United States District Court, Northern District of Illinois
November 27, 1950
RAILWAY EXP. AGENCY, INC.
KENNEDY ET AL.
The opinion of the court was delivered by: Igoe, District Judge.
This suit was brought by Railway Express Agency, Incorporated
under the Railroad Unemployment Insurance Act, 45 U.S.C.A. c. 11
against William J. Kennedy, Frank C. Squire and Horace W. Harper,
individually and as members of the Railroad Retirement Board of
the United States, for a temporary and permanent injunction
enjoining them from paying any unemployment insurance benefits
out of the Railroad Unemployment Insurance account to any
employees of plaintiff represented by Locals 808 and 459 for days
of work lost by reason of an alleged unlawful strike against
plaintiff on September 23, 1950.
A temporary restraining order was issued, and at a subsequent
hearing for the issuance of a preliminary injunction, defendants
moved to dismiss the complaint on the grounds, among others, lack
of jurisdiction in the Court because the suit, in effect, is an
action against the United States, whose general counsel has not
been properly served as provided by statute; that prerequisite to
jurisdiction is the consent of the United States to be sued which
was not had or its immunity waived; that employees of plaintiff
have a vital interest in the outcome and are requisite party
defendants; that plaintiff has no pecuniary interest in and to
the fund, which is solely for the benefit of employees; that
contributions required of employers by the statute are security
taxes, the expenditure of which may not be collaterally attacked;
that the requisite statutory findings and conclusions made by the
Board as to employees entitled to receive benefits are official
actions of the Board and not of individuals, and are conclusive
so far as this plaintiff is concerned.
Plaintiff contends the strike was in direct violation of the
statute and benefit payments are, therefore, prohibited by its
terms which the Board unlawfully ignored; that the benefit fund
is a trust fund in which plaintiff has a pecuniary interest by
reason of its contributions; that if permitted to be thus
dissipated, the fund will shrink, requiring a larger percentage
contribution (up to 3%) under Sec. 358, which would be
considerably in excess of the ½ of 1% contribution currently
required; that because such contributions constitute a trust
fund, to preserve the same and keep the required contributions to
a minimum, plaintiff has a pecuniary interest and is entitled to
attack the findings and conclusions of the Board, when in
plaintiff's opinion such findings, conclusions and
recommendations violate the terms and spirit of the statute.
The Court has considered the evidence together with the briefs
of the parties, and is of the opinion the Complaint herein should
be dismissed for want of jurisdiction on, among others, the
1. While the Complaint herein is against defendants
individually and as members of the Board, it is, in effect,
against the Board. In such case, it is a suit against an agency
of the United States, which has not consented to such action, nor
has the United States waived its right of immunity to be sued.
2. The unemployment fund in question is in the nature of
security taxes for the benefit of employees and the United
States, under the security program, has a vital interest therein.
As taxes due, the United States is the owner of the fund,
accountable only to the Congress, and plaintiff has no pecuniary
3. That the statute requires the Board as such to make
investigations, findings and determinations, as to the right of
employees to receive unemployment compensation. When made, they
are conclusive of the subject with right of appeal under the
statute only on behalf of objecting employees.
4. That there exists no statutory right in plaintiff to object
or contest the findings and decisions of the Board, even though
the same be incorrect or an arbitrary exercise of their delegated
authority. To hold otherwise would delay prompt unemployment
payments and render orderly administrative procedure impossible.
5. The employees have not authorized defendants to represent
their interest, and said employees have a vital interest separate
and apart from the interest of defendants. The Complaint seeks to
affect their rights to compensation, as found by the Board, and
they are indispensable parties regardless of whether, as
plaintiff contends, the issue is one of law.
The temporary restraining order is revoked. Prayer for
temporary and permanent injunction is hereby denied, and the
Complaint is dismissed at plaintiff's costs.
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