Erkins v. Bryan, Civ. A. No. 80-180-N.

CourtUnited States District Courts. 11th Circuit. Middle District of Alabama
Writing for the CourtCooper, Mitch & Crawford, Jerome A. Cooper, Birmingham, Ala., for defendants
Citation494 F. Supp. 732
PartiesElbert ERKINS, and Samuel Denson, and Perry Culpepper, Plaintiffs, v. Billy BRYAN, and Arthur Comer, and George Bullard, and Charlie Greene, Defendants.
Decision Date21 July 1980
Docket NumberCiv. A. No. 80-180-N.

494 F. Supp. 732

Elbert ERKINS, and Samuel Denson, and Perry Culpepper, Plaintiffs,
v.
Billy BRYAN, and Arthur Comer, and George Bullard, and Charlie Greene, Defendants.

Civ. A. No. 80-180-N.

United States District Court, M. D. Alabama, N. D.

June 30, 1980.

Motion for Reconsideration Denied July 21, 1980.


494 F. Supp. 733

William I. Grubb, II, Eufaula, Ala., Thomas M. Jacobson, Jacobson, Sodos, Melnick & Krings, Milwaukee, Wis., for plaintiffs.

Cooper, Mitch & Crawford, Jerome A. Cooper, Birmingham, Ala., for defendants.

James D. English, Pittsburgh, Pa., appearing specially on behalf of United Steelworkers of America, AFL-CIO-CLC, for the limited purpose of presenting argument on its motion to intervene or its motion for reconsideration.

ORDER

HOBBS, District Judge.

This case illustrates again the pitfalls of ex parte orders; even in those circumstances where Congress by statute has expressly authorized such orders.

The plaintiffs in accordance with Section 501(b) of the Labor Management Reporting and Disclosure Act of 1959 (29 U.S.C. § 501(b)) petitioned this Court for leave to file a complaint against certain officers of Local Union No. 7326 of United Steelworkers of America who allegedly took union funds and expended them for unauthorized and improper purposes including purchases for the personal benefit of said officers. Plaintiffs by this complaint seek to compel the officers of the local union to account for all expenditures made by them out of union funds and to require the defendant union officials to reimburse Local 7326 and USW for all improper expenditures of union funds made or authorized by them.1

494 F. Supp. 734
Section 501(b) provides as follows: When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent, shop steward, or representative in any district court of the United States or in any State court of competent jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization. No such proceeding shall be brought except upon leave of the court obtained upon verified application and for good cause shown, which application may be made ex parte. The trial judge may allot a reasonable part of the recovery in any action under this subsection to pay the fees of counsel prosecuting the suit at the instance of the member of the labor organization and to compensate such member for any expenses necessarily paid or incurred by him in connection with the litigation.

The purpose of allowing suit by union members is "to further union democracy and thereby prevent misuse of power of union leaders." Phillips v. Osborne, 403 F.2d 826 (9th Cir. 1968). The suit is for the benefit of the union, not its individual members or the named plaintiffs. As is clear from its reading, § 501(b) imposed certain conditions precedent to suit.

First, a demand must be made on the union to bring an action to recover the allegedly misappropriated funds. Plaintiffs made such a demand.

Second, the labor organization must refuse or fail to sue to recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so. The union in this case has failed to sue although it was provided with a letter in mid-December, 1979, requesting an accounting and alleging misappropriation of union funds by officers of Local Union No. 7326. A representative of USW responded to this letter by requesting the basis for the charges against officials of the Local union. In February 1980, plaintiffs sent an affidavit to USW which contained information suggesting that union funds were misappropriated by local officers. A series of letters were exchanged between the attorney for the plaintiffs and a representative of USW. On March 6, 1980, the representative of USW wrote the plaintiffs' attorney stating that USW had determined to turn the matter over to the United States Department of Labor for investigation of the charges against the Local officers.

USW contends that its action in turning this matter over to the Department of Labor was reasonable and in no way manifests a decision on its part not to pursue the alleged wrongdoers. Although USW's election may be logical and in the best interest of the union, it does not obviate the fact that the union has refused to bring suit after a demand of several months standing. This Court, therefore, finds that the second condition precedent to suit has been met.

