Seay v. McDonnell Douglas Corp.

• Decision Date: 31 March 1976
• Docket Number: No. 74-2081,74-2081
• Citation: 533 F.2d 1126
• Parties: 92 L.R.R.M. (BNA) 2063, 78 Lab.Cas. P 11,366 George L. SEAY et al., Plaintiffs-Appellants, v. McDONNELL DOUGLAS CORPORATION et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1126

533 F.2d 1126

92 L.R.R.M. (BNA) 2063, 78 Lab.Cas. P 11,366

George L. SEAY et al., Plaintiffs-Appellants, v. McDONNELL DOUGLAS CORPORATION et al., Defendants-Appellees.

No. 74-2081.

United States Court of Appeals, Ninth Circuit.

March 31, 1976.

Jonathan C. Gibson (argued), San Diego, Cal., for plaintiffs-appellants.

Joseph Rauh (argued), of Rose, Klein & Marias, Los Angeles, Cal., for defendants-appellees.

OPINION

Before SNEED and KENNEDY, Circuit Judges, and ZIRPOLI, District Judge. ^*

ZIRPOLI, District Judge:

This case involves a dispute between non-union employees of McDonnell Douglas and the International Association of Machinists (hereafter "IAM") ¹ concerning the purposes for which the union uses agency fees paid by plaintiffs pursuant to the collective bargaining agreement between IAM and McDonnell Douglas. ² Plaintiffs appeal from an order of the district court granting summary judgment in favor of the defendant union.

Background

In International Association of Machinists v. Street, 367 U.S. 740, 81 S.Ct. 1784, 6 L.Ed.2d 1141 (1961), and Brotherhood of Railway Clerks v. Allen, 373 U.S. 113, 83 S.Ct. 1158, 10 L.Ed.2d 235 (1963), the Supreme Court held that unions may not use union dues or agency fees to finance political activities if members or fee payors object to the use of those funds for such purposes. ³ In 1967 plaintiffs instituted the instant suit alleging that over plaintiffs' known objections, the defendant union was utilizing agency fees to finance political activities. The district court dismissed the suit on the ground that its jurisdiction had been preempted by the National Labor Relations Act. This court reversed holding that the district court had jurisdiction of the suit under section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185. Seay v. McDonnell Douglas Corp., 427 F.2d 996 (9th Cir. 1970). We found that the complaint alleged a breach of the collective bargaining agreement on two grounds. First, the complaint alleged a breach of the union's duty of fair representation; second the complaint alleged a breach of the implied term of the contract that agency fees be used only for the negotiation or administration of the collective bargaining agreement and for expenses incurred in the adjustment of grievances and disputes. Id. at 1000-001. We therefore reversed the order of the district court and ordered that the complaint be reinstated with leave to amend. Id. at 1004.

On June 28, 1973, three years after this court held that the district court had jurisdiction over plaintiffs' complaint, IAM issued Circular No. 669 which provided in pertinent part:

POLICY Accordingly, and effective July 1, 1973, the following policy is hereby established.

1. Any dues-paying member or non-member who is covered by a collective bargaining agreement containing a "union shop" or "agency shop" provision shall have the right to object to the expenditure of a portion of his dues or agency fees for the activities or causes primarily political in nature.

2. By action of the Executive Council, the United States members of the Committee on Law are designated to determine the approximate annual proportion of dues spent for such political purposes.

The Chairman of the Committee on Law shall preside as Chairman.

3. A member or non-member may perfect his objection by individually notifying the General Secretary-Treasurer and the Recording Secretary of the local or district lodge to which he belongs or to which he must pay agency shop fees by registered or certified mail; provided, however, that such objection shall be timely only during the first 14 days of union membership and during 14 days following each anniversary of union membership.

4. An objection may be continued from year to year by individual notifications as provided in paragraph 3 above and must be given during each annual anniversary 14-day period.

5. If an objecting member or agency fee payer is dissatisfied with the approximate proportional allocation made by the Law Committee, he may appeal the ruling of the Committee to the Executive Council.

6. If the objector is not satisfied with the decision of the Executive Council, he shall have the right of an appeal to the Convention in accordance with the provisions of Article "L" of the IAM Constitution.

7. Consistent with this policy, any objector who has filed in the past such a complaint with his local or district lodge shall have such objection honored retroactively, provided such objector files with the Recording Secretary and the General Secretary-Treasurer a copy of such letter with a current objection as provided in paragraph 3 above.

