Labor & Employment Law Daily Employee arguing for equitable remedy for fair-share fee deductions merely sought damages
Friday, November 8, 2019

Employee arguing for equitable remedy for fair-share fee deductions merely sought damages

By Ronald Miller, J.D.

In a companion case to Janus v. AFSCME (Janus III), the Seventh Circuit ruled that an employee who sought the equitable relief of restitution, was also seeking damages. Because the employee’s claim was against the general assets of a union, and held in its treasury, it can only be characterized as legal rather than equity. So there was no reason to consider whether the good-faith defense applies where the claim is for equitable restitution. Accordingly, the appeals court affirmed the judgment of the district court rejecting the employee’s claim for a refund of her fair-share fees paid prior to the ruling in Janus v. AFSCME, Council 31 (Janus II) (Mooney v. Illinois Education Association, November 5, 2019, Wood, D.).

Fair-share fee arrangement. From the time she started her public employment until June 2018, the employee’s school district employer deducted from her paycheck and sent to the union a fair-share fee to cover costs incurred by the union in labor-management activities. Both the Illinois Public Relations Act, and Abood v. Detroit Bd. of Educ., authorized this fee arrangement. However, that state of affairs came to an end when the U.S. Supreme Court overruled Abood in Janus v. AFSCME, Council 31 (Janus II), and announced that compulsory fair-share fee arrangements violated the First Amendment rights of persons who prefer not to associate with the union that represents their employee unit.

Following Janus II, state employers in Illinois immediately ceased deducting fair-share fees from the paychecks of nonmember public-sector unions. The employee filed a class action lawsuit seeking restitution pursuant to 42 U.S.C. § 1983 for the fees that had been deducted from her pay prior to Janus II. The district court entered judgment for the union, dismissing the employee’s claims. In so doing, it joined the consensus across the country concluding that unions that collected fair-share fees prior to Janus II were entitled to assert a good-faith defense to section § 1983 liability.

Equitable remedy sought. The Seventh Circuit noted that there was one difference between the claim brought by the employee in this action and that brought in the companion case. In the companion case, the employee sought damages pursuant to § 1983 in the amount of fair-share fees he paid prior to the Supreme Court’s ruling in Janus II. By contrast, in this case the employee insists that she is not seeking damages, but instead that she is entitled to the equitable remedy of restitution under § 1983. From the union’s point of view, the two requests are identical—each one seeks a refund of fees.

Here, the appeals court concluded that in substance, the employee in this case was also seeking damages, so that her claim failed. Section 1983 allows remedies either in law or equity. The district court has discretion to tailor an appropriate remedy for the constitutional violation. The employee asserted that even if she concedes that a good-faith defense protects the union against a damages award, an equitable demand for restitution cannot be defeated on good-faith grounds.

For its part, the union argued that, in substance, the employee’s suit is exactly the same as the companion case; one for damages flowing from a First Amendment violation. The appeals court observed that the gravamen of the employee’s complaint was that her First Amendment rights were violated by the fair-share requirement because she was compelled to furnish financial support to union activities with which she disagreed.

As have all other district courts that have faced this question, the district court agreed with the union’s position, and concluded that “Plaintiff’s claim lies in law rather than equity, and there is consequently no reason to consider whether the good-faith defense applies where the claim is for equitable restitution.”

Here, the appeals court agreed with the district court’s analysis, which found ample support in the law. The employee was bringing a claim against the union’s treasury generally, not one against an identifiable fund or asset. She was unable to escape this conclusion by arguing that the entire treasury is an identifiable fund against which she can pursue an equitable lien. The court observed that every defendant will have a “fund” consisting of all of its assets. It was not enough that the employee’s fees once contributed to the union’s overall assets. Rather, she must point to an identifiable fund and show that her fees specifically are still in the union’s possession.

Because the employee’s claim was one for damages, the appeals court affirmed the district court’s judgment.

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