184 F.Supp. 649 (D.Md. 1960), Civ. A. 12072, Executive Bd., Local Union No. 28, I. B. E. W. v. International Broth. of Elec. Workers

Docket Nº:Civ. A. 12072
Citation:184 F.Supp. 649
Party Name:Executive Bd., Local Union No. 28, I. B. E. W. v. International Broth. of Elec. Workers
Case Date:May 11, 1960
Court:United States District Courts, 4th Circuit, District of Maryland

Page 649

184 F.Supp. 649 (D.Md. 1960)

EXECUTIVE BOARD, LOCAL UNION No. 28, I.B.E.W., Patrick J. Gallagher, Chairman, Donald L. Behr, Member, William J. Ross, Member, William J. Knoppel, Member, Vernon H. Landgraf, Member, and Louis E. Becker, Member,


INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, Charles S. Goidel, Individually, and as International Representative, I.B.E.W., and Edward G. Rost, Jr., Individually, and as Financial Secretary of Local Union No. 28, I.B.E.W.

Civ. A. No. 12072.

United States District Court, D. Maryland.

May 11, 1960

Page 650

Patrick A. O'Doherty, O'Doherty, Gallagher & Hegarty and Hamilton O'Dunne, Baltimore, Md., for plaintiffs.

Thomas E. Bracken and James B. Murphy, Baltimore, Md., for defendants.

R. DORSEY WATKINS, District Judge.

This is a suit brought under the Labor-Management Reporting and Disclosure Act of 1959, 73 Stat. 519, Title III, sections 302 and 303; Title V, section 501, 29 U.S.C.A. § 401 et seq. (Act), to terminate the trusteeship of Local Union No. 28, International Brotherhood of Electrical Workers (Local Union) and for an accounting of Local Union's funds. The plaintiffs are seven members of the Local Union, comprising its Executive Board. The defendants are the International Brotherhood of Electrical Workers (I.B.E.W.), Charles S. Goidel (Goidel) individually and as International Representative of I.B.E.W.; and Edward J. Rost, Jr. (Rost), individually and as Financial Secretary of Local Union.

The complaint alleges that the Executive Board has the duty to supervise and oversee the distribution of the funds of Local Union; to approve bills incurred by Local Union and to act as trustee of its funds. At a meeting of the Executive Board on September 12, 1958, the then President of Local Union appeared before the Executive Board, and complained that Rost was acting in violation of the By-Laws of Local Union in that he was paying bills without the approval of the President or Executive Board; expense monies were being paid

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by Rost to himself and to Assistant Business Managers without submission to or approval of the Executive Board; and that the monies of Local Union were not being deposited as required by the By-Laws. The Executive Board found the charges to be valid, adopted the President's recommendation that past violations be excused, but instructed Rost to abide by the Constitution and By-Laws in the future. Rost said he would continue to conduct his office as in the past. He did so continue, and on December 15, 1958 the Executive Board again ordered him to comply with the By-Laws. He refused, and on January 31, 1959, the President of Local Union wrote to the International Executive Council of I.B.E.W. requesting an investigation of the financial affairs of Local Union. On February 9, 1959 the International President of I.B.E.W. sent his representative, Goidel, to Baltimore to confer with the Local Union officers. Goidel advised these officers that 'he was assuming supervision of the Local Union.' Several days later Goidel orally ordered the Local Union President to sign checks for 'unaccountable expenses' of Rost and the Assistant Business Managers. When the President refused to sign without a written order, Goidel removed him from office and replaced him with a personal appointment. On March 29, 1959, Goidel suspended meetings of the Executive Board.

Since the assumption of jurisdiction by Goidel, the members of the Executive Board and members of Local Union have requested an accounting of Local Union funds, but Goidel has refused any accounting. The elected President of Local Union was suspended for refusing to sign checks, and members have been summarily suspended for requesting an accounting. Goidel stated at a Local Union meeting that the monies of Local Union 'were being deposited in a local bank, subject to his order only', which petitioners allege to be a violation of sections 303(a)(2) and 501(a) of the Labor-Management Reporting and Disclosure Act of 1959.

The complaint further alleges that at the July 1959 meeting of Local Union, Goidel 'advised the membership that they were going to operate under a new set of By-Laws that he promulgated and that he would tolerate no discussion of their wisdom. The membership at the following meeting forced a vote on the proposed new By-Laws and rejected them by a vote of approximately 490 to 5. Thereupon the representative said that he would see that the new By-Laws would be placed in effect regardless of the expression of the membership and thereafter suspended Local meetings.'

