# Petition for Writ of Certiorari — Prescott v. County of El Dorado > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0670%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2003 - **Citation:** 537 U.S. 1188 ## Text { FILED 02 68 60CT 25 2003 NO. 02-___amge OF THE CLERK IN THE Supreme Court of the United States OCTOBER TERM, 2002 STEVEN PRESCOTT; ROBERT F. BERRY; CHERYL JONES; KAREN PIERCE; AND CHRISTINE M. TURNEY, ~ Petitioners, V. COUNTY OF EL DORADO; SHARON LIBICKI; AND EL DORADO COUNTY EMPLOYEES ASSOCIATION, LOCAL NO. 1, Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit PETITION FOR A WRIT OF CERTIORARI ZO 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 October 2002 \\A Vy = = QUESTIONS PRESENTED Do public employees Possess standing to challenge, as void as against Federal constitutional law and public policy, the legality of provisions of the collective bargaining agreement governing their terms and conditions of employment? May a public employer agree to be indemnified by a labor union for the public employer’s liability for violating its nonunion employees’ constitutional rights when it seizes compulsory union fees in violation of this Court’s decision in Teachers Local No. 1 y. Hudson, 475 U.S. 292 (1986)? wtks PARTIES TO THE PROCEEDINGS BELOW There were no parties to the proceedings in the court whose judgment is sought to be reviewed other than those named in the caption: - lii - TABLE OF CONTENTS Page SPU UMINOE DUIUITID ovis osc ces da cedccoveecsa.. i PARTIES TO THE PROCEEDINGS BELOW ................ ii TABLE OF AUTHORITIES ............. he eaNeins dscns vii ee brels ih tew i fouuc’..c.. 2 | ee eS ee ee 2 CONSTITUTIONAL AND STATUTORY PROVISIONS sa ob nn oa oe ob vka wk ne 2 STATEMENT OF THE CASE .......................... 3 Or, SUNN oS ww A hs Ke wee pieee vias stews 4 II. Prior Proceedings and Proceedings Below ...... 6 REASONS FOR GRANTING THE WRIT ................. 10 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 .............. 10 -iV- TABLE OF CONTENTS — CONTINUED Page A. The Conflict with Decisions on the Injury-in-Fact Inflicted by Government Enforcement of an AQUROY TROD TOD oo civ cece c ec ceccvesees 11 1. The Conflict with This Court............. 12 2. The Conflict Among the Circuits ......... 16 B. The Conflict with “Standing” Decisions ........ 17 1. The Conflict with This Court’s Decisions ... 17 2. The Conflict Among the Circuits GE ke cecicnstiirads sateen, 20 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 ...... 23 A. The PR AS 2 ix Spe es eg ee ee a 23 B. The Importance of the Issue ................. 28 CIE inno n co cle TS ae Oa eo eee eh eek 30 -V- - TABLE OF CONTENTS -— CONTINUED APPENDICES Page A. Decision of the United States Court of Appeals for the Ninth Circuit (1 August 2002), reported at 298 F.3d 844 (9th Cir. 2002) ................ la Final Judgment in a Civil Case Entered by the United States District Court for the Eastern District of California (17 April 2001) ......... _6a Order on Pending Summary Judgment Motions Entered by the United States District Court for the Eastern District of California (17 April 2001)... 7a Decision of the United States Court of Appeals for the Ninth Circuit (12 May 1999), reported at 204 ee ee oe 19a Decision of the United States Court of Appeals for the Ninth Circuit (12 May 1999), reported at 177 P36 1102 (Sth Cir. 1999) oo vnc cevcveccccs. 22a Final Judgment in a Civil Case Entered by the United States District Court for the Eastern District of California (1 April 1998) ......... 47a -Vi- TABLE OF CONTENTS — CONTINUED Page . Opinion and Order Denying Defendants’ Motion to Dissolve or Modify the Preliminary Injunction, and Granting in Part and Denying in Part Plain- tiffs’ Motion for Summary Judgment Entered by the United States District Court for the Eastern District of California (26 January 1998) ....... 48a . United States Constitution, Article II] ........ 69a United States Constitution, yf. I re ee 70a United States Constitution, Fourteenth Amendment ................ Tla . Civil Rights Act of 1871, 42 U.S.C. § 1983 (West Supp. 1999) .............. 72a Meyers-Milias-Brown Act, Cal. Gov’t Code § 3502.5(a) ....°........ 73a - Vii - TABLE OF AUTHORITIES Cases Page Abood v. Detroit Board of Education, on She CENTER Sal. Rdi a Bidar sé ove 12, 15, 23 Air Line Pilots Association v. Miller, ee 13 Allen v. Wright, ey SOE ik ink we oh chudud tenecdatsas 10 Andrews v. Education Association of Cheshire, S49 F206 53S CE Cir. 1987) o.oo cccscccccccccces 17 Bowsher v. Synar, SE POE 65s i nn neevddsknunech ues 15 Brewer v. Lewis, 989 F.2d 1021 (9th Cir. 1993) .................. 22 Carey v. Piphus, eM NOD ih oN bk Walks ine elie oe 25 City of Newport v. Fact Concerts, Inc., a UO Ek ocienin Sein vce k a nc ook 25 Clements v. Fashing, cetittectees ice. FO eT 20 Clinton v. City of New York, Pe Wes GET CNMI vc kc cndccccccvece 10, 15, 18, 19 - Vili - TABLE OF AUTHORITIES — CONTINUED Page Cramer v. Matish, 924 F.2d 1057 (table), 1990 WL RS OT ere eee 22, 26 District of Columbia v. Carter, ere rr 24 Ellis v. Railway Clerks, te errr 15, 24, 28, 29 Elrod v. Burns, es ee 65 5 och be vbk aenseeesenen ees 12 Federal Election Commission v. Akins, Se ae EP ous cikdwinvekesetessdenasere 10 Foster v. Madhesian, 268 F.3d 629 (Sth Cir. 2002) ...... cc ccccees passim Friends of the Earth, Inc. v. Laidlaw, : ee Es. 0b ve ea Wieceaeasrcdedonecuens 7 Harik v. California Teachers Ass'n, Fe Fe Oe A: BED voi vccncocccusees 11,24 Hohe v. Casey, ie hog: le Bee eee passim - ix - TABLE OF AUTHORITIES — CONTINUED Page Hohe v. Casey, 740 F. Supp. 1092 (M.D. Pa. 1989), rev'd in part, 956 F.2d 399 (3d Cir. 1992)................ 21 Hudson v. Teachers Local No. 1, 743 F.2d 1187 (7th Cir 1984), ay Se UI wv kis od cccdce cdcccons 17 Knight v. Kenai Peninsula Borough School District, 131 F.3d 807 (9th Cir. 1997), cert. denied sub nom. Anchorage Education Association v. Patterson, 524 U.S. 904 (1998) ........... 12, 16, 20 Lawrence v. Chater, POO Ae BU CIIOE oc ccécccccdidwin OF eT Cee 7 Lehnert v. Ferris Faculty Association, | AR Cr Pre Po eee 15 Los Angeles v. Lyons, See bo odd aid ae base ve 10, 16, 17, 18 Lujan v. Defenders of Wildlife, Pe ROO Sb iced Obed swbi sconces 10, 22 Ex parte McCardle, FE FSV ei ver eb wei bdvhedéccees 23 -X- TABLE OF AUTHORITIES — CONTINUED Page Mitchum v. Foster, og te ef ee ee ee ee ee 24 Monroe v. Pape, Cg eg POPUP TOL TET EL TERT Eee 24, 29 National Law Center on Homelessness & Poverty v. Kantor, Pe ee 8 a ls BE ov oo we ha ee ed ewes’ 23 National Organization for Women v. Scheidler, SS Re eer ee er ee re 22 Northeastern Florida Chapter of the Associated General Contractors of America v. Jacksonville, Pe a CEE 8 8x8 nets baevees ss Ciiee ies 19 O’Shea v. Littleton, ge | ET eee ee ere ret eer 18 Patterson v. American Tobacco Co., . Dae Wat CORE, BRP vi eek cece stern aes 18 Prescott v. County of El Dorado, 915 F. Supp. 1080 (E.D. Cal. 1996) .............. 5, 6 Regents of University of California v. Bakke, ee Sis EP CUA 6 Fak nance eile sen i Adee 20 « Xie« TABLE OF AUTHORITIES — CONTINUED Page Sierra Club v. Morton, ect ht LS PEPPePEe Terror reer 10 Simon v. Eastern Kentucky Welfare Rights Organization, 1 | erry rae Tar rare 10 Stamford Board of Education v. Stamford Education Association, 697 F.2d 70 (2d Cir. 1982) ............ 18, 25, 26, 27 Steel Co. v. Citizens for a Better Environment, gS NE ee ee 10, 23 Teachers Local No. 1 v. Hudson, re ee Eh P90 eben bone Sees passim Tierney v. City of Toledo, B24 F268 1497 COM Ct. 1967) occ ce cseeccseds 17 Turner v. Fouche, PO ee re re ee 19 Valley Forge Christian College v. Americans United for Separation of Church & State, ok ga oS re eee 10 Vermont Agency of Natural Resources v. United States ex rel. Stevens, re rae ere eee 10 - Xii- TABLE OF AUTHORITIES — CONTINUED Page Ex parte Virginia, oe Reh er re se errr cr 24 Warth v. Seldin, , eg te Bl, rrr viene vakalemee 10 Weaver v. University of Cincinnati, FPO F226 1529 COC, TGF) avec cv cnedvinys passim Wessel v. City of Albuquerque, | 299 F.3d 1186 (10th Cir. 2002) ... 2. cc ecveee passim Wilson v. Garcia, O72 TS: BO COR) 6 8 NEENAH 24 29 Wyatt v. Cole, TG Ui TSG 6 vk ve cc esved recess vayeseos 25 Constitutions, Statutes, and Rules United States Constitution, Se 6a Ces Airis Sere re eee 2,19 SI 0 5 6 06 5 or eRTA AAR passim NE BET ki ik'basan bed k bee eeeee eee 6 ae Line Item Veto Act, yack fom fF fF Seererrrervee re ieee. 18-19 - Xili - TABLE OF AUTHORITIES — CONTINUED Page ee rrr 2 Civil Rights Act of 1871, 42 U.S.C. § 1983 (West Supp. 1999) Stakes 0's passim Civil Rights Attorney’s Fees Award Act, 1976, 42 U.S.C. § 1988 (West Supp. 1999) ........ 16 25, 26 SS San ae 2 Meyers-Milias-Brown Act, eR 4 i 4 eg gS 2,4 Cae eee POGOe sree) ................... 28 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 UNION REV. 1 (Summer 1995) .................. 28 1A MARTIN A. SCHWARTZ & JOHN E. KIRKLIN, Section 1983 Litigation: Claims and Defenses § 1.3 SS Oe 24 IN THE Supreme Court of the United States OCTOBER TERM, 2002 No. 02- STEVEN PRESCOTT; ROBERT F. BERRY; CHERYL L. JONES; KAREN PIERCE; AND CHRISTINE M. TURNEY, Petitioners, Vv. COUNTY OF EL DORADO; KATHY LIBICKI; AND EL DORADO COUNTY EMPLOYEES ASS’N, LOCAL NO. 1, Respondents. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT PETITION FOR A 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 1 August 2002. : se OPINIONS BELOW The panel opinion sought to be reviewed (Appendix (“App.”) A at la) is reported at 298 F.3d 844. The judgment (App. B at 6a), and opinion and order of the United States District Court for the Eastern District of California on Petition- ers’ and Respondents’ Cross-Motions for Summary Judgment (App. C at 7a) are unreported. Also included are the panel decision of the Ninth Circuit (App. D at 19a), on remand from this Court, reported at 204 F.3d at 984, the original panel decision of the Ninth Circuit (App. E at 22a), reported at 177 F.3d 1102, and the District Court’s unreported original judgment (App. F at 47a) and opinion and order (App. G at 48a). JURISDICTION The court of appeals entered its judgment on 1 August 2002. 