Pirlott v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 8, 2008 Decided April 18, 2008

No. 07-1025

DAVID PIRLOTT AND

SHERRY PIRLOTT,

PETITIONERS

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with

07-1082, et al.

On Petitions for Review and

Cross-Application for Enforcement

of an Order of the National Labor Relations Board

Glenn M. Taubman argued the cause and filed the briefs for

petitioner Sherry Pirlott and David Pirlott.

Frederick Perillo argued the cause for petitioner Teamsters

Local 75. With him on the briefs was Scott D. Soldon.

Amy H. Ginn, Attorney, National Labor Relations Board,

argued the cause for respondent. With her on the brief were

Ronald E. Meisburg, General Counsel, John H. Ferguson,

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Associate General Counsel, Linda Dreeben, Assistant General

Counsel, and Jill A. Griffin, Supervisory Attorney.

Glenn M. Taubman was on the brief for intervenors Sherry

Pirlott and David Pirlott.

Scott D. Soldon and Frederick Perillo were on the brief for

amicus curiae Teamsters Local 75.

Before: RANDOLPH and ROGERS, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: Sherry and David Pirlott

(“Charging Parties”), employees of Schreiber Foods in Green

Bay, Wisconsin, complain that their union, Teamsters Local 75

(“Union”) violated its duty of fair representation under

Communications Workers of America v. Beck, 487 U.S. 735

(1988), by spending their dues for organizing activities and

failing to provide them with adequate financial disclosures. The

Charging Parties filed unfair labor practice charges with the

National Labor Relations Board (“NLRB” or “Board”) and a

complaint was issued by the Board’s General Counsel. The

Board found that the Union’s financial disclosures were

adequate, but determined that the Union had not justified its

expenditures and ruled that the portion of the Charging Parties’

dues spent on organizing activities must be returned to them.

The Union challenges the Board’s ruling, arguing that the

Board disregarded past precedent, arbitrarily failed to weigh

evidence before it, and denied the Union a fair opportunity to

present its case. The Charging Parties challenge the Board’s

decision, because it fails to state that all organizing expenses,

not just the organizing expenses in their case, run afoul of Beck.

We reject the Charging Parties’ claim as not properly before the

court. We deny the Union’s petition for review and grant the

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Board’s cross-application for enforcement in part. In particular,

we uphold the Board’s determination that the Union failed to

show that its organizing activities were permissible expenditures

for objecting nonmembers’ dues under Beck, and we remand the

case to allow the Board to reconsider the issue of the adequacy

of the Union’s financial disclosure in light of Penrod v. NLRB,

203 F.3d 41 (D.C. Cir. 2000).

I. BACKGROUND

Under § 8(a)(3) of the National Labor Relations Act

(“NLRA”), unions have the right to negotiate union-security

clauses. Under such provisions, an employer may “mak[e] an

agreement with a labor organization . . . to require as a condition

of employment membership therein.” 29 U.S.C. § 158(a)(3).

The Supreme Court has long limited the permissible scope of

union-security clauses by holding that when employees object

to union membership, their obligation to the union is restricted

to its “financial core” – i.e., objecting nonmembers can be

required to pay their dues to the union but nothing more. NLRB

v. Gen. Motors Corp., 373 U.S. 734, 742 (1963). In Beck, the

Court held that objecting nonmembers cannot be required “to

support union activities beyond those germane to collective

bargaining, contract administration, and grievance adjustment.”

487 U.S. at 745. Under Beck, if a union’s activities extend

beyond its role as the representative of a collective bargaining

unit, the dues of objecting nonmembers must be reduced on a

per capita basis for all funds spent on those additional activities.

Schreiber Foods processes cheese and other dairy products

in Green Bay, Wisconsin. Since 1951, the Union has been the

exclusive representative of production and maintenance

employees at Schreiber Foods. During the relevant time period,

the Union had several thousand members in nearly 150

bargaining units. Approximately 1,600 members were in the

dairy industry, and 600 were in the food processing industry.

The Union also represents employees in the public sector in

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Green Bay, Wisconsin. The Union is affiliated with the

International Brotherhood of Teamsters, the Central Conference

of Teamsters, and the Wisconsin Joint Council 39.

