United States District Court, District of Columbia
DAVID W. NOBLE, JR., Plaintiff,
VINCENT R. SOMBROTTO, et al., Defendants.
SUPPLEMENTAL FINDINGS AND CONCLUSIONS
EMMET G. SULLIVAN, District Judge.
David Noble, a member of the National Association of Letter Carriers ("NALC"), brought this lawsuit in 1994 against Vincent Sombrotto, the NALC's then-president, as well as nine other officers of the NALC, an officer of the union's Mutual Benefit Association, and an officer of the union's Health Benefit Plan. Mr. Noble accused the individual defendants of violating their fiduciary duties to the NALC under Section 501 of the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 401, et seq., by accepting: (1) an in-town allowance of $500 per month to cover costs incurred in the performance of their duties; (2) reimbursement for the employee portion of their Federal Insurance Contributions Act taxes; and (3) per-diem payments during the union's national conventions. Mr. Noble also alleged that the defendants violated their obligations under Section 201 of the LMRDA by refusing his requests to inspect certain documents in order to verify the contents of financial reports that the NALC filed with the Department of Labor.
On April 28, 2003, this Court denied the parties' cross motions for summary judgment. See Noble v. Sombrotto (" Noble I "), 260 F.Supp.2d 132 (D.D.C. 2003). The Court subsequently held a trial and received proposed findings of fact and conclusions of law. On September 30, 2005, the Court adopted the defendants' proposed findings, and dismissed Mr. Noble's claims. See Order, ECF No. 239. The Court denied Mr. Noble's motion to reconsider on September 20, 2006. See Noble v. Sombrotto (" Noble II "), No. 94-302, 2006 WL 2708796 (D.D.C. Sept. 20, 2006).
Mr. Noble appealed to the D.C. Circuit, which affirmed in part and reversed in part. See Noble v. Sombrotto (" Noble III "), 525 F.3d 1230 (D.C. Cir. 2008). The D.C. Circuit affirmed this Court's dismissal of Mr. Noble's Section 501 claims with respect to the tax reimbursements and per-diem payments. Id. at 1237-39. As for the in-town allowances, the Circuit disagreed with this Court's finding that Mr. Noble had failed to produce evidence that the allowances had been used for personal gain. See id. at 1236. The Circuit also vacated this Court's conclusion that Mr. Noble's Section 201 claim was moot. Id. at 1241-42.
After the case was remanded, the Court held a status hearing, decided to proceed with the existing record, and directed the parties to submit proposed supplemental findings of fact and conclusions of law, containing citation to evidence in the record, and addressing the issues before the Court on remand. See Minute Order of January 7, 2010. The parties have now submitted proposed supplemental findings of fact and conclusions of law. See Pl.'s Suppl. Proposals ("Pl.'s Proposals"), ECF No. 270; Defs.' Suppl. Proposals ("Defs.' Proposals"), ECF No. 272; Individual Defs.' Additional Suppl. Proposals ("Individual Defs.' Proposals"), ECF No. 274; Pls.' Objs. to Defs.' Suppl. Proposals ("Pl.'s Objs."), ECF No. 284.
The Court subsequently "determined that the trial exhibits that were introduced during the April 2004 bench trial are not available on the docket in this case and that any hard copies were returned to the parties sometime after the trial concluded." Minute Order of December 2, 2013. For that reason, the Court directed the parties to file copies of their trial exhibits "by no later than December 16, 2013." Id. The defendants filed their exhibits on December 16, 2013, but Mr. Noble repeatedly requested an extension of this deadline. The defendants did not oppose his first three extension requests, but noted that they might oppose future requests. See Defs.' Response to Third Extension Mot., ECF No. 292 at 1.
On January 20, 2014, Mr. Noble made a fourth request, asserting that "I located all of my trial exhibits except six by January 9, 2014." Fourth Extension Mot., ECF No. 293 at 2. The remaining six exhibits, he said, were lost by him, and located and provided by the NALC, but without sufficient time for Mr. Noble to review them for accuracy. See id. at 2. The defendants proposed a shorter extension, Opp. to Fourth Extension Mot., ECF No. 294 at 2, but the Court granted Mr. Noble the full extension to February 3, 2014, stating that "[f]urther requests for extensions of time will be viewed with disfavor." Minute Order of January 24, 2014.
