[No. 28375-1-II. Division Two. December 12, 2008.]
Judith A. Lonnquist (of Law Offices of Judith A. Lonnquist, PS), and Harriet K. Strasberg, for petitioner.
Steven T. O'Ban and Chad Allred (of Ellis Li & McKinstry, PLLC), for respondents.
Edward E. Younglove III and Joaquin M. Hernandez on behalf of Washington Federation of State Employees, amicus curiae.
James D. Oswald on behalf of Washington State Labor Council, amicus curiae.
Authored by J Dean Morgan.
Concurring: J. Robin Hunt.
Dissenting: C. C. Bridgewater.
¶1 MORGAN, J. ¶2 Since 1975, the Educational Employment Relations Act (EERA) If an agency shop provision is agreed to and becomes effective pursuant to RCW 41.59.100, . . . the agency fee equal to the fees and dues required of membership in the exclusive bargaining representative shall be deducted from the salary of employees in the bargaining unit. And RCW 41.59.100 reiterates, subject to an exception not pertinent here: If an agency shop provision is agreed to [in the CBA], the employer shall enforce it by deducting from the salary payments to members of the bargaining unit the dues required of membership in the bargaining representative, or, for nonmembers thereof, a fee equivalent to such dues. ¶3 From 1975 until December 1992, Washington law did not restrict the manner in which a union could later spend agency shop fees after receiving them. Effective December 3, 1992, however, Washington voters enacted Initiative 134 (I-134). In Section 16 of I-134, the voters stated: A labor organization may not use agency shop fees paid by an individual who is not a member of the organization to make contributions or expenditures to influence an election or to operate a political committee, unless affirmatively authorized by the individual. The voters also directed in Section 33 of I-134 that Section 16 be codified in chapter 42.17 RCW, and the code reviser designated Section 16 as former RCW 42.17.760. For convenience, we refer interchangeably to Section 16 as "Section 16" or "former RCW 42.17.760." ¶4 In August 2000, the Evergreen Freedom Foundation (EFF) complained to the Washington State Public Disclosure Commission (PDC) that WEA had used agency shop fees for political purposes without affirmative authorization from its fee-paying nonmembers. On September 25, 2000, WEA stipulated in writing, at a hearing before the PDC, that it had received and deposited agency shop fees into its general fund, that it had expended money from that fund for political purposes without its nonmembers' authorization, and that it had "committed multiple violations of former RCW 42.17.760." ¶5 In October 2000, following a referral of EFF's complaint to the Washington State Attorney General (AG), the AG filed an action (hereafter the AG's case) related to but different from the one that we are now reviewing. The AG alleged that the public was entitled to relief in the nature of fines and penalties, but not that individual nonmembers should recover money that WEA might have spent for political purposes without their affirmative authorization. As the AG stated in a contemporaneous press release, "The lawsuit is aimed at enforcing the law on behalf of the citizens of Washington and is not intended to recover fees paid by individuals to the WEA." ¶6 In the summer or fall of 2001, the trial court held a bench trial in the AG's case. Finding that WEA had received an agency shop fee from each of about 4,000 nonmembers, and applying RCW 42.17.400(1) and .390(3), the trial court multiplied the estimated number of nonmembers by $ 25 and assessed a penalty in favor of the State. ¶7 Meanwhile, on March 19, 2001, Gary Davenport and four other nonmembers of WEA (hereafter the Davenport plaintiffs) commenced the action that we are now reviewing (hereafter the Davenport case). The Davenport plaintiffs alleged in their complaint, as later amended, that WEA was a labor organization to which they had "paid mandatory agency fees in amounts equivalent to union dues," that WEA had "used their fees to influence elections and to support political committees," and that they had not authorized this use. ¶8 In the summer of 2001, WEA moved to dismiss the Davenport case under CR 12, and the Davenport plaintiffs moved for an order certifying a class. In January 2002, the trial court denied WEA's motion to dismiss because, in its view, the Davenport plaintiffs had adequately alleged a private statutory cause of action based on former RCW 42.17.760 and a common law cause of action for conversion. Ruling that the statutory cause was subject to the five-year statute of limitations set forth in RCW 42.17.410, and recognizing that the plaintiffs had filed their complaint on March 19, 2001, the trial court also granted the plaintiffs' motion to certify a "class of all public school employees who, between March 19, 