Cummings v. Connell, 402 F.3d 936 (9th Cir. 03/29/2005)

[1] UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

[2] Nos. 03-17095, 04-15154, 04-15186

[3] 402 F.3d 936

[4] March 29, 2005; See amended opinion filed May 17, 2005

[5] CHRISTINE A. CUMMINGS; JANET TAYLOR DARVAS; RICHARD K. DEHART; CHRISTOPHER GARBANI; PATRICIA A. MCCUMSEY; DANIEL NOWALIS; CLAUDIA STEWART, PLAINTIFFS-APPELLANTS, AND MONA YASSA, PLAINTIFF,
v.
KATHLEEN CONNELL, CONTROLLER, STATE OF CALIFORNIA; MARTY MORGENSTERN, DIRECTOR CALIFORNIA DEPARTMENT OF PERSONNEL ADMINISTRATION; CALIFORNIA STATE EMPLOYEES ASSOCIATION, LOCAL 1000; LOCAL 1000 SERVICE EMPLOYEES INTERNATIONAL UNION, AFL-CIO-CLC, DEFENDANTS-APPELLEES.
CHRISTINE A. CUMMINGS; JANET TAYLOR DARVAS; RICHARD K. DEHART; CHRISTOPHER GARBANI; PATRICIA A. MCCUMSEY; DANIEL NOWALIS; CLAUDIA STEWART; MONA YASSA, PLAINTIFFS-APPELLEES,
v.
KATHLEEN CONNELL, CONTROLLER, STATE OF CALIFORNIA; MARTY MORGENSTERN, DIRECTOR CALIFORNIA DEPARTMENT OF PERSONNEL ADMINISTRATION, DEFENDANTS, AND CALIFORNIA STATE EMPLOYEES ASSOCIATION, LOCAL 1000; LOCAL 1000 SERVICE EMPLOYEES INTERNATIONAL UNION, AFL-CIO CLC, DEFENDANTS-APPELLANTS.
CHRISTINE A. CUMMINGS; JANET TAYLOR DARVAS; RICHARD K. DEHART; CHRISTOPHER GARBANI; PATRICIA A. MCCUMSEY; DANIEL NOWALIS; CLAUDIA STEWART, PLAINTIFFS-APPELLANTS, AND MONA YASSA, PLAINTIFF,
v.
KATHLEEN CONNELL, CONTROLLER, STATE OF CALIFORNIA; MARTY MORGENSTERN, DIRECTOR CALIFORNIA DEPARTMENT OF PERSONNEL ADMINISTRATION; CALIFORNIA STATE EMPLOYEES ASSOCIATION, LOCAL 1000; LOCAL 1000 SERVICE EMPLOYEES INTERNATIONAL UNION, AFL-CIO-CLC, DEFENDANTS-APPELLEES.

[6] Appeal from the United States District Court for the Eastern District of California William B. Shubb, Chief Judge, Presiding D.C. No. CV-99-02176-WBS

[7] Counsel

[8] Jeffrey B. Demain and Eileen B. Goldsmith, Altshuler, Berzon, Nussbaum, Rubin & Demain, San Francisco, California, for the defendant-appellee/appellant/cross-appellee.

[9] W. James Young, National Right to Work Legal Defense Foundation, Inc., Springfield, Virginia, for the plaintiffs-appellants/appellees/cross-appellants.

[10] The opinion of the court was delivered by: Silverman, Circuit Judge

[11] FOR PUBLICATION

[12] Argued and Submitted February 14, 2005-San Francisco, California

[13] Before: Arthur L. Alarcón, Eugene E. Siler, Jr.,*fn1 and Barry G. Silverman, Circuit Judges.

[14] OPINION

[15] We hold today that when nominal damages are awarded in a civil rights class action, every member of the class whose constitutional rights were violated is entitled to nominal damages. An award of nominal damages to only the named class representatives fails to appreciate the difference between a class action and a conventional lawsuit.

