averred that this action has been brought pursuant to Rule 23 on behalf of two classes of persons, i.e. the beneficiaries of the Health and Welfare Fund and the beneficiaries of the National Pension Program. Moreover, there is precedent which indicates that a Section 302 action typically is brought under Rule 23. See, e.g. Holton v. McFarland, 215 F. Supp. 372, 376 (D. Alaska, 1963), and Booth v. Security Mutual Life Insurance Company, 155 F. Supp. 755, 759 (D.N.J., 1957). Certainly the substance of the plaintiffs' claim reflects the fact that the rights allegedly violated by the defendants are rights shared in common by all members of the two specified classes, and that any affirmative relief decreed by this Court would be accorded to the members of these classes and not merely to the individual plaintiffs. The conclusion, therefore, must be that this action is, at least in theory, a class action under Rule 23, and that this Court has an obligation pursuant to Rule 23(c) to determine whether it is to be so maintained.
The defendants have cited limited authority supporting the dismissal of an action purportedly brought under Rule 23 when there has been a failure to specify in the complaint the conditions set forth in Rule 23(a). See, Knapp, supra, 19 F.R.D. at p. 516. In this case, however, although the plaintiffs have not specified precisely the Rule 23 conditions their complaint does indicate that the action satisfies at least conditions (1) through (3). Moreover, in their briefs opposing the motions to dismiss the plaintiffs also have alleged that they do " . . . fairly and adequately protect the interests of the class . . .", an assertion which the defendants have not contradicted. For all these reasons, and also because it is evident that this action falls within the category of class actions defined in Rule 23(b)(2), the defendants' motion to dismiss is denied to the extent that it is based upon their contentions challenging the authenticity of this suit as a class action.
Finally, the plaintiffs have named as defendants both the United States Fidelity and Guaranty Company, hereafter referred to as Fidelity, and the American Insurance Company, hereafter referred to as American. American admits that, pursuant to the statutory requirement of Title 29 U.S.C.A. § 308d, it has bonded the individual defendants who are members of the Board of Trustees of the Health and Welfare Fund and that, pursuant to the statutory requirement of Title 29 U.S.C.A. § 502, it has bonded those individual defendants who are members of the Executive Board of U.I.U. Fidelity admits that it provided the bond required by these statutes until 1963 at which time it claims the bonds were terminated and its liability under the bonds absolved. Neither American nor Fidelity has admitted that it bonded those individual defendants who are only members of the Board of Governors of the National Pension Trust. Both companies have made motions to dismiss which are denied for reasons discussed below.
Like all the other defendants in this action, Fidelity and American have urged that there is no federal subject-matter jurisdiction of this action. Since this Court has concluded that generally subject-matter jurisdiction exists here under Title 29 U.S.C.A. § 186 the issue presented by these particular motions is whether this jurisdiction extends to the complaints directed against these two defendants.
Neither party has cited, nor has this Court been able to find, any cases involving the extension of Section 302 jurisdiction to complaints directed against bonding companies such as Fidelity and American. In cases in which bonding companies are joined as party-defendants in actions brought pursuant to Section 502 of the Labor-Management Reporting and Disclosure Act, however, courts have denied their motions to dismiss for lack of subject-matter jurisdiction for reasons which are applicable to the current situation. See, Robinson v. Weir, et al., 277 F. Supp. 581 (D. Neb., 1966), and Purcell v. Keane, 277 F. Supp. 252 (E.D. Pa., 1967). The reasoning supporting the denial of these motions was summarized in Robinson, supra, 277 F. Supp. at 582:
"It is the conclusion of the Court that Congress intended that under § 501(b) a member should be entitled to sue for complete and appropriate relief, which would include not only suing the officer or representative but also the surety which has bonded that officer or representative. Any other determination would not effectuate the purpose of the Act and would require a multiplicity of suits in order to insure that the members would receive complete and appropriate relief and that they would be properly protected."
Similarly, it is clear that "complete and appropriate relief" can be provided to these plaintiffs suing under Section 302 only if the insurance companies bonding the individual defendants are held to be proper party-defendants to the action.
American and Fidelity have contended, however, that the language in Section 302(e) which directs federal courts to "restrain" acts proscribed by the statute indicates that there is federal jurisdiction pursuant to Section 302 only for the purpose of preventing possible abuses rather than for the purpose of remedying abuses which might have occurred in the past. See generally, Employing Plasterers, supra, 272 F.2d at p. 97. As discussed supra, p. 472, fn. 3, this interpretation is inconsistent with both the plain meaning of the language used in the statute and with the purposes sought to be served by the statutory scheme. Moreover, if this interpretation were to be applied to these defendants it effectively would defeat the purpose of having the trustees bonded.