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, and § 3502.5(a) of the California Government Code. Their pertinent text is set out in Appendices H-L at 66a-70a. xo STATEMENT OF THE CASE Like this Court’s earlier consideration, Prescott v. County of El Dorado, 528 U.S. 1111 (2000), this case involves: (1) the standing of public employees to challenge provisions of the agreement governing their terms and conditions of employment; and (2) whether a public employer may contract away (to the union benefitting from its actions) liabilities arising from its enforcement of an agency shop scheme which fails to comply with “the constitutional requirements for the Union’s collection of agency fees.” Teachers Local No. 1 v. Hudson, 475 U.S. 292, 310 (1986). , This civil rights action, brought under 42 U.S.C. § 1983, sought and obtained declaratory, injunctive, and other relief to prevent and redress violations of Petitioners’ constitutional rights to be free from unlawful seizures of compulsory union fees. See generally Hudson, 475 U.S. at 306-10. Included within their Complaint, Petitioners Steven Prescott, et al. (“the employees”), also challenged the “indemnification provision” of the memorandum of understanding (“MOU”) between Respondents County of El Dorado (“County”) and El Dorado County Employees Association, Local No. 1 (“EDCEA”), alleging that it is void as against public policy and unenforceable (Record (“R.”) 1, Complaint, {J 14 and 31, and Exhibit A, Article 4, § 3(J)). Applying Hudson, the lower courts decided most of the employees’ claims and entered judgment largely in their favor. However, the lower courts twice declined to address the indemnification issue, declaring that the employees lack standing to challenge this section of the MOU governing their terms and conditions of employment. See App. A at 3a-5a, 298 F.3d at 845-47; App. E at 41a-43a, 177 F.3d at 1111-12; App. G at 64a-66a. I. The Facts. The employees are employed by the County in a bargaining unit represented by EDCEA. EDCEA is a “recognized employee organization” and the County is a “public agency” within the meaning of California’s Meyers-Milias-Brown Act (“MMBA”), Cal. Gov’t Code § 3501(b) and (c). The employees are not union members, and were not, when “agency fees” were seized from their pay. App. A at 2a-3a. Pursuant to the MMBA, Cal. Gov’t Code § 3502.5(a), the EDCEA/County MOU imposed a forced-unionism obligation (entitled “Fair Share”) by which the County agreed to deduct fees from the wages of all bargaining unit employees who did not join EDCEA, and to forward those fees to EDCEA. App. A at 2a-3a. Included in this section of the MOU was an indemnification provision, as follows: Local 1 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 collection 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 [sic] time as well. Id. at 3a, 298 F.3d at 845. In April 1995, EDCEA sent a notice to the employees, purportedly in compliance with Hudson’s requirements. On 12 May 1995, the County seized initiation fees and agency fees from each employee’s bi-weekly salary, forwarding the fees to EDCEA’s affiliate, Public Employees Union, Local No. 1. ee Respondents failed to comply with all of the procedural protections required by this Court’s decision in Hudson before fees were seized. Prescott v. County of El Dorado, 915 F. Supp. 1080, 1091-92 (E.D. Cal. 1996). As adjudicated by the lower courts, EDCEA’s notice and procedure violated Hudson’s three requirements, 475 U.S. at 310, failing to provide: (1) “an adequate explanation of the basis for the fee” by failing to provide audited financial disclosure, App. E at 29a-34a, 177 F.3d at 1106-09; (2) “a reasonably prompt opportunity to challenge the amount of the fee before an impartial decisionmaker,” as EDCEA’s challenge procedure would not occur until more than a year after the first fee seizure, 915 F. Supp. at 1091, and the union required specific objections submitted “under penalty of perjury,” App. G at 63a-64a (permanently enjoining EDCEA from imposing requirements); and (3) “an escrow for the amounts reasonably in dispute while such challenges are pending,” as EDCEA escrowed only 4% of the fee seized, App. E at 37a-40a, 177 F.3d at 1110-11. Respondents County and Kathy Libicki (the County’s Director of Human Resources) took no steps to comply with Hudson’s requirements, relying wholly upon EDCEA’s representations that it had done so. The County and Libicki initially claimed that they undertook no independent review to confirm EDCEA’s representations that it had complied with Hudson’s requirements before seizing agency fees from the employees. R. 23, Exhibit 3, page 2, Admission No. 3; R. 92, pages 24-25; see also R. 90, | 23 (failing even to ascertain whether the notice was sent to all “potential objectors,” Hudson, 475 U.S. at 306). However, later discovery revealed that they had concluded that EDCEA’s financial disclosure probably did not comply with Hudson’s requirements. R. 92, pages 35-36 and Exhibit 6A; see also R. 90, { 22. Nevertheless, the County enforced the forced-unionism agreement in the belief ie that the indemnification agreement protected it from all liability to the employees. II. Prior Proceedings and Proceedings Below. The employees filed their Complaint in October 1995, seeking declaratory and injunctive relief, and damages, on the grounds that Respondents were enforcing their “agency shop” scheme in violation of Hudson, and that the indemnification provision of the MOU is void as against public policy. After preliminarily enjoining all fee seizures, Prescott, 915 F. Supp. at 1092, the District Court, on 26 January 1998, entered its order, App. G at 48a-68a, and its judgment, on 1 April 1998, largely in favor of the employees, App. F at 47a. The District Cou:t permanently enjoined EDCEA from utilizing portions of its Hudson procedure. App. G at 63a-64a. District Court rulings that EDCEA’s unaudited financial disclosure and escrow were adequate under Hudson were reversed on appeal. App. E at 29a-34a, 37a-40a, 177 F.3d at 1106-09, 1110-11, cert. granted, vacated, remanded, 528 U.S. 1111 (2000), reinstated in pertinent part, App. D at 20a-21a, 204 F.3d at 984. As to the employees’ claim that the indemnification provision of the MOU is void as against public policy and unenforceable, the District Court sua sponte declared that the employees lack standing to challenge this term of the MOU governing their terms and conditions of employment. App. G at 64a-66a. Specifically, the District Court found that the employees had “not demonstrated any of the three prerequisites to standing.” The court reasoned 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.” Jd. at 66a. The employees appealed, R. 54, attacking, inter alia, the . - District Court’s ruling that they lack standing to challenge the indemnification provision. App. E at 41a, 177 F.3d at 1111. Acknowledging “that [the employees] suffered some injury when the fees were deducted from [their] paycheck(s],” the first Court of Appeals panel nevertheless affirmed the District Court’s standing ruling. Jd. at 42a, 177 F.3d at 1112 (identifying injury as failure to comply with Hudson's standards; injury results from unioa’s conduct). Thus, both the District Court and the original panel denied any nexus between the indemnification provision and the County’s seizure of fees from the employees. Id., 177 F.3d at 1112. The original panel’s denial was rooted in its conclusion that the employees were injured not by the County’s illegal fee seizures, but because “fee deduction procedures were [not] properly followed.” It then concluded that this miscast “injury” was not “fairly traceable to the agreement,” and that it was “speculative” to conclude that “striking of the agreement would redress or prevent the injuries . . . suffered.” Jd., 177 F.3d at 1112. The employees petitioned this Court for a writ of certiorari. This Court apparently determined either “intervening developments, or recent developments that [it] had reason to believe the court below did not fully consider, reveal[ed] a reasonable probability that the decision below rest[ed] on a premise that the lower court would reject if given the opportunity for further consideration.” Lawrence v. Chater, 516 U.S. 163, 167 (1996). This Court granted the petition, vacated the decision below, and, on 18 January 2000, remanded the case “for further consideration in light of Friends of the Earth, Inc. v. Laidlaw,” 528 U.S. 167 (2000). 528 U.S. 1111 (2000). dite Further discovery on remand revealed the County knew, prior to seizing the compulsory fees from the employees’ wages, that EDCEA’s financial disclosure “may not meet [the] standard of ‘legally audited’ financial disclosure.” R. 92, pages 35-36 and Exhibit 6A (original emphasis). Nevertheless, upon cross- motions for summary judgment, the District Court again held that the employees lack standing to.challenge the validity of the indemnification clause, App. C at 15a-18a, and dismissed the case, App. B at 6a. The employees again appealed. R. 99. Retreating from the concession of its predecessor panel, App. E at 42a, 177 F.3d at 1112; but see Hudson, 475 US. at 310, the second panel refused to acknowledge that employees are injured by the illegal seizure of their property. Instead, the second panel—like the District Court, App. C at 16a—identi- fied the injury as a failure to comply with Hudson’s standards and affirmed the District Court’s standing ruling. App. A at 4a- Sa, 298 F.3d at 846-47. Like the District Court, the panel recast the Complaint, stating that “[t]he only cognizable injury the plaintiffs allege is that the union did not give them adequate notice of the basis of the fees.” Jd. at 2a, 298 F.3d at 845; see also id. at 3a-4a, 298 F.3d at 846 (“The only injury they alleged was that the union failed to comply with the requirements of Hudson to provide notice of the basis of the agency fees . . . and to maintain an adequate portion of collected fees in escrow pending fee arbitration.”). However, the Complaint five times identifies the seizure of agency fees as the source of the employees’ injuries. R. 1, #f 15, 19, 20, 21 & 24.' ' The panel likewise disregards prior proceedings herein, for in addition to the failure to provide “adequate notice,” the District Court had adjudicated four distinct procedural deficiencies. See page 5, supra. vile Based upon this misapprehension of the Record and prior proceedings, and the flawed premise that inadequate notice— and not the illegal seizure of property—causes injury, the panel declared that the employees had not “met the redressability requirement for standing,” because it was merely “speculative” that the declaratory and injunctive remedy sought would not “prevent future violations.” App. A at 4a, 298 F.3d at 846. The panel also asserted that a public employer is not liable when it seizes fees from employees absent compliance with “the constitutional requirements for the . . . collection of agency fees.” Hudson, 475 U.S. at 310. The panel concluded that a public employer “has no responsibility for ensuring the adequacy of the notice; that is the union’s responsibility.” App. A at 4a, 298 F.3d at 846 (citing Foster v. Madhesian, 268 F.3d 689, 694 (9th Cir. 2001)). 