Key Points

  • The Fourth Department unanimously declared that a NYSUT membership agreement's dues provision is not an unlawful penalty provision.
  • Under Civil Service Law ยง 208(1)(b)(i), dues deductions continue until an employee revokes membership in accordance with the terms of the signed authorization, and the agreement here obligated the plaintiff to pay dues until the August 1-31 revocation window began.
  • Applying Truck Rent-A-Center v Puritan Farms 2nd, the court held that requiring dues for the remainder of the year was not grossly disproportionate to the unions' actual damages, and the plaintiff bore the burden of showing a penalty.
  • The trial court erred by dismissing the declaratory claim instead of declaring the parties' rights under the Kerri W.S. v Zucker framework, so the panel reinstated that claim and declared in the unions' favor.
  • The plaintiff's claims to recover the $290.16 in post-resignation dues, which depended on the penalty claim, remain dismissed.

A New York appeals court ruled on Oct. 9 that a teachers union could keep collecting dues from a member who quit in March until the August window in which his signed membership agreement allowed him to revoke his dues authorization, rejecting his claim that the arrangement was an unlawful contractual penalty.

A five-justice panel of the Appellate Division, Fourth Department, ruled unanimously against Thomas Caswell, a teacher in the Oswego City School District, and for New York State United Teachers and the Oswego Classroom Teachers Association. The panel, made up of Justices Montour, who presided, Ogden, Greenwood, Nowak and Skinner, issued an unsigned memorandum decision declaring that the dues provision in Caswell's membership agreement "is not an unlawful penalty provision."

The decision holds that New York's public-sector labor law binds a union member to the revocation terms of a signed dues authorization, and that collecting dues until the stated window opens is a valid contract term rather than an unenforceable penalty. For Caswell, the disputed obligation came to $290.16, the dues the school district deducted from his paychecks after he quit.

Caswell signed a union membership and dues deduction authorization form in 2018, authorizing the district to deduct monthly dues and send them to the local union. The form provided that it would "remain in effect, regardless of whether I am or remain a member of the Union, for a period of one year" and would renew automatically unless he mailed a written revocation "between the window period of August 1 and August 31."

On or around March 25, 2024, Caswell gave written notice to the state union that he was ending his membership. Carrie Patane, president of the Oswego association, responded by reminding him of the window period. She told him that he could withdraw from the union and give up the rights of membership, but that he still owed dues until June 30, 2024, the last payroll period before the window. At the unions' direction, the district kept deducting dues through the end of June and paid the $290.16 to the local.

Caswell sued the two unions and their presidents, Patane and NYSUT President Melinda Person, in March 2025. He argued that the dues clause purported to be a liquidated damages provision but was in fact an unlawful penalty. He sought a declaration to that effect and, on theories of money had and received and conversion, the return of the dues collected after his resignation.

The unions moved to dismiss under CPLR 3211(a)(7), the New York rule permitting dismissal of a complaint that fails to state a cause of action. They submitted an affirmation from a NYSUT official describing members' rights, including the right to run for union office, to vote for union officers and to take part in the union's internal affairs. Patane said in her own affirmation that the local paid monthly assessments to NYSUT for services that included advice, guidance and support. Justice Gregory R. Gilbert of Supreme Court, Oswego County, granted the motion in an order entered June 17, 2025.

On appeal, the panel began with the Taylor Law, which the court said guarantees public employees the right to choose whether to join a union. The statute provides that a dues deduction remains in force until an employee "revokes membership in the employee organization in writing in accordance with the terms of the signed authorization." Applying that text, the court wrote that "pursuant to the unambiguous terms of the membership agreement, plaintiff remained obligated to pay monthly dues until the window period of August 1 through August 31 began."

The panel then tested Caswell's penalty argument against Truck Rent-A-Center v. Puritan Farms 2nd, a 1977 decision. That decision holds that a clause demanding a sum "grossly disproportionate to the amount of actual damages" is an unenforceable penalty. In the passage the Fourth Department quoted, that court wrote, "A promisor would be compelled, out of fear of economic devastation, to continue performance and [the] promisee, in the event of default, would reap a windfall well above actual harm sustained."

The panel noted that Caswell, as the party seeking to avoid payment, bore the burden of proving that the clause imposed a penalty. Considering "the nature of the agreement and the circumstances," the court concluded that "it is not an unenforceable penalty to require the payment of dues for the remainder of the year until the start of the window period." The panel added, "It cannot be said that the payment of dues for one year is grossly disproportionate to the amount of actual damages sustained by the Unions as a result of plaintiff's early termination of union membership."

The appeals court agreed with Justice Gilbert that Caswell was not entitled to any relief, but it corrected the form of the ruling. Under the Fourth Department's three-step framework in Matter of Kerri W.S. v. Zucker, a trial court facing a motion to dismiss a declaratory judgment action that presents a justiciable controversy and only questions of law denies the motion to keep jurisdiction and then, in words the panel quoted from St. Lawrence Univ. v. Trustees of Theol. School of St. Lawrence Univ., immediately "declare[s] the rights of the parties, whatever they may be." The panel held that the lower court "erred, however, in dismissing the complaint to the extent that it seeks a declaration and in failing to declare the rights of the parties."

Lawyers for Caswell included Anthony R. Holtzman of The Fairness Center in Harrisburg, Pennsylvania. The unions were represented by Robert T. Reilly, general counsel of New York State United Teachers in Latham.

The court modified the trial court's order by reinstating Caswell's complaint only to the extent that it seeks a declaration, entered judgment declaring in the unions' favor and otherwise affirmed, without costs. The money-had-and-received and conversion claims depended on the penalty claim, and they remain dismissed. The decision is uncorrected and subject to revision before publication in the Official Reports.