United States District Court, Northern District of Illinois
June 6, 1973
BERNARD W. MCNAMARA ET AL., PLAINTIFFS,
ROBERT JOHNSTON ET AL., DEFENDANTS, UAW, INTERVENOR.
The opinion of the court was delivered by: Bauer, District Judge.
MEMORANDUM OPINION AND ORDER
This cause comes on the defendants' motion to dismiss the
This is an action for an alleged breach of the fiduciary
duty imposed on defendants under Section 501(a) of the
Labor-Management Reporting and Disclosure Act of 1959
(commonly referred to as the Landrum-Griffin Act) 29 U.S.C. § 501(a).
The plaintiffs are employed as production unit workers in
the Fisher Body Plant of General Motors Corporation at Willow
Springs, Illinois, and are dues paying members of the
International United Automobile, Aerospace and Agriculutural
Implement Workers of America ("UAW"), the designated
collective bargaining representative of production unit
workers in the plant. The plaintiff, Bernard W. McNamara, in
addition to being a dues paying member of UAW, also serves in
the capacity of Recording Secretary of UAW, Local 558, a post
to which he was duly elected by the membership of the Local.
The plaintiffs bring this action as members of UAW for the
benefit of the union and its members.
The defendant, Robert Johnston, is Regional Director of UAW,
Region 4, a region which includes the State of Illinois.
Robert Johnston also serves as Chairman of the UAW Illinois
State Community Action Program Council ("CAP").
Defendant James Wright is Chairman of the UAW Chicago Area
CAP Council. Defendants Johnston, Wright and Peterson exercise
custody and control over Illinois CAP funds, and all decisions
respecting the use and expenditure of such funds.
Defendant Emil Mazey is Secretary-Treasurer of UAW
International and in such capacity receives and handles union
funds as hereinafter described.
Defendant Leonard Woodcock is International President of UAW
and in such capacity exercises control and direction over the
handling and expenditure of union funds.
The plaintiffs, in the complaint, allege, inter alia, the
1. Pursuant to the provisions of the UAW
Constitution and the administrative
instructions issued by the president of UAW
International on May 19, 1969, each local
union in the State of Illinois, including
Local Union 558, is required to set aside a
minimum of 3% of each member's monthly
membership dues as a per capita payment to
the UAW Illinois State CAP, and to remit such
money to defendant Robert Johnston. Upon
receipt of said money defendant Johnston
allocates it proportionately to UAW Illinois
State CAP and Chicago Area CAP.
2. The defendants Johnston, Wright and Peterson,
unlawfully and wrongfully diverted a large
part of said money into the political
campaign coffers of candidates for public
office and for various political expenditures
and purposes totally unrelated to the
interests and welfare of the union and its
members or to the functions and purposes of
the union as collective bargaining
representative of plaintiffs and their fellow
dues paying members of the union.*fn1 These
actions of the defendants
were in violation of 29 U.S.C. § 501(a) which
sets forth their statutory duty of fidelity and
trust to hold such money solely for the benefit
of the union and its members.*fn2
3. Defendants Mazey and Woodcock instructed,
controlled and directed defendants Johnston,
Wright and Peterson in violation of their
aforesaid statutory duty of fidelity and
trust to hold such money solely for the
benefit of the union and its members.
Further, defendants Mazey and Woodcock, in
violation of their statutory duty, have
unlawfully and wrongfully diverted a
substantial part of the membership dues for
various political expenditures and purposes
totally unrelated to the interests and
welfare of the union and its members or to
the functions and purposes of the union as a
collective bargaining representative of
plaintiffs and their fellow dues paying
members of the union.*fn3
4. The "unlawful and unauthorized" diversion of
union money and assets into political
campaigns was not only made by defendants in
violation of their statutory duty of fidelity
and trust, but was also done contrary to an
express and explicit resolution adopted by a
referendum vote of the membership of UAW
Local 558 on May 6, 1969.*fn4 Defendants
formal notification of such a resolution and
of the explicit objections of the members of
UAW Local 558 to use of any part of their
membership dues money by defendants for
partisan political candidates and activites,
or for ideological causes or support of
organizations or groups espousing ideological
causes. The defendants have ignored the
objections expressed by the members of UAW
Local 558 and the executive officers of UAW
have failed and refused to institute a legal
action in the name of the union to require
defendants to render an accounting.
