A.B.D. No. 86-9

STATE OF NEW JERSEY

BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION APPEAL BOARD

OAL DKT #PRB-8910-84

AGENCY DKT #AB-84-13

JONATHAN MALLAMUD

Petitioner,

v.

RUTGERS COUNCIL OF AMERICAN ASSOCIATION

OF UNIVERSITY PROFESSORS CHAPTERS

Respondent.

Nelson R. Kieff, Esq., pro hac vice, (National Right to Work Legal Defense Foundation, Inc.) appearing pursuant to N.J.A.C. 1:1-3.7 for petitioner.

Jeffrey A., Mintz, (Mesirov, Gelman, Jaffe, Cramer & Jamieson, attorneys) as local counsel for petitioner.

Paul Schachter, Esq., (Reinhardt & Schachter, P.C.) for respondent Rutgers Council of AAUP Chapters

DECISION AND ORDER

On January 17, and October 3, 1984 Jonathan Mallamud ("Petitioner") filed and perfected a petition of appeal with the Public Employment Relations Commission Appeal Board ("Appeal Board"). The Petitioner is a Professor of Law at Rutgers University School of Law-Camden and is represented for purposes of collective negotiations by Respondent, Rutgers Council of American Association of University Professors Chapters ("Rutgers Council"), an affiliate of the American Association of University Professors ("AAUP"). The

petition alleges that: (1) the representation fee in lieu of dues collected from Petitioner by Rutgers Council, pursuant to N.J.S.A. 34:13A-5.5 et seq. was improperly spent on activities and benefits not chargeable to objecting non-members; (2) the collection of a representation fee in lieu of dues and the structure and operation of the Rutgers Council demand and return system violated Petitioner's rights under the United States and New Jersey Constitutions and N.J.S.A. 34:13A-5.5 et. seq. and (3) Rutgers Council did not meet its statutory burden of proof in presenting evidence of its expenditures during demand and return system proceedings. On March 15, and October 24, 1984, Rutgers Council filed an Answer and amended Answer to the petition. On December 11, 1984, we declared the matter a contested case and transferred it to the Office of Administrative Law. The case was assigned to Administrative Law Judge Joseph Lavery who conducted a hearing on June 10 and October 2, 1985.

On December 30, 1985, the Administrative Law Judge issued his Initial Decision. He concluded that Petitioner's representation fee was not spent on any rebatable activities or on any member-only benefits. He also concluded that sanctions should be imposed upon Petitioner's counsel pro hac vice pursuant to N.J.A.C. 1:1-3.5. He ordered that Petitioner's appeal be denied and further ordered that Petitioner's pro hac vice counsel pay certain of Respondent's litigation expenses as sanctions. A copy of his report is appended to this Decision.

On January 28, 1986, the Petitioner filed exceptions pursuant to N.J.A.C. 1:1-16.4(a). On January 31, 1986, Rutgers Council filed a response.1/ Pursuant to N.J.S.A. 52:14B-10(c) the case is properly before us to affirm, reject or modify the Initial Decision.

The Petitioner's appeal involves representation fees paid during the 1982-83 and 1983-84 fiscal years (i.e. July 1 to June 30). As a result of demand and return system proceedings conducted by Rutgers Council for both these periods, Petitioner received a refund of the portion of his fees which were paid over to the AAUP.2/ Prior to the opening of the O.A.L. hearing, the parties agreed to a further refund of representation fees to Petitioner. A letter agreement, dated May 2, 1985, signed by counsel pro hac vice for the Petitioner and counsel for the Respondent reflects an agreement to refund any remaining amounts of Petitioner's 1982-83 fee and to refund one-half of the 1983-84 fee.3/

1/	The Petitioner's exceptions were filed after the expiration of both the period allowed by administrative rule and an extension of time granted to Petitioner. Rutgers Council has objected to this late filing. We have decided to review the Petitioner's exceptions.

2/	The refunds were granted because the AAUP did not come forward during the proceedings conducted by Rutgers Council to prove how AAUP spent its share of the Petitioner's representation fee in lieu of dues.

3/	The refund of $50.21 representing the portion of the fee payable to the AAUP for 1983-84, which is 21 percent of the Petitioner's fee for that year, is to count toward the 1983-84 refund.

The issues raised and discussed in the Initial Decision and the Petitioner's exceptions fall into three categories: (1) procedural issues dealing with discovery, limitations on cross-examination and the introduction of evidence and the imposition of sanctions on counsel; (2) constitutional and statutory issues concerning the structure and operation of the representation fee statutes and Rutgers Council's demand and return system and (3) factual and legal issues regarding whether certain Rutgers Council expenditures were chargeable to non-members and whether Rutgers Council had met its burden of justifying the amounts assessed upon Petitioner as a representation fee.

We have reviewed the Initial Decision in light of the Petitioner's exceptions, Respondent's reply and the entire record in this case. We adopt Judge Lavery's findings of fact with respect to both the undisputed and contested facts.

