Opinion
No. 01-9516.
July 9, 2002.
Appeal from the Court of Appeals, Paul J. Kelly, Jr., Circuit Judge.
Ruth E. Burdick, Attorney, (Arthur F. Rosenfeld, General Counsel, John E. Higgins, Jr., Deputy General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, and David Habenstreit, Supervisory Attorney, with her on the brief), National Labor Relations Board, Washington, D.C., for Petitioner.
Stephen L. Andrew (and D. Kevin Ikenberry, with him on the briefs), Stephen L. Andrew Associates, Tulsa, OK, for Respondent.
Petitioner National Labor Relations Board ("NLRB" or "Board") seeks enforcement of its order issued in Oklahoma Fixture Co., 331 N.L.R.B. No. 145 (2000). In that order, the NLRB found that Respondent Oklahoma Fixture Company ("OFC") violated Sections 8(a)(1) and (5) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1), (5) (the "Act"). We have jurisdiction pursuant to 29 U.S.C. § 160(e) and we deny enforcement.
The facts in this case are not in dispute. OFC is engaged in the manufacture and installation of retail store fixtures. The United Brotherhood of Carpenters and Joiners of America, Local No. 943 ("Union"), is the exclusive bargaining representative for the "inside unit," those employees who work at OFC's Tulsa, Oklahoma facility. The collective bargaining agreement ("CBA") in effect during the relevant period contains a union security clause which requires union membership "in good standing" as a condition of employment. II R. Doc. 32 at 4 (CBA Art. 2.1). That clause, however, also provides that "all employees covered by [the CBA] and hired on or after its effective date shall, on the ninety-first (91st) day following the beginning of such employment, become and remain members in good standing in the Union." Id. The CBA states further that the only way a Union member "in good standing" can lose that status is through "failure to tender periodic dues and initiation fees uniformly required of all members." Id. (CBA Art. 2.2). Although probationary employees are considered part of the bargaining unit, see id. at 4 (CBA Art. 1.1), probationary employees are excluded from certain benefits of the CBA, including seniority status, resort to grievance procedures, and paid holidays. See id. at 7, 12 (CBA Art. 5.1A, 8.2).
The Union established a "permit fee" to be paid by new inside unit employees ("probationary employees") during the second and third months of their employment. The permit fee is equal in amount to the monthly dues that members pay to the Union. In 1989, OFC began the practice of deducting permit fees from the paychecks of inside unit employees who had signed checkoff authorization forms and forwarding the fees to the Union. In February 1997, OFC, without notice to the Union, ceased the practice of deducting and remitting the permit fees.
In response, the Union filed an unfair labor practice charge and the Board's General Counsel subsequently issued a complaint alleging that OFC had violated sections 8(a)(1) and (5) of the Act by unilaterally changing the terms and conditions of employment. After a hearing, the administrative law judge concluded that OFC had engaged in the alleged unfair labor practice and the Board affirmed the judge's decision.
In opposition to this petition for enforcement, OFC claims, as it did before the administrative law judge and the Board, that the deduction of the permit fees from the probationary employees' wages and payment over to the Union violates Section 302 of the Act. That section, enacted as part of the 1947 amendments to the Act, ch. 120, 61 Stat. 136, 157 (1947), makes it unlawful for an employer to pay any money "to any labor organization . . . which represents . . . any of the employees of such employer who are employed in an industry affecting commerce. . . ." 29 U.S.C. § 186(a)(2). The Board rejected this assertion in its decision below, finding instead that the deduction of permit fees fell within the exception of Section 302(c)(4) of the Act, which allows such payments where they are "in payment of membership dues in a labor organization" and the employer has received a written authorization for the deduction from the employee's wages. 29 U.S.C. § 186(c)(4).
When reviewing an NLRB order, we grant enforcement if we find that the Board correctly interpreted and applied the law. N.L.R.B. v. Greater Kansas City Roofing, 2 F.3d 1047, 1051 (10th Cir. 1993). The Board's factual findings are conclusive "if supported by substantial evidence on the record," 29 U.S.C. § 160(e), and we generally afford "great weight" to the Board's determinations of questions of law and uphold them when within reasonable bounds. Greater Kansas City Roofing, 2 F.3d at 1051 (internal quotations omitted); see also Intermountain Rural Elec. Ass'n v. N.L.R.B., 984 F.2d 1562, 1566 (10th Cir. 1993) ("[I]f the Board's construction of [the Act] is defensible, it is entitled to considerable deference.") (internal citations omitted). This case, however, requires that we interpret the term "membership dues" as stated in section 302(c)(4) of the Act. Thus, despite the deference we give to the Board, "[t]he judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent." Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 843 n. 9, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
We think it appropriate to begin by interpreting what constitutes "membership" under the CBA, an interpretation to which we owe no deference to the Board. See Litton Fin. Printing Div. v. N.L.R.B., 501 U.S. 190, 202-03, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991) ("`Arbitrators and courts are still the principal sources of contract interpretation.'" (quoting N.L.R.B. v. Strong, 393 U.S. 357, 360-61, 89 S.Ct. 541, 21 L.Ed.2d 546 (1969))); see also Int'l Union of Mine, Mill and Smelter Workers, Local 515 v. Am. Zinc, Lead Smelting Co., 311 F.2d 656, 659-660 (9th Cir. 1963) (holding that "membership dues" in Section 302(c)(4) included assessments, but remanding because "the meaning of the words `Union membership dues' used in [the collective bargaining agreement] . . . is not so clear as to be self-evident"). Under article 2.1 of the CBA, employees do not become "members in good standing" until the ninety-first day following employment. "Member in good standing" status requires, under article 2.2 of the CBA, only payment of the "periodic dues and initiation fees required of all members." Thus, "membership," as defined in the CBA, contemplates only the minimal requirement of payment of membership dues and reflects the Supreme Court's statement in N.L.R.B. v. General Motors Corp. that union membership can be a condition of employment only when "whittled down to its financial core." 373 U.S. 734, 742, 83 S.Ct. 1453, 10 L.Ed.2d 670 (1962). Further, as stated in article 2.1 of the CBA, this minimal membership requirement does not begin until the ninety-first day of employment. Although the Act does not define "membership dues," we construe the term as connoting a payment related to membership of some kind. See Robinson v. Shell Oil Co., 519 U.S. 337, 341, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) ("The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which the language is used, and the broader context of the statute as a whole."). The CBA evinces unmistakably that union "membership," even at its most minimal level of commitment, i.e., its "financial core," does not begin until the ninety-first day of employment.
