One Year after Janus: Unions Lose Fee Payers, Keep Members, Win Lawsuits

05.31.2019

As anyone involved in public employment knows, on June 27, 2018, the U.S. Supreme Court struck down the practice of collecting “agency fees” or “fair share fees” from public employees who decline to join a labor union. (Janus v. American Federation of State, County, and Municipal Employees, Council 31 (2018) 138 S.Ct. 2448.) As expected, the Janus ruling shook up the public-sector landscape, particularly here in earthquake-prone California. Nearly a year later, what are the primary effects of Janus?

Predictions that unions would lose members have not been borne out. In California, legislative action appears to have contributed to diluting the anticipated effect of the Janus decision. Research reported by POLITICO on May 17, 2019 indicates that 10 large public-sector unions nationwide lost a total of 309,612 fee payers (not members) in 2018, and at the same time gained 132,212 members. All but one of these large unions reported having more funds than they did the year before, even if they lost membership. POLITICO cites increased dues and budget cuts as the reason for the unions’ financial health in spite of the drop in agency fees.

Both unions and public employers have been deluged with lawsuits since Janus, as we previously reported. These lawsuits by public employees allege the unions and employers violated the Constitution by deducting involuntary dues and agency fees before the Janus ruling, and should now reimburse the employees for years of back dues and fees.

Recently the courts have issued their initial rulings in those cases, all in favor of the unions and the employers.

On May 8, 2019, the first substantive ruling in a set of California teacher-union challenges was issued by a federal judge in Los Angeles. (Babb v. California Teachers Association (C.D. Cal. 2019) 2019 WL 2022222.) The plaintiffs in the consolidated lawsuits were all teachers, some of whom were never union members, while others had resigned their membership after the Janus ruling. Making a number of arguments, the plaintiffs sought two forms of relief: (1) that compulsory agency fees be declared unconstitutional and enjoined; and (2) that the union defendants (California Teachers Association, National Education Association, and United Teachers Los Angeles), be required to repay all agency fees they received before Janus was decided.

Some of the plaintiffs also challenged the constitutionality of Government Code section 1159, which granted immunity to public-sector unions in California for pre-Janus collection of dues and agency fees. The California Attorney General was given leave to intervene in three of the lawsuits to defend the statute.

The unions moved to dismiss all claims. Judge Josephine L. Staton granted each of the unions’ motions to dismiss the lawsuits.

First, the court held the unions had a good-faith defense to liability under 42 United States Code section 1983, which prohibits the violation of constitutional rights under the authority of state law. The unions asserted they collected agency fees while state law and controlling Supreme Court precedent allowed those fees, and thus they acted in good faith. Further, the unions argued that plaintiffs who were union members prior to Janus had joined and paid their dues voluntarily. The court agreed.

Addressing the plaintiffs’ state law claims for a refund of agency fees, the court agreed with the unions that the Educational Employment Relations Act (EERA) preempted those claims because (until Janus) the EERA expressly authorized collection of agency fees. The plaintiffs could not assert common-law claims where a statute — the EERA — displaced common-law liability.

Even apart from the EERA, the court found Government Code section 1159 was an independent and adequate basis for dismissing the state law claims. Section 1159 was enacted on September 14, 2018 and took effect immediately, barring any liability of the State Controller, a public employer, an employee organization, or any of their employees of agents for deducting or receiving agency fees prior to June 27, 2018 (the date of the Janus ruling). The court found that section 1159 “clearly precludes” the plaintiffs’ state law claims for reimbursement of agency fees they paid prior to Janus, and that retroactive application of section 1159 did not violate due process.

Plaintiffs also argued that Government Code section 3558, which requires public employers to provide employees’ contact information to unions, violates their constitutional right to privacy. Again, the court disagreed, finding that section 3558 “serves a compelling government interest” — furthering direct communication between unions and all of the bargaining unit employees they represent.

One plaintiff challenged Education Code section 45060, enacted just before the Janus ruling, which requires unions, rather than employers, to process employee requests to change or cancel their union-dues payroll deductions and requires all such requests to be in writing. The court found the plaintiff’s claim was moot because he had already resigned from union membership and no longer had dues deducted from his paycheck, and in any case the requirement did not violate his rights.

Lastly, the court found collective bargaining agreements under California’s system of “exclusive representation” do not violate federal antitrust law. One plaintiff argued such agreements are anti-competitive because they require compensation based on imposed pay scales and preclude individual negotiation based on performance and merit. According to the court (and others), antitrust law “simply does not encompass the way in which a state chooses to set employment terms for its public employees.”

The Babb rulings are consistent with other federal court decisions within the jurisdiction of the Ninth Circuit Court of Appeals. On March 14, 2019, a federal district court in Alaska granted various teacher unions’ motions to dismiss a similar lawsuit. (Crockett v. NEA-Alaska (D. Alaska 2019) 367 F.Supp.3d 996.) In April the plaintiffs in that case filed an appeal to the Ninth Circuit Court of Appeals. Likewise, on March 11, a district court in the state of Washington denied teachers’ request for injunctive relief and damages against the Washington Education Association. (Carey v. Inslee (W.D. Wash. 2019) 364 F.Supp.3d 1220.) The plaintiffs in that case have also appealed to the Ninth Circuit. And on April 16, a federal judge in the Northern District of California, in a two-paragraph decision, dismissed a lawsuit against the Service Employees International Union under the same analysis. (Hough v. SEIU Local 521 (N.D. Cal. 2019) 2019 WL 1785414.)

While Janus is the law of the land, plaintiffs seeking reimbursement of pre-Janus dues and fees have thus far achieved no success in the courts. Given the plaintiffs’ immediate appeals to the Ninth Circuit, it appears the goal is to push these cases up to the Supreme Court for review. We will continue to monitor and provide updates on Janus­-related litigation.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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