1996 and August 31, 2001 (inclusive), were nonmembers paying agency shop fees to Defendant WEA." ¶9 WEA appealed the AG's case as a matter of right and sought discretionary review in the Davenport case. We granted discretionary review in the Davenport case, with the result that both cases came before us at the same time. The main issue raised in both cases was whether former RCW 42.17.760 was unconstitutional, and hence unenforceable, because it violated the First Amendment. A majority of the panel answered "yes," ¶10 The AG in her case and the Davenport plaintiffs in theirs asked the Washington Supreme Court to review our decision. After granting review, a majority of the court ¶11 The AG in her case and the Davenport plaintiffs in theirs asked the United States Supreme Court to review the Washington Supreme Court's decision. After granting review, the high Court held that former RCW 42.17.760 did not violate the First Amendment, vacated both judgments, and remanded both cases to the Washington Supreme Court. ¶12 When the Washington Supreme Court received the two cases back on remand, it decided to retain jurisdiction over the AG's case but to transfer the Davenport case to us for further proceedings. We heard additional oral argument and invoked RAP 12.1(b) as the basis for requesting supplemental briefs on whether the Davenport plaintiffs had stated a common law cause of action for restitution. [1-4] ¶13 Having now received and reviewed the parties' supplemental briefs, we are met at the outset by WEA's reminder that the trial court has not yet made any findings of fact. ¶14 With this understanding of our task on appeal, we turn now to three questions in the Davenport case: First, did the trial court properly deny WEA's motion for judgment on the pleadings? Second, did the trial court properly rule that the applicable statute of limitations was five years? Third, did the trial court properly certify a class? Throughout this opinion, we assume, in compliance with the United States Supreme Court's ruling, that former RCW 42.17.760 does not violate the United States Constitution. I ¶15 The main issue is whether the trial court properly denied WEA's CR 12 motion for judgment on the pleadings. WEA claimed that the plaintiffs had failed to plead a cause of action recognized by Washington law. The plaintiffs responded that they had successfully pleaded a statutory cause of action based on Section 16 of I-134, as well as a common law cause of action for conversion. Coupling this history with our request for supplemental briefs, we now must decide whether the plaintiffs have stated (a) a private statutory cause of action under Section 16, (b) a common law cause of action for conversion, and/or (c) a common law cause of action for restitution. A [5] ¶16 Whether the plaintiffs have stated a statutory cause of action subdivides into two questions: (1) Does former RCW 42.17.760 expressly or impliedly create a private (as opposed to a public) statutory cause of action for damages and (2) if so, have the plaintiffs properly pleaded such an action here? We review the first question de novo (i.e., without deference to the trial court's reasoning or result), because it involves an issue of law. [6-10] ¶17 We begin our analysis of the first question by examining the rules of statutory construction. Those rules govern initiatives as well as statutes, [11-14] ¶18 Applying these rules here, we first inquire whether the voters who enacted I-134 had an express intent that Section 16 be the basis for a private statutory cause of action. Section 16 clearly expresses the rule that a labor organization cannot spend a nonmember's agency shop fee for political purposes without the nonmember's affirmative authorization, but it says nothing about whether the nonmember has (or lacks) a cause of action to recover money spent in violation of its provisions. Accordingly, the voters who enacted Section 16 did not expressly exhibit intent that Section 16 be the basis for a private statutory cause of action. ¶19 We next ask whether the voters who enacted Section 16 had an implied intent that Section 16 be the basis for a private statutory cause of action. Believing that the 1992 voters implied the absence, not the presence, of such intent, we answer no. ¶20 When the 1992 voters enacted Section 16, they omitted to state whether they intended Section 16 to be the basis for a private statutory cause of action (i.e., a statutory cause of action that permits a nonmember to recover, in his own name and for his own account, an agency shop fee spent in violation of Section 16). Section 16 itself, its legislative history, ¶21 We buttress this implication by contrasting the 1992 voters' expression of a public statutory cause of action with their omission of a private one. Since 1972, chapter 42.17 RCW has