Jean v. Dugan

Decision Date24 March 1994
Docket NumberNo. 93-2047,93-2047
Parties127 Lab.Cas. P 57,647 Virgil JEAN, Plaintiff-Appellant, v. William E. DUGAN, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

J. Charles Sheerin (argued), Michigan City, IN, for plaintiff-appellant.

Louis E. Sigman, Dale D. Pierson (argued), Pasquale A. Fioretto, Baum & Sigman Chicago, IL, Joseph S. Irak, Merrillville, IN, for defendant-appellee.

Before BAUER, WOOD, Jr., and FLAUM, Circuit Judges.

FLAUM, Circuit Judge.

In this diversity case, Virgil Jean ("Jean"), a resident of Indiana, filed a three-count complaint seeking damages and injunctive relief against William Dugan ("Dugan"), a resident of Illinois. In Count I, Jean alleged defamation on the basis of various statements made by Dugan in 1988 and 1989. In Counts II and III, Jean raised employment-based claims, alleging unlawful retaliation and interference with contractual relations. The district court granted summary judgment for Dugan on all three counts. We affirm.


This case arises from a rather severe falling out between two elected officials of the International Union of Operating Engineers, Local 150, AFL-CIO ("Local 150"). Local 150 is a labor organization within the meaning of Sec. 2 of the National Labor Relations Act ("NLRA") and the Labor Management Relations Act ("LMRA"), 29 U.S.C. Sec. 142, 152(5), and Sec. 3(i) of the Labor Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. Sec. 402(i). More specifically, Local 150 is a voluntary unincorporated association of heavy equipment operators and other employees organized in eight district offices throughout Northern Indiana, Northern Illinois, and Eastern Iowa with its principal headquarters located in Countryside, Illinois. 1

Under the Constitution of the International Union ("Union Constitution") and the By-Laws of Local 150, the membership of Local 150 must hold regular elections to fill the offices of President-Business Manager, Vice President, Recording-Corresponding Secretary, Financial Secretary, and Treasurer. Article X, Sec. 2 of the By-Laws provides that terms of office "shall continue for three years or until the installation of a successor, the officer's resignation or his removal by impeachment." In August 1986, defendant-appellee William Dugan, a resident of Illinois, was elected President-Business Manager and plaintiff-appellant Virgil Jean, a resident of Indiana, was elected Financial Secretary. 2

Soon after the election, Dugan, acting under his authority as President-Business Manager, appointed Jean to the position of Business Representative and named Jean as a Trustee of the Midwest Operating Engineers ("MOE") Welfare Fund. 3 Thus, as of September 1986, Jean held three union positions--Financial Secretary, Business Representative, and Trustee. Neither the Union Constitution nor the By-Laws mandated that Local 150 remunerate Jean for his services, but Local 150 did, in fact, authorize the payment of a salary, the use of a business credit card, and access to a union-owned automobile as compensation for Jean.

As Business Representative, Jean interacted extensively with companies which employed members of Local 150. Jean's alleged dealings with one such company, Hebron Plumbing & Heating Company ("Hebron") precipitated his falling out with Dugan. Hebron signed two memoranda of agreement with Local 150, one dated October 28, 1981, and the other February 13, 1987, by which Hebron adopted collective bargaining agreements negotiated by the union and various construction industry multi-employer associations. Pursuant to the terms of the master agreement, Hebron undertook an obligation to make various contributions to the MOE fringe benefit funds ("the Funds"). 4 After Thomas Hartman, a Hebron employee and a member of Local 150, inquired about his eligibility for benefits, the MOE fund office requested an audit of Hebron's payroll records, but Hebron refused to permit one. The Trustees of the various funds then filed suit in federal court to compel an audit. William E. Dugan, et al. v. Hebron Plumbing and Heating, Inc., No. 88 C 0311 (N.D.Ind.). There, Hebron argued that it was not required either to submit to an audit or to make contributions because of a "side agreement" between Hebron and Jean.

