International Broth. of Teamsters v. Local Union No. 810
| Decision Date | 22 March 1994 |
| Docket Number | D,No. 914,914 |
| Citation | 19 F.3d 786 |
| Parties | 145 L.R.R.M. (BNA) 2848, 127 Lab.Cas. P 11,052 INTERNATIONAL BROTHERHOOD OF TEAMSTERS; Joseph Padellaro, as Trustee of Local Union Number 810, affiliated with the International Brotherhood of Teamsters, Plaintiffs-Appellees, v. LOCAL UNION NUMBER 810, affiliated with the International Brotherhood of Teamsters; Dennis Silverman; Max Sanchez; John Chambers; Stephen Silverman; Thomas Auld; Jose Cuevas; Mell Jones, Defendants-Appellants. ocket 93-9012. |
| Court | U.S. Court of Appeals — Second Circuit |
Joseph E. Gulmi, New York City (Vincent F. Pitta, Barry N. Saltzman, Eve I. Klein, Annmarie P. Venuti, David L. Weissman, Shea & Gould, of counsel), for defendants-appellants.
Richard M. Seltzer, New York City (Dominique Bravo, Richard A. Brook, Joseph J. Vitale, Cohen, Weiss and Simon, of counsel), for plaintiffs-appellees.
Before: CARDAMONE, JACOBS, and GOODWIN *, Circuit Judges.
This is an appeal by a local teamsters union from a grant of a preliminary injunction that enjoined it from resisting, and directed it instead to submit to a temporary trusteeship imposed upon it by its parent, the International Brotherhood of Teamsters. The analytical framework upon which we rest our decision has two main components: one is the notion that federal courts should be slow to rush into what is essentially a matter of internal union governance; and the other, a corollary of the first, is that Congress--believing that an ounce of prevention today is worth a pound of cure tomorrow--has empowered the general president of a parent union to impose a temporary trusteeship on one of its locals when convinced an emergency exists warranting such action.
Defendants are Local Teamsters Union Number 810 (Local 810), and its officers, Dennis Silverman, Max Sanchez, John Chambers, Stephen Silverman, Thomas Auld, Jose Cuevas and Bruno Franco (replacing retiree Mell Jones). They appeal a memorandum and order dated September 27, 1993 and a judgment dated September 29, 1993 both by the United States District Court for the Southern District of New York (Knapp, J.). See International Bhd. of Teamsters v. Local Union No. 810, 835 F.Supp. 727 (S.D.N.Y.1993). The September 29 judgment granted a preliminary injunction to plaintiffs International Brotherhood of Teamsters (IBT) and its temporary trustee, enjoining defendants from resisting the imposition of an emergency temporary trusteeship and from refusing to deliver to Joseph Padellaro, the temporary trustee, all of Local 810's records. We affirm.
This case arises against the backdrop of the March 14, 1989 consent decree entered into as a result of United States v. International Brotherhood of Teamsters, 88 Civ. 4486 (S.D.N.Y.). See generally United States v. International Bhd. of Teamsters, 814 F.Supp. 1165, 1167-68 (S.D.N.Y.1993) (describing consent decree). The United States had charged that the IBT General Executive Board permitted members of organized crime to exercise control over and to corrupt the international union and some of its local affiliates. The consent decree granted court-appointed officers broad power to investigate corruption and to supervise IBT until the election of a new general president. Ron Carey was elected to this post in 1991.
In the instant matter, following an investigation into Local 810, a court-appointed investigations officer levied charges of misconduct against appellants Dennis Silverman, Max Sanchez, Stephen Silverman and John Chambers, as officers and trustees of Local 810. Dennis Silverman and Max Sanchez were accused of financial improprieties, and all four officers were charged with allowing union funds to be used to pay legal expenses for a Local 810 member. As a result of these charges, Judge Frederick B. Lacey, a former federal district court judge, serving as the court-appointed independent administrator, ordered the suspensions of these officers for periods ranging from three to six months. At the time of the imposition of the temporary trusteeship at issue in this case, Dennis Silverman, president of Local 810, had begun serving his suspension and Max Sanchez was acting president.
