justify its expense in detail prior to the challenge. Employing the
“local union presumption,” the court also held that PEU need not
- Me
provide a breakdown of the expenditures for each local affiliate, since
local affiliates generally spend less money on political activity than
State or national unions.
Recognizing the very limited record describing the difference
between various types of financial reviews, the court also determined
that, while adequate notice under Hudson must include “verification
by an independent auditor,” an accountant’s “review” appeared to
provide the verification required by the Supreme Court. The court
noted, however, that the lack of a full record deprived it of an
opportunity to definitively resolve the issue. See Prescott, 915 F.
Supp at 1089, n. 13. Finally, the court held that plaintiffs did not
demonstrate a likelihood for success on their challenge to the 4%
escrow figure because plaintiffs did not show that more than 4% was
reasonably in dispute.
The parties now cross move for summary judgment. Plaintiffs
continue to maintain that the notice and procedures violate the First,
Fifth and Fourteenth Amendments because they (1) do not contain
audited financial disclosures of the expenditures of EDCEA and
affiliated labor organizations receiving money from EDCEA, (2)
utilize an unconstitutional standard of chargeability, and (3) contain
unduly burdensome procedures for challenging the fee. Plaintiffs seek
a declaratory judgment stating that the defendants have violated the
constitutional requirements for collecting an agency fee, a permanent
injunction against all fee “seizures” from the nonmembers, and
restitution of all fees already “seized” from nonmembers. Finally,
plaintiffs request a declaratory judgment that the indemnification
agreement between the County and EDCEA is void as against public
policy.
Defendants argue that the court should grant them summary
judgment primarily for the reasons discussed in the court’s prelimi-
nary injunction order. With regard to the “verification by an inde-
pendent auditor” required by Hudson, defendants argue that an
accountant’s review suffices because it provides nonmembers with the
information pertinent in assessing the validity of the fee, and that an
audit would burden the Union with an unnecessary cost. Defendants
also move to dissolve the preliminary injunction on the basis that the
- 23a-
Union has instituted a procedure which permits a nonmember to have
a hearing within sixty days from making a challenge to the fee, and to
obtain a final decision within thirty days from the hearing. I turn first
to a brief description of the overall problem, and then address the
particular claimed deficiencies. ' -
The High court has held that there are “constitutional require-
ments for the Union’s collection of agency fees [which] include an
adequate explanation of the basis for the fee, a reasonably prompt
opportunity to challenge the amount of the fee before an impartial
decisionmaker, and an escrow for the amounts reasonably insdispute
while such challenges are pending.” Hudson, 475 U.S. at 310. The
purpose of the prerequisites is to insure that nonunion employees
have “a fair opportunity to identify the impact of the governmental
action on his interests and to assert a meritorious First Amendment
claim.” Hudson, 475 U.S. at 303. In sum, the procedures seek to
insure that the nonmember has sufficient information to make an
intelligent choice to either accept or challenge the fee. Jd; see also,
e.g., Damiano v. Matish, 830 F.2d 1363, 1370 (6" Cir. 1987) (disclo-
sure must provide nonunion employees with sufficient information so
as to enable them to make an intelligent choice), and Laramie v.
County of Santa Clara, 784 F. Supp. 1492, 1497 (N.D. Cal. 1992)
(union must “provide enough information to nonmembers so that they
may understand the charges and then reasonably challenge the basis
of the fair share’’).
I.
THE ROLE OF THE INDEPENDENT AUDITOR
The Court explained in Hudson that “practical reasons” preclude
“*{a]bsolute precision’ in the calculation of the charge to nonmem-
bers” and thus “cannot be ‘expected or required.’” Hudson 475 U.S.
at 307, n.18. Moreover, the Court held that “[t]he Union need not
provide nonmembers with an exhaustive and detailed list of all its
The standards for resolution of a matter on summary judgment are well-
known and need not be repeated here. See, e.g., Clark v. County of Placer, 923 F.
Supp. 1278, 1281-82, (E.D. Cal. 1996).
