Phyllis Ann BROWNE, et al., Petitioners-Appellants, v. WISCONSIN EMPLOYMENT RELATIONS COMMISSION, Respondent. The AMERICAN FEDERATION OF STATE, COUNTY & MUNICIPAL EMPLOYEES, AFL-CIO, DISTRICT COUNCIL 48, et al., Petitioners-Appellants, v. WISCONSIN EMPLOYMENT RELATIONS COMMISSION, Respondent.
No. 89-1094
Supreme Court of Wisconsin
June 18, 1992
Motion for reconsideration denied on August 11, 1992.
485 N.W.2d 376
(T.C. No. 750-002)
For the respondent the cause was argued by John D. Niemisto, assistant attorney general, with whom on the brief was James E. Doyle.
For the intervenor-respondents there was a brief by Larry P. Weinberg and Robert D. Lenhard, Washington, D.C. and John H. Bowers and Lawton & Cates, S.C., Madison and oral argument by Mr. Weinberg and Mr. Bowers.
Amicus curiae briefs were filed by Pamela Jacobs and Bruce Meredith, Madison for the Wisconsin Education Association Council.
HEFFERNAN, CHIEF JUSTICE. This is a consolidated appeal on certification of the court of appeals from a judgment of the circuit court for Milwaukee County, Michael P. Sullivan, Circuit Judge, affirming on review pursuant to
The facts are undisputed. In the early 1970‘s, the Milwaukee Board of School Directors and Milwaukee
Two groups of nonunion employees filed actions challenging the constitutionality of
facts in respect to this case appear in Browne II. The cases were ultimately remanded by the circuit court to WERC to make findings of fact and conclusions of law regarding what portion of the fair-share fees had been used for purposes unrelated to collective bargaining or contract administration.
On March 4, 1986, the United States Supreme Court decided Hudson, which set forth certain procedural safeguards necessary for the collection of fair-share fees:
[T]he constitutional requirements for the Union‘s collection of agency fees include an adequate explanation of the basis for the fee, a reasonably prompt opportunity to challenge the amount of the fee before an impartial decisionmaker, and an escrow for the amounts reasonably in dispute while such challenges are pending.
Hudson, 475 U.S. at 310. In response to Hudson, the unions published a “NOTICE TO ALL NONMEMBER FAIRSHARE PAYORS,” which purported to provide nonunion employees an explanation of the basis for the fair-share fee, give them an opportunity to object to the use of the fees for nonchargeable activities, and provide a mechanism by which objecting nonunion employees could challenge the unions’ calculation of the fee before an impartial decisionmaker.
The notice first breaks down the unions’ activities into 38 separate categories and indicates which categories the unions consider “chargeable” and which catego-
Under the heading “AFSCME Council 48 Affiliated Locals Financial Information,” the notice provides that “Council 48 has determined that the percentage of chargeable activities of these local unions is at least as great as the percentage of chargeable activities of Council 48.” The notice does not indicate the basis for this “local presumption,” and does not indicate whether the local unions’ expenses were audited.
Next, the notice provides a procedure whereby nonunion employees, within 30 days of the notice, can object to the unions’ use of fair-share fees for nonchargeable activities, at which point those employees receive an advance rebate of the portion of the fees which the unions determined to be nonchargeable. The notice then provides a procedure for objecting employees to challenge the unions’ calculation of the nonchargeable amount. “Challengers” must inform the unions in writing of their intent to challenge the calculation, at which point the unions will place in escrow 100 percent of the
In April, 1986, the nonunion employees requested WERC to review the fair-share agreements in light of Hudson. On May 9, 1986, WERC issued an order to show cause and notice of hearing in both Browne and Johnson, and consolidated the cases. On May 30, 1986, WERC held a hearing. On April 24, 1987, WERC issued an extensive decision, determining that the unions had committed prohibited practices under
WERC held that the unions’ notice and procedures were legally deficient in several aspects and legally sufficient in several others, and that the Hudson holding is to be retroactively applied. WERC ordered the union to: (1) refund to the complainants, at percentages established in the various stipulations, all nonchargeable fair-share fees collected prior to December 31, 1982, with interest;6 (2) escrow an amount equal to all fair-share fees deducted from the complainants between January 1, 1983 to March 4, 1986 (the date Hudson was decided), with
The unions and the nonunion employees both sought review of portions of WERC‘s decision pursuant to
The nonunion employees, represented by the National Right to Work Legal Defense Foundation (Right to Work Foundation), raise the following issues: (1) whether the costs of public advertising, lobbying, representation of other bargaining units, litigation or organizing are chargeable in light of Lehnert; (2) whether AFSCME‘s advance disclosure procedure, the objection requirement, and the limited scope of the arbitrator‘s decision meet the requirements of Hudson; (3) whether the employers committed a prohibited practice by deducting fair share fees without ensuring compliance with the procedures mandated in Hudson; (4) whether restitution and a cease-and-desist order would have been
The unions’ appeal raises the following issues: (1) whether Hudson applies retroactively; (2) whether 100 percent escrow of all fair-share fees of all nonunion employees is an appropriate remedy; (3) whether WERC properly vacated the arbitrator‘s decision; (4) whether an independent and separate audit of local unions is required by Hudson; and (5) whether the escrow must be under the control of a neutral third party.