Fidelity and American have argued also that the plaintiffs may not sue them because they are not the insured parties named in the bonds and because they failed to comply with the provisions of the bonds which establish requirements with respect to notice of loss, proof of loss, and time within which an action on the bonds can be brought. Again, the reasoning employed by courts which have denied motions to dismiss made by bonding companies sued in actions brought pursuant to the Labor-Management Reporting and Disclosure Act supports a denial of the motions to dismiss made here by American and Fidelity. The Court in Keane, supra, 277 F. Supp. at p. 258, described well the inequities involved in barring plaintiffs from suing bonding companies because of such technicalities:
"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."
Similar considerations have convinced this Court that it should not accept Fidelity's argument that the plaintiffs should be barred from recovery because of the provisions in the bond provided by Fidelity to the effect that "Loss is covered under this bond only if discovered not later than one year from the end of the Bond Period."
n. 1 Section 301 reads:
"(a) Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties."
Section 302 reads in pertinent part:
"(a) It shall be unlawful for any employer or association of employers or any person who acts as a labor relations expert, advisor, or consultant to any employer or who acts in the interest of an employer to apy, lend, or deliver or agree to pay, lend, or deliver, any money or other thing of value--(1) to any representative of any of his employees who are employed in an industry affecting commerce.
(c) The provisions of this section shall not be applicable . . . (5) with respect to money or other thing of value paid to a trust fund established by such representative for the sole and exclusive benefit of the employees of such employer, and their families and dependents (or of such employees families and dependents jointly with the employees of other employers making similar payments, and their families and dependents): PROVIDED, That (A) such payments are held in trust for the purpose of paying either from principal or income or both, for the benefit of employees, their families and dependents for medical or hospital care, pensions on retirement or death of employees, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, or unemployment benefits or life insurance, disability and sickness insurance or accident insurance: (B) the detailed basis on which such payments are to be made is specified in a written agreement with the employer, and employees and employers are equally represented in the administration of such fund, together with such neutral persons as the representatives of the employers and the representatives of the employees may agree upon and in the event the employer and employee groups deadlock on the administration of such fund and there are no neutral persons empowered to break such deadlock, such agreement provides that the two groups shall agree on an impartial impire to decide such dispute, or in event of their failure to agree within a reasonable length of time, an impartial umpire to decide such dispute shall, on petition of either group, be appointed by the district court of the United States for the district where the trust fund had its principal office, and shall also contain provisions for an annual audit of the trust fund, a statement of the results of which shall be available for inspection by interested persons at the principal office of the trust fund and at such other places as may be designated in such written agreement; and (C) such payments as are intended to be used for the purpose of providing pensions or annuities for employees are made to a separate trust which provides that the funds held therein cannot be used for any purpose other than paying such pensions or annuities; or (6) with respect to money other thing of value paid by any employer to a trust fund established by such representative for the purpose of pooled vacation, holiday, severance or similar benefits, or defraying costs of apprenticeship or other training programs: PROVIDED, That the requirements of clause (B) of the proviso to clause (5) of this subsection shall apply to such trust funds".
Section 501 reads:
"(a)' the officers, agents, shop stewards, and other representatives of a labor organization accupy positions of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expand the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as an adverse party or in behalf of an adverse party or in behalf of an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interests of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization."
And now, this 10th day of January, 1969, it is hereby ordered that all motions to dismiss the above-captioned case made by the named individual defendants, and the defendants the Upholsterers' International Union of North America, the U.I.U. Health and Welfare Fund, the U.I.U. National Pension Trust, the United States Fidelity and Guaranty Company, and the American Surety Company, are denied.
It is further ordered that the motion to dismiss the complaint for failure to state a claim upon which relief can be granted, made pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure by the entity defendants, is granted to the extent that the plaintiffs have challenged the composition of the Board of Trustees of the Health and Welfare Fund of the U.I.U., and, accordingly, this claim is dismissed from the above-captioned case. This Rule 12(b)(6) motion is denied without prejudice, however, to the extent that the motion challenges any other aspects of the plaintiffs' complaint.
It is finally ordered that the motion for a more definite statement, made by the entity defendants in the above-captioned case, is granted, and the plaintiffs are ordered to describe more precisely the alleged improper dealings between the trust funds and the U.I.U. to which they vaguely refer in para. 18 of their present complaint.