United States District Court, M.D. Pennsylvania
February 4, 2005.
LEROY ROBINSON and JAY DINO, Plaintiffs
PENNSYLVANIA STATE CORRECTIONS OFFICERS ASSOCIATION, et al., Defendants.
The opinion of the court was delivered by: CHRISTOPHER CONNER, District Judge
Once again the court must consider the efforts of defendant,
the Pennsylvania State Corrections Officers Association
("Association"), to impose a "fair share fee" on nonunion public
employees in a manner consistent with the First Amendment. The
court previously held that a fee assessed by the Association from
December 2001 through mid-2003 was unconstitutional because
advance notice was not provided to employees.*fn1 Now under
review, in the context of cross-motions for summary judgment, is
a subsequent fee collected from mid-2003 to mid-2004 and preceded
by notice dated March 15, 2003. Whether this notice provided a
constitutionally adequate explanation of the basis for the fair
share fee is the dispositive issue for resolution.
I. Statement of Facts*fn2
The Association was named as exclusive bargaining
representative for employees of Pennsylvania corrections and
forensic facilities in 2001 and soon entered into a new
collective bargaining agreement on their behalf. One provision of
the agreement required the Commonwealth to deduct a fair share
fee from nonunion employees and to remit these funds to the
Association to finance its activities. (Doc. 46 ¶¶ 1-3; Doc. 50
¶¶ 1-3). The Association notified the Commonwealth that a fee of
1.00% of nonunion employees' gross pay was appropriate to meet
the Association's expenses. In late 2001, without prior notice to
employees, the Commonwealth began deducting the fee from salaries
of nonunion employees and remitting these amounts to the
Association. (Doc. 46 ¶¶ 4-5; Doc. 50 ¶¶ 4-5; see also Doc. 37
On March 15, 2003, the Association issued a notice to nonunion
employees, stating that a new fair share fee would be assessed
starting in April 2003.*fn3 The sixteen-page document
explains the nature and basis of the fee. It lists thirty-two
types of expenses, categorized by their relationship to the
collective bargaining activities of the union, and indicates that
expenses that are "germane" to such activities will be charged to
nonunion employees. (Doc. 44, Ex. 1; Doc. 46 ¶ 6; Doc. 50 ¶ 6).
The percentage of "chargeable expenses" to total expenses,
according to the notice, is approximately 77.67%. By multiplying
this percentage by the dues rate for union members (1.50% of
wages), the notice concludes that the fair share fee is 1.17% of
wages. (Doc. 44, Ex. 1).
Appended to the notice is an audit report of the "major
categories of expenses" on which the fair share fee calculation
was based. The report states that the purpose of the audit was to
"obtain a reasonable assurance about whether the schedule of
expenses and allocation between chargeable and nonchargeable
expenses is free of material misstatement." (Doc. 44, Ex. 1). The
attached schedule details seventeen categories of expenses
incurred by the union in 2002, including "salaries and wages,"
"affiliation [costs]," and "rent and utilities." These categories
are divided between chargeable and nonchargeable expenses, and
notes to the report describe the union's methodology in
classifying certain costs as chargeable to nonunion employees.
The report states that the percentage of chargeable expenses to
total expenses is approximately 77.67%, and, by multiplying this
percentage by the union dues rate, concludes that the fair share
fee is 1.17% of wages. (Doc. 44, Ex. 1).
Shortly after distribution of the notice, plaintiffs and
several other nonunion employees filed objections with the
Association, challenging the "calculation of
chargeable expenses and the amount of the [f]air [s]hare [f]ee."
The objections were referred to the American Arbitration
Association ("AAA"), pursuant to procedures outlined in the
notice, and hearings were scheduled for September 2003 before an
arbitrator selected by the AAA. The hearings were subsequently
rescheduled at the request of plaintiffs, and did not commence
until March 2004. (Doc. 46 ¶¶ 8-9, 11-14; Doc. 50 ¶¶ 8-9, 11-14;
Doc. 50, Exs. K, L; Doc. 51, App. E).
