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Protecting citizens' rights in the courts
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  JOSEPH FRANZA,
v. No. 88-7258 INTERNATIONAL BROTHERHOOD OF TEAMSTERS,
This is an appeal in a freedom of speech case in which a jury found that a union officer caused the discharge of a union member from his employment with an employee benefit plan because that member had supported the officer's opponent in a union election. Nonetheless, the district court ruled that the member's claim under Title I of the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA") must be dismissed because employment-related reprisals for free speech activities do not directly affect "membership rights" and so are not barred by the LMRDA. 680 F. Supp. 496 (D. Conn. 1988) (Nevas, J.). To support that ruling, the lower court relied on Finnegan v. Leu, 456 U.S. 431 (1982), which allowed union officers to discharge policy-making officials from their union jobs even though the discharge may have the effect of inhibiting such officials' exercise of free speech rights. However, as this brief will demonstrate, Finnegan does not support the decision below for two reasons. First, plaintiff was not a union employee, but was instead employed by a separate entity -- a jointly-trusteed welfare benefit fund -- which Congress intended to be independent and not subject to the tides of union politics. Second, the position held by plaintiff did not fall into the category of policy-making jobs covered by the Finnegan exception to the general rule barring retaliation against union dissenters. Does Title I of the LMRDA forbid a union leader from retaliating against a supporter of his electoral opponent by obtaining the supporter' discharge from employment, where the supporter's employer is not the union but an employee benefit fund and the supporter does not hold a policy-making position with the fund? Section 101(a)(1) of the LMRDA, 29 U.S.C. § 411(a)(1), provides: Every member of a labor organziation shall have equal rights and privileges within such organization to nominate candidates, to vote in elections or referendums of the labor organization, to attend membership meetings, and to participate in the deliberations and voting upon the business of such meetings, subject to reasonable rules and regulations in such organization's constitution and bylaws. Section 101(a)(2) of the LMRDA, 29 U.S.C. § 411(a)(2), provides: Every member of any labor organization shall have the right to meet and assemble freely with other members; and to express any views, arguments, or opinions; and to express at meetings of the labor organization his views, upon candidates in an election of the labor organization or upon any business properly before the meeting, subject to the organization's established and reasonable rules pertaining to the conduct of meetings: provided, That nothing herein shall be construed to impair the right of a labor organization to adopt and enforce reasonable rules as to the responsibility of every member toward the organization as an institution and to his refraining from conduct that would interfere with its performance of its legal or contractual obligations. Section 102 of the LMRDA, 29 U.S.C. § 412, provides: Any person whose rights secured by the provisions of this title have been infringed by any violations of this title may bring a civil action in a district court of the United States for such relief (including injunctions) as may be appropriate. Any such action against a labor organization shall be brought in the district court of the United States for the district where the alleged violation occurred, or where the principal office of such labor organization is located. Section 404 of ERISA, 29 U.S.C. § 1104, provides in relevant part: (1) [A] fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and -- (A) for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan; Plaintiff-appellant Joseph Franza was a member of defendant-appellee Teamsters Local 671 (here called "Local 671" or the "Union") and, in 1980, became an employee of Health Services Plan of Teamsters Local 671 (here called the "Plan"). The Plan administers various employee welfare benefit funds covering the members of Local 671, which are funded by contributions from the employers with which Local 671 engages in collective bargaining on behalf of its members. Under the strictures of ERISA, the Plan is not only a separate entity from Local 671, but it is required to maintain an arms-length relationship with the Local. Joint Appendix at 37-38 ("Jt. App. 37-38"); see also infra at 22-23. Franza was hired by Richard Robidoux, who was at that time the Chairman of the Board of Trustees of the Plan as well as the Secretary-Treasurer of Local 671.