Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

SAUNDERS v. HANKERSON

April 8, 2004.

NATHAN A. SAUNDERS, Plaintiff,
v.
ESTER HANKERSON, et al. Defendants



The opinion of the court was delivered by: EMMET SULLIVAN, District Judge

MEMORANDUM OPINION

This case arises from the alleged embezzlement of approximately five million dollars in union funds by officials of the Washington Teachers' Union ("WTU"). Plaintiff in Civil Action No. 02-2536, Nathan Saunders, is a teacher of History and Government at Anacostia Senior Public High School and a member in good standing of the WTU. Mr. Saunders commenced this action on December 27, 2002, seeking compensatory and injunctive relief from officials of both the WTU and the American Federation of Teachers ("AFT"), the national union with which the WTU is affiliated. The AFT, in turn, initiated Civil Action No. 03-79 against officials of the WTU on January 17, 2003. Finally, a group of D.C. public school teachers now seek certification as a class to bring a separate action against officials of the WTU in Civil Action No. 03-261. The following motions are currently pending in Civil Action No. 02-2536: (1) plaintiff's Motion for Preliminary Injunction and Appointment of an Independent Monitor; (2) defendant AFT's Motion to Dismiss; (3) defendant WTU Executive Board's Motion to Dismiss; (4) defendant WTU Trustees' Motion to Dismiss; and (5) renewed motion to intervene as plaintiffs filed by Mary Baird Currie et al. Proceedings are stayed as to all other defendants. There are currently no pending motions in the related case of American Federation of Teachers v. Bullock et al., 03-79. Pending motions in Civil Action 03-261 have been denied without prejudice pending resolution of the issues before the Court in the present case. Accordingly, this memorandum opinion focuses exclusively on the motions pending in Saunders v. Hankerson, Civil Action 02-2356.

I. BACKGROUND

  The Washington Teachers' Union ("WTU") is a five-thousand-member local union representing public school teachers and professionals employed by the Board of Education of the District of Columbia. First Am. Compl. ¶¶ 29, 81. The WTU is affiliated with the American Federation of Teachers ("AFT"), a national union representing education professionals across the country. Id. ¶ 82. The WTU, also known as Local #6 of the AFT, is governed by the AFT Constitution and is expected to make "per capita" dues payments of approximately $700,000 per annum to the AFT. Id. ¶ 72. Members of the WTU, including plaintiff, are also members of the AFT. Id. ¶ 82.

  Between 1995 and July 2002, Barbara Bullock served as the elected President of the WTU. First Am. Compl. ¶¶ 1, 5, 106. Ms. Bullock was also elected to the position of Vice President of the AFT, and she served in that capacity from at least July 2000 to July 2002. Id. ¶¶ 15, 69. She has since resigned from both her Presidency of the WTU and her post on the AFT's Executive Council. Id. ¶¶ 15, 106-107. During the time frame relevant to these actions, defendant Gwendolyn Hemphill served both as Ms. Bullock's Special Assistant and as Legislative Representative for the WTU. Id. ¶¶ 1, 4, 122-23. Defendant Leroy Holmes was employed as Ms. Bullock's personal chauffeur. Id. ¶¶ 1, 4. Defendant James Baxter served as the WTU's elected Treasurer from July 1994 until he took a leave of absence as of September 2002. Id. ¶¶ 1, 17, 136.

  Defendants Bullock, Baxter, Hemphill, and Holmes are alleged to have participated in a scheme to defraud the WTU to the tune of $5 million dollars, utilizing union funds to purchase luxury items for personal use.*fn1 Ms. Hemphill's daughter and son-in-law, defendants Cheryl and Michael Martin, along with Mr. Martin's business associate, defendant Errol Alderman, are also alleged to have participated in and benefited from the scheme both as individuals and through Expressions Unlimited, Michael Martin's business.*fn2 Id. ¶ 4. Similarly, Ms. Bullock's sister, Gwendolyn Clark, is alleged to have participated in and benefited from the scheme individually through a joint bank account shared with Ms. Bullock, as well as through her business, "Gwen's of Columbia." Id. Collectively, these defendants (Bullock, Baxter, Hemphill, Holmes, C. Martin, M. Martin, Errol Alderman, Gwendolyn Clark) are hereinafter referred to as "individual defendants." The remaining organizational and institutional defendants*fn3 are alleged either to have acted in concert with these defendants, or to have been negligent in their responsibility to exercise oversight with respect to the activities of the WTU and its officials. Id. ¶¶ 2, 3.

