Opinion ID: 402462
Heading Depth: 1
Heading Rank: 1

Heading: the union predicament

Text: 34 To appreciate the importance of this case, it is necessary to focus on the bind in which the Union found itself in 1977 after the members of one of its locals stopped paying their dues. Local 681 had represented the pipefitters and helpers at mills of the International Paper Company (the Company) in Vicksburg and Natchez, Mississippi, since 1951. The members of Local 681 voted in 1972 to add working dues, a fraction of the actual hourly earnings of individual workers, to the dues already being assessed Union members at a flat monthly rate. But in 1974, the Local 681 members at the Natchez mill began refusing to pay both kinds of dues. 35 By 1976, Union membership at the Natchez mill had declined from 38 to 1, and even the remaining member was not required to pay dues by virtue of his position as shop steward. The Union was not decertified at the Natchez mill until July 1979. In the interim, however, Local 681 expended thousands of dollars representing the employees at the Natchez mill despite the fact that it received nothing in dues or fees from those employees during the same period. 36 This outlay by the Union reflected its statutory duty to represent all employees in the bargaining unit, whether union or nonunion. See, e.g., Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 564-65, 96 S.Ct. 1048, 1056, 47 L.Ed.2d 231 (1976); Humphrey v. Moore, 375 U.S. 335, 342, 84 S.Ct. 363, 367, 11 L.Ed.2d 370 (1964). This obligation arises from the fact that the union, as the exclusive bargaining representative of all employees, must serve the interests of all employees in the bargaining unit without hostility or discrimination toward any. Vaca v. Sipes, 386 U.S. 171, 177, 87 S.Ct. 903, 910, 17 L.Ed.2d 842 (1967). The duty was first recognized by the Supreme Court in Steele v. Louisville & N.R. Co., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173 (1944), in which a union whose constitution excluded blacks from membership sought a collective bargaining agreement that also would have excluded black firemen from service with the railroad. The duty of fair representation has grown enormously in scope since 1944, however, from avoiding racial discrimination to providing daily representation: 37 The bargaining representative's duty ... does not come to an abrupt end ... with the making of an agreement between union and employer. Collective bargaining is a continuing process. Among other things, it involves day-to-day adjustments in the contract and other working rules, resolution of new problems not covered by existing agreements, and the protection of employee rights already secured by contract. The bargaining representative can no more unfairly discriminate in carrying out these functions than it can in negotiating a collective agreement. 38 Conley v. Gibson, 355 U.S. 41, 46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); see Abood v. Detroit Board of Education, 431 U.S. 209, 221-22, 97 S.Ct. 1782, 1792, 52 L.Ed.2d 261 (1977). The National Labor Relations Board (NLRB) has repeatedly held that a union cannot lawfully refuse to process a grievance of an employee in the bargaining unit on the ground that he is not a union member. E.g., International Brotherhood of Electrical Workers, Local 1504, 211 NLRB 580 (1974); Locals 186, 381, 396, et al., affiliates of the International Brotherhood of Teamsters, 203 NLRB 799 (1973); United Steelworkers of America, Local 937, 200 NLRB 40 (1972). 39 These decisions have compounded the problem of free riders-employees who obtain the benefits of union representation while refusing to join the union and thereby support the cost of its activities. Fifty years ago, when the Wagner Act was passed, free riders simply benefitted from accomplishments that the union would have sought in any event, such as higher wages or improved working conditions. Today, free riders can invoke union efforts on their particular behalf, such as the prosecution of nonunion grievances and arbitrations, and thus affirmatively deplete the union's treasury. The difference is like that between the house guest who warms himself beside the fireplace, and the guest who demands that the thermostate be turned up. In short, the problem of free riders has become more pronounced as the responsibilities of unions have grown. 40 In the interest of fair representation, however, the NLRB has frustrated union efforts to recoup these costs from free riders. In Hughes Tool Co., 104 NLRB 318 (1953), for example, the Board held that a union could not charge nonunion employees a flat rate for handling their grievances, or a graduated fee for handling arbitrations. In Machinists Local 697, 223 NLRB 832 (1976), the Board held that a union could not charge nonunion employees the actual costs of handling their grievances and arbitrations. In both cases the Board reasoned that these charges were unlawful because similar fees were not charged to union members, thereby ignoring the fact that the members had presumably already met the expense of such representation in their dues. 41 Whatever the wisdom of these NLRB decisions, Local 681 continued to represent the employees at the Natchez mill long after it ceased to have any dues-paying members at that location. 