Statutory Authority: The provisions of this Subchapter C issued under the Texas Education Code, §§21.031, 21.045(a)(1), and 21.048(a), and the Texas Occupations Code, §54.003, unless otherwise noted.
(a) A candidate seeking certification as an educator must pass the examination(s) required by the Texas Education Code (TEC), §21.048, and the State Board for Educator Certification (SBEC) in §233.1(e) of this title (relating to General Authority) and shall not retake an examination more than four times, unless the limitation is waived for good cause. The burden of proof shall be upon the candidate to demonstrate good cause.
(1) For the purposes of the retake limitation described by the TEC, §21.048, an examination retake is defined as a second or subsequent attempt to pass any examination required for the issuance of a certificate, including an individual core subject examination that is part of the overall examination required for the issuance of a Core Subjects certificate as described in §233.2 of this title (relating to Early Childhood; Core Subjects).
(A) A canceled examination score is not considered an examination retake.
(B) An examination taken by an educator during a pilot period is not considered part of an educator's five-time test attempt limit.
(C) Pursuant to TEC, §21.0491(d), the limit on number of test attempts does not apply to the trade and industrial workforce training certificate examination prescribed by the SBEC.
(v) the number of clock-hours completed for the educational activity. Clock-hours completed before the most recent examination attempt or after a request for a waiver is submitted shall not be included. One semester credit hour earned at an accredited institution of higher education is equivalent to 15 clock-hours.
(iii) 180 calendar days after the date of the most recent unsuccessful examination attempt that was the result of the most recently approved request for waiver of the limitation.
(6) The TEA staff shall administratively approve each application that meets the criteria specified in paragraphs (2)-(5) of this subsection.
(7) An applicant who does not meet the criteria in paragraphs (2)-(5) of this subsection may appeal to the SBEC for a final determination of good cause. A determination by the SBEC is final and may not be appealed.
(b) A candidate seeking a standard certificate as an educator based on completion of an approved EPP may take the appropriate certification examination(s) required by subsection (a) of this section only at such time as the EPP determines the candidate's readiness to take the examinations, or upon successful completion of the EPP, whichever comes first.
(c) The holder of a lifetime Texas certificate effective before February 1, 1986, must pass examinations prescribed by the SBEC to be eligible for continued certification, unless the individual has passed the Texas Examination of Current Administrators and Teachers (TECAT).
(d) The commissioner of education approves the satisfactory level of performance required for certification examinations, and the SBEC approves a schedule of examination fees and a plan for administering the examinations.
(e) The appropriate examination(s) required for certification are specified in the figure provided in this subsection.
(f) Scores from examinations required under this title must be made available to the examinee, the TEA staff, and, if appropriate, the EPP from which the examinee will seek a recommendation for certification.
(g) The following provisions concern ethical obligations relating to examinations.
(1) An educator or candidate who participates in the development, design, construction, review, field testing, scoring, or validation of an examination shall not reveal or cause to be revealed the contents of the examination to any other person.
(F) deviate from the rules governing administration of the examination.
(E) otherwise engage in conduct that amounts to cheating, deception, or fraud.
(C) otherwise engage in conduct that amounts to violations of test security or confidentiality integrity, including cheating, deception, or fraud.
(C) voiding of a score from an examination in which a violation specified in this subsection occurred as well as a loss of a test attempt for purposes of the retake limit in subsection (a) of this section.
Statutory Authority: The provisions of this §230.21 issued under the Texas Education Code, §§21.041(b)(1), (2), and (4); 21.044(a); 21.048; 21.050; 22.082; and the Texas Occupations Code, §54.003.
Source: The provisions of this §230.21 adopted to be effective August 12, 2012, 37 TexReg 5753; amended to be effective August 28, 2016, 41 TexReg 6191; amended to be effective May 17, 2018, 43 TexReg 3089; amended to be effective December 23, 2018, 43 TexReg 5470.
§230.23. Testing Accommodations for Persons with Dyslexia.
The Texas Education Agency (TEA) shall provide examination accommodations for persons with dyslexia.
(1) For each licensing examination administered, the TEA and its testing vendor shall provide reasonable examination accommodations to an examinee diagnosed as having dyslexia as that term is defined in the Texas Occupations Code, §54.003.
(2) The TEA and its testing vendor shall provide examination accommodations to an examinee diagnosed with dyslexia, provided acceptable medical or diagnostic documentation has been received and reviewed by the vendor prior to the administration of the examination.
Statutory Authority: The provisions of this §230.23 issued under the Texas Education Code, §§21.041(b)(1), (2), and (4); 21.044(a); 21.048; 21.050; 22.082; and the Texas Occupations Code, §54.003.
Source: The provisions of this §230.23 adopted to be effective August 12, 2012, 37 TexReg 5753; amended to be effective December 23, 2018, 43 TexReg 5470.
§230.25. Test Exemptions for Persons with a Hearing Impairment.
(a) A candidate who has a hearing impairment may request exemption from educator certification and competence examinations that have not been field-tested for appropriateness, reliability, and validity as applied to persons with hearing impairments.
(C) for the Texas pedagogy and professional responsibilities examination, by documenting successful completion of EPP coursework and training covering educator standards for the grade level for which certification is sought.
(c) The TEC, §21.048, provides that the SBEC may not administer a certification examination that has not been field-tested for appropriateness, reliability, and validity to a person who is unable to process linguistic information. An educator who has been granted such an exemption may not subsequently take any other such certification examination without submitting a new audiologist's report that addresses the prior audiologist's report and documents that the educator is now able to process written linguistic information.
(d) This section does not affect the procedures for one-year certificates, extensions, and permits based on out-of-state credentials pursuant to §230.113 of this title (relating to Requirements for Texas Certificates Based on Certification from Other States or Territories of the United States), but, to be issued a standard certificate, a person must either satisfy the applicable examination requirements or be recommended for certification by an EPP.
(e) As with other EPP completion and admission documentation under §228.40 of this title (relating to Assessment and Evaluation of Candidates for Certification and Program Improvement), all documentation required under this section shall be retained by an EPP for five years and is subject to audit by Texas Education Agency staff.
Statutory Authority: The provisions of this §230.25 issued under the Texas Education Code, §§21.031; 21.041(a), (b)(1), (4), (7), and (8), and (c); 21.045(a)(1); 21.048; and the Texas Occupations Code, §54.003.
Source: The provisions of this §230.25 adopted to be effective August 12, 2012, 37 TexReg 5753; amended to be effective August 28, 2016, 41 TexReg 6191.
For more information, email sbecrules@tea.texas.gov.


Briseno v. ConAgra Foods, Inc.
Ninth Circuit Holds Rule 23 Does Not Require Proof of Administrative Feasibility.
Class actions are a means for aggregating claims that are too small to incentivize individual litigation. Enabling compensation is one clear benefit of class actions, but aggregate litigation also serves a consonant public purpose of deterring unlawful conduct. By making small claims economically feasible to litigate, class actions enlist private attorneys as law enforcement agents. However, where claims are frivolous and damages are high, these cases create coercive settlement pressure.1× 1. See, e.g., In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1298 (7th Cir. 1995) (Posner, J.).
In part to filter out classes that are unlikely to succeed on the merits, courts must conduct a “rigorous analysis” of Rule 23(a)’s prerequisites before certifying a class.2× 2. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011); id. at 350–51. Plaintiffs must demonstrate that a class (1) is sufficiently numerous so that joinder is impracticable, and (2) raises a common question of law or fact; and that the representative (3) alleges claims that are typical of class claims, and (4) can adequately represent the class.3× 3. Fed. R. Civ. P. 23(a). In monetary-damage actions, Rule 23(b)(3) additionally requires that class-wide common issues predominate over individual issues.4× 4. Id. at 23(b)(3). But some courts impose an additional prerequisite that does not appear in the text of Rule 23. Under the Third Circuit’s version of “administrative feasibility” doctrine, plaintiffs must propose a reliable means for ascertaining the identity of all class members before the class can be certified.5× 5. See, e.g., Carrera v. Bayer Corp., 727 F.3d 300, 305–07 (3d Cir. 2013). Because most individuals who purchase inexpensive products in stores do not keep itemized receipts and cannot prove their purchase, this requirement typically prevents those consumers from becoming certified as a class. Recently, in Briseno v. ConAgra Foods, Inc.,6× 6. 844 F.3d 1121 (9th Cir. 2017). the Ninth Circuit declined to adopt administrative feasibility as a standalone requirement for class certification.7× 7. Id. at 1126. This requirement is sometimes referred to as “ascertainability,” but that term refers to a broader concept that includes other, less disputed requirements. Id. at 1124 n.3. See generally 1 William B. Rubenstein, Newberg on Class Actions § 3:1 (5th ed. 2016). Although Briseno deftly analyzed a number of important arguments against administrative feasibility, it did not consider a fundamental problem with that doctrine: no realistic alternative to consumer class actions could effectively replicate their role as a law enforcement mechanism. For this reason, a standalone administrative feasibility requirement would seriously undermine much of consumer protection law and render some potential defendants judgment-proof when they cause a small amount of harm to a large number of people.
