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Government and People
UNITED STATES DISTRICT COURT
NATHAN A. SAUNDERS, Plaintiff,
Civ. Action No. 02-2536 (EGS)
STATEMENT OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’ OPPOSITION TO PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION AND TO APPOINT A MONITOR
David J. Strom (D.C. Bar No. 376233)
James M. Cole (D.C. Bar No. 385837)
ATTORNEYS FOR AFT AND EDWARD J. MCELROY
March 21, 2003
STATEMENT OF POINTS AND AUTHORITIES IN SUPPORT OF AUTHORITIES IN SUPPORT OF DEFENDANTS' OPPOSITION TO PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTION AND TO APPOINT A MONITOR
I. The AFT Administratorship Was Lawfully Imposed,
Is Not Subject To Attack For A Period Of 18 Months, And Thus, Plaintiff s
Motion For A Preliminary Iniunction Must Be Denied
A. Likelihood Of Success On The Merits
AFT Does Not Owe A Fiduciary Duty To The WTU And Is Not The Agent Of The WTU,
Therefore Plaintiffs' Motion For Preliminary Injunction Must Be Denied
B. Saunders Cannot Prove Irreparable Harm
1. The Alleged
Possible Harms To The Plaintiff Are Purely Speculative And Remote
III. A Court-Appointed Monitor Is Not Appropriate Relief Under
Either The LMRDA Or Fed.R. Civ. P. 53
CasesAssociation of Contracting Plumbers of the City of New York, Inc. v. Local Union No. 2, 676 F.Supp. 523, 529 (S.D.N.Y. 1988)
Carbon Fuel Co v. United Mine Workers (1979)
Coble v. Howard University, 960 F. Supp. 1, (D. D.C.1997)
Dow v. United Bhd. of Carpenters and Joiners of Am., 1 F.3d 56, (1st Cir. 1993)
EEOC v. Regency Architectural Metals Corn., 896 F. Supp. 260 , (D. Conn. 1995)
Executive Board Local 1302, United Bhd. of Carpenters & Joiners v. United Bhd. of Carpenters & Joiners, 477 F.2d 612, (2d Cir. 1973)
Government of Rwanda v. Rwanda Working Group, 227 F. Supp. 2d 45, (D. D.C. 2002)
Gurton v. Arons, 339 F.2d 371, (2d Cir. 1964)
Int'1 Bhd. of Teamsters v. Local Union No. 810, 19 F.3d 786, (2nd Cir. 1994)
International Bhd. of Teamsters v. Local 705, 827 F. Supp. 513, (N.D. Ill. 1993)
Int'1 Longshoremen's Ass'n, AFL-CIO v. N.L.R.B., 56 F.3d 205, (D.C. Cir. 1995)
Laughon v. International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists & Allied Crafts of the United States and Canada, 248 F. 3d 931, (9t Cir. 2001)
Local 144, Hotel, Hospital, Nursing Home & Allied Services Union v. Stern, 1998 WL 807765 165 F.3d 14 (2nd Cir. 1998)
Local No. 48 v. United Brotherhood of Carpenters & Joiners, 920 F.2d 1047, (1 st Cir. 1990)
Mallick v. Int'1. Bhd. of Electrical Workers, 749 F.2d 771, (D.C. Cir. 1984;
National Assn of Letter Carriers v. Sombrotto, 449 F.2d 915, 923 (2d Cir.1971)
National Treasures Employees Union v. United States, 927 F.2d 1253, 1254 (D.C. Cir. 1991)
Mason Tenders Dist. Council of Greater New York v. Laborers' Intern. Union of North America, 884 F. Supp. 823, 832 (S.D.N.Y. 1995)
Phelan v. Local 305 of United Ass'n of Journeymen & Apprentices of the Plumbing & Pipefitting Indust., 973 F. 2d 1050, 1062 cert. denied, 502 U.S. 972, 113 S. Ct. 1415 (2nd Cir. 1992)
Pile Drivers, Divers, Carpenters, Bride, Wharf and Dock Builders Local Union 34 v. Northern California Carpenters Regional Council, 992 F. Supp. 1138, (N.D. Ca. 1997)
Shiman v. Frank, 625 F.2d 80, (6th Cir. 1980)
Teamsters Local Union No. 406 v. Crane, 848 F.2d 709, (6th Cir. 1988)
Time Warner Entertainment Co. v. FCC, 810 F. Supp. 1302 (D. D.C. 1992)
Transport Workers Union of Philadelphia v. Transport Workers Union of America, 2d 659 (E.D. Pa 2001)
United States v. Int'l Bhd of Teamsters, Chauffeurs, Warehousemen and Helpers, AFL-CIO, 803 F. Supp. 748 (S.D.N.Y.)
Wirtz v. Local 153 Glass Bottle Blowers Assn, 389 U.S. 463, 470-71 n. 10 (1968)
Unpublished CasesBrennan v. Int'1 Bhd. of Teamsters, No. Civ. A. 95-1375 (WBB) 1997 WL 446259, 156 LRRM (BNA) 3099 (D.D.C. July 30, 1997)
Local 507, Transport Workers Union of America, AFL-CIO v. Transport Workers Union of America, 166 L.R.R.M. 2618, (D. Mass. 2001)
Morris v. Hoffa, No. Civ. A. 99-5749, 1999
United States v. Local 1804-1 Int'1 Longshoremen's Ass'n, 2003 WL 194584 (January 29, 2003 S.D.N.Y.)
