Johnson v. Nelson

Decision Date31 December 1963
Docket NumberNo. 17298.,17298.
Citation325 F.2d 646
PartiesAlfred JOHNSON and Robert J. Jensen, Appellants, v. Lester R. NELSON, L. Boerebach, C. H. Bunkholt, Gunnar Peterson, E. H. Everetts, Ralph Hallberg, Harry Burns and Vern Thomay, Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

Herbert S. Thatcher, Washington, D. C., for appellants; Francis X. Helgeson, Minneapolis, Minn., with him on the brief.

James C. O'Neill, St. Paul, Minn., for appellees; Bundlie, Kelley & Torrison, St. Paul, Minn., with him on the brief.

Before VOGEL, MATTHES and MEHAFFY, Circuit Judges.

MATTHES, Circuit Judge.

This action was instituted by eight members (appellees) of Local No. 386 (Local) of the Brotherhood of Painters, Decorators and Paperhangers of America, AFL-CIO, against Alfred Johnson and Robert J. Jensen (appellants), Local's president and treasurer, respectively, under Title V — § 501(a) and (b) of the Labor-Management Reporting and Disclosure Act, (LMRDA) of 1959, 29 U.S. C.A. § 501(a) and (b) (commonly referred to as the Landrum-Griffin Act).1 In brief, the complaint alleged that appellants as officers of Local, occupied positions of trust and that their refusal to sign checks in payment of certain attorneys' fees and other expenses which had been approved by the membership of Local, constituted a violation of their fiduciary obligations.

After a trial, the court, Judge Larson, found the issues for appellees and entered a judgment directing appellants to "prepare, execute, and deliver, forthwith, checks in full payment of the duly approved bills reimbursing Petitioners appellees for their attorneys' fees and related expenses. * * *" Appellants duly appealed from the judgment so entered.

The facts are uncontroverted, and inasmuch as they are exhaustively detailed in the trial court's findings, D.C., 212 F.Supp. 233, 236-240 (1963), it is neither necessary nor desirable that we indulge in another complete recital of them. A concise résumé will suffice.

Local has approximately 2200 members. Under the constitution of the International Union, seven members in good standing constitute a quorum for a meeting. Bills for expenses incurred must be approved first by the trustees and then by the membership of Local before payment. The president and treasurer are required to sign checks in payment of approved bills.

Strong differences of opinion existed within Local regarding wage negotiations being conducted by incumbent officers; appellees and certain other members manifested their intention to present a slate of candidates to oppose appellants and other incumbent officers; at the nomination meeting, before appellees had nominated their opposition candidates, charges alleging violation of various union principles were preferred against appellees and others (most were opposition candidates) by one Carlson, the incumbent business agent of Local; a union trial was conducted by a Trial Board of which appellant Johnson was chairman. After three accused members were properly tried and acquitted, different trial procedures — in violation of the union constitution — were adopted by the Trial Board, and the accused members were presumed to be guilty instead of innocent of the charges. Under the new procedures, the remaining accused members were tried, found guilty, and either fined or suspended. On appeal, despite obvious violations of the rights of appellees, the International Union affirmed the "unlawful" action of the Local Trial Board.

Appellees instituted an action in the United States District Court for the District of Minnesota, charging appellants and others with violation of Title I — § 101(a) (2) and (5) of LMRDA, 29 U.S.C.A. § 411(a) (2) and (5),2 and seeking to set aside the improper disciplinary action. After the court (Judge Devitt) granted a temporary injunction, the parties entered into a stipulation approved by the court whereby the decisions of the Local Trial Board and the penalties imposed by that tribunal were set aside and withdrawn.

Appellees incurred attorneys' fees in the amount of $3,475 in the federal court action and costs in the amount of $262.44 in the first union trials.

At a meeting the membership of Local approved payment of appellees' attorneys' fees incurred in the federal court action, but at a subsequent meeting rescinded this action.

