Chevron Chemical Co.

National Labor Relations Board - Board Decisions

Aug 24, 1998

326 N.L.R.B. 301 (N.L.R.B. 1998)

TEAMSTERS LOCAL 618 (CHEVRON CHEMICAL CO.) 301

Automotive, Petroleum and Allied Industries Em-
ployees Local 618, affiliated with International
Brotherhood of Teamsters, AFL–CIO (Chevron
Chemical Company) and Delbert Reed. Case
14–CB–7390
August 24, 1998
DECISION AND ORDER
BY CHAIRMAN GOULD AND MEMBERS FOX
AND HURTGEN
On May 21, 1992, Administrative Law Judge Michael
O. Miller issued the attached decision. The General
Counsel filed exceptions and a supporting brief.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the decision and the record
in light of the exceptions and brief and has decided to
affirm the judge’s rulings, findings, and conclusions only
to the extent consistent with this Decision and Order.1
1. The complaint alleges that the Respondent violated
Section 8(b)(1)(A) by charging Charging Party Delbert
Reed, a nonmember of the Respondent, for the cost of
representing employees in bargaining units other than the
Employer Chevron Chemical Company (Chevron) bar-
gaining unit to which Reed belonged. The allegation is
that these costs are unrelated to unit collective bargain-
ing, contract administration, or grievance adjustment.
See Communications Workers v. Beck, 487 U.S. 735
(1988).
The judge recommended dismissal of this allegation.
He found that under Beck, as a general principle, a union
need not account for its representational expenses on a
unit-by-unit basis. For reasons set forth in California
Saw & Knife Works, 320 NLRB 224, 237, 293–294
(1995), enfd. 133 F.3d 1012, 1016 (7th Cir. 1998), we
agree with the judge that the Respondent was privileged
to calculate its Beck fee allocation on other than a unit-
by-unit basis. We therefore adopt his recommended
dismissal of this complaint allegation.2

1 On April 18, 1994, the General Counsel moved to withdraw his ex-
ceptions 1 and 2, excepting to the administrative law judge’s failure to
find that the Respondent violated Sec. 8(b)(1)(A) of the Act by describ-
ing as chargeable in its Beck notice expenditures for the organization of
employees of competing employers in the industry and by including
organizing as a chargeable category in its accounting. The General
Counsel has contended that any such expenditures would have been
nonchargeable to objectors. We grant the General Counsel’s motion to
withdraw these exceptions.
2 The judge found that, as an exception to the general principle, the
Respondent did breach its duty of fair representation by including the
cost of nonunit litigation and arbitration expenditures in the fees it
charged objectors. No exception was filed to this finding, which we
adopt pro forma. We note, however, that in California Saw, 320 NLRB
at 237–239, enfd. 133 F.3d at 1016 (7th Cir. 1998), the Board held that
some extra unit litigation expenses are properly chargeable to Beck
objectors. Member Hurtgen does not pass on the issue of whether a
union may charge objectors for extra unit litigation expenses.
2. The complaint also alleges that the Respondent vio-
lated Section 8(b)(1)(A) by failing adequately to disclose
the basis for its allocation of chargeable and noncharge-
able items in the accounting it provided Reed, including
its failure to respond to Reed’s request for further infor-
mation after he received the accounting, and failing to
reflect that its accounting had been verified by an inde-
pendent accounting firm.
In California Saw, supra, the Board held that, when
nonmembers object to a union’s use of agency fees paid
under a union-security agreement, the union must reduce
the fee to reflect representational expenditures only. The
union also must apprise the objector of the percentage of
fees being reduced, explain the basis for the calculation
and the objector’s right to challenge it, and provide the
objector sufficient information to decide intelligently
whether to challenge the union’s calculations. Specifi-
cally, California Saw requires unions to furnish to the
objector a breakdown of its calculations by major catego-
ries of expenditures, designating which categories it
claims are chargeable or nonchargeable to objectors. Id.
at 239.
The judge found that the Respondent satisfied its dis-
closure obligations under Beck. In response to Reed’s
letter of resignation, in which he made a Beck objection,
and the subsequent request for a breakdown of how
moneys he had remitted had been spent, the Respondent
sent him, inter alia, a financial accounting which desig-
nated the expenditures that the Respondent had incurred
during the previous calendar year and the percentages of
each expenditure that it claimed were chargeable and
nonchargeable. California Saw requires that the union
inform the objector of “the major categories of expendi-
tures” so as “to enable objectors to determine whether to
challenge” a union’s claim that designated expenditures
are chargeable. Id. A union need not, at the prechallenge
stage, establish full justification for its fee calculation.
That burden is created only if and after the employee
files a challenge to that figure. Teamsters Local 443
Connecticut Limousine Service, 324 NLRB 633, 634
(1997). The accounting that the Respondent furnished
Reed comports with the standard of California Saw &
Knife. We, therefore, adopt the judge’s finding that the
Respondent’s information was adequate and his recom-
mended dismissal of this allegation.3
3 In view of our finding that the Union’s disclosure of information is
adequate under California Saw, we also adopt the judge’s related find-
ing that the Respondent did not restrain or coerce Reed by failing to
reply to a second written request for information, which Reed lodged
after he received his accounting. The judge found that this followup
letter requested “minutely detailed information,” ranging from a break-
down of auto expenses to “charges for stewards meetings,” so as to
establish “who pays for beer consumed at [those] meetings.” We find
that the accounting Reed received, designating and classifying as
chargeable or nonchargeable all expenditures incurred during the rele-
vant period was sufficient to meet the Respondent’s obligation under
California Saw to disclose “major categories” of expenditures. 320
326 NLRB No. 34
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 302
We also adopt the judge’s finding that the Respondent
did not violate Section 8(b)(1)(A) by failing to have the
information, which it provided to Reed, reflect the fact
that it had been verified by an independent auditor. Id.
The complaint allegation regarding verification is a nar-
row one. There is no issue as to the adequacy of the Re-
spondent’s accounting procedures. Indeed, verification
was performed by an independent auditor.4 The General
Counsel argues that this fact was not shown on the face
of the accounting document itself. However, contempo-
raneously with the accounting he was furnished, Reed
did receive a notice from the Union addressing the rights
and obligations of financial core members. In that letter,
Reed was informed that the Beck accounting (which the
Respondent had sent him) was “an independent account-
ant’s report.” We find, therefore, that the record as a
whole does not support the General Counsel’s contention
that the Union failed to inform Reed that its accounting
had been verified by an independent accountant. Ac-
cordingly, we adopt the judge’s recommended dismissal
of this allegation.
3. The complaint also alleges that the Respondent vio-
lated Section 8(b)(1)(A) by offsetting interest and divi-
dend income it received during the relevant period
against nonchargeable expenditures prior to determining
the respective percentages of chargeable and noncharge-
able expenditures. The General Counsel contends that
the Respondent has used this offset to overstate the
chargeable percentage that it has assessed objectors. The
judge dismissed the allegation, stating that, because the
income at issue was derived from assets belonging to the
Union (i.e., the members), the Respondent had no obliga-
tion to share the benefit of these assets with Reed, a
nonmember, in formulating its chargeability allocation.
Accordingly, the judge found that the offset did not
breach the Respondent’s duty of fair representation and
recommended dismissal of this complaint allegation. We
reverse.
Our difference with the judge is essentially a factual
one. The judge stated that the interest and dividend in-
come represented “assets belonging to the Union (i.e., its
members.)” However, there is no evidence in the record
to support a finding that the interest and dividend income
was generated solely from funds (or assets purchased
with funds) other than dues and fees for representational
services exacted equally from all unit employees, includ-

