B. Nominal Damages and Restitution
1. Nominal Damages
Plaintiffs request an award of nominal damages for the failure to provide adequate procedural protections prior to fair-share-fee withholdings. Nominal damages were discussed by the Supreme Court as follows:
Common-law courts traditionally have vindicated deprivations of certain "absolute" rights that are not shown to have caused actual injury through the award of a nominal sum of money. By making the deprivation of such rights actionable for nominal damages without proof of actual injury, the law recognizes the importance to organized society that those rights be scrupulously observed; but at the same time, it remains true to the principle that substantial damages should be awarded only to compensate actual injury or, in the case of exemplary or punitive damages, to deter or punish malicious deprivations of rights.
Carey v. Piphus, 435 U.S. 247, 266, 98 S. Ct. 1042, 55 L. Ed. 2d 252 (1978). In light of this teaching, the court orders that each of the eight successful plaintiffs recover from defendants nominal damages in the amount of $ 1.00. Hohe v. Casey, No. 91-5002, 1991 WL 315735 (3rd Cir. Feb. 10, 1992).
In addition to nominal damages, plaintiffs seek restitutionary damages of all fair-share fees which were withheld after January 1, 1989. They argue that unless the court orders return of all fair-share fees withheld, the Union will unfairly keep all "its ill-gotten gains," and that "only restitution will fully remedy the defendants' "past wrongs," (Plaintiffs' Memorandum, § V.B).
The Union counters that a return of all the fair-share fees is unduly harsh in that a large portion of the previously collected fees were properly chargeable.
The Union argues that "full" restitution would transform plaintiffs into "free-riders" for the years in question to the extent that plaintiffs would be allowed to recover their validly chargeable expenses. This result would be contrary to the policy continually expressed by the Supreme Court. See Abood, 431 U.S. at 237; Hudson, 475 U.S. at 310; Railway Clerks v. Allen, 373 U.S. 113, 122, 83 S. Ct. 1158, 10 L. Ed. 2d 235 (1963).
Restitution is a remedy that is ordinarily a substitute for damages. It is not a type of damages. "The damages recovery is to compensate the plaintiff, and it pays him, theoretically, for his losses. The restitution claim, on the other hand, is not aimed at compensating the plaintiff, but at forcing the defendant to disgorge benefits that it would be unjust for him to keep." Dan B. Dobbs, Handbook on the Law of Remedies 224 (1973).
Several courts have addressed this precise issue. In Gilpin v. AFSCME, AFL-CIO, 875 F.2d 1310 (7th Cir. 1989), cert. denied, 493 U.S. 917 (1989), Judge Posner declined to order restitution of all fees previously withheld. "The constitutional violation was a technical one at worst, and a punitive remedy is not called for." Id. at 1315. Similarly, in Lowary v. Lexington Local Bd. of Education, 903 F.2d 422 (6th Cir. 1990), cert. denied, 112 L. Ed. 2d 396, 111 S. Ct. 385 (1990), the Sixth Circuit decided that a return of all fair-share fees undermined the policy concerns of Supreme Court decisions. The court concluded "that plaintiffs are entitled to recover only the nonchargeable portion of the unconstitutionally collected fees." Id. at 433. See e.g., Hohe, No. 91-5002, slip op. at 40; Pilots Against Illegal Dues v. Air Line Pilots Ass'n, 938 F.2d 1123, 1133 (10th Cir. 1991).
Each of these courts reasoned that allowing unions to retain the chargeable portions of unconstitutionally collected fees does not create a disincentive for unions to comply with Hudson. As the Supreme Court stated in Carey, "To the extent . . . Congress intended [that] the awards under § 1983 should deter the deprivation of constitutional rights, there is no evidence that it meant to establish a deterrent more formidable than that inherent in the award of compensatory damages." Carey, 435 U.S. at 256-57 (citation omitted). See also Memphis Community School Dist. v. Stachura, 477 U.S. 299, 106 S. Ct. 2537, 91 L. Ed. 2d 249 (1986). The court is also cognizant of the incentive for compliance provided by the high cost of modern litigation and the vigilance of fair-share fee payors and their attorneys. See Gilpin, 875 F.2d at 1315.