Mr. Noble nonetheless sought a fifth extension of the deadline for filing his exhibits, even though he had found "all of my trial exhibits except six by January 9, 2014" and obtained the remaining six by January 21, 2014. See Fifth Extension Mot., ECF No. 295 at 1-2. He claimed that on January 28, 2014, he discovered that one of the exhibits provided by the NALC was incomplete, and that he did not receive a complete copy of that exhibit until January 31, 2014. Id. at 2. Mr. Noble did not explain how this prevented him from filing copies of the other exhibits, which he had located by January 9, 2014. The Court granted Mr. Noble's motion in part, directing him to file by no later than February 5, 2014 copies of all of the trial exhibits except for Exhibit 1-the one he received on January 31, 2014. See Minute Order of February 4, 2014. The Court gave Mr. Noble until February 17, 2014 to file Exhibit 1. See id. On February 5, 2014, Mr. Noble filed only a small number of his trial exhibits. See Exhibits, ECF No. 296 (Plaintiff's Exhibit Nos. 2-8, 13-14, 31, 38, 75, 76, 79, 89, and 91). He filed Exhibit 1 on February 17, 2014. See Exhibit One, ECF No. 297.
Notwithstanding Mr. Noble's failure to comply with Court-imposed deadlines, the Court granted Mr. Noble another chance in July 2014, directing him to file a complete set of his trial exhibits by August 18, 2014. See Minute Order of July 14, 2014. Mr. Noble again failed to comply. On August 18, 2014, he filed a motion "to vacate the July 14, 2014 Minute Order, " which requested an additional one-month extension and asked that the Court stay the case pending an election for the office of NALC President. See Noble Declaration, ECF No. 298-1 at 1-2. The Court denied both requests. See Minute Order of October 9, 2014.
The Court therefore relies on the existing record, including documents in the summary-judgment record that correspond to some of Mr. Noble's trial exhibits. Upon consideration of that record, as well as the parties' proposed supplemental findings and the applicable law, the Court finds that (1) the Mutual Benefit Association and the Health Benefit Plan are sufficiently separate from the NALC that defendants Dunn and Vincenzi are outside the scope of Section 501; (2) the remaining individual defendants reasonably interpreted the NALC Constitution to permit the in-town allowances and they used the money for union business; and (3) the existing record is insufficient to resolve Mr. Noble's Section 201 claim. Accordingly, the Court enters judgment in favor of the defendants on Mr. Noble's Section 501 claims, and will direct the filing of additional pleadings regarding his Section 201 claim.
I. Findings of Fact
The NALC is governed by a Constitution, which creates two bodies for the governance of the union. See Noble III, 525 F.3d at 1233. The national convention of union members meets biennially, is empowered to amend the Constitution, and is the union's supreme body. Id. The Executive Council, which is made up of twenty-eight officers, ten of whom are resident officers who work in Washington, D.C., is charged with running the union's day-to-day operations. Id.
A. History of the In-Town Allowances.
The Constitution charges the Executive Council to "act between Conventions on all matters related to the welfare of the Union not specifically prohibited by the membership, '" and to "authorize and/or ratify the payment of salaries, wages, expenses, allowances, and other disbursements which it deems necessary and appropriate to the purpose and functioning of this Union, other than provided for.'" Id. (quoting NALC Const. art. 9, § 11(e) (1992)). Pursuant to these powers, the Executive Council has, since the 1950s, authorized the payment of a $500 per month in-town allowance to its resident officers. Id. at 1234. The Executive Council reauthorized the same payments in resolutions passed in 1975, 1977, and 1980. Id. at 1235.
The in-town allowances are intended "to cover the expenses NALC officers residing in Washington, D.C. incurred in the performance of their official duties." Id. These expenses include costs for "transportation, entertainment, and other expenses for the benefit of the Association in the Washington, D.C., Metropolitan Area, " which were estimated to "approximate, on the average" $500 per month. 1980 Resolution, Defs.' Ex. 2, ECF No. 288-3 at 5; see also Noble II, 2006 WL 2708796, at *2. The NALC President was authorized to receive an in-town allowance in excess of $500 per month for "all official expenditures made by him, both in town and out of town." Noble III, 525 F.3d at 1235. The $500 per month limit on in-town expenditures has remained constant since the 1950s. Id. at 1234.