[16] We also hold that, pursuant to Ninth Circuit Rule 39-1.6, a request for attorney's fees incurred on appeal must be made to us, not to the district court. The district court is not authorized to award attorney's fees for an appeal unless we transfer the fee request to the district court for consideration.

[17] I. Facts

[18] This is the second time this case has been on appeal. A detailed description of the facts underlying this case is set out in Cummings v. Connell, 316 F.3d 886 (9th Cir. 2003) ("Cummings I"). We briefly summarize them here. Defendant California State Employees Association, Local 1000, Service Employees International Union, AFL-CIO-CLC is the exclusive representative for nine bargaining units of California state employees. The seven named plaintiffs are nonunion employees of the State of California. Although the plaintiffs have no affiliation with the Union, the state deducts agency "fair share" fees from their paychecks to cover their share of the collective bargaining process between the state and the Union.*fn2 Plaintiffs brought a class action pursuant to 42 U.S.C. § 1983 on behalf of 37,000 nonunion members alleging that the Union was improperly withholding the agency fees without providing the procedural safeguards mandated by the Supreme Court in Chicago Teachers Union v. Hudson, 475 U.S. 292 (1986).*fn3 The district court certified the class*fn4 and ultimately determined that the notices were indeed deficient under Hudson. The court ordered the Union to refund the non-chargeable portion of the fee to all fee payers, including those who did not object to any of the notices. This restitution award came to approximately $3 million dollars. The court also awarded plaintiffs' attorneys' fees and costs of nearly $100,000.

[19] In Cummings I, we affirmed the district court's certification of the class. We also affirmed the court's ruling that the Union's first Hudson notice was defective for failing to include verifications of the withholding calculations. However, we reversed as over-broad the award of restitution of the nonchargeable portion of the fee to all class members, including to those who did not object to any of the notices. We said:

[20] We agree with the Union, however, that the district court went too far in ordering partial restitution to all class members. Ordinarily, if there is a proper Hudson notice, the employee has the burden to object to paying the full nonmember fee, and only then is entitled to a refund of the nonchargeable portion of the fee.

[21] In this case, the nonmembers all eventually received notices with sufficient information under Hudson, and a renewed opportunity to object and receive their money back with interest. We fail to see how plaintiffs suffered any compensable harm (aside from nominal damages) from the initial defective notice.

[22] On remand, the district court should reconsider the issue of attorneys' fees and costs to determine whether further reduction is appropriate in light of our decision regarding the proper remedy for the Hudson violation.

[23] 316 F.3d at 894, 895, 898 (citations omitted).

[24] On remand, the district court made two rulings that are now before us on appeal. The first one concerned the award of nominal damages. The court ruled that in light of our opinion in Cummings I "the issue of whether plaintiffs suffered an injury entitling them to nominal damages is not a matter of dispute." 281 F. Supp. 2d at 1191. What remained to be resolved was which plaintiffs should receive those damages - each of the 37,000 class members or just the seven class representatives? -and also the amount of nominal damages to be awarded - $1.00 per person or $17.00 per person? In the end, the district court ruled that only the seven named class representatives were each entitled to the one dollar nominal damages award, not each class member. The court additionally declined to grant a separate nominal damage award for each of the seventeen alleged acts of the same constitutional violation. The total damage award against the Union was $7.00. Plaintiffs appeal both the failure to award nominal damages to each class member, and the amount awarded per person.

[25] The second one concerned attorney's fees. Following the entry of the amended judgment, plaintiffs renewed their request for attorneys' fees and costs, seeking roughly $194,237. After taking into consideration plaintiffs' limited success on appeal and deducting all fees associated with the unsuccessful chargeability cause of action, the court awarded a total of $94,369.42. This figure represented approximately $65,052 for attorneys' fees and costs incurred in the district court for the pre- and post-appeal phases of the case. Of particular significance, it also included approximately $29,318 for fees and expenses incurred on appeal. The parties cross-appeal the fees and costs order.