- 24a -
expenditures.” /d. Nonetheless, the Court decreed that “adequate
disclosure surely would include the major categories of expenses, as
well as verification by an independent auditor.” /d.
Clearly the Court’s footnote recognizing “practical consider-
ations,” abjuring “absolute precision,” but requiring the “verification
by an independent auditor” raises more questions than it answers.
Thus, unanswered are the level of verification short of absolute
precision required, whether the verification, although it must be
performed by an independent auditor, must be in the form of an audit,
and whether what must be verified is the breakdown between
chargeable versus nonchargeable expenses.
A. VERIFICATION OF ALLOCATIONS
In its prior order this court rejected plaintiffs’ contention that the
independent auditor must verify the allocation between chargeable and
nonchargeable expenditures within each major expense category. See
Prescott, 915 F. Supp. at 1087. At oral argument on this motion,
counsel for plaintiffs’ counsel asserted that the auditor’s function is
to provide a verification of the expenditures such that the Union, and
the nonmembers, can confirm that those expenditures which the Union
claims are nonchargeable are actually spent on those matters which the
Union characterizes as nonchargeable. Accordingly, the court affirms
its prior order that the auditor need not verify the allocation between
the chargeable and nonchargeable expenditures within each major
expense category. Below in addressing the question of what level of
“verification” is required under Hudson the court will further consider
the auditor’s role in the process. =
B. THE MEANING OF “VERIFICATION”
The parties agree that the Union’s accountant performed a
“review” of PEU’s books rather than an “audit.” The dispute is
whether such a review satisfies the requirement for “verification by an
independent auditor.” To resolve the dispute, the court applies its
ee
|
i
i |
|
i
- 25a-
understanding of Hudson to the evidence adduced by the parties in
connection with this motion.’
Defendants acknowledge that their accountant’s review of PEU’s
financial statements did not constitute a “verification by an independ-
ent auditor. . . [w]ithin the meaning of the accounting profession. . . .”
Charles A. Luther Depo. At 81.’ Plaintiffs argue that by using the
term “auditor” the Supreme Court mandated that the person perform-
ing the “verification” must perform an audit as that term is defined by
the accounting profession.
Plaintiffs’ argument confuses the question of who must perform,
“an independent auditor,” with what must be performed, disclosure
and verification of “the major categories of expenses.” Both parties
agree that an “auditor can be an accountant,” and that an accountant
can perform both reviews and audits. Put simply then, an independent
auditor could be either an accountant performing a review, or an
accountant performing an audit. Thus, the High Court’s use of the
term “independent auditor” does not command an audit.
Yet a second reason suggests that the professions’ understanding
of the phrase is not dispositive. Nothing in Hudson suggests either
that the Supreme Court was aware of the meaning attributed to the
phrase by the accounting profession, or that it intended to apply that
At oral argument, both counsel assured the court that the case could be
resolved on summary judgment based upon the record now before me. While the
court believes that a full trial would be helpful, particularly in relation to the duties of
accountants, the parties’ position weighs heavily against the court’s insisting on trial.
3
Luther, the Union's accountant testified that the phrase “verification by an
independent auditor” within the accounting profession “deals with the preparation of
some form of audited statement.” Luther Depo. at 81. Plaintiffs’ expert puts it that
“[o}ne such level of service [provided by an accountant] includes functioning as an
‘independent auditor."” See Decl. of Irving B. Ross at * 12.
- 26a -
meaning.’ Rather, reading the phrase in the context employed by the
High Court suggests something quite different than the elaborate
procedures contemplated by the profession.* Concluding that the
phrase employed by the court is not self-defining, I turn to the Court’s
explanation the purpose of verification.
The Supreme Court explained that the purposed of verification is
to permit the nonmember an opportunity to make an informed choice
of whether to challenge the basis for the fee. Accordingly, the Court
merely required that unions provide an explanation of the major
categories and that those categories be verified.® As this court
+ Indeed, the language employed by the Court suggests that it was not speaking
in the language of accountants. As one declaration puts it, “[p]rofessional reporting
standards utilized by accountants do not use the term ‘verification.’ CPAs provide
compilation, review, audit, or attestation services and, as a result of the services,
provide reports or opinions.” Decl. of John D. Moyle, at ¥ 8.
