Brown v. Am. Fed'n of State, Cnty. & Mun. Emps.

41 F.4th 963

Eric BROWN; Jody Tuchtenhagen; Debbie Schultz, on behalf of themselves and others similarly situated, Plaintiffs - Appellants,

v.AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, COUNCIL NO. 5, AFL-CIO, Defendant - Appellee.

Mark Fellows ; Alicia Bonner ; Catherine Wyatt, on behalf of themselves and others similarly situated, Plaintiffs - Appellants,

v.Minnesota Association of Professional Employees, Defendant - Appellee.

No. 21-1640

No. 21-1684

United States Court of Appeals, Eighth Circuit.

Submitted: February 16, 2022

Filed: July 25, 2022

Counsel who presented argument on behalf of the appellant was Jeffrey Michael Schwab, of Chicago, IL. Also appearing on appellants' brief were Daniel Suhr of Chicago, IL; Douglas P. Seaton, Golden Valley, MN; William L. Messenger, Springfield, VA; Craig S. Krummen, Minneapolis, MN.

Counsel who presented argument on behalf of the appellee AFSCME in 21-1640 was Leon Dayan, of Washington, DC. Also appearing on the brief of AFSCME were Josie Hegarty of South St. Paul, MN and Ramya Ravidran of Washington, DC.

Counsel who presented argument on behalf of appellee Minnesota Association of Professional Employees in Case No. 21-1684, was Scott A. Kronland of San Francisco, CA. Also appearing on the brief of MN Association of Professional Employees were Brendan D. Cummins and Justin D. Cummins of Minneapolis, MN and P. Casey Pitts and Amanda C. Lynch of San Francisco, CA.

Before LOKEN, COLLOTON, and SHEPHERD, Circuit Judges.

COLLOTON, Circuit Judge.

These are appeals by current and former Minnesota state employees who seek damages for money deducted from their paychecks by unions that represented their local bargaining units. Although the Supreme Court held the deduction practice unlawful in Janus v. American Federation of State, County, & Municipal Employees , ––– U.S. ––––, 138 S. Ct. 2448, 201 L.Ed.2d 924 (2018), the district court^* determined that the unions acted in good-faith reliance on state statutes and existing judicial precedent. Accordingly, the court ruled that the unions were entitled to a defense to liability under 42 U.S.C. § 1983, and dismissed the employees' claims. We agree, and therefore affirm.

Minnesota law permits public employees to bargain collectively with the State by designating a labor union to serve as the exclusive representative for employees in their bargaining unit. Minn. Stat. § 179A.06, subdiv. 2. Employees may decline to join the union. Id. If an employee chooses not to join, however, state law permits the union to require the employee to contribute a so-called "fair-share" fee equal to the cost of membership dues, less the cost of benefits available only to members. Id. , subdiv. 3. The statute caps these fees at eighty-five percent of what the union charges for regular membership dues. Id. To collect fees from a non-member employee, the union must send a written notice to the employee's public employer, at which point the employer is required to "deduct the fee from the earnings of the employee and transmit the fee" to the union after thirty days. Id.

In Abood v. Detroit Board of Education , 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977), the Supreme Court held that a similar regime permitting public-sector unions to compel the payment of fees from state employees who chose not to join the unions did not violate the First Amendment free speech rights of the employees. The Court concluded that the unions could extract fair-share fees from non-members so long as the fees were used to fund projects "germane to [the unions'] duties as collective-bargaining representative," rather than ideological or political causes. Id. at 235-36, 97 S.Ct. 1782. Forty-one years later in Janus , the Supreme Court overruled Abood . 138 S. Ct. at 2460. The Court held that public-sector unions violated the First Amendment by deducting fair-share fees from non-member employees without first obtaining affirmative consent from the employees. Id. at 2486.

The employees allege that between May 2014 and the 2018 decision in Janus , the unions representing their bargaining units unconstitutionally deducted fair-share fees from their paychecks. The employees sued the unions under § 1983 on behalf of themselves and a putative class, and sought damages equal to the amounts deducted from their paychecks before Janus . The unions moved to dismiss the complaint. The unions did not dispute that collecting these fees ran afoul of the rule announced in Janus . But the unions asserted that for deductions taken until Janus was decided, they were entitled to rely "in good faith upon then-valid Minnesota law and then-binding Supreme Court precedent in receiving Plaintiffs' fair-share fees payments."

The district court granted the motions to dismiss. Joining "every court to consider the issue," the court concluded "that private actors who act in good faith reliance on a state statute and Supreme Court case law holding that statute constitutional have an affirmative defense to § 1983 liability." The court concluded that "[t]he Unions' reliance on [ § 179A.06 ] was supported by Abood and forty years of precedent," and that the employees had not alleged that the unions acted in bad faith. The employees appeal, and argue that there is no good-faith defense to liability for damages under § 1983.

