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January 15, 2020

Stroock Special Bulletin

By: Dina Kolker, Alan M. Klinger, Arthur J. Herskowitz

On January 10, 2020, the United States District Court for the Southern District of New York dismissed with prejudice a putative nationwide class action complaint[1] against multiple public-sector unions,[2] seeking the retroactive disgorgement of agency shop fees,[3] which had been found unconstitutional following the Supreme Court’s landmark decision, Janus v. AFSCME.[4]  With this decision, the Southern District is the first federal court in New York to rule on the issue, and it joins a burgeoning number of courts nationwide[5] in holding that public-sector unions are insulated from liability for pre-Janus agency shop fee collection under the “good faith” defense.[6]  The decision is a significant win in fending off the continuing campaign waged by anti-union interest groups, which seek to weaken public-sector unions through the refund of tens of millions of dollars collected under previously valid law.

For over 40 years, the Supreme Court allowed for the collection of fees from non-union members in order to fund non-political activities that benefited all employees.[7]  Despite occasional dicta criticizing the status quo, the constitutionality of agency shop fees was consistently reaffirmed.[8]  However, on June 27, 2018, the Supreme Court held that agency shop fees are unconstitutional in the public collective bargaining context.[9] Almost immediately, plaintiffs nationwide brought suit under 42 U.S.C. § 1983 and the tort laws of their respective states, seeking retroactive disgorgement of agency shop fees ad infinitum.

Here, plaintiffs brought suit not only under § 1983, but also under New York state law regarding conversion and unjust enrichment.  As an initial matter, Judge Katherine Polk Failla held that the Southern District lacked subject matter jurisdiction over plaintiffs’ claims for prospective and declaratory relief, because (1) the defendants had complied with Janus, thereby vitiating allegations of present or future harm; (2) the Janus decision explicitly applied to all states, and not just the state law at issue there; and (3) the decision invalidated all state laws allowing for or mandating agency shop fees by virtue of the Supremacy Clause.

Further, the court held that plaintiffs’ claims for disgorgement were deficient.  The plaintiffs failed to state a claim under § 1983 because the unions had collected agency shop fees in good faith reliance on previously valid law.  Additionally, plaintiffs’ state law conversion and unjust enrichment claims were precluded under New York Civil Service Law § 215, which states that unions “shall not be liable for, and shall have a complete defense to, any claims or actions” stemming from pre-Janus agency shop fee collection.

Importantly, this case presented the first test of New York Civil Service Law § 215, adopted in April 2019, which clarified New York law to bar any state law-based claims brought after the Supreme Court’s decision in Janus.  The statute explicitly provided for its retroactive application.  Despite challenges both to the terms of the statute itself and its constitutionality on several grounds, Judge Failla affirmed the law’s validity and applicability barring plaintiffs’ state law claims.

The implications of this decision, and others like it, are significant, in that unions would otherwise be forced to pay tens of millions of dollars collected and spent under previously valid Supreme Court precedent and state law, despite the fact that those fees were used to benefit union members and non-members alike.  An analogous case raising similar issues remains pending before the Eastern District of New York, where Stroock and New York State United Teachers also serve as co-counsel for union defendants.  Another such case brought in district court in Connecticut is presently being appealed to the Court of Appeals for the Second Circuit.

The unions in Seidemann were represented by Stroock & Stroock & Lavan LLP and New York State United Teachers, together with Cohen, Weiss & Simon LLP, Peter Zwiebach, Esq., Gladstein, Reif & Meginniss, LLP and Levy Ratner, P.C.[10]

Alan Klinger, Charles Moerdler, Dina Kolker and Arthur Herskowitz made up the Stroock team in this case.

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For More Information:

Dina Kolker

Alan M. Klinger

Arthur J. Herskowitz

[1] Seidemann et al. v. Professional Staff Congress Local 2334, et al., No. 1:18-cv-09778 (KPF), 2020 WL 127583 (S.D.N.Y. Jan. 10, 2020).

[2] Defendant unions were Professional Staff Congress Local 2334 (“PSC”); American Federation of Teachers (“AFT”), American Federation of Labor and Congress of Industrial Organizations (“AFL-CIO”), American Association of University Professors Collective Bargaining Congress (“AAUPCBC”), New York State United Teachers (“NYSUT”); National Education Association (“NEA”); Faculty Association of Suffolk County Community College (“FASCCC”), and United University Professions, Farmingdale State College Chapter (“UUP”).

[3] The plaintiffs also sought a declaratory judgment stating that compulsory agency shop fees under New York law were unconstitutional, and an injunction against the collection of same.