> Plaintiffs’ leap from who to what is shared by most reported cases.
Nonetheless, even requiring an audit does not resolve the question of the scope of the
task, given the variety of audit types existing within the accounting profession. See
Gwirtz v. Ohio Educ. Ass 'n., 887 F.2d 678, 681 (6" Cir. 1989) (Auditing Standard No.
29 proper reporting mechanism and constitutes independent audit because it subjects
financial statements to detailed testing); Hohe v. Casey, 727 F. Supp. 163, 167 (M.D.
Pa. 1989) (auditor must perform evaluation of client’s internal controls sufficient to
form an opinion); Mitchell v. Los Angeles Unified School Dist., 744 F. Supp. 938,
941, n.4 (C.D. Cal.) (modified SAS 29 audit verifying expenditures claimed actually
made suffices if performed in accordance with generally accepted accounting
principles) rev'd on other grounds by 963 F.2d 258 (9® Cir. 1992); but see Laramie,
78% «. Supp. at 1497 (“review” suffices).
There are also higher levels of verifications than an audit (e.g., attestation) and
different levels of assurances within the auditing function. See Ross Decl. at 4 12 (an
“attestation” is an “extension of the generally accepted auditing standards.”); see also
Luther Depo at 72 (noting that the American Institute of Certified Accountants has set
forth 66 different auditing standards).
6
This court has no doubt that dicta in its previous opinion has added to the
confusion. There, in rejecting plaintiffs’ contention that the auditor must verify that
- 27a-
understands the evidence before it, a review satisfies the “categorical”
verification and an audit (at whatever level) while providing greater
assurance concerning the expenditures reported, does not provide
additional information regarding the classification of expenses in the
financial statements.
Plaintiffs’ expert explains that an accountant performs an audit
_to express a “conclusion about the reliability of a written assertion that
is made by another party[.]” See Ross Decl. at 9 12. An audit “is
concerned with whether the recorded information properly reflects the
economic events that occurred during the accounting period.” /d. at
44 12, 14, 16.’ In contrast, an accounting review is “the process of
recording, classifying and summarizing economic events in a logical
manner for the purpose of providing financial information.” /d. at §
14.5 Defendants’ expert, John D. Moyle, agrees that an audit tests
evidentiary matter to provide a reasonable assurance that records are
the allocation of expenditures between chargeable and nonchargeable categories, |
opined that the role of the auditor is to “ensure that the expenditures which the union
claims it made for certain expenses were actually made for those expenses.” Prescott,
915 F. Supp. at 1087 (quoting Laramie, 784 F. Supp. at 1497). This court’s previous
opinion, while citing to various Circuit Court opinions, failed to address the more
modest purpose articulated in Hudson itself. To the extent the previous dicta conflicts
with this opinion, the court must disavow it.
” The techniques employed during an audit “include a study and evaluation of
the client’s internal accounting controls, tests of accounting records, and the obtaining
of corroborating evidential matter through inspection, observation and confirmation.”
See Ross Decl. at 4 12.
8 These descriptions are corroborated by plaintiffs’ experts’ citation to various
accounting texts which describe auditing as a function which provides a verification
of financial data by testing the validity of the data, as opposed to the acceptability of
its presentation. See Suppl. Ross Decl. at { 8 (citing Alvin A. Arens, et. al., Auditing,
An Integrated Approach (5* ed.); Kell, Boynton, & Ziegler, Modern Auditing (3™ ed.),
Chapter 2, p. 46).
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accurate, while a review assesses whether the material is presented ©
according to accepted classifications. See, supra, n.6.”
