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Purcell v. Keane

decided: January 31, 1969.

GERVASE J. PURCELL, JR., ET AL., ON BEHALF OF LOCAL 169, AFFILIATED WITH INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, APPELLEES
v.
FRANK KEANE, ET AL., APPELLANTS



McLaughlin, Kalodner and Aldisert, Circuit Judges.

Author: Mclaughlin

McLAUGHLIN, Circuit Judge.

This is an interlocutory appeal from an order denying defense motions to dismiss the complaint certified for this appeal by the District Court pursuant to 28 U.S.C. § 1292 (b). Leave to appeal was granted by this Court on December 6, 1967.

The narrow issue here is whether exhaustion of internal union remedies is a condition precedent to suit brought under Section 501 (b) of the Labor Management Reporting and Disclosure Act of 1959 (hereinafter LMRDA), 73 Stat. 535, 29 U.S.C. § 501 (b) (1959).

Appellees are rank-and-file members of Warehouse Employees Local 169, affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Essentially, their complaint, filed November 8, 1966, alleges numerous breaches of fiduciary duties by appellants who were officers or business agents of Local 169. The alleged breaches included various expenditures of union funds for personal use and failure to account for union funds advanced to appellants to attend a convention in Miami Beach, Florida.

A brief chronological narration of appellees' efforts to apprise the union of these alleged violations and to urge the union leadership to take effective action against appellants is vital to a clear understanding of the background of this case. On September 29, 1966, prior to the filing of the complaint, appellees forwarded a letter to all the members of the Executive Board of Local 169 which, in effect, detailed the violations and concluded with the paragraph:

"We therefore demand that the Executive Board take immediate steps to recover from the officers and agents whose names appear on the attached list the amounts of the unauthorized expenditures made by them. Immediate action by you is requested and you are advised that if you do not act promptly to recover these sums, we, as members of Local 169, shall do so ourselves, on behalf of the union, by means of a lawsuit if necessary, under the provisions of Section 501 of the Labor Management Reporting and Disclosure Act."

Attached to the letter was a list of the numbers of 287 union checks which allegedly represented the improper expenditures. The affidavit of Hartsough, president of the Local, notes the following events. A meeting of the Executive Board of Local 169 was held on October 4, 1966 at which a subcommittee was appointed to inquire into the charges contained in appellees' letter. About October 17 or 18, 1966, Hartsough asked McGowan, a member of the special subcommittee, when the report would be ready. McGowan, in essence, answered that he was too busy to do anything about it and, further, that he did not know when the subcommittee would meet. As a result of that conversation with McGowan, Hartsough sent the following letter to each of the members of the subcommittee on October 25, 1966:

"Dear Sir and Brother,

On October 4, 1966, at an Executive Board Meeting, a sub-committee was appointed by me, to go over certain allegations made regarding checks, etc.; since you are a member of the sub-committee, I feel a report is now due.

Awaiting your early response, I am

Fraternally,

(Signed) EDW. J. ...


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