(1) Although Richard Robidoux had a dual role, Franza was employed solely by the Plan, and not by the Union. His title was that of "agent", apparently so that he could take advantage of provisions in collective bargaining agreements giving an "agent" the authority to enter an employer's premises, Jt. App. 61a-62, 77-78. His principal duties consisted of (1) auditing employer contributions made to the Plan to make sure that the Plan received all the money that was due it, so that it could maintain a full set of benefits for the members, and (2) reviewing problems that individual members were having with their benefits. Jt. App. 8-8a, 17-24, 78. In addition, Franza served, in effect, as an all-purpose "gofer," doing whatever ministerial tasks his boss, the Chairman of the Plan, required. Jt. App. 25, 65, 77, 92-93. At no time, however, did Franza hold a policy-making position. In the fall of 1986, the Union held its triennial election of officers, and defendant-appellee Thomas Robidoux ran against his cousin Richard Robidoux for the position of Secretary-Treasurer. Franza and another employee of the Plan openly campaigned in support of Richard Robidoux, but in November, 1986, Thomas Robidoux was elected. Jt. App. 25, 26, 76. On December 23, 1986, the day following his installation as Secretary-Treasurer of the Union, Thomas Robidoux went to the office of the Plan and fired Franza. Jt. App. 28-34. At the time of the termination, Thomas Robidoux had no official position with the Plan. However, when Thomas Robidoux assumed the Chairmanship of the Board of Trustees of the Plan on December 27, the Board retroactively approved the termination. Jt. App. 148-151. This action was filed against Thomas Robidoux and Local 671 in the District of Connecticut on June 10, 1986. Plaintiff alleged that he had been terminated, not out of any dissatisfaction with the performance of his duties as an employee of the Plan, but solely because Thomas Robidoux desired to punish him for having supported Thomas' opponent in the union election. Franza conceded that he remained a member of Local 671 and could still attend meetings, but argued that employment-related reprisals could only serve to discourage him and other union members from fully exercising their statutory rights as members to express their views "upon the candidates in an election of the labor organization," section 101(a)(2), and "to vote in union elections" and "to participate in the deliberations and voting upon the business of [union] meetings." Section 101(a)(1).(2) Defendants argued, for their part, that when Franza was hired he lacked the qualifications for his auditing duties, that Franza performed improper personal services for Richard Robidoux, and that he was fired solely because Thomas Robidoux desired to rid the Plan of an unproductive employee whose services could not properly be paid for with Plan funds. However, at a bifurcated trial, the jury accepted Franza's claim and rejected the appellees' version of the facts, by answering in the affirmative the following special interrogatory, Jt. App. 186: Has the plaintiff Joseph Franza met his burden of proving, by a preponderance of the evidence, that Thomas Robidoux retaliated against him because the plaintiff supported Richard Robidoux in his re-election campaign? The jury also found that plaintiff had not established, either by a preponderance of the evidence or by a higher evidentiary standard, the existence of a "scheme to suppress dissent" within the local. Finally, the jury found that Local 671 had not itself retaliated against Franza for exercising his free speech rights.(3) Nevertheless, the district court dismissed Franza's claim because it concluded that Title I did not forbid his retaliatory discharge. The court began by properly stating the issue as being whether Title I provides a cause of action "for a union member who is dismissed from non-union employment . . .." 680 F. Supp. 496, 499, Jt. App. 190. Unaccountably, however, the court proceeded to decide the case solely by reference to various decisions that pertain to the dismissal of union members from union employment in various policy-making positions. Thus, the court noted that, in such cases as Finnegan v. Leu, 456 U.S. 431 (1982), and Cotter v. Owens, 753 F.2d 223 (2d Cir. 1985), the courts had declined to permit policy-making union employees to contest retaliatory discharges absent proof either that their membership rights had been injured or that the union had engaged in a scheme to suppress dissent within the union. 680 F. Supp. at 499-502, Jt. App. 190-193. The court assumed without discussion that it was appropriate to apply these rulings to union leaders' efforts to retaliate by discharging Franza in this situation. Instead, the court simply noted that plaintiff was still allowed to attend union meetings, that his membership had not been suspended in any way, and that, apart from his discharge, no action had been taken to discourage him from freely exercising his rights to criticize the new incumbent leaders of the union. From these undisputed facts, the court concluded that Franza's "union membership status, rights, and privileges remained unchanged as a result of his discharge from the auditor position with the plan." Id. at 503, Jt. App. 195. Accordingly, the court entered judgment for defendants. Id. at 504, Jt. App. 196. A. Congress Intended That Title I Would Be Applied to Employment-Related Reprisals in Cases Such as This. Plaintiff's claim must be considered in the context of the events and concerns which led to the enactment of Title I of the LMRDA. The LMRDA, and particularly Title I, was the product of hearings conducted in the late 1950's by the Senate Select Committee on Improper Activities in the