Mallick v. International Broth. of Elec. Workers

• Decision Date: 27 November 1984
• Docket Number: No. 83-2200,83-2200
• Citation: 749 F.2d 771
• Parties: 117 L.R.R.M. (BNA) 3081, 242 U.S.App.D.C. 93, 53 USLW 2288, 102 Lab.Cas. P 11,260 John MALLICK, Appellant v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 771

749 F.2d 771

117 L.R.R.M. (BNA) 3081, 242 U.S.App.D.C.

93, 53 USLW 2288,

102 Lab.Cas. P 11,260

John MALLICK, Appellant v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, et al.

No. 83-2200.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 26, 1984.

Decided Nov. 27, 1984.

Paul Alan Levy, Washington, D.C., with whom Alan B. Morrison, Washington, D.C., was on brief, for appellant.

John P. Counts, Washington, D.C., for appellees.

Before WRIGHT and WALD, Circuit Judges, and MACKINNON, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge WALD.

Concurring opinion filed by Senior Circuit Judge MACKINNON.

WALD, Circuit Judge.

John Mallick appeals from a summary judgment dismissing his action against his union, the International Brotherhood of Electrical Workers (IBEW), and two IBEW officers under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), 29 U.S.C. Secs. 401-531. ¹

                Mallick sought the right, as a union member, to examine IBEW financial records detailing the amount of a settlement and the attorneys' fees the IBEW paid in independent litigation to which he was not a party.  Mallick relied in part on subsection 201(c) of the LMRDA, 29 U.S.C. Sec. 431(c), which requires a union to permit a member "for just cause to examine any books, records, and accounts necessary to verify" certain reports that the union must file with the Secretary of Labor.  The district court concluded that a union member may examine the records underlying the required union reports only if he can point to some irregularity or discrepancy in the reports themselves. 2   Because we take a broader view of subsection 201(c) than the district court, we vacate summary judgment on that claim and remand for further proceedings.  Mallick also brought claims seeking the same information under subsections 501(a) and 101(a) of the LMRDA, 29 U.S.C. Secs. 501(a), 411(a).  Whatever rights Mallick may have under subsection 501(a) on the facts of this case are no broader than his rights under subsection 201(c), and we therefore vacate summary judgment on the subsection 501(a) claim and direct the district court to base its judgment on subsection 201(c).  We affirm summary judgment for the IBEW on the subsection 101(a) claims
                

I. BACKGROUND

This lawsuit involves decisions made by the IBEW in litigating an earlier action, Boswell v. International Brotherhood of Electrical Workers, Civ. No. 79-2571 (D.N.J. Mar. 2, 1981). Boswell, also an IBEW member, sued the union and two union officers, charging that he had been disciplined for acts protected by the free speech provisions of the LMRDA. Boswell requested actual and punitive damages, rescission of the disciplinary measures imposed on him, and equitable relief requiring The case was ultimately settled. As part of the settlement, the IBEW made changes in its constitution, and apparently paid Boswell a substantial sum of money and attorneys' fees. ⁴ Boswell signed a letter agreeing to the settlement, in which he promised not to reveal its financial terms unless the IBEW did so first. The district judge entered an order stating that the parties had settled on terms set forth in separate letters, and he redacted references to the financial terms of the settlement from the transcript of the settlement hearing. He did not, however, order any party not to disclose the terms of the settlement. ⁵

the removal from the IBEW constitution of allegedly unlawful provisions. ³

In late 1981, Mallick wrote to the International President and International Secretary of the IBEW. He asked that he be allowed to examine IBEW books and records reflecting its expenditures in Boswell, including the amount of all attorneys' fees and other costs of defending the union and its officials, as well as the amounts paid to Boswell and his counsel. Mallick later explained that he believes the IBEW litigates union democracy lawsuits without regard to costs or to the best interests of members, simply to discourage members from bringing such lawsuits. The IBEW refused his request, ⁶ and on April 19, 1982, Mallick brought this action against the IBEW, its International President, and its International Secretary.

In his complaint, Mallick requested injunctive and declaratory relief granting him access to the disputed IBEW books and records. According to the complaint, disclosure of the Boswell costs would enable IBEW members to engage in more informed debate about whether the union was wise to defend the suit as it did, and would assist IBEW members in determining whether any of the Boswell payments were excessive or improper. ⁷ On cross-motions for summary judgment, the district court granted summary judgment on all claims for the IBEW. Mallick v. International Bhd. of Elec. Workers, No. 82-1075 (D.D.C. Oct. 14, 1983) (order).