Before and during this period, plaintiffs prosecuted the
above-captioned case on behalf of a class of nonunion
employees.*fn4 They claim that the Association's fee
assessment infringed upon their First Amendment rights. (Docs. 1,
16). The court ruled in January 2004 that the collection of fair
share fees prior to the March 15, 2003, notice violated nonunion
employees' rights, but deferred entry of judgment pending
resolution of plaintiffs' remaining claims.*fn5 The parties
thereafter filed cross-motions for summary judgment on the
adequacy of the March 15, 2003, notice and objection
procedures.*fn6 (Docs. 42, 44). Oral argument on the motions
was held on January 31, 2005. (Doc. 68).
II. Standard of Review
Summary judgment is appropriate when the evidence of record
unquestionably establishes the validity of one party's position.
See FED. R. CIV. P. 56(c), (e); Pappas v. City of Lebanon,
331 F. Supp. 2d 311, 315 (M.D. Pa. 2004). Doubts over the weight
to be accorded testimony and exhibits must be resolved in favor
of the opposing party, which must be given the benefit of all
reasonable inferences to be drawn from the evidence. Schnall v.
Amboy Nat'l Bank, 279 F.3d 205, 209 (3d Cir. 2002). Only if the
facts of the case, so construed, demonstrate that one party
cannot succeed on its claim or defense should summary judgment be
entered. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
This task is more difficult when the court is presented with
cross-motions for summary judgment: when both the plaintiff and
the defendant are non-moving parties and each is entitled to
consideration of the evidence in its favor. InterBusiness Bank,
N.A. v. First Nat'l Bank of Mifflintown, 318 F. Supp. 2d 230,
235-36 (M.D. Pa. 2004). However, the dispositive issue in this
case the facial adequacy of the notice does not implicate
factual disputes susceptible to different standards of review.
The notice has been submitted to the court, and both parties
agree on its contents and authenticity. The only question,
whether the notice satisfies constitutional disclosure
requirements, is one of law and may be resolved on the summary
judgment record. See Chi. Teachers Union, Local
No. 1 v. Hudson, 475 U.S. 292, 307 & n. 18 (1986); Hohe v.
Casey, 956 F.2d 399, 403 (3d Cir. 1992).
Many states, including Pennsylvania, permit "agency shop"
arrangements between an employees' union and a public employer.
See 43 PA. CONS. STAT. § 211.7; PA. STAT. ANN. tit. 71, § 575;
see also Otto v. Pa. State Educ. Ass'n, 330 F.3d 125, 129 (3d
Cir.), cert. denied, 540 U.S. 982 (2003). Under these
arrangements, a single union is designated as the exclusive
representative of employees, regardless of individual union
membership. Abood v. Detroit Bd. of Educ., 431 U.S. 209, 224
(1977); see 43 PA. CONS. STAT. § 211.7. Other unions are
precluded from participating in contract negotiations, and the
final agreement reached by the designated union affects all
employees. Abood, 431 U.S. at 224.
That employees may reap the benefit of union negotiations
without joining the organization creates an obvious "free-rider"
problem. See id. at 222-26, 231, 234-35. The incentive for
employees to join a union, and to assume the obligation of union
dues, is to draw on the collective bargaining power of the
organization. Id. at 221-22. Under an agency shop arrangement,
however, employees enjoy the results of the union's exertions
whether or not they accept membership. Individual employees have
little incentive to forgo a percentage of their paycheck to
obtain a benefit that they will receive anyway. See id. at
222-26, 231, 234-35.
To counter this problem, Pennsylvania and most other states
permit unions to impose a "fair share fee" on nonunion employees,
requiring them to contribute an equal share to the union's costs
of operation. See PA. STAT. ANN. tit. 71, § 575; see also
Otto, 330 F.3d at 129. The fee, generally negotiated pursuant
to the collective bargaining agreement, is normally set as a
percentage of nonunion employees' salaries. It is then
periodically assessed by the employer and remitted to the union.