  In April 2002, Ms. Bullock, without the approval of the WTU Executive Board, and without complying with the requirements of the WTU bylaws, authorized the District of Columbia Public Schools ("DCPS") to deduct dues in the amount of $160.00 from each WTU member's paycheck. Id. ¶ 31. As a result, $160.00 was deducted from plaintiff Nathan Saunders' paycheck in July 2002. Id. ¶¶ 31, 33. Mr. Saunders subsequently contacted the WTU to inquire as to why his dues deduction was larger than usual, and was told that the DCPS was responsible for the improper deduction. Id. ¶¶ 34-35. He was also told that a faxed request for a refund to the WTU offices would result in a refund. Id. ¶¶ 34-35. Although plaintiff complied with these instructions, he was not refunded the amount of the deduction over and above his usual union dues until January 21, 2003, almost one month after he commenced this action. Id. ¶ 35. The Complaint also alleges that several other union members lodged complaints with the AFT in July 2002 regarding the unauthorized dues deduction. Based in part on these complaints by WTU members, as well as on a significant arrearage in per capita dues payments owed by the WTU to the AFT, in September 2002 the AFT initiated an investigation into the July 2002 dues deductions and the WTU's finances.

  On October 23, 2002, "formal requests were made to Bullock, Baxter, and Hemphill to repay the WTU all of the Union funds expended by or caused to be expended by them for personal and otherwise unauthorized and/or non-Union purposes." Id. ¶ 103. A second demand for payment was made on December 23, 2002. Id. ¶ 104. None of the individual defendants complied with these demands. Id. ¶ 106.

  In November 2002, plaintiff participated in drafting a letter to the WTU Executive Board and Board of Trustees requesting detailed information regarding the WTU's financial status, as well as specific information regarding the processes through which the unauthorized July 2002 dues deduction took place, and by which teachers would be refunded excess deductions. Id. ¶¶ 40-42. On November 21, 2002, plaintiff organized and attended simultaneous demonstrations and pickets at the offices of the WTU and the AFT, through which he demanded full disclosure of the facts surrounding the unauthorized dues deduction and the resignation of Ms. Bullock, as well as an immediate election to fill the positions of WTU President, Vice President, and Treasurer. Id. ¶¶ 43-44, 46. Significantly, the press release issued in conjunction with the demonstrations demanded that the AFT account for its failure to detect financial improprieties within the WTU. Id. ¶ 45. These actions did not prompt refund of the improper dues deductions to WTU members.

  At a WTU General Membership Meeting held in or about November or December 2002, plaintiff introduced a motion to require repayment of all improperly deducted funds to union members, as well as an accounting of the local union's current financial status. Id. ¶¶ 47-52. Although those motions were overwhelmingly approved by the general membership, the WTU Executive failed to comply within the time frames set forth therein. Id.

  On December 27, 2002, plaintiff, proceeding pro se, commenced Civil Action 02-2356 and filed a motion for a temporary restraining order or preliminary injunction, seeking immediate dissolution of the WTU Executive Board and Board of Trustees, as well as the immediate appointment of an independent monitor to (1) secure the WTU's remaining assets and records, (2) provide full cooperation to law enforcement authorities in ongoing criminal investigations into the activities of Bullock, Baxter, Holmes and Hemphill, (3) complete audits of the WTU's financial records as necessary, and (4) hold immediate elections for all offices. Id. ¶ 53. Additionally, plaintiff asked the Court to (1) impose fines on each of the responsible defendants, (2) mandate complete restitution, and (3) order the AFT to repay all per capita payments made by the WTU to the AFT during the period in which the embezzlement was taking place. At that time, neither the WTU Executive nor the AFT had initiated any legal action against any of the individual or institutional defendants.*fn4 Id. ¶ 54.

