Court Opinion

ID: 8408524
Source: CourtListenerOpinion
Date Created: 2022-11-02 16:44:03.916974+00
Date Added: 2024-06-11T16:47:35.360367
License: Public Domain

CLIFTON, Circuit Judge,
concurring in part and dissenting in part:
I respectfully dissent with regard to the majority’s conclusions (1) that the district court erred in reaching the changeability issue (section I.B. of the Discussion in the majority opinion), and (2) that the district court did not err in limiting the class definition and relief to the seven-month period spanning March through October, 1999 (section II.C.). I concur in the remainder of the majority opinion.
I. CHARGEABILITY
The district court granted summary judgment for Plaintiffs on their claim that Categories 24 (Legislative Activity Related to Collective Bargaining), 29 (Initiatives), and 41 (Legislative Political Action) were nonchargeable, ruling that PECG had “fail[ed] to show how any of the challenged expenditures are germane to collective bargaining activity.” The majority reverses this ruling based not on the merits, but on the doctrine of judicial estoppel. It does so even though it is beyond dispute that at least part of Plaintiffs’ claim is valid and meritorious, as PECG now concedes that Category 41 was non-chargeable. See ante at 1043-1044 n. 3. To reverse the district court and require the dismissal of an indisputably valid claim is surely extraordinary. It is also, in the *1053context of this case, both inefficient and wrong.
The majority correctly recognizes that judicial estoppel is intended to preclude a party from taking inconsistent positions to its advantage. Ante at 1044. The Supreme Court has stated that “a party’s later position must be ‘clearly inconsistent’ with its earlier position.” New Hampshire v. Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001). Plaintiffs’ pursuit of the chargeability claim was not inconsistent, much less “clearly inconsistent,” with the position they took in litigating PECG’s counterclaim.
The majority states that “Plaintiffs gained an advantage by initially taking the position that they were not litigating the chargeability claim ... [i]n order for their action to survive PECG’s nonexhaustion counterclaim.... Plaintiffs then sought a second advantage by taking the incompatible position that they were pursuing a chargeability claim.” Ante at 1048 (emphasis in original). This reflects a fundamental misunderstanding of Plaintiffs’ claims. Plaintiffs at no time took the position “that they were not litigating the chargeability claim.” Plaintiffs did challenge chargeability in the context of a Hudson violation. Plaintiffs’ claims all along were that the notice was procedurally deficient under Hudson for two reasons: (1) it had not been audited as required by Hudson, and (2) it violated Hudson by classifying “clearly nonchargeable” expenses as chargeable.
Plaintiffs consistently challenged chargeability in the form of that second claim throughout the litigation. In the First Amended Verified Complaint, Plaintiffs alleged that PECG, by including “clearly nonchargeable” expenditures in the agency fee, “failed to adopt procedures which ensure that the fee is lawful, as required by Hudson.” In their brief for a preliminary injunction, Plaintiffs argued that “a union violates Hudson when its procedures are so inadequate that objecting non-members are charged for expenditures that have clearly and repeatedly been held non-chargeable.” In their brief supporting their motion for partial summary judgment, Plaintiffs wrote, “It remains the Plaintiffs’ position that PECG’s inclusion of clearly nonchargeable categories of expenditures in chargeable expense totals reflected in the Notices violated the requirements of Hudson .... ” The district court understood that, both at the time of granting summary judgment to Plaintiffs on their claim that the expenditures within Categories 24, 29, and 41 were not properly chargeable, and, as will be illustrated below, at the time of granting Plaintiffs’ motion to dismiss the PECG nonexhaustion counterclaim.
Plaintiffs’ asserted grounds for dismissal of PECG’s counterclaim were not inconsistent with their chargeability claim. PECG’s counterclaim sought a declaratory judgment which, in effect, called for dismissal of Plaintiffs’ claims for failure to exhaust internal union remedies under Cal. Code Regs. tit. 8, § 32994.1 Plaintiff responded with alternative arguments. One was that the state regulation did not require exhaustion of PECG’s internal appeal procedures before a § 1983 lawsuit could be filed, because the state regulation *1054by its terms only required exhaustion before the filing of a state unfair practice charge, not a § 1983 claim. A variant of that argument was that if the California regulation did apply to require exhaustion of state or union remedies before a § 1983 action could be filed, that requirement was unconstitutional. Plaintiffs also argued that because PECG’s procedures for taking fair-share fees from non-members was insufficient under Hudson, Plaintiffs’ lawsuit qualified for the exception to the exhaustion requirement set forth in the last sentence of the regulation in question, which provides that exhaustion of the Agency Fee Appeal Procedure is not required when the union’s appeal procedure “is insufficient on its face.” CaLCode Regs. tit. 8, § 32994(a).
