Tavernor, Bernadette v. IL Fed Teachers ( 2000 )


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  • In the
    United States Court of Appeals
    For the Seventh Circuit
    No. 99-2766
    Bernadette Tavernor, et al.,
    Plaintiffs-Appellants,
    v.
    Illinois Federation of Teachers
    and University Professionals of
    Illinois Local 4100,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Central District of Illinois, Springfield Division.
    No. 99-3050--Jeanne E. Scott, Judge.
    Argued January 21, 2000--Decided September 6, 2000
    Before Posner, Diane P. Wood, and Evans, Circuit
    Judges.
    Diane P. Wood, Circuit Judge. Two points in the
    area of public labor relations are by now well
    established. First, public employers may have a
    collective bargaining agreement with a union that
    requires all employees, union members and
    nonmembers alike, to contribute to the union’s
    representational activities--that is, the
    agreement may include a "union security clause."
    Second, those who object to nonrepresentational
    activities of the union have the right to pay
    fees that exclude contributions to those
    activities--so-called "fair share fees." See
    Hudson v. Chicago Teachers Union Local No. 1, 
    475 U.S. 292
    , 302 (1986), citing Abood v. Detroit Bd.
    of Educ., 
    431 U.S. 209
    (1977).
    In this case, we must assess the system used by
    the union representing certain clerical employees
    of the University of Illinois at Springfield to
    implement those rules, to ensure that this system
    respects the First Amendment rights of objecting
    employees. The district court upheld the union’s
    system. We conclude, however, that even though
    the union followed the mechanics of certain
    statutory procedures established by the State of
    Illinois, its system in operation did not provide
    sufficient protection to the objectors. We
    therefore reverse and remand for further
    proceedings.
    I
    The plaintiff employees work in a bargaining
    unit represented exclusively by the University
    Professionals of Illinois, Local No. 4100 (UPI),
    an affiliate of the Illinois Federation of
    Teachers (IFT). IFT in turn is an affiliate of
    the American Federation of Teachers, a national
    labor organization. The University’s collective
    bargaining agreement (CBA) makes UPI the
    recognized exclusive bargaining agent for members
    and nonmembers alike. It also contains a union
    security clause that requires employees either to
    join the union or to pay "fair share fees" to
    cover the cost of their representation in
    collective bargaining.
    Fair share fees are the solution to free rider
    problems in the collective bargaining context.
    Unions assist employees by helping them bargain
    more effectively with employers. The idea is the
    simple "strength in numbers" aphorism: if
    employees are united and speak with one voice,
    they are more likely to get what they want. Not
    all employees want to join unions, however. This
    presents a possible free-rider problem: because
    all employees are covered by a collective
    bargaining agreement, it is possible for
    employees who elect not to join the union to reap
    the benefits of the union’s representation
    without paying the dues associated with union
    membership. And if representation is "free",
    fewer employees would elect to join unions,
    leaving it to their co-workers to bear the costs.
    Fair share fees ensure that the costs of
    collective bargaining are borne by all employees,
    regardless of their choice to join the union.
    Lehnert v. Ferris Faculty Ass’n, 
    500 U.S. 507
    ,
    517 (1991); Communications Workers of America v.
    Beck, 
    487 U.S. 735
    , 748 & n.5 (1988); Ellis v.
    Brotherhood of Ry., Airline & S.S. Clerks, 
    466 U.S. 435
    , 447 (1984); 
    Abood, 431 U.S. at 221-22
    ,
    224.
    The Illinois legislature has adopted the
    Illinois Educational Labor Relations Act (IELRA),
    115 ILCS 5/1 et seq., which establishes
    procedures governing collective bargaining
    arrangements between public educational
    institutions and their employees, including the
    assessment of fair share fees for objectors. See
    115 ILCS 5/11. The Illinois Education Labor
    Relations Board (IELRB) administers the IELRA,
    and among other things, resolves disputes between
    objectors and unions regarding fair share fees.
