United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 8, 2008 Decided April 18, 2008
No. 07-1025
DAVID PIRLOTT AND
SHERRY PIRLOTT,
PETITIONERS
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with
07-1082, et al.
On Petitions for Review and
Cross-Application for Enforcement
of an Order of the National Labor Relations Board
Glenn M. Taubman argued the cause and filed the briefs for
petitioner Sherry Pirlott and David Pirlott.
Frederick Perillo argued the cause for petitioner Teamsters
Local 75. With him on the briefs was Scott D. Soldon.
Amy H. Ginn, Attorney, National Labor Relations Board,
argued the cause for respondent. With her on the brief were
Ronald E. Meisburg, General Counsel, John H. Ferguson,
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Associate General Counsel, Linda Dreeben, Assistant General
Counsel, and Jill A. Griffin, Supervisory Attorney.
Glenn M. Taubman was on the brief for intervenors Sherry
Pirlott and David Pirlott.
Scott D. Soldon and Frederick Perillo were on the brief for
amicus curiae Teamsters Local 75.
Before: RANDOLPH and ROGERS, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
EDWARDS.
EDWARDS, Senior Circuit Judge: Sherry and David Pirlott
(“Charging Parties”), employees of Schreiber Foods in Green
Bay, Wisconsin, complain that their union, Teamsters Local 75
(“Union”) violated its duty of fair representation under
Communications Workers of America v. Beck, 487 U.S. 735
(1988), by spending their dues for organizing activities and
failing to provide them with adequate financial disclosures. The
Charging Parties filed unfair labor practice charges with the
National Labor Relations Board (“NLRB” or “Board”) and a
complaint was issued by the Board’s General Counsel. The
Board found that the Union’s financial disclosures were
adequate, but determined that the Union had not justified its
expenditures and ruled that the portion of the Charging Parties’
dues spent on organizing activities must be returned to them.
The Union challenges the Board’s ruling, arguing that the
Board disregarded past precedent, arbitrarily failed to weigh
evidence before it, and denied the Union a fair opportunity to
present its case. The Charging Parties challenge the Board’s
decision, because it fails to state that all organizing expenses,
not just the organizing expenses in their case, run afoul of Beck.
We reject the Charging Parties’ claim as not properly before the
court. We deny the Union’s petition for review and grant the
3
Board’s cross-application for enforcement in part. In particular,
we uphold the Board’s determination that the Union failed to
show that its organizing activities were permissible expenditures
for objecting nonmembers’ dues under Beck, and we remand the
case to allow the Board to reconsider the issue of the adequacy
of the Union’s financial disclosure in light of Penrod v. NLRB,
203 F.3d 41 (D.C. Cir. 2000).
I. BACKGROUND
Under § 8(a)(3) of the National Labor Relations Act
(“NLRA”), unions have the right to negotiate union-security
clauses. Under such provisions, an employer may “mak[e] an
agreement with a labor organization . . . to require as a condition
of employment membership therein.” 29 U.S.C. § 158(a)(3).
The Supreme Court has long limited the permissible scope of
union-security clauses by holding that when employees object
to union membership, their obligation to the union is restricted
to its “financial core” – i.e., objecting nonmembers can be
required to pay their dues to the union but nothing more. NLRB
v. Gen. Motors Corp., 373 U.S. 734, 742 (1963). In Beck, the
Court held that objecting nonmembers cannot be required “to
support union activities beyond those germane to collective
bargaining, contract administration, and grievance adjustment.”
487 U.S. at 745. Under Beck, if a union’s activities extend
beyond its role as the representative of a collective bargaining
unit, the dues of objecting nonmembers must be reduced on a
per capita basis for all funds spent on those additional activities.
Schreiber Foods processes cheese and other dairy products
in Green Bay, Wisconsin. Since 1951, the Union has been the
exclusive representative of production and maintenance
employees at Schreiber Foods. During the relevant time period,
the Union had several thousand members in nearly 150
bargaining units. Approximately 1,600 members were in the
dairy industry, and 600 were in the food processing industry.
The Union also represents employees in the public sector in
4
Green Bay, Wisconsin. The Union is affiliated with the
International Brotherhood of Teamsters, the Central Conference
of Teamsters, and the Wisconsin Joint Council 39.