[4] 585 U.S. __, 138 S. Ct. 2448 (2018)

[5] See, e.g., Janus v. Am. Fed’n of State, Cty. & Mun. Emps., Council 31, AFL-CIO, 942 F.3d 352 (7th Cir. 2019); Mooney v. Ill. Educ. Ass’n, 942 F.3d 368 (7th Cir. 2019); Aliser v. SEIU California, 3:19-cv-00426 VC, __ F. Supp. 3d __, 2019 WL 6711470 (N.D. Cal. Dec. 10, 2019); Allen v. Santa Clara County Correctional Peace Officers Assoc., 400 F.Supp.3d 998 (E.D. Cal. 2019) (appeal pending); Ogle v. Ohio Civil Serv. Employees Ass'n, AFSCME, Local 11, 397 F.Supp.3d 1076 (S.D. Ohio July 17, 2019); Diamond v. Pa. State Educ. Ass’n, 399 F.Supp.3d 361 (W.D. Pa. 2019); Hernandez v. AFSCME Cal., 386 F.Supp.3d 1300 (E.D. Cal. 2019); Doughty v. State Emp.’s Ass’n of N.H., SEIU, Local 1984, CTW, CLC, 19 cv 00053-PB (D. N.H. May 30, 2019), ECF No. 20; Babb v. Cal. Teachers Ass’n, 378 F.Supp.3d 857 (C.D. Cal. 2019); Wholean v. CSEA SEIU Local 2001, 3:18-cv-01008-WWE, 2019 WL 1873021, at *3 (D. Conn. April 26, 2019); Akers v. Md. State Educ. Ass’n, 376 F.Supp.3d 563 (D. Md. 2019); Bermudez v. Serv. Emps. Int’l Union, Local 521, 18-cv-04312-VC, 2019 WL 1615414 (N.D. Cal. April 16, 2019); Lee v. Ohio Educ. Ass’n, 366 F. Supp. 3d 980, 982-83 (N.D. Ohio 2019); Hough v. SEIU Local 521, 18-cv-04902-VC, 2019 WL 1785414, at *1 (N.D. Cal. April 16, 2019); Carey v. Inslee, 364 F. Supp. 3d 1220, 1229 (W.D. Wash. 2019); Crockett v. NEA-Alaska, 367 F. Supp. 3d 996, 1006 (D. Alaska 2019); Cook v. Brown, 364 F. Supp. 3d 1184, 1192 (D. Or. 2019); Danielson v. Am. Fed’n of State, Cty., & Mun. Emps., Council 28, AFL-CIO, 340 F. Supp. 3d 1083, 1084-87 (W.D. Wash. 2018).  There are also myriad similar challenges before various district courts.  See, e.g., Pellegrino v. New York State United Teachers, 2:18-cv-03439 (E.D.N.Y.); Hoekman v. Education Minnesota, 18-cv-01686 (D. Minn).

[6] An affirmative defense arguing that reliance on previously-valid, but subsequently overturned, law shields a defendant from liability.

[7] See Abood v. Detroit Board of Education, 431 U.S. 209 (1977).

[8] See, e.g., Friedrichs v. California Teachers Assoc., 578 U.S. __, 136 S.Ct. 1083 (2016) (per curiam); Harris v. Quinn, 573 U.S. __, 134 S. Ct. 2618 (2014); Locke v. Karass, 555 U.S. 207 (2009); Lehnert v. Ferris Faculty Ass’n, 500 U.S. 507 (1991); Chicago Teachers Union v. Hudson, 475 U.S. 292 (1986); Ellis v. Bhd. Of Ry. Clerks, 466 U.S. 435 (1984).

[9] Janus v. AFSCME, 585 U.S. __, 138 S. Ct. 2448 (2018)

[10] Stroock & Stroock & Lavan LLP is co-counsel for Professional Staff Congress Local 2334 (PSC), American Federation of Teachers (AFT) and New York State United Teachers (NYSUT); Robert T. Reilly, Esq. is co-counsel for PSC, and AFT, as well as counsel for Faculty Association of Suffolk County Community College; United University Professions, Farmingdale State College Chapter; and National Education Association of the United States; Cohen, Weiss & Simon LLP is co-counsel for PSC;  Peter Zwiebach, Esq. is co-counsel for PSC; Gladstein, Reif & Meginniss, LLP is counsel for AFL-CIO; and Levy Ratner, P.C. is counsel for American Association of United Professors Collective Bargaining Congress.

This article is for general information purposes only. It is not intended as legal advice, and you should not consider it as such.

For more information on this case see the recent Bloomberg Law article here.