UnióN De Empleados De Muelles De P.R., Inc. v. Int'l Longshoremen's Ass'n

• Decision Date: 28 February 2018
• Docket Number: No. 16-1372,16-1372
• Citation: 884 F.3d 48
• Parties: UNIÓN DE EMPLEADOS DE MUELLES DE PUERTO RICO, INC., Plaintiff, Appellant, v. INTERNATIONAL LONGSHOREMEN'S ASSOCIATION, AFL-CIO, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

884 F.3d 48

UNIÓN DE EMPLEADOS DE MUELLES DE PUERTO RICO, INC., Plaintiff, Appellant,

v.INTERNATIONAL LONGSHOREMEN'S ASSOCIATION, AFL-CIO, Defendant, Appellee.

No. 16-1372

United States Court of Appeals, First Circuit.

February 28, 2018

Eddie Q. Morales for appellant.

John P. Sheridan, with whom Kevin J. Marrinan and Marrinan & Mazzola Mardon, P.C. were on brief, for appellee.

Before Lynch, Lipez, and Kayatta, Circuit Judges.

LIPEZ, Circuit Judge.

This case involves a dispute between an international union—the International Longshoremen's Association ("ILA")—and one of its affiliated local unions in San Juan, Puerto Rico—Unión de Empleados de Muelles de Puerto Rico, Inc. ("UDEM")—regarding the validity of the ILA's decision to place UDEM into a trusteeship after UDEM opposed the ILA's plan to merge it with other local unions. In the proceedings below, initiated when UDEM filed a lawsuit against the ILA, the district court held that the trusteeship was lawfully imposed, denied UDEM's motion for a preliminary injunction against the trusteeship, and struck UDEM as a party because it did not have authorization from the trustee to sue the ILA. Having stricken the sole plaintiff, the district court dismissed the complaint.

Appealing from the dismissal of its complaint and the denial of its motion for a preliminary injunction, UDEM contends that the trusteeship was invalid because UDEM voted to disaffiliate from the ILA before the trusteeship was imposed and because UDEM was placed in trusteeship for reasons that are improper under Title III of the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. §§ 461 - 66, which governs the local union's rights vis-à-vis the international. The ILA responds that UDEM's disaffiliation vote was ineffective because it did not follow the procedures in the ILA constitution for disaffiliation, including providing adequate notice of the vote, and that the trusteeship was imposed for purposes that were legitimate under the LMRDA. Because the trusteeship was valid, the ILA asserts, UDEM could not initiate litigation without authorization of the trustee, and therefore its complaint was properly dismissed. In addition, the ILA now argues that UDEM's appeal is moot because the trusteeship has ended.

After considering the parties' supplemental briefing on mootness, we hold that UDEM's appeal from the denial of its motion for a preliminary injunction is moot due to the termination of the trusteeship. However, because UDEM's claims for declaratory relief and damages present a live controversy despite the end of the trusteeship, the remainder of the appeal is not moot. On the merits of the remaining appeal, we affirm the order of the district court. UDEM's vote to disaffiliate before the ILA placed it in trusteeship was invalid under the ILA constitution, and the trusteeship was lawfully imposed under the LMRDA, leaving UDEM without authority to bring this lawsuit absent permission from the trustee. Because UDEM did not receive authorization from the trustee, the district court properly struck UDEM as a plaintiff and dismissed the case.

I.

A. Initial Proceedings in the District Court

On June 3, 2015, UDEM filed suit against the ILA under Title III of the LMRDA, see 29 U.S.C. § 464, challenging on numerous grounds the lawfulness of the trusteeship imposed on UDEM by the ILA. UDEM sought a declaratory judgment that the trusteeship was invalid, a permanent injunction prohibiting the ILA from continuing the trusteeship, a permanent injunction "prohibiting ILA from interfering with its operations and management," and damages.

After the ILA answered the complaint, UDEM filed a motion for a preliminary injunction. In the motion, UDEM alleged that it had disaffiliated from the ILA at a meeting of its membership on May 9, prior to being informed of the emergency trusteeship on May 12, and thus the ILA could not lawfully impose the trusteeship. Further, UDEM argued that the trusteeship was imposed for purposes that were illegitimate under the LMRDA, including preventing UDEM's disaffiliation, penalizing UDEM for opposing a proposed merger, and circumventing the grievance and arbitration procedure in the work-sharing agreement between UDEM and other local unions.