Thereafter, Dugan launched an investigation to determine whether certain Business Representatives, including Jean, were not enforcing the obligation of various companies to contribute to the funds. In the course of this investigation, Dugan met with Jean and asked him to take whatever steps necessary to straighten out the problem and ensure that the contributions would be paid. Jean contends that he first learned of Hebron's alleged failure to pay its required contributions at this meeting. When questioned on this matter, Jean informed Dugan that Local 150's former Financial Secretary, Harry Baker, had told the Business Representatives that owner operators were not required to contribute for themselves. In his affidavit, 5 Jean vigorously disputes that this admission was tantamount to an acknowledgment that he had made a "deal" with any contractors regarding the payment of nonpayment of contributions on behalf of employees. Essentially, Jean maintains that any statements he made about contributions merely conformed to the instructions he was given. When Dugan responded that such instructions were incorrect, Jean replied, "Right or wrong, that is what we were told to say and that is what we told them." Dugan then repeated his order to resolve the matter and also asked Jean for a list of contractors which had been given the incorrect instructions.

In response to Dugan's order, Jean and another Business Representative named Tom Kuiper met with the owner of Hebron to urge him to permit an audit and to satisfy Hebron's obligation to contribute to the funds. The Trustees eventually audited Hebron and found a deficiency of about $40,000 in contributions. In the course of the litigation between the funds and Hebron, the Funds' attorneys discovered that Hebron possessed a list of the area contractors which had been told they did not have to pay contributions. The Funds' attorneys then informed Dugan in early December 1988 of Hebron's possession of official union documents (without the knowledge and authorization of the union) and recommended that Jean be questioned about this matter.

On December 7, 1988, Dugan and the Funds' attorneys met with Jean prior to the scheduled meeting of the various MOE funds. Jean first denied and then conceded that he had given documents or lists to Hebron. Specifically, Jean admitted that he provided Hebron with copies of various memoranda of agreements with other employers. According to Dugan's affidavit, when asked why he would divulge such confidential information to Hebron, Jean responded that he would do it for anybody, notwithstanding the fact that Hebron's president may have been his friend. In his affidavit, Jean maintains that he delivered the documents to Hebron because he "believed himself to be under an order of court to produce those documents and because he believed that they were not confidential documents and would be producible in collective bargaining."

Following the interview, Dugan excused Jean from attending the Trustees' meeting. Dugan later advised the Trustees that on the basis of the information he had received, Dugan felt that he had no alternative but to remove Jean as a Trustee. On December 12, 1988, Dugan informed Jean that he had been removed as a Trustee. Dugan also suggested that Jean resign as a Business Representative in order to avoid personal embarrassment. When Jean refused to resign, Dugan fired him as a Business Representative of Local 150. In particular, Dugan told Jean that, as President-Business Manager, Dugan could not tolerate Jean's conduct and could not keep Jean on the union's payroll. Dugan further instructed Jean to return his union-owned car and credit card. The following day Jean did turn in his car keys and credit card. Jean received his full semi-monthly salary through December 15, 1988, and a Christmas bonus check later that month. He did not receive a payroll check for the second half of December, 1988, which, but for his termination, would have arrived in the first part of January, 1989.

On December 16, 1988, Jean prepared a letter that he wanted printed in the January, 1989, issue of the Local 150 Engineer, an intra-union publication. On December 22, 1988, Jean submitted to Dugan an additional statement that he wished to read or have read at the union's various central and district meetings. Both of Jean's requests were honored. The January, 1989, issue of the Local 150 Engineer contained both Jean's letter and Dugan's response and Jean's additional statement was read at the various meetings.

Soon thereafter, on or about February 9, 1989, Jean prepared another letter in which he resigned his elected position as Financial Secretary. In that letter, Jean stated,

I first want you to know that the President asking me to [resign] has not influenced me in any manner. After much thought and many requests from members of this local, I have decided to resign my position as Financial Secretary this 9th day of February [1989] in order that I may actively seek the office of President-Business Manager of this local without any conflict of interest being involved and no undue hardships put on any elected or appointed representative of this local.

In Local 150's regularly scheduled August, 1989, election, Dugan prevailed over Jean for the position of President-Business Manager.

On December 31, 1990, Jean filed a three-count complaint seeking damages and injunctive relief against Dugan. In Count I, Jean alleged defamation on the basis of various statements made by Dugan in 1988 and 1989. In Counts II and III, Jean raised employment-based claims, alleging retaliation and interference with...

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