[26] II. Discussion

[27] A. Nominal Damages Award

[28] (1) Award of Nominal Damages to Class Representatives v. All Class Members

[29] The district court declined to award each class member $1.00 because the total award against the Union would be $37,000, which the court found to be substantial.*fn5 As already mentioned, the court awarded a total of $7.00, $1.00 to each of the class representatives. Plaintiffs contend that each member of the plaintiff class had been subjected to a constitutional violation, and thus each member should receive nominal damages; to do otherwise, fails to vindicate the rights of the other class members and disregards the purpose of class action litigation. The Union counters that where, as here, the plaintiff class is large, awarding even a $1.00 to each class member offends the purpose underlying nominal damages.

[30] [1] Under § 1983, damages for violations of constitutional rights are determined according to principles derived from the common law of torts. See, e.g., Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 305-06 (1986); Carey v. Piphus, 435 U.S. 247, 253 (1978). Damages are commonly understood to compensate a party for loss or harm sustained. Nominal damages, however, serve a separate function. As distinguished from punitive and compensatory damages, nominal damages are awarded to vindicate rights, the infringement of which has not caused actual, provable injury.

[31] Common-law courts traditionally have vindicated deprivations of certain "absolute" rights that are not shown to have caused actual injury through the award of a nominal sum of money. By making the deprivation of such rights actionable for nominal damages without proof of actual injury, the law recognizes the importance to organized society that those rights be scrupulously observed; but at the same time, it remains true to the principle that substantial damages should be awarded only to compensate actual injury or, in the case of exemplary or punitive damages, to deter or punish malicious deprivations of right.

[32] Carey, 435 U.S. at 266. Nominal damages, as the term implies, are in name only and customarily are defined as a mere token or "trifling." See, e.g., id. at 267; Magnett v. Pelle-tier, 488 F.2d 33, 35 (1st Cir. 1973) (per curiam). Although the amount of damages awarded is not limited to one dollar, the nature of the award compels that the amount be minimal. See Romano v. U-Haul Intern., 233 F.3d 655, 671 (1st Cir. 2000). Nominal damages serve one other function, to clarify the identity of the prevailing party for the purposes of awarding attorney's fees and costs in appropriate cases. Cf. Farrar v. Hobby, 506 U.S. 103, 111-12 (1992) (stating that "a plaintiff who wins nominal damages is a prevailing party under § 1988").

[33] Cummings I established that only nominal damages should have been awarded. However, on remand, the question remained "nominal damages awarded to whom?" Each class member? Or just the seven named class representatives?

[34] In Harrington v. City of Albuquerque, 329 F. Supp. 2d 1237 (D. N.M. 2004), the district court awarded nominal damages after finding that the union failed to provide constitutionally sufficient Hudson notices. Id. at 1240. The plaintiffs sought "partial summary judgment awarding nominal damages for each named plaintiff and each class member." Id. at 1241. The union conceded that the named plaintiffs were entitled to nominal damages, but, "having opposed Plaintiffs' motion for class certification, oppose[d] awarding damages to each class member." Id. The court rejected the union's argument because it had already determined that the class was properly certified. No other objection being discussed, the court awarded the "entire class of Plaintiffs . . . nominal damages in the amount of one dollar per person." Id. The class comprised approximately 300 members, Harrington v. City of Albuquerque, 222 F.R.D. 505, 509 (D. N.M. 2004).

[35] In Hohe v. Casey, 956 F.2d 399, 415-16 (3d Cir. 1992), yet another Hudson notice violation case, the Third Circuit affirmed "the district court's award of $1.00 nominal damage to each nonmember," because it had been established that constitutionally inadequate procedures were used in imposing the fair share fee. The plaintiff class was comprised of roughly 18,000 members, id. at 402, making the total nominal damage award approximately $18,000.