Statutes29 U.S.C. § 401
29 U.S.C. §§ 401 et seq
29 U.S.C.A. §§ 461-466
29 U.S.C. §462
29 U.S.C. § 431 (c)
29 U.S.C. § 462
29 U.S.C. § 464(a)
29 U.S.C. § 464(c)
29 U.S.C. §501
29 U.S.C. §§ 411-415
992 F. Supp. 1138, 1141-42. (N.D. Ca 1997)
S. Rep. No. 187, 86th Cong., 1st Sess. (1959), reprinted in 1959
U.S.C.C.A.N. 2318, 2333
Federal Rule of Civil Procedure 53
UNITED STATES DISTRICT COURT
NATHAN A. SAUNDERS, Plaintiff,
Civ. Action No. 02-2536 (EGS)
STATEMENT OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’ OPPOSITION TO PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION AND TO APPOINT A MONITOR
Specifically, Saunders' Motion for a Preliminary Injunction and to Appoint a Monitor is an unjustified attack on a lawfully imposed trusteeship that was invoked under the procedures of the Labor Management Reporting and Disclosure Act, 29 USC § 461 et sea. ("LMRDA"), and thus, the court must deny the Plaintiffs requested remedy. Only in the most limited circumstances, which are not present here, are trusteeships subject to judicial intervention.
While the Plaintiff has cited the usual standards that a moving party must satisfy to obtain a preliminary injunction, Defendant asserts that the court must consider this case in light of the presumption of validity that these trusteeships enjoy under 29 U.S.C. § 464(c). This statutory presumption means that a trusteeship may only be disrupted for the exceptional circumstances specified in Section 464. A heightened standard, therefore, is applied where a preliminary injunction is sought to enjoin a trusteeship. National Assn of Letter Carriers v. Sombrotto, 449 F.2d 915, 923 (2d Cir. 1971). Accordingly, Saunders is required to show that AFT had no valid right to impose the trusteeship, which is ascertained by determining whether AFT complied with its own constitutional provisions imposing the trusteeship. Mason Tenders Dist. Council of Greater New York v. Laborers' Intern. Union of North America, 884 F. Supp. 823, 832 (S.D.N.Y. 1995). If Plaintiff meets this burden first, in order to complete his showing of the likelihood of success on the merits, he is required to show that AFT acted with bad faith or improper purpose in imposing the trusteeship over the WTU. Id.; Int'1 Bhd. of Teamsters v. Local Union No. 810, 19 F.3d 786, 791-792 (2d. Cir. 1994). As demonstrated below, the AFT's administratorship was imposed for a valid purpose, in conformance with the AFT Constitution, and Plaintiff Saunders cannot meet the necessary burden to enjoin the AFT administratorship.
I. The AFT Administratorship Was Lawfully Imposed, Is Not Subject To Attack For A Period Of 18 Months, And Thus, Plaintiffs Motion For A Preliminary Injunction Must Be Denied.Section 462 of the LMRDA expressly authorizes a parent labor organization such as the AFT, to "in accordance with [its] constitution and bylaws," impose a trusteeship over an affiliated local union "for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures, or otherwise carrying out the legitimate objects" of the parent union. 29 U.S.C. § 4621; Local 144, Hotel, Hospital, Nursing Home & Allied Services Union v. Stern 165 F.3d 14, 1998 WL 807765 * 1 (2nd Cir. 1998). Congress, in enacting the trusteeship provisions of the LMRDA, intended that so long as the grounds for trusteeship satisfy the statutory prerequisites -- and here there is no dispute that the trusteeship was imposed for a valid purpose following the due process provisions of the AFT Constitution -then there should be no grounds for judicial review as to the terms or conditions of the trusteeship. 29 U.S.C.A. §§ 461-466. Transport Workers Union of Philadelphia v. Transport Workers Union of America, 131 F. Supp. 2d 659 (E.D. Pa. 2001).
Section 464 (c), a companion provision to §462, serves to reinforce beyond doubt this point that except in extraordinary circumstances, which have not been alleged by plaintiff to exist here, Congress intended to insulate trusteeships from judicial challenge. This section unambiguously states that a trusteeship imposed for one of the statutory purposes, in accordance with the constitution and bylaws of the parent union and after a fair hearing, "shall be presumed valid" for a period of 18 months. 29 U.S.C. § 464(c)2. During the 18-month period, the trusteeship "shall not be subject to attack except upon clear and convincing proof that [it] was not established or maintained in good faith for a purpose allowable under" the LMRDA. Id.; Transport Workers Union of Philadelphia, 131 F. Supp. 2d 659, 662; Local 144, Hotel, Hospital, Nursing Home & Allied Services Union, 1998 WL 807765 * 1; Pile Drivers, Divers, Carpenters, Bride, Wharf and Dock Builders Local Union 34 v. Northern California Carpenters Regional Council, 992 F. Supp. 1138, 1141-42 (N.D. Ca. 1997).
The legislative history of these provisions of the LMRDA confirms this interpretation of the statute's plain language insulating of trusteeships from collateral attack as attempted by plaintiff here. The LMRDA scheme is rooted in the understanding that trusteeships "are among the most effective devices which responsible international officers have to ensure order within their organization" and that trusteeships are a key safeguard "to prevent corruption, mismanagement of union funds, violation of collective bargaining agreements, ... in short, to preserve the integrity and stability of the organization itself." S. Rep. No. 187, 86th Cong., 1st Sess. (1959), reprinted in 1959 U.S.C.C.A.N. 2318, 2333. The Committee further reported that it was not Congress' intention in regulating union trusteeships "to interfere in any way with the recognized authority and responsibility of a union to require compliance by subordinate organizations with all lawful and proper provisions of the union's constitution and bylaws." Id. at 2362.