We first examine the chargeability of the costs of various types of activities in light of Lehnert. Second, we consider whether the unions’ notice provides the procedural safeguards required by Hudson. Third, we consider whether the employers committed a prohibited practice in this case. Finally, we examine the propriety of the relief ordered by WERC.
I.
An initial consideration in this case is the proper deference due the WERC decision. The Right to Work Foundation argues that because WERC was merely applying the law to issues of first impression, this court should accord the agency‘s interpretation only “due weight.” Berns v. WERC, 99 Wis. 2d 252, 261, 299 N.W.2d 248 (1980). WERC asserts that its decision in this case represents an interpretation of the Municipal Employment Relations Act (MERA),
The unions and the nonunion employees both sought review of portions of WERC‘s decision pursuant to
The nonunion employees, represented by the National Right to Work Legal Defense Foundation (Right to Work Foundation), raise the following issues: (1) whether the costs of public advertising, lobbying, representation of other bargaining units, litigation or organizing are chargeable in light of Lehnert; (2) whether AFSCME‘s advance disclosure procedure, the objection requirement, and the limited scope of the arbitrator‘s decision meet the requirements of Hudson; (3) whether the employers committed a prohibited practice by deducting fair share fees without ensuring compliance with the procedures mandated in Hudson; (4) whether restitution and a cease-and-desist order would have been
The unions’ appeal raises the following issues: (1) whether Hudson applies retroactively; (2) whether 100 percent escrow of all fair-share fees of all nonunion employees is an appropriate remedy; (3) whether WERC properly vacated the arbitrator‘s decision; (4) whether an independent and separate audit of local unions is required by Hudson; and (5) whether the escrow must be under the control of a neutral third party.
We first examine the chargeability of the costs of various types of activities in light of Lehnert. Second, we consider whether the unions’ notice provides the procedural safeguards required by Hudson. Third, we consider whether the employers committed a prohibited practice in this case. Finally, we examine the propriety of the relief ordered by WERC.
I.
An initial consideration in this case is the proper deference due the WERC decision. The Right to Work Foundation argues that because WERC was merely applying the law to issues of first impression, this court should accord the agency‘s interpretation only “due weight.” Berns v. WERC, 99 Wis. 2d 252, 261, 299 N.W.2d 248 (1980). WERC asserts that its decision in this case represents an interpretation of the Municipal Employment Relations Act (MERA),
application, and the fact that it is a policymaking body.7
Depending upon the nature of the issues and facts, we accord an agency‘s determinations great weight, due weight, or no weight at all. Sauk County v. WERC, 165 Wis. 2d 406, 413-14, 477 N.W.2d 267 (1991). In West Bend Education Ass‘n v. WERC, 121 Wis. 2d 1, 12, 357 N.W.2d 534 (1984), we explained the “great weight” standard:
[I]f the administrative agency‘s experience, technical competence, and specialized knowledge aid the agency in its interpretation and application of the statute, the agency‘s conclusions are entitled to deference by the court. Where a legal question is intertwined with factual determinations or with value or policy determinations or where an agency‘s interpretation and application of the law is of long standing, a court should defer to the agency which has primary responsibility for determination of fact and policy. [Footnote omitted.]
In Berns, we stated that “where the question involved is ‘very nearly [one of] first impression,’ we do not use the ‘great weight’ standard but, instead, accord to the interpretation due weight in determining what the appropriate construction should be.” Berns, 99 Wis. 2d at 261 (citations omitted). In Local No. 695 v. LIRC, 154 Wis. 2d 75, 84, 452 N.W.2d 368 (1990), we further stated that “[w]here a legal question is concerned and there is no evidence of any special expertise or experience, the weight to be afforded an agency interpretation is no weight at all.”
To the extent that WERC‘s decision involved the application of the principles of Hudson to the specific context of collective bargaining and fair-share agreements under the MERA, we accord WERC‘s decision great weight because of its expertise in these aspects of public sector collective bargaining arena. Additionally, the application of constitutional principles to specific facts in the public sector collective bargaining arena involves public policy considerations, which WERC is specifically authorized to make.
Certain questions presented by this case, such as whether the unions’ disclosure satisfied Hudson, are matters of very nearly first impression, and we accord WERC‘s determinations due weight. To the extent that WERC‘s decision involved purely constitutional and legal questions of first impression, such as whether Hudson applies retroactively or whether a “local presumption” may satisfy the Hudson requirements, we accord WERC‘s decision no weight.
