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GIORDANI v. HOFFMANN

January 10, 1969

Guido Giordani, Anthony Halpin, Alfredo Pizarro, Theodore G. Tibbatts, Martin Major, Saverio Ciulla, and Raymond Garofolo on behalf of the Upholsterers International Union, a labor organization, and also as representatives of the class of persons on whose behalf contributions are made to the U.I.U. Health and Welfare Fund, a trust fund, and also as representatives of the class of persons on whose behalf contributions are made to the U.I.U. National Pension Program, a trust fund, Plaintiffs
v.
Sal B. Hoffmann et al., Defendants



The opinion of the court was delivered by: MASTERSON

 Plaintiffs, all members of Local 44 of the Upholsterers International Union, hereafter referred to as U.I.U., instituted this civil action on December 23, 1966. The plaintiffs alleged federal subject-matter jurisdiction of this action under §§ 301 and 302 of the Labor Management Relations Act, Title 29 U.S.C. §§ 185 and 186, and under § 501 of the Labor-Management Reporting and Disclosure Act, Title 29 U.S.C.A. § 501 (these statutes hereafter are referred to respectively as § 301, § 302, and § 501). *fn1" Because their action allegedly was based in part upon § 501 the plaintiffs applied to this Court for leave to sue pursuant to the requirement contained in that statute. On December 23, 1966, this application was granted and on December 4, 1967, the defendants' motions to vacate this order were denied. Presently before this Court are motions to dismiss, or in the alternative motions for a more definite statement, made by all the defendants.

 In prosecuting this action the plaintiffs purport to be acting pursuant to Rule 23 of the Federal Rules of Civil Procedure by representing two classes of persons, i.e. the class of persons " . . . on whose behalf contributions are made to the U.I.U. Health and Welfare Fund . . ." and the class of persons " . . . on whose behalf contributions are made to the U.I.U. National Pension Program." Both of these trust funds were established under the General Laws, or Constitution, of the U.I.U. to benefit employees whom it represents for purposes of collective bargaining.

 Contributions to both funds are made by employers who have entered into collective bargaining contracts with the U.I.U.

 In their original complaint the plaintiffs named all the individuals listed in the present caption above as individual defendants. They also named as defendants three organizations composed of groups of these individuals, i.e. the Board of Trustees of the Health and Welfare Fund, the General Executive Board of the U.I.U., and the Board of Governors of the National Pension Trust, hereafter referred to as the entity-defendants. Finally, they named as defendants the United States Fidelity and Guaranty Company and the American Insurance Company, which companies bonded the General Executive Board of the U.I.U. and the Trustees and Governors of the trust funds pursuant to the requirements contained respectively in Title 29 U.S.C.A. § 502 and Title 29 U.S.C.A. § 308d. In this original complaint the plaintiffs purported to represent not only the two classes of beneficiaries of the trust funds, but also, in a derivative fashion, the U.I.U. itself.

 On April 2, 1968, this Court conducted a hearing on motions to dismiss made by all the defendants noted above including the entity-defendants. At that time the plaintiffs made a motion to strike the entity-defendants from the case on the basis that " . . . none of the quoted entities . . . are defendants, or parties, to this civil action." With the agreement of the defendants, the Court, by order dated April 3, 1968, granted the plaintiffs' motion to strike and granted the plaintiffs twenty days within which to amend their complaint " . . . taking out the parties and the reference to the parties as to whom the motion to strike has been granted . . .", (Transcript, April 2nd hearing, pp. 22-25). On April 15, 1968, the plaintiffs filed an amended complaint, the caption of which reflected the following changes from the original complaint:

 (1) deletion of the General Executive Board of the U.I.U., the Board of Governors of the Pension Trust, and the Board of Trustees of the Health and Welfare Fund as separate party-defendants;

 (2) addition of the U.I.U. per se as a separate defendant; and

 (3) inclusion of the Health and Welfare Fund and the National Pension Trust as separate defendants.