In May, 1961, Carlson filed new charges against "various Petitioners appellees and other members." Pursuant to the stipulation between the parties in the federal court case, the membership of Local elected a Special Trial Board to hear these charges. Appellee Nelson was the first accused to be tried. After trial but before the Special Trial Board had reported its decision to the membership, a representative of the International Union recommended a settlement of all issues to the Special Trial Board, including the payment of all attorneys' fees and expenses for both groups.

Thereafter, the Special Trial Board dismissed the charges against appellee Nelson and recommended that the attorneys' fees and expenses incurred by all parties in the two series of union trials and in the first federal court action be paid by Local. The membership of Local approved the recommendation of the Board. However, on August 18, 1961, in response to a letter from acting Local treasurer Romine, the General President of International suggested that payment of attorneys' fees incurred by appellees be deferred until investigation had been made. During a union meeting on August 21, 1961, appellant Johnson unsuccessfully attempted to rescind the prior approval by Local of the Special Board's recommendation. Johnson then submitted to the membership the vouchers of appellees, item by item, for attorneys' fees and other expenses incurred in the federal court action, and the membership approved each item.

On September 4, 1961, Johnson by letter requested an order from the International President directing Johnson not to pay the questioned bills. On September 6 and September 13, the officers of Local by unanimous vote (appellants abstaining) directed appellants to pay the bills. Appellants persisted in their refusal to do so.

On September 29, 1961, Romine and appellants were advised by the General President of International that investigation had been completed and that "in our opinion" appellees' bills and expenses were "individual indebtedness of these members" and should not be paid by Local. Appellees were not contacted during this "investigation". The letter further advised that there was no objection to payment of attorneys' fees for the union trials.

At a meeting of Local on October 2, 1961, appellees' attorneys requested Local's officers, pursuant to Title V — § 501 (b) of the LMRDA, 29 U.S.C.A. § 501 (b), to take corrective or remedial action against appellants, or else appellees would themselves commence action. Appellants advised appellees to proceed, and this action was instituted on October 16, 1961.

On November 15, 1961, the General Executive Board (GEB) of International unilaterally, on its own motion, determined that the action of Local in approving the recommendations of the Trial Board respecting payment of appellees' bills was null and ineffective. The GEB suggested that the membership of Local reconsider its authorization of reimbursement "for the reasons: (1) that it is against the general policy of the Brotherhood to sanction expenditure of local union funds for such purposes and, (2) the expenditure of such funds for such purposes might well constitute a violation of Title V of the Landrum-Griffin Act." The GEB further advised that if the Local nevertheless decided to conduct a vote on the question, the Local should take such vote by secret ballot referendum vote of the entire membership by mail. No union constitutional provisions were cited as authority for the determinations made by the GEB.

There are two basic questions presented for our consideration and determination. (1) the scope of Title V — § 501 of the Act, 29 U.S.C.A. § 501; (2) whether the conduct of appellants constitutes a violation of their fiduciary responsibilities and duties under Title V — § 501.

In summary, appellants' position as to question (1) is that Title V of the Landrum-Griffin Act was designed to apply to situations where the action or non-action of union officials results in some pecuniary loss or disallowance to the membership as a group, and that the trust relationship imposed by Title V relates to financial or money-related responsibilities rather than to a broad "trustee" responsibility in regard to all activities and relationships between the officers of a union and the membership.

Careful analysis of Title V refutes the notion that the statute is narrow in its terms and scope and that it is limited solely to pecuniary responsibilities or the proper or improper use of union funds.

In explicit language, § 501(a) provides that officers and other representatives of a labor organization "occupy positions of trust in relation to such organization and its members as a group." It is the duty of each such person, "taking into account the special problems and functions of a labor organization," not only to hold its money and property solely for the benefit of the organization and its members, but to "refrain from dealing with such organization as an adverse party * * * in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interests of such organization."

Thus it plainly appears that the statute is broad in its reach. Officers and other union representatives may not act adversely to their organization or to the members as a group, or acquire a personal interest which is contrary to the interests of the organization. Being trustees the officers must subvert their own personal interests to the lawful mandates and orders of the organization.

The legislative history of the Act demonstrates that Congress...

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