II.
Consideration of the issues presented by this appeal must begin with a review of several United States Supreme Court decisions regarding fair-share fees. The cases include Railway Employes’ Dept. v. Hanson, 351 U.S. 225 (1956); Machinists v. Street, 367 U.S. 740 (1961); Abood v. Detroit Bd. of Education, 431 U.S. 209 (1977); Chicago Teachers Union v. Hudson, 475 U.S. 292 (1986); Ellis v. Railway Clerks, 466 U.S. 435 (1984); and Lehnert v. Ferris Faculty Ass‘n, — U.S. —, 111 S. Ct. 1950 (1991).
In Hanson, the Court upheld the constitutionality of a union shop agreement between a railroad and several unions. Under the union shop agreement, authorized by
In Street, the union shop provision of the RLA was again challenged. Unlike Hanson, however, the record in Street indicated that union dues were in fact used to support political causes. Construing the RLA to avoid constitutional infirmity, the Court held that the union shop provision authorized compulsory union membership only “to share the costs of negotiating and administering collective agreements, and the costs of the adjustment and settlement of disputes,” and not “to provide the unions with a means for forcing employees, over their objection, to support political causes which they oppose.” Street, 367 U.S. at 764. Thus, the court held
In Abood, the Court considered for the first time the constitutionality of a state statute authorizing a union shop arrangement in the public sector. The Michigan statute allowed public sector unions to charge nonunion employees a “service fee” equal in amount to union dues. Abood and other nonunion employees challenged the union shop provision as a violation of their freedom of association under the
However, the Court limited the purposes for which compelled union fees from an objecting nonunion employee could be constitutionally used:
We do not hold that a union cannot constitutionally spend funds for the expression of political views, on behalf of political candidates, or toward the advancement of other ideological causes not germane to its duties as collective-bargaining representative. Rather, the Constitution requires only that such expenditures be financed from charges, dues, or assessments paid by employees who do not object to advancing those ideas and who are not coerced into doing so against their will by the threat of loss of governmental employment.
The dividing line between chargeable and nonchargeable expenditures in the private sector was considered in Ellis. The Court, again applying the union shop provision of the RLA, considered among other issues the chargeability of extra-unit litigation8 and organizing efforts. The Court applied two tests to the expenditures: first, whether they were “necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues,” Ellis, 466 U.S. at 448; and second, whether they “involve additional interference with the First Amendment interests of objecting employees, and, if so, whether they are nonetheless adequately supported by a governmental interest.” Id. at 456. The Court held that both extra-unit litigation expenses and organizing expenses failed the first test—neither was sufficiently related to the unions’ duties as exclusive bargaining representative to be chargeable. Id. at 451-53.
In Hudson, the Court considered a question expressly left open in Abood—what procedural safeguards are necessary to ” ‘prevent[ ] compulsory subsidization of ideological activity by employees who object thereto without restricting the Union‘s ability to require every employee to contribute to the cost of collective-bargaining activities.’ ” Hudson, 475 U.S. at 302, citing
[T]he constitutional requirements for the Union‘s collection of agency fees include an adequate explanation of the basis for the fee, a reasonably prompt opportunity to challenge the amount of the fee before an impartial decisionmaker, and an escrow for the amounts reasonably in dispute while such challenges are pending.
Id. at 310. The Court stated that the nonunion employee had the burden of objecting to the amount of the fee, but that the union must first provide adequate information regarding the basis of the fee to allow the nonunion members to object to it intelligently. Id. at 306. Because the union procedure before the Court involved an advance rebate of the nonchargeable fees to all nonunion employees, the Court did not comment on the nonunion employee‘s burden of objecting in the first instance to the use of agency dues for nonchargeable purposes.
Finally, in Lehnert, the Court considered the question expressly left open in Abood—what is the dividing line between chargeable and nonchargeable union activities in the public sector. The majority of the Court set forth the following test:
[C]hargeable activities must (1) be “germane” to collective-bargaining activity; (2) be justified by the government‘s vital policy interest in labor peace and avoiding “free riders“; and (3) not significantly add
to the burdening of free speech that is inherent in the allowance of an agency or union shop.
Lehnert, — U.S. at —, 111 S. Ct. at 1959. Justice Scalia, joined by three other Justices, stated that he would hold chargeable only “the costs of performing the union‘s statutory duties as exclusive bargaining agent.” Id. at —, 111 S. Ct. at 1975 (Scalia, J., concurring in part and dissenting in part). As discussed below, the Court‘s application of the test to the various categories of expenses offers general guidelines to lower courts in determining the chargeability of public sector union activities.
III.