Labor-Management Field, chaired by Senator McClellan. S. Rep. No. 187, 86th Cong., 1st Sess. 2 (1959), reprinted in I NLRB, Legislative History of the LMRDA 398 (1959) ("Legis. Hist."). The McClellan Committee investigations revealed many different ways in which corrupt union leaders had dominated unions and remained unaccountable to their members. The Committee's hearings specifically addressed the problem of union officers who prevented dissenting members from obtaining employment or who procured the discharge of such members who were already employed. E.g., 10 McClellan Committee Hearings, 85th Cong., 1st Sess. 3759 (August 2, 1957). Indeed, abuses in the Teamsters Union were the principal focus of the McClellan Committee's investigation and of Congress' concern that led to the passage of the Act. See McAdams, Power and Politics in Labor Legislation 11-12, 156, 211 (1964). As initially reported by the Senate Committee on Labor and Public Welfare, the LMRDA neither protected union members' rights to speak about candidates or to deliberate on union business, nor gave members a right to sue when union leaders retaliated against them for exercising those rights. Indeed, the Senate Committee consciously decided not to legislate on that topic lest it interfere with unions' internal affairs. I Legis. Hist. 403. In so doing, the Senate Committee rejected Senator McClellan's proposed Bill of Rights of Union Members. However, the full Senate repudiated the Committee's attempt to minimize intrusion into union affairs when it adopted the Bill of Rights offered by Senator McClellan as a floor amendment, and the House confirmed the Senate's action by adopting the Landrum-Griffin substitute for the House Committee's bill. See Levy, Legal Responses to Rank-and-File Dissent, 30 Buff. L. Rev. 663, 681 n.22, 684 n.118 (1981). The discussions of the purposes of the Bill of Rights on the floor of the Senate shows beyond peradventure that Congress intended to forbid the very sort of employment-related reprisals that the jury found in this case. Thus, as Senator McClellan explained, his amendment was offered because a "union man is not protected by effective law which he can use against beatings and tortures and job-loss as reprisals for assembling [and] for speaking up in meetings . . .." II Legis. Hist. 1098. Senator McClellan further explained that Congress needed to prescribe and define by law what the rights of union members are, place in them by the democratic process the power to secure those rights, and protect them in their efforts to do so from reprisals of any kind . . .. Without such protection, other provisions of law may be of little benefit and meaningless. Without such protection in the exercise of his legitimate rights, the records of our committee's investigations show over and over against that a rank-and-file member dare not risk any opposition to a corrupt or autocratic leadership. If he does so, he may be beaten, his family threatened, his property destroyed or damaged, and he may be forced out of his job -- all of these things can happen and have happened. II Legis. Hist. 1098 (emphasis added). Having introduced his Bill of Rights amendment, Senator McClellan proceeded to explain what he intended to accomplish by each subsection of the amendment. Section 101(a)(2), he said, was addressed in part to the problem that his Select Committee had encountered of union members who were afraid of the consequences of speaking out: They are afraid of reprisals against them. Two waitresses from Chicago testified that it required 6 months to get a job. Union officials go around and interfere. They say to a prospective employer, "If you hire this person, you will have labor trouble." They cannot come here and tell the truth without risking reprisals. This provision is for the benefit of the working people, the people from whom some of these parasites draw the lifeblood which courses through their veins. II Legis. Hist. 1103. Nor was the fact that Title I would apply to employment-related reprisals lost on the opponents of the Bill of Rights amendment. Remarking on the portion of the original Bill of Rights that would have given the Secretary of Labor the power to sue for violations of Title I, Senator Kennedy objected to Section 101(a)(1), which gave members "equal rights and privileges within such organization," on the ground that it involved putting the Secretary of Labor into the adjustment of matters such as equal rights and privileges within a labor organization. I should think that would involve the Secretary of Labor in criminal offense procedures, seniority disputes, and every other matter as to which any member of a union may feel he was discriminated against by union officers or by his employer while he was a member of his union. II Legis. Hist. 1113 (emphasis added). Notwithstanding these objections, the Senate adopted the Bill of Rights, which, with modifications not relevant here, was enacted into law.