2 « 86. 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, this case appears to present a routine standing issue, addressed frequently by this Court. See Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 763, 771-78 (2000); Clinton v. City of New York, 524 U.S. 417 (1998); Federal Election Comm’n v. Akins, 524 U.S. 11 (1998); Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (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 repeated the familiar tripartite showing required to establish 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, 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 lower court’s treatment of standing here is not routine. Prescott v. County of El Dorado, 528 U.S. 1111 (2000). By misdefining the employees’ injury, the Ninth Circuit writes out of civil rights law the government’s duty to refrain from violating nonunion employees’ constitutional rights, failing to apply this Court’s clearly-enunciated standards, see Hudson, 475 U.S. at 307 n.20 ( “the government and union have a responsibility to provide procedures that minimize th[e] ott. impingement [on First Amendment rights] and that facilitate a nonunion employee’s ability to protect his rights”) as well as those of virtually every other Circuit addressing this issue. Consequently, the employees face the prospect of future violations of their constitutional rights by both illegal agency fee seizures absent compliance with the “constitutional requirements for the . . . collection of agency fees,” id. at 310, and by compelled subsidization of the public employer’s defense against their successful lawsuit challenging past violations of their constitutional rights. A. The Conflict with Decisions on the Injury-in-Fact Inflicted by Government Enforcement of an Agen- cy Shop Scheme. The panel’s decision conflicts with this Court’s standing decisions, because it conflicts with this Court’s forced-unionism jurisprudence. Although nonmembers are injured by the public employer’s seizure of agency fees from their wages, the panel radically abstracted their injury, attributing their “injury in fact” to inadequate notice under Hudson. App. A at 2a, 298 F.3d at 845. Thus, the panel premised its decision on the implausible proposition that the contents ofa union’s notice—rather than the seizure of his or her property—injures an employee. The Ninth Circuit has applied this analysis in a series of cases, beginning with the first decision herein, App. E at 41a- 43a, 177 F.3d at 1111-12, and culminating in its decision on remand from this Court. App. A at 4a; see also Foster v. Madhesian, 268 F.3d 689, 694 (9th Cir. 2001); Harik v. California Teachers Ass'n, 298 F.3d 863, 870 (9th Cir. 2002) (reversing judgment against public officials for seizing fees absent Hudson compliance). ee The panel’s conclusion defies this Court’s mandate that it is the public employer’s responsibility, before it seizes fees from “potential objectors,” to ensure that Hudson’s standards are satisfied. Hudson, 475 U.S. at 306-07 & n.20; see also Knight v. Kenai Peninsula Borough Sch. Dist., 131 F.3d 807, 817 (9th Cir. 1997) (miscast by both the Foster and the Prescott panels). 1. The Conflict with This Court. Hudson holds that an employer’s seizure of nonmembers’ fees is the constitutionally-injurious act, rejecting the argument that only the union’s expenditure of nonmembers’ fees injures them. Proceeding from the principle “that requiring employees to support the collective-bargaining representative ‘has an impact upon their First-Amendment interests’” (quoting Abood v. Detroit Board of Education, 431 U.S. 209, 222 (1977)), this Court identified a two-fold violation in any forced-unionism scheme: that it “may well ‘interfere in some way with an employee’s freedom: (1)] to associate for the advancement of ideas, or [(2)] to refrain from doing so, as he sees fit.”” Hudson, 475 U.S. at 301. This Court reiterated that “the agency shop itself impinges on the nonunion employees’ First-Amendment interests,” noting that an “appropriately justified advance reduction” of the fee is required. Jd. at 309. Recognition that it is the taking which injures the constitutional rights of nonmembers was cemented by this Court’s holding establishing “the constitutional requirements for the . . . collection of agency fees.” Id. at 310 (emphasis added); cf. Elrod v. Burns, 427 U.S. 347, 373 (1976) (“loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury”) (emphasis added). sit. While declining to consider the case “through the prism of the procedural due process protections necessary for deprivations of property,” this Court recognized that the infringement is dual, because “the procedures required by the First Amendment also provide the protections necessary for any deprivation of property.” Hudson, 475 U.S. at 304 n.13. It therefore rejected the union’s argument that “any valid constitutional objection to [its] procedure,” was addressed by escrow of all monies seized from nonmembers. Jd. at 309. This principle was again recognized when this Court rejected the argument that “[iJllegality depends on the spending of compelled agency fees for ideological purposes . . . not simply the initial collection of those fees.” Air Line Pilots Ass'n v. Miller, 523 U.S. 866, 876 n.4 (1998) (original emphasis). Furthermore, the panel’s novel conclusion disregards the government’s duty to refrain from unconstitutional conduct, and its culpability for its unconstitutional seizure of “agency fees” from nonunion public employees for a union’s benefit. See also Foster, 268 F.3d at 694. This Court unambiguously declared in Hudson 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 enforce a forced- unionism provision, 475 U.S. at 307 n.20 (emphasis added). Yet, another Ninth Circuit panel—relied upon by the panel below, App. A at 4a—discarded that conclusive affirm-ance of government responsibility in favor of a construction of § 1983 embracing the proposition that “the routine deduction of fees by the [government] employer,” does not injure employees when the necessary procedures have not been provided. Foster, 268 F.3d at 694. -14- Thus, the panel followed Foster’s decision elevating state statutory policy ostensibly favoring seizure of agency fees, id., over the federal constitutional policy barring fee seizures absent compliance with “the constitutional requirements for the . . . collection of agency fees,” Hudson, 475 U.S. at 310. Distribution of an inadequate Hudson notice does not cause the injury necessary to establish standing. App. A at 4a, 298 F.3d at 846. Rather, nonmembers are injured by the seizure of agency fees, an act committed solely by the public employer. The panel’s iailure to acknowledge this point (the core of the employees’ argument, see Plaintiffs-Appellants’ Reply Brief, filed 1 December 2001, pages 4-22), underlies its standing ruling: “The challenged indemnification clause upon which the employer insisted caused neither the union to furnish, nor the plaintiffs to receive, inadequate notice.” App. A at 4a, 298 F.3d at 846. What the panel did not face was the fact that the indemnification clause caused the County to agree to, and enforce, the forced-unionism agreement, i.e., to seize agency fees from the employees’ wages. Having miscast the “injury” suffered by the employees from whom forced union dues are seized, the panel consequently ignores the palpable and direct effect of the indemnification agreement in the seizure of agency fees. Moreover, the panel ignores the real and imminent prospect of additional financial injury (beyond the County’s past illegal seizures of agency fees), insofar as the employees remain subject to the County/EDCEA forced-unionism agreement.” Indeed, given the renewal of ? Petitioner Karen Pierce left her bargaining unit employment during the pendency of this lawsuit, R. 68, Exhibit A, J 5, and therefore does not face the prospect of compelled subsidization of EDCEA’s indemnification expenditures. However, because the other employees possess standing on (continued...) o1$- agency fee seizures after the District Court’s order of January 1998, App. G, they already have suffered that injury, when EDCEA charged them for the costs of indemnifying the County for its defense against their own meritorious lawsuit. A union may not charge objecting nonmembers for “expenses incident to [an illegal] strike,” because this Court “can imagine no legitimate governmental interest that would be served by compelling objecting employees to subsidize activity that the State has chosen to disallow.” Lehnert v. Ferris Faculty Ass'n, 500 U.S. 507, 531 (1991); accord id. at 562 (opinion of Scalia, J.). Similarly, no legitimate governmental interest can be served by compelling objecting employees to subsidize a public employer’s costs of defending itself against those employees’ successfully-adjudicated claims that it violated their First and Fourteenth