Erkins v. Bryan, s. 84-7455

Decision Date08 April 1986
Docket Number84-7774,Nos. 84-7455,s. 84-7455
Citation785 F.2d 1538
Parties122 L.R.R.M. (BNA) 2618, 104 Lab.Cas. P 11,864 Elbert ERKINS and Samuel Denson, Plaintiffs-Appellees, Cross-Appellants, v. Billy BRYAN, Arthur Comer, George Bullard and Charlie Greene, Defendants-Appellants, Cross-Appellees, United States Fidelity & Guaranty Corp., Defendant-Cross-Appellee. Elbert ERKINS and Samuel Denson, Plaintiffs-Appellees, Cross-Appellants, v. Billy BRYAN, Arthur Comer, George Bullard and Charlie Greene, Defendants-Appellants, Cross-Appellees, U.S. Fidelity & Guaranty Corp., Defendant, United Steelworkers of America, Defendant-Appellant, Cross-Appellee.
CourtU.S. Court of Appeals — Eleventh Circuit

Jerome A. Cooper, Birmingham, Ala., for Bryan, et al.

Wade K. Wright, James W. Garrett, Jr., Montgomery, Ala., for U.S. Fidelity & Guar. Corp.

William I. Grubb, II, Eufaula, Ala., Thomas M. Jacobson, Walter F. Kelly, Milwaukee, Wis., for Erkins & Denson.

James Brudney, Michael H. Gottesman, Washington D.C., for United Steelworkers of America.

Appeals from the United States District Court for the Middle District of Alabama.

Before HILL and CLARK, Circuit Judges, and MOYE *, Chief District Judge.

CLARK, Circuit Judge:

All parties below have appealed from the district court decision in this suit for an accounting of union funds under Sec. 501 of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. Sec. 501(a), (b). Elbert Erkins and Samuel Denson, plaintiffs below, were members of Local 7326 (Local), United Steelworkers of America (USW), when the Local struck plaintiffs' employer, American Buildings Co. in Eufaula, Alabama. The strike lasted from December, 1976 until May, 1978, when employees voted to decertify USW as their bargaining representative. During the course of the strike, USW provided the Local with a strike fund of $405,000. Billy Bryan, Arthur Comer, George Bullard and Charlie Greene, defendants below, were either Local officials or prominently involved in directing picketing and other strike efforts. Together, these four individuals received $140,000 from the strike fund in payment for various expenses incurred on behalf of the Local.

Soon after the strike ended, plaintiffs challenged the propriety of these payments, especially in view of the fact that defendants had acquired significant items of personal property during and after the strike while many other union members were struggling just to meet household expenses. Plaintiffs investigated the use of strike funds by defendants and in January, 1980, they requested that USW bring suit against defendants for misapplication of union funds. When USW instead referred the case to the Department of Labor, plaintiffs sought leave to bring suit on behalf of the union in federal court. Leave was granted and suit was filed on May 1, 1980, two years after the end of the strike.

In their suit, plaintiffs sought recovery of the $140,000 in payments, either from the individual defendants or from their indemnitor, United States Fidelity and Guaranty Corporation (USF & G). In addition, plaintiffs requested an award of $305,000 in attorney's fees, payable by the defendants or intervenor, USW. After a three day non-jury trial, the district court ordered a recovery of $14,461.30 from the individual defendants, payable to USW. The court held that plaintiffs' delay in joining USF & G had discharged the indemnitor from any liability under the bond, and recovery could be had only from the individuals. In a separate order, the court awarded plaintiffs $42,000 in attorney's fees, payable by USW. 598 F.Supp. 240.

The parties present the following issues on appeal. Defendants argue that the district court erred in finding plaintiffs had standing to sue as union "members" under Sec. 501(b) of LMRDA. Defendants contend that the statutory definition of union "member" must yield to each union's definition of membership and plaintiffs would not be considered members by USW standards. Alternatively, defendants urge that this suit is time barred under recent Supreme Court precedent applying a six-month statute of limitations to cases brought under federal labor law. Intervenor USW joins in defendants' arguments and furthermore contests the order to pay $42,000 in attorney's fees. USW contends that the district court's use of the common benefit theory of fee awards is clearly at odds with the language and legislative history of Sec. 501(b), which limits fee awards to the amount of money recovered in an accounting suit (here only $14,461.30).

