202 N.W.2d 305 (Mich. 1972), 50, Smigel v. Southgate Community School Dist.

Docket Nº:50.
Citation:202 N.W.2d 305, 388 Mich. 531
Opinion Judge:T. M. KAVANAGH, Chief Justice. WILLIAMS, Justice.
Party Name:Jean SMIGEL et al., Plaintiffs-Appellees, v. SOUTHGATE COMMUNITY SCHOOL DISTRICT, a Public Corporate Body, et al., Defendants-Appellants.
Attorney:[388 Mich. 538] Clark, Hardy & Lewis, by Charles L. Fine, Detroit, for plaintiffs-appellees. Levin, Levin, Garvett & Dill, by Erwin B. Ellmann, for Southgate Education Association, Donald Kouba and Jack Frucci, defendants-appellants; Erwin B. Ellmann, Robert J. Finkel, Daniel J. Hoekenga, Wallace...
Judge Panel:Before the Entire Bench.
Case Date:November 29, 1972
Court:Supreme Court of Michigan
 
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Page 305

202 N.W.2d 305 (Mich. 1972)

388 Mich. 531

Jean SMIGEL et al., Plaintiffs-Appellees,

v.

SOUTHGATE COMMUNITY SCHOOL DISTRICT, a Public Corporate

Body, et al., Defendants-Appellants.

No. 50.

Supreme Court of Michigan.

November 29, 1972

Page 306

[388 Mich. 538] Clark, Hardy & Lewis, by Charles L. Fine, Detroit, for plaintiffs-appellees.

Levin, Levin, Garvett & Dill, by Erwin B. Ellmann, for Southgate Education Association, Donald Kouba and Jack Frucci, defendants-appellants; Erwin B. Ellmann, Robert J. Finkel, Daniel J. Hoekenga, Wallace K. Sagendorph, Detroit, of counsel.

Zwerdling, Miller, Klimist and Maurer, by A. L. Zwerdling, Detroit, for amicus curiae.

Rothe, Marston, Mazey, Sachs, O'Connell, Nunn & Freid, by Theodore Sachs, Detroit, for Detroit Federation of Teachers, amicus curiae.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Solicitor Gen., Francis W. Edwards, Asst. Atty. Gen., Detroit, for Michigan Employment Relations Commission, amicus curiae.

Goldberg, Previant & Uelmen, Milwaukee, Wis., for the Michigan Conference of Teamsters; John S. Williamson, Jr., Milwaukee, Wis., on the brief.

Before the Entire Bench.

T. M. KAVANAGH, Chief Justice.

We concur with Justice Swainson that the pure legal issues concerning construction of our [388 Mich. 539] statutes are not peculiarly within the scope of the expertise of the Michigan Employment Relations Commission and as such were properly brought before the circuit court.

However, we do not agree that the trial court correctly denied the plaintiffs injunctive relief. The determinative issue which must be resolved in this case is:

Does the 'agency shop' provision involved in the instant case create the practical equivalent of a 'union shop' and, as such, is it prohibited by section 10 of the Public Employment Relations Act?

It should be emphasized at the outset that this case involves public employees and is therefore controlled by the so-called Public Employment Relations Act. 1 The historical backdrop against which we must view this statute is most significant. The original act 2 had as its stated purposes the prohibition of strikes by certain public employees and the provision for mediation of grievances. It was not until its amendment in 1965 that the statute granted public employees the right to organize and bargain collectively. 1965 P.A. 379 not only authorized the formation of public employees' unions, but also incorporated the policy of the National Labor Relations Act--that an employer must assume a posture of complete neutrality regarding union membership. He must do nothing to either advance or retard union organizing. Likewise must he refrain from practices which either encourage or discourage membership in labor organizations.

In this respect there is a significant distinction in Michigan's labor law between public and private employees. Though M.C.L.A. § 423.16; M.S.A. § 17.454(17) is nearly identical to M.C.L.A. § 423.210; [388 Mich. 540] M.S.A. § 17.455(10) in respect to the requirement of employer neutrality, the statute regarding private employment includes one very important provision which is not found in the Public Employment Relations Act. M.C.L.A. § 423.14; M.S.A. § 17.454(15) constitutes an authorization of union security clauses whether in the form of 'closed shop,' 'union shop' or 'agency shop'.

Page 307

Prior to the 1965 amendment of the Public Employment Relations Act, public employees had no right to organize collectively for bargaining purposes. Defendant union deemphasizes the significance of this fact in an attempt to show that public employees now have been granted, with the exception of the right to strike, all rights conferred upon private employees.

However, as we have already indicated, the specification of rights for public employment is narrower than for private employment. The legislature accomplished this result by not including in the Public Employment Relations Act the right, specified in M.C.L.A. § 423.14; M.S.A. § 17.454(15), to enter into agreements containing union security clauses.