Amendment rights by seizing agency fees in the absence of Hudson compliance. This Court has consistently recognized the First Amend- ment repercussions of forced-unionism schemes. Hudson, 475 USS. at 301 (quoting Abood, 431 U.S. at 222); see also Abood, 431 U.S. at 255 (Powell, J., concurring in the judgment); Lehnert, 500 U.S. at 517-19; see also Ellis v. Railway Clerks, 466 U.S. 435, 447, 455-56 (1984) (“by 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”). The coerced subsidization imposed by indemnification provisions in cases such as this serves no legitimate governmental interest, but seriously “impact[s]” the 2 (...continued) this basis, this Court need not consider Pierce’s status. Clinton, 524 U.S. at 431 n.19 (citing Bowsher v. Synar, 478 U.S. 714, 721 (1986)). -16- employees’ First Amendment rights. Hudson, 475 U.S. at 301; cf. 42 U.S.C. § 1988 (fee-shifting provisions). When it adopted the “injury-because-Hudson-was-not- followed” reasoning (App. A. at 2a-4a, 298 F.3d at 845-46), the panel below—like its predecessor panel, App. E—ignored the employees’ real economic injury in EDCEA’s indemnification of the County and Libicki from the costs of their defense of this lawsuit. The County/EDCEA MOU thus adds to the injury of the County’s unlawful seizure of agency fees the insult of requiring the employees to subsidize the County’s financial liability for that injury. Certainly, that injury is sufficient to confer upon the employees standing to challenge the legality of the indemnification agreement. Lyons, 461 U.S. at 111. 2. The Conflict Among the Circuits. The Ninth Circuit’s decision also conflicts with decisions of four other Circuits that have held employers liable for seizing agency fees absent compliance with Hudson’s requirements.’ There is no other precedent consistent with this panel’s decision. A public employer’s duty to refrain from inflicting constitutional harm by seizing fees is unanimously recognized in the Third, Sixth, Seventh, and Tenth Circuits, the only other Circuits to consider the question. Wessel v. City of Albuquerque, 299 F.3d 1186, 1197-99 (10th Cir. 2002) (“That a public employer has certain obligations within the fair share deduction framework established by courts is beyond dispute”), reh’g denied (1 Oct. 2002); Hohe v. Casey, 956 F.2d 399, 405- 06, 411 (3d Cir. 1992) (“the employer and the union must have > There is good cause to believe that it defies existing Ninth Circuit precedent, since this rule was previously recognized in Knight, 131 F.3d at 817, based upon Hudson, 475 U.S. at 307 n.20. «tts a constitutional procedure in place before deducting fees”); Tierney v. City of Toledo, 824 F.2d 1497, 1504, 1507 (6th Cir. 1987) (“no union or employer may take any action to enforce a non-union member’s duty to pay any dues, whether through a deduction from wages or payment from wages already paid,” absent Hudson compliance); Weaver v. University of Cincin- nati, 970 F.2d 1523, 1538 (6th Cir. 1992) (“a public employer ha[s] duties separate and apart from those of the union”); Hudson v. Teachers Local No. 1, 743 F.2d 1187, 1191 (7th Cir. 1984) (public agency liable), aff'd, 475 U.S. 292 (1986); see also Andrews v. Education Ass’n of Cheshire, 829 F.2d 335, 339 (2d Cir. 1987) (Hudson “mandated that the unions and government use a narrowly drawn plan that protects the nonmembers’ first amendment interests”). The panel’s mischaracterization of the employees’ argument—that they argued that “the indemnification clause is the legal cause of the inadequate Hudson notice,” App. A at 4a; 298 F.3d at 846; but see supra page 8—is contrary to both the Record and the uniform rule of law recognized by this Court and the other Circuits. — This Court should grant certiorari to address the panel’s deviation from this Court’s forced-unionism jurisprudence, and that of the other Circuits, as to the injury-in-fact suffered by nonunion employees subject to forced-unionism schemes. B. The Conflict with “Standing” Decisions. — 1. The Conflict with This Court’s Decisions. Insofar as the employees seek prospective declaratory and injunctive relief that Respondents’ indemnification scheme is void as against public policy, the panel failed to analyze properly the employees’ standing under Lyons. Lyons holds that litigants seeking such relief demonstrate standing when they : 2 show a “real or immediate threat that [they] will be wronged again—a ‘likelihood of substantial and immediate irreparable injury.”” 461 U.S. at 111 (quoting O'Shea v. Littleton, 414 U.S. 488, 502 (1974)). The four employees who remain employed by the County, subject to successor County/EDCEA MOUs and their forced-unionism provisions, satisfy these requirements. Nevertheless, because “[t]he remedy the plaintiffs seek, invalidation of the indemnification clause, does not compensate plaintiffs for past violations of Hudson, nor does it prevent future violations,” the panel below declared that the employees failed to meet “the redressability requirement for standing.” App. A at 4a, 299 F.3d at 846. In Stamford Board of Education v. Stamford Education Association, 697 F.2d 70, 74 (2d Cir. 1982), a similar indemnification provision was struck down. The Second Circuit cited the union’s payment of the public employer’s damages for entering into an unlawful agreement and the derivation of that payment from, “at least in part, funds collected as dues from the plaintiffs themselves or from members of the plaintiff class.” Id. (citing Patterson v. American Tobacco Co., 535 F.2d 257, 269 (4th Cir. 1976) (union may not bargain away minority employees’ right to equal treatment)). Similarly, the employees here face the very real prospect of subsidizing the opposition to their own lawsuit, when EDCEA indemnifies Respondents County and Libicki, and charges bargaining unit employees for those costs. That the employees will be forced to subsidize the County’s defense exceeds the showing of “contingent liability” sufficient to confer standing upon the City of New York in Clinton v. City of New York, 524 U.S. 417, 429-30 (1998). Opposing a constitutional challenge to the Line Item Veto Act, 2 U.S.C. § 691, et seqg., the United States government argued that there - 19. was no “actual injury [to the City] because the claims are too speculative,” 524 U.S. at 430, citing the fact that its liabilities were dependent upon the action of the State of New York. Rejecting this argument, this Court compared 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, “[e]ven if the outcome of the second trial is speculative, the reversal, like the President’s cancellation, causes a significant immediate injury by depriving the defendant of the benefit of a favorable final judgment.” Jd. Similarly, the courts below were confronted with the self- evident fact that indemnification lowers employer costs for violating nonmember employee rights, thereby creating disincentives to the public employer’s protection of the employees’ constitutional rights. Moreover, it is uncontroverted that the County, doing nothing to ensure that Hudson was satisfied, seized agency fees notwithstanding its doubts about the constitutional adequacy of EDCEA’s financial disclosure. If “denial of a benefit in the bargaining process can itself create an Article II injury, irrespective of the end result,” Clinton, 524 U.S. at 433 n.22 (citing Northeastern Florida Chapter of the Associated Gen. Contractors of America v. Jacksonville, 508 U.S. 656, 666 (1993)), then certainly achievement of a term in the bargaining process can likewise inflict an Article Ill injury.’ 4 The employees need not demonstrate that the County would have eschewed fee seizures absent the indemnification provision, see App. E at 42a-43a, 177 F.3d at 1112, to establish their standing. This Court has repeatedly refused to impose such a requirement. Jacksonville, 508 US. at 664-65 (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 (continued...) - 20. 2. The Conflict Among the Circuits on Standing. In addition to the Ninth Circuit in this case, three other courts of appeals—the Tenth, Sixth, and Third, respectively—have faced the indemnification issue in the context of forced-unionism agreements. See Wessel, 299 F.3d at 1197-99; Weaver, 970 F.2d at 1536-38; Hohe, 956 F.2d at 411-12. Indeed, an earlier panel of the Ninth Circuit faced a similar challenge. Knight, 131 F.3d at 817 (addressing merits challenge to indemnification provisions brought by similarly- situated employees).° None has eluded the merits by adopting the position of the panel in this case. Most recently, in Wessel, the Tenth Circuit specifically criticized and rejected the Ninth Circuit’s approach. There, the * (...continued) 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). : * Other than a perfunctory citation which fails to support the proposition for which it is cited, the panel disregarded this circuit authority. App. A at 4a, 298 F.3d at 846. In Knight, the district court “quickly disposed of” the argument that employees “are not a proper party to sue on a contract of indemnity.” Petition for a Writ of Certiorari, Anchorage Educ. Ass'n v. Patterson, No. 97-1454, App. C at 47a. However, perhaps recognizing Knight’s conclusion on the standing issue, the panel renders Knight through the prism of Foster, which declared that the seizure of fees is not an “adverse action” under Knight, 131 F.3d at 817. Foster, 268 F.3d at 694. -21- court referred to the Ninth Circuit’s erroneous identification of the injury, noting that: [t]he alleged injury results from the indemnification provision’s negation of any incentive for the City to ensure that the Hudson requirements were followed. The nonmembers’ entire argument presumes that, if the City faced potential liability, it would have prevented the fair share fees from being deducted unconstitutionally from the nonmembers’ paychecks. 299 F.3d at 1199 n.3. The Third Circuit addressed the challenge of similarly- situated employees to an indemnification agreement in Hohe, 956 F.2d at 411-12. There, the district court rejected the employees’ challenge to the indemnification provision, simultaneously rejecting 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). 