The dissent suggests the CBA is irrelevant, but then discusses the importance, under Communications Workers of Am. v. Beck, 487 U.S. 735, 108 S.Ct. 2641, 101 L.Ed.2d 634 (1988), of the "purpose of a particular payment." Without the CBA, the dissent's and the Board's attempts to discern a "purpose" for the permit fees in question are pure guesswork. Statutes must be applied to facts. The dissent's repeated pleas for broad interpretation of Section 302 cannot mask the need to examine the CBA, regardless of whether the examination precedes or succeeds a discussion of the statute.
At oral argument, counsel for OFC conceded that a probationary employee may join the Union before the probationary period ends. Be that as it may, the issue framed in this appeal pertains to probationary employees who are not Union members. Unlike the dissent, we decide only the issue before us on record facts.
Despite the fact that employees are not members of the Union until their ninety-first day of employment, the Board claims here, as it did in the decisions below, that the term "membership dues" as used in Section 302(c)(4) of the Act should receive a broad construction. While we agree that a broad construction of "membership dues" for purposes of Section 302(c)(4) "is consistent with the criminal character of the sanctions it embodies," N.L.R.B. v. Food Fair Stores, Inc., 307 F.2d 3, 12 (3d Cir. 1962), it is still an exception to a general rule. As such, we believe that, under the terms of this CBA and given the unambiguous statutory language, Section 302(c)(4)'s exception is not rooted in the Board's rule-swallowing interpretation.
While the dissent characterizes these payments as "like membership dues," the undisputed fact remains that the permit fees are not membership dues; neither do they constitute an agency fee or an initiation fee. Under the dissent's rationale, an employee's consent to the transfer of funds to a union would be the solitary requirement for meeting § 302(c)(4)'s exception. Surely, Congress intended some limitation through its use of "membership dues" rather than the all-encompassing interpretation the dissent postulates.
Indeed, the broad construction of the exception in Section 302(c)(4) originated in a Department of Justice opinion letter that discussed whether "membership dues" included initiation fees and assessments. See Justice Department's Opinion on Checkoff, 22 L.R.R.M. 46, 47 (1948). That opinion, however, was addressing a question as to whether "membership dues" included assessments where "the union constitution provides that such fees and assessments are included in the term `membership dues.'" Id. Further, the opinion noted specifically that the initiation fees and assessments in question were "incidents of membership." Id. The cases upon which the Board relied in its opinion in this case, and which it relies upon in this petition, all involve circumstances where the additional fees in question were assessed against current members of the union. See, e.g., Schwartz v. Assoc. Musicians, Local 802, 340 F.2d 228, 230 (2d Cir. 1964) (holding that a tax "payable by and collected from all members" was a "membership due" under Section 302(c)(4)); International Union, 311 F.2d at 659 (reversing the district court after determining that "membership dues" includes assessments from employee union members); Food Fair Stores, 307 F.2d at 5 (noting that the assessment was to be paid "by every member").
The Board repeats several justifications from its decision for treating the permit fees as membership dues, namely: (1) the Union's permit fee is "similar" to membership dues because the amount is equal to that charged to Union members; (2) the permit fee resembles an initiation fee because it represents an amount the employee must pay the Union prior to becoming a member; and (3) the permit fee is reasonably viewed as a charge to finance the cost of representing the probationary employees because even the probationary employees are part of the bargaining unit.
To begin, the fact that the amount of the permit fee is equivalent to the actual membership dues has no relevance to determining whether the fees constitute "membership dues" under Section 302(c)(4). That the permit fees unintentionally, or even intentionally, bear similarity in dollar amount to membership dues does not overcome the fact that the CBA excludes the probationary employees from any definition of "Union member." The contention that the permit fees resemble an initiation fee is similarly unavailing, especially in light of the fact that, according to the Union's "Dues Permit Structure," probationary employees must pay an initiation fee after ninety-one days of employment. II R. Doc. 29. Finally, the fact that probationary employees obtain a free ride by receiving the benefits of collective representation without payment does not justify allowing the Union to receive payments in violation of the statute, especially when the probationary employees in this case are excluded from certain benefits. See Quick v. N.L.R.B., 245 F.3d 231, 245 (3d Cir. 2001) (stating that the employee was "permitted to become a `free rider' because of the draftsmanship of [the CBA] not because the NLRB erroneously interpreted that clause. . . ."). Although the Board's opinion suggests the permit fees could be reasonably viewed as covering the union's cost for representing probationary employees, III Doc. 4 at 7, neither party contends, and we have found no indication that the CBA in this case contains an "agency shop" provision or that it provides for an agency or service fee. Cf. Grajczyk v. Douglas Aircraft Co., 210 F.Supp. 702, 703-04 (S.D.Cal. 1962).