PEU’s accountant’s explanation of the auditing and review
functions confirms the distinctions highlighted above. Luther testified
that the difference between a review and an audit is that an audit
would normally include the observation of physical inventory and
analysis of documents, see Luther Depo. at 12-13, while a review
would involve discussions with personnel and analysis of documents
to insure that the expenditures were properly classified. /d. at 24-26."°
Although Luther asserts that PEU’s final review statement reflected
changes made to the information as provided by the client, id. at 63,
Moyle further explains that an “auditor performs tests of the accounting
systems and records to obtain sufficient competent evidential matter to afford a
reasonable basis for an opinion regarding whether the financial statements, are, in all
material respects, fairly presented in accordance with GAAP.” See Moyle Decl. at 4
12. In the next paragraph of his declaration, Moyle states that the purpose of an
auditor's opinion is to provide “reasonable assurance”. /d. at 4 13. This purpose
indicates that the focus of the audit is on testing the reliability of the records. in
contrast, Moyle explains that the review is limited to “negative assurances” that
nothing came to the CPA's attention that would indicate that the management's
assertions are not presented in accordance with the established criteria. /d. at ¥ 16.
Since a review is based on “negative assurances,” it will approve of the financial
statements so long as they are presented according to accepted classifications; there
will be no independent verification that the presentation is an accurate reflection of
reality.
'0 Luther testified that he receive! expenditures information, receipts, and
specific coding to asset or liability categories from PEU. See Luther Depo. at 55. He
then produced a ledger which contained a separate account for each category of assets,
liabilities, and equity. /d. at 37-38. Luther explains that the categories he created do
not necessarily reflect the internal accounting system of the union, but are similar to
it. Jd. at 41. Luther’s working documents were based on information and documenta-
tion provided by the client, and sometimes information specifically requested by the
accountant. /d. at T¥ 46, 48.
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his description of those changes demonstrates that they revolved
around classification of statements.''
Defendants contend that a review is sufficient under Hudson
given that under accounting standards the fair presentation of financial
statements is the responsibility of the entities’ management. Moyle
Decl. at § 10. Once again, it is unclear to the court why accounting
standards should govern. Nevertheless, the contention is consistent
with Hudson’s requirement that the Union provide the categories of
expenditure with the independent auditor verifying them.'? Moreover,
a conclusion that a review satisfies Hudson is consistent with its
emphasis on practicalities. See Hudson, 475 U.S. at 307, n.18. In his
deposition, PEU’s accountant estimates that he billed PEU between
$2,500 and $3,000 for the reviewed financial statement for the 1994
year. See Luther Depo. at 20. Based on his personal experience,
Luther testified that an audit covering the same scope as the review
would costs between $12,000 and $15,000. /d. at 22 & 74. He also
testified that it would cost as much as $45,000 to do an audit of all
units. /d.
While to say the least the matter is not free from doubt, the court
concludes on the basis of the above considerations that a review
satisfies the Hudson purpose. Accordingly, no higher verification is
"For example, Luther testified that if he came across a check during a review
which appeared to be submitted by the client in the wrong category, he would
normally recommend that it be reclassified into the proper category. See Luther Depo.
at 50. Luther then testified that if the Client refused to reclassify, and if the failure was
material, he might not issue the review. /d. at 50-51.
'2 As this court understands the evidence, a review verifies the classifications
made by the union. The ordinary meaning of “classification” is “the act or a method
of distributing into groups, classes, or families: an assigning to a proper class.” The
ordinary meaning of “classify” is “to group or segregate in classes that have systematic
relations usu. founded on common properties or characters: sort.” See Webster's
Dictionary, at 417, col. 1. Thus, the act of classifying, the process being verified by
a review, appears to be what the High Court required the union to provide verification
of through an independent auditor.
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required, although it may be desirable.’ Accordingly, summary
judgment will be entered on behalf of defendants as to this claim.
Il.
SUFFICIENCY OF THE ESCROW
The court in its previous order explained why it believed that
plaintiffs’ challenge to the escrow amount does not lie. Plaintiff
challenges that explanation on the basis that the court has failed to
apply rigorous First Amendment standards. As I explained there,
however, the language of the First Amendment hardly commands any
of the procedures developed in Hudson. Rather, the procedures
mandated by the Supreme Court must be viewed as providing a
prophylactic border surrounding First Amendment values. As such,
however, they must be balanced against the competing interests of
fairness and labor peace embodied in the agency shop. Abood v.