At all relevant times, the Union and Schreiber Foods have
been parties to a collective bargaining agreement that contains
a union-security clause. The clause in the Schreiber Foods
contract reads:
All present employees who are members of the Union on
the effective date of this subsection . . . shall remain
members of the Union in good standing as a condition of
employment. All present employees who are not members
of the Union and all employees who are hired hereafter
shall become and remain members in good standing of the
Union as a condition of employment . . . .
Schreiber Foods, 329 N.L.R.B. 28, 42 (1999) (decision of the
Administrative Law Judge (“ALJ”)). Sherry Pirlott began
working at Schreiber Foods and joined the Union in 1963. Her
husband David Pirlott was hired at Schreiber Foods and joined
the Union in 1973. In a joint letter dated September 20, 1989,
they resigned their membership in the Union and objected to the
use of their fees for any non-collective bargaining activity. The
Union then informed the Charging Parties by letter that their
dues would be reduced by $0.23 per month. Attached to this
letter was a one-page “Schedule of Expenses and Non-
Chargeable Expenses Year Ended December 31, 1988”:
1988 Nonchargeable
Expense
Per Capita Tax $253,202 $6,299
Salaries 482,273 0
Expense Allowance 18,505 0
Contributions 700 700
Benefits 94,555 0
Professional Fees 9,058 0
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Taxes 35,721 0
Meeting and Committee 10,177 0
Automobile 10,232 0
Out-of-Town Travel 22,478 0
Education & Publicity 19,127 4,537
Stewards 17,235 0
Building Maintenance 5,511 0
Administrative 110,123 0
Total Expenses $1,088,897 $11,536
Percent Nonchargeable 1.1%
Id. at 45. The Charging Parties objected, demanded that their
dues be placed in an escrow account, and filed unfair labor
charges against the Union with the NLRB on November 8, 1989.
The NLRB General Counsel issued a Complaint and Notice
of Hearing (“Complaint”) approximately two years later. In that
Complaint, the General Counsel alleged, inter alia, that the
Union charged objecting nonmembers for “expenses incurred
for activities outside the bargaining unit” “contrary to the
requirements of Beck.” Complaint at ¶ 11. The General
Counsel also alleged that the financial disclosures given to the
Charging Parties “(i) fail[] to adequately define which expenses
are considered by the Union to be nonchargeable; (ii) fail[] to
break down expenditures on a unit-by-unit basis; and (iii) fail[]
to provide a breakdown of the International Teamsters Union’s
expenditures.” Id. at ¶ 13(b). Based on these allegations, the
Complaint argues that the Union was engaged in unfair labor
practices within the meaning of § 8(b)(1)(A) and (2) of the
NLRA.
An ALJ held a hearing on March 5, 1992. After briefing
and testimony, the ALJ first addressed the Union’s financial
disclosures, finding that those disclosures were inadequate. The
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ALJ stated that, while “[i]t is clear that absolute precision is not
required of the unions in these situations, . . . the employees
must be given adequate information with which to make an
informed choice as to whether he or she should dispute any of
the figures.” Schreiber Foods, 329 N.L.R.B. at 46-47. The ALJ
found that the categories provided by the Union “do not provide
sufficient information from which the employees can
intelligently decide if the fee is proper.” Id. at 47.
The ALJ also responded to the General Counsel and the
Charging Parties’ argument that, under Beck, organizing
expenses – incurred in order to organize new workers and
establish new bargaining units – should never be charged to
objecting nonmembers. The ALJ found that organizing
expenses were sufficiently related to collective bargaining that
they could be charged to objecting nonmembers:
[A]fter a union has negotiated an agreement with an
employer, that agreement often serves as a bargaining tool,
at least, at employers in the same or a similar industry, and
will often cause an employer to improve his offer to the
union to approach what his competitor agreed to. A union’s
organizational expenses should likewise be treated in
somewhat the same manner. Most employers are not
philanthropists willing to pay their employees whatever
they want. Rather an employer will usually agree to a
competitive wage that it can afford. When a union
organizes other employers in the industry, and executes
contracts with these employers, others in the industry can,
competitively, be more flexible than if they were the only
organized shop in the industry.