As to the dissent's suggestion that our holding would render the payment of agency fees illegal under § 302, we note that the Supreme Court stated in General Motors that the "difference between the union and agency shop may be of great importance in some contexts, but for present purposes it is more formal than real." 373 U.S. at 744, 83 S.Ct. 1453. Thus, the "practical equivalence" of agency fees to union membership dues, see id. at 743, 83 S.Ct. 1453, would render such payments safe under § 302(c)(4)'s exception. Here, no "practical equivalent" exists, leading to the Board's straw-grasping justifications for allowing the permit fees to fall within the exception.
We view our decision as adhering to Congress' purpose for enacting Section 302, which included a concern "with corruption of collective bargaining through bribery of employee representatives by employers." Master Insulators of St. Louis v. Int'l Ass'n of Heat Frost Insulators, Local No. 1, 925 F.2d 1118, 1121 (8th Cir. 1991); see also Schwartz, 340 F.2d at 233-34 (discussing purposes of Section 302). While we certainly do not suggest that abuse of the funds occurred in this case, "Section 302 is aimed primarily at the prevention of possible abuse and not at providing a remedy for abuse actually perpetrated." Employing Plasterers' Ass'n v. Journeymen Plasterers' Protective and Benevolent Soc'y, Local No. 5, 279 F.2d 92, 97 (7th Cir. 1960). Because we conclude that the remittance of permit fees in this case constitutes a violation of Section 302, OFC's practice of doing so, even though a long-standing one, cannot be enforced as part of the CBA nor could it become, as the dissent suggests, a valid amendment to the CBA. See Jackson Purchase Rural Elec. Coop. Ass'n v. Local Union 816, 646 F.2d 264, 266 (6th Cir. 1981); see also N.L.R.B. v. BASF Wyandotte Corp., 798 F.2d 849, 853 n. 1 (5th Cir. 1986).
Accordingly, the Board's petition for enforcement is DENIED.
The majority holds the National Labor Relation Board's interpretation of membership dues under section 302, 29 U.S.C. § 186(c)(4), is unreasonable and cannot be enforced. I disagree and therefore respectfully dissent.
I
Section 302 makes it a crime for money payments to pass between employers and unions but provides various exceptions for payments related to legitimate business between those entities. Under one of these exceptions, section 302(c)(4), employers may forward payments of "membership dues," deducted pursuant to employees' voluntary authorization cards, to the workers' union.
Section 302(a) provides: "It shall be unlawful for any employer . . . to pay, lend, or deliver, or agree to pay, lend or deliver, any money or other thing of value (1) to any representative of any of his employees . . . or (2) to any labor organization." 29 U.S.C. § 186(a). Section 302(b) prohibits labor organizations from demanding such payments from employers. Id. § 186(b). Section 302 is a provision of the Labor Management Reporting Act, 29 U.S.C. § 186.
Section 302(c)(4) provides: "The provisions of this exception shall not be applicable with respect to money deducted from the wages of employees in payment of membership dues in a labor organization: Provided, That the employer has received from each employee, on whose account such deductions are made, a written assignment. . . . 29 U.S.C. § 186(c)(4).
The employees in this case are probationary employees in their first 90 days of employment. These employees paid permit fees pursuant to "checkoff": they voluntarily signed cards authorizing their employer, Oklahoma Fixtures Company, to deduct the amount of the permit fees from their paychecks and forward this amount to the union. The issue in this case is whether Oklahoma Fixtures, by forwarding these employees' permit fees to their union, engaged in criminal conduct as defined under section 302, or whether forwarding such payments constituted non-criminal conduct under the (c)(4) exception for "membership dues."
This case has been appealed from the National Labor Relations Board (the Board). In construing "membership dues" under section 302, therefore, we must defer to the Board's interpretation of that labor statute if the interpretation is "reasonably defensible." See Holly Farms Corp. v. NLRB, 517 U.S. 392, 409, 116 S.Ct. 1396, 134 L.Ed.2d 593 (1996). The Board determined that the permit fees at issue here are "membership dues" under section 302. Oklahoma Fixture Co., 331 NLRB 145, 6-7 (2000). It reasoned that the Department of Justice, the Board itself, and numerous courts have consistently interpreted "membership dues" broadly to include initiation fees and other assessments of employees by their unions, as well as agency fees paid by nonmembers. It also determined that the permit fees are similar to dues, and noted that the probationary employees are members of the collective bargaining unit and therefore a legitimate subject of service fees for the union. On this basis, the Board concluded the permit fees are permissible "membership dues" under section 302.
The majority determines that the collective bargaining agreement (CBA) indicates the permit fees are not "membership dues" under section 302. It also holds that "membership dues" as used in section 302 is unambiguous and that this unambiguous meaning excludes these permit fees. Accordingly, it concludes the Board's interpretation is unreasonable. As explained below, in my judgment the majority misreads the CBA, disregards relevant case law, and misconstrues the labor statutes at issue here. Under a correct reading of these sources, the Board's interpretation is much more persuasive than the majority's and easily warrants our deference as a reasonable interpretation of section 302.
II
The majority begins its analysis of the statutory term "membership dues" by construing the CBA. Not only is the contractual meaning of that term largely irrelevant to our statutory interpretation issue, but in conducting this inquiry the majority also plainly misconstrues the CBA and labor law. The misreading of labor law, in particular, leads the majority to conclude, contrary to case law, that the CBA indicates the permit fees are not membership dues.
