Becker v. Industrial Union of Marine and Shipbuilding Workers of America, AFL-CIO

• Decision Date: 09 April 1990
• Docket Number: No. 88-1128,D,I,AFL-CI,88-1128
• Citation: 900 F.2d 761
• Parties: 134 L.R.R.M. (BNA) 2028, 115 Lab.Cas. P 10,005 Darrell BECKER; Donald Sunkin; Local 61, Industrial Union of Marine and Shipbuilding Workers of America,ntervenors-Appellants, and Ann McLaughlin, Secretary of Labor, United States Department of Labor; Micky Meader, Plaintiffs, v. The INDUSTRIAL UNION OF MARINE AND SHIPBUILDING WORKERS OF AMERICA,efendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 761

900 F.2d 761

134 L.R.R.M. (BNA) 2028, 115 Lab.Cas. P 10,005

Darrell BECKER; Donald Sunkin; Local 61, Industrial Union

of Marine and Shipbuilding Workers of America,

AFL-CIO, Intervenors-Appellants,

and

Ann McLaughlin, Secretary of Labor, United States Department

of Labor; Micky Meader, Plaintiffs, v. The INDUSTRIAL UNION OF MARINE AND SHIPBUILDING WORKERS OF

AMERICA, AFL-CIO, Defendant-Appellee.

No. 88-1128.

United States Court of Appeals, Fourth Circuit.

Argued Jan. 10, 1990.

Decided April 9, 1990.

Arthur Zachary Schwartz, Lewis, Greenwald, Kennedy, Lewis, Clifton & Schwartz, New York City, for intervenors-appellants.

Michael Brodie, Sacks, Basch, Brodie & Sacks, Philadelphia, Pa., for defendant-appellee.

Before PHILLIPS and MURNAGHAN, Circuit Judges, and YOUNG, Senior United States District Judge for the District of Maryland, sitting by designation.

PHILLIPS, Circuit Judge:

This case arises from an internecine struggle within the Industrial Union of Marine and Shipbuilding Workers of America (IUMSWA). The question presented on appeal is whether IUMSWA violated the Labor Management Reporting and Disclosure Act ("the Act") when it imposed a trusteeship on its Local 61. The district court held that the trusteeship was not imposed for improper purposes and that Local 61's continuing non-cooperation justified maintenance of the trusteeship. That holding is challenged on appeal, but also challenged is the procedural validity of the trusteeship process, that is, whether the trusteeship was imposed consistent with the "fair hearing" requirements of the Act. Though raised below, the district court did not specifically rule on the fair hearing question. We believe that the district court erred when it failed to determine first whether IUMSWA had held a fair hearing in conjunction with the imposition of a trusteeship, and this failure precludes us from reviewing the court's holding that the trusteeship was not imposed for improper purposes. We therefore remand this case to the district court with directions to determine whether the trusteeship was authorized or ratified after fair hearing within the meaning of the Act.

I

We first review briefly the procedural posture of this case. Two actions instituted by the Secretary of Labor ("the Secretary") under the Act against IUMSWA were consolidated for trial before the district court. In JFM-87-411, the Secretary challenged the 1986 national IUMSWA election under Title IV of the Act; in JFM-87-2799, the Secretary sought to have declared invalid under Title III of the Act the trusteeship imposed by IUMSWA over Local 61. After a nine and one-half day trial, the district court entered judgment for IUMSWA in both actions. The Secretary and intervenors, Darrell Becker and Donald Sunkin in 87-411 and Local 61 in 87-2799, filed notice of appeal. The Secretary then moved to dismiss her appeal, and this court granted the motion. We then granted IUMSWA's motion to dismiss the appeal in JFM-87-411 on the basis that the intervenors lacked standing to press the appeal when the Secretary dismissed her appeal. See Trbovich v. United Mine Workers, 404 U.S. 528, 535-36, 92 S.Ct. 630, 634-35, 30 L.Ed.2d 686 (1972). Before this court and ripe for review is Local 61's appeal of the judgment in JFM-87-2799 upholding the imposition of a trusteeship over the local. ¹

II

We turn now to the facts. ² IUMSWA is a national labor union representing approximately 10,000 workers in the shipbuilding, ship repairing, and related fields. IUMSWA has two national officers, a president and a vice-president/secretary treasurer, who serve along with ten other elected members on the General Executive Board (GEB), the national governing body for the union. Local 61, located in Pittsburgh, Pennsylvania, is one of some thirty affiliated locals in IUMSWA.

Becker was elected president of Local 61 in 1983. Only two months after he assumed the presidency of Local 61, the local struck its largest employer, Dravo Corporation. A dispute arose between Becker and national president Arthur Batson regarding payment of strike benefits. This disagreement blossomed into a more general rift between Becker and Batson, with Becker openly criticizing Batson's policies.