The plaintiffs seek an order of this Court requiring
defendants to furnish an accounting and repay in damages to
the Union all monies unlawfully diverted by them.*fn5
The defendants, in support of their motion to dismiss the
1. The complaint does not state a cause of
action upon which relief can be granted
because the alleged unlawful expenditures are
expenses entirely proper under Section 501,
and the UAW Constitution.
2. Plaintiffs have failed to exhaust their Union
remedies prior to bringing this action.
3. Plaintiffs have failed to allege the
performance of the procedural requirements
contained in Section 501(b) of the Act.
4. There was no showing of good cause made prior
to the filing of the instant suit.
The plaintiffs, in opposition to the instant motion, contend
that the complaint states a proper cause of action according
to 29 U.S.C. § 501(a) and has met the procedural requirements
of 29 U.S.C. § 501(b).
It is the opinion of this Court that the plaintiffs' claims
do not constitute a proper cause of action under 29 U.S.C. § 501.
THE PLAINTIFFS' COMPLAINT FAILS TO SUFFICIENTLY STATE A CAUSE
OF ACTION UNDER 29 U.S.C. § 501.
The jurisdiction of this Court is invoked under the
Labor-Management Reporting and Disclosure Act, 29 U.S.C. § 501.
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.*fn6
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 reasonable time any member of the union may sue in a
federal court in a derivative capacity for the benefit of the
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 union members; and to
insure high standards of responsibility on the part of, at
that time, powerful and sometimes detached and autocratic
union officers. Richardson v. Tyler, 309 F. Supp. 1020
(N.D.Ill. 1970); Purcell v. Keane, 277 F. Supp. 252 (E.D.Pa.
1967). Thus the precise issue of the instant action is whether
the defendants breached their fiduciary duty in violation of
29 U.S.C. § 501.
Section 501(a) of the Act literally requires, and was
intended to so require, union officers to expend union funds
in accordance with the union's constitution
and bylaws and any resolution of the governing bodies adopted
Congress did not in Section 501, or elsewhere in the Act,
attempt to regulate or limit the purposes for which a union
may spend its money, and the use of the phrase "taking into
account the special problems and [that] the labor
organization" indicates an awareness of the fact that the
labor union of today does not typically confine its activities
to "business unionism."*fn9 What the Act does require is that
expenditures of a union's funds as well as use of its other
assets, be exclusively for purposes which are authorized by
its constitution, bylaws, and any pertinent resolutions of its
governing body.*fn10 Congress did not intend § 501 to be a bar
to union expenditures for political activity. Nowhere in the
Act is there an attempt to limit or regulate the purposes for
which a union uses its funds. The very words which are embodied
in § 501 of the Statute — ". . . taking into account the
special problems and functions of a labor organization . . ."
indicates a recognition of the political realities of modern
unionism. Senator McClellan, the principal Congressional
proponent of fiduciary responsibility for union officials,
"However, I am not offering my amendment on the
direct question of political contributions.
Everyone knows my views on the subject, I assume.
This is not a drive at that situation. It is a
drive at skullduggery of some leaders when they
meet in executive sessions and pay off this one
and pay off that one. . . . I may say that there
never was any idea of my trying to curb the
authority of the members of a union to do
whatever the members want to do; rather it is my
intention to protect the members from having the
members of a board or a committee vote to do just
about anything they want to do, as has been the
case in many instances." 105 Cong.Rec. 6526
(Daily Ed., April 23, 1959); II Legislative
History of the Labor Management Act of 1959, at
It is clear that political expenditures of union funds which
are authorized by its constitution, bylaws, and any pertinent
resolution of its governing body is not within the prohibition
of Section 501 of the Act.
