Daniels v. Sanitarium Ass'n

• Decision Date: 21 May 1963
• Citation: 381 P.2d 652,59 Cal.2d 602,30 Cal.Rptr. 828
• Parties: , 381 P.2d 652, 53 L.R.R.M. (BNA) 2337, 47 Lab.Cas. P 50,837 Luther DANIELS et al., Plaintiffs and Appellants, v. SANITARIUM ASSOCIATION, INC., et al., Defendants and Respondents. L. A. 27090
• Court: California Supreme Court

Page 828

30 Cal.Rptr. 828

59 Cal.2d 602, 381 P.2d 652, 53 L.R.R.M. (BNA) 2337,

47 Lab.Cas. P 50,837

Luther DANIELS et al., Plaintiffs and Appellants, v. SANITARIUM ASSOCIATION, INC., et al., Defendants and Respondents.

L. A. 27090.

May 21, 1963.

Levy, DeRoy, Geffner, Kosdin & Glow and Leo Geffner, Los Angeles, for plaintiffs and appellants.

Paul, Hastings, Janofsky & Walker, Leonard S. Janofsky, Oliver F. Green, Jr., and Dennis H. Vaughn, Los Angeles, for defendants and respondents.

TOBRINER, Justice.

Plaintiffs confront us with the anachronistic situation that an unincorporated labor union cannot, under the decisions at common law, file suit in its own name. These older cases, of course, reflect an age when a labor union occupied a doubtful legal status. For the reasons we shall later specify in more detail we believe that the role of the union in the present economy, and the statutory sanction of the union under certain circumstances as a bargaining representative of employees, requires a procedural accommodation to the union's ability to litigate. Moreover, since we have recognized that the union may be substantively liable in tort as an entity, we do not see why it should not be able to sue as an entity. Upon a parity of reasoning we have likewise concluded that the union may be defamed as an entity.

Luther Daniels brought this action for libel 'in a representative capacity for and on behalf of Service and Maintenance Employees Union Local 399, Building Service International Union, AFL-CIO.' Daniels is the vice-president of this local, which is an unincorporated association representing approximately 7,000 members in the Los Angeles County area.

The complaint alleged the following essential facts. Local 399 represents employees of hospitals and sanitariums and has negotiated collective bargaining agreements on their behalf. By reason of its representation and the agreements it has secured, the union has built up an excellent reputation in the general community.

About September 23, 1960 defendants printed and published a letter which was circulated to approximately 50 sanitariums, hospitals and nursing homes in California. This document exposed the union, its officers, members and representatives to public hatred, ridicule, and contempt, and greatly injured them in their reputation, business and credit in the community. As a result, Daniels, on behalf of the union, filed the present suit, seeking $300,000 in general damages and $200,000 in exemplary damages.

Defendants demurred to the complaint; the court sustained the demurrer, allowing plaintiffs 15 days to amend. The minute order contained the following notation: 'An unincorporated association cannot sue and insofar as this is a suit on behalf of the association, an unincorporated association does not have a cause of action for libel.' Plaintiffs refused to amend; the court entered a judgment of dismissal.

In support of the judgment of dismissal defendants rely on those cases which conclude that an unincorporated labor union, as an unincorporated association, cannot, in the absence of a specific statutory provision, qualify as a party plaintiff. ¹ The basic reason for this court-created rule 'was that the association was not, in the eyes of the law, a legal unit or entity, and had no legal capacity to become a party to an action.' (Jardine v. Superior Court (1931) 213 Cal. 301 at p. 307, 2 P.2d 756 at p. 759, 79 A.L.R. 291.) ²

The trade union has grown from the early loose craft union into an institution comparable to a corporation or public utility. Indeed this court has said that the union may no longer be regarded as a mere fraternal organization or social club. (James v. Marinship Corp. (1944) 25 Cal.2d 721, 155 P.2d 329, 160 A.L.R. 900.) The legal evolution of the status of the union has occurred both by statutory and decisional recognition of the metamorphosis in its composition and function. ³

This court has recently recognized the contemporaneous social responsibility of these organizations and the resultant legal amenability. In the case of Marshall v. International Longshoremen's & Warehousemen's Union (1962) 57 Cal.2d 781, 22 Cal.Rptr. 211, 371 P.2d 987, we rejected as to labor unions the long-standing general rule that a member of an unincorporated association could not recover against the association for personal injuries sustained as a result of the association's negligence. The old approach regarded all members of the union as principals and agents or partners; hence, the negligence of any member would be attributable to any other member suffering injury. After analyzing the emerging entity status of a labor union, we concluded that the old rule could no longer be applied to unions. ⁴ We also held that any judgment recovered from the union could be satisfied from the funds and property of the union alone. (See also Inglis v. Operating Engineers Local Union No. 12 (1962) 58 Cal.2d 269, 23 Cal.Rptr. 403, 373 P.2d 467.)

