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04/29/65 International Brotherhood v. W. Willard Wirtz

April 29, 1965




Before DANAHER, BURGER, and McGOWAN, Circuit Judges.


April 29, 1965.


BURGER, C. J.: The District Court on application of the Secretary of Labor ordered enforcement of a subpoena duces tecum issued by the Secretary directing International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, the "Teamsters Union" in ordinary parlance, to produce records containing information as to financial matters required to be reported under §§ 201(a) and 201(b) of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. 431(a) and 431(b). On this appeal the Teamsters Union challenges the power of the Secretary under Section 601 of the Act, 73 Stat. 539, 29 U.S.C. § 521, to subpoena records of a labor organization for the purpose of investigating, evaluating and publicizing the existence of alleged violations of Section 501(a) of the Act, 73 Stat. 535, 29 U.S.C. § 501(a), which imposes certain fiduciary duties upon officers, agents and other representatives of labor organizations, on the ground that the Secretary has no remedial or enforcement powers as to Section 501(a) violations.

Certain background facts are important. On May 11, 1964 the Secretary issued a press release stating that the Department of Labor had begun an investigation into the possible use of union funds by Appellant to pay legal fees incurred by James Hoffa, its president. The release also disclosed that sixteen members of a Teamsters Union local had complained that Hoffa had used union funds for private purposes in violation of Section 501. Additionally, the Secretary's announcement stated that the complaining local union members requested prompt investigation of the complaint and publication of the results of the inquiry.

The stated purpose of the challenged subpoena, issued three days later on May 14, was to implement an investigation to determine whether any person had violated or was about to violate any provision of the Reporting and Disclosure Act of 1959 (except Title I and amendments made by the Act to other statutes). *fn1

Shortly after the Secretary's announcement of his investigation, six members of the same Teamsters Union local referred to in the press release brought suit on behalf of the union and its members against various union officers, including James Hoffa, charging that union treasury funds had been wrongfully diverted by the union to pay legal expenses of Hoffa and other union officials in defense of various criminal prosecutions and demanding an accounting for and restitution of the diverted funds to the union. The action was brought under Section 501(b) of the Labor-Management Reporting and Disclosure Act and the complaint alleged that the claimed diversion of funds violated Section 501(a) of the Act.

On the return date fixed in the subpoena, Appellant refused to deliver any records pending action on its request that the Secretary withdraw the subpoena. Its request was based primarily on contentions (a) that the Secretary has no enforcement role or power to remedy violations of Section 501(a) and hence his investigatory powers under Section 601 do not extend to inquiry into violations of Section 501(a); (b) that a civil action had been brought by members of Teamsters Local 107 who allegedly were among those whose complaints to the Secretary led to issuance of the subpoena and that the Secretary is without power so to assist private litigants for whom all discovery procedures of the Federal Rules of Civil Procedure are available; (c) that even if the Secretary has such powers he may not use them when union members have not exhausted their rights to examine union records on demand; (d) that the subpoena is oppressive, burdensome and duplicitous.

The Solicitor of Labor on behalf of the Secretary then advised Appellant that the scope of the demand would be reduced to cover only the period from January 1, 1962 to a current date; the original subpoena was withdrawn and an amended subpoena issued. On June 1, 1964 in a hearing on the return of the new subpoena, Appellant, while still challenging the Secretary's powers, offered to comply with the demands if the Secretary would give assurances not to make any public disclosure of findings as to the expenditures of Teamsters Union funds to pay litigation expenses of criminal proceedings against Hoffa. The Secretary declined to give any such assurances and proceeded in the District Court for enforcement of the subpoena. The District Court ordered enforcement and granted a stay pending resolution of this appeal.

The contentions on appeal are essentially those urged unsuccessfully on the Secretary, i.e ., chiefly that the Secretary lacks power under the Reporting and Disclosure Act to investigate and publicize findings as to violations of Section 501(a) of the Act.

The powers of the Secretary under the Reporting and Disclosure Act are broad and, as with visitorial powers in other contexts, they are to be construed in such a way as to give effect to the purposes of the Act. That the Secretary's public announcement cites Section 501(a) as the basis of complaints by union members cannot in any sense limit the scope of his investigation. *fn2 An inquiry prompted by reports of violations in one area of the statutory coverage might reveal violations in other areas. Nor can the pendency of class actions brought by union members and aimed at the related objective of accounting and restitution operate to circumscribe the Secretary's powers.

It would be an anomaly if private persons, for whatever motives, could determine what the Secretary could or could not do with information which he secures in the exercise of his overseeing functions under the Act. The Secretary has the power under Section 601 to investigate and report to "interested persons or officials" concerning facts required to be reported under the Act, reasons for failure to report and "any other matter which he deems to be appropriate . . . ." See note 1 supra . A basic purpose of the Act was to aid union members in securing information as to the financial affairs of their unions and the employment of union assets. The power to report to "interested persons" in addition to "officials" such as the Attorney General includes the power to inform the public at large and union members. To give the Act a lesser scope would be to lose sight of the fiduciary nature which Congress has attributed to the offices of union leadership. *fn3

Congress afforded a broad range of remedies, civil and criminal, and authorized investigations as a means of aiding union members in pursuit of their remedies; there is nothing in the language of the statute, its history or the announced legislative purpose which should lead us to accept the Union's narrow reading of this remedial legislation.

It is not without significance that Congress considered and rejected a limitation on the Secretary's powers in the form of a requirement that the Secretary first find probable cause to believe that violations had occurred before issuing a subpoena. See Int'l Bhd. of Teamsters v. Goldberg, 112 U.S. App. D.C. 391, 303 F.2d 402 (1962), approving Goldberg v. Truck Drivers Local 299, 293 F.2d 807 (6th Cir.), cert. denied, 368 U.S. 938, 7 L. Ed. 2d 337, 82 S. Ct. 379 (1961). While Appellant does not here argue for such a requirement, we ...

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