The first issue we consider is the chargeability to nonunion employees of union expenses for public advertising, lobbying, exclusive representation of other bargaining units, litigation and organizing. In Lehnert, the United States Supreme Court specifically considered four of the five categories of expenses at issue in this case. Because Lehnert was decided after WERC‘s decision, WERC‘s conclusions regarding chargeability merit no deference. Lehnert makes clear that the determination of chargeability is a constitutional determination. Lehnert, — U.S. at —, 111 S. Ct. at 1959; Hohe v. Casey, No. 91-5002, (3rd Cir. Feb. 10, 1992), slip op. at 20. This court owes no deference to WERC regarding constitutional questions of first impression. Local No. 695, 154 Wis. 2d at 84.
A.
The unions’ notice listed as chargeable “[t]he public advertising of positions on the negotiation of, or provi-
In Lehnert, the Court stated:
The Court of Appeals determined that the union constitutionally could charge petitioners for certain public-relations expenditures. In this connection, the court said: “Public relations expenditures designed to enhance the reputation of the teaching profession... are, in our opinion, sufficiently related to the unions’ duty to represent bargaining unit employees effectively so as to be chargeable to dissenters.” 881 F.2d, at 1394. We disagree. Like the challenged lobbying conduct, the public-relations activities at issue here entailed speech of a political nature in a public forum. More important, public speech in support of the teaching profession generally is not sufficiently related to the union‘s collective-bargaining functions to justify compelling dissenting employees to support it.
Lehnert, — U.S. at —, 111 S. Ct. at 1964. Justice Scalia agreed that public relations expenses are nonchargeable because they are not “part of this collective bargaining process.” Id. at —, 111 S. Ct. at 1979-80.
The unions and WERC urge that we read Lehnert narrowly and hold that public advertising specifically related to collective bargaining or contract administration is chargeable. They argue that public advertising is an important negotiating tool in the public sector. We agree, and affirm WERC‘s conclusion that costs for pub-
B.
WERC held that lobbying “for collective bargaining legislation or regulations or to effect changes therein” or “for legislation or regulations affecting wages, hours and working conditions of employes generally before Congress, state legislatures, and state and federal agencies” is chargeable, but that lobbying for “political, charitable, and ideological matters” is not chargeable.
In Lehnert, Justice Blackmun stated:
[W]e hold that the state constitutionally may not compel its employees to subsidize legislative lobbying or other political union activities outside the limited context of contract ratification or implementation.
Lehnert, — U.S. at —, 111 S. Ct. at 1960-61. Justice Blackmun explained that “[t]here is no question as to the expressive and ideological content of these activities,” and therefore there is a significant possibility of interference with the dissenting employees’ First Amendment interests. Id. at —, 111 S. Ct. at 1960. Justice Scalia concurred in the result because he concluded that lobbying expenses are not “part of this collective bargaining process.” Id. at —, 111 S. Ct. at 1979-80 (Scalia, J., concurring in part and dissenting in part).
Thus, in accordance with Lehnert, we hold that expenses for lobbying activities are chargeable if the lob-
C.
WERC held that the costs of representing other bargaining units are chargeable. WERC reasoned that the wages, hours and working conditions of other units “impact on the results obtained in collective bargaining for the employes in [the] unit involved herein.” These costs arise in the context of the local unions’ affiliation fees to Council 48 and AFSCME.
In Lehnert, Justice Blackmun concluded that “a local bargaining representative may charge objecting employees for their pro rata share of the costs associated with otherwise chargeable activities of its state and national affiliates, even if those activities were not performed for the direct benefit of the objecting employees’ bargaining unit.” Lehnert, — U.S. at —, 111 S. Ct. at 1961. In this context, Justice Blackmun noted that “[t]he essence of the affiliation relationship is the notion that the parent will bring to bear its often considerable economic, political, and informational resources when the local is in need of them.” Id. at —, 111 S. Ct. at 1961. Thus the Court concluded that such costs are chargeable so long as they “may ultimately enure to the benefit of the members of the local union by virtue of their membership in the parent organization.” Id. at —, 111 S. Ct. at 1961-62. Justice Scalia concurred in this holding. Id. at —, 111 S. Ct. at 1980-81 (Scalia, J., concurring in part and dissenting in part).
Because WERC has expertise in determining whether the costs of certain activities enure to the benefit of the local unions, we give WERC‘s conclusion great
D.
WERC held that jurisdictional dispute proceedings, impasse mechanisms, and litigation “relating to concerted activity and collective bargaining” are chargeable, even if the nonunion employees’ units are not involved. In Lehnert, Justice Blackmun stated that where union litigation is “unrelated to an objecting employee‘s unit,” it is “not germane to the union‘s duties as exclusive bargaining representative” and is not chargeable. Lehnert, — U.S. at —, 111 S. Ct. at 1964. Justice Blackmun explained that such litigation “is more akin to lobbying [than bargaining] in both kind and effect.” Id. at —, 111 S. Ct. at 1963. Justice Marshall dissented from this conclusion, and Justice Scalia did not directly address it. Thus there is no majority holding on this issue in Lehnert.