(4) Accordingly, most courts have held that employment-related reprisals for free speech activity are forbidden by and actionable under Title I. Murphy v. Operating Engineers Local 18, 774 F.2d 114, 121-123 (6th Cir. 1985); Vandeventer v. Operating Engineers Local 513, 579 F.2d 1373, 1378-1379 (8th Cir. 1978); Duncan v. Peninsula Shipbuilders Ass'n, 394 F.2d 237, 239 (4th Cir. 1968); Taliaferro v. Schiro, 669 F. Supp. 776 (W.D. La. 1987); Moore v. IBEW Local 569, 653 F. Supp. 767 (N.D. Cal. 1987). Even the AFL-CIO has recognized that one of the principal reasons that Title [I] was enacted was to protect dissident members from economic reprisals by unions . . .. [A]n allegation that a union has sought to blacklist or procure the discharge of a dissident member clearly states a claim for relief under Title I. Reed v. UTU, No. 87-1031 (S. Ct.), Brief of AFL-CIO as Amicus Curiae, at 18.(5) Although this Court has never expressly passed on that point, its decisions strongly support the rulings of the other circuits, because this Court has repeatedly recognized in its decisions under section 101(a)(5) that "blacklisting" and comparable interference with members' employment can constitute discipline which is subject to the due process restrictions of that subsection. E.g., Morrissey v. NMU, 544 F.2d 19, 26 (2d Cir. 1975); Figueroa v. NMU, 342 F.2d 400 (2d Cir. 1968); Detroy v. AGVA, 286 F.2d 75, 81 (2d Cir. 1961); Poulos v. Bracco, 117 LRRM 3063, 3066 (E.D.N.Y. 1984). If employment-related reprisals are subject to Title I's due process requirements, as this Court has ruled, then such reprisals are certainly forbidden when, as the jury found here, they are motivated by improper animus based on the exercise of the substantive Title I rights protected by sections 101(a)(1) and 101(a)(2). B. Finnegan and Cotter Do Not Bar the Application of Title I to Reprisals Relating to Non-Union Employment or to Appointees Holding Non-Policymaking Positions. The court below avoided any discussion of the many cases cited above, but instead focused on those decisions where courts have limited the rights of union policy-making staff to sue for discharge from union employment. 680 F. Supp. at 499-502, citing, e.g., Finnegan v. Leu, 456 U.S. 431 (1982), and Cotter v. Owens, 753 F.2d 223 (2d Cir. 1985). These cases, according to the district judge, draw a bright line between union actions that injure "a member's rights as a member" and those which do not. Furthermore, the court believed, they establish that actions that affect a member's employment do not "establish any direct interference with membership rights." Id. at 502. Although there are dicta in Cotter and perhaps even in Finnegan that would, if read out of context, provide some support for the district court's view of the statute, neither case applied Title I to facts similar to those involved in this case or in others like it. For reasons that are set forth more fully below, this Court, like the Sixth Circuit in Murphy v. Operating Engineers Local 18, 774 F.2d 114, 122-123 (1985), should squarely reject the argument that Finnegan bars Title I relief in any case involving discharge from employment, no matter what the nature of the employment involved. In this Section of the brief, we show that Finnegan and Cotter should not be applied to employees who are not policy-makers and especially to employees of entities other than the union itself. In Section C, we demonstrate that under this legal standard Franza is entitled to reversal of the judgment below. Before turning to a careful reading of Finnegan and Cotter, we present a simple hypothetical that points up the inadequacy of any attempt to generalize from cases about the removal of high-ranking union appointees to create a bright line test for all Title I cases based solely on a distinction between loss of "membership rights" and other kinds of injury. Even the defendants, we trust, would concede that a member who is beaten or arrested, at the behest of the union leadership, for having expressed views about union leaders at a union meeting, may claim the protection of Title I. Morrissey v. NMU, 544 F.2d 19 (2d Cir. 1976); Shimman v. Frank, 625 F.2d 80, 90 (6th Cir. 1980). That is so even though a punch in the nose or a night in jail does not alter the member's status as a member of the union; nor do union membership rights include a guarantee that a worker will not obtain a broken nose or a criminal record. The reason why there is a violation of Title I in these circumstances is that the nose was broken because the individual exercised the membership right of expressing views about the union's leadership. If that is so, that result is inconsistent with the notion that discharge from employment, with the union or with a non-union entity, because a member exercised free speech rights, is not a violation of Title I because it does not interfere with "membership" rights. Nor, we assume, would the courts impose a requirement that a member whose nose was broken must show the existence of an overall scheme to suppress dissent throughout the union before the member may be awarded damages or obtain relief to prevent future assaults. Whether or not there is such a scheme, and whether or not union-wide suppression is the objective of the punch, a single punch, with or without such a scheme, surely chills dissent on the part of the individual punched, and of those who witness it. Just as physical abuse of dissenters was clearly among the targets at which Title I was directed, so were employment-related reprisals of the kind involved