The opinion of the court was delivered by: LAMBERTH
This case comes before the court on plaintiffs and defendant's cross motions for summary judgment. The court grants each motion in part and denies each in part.
This case originally came before the court on plaintiffs' motion for a preliminary injunction based on their constitutional and statutory claims, and defendant's motion to dismiss those two claims. In a Memorandum Opinion and accompanying Order dated October 25, 1988, the court dismissed plaintiffs' constitutional claim and denied plaintiffs' motion for a preliminary injunction. 702 F. Supp. 920 (D.D.C. 1988). Reconsideration was denied in an Opinion dated November 7, 1988. 702 F. Supp. at 925. On July 13, 1989, the Court of Appeals for the District of Columbia Circuit affirmed this court's denial of preliminary relief, for the reasons stated by this court in its October 25 and November 7, 1988 Opinions. See Abrams v. Communications Workers of America, 280 U.S. App. D.C. 189, 884 F.2d 628 (D.C. Cir. 1989). Since that time, the parties have engaged in discovery. Discovery is now complete and each side has moved for summary judgment on plaintiffs' remaining statutory claim.
The facts of this case are long and complicated. They are, however, not in dispute.
All the court must determine is whether the facts as stated demonstrate that CWA has violated its statutory duty of fair representation toward plaintiffs. That analysis will in turn determine the appropriateness of summary judgment for either plaintiffs or defendant.
Plaintiffs must pay fees to the CWA because of two provisions in the National Labor Relations Act. Under section 9(a) of the National Labor Relations Act, the bargaining unit employees in plaintiffs' work places may choose a particular union to be those employees' exclusive collective bargaining representative. 29 U.S.C. § 159(a). In this case, the chosen union is the defendant, CWA. Under section 8(a)(3) of the Act, plaintiffs' employers can require its bargaining unit employees to become members of the selected union, CWA, or at least pay dues equal to those of members as a condition of employment. 29 U.S.C. § 158(a)(3). Plaintiffs' collective bargaining agreement imposes the latter requirement. Article 4, Section 1 requires all employees to "pay or tender to the Union amounts equal to the periodic dues applicable to members." Plaintiffs' Motion, Attachment 1, General Agreement between CWA and [plaintiffs' employers] at 26.
These provisions require that plaintiffs, as bargaining unit members, pay the equivalent of membership dues to the CWA, because the CWA is their chosen and exclusive bargaining representative. Plaintiffs must do so regardless of their opinion of the CWA and unionism in general.
Because these provisions can have the effect of forcing individuals to support union activities against their will, the Supreme Court has whittled down the dues that must be paid by employees who choose not to become union members. The Supreme Court has concluded that nonmember employees like plaintiffs must only pay that proportion of membership dues attributable to those union activities "germane to collective bargaining, contract administration, and grievance adjustment." Communications Workers v. Beck, 487 U.S. 735, 745, 101 L. Ed. 2d 634, 108 S. Ct. 2641 (1988). The rationale behind this rule is straightforward: if employees choose not to become union members, they should have to support only those union activities that they by law have to accept, i.e. collective bargaining and related activities. This rule ensures that nonmember employees pay for the collective bargaining benefits they receive, but it also exempts them from having to finance political or otherwise nonessential union activities with which they might disagree.
CWA has established a procedure for accommodating nonmember employees, like plaintiffs, who object to paying dues for expenditures unrelated to collective bargaining. That procedure allows a nonmember employee to opt-out of paying for non-collective bargaining activities. That procedure also allows the dissenting employee to challenge the CWA's determination of what activities are related to collective bargaining and thus chargeable to nonmember fee payers. The mechanics of this policy are quite intricate and are listed here in full.
The CWA Policy on Agency Fee Objection provides that "the agency fee payable by objectors will be based on the Union's expenditures for those activities or projects normally or reasonably undertaken by the Union to advance the employment-related interest of the employees it represents. Defendant's Exh. A. Among those expenditures CWA treats as "chargeable" to objectors are those going for negotiations with employers, enforcing collective bargaining agreements, informal meetings with employer representatives, discussion of work related issues with employees, handling employees' work-related problems, union administration, and litigation costs.
CWA provides a detailed list of " chargeable' and "nonchargeable" expenditures to each objector. See Defendants Exhs. G and U (original and updated lists).