However, we find Justice Blackmun‘s plurality opinion persuasive. Moreover, it may be inferred from Justice Scalia‘s discussion of Ellis and from other early fair-share cases that a majority of the Court would find extra-unit litigation expenses nonchargeable. In Ellis, the Court determined whether certain costs were chargeable under the RLA. With regard to litigation expenses, Ellis held that only litigation “incident to negotiating and administering the contract or to settling grievances and disputes arising in the bargaining unit,” and “other litigation . . . that concerns bargaining unit employees and is normally conducted by the exclusive representative” is chargeable. Ellis, 466 U.S. at 453. Justice Scalia quoted this portion of Ellis and noted that “there is good reason to treat” Ellis and other early cases “as merely
Therefore, we conclude that unless the litigation is directly related to the objecting employee‘s bargaining unit, it is nonchargeable. Extra-unit litigation fails the first aspect of the Lehnert test—it is not germane to the collective bargaining activity of the local union. See Albro v. Indianapolis Ed. Ass‘n, 585 N.E.2d 666, 672 (Ind. Ct. App. 1992). We do not decide whether the costs of jurisdictional dispute proceedings and impasse mechanisms are chargeable. Because this factual aspect of the case was not sufficiently addressed by WERC, it must be determined on remand whether or to what extent the unions’ jurisdictional dispute proceedings and impasse mechanisms relate to the local unions.
E.
WERC held that every kind of organizing activity is chargeable—organizing within the unit, organizing and seeking recognition as bargaining agent for other units, and defending against efforts by other unions to supplant the union as exclusive representative. Lehnert did not address the chargeability of organizing costs.
Applying as we must the Lehnert test to organizing costs, it is apparent that such costs are not chargeable. The only possible germane connection between organizing costs and the unions’ collective bargaining duties is the theory that any time the union is strengthened, all individual units benefit by increased bargaining power. This rationale was rejected in Lehnert with respect to political lobbying expenses, general public relations
In Ellis, the Court explained why organizing costs should not be chargeable:
[W]here a union shop provision is in place and enforced, all employees in the relevant unit are already organized. By definition, therefore, organizing expenses are spent on employees outside the collective-bargaining unit already represented. Using dues exacted from an objecting employee to recruit members among workers outside the bargaining unit can afford only the most attenuated benefits to collective bargaining on behalf of the dues payer.
[T]he free-rider rationale does not extend this far. The image of the smug, self-satisfied nonmember, stirring up resentment by enjoying benefits earned through other employees’ time and money, is completely out of place when it comes to the union‘s overall organizing efforts.
Ellis, 466 U.S. at 452. See Albro, 585 N.E.2d at 673 (neither offensive nor defensive organizing costs are chargeable under Ellis and the second and third criteria of Lehnert).
IV.
The second broad issue we consider is whether the fair-share fee procedure established by the unions in response to Hudson satisfies the requirements of Hudson.
A.
The initial consideration in this respect is whether Hudson may be applied retroactively. WERC held that under the three-part test of Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07 (1971), Hudson may be applied retroactively. The unions argue that WERC erred because pre-Hudson law did not clearly foreshadow Hudson‘s procedural requirements. We hold that Hudson applies retroactively.
Chevron set forth a three-part test for determining retroactivity, which may be summarized as follows:
- The decision to be applied prospectively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed.
- Whether retroactive operation will further or retard application of the new rule.
- Whether retroactive application would result in substantial injustice to the parties.
See Chevron, 404 U.S. at 106-07. Because there is a presumption in favor of retroactive application, all three Chevron factors must be satisfied in order for a decision to apply prospectively. Lowary v. Lexington Local Bd. of Education, 903 F.2d 422, 426-27 (6th Cir. 1990), cert. denied, 111 S. Ct. 385 (1990).
The first Chevron condition, referred to as the “clear break” principle, is “the threshold test for determining whether or not a decision should be applied retroactively.” United States v. Johnson, 457 U.S. 537, 550
While Hudson did not overrule any prior cases, its procedural requirements were clearly foreshadowed by prior agency shop decisions as well as First Amendment, due process, and fair representation case law.
Lowary, 903 F.2d at 429. Thus, Hudson was not a “clear break” from prior law.9 We conclude that Hudson must be given retroactive application.
B.