The ILA then filed an opposition to UDEM's motion for a preliminary injunction and a motion to strike UDEM as a plaintiff, arguing that UDEM in fact did not disaffiliate before the trusteeship was imposed because it failed to give notice to its members that a vote on disaffiliation was being held, as required for a disaffiliation vote to be effective under the ILA constitution. Additionally, the ILA argued that the purposes for which the trusteeship was imposed—UDEM's opposition to the merger, financial misconduct, undermining of collective bargaining relationships with employers, and refusal to cooperate with the work-sharing agreement—were all legitimate under the LMRDA. Because UDEM was under a lawful trusteeship at the time the suit was filed, the ILA contended, no one could file a complaint in UDEM's name without the authorization of the trustee. The old officers of UDEM, who were removed when the trusteeship was put in place, no longer had authority to initiate this action on behalf of UDEM, and, if they sued at all, should have done so individually.

The case was referred to a magistrate judge, who held a hearing on both motions and issued a report and recommendation.

B. The Magistrate Judge's Findings of Fact

UDEM, which was founded in 1938, represented certain workers in the Port of San Juan. In 1961, after UDEM affiliated with the ILA, it became known as Local 1901 of the ILA. René A. Mercado-Álvarez ("Mercado") was elected president of UDEM in 2012 and was president during the time relevant to this case.

In addition to UDEM, there were three other local ILA unions in the Port: Local 1575, Local 1740, and Local 1902. The present dispute began in January 2015 when Horizon Lines, a major stevedoring company, closed its operations in the Port and was replaced by another stevedoring company, Luis Ayala Colón ("Ayala").¹ Prior to closing, Horizon Lines employed members of ILA Local 1575 under a collective bargaining agreement ("CBA") with that union. Following the closure of Horizon Lines, Local 1575 asserted that its members had the right to work for Ayala because, pursuant to the CBA with Horizon Lines, Ayala was a successor employer. On the other hand, UDEM and Locals 1902 and 1740 each had existing CBAs with Ayala and believed that they, not Local 1575, were entitled to work for Ayala in Horizon Lines's former terminals.

In February and March of 2015, the ILA held a series of meetings with the four locals involved in the dispute over bargaining with Ayala. At those meetings, ILA representatives took the position that the other locals needed to accommodate Local 1575 so that its members would not be out of work, and they proposed a work-sharing agreement to achieve that goal. UDEM and Local 1902 both opposed the proposed arrangement, and no agreement among the locals was reached. Subsequently, the ILA's president wrote a letter to UDEM and Local 1902 directing them to execute the work-sharing agreement or "more stringent measures" would be taken against them. Mercado, the president of UDEM, testified that he understood this threat to mean possible merger of the local unions or a trusteeship.

At the end of March, all four locals consented to a work-sharing agreement that had been drafted by Mercado. Following the ratification of that agreement, the ILA informed the locals that, in order to implement it, UDEM and Locals 1902 and 1740 would have to accept transfers of some unemployed members of Local 1575 to jobs held by their members, even though such transfers were not expressly required in the agreement. The ILA was later informed that UDEM had not complied with this directive.

On April 14, the leadership of UDEM met with ILA officials, who told Mercado that the ILA was planning to merge the locals and that the reason for the merger was the dispute with Local 1575. After learning of the ILA's intention to merge the locals, Mercado called a meeting of UDEM's executive board on April 23. The board voted unanimously against a potential merger and in favor of disaffiliating from the ILA. Following this vote, however, Mercado continued to refer to UDEM as affiliated with the ILA.²

On May 1, the ILA sent a letter to members of the four local unions explaining that it had decided that merging the locals was the best course of action and that it would move forward with that plan. A few days later, it informed the locals that Local 1740's charter would be amended to add job classifications that were currently included in UDEM's charter. Mercado saw this move as a first step toward removing those job classifications from UDEM, as the ILA generally did not permit two locals to cover the same job classifications.

On May 8, the ILA informed UDEM's membership that a meeting would be held on May 11 to discuss the merger. The letter reiterated the reasons that the ILA felt the merger was necessary, and it alleged that Mercado had spread false information to UDEM's membership about the merger. On May 9, the day after that letter was sent, Mercado called an emergency UDEM membership meeting. At the meeting, a motion was put forth for

the Board of Directors to continue making the efforts that it understands pertinent as up to the present and that every effort be made which is not limited to any action which must be taken to protect [the] Union and for every action taken by the Board to be accepted, including the disaffiliation from the ILA.

The motion was "seconded unanimously."³ A motion was then made to reject the merger, which was also unanimously approved.

The membership also voted to inform the ILA that UDEM did not accept the merger, but they did not discuss informing the ILA that they had voted to disaffiliate.

Few members of UDEM showed up for the ILA's ...