Penrod v. Nat'l Labor Bd.

Decision Date22 February 2000
Docket NumberNo. 99-1121,99-1121
Citation203 F.3d 41
Parties(D.C. Cir. 2000) Robert Penrod, et al.,Petitioners v. National Labor Relations Board, Respondent International Brotherhood of Teamsters, Local 166,Intervenor
CourtU.S. Court of Appeals — District of Columbia Circuit

Glenn M. Taubman argued the cause and filed the briefs for petitioners.

Jill A. Griffin, Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Linda Sher, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, and Peter D. Winkler, Supervisory Attorney. John D. Burgoyne, Deputy Associate General Counsel, entered an appearance.

James B. Coppess argued the cause for intervenor. With him on the brief was Gary S. Witlen.

Before: Williams, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Concurring opinion filed by Circuit Judge Tatel.

Tatel, Circuit Judge:

This petition to review a decision of the National Labor Relations Board requires us to consider what information a union's duty of fair representation requires it to give employees about their right under Communications Workers of America v. Beck, 487 U.S. 735 (1988), to pay only that portion of union dues attributable to "collective bargaining, contract administration, and grievance adjustment." Id. at 745. The Board held that unions have no obligation to tell employees who have not yet exercised their Beck rights what percentage of dues are spent on nonrepresentational activities. The Board also ruled that the union in this case had given employees who had chosen to exercise their Beck rights sufficient information to satisfy its duty of fair representation. Finding a portion of the Board's decision unsupported by reasoned decision making and the remainder in conflict with Supreme Court and circuit precedent, we grant the petition for review.


Section 8(a)(3) of the National Labor Relations Act gives unions the right to negotiate union security provisions allowing them to collect dues from all members of a bargaining unit, including those who decline full union membership. 29 U.S.C. § 158(a)(3); Marquez v. Screen Actors Guild, Inc., 119 S. Ct. 292, 296 (1998). Employees who choose not to become full union members are called "financial core" payors. See NLRB v. General Motors Corp., 373 U.S. 734, 742 (1963). In Beck, the Supreme Court held that section 8(a)(3) does not obligate employees "to support union activities beyond those germane to collective bargaining, contract administration, and grievance adjustment." 487 U.S. at 745. Unlike full union members and financial core payors, employees who object to funding nonrepresentational activities, called "Beck objectors," pay reduced dues. Beck objectors are also known as "potential challengers" because they have a right to challenge the union's calculation of the reduced dues; in response to such challenges, the union bears the burden of justifying its calculation. See California Saw & Knife Works, 320 NLRB 224, 240 (1995).

Petitioners Robert Penrod, Nadine Penrod, and Clement Wierzbicki, long-time employees of DynCorp Support Services Operations, resigned from their union, International Brotherhood of Teamsters, Local 166, and exercised their Beck rights. Petitioner John Burnham never became a full member of the union, instead informing Local 166 shortly after being hired that he wished to be a financial core payor.

Having received no information from Local 166 about their Beck rights, all four petitioners filed unfair labor practice charges against the union. Pursuant to an agreement settling these charges, Local 166 promised to give all new employees and financial core payors initial Beck notices outlining their Beck rights and describing how to exercise them.The union also sent letters to the Beck objectors informing them that they must pay 93.6 percent of union dues and describing procedures for challenging that calculation. Attached was a letter from an independent auditor confirming the accuracy of the reduced fee calculation. The auditor in turn attached a handwritten worksheet listing nineteen categories of expenditures, such as "salaries," "benefits paid," "legal expenses," and "auto expenses." For each expenditure category, the auditor identified the amount and percentage "chargeable" and "nonchargeable" to Beck objectors. The worksheet referred to a "breakdown" and to "schedules," but they were not attached. The auditor's worksheet is attached to this opinion as Appendix A.

