Appendix — Communications Workers v. Beck
Supreme Court brief1988
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86-637" FILED
OCT 1'7 1986 |
JOSEPH F. SPANIOL, JR.
No. CLERK
‘
‘
IN THE
Supreme Court of the United States
OCTOBER TERM, 1986
COMMUNICATIONS WORKERS OF AMERICA
and ITs LOCALS 2100, 2101, 2108, and 2110,
Petitioners,
Vv.
Harry E. BECK, JR., et al.,
Respondents.
APPENDIX TO THE
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
THOMAS S. ADAIR
JAMES COPPESS
1925 K Street, N.W.
Washington, D.C. 20006
DAVID M. SILBERMAN
LAURENCE GOLD
Of Counsel: (Counsel of Record)
GEORGE KAUFMANN 815 16th Street, N.W.
2101 L Street, N.W. Washington, D.C. 20006
Washington, D.C. 20037 (202) 637-5390
WILSON - Epes PRINTING Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001
@ LEB
TABLE OF CONTENTS
I. Decisions of the Court of Appeals
A. Opinions on Rehearing En Bane ..................
B. Opinion of the Court of Appeals’ Panel ........
II. Decisions of the District Court
C. Judgment of the District Court —................
Memorandum Opinion, August 9, 1983........
Memorandum and Order, March 4, 1983......
Memorandum Opinion, January 19, 1981....
Memorandum and Order, March 16, 1979....
Memorandum and Order, January 12, 1979..
Memorandum Opinion, April 13, 1977 _........
"Ae SF
III. Reports of the Special Master
J. Supplemental Report, September 14, 1981...
K. Report, August 18, 1980 _.......... viii lel
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 83-1955
HARRY E. BECK, JR.; DoRIS R. AMBROSE; JACQUELINE
S. BRANDON; MARY ANNA Cox; SALLY B. DIMAuRO;
RuE T.F. DOWNEY; KATHLEEN A. HEIL; JOHN J.
HURLEY; HARRIETT LIPSCHULTZ; CLAY B. LUTZ; BAR-
BARA MCGAUGHEY; ROLAND R. MERKLE; ETHEL T.
MERRYMAN; Doris J. MORROW; MARION F. NORTHROP;
FRANCES M. PHILLIPS; VIVIAN REEDY; BARBARA A.
RUSSELL; Lois A. STALLINGS; HARRY B. SWARTZ, SR.,
Appellees,
versus
COMMUNICATIONS WORKERS OF AMERICA (C.W.A.), an
unincorporated Labor Organization; C.W.A. CoMMIT-
TEE ON POLITICAL EDUCATION (C.W.A. COPE) ; C.W.A.
DistricT II; LocAL 2100 oF C.W.A.; LOCAL 2101 oF
C.W.A.; LOCAL 2108 oF C.W.A.; LOCAL 2110 or C.W.A.,
Appellants,
and
LOCAL 2350 oF C.W.A.; AMERICAN FEDERATION OF LABOR-
CONGRESS OF INDUSTRIAL ORGANIZATIONS (AFL-CIO),
a Federation of National and International Labor Or-
ganizations; AFL-CIO COMMITTEE ON POLITICAL ED-
UCATION ; MARYLAND STATE AFL-CIO; AMERICAN TELE-
PHONE & TELEGRAPH, a Corporation; C & P TELE-
PHONE COMPANY OF MARYLAND, a Corporation,
Defendants.
2a
No. 83-1956
HARRY E. BECK, JR.; Doris R. AMBROSE; JACQUELINE
S. BRANDON; MARY ANNA Cox; SALLY B. DIMAUuURO;
RuE T.F. DOWNEY; KATHLEEN A. HEIL; JOHN J.
HURLEY; HARRIETT LIPSCHULTZ; CLAY B. LUTZ; BAR-
BARA MCGAUGHEY; ROLAND R. MERKLE; ETHEL T.
MERRYMAN; Doris J. MORROW; MARION F. NORTHROP;
FRANCES M. PHILIPS; VIVIAN REEDY; BARBARA A.
RUSSELL; LoIs A. STALLINGS; HARRY B. SWARTZ, SR.,
versus Appellants,
COMMUNICATIONS WORKERS OF AMERICA (C.W.A., an
unincorporated Labor Organization; C.W.A. COMMIT-
TEE ON POLITICAL EDUCATION (C.W.A. COPE) ; C.W.A.
District II; LocAL 2100 or C.W.A.; LOCAL 2101 oF
C.W.A.; LOCAL 2108 or C.W.A.; LOCAL 2110 oF C.W.A.,
_ Appellees,
LOCAL 2350 oF C.W.A.; AMERICAN FEDERATION OF LABOR-
CONGRESS OF INDUSTRIAL ORGANIZATIONS (AFL-CIO),
a Federation of National and International Labor Or-
ganizations; AFL-CIO COMMITTEE ON POLITICAL ED-
UCATION ; MARYLAND STATE AFL-CIO; AMERICAN TELE-
PHONE & TELEGRAPH, a Corporation; C & P TELE-
PHONE COMPANY OF MARYLAND, a Corporation,
Defendants.
Appeals from the United States District Court
for the District of Maryland, at Baltimore
James R. Miller, Jr., District Judge. (C/A M-76-839)
Argued: April 8, 1986. Decided: September 12, 1986
8a
Before WINTER, Chief Judge, and RUSSELL, WIDE-
NER, HALL, PHILLIPS, MURNAGHAN, SPROUSE,
ERVIN, CHAPMAN and WILKINSON, Circuit Judges,
sitting en banc.
Laurence Gold (James Coppess; George Kaufman on
brief) for Appellants/cross-appellees; Edwin Vieira
(Joseph J. Hahn, National Right to Work Legal De-
fense Foundation, Inc., on brief) for Appellees/cross-
appellants.
PER CURIAM:
In this cause, the existence of federal jurisdiction con-
stituted the dividing issue both between the majority and
dissenting panel opinions, as reported in 776 F.2d 1187
(4th Cir. 1985), as well as in the en banc hearing. With-
out reviewing the extended discussion of this issue in
the two panel opinions, which delineated adequately the
difference in the Court on the dispositive issue of juris-
diction, it seems sufficient for purposes of this en banc
decision to summarize the ultimate jurisdictional deci-
sion as stated in the two panel opinions, beginning first
with the majority opinion.
The majority panel opinion found first that the exac-
tion of union dues from non-consenting non-union em-
ployees under an agency contract beyond the require-
ments for purposes of collective bargaining, grievance
adjustment or contract administration was “a clear
breach of section 8(a) (3) [of the NLRA] and of the
union’s duty of fair representation.” It then concluded
that federal jurisdiction “over plaintiffs’ statutory suit
against defendant union under section 8(a) (3) and for
breach of the duty of fair representation was properly
invoked under 28 U.S.C. § 1337.” 776 F.2d at 1204-05'
1The majority opinion, in note 26 on page 1204, also opined
that federal jurisdiction might also be found “under § 301 of the
Taft-Hartley Act, 29 U.S.C. § 185.”
4a
The majority opinion opined that, having found federal
jurisdiction for violation of both the statute and the duty
of fair representation, it seemed “unnecessary . .. to
consider the constitutional basis for jurisdiction” id., but
despite this, it proceeded to state that on constitutional
grounds jurisdiction in the cause was sustainable even
though it had earlier recognized that decisions on con-
stitutional grounds should be avoided if the matter could
be resolved on statutory grounds. See 776 F.2d at 1198
and International Association of Machinists v. Street,
367 U.S. 740 (1961).
The dissenting panel opinion, on the other hand, con-
cluded that § 8(a) (3) of the NLRA “cannot fairly be
read to impose” on unions under an agency shop agree-
ment the obligation to use agency shop fees only “for
purposes . . . directly related to collective bargaining,
grievance adjustment, or contract administration” as
against objecting non-union employees. 776 F.2d at 1214.
As the dissent puts its position, “[{b]Joth the language of
§ 8(a) (3) and its legislative history show that Congress
did not intend to limit the use of agency shop fees un-
der the NLRA. Further, the history and purpose of this
provision differs from the history and purpose of the
agency shop provision in the Railway Labor Act; thus
the Railway Labor Act’s limits on fee use should not be
engrafted onto the NLRA’s § 8(a) (3).” 776 F.2d at
1215. Nor, the opinion continues, can such exaction by
the union of these dues to be used for purposes not re-
lated to “collective bargaining, grievance adjustment or
contract administration” represent a cognizable constitu-
tional claim because the union’s “use of [such non-con-
senting employees’) fees does not constitute state action.”
776 F.2d at 1214. The dissenting opinion did not dis-
cuss the maintainability of the action as one for a viola-
tion of the duty of fair representation by the union un-
der § 1337.
5a
After the filing of the panel opinions, en banc hearing
of the cause was voted. At the en banc hearing, the
arguments of the parties focused on the existence of fed-
eral jurisdiction of the cause. The arguments of the
parties on such issues followed substantially the line of
the two panel opinions already summarized, with the
plaintiffs relying on the jurisdictional grounds adum-
brated in the panel majority opinion and with the union
and its local resting their argument on the grounds
stated in the dissenting opinior.
After the en banc arguments, five members of the
Court (Judges Russell, Widener, Ervin, Chapman, and
Wilkinson), voted that federal jurisdiction “over plain-
tiffs’ statutory suit against defendant union under sec-
tion 8(a)(3) and for breach of the duty of fair rep-
resentation was properly invoked under 28 U.S.C. § 1337,”
but three of these five judges (Judge Widener, Ervin,
and Wilkinson) felt it unnecessary to consider whether
jurisdiction also existed on constitutional grounds. Judges
Russell and Chapman, the other members of the group,
however, were of the opinion that jurisdiction of the
cause could also be sustained on the constitutional claim.
Judge Murnaghan, speaking for himself, in a separate
concurring opinion, filed along with this order and opin-
ion, found that federal jurisdicion existed in this case
to decide the plaintiffs’ claims as violations of the union’s
statutory duty of fair representation, under Vaca v.
Sipes, 386 U.S. 171 (1967),* but he agreed with the
dissenting panel opinion insofar as it would deny federal
jurisdiction on either the statutory or the constitutional
grounds. The result is that six Judges of the Court voted
to sustain federal jurisdiction over the cause, though in
some instances on somewhat varying grounds.
2 It is inaccurate to state that the majority opinion did not find
jurisdiction on the violation of the duty of fair representation by
the union. The majority panel opinion did assert such jurisdiction
but it did not assert it with the same depth of reasoning and per-
ception as does Judge Murnaghan’s concurring opinion.
6a
Four members of the Court have, however, voted after
the en banc hearing, (Judges Winter, Hall, Phillips,
and Sprouse) to sustain the conclusions of the dissenting
panel opinion that here was no federal jurisdicion herein
either on statutory or constitutional grounds. The dis-
senting opinion did not specifically address the violation
of the duty of fair representation, as alleged in the plain-
tiffs’ complaint and as found in both the majority panel
opinion and in the concurring opinion of Judge Murna-
ghan to be a basis for jurisdiction herein, but it is to be
assumed that this ground was similarly disapproved in
the dissenting opinion.
It follows that the en banc court by a vote of six to
four sustained federal jurisdiction in this cause. There
was apparently no difference within the Court, assuming
that federal jurisdiction was upheld, that the majority
panel opinion’s disposition of the allocation issue was
properly resolved.
Accordirgly, the result of the en bane consideration
is the affirmation by the en banc court of federal juris-
diction over the cause and of the majority panel’s deter-
mination on the allocation issue.
MURNAGHAN, Circuit Judge, concurring:
The posture of the case, the order of my writing and
the outcome are, if not unique, at least unusual. A two-
to-one majority at the panel level held unconstitutional
a labor union’s practice of using agency fees, received
from employees who were not union members, for pur-
poses unrelated to collective bargaining, grievance ad-
justment, or contract administration. Alternatively, the
majority concluded that the union’s conduct had violated
§8(a)(3) of the National Labor Relations Act, 29
U.S.C. § 158(a) (3). The non-member employees were
entitled to relief for that violation, in the majority’s view,
7a
on two theories: first, that § 8(a)(8) itself provided
them with a cause of action justiciable in the federal
courts, and, second, that the definition of an unfair labor
practice contained in § 8(a) (3) also described a breach
of the duty of fair representation.* Judge Russell au-
thored the majority opinion, with Judge Chapman con-
curring. Beck v. Communications Workers of America,
776 F.2d 1187 (4th Cir. 1985).
Chief Judge Winter, in dissent, concluded that the ab-
sence of government action foreclosed the constitutional
route to recovery, and that § 8(a) (8), involving only
controversies between employers and employees, created
no restriction on a union’s authority to use agency fees
for non-collective-bargaining purposes. He further con-
cluded that, in the absence of a violation of § 8(a) (3),
there could be no breach of the duty of fair representa-
tion, and that, in any event, the plaintiffs had no cause of
action based on § 8(a) (8) itself, due to the National
Labor Relations Board’s exclusive jurisdiction to deal
*The extent to which the panel majority relied on the duty
of fair representation is unclear. On the one hand, the opinion
states that “plaintiffs have stated a good cause of action for a
violation of . . . the duty of fair representation” as well as for a
violation of §8(a)(3). 776 F.2d 1187, 1196. Moreover, the ma-
jority plainly concluded that it was the fair representation claim
that brought the statutory aspect of the case within tnis court’s
jurisdicion, rather than within the exclusive jurisdiction of the
NLRB. /d. at 1203-04. On the other hand, the majority’s rationale
for its holding on the statutory issue is explained exclusively in
terms of § 8(a)(3) and its relationship to §2, Eleventh of the
Railway Labor Act, with no consideration given to the independent
force of the duty of fair representation. In addition, the opinion
states that “[o]nly if jurisdiction of these claims under § 8(a) (3)
itself is non-existent would a dismissal of this action .. . be appro-
priate.” Jd. at 1196 (emphasis supplied). These somewhat con-
tradictory indications are reconciled, it seems to me, if the opinion
is read to hold that a breach of the duty of fair representation
follows automatically from a violation of §8(a)(3). If I have
misread Judge Russell, I solicit his indulgence.
8a
with unfair labor practices under the doctrine of San
Diego Building Trades Council v. Garmon, 359 U.S. 236,
245 (1959). Id. at 1214-25.
A grant of rehearing en banc, of course, eliminated the
panel level decisions as grounds for disposing of the case.
Back at square one, the court divided six to four. Judge
Widener, Judge Ervin and Judge Wilkinson joined Judge
Russell and Judge Chapman on one side of the great
divide, while Judge Hall, Judge Phill'ps and Judge
Sprouse aligned themselves with Judge Winter.
I find myself in an odd position. On the two issues
addressed by my brothers, I find myself in Chief Judge
Winter’s camp. In my view, governmental authority
cannot be ascribed to the union here, and hence there
can be no constitutional violation. Nor, I believe, does
§ 8(a) (3) in itself prohibit unions from spending agency
fees for purposes unrelated to collective bargaining, griev-
ance adjustment, or contract administration. Those ar-
guments are fully adequate to rebut the contentions mar-
shalled by Judge Russell. However, another set of con-
siderations, raised by the plaintiffs* but not dealt with
4In his dissenting opinion at the en banc level, Chief Judge
Winter argues that the issue of the duty of fair representation was
neither advanced by the parties nor considered by the panel ma-
jority. Post, at 1. It is true that, in the briefs and oral argu-
ments, the duty of fair representation was overshadowed by the
parties’ emphasis on § 8(a) (3). However, that seems to have
occurred because the parties, like the panel majority, believed that
§ 8(a) (3) provided a sort of “standard of care” for the duty of fair
representation, and not because they believed that the plaintiffs’
claim rested on § 8(a) (3) alone. A review of the record reveals
the inaccuracy of the suggestion that the fair representation issue
is of my own devising.
The duty of fair representation was initially raised as a ground
for relief in the plaintiffs’ complaint. Supplemental Appendix 15.
Moreover, it is noteworthy that, although the issue was raised
separately, the complaint also charged that the union’s expenditure
of agency fees violated its fiduciary duty to all bargaining unit
9a
by Chief Judge Winter or by Judge Russell, has led me
to the conclusion that the plaintiffs should prevail. It
is one thing to be out of step with everyone but Johnny.
It is even more lonely to find my vote the casting one,
where that status derives from its alignment with five
votes in favor of a rationale I disagree with and its
operation to four votes whose rationale, to the extent
expressed, I approve.
employees. Jd. at 12-15. The plaintiffs’ failure, at that stage, to
perceive a connection between their claims surely does not prevent
this court from doing so.
The question of the duty of fair representation was raised again
in the briefs submitted in connection with the initial hearing on
appeal before a panel of this court. The defendants pointed out that
because claims based directly on §8(a)(3) are within the ex-
clusive jurisdiction of the National Labor Relations Board, the
plaintiffs would have to find an alternative basis for their statutory
claim if they wished this court ‘o consider it. Reply Brief of
Appellants/Cross-Appellees 9-10. The plaintiffs responded with
the argument that the statutory basis for their claim actually lay
in the implied duty of fair representation. Appellees’ Supplemental
Brief 2-3. Although the plaintiffs did not clarify their view of the
relationship between the basis of their claim in the duty of fair
representation and their arguments under § 8(a)(3), the only
reasonable interpretation of their position seems to be that they
believed that § 8(a)(3) provided a convenient standard by which
the presence or absence of a breach of the duty of fair representa-
tion could be tested.