Although this court has yet to address whether private parties sued under § 1983 may invoke a good-faith defense, the issue has been much discussed elsewhere. The Supreme Court broached the topic in Lugar v. Edmondson Oil Co. , 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982), a case holding that certain private actors could be subject to suit under § 1983 for acting under color of state law. Id. at 941-42, 102 S.Ct. 2744. Responding to a concern that a private individual might be held liable for innocent reliance on a state law that was only later declared unconstitutional, see id. at 955-56, 956 n.14, 102 S.Ct. 2744 (Powell, J., dissenting), the Court said that "this problem should be dealt with not by changing the character of the cause of action but by establishing an affirmative defense." Id. at 942 n.23, 102 S.Ct. 2744 (opinion of the Court). But because the question of a defense was not before it, the Court left the issue for another day. Id.

A decade later, the Court raised the possibility again. In Wyatt v. Cole , 504 U.S. 158, 112 S.Ct. 1827, 118 L.Ed.2d 504 (1992), the Court held that private actors subject to suit under § 1983 could not invoke qualified immunity. Id. at 168-69, 112 S.Ct. 1827. At the same time, however, the Court did "not foreclose the possibility that private defendants faced with § 1983 liability ... could be entitled to an affirmative defense based on good faith and/or probable cause or that § 1983 suits against private, rather than governmental, parties could require plaintiffs to carry additional burdens." Id. at 169, 112 S.Ct. 1827.

In separate opinions, a majority of the Justices found support for a good-faith defense in the common law, and suggested that the defense would be available on remand. See id. at 172-75, 112 S.Ct. 1827 (Kennedy, J., concurring); id. at 176-77, 112 S.Ct. 1827 (Rehnquist, C.J., dissenting). Two Justices concluded that there was "support in the common law for the proposition that a private individual's reliance on a statute, prior to a judicial determination of unconstitutionality, is considered reasonable as a matter of law." Id. at 173-74, 112 S.Ct. 1827 (Kennedy, J., concurring). Three others believed that the defendants could prevail if "their reliance on the ... statute was objectively reasonable for someone with their knowledge of the circumstances." Id. at 178, 112 S.Ct. 1827 (Rehnquist, C.J., dissenting). These two opinions debated whether a showing of subjective bad faith by the defendant would obviate the defense.

On remand, the Fifth Circuit concluded that the separate opinions in Wyatt "largely answered" the question whether a defendant in a § 1983 action may assert a good-faith defense. The court held "that private defendants sued on the basis of Lugar may be held liable for damages under § 1983 only if they failed to act in good faith in invoking the unconstitutional state procedures." Wyatt v. Cole , 994 F.2d 1113, 1118 (5th Cir. 1993).

Since Wyatt , seven more circuits have recognized a good-faith defense for private parties who relied on a presumptively valid state statute when they allegedly deprived a plaintiff of constitutional rights. Each of these courts has held that the defense barred a claim against a public-sector union to recover fair-share fees collected before Janus . See Akers v. Md. State Educ. Ass'n , 990 F.3d 375, 382 (4th Cir. 2021) ; Doughty v. State Emps.' Ass'n of N.H. , 981 F.3d 128, 130, 132 n.3 (1st Cir. 2020) ; Diamond v. Pa. State Educ. Ass'n , 972 F.3d 262, 271 (3d Cir. 2020) (opinion of Rendell, J.); id. at 284 (Fisher, J., concurring in the judgment); Wholean v. CSEA SEIU Loc. 2001 , 955 F.3d 332, 334-36 (2d Cir. 2020) ; Lee v. Ohio Educ. Ass'n , 951 F.3d 386, 391 (6th Cir. 2020) ; Danielson v. Inslee , 945 F.3d 1096, 1098-99 (9th Cir. 2019) ; Janus v. Am. Fed'n of State, Cnty. & Mun. Emps. , 942 F.3d 352, 364-66 (7th Cir. 2019). No circuit has ruled otherwise.

Challenging this consensus, the employees rely on the text of § 1983. The statute provides that "[e]very person" who acts under color of state law to deprive another of his constitutional rights "shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress." 42 U.S.C. § 1983. The employees argue that a defense predicated on a defendant's good faith would undermine the promise of a remedy for "every person" whose rights are violated. They urge that this court may not depart from the statutory text and "create immunities based solely on our view of sound policy." Rehberg v. Paulk , 566 U.S. 356, 363, 132 S.Ct. 1497, 182 L.Ed.2d 593 (2012).

While federal courts may not "make...