    Under the IELRA and the governing regulations,
    see Ill. Admin. Code sec. 1125.10 et seq., unions
    and employers may agree to charge fair share fees
    to public employees who are not members of the
    union but are covered by the collective
    bargaining agreement. The union certifies the
    amount of the fair share fee to the employer. The
    amount certified can neither exceed union dues
    nor include any costs related to supporting
    candidates for political office. The employer
    deducts the certified fair share fee from
    nonmembers’ earnings and pays the fee to the
    union. At least two weeks before the deductions
    begin, the union must provide notice of the fair
    share fee to all nonmembers as well as the right
    to object to that amount. Ill. Admin. Code sec.
    1125.20.
    A nonmember has six months after the first
    deduction in which to object to the fair share
    fee; the nonmember waives any objection to fees
    collected before the objection. 
    Id. sec. 1125.30.
    Objections are effective only for the year in
    which the fair share fee is sought, 
    id., so objections
    must be renewed on an annual basis. If
    a nonmember objects to the amount of the fair
    share fee (either in whole or in part), the
    objecting nonmember’s full fee continues to be
    deducted; however, the fee (or the portion
    thereof in dispute) is placed in an interest-
    bearing escrow account managed by the IELRB or
    the union. The IELRB then consolidates all fair
    share fee objections for a single bargaining unit
    and conducts an administrative hearing to
    determine the correct fair share fee. 
    Id. sec. 1125.60.
    The hearing is held within 30 days of
    the last possible time for filing objections--in
    other words, seven months after the first
    deduction. 
    Id. sec. 1125.80.
    IFT developed the fair share fee program
    adopted by UPI. Because UPI represents
    educational employees, it uses the school year
    calendar for the calculation (and deduction) of
    fair share fees. As provided for in the IELRA,
    the University automatically deducts fair share
    fees from nonmembers’ paychecks. In this case,
    UPI has instructed the University to deduct an
    amount equivalent to 100 percent of union dues as
    nonmembers’ fair share fee payment. The notice
    UPI sent to nonmembers indicates the amount of
    the fair share fee (expressed as a percentage of
    union dues) as well as information about how the
    fee was calculated. For the 1997-98 school year,
    the notice said that the fair share fee was 84.46
    percent of full union dues; for the 1998-99
    school year it was 86.78 percent. Notwithstanding
    those calculated percentages, however, in both
    years the notice also said that a fair share fee
    equivalent to 100 percent of union dues would be
    deducted. The notice indicated how objections
    could be filed with the IELRB. As the IELRA
    requires, when someone objects, the full amount
    of the deducted fees (i.e., 100 percent of the
    union dues for that objector) is held in an
    interest bearing escrow account managed by the
    IELRB. If a person does not object within the
    period allowed, he waives the right to object to
    the fee, and the UPI receives the amount deducted
    (in this case, 100 percent of union dues) in its
    entirety.
    The plaintiffs filed objections to the
    collection of funds exceeding the calculated fair
    share fee with the IELRB for both the 1997-98 and
    1998-99 school years. As the system required, the
    University continued to deduct an amount
    equivalent to 100 percent of union dues from
    their paychecks, but it placed these funds in an
    escrow account instead of turning them over to
    the union. In July 1998, the IELRB consolidated
    the plaintiffs’ objections to the 1997-98 fees
    and set a hearing for September 10, 1998. The
    hearing was eventually held on October 30, 1998;
    the Administrative Law Judge rendered a decision
    on May 17, 1999.
    Just before the IELRB hearing was scheduled to
    take place, IFT had offered all objectors an
    immediate refund, in an amount greater than the
    calculated non-chargeable portion of the fee, in
    exchange for dropping their objections. The Labor
    Board approved the withdrawal of their charge and
    disbursed their escrowed fees, thinking that the
    settlement had been accepted. In fact, it had not
    been. Instead, the plaintiffs had withdrawn their
    objections without accepting the settlement
    offer, without notifying the union, and without
    telling their lawyer. (This explains why these
    plaintiffs, although listed as objectors at the
    initial stages of the proceeding, are absent from
    the list of objectors at the conclusion of the
    IELRB proceedings.) The union attempted to
    rectify the situation when it discovered what had
    happened by determining the amount that had been
    disbursed from the plaintiffs’ escrowed funds,
    adding interest at the prime rate through May
    1999, and sending the non-chargeable amounts to
    the plaintiffs’ attorney.