Id. at 47-48. The ALJ found, however, that the Union could not
charge objecting nonmembers for organizing expenses incurred
to unionize employees in the public sector, because whether or
not public sector employees are unionized “probably has little or
7
no effect on Schreiber or the ultimate terms and conditions of
employment of its employees.” Id. at 48.
The parties appealed to the Board, which issued a decision
on September 1, 1999. The Board reversed the ALJ’s
determination that the financial disclosures were inadequate,
stating that “[t]he information provided by the Union herein was
clearly sufficient to enable an objector to decide whether to
challenge the Union’s figures.” Id. at 30. The Board held that
“[t]he union’s duty of fair representation – which requires a
union to act in good faith – is met if it supplies its major
categories of expenditures and supplies verified figures.” Id.
With respect to the chargeability of organizing expenses,
the Board summarized the parties’ positions as follows:
The General Counsel asserts that under Ellis v. Railway
Clerks, 466 U.S. 435 (1984), a decision interpreting the
Railway Labor Act, any expenses spent outside the relevant
unit are nonchargeable. Since organizing expenses are, by
definition, spent outside the relevant (already-organized)
unit, they are nonchargeable (according to the General
Counsel’s view). The Charging Parties, inter alia, assert
that the record contains no empirical evidence to suggest
that organizing activity could actually benefit
already-represented employees. Finally, the Union . . .
noted that the judge refused to allow it any significant
opportunity to present evidence demonstrating the
interaction of various bargaining units represented by the
Union and how such activities have a direct impact on the
Union’s ability to represent individual bargaining units.
Id. at 31. The Board decided to sever the issue of the
chargeability of organizing expenses and remanded that portion
of the case to the ALJ for further proceedings. Id. The Board
described the standard as follows:
8
[T]he Board in California Saw [& Knife Works, 320
N.L.R.B. 224 (1995)] held that the legality of charging
objectors for a particular union expense depends on
“whether they are germane to the union’s role in collective
bargaining, contract administration, and grievance
adjustment.” 320 N.L.R.B. at 239. . . . As for organizing
expenses, although the General Counsel . . . urge[s] a per se
approach based on Ellis, the Board has yet to decide their
chargeability to objectors. In Connecticut Limousine
Service, 324 N.L.R.B. 633, 637 (1997), a Board majority
identified several questions relevant to that determination
including, for example, whether the expenditures for
organizing were necessary to “preserve uniformity of labor
standards in the organized workforce” as asserted by the
union therein and “what kinds of employers, either in the
Employer’s specific industry or in competing industries, the
Union might attempt to organize in order to preserve
uniform labor standards.”
In the absence of this defining precedent at the time that the
instant dispute arose, we find it appropriate to sever these
chargeability issues from this proceeding and remand them
to the judge for further proceedings, including, if necessary,
a reopening of the hearing to adduce additional evidence,
and for the issuance of a supplemental decision containing
findings of fact, conclusions of law, and a recommended
Order. In deciding the chargeability of these expenses, the
judge shall consider the questions deemed relevant by the
Board in Connecticut Limousine.
Id. at 31-32 (footnotes omitted). One Board member dissented,
arguing that there should be a per se rule that all organizing
expenses are nonchargeable. Id. at 36.
After the remand order from the Board on the chargeability
issue, the General Counsel moved to close the record and
dismiss the remaining portions of the Complaint on the ground
9
that the Board had “rejected the sole theory underlying the
complaint, which was that no nonunit expenses were chargeable
to Beck objectors.” Schreiber Foods, 3-CB-3077, Order at 2
(Feb. 5, 2001), reprinted in Br. for NLRB (Appendix). The
Board rejected the General Counsel’s request, finding that, while
“[t]he General Counsel clearly is correct that the Board rejected
the . . . contention that all nonunit expenses are per se not
chargeable to Beck objectors . . . , both the judge and the Board
explicitly considered a lesser theory of violation . . . , and the
Board’s remand directed the judge to address the chargeabilty of
certain nonunit expenditures under the standard set forth in
California Saw.” Id. at 2-3. In its February 2001 order, the
Board went on to describe the inquiry before the ALJ:
On the current record, the General Counsel has shown that
certain nonunit expenditures are being charged. The
Respondent at this point has the burden of going forward to
show that these expenditures are properly chargeable under
the California Saw standard. . . . The nonunit expenses
involved herein involve organizational expenses and other
expenses. In regard to the former, the judge should
consider the Board’s decision in Meijer, Inc., 329 N.L.R.B.