NLRB at 239, citing, inter alia, Chicago Teachers Union Local 1 v.
Hudson, 475 U.S. 292, 307 fn. 18 (1986); Dashiell v. Montgomery
County, 925 F.2d 750, 756 (4th Cir. 1991). See also Connecticut Lim-
ousine, supraat 633-634.
4 Hence, this case is not affected by the D.C. Circuit’s decision in
Ferriso v. NLRB, 125 F.3d 865 (1997), which held, contrary to the
Board’s decision in California Saw, that Beck dues calculations must be
verified by an independent auditor. Compare Machinists v. NLRB, 133
F.3d 1012, 1016–1018 (7th Cir 1998), enfg. California Saw & Knife,
320 NLRB 224 (1995), which upheld the Board’s holding on this issue.
ing objectors, pursuant to the union-security clause.5 In
the absence of such a showing, we are unable to conclude
that the methodology used by the Respondent to calcu-
late the fees charged to objectors was reasonably de-
signed to ensure that objectors were required to pay only
their “fair share” of the Union’s representational ex-
penses, and that no portion of the fees they were charged
would be expended for nonrepresentational activities.
Accordingly, we find that the Respondent violated Sec-
tion 8(b)(1)(A).6
ORDER
The National Labor Relations Board orders that the
Respondent, Automotive, Petroleum and Allied Indus-
tries Employees Local 618, affiliated with International
Brotherhood of Teamsters, AFL–CIO, its officers,
agents, and representatives, shall
1. Cease and desist from
(a) Including the costs of nonunit arbitrations and liti-
gation in those expenditures charged to objecting finan-
cial core members.
(b) Calculating dues and fees charged to objecting fi-
nancial core members in a manner not reasonably de-
signed to ensure that no portion of their fees and dues are
expended for nonrepresentational purposes.
(c) In any like or related manner restraining or coerc-
ing employees in the exercise of the rights guaranteed
them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Recalculate the percentage ratios between charge-
able and nonchargeable expenditures, after (i) excluding
from the chargeable category the costs of nonunit arbitra-
tions and litigation and (ii) excluding the offset for non-
dues interest and dividend income; and pay to Delbert
Reed the difference between the fees he paid under the
allocation used by the Union and the allocation as recal-
culated.
(b) Preserve and, within 14 days of a request, make
available to the Board or its agents for examination and
copying, all records necessary to analyze the amount of
5 The Respondent Union is the party that has the relevant evidence
and thus has the burden of going forward with any such evidence.
6 The Supreme Court has not specified any particular methodology
that a union must use to calculate the fees it charged to objectors, and
we decline to do so here. Although the issue of methodology was not
specifically before the Court, we note that the Court, in non-NLRA
contexts, has indicated as acceptable a method whereby the union di-
vides its expenditures for nonrepresentational purposes by its total
expenditures, and reduces objectors’ dues and fees by the resulting
percentage. See Railway Clerks v. Allen, 373 U.S. 113, 122 (1963);
Abood v. Detroit Board of Education, 431 U.S. 209, 239–2340 (1977).
However, the Court indicated in Allen that other methodologies might
also be acceptable. 373 U.S. at 2132 fn. 8 and appendix. Since these
issues have not been litigated or briefed, we do not rule upon what
methodologies would be lawful in lieu of the “offset” method found
unlawful herein. For the same reason, we do not pass upon the legality
of the methodology endorsed by our concurring colleague.
TEAMSTERS LOCAL 618 (CHEVRON CHEMICAL CO.) 303
rebated fees to which Reed is entitled under the terms of
this Order.
(c) Within 14 days after service by the Region, post at
its union office in St. Louis, Missouri, copies of the at-
tached notice marked “Appendix.”7 Copies of the notice,
on forms provided by the Regional Director for Region
14, after being signed by the Respondent’s authorized
representative, shall be posted by the Respondent upon
receipt and maintained for 60 consecutive days in con-
spicuous places including all places where notices to
members are customarily posted. Reasonable steps shall
be taken by the Respondent to ensure that the notices are
not altered, defaced, or covered by any other material.
(d) Within 21 days after service by the Region, file
with the Regional Director a sworn certification attesting
to the steps that the Respondent has taken to comply.

CHAIRMAN GOULD, concurring.
I agree with the result reached by my colleagues but I
write separately with respect to the interest and dividend
offset issue discussed in section 3 of the decision. As my
colleagues state in footnote 6, the Supreme Court has not
specified a methodology that unions must use to calcu-
late Beck1 dues reductions. Any method is acceptable if
it does not result in the shifting of the cost of nonrepre-
sentational expenditures to objecting employees. My
colleagues note that the Court has arguably approved a
method whereby the union divides its expenditures for
nonrepresentational purposes by its total expenditures
and reduces objectors’ dues and fees by the resulting
expenditures. I write separately to set forth an alternative
method which would also reach the desired result of not
charging objectors for nonrepresentational expenditures.
This method is essentially the method that the Court sug-
gested as appropriate in Machinists v. Street, 367 U.S.
740 (1961).
As stated in Beck, and applied in our seminal decision
in California Saw & Knife Works, 320 NLRB 224
(1995), nonmember employees of a bargaining unit who
object to the use of their dues under a contractual union-
security clause may not be charged for activities that are
unrelated to the union’s role as a collective-bargaining
representative. Applying this standard in Street, the
Court defined political activity as an expense for which
objectors were unlawfully charged, and as a remedy sug-
gested a “restitution” formula that would refund to the
objector the:

portion of his money . . . in the same proportion that the
expenditures for political purposes bore . . . to the total
union budget.

7 If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading “Posted by Order of the Na-
tional Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
1 Communications Workers v. Beck, 487 U.S. 735 (1988).

