Nev. State Educ. Ass'n v. Clark Cnty. Educ. Ass'n

• Decision Date: 04 March 2021
• Docket Number: No. 79208,79208
• Citation: 482 P.3d 665
• Parties: NEVADA STATE EDUCATION ASSOCIATION; National Education Association; Ruben Murillo, Jr.; Robert Benson; Diane Di Archangel; and Jason Wyckoff, Appellants, v. CLARK COUNTY EDUCATION ASSOCIATION; John Vellardita; and Victoria Courtney, Respondents.
• Court: Nevada Supreme Court

482 P.3d 665

NEVADA STATE EDUCATION ASSOCIATION; National Education Association; Ruben Murillo, Jr.; Robert Benson; Diane Di Archangel; and Jason Wyckoff, Appellants,

v.CLARK COUNTY EDUCATION ASSOCIATION; John Vellardita; and Victoria Courtney, Respondents.

No. 79208

Supreme Court of Nevada.

FILED MARCH 04, 2021

Leonard Law, PC, and Debbie A. Leonard, Reno; Bredhoff & Kaiser, PLLC, and Robert Alexander and Georgina Catherine Yeomans, Washington, D.C., for Appellants.

Snell & Wilmer, LLP, and Kelly H. Dove, John S. Delikanakis, Bradley T. Austin, and Michael Paretti, Las Vegas; Snell & Wilmer, LLP, and Andrew M. Jacobs, Tucson, Arizona; Asher, Gittler & D'Alba, Ltd., and Joel A. D'Alba, Chicago, Illinois, for Respondents.

BEFORE PARRAGUIRRE, STIGLICH and SILVER, JJ.

OPINION

By the Court, STIGLICH, J.:

The bylaws of national- and state-level unions are contractually binding on affiliated local unions unless and until the local union disaffiliates from the parent unions. The local and parent unions may also enter into other contracts that govern certain aspects of their relationship. In this dispute between a local teachers’ union and its state and national affiliates, we conclude that the parent unions’ bylaws, while binding, did not by their own terms control the important issue of the transmission of dues from the local to the state affiliate. Instead, the local union's obligation to transmit dues was the subject of a separate contract. That contract contained a provision expressly permitting either party to terminate it by giving timely notice. We hold that the local union validly terminated this contract pursuant to that provision and so was not contractually obligated to continue transmitting its members’ dues to the state union. Based on this, and because the parent unions’ remaining tort-based claims also fail, we affirm the district court's grant of summary judgment to the local union.

BACKGROUND

The three unions' contractual relationship

The Clark County Education Association (CCEA) is a local union representing teachers and other employees of the Clark County School District. The Nevada State Education Association (NSEA) is a statewide union whose members are teachers and other school district employees throughout Nevada. The National Education Association (NEA) is a national union that represents about three million teachers and other education professionals throughout the United States. When this dispute began, these three unions had been affiliated for decades. Indeed, CCEA's bylaws required its members to join NSEA and NEA, and conversely, those unions' bylaws required members to join the appropriate local affiliate.

When a Clark County educator wished to become a union member, he or she would sign a Membership Enrollment Form. That form authorized the school district to deduct "professional dues" from the teacher's paycheck and to pay those dues to CCEA. The Membership Enrollment Form did not expressly state the amount of dues or which organizations’ dues were included, but the long-standing practice was to deduct all three unions’ dues and to transmit the lump sum to CCEA. Each organization set its own dues according to its own bylaws. The total dues for CCEA's members for the 2017-2018 school year were $810.50 per person, which constituted the sum total of the CCEA, NSEA, and NEA dues.

For decades before the instant dispute, CCEA would transmit to NSEA all of NSEA's and NEA's dues that it received. NSEA would, in turn, transmit NEA's portion of the dues to NEA. However, the parties vigorously dispute which contractual provision, if any, required CCEA to transmit dues. There are several overlapping possibilities.

First, there is section 2-9 of the NEA bylaws, entitled "Dues Transmittal and Enforcement Procedures." Section 2-9(a) states that "[s]tandards and contracts for transmitting dues shall be developed between the state affiliate and each local affiliate." Section 2-9(a) further states that "[l]ocal affiliates shall have the full responsibility for transmitting state and Association [i.e., NEA] dues to state affiliates on a contractual basis."¹ Section 2-9(b) further provides that "[a] local shall transmit to a state affiliate ... at least forty (40) percent of the Association dues receivable for the year by March 15 and at least seventy (70) percent of the Association dues receivable for the year by June 1." Section 2-9(b), however, does not provide an explicit deadline to transmit one hundred percent of the NEA dues and does not address the state affiliate's dues at all.