It is only on those narrow statutory bases that the LMRDA provides for a limited judicial inquiry concerning the imposition of trusteeship. Otherwise, "it is common ground that a labor union's internal affairs comprise an enclave best kept free from judicial intrusion." Dow v. United Bhd. of Carpenters and Joiners of Am., 1 F.3d 56, 58 (1st Cir. 1993). (citing Local No. 48 v. United Bhd. of Carpenters & Joiners, 920 F.2d 1047, 1051 (1st Cir. 1990)). As the First Circuit Court of Appeals said in the Local No. 48 case, "Courts have neither a monopoly on fairness nor a sufficient expertise in the administration of labor organizations to warrant pervasive judicial interference in the internal affairs of a union." Local No. 48, 920 F.2d at 1051. See also Association of Contracting Plumbers of the City of New York, Inc. v. Local Union No. 2, 676 F. Supp. 523, 529 (S.D.N.Y. 1988) ("[C]ourts have no special expertise in the operations of unions which would justify a broad power to interfere." (quoting Gurton v. Arons, 339 F.2d 371, 375 (2d Cir. 1964)). In light of the presumption of validity, "judicial intervention should be undertaken with only the greatest care and caution." Local 144, 165 F.3d 14 citing Executive Board Local 1302, United Bhd. of Carpenters & Joiners v. United Bhd. of Carpenters & Joiners, 477 F.2d 612, 615 (2d Cir. 1973).
In this case, there is no basis for judicial intervention because Saunders has not alleged "clear and convincing proof' in his Motion for Preliminary Injunction that the AFT administratorship is in any way defective or that it "was not established or maintained in good faith" as set forth in § 464(c). The trusteeship imposed by the AFT here meets the statutory requirements, is valid, and should not be subject to attack by Saunders. The AFT Constitution at Art. Vl, Section 15(b) provides that, upon proper grounds shown, the AFT President is authorized to appoint a committee of the council to investigate and conduct a hearing. The process provides for notice to the affected parties and affords them the opportunity to "appear and present evidence, witnesses and arguments." The committee then submits its findings and recommendations to the AFT Executive Council, which, upon a two-thirds (2/3) vote has the power to authorize the president to establish an administratorship and appoint an administrator. The local affiliate is notified of the decision in writing, including an explanation of the administrator's duties and functions. The AFT's provisions for establishing the adminstratorship provides due process over and above that which is required by the LMRDA. So long as the AFT followed its procedures, and there are no allegations by plaintiff that it did not, the administratorship over the WTU is not subject to attack. Local 144, 165 F.3d 14; Executive Board Local 1302, 472 F.2d at 615; Transport Workers Union, 131 F. Supp. 2d at 663-64.
On January 8, 2003, AFT President Sandra Feldman commenced the procedures set forth in the AFT Constitution to consider whether an administratorship for the WTU was necessary. See WTU Administratorship Investigation, p. 6.3 The Executive Council gave President Feldman the authority to appoint a committee of the Council to investigate and conduct a hearing on the necessity for the adminstratorship. Id. at 1. The Committee conducted a hearing on January 16, 2003, with prior notice of the time and place of the meeting, and the applicable criteria for consideration of an administratorship. See Id. at 1. The WTU interim president and ten members of the WTU Executive Board attended the hearing. Upon a presentation of the evidence, AFT President Feldman, the WTU interim president, and everyone attending the hearing agreed that an administratorship was needed to correct financial malpractice and restore the interests of the WTU membership. See Id. at 5. No one present at the hearing argued that proper procedures were not followed or disputed that proper grounds existed for the imposition of an administratorship. On January 22, 2003, the AFT Executive Council met and voted unanimously to establish an administratorship and George Springer, former president of the Connecticut Federation of Teachers, was unanimously selected to serve as the Administrator. The adminstratorship of the WTU commenced on January 27, 2003.
Plaintiff makes no allegation that the adminstratorship was imposed over the WTU for an improper purpose or that the procedures followed by the AFT did not meet the requirements of the LMRDA. In fact, Plaintiff acknowledges the validity of the AFT administratorship and has stated that "the AFT has an important role to play" (Memorandum at p. 3), that a court appointed monitor should not interfere with the "AFT's day-to-day conducting of WTU's affairs," and that the AFT should be permitted "to investigate the issues associated with the misappropriation and to remain involved in the restructuring of its local." Memorandum at p. 15.4 Consequently, in light of the express language of sections 462 and 464 of the LMRDA, the legislative history and the interpretation of those provisions by the federal courts cited earlier, the Court should deny Saunders' requests for a preliminary injunction and appointment of a monitor to oversee the AFT imposed administratorship.
II. Plaintiffs Motion For A Preliminary Injunction Should Be Denied Because The Balance Of Equities Weighs Heavily In Favor Of The Defendant.
Assuming that the Court does not deny Plaintiff's Motion for a Preliminary Injunction based on the heightened standard of proof necessary to disturb a lawfully invoked trusteeship under the LMRDA, the balance of the equities weighs in favor of the Defendants under the normal standard for issuing a preliminary injunction. It frequently is observed that a preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion. Sampson v. Murray, 415 U.S. 61 (1974); Wright & Miller, 11A Fed. Prac. & Proc. Civ.2d § 2948 Grounds For Granting Or Denying A Preliminary Injunction. Additionally, preliminary injunctions are usually granted to preserve the status quo not alter it, as plaintiffs request.
