Erkins v. Bryan, AFL-CIO-CL
| Decision Date | 14 December 1981 |
| Docket Number | No. 80-7559,I,AFL-CIO-CL,80-7559 |
| Citation | 663 F.2d 1048 |
| Parties | 109 L.R.R.M. (BNA) 2202, 92 Lab.Cas. P 13,176 Elbert ERKINS, Samuel Denson and Perry Culpepper, Plaintiffs-Appellants, v. Billy BRYAN, Arthur Comer, George Bullard and Charlie Greene, Defendants-Appellees, United Steelworkers of America,ntervenor-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Jacobson, Sodos, Melnick & Krings, Thomas M. Jacobson, Milwaukee, Wis., William I. Grubb, II, Eufaula, Ala., Walter F. Kelly, Milwaukee, Wis., for plaintiffs-appellants.
Cooper, Mitch & Crawford, Jerome A. Cooper, Birmingham, Ala., for Bryan, et al.
James D. English, Associate Gen. Counsel, United Steelworkers of America, Pittsburgh, Pa., Bernard Kleiman, Gen. Counsel, Chicago, Ill., for United Steelworkers of America.
Appeal from the United States District Court for the Middle District of Alabama.
Before TUTTLE, HENDERSON and HATCHETT, Circuit Judges.
By this appeal we are required to construe and apply the provisions of the Landrum-Griffin Act, particularly 29 U.S.C. § 501(b) when persons alleging themselves to be members of a local union seek permission of a United States district court to file an action against former officers of the local alleging misappropriation of union funds, in which action the prospective plaintiffs seek to make a recovery for the benefit of the union.
This section provides:
When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent, shop steward, or representative in any district court of the United States or in any State court of competent jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization. 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 ex parte. The trial judge may allot a reasonable part of the recovery in any action under this subsection to pay the fees of counsel prosecuting the suit at the instance of the member of the labor organization and to compensate such member for any expenses necessarily paid or incurred by him in connection with the litigation.
29 U.S.C. § 501(b).
The petitioners, here the appellants, filed their petition with the district court seeking permission to file their suit as members of Local 7326 of the International Union, United Steel Workers, alleging that several former officers had, during a strike in which the petitioners had participated, embezzled and misappropriated money furnished to the Union by the International for strike benefits. The petition alleged that the petitioners were, at the time, members of Local 7326. They alleged sufficient facts which would have supported a complaint alleging misapplication of funds as outlined in § 501(b). They also alleged that they had "made demand by letter to United Steel Workers of America (their international union) to take the necessary action to prevent any further union funds from being misused by defendants for the abovementioned purposes, and to take immediate steps, by filing court action, to recover from the individual defendants the funds the defendants have wrongfully expended." They alleged the officers of the International had failed under a reasonable time to take such action. Based on such application, sworn to by the parties and presented to the court ex parte as is permitted under the statute, the trial court entered its order granting leave to file the petitioners' complaint.
Thereafter, after granting leave to the named respondents to delay the filing of their response, the trial court set down for a hearing a motion by United Steel Workers of America for permission to intervene for the purpose of moving the court to revoke its order permitting the filing of petitioners' complaint. This motion to intervene was supported by a long affidavit by the associate general counsel of the United Steel Workers of America, who outlined the usual procedures for the handling of the affairs of locals which are in similar circumstances to Local No. 7326. Neither the petition to intervene nor the Frankel affidavit categorically stated that the petitioners were no longer "members" of the union. This affidavit was extensively answered by counsel for petitioners prior to the hearing conducted by the trial court. The court did not enter an order allowing the intervention, but considered the pleading and affidavit as though it had done so.
The historical facts necessary for us to consider the correctness of the trial court's order revoking its original grant of permission to the petitioners to file their complaint are not in dispute. The membership of Local 7326 consisted entirely of production and maintenance employees employed by American Buildings Company in Eufaula, Alabama. As of January 1, 1978 there were approximately 300 workers employed in the plant. There was a similar number of members of the Local in December of 1976, at the time of the expiration of the most recent collective bargaining agreement between the Local and the Company. Following the expiration of that agreement, USW commenced a strike against the Company over the terms of a proposed new agreement. The strike was authorized by a vote of the membership of Local 7326. It proved to be a long, bitterly contested struggle which was lost in the end by the Union. In support of the strike the AFL-CIO declared a boycott of the Company's products. The Local lost the right to represent the Company's employees following its defeat in a National Labor Relations Board decertification election conducted on May 18, 1978. This election became final by the Board's certification of the results of the election on July 14, 1978.
