INTERN. BROTH. OF BOILERMAKERS v. LOCAL LODGE D474

• Decision Date: 11 March 1987
• Docket Number: No. SA-86-CA-1568.,SA-86-CA-1568.
• Parties: INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO, Plaintiff, v. LOCAL LODGE D474 OF the CEMENT, LIME, GYPSUM AND ALLIED WORKERS DIVISION OF the INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO, et al., Defendants.
• Court: U.S. District Court — Western District of Texas

673 F. Supp. 199

INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO, Plaintiff, v. LOCAL LODGE D474 OF the CEMENT, LIME, GYPSUM AND ALLIED WORKERS DIVISION OF the INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO, et al., Defendants.

No. SA-86-CA-1568.

United States District Court, W.D. Texas, San Antonio Division.

March 11, 1987.

Frank Herrera, Jr., San Antonio, Tex., Robert L. Dameron, Blake & Uhlig, P.A., Kansas City, Kan., for plaintiff.

John E. Schulman, Law Office of John Schulman, P.C., San Antonio, Tex., for defendants.

ORDER

H.F. GARCIA, District Judge.

On this day came on to be considered the motion of plaintiff for preliminary injunction. Also under consideration are the Findings and Recommendation of United States Magistrate Robert B. O'Connor to whom the motion was referred. Plaintiff, the International Brotherhood of Boilermakers (International), has sued one of its local lodges (D474) and three of the lodge officers. Pursuant to the constitution of the International, it imposed a trusteeship on D474 and sought possession of the funds, properties, books and assets of D474, which defendants have refused to relinquish. The International seeks to enjoin defendants from transferring or otherwise disposing of them. After conducting a two day evidentiary hearing, the Magistrate recommended that the motion be granted. Defendants have timely filed objections to the report. Pursuant to Title 28 U.S.C. Section 636(b), this Court has conducted a de novo review of the report by reading the pleadings, the transcript of the hearing, and the evidence.

Title 29 U.S.C. Section 462 provides that:

"Trusteeships shall be established by a labor organization over a subordinate body only in accordance with the constitution and bylaws of the organization which has assumed trusteeship over the subordinate body and for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures, or otherwise carrying out the legitimate objects of such labor organization."

Three essential conditions must be met for a trusteeship to be valid: (1) there must be adherence to the constitution of the union, (2) there must be a fair hearing, and (3) it can be imposed only for a permissible purpose. Luggage Workers Union, Local 167 v. International Leather Goods, Plastics and Novelty Workers Union, 316 F.Supp. 500, 504 (D.Del.1970). See, Executive Board Local 1302 v. United Brotherhood of Carpenters and Joiners of America, 477 F.2d 612, 613 (2d Cir.1973). Graphic Arts International Union, AFL-CIO v. Graphic Arts International Union, Local No. 529, 529 F.Supp. 587, 593 (W.D.Mo. 1982). A trusteeship established by a labor organization in conformity with the procedural requirements of its constitution and bylaws and authorized or ratified after a fair hearing shall be presumed valid and shall not be subject to attack for a period of eighteen months except upon clear and convincing proof that the trusteeship was not established or maintained in good faith for a purpose allowable under section 462. Title 29 U.S.C. Section 464(c).

Article XVIII of the International's constitution governs trusteeships. Section 3 provides for the imposition of a trusteeship if the activities of the local or its officers or members create an emergency imminently threatening the welfare, funds or property of the local. In such case, a hearing must be held within fifteen days. Section 1 establishes several grounds for imposition of a trusteeship: secession or threatened secession, dissolution or threatened dissolution, dissipation or loss of funds or assets or financial malpractice or corruption or threat thereof, violation or threatened violation of collective bargaining agreements, and the deprivation of democratic procedures and other activities constituting a violation of the constitution and threatening the welfare of the subordinate body membership or the International Brotherhood. Section 2 provides that the trustee shall have the right to all the funds, properties, books and assets of the local. It also confers on the trustee the authority to remove or suspend officers, and it requires those officers to surrender to the trustee all monies, books and properties of the local.

