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More on Suits against Unions for Janus Violations

A response to Aaron Tang

|The Volokh Conspiracy |

Professor Aaron Tang has a response to my post earlier this week about the possibility that unions could be sued for several years worth of agency fees collected even before the Supreme Court held that the fees were unconstitutional in Janus. Professor Tang writes:

Where I part ways with Professor Baude is at step three. He notes, correctly, that under Wyatt v. Cole, private parties do not enjoy qualified immunity from § 1983 claims. But here's the most important part of his post, buried away in the end: He concedes that Wyatt "reserved the possibility that private parties could make a separate 'good faith' defense distinct from qualified immunity."

That, then, is the (multi-) million dollar question for unions: Even if they don't enjoy a qualified immunity from suit, can they nevertheless raise their good faith reliance on state agency fee statutes as an affirmative defense to retrospective liability? I want to suggest that the answer to this question is quite clear in the unions' favor.

To see why, one must go back to the origins of § 1983. As the Supreme Court has long recognized, "[Section 1983] creates a species of tort liability." Imbler v. Pachtman, 424 U.S. at 417. While the statute itself makes no mention of immunities or defenses from such liability, the Court has granted immunity to government actors nonetheless if they "were shielded from tort liability" under the "most closely analogous tort[]" at common law. Wyatt v. Cole, 504 U.S. at 164.

Wyatt v. Cole posed the question whether private actors could benefit from the same qualified immunity defense as government actors. The Court's answer was "no," but for a very particular reason. Qualified immunity, the Court recognized in Wyatt, is something special and ahistorical. See 504 U.S. at 166 (conceding that the Court's decision to award qualified immunity in "Harlow v. Fitzgerald 'completely reformulated qualified immunity along principles not at all embodied in the common law.'"). For qualified immunity is not just a defense from liability, but an immunity from suit altogether that can be objectively determined and thus immediately appealed if denied. Id.

This means the private actors in Wyatt wanted something much more than to avoid personal liability for using a state statute to obtain private party: they wanted to be immune from the lawsuit altogether.The Court said they enjoyed no such immunity, because unlike government actors whom society may wish to vest with discretion when making difficult on-the-spot decisions, "private parties hold no office requiring them to exercise discretion."504 U.S. at 168.

The upshot of Wyatt, then, is that private parties who obtain property belonging to other private parties by relying on an unconstitutional statute (just like in Janus) can be forced to defend a lawsuit. But Wyatt emphatically doesn't hold that such parties should actually be held liable for a refund in that suit. See 504 U.S. at 169 (reserving this question).

That is because the common law origins of § 1983 still inform the separate question of whether the private party defendants can raise an affirmative defense to liability. Indeed, to know what kind of affirmative defenses a defendant can raise, the Court has instructed us to look at the defenses that were available to the most analogous tort at common law. See, e.g., Pierson v. Ray, 386 U.S. at 556-57 ("Section 1983 should be read against the background of tort liability . . . . part of th[at] background . . . in the case of police officers making an arrest, is the defense of good faith and probable cause."). The argument to the contrary—that private defendants can't raise the same defenses that would've been available to them at the common law—borders on the absurd: that Congress enacted § 1983 not just to hold government actors liable for civil rights violations, but also to radically expand liability for private parties by silently abrogating all of the common law defenses they'd long enjoyed.

So what, then, is the most analogous common law tort to what the union fee objectors are alleging in these refund suits? It's the common law tort of malicious prosecution and abuse of process, which "provided causes of action against private defendants for unjustified harm arising out of the misuse of governmental processes," Wyatt, 504 U.S. at 164—like a statute authorizing agency fees. And in the specific context of that common law tort action, it is undisputed that defendants (like the unions here) could raise the affirmative defense of good faith.

In fact, every lower court to address the question has concluded as much, including in a case that should be of particular relevance here: the Fifth Circuit in Wyatt v. Cole itself, which held on remand (after the Supreme Court's ruling denying qualified immunity) that the very same private defendants could prevail based on the good faith defense. See 994 F.3d at 1120 ("[W]e think that private defendants, at least those invoking ex parte prejudgment statutes, should not be held liable under § 1983 absent a showing of malice and evidence that they either knew or should have known of the statute's constitutional infirmity.").

