Laborers' International Union of North America v. National Post Office Mail Handlers, Watchmen, Messengers & Group Leaders Division of the Laborers' International Union of North America

Citations: 279 U.S. App. D.C. 315; 880 F.2d 1388Docket: Nos. 89-7013, 89-7049 and 88-7207

Court: Court of Appeals for the D.C. Circuit; July 28, 1989; Federal Appellate Court

Lead Opinion SummaryLead Opinion Original

EnglishEspañolSimplified EnglishEspañol Fácil

A dispute has emerged between the Laborers’ International Union of North America (LIUNA) and its affiliate, concerning the international union's authority to impose supervision or a trusteeship on the affiliate. The central legal issue is whether a federal district judge can enjoin the international union from conducting a constitutionally mandated hearing before imposing a trusteeship, absent an emergency. The court concluded that the Labor-Management Reporting and Disclosure Act of 1959 does not grant such authority to enjoin the pretrusteeship hearing. Consequently, the court vacated prior district court orders dated July 28, 1988, and January 17, 1989, deeming certain aspects moot under United States v. Munsingwear, Inc.

The background of the case includes the imposition of a trusteeship on the affiliate by LIUNA on December 16, 1985, which ended on February 1, 1988. Following the end of the trusteeship, a new leadership slate critical of LIUNA was elected, leading to disagreement over the term of office for these new leaders. LIUNA asserted that they should serve only a partial term, while the newly elected officials claimed full four-year terms. In March 1988, the Division announced plans for a national conference to amend its constitution without holding new elections. On June 20, 1988, LIUNA President Fosco declared an emergency supervision, citing the need to address corruption and financial malpractice, and invoked his constitutional authority to impose supervision without a hearing, based on an ongoing criminal investigation involving newly elected president Herbert Walker, who later pled guilty to embezzlement charges.

On June 20, the Committee approved a resolution granting Walker a leave of absence pending his criminal case. Fosco claimed the Division engaged in fraud concerning the Mail Handlers Health Benefit Plan, a contract with the federal Office of Personnel Management (OPM) that insures about 517,000 federal employees and 40,000 Division members, underwritten by CNA Insurance Company. LIUNA alleged that Mail Handlers Local No. 300 pressured the Health Plan to compel CNA to pay false claims from the Federal Plaza Medical Associates. An OPM audit uncovered several fraudulent claims, particularly during LIUNA's trusteeship. When OPM instructed CNA to stop paying questionable claims, Federal Plaza and some Local No. 300 officials sued for payment. LIUNA accused the affiliate's leadership of pressuring CNA to pay these claims instead of protecting the Division.

Additionally, Fosco pointed to a financial dispute where the Division claimed LIUNA overbilled for collective bargaining expenses, amounting to $664,335.75 since January 1987. Walker informed Fosco that the Division could no longer provide financial support to LIUNA without reimbursement. LIUNA countered that no funds were owed and argued Walker's letter miscalculated expenses. Fosco cited Walker's funding threat as part of the emergency justifying supervision. He appointed Louis Elesie as supervisor and mandated an immediate audit of Division finances, granting Elesie full access to records and requiring authorization for any expenditures.

On June 24, 1988, LIUNA secured a temporary restraining order against the Division, preventing it from interfering with Elesie's supervision. The court ordered the Division to grant unrestricted access to its records and comply with Elesie’s directives. However, on July 28, 1988, the district court denied LIUNA’s motion for a preliminary injunction, stating that Fosco lacked reasonable grounds to believe an emergency existed on June 20.

The district court observed that significant fraud at Federal Plaza occurred during LIUNA's trusteeship, noting that the Division consistently paid its per capita tax assessments. It highlighted that Walker, who was placed on leave, faced charges unrelated to his role as National Director. The judge pointed out that several LIUNA officers, including President Fosco, had previously been indicted without resigning. The court's denial of LIUNA's motion for a preliminary injunction is central to the appeal in case No. 88-7207. 

Amid these developments, a special LIUNA panel conducted a hearing from July 13 to 16, 1988, concluding an emergency necessitated supervision, which Fosco subsequently imposed on June 20. On August 2, 1988, LIUNA's General Executive Board approved this supervision. Elesie has assumed the role of supervisor, despite the Division securing a temporary restraining order on August 11 for its bank to honor checks signed by its officials. The Division continues to provide check registers to Elesie, who claims authority to disapprove Policy and Steering Committee resolutions, a power the Division contests.

On September 20, a district court hearing addressed the enforceability of the supervision and the implications of the special panel's findings and the General Executive Board's vote. The court referred ongoing motions to a special master for a report by February 1, 1989, although delays occurred due to the special master's illness. The Division argues that a planned constitutional conference was postponed from August to November 1988 due to Elesie's delays in approving supplies and outside legal counsel, which Elesie disputes.

