United States v. Goad
| Decision Date | 14 January 1974 |
| Docket Number | No. 73-1309.,73-1309. |
| Citation | 490 F.2d 1158 |
| Parties | UNITED STATES of America, Appellee, v. Clyde R. GOAD et al., Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Stanley M. Rosenblum, Clayton, Mo., for appellants.
William M. Piatt, Atty., U. S. Dept. of Justice, Washington, D. C., for appellee.
Before GIBSON, LAY and HEANEY, Circuit Judges.
Rehearing and Rehearing En Banc Denied February 5, 1974.
The four defendants were charged and convicted of violating 29 U.S.C. § 501(c)1 of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 401 et seq. (hereinafter Act). Defendants are Donald D. Lane, president of Local 600 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (hereinafter the Union); Clyde R. Goad, vice-president; Daniel R. Mahany, secretary-treasurer; and Michael Ryan, recording secretary. Defendants each received three different salary increases of $50.00 per week that were not authorized in accordance with the Union's constitution.
The District Court2 sentenced Lane to two years imprisonment each on Counts 7, 8, and 9, the sentences to run concurrently, and three years probation each for Counts 1 through 6 and 10 through 12, such probation to run concurrently and to be served following completion of the sentence for Counts 7, 8, and 9. Goad received 18 months imprisonment (six months imprisonment and one year probation) each on Counts 1 and 2, to be served concurrently, and three years probation on Count 3 to be served after the sentence on Counts 1 and 2. Ryan received 18 months imprisonment (six months imprisonment and one year probation) each on Counts 4 and 5, to be served concurrently, and three years probation for Count 6, to be served after the sentence for Counts 4 and 5. Mahany received two years imprisonment each on Counts 10 and 11, to be served concurrently and pursuant to parole eligibility under 18 U.S.C. § 4208(a)(2). Mahany also received three years probation for Count 12, to be served after completion of the sentence for Counts 10 and 11. We affirm the convictions of all four defendants.
Members of the Union are 7,500 over-the-road truck drivers operating out of St. Louis and dockhands. The Union is governed by a seven member Executive Board, comprised of the local president, vice-president, secretary-treasurer, recording secretary (the four defendants occupied these offices during the times herein pertinent), and three trustees, all elected by the members every three years. The daily affairs are managed by the four officers, who were in this case first elected in 1968 and reelected by a two-to-one margin in December, 1971. The Union receives over one million dollars in annual dues, and its treasury in December, 1968, totaled approximately $2,000,000.
The previous officers held office for all but one week during 1968 and received the following salaries: president, $21,000; vice-president, $15,000; secretary-treasurer, $19,600; and recording secretary, $17,700. The defendants received the following salaries and expenses from 1968-1971:
Elected 1968 1969 1970 1971
Official Salary Expenses Salary Expenses Salary Expenses Salary Expenses
Lane $350 --- $23,418 $6,432 $34,811 $6,289 $36,133 $6,132
Goad 300 --- 21,600 3,928 30,610 4,450 33,311 5,086
Mahany 300 $2,173 23,771 5,303 34,814 11,677 38,742 12,524
Ryan 300 --- 20,870 2,595 32,062 4,982 33,728 4,974
President Donald Lane authorized separate $50.00 per week pay increases for the periods commencing May 24, 1969, October 18, 1969, and January 5, 1970. Neither the Executive Board nor the general membership specifically authorized or approved any of the salary increases. Each salary increase was the basis of a charged violation against each defendant for his own salary increases. Lane, however, was charged with three violations for his own three salary increases and with nine violations relating to the three salary increases for each of the three other officers. The Government did not contend that substantial expense money received was illegal.
Section 7.02(b) of the Union's constitution requires the Executive Board to "approve the salaries, benefits, allowances, direct and indirect disbursements, expenses and reimbursement of expenses for officers, agents and employees." The minutes from every Executive Board meeting from December 22, 1968, through October 15, 1972, were admitted into evidence, and no approval of the three salary increases for any of the officers was recorded.3 Defendants make no claim that the Executive Board or the membership expressly approved of the salary increases, and the three trustees testified that they did not know of the increases. In late 1971, when all of the officers were running for reelection, Union members asked at different Union membership meetings what the officers were being paid. Apparently, Lane responded at these times that "I'll not discuss it with you or anyone else" or "I don't ask what you make and you shouldn't ask me what I make." Mahany often said to "come on up and look at the books; they are always open." Apparently Union members first learned of the substantial increases in late 1971, when a candidate for president, opposing Lane, obtained accurate salary information from the LM-2 reports filed with the Government pursuant to the Act and mailed copies of those reports to the members.
Defendants' main contention is that the following resolution4 approved by the Union membership granted to the President and Secretary-Treasurer the power to increase salaries without approval of the Executive Board:
The President and Secretary-Treasurer have the authority, which is hereby confirmed, verified, and extended to make such expenditures and use of Teamsters Local 600 funds and facilities to whatever extent they believe is related to the interests and benefit of Teamsters Local 600 without any prior approval.
We agree with the Government that this general resolution cannot be read as rescinding the specific constitutional provision requiring Executive Board approval of salary increases. To do so would defeat the provisions of the Union's constitution. Defendants urge other contentions that the Union's constitution authorized the salary increases; however, we think that § 702(b) of the Union's constitution clearly takes precedence and provides that salary increases must be approved by the Executive Board.
Defendants also argue that the Government must prove "lack of union benefit" as an essential element of a crime under § 501(c). Since the District Court instructed the jury that a § 501(c) crime contains the essential elements of a specific intent to deprive the union of its funds and an unauthorized expenditure of union funds, defendants argue that it was prejudicial error not to include the alleged element of lack of union benefit. Defendants contend that the essential elements of every § 501(c) crime are: (1) specific intent to deprive the union of its funds, (2) unauthorized expenditure of union funds, and (3) lack of union benefit from the expended funds.
In order to decide whether lack of union benefit from expended union funds — in this case, unauthorized salary increases — is an element of a § 501(c) crime, we review the legislative history and Congressional purpose of § 501. This court has clearly held that "Congress intended that it the Act should not be interpreted by the Courts narrowly or strictly, but, to the contrary, that its confines are broad." Johnson v. Nelson, 325 F.2d 646, 650 (8th Cir. 1963); accord, Pignotti v. Local # 3 Sheet Metal Workers' Int. Ass'n, 477 F.2d 825, 832-835 (8th Cir. 1973). We said in Johnson:
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.
Johnson v. Nelson, supra, 325 F.2d at 650.
Section 501 should be interpreted broadly in order to insure that elected union officials fulfill their responsibilities as fiduciaries to their members, guard union funds from predators, and keep intact all such funds except those expended in the legitimate operation of the union's business. The funds should be treated as trust funds belonging to the union's members. Section 501(a), titled in part "Fiduciary responsibility of officers of labor organizations," specifically states:
(a) The officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder * * *.
Much has been written by many courts concerning the fiduciary responsibility of union officials imposed by § 501,5 however, House Report No. 741, prepared by the Committee on Education and Labor, trenchantly describes the purposes of the Labor-Management Reporting and Disclosure Act.6 In commenting on union financial and administrative practices, House Report No. 741 said:
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Employment-related crimes.
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Employment-related crimes.
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Employment-related crimes.
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