Court Opinion

ID: 868652
Source: CourtListenerOpinion
Date Created: 2013-05-22 14:43:53.686436+00
Date Added: 2024-06-11T15:46:56.747016
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                             Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                      File Name: 13a0144p.06

                UNITED STATES COURT OF APPEALS
                                  FOR THE SIXTH CIRCUIT
                                    _________________

                                                  X
                                                   -
 CARRIE SCHLAUD; EDWARD J. GROSS; NORA
                                                   -
 I. GROSS; PEGGY M. MASHKE; DIANA ORR,
 and others similarly situated,                    -
                           Plaintiffs-Appellants, -
                                                      No. 12-1105

                                                   ,
                                                    >
                                                   -
                                                   -
            v.
                                                   -
                                                   -
 RICK SNYDER, et al.,
                                     Defendants, -
                                                   -
                                                   -
                                                   -
 INTERNATIONAL UNION, UNITED
                                                   -
 AUTOMOBILE, AEROSPACE, AND
 AGRICULTURAL IMPLEMENT WORKERS OF                 -
                                                   -
                                                   -
 AMERICA; MICHIGAN COUNCIL 25 OF THE
                                                   -
 AMERICAN FEDERATION OF STATE, COUNTY
                                                   -
 AND MUNICIPAL EMPLOYEES, AFL-CIO;
 CHILD CARE PROVIDERS TOGETHER                     -
                                                   -
                                                  N
 MICHIGAN,
                          Defendants-Appellees.
                     Appeal from the United States District Court
               for the Western District of Michigan at Grand Rapids.
                 No. 1:10-cv-147—Robert J. Jonker, District Judge.
                                  Argued: December 6, 2012
                             Decided and Filed: May 22, 2013
 Before: MOORE and COOK, Circuit Judges; and BERTELSMAN, District Judge.*

                                      _________________

                                           COUNSEL
ARGUED: William L. Messenger, NATIONAL RIGHT TO WORK LEGAL
DEFENSE FOUNDATION, Springfield, Virginia, for Appellants. John M. West,
BREDHOFF & KAISER, P.L.L.C, Washington, D.C., for Appellees. ON BRIEF:
William L. Messenger, NATIONAL RIGHT TO WORK LEGAL DEFENSE

        *
        The Honorable William O. Bertelsman, United States District Judge for the Eastern District of
Kentucky, sitting by designation.

                                                 1
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FOUNDATION, Springfield, Virginia, for Appellants. John M. West, BREDHOFF &
KAISER, P.L.L.C, Washington, D.C., for Appellees.
                                  _________________

                                       OPINION
                                  _________________

       KAREN NELSON MOORE, Circuit Judge. Plaintiffs-Appellants are home
childcare providers in Michigan seeking to file a class-action lawsuit for the return of
union dues and agency fees that were collected allegedly in violation of their First
Amendment rights. The district court denied certification of plaintiffs’ proposed
class—all home childcare providers in Michigan—because there was a conflict of
interest within the class that undermined the adequacy of the named plaintiffs’
representation: some members voted for union representation and others voted against
union representation. Plaintiffs attempted to cure this conflict by proposing a subclass
of only those providers who did not participate in any election related to union
representation. The district court determined that plaintiffs’ proposed subclass did not
cure within-class conflicts because the district court could not assume that all members
of the subclass opposed union representation. The district court further reasoned that,
even if all members of the proposed subclass did oppose union representation, their
reasons for doing so were different enough to create a conflict within the class.

       On appeal, plaintiffs argue that the district court abused its discretion in denying
certification of both their proposed class and their proposed subclass because no conflict
existed within either class. We disagree and AFFIRM the district court’s denial of
certification of plaintiffs’ proposed class and subclass.

                                  I. BACKGROUND

       Plaintiffs Carrie Schlaud, Edward Gross, Nora Gross, Peggy Mashke, and Diana
Orr are home childcare providers in Michigan. Plaintiffs receive subsidies from the
State of Michigan’s Child Development and Care Program (“CDC”) for providing
childcare services for low-income families. The CDC helps qualifying parents enter the
No. 12-1105           Schlaud et al. v. Snyder et al.                                           Page 3

workforce by providing a means to afford childcare services. Under the CDC, parents
choose a childcare provider, and the Michigan Department of Human Services (“DHS”)
makes direct payments to that provider. In theory, providers can charge parents the
difference between their rates and the money received from the CDC subsidy; in reality,
most qualifying parents are unable to afford anything, so providers generally receive the
subsidy alone as payment for their services.1 Although they receive subsidies directly
from the state, “[home childcare] providers are not employed by the State of Michigan.”
R. 83-1 (Ex. 2 - CDC Handbook at 5) (Page ID #1504).