CWA notifies non-union member employees of their right to file objections through a notice that is published each year in the March issue of the CWA News which is then sent to all employees. CWA also sends a copy of this notice to any employee who makes an inquiry concerning the union's policy. Defendant's Motion, Brackens Decl. at PP 2, 12. The notice defines in general terms the sorts of expenditures that nonmembers may opt out of financing and also cites examples of "chargeable' and "nonchargeable' expenditures. Defendant's Exh. B (Policy Statement). The notice also reports that CWA's experience over the past seven years has been that "chargeable" expenditures make up about 80-85% of total union expenditures, while "nonchargeable" expenditures make up about 15-20% of the total. Id. Finally, the notice explains the method for filing an objection, and the rights that the CWA accords to those who do so. Id.
The CWA's fiscal year runs from January 1 through December 31. The CWA policy provides for a fee year that runs from July 1 through June 30. This fee year allows the advance reduction, see infra, of objectors' fees to be based on audited expenditures from the most recently completed fiscal year. The policy calls for objections to be made during the month of May, so that the CWA will have thirty days in which to arrange for the payment of the advance reduction. In practice, however, the CWA accepts objections anytime after the publication of the policy notice in the March CWA News through the second week of June. Objections filed out of time are accepted if the employee has a reasonable excuse, e.g. mid-year employment. If the objector files his/her objection out of time and has no excuse, the CWA does not accept the objection and sends a letter to that employee explaining when objections should be filed. Brackens Decl. at P 4.
When CWA receives an objection, it reduces the fees of the objecting employee by the percentage of national union expenditures categorized as nonchargeable for the most recent fiscal year. CWA uses national union expenditures as a benchmark instead of local union expenditures because on average national union expenditures for chargeable activities are lower than those on the local level. This approach also allows CWA to process objections quickly, without having to calculate each objector's local union's nonchargeable expenses.
CWA uses an accounting firm to actually compute the percentage of union fees chargeable to objectors. The firm bases its calculation on its annual audit of CWA expenditures and produces a special report detailing the chargeable and nonchargeable expenses. Defendant's Motion, Beans Decl. at P 2; Exh. H. The accounting firm allocates the expenditures relating to CWA's officers and staff on the basis of a time sampling study done each year by the statistical firm of Westat, Inc. Defendant's Exhs. J and M. The accounting firm's calculation is based on a format designed by the late Dr. Emmanuel Saxe, the former Dean of the Bernard M. Baruch School of Business and Public Administration, city University of New York. Beans Decl. P 2. The firm's reports are reviewed by Dr. Martin Benis, Professor of Accounting at Baruch College, to insure that the method suggested by Dr. Saxe is followed. Id.
CWA sends a letter from the union's secretary-treasurer with the advance reduction check. The letter explains the calculation of the fee reduction, the method by which that calculation may be challenged before an independent arbitrator, and the rights of employees making such a challenge. Brackens Decl. at P 7; Defendant's Exh. E (sample letter). Attached to that letter is a detailed list of examples of "chargeable" and "nonchargeable" expenditures, taken from CWA's actual practice in allocating expenditures, so that the fee payer will be able to determine whether he or she disagrees with the union's allocation of those expenditures. Defendant's Exh. G. Also attached to the letter is a detailed report by CWA's accountants showing the actual allocation of union expenditures to the chargeable and nonchargeable categories. Defendant's Exh. K. This report explains the methods used for allocating different sorts of expenditures. Id.
If an objecting employee wishes to challenge the amount of the advance reduction, he or she must write a letter to that effect within thirty days of receiving the advance reduction check. CWA Policy then requires the referral of the matter to arbitration. The American Arbitration Association appoints an independent arbitrator and CWA bears the burden of proving to that arbitrator the validity of its calculation. The fee payer need not specify the nature of his or her objection, and need not actually participate in the proceedings before the arbitrator. CWA policy also specifies that the arbitration proceedings be conducted in accordance with the AAA Rules for the Impartial Determination of Union Fees. Defendant's Exh. P. The arbitrator's rule is final and binding upon the union. While challenges are pending, A holds forty percent of the fees paid by those objectors making the challenge in an interest-bearing escrow account. Brackens Decl. at P 8.