Finally, the panel majority’s opinion clearly considered and
agreed with the plaintiffs’ arguments concerning the fair repre-
sentation issue. A close reading of that opinion reveals that the
panel majority believed that the plaintiffs had two alternative
statutory claims, one based directly on § 8(a) (3), the other based
on the duty of fair representation. The panel majority concluded
that the union’s expenditure of agency fees was “not only a viola-
tion of the statute itself but also a violation of the duty of fair
representation.” 776 F.2d at 1203. The majority then explained,
in an extensive discussion, that the presence of the fair representa-
tion claim provided the court with jurisdiction and defeated the
argument that exclusive jurisdiction lay with the NLRB. Z/d. at
1203-04.
10a
I.
The plaintiffs are twenty employees of the American
Telephone and Telegraph Company and the Chesapeake
& Potomac Telephone Company. Both employers have
negotiated collective bargaining agreements with the
Communications Workers of America (CWA). Both col-
lective bargaining agreements contain an “agency shop”
provision, which requires the employer to deny employ-
ment to any employee who refuses either to join the
CWA or to pay the CWA agency fees equivalent to
union dues. The plaintiffs are employees who are not
members of the union, and who have regularly paid the
required agency fees. The CWA and its locals use a part
of the fees paid by the plaintiffs for purposes unrelated
to collective bargaining, contract administration, or griev-
ance adjustment.
The plaintiffs filed the present action in the United
States District Court for the District of Maryland in
June 1976. The plaintiffs alleged that the CWA had vio-
lated both its statutory duty of fair representation and
the plaintiffs’ First Amendment rights of freedom of ex-
pression by executing and enforcing the agency shop pro-
visions in such a manner as to coerce the plaintiffs into
paying fees which are not used for collective bargain-
ing purposes. Although the union had adopted an in-
ternal procedure for the refund of the appropriate por-
tion of dues and fees to employees who objected to such
expenditures, the plaintiffs contended that the procedure
was inadequate. The plaintiffs sought a declaratory judg-
ment establishing the illegality of the exaction of fees for
non-collective-bargaining purposes, an injunction against
the CWA’s continued use of agency fees for such pur-
poses, and a monetary judgment for fees collected and
used for such purposes in the past.
The CWA moved to dismiss the action because of the
plaintiffs’ failure to exhaust internal union procedures
lla
for resolving the dispute, or, in the alternative, for a
stay pending such exahustion. The district court denied
the motion. Beck v. Communications Workers of Amer-
ica, 468 F. Supp. 87, 90-91 (D. Md. 1979). The district
court reasoned that deferral to the union’s internal re-
bate procedure was not warranted where the plaintiffs
alleged that the procedure itself violated their rights.
The CWA does not appeal that decision.
The district court subsequently decided that the plain-
tiffs were entitled to the relief they sought. Addressing
the question of restitution of amounts previously collected
and improperly used, the court ruled that if the parties
could not agree upon the sums to be refunded, the court
would appoint a special master to make that determina-
tion. Beck v. Communications Workers of America, 468
F. Supp. 93, 97 (D. Md. 1979).
The parties were unable to agree on the amounts to
be refunded, and a master was appointed. In his first
report, filed August 18, 1980, the master found that only
19% of the CWA’s total expenditures were made for
purposes related to collective bargaining and contract
administration, and he recommended that 81% of past
agency fees collected by the CWA be refunded to the
plaintiffs. The CWA filed exceptions to the report. The
district court remanded the matter to the master, direct-
ing the master to make specific findings in response to
questions prepared by the court. Beck v. Communica-
tions Workers of America, 106 LRRM 2323 (D. Md.
1981). The master filed a supplemental report in Sep-
tember 1981 which largely reaffirmed his earlier findings.
The CWA filed exceptions to the supplemental report.
On March 5, 1982, while the district court was con-
sidering those exceptions, the union filed a motion under
Fed. R. Civ. P. 12(b) (6) to dismiss the complaint for
failure to state a claim. The union contended that the
plaintiffs’ constitutional claim failed for lack of govern-
12a
ment action, and that the statutory claim failed because
the union’s conduct did not violate the duty of fair rep-
resentation.
The district court apparently ignored the union’s mo-
tion to dismiss, thereby effectively denying the motion.
Instead, the district court granted judgment for the
plaintiffs for restitution of previously paid agency fees
in specified amounts. The district court also permanently
enjoined the CWA and its locals from retaining from the
plaintiffs in the future the portion of their agency fees
certified as non-retainable by an independent certified
public accountant.
On appeal, the CWA raised two claims of error. First,
it argued that its motion to dismiss the complaint should
have been granted. Second, it contended that, if the com-
plaint properly stated a claim, the district court and the
special master had applied an erroneous standard of
proof in determining the amount of the plaintiffs’ re-
funds. Judge Russell, joined by Judge Chapman, held
that the plaintiffs had properly stated a claim for viola-
tion of both their constitutional rights and the require-
ments of § 8(a) (3); they then went on to agree with
the union that an enormous standard of proof had been
applied. The panel therefore voted to vacate some of the
special master’s conclusions and to remand the case for
further proceedings. Beck v. Communications Workers
of America, 776 F.2d 1187 (4th Cir. 1985). Chief Judge
Winter, in dissent, concluded that the motion to dismiss
the complaint should have been granted. Jd. at 1214-25.
II.
Chief Judge Winter has, in my opinion, the better of
the arguments as to whether the Communications Work-
ers of America, in applying agency fees to non-collective-
bargaining purposes, has infringed First Amendment
rights of the plaintiffs or breached a statutory duty un-
der § 8(a)(3). I simply do not perceive the existence
13a
of governmental action sufficient to invoke the Constitu-
tion. Moreover, I agree with Chief Judge Winter that
the courts do not have jurisdiction to consider a claim
resting directly on § 8(a) (3). Claims based on conduct
which arguably amounts to an unfair labor practice un-
der § 8 of the National Labor Relations Act are within
the exclusive jurisdiction of the National Labor Rela-
tions Board. San Diego Building Trades Council v. Gar-
mon, 359 U.S. 236, 245 (1959). While we may, of
course, review the unfair labor practice determinations
of the NLRB, § 8(a) (3) provides no right of action that
is cognizable in the first instance in the federal courts.°
On the other hand, federal courts plainly have jurisdic-
tion to decide claims for violation of a union’s statutory
duty of fair representation. Vaca v. Sipes, 386 U.S. 171,
176-88, (1967). Because that duty does not arise from
the NLRA’s unfair labor practice provisions, such claims
were originally thought to be outside the scope of the
NLRB’s jurisdiction. Somewhat belatedly, the NLRB
decided that a union’s breach of its duty of fair rep-
resentation also constitutes an unfair labor practice un-
der §§8(b)(1) and 8(b) (2). Miranda Fuel Co., 140
NLRB 181 (1962), enforcement denied, 326 F.2d 172
(2d Cir. 1963). Nevertheless, in Vaca v. Sipes, supra,
the Supreme Court explicitly held that the NLRB’s as-
sumption of jurisdiction did not deprive the federal courts
of jurisdiction, despite the holding in San Diego Build-
ing Trades Council v. Garmon.* Thus, it is settled that
*No siimlar jurisdictional problem exists with respect to the
analogous provision of the Railway Labor Act, § 2, Eleventh, relied
on by Judge Russell, which also authorizes the adoption of union
shop and agency shop agreements. Unlike § 8(a) (3), § 2, Eleventh
is not subject to the jurisdiction of an administrative board. In-
deed, there is no administrative board under the RLA whose func-
tions parallel those of the NLRB.
® The Court explained that:
[A] primary justification for the pre-emption doctrine [an-
nounced in Garmon|]—the need to avoid conflicting rules of
l4a
suits for breach of the duty of fair representation, unlike
claims based on § 8(a)(3), are cognizable in federal
courts.
Chief Judge Winter assumed, however, that the scope
of the duty of fair representation, as it relates to the
use of agency fees, is merely coextensive with the require-
ments of § 8(a) (3). He therefore concluded that, in the
absence of a violation of § 8(a) (3), the fair representa-
tion issue was also necessarily resolved in favor of the
union. It is at this point that I part company with Chief
Judge Winter’s analysis. The extent of the duty of fair
representation is not identical to that of § 8(a)(3). The
two statutory obligations are quite distinct. The duty of
fair representation does not arise from § 8(a) (2) or from
any of the NLRA’s unfair labor practice provisions;
rather, it is implicit in the statute as a whole. See Vaca
v. Sipes, 386 U.S. 171, 177 (1967) ; Humphrey v. Moore,
375 U.S. 335, 342 (1964); Ford Motor Co. v. Huffman,
345 U.S. 330, 337 (1953).7 Conduct that amounts to an
substantive law in the labor relations area and the desirability
of leaving the development of such rules to the administrative
agency created by Congress for that purpose—is not applicable
to cases involving alleged breaches of the union’s duty of fair
representation. .. . [A]s these matters are not normally within
the Board’s unfair labor practice jurisdiction, it can be doubted
whether the Board brings substantially greater expertise to
bear on these problems than do the courts, .... Nor do we
think that Congress intended to shield employers from the
natural consequences of their breaches of bargaining agree-
ments by wrongful union conduct in the enforcement of such
agreements.
Vaca v. Sipes, 386 U.S. at 180-81, 186.
7 Insofar as the statutory source of the duty may be more pre-
cisely located, it is to be found in §9(a) of the Act, which grants
to recognized unions the privilege of acting as the exclusive bargain-
ing representative of all employees. Kolinske v. Lubbers, 712 F.2d
471, 481 (D.C. Cir. 1983); Local Union No. 12, United Rubber
Workers v. N.L.R.B., 368 F.2d 12, 17 (5th Cir. 1966); Price v.
15a
infringement of § 8(a) (3) may also violate the duty of
fair representation, but it does not follow that there can
be no fair representation breach in the absence of a
§ 8(a) (3) violation.
An analysis of the application of the duty of fair
representation in the present case must begin with the
threshold question whether the duty is implicated at all
in the collection and spending of agency fees. A union’s
duty of fair representation extends only to the union’s
conduct in representing employees in dealing with their
employer. Kolinske v. Lubbers, 712 F.2d 471, 481 (D.C.
Cir. 1983). The union must abide by that duty, for ex-
ample, in negotiating a collective bargaining agreement,
Ford Motor Co. v. Huffman, 345 U.S. 330 (1953), or in
adjusting an employee’s grievance, Bowen v. United
States Postal Service, 459 U.S. 212 (1983); Vaca v.
Sipes, 386 U.S. 171 (1967). On the other hand, the duty
of fair representation does not apply to the union’s treat-
ment of employees within its own internal structure.
Bass v. International Brotherhood of Boilermakers, 630
F.2d 1058, 1062-63 (5th Cir. 1980).
The duty of fair representation, however, extends to a
union’s collection and use of agency fees. If dissenting
employees refuse to pay the portion of their fees that is
to be used for non-collective-bargaining purposes, the em-
ployer is obligated, under the terms of the agency shop
clause of the collective bargaining agreement, to discharge
them. The matter thus involves the union’s representa-
tion of employees in dealing with the employer, thereby
implicating the duty of fair representation. In particu-
lar, the collection of agency fees from employees who are
not union members can hardly be characterized as a
purely internal union matter, because the union would
United Auto Workers, 621 F.Supp. 1243, 1250 (D. Conn. 1985).
That privilege carries with it the duty to represent all employees
fairly. Humphrey v. Moore, 375 U.S. 335, 342 (1964); Steele v.
Louisville & Nashville R.R. Co., 323 U.S. 192, 200-04 (1944).
16a
have no power to coerce the payment of fees from such
employees absent the threat of action by the employer.”
The duty of fair representation imposes on a recognized
union an obligation that is fiduciary in nature. Howard
v. Aluminum Workers Int’l Union, 589 F.2d 771, 774
(4th Cir. 1978); Thompson v. Brotherhood of Sleeping
Car Porters, 316 F.2d 191, 201 (4th Cir. 1963).° The
union’s exclusive bargaining status, which involves a
power to act on behalf of all employees, necessarily
creates a relationship of trust. The Supreme Court has
explained that the relationship between a union and the
employees whom it represents is governed by the “princi-
ple of general application that the exercise of a granted
power to act in behalf of others involves the assumption
toward them of a duty to exercise the power in their
interest and behalf.” Steele v. Louisville & Nashville
R.R. Co., 323 U.S. 192, 202 (1944). In effect, the union
acts as the agent of the employees it represents, union
and non-union alike. Humphrey v. Moore, 375 U.S. 335,
342 (1964); Wallace Corp. v. Labor Board, 323 U.S. 248,
255 (1944). As an agent, the union may not seek to
further its own interests at the expense of a principal.
® The issue here is thus very different from that presented in
Kolinske v. Lubbers, 712 F.2d 471 (D.C. Cir. 1983), which held
that the duty of fair representation was not implicated in a union’s
unilateral decision not to distribute strike benefits to non-union
employees who honored a picket line but failed to participate in
various strike activities. The union’s refusal to pay strike bene-
fits to a non-member who refused to participate in strike activities
was properly characterized as an internal union matter because
the authority to make and enforce that decision lay solely with
the union, and did not depend on, and indeed could hardly count
on, the cooperation of the employer.
® Accord, N.L.R.B. v. Local 282, Int'l Brotherhood of Teamsters,
740 F.2d 141, 147 (2d Cir. 1984); Deboles v. Trans World Airlines,
552 F.2d 1005, 1014 (3d Cir. 1977); Waiters Union, Local 781 v.
Hotel Ass’n, 498 F.2d 998, 1000 (D.C. Cir. 1974) ; Local Union No.
12, United Rubber Workers v. N.L.R.B., 368 F.2d 12, 17 (5th Cir.
1966).
17a
Instead, the union must use the fees collected from em-
ployees only for purposes within the scope of the agency
relationship.
With respect to employees who are not members of the
union, the scope of the union’s agency function is defined,
not by mutual consent, but by law. Unlike traditional
agency relationships, the association between a union and
non-member employees is not shaped by the agreement of
the parties, but is imposed by statute. Therefore, the
scope of the union’s agency function corresponds to the
extent of its statutory authority to represent non-member
employees. Because that authority is confined to collec-
tive bargaining, contract administration or grievance ad-
justment, it follows that agency fees may be used only
for those purposes.'®
It is not necessary now to decide whether the scope
of the union’s agency function—and hence the extent of
its permissible use of employee funds—is the same with
respect to union members as it is with respect to non-
members. The contractual arrangements between the
union and its members are not before us. Nor is it neces-
sary to decide whether a union’s use of members’ dues
for purposes outside the scope of its agency function
should properly be remediable by the courts, or should be
left to be resolved through internal union processes."
1 Of course, it is possible that non-member employees might
voluntarily choose collaterally to extend the statutory right of rep-
resentation, and thereby contractually to use the union as their
agent for some purpose unrelated to collective bargaining. To that
extent, the scope of the union’s agency function would be defined
by mutual consent, and could be treated under traditional principles
of contract law and agency law. Amounts spent by the union pur-
suant to such express authorization by non-member employees
would not involve a breach of the duty of fair representation.
Here, however, there is no indication of mutual consent extending
the union’s authority beyond that spelled out by statute.
Chief Judge Winter asserts, post at 4, that “[a]gency fees
are the equivalent of union dues,” and that for the purposes of
18a
Those questions are not presented here, because none of
the plaintiffs are union members.
My conclusion is not foreclosed by the legislative history
of the Taft-Hartley Act, which is retraced in Chief Judge
Winter’s panel dissent. Beck v. Communications Workers
of America, 776 F.2d 1187, 1215-18 (4th Cir. 1985). In
the first place, it should be borne in mind that the 1947
Congress’ failure to enact legislation imposing limits on
union spending is an instance, not of positive action, but
of inaction. As the Supreme Court has pointed out,
“fo]rdinarily, and quite appropriately, courts are slow to
attribute significance to the failure of Congress to act on
particular legislation.” Bob Jones University v. United
States, 461 U.S. 574, 600 (1983). “ ‘Unsuccessful at-
tempts at legislation are not the best of guides to legisla-
tive intent,’” id., quoting Red Lion Broadcasting Co. v.
F.C.C., 395 U.S. 367, 382 n.11 (1969), because, rather
than indicating a clear intent, “[c]ongressional inaction
frequently betokens unawareness, preoccupation, or paral-
ysis.” Zuber v. Allen, 396 U.S. 168, 185-86 n.21 (1969).
Second, insofar as any congressional intent may be
discerned from Congress’ failure to act, the legislative
regulating union exyenditures members and non-members should
be treated alike. That view overlooks an important distinction
between members and nonmembers: members have the right to vote
in union elections. By exercising their right to vote, union members
can indirectly control tie union’s spending decisions. Nonmembers,
who do not have a right to vote, lack any power over union policy-
making and must trust in the good faith of union officials in pro-
tecting their interests. The union member’s voting power might
or might not justify a determination that the relationship between
a union and its members is not sufficiently fiduciary to warrant
judicial intervention with respect to expenditures of dues for non-
collective bargaining purposes; that question is not before us here.
What is clear, however, is that the non-union member, who lacks
any means of imposing limits on the freedom of union officials to
deal with his compulsory contributions, is in a situation quite
different from that of the union member and of the kind that tra-
ditionally calls for judicial protection.