here. What this hypothetical indicates is that neither the Supreme Court, nor this Court, could possibly have meant to say that in no case can a union's action be considered a violation of Title I unless it alters the member's status as a member of the union (or unless there is an overall scheme to suppress dissent). Rather, as demonstrated below, the requirements of showing a violation of "membership rights" or of a "scheme to suppress dissent" were intended to be limitations on the exception to the general rule against employment-related discharge. The exception was recognized in Finnegan, and under it union leaders may discharge those who previously held certain union offices, even for the purpose of retaliating against those who supported another candidate in the union election. That rule is needed to protect a vital component of union democracy: the right of an elected union leader to select policy-making subordinates based on their political loyalty. Because that process is necessary to achieve a Congressional objective, even though it otherwise penalizes the exercise of free speech rights in some cases, the courts have balanced the two interests and have held that dismissal from union employment in that situation does not violate section 101(a)(2). But in the course of recognizing such an exception in Finnegan, the Court also indicated that, if the discharge creates a greater-than-normal impact on membership rights, and thus outweighs the democratic value of picking loyal subordinates, the discharge may be invalid. As examples of improper discharges, the Court included those that resulted in a denial of the individual's status as a member, and those based on an overall scheme to suppress dissent within the union. A close reading of Finnegan and Cotter supports this analysis. The issue in both Finnegan and Cotter was whether the free speech provisions of the LMRDA bar an elected union leader from dismissing policy-making appointees who do not support the leader politically. In Finnegan, the question was whether a union leader could fire union business agents -- appointees whose policy-making tasks include the negotiation of collective bargaining agreements and decisions about which grievances should be taken to arbitration -- because they had opposed him for election. The Court first considered the claim that such discharges constituted a form of "other discipline" that would, if imposed for the exercise of Title I rights, be forbidden by section 609 of the Act, 29 U.S.C. § 529. This construction of the statute was rejected because there was strong legislative history showing that Congress did not intend the language "otherwise discipline" in section 101(a)(5), 29 U.S.C. § 411(a)(5), to apply to "suspension of a member's status as an officer of the union." 456 U.S. at 438, quoting H.R. Conf. Rep. No. 1147 at 31, reprinted at I Legis. Hist. 935. This and other portions of the legislative history showed "that the virtually identical language in § 609 was likewise meant to refer only to punitive actions diminishing membership rights, and not to termination of a member's status as an appointed union employee." Id. See also id. at 437-438, where the Court stated that section 609 "refers only to retaliatory actions that affect a union member's rights or status as a member of the union . . . [D]ischarge from union employment does not impinge upon the incidents of union membership." (emphasis in original). This aspect of Finnegan does not, however, support the decision below. First, plaintiff's claim here is based on section 102 of the LMRDA, 29 U.S.C. § 412, which provides a cause of action when a union "infringes" on Title I rights; it is not based on section 609 which requires a showing of "discipline." Second, the Supreme Court's discussion of the scope of section 609 was informed by its review of the legislative history which shows Congress' intent not to subject the suspension of union officers to the requirements imposed on union actions that do constitute "discipline." Yet, as we have shown above, "Congress recognized that interference with employment rights constituted a powerful tool by which union leaders could control union affairs," Vandeventer v. Operating Engineers Local 513, 579 F.2d 1373, 1378 (8th Cir. 1978), and Congress intended Title I to protect union members from employment-related reprisals because of their exercise of free speech rights. Accordingly, Finnegan's discussion of the limits of section 609 should not be read to bar all claims based on reprisals with respect to employment.(6) Indeed, in the next portion of Finnegan, the Court expressly noted that the term "infringe" in section 102 is broader than the term "discipline" in section 609. 