Numerous sections of the UAW Constitution mandate the kind
of expenditures which are challenged in the instant
complaint.*fn12 Plaintiffs have failed to cite to this Court
any provision of the UAW Constitution violated by defendants.
The Constitution of the UAW (Art. 7, Sec. 1) establishes the
convention or the supreme governing body of the International
Union. The official proceedings of the convention demonstrate
the approval by resolution of UAW contributions to various
organizations and groups concerned with such issues as civil
rights, peace, foreign affairs, civil liberties, consumer
protection, legislation, education and economic policy.*fn13
The 1970 UAW convention thus approved the type of
contributions which are challenged by the plaintiffs.
The fiduciary duty of union officers under § 501 is based on
general agency principles. Union officers are viewed as agents
for their principal, the membership. It necessarily follows
that an agent cannot be in breach of duty when he is acting
pursuant to the direction of his principal. To find a breach of
duty when an officer disburses funds in accordance with the
constitution and bylaws of his union would be contrary to the
letter and spirit of § 501. It would inject judicial
interventions into the policy making process of a union.*fn14
The defendants' expenditures of union funds for
contributions to political candidates and social causes was
authorized by the UAW Constitution and thus cannot by itself
constitute a violation of § 501 of the Act.*fn15
This ruling is in keeping with the Congressional intent in
enacting § 501 as described by Senator Morse:
"I have been assured that the fiduciary section
will not prevent political contributions. I trust
the courts will
so interpret the language in the bill." Vol. II,
Leg.Hist., LMRDA, p. 1416; Cong.Rec., September
3, 1959, p. 16387.*fn16
The plaintiffs have attempted to infer that the actions of
the defendants were illegal (ultra vires) and thus a breach of
the defendants' fiduciary duty by stating that the defendants'
contributions were made in violation of 18 U.S.C. § 610.*fn17
However, the Supreme Court in Pipefitters Local Union No. 562
v. United States, 407 U.S. 385
, 92 S.Ct. 2247, 33 L.Ed.2d 11
(1972) has recently stated:
"We therefore hold that § 610 does not apply to
union contributions and expenditures from political
funds financed in some sense by voluntary donations
of employees."*fn18 Id. at 409, 92 S.Ct. at 2261.
Further, Section 610 does not authorize a private right of
action and the plaintiffs' conclusory allegations that § 610
has been violated cannot in themselves change the defendants'
union authorized political expenditures into a 29 U.S.C. § 501
violation. Ash v. Cort, 350 F. Supp. 227 (E.D.Pa. 1972)*fn19
Schonfeld v. Raftery, 335 F. Supp. 846 (S.D.N.Y. 1971).
However, this ruling should not be interpreted as foreclosing
the plaintiffs' right of redress under § 610 through the proper
Since the spring of 1968 the UAW has provided a procedure by
which individual members*fn21 as a matter of conscience may
dissent from the political activity of the UAW and enter an
objection to the expenditure a portion of their dues for
political purposes.*fn22 In such cases the UAW refunds to the
individual the proportion of union dues used for such
purposes.*fn23 Moreover, if a union member is dissatisfied
with the proportional allocation made by the
Secretary-Treasurer of the union, the dissenting member may
appeal therefrom to the International Executive Board, and
then, at his option, either to the UAW Convention or to the
UAW's unique Public Review Board.*fn24
Regardless of whether the plaintiffs could have used other
procedural or legal remedies to redress their instant
grievance, it is clear that the instant complaint brought
under 29 U.S.C. § 501 is insufficient and must be dismissed.
The plaintiffs, in their complaint, have failed to state a
claim upon which relief can be granted. Section 501 of 29
U.S.C. was never intended by Congress, nor interpreted by
courts, to cover political contributions which have been
authorized by a union's constitution or other governing
Further, the issue of the propriety of a union's authorized
charitable and political contributions presents a sensitive
controversy over which a federal district court should be
reluctant to act without a clear and specific grant of
Accordingly, it is hereby ordered that the defendants motion
to dismiss is granted.