         In 2006, DHS and Mott Community College (“Mott”) entered into an interlocal
agreement (“ILA”) to create the Michigan Home Based Child Care Council (“the
Council”). DHS and Mott established the Council with the intent “to establish a
mechanism for improving the quality of child care provided in home settings, raising
standards and improving training for home based child care providers, and stabilizing
the home based child care industry.” R. 83-2 (Ex. 8 - ILA at 3) (Page ID #1593). The
ILA grants the Council “the right to bargain collectively and enter into agreements with
labor organizations.” Id. at 16 (Page ID #1606).

         In the fall of 2006, the Council began negotiations with Child Care Providers
Together Michigan (“CCPTM” or “the Union”). CCPTM is a joint venture between
International Union, United Automobile, Aerospace and Agricultural Implement
Workers of America and Michigan Council 25 of the American Federation of State,
County and Municipal Employees. Prior to the negotiations between the Council and
CCPTM, a neutral third party certified CCPTM as the exclusive majority collective
bargaining representative of home childcare providers in Michigan, based on the
submission of 22,180 valid provider-signed authorization cards out of a possible 40,532
eligible providers. R. 83-2 (Ex. 7 - Certification of Results) (Page ID #1588–89). After
the card check, “[t]he Union . . . petitioned the Michigan Employment Relations
Commission (“MERC”) for an election under the guidelines of M.C.L. § 423.212.” R.

         1
         “Michigan has a turnover rate of approximately 40% per year in family day care homes, partially
because childcare professionals receive such low wages and typically no health benefits.” R. 83-1 (Ex.
4 - CDC Presentation at 15) (Page ID #1559).
No. 12-1105           Schlaud et al. v. Snyder et al.                                        Page 4

118 (08/30/2011 D. Ct. Op. at 4) (Page ID #2592). MERC certified CCPTM as the
representative after the secret-ballot election, in which 5,921 out of 6,396 ballots cast
were in favor of the Union. R. 83-3 (Ex. 13 - Certification of Representative) (Page ID
#1672); R. 83-3 (Ex. 12 - Tabulation of Results) (Page ID #1670).

        The Union and the Council entered into a Collective Bargaining Agreement
(“CBA”), which became effective on January 1, 2008. R. 83-3 (Ex. 17 - CBA) (Page ID
#1691–727). Prior to signing the CBA, the Union “conducted a mail ballot election to
ratify the tentative agreement reached with the . . . Council.” R. 83-3 (Ex. 16 - CBA
Ratification Results) (Page ID #1688). An arbitrator found that 4,806 home childcare
providers voted in favor of the CBA, seventy-eight providers voted against it, and
twenty-two ballots were spoiled.2 Id. Under the terms of the CBA, home childcare
providers receiving subsidies through the CDC were required to become members of the
Union or to pay a service fee (also known as an agency fee). R. 83-3 (Ex. 17 - CBA at
9) (Page ID #1700).

        In January 2009, DHS began deducting 1.15% from subsidy payments made to
home childcare providers. R. 19 (Governor and DHS Director Answer at ¶ 30) (Page
ID #336); R. 83-4 (Ex. 18 - Letter) (Page ID #1730). The deducted funds were sent to
the Council, which then forwarded them to the Union.                     “The Union collected
$2,000,019.09 in 2009 and [at least] $1,821,635.21 in 2010.” R. 118 (08/30/2011 D. Ct.
Op. at 5) (Page ID #2593) (citing R. 79 (Mot. for Summ. J. App. at 10) (Page ID #819)).

        On February 17, 2010, plaintiffs filed a class-action suit against the Union, the
Council, the Governor of Michigan, and the director of DHS. In their complaint,
plaintiffs alleged that defendants deprived plaintiffs “of their rights to free association
and speech under the First Amendment, as secured by the Fourteenth Amendment and
42 U.S.C. § 1983,” by “compelling Plaintiffs and the members of the Plaintiff class to
financially support the Union as their state-designated political representative.” R. 1

        2
           The named plaintiffs did not participate in the card check, secret-ballot election, or the
ratification election.
No. 12-1105           Schlaud et al. v. Snyder et al.                               Page 5

(Compl. at ¶ 41) (Page ID #12–13). On January 15, 2011, plaintiffs moved to certify the
following plaintiff class under Federal Rule of Civil Procedure 23(b)(1)(A) or 23(b)(3):

       All individuals who: (1) are home childcare providers in the State of
       Michigan, including all those classified as Group Homes, Family Homes,
       Relative Care Providers, or Day Care Aides, and, (2) have had any Union
       dues or fees deducted from the subsidy paid to them by Michigan’s
       Department of Human Service.