At all relevant times, the Union and Schreiber Foods have

been parties to a collective bargaining agreement that contains

a union-security clause. The clause in the Schreiber Foods

contract reads:

All present employees who are members of the Union on

the effective date of this subsection . . . shall remain

members of the Union in good standing as a condition of

employment. All present employees who are not members

of the Union and all employees who are hired hereafter

shall become and remain members in good standing of the

Union as a condition of employment . . . .

Schreiber Foods, 329 N.L.R.B. 28, 42 (1999) (decision of the

Administrative Law Judge (“ALJ”)). Sherry Pirlott began

working at Schreiber Foods and joined the Union in 1963. Her

husband David Pirlott was hired at Schreiber Foods and joined

the Union in 1973. In a joint letter dated September 20, 1989,

they resigned their membership in the Union and objected to the

use of their fees for any non-collective bargaining activity. The

Union then informed the Charging Parties by letter that their

dues would be reduced by $0.23 per month. Attached to this

letter was a one-page “Schedule of Expenses and Non-

Chargeable Expenses Year Ended December 31, 1988”:

1988 Nonchargeable

Expense

Per Capita Tax $253,202 $6,299

Salaries 482,273 0

Expense Allowance 18,505 0

Contributions 700 700

Benefits 94,555 0

Professional Fees 9,058 0

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Taxes 35,721 0

Meeting and Committee 10,177 0

Automobile 10,232 0

Out-of-Town Travel 22,478 0

Education & Publicity 19,127 4,537

Stewards 17,235 0

Building Maintenance 5,511 0

Administrative 110,123 0

Total Expenses $1,088,897 $11,536

Percent Nonchargeable 1.1%

Id. at 45. The Charging Parties objected, demanded that their

dues be placed in an escrow account, and filed unfair labor

charges against the Union with the NLRB on November 8, 1989.

The NLRB General Counsel issued a Complaint and Notice

of Hearing (“Complaint”) approximately two years later. In that

Complaint, the General Counsel alleged, inter alia, that the

Union charged objecting nonmembers for “expenses incurred

for activities outside the bargaining unit” “contrary to the

requirements of Beck.” Complaint at ¶ 11. The General

Counsel also alleged that the financial disclosures given to the

Charging Parties “(i) fail[] to adequately define which expenses

are considered by the Union to be nonchargeable; (ii) fail[] to

break down expenditures on a unit-by-unit basis; and (iii) fail[]

to provide a breakdown of the International Teamsters Union’s

expenditures.” Id. at ¶ 13(b). Based on these allegations, the

Complaint argues that the Union was engaged in unfair labor

practices within the meaning of § 8(b)(1)(A) and (2) of the

NLRA.

An ALJ held a hearing on March 5, 1992. After briefing

and testimony, the ALJ first addressed the Union’s financial

disclosures, finding that those disclosures were inadequate. The

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ALJ stated that, while “[i]t is clear that absolute precision is not

required of the unions in these situations, . . . the employees

must be given adequate information with which to make an

informed choice as to whether he or she should dispute any of

the figures.” Schreiber Foods, 329 N.L.R.B. at 46-47. The ALJ

found that the categories provided by the Union “do not provide

sufficient information from which the employees can

intelligently decide if the fee is proper.” Id. at 47.

The ALJ also responded to the General Counsel and the

Charging Parties’ argument that, under Beck, organizing

expenses – incurred in order to organize new workers and

establish new bargaining units – should never be charged to

objecting nonmembers. The ALJ found that organizing

expenses were sufficiently related to collective bargaining that

they could be charged to objecting nonmembers:

[A]fter a union has negotiated an agreement with an

employer, that agreement often serves as a bargaining tool,

at least, at employers in the same or a similar industry, and

will often cause an employer to improve his offer to the

union to approach what his competitor agreed to. A union’s

organizational expenses should likewise be treated in

somewhat the same manner. Most employers are not

philanthropists willing to pay their employees whatever

they want. Rather an employer will usually agree to a

competitive wage that it can afford. When a union

organizes other employers in the industry, and executes

contracts with these employers, others in the industry can,

competitively, be more flexible than if they were the only

organized shop in the industry.

