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Jacobs v. Teamsters Local 97

July 17, 2009


On appeal from the Public Employment Relations Commission Appeal Board, Docket No. AB-2006-005.

Per curiam.


Argued: April 1, 2009

Before Judges Fisher, C.L. Miniman and King.

Respondent Teamsters Local 97 (Local 97) appeals an order of the New Jersey Public Employment Relations Commission Appeal Board (Appeal Board) requiring the union to refund $300 of the sums deducted by the Teaneck Board of Education (Teaneck BOE) from Petitioner Michael Jacobs's pay as and for representation fees in lieu of dues. We affirm.

On April 26, 2006, Jacobs filed a petition of appeal with the Appeal Board contesting the representation fees deducted from his pay over a two-year period. At the time, Jacobs had been employed by the Teaneck BOE as a glazer and locksmith since 1996. Jacobs claimed in his petition that the representation fee should only be $1 per paycheck and Local 97 did not provide required reports accounting for the uses made of fees and dues, used fees for expenses not connected with the Teaneck BOE negotiations unit, and spent Political Action Committee (PAC) money for inappropriate and unlawful purposes. After Local 97 submitted its answer, the Appeal Board transferred the matter to the Office of Administrative Law (OAL) as a contested case.

On December 18, 2007, an Administrative Law Judge (ALJ) conducted an evidentiary hearing and rendered an Initial Decision recommending that Jacobs's petition be dismissed. Jacobs filed five exceptions with the Appeal Board seeking to modify or set aside the ALJ's Initial Decision; Local 97 did not file a response. The Appeal Board issued a Final Decision on June 19, 2008, in which it rejected three of Jacobs's exceptions and granted the remaining two exceptions, only one of which is at issue in this appeal.*fn1 That exception relates to the reliability of the financial statements Local 97 used to calculate the disputed representation fees. It required the Appeal Board to determine "whether Local 97 has properly distinguished between chargeable and non-chargeable [sic] expenses and whether the record is sufficient to sustain Local 97's burden in a challenge to the representation fees collected from the petition." The issue is best understood in the context of the applicable statutory scheme.

Public employees in New Jersey who work in a job that is part of a union-represented bargaining unit are not required to join the union. N.J.S.A. 34:13A-5.3. Jacobs withdrew from union membership sometime in 2004. As a result, he was required to pay representation fees in lieu of dues. N.J.S.A. 34:13A-5.5(a). At the time of his petition of appeal, those fees were $27.08 biweekly. Those fees are limited by statute.

The representation fee in lieu of dues shall be in an amount equivalent to the regular membership dues, initiation fees and assessments charged by the majority representative to its own members less the cost of benefits financed through the dues, fees and assessments and available to or benefitting only its members, but in no event shall such fee exceed 85% of the regular membership dues, fees and assessments. [N.J.S.A. 34:13A-5.5(b).]

The amount of the fee is negotiated by the public employer and the union. N.J.S.A. 34:13A-5.5(a). Any public employee paying such a fee has a right to institute a proceeding pursuant to N.J.S.A. 34:13A-5.6 and N.J.A.C. 1:20-3.2 before the Appeal Board for a return of any part of that fee paid by him which represents the employee's additional pro rata share of expenditures by the majority representative that is either in aid of activities or causes of a partisan political or ideological nature only incidentally related to the terms and conditions of employment or applied toward the cost of any other benefits available only to members of the majority representative. [N.J.S.A. 34:13A-5.5(c).]

This is called a demand-and-return system. N.J.S.A. 34:13A-5.6.

Excluded from return is the employee's pro-rata share of "the costs of support of lobbying activities designed to foster policy goals in collective negotiations and contract administration or to secure for the employees represented advantages in wages, hours, and other conditions of employment in addition to those secured through collective negotiations with the public employer." N.J.S.A. 34:13A-5.5(c).

This statutory scheme, like similar agency-fee statutes, serves the dual goal of allowing unions to assess nonmembers for the benefits they derive from collective bargaining agreements while protecting nonmembers' First Amendment rights to refrain from engaging in political or ideological activities not needed to secure a negotiated agreement. See generally Locke v. Karass, ___ U.S. ___, ___, 129 S.Ct. 798, 803-06, 172 L.Ed. 2d 552, 558-61 (2009) (discussing and reaffirming the standard announced in Lehnert v. Ferris Faculty Ass'n, 500 U.S. 507, 520-22, 111 S.Ct. 1950, 1960-61, 114 L.Ed. 2d 572, 590-91 (1991)). Our Supreme Court has found New Jersey's agency-fee statute constitutional. In re Bd. of Educ. of Boonton, 99 N.J. 523, 548 (1985), cert. denied, 475 U.S. 1072, 106 S.Ct. 1388, 89 L.Ed. 2d 613 (1986); accord In re Hunterdon County, 369 N.J. Super. 572, 585 (App. Div.), certif. denied, 182 N.J. 139 (2004).

In setting the amount of representation fees, the Boonton Court construed the "demand-and-return system to require that the majority representative compute the annual representation fee charged to nonmembers on the basis of the ...

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