Danielson v. Inslee, 18-36087

• Citation: 945 F.3d 1096
• Decision Date: 26 December 2019
• Docket Number: No. 18-36087,18-36087
• Parties: Dale DANIELSON, a Washington State employee ; Benjamin Rast, a Washington State employee ; Tamara Roberson, a Washington State employee ; as individuals, and on behalf of all others similarly situated, Plaintiffs-Appellants, v. Jay Robert INSLEE, in his official capacity as Governor of the State of Washington; David Schumacher, in his official capacity as Director of Washington State Office of Financial Management; American Federation of State, County, and Municipal Employees, Council 28, AFL-CIO, a labor organization, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

945 F.3d 1096

Dale DANIELSON, a Washington State employee ; Benjamin Rast, a Washington State employee ; Tamara Roberson, a Washington State employee ; as individuals, and on behalf of all others similarly situated, Plaintiffs-Appellants,

v.Jay Robert INSLEE, in his official capacity as Governor of the State of Washington; David Schumacher, in his official capacity as Director of Washington State Office of Financial Management; American Federation of State, County, and Municipal Employees, Council 28, AFL-CIO, a labor organization, Defendants-Appellees.

No. 18-36087

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 6, 2019 Seattle, Washington

Filed December 26, 2019

Jonathan F. Mitchell (argued), Mitchell Law PLLC, Austin, Texas; Talcott J. Franklin, Talcott Franklin PC, Dallas, Texas; Eric Stahlfeld, Freedom Foundation, Olympia, Washington; Christopher Hellmich, Hellmich Law Group P.C., Anaheim Hills, California; for Plaintiffs-Appellants.

P. Casey Pitts (argued), Scott Kronland, and Matthew J. Murray, Altshuler Berzon LLP, San Francisco, California; Edward E. Younglove III, Younglove & Coker P.L.L.C., Olympia, Washington; for Defendants-Appellees.

Before: Ronald M. Gould and Jacqueline H. Nguyen, Circuit Judges, and Gregory A. Presnell,^* District Judge.

NGUYEN, Circuit Judge:

"Stare decisis —in English, the idea that today’s Court should stand by yesterday’s decisions—is ‘a foundation stone of the rule of law.’ " Kimble v. Marvel Entm’t, LLC , ––– U.S. ––––, 135 S. Ct. 2401, 2409, 192 L.Ed.2d 463 (2015) (quoting Michigan v. Bay Mills Indian Cmty. , 572 U.S. 782, 798, 134 S.Ct. 2024, 188 L.Ed.2d 1071 (2014) ). But on rare occasion, even longstanding precedent can be overruled. What happens when the Supreme Court reverses course, but private parties have already acted in reliance on longstanding bedrock precedent?

This question lies at the center of this appeal. For over 40 years, public sector unions around the country relied on the Supreme Court’s decision in Abood v. Detroit Board of Education , 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977), which held that the unions could collect compulsory agency fees from nonmembers to finance their collective bargaining activities, without running afoul of the First and Fourteenth Amendments. State laws and regulations further entrenched the union agency shop into the local legal framework. But in 2018, the Supreme Court uprooted its precedent by overturning Abood . In Janus v. American Federation of State, County, & Municipal Employees, Council 31 , ––– U.S. ––––, 138 S. Ct. 2448, 201 L.Ed.2d 924 (2018), the Supreme Court held that unions’ compulsory collection of agency fees violated the Constitution.

Many public sector unions, including the defendant union here, immediately stopped collecting agency fees. But uncertainty remained as to whether they would be monetarily liable for their pre- Janus conduct—conduct that was once explicitly authorized under Abood and state law.

Throughout the country, public sector employees brought claims for monetary relief against the unions pursuant to 42 U.S.C. § 1983. Many unions asserted a good faith defense in response. Joining a growing consensus, the district court here ruled in favor of the union. We affirm and hold that private parties may invoke an affirmative defense of good faith to retrospective monetary liability under 42 U.S.C. § 1983, where they acted in direct reliance on then-binding Supreme Court precedent and presumptively-valid state law.

I. FACTS AND PROCEDURAL HISTORY

A. Factual Background

Plaintiffs are Washington state employees who work within bargaining units exclusively represented by the American Federation of State, County, and Municipal Employees, Council 28, AFL-CIO (the "Union"). Plaintiffs are not members of the Union and object to financing its activities. Nonetheless, until recently, they were required to pay agency fees to the Union. Collection of agency fees from nonmembers was authorized by the governing collective bargaining agreement, by Washington law, and by over four decades of U.S. Supreme Court precedent dating back to Abood .

On June 27, 2018, the Supreme Court issued its decision in Janus , reversing course on the constitutionality of the traditional agency shop regime. Janus overruled Abood and held that the mandatory collection of agency fees from objectors violated the First Amendment. 138 S. Ct. at 2486. It is undisputed that, immediately thereafter, the Union stopped collecting mandatory fees from nonmembers.

