North Carolina Members Win Union Dues Suit

U.S. Magistrate Judge Carl Horn in N.C. ruled Sept. 14 that the Int’l Ass’n of Machinists “systematically denied procedural protections” to two nonmembers the union represented at US Airways who objected to the payment of dues in support of IAM’s nonrepresentational activities. Horn found IAM denied John Masiello and Craig Sickler their right to object to supporting the union’s nonrepresentational activities when it failed to institute the precollection procedures the Supreme Court established in Chicago Teachers Union v. Hudson before it sought to enforce the union security clause in its contract with the employer. “The record is replete with examples of the union’s untimely, inadequate practices and procedures,” Horn wrote.

In 1988, Masiello and Sickler were hired by US Airways in Charlotte to work in the “mechanical and related personnel” craft or class and both became members of IAM. In Charlotte, IAM carries out its functions through its affiliates Airline Machinists Dist. 141-M and Local Lodge 1725. In 1995, both resigned their memberships in IAM and started to annually inform the union, in writing, that they objected to supporting its nonrepresentational activities. On July 8, 1996, Masiello revoked the dues check-off authorization he had signed. Sickler revoked his on Oct. 28.

In 1998, IAM published its current version of a “Notice to Employees Subject to Union Security Clauses,” which explained to nonmembers how to file objections and pay reduced dues. The notice stated that the reduced fees for the 1999 calendar year were to be calculated as “the percentage reduction in monthly Grand Lodge per capita payments … 26.62 percent, plus a 12.71 percent reduction in district lodge per capita and [a] 17.83 percent reduction in local lodge fees.” No financial information or explanation of how the union arrived at the fee calculations was included.

In Nov. 1998, Masiello and Sickler each sent IAM a letter objecting to the notice. IAM’s secretary-treasurer, Donald E. Wharton, informed both by mail that their objections had been “perfected” and that they had 30 days to file a challenge to the reduced fee calculations before an impartial arbitrator.  Included with Wharton’s letter to each was a “financial disclosure package.” The package contained one-page “fee reduction audit” summaries for IAM and affiliates, “most of which had nothing to do with [Dist.] 141-M or [Local] 1725,” Horn said.

“Certain of the information dated back to 1993, some was illegible, and whole sections and columns of information were cut off the copies received by the Plaintiffs,” Horn wrote. “Significantly, the ‘financial disclosure package’ nowhere mentioned the expenditures of Plaintiffs’ local union, LL 1725, nor were any of the IAM affiliates’ one page ‘fee reduction audits’ prepared by independent certified public accountants.”  In his deposition, IAM assistant secretary-treasurer William Engler conceded that nonmember objectors would be unable to compute from the limited information the union provided what reduction in dues was proper.

Masiello and Sickler filed challenges to the union’s reduced fee calculations and requested arbitration. They also asked for additional financial disclosure and for the disputed fees to be placed in an escrow account. IAM did not send the employees the information they requested. “IAM did not initiate arbitration until [Nov.] 1999, five months after Masiello and Sickler were discharged, it did not commission any independent audits, and it failed to deposit disputed funds in an independent escrow account,” Horn said.

Masiello and Sickler refused to pay any dues that allegedly accrued after Jan. 1, 1999.  On Apr. 7, 1999, IAM threatened to have Masiello and Sickler fired if they did not pay the dues they owed plus a “reinstatement fee.” On May 14, IAM requested that US Airways terminate both employees for their “noncompliance” with the “Union Shop and Dues Check-Off” provision of the collective bargaining agreement. Masiello and Sickler appealed to US Airways, citing the complete lack of procedural protections, but it “brushed aside the argument as ‘not germane’ ” to the collective bargaining agreement, Horn said. The two were fired on June 1 despite the fact that both had good work records. They sued IAM and US Airways, claiming they were denied the procedural protections to which they were entitled in objecting to the union’s calculation of the reduction of dues.

Horn held that IAM did not give Masiello and Sickler the Hudson required “precollection notice,” an “audited financial disclosure,” or a “fairly calculated ‘advance reduction’ in dues.” Regarding notice, he said, all the employees were given was the “notice” itself, with no disclosure about union expenditures.  The “financial disclosure package” Masiello and Sickler were given after their objection “was hardly an improvement on no disclosures at all,” Horn said. Further, IAM auditor Jim Pickler conceded in his testimony that the dues reduction IAM should have offered nonmembers was twice what it had allowed.

Horn also held that IAM flouted the requirement that it establish an independent escrow account. The two accounts IAM established as its escrow accounts are controlled by IAM bosses and employees, and IAM routinely withdraws money from them whenever it believes the amounts in the account are excessive. Thus, IAM’s “so-called ‘escrow account,’ which simply moves money from one IAM pocket to another, cannot possibly pass muster under Hudson,” Horn concluded.

Further, Horn said IAM’s attempt to comply with the requirement to provide the employees an expeditious hearing before an impartial decisionmaker “was the antithesis of expeditiousness.” The two had filed their challenge requesting arbitration in Dec. 1998, they were fired in May 1999, and IAM finally initiated arbitration in Nov. 1999. After reviewing the evidence, Horn said that a reasonable factfinder could reach “only one conclusion” in this case and granted summary judgment in favor of Masiello and Sickler as to liability. [BNA 9/27/00]