Id. at 47-48. The ALJ found, however, that the Union could not

charge objecting nonmembers for organizing expenses incurred

to unionize employees in the public sector, because whether or

not public sector employees are unionized “probably has little or

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no effect on Schreiber or the ultimate terms and conditions of

employment of its employees.” Id. at 48.

The parties appealed to the Board, which issued a decision

on September 1, 1999. The Board reversed the ALJ’s

determination that the financial disclosures were inadequate,

stating that “[t]he information provided by the Union herein was

clearly sufficient to enable an objector to decide whether to

challenge the Union’s figures.” Id. at 30. The Board held that

“[t]he union’s duty of fair representation – which requires a

union to act in good faith – is met if it supplies its major

categories of expenditures and supplies verified figures.” Id.

With respect to the chargeability of organizing expenses,

the Board summarized the parties’ positions as follows:

The General Counsel asserts that under Ellis v. Railway

Clerks, 466 U.S. 435 (1984), a decision interpreting the

Railway Labor Act, any expenses spent outside the relevant

unit are nonchargeable. Since organizing expenses are, by

definition, spent outside the relevant (already-organized)

unit, they are nonchargeable (according to the General

Counsel’s view). The Charging Parties, inter alia, assert

that the record contains no empirical evidence to suggest

that organizing activity could actually benefit

already-represented employees. Finally, the Union . . .

noted that the judge refused to allow it any significant

opportunity to present evidence demonstrating the

interaction of various bargaining units represented by the

Union and how such activities have a direct impact on the

Union’s ability to represent individual bargaining units.

Id. at 31. The Board decided to sever the issue of the

chargeability of organizing expenses and remanded that portion

of the case to the ALJ for further proceedings. Id. The Board

described the standard as follows:

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[T]he Board in California Saw [& Knife Works, 320

N.L.R.B. 224 (1995)] held that the legality of charging

objectors for a particular union expense depends on

“whether they are germane to the union’s role in collective

bargaining, contract administration, and grievance

adjustment.” 320 N.L.R.B. at 239. . . . As for organizing

expenses, although the General Counsel . . . urge[s] a per se

approach based on Ellis, the Board has yet to decide their

chargeability to objectors. In Connecticut Limousine

Service, 324 N.L.R.B. 633, 637 (1997), a Board majority

identified several questions relevant to that determination

including, for example, whether the expenditures for

organizing were necessary to “preserve uniformity of labor

standards in the organized workforce” as asserted by the

union therein and “what kinds of employers, either in the

Employer’s specific industry or in competing industries, the

Union might attempt to organize in order to preserve

uniform labor standards.”

In the absence of this defining precedent at the time that the

instant dispute arose, we find it appropriate to sever these

chargeability issues from this proceeding and remand them

to the judge for further proceedings, including, if necessary,

a reopening of the hearing to adduce additional evidence,

and for the issuance of a supplemental decision containing

findings of fact, conclusions of law, and a recommended

Order. In deciding the chargeability of these expenses, the

judge shall consider the questions deemed relevant by the

Board in Connecticut Limousine.

Id. at 31-32 (footnotes omitted). One Board member dissented,

arguing that there should be a per se rule that all organizing

expenses are nonchargeable. Id. at 36.

After the remand order from the Board on the chargeability

issue, the General Counsel moved to close the record and

dismiss the remaining portions of the Complaint on the ground

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that the Board had “rejected the sole theory underlying the

complaint, which was that no nonunit expenses were chargeable

to Beck objectors.” Schreiber Foods, 3-CB-3077, Order at 2

(Feb. 5, 2001), reprinted in Br. for NLRB (Appendix). The

Board rejected the General Counsel’s request, finding that, while

“[t]he General Counsel clearly is correct that the Board rejected

the . . . contention that all nonunit expenses are per se not

chargeable to Beck objectors . . . , both the judge and the Board

explicitly considered a lesser theory of violation . . . , and the

Board’s remand directed the judge to address the chargeabilty of

certain nonunit expenditures under the standard set forth in

California Saw.” Id. at 2-3. In its February 2001 order, the

Board went on to describe the inquiry before the ALJ:

On the current record, the General Counsel has shown that

certain nonunit expenditures are being charged. The

Respondent at this point has the burden of going forward to

show that these expenditures are properly chargeable under

the California Saw standard. . . . The nonunit expenses

involved herein involve organizational expenses and other

expenses. In regard to the former, the judge should

consider the Board’s decision in Meijer, Inc., 329 N.L.R.B.

