685 F.2d 1065 (9th Cir. 1982), 80-5562, Ellis v. Brotherhood of Ry., Airline and S. S. Clerks, Freight Handlers, Exp. & Station Employees

Docket Nº:80-5562, 80-5603.
Citation:685 F.2d 1065
Party Name:Howard ELLIS, et al., Plaintiffs/Appellants, v. BROTHERHOOD OF RAILWAY, AIRLINE AND STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES, et al., Defendants/Appellees. Allen FAILS, et al., Plaintiffs/Appellants, v. BROTHERHOOD OF RAILWAY, AIRLINE AND STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES, et al., Defendants/
Case Date:February 22, 1982
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1065

685 F.2d 1065 (9th Cir. 1982)

Howard ELLIS, et al., Plaintiffs/Appellants,

v.

BROTHERHOOD OF RAILWAY, AIRLINE AND STEAMSHIP CLERKS,

FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES,

et al., Defendants/Appellees.

Allen FAILS, et al., Plaintiffs/Appellants,

v.

BROTHERHOOD OF RAILWAY, AIRLINE AND STEAMSHIP CLERKS,

FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES,

et al., Defendants/Appellees.

Nos. 80-5562, 80-5603.

United States Court of Appeals, Ninth Circuit

February 22, 1982

Page 1066

[Copyrighted Material Omitted]

Argued Nov. 2, 1981.

Decided Sept. 3, 1982.

Page 1067

Michael E. Merrill, San Diego, Cal., for Ellis et al.

Joseph Rauh, Laurence Gold, Washington, D. C., argued, for Broth. of Railway, et al.; Joseph L. Rauh, Jr., Rauh, Silard & Lichtman, Washington, D. C., William J. Donlon, Rockville, Md., on brief.

Marsha S. Berzon, San Francisco, Cal., J. Albert Woll, Washington, D. C., for amicus curiae.

Appeal from the United States District Court for the Southern District of California.

Before PREGERSON and ALARCON, Circuit Judges, and WHELAN, [*] District Judge.

PREGERSON, Circuit Judge:

BACKGROUND

The Railway Labor Act, as amended in 1951, permits employers engaged in interstate rail or air commerce to include in collective bargaining contracts either a union shop or an agency fee provision. Railway Labor Act, § 2, subd. 11, 45 U.S.C. § 152, subd. 11 (hereafter "Section 2, Eleventh"). A union shop provision requires employees to join the union that represents their craft or class. 45 U.S.C. § 152, subd. 11(a). An agency fee provision requires employees to pay the union a fee equal to union dues, initiation fees, and assessments, but does not require employees actually to join the union. 45 U.S.C. § 152, subd. 11(b). Such provisions prevent "free riders" from reaping the benefits of collective bargaining without contributing financial support to the union's efforts. In Railway Employees' Department v. Hanson, 351 U.S. 225, 76 S.Ct. 714, 100 L.Ed. 1112 (1956), the Supreme Court upheld the constitutionality of such financial support requirements, specifically rejecting contentions that a union shop provision violated the First and Fifth Amendment rights of protesting employees.

Five years later, in International Association of Machinists v. Street, 367 U.S. 740, 81 S.Ct. 1784, 6 L.Ed.2d 1141 (1961), the Court reaffirmed Hanson, but construed the Railway Labor Act as prohibiting the union from using any portion of an employee's mandatory dues to support political and ideological causes once the employee has informed the union of his or her objection to those expenditures. That construction allowed the Court to avoid deciding the First Amendment challenge to the use of union dues to support political activities. That issue was not faced until 1977 when, in Abood v. Detroit Board of Education, 431 U.S. 209, 234, 97 S.Ct. 1782, 1799, 52 L.Ed.2d 261 (1977), the Court ruled that the First Amendment prohibits a union from financing political and ideological causes not germane to collective bargaining duties by using a portion of the dues of employees who object to advancing those causes. 1

The instant action commenced in 1973, when appellants, a group of Western Airlines employees, challenged the dues payment obligation imposed by a union shop agreement. 2 The appellants contended that

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they could not be required to contribute to any union costs except those incurred for collective bargaining and grievance administration activities. They urged the district court to define the scope of those activities narrowly. Such a construction would entitle them to a substantial dues rebate.

In October 1975, the union (Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees, hereafter "BRAC") instituted a retroactive voluntary rebate program for employees who object to the use of a portion of their dues to support certain political or ideological causes not germane to collective bargaining. BRAC asserts that this rebate plan protects appellants' rights under Street and Abood with respect to union activities conceded by all to be "political" or "ideological."