The evidence is undisputed that as early as September, 1986, D474 initiated efforts to disaffiliate from the International. Defendants have also admitted transferring funds of the local that month and refusing to relinquish them to the trustee. The evidence establishes that D474 and other similarly situated locals met on September 17, 1986 and discussed disaffiliation from the International as well as the transfer of funds. Additionally, at that meeting, they voted in favor of formation of the IWNA and appointed trustees which included a D474 member. The testimony of Victor Maggio, assistant to the president of the International, at the Magistrate's hearing succinctly sets forth the reasons the trusteeship was imposed.

Q: Can you give the Court, generally, the topics or the reason that the Lodge D-474 transcript played a role in the determination as to whether or not to impose a trusteeship.

A: Yes. One, that officers and representatives of Lodge D-474 participated in a meeting September 17th, 1986 in Ontario, California for the purpose of formulating another organization called the Independent Workers of North America. Secondly, that a trustee was appointed by the Lodge president to serve on behalf of Lodge D-474 to manage the affairs of the Independent Workers of North America where there is no provision within the Lodge bylaws, nor constitution for any such action. Thirdly, that a result of their own testimony confirmed what we believe to be of fundamental conflict of the officers and members of Lodge D-474 with regard to protection of the assets of the Local Lodge, and to preserve the collective bargaining duties required under the agreement. (P. 190)

A: Consequently, as a result of all testimony provided during NLRB hearings, there was reason to believe there was immanent danger in Lodge D-474 as to the welfare of the assets, fund, property of the Local Lodge. That in fact, there was dissolution or threatened dissolution, secession or threatened secession. Further violation by officers of Lodge D-474 as to their duties and responsibilities under the constitution. And further as a result of their involvement with the IWNA there was a fundamental conflict which jeopardized the collective bargaining relationship with the employer. Further, those reasons existed and caused the need for the emergency. Further, by telegram of November 17th, the Lodge officers were advised that they failed to comply with directives to turn over all records, books, and assets of the Local Lodge to the trustee, which is expressly provided for in article 18 of the constitution. Further, there was failure to pay per capita tax and submit membership reports in a timely fashion as required under the constitution, whereby officers neglected their duties and responsibilities. And in fact, neglected their fiduciary responsibility to the members of Lodge D-474 by jeopardizing their good standing in the International Brotherhood of Boilermakers for failing to submit payments and reports.

(P. 193-194)

The trusteeship was imposed on November 7, 1986 and a hearing was held on November 21st. The attempt to disaffiliate and the transfer of funds justified imposition of the emergency trusteeship under the constitution. The hearing was timely held. This Court is convinced that the International complied with the requirements of its constitution in imposing the trusteeship on D474.

The next condition which must be satisfied is the requirement of a fair hearing. A fair hearing implies at least the procedural requirements of notice of the charges and the date and nature of the hearing, presentation of evidence and witnesses in support of the reasons for imposing the trusteeship with the opportunity for cross-examination, and the opportunity to present evidence in rebuttal. Jolly v. Gorman, 428 F.2d 960, 967-968 (5th Cir.1970). C.A.P.E. Local Union 1983 v. International Brotherhood of Painters and Allied Trades, 598 F.Supp. 1056, 1070 (D.N.J. 1984). Tam v. Rutledge, 475 F.Supp. 559, 569 (D.Hawaii 1979). Luggage Workers Union, Local 167, 316 F.Supp. at 508. The hearing need not precede imposition of the trusteeship. Hotel and Restaurant Employees and Bartenders International Union v. Rollison, 615 F.2d 788, 792 (9th Cir.1980). However, for post hac ratification to be valid, it must be permissible under the union's constitution and follow the imposition with reasonable promptness. National Association of Letter Carriers v. Sombrotto, 449 F.2d 915, 920 (2d Cir.1971). C.A.P.E. Local Union 1983, 598 F.Supp. at 1068. Tam v. Rutledge, 475 F.Supp. at 562.

As noted above, the International constitution does contain a ratification provision, justifying the post-imposition hearing. On the same day the trusteeship was imposed, an official notice of the trusteeship hearing was issued. The notice advised that a hearing would be held on November 21st to determine whether to continue the trusteeship. Officers and members were advised they would have the opportunity to present evidence and cross-examine witnesses at the hearing. The reasons for the emergency trusteeship were also cited in the notice. A subsequent notice on November 17th further advised D474 officers that they had violated the constitution by refusing to relinquish all monies, books and properties of the local to the trustee. It also cited their failure to collect and remit payment of per capital tax to the International, as well as the conflict which existed because of their ties to the IWNA. The officers of D474...