National Labor Relations Board v. Studio Transportation Drivers Local 399
United States Court of Appeal for the Ninth Circuit
Cite as 06-72695

Union’s Method of Calculating Representation Dues was an Unfair Labor Practice

The following are the pertinent facts:

Hyo Chol Lim was an employee of Hilltop Services, a subsidiary of Universal Studios. The Studio Transportation Drivers, Local 399 union represented a bargaining unit of about ten air conditioning, electrical, and general maintenance technicians who work for Hilltop including the approximately 2,500 drivers and wranglers employed by major motion picture studios.

There was a collective bargaining entered and agreed between the Union and the studios, which among others include the provision respecting the manner of hiring of drivers and wranglers to which must be done according to specific rules and guidelines. It also includes sanctions in case of violation of the CBA or its rules. In addition, the CBA provides grievance procedures and stipulations as to payment of liquidated damages.

Further, the Studio Transportation Drivers, Local 399 union collective bargaining agreement includes a union security clause which require all employees to become members of the Union within a certain period after being hired.

In April 2002, Hyo Chol Lim notified the Studio Transportation Drivers, Local 399 union that he was asserting his rights as a Beck objector, based on the right granted him under the Supreme Court’s decision in Communications Workers of America v. Beck, 487 U.S. 735 (1988). Under that decision, employees who work under collective bargaining agreements with union security clauses can refuse to join the union as long as they agree to pay their fair share of representational expenses.

The Studio Transportation Drivers, Local 399 union conceded Lim’s right to refuse to join the union under Beck, but informed him that his fair share of representational expenses would be 99.6% of dues owed by union members.

Lim, represented by the National Right to Work Legal Defense Foundation, filed a charge with the National Labor Relations Board challenging this 99.6% figure and alleging that the union’s method of calculating dues was an unfair labor practice under § 8(b)(1)(a) of the National Labor Relations Act.

Specifically, Lim challenged the union’s decision with the following contentions:

• Challenging the use of the liquidated damages obtained in the sum of $26,705 to fund non-representational expenses.


• Lim argued that this practice unfairly increased his fair share fee by reducing the amount of money the union spent on non-representational expenses from its general fund, and thus increased the percentage of representational expenses that he owed.

The Acting Regional Director of the Los Angeles office of the National Labor Relations Board filed a complaint against the Studio Transportation Drivers, Local 399 union.

In the complaint, the National Labor Relations Board contended that the Studio Transportation Drivers, Local 399 union’s liquidated damages income should have been excluded from the calculation of the fair share fee owed by Lim. The Board noted that if the “liquidated damages” income were excluded, Lim would have only paid as a fee 98.8% of full union member dues, not 99.6%.

In the case, the parties have agreed on the basic framework for how Lim’s representational fees should have been calculated. The parties disagree, however, on the appropriate total amount for non-representational expenses.

Later on, the case was heard before an Administrative Law Judge on November 3, 2003. After hearing the respective claims and arguments of the parties, the Administrative Law Judge has made the following findings:

• That the Studio Transportation Drivers, Local 399 union violated the National Labor Relations Act and ordered the union to recalculate the fair share fee required of Beck objectors like Lim.


• That the Studio Transportation Drivers Local 399 union reimburse Lim according to the Board’s calculation.

A three-member panel of the Labor Board unanimously agreed with the Administrative Law Judge’s finding that the Union’s practices violated the National Labor Relations Act.

Consequently, the National Labor Relations Board applied to the United States Court of Appeal for the Ninth Circuit to enforce its order finding that Studio Transportation Drivers, Local 399 committed an unfair labor practice against Hyo Chol Lim, who refused to join the Union.

In granting the National Labor Relations Board application to enforce its order, the United States Court of Appeal for the Ninth Circuit found that:

• Where a union’s representational expenses generated secondary income as liquidated damages and the union spent the secondary income on political and charitable contributions rather than on representational expenses, the National Labor Relations Board’s conclusion that the union’s actions essentially increased the dues required to pay for these contributions in violation of the National Labor Relations Act was rational and consistent.