Court Opinion

ID: 767576
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:36:53+00
Date Added: 2024-06-11T12:12:26.727248
License: Public Domain

203 F.3d 41 (D.C. Cir. 2000)
Robert Penrod, et al.,Petitionersv.National Labor Relations Board, RespondentInternational Brotherhood of Teamsters, Local 166,Intervenor
No. 99-1121
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 7, 2000Decided February 22, 2000

[Copyrighted Material Omitted]
On Petition for Review of an Order of the National Labor Relations Board
Glenn M. Taubman argued the cause and filed the briefs  for petitioners.
Jill A. Griffin, Attorney, National Labor Relations Board,  argued the cause for respondent.  With her on the brief were  Linda Sher, Associate General Counsel, Aileen A. Armstrong,  Deputy Associate General Counsel, and Peter D. Winkler,  Supervisory Attorney.  John D. Burgoyne, Deputy Associate  General Counsel, entered an appearance.
James B. Coppess argued the cause for intervenor.  With  him on the brief was Gary S. Witlen.
Before:  Williams, Randolph and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Tatel.
Concurring opinion filed by Circuit Judge Tatel.
Tatel, Circuit Judge:

1
This petition to review a decision of  the National Labor Relations Board requires us to consider  what information a union's duty of fair representation requires it to give employees about their right under Communications Workers of America v. Beck, 487 U.S. 735 (1988), to  pay only that portion of union dues attributable to "collective  bargaining, contract administration, and grievance adjustment."  Id. at 745.  The Board held that unions have no  obligation to tell employees who have not yet exercised their  Beck rights what percentage of dues are spent on nonrepresentational activities.  The Board also ruled that the union in  this case had given employees who had chosen to exercise  their Beck rights sufficient information to satisfy its duty of  fair representation.  Finding a portion of the Board's decision  unsupported by reasoned decision making and the remainder  in conflict with Supreme Court and circuit precedent, we  grant the petition for review.

2
* Section 8(a)(3) of the National Labor Relations Act gives  unions the right to negotiate union security provisions allowing them to collect dues from all members of a bargaining  unit, including those who decline full union membership.  29  U.S.C. § 158(a)(3);  Marquez v. Screen Actors Guild, Inc., 119 S. Ct. 292, 296 (1998).  Employees who choose not to become  full union members are called "financial core" payors.  See  NLRB v. General Motors Corp., 373 U.S. 734, 742 (1963). In  Beck, the Supreme Court held that section 8(a)(3) does not  obligate employees "to support union activities beyond those  germane to collective bargaining, contract administration, and  grievance adjustment."  487 U.S. at 745.  Unlike full union  members and financial core payors, employees who object to  funding nonrepresentational activities, called "Beck objectors," pay reduced dues.  Beck objectors are also known as  "potential challengers" because they have a right to challenge  the union's calculation of the reduced dues;  in response to  such challenges, the union bears the burden of justifying its  calculation.  See California Saw & Knife Works, 320 NLRB  224, 240 (1995).

3
Petitioners Robert Penrod, Nadine Penrod, and Clement  Wierzbicki, long-time employees of DynCorp Support Services Operations, resigned from their union, International  Brotherhood of Teamsters, Local 166, and exercised their  Beck rights.  Petitioner John Burnham never became a full  member of the union, instead informing Local 166 shortly  after being hired that he wished to be a financial core payor.

4
Having received no information from Local 166 about their  Beck rights, all four petitioners filed unfair labor practice  charges against the union.  Pursuant to an agreement settling these charges, Local 166 promised to give all new  employees and financial core payors initial Beck notices outlining their Beck rights and describing how to exercise them.The union also sent letters to the Beck objectors informing  them that they must pay 93.6 percent of union dues and  describing procedures for challenging that calculation.  Attached was a letter from an independent auditor confirming  the accuracy of the reduced fee calculation.  The auditor in  turn attached a handwritten worksheet listing nineteen categories of expenditures, such as "salaries," "benefits paid,"  "legal expenses," and "auto expenses."  For each expenditure  category, the auditor identified the amount and percentage "chargeable" and "nonchargeable" to Beck objectors.  The  worksheet referred to a "breakdown" and to "schedules," but  they were not attached.  The auditor's worksheet is attached  to this opinion as Appendix A.