Examining what constitute "membership dues" under the CBA is misleading and unnecessary because it is the statute itself, not the CBA, that controls the meaning of "membership dues" under section 302. Similarly, inquiring who is a "member" of the union is also misleading. While the CBA here does determine who is required to be a member of the union, it is not true that only payments by actual union members are "membership dues" under labor statutes as they have been interpreted by the Supreme Court. See NLRB v. General Motors Corp., 373 U.S. 734, 83 S.Ct. 1453, 10 L.Ed.2d 670 (1963); see also Marquez v. Screen Actors Guild, Inc., 525 U.S. 33, 119 S.Ct. 292, 142 L.Ed.2d 242 (1998). In General Motors, the Court held that agency fees, which are payments by non-members as a service fee to the union for the benefits of representation, constitute "membership dues." General Motors, 373 U.S. 734, 83 S.Ct. 1453, 10 L.Ed.2d 670. Although the Court was construing section 8(a)(3) of the National Labor Relations Act, 29 U.S.C. § 186(a), other courts have held, for reasons I discuss below, that "membership dues" should be interpreted even more broadly under the statute at issue here, section 302, see Assoc. Builders Contractors v. Carpenters Vacation Holiday Trust Fund, 700 F.2d 1269, 1275 n. 6 (9th Cir. 1983); Int'l Union of Mine, Mill Smelter Workers, Local 515 v. American Zinc, Lead Smelter Co., 311 F.2d 656 (9th Cir. 1963) (hereinafter " American Zinc"); NLRB v. Food Fair Stores, Inc., 307 F.2d 3 (3d Cir. 1962); Grajczyk v. Douglas Aircraft Co., 210 F.Supp. 702 (S.D.Cal. 1962); see also Arroyo v. United States, 359 U.S. 419, 425, 79 S.Ct. 864, 3 L.Ed.2d 915 (1959) (exceptions to section 302 should be broadly construed because the statute is a criminal one).
Having incorrectly decided to use the CBA as a basis for statutory interpretation, the majority proceeds to compound the problem by misreading the contract and misapplying labor law to conclude that the permit fees cannot be membership dues within the meaning of section 302. First, the majority states that under the CBA employees do not become union members until 90 days have passed. In fact, although employees are not required (as a condition of employment) to become members until their 91st day, they are not precluded from becoming members before that, as the company conceded at oral argument. The majority also mistakenly states that probationary employees are required to pay the permit fees; however, these fees are voluntary and the company may deduct them only after employees submit voluntary authorization cards to this effect. The majority thus states that probationary employees are required to pay dues and are excluded from being union members, neither of which is correct.
The other problems with the majority's interpretation of the CBA have less bearing on the question of statutory interpretation. The Board determined, and the company did not appeal, that the company's eight-year practice of deducting permit fees had effectively amended the collective bargaining agreement to include this practice in the checkoff provision, yet the majority never mentions this important alteration in the contract in attempting to interpret it. The omission of this fact is at best incomplete and at worst misleading. The inclusion of this practice in the CBA was the basis for the Board's finding that the company's cessation of the practice constituted a failure to bargain over terms of employment under section 8(a)(5), 29 U.S.C. § 186(a)(5). I also disagree with the majority's conclusion that the CBA unambiguously excludes these permit fees from "membership dues." Of course, just because checkoff for permit fees became a contract provision does not make those fees "membership dues." However, we cannot definitively conclude to the contrary when the provision has merely been implied in the CBA and we have no idea whether it was implied in the contract term "[membership] dues" or as a separate term. Moreover, the CBA does not even appear to use the term "membership dues" as such. The closest it comes is in the "Dues and Permit Structure" appended to the CBA, which provides a list of "Monthly Dues" to be paid "after 91 days." Rec. vol. II, exh. 29. In addition, the checkoff provision does not refer to the dues solely of "members" but merely to dues from "all employees covered by [the CBA]. . . ." Id. exh. 32 at 5. This provision appears to cover, for example, summer helpers. Summer helpers also remit a fee to the union and they, like other employees in the collective bargaining unit who may or may not be union members, are "employees covered by [the CBA]." Rec. vol. II, exh. 29. Similarly, probationary employees are covered by the CBA because they are in the bargaining unit, so the CBA may have already provided for checkoff for probationary employees even before this became an implied term of the contract. For these reasons, the meaning of the term "membership dues" in the CBA is at least ambiguous.
On the basis of this erroneous reading, the majority concludes the permit fees are impermissible, i.e., they are not "membership dues" under section 302(c)(4). Even if this interpretation of the CBA were correct, however, the majority would have determined merely that these fees might violate section 8(a)(3), which prohibits unions and employers from requiring employee payments as a condition of employment unless they are "membership dues." In that event, the fees might be impermissively coercive for employees. This has little to do with whether particular payments going to unions — whether compulsory on the part of employees or not — constitute illegal transfers under section 302. Thus, the majority's analysis and conclusion are not only irrelevant, they are legally erroneous because they apply the principles from section 8(a)(3), a labor rights statute, to the interpretation of section 302, a criminal statute.
In fact, it may well be permissible under section 8(a)(3) for the CBA to require probationary employees to pay dues in their second and third months. Section 8(a)(3) only prohibits requiring dues payments for the first 30 days of employment. 29 U.S.C. § 158(a)(3). Additionally, while probationary employees do not receive all protections of the union contract, they are members of the collective bargaining unit and receive some of the benefits of such membership. Therefore, while they might claim they should pay lower dues — based on receiving fewer benefits than more senior workers — it would not appear to violate 8(a)(3) to require probationary employees to pay dues generally as long as they were not required to do so in the first 30 days.