An officer was required to request the in-town allowance each month the officer wished to receive it, and any officer seeking reimbursement for over $500 was required to provide a receipt and the express authorization of the NALC President to incur the extra expense. See Noble II, 2006 WL 2708796, at *2; 1980 Resolution, Defs.' Ex. 2, ECF No. 288-3 at 6. Officers were not required to submit receipts to receive an in-town allowance of up to $500 per month; rather, the Resolution stated, "[a]pplication for allowances pursuant to this Resolution constitute[s] a representation by the applying officer or employee that the sum requested was expended on behalf of the Association in the course of performance of official duties." 1980 Resolution, Defs.' Ex. 2, ECF No. 288-3 at 5; see also Noble III, 525 F.3d at 1235; Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 98:22-24 (Mr. Sombrotto: "It's assumed that you're using it for the Union activities. That's what the resolution is there for."). Officers were, however, required to "personally keep their receipts for a reasonable period' of up to five years." Noble III, 525 F.3d at 1235 (quoting 1980 Resolution, Defs.' Ex. 2, ECF No. 288-3 at 5).
B. Evidence of How the In-Town Allowances Were Used.
NALC officers testified that no officer would have incurred less than $500 per month in expenses. President Sombrotto testified that "I don't know any officer" who claimed the $500 each month despite not having incurred at least $500 in expenses. Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 100:14-19. Indeed, testimony of NALC officials indicated that it would be difficult for an officer to spend less than $500 in a given month. President Young stated: "[s]ince I've been here in 1990, I'm not aware of a single resident officer that doesn't spend in excess of $500 a month for all these various things we're talking about." Id. at 176:24-177:12.
It nonetheless appears that NALC officers understood the resolution to permit a hypothetical officer who incurred less than $500 per month in expenses to claim the full $500 allowance. For example, when asked whether "Chuck Overby [who] suffered a stroke and was in the hospital for several months" could "draw $500 a month in in-town expenses, " Mr. Sombrotto answered "Yeah. If he applied for it, he received it. Whether he did it or not.... I can't testify to that. But if he had, he would have received it." Id. at 103:21-104:1; see also id. at 96:14-19 (Mr. Sombrotto agreed that an officer could claim $500 without incurring as much in expenses, "[b]ut if you do and you don't receipt it, then you have to pay taxes"); id. at 179:5-10 (when asked whether "a hypothetical officer spent $100 on in-town expenses" was "entitled to $500 for the month, notwithstanding the fact that she or he spent only $100, " Mr. Young responded "you get $500"). These general assertions about the in-town allowances are supplemented by additional testimony from Presidents Sombrotto and Young, as well as receipts that were submitted by NALC officials.
President William Young submitted receipts for nearly all of the expenses he incurred between December 1990 and July 1993. Defs. Ex. 8, ECF No. 288-9 at A-12 (Mr. Young incurred $16, 358 in expenses during this period, received $16, 000 in in-town expense allowances, and submitted receipts for $15, 798 of those expenditures); Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 177:16-17 (President Young: "My initial history in the Union from 1990 until about 1994 or 5 was to receipt everything"); Young Receipts, Pl.'s Ex. 7, ECF No. 296-6. Mr. Young stopped submitting receipts "because it wasn't worth the aggravation." Id. at 177:17-18. He explained:
So I just decided [for] my own benefit that I wasn't going to receipt much. And now I'm somewhere in between the two. Every now and then I'll throw in a receipt if it's easy, especially the ones where I use credit cards. But if I just pay cash money, I'm not going to receipt it because it isn't worth the hassle in the long run.
Id. at 177:24-178:4.
Mr. Young's receipts reflect, for example, expenditures on meals with visiting union officials to discuss a potential "prescription co-pay that could benefit [the] members, " id. at 164:18-165:2, Christmas gifts to union secretaries, drivers, and cooks, and expenses for mailing Christmas cards to union officials. Id. at 165:3-166:3; see also Young Receipts, Pl.'s Ex. 7, ECF No. 296-6. Ultimately, Mr. Young used the in-town allowance "for any legitimate expenses that I incurred while in-town not on an assignment from the president." Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 166:6-20.
President Sombrotto kept some receipts during the course of his tenure as an NALC officer, ranging from some months in which he submitted no receipts, to others in which he submitted over $100 worth of receipts. See Sombrotto Receipts, Pl.'s Ex. 1, ECF No. 297. Many of the receipts were for restaurants in Washington, D.C., and President Sombrotto testified that these expenses were often incurred while having dinner with Richie O'Connell, a union officer. See id. at 112:8-115:13.
