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Sheet Metal Workers' International Association v. United Transportation Union

March 4, 2011

SHEET METAL WORKERS' INTERNATIONAL ASSOCIATION, PLAINTIFF,
v.
UNITED TRANSPORTATION UNION, DEFENDANT.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

Before the Court is a motion by plaintiff Sheet Metal Workers International Association ("SMWIA") to compel arbitration of the claims in this case, which relate to an attempted merger between SMWIA and defendant United Transportation Union ("UTU"). UTU contends that no valid arbitration clause exists because the Merger Agreement that contains the arbitration provision either was never formed or has terminated. UTU also moves for leave to file several counterclaims against SMWIA arising from the disputed merger. Individual members of UTU move to intervene, raising statutory claims under the Labor Management Reporting and Disclosure Act ("LMRDA") that relate to their vote that ratified the Merger Agreement in 2007.

BACKGROUND

I. Procedural History

The present conflict arises from an attempted merger between SMWIA and UTU in late 2007, which would create a new union, the International Association of Sheet Metal, Air, Rail and Transportation Workers ("SMART"). The parties and individual members of UTU have filed several cases that relate to the disputed merger. In Michael v. United Transp. Union, 2008 WL 2600002 (N.D. Ohio 2008), a district court granted injunctive relief to individual plaintiffs who claimed that UTU violated their rights to an "equal vote" under Title I of the LMRDA by not providing them sufficient information to vote on the merger. The Sixth Circuit reversed and the injunction was withdrawn and the case dismissed. See Michael v. Futhey, 2009 WL 4981688 (6th Cir. 2009). This case was stayed during the Michael litigation. See Order dated April 3, 2008 [Docket Entry 15] at 1.*fn1

After the Michael litigation, SMWIA continues to urge that the current dispute regarding the Merger Agreement should be sent to arbitration, and UTU maintains that the Merger Agreement is invalid and no obligation to arbitrate exists. UTU has moved for leave to file an amended answer and counterclaims. See Defendant's Counterclaims and Amended Answer ("Def.'s Answer") [Docket Entry 22]. SMWIA does not oppose this motion, but contends that the defenses and counterclaims UTU raises in its amended answer are "within the scope of the arbitration clause of Article XII of the parties Merger Agreement." Plaintiff's Memorandum in Opposition to UTU's Motion for Leave to File ("Pl.'s Opp'n to Mot. for Leave") [Docket Entry 25] at 1. Additionally, individual members of the UTU have sought leave to intervene in this case, claiming violation of their LMRDA rights. Motion by Certain Members of Defendant UTU for Leave to Intervene ("Mot. to Intervene") [Docket Entry 32] at 8. Individual UTU members have also filed a separate case before this Court, Murphy v. Sheet Metal Workers Int'l Ass'n, 10-cv-01194, which raises substantially the same issues as are raised by the proposed intervenors. SMWIA has moved, and UTU has consented, to consolidate Murphy with this case. See Consent to Motion to Consolidate [Docket Entry 14] at 1.

II. Factual Background

Several of the details of the attempted merger remain in dispute between the parties. But the sequence of events that gave rise to the parties' claims and the contractual provisions of the Merger Agreement are straightforward. In May 2007, Paul Thompson, then President of UTU, and Michael Sullivan, the President of SMWIA, entered into a Merger Agreement, which set forth a process by which the two unions would ratify the proposed merger. Am. Compl. ¶ 11. On June 11, 2007, the UTU Board of Directors voted unanimously to approve the Merger Agreement. Id. ¶ 17. The Board also voted to submit the merger to a vote of UTU membership, as required by the Merger Agreement. Id. On June 13, 2007, the General Executive Counsel of SMWIA voted to approve the Merger Agreement. Id. ¶ 18. Between July 17, 2007, and August 7, 2007, UTU's membership voted on the proposed merger. Id. ¶ 19. UTU members voted using an automated telephone voting system administered by the American Arbitration Association. Defendant's Opposition to SMWIA's Motion to Compel ("Def.'s Opp'n") [Docket Entry 33] at 9. Members who called in to vote were asked: "Do you accept the proposed merger agreement? Press 1 to accept the proposed merger agreement. Press 2 to reject the proposed merger agreement." Id. Members were not asked to vote on the SMART Constitution. Id. UTU membership voted in favor of the "merger agreement," with a vote count of 8,625 for the merger and 3,472 against it. Am. Compl. ¶ 19. The American Arbitration Association certified the results on August 8, 2007. Id. The Merger Agreement stated that the effective date of the merger would be January 1, 2008. Merger Agreement ("MA") [Docket Entry 1-1] at 3.