While both section 8(a)(3) and section 302 are labor statutes and both contain the term "dues," the prescriptions, purpose, and previous interpretations of "dues" in each are not the same. Section 8 is aimed at protecting employees from union and employer coercion. Section 8(a)(3) prohibits compulsory unionism except for permitting CBAs to require employees to compensate unions for representation. "Membership dues" has been interpreted narrowly under 8(a)(3) precisely because employees can be discharged for failing to pay union "membership dues." Since 8(a)(3) grants unions this coercive power over workers' employment, the term has been interpreted narrowly to limit the scope of that power. See General Motors Corp., 373 U.S. at 740-43, 83 S.Ct. 1453 (Congress's dual purposes in enacting 8(a)(3) were to eliminate the most serious abuses of compulsory unionism by abolishing the "closed shop," while permitting union security agreements that ensured employees afforded representation were not "free riders"); Food Fair Stores, Inc., 307 F.2d at 15 (affirming Board's position narrowly construing section 8(a)(3) because while "the Act does not forbid the union from demanding money in addition to `periodic dues' . . . it [i]s prevented from requesting the discharge of an employee who refuse[s] to pay the additional charge.").
Moreover, the probationary employees here may enforce these rights against their union during the probationary period. All employees at an organized shop who are in the bargaining unit, not just those who actually join the union and/or non-members paying agency fees, are protected under section 8 and may file unfair labor practice charges or a duty of fair representation claim. See, e.g., Hodges v. Atchison, Topeka Santa Fe Ry. Co., 728 F.2d 414, 417 (10th Cir. 1984) (stating collective bargaining agent "was obliged to represent" probationary employee); D'Amato v. Wisconsin Gas Co., 760 F.2d 1474, 1489 n. 20 (7th Cir. 1985) (union has duty of fair representation to probationary employees). This is because once a union is certified as the collective bargaining representative of a "bargaining unit" of employees, federal law gives the union the exclusive right to represent those employees. 29 U.S.C. § 159(a). Based on this legal authorization, unions have a corresponding duty to fairly treat and act on behalf of all employees it represents (all those in the bargaining unit), not just those who join the union. See Ford Motor Co. v. Huffman, 345 U.S. 330, 337, 73 S.Ct. 681, 97 L.Ed. 1048 (1953) (construing 29 U.S.C. § 159(a) to include an implied duty of fair representation).
That these rights and duties apply specifically to probationary employees is well-settled. See, e.g., Hodges, 728 F.2d at 417 (rejecting probationary employee's argument that his state law wrongful discharge claim is not preempted by Railway Labor Act because he is not a union member; claim is preempted because probationary employee is "subject to the terms and conditions of employment obtained in the agreement, and the collective bargaining agent was obliged to represent him." (emphasis added)); see also D'Amato, 760 F.2d at 1489 n. 20 (rejecting as "specious" probationary employee's claim that he need not exhaust administrative procedures because he is probationary, noting that while such employees are at-will, "`the right to terminate probationary employees is not unlimited,'" and "probationary employees are members of the Union's collective bargaining unit to whom the Union owes a duty of fair representation.") (quoting Standard Oil Co. of California, 38 Lab. Arb. Awards 350, 352 (1962) (emphasis added)); W.W.J. Van Leeuwen v. United States Postal Serv., 628 F.2d 1093 (8th Cir. 1980) (adjudicating duty of fair representation claim by probationary employee against his union despite that probationary employee precluded from grievance and arbitration process); Conrad v. Delta Air Lines, Inc., 494 F.2d 914, 916 (7th Cir. 1974) (collective bargaining agreement limiting probationary employees' protections from discharge "not arbitrary nor irrational" so union could reject plaintiff's grievance without violating the duty of fair representation it owed probationary employee).
In contrast, the term "dues" in section 302 has been interpreted broadly for two reasons. First, section 302 is unrelated to any coercive power of the employer or union over employees. As I have pointed out, the statute prohibits payments between employers and unions that do not fall under one of its exceptions. The purpose of the statute is to prevent corruption between unions and employers, not to cabin any coercive power of the union over employees because, unlike section 8(a)(3), section 302 affords the union (and the employer) no such power. See Arroyo, 359 U.S. at 425-26, 79 S.Ct. 864 (purpose of section 302 to prevent "corruption of collective bargaining through bribery of employee representatives by employers, extortion by employee representatives, and possible abuse by union officers of the power which they might achieve if welfare funds were left to their sole control.").
Unlike compulsory dues permitted under 8(a)(3), which are involuntary, section 302(c)(4), allowing employers to convey membership dues to unions, relates to the voluntary procedure of checkoff. Because checkoff is permitted only pursuant to voluntary authorization cards, payments from employees may be forwarded only after the employees have agreed not only to have the fees deducted from their paychecks, but also to pay them in the first place. Thus, even if certain fees may not be required under 8(a)(3), they may still be voluntarily made and be a legitimate subject of checkoff under 302(c)(4). See, e.g., American Zinc, 311 F.2d at 659-60 (comparing permissible payments under sections 302(c)(4) and 8(a)(3)). Whether particular payments may be required as membership dues under 8(a)(3) is therefore an entirely separate issue from whether they are a permissible subject of checkoff under 302(c)(4). See, e.g., Food Fair Stores, Inc., 307 F.2d at 12 (construing 8(a)(3) differently from Section 302 "creates no inconsistency with the enforcement of Section 302 for it is completely extrinsic thereto."); Grajczyk, 210 F.Supp. at 705-06 (holding that checkoff for agency fees does not violate section 302 but noting "[w]hether or not the agreement by which [checkoff for agency fees] was brought about is an unfair labor practice or otherwise unlawful is quite a different question . . .").