See Abood, 431 U.S. at 222-23, 235-36.
The fee substantially eliminates the free-rider problem but it
creates a constitutional free speech issue. See id.; see
also Hudson, 475 U.S. at 302-03. It is a compulsory assessment
on nonunion employees for the purpose of subsidizing speech by
the union. Id.; Abood, 431 U.S. at 221-26, 235-36. The forced
exaction that the fair share fee represents undoubtedly
constitutes an infringement on nonunion employees' freedom of
expression. Hudson, 475 U.S. at 302-03; Abood,
431 U.S. at 221-26, 235-36.
Nevertheless, this infringement is constitutionally justified
to support the national interest in collective bargaining. Id.
at 231-35; accord Hudson, 475 U.S. at 302-03. The First
Amendment is not an absolute. See, e.g., Marks v. United
States, 430 U.S. 188, 193-94 (1977). The national interest in
fostering collective bargaining activities supports the limited
imposition on First Amendment rights represented by the fair
share fee. See Abood, 431 U.S. at 225-26, 231. The fee
may be imposed "to finance expenditures by the [u]nion for the
purposes of collective bargaining, contract administration, and
grievance adjustment." Id.
The fee may not be used, however, to subsidize "ideological"
and "political" activities. Robinson v. Pa. State Corr. Officers
Ass'n, 299 F. Supp. 2d 425, 428 (M.D. Pa. 2004) (quoting
Hudson, 475 U.S. at 305).
Whatever the benefits of union representation, they
cannot outweigh the First Amendment rights of
nonunion employees to support only that political
speech with which they agree. Unions may not use
funds obtained through a fair share fee to advance
"political views, . . . political candidates, or . . .
other ideological causes not germane to [their]
duties as . . . collective-bargaining
representative." Any appropriation of a nonunion
employee's earnings for an impermissible use, even if
the funds are later returned, constitutes a violation
of the employee's First Amendment rights.
Id. (quoting Abood, 431 U.S. at 235) (internal citations
The Constitution limits the fair share fee to nonunion
employees' pro rata share*fn7 of the union's expenditures
for collective bargaining activities. See
Lehnert v. Ferris Faculty Ass'n, 500 U.S. 507, 524 (1991);
Abood, 431 U.S. at 225-26, 231; Ping v. Nat'l Educ. Ass'n,
870 F.2d 1369, 1372 (7th Cir. 1989). The fee may be used only
to standardize the financial burden on employees in supporting
these activities. See Lehnert, 500 U.S. at 524; Abood,
431 U.S. at 225-26, 231. In other words, the revenues that would
generated by assessment of the fee on all employees union and
nonunion must equal (or at least reasonably approximate) the
expenses of the union related to chargeable activities. Id.;
see also Hudson, 475 U.S. at 306-07. A fee that generates
revenues in excess of these costs represents an unwarranted
infringement on nonunion employees' First Amendment rights.
Abood, 431 U.S. at 225-26, 231.
To ensure that the fee does not exceed constitutional
limitations, the Supreme Court, in the seminal case of Chicago
Teachers Union, Local No. 1 v. Hudson, 475 U.S. 292 (1986),
announced several "procedural safeguards" that must be instituted
prior to collection of a fair share fee. See id. at 305-06,
309. "Perhaps the most important of these is advance notice to
nonunion employees explaining the method by which the fee was
calculated."*fn8 Robinson, 299 F. Supp. 2d at 428. Advance
notice is necessary to provide employees with
"sufficient information to gauge the propriety of the union's
fee" and, if appropriate, to lodge an objection thereto.
Hudson, 475 U.S. at 306.
The content of the notice is a matter of significant debate.