[730] (1999), which issued after the Remand Order in the

instant case. In Meijer, the Board held that “at least with

respect to organizing within the same competitive market as

the bargaining unit employer, organizing expenses are

chargeable to bargaining unit employees” under the

California Saw standard.

Id. at 3-4 (quoting Meijer, 329 N.L.R.B. at 734).

At a second hearing on October 10-11, 2001, the ALJ

received testimony from three Union witnesses: Professor Dale

Belman of the Michigan State University School of Labor

Relations, Danny McGowan, a business agent of the Union, and

Detlef Pavlovich, the Union’s accountant. The Charging Parties

called Irving Ross, also a certified public accountant, to retort

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Pavlovich’s testimony. Schreiber Foods, 349 N.L.R.B. No. 14,

slip. op. at 23 (Jan. 26, 2007) (decision of ALJ).

Prior to hearing testimony, the ALJ described the previous

decisions of the Board. In that description, the ALJ stated that

“you can separate union[] activities or expenses in[to] three

areas.” Hearing Tr. at 234 (Oct. 10, 2001), reprinted at

Appendix (“App.”) 109. The first category included “companies

that are in the same business, same industries, competitive to

Schreiber Foods.” Id. at 234-35, App. 109-10. The other

categories included public sector employees and employees of

private firms that were not competitive with Schreiber. Id. at

235, App. 110. For organizing of employees within the

competitive market, the ALJ stated, “I think it’s clear [from] my

decision . . . and [the] Board[’s] subsequent decisions that those

expenses are clearly chargeable to the objectors. I don’t think

there’s any question about that.” Id.

On December 12, 2001, the ALJ issued a decision. The

ALJ first concluded that “the Board has already decided that a

union can charge objectors for expenses incurred in organizing

or representing units within the same competitive market as the

bargaining unit employer.” Schreiber Foods, 349 N.L.R.B. slip.

op. at 27 (quotation marks omitted). The ALJ also found that

the Union’s “representational and organizational expenses for

employers outside of the competitive market” were chargeable.

Id. In making this finding, the ALJ relied in large part on the

testimony of Professor Belman that an increase in the number of

unionized employees “in a small city such as Green Bay” would

create an upward pressure on wages, regardless of the industry.

For public sector employees, the ALJ reached a different

conclusion, finding that increased unionization of public sector

employees would have little effect on the wages of private sector

employees. However, the ALJ found that the Union had not

spent any of the objecting members’ dues on organizing of

public sector employees. Id. at 27-28.

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The Board issued its final decision in this matter on January

26, 2007. In that decision, a majority of the Board found that

the Union had not “presented sufficient evidence to support a

finding, under Meijer, that its organizing expenses are

chargeable to objectors.” Id. at 4. The Board unanimously

upheld the ALJ’s determination that the Union did not charge

objectors for expenses incurred in organizing public sector

employees.

The Board’s opinion did not interpret Meijer as establishing

a per se rule on the chargeability of union expenses for

organizing employees within a competitive market. Rather, the

Board found that

Meijer permits a union to demonstrate, as the unions did in

Meijer for the highly competitive retail grocery business

located in the same metropolitan area, that there is a direct,

positive relationship between the wage levels of

union-represented employees and the level of organization

of employees of employers in the same competitive market.

If this same showing is made under analogous factual

settings, then under Meijer the union may lawfully charge

objectors for organizing expenditures.

Id. at 6 (quotation marks and citations omitted). The Board

found that the Union had failed to meet this standard, describing

Professor Belman’s testimony as “generalized academic

research” that was “not specific” to the market in question. Id.