The second reason "membership dues" in section 302 is interpreted broadly is because they constitute an exception to a criminal statute. Arroyo, 359 U.S. at 425, 79 S.Ct. 864 (construing section 302); Food Fair Stores, Inc., 307 F.2d at 12 ("The broad construction granted in the administration of section 302 by the Department of Justice is consistent with the criminal character of the sanctions it embodies."). The Third Circuit explained the application of the differences between sections 302 and 8(a)(3) as follows:
In acquiescing in the interpretation of the Department of Justice of Section 302 for the purpose of its administration of that statute in its penal aspects the Board did not bind itself to a similar construction in the administration of Sections 8(a)(3) and 8(b)(2). Two different policies are brought into play, the operative effects of which create no conflict. Section 8(a)(3) prevents a union shop employer from discharging an employee at the request of the union unless he has reason to believe that only failure to pay uniform `periodic dues' or `initiation fees' is the sole cause of his lack of union membership, while Section 302, under the interpretation of the Department of Justice, permits an employer with a valid union security contract to deduct assessments, providing the employee has voluntarily signed an authorization as prescribed in the section. The broad construction granted in the administration of Section 302 by the Department of Justice is consistent with the criminal character of the sanctions it embodies. The narrow construction applied by the Board to the enforcement of section 8(a)(3) and 8(b)(2) is consistent with the overall protection afforded by those sections to employees and equally creates no inconsistency with the enforcement of Section 302 for it is completely extrinsic thereto.
Food Fair Stores, Inc., 307 F.2d at 12 (emphasis added).
Because of the differences between the statutes, the majority's proposition that the permit fees here cannot be membership dues if they fail to meet, or appear to violate, the 8(a)(3) definition of compulsory membership dues misconstrues both the CBA and section 302. The prescriptions of 8(a)(3) for limiting compulsory unionism should not be applied to determine whether permit fees give rise to criminal conduct by Oklahoma Fixtures. Accordingly, the majority is in error in concluding that because probationary employees are not required to be members until their 91st day of employment, checkoff for the permit fees must violate section 302.
III.
After suggesting the CBA's definition of member should guide our inquiry, the majority turns to the meaning of "membership dues" under the statute. The majority's analysis turns on its conclusion that the term "membership dues" is plain and unambiguous. This conclusion is contrary to Supreme Court precedent, every other court that has considered the issue, and common sense. The term used in section 8(a)(3) is actually "periodic dues" paid for "acquiring or maintaining membership" rather than "membership dues" as used in section 302, which provides one obvious reason the meaning of "dues" in the two statutes are not interchangeable. See, e.g., Food Fair Stores. Inc., 307 F.2d at 9-16 (construing "periodic dues" under 8(a)(3) to exclude strike assessments). The Supreme Court has stated on more than one occasion that the "dues" in section 8(a)(3) incorporates more than its literal meaning suggests. See Marquez, 525 U.S. at 46, 119 S.Ct. 292 (1998) (the statutory language of section 8(a)(3) "incorporates all the refinements that have become associated with that language. . . . To the extent that these interpretations are not obvious, the relevant provisions of § 8(a)(3) have become terms of art. . . ."); General Motors Corp., 373 U.S. at 742, 83 S.Ct. 1453 ("[T]he 1947 amendments [to section 8] not only abolished the closed shop but also made significant alterations in the meaning of `membership' for the purposes of union-security contracts."). It seems highly unlikely that "dues" in section 8(a)(3) would encompass such non-obvious interpretations and refinements but "dues" in section 302 would not. Indeed, the Ninth Circuit has expressly held that the term "membership dues" in section 302(c)(4) is ambiguous. American Zinc, 311 F.2d at 660.
Section 8(a)(3) permits unions to demand "periodic dues and the initiation fees uniformly required" of members as a condition of their employment. 29 U.S.C. § 158(a)(3). Section 302(c)(4) permits payments from companies and unions that are wage deductions "in payment of membership dues." 29 U.S.C. § 186(c)(4).
In citing American Zinc, Lead Smelting Co., 311 F.2d 656, for its holding that the term "membership dues" in the CBA checkoff provision there was ambiguous, see op. at 1149-50, the majority fails to mention that the checkoff term was held ambiguous based on the court's holding that the statutory term was ambiguous, American Zinc, 311 F.2d at 660 ("In light of what has been pointed out earlier regarding the interpretation of the words `membership dues' in section 302, it is apparent that the meaning of the words `Union membership dues' used [in the CBA] is not so clear as to be self-evident . . ."), a position the majority specifically rejects later in the opinion, see id. at 1150-51.
The fact that periodic or membership dues have been construed narrowly in 8(a)(3), but broadly as an exception to section 302, or even that the term is construed differently in the two statutes at all, also strongly suggests its meaning is not plain. See Food Fair Stores, Inc., 307 F.2d at 11-13 (membership dues under 8(a)(3) does not include "assessments" even if section 302 does); cf. Schwartz v. Assoc. Musicians, Local 802, 340 F.2d 228 (2d Cir. 1964) (tax assessed in addition to dues constitutes "membership dues" under section 302); American Zinc, 311 F.2d at 659 (section 302(c)(4) permits strike assessments); Grajczyk, 210 F.Supp. at 705-06 ("membership dues" under section 302 covers agency fees even if such fees might constitute an unfair labor practice). And of course, the fact that courts have concluded certain payments are covered under section 302 but not under section 8(a)(3) further suggests the meaning of membership dues is not straightforward. Compare Food Fair Stores, Inc., 307 F.2d at 10-16 (membership dues under 8(a)(3) does not include strike assessments), with American Zinc, 311 F.2d at 659 (membership dues under section 302(c)(4) does include strike assessments).