Appellants contend that the plan still violates their First Amendment rights because it provides a rebate rather than an immediate dues reduction, thereby giving the union use of a portion of their dues for up to a full year. They also argue that the union kept inadequate records and could not account accurately for its expenditures.

Appellants next argue that they cannot be charged for certain major operating expenditures of the union. These expenditures were incurred for union activities that include: 1) Grand Lodge conventions; 2) Grand Lodge litigation not having as its subject matter contract negotiation or administration; 3) Grand Lodge publications; 4) Grand Lodge social activities; 5) Grand Lodge death benefits; and 6) Grand Lodge organizing activities. Expenditures for these activities are not "political" or "ideological" and thus not governed by the narrow holdings of Street and Abood. Nonetheless, appellants interpret language in those and other opinions as indicating that such expenditures are not a part of the collective bargaining and grievance administration costs to which objecting employees can be required to contribute. BRAC responds that these activities are sufficiently germane to the collective bargaining process so that all employees under a union shop or agency fee arrangement should be required to shoulder their fair share of the cost of these traditional union activities.

In 1976, the district court granted appellants' summary judgment motion, holding in paragraph twenty-two of its ruling that the major operating expenditures in question (denominated "Paragraph 22" expenditures or activities) were not incurred for collective bargaining activities. The court thus ruled as a matter of law that protesting employees could not be forced to support the activities listed above through compulsory dues payments. BRAC sought 28 U.S.C. § 1292(b) certification, arguing that the district court's ruling, which covered the liability issues, extended a dissenter's entitlement to a rebate beyond the area of political and ideological expenditures. The district court issued the certification but this court declined to hear the matter until after a trial on the damages issues. (BRAC v. Ellis, No. 76-8143, June 7, 1976.)

The district court tried the damages claims in 1978. With respect to certain expenditures, conceded by the union to be political and ideological, the court held that the union's rebate plan fully protected plaintiffs' interests. The court then found that approximately forty per cent of the Grand Lodge's annual expenditures had been for Paragraph 22 activities, i.e., the six activities listed above. The court ruled that these expenditures, as well as minimal Paragraph 22 expenditures made by the Local Lodges and intermediate System Boards, had to be refunded to protesting employees. 3

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The protesting employees appealed the decision, contending: (1) that the court erred in declining to adjudicate their First Amendment claims; 2) that the court applied the wrong standard of proof; 3) that the damages award is inadequate because the court did not require the union to account accurately for its expenditures; 4) that the court erred in cutting off plaintiffs' discovery rights six months before trial; and 5) that the court erred in refusing to consider evidence uncovered by plaintiffs after the trial but before judgment had been rendered.

The union challenged the court's summary judgment ruling that the six activities enumerated in Paragraph 22 are not germane to collective bargaining.

I. BRAC'S EXISTING POLITICAL-IDEOLOGICAL REBATE PLAN

In BRAC v. Allen, 373 U.S. 113, 83 S.Ct. 1158, 10 L.Ed.2d 235 (1963), the Supreme Court grappled with the problem of providing a practical and adequate remedy to employees who object to a union's political and ideological expenditures. The Court stated: "The difficulties in judicially administered relief ... should, we think, encourage petitioner unions to consider the adoption by their membership of some voluntary plan by which dissenters would be afforded an internal union remedy." Id. at 122, 83 S.Ct. at 1163.

Pursuant to that suggestion, BRAC instituted a voluntary rebate plan in late 1975. Under the program, a protesting employee receives a rebate on his or her pro rata share of all union disbursements for political and ideological activity as well as all legislative and lobbying costs, charitable donations, and fees for affiliations with other labor organizations. The Grand Lodge computes the rebate based on information submitted by subordinate units and on reports submitted by Grand Lodge personnel concerning time and funds spent for political and ideological purposes. Any employee who believes his or her rebate inadequate may appeal directly to an independent Public Review Board authorized to make final determinations on such appeals.

In Findings of Fact and Conclusions of Law rendered after the trial, the district court held that BRAC's voluntary rebate plan constituted a good-faith effort to comply with the requirements imposed by the United States Supreme Court in Street and Allen.

A. Appellants' Constitutional Challenge to the Plan

Appellants challenge the court-approved plan, arguing that it does not protect their First Amendment right to abstain from contributing in the first place to the union's political activities. The program fails to pass constitutional muster, they contend, because it allows the union to collect and retain the full amount of a protesting...

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