Opinion ID: 4453185
Heading Depth: 2
Heading Rank: 1

Heading: Existence of Good‐faith Defense

Text: We now turn to the ultimate question in this case: to what remedy or remedies is Mr. Janus entitled? As the Supreme Court wrote in Davis v. United States, 564 U.S. 229 (2011), ret‐ roactivity and remedy are distinct questions. “Retroactive ap‐ plication does not … determine what ‘appropriate remedy’ (if any) the defendant should obtain.” Id. at 243; see also Ameri‐ can Trucking Ass’ns, Inc. v. Smith, 496 U.S. 167, 189 (1990) (plu‐ rality opinion) (“[T]he Court has never equated its retroactiv‐ ity principles with remedial principles….”). It thus does not necessarily follow from retroactive application of a new rule that the defendant will gain the precise type of relief she seeks. See Powell v. Nevada, 511 U.S. 79, 84 (1994). To the con‐ trary, the Supreme Court has acknowledged that the retroac‐ tive application of a new rule of law does not “deprive[] re‐ spondents of their opportunity to raise … reliance interests entitled to consideration in determining the nature of the No. 19‐1553 17 remedy that must be provided.” James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 544 (1991). Sometimes the law recognizes a defense to certain types of relief. An example that comes readily to mind is the qualified immunity doctrine, which is available for a public employee if the asserted constitutional right that she violated was not clearly established. See, e.g., Ashcroft v. al‐Kidd, 563 U.S. 731 (2011). We must decide whether a union may raise any such defense against its liability for the fair‐share fees it collected before Janus II. This is a matter of first impression in our circuit. But, as the district court noted, every federal appellate court to have decided the question has held that, while a private party act‐ ing under color of state law does not enjoy qualified immun‐ ity from suit, it is entitled to raise a good‐faith defense to lia‐ bility under section 1983. See Clement v. City of Glendale, 518 F.3d 1090, 1096–97 (9th Cir. 2008); Pinsky v. Duncan, 79 F.3d 306, 311–12 (2d Cir. 1996); Vector Research, Inc. v. Howard & Howard Attorneys P.C., 76 F.3d 692, 698–99 (6th Cir. 1996); Jor‐ dan v. Fox, Rothschild, O’Brien & Frankel, 20 F.3d 1250, 1275–78 (3d Cir. 1994); Wyatt v. Cole, 994 F.2d 1113, 1118–21 (5th Cir. 1993) (“Wyatt II”). Mr. Janus takes issue with this consensus position. He points to the text of section 1983, which we grant says nothing about immunities or defenses. That, he contends, is the end of the matter. “Shall be liable to the party injured” is mandatory language that, in his view, allows for no exceptions. The prob‐ lem with such an absolutist position, however, is that the Su‐ preme Court abandoned it long ago, when it recognized that liability under section 1983 is subject to common‐law immun‐ ities that apply to all manner of defendants. 18 No. 19‐1553 The Court discussed that history in Wyatt I, where it noted that despite the bare‐bones text of section 1983, it had “ac‐ corded certain government oﬃcials either absolute or quali‐ fied immunity from suit if the tradition of immunity was so firmly rooted in the common law and was supported by such strong policy reasons that Congress would have specifically so provided had it wished to abolish the doctrine.” 504 U.S. at 163–64 (quoting Owen v. City of Independence, 445 U.S. 622, 637 (1980)) (internal quotation marks omitted). In Wyatt I, the Court had to decide how far its immunity jurisprudence reached, and specifically, whether private parties acting under color of state law would have been able, at the time section 1983 was enacted (in 1871), to invoke the same immunities that public oﬃcials had. (That is more than a bit counterfac‐ tual, as the Court did not recognize this type of private liabil‐ ity until 1982, but we put that to one side.) Surveying its im‐ munity jurisprudence, including Mitchell v. Forsyth, 472 U.S. 511 (1985), Harlow v. Fitzgerald, 457 U.S. 800 (1982), Wood v. Strickland, 420 U.S. 308 (1975), and Pierson v. Ray, 386 U.S. 547 (1967), the Court “conclude[ed] that the rationales mandating qualified immunity for public oﬃcials are not applicable to private parties.” 