Detroit Bd. of Education, 431 U.S. 209, 218 (1977). In resolving these
competing values the High Court requires unions to escrow “the
amounts reasonably in dispute while such challenges are pending.”
Hudson, 475 U.S. at 310. In the matter at bar, this court continues to
find that plaintiffs have not demonstrated that an amount greater than
4% is in dispute. Accordingly, injunctive relief will not be granted,
and defendants’ motion for summary judgment will be granted."
'5 It must be kept in mind that what is being considered is constitutional
minima, and not what might be the most efficacious process. Although aspects of
Hudson may suggest otherwise, neither this court, nor the Supreme Court for that
matter, is in the business of legislating.
'4 The court wishes to emphasize that it is not finding that 4% in fact
represents the amount of nonchargeable expenditures. Indeed, defendants’ counsel's
acknowledgment during oral argument that the union did not keep records of the labor
and expenditures involved for many of its political activities raises substantial
questions as to the manner of determining the escrow figure. The issue, however, is
what is in contention, and in that regard the evidence does not demonstrate that more
than 4% is in contention.
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Ill.
LOCAL UNION PRESUMPTION
In its preliminary injunction order the court relied on the local
union presumption. Plaintiffs claim that the decisions cited by the
court to support the local union presumption have been superseded.
See Lowary v. Lexington Local Bd. of Educ. (“Lowary IT’), 903 F.2d
422, 430 (6" Cir. 1990), superseding Gillespie v. Willard City Board
of Education, 700 F. Supp. 898, 903 (N.D. Ohio 1987); Hohe v. Casey,
956 F.2d at 399, 409-11 (3 Cir. 1992), superseding Hohe v. Casey,
695 F. Supp. 814, 819 (M.D. Pa. 1988), aff'd, 868 F.2d 69 (3 Cir.
1989), cert. denied, 493 U.S. 848 (1989). Plaintiffs also contend that
Tierney v. City of Toledo, 917 F.2d 927, 937 (6" Cir. 1990) rejects the
local union presumption. They then contend that this court should
follow suit. For the reasons explained below, the court declines to do
SO. /
The Tierney decision is inapposite. There, the Sixth Circuit
addressed the failure of a local union to explain how the dues paid to
the international union were spent. Here, plaintiffs challenge the
Union’s alleged failure to account for the expenditures of its local
affiliates. Thus, the reluctance to invoke a presumption in Tierney
makes sense for the same reason that the efficiency of invoking it here
also makes sense: the local union is presumed to spend less on
nonrepresentational activities. Moreover, since Hudson specifically
required local unions to account for their payments to state and
national labor organizations, see Hudson, 475 U.S. at 307, n.18, the
Sixth Circuit had no choice but to invalidate the notice.
Lowary II is also inapposite. As this court observed in the
preliminary injunction opinion, Lowary J] rejected the presumption in
the context of an arbitration hearing. Since in an arbitration, “the
nonmember’s burden is simply to make his objection known,” see
Lowary IT, 903 F.2d at 431, it was impermissible to place an additional
burden on the nonmember, during arbitration, to rebut a presumption
that the union spent its money properly. /d. Unlike an arbitration, the
presumption here does not affect the nonmembers’ ability to prevail
at arbitration, nor would it appear to affect his or her ability to make
a decision as to whether to challenge the fee.
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Plaintiff is correct about the Third Circuit’s rejection of the local
union presumption. See Hohe v. Casey, 956 F.2d at 409-11. Even if
Hohe were binding, however, it would not be dispositive under the
facts at bar. Hohe did not categorically reject the local union
presumption; rather, it held that the union could not assume that local
expenditures mirrored state expenditures when the notice itself offered
no reason or explanation of why such an assumption was justified. /d.
at 410. The Hohe court specifically noted that while nonmembers of
the local received only information about the parent union’s expendi-
tures, they were not informed of the percentage of their local dues
which went to the parent union.