These arguments might not have all been meritorious, but that does not matter at this point.2 What does matter is that Plaintiffs’ position was not, as the majority asserts, “that they were not litigating the chargeability claim.” Ante at 1048. Plaintiffs’ argument regarding the exception contained in the last sentence of § 32994(a) appears to have left that impression with the majority, but read carefully and in conjunction with the other arguments made by Plaintiffs to the district court at the same time, it is clear that Plaintiffs had not abandoned their charge-ability claim. They were not “challenging *1055only the informational deficiencies of PECG’s Hudson notice.” Ante at 1048 (emphasis in majority opinion). Simply put, Plaintiffs were challenging both the informational deficiencies and the inclusion of inappropriate charges as violations of Hudson. Plaintiffs did not view the two contentions as mutually exclusive. They repeatedly asserted that PECG had violated the Hudson requirements in both ways.
The majority’s assertion that “[t]he district court ... understood Plaintiffs’ declaration to mean that they were not pursuing a changeability claim,” ante at 1049, is simply erroneous. The district court unquestionably knew that Plaintiffs were making such a claim. In the district court’s order of November 8, 1999 which granted Plaintiffs’ motion to dismiss PECG’s counterclaim — the point at which, according to the majority, the district court was led by Plaintiffs to believe that Plaintiffs were not pursuing a changeability claim — the district court also denied a motion by Plaintiffs for a preliminary injunction. In the portion of the order discussing the preliminary injunction motion, the district court described one of Plaintiffs’ claims as follows: “Plaintiffs argue that PECG violated Hudson by charging nonmembers for clearly non-chargeable expenditures.” The district court went on to conclude that Plaintiffs had not demonstrated a likelihood of success on that claim sufficient to support a preliminary injunction, but the fact of that discussion— contained in the very same order which dismissed the PECG nonexhaustion counterclaim — makes obvious that it was simply not true that Plaintiffs had led the district court to believe that Plaintiffs, in the words of the majority, “were not pursuing a changeability claim.” The district court’s order itself said that Plaintiffs were making that claim.
The district court, in dismissing PECG’s counterclaim, offered the following discussion and description of Plaintiffs’ position:
PECG asserts that [§ 32994] sets forth “a mandatory procedure for persons who wish to challenge the determination of fair share fees.” ... Plaintiffs assert they challenge PECG’s actions for failure to comply with Hudson, not because of questions involving the propriety of the fee determination.... Thus, in light of Plaintiffs’ assertion, it does not appear that the exhaustion requirement of Section 32994(a) applies to this action.
Plaintiffs won dismissal of the counterclaim not because they “disclaimed” the changeability claim, ante at 1044, but because the district court accepted their position that the exhaustion required under § 32994(a) did not apply to their § 1983 claim that PECG had not complied with Hudson.3 That is consistent with the words of the statute, which require exhaustion of the union’s fee appeal process before an unfair practice charge complaint will be issued for an “agency fee objection.” The statute does not say anything about exhaustion being required before a lawsuit can be filed in federal court complaining of a constitutional violation.4 *1056Since the very same order said just a few pages earlier that “Plaintiffs argue that PECG violated Hudson by charging nonmembers for clearly non-chargeable expenditures,” it is plain that the district court understood Plaintiffs’ Hudson claim to include the chargeability contention.
The majority’s misunderstanding of Plaintiffs’ position causes it to apply judicial estoppel where there should be none. Not only have Plaintiffs maintained a consistent position throughout this litigation, but they would not “derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” New Hampshire, 532 U.S. at 751, 121 S.Ct. 1808. It is not as if PECG lost on the merits of the chargeability issue without having been afforded an opportunity to defend its position. PECG had the opportunity to, and did, defend the chargeability of Categories 24, 29, and 41 in its opposition to Plaintiffs’ motion for partial summary judgment. The district court simply ruled against that position. PECG has suffered no “unfair detriment,” and Plaintiffs have obtained no “unfair advantage,” so as to warrant judicial estoppel of the chargeability claim.
Nor is judicial estoppel required to prevent Plaintiffs from “ ‘playing fast and loose with the courts.’ ” Ante at 1044 (quoting Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir.1990)). Indeed, it is anomalous for the majority to hold — especially under an abuse of discretion standard, see ante at 1040 — that the decision of the district court must be reversed because the district court itself was abused by being “play[ed] fast and loose with.” The district court surely knows better than we do how Plaintiffs’ prior position affected the district court’s own ruling on the motion to dismiss the counterclaim. The district court’s awareness of Plaintiffs’ chargeability claim was explicitly demonstrated in the same order in which the PECG counterclaim was dismissed. Nevertheless, the majority today informs the district court that it was so misled by Plaintiffs’ position that its later consideration of Plaintiffs’ chargeability claim constituted an abuse of discretion — even though the district court was persuaded to grant summary judgment to Plaintiffs on that claim, and even though that claim is, at this point, conceded by PECG to be at least partially valid, as to Category 41 expenditures. I do not agree. With respect, it appears to me that it is the majority, not the district court, that has misunderstood.