See Otto, 330 F.3d at 128; Tierney v. City of Toledo,
917 F.2d 927, 933-38 (6th Cir. 1990); Prescott v. County of El
Dorado, 915 F. Supp. 1080, 1086 & n. 9 (E.D. Cal. 1996). The
Supreme Court stated in Hudson that the notice must provide an
"adequate explanation of the basis for the fee." Hudson,
475 U.S. at 310. In a footnote, the Court remarked that it should
include "the major categories of expenses" incurred by the union
during the previous year, verification by an "independent
auditor," and "an explanation of the share" of expenses devoted
to collective bargaining activities. Id. at 307 n. 18. Beyond
these nebulous formulations, however, the Court declined to
address further the nature of a constitutionally sufficient
The requisite content of the Hudson notice must be assessed
in light of the purpose contemplated by the Supreme Court. See
Hohe, 956 F.2d at 410; see also Gilpin v. Am. Fed'n of
State, County, & Mun. Employees, 875 F.2d 1310, 1316 (7th Cir.
1989); Damiano v. Matish, 830 F.2d 1363, 1369-70 (6th Cir.
1987); cf. Air Line Pilots Ass'n v. Miller, 523 U.S. 866,
876-77 (1998). The notice was not intended
to provide a full financial background of the union. See
Hohe, 956 F.2d at 410; see also Gilpin, 875 F.2d at 1316
(stating that notice should not be as "complicated as an SEC
prospectus"). Nor was it meant to detail with "absolute
precision" the expenses and revenues involved in the fair share
fee calculation. Hudson, 475 U.S. at 307 n. 18; see also
Hohe, 956 F.2d at 410; Tavernor v. Ill. Fed'n of Teachers,
226 F.3d 842, 850 (7th Cir. 2000). Rather, it was designed to
give nonunion employees the information necessary to evaluate
whether they should challenge the union's fair share fee as an
unconstitutional infringement on their expressive
rights.*fn10 See Hudson, 475 U.S. at 306-07 & n. 18;
Hohe, 956 F.2d at 410-11; see also Hudson v. Chi. Teachers
Union, Local No. 1, 922 F.2d 1306, 1314 (7th Cir. 1991).
It follows that the cardinal purpose of the Hudson notice is
disclosure of the relationship between the fair share fee and
nonunion employees' pro rata share of union expenses
attributable to collective bargaining activities. See Hudson,
475 U.S. at 306-07; Hohe, 956 F.2d at 410. As discussed
only constitutionally permissible function of the fair share
fee is to standardize the financial burden on union and nonunion
employees in supporting the collective bargaining activities of
the "agency shop" union. See Lehnert, 500 U.S. at 524; see
also Abood, 431 U.S. at 225-26, 231. Revenues generated by
assessment of the fair share fee on all employees union and
nonunion must equal the union's expenses devoted to collective
bargaining activities.*fn11 Id.; see also Hudson,
475 U.S. at 306-07. A notice that does not describe this essential
equation fails the fundamental goal of Hudson and does not
sufficiently protect the constitutional rights of nonunion
The specific conditions identified in the Hudson footnote are
merely means to achieve this overarching end. A list of the
"major categories" of expenses assists nonunion employees in
determining the extent and nature of the union's chargeable
expenditures. See Hohe, 956 F.2d at 410. Verification by an
"independent auditor" provides reasonable assurance of the
accuracy of financial disclosures. Otto, 330 F.3d at 134-35.
And "an explanation of the share" of expenses devoted to
collective bargaining activities permits employees to evaluate
the union's justification for the fee. Hohe, 956 F.2d at 410.