Briseno is a consumer class action. ConAgra Foods manufactured and sold Wesson Oils, a brand of cooking oil it advertised as “100% Natural.”8× 8. In re ConAgra Foods Inc., 908 F. Supp. 2d 1090, 1095 (C.D. Cal. 2012). However, ConAgra allegedly made Wesson Oils with genetically modified organisms, which might not qualify as natural.9× 9. Id. Robert Briseño filed one of eleven class actions against ConAgra alleging it had deceived consumers into believing Wesson was 100% natural.10× 10. See In re ConAgra Foods, Inc., 90 F. Supp. 3d 919, 939 (C.D. Cal. 2015). In 2011, the Judicial Panel on Multidistrict Litigation consolidated the actions before Judge Morrow of the U.S. District Court for the Central District of California.11× 11. See In re Wesson Oil Mktg. & Sales Practices Litig., 818 F. Supp. 2d 1383 (J.P.M.L. 2011). Under the laws of eleven states, the buyers alleged violation of consumer protection statutes, breach of express and implied warranties, and unjust enrichment.12× 12. In re ConAgra Foods, 90 F. Supp. 3d at 939–40. After the court dismissed some of these claims in 2012, the action proceeded through discovery, and in 2014, Briseño moved for class certification.13× 13. See id. at 938–39.
ConAgra, citing the Third Circuit case Carrera v. Bayer Corp.,14× 14. 727 F.3d 300 (3d Cir. 2013). argued against class certification because Briseño could not present an administratively feasible means for ascertaining who had bought Wesson Oil during the class period.15× 15. Defendant ConAgra Foods, Inc.’s Memorandum of Points and Authorities in Opposition to Plaintiffs’ Amended Motion for Class Certification at 25–26, In re ConAgra Foods, 90 F. Supp. 3d 919 (No. 2:11-cv-05379-MMM-AGR). The Third Circuit’s doctrine, which has caused a deep circuit split,16× 16. The Fourth Circuit cited the Third Circuit’s doctrine in finding a putative class presented too many “administrative barrier[s]” to merit certification. See EQT Prod. Co. v. Adair, 764 F.3d 347, 358–60 (4th Cir. 2014). The Second and Eleventh Circuits have applied the doctrine in unpublished opinions. Leyse v. Lifetime Entm’t Servs., LLC, Nos. 16-1133-cv, 16-1425-cv, 2017 WL 659894, at *2 (2d Cir. Feb. 15, 2017); Karhu v. Vital Pharm., Inc., 621 F. App’x 945, 947–49 (11th Cir. 2015). However, the Sixth, Seventh, and Eighth Circuits have held that plaintiffs need not prove administrative feasibility at class certification. See Rikos v. Procter & Gamble Co., 799 F.3d 497, 525 (6th Cir. 2015); Mullins v. Direct Dig., LLC, 795 F.3d 654, 658 (7th Cir. 2015); Sandusky Wellness Ctr., LLC v. Medtox Sci., Inc., 821 F.3d 992, 995–96 (8th Cir. 2016). The Third Circuit has arguably cabined its doctrine in recent cases. See Briseno, 844 F.3d at 1127 n.6. is rooted in three principles. First, the administrative feasibility requirement “eliminates serious administrative burdens . . . by insisting on the easy identification of class members.”17× 17. Carrera, 727 F.3d at 305 (quoting Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 593 (3d Cir. 2012)). It also “protects absent class members by facilitating the best notice practicable.”18× 18. Id. at 305–06 (quoting Marcus, 687 F.3d at 593). Finally, “it protects defendants by ensuring that those persons who will be bound by the final judgment are clearly identifiable.”19× 19. Id. at 306 (quoting Marcus, 687 F.3d at 593).
The district court rejected ConAgra’s position and held that proof of administrative feasibility is unnecessary for class certification.20× 20. In re ConAgra Foods, 90 F. Supp. 3d at 970–71. It emphasized that “ConAgra’s argument would effectively prohibit class actions involving low priced consumer goods.”21× 21. Id. at 970 (quoting Order Denying Plaintiffs’ Motion for Class Certification: Granting in Part and Denying in Part Defendant’s Motion to Strike at 39, In re ConAgra Foods, 90 F. Supp. 3d 919 (No. 2:11-cv-05379-MMM-AGR)). The court found the remaining Rule 23 requirements were satisfied and certified the class under Rule 23(b)(3).22× 22. Id. at 1035–36. Separately, the district court declined to certify an injunctive relief class under Rule 23(b)(2), finding plaintiffs could not satisfy Article III standing. Id.
The Ninth Circuit affirmed.23× 23. Briseno, 844 F.3d at 1123. The court joined the Sixth, Seventh, and Eighth Circuits in rejecting the Third Circuit’s doctrine.24× 24. Id. at 1123. Writing for the panel, Judge Friedland25× 25. Judge Friedland was joined by Judges Fletcher and Christen. held that Rule 23 does not require or permit an administrative feasibility analysis.26× 26. Briseno, 844 F.3d at 1123.
The panel focused entirely on administrative feasibility, noting the issue was one of first impression in the Ninth Circuit.27× 27. Id. at 1124–25. In a separate memorandum opinion, the panel affirmed the district court’s decision with respect to ConAgra’s remaining challenges. See Briseno v. ConAgra Foods, Inc., No. 15-55727, 2017 WL 53421 (9th Cir. Jan. 3, 2017). It first examined the text of Rule 23 and found that because its four prerequisites to certification do not include administrative feasibility, courts should presume the enumerated prerequisites “constitute an exhaustive list.”28× 28. Briseno, 844 F.3d at 1125.
The panel next assessed and rejected the Third Circuit’s three rationales for including administrative feasibility as a standalone requirement.29× 29. Id. at 1127–32. Considering its first rationale, the panel reasoned that the need to mitigate administrative burdens was already captured by Rule 23(b)(3)(D), which requires that courts weigh “the likely difficulties in managing a class action.”30× 30. Id. at 1127–28 (quoting Fed. R. Civ. P. 23(b)(3)(D)). The court also noted that a heightened standard would “conflict with the well-settled presumption that courts should not refuse to certify a class merely on the basis of manageability concerns,” id. at 1128 (quoting Mullins v. Direct Dig., LLC, 795 F.3d 654, 663 (7th Cir. 2015)), and would leave plaintiffs without a realistic alternative in low-value consumer class actions like the case at hand, id. To the Third Circuit’s second point, the panel found that concerns about protecting absent class members by ensuring individual notice were misguided, because Rule 23(c)(2)(B) does not require actual, individual notice, but merely the “best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.”31× 31. Id. at 1128–29 (quoting Fed. R. Civ. P. 23(c)(2)(B)). The panel similarly observed that “the Due Process Clause does not require actual, individual notice in all cases.” Id. at 1129. The panel also found the risk that fraudulent claim submissions would dilute a common fund to be nominal, because the claiming rates for consumer class actions are as low as ten to fifteen percent, and because individuals would be unlikely to perjure themselves by submitting false affidavits for small claims.32× 32. Id. at 1130. Responding to the Third Circuit’s final point, the court found that defendants’ due process rights are sufficiently protected by existing procedures.33× 33. Id. at 1131–32. The panel rejected Carrera’s assumption that defendants lack the opportunity to challenge fraudulent claims and highlighted the numerous means for mounting such challenges at the claims-administration stage.34× 34. Id. The court also noted that, in circumstances where aggregate liability is known, a defendant’s due process rights are not implicated because total liability is not affected by the identification of absent class members. Id. at 1132.
Briseno is well reasoned and persuasive. Neither due process nor Rule 23 requires administrative feasibility,35× 35. Addressing Carrera’s argument about defendants’ due process rights, the Seventh Circuit noted that even though “a defendant has a due process right not to pay in excess of its liability and to present individualized defenses . . . [i]t does not follow that a defendant has a due process right to a cost-effective procedure for challenging every individual claim to class membership.” See Mullins, 795 F.3d at 669 (citing Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2309 (2013) (finding similar procedural rights unavailable under antitrust law)). and the doctrine frustrates, rather than safeguards, the interests of absent class members. A freestanding administrative feasibility requirement would substitute a remote possibility of claim dilution with the complete certainty of recovering nothing where claims are too small to bring individually.36× 36. See Briseno, 844 F.3d at 1129.
However, the panel missed an opportunity to consider the wider harm this doctrine would cause. By barring cases like Briseño’s, administrative feasibility would frustrate the deterrent value of consumer class actions. The Seventh Circuit has mentioned this problem,37× 37. See Mullins, 795 F.3d at 668. but no court has given serious attention to how the inadequacy of alternative enforcement mechanisms would seriously undermine much of consumer protection law if administrative feasibility were a required component of class certification. Because courts and lawmakers are continuing to debate the merits of the Third Circuit’s doctrine,38× 38. See sources cited infra notes 68–70. this implication of administrative feasibility deserves attention.
Rule 23(b)(3)’s core purpose is to enable the aggregation of small claims.39× 39. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)). Where recovery amounts to a few dollars per person, as in many consumer-rights cases, the filing fee alone would exceed the damages award, and plaintiffs’ attorneys, who typically work on contingent fees, would have no reason to litigate individual actions for trivial losses. Judge Posner has observed that “[t]he realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”40× 40. Carnegie v. Household Int’l, Inc., 376 F.3d 656, 661 (7th Cir. 2004) (emphasis omitted).
