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Scheffer v. Civil Service Employees Association

July 25, 2007


The opinion of the court was delivered by: Michael A. Telesca United States District Judge



Plaintiffs David Scheffer, Mary Bergevin, Joseph Stephany, Laura Swartzenberg and Rosario Zocco bring this action against defendants Civil Service Employees Association, Local 828; Civil Service Employees Association, AFSCME, Local 1000, AFL-CIO; and the American Federation of State, County and Municipal Employees, AFL-CIO, claiming that the defendants violated their civil rights by unlawfully collecting and distributing union fees in violation of their rights under the First and Fourteenth Amendments to the United States Constitution.

Plaintiffs have filed a motion for summary judgment claiming that there is no dispute as to any of the materials facts and thus plaintiffs are entitled to judgment as a matter of law. Specifically, plaintiffs allege that the defendants seized union fees from the wages of plaintiffs, in the absence of the notice and procedural safeguards required by the First Amendment as set forth in Teachers Local No. 1 v. Hudson, 475 U.S. 292 (1986) and further that defendants used fees collected from plaintiffs' wages for non-bargaining activities such as organizing. Defendants have also filed a motion for summary judgment arguing that none of the plaintiffs' claims, which consist of the chargeability claim against the unions and the Hudson notice claim, have any merit. According to defendants, there is no dispute as to any of the material facts and as such they are entitled to judgment as a matter of law.

After a review of all the motion papers in support of and in opposition to the motions for summary judgment and for the reasons set forth below, I grant the defendants' motion for summary judgment and deny the plaintiffs' motion for summary judgment.


I. The Parties

Plaintiffs are employed by Monroe County, New York as probation officers. Plaintiffs are "public employees" within the meaning of N.Y. Civ. Serv. Law § 201(7)(a). Plaintiffs are employed in a bargaining unit represented by the Civil Service Employees Association, Inc. ("CSEA"),*fn1 Local 1000, AFSCME, AFL-CIO, Monroe County Employee Unit, Local 828 ("Local 828"). Each of the defendants is an "employee organization" within the meaning of N.Y. Civ. Serv. Law § 201(5). CSEA is a labor organization that is recognized as the collective bargaining agent for over 200,000 employees in New York State. The total includes 76,000 state government employees, 112,000 local government employees and 4,300 private-sector employees. CSEA negotiates its collective bargaining agreements ("CBA"s) with approximately 900 employers across New York State. CSEA's members are employed in a variety of industries and hold various occupations including laborers, lawyers, nurses aides, doctors, accountants, and zoo keepers. In addition, CSEA has nearly 1,300 local administrative subdivisions*fn2 - approximately 375 "locals" and more than 900 "units," which are subdivisions of the locals. In fact, CSEA Local 828 is one of the approximately 375 locals of CSEA.*fn3

Plaintiffs resigned their union memberships in June 2005*fn4 by sending a letter to CSEA and simultaneously objected to paying for the defendants' non-bargaining-related activities.*fn5 In the letter, each plaintiff objected to paying fees for "any purpose other than [his/her] pro rata share of the union's costs of collective bargaining, contract administration, and grievance adjustment."

II. Process Concerning The Agency Fee

Under New York law, employers collect from all nonmembers and remit to CSEA an agency fee equivalent to full union dues. It is CSEA's policy to dispatch its agency shop notice to all nonunion members on an annual basis. The 2005-2006 Agency Shop Notice was mailed on May 10, 2005 to all bargaining-unit members who as of that date were nonmembers of the union.*fn6 The agency shop notice sets forth CSEA's and AFSCME's calculations of their expenditures that are chargeable and non-chargeable to agency fee payors who object to paying for the union's activities that are not germane to collective bargaining.*fn7 As outlined in the agency shop notice, CSEA allocates expenses as chargeable if the expense is in connection with "the collective bargaining process, contract administration and pursuing matters affecting wages, hours and other conditions of employment." See Ex. 19 to Defendants' 2/2/07 Appendix. For the 2005-2006 agency shop notice, CSEA used the actual expenditures for the fiscal year ending September 30, 2004, which was the most recent fiscal year for which data was available. The agency shop notice includes a report from CSEA's independent accountant who annually provides CSEA with an outside opinion as to the financial statements of CSEA and reviews CSEA's allocation of expenses as chargeable and nonchargeable.

In the 2005 agency shop notice, the chargeable percentage of CSEA's expenditures for the 2005-2006 fiscal year was 77% and the nonchargeable percentage was 23%. Expenditures for CSEA's publications are allocated by determining the portions of the publications' content dealing with chargeable and nonchargeable issues. Expenditures for CSEA's conventions and meetings are allocated between chargeable and nonchargeable categories by reviewing the agenda for the convention and allocating any portion of the agenda that is political or ideological in nature to the nonchargeable category. If insufficient information is available to determine the content of a particular convention or meeting, CSEA allocates all of the expenses to the nonchargeable category. Moreover, CSEA allocates the expenditures for support or administration services by using the overall chargeable and nonchargeable percentages calculated for CSEA's program departments.