Street, supra, 367 U.S. at 775.2 As interpreted by Justice
Whittaker in his concurring opinion, this formula requires
‘“restitution’ to the objector of that part of his dues that is
equal to the ratio of dues spent for ‘proscribed activity’ to
total dues collected by the union.” Id. at 780.
I would express this formula in the converse, that is, an
objector is required to pay that portion of the dues that is
equal to the ratio of dues spent for chargeable representa-
tional purposes to total dues collected. In mathematical
terms, this “Street” formula is expressed as:

chargeable expenses
__________________ = percent of dues owed by
total dues income the objector

As the Court explained in Street, the purpose behind
an accurate calculation formula is to ensure that a union
does not use payments from nonmember objectors solely
for representational activities, thus freeing up payments
by members to be used for nonrepresentational activities,
and thereby “shift[ing] a disproportionate share of the
costs of collective bargaining to the dissenter and
hav[ing] the same effect of applying his money to sup-
port such political activities.” In my view, the Street
formula achieves this purpose. The union simply must
show what its total dues were for a particular reporting
period (the denominator), and how much of that money
was spent on chargeable items (the numerator). If the
total amount of dues exceeds the amount of chargeable
items, then the Beck objectors’ dues are reduced by the
percentage difference between those two amounts. If the
total amount of dues equals or is less than the amount of
chargeable items, then the objector must pay the same
amount of dues as paid by union members.3
2 The same formula, in the form of injunctive relief, was alterna-
tively suggested by the Court.
3 For an example of this applied formula, see Tierney v. City of
Toledo, 917 F.2d 927, 938 (6th Cir. 1990). See also the following ex-
ample posed by Justice Whittaker in his partial dissent in Street. Justice
Whittaker stated (367 U.S. at 779–780):
When many members pay the same amount of monthly dues
into the treasury of the union which dispenses the fund for
what are, under the Court’s opinion, both permitted and pro-
scribed activities, how can it be told whose dues paid for
what? Let us suppose a union with two members, each paying
monthly dues of three dollars, and that one does but the other
does not object to his dues being expended for “proscribed
activity” whatever that phrase may mean. Of the dues for a
given month, the union expends four dollars for admittedly
proper activity and two dollars for “proscribed activity,” an-
swering to the objector that the two dollars spent for “pro-
scribed activity” were not from his, but from the other’s,
dues. Would not the result be that the objector was thus re-
quired to pay not his one-half but three-fourths of the union’s
legitimate expenses? Or, has not the objector nevertheless
paid a ratable part of the cost of the “proscribed activity”?
Under the Street formula, the amount spent on “admittedly proper
activity” ($4) is divided by the total amount of dues ($6) for a percent-
age of 66.6 percent. The objector is obligated to pay 66.67 percent of
the dues ($3) charged to union members or $2 (.6667 x $3=$2). Thus,
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 304
I concede, as my colleagues point out, that the Court in
Railway Clerks v. Allen,4 also suggested a formula based
upon the proportion of total nonchargeable expenditures
to total union expenditures. Unions are free to use this
formula if a lawful result is achieved. In my view, how-
ever, the Street formula, as shown above, appears to be
preferable to the Allen formula both in ease of applica-
tion and its certainty in yielding an accurate and lawful
dues amount that an objector must pay. I will, neverthe-
less, accept any formula which does not result in objec-
tors paying for nonrepresentational activities.

APPENDIX
NOTICE TO MEMBERS
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government

The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us to
post and abide by this notice.

Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protection
To choose not to engage in any of these protected
concerted activities.

WE WILL NOT charge objecting financial core members
for any portion of our expenditures for arbitrations or
litigation which does not involve the unit in which they
are employed.
WE WILL NOT offset nonchargeable expenditures
against nondues interest and dividend income on our
accounting before computing the percentage of expendi-
tures chargeable to objecting financial core members.
WE WILL NOT in any like or related manner restrain or
coerce you in the exercise of the rights guaranteed you
by Section 7 of the Act.

the objector is required to pay only “his one-half . . . of the union’s
legitimate expenses” as Justice Whittaker posits that he should.
See also Retail Clerks v. Schermerhorn, 373 U.S. 746, 754 (1963),
where the Court stated:
Unions “rather typically” use their membership dues “to do
those things which the members authorize the union to do in
their interest and on their behalf.” If the union’s total budget
is divided between collective bargaining and institutional ex-
penses and if nonmember payments, equal to those of a
member, go entirely for collective bargaining costs, the non-
member will pay more of these expenses than his pro rata
share. The member will pay less and to that extent a portion
of his fees and dues is available to pay institutional expenses.
The union’s budget is balanced. By paying a larger share of
collective bargaining costs the nonmember subsidizes the un-
ion’s institutional activities.
The Street formula prevents a union from requiring nonmembers to
“subsidize[ ] the union’s institutional activities.”
4 373 U.S. 113, 122 (1963).
WE WILL make Delbert Reed whole for the portion of
the fees he paid which pertain to arbitration or litigation
outside of the collective-bargaining unit in which he was
employed at the Chevron Chemical Company.
WE WILL make Delbert Reed whole for the difference
in the fees he paid under the allocation of nondues inter-
est and dividend income used by the Union to compute
those fees and the allocation as recalculated.

AUTOMOTIVE, PETROLEUM AND ALLIED
INDUSTRIES EMPLOYEES LOCAL 618,
AFFILIATED WITH INTERNATIONAL BROTHER-
HOOD OF TEAMSTERS, AFL–CIO

Frenchette C. Potter, Esq., for the General Counsel.
Clyde E. Craig, Esq. (Craig & Craig, P.C.), for the Respon-
dent.
Delbert Reed, pro se.
DECISION
STATEMENT OF THE CASE
MICHAEL O. MILLER, Administrative Law Judge. This case
was tried in St. Louis, Missouri, on January 29, 1992, based on
an unfair labor practice charge filed on May 2, 1990, by Delbert
Reed, an individual, and a complaint issued by the Regional
Director for Region 14 of the National Labor Relations Board
(the Board), on July 19, 1990, as thereafter amended.
The complaint alleges that Automotive, Petroleum and Al-
lied Industries Employees Local 618, affiliated with Interna-
tional Brotherhood of Teamsters, AFL–CIO (Respondent or the
Union), in assessing a dues equivalency fee on Reed, a “finan-
cial-core member,” violated Section 8(b)(1)(A) of the National
Labor Relations Act (the Act) in several respects. Respondent’s
timely filed answer denies the commission of any unfair labor
practices.
On the entire record, including my observation of the de-
meanor of the witnesses, and after considering the briefs filed
by the General Counsel and the Respondent, I make the follow-
ing
FINDINGS OF FACT
I. THE EMPLOYER’S BUSINESS AND THE UNION’S LABOR
ORGANIZATION STATUS PRELIMINARY CONCLUSIONS OF LAW
Chevron Chemical Company (the Employer), a Missouri
corporation, is engaged in the manufacture, sale, and distribu-
tion of pesticides, herbicides, and related products at its facility
in Maryland Heights, Missouri. In the course and conduct of its
business operations during the 12-month period ending April ,
1990, the Employer sold and shipped from that plant, products,
goods, and materials valued in excess of $50,000 directly to
points located outside the State of Missouri. The Respondent
admits and I find and conclude that the Employer is an em-
ployer engaged in commerce within the meaning of Section
2(2), (6), and (7) of the Act.
The complaint alleges, Respondent admits, and I find and
conclude that it is a labor organization within the meaning of
Section 2(5) of the Act.
TEAMSTERS LOCAL 618 (CHEVRON CHEMICAL CO.) 305
II. ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
The facts are uncontradicted and simply stated: The Union
represents about 50 employees in approximately 600 individual
collective-bargaining units in the St. Louis, Missouri area.
Some of these units have as few as two or three employees.
Delbert Reed has been employed by Chevron Chemical
Company for about 6 years. The unit in which he works, con-
sisting of about 1 employees, is one of the larger units repre-
sented by the Respondent.
The Respondent’s collective-bargaining agreement with
Chevron, in effect from May 1, 1989, to May 15, 1991, con-
tained a union-security agreement requiring all employees to
become and remain members of the Union on and after May 31
of their employment. It further provided that “the Company
will discharge any such employee who fails to remain a mem-
ber thereof for failure to tender periodic dues or initiation fees
uniformly required as a condition of employment.”1
In August 1989, Reed withdrew from union membership in
expectation of taking other employment. He did not resume
paying his dues when that other job fell through. The Union
was seeking his termination for failure to pay dues when, in
December of that year, he submitted the following resignation
letter:

