The opinion of the court was delivered by: BECKER
In July 1975, Local 1 (ACA), a small local union affiliated with the International Brotherhood of Teamsters (IBT) was ordered by the IBT's General Executive Board (GEB) to be merged into Highway Truck Drivers and Helpers Local 107, a large local union. Under the terms of the merger order, Local 107 was the sole surviving entity. Alleging violation of rights protected under 42 U.S.C. § 1985, 29 U.S.C. § 101 Et seq., state law, and the IBT Constitution, Local 1 and its officers brought this action seeking declaratory and injunctive relief against the merger.
The first phase of this litigation dealt with plaintiffs' motion for a preliminary injunction. In an earlier opinion, 419 F. Supp. 263 (E.D.Pa.1976), we denied that motion. Plaintiffs' prayer for declaratory and injunctive relief against the merger is now before us on final hearing, though on the same record as in the earlier phase, because the parties have not supplemented it. Since our earlier opinion contains extensive findings of fact and conclusions of law, we may finalize any decision on the declaratory and injunctive issues with only the briefest of discussion. Reaffirming our earlier findings and conclusions, we decide that plaintiffs have not proved that the IBT merger order of July, 1975 violated any rights of plaintiffs protected under 42 U.S.C. § 1985, 29 U.S.C. § 101 Et seq., state law, or the IBT constitution. Accordingly, we shall grant to defendants declaratory and injunctive relief, declaring that the merger is valid and lawful, and ordering Local 1 to turn over various union property under its control.
The principal purpose of this opinion is to address a claim by plaintiff William Bender, Secretary-Treasurer, Business Agent, and Chief Executive officer of Local 1 for salary for work for Local 1 both prior to and after the merger order. Bender asserts this claim against both Local 107 and the IBT. The salary claim relates mainly to Bender's work for Local 1 from 1972 until the merger order in July, 1975, during which time he was paid virtually no compensation, because of the extremely small size and financial weakness of Local 1. Bender worked full time during that period. While part of his time was spent in servicing the existing membership, most of it was devoted to efforts to broaden Local 1's membership base and increase its members by various organizing campaigns, or in efforts to retain those members obtained in casualty insurance industry organization drives when their Local 1 affiliation was under attack before the NLRB and in the Courts. Local 1's assets during most of the period from 1972-1975 were two thousand dollars or less. In 1974 and again in 1975 Local 1's Executive Board voted Bender a salary covering the period 1972-75, contingent on the local acquiring funds sufficient to pay it. The merger order in July, 1975 extinguished any possibility that Local 1 Qua Local 1 would ever come to have sufficient resources to pay Bender any back salary.
Local 107 and the IBT have interposed a great number of defenses to the salary claim, most of them relating to procedural irregularities on the part of Local 1's Executive Board, which, in their view, render the resolutions to pay Bender past and future salary void Ab initio. Inter alia, defendants assert that the Executive Board's actions were invalid for the following reasons: (1) the Executive Board's failure to enact by-laws and otherwise follow the IBT constitution; (2) the failure of Local 1's general membership to ratify the salary resolutions; (3) the resolutions constituted a breach of the Executive Board members' fiduciary duty under the IBT Constitution; (4) the resolutions violated the Labor-Management Reporting Disclosure Act, 29 U.S.C. § 431(b) and (c) (LMRDA); (5) the resolutions were fraudulent, I. e. made in anticipation of the merger, hence to bind the successor local or the IBT; (6) the "when and if" condition precedent to the salary resolutions has never come to pass because Local 1 went out of existence and therefore never obtained sufficient funds, and because Local 107 does not have sufficient funds; and (7) the IBT Constitution shields the IBT from liability.
As will at length appear, we reject every defense except the one, founded upon the IBT Constitution, which absolves the International from liability by virtue of a merger order, and decide that under Pennsylvania law, which we follow on this pendent claim, the contingent salary obligation created by Local 1's Executive Board was valid, and was transferred by virtue of the merger to become a contingent liability of the successor organization, Local 107. Finding that the contingency has been discharged i. e. that Local 107 has funds sufficient to pay the back salary we conclude the pre-merger order salary is an obligation upon Local 107 now due and owing. However, because Following the merger of July, 1975, Bender acted purely as a volunteer (he was not hired by successor Local 107), there is no basis for any salary claim for his post-merger services, and that claim will be denied.