    None of this satisfied the plaintiffs, who were
    out to establish a broader principle. Tavernor,
    along with Richard Barnes, Carol Dixon, Cynthia
    Ervin, Donna Johnson, Peggy Kitchen, Ginger
    Mayer, Angela Pezold, Marcia Rossi, and Linda
    Squires, filed a class action complaint on behalf
    of (1) all nonmembers who were not notified that
    they could object to the Union’s collection of
    fees for indisputably nonchargeable activities
    and have their fee reduced accordingly and (2)
    nonmembers who took the step of making their
    objection known to UPI. The plaintiffs asked to
    have the union fair share fee collection
    procedure declared a violation of the First
    Amendment. They argued that UPI’s process does
    not include sufficient procedural safeguards (as
    required under the First and Fourteenth
    Amendments) and that UPI must reduce fair share
    fees upon receipt of the nonmembers’ objection
    for all costs that are indisputably not
    chargeable to collective bargaining. By way of
    relief, they sought an injunction against the
    collection of fair share fees and a refund with
    interest of all funds they had paid which were
    not chargeable to them as a fair share fee. UPI
    and IFT moved to dismiss the complaint for
    failure to state a claim (or, in the alternative,
    to defer to proceedings before the IELRB). The
    district court treated the motion as one for
    summary judgment and ruled in favor of UPI and
    IFT.
    II
    The Supreme Court has laid out three
    requirements for the collection of "fair share
    fees": the union must (1) provide "an adequate
    explanation of the basis for the fee"; (2) give
    the nonmember "a reasonably prompt opportunity to
    challenge the amount of the fee before an
    impartial decisionmaker"; and (3) have "an escrow
    for the amounts reasonably in dispute while such
    challenges are pending." 
    Hudson, 475 U.S. at 310
    .
    Because the payment of a fair share fee has an
    effect on the objectors’ First Amendment rights,
    the procedures used to collect "fair share fees"
    must be "carefully tailored to minimize the
    infringement" on those rights. 
    Id. at 303;
    see
    also 
    Lehnert, 500 U.S. at 519
    (holding union’s
    expenses for activities germane to the collective
    bargaining process may be chargeable to
    nonmembers where they do not "significantly add
    to the burdening of free speech that is inherent
    in the allowance of an agency or union shop").
    The employee bears the burden of protecting her
    First Amendment rights. If she believes that the
    union has incorrectly calculated the fair share
    fee or has included expenses related to political
    or other expression to which the employee does
    not wish to contribute, she must make her
    objection known. International Ass’n of
    Machinists v. Street, 
    367 U.S. 740
    , 774 (1961).
    Once an employee objects, the burden shifts to
    the union to demonstrate that its fair share fee
    was correctly calculated and does not include
    expenditures related to non-germane matters.
    
    Hudson, 475 U.S. at 306
    .
    Because the employees’ First Amendment rights
    are at stake, "the procedure [must] be carefully
    tailored to minimize the infringement." 
    Hudson, 475 U.S. at 303
    ; see also 
    id. at 309
    (specifying
    requirements "necessary to minimize both the
    impingement and the burden"). For the objector,
    even a requirement that she support the
    collective bargaining representative through fair
    share fees potentially affects her First
    Amendment rights and may "interfere in some way
    with [her] freedom to associate for the
    advancement of ideas, or to refrain from doing
    so, as [s]he sees fit." 
    Abood, 431 U.S. at 222
    .
    For this reason, it is critically important to
    ensure that the fair share fee collection
    mechanism is no more burdensome on employees’
    rights than necessary. See 
    Hudson, 475 U.S. at 307
    n.20; see also Dashiell v. Montgomery County,
    Md., 
    925 F.2d 750
    , 754 (4th Cir. 1991).
    Furthermore, "[t]he amount at stake for each
    individual dissenter does not diminish [the First
    Amendment] concern. For, whatever the amount, the
    quality of respondents’ interest in not being
    compelled to subsidize the propagation of
    political or ideological views that they oppose
    is clear." 
    Hudson, 475 U.S. at 305
    .
