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Appeals court: Supreme Court declared union fees unconstitutional, but union collected in 'good faith,' so no refunds

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By Jonathan Bilyk | Nov 6, 2019

Mark Janus

Unions representing Illinois’ public workers can not be forced to refund any of the “untold billions” of dollars in fees they had unconstitutionally collected from non-union workers for four decades, a federal appeals court has ruled, because the unions collected the fees in “good faith,” relying on their “good luck” of having both state law and a later-overturned Supreme Court decision on their side for all those years.

 On Nov. 5, a three-judge panel of the U.S. Seventh Circuit Court of Appeals in Chicago rejected the appeal of former Illinois state employee Mark Janus, in his legal action against the American Federation of State County and Municipal Employees Council 31, a labor union representing many Illinois state workers, and Illinois’ state government.

The panel’s opinion was authored by Seventh Circuit Chief Judge Diane P. Wood. Judges Daniel A. Manion and Ilana D. Rovner concurred.

U.S. Seventh Circuit Court of Appeals Chief Judge Diane P. Wood |

“It is not true, as Mr. Janus charges, that this defense will be available to ‘every defendant that deprives any person of any constitutional right,’” Judge Wood wrote. “We predict that only rarely will a party successfully claim to have relied substantially and in good faith on both a state statute and unambiguous Supreme Court precedent validating that statute.”

Janus and AFSCME have been locked in near constant litigation since 2015, when Janus, a non-union member who claims philosophical and political differences with the union, stepped in as lead plaintiff in a lawsuit launched by Republican former Illinois Gov. Bruce Rauner against AFSCME over its collection of so-called “fair share” fees, also known as agency fees, from non-union state workers.

In that litigation, Rauner, and later Janus, argued the unions violated the constitutional speech and association rights of non-union state workers by requiring them to pay the fees, ostensibly to offset costs the union incurred in representing them as “exclusive bargaining representatives,” appointed by the state, for certain groups of state workers.

The lawsuit was a direct challenge to the longstanding U.S. Supreme Court precedent, in the case known as Abood v Detroit Board of Education. In Abood, the Supreme Court in 1977 had declared those compulsory fees to be constitutional.

In the Seventh Circuit’s decision, Judge Wood said the court had reasoned the compulsory fees represented a balance between preserving the non-union workers’ rights to not join a union, and the unions’ risk of representing workers while receiving no money from them to do so – “free-riding,” as Judge Wood put it in her opinion.

Janus’ case eventually landed before the Supreme Court, which used the case to overturn the Abood precedent, and declare the compulsory fees unconstitutional in 2018. The decision forbade the unions and the state from continuing to forcibly collect the fees and pay them to the union.

“It is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public‐sector unions in violation of the First Amendment,” Supreme Court Justice Samuel Alito wrote in the Janus decision.

Relying partially on that language, Janus then sued AFSCME again, this time asking the court to order the unions to refund the fees he had been forced to pay, at least since the union became aware of the real possibility that the fee regime would be declared unconstitutional.

Janus argued Supreme Court decisions should not just be applied prospectively, in the future, but also retroactively. He argued if something is unconstitutional now, it also was unconstitutional previously.

AFSCME and the state of Illinois, however, contested Janus’ action, asserting AFSCME was entitled to keep the fees, because they had collected the fees in “good faith,” relying on both state law and the Abood decision.

The case had landed before the Seventh Circuit court earlier this spring, after U.S. District Judge Robert Gettleman had also sided with AFSCME and the state. In that decision, Gettleman agreed with the union’s “good faith defense.”

On appeal, the Seventh Circuit judges said Gettleman was correct.

In winning the case before the Supreme Court and stopping the union from continuing to claim $44 each month from his paycheck, Janus secured the only victory he was entitled to in this instance, Judge Wood wrote.

In this instance, Wood asserted Janus didn’t lose anything, because the money was never his to begin with. Rather, the money belonged to the union under its collective bargaining agreement with the state government, and only was nominally added to Janus’ paycheck to represent his payment for future services to be provided by the union.

 “… Though Mr. Janus contends that he did not want any of the benefits of AFSCME’s collective bargaining and other representative activities over the years, he received them,” Judge Wood wrote. “Putting the First Amendment is‐sues that concerned the Supreme Court in Janus II to one side, there was no unjust “windfall” to the union, as Mr. Janus alleges, but rather an exchange of money for services.”

The decision on Janus' appeal is in keeping with earlier decisions by the Seventh Circuit. The court last year also denied an appeal from nonunion home care providers and independent child care workers who had asked the court to order the Service Employees International Union to also refund the fees they had paid under a compulsory arrangement created under Democratic former Illinois Gov. Pat Quinn, and which the U.S. Supreme Court had also declared unconstitutional. In that decision, the Seventh Circuit rejected the attempt to bring a class action against the SEIU, as the judges said it would be too difficult to determine which caregivers actually wanted the money taken, and which ones did not.

While concurring in the overall decision, Judge Manion added a special concurring opinion to contest Wood’s assertion the union didn’t gain a “windfall” under the unconstitutional fee regime from 1977-2018.

Citing Justice Alito’s opinion in the Janus decision, Manion noted the Supreme Court explicitly cited the " windfall” the union had received under the regime.

“Even though the Supreme Court reached the wrong result in Abood 41 years before Janus II, the unions justify their acceptance of many millions of dollars because they accepted the money in ‘good faith,” Manion wrote.

“Probably a better way of looking at it would be to say rather than good faith, they had very ‘good luck’ in receiving this windfall for so many years. Since the court is not holding that the unions must repay a portion of the windfall, they can remind themselves of their good luck for the years ahead.”

Representing Janus are attorneys with the firm of Winston & Strawn LLP, of Chicago; the National Right to Work Legal Defense Foundation, of Springfield, Va.; and the Liberty Justice Center, of Chicago.

AFSCME has been represented by attorneys with the firm of Dowd, Bloch, Bennett, Cervone, Auerbach & Yokich, of Chicago.

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Organizations in this Story

State of IllinoisLiberty Justice CenterU.S. Court of Appeals for the Seventh CircuitNational Right to Work FoundationDowd Bloch Bennett Auerbach & YokichWinston & Strawn LLPAfscme IL Council 31

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