This opinion constitutes our findings of fact and conclusions of law under Fed.R.Civ.P. 52(a).
II. Bender's Salary Claims
1. Plaintiff Bender's work for Local 1
We made extensive findings of fact about Mr. Bender in our earlier opinion. We now ratify and incorporate the factual findings relevant to him from that opinion.
By way of brief recapitulation, we note the following.
In May, 1971, Bender was elected Secretary-Treasurer, and member of the Executive Board of Local 1. Most of Local 1's members were employees of radio stations in New York and Philadelphia. He subsequently assumed the duties of business agent and principal executive officer of the local, which meant he had primary responsibility for servicing the needs of the existing members of the local (handling grievances, negotiating collective bargaining agreements, etc.) and for union organization. The latter was an important duty in view of the large decline in Local 1's membership. Bender took the initiative by seeking to organize in the insurance industry, which was essentially virgin territory for the union movement, as well as in other non-broadcast industries. As our earlier opinion demonstrates, Bender's efforts were unsuccessful and, because of its small size (40 to 115 members during 1972-74, See 419 F. Supp. at 278) and concomitant inability to support its activities financially, the IBT ultimately, and over the objection of both locals, decided to merge Local 1 into Local 107.
During Bender's stewardship of Local 1, he was also involved in IBT politics, becoming a partisan for the return to power of James R. Hoffa. We turn now from recapitulation to the making of new findings germane to the issues before us.
From May to December 1971, Local 1 paid Bender a salary of $ 200 per week. He was the only salaried official of the Local. Bender's salary ceased, however, on January 1, 1972, because of the lack of assets in Local 1's treasury. The relevant financial statement shows that the union began the year 1971 with $ 8,800 in cash. By December 31, 1971, the balance was $ 407.40. Local 1 was never again in a financial position to pay Bender (or any other officer) a salary over any continuous period of time.
Bender continued to work as Secretary-Treasurer, business agent and principal executive officer for Local 1 during the years 1972, 1973, and 1974, without compensation, supporting himself from savings and from his wife's earnings. His hope during those years was to vastly increase the membership of the local by making a breakthrough in the casualty insurance industry. Bender had already had some success in organizing insurance adjusters. He therefore undertook drives to organize more insurance adjusters, and also greeting card workers, newspaper circulation managers and radio technicians. At one point he obtained signature cards from 1500 radio technicians at NBC and ABC. At another point he made substantial progress in organizing 700 greeting card workers at the Norcross plant in West Chester, Pennsylvania. For various reasons these efforts did not achieve fruition in the form of Local 1 membership. Many hundreds of casualty insurance industry employees were the object of various Bender organizational drives, with certification achieved for various periods of time at several large insurance companies. But Bender's insurance industry initiative was fraught with litigation before the NLRB and the courts, and was ultimately scuttled because of lack of IBT financial support. The greatest increase in Local 1's membership during these years occurred in June, 1975, one month before the IBT ordered Local 1 merged with Local 107, when the membership jumped from 61 to 115 (419 F. Supp. at 278).
We find that during the years 1972, 1973, and 1974, and through July, 1975, Bender worked over forty hours a week, five or more days a week, 52 weeks a year, at his union responsibilities. We further find that 100% of his activities were directly on behalf of Local 1. In other words, although his organization of a number of new workers would have indirectly inured to the benefit of the IBT, its Eastern Conference and its appropriate Joint Council through payment of additional per capita sums by Local 1 to those organizations under the IBT charter, Bender was working not for any of those organizations but rather full-time for Local 1.