Justice Dooling, writing for the unanimous court in Marshall, pointed out that when the concepts of partnership 'are transferred bodily to other forms of voluntary associations such as fraternal organizations, clubs and labor unions, which act normally through elected officers and in which the individual members have little or no authority in the day-to-day operations of the association's affairs, reality is apt to be sacrificed to theoretical formalism. The courts, in recognition of this fact, have from case to case gradually evolved new theories in approaching the problems of such associations, and there is now a respectable body of judicial decision, especially in the field of labor-union law, with which we are here directly concerned, which recognizes the existence of unincorporated labor unions as separate entities for a variety of purposes * * *.' (57 Cal.2d at pp. 783-784, 22 Cal.Rptr. at p. 213, 371 P.2d at p. 989.)

To elaborate this position Justice Dooling refers to a series of decisions in this state which treat a labor union as an entity: Shafer v. Registered Pharmacists Union (1940) 16 Cal.2d 379, 387, 106 P.2d 403 (union shop contract of union); Cason v. Glass Bottle Blowers Ass'n (1951) 37 Cal.2d 134, 147, 231 P.2d 6, 21 A.L.R.2d 1387 (mandamus proceeding against union to compel hearing of suspended member); Mooney v. Bartenders Union Local No. 284 (1957) 48 Cal.2d 841, 843, 313 P.2d 857, 64 A.L.R.2d 1154 (inspection by member of union's financial records); and DeMille v. American Federation of Radio Artists (1947) 31 Cal.2d 139, 187 P.2d 769, 175 A.L.R. 382 (refusal to pay union assessments). Justice Dooling concludes this point with a quotation from Oil Workers International Union v. Superior Court (1951) 103 Cal.App.2d 512, 230 P.2d 71, to the effect: 'It is obvious that such organizations are no longer comparable to voluntary fraternal orders or partnerships; that they are sui generis, and approximate corporations in their methods of operation and powers. * * * To consider such organizations under present day conditions as mere social or fraternal orders or partnerships is to close one's eyes to the realities now existing.' (57 Cal.2d pp. 786-787, 22 Cal.Rptr. p. 215, 371 P.2d p. 991.)

The reluctance of the courts to traverse the full route in procedural recognition of the changed nature of trade unions leads to obscurantism in the enforcement of union rights. The latent unfairness and patent difficulties find their reflection in the instant case.

In the absence of a remedy for the union as an entity, plaintiff Daniels sought to bring suit on behalf of the union in a representative capacity. ⁵ Defendants assert that such a representative suit is not available. The complaint, according to defendants, alleges a libel of the union as an entity. The complaint does not identify or name any ascertainable persons who were libeled, and therefore states no cause of action as to any of the numerous individual members of the union. Since the complaint alleges a libel of the union as an entity, rather than of the specific members, plaintiffs fail to meet the statutory requirement of numerous parties. (Code Civ.Proc., § 382.)

The union is thereby presented with a fleeting image of the entity. If it seeks to sue as an entity, it meets the legal response that it cannot do so because it is merely a collection of individuals. If, however, it seeks to bring a class action on behalf of its members, it is told that it cannot sue in that capacity because it has complained that the union suffered the libel and because the union therefore cannot be conceived to be simply an association of individuals. The resultant anomaly deprives the union of any effective procedure of litigation.

Defendants argue that any change with respect to the capacity of a union to sue lies within the exclusive province of the Legislature. In the absence of legislation, however, the courts have recognized the entity concept in order to reach a proper result as to other institutions. One noted commentator advocating judicial recognition of the unincorporated association's capacity to sue, has described the willingness of courts either to endow entity status or pierce it when such result was desirable. ⁶

The social and economic realities of the present-day organization of society has thus led this court and others to recognize the suability of unions. ⁷ In so deciding as to tort liability in Marshall and Inglis, we did not insist upon a rigid preservation of legal formality which had been moulded for an age of a different social structure. We must recognize that the society of today rests upon the foundation of group structures of all types, such as the corporation, the co-operative society, the public utility. Such groups must, of course, operate successfully within the society; one of the prerequisites to that functioning is, generally, liability to suit and opportunity for suit. To frustrate that viability by the...