5
Complaining that the information furnished by Local 166  and its auditor was inadequate, petitioners renewed their  unfair labor practice charges.  In response, the NLRB's  General Counsel filed a formal complaint charging Local 166  with failing to include in the initial Beck notice the percentage  by which dues would be reduced for new employees and  financial core payors who exercise their Beck rights.  The  General Counsel also charged that the financial information  given to Beck objectors was "too vague to permit each of  these employees to decide whether to challenge any of the  expenditures listed in the Statement of Expenses."

6
The Board rejected the General Counsel's charges.  International Bhd. of Teamsters, Local 166, AFL-CIO, 327 NLRB  No. 176 (1999).  Although agreeing that the duty of fair  representation required Local 166 to provide initial Beck  notices to new employees and financial core payors, the Board  determined that the union had not violated its duty by failing  to include the percentage by which dues would be reduced.Citing the time and expense needed to make such calculations, and explaining that the duty of fair representation  affords unions a "wide range of reasonableness," the Board  concluded that the decision to furnish the percentage was a  "judgment call" within the union's discretion.  Id., slip op. at  3.  With respect to employees who had exercised their Beck  rights, the Board found that the auditor's information was  sufficient for them to determine whether to challenge the  reduced fee calculation.  Id., slip op. at 4-5.

7
Petitioners challenge the Board's decision on three  grounds.  The first two concern the information given Beck  objectors.  The one-page handwritten list of expenditures,  they say, neither explained nor justified the union's determination that Beck objectors would be required to pay 93.6  percent of dues.  Their second challenge focuses on the approximately twenty-five percent of total expenditures that  Local 166 paid to its affiliates.  See Appendix A.  The third  challenge relates to new employees and financial core payors; according to petitioners, such employees are entitled to know  the precise amount by which their dues would be reduced  were they to exercise their Beck rights.  Local 166, defending  the Board's conclusion that it satisfied its duty of fair representation, has intervened.

II

8
Grounded in section 9(a) of the NLRA, 29 U.S.C. § 159(a),  the judicially created duty of fair representation reflects the  principle that a union's status as exclusive representative of  employees in a bargaining unit "includes a statutory obligation to serve the interests of all members without hostility  or discrimination toward any, to exercise its discretion with  complete good faith and honesty, and to avoid arbitrary  conduct."  Vaca v. Sipes, 386 U.S. 171, 177 (1967).  Unions  breach their duty of fair representation when their conduct  toward members of a bargaining unit is "arbitrary, discriminatory, or in bad faith."  Id. at 190.

9
The Supreme Court fleshed out the duty of fair representation in the Beck context in Chicago Teachers Union, Local  No. 1, AFT, AFL-CIO v. Hudson, 475 U.S. 292 (1986).  In  that case, the Court established procedures that unions must  follow to protect objectors and described the financial information that unions must give to potential objectors.  "Basic  considerations of fairness, as well as concern for the First  Amendment rights at stake," the Court held, "dictate that the  potential objectors be given sufficient information to gauge  the propriety of the union's fee."  Id. at 306.  While Hudson  involved public employees and arose under the First Amendment, this circuit has applied its requirements to nonpublic  unions such as Local 166.  See, e.g., Abrams v. Communications Workers of America, 59 F.3d 1373, 1379 n.7 (D.C. Cir.  1995).  With this framework in mind, we turn to petitioners'  three challenges.

General Disclosure to Beck Objectors

10
With respect to their first claim--that the list of nineteen  expenditure categories was insufficient to allow them to determine whether to challenge the reduced fee calculation-petitioners complain that the single sheet "contains no notes  or other written explanation concerning how that union's  overall 93.6% chargeable, 6.4% nonchargeable calculation was  made."  That lack of explanation, petitioners contend, was  compounded by the "vague and unexplained" line items and  the absence of referenced schedules and breakdowns.