While remunerating class members is an obvious benefit of claim aggregation, class actions, like all tort actions, simultaneously serve a parallel purpose: they deter potential defendants from misconduct.41× 41. See Rubenstein, supra note 7, § 1:8 (“[C]lass actions deter misconduct by harnessing private attorneys general to assist in the enforcement of important public policies.”); see also Hughes v. Kore of Indiana Enter., Inc., 731 F.3d 672, 677 (7th Cir. 2013) (Posner, J.) (“But even when as in this case the aggregate claim . . . is meager, [class] treatment will often be appropriate. A class action, like litigation in general, has a deterrent as well as a compensatory objective.”); Geoffrey C. Shaw, Note, Class Ascertainability, 124 Yale L.J. 2354, 2389 (2015). Claim aggregation creates an incentive for attorneys to litigate actions that would otherwise be grossly unprofitable. In doing so, these lawyers act as private attorneys general, uncovering and prosecuting illegal conduct on behalf of the public interest.42× 42. See William B. Rubenstein, On What a “Private Attorney General” Is — and Why It Matters, 57 Vand. L. Rev. 2129, 2167–68 (2004); see also id. at 2159–61. By enlisting private attorneys to enforce consumer protection laws and offering a mechanism for disgorging liable parties of wrongful revenues, class actions encourage more cautious and transparent behavior.43× 43. See Hughes, 731 F.3d at 677–78 (“[T]he damages sought by the class, and, probably more important, the attorney’s fee that the court will award if the class prevails, will make the suit a wake-up call for Kore and so have a deterrent effect on future violations of the Electronic Funds Transfer Act by Kore and others. . . . [A] judgment would remind Kore to take greater care in the future to comply with federal law, however irksome compliance may seem.” Id. at 678.).
Many view deterring misconduct as more important than compensating class members with small claims.44× 44. See, e.g., Stephen Berry, Ending Substance’s Indenture to Procedure: The Imperative for Comprehensive Revision of the Class Damage Action, 80 Colum. L. Rev. 299, 300 (1980). Some believe deterrence is the only legitimate rationale for certain class actions.45× 45. See Myriam Gilles & Gary B. Friedman, Exploding the Class Action Agency Costs Myth: The Social Utility of Entrepreneurial Lawyers, 155 U. Pa. L. Rev. 103, 104–05 (2006) (“In reality, there is generally no legitimate utilitarian reason to care whether class members with small claims get compensated at all.” Id. at 105.). Consider Briseno itself: there may be little reason to care whether class members recover the tiny amounts they each claim to have lost, but disgorging ConAgra of potentially millions of dollars in wrongful revenues has a clear benefit of deterring fraud. Had the panel required proof of administrative feasibility, the class could not have been certified in light of the reality that consumers rarely keep itemized grocery receipts and would have no other means of proving their purchase.46× 46. See Briseno, 844 F.3d at 1125. The deterrent benefits would vanish, because “[w]ithout the class action mechanism, corporations . . . [would be] free to engage in false advertising, overcharging, and a variety of other wrongs without consequence.”47× 47. Byrd v. Aaron’s Inc., 784 F.3d 154, 176 (3d Cir. 2015) (Rendell, J., concurring).
If an administrative feasibility requirement were to foreclose many consumer class actions, alternative enforcement mechanisms, such as public enforcement actions or parens patriae litigation, would be unlikely to replicate their deterrent effect. Part of the reason Congress encourages class actions is that federal and state entities often lack the resources or the incentive to bring their own enforcement proceedings.48× 48. See Rubenstein, supra note 42, at 2149–50, 2150 n.75; see also Reiter v. Sonotone Corp., 442 U.S. 330, 344 (1979) (noting in the antitrust context that “Congress created [a] treble-damages remedy . . . precisely for the purpose of encouraging private challenges to antitrust violations. These private suits provide a significant supplement to the limited resources available to the Department of Justice for enforcing the antitrust laws and deterring violations.”). This dynamic is especially salient for consumer protection litigation. Private attorneys have clear financial incentives to investigate potential consumer fraud, but government entities have limited funding and may be unable to make the same investments.49× 49. See, e.g., Michael L. Rustad, Commentary, Smoke Signals from Private Attorneys General in Mega Social Policy Cases, 51 DePaul L. Rev. 511, 517 (2001) (“Given that the states lack the financial and legal resources to litigate against the powerful tobacco companies, the trial lawyer’s role has a continuing vitality. Private attorneys, acting as private attorneys general under the contingency fee system, made [a] historic tobacco settlement possible.”). For example, the Food and Drug Administration has not defined “natural” for food-labeling purposes because of “resource limitations and other agency priorities” and instead polices mislabeling with ad hoc warning letters.50× 50. Sarah Valenzuela, Note, Tracing the Evolution of Food Fraud Litigation: Adopting an Ascertainability Standard That Is “Natural,” 34 Rev. Litig. 609, 618 (2015) (quoting Food Labeling: Nutrient Content Claims, General Principles, Petitions, Definition of Terms; Definitions of Nutrient Content Claims for the Fat, Fatty Acid, and Cholesterol Content of Food, 58 Fed. Reg. 2302, 2407 (Jan. 6, 1993)). Certain statutes acknowledge similar difficulties by incentivizing citizen suits,51× 51. See Rubenstein, supra note 42, at 2152 & nn.87–89; see also 31 U.S.C. § 3730(b) (2012) (enabling qui tam suits for fraud against the federal government). and public enforcers occasionally bring actions in response to misconduct uncovered by private attorneys.52× 52. Rubenstein, supra note 42, at 2152–53 (citing Rustad, supra note 49, at 518). While public enforcement actions also lead to private “piggyback” actions, these are most often antitrust and securities actions, rather than consumer or mass tort actions. See id. at 2150, 2152–53. This resource problem is so stark that “attorneys general sometimes hire private counsel to litigate state cases on a contingency basis.”53× 53. Margaret H. Lemos, Aggregate Litigation Goes Public: Representative Suits by State Attorneys General, 126 Harv. L. Rev. 486, 524 (2012).
But funding is only the tip of the iceberg. A major difference between public and private enforcers in the aggregate-consumer context is that private firms collect a percentage of a class’s recovery — around thirty percent in some “all natural” labeling cases54× 54. See, e.g., Larsen v. Trader Joe’s Co., No. 11-cv-05188-WHO, 2014 WL 3404531, at *1 (N.D. Cal. July 11, 2014) (awarding twenty-eight percent of a settlement fund); Pappas v. Naked Juice Co. of Glendora, Inc., No. LA CV11-08276 JAK (PLAx), 2014 WL 12382279, at *13 (C.D. Cal. Jan. 2, 2014) (awarding twenty-eight percent of a settlement fund). — while government lawyers face no prospect of personal financial gain from this litigation. A government entity might view an adequate but less-than-optimal settlement as an acceptable outcome, particularly where litigation can last for over a decade and require significant investment and opportunity costs that public enforcers may be unable to bear.55× 55. See Lemos, supra note 53, at 523. By contrast, at least to a certain extent,56× 56. See John C. Coffee, Jr., Understanding the Plaintiff’s Attorney: The Implications of Economic Theory for Private Enforcement of Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669, 687 (1986) (describing limitations of this principle). a private attorney who will earn a percentage of the recovery has a direct incentive to fight for a higher settlement and consequently to deter corporate misconduct.
Some of these problems may seem particular to unelected officials whose priorities are subject to institutional demands, rather than the direct demands of the consumer public. But even state attorneys general who must stand for reelection might not feel public pressure to zealously pursue enforcement actions where they have less costly and more lucrative means for garnering voter approval. For an attorney general, prosecuting a high-profile criminal action could be a much quicker and cheaper endeavor that yields an equal or greater amount of public support. The federal Speedy Trial Act57× 57. 18 U.S.C. §§ 3152–3156, 3161–3174 (2012). and similar state statutes58× 58. See, e.g., N.Y. Crim. Proc. Law § 30.30 (McKinney 2006). require that criminal trials begin no more than a few months after defendants are charged or first appear in court.59× 59. See, e.g., 18 U.S.C. § 3161(c)(1) (seventy days). Briseno, by contrast, has been in court for almost six years.60× 60. See In re ConAgra Foods, Inc., 90 F. Supp. 3d 919, 937 (C.D. Cal. 2015). Although a large recovery would make for a nice talking point, it might amount to very little per constituent if distributed,61× 61. See Lemos, supra note 53, at 516, 521. and pushing for a higher recovery — perhaps a few dollars more per claimant, though tens of millions to the defendant in some cases — might not be worth the cost. But to a private attorney who keeps a percentage of the recovery, that extra effort could yield millions more in attorney’s fees.
Government entities face a number of institutional challenges in enforcing consumer rights, and these challenges would be exacerbated if they bore this burden alone. Elected officials may be captured by their donors and be unlikely to prosecute them.62× 62. See id. at 514. Recent media reports have detailed how lobbyists, including food-industry lobbyists, have halted state enforcement actions.63× 63. See, e.g., Eric Lipton, Lobbyists, Bearing Gifts, Pursue Attorneys General, N.Y. Times (Oct. 28, 2014), https://www.nytimes.com/2014/10/29/us/lobbyists-bearing-gifts-pursue-attorneys-general.html?_r=0 [https://perma.cc/9FBL-RJHY] (“Attorneys general are now the object of aggressive pursuit by lobbyists and lawyers who use campaign contributions, personal appeals at lavish corporate-sponsored conferences and other means to push them to drop investigations, change policies, negotiate favorable settlements or pressure federal regulators . . . .”). But also troubling is the possibility that state attorneys general, as public officials, might be conflicted in balancing their duty to protect the public with the danger of harming corporations who employ many of those citizens.64× 64. See Lemos, supra note 53, at 513–14; Margaret H. Lemos, State Enforcement of Federal Law, 86 N.Y.U. L. Rev. 698, 729 & n.143 (2011). These conflicts exist in today’s enforcement actions, and government litigation can be a highly effective means for punishing corporate wrongdoing.65× 65. See, e.g., Jack Ewing & Hiroko Tabuchi, Volkswagen Set to Plead Guilty and to Pay U.S. $4.3 Billion in Deal, N.Y. Times (Jan. 10, 2017), www.nytimes.com/2017/01/10/business/volkswagen-diesel-settlement.html [https://perma.cc/AT4S-6JYH]. But eradicating private enforcement of many small-claims consumer class actions would offer potential defendants “a considerably stronger incentive to lobby against public enforcement efforts or to seek to curtail funds to public enforcement agencies.”66× 66. John C. Coffee, Jr., Rescuing the Private Attorney General: Why the Model of the Lawyer as Bounty Hunter Is Not Working, 42 Md. L. Rev. 215, 227 (1983).