[730] (1999), which issued after the Remand Order in the
instant case. In Meijer, the Board held that “at least with
respect to organizing within the same competitive market as
the bargaining unit employer, organizing expenses are
chargeable to bargaining unit employees” under the
California Saw standard.
Id. at 3-4 (quoting Meijer, 329 N.L.R.B. at 734).
At a second hearing on October 10-11, 2001, the ALJ
received testimony from three Union witnesses: Professor Dale
Belman of the Michigan State University School of Labor
Relations, Danny McGowan, a business agent of the Union, and
Detlef Pavlovich, the Union’s accountant. The Charging Parties
called Irving Ross, also a certified public accountant, to retort
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Pavlovich’s testimony. Schreiber Foods, 349 N.L.R.B. No. 14,
slip. op. at 23 (Jan. 26, 2007) (decision of ALJ).
Prior to hearing testimony, the ALJ described the previous
decisions of the Board. In that description, the ALJ stated that
“you can separate union[] activities or expenses in[to] three
areas.” Hearing Tr. at 234 (Oct. 10, 2001), reprinted at
Appendix (“App.”) 109. The first category included “companies
that are in the same business, same industries, competitive to
Schreiber Foods.” Id. at 234-35, App. 109-10. The other
categories included public sector employees and employees of
private firms that were not competitive with Schreiber. Id. at
235, App. 110. For organizing of employees within the
competitive market, the ALJ stated, “I think it’s clear [from] my
decision . . . and [the] Board[’s] subsequent decisions that those
expenses are clearly chargeable to the objectors. I don’t think
there’s any question about that.” Id.
On December 12, 2001, the ALJ issued a decision. The
ALJ first concluded that “the Board has already decided that a
union can charge objectors for expenses incurred in organizing
or representing units within the same competitive market as the
bargaining unit employer.” Schreiber Foods, 349 N.L.R.B. slip.
op. at 27 (quotation marks omitted). The ALJ also found that
the Union’s “representational and organizational expenses for
employers outside of the competitive market” were chargeable.
Id. In making this finding, the ALJ relied in large part on the
testimony of Professor Belman that an increase in the number of
unionized employees “in a small city such as Green Bay” would
create an upward pressure on wages, regardless of the industry.
For public sector employees, the ALJ reached a different
conclusion, finding that increased unionization of public sector
employees would have little effect on the wages of private sector
employees. However, the ALJ found that the Union had not
spent any of the objecting members’ dues on organizing of
public sector employees. Id. at 27-28.
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The Board issued its final decision in this matter on January
26, 2007. In that decision, a majority of the Board found that
the Union had not “presented sufficient evidence to support a
finding, under Meijer, that its organizing expenses are
chargeable to objectors.” Id. at 4. The Board unanimously
upheld the ALJ’s determination that the Union did not charge
objectors for expenses incurred in organizing public sector
employees.
The Board’s opinion did not interpret Meijer as establishing
a per se rule on the chargeability of union expenses for
organizing employees within a competitive market. Rather, the
Board found that
Meijer permits a union to demonstrate, as the unions did in
Meijer for the highly competitive retail grocery business
located in the same metropolitan area, that there is a direct,
positive relationship between the wage levels of
union-represented employees and the level of organization
of employees of employers in the same competitive market.
If this same showing is made under analogous factual
settings, then under Meijer the union may lawfully charge
objectors for organizing expenditures.
Id. at 6 (quotation marks and citations omitted). The Board
found that the Union had failed to meet this standard, describing
Professor Belman’s testimony as “generalized academic
research” that was “not specific” to the market in question. Id.
The Board contrasted the evidence put forward by the Union in
this case with the “direct, positive relationship between the wage
levels of union-represented employees and the level of
organization” shown in Meijer. Id. (quoting Meijer, 329
N.L.R.B. at 738).