In contrast to Hohe, the nonmembers here are told (rightly or \.
wrongly) that all their dues go to PEU. Moreover, the figures
presented in the budget provide a good explanation of why the
presumption is justified. The notice indicates that $56,544.00 of
PEU’s $2,626,954 budge goes to “Unit Funds.” This amounts to
2.15% of the budget. Since there are 40 local units, EDCEA receives
$1,413.60 (0.05% of PEU’s budget). As a practical matter, there does
not seem to be a high likelihood that EDCEA (or any other local
affiliate) would spend a higher percentage of $1,413.60 on political
activities than PEU would spend of its $2.5 million. Thus, unlike
Hohe, the Union offers some reason why nonmembers in the local
union can rely on PEU’s books for a breakdown of their dues.
For the reasons discussed in the preliminary injunction order, the
court still concludes that the local union presumption is appropriate
and permissible under Hudson. See Lucid v. City and County of San
Francisco, 774 F. Supp. 1234, 1237 (N.D. Cal. 1991) (“No authority
requires such a breakdown [of expenses incurred on a bargaining unit
basis] and we decline to extend existing law to create one. Requiring
- such a breakdown may be extremely impracticable, if not impossible,
as well as unduly burdensome.”); see also Andrews v. Education
Association of Chesire, 653 F. Supp. 1373, 1377-78 (D.Conn. 1987)
(without presumption, unions would be put to “the potentially
prohibitive cost” of proving the individual percentages of a very large
number of affiliates), aff'd as modified on other grounds, 829 F.2d
335, 338-339 & n.1 (2d Cir. 1987). Accordingly, summary judgment
will be entered on behalf of defendants on this claim.
rrr rremaaaeal
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IV.
FAIR SHARE FEE PROCEDURES
In the prior order, the court preliminary enjoined the Union from
collecting a fair share agency fee until it provided a challenge
procedure which allows for the dispute to be resolved within 120 days
from the date on which the disputed fee is seized from the nonmem-
bers’ paycheck. The court also ruled that the “under penalty of
perjury” and specificity requirements, removed by the Union's
January 10, 1996 letter, must not be re-imposed on nonmembers.
Defendants now argue that the court should dissolve these order
because it has continued to abide by its January 10, 1996 letter and has
also voluntarily instituted a procedure which allows dissenting
nonmembers to make challenges within sixty days.
The court will not dissolve the injunction. Voluntary cessation
of illegal conduct does not moot a case because defendant would
otherwise be free to return to its old ways. United States v. W.T.
Grant Co., 345 U.S. 629, 632 (1953). Accordingly, the injunction will
remain permanent.
V.
INDEMNIFICATION CLAUSE
Plaintiffs assert that the hold harmless agreement between the
Union and the district is void as being against public policy and that
this court should so declare. The assertion raises a number of subtle
and that difficult questions, viz, is this a question of federal law since
it arises in the context of procedures mandated by the Supreme Court
as implementing First Amendment rights, or state law since a
California contract is in issue; in either event, how is public policy to
be discovered, i.e. if federal law, is it a matter of federal common law
requiring an examination of the common law as it stood at the time of
the adoption of § 1983, see, e.g., Pierson v. Rhay, 386 U.S. 367 (1951)
(§ 1981 applied against the backdrop of tort law at the time of its
adoption), or if state law what doctrines of state public policy are in
issue.
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I begin by noting that neither party has briefed the difficult issues
underlying resolution of this aspect of plaintiffs’ claim, but instead
rely on circuit cases, which also do not address these questions, but in
any event reached opposite results. See Hohe v. Casey, 956 F.2d 399,
411-12 (3d Cir. 1992) (agreement to hold public employer harmless
does not violate public policy); Weaver v. University of Cincinnati,
970 F.2d 1523, 1536-38 (6" Cir. 1992) (hold harmless agreement does
violate public policy). Happily, it is this court’s view that those
question need not be reached, since plaintiffs have failed to show that
they have standing to raise the issue.