II. THE SUBSECTION 201(C) CLAIM

A

Mallick's first claim arises under subsection 201(c) of the LMRDA. The relevant passage from subsection 201(c) reads:

Every labor organization required to submit a report under this subchapter shall make available the information required to be contained in such report to all of its members, and every such labor organization and its officers shall be under a duty ... to permit such member for just cause to examine any books, records, and accounts necessary to verify such report.

29 U.S.C. Sec. 431(c). Mallick argues that subsection 201(c) grants union members a general right of access to records underlying the LM-2 reports, qualified only by the requirement that they show "just cause." Under this view, a union member need not show any troubling item at all on his union's LM-2 reports to establish a right to examine the underlying records. According to Mallick, the phrase "necessary to verify such reports" merely limits the right of examination to records of those transactions actually summarized in the LM-2. Thus, although non-financial records concerning, for example, organizing and negotiating strategy would not be available, any records of transactions reflected in items on the LM-2 report would be.

The IBEW replies that the LM-2 report it filed for 1980-1981, the reporting year in which Boswell was settled, was accurate and showed no items that were grossly disproportionate in amount. On its view, Mallick therefore does not seek to "verify" the report, and consequently has no right to examine the underlying records.

Mallick does not concede that he must show anything on the face of the report suggesting improprieties. But he believes that even if there is such a requirement, he has met it. Specifically, Mallick notes that the LM-2 report showed a drop of nearly $400,000 in the balance of a special reserve fund IBEW maintains for legal expenses, called the Defense Fund. From 1973 to 1980, the Fund balance did not vary by more than 1% from $5,000,000; the $400,000 change in 1980-1981 represented a decline of about 8%. ⁸ According to the IBEW constitution, the Fund "shall be for the sole purpose of providing legal defense. No disbursements shall be made from this fund except for the legal defense of L.U.'s [local unions] and their members, or for the defense of an International Officer or Representative ...." IBEW Const. art. XI, Sec. 1 (1982), R. Item 8, Exhibit C at Exhibit A. Mallick argues that the sudden drop suggests an abnormally high outlay for legal expenses in that year. ⁹

The IBEW has acknowledged that before Mallick brought this action, it had not disclosed to its members whether the Boswell costs were paid from the Defense Fund or the General Fund. The IBEW Constitution does not appear to require that all attorneys' fees for IBEW representation be paid from the Defense Fund, and does not clearly state whether settlements and attorneys' fees for adverse parties are ordinarily paid from the Fund at all. ¹⁰

The 1980-1981 LM-2 report also stated that the IBEW had spent $2,082,887 in "Professional Fees." This item, however, includes payments for auditing, economic research, and similar services, as well as for outside legal work. It does not include compensation to employees for professional services, which is accounted for separately. ¹¹

In deciding this case, we assume that the LM-2 report accurately set forth the required information. We note, however, that the report would leave an interested union member almost completely uninformed about basic union financial practices concerning litigation. He would have little idea of the total expenditure on legal costs, let alone how the total expenditure breaks down. ¹² He could not evaluate the specific concern Mallick raises: that the IBEW defends union democracy suits like Boswell without regard to costs or to the interests of the members. Finally, he would be entirely unable to understand the meaning of the change in the Defense Fund balance, which might reflect anything from unusual but essentially random fluctuation to a very sharp increase in actual legal costs, possibly caused by payments in a single major litigation.

We must decide whether the LMRDA affords a union member in this position any remedy. That question involves two subsidiary inquiries. First, does the right of examination merely assist union members in forcing their unions to file accurate reports? And second, if the right of examination goes beyond this limited scope, does it extend to the facts presented here? To address these problems, we examine the statutory text in light of its legislative history.

B

The district court held that because Mallick had not shown that the LM-2 report was "untruthful, inaccurate, or incomplete," District Court Op., supra note 2, at 3, examination of the underlying records was not necessary to verify the reports. This is a plausible reading of the statutory text, but it is certainly not the only possible interpretation. As the various theories of the parties and the rather tangled web of judicial decisions concerning subsection 201(c) make...