19a
history indicates merely that Congress chose not to re-
strict unions’ expenditures of employees’ funds through
the use of unfair labor practice provisions. N othing in
the legislative history indicates that Congress intended to
preclude the development of such restrictions by the
courts under the principles of the duty of fair represen-
tation.” Finally, even if the legislative history of the
Act may be read affirmatively to permit union expendi-
tures of members’ dues for purposes unrelated to collec-
tive bargaining—thereby foreclosing the possibility of a
breach of the duty of fair representation based on such
expenditures—the legislative history is altogether silent
on the question of union uses of non-members’ agency
fees. The provisions of the House bill regulating the
“reasonableness” of union exactions, which were ulti-
mately rejected by the Conference Committee, were con-
cerned only with members’ dues, and not with fees
paid by non-members. H.R. 3020, 80th Cong., 1st Sess.
$§ 7(b), 8(c) (2) (1947). The opponents of those provi-
sions, whose view prevailed in the final version of the
statute, acted on the basis of a conviction that the gov-
ernment should avoid the policing of internal union
affairs, H.R. Rep. No. 245, 80th Cong., 1st Sess. 76
(1947) (minority views); 93 Cong. Rec. 6601 (1947)
(statement of Sen. Taft)—not of matters involving out-
siders to the union."* There is simply no indication in
the legislative history that Congress intended that unions
should be free from legal accountability for their collec-
™ Congress was aware, at the time of the enactment of the Taft-
Hartley Act in 1947, of the judicial implication of the duty of fair
representation under the federal labor statutes. The duty had first
been recognized three years earlier in Steele v. Louisville & Nash-
ville, R.R., 323 U.S. 192 (1944).
8 Congress later overcame many of its objections to govern-
mental intrusion into internal union affairs with the passage of
the Labor Management Reporting and Disclosure Act of 1959, 29
U.S.C. § 401 et seqg., which established a “bill of rights” for union
members against their union leadership.
20a
tion and use of non-members’ fees.’* The legislative his-
tory, then, poses no obstacles to the view that union
14 Chief Judge Winter argues, post at 4-6, that Congress in 1947
consciously adopted a “hands off” approach to unions’ expenditures
of agency fees. In my view, that inference is simply too tenuous
to be accepted. None of the evidence pointed to by Judge Winter
provides any real support for that conclusion. On the contrary,
both § 8(d) (4) of the original House bill, reprinted in 2 Legislative
History of the Labor Management Relations Act 56-58 (1948),
which was a precursor of the present proviso to § 8(a) (3), and the
remarks of Senator Taft in the Senate debates, 93 Cong. Rec.
§ 4400 (April 30, 1947), reprinted in 2 Legislative History of the
Labor Management Relations Act 1142 (1948), indicate that their
authors were focusing on the question of union membership.
It is true that both the drafters of the House bill and Senator
Taft endorsed the union shop, but the union shop is not the same
as the agency shop. Both differ from the closed shop in that the
employer is not obligated to hire employees only from among per-
sons who are already union members. However, under a union
shop arrangement, new employees must become, or at least seek to
become, union members within a brief period after their employ-
ment commences. While the union may deny them membership,
they cannot choose to remain nonmembers. In an agency shop, on
the other hand, membership in the union is entirely optional.
Judge Winter has pointed to nothing in the legislative history that
suggests that Congress consciously focused on the latter kind of
arrangement. The portions of the House bill and the Senate debates
cited by the dissent reveal a concern for the would-be union member
who is denied membership in a union shop arrangement, but they
have no bearing on agency shops or agency fees.
No discussion of Congress’ intent in the Taft-Hartley Act with
respect to agency shop arrangements can ignore the Supreme
Court’s decision in NLRB v. General Motors, 373 U.S. 734 (1963).
There, the Court held that the proviso to § 8(a) (3), which exempted
union shop arrangements from prohibition as an unfair labor
practice due to their discriminatory nature, also extended to agency
shop agreements. The Court’s decision was undoubtedly correct,
but it was not based on a perception that Congress consciously
considered the problem of agency shops in 1947. Rather, implicitly
acknowledging the lack of evidence of any such conscious consid-
eration, the Court looked to the interpretation that would be most
consistent with “the desire of Congress to reduce the evils of com-
plusory unionism while allowing financial support for the bar-
2la
expenditures of agency fees collected from non-members
for non-collective-bargaining purposes violates the duty
of fair representation.
ITT.
Because I have concluded that the plaintiffs here are
entitled to the relief they seek, I must, like Judge Russell
and those aligned wth him, reach the union’s second
assignment of error—their contention that the special
master and the district court applied the wrong standard
of proof in determining which categories of union ex-
penditures were permissible. On this issue, I agree that
the proper standard is one of preponderance of the evi-
dence, Ellis v. Brotherhood of Railwaq Clerks, 446 U.S.
435, 457 n.15 (1984), and that all disputed factual issues
should therefore be remanded for redetermination under
the correct standard of proof.
IV.
In recapitulation, it appears, on reading Judge Rus-
sell’s en bane opinion, that:
1) The Court has concluded that the plaintiffs are
entitled to relief, by a vote of five who find that the
defendants have breached a duty imposed on them by
§8(a)(3), and of one who finds no violation of
§ 8(a) (3), but concludes that the duty of fair repre-
sentation ereated principally by §9(a) has been in-
fringed, as against four who deny any statutory violation.
gaining agent.” Id. at 744. While that broad congressional pur-
pose can easily support the conclusion drawn from it in General
Motors, it simply cannot, without severe logical strain, be made
the basis of an inference that Congress considered and rejected
the posibility of any restrictions on unions’ expenditures of agency
fees. Indeed, if anything, it cuts the other way: imposing fiduciary
responsibilities on unions with respect to agency fee expenditures
would tend to reduce the burdens of compulsory unionism for the
non-member employee, while at the same time guaranteeing the
union financial support for its collective bargaining activities.
22a
2) The constitutional grounds asserted as a basis for
recovery by the plaintiffs have received support from
Judge Russell and Judge Chapman. Five members of the
Court (Chief Judge Winter, Judge Hall, Judge Phillips,
Judge Sprouse and I) have concluded that no such
constitutional basis for relief exists. Three Court mem-
bers( Judge Widener, Judge Ervin and Judge Wilkinson)
have not reached the question, considering it unnecessary
to do so in light of the posture of the Court on the statu-
tory issue.
3) By a vote of six, the Court has decided that there
must be remanded for a proper allocation as among
permissible and impermissible expenditures chargeable to
the plaintiffs such items as were not specifically deter-
mined in the panel majority opinion to be permissible or
unallowable. The remaining four members of the Court
have not reached the question.
WINTER, Chief Judge, dissenting:
For the reasons set forth in the dissenting panel opin-
ion, Beck v. Communications Workers of America, 776
F.2d 1187, 1214-25 (4 Cir. 1985), I conclude that the
judgment of the district court should be reversed and
it should be directed to dismiss the complaint.’ From a
contrary disposition, I respectfully dissent.
Although the dissenting panel opinion sets forth what
I consider to be the correct resolution of the legal is-
1 The dissenting panel opinion spoke to the issues of state action
and the duty of a union under § 8(a)(3) of the National Labor
Relations Act because the panel majority based its judgment on
both. The in banc majority has declined to consider the issue of
state action. It is interesting to note, however, that the Second
Circuit in Price v. International Union, —— F.2d —— (July 16,
1986), has emphatically rejected the view of the panel majority
on the state action issue.
~ = eae a oes ertaive
23a
sues presented by this appeal, I am constrained to com-
ment on the separate opinion of Judge Murnaghan.
The thesis advanced by Judge Murnaghan is essentially
one of his own devising. It is not one advanced by the
parties and litigated by them. Although the in banc per
curiam opinion now claims that the majority panel opin-
ion rested, in part, on Judge Murnaghan’s theory, the
weakness of the claim is fully exposed in note 3 of what
Judge Murnaghan has written. Certainly a single ob-
scure reference in almost twenty-five pages of text, is a
fair indication that not much reliance was put on the
theory.
In any event, Judge Murnaghan expresses the view
that while §8(a)(3) of the National Labor Relations
Act, 29 U.S.C. § 158(a) (8), does not prohibit unions
from spending agency fees for purposes unrelated to
collective bargaining, grievance adjustment, or contract
administration, a union’s duty of fair representation un-
der §9(a) of the Act, 29 U.S.C. § 159, prohibits such
expenditures with agency fees collected from dissenting
employees. Judge Murnaghan’s view does not withstand
close scrutiny.
The duty of fair representation is a judicial doctrine
derived from the statutory duty of representatives desig-
nated or selected for the purposes of collective bargain-
ing to “be the exclusive representatives of all of the em-
ployees in such unit for the purposes of collective bar-
gaining in respect to rates of pay, wages, hours of em-
ployment, or other conditions of employment... .” §9
(a) (emphasis added)”. The doctrine was first formu-
lated with respect to the Railway Labor Act, Steele v.
Louisville & Nashville Railroad Co., 323 U.S. 192 (1944),
and it was extended to the National Labor Relations Act
in Ford Motor Co. v. Huffman, 345 U.S. 330 (1953).
As described in Vaca v. Sipes, 386 U.S. 171, 177 (1967) :
Under this doctrine, the exclusive agent’s statutory
authority to represent all members of a designated
24a
unit includes a statutory obligation to serve @e in-
terests of all members without hostility or diserim)-
ination toward any, to exercise its discretion with
complete good faith and honesty, and to avoid arbi-
trary conduct.
As the cases demonstrate, the doctrine is generally in-
voked to redress discriminations by a union on the basis
of race, because of animosiy toward a member of the bar-
gaining unit, in short, because of any irrational, un-
equal, unfair treatment of a member of the bargaining
unit. It has been held that the doctrine is inapplicable
to internal union matters that do not involve the em-
ployer such as the expenditure of dues. See Price v. In-
ternational Union, —— F.2d —— (2 Cir., July 16,
1986).2. It hardly seems applicable where the union’s
challenged expenditures were made equally on behalf of
all members of the collective bargaining unit, dues pay-
ing union members and agency-fee paying nonunion mem-
bers alike. Absent proof that a union acted arbitrarily,
discriminatorily, or in bad faith in spending its rev-
enues, there is no breach of the duty of fair representa-
tion even if the employer is also involved. See Price,
supra.
More importantly, it would seem obvious to me that
the duty of fair representation, derived from §9 of the
Act, cannot be transgressed if a union does only what
Congress has intentionally refrained from prohibiting it
to do. As the dissenting panel opinion spells out in de-
tail, 776 F.2d at 1215-18, Congress was fully aware of
proposals to limit the use of monies collected from mem-
2 Price also points out that suit for breach of the duty of fair
representation will ordinarily not be entertained until there has
been an exhaustion of internal union remedies. Whether there was
exhaustion of any available remedies in this case is far from clear.
Perhaps non-exhaustion was the reason why the parties did not
advance the argument constructed by Judge Murnaghan.
enema ae
25a
bers of the bargaining unit for purposes not directly
related to collective bargaining, grievance adjustment,
etc. It took testimony protesting the expenditure of such
monies for political purposes, and it considered a num-
ber of legislative proposals to prohibit or severely limit
such expenditures. In the final analysis, it rejected all
of the proposed restrictions and enacted legislation only
limiting excessive or discriminatory initiation fees for
union membership, 29 U.S.C. § 158(b) (5), and prohibit-
ing the use of monies collected in connection with federal
elections, 2 U.S.C. § 441(b) (3).* It is abundantly clear
from the legislative history of these provisions that more
stringent regulation was rejected as a matter of legisla-
tive judgment and not because of any thought that reg-
ulation was unnecessary because the judicial doctrine of
fair representation estabiished at the time that Congress
considered the issue of regulation accomplished that re-
sult. From my study of the legislative history, I think
* Plaintiffs make no claim that either of these restrictions was
violated.
*it is disingenuous to assert that the members of Congress who
vigorously debated the union security provision of § 8(a) (38)
were aware that regardless of their legislative compromise, the
judiciary remained free to imply additional limitations under the
duty of fair representation. See ante at 22 & n.11 (Murnaghan,
J., concurring). It is true that the Supreme Court first recognized
that duty in Steele v. Louisville & Nashville R.R., 323 U.S. 192
(1944) three years before Congress enacted the Taft-Hartley
Act. But Steele merely held that under the Railway Labor Act,
a union could not refuse to represent black employees in the col-
lective bargaining process because it had a “duty to exercise fairly
the power conferred upon it in behalf of all those for whom it acts,
without hostile discrimination against them.” Jd. at 208. Unlike
the present case where Judge Murnaghan implies from the Act a
limitation that Congress rejected, the Steele could could fairly
state that a duty to represent all the workers of a unit in collective
bargaining with the employer “expresse[d] the aim of Congress.”
Id. at 202. Three years later when Congress decided as a matter
of national labor policy to reject proposed limitations on union dues,
it is untenable to think that it was “aware” that the Steele decision
26a
/
it sheer sophistry to assert that Congress decided on a
course of very limited regulation only with respect to
dues from union members and not also with respect to
agency fees. Agency fees are the equivalent of union
dues, and it is inconceivable to me that Congress specif-
ically intended not to regulate the expenditure of union
dues except in minor respects but, by mere silence, in-
tended the expenditure of agency fees to be regulated
under the judicial doctrine of the duty of fair repre-
sentation.°
might serve to accomplish the same thing. It is testament to the
unforeseeability of this reading of Steele that no other court has
expanded the duty of fair representation for nearly forty years.
5 Judge Murnaghan argues, ante at 22-23, that the legislative
history only shows that Congress rejected limits on union expendi-
tures of members’ dues, leaving open the possible regulation of
nonmembers’ agency fees. It is true that the provisions of the
House bill limiting initiation fees and dues to “reasonable” amounts
expressly applied only to “members.” H.R. 3020, 80th Cong., Ist
Sess. §§ 7(b), 8(c) (2) (1947) ; see Beck, 776 F.2d at 1216 (Winter,
C.J., dissenting). But the union security agreement provision of
that bill, § 8(d) (4), much like the present § 8(a) (3), would have
made it an unfair labor practice for the employer to deny employ-
ment to individuals whose membership was denied despite their
“tender[ing] to the [labor] organization the initiation fees and
dues regularly imposed as a condition of membership therein . .. .”
Nonmembers had a right to work under this bill if they tendered
the dues “regularly imposed” on members, and, thus, through
§8(d)(4) the reasonableness limitations would have applied to
agency fees. In rejecting this bill, Congress rejected the regula-
tion of fee collection from members and nonmembers for reasons
applicable to both. The House Minority Report criticized the bill’s
attempt to monitor union fees as an undue regulation of unions’
internal affairs that, as a practical matter, was unenforceable
because of “the infinite details involved in the internal functioning
of thousands of trade-unions having millions of members.” H.R.
Rep. No. 245, 80th Cong., Ist Sess. 76 (1947) (Minority Report) ;
see Beck, 776 F.2d at 1216 (Winter, C.J., dissenting). As the dis-
senting panel opinion notes, the proceedings of this one case, re-
quiring over nine years, over 4,000 pages of testimony, over 3,000
documents, two district judges and a special master, “exemplify
27a
As I view it, the concurring opinion simply fails to
appreciate the delicate compromise the Taft-Hartley Act
managed to achieve. Congress considered the arguments
of those who sought to prohibit all union security agree-
ments, and those who wished to retain all such agree-
ments, including the “closed shop.” Senator Taft took a
middle position, distinguishing between closed shops and
the “union shop.” Under his compromise, an employee
could work at a unionized facility without acquiring mem-
bership, but only as long as he “pa[id] the same dues as
other members of the union.” 93 Cong. Rec. § 4400
(daily ed. April 30, 1947), reprinted in 2 Legislative
History of the Labor Management Relations Act, 1947,
at 1142 (1948). Senator Taft explained that the bill
thus prohibited the closed shop and guaranteed that a
worker could “get a job without joining the union or
asking favors of the union... .” 2 Legislative History,
supra, at 1422. Once assured of this right to work with-
out union membership, however, Senator Taft asserted
that “[t)he fact that the employee will have to pay dues
to the union seems . . . to be much less important.” 2
Legislative History, supra, at 1422. See also id. at 1010-
11, 1096-97, 1403 (remarks of Senator Taft). Thus, the
compromise that became law intended to permit union
security agreements requiring nonmembers to tender the
same dues to the union that members regularly paid. So
far as payments to the union were concerned, members
and nonmembers were on a parity and treated alike. In
deciding whether to disturb this legislative solution, we
should be guided by the Supreme Court’s reasoning in
Local 1976, United Brotherhood of Carpenters and Join-
precisely the situation that Congress decided to avoid in defeating
the amendment to supervise union dues collection.” Beck, 776 F.2d
at 1218 (Winter, C.J., dissenting). The result is identical, and
equally offensive to Congressional intent, whether accomplished
through the interpretation of §8(a) (3), or the expansion of the
duty of fair representation.
28a
ers v. N.L.R.B., 357 U.S. 93, 99-100 (1958), deciding a
secondary boycott issue:
It is relevant to recall that the Taft-Hartley Act
was, to a marked degree, the result of conflict and
compromise between strong contending forces and
deeply held views on the role of organized labor in
the free economic life of the Nation and the appro-
priate balance to be struck between the uncontrolled
power of management and labor to further their
respective interests. This is relevant in that it
counsels wariness in finding by construction a broad
policy . . . when, from the words of the statute it-
self, it is clear that those interested in just such a
condemnation were unable secure its embodiment in
enacted law. The problem raised by these cases af-
fords a striking illustration of the importance of
the truism that it is the business of Congress to
declare policy and not this Court’s.