8. Whatever amount is determined by the Law Committee to be allocable for political purposes, one-half will be rebated by the affected local or district lodge and one-half by the Grand Lodge.

9. The amount of reduced dues for such objectors shall be a matter of record and so stated at the bottom of the monthly report furnished by the General Secretary-Treasurer.

10. Where there is in effect an automatic dues deduction or checkoff with an employer, the Financial Secretary or Secretary-Treasurer shall refund such dues or agency fee payments checked off by monthly check until the anniversary date of the checkoff period, and one-half of that amount rebated to the objector shall be deducted from the per capita tax forwarded to the Grand Lodge in his behalf.

11. The period of retroactivity shall be from the time that the objection has been made to the use of dues money or agency fees for political purposes.

Defendant then moved for summary judgment arguing that the inauguration of this new policy negated any charge that it had breached its duty of fair representation. In ruling on defendant's motion the district court noted that defendant conceded that it spends money for political activities, that it stands in a fiduciary relationship to plaintiffs and owes them a duty of fair representation, and that employees who object to the expenditure of union funds for political purposes are entitled to a pro rata rebate of their dues or agency fees, once they make their objections known to the union. Based on these concessions the district court observed that there was nothing left for it to do but to determine the amount of rebate to which plaintiffs were entitled. Seay v. McDonnell Douglas Corp., 371 F.Supp. 754, 757 and n.6 (C.D.Cal.1973). The court went on to hold, however, that since the union had voluntarily adopted a procedure whereby plaintiffs were entitled to a rebate, any charge of breach of the duty of fair representation was negated since the union remedy was fair, reasonable, and adequate on its face. The district court therefore granted defendant's motion for summary judgment. Plaintiffs now appeal that ruling. ⁴ The issue before this court is whether defendant's promulgation of Circular No. 669 entitled them to summary judgment. ⁵

The Effect of the Promulgation of Circular No. 669

Mootness

Defendant contends that by implementing the intra-union remedy of Circular No. 669 the union has provided plaintiffs with all of the relief to which they would have been entitled had the case been fully adjudicated, and that therefore the case is moot. While this argument is persuasive on its face, it bears further scrutiny.

This is a case in which defendant voluntarily ceased its allegedly wrongful conduct after litigation had been instituted. The Supreme Court has held that under these circumstances, voluntary termination of allegedly wrongful conduct does not deprive a court of its power to act. United States v. W. T. Grant Co., 345 U.S. 629, 632, 73 S.Ct. 894, 897, 97 L.Ed. 1303, 1309 (1953). The case should not be held moot unless it is "absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur." Pacific Maritime Association v. ILWU, 454 F.2d 262 (9th Cir. 1971), cited with approval in Electrical Workers 77 v. Puget Sound Power and Light Co., 506 F.2d 523, 524 (9th Cir. 1974), cert. denied, 420 U.S. 992,95 S.Ct. 992, 43 L.Ed.2d 674 (1975). In the instant case there is no assurance that the union will continue to abide by the provisions of Circular No. 669 once the present litigation is terminated. It has known of its obligation to provide for a rebate of fees used for political purposes since the Supreme Court's 1961 decision in Street yet it did not comply with its obligations under Street until 1973, six years after the instant suit was instituted and 12 years after Street was decided. In light of these circumstances, it would be error for this court to conclude that this litigation is moot.

The Propriety of Granting Summary Judgment

The district court premised its grant of summary judgment on the issue of breach of the duty of fair representation on a finding that the intra-union remedy was a fair, reasonable, and adequate procedure. Seay v. McDonnell Douglas, supra, 371 F.Supp. at 763. In reaching this conclusion, the district court relied heavily on the Tenth Circuit decision in Reid v. UAW, District 1093, 479 F.2d 517 (10th Cir.), cert. denied, 414 U.S. 1076, 94 S.Ct. 572, 38 L.Ed.2d 483 (1973), a case on all fours with the instant case. ⁶ The district court also relied on a suggestion in Brotherhood of Railway Clerks v. Allen, supra, that an internal union remedy might provide a useful alternative to litigation on the issue of remedy. In discussing this question, the court in Allen stated:

(W)e think it appropriate to suggest . . . a practical decree to which each respondent proving his right to relief would be entitled. Such a decree would order (1) the refund to him of a portion of the exacted funds in the same proportion that union political expenditures bear to total union expenditures, and (2) a reduction of future such exactions from him by the same proportion. We recognize that practical difficulties may attend a decree reducing an employee's obligations under the union-shop agreement by...