BEFORE THE ARBITRATOR
In the Matter of the Arbitration of
The Financial Core Dues Challenges Involving
MINDY BLAKELY, JOSEPH BRENNAN, KELLY
THERESA COOK, JODI GALINSKY, JEFFREY
GEHRKE, MICHAEL R. GLASS,
RICHARD HECK, STEPHEN HENNING, RENEE
RICHARD LOUNSBURY, DAMON LUDWIG, M. KAY
WILLIAM MATZ, ROBERT MAYFIELD, GILBERT
JOSHUA SCHLIEGER, MICHAEL A. SMITH, PAMULA
TEAMSTERS LOCAL UNION NO. 579
Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C., Attorneys at Law,
by Ms. Andrea F. Hoeschen, on behalf of Teamsters Local Union No.
Mindy Blakely, Jodi Galinsky, Michael R. Glass, Robert Mayfield, Joshua
Schlieger, Michael A. Smith and Pamula J. Wahl, Objectors, on their own
Teamsters Local Union No. 579, hereinafter "Union", has established a written
which provides that it will request the Wisconsin Employment Relations Commission appoint
Commission staff member to act as a neutral arbitrator to decide disputes as to the Union's
determination of the financial core fee amount. Pursuant to that procedure, on August 1,
Union requested that the Commission appoint a member of its staff as arbitrator to resolve
challenges of the above-named Objectors to the Union's determination of the financial core
amount. The Commission designated David E. Shaw, a member of its staff, as arbitrator to
the disputes. By letters of August 15, October 9 and November 14, 2001, the undersigned
a copy of the Union's written procedures.
By letter of November 26, 2001, the Union provided the undersigned with said
Thereafter, the undersigned attempted to schedule a hearing in the matter, giving "due
to the availability of the challengers and of the Union. Hearing was held before the
March 19, 2002, in Janesville, Wisconsin, and a stenographic transcript was made of the
Only those Objectors noted above appeared at the hearing. The parties agreed to a briefing
which was completed by May 17, 2002.
To maximize the ability of the parties we serve to utilize the Internet and
software to research decisions and arbitration awards issued by the Commission and its staff,
footnote text is found in the body of this decision.
The Union is the recognized exclusive collective bargaining representative for
"all regular full-time and regular part-time production employees,
warehouse employees, shipping
and receiving employees and maintenance employees, employed by Janesville Products at its
located at 2315 Beloit Avenue, Janesville, Wisconsin. Excluding managerial employees,
clerical employees, professional employees, and supervisors as defined in the Act."
Those employees are covered by a union security agreement which requires that they
be members in
good standing of the Union. Under federal law, employees covered by such agreements
required to be actual "members" of the union, but may only be required to pay union dues
In Communications Workers of America v. Beck, 487 U.S. 735 (1988), the U.S. Supreme
Court held that Sec. 8(a)(3) of the Labor Management Relations Act does not permit a union
expend funds of dues-paying non-member employees collected pursuant to a union security
over the objections of those non-member employees, on "activities unrelated to collective
contract administration or grievance adjustment", and that to do so would violate the union's
of fair representation. Under the Court's ruling in Beck, unions are required to provide
non-members with notice of their rights under Beck, provide financial disclosure of the
expenditures, and establish a procedure for such non-members to object to paying for
germane to the union's representational duties and to obtain a reduction in their fees for such
activities, and to challenge the accuracy of the union's calculations.
By letter of January 26, 2001, the Union provided the financial core dues-paying
employees in the bargaining unit it represents at Janesville Products (hereafter "Objectors"),
notice of their right to object (on an individual basis) and request a reduction and to obtain
explanation of the reduced fee amount, along with an independent accountant's report of the
expenditures. The Union calculated the reduced fee amount to be 96.99% of the financial
amount. By letters of February 9, 2001, the Objectors
filed their objections. They received the additional financial information, as well as the
procedures for challenging its calculation of the reduced fee amount, by letter of March 30,
By letters of April 6, 2001, the individual Objectors notified the Union that they did not
the Union's calculations of the reduced fee amount.
On August 1, 2001, the Union filed a request with the Commission to appoint a staff
arbitrator to decide the challenges. Thereafter, the undersigned was appointed to arbitrate
challenges. Hearing was held before the undersigned on March 19, 2002, in Janesville,
Objectors Blakely, Galinsky, Glass, Mayfield, Schlieger, Smith and Wahl attended the
had the opportunity to question Union witnesses and to present evidence on their own behalf.
The Union's procedures for objecting and for challenging the financial core fee
contains, in part, the following provisions:
. . .