In the present case, the Union's greatest error was its failure to update its notice to fair-share fee payors with financial information. There is no evidence that defendants maliciously or oppressively flouted plaintiffs' constitutional rights. Revealingly, plaintiffs do not request punitive damages. In any case, the court sees no conceivable basis for such an award based on the facts of this case. Therefore, the court orders that plaintiffs are entitled to recover an amount equal to the total of the nonchargeable portions of the collected fair-share fees, plus accrued interest.
3. Calculation of The Nonchargeable Amount
The Supreme Court has suggested that courts should not involve themselves in the factual inquiries involved in making a chargeability determination. See Allen, 373 U.S. at 122-24; Abood, 431 U.S. at 240.
While the court theoretically could conduct a trial to determine the proper amount of restitution, i.e., the nonchargeable portions of the collected fair-share fees, the wisest course is to refer the determination to an arbitrator. This was the option approved by the Sixth Circuit in Lowary, 903 F.2d at 433, and the court is persuaded that it is the correct path to take here.
Plaintiffs' reliance on the recent Hohe decision is misplaced. Hohe simply stands for the proposition that legal questions over chargeability could not be referred to arbitrators. In this case, the court itself ruled that, with one exception, the Union's chargeable categories were constitutional. The court is merely using an arbitrator for an accounting of the proper fair-share fee. This use of the arbitrator is exactly in keeping with the Supreme Court's recommendations. Thus, plaintiffs' contention that such a remedy is "wholly inappropriate" is without legal basis.
C. Attorneys' Fees and Costs
The court finds that plaintiffs' are entitled to an award of their reasonable attorneys' fees and costs, pursuant to 42 U.S.C. § 1988. See also Grunwald, 917 F.2d at 1230.
Having considered the papers, submissions, and arguments submitted by the parties, and good cause appearing, IT IS HEREBY ORDERED as follows:
1. Judgment is hereby entered, pursuant to 28 U.S.C. § 2201, declaring that:
a) the collective bargaining obligations between the County of Santa Clara ("County") and Local 715, S.E.I.U., AFL-CIO ("Union") pertaining to the withholding of fair-share fees are unenforceable as to the plaintiffs in the absence of procedures that comply with the requirements of Hudson, Lehnert, and Grunwald; and
b) the actions of the defendants in withholding the fair-share fees from the plaintiffs in the absence of procedures which comply with the requirements of Hudson have violated, and continue to violate, the plaintiffs' first, fifth, and fourteenth amendment rights; and
c) the "Notice to Service Fee Payers: Santa Clara County," sent to plaintiffs on December 29, 1988, and allegedly sent to plaintiffs on July 12, 1989 and July 16, 1990, did not and does not meet the constitutional requirements for such procedures and notice as described by Hudson because:
i) the financial information is not and has not been annually updated;
ii) the Union's disclosure of payments to its affiliates is insufficient as it fails to fully explain the chargeable portions of those payments, and thus prevents nonmembers from making a more informed challenge to the fair-share fee;
iii) the item related to Union social and recreational activities on the Union's list of chargeable expenses is nonchargeable and impermissible; and
iv) the Union's certified mail requirement is unconstitutionally burdensome.
2. Judgment is hereby entered in favor of plaintiffs Anthony Laramie, Rex O. Wonnell, Jr., Herb Mauldin, Ronald McNay, Christina McNay, Jane Jaeger, Sally Vanderford and Jerry Wood, and against defendants on the issue of liability pursuant to 42 U.S.C. § 1983.
3. The determination of damages is referred to an impartial decisionmaker: the American Arbitration Association. The arbitration shall focus on the proper amount of restitutionary damages as discussed in this order.
4. Defendants are enjoined from taking any further steps to withhold fair-share fees from nonmembers until a constitutionally adequate plan consistent with Hudson, Lehnert, Grunwald, and this order is in place.
DATED: March 5, 1992
WILLIAM A. INGRAM
United States District Judge