456 U.S. at 439. The Court found it unnecessary to decide how much broader section 102 may be because it found that allowing the discharge of union business agents based on their political views was consistent with the objectives of the LMRDA. Again unlike the plain legislative history showing Congressional desire to prevent employment-related reprisals generally, upon which Franza relies here, the Court noted that nothing in the legislative history of the Act showed any Congressional intent to alter the traditional pattern according to which union leaders could appoint business agents of their own choice. Indeed, the Court concluded that "the ability of an elected union president to select his own administrators is an integral part of ensuring a union administration's responsiveness to the mandate of a union election." Id. at 441-442. While reserving the question of what result would obtain if there were a "purposeful and deliberate attempt . . . to suppress dissent within the union," or if the members did not hold policy-making or confidential positions, id. at 441 and n.11, the Court held that section 102 did not forbid the discharge of union business agents for supporting the losing candidate in a union election. Thus, Finnegan is limited to policy-making positions within a union, and as we demonstrate in Section C, infra, this case presents a very different set of circumstances, because the position was neither policy-making nor with the union. In Cotter v. Owens, 753 F.2d 223 (2d Cir. 1985), one of the issues was whether a union member who had been appointed to a position within the union hierarchy could be removed for joining a dissident caucus. The position there was membership on a committee organized by the union leader to monitor issues of nuclear safety, to disseminate information to the membership, and to suggest improvements in safety training and practices. Id. at 224. The Court ruled that the position was policy-making and that the case "does not fall within the 'non-policymaking' exception of Finnegan, if such an exception exists." Id. at 228. In the course of its discussion of the scope of the policy-making exception to Finnegan, this Court set forth the dictum on which the court below relied most heavily: Finnegan severely circumscribed the bounds of judicial intervention in intra-union factional disputes by limiting Title I claims to cases directly affecting membership rights. A member's effort to be part of the union hierarchy may implicate those rights indirectly, but it is not a Title I protected activity under most circumstances. 753 F.2d at 228. This portion of the Court's opinion should not be read to bar union members' claims that they were discharged from non-union employment because of their exercise of free speech rights, but, like the discussion of "membership rights" in Finnegan, is properly limited to the context of removal of union appointees. As Chief Justice Marshall wrote in rejecting an attempt to apply some general language in Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803), to the issues in Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 399-400 (1821): It is a maxim not to be disregarded, that general expressions, in every opinion, are to be taken in connection with the case in which those expressions are used. If they go beyond the case, they may be respected, but ought not to control the judgment in a subsequent suit when the very point is presented for decision. The reason of this maxim is obvious. The question before the court is investigated with care and considered in its full extent. Other principles which may serve to illustrate it, are considered in their relation to the case decided, but their possible bearing on all other cases is seldom completely investigated. So here, the discussion of impact on "membership rights" was thoroughly considered in Cotter only as it related to removals from union positions, and policy-making positions at that. There is no basis for contending that it was meant to be a discussion of the prerequisites for all claims under Title I, and there are several parts of Cotter that suggest the contrary conclusion. First, as we have shown, in Finnegan itself the Court did not direct its discussion to cases involving discharge by employers other than unions, or to discharges from positions that could not be described as "policy-makers," "top staff," or "administrators." Insofar as Cotter purported to draw its authority from Finnegan, it should not be read to have gone any further than Finnegan actually did. Second, the specific purpose for the reference to Finnegan in the passage excerpted above was to answer Cotter's argument that he was a "low-level" union official with limited discretion. Id. at 227. This Court was not purporting to lay down a general rule for all Title I cases, and it would be unwise to base such a general rule on this fleeting reference to "membership rights" in a limited context. Third, the cited passage suggests by negative implication that an "effort to be part of the union hierarchy" is a Title I protected activity in some circumstances. And fourth, the Court did not stop with the observation that Cotter had not shown a direct effect on membership rights, but went on to explain why committee membership was properly considered a policy-making position. Thus, even with respect to whether the discharge of union employees affects membership rights in any way, the passage is plainly dictum. As a result, Cotter lends no support to the proposition that, in order to press a claim under Title I, a person who is not a policy-making appointee or who is not an employee of the union must show either that some specific membership right was curtailed or that he was a victim of a broad scheme to suppress dissent.