decided: September 21, 1987.
HOWARD K. ANDREWS, VALERIE A. ANDREWS, PAUL BOURDEAU, ROBERT N. BROWN, JOSEPH FIOCCLA, BARBARA C. HAMMER, NANCY G. HULTGREN, JUDITH KOLLIAS, JOHN A. KOSLOSKI, FRANCES MCLAUGHLIN, PETER NAVAGE, MARY W. NEWMAN, JOHN A. PAWLOSKI, JOANN PETERSON, THOMAS QUINLAN, NORMAN C. REMSEN, MILDRED D. RICHARD, ARLENE L. SALVATI, MAUREEN SCHMIDT, BARBARA T. STAPLETON, FREIDA B. STEGERWALD, AND GEORGE SZIGETI, ALEXANDER J. JACOVINO, PETER H. GALULLO, JOSEPH A. MANNELO, RICHARD C. MANTIGLIA, JANICE ETERGINIO, HENRY P. CAPOZZI, FRANCIS DESIDERIO, MARY LOU WALSH, GEORGE R. DESIDERIO, CARL J. THERIAULT, KURT A. MEYER, ROSEMARY HUDIMATCH, LOUIS M. RUGGIERO, MICHAEL F. ARCOVIO, MERLE KADISH ARCOVIO, SUSAN COX, TERESE P. FILIPPONE, RICHARD N. CALABRO, CARMEL PERILLO, CHARLENE BURKACKI, ANN M. FARESE, MARIANNE D. DERWIN, JANE MUCCIACCIARO, ANTHONY MUCCIACCIARO, FRANCIS G. CRETO, EDMUND A. LAUDATI, CHARLOTTE SHOCKI, MARGUERITE R. THERIAULT, CHARLES L. STANGO, ALEXANDER F. LENDA, JR., THOMAS P. CERASULO, GEORGE T. BERARDI, WILLIAM A. GUISTO, JOHN F. KEEFE, CAROL MAMBRUNO, MARGARET GENERALI, FRANCES B. MARCUSE, JOSEPH B. MCGURK, MITCHELL ARISIAN, BARBARA BIANCO, BARBARA CARRINGTON, ANNE COSTA, EVELEYN E. CRAFT, FRANCIS P. DESIDERIO, RALPH E. KNAPP, NED MENCIO, GENNARO M. PALMENTO, LAWRENCE PURDY, ROSEMARY PURDY AND DAVID S. MACHARELLI, PLAINTIFFS-APPELLANTS,
EDUCATION ASSOCIATION OF CHESHIRE, RICHARD BYE, PRESIDENT, IN BOTH HIS INDIVIDUAL AND OFFICIAL CAPACITIES; NEW MILFORD EDUCATION ASSOCIATION, RICHARD SHERIDAN, PRESIDENT, IN BOTH HIS INDIVIDUAL AND OFFICIAL CAPACITIES; BRANFORD EDUCATION ASSOCIATION, JOHN D'AMATO, PRESIDENT, IN BOTH HIS INDIVIDUAL AND OFFICIAL CAPACITIES; CONNECTICUT EDUCATION ASSOCIATION, ROBERT F. EAGAN, PRESIDENT, IN BOTH HIS INDIVIDUAL AND OFFICIAL CAPACITIES; NATIONAL EDUCATION ASSOCIATION, WILLIAM MCGUIRE, PRESIDENT, IN BOTH HIS INDIVIDUAL AND OFFICIAL CAPACITIES; BRANFORD BOARD OF EDUCATION; CHESHIRE BOARD OF EDUCATION; WINDSOR BOARD OF EDUCATION; NEW MILFORD BOARD OF EDUCATION; WATERBURY TEACHERS ASSOCIATION; CONNECTICUT EDUCATION ASSOCIATION; AND WATERBURY BOARD OF EDUCATION, DEFENDANTS-APPELLEES
Appeal from judgment of the United States District for the District of Connecticut (Jose A. Cabranes, Judge) upholding the constitutionality of procedures used by the appellee labor unions for assessing agency fees against nonmembers who benefited from the unions' collective bargaining and contract administration activities. Affirmed with instructions to the district court to modify its judgment to enjoin the appellee unions from exercising a waiver provision in their arbitration agreement with the American Arbitration Association.
Feinberg, Chief Judge, Lumbard and Newman, Circuit Judges.
On this appeal we are asked to decide the constitutionality of a set of procedures used by a group of Connecticut teachers unions for allocating collective bargaining, contract administration and grievance adjustment expenses for the purpose of charging agency fees to nonmembers. Appellants, a group of nonunion employees of the various Connecticut school boards that are named as defendants in this action, appeal from a judgment entered by Judge Jose A. Cabranes in the District of Connecticut on February 18, 1987. Judge Cabranes denied plaintiffs' motion for summary judgment, granted defendants' cross-motion for summary judgment and dismissed plaintiffs' pendant state law claim for lack of jurisdiction. The decision is reported as Andrews v. Education Ass'n of Cheshire at 653 F. Supp. at 1373 (1987). Plaintiffs maintain that Judge Cabranes erred in refusing to hold the defendants' proposed procedures for collecting the agency fees unconstitutional under Chicago Teachers Union v. Hudson, 475 U.S. 292, 106 S. Ct. 1066, 89 L. Ed. 2d 232 (1986). We affirm the judgment of the district court but remand with directions to enjoin the union from exercising any alleged right under its agreement with the American Arbitration Association unilaterally to waive an oral hearing on any nonmember's dissent.