1 Between May 1976 and June 1978, the Union's agent travelled to Natchez once a week to handle grievance, insurance, pension, vacation, and other matters and to attend safety meetings. The Union successfully prosecuted 19 grievances, negotiated a new contract after frequent bargaining sessions resulting in wage increases and other added benefits for the Natchez employees, and hired an attorney to represent Local 681 in a Title VII civil rights action. In the fiscal year ending June 30, 1977, Local 681 expended approximately $10,700 in order to represent the employees at the Natchez mill. 2 42 It is not surprising that the Union attempted to remedy this erosion of its financial resources by proposing the representation fee clause to the company during contract negotiations in May 1977. 3 The clause would have collected from each nonunion employee a pro rata share of the costs and expenses incurred by the union that are directly related to enforcing and servicing the collective bargaining agreement, as determined by an independent audit to determine those services performed by the union directly related to the collective bargaining process. The initial representation fee required of the 38 employees at the Natchez mill would have been $5 a week, allowing the Union to collect approximately $9,900 a year or somewhat less than the $10,700 expended by Local 681 in representing those employees. The clause specifically stated that in no event would the representation fee exceed the dues and assessments required of Union members. Had the Natchez employees remained in the Union and paid all their dues and assessments under the pre-existing dues structure, the Union would have collected a total of $14,200-which would have provided approximately $3,500 in additional income that it could have used for institutional expenses. 4 II. THE LEGAL ISSUE 43 There is no doubt that the proposed representation fee violates the Mississippi right-to-work laws, 5 which state: 44 No employer shall require any person, as a condition of employment or continuation of employment, to pay any dues, fees or other charges of any kind to any labor union or labor organization. 45 Miss.Const. Art. VII, § 198-A; Miss.Code Ann. § 71-1-47. This observation precipitates but does not resolve the court's inquiry, of course. State law generally cannot be applied to limit the arrangements that unions and employers may make concerning subjects of collective bargaining made mandatory by the National Labor Relations Act, and the administrative law judge specifically found that the representation fee proposed by the Union was such a mandatory subject of bargaining under sections 8(a)(3) and 8(d) of the Act, 29 U.S.C. §§ 158(a)(3), (d). Initial Decision, 252 NLRB 1299, 1303 (1980). 46 In section 14(b) of the Act, however, Congress authorized the states to enact statutes in conflict with this federal law. Section 14(b) provides: 47 Nothing in this subchapter shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law. 48 29 U.S.C. § 164(b). In other words, when state laws that fall within the scope of section 14(b) conflict with provisions of federal law, state law governs. But the extent to which section 14(b) authorizes states to limit collective bargaining, an area in which Congress has otherwise preempted the field, is clearly a federal question. Oil, Chemical & Atomic Workers v. Mobil Oil Corp., 426 U.S. 407, 417, 96 S.Ct. 2140, 2145, 48 L.Ed.2d 736 (1976); NLRB v. Tom Joyce Floors, Inc., 353 F.2d 768, 770-71 (9th Cir. 1965). We must therefore determine whether the Mississippi laws banning payment of charges of any kind constitute a prohibition of membership that is within the scope of section 14(b). 49 The Supreme Court has carefully left open the precise definition of what it means to require membership in a labor organization, as that term is used in section 14(b). In companion cases decided in 1963, the Court did hold that the term membership could be whittled down to its financial core. At issue was the legality of the agency shop arrangement, which leaves union membership optional but requires nonunion employees to pay to the union sums equal to the initiation fees and dues of union members. In NLRB v. General Motors Corp., 373 U.S. 734, 83 S.Ct. 1453, 10 L.Ed.2d 670 (1963), the Court observed: 50 It is permissible to condition employment upon membership, but membership, insofar as it has significance to employment rights, may in turn be conditioned only upon payment of fees and dues. Membership as a condition of employment is whittled down to its financial core. 51 Id. at 742, 83 S.Ct. at 1459. As a result, the Court said, the agency shop is the practical equivalent of the union shop, an arrangement under which all employees must join the union within a specified period of time as a condition of continued employment. Unions were therefore permitted to bargain for an agency shop in any state in which they could bargain for a union shop, NLRB v. General Motors Corp., but could not bargain for an agency shop in any state where the right-to-work laws prohibited bargaining for a union shop. Retail Clerks v. Schermerhorn, 373 U.S. 746, 83 S.Ct. 1461, 10 L.Ed.2d 678 (1963). 