In addition to the majority opinion, two panel members
wrote separately. Member Schaumber dissented in part, arguing
that Meijer should be overruled and that the Board should find
12
that “as a matter of law . . . organizing expenses are
nonchargeable to objecting nonmembers.” Id. at 12. Panel
member Liebman, on the other hand, argued that Meijer
established a per se rule that all organizing expenses within the
employer’s competitive market were chargeable. Id. at 18.
Board Chairman Battista, while admitting to “grave doubts
about the validity” of Meijer, found that it was distinguishable,
and therefore concluded that, “where a case is distinguishable,
there is no need to overrule it.” Id. at 7 n.21.
Both the Union and the Charging Parties challenge the
Board’s ruling. Under 29 U.S.C. § 160(f):
Any person aggrieved by a final order of the Board granting
or denying in whole or in part the relief sought may obtain
a review of such order . . . in the United States Court of
Appeals for the District of Columbia, by filing in such . . .
court a written petition praying that the order of the Board
be modified or set aside.
II. ANALYSIS
A. Standard of Review
This court’s review of NLRB decisions is deferential, and
a decision of the NLRB will be overturned only if “the Board’s
factual findings are not supported by substantial evidence, or the
Board acted arbitrarily or otherwise erred in applying
established law to the facts of the case.” Cmty. Hosp. of Cent.
Cal. v. NLRB, 335 F.3d 1079, 1082-83 (D.C. Cir. 2003)
(quotation marks, brackets, and ellipses omitted). “The Board
cannot ‘ignore its own relevant precedent but must explain why
it is not controlling.’” Manhattan Ctr. Studios, Inc. v. NLRB,
452 F.3d 813, 816 (D.C. Cir. 2006) (quoting BB & L, Inc. v.
NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995)). “‘Where an agency
departs from established precedent without a reasoned
explanation, its decision will be vacated as arbitrary and
13
capricious.’” Id. (quoting ANR Pipeline Co. v. FERC, 71 F.3d
897, 901 (D.C. Cir. 1995)) (brackets omitted).
In reviewing an NLRB decision concerning the duty of fair
representation, this court affords “significant” deference to the
Board. Thomas v. NLRB, 213 F.3d 651, 657 (D.C. Cir. 2000).
It is hard to think of a task more suitable for an
administrative agency that specializes in labor relations, and
less suitable for a court of general jurisdiction, than crafting
the rules for translating the generalities of the Beck decision
into a workable system for determining and collecting
agency fees.
Id. (quoting Int’l Ass’n of Machinists & Aerospace Workers v.
NLRB, 133 F.3d 1012, 1015 (7th Cir. 1998)) (ellipses omitted).
B. Matters Not Before This Court
Before turning to the merits, it is important to understand
what is not at issue in this appeal. First, the parties agree that
the Board’s decision on the question of whether the Union’s
financial disclosures were adequate should be vacated in light of
Penrod. In Penrod, we examined a union disclosure that was
similar to the one at issue in this case. The court held that the
general information provided by the union in Penrod was not
sufficient to give objectors a basis upon which to decide whether
to challenge the union’s calculations. Because Penrod was
decided after the Board made its determination in this case that
the Union’s disclosures were adequate, Penrod did not figure
into the Board’s disposition of that issue. We therefore vacate
the Board’s order with respect to the financial disclosures and
remand to the Board to allow it to reconsider whether the Union
fulfilled its obligation to provide adequate financial disclosure.
Second, neither party challenges the Board’s determination
that the Union did not unlawfully charge the Charging Parties
for expenses incurred in organizing employees working in the
14
public sector. The ALJ found that “there was no net cost to the
[Union] of representing . . . public-sector employees,” 349
N.L.R.B. slip. op. at 28, and the Board upheld that
determination. Neither party objects to the Board’s decision on
this question.
Finally, the Charging Parties petition this court to require
the Board to adopt a per se rule that expenses incurred in
organizing employees of other employers can never be charged
to objectors. The Charging Parties are not “aggrieved” within
the meaning of the NLRA on this issue, so their claim is not
properly before this court for review.
