certain enumerated checks do not indicate any impropriety on the part of defendants; failure to join the president of the union as a party defendant; failure to name the union as a party defendant; and the request for a jury trial. They do not warrant dismissal of this action.
Federal Rule of Civil Procedure 8(a)(2) requires that the Complaint contain a "short and plain statement of the claim ". This, plaintiffs have satisfied.
The question of indispensability of parties relates to plaintiffs' failure to join (a) the president and (b) the union as party defendants. Section 501(b) can be likened to the familiar situation in which a corporate shareholder brings a derivative suit in the corporation's behalf after the corporation has refused to proceed against directors who have made themselves personally liable for breach of duty. In a shareholder derivative action the corporation for whose benefit the action is brought is an "indispensable party", but an indispensable party plaintiff. The individual shareholder is allowed to act in protection of the corporation's interest because, due to the adversity of the directors, it is disabled from protecting itself. See Koster v. (American) Lumbermens Mutual Co., 330 U.S. 518, 91 L. Ed. 1067, 67 S. Ct. 828 (1947). Similarly in the 501(b) situation, the union is impotent to act on its own behalf. It must be named as a party plaintiff as was done in this case. However, there is no authority that holds a corporation or a union is an indispensable party defendant.
As to the union president, Mr. Hartsough, it is well-established that a party is indispensable when his "rights may be affected and that a court 'cannot proceed to a final decision of the cause' until he is made a party. Russell v. Clark's Executors, 11 U.S. 69, 7 Cranch 69, 98, 3 L. Ed. 271 (1812) ". Provident Tradesmens Bank & Trust Co. v. Lumbermens Mutual Cas. Co., 365 F.2d 802, 805 (3rd Cir. 1966). The facts do not show that Mr. Hartsough had anything to do with the alleged improprieties of the named defendants. It is certainly not readily apparent how any adjudication of the case would affect the rights of the president here. He is thus not an indispensable party in this case.
Finally, while plaintiffs may have erroneously requested a jury trial, this does not warrant a dismissal of their cause of action.
For all the foregoing reasons, on all the points of law raised, defendants' motion to dismiss is hereby denied.
II. Motion to Dismiss by additional defendant, Fireman's Fund American Insurance Company
In plaintiffs' action against defendant officers of the union as related above, Fireman's Fund American Insurance Company which had issued its fidelity bond to Local 169 has been joined as a party defendant. The question is whether this joinder is proper.
The bond is required under section 502 of the Act "to provide for protection against loss by reason of acts of fraud or dishonesty ". 29 U.S.C.A. § 502. The bond applies generally to the officers of the union.
The bonding company argues that there is no statutory authority to join it as a defendant in a 501 action in which the bonded officers are the other defendants. In an opinion directly on point, the United States District Court for Nebraska specifically ruled that a union member may join as a defendant the surety which has bonded the officer defendants in a 501 action pursuant to section 502 of the same Act. Robinson v. Weir, 277 F. Supp. 581, 63 L.R.R.M. 2383 (D. Neb. 1966). This Court agrees.
The second issue raised is whether the failure of plaintiffs to comply with the provisions of the bonds, particularly with respect to notice of loss, proof of loss, and time in which an action can be brought, constitutes grounds for dismissal.
The purpose of section 501(b) is to permit individual union members to proceed on behalf of their union when the union officers who normally have this responsibility will not act. Section 502 must be read in light of section 501. In the typical 501 situation, the union through its officers will not act against its errant officers because either the officers empowered to act are the ones charged or are at least close associates. If it is preposterous to expect them to sue themselves, it follows that it is equally unlikely to expect them to sue on a surety bond on which they defaulted. As to notice to the surety company where it is apparent in a 501 situation, as it is under the circumstances involved here, that the individual members plaintiff had no actual knowledge of the provisions of the surety contract, they will not be charged with the duty of giving notice to the surety company in accordance with the provisions of the insurance policy.
For the foregoing reasons, this Motion to Dismiss is hereby denied.
And now, November 20, 1967, it is ordered that the motions to dismiss of defendants, Frank Keane, Archie McGowan, Frank Burdy, Bernard Marcus, Andres O'Hara, William Maloney and Fireman's Fund American Insurance Company be and the same are hereby denied.
And it is so ordered.