Moreover, if the meaning of "membership dues" is plain, then it seems we must accept its literal meaning. The literal meaning, however, would exclude agency fees, which the Supreme Court has held are covered under section 8(a)(3), General Motors Corp., 373 U.S. 734, 83 S.Ct. 1453, 10 L.Ed.2d 670, and which undoubtedly fall within the section 302(c)(4) exception as well, see Grajczyk, 210 F.Supp. at 705-06. Nor is the company's argument that agency fees are in fact membership dues, rather than included in "dues" as a matter of statutory construction, convincing in the least. Employees who opt not to join the union and to pay agency fees in lieu of membership dues are not members of the union, they are non-members paying agency fees so they will not have to become union members to maintain employment. The Supreme Court made this clear in General Motors, where its holding that agency fees are "membership dues" under 8(a)(3) was based on two conclusions: the statute "made significant alterations in the meaning of `membership' for the purposes of union-security contracts," 373 U.S. at 742, 83 S.Ct. 1453; and this meaning incorporated the clear intent of Congress to permit union security agreements under that statute, id.
Similarly, a literal interpretation of "dues" (as opposed to "membership") would also exclude payments such as strike assessments, since the traditional understanding of "dues" covers only monthly (or other periodic) payments made by members, not additional assessments or fees imposed by the union. See, e.g., Food Fair Stores, Inc., 307 F.2d at 11-16. The majority nevertheless suggests it would include such assessments in the meaning of membership dues, see op. at 7, when it distinguishes this case from cases upholding other non-periodic assessments because they involve payments by "current members." See American Zinc, 311 F.2d at 659-60 (upholding strike assessment); Schwartz, 340 F.2d at 233-34 (upholding tax imposed over and above dues). Similarly, while section 8(a)(3) expressly permits initiation fees, section 302 does not; the rationale of a literal interpretation of section 302 would also exclude initiation fees. Thus, the majority's assertion that the statute is unambiguous is simply inconsistent with the rest of the opinion and the cases it cites.
Not only does the majority incorrectly view the term "membership dues" as unambiguous, its determination of the substance of that plain meaning — and its subsequent conclusion that the Board's interpretation is unreasonable — is flawed as well. The Board's interpretation is supported by a much more convincing rationale and easily meets the "reasonableness" standard we are to apply to Board interpretations of labor legislation. See Holly Farms Corp., 517 U.S. at 409, 116 S.Ct. 1396.
The majority reasons that permit fees are not comparable to other types of employee payments regarded as the equivalent of membership dues because all other types of payments are made by "current members," and probationary employees are not union members. As discussed supra, this reasoning would make agency fees illegal under section 302 because non-members paying fees in lieu of membership dues are not "current members," yet such agency fees are considered "membership dues" under the more narrowly interpreted section 8(a)(3). See General Motors Corp., 373 U.S. at 734, 83 S.Ct. 1453.
In contrast, the rationale of cases upholding broader interpretations of section 302 is logical and convincing. In Schwartz, for example, the Second Circuit held that a tax imposed over and above dues falls within section 302. See 340 F.2d at 233-34. In doing so, it reasoned that a narrow construction of section 302(c)(4) is not consistent with the limited purpose of the statute, the taxes are similar to dues, it is irrelevant that the taxes were not required as a condition of employment (i.e. whether they were "dues" under 8(a)(3)), and there is no other logical or practical reason the taxes should not be permitted under section 302. Id. Similarly, in American Zinc, 311 F.2d 656, the Ninth Circuit held strike assessments are a permissible subject of checkoff under section 302. It noted the consistent position of the Department of Justice and the Board on the meaning of "dues," which excludes "assessments" from the 8(a)(3) term "dues" but not from section 302, and further noted that interpreting dues in section 302 more broadly than in 8(a)(3) is consistent with the different provisions and purposes of those two statutes. Id. at 659-60.
The court determined the purpose of section 302 was to 1) protect welfare funds for the benefit of employees; 2) prevent bribery of unions by employers and extortion or retribution of employers by unions; and 3) prevent abuses of power that might attend benefits funds left solely to union control. Schwartz v. Assoc. Musicians, Local 802, 340 F.2d 228, 233-34 (2d Cir. 1964).
Relatedly, in Food Fair Stores, the Third Circuit upheld the Board's consistent position that strike assessments are "dues" under section 8(a)(3) but not under section 302 because the position is "not contrary to any clearly expressed legislative intent and [is] totally reasonable." Food Fair Stores, Inc., 307 F.2d at 16. Finally, in holding agency fees are legal under section 302(c)(4) even though they do not fall within the literal interpretation of "membership dues," the court in Grajczyk reasoned that the prohibitions of the statute are directed at the relationship between the employer and the union, permitting agency fees is "thoroughly consistent" with the purpose of the statute, and there is no practical difference between agency fees and members' dues. Grajczyk, 210 F.Supp. at 705-06.
The reasoning of these cases supports my conclusion that these permit fees fall under section 302(c)(4). There is no suggestion these payments are related to union-employer corruption, they resemble dues paid by actual members, and it is consistent with the Board's long-standing position to so hold. See Holly Farms Corp., 517 U.S. at 405-09, 116 S.Ct. 1396 (noting that Board's interpretation adhered to "longstanding NLRB precedent" in upholding the interpretation as reasonable).