Section 10(f) of the Act provides that “[a]ny person
aggrieved by a final order of the Board granting or denying in
whole or in part the relief sought may obtain a review of such
order.” 29 U.S.C. § 160(f). The Board in this case ordered the
Union to “[c]ease and desist from . . . [c]harging and collecting
from objecting nonmembers” and to “[r]efund with interest”
dues and fees attributable to organizing activities. 349 N.L.R.B.
slip. op. at 8. Where, as here, a judgment gives a party all the
relief requested, an appeal may not be taken simply to challenge
the Board’s reasoning. See Liquor Salesmen’s Union Local 2 v.
NLRB, 664 F.2d 1200, 1206 (D.C. Cir. 1981) (holding that union
was not aggrieved by Board decision when it “has received all
the relief it requested” even if Board did not “pass specifically
on [union’s] motion for summary judgment”).
The Charging Parties here received the specific relief that
they sought and they are entitled to nothing more. It is of no
moment that the Board’s written rationale was not as far-
reaching as the Charging Parties would have preferred. There
is nothing in the Board’s decision that resulted in a cognizable
injury to the Charging Parties sufficient to support a showing of
aggrievement under § 10(f). Nor is there any imminent threat
that the Charging Parties will face the same injury that prompted
15
the complaint in this case. Cf. City of Los Angeles v. Lyons, 461
U.S. 95 (1983). There is no basis for review under § 10(f).
Even assuming, arguendo, that the Charging Parties’
disagreement with the Board’s reasoning might satisfy the
requirement of aggrievement under § 10(f), we would still
decline their invitation to issue an advisory opinion instructing
the Board to adopt a per se rule covering organizing expenses.
It is not within the province of the judiciary to force an agency
to adopt a rule on a subject that is within its compass of
authority before the agency itself has acted on the issue. Under
our system of judicial review, it is the role of the agency charged
with administrating a statute to make the initial interpretation of
that law – one that will be overturned only when the agency acts
without delegated authority, or its action is at odds with the plain
meaning of the authorizing statute, unreasonable, or arbitrary
and capricious. See Chevron U.S.A. Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837 (1984).
It is also well understood that “a reviewing court must
confine itself to the grounds upon which the record discloses
that the agency’s action was based.” EDWARDS & ELLIOTT,
FEDERAL STANDARDS OF REVIEW – REVIEW OF DISTRICT COURT
DECISIONS AND AGENCY ACTIONS 171 (2007). The Charging
Parties were awarded relief because the Board found that the
Union failed to show that its organizing expenses were germane
to its role as bargaining agent for the employees in the Schreiber
unit. The Board declined to decide anything more, apparently
in part because it could not reach a consensus on the general
issue of the chargeability of organizing expenses. In any event,
the Board majority concluded that this question was not squarely
presented and that the case could be resolved on narrower
grounds. The Board also made it clear that it anticipated a
future opportunity to revisit the general chargeabilty issue:
Presumably, the General Counsel, now aided by this
opinion, will understand that organizational expenses
16
cannot be charged unless there is a specific nexus between
those expenses and the economic integrity of the unionized
unit. And a union, similarly aided by this opinion, will seek
to build the kind of record that existed in Meijer but does
not exist here. Where that showing is made, we will then be
squarely presented with the issue of whether organizational
expenses can be charged if the nexus is shown.
Schreiber Foods, 349 N.L.R.B. slip op. at 7 n.21.
The general chargeabilty issue is a matter for the Board to
decide in the first instance. See, e.g., Tradesmen Int’l, Inc. v.
NLRB, 275 F.3d 1137, 1141 (D.C. Cir. 2002) (“Defining the
scope of [the NLRA’s] protections ‘is for the Board to perform
in the first instance as it considers the wide variety of cases that
come before it.’”) (quoting NLRB v. City Disposal Sys., Inc., 465
U.S. 822, 829 (1984)). The Board did not decide the issue in
this case, so this court is constrained to confine itself to the
grounds upon which the record discloses that the agency’s
action was based.