    In general, there are three systems used to
    collect fair share fees, some of which satisfy
    these concerns more easily than others. Under a
    rebate system, the union collects the full amount
    of dues, spends them, and then refunds to
    nonmembers the portion that it was not allowed to
    exact from nonmembers in the first place (that
    is, the amount exceeding collective bargaining
    costs). Rebates of this kind--where the union
    itself has the disputed funds for a period of
    time--are no longer used in contexts where First
    Amendment rights are in play (such as the cases
    of public employers or those falling under the
    Railway Labor Act). The problem is simple: such
    a system effectively requires the objector to
    make an involuntary (even if temporary) loan to
    the union that can be used for expenses not
    related to collective bargaining. See 
    Ellis, 466 U.S. at 443-44
    .
    In striking down rebate systems, however, the
    Court also signaled what kind of system would be
    acceptable, noting that "there are readily
    available alternatives, such as advance reduction
    of dues and/or interest-bearing escrow accounts,
    that place only the slightest additional burden,
    if any on the union." 
    Id. In an
    advance reduction
    system, the union collects only what it has
    calculated to be the fair share fee (with,
    perhaps, a slight cushion to cover any possible
    calculation errors) and no more. In an escrow
    system (or "deduction-escrow-refund" system, as
    it has been described, Grunwald v. San Bernadino
    City Unified Sch. Dist., 
    994 F.2d 1370
    , 1372 (9th
    Cir. 1993)), the union collects some amount from
    nonmembers (either an amount equal to full union
    dues, the estimated "fair share fee," or the fair
    share fee plus some cushion). The union places
    the fees collected from nonmembers into an
    interest-bearing escrow account. Depending on the
    particular system, the union may place into
    escrow either the full amount collected or only
    the amount reasonably in dispute. The funds
    remain in escrow, and cannot be spent by the
    union, until one of two things happens: either
    (1) the nonmember does not object to the union’s
    collection of the funds, in which case the funds
    are released to the union, or (2) the nonmember
    objects to the collection of the funds and the
    proper fair share fee amount is decided by an
    impartial decisionmaker. In either case, the
    party who has a right to the funds receives them
    with interest.
    The UPI procedure at issue here is of the
    deduction-escrow-refund ilk. What is somewhat
    unusual about the procedure is that UPI collects
    and escrows an amount that it concedes is more
    than the calculated fair share fee. That is,
    rather than collect an amount equal to or only
    slightly exceeding the 80-odd percent of union
    dues that UPI has calculated is allocable towards
    "chargeable" expenses (that is, costs associated
    with collective bargaining), UPI has the
    university collect 100 percent of union dues from
    all employees of the bargaining unit, members and
    nonmembers alike. It does so even though in
    recent memory its chargeable expenses have never
    gone much higher than approximately 85 percent of
    union dues. The objectors thus have two points to
    make: first, the conventional complaint about the
    union’s calculation of its fair share charge
    (i.e., what expenses are chargeable), and second,
    the more uncommon complaint about the systematic
    collection of amounts that admittedly exceed the
    costs of collective bargaining. The plaintiffs
    claim that this is not the kind of narrowly
    tailored procedure required by the Supreme
    Court’s decisions, and that nothing less than
    some sort of advance reduction system would be
    constitutional under Hudson.
    The circuits are split as to whether such an
    absolute rule exists. Most have found that either
    advance reduction or a "deduction-escrow-rebate"
    approach can satisfy Hudson, as long as the
    particular procedure provides sufficient
    information to nonmembers and a prompt, impartial
    method through which nonmembers can challenge the
    calculation of the fee. See 
    Grunwald, 994 F.2d at 1373-76
    ; Pilots Against Illegal Dues v. Air Line
    Pilots, 
    938 F.2d 1123
    , 1132-33 (10th Cir. 1991);
    Gibson v. The Florida Bar, 
    906 F.2d 624
    , 631
    (11th Cir. 1990); Crawford v. Airline Pilots
    Ass’n Int’l, 
    870 F.2d 155
    , 161 (4th Cir. 1989);
    Hohe v. Casey, 
    868 F.2d 69
    , 72 (3d Cir. 1989);
    Andrews v. Educational Ass’n of Cheshire, 
    829 F.2d 335
    , 339 (2d Cir. 1987). These courts have
    found that escrow accounts satisfy the First
    Amendment, because (unlike a rebate) an escrow
    does not give the union even temporary use of the
    dissenters’ funds to pay for political or other
    sorts of speech. They also rely on language in
    Ellis suggesting that escrow accounts are a
    constitutional alternative. 
