Holdeman v. Sheldon

• Decision Date: 09 May 1962
• Citation: 204 F. Supp. 890
• Parties: Arthur L. HOLDEMAN, on behalf of Local 88 of the International Organization of Masters, Mates and Pilots of America, AFL-CIO, Plaintiff, v. Lloyd W. SHELDON and Frank T. Scavo, Defendants.
• Court: U.S. District Court — Southern District of New York

204 F. Supp. 890

Arthur L. HOLDEMAN, on behalf of Local 88 of the International Organization of Masters, Mates and Pilots of America, AFL-CIO, Plaintiff, v. Lloyd W. SHELDON and Frank T. Scavo, Defendants.

United States District Court S. D. New York.

May 9, 1962.

Burton H. Hall, New York City, for plaintiff.

Harold, Luca, Persky & Mozer, New York City, for defendants. (John R. Harold, New York City, of counsel.)

CROAKE, District Judge.

This is an action instituted by Arthur L. Holdeman, president of Local 88 of the International Organization of Masters, Mates and Pilots of America (hereinafter referred to as "Local 88"), on behalf of the union against defendants Lloyd Sheldon and Frank T. Scavo, officers of Local 88, pursuant to 29 U.S.C.A. § 501(b), for certain alleged unlawful acts of the defendants, as officers of the union. The claims against these defendants arise out of the issuance of certain checks expending the funds of the union by these defendants.

The plaintiff now moves for a temporary injunction restraining defendants, Sheldon and Scavo, and other persons in participation with them from allowing Local 88 to defend or otherwise represent the two individual defendants in this suit.

Local 88 moves to intervene in this action and additionally requests that the time of individual defendants Sheldon and Scavo to answer the complaint be extended so that if the motion to intervene is granted, a common answer may be served on behalf of the individual defendants and Local 88. The individual defendants and Local 88 also cross-move, in response to original motion of the plaintiff for injunctive relief, and for an order dismissing the complaint for failure to state a claim upon which relief may be granted, also for summary judgment or alternatively for an order referring this matter to Judge Cooper of this court.

This dispute involves the payment of union funds to two persons who may or may not be employees of the union. Although the parties are in dispute as to the factual circumstances involved, certain facts appear to be uncontroverted. On or about the beginning of August 1961, two patrolmen named Gaier and Fowler, employed by the union, were discharged from their positions by action of the executive board. The discharge was to become effective on August 11, 1961. Two other men were appointed to the positions from which these men had been discharged. Prior to the effective date of the discharge, a meeting of the members of the union was held at which the action of the executive board was rejected.

At this point, the status of the discharged and newly appointed patrolmen became doubtful due to the conflict between the action taken by the executive committee and that taken by the members at their meeting. Since the union had recently adopted a new constitution, it was not clear whether the right to discharge and hire union employees was vested in the executive board or in the general membership. To clarify the existing situation, defendant Sheldon instituted an action in the Supreme Court, Queens County, to restrain the newly-hired patrolmen from performing their duties. An ex parte restraining order was issued until September 1, 1961, enjoining the new patrolmen from assuming their positions, until the legal issues concerning the conflict of authority were determined by that court. The court, in an opinion dated September 1, 1961, held that under the new constitution adopted by the union, the office of patrolman was made an elective office. The court further found that "Section 6" of the new constitution provided that the provision of the new constitution relating to the election processes and the positions of officers shall apply to the terms of offices commencing January 1, 1962. The court, therefore, concluded that the election of patrolmen prior to January 1, 1962 was governed by the provisions of the old constitution which vested final authority for designating patrolmen in the executive board.

During the intervening period, defendants Scavo and Sheldon signed checks which were used to pay patrolmen Gaier and Fowler for work allegedly performed by them for the weeks ending August 18, August 25 and September 1. It is to recover these payments that this suit is brought. Plaintiff contends that the two patrolmen did not work during this period and, further, that defendants Sheldon and Scavo were not authorized to sign checks for such payments. Defendants maintain that the patrolmen did work during that period and were, therefore, entitled to compensation. Defendants also advance arguments to show that, if compensation was due, the signing of the checks by defendants was sanctioned by the controlling provisions of the constitution of the union.