On a pragmatic level, the majority’s holding regarding the chargeability claim simply promotes inefficiency. The majority’s remedy is “an order requiring PECG to issue a proper notice, with a renewed opportunity for nonmembers to object to paying the nonchargeable portion of the fee, and to receive a refund, with interest, of that amount.” Ante at 1043. Because PECG has conceded that items in Category 41 were non-chargeable, Plaintiffs and other fee payers will be entitled, upon timely objection, to obtain a refund for the portion of the fee related to Category 41. See ante at 1043-1044 & n. 3. As to the other categories, when Plaintiffs respond to the new notice by objecting to the chargeability of items in Categories 24 and 29, then PECG will presumably defend the chargeability of those items, and that dif*1057ference will be litigated. But that difference has already been litigated, and the district court already granted Plaintiffs’ motion for partial summary judgment, concluding that Categories 24 and 29 were not properly chargeable. The majority’s application of judicial estoppel to reverse that holding simply means that the parties will be forced to litigate the changeability of items in those categories anew. I see no reason to require litigation over that subject all over again.
II. SEVEN-MONTH PERIOD
I also disagree with the majority’s conclusion that the district court did not err by limiting the class definition and the relief to the seven-month period spanning March through October 1999. There is no dispute that the March 1999 notice was inadequate. The October 1999 notice contained the same defects as the March 1999 notice. PECG does not even try to argue at this point that it satisfied the constitutional requirements set forth in Hudson by issuing the October 1999 notice. PECG should not succeed in cutting off liability by issuance of an equally defective notice.
The constitutional wrong is the taking of the agency fees absent compliance with Hudson’s requirements. That violation did not end in October 1999. Plaintiffs did not simply complain about the creation or delivery of a bad notice in March 1999. They complained about the constitutional wrong — that agency fees have been taken from them without compliance with the requirements identified in Hudson — and that wrong continued beyond October 1999. Delivery of another defective notice did not right that wrong.
Nothing in the First Amended Verified Complaint temporally limits Plaintiffs’ claims. To the contrary, Plaintiffs’ allegations suggest continuing liability. Plaintiffs proposed for the class to include all nonmembers who had “fair share fees” seized from their pay “at any time since April 1, 1999,” and sought to enjoin PECG “from seizing any fees until they establish a 'procedure in full compliance with Hudson’s and Abood’s requirements.” (Emphases added.) No allegation indicated that their claims were limited to the March 1999 notice or that liability could be cut off by issuance of another defective notice. Had PECG never issued the October 1999 notice, Plaintiffs would not have been subject to the seven-month limit. The issuance of an equally defective notice should not cut off liability when the issuance of no notice would not have done so.
The majority notes that Plaintiffs represented in a Joint Status Report after issuance of the October 1999 notice that they did not anticipate amending the pleadings, and that Plaintiffs accepted the provision of the district court’s Rule 16 scheduling order stating that no amendments would be permitted without leave of court. But Plaintiffs’ representation that they did not anticipate amending their complaint is fully consistent with their current position that no amendment was necessary. Because they believed that no amendment was necessary, they had no reason to indicate that they anticipated amending their complaint.
Nor does Plaintiffs’ subsequent attempt to file a Second Amended Complaint to “update the facts including allegations” of post-October 1999 notice liability mean that amendment was necessary as a matter of law.) The fact that Plaintiffs attempted to amend their complaint is simply not very probative of the purely legal question of whether the complaint was limited to a seven-month period. Plaintiffs may well have sought to add additional allegations in an abundance of caution. Prudence in lawyering should not be held against Plaintiffs.
*1058Finally, I disagree with the majority’s conclusion that Rule 15(d) serves to cut off liability after October 1999. The problem with the majority’s conclusion is that Rule 15(d) is relevant only if one assumes that a supplemental pleading was required to extend liability past October 1999. The majority’s reasoning is therefore circular: it assumes what it sets out to prove. As explained above, I do not read the First Amended Verified Complaint as limiting liability to a seven-month period; on the contrary, it suggests an intent to impose liability until PECG issues a procedurally proper notice. The October 1999 notice was not procedurally proper. I would therefore reverse the district court’s seven-month limitation on the class definition and relief and remand for further appropriate proceedings.
The practical impact of this portion of the majority’s decision depends upon what other alternatives might be available to Plaintiffs and other fee payers for obtaining relief for the time period after the October 1999 notice was sent. The door appears to be closed in this lawsuit, however, despite the facts that (1) the October 1999 notice was just as defective as the March 1999 notice had been, and (2) at least some of the charges imposed by PECG (i.e., Category 41) were improper. To require Plaintiffs to go elsewhere to obtain relief is, at best, wasteful and inefficient. If it turns out that relief cannot be obtained elsewhere, then this decision is unjust, as well.