The first of Hudson‘s three procedural safeguards for the collection of fair-share fees is that the union must provide “an adequate explanation of the basis for the fee.” Hudson, 475 U.S. at 310. The Court explained the purpose of this requirement:
Basic considerations of fairness, as well as concern for the First Amendment rights at stake, also dictate that the potential objectors be given sufficient information to gauge the propriety of the union‘s fee. Leaving the nonunion employees in the dark about
Id. at 306. The “careful distinctions” referred to are the differences “between collective-bargaining activities, for which contributions may be compelled, and ideological activities unrelated to collective bargaining, for which such compulsion is prohibited.” Abood, 431 U.S. at 236. The union must identify all of its expenditures, not merely those which in its opinion it concludes are nonchargeable. Hudson, 475 U.S. at 306-07.
In a footnote, the Court added the following language, which forms the basis for the Right to Work Foundation‘s objections to the unions’ disclosure:
We continue to recognize that there are practical reasons why “[a]bsolute precision” in the calculation of the charge to nonmembers cannot be “expected or required.” Allen, 373 U.S., at 122, quoted in Abood, 431 U.S., at 239-240, n.40. Thus, for instance, the Union cannot be faulted for calculating its fee on the basis of its expenses during the preceding year. The Union need not provide nonmembers with an exhaustive and detailed list of all its expenditures, but adequate disclosure surely would include the major categories of expenses, as well as verification by an independent auditor. With respect to an item such as the Union‘s payment of $2,167,000 to its affiliated state and national labor organizations, see n.4, supra, for instance, either a showing that none of it was used to subsidize activities for which nonmembers may not be charged, or an explanation of the share that was so used was surely required.
Hudson, 475 U.S. at 307 n.18. The Right to Work Foundation objects to two aspects of the unions’ disclosure
AFSCME and Council 48 had their general expenses audited, and then broke them down according to the chargeable and nonchargeable criteria. The Right to Work Foundation argues that note 18 of Hudson requires an independent audit to verify the unions’ breakdown of the various expenses. WERC concluded that because the unions’ procedure included 100 percent escrow of challengers’ fees while challenges are pending before an impartial decisionmaker, no further audit is necessary. We agree with WERC‘s conclusion.
Hudson indicates that the breakdown of expenses need not be audited if there is a 100 percent escrow of all amounts reasonably in dispute.10 The Court stated: “If the Union chooses to escrow less than the entire amount, however, it must carefully justify the limited escrow on the basis of the independent audit, and the escrow figure must itself be independently verified.” Hudson, 475 U.S.
The audit provided by AFSCME and Council 48 was sufficient to ensure that their expenses were valid; the unions’ detailed categories of chargeable and nonchargeable activities provided an “adequate explanation of the basis for the fee.” Id. at 310.
Whether the expenses were properly broken down according to the chargeable and nonchargeable criteria may be determined later by an impartial decisionmaker. Because all of the challenged fees are placed in an interest-bearing escrow pending resolution of the challenge, there is no danger of any First Amendment violation. Moreover, an auditor does not have the legal authority to make the determination of what activities are chargeable and what are not, and it is unnecessary for notice purposes to require an auditor to determine whether a certain expense was, in fact, a “public advertising” expense or an “organizing” expense. This can be better accomplished by an impartial decisionmaker.11
C.
WERC also upheld the unions’ procedure of deducting a fair-share fee equal to full union dues, and requiring nonunion employees object annually within thirty days after the notice is given if they want an advance rebate. The Right to Work Foundation challenges the objection requirement on two grounds. First, the Foundation argues that it is unduly burdensome. This argument is meritless. Abood, Hudson, Lehnert and other United States Supreme Court decisions in this area make clear that objection is required. “[D]issent is not to be presumed.” Street, 367 U.S. at 774. The only limitation in Hudson is that the nonunion employee must have “a reasonably prompt opportunity to challenge the amount
Since Hudson places the burden of objection upon the employees (as contrasted to burden of proof), we do not consider unreasonable the plan‘s provision that each member be required to object each year so long as the union continues to disclose what it must before objections are required to be made.
Tierney v. City of Toledo, 824 F.2d 1497, 1506 (6th Cir. 1987). See also Mitchell v. Los Angeles Unified School District, No. 90-56180 (9th Cir. April 29, 1992). This conclusion is equally valid here; the unions’ requirement of annual objection is reasonable.
Second, the Right to Work Foundation argues that the objection requirement violates MERA. The Foundation asserts that MERA requires an advance rebate of the nonchargeable amount to all nonunion employees, regardless of any objection. The Foundation notes that
This argument of the Right to Work Foundation is also without merit. Hudson reiterated the principle that
a nonunion employee‘s objection to payment of nonchargeable expenses will not be presumed:
The nonmember‘s “burden” is simply the obligation to make his objection known. See Machinists v. Street, 367 U.S., at 774 (“[D]issent is not to be presumed—it must affirmatively be made known to the union by the dissenting employee“); Railway Clerks v. Allen, 373 U.S., at 119; Abood, 431 U.S., at 238.
