Diamond v. Pa. State Educ. Ass'n

• Citation: 972 F.3d 262
• Decision Date: 28 August 2020
• Docket Number: Nos. 19-2812,19-3906,s. 19-2812
• Parties: Arthur DIAMOND, on behalf of himself and others similarly situated ; Jeffrey Schawartz; Sandra H. Ziegler, on behalf of themselves others similar situated; Matthew Shively ; Matthew Simkins; Douglas R. Kase; Justin Barry, Appellants in case no. 19-2812 v. PENNSYLVANIA STATE EDUCATION ASSOCIATION; Chestnut Ridge Education Association, as representative of the class of all chapters and affiliates of the Pennsylvania State Education Association; National Education Association; Josh Shapiro, in his official capacity as Attorney General of Pennsylvania; James M. Darby; Albert Mezzaroba; Robert H. Shoop, Jr., in their official capacities as chairman and members of the Pennsylvania Labor Relations Board; Lesley Childer-Potts, in her official capacity as district attorney of Bedford County, and as representative of the class of all district attorneys in Pennsylvania with the authority to prosecute violations of 71 Pa. Stat. 575 Janine Wenzig and Catherine Kioussis, Appellants in case no. 19-3906 v. Service Employees International Union Local 668
• Court: U.S. Court of Appeals — Third Circuit

972 F.3d 262

Arthur DIAMOND, on behalf of himself and others similarly situated ; Jeffrey Schawartz; Sandra H. Ziegler, on behalf of themselves others similar situated; Matthew Shively ; Matthew Simkins; Douglas R. Kase; Justin Barry, Appellants in case no. 19-2812

v.PENNSYLVANIA STATE EDUCATION ASSOCIATION; Chestnut Ridge Education Association, as representative of the class of all chapters and affiliates of the Pennsylvania State Education Association; National Education Association; Josh Shapiro, in his official capacity as Attorney General of Pennsylvania; James M. Darby; Albert Mezzaroba; Robert H. Shoop, Jr., in their official capacities as chairman and members of the Pennsylvania Labor Relations Board; Lesley Childer-Potts, in her official capacity as district attorney of Bedford County, and as representative of the class of all district attorneys in Pennsylvania with the authority to prosecute violations of 71 Pa. Stat. 575

Janine Wenzig and Catherine Kioussis, Appellants in case no. 19-3906

v.Service Employees International Union Local 668

Nos. 19-2812

19-3906

United States Court of Appeals, Third Circuit.

Argued April 24, 2020

Opinion Filed: August 28, 2020

OPINION

RENDELL, Circuit Judge:

In reliance on a Pennsylvania statute and the Supreme Court's decision in Abood v. Detroit Bd. of Educ. , 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977), Appellee Unions, the Service Employees International Union Local 668 and the Pennsylvania State Education Association, collected "fair-share fees" from Appellants over Appellants’ objections. But the Supreme Court overruled Abood in Janus v. AFSCME Council 31 , holding that state legislation condoning public-sector fair-share fees was unconstitutional. ––– U.S. ––––, 138 S. Ct. 2448, 201 L.Ed.2d 924 (2018) (" Janus I "). Now, Appellants bring these § 1983 lawsuits seeking reimbursement of the sums they were required to pay. The District Courts, joining a consensus of federal courts across the country, dismissed Appellants’ claims for monetary relief, ruling that because the Unions collected the fair-share fees in good faith reliance on a governing state statute and Supreme Court precedent, they are entitled to, and have successfully made out, a good faith defense to monetary liability under § 1983. We will affirm.

I

A. Legal background

Labor laws in the United States have long authorized employers and labor organizations to bargain for an "agency shop," an arrangement in which one union is allowed to exclusively represent an entity's employees on the condition that the union represent all the entity's employees—even those who do not join the union. See, e.g. , Janus I , 138 S. Ct. at 2460 ; 45 U.S.C. § 152 (Railway Labor Act); 29 U.S.C. § 159 (National Labor Relations Act). Agency shop arrangements are intended to promote uniform bargaining, streamlined administration, and other interests, but they also create an incentive for employees to decline to join their union (and therefore avoid paying dues) while still accruing the benefits of union representation. See, e.g. , Janus I , 138 S. Ct. at 2465-69 (describing the intended purpose of agency shops to create "labor peace" and describing the hypothetical potential for "free rider" problems in agency shop arrangements). To address this incentive, Congress often allowed unions and employers who opt for an agency shop arrangement to require all employees either to join the union and pay dues or, if an employee does not join the union, to nonetheless contribute to the costs of representation, bargaining, and administration of bargaining agreements. This requirement that non-members pay some form of union dues is often referred to as a "fair-share" fee, and is present in various pieces of federal legislation, including, for instance, the Railway Labor Act, 45 U.S.C. § 152, and the National Labor Relations Act, 29 U.S.C. §§ 157, 158(a)(3).

