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LUCID v. CITY & CTY. OF SAN FRANCISCO

July 17, 1991

WILLIAM LUCID, et al., Plaintiffs,
v.
CITY AND COUNTY OF SAN FRANCISCO, et al., Defendants



The opinion of the court was delivered by: HENDERSON

 THELTON E. HENDERSON, CHIEF UNITED STATES DISTRICT JUDGE

 This matter came before the Court on July 15, 1991, on plaintiffs' motion for summary judgment and defendant's cross-motion to dissolve the preliminary injunction. Having carefully considered the parties' written and oral arguments, the Court defers ruling on both motions and directs the parties to proceed as set forth below.

 BACKGROUND

 The background to this litigation has been set forth in this Court's January 18, 1991 Order granting a preliminary injunction and will not be recited here. The issue presented by these cross-motions is whether the defendant union *fn1" (Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local Union No. 38) (hereafter "Local 38" or "Union") has established procedures for initiating collection of agency fees from non-union members that comport with the constitutional requirements set forth in Lehnert v. Ferris Faculty Ass'n, U.S. , 114 L. Ed. 2d 572, 111 S. Ct. 1950, 59 U.S.L.W. 4544, 4548 (1991), Chicago Teachers Union v. Hudson, 475 U.S. 292, 106 S. Ct. 1066, 89 L. Ed. 2d 232 (1986), and Grunwald v. San Bernadino Unified City School Distr., 917 F.2d 1223 (9th Cir. 1990).

 Under the above authority, unions may initiate collection of agency fees from non-members, consistent with the first amendment, if the following requirements are satisfied:

 1. The union must provide non-members with an audited financial statement that identifies the major categories of expenses, and divides them into chargeable and non-chargeable expenses,

 2. The union must provide non-members with an opportunity to object to the amount of the agency fee sought, and any amount reasonably in dispute must be escrowed, and

 3. Prompt arbitration must be provided to resolve any objection over the amount of the agency fee.

 On January 18, 1991, we ruled that the disclosure made to plaintiffs was constitutionally inadequate in several respects and preliminarily enjoined defendants, pending trial or further order of the Court, from (1) taking any action aimed at collecting agency fees from plaintiffs, and (2) proceeding with an arbitration to resolve the dispute.

 On May 20, 1991, plaintiffs filed the instant motion for summary judgment seeking a permanent injunction against any efforts to collect agency fees from plaintiffs until Local 38 establishes constitutionally adequate procedures. Plaintiffs also seek nominal damages and an award of punitive damages in the amount of $ 1,000 per plaintiff.

 On June 4, 1991, Local 38 engaged an accounting firm Miller, Kaplan, Arase & Co. ("MKA") familiar with these matters to prepare a financial statement that would comply with the requirements set forth above and our preliminary injunction order. On June 17, Local 38 filed its opposition to plaintiffs' summary judgment motion along with a cross-motion to dissolve the preliminary injunction, based on the new MKA financial statement for the year ending December 31, 1990.

 Consequently, both plaintiffs' summary judgment motion and Local 38's cross-motion turn primarily on the adequacy of the new MKA financial statement. Plaintiffs argue that the MKA statement is also inadequate and that summary judgment should therefore still be granted. Local 38 contends that the MKA statement is sufficient and therefore the preliminary injunction should be dissolved and the summary judgment motion denied. Plaintiffs also raise two subsidiary issues in the event we find the MKA statement adequate: (a) whether they can be retroactively assessed agency fees, and (b) whether plaintiffs have been provided sufficient notice concerning their right to object to the agency fee and have such objection resolved by arbitration. *fn2"

 DISCUSSION

 A. Adequacy of the MKA Schedule

 The MKA financial statement consists of an audited "schedule of chargeable and nonchargeable expenses" for Local 38 for the year January 1, 1990 to December 31, 1990. It breaks down the Union's expenses into 27 different categories and determines what percentage is "chargeable" and what percentage is "non chargeable" based on criteria set forth in the "Notes" attached to the schedule. The combined chargeable expenses for all 27 categories constitute 78.9% of total expenses. Based on this percentage, ...


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