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 plaintiffs’ challenge to [the statute].” 740 F. Supp. at 1099. In a footnote, the district court went on to state that, “[flor the same reasons we also reach that conclusion with respect to the indemnification clause in the collective bargaining agreement.” Jd. at n.5. On appeal, the nonmembers argued that the indemnification clause “is void as against public policy.” 956 F.2d at 411. The 22 - Third Circuit explicitly held that employees subject to a monopoly bargaining agreement 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.” Jd. at 411. Later, the Sixth Circuit declared such clauses void as against public policy. Weaver, 970 F.2d at 1536-38.° That decision is devoid of any suggestion that employees lack standing to challenge indemnification provisions. The court found it sufficient that 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.” Id. at 1538 (other citations omitted). Any federal court’s merits judgment presupposes determination that the parties possess the requisite standing. National Org. 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). It is “an indispensable part of the plaintiff's case.” Lujan, 504 U.S. at 5€t. 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 Sixth Circuit earlier issued an unpublished decision declaring such clauses void as against public policy. Cramer v. Matish, 924 F.2d 1057 (table), 1990 WL 169640 (6th Cir. 1990). There, no question was raised that employees possess standing to challenge one of their terms and conditions of employment. 5. the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.” Steel Co., 523 U.S. at 94 (quoting Ex parte McCardle, 7 Wall. 506, 514 (1868)); see also National Law Center on Homelessness & Poverty v. Kantor, 91 F.3d 178, | 80 (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. This 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. 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 AGREEMENTS. A. The Conflict. Like this case, Hudson was brought pursuant to § 1983. 475 US. at 298 n.3. 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, 431 U.S. at 237). “{A]nalyz[ing] the problem from the perspective of the First Amendment concerns,” 475 U.S. at 304 n.13, the Court determined that there are three “constitutional requirements for - 2. the . . . collection of agency fees.” Jd. at 310. The Court specifically stated that, in this context, both “the government and union have a responsibility 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). Under this articulation of government responsibility, a public employer may not, without running afoul of constitutional norms, seize agency fees from nonmember employees on behalf of a union absent strict adherence to these “constitutional requirements.” Hudson, 475 U.S. at 310. If it does so, it injures the nonmembers. Nevertheless, the Ninth Circuit has rejected this Court’s decisionmaking in three cases that write government liability out of § 1983 law. App. A at 2a- 4a, 298 F.3d at 846; Foster, 268 F.3d at 694; Harik, 298 F.3d at 870. Section 1 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). Its purpose is 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 1A Martin A. Schwartz & John E. Kirklin, Section 1983 Litigation: Claims and Defenses § 1.3 (3d ed. 1997). Its passage was rooted in grave distrust of state and local officials to enforce federal constitutional rights against—and perhaps in league ye with—powerful local interests committed to violation of the federal constitutional rights possessed by individuals. Thus, State and local governments bear non-delegable responsibility for their “constitutional torts.” 42 U.S.C. §§ 1983, 1988. The purpose of § 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). Similar purpose can be inferred from the fee-shifting provisions of § 1988. Surprisingly, the courts of appeals are in deep conflict over whether labor unions may agree to indemnify public employers ‘against any liability arising out of the unlawful enforcement of compulsory-unionism provisions. The Ninth Circuit has twice eluded this issue, but four other courts of appeals have faced it, three in this specific context. Shortly after the decision in this case, the Tenth Circuit declared such agreements void as against public policy. Wessel, 299 F.3d at 1197-99 (2-1 decision). Another Circuit, the Sixth, agrees. Weaver, 970 F.2d at 1536-38 (holding that “[a] clause that relieves the employer of all consequences for its failure to assume and conscientiously carry out its cuties, 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, 697 F.2d at 73-75. Only the Third Circuit has found such agreements permissible and enforceable. Hohe, 956 F.2d at 411-12. When the Third Circuit first addressed this controversial issue, the Sixth Circuit already had addressed it in its -26-"— unpublished Cramer opinion. Citing Stamford, Cramer reversed a district court judgment and remanded the case, directing the lower court to “strike [this] . . . void provision[] from the policy.” Cramer, 1990 WL 169640 at *4. The provision was void as against public policy because, “[uJnder Hudson, the public employer, not the union, has the primary duty to ensure that the plan is constitutionally valid.” “[C]lauses 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.” Id. (citing Stamford, 697 F.2d at 73-75). Cramer concluded that “[w]ith-out such a role, public employe[r]s would have no incentive to fulfill their constitutional duties.” 1990 WL 169640 at *4 (emphasis added). Cramer thus held that a union’s indemnification of a public employer in this context is void as against public policy. The Third Circuit declined to follow Cramer. Hohe, 956 F.2d at 411 (citing Cramer (other citation omitted)). Noting the immunity from damages enjoyed by the Commonwealth and its officers sued in their official capacity, the court rejected the argument that indemnification encourages public employers to violate employees’ constitutional rights by allowing escape from liability for costs and attorneys’ fees pursuant to § 1988. The court reasoned that “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 union has a significant incentive “to ensure that its > This distinguishes Hohe from the present case, where the indemnification clause specifies that indemnification includes the “reasonable cost of County’s attorney fees and costs.” App. A at 3a, 298 F.3d at 845. ~ 29s 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 indemnification clause is not required by the First Amendment.” Id. at 412. Shortly after Hohe, the Sixth Circuit decided Weaver, adopting virtually every argument rejected by the Third Circuit. The Sixth Circuit, carefully analyzing Stamford as well as Hohe, concluded that the former was more persuasive than the latter. The Sixth Circuit declared that “the indemnification agreement in the present case was repugnant to public policy, and therefore, invalid,” for two reasons. First, 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 (citations omitted). The Sixth Circuit concluded 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.” Id. Most recently, the Tenth Circuit in Wessel addressed the indemnification issue, agreeing with the Sixth Circuit. Wessel rejected the district court’s argument that a public employer can “do little, if anything, to deteci and prevent,”* Hudson violations. 299 F.3d at 1197. The Tenth Circuit conscientiously applied this Court’s Hudson mandate. It concluded that “if the * That argument clearly is inapplicable here, where the County determined before seizing fees that the union’s financial disclosure was probably inadequate under Hudson. « Supreme Court had only been concerned with the union’s ability to carry out the Hudson requirements, it would not have placed the burden on both parties.” Wessel, 299 F.3d at 1198 (citing 475 U.S. at 307 n.20). 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 and Hudson, and when it granted certiorari and vacated and remanded the prior panel’s opinion. . It is important in practice because the Court’s resolution of this question will affect employees subject to large numbers 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 Gov’t Union Rev. 1, 23-28 (table) (Summer 1995). As the cases above illustrate, public employee unions frequently assume the employer’s liability in order to obtain and enforce forced-unionism agreements. Indeed, California has recently amended the MMBA to require that public employees indemnify local public employers in the absence of a negotiated agreement. Cal. Gov’t Code § 3502.5(b). There can be little doubt that the purpose is to ensure that public employers seize fees even when they have good cause to believe that a union has failed to comply with Hudson’s requirements. 