Plaintiffs argue that CSEA does not provide to its nonmembers audited financial disclosures of the breakdown between chargeable and nonchargeable expenses for the CSEA local affiliates and/or subdivisions that receive money collected from the plaintiffs. Defendants claim that while CSEA's agency shop notice does not include specific information on the expenditures of CSEA's local affiliates, it relies on a presumption that the audited expenditures CSEA makes as rebates to the local administrative subdivisions are used for chargeable activities to at least the same extent as CSEA's other expenditures. For the fiscal year ending September 30, 2004, CSEA's local affiliates had expenses in excess of $10 million. For the fiscal year ending September 30, 2005, CSEA's local subdivisions had expenses in excess of $12 million.

The 2005-2006 CSEA agency shop notice states that $2,155,019 of organizing expenses were chargeable and $114,642 of organizing expenses were non-chargeable. The 2006-2007 CSEA agency shop notice states that $2,214,037 of organizing expenses were chargeable and $119,765 of organizing expenses were non-chargeable. CSEA calculates that its organizing expenses are partially chargeable to objecting non-union members.

In addition, CSEA administers a Political Action Trust Fund, which is a separate entity from CSEA and which has expenses that include direct contributions to candidates, education of members on political activities, providing information to members and the general public regarding politics, and payroll for the staff of the Trust who provide these services. The Trust receives 3% of the dues and fees collected by CSEA from its members and non-objecting fee payors. CSEA treats these expenditures as entirely nonchargeable. Another expense is affiliation dues by CSEA to AFSCME. CSEA allocates that expenditure between chargeable and nonchargeable categories "based on the most recent allocation calculations for AFSCME." At the time CSEA complied with its 2005 agency shop notice, the most recent allocation determined that 66% of AFSCME's total expenses were chargeable. Regarding this expense, the agency shop notice includes a report from AFSCME's independent accountant who provides AFSCME with an outside annual opinion as to the financial statements of AFSCME and reviews AFSCME's allocation of expenses as chargeable and nonchargeable.

Another type of expense is the "rebates" that CSEA provides to its local subdivisions, which enable those subdivisions to operate. CSEA's rebates to its subdivisions are also allocated between chargeable and nonchargeable categories. CSEA sends an advance rebate check to the nonmembers on a quarterly basis that amounts to the difference between full union dues and the agency fee objector amount.

Further, CSEA has mandated uniform constitutions for its local subdivisions. Each mandated constitution contains an article entitled "Political and Ideological Endorsements and Expenditures," which prohibits any local subdivision from endorsing "any candidate for political or party office or any proposition on behalf of CSEA." See Sullivan Aff. at ¶ 26. The "Political and Ideological Endorsements and Expenditures" section of the mandated constitution also provides that

No member or officer of [a local subdivision] shall make, or cause the [local subdivision] to make, either directly or indirectly, any expenditure, reimbursement or contribution of any kind from union funds or property for political or ideological purposes, nor may the [local subdivision] make any loans or incur any indebtedness for such purposes.

See Id. CSEA has also adopted a Financial Standards Code in order to "establish minimum standards to be met by [CSEA's subdivisions] in the handling of funds and other assets ... and in the maintenance of financial records." See Id. at ¶ 27. The Financial Standards Code provides that "[n]o contributions may be made or any expenses incurred by the subordinate for any political cause." See CSEA Financial Standards Code, Art. VI, § 4(a).

In addition, CSEA's statewide treasurer sends an annual notice to CSEA's local subdivision and/or affiliate notifying them of CSEA's allocation of chargeable and nonchargeable expenses and instructing them not to exceed the nonchargeable percentage obtained in the annual notice. In order for a local affiliate to obtain a rebate from CSEA, the affiliate must file forms with CSEA proving that they have complied with annual reporting requirements and budgets mandated by the constitution and Code of Financial Standards. To review for compliance with the nonchargeable percentage limitation, CSEA's Department of Internal Operations audits the local subdivisions on a random basis and reports whenever inconsistencies appear in the budgeting and reporting forms submitted by each subdivision to CSEA. CSEA's Statewide Treasurer also conducts training on financial requirements for the treasurers of CSEA's local subdivisions. This training includes instruction on complying with the limits set forth in the agency shop notice.

Defendants argue that because of the nature of activities in which CSEA's local affiliates engage, the prohibition on their use of any funds for political purposes, and the limitation on their funds for other nonchargeable purposes, CSEA's use of the "local presumption" to calculate the chargeable percentage of its expenditures for rebates to the local subdivisions understates the actual chargeable percentage of those expenditures. Plaintiffs dispute this statement and argue that defendants cannot know whether the use of the "local presumption" understates ...

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