Complaining that the information furnished by Local 166 and its auditor was inadequate, petitioners renewed their unfair labor practice charges. In response, the NLRB's General Counsel filed a formal complaint charging Local 166 with failing to include in the initial Beck notice the percentage by which dues would be reduced for new employees and financial core payors who exercise their Beck rights. The General Counsel also charged that the financial information given to Beck objectors was "too vague to permit each of these employees to decide whether to challenge any of the expenditures listed in the Statement of Expenses."

The Board rejected the General Counsel's charges. International Bhd. of Teamsters, Local 166, AFL-CIO, 327 NLRB No. 176 (1999). Although agreeing that the duty of fair representation required Local 166 to provide initial Beck notices to new employees and financial core payors, the Board determined that the union had not violated its duty by failing to include the percentage by which dues would be reduced.Citing the time and expense needed to make such calculations, and explaining that the duty of fair representation affords unions a "wide range of reasonableness," the Board concluded that the decision to furnish the percentage was a "judgment call" within the union's discretion. Id., slip op. at 3. With respect to employees who had exercised their Beck rights, the Board found that the auditor's information was sufficient for them to determine whether to challenge the reduced fee calculation. Id., slip op. at 4-5.

Petitioners challenge the Board's decision on three grounds. The first two concern the information given Beck objectors. The one-page handwritten list of expenditures, they say, neither explained nor justified the union's determination that Beck objectors would be required to pay 93.6 percent of dues. Their second challenge focuses on the approximately twenty-five percent of total expenditures that Local 166 paid to its affiliates. See Appendix A. The third challenge relates to new employees and financial core payors; according to petitioners, such employees are entitled to know the precise amount by which their dues would be reduced were they to exercise their Beck rights. Local 166, defending the Board's conclusion that it satisfied its duty of fair representation, has intervened.


Grounded in section 9(a) of the NLRA, 29 U.S.C. § 159(a), the judicially created duty of fair representation reflects the principle that a union's status as exclusive representative of employees in a bargaining unit "includes a statutory obligation to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct." Vaca v. Sipes, 386 U.S. 171, 177 (1967). Unions breach their duty of fair representation when their conduct toward members of a bargaining unit is "arbitrary, discriminatory, or in bad faith." Id. at 190.

The Supreme Court fleshed out the duty of fair representation in the Beck context in Chicago Teachers Union, Local No. 1, AFT, AFL-CIO v. Hudson, 475 U.S. 292 (1986). In that case, the Court established procedures that unions must follow to protect objectors and described the financial information that unions must give to potential objectors. "Basic considerations of fairness, as well as concern for the First Amendment rights at stake," the Court held, "dictate that the potential objectors be given sufficient information to gauge the propriety of the union's fee." Id. at 306. While Hudson involved public employees and arose under the First Amendment, this circuit has applied its requirements to nonpublic unions such as Local 166. See, e.g., Abrams v. Communications Workers of America, 59 F.3d 1373, 1379 n.7 (D.C. Cir. 1995). With this framework in mind, we turn to petitioners' three challenges.

General Disclosure to Beck Objectors

With respect to their first claim--that the list of nineteen expenditure categories was insufficient to allow them to determine whether to challenge the reduced fee calculation-petitioners complain that the single sheet "contains no notes or other written explanation concerning how that union's overall 93.6% chargeable, 6.4% nonchargeable calculation was made." That lack of explanation, petitioners contend, was compounded by the "vague and unexplained" line items and the absence of referenced schedules and breakdowns.

The Board ruled that the Beck objectors had no need for schedules, breakdowns, or better-defined categories of expenses to determine whether to challenge the reduced dues calculation. Addressing the Beck objectors' most fundamental argument--that the single page of financial information failed to explain how the union arrived at its 93.6 percent chargeable figure--the Board relied entirely on a decision of the Seventh Circuit, Gilpin v American Fed'n of State, County, and Mun. Employees, AFL-CIO, 875 F.2d 1310, 1316 (7th Cir. 1989): "As the Seventh Circuit Court of Appeals has remarked in response to the same kind of argument, 'if it did [include the disclosure petitioners requested], the notice would be as long and complicated as an SEC prospectus.' The court discerned no reason for imposing such a...

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