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 Baar TU MRT Ta yer Tee sre pene, Menu re TIRT ET, P —— , : - 29 « by reason of, action taken. or not taken” pursuant “to the collection and procedures for collection of fair share fees,” App. A at 3a, 298 F.3d at 845, is important in principle, too. A requirement that public employees financially support their monopoly bargaining representative implicates fundamental constitutional rights. Because the impairment 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 as to 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 embodied in § 1983, which is to create a remedy “against those who representing a - State in some capacity [a]re unable or unwilling to enforce a state law.” Monroe v. Pape, 365 U.S. at 175-76. This Court’s intervention is necessary to establish conclusively nationwide that public employers, surrendering their employees’ unfettered right to choose whether to support their monopoly bargaining representative, cannot avoid their “responsibility to provide procedures that facilitate a nonunion employee’s ability to protect his rights.” Hudson, 475 U.S. at 307 n.20. Further, it is necessary to guarantee. that public employers cannot, without economic consequence and 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. so 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 October 2002 APPENDICES APPENDIX A OPINION OF THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 1 August 2002 -la- [298 F.3d 844] United States Court of Appeals, Ninth Circuit. Steven PRESCOTT; Robert F. Berry; Cheryl L. Jones; Karen Pierce; Christine M. Turney, Plaintiffs-Appellants, Vv. COUNTY OF EL DORADO; Kathy Libicki; Local 1 El Dorado County Employees Association, Defendants-Appellees. No. 01-15913. Argued and Submitted April 9, 2002. Filed Aug. 1, 2002. [845] Before SCHROEDER, Chief Judge, B. FLETCHER and KOZINSKI, Circuit Judges. OPINION SCHROEDER, Chief Judge. This case was before us previously, when we held, inter alia, that the plaintiffs lacked standing to challenge an indemnification provision in a collective bargaining agreement. Prescott v. County of El Dorado, 177 F.3d 1102, 1112 (9th Cir.1999) (Prescott I). That provision requires the union to hold the employer harmless from any liability arising out of the collection of agency fees from non-union members of the bargaining unit. Jd. Plaintiffs are non-union members of an _ agency shop bargaining unit employed by defendant El Dorado County, California. The Supreme Court vacated our decision and remanded for reconsideration of the standing issue in light of its decision in Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). Prescott v. County of El Dorado, 528 U.S. 1111, 120 S.Ct. 929, 145 L.Ed.2d 807 (2000). We remanded in turn to the district court. Prescott v. County of El Dorado, 204 F.3d 984-85 (9th Cir.2000) (Prescott IT ) (reinstating the original opinion except as to standing and remanding to the district court). We now review the district court’s decision, on remand, that the plaintiffs lack standing to challenge the indemnification clause. We affirm, because there is no causal relationship between the indemnification agreement and the injury plaintiffs have suffered. The indemnification clause requires the union to defend and indemnify the employer against all claims arising out of the employer’s collection of agency fees. The only cognizable injury the plaintiffs allege is that the union did not give them adequate notice of the basis of the fees. Chicago Teachers Union, Local No. 1 v. Hudson, 475 U.S. 292, 310, 106 S.Ct. 1066, 89 L.Ed.2d 232 (1986). The facts and the background of the litigation are more fully explained in our earlier opinion. Prescott I, 177 F.3d at 1104-05. Plaintiffs sued in federal court alleging that the process by which the agency fees were deducted from their paychecks violated the standards enunciated by the Supreme Court in Hudson. They also challenged the validity, on public policy -3a- grounds, of the indemnification clause. Jd. Only the plaintiffs’ challenge to the indemnification clause remains at issue in this appeal. The indemnification clause provides: Local 1 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 collection 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 [sic] time as well. Plaintiffs asked the district court to hold that the clause is contrary to public policy and therefore unenforceable. Plaintiffs [846]did not show, however, that the clause itself has caused them any injury. The only injury they alleged was that the union failed to comply with the requirements of Hudson to provide notice of the basis of agency fees that plaintiffs must pay as members of an agency shop and to maintain an adequate portion of collected fees in escrow pending fee arbitration. See Prescott I, 177 F.3d at 1104-05. In order to have standing, a plaintiff must establish an injury in fact, causation, and redressability. Laidlaw, 528 U.S. at 180-81, 120 S.Ct. 693. Plaintiffs maintain that there is a causal relationship between the Hudson injury and the indemnification clause. They contend that because the Hudson notice requirement is triggered by the collective bargaining agreement, and because the employer has stipulated that it would not have - 4a. entered into the collective bargaining agreement unless it contained the indemnification clause, the indemnification clause is the legal cause of the inadequate Hudson notice. The district court correctly ruled, however, that this causal relationship is too remote. The injury must be “fairly traceable to the challenged action of the defendant.” Laidlaw, 528 U.S. at 180, 120 S.Ct. 693. It cannot be the result of the “independent action of some third party not before the court.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 41-42, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976).) Plaintiffs’ injury was not caused by the employer’s entry into the collective bargaining agreement; it was caused by the union’s inadequate notice of expenditures on which the agency fees were based. Indeed, in this circuit, the employer has no responsibility for ensuring the adequacy of the notice; that is the union’s responsibility. Foster v. Mahdestan, 268 F.3d 689, 694 (9th Cir.2001); Knight v. Kenai Peninsula Borough Sch. Dist., 131 F.3d 807, 817 (9th Cir.1997). The challenged indemnification clause upon which the employer insisted caused neither the union to furnish, nor the plaintiffs to receive, inadequate notice. In addition, and as a corollary, the district court also correctly held that the plaintiffs have not met the redressability requirement for standing. Redressability requires that it be “likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Laidlaw, 528 U.S. at 181, 120 S.Ct. 693. The remedy the plaintiffs seek, invalidation of the indemnification clause, does not compensate plaintiffs for past violations of Hudson, nor does it prevent future violations. - 5a- Cf. Latdlaw, 528 U.S. at 185-86, 120 S.Ct. 693 (“a sanction that effectively abates that conduct and prevents its recurrence provides a form of redress”). Plaintiffs also contend that the district court failed to comply with our mandate to require the union to retain a larger percentage of agency fees in escrow. See Prescott I, 177 F.3d at 1111. After our prior remand, the district court entered an order requiring ten percent of collected fees to be held in escrow. This complied with our directive. The plaintiffs nevertheless complain that the order was not expressly embodied in the district court’s order resolving the standing issue, its final order in the case. That order, however, explains that the court had already ordered the escrow, and that its order remained in full effect. The final judgment entered thus encompassed all the interlocutory rulings of the court, including the escrow order. See, ¢.g., City of Los Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 889 n. 1 (9th Cir.2001) (interlocutory orders merge into the final judgment and [847]may be challenged in appeal from that judgment). AFFIRMED. APPENDIX B FINAL JUDGMENT OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA 17 April 2001 - 6a - [Clerk’s stamp omitted in printing] UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA JUDGMENT IN A CIVIL CASE STEVEN H. PRESCOTT, et al. v. CASE NUMBER: CIV S-95-1859 LKK JEM 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 ENTER- ED IN FAVOR OF DEFENDANTS AND AGAINST PLAINTIFFS IN ACCORDANCE WITH THE COURT’S ORDER OF APRIL 17, 2001. Jack L. Wagner Clerk of the Court ENTERED: April 17, 2001 by: /s/ A. Sourvannarath, Deputy Clerk APPENDIX C ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA 17 April 2001 - Ja- [Clerk’s stamp omitted in printing] UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA STEVEN H. PRESCOTT, et al., Plaintiffs, NO. CIV. S-95-1859 LKK/JFM ORDER COUNTY OF EL DORADO, et al., Defendants. / The plaintiffs, non-union employees of El Dorado County (the “County”), sued the El Dorado County Employees Association (“EDCEA” or the “Union”), as a local affiliate of the Professional Employees Union, Local #1 (“PEU”), for failing to provide them proper notice and _ procedural requirements with the collection of its agency fee in violation of the First, Fifth and Fourteenth Amendments to the United States Constitution. This matter comes before the court on cross-motions for summary judgment. I resolve the matter based on the papers and pleadings filed herein and after oral argument. PROCEDURAL HISTORY On February 26, 1996, 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 - 8a- of El Dorado, 915 F. Supp. (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. Id. 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 major 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 provide a breakdown of the expenditures for each local affiliate because 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. - 9a - The parties then cross-moved for summary judgment. Plaintiffs continued to maintain that the notice and procedures violated the First, Fifth and Fourteenth Amendments because they (1) did not contain audited financial disclosures of the expenditures of EDCEA and affiliated labor organizations receiving money from EDCEA, (2) utilized an unconstitutional standard of chargeability, and (3) contained unduly burdensome procedures for challenging the fee. Plaintiffs sought 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 requested a declaratory judgment that the indemnification agreement between the County and EDCEA was void as against public policy. Defendants argued that the court should grant them summary judgment primarily for the reasons discussed in the court’s preliminary injunction order. With regard to the “verification by an independent auditor” required by Hudson, defendants argued that an accountant’s review sufficed because it provided 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 moved to dissolve the preliminary injunction on the basis that the 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. In consideration of the motions for summary judgement, the court held that defendants’ “accounting review” satisfied the - 10a - constitutional requirements set forth in Hudson. See Order filed January 26, 1998 at 12. The court also reaffirmed its holding that a 4% escrow amount was sufficient, see id. at 13, and held that the local union presumption was valid under Hudson. See id. at 16. The court then made permanent the preliminary injunction issued on February 26, 1996. See id. at 17. Finally, the court dismissed plaintiffs’ challenge to the indemnity clause between the Union and the district because the plaintiffs had failed to demonstrate standing to pursue such a claim. See id. at 19. On appeal, the Ninth Circuit reversed in part and affirmed in part this court’s order. In relevant part, the court affirmed this court’s holding that the plaintiffs lacked standing to challenge the indemnity agreement. See Prescott v. El Dorado, 177 F.3d 1102, 1111-1112 (9" Cir. 1999) (“Prescott IT”). The court noted that plaintiffs could not show any connection between the indemnity agreement and their injury and that they could not demonstrate that a favorable decision would ameliorate their injury or prevent future recurrence of the violation. See id. at 1112. The Supreme Court granted certiorari, vacated the Ninth Circuit’s judgment and remanded the case for further consideration in light of Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000). The remaining issue in this lawsuit is the plaintiffs’ challenge to the indemnity agreement.’ ' The court disposed of the other issues remanded by the Circuit in Prescott I. See Order filed November 17, 1999. Specifically, the court held that the Union must hold 10% of the nonmembers’ fees in escrow. Defendants complied with the other order issued by the Ninth Circuit when it completed an independent audit of the PEU. (continued...) -lla- II. THE FACTS’ The “Union Rights” article of the Collective Bargaining Agreement between the County and the EDCEA contains a “hold harmless” section in which the EDCEA indemnifies and holds the County harmless against any suit for actions taken under the “Union Rights” article. In pertinent part, the article provides: Local 1 shall defend, indemnify and hold harmless, release and save the County and its agents and employees against any and all claims, demands, suits, orders, judgments 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 not limited to the collection and procedure 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. Pursuant to the “Hold Harmless” section, the EDCEA attorneys in this action have entered an appearance on behalf of, ' (...continued ) Contrary to plaintiffs’ suggestion, the court need not enter declaratory or injunctive relief for the plaintiffs on those issues. ? The facts as stated herein are considered undisputed for the purposes of summary judgment. Ifa fact objected to by an opposing party is included in this section, then the court has overruled that objection. - 12a- and are providing representation to defendants County of El Dorado and Kathy Libicki (“the County Defendants”). The entire compensation paid to counsel for the County Defendants for the representation they are providing in this case has been and is being paid for by the EDCEA. The County Defendants required inclusion of the “Hold Harmless” section as part of the “Union Rights” article of the Memorandum of Understanding. Absent the hold harmless clause, the County Defendants would not have entered into or enforced an agreement including a provision requiring union membership, or in lieu of union membership, payment of an agency fee. III. SUMMARY JUDGMENT STANDARDS UNDER FED. R. CIV. P. 56 Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56 (c); See also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Secor Limited v. Cetus Corp., 51 F.3d 848, 853 (9" Cir 1995). Under summary judgment practice, the moving party [A]lways bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,” which it believes demonstrated the absence of a genuine issue of material fact. - 13a- Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the ‘pleadings, depositions, answers to interrogatories, and admissions on file.” Id. Indeed, summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. See id. at 322. “[A] complete failure of proof concerning an essential element of the nonmov- ing party’s case necessarily renders all other facts immaterial.” Id. In such a circumstance, summary judgment should be granted, “so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied.” Id. at 323. If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsu- ' _Co. v. Zeni io Corp., 475 U.S. 574, 586 (1986); See also First Natl Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968); Secor Limited, 51 F.3d at 853. In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Fed. R. Civ. P. 56(e); Matsushita, 475 U.S. at 586 n.11; See also First Natl - 14a- Bank, 391 U.S. at 289; Rand v. Rowland, 154 F.3d 952, 954 (9" Cir. 1998). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Owens v. Local No. 169, Assoc. of Western Pulp and Paper Workers, 971 F.2d 347, 355 (9" Cir. 1992) (quoting T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9" Cir. 1987), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party, Anderson, 477 U.S. 248-49; see also Cline v. Industrial Maintenance Engineering & Contracting Co., 200 F.3d 1223, 1228 (9* Cir. 1999). In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial.” First Natl Bank, 391 U.S. at 290; See also T.W. Elec. Serv., 809 F.2d at 631. Thus, the “purpose of summary judgment is to ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ. P. 56(e) advisory committee’s note on 1963 amendments); see also International Union of Bricklayers & Allied Craftsman Local Union No. 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9™ Cir. 1985). In resolving the summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, ifany. Rule 56(c); See also In re Citric Acid Litigation, 191 F.3d 1090, - 1Sa- 1093 (9" Cir. 1999). The evidence of the opposing party is to be believed, see Anderson, 477 U.S. at 255, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party, see Matsu- shita, 475 U.S. at 587 (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)); See also Headwaters Forest Defense v. County of Humboldt, 211 F.3d 1121, 1132 (9" Cir. 2000). Nevertheless, inferences are not drawn out of the air, and it is the opposing party’s obligation to produce a factual predicate from which the inference may be drawn. See Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985), afPd, 810 F.2d 898, 902 (9" Cir. 1987). Finally, to demonstrate a genuine issue, the opposing party “must do more than simply show that there is some metaphysical doubt as to the material facts. .. . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.” Matsushita, 475 U.S. at 587 (citation omitted). IV. STANDING Plaintiffs seek an order declaring the Union’s indemnity agreement with the County void as a matter of public policy. Specifically, they maintain that the indemnity agreement removes incentive for the County to ensure that the Union abides by the requirements of Hudson. Before addressing the merits of their argument, however, I must first determine whether they have standing to challenge the agreement. - l6a- 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). Plaintiff must also demonstrate “that the injury can be fairly traced to the challenged action, [and that it] is likely to be redressed by a favorable decision.” Id. (quoting Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38 (1976)); see also Preferred Communications, Inc. v. City of Los Angeles, 754 F.2d 1396, 1403, (9" Cir. 1985). Plaintiffs have failed to demonstrate how the remedy they seek will prevent any future violation of their rights under Hudson. Although the plaintiffs may have suffered a violation of the standards enunciated in Hudson, that injury resulted from the Union’s conduct, and, notwithstanding the defendants’ stipulation, the hold harmless agreement is a cause of the injury only in the most indirect fashion.’ In this motion, plaintiffs do not seek to make themselves whole for this past violation. Instead, the plaintiffs seek to strike the indemnity agreement in order to prevent the Union from using their dues for political and ideological causes with which they disagree, and which are said to be unrelated to the Union’s duty as collective bargaining agent. See Hudson, 475 U.S. at 298. Even if this court ultimately struck the indemnity agreement it would not follow that plaintiffs’ injury would be avoided. Rather, whether or not the Union will violate plaintiffs’ right under Hudson will turn > While plaintiffs stipulation makes no sense factually or legally, the court accepts it for the purpose of this motion. Nonetheless, the stipulation does not resolve the issue of whether the order sought will provide relief. - 17a- on the Union’s conduct independent of the indemnity agreement. Therefore, because plaintiffs cannot connect a favorable judgment in this case with receiving relief from the injury they have failed to demonstrate standing. See, e.g., Simon v. Eastern Ken Welfare Rights Organization, 426 U.S. 26 (1976) (standing denied because it was speculative as to whether the hospitals involved would change their polices to provide for better treatment of the indigent if the plaintiffs successfully invalidated the IRS code which only required the hospitals to provide emergency care for the indigent); Warth v. Seldin, 422 U.S. 490 (1975) (denying standing to challenge zoning regulations because there was no showing that plaintiffs would personally benefit by obtaining housing if the court found the regulation unconsttutional); Linda R.S. v. Richard D., 410 U.S. 614, 618 (1973) (“[Prevailing on the merits] would result in jailing of the child’s father. The prospect that prosecution will . . . result in payment of support [which would remedy the alleged injury] can, at best, be termed only speculative.”) The Court’s holding in Friends of Earth Inc. v. Laidlaw, does not affect this conclusion. There, the court held that environmental groups had standing to seek relief under the Clean Water Act when they could demonstrate that the alleged violations of a polluter has caused their