  Upon defendant AFT's representations through counsel at the first status hearing held in Civil Action 02-2356 that the AFT had taken over the management of the WTU's assets and finances, was fully cooperating with law enforcement agencies, and had dissolved the existing Executive Board, plaintiff's motion for injunctive relief was withdrawn.*fn5 1/07/03 Status Hearing, Civil Action No. 02-2356.

  The Court appointed counsel to represent plaintiff Saunders on January 21, 2003, and an Amended Complaint was filed with leave of the Court on February 5, 2003. A renewed motion for preliminary injunction was filed on March 3, 2003. II. PLAINTIFF'S CLAIMS

  Plaintiff brings this suit as a derivative action on behalf of the WTU pursuant to Fed.R.Civ.P. 23.1*fn6 and the Labor Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 401, 501(b) (2004).*fn7 Plaintiff also avails himself of the citizen-suit provision of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964 (c) (2004),*fn8 alleging that the individual defendants formed an association-in-fact for the purpose of defrauding the WTU, in violation of the federal money-laundering statutes, 18 U.S.C. § 1956-57 and the LMRDA, 29 U.S.C. § 501(c). The First Amended Complaint charges all individual defendants with civil conspiracy, violations of RICO, and a civil RICO conspiracy. First Am. Compl. Counts XIV-XVI. Among the individual defendants, Bullock, Baxter, and Hemphill, as well as James Goosby, as an agent of the WTU, are also alleged to have breached fiduciary and statutory duties to plaintiff and members of the WTU. Id. ¶¶ 101-102; Counts I, III. Additionally, plaintiff has asserted common law claims of breach of fiduciary duty, fraud, conversion, unjust enrichment, and aiding and abetting, against various individual defendants. Id. Counts VIII-XII. Finally, plaintiff charges defendant Independence Federal Savings Bank ("IFSB") with both common law negligence and aiding and abetting. Id. Counts XVII-XVIII. Proceedings against individual defendants, as well as against defendants Goosby and IFSB, are currently stayed in Civil Action No. 02-2356 until resolution of pending motions to dismiss by the AFT, WTU Executive Board, and WTU Board of Trustees.

  With respect to the institutional defendants, plaintiff asserts claims against the entire WTU Board of Directors and the WTU Board of Trustees, on the grounds that those local officials who were not directly participating in the embezzlement scheme nevertheless failed to fulfill their fiduciary duty to oversee the assets of the WTU to the benefit of the membership.*fn9 Id. ¶¶ 3, 85-87, 89-98, Count I. Specifically, plaintiff contends that the WTU Executive Board and the Board of Trustees failed to put in place necessary checks and balances to preclude individual defendants Bullock, Baxter, Holmes and Hemphill from converting union funds and filing false financial reports with the United States Department of Labor. Plaintiff submits that these institutional defendants failed to ensure that the WTU employed an accountant between 1996 and 2002, and failed to require that the members of the Executive Council charged with handling the local's funds be bonded. Id. ¶¶ 87-88, 90-98, 109, 126, 138, 209, 210, 211, 215-217. Further, plaintiff alleges that defendant Esther Hankerson, the WTU's General Vice President during the relevant period, learned as early as 1997 of facts placing her on notice of improper use of union funds but failed to act on this knowledge.*fn10 Id. ¶¶ 3, 31.