The Board contrasted the evidence put forward by the Union in

this case with the “direct, positive relationship between the wage

levels of union-represented employees and the level of

organization” shown in Meijer. Id. (quoting Meijer, 329

N.L.R.B. at 738).

In addition to the majority opinion, two panel members

wrote separately. Member Schaumber dissented in part, arguing

that Meijer should be overruled and that the Board should find

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that “as a matter of law . . . organizing expenses are

nonchargeable to objecting nonmembers.” Id. at 12. Panel

member Liebman, on the other hand, argued that Meijer

established a per se rule that all organizing expenses within the

employer’s competitive market were chargeable. Id. at 18.

Board Chairman Battista, while admitting to “grave doubts

about the validity” of Meijer, found that it was distinguishable,

and therefore concluded that, “where a case is distinguishable,

there is no need to overrule it.” Id. at 7 n.21.

Both the Union and the Charging Parties challenge the

Board’s ruling. Under 29 U.S.C. § 160(f):

Any person aggrieved by a final order of the Board granting

or denying in whole or in part the relief sought may obtain

a review of such order . . . in the United States Court of

Appeals for the District of Columbia, by filing in such . . .

court a written petition praying that the order of the Board

be modified or set aside.

II. ANALYSIS

A. Standard of Review

This court’s review of NLRB decisions is deferential, and

a decision of the NLRB will be overturned only if “the Board’s

factual findings are not supported by substantial evidence, or the

Board acted arbitrarily or otherwise erred in applying

established law to the facts of the case.” Cmty. Hosp. of Cent.

Cal. v. NLRB, 335 F.3d 1079, 1082-83 (D.C. Cir. 2003)

(quotation marks, brackets, and ellipses omitted). “The Board

cannot ‘ignore its own relevant precedent but must explain why

it is not controlling.’” Manhattan Ctr. Studios, Inc. v. NLRB,

452 F.3d 813, 816 (D.C. Cir. 2006) (quoting BB & L, Inc. v.

NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995)). “‘Where an agency

departs from established precedent without a reasoned

explanation, its decision will be vacated as arbitrary and

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capricious.’” Id. (quoting ANR Pipeline Co. v. FERC, 71 F.3d

897, 901 (D.C. Cir. 1995)) (brackets omitted).

In reviewing an NLRB decision concerning the duty of fair

representation, this court affords “significant” deference to the

Board. Thomas v. NLRB, 213 F.3d 651, 657 (D.C. Cir. 2000).

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.

Id. (quoting Int’l Ass’n of Machinists & Aerospace Workers v.

NLRB, 133 F.3d 1012, 1015 (7th Cir. 1998)) (ellipses omitted).

B. Matters Not Before This Court

Before turning to the merits, it is important to understand

what is not at issue in this appeal. First, the parties agree that

the Board’s decision on the question of whether the Union’s

financial disclosures were adequate should be vacated in light of

Penrod. In Penrod, we examined a union disclosure that was

similar to the one at issue in this case. The court held that the

general information provided by the union in Penrod was not

sufficient to give objectors a basis upon which to decide whether

to challenge the union’s calculations. Because Penrod was

decided after the Board made its determination in this case that

the Union’s disclosures were adequate, Penrod did not figure

into the Board’s disposition of that issue. We therefore vacate

the Board’s order with respect to the financial disclosures and

remand to the Board to allow it to reconsider whether the Union

fulfilled its obligation to provide adequate financial disclosure.

Second, neither party challenges the Board’s determination

that the Union did not unlawfully charge the Charging Parties

for expenses incurred in organizing employees working in the

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public sector. The ALJ found that “there was no net cost to the

[Union] of representing . . . public-sector employees,” 349

N.L.R.B. slip. op. at 28, and the Board upheld that

determination. Neither party objects to the Board’s decision on

this question.

Finally, the Charging Parties petition this court to require

the Board to adopt a per se rule that expenses incurred in

organizing employees of other employers can never be charged

to objectors. The Charging Parties are not “aggrieved” within

the meaning of the NLRA on this issue, so their claim is not

properly before this court for review.

