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National Labor Relations Board v. Local 138

decided: November 27, 1967.

NATIONAL LABOR RELATIONS BOARD, PETITIONER
v.
LOCAL 138, INTERNATIONAL UNION OF OPERATING ENGINEERS, AFL-CIO, RESPONDENT



Moore, Smith and Kaufman, Circuit Judges.

Author: Smith

SMITH, C.J.:

The National Labor Relations Board petitions for enforcement of its supplemental order which issued after proceedings held pursuant to a remand by this court.*fn1 The Board ordered Local 138, International Union of Operating Engineers, to reimburse nonmembers for a portion of permit fees collected from them as a condition of referral or employment between June 9, 1958 and July 1, 1963.*fn2 We grant enforcement.

In its original decision in this case, the Board found, inter alia, that Local 138 had violated the National Labor Relations Act, 29 U.S.C. ยง 141 et seq., by operating a discriminatory hiring and job referral system and by exacting an unlawful fee of nonmembers for use of the system.*fn3 The Board ordered the union to cease and desist from maintaining any practice or enforcing any agreement with employers which unlawfully gives members preference over nonmembers in job referrals, or which conditions referrals on good standing in the union. Local 138 was also ordered to "reimburse all individual nonmembers for permit or service fees unlawfully exacted from them as a condition of referral or employment with interest thereon at six percent . . .", on the ground that the union could not lawfully exact a fee for the use of a discriminatorily operated hiring and referral system.*fn4

On petition to review and cross-petition to enforce this original order, we did not find substantial evidence to support a finding of blanket discrimination against nonmembers in the operation of the union's hiring hall, but held that there was evidence of some discrimination, sufficient to justify the cease and desist portion of the order. We thought that the Board had gone too far, however, in ordering that the permit fees be returned in toto, since there were indications that the nonmembers received some value from their use of the hiring hall. Enforcement of that portion of the order was therefore denied.*fn5

Although we thought that the union should be allowed to keep some part of the permit fees collected, we agreed with the Board that the fees, which were in an amount equal to the monthly dues paid by the union's members, were excessive.*fn6 We noted that

The fees were charged solely for the use of the hiring hall. Yet of each $10.00 monthly payment, $2.00 was remitted by the local union to the International. While a union might under proper accounting procedures include in the cost of operating a hiring hall some reasonable percentage of the union's general expenses, the union has not argued before us that its charges to nonmembers were based on anything except an intention to exact from them the amount paid by members. This the union could not do under the guise of charging for its services as an employment agency.*fn7

We remanded the case to the Board for further findings, stating that

The Board should consider on remand what proportion of the fees which were paid were reasonably related to the value of the services provided by the union, having in mind also the cost to the union of performing such services. Any excess over that amount could properly be ordered returned to the men who paid it.*fn**fn8

After proceedings held pursuant to the remand, the Trial Examiner issued a supplemental decision recommending that the union be ordered to refund $3.50 of every $10.00 permit fee received during the pertinent period, with interest at six percent. He reached the $3.50 figure by adopting and applying the formula suggested by the General Counsel for determining what proportion of the fees was reasonably related to the value of the services. The General Counsel's formula permitted the union to claim as allocable to the hiring hall all union expenses except those which are "institutional" in character. The union was allowed to claim, for example, all of its office expenses, but assessments imposed by the International, litigation expenses, and other expenses unrelated to the union's bargaining agent and hiring hall activities, such as expenses of dinners, meetings, and conventions, were not allowed.

The Board adopted the findings, conclusions, and recommendations of the Trial Examiner, finding the cost allocation formula acceptable. It concluded that the permit fee was "excessive," stating that in making its determination, it had been mindful of our rejection of its earlier finding of blanket discrimination against permit men.*fn9

The General Counsel submitted detailed calculations before the Trial Examiner showing the union's various expenses and explaining what amounts might, in his view, fairly be allocated to the running of the hiring hall. His calculations went virtually unchallenged, for the union refused to discuss the accounting issues involved.*fn10

The union's position before the Trial Examiner, the Board, and this court has been that under our mandate on remand the permit men could be charged the fair value of all services received from the union. The union urges upon us that hiring hall costs cannot reasonably be separated from other expenses, and that permit men receive all benefits received by union members except the right to attend union meetings. It follows, the union contends, that permit men may be charged fees equal to the dues paid by union members.

The union clearly misinterprets our earlier opinion. When this case was first before us, we assumed that the permit fees were charged solely for the use of the hiring hall, because that was the only service for which the union had a right to charge the permit men.*fn11 Thus when we remanded for further findings, ordering the Board to consider what proportion of the fees was reasonably related to the "value of the services provided by the union," we were referring to the value of the hiring hall services. The Board's interpretation of our mandate was correct. Furthermore, ...


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