Hudson, 475 U.S. at 306 n.16. The language in Street indicates beyond question that the “objection” required of the nonunion employee refers in the first instance to the use of the funds, not merely the calculation of the funds: “Any remedies, however, would properly be granted only to employees who have made known to the union officials that they do not desire their funds to be used for political causes to which they object.” Street, 367 U.S. at 774. To the extent that Browne II indicates that an advance rebate is required for all nonunion employees, that language is withdrawn. It is a prohibited practice under
The second of Hudson‘s three procedural safeguards is that there must be “a reasonably prompt opportunity to challenge the amount of the fee before an impartial decisionmaker.” Hudson, 475 U.S. at 310.
The Right to Work Foundation argues that the arbitrator‘s decision should apply to all nonunion employees, not merely the challengers. The Foundation asserts that this extra hurdle of requiring not only an “objection,” but also a “challenge” is unwarranted, and ignores the command in Hudson that “the procedure be carefully tailored to minimize the infringement” on nonunion employees’ rights. Hudson, 475 U.S. at 303. In conformity with the teachings of Hudson, we reject the Foundation‘s position.
The fair-share scheme discussed in Hudson involved an automatic advance rebate. The Chicago Teachers Union (CTU) deducted only 95 percent of full union dues from all nonunion employees, the percentage it calculated was chargeable. The question involved in Hudson was what procedural safeguards are required to allow nonunion employees to challenge intelligently the union‘s calculation of the nonchargeable amount. The CTU procedure presumed an objection to expenditure of fair-share fees for nonchargeable expenses. Previous cases make clear that such a presumption is not constitutionally required. See supra, pp. 118-120 (concluding that full union dues may be deducted absent objection). Therefore the analysis in Hudson presumes an original
The unions’ challenge procedure in this case is thus constitutionally valid as long as it meets the requirements of Hudson. Objection need not be presumed at either level—objection to the use of fees for nonchargeable activities, or objection to the unions’ determination of the nonchargeable amount. It is consistent with Hudson to limit the effect of the arbitrator‘s decision to challengers. Where the notice provisions are adequate, objecting nonunion employees who fail to challenge the unions’ calculation of the nonchargeable amount waive any challenge to that calculation.
E.
Under the unions’ procedures, AFSCME‘s and Council 48‘s expenditures were audited, but the local unions’ expenditures were not. Also, the notice did not set forth the major categories of the local unions’ expenses. The notice explained that: “Council 48 has determined that the percentage of chargeable activities of these local unions is at least as great as the percentage of chargeable activities of Council 48.” This is commonly referred to as a “local presumption.”
As to the information provided in the notice for the affiliated local unions, there is only an unverified single amount that is alleged to represent the total expenses for all of these locals. There is neither a sufficient breakdown and explanation of the
expenses, nor an audit of such figures. While we recognize the practical problems with requiring the unions to provide such information as to the locals’ expenditures, we cannot accept, and do not read the Court in Hudson as accepting, a presumption as to the chargeable portion of locals’ expenses based upon a union official‘s experience.
However,
We think that were an independent auditor to take a random sampling of a representative number of the local unions and audit their records, and if that sampling established to the auditor‘s satisfaction that the locals’ expenditures always have a lesser percentage of non-chargeable expenses than does Respondent District Council 48, such a presumption would be established and would be sufficient for notice purposes.
The unions argue that these requirements are unnecessary under Hudson, and also that they are unduly burdensome. The unions stress the language in Hudson, 475 U.S. at 307 n.18, that the union need not provide an “exhaustive and detailed list of all its expenditures,” and that “absolute precision” is not required in calculating the chargeable amount. According to the unions,
The local presumption implemented by the unions, based solely upon a union official‘s personal experience and no statistical evidence, is clearly insufficient under
Requiring nonmembers to contribute to the cost of collective bargaining involves a substantial interference with their First Amendment right of freedom of association. Although it may be somewhat burdensome on the unions, full disclosure of financial information is a minimal requirement in exchange for this interference. Hudson and a due regard for First Amendment values lead to this conclusion. The union must provide detailed information so that the dissenting teachers can understand why they are being charged. Only then can they make an informed decision.
See also Hohe v. Casey, No. 91-5002 (3rd Cir. Feb. 10, 1992), slip op. at 23-26; Lehnert v. Ferris Faculty Ass‘n, 707 F. Supp. 1473, 1479-80 (W.D. Mich. 1988), aff‘d, 893 F.2d 111 (6th Cir. 1989), cert. denied sub nom., Lindsay v. Ferris Faculty Ass‘n, 110 S. Ct. 267 (1990).
While a broad local presumption is insufficient, we conclude that
F.
Finally, the unions object to
Escrow. A writing, deed, money, stock, or other property delivered by the grantor, promisor or obligor into the hands of a third person, to be held by the latter until the happening of a contingency or performance of a condition, and then by him delivered to the grantee, promisee or obligee. [Emphasis added.]
V.