Plaintiffs seeking declaratory relief must demonstrate standing to
raise the question. Standing requires a showing that plaintiff has
“personally suffered some actual or threatened injury as a result of the
putatively illegal conduct of the defendant.” Scott v. Rosenberg, 702
F.2d. 1263, 1267 (9" Cir. 1993). Second, “that the injury can be fairly
traced to the challenged action, [and third, that it] is likely to be
redressed by a favorable decision.” /d. (quoting Eastern Kentucky
Welfare Rights Org. v. Simon, 426 U.S. 26, 38 (1976)); see also
Preferred Communications, Inc. v. City of Los Angeles, 754 F.2d
1396, 1403, (9" Cir. 1985).
It seems relatively clear to this court that plaintiffs have not
monstrated any of the three prerequisites to standing.'* While it
may be that plaintiffs have suffered a violation of the standards
enunciated in Hudson, that injury is the result of the Union’s conduct,
and is traceable to the hold harmless agreement in only the most
indirect fashion. Such indirect injury is insufficient. Eastern
Kentucky, 426 U.S. at 40. As the Ninth Circuit has observed, the mere
assertion that the employer “felt freer” to shirk its duty to its employ-
T ees is insufficient, without more, to establish an injury. Knight v.
Kenai Peninsula Borough School District, __ F.3d __, 1997 WL
751724, at *7 (9" Cir. 1997). Having concluded that plaintiffs lack
\ 'S Relative clarity suffices. As the Supreme Court explained, resolution of
standing issues tends to be a question of degree rather than kind, i.c., identifying a
point on a continuum, and thus determinations of standing are “not susceptible of
precise definition.” Allen v. Wright, 468 U.S. 737 (1984).
Se ee ae
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standing to raise the issue of the lawfulness of the hold harmless
agreement, the court cannot reach the issue. Accordingly, summary
judgment as to this claim must be entered on behalf of defendants.
VI.
RESTITUTION
Plaintiffs request complete restitution of all agency fees collected
under the constitutionally deficient procedures. The request appears
overly ambitious. The Supreme Court has held that restitution under
§ 1983 need not be more expansive than compensatory damages for it
to fulfill the deterrent effect that Congress intended. Carey v. Piphus,
435 U.S. 247, 256-57 (1978) (cited in Lowary JI, 903 F.2d at 433).
“Although some undetermined part of these fees was unconstitution-
ally seized, plaintiffs would be ‘free riders’ to the extent that plaintiffs
were allowed to recover their validly chargeable expenses.” Lowary
IT, 903 F.2d at 432. Morever, “awarding total restitution to plaintiffs
will undermine the policy concerns of Abood.” /d. at 432-33. As the
Sixth Circuit observed, the proper remedy for an unconstitutional fee
collection under Hudson is not the refund of the total fee, but the
refund of that portion which was not spent on chargeable activities.
Id. at 433 (citing Hudson and Railway Clerks v. Allen, 373 U.S. 113,
122 (1963)).
While plaintiffs have submitted evidence suggesting that they
were charged amounts in excess of the Union’s representational costs,
it is unclear from the record whether and how much of a refund is
appropriate. Given that the appropriate forum for resolution of the
issue is the challenge procedure mandated by Hudson, the court will
defer to that process. Accordingly, summary judgment will ” denied
plaintiff and granted defendants as to this claim.
VII.
ORDER
For all the above reasons, the court makes the following OR-
DERS:
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|. Defendants’ motion to dissolve the preliminary injunction
is DENIED and the injunction is made permanent; and
2. The cross-motions for summary judgment are GRANTED
and DENIED as provided above.
IT IS SO ORDERED.
DATED: January 23, 1998.