Plaintiffs' complaint challenges this procedure on First Amendment and statutory grounds. The court already has dismissed plaintiffs' First Amendment claim because no state action is present. See 10/25/88 Memorandum Opinion and accompanying Order. All that remains is plaintiffs' contention that the CWA procedure violates CWA's fiduciary duty to fairly represent plaintiffs.
In their Complaint, plaintiffs contend that this procedure violates CWA's duty of fair representation because it: (1) uses the advance reduction method instead of reducing each plaintiff's payment on a pro rata basis, (2) does not require the demonstration that each chargeable activity works to the "actual benefit" of objectors, (3) requires yearly objections during a limited window period, (4) employs an overly broad definition of chargeable activities, (5) fails to advise non-union members of chargeable costs on a timely basis, and (6) uses an accounting method for determining chargeable costs that is unreliable and inaccurate.
In plaintiffs' motion for summary judgment, plaintiffs reduce these arguments down to three. They contend that: (1) CWA's definition of chargeable expenses is too broad, (2) CWA's computation of chargeable costs is inadequate, and (3) CWA's mandated use of arbitration to resolve fee disputes is unlawful. Plaintiffs' Motion at 2.
II. DUTY OF FAIR REPRESENTATION.
CWA's duty of fair representation is a duty that is judicially implied from its statutory duty -- under 29 U.S.C. §§ 158(a)(3), 159 -- to represent all bargaining unit employees of a particular employer. See Steele v. Louisville & Nashville R. Co. 323 U.S. 192, 202, 89 L. Ed. 173, 65 S. Ct. 226 (1944). This duty requires a union to "represent fairly the interests of all bargaining-unit members during the negotiation, administration, and enforcement of collective bargaining agreements." International Bhd. of Elec. Workers v. Foust, 442 U.S. 42, 47 (1979).
A breach of a union's duty of fair representation occurs only when a union's conduct toward a member of the collective bargaining unit is "arbitrary, discriminatory, or in bad faith." Vaca v. Sipes, 386 U.S. 171, 190, 17 L. Ed. 2d 842, 87 S. Ct. 903 (1967); Price v. Int'l Union, UAW, 927 F.2d 88, 92 (2d Cir. 1991). This standard applies to a union's contract administration, enforcement, and negotiation, as well as any other instances where a union acts in a representative role. Air Line Pilots v. O'Neill, U.S. , 111 S. Ct. 1127, 1135, 113 L. Ed. 2d 51 (1991). Under this standard, the court's review of CWA's actions must be highly deferential. Id. The court can find a breach of this duty only if CWA's actions "can be fairly characterized as so far outside a 'wide range of reasonableness,' . . . that [those actions] are wholly 'irrational' or 'arbitrary.' Id. (citation omitted).
Plaintiffs contend that heightened review applies in cases where a union exacts funds from nonmember employees. Plaintiffs argue that under the case of Chicago Teachers Union v. Hudson, 475 U.S. 292, 89 L. Ed. 2d 232, 106 S. Ct. 1066 (1986), CWA must not only meet the Vaca standard but also additional constitutional standards. Hudson imposes specific requirements on a union's procedure for exacting fees from nonmembers and does not rely on the deferential review standard of Vaca. The court concludes that Hudson does not apply to this case.
In Hudson, the Supreme Court applied a higher, constitutional standard of scrutiny to the procedures that the union there used to exact funds from nonmembers, but the Supreme Court did so because the employees involved worked in the public sector. The union involved was the Chicago Teachers Union, and it had the approval of the Chicago Board of Education to be the exclusive collective bargaining agent for the Board's educational employees. Hudson, 475 U.S. at 294. As this court already has concluded, no such state action exists in this case. 702 F. Supp. at 921-23. In the absence of state action, the court has no basis for imposing Hudson's heightened constitutional review.
Plaintiff insists that the duty of fair representation has constitutional dimensions which nevertheless require the application of the Hudson requirements to this case. None of the four reasons plaintiffs give for this position justify the application of heightened scrutiny.
First, plaintiffs argue that the duty of fair representation is itself constitutionally based and thus deserving of Hudson's scrutiny. Plaintiffs' Motion at 12-13. For this position plaintiffs rely on the statement in Vaca that the duty of fair representation is "at least as exacting a duty . . . as the Constitution imposes upon a legislature to give equal protection to the interests of those for who it legislates." Vaca, 386 U.S. at 202. This ...