    See 466 U.S. at 444
    .
    Other courts have not read Ellis quite that
    broadly, observing that the Court may have had in
    mind the use of escrow accounts only for disputed
    amounts. In Hudson, for example, it referred to
    an escrow "for the amounts reasonably in dispute
    while such challenges are 
    pending." 475 U.S. at 310
    (emphasis added). This has led the Sixth
    Circuit to hold that only advance reductions
    comply with the First Amendment. See Tierney v.
    City of Toledo, 
    824 F.2d 1497
    , 1504-05 (6th Cir.
    1987). Tierney held unconstitutional a fair share
    collection procedure under which the union
    collected a fee equal to 100 percent of union
    dues and refunded the nonchargeable amount upon
    objection. See also Damiano v. Matish, 
    830 F.2d 1363
    , 1370 (6th Cir. 1987).
    In addition to the question whether an advance
    reduction is the only constitutionally acceptable
    option, several other aspects of fair share fee
    procedures have also come under attack. See,
    e.g., Kidwell v. Transportation Communications
    Int’l Union, 
    946 F.2d 283
    , 304 (4th Cir. 1991)
    (must the calculation of the fair share fee be
    done by professional accountants or an
    independent auditor); Ping v. National Educ.
    Ass’n, 
    870 F.2d 1369
    , 1374 (7th Cir. 1989)
    (same); Pilots Against Illegal 
    Dues, 938 F.2d at 1132
    (how accurate must the calculation be and
    what level of detail is required); 
    Dashiell, 925 F.2d at 756
    (same); Shea v. International Ass’n
    of Machinists and Aerospace Workers, 
    154 F.3d 508
    , 515 (5th Cir. 1998) (can an annual objection
    be required); 
    Gibson, 906 F.2d at 632
    (composition of arbitral panel). The theme that
    we perceive in these cases is a familiar one:
    each fair share fee procedure must be assessed as
    a whole, to ensure that it meets the "careful
    tailoring" requirement of Hudson.
    Our review of UPI’s fair share collection
    procedure convinces us that the burdens it places
    on objectors are too great under Hudson. To begin
    with, the independent dispute resolution
    procedure is far from prompt. Under the IELRA,
    objections do not even begin to be processed
    until six months after the initial deduction is
    made. The objections must then be consolidated
    and a hearing scheduled. It then takes an
    additional four to six months for the decision to
    be made. And, if either the union or the
    objectors disagree with the decision, the funds
    remain in escrow pending the resolution of an
    appeal. Thus, for at least a year, the objector
    does not have access to the portion of her funds
    that no one ever claimed the union could keep.
    Cf. 
    Grunwald, 994 F.2d at 1372-73
    (upholding fair
    share fee dispute procedure where lag between
    objection and decision was between two and three
    months). Moreover, the IELRA requires objections
    to be renewed annually, which places an
    additional burden on objectors. No sooner does
    the objector complete one round than, like
    Sisyphus with his rock, he must begin anew with
    another. See 
    Shea, 154 F.3d at 515
    .
    It is important to note that the IELRA system
    itself does not require the 100% escrow that UPI
    uses. Our remarks should therefore not be taken
    as facial criticism of the IELRA; we are
    addressing only the way that mechanism is being
    used here. The union collects some funds that it
    realizes it would not be entitled to retain over
    a proper objection (but that it is equally
    entitled to keep if the nonmember chooses not to
    object). Before the deductions are made, the
    union has calculated the fair share fee (84 to 86
    percent of union dues). The union then requests
    the university to deduct an amount equivalent to
    full union dues from nonmembers’ paychecks. From
    the point of view of the dissenting subset of
    nonmembers (however large that may be), although
    there is no dispute regarding approximately 15
    percent of the funds collected, they are
    nonetheless deprived of those funds for well over
    a year. This system places a significant burden
    on the objection process.