expressed a public statutory cause of action under which either the AG or the prosecuting attorney (or, if they both decline to act, a private citizen) can bring a civil action "in the name of the state for any appropriate civil remedy" ¶22 We further buttress the 1992 voters' absence of intent by noting our own decision in Crisman v. Pierce County Fire Protection District No. 21. ¶23 Lastly, we buttress the 1992 voters' absence of intent by noting that for many years before 1992, the Washington courts had recognized a common law cause of action for restitution that the 1992 voters would have duplicated by creating a private statutory cause of action. "When a legislative provision protects a class of persons by proscribing or requiring certain conduct but does not provide a civil remedy for the violation, the court may, if it determines that the remedy is appropriate in furtherance of the purpose of the legislation and needed to assure the effectiveness of the provision, accord to an injured member of the class a right of action, using a suitable existing tort action or a new cause of action analogous to an existing tort action." Bennett, 113 Wn.2d at 920 (emphasis added).» ¶24 We reject for several reasons the plaintiffs' reliance on Nelson v. McClatchy Newspapers, Inc., ¶25 In sum, when the 1992 voters enacted Section 16, they neither expressly nor impliedly manifested an intent that Section 16 serve as the basis for a new private statutory cause of action. Necessarily then, we hold that Section 16 does not furnish such a basis. B [15-19] ¶26 The next issue here is whether the plaintiffs have a common law cause of action for the tort of conversion. Rooted in the common law action of trover, ¶27 Taking the plaintiffs' allegations in the light most favorable to them, we begin by observing that WEA might have converted the Davenport plaintiffs' money at either or both of two different times. The earlier time was when WEA received the money from each plaintiff's employer. The later time was when WEA used the money for political purposes. ¶28 To determine whether WEA committed the tort of conversion when it initially received money from each plaintiff's employer, we must ascertain whether WEA initially received the money "wrongfully" or "with lawful justification." When the legislature enacted RCW 41.59.100 and .060(2), it authorized each nonmember's employer to deduct from the plaintiff's salary, and pay to WEA (or other labor organization), money that had been earned by the nonmember. Necessarily, it also authorized WEA (or other labor organization) to receive that same money. Having received the money with lawful justification, WEA did not commit the tort of conversion at that time. ¶29 To determine whether WEA committed the tort of conversion when it later used the money for political purposes, we must ascertain whether each plaintiff had a "property interest" in the money when WEA later used it. Before former RCW 42.17.760 took effect (i.e., before December 3, 1992), RCW 41.59.100 and .060(2) mandated that each nonmember's employer transfer to WEA money that otherwise would have belonged to the nonmember. Because nothing in the Washington law that existed at that time restricted the manner in which WEA could later use the money, the transfer was unconditional, WEA became the sole owner and possessor of the money transferred, and the nonmember did not obtain the "property right" necessary for conversion. ¶30 When former RCW 42.17.760 was enacted in 1992, it unquestionably restricted (conditioned) WEA's ability to use the transferred money for political purposes. But did it also create or resurrect in each nonmember the kind of "property interest" that he or she must show in order to sue for conversion? We think not. Reading the former statute according to its plain terms, we see nothing that speaks to the existence of such an "interest." The statute is simply silent on that point, and we are not willing to infer the creation of such an interest from its silence. Accordingly, we conclude that the plaintiffs do not have the kind of "property interest" that they need to sue for conversion, and that they have not stated a cause of action for that tort. C [20, 21] ¶31 That the plaintiffs lack a common law cause of action for conversion does not necessarily mean that they cannot recover in this case. In Seekamp v. Small, [T]he failure of [the plaintiff] to prove a cause of action in conversion does not of itself justify the granting of a new trial. The complaint contained allegations sufficient to state a cause of action for money had and received and the record is replete with evidence, admitted without objection, entitling [the plaintiff] to recover on that cause of action . . . . In Bosworth v. Wolfe, 146 Wash. 615, 264 Pac. 413, [417,] 56 A.L.R. 1117, we said: "The