To prepare members for the vote, UTU mailed to the membership a copy of the Merger Agreement. See Defendant's Counterclaims and Amended Answer ("Def.'s Answer") [Docket Entry 22-1] ¶ 11. The version of the Merger Agreement sent to UTU membership contained empty signature lines for the Presidents of both unions and the Secretary-Treasurers of both unions. See Def.'s Opp'n at 10. The final, signed Merger Agreement, however, only contained signature lines for the Presidents. Id. The Merger Agreement states that "[t]he UTU Constitution will become Article 21A of the SMART Constitution to the extent not in conflict with the current SMWIA Constitution or the terms of this Agreement." MA at 11. UTU did not mail members a copy of the SMART Constitution -- or the SMWIA or UTU Constitutions (although both were available on the UTU website). See Def.'s Opp'n at 8.

UTU held its convention in August 2007 shortly after the vote on the merger. Am. Compl. ¶ 23. Malcolm B. Futhey, Jr. was elected to succeed Paul Thompson as President of UTU, and a number of other new UTU officers were also elected. Id. ¶¶ 23-25. Following the convention, and prior to the merger's effective date of January 1, 2008, internal dissent within UTU regarding the merger grew. See id. ¶¶ 26-27. Futhey, who would become President of UTU on January 1, 2008, sided with UTU members who argued that the merger should not go into effect. Id. ¶ 27. These dissenters assert that Thompson had misled the UTU Board and membership regarding potential conflicts between the SMWIA and UTU Constitutions. Id. ¶

28. Also, they contend that UTU, under Thompson's leadership, improperly failed to provide a printed copy of the new SMART Constitution to UTU members when they voted on the merger. See Def.'s Opp'n at 8.

Article II of the Merger Agreement, titled "Effective Date," set forth a number of conditions before the proposed merger would take effect:

Upon approval of this Merger Agreement and of the SMART Constitution (together the "Merger Documents") by the General Executive Council of SMWIA and the Board of Directors of UTU, and by the membership of UTU prior to its regular convention to be held in August 2007, and upon certification of those results by the respective International General Secretary-Treasurers, the merger of SMWIA and UTU to form SMART shall be effective. SMART shall be created as an unincorporated association under the laws of the District of Columbia, effective January 1, 2008, which shall be the effective date of the merger and is hereafter referred to as the "Effective Date." If either SMWIA or UTU fails to approve the Merger Documents by the procedures stated above, they shall be deemed terminated and of no force and effect.

MA at 3. Article XII of the Merger Agreement contained an arbitration clause:

In the event of any dispute or controversy arising out of or under this Agreement, such dispute or controversy shall be referred to the SMWIA General President and the International President of UTU (or, if the dispute or controversy arises after the Effective date, the SMART General President and the SMART President, Transportation Division for conference and resolution). If they are unable to resolve the dispute or controversy, it may be submitted by either officer, and no one else, to arbitration by an arbitrator appointed by the President of the AFL-CIO. The decision of such arbitrator on the disputed matter shall be final and conclusive on all parties and may be enforced in any court of competent jurisdiction.

The arbitrator's power shall be limited to the application and interpretation of this Agreement. The arbitrator shall have no power or authority to rescind, alter, amend, or modify any of the provisions of this Agreement.

Arbitration under this agreement shall be the exclusive remedy for any dispute hereunder, and the right to obtain such arbitration shall be a complete defense to any action at law or in court or in any tribunal to enforce, modify, construe or assert any right under this Agreement. The arbitrator shall have the power to require the attendance of any party to a dispute hereunder or of any witness whose testimony may be relevant to the arbitration of such dispute and to subpoena books, records, and other instruments relative to such dispute.

Each party will bear its own cost and will share equally the fees and expenses of the arbitration, provided that if the arbitration proceeding occurs after the Effective Date, all costs shall be borne by SMART.

The laws of the District of Columbia shall be deemed to govern the interpretation and performance of this Agreement.

MA at 13-14. The Merger Agreement also states in Article III that it "shall expire and have no further legal force and effect on September 1, 2011 or when three-fourths of the SMART General Executive Council vote to terminate it." MA at 4.

After the proposed January 1, 2008 "effective date" of the merger, and following the legal developments of the Michael litigation, the parties have continued to dispute the obligations and duties of union officers as to UTU, SMWIA, and SMART. Def.'s Answer at 14-15. These disputes are the bases for claims under Title V of the LMRDA, which regulates the fiduciary duty of union officers to their respective union members. See Mot. to Intervene at 13-15. Ultimately, as both unions concede, these issues relate to whether the merger ...


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