C. The Board Did Not Act Arbitrarily in Finding That the
Union’s Organizing Expenses Were Not Germane to
Schreiber Employees
The Union offers several arguments that the Board acted
arbitrarily in finding that the Union violated its duty of fair
representation. The Union first contends that the Board ignored
prior precedent, established in Meijer, that all organizing
expenses within a competitive market are per se chargeable. In
the alternative, the Union asserts that, even under the standard
used by the Board, it presented sufficient evidence to show that
its organizing efforts benefitted the employees in the Schreiber
bargaining unit. Finally, the Union claims that it was denied a
fair opportunity to present its case. We find none of these
arguments convincing.
17
In Meijer, as in this case, several objecting nonmembers
challenged the chargeability of organizing expenses. The Board
held that a nonunit expense could be charged to objecting
nonmembers so long as the activity is “germane to the union’s
role in collective-bargaining” and some benefit ultimately inures
to the benefit of the employees in the unit. 329 N.L.R.B. at 733
(quoting California Saw, 320 N.L.R.B. at 239). Applying that
standard to the facts in Meijer, the Board concluded:
Having considered the evidence, the judge’s decision, and
the parties’ arguments, we find that, at least with respect to
organizing within the same competitive market as the
bargaining unit employer, organizing expenses are
chargeable to bargaining unit employees under the
California Saw standard.
Id. at 733-34 (footnote omitted).
The Board in Meijer noted that it was “not finding
organizing expenses chargeable in [that] case merely on a
general notion that organizing makes a union stronger and a
stronger union is a more successful bargainer.” Id. at 738.
Instead, the Board based its decision in Meijer “on academic
research, empirical data, and specific evidence.” Id. The Board
cited several studies by academics in the labor economics field
that found relationships between “the percent of employees
organized and the level of union wages.” Id. at 734. That
relationship was confirmed in the “retail food industry” – the
industry in which the employer in that case operated – by
“persuasive evidence.” Id. Finally, the Board in Meijer noted
testimony from the president of the Union showing that the
employer had “insisted on paying the mercantile clerks less than
the food clerk rate because of the lower-wage, nonunion
competition it faces in the mercantile industry.” Id. at 735.
From this testimony, the Board concluded that the “clerks’
wages have been directly affected by the difference in the levels
18
of organization of [the employer’s] competitors in the two
industries in which it operates.” Id.
In the instant case, the Board majority interpreted Meijer to
mean that, in order to justify charging objecting nonmembers for
organizing expenses, “the union must produce specific evidence
showing a positive correlation between wages and union density
in the relevant market at issue.” Schreiber Foods, 349 N.L.R.B.
slip op. at 6 n.18. The Union claims that this interpretation
amounts to an arbitrary departure from the precedent in Meijer.
We disagree.
The Board majority opinion discusses Meijer at length,
concluding:
Meijer permits a union to demonstrate, as the unions did in
Meijer for the highly competitive retail grocery business
located in the same metropolitan area, that there is a direct,
positive relationship between the wage levels of
union-represented employees and the level of organization
of employees of employers in the same competitive market.
If this same showing is made under analogous factual
settings, then under Meijer the union may lawfully charge
objectors for organizing expenditures.
Id. at 6 (citation and quotation marks omitted). The dissenting
Board member and the Union interpret Meijer differently. But
this disagreement does not render the majority opinion
unreasonable. There is no doubt that the Board may not ignore
its prior decisions, LeMoyne-Owen College v. NLRB, 357 F.3d
55, 60-61 (D.C. Cir. 2004), and that it must provide a reasoned
justification when it departs from precedent, Titanium Metals
Corp. v. NLRB, 392 F.3d 439, 446 (D.C. Cir. 2004). In this
case, the Board did not depart from or ignore Meijer. Rather,
the Board offered a “reasoned justification” for its interpretation
and application of Meijer. The Board decision thus easily
avoids “a finding of arbitrary and capricious action.” W & M
19
Properties of Conn., Inc. v. NLRB, 514 F.3d 1341, 1348 (D.C.
Cir. 2008).
After finding that there was no per se rule, the Board turned
to the evidence presented to the ALJ, and found that the Union
had failed to make a persuasive case that its organizing expenses
were germane to its role as the bargaining agent for the
employees at Schreiber. The Board found that the testimony
before the ALJ largely amounted to a “literature review that
supported the general proposition[]” that organizing will “allow
unions to raise wages more than they otherwise would.”