Petitioner's procedural exceptions challenge Judge Lavery's limitations on cross-examination, his exclusion from evidence certain "admissions" attached to Petitioner's post-hearing brief and the imposition of sanctions.4/ We find Judge Lavery's rulings,

4/	The exceptions also assert that Petitioner should have been provided with a transcript of the June 10, 1985 hearing and that the Initial Decision does not refer to that day of the hearing. This latter assertion is not correct. See Initial Decision at p.4. We find nothing in the record to indicate that Petitioner requested and was denied an opportunity to inspect the transcript in question. See N.J.A.C. 1:1-3.3. Petitioner's counsel pro hac vice was sanctioned for failing to notify Judge Lavery that he would not appear at the hearing scheduled for that date.

which were based upon his orders regarding discovery, to be sound and we reject these exceptions. We also affirm his imposition of sanctions. The assigned administrative law judge is responsible for the conduct of proceedings in contested cases we transfer to the Office of Administrative Law. We are reluctant to overturn an administrative law judge's decision that such sanctions are necessary to preserve the order and decorum of the hearings.

Before we discuss the Petitioner's substantive exceptions, we affirm Judge Lavery's determination that issues relating to the Petitioner's 1982-1983 representation fee and the portion of his 1983-1984 fee attributable to the AAUP are moot, since Petitioner has received a full refund of those amounts. Since the Petitioner's remedy, if his appeal is successful, would be a refund of his representation fee in lieu of dues, and since he has already received full relief for 1982-83 and partial relief for 1983-84, then our consideration of the issues raised in the Petitioner's exceptions will focus upon his entitlement, if any, to a further rebate of his 1983-84 representation fee in lieu of dues.

We reject the Petitioner's exceptions which question the validity of N.J.S.A. 34:13A-5.5 et seq. That issue has been resolved by the courts. See Boonton Bd. of Ed. of the Town of Boonton v. Judith M. Kramer 99 N.J. 523 (l985) cert. den. U.S. Supreme Ct. Dkt. No. 85-684 (3/l0/86) and Robinson v. N.J., 547 F. Supp. l29 (D.N.J. l982), supplemental opinion 565 F. Supp. 942 (D.N.J. l983), revd and remd 74l F.2d 598, ll7 LRRM 200l (3rd Cir.

l984), pet. for rehearing en banc den. 9/84 F.2d (l984), cert. den. U.S. , l05 S.Ct. l228, 84 L.Ed.2d 366 (l985). We also reject Petitioner's assertion that we lack authority to transfer cases for hearing to the Office of Administrative Law. Appeal Board proceedings are contested cases which require resolution in a quasi-judicial manner. See In re Matter of Public Hearings, 142 N.J. Super. 136, 151 (App. Div. 1976) and N.J.S.A. 52:14B-2(b). We are authorized to refer such cases for hearing to the Office of Administrative Law but retain the power to affirm, reject or modify the Initial Decision. See N.J.S.A. 52:14B-10(c) and N.J.S.A. 52:14F-7.

We now consider Petitioner's challenge to the demand and return procedure adopted by Rutgers Council.5/ Petitioner contends that "Rutgers Council and the State did not provide and ... is unable to provide, the essential protections that [Boonton] required as a precondition to collection of any fee." More specifically, Petitioner contends that Rutgers Council's demand and return system is inadequate because it: (1) fails to provide adequate notice of the amount and method of computation of the fee prior to the time it is deducted from his salary; (2) does not

5/	We disagree with Paragraph #5 of Respondent's reply to Petitioner's exceptions which asserts that we lack jurisdiction to examine a demand and return system. The absence of or defects in a demand and return system can be advanced as a reason warranting the refund of a representation fee.

provide for a neutral decisionmaker and (3) the demand and return system proceedings held concerning Petitioner's representation fee lacked due process.

The act authorizing a majority representative to collect representation fees in lieu of dues does not make reference to a notice requirement. PERC held in Boonton, that a majority representative commits an unfair practice unless it personally notifies each non-member of the amount of the fee and his rights to review the fee charged. See Kramer and Bd. of Ed. of Town of Boonton and Boonton Ed. Ass'n and NJEA, P.E.R.C. No. 84-3, 9 NJPER 472 (¶l4l99 l983), affmd as mod., sub nom., Boonton Bd. of Ed. of the Town of Boonton v. Judith M. Kramer 99 N.J. 523 (l985), cert. denied U.S. (3/10/86). The recent decision in Chicago Teachers Union v. Hudson, 54 U.S.L.W. 4231, U.S. (3/4/86), affirming 743 F. 2d ll87 (7th Cir. l984) ("Hudson") now requires that a majority representative show in advance of collection all employees who pay representation fees in lieu of dues how their fees are spent so they can make an informed decision whether to file for a rebate. The demand and return system used by Petitioner for 1983-84 did not have this feature. The Rutgers Council system provided that an objection could be registered within 90 days after the fiscal year began, rather than prior to the year. The system does give non-members access to the type of information discussed in Hudson, after an objection has been registered, and also provides for a complete escrow in an interest-bearing account of the fees of