But these details are meaningless in assessing the
constitutionality of a fair share fee unless they are accompanied
by disclosure of the relationship between the fair share fee and
nonunion employees' pro rata share of union
expenses attributable to collective bargaining activities. See
Lehnert, 500 U.S. at 524; Abood, 431 U.S. at 225-26, 231;
Hohe, 956 F.2d at 410-11; see also Hudson,
475 U.S. at 306-07.
The Sixth Circuit has gone further, holding in Tierney v. City
of Toledo, 917 F.2d 927 (6th Cir. 1990), that the Hudson
notice must disclose the union's total annual income
including profits from sources other than employee dues and fees
when necessary to corroborate the union's assertions regarding
funding of political activities. See id. at 938. This
conclusion is untenable. The accuracy of expenses listed in the
notice is reasonably assured through the independent auditor
requirement, see Otto, 330 F.3d at 134-35,*fn12 and
substantive challenges to the veracity of these figures should be
resolved through objections to the fair share fee calculation
itself, see Hudson, 922 F.2d at 1313-14.*fn13 Although
unclear from the opinion, the notice in Tierney apparently
disclosed collective bargaining expenses from the previous year
and revenues to be generated by the fair share fee as applied to
all employees. See Tierney, 917 F.2d at 938-39. The Sixth
Circuit did not cogently explain the need for more elaborate
information, and this court declines to modify the careful
balance struck in Hudson "[a]bsent a counter directive by the
Supreme Court." Otto, 330 F.3d at 132-33.
The Hudson notice need provide only enough information for
nonunion employees to gauge whether the fair share fee proposed
by the union arguably exceeds their pro rata share of expenses
attributable to collective bargaining activities. Hudson,
475 U.S. at 306-07; Hohe, 956 F.2d at 410. It should list the prior
year's expenditures, reasonably categorized to indicate their
use, with verification by an independent auditor. Hudson,
475 U.S. at 307 n. 18; see also Hohe, 956 F.2d at 410-11; Otto,
330 F.3d at 134-35 & n. 9. These expenditures should be further
divided into "chargeable" and "nonchargeable" costs, with a
general explanation of the basis for these allocations. Hudson,
922 F.2d at 1314-16; see also Hohe, 956 F.2d at 410-11;
Gilpin, 875 F.2d at 1316; Damiano, 830 F.2d at 1369-70. Most
importantly, the notice must link the total chargeable
expenditures to the revenues to be generated by the fair share
fee, if applied to all employees.*fn14 Hudson,
475 U.S. at 306-07; see also Lehnert, 500 U.S. at 524. Only with this
information can the potential objector make an intelligent
decision on whether to test the validity of the fee through
formal objection.*fn15 See Hudson, 475 U.S. at 306-07;
Hohe, 956 F.2d at 410-11.
The notice issued by the Association on March 15, 2003,
followed the disclosures suggested by the Hudson footnote. It
lists seventeen "major categories" of expenses incurred by the
Association in the previous year. These expenses are verified by
an "independent auditor."*fn16 And notes to the audit
provide an "adequate explanation" of the union's method for
share of expenses attributable to collective bargaining
activities. See Hudson, 475 U.S. at 307 n. 18.
However, the notice failed in its primary duty: to link the
fair share fee to nonunion employees' pro rata share of union
expenses attributable to collective bargaining activities. See
id. at 306. The notice issued by the Association identifies the
expenses attributable to collective bargaining activities and
converts this amount into a percentage of total expenditures,
which is then multiplied by the union dues rate to arrive at the
fair share fee. The error in this calculation is that it is based
on union dues, rather than the revenues necessary to cover
chargeable expenses. See Abood, 431 U.S. at 225-26, 231.
Union dues may bear little or no relation to chargeable (or
total) expenses of the union,*fn17 and are essentially
irrelevant to computation of the fair share fee.