Thus I would conclude that when a union expends
agency fees for purposes unrelated to collective bargain-
ing, grievance adjustment, or contract administration,
not otherwise specifically prohibited by the Act, such ex-
penditures are not outlawed under the duty of fair
representation.
Judges Hall, Phillips, and Sprouse authorize me to say
that they concur in these views.
29a
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 83-1955
Harry E. Beck, Jr.; Doris R. AMBROSE; JACQUELINE
S. BRANDON; MARY ANNA Cox; SALLY B. DIMAuRo;
RuE T.F. DOWNEY; KATHLEEN A. HEIL; JOHN J.
HURLEY; HARRIETT LIPSCHULTZ; CLAY B. LUTZ; BaAR-
BARA MCGAUGHEY; ROLAND R. MERKLE; ETHEL T.
MERRYMAN; Doris J. MORROW; MARION F. NORTHROP;
FRANCES M. PHILLIPS; VIVIAN REEDY; BARBARA A.
RUSSELL; Lois A. STALLINGS; HARRY B. SWARTZ, SR.,
Appellees,
versus
COMMUNICATIONS WORKERS OF AMERICA (C.W.A.), an
unincorporated Labor Organization; C.W.A. COMMIT-
TEE ON POLITICAL EDUCATION (C.W.A. COPE) ; C.W.A.
DistricT II; LocaL 2100 or C.W.A.; LOcAL 2101 oF
C.W.A.; LOCAL 2108 oF C.W.A.; LOCAL 2110 oF C.W.A.,
Appellants,
and
LOCAL 2350 oF C.W.A.; AMERICAN FEDERATION OF LABOR-
CONGRESS OF INDUSTRIAL O8G\NIZATIONS (AFL-CIO),
a Federation of National and International Labor Or-
ganizations; AFL-CIO COMMITTEE ON POLITICAL ED-
UCATION ; MARYLAND STATE AFL-CIO; AMERICAN TELE-
PHONE & TELEGRAPH, a Corporation; C & P TELE-
PHONE COMPANY OF MARYLAND, a Corporation,
Defendants,
30a
No. 83-1956
HaArrRY E. BECK, JR.; DorIS R. AMBROSE; JACQUELINE
S. BRANDON; MARY ANNA Cox; SALLY B. DIMAURO;
Rue T.F. DOWNEY; KATHLEEN A. HEIL; JOHN J.
HuRLEY; HARRIETT LIPSCHULTZ; CLAY B. LUTZ; BAR-
BARA MCGAUGHEY; ROLAND R. MERKLE; ETHEL T.
MERRYMAN; Doris J. MORROW; MARION F. NORTHROP;
FRANCES M. PHILIPS; VIVIAN REEDY; BARBARA A.
RUSSELL; LOIS 4. STALLINGS; HARRY B. SWARTZ, SR.,
Appellants,
versus
COMMUNICATIONS WORK®ERS OF AMERICA (C.W.A., an
unincorporated Labor Organization; C.W.A. COoMMIT-
TEE ON POLITICAL EDUCATION (C.W.A. COPE) ; C.W.A.
District II; LocaL 2100 or C.W.A.; LOCAL 2101 OF
C.W.A.; LOCAL 2108 oF C.W.A.; LOCAL 2110 oF C.W.A.,
Appellees,
and
LOCAL 2350 or C.W.A.; AMERICAN FEDERATION OF LABOR-
CONGRESS OF INDUSTRIAL ORGANIZATIONS (AFL-CIO),
a Federation of National and International Labor Or-
ganizations; AFL-CIO COMMITTEE ON POLITICAL ED-
UCATION ; MARYLAND STATE AFL-CIO; AMERICAN TELE-
PHONE & TELEGRAPH, a Corporation; C & P TELE-
PHONE COMPANY OF MARYLAND, a Corporation,
Defendants.
Appeals from the United States District Court
for the District of Maryland, at Baltimore
James R. Miller, Jr., District Judge. (C/A M-76-839)
Argued: November 1, 1984. Decided: October 24, 1985
8la
Before WINTER, Chief Judge, and RUSSELL and
CHAPMAN, Circuit Judges.
Laurence Gold (James Coppess; George Kaufman on
brief) for Appellants/Cross-Appellees; Edwin Vieira, Jr.
(Joseph J. Hahn on brief) for Appellees/Cross-Appel-
lants.
RUSSELL, Circuit Judge:
Plaintiffs in this suit are twenty non-union employees '
of either the American Telephone and Telegraph Com-
pany (AT&T) or its subsidiary Chesapeake and Potomac
Telephone Company (C&P) and, as such, are subject to
an “agency shop” agreement? negotiated between the em-
ployers and the Communications Workers of America
(CWA) and its locals as the exclusive bargaining agents
of such employees under the terms of section 8(a) (3)
of the National Labor Relations Act (NLRA), 29 U.S.C.
§ 158(a) (3).* Plaintiffs are required under the agree-
ment to pay agency fees to CWA through its locals in an
1 A number of other employees joined as plaintiffs while suit was
proceeding.
2 Professor Cantor has explained that an agreement as au-
thorized under § 8(a) (3) creates actually an “agency shop”:
Although the statutory language refers to union ‘member-
ship’ as a condition of employment, the NLRA has been inter-
preted to refer to ‘financial core membership’ rather than full
union membership. Thus what appears to be a union shop
authorization is actually an agency shop authorization.
Cantor, Uses and Abuses of the Agency Shop, 59 Notre Dame L.
Rev. 61 n.2 (1983).
% Plaintiffs’ employers and the AFL-CIO were named as de-
fendants in the complaint, but on motion they were dismissed as
defendants leaving only CWA and its locals as defendants in the
action. There is no appeal from this dismissal.
32a
amount equivalent to the dues paid by union members.
Their complaint is that defendants CWA and its locals
have expended a part of their agency fees for purposes
unrelated to “collective bargaining, contract administra-
tion, and grievance adjustment.” Plaintiffs’ claim such
expenditures constitute a violation of their First Amend-
ment rights of free speech and association justiciable
under 28 U.S.C. § 1831 and 42 U.S.C. § 1983, and a vio-
lation of defendants’ duty to fairly represent all employ-
ees justifiable under 28 U.S.C. § 13837 and 29 U.S.C.
§ 185(a).* Plaintiffs sought a declaratory judgment
against defendants establishing the illegality of the ex-
cessive exactions, injunctive relief against continued ille-
gal exactions by CWA and its locals, and monetary judg-
ment for past illegal collections by CWA and its locals.
CWA alleged in its answer that “all actions taken by
CWA defendants [were] consistent with the duties and
obligations imposed [upon CWA] as recognized or certi-
fied collective bargaining representative of the plaintiffs
under the National Labor Relations Act.” They also
asserted that plaintiffs were without standing to main-
tain the action, that plaintiffs had failed to exhaust avail-
able internal union remedies, that the court lacked juris-
diction over the subject matter of the action, and that the
action was barred by the statute of limitations.
After informal discovery, defendant CWA moved to
dismiss the action for failure of plaintiffs first to exhaust
internal union procedures or, alternatively, for a stay
* Jurisdiction in actions such as this are sometimes sustained
under 28 U.S.C. § 1337, and at other times under §185 of the
Labor-Management Relations Act, 29 U.S.C. § 185, or under both.
For an instance of an action maintained under § 185, see Reid v.
McDonnell Douglas Corp., 443 F.2d 408, 411-412 (10th Cir. 1971).
The action, however, was later dismissed on the ground that the
union had “adopted a complying intra-union remedy” in the form
of a good faith rebate procedure. Reid v. International Union,
479 F.2d 517, 520 (10th Cir.), cert. denied, 414 U.S. 1076 (19738).
83a
pending such exhaustion.» CWA submitted in support of
the motion a resolution of the Executive Committee cf
CWA adopted on June 19, 1974. This resolution provided
that:
Any member or non-member who is covered by a
collective bargaining agreement containing a ‘Union
Shop’ or ‘Agency Shop’ provision shall have the right
to object to the expenditure of a portion of dues or
agency fees for activities or causes primarily polit-
ical in nature, and shall be entitled to the refund
of a portion of such dues under the terms, conditions
and procedures contained in this statement of policy.
The resolution further provided that the Administrative
Commitiee of the Executive Board of CWA should de-
termine the approximate annual proportion of dues or
agency fees spent for activities or causes primarily polit-
ical in nature as of March 31st of each year. By affi-
davit, defendants said that for the year ending March 31,
1976, the impermissible expenditures for political pur-
poses amounted to 7.63 percent of the fees collected. CWA
also alleged that its auditors were attempting to arrive
at, for use in succeeding years, a figure estimating the
proportion of expenditures made by the unions for polit-
ical purposes. Should any member or non-member object
to the allocation determination, he could appeal to the
Executive Board and from the Executive Board to the
Union Convention.*®
5It is significant that defendants did not in their motion to dis-
miss raise the jurisdictional objection that plaintiffs’ constitutional
claim failed because of the alleged absence of “state action,” though
several years later, as we later note, they raised this point.
* There can be little doubt that this resolution had its genesis
in Brotherhood of Ry. and S.S. Clerks v. Allen, 373 U.S. 118, 122
(1963), in which the Supreme Court, in dealing with objections to
the exaction under the Railway Labor Act (RLA) of union dues to
be used for impermissible purposes, threw out this observation:
“The difficulties in judicially administered relief [in fashioning a
84a
The district judge advised both parties that, prelim-
inary to a hearing on defendants’ motion for summary
judgment based on their rebate procedure, he wished the
advice of counsel on the impact of Abood v. Detroit Board
of Education, 431 U.S. 209 (1977) on the issues in the
case. Counsel for CWA responded in a letter dated
June 3, 1977 and incorporated as a part of the record in
this case. After indicating that Street’ and Hanson *
arose under the RLA and that Abood dealt with public
employees, CWA’s counsel expressed the opinion that
Abood was not directly in point. But he added:
The principal opinion’s discussion [in Abood] of
national labor policy and decisions under the Na-
tional Labor Relations Act would seem to indicate
remedy for a violation under the RLA] .. . should, we think, en-
courage petitioner unions to consider the adoption by their mem-
bership of some voluntary plan by which dissenters would be
afforded an internal union remedy.” This idea was repeated in
Abood v. Detroit Bd. of Educ., 431 U.S. 209, 240 (1977).
As a result of this observation, unions generally developed re-
bate schemes somewhat similar to that adopted by CWA and such
rebate schemes became the first line of defense by unions in suits
such as this one. Many of these rebate schemes, however, were
fairer than the one involved in this case, where the right of appeal
by the dissenting employees is restricted to a union-constituted
body and never to an impartial board. Cf. Ellis v. Brotherhood of
Ry., Atrline and S.S. Clerks, 685 F.2d 1065, 1069 (9th Cir. 1982),
in which “[a]ny employee who believes his or her rebate inadequate
may appeal directly to an independent Public Review Board au-
thorized to make final determinations on such appeals.” The re-
bate scheme in Ellis, with its more impartial appeal scheme, was,
however, found invalid on other grounds by the Supreme Court
in Ellis v. Brotherhood of Ry., Airline and S.S. Clerks, —— U.S.
. , 80 L.Ed.2d 428, 439 (1984). Prior to Ellis, courts had
varied in their treatment of this defense. Reid v. International
Union, 479 F.2d at 520; Perry v. Local Lodge 2569, 708 F.2d 1258,
1262 (7th Cir. 1983).
T International Ass’n of Machinists v. Street, 367 U.S. 740 (1961).
8 Railway Employee's Dept. v. Hanson, 351 U.S. 225 (1956).
85a
that the principles of Hanson and Street interpret-
ing the Railway Labor Act apply equally to non-
railway employees. Several lesser courts have so
held. The problem is that the Supreme Court appears
to use the terms ‘ideological purpose,’ ‘political pur-
poses,’ and ‘purposes other than collective bargain-
ing,’ interchangeably. The Court gives little guid-
ance as to which expenditures it considers to be re-
fundable to an agency fee payor.
CWA’s counsel concluded his letter with this statement:
If plaintiffs are willing to agree that the Supreme
Court decisions mean only that the Union defendants
must make a provision for pro-rata refund of that
portion of the dues dollar expended upon political
activities, the procedure is in effect [under the reso-
lution of the Executive Committee] and this case
should be settled. If plaintiffs intend to insist upon
a much broader interpretation of those expenses for
which they feel they are not responsible, no settle-
ment is in sight. . . . [and plaintiffs must proceed
under the appeal procedure established by the reso-
lution.] *
Plaintiffs did not agree to submission to CWA’s in-
ternal union remedies and the matter came on for deter-
mination by the district judge. Finding exhaustion of
internal union remedies not required,” the district judge
proceeded to find that the agency shop agreement was
valid subject to the limitation that CWA could not “col-
lect and disburse [as the exclusive bargaining agent un-
der such agreement] such ‘agency fees’ for purposes other
than ‘collective bargaining, contract administration, and
®It will be noted that defendants did not in this ‘etter raise or
indicate that there was any jurisdictional defect in the proceedings.
1 There is no appeal from this decision. The inadmissibility of
the exhaustion defense, with its reliance on the union’s rebate
procedure, is therefore not an issue on this appeal.
36a
grievance adjustment’ without seriously implicating the
first amendment rights of free speech and association of
fee payors who object.” Beck v. Communications Work-
ers, 468 F.Supp. 93, 96 (D.Md. 1979) (quoting Abood,
431 U.S. at 225-226). Qn the »asis of that finding, he
denied defendants’ motion to dismiss and granted a
declaratory judgment that collections by the union from
objecting employees in an amount “beyond that allocable
to collective bargaining, contract administration and
grievance adjustment” were illegal as violative of “the
first amendment rights of the plaintiffs.” 468 F.Supp.
at 97. He ruled that it was necessary to determine “what
proportion of the union’s total expenditures is attributable
to activities other than collective bargaining, contract ad-
ministration and grievance adjustment,” and, in that de-
termination, he said: “(t]he burden of proving such pro-
portion rests upon the union, but ‘[a]bsolute precision in
the calculation of such proportion is not, of course, to be
expected or required.’” Jd. (quoting Allen, 373 U.S. at
122). Finally, he provided that if the parties were un-:
able to agree within thirty days on the amount to be
refunded under the guidelines as stated by him, the
matter of allocation should be referred to a master for
the purpose of determining “what portion of the agency
fees the defendant has collected improperly.”
Since there was no agreement between the parties on
the proper allocation, a special master was appointed. At
the initial hearings before him, the special master re-
ceived twenty-eight days of testimony and argument as
well as 2,100 documentary exhibits. In his first report,
filed August 18, 1980, he found that only 19 percent of
CWA’s total expenditures were related to and were rea-
sonably necessary for the proper effectuation of permis-
sible purposes. The special master accordingly recom-
mended that CWA be ordered to refund to plaintiffs 81
percent of the agency fees collected in the past and that
CWA be enjoined from collecting from plaintiffs more
37a
than 19 percent of the dues and assessments charged CWA
members.
After the filing of the special master’s report, CWA
moved the district court to remand the matter to the
special master. In support of the motion, CWA filed a
memorandum stating:
A re-reference is initially required because the
master failed to determine the extent of the plain-
tiffs’ financial obligation as to the 60% of the agency
fees retained by the local union, although the issue
was part of the reference to the master. Re-refer-
ence to the master is also appropriate because the
national union is prepared promptly to provide a new
basis for the determination of its future entitlement,
a circumstance which the master recognized would
warrant further proceedings and, upon proper proof,
an injunction different from the terms proposed in
the master’s August 1980 report. The national un-
ion proposes to meet the master’s proof requirements
by (1) offering a full return to the plaintiffs of their
entire fee payment to the national union from its
beginning in 1976 to the end of the present fiscal
year [1980], and (2) utilization during the final
third of the national union’s 1980 fiscal year, which
commences on December 1, 1980 of contemporaneous
time records for officers and employees which will
provide a basis for determination of the plaintiffs’
financial obligation to the national union thereafter.
(emphasis added)”
Time for filing exceptions to the report of the special
master was extended until after determination of the
11 Again, it is of interest that defendants at this point did not
indicate that a jurisdictional problem existed. Actually, the state-
ment of position suggested that defendants in effect conceded the
partial invalidity of their collection and use of the dues-equivalent
and thus conceded partial liability.
88a
motion to recommit. In the meantime, Laurence Gold,
Esquire, had been retained as lead counsel for CWA in
this litigation. He wrote counsel for plaintiffs a letter
dated October 16, 1980, made a part of the record in
this proceeding, in which he proposed:
As a result of my discussions with the CWA na-
tional union, I have now been authorized to advise
you that the national offers to pay to the individual
plaintiffs in the above-noted case the full amount of
monies paid by them as agency fees to the defendant
CWA national union from January 1, 1976 to date
and to waive such fees through the balance of the
national’s current budget year, provided that the
parties can agree upon, and the District Court will
enter, an order which will preserve for review with-
out any res judicata or estoppel effect all issues which
either party may wish to raise with respect to: (a)
Judge Blair’s rulings regarding the expenditures
which may ahd may not lawfully be charged to
agency fee payors and (b) all rulings of the master
other than his factual findings allocating expendi-
tures in accordance with those rulings.’
The district judge proceeded to grant the motion to
recommit, but in so doing, he identified precisely the
issues to be addressed on the recommital and provided
that those issues should be resolved without further testi-
mony unless the special master “deems it appropriate.”
