Hotel & Restaurant Employees & Bartenders Intern. Union v. Rollison

• Decision Date: 11 January 1980
• Docket Number: Nos. 78-3142,78-3666,s. 78-3142
• Citation: 615 F.2d 788
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: 104 L.R.R.M. (BNA) 3038, 87 Lab.Cas. P 11,790 HOTEL & RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION, and Marcel A. Kenney, Trustee of Hotel, Motel, Restaurant, Construction Camp Employees and Bartenders Union Local 879, Plaintiffs-Appellants, v. Kay ROLLISON, Richard O'Neill, and all others similarly situated, Defendants-Appellees.

Page 788

615 F.2d 788

104 L.R.R.M. (BNA) 3038, 87 Lab.Cas. P 11,790

HOTEL & RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION, and Marcel A. Kenney, Trustee of Hotel, Motel Restaurant, Construction Camp Employees and Bartenders Union Local 879, Plaintiffs-Appellants, v. Kay ROLLISON, Richard O'Neill, and all others similarly situated, Defendants-Appellees.

Nos. 78-3142, 78-3666.

United States Court of Appeals Ninth Circuit.

Jan. 11, 1980.

As Amended Jan. 29 and March 14, 1980.

Rehearing Denied April 4, 1980.

Robert M. Goldberg, Goldberg & Elliott, Anchorage, Alaska, for plaintiffs-appellants.

Dan Siegel, Oakland, Cal., for defendants-appellees.

Appeal from the United States District Court for the District of Alaska.

Before CHAMBERS and TANG, Circuit Judges, and THOMPSON, ^* District Judge.

TANG, Circuit Judge.

Appellant Hotel and Restaurant Employees and Bartenders International Union (International Union) appeals from two decisions by the district court affecting the International Union's ability to establish a trusteeship over the Hotel, Motel, Restaurant, Construction Camp Employees and Bartenders Union Local 879 (Local). In No. 78-3142, the district court ¹ granted in part and denied in part the International Union's motion for a preliminary injunction. The portion denied is the basis of this appeal. In No. 78-3666, the district court ² denied the International Union's motion for summary judgment, modified the previous order on the motion for preliminary injunction, and deferred further action until NLRB proceedings and a Department of Labor investigation were completed.

We affirm the orders and rulings of the district court.

Issues on Appeal

(1) Whether the district court abused its discretion by granting in part and denying in part the International Union's motion for a preliminary injunction, ³ thus allowing the elected officers of the Local to continue to administer the day-to-day affairs of the Local pending a hearing and decision on the validity of the trusteeship established by the International Union.

(2) Whether the district court erred in denying the International Union's motion for summary judgment.

(3) Whether the district court abused its discretion in deferring any further action until the NLRB proceedings and the Department of Labor investigations were completed.

Statements of Facts

In March of 1978, appellee Kay Rollison was installed as the Financial Secretary/Business Agent of the Local. ⁴ Her installation followed a year of bitter disputes between herself and the Local's previous administration which had the backing of the International Union. ⁵

On August 24, 1978, Marcel Kenney ⁶ was appointed by the General President of the International Union pursuant to the International Union's Constitution to be International Trustee of the Local. The General Secretary/Treasurer of the International Constitution gave notice to the Local of the charges which necessitated the appointment of the trustee, ⁷ and informed the Local that the trustee would immediately take charge of Local affairs.

On September 6, 1978, Kenney arrived at the offices of the Local in Fairbanks, served notice that a trusteeship had been imposed, took custody of the Local's property and records, and had the locks changed on the Local's offices. Kenney terminated the employment of appellee Richard O'Neill and suspended all other Local officers, including Rollison. That evening, O'Neill, Rollison and others broke into and occupied the Local's offices.

The next morning, September 7th, Kenney served the trusteeship papers on Rollison. ⁸ She told Kenney at this time that she refused to honor the trusteeship. Kenney thereupon advised her he would take legal action to secure the trusteeship. That day, the Local's Executive Board met, voted to resist the trusteeship, and authorized Rollison to take all necessary legal action to carry out that decision.

On September 7th, appellants Kenney and the International Union (hereafter jointly referred to as International Union) filed a complaint in district court, seeking to prohibit appellees from interfering in any way with the operation of the trusteeship. At the same time, the International Union also moved for a temporary restraining order and preliminary injunction enforcing the trusteeship. ⁹ The motion for a temporary restraining order was denied ¹⁰ and a hearing was set for September 11, 1978 on the motion for a preliminary injunction.

