Seay v. McDonnell Douglas Corporation

• Decision Date: 03 June 1970
• Docket Number: No. 23114.,23114.
• Citation: 427 F.2d 996
• Parties: George L. SEAY et al., Appellants, v. McDONNELL DOUGLAS CORPORATION, a corporation, and International Association of Machinists and Aerospace Workers, Aeronautical District Lodge 1578, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

427 F.2d 996 (1970)

George L. SEAY et al., Appellants, v. McDONNELL DOUGLAS CORPORATION, a corporation, and International Association of Machinists and Aerospace Workers, Aeronautical District Lodge 1578, Appellees.

No. 23114.

United States Court of Appeals, Ninth Circuit.

June 3, 1970.

Jonathan C. Gibson (argued), of Welsh & Gibson, San Diego, Cal., McNutt, Dudley & Easterwood, Gall, Lane & Powell, Washington, D. C., for appellants.

Alfred M. Klein, (argued), of Rose, Klein & Marias, Los Angeles, Cal., Louis Lieber, Jr., Gene A. Powell, Santa Monica, Cal., for appellees.

Before BARNES, KILKENNY and TRASK, Circuit Judges.

TRASK, Circuit Judge.

This is an appeal by George L. Seay and twenty-eight other employees of McDonnell Douglas Corporation from the District Court's dismissal of their class action against the corporation and the International Association of Machinists and Aerospace Workers, Aeronautical District Lodge No. 1578, for lack of jurisdiction.

Appellants are employed by McDonnell Douglas in its missile and space systems division at plants in California. They are not members of appellee union but are subject to a collective bargaining agreement between the company and union which contains, in Article V thereof, a so-called agency fee agreement. Under this provision, union membership is optional but non-union employees, such as appellants, as a condition of employment, must pay to the union each month an agency fee equal to the monthly membership dues established by the union for its members.

Appellants filed a complaint in the District Court on September 22, 1967, alleging that the compulsory agency fee payments made by them were being used in "substantial amounts" by the union to support the political campaigns of candidates for public office and were being employed "to propagate political and economic doctrines, concepts, ideologies, and legislative programs which are opposed by plaintiffs and the class they represent." Appellants further averred, in paragraph eight of their complaint:

"The exaction of compulsory agency fee payments from plaintiffs and the class they represent under threat of loss of their employment, and the use of such agency fee payments for the purposes aforesaid, imposes upon them political and ideological conformity, prevents them from exercising their rights and privileges as citizens of the United States, deprives them of their civil rights guaranteed to them under statutes of the United States, injures them in their persons and property, and abridges rights guaranteed to them under the First, Fifth, and Ninth Amendments to the United States Constitution which Amendments guarantee to individuals freedom of association, freedom of thought, freedom of speech, freedom of political action, freedom to pursue the occupations of their choice, freedom from unwarranted invasion of their privacy, and other fundamental personal rights and liberties."

Appellants also charged that the diversion of their agency fee payments for political purposes constituted a breach of the union's fiduciary duty to appellants and the class they represent to use the payments solely for purposes reasonably necessary and germane to collective bargaining.

Appellants requested relief in the form of (a) a declaratory judgment holding that the agency fee agreement in its operation and effect abridged appellants' statutory and constitutional rights; (b) an order requiring the union to account for its expenditures of agency fee payments; (c) a permanent injunction restraining appellees from enforcing the agency fee agreement as against appellants or members of the class they represent, and (d) a judgment for monetary damages for injuries sustained as a result of appellees' unlawful conduct.

Appellants asserted federal court jurisdiction over the subject matter of the suit by virtue of 28 U.S.C. § 1331(a) and 29 U.S.C. § 185.

Appellee company moved to dismiss the complaint for failure to state a claim for relief, pursuant to Rule 12(b) (6), Fed.R.Civ.P. This motion was denied on February 16, 1968 and, on May 6, 1968, the District Court held a hearing to determine whether it had jurisdiction over the subject matter of the complaint and whether the action was maintainable as a class action under Rule 23, Fed.R.Civ.P. On May 24, 1968, the court dismissed the complaint and action on the ground that the subject matter of the suit was within the exclusive primary jurisdiction of the National Labor Relations Board. Appellants now appeal from that judgment of dismissal. We disagree with the disposition of the case made by the trial court for the reasons we herein set forth.