(d) Procedure for Resolving Challenges to the
Financial Core Fee
Local 579 reserves the right to
consolidate contemporaneously-made challenges into a
single consolidated case.
Promptly after receipt of the
challenge(s), Local 579 will schedule a meeting of the
challenger(s) with its Executive Board to hear the reasons for your objection(s) and to
to resolve the matter informally. If an agreement is reached at this meeting, the
will be charged the agreed-upon amount, and the escrow will be deposited into the Local
Union's general fund or returned to the objector(s) accordingly.
If no resolution is reached at the
Executive Board step, then within 10 days after the
meeting with the Executive Board, Local 579 will submit a request that the Wisconsin
Employment Relations Commission (WERC) appoint a neutral arbitrator to decide the
challenge(s) and will give the name(s) of the challenger(s) to the WERC. The WERC will
inform the challenger(s) and Local 579 of the identity of the arbitrator from among the
The arbitrator will establish the
date, time and place of the hearing, giving due
consideration to your availability and the availability of the Union. You may attend and
present your objection. Local 579 will attend to defend the correctness of its calculation
against your objection.
(e) Costs of the Arbitration
The Union shall pay the
arbitrator's fee and other expenses, the rental, if any, of the
location chosen, and shall pay for its own and the arbitrator's copy of the transcript, if
The Union will bear its own
expenses. You will be responsible for paying your own
expenses, your own copy of the transcript, if any, and any other costs you incur in
(f) Representation of
Challenging Parties by Counsel
You may be represented by
counsel or other representative of your own choosing in the
arbitration process at your own cost.
The arbitration hearing shall
occur within 30 days of the date of your challenge or as soon
as reasonably practicable thereafter. The exact date, time and place of the hearing shall be
determined by the arbitrator.
Ten days prior to the start of the
hearing, the Union will make available to you copies of
the books and records upon which the Union relies to justify the amount of the financial core
fee at your request. You may inspect these books and records at the Local 579 office in
You and the Union shall be given
the opportunity to file post-hearing briefs. Such briefs
must be filed within 30 days after the hearing is complete.
The arbitrator shall issue a
written decision and award within 30 days after receipt of the
post-hearing briefs. 1/ The arbitrator's award shall be binding on you, the Union and all
challengers party to the consolidated case. Any and all financial core fee payments held in
escrow shall be distributed to the Union or returned to you (or the other challengers in a
consolidated case) in conformity with the arbitration award. If the award sustains your
challenge, your financial core fee (and the financial core fee of each challenger participating
in a consolidated case) will be reduced for the balance of the year in conformity with the
1/ The Union waived the
thirty (30) day requirement for the issuance of an award.
The Union asserts that the evidence presented at hearing demonstrates that the
dues amount it calculated is both reasonable and lawful. In that regard, the Union notes that
presented testimony from a supervising auditor from the accounting firm that has audited the
for the past several years who explained the categories of expenses that constitute the
rate and the process by which the firm verified the Union's expenses. The Objectors did not
any witnesses and did not identify any particular aspects of the dues that do not comply with
In reply to the brief of the Objectors, the Union asserts that they did not identify any
or improprieties in the audits; rather, the Objectors identified three areas of complaint with
financial core dues amount.
First, the Objectors argue that the amount should only reflect expenses incurred in
representing their bargaining unit. There is no requirement that unions provide Objectors
with a unit-by-unit breakdown of expenses. To be considered "germane to collective
do not have to result in a direct and tangible benefit to the dissenters' bargaining unit,
to create a "pool of resources" potentially available to the local union are properly
if none of the money is actually spent in that particular unit in a given year. Lehnert v.
Faculty Association, 500 U.S. 507 (1991); California Saw and Knife Works, 320 NLRB 224
Second, the Objectors allege that the Union used funds for individual officers'
campaigns, but do not support the allegation with any evidence. They only allege in their
"On at least two occasions, flyers were posted on the Union bulletin board at work
candidate for a particular position at the local union hall." They do not allege the candidates
current Union employees and provide no evidence that Union funds were used to pay for the
Last, the Objectors apparently object to having to pay toward fringe benefits for the
employees. The law is settled that all costs of representational activities, including the wages
benefits of the union's employees, are properly chargeable to the extent they are engaged in
representational activities. Johnson Controls World Services, 329 NLRB 543 (1999).
The Union requests that its financial core dues amount be declared to be reasonable
The arguments in the Objectors' brief are set forth in their entirety as follows:
We, the Financial Core Members of Janesville-Sackner Group,
present our reasons for requesting
a further reduction of the fees assessed us by Teamsters Local 579.