I am paying back dues under protest. I am willing to become a
financial core member. I do not wish to be a full union mem-
ber nor do I wish my funds to be used for any purpose other
than collective bargaining.

Reed subsequently requested a breakdown of how the dues
money was spent. He was told that the dues income did not
cover the Local’s expenses and, on March 14, 1990,2 was sent a
letter which stated that the percentage of dues for financial core
members was 99.81 percent. That percentage, he was told,
would apply to his dues obligations retroactively from Decem-
ber 1989.
On March 28, Reed received a notice from the Union which
set out his rights as a financial core member and the Union’s
policy with respect to their financial obligations. In relevant
part, it stated:

Both the National Labor Relations Act and the Railway Labor
Act provide that although employees represented by a union .
. . are not required to become members of the union, they may
be required to pay their fair share of the costs of operating the
union, if the employees are covered by a valid union shop,
agency shop, or maintenance of membership contract. This
fair share is based upon the union’s expenditures in perform-

1 The union-security language paralleled the language of Sec. 8(a)(3)
which precludes the discharge of an employee for nonmembership if
the employer “has reasonable grounds for believing that membership
was denied for reasons other than the failure . . . to tender the periodic
dues and the initiation fees uniformly required as a condition of acquir-
ing or retaining membership.” It implicitly recognized that, under long-
standing Board and court law, the only level of membership which
could be required was limited to membership at its “financial core.”
NLRB v. General Motors Corp., 373 U.S. 734 (1963); Union Starch &
Refining Co., 87 NLRB 779 (1949), enfd. 186 F.2d 1008 (7th Cir.
1951). The succeeding agreement between Respondent and the Em-
ployer contains neither a union-security clause nor one requiring main-
tenance of membership.
2 All dates hereinafter are 1990 unless otherwise specified.
ing the duties “of an exclusive representative of the employ-
ees in dealing with the employer on labor management is-
sues.” The Union policy in complying with the law follows:

3. The financial core fee payable by objectors will be
based on the Union’s expenditures for those activities or
projects normally or reasonably undertaken by the Union
to advance the employment-related interests of the em-
ployees it represents. They will be referred to as “charge-
able” expenses. The balance of the expenditures are “non-
chargeable.”
4. Among the “chargeable” expenditures are those for
negotiations with employers; enforcing collective bargain-
ing agreements; handling employees’ work-related prob-
lems through the grievance procedure, before administra-
tive agencies, or at informal meetings; organizing employ-
ees of competing employers in the industry; union govern-
ance and administration; litigation related to any of the
above, and the cost of economic activities in support of
chargeable expenditures. Among the expenditures treated
as “nonchargeable,” which objectors will not be required
to support, are those for community service, cost of affilia-
tion with non-related organizations, and support of politi-
cal candidates. In calender year 1988, a minimum of
87.83% of the International Union’s expenditures were
made for chargeable activities. Last year, approximately
99.81% of the Local Union’s expenditures were made for
“chargeable” activities. The sum of $.05 will therefore be
rebatable from the Local Union.
5. Objectors who disagree with the figures will be
given, on written request made within days of receipt of
this notice, a full explanation of the basis of the reduced
fee charged to them. That explanation will include a more
detailed list of the categories of expenditures deemed to be
“chargeable” and those deemed to be “nonchargeable,”
and will also include the independent accountant’s report
showing the Union’s expenditures on which the reduced
fee is based.

At the same time, Reed received the accounting referred to in
paragraph 5, above. That accounting reflected that the Union
had incurred no organizational expenses in 1988. The expenses
for auto, out-of-work benefits, salaries for negotiations and
pickets, steward meetings, arbitrators, delegate travel, legal
expenses, office salaries, professional fees, and payroll taxes
were all listed and treated as fully chargeable.
The accounting also reflected that 100 percent of the “gen-
eral membership benefits” (i.e., those things pertaining only to
members, like flowers on a bereavement), approximately 13
percent of the affiliation expenses and 1 percent of other listed
expenses (officers, representatives and assistant’s salaries and
expense allowances, payroll taxes, insurance, office and hall
rent, postage, telephone and telegraph, and depreciation) were
treated as nonchargeable.
The accounting had been prepared by Joseph Filla, a certi-
fied public accountant. He explained that the office salaries and
automobile expenses were components of the administration of
the local and therefore fully chargeable. He had determined that
only 1 percent of the salaries and related expenses were non-
chargeable based on interviews with the Union’s staff. No time
and motion studies were done.
According to the accounting, the Union had received interest
and dividend income of approximately $54,000. All of that had
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 306
been applied to nonchargeable items. Filla explained that this
was done, appropriately he believed, because the income had
been derived from assets belonging to the members. Nonmem-
bers were not entitled to the benefits so derived.
Included in the breakdown was $21,224 in legal fees and ex-
penses. Of this, $8700 was the law firm’s retainer; the remain-
der was for particular legal services rendered to the Union,
including litigation. There were no litigation expenses or other
legal services which had involved the Chevron unit. Neither
were there any arbitrations in that unit.
After he received a legible copy of this breakdown, Reed
made a written request for minutely detailed information. In-
cluded in his request were such items as:

2. A breakdown of auto expenses detailing all such
expenses that are chargeable.
3. A breakdown of officer & business reps. & assis-
tants’ exp. allowance.
. . . .
6. Charges for stewards’ meetings & expenses. The
stewards are not paid a salary and therefore I desire a
breakdown of these expenses specifically to inquire as to
who pays for beer consumed at such meetings.

