Ochoa v. Pub. Consulting Grp., Inc.

48 F.4th 1102

Cindy Ellen OCHOA, as an individual, Plaintiff-Appellant,

v.PUBLIC CONSULTING GROUP, INC., a Massachusetts corporation; Public Partnerships LLC, incorporated in Delaware; Cheryl Strange, in her official capacity as Secretary of the Department of Social and Health Services; Jay Robert Inslee, in his official capacity as Governor of the State of Washington, Defendants-Appellees.

No. 19-35870

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 8, 2022 Portland, Oregon

Filed September 19, 2022

Sydney Phillips (argued) and Caleb Jon F. Vandenbos, Freedom Foundation, Olympia, Washington, for Plaintiff-Appellant.

Alicia Young (argued), Assistant Attorney General; Susan Sackett Danpullo, and Cheryl L. Wolfe, Senior Counsel, Labor and Personnel Division; Robert W. Ferguson, Attorney General; Office of the Attorney General, Olympia, Washington; for Defendants-Appellees Cheryl Strange and Jay Robert Inslee.

Scott A. Flage (argued) and Markus W. Louvier, Evans Craven & Lackie PS, Spokane, Washington, for Defendants-Appellees Public Consulting Group, Inc., and Public Partnerships LLC.

Scott A. Kronland, Altshuler Berzon LLP, San Francisco, California; Michael C. Subit, Frank Freed Subit & Thomas LLP, Seattle, Washington; for Amicus Curiae SEIU Local 775.

Before: Richard A. Paez and Jacqueline H. Nguyen, Circuit Judges, and John R. Tunheim,^* District Judge.

PAEZ, Circuit Judge:

Cindy Ochoa is a resident of Washington who works as an individual provider ("IP") of in-home care for her disabled adult son. Under Washington law, IPs are considered public employees for the purpose of collective bargaining, and they are represented by Service Employees International Union 775 ("SEIU"). Ochoa did not join the union, but on two separate occasions the State nonetheless withheld dues from her paycheck. Ochoa sued the union; Jay Inslee, Governor of Washington; Cheryl Strange, Secretary of the Washington Department of Social and Health Services ("DSHS"); Public Partnerships LLC ("PPL"), a private company that administers DSHS's payroll system; and Public Consulting Group, Inc. ("PCG"), the parent company of PPL. She alleged that the defendants violated her First and Fourteenth Amendment rights and engaged in the willful withholding of her wages in violation of state law.

The district court dismissed all of Ochoa's claims against PPL and PCG (collectively, "private defendants") and granted summary judgment to Governor Inslee and Secretary Strange (collectively, "State defendants"). We affirm. Ochoa has standing to bring her claims for prospective relief, and the district court erred in holding that PPL and PCG are not state actors. Ochoa, however, has not alleged facts sufficient to support a Fourteenth Amendment due process claim or a claim for violation of state law.

BACKGROUND

Washington contracts with IPs to provide in-home care services to clients who are eligible for Medicaid. DSHS is responsible for administering the IP program, which involves paying providers' wages and withholding deductions, including union dues. DSHS uses a payroll system called IPOne to pay IPs and to process any dues deductions. IPOne is maintained by a private contractor, PPL.¹ SEIU provides DSHS with an electronic dues interface file identifying IPs who should have union dues withheld from their paychecks. DSHS then sends that file to PPL so the company can make the deductions. PPL relies entirely on the information from the union in determining from whom it should withhold dues.

When Ochoa first began working as an IP, Washington automatically withheld dues from all IPs' paychecks. After the Supreme Court's decision in Harris v. Quinn , 573 U.S. 616, 134 S.Ct. 2618, 189 L.Ed.2d 620 (2014), the State and SEIU amended their collective bargaining agreement to establish an opt-out process in which union dues would be deducted from all IPs except those who affirmatively objected.² In July 2014, Ochoa exercised her right to cease paying union dues. She alleges that since then, she "has never communicated to any of the Defendants that she would like to support SEIU 775—either financially or otherwise." In May 2016, a union representative visited Ochoa at home and asked her to sign a form to verify her contact information, which Ochoa refused to do. Four months later, DSHS received a dues interface file from SEIU indicating that dues should be withheld from Ochoa's paycheck. Beginning on October 17, 2016, dues were withheld. About five months later, Ochoa noticed the withholdings and contacted IPOne several times to demand that they stop withholding dues. She received no response until May 2017, when IPOne informed her that she would need to contact SEIU for assistance.

