Arnold Fleck v. Joe Wetch ( 2019 )

United States Court of Appeals
For the Eighth Circuit
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No. 16-1564
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Arnold V. Fleck
lllllllllllllllllllllPlaintiff - Appellant
v.
Joe Wetch, President of the State Bar Association of North Dakota, et al.
lllllllllllllllllllllDefendants - Appellees
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Pacific Legal Foundation
lllllllllllllllllllllAmicus on Behalf of Appellant
State Bar of California; The Missouri Bar; State Bar of Alaska; State Bar of
Arizona; State Bar of Kentucky; State Bar of Michigan; State Bar of South
Dakota; State Bar of Wyoming
lllllllllllllllllllllAmici on Behalf of Appellees
Texas Legal Ethics Counsel
lllllllllllllllllllllAmicus Curiae
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Appeal from United States District Court
for the District of North Dakota - Bismarck
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Submitted: June 13, 2019
Filed: August 30, 2019
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Before LOKEN, COLLOTON, and KELLY, Circuit Judges.
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LOKEN, Circuit Judge.
To practice law in North Dakota, every resident lawyer must maintain
membership in and pay annual dues to the State Bar Association of North Dakota
(SBAND). See N.D.C.C. §§ 27-11-22; 27-12-02, -04. When attorney Arnold Fleck
learned that SBAND was using his compulsory dues to oppose a state ballot measure
he supported, Fleck commenced this action against SBAND and various state
officials in their official capacities, asserting First Amendment claims. The district
court1 granted summary judgment for the defendants. Fleck appealed; we affirmed.
Fleck v. Wetch, 868 F.3d 562 (8th Cir. 2017). Almost one year later, the Supreme
Court issued its decision in Janus v. American Federation of State, County, and
Municipal Employees, 138 S. Ct. 2448 (2018). The Court then granted Fleck’s
petition for a writ of certiorari, summarily vacated our decision, and remanded “for
further consideration in light of Janus.” 139 S. Ct. 590 (2018). We reopened the case
and directed the parties to submit supplemental briefs addressing the issues on
remand. Having considered the supplemental briefs, the record on appeal, and the
Supreme Court’s decision in Janus, we again affirm the decision of the district court.
I. Framing the Issues on Remand.
A. In Abood v. Detroit Board of Education, 431 U.S. 209 (1977), the Supreme
Court held that public-sector unions may collect compulsory “agency fees” from non-
1
The Honorable Daniel L. Hovland, Chief Judge, United States District Court
for the District of North Dakota.
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members within the bargaining unit to fund activities germane to collective
bargaining, but may not use those fees to fund non-germane political or ideological
activities that a nonmember employee opposes. In Chicago Teachers Union, Local
No. 1 v. Hudson, 475 U.S. 292, 303 (1986), the Court held that the procedure a union
adopts to implement this distinction must “be carefully tailored to minimize the
infringement” of a nonmember’s First Amendment rights. This includes, the Court
declared, “an adequate explanation of the basis for the fee, a reasonably prompt
opportunity to challenge the amount of the fee before an impartial decisionmaker, and
an escrow for the amounts reasonably in dispute while such challenges are pending.”
Id. at 310.
In Keller v. State Bar of California, 496 U.S. 1, 13-15 (1990), the Court held
that an integrated bar such as SBAND can, consistent with the First Amendment, use
a member’s compulsory fees to fund activities germane to “regulating the legal
profession and improving the quality of legal services,” but not to fund “activities
having political or ideological coloration which are not reasonably related to the
advancement of such goals” that the member opposes (non-germane activities).
Lacking an adequate record to address procedural alternatives in detail, the Court
stated that “an integrated bar could certainly meet its Abood obligation by adopting
the sort of procedures described in Hudson.” Id. at 17.
In Janus, the Supreme Court overruled Abood and held that public-sector
unions may not deduct agency fees or “any other payment to the union” from the
wages of nonmember employees unless the employees waive their First Amendment
rights by “clearly and affirmatively consent[ing] before any money is taken from
them.” 138 S. Ct. at 2486. On remand, Fleck argues that Janus “requires reversal of
the district court decision” because Keller’s theoretical underpinnings have been
undercut by Janus and by Harris v. Quinn, 573 U.S. 616 (2014).