Congress has specifically chosen class actions as a means for enforcing consumer protection laws,67× 67. See Myriam Gilles, Class Dismissed: Contemporary Judicial Hostility to Small-Claims Consumer Class Actions, 59 DePaul L. Rev. 305, 305–06 (2010). and no alternative could readily replace them. A freestanding administrative feasibility requirement would be a startling step further than prior measures for mitigating coercive settlements. As federal courts,68× 68. Not long after Briseno was decided, the Second Circuit issued an unpublished opinion affirming a denial of class certification on administrative feasibility grounds. See Leyse v. Lifetime Entm’t Servs., LLC, Nos. 16-1133-cv, 16-1425-cv, 2017 WL 659894 (2d Cir. Feb. 15, 2017). Congress,69× 69. On March 9, 2017, the U.S. House of Representatives passed H.R. 985, which would effectively codify Carrera. See H.R. 985, 115th Cong. § 1718(a) (2017). and the Federal Rules Advisory Committee70× 70. The Committee expressly declined to adopt an administrative feasibility requirement in a recent set of proposed amendments to Rule 23. See Memorandum from Hon. Jeffrey S. Sutton, Chair, Comm. on Rules of Practice & Procedure, to Hon. John D. Bates, Chair, Advisory Comm. on Civil Rules 10 (May 12, 2016), http://www.uscourts.gov/sites/default/files/2016-05-12-civil_rules_report_to_the_standing_committee_0.pdf [https://perma.cc/6HAV-LAQW]. continue debating this doctrine, the stakes for stating the full case against it are high. Grafting an administrative feasibility requirement onto Rule 23 would eliminate a large subset of consumer class actions and disturb the important and inimitable role they play in protecting consumer rights.


text: The morphological traits of the smooth newt, Triturus vulgaris (LINNAEUS, 1758), have been studied in a considerable number of population samples from former Yugoslavia, taxonomically the most intriguing area of the Balkans. We found a great deal of variation in various morphological traits, more than previously thought, including those used to delimit subspecies. However, relevant taxonomic conclusions could be suggested from such variability patterns. We reaffirmed the possibility of the existence of two separate population groups within the range of the T. v. graecus subspecies. One group occurs in the area of southern Herzegovina and Montenegro, which was described a long time ago as the tomasinii form or subspecies (T. v. tomasinii). The other group is from the Former Yugoslav Republic of Macedonia (T. v. graecus sensu stricto). Rather broad intergradation zones of tomasinii x T. v. vulgaris and T. v. meridionalis x T. v. vulgaris were determined. The former zone occurs mostly in the Oromediterranean part of the Dinaric Alps. It was found that the ranges of the smooth newt subspecies followed the Balkan zoogeographical divisions to some extent.

matches: v. v. v. v. v. v.


Oxford Global Resources, LLC, is a recruiting and staffing company that places individual contractors who have specialized technical expertise with businesses who need workers having such skills. Oxford hired Jeremy Hernandez to work in its Campbell, California, office. To accept Oxford’s offer Hernandez had to and did sign an offer letter and a separate “protective covenants agreement” (the “Agreement”) that contains confidentiality, non-competition, and non-solicitation provisions. The Agreement provides that it is governed by Massachusetts law and that any suit arising from or relating to that contract must be brought in Massachusetts.
Oxford alleges that Hernandez breached the Agreement by using information regarding the identity of Oxford’s customers to solicit those customers on behalf of a competitor in California. Hernandez has moved to dismiss this action under the forum non conveniens doctrine, arguing that this action should be heard in California, where he lives and worked for Oxford.
The Court concludes that the forum selection clause is unenforceable and that the interests of justice require that this case be heard in California. The Court will therefore ALLOW the motion to dismiss pursuant to G.L. c. 223A, § 5, and the common law doctrine known as forum non conveniens.
1. Enforceability of the Forum Selection Clause.
contract.1 Although the Agreement specifies that it is governed by Massachusetts law, the Court concludes that choice-of-law provision is unenforceable and that the contract is instead governed by California law.
1 The Court concludes and the parties seem to agree that the provision stating that the Agreement will be governed by Massachusetts law and that all actions relating to or arising out of the Agreement “will be submitted” to a court in Massachusetts is a mandatory forum selection clause that requires such contract claims to be tried in Massachusetts. Although the contract does not expressly state that jurisdiction in Massachusetts is exclusive or that such suits may not be brought elsewhere, the combination of the “will be submitted” language with a choice of law clause stating that Massachusetts law shall govern the contract has the effect of making Massachusetts the “mandatory and exclusive” venue. See Baby Furniture Warehouse Store, Inc., v. Meubles D & F Ltée, 75 Mass. App. Ct. 27, 31 (2009) (provision stating that contract is governed by Quebec law and that parties “agree to submit themselves to the jurisdiction of” Quebec courts for resolution of any disputes arising out of contract or parties’ relationship gave Quebec courts “exclusive jurisdiction over any disputes between the parties”); accord Boland v. George S. May Intern. Co., 81 Mass. App. Ct. 817, 826 n.12 (2012) (dictum).
that is drafted unilaterally by the dominant party and then presented on a “take-it-or-leave-it” basis to the weaker party who has no real opportunity to bargain about its terms. Such contracts are usually prepared in printed form, and frequently at least some of their provisions are in extremely small print. Common examples are tickets of various kinds and insurance policies. Choice-of-law provisions contained in such contracts are usually respected. Nevertheless, the forum will scrutinize such contracts with care and will refuse to apply any choice-of-law provision they may contain if to do so would result in substantial injustice to the adherent.
Restatement (Second) of Conflict of Laws § 187 comment b (1971) (emphasis added).
It is apparent that the Agreement is a contract of adhesion and that Hernandez had neither the opportunity nor the bargaining power to negotiate over whether California or Massachusetts law would govern his non-competition, non-solicitation, and confidentiality agreements. The complaint specifically alleges that Oxford would not have hired Hernandez if he did not sign the Agreement, which makes clear that Hernandez had no opportunity to negotiate these issues. Oxford has neither alleged nor proffered any evidence suggesting that the parties had any negotiation over the choice of law or forum selection provisions contained in § 6.3 of the Agreement, or even that Oxford expressed any willingness to discuss those issues. The complaint also reveals that Hernandez had no bargaining power with respect to these issues. The complaint and its attachments indicate that Hernandez was hired to work as an entry-level employee. Oxford agreed to pay Hernandez $ 50,000 per year to work as an “account manager,” and alleges that Hernandez “had no previous experience or skill in the information technology staffing and consulting industry.” The only fair inference from the facts alleged by Oxford in its complaint is that Hernandez had no power to bargain over the combined choice-of-law and forum selection provision.
Oxford notes that § 7.5 of the Agreement states that Hernandez, by signing the contract, acknowledged that he had the opportunity to read the Agreement and to ask his own lawyer to review it, that he understood each provision, and that he was not under duress. But that boilerplate language cannot change the apparent facts that Hernandez had no bargaining power with respect to the choice-of-law and forum selection clauses in Oxford’s standard form contract, and that the Agreement signed by Hernandez was not the product of any negotiations between the parties.
It is also apparent that the choice-of-law provision was an attempt by Oxford to circumvent California’s strong public policy against the enforceability of non-competition agreement. If the Agreement did not contain a choice of law provision, then California law would govern Oxford’s claims under the Agreement because California “has the most significant relationship to the transaction and the parties.” Bushkin Associates, Inc. v. Raytheon Co., 393 Mass. 622, 632 (1985); accord, e.g., Nile v. Nile, 432 Mass. 390, 401 (2000); OneBeacon America Ins. Co. v. Narragansett Elec. Co., 90 Mass. App. Ct. 123, 128 (2016). It is undisputed that Hernandez was a California resident who was recruited and hired by Oxford in California, to work in Oxford’s California office, and to service only California clients. Although Oxford says its principal place of business is in Massachusetts, Oxford has alleged no facts and presented no evidence suggesting that Hernandez’s contract with and work for Oxford implicated Massachusetts in any way.
Non-competition agreements like the one that Oxford required Hernandez to sign are not enforceable under California law. See Cal. Bus. & Prof. Code § 16600 (“every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void”). This statute codifies “California’s strong public policy against noncompetition agreements.” Advanced Bionics Corp. v. Medtronic, Inc., 59 P.3d 231, 236-237 (Cal. 2002). Even before the passage of § 1660, “it has long been the public policy of [California] that ‘[a] former employee has the right to engage in a competitive business for himself and to enter into competition with his former employer, even for the business of … his former employer, provided such competition is fairly and legally conducted.’ ” Reeves v. Hanlon, 95 P.3d 513, 517 (Cal. 2004), quoting Continental Car–Na–Var Corp. v. Moseley, 148 P.2d 9, 13 (Cal. 1944).
complaint alleges that Hernandez breached the Agreement merely by soliciting companies and individuals that he knew where customers of or consultants placed by Oxford. The non-competition restriction that Oxford seeks to enforce therefore goes far beyond what is permitted under California law or, for that matter, under Massachusetts law.