Beck v. Communications Workers, No. M-76-839, slip op.
at 3 (D.Md. Jan. 19, 1981). In connection with the objec-
tion of defendants to the absence of specific findings on
the liability of the local unions, the district judge di-
rected the special master to make findings in response to
these questions:
12 It will be noted that counsel made no reference to any claim
of want of jurisdiction over the cause in their statement of the
issues on which they wished to reserve the right to object.
39a
(1) What portion of the fees paid were retained
by the local union defendants, and what portion was
paid over to defendant CWA;
(2) What percentag of the fees retained by each
local union defendant is attributable to permissible
expenditures, as outlined by previous order of this
court.
Id. at 2-3. The special master was also directed to make
these additional findings in connection with future in-
junctive relief:
(1) Do the unions’ current recordkeeping policies
in any way alter the factual findings previously sub-
mitted to the court?
(2) If so, what method of computation would
most accurately reflect the percentage of fees col-
lected which are properly allocable to permissible
activities?
(3) In what manner, if at all, may this computa-
tion procedure be made self-executing in order to
compensate for future changes in union policies?
(4) How should the final injunction be framed in
order to accomplish the objection (sic) set forth in
this order and the prior orders in this action?
Id. at 3.
After taking additional testimony, the special master
filed his supplemental report in September, 1981. In this
report he proceeded to answer the specific questions
addressed to him by the district court. He found, in
response to the first two questions posed relating to the
liability of the local unions, that his “calculations of
applicable percentages of permissible and impermissible
expenditures by CWA [were] applicable to and control
the expenditures by the four Local Unions, i.e., Local
2100, Local 2101, Local 2108 and Local 2110, including,
of course, the 60 percent of the fees in question retained
40a
by the Local Union Defendants.” He added that “[t]his
is implicit in the calculations appearing in Appendix F
attached to the Original Report.” The special master
excused any lack of detail in his original report in this
regard because of his desire to avoid unduly expanding
his report, “especially when the Special Master concluded
that the same deficiencies in meeting the required burden
of proof to establish expenditures made for the three
permissible categories—collective bargaining, contract
administration and grievance adjustment—applicable to
the CWA expenditures were also applicable to the Local
Union expenditures.” He found that, “giving the locals
the benefit of every doubt,” he could not find that more
than 19 percent of the locals’ share of the exacted fees
were used for permissible purposes under the guidelines
earlier stated by the district judge. In response to the
other questions with which he was directed to report, he
found that the unions’ current record-keeping policies did
not in any way alter his previous factual findings. He
found that the new system proposed by the unions for
future allocation of permissible costs, as reviewed in the
testimony, was ‘generally sufficient, prima facie to enable
CWA to meet its burden of proof [i.e., by the standard
of “clear and convincing” proof],” provided certain de-
fects and omissions, detailed by the special master, were
corrected or supplied. He concluded, however, that the
system of calculation could not be made self-executing
and would require periodic monitoring.
CWA and the local unions filed exceptions to the initial
report and the supplemental repurt of the special master.
In general, the objections of both the national and the
local unions present the same contentions. The objections
to the special master’s findings of fact are stated in
broad language and are incorporated in two general
claims: First, they claim “(t]he categories of rebatable
expenditures [by defendants as found by the special
master] are too broad in that they give plaintiffs credit
4la
for CWA expenditures in addition to those for political
and ideological activities unrelated to collective bargain-
ing’; and second, the special master placed the burden
of proof by “clear and convincing evidence” on the unions
to establish the retainable portion of the agency fees
paid by dissenting employees and drew inferences ad-
verse to the unions for their failure to produce records.
Plaintiffs also filed objections to the special master’s
reports. In effect, they objected broadly that the special
master had been too generous in its allowance of permis-
sible expenditures by the unions against the claims of
plaintiffs. They also found objectionable the conditional
approval expressed by the special master of the union’s
proposed procedure for determining the amount of plain-
tiffs’ agency fees to be refunded. Finally, they took
exception to the special master’s recommendation that
plaintiffs “bear 19% of the costs of proceedings in which
they are the prevailing parties.”
On March 5, 1982, while the district judge was con-
sidering the objections of the parties to the special mas-
ter’s initial and supplemental reports, the unions peti-
tioned for leave to file a Fed.R.Civ.P. 12(b) (6) motion
for dismissal on the ground “that plaintiffs’ complaint
fails to state a claim upon which relief can be granted.”
In their memorandum in support of their motion, the
unions referred to both plaintiffs’ First Amendment
cause of action and their claim that the unions’ violated
their duty of fair representation as set forth in plain-
tiffs’ “Second Claim for Relief” appearing “in para-
graphs 26, 27, and 28” of the complaint. Their position
on the constitutional claim was that there was an ab-
sence of governmental action, which is a prerequisite for
a justiciable First Amendment claim. They would fault
the claim of a violation of the duty of fair representation
18 The exceptions do not identify specifically any expenditures
which were improperly disallowed except those relating to “or-
ganizing.”
42a
because the agency shop is specifically authorized by
statute, thereby validating the collection by the unions
of the agency fees from dissenting non-union employees
such as plaintiffs and that after collection, the unions
have “a due process right to spend the funds in any
manner [they choose].” (emphasis added)
The district court dismissed sub silentio defendants’
12(b) (6) motion and proceeded to sustain substantially
the special master’s recommendation with but slight
variations. The court first corrected a mathematical
error made by the special master, thereby increasing to
21 percent the amount properly chargeable to the agency
fee payor plaintiffs. Beck v. Communications Workers,
No. M-76-839, slip op. at 12-18 (D.Md. Aug. 9, 1983)
(memorandum and order). Furthermore, the court modi-
fied the special master’s recommended injunction by or-
dering CWA, after collecting 100 percent of the agency
fees, to return to plaintiffs that percentage or such fees
determined by an independent certified public accountant
to be non-retainable as attributable to expenditures unre-
lated to collective bargaining, contract administration,
and grievance adjustment. Beck v. Communications
Workers, No. M-76-839, slip op. at 2-3 (D.Md. Aug. 9,
1983) (judgment). The district court also ordered CWA
t maintain, for each fiscal year, an interest-bearing
escrow account containing twice the amount determined
in the previous fiscal year to be non-retainable. Id. at 3.
In addition, the injunction provided that only if plaintiffs
successfully challenged the amount determined to be non-
retainable would CWA bear the cost of such challenge.
Id. at 3-4. This appeal followed with both plaintiffs and
defendants excepting to the rulings and conclusions of
the district court. We address first the exceptions of
defendants.
After six years of litigation, 4,000 pages of testimony,
the introduction of over 3,000 documents, and innumer-
able hearings and adjudication of motions, defendants, in
ee oe Ae +
43a
their brief in this court, limit themselves to two claims
of error, the first of which raises a question of a federal
justiciable claim not advanced by defendants until they
filed their motion for judgment under Rule 12(b) (6)
made only after all evidence had been received and after
the cause was ripe for disposition on the merits.'* Their
other claim of error relates to the standard of proof to
be used in resolving plaintiffs’ claim for a refund. The
first claim of error by defendants to which defendants
devoted almost eighty percent of their initial brief in
this court, is directed at plaintiffs’ claim that the collec-
tion and use of fees exacted of them by defendant unions
under the authority of the agency fee agreement, for
purposes other than those “germane to collective bar-
gaining,” are violative of plaintiffs’ free speech and
association rights under the First Amendment and their
due process rights under the Fifth Amendment. Juris-
diction of such a constitutional action, plaintiffs opined,
existed under 28 U.S.C. 1331. Defendants, on this ap-
peal, contest that position. It should be emphasized at
the outset that in raising this belated jurisdictional claim
defendants do not dispute the factual base for plaintiffs’
constitutional claim. The district judge found, within a
14 While the lateness of this claim may not be a bar to its con-
sideration, nonetheless the failure of defendants to raise such con-
tention until after all evidence had been taken and after defend-
ants had consistently in the protracted proceedings acted on the
assumption that there was jurisdiction of the subject matter is
conduct not to be commended. Such delay places an intolerable
burden on orderly and efficient judicial administration. They had
earlier raised other defenses, all in vain, and CWA had actually
offered on two occasions to rebate all collections of dues from
dissenting non-union employees. The defense offered by defendants
for their delay is that they did not raise the jurisdictional claim in
1979 because the jurisdictional ruling was unexpected. “» 5 excuse
might have some credibility if defendants had acted prv.uptly but
to delay for years to raise the point undercuts the reasonableness
of the excuse.
44a
few months after this action was begun—on showings
largely made by defendants themselves—that:
In this case it is undisputed that the defendant
union, CWA, has negotiated an ‘agency shop’ clause
with the plaintiffs’ employers which allows the union
to collect dues-equivalent payments from the plain-
tiffs. . . . It is also clear that the plaintiffs object
to the expenditure of their funds for purposes other
than ‘collective bargaining, contract administration,
and grievance adjustment.’ Finally, it is undisputed
that CWA has spent and continues to spend an as
yet undetermined fraction of its dues receipts and
dues-equivalent agency receipts for purposes other
than the three enumerated ones.”
Defendants have never contested those findings.
The legal basis asserted by defendants for this claim
of lack of jurisdiction in the federal courts over the
constitutional claim of plaintiffs is, to quote defendants’
statement of their position in their brief, that “the plain-
tiffs’ First Amendment claims fail because the defendant
unions’ negotiation of a union security clause valid under
the National Labor Relations Act, as amended, and under
applicable state law and the unions’ expenditure of
agency fees collected under such a clause is not state
action subject to constitutional constraints.” Brief for
Appellants at 14. They concluded this statement of their
position with: “If our position in this regard is accepted,
the judgment of the district court should be reversed and
the plaintiffs’ constitutional claims should be dismissed.”
Id.
It would seem fair to assuy« from this statement of
their position by defendants that, in their view, plain-
tiffs’ case is restricted to a constitutional claim, and if
18 Beck v. Communications Workers, 468 F.Supp. 98, 96-97 (D.Md.
1979).
45a
the constitutional cause of action fails for lack of juris-
diction, plaintiffs are without a federal judicial remedy.
This assumption is further indicated by the failure of
defendants in their initial brief even to notice or discuss
plaintiffs’ statutory claim. We take it that defendants
posited that, since in their view the ruling of the district
judge rested on constitutional grounds, the federal juris-
dictional basis for judgment herein must stand or fall on
whether jurisdiction can be sustained over plaintiffs’ con-
stitutional claim.
It is, however, a settled rule of appellate procedure
“that a decision of the district court is not to be reversed
if it has reached the correct result, even though the rea-
son assigned by it may not be sustained.” See Stern v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 603 F.2d
1073, 1093 (4th Cir. 1979). The complaint herein states
in separate counts not merely a cause of action charging
a violation of the First Amendment in the compelled pay-
ment of the dues-equivalent under threat of loss of job,
but also a cause of action under section 8 (a) (3) of the
NLRA as construed by the Supreme Court, and related
thereto, a violation by defendants of their duty of fair
representation. Only if jurisdiction of these claims under
section 8(a) (3) itself is non-existent would a dismissal
of this action for lack of jurisdiction be appropriate.
Nor would this result be different because the district
court may have decided jurisdiction on the assumption
that pleintiffs’ action was based on the unconstitutional-
ity of ine compelled payments. If the judgment can be
sustained because of jurisdiction over either the constitu-
tional or the statutory claim of plaintiffs, the judgment
will be sustained, though, as we later observe, courts
prefer to decide the issue by a construction of the statute
if confrontation of the constitutional issue can thus be
avoided. That this is the accepted practice is illustrated
by the decision of the Supreme Court in /nternational
Association of Machinists v. Street, 367 U.S. 740 (1961).
46a
That case, which involved similar constitutional and
statutory issues to those posed there under a similar
statute and agency contract, was decided in the state
court on constitutional grounds. On appeal, plaintiffs
apparently pressed the constitutional claim. The Su-
preme Court, however, decided the case on statutory
grounds, thereby avoiding review of the constitutional
issue.
In their reply brief in this court, it is accordingly un-
derstandable that defendants chose not to persevere in
their argyment that the judgment herein must be re-
versed if the constitutional claim of defendants is not
accepted, and defendants recognized the necessity of ad-
dressing the statutory claim, the maintenance of which
did not require “state action.” Since it seems clear to
us that plaintiffs have stated a good cause of action for
a violation of section 8(a) (3) of the NLRA redressable
under 28 U.S.C. § 1887 and 29 U.S.C. § 185(a), as well
as a claim of a violation of the duty of fair representa-
tion justiciable under 28 U.S.C. § 1831 and 29 U.S.C.
$ 185(a), we shall deal with this question before address-
ing the right of plaintiffs to maintain a constitutional
claim on the same facts. We begin by considering both
the language of and the legislative purpose of section
8(a) (3) of the NLRA, which provides the basis for plain-
tiffs’ statutory claim.
Section 8(a) (3), added to the NLRA by the Labor-
Management Relations Act of 1947 (Taft- Hartley Act) ,"
provides permissive authority for an agreement between
an employer and the exclusive union bargaining repre-
sentative, selected in conformity with the terms of the
NLRA, whereby employees are required to have union
“membership” as a condition of employment, subject how-
ever, to the express condition that no employer could dis-
1 Act of June 23, 1947, ch. 120, Title I, § 101, 61 stat. 136, 140-
141.
47a
charge an employee “for nonmembership in a labor or-
ganization . . . if he has reasonable grounds for believing
that membership was denied or terminated for reasons
other than the failure of the employee to tender the peri-
odie dues and the initiation fees uniformly required as a
condition of acquiring or retaining membership.” 29
U.S.C. § 158(a) (3) (1983). The legislative purpose of
section 8(a) (3), as evidenced in the legislative record,
was twofold: First, Congress intended the elimination
of the closed shop and the substitution of the union or
agency shop; second, in response to the plea of the un-
ions that the existing statute encouraged “free riders,”
employees who enjoyed the benefits of collective bargain-
ing but shared none of the costs of the bargaining pro-
cess, it included the “membership provision or require-
ment. See S. Rep. No. 105, 80th Cong., 1st Sess. 6-7
(1947); Legislative History of the Labor-Management
Relations Act, 1947, at 413, 1422 (1948) (statements of
Senator Taft); Oil, Chemical & Atomic Workers Inter-
national Union v. Mobil Oil Corp., 426 U.S. 407, 426
(1976) (Stewart, J., dissenting); NLRB v. General Mo-
tors Corp., 373 U.S. 734, 740-741 (1963).
However, the “membership” requirement was quickly
“whittled down to its financial core,” because the Supreme
Court found that “[t]his legislative history [of the stat-
ute] clearly indicates that Congress intended to prevent
utilization of union security agreements for any purpose
other than to compel payment of union dues and fees.”
NLRB v. General Motors Corp., 373 U.S. at 742 (quoting
Radio Officers’ Union v. NLRB, 347 U.S. 17, 41 (1954)).
Accordingly, “[{i]f aa employee in a union shop unit re-
fuses to respect any union-imposed obligations other than
the duty to pay dues and fees, and membership in the
union is therefore denied or terminated, the condition of
‘membership’ for § 8(a) (3) purposes is nevertheless sat-
isfied and the employee may not be discharged for non-
membership even though he is not a normal member.”
48a
NLRB v. Genera’ Motors Corp., 373 U.S. at 743.17 Thus,
the extent of the objecting employee’s obligation under
the union or agency contract is the payment of dues, and
the legislative history reveals that the obligation to pay
dues was, it would seem, directly related to the costs of
the collective bargaining itself.’
Prior to 1950, railroad workers, on the other hand, had
been denied the right to have a union or agency shop.
They sought similar rights to those enjoyed by employ-
€es in other industrial fields under section 8(a) (3). Con-
gress responded to this demand by enacting section 2,
Eleventh of the Railway Labor Act (RLA).’® Evident of
its intention merely to givé railway workers similar
rights to those of other workers under section 8(a) ( 3),
“Congress [in phrasing section 2, Eleventh] simply
tracked the language of Section 8(a) (3) of the Taft-
Hartley Act.” T. Haggard, Compulsory Unionism, The
NLRB And The Courts 115 (1977). Further, the legis-
lative record is replete with responsible representations
that the intent was to confer on railway workers simply
the same rights other workers had under section 8(a) (3).
Id. at 127. Senator Hill, the manager of the bill in the
Senate, assured the Senate that the intention of section 2,
17 This follows the comments of Representative Klein that while
the statute purports to allow a union shop, the practical effect of the
statute’s insulation of ousted members against being fired by the
employer so long as dues were paid was to “allow only a re-
quirement that dues be paid.” Legislative History of the Labor-
Management Relations Act, 1947, at 655 (1948).
8 Professor Cantor in his article, Uses and Abuses of the Agency
Shop, supra note 2, at 75 n.64 recognizes this:
“Where Congress has authorized compulsory extraction of a
fee from workers in a represented unit, the monies must be
spent in a manner consistent with the purpose for which the
fee is extracted, effective representation of workers.”