Local 7326 did not serve as collective bargaining representative for employees of any other employer than American Building Company. Thereupon, by letter dated July 14, 1978, the director of the district of USW in which Local 7326 was located requested that an administrator be appointed for Local 7326. This was apparently done under the provisions of Article IX of International's constitution which provides "in the event the International president shall have reason to believe any local union is failing to comply with any provision of the constitution, or that action may be required for one of the purposes specified in the following paragraph, the International president may, unilaterally or at the request of officers or members of the local union, institute proceedings ..." which may after appropriate hearings result in "suspending or revoking the charter of any such local union." Included as one of the purposes mentioned above for which such action can be taken is "otherwise carrying out the legitimate objects of the International union or such local." Presumably, in the opinion of the district director, such administrator was to be appointed because, in the language of the general counsel's affidavit: "This is the usual first step in a procedure followed in cases where locals have ceased to represent any employees." (Emphasis added.)
Following this appointment, the parties apparently agree that Local 7326 has been dormant; no dues have been paid and no meetings have been held. There apparently have been no collective bargaining or other union activities. Petitioners are still employees of American Buildings Company.
The International contends that under these circumstances, the petitioners were no longer "members" of the Union. Petitioners, on the other hand, contend that until the charter has been revoked, the administrator has completed his audit and the funds have been properly disbursed, they are still members of the Local and of the International. They further contend that even if they were not technically "members" at the time the suit was filed, they nevertheless should be treated as "members-in-substance" and be permitted to file the complaint as members.
Although the petitioners, in their opposition to the trial court's reconsideration of its order granting permission to file the complaint, included a paragraph quoting from the Landrum-Griffin Act section under "definitions" dealing with "members," the trial court did not mention this definition in its disposition of the case. It held in effect, that the decertification brought about the dormancy of the Local which resulted in the loss of membership by all of its previous members, including the petitioners. It held that since they were not technically members they were not qualified under the statute to file such a complaint. The court bolstered its determination of this issue by equating the status of a "member" under § 502 with that of a former stockholder in a derivate suit, citing in support of this theory, Phillips v. Osborne, 403 F.2d 826 (9th Cir. 1968). This Court has held that a former stockholder is not qualified to bring an action on behalf of his corporation under Fed.R.Civ.Proc. 23.1. Schilling v. Belcher, 582 F.2d 995 (5th Cir. 1978), where we stated: "Only a shareholder, by virtue of his 'proprietary interest in the corporate enterprise,' " Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 321, 56 S.Ct. 466, 471, 80 L.Ed. 688 (1936), may " 'step into the corporation's shoes and ... seek in its right the restitution he could not demand in his own.' "
The difficulty with this reasoning is that this statute makes a "member" of the union a statutory representative "to recover damages or secure an accounting or other appropriate relief for the benefit of the labor...
To continue reading
Request your trial
-
Erkins v. Bryan, s. 84-7455
...of this issue is foreclosed by the decision of a prior panel in an interlocutory appeal in this case. See Erkins v. Bryan, 663 F.2d 1048 (11th Cir.1981) (Erkins I ). That panel held that plaintiffs were USW members at the time of filing suit and thus had standing to sue. Since findings of f......
-
Ross v. Kemp
...parties and due administration of justice). This circuit does not consider the same factors in all cases, however. In Erkins v. Bryan, 663 F.2d 1048, 1052 (11th Cir.), cert. denied, 459 U.S. 989, 103 S.Ct. 343, 74 L.Ed.2d 384 (1982), the panel allowed a party to supplement the record with d......
-
Fraser v. James, Civ. No. 1986/123.
...79 L.Ed.2d 741 (1983). In fact, section 501 has been applied to suits alleging the wrongful handling of strike funds. Erkins v. Bryan, 663 F.2d 1048 (11th Cir.1981), reversing, 494 F.Supp. 732 (N.D.Ala.1980), cert denied, 459 U.S. 989, 103 S.Ct. 343, 74 L.Ed.2d 384 (1982); Agola v. Hagner, ......
-
Department of Labor v. Aluminum, Brick and Glass Workers Intern. Union, Local 200
...867 F.2d 500, 509 (9th Cir.1989); Brennan v. Local 357, Int'l Bhd. of Teamsters, 709 F.2d 611, 614-15 (9th Cir.1983); Erkins v. Bryan, 663 F.2d 1048, 1052 (11th Cir.1981), cert. denied, 459 U.S. 989, 103 S.Ct. 343, 74 L.Ed.2d 384 (1982); Alvey v. General Elec. Co., 622 F.2d 1279, 1284 (7th ......