2. Local 1's Executive Board Its Structure, Function, and Compliance with the IBT Constitution
In our earlier opinion, we made certain factual findings which are a necessary point of embarkation for our factual findings herein:
Local 1's shortcomings have not been only financial. The local has also suffered from a bifurcation of its internal operations, a tale of two cities, as it were. For, while the local's office is in Philadelphia, most of its members, including Bender, live and work in metropolitan New York. Local 1 has failed to hold monthly membership meetings as required by the IBT Constitution Art. XIV, § 2(a)(1), probably for that reason, and its executive board meetings were held in a strange way: two members would meet in Philadelphia one day and three in New York the next (with Bender). Moreover, an audit report prepared for the IBT showed, Inter alia, that Local 1 failed to adopt bylaws, as required by the IBT Constitution, Art. XXII, § 1, and that the local was late in paying per capita sums due the IBT, the Eastern Conference, and the Joint Council, and in filing required trustee reports. These problems did not prevent Bender, a most dedicated man, from servicing the membership, and at no time has there been any complaint by members of Local 1 regarding servicing, negotiation of collective bargaining agreements, or the performance of duties by Bender. On the other hand, the local's viability is at best marginal, and, in view of its financial difficulties, it lacks the capacity effectively to organize its jurisdiction.
While we re-affirm these findings (except for amending the number of officers of the Executive Board from five to seven) we also need to supply additional facts which were not material to the legal questions presented in our earlier opinion, but which are material to the question whether Local 1 was in compliance with the IBT Constitution and whether the Executive Board acted within its powers in voting Bender a salary.
At the time Local 1 of the ACA sought to become IBT Local 1, seven members of Local 1 ACA signed a charter application. Those applicants were Bender, Morton Borrow, Charles F. McCracken, Sam Van Fossen, Frank Unterberger, Walter Jost, and Gordon Greenfield. In the application they pledged themselves to be governed by the IBT Constitution and all amendments thereto. Two weeks later, on November 15, 1966, Local 1 received its Charter from the IBT, with the above seven persons listed as Charter Members. The IBT Charter they were granted on behalf of Local 1 provided:
This Local Union shall be empowered to adopt Bylaws, negotiate contracts covering wages, hours, and conditions of employment in accordance with the laws, usages and requirements of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, and in accordance with the best interests of the labor movements.
The International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America grants this charter with the understanding that should the parties receiving it, or their successors, fail to comply with the provisions herein set forth, or with the Constitution, laws, usages and requirements of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, this charter will be revoked and they shall be required to turn over all books, documents, property and funds to the General President or his representative, or to the General Secretary-Treasurer of the International Union, and should Local Union No. 1 secede, disaffiliate, or dissolve, or be suspended, or forfeit its charter, then all books, documents, property and funds shall likewise be turned over to the General President, or his representative, or to the General Secretary-Treasurer in accordance with the applicable provisions of the International Constitution.
The record is silent on the internal structure of Local 1 prior to 1971. In May, 1971, however, in the same general membership election in which Bender was elected Secretary-Treasurer, six other members were elected to the Executive Board. Charter members Borrow, Jost and McCracken were elected President, Vice-President and Recording Secretary, respectively; charter members Greenfield and Van Fossen were elected Trustees and non-charter member Myers was elected the third Trustee. Each of the seven positions was for a term of three years, until May, 1974. The provision of the IBT Constitution governing the composition of Local 1's Executive Board reads as follows:
The officers of the Local Union shall consist of a President, Vice-President, Recording Secretary, Secretary-Treasurer and three (3) trustees. These officers shall constitute the Executive Board of the organization. . . .
Although in our earlier opinion we found Local 1's Executive Board to be composed of five members, we now amend that finding as follows: from May, 1971 to May, 1974, the officers of Local 1's Executive Board, elected by the general membership, were the seven named above. Following a general membership election in May, 1974, at least three, and possibly four (I. e. Bender, Morrow and Jost, with one being unidentified) were re-elected. Thus, notwithstanding defendants' intimation to the contrary, not only was Article XXII § 2 complied with, but the 3 year interval between elections required by Article XXII § 3 was complied with as well.
We also find that the bifurcated branches of the Executive Board referred to in our earlier opinion regularly met, though not within two days of each other, (as earlier found) but within approximately one week to ten days of each other, with Bender and two other members meeting in New York and Bender and four other members meeting in Philadelphia.
The duties of the individual members of the Executive Board, and of the Executive Board of a local itself, are specified in a number of articles of the IBT Constitution. One provision relevant to the IBT and Local 107's defense is Article VI § 4(b), which provides:
Local Unions shall not adopt bylaws or take any action which would impair their ability to meet their financial obligations to the International Union and its subordinate bodies or interfere with the discharge of their obligations to their members in the negotiation and administration of collective bargaining agreements and in conducting the affairs of the Local Union as a solvent organization.