. Cal.Code Regs. tit. 8, § 32994(a) provides as follows:
If an agency fee payer disagrees with the exclusive representative’s determination of the agency fee amount, that employee (hereinafter known as an "agency fee objector”) may file an agency fee objection. Such agency fee objection shall be filed with the exclusive representative. An agency fee objector may file an unfair practice charge that challenges the amount of the agency fee; however, no complaint shall issue until the agency fee objector has first exhausted the exclusive representative’s Agency Fee Appeal Procedure. No objector shall be required to exhaust the Agency Fee Appeal Procedure where it is insufficient on its face.

. Contrary to the majority's assertions, I do not challenge the conclusion that, legally speaking, there may be "no such thing as a Hudson chargeability claim.” Ante at 1046. Indeed, Plaintiffs' argument in the alternative that-if § 32994(a) does apply to the § 1983 claim, then the Hudson chargeability claim falls under § 32994(a)’s insufficiency exception, might very well be legally incorrect. The district court’s conclusion that this argument "conflates PECG's notice compliance under Hudson with a determination as to whether expenses are properly chargeable” only establishes that Plaintiffs have advanced a legally deficient argument. At the end of the day, however, the viability of Plaintiffs' argument is immaterial to the question of whether the doctrine of judicial estoppel should apply. The district court's order clearly demonstrates that Plaintiffs have consistently asserted a chargeability claim. The fact that they might have incorrectly placed that chargeability claim under the auspices of a Hudson claim is irrelevant.
The majority states that even if Plaintiffs advanced a "chargeability claim as a result of a mistaken belief that they could pursue chargeability issues as part of their Hudson claim,” "judicial estoppel applies” because the "district court plainly apprised them in the November 8, 1999, order of the proper analysis, and they did not seek reconsideration due to a purported mistake.” Ante at 1047. In effect, the majority has assigned to Plaintiffs a position which Plaintiffs themselves clearly did not take-"abandonment” of the chargeability claim-and then applied the doctrine of judicial estoppel against Plaintiffs because Plaintiffs did not remain faithful to a position which they never took for themselves. The majority offers no legal support from this court or any others for this proposition. Why Plaintiffs made the legal decision not to seek reconsideration and advance a perhaps more meritorious position is neither here nor there. All that is important for our purposes is whether Plaintiffs initially argued a consistent chargeability claim in a prior legal proceeding, which they clearly did. Moreover, the majority’s stance on this issue is in tension with Ninth Circuit precedent that recognizes an exception to the judicial estop-pel doctrine where a party advances a good faith, though legally incorrect position and later alters its position in subsequent litigation. See, e.g., Johnson v. State of Oregon, 141 F.3d 1361, 1369 (9th Cir.1998) ("If incompatible positions are based not on chicanery, but only on inadvertence or mistake, judicial es-toppel does not apply.”); Stevens Tech. Servs., Inc. v. SS Brooklyn, 885 F.2d 584, 589 (9th Cir.1989) (judicial estoppel not applied where prior inconsistent statement based on a party's goodfaith but wrong position as to its rights). Given that prior inconsistent and incorrect positions advanced in good faith are excused under Ninth Circuit precedent on judicial estoppel, it would be puzzling to now hold that prior consistent, though incorrect, positions advanced in good faith must be es-topped.

. The district court quoted the following portion of Plaintiffs' reply brief in justifying its conclusion: "The regulations require exhaustion when the fee payer challenges the amount of the fee.... Here, the Non-members allege that PECG's procedures for taking “fair share fees” are insufficient under [Hudson.\.” Interestingly, this part of Plaintiffs’ reply brief was in support of its alternative position that assuming that § 32994(a) applies, its insufficiency exception also applies under Hudson. Though it appears from this that the district court was not fully cognizant of the nuances of Plaintiffs' position, its order nonetheless establishes that Plaintiffs' consistently, though perhaps erroneously, advanced a chargeability claim.

. The majority opinion simply assumes that Plaintiffs were required to exhaust the union's fee appeal process, in concluding that the *1056district court abused its discretion in considering the merits of Plaintiffs' chargeability claim. Ante at 1049. That disregards the words of the statute. It also disregards Plaintiffs' seemingly persuasive argument that exhaustion of state administrative remedies is not a prerequisite to an action under § 1983. See Patsy v. Board of Regents of Florida, 457 U.S. 496, 516, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982); see also Air Line Pilots Ass'n v. Miller, 523 U.S. 866, 875, 118 S.Ct. 1761, 140 L.Ed.2d 1070 (1998); Knight v. Kenai Peninsula Borough School Dist., 131 F.3d 807, 816 (9th Cir.1997).