(1) Appellants' Complaint

As a preliminary matter, we must consider appellants' motion to amend their complaint in several particulars, filed in this court prior to oral argument. We grant that motion. Paragraphs I and II of the motion concern formal matters which received no objections from appellees.

Paragraphs III and IV of the motion seek to amend paragraph ten of the original complaint which alleged that the union in exacting the compulsory agency fee payments

"* * * owed and continued to owe a fiduciary duty to plaintiffs and the class they represent to use said payments for purposes reasonably necessary and germane to collective bargaining purposes only; * * *."

The amendment seeks to make plain that the duty is one of "fair representation and a duty under the collective bargaining agreement."

The Judicial Code in Section 1653, 28 U.S.C. § 1653, expressly provides that "defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts." See Cox v. Livingston, 407 F.2d 392, 393 (2d Cir. 1969); Jones v. Freeman, 400 F.2d 383, 387 (8th Cir. 1968). Here the proposed amendment is closely related to the general allegations of the complaint. The issues which were briefed and argued encompassed the questions of fair representation and the effect of the collective bargaining agreement.

The trial court interpreted the allegations of the complaint narrowly as stating only a claim that the defendant union failed to use the agency fee payments for purposes necessary and germane to collective bargaining.

The trial court further stated that there had been "no charge that the union failed fairly and impartially to represent the plaintiffs either in collective bargaining with defendant company or in its enforcement of the resulting collective bargaining agreement." The complaint as we view it went far beyond such limited claims. It specifically asserted that proceeds from funds exacted from the plaintiffs under the terms of the agreement were used in substantial amounts for political and ideological purposes contrary to plaintiffs' wishes and in derogation of their constitutional rights under the First, Fifth and Ninth Amendments.

The District Court treated this controversy as an ordinary unfair labor practice case arising under 29 U.S.C. §§ 158(a) (3) and 158(b) (2), and involving a dispute "over fees payable under a union security provision." The court relied upon N.L.R.B. v. Technicolor Motion Picture Corp., 248 F.2d 348 (9th Cir. 1957), and Radio Officer's Union v. N. L.R.B., 347 U.S. 17, 74 S.Ct. 323, 98 L. Ed. 455 (1954). We do not regard those cases as controlling. In N.L.R.B. v. Technicolor, an employee did not pay his initiation fee for union membership within thirty days after a union security contract became effective. He subsequently tendered payment, but was discharged by his employer. The issue was whether the discharge was proper. Upon a complaint lodged by the employee, the case was handled through standard NLRB procedures without the issue of initial federal court jurisdiction or pre-emption being asserted. There was no question raised concerning improper use of exacted agency fees. Radio Officers, supra, likewise raised questions of the interpretation and effect of a collective bargaining agreement. It also was handled through regular Board procedures with no question being raised as to pre-emption or improper use of funds.

The answer of the International Association of Machinists (IAM) acknowledged that certain amounts which it considered de minimis were expended from all of its sources of income, including the money representing agency fees from plaintiffs, for political purposes and the election of political candidates. It alleged that these sums were reasonably necessary to strengthen the union and its bargaining position and to advance the interests of all employees by having more favorable legislation and elected public officials. It also admitted that the agency fee payments were extracted by the defendants acting under the authority of the National Labor Relations Act.

Within this framework of pleadings, however inartistically set forth, we believe jurisdiction was sufficiently alleged under 29 U.S.C. § 185.

(2) Jurisdiction

Section 301 of The Labor-Management Relations Act, 29 U.S.C. § 185, reads as follows, in subsection (a):

"Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties."

We conclude that this provision confers jurisdiction upon the District Court. While appellants' complaint does not allege a violation of the collective bargaining agreement on its face inasmuch as the agreement does not specifically discuss the permissible purposes for which agency dues may be expended, Section 301 must be given a broad reading. See Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 456-457, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957); Smith v. Evening News Ass'n, 371 U.S. 195, 199-200, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962).

Appellee...