Following the September 11th hearing, a written order was issued by the district court on September 12, 1978, granting in part the motion for a preliminary injunction and denying it in part. The order recognized that an emergency existed regarding pending collective bargaining negotiations, contract negotiations and NLRB proceedings. The court ordered (1) that Kenney be given control of all materials relevant to the investigation of the Local; (2) that the International Union was authorized to conduct an audit of the Local; (3) that space in the Local's office be set aside for Kenney; and (4) suspended the Local's authority to engage in collective bargaining negotiations. In denying the motion in part, the court ordered that the Local's officers were authorized to carry on the day-to-day affairs of the Local pending the hearing of charges on September 20, 1978 and their subsequent disposition by the General President of the International Union. ¹¹

On October 11, 1978, the International Union moved for judgment by default, or alternatively, for summary judgment. That same day the appellees brought an action to overturn the trusteeship. ¹²

Following a hearing, the district court issued its written order which (1) denied the International Union's motion for summary judgment; (2) vacated a portion of the September 12, 1978 order, thereby returning collective bargaining negotiating authority to the Local; and (3) held in abeyance further action in the cases until the Department of Labor and the NLRB completed their proceedings. ¹³

The district court subsequently denied a motion by the International Union for a stay pending appeal to this court. The court reasoned that the Local had raised serious questions as to the good faith imposition of the trusteeship and the balance of hardships tipped strongly in favor of the Local's officers and the members they represented.

I. Preliminary Injunction

The International Union first sought judicial aid to enforce its trusteeship and to evict the Local's elected officials from the Local's offices. The International Union is empowered by the Labor-Management Reporting and Disclosure Act of 1959, §§ 302-304 to impose a trusteeship if it does so in accordance with its constitution and bylaws. 29 U.S.C. § 462. ¹⁴ Although a trusteeship must be authorized or ratified by a fair hearing, Congress did not provide that the hearing must be held in all cases before a trusteeship can be imposed. This court has held that the district court has the discretion to determine whether it can reasonably be said that an emergency exists, thus justifying imposition of the trusteeship prior to a hearing. Retail Clerks Union Local 770 v. Retail Clerks International Association, 479 F.2d 54, 55 (9th Cir. 1973). In Retail Clerks, the court reasoned:

"Congress recognized that the imposition of a trusteeship is an extraordinary intrusion into the affairs of a local union. Such a step should not be taken without a prior hearing, absent some necessity for immediate action."

Id. at 55.

The district court in the instant case did find that an emergency existed, but its holding is unique in that it granted only a partial trusteeship. The court suspended the Local's collective bargaining authority, provided Kenney with complete custody and control over all the books and records, but allowed the Local's elected officers to continue running the day-to-day affairs of the Local pending the hearing and disposition of charges by the International President.

In looking at the notice of charges, it is apparent that the charges are adequately safeguarded by having all the books and records of the Local immediately turned over to the control of the trustee and by suspending the authority of the Local to engage in collective bargaining. In light of the animosity that had existed between the Local's officers and the International Union since well before the trusteeship was declared, the district court provided a creative and carefully delineated compromise that protected both parties' concerns. An immediate prehearing trusteeship is an extraordinary intrusion into the affairs of a local union, and the district court did not abuse its discretion in designing a less drastic method which protected both the International Union's interest in reviewing the assets and transactions of the Local and the Local's interest in maintaining the day-to-day affairs of the membership.

II. Summary Judgment ¹⁵

Under Section 304 of the Labor-Management Reporting and Disclosure Act of 1959, a trusteeship imposed by a labor organization is subject to attack upon clear and convincing proof that it was not established or maintained in good faith for a purpose allowable under the Act. 29 U.S.C. § 464(c). The facts of this case support the district court's finding that, "It cannot be denied that these allegations raise serious questions about the good faith of the International and the validity of the trusteeship. Where the heart of the International's case is so vigorously contested, summary judgment is clearly inappropriate."

A district court may not order summary judgment where there arises a genuine issue of material fact. See, e. g., Adickes v. S. H. Kress & Co., 398 U.S. 144, 153, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Scharf v. U. S. Attorney General, 597 F.2d 1240, 1242-1243 (9th Cir. 1979). As in cases where intent or motive is at issue, a court should be wary of granting summary judgment when good faith is in question. Cf. Gard v. U. S., 594...