Plaintiffs are nonunion teachers employed by one of three Connecticut boards of education -- Cheshire, New Milford and Waterbury. These three boards have collective bargaining agreements with their respective education associations -- the Cheshire Education Association, the New Milford Education Association and the Waterbury Teachers Association (collectively "LEAs"). Each LEA recognizes its education association as its exclusive bargaining representative. All the local associations are affiliates of the Connecticut Education Association ("CEA") and the National Education Association ("NEA").
Each of these collective bargaining agreements provides that if an employee of one of the local associations chooses not to become a member of the union which represents the local's employees, that employee remains obligated to pay an agency fee to the union. These fees are designed to allocate a pro-rata share of the union's collective bargaining and grievance adjustment expenses to nonunion employees who receive the benefits of such activities, but who do not pay dues. The deductions are based on the provisions of the Connecticut Teacher Negotiations Act, Conn. Gen. Stat. § 10-153a(b). That statute authorizes a local association to pay a service fee to the exclusive bargaining representative of its employees in an amount "not greater than the amount of dues uniformly required of members of the exclusive bargaining representative organization which represents the costs of collective bargaining administration and grievance adjustment." Under the plans these fees are collected by the local association through an automatic payroll deduction; from those deductions, each LEA pays a portion of the agency fee to the CEA and the NEA.
Plaintiffs have elected not to become members of the defendant labor unions but are in the bargaining units represented by these defendants, and, in accordance with the plan, they are charged agency fees. They now challenge the procedures under which the agency fees are computed. They claim that the procedures provided for by the plan do not meet the constitutional requirements recently considered by the Supreme Court in Hudson. Pursuant to a pretrial order of May 14, 1986, defendants filed with the district court a written description of a proposed agency fee collection plan for their respective bargaining units.
Under the plan, prior to November 15 of each year, the unions send a memorandum to each nonmember required to pay an agency fee, which indicates the amount of the fee that the associations intend to charge and how that fee was calculated by listing expenditures for each major category of chargeable activity. The plan provides that that memorandum shall also inform each potential objector as to the procedure he or she must follow to challenge the amount of the fee. Together with this memorandum, each nonmember receives "such additional information as may be necessary for him or her to gauge the propriety" of the fee, including the budgets of LEA, CEA, and NEA projecting expenditures for the current service fee year, and end-of-year financial reports for LEA, CEA, and NEA for the immediately preceding year, together with statements for an independent auditor or authorized association representative verifying those reports. Nonmembers have at least thirty days after receiving the reports to file an objection with the CEA. Nonmembers who do object to any portion of the fee pay 100 % of their service fee into an interest-bearing escrow account at the Connecticut National Bank until the challenge is resolved.
If any nonmembers challenge the fee, the unions contact the American Arbitration Association (AAA) under a pre-existing contract between the union and the AAA and ask it to select, from a list of arbitrators experienced in public sector labor relations, an arbitrator to hear the dispute. The arbitrator then conducts the hearing in accordance with standard AAA rules for determination of agency fees. The unions are required to prove at these hearings the percentage of CEA and NEA budgets which will be expended for activities that may be lawfully charged to objecting nonmembers; the procedure assumes that each of the LEAs expends at least as large a percentage of their budgets on chargeable activities as does the state-wide CEA.*fn1 Unless an extension is granted, the arbitrator must file his opinion by January 30. After that, the unions must recalculate their fee to comport with the arbitrator's decision and, if necessary, rebate some of the money in the escrow accounts and make whatever adjustments are necessary in the objecting nonmembers' future payments.
In the district court prior to trial, the plaintiffs made six constitutional challenges to the defendants' agency fee collection procedures. Judge Cabranes rejected each of those challenges and found the procedures to be constitutional. He dismissed the plaintiffs' pendant state law claim for lack of subject matter jurisdiction and granted judgment for the defendants.
Plaintiffs advance two arguments. First, they contend that the defendants' procedure is constitutionally deficient because an independent auditor does not verify the financial information that the unions use to classify expenses into the various categories of expenditures. Second, they maintain that the AAA does not satisfy the constitutional requirement for an impartial decisionmaker.
The Supreme Court has recently dealt with the issue of agency fees. In Hudson, the Court considered the constitutionality of procedures "to draw that necessary line [between contract bargaining and administration costs which are properly charged to nonmembers and sums for the support of ideological causes which are not] and to ...
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