R. 63 (Mot. for Certification) (Page ID #634–35). Plaintiffs also requested that the
district court certify, in the alternative, any class that it deemed appropriate. Id.

       The district court denied plaintiffs’ motion for certification because a conflict of
interest within plaintiffs’ proposed class undermined the adequacy of the named
plaintiffs’ representation under Federal Rule of Civil Procedure 23(a)(4). R. 118
(8/30/2011 D. Ct. Op. at 8–12) (Page ID #2596–600). The conflict identified by the
district court was:

       4,806 providers (and potential class members) voted in favor of the
       collective bargaining agreement, which included a provision requiring
       providers to pay union dues or agency fees. These results, unchallenged
       by the plaintiffs, establish that a substantial number of providers and
       potential class members not only wanted union representation, but were
       willing to pay union dues or an agency fee to receive it. Those providers
       are of a different type than the plaintiffs, because they have voted for
       union representation and have ratified the union dues by way of the CBA.
       Accordingly, the potential class representatives—all of whom oppose
       union representation in any form—are inherently at odds with a
       substantial number[] of the potential class members they seek to
       represent.

Id. at 10 (Page ID #2598).

       The district court also determined that no alternative class could be certified
under Rule 23(a)(4) because even if all potential class members opposed financially
supporting the Union, their motivations for that opposition were different enough to
create conflict. Relying on Weaver v. University of Cincinnati, 970 F.2d 1523 (6th Cir.
1992), and Gilpin v. AFSCME, 875 F.2d 1310 (7th Cir.), cert. denied, 493 U.S. 917
(1989), the district court explained that although some members of the subclass, like
No. 12-1105        Schlaud et al. v. Snyder et al.                                    Page 6

plaintiffs, would not support the Union regardless of the benefits it might bring, there
were other members of the subclass who approved of the potential benefits of
unionization but nonetheless would not financially support the Union in hopes of free-
riding on the Union’s success. R. 118 (08/30/2011 D. Ct. Op. at 10) (Page ID #2598);
R. 123 (12/22/2011 D. Ct. Op. at 5) (Page ID #2630).

        Plaintiffs attempted to cure the conflict identified by the district court by
proposing a subclass of:

        All individuals who: (1) are home childcare providers in the State of
        Michigan, including all those classified as Group Homes, Family Homes,
        Relative Care Providers, or Day Care Aides, (2) had any Union dues or
        fees deducted from the subsidy paid to them by Michigan Department of
        Human Service, and (3) did not sign authorization cards for the Union or
        vote in elections that regarded Union representation or ratification of the
        Union’s collective bargaining agreement.

R. 120 (Mot. to Amend J. at 1) (Page ID #2608). The district court determined that
plaintiffs’ proposed subclass did not cure the conflict because “[s]hort of requiring
depositions of each provider in the proposed subclass, it is impossible to determine the
motivations behind each provider’s action (or inaction) regarding the Union.” R. 123
(12/22/2011 D. Ct. Op. at 5) (Page ID #2630). Relying again on Weaver and Gilpin, the
district court concluded that it “cannot simply assume that non-voting providers are
hostile to Union representation.”       Id.   Plaintiffs timely appealed the denial of
certification.
No. 12-1105             Schlaud et al. v. Snyder et al.                                              Page 7

                                 II. CLASS CERTIFICATION3

         We review the district court’s denial of class certification for abuse of discretion.
Randleman v. Fid. Nat’l Title Ins. Co., 646 F.3d 347, 351 (6th Cir. 2011). “The district
court maintains substantial discretion in determining whether to certify a class, as it
possesses the inherent power to manage and control its own pending litigation.” Beattie
v. Centurytel, Inc., 511 F.3d 554, 559 (6th Cir. 2007) (quotation marks omitted). “The
district court’s decision certifying the class is subject to a very limited review and will
be reversed only upon a strong showing that the district court’s decision was a clear
abuse of discretion.” Id. at 559–60 (quotation marks omitted). “A district court abuses
its discretion when it relies on erroneous findings of fact, applies the wrong legal
standard, misapplies the correct legal standard when reaching a conclusion, or makes a
clear error of judgment.” Randleman, 646 F.3d at 351 (quotation marks and alteration
omitted).