To obtain a preliminary injunction, an applicant must prove that "(1) it has a substantial likelihood of succeeding on the merits; (2) it will suffer irreparable harm if the injunction is not granted; (3) other interested parties will not suffer substantial harm if the injunction is granted; and (4) the public interest will be furthered by the injunction." Time Warner Entertainment Co. v. FCC, 810 F. Supp. 1302 (D. D.C. 1992) citing National Treasury Employees Union v. United States, 927 F.2d 1253, 1254 (D.C. Cir. 1991) (citations omitted). A significant failure of proof with respect to any element may warrant the refusal of injunctive relief and require the movant to await the conclusion of the case. Id.
A. Likelihood Of Success On The Merits
In Defendants' Memorandum in Support of their Motion to Dismiss it is established that the Plaintiff's claims are fatally flawed and fail to state a claim against AFT or McElroy, therefore it is plain that the Plaintiff has failed to demonstrate a likelihood of success on the merits and should not be granted a preliminary injunction.5 In addition to the arguments addressing Plaintiffs standing, subject matter jurisdiction and failure to state a claim, Defendant takes this opportunity to address additional deficiencies in Plaintiff's Motion for a Preliminary Injunction.
The basis for Saunders' claim of likelihood of success on the merits of his Section 501, Section 301, common law negligence and common law fiduciary breach claims are that the AFT had a duty, as the parent organization, to monitor the finances of the WTU. Plaintiff asserts that it will likely be successful in its claims against the AFT because the AFT breached its oversight duties which resulted in the financial loss to the WTU. Saunders has mischaracterized the relationship between the AFT and the WTU and has attempted to create duties and obligations where none exist. Indeed, Plaintiff in Footnote 8 of his Memorandum acknowledges the weakness of these claims by citing several cases from this district and other Circuit Courts of Appeals6 that discredit the validity of his claims. Consequently, Saunders is not likely to succeed on the merits of his statutory or common law claims.
Plaintiff asserts in its Memorandum that the AFT has assumed a duty of "assisting and providing advice to local treasurers and audit committees in maintaining the locals' finances and conducting the audits." Plaintiff's Memorandum, p. 5. According to Saunders, the AFT's duty is evidenced by "two guidance documents on its website for treasurers and audit committees of local unions." Id. at 6. Plaintiff asserts, therefore, that the AFT's offer of guidance coupled with the constitutional requirement that locals submit an audit and financial statements to the AFT, are evidence that the AFT has a legal duty to monitor the finances of local unions. Therefore, Plaintiff argues, the AFT's failure to monitor the WTU was a breach of its duty and was the cause of the WTU's "serious financial difficulty."
The law in this area is clear: without evidence that the international union instigated, supported, ratified, or encouraged local's activities or that the local acted pursuant to its agreement with the international, there is no agency relationship as a matter of law, as required to impose liability on the international for the local's actions. Carbon Fuel Co. v. United Mine Workers of America, 100 S. Ct. 410, 444 U.S. 212 (1979); Coble v. Howard University, 960 F. Supp. 1, 5. (D. D.C. 1997). The fact that the AFT Constitution requires local unions to take certain action and a local seeking to fulfill its requirements can turn to the AFT for advice, does not create a fiduciary duty or demonstrate an agency relationship between the AFT and the WTU.
The AFT's constitutional requirement that Local unions conduct an audit was adopted for the benefit of the local membership, and not for the purpose of giving the AFT greater oversight of local union finances. This is evidenced by the language in Article IV Section 6 which states, in relevant part:
(Emphasis supplied). By establishing this requirement, the AFT was providing minimum standards to be met by the local union for the benefit of the local membership, which is no different from other provisions in the AFT Constitution setting minimum standards for the protection of local union members. These minimum standards are to be carried out by the local union, and the AFT does not open itself up to liability for establishing the requirements.
For example Article IV, Section 5 provides, "the conduct of elections shall be consistent with the standards for such elections developed under Title IV of the Labor-Management Reporting and Disclosure Act." Like the audit requirement, the election safeguards benefit local members by requiring local unions to apply the basic democratic principles required by Congress and enacted in the LMRDA. See 29 U.S.C. §§ 401 et seq. The AFT, however, has rot dictated the precise election procedures to be used by local unions, and the AFT, in the absence of ratification or participation, could not be liable for a local's violation of the LMRDA's requirements. See Phelan v. Local 305 of United Ass'n of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, 973 F. 2d 1050, 1062 cert. denied, 502 U.S. 972, 113 S. Ct. 1415 (2nd Cir. 1992) (International union was not shown to have participated in, ratified or encouraged alleged scheme to suppress dissent, precluding imposition of liability of international); Shiman v. Frank, 625 F.2d 80, 99 (6th Cir. 1980) (holding that an international that does not authorize, encourage or ratify violations of the LMRDA should not be held liable for them).
Similarly, Article IV, Section 10 provides that the AFT will revoke the charter of any local union that limits its membership on the basis of race, creed, sex, sexual orientation, social, political or economic status or national origin. Again, the AFT is not responsible for policing local union conformance with this rule, and could not be held liable under agency theory for the discriminatory acts of a local. See Laughon v. International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists & Allied Crafts of the United States and Canada, 248 F. 3d 931, 936 (9th Cir. 2001) (Court dismissed claim where unsuccessful applicant for union membership alleged her rejection was due to sex discrimination because plaintiff failed to establish liability of the international union, even though the international had actual notice of local's discriminatory activity and did not investigate); EEOC v. Regency Architectural Metals Corp., 896 F. Supp. 260 , 270-71 (D. Conn. 1995) (International union was not vicariously liable for local union's violation of Title VII in failing to assert female member's colorable sex discrimination grievance against employer; there was no evidence to establish agency relationship, international agent did not generally control actions of its locals).