11
The Board ruled that the Beck objectors had no need for  schedules, breakdowns, or better-defined categories of expenses to determine whether to challenge the reduced dues  calculation.  Addressing the Beck objectors' most fundamental argument--that the single page of financial information  failed to explain how the union arrived at its 93.6 percent  chargeable figure--the Board relied entirely on a decision of  the Seventh Circuit, Gilpin v. American Fed'n of State,  County, and Mun. Employees, AFL-CIO, 875 F.2d 1310,  1316 (7th Cir. 1989):  "As the Seventh Circuit Court of  Appeals has remarked in response to the same kind of  argument, 'if it did [include the disclosure petitioners requested], the notice would be as long and complicated as an SEC  prospectus.'  The court discerned no reason for imposing  such a requirement, and neither do we."  327 NLRB No. 176,  slip. op. at 5 (citing Gilpin, 875 F.2d at 1316).

12
The union's disclosure in Gilpin was more extensive than  Local 166's. In addition to listing thirty-five different types of  expenditures (comparable to the nineteen categories provided  by Local 166), the notice in Gilpin identified thirty-five  specific union activities, indicating for each whether the union  considered it "wholly chargeable," "wholly unchargeable," or  "mixed."  Gilpin, 875 F.2d at 1316.  For example, the notice  identified publishing a union newsletter as "mixed" and adjusting grievances as "wholly chargeable."  Id.  For a payment of $1.50, each employee could also obtain an arbitrator's  "detailed ruling" said to sustain the union's expense allocations.  Id.  According to the Seventh Circuit, this information  "should be enough ... to allow the employee to decide  whether there is any reason to mount a challenge."  Id.

13
By comparison, the Beck objectors in this case were given  only general categories of expenditures.  See Appendix A. To be sure, two of these categories--"contributions" and  "organizing"--were quite specific, but both were totally "nonchargeable."  The union offered no separate list of activities,  nor provided any opportunity to obtain a detailed explanation  of how the union calculated the allocation of expenses.  In  addition, the Beck objectors never received the "schedules"  and "breakdown" said to be attached to the auditor's report.

14
The information provided in Gilpin, as the Seventh Circuit  found, gave objectors a basis for objecting to the union's  calculation of reduced dues.  For example, they could have  reviewed the newsletter and made their own judgment about  whether to challenge the union's determination that newsletter costs were partially chargeable.  Could Beck objectors in  this case have made a similar judgment about the general  categories of expenditures supplied by the auditor?  For  example, how could they have evaluated the union's determination that "salaries" were partially chargeable to Beck objectors in view of the fact that the only other information they  were given about salaries was the gross amount?  Instead of  answering this question, the Board simply cited Gilpin as  though the case dealt with the same type of disclosure. Because it did not, we think the Board's decision reflects a  classic case of lack of reasoned decision making.  See Macmillan Publishing Co. v. NLRB, 194 F.3d 165, 168 (D.C. Cir.  1999) (The Regional Director's "rationale was the antithesis of  reasoned decision making, and as such was arbitrary and  capricious.") (citing Motor Vehicles Mfrs. Ass'n v. State Farm  Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).

Information about Payments to Affiliates

15
Petitioners' second complaint about the union's financial  disclosure focuses on the information about Local 166's payments to affiliated unions.  Representing almost twenty-five  percent of the union's total expenditures, payments to affiliates were 90.8 percent chargeable to Beck objectors.  See  Appendix A.  In addition to arguing that Local 166 should  have explained this calculation, petitioners claim that they are  entitled to know which affiliates received funds and how those  affiliates used those funds.  They rely on the following language from Hudson:  "[E]ither a showing that none of [the  money paid to affiliates] was used to subsidize activities for  which nonmembers may not be charged, or an explanation of  the share that was so used was surely required."  475 U.S. at  307 n.18.

16
In concluding that Local 166's disclosure was adequate, the  Board distinguishedHudson:  "In that case, the union paid  more than half its income to affiliated organizations, but  informed nonmembers only that they were required to pay 95  percent of full dues.  It did not inform them of the basis on  which it was charging them that amount or, apparently,  anything regarding how the amounts transferred to affiliates  were spent or what percentages were chargeable and nonchargeable."  327 NLRB No. 176, slip. op. at 5.