He also asked for such things as the names of all employees
and the issues involved in all arbitrations, details on insurance,
details of all legal expenses, an explanation of how all rented
space was used, a breakdown of all office printing, postage,
telephone, and general expenses. He also objected to the inclu-
sion of depreciation. Reed received no response to this letter.
One business agent is primarily responsible for the Chevron
unit. On occasion, he may be assisted by any of up to eight
others. Chevron is but 1 of 38 or 39 units which this agent ser-
vices.
B. Analysis
The obligations of a collective-bargaining representative to-
ward those, like Reed, who opt for financial core membership,
and the financial obligations of such members to their represen-
tative, are determined under Communications Workers v. Beck,
487 U.S. 735 (1988). In Beck, the Court defined the issue as
whether, under Section 8(a)(3), the “financial core includes the
obligation to support union activities beyond those germane to
collective bargaining, contract administration, and grievance
administration.” 487 U.S. at 745. A majority of the justices3
held that it does not.
In reaching this conclusion, the Court looked back to its de-
cision in Machinists v. Street, 367 U.S. 740 (1961). Therein, the
language of section 2, Eleventh of the Railway Labor Act4
(RLA), was examined to determine whether that language,
which is substantially identical to the language of Section
8(a)(3) of the NLRA, precluded the expenditure of agency fees
on political causes, over the objections of nonmembers. The
Street Court concluded that it did.
The majority of the Court held that Street and its progeny
provided controlling precedent for its Beck decision. In so hold-
ing, it noted that both RLA Section 2, Eleventh and NLRA
Section 8(a)(3) had been held to be “statutory equivalents . . .
because their nearly identical language reflects the fact that in

3 Justice Brennan delivered the opinion, in which the chief justice
and Justices White, Marshall, and Stevens joined. Justice Kennedy took
no part in the consideration or decision of the case.
4 64 Stat. 1238, 45 U.S.C. § 152, Eleventh.
both Congress authorized compulsory unionism only to the
extent necessary to ensure that those who enjoy union-
negotiated benefits contribute to their cost.” Beck, 487 U.S. at
746. quoting Ellis v. Railway Clerks, 466 U.S. 435, 452 fn. 13
(1984). The elimination of “free-riders,” i.e., those who enjoy
the benefits of union representation without sharing in the cost
thereof, was, in the Court’s view, the overriding legislative
justification for authorizing union-security agreements. Thus,
the Court stated (Beck, 487 U.S. at 751–752):

In Street we concluded that Ҥ 2, Eleventh contemplated
compulsory unionism to force employees to share the costs of
negotiating and administering collective agreements, and the
costs of the adjustment and settlement of disputes,” but that
Congress did not “intend to provide the unions with a means
of forcing employees, over their objection, to support political
causes which they oppose.” 367 U.S. at 764, 81 S.Ct. at 798
. . . We have since reaffirmed that “Congress’ essential justifi-
cation for authorizing the union shop” limits the expenditures
that may properly be charged to nonmembers under § 2,
Eleventh to those “necessarily or reasonably incurred for the
purpose of performing the duties of an exclusive [bargaining]
representative.” Ellis v. Railway Clerks, 466 U.S. at 447–448,
104 S.Ct. at 1892. Given the parallel purpose, structure, and
language of § 8(a)(3), we must interpret that provision in the
same manner. [Emphasis added.]

Thus, the Beck Court clearly stated that Section 8(a)(3), like
section 2, Eleventh, “authorizes the exaction of only those fees
and dues necessary to ‘performing the duties of an exclusive
representative of the employees in dealing with the employer
on labor-management issues.”’ Beck, 487 U.S. at 762–763,
quoting Ellis, 466 U.S. at 448. Those are only such fees and
dues as are “germane to representational activities,” those
which finance and defray the costs of collective bargaining, and
are “necessarily or reasonably incurred for the purpose of per-
forming the duties of an exclusive [bargaining] representative.”
Beck, 487 U.S. at 752, 759, and 763.5 See also Lehnert v. Ferris
Faculty Assn., 500 U.S. 507, 1957 (1991).
What expenses, then, may a union charge one who chooses
to be a financial core member and what information must it
provide such individuals? Inasmuch as the Court, in Beck, held
Section 8(a)(3) and section 2, Eleventh to be identically in-
5 Justice Blackmun concurred in part and dissented in part, joined by
Justices O’Connor and Scalia. The dissent rejected the majority’s reli-
ance upon Street. It looked instead to the unambiguous language of
Sec. 8(a)(3) as its guiding principle of statutory construction and to the
Board’s reasonable construction of the statute. It found the majority’s
limitation of chargeable fees to those germane to collective bargaining,
contract adminstration, and grievance adjustment unwarranted by the
plain language of Sec. 8(a)(3). It would have held that under Sec.
8(a)(3), unions are entitled to collect those “periodic dues and initiation
fees uniformly required of all members, not a portion of full dues.”
Beck, 487 U.S. at 771. The dissent also distinguished the congressional
intent underlying Sec. 2, Eleventh and Sec. 8(a)(3). It noted that the
latter was intended to “remedy the most serious abuses of compulsory
union membership,” the closed shop and the union-shop agreement
which effectively acted as a closed shop through the arbitrary or dis-
criminatory denial of union membership coupled with a demand for
discharge of nonmembers. The purpose of Sec. 2, Eleventh, to elimi-
nate the abuses of “free-riders” in a system which provided for volun-
tary unionism, was more limited. The dissenting justices would not
have found the two statutes to have been comparably intended nor the
Court’s earlier interpretation of Sec. 2, Eleventh in Street to be control-
ling in Beck.
TEAMSTERS LOCAL 618 (CHEVRON CHEMICAL CO.) 307
tended by Congress, and its decision in Street to be controlling,
one must look to the Street decision and its progeny for guid-
ance.
The only union expenditures at issue in Street were those for
political causes opposed by the unwilling agency-fee payer.
The Court concluded that section 2, Eleventh had been adopted
as a limitation upon the voluntary unionism which character-
ized the RLA. Its adoption was in response to concerns about
“free riders,” those who received the benefits of the unions’
representation on their behalf without bearing their fair share of
the costs. It held, 367 U.S. at 763–764:

The conclusion to which this history clearly points is that § 2,
Eleventh contemplated compulsory unionism to force em-
ployees to share the costs of negotiating and administering
collective bargaining agreements, and the cost of the adjust-
ment and settlement of disputes. [Footnote omitted.] One
looks in vain for any suggestion that Congress also meant in
§ 2, Eleventh to provide the unions with a means for forcing
employees, over their objection, to support political causes
which they oppose.

The Court went on to note the limited nature of the issue be-
fore it and stated, 367 U.S. at 768–769:

[The use of the objector’s money] to support candidates for
public office, and advance political programs, is not a use
which helps defray the expenses of the negotiation or admini-
stration of collective agreements, or the expenses entailed in
the adjustment of grievances and disputes. In other words, it is
a use which falls clearly outside the reasons advanced by the
unions and accepted by Congress why authority to make un-
ion-shop agreements was justified. On the other hand, it is
equally clear that it is a use to support activities within the
area of dissenters’ interests which Congress enacted the pro-
viso to protect. We give § 2, Eleventh the construction which
achieves both congressional purposes when we hold, as we
do, that § 2, Eleventh is to be construed to deny the unions,
over an employee’s objection, the power to use his exacted
funds to support political causes which he opposes. [Footnote
omitted.]