(7) In summary, neither Finnegan nor Cotter undermines on an across-the-board basis the general rule discussed in Section A of this brief, that employment-related reprisals are forbidden by section 101(a)(1) and 101(a)(2) of the Act and may be redressed by suits under section 102. Rather, they only create an exception to that general rule that allows the discharge of policy-making employees of a union. As we now show, this case is very different from both Finnegan and Cotter. C. Title I Protects Franza Against Employment Reprisals, Both Because He Was Employed With an Employee Benefit Plan And Not His Union, and Because He Did Not Hold a Policy-making Position. Notwithstanding the general rule that employment-related reprisals for free speech activities are forbidden by Title I for jobs with entities other than the union, two questions remain: whether employment by an employee benefit plan established under the union's collective bargaining agreements is more comparable to union employment than to non-union employment, and whether Franza was a policy-making employee. Unless both questions are answered in the affirmative, the decision below must be reversed. First, even if the Court were persuaded that an individual who performed Franza's duties pursuant to employment with a union would be subject to discharge for failing a political loyalty test, Franza did not work for his union, but for its employee benefit plan. The distinction is not a purely formal one. ERISA draws a bright line between a union and its affiliated benefit funds and forbids the trustees to base their management decisions on considerations related to politics within their own organizations, either unions or employers. Thus, although ERISA permits employee benefit funds to be governed by trustees who also hold positions with the union or the employer, the trustees may not make management decisions for the fund based on the interests of the institutions which they represent; rather, their sole objective must be to advance the interests of the beneficiaries. Central States Pension Fund v. Central Transport, 472 U.S. 559, 571 n.12 (1985) (had purpose of audit been to expand union membership, it would have violated duty of loyalty to beneficiaries); Deak v. Masters, Mates & Pilots Pension Plan, 821 F.2d 572, 579-581 (11th Cir. 1987) (amending pension rules to discourage employment with non-signatory employers violated duty of loyalty by advancing union's institutional interest contrary to individual interests of plan beneficiaries); Adams v. General Tire & Rubber Co., 794 F.2d 164, 167 (4th Cir. 1986) (denying benefits in order to increase pressure on union during strike is breach of fiduciary duty). This Court has applied that rule to forbid trustees representing an employer from using control of plan assets to provide support for their battles for control of the corporation. Donovan v. Bierworth, 680 F.2d 263, 271-276 (2d Cir. 1982); Norlin Corp. v. Rooney, Pace, 744 F.2d 255, 264-267 (2d Cir. 1984). See also Leigh v. Engle, 727 F.2d 113, 124-133 (7th Cir. 1984); Sandoval v. Simmons, 622 F. Supp. 1174, 1212-1213 (C.D. Ill. 1985). Although we have found no cases precisely on point, there is no reason why the same limitation would not apply when it is a union trustee who seeks to use his influence on the fund's trustees to use fund assets to perpetuate his control over the union. Cf. Teamsters Local 144 v. Kuba, 631 F. Supp. 1063, 1071-1072 (D. Conn. 1986) (union trustees improperly obtained amendment to plan to perpetuate their control of the plan after they lost their union positions). In light of the restrictions imposed by ERISA's duty of loyalty, 29 U.S.C. § 1104, there is no basis under the LMRDA to treat the fund as a mere extension of the union, or the fund's employees as merely another category of union personnel whose termination may proceed according the same standards as those which apply to employees of the union itself. Thus, the courts' recognition of union leaders' power to dismiss policy-making union employees for backing the wrong horse in a union election does not protect the leaders' right to dismiss benefit fund employees for the same reason. Accordingly, reprisals with respect to benefit fund employment should be treated in the same way as reprisals with respect to other non-union employment, and not as if they involved employment with the union itself. There is another reason why it would be improper to extend the exception to Title I created in Finnegan to employment by an employee benefit fund. As the eariler discussion makes clear, the reason that the Court permitted the firings in Finnegan was not that it wished to encourage the stifling of internal union political debate or that it wished to make it easier for union officials to retaliate against those who oppose them. Rather, the Court in Finnegan was willing to accept some restrictions on free speech -- or assumed that Congress was willing to do so -- because of the countervailing need to allow union officers to fill positions of responsibility with individuals in whom they had trust and who would fully support them in implementing the programs on which they ran for office. That ability to prevent opponents from remaining in influential positions was found necessary so that union leaders