1 Act of Jan. 10, 1951, ch. 1220, 64 stat. 1238-1239, codified at
45 U.S.C. § 152, Eleventh (1983).
49a
Eleventh was “merely to extend to employees and em-
ployers subject to the Railway Labor Act rights now pos-
sessed by employees and employers under the Taft-
Hartley Act in industry generally.” 96 Cong. Rec. 15,737
(1950). Senator Taft, the co-author of section 8(a) (3),
was equally explicit. He declared during debate that
section 2, Eleventh “inserts in the railway mediation law
almost the exact provisions . . . of the Taft-Hartley law,
so that the conditions regarding the union shop and the
check-off are carried into the relations between railroad
unions and railroads.” 96 Cong. Rec. 16,267 (1950). See
also S.Rep. No. 2262, 81st Cong., 2d Sess. 3, 5 (1950);
H.R. Rep. No. 2811, 81st Cong., 2d Sess. 405 (1950).
As is obvious, it would be difficult, if not impossible, to
find two statutes more identical in language and legisla-
tive purpose than section 8(a) (3) of the NLRA and sec-
tion 2, Eleventh of the RLA.*” It is inconceivable that
two such statutes would be construed differently. For
this reason it seems fair to assume that the construction
given one by the Supreme Court would be equally applica-
ble to the other, and we proceed on that basis in constru-
ing section 8(a) (3).
The first consideration of either of these statutes by
the Supreme Court was in Railway Employes’ Depart-
ment v. Hanson, 351 U.S. 225 (1956). In that case,
which involved a charge of unconstitutionality against
section 2, Eleventh under the First Amendment free
speech and association clause and the due process clause
of the Fifth Amendment, the Court found the statute,
Tt is true there are differences between the RLA and the
NLRA, and where there is “difference in the language and scheme
of the two statutes” there will be differences in the application
of the provisions of such Acts. See Ruby v. American Airlines,
Inc., 323 F.2d 248, 256 (2d Cir. 1963), cert. denied, 376 U.S. 913
(1964). This is not such a case. There is like statutory language
and like legislative purpose here and, therefore, like statutory
construction.
50a
which authorizes the collection of a dues-equivalent from
non-union, objecting employees by an exclusive bargain-
ing representative of the employees, valid so far as the
unions’ use of the fees was for purposes “germane to
collective bargaining” Id. at 235. The Court reserved
ruling on the permissibility of the collection of the dues-
equivalent from objecting employees “for purposes not
germane to collective bargaining,” though it was the clear
implication of the decision that such use would be uncon-
stitutional. Jd. at 238.
Five years later in International Association of Ma-
chinists v. Street, 367 U.S. 740 (1961), the Supreme
Court was directly confronted with the question whether
a union, acting as the exclusive bargaining representa-
tive under an agency contract as authorized under sec-
tion 2, Eleventh, could constitutionally collect and use the
dues-equivalent from an objecting employee in the unit
for “political purposes.” The result of sustaining this
argument would have been a decision rendering the stat-
ute unconstitutional. The Court found it unnecessary,
though, to consider the constitutionality of the union’s
collection and use of the dues-equivalent under the stat-
ute because it held that it was “not only ‘fairly possible’
but entirely reasonable” to construe the statute itself
in a way making it unnecessary to consider the statute’s
constitutionality. Id. at 750. In adopting this procedure,
the Court was merely following a rule often applied and
recently restated in Ellis v. Brotherhood of Railway, Air-
line and Steamship Clerks, —— US. . , 80 L.Ed.
2d 428, 439 (1984): “When the constitutionality of a
statute is challenged, this Court first ascertains whether
the statute can be reasonably construed to avoid the con-
stitutional difficulty.” The Court, accordingly, looked to
the legislative purpose of section 2, Eleventh. See United
States v. Security Industrial Bank, 459 U.S. 70, 82 n.12
(1982); Buckley v. Valeo, 424 U.S. 1, 79 n.106 (1976) ;
Broadrick v. Oklahoma, 413 U.S. 601, 613 (1973). Based
5la
on its finding of the statute’s legislative purpose, the
Supreme Court held that, under section 2, Eleventh, un-
ions were not vested with “unlimited power to spend ex-
acted money” and they might not use such money to
“support candidates for public office” or to “advance
political programs” because those were not uses which
help “defray the expenses of the negotiation or admin-
istration of collective agreements, or the expenses en-
tailed in the adjustment of grievances and disputes.”
Street, 367 U.S. at 768.2" The Court, however, limited
its decisions to the union’s “power to use [the dissenting
employee’s] funds to support political causes which he
opposes,” saying: |
We express no view as to other union expenditures
objected to by an employee and not made to meet the
costs of negotiation and administration of collective
agreements, or the adjustment and settlement of
grievances and disputes. Id. at 769.
This construction of section 2, Eleventh, as stated in
Street, was restated in Brotherhood of Railway and
Steamship Clerks v. Allen, 373 U.S. 113 (1963). In that
case the Supreme Court said:
Respondents’ amended complaint alleges that sums
exacted under the Agreement ‘have been and are and
will be regularly and continually used by the defend-
ant Unions to carry on, finance and pay for political
activities directly at cross-purposes with the free
will and choice oi the plaintiffs.’ This allegation
sufficiently states a cause of action. It would be im-
practicable to require a dissenting employee to allege
and prove each distinct union political expenditure to
*1In Ellis, —— U.S. at ——, 80 L.Ed.2d at 486, the Supreme
Court said that Street held that the RLA “does not authorize a
union to spend an objecting employee’s money to support political
causes. The use of employee funds for such ends is unrelated to
Congress’ desire to eliminate ‘free riders’ and the resentment they
provoked.”
52a
which he objects; it is enough that he manifests his
opposition to any political expenditures by the un-
ion.” Id. at 118 (emphasis added).
In Ellis, the Supreme Court followed Street and Allen
in their statement of the principle that a statute chal-
lenged for unconstitutionality under the First Amend-
ment may be sustained if, as a result of a reasonable
narrowing construction consonant with the legislative
purpose reflected in the statute, the constitutiona! objec-
tion may be removed or obviated. It found, as had the
Court in the earlier cases, that the statute could reason-
ably be given such construction, and it proceeded to hold
that expenditures from the dues-equivalent collected from
objecting employees under an agency contract authorized
by section 2, Eleventh could embrace expenditures “neces-
sarily or reasonably incurred for the purpose of perform-
ing the duties of an exclusive representative of the em-
ployees in dealing with the employer on labor-management
issues. Under this standard, objecting employees may be
compelled to pay their fair share of not only the direct
costs of negotiating and administering a collective-
bargaining contract and of settling grievances and dis-
putes, but also the expenses of activities or undertakings
normaiiy or reasonably employed to implement or effec-
tuate the duties of the union as exclusive representative
of the employees in the bargaining unit.” —-— U.S. at
, 80 L.Ed.2d at 442 (emphasis added). The Court
then went beyond the holdings of its previous decisions,
which had limited its interdiction of the use of the dues-
equivalent to expenditures for “political activities” or
“political expenditures” (Allen, 373 U.S. at 118-19), or
“for the expression of political views, on behalf of polit-
ical candidates, or towards the advancement of other
ideological causes not germane to its duties as collective-
bargaining representative (Abood, 481 U.S. at 235, or
“for forcing ideological conformity or other action in
contravention of the First Amendment” (Hanson, 351
53a
U.S. at 238), or “to use [of the employee’s] money to
support political causes which he opposes” (Street, 307
U.S. at 768). Instead, the Court proceeded to identify
more specifically certain expenditures which would be per-
missible and some which would not be permissible under
the standards declared by the Court in the construction
of section 2, Eleventh. Costs of national conventions,
“refreshments for union business meetings and occa-
sional social activities,” publications “reporting [to em-
ployees] about those activities it can charge them for
doing,” and “litigation incident to negotiating and ad-
ministering the contract or to settling grievances and
disputes” were said to be permissible charges that could
be legitimately made on a proportionate basis against
objecting employees but not “organizing” expenditures,
which are “outside Congress’ authorization.” —— U.S.
at ——, 80 L.Ed. 2d at 442-445.
In the midst of its decisions construing section 2,
Eleventh of the RLA, the Supreme Court dealt in Abood
v. Detroit Board of Education, 431 U.S. 209, 223 (1977),
with a state statute which authorized an agency shop
under “a regulatory scheme which, although not identical
in every respect to the NLRA or the Railway Labor Act,
[was] broadly modeled after federal law.” Accordingly,
for guidance in construing that state statute “modeled”
after section 8(a)(3) of the NLRA and section 2,
Eleventh of the RLA, the Supreme Court looked to the
decisions in Hanson and Street under section 2, Eleventh.
Id. at 225. It observed that “insofar as the service charge
is used to finance expenditures by the Union for the pur-
poses of collective bargaining, contract administration,
and grievance adjustment, those two decisions of this
Court appear to require validation of the agency-shop
agreement before us.” Jd. at 225-26. But Michigan law
also “permit[ed] union expenditures [by the union under
the agency shop agreement] for legislative lobbying and
in support of political candidates.” Jd. at 215. The Su-
54a
preme Court invalidated on First Amendment grounds
the Michigan statutory authorization for the use of fees
collected from an objecting employee for such purposes,
saying:
We do not hold that a union cannot constitution-
ally spend funds for the expression of political views,
on behalf of political candidates, or toward the ad-
vancement of other ideological causes not germane to
its duties as collective-bargaining representative.
Rather, the Constitution requires only that such ex-
penditures be financed from charges, dues, or assess-
ments paid by employees who do not object to ad-
vancing those ideas and who are not coerced into
doing so against their will by the threat of loss of
governmental employment. Id. at 235-236.”
It is defendants’ position, though, that the construction
of section 2, Eleventh as first stated in Street and later
reiterated in Allen and Ellis, is inapplicable in the con-
struction of section 8(a) (3), despite their similarity in
language and purpose, and despite the use of those cases,
in construing a similar Michigan statute in Abood. In
its discussion of the statute in Abood, the Court likened
that statute to section 8(a) (3) and section 2, Eleventh
and then said that the Michigan statute was to be con-
strued as those two federal statutes had been construed
in Hanson and Street. It is difficult, therefore, to see
the force of an argument that Street, Allen, and Ellis
are not as relevant to the construction of section 8 (a) (3)
as they are to the construction of section 2, Eleventh. If
those decisions were relevant to the construction of the
statute in Abood, they are even more relevant in con-
struing a like federal statute.
And defendants appear to have conceded as much in
their formal presentation of their position to the district
2 For a full critique of Abood, see generally The Supreme Court,
1976 Term, 91 Harv. L. Rev. 1, 158-198 (1977).
55a
court in the letter of their counsel. In his letter of June 3,
1977, defendants’ counsel advised the district court on
the position of defendants thus: “The principal opinion’s
discussion [in Abood] of national labor policy and deci-
sions under the National Labor Relations Act would seem
to indicate that the principles of Hanson ard Street in-
terpreting the Railway Labor Act apply equally to non-
railway employees.” Moreover, one commentator sug-
gested, even in advance of Abood:
It is unlikely that the first amendment issue
raised by political expenditures of forced contribu-
tions under the union’s security agreements will be
resolved in the private sector. The issue under the
RLA has been mooted by Street, and the NLRA,
which governs most other private employers, contains
language authorizing union security agreements that
is almost identifical to that in the RLA. Since the
Supreme Court interpretated the RLA as prohibiting
political expenditures, it would be almost certain to
place a similar interpretation on that language in
the NLRA.*
Even Professor Cantor, who is the most public critic of
the limited use of union dues under an agency contract,
supports this view. In his latest article, Forced Payments
to Service Institutions and Constitutional Interests in
Ideological Non-Association, 36 Rutgers L.Rev. 3, 41 n.219
(1984), he states:
Although Street dealt only with RLA authoriza-
tions of a union shop, the NLRA provision contains
virtually identical constraints. [citations omitted]
RLA §2 (11), adopted in 1951, was simply in-
tended to confer on rail unions the same union secu-
rity prerogatives conferred on industrial unions in
1947 in the Taft-Hartley Act. [citations omitted]
23 Blair, Union Security Agreements in Public Employment, 60
Cornell L. Rev. 183, 194 (1975).
56a
Thus, legislative history under both the RLA and
the Taft-Hartley Act is relevant to assessing con-
gressional intent in shaping the permissible bounds
of union security provisions.
In Henkel & Wood, Limitations on the Uses of Union
Shop Funds After Ellis: What Activities are “Germane”
to Collective Bargaining? 35 Lab. L.J. 736, 743 (1984),
the latest academic comment on the two statutes, the au-
thors said:
Second, it is apparent that Ellis will apply to
claims brought under the NLRA. As noted in Ellis,
Congress’s purpose in allowing the union shop was
to eliminate the free-rider problem, which arose from
exclusive union representation. Congress favored ex-
clusive union representations as a means of promot-
ing labor peace. This notion of exclusive union rep-
resentation ‘underlies the National Labor Relations
Act as well as the Railway Labor Act.’ For this
reason the policies behind the Ellis standard are just
as applicable under the NLRA. The Ninth Circuit
dealt with this issue in Seay [Seay v. McDonnell
Douglass Corp., 427 F.2d 996, 1003 (9th Cir. 1970)]. In
that case the court noted: ‘Both the applicable pro-
visions of the Act [RLA] 45 U.S.C. [§ 152, Eleventh
—and the applicable provision of the National Labor
Relations Act—29 U.S.C. § 158(a) (3)—] are for all
purposes here, the same.’ It appears, therefore, that
the scope of Ellis will extend to cases under the
NLRA.
We conclude, therefore, that the two statutes, (i.e.,
section 2, Eleventh and section 8(a) (3) phrased similarly
and expressive of the same legislative purpose, should
be given the same construction. The defendants appear
to argue, though, that the Supreme Court in Street, Allen,
and Ellis in its construction of section 2, Eleventh was
so motived by a desire to avoid finding the statute
57a
under review unconstitutional that it gave the stati-te a
skewed or “tortured” construction. They posit that the
same “grave” constitutional question perceived by the
Supreme Court to exist in connection with the construc-
tion of section 2, Eleventh did not exist in connection
With the construction of section 8(a) (3). It followed
under the defendants’ syllogism that, in their view, Street,
Allen, and Ellis were not to be given weight in constru-
ing section 8(a)(3). We do not find either of the
grounds for this syllogism of the defendants valid. First
of all, we disagree that the Supreme Court gave section
2, Eleventh an “unreasonable” or skewed construction in
order to avoid confronting the constitutional issue. In
construing section 2, Eleventh, the Supreme Court in
Street carefully canvassed the legislative record in order
to ascertain che legislative purpose of the statute and, on
the basis of that examination of legislative purpose, it
reached what in its considered opinion was an “entirely
reasonable” construction of the statute. 367 U.S. at 750.
In view of the strength of this construction (“entirely
reasonable”), we are not prepared to find the construc-
tion given section 2, Eleventh by Justice Brennan in
Street to be “tortured,” to use Professor Cantor’s term.
Cantor, supra note 2, at 72. We would be properly hesi-
tant to brand a construction of a statute adopted by the
Supreme Court in three cases to be “skewed”; we believe
the construction adopted by the Supreme Court was, as
that Court said, one which was the “entirely reasonable”
construction of the statute bused on both its language and
its legislative history.
Defendants’ second reason, as included in their syllo-
gism, seems to be, however, that the Supreme Court could
not be expected to nor would it be impelled to give sec-
tion 8(a)(3), in an action involving that section, the
same construction it had given section 2, Eleventh, in an
action involving only that statute, because the Court
would not have been confronted with the same “grave”
58a
constitutional question in the case of a challenge to sec-
tion 8(a)(3) as it was when section 2, Eleventh was
challenged. The rationale for this position is said by
defendants to be that section 2, Eleventh explicitly pre-
empted all contrary state law whereas section 8(a) (3)
is inapplicable in any state which has enacted a right-to-
work law under section 14(b) of the Taft-Hartley Act.**
We are unable to see the force of this argument when the
question arises in a state such as Maryland which has no
right-to-work law and to which section 14(b) has no
application. So far as this case is concerned, arising as
it does in Maryland, there is no difference between a
section 8(a) (3) constitutional challenge and the section 2,
Eleventh challenge in Street. Section 8(a) (3) is just as
effective aud all-inclusive so far as employees in Mary-
land covered by the NLRA are concerned, as section 2,
Eleventh is with respect to railway employees employed
in Maryland. In fact, the purpose of enacting section
14(b) was to prevent pre-emption of state law in those
states which should exercise the right given them by sec-
tion 14(b) to be exempt from the authorization of sec-
tion 8(3) (3). Oil, Chemical & Atomic Workers Inter-
national Union v. Mobil Oil Corp., 426 U.S. at 417. When
the employees in Maryland, whether employed on the rail-
road or in other industrial installations have no rights
secured under section 14(b) of the NLRA and are sub-
ject to practically identical statutory restrictions and limi-
tations under section 8(a) (3) and section 2, Eleventh, it
seems inconceivable that the Supreme Court would, in
construing the two statutes, offer protection to one group
of such employees and deny it to others because of some
action taken by another state in enacting a statute under
section 14(b) to protect only that latter state’s employ-
ees. Actually, it is interesting that in Abood, where the
Supreme Court faced the constitutionality of the agency
shop clause directly, because the Michigan statute ad-
24 29 U.S.C. § 164(b) (1983).
ore at
8 en Til a ie Tl tase ll
59a
dressed public employees, it adopted the very construc-
tion of section 2, Eleventh declared by it in Street as the
limit of constitutional power in permitting the exaction of
the dues-equivalent from an objecting employee under an
agency contract executed by an exclusive bargaining rep-
resentative under the authority of a state or federal stat-
ute. This, it seems to us, demonstrates that it matters not
under what statute the claim arises, for the result is the
same.