         Plaintiffs have the burden of establishing their right to class certification.
Beattie, 511 F.3d at 560. The Federal Rules of Civil Procedure impose four prerequisites
to a class action:

         3
            Although the district court dismissed this case as moot against the union defendants because
defendants tendered monetary and nominal damages to the named plaintiffs, we retain jurisdiction to
consider whether the district court properly denied certification of plaintiffs’ proposed class and subclass.
R. 118 (08/30/2011 D. Ct. Op. at 13–18) (Page ID #2601–06); see U.S. Parole Comm’n v. Geraghty, 445
U.S. 388, 404 (1980) (“We therefore hold that an action brought on behalf of a class does not become moot
upon expiration of the named plaintiff's substantive claim, even though class certification has been
denied.”); see also Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 339 (1980) (“To deny the right to
appeal simply because the defendant has sought to ‘buy off’ the individual private claims of the named
plaintiffs would be contrary to sound judicial administration. Requiring multiple plaintiffs to bring
separate actions, which effectively could be ‘picked off’ by a defendant’s tender of judgment before an
affirmative ruling on class certification could be obtained, obviously would frustrate the objectives of class
actions; moreover it would invite waste of judicial resources by stimulating successive suits brought by
others claiming aggrievement.”). The Court’s decision in Genesis Healthcare Corp. v. Symczyk is not at
odds with this determination because it does not involve class certification under Rule 23, which is
“fundamentally different from collective actions under the FLSA” because “a putative class acquires an
independent legal status once it is certified under Rule 23[, whereas u]nder the FLSA . . . , ‘conditional
certification’ does not produce a class with an independent legal status, or join additional parties to the
action.” — U.S. —, 133 S. Ct. 1523, 1529–30 (2013). Furthermore, plaintiffs in the present case moved
for certification prior to defendants’ attempt to settle. Id. at 1530 (“Geraghty is inapposite, because the
Court explicitly limited its holding to cases in which the named plaintiff’s claim remains live at the time
the district court denies class certification. . . . Here, respondent had not yet moved for ‘conditional
certification’ when her claim became moot, nor had the District Court anticipatorily ruled on any such
request.”).
No. 12-1105           Schlaud et al. v. Snyder et al.                                               Page 8

        (1) the class is so numerous that joinder of all members is impracticable;
        (2) there are questions of law or fact common to the class; (3) the claims
        or defenses of the representative parties are typical of the claims or
        defenses of the class; and (4) the representative parties will fairly and
        adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). The district court must engage in a “rigorous analysis” to ensure
that these factors are present before it can certify a class. Beattie, 511 F.3d at 560
(quotation marks omitted). This case revolves primarily around the fourth factor:
adequacy of representation.4

        “The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest
between named parties and the class they seek to represent. A class representative must
be part of the class and possess the same interest and suffer the same injury as the class
members.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625–26 (1997) (quotation
marks and citations omitted). If “the district court [has] some indication that the named
plaintiffs’ interests could be divergent from those of other members of the proposed
class,” the district court does not abuse its discretion in denying certification. Weaver
v. Univ. of Cincinnati, 970 F.2d 1523, 1531 (6th Cir. 1992).

A. Proposed Class

        Plaintiffs’ proposed class consists of any home childcare provider in the State of
Michigan who had union dues or agency fees deducted from a subsidy payment from
DHS. The district court denied certification because a conflict existed within this
proposed class: the interests of “the potential class representatives—all of whom oppose
union representation in any form—are inherently at odds with a substantial number[] of

        4
          We note that our analysis under the adequacy-of-representation factor could also be expressed
in terms of commonality or typicality:
        The adequacy-of-representation requirement “tend[s] to merge” with the commonality
        and typicality criteria of Rule 23(a), which “serve as guideposts for determining whether
        . . . maintenance of a class action is economical and whether the named plaintiff’s claim
        and the class claims are so interrelated that the interests of the class members will be
        fairly and adequately protected in their absence.”
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 626 n.20 (1997) (quoting Gen. Tel. Co. of S.W. v. Falcon,
457 U.S. 147, 157, n.13 (1982)).
No. 12-1105             Schlaud et al. v. Snyder et al.                                                  Page 9

the potential class members” who “not only wanted union representation, but were
willing to pay union dues or an agency fee to receive it.” R. 118 (08/30/2011 D. Ct. Op.
at 10) (Page ID #2598). Plaintiffs assert that their interests are not at odds with potential
class members because they “share[d] . . . a common interest in not being forced to
financially support an expressive organization without their consent and in violation of
their First Amendment rights.” Appellants Br. at 16. The evidence in the record leads
us to the opposite conclusion.