When Ochoa contacted the union, a representative told her that dues were being withheld because Ochoa had signed a union membership card. Ochoa informed the representative that she had not signed a membership card and asked to be shown the card. When SEIU sent her a copy of the card, she recognized that the signature was not hers and once again asked the union to stop withholding dues. In June 2017, the secretary-treasurer of the union sent Ochoa a letter acknowledging that the signature on the card did not match the one on file for her. The letter included a check for $358.94. A month later, the union sent a second letter, which included a check for $51.12. Ochoa, through her attorney, rejected the checks. The withholding of union dues then stopped.

In 2018, the Supreme Court held that an opt-out process for deducting union dues from public employees violates the First Amendment. Janus v. Am. Fed'n of State, Cnty., & Mun. Emps., Council 31 , ––– U.S. ––––, 138 S. Ct. 2448, 201 L.Ed.2d 924 (2018). Immediately following the decision, the State began working to create an opt-in process and to ensure that union dues would not be deducted from any IP who had not affirmatively authorized such deductions. While the State was developing a permanent change, it implemented a work-around plan. Under this plan, SEIU would provide the State with two electronic interface files: one identifying all IPs who had opted out of paying dues, and one identifying all IPs who had affirmatively opted in. Beginning on July 16, 2018, deductions were taken only from the paychecks of IPs on the opt-in list. Because of discrepancies between the lists, however, there were approximately eighty-seven IPs from whom the State believes it deducted dues without affirmative consent.

Ochoa was among these providers. Dues were withheld from her salary in July and August 2018. Upon noticing the withholdings, she again contacted IPOne and spoke to a representative who said that she could not fix the problem. She also contacted SEIU. After her calls to the union failed to stop the withholdings, Ochoa had her counsel contact SEIU, and the withholdings then promptly ceased.

Following these unauthorized deductions, Ochoa filed this lawsuit. In the operative complaint, Ochoa brought a claim under 42 U.S.C. § 1983 alleging that the defendants violated her First and Fourteenth Amendment rights by failing to employ minimal procedural safeguards to avoid unconstitutional dues withholdings and a claim that the defendants violated Wash. Rev. Code § 49.52.050 by engaging in willful withholding of her wages in 2018. The district court dismissed all the claims against the private defendants, concluding that they were not the proximate cause of the erroneous deprivations, were not state actors for the purposes of § 1983, and did not willfully withhold wages under § 49.52.050. The district court subsequently granted summary judgment to the State defendants, concluding that the Eleventh Amendment barred all claims against them except those for prospective relief and that Ochoa lacked standing to seek such relief. Ochoa timely appealed the final judgment.³

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. We review de novo a district court's grant of summary judgment, "including legal determinations regarding standing." Alaska Right to Life PAC v. Feldman , 504 F.3d 840, 848 (9th Cir. 2007). We also review de novo a dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). See Cholla Ready Mix, Inc. v. Civish , 382 F.3d 969, 973 (9th Cir. 2004). We may affirm the dismissal "on any basis fairly supported by the record." Vestar Dev. II, LLC v. Gen. Dynamics Corp. , 249 F.3d 958, 960 (9th Cir. 2001).

DISCUSSION

A. Standing

Ochoa argues that the district court incorrectly concluded that she lacked standing to seek prospective relief. Because Ochoa's claim is procedural and thus need not meet "all the normal standards" for standing, Lujan v. Defs. of Wildlife , 504 U.S. 555, 572 n.7, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), we hold that she does have standing to seek declaratory and injunctive relief against both the State and the private defendants.⁴

To have standing to bring suit, a plaintiff must generally establish that she has suffered an injury in fact that is fairly traceable to the challenged conduct of the defendant and that will likely be redressed by a favorable decision. See Lujan , 504 U.S. at 560, 112 S.Ct. 2130. The Supreme Court has explained that "procedural rights are special," however, and a plaintiff can therefore assert a procedural right "without meeting all the normal standards for redressability and immediacy." Id. at 572 n.7, 112 S.Ct. 2130. To establish procedural standing, a plaintiff must "show that it was accorded a procedural right to protect its interests and that it has concrete interests that are threatened." City of Las Vegas v. F.A.A. , 570 F.3d 1109, 1114 (9th Cir. 2009).

Ochoa meets this less demanding standard. Under the Fourteenth Amendment, she has a procedural right to due process. See Marsh v. County of San Diego , 680 F.3d 1148, 1155 (9th Cir. 2012). This right protects her concrete liberty interest under the First Amendment in...