The Association may have been led astray by dicta in several
cases, which appear to sanction the calculation of a fair share
fee based upon "the proportion of chargeable expenditures to
total dues." Tierney, 917 F.2d at 938-39; see also, e.g.,
Damiano, 830 F.2d at 1367 & n. 5; Laramie v. County of Santa
Clara, 784 F. Supp. 1492, 1499 (N.D. Cal. 1992). The court
rejects these formulations and the accompanying suggestion that
"the Supreme Court has
not specified what methodology a union must use to calculate the
[fair share] fee." Tierney, 917 F.2d at 938-39. To the
contrary, the Supreme Court has repeatedly provided a formula for
computing the fair share fee: the employee's pro rata share of
chargeable expenses. Lehnert, 500 U.S. at 524; Abood,
431 U.S. at 225-26, 231.
This share, phrased as a percentage of salary, is calculated by
dividing chargeable expenses of the union by the total salary of
all employees, union and nonunion.*fn18 See Hohe v.
Casey, 740 F. Supp. 1092, 1097 (M.D. Pa. 1990), vacated in part
on other grounds, 956 F.2d 399 (3d Cir. 1992); see also
Bagnall v. Airline Pilots Ass'n, Int'l, 626 F.2d 336, 339 (4th
Cir. 1980); S.E.C. v. Infinity Group Co., 993 F. Supp. 321, 323
(E.D. Pa. 1998), aff'd, 212 F.3d 180 (3d Cir. 2000). The
resulting percentage represents each employee's "fair share"
(i.e., pro rata share) of the chargeable expenses of the union.
See Lehnert, 500 U.S. at 524; Abood, 431 U.S. at 225-26,
231. By applying this methodology, and describing it in a
Hudson notice, the union informs non-members of chargeable
expenses and expected revenues and provides them with a basis on
which to assess the constitutionality of the fee. See Hudson,
475 U.S. at 306-07; Hohe, 956 F.2d at 410-11.
The fair share fee calculation presented in the March 15, 2003,
notice was not based on chargeable expenses, as required by the
First Amendment, but
instead was based on union dues. The notice is devoid of any
reference to revenues anticipated from the fair share fee, as
applied to all employees, and it offers no information by which
these revenues may be determined.*fn19 Without disclosure of
this information, the constitutionality of the fair share fee
cannot be reasonably evaluated, or even broached.*fn20 See
Hudson, 475 U.S. at 306-07; Hohe, 956 F.2d at 410; see also
Hudson, 922 F.2d at 1314.
The Association seems to have missed the Hudson forest for
the trees. Like those in Hudson and other cases, the notice
issued by the Association contains specific financial information
concerning union activities. Cf. Hudson, 475 U.S. at 307;
Hohe, 956 F.2d at 410; Gillespie v. Willard City Bd. of
Educ., 700 F. Supp. 898,
902-03 (N.D. Ohio 1987). Indeed, the sixteen-page document
provides a level of detail that likely exceeds the minimums
identified in the Hudson footnote and, in all respects, appears
to represent a credible effort by the Association to satisfy
But there is no good faith exception to the First Amendment in
the Hudson context. For all of its detail relating to union
expenses, the notice did not disclose the revenues to be
generated by assessment of the fee on all employees. In failing
to provide the constitutionally crucial link between fair share
fee revenues and chargeable expenses, the notice failed to
provide the information fundamentally necessary to allow nonunion
employees "to gauge the propriety of the union's fee." Hudson,
475 U.S. at 306. It thus did not adequately protect their rights
to freedom of expression. Id.; Hohe, 956 F.2d at 410;
Gillespie, 700 F. Supp. at 902-03.
The notice provided by the union on March 15, 2003, failed in
the central purpose of Hudson and must be deemed inadequate as
a matter of law. Summary judgment will be granted in favor of
plaintiffs on the unconstitutionality of the fair share fee
assessment based on that notice.
An appropriate order will issue.
AND NOW, this 4th day of February, 2005, upon consideration of
the crossmotions for summary judgment (Docs. 42, 44), and for the
reasons set forth in the accompanying memorandum, it is hereby
1. Plaintiffs' motion for partial summary judgment
(Doc. 42) is GRANTED.
2. Defendants' motion for summary judgment (Doc. 44)
3. The Clerk of Court is directed to defer the entry
of judgment until the conclusion of this case.