The complaint further alleges that Goidel attempted to increase the dues by more than 100% Without regard to the Constitution and By-Laws, his effort being withdrawn only after the United States District Court for the District of Maryland had been petitioned for an injunction; that he had caused to be filed with the Secretary of Labor alleged changes in the By-Laws which had not been passed upon by the membership of Local Union; and that Goidel has refused to meet with the Executive Board to review the financial position of Local Union, although he alleges there is an operating deficit of $6,500 a month.

It is further alleged that Goidel in a financial report filed in January 1960 disclosed that he had merged the Treasurer's Fund with that of the Financial Secretary, in violation of the By-Laws; and that the membership of Local Union at a meeting in January, 1960, referred this report to the Executive Board for investigation, study and recommendations, but Goidel declined to meet with the Executive Board. At a meeting of March 4, 1960, the members unanimously authorized the Executive Board to 'take such steps, including legal action,' as might be necessary to investigate and study the financial condition of Local Union. The complaint further alleges:

'25. Your petitioners allege that the International Brotherhood of Electrical Workers are in violation of the Trusteeship Provisions of Title III, section 302 of the Labor

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Management Reporting and Disclosure Act of 1959 in that it is continuing to assume Trusteeship of Local Union No. 28 without satisfying the requirement to maintain a trusteeship as set forth in said Title and section.

'26. The International Brotherhood of Electrical Workers filed with the Commissioner of Bureau of Labor-Management Reports, United States Department of Labor, a report dated October 14, 1959, and signed by the International President and International Representative alleging that the said trusteeship was being continued because 'factionalism in the Local Union has prevented the officers thereof from properly organizing the electrical industry' in its jurisdiction.

'27. The trusteeship provision of the said act, section 302 provides that a trusteeship may be maintained only '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 such labor organization.'

'28. Your petitioners aver that 'factionalism', if it did exist-- and this your petitioners deny, in not a sufficient cause to deliver up Local Union No. 28 autonomy to International control.'

On the day their answer was due, defendants requested an additional twenty days, but in view of the nature of the case the court granted only an additional six days. The defendants have filed a motion to dismiss, alleging seven grounds. The motion was heard on April 29, 1960, at which time three additional grounds were stated. The parties were allowed five days for the filing of briefs.

The grounds stated in the motion to dismiss will not require extended discussion. One of the grounds advanced at the hearing is more serious, although the court entertains no doubt as to the correct answer.

Grounds Alleged in Motion.

1. Failure to state a claim upon which relief can be granted.

The only point seriously argued or briefed with respect to this ground was that the complaint failed formally to allege that Local Union and I.B.E.W. are labor organizations within the meaning of the Act, or that they are engaged in an industry affecting commerce. Counsel for plaintiffs orally so alleged, and the court granted leave to amend the complaint formally so to allege.

Whatever the actual merits, or lack thereof, may be, the allegations of the complaint, which on a motion to dismiss must be taken as true, state conduct, or misconduct, giving rise to causes of action under the Act.

2. and 3. Lack of diversity of citizenship (28 U.S.C.A. § 1332) or of any matter arising under the Constitution or laws of the United States (28 U.S.C.A. § 1331).

As the court finds that jurisdiction under the Act exists as to the allegations of the complaint as amended, it is immaterial whether or not jurisdiction otherwise would exist.

4. That an accounting cannot be had of funds coming into defendants' hands since June 1958, since the Act became effective only on September 14, 1959, and is not retroactive. Flaherty v. McDonald, D.C.D.Cal.1960, 183 F.Supp. 300; Highway Truck Driver's and Helpers Local 107 v. Cohen, D.C.D.Pa. 1960, 182 F.Supp. 608.

Certainly, however, if the facts justify it, an accounting under the Act could be had for all funds coming into defendants' hands after September 14, 1959; and probably for all funds in their hands as of the effective date of the Act.

5. Failure to show good cause and to obtain leave of court.

Section 501(a) of the Act recites the fiduciary responsibility of officers of labor

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organizations. Section 501(b) provides for suit for and alleged violation of such duties. One condition of suit is:

'No such proceeding shall be brought except upon leave of the court obtained upon verified application and for good cause shown, which application may be made...

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