The third condition precedent to bringing suit is that the plaintiff be a "member" of the union. The complaint alleges that plaintiffs "were at all times material hereto members in good standing" of Local 7326 of USW. Without question, plaintiffs were members of the union for purposes of § 501(b) during the time of the alleged misappropriation of funds. The USW points out, however, that plaintiffs are not now, and were not at the time suit was filed, members of the union.

Local 7236 went on strike against the only employer employing any of its members in December, 1976. The strike was long and bitter, ending in failure in May, 1978. Thereafter, USW lost the right to represent the company's employees following its defeat in a National Labor Relations

494 F. Supp. 735
Board decertification election conducted in May, 1978. The Board overruled USW objections to the decertification election on July 14, 1978

Following the loss of the election, Local 7326 had no bargaining representative status, and in July, 1978, an administrator was appointed to conclude the affairs of Local 7326. The Local was dormant for some eighteen months or more prior to the filing of the instant suit. No dues have been received nor have any meetings been held. In short, no activities of any kind have occurred since at least October, 1978, in connection with USW Local 7326.

During the strike, USW placed money in a special strike fund for the use of Local 7326 to cover expenses of the strike and to aid members through the economic hardship of the strike. The Local was responsible for the distribution of these funds, and it is with respect to these funds that plaintiffs charge misappropriation by officers of Local 7326. Pursuant to agreement between USW and its locals, any funds remaining in local strike funds after conclusion of strikes are returned to USW.

All dues paid by members of the USW are the property of USW rather than the local, and in the event of the revocation of a local union's charter or if a local union disbands, all assets of the local are returned to USW. Article IX, Sec. 4, of USW Constitution.

Finally, Article XI, Section 7 of the USW Constitution, provides:

A member whose membership is terminated shall have no right or interest in any property of the Local Union or of the International Union, including
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5 cases
  • Fraser v. James, Civ. No. 1986/123.
    • United States
    • United States District Courts. 3th Circuit. District of the Virgin Islands
    • March 9, 1987
    ...501 has been applied to suits alleging the wrongful handling of strike funds. Erkins v. Bryan, 663 F.2d 1048 (11th Cir.1981), reversing, 494 F.Supp. 732 (N.D.Ala.1980), cert denied, 459 U.S. 989, 103 S.Ct. 343, 74 L.Ed.2d 384 (1982); Agola v. Hagner, 556 F.Supp. 296, 299-300 (E.D.N.Y.1982) ......
  • Fraser v. James, Civil No. 1986/123
    • United States
    • United States District Courts. 3th Circuit. District of the Virgin Islands
    • March 9, 1987
    ...has been applied to suits alleging the wrongful handling of strike funds. Erkins v. Bryan, 663 F.2d 1048 (11th Cir. 1981), reversing, 494 F. Supp. 732 (N.D. Ala. 1980), cert. denied, 459 U.S. 989 (1982); Agola v. Hagner, 556 F. Supp. 296, 299-300 (E.D.N.Y. 1982) (citing United States v. Rob......
  • Agola v. Hagner, CV 82-0013.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • July 21, 1982
    ...action under § 501 for the recovery of strike benefit funds was permitted in Erkins v. Bryan, 663 F.2d 1048 (11th Cir.1981), reversing, 494 F.Supp. 732 (N.D.Ala.1980) where the plaintiffs alleged embezzlement and misapplication of strike funds by union officers and an accounting was request......
  • Erkins v. Bryan, Civ. A. No. 80-180-N.
    • United States
    • United States District Courts. 11th Circuit. Middle District of Alabama
    • November 27, 1984
    ...suit was filed, this Court held that plaintiffs lacked standing to bring this suit, and, therefore, withdrew its leave to file suit. 494 F.Supp. 732. Plaintiffs appealed, and the Court of Appeals reversed, holding that plaintiffs remained "members" of the union within the meaning of Section......
  • Request a trial to view additional results

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