Defendant union urges the position that an 'agency shop' agreement is not an 'all-union' agreement as contemplated by M.C.L.A. § 423.14; M.S.A. § 17.454(15) and that therefore it need not be specifically authorized by the Public Employment Relations Act. While this might be true where an 'agency shop' provision accomplishes no more than reimbursement to the union for services rendered to a non-member, it is certainly not true whenever an 'agency shop' agreement has the effect of either encouraging or discouraging union membership in violation of M.C.L.A. § 423.210; M.S.A. § 17.455(10).

[388 Mich. 541] The traditional 'agency shop' provision is a well known type of union security clause. Its terms are often such as to render it the practical equivalent of a union shop and as such it by definition contravenes the policy and purposes of the Public Employment Relations Act.

The United States Supreme Court has on at least two occasions opined that an 'agency shop' provision imposing on employees the only enforceable membership obligation--payment of initiation fees and regular dues--is the practical equivalent of an all-union shop. Retail Clerks International Association, Local 1625, AFL-CIO v. Schermerhorn, 373 U.S. 746, 83 S.Ct. 1461, 10 L.Ed.2d 678 (1963); National Labor Relations Board v. General Motors Corp., 373 U.S. 734, 83 S.Ct. 1453, 10 L.Ed.2d 670 (1963).

Significant here is the specific choice of language in article II, paragraph 2 of the contract. The payroll deduction for nonmembers is 'a representation fee Equivalent to the dues and assessments of the Association (including the National and Michigan Education Associations).' (Emphasis added). There is not even the pretense that the sum to be deducted is a pro rata share of representation expenses, or that it will even be used for such purpose. In Retail Clerks v. Schermerhorn, Supra, the 'agency shop' clause, though specifically earmarking the funds for aiding the union in meeting collective bargaining expenses, was nevertheless found objectionable under the Florida 'right-to-work' law. The Court reasoned (373 U.S. 746, 752--754, 83 S.Ct. 1461, 1465--1466, 10 L.Ed.2d 678):

'There is no ironclad restriction imposed upon the use of nonmember fees, for the clause merely describes the payments as being for 'the purpose of aiding the Union' in meeting collective bargaining expenses. The [388 Mich. 542] alleged restriction would not be breached if the service fee was used for both collective bargaining and other expenses, for the union would be 'aided' in meeting its agency obligations, not only by the part spent for bargaining purposes but also by the part spent for institutional items, since an equivalent amount of other union income would thereby be freed to pay the costs of bargaining agency functions.

'But even if all collections from nonmembers must be directly committed to paying bargaining costs, this fact is of bookkeeping significance only rather than a matter of real substance. It must be remembered that the service free is admittedly the exact equal of membership initiation fees and monthly dues * * * Unions 'rather typically' use their membership dues 'to do those

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things which the members authorize the union to do in their interest and on their behalf.' If the union's total budget is divided between collective bargaining and institutional expenses and if nonmember payments, equal to those of a member, go entirely for collective bargaining costs, the nonmember will pay more of these expenses than his pro rata share. The member will pay less and to that extent a portion of his fees and dues is available to pay institutional expenses. The union's budget is balanced. By paying a larger share of collective bargaining costs the nonmember subsidizes the union's institutional activities. In overall effect, economically, and we think for the purposes of § 14(b), the contract here is the same as the General Motors agency shop arrangement. Petitioners' argument, if accepted, would lead to the anomalous result of permitting Florida to invalidate the agency shop but forbidding it to ban the present service fee arrangement under which collective bargaining services cost the nonmember more than the member.

'6 'Rather typically, unions use their members' dues to promote legislation which they regard as desirable and to defeat legislation which they regard as undesirable, to publish newspapers and magazines, to promote free labor institutions in other nations, to finance low cost housing, to aid victims of natural disaster, to support charities, to finance litigation, to provide scholarships, and to do those things which the members authorize the union to do in their interest and on their behalf.'

'We cannot take seriously petitioners' unsupported suggestion at the oral argument that we must assume that the union spends all of its income on collective bargaining expenses. The record is entirely silent on this matter one way or the other and it would be unique indeed if the union expended no funds for non-collective bargaining purposes.'

[388 Mich. 543] Following this reasoning we are compelled to conclude that the 'agency shop' provision in the instant contract is repugnant on its face to the provisions of our Public Employment Relations Act.

We hold that any such clause as this which makes no effort to relate the nonmembers' economic obligations to actual collective bargaining expenses is clearly prohibited by section 10 of the Public Employment Relations Act, as of necessity either encouraging or discouraging membership in a labor organization.

Having so concluded, we hold that the trial court erred in denying plaintiffs injunctive...

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