Pursuant to one of Carey's promises in the IBT election campaign, he established in late 1992 an Ethical Practices Committee to review complaints regarding corruption or serious wrongdoing within IBT and its local affiliates. On August 25, 1993, Aaron Belk, the Administrator of the Ethical Practices Committee, uncovered information of ongoing misconduct on the part of Local 810 officials. This information was developed through conversations with two individuals, one a former business agent of the local, and the other a current delegate/business agent. The allegations included: 1) mismanaging of Local 810 pension and health and welfare funds; 2) collecting cash contributions from Local 810 business agents and staff for no apparent legitimate reason; 3) instituting pay and severance pay increases for Local 810 officers without approval of the membership; 4) paying exorbitant salary and benefits to the Silverman family; 5) paying full-time salaries to Local 810 employees who actually worked part-time; 6) failing to hold membership meetings and discouraging members from attending those meetings that were held; and 7) holding closed membership meetings limited solely to employees of Local 810 and its health and welfare fund. By letter dated August 30, 1993 Belk informed Carey of these allegations of ongoing misconduct and recommended that he place Local 810 under immediate temporary trusteeship.
Based on the allegations of financial wrongdoing and lack of democratic procedures within the local and because Local 810's officers had been suspended, Carey imposed a temporary trusteeship over Local 810 without holding a hearing. Pursuant to the International Constitution (constitution) a notice dated September 10, 1993 was sent to officers and members of Local 810 informing them of the reasons for the temporary trusteeship. Carey appointed Joseph Padellaro as temporary trustee effective September 13, 1993. On that same day Padellaro appeared at the offices of Local 810 and was there informed that the local would accept his appointment only by court order.
IBT therefore immediately filed a verified complaint in the Southern District of New York and moved for a temporary restraining order to enjoin Local 810 from refusing to recognize the temporary trusteeship. Later that same day--September 13--the district judge signed a temporary restraining order and an order to show cause, which enforced the imposition of the temporary trusteeship, and scheduled a hearing on whether preliminary injunctive relief should be granted. After a September 24, 1993 hearing on the preliminary injunction, the district court refused to hold a full evidentiary hearing on whether an emergency in fact existed and instead determined that the subject of the inquiry before it was whether Carey acted in good faith when he imposed the temporary trusteeship.
By judgment dated September 29, 1993, Judge Knapp granted a preliminary injunction to IBT and Joseph Padellaro, enjoining Local 810 from resisting imposition of the temporary trusteeship. Local 810 and its officers appeal contending the district court not only should have examined IBT General President Carey's good faith in imposing the temporary trusteeship, but also should have taken proof on whether an emergency in fact existed when IBT, without holding a hearing, imposed the temporary trusteeship.
We review a district court's decision to grant or deny a preliminary injunction for abuse of discretion. See JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75, 79 (2d Cir.1990). Abuse of discretion usually consists of clearly erroneous findings of fact or the application of an incorrect legal standard. See Chemical Bank v. Haseotes, 13 F.3d 569, 572 (2d Cir.1994) (per curiam). Ordinarily, a party seeking a preliminary injunction must meet the burden established by our now familiar test: 1) irreparable harm should injunctive relief not be granted and 2) either a likelihood of success on the merits, or sufficiently serious factual questions making a fair ground for litigation with a balance of hardships tipping in the movant's favor. See id. at 572-73; Resolution Trust Corp. v. Elman, 949 F.2d 624, 626 (2d Cir.1991); Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979) (per curiam).
Although the burdens assigned to the respective parties are no different in the labor trusteeship context, the scope of the examination by the district court is limited--because of the statutory scheme to be discussed in a moment--to whether the parent union showed a likelihood of success on the merits of its claim of right to impose the trusteeship and whether it would suffer irreparable harm should the preliminary injunction permitting a trusteeship not be granted. See National Ass'n of Letter Carriers v. Sombrotto, 449 F.2d 915, 923 (2d Cir.1971). Once the parent organization demonstrates likelihood of success on the merits of its claim of right to impose the trusteeship, the burden shifts to the local to show either that the trusteeship was not imposed in accordance with the procedural requirements of the union constitution or that the parent organization acted without good faith or for a statutorily unauthorized purpose. Id.; see also Teamsters Local Union No. 406 v. Crane, 848 F.2d 709, 712 (6th Cir.1988). If the familiar burden associated with obtaining a preliminary injunction were inflexibly applied to a parent union without regard to Congress' aim in the labor trusteeship context, a resisting local could easily thwart that aim simply by refusing to accept the imposition of the trusteeship. See Sombrotto, 449 F.2d at 920.
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