  Additionally, plaintiff charges the Board of Trustees with failing to fulfill its duties under the WTU constitution and by-laws to "attest to the accuracy of all bank accounts of Local #6 at the end of each fiscal year," to "examine all financial records, receipts, expenditures, disbursements, vouchers, bills and statements," and to prepare, in consultation with the Treasurer, an annual budget and quarterly reports to be presented to the Executive Board and the WTU membership. Id. ¶¶ 91-97. Finally, plaintiff maintains that the AFT bears significant responsibility for the individual defendants' fraudulent actions because it failed to enforce provisions in the AFT Constitution requiring local unions to submit biennial audit reports and annual financial reports and to investigate WTU's delinquency in payment of per capita dues to the national union.*fn11 Id. ¶¶ 70-80, 261. Accordingly, plaintiff brings this suit on behalf of the WTU and its membership, pursuant to Section 501 of the LMRDA and Section 301 of the LMRA, against the AFT and its Secretary-Treasurer, Edward J. McElroy, in his official capacity, for breach of fiduciary duty and breach of contract. Id. ¶¶ 75-79, Counts II, IV. Plaintiff also asserts common law breach of fiduciary duty and negligence claims against the AFT. Id. Counts VI and VII.

  In support of his breach of fiduciary duty and breach of contract claims against the AFT, plaintiff points to provisions in the AFT constitution ("Constitution") requiring union locals to submit an annual financial statement, including statements of assets and liabilities, as well as of income and expenses, within five months of the end of the local's fiscal year. Id. ¶ 62, 224. Plaintiff also relies on a provision added to the Constitution in 1993, which requires local unions to submit biennial audits to both their members and the AFT. Id. ¶ 63, 224. Plaintiff maintains that the AFT Executive Council has the power to enforce its constitutional requirements by revoking the charter of a local union, either for non-payment of per capita dues to the AFT or based on a finding that the existence of the local is "detrimental to the development of democracy in education." Id. ¶¶ 66-67. Alternatively, the AFT may, by vote of its Executive Council, investigate a local union when the local's conduct "fails to comply with the provisions of the AFT constitution or when the local's conduct is not in harmony with the principles of the AFT and tends to bring the AFT into disrepute." Id. ¶ 68. Plaintiff further asserts that the AFT has assumed a duty to union locals by holding itself out as a source of guidance and information with respect to union local financial management through documents found on its website. Id. ¶ 64.

  In the First Amended Complaint, plaintiff seeks permanent injunctive relief precluding defendants Bullock, Baxter, Hemphill, Holmes, Hankerson, as well as the members of both the Executive Board and Board of Trustees, from holding any elected or appointed office in the WTU for the next ten years. He further claims, on behalf of the WTU, compensatory damages against individual defendants, including defendant Goosby, the WTU Board of Trustees, and the WTU Executive Board for all sums wrongfully converted from the WTU treasury between 1995 and 2002, as well as compensatory damages against IFSB for negligent payment of checks drawn on the WTU account. Additionally, plaintiff asks this Court to award treble punitive damages against individual defendants pursuant to 18 U.S.C. § 1964(c) of RICO. Finally, plaintiff requests, on behalf of the WTU, that the AFT be required to make restitution of all sums paid as dues by the WTU to the AFT from 1995 to 2002.

  In his pending motion for preliminary injunctive relief, as well as in his prayer for permanent relief, plaintiff also asks the Court, pursuant to Fed.R.Civ.P. 53, to appoint, at AFT's expense, an independent monitor with no prior affiliation with the AFT or WTU to oversee the actions of the AFT Administrator selected by the national union to manage the day to day activities of the WTU. Such an independent monitor would report to the Court and the WTU membership with respect to whether the AFT's actions are in the best interests of the WTU.

  Finally, plaintiff currently seeks temporary injunctive relief barring the AFT from (1) settling any claims or cases relating to the WTU; (2) employing former Officers or Executive Board Members of the WTU; (3) making any expenditures outside the WTU's ordinary course of business, including payment of delinquent per capita dues from the WTU to the AFT; or (4) altering the WTU's constitution.

 III. MOTIONS TO INTERVENE

  A number of individuals, associations, and organizations have sought to intervene or serve as amid curiae in this case.

  A group of D.C. Public School teachers, hereinafter referred to as Mary Baird Currie, et al, filed a motion styled as one to intervene and for appointment of counsel on January 27, 2003. The Court construed the motion as one for leave to serve as amicus curiae, and subsequently granted it on March 10, 2003. 3/10/03 Status Conference, Civil Action No. 02-2356. Marie Baird Currie, et al renewed their motion to intervene as plaintiffs and for appointment of counsel on April 18, 2003.