    True, UPI responds, but two factors operate
    together to save it: first, the union does not
    get the benefit of the funds either, because they
    are in an outside escrow account managed by
    IELRA, and second, when the dust settles the
    objectors get the monies they are due with a
    proper interest payment. UPI does bear a slight
    burden under the disputed system: it, too, is
    deprived of funds to which it is indisputably
    entitled while dissenters’ objections wend their
    way through the administrative system. Indeed, as
    a percentage, the union loses far more, because
    its ultimate share of the escrowed funds is some
    85 percent of the total, while the dissenters’
    share is only about 15 percent. From a legal
    point of view, however, this simply rephrases the
    question: can the union deprive the objectors of
    the use of their money for lengthy periods of
    time, as long as the ultimate payment is with
    interest? As a practical matter, we agree that
    the system seems a bit odd at first: why would
    UPI design a system that results in its being
    deprived of funds due to it? There are two
    possible answers. The answer may lie in the
    relative size of the two classes of employees. At
    oral argument, counsel for UPI estimated that out
    of 80,000 represented employees, fewer than 100
    object in any given year. By certifying the
    maximum fair share fee possible (100 percent of
    dues), UPI may be maximizing what it stands to
    gain through forfeiture. Coupling that fact with
    the reality that the 15 percent shares for the
    objectors are relatively small dollar amounts in
    absolute terms, the union’s incentive to handle
    things this way may be more apparent. We
    therefore do not think that the reciprocity of
    burdens saves this system.
    UPI’s point about interest is in principle a
    valid one. In case after case, we point out that
    a person is fully compensated for the temporary
    deprivation of money if the repayment is made
    with a market rate of interest. See, e.g., Medcom
    Holding Co. v. Baxter Travenol Lab., Inc., 
    200 F.3d 518
    , 519 (7th Cir. 1999); In re Milwaukee
    Cheese Wis., Inc., 
    112 F.3d 845
    , 849 (7th Cir.
    1997). If the money is in an escrow account, the
    objector has given nothing to the union to use,
    answering the Supreme Court’s objection in Ellis.
    And if the ultimate repayment after the
    adjudication is over is made with interest, there
    is no economic loss. The problem with this
    picture, however, lies in the Supreme Court’s
    caution that the procedures for administering
    fair share systems must be structured so as to
    minimize the burden on the objectors’ First
    Amendment rights. Anyone who has read even the
    first thing in law and economics literature
    (perhaps Ronald Coase’s Nobel Prize-winning
    works, including his path-breaking article on The
    Problem of Social Cost, 3 J. Law & Econ. 1) will
    be familiar with the concept of transaction
    costs. The interest payment will compensate the
    objectors for the lost use of their money during
    the adjudicative process, but it will not
    compensate them for the transaction costs they
    incur in order to obtain it. The Supreme Court
    has not asked for the impossible--it has not
    demanded that unions find a way to reduce
    transaction costs to zero--but it has sent the
    message that unions must use systems that will
    keep these costs to a manageable level. See also
    
    Grunwald, 994 F.2d at 1375
    (stressing the need to
    keep procedural burdens down, especially in light
    of the small sums involved); 
    Shea, 154 F.3d at 515
    (same). It is in that light, therefore, that
    we complete our review of the system the UPI
    uses.
    In support of its procedure, UPI relies heavily
    on the Ninth Circuit’s opinion in Grunwald, in
    which the court upheld a deduction-escrow-refund
    procedure that the union thinks was similar to
    its own. But the devil is in the details, and it
    is the details of the Grunwald system that
    distinguish it from UPI’s. In Grunwald, as here,
    an amount equal to 100 percent of union dues was
    deducted from nonmembers’ paychecks, and
    nonmembers’ fees were placed in an interest-
    bearing escrow account. The difference lay in
    precisely the transaction cost point we have just
    made. In Grunwald, nonmembers did not have to go
    through such a cumbersome dispute procedure in
    order to collect their refund. Instead, once a
    nonmember submitted a notice to the union
    objecting to the use of her fees, she could
    either accept the union’s calculation of the fair
    share fee, in which case she would receive a
    refund from the union for the excess, or, if she
    disputed the union’s calculation of the fee, she
    could request that the appropriate fee be
    determined through arbitration. See 
    Grunwald, 994 F.2d at 1372-73
    . The contrast with the current
    system is immediately evident. (We do not believe
    that the union’s offer here to settle the case on
    the eve of litigation transforms this system into
    the Grunwald one; settlement is a matter of
    grace, while the system in Grunwald was a matter
    of right.)
