Wagner v. Professional Eng'Rs in Cal. Gov't

Decision Date14 January 2004
Docket NumberNo. 02-16461.,No. 02-16397.,02-16397.,02-16461.
Citation354 F.3d 1036
PartiesJ. Richard WAGNER and Kristin Schwall, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees/Cross-Appellants, v. PROFESSIONAL ENGINEERS IN CALIFORNIA GOVERNMENT, Defendant-Appellant/Cross-Appellee, and Kathleen Connell, State Controller, in her official capacity only, Defendant.
CourtU.S. Court of Appeals — Ninth Circuit

Jeffrey B. Demain, Altshuler, Berzon, Nussbaum, Rubin & Demain, San Francisco, CA, for the defendant-appellant/cross-appellee.

Mark J. Beutler, National Right to Work Legal Defense Foundation, Inc., Springfield, VA, for the plaintiffs-appellees/cross-appellants.

Appeals from the United States District Court for the Eastern District of California; Garland E. Burrell, District Judge, Presiding. D.C. No. CV-99-01692-GEB.

Before: GRABER, WARDLAW, and CLIFTON, Circuit Judges.

GRABER, Circuit Judge.

Defendant Professional Engineers in California Government ("PECG") is the exclusive bargaining agent for a unit of California state employees and has entered into a collective-bargaining agreement with the state. The agreement contains a union security clause. Plaintiffs are engineers who are members of the bargaining unit but nonmembers of PECG. As such, they are obligated to pay "fair-share" fees.

Plaintiffs allege (1) that PECG failed to provide proper notice to fee payers as required by Chicago Teachers Union, Local No. 1 v. Hudson, 475 U.S. 292, 106 S.Ct. 1066, 89 L.Ed.2d 232 (1986), and (2) that PECG improperly categorized certain activities as representational. With respect to the first claim, PECG concedes that the 1999 notice was defective. We hold that the proper remedy for a defective notice is issuance of a proper notice with a renewed opportunity for objection. We also hold that Plaintiffs are judicially estopped from pursuing their second claim.


A union that represents employees in a collective-bargaining unit has a legal obligation to represent equally all employees in the bargaining unit, whether or not they are members of the union. In Lucas v. NLRB, 333 F.3d 927, 931-32 (9th Cir.2003), we explained:

The Supreme Court has long recognized that a union has a statutory duty of fair representation under the [National Labor Relations Act ("NLRA")]. See Vaca v. Sipes, 386 U.S. 171, 177, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). Although the Act does not explicitly articulate this duty, the Court has held that the duty is implied from "the grant under § 9(a) of the NLRA, 29 U.S.C. § 159(a) (1982 ed.), of the union's exclusive power to represent all employees in a particular bargaining unit." Breininger v. Sheet Metal Workers Int'l Ass'n Local Union No. 6, 493 U.S. 67, 87, 110 S.Ct. 424, 107 L.Ed.2d 388 (1989). In Breininger, the Court reasoned that this authority to represent all employees necessarily included the obligation to do so in a non-discriminatory manner. See id. at 79, 87-88, 110 S.Ct. 424.

Because all employees benefit from the union's representation, the Supreme Court has held that nonmembers constitutionally may be compelled to contribute their pro rata share of the costs incurred in obtaining the benefits of representation. Abood v. Detroit Bd. of Educ., 431 U.S. 209, 221-23, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977). As our court has recognized: "It is settled law that a union may charge nonunion employees certain fees to pay for their `fair share' of the union's cost of negotiating and administering a collective bargaining agreement." Cummings v. Connell, 316 F.3d 886, 888 (9th Cir.), cert. denied, 539 U.S. 927, 123 S.Ct. 2577, 156 L.Ed.2d 604 (2003).

The collective-bargaining agreement between PECG and the state contains a union security clause, which requires non-members to pay fees for the union's representational activities. These fees commonly are known as "fair share" or "agency" fees. Under the First Amendment, however, a fee payer has a right to decide whether to pay for political and expressive activities that are unrelated to collective bargaining. Hudson, 475 U.S. at 301-02, 106 S.Ct. 1066 ("[N]onunion employees do have a constitutional right to `prevent the Union's spending a part of their required service fees to contribute to political candidates and to express political views unrelated to its duties as exclusive bargaining representative.'" (quoting Abood, 431 U.S. at 234, 97 S.Ct. 1782)). California law also entitles a non-union member to a refund, upon request, of the portion of the fair-share fee that is not related to the union's representational activities. Cal. Gov't Code § 3515.8. Thus, although a union may charge fee payers the full equivalent of union dues, a fee payer may object to paying for nonrepresentational expenses. The expenditures that a union may not charge if a fee payer objects are commonly called "nonchargeable" expenditures.