In order to decide the various motions and cross-motions, it becomes necessary to decide whether Local 88 shall be allowed to intervene in this suit and submit common answer with and on behalf of the individual defendants. The determination of this question controls the request of plaintiff that the defendants, and all persons in participation with them, be enjoined from allowing Local 88 to furnish counsel or counsel fees for these defendants. These questions must be decided first for if plaintiff's relief is granted and defendant's request to intervene and file an answer is denied, the motions for dismissal and/or summary judgment on behalf of defendants and intervenors is not properly before this court. The intervenors and their counsel must first establish that they have a right to be parties in this suit.

The question of whether Local 88 can intervene or supply counsel to defendants in this case presents serious questions involving the interpretation of 29 U.S.C.A. § 501(b). Plaintiff maintains that under the authority of Highway Truck Drivers and Helpers Local 107 v. Cohen et al., 182 F.Supp. 608 (E.D.Pa.1960), aff'd 284 F.2d 162 (3d Cir., 1960), cert. denied 365 U.S. 833, 81 S.Ct. 747, 5 L.Ed.2d 744 (1961), the union is not entitled to furnish counsel to defendants for the purposes of this suit. However, as counsel for defendants points out, the district court in the Cohen case, supra, was careful to limit its holding as applying to the particular factual circumstances in that case which, admittedly, involved conduct on the part of the individual defendants which was in gross violation of their fiduciary duty to the union. It is also true that the Cohen case involved a payment of legal fees, while in the instant case the union requests the right to intervene since it contends that its cause is common with that of defendants. Treating the last point first, this court cannot adequately determine whether there is any merit in the distinction based upon the intervention until it has determined whether the interests of the individual defendants is in conflict with the union. Surely, given circumstances where the interests of the union and defendants conflict, the rationale of the Cohen decision would not be limited to non-payment of counsel fees. In Mochetta v. Cross, 43 C.C.H.Lab.Cas. 24,892 (D.C.D.C.1961) and Alvino v. Bakers and Confectionary Workers' International Union of America, (D.C.D.C.1961), the court decided under the authority of the Cohen case supra, that union counsel shall not be allowed to represent individual defendants in cases of this type. This court agrees with the conclusion of the Mochetta and Alvino cases, supra, for the salutary effects of the rule in the Cohen case could always be avoided if union counsel were simply allowed to represent the defendants, as an alternative to the payment of counsel fees.

In the instant case the question presented is whether the desire of the union to intervene is significantly different from the situation where the union attempts to supply counsel to the defendants. In approaching this question, the court recognizes that situations may arise where the union has an independent reason for intervention. Thus, a blanket condemnation of intervention in cases of this type is not warranted. However, in the instant case, it seems clear that the union has no interest other than the protection of the two defendants. Indeed, the proposed intervenors urge that they desire to respond to the complaint with common answer for defendants, and the union.

Furthermore, if some conflict develops between the individual defendants and the best interests of the union later in this litigation, it is hard to imagine how union counsel who will be serving both defendants and the union can adequately protect the union's interests.

Counsel for the proposed intervenors earnestly contended during the argument and in briefs that this case would be defended at no extra cost to the union since counsel is paid on an annual retainer. The court does not accept this argument as persuasive. Although cost to the union is a factor, more important is the idea that in a suit of this type a person who is charged with a violation of his fiduciary responsibility to the union should not be given the opportunity to overwhelm his opponent by putting at his disposal the power and resources of the union. The evils which § 501 was designed to cure would often continue unchecked if a union official was to be permitted to use the power of the union to protect himself whenever he is accused of a wrongful act. It could very well be that the officer so charged with the offense is in a position to control the union machinery. This court is of the opinion that procedural device of intervention which the union seeks to employ should not be granted if the charges alleged in the complaint demonstrate that the interests of the union are in conflict with those of the defendant.

In the Cohen, Mochetta and Alvino cases, supra, it is clear that the courts believed that this finding was extremely important. In making this determination, it would appear necessary for this court to make some preliminary inquiry as to the nature of plaintiff's complaint,...