[36] On the other hand, there are cases where the court granted the damages award to "the class," as opposed to each class member, as if "the class" existed as a distinct entity like a corporation or partnership. In Norwood v. Bain, 166 F.3d 243, 245 (4th Cir. 1999) (per curiam / en banc), the Fourth Circuit sitting en banc remanded a § 1983 class action to the district court with instructions to enter judgment "that includes an award of nominal damages to the plaintiff class against [defendants] not exceeding $1.00." The court in Alexander v. Polk, 572 F. Supp. 605, 623 (E.D. Pa. 1983), followed suit awarding $1.00 in nominal damages to the entire plaintiff class in a § 1983 case. The court additionally awarded $1.00 in nominal damages individually to a plaintiff who was not a member of the class. Id. The Third Circuit affirmed the nominal damage award to the individual non-class member and remanded the class award to the district court for consideration of whether compensatory damages, in lieu of nominal damages, were appropriate. Alexander v. Polk, 750 F.2d 250, 265 (3d Cir. 1984). See also Davenport v. DeRobertis, 653 F. Supp. 649 (N.D. Ill. 1987) (approving jury's award of $1.00 in nominal damages to each of the named plaintiffs in prisoner class action suit).

[37] Finally, adding to the mix, is the apparently atypical position taken by the court in Callahan v. Sanders, 339 F. Supp. 814 (M.D. Ala. 1971), denying any award of nominal damages because of the enormous size of the plaintiff class. Plaintiffs filed a § 1983 suit against the Alabama justices of the peace alleging imposition of fines in violation of due process and the Alabama highway laws. The court determined that the defendants' conduct resulted in constitutional deprivations, but found that plaintiffs failed to sustain actual injury. The court, after recognizing the availability of nominal damages, refrained from awarding any damages because the class was large. The Fifth Circuit affirmed. Callahan v. Wallace, 466 F.2d 59, 62 (5th Cir. 1972).

[38] [2] We agree with the approach taken by the courts that have recognized that each class member whose constitutional rights were violated is entitled to nominal damages. Once a class has been certified, there is no justification for awarding nominal damages to only the named class representatives. Class action litigation is a procedural mechanism designed to join multiple parties with similar or identical claims, so that they may seek redress in an efficient and expeditious manner. Eyak Native Village v. Exxon Corp., 25 F.3d 773, 781 (9th Cir. 1994).

[39] One of the goals of class action litigation is to save the resources of both the courts and the parties "by permitting an issue potentially affecting every [class member] to be litigated in an economical fashion under Rule 23." Califano v. Yamasaki, 442 U.S. 682, 701 (1979). This is accomplished in part by allowing the class to proceed on a representative basis; a class representative functions as a stand-in for the entire class and assumes duties on behalf of the class. See Gen. Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 155 (1982) (acknowledging that class actions present the exception to the rule that litigation is to be conducted by and on behalf of the individually named parties). Nevertheless, while class representatives stand in the stead of their fellow class members, Rule 23 recognizes that the absent class members' rights must be scrupulously observed. Fed. R. Civ. P. 23 (requiring that the class representative fairly and adequately represent the interests of the absent class members).

[40] [3] Where a plaintiff proves a violation of constitutional rights, nominal damages must be awarded as a matter of law. Schneider v. County of San Diego, 285 F.3d 784, 794 (9th Cir. 2002). Every member of the plaintiff class was entitled to the Hudson procedural safeguards; every member of the class received the same inadequate Hudson notice sent by the Union; every member of the class suffered the same deprivation of rights. And it follows that every member is entitled to nominal damages, just as if each one had brought his or her own lawsuit. It is axiomatic that Rule 23 cannot "abridge, enlarge or modify any substantive right" of any party to the litigation. 28 U.S.C. § 2072. Consequently, the mere fact that a case is proceeding as a class action does not allow the district court to vindicate the rights of the individually named plaintiffs differently as compared to the absent class plaintiffs.