Section 10(f) of the Act provides that “[a]ny person

aggrieved by a final order of the Board granting or denying in

whole or in part the relief sought may obtain a review of such

order.” 29 U.S.C. § 160(f). The Board in this case ordered the

Union to “[c]ease and desist from . . . [c]harging and collecting

from objecting nonmembers” and to “[r]efund with interest”

dues and fees attributable to organizing activities. 349 N.L.R.B.

slip. op. at 8. Where, as here, a judgment gives a party all the

relief requested, an appeal may not be taken simply to challenge

the Board’s reasoning. See Liquor Salesmen’s Union Local 2 v.

NLRB, 664 F.2d 1200, 1206 (D.C. Cir. 1981) (holding that union

was not aggrieved by Board decision when it “has received all

the relief it requested” even if Board did not “pass specifically

on [union’s] motion for summary judgment”).

The Charging Parties here received the specific relief that

they sought and they are entitled to nothing more. It is of no

moment that the Board’s written rationale was not as far-

reaching as the Charging Parties would have preferred. There

is nothing in the Board’s decision that resulted in a cognizable

injury to the Charging Parties sufficient to support a showing of

aggrievement under § 10(f). Nor is there any imminent threat

that the Charging Parties will face the same injury that prompted

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the complaint in this case. Cf. City of Los Angeles v. Lyons, 461

U.S. 95 (1983). There is no basis for review under § 10(f).

Even assuming, arguendo, that the Charging Parties’

disagreement with the Board’s reasoning might satisfy the

requirement of aggrievement under § 10(f), we would still

decline their invitation to issue an advisory opinion instructing

the Board to adopt a per se rule covering organizing expenses.

It is not within the province of the judiciary to force an agency

to adopt a rule on a subject that is within its compass of

authority before the agency itself has acted on the issue. Under

our system of judicial review, it is the role of the agency charged

with administrating a statute to make the initial interpretation of

that law – one that will be overturned only when the agency acts

without delegated authority, or its action is at odds with the plain

meaning of the authorizing statute, unreasonable, or arbitrary

and capricious. See Chevron U.S.A. Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837 (1984).

It is also well understood that “a reviewing court must

confine itself to the grounds upon which the record discloses

that the agency’s action was based.” EDWARDS & ELLIOTT,

FEDERAL STANDARDS OF REVIEW – REVIEW OF DISTRICT COURT

DECISIONS AND AGENCY ACTIONS 171 (2007). The Charging

Parties were awarded relief because the Board found that the

Union failed to show that its organizing expenses were germane

to its role as bargaining agent for the employees in the Schreiber

unit. The Board declined to decide anything more, apparently

in part because it could not reach a consensus on the general

issue of the chargeability of organizing expenses. In any event,

the Board majority concluded that this question was not squarely

presented and that the case could be resolved on narrower

grounds. The Board also made it clear that it anticipated a

future opportunity to revisit the general chargeabilty issue:

Presumably, the General Counsel, now aided by this

opinion, will understand that organizational expenses

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cannot be charged unless there is a specific nexus between

those expenses and the economic integrity of the unionized

unit. And a union, similarly aided by this opinion, will seek

to build the kind of record that existed in Meijer but does

not exist here. Where that showing is made, we will then be

squarely presented with the issue of whether organizational

expenses can be charged if the nexus is shown.

Schreiber Foods, 349 N.L.R.B. slip op. at 7 n.21.

The general chargeabilty issue is a matter for the Board to

decide in the first instance. See, e.g., Tradesmen Int’l, Inc. v.

NLRB, 275 F.3d 1137, 1141 (D.C. Cir. 2002) (“Defining the

scope of [the NLRA’s] protections ‘is for the Board to perform

in the first instance as it considers the wide variety of cases that

come before it.’”) (quoting NLRB v. City Disposal Sys., Inc., 465

U.S. 822, 829 (1984)). The Board did not decide the issue in

this case, so this court is constrained to confine itself to the

grounds upon which the record discloses that the agency’s

action was based.