could properly be held accountable to the membership of the union. The need for political accountability to the voters has no place in this case, because Franza's employer was not the union, but rather a jointly-trusteed fund of which the union's Secretary-Treasurer was simply one of the trustees. Unlike Local 671, the fund is not a political entity, and to the extent that it has any policy-making functions, the law requires that they be carried out with the best interests of the fund participants in mind and that they not be part of a program to help out any trustees, be they union, employer, or neutral. In short, the rationale for the exception carved out in Finnegan to Title I's prohibition on infringing union members' free speech rights has no application where the goal of political accountability to a union electorate which animated Finnegan has no place in the operation of the employee benefit fund that employed Franza. Moreover, even if Franza were employed by a union, he would not be subject to discharge because his job was not a policy-making position. His principal duties consisted of auditing employers' records in order to be certain that the employers were (1) correctly reporting all hours spent by employees under the union's various collective bargaining agreements, and (2) forwarding to the union the proper amount of money owed under the health benefit clauses for the number of hours worked. It is extremely difficult to understand how these functions would be performed differently depending on which Robidoux cousin Franza supported in a union election. The judgment of the district court dismissing the action should be reversed, and, for reasons discussed in footnote 3 on page 6, supra, the case should remanded for further proceedings on relief against both defendants. Respectfully submitted,
Paul Alan Levy Alan B. Morrison Arthur L. Fox II Public Citizen Litigation Group
Leon Rosenblatt
Attorneys for Plaintiff-Appellant July 7, 1988 1. In Local 671, as in most Teamster locals, the Secretary-Treasurer, not the President, is the principal executive officer. 2. Franza also alleged that his discharge was "discipline," imposed without due process, in violation of section 101(a)(5) of the LMRDA, 29 U.S.C. § 411(a)(5). This aspect of the action was dismissed during the trial, and is not at issue in this appeal. 3. Franza argued in his post-trial brief that, despite the jury's finding in response to this interrogatory, he was entitled to relief against Local 671 because it was legally responsible for Thomas Robidoux's conduct. The trial judge did not reach this argument in light of his ruling that Robidoux had not violated the Act. 680 F. Supp. 496, 499 n.4. Likewise, we do not discuss that issue in this brief. Rather, if the Court reverses on the basic liability issue, the district judge should be instructed to consider the derivative liability of Local 671 in the first instance, along with the various other relief issues that remain to be decided. 4. As enacted, the Bill of Rights is enforceable only by suits of individual members, not by the Secretary of Labor, as the McClellan amendment had provided. Senator Kennedy's remarks nevertheless support plaintiff's argument that the Bill of Rights protects members against employment-related reprisals, because they show the Senate's understanding of the meaning of Section 101(a)(1), although the enforcement mechanism was changed. 5. A copy of the brief has been lodged with the Clerk and served on opposing counsel. 6. For similar reasons, two courts have ruled that Finnegan bars the extension of due process rights under section 101(a)(5), which also applies only to union "discipline," to decisions by union hiring halls applying collectively bargained employment screening rules. Turner v. Boilermakers Local 455, 755 F.2d 866 (11th Cir. 1985); Hackenburg v. Boilermakers Local 101, 694 F.2d 1237 (10th Cir. 1982). Neither decision, however, limits the application of free speech protections under section 101(a)(2). 7. The court below also relied in part on Schonfeld v. Penza, 477 F.2d 899 (2d Cir. 1973), from which it extracted a rule that "intervention in union affairs should be limited to those instances where 'union action . . . can fairly be said, as a result of established union history or articulated policy, to be part of a purposeful and deliberate attempt by union officials to suppress dissent within the union.'" 680 F. Supp. at 501, quoting 477 F.2d at 904 (emphasis added). However, not only did the Schonfeld court not use the underscored language of limitation, but it was addressing issues arising from the overlap between rights under Titles I and IV of the LMRDA. It is questionable whether the such a showing is needed even in that respect. Thus, Schonfeld was a response to a doctrinal problem, the relationship between Titles I and IV, that has since been resolved in a different way in Teamsters Local 82 v. Crowley, 467 U.S. 526 (1984). In Crowley, the Supreme Court ruled that when Title I and Title IV rights overlap, the only restriction imposed by Title IV is that a Title I court may not grant relief that would invalidate, block, or substantially delay a union officer election. more resources
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