         The record shows that 4,806 home childcare providers approved the CBA that
contains the provision authorizing deductions from subsidy payments to support the
Union. R. 83-3 (Ex.16 - Election Results) (Page ID #1688); R. 83-3 (Ex. 17 - CBA at
9) (Page ID #1700). Thus, plaintiffs’ proposed class includes a substantial number of
providers who voted in favor of financially supporting the Union in an action that alleges
that the entire class was forced to support the Union financially. This is a clear conflict
within the proposed class. Plaintiffs, who allege that they were compelled to pay the
fees under the CBA, have divergent interests from other potential class members, who
voted in favor of that same CBA. Further, those who voted for the CBA did not suffer
the injury alleged by plaintiffs because they were not compelled to support the Union
financially—they voted to do so. Finally, plaintiffs’ lawsuit would impair the ability of
the Union to represent its members and is, therefore, not in the interest of those proposed
class members who voted in favor of using collective action to improve the conditions
of the CDC. The district court did not abuse its discretion in denying certification of
plaintiffs’ proposed class because plaintiffs fail to meet the prerequisite of adequacy of
representation under Rule 23(a)(4).5

         5
            As noted earlier, plaintiffs requested in their motion for class certification that the district court
certify, in the alternative, any class that it deemed appropriate. R. 63 (Mot. for Certification) (Page ID
#634–35). The district court determined that no appropriate alternative class could “be certified consistent
with Rule 23(a)(4).” R. 118 (8/30/2011 D. Ct. Op. at 9) (Page ID #2597). We agree with the district
court’s conclusion for the reasons discussed in our analysis of plaintiffs’ proposed subclass.
No. 12-1105            Schlaud et al. v. Snyder et al.                                          Page 10

B. Proposed Subclass

         Plaintiffs’ proposed subclass includes any home childcare provider who did not
vote in any Union-related election. Plaintiffs argue that this subclass cures the conflict
identified above because no one in the proposed subclass expressed support for the
Union. In effect, plaintiffs attempt to meet their burden of establishing their right to
class certification by asking this court to assume that any home childcare provider who
did not vote in any election related to the Union is opposed to supporting the Union
financially. We decline to make this assumption.

         There are a variety of reasons why a home childcare provider might not
participate in any of the Union elections, but one stands out to us. As noted earlier, there
is a high turnover rate of home childcare providers. Also noted earlier, the Union
elections occurred years before DHS made deductions from potential subclass members’
subsidy payments. The combination of these two facts leads us to a simple conclusion:
many of the potential subclass members did not vote in the Union elections because they
were not then home childcare providers receiving subsidy payments (i.e., not eligible
voters). See Appellants Br. at 10–11. We cannot assume that these new home childcare
providers are uniformly opposed to supporting the Union financially because the record
indicates that in each Union election, a majority of voters supported the Union. See
Hansberry v. Lee, 311 U.S. 32, 45 (1940) (“Such a selection of representatives for
purposes of litigation, whose substantial interests are not necessarily or even probably
the same as those whom they are deemed to represent, does not afford that protection to
absent parties which due process requires.”). The interests of those providers who would
financially support the Union are in conflict with the interests of plaintiffs. Therefore,
plaintiffs failed to meet their burden of establishing their right to certification of their
proposed subclass.6

         6
         We need not address the district court’s reliance on Weaver v. University of Cincinnati, 970 F.2d
1523, 1531 (6th Cir. 1992), and Gilpin v. AFSCME, 875 F.2d 1310, 1313 (7th Cir.), cert. denied, 493 U.S.
917 (1989), because “we are free to affirm the judgment on any basis supported by the record.” Angel v.
Kentucky, 314 F.3d 262, 264 (6th Cir. 2002).
No. 12-1105        Schlaud et al. v. Snyder et al.                             Page 11

                                 III. CONCLUSION

       For the reasons set forth in this opinion, we AFFIRM the district court’s denial
of plaintiffs’ proposed class and subclass.