In discerning whether the permit fees are dues under section 302, the majority also holds it is irrelevant whether the permit fees have a "union security" purpose. In fact, this is highly relevant to the interpretation of this labor statute and provides further support for the Board's interpretation. Case law instructs us that not only is the purpose of a particular payment relevant to determining whether it constitutes "dues," but a "union security" purpose is a particularly relevant indication that a payment constitutes "dues." The Supreme Court has noted with approval the Board's consideration of the purpose of payments made by members in determining whether those payments constitute "periodic dues" in section 8(a)(3). Communications Workers of America v. Beck, 487 U.S. 735, 752 n. 7, 108 S.Ct. 2641, 101 L.Ed.2d 634 (1988) ("[O]nce the Board determined that the dues were not used for collective-bargaining purposes, the conclusion that they were not dues within the meaning of § 8(a)(3) followed automatically."); see also Master Insulators v. Int'l Ass'n of Heat Frost Insulators, 925 F.2d 1118, 1122-23 (8th Cir. 1991) (payments collected as dues but deposited in welfare funds must meet section 302 requirements for welfare funds because "it is the purpose of the payment and not the manner in which it is collected that determines its character") (citing Beck, 487 U.S. at 752 n. 7, 108 S.Ct. 2641); Assoc. Builders Contractors, 700 F.2d at 1275 (concluding "supplemental dues" are "membership dues" under section 302(c)(4) after finding dues were directed toward a permissible purpose under 8(a)(3)).
The majority concludes union security is irrelevant in part because, the opinion asserts, this CBA has no provision for an agency shop or agency fees. See op. at 10. This misapprehends the concept of union security because under this CBA, an agency fee provision would serve absolutely no function with regard to non-probationary employees. All non-probationary employees are required to join the union and therefore pay dues — making agency fees in lieu of dues unnecessary. In other words, the requirement that all non-probationary employees pay dues establishes "union security." See, e.g., NLRB v. General Motors Corp., 373 U.S. 734, 741-44, 83 S.Ct. 1453, 10 L.Ed.2d 670 (1963) (explaining both union shops and agency shops are forms of "union security" because all employees pay membership fees or their equivalent); see also Rec. at 199 (CBA Art. 2 "UNION SECURITY"). Probationary employees who agree to checkoff are voluntary subjects of this shop's "union security." This misunderstanding is one more reason the majority is mistaken in concluding union security is not relevant to our analysis.
Beck indicates the importance the Court has placed specifically on a "union security" purpose for determining whether payments qualify as "dues," perhaps simply reflecting that "union security" is the core, legitimate purpose of dues themselves. In Beck, the issue was whether unions could spend required agency fees on any activities other than representation activities for the direct benefit of employees in the bargaining unit. In determining whether unions could require agency fees that exceeded what was necessary to fund direct representation activities, the Court made it clear that "dues" has always included at least payments by employees who might otherwise be free riders — payments to compensate the union for its representation. Beck, 487 U.S. at 747-54, 108 S.Ct. 2641 (discussing history and purpose of section 8(a)(3)). In other words, while Beck decided that unions could not require employees they represent to pay for activities such as political organizing, it affirmed that dues unquestionably includes fees whose purpose is union security. Id. General Motors reflects a similar rationale because there the Court interpreted "dues" in section 8(a)(3) to include agency fees based primarily on construing "dues" to reflect Congress's intent to preserve union security agreements, in spite of finding the term did not literally encompass agency fees. General Motors Corp., 373 U.S. at 740-44, 83 S.Ct. 1453.
The Supreme Court has articulated the legislative goal of preserving union security primarily in construing 8(a)(3), but as Congressional labor policy there is every reason this principle should equally inform the construction of section 302. As the Supreme Court noted in Arroyo, section 302 "was enacted as part of a comprehensive revision of federal labor policy in the light of experience acquired during the years following the passage of the Wagner Act. . . ." 359 U.S. at 425, 79 S.Ct. 864; see also Assoc. Builders Contractors, 700 F.2d at 1275 (concluding "supplemental dues" were legal "membership dues" under section 302(c)(4) after determining they were spent for a proper purpose under section 8(a)(3)). Indeed, the legislative history of section 302 indicates Congress intended that its policy of preserving union security would also apply to that statute. See Grajczyk, 210 F.Supp. at 705 (history of a defeated amendment to section 302 indicates Congress wanted to permit, not prohibit, service fees under section 302).
Here, probationary employees are a legitimate subject of union security because they are members of the bargaining unit and are covered by the CBA. As noted above, see supra note 5, unions are legally obligated to represent all employees in the bargaining unit, not just those employees who are union members. Union security agreements allow unions to obtain "service fees," or dues-like compensation, from employees they are obligated to represent but who opt not to join the union. The probationary employees are a legitimate subject of union security because they are members of the bargaining unit, are covered by the CBA, and are owed a duty of fair representation like other members of the bargaining unit. See, e.g., Hodges v. Atchison, Topeka Santa Fe Ry. Co., 728 F.2d 414, 417 (10th Cir. 1984). Thus, the permit fees compensate the union for its representation of the probationary employees. This, in effect, defines membership dues to cover all members of the bargaining unit, rather than just members of the union. This is a rational way to interpret membership dues under section 302 because it is consistent with the inclusion of agency fees and, more generally, encompasses exactly those members of the unit to whom a union owes a duty of fair representation and from whom a union may legitimately collect service fees.
Under the CBA, while the probationary employees do not obtain all of the benefits of the CBA, notably seniority rights and access to the grievance process, many of their work conditions are nevertheless products of the collective bargaining process, such as their rate of pay and on-the-job health and safety. Whether the permit fee is the appropriate amount in light of the partial benefits probationary employees receive is a question of fair representation (that is not before us), but the fact that they receive some benefits under the CBA means they do receive representation from the union.
In conclusion, the majority goes against a substantial and well-reasoned legal and administrative tide in holding that the term "membership dues" in section 302 is unambiguous and that the Board's interpretation is unreasonable. I find these conclusions, and the reasoning supporting them, flawed and unpersuasive. For these reasons, I respectfully dissent.