The requirement that local unions conduct an audit for the benefit of the membership and submit a copy to the AFT is a similar provision. Similar to requiring local unions to abide by federal labor law and prohibiting discrimination, the AFT is providing a baseline requirement that it desires affiliated locals to follow for the benefit of local members.7 The AFT, however, cannot be held liable for the unlawful acts of certain WTU officers, where it had no knowledge that the WTU's finances were being mismanaged and the AFT did not ratify the acts of the WTU officers who committed malfeasance.
Saunders tries to make the case that the AFT has assumed the duty of assisting and providing advice to local unions by offering advice and guidance on conducting an audit. Saunders asserts that the duty flows from the AFT providing "two guidance documents on its website" and a "staffed hotline phone". Plaintiff, however, fails to offer any compelling reasons how offering guidance on how to conduct an audit imputes a duty on the international to oversee the financial affairs of the local union and Plaintiff fails to cite a single case where a duty is created in this manner.8 What the Plaintiff also fails to disclose is that the guidance on the website is not applicable to the WTU because of its size. The manual entitled "Keeping the Records Straight" specifically advises that the "manual is specifically geared to medium-sized or small unions." Larger unions are advised to seek the advice of an outside auditor so long as the auditor complies with "the standards of generally accepted accounting principles." AFT Constitution Art. IV, Section 6. The WTU, with over 5,000 members, therefore should use an outside independent auditor and the manual is not appropriate guidance as plaintiff incorrectly suggests. Nonetheless, the AFT's offering of the manual is not adequate to create a duty between the AFT and WTU.
Plaintiff asserts that the AFT's duty is evidenced by the authority to enforce its audit requirement, but he fails to state that union members themselves have equal opportunity to commence an investigation into a local under the AFT Constitution, and the right to see and review the books of their union under the LMRDA9. See Brennan v. Int'l 1 Bhd. of Teamsters, No. Civ. A. 95-1375 (WBB) 1997 WL 446259, 156 LRRM (BNA) 3099 (D. D.C. July 30, 1997);
Mallick v. Int'1. Bhd. of Electrical Workers, 749 F.2d 771 (D.C. Cir. 1984). Because of the structure of the AFT, the local membership would be most aware of the union's finances and how membership dues were being spent on a day-to-day basis.
The Defendant's Motion to Dismiss addresses the various deficiencies in plaintiff's allegation that the AFT and Secretary- Treasurer breached their fiduciary duties to the WTU and the WTU membership. The Defendants have already demonstrated that an action for breach of fiduciary duty cannot be brought against the AFT, and that the AFT Secretary-Treasurer does not exercise "autocratic control" over the WTU thereby creating a fiduciary duty to the members of the WTU. Defendants address herein Plaintiff's flawed and counter intuitive contention that the AFT is the agent of the WTU, rather than the AFT being the principal and the WTU the agent, and that AFT has a fiduciary duty to the members of the WTU.
Plaintiff claims that the "AFT functions, in part, as the WTU's agent at the national level," and that the "AFT entered into an agency relationship with the WTU and its members." (Plaintiff's Memorandum at p. 17) (emphasis supplied). Plaintiff ignores the basic requirement that the agent-principal relationship is characterized by an indication by the principal that the agent will act on his behalf and subject to his control. Government of Rwanda v. Rwanda Working Group, 227 F. Supp. 2d 45, 63 (D. D.C. 2002); Int'1 Longshoremen's Ass'n, AFL-CIO v. N.L.R.B., 56 F.3d 205, 213 (D.C. Cir. 1995) (Agency relationship arises only where principal has right to control conduct of agent on matters entrusted to him). With respect to financial advice (and otherwise), the WTU has absolutely no right to control any aspect of the AFT's guidance. For example, if the AFT were to provide financial advice to the Michigan Teachers Union, it would not be doing so at the behest of the WTU, and the advice given by the AFT would not be subject to the WTU's control or approval. The advice and guidance provided by the AFT to local federations simply does not make the AFT an agent of the WTU or, for that matter, the WTU an agent of the AFT. Int'1 Longshoremen's Ass'n., 56 F.3d at 213 (stating that if existence of agency relation is not clearly shown, fact that it is understood that person acting is not to be subject to control of other as to manner of performance determines that relation is not that of agency).
Saunders contends that Secretary-Treasurer McElroy had a fiduciary duty to the WTU because he is "responsible for ensuring that the AFT receives a copy of the WTU's annual financial statement and biennial audit." (Plaintiff's memorandum, p. 17). Plaintiff argues that this responsibility created a fiduciary duty to the WTU and its members, and that McElroy should have investigated why the financial statement and biennial audit were not received. In his strained effort to create a fiduciary duty between the WTU members and the officers of the AFT, Plaintiff cites a case holding the secretary-treasurer of a local union liable for failure to investigate and take remedial action against the criminal activity within that local. United States v. Int'1 Bhd of Teamsters, Chauffeurs, Warehousemen and Helpers, AFL-CIO, 803 F. Supp. 748 (S.D.N.Y. 1992) That case is easily distinguishable and further emphasizes the weaknesses in Plaintiffs arguments.10
The distinction between the Teamsters case and the situation before the court is obvious. Here, Secretary Treasurer McElroy holds a position with the international union and not with the local union. Thus, due to the AFT's lack of "autocratic control" over the autonomous WTU, Secretary Treasurer McElroy does not have a fiduciary relationship with WTU members. Also, there is no evidence that McElroy had any knowledge of wrongdoing at the local level, and the WTU's failure to provide an audit does not by itself raise any inference of financial wrongdoing. Accordingly, where there was no duty or knowledge, McElroy had no legal responsibility to take remedial action.