  Upon careful consideration of the motion, Fed.R.Civ.P. 19, and the controlling case law, and for the reasons given in open court during the status hearing held in this case on March 10, 2003, the renewed motion to intervene is hereby DENIED WITHOUT PREJUDICE. It appears to the Court that putative intervenors' interests are adequately represented by plaintiff Nathan Saunders, and nothing in the renewed motion has persuaded it otherwise. However, Marie Baird Currie, et al remain welcome to continue to participate in the case as amicus curiae, at their own expense.

  Another group of B.C. Public School teachers, hereinafter referenced as Cynthia Greene et al, also sought the Court's permission to intervene in this action. For essentially the same reasons, their motion to intervene was construed as a request to serve as amicus curiae and granted at the March 10, 2003 status hearing. Messrs. Roland Ashby-Rier and Alfred Hubbard*fn12 made a submission to this Court as amicus curiae on January 17, 2003 and asked the Court appoint counsel to represent their interests in this action. While the Court welcomes their submissions as amid, it stated at the January 21, 2003 status hearing and reiterated at the March 10, 2003 status hearing that it is unable to provide for appointment of counsel to represent them.

  Finally, the American Federation of Labor — Congress of Industrial Organizations ("AFL-CIO"), the largest national confederation of labor organizations in the United States, filed an unopposed motion to serve as amicus curiae, which was granted on April 29, 2003. 4/29/03 Order, Civil Action No. 02-2356. I. AFT MOTION TO DISMISS

  A. Unions as defendants to Section 501(b) action

  As an initial matter, defendant AFT correctly asserts that claims made pursuant to Section 501 of the LMRDA cannot be brought against labor organizations such as the AFT, but rather can be made only against officers acting in their official capacities. Section 501 imposes liability only on individual union officers for breach of fiduciary obligations, and does not impose any duties on labor organizations as such. Accordingly, plaintiff's Section 501(b) claims against the AFT in Count II of the First Amended Complaint must be DISMISSED.

  The language of Section 501(a) refers to the duties of officers, agents, shop stewards, and other representatives of a labor organization and "each such person," thereby supporting the proposition that the statute is intended to reach only natural persons. 29 U.S.C. § 501 (a) (2004). Additionally, the Second, Third, and Eighth Circuits have expressly held that suits under the LMRDA can be brought only against union officials. See, e.g., Sabolsky v. Budzanoski, 457 F.2d 1245, 1249 (3d Cir. 1972) (holding that local and international unions could not properly be joined as defendants in an action brought pursuant to Section 501(b)); Pignotti v. Local #3 Sheet Metal Workers Int'l Ass'n, 477 F.2d 825, 832 (8th Cir. 1973) ("all parties agree that neither the International Association nor Local No. 3 have violated § 501 as that section imposes liability only on the individual union officials."). As was recently stated by the United States District Court for the Southern District of New York,
There is simply nothing in the statute that permits Section 501 claims against a labor organization for alleged violations of individual officers and/or representatives. The courts of appeal that have addressed this issue have repeatedly held that an action against a labor organization under Section 501(b) is not cognizable as a matter of law."
Corrmer v. McEntee, 145 F. Supp.2d 333, 339-40 (S.D.N.Y. 2001).

  Indeed, plaintiff does not dispute that Section 501 does not provide for relief against a union as a separate legal entity, conceding that its provisions reach only individual union officers. Pl.'s Opp'n at 19. Nevertheless, he asserts a theory, admittedly novel, that an international union can be sued under Section 501 provided that it is found to have acted as the agent of a local union. Id.