An employee is free to carry away his own memory of customers’ names, needs, and habits and use that information, even to serve or to solicit business from those very customers. Such “remembered information” is not confidential because the information itself, as distinguished from an employer’s compilation of such information into a list or database, is known to the customers and thus not kept secret by the employer. American Window Cleaning Co. of Springfield, Mass. v. Cohen, 343 Mass. 195, 199 (1961); accord Angell Elevator Lock Co. v. Manning, 348 Mass. 623, 625 (1965); Woolley’s Laundry, 304 Mass. at 391-392; May v. Angoff, 272 Mass. 317, 320 (1930). The same is true under California law. See Retirement Group v. Galante, 176 Cal.App.4th 1226, 1239-1241, 98 Cal.Rptr.3d 585, 594-596 (Cal. App. Ct. 2009).
Since the mere identity of customers is not confidential, the Agreement that Oxford seeks to enforce is the kind of non-competition agreement that is void under California law. Dowell v. Biosense Webster, Inc., 179 Cal.App.4th 564, 577-579, 102 Cal.Rptr.3d 1, 11-12 (Cal. App. Ct. 2009); Galante, supra.
In sum, the Agreement’s choice-of-law provision is not enforceable because it would result in substantial injustice to Hernandez by depriving him of the freedom to compete against Oxford in California that is guaranteed under California law, and it would do so based solely on a contract clause that Hernandez had no meaningful opportunity to negotiate when he was hired. See Taylor, 465 Mass. at 195 n.8. For the reasons discussed above, the Agreement is therefore governed by California law.
1.2. The Forum Selection Clause is Not Enforceable. The mandatory forum selection clause is unenforceable for much the same reasons.
result of meaningful negotiation between the parties, does not render the provision unenforceable under California law. See Cal-State Business Prods. & Servs., inc. v. Ricoh, 12 Cal.App.4th 1666, 1679-1681, 16 Cal.Rptr.2d 417, 425-426 (Cal. Ct. App. 1993). “A mandatory forum selection clause … is generally given effect unless enforcement would be unreasonable or unfair,” even if it is made part of an employment agreement. Verdugo v. Alliantgroup, L.P., 237 Cal.App.4th 141, 147, 187 Cal.Rptr.3d 613, 618 (Cal. Ct. App. 2015).
Since Oxford was hiring Hernandez to work for it in California, the evident reason why Oxford sought to make the Agreement subject to Massachusetts law and require that any lawsuits arising from the contract be brought in Massachusetts was that Oxford wanted to keep Hernandez from enforcing his rights under California law not to be subject to a broad non-competition agreement that barred any solicitation of Oxford’s former or prospective customers. Under these circumstances, the forum selection clause in the Agreement is not enforceable under California law.
2 These holdings by the California courts are not idiosyncratic. For example, the United States Supreme Court has noted with respect to mandatory arbitration clauses that “in the event the choice-of-forum and choice-of-law clauses operated in tandem as a prospective waiver of a party’s right to pursue statutory remedies for antitrust violations, we would have little hesitation in condemning the agreement as against public policy.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 n.19 (1985); see also M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (“A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.”) (dictum).
forum non conveniens provides that, ‘where in a broad sense the ends of justice strongly indicate that the controversy may be more suitably tried elsewhere, then jurisdiction should be declined and the parties relegated to relief to be sought in another forum.’ ” Id., quoting Universal Adjustment Corp. v. Midland Bank, Ltd., 281 Mass. 303, 313 (1933). Thus, “dismissal may be appropriate ‘[w]hen the court finds that in the interest of substantial justice the action should be heard in another forum.’ ” Id., quoting G.L. c. 223A, § 5. “Decisions to grant or deny motions to dismiss on the ground of forum non conveniens are left to the discretion of the trial judge.” Id.
The Court concludes, in the exercise of its discretion, that it would be unfair to compel Hernandez to defend himself in Massachusetts and that justice would best be served by dismissing this action so it may be tried in California.
State courts in California provide an adequate alternative forum. They are just as capable of hearing this matter and deciding it fairly. Oxford does not contest this point. The choice-of-law issues discussed above have no bearing on whether this case should be tried in Massachusetts or California. Cf. Melia, 462 Mass. at 173-182. Thus, the Court’s determination that California law bars or at least limits Oxford’s contract claims is irrelevant when deciding Hernandez’s motion to dismiss on grounds of forum non conveniens. If California law applies and limits Oxford’s claims, that will be true whether this matter is tried in California or Massachusetts courts.
located in California, and that none of the conduct that Oxford accuses Hernandez of engaging in took place in Massachusetts or anywhere else outside of California.
As a result, the relevant private interests weigh heavily in favor of litigating this case in California. Since everything relevant to this case happened in California, it appears that all relevant witnesses are located in California and cannot be compelled to testify in Massachusetts. All other relevant evidence is presumably either located in California or available electronically so that it has no bearing on which forum is more convenient. It will be easier and more efficient for both Hernandez and Oxford to try this case in California. Indeed, Hernandez will be unable adequately to defend himself unless the case is litigated in California. And if Oxford were to obtain a judgment against Hernandez it would be much easier to enforce it if issued by a California court. The private interests strongly favor trial in California. Cf. Gianocostas, 450 Mass. at 726-727.
With respect to the relevant public interests, California has a much stronger interest than Massachusetts in deciding whether Hernandez breached his contract or committed a tort in trying to convince some of Oxford’s customers or consultants in California to use a competitor instead. Hernandez has been a California resident since before he first started working for Oxford in California. And the business operations that Oxford claims were unlawfully harmed are located in California and serve California customers. Massachusetts has very little interest in the outcome of this lawsuit. Thus, the public interests also strongly favor trial in California.
For all of these reasons, the Court concludes that California is the appropriate forum in which to litigate Oxford’s claims against Hernandez.
Defendant’s motion to dismiss this action on grounds of forum non conveniens is ALLOWED. Final judgment shall enter dismissing all claims without prejudice.


CITY BANK FARMERS' TRUST CO. v. SCHNADER, Attorney General of Pennsylvania et al.
Appeal from the District Court of the United States for the Eastern District of Pennsylvania.
Mr. Henry S. Drinker, Jr., of Philadelphia, Pa., for appellant.
Mr. Wm. A. Schnader, of Philadelphia, Pa., for appellees.
The appellant, by a bill filed in the District Court for Eastern Pennsylvania, sought to enjoin the appellees, who are officials of the commonwealth of Pennsylvania, from attempting to impose and collect an inheritance tax. Diversity of citizenship and an amount in controversy exceeding, exclusive of interest, $3,000, were averred. The bill sets forth that Thomas B. Clarke, a citizen and resident of the state of New York, died there in 1931 leaving a will under which appellant qualified as executor; that at and before the time of Clarke's death there was on exhibition in Pennsylvania a collection of paintings owned by him, of the estimated market value at the date of his death of $714,750; that these paintings had been loaned to the Pennsylvania Museum and School of Industrial Art, a nonprofit corporation, so that they might be exhibited in the museum of that institution; that the loan was negotiated orally and was for an indeterminate period, but the pictures were to be returned to Clarke at any time upon his request. The bill then quotes he act of Assembly of Pennsylvania 1 whereby a transfer inheritance tax of a specified percentage of value is laid upon transfers, by will or the intestate laws, or property located within the commonwealth, from a decedent not a resident of the commonwealth at the time of his death; describes the procedure for the collection of the tax, namely, that the department of revenue, whenever occasion may require, shall appoint an appraiser to appraise the value of the property, if subject to tax; appraisement shall be made after notice to the interested parties; the appraiser shall report his valuation in writing to the department of revenue; whereupon that department is required to give notice to all interested parties, and any person not satisfied with the appraisement may appeal to the court of common pleas of Dauphin county, which may determine all questions of valuation and the liability of the appraised estate for the tax. The bill recites the appointment of an appraiser who duly notified the appellant of the proposed date of his appraisement; the making of a return, under protest, pursuant to instructions of the appellee Schnader, enumerating as property within the commonwealth at the decedent's death the seventy-nine portraits in question, and denying taxable situs or taxability of the property in Pennsylvania; a hearing by the appraiser, who referred the question of taxability to the department of justice, of which the appellee Schnader is the head, and, pending a decision by him, postponed the appraisement indefinitely; and repeated requests for an immediate determination of tax liability in response to which the appellee Schnader orally advised the appellant its claim of nontaxability in Pennsylvania would be denied. The bill charges that, if the statute be construed to impose an inheritance tax upon the paintings merely because they were temporarily within the commonwealth at the time of the decedent's death, it is unconstitutional as depriving the appellant of property without due process and denying equal protection of the laws, in contravention of the Fourteenth Amendment; and, if the statute be construed as not applying to the property, the threatened appraisal, assessment, and collection by the defendants will unconstitutionally deprive the appellant of property without due process and deny it equal protection. It further charges that the threat of appraisement, assessment, and collection, and the unlawful failure and refusal of the appellee Metzger to issue a waiver of taxes on behalf of the commonwealth, have caused and are causing irreparable injury by interfering with the administration of the estate in the Surrogate's Court of New York, preventing distribution, compelling the executor to maintain large cash reserves at a low rate of interest to cover a possible Pennsylvania tax and costs of litigation, and also that the threatened tax constitutes a possible lien and a cloud upon the title of the plaintiff, interfering with the sale of the paintings as directed by the will. The bill avers the absence of any adequate remedy at law.
A temporary injunction was issued, an answer was filed admitting the facts stated, and a statutory court of three judges was convened and heard the case on the pleadings and an agreed statement which is immaterial to the questions presented.
The answer asserted, and the court found, that the appellant had an adequate remedy at law, as it could appeal from the appraisement, when made, to the Dauphin county court, which has jurisdiction to pass on both the amount of the tax and the legality of its imposition. The bill was therefore dismissed for want of equity.