Administrative costs: These costs have no direct cause and effect on us. All
we receive is the right to fair representation. All other duties by this organization are
used only by "full" paying members. Any administrative costs charged to us should
involve the Janesville-Sackner Group contract ONLY, and not the costs of
administering to every other group represented by Teamsters Local 579.
2. Warehousing costs:
The International does not have any direct input into our
contract or any grievances which may be brought forth. These are all handled by the
"Local". So, there is no "Warehouse" principal when dealing with any issues
concerning the contract between Janesville-Sackner Group and Teamsters Local 579.
3. Supplies and
Printing: Teamsters Local 579 did campaign locally. On at least two
occasions, flyers were posted on the Union bulletin board at work promoting a
candidate for a particular position at the local union hall.
4. Employee benefits:
"We" are not entitled to any "benefits" except fair representation.
Therefore, we do not feel obligated to fund any benefits.
With all due respect, we are asking that our
fees be further reduced to reflect more accurately
our status as financial core members. We charge that even with the audit, as presented to
us, that the
"nonchargeable" figures were not fully disclosed to us. This does not involve money only
to local politics but to undisclosed national political activities. Local treasury money can not
direct political activities but it can do a lot such as mailings, support or oppose candidates,
visits, voter registration, and get out the vote drives.
According to the January 26, 2001 notice it sent to the Objectors, the Union
reduced financial core fee amount for the period beginning March 1, 2001 through February
on its expenditures for the calendar year 1999. At hearing, the Union submitted "Schedules
Expenses and Allocation of Expenses Between Chargeable Expenses and Non-Chargeable
Modified Cash Basis and Report of Independent Auditors" for
the years ended December 31, 2000, December 31, 1999, and December 31,
1998. The audits were
performed by Thomas Havey LLP, a certified public accountant and consulting firm that
performs audits, including audits for a number of labor organizations. In addition, the Union
presented as witnesses a senior member of that accounting firm who supervised the audit and
Secretary-Treasurer of Local 579.
The Objectors challenge the Union's calculations of the reduced financial core dues
in four areas, which they describe as:
1) General Administrative costs
2) Warehousing costs
3) Supplies and Printing
4) Employee Benefits
General Administrative Costs and "Warehousing"
The Objectors assert that they should only be charged for "administrative costs"
administering the collective bargaining agreement covering their bargaining unit. Objectors
that they should not be charged for costs related to activities that only benefit "full" members
Union. They do not, however, identify what activities they are referencing in that regard.
Presumably, Objectors are disputing having to pay their pro rata share of the cost of holding
membership meetings, ratification meetings etc., that is, activities in which only full
members of the
Union may participate. They also dispute the legality of the per capita charges for affiliation
Joint Council and the International.
These issues were addressed by the U.S. Supreme Court in Lehnert v. Ferris Faculty
Association, supra. In that case, the objecting non-members asserted that the
local union should
not be permitted to utilize their fees for activities that "though closely related to collective
generally, are not undertaken directly on behalf of the bargaining unit to which the objecting
employees belong." Relying on its earlier decisions, the Court held:
Petitioners' contention that they may be charged only for
collective bargaining activities
undertaken directly on behalf of their unit presents a closer question. While we consistently
looked to whether non-ideological
expenses are "germane to collective
bargaining." Hanson, 351 U.S., at 235, we have never
interpreted that test to require a direct relationship between the expense at issue and some
benefit to the dissenters' bargaining unit.
We think that to require so close a
connection would be to ignore the unified-membership
structure under which many unions, including those here, operate. Under such
membership in the local union constitutes membership in the state and national organizations.
643 F.Supp., at 1308. See also Cumero v. Public Employment Relations Board, 49 Cal. 3d
575, 603-604, 778 P.2d 174, 192 [132 LRRM 2575] (1989) (noting the inherent "close
The essence of the affiliation relationship
is the notion that the parent will bring to bear its
often considerable economic, political, and informational resources when the local is in need
Consequently, that part of a local's affiliation fee which contributes to the pool of resources
potentially available to the local is assessed for the bargaining unit's protection, even if it is
actually expended on that unit in any particular membership year.
The Court recognized as much in Ellis.
There it construed the RLA to allow the use of
dissenters' funds to help defray the costs of the respondent union's national conventions. It
that "if a union is to perform its statutory functions, it must maintain its corporate or
existence, must elect officers to manage and carry on its affairs, and may consult its
overall bargaining goals and policy." 466 U.S. at 448.