  In support of this theory, plaintiff cites to case law from the U.S. Supreme Court holding that unions are held to the same standards of common law agency as corporations. United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 395 (1922). Under plaintiff's theory, the AFT is a proper defendant to plaintiff's LMRDA claims because WTU's decision to affiliate with the AFT is equivalent under the law of agency to authorizing the AFT to act as the WTU's agent within the parameters set forth in the AFT Constitution. Pl.'s AFT Opp'n at 16-19. Plaintiff further opines that WTU members exercise control over the AFT by introducing and passing resolutions at annual AFT conventions, and by maintaining the right to withdraw affiliation from the AFT. Id. at 17. Under plaintiff's theory, it then follows that if the AFT failed to satisfactorily perform the fiduciary duties it assumed when it became the WTU's agent, the AFT is a proper defendant to plaintiff's LMRDA claim.

  The AFT agrees that agency rules apply in the labor context but argues that plaintiff's novel theory fails to address the weight of authority holding that a federal court does not have jurisdiction to entertain a Section 501(b) suit against a "labor organization." AFT Reply at 2. Both parties proceed to argue at length about whether a national union can be held liable for the actions of a local affiliate under the related but distinct theory that the local is an agent of the national. It appears that issue has been squarely resolved by the U.S. Supreme Court's opinion in Carbon Fuel v. United Mine Workers of America, which states that an international union cannot be held liable for the acts of its local under an agency theory absent evidence that the international "instigated, supported, ratified, or encouraged the local's activity, or that the local acted pursuant to agreement with the international." Carbon Fuel Co. v. United Mine Workers of Am., 444 U.S. 212, 218 (1979). The Carbon Fuel Co. Court expressly relied on Congress' intent when enacting the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, to limit the liability of international unions for the actions of their locals:
In the face of Congress' clear statement of the limits of an international union's legal responsibility for the acts of one of its local unions, it would be anomalous to hold that an international is nonetheless liable for its failure to take certain steps in response to actions of the local. Such a rule would pierce the shield that Congress took such care to construct.
Id. at 217-18. However, the authority narrowly defining the circumstances under which a national union can be held liable under the theory that a local is acting as the agent of an international union is of limited utility in addressing the theory advanced by plaintiff; namely, that the AFT was acting as the agent of a local union.

  Even assuming, arguendo, that plaintiff's maintain a viable theory that a national union could be held liable under the circumstances presented by this case as an agent of the local union, plaintiff's allegations are insufficient to establish the requisite agency relationship. There is nothing in the First Amended Complaint suggesting that the WTU exercises any greater control over the actions of the AFT than does any other local union through the national union's internal democratic structures, or that any specific agreement existed wherein the AFT agreed to act as the WTU's agent under specific circumstances, such as the negotiation of a collective bargaining agreement. Therefore, plaintiff's LMRDA claims against the AFT as a legal entity must fail as a matter of law.

  Accordingly, Count II of plaintiff's First Amended Complaint is hereby DISMISSED as to defendant AFT. However, the authority discussed above does not bar the remainder of plaintiff's claims against AFT Secretary-Treasurer McElroy, acting in his official capacity, as well as against officers of the WTU Executive Board and Board of Trustees in their official capacities.

  B. Subject Matter Jurisdiction

  The AFT next contends that this Court lacks subject matter jurisdiction to adjudicate plaintiff's claims against remaining defendants because plaintiff has failed to satisfy the jurisdictional pre-requisites for bringing claims pursuant to the LMRDA*fn13 and the LMRA.*fn14

  1. LMRDA claim

  Section 501(a) of the LMRDA defines the fiduciary duty of officers, agents and other representatives of labor organizations, requiring each person to hold union money or property for the sole benefit of the union and its members. 29 U.S.C. § 501 (a) (2004). In the event that the union fails to seek appropriate relief against a person alleged to have violated this fiduciary duty, Section 501(b) permits any individual member of the union to sue that person for the benefit of the organization. 29 U.S.C. § 501 (b); Yager v. Carey, 910 F. Supp. 704, 726 (D.D.C. 1995).