Defendants also seek to cite other differences between
section 2, Eleventh and section 8(a) (3) which render it
improper to construe the two statutes similarly. The
first of these differences is that prior to the enactment of
section 2, Eleventh, the RLA prohibited the union shop
whereas section 8(a)(3) of the NLRA permitted the
union shop prior to the amendment made to that section
in 1947 by the Taft-Hartley Act. It escapes us how the
language of the two Acts prior to the additions of the
provisions in question could effect the construction to be
given the later amendments, expressed in similar lan-
guage and intended to effectuate the same legislative
purpose. Next, defendants find substantial differences
because section 2, Eleventh allows union shop charges
“for periodic dues, initiation fees, and assessments” and
section 8(a)(3) uses the language “periodic dues and
the initiation fees.” When we consider the definition
which the Supreme Court gave the term “assessment” in
section 2, Eleventh of the Railway Labor Act, we per-
ceive no reason to make any distinction between the two
Acts so far as the issue involved in this case is con-
cerned. Thus, in Hanson, the Court clearly stated that
“(i]f ‘assessments’ are in fact imposed for purposes not
germane to collective bargaining,” they would be subject
to the same restraints on use as would “dues.” 351
U.S. at 235. In short, “assessments” add nothing to
“dues” so far as an ability of the union to use either
for “purposes not germane to collective bargaining.” Fi-
60a
nally, defendants find some significance in the fact that,
during the development of section 8(a) (3), there was
some discussion of placing a limit on “dues” or “initia-
tion fees,” but Congress determined ultimately not to do
so, whereas in the later adoption of section 2, Eleventh
the legislative history is silent on this point. The fact
that in the legislative history of the earlier statute (sec-
tion 8(a)(3)) there had been discussion of placing a
dues limit in the statute, but Congress ultimately deter-
mined not to include or limit, whereas Congress, during
the discussion preceding the later enactment of section 2,
Eleventh never mentioned the subject of a limit on dues
but followed the earlier statute in omitting such a limit,
lacks any logical meaning to us. The addition of a spe-
cific limit on “dues” in the statute had been resolved
when section 8(a)(3) was adopted. Unless Congress
wished to depart from its view as adopted in 1947 in the
consideration of section 8(a) (3), there was no point in
reopening the matter when later Congress was consider-
ing enacting a similar statute for railway workers in
section 2, Eleventh.
As their final thrust at the statutory claim of plain-
tiffs, defendants assert that plaintiffs’ action, if sustain-
able, is within the exclusive jurisdiction of the National
Labor Relations Board and that plaintiffs are without
any justiciable remedy for the redress of this violation
of their rights. Defendants conceded in their affidavits
and motions, however, that a portion of the dues collected
from plaintiffs by them was and will be used to finance
political activities. The conscious use of such funds by
the unions on their authority as the exclusive bargaining
representative under the agency contract negotiated by
them with the employer is not only a violation of the
statute itself but also a violation of defendants’ duty of
fair representation. In either case, the action would have
been within the jurisdiction of the district court under
28 U.S.C. § 1337. In Street, the Supreme Court made it
eS eT CR ee ee eo
6la
clear that under the federal labor law “a union’s status
as exclusive bargaining representative carries with it
the duty fairly and equitably to represent all employees
of the craft or class, union and nonunion.” 367 U.S. at
761. And this duty has been interpreted “to require a
union to represent fairly all the members of the bargain-
ing unit for which the union is the exclusive agent, and
this obligation in turn has been interpreted to include a
specific duty to the unit’s nonunion employees to estab-
lish procedures that will make sure that the employees
are not forced to pay for union activities other than those
the union undertakes in its agency role.” Hudson v.
Chicago Teachers Union Local No. 1, 743 F.2d 1187, 1191
(7th Cir. 1984).
Specifically, courts have held that the union, under its
role of exclusive bargaining representative by virtue of
the agency contract, violates this duty of fair representa-
tion by compelling payments of dues to be used for pur-
poses “not germane to collective bargaining” unless the
unions have established a rebate procedure that fully pro-
tects the nonassenting employees from illegal exactions.
That defendants in this case have not established a re-
bate procedure that “adequately protected the nonmem-
bers’ right to avoid contributing to objectionable political
purposes” is established by Ellis. Champion v. Califor-
nia, 738 F.2d 1082, 1086 (9th Cir. 1984), cert. denied
sub nom. Champion v. Deukmejian, —— U.S. ——, 84
L.Ed.2d 367 (1985) (decided on the basis of Ellis).
Under those circumstances, an action for violation of
the duty of fair representation is not pre-empted by the
National Labor Relations Act, for, as the Supreme Court
said in Amalgamated Association of Street, Electric Raiil-
way & Motor Coach Employees v. Lockridge, 403 U.S.
274, 299 (1971):
Indeed, in Vaca v. Sipes, 386 U.S. 171 (1967),
we held that an action seeking damages for injury
62a
inflicted by a breach of a union’s duty of fair rep-
resentation was judicially cognizable in any event,
that is, even if the conduct complained of was argu-
ably protected or prohibited by the National Labor
Relations Act and whether or not the lawsuit was
bottomed on a collective agreement.
This same thought was expressed in Smith v. Local No.
25, Sheet Metal Workers International Association, 500
F.2d 741, 746 (5th Cir. 1974):
In our judgment, union conduct may be consistent
with or even unrelated to the terms of a collective
bargaining agreement and yet violative of the duty
of fair representation.
Such was the ruling in Seay v. McDonnell Douglas Corp.,
427 F.2d 996, 1000 (9th Cir. 1970), and Reid v. McDon-
nell Douglas Corp., 443 F.2d 408, 411-12 (10th Cir.
1971) .*
Jurisdiction over plaintiffs’ statutory suit against de-
fendant union under section 8(a) (3) and for breach of
the duty of fair representation was properly invoked
under 28 U.S.C. § 1337. Section 1337 provides, in perti-
nent part, that “[t]he district courts shall have original
jurisdiction of any civil action or proceeding arising
under any Act of Congress regulating commerce.” The
Supreme Court has held that the NLRA is an Act of
Congress regulating commerce, see Capital Services, Inc.
v. NLRB, 347 U.S. 501, 504 (1954), and a suit for the
protection of rights protected by section 8(a)(3) and
under the union’s duty of fair representation is one aris-
ing under the NLRA, see William E. Arnold Co. v. Car-
2° On remand, the court in Reid found that the union had given
proper protection by its rebate provision and therefore held that
the union had not violated its duty of fair representation. Reid v.
International Union, 479 F.2d 517, 520 (10th Cir. 1973). The
correctness of this decision must be doubtful after Ellis in which
the Supreme Court disapproved a similar rebate procedure.
63a
penters District Council, 417 U.S. 12, 16 (1974) ; NLRB
v. Heyman, 541 F.2d 796, 799 (9th Cir. 1976) ; Axderson
v. United Paperworkers International Union, 641 F.2d
574, 576 (8th Cir. 1981); Smith v. Local No. 25, Sheet
Metal Workers International Association, 500 F.2d 741,
748-749 (5th Cir. 1974) ; Nedd v. United Mine Workers,
400 F.2d 103, 106 (3rd Cir. 1968). See also Storey v.
Local 327, International Board of Teamsters, No. 83-
5747, slip op. at 11-13 (6th Cir. Mar. 29, 1985). In the
case sub judice, plaintiffs pled jurisdiction under section
1337 and challenged CWA’s expenditures both under
section 8(a) (3) as construed by the Supreme Court and
as violative of its duty of fair representation. Conse-
quently, the district court properly exercised jurisdiction
over this matter. In addition, were this not so, it is
difficult to find jurisdiction in Ellis, which was filed
initially in the federal district court, just as this case.
That case was exactly like this case, save that it was
brought under section 2, Eleventh and this one under
section 8(a) (3). But, as we have seen, the two statutes
are to be construed alike and both give to objecting
employees the same rights. If there was jurisdiction
under section 1337 over a statutory claim under section
2, Eleventh in Ellis (and that could be the only basis for
jurisdiction in Ellis since the Supreme Court found it
unnecessary to consider the constitutional claim), by the
same token there is jurisdiction over the statutory claim
26 Because jurisdiction was properly invoked under § 1337, we
need not decide whether jurisdiction exists under § 301 of the
Taft-Hartley Act, 29 U.S.C. § 185. However, in Seay v. McDonnell
Douglas Corp., 427 F.2d 996, 1000 (9th Cir. 1970), it was said
that jurisdiction could be sustained under § 185 if the facts alleged
or proved brought the action within the section. The undisputed
facts in this case meet that test. See Aguirre v. Automotive
Teamsters, 633 F.2d 168, 174 (9th Cir. 1980) (“‘If facts giving
the court jurisdict'on are set forth in the complaint, the provision
conferring jurisdiction need not be specifically pleaded’”) (quot-
ing Williams v. United States, 405 F.2d 951, 954 (9th Cir. 1969) ) ;
Fristoe v. Reynolds Metal Co., 615 F.2d 1209, 1212 (9th Cir. 1980).
64a
under section 8(a)(3) here. In short, jurisdiction can
only be denied in this case if jurisdiction is to be denied
in Ellis.
Kolinske v. Lubbers, 712 F.2d 471, 481-82 (D.C.Cir.
1983), has been cited as contrary to jurisdiction in this
case. Kolinske, on its facts, may well be said nct to raise
an issue within the union’s duty of fair representation
or violative of section 8(a) (3). The question there in-
volved was the appellee’s eligibility to receive strike bene-
fits during a strike. These benefits were not created
under the agency contract with the employer; neither did
they have statutory authorization; they “were developed
by the union solely as an ancillary, supportive tool of
collective bargaining”; they by the terms of their crea-
tion “were made available to any employee, whether
member or non-member, who contributed to the fund
and in some way manifested a willingness to help the
union’s collective bargaining activities” (in this case the
strike) ; and “{e]ligibility for benefits was conditioned
in many ways, and payment was based on family size
and length of a strike.” Jd. at 482 (emphasis added).
The appellee’s claim in that case related to the union’s
rules of eligibility for benefits from a union-developed
and union-created fund. Such a case is one entirely
involving union internal policies. In this case, however,
the union’s rights and obligations arise out of an agency
contract authorized under a federal statute. Under that
federally authorized contract, the union derives its right
to collect a service charge from objecting employees. The
rights of the union thus derive from an agreement, the
content of which—so far as the collection of the dues-
equivalent—is controlled by federal law as described by
the Supreme Court. The source of the union’s authority
in this case is not certain rules developed and set by the
internal procedures of the union; its right to the service
charge and its obligation in the use of the dues-equivalent
collected for that purpose stem from an agency contract
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65a
that exists only by virtue of federal law. A violation by
the union of its duties under such contract, is a clear
breach of section 8(a)(3) and of the union’s duty of
fair representation, intended to protect against discrimi-
natory or arbitrary action by the union.
Since we are satisfied that there is jurisdiction of the
statutory action under section 1337 on the authority of
Street, Allen, and Ellis, it would seem unnecessary for
us to consider the constitutional basis for jurisdiction.
Lest it be thought that we agree with defendants’ con-
tention that there is no such basis for jurisdiction in this
case, we address briefly that issue. We add that we are
convinced that there is governmental action sufficient to
sustain jurisdiction. The Supreme Court found jurisdic-
tion of the constitutional right of action under section 2,
Eleventh in Hanson, which involved “private employ-
ment” as does this case. 351 U.S. at 232. Further, the
constitutional claim dealt with a statute which, as we
have seen, was similar in language and legislative pur-
pose to section 8(a)(3). As Abood emphasizes, “the
union shop, as authorized by the Railway Labor Act, also
was found to result from governmental action in Hanson.
The plaintiffs’ claims in Hanson failed, not because there
was no governmental action, but because there was no
First Amendment violation.” 431 U.S. at 226. If we
assume that section 2, Eleventh and section 8(a) (3) are
to be given the same interpretation, then it necessarily
follows under Hanson that there is governmental action
here sufficient to satisfy the requirements for governmen-
tal action.” And defendants apparently recognize this,
for they have argued at some length, as we have seen,
that there is a substantive difference in the two statutes.
As we have said, no difference in the two statutes can
be found either in their language or in their proclaimed
legislative purpose. Defendants, however, purport to find
27 See Blair, supra note 23, at 194.
66a
a difference in the fact that section 14(b) of the NLRA
applies to exclusive representation cases under the
NLRA, and not to such cases arising under the RLA.
As we have said earlier, section 14(b) provides that
section 8(a) (3) in its authorization of the agency shop
will not apply in cases arising in a state which has
banned agency shops. There is no similar provision in
the RLA, for section 2, Eleventh states explicitly that it
supersedes any state law. Repeating what we said
earlier: we are unable to find that this difference has
any relevance in the caes before us. This action arises
in Maryland, a State which has no right-to-work statute.
So far as an agency shop under section 8(a)(3) in
Maryland is concerned, it stands the same as the similar
agency shop under section 2, Eleventh of the RLA. Sec-
tion 14(b) applies in neither of those cases; the con-
trolling law in both cases is the federal statute. The
court in Linscott v. Millers Falls Co., 440 F.2d 14, 17
(1st Cir.) cert. denied, 404 U.S. 872 (1971), put the
matter accurately: “By section 14(b)’s necessary impli-
cation, federal approval, and hence federal enforcement
(under section 8(a) (3)] will exist in those states that
do not enact such a law.”
Defendants purport to find some substance for their
argument in what they declare is the permissiveness in
section 2(a) (3). Whether there is an authorized agency
shop under section 8(a) (3) in any state depends, they
argue, upon the will of the state, which, by enacting a
section 14(b) statute, can prevent the execution of a
valid agency contract over employment in the state. Gov-
ernmental action which can exist only by the permission
of the state will not do, they declare. Defendants over-
look that an agency contract, whether under section 2,
Eleventh or under section 8(a) (8), is by definition per-
missive. It depends on the agreement of both the em-
ployer and the bargaining agent; unless both give their
permission, there can be no agency contract under either
statute. This is the reason Justice Douglas in Hanson
67a
said: “The union shop provision of the Railway Labor
Act is only permissive.” 351 U.S. at 231. Of course,
there is no federal jurisdiction until the employer and
the union choose to invoke the authorization granted un-
der section 8(a) (3). To that point their rights may be
termed “permissive.” But when they actually invoke sec-
tion 8(a) (3) and execute an agreement under the stat-
ute, the obligations cease to be “permissive” and become
compelled under the statute.
Abood is also supportive of governmental action. It
arose out of a state statute, applicable to state employees,
which was similar in language to both section 8(a) (3)
and section 2, Eleventh, except in one particular: it al-
lowed the union enjoying the rights under an agency con-
tract to collect dues which could be used for lobbying or
political purposes. That statute had been enacted because
states are exempt from the NLRA’s provisions, just as
states enacting right-to-work statutes are exempt. See
29 U.S.C. § 152(2). Certain state employees assailed the
constitutionality of the provision allowing the use of
their “dues” for political or lobbying purposes. The state
trial court sustained the statute, finding the clause per-
mitting use of the exacted funds did “not violate the
Federal Constitution.” 451 U.S. at 215. On appeal of
the state intermediate appellate court’s decision revers-
ing and remanding the trial court, the Supreme Court
reversed. The Court began by stating: “To compel em-
ployees financially to support their collective-bargaining
representative has an impact upon their First Amend-
ment interests ... [and may] well be thought .. . to
interfere in some way with an employee’s freedom to
associate for the advancement of ideas, or to refrain
from doing so, as he sees fit.” 431 U.S. at 222. The Court
found, however, that, because of “the legislative assess-
ment of the important contribution of the union shop to
the system of labor relations established by Congress,” a
“service charge” may be collected to such extent as it is
68a
used to finance “expenditures by the Union for the pur-
poses of collective bargaining, contract administration,
and grievance adjustment” but not for political or lobby-
ing purposes. Id. at 222, 225-226. It then addressed the
question whether there is a difference between public and
private employees in this area and dismissd the claim
with this significant statement: “The differences between
public and private-sector collective bargaining simply
do not translate into differences in First Amendment
rights.” Id. at 232. It reiterated its construction of
Hanson, as already quoted, to the effect that the union
shop agreement authorized by the RLA was “found to
result from governmental action.” Jd. at 226.
Governmental involvement and governmental action in
this case, as Abood makes clear, is indisputable. The
right of action herein has its roots in the national labor
policy embodied in the NLRA and the Taft-Hartley Act
and is a part of that legislated national labor policy, that,
according to the opinion of the Supreme Court in NLRB
v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 180 (1967),
extinguishes the individual employee’s power to
order his own relations with his employer and cre-
ates a power vested in the chosen representative to
act in the interests of all the employees. “Congress
has seen fit to clothe the bargaining representative
with powers comparable to those possessed by a
legislative body both to create and restrict the rights
of those whom it represents... .” Steele v. Louis-
vile & Nashville R. Co., 323 U.S. 192, 202 (1944).