1. It is conceded that neither the statutes of Pennsylvania nor the decisions of its courts permit an action at law for the recovery of a tax paid under protest. If that procedure were permissible in the state courts, the appellant could pursue the same remedy in a federal court; there being the requisite diversity of citizenship and amount in controversy. Matthews v. Rodgers, 284 U.S. 521, 52 S.Ct. 217, 76 L.Ed. 447. Under the state law, the only remedy afforded one who has paid a tax is an application for refund to the board of finance and revenue, an administrative body; but the action upon the claim is final and no court may review or set aside the board's decision. 2 The District Court, however, was of opinion that the taxpayer's right of appeal from the appraisal to the court of common pleas of Dauphin county constituted such a remedy at law as ousted the jurisdiction of a federal court of equity. The act of Assembly 3 requires the appointment of an appraiser whose duty is to report his appraisement in writing to the department of revenue, which must then give immediate notice to all parties interested, and continues: 'Any person not satisfied with the appraisement * * * may appeal within thirty days to the court of common pleas of Dauphin County, on paying or giving security to pay all costs together with whatever tax shall be fixed by the court. Upon such appeal, the court may determine all questions of valuation, and the liability of the appraised estate for such tax, subject to the right of appeal to the Supreme or Superior Court.' The appeal must be entered in a state court specifically designated by the statute, and is thus not an ordinary action at law, but a statutory proceeding. The commonwealth has conditioned the right to implead it, upon resort to a forum of its choice. The taxpayer cannot, therefore, though a nonresident, appeal from the appraisement to a federal court. Moreover, in such cases, upon the perfecting of an appeal, the commonwealth becomes the adverse party to the litigation in the common pleas court (Comm. v. Taylor, 29A Dauph. Co. Rep. (Pa.) 102; Comm. v. Taylor, 32 Dauph. Co. Rep. (Pa.) 207); and this fact would prevent removal of the case from the Dauphin county court to a federal court (Judicial Code, § 24(1), as amended; 28 U.S.C. 41(1), 28 USCA § 41(1); Judicial Code, § 28, as amended; 28 U.S.C. 71, 28 USCA § 71), for the state is not a citizen within the purview of these statutes which define the jurisdiction of the federal courts and permit a removal to them (Stone v. South Carolina, 117 U.S. 430, 6 S.Ct. 799, 29 L.Ed. 962; Postal Telegraph Cable Co. v. Alabama, 155 U.S. 482, 15 S.Ct. 192, 39 L.Ed. 231; Arkansas v. Kansas & Texas Coal Co., 183 U.S. 185, 22 S.Ct. 47, 46 L.Ed. 144), nor is the controversy one arising under the laws of the United States (Tennessee v. Union & Planters' Bank, 152 U.S. 454, 14 S.Ct. 654, 38 L.Ed. 511; Chicago, R.I. & P. Ry. Co. v. Nebraska (C.C.A.) 251 F. 279). As the statutory remedy, if it be treated as an action at law, would lie only in the state court and is not cognizable by the federal courts, either as an original action or by removal, its existence cannot oust federal equity jurisdiction. Smyth v. Ames, 169 U.S. 466, 516, 18 S.Ct. 418, 42 L.Ed. 819; Chicago, B. & Q.R.R. Co. v. Osborne, 265 U.S. 14, 16, 44 S.Ct. 431, 68 L.Ed. 878; Risty v. Chicago, R.I. & Pac. Ry. Co., 270 U.S. 378, 388, 46 S.Ct. 236, 70 L.Ed. 641; Matthews v. Rodgers, supra, page 526 of 284 U.S., 52 S.Ct. 217.
2. Since the Dauphin county court is empowered, upon appeal from the action of the appraiser, to determine all questions, including both valuation and liability for the tax, the contention is made that its function is at least in part administrative, and a suit for injunction may not be entertained by a federal court prior to the decision of the state court. Prentis v. Atlantic Coast Line, 211 U.S. 210, 29 S.Ct. 67, 53 L.Ed. 150; Porter v. Investors Syndicate, 286 U.S. 461, 52 S.Ct. 617, 76 L.Ed. 1226. The statutes under consideration in those cases delegated legislative power of regulation to an administrative body and vested a revisory power in a court. As has repeatedly been held, the action of the court in such a matter is legislative rather than judicial, so that one who has not pursued the legislative process to a conclusion cannot turn to a court of equity for relief from a regulatory order which is not the final word of the constituted state authority. But other decisions make it clear that, while the action of the appraiser in a case like the present is purely administrative, the function of the court upon appeal is judicial in character, if, when the case is brought into the court, the commonwealth becomes plaintiff and the taxpayer defendant, and the action is tried as an ordinary action, resulting in a judgment which is final and binding on the parties, subject only to appeal to a higher state court, as permitted by the act. This renders the proceeding judicial, and gives it the character of a suit or action at law.
To the same effect see Searl v. School District No. 2, 124 U.S. 197, 8 S.Ct. 460, 31 L.Ed. 415; Mason City R.R. Co. v. Boynton, 204 U.S. 570, 27 S.Ct. 321, 51 L.Ed. 629.
In Smith v. Douglas County, Neb. (C.C.A.) 254 F. 244, it appeared that a Nebraska statute imposed a tax on inheritances for the benefit of the county of the decedent's residence, at a stipulated rate upon the appraised value of the property. The method of levying the tax was that the county judge appointed an appraiser to report the valuation to the judge, who then fixed the value and the amount of tax and gave notice to all interested parties. Any one dissatisfied with the judge's finding might appeal within sixty days to the county court upon filing bond to cover costs and the tax which might be fixed by the court. The statute (Rev. St. Nob. 1913, § 6634) provided that county ourts should have jurisdiction 'to hear and determine all questions in relation to all taxes arising under this article.' It will be noted how closely the procedure resembles that prescribed with respect to the tax in controversy. It was held that the proceeding was ex parte until it reached the county court; but thereafter became a controversy inter partes, and the court's action in determining all questions in relation to the tax was not merely administrative, but judicial.
If the Dauphin county court were by the act of Assembly granted only the right to revise the valuation of the appraiser and precluded from considering any other question, its proceedings would be purely administrative, and the contention that the appellant had failed to pursue to the end its administrative remedy would be sound (Upshur County v. Rich, 135 U.S. 467, 10 S.Ct. 651, 34 L.Ed. 196) at all events where the valuation is a subject of controversy.
The court below relied upon Keokuk & Hamilton Bridge Co. v. Salm, 258 U.S. 122, 42 S.Ct. 207, 66 L.Ed. 496, where a bill to enjoin collection of a state tax was held to lack equity. That case, is, however, distinguished by the fact that before resorting to any court the taxpayer could have appealed to the board of review to correct the assessment of which he complained, and the record failed to show that he had pursued the administrative remedy so afforded him (page 125 of 258 U.S., 42 S.Ct. 207, 208).
The acts of Assembly of Pennsylvania direct the department of revenue to collect and the Attorney General to bring suit for the amount of the tax, if it is not paid within one year of assessment. If, therefore, the appellant should omit to take an appeal to the Dauphin county common pleas court, the assessment would become final and the appellant liable to suit for the amount of the tax. 4 As the commonwealth is the plaintiff in the action, the cause could not be removed for reasons already stated.
We are of opinion that upon the making of the appraisement the administrative procedure is at an end and the appellant can thereafter resort to a federal court of equity to restrain further action by the state officers if in violation of constitutional rights.
3. The question then is whether the bill was prematurely filed. In view of what has been said, the appellant's cause of action in equity will not, strictly speaking, arise until an appraisement is made and certified to the department of revenue and notice of the fact is given appellant. However, in view of the allegations of the bill, we are not inclined to hold the suit premature. The bill charges that the secretary of revenue has refused to issue a waiver of tax, and that the Attorney General has notified the appellant and the state's appraiser the property is subject to the tax, and the appellant's claim for exemption will be denied. The commonwealth's law officers plainly intend to perform what they consider their duty, and will, unless restrained, cause the assessment and imposition of the tax. The action, the legality of which is challenged, thus appears sufficiently imminent and certain to justify the intervention of a court of equity. Compare Pennsylvania v. West Virginia, 262 U.S. 553, 592, 43 S.Ct. 658, 67 L.Ed. 1117, 32 A.L.R. 300. Moreover, no purpose would be served by dismissing the bill, if, as we hold, the moment the proposed assessment is made another suit may be instituted in the federal court.
The decree of the District Court is reversed and the cause remanded, with instructions to reinstate the bill and proceed to a hearing upon the merits.
Act of June 20, 1919, P.L. 521 (72 Purdon's Penna. Stats. § 2301), as amended by Act of June 22, 1931, P.L. 690, § 2 (72 PS Pa. § 2301).
Act of April 9, 1929, P.L. 343, art. 5, § 503; 72 Purdon's Penna. Stats. § 503 (72 PS Pa. § 503).
Act of April 9, 1929, P.L. 343, § 1202; 72 Purdon's Penna. Stats. § 1202 (72 PS Pa. § 1202).
Act of April 9, 1929, P.L. 343, §§ 203(h), 1406; 72 Purdon's Pa. Stats. §§ 203(h), 1406 (72 PS Pa. §§ 203(h), 1406).
Thomas S. GIBSON et al., Appellants, v. L. M. BERRYHILL et al.
WORCESTER COUNTY TRUST CO. v. RILEY, Controller of the State of California, et al.
HENNEFORD et al. v. NORTHERN PAC. RY. CO.
CARTER v. CARTER COAL CO. et al. HELVERING et al. v. CARTER et al. R. C. TWAY COAL CO. et al. v. GLENN. R. C. TWAY COAL CO. et al. v. CLARK.
HILL v. MARTIN, State Tax Commissioner, et al. DORRANCE et al. v. SAME.