  Before an action may be brought pursuant to Section 501(b), a plaintiff must: (1) demonstrate that he has requested that the union or its governing officers bring legal action, recover damages, secure an accounting, or obtain other appropriate relief; (2) that upon request, the union refused or failed to do so within a reasonable time; and (3) obtain leave of the court to bring an action with a showing of good cause. 29 U.S.C. § 501(b); see also 0'Connor v. Freyman, Civ. A. No. 85-0566, 1985 WL 121 at *1 (D.D.C. May 31, 1985).

  a. Demand and Refusal

  "To file an action under [Section 501] the plaintiff must first request action by the union and be refused . . ." Bocchiere v. Biller, Civ. A. No. 87-1804, 1988 WL 163032 at *2 (D.D.C. April 29, 1988), vacated on other grounds, 1990 WL 67713 (D.C. Cir. May 16, 1990). "[T]he provision of the statute requiring [a] demand to sue is mandatory and . . . its requirements cannot be met by anything short of an actual request. An allegation of the futility of such a request will not suffice." 0'Connor v. Freyman, 1985 WL 121 at *2; see also Flaherty v. Warehousemen, Garage & Serv. Station Employees' Local Union No. 334, 574 F.2d 484, 487 (9th Cir. 1978) (same); Yager v. Carey, 910 F. Supp. at 727 ("some form of request that the union or a governing member of the union bring the action is a requirement that cannot be waived as fufile.").

  i. Demand

  Defendant AFT argues that plaintiff failed to make a specific and unequivocal demand that the AFT file suit against individual defendants. The AFT overstates the threshold presented by this jurisdictional requirement.

  It is important to note that the demand required by Section 501(b) is not necessarily one to pursue legal action; rather, and this jurisdictional prerequisite may be satisfied by a demand for an accounting or "other appropriate relief." See 29 U.S.C. § 501 ("when . . . the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue . . . or secure an accounting or other appropriate relief for the benefit of the labor organization.")(emphasis added)). The AFT's arguments fail to take into account that the demand requirement may be satisfied by a request for "other appropriate relief." See AFT Mot. at 15, AFT Reply at 14 (submitting that a union member must "request that the union or its governing officers bring legal action or secure an accounting [for a violation of Section 501(a)].")