In order to succeed on a petition for a preliminary injunction, there must be a likelihood that irreparable harm will occur; speculative injury is not sufficient. See Time Warner Entertainment Co. v. Federal Communications Commission, 810 F. Supp. 1302 (D. D.C. 1992). There must be more than an unfounded fear on the part of the applicant. Thus, a preliminary injunction will not be issued simply to prevent the possibility of some remote future injury. Wright & Miller, 11A Fed. Prac. & Proc. Civ.2d § 2948.1 Irreparable Harm. Applying these standards, Saunders' Motion for a Preliminary Injunction must be denied where the only harm articulated is unfounded and speculative.
Saunders claims that an injunction is necessary to save plaintiff from irreparable harm for the following reasons: (1) administratorship will hinder efforts to turn the WTU into a viable union; (2) the administratorship "will raise significant concerns about the AFT giving itself preference in money realized" from recovery; (3) the AFT has retained Esther Hankerson; (4) the AFT has suspended the WTU Constitution and may make changes to it; (5) failure to ensure impartial oversight will irreparably injure WTU and membership. These claims are speculative and unfounded, and do not warrant the granting of Plaintiff's motion.
Plaintiff fails to adequately explain the existence of a conflict between the AFT and the WTU. Apparently, the Plaintiff is concerned that the AFT may compromise outstanding claims against the former officers of the WTU and others (such as the bank), because the WTU currently owes the AFT $500,000 in per capita payments.11 Contrary to Plaintiff's assertion, the interests of the WTU and the AFT are aligned to recover from the responsible parties the maximum restitution possible and no such conflict exists. Indeed, assuming for the sake of argument that as Plaintiff alleges, the AFT is liable for the misappropriation of funds from the WTU, then the AFT can reduce its alleged liability to the WTU by settling for the most amount of money possible. It follows that the AFT has a real incentive (and not a conflict of interest) to recoup the largest sums available from other sources. Consequently, this alleged harm is without any foundation in logic or fact and certainly cannot be the basis for a preliminary injunction.
Plaintiff also alleges concerns relating to per capita payments by the WTU to the AFT, but the issues raised do not demonstrate irreparable harm. As of this date, the AFT has returned to every WTU member the full amount of the dues overcharge by the WTU which had been used by WTU to pay its per capita. The AFT, which is itself funded by the dues of educators, refunded the dues overpayment out of its own funds without any guarantee that it will recoup this money from the defendants named in the AFT's pending restitution litigation. By refunding the dues overpayment, the AFT has demonstrated that it is working in the best interests of WTU members, and Plaintiff's concerns are unfounded.
The AFT, as the administrator of the WTU, was within its rights to retain Esther Hankerson, and she has cooperated completely with the AFT's investigation into the financial misfeasance of its former WTU president, treasurer and assistant to the president. Moreover, she provided a necessary day-to-day link between the WTU members, the school board, the superintendent and the AFT appointed administrator as Mr. Springer became increasingly involved in the exercising responsibility for the affairs of the local. Had the AFT completely deposed all WTU officers, it is likely that WTU members would be more distrustful of the administratorship, and the transition period for the administrator would have been longer and less efficient. Nevertheless, Ms. Hankerson has at this time taken a leave of absence and is no longer participating in the administration of the WTU; and any probability of irreparable harm caused by her retention has been eliminated. Similarly, the WTU Board has been relieved of its duties by operation of the administratorship.
The final contention that Plaintiff asserts will cause irreparable harm is the possible altering of the WTU Constitution during the period of the administratorship, however, there is no articulation as to any specific potential harm to the WTU or its members. Indeed, Plaintiff's allegations on this point are speculative, inchoate and unsupported. There are no plans at this time to alter the WTU Constitution. Assuming for the sake of argument that later there is a decision to amend the WTU Constitution, the AFT administrator will abide by a process that is followed throughout the AFT This process begins with the selection of a committee of members to recommend constitutional amendments and concludes, after membership meetings for input, with a ratification vote by the full membership. Plaintiff's concern about the alteration of the WTU Constitution is purely speculative and fails to state any imminent harm as a result of this alleged course of action by the AFT.
In the final analysis it should be remembered that the AFT has now assumed administratorship of the WTU. Thus in contrast to the situation in the past, the AFT has assumed fiduciary responsibility for the local's affairs. Therefore, in the future were some action to occur, which unlike the present allegations amounts to a true breach of fiduciary duty, then WTU members might be able to assert a claim under the LMRDA.
The LMRDA provides explicit language that serves to protect WTU members from any harm that they may experience as a result of the trusteeship. First, while the trusteeship is in place, WTU members retain their basic Title I rights and protections enumerated in the LMRDA. 29 U.S.C. §§ 411-415. Second, now that the AFT has appointed an administrator who exercises autocratic control over the WTU, Plaintiff has the protection of Section 501 for any potential breach of fiduciary duty in the future. 29 U.S.C. § 501. Finally, the trusteeship may be challenged by the Secretary of Labor if clear and convincing evidence indicates that it has been established or maintained for an improper purpose. 29 U.S.C § 464(a). Pile Drivers, Divers, Carpenters, Bride, Wharf and Dock Builders Local Union 34 v. Northern California Carpenters Regional Council, 992 F. Supp. 1138, 1141-42. (N.D. Ca. 1997). Such a challenge is made by written complaint to the Secretary of Labor and if a violation is found, a complaint may be filed by the Secretary in federal court. 29 U.S.C. § 464(a). Consequently, the need for a preliminary injunction is not warranted where Plaintiff and other WTU members retain all the statutory rights they had before the trusteeship, are protected from an unlawful trusteeship, and have a potential fiduciary claim against the AFT administrator.