Here's the first kicker: the plaintiffs who lost on remand in Wyatt filed a cert petition seeking review of the Fifth Circuit's decision to recognize a good faith defense. The Supreme Court denied cert. 510 U.S. 977.

And here's the second: if the private defendants acted in good faith by relying on a state replevin statute in Wyatt, how much more can that be said for public sector unions? The unions, after all, relied on similar state statutes authorizing collecting of agency fees. But the agency fee statutes also had the additional pedigree of the Supreme Court's decision in Abood, which remained good law until Janus.It's hard to imagine a course of action that is more well-grounded in the law—and thus more in good faith—than a party's decision to do something that is both (a) authorized by state law and (b) blessed by an on-point Supreme Court ruling.

And so that leaves me at the same place where I concluded my first post: If relying on these sources of law is "not good enough, we have bigger problems than the impending losses to public sector unions. Sending unions into bankruptcy because they mistakenly trusted the Supreme Court when it stood by Abood in 2012 (and declined to overrule it again in 2014) would be more than a blow to middle class workers; it would be a serious danger to the rule of law."

Professor Tang and I have exchanged several comments about these points on Twitter, but I wanted to offer a few short observations here.

First, this places a great deal of weight on lower court precedents and the denials of certiorari. It is true that circuits have recognized a good faith defense for private parties (though there are fewer such decisions than one might think). And this is understandable, whether as a consolation prize for the lack of qualified immunity or an attempt to avoid the Otter Principle (see Animal House). But the Supreme Court regularly decides cases contrary to the weight of lower court precedent, and the "denial of a writ of certiorari imports no expression of opinion upon the merits of the case."

So the question is not what lower courts have said, or how many of them, but what the best arguments are in support of their position. Professor Tang points to the common law background of Section 1983, and I have recorded my skepticism that the common law supported a general good faith defense. But let us put that aside.

Professor Tang also points, more intriguingly, to the "most analogous common law tort" for these claims, which he suggests is malicious prosecution or abuse of prosecution. But I am not convinced these torts are the best analogy. Lugar v. Edmondson Oil, the case that allows these suits to proceed in the first place, stressed that Section 1983 does not allow a lawsuit for "private misuse of a state statute," but only to "challenge[] the constitutionality of the … statute." Instead, it seems to me that a better analogy is drawn from claims for restitution and unjust enrichment.

In Sections 18 and 19 of the current version of the Restatement of Restitution and Unjust Enrichment describes two different kinds of claims for payments made "under legal compulsion." One for a "Judgment Subsequently Reversed or Avoided" (Section 18):

A transfer or taking of property, in compliance with or otherwise in consequence of a judgment that is subsequently reversed or avoided, gives the disadvantaged party a claim in restitution as necessary to avoid unjust enrichment.

And one for "Recovery of Tax Payments" (Section 19):

(1) Except to the extent that a different rule is imposed by statute, the payment of tax by mistake, or the payment of a tax that is erroneously or illegally assessed or collected, gives the taxpayer a claim in restitution against the taxing authority as necessary to prevent unjust enrichment. "Tax" within the meaning of this section includes every form of imposition or assessment collected under color of public authority.

(2) If restitution pursuant to subsection (1) would disrupt orderly fiscal administration or result in severe public hardship, the court may on that account limit the relief to which the taxpayer would otherwise be entitled.

And a propos that reference to "severe public hardship" in Section 19(2), see comment f:

Significant disruption and hardship are grounds to limit restitution under § 19(2); the mere fact that relief will be expensive is not. If effective relief to claimants will require substantial public revenues, the case is one in which the taxing authority has expended substantial revenues to which it was not legally entitled. Relief may sometimes be structured to minimize fiscal disruption, such as by allowing refunds in the form of credits against future assessments.

The Restatement goes on to consider various scenarios and precedents that could potentially be analogized to Janus claims, and the best analogy could surely be debated. The precedents here are quite nuanced, and it is possible that in the end they might not support recovery, or might have such individualized determinations that recovery could not be adjudicated on a class-wide basis, but I think they are enough to show that citing a supposed "good faith" defense alone is much, much, too quick.

For the much longer treatment of Janus by Eugene and me … watch this blog early next week!

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