action for money had and received was invented by the common-law judges to secure relief from the narrower restrictions of the common-law procedure, which afforded no remedy in too many cases of merit. The action is a modified form of assumpsit. It has gone through various transformations; first from tort, then from contract, and afterwards into a remedy where there was technically neither tort nor contract. It is founded on the principle that no one ought unjustly to enrich himself at the expense of another, and the gist of the action is that the defendant has received money which in equity and good conscience should have been paid to the plaintiff, and under such circumstances that he ought, by the ties of natural justice, to pay it over." Accordingly, the next issue here is whether the Davenport plaintiffs have alleged the facts needed for a common law cause of action for restitution. ¶32 Sometimes termed a cause of action for "a contract implied in law" A more important misconception is that restitution is essentially a remedy, available in certain circumstances to enforce obligations derived from torts, contracts, and other topics of substantive law. On the contrary, restitution (meaning the law of unjust or unjustified enrichment) is itself a source of obligations, analogous in this respect to tort or contract. A liability in restitution is enforced by restitution's own characteristic remedies, just as a liability in contract is enforced by what we think of as contract remedies. Unlike the law of conversion, which requires that the transferee have wrongfully received the property of another, [22] ¶33 The Washington Supreme Court embraced or re-embraced these general principles in Nelson v. Appleway Chevrolet, Inc. The new Restatement (Third) of Restitution addresses the confusion surrounding unjust enrichment claims. While historically understood as an equity action, restitution has roots in both equity and the law. See RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT, $ 1 cmt. b (Discussion Draft 2000). The original justification, dating back to Lord Mansfield's decision in Moses v. Macferlan[, (1760) 97 Eng. Rep. 676, 681 (K.B.),] has given way to a modern understanding, based on a transaction's legal validity. Specifically, any transaction not adequately supported by law is voidable. See RESTATEMENT (THIRD) OF RESTITUTION, supra, $ 1 cmt. b at 3 ("Unjustified enrichment is enrichment that lacks an adequate legal basis: it results from a transfer that the law treats as ineffective to work a conclusive alteration in ownership rights."). Because Appleway illegally charged Nelson the B&O tax as an additional cost to the final purchase price, Appleway has been unjustly enriched with money properly belonging to Nelson. In effect, Appleway has made Nelson pay Appleway's taxes. Furthermore, restitution is more than a simple contract remedy. It is "itself a source of obligations, analogous in this respect to tort or contract." Id. $ 1, cmt. h at 12-13. [23, 24] ¶34 Although "enrichment" is easy to define, it will not by itself support restitution. One person "enriches" another merely by transferring money or other benefit to the other. ¶35 In contrast, "unjust" enrichment is quite difficult to define. According to both the Restatement (Third) and Nelson v. Appleway, it "'results from a transfer that the law treats as ineffective to work a conclusive alteration of ownership rights.'" [T]he use of legal compulsion to effect a transfer presupposes a conclusion about the distribution of property between transferor and transferee--the conclusion being that justice (whether embodied in the law of civil obligations or the tax code) requires a transfer from one to the other. If that conclusion about the parties' proper entitlements is subsequently revealed to be erroneous, the effect of the legal compulsion will have been to create an improper distribution, rather than to redress one. Restitution in such a case is supported not merely by considerations of private justice between the parties, but by recognition of the fact that the misapplication of the state's coercive means deprives them of their ordinary justification as legalized coercion. The law of Washington has long been in agreement. ¶36 As the following authorities show, a transfer made under compulsion of law creates rather than redresses "an improper distribution" in at least two instances. In one, the initial transfer is compelled, either in whole or in part, by an unlawful or mistaken view of the law. In the other, the initial transfer is lawfully compelled ab initio, subject to a condition the later failure of which deprives it of its initially lawful justification and makes retention of its benefits currently unjustifiable. ¶37 Transfers of the first kind are exemplified in Broward County v. Mattel,