B. Procedural Background

On March 15, 2018, Plaintiffs brought a putative class action pursuant to 42 U.S.C. § 1983 against Jay Inslee, in his official capacity as Governor of Washington; David Schumacher, in his official capacity as Director of the Washington Office of Financial Management; and the Union. In anticipation of the Supreme Court’s decision in Janus , Plaintiffs alleged that the imposition of compulsory agency fees violated their constitutional rights under the First and Fourteenth Amendments. They sought declaratory and injunctive relief, a refund of "all agency fees that were unlawfully collected from Plaintiffs and their fellow class members," and an award of attorney’s fees and costs.

In the wake of Janus and changes to the Union’s practices, the district court determined that the claims against Inslee and Schumacher (the "State Defendants") for declaratory and injunctive relief were moot, and they were dismissed from the case.¹ Shortly thereafter, the Union filed a motion for judgment on the pleadings or summary judgment. The Union argued that the claims for declaratory and injunctive relief should be dismissed as moot, as the parallel claims against the State Defendants had been. The Union further argued that the claim for monetary relief should be dismissed because it had relied in good faith on presumptively-valid state law and then-binding Supreme Court precedent. The district court granted the Union’s motion as to all claims and dismissed the case. Plaintiffs then sought reconsideration of the ruling, which the district court denied. This appeal timely followed.²

II. STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291. We review de novo an order granting summary judgment or judgment on the pleadings. Heliotrope Gen., Inc. v. Ford Motor Co. , 189 F.3d 971, 975, 978 (9th Cir. 1999).

III. DISCUSSION

We hold that the district court properly dismissed Plaintiffs’ claim for monetary relief against the Union. In so ruling, we join the Seventh Circuit, the only other circuit to have addressed the question before us. See Janus v. Am. Fed’n of State, Cty. & Mun. Emps., Council 31 , 942 F.3d 352 (7th Cir. 2019) (" Janus II "); Mooney v. Ill. Educ. Ass’n , 942 F.3d 368 (7th Cir. 2019). We agree with our sister circuit that a union defendant can invoke an affirmative defense of good faith to retrospective monetary liability under section 1983 for the agency fees it collected pre- Janus , where its conduct was directly authorized under both state law and decades of Supreme Court jurisprudence. The Union was not required to forecast changing winds at the Supreme Court and anticipatorily presume the overturning of Abood . Instead, we permit private parties to rely on judicial pronouncements of what the law is, without exposing themselves to potential liability for doing so.

1. We assume the retroactivity of the rule established in Janus, but that does not answer the remedial question before this court.

As an initial matter, Plaintiffs urge the retroactive application of the Supreme Court’s decision in Janus . But, like the Seventh Circuit, we find it unnecessary to "wrestle the retroactivity question to the ground." Janus II , 942 F.3d at 360. The Supreme Court has made clear that right and remedy must not be conflated, and that retroactivity of a right does not guarantee a retroactive remedy. Davis v. United States , 564 U.S. 229, 243, 131 S.Ct. 2419, 180 L.Ed.2d 285 (2011). Therefore, we will assume that the right delineated in Janus applies retroactively and proceed to a review of available remedies.

2. A private entity may avail itself of a good faith defense in litigation brought pursuant to 42 U.S.C. § 1983.

The Supreme Court has held that private parties sued under 42 U.S.C. § 1983 cannot claim qualified immunity, but it has suggested in dicta that such parties might be able to assert a good faith defense to liability instead. Wyatt v. Cole , 504 U.S. 158, 168–69, 112 S.Ct. 1827, 118 L.Ed.2d 504 (1992) ; Lugar v. Edmondson Oil Co. , 457 U.S. 922, 942 n.23, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982). Although the Supreme Court has never squarely reached the question, we held in Clement v. City of Glendale that private parties may invoke a good faith defense to liability under section 1983.³ 518 F.3d 1090, 1096–97 (9th Cir. 2008).

Plaintiffs argue that Clement should be disregarded. They contend the Ninth Circuit previously reached a contrary outcome in Howerton v. Gabica , 708 F.2d 380 (9th Cir. 1983), and a three-judge panel cannot overturn existing precedent.

Because "we are required to reconcile prior precedents if we can do so," we first assess whether Clement and Howerton are truly at odds. Cisneros-Perez v. Gonzales , 465 F.3d 386, 392 (9th Cir. 2006). We find the two decisions reconcilable. Howerton stands for the unremarkable proposition that private parties cannot avail themselves of qualified immunity to a section 1983 lawsuit. 708 F.2d at 385 n.10. Both the Supreme Court and later panels of our court have adopted that reading of Howerton . See, e.g. , Wyatt v. Cole , 504 U.S. 158, 161, 112 S.Ct. 1827, 118 L.Ed.2d 504 (1992) (citing Howerton for the proposition that the Ninth Circuit has held that private parties acting under color of state law are not entitled to qualified immunity); F.E. Trotter, Inc. v. Watkins , 869 F.2d 1312, 1318 (9th Cir. 1989) (citing Howerton for the proposition that "the Ninth Circuit has stated that...