United Food and Commercial Workers Union, Local 1036, Phillip Mulder Charles Buck Leon Gibbons United Food and Commercial Workers Union, Local 7 United Food and Commercial Workers Union, Local 951, Intervenors v. National Labor Relations Board, Glenn Hilton United Food and Commercial Workers Union, Local 951, Respondent-Intervenor. Phillip Mulder Glenn Hilton Charles Buck Leon Gibbons, United Food and Commercial Workers Union, Local 7 United Food and Commercial Workers Union, Local 951, Intervenors v. National Labor Relations Board, Rebecca McReynolds Barbara Kipp, United Food and Commercial Workers Union, Local 7 United Food and Commercial Workers Union, Local 951, Intervenors v. National Labor Relations Board, National Labor Relations Board, United Food and Commercial Workers Union, Local 7 United Food and Commercial Workers Union, Local 951, Intervenors v. United Food and Commercial Workers Union, Local 1036, National Labor Relations Board, United Food and Commercial Workers Union, Local 7 United Food and
Docket: 99-71317
Court: Court of Appeals for the Ninth Circuit; October 7, 2002; Federal Appellate Court
The case involves multiple petitions and interventions concerning the National Labor Relations Board (NLRB) and the United Food and Commercial Workers Union (UFCW), specifically Locals 1036, 7, and 951. Key points include the interpretation of the union security provision under the National Labor Relations Act (NLRA), which allows unions and employers to require employees to become union members as part of collective bargaining agreements (CBAs). The union intervenors represent employees in various retail food companies, and the NLRA mandates that these exclusive bargaining representatives must advocate for all employees in a bargaining unit—both union members and non-members—regarding wages, benefits, and working conditions. This provision ensures that all employees benefit from union representation while also sharing the associated economic costs. The excerpt also notes procedural details, including the filing and amendment of the opinion dated March 25, 2002, and the involvement of various legal representatives for the parties involved.
"Free riders" who benefit from union efforts without contributing financially could significantly reduce union membership and jeopardize the collective bargaining system. The Supreme Court ruled in NLRB v. General Motors that an employee's "membership" in a union can be satisfied by merely paying dues. In a "union shop," employees must become union members, while in an "agency shop," they only need to pay dues without formal membership. The statutory language under Section 8(a)(3) allows employees to refrain from joining the union aside from paying dues and fees. There is little legal distinction between union and agency shops, though unions may choose to list dues-paying nonmembers as "members."
Limitations exist regarding the dues that nonmembers or nominal members can be compelled to pay. The Supreme Court's decision in Communications Workers of America v. Beck clarified that nonmembers are only required to pay dues necessary for the exclusive representative's duties in labor-management relations, defined as activities germane to collective bargaining, contract administration, or grievance adjustment. The core issue in this case is whether Locals 7 and 951 violated the Beck ruling by making nonmembers pay for organizing costs of their employers' competitors, and whether such organizing activities are germane to collective bargaining with the nonmembers' employer.
The individual petitioners, nonmembers of Locals 7 and 951, filed unfair labor practice charges with the NLRB, arguing it was improper for the unions to use their dues for organizing efforts. The NLRB dismissed these charges, referencing its prior decision in California Saw and Knife Works, which allowed for nonmembers' dues to fund union activities outside their bargaining unit if those activities were germane to the union's collective bargaining role. Following extensive fact-finding, the Board concluded that organizing within the same competitive market as the bargaining unit employer is germane to collective bargaining and thus chargeable to bargaining unit employees. The NLRB seeks enforcement of its dismissal order, while the nonmembers request a review to vacate it. Jurisdiction over the petitions is established under the NLRA.
A court panel initially refused to enforce a Board order and granted relief to nonmembers, citing the precedents of Beck and Ellis. Upon en banc review, the court decided to enforce the Board's order, affirming that under Section 8(a)(3) of the NLRA, a union as an exclusive bargaining representative can charge both members and nonmembers for organizing costs, particularly when organizing employers in the same competitive market. The court emphasized the requirement for substantial deference to the NLRB, highlighting its primary jurisdiction over unfair labor practices, including claims related to the improper assessment of union dues. The Chevron doctrine mandates that courts defer to the NLRB's reasonable interpretations of the NLRA, especially when the statute is ambiguous, as is the case with Section 8(a)(3) regarding the types of expenditures permissible from dues. Nonmembers challenged the Board's authority, referencing Seay v. McDonnell Douglas, which emphasized that constitutional questions should not be subject to the Board's expertise. In Seay, nonmembers claimed their dues were used for political purposes without consent, thereby infringing on their First Amendment rights. The court noted that similar cases have traditionally restricted the use of nonmembers' dues for political activities to protect their constitutional rights, applying this principle within the NLRA context.