504 U.S. at 167. The Court recognized that this outcome risked leaving pri‐ vate defendants in the unenviable position of being just as vulnerable to suit as public oﬃcials, per Lugar, but not pro‐ tected by the same immunity. Id. at 168. But, critically for AFSCME, the Court pointed toward the solution to that prob‐ lem. It distinguished between defenses to suit and immunity from suit, the latter of which is more robust, in that it bars recovery regardless of the merits. Id. at 166. It then confirmed that its ruling rejecting qualified immunity did “not foreclose the possibility that private defendants faced with § 1983 No. 19‐1553 19 liability under [Lugar] could be entitled to an aﬃrmative de‐ fense based on good faith and/or probable cause or that § 1983 suits against private, rather than governmental, parties could require plaintiﬀs to carry additional burdens.” Wyatt I, 504 U.S. at 169. Mr. Janus rejects the line that the Court drew between qualified immunity and a defense to liability; he sees it as nothing but a labeling game. But Wyatt I directly refutes this criticism. Adding to the language above from the majority, Justice Kennedy, in concurrence, explained why a defense on the merits might be available for private parties even if im‐ munity is not. “By casting the rule as an immunity, we imply the underlying conduct was unlawful, a most debatable prop‐ osition in a case where a private citizen may have acted in good‐faith reliance upon a statute.” 504 U.S. at 173 (Kennedy, J., concurring). The distinction between an immunity and a defense is one of substance, not just nomenclature, and “is im‐ portant because there is support in the common law for the proposition that a private individual’s reliance on a statute, prior to a judicial determination of unconstitutionality, is con‐ sidered reasonable as a matter of law.” Id. at 174; see also Lu‐ gar, 457 U.S. at 942 n.23 (“Justice Powell is concerned that pri‐ vate individuals who innocently make use of seemingly valid state laws would be responsible, if the law is subsequently held to be unconstitutional, for the consequences of their ac‐ tions. In our view, however, this problem should be dealt with not by changing the character of the cause of action but by establishing an aﬃrmative defense.”). The Wyatt I Court remanded the case to the Fifth Circuit, which decided that the “question left open by the majority”— whether a good‐faith defense is available in section 1983 20 No. 19‐1553 actions—“was largely answered” in the aﬃrmative by the five concurring and dissenting justices. Wyatt II, 994 F.2d at 1118. The court accordingly held “that private defendants sued on the basis of Lugar may be held liable for damages under § 1983 only if they failed to act in good faith in invoking the uncon‐ stitutional state procedures, that is, if they either knew or should have known that the statute upon which they relied was unconstitutional.” Id. Other circuits followed suit. In Jordan, the Third Circuit noted “the [Supreme Court’s] statement [in Wyatt I] that per‐ sons asserting section 1983 claims against private parties could be required to carry additional burdens, and the state‐ ments in Lugar which warn us [that] a too facile extension of section 1983 to private parties could obliterate the Fourteenth Amendment’s limitation to state actions that deprive a person of constitutional rights and the statutory limitation of section 1983 actions to claims against persons acting under color of law.” 20 F.3d at 1277 (cleaned up). Those considerations, the court said, lead to the conclusion that “‘good faith’ gives state actors a defense that depends on their subjective state of mind, rather than the more demanding objective standard of reasonable belief that governs qualified immunity.” Id. The Sixth Circuit concurred in Vector Research, 76 F.3d at 699, as did the Ninth Circuit in Clement, 518 F.3d at 1096–97. Most recently, in a case decided after Harris v. Quinn, the Second Circuit allowed a good‐faith defense to a section 1983 claim for reimbursement of agency fees paid prior to decision. Jarvis v. Cuomo, 660 F. App’x 72, 75–76 (2d Cir. 2016). Mr. Janus pushes back against these decisions with the ar‐ gument that there is no common‐law history before 1871 of private parties enjoying a good‐faith defense to constitutional No. 19‐1553 21 claims. As we hinted earlier, however, the reason is simple: the liability of private parties under section 1983 was not clearly established until, at the earliest, the Court’s decision in United States v. Price, 383 U.S. 787 (1966). For nearly 100 years, nothing would have prompted the question. We now join our sister circuits in recognizing that, under appropriate circumstances, a private party that acts under color of law for purposes of section 1983 may defend on the ground that it proceeded in good faith. The final question is whether that defense is available to AFSCME.