Schreiber Foods, 349 N.L.R.B. slip op. at 6. Indeed, the Union
conceded that its principal witness “was not acquainted with the
markets or industries relevant to the objectors’ unit; nor did he
have any knowledge of or acquaintance with the [Union’s]
organizing efforts.” Id. The Board also found that the
testimony of the Union’s secretary-treasurer “was never
developed beyond the purpose of the [Union’s] organizing
efforts to a discussion of the actual effects of those efforts.” Id.
The Board went on to say:
Unlike the “numerous examples,” Meijer, 329 NLRB at
735, recounted by the senior officials of the respondent
unions in Meijer, which demonstrated the accuracy of the
proposition that there was a “direct, positive relationship
between the wage levels of union-represented employees
and the level of organization” in Meijer, id. at 738, [none of
the witnesses in this case] provided any such examples.
Thus, we find that the [Union] has failed to meet its burden
under Meijer of establishing that its organizing
expenditures are germane to its duties as a bargaining
representative and ultimately inure to the benefit of the
objectors' bargaining unit and were not chargeable to
objectors.
Id. The Board’s findings are reasonable and supported by
substantial evidence.
20
Finally, we reject the Union’s argument that it lacked the
opportunity to put evidence before the ALJ concerning the
germaneness of organizing in the employer’s competitive
market. The Union’s argument is based on the Board’s
supplemental order of February 2001, declining the General
Counsel’s request to dismiss the case. The Union argues that
this order, and the ALJ’s interpretation thereof, indicated that all
organizing expenses in the competitive market were chargeable
under Meijer, and that it therefore lacked notice that it was
required to justify those expenditures. The Union further argues
that the Board should have dismissed the Complaint after the
General Counsel’s theory of the case – that all organizing
expenses were per se nonchargeable – was rejected by the
Board. According to the Union, the Board’s failure to dismiss
the Complaint relieved the General Counsel of its burden of
identifying expenses that were unlawfully charged, and placed
the Union in the position of having to defend all of its nonunit
expenses – an impermissibly vague inquiry.
The claim that the Union faced a completely unstructured
inquiry is belied by the original remand order, which explicitly
stated the issues to be addressed, including whether organizing
was “necessary to preserve uniformity of labor standards” and
“what kinds of employers, either in the Employer’s specific
industry or in competing industries, the Union might attempt to
organize in order to preserve uniform labor standards.”
Schreiber Foods, 329 N.L.R.B. at 32 (quotation marks omitted).
The remand order even specifically allowed for “a reopening of
the hearing to adduce additional evidence.” Id. Furthermore, in
the February 2001 order, the Board explicitly pointed to Meijer,
which clearly shows how a Union could justify its organizing
expenditures. The Union’s failure to present adequate evidence
to the Board was not the result of the Board presenting the
Union with a vague or unstructured inquiry.
21
The February 2001 order did not modify the Board’s initial
remand order – requiring the Union to justify its organizing
expenditures – nor did it in any way preclude the Union from
putting forward relevant evidence. The Union in fact did enter
evidence at the remand hearing, over no objections from the
ALJ, the General Counsel, or the Charging Parties. The Union
introduced testimony from an expert witness in labor economics
as well as a Union official concerning the Union’s organizing
activity and its effect on wages. The ALJ did not in any way
preclude the Union from offering evidence on the germaneness
of this type of organizing. The Board simply found that the
Union’s evidence did not meet the Board’s standard of proof.
The Union had every opportunity to build its evidentiary record
before the Board arrived at this conclusion.
Because the Board did not arbitrarily depart from precedent,
misconstrue the evidence before it, or deny the Union a fair
hearing, we uphold the Board’s order, finding that the Union
unlawfully charged the Charging Parties for organizing
activities, and ordering the reimbursement of the portion of their
dues that were used for those activities.
III. CONCLUSION
For the reasons indicated above, we reject the Charging
Parties’ claim as not properly before the court; we deny the
Union’s petition for review; and we grant the Board’s cross-
application for enforcement in part. The case is hereby
remanded to allow the Board to reconsider the issue of the
adequacy of the Union’s financial disclosure in light of Penrod.