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April 5, 1963

HIGHWAY TRUCK DRIVERS AND HELPERS LOCAL 107 OF the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, an unincorporated association, by Thomas Graham, Carmen Grasso, Anthony Hnizdo, Jr., Karl M. Jensen, John C. Jones, Edward P. McCormick, John Regan, William D. Stasen and Robert D. Thomas, trustees, ad litem
Raymond COHEN, Joseph E. Grace, Edward Battisfore and Edward Walker

The opinion of the court was delivered by: BODY

Plaintiffs are nine trustees ad litem who are members of Highway Truck Drivers and Helpers Local 107. This suit is brought against four defendants, officers of Local 107, to compel repayment by them to the union of certain attorney fees paid by the union on behalf of said officers. Local 107 has itself been allowed to intervene as a party defendant. The cause of action is based upon the Labor-Management Reporting and Disclosure Act of 1959, P.L. 86-257 (referred to hereinafter as the 'Act').

A great deal of litigation has narrowed the issues in this case. (See opinion of Chief Judge Clary of March 24, 1960, D.C., 182 F.Supp. 608, affirmed 284 F.2d 162 (3d Cir. 1960).) Consequently, as we view the case at this juncture, very few issues of fact and law remain unresolved. The prior opinions were written in disposal of a motion to dismiss and in granting an injunction against future payments of legal costs of defendants.

 The action was tried before this court without a jury on a brief oral statement and argument by counsel and a complete stipulation of the facts with no oral testimony.

 The defendant officers were accused of misapplication of union funds in several matters. In one case they remain accused. Some of these matters are no longer before the court since Judge Clary's opinion, supra, has already ruled them out because the operative facts involved occurred prior to the effective date of the Act. The remaining matters consist of:

 1. An indictment of defendants and others in the Court of Quarter Sessions upon a charge of conspiring to cheat and defraud Local 107. 2. A petition for a writ of habeas corpus attacking the indictment. 3. A civil injunction suit which was brought by the defendants to prevent the international union from carrying out an investigation of its own of the charges against defendants. 4. The present suit. 5. A petition for a writ of prohibition filed by defendants et al. asking the Supreme Court of Pennsylvania to prevent the Court of Quarter Sessions of Philadelphia from convening a special grand jury to investigate charges of criminal wrongdoing by members of Local 107, defendants, and others (in substance).

 Attorney fees in the amount of $ 24,921.41 were paid by the union to cover bills presented by defendants' attorneys for services rendered in defense of the officers. None of the payments were received for benefits conferred on the union. Such payments would have constituted a breach of legal ethics if retained in matters where the union and defendants had conflicting interests. All the attorneys were completely ethical at all times.

 The attorneys who represented defendants billed them in a manner which makes it difficult to determine how much money was allocated to any one matter. Moreover, in the special grand jury proceeding, it is impossible to allocate amounts to union benefit as opposed to benefits to defendants and others. Because of the applicable law, however, it is unnecessary to make any allocation of fees.

 On July 3, 1961 the International Union amended its constitution to authorize payment of all legal expenses on behalf of officers accused in criminal proceedings or in civil suits if certain procedures are followed. The resolution of Local 107, which was adopted on September 20, 1959, meets the requirements of the new constitutional provision. This same resolution was declared invalid by Judge Clary as unauthorized by the constitution in effect on March 24, 1960.

 This court is bound by the law of this case established by Judge Clary's opinion and by the opinion of the Court of Appeals for this Circuit, supra. Defendant urges that while the Local 107 resolution was ultra vires when these opinions were written, it has subsequently been validated by an amendment to the constitution of the international union. This view is all right as far as it goes, but it completely disregards the statement in 284 F.2d at page 164 which says that the resolution was 'invalid because it authorized action beyond the powers of the union as derived from its constitution and was inconsistent with the aims and purposes of the Labor-Management Reporting and Disclosure Act. * * *' (Emphasis supplied)

 'Our own examination of the record and the 1959 Act satisfies us that under the facts the district court here has acted in complete accord with the letter and spirit of the Labor-Management Reporting and Disclosure Act.'

 This clearly establishes the Act as the primary basis for prohibiting payment of defendants' attorney fees. Judge Clary was merely adding another string to his bow in holding the payments to be ultra vires. Assuming that string was broken by the constitutional amendment, without any doubt the Act itself is sufficient reason for requiring defendant to repay the money in question. As Judge Clary said (182 F.Supp. at pages 620, 621):

 'There is a further reason why the present Resolution is no defense here. Aside from its validity under Pennsylvania law, it is inconsistent with the aims and purposes of the Labor Management Reporting and Disclosure Act and violates the spirit of that Act. A stated purpose of the Act is 'to eliminate * * * improper practices on the part of labor organizations * * * and their officers'. (Emphasis added). To allow a union officer to use the power and wealth of the very union which he is accused of pilfering, to defend himself against such charges, is totally inconsistent with Congress' effort to eliminate the undersirable element which has been uncovered in the labor-management field. To allow even a majority of members in that union to authorize such action, when, if the charges made against these defendants are true, it is these very members whom the officers have deceived, would be equally inconsistent with the Act. If some of those members have not been deceived by the defendants, but because of the immediate gains in their income and working conditions which Local 107 has won for them, they are content to accept as officers anyone who produces immediate results, regardless of what other wrongs those officers may commit in so doing, this Court would still not feel constrained to bow to their will in the light of its duty both to those members of Local 107 who place honesty above material gain as well as to the millions of others in the labor movement whose cause would be seriously injured by such an attitude.'

 Consequently, all payments made on behalf of defendants in the first four matters in question ...

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