President Sombrotto testified that he regularly incurred union-related expenses in excess of $500 per month. See Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 96:9-13 (Sombrotto: "I spent more than $500 a month, I guarantee you that."); Sombrotto Decl. ("2001 Sombrotto Decl."), Ex. to ECF No. 128 ¶ 15; see also Young Decl. ("2001 Young Decl."), Ex. to ECF No. 128 ¶ 4. As President, he and President Young could have claimed an amount in excess of $500, Noble II, 2006 WL 2708796, at *3, but neither did. See Sombrotto Decl. ¶ 15; Young Decl. ¶ 4. Instead, each paid for any additional expenses out of their own pocket. See Sombrotto Decl. ¶ 15; Young Decl. ¶ 4.
Defendant Lawrence Hutchins submitted receipts for a large portion of his in-town expenses. See Investigative Committee Report, Defs.' Ex. 8, ECF No. 288-9 at A-10 (reflecting that Mr. Hutchins provided receipts for approximately $12, 700 of the $18, 000 he received between 1988 and 1990, and for nearly all of the $16, 000 he received between 1991 and July 1993); Hutchins Receipts, ECF Nos. 296-7, 296-8, 296-9. Mr. Hutchins's receipts largely reflect expenditures at restaurants, as well as taxi and parking charges. See Hutchins Receipts, ECF Nos. 296-7, 296-8, 296-9. Defendant Michael O'Connor appears only to have received an in-town allowance during 1994, but the record contains receipts for over $400 of the $500 he received each month. See O'Connor Receipts, Pl.'s Ex. 6, ECF No. 296-5. Mr. O'Connor's receipts related to restaurants, taxis, and parking. See id.
The record contains no evidence regarding defendants Souza and Worsham, who appear never to have received an in-town allowance because they did not reside in Washington, D.C. See 2001 Sombrotto Decl. ¶ 6 (noting that Souza and Worsham "while not Resident Officers, ' were members of the Executive Council"). The remaining individual defendants, Francis Connors, Richard O'Connell, George Davis, and Walter Couillard have died during the course of this litigation. See supra at 1 n.1.
C. The In-Town Allowances Provided by the Mutual Benefit Association and the Health Benefit Plan.
The Mutual Benefit Association and the Health Benefit Plan are "separate and distinct" from the NALC. See Noble II, 2006 WL 2708796, at *7; see also Noble III, 525 F.3d at 1237 (noting that this factual finding is "conclusive on remand"). Indeed, the plans each have their own constitution, separate from the NALC constitution. Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 73:1-11. They are governed separately, and have separate offices and staff. See id. at 72:19-22, 75:2-4; Vincenzi Decl. ("2001 Vincenzi Decl."), Ex. to ECF No. 128 ¶ 4; Dunn Decl. ("2001 Dunn Decl."), Ex. to ECF No. 128 ¶ 3.
The Mutual Benefit Association is incorporated in Tennessee. Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 72:19-25; Dunn Decl. Ex. A. It is a fraternal benefit corporation that offers life and disability insurance, and receives its funds through the sale of those insurance policies, as well as through investment income earned through investing the premiums. Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 72:19-73:19; Dunn Decl. ¶ 4.
Defendant William Dunn served as the NALC's Director of Insurance, which made him Director of the Mutual Benefit Association, until 1994. Dunn Decl. ¶ 2. Mr. Dunn's role was governed by the Mutual Benefit Association's Constitution. Id. ¶ 5. His salary, benefits, business expenses, and $500 per month in-town allowance were all paid by the Mutual Benefit Association, not the NALC. Dunn Decl. ¶¶ 4, 6; Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 73:25-74:6. Mr. Dunn used his in-town allowance on various business-related expenditures, including transportation and meals with union officials. Dunn Decl. ¶ 9.
The Health Benefit Plan is "part of the federal employee health benefit plan operated under rules promulgated by the Office of Personnel Management" and makes its money by selling insurance policies "to members of [the NALC] and other federal employees." Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 74:13-19. Mr. Vincenzi served as the Health Benefit Plan's director from 1986 until 1994. Vincenzi Decl. ¶ 2. His duties were governed by the Plan's Constitution. Id. ¶ 5. Mr. Vincenzi's salary, benefits, and in-town allowances were paid by the Health Benefit Plan from its funds. Id. ¶¶ 6, 7; Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 75:5-24. Mr. Vincenzi ...