Ls/
LAWRENCE K. KARLTON
CHIEF JUDGE EMERITUS
UNITED STATES DISTRICT COURT
APPENDIX D
ORDER OF THE UNITED STATES
COURT OF APPEALS FOR THE
NINTH CIRCUIT
25 June 1999
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[Clerk’s Stamp Omitted in Printing]
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEAL
FOR THE NINTH CIRCUIT
STEVEN PRESCOTT; ROBERT _) No. 98-15579
F. BERRY; CHERYL L. JONES; )
KAREN PIERCE; CHRISTINE ) D.C. No. CV-95-01859-
M. TURNEY, ) LKK
Plaintiffs-Appellants,
Vv.
— YS SZ
) ORDER DENYING PETI-
COUNTY OF EL DORADO; ) TION FOR REHEARING
KATHY LIBICKI; LOCAL 1 EL ) AND REJECTING THE
DORADO COUNTY EMPLOY- ) SUGGESTION FOR RE-
EES ASSOCIATION, ) HEARING EN BANC
Defendants- Appellees.
— ~~"
Before: FERNANDEZ and McKEOWN, Circuit Judges, and
WEINER", District Judge.
The panel has unanimously voted to deny the appellants’ petition
for rehearing. The suggestion for rehearing en banc was circulated to
the judges of the court, and no judge requested a vote for en banc
consideration. —
\
The petition for rehearing is DENIED and the suggestion for
rehearing en banc is REJECTED.
'© Honorable Charles R. Weiner, Senior United States District Judge for
Eastern Pennsylvania, sitting by designation.
\
APPENDIX E
UNITED STATES CONSTITUTION
Article III
;
;
}
'
- 38a -
UNITED STATES CONSTITUTION
Article [H
Section 1. The judicial Power of the United States, shall be vested in
one supreme Court, and in such inferior Courts as the Congress may
from time to time ordain and establish....
Section 2. The judicial Power shail extend to all Cases, in Law and
Equity, arising under this Constitution [and] the Laws of the United
States...
od
= ui:
-
APPENDIX F
UNITED STATES CONSTITUTION
First Amendment
a
- 39a -
UNITED STATES CONSTITUTION
First Amendment
The First Amendment provides in pertinent part:
Congress shall make no law ... abridging the freedom of speech; ... or
the right of the people peaceably to assemble; and to petition the
Government for a redress of grievances.
APPENDIX G
UNITED STATES CONSTITUTION
Fourteenth Amendment
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UNITED STATES CONSTITUTION
Fourteenth Amendment
The Fourteenth Amendment provides in pertinent part:
Section 1. .... No State shall make or enforce any law which shall
abridge the privileges or immunities of citizens of the United States;
nor shall any State deprive any person of life, liberty, or property,
without due process of law; nor deny to any person within its
jurisdiction the equal protection of the laws.
APPENDIX H
CIVIL RIGHTS ACT OF 1871
42 U.S.C. § 1983 (West Supp. 1999)
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CIVIL RIGHTS ACT OF 1871
42 U.S.C. § 1983 (West Supp. 1999) -
Every person who, under color of any statute, ordinance,
regulation, custom, or usage, of any State ... subjects, or causes to be
subjected, any citizen of the United States or other person within the
jurisdiction thereof to the deprivation of any rights, privileges, or
immunities secured by the Constitution and laws, shall be liable to the
party injured in an action at law, suit in equity, or other proper
proceeding for redress....
en ate = ae eee
APPENDIX I
MEYERS-MILIAS BROWN ACT
Cal. Gov’t Code § 3502.5(a)
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MEYERS-MILIAS BROWN ACT
Cal. Gov’t Code § 3502.5(a)
... an agency shop agreement may be negotiated between a public
agency and a recognized public employee organization which has been
recognized as the exclusive or majority bargaining agent pursuant to
reasonable rules and regulations, ordinances, and enactments, in
accordance with this chapter. As used in this chapter, “agency shop”
means an arrangement that requires an employee, as a condition of
continued employment, either to join the recognized employee
organization, or to pay the organization a service fee in an amount not
to exceed the standard initiation fee, periodic dues, and general
assessments of such organization for the duration of the agreement, or
a period of three years from the effective date of such agreement,
whichever comes first....
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.