. . .
We therefore conclude that a local bargaining representative may
charge objecting employees for
their pro rata share of the costs associated with otherwise chargeable activities of its state and
national affiliates, even if those activities were not performed for the direct benefit of the
employees' bargaining unit. This conclusion, however, does not serve to grant a local union
blanche to expend dissenters' dollars for bargaining activities wholly unrelated to the
their unit. The union surely may not, for example, charge objecting employees for a direct
or interest-free loan to an unrelated bargaining unit for the purpose of promoting employee
unionism generally. Further, a contribution by a local union to its parent that is not part of
responsibilities as an affiliate but is in the nature of a charitable donation would not be
dissenters. There must be some indication that the payment is for services that may
benefit of the members of the local union by
virtue of their membership in the parent
organization. And, as always, the union bears the burden of proving the proportion of
expenses to total expenses. Chicago Teachers v. Hudson, 475 U.S., at 306; Abood, 431
at 239-240, n. 40; Railway Clerks v. Allen, 373 U.S., at 122. We conclude merely
that the union
need not demonstrate a direct and tangible impact upon the dissenting employee's unit.
The financial information presented by the Union indicates that both the Joint Council
International break-out the amounts that are non-chargeable from the per capita taxes they
from the Union. The senior auditor who testified, explained that they relied on reports
to verify those figures from the International and Joint Council. While this does not provide
detail so as to be able to judge the accuracy of those bodies' computations, the Objectors
established, or even offered (other than asserting that the International has no direct
negotiating or administering the labor agreement covering their bargaining unit) a basis for
that they are inaccurate. Rather, they dispute the propriety of their having to pay anything to
organizations. As noted above, the Court has rejected that contention.
As to Objectors' assertion that they should not be charged for the Union's
costs" because they are not directly related to the representation of their bargaining unit, it is
as to what costs the Objectors are referring. If they are referring to such expenses as office
meeting and travel, automobile expense, salaries and expense allowances, postage, telephone
utilities, the Arbitrator is not aware of a requirement that unions allocate such expenses by
unit, rather than per employee represented. Those costs would not be chargeable only to the
they were incurred for non-chargeable activities. As Objectors have presented no evidence to
that the Union engaged in non-chargeable activities beyond that conceded by the Union, there
basis upon which to question the Union's calculations in that regard.
Supplies and Printing
The Objectors assert that these categories cannot be considered totally chargeable to
because the Union did campaign in a local union election. In that regard, Objectors assert
that on at
least two occasions, flyers were posted on the Union bulletin board in their workplace
candidate for a local union office. However, the Objectors have provided no evidence to
their assertions. Conversely, the Union's principal officer, Darrell Shelby, testified that the
not engaged in any political activities in the prior year, including not doing any mailings and
running any phone banks. Shelby also testified that while he did run for election to the
Secretary-Treasurer position, he did not do any campaigning for the position. Thus, what
evidence is in the
record is contrary to the Objectors' assertions.
The compensation paid to the Union's employees, both in the form of salary and
benefits, is chargeable to objecting non-members, except to the extent that those employees
in non-chargeable activities on work time. Again, Shelby testified that Local 579 did not
any political or lobbying activities, but instead left that to the International and Joint Council.
senior auditor testified that in performing the audit, they review the minutes of the
question personnel as to the labor organization's involvement in political activities in the past
and, if necessary, review the time sheets of the personnel, in assessing the reliability of the
organization's calculations as to the amounts that are chargeable or are non-chargeable. He
testified that, in his experience, which is extensive, many Teamsters locals engage in very
political or lobbying activities, but instead leave those to the International. This is consistent
Shelby's testimony. Thus, there is no basis in record upon which to find that the total
salary and fringe benefits paid to the Union's four employees was not fully chargeable to the
In conclusion, faced with the independent auditor's report verifying the accuracy of
Union's allocation of its expenses into chargeable and non-chargeable categories, which is the
for the Union's calculation of the reduced financial core dues amount, and the lack of any
evidence that would provide a basis for questioning the accuracy of the Union's calculation,
Arbitrator must conclude that the reduced financial core dues rate, as calculated by the
Based upon the foregoing, the evidence and the arguments of the parties, the
makes and issues the following
The financial core dues amount properly charged to the Objectors in this proceeding
amount as has been calculated by Teamsters Local Union No. 579. Therefore, the
challenges to the
Union's calculation of the financial core dues amount are dismissed.
Dated at Madison, Wisconsin, this 11th day of July, 2002.