The case under review centers on whether organizing an employer's competitors is relevant to collective bargaining, rather than a First Amendment rights claim. The nonmembers incorrectly interpret prior rulings (Dean v. Trans World Airlines and Chicago Teachers Union v. Hudson) as necessitating constitutional interpretation for nonmembers' dues used in non-germane activities. However, these cases focus on procedural requirements for unions to ensure nonmembers' dues are not misused, not on the constitutional implications of non-political activities.
The central issue involves the Board's authority to determine if organizing is germane to collective bargaining, a matter requiring specialized knowledge of labor relations. The Board's determination is supported by the premise that organizing is fundamental to collective bargaining because it is essential for establishing a majority of union members necessary for collective negotiations. Specifically, organizing outside the nonmembers' bargaining unit, particularly among employees of competing firms, is vital for enhancing wages, benefits, and working conditions. Successful organizing can mitigate competition from non-unionized employers, whose lower wages and benefits undermine the union's bargaining power and its ability to meet its members' economic goals. The Board's conclusion that such organizing is germane to collective bargaining is deemed correct and deserving of deference.
The NLRB determined that extra-bargaining unit organizing is relevant to collective bargaining and justifies the use of nonmembers' dues, supported by extensive economic research and expert testimony. Studies indicated a positive correlation between unionization rates and negotiated wage rates, particularly within the retail food industry. It was found that management is more inclined to negotiate higher wages when competitors face similar union costs, whereas they are less willing to negotiate when competitors are exempt from such costs. Consequently, the NLRB concluded that organizing within the competitive market is germane to collective bargaining, allowing for nonmembers to be charged for their fair share of organizing costs under the "necessary" or "germane" standard established in Beck.
Nonmembers challenged this conclusion by citing the Supreme Court’s decision in Ellis v. Brotherhood of Railway, Airline and Steamship Clerks, which had ruled that organizing was not germane to collective bargaining under the Railway Labor Act (RLA), thus prohibiting charging its costs to nonmembers. However, the NLRB clarified that the RLA does not empower an administrative agency to interpret the Act, unlike the NLRA, where such deference to the NLRB's determinations is appropriate. The Ellis case was specific to the railroad industry and involved organizing efforts directed at non-related employers, contrasting with the current case's focus on industries under the NLRA.
The Court in Ellis determined that organizing under the Railway Labor Act (RLA) primarily benefits the union as a whole, leading to the conclusion that nonmembers in a bargaining unit cannot be charged for organizing costs since these costs provide only limited benefits to them. The nonmembers referenced the Supreme Court's statements in Beck, which indicated that the RLA and National Labor Relations Act (NLRA) provisions are "statutory equivalents" and intended to provide similar protections for employees against unions using dues for non-collective bargaining purposes. They argued for a parallel application of the statutes, asserting that if certain expenditures are not chargeable under one act, they should not be under the other.
However, it was clarified that the Beck ruling did not address the specific activities considered germane to collective bargaining. The Court in Beck rejected the notion that the NLRA allows unions to charge nonmembers for activities irrelevant to collective bargaining, affirming that both statutes intend to permit charges only for germane expenditures. The determination of what activities are germane remains with the National Labor Relations Board (NLRB) for the NLRA, while the courts have this authority under the RLA. This distinction in interpretation procedures under the two acts negates the nonmembers' argument for automatic equivalency in the determination of germane expenditures, as the Supreme Court explicitly noted the lack of an administrative agency for the RLA. Thus, the varying jurisdictions further complicate the application of findings from the RLA to NLRA cases.
Nonmembers' arguments threaten to eliminate the National Labor Relations Board's (NLRB) authority to make factual determinations relevant to collective bargaining across industries with differing histories and procedures than the railroad sector. The NLRB plays a crucial role in adjudicating union operations, leveraging its expertise in labor policy and fact-finding. The complexity of determining whether "organizing" is "germane to collective bargaining" necessitates specialized knowledge, making it a task more suited for an administrative agency than a general court, as emphasized by the Seventh Circuit in a prior case.
Furthermore, statutory equivalence in decision-making regarding germaneness under different labor acts does not imply uniformity, as the Supreme Court in Ellis highlighted the distinct legislative history of the Railway Labor Act (RLA). The RLA mandates a detailed dispute resolution structure not found in the National Labor Relations Act (NLRA), which lacks a similar framework for resolving minor and major disputes. The processes of collective bargaining and dispute resolution under the RLA differ significantly from those under the NLRA, leading to the conclusion that the Supreme Court did not intend for germaneness to be interpreted identically across the two Acts. Differences in legislative histories and bargaining dynamics further support the notion that the definitions of germaneness can diverge between the two statutory frameworks.