  Plaintiff alleges in his amended complaint that he took a number of actions, which, either individually or in the aggregate, are sufficient to satisfy the demand element of Section 501(b)'s jurisdictional prerequisite as to the WTU Executive Board, the WTU Board of Trustees, and the AFT:
(1) In July 2002, plaintiff telephoned the WTU to inquire as to the basis for the deduction of $160 in union dues from his paycheck and requested a refund. As instructed by the person who answered his call, he subsequently faxed a written request for a refund. First Am. Compl. ¶¶ 35-36;
(2) Having failed to receive a refund or a satisfactory reason for not receiving one, four months later, in November 2002, plaintiff participated in drafting a letter to the WTU, defendant Hankerson, who at the time was serving as the interim president of the local, the WTU Executive Board, and the WTU Board of Trustees. This letter not only reiterated plaintiff's demand for a refund of the improper deduction, but also inquired as to why the deduction was made and why it was not immediately corrected when the error was reported. First Am. Compl. ¶¶ 40-42;
(3) On November 21, 2002, plaintiff organized and participated in a protest outside the AFT offices. A press release was issued in conjunction with the demonstration, demanding full disclosure of the circumstances leading up to the improper dues deduction. The press release also demanded that the positions of WTU President, Vice President, and Treasurer be filled immediately through an election and stated that "the American Federation of Teachers must respond to the entire membership as to how the parent body, which has ultimate oversight responsibility, could allow such alleged improprieties to exist and yet still expect dues paying members to continue to trust their leadership." First Am. Compl. ¶¶ 43-46; (4) At a WTU membership meeting that took place in or about November or December 2002, plaintiff proposed and voted in favor of a motion demanding an immediate refund of the improper dues deduction and requesting, by no later than December 13, 2002, a written statement from the WTU Executive Board stating when the refund would be mailed and describing the process by which refunds were allocated. First Am. Compl. ¶¶ 47-52.
The AFT responds that all of these actions amount to, at most, a request for repayment of the improper deduction and a request for more information regarding how the improper deduction came about. It further notes that both of these demands have now been satisfied: WTU members were reimbursed the full amount of the improper deduction, and the results of the AFT's forensic audit of the WTU's finances were disseminated by the AFT after this action was commenced. AFT Reply at 12 n. 9. It further maintains that none of plaintiff's actions were specific enough to amount to a request that either the WTU or the AFT bring suit pursuant to Section 501 against any party. Id. Finally, defendants submit that plaintiff does not allege that he, or any other member of the WTU, made any complaint to the WTU Executive Board, the Board of Trustees, or the AFT specifically referencing the WTU's failure to generate annual financial statements or perform biennial audits as required by the AFT constitution, which is ultimately the basis of the breach of fiduciary duty claims plaintiff now asserts. Neither party cites to controlling authority addressing the question of whether the actions described by plaintiff are sufficient to meet the "demand" element of Section 501(b)'s jurisdictional prerequisites. Plaintiff cites persuasive authority from this District in support of his contention that he need only to have asked both the WTU and the AFT to take action, and these two entities need only have failed to take some action to address the concerns he raised, in order to meet the jurisdictional requirements of Section 501(b). See Pl.'s AFT Opp'n at 19-22. For instance, in Trine Council v. Biller, the United States District Court for the District of Columbia found that a letter to a national union president stating "[w]e of the Providence (Rhode Island) local protest the purchase of a new building until after the National Convention (and) until we know exactly how much it will cost and what our dues will be" was sufficient to satisfy the jurisdictional prerequisites of Section 501(b). Trine Council v. Biller, Civ. A. No. 82-1232, 1982 WL 2038 at *2 (D.D.C. May 26, 1982). Although the court in Cefalo v. Moffett did not outline precisely how it did so, it found that "both plaintiffs complained of the wrongs which they now assert in this litigation to the Union and the Union took no action to redress those wrongs," and held this action to be sufficient to meet Section 501(b)'s jurisdictional requirements. Cefalo v. Moffett, 333 F. Supp. 1283, 1285 (D.D.C. 1971). The Second Circuit has held that a detailed letter alleging constitutional violations at a meeting of a union local, demanding that a vote be declared void, and requesting a "complete accounting" of union expenditures, as well as a "true and accurate accounting" of all benefits paid to union officers and staff, is sufficient to meet Section 501(b)'s demand requirement. Dinko v. Wall, 531 F.2d 68, 70-73 & n.2 (2d Cir. 1976). Similarly, the Third Circuit held in Sabolsky v. Budzanoski that a letter to the United Mine Workers of America's International President, which did not contain a request to bring suit but did seek internal relief, represented a sincere effort to obtain internal compliance with the International's constitution. Sabolsky, 457 F.2d at 1252; see also Woods v. Local #12 Sheet Metal Workers Int'l Assoc., 438 F. Supp. 578, 580 (W.D. Pa. 1977) ("charge letter" filed pursuant to internal union procedure, followed by union finding of "not guilty" and appeal to the general President of International Union as to which President had made no finding as of date of suit, was sufficient to satisfy Section 501(b) jurisdictional prerequisite); but see Flaherty v. Warehousemen, Garage & Serv. Station Employees' Local Union No. 334, 574 F.2d at 487 (finding plaintiff's oral and written demands that it be provided with financial records of the local insufficient to justify grant of leave to file Section 501(b) action); Cassidy v. Horan, 405 F.2d 230, 232 (2d Cir. 1968) (demand that officers return certain sums of money did not satisfy statutory demand to sue).

  There are several competing policy considerations underlying resolution of the question of whether plaintiff's actions are sufficient to meet the demand requirement enshrined in Section 501(b). First, "[b]ecause section 501(b) extends the jurisdiction of the federal courts, it is strictly construed." Flaherty, 574 F.2d at 487; 0'Connor v. Freyman, 1985 WL 121 at *1. Moreover, Congress has expressed a clear preference for internal resolution of union matters. See, e.g., Wirtz v. Local 153 Glass Bottle Blowers Ass'n of United States and Canada, 389 U.S. 463, 470-71 n. 10 (1968). Furthermore, "Section 501(b) was designed to prevent the filing of ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.