 The plaintiffs' original complaint, and their amended complaint, both are extremely prolix, but it is clear that the defendants' actions which they challenge relate to the administration of the two trust funds established by the U.I.U. The plaintiffs have enumerated a large number of alleged improprieties by the defendants including, but not limited to:

 (1) excessive and improper compensation arrangements for the trustees of the Health and Welfare Fund and for the governors of the National Pension Trust, particularly for the individual defendant Sal Hoffmann, who is also the President of the U.I.U. itself, including a practice by which the two trust funds make contributions to each other on behalf of these persons;

 (2) improper employment practices by both trust funds, e.g. a practice of "nepotism" through which an unspecified number of Sal Hoffmann's relatives are alleged to have been employed;

 (3) improper "self-dealings" between the trust funds and the U.I.U. in the form of " . . . leasing of facilities, loans and use of personal (sic) etc. ";

 (4) improper composition of the Board of Governors of the Pension Trust and the Board of Trustees of the Health and Welfare Fund;

 (5) improper employment practices by the Health and Welfare Fund in the employment of a number of "Social Security Stewards" who are employees of the U.I.U.;

 (6) improper administration of the trust funds by the extension of the benefits of the funds to officers and employees of the U.I.U. itself; and

 (7) improper administration of the trust funds by the establishment and maintenance of a convalescent and recreational center in Florida known as Salhaven.

 I

 In support of their motion to dismiss the entity-defendants, i.e. the U.I.U., the Health and Welfare Fund, and the National Pension Trust, initially argue that the Court has no personal jurisdiction over them because there has been no valid service of process upon them. *fn2" Essentially they contend that the plaintiffs' attempt to serve them on April 25, 1968, pursuant to Rule 4(d)(7) of the Federal Rules of Civil Procedure and Rules 2157 and 2180 of the Pennsylvania Rules of Civil Procedure, was unsuccessful. This is allegedly so because the person served, Richard S. Hoffmann, was neither " . . . an executive officer, or trustee", " . . . an agent or person for the time being in charge . . .", nor " . . . an agent, authorized by appointment to receive service of process . . .", of either of the trust funds, as required by Rule 2180, nor a " . . . person for the time being in charge of any place where such association regularly conducts any business . . ." of the U.I.U., as required by Rule 2157.

 In support of this contention the entity-defendants have filed three affidavits of Mr. Hoffmann which allege, inter alia, that he was not "in charge" of the offices of the entity-defendants. Mr. Hoffmann acknowledges, however, that he did receive three copies of the plaintiffs' amended complaint at 1500 North Broad Street in Philadelphia where all three entity-defendants maintain their offices. See, Affidavit filed June 3, 1968. He admits also that at the time he was served with the complaint, and at all other times relevant to this case, he was resident-counsel for all three entity-defendants. See, para. 1 of Affidavit filed September 19, 1967, and para. 2 of Affidavit filed December 7, 1967. A consideration of these factors, and the only precedent directly on point, Goldlawr, Inc. v. Shubert, 169 F. Supp. 677, 679, 688-689 (E.D. Pa., 1958), rev'd on other grounds, 369 U.S. 463, 82 S. Ct. 913, 8 L. Ed. 2d 39 (1962), compels a conclusion that service upon Mr. Hoffman was proper and that, therefore, there is personal jurisdiction here over these defendants.

 In Goldlawr, supra, 169 F. Supp. at p. 689, the Court, under circumstances somewhat similar to those involved here, denied the foreign-defendants' motions to dismiss and held that there was personal jurisdiction over those defendants. The Marshal who had made service upon those defendants stated in his return of service that the person whom he had served was "in charge" of the offices of the defendants. Applying Pennsylvania law which considers a Marshal's return conclusive as to matters of fact, the Court held that his allegation compelled a conclusion that service of the foreign-defendants had been proper.

 A conclusion that the plaintiffs properly served these defendants is consistent with the relevant policy interest of insuring " . . . that a defendant will receive actual knowledge of the commencement of the action against him." Goldlawr, supra, 169 F. Supp. at 689. There is no doubt that the plaintiffs adequately informed the entity-defendants of the commencement of this action, and that any technical errors allegedly committed in serving the complaint have not prejudiced them. Accordingly, the entity-defendants' ...


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