objecting non-members. While we find that the demand and return system does not measure up to the Hudson mandate, we do not agree that this deficiency requires that Rutgers Council refund the remainder of Petitioner's fee. In Boonton, while PERC found that the majority representative committed an unfair practice by failing to provide proper notice, it did not order a full refund of the charging party's representation fee. The refund was limited to the period of time when the majority representative had no demand and return system in place.6/ The lack of notice did not taint an otherwise valid demand and return system. We view the new notice requirements mandated by Hudson as a change in the law which should be applied prospectively. See Rutherford Educ. Ass'n v. Bd. of Educ. of Rutherford, 99 N.J. 8 (1985) and Spiewak v. Rutherford Bd of Ed, 90 N.J. 63, 82-83 (1982). While Petitioner is entitled to the benefit of the ruling in Hudson, see Rutherford, supra, and Ramirez v. Amsted Industries, Inc., 86 N.J. 332, 357 (1981), we find that the lack of a proper notice constitutes harmless error in this case since Petitioner was aware of and exercised his right to register an objection with Rutgers Council.7/ We reject

6/	The charging party in Boonton appealed PERC's refusal to grant a full refund of her fee but the Commission's remedy was affirmed on review.

7/	Another purpose of the advance notice required by Boonton and Hudson is to prevent the temporary use of an objecting non-member's fees by setting up an advance reduction or escrow system. Here the 1983-84 fee collected from Petitioner did not exceed 85 percent of Rutgers Council dues. All of the fee

Footnote Continued on Next Page

Petitioner's other exceptions regarding the demand and return system. The Appeal Board is an impartial body which as mandated by statute is part of every demand and return system.8/ Because our jursidiction provides review of demand and return system proceedings by a de novo hearing we hold that any bias on Rutgers Council's Representation Fee Review Committee is neutralized by the safeguard of de novo proceedings before the Appeal Board.

The Petitioner has also challenged several categories of Rutgers Council expenditures, asserting that they are member-only benefits, or are unrelated to collective negotiations and contract administration. We affirm Judge Lavery's rulings in all these areas, including Rutgers Council's expenses relating to representation fee litigation in general and this case in particular. In holding that litigation expenses were chargeable to

7/	Footnote Continued From Previous Page

was escrowed after his objection was registered and half was later refunded. As we find infra, none was actually spent on rebatable activities. Given all of these circumstances, despite the fact that the fee may not have been escrowed the moment the 1983-1984 fiscal year began, there was no harm to Petitioner. It should be kept in mind that the statutory 15 percent cushion built into our system reduces the potential for temporary, improper use of the fees of objecting non-members and distinguishes it from systems such as that found wanting in Hudson.

8/	The demand and return system in Hudson was rejected because the union controlled the selection of the arbitrator who sat as the final step of the procedure. Significantly, within a week of its decision in Hudson, the U.S. Supreme Court declined to review Boonton, in which our Supreme Court upheld the validity of the representation fee legislation.

non-members, the U.S. Supreme Court in Ellis v. Brotherhood of Railway and Airline Clerks, U.S. 80 L. Ed. 2d 428, 104 S. Ct. 116 LRRM 2001, 2009 (1984) made an analogy to fair representation litigation where unions, in defending suits by employees they represent, draw upon dues and fees for their legal expenses. Cf Dolan v. Rockford School District, F. Supp. , 121 LRRM 2863, 2866 (N.D. Ill. 2/28/86)

We also reject Petitioner's assertion that a representation fee which is based upon a percentage of employee salary uniformly applied is improper. PERC has held that differences in employee salaries may be taken into consideration in assessing representation fees. (See Boonton, supra, 99 N.J. at 535-536 noting that non-professional employees paid lesser amounts than professional employees). We recently held that wide variations in the percentage of salary paid as representation fees among employees in the same negotiating unit may be grounds for modifying representation fees, Talamini and Matarazzo v. Cliffside Park Education Association, A.B.D. No. 86-6, l2 NJPER l87 (¶l7070 l986).

Finally, we agree with Judge Lavery that Rutgers Council satisfied its burden of proof by showing with sufficient specificity how it expended representation fees and dues during the 1983-1984 fiscal year.

In conclusion we grant Petitioner's exception that the demand and return system maintained by Petitioner was inadequate because it failed to provide a pre-collection Hudson-type notice.

However, because the Rutgers Council demand and return system is otherwise in susbtantial compliance with the law and because its defects worked no harm on Petitioner, we will not order any further refund of the representation fee in lieu of dues paid by Petitioner for 1983-1984. In all other respects we affirm the Initial Decision.

ORDER

The Initial Decision of the Office of Administrative Law (attached hereto) is hereby modified as set forth in the foregoing opinion and as modified is affirmed.

BY ORDER OF THE APPEAL BOARD

ROBERT J. PACCA

Chairman

Chairman Pacca and Board Members Dorf and Verhage voted in favor of this decision.

DATED: TRENTON, NEW JERSEY

April l5, l986

ISSUED: April l6, l986