17
The Board's basis for distinguishing Hudson is curious.  To  begin with, two of the deficiencies in the Hudson notice that  the Board said made Hudson different from this case were  also deficiencies in Local 166's disclosure.  The union in  Hudson, the Board said, "did not inform [the employees] of  the basis on which it was charging them that amount or,  apparently, anything regarding how the amounts transferred  to affiliates were spent."  Id.  Yet this is precisely the  information that Local 166 failed to provide and that petitioners seek in this case.

18
So the Board's conclusion that Hudson differs from this  case boils down to two distinctions.  In Hudson, the union  spent fifty percent of its budget on affiliates;  here, it spent  twenty-five percent.  In Hudson, the union failed to identify the percentage of payments to affiliates chargeable to Beck  objectors;  here, the union said such payments were ninety  percent chargeable.  Nothing in Hudson suggests that the  level of required disclosure turns on such factors.  Hudson's  directive is quite simple:  unless a union demonstrates that  "none of [the amount paid to affiliates] was used to subsidize  activities for which nonmembers may not be charged," then  "an explanation of the share that was so used [is] surely  required."  475 U.S. at 307 n.18.  Because Local 166 disclosed  that over ninety percent of the amount paid to its affiliates  was chargeable to Beck objectors, Hudson requires that the  union explain how its affiliates used the money.

19
Initial Notice to New Employees and Financial Core Payors

20
This brings us to petitioners' challenge to the Board's  ruling that the initial Beck notice given to new employees and  financial core payors need not identify the percentage reduction in dues that would result from a Beck objection.  Explaining its decision, the Board observed that calculating the  reduced fee "can be an expensive and time consuming undertaking" and emphasized the "wide range of reasonableness"  afforded unions in serving the employees they represent.  327  NLRB No. 176, slip op. at 3.  We need not consider whether  to defer to such reasoning, for this issue is squarely controlled by Hudson as interpreted by this court in Abrams.

21
In Hudson, the Supreme Court held that "[b]asic considerations of fairness, as well as concern for the First Amendment rights at stake, also dictate that the potential objectors  be given sufficient information to gauge the propriety of the  union's fee."  475 U.S. at 306.  Abrams expressly applies  Hudson's requirements to new employees and financial core  payors.  59 F.3d at 1379.  Since Hudson requires that potential objectors be told the percentage of union dues chargeable  to them--for how else could they "gauge the propriety of the  union's fee"--and since Abrams applies Hudson to new employees and financial core payors, they too must be told the percentage of union dues that would be chargeable were they  to become Beck objectors.

22
The Board and Local 166 nevertheless insist that Hudson  applies only to employees who have elected to exercise their  Beck rights, not to new employees and financial core payors.But Abrams could not have been clearer.  Like the Board  and Local 166, the dissent in Abrams argued that Hudson's  requirements do not apply to new employees and financial  core payors.  Abrams, 59 F.3d at 1383-84 (Tatel, J., concurring in part and dissenting in part).  Abrams ruled to the  contrary:  "The dissent takes issue with our interpretation of  Hudson but the quoted language makes clear that potential  objectors must be given adequate notice.  Although the Supreme Court addressed the issue in the context of 'information about the basis for the proportionate share' of financial  core expenses, the same 'basic considerations of fairness'  necessarily extend to a union's notice to workers of their right  to object to payment of any expenses beyond the financial  core."  Abrams, 59 F.3d at 1379 n.6 (internal citation omitted).

23
The Board and Local 166 point out that Abrams concerned  the wording of the initial Beck notice, not whether the union  must disclose the percentage reduction.  In order to conclude  that the wording was inadequate, however, Abrams had to  hold that Hudson applies to new employees and financial core  payors, and Hudson carries with it the requirement that  unions give employees "sufficient information to gauge the  propriety of the union's fee"--i.e., the percentage reduction  (see supra at 47).  475 U.S. at 306.  We recognize that this  means that new employees and financial core payors must be  given the same information as Beck objectors, but Abrams is  the law of this circuit.