CITY BANK FARMERS' TRUST CO. v. SCHNADER, Attorney General of Pennsylvania, et al.
GULLY, State Tax Collector, et al. v. INTERSTATE NATURAL GAS CO.


In many respects, the Supreme Court’s cert grant earlier this week in United States v. Texas was utterly unsurprising. The Fifth Circuit Court of Appeals affirmed a nationwide injunction blocking a Department of Homeland Security policy that would have allowed approximately 4 million parents of U.S. citizens and lawful permanent residents to seek “deferred action” and temporary authorization to work in the United States. The Supreme Court’s own Rule 10 says that in deciding whether to grant cert, the Court considers whether a lower court has ruled on “an important question of federal law that has not been, but should be, settled by this Court.” United States v. Texas meets that standard by any measure.
In one respect, though, the cert-stage proceedings in United States v. Texas pose a puzzle. (And no, I’m not referring the Court’s decision to add a fourth question regarding the Take Care Clause of Article II; as Marty Lederman and others have explained, the Court had reason to add that question even if it has no intention of going Texas’s way on the constitutional issue.) I’m referring instead to the third question: “Whether the Guidance was subject to the APA’s notice-and-comment procedures.” Of course, there is no mystery as to why the Supreme Court granted cert on that question: the notice-and-comment issue is one of two independent bases for the Fifth Circuit’s ruling, so the Supreme Court would need to reach that issue if it wants to overturn the Fifth Circuit’s decision on the merits. The puzzle is why the Obama administration is still litigating this issue despite the fact that DHS could moot the notice-and-comment question if it wanted to.
A bit of background: In November 2014, Homeland Security Secretary Jeh Johnson sent a memo to top DHS officials outlining new policies for exercising prosecutorial discretion. Most significantly, the Johnson memo directs DHS officials to establish a process that will allow parents of U.S. citizens and permanent residents to apply for “deferred action.” The memo states that applications will be evaluated on a “case-by-case basis,” and that deferred action will be limited to parents who—among other criteria—have not been convicted of a felony or significant misdemeanor. DHS’s approval of an application for deferred action means that the Department has decided to forbear from removing the applicant for three years. Successful applicants also may seek work authorization for a three-year period. The program is known as “Deferred Action for Parents of Americans and Lawful Permanent Residents” (DAPA), and DHS planned to begin accepting applications in May 2015.
In December 2014, Texas and 25 other states sued in federal district court seeking to enjoin implementation of DAPA. Texas’s substantive arguments are (1) that DHS lacks statutory authorization for DAPA, and (2) that DAPA violates the Take Care Clause of Article II. Texas’s procedural argument is that DAPA is subject to the Administrative Procedure Act’s notice-and-comment requirements, and that DHS failed to comply with those requirements entirely. In February 2015, a federal district court held that Texas was likely to prevail on its notice-and-comment argument, and the court entered a nationwide preliminary injunction against implementing DAPA. In November, a Fifth Circuit panel voted to 2-1 to affirm the injunction—on the procedural ground that DHS failed to go through notice and comment and on the substantive ground that DHS lacks statutory authority for the DAPA program.
I am not the first to observe that DHS could moot the notice-and-comment question by publishing the Johnson memo in the Federal Register and then finalizing it 30 or more days later. That’s all that the APA’s notice-and-comment provision requires. To be sure, the notice-and-comment process is not costless, but it is also not prohibitively expensive. The White House’s regulations.gov website shows 221 proposed rules published in the last month—ranging from a proposal to end the endangered-species status of the scarlet-chested parakeet to a proposal to clarify the number of charity stamps that the Postal Service can sell at any one time. The costs of notice-and-comment rulemaking are likely higher for higher-profile rules (for one thing, DHS is likely to receive more comments on its deferred action policy than on its ammonium nitrate security regulations). On the other hand, the deferred action policy is a top administration priority, and it seems like it would be well worth DHS’s time to wade through a pile of public comments (most of which are electronic anyway) if going through the notice-and-comment process increases the probability that the deferred action policy will pass judicial muster.
-- (1) The administration may believe that taking the notice-and-comment issue off the table won’t measurably increase its chances of victory. The issues in United States v. Texas fall into three categories: (i) threshold questions of standing and reviewability; (ii) substantive questions as to whether the administration has the statutory and constitutional authority to implement DAPA; and (iii) the procedural question (notice and comment). If the administration wins on a threshold question, then the whole case goes away and DHS can implement DAPA. If the administration loses on the threshold questions, then it must win on both the substantive and procedural questions in order to have the Fifth Circuit’s decision reversed.
The administration may think that pt is so close to 1 that the rest of the terms in the equation don’t matter. That is, the administration might think its arguments on standing and reviewability are airtight, and that the Court won’t even reach the substantive and procedural questions. Or, the administration may think that pp is close to 1: its arguments on notice-and-comment are so strong that if the Court rules for Texas on the threshold issues, all that really matters are the substantive questions. Less likely, the administration might think that ps is close to zero—if it can’t win on standing, it won’t win on the substance—in which case the procedural question also won’t be outcome-determinative. A fourth possibility is that the administration thinks that a five-Justice majority will only rule for Texas on standing if it’s dead-set on striking down DAPA—in which case an ideologically motivated majority will side with Texas on the substance as well. Put differently, the administration may think that pt and ps are closely correlated—in which case the notice-and-comment issue also wouldn’t matter.
-- (2) The administration may think that proceeding with notice-and-comment will reduce its chances of securing Supreme Court review. The administration may want to resolve the DAPA issue ASAP so that it can begin to implement the policy before President Obama’s second term is out. Maybe the worry is that if DHS proceeds with notice-and-comment, the Supreme Court will remand to the Fifth Circuit to determine whether DHS had rendered the procedural issue moot. To be sure, there would still be a live case and controversy on the substantive questions (insofar as there is a “case or controversy” to begin with). But a remand to the Fifth Circuit would delay matters for months, pushing oral argument over to the Supreme Court’s October 2016 Term.
It seems pretty clear, though, that the procedural question would be moot once DHS completed the 30-day notice-and-comment process. The Court resolved an analogous question in the tax context four decades ago, and there is no reason why the Court would need to remand to the Fifth Circuit to figure it out. If there were any lingering doubt on the matter, the Supreme Court could hear arguments on the threshold and substantive questions and then remand to the Fifth Circuit if necessary. (There would be no remand if the Court rules against Texas on standing/reviewability or if the Court rules for Texas on the substance.) Which is to say: If the Supreme Court wants to hear United States v. Texas this spring, DHS’s initiation of notice-and-comment proceedings won’t be an obstacle. And if the Supreme Court wanted to delay consideration until the fall, it could have relisted the case for a few more weeks before granting cert.
-- (3) The administration may think that going through with notice and comment on DAPA would establish a bad precedent. Notice and comment is not required under § 553 for “general statements of policy.” The administration maintains that the Johnson memo qualifies as such a statement. Note, though, that executive agencies routinely publish planned actions in the Federal Register and solicit comments from the public even while maintaining that the APA’s notice-and-comment requirement does not apply. (For a few recent examples, see here, here, and here.) DHS could easily take that route in this case, going through with notice-and-comment while sticking to its view that notice-and-comment is unnecessary.
-- (4) The administration may think that Supreme Court review on the notice-and-comment question will establish a favorable precedent. That is, maybe the administration actually wants the Supreme Court to weigh in on the notice-and-comment question. In recent years, the Fifth and D.C. Circuits have whittled down the notice-and-comment exemption for “general statements of policy.” Those courts say that a guidance document only falls within the exemption if it “genuinely leaves the agency and its decisionmakers free to exercise discretion.” Even when the language of the guidance appears to allow discretion, the Fifth and D.C. Circuits will look to the agency’s post-guidance conduct to decide whether the guidance is binding “as a practical matter.” Put differently, the Fifth and D.C. Circuits decide whether notice and comment was required at time t by looking at the way the agency acted at time t + 1. The Fifth Circuit decision in this case extends that approach even further. The Fifth Circuit held that the Johnson memo was a rule subject to the notice-and-comment requirement rather than a “general statement of policy” because there is “a substantial likelihood that DAPA would not genuinely leave the agency and its employees free to exercise discretion.” In other words, the Fifth Circuit held that notice and comment was required at time t based on the court’s prediction as to how DHS would act at time t + 1.
The Fifth Circuit’s approach has no basis in statutory text or in Supreme Court case law. Just last Term, in Perez v. Mortgage Bankers Association, the Supreme Court reversed the D.C. Circuit for conjuring up a “judge-made procedural right” to notice and comment that had no root in the APA. The administration may be looking for a similar ruling here. But if so, United States v. Texas would seem like a strange vehicle. One would think that the administration would choose to challenge the Fifth and D.C. Circuit’s approach in a case with low ideological valence—like Mortgage Bankers, in which the underlying dispute was about overtime pay for loan officers. And if one were trying to choose a case with low ideological valence, United States v. Texas would be just about the last pick.
-- (5) A final possibility—perhaps not the most likely, but probably the most interesting—is that the administration’s litigation strategy is informed by insights from behavioral economics. (President Obama issued an executive order in September 2015 calling on agencies to incorporate behavioral science insights into their programs and policies; maybe DHS and the Solicitor General are taking a cue from the White House.) One of the more robust results in the behavioral economics literature is the “compromise effect.” As stated by Itamar Simonson, the “compromise effect” is the finding that “an alternative’s choice probability tends to increase when it becomes a compromise choice in the set.” In one well-known study, Simonson and co-author Amos Tversky offered consumers a $170 camera and a $240 camera; 50% of subjects chose the $170 camera and 50% chose the $240 option. But when Simonson and Tversky added a third, more expensive alternative (a $470 camera), the share that chose the $240 camera jumped from 50% to 57%, and the share that chose the cheaper camera fell from 50% to 22%. (The remaining 21% opted for the high-end option.) That is, the $240 camera became more attractive when it was presented as the middle of three options, and the $170 camera became less popular when it was the cheapest of the three.
