The opinion of the court was delivered by: Robson, District Judge.
The plaintiff in this cause seeks recovery of funds allegedly
misappropriated by the defendants from Local 19 of the
International Longshoremen's Association. After a trial on the
merits, this court is of the opinion that judgment should be
rendered for the defendants.
The jurisdiction of this court is invoked under the
Labor-Management Reporting and Disclosure Act ("the Act").
29 U.S.C. § 501(a). This legislation confers fiduciary status upon
union officers who deal with the property and funds of a union.
As a fiduciary under the Act, a union officer must account to
his union "for any profit received by him in whatever
capacity in connection with transactions conducted by him or
under his direction on behalf of the" union. (Emphasis
supplied.) The statute further provides that any breach of
fiduciary duty shall not be relieved by a subsequent
exculpatory resolution passed either by the union itself or by
its governing board. Should a union or its governing board fail
or refuse to sue, recover damages, or secure an accounting
within a reasonable time, any member of the union may sue in a
federal court in a derivative capacity for the benefit of the
union. 29 U.S.C. § 501(b). The clear intent of Congress in
enacting this legislation was to weed out instances of
corruption and breach of trust; to preserve the rights of
individual members and to insure high standards of
responsibility on the part of, at that time, powerful and
sometimes detached and autocratic union officers. Purcell v.
Keane, 277 F. Supp. 252, 256 (E.D.Pa. 1967).
The following facts have been stipulated by and between the
parties. During the relevant period, the plaintiff was a member
in good standing of the union; the defendant Harrison Tyler was
president of the union; and the defendant Hurley Porter was
financial secretary of the union. On or about March 4, 1968,
the plaintiff sent a letter to the recording secretary of Local
19 attesting to certain alleged violations of fiduciary duties
by the defendants herein. Joint Exhibit B. Pertinent to this
case is the following accusation:
"* * * As you * * * know, our financial secretary claims that
$3,200.00 was reported stolen as a result of a burglary in
our headquarters on or about October 14, 1967, and on
November 16, 1967, he reported that the sum of $3,900.00 was
stolen. That he has done nothing about retrieving this money
from the bonding company and that no one has accounted for
the discrepancy of $700.00; that no money has been reimbursed
by anybody * * *."
On March 7, 1968, the defendant Tyler responded by letter to
the plaintiff's charges. Joint Exhibit C. The letter stated
that the union would be reimbursed for the defendants' personal
expenses. Concerning the burglary and the discrepancy in the
amount allegedly stolen, Tyler stated that
"* * * [t]he information we have, based upon an audit made by
the Union's Certified Public Accountant, is that the amount
of cash taken in the burglary was $3,922.11. The bonding
company was notified by the Financial Secretary. I am
investigating to determine what action the bonding company
will take, and I will advise you promptly."
The evidence does not indicate whether the plaintiff was ever
so advised, promptly or otherwise.
The plaintiff sent another letter to the recording secretary on
April 8, 1968, in which he realleged the charges contained in
his letter of March 4, 1968. Joint Exhibit D. He further
charged that the defendant Tyler had "acted outside of his
authority" by allowing contract extras and by making purchases
for the union's new building which were $67,000 in excess of
the lowest bid accepted and authorized by the union membership.
The letter also asserted that the contractor involved repaired
the defendant Tyler's home "free of charge." The plaintiff
alleged that this conduct violated the Act, and requested an
The defendant Tyler responded by letter on April 15, 1968, that
the records relating to expenditures for the new union building
and furniture were available for the plaintiff's inspection.
Joint Exhibit E. The defendant Tyler also denied the
plaintiff's statement that the contractor in question repaired
his home free of charge. The letter further stated that the
plaintiff was free to submit any evidence he desired to any
meeting of the union membership or to the Executive Board. The
plaintiff admits that he did not take any further action within
the framework of the union. It does not appear that the union
membership or the governing board were ever presented with any
evidence concerning the fiduciary breaches asserted against the
The defendants claim that the plaintiff does not have standing
to sue in this court because he has not exhausted the remedies
afforded to him by the union. This court does not agree.
Article XVIII of the Constitution of the International
Longshoremen's Association provides in part as follows:
"Section 3. Proceedings under this Article*fn1 may be
initiated by any member of the I.L.A. by filing written
charges, specifying the acts or conduct with which the
accused is charged, with the Recording Secretary of the
appropriate Local Union or District Council or District
organization, or with the International Secretary-Treasurer,
as the case may be. The Secretary with whom such charges are
filed shall promptly transmit a copy thereof to the accused
at his last known address, together with written notice of
the time and place of the hearing thereon, which shall be
held not less than five days after the date of the notice."