The Court upheld that provisions regarding costs chargeable to nonmembers under both the NLRA and RLA should be interpreted consistently, indicating that only costs related to collective bargaining activities can be charged. However, it clarified that these provisions do not need to be applied identically due to distinct factual and legal contexts of each statute. The Court referenced Jacksonville Terminal Co., emphasizing that the NLRA’s prohibitions do not automatically translate into the RLA context, due to the unique nature of the railroad industry. It cautioned against overextending its precedents, stating that the Beck decision does not limit the interpretation of "germane to collective bargaining" to expenses under the RLA. The Board's findings, based on a comprehensive examination of the NLRA and its application to organizing, revealed significant differences between the economic and bargaining landscapes of NLRA-covered industries and the railroad sector. The Board concluded that organizing efforts within the same competitive market as the bargaining unit are germane to collective bargaining. The Court affirmed the Board's decision, allowing unions to charge nonmembers for organizing costs in such contexts. The enforcement of the Board's orders for Locals 7 and 951 was granted, while the petition for Local 1036 was remanded for further action.
The National Labor Relations Act (NLRA), enacted in 1935 and amended in 1947 (Labor Management Relations Act), governs labor relations, while the Railway Labor Act (RLA), established in 1926 and amended in 1936 to include airlines, separately regulates the railroad industry. Section 8(a)(3) of the NLRA allows employers and unions to require union membership as a condition of employment after the thirtieth day of employment. Union representation under the NLRA is organized by bargaining units, defined as groups of employees formed for collective bargaining. The National Labor Relations Board (NLRB) assesses whether a group constitutes an appropriate bargaining unit based on employee interest and a "community of interests," considering factors such as union organization extent, historical bargaining practices, employee duties and conditions, company structure, and employee desires.
Multiple bargaining units may exist within a single employer or across different employers. Recognition of a union by an employer or a collective bargaining agreement (CBA) does not necessitate an NLRB election, provided a majority of employees in the proposed unit wish to be represented and the unit is deemed appropriate. Section 8(a)(3) specifies that required dues include periodic dues and initiation fees for union membership. Terminology such as "dues-paying nonmembers," "financial core members," and "objecting nonmembers" refers to employees who pay only the mandatory dues or agency fees, applicable in both union and agency shop contexts. The analysis applies equally to all such employees, noting that the nonmembers in this case declared their resignation from the union, invoking rights established in prior case law.
Local 7 classified its former members as "financial core members" under a union shop arrangement, while Local 951 accepted resignations from its members, treating them as nonmembers. The National Labor Relations Board (NLRB) referred to both groups as "nonmembers," which the current document adopts. The term "dues" encompasses all required payments from nonmembers, including fees and assessments. Employees Mulder, Buck, and Gibbons were affiliated with Meijer, Inc. in Michigan, represented by Local 951, while McReynolds and Kipp were with City Markets in Colorado, represented by Local 7. The NLRB's decision was upheld by the Seventh Circuit, which enforced the Board's order, referencing several Supreme Court cases that restrict how unions can use nonmembers' dues for political activities. The Hudson case established procedural safeguards for nonmembers regarding dues collection, emphasizing their right to challenge dues and mandating escrow for disputed amounts. The enactment of Section 8(a)(3) of the NLRA aimed to protect wage standards by allowing unions to organize across competing employers. Future cases will determine if organizing expenses relate to competition within the same market context.
Section 2, Eleventh of the Railway Labor Act (RLA), enacted in 1951, mirrors the language of Section 8(a)(3) of the National Labor Relations Act (NLRA), allowing employers and unions to require employee union membership as a condition of continued employment within sixty days. Required dues include periodic dues, initiation fees, and assessments but exclude fines and penalties. The court addressed the applicability of this provision without regard to the employer being an airline rather than a railroad, noting that the RLA was initially intended for railroads but later amended to include airlines.
The nonmembers' argument references the case Seay v. McDonnell Douglas Corp., claiming that interpretations of the RLA's union-security provision are relevant to the NLRA. However, this interpretation is mischaracterized; Seay only stated that specific RLA cases concerning the use of nonmembers' dues for political purposes applied to the NLRA, but the current nonmembers do not present a similar constitutional challenge.
At the time the RLA's union-security provision was enacted, union membership in covered industries was over 90%, while NLRA industries had historically low unionization rates, peaking at 38% in 1954 and declining to less than 10% by the present day. Additionally, the document distinguishes between "minor" disputes, which involve the interpretation of existing collective bargaining agreements, and "major" disputes that arise during negotiations for new contracts. It notes that while both Acts require good faith bargaining, the scope of mandatory bargaining differs between them. In the transportation industry, most disputes are resolved through direct negotiation, with strikes being uncommon.
Strikes in industries covered by the National Labor Relations Act (NLRA) significantly exceed those in the transportation sector, with thousands occurring annually in NLRA industries compared to about a dozen in transportation. A charge was brought against United Food and Commercial Workers Union Local 1036 by petitioner Hilton, alleging that the union's "welcoming letter" failed to adequately inform new employees of their rights as established in NLRB v. General Motors Corp. The National Labor Relations Board (NLRB) found the letter inadequate and mandated the union to implement corrective measures. The original panel opinion in appeal No. 99-71317 was upheld, confirming that the letter did not meet the requirements for advising new employees of their rights. However, the case was remanded for the NLRB to adjust its remedy, which was deemed overly broad.