Plaintiffs for their part assert error in the district court's order to recover only $14,461.30. Plaintiffs contend that the district court arbitrarily approved numerous payments not properly accounted for by defendants; thus, they request a judgment for the full $140,000 paid to defendants. Furthermore, plaintiffs contend that USF & G was erroneously found discharged from the fidelity bond since USF & G did not prove prejudice from the delay in being joined as a defendant. Lastly, plaintiffs' attorneys argue that the district court erroneously awarded only 12% of their requested fee by arbitrarily reducing the number of hours billed, the hourly rate and eliminating the contingency factor.

We affirm the district court order and thus, reject all these contentions.

I. Plaintiffs' Standing Under Sec. 501

Section 501(a) provides that "the officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group. It is therefore, the duty of each such person ... to hold [the organization's] money and property solely for the benefit of the organization and its members." 29 U.S.C. Sec. 501(a). Section 501(b) provides that "any member of the labor organization" may sue a defaulting union officer in federal court "to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization." 29 U.S.C. Sec. 501(b). Defendants argue that plaintiffs were not members of USW at the time of suit and therefore cannot sue for an accounting. Our consideration 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 fact and conclusions of law by an appellate court bind all subsequent proceedings in the same case, absent exceptional circumstances, we find that plaintiffs have standing. See Westbrook v. Zant, 743 F.2d 764, 768 (11th Cir.1984).

II. Statute of Limitations for Sec. 501 Accounting

Defendants assert that the district court erred in refusing to apply the six-month statute of limitations of the National Labor Relations Act (NLRA) to the present action. Neither Sec. 501 nor the LMRDA specifically provide a period of limitations. When confronted with such legislative omissions, federal courts ordinarily adopt the most analogous state statute of limitations. An exception to this rule occurs when state law would contradict the purposes of the federal law or policy at issue; in that case, courts look to related federal statutes or doctrines. See UAW v. Hoosier Corp., 383 U.S. 696, 703-704, 86 S.Ct. 1107, 1111-1112, 16 L.Ed.2d 192 (1966). Defendants urge that the recent Supreme Court decision in DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), requires this court to apply the NLRA statute of limitations in this case.

DelCostello involved a hybrid action brought under federal labor law by a disgruntled union member against his employer for breach of the collective bargaining agreement and against the union for breach of its duty of fair representation. The suit against the employer was brought under Sec. 301 of the National Labor Relations Act, 29 U.S.C. Sec. 185. The suit against the union was brought as an unfair representation claim pursuant to 29 U.S.C. Sec. 158(b). The Supreme Court selected a federal rather than state limitation for the case based upon several considerations: the Court found no closely analogous state limitation; federal labor policy in this context required particularly prompt resolution; and the interplay of hybrid claims, one part (the unfair labor practice claim) having an extremely short express federal limitation (6 months under Sec. 10, 29 U.S.C. Sec. 160(b)), argued for a single federal limitation when combined. See 462 U.S. at 171, 103 S.Ct. at 2294. Thus, the Court applied the six-month limitation normally applicable to unfair labor practices, see 29 U.S.C. Sec. 160(b), and emphasized that such a result properly balances "the national interest in stable bargaining relationships and finality of private settlements, and an employee's interest in setting aside what he views as an unjust settlement under the collective bargaining system." 462 U.S. at 171, 103 S.Ct. at 2294 (quoting United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981)). The Supreme Court noted, however, that nothing in the DelCostello analysis should upset the traditional rule of UAW v. Hoosier, supra. See 462 U.S. at 171, 103 S.Ct. at 2294.

In this circuit, the rationale of DelCostello has been applied in two contexts other than a hybrid action, and defendants argue that these cases should control our decision here. The first such case is Erkins v. United Steelworkers, 723 F.2d 837 (11th Cir.1984) (Erkins II ), a pure breach of fair representation claim brought by the instant plaintiffs and based on the failure of the union to negotiate with the employer during the strike which spawned the present case. The Erkins II panel applied the NLRA limitation for unfair labor practices because a fair representation claim bears a close resemblance to an unfair practice and thus implicates the very...

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