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Like Keller, this case involves a mandatory bar association, not a public-sector
union. The majority in Janus did not discuss Keller nor respond to the dissent’s
assertion that Keller was a “case[] involving compelled speech subsidies outside the
labor sphere [that] today’s decision does not question.” 138 S. Ct. at 2498 (Kagan,
J., dissenting). In Harris, the Court specifically stated that its holding should not be
assumed to “call into question our decision[] in Keller.” 573 U.S. at 655. Thus,
analysis of the potential relevance of the Janus and Harris decisions on remand
requires careful attention to the specific claims asserted by Fleck in this litigation.
We must be mindful of the principle that, “if a precedent of this Court has direct
application in a case [here, Keller], yet appears to rest on reasons rejected in some
other line of decisions, the Court of Appeals should follow the case which directly
controls, leaving to this Court the prerogative of overruling its own decisions.”
Agostini v. Felton, 521 U.S. 203, 237 (1997) (quotation omitted); see Minn. Citizens
Concerned for Life, Inc. v. Swanson, 692 F.3d 864, 879 (8th Cir. 2012) (en banc).
B. Fleck asserted three separate First Amendment claims in his February 2015
Complaint: First, that SBAND’s procedures for collecting and spending mandatory
member dues fail to protect members’ rights not to subsidize non-germane
expenditures to which they objected. Second, that those procedures violate his right
to “affirmatively consent” before subsidizing non-germane expenditures. Third, that
mandatory membership in SBAND as a condition of practicing law violates his First
Amendment right to freedom of association and to avoid subsidizing speech with
which he disagrees. The first claim was resolved by a November 2015 settlement in
which SBAND revised its license fee statement. See Fleck, 868 F.3d at 653. Fleck
does not argue on remand that Janus permits him to revive a claim that he settled.
Thus, we limit this opinion to whether Janus requires further consideration of our
decision affirming the grant of summary judgment on his second and third claims.
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II. The Mandatory Association Claim.
Fleck’s brief on remand placed primary emphasis on his third claim -- that
mandatory state bar association membership violates the First Amendment by
compelling him both to pay dues to SBAND and to associate with an organization
that engages in political or ideological activities. He argues that Janus requires
further consideration of this claim because Keller did not address what the Supreme
Court described as “a much broader freedom of association claim than was at issue
in Lathrop,” 490 U.S. at 17,2 and in Janus the Court “made clear that courts must
apply ‘exacting scrutiny’ -- or possibly even strict scrutiny -- to the question of
whether the state’s decision to force an attorney to join the state bar association
violates the First Amendment freedom of association.”
Assuming without deciding that Keller “left the door open” to pursue this
freedom of association claim in the district court and in this court, Fleck explicitly
chose not to do so. In his motion for summary judgment to the district court, Fleck
conceded that his “claim challenging the constitutionality of conditioning the practice
of law upon SBAND membership . . . is presently foreclosed by Keller,” and therefore
the district court “must deny his motion for summary judgment as it relates [to] this
claim.” Defendants in responding to Fleck’s motion and the district court’s order
granting defendants’ cross-motion for summary judgment relied in part on this
concession. Likewise, Fleck’s brief on appeal to this court conceded that his
“alternative claim challenging the constitutionality of mandatory bar association
membership is foreclosed by Keller and Lathrop,” and therefore “this Court must
2
The Court in Keller applied its prior decision in Lathrop v. Donohue, 367 U.S.
820, 843 (1961), where it held that the “compulsory payment of reasonable annual
dues” to the integrated Wisconsin bar did not violate plaintiff’s First Amendment
“rights of association.” The Court in Lathrop noted that it was presented “only with
a question of compelled financial support of group activities, not with involuntary
membership in any other aspect.” Id. at 828.
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affirm the lower court’s judgment on this claim.” He explained that he was
presenting the argument “to preserve it for the proper forum.” Relying on this
concession, we stated that “we need not further address this issue” and devoted our
opinion to an analysis of Fleck’s opt-out claim. Fleck, 868 F.3d at 653.