52 Schermerhorn, however, clearly left open the status of the kind of representation fee at issue in this case. Originally, the petitioners in Schermerhorn had likened their proposal to the agency shop involved in General Motors. Upon briefing and argument, however, the petitioners made a last-minute effort to distinguish their contract from an agency shop. 373 U.S. at 752 n.4, 83 S.Ct. at 1465 n.4. The clause provided that nonunion employees would contribute to the union for the purpose of aiding the Union in defraying costs in connection with its legal obligations and responsibilities as the exclusive bargaining agent of the employees in the appropriate bargaining unit. The petitioners claimed that this confined nonunion payments to collective bargaining purposes alone, and prohibited the union from using the payments for institutional purposes unrelated to its exclusive agency functions. Id. at 752, 83 S.Ct. at 1465. 53 The Supreme Court was wholly unpersuaded by this belated attempt to distinguish General Motors. Justice White's opinion gave two primary reasons. First, contrary to the petitioners' suggestion, the clause at issue imposed no ironclad restriction on what the union could do with the payments it received from nonmembers, and therefore could have allowed the union to use these payments for institutional items. Id. at 753, 83 S.Ct. at 1465. 6 Second, because the proposed service fee was set equal to the union's initiation fees and dues, and because the union dues could be expended for a variety of purposes, there was no guarantee that a nonmember might not pay more of the union's collective bargaining costs than his pro rata share. Id. at 754, 83 S.Ct. at 1466. The Court explained: 54 If the union's total budget is divided between collective bargaining and institutional expenses and if nonmember payments, equal to those of a member, go entirely for collective bargaining costs, the nonmember will pay more of these expenses than his pro rata share. The member will pay less and to that extent a portion of his fees and dues is available to pay institutional expenses. The union's budget is balanced. By paying a larger share of collective bargaining costs the nonmember subsidizes the union's institutional activities. 55 Id. Accordingly, there was no reason why the clause should, in the present posture of the case, be construed against respondent to raise a substantial difference between this and the General Motors case. Id. at 752, 83 S.Ct. at 1465. It would be anomalous, the Court said, to let Florida ban agency shop agreements under which union members and nonmembers paid equal shares while forbidding Florida to ban an arrangement in which nonmembers might pay even more bargaining costs than members. Id. at 754, 83 S.Ct. at 1465. 56 By discussing the Schermerhorn petitioners' position, clearly only a product of appellate strategy, in so much detail, the Court signalled that it considered the status of the kind of representation-fee proposal now before us to be a difficult question. The Court's discussion draws a clear distinction between agency shops and the collection of fees to cover representation costs. Schermerhorn does not govern this case, because the belated effort to distinguish General Motors failed. If the representation fee proposed by the Union in this case meets the two conditions laid down in Schermerhorn -an ironclad restriction against using nonmember payments for purposes other than servicing the collective bargaining agreement, with nonunion members paying no more than their pro rata share of such expenses-then the clause conceivably does not require membership in a labor organization and therefore is beyond the reach of state right-to-work laws whose application depends on section 14(b). 57 The NLRB, which affirmed the decision of the administrative law judge in a simple one-page decision and order, 252 NLRB 1299 (1980), seems not to have devoted the careful attention to this case that Schermerhorn requires. Nothing in subsequent Supreme Court decisions has departed from its dicta in Schermerhorn. 7 The question before us is open, and is a matter of some significance. Our answer must center on the congressional intent in enacting section 14(b). The legislative history is lengthy, often dry, and relatively inconclusive, but it casts serious doubts on the reasoning of the majority.