    In our case, those who wish to object (who, it
    is worth noting, may be a smaller group than
    those who do not choose to become union members)
    bear a substantial burden no matter what they do:
    they can object and spend substantial time and
    energy to collect their refund, or they can forgo
    the hassle of objecting and forfeit the funds.
    The union only benefits: it either gets exactly
    what it is due or, for those who do not have the
    time or energy to fight, more than what it is
    due. We emphasize that these observations pertain
    to the system we are reviewing in this particular
    case, where there is a persistent difference of
    approximately 15 percent between the amounts
    collected and the fair share fee. Unions are
    entitled to use reasonable estimates to collect
    amounts that include a cushion. The transaction
    cost argument, in short, is a double-edged sword.
    Nothing we say here should be understood to mean
    that objectors have the right to impose
    unreasonable transaction costs on unions either,
    as for example by forcing them to engage in
    elaborate escrow and arbitration procedures over
    a couple of dollars, as long as a process is in
    place to make sure the books are ultimately
    balanced properly for all concerned. Our only
    point is that these facts do not present such a
    case for the union.
    UPI’s primary argument for its objection
    procedures is that the current system is more
    simple for the University’s payroll. We are not
    convinced that it would be particularly hard for
    UPI to instruct the University to deduct the
    calculated fair share fee plus a slight cushion
    (1-2 percent, for example) from each objector and
    place the cushion plus any amounts in dispute in
    escrow, or for the University to adjust each
    employee’s deduction once he or she objects.
    (There would be no need for such an instruction
    until an objection was filed, however.) Payroll
    systems process different sorts of deductions for
    different employees all the time. We also note
    that "[t]he IFT amended the recommended fair
    share fee program for the 1997-98 membership year
    from an advance reduction to a post-objection
    refund program." Affidavit of James Geppert, Jr.,
    Secretary-Treasurer of IFT, dated April 13, 1999.
    If the advance reduction was possible a few years
    ago, we find it hard to understand why it is
    unmanageable today. In addition, the union does
    not argue it would be too burdensome for it to
    figure out who the objecting employees are each
    year. Cf. 
    Grunwald, 994 F.2d at 1376
    (finding
    adequate explanation for deduction-escrow-refund
    system where employees were employed on a year-
    to-year basis).
    Furthermore, UPI’s present system is not the
    only one available to it. There is at least one
    other procedure it could use to deduct its fair
    share fees that would both comport with the IELRA
    and be less burdensome on objectors’ free speech
    rights. The UPI could fashion a system similar to
    the one approved in Grunwald. That is, the UPI
    could continue to certify a fair share fee equal
    to 100 percent of union dues. Upon objection,
    however, the UPI would deduct only the calculated
    fair share fee from the objectors’ paychecks
    (that is, the percentage of union dues that the
    UPI currently includes in its notice). If the
    objecting employee contested the amount
    calculated by the UPI, the amounts in dispute
    could be placed in escrow and the statutory
    procedures followed for the adjudication of that
    dispute. Cf. 
    Grunwald, 994 F.2d at 1372-73
    .
    We reiterate finally that in coming to this
    decision we need not and do not strike down the
    IELRA. UPI and IFT are correct that Illinois law
    provides "the exclusive method for handling fair
    share fees upon the filing of an objection by an
    employee." Ill. Admin. Code sec. 1125.10. The UPI
    procedure tracks the IELRA--the union provides
    notice of the fair share fee, holds objectors’
    fees in escrow, and allows an impartial
    decisionmaker (the IELRB) to determine if the
    fair share fee (i.e. the chargeable expenses) was
    correctly calculated. What is at issue here is
    not the system, but the inputs into that system:
    that is, whether the union may collect more than
    its calculated fair share fee and force objectors
    to take action in order to get their money back.
    In other words, what is at stake is not the
    facial validity of the IELRA; it is only the
    application of those procedures in UPI’s contract
    with the University. See Robinson v. State of New
    Jersey, 
    806 F.2d 442
    , 446-47 (3d Cir. 1986)
    (discussing difference between facial and as
    applied challenges in this context).
    III
    We conclude that UPI’s practice goes beyond
    what Hudson permits because it imposes excessive
    burdens on objectors without adequate
    justification. We therefore REVERSE the district
    court’s summary judgment for UPI and IFT and REMAND
    to the district court for further proceedings
    consistent with this opinion.