Hudson provides that “the government and union have a responsibility to provide procedures that minimize that impingement and that facilitate a nonunion employee‘s ability to protect his rights.” Hudson, 475 U.S. at 307-08 n.20 (emphasis added). See also Gilpin v. AFSCME, 875 F.2d 1310, 1312 (7th Cir. 1989), cert. denied, 493 U.S. 917 (1989) (“[B]oth the public employer and the union can be held liable in a suit under
VI.
A.
Finally, we consider the propriety of the relief ordered by
The unions first argue that
This court has held that “[t]here is no doubt that the
The prospective remedial order in this case was within
The unions also argue that
The unions’ argument appears to be that there are some amounts which may never be objected to as nonchargeable, and therefore such amounts are collectible regardless of compliance with Hudson. The language of Hudson clearly indicates that these categories of expenses, which no employee could challenge as nonchargeable, arise only after proper notice and only where there is an independent audit of the breakdown of expenses:
If, for example, the original disclosure by the Union had included a certified public accountant‘s verified breakdown of expenditures, including some categories that no dissenter could reasonably challenge, there would be no reason to escrow the portion of the nonmember‘s fees that would be represented by those categories.23
B.
First, it is reasonable for
Second, because the unions’ general notice provisions were defective, i.e., the local unions’ disclosure was inadequate and unaudited, the arbitration must necessarily be vacated because the potential objectors who failed to object because of insufficient information may now object and are entitled to challenge the unions’ determination and participate in the arbitration. Arbitration is appropriate only after Hudson has been complied with. See Lucid v. City and County of San Francisco, 136 L.R.R.M. (BNA) 2877, 2880-81 (N.D. Cal. 1991) (“[A]rbitration as contemplated by Hudson is limited to resolving disputes over the amount of the agency fee once constitutionally adequate disclosures have been made and an objection is lodged.“) (emphasis in origi-
C.
After vacating the arbitrator‘s award,
The Right to Work Foundation asserts that this retrospective remedy is “woefully inadequate,” and that the proper remedy is restitution to all nonunion employees of all fair-share fees collected by the unions after January 1, 1983, and issuance of a cease-and-desist order barring further collection absent compliance with Hudson. The argument supporting such relief is simply that the unions are entitled to nothing absent the Hudson safeguards.
We hold that
Not only would the “restitution” that the [Right to Work] Foundation seeks confer a windfall on the nonunion employees but it might embarrass the union financially. Yet those nonunion employees who, while not wanting to pay more (and perhaps even wanting to pay less) than their “fair share” fees, have no desire to ruin the union or impair its ability to represent them effectively might not want so punitive a remedy.
Gilpin, 875 F.2d at 1313. See also Lowary, 903 F.2d at 432-33. We agree, and affirm
In conclusion, we hold that political and ideological lobbying, extra-unit litigation and organizing are nonchargeable activities. We conclude that Hudson applies retroactively, and that the unions’ fair-share fee procedure is defective because there was no independent audit to determine whether the local unions’ percentage of nonchargeable expenses was in fact less than that of Council 48. We also conclude that while municipal employers have a duty under federal law to ensure that the unions’ procedure satisfies Hudson, their failure to do so is not a prohibited practice. Finally, we affirm
We remand the case to the circuit court with instructions to remand the case to
BABLITCH, WILLIAM A., J. (dissenting in part). Although I agree with much of the majority opinion, I must respectfully dissent to two of the majority‘s conclusions: 1) The majority concluded that litigation expenses with respect to concerted activity and collective bargaining are chargeable only if they are directly related to the objecting employee‘s bargaining unit; and, 2) The majority concluded that organizing expenses are nonchargeable to the objecting employee.
Litigation Expenses.
Organizing Expenses.
Accordingly, I dissent from the above two parts of the majority opinion.
I am authorized to state that JUSTICE SHIRLEY S. ABRAHAMSON joins in this dissent.
Notes
“Fair-share agreement” means an agreement between a municipal employer and a labor organization under which all or any of the employes in the collective bargaining unit are required to pay their proportionate share of the cost of the collective bargaining process and contract administration measured by the amount of dues uniformly required of all members. Such an agreement shall contain a provision requiring the employer to deduct the amount of dues as certified by the labor organization from the earnings of the employes affected by said agreement and to pay the amount so deducted to the labor organization.
Municipal employes shall have the right of self-organization, and the right to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in lawful, concerted activities for the purpose of collective bargaining or other mutual aid or protection, and such employes shall have the right to refrain from any and all such activities except that employes may be required to pay dues in the manner provided in a fair-share agreement.
The plaintiffs complain that despite its detail the notice does not explain the principles under which, say, $16,788 out of a total of $17,445 for “Editorial Services” is chargeable to the agency fee portion of union dues. But if it did, the notice would be as long and complicated as an SEC prospectus.