The Court in Street expressed no view as to other objected-to
union expenditures. It proposed various remedies and remanded
the case for further proceedings.
The same question, that of expenditures to support political
causes, was posed, and the same result reached, in Railway
Clerks v. Allen, 373 U.S. 113 (1963). In that case, the Court
placed the burden of calculating and proving the proportion of
political to total union expenditures upon the unions, which
possessed the necessary facts and records. It emphasized, 373
U.S. at 122:

Absolute precision in the calculation of such proportion is not,
of course, to be expected or required; we are mindful of the
difficult accounting problems that may arise. And no decree
would be proper which appeared likely to infringe upon the
unions’ right to expend uniform exactions under the union-
shop agreement in support of activities germane to collective
bargaining and, as well, to expend nondissenters’ such exac-
tions in support of political activities.

Finally, the Court in Allen went on to suggest a practical decree
which would avoid extensive litigation.
Similarly, in Abood v. Detroit Board of Education, 431 U.S.
209 (1977), the Court upheld the validity of an agency shop
clause applicable to governmental employees “insofar as the
service charge is used to finance expenditures by the Union for
the purposes of collective bargaining, contract administration,
and grievance adjustment . . .” 431 U.S. at 2. The constitution,
it held, barred the union from collecting sums from dissenting
employees for the support of ideological causes not germane to
its duties as collective-bargaining representative. The Court
cited as controlling, Railway Employee’s Department v. Han-
son, 351 U.S. 2 (1956), which had upheld the validity of section
2, Eleventh, and Street. It did not otherwise define the line be-
tween chargeable and nonchargeable expenditures.
The language of the Abood Court, with respect to the union’s
obligations, is worthy of note, 431 U.S. at 221–222:

The designation of a union as exclusive representative
carries with it great responsibilities. The task of negotiat-
ing and administering a collective-bargaining agreement
and representing the interests of employees in settling dis-
putes and processing grievances are continuing and diffi-
cult ones. They often entail expenditure of much time and
money. . . . The services of lawyers, expert negotiators,
economists, and a research staff, as well as general admin-
istrative personnel, may be required. Moreover, in carry-
ing out these duties, the union is obliged “fairly and equi-
tably to represent all employees . . ., union and non-union”
within the relevant unit [citing Emporium Capwell Co. v.
Western Addition Community Org., 420 U.S. 50, at 761].
A union- shop arrangement has been thought to distribute
fairly the cost of these activities among those who benefit,
and it counteracts the incentive that employees might oth-
erwise have to become “free-riders”_to refuse to contrib-
ute to the union while obtaining benefits that necessarily
accrue to all employees. [Citations and footnotes omitted.]

There is no question of expenditures in support of political
candidates or causes in the instant case. The Union made no
political contributions in 1988 and expressly acknowledged that
such expenditures were not chargeable to objecting financial
core members.
The first case to reach the Supreme Court questioning the
chargeability of other types of expenditures under section 2,
Eleventh was Ellis v. Railway Clerks, 466 U.S. 435 (1984).
Therein, the Court stated at 448:

Hence, when employees . . . object to being burdened with
particular union expenditures, the test must be whether the
challenged expenditures are necessarily or reasonably in-
curred for the purpose of performing the duties of an exclu-
sive representative of the employees in dealing with the em-
ployer on labor-management issues. Under this standard, ob-
jecting employees may be compelled to pay their fair share of
not only the direct costs of negotiating and administering a
collective-bargaining contract and settling grievances and dis-
putes, but also the expenses of activities or undertakings nor-
mally or reasonably employed to implement or effectuate the
duties of the union as exclusive representative of the employ-
ees in the bargaining unit.

Specifically, the Court found that the expense of union con-
ventions were chargeable. It found that, in order to perform its
statutory functions, the union was required to maintain its cor-
porate or associational existence, to elect officers to carry out
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 308
and manage its affairs, and consult with its members on goals
and policies. It also upheld de minimus expenditures for social
activities and expenditures for union publications to the extent
that they are not devoted to political causes.
In the instant case, the chargeable expenditures included le-
gal fees over and above the annual retainer, all of which, in
1989, had paid for advice and litigation on behalf of other bar-
gaining units. They also included the costs of arbitrations in
other units. Ellis would appear to hold nonunit litigation and
arbitration expenditures to be nonchargeable under the RLA.
The Court stated, 466 U.S. at 455:

The expenses of litigation incident to negotiating and
administering the contract or settling grievances and disputes
arising in the bargaining unit are clearly chargeable to
petitioners as a normal incident of the duties of the exclusive
representative. The same is true of fair representation
litigation arising within the unit, of jurisdictional disputes with
other unions, and of any other litigation before agencies or in
the courts that concerns bargaining unit employees and is
normally conducted by the exclusive representative. The
expenses of litigation not having such a connection with the
bargaining unit are not to be charged to objecting employees.

See also Lehnert v. Ferris Faculty Assn., 500 U.S. 507
(1991), involving the constitutionality of a state law permitting
union and agency shops in agreements covering units of public
employees.6 Therein, the Court, citing Ellis, found that the First
Amendment barred the passing-on of extra-unit litigation ex-
penses, which it found akin to political activity and “not ger-
mane to the union’s duties as exclusive bargaining representa-
tive.”
Respondent did not incur any expenses for organizational ac-
tivities in 1988. Perforce, none of the fees paid by Reed went to
such activities. However, the Union’s notice to nonmembers,
and the accounting prepared by its certified public accountant,
included respectively, as potentially chargeable expenditures,
“organizing employees of competing employers in the indus-
try” and “Organizing.” The General Counsel argues, in brief,
that by the mere inclusion of the reference to organizational
expenses, the Union violated Section 8(b)(1)(A). The brief
contains no discussion as to how or why the inclusion of those
categories restrains and coerces employees (the operative words
of Section 8(b)(1)(A)) when no such expenses were actually
charged to the dissenting employee.
The Court, in Ellis, treated with organization expenses. It
found that the use of dues moneys “exacted from objecting
employees to recruit members outside the bargaining unit can
afford only the most attenuated benefit to collective bargaining
on behalf of dues payers.” 466 U.S. at 452–453. Accordingly, it
held them to be nonchargeable. However, the organizational
expenses considered therein were not limited to those expended
on organizing employees of competing employers in the same
industry, as Respondent had limited its potentially chargeable
organizational expenses in its notice.