Saunders maintains that the public interest factor weighs in favor of his request for a preliminary injunction because the "WTU membership and general public are deeply interested in the outcome of this case" and "appointment of a monitor will assure all WTU members and the general public that interests are protected, while permitting the AFT to remain involved." Plaintiff s Memorandum at p. 15. Plaintiffs assertions of public interest are outweighed by the statutorily preferred method for resolving such disputes.
The AFT must be permitted to take the action necessary to correct the financial malpractice, to recoup the monies stolen by former WTU officers, and to return the operations of the WTU to an even keel. Judicial involvement in the AFT's oversight of the WTU is contrary to the well-established policy of avoiding judicial interference in union self-governance and internal affairs. Wirtz v. Local 153 Glass Bottle Blowers Ass'n., 389 U.S. 463, 470-71 n. 10 (1968); Transport Workers Union of Philadelphia, Local 234, 131 F. Supp. 2d. 659, 665 n.13; Pile Drivers, Local Union 34, 992 F. Supp. 1138. The internal operations of unions are to be left to the officials chosen by the members, except in the limited instances expressly provided by the LMRDA. Transport Workers Union of Philadelphia, Local 234, 131 F. Supp. 2d. 659, 665 n.13; See also Int'1 Bhd. of Teamsters v. Local Union No. 810, 19 F.3d 786, 790 (2°d Cir. 1994) (recognizing purpose of presumption of validity is "to prevent federal courts from intervening in internal union affairs"). Thus, even when there is either a matter of intense public interest or a situation which involves a politically charged controversy, the role of the court is to ensure that the matter is resolved in accordance with the union's democratic process as mandated by Congress and by its constitution. See Morris v. Hoffa, No. Civ. A. 99-5749, 1999 WL 1285820, at *7 (E.D. Pa. Dec. 28, 1999) (stating that courts have no special expertise in the operation of unions which would justify a broad power to interfere . . . "[g]eneral supervision of unions by the courts would not contribute to the betterment of the unions or their members or to the cause of labor-management relations."); Local 507. Transport Workers Union of America AFL-CIO v. Transport Workers Union of America, 166 L.R.R.M. 2618, 2620 (D. Mass. 2001) ("[T]here is a public interest in allowing labor organizations to practice democratic self-government ... [and] a strong public policy against court interfering with the internal affairs of labor organizations."). Accordingly, the AFT should be permitted to continue to take the steps necessary to restore democracy and correct the financial malpractice in the WTU.
In light of the steps that the AFT has taken to correct the financial mismanagement at the WTU and the statutory scheme favoring trusteeships over judicial intervention, the public interest will not be served by enjoining the AFT and appointing an independent monitor to review the actions of the administrator. See Teamsters Local Union No. 406 v. Crane, 848 F.2d 709, 714-15 (6th Cir. 1988) (stating that "it would unreasonably impair the independence of labor unions to allow for the Government to review the judgment of union officials upon the needs of the organization or the best means of effectuating them") (internal quotations and citation omitted); International Bhd. of Teamsters v. Local 705, 827 F. Supp. 513, 516 (N.D. Ill. 1993) (attempts by an international union "to correct and prevent financial malpractice which might be occurring in its local unions is a worthy goal that serves to benefit the public."). The public interest factor, therefore, weighs heavily in favor of the AFT.
Another factor bearing on the court's exercise of its discretion as to whether to grant preliminary relief involves an evaluation of the severity of the impact on Defendant should the temporary injunction be granted balanced against the alleged hardship that would occur to Plaintiff if the injunction should be denied. The policy against the imposition of judicial restraints prior to an adjudication of the merits becomes more significant when there is reason to believe that the decree will be burdensome. As might be expected, the injunction usually will be refused if the balance tips in favor of defendant. Wright & Miller, 11A Fed. Prac. & Proc. Civ.2d § 2948.2 Balancing Hardship To Parties. For the same reasons that an injunction against a lawfully imposed trusteeship is against the public interest, the AFT and WTU would be similarly harmed if prevented by the court from reestablishing local leadership and sorting out their own affairs internally. The Court should also recognize that the AFT, which is completely funded with per capita dues payments by teachers, is bearing the costs of the administratorship over the WTU and will be harmed financially by the appointment of a monitor. The imposition of a court-appointed monitor is likely to delay decisions if the AFT is required to consult with the monitor. Consequently, this action will unduly postpone the return of governance to WTU members, resulting in additional costs to the AFT and its members in administering the WTU. Such adverse impacts are a further reason for the Court to refuse to appoint a monitor.
Defendant has clearly shown that (1) the Plaintiff is not likely to succeed on the merits, (2) there is no possibility of irreparable harm to the Plaintiff, (3) the public interest weighs in favor of the Defendant, and (4) the Defendant will be harmed by a preliminary injunction. Consequently, a balancing of the equities demonstrates that the factors weigh against the Plaintiff, and the court should deny the Plaintiff's Motion for a Preliminary Injunction.
III. A Court-Appointed Monitor Is Not Appropriate Relief Under Either The LMRDA Or Fed. R. Civ. P. 53
Given the Congressionally legislated scheme allowing international unions to remedy wrongdoing at the local level, and judicial hesitancy to refer cases to an independent monitor pursuant to Fed. R. Civ. P. 53, the court must reject Plaintiff's request for an independent monitor to oversee the AFT's administratorship of the WTU.