When the conference finally occurred in November, the Division adopted a revised constitution for direct election of national officers, scheduled for January and February 1989. LIUNA contends that the Division violated its international constitution by not holding an election at the November conference and failing to obtain the General Executive Board's approval for constitutional revisions. On December 8, 1988, Fosco proposed appointing a trustee for the Division, citing reasons including the implementation of amendments without prior approval, failure to conduct timely elections as per the old constitution, and instances of financial malpractice.

On December 19, the district court issued a temporary restraining order preventing LIUNA from holding a hearing the following day. On January 17, 1989, the court preliminarily enjoined LIUNA from conducting the hearing or imposing a trusteeship, citing bad faith in LIUNA's actions to undermine the Division's autonomy. The court deemed LIUNA's reasons for the trusteeship as "pretextual and politically motivated" and concluded that a hearing during an election would violate Title I of the LMRDA, as it would hinder the Division’s officers from informing members about the elections and campaigning. Consequently, the court prohibited LIUNA from conducting any hearing or imposing a trusteeship unless based on different grounds than those stated in a December 8, 1988 letter from General President Fosco. This ruling is subject to appeal in cases Nos. 89-7013 and 89-7049.

Regarding mootness, the court acknowledged that evolving circumstances have rendered some aspects of its orders moot, and thus vacated these parts, referencing precedents. Notably, the court found that its July 28, 1988 ruling, which denied LIUNA’s preliminary injunction motion, is now moot due to subsequent developments. Presently, both parties have pending motions for injunctions relating to supervision established by LIUNA's General Executive Board on August 2, following a hearing on supervision from July 13 to 16, 1988. The district court's prior decision is deemed irrelevant, and the court instructed it to proceed with considering the pending motions for injunctions, noting that any potential relief must reflect the changes since the original ruling.

The district court's January 17, 1989 ruling, which asserted that a pre-trusteeship hearing would disrupt the electoral process and violate Title I of the LMRDA, is now moot as the election is concluded, eliminating grounds for an injunction against LIUNA. The court noted that the relief granted has lapsed, and there are no ongoing issues for review. Although the Division suggests potential re-run elections, this scenario is deemed speculative and insufficient to indicate a current controversy. 

The remaining issue pertains to the district court's authority under Title III of the LMRDA to prevent a union from conducting a hearing to consider the imposition of a trusteeship. The district court previously stated that LIUNA's bad faith alone warranted such an injunction, but this court disagrees, finding that the statute does not permit such an action. The LMRDA outlines conditions under which trusteeships can be established and acknowledges judicial review for appropriate relief, including injunctions against bad faith imposition of trusteeships. However, while courts have enjoined inappropriate trusteeships, the court emphasizes that it cannot enjoin a required internal union hearing unless an emergency exists. A hearing does not equate to the establishment of a trusteeship but is merely a procedural step that may or may not lead to such a decision.

LIUNA's president proposed a trusteeship and initiated a hearing, but the decision to impose a trusteeship was reserved for the General Executive Board. LIUNA's constitution mandates that a notice for a hearing must be issued before appointing a trustee or supervisor. Title III indicates that judicial review pertains to the trusteeship order itself and does not extend to the decision to hold a hearing. A hearing by an international union does not suspend an affiliate’s autonomy, nor does it constitute a trusteeship. The statutory framework suggests that disputes regarding trusteeships should be addressed while the trusteeship is in place. Legislative history of the LMRDA highlights concerns over the imposition of trusteeships, with reports documenting abuses such as unjustified trusteeships, prolonged durations, and misuse of power by officials. The LMRDA grants federal courts authority to dissolve improperly imposed trusteeships but does not extend this authority to enjoin pre-trusteeship hearings. Furthermore, union constitutions are regarded as contracts under section 301(a) of the Taft-Hartley Act, and a court's injunction against a pre-trusteeship hearing would infringe on the union’s contractual rights to conduct such hearings according to its constitution and bylaws.

The LMRDA does not empower courts to alter union constitutions or dictate detailed union business procedures, as Congress intended minimal governmental interference in labor union matters. There is no precedent for a district judge to enjoin a pre-trusteeship hearing under Title III of the LMRDA. The statute maintains an incentive for unions to conduct fair hearings, as section 304(c) establishes a presumption of validity for trusteeships only after a fair hearing, promoting fair procedural practices. Furthermore, section 302 mandates impartial hearings prior to trusteeship imposition if required by the union's constitution. Case law supports that a fair hearing is crucial, and failure to conduct one can result in the loss of the presumption of validity for a trusteeship. The district court’s order, which not only prohibited the hearing but also the establishment of a trusteeship, lacks statutory support as the court did not find the trusteeship declaration to be imminent or irreparable. Since the hearing process in question was lengthy and a trusteeship was proposed only post-hearing, the order cannot be upheld. The court also refrained from deciding on the powers regarding pre-trusteeship hearing injunctions under Title I, and ultimately vacated the orders from July 28, 1988, and January 17, 1989.