24
Petitioners challenge the initial Beck notice for a second  reason.  They contend that the initial notice must not only  identify the amount of the reduced fee but also explain the  method used to calculate the fee.  According to the Board,  petitioners failed to raise this issue before the Board and so cannot raise it for the first time on appeal.  We agree with  the Board.

25
The two record excerpts petitioners point to--a paragraph  in the petitioners' final unfair labor practice charge and three  paragraphs in the General Counsel's fourth amended complaint--cannot fairly be read to raise the issue.  Both refer  only to the financial information designed for Beck objectors,  not to the initial Beck notice given to new employees and  financial core payors.  Rejecting petitioners' contention that  the method of calculation is "implicit" in the issue of disclosure of the fee itself, we conclude that we may not consider  petitioners' claim that the initial Beck notice must include an  explanation of the method used to calculate the fee.  See 29  U.S.C. § 160(e) ("No objection that has not been urged before  the Board ... shall be considered by the court, unless the  failure or neglect to urge such objection shall be excused  because of extraordinary circumstances.");  Harter Tomato  Prods. Co. v. NLRB, 133 F.3d 934, 939 (D.C. Cir. 1998).

III

26
The petition for review is granted, and this case is remanded to the Board for proceedings consistent with this opinion.

27
So ordered.

APPENDIX A

28
[Tabular or Graphical Material Omitted]

Tatel, J., concurring:

29
I dissented in Abrams because I saw  nothing in Hudson that required its application to new employees and financial core payors.  Abrams, 59 F.3d at 138384 (Tatel, J., concurring in part and dissenting in part).  This  case demonstrates the consequences of Abrams:  judicial  usurpation of the Board's traditional authority to determine  national labor policy.

30
To protect employees' Beck rights, the Board has crafted a  three-step process, calibrating the nature and amount of  information that unions must give employees to the decision  they must make at each stage.  New employees and financial  core payors receive an initial Beck notice informing them of  their Beck rights and how to exercise them.  See California  Saw & Knife Works, 320 NLRB at 233.  Beck objectors are  told the amount of the reduced dues as well as how that  amount was calculated.  See id.  Beck objectors who challenge the union's calculation receive still more information,  with the union bearing the burden of proving the accuracy of  its calculation.  See id. at 240.  Balancing employees' need for  information against the burden on unions of providing the  information, this process reflects the Board's application of  the duty of fair representation in the Beck context.

31
Consistent with this approach, the Board held in this case  that unions were not required to disclose to new employees  and financial core payors the percentage by which their dues  would be reduced were they to exercise their Beck rights.Not only does the Board believe that new employees and  financial core payors have no need for this information to  decide whether to exercise their Beck rights, but it concluded  that providing the information would be an "expensive and  timeconsuming undertaking."  International Bhd. of Teamsters, Local 166, 327 NLRB No. 176, slip. op. at 3.  Whether  to disclose the percentage is a "judgment call," within the  "wide range of reasonableness" afforded unions in carrying  out their duty of fair representation, the Board found.  Local  166's failure to disclose the percentage was not "arbitrary,  discriminatory, or in bad faith."  Id.

32
Absent Abrams, we would evaluate the Board's reasoning  pursuant to a highly deferential standard.  See Ferriso v.  NLRB, 125 F.3d 865, 869 (D.C. Cir. 1997).  Yet as our opinion in this case demonstrates, Abrams' extension of Hudson to new employees and financial core payors has foreclosed us from considering the Board's rationale at all, requiring  that we ignore not just our traditional deference to the Board,  but also the "wide range of reasonableness" afforded unions  in satisfying their duty of fair representation.  See Marquez,  119 S. Ct. at 300.  "It is hard to think of a task more suitable  for an administrative agency that specializes in labor relations, and less suitable for a court of general jurisdiction, than  crafting the rules for translating the generalities of the Beck  decision ... into a workable system for determining and  collecting agency fees."  International Ass'n of Machinists &  Aerospace Workers v. NLRB, 133 F.3d 1012, 1015 (7th Cir.  1998).  By commandeering a judgment that should have been  left to the Board's expertise, Abrams has produced a result  that I doubt Hudson intended.