As the Defendant has thoroughly explained, the LMRDA provides the legitimate purposes for appointing a trusteeship over a local union, and that a trusteeship imposed for one of the statutory purposes, in accordance with the constitution and bylaws of the parent union and after a fair hearing, "shall be presumed valid" for a period of 18 months. See Argument at I, supra. During the 18-month period, the trusteeship "shall not be subject to attack except upon clear and convincing proof that [it] was not established or maintained in good faith for a purpose allowable under" the LMRDA. 29 U.S.C. § 464(c). Plaintiff has not alleged with clear and convincing proof any facts demonstrating that the AFT's administratorship is unlawful, and thus, the Court must not allow Plaintiff to attack the administratorship by subjecting its actions to the approval of an independent monitor.
Plaintiff's invocation of Fed. R. Civ. P. 53 for the purpose of seeking a court-appointed monitor is also inappropriate in this case. Rule 53(b) provides, in relevant part:
Fed. R. Civ. P. 53. Plaintiff's justification for seeking an independent monitor - specifically, the existence of "complicated issues" - simply does not present the kind of exceptional circumstances that require a court-appointed monitor. In this case and in the AFT's restitution litigation, the legal issues are not complex, there are relatively few parties involved, and the liabilities of those parties are easily calculated. Consequently, appointment of a monitor pursuant to Rule 53 is not warranted. United States v. Microsoft Corporation, 147 F. 3d 935, 955 (D.C. Cir. 1998) (stating that government's antitrust action against software developer based on allegation that developer violated consent decree did not involve sufficient complexity to warrant reference of nonjury action to a special master).
The Plaintiff in seeking a court appointed monitor makes reference to two cases in which the court considered whether it was appropriate to appoint a monitor to ensure compliance with consent decrees allegedly violated by the defendants. United States v. Microsoft Corporation, 147 F. 3d 935; United States v. Local 1804-1 Int'1 Longshoremen's Ass'n., 2003 WL 194584 (January 29, 2003 S.D.N.Y.) (holding that blatant contempts of court by a local labor union compelled the appointment of an administrator to govern a local union's affairs, with the broad powers necessary to insure no further violations of a consent decree enjoining union officers from engaging in racketeering activity or associating with organized crime groups). The cases are clearly not applicable to the current situation where the Court has not issued a consent decree and the AFT has not violated any orders. In the absence of court orders or consent decrees and any history of non-compliance with such orders or decrees, there exists no justification for the appointment of a monitor.
For the reasons stated above, the Court should deny the Plaintiff's Motion for a Preliminary Injunction and to Appoint a Monitor Pursuant to Federal Rule of Civil Procedure 53.
David J. Strom (D.C.
Bar No. 376233)
James M. Cole (D.C.
Bar No. 385857)
Date: March 21, 2003
1. 29 U.S.C. § 462 provides:
2. 29 U.S.C. 464(c) provides:
3. A copy of the AFT Executive Council's Decision and Order concerning the administratorship of the WTU is attached as Exhibit 1 to the declaration of David J. Strom.
4. In effect, Plaintiff has comeded that the WTU trusteeship was adopted for a valid statutory purpose and having done so, Plaintiff is statutorily barred from attacking that trusteeship.
5. Defendants incorporate by reference their Memorandum in Support of the Motion to Dismiss.
6. Plaintiff explicitly concedes that Section 501 claims for fiduciary breach cannot be brought against the AFT. See United Mine Workers v. Boyle, No. 3436-69, 1978 WL 1601 at *2 (D. D.C., May 3 1978) (Section 501 "has been stringently construed as not reaching actions against labor unions themselves.").
7. The 1999 letter from Secretary-Treasurer McElroy to the local audit committees cited by the Plaintiff demonstrates that the audit requirements are for the benefit of the members and not part of any oversight duty of the AFT:
Plaintiff's Ex.5 to Byrne Declaration (emphasis added).
8. At most, offering advice to local unions concerning an audit requires the AFT to give competent advice to the local on this topic.
9. Subsection 201(c) of the LMRDA, 29 U.S.C. § 431(cl provides:
Every labor organization required to submit a report under this subchapter shall make available the information required to be contained in such report to all of its members, and every such labor organization and its officers shall be under a duty . . . to permit such member for just cause to examine any books, records, and accounts necessary to verify such report.
10. In that case, the United States government and the National office of the Teamsters had previously entered into a consent decree based on prior violations of law "to rid the IBT of the hideous influence of organized crime." Int'1 Bhd of Teamsters, 803 F. Supp. 748, 750. The secretary-treasurer of the local, however, had knowledge that the business agent of the local had ties to organized crime, was involved in a casino skimming operation, and had been indicted for criminal contempt. Id. at 753. Rather than remove the business agent from his position of trust in the local, the secretary-treasurer granted the business agent two leaves of absence during his incarceration and then reemployed him after the business agent was released from prison. Id.
The court found that the secretary-treasurer's toleration of officers who engage in criminal activity violated the trust of the local membership and constituted a breach of the secretary treasurer's fiduciary duty. 803 F. Supp. at 755. The court noted that it had previously ruled that failing to investigate and remedy corruption when there is a fiduciary duty to do so, could constitute aiding and abetting the extortion of IBT members' rights to self determination. Id. at footnote 2. In light of the secretary-treasurer's "total failure to act" when his fiduciary duty required him to do so, he breached his fiduciary duty to the rank and file members. 803 F. Supp. at 755.
11. The $500,000 figure reported on the LM-15, and described by the Plaintiff as "delinquent dues," is the amount of per capita payments owed by the WTU to the AFT since June 2002. This amount is properly due and owing to the AFT pursuant to Article VIII, Section 1(a) of the AFT Bylaws and Section § 463 of the LMRDA which provides that during the period of trusteeship "the normal per capita tax" may be collected by the national union.
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