members to refrain from activity they had previously and would have otherwise undertaken in the affected area. 528 U.S. at 183. Although the injury sutfered by the organization members in Friends of Earth Inc. could have been redressed by a favorable decision, as explained above, the same is not true in this case with respect to plaintiffs’ challenge to a third-party indemnity agreement. - 18a - V. ORDERS Accordingly, defendants’ motion for summary judgment is GRANTED and the Clerk is directed to CLOSE the case. IT IS SO ORDERED. DATED: April 12, 2001. Ls/ LAWRENCE K. KARLTON Senior Judge United States District Court APPENDIX D DECISION OF THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 2 March 2000 - 19a- [204 F.3d 984] 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. March 2, 2000. W. James Young, National Right to Work Legal Defense Foundation, Inc., Springfield, Virginia, for the plaintiff- -appellant. Fred J. MHiestand, Sacramento, California, for the defendant-appellee. On Remand from the United States Supreme Court Before: FERNANDEZ and McCKEOWN, Circuit Judges, and WEINER,’ District Judge. ! Honorable Charles R. Weiner, Senior United States District Judge for the Eastern District of Pennsylvania, sitting by designation. - 20a - Steven Prescott,” an employee of the County of El Dorado, California, appealed the 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. We affirmed the district court in part, reversed in part, and remanded. See Prescott v. County of El Dorado, 177 F.3d 1102 (9th Cir.1999) (Prescott I ). Prescott sought certiorari relief from the United States Supreme Court and it, without further specification, granted certiorari and then vacated and remanded our decision for further consideration’ in light of its recent holding in Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). Friends of the Earth is a standing case, and the only portion of our decision that dealt with standing was part E, which discussed the issue of indemnification. See Prescott I, 177 F.3d at 1111-12. In that portion, we affirmed the district court’s determination that Prescott lacked standing to object to a contract provision between the El Dorado County Employees Association, Local No. 1 and the County, pursuant to which the former agreed to indemnify the latter “from any liability which arises out of deductions of fees from employee wages, and to provide a defense against any claims.” Jd. at 1111. ? Robert F. Barry, Cheryl L. Jones, Karen Pierce and Christine M. Turney also appeal. What we hold regarding Prescott applies equally to them. 3 See Prescott v. El Dorado, _U.S.__, 120 S. Ct. 929, 145 L. Ed.2d 807 (2000). -2la- Because the district court should address the standing issue in the first instance, we now return the issue to that court for any necessary further development of the facts and for its consideration of Friends of the Earth in that respect under the facts of this case. We reinstate our opinion in Prescott I, with the exception of part E. That part shall remain vacated. We also reinstate the concurring opinion. Moreover, we vacate the district court’s standing determination, which was discussed in part E, and remand that issue for further consideration. [985]Therefore, in light of Prescott I, as modified, we ORDER that the district court’s decision is AFFIRMED in part, REVERSED in part, VACATED in part, and REMANDED. APPENDIX E DECISION OF THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 12 May 1999 [177 F.3d 1102] Steven PRESCOTT; Robert F. Berry; Cheryl L. Jones; Karen Pierce; Christine M. Turney, Plaintiffs-Appellants, - 22a - Vv. 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. * eH [1103]Before: FERNANDEZ and McKEOWN, Circuit Judges, and WEINER,’ District Judge. Opinion by Judge FERNANDEZ; Concurrence by Judge McKEOWN. [1104]FERNANDEZ, Circuit Judge: 1 Honorable Charles R. Weiner, Senior United States District Judge for the Eastern District of Pennsylvania, sitting by designation. - 23a - 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 the purpose of supporting the El Dorado County Employees Association, 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 tair-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 # 1 (PEU), and all dues for the EDCEA are paid to PEU. Members dues amount to 1 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, ? Robert E. Barry, Cheryl L. Jones, Karen Pierce and Christine M. Turney also appeal. What we hold regarding Prescott applies equally to them. - 24a - which EDCEA receives and controls. EDCEA has 570 members and 114 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 fee 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 defray 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 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 there-after.” 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 - 25a - 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. Organizing 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 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 > 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.” - 26a - 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 for 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.” Id. 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). * 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. - 27a - 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 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 agreements, [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. International 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). - 28a - 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.” Id. 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: 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. - 29a - 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.” Id. 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 nonmember 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. 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, eT ae - 30a - 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]management 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. Id. 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. Id. 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. id. 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, “[ljeaving 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 information—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 -3la- verification by an independent auditor.” Id. 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 accouniant’s verified breakdown of expenditures....” Id. at 310, 106 S.Ct. at 1077. And yet again the Court spoke of a determination made “on the basis of the independent audit,” and stated that an escrow figure “must itself be independently verified.” Id. 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, __US.__, 118 S.Ct. 2060, 141 L.Ed.2d138 (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.” Jd. 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.” Id. We held, therefore, that the union’s notice did not satisfy Hudson. The holdings of other courts are - 32a- 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 expenses.”); Andrews p. 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 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.5 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 I, 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 a) ° We express no opinion on the exact type of audit required under Hudson. - 33a - 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 PEU) 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 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 PE - 34a - 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.” Id. at 411. Nor can it be said that the amounts will always be so insignificant 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 expenditures, 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. - 35a- 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. 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. Id. at 310, 106 S.Ct. at 1077-78. Prescott suggests that we have already decided that the remedy #s restitution. We have done no such thing. Prescott seeks to support his position by pointing to our decision in Dean v. Trans World Atrlines, 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. Id. 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 Hee A aE Ayer At em hates yan RAR AN RE EY Ys - 36a - unilateral reduction of fees.” Id. 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.” Id. 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. In our opinion, the Seventh Circuit got it just right when i 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 venefits 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.... - 37a- 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. r C. The Escrow The district court determined that the escrow cushion created by PEU’s procedures was sufficient because it appeared that nonchargeable 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. 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 qos: - 38a - 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 substantiation 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 improper 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 allocations, 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 persuasion because it is seeking to mulct an unwilling person for fees and must show its - 39a - entitlement to them. See Lehnert v. Ferris Faculty Ass’n., 500 U.S. 507, 524, 111 S.Ct. 1950, 1962, 114 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 insouciance; it has, instead, misunderstood the financial statement requirements which we now make plain. ° 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. sites cst, SENG HE 8 At ty ayn A ” . pita BB OA SATB Se fos, Tah NG ROADS LOE BR GENEL R EIT SHOES EN LIE EDS ILD OCI RT PSEA aS one ne : - 40a - 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 pu [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0670%3A1. Public record. Not legal advice.