6 As it had in Abood, the Court in Lehnert found that cases of statu-
tory construction, such as Street and Allen, provided guidance for re-
solving constitutional challenges to the enforcement of state-authorized
union-security agreements covering public employees. The reverse is
also generally true; cases decided under the constitution, although
based on higher standards, provide some guidance for those to be de-
cided on statutory grounds.
Whether organizational expenses, generally, are chargeable
under Section 8(a)(3), as distinguished from section 2, Elev-
enth, given the differences in the nature of collective-
bargaining units under the NLRA and the RLA, discussed infra,
and whether organizational expenses which are limited to com-
peting employers in the industry, as Respondent has limited
them, are chargeable, are open and legitimate questions. For the
Union to assert a position that it is entitled to charge fee-payers
for such expenses is not conduct which rises to the level of a
threat, violative of Section 8(b)(1)(A). I leave to the Board’s
proposed rulemaking procedures the resolution of whether the
Union’s limitations on the chargeability of organizing expenses
to those incurred in organizing the employees of competing
employees in the industry makes the connection between these
expenditures and the interests of unit employees less attenuated
and more germane than the generalized organizing expenses
discussed in Ellis.7
Reed was not charged for any organizing activity. In light of
that, noting, too, that the Union no longer has a union-security
agreement in Reed’s unit, and in the absence of any explanation
as to why or how Reed was restrained or coerced by the Un-
ion’s statements of what it might do under other circumstances,
I shall recommend dismissal of the General Counsel’s allega-
tion with respect to organizational expenses.
It appears from the amended complaint (par. 7(b)(5)) and the
General Counsel’s brief, that the General Counsel contends that
only those expenses directly attributable the Chevron unit were
properly charged to Reed. While certain language in Ellis and
earlier cases seem to point in that direction, the Court in
Lehnert clearly rejected so burdensome an approach. There, the
Court stated, 500 U.S. 519:

as to nonpolitical expenses, petitioners assert that the local un-
ion may not utilize dissenters’ fees for activities that, although
closely related to collective bargaining generally, are not un-
dertaken directly on behalf of the bargaining unit to which the
objecting employees belong. We . . . find [this proposition] to
be foreclosed by our prior decisions.

At 500 U.S. 522–523, the Court continued:

Petitioner’s contention that they may be charged only
for those collective-bargaining activities undertaken di-
rectly on behalf of their unit presents a closer question.
While we consistently have looked to whether non-
ideological expenses are “germane to collective bargain-
ing,” [Railway Employees v.] Hanson, 351 U.S. at 235, we
have never interpreted that test to require a direct relation-
ship between the expense at issue and some tangible bene-
fit 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 the RLA, collective-bargaining units are based on
employee classes and crafts and are generally employer or sys-
tem wide. RLA, section 2, Ninth and Eleventh. See, for exam-
ple, Street, supra; Ellis, supra, (unit consisting of all of Western
7 To the extent that the Board has indicated an interest in the views
of its administrative law judges by directing that cases pending before
us be decided while it proceeds with rulemaking, I would find that that
connection is, indeed, less attenuated and more germane. I would, for
the reasons set forth, infra, find such expenses properly charged to
objecting agency-fee payers.
TEAMSTERS LOCAL 618 (CHEVRON CHEMICAL CO.) 309
Airlines clerical employees); Crawford v. Air Line Pilots Assn.,
870 F.2d 155 (4th Cir. 1989) (industrywide bargaining by a
unitary national labor organization). The unions which repre-
sent those employees are similarly organized along the same
lines. Each unit would, therefore, tend to have substantial num-
bers of employees sharing the costs of representation. As the
instant case illustrates, however, units under the NLRA fre-
quently encompass only a few employees with a single consoli-
dated local union representing many such units.
Limiting the chargeability of otherwise chargeable expenses
to those incurred in the objecting employee’s unit, in NLRA
cases, could work a gross and unwarranted hardship upon local
unions which, like the Respondent, represent employees in
many units, including some with only a few employees. It
would ignore the nature of local unions and collective-
bargaining units under the NLRA. See Lehnert, 500 U.S. 523
fn. 4. The bookkeeping required of Respondent, with more
than 600 units, or similar locals, would be onerous and expen-
sive, diverting funds from representational obligations. The
expense and burden of such accounting would discourage un-
ions from seeking to collect any dues from objecting financial
core members; it would encourage “free riders,” contrary to the
statutory intent as perceived by the Court in Street. It would
also impose a heavy regulatory burden on unions, contrary to
the intent and spirit of the president’s regulatory moratorium.8
Imposition of such an obligation would also be unfair and
could impede unions in fulfilling their fair representation obli-
gations. In smaller units, a consolidated local might spend far
more on one round of negotiations or a single significant arbi-
tration than it could ever expect to recover out of the dues of
the unit employees. If such costs were not apportioned among
all those represented by the local, with objecting financial core
members bearing their shares, such consolidated locals would
be discouraged from undertaking costly representational activi-
ties on behalf of employees in smaller units.
Similarly, separation of expenses for bargaining, routine con-
tract administration, arbitrations, litigation and grievance han-
dling by a consolidated local, unit-by-unit, and year-by-year,
could preclude that union from recouping its costs from object-
ing unit employees. In any 1 year, the local might incur ex-
penses in excess of dues income for any individual unit; ex-
penses would be heaviest in the year in which a multiyear
agreement is negotiated. Over the course of time, however,
those expenses would even out.
Moreover, the local’s willingness to pursue a matter to litiga-
tion or arbitration inures to the benefit of all of its members.
Valuable and applicable precedent may be established, particu-
larly where that local negotiates similar agreements with each
of the employers. Other employers may be encouraged to re-
solve grievances short of arbitration, or to comply with arbitral

8 The General Counsel’s theory, as indicated by questions directed to
the Union’s secretary/treasurer, appears to be that it should have under-
taken time and motion studies before apportioning salaries and other
expenses between chargeable and nonchargeable items. Imposition of
such a burden would be contrary to the letter and spirit of the Court’s
decisions in both Allen and Lehnert, supra. I also conclude that the
Union has met its burden of proof with regard to establishing the appor-
tionment of expenses, through Filla’s testimony. Other than to ask
whether Filla had looked at documents, and whether the secre-
tary/treasurer had conducted time and motion studies, the General
Counsel proffered no evidence to rebut Filla’s testimony.
awards, where it knows that this union is willing to undertake
the expense of formal proceedings.
In like vein, a union’s successful negotiation with one em-
ployer inures to the benefit of the employees in all of the units
it represents. See Crawford v. Air Line Pilots, supra, where the
costs of strikes at other airlines and the creation of strike con-
tingency funds were held to be properly charged to agency fee-
payers. Employers are vitally concerned with the wage costs of
those with whom it competes for employees or customers.
Many employers take surveys of area wages. See, for example,
Mobil Exploration & Production U.S., 295 NLRB 1179 (1989),
and General Electric Co., 188 NLRB 911 (1971). Many others
argue in the course of their negotiations that, in order to remain
“competitive,” they cannot raise labor costs or must even, in
some instances, reduce those costs. See, for example, Accurate
Die Casting Co., 292 NLRB 284, 296 (1989), and Robinson
Bus Service, 292 NLRB 70 (1988). The union’s successful
bargaining with many employers in a single geographical area
or industry maintains the level playing field so that employers
are able to improve wages and benefits without jeopardizing
their competitive position.
To the extent that the General Counsel’s complaint seeks to
exclude as nonchargeable those otherwise chargeable union
expenditures made on behalf of other units, other than arbitra-
tion and litigation expenses, I shall recommend dismissal. As to
those expenditures incurred by the Union with respect to litiga-
tion (as distinguished from more general legal advice) and arbi-
trations outside of the Chevron unit, I am constrained by the
language of Ellis, quoted above, to find that they were non-
chargeable. To the extent that the Union has required Reed to
bear a share of those expenditures, it has violated Section
8(b)(1)(A).
The General Counsel further alleges that the Union violated
Section 8(b)(1)(A), by: (1) failing to adequately disclose the
basis for the allocation between chargeable and nonchargeable
items; (2) failing to reflect that its accounting had been verified
by an independent accounting firm; and (3) by failing to prop-
erly advise Reed of the chargeable expenses incurred in the
Chevron bargaining unit to which he belonged.9
In Teachers AFT Local 1 v. Hudson, 476 U.S. 292 (1986),
the Court addressed the question of what information a union
must provide, and what procedures it must adopt, to protect the
constitutional rights of objecting fee payers (therein, public
employees under a state-sanctioned agency shop agreement).
Quoting Abood, 431 U.S. at 397, it stated:

The objective must be to devise a way of preventing compul-
sory subsidization of ideological activity by employees who
object thereto without restricting the Union’s ability to require
every employee to contribute to the cost of collective-
bargaining activities.

The Court went on to say:

the nonunion employee-the individual whose First Amend-
ment rights are being affected-must have a fair opportunity to
identify the impact of governmental action upon his interests
9 No contention was made, either in the complaint or the brief, that
the Union’s apparent lack of any impartial procedure for determining
disputed claims of chargeability violated Sec. 8(b)(1)(A). See Teachers
AFT Local 1 v. Hudson, 475 U.S. 292, 297–298 (1985), with respect to
the requirement of such a procedure in the context of a constitutional
challenge. See also, Price v. Auto Workers, 927 F.2d 88 (2d Cir. 1991).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 310
and to assert a meritorious First Amendment claim. [475 U.S.
at 3.]

In Hudson, supra, the union had identified its nonchargeable
expenditures but failed to identify those which were charge-
able; the Court held that it was required to identify both. How-
ever, in so finding, it recognized that there were “practical rea-
sons why absolute precision in the calculation charged to non-
members cannot be expected or required, citing Allen.” It held
that the union:

need not provide nonmembers with an exhaustive and de-
tailed list of all its expenditures, but adequate disclosure
surely would include the major categories of expenses, as well
as verification by an independent auditor. [476 U.S. at 7 fn.
18.]

The instant case presents a statutory challenge to the Union’s
procedure, not one based on the First Amendment. The stan-
dard by which those procedures should be judged is, therefore,
less stringent than that imposed in Hudson. See Price v. Auto
Workers, 927 supra 92 (2d Cir.), holding that, in order to satisfy
its duty of fair representation, the union need only adopt proce-
dures which are not arbitrary, discriminatory or implemented in
bad faith. See also, Vaca v. Sipes, 386 U.S. 171 (1967). How-
ever, whether the standard is the same or is more relaxed, I am
satisfied that the Union has met it in this case.
Thus, I note that the Union, in its notice to nonmembers, ex-
plained, in language quoted earlier in this decision, which cate-
gories of expenditures would be deemed chargeable and which
would not. It did so in terms both general and specific. That
same notice indicated that objectors who made an appropriate
request would be furnished with the report of an independent
accountant. Even without his request, the Union sent that report
to Reed. That report, based on the CPA’s examination of the
books and his interviews of union staff, taken together with the
assurance in the notice that the report would be prepared by an
independent accountant, and the explanations contained therein,
is sufficiently precise to satisfy Respondent’s obligation under
Hudson for disclosure of major categories, independently veri-
fied.
What is required here, as suggested by both Abood and Hud-
son, is a balancing of conflicting interests. That balance must
be struck in such a way as not to impede collective bargaining.
Viewed in terms of statutory interpretation, the objecting em-
ployee’s right not to subsidize expenses not “necessarily or
reasonably incurred for the purposes of performing the duties of
an exclusive representative” and the union’s right to collect its
fair share of those expenses which are “germane to collective
bargaining, contract administration and grievance adjustment”
from such employees are equal.8 See also Tierney v. City of
Toledo, 917 F.2d 927, 929 (6th Cir. 1990).

8 The inclusion of politically or ideologically based expenditures,
which present constitutional as well as statutory issues, could change
that balance. From a cursory review of recent and pending cases, how-
ever, it no longer appears to be seriously questioned that unions may
not charge expenditures in support of particular candidates or political
parties to objecting fee payers.
The steps the Union has taken in this case, in the main, prop-
erly balance its statutory rights and obligations against those of
the objecting financial core member. To require the Union to do
more would encourage “free riders,” contrary to the legislative
intent as identified by the Court in Street and subsequent cases.
For the foregoing reasons, and as I have found that Respon-
dent was not required to allocate only those expenses attribut-
able solely to the Chevron unit, I further find that Respondent
did not restrain or coerce Reed by failing to respond to Reed’s
final letter.
Finally, the General Counsel challenges the Union’s alloca-
tion of interest and dividend income to nonchargeable items,
resulting in an increase in the proportion of chargeable items to
dues income. As noted earlier, the dividend and interest income
was derived from assets belonging to the Union (i.e., its mem-
bers). As Reed chose not to be a member, I see no rationale
explanation for why he, or any other dissenting financial core
member, should share in the benefits of such assets. I find that
the Union’s allocation of this income to nonchargeable items to
be entirely appropriate, taken in good faith, and neither arbi-
trary nor discriminatory. I shall recommend dismissal of this
allegation. Price, supra.9
CONCLUSIONS OF LAW
1. By including the costs of nonunit arbitrations and litiga-
tion in those expenditures charged to objecting financial core
members, the Union has engaged in an unfair labor practice
affecting commerce within the meaning of Section 8(b)(1)(A)
and Section 2(6) and (7) of the Act.
2. The Union has not violated the Act in any other manner
alleged in the complaint.
REMEDY
Having found that the Respondent has engaged in an unfair
labor practice, I find that it must be ordered to cease and desist
and to take certain affirmative action designed to effectuate the
policies of the Act.
Inasmuch as Respondent has been found to have breached its
duty of fair representation by including the costs of nonunit
arbitrations and litigation in the fees paid by objecting financial
core members, I shall direct that it recalculate the percentages
of chargeable and nonchargeable expenditures and pay to Del-
bert Reed the difference between the fees he paid under the
allocation used by the Union and the allocation as recalculated.
[Recommended Order omitted from publication.]

9 In Tierney v. City of Toledo, supra, the union had adopted a similar
allocation of nondues income. The issue was not pressed before the
circuit court, the objectors reserving it for hearing before an arbitrator,
and the court expressed no view as to its propriety.