C. The Board Did Not Act Arbitrarily in Finding That the

Union’s Organizing Expenses Were Not Germane to

Schreiber Employees

The Union offers several arguments that the Board acted

arbitrarily in finding that the Union violated its duty of fair

representation. The Union first contends that the Board ignored

prior precedent, established in Meijer, that all organizing

expenses within a competitive market are per se chargeable. In

the alternative, the Union asserts that, even under the standard

used by the Board, it presented sufficient evidence to show that

its organizing efforts benefitted the employees in the Schreiber

bargaining unit. Finally, the Union claims that it was denied a

fair opportunity to present its case. We find none of these

arguments convincing.

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In Meijer, as in this case, several objecting nonmembers

challenged the chargeability of organizing expenses. The Board

held that a nonunit expense could be charged to objecting

nonmembers so long as the activity is “germane to the union’s

role in collective-bargaining” and some benefit ultimately inures

to the benefit of the employees in the unit. 329 N.L.R.B. at 733

(quoting California Saw, 320 N.L.R.B. at 239). Applying that

standard to the facts in Meijer, the Board concluded:

Having considered the evidence, the judge’s decision, and

the parties’ arguments, we find that, at least with respect to

organizing within the same competitive market as the

bargaining unit employer, organizing expenses are

chargeable to bargaining unit employees under the

California Saw standard.

Id. at 733-34 (footnote omitted).

The Board in Meijer noted that it was “not finding

organizing expenses chargeable in [that] case merely on a

general notion that organizing makes a union stronger and a

stronger union is a more successful bargainer.” Id. at 738.

Instead, the Board based its decision in Meijer “on academic

research, empirical data, and specific evidence.” Id. The Board

cited several studies by academics in the labor economics field

that found relationships between “the percent of employees

organized and the level of union wages.” Id. at 734. That

relationship was confirmed in the “retail food industry” – the

industry in which the employer in that case operated – by

“persuasive evidence.” Id. Finally, the Board in Meijer noted

testimony from the president of the Union showing that the

employer had “insisted on paying the mercantile clerks less than

the food clerk rate because of the lower-wage, nonunion

competition it faces in the mercantile industry.” Id. at 735.

From this testimony, the Board concluded that the “clerks’

wages have been directly affected by the difference in the levels

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of organization of [the employer’s] competitors in the two

industries in which it operates.” Id.

In the instant case, the Board majority interpreted Meijer to

mean that, in order to justify charging objecting nonmembers for

organizing expenses, “the union must produce specific evidence

showing a positive correlation between wages and union density

in the relevant market at issue.” Schreiber Foods, 349 N.L.R.B.

slip op. at 6 n.18. The Union claims that this interpretation

amounts to an arbitrary departure from the precedent in Meijer.

We disagree.

The Board majority opinion discusses Meijer at length,

concluding:

Meijer permits a union to demonstrate, as the unions did in

Meijer for the highly competitive retail grocery business

located in the same metropolitan area, that there is a direct,

positive relationship between the wage levels of

union-represented employees and the level of organization

of employees of employers in the same competitive market.

If this same showing is made under analogous factual

settings, then under Meijer the union may lawfully charge

objectors for organizing expenditures.

Id. at 6 (citation and quotation marks omitted). The dissenting

Board member and the Union interpret Meijer differently. But

this disagreement does not render the majority opinion

unreasonable. There is no doubt that the Board may not ignore

its prior decisions, LeMoyne-Owen College v. NLRB, 357 F.3d

55, 60-61 (D.C. Cir. 2004), and that it must provide a reasoned

justification when it departs from precedent, Titanium Metals

Corp. v. NLRB, 392 F.3d 439, 446 (D.C. Cir. 2004). In this

case, the Board did not depart from or ignore Meijer. Rather,

the Board offered a “reasoned justification” for its interpretation

and application of Meijer. The Board decision thus easily

avoids “a finding of arbitrary and capricious action.” W & M

19

Properties of Conn., Inc. v. NLRB, 514 F.3d 1341, 1348 (D.C.

Cir. 2008).

After finding that there was no per se rule, the Board turned

to the evidence presented to the ALJ, and found that the Union

had failed to make a persuasive case that its organizing expenses

were germane to its role as the bargaining agent for the

employees at Schreiber. The Board found that the testimony

before the ALJ largely amounted to a “literature review that

supported the general proposition[]” that organizing will “allow

unions to raise wages more than they otherwise would.”

