Ellis v. Bhd. of Ry. - 466 U.S. 435, 104 S. Ct. 1883 (1984)

Rule:

The test must be whether a challenged expenditure is necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative of the employees in dealing with an employer on labor-management issues. Under this standard, objecting employees may be compelled to pay their fair share of not only the direct costs of negotiating and administering a collective-bargaining contract and of settling grievances and disputes, but also the expenses of activities or undertakings normally or reasonably employed to implement or effectuate the duties of a union as exclusive representative of the employees in a bargaining unit.

Facts:

Present and former clerical employees of an airline which had a union shop agreement with the union representing such employees, brought separate suits, later consolidated, against their national union, its board of adjustment, and three locals, alleging the inadequacy of the union's rebate scheme respecting the use of objecting employees' dues for union political or ideological activities, and the illegality of burdening objecting employees with six specific union expenses--the quadrennial convention, litigation not involving the negotiation of agreements or settlement of grievances, union publications, social activities, death benefits for employees, and general organizing efforts. The district court granted summary judgment to the employees on the question of liability regarding the six expenses at issue, and after finding the union's rebate program acceptable, ordered refunds for the expenditures at issue. The Court of Appeals, affirming in part and reversing in part, held that the union's rebate plan was adequate, but that because the challenged six activities ultimately benefited the union's collective bargaining efforts, the union could finance them with dues collected from objecting employees. A writ of certiorari was granted. 

Issue:

Could the union finance the challenged activities with dues collected from objecting employees?

Answer:

Yes, but only with respect to the expenditures necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative of employees dealing with employer on labor-management issues.

Conclusion:

The Court held that pursuant to the Railway Labor Act, the employees could be compelled to pay dues to the union to prevent the employees from reaping benefits as free riders of bargaining performed by the union. The Court, however, held that the employees could rightfully object to, and receive a refund for, those expenditures not necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative of employees dealing with employer on labor-management issues. Under this standard, the Court held the organizing and litigation expenses were not to be charged to the employees. The Court held that publication expenses were chargeable to the employees only to the extent they were attributable to the cost of reporting to the employees about those activities the union could charge them for doing.