Next, there is the Dues Transmittal Agreement (DTA), which NSEA and CCEA entered into in 1979. The DTA designated CCEA as NSEA's agent "for the purpose of collecting and transmitting NSEA and NEA dues." It required CCEA to transmit those dues within ten working days after receiving them from the school district. The contract also provided that, should any amendment to the NSEA constitution or bylaws conflict with the DTA, the DTA would be automatically amended to reflect the amendment. Finally and crucially, the contract provided that it would "remain in force for each subsequent membership year unless terminated in writing by either party prior to September 1 of any NSEA membership year, or amended by mutual consent of both parties."

Twenty years after entering the DTA, NSEA and CCEA entered into a second contract called the Service Agreement. That agreement set forth extensive services NSEA would provide to CCEA, including political action training, liability insurance coverage, and certain grant funding. The Service Agreement prominently stated that the DTA, which was included in the Service Agreement as an appendix, was to be "continued without change." Like the DTA, the Service Agreement renewed automatically each September 1, unless either party provided timely notice of termination.²

Finally, NSEA's bylaws also reference dues transmittal. They provide that "NSEA shall affiliate a local association when it meets the following minimum standards," with a short list of prerequisites for affiliation. One such prerequisite, added in 2015, is to "[h]ave a dues transmittal contract with NSEA."

The instant dispute

In May 2017, CCEA notified NSEA that it wanted to terminate the existing Service Agreement and negotiate new terms. Although CCEA stated that time was of the essence, NSEA initially refused to negotiate before mid-September. In a July letter, CCEA reiterated its pressing need to renegotiate before the new school year began and clarified its position that the existing Service Agreement would expire at the end of August, with or without a new agreement in place.

In early August, CCEA wrote to NSEA a third time. Therein, CCEA stated that the Service Agreement "serve[d] as the dues transmittal contract" and that there would be no agreement in place to collect and transmit dues to NSEA after August 31. CCEA firmly and clearly stated that if NSEA wanted CCEA to continue collecting and transmitting dues, then NSEA would have to negotiate a new agreement.

No new agreement was forthcoming. The September 1 deadline came and went. However, the school district continued to deduct dues for all three unions from each union member's paycheck and transmit them to CCEA. CCEA kept the portion constituting its own dues, but placed the remainder—which it would previously have sent to NSEA—in an escrow account pending litigation. In turn, NSEA ceased providing CCEA with any of the services referred to in the Service Agreement.

CCEA promptly filed a declaratory judgment action, seeking a declaration that it had no obligation to transmit the money in escrow to NSEA. NSEA and NEA filed a separate action for declaratory and injunctive relief, in which they sought to have the dues in escrow disgorged to NSEA. They argued that CCEA failed to effectively terminate the DTA and was now in breach of that contract. They also argued that CCEA had breached both the NSEA and NEA bylaws. Alternatively, they argued that CCEA had unjustly enriched itself or committed conversion by retaining the members’ dues. Finally, a small number of individual teachers joined NSEA and NEA, claiming that CCEA defrauded them by falsely promising to transmit their dues to NSEA. The teachers sought punitive damages. As the cases initiated by CCEA and by NSEA and NEA presented largely the same issues, the cases were consolidated.

In April 2018, the members of CCEA formally voted to disaffiliate from NSEA and NEA. CCEA, as a newly independent union, would collect $510 in annual dues per member. While this was a greater amount than CCEA's previous dues, it reflected the need to fund member services that NSEA or NEA previously provided. The school district then changed its payroll deduction to conform to CCEA's new dues, and CCEA stopped depositing money in the escrow account.

The district court disposed of this litigation with two summary judgment orders. First, in December 2018, the district court concluded that NSEA and NEA could not recover under the DTA. It found that "[t]he Service Agreement incorporates the [DTA]" and that the two documents formed "a single integrated agreement." It then concluded that CCEA's letters effectively terminated the agreements as of September 1, 2017. It is not entirely clear from the order whether the district court based that conclusion on its finding that the two contracts formed a single agreement.

Second, in July 2019, the district court granted summary judgment to CCEA on all remaining claims. The district court concluded that, as a matter of law, NEA's and NSEA's bylaws were not contractually binding on CCEA. Therefore, CCEA had no contractual obligation to transmit dues other than that imposed by the DTA. The district court further concluded that NSEA and NEA had no property interest in the escrowed funds that could give rise to a claim for conversion or unjust enrichment. Finally, the district court granted summary judgment to CCEA on the fraud...