Schreiber Foods, 349 N.L.R.B. slip op. at 6. Indeed, the Union

conceded that its principal witness “was not acquainted with the

markets or industries relevant to the objectors’ unit; nor did he

have any knowledge of or acquaintance with the [Union’s]

organizing efforts.” Id. The Board also found that the

testimony of the Union’s secretary-treasurer “was never

developed beyond the purpose of the [Union’s] organizing

efforts to a discussion of the actual effects of those efforts.” Id.

The Board went on to say:

Unlike the “numerous examples,” Meijer, 329 NLRB at

735, recounted by the senior officials of the respondent

unions in Meijer, which demonstrated the accuracy of the

proposition that there was a “direct, positive relationship

between the wage levels of union-represented employees

and the level of organization” in Meijer, id. at 738, [none of

the witnesses in this case] provided any such examples.

Thus, we find that the [Union] has failed to meet its burden

under Meijer of establishing that its organizing

expenditures are germane to its duties as a bargaining

representative and ultimately inure to the benefit of the

objectors' bargaining unit and were not chargeable to

objectors.

Id. The Board’s findings are reasonable and supported by

substantial evidence.

20

Finally, we reject the Union’s argument that it lacked the

opportunity to put evidence before the ALJ concerning the

germaneness of organizing in the employer’s competitive

market. The Union’s argument is based on the Board’s

supplemental order of February 2001, declining the General

Counsel’s request to dismiss the case. The Union argues that

this order, and the ALJ’s interpretation thereof, indicated that all

organizing expenses in the competitive market were chargeable

under Meijer, and that it therefore lacked notice that it was

required to justify those expenditures. The Union further argues

that the Board should have dismissed the Complaint after the

General Counsel’s theory of the case – that all organizing

expenses were per se nonchargeable – was rejected by the

Board. According to the Union, the Board’s failure to dismiss

the Complaint relieved the General Counsel of its burden of

identifying expenses that were unlawfully charged, and placed

the Union in the position of having to defend all of its nonunit

expenses – an impermissibly vague inquiry.

The claim that the Union faced a completely unstructured

inquiry is belied by the original remand order, which explicitly

stated the issues to be addressed, including whether organizing

was “necessary to preserve uniformity of labor standards” and

“what kinds of employers, either in the Employer’s specific

industry or in competing industries, the Union might attempt to

organize in order to preserve uniform labor standards.”

Schreiber Foods, 329 N.L.R.B. at 32 (quotation marks omitted).

The remand order even specifically allowed for “a reopening of

the hearing to adduce additional evidence.” Id. Furthermore, in

the February 2001 order, the Board explicitly pointed to Meijer,

which clearly shows how a Union could justify its organizing

expenditures. The Union’s failure to present adequate evidence

to the Board was not the result of the Board presenting the

Union with a vague or unstructured inquiry.

21

The February 2001 order did not modify the Board’s initial

remand order – requiring the Union to justify its organizing

expenditures – nor did it in any way preclude the Union from

putting forward relevant evidence. The Union in fact did enter

evidence at the remand hearing, over no objections from the

ALJ, the General Counsel, or the Charging Parties. The Union

introduced testimony from an expert witness in labor economics

as well as a Union official concerning the Union’s organizing

activity and its effect on wages. The ALJ did not in any way

preclude the Union from offering evidence on the germaneness

of this type of organizing. The Board simply found that the

Union’s evidence did not meet the Board’s standard of proof.

The Union had every opportunity to build its evidentiary record

before the Board arrived at this conclusion.

Because the Board did not arbitrarily depart from precedent,

misconstrue the evidence before it, or deny the Union a fair

hearing, we uphold the Board’s order, finding that the Union

unlawfully charged the Charging Parties for organizing

activities, and ordering the reimbursement of the portion of their

dues that were used for those activities.

III. CONCLUSION

For the reasons indicated above, we reject the Charging

Parties’ claim as not properly before the court; we deny the

Union’s petition for review; and we grant the Board’s cross-

application for enforcement in part. The case is hereby

remanded to allow the Board to reconsider the issue of the

adequacy of the Union’s financial disclosure in light of Penrod.