The Supreme Court has upheld the constitutionality of these agency shop arrangements, including fair-share fees. For instance, in Railway Employees’ Dep't v. Hanson , the Supreme Court ruled that the Railway Labor Act's provisions allowing agency shop arrangements and fair-share fees did not violate the First Amendment. 351 U.S. 225, 236-38, 76 S.Ct. 714, 100 L.Ed. 1112 (1956). Although the employees in that case argued that the agency shop "agreement forces men into ide[o]logical and political associations which violate their right to freedom of conscience, freedom of association, and freedom of thought protected by the Bill of Rights," id. at 236, 76 S.Ct. 714, the Court "h[e]ld that the requirement for financial support of the collective-bargaining agency by all who receive the benefits of its work ... does not violate" the First Amendment, id. at 238, 76 S.Ct. 714. The Supreme Court later reaffirmed this ruling. See Int'l Ass'n of Machinists v. Street , 367 U.S. 740, 749, 81 S.Ct. 1784, 6 L.Ed.2d 1141 (1961) (affirming the constitutionality of the Railway Labor Act's agency shop and fair-share provisions).

Eventually, state legislatures across the country passed laws authorizing public-sector unions to collect fair-share fees and bargain for agency shop arrangements with state government employers. In Abood , the Supreme Court affirmed the constitutionality of one such law, a Michigan statute permitting state employers to negotiate for agency shop arrangements and fair-share fees with the public-sector unions that represented their employees. 431 U.S. at 224-26, 97 S.Ct. 1782. The Abood Court ruled that the important government interests in creating functional and peaceful labor relations and preventing the free rider problem "support the impingement upon associational freedom created by the agency shop." Id. at 225, 97 S.Ct. 1782. Although the Court recognized that the "government may not require an individual to relinquish rights guaranteed [ ] by the First Amendment as a condition of public employment," id. at 234, 97 S.Ct. 1782, the Court held that there was no reason to distinguish Abood from cases like Hanson that had upheld agency shop arrangements in the private sector, id. at 232, 97 S.Ct. 1782 (holding that the "differences between public- and private-sector collective bargaining simply do not translate into differences in First Amendment rights").

But the Abood Court also ruled that—as in the private sector—non-members’ fair-share fees could only be used to pay for union activities that were "germane to [the union's] duties as collective-bargaining representative," but not the union's political or other work. Id. at 235, 97 S.Ct. 1782. In the Abood Court's view, this limitation struck an appropriate balance between the non-members’ speech rights under the First Amendment and the government's interests in regulating labor relations. Id. at 237, 97 S.Ct. 1782 (describing the Court's ruling as "preventing compulsory subsidization of ideological activity by employees who object ... without restricting the [u]nion's ability to require every employee to contribute to the cost of collective-bargaining activities"). Over the course of the following four decades, the Supreme Court affirmed its holding in Abood against similar challenges to the constitutionality of state laws allowing for agency shop arrangements between public-sector employers and public-sector unions. See, e.g. , Lehnert v. Ferris Faculty Ass'n , 500 U.S. 507, 111 S.Ct. 1950, 114 L.Ed.2d 572 (1991) ; Locke v. Karass , 555 U.S. 207, 129 S.Ct. 798, 172 L.Ed.2d 552 (2009) ; Friedrichs v. Cal. Tchrs. Ass'n , ––– U.S. ––––, 136 S. Ct. 1083, 194 L.Ed.2d 255 (2016) (per curiam) (equally divided Court affirming without opinion).

In light of Abood , Pennsylvania enacted a law allowing public-sector agency shop arrangements and authorizing unions that serve as exclusive representatives to collect fair-share fees. See 71 Pa. Stat. and Cons. Stat. Ann. § 575 (West 2020). Under section 575(b), "[i]f the provisions of a collective bargaining agreement so provide, each nonmember of a collective bargaining unit shall be required to pay to the exclusive representative a [fair-share] fee." Fair-share fees could consist of normal dues minus "the cost for the previous fiscal year of [the union's] activities or undertakings which were not reasonably employed to implement or effectuate the duties of the employe[e] organization as exclusive representative." Id. § 575(a). The law also set forth the procedure by which fair-share fees would be deducted from non-member employees’ paychecks, see id. § 575(c), and a procedure through which non-member employees could obtain information about how their fees were used, see § 575(d). If this information reflected any improper uses, non-members could challenge the fair-share fees. See id. § 575(e).

In 2018, the Supreme Court "overruled" Abood . Janus I , 138 S. Ct. at 2460. Holding that Abood "was poorly reasoned" and led to "practical problems and abuse," the Court ruled that Abood was "inconsistent with other First Amendment cases" and was not entitled to continued precedential status. Id. The Janus I Court held that Abood had mischaracterized the government's interests in promoting "labor peace" and preventing "free-riders." Id. at 2465-70. Whereas the Abood Court had decided that those interests justified the fair-share fee laws’ impingement on the union non-members’ speech rights, the Court in Janus I stated that, instead, " ‘labor peace’ can readily be achieved through means significantly less restrictive of associational freedoms," and that "avoiding free riders is not a compelling interest." Id. at 2466 (internal quotation marks and citations omitted).

Accordingly, "the First Amendment does not permit the government to compel a person to pay for another party's speech just because the government thinks that the speech furthers the interests of the person who does not want to pay." Id. at 2467. State legislation allowing public-sector employers and public-sector unions to collect fair-share...