To facilitate fee payers' First Amendment choice, the union must provide fee payers with "an adequate explanation of the basis for the fee." Hudson, 475 U.S. at 310, 106 S.Ct. 1066. This explanation is referred to as a "Hudson notice." In the Hudson notice, each major category of expenditures is classified as chargeable, nonchargeable, or partly chargeable to objecting fee payers. Those classifications are referred to as the union's "chargeability determinations."

The union also must provide to nonmembers an opportunity to object to paying for nonchargeable expenditures, as well as an opportunity to challenge before an impartial decisionmaker the union's calculation of the amount of the fair-share fee. Id.

This appeal concerns two kinds of claims: (1) that the Hudson notice was defective, so that fee payers could not make an informed decision whether to object, and (2) that certain chargeability determinations were improper.


PECG is the exclusive representative of employees in State Bargaining Unit 9. In March 1999, PECG issued a Hudson notice to about 1,700 fee payers. The notice classified as chargeable a number of expenditures, including expenditures under the headings "Legislative Activity Related to Collective Bargaining," "Initiatives," and "Legislation/Political Action."

In response to the Hudson notice, 33 nonmember fee payers objected to paying the full fair-share fee, and they objected to the classification of the expenditures in the three foregoing categories as chargeable. The objectors filed this action in July 1999. More than two years later, the district court certified a class consisting of all individuals who, at any time between April 1 and October 31, 1999, were California state employees in the bargaining unit represented by PECG, were not members of PECG, and had fair-share fees deducted from their pay.

In response to a series of motions for summary adjudication, the district court eventually held that (1) the March 1999 Hudson notice was insufficient as a matter of law because it contained unaudited financial information,1 and (2) PECG had failed to show how any of the challenged expenditures was germane to collective-bargaining activity. The district court therefore granted Plaintiffs' motion for summary judgment. The court also awarded nominal damages and compensatory damages to each member of the class.

PECG brought this timely appeal, and Plaintiffs timely cross-appealed.


We review de novo a district court's decision on summary judgment. Biodiversity Legal Found. v. Badgley, 309 F.3d 1166, 1175 (9th Cir.2002). We also review de novo a district court's decision to grant or deny declaratory relief. DP Aviation v. Smiths Indus. Aerospace & Def. Sys. Ltd., 268 F.3d 829, 840 (9th Cir.2001).

We review for abuse of discretion a district court's decision to grant class certification. Cummings, 316 F.3d at 895. Likewise, we review for abuse of discretion the question whether the district court properly applied the doctrine of judicial estoppel to the facts. Broussard v. Univ. of Cal., 192 F.3d 1252, 1255 (9th Cir.1999).

A. The remedy for PECG's defective Hudson notice is a new, proper notice with a renewed opportunity to object.

As noted, the Supreme Court has established certain safeguards in connection with the collection of fair-share fees, including "an adequate explanation of the basis for the fee." Hudson, 475 U.S. at 310, 106 S.Ct. 1066. PECG does not appeal the district court's determination that the Hudson notice it provided in March 1999 was inadequate to explain the basis for the fee.

The question naturally arises, then, what is the appropriate remedy for issuance of a defective Hudson notice? PECG argues that the remedy for a bad notice is a good notice, resulting in a new opportunity to object and obtain a refund of the nonchargeable portion of the fee (with interest), while Plaintiffs argue that a bad notice invalidates the collection of any nonchargeable amounts for the period covered by the notice, resulting in a refund of all such amounts to fee payers. For the two reasons that follow, we agree with PECG.

First, we consider the function of a Hudson notice and the kind of harm that arises from issuance of an inadequate notice. "The purpose of the Hudson notice is to provide fee payers with adequate information so that they may decide whether to object or to challenge the Union's calculation." Cummings, 316 F.3d at 895 (citing Hudson, 475 U.S. at 306, 106 S.Ct. 1066). An inadequate notice gives fee payers insufficient information with which to decide whether or not to object to paying portions of the fee that are unrelated to representational activities. A new, conforming notice, with a renewed opportunity for fee payers to object to paying nonchargeable amounts, addresses that harm. Following a new, conforming notice, fee payers could object, and objectors would be entitled to a refund of the nonchargeable portion of the fee,...

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