Fleck’s petition to the Supreme Court for a writ of certiorari misrepresented his
position before our court. The petition stated that he “acknowledged [to the district
court] that his challenge to mandatory bar membership was foreclosed by binding
precedent.” But it then falsely asserted that our court “affirmed the dismissal of
Fleck’s challenge to mandatory bar membership on the basis of” Keller and Lathrop
and asked the Supreme Court to “reverse the Eighth Circuit’s decision and overrule
Keller and Lathrop.” Then on remand, he argued the constitutionality of mandatory
bar association membership to this court for the first time, on a district court summary
judgment record that did not address this issue, an issue a majority of the Court
treated as highly fact-intensive in Lathrop. See 367 U.S. at 827-48 and 851-64
(Harlan, J., concurring).
As a general rule, we will not consider arguments raised for the first time on
appeal “as a basis for reversal.” von Kerssenbrock-Praschma v. Saunders, 121 F.3d
373, 375 (8th Cir. 1997) (citation omitted). In addition to the “inherent injustice in
allowing an appellant to raise an issue for the first time on appeal,” a primary reason
for this rule is that “the record on appeal generally would not contain the findings
necessary to an evaluation of the validity of an appellant’s arguments.” Id. at 376
(citation omitted). However, we may invoke our “discretion to consider an issue for
the first time on appeal where the proper resolution [of that issue] is beyond any
doubt . . . or when the argument involves a purely legal issue in which no additional
evidence or argument would affect the outcome of the case.” Weitz Co., LLC v.
Lloyd’s of London, 574 F.3d 885, 891 (8th Cir. 2009) (citation omitted). This is not
an appropriate case to invoke that exception.
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Fleck conceded his associational claim was governed by binding precedent
before the district court and on appeal. Fleck was represented by public interest
lawyers who advised this court they were preserving the issue to argue to the
Supreme Court that Keller and Lathrop should be overruled. Perhaps more
importantly, this is not a “purely legal” issue. Based on Fleck’s concession,
defendants did not place in the summary judgment record the types of detailed
information discussed by the Supreme Court in Lathrop concerning the legislative
decision to adopt an integrated bar in North Dakota, the extent to which this method
of licensing and regulating the profession burdens associational rights of North
Dakota lawyers, and whether, if exacting scrutiny is the governing standard, North
Dakota can serve its “compelling state interests . . . through means [that are]
significantly less restrictive of associational freedoms.” Boy Scouts of Am. v. Dale,
530 U.S. 640, 680 (2000) (citation omitted).
It may well be, as Fleck now argues, that Keller and Lathrop did not consider,
and therefore did not foreclose, his First Amendment associational claim. It may also
be that Janus confirms that this issue would now be decided under a more rigorous
exacting scrutiny standard than the Court may have applied in Keller and Lathrop.
We decline to consider these issues because, whatever level of scrutiny is appropriate,
the claim must still be decided on an evidentiary record. Based on prior Supreme
Court precedent, we conclude the record is inadequate as the result of Fleck forfeiting
the issue in the district court and on appeal. Accordingly, we decline to invoke our
discretion to take up this claim for the first time on remand.
III. The Opt-Out Procedure Claim.
Once a year, SBAND mails a fee statement which attorney members fill out
and return with their annual dues payment. SBAND fills in the top half of the
statement including the member’s annual license fee (for example, at the time in
question, $380 for a lawyer with more than five years of practice.) As revised by the
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settlement that resolved Fleck’s first claim in this lawsuit, the bottom half of the
statement includes a column in which the lawyer may elect to pay additional fees to
enroll in one or more practice group sections, to donate to the North Dakota Bar
Foundation or the Pro Bono Fund, and to take a “Keller deduction.” SBAND agreed
to add the Keller-deduction line in response to this lawsuit. Next to this line, the
statement explains:
OPTIONAL: Keller deduction relating to nonchargeable activities.
Members wanting to take this deduction may deduct $10.07 if paying
$380; $8.99 if paying $350; and $7.90 if paying $325. (See Insert.)
Accompanying the fee statement is a two-page insert entitled Notice Concerning State
Bar Dues Deduction and Mediation Process explaining how SBAND calculates non-
chargeable activities and how members may object to these determinations. In
addition, a new Keller Policy available on SBAND’s member website provides an
additional notice. See Fleck, 868 F.3d at 655.