In December 1984, Dravo permanently shut down its operations. In early 1985, Becker and other members of Local 61 established the "Union Defense Fund" (Fund) for the asserted purpose of paying fines of local members arrested during the course of strike activities. Revenues for the Fund were raised in bulk mail solicitations, using Local 61 stationary and Local 61's bulk mail permit, and through the selling of "strip tickets," a type of lottery, which bore Local 61's name and address.

Becker escalated his campaign against Batson in the early summer of 1985. He began to send out additional bulk mailings emphasizing Local 61's plight and criticizing Batson's responses, or lack thereof, to the local's problems. Becker's bid for reelection as Local 61's president was apparently stalled when Batson ruled against him on an eligibility challenge, but Becker filed a lawsuit challenging Batson's action and a federal district court in Pennsylvania eventually ordered Becker installed as Local 61 president. IUMSWA, however, apparently never recognized Becker as Local 61's president. In early 1986, Becker formally announced that he would run against Batson for national president.

The administration of the Union Defense Fund soon became another bone of contention between Becker and Batson. Becker continued to solicit contributions to the Fund, while Batson responded with a letter criticizing such efforts to bypass the national union. Batson ordered an audit of the Fund after he received information that the Fund was being used for purposes other than the payment of members' fines. ³ The audit showed, in addition to details of the solicitation activities, that the Fund was administered by Local 61 members, its bank account had the local's tax identification number, and Fund revenues were being used to pay various Local 61 expenses, including purchasing a copy machine and office supplies and stocking a soft drink machine for the local hall. When the Fund made a direct contribution to the Local 61 general fund, the donation was reported to IUMSWA, but the proceeds of the fund and the payment of Local 61 expenses were not reported.

Upon receiving an oral report on the results of the audit from the accountant who performed it, Batson wrote Local 61 a letter dated August 29, 1986 indicating that, pursuant to the union constitution, "a majority of the National Officers" had determined that there was reason to believe that Local 61 had violated the union constitution. The letter documented various charges, including "failing to properly report all cash receipts and disbursements on the monthly financial statements," "expending funds in a manner contrary to the policies" of the union, and "expending funds ... raised under the auspices of [the] Local to promote [a] candidate in an election." The letter concluded that the local was "subject to suspension" and that a hearing would be held September 9, 1986 on the charges. ⁴

The hearing was held on September 9, at which time Local 61's request for a continuance was denied. Batson presided; the other IUMSWA national officer was ill and did not attend, but two other GEB members assisted Batson. Becker, Local 61 vice-president Sunkin, and other members of the local were in attendance. The hearing, a six hour affair, was not conducted as a "formal hearing." Batson, though he was in some sense presenting the affirmative case against the local, did not present evidence supporting the imposition of a trusteeship. ⁵ At the beginning of the hearing, Becker pressed Batson for specifics underlying the charges in the August 29 letter. Batson raised the issue of the use of Local 61's tax identification number for the Fund's bank account, the strip tickets, the direct mail solicitations for the Fund on Local 61 stationery, and the use of the Fund's bulk mail permit for Becker's campaign mailings. Batson also frequently referred to the audit of the Fund, although the accountant's report apparently was not provided to the local. Throughout this initial part of the hearing, Batson characterized the Fund as a union fund and opined that collections should have been reported to IUMSWA. ⁶ And he willingly presaged his ultimate decision:

I am very comfortable with the fact that you guys are guilty of the things that are charged, that this fund is a union fund, that you have not reported this fund to the officers, and that it was collected under the auspices of the union under a tax ID number....

J.A. at 2087.

Becker did present evidence and argument and several other Local 61 members spoke in support. They indicated that Local 61 was advised by a representative of the Department of Labor that a fund could be set up to pay members' legal fines as long as that fund was kept separate from the local's general fund. Becker also argued that use of Local 61's return address on the bulk mail solicitations and the strip tickets was not problematic as long as Fund contributions were kept separate from the Local 61 general fund. Testimonial evidence confirmed that Fund monies were used to pay for the copier and office supplies. Mostly though, the hearing was a jumble of questions, digressions, and conclusory statements by the numerous parties present, with frequent sniping between Batson and Becker. When Becker rested on his defense, Batson ruled that he would "suspend" the Local, effectively imposing a trusteeship. ⁷ Batson sent a letter to the IUMSWA membership on September 11, 1986 advising them that Local 61 had been suspended.

Local 61 appealed the decision to the GEB. On October 3, 1986, the GEB met to review the trusteeship issue. Becker presented argument for the local; Batson responded, emphasizing the alleged improprieties involving...