That power of a union to exercise this compelling power
as the exclusive bargaining representative of employees
—both those approving and those objecting—in the unit
stems from federal law. It is, as Justice Douglas said in
Hanson, when referring to section 2, Eleventh, the “fed-
eral statute [which] is the source of the power and
authority by which any private rights [of an objecting
69a
employee] are lost or sacrificed. [citation omitted] The
enactment of the federal statute authorizing union shop
agreements is the governmental action on which the Con-
stitution operates, though it takes a private agreement
to invoke the federal sanction.” 351 U.S. at 232. And, in
Ellis, the Supreme Court reiterated this same point. It
said:
Only a union that is certified [under federal law]
as the exclusive bargaining agent is authorized to
negotiate a contract requiring all employees to be-
come members of or to make a contribution to the
union. Until such a contract is executed, no dues or
fees may be collected from objecting employees who
are not members of the union; and by the same
token, any obligatory payments required by a con-
tract authorized by § 2, Eleventh terminate if the
union ceases to be the exclusive bargaining agent.
— USS. at ——, 80 L.Ed. 2d at 442.*
Again, as the Court in Hanson said, the “sanction of
government” is “put behind” an agency contract, whether
under section 2, Eleventh or under section 8(a) (3), ex-
ecuted by the exclusive bargaining agent. 351 U.S. at
232 n.4. Justice Douglas, who had written the opinion in
28 Since oral argument, counsel for defendants have cited to us
Price v. International Union, No. H-84-1221, (D. Conn. Apr. 11,
1985). That case is similar to the one under review here. In Price
the Court found that there was no “governmental action”. Its
rationale for this conclusion was:
The union security clause contained in the contract among
the defendants here is part of a privately bargained contract
among private parties. That clause would be permissible if
both state and federal law were silent about such clauses, and
the existence of a permissive, but not compulsory ‘federal
statute which may be preempted by contrary state law does
not establish that the federal government is the source of au-
thority for the clause. Slip op. at 12-13.
This reasoning contradicts the holding in Ellis, —— U.S. at ——,
80 L.Ed.2d at 442, quoted above in the text (p. 47).
70a
Hanson, made this point more emphatic in his dissent
from the denial of certiorari, in which Chief Justice
Burger concurred, in Buckley v. American Federation of
Television and Radio Artists, 419 U.S. 1093, 1095
(1974) :
When Congress authorizes an employer and a
union to enter into union-shop agreements binding
and enforceable over the dissents of a minority of
employees or union members, it has cast the weight
of the Federal Government behind the agreements
just as surely as if it has imposed them by statute.
If we were to follow the defendants’ reasoning, what
the government has done by authorizing the agency shop
in section 2, Eleventh and section 8(a) (3) and compel-
ling either union membership or the dues-equivalent con-
tribution as a condition of employment is to vest the
union with the right and authority to collect dues to be
used for, among other purposes, the support of political
candidates, policies, and political ideologies without any
right existing in non-consenting employees to a judicial
forum for the protection of their First Amendment
rights or their rights under section 8(a) (3). Such au-
thority as the union has in this case is grounded directly
on the power given it as a result of its status as bargain-
ing representative under the federal statute and under
an agency contract that in turn owes its status to
another federal statute. When that power—power to
collect against the employee’s will—to collect the dues-
equivalent and to use those funds in a completely uncon-
stitutional way (i.e., for political and lobbying purposes)
is exercised by the union entirely under federal authori-
zation, it seems impossible not to find in such union
action governmental action. It is true, the actor is the
union, but the union acts only under the warrant of
federal authority. The union wears the cloak of the
government; in making its demands it acts under au-
thority vested in it by the federal government. As Jus-
Tla
tice Douglas said in his concurring opinion in Street:
“Since neither Congress nor the state legislature can
abridge [First Amendment] rights, they cannot grant
the power to private groups to abridge them.” 367 U.S.
at 777. There is, in our opinion, governmental action.
In this case, the two-part test set iorth in Lugar v.
Edmondson Oil Co., 457 U.S. 922 (1982) is fully satis-
fied. Unquestionably the deprivation in this case is
“caused by the exercise of some right or privilege cre-
ated by the State” and, since the statute clothes the
union with the authority to exercise that power, the “con-
duct [of the union] is otherwise chargeable to the State.”
Id. at. 937.
Defendants seek to find support for their contrary
view in the recent cases of Blum v. Yaretsky, 457 U.S.
991 (1982) and Rendell-Baker v. Kohn, 457 U.S. 830
(1982). Blum and Rendell-Baker both involved conduct
by defendants which was clearly private. Blwm involved
a nursing home which was expected to meet certain regu-
latory requirements, but the transfer of patients, which
was the subject of that action, was not within the regula-
tions. In finding an absence of state action, the Court
said: “{a] State normally can be held responsible for a
private decision only when it has exercised coercive
power or has provided such significant encouragement,
either overt or covert, that the choice must in law be
deemed to be that of the State.” 457 U.S. at 1004. That
language delineates perfectly the difference between this
case and Blum.
Rendell-Baker involved the discharge of a teacher by
a private school receiving its support largely from public
funds. However, it was expressly agreed between the
public bodies and the school that the latter was private
and its employees were not “city employees.” 457 U.S.
at 833. The decision to discharge the plaintiff was “not
compelled or even influenced by any state regulation.”
72a
Id. at 841. That is again quite different from this case
where all acts taken were compelled by federal statute.
Defendants also cite United Steelworkers v. Weber,
443 U.S. 193 (1979) and United Steelworkers v. Sadlow-
ski, 457 U.S. 102 (1982). In Sadlowski, the Supreme
Court found the challenged conduct valid. In Weber, the
employer and the union added to their collective bargain-
ing agreement an affirmative action plan. Such addition
was purely voluntary, based on no statutory or regula-
tory authorization. As the Court remarked, such a plan
did not involve state action. 443 U.S. at 200. Neither of
these cases adds any force to defendants’ objection to our
finding of governmental action and thus jurisdiction over
the plaintiffs’ clearly established constitutional claim. It
follows that, in our opinion, governmental action” and
thus jurisdiction would exist in this case over plaintiffs’
constitutional claim.
Satisfied that there is jurisdiction present on both the
statutory and constitutional claims of plaintiffs, we turn
to the defendants’ second claim of error in the decision
of the district court.
The only remaining issue in this case is directed at
determining what expenditures made by the union out
of the dues-equivalent collected under an agency contract
executed pursuant to section 8(a) (3) were permissible
against objecting non-union employees such as plaintiffs.
29 Compare Linscott v. Millers Falls Co., 440 F.2d 14, 17 (1st
Cir.), cert. denied, 404 U.S. 872 (1971), Seay v. McDonnell Douglas
Corp., 427 F.2d 996, 1000 (9th Cir. 1970), Havas v. Communica-
tions Workers, 509 F.Supp. 144, 148-149 (N.D.N.Y. 1981), and
Lykins v. Aluminum Workers Int’l Union, 510 F.Supp. 21, 24-26
(E.D. Pa. 1980), with Kolinske v. Lubbers, 712 F.2d 471, 474-480
(D.C. Cir. 1983), Hovan v. United Bd. of Carpenters and Joiners,
704 F.2d 641, 642-645 (1st Cir. 1983), Reid v. McDonnell Douglas
Corp., 443 F.2d 408, 410-411 (10th Cir. 1971), further proceedings,
479 F.2d 517 (10th Cir.), cert. denied, 414 U.S. 1076 (1973), and
Price v. International Union, No. H-84-1221, slip op. at 12-13 (D.
Conn. Apr. 11, 1985).
73a
The standard to be used in such determination was re-
cently set forth by the Supreme Court in Ellis, by draw-
ing upon and expanding upon the earlier decisions in
Street, Allen, and Abood. Ellis said that objecting em-
ployees such as plaintiffs, from whom dues are collected
and used under the agency contract, can only be charged
for expenditures “necessarily or reasonably incurred for
the purpose of performing the duties of an exclusive rep-
rensentative of the employees in dealing with the em-
ployer on labor-management issues.” ——— U.S. at ——,
80 L.Ed.2d at 442. Under this standard, the objecting
employees “may be compelled to pay their fair share of
not only the direct costs of negotiating and a ‘minister-
ing a collective-bargaining contract and of settling griev-
ances and disputes, but also the expenses of activities or
undertakings normally or reasonably employed to imple-
ment or effectuate the duties of the union as exclusive
representative of the employees in the bargaining unit.”
Id. The objecting employees are entitled to a refund of
any amount collected of them by the union beyond these
“aosts.”’
The burden of proof in establishing the charges validly
chargeable under this standard against the objecting em-
ployees rests on defendant unions. This was settled by
Allen, in which the Supreme Court said:
Since the unions posses the facts and records from
which the proportion of political to total union ex-
penditures can reasonably be calculated, basic con-
siderations of fairness compel that they, not the
individual employees, bear the burden of proving
such proportion. Absolute precision in the calcula-
tion of such proportion is not, of course, to be ex-
pected or required; we are mindful of the difficult
accounting problems that may arise. 378 U.S. at
122.
It is at this point in the analysis that the error claimed
by defendants emerges. In determining whether the un-
74a
ions met their burden, the special master applied the clear
and convincing standard of proof, though the special
master modified this somewhat by the language in Allen
that absolute precision was neither expected nor required.
Even as modified, though, this standard of proof con-
flicts with the standard set forth in Ellis, which is that
of preponderance of the evidence. —— U.S. at —— n.15,
80 L.Ed.2d at 447 n.15.
Defendants’ specific claim of error is that the special
master used the improper standard of proof and that the
district judge affirmed such use. It is clear that the
special master erred in his standard of proof. However,
it does not follow that all the conclusions of the special
master, as affirmed by the district judge, must be vacated.
Defendants identify no findings made by the special mas-
ter and confirmed by the district judge which were made
on the basis of this standard; they apparently would
presume, however, nothing else appearing, that any find-
ing of disputed fact was tainted by error due to the appli-
cation of the incorrect standard. But, even accepting de-
fendants’ argument, it means that only those conclusions
in which there was a dispute in the evidence are vulner-
able to attack on the ground that the special master had
weighed and resolved the facts by the use of an incorrect
standard of proof. If the conclusion of the special master
was one of law and required no evaluation of conflicts in
evidence or if it was based on an absence of any evidence,
the error in application of the incorrect standard of proof
could not be said to have influenced the decision and
would thus be harmless. Our problem, therefore, is to
ascertain the findings or conclusions of the special master
as confirmed by the district judge which may have been
affected or influenced by the application of the incorrect
standard of proof.
In doing this, however, we must recognize that there
are two sets of defendants; one, CWA, the national
union, and the other, the locals. The fee collected from
75a
the employees under the agency contract was divided be-
tween the two on a 40-60% basis, respectively. The na-
tional and the local unions have made separate presenta-
tions and we must, therefore, deal separately with the
expenditures of CWA and the locals. We shall begin
with CWA’s proof of expenditures.
CWA, through its expert witness, a certified public
account, reviewed the expenditures made by CWA for
the years in question and classified them under eight
headings. The special master accepted the witness’ list-
ing of expenditures and the classifications within which
he grouped these expenditures. He found no occasion in
dealing with four of these classifications to inquire into
the accuracy of the charges or the propriety of the clas-
sification. He did this because he found these groups to
include charges impermissible against plaintiffs as a
matter of law. He gave specific reasons in each instance
for this disallowance. None of these reasons, we empha-
size, represented a resolution of disputed facts but in-
stead represented a determination that as a matter of
law the expenditures were not chargeable to plaintiffs.
We consider each of these disallowed categories of ex-
penditures:
(1) The first of these disallowed expenditures were
those CWA itself classified as “political.” It seems
that CWA concedes the propriety of this disallow-
ance. Had defendants not conceded the inadmissi-
bility of these expenditures as charges against plain-
tiffs, Street would have compelled their disallow-
ance.”
* Professor Cantor has suggested that Congress in the Taft-
Hartley Act banned the use of union fees in federal elections.
Cantor supra note 2 at 72-76, 49 Notre Dame L. Rev. He argues
that Congress thereby manifested its awareness of the problem
and the fact that it did not include a similar prohibition in
§ 8(a)(3) of the Act indicates an intention by Congress not to
prohibit such use in connection with that section. To sustain any
76a
(2) The second category of expenditures found by
the special master to be impermissible were “labor
legislation” expenditures. This disallowance was
based on two grounds: First, he found that in large
part these expenditures covered costs of “lobbying
efforts” by CWA “far remote . . . from collective
bargaining, contract negotiation and grievance ad-
justment,” for instance, “lobbying efforts on behalf
of the adoption of the Panama Canal Treaty, and
the Equal Rights Amendment.” He suggested that
there might have been some areas such as “the Tele-
communications Act or Occupational Health and
Safety Regulations” where “lobbying” would have
some relevance, but the special master said CWA
had made no effort to identify any such permissible
“lobbying activities” or to offer any evidence in sup-
port. The disallowance seems justified under Abood.*!
(3) “Community services” expenditures were also
found inadmissible charges as a matter of law. In
reaching that conclusion, the special master held that
such expenditures did “not directly relate to, and
are not reasonably necessary, in the opinion of the
Special Master, for the proper effectuation of collec-
tive bargaining, contract administration and griev-
ance adjustment.” He added that First Amendment
rights were involved in this situation because em-
ployees “may not approve of the particular charities
such theory would be to reverse the decisions in Street, Allen, and
Abood. We refuse the suggestion and choose to abide by the de-
cision which the Supreme Court has reached in those cases deal-
ing with § 2, Eleventh of the RLA which is similar to § 8(a) (8).
%1In Robinson v. New Jersey, 741 F.2d 598 (3d Cir. 1984), the
court appears to have sustained “lobbying” expenditures by public
employees because of the unique relationship of public employees’
working conditions, wages, etc. to legislation. It is not easy to
reconcile this decision with Abood. However, we are not here
concerned with public employees and the unique considerations
which influenced the decision in Robinson are not present here.
77a
receiving the largess of the Union” and the employees
“may well have their own favorite charities . . . to
which they may wish to contribute the portion of
their agency fee payments allocated by the Union to
charitable contributions.” The disallowance seems
to accord with the test stated in Ellis.
(4) Finally, the special master disallowed what
CWA identified as expenditures for “organizing.”
Incidentally, this is the only specifically disallowed
class of expenditures which CWA claimed to be er-
roneous in its exceptions to the special master’s re-
port. However, Ellis held that such expenditures
were not allowable charges against the objecting em-
ployees because “such expenditures are outside Con-
gress’ authorization.” ——- U.S. at ——, 80 L.Ed.2d
at 444. The Supreme Court gave a number of rea-
sons supporting their decision. These began with the
statement of the legislative purpose of the enabling
legislation: “We remain convinced that Congress’
essential justification for authorizing the union shop
was the desire to eliminate free riders—employees in
the bargaining unit on whose behalf the union was
obliged to perform its statutory functions, but who
refused to contribute to the costs thereof.” Jd. at
—, 80 L.Ed.2d at 441-442. The Court concluded
with this comment: “Organizing money is spent on
people who are not union members, and only in the
most distant way works to the benefit of those al-
ready paying dues. Any freerider problem here...
is a far cry from the free-rider problem with which
32 The only justification offered by CWA before the special
master for the allowance of these expenditures as charges against
plaintiffs was that such expenditures “creat[ed] a favorable climate
of public sympathy and support when collective bargaining time
arrives and particularly when there is a strike.” We agree with
the special master and the district judge that, under the test
stated in Ellis, such expenditures were not “reasonably necessary
... for the proper effectuation” of collective bargaining.
78a
Congress was concerned.” Jd. at ——, 80 L.Ed.2d
at 445.
The error in the standard of proof had no connection
with the findings and conclusions on the chargeability of
expenditures in these four categories and cannot provide
a justification for a reversal. We therefore affirm the
decision of the district court in approving the special
master’s disallowance of CWA’s expenditures under the
following four classifications made by defendants’ ac-
countant: “political,” “labor legislation,” “community
services,” and “organizing.” There were four other clas-
sifications of expenditures identified by CWA’s expert.
One of these, headed “administrative,” was a catch-all,
spread out over the other seven classifications on a pro-
portionate basis, and appears to create no problem. The
other classifications in the grouping of expenditures were
disbursements for “collective bargaining,” “grievances,”
and “contract administration” purposes. The expendi-
tures in these areas were also listed and identified as to
their particular purpose by CWA. Some items of ex-
penditures included in these areas were disallowed by
the special master. Thus, he disallowed all expenditures
listed under the heading of “Foreign Affairs.” CWA had
other expenditures identified for the purpose of “Defense
Funds.” Included in such expenditures was a substantial
contribution to the United Mine Workers in support of
their strike. This expenditure was disallowed by the spe-
cial master. CWA had a grouping of expenditures in an
area titled by it as “Publicity and Public Relations,”
which the president of CWA, according to the special
master, classified as “Organizing.” On that basis the
special master disallowed the expenditures under this
grouping. We agree with the special master’s rulings on
these disallowed items, as approved by the district judge.
Their disallowance was made on the ground that such
expenditures did not qualify for allowance under the rule
as enunciated by the Supreme Court in Ellis. Such deci-
79a
sions by the special master could not have involved in
any way the erroneous standard for evaluating disputed
questions of fact and are affirmed.
The other expenditures listed under the broad classifi-
cations of “collective bargaining,” “grievance,” and “con-
tract administration,” included various items such as
“Convention and Related Committees,” “Development and
Research,” “Professional Fees,” and “Education.” The
differences between the special master and CWA did not
concern the propriety of the titles. Unlike the situation
in connection with the four classifications first discussed,
where the items were disallowed as not admissible
charges as a matter of law, it seemed that expenditures
under these headings were reviewed on their facts. Most
of these expenditures consisted of personal services.
CWA’s auditor relied in his compilation of these cost
items on the estimate given him in interviews by the
employees involved. CWA
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