In Knox v. SEIU, 567 U.S. 298, 322 (2012), the Supreme Court held that
“when a public-sector union imposes a special assessment or dues increase, the union
must provide a fresh Hudson notice and may not exact any funds from nonmembers
without their affirmative consent.” In Fleck, we held that the revised SBAND
procedures complied with the annual procedures established in Hudson and cross-
referenced in Keller and that “the opt-out issue debated by the Court in Knox is
simply not implicated by SBAND’s revised license fee Statement”:
Before submitting an annual license fee payment, each member
calculates the amount owing on the revised Statement. If he selects the
Keller deduction, he writes a check for the lower amount that excludes
a payment for SBAND’s non-germane expenditures. If he does not
choose the Keller deduction, he “opts in” to subsidizing non-germane
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expenses by the affirmative act of writing a check for the greater
amount.
868 F.3d at 656-57.
On remand, Fleck argues that “SBAND’s collection of money . . . for non-
germane activities violates the First Amendment, just as the union fees in Janus did,
because SBAND does not obtain attorneys’ consent to pay in a manner that is
(1) clear, (2) affirmative, and (3) prior to collecting of funds, as Janus requires.” We
disagree. Janus held that no fee or payment to the union “may be deducted from a
nonmember’s wages . . . unless the employee affirmatively consents to pay . . . .
before any money is taken.” 138 S. Ct. at 2486. In this case, SBAND collects dues
from members who are licensed attorneys. The audience is sophisticated and trained
to understand and appreciate legal communications. Though membership is
mandatory, it still involves a relatively comfortable relationship in which the member
is encouraged to raise issues or seek information from his or her organization.
SBAND’s revised fee statement and procedures clearly do not force members
to pay non-chargeable dues over their objection. Attorneys are not paid public sector
wages, and SBAND does not automatically deduct annual dues from any source of
member funds. It does not have an online system for collecting dues and fees and
does not even accept credit card payments. Each member must determine how much
he or she owes in annual dues and then write a check to SBAND to pay that amount.
The member’s right to pay or refuse to pay dues to subsidize non-chargeable expenses
is clearly explained on the fee statement and accompanying instructions, in advance
of the member consenting to pay by delivering a check to SBAND. Doing nothing
may violate a member’s obligations to pay dues, but it does not result in the member
paying dues that he or she has not affirmatively consented to pay.
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Nothing in the summary judgment record suggests that SBAND’s revised fee
statement is so confusing that it fails to give SBAND members adequate notice of
their constitutional right to take the Keller deduction. Indeed, Fleck’s stipulation that
the revised fee procedures “resolve fully and completely” his first claim for relief is
strong evidence to the contrary, as that claim included the allegation that SBAND was
failing to provide “notice to members, including an adequate explanation of the basis
for the dues and calculations of all non-chargeable activities.” The best that can be
said for Fleck’s argument is that a busy or careless lawyer might fill out the fee
statement and write a check to SBAND for the full annual dues without noticing the
option to take the Keller deduction. The record contains no evidence this has ever
happened or is likely to happen. Fleck asserts a facial, not an as-applied attack on the
revised fee statement.
In a “union shop,” every employee must be a union member. The Supreme
Court’s public-sector union cases -- Abood, Knox, Harris, and Janus -- have involved
“agency shop” relationships, authorized by state law and/or the collective bargaining
agreement, in which employees may be nonmembers; the issue was the manner in
which and extent to which nonmembers could be compelled to pay agency fees to
subsidize the union’s non-germane activities. The Supreme Court has never decided
whether a public-sector union shop would violate employees’ First Amendment
associational rights. If the Court upheld a mandatory membership requirement, the
dues subsidy issue would be analogous to the issue in this case under Keller and
Hudson. We have little doubt the Court would impose a requirement that the union
adopt procedures “carefully tailored to minimize the infringement” of a dissenting
member’s First Amendment rights. Hudson, 475 U.S. at 303. But because of the
practical differences when an organization deals with members and nonmembers, we
do not assume that the “Hudson notice” requirements would be the same in every
detail. Therefore, as Janus did not overrule Keller and did not question use of the
Hudson procedures when it is appropriate to do so, we conclude after further
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consideration that Janus does not alter our prior decision explaining why the district
court did not err in granting summary judgment dismissing Fleck’s second claim.
For the foregoing reasons, the judgment of the district court is affirmed.
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