Retail stores make use of the compromise effect all the time: Starbucks knows that offering a “venti” size in addition to a “tall” and a “grande” makes the “grande” look more attractive because it appears to be a compromise. Mark Kelman and coauthors have also documented a “compromise effect” in legal decisionmaking. Experimental subjects role-playing as jurors gravitate toward whichever punishment is framed as the middle option rather than one of two extremes.
What does any of this have to do with United States v. Texas? If the Supreme Court reaches the merits questions in the case, then it (1) could reverse the Fifth Circuit on the substantive and procedural questions; (2) could reverse the Fifth Circuit on the substance but affirm on the procedural question; or (3) could affirm the Fifth Circuit on both the substantive and procedural questions. (There technically is a fourth option—affirm on substance and reverse on procedure—though if DAPA fails on substantive grounds, it is difficult to see why the Court would bother reaching the notice-and-comment issue.) So framed, Option 2 is the moderate option bookended by two extremes. The behavioral economics literature on the compromise effect suggests that this framing makes it more likely that the Court will choose Option 2. By mooting the notice-and-comment issue, however, DHS would leave only Option 1 and Option 3 on the table if the Court reaches the merits.
Of course, the administration would prefer that the Court choose Option 1. (Actually, it would prefer that the Court reverse on standing/reviewability and thus never reach the merits.) But most of all, the administration wants the Court not to choose Option 3. Option 3 means the death of DAPA. Option 2 means that the administration can implement DAPA after it goes through a 30-day notice-and-comment process. At least in relative terms, Option 2 would be a resounding victory for the administration. And if the compromise effect holds here, keeping Option 2 in the mix makes Option 3 less probable.
Take this last hypothesis with several grains of salt. It’s worse than predicting what’s going on in the mind of Anthony Kennedy; it’s predicting what’s going on in the minds of Donald Verrilli and Jeh Johnson as they predict what’s going on in the mind of Anthony Kennedy. The bottom line, though, is that while the administration’s strategy on the notice-and-comment issue initially seemed befuddling, it might turn out in the end to be brilliant.
The Supreme Court will soon decide whether public-sector employers can maintain “agency shops” in the roughly two dozen states that now allow these arrangements. In an “agency shop,” an employee who chooses not to join her local union must nevertheless pay the union an “agency fee” to cover her pro rata share of its collective bargaining expenses. Agency shop supporters justify these arrangements as a means of preventing non-union members from free-riding off the union’s bargaining efforts. Opponents—including the plaintiffs in Friedrichs—say that agency shop arrangements violate the First Amendment rights of non-union members who are forced to pay a fee to an organization whose views they reject.
In the 1977 case Abood v. Detroit Board of Education, the Supreme Court held that agency shop arrangements in public-sector workplaces do not violate the First Amendment as long as nonmembers’ fees are applied toward collective bargaining costs rather than unrelated “ideological activities.” More recent decisions have suggested that Abood may be ripe for reconsideration, and the question presented in Friedrichs explicitly asks whether Abood should be overruled. We take no position on that constitutional question. We do think, however, that the practical implications of overruling Abood could be more muted than either side recognizes. Even if Abood is overruled, public-sector employers in sympathetic states still will be able to ensure that unions are reimbursed for their collective bargaining costs (including the cost of representing nonmembers). They just might have to take a different (and more straightforward) approach than the agency shop.
In a new essay in the University of Chicago Law Review Dialogue, we explain in detail how this alternative arrangement might work, but here’s a quick synopsis: Let’s say a union in California represents a school district’s 100 teachers and has collective bargaining costs of $100,000 per year. To make things simple, let’s also assume that all teachers in the district earn $50,000 annually. Under the existing agency shop arrangement, every teacher must pay $1,000 to the union to cover her share of the union’s collective bargaining costs. (Union teachers also pay additional dues to cover expenses unrelated to collective bargaining.) So in our example, although teachers nominally earn $50,000, their effective pay is really $49,000, because each pays a minimum—and mandatory—$1,000 agency fee. A more straightforward way to accomplish the same result would be to adopt what we call the “direct payment alternative,” whereby the district would reimburse the union directly for its bargaining costs. To offset these costs, the district might then want to reduce each teacher’s salary from $50,000 to $49,000. The teachers, however, would be no worse off: They would no longer have to pay $1,000 in agency fees or union dues, so their net wage (before taxes) would be the same as in the agency shop arrangement.
Even if five justices vote to overrule Abood, it seems unlikely that the Court’s decision would prevent public-sector employers from adopting the direct payment alternative. Money may be considered speech under current First Amendment doctrine, but expenditures of government money count as “government speech.” And the Supreme Court’s “government speech” precedents, such as Rust v. Sullivan, establish that the government has wide latitude to make policy judgments when it chooses what speech to fund. Indeed, the direct payment alternative may actually be preferable for unions, even if the court declines to discard Abood. Under the court’s post-Abood decision in Lehnert v. Ferris Faculty Association, unions are subject to a number of constitutional limitations on how they may collect and spend agency fees. Those limitations would be unlikely to apply under a direct payment method, given the breadth of permissible government speech.
An added benefit of the direct payment alternative—at least from the perspective of public-sector employees—is that it would also result in most of them paying less in federal taxes. In the agency shop example above, each teacher’s adjusted gross income for federal tax purposes would be $50,000, and her wages for Social Security and Medicare tax purposes would be $50,000 as well. While union dues and agency fees are deductible for federal income tax purposes, many employees cannot take advantage of this benefit—either because they don’t itemize deductions on their returns or because they fall below the 2% floor on miscellaneous itemized deductions. Under the direct payment alternative, the school district’s reimbursements to the union would be excluded from employees’ income, and so teachers in our hypothetical school district would be taxed on $49,000 instead of $50,000. Even employees who itemize on their returns and whose miscellaneous deductions exceed the 2% floor would be better off under the direct payment alternative—both because the reduction in gross income would lower the 2% floor and because of the payroll tax savings.
Why, then, haven’t public-sector unions prodded employers to switch to the direct payment alternative already? The straightforward answer is that in roughly a dozen states with agency shops—including the Friedrichs plaintiffs’ state of California—direct payments from public-sector employers to labor unions are prohibited by state law. But states can change their laws, so this doesn’t explain why states maintain agency shop arrangements notwithstanding the availability of the direct payment alternative. Nor does it explain why states chose agency shop arrangements instead of the direct payment alternative in the first place.
One possible reason is that even though public-sector employees would be better off post-tax under the direct payment alternative, employees don’t realize that fact. The required payment to the union may be an example of what behavioral economists call a “low-salience” fee. In other words, an annual salary of $50,000 with a required agency fee of $1,000 might appear more lucrative than a $49,000 salary and no fee. This may be so even though under the direct payment alternative, a public-sector employee actually pays less in federal taxes and takes home more of her salary as a result. So public-sector employers may favor agency shop arrangements in order to inflate the sticker salary that they can offer potential employees—even though after-tax pay is lower under the agency shop than the direct payment setup.
A second—and perhaps more likely—reason is political: A direct payment alternative might initially be met with hostility from taxpayers and lawmakers alike. Voters and legislators might object to the appearance of states and municipalities subsidizing public-sector unions. But appearances can be deceiving—and revealing: state and local governments in agency shop states already subsidize public-sector unions when they require employees to pay agency fees. The direct payment alternative simply makes this subsidy more transparent.
Does the possibility of the direct payment alternative mean states could neutralize the effects of a decision to overrule Abood? In at least eight states with agency shops, we believe direct payments from public-sector employers to unions are arguably already legal. In those states, public-sector employers could minimize any potential fallout of Friedrichs without any change to state law—and they might want to do so regardless of the outcome for the reasons noted above.
In about a dozen more states with agency shop arrangements, direct payments from public-sector employers to unions are prohibited by law, and those laws would need to change. This might not be so difficult in some instances, since agency shops arrangement exist only in states that already look favorably on public-sector unions. As a result, political support for public-sector unions in those states may be so strong that a decision to overrule Abood would have limited practical effect: those same states that presently enable agency shop arrangements may just change their laws to allow direct payments instead.
To be sure, support for public-sector unions is not equally strong in all agency shop states. In California, for example, the state Senate, Assembly, and Governor’s mansion are all controlled by Democrats, and public-sector unions presumably would find powerful allies willing to support a direct payment alternative in the event Abood is overruled. Thus even if the Friedrichs plaintiffs win before the Supreme Court, California could very well implement the direct payment alternative instead, continuing to prevent the free-rider problem among non-union public employees. In other agency shop states, however, divided government might make Friedrichs’ holding more consequential. In Illinois, for example, it appears unlikely that Governor Bruce Rauner—who has clashed with public-sector unions throughout his tenure—would sign off on direct payments.
Does the availability of the direct payment alternative mean that the fight over agency shops is “much Abood about nothing”? We don’t think so: the outcome in Friedrichs really will determine whether public-sector unions in some states (e.g., Illinois) are reimbursed for the cost of representing nonmembers in collective bargaining. Moreover, the direct payment alternative and the agency shop differ meaningfully—in the way they are taxed and in the way they are perceived. We do think, though, that whichever way Friedrichs goes, states will still have the option of adopting arrangements that address the free-rider concern that motivated the agency shop to begin with. Not every state will adopt our direct payment alternative, but the chief obstacle will be political—not constitutional.