Defendants have contended that this section was violated and that the action taken to confer a salary upon Bender was ultra vires. We find, however, that neither the Executive Board nor any of its officers between 1971 and July 1975 "took any action" which impaired their ability to meet any obligations to the ACA or IBT or any other organization, nor that was in derogation of their fiduciary duty to Local 1's membership.
The financial statements for these years show that the $ 9,000 cash balance present on December 31, 1969, was reduced to $ 8,700 a year later, and then dropped dramatically to $ 400 by the end of 1971 (owing largely to Bender's salary between May and December). The balance increased to $ 970 in December, 1972 but fell further to $ 200 by the end of 1974. While these are meager amounts by union standards, at no time did Local 1 go "into the red" or refuse to honor any of its financial obligations other than for Bender's salary. In most of these years it collected over $ 4,000 in dues, made per capita payments to the IBT and paid the sundry daily expenses associated with running a local union. While it is true, as we found in our earlier opinion, 419 F. Supp. at 280, (quoted above on p. 966), that an IBT audit showed Local 1 to be late with per capita payments, it is important to add that the "lateness" and the international auditor's injunction to Local 1 to pay earlier seem technical in the extreme: the November payment, due December 20, was paid on that date; the December payment was one day late, the January payment two days late, the February payment three days early, the March payment ten days early, and the April payment two days late. These were the data on which the international auditor's verdict of tardiness was based.
In sum, we find that the two Executive Boards of Local 1 (I. e. the May "71 May "74 Board and the May "74 July "75 Board) carried out their duties between 1971 and July, 1975 in a responsible manner, managing their limited finances so as to meet their obligations in a timely fashion. The IBT audit in the summer of 1972 supports this finding. This in no way contravenes our earlier finding that the local's financial viability was "marginal," for throughout the years 1972-75 Local 1 clearly did not have any money to pay salaries to its officers or to engage in any organizing campaigns. Article VI § 4(b) was, in our view, substantially if not totally complied with.
The second relevant portion of the Constitution (relied upon by defendants) is Article XIV § 2(a)(1), which provides:
General membership meetings shall be held monthly at such place and time as shall be designated by the Local Union Executive Board subject to disapproval by the General Executive Board. The General Executive Board shall establish such conditions relative to the holding of meetings as in its judgment it deems advisable. Membership meetings may be suspended during any three (3) months between June and October by action of the membership at a meeting after reasonable notice of the intention to vote upon such question.
We find that this provision was not complied with during the period 1971 July 1975. We credit Bender's testimony that, on the occasion membership meetings were called, the response was not good, and we also find there were especial difficulties in conducting membership meetings because of the geographic dispersion of Local 1's membership, I. e. its members resided in both the Philadelphia and New York City areas. Nevertheless, the IBT Constitution does not excuse the lack of monthly meetings for these reasons, and the simple fact is there was not compliance with this provision.
The third Constitutional provision relevant to the IBT and Local 107's defenses is Article XXII § 1, mandating local union by-laws:
Section 1. Each Local Union shall adopt its own separate Bylaws which must comply, and may not conflict, with the provisions of the International Constitution. Said Bylaws shall designate as the principal executive officer the President, the Secretary-Treasurer or the Recording Secretary.
This provision was apparently one of the Constitutional changes enacted in May, 1971. In the IBT Audit dated June 15, 1972, the International Auditor called attention to the fact that Local 1 was not in compliance with this provision. We find that at no time during the period May, 1971 to July, 1975 did Local 1 have by-laws in effect. We credit Bender's testimony that he was aware of the requirement, that he started to draft a set on several occasions, but that neither he nor any other members of the Executive Board gathered sufficient momentum to draft a set of by-laws. Turning the coin over, however, we find that the IBT was clearly aware of the fact that Local 1 was in non-compliance with this provision as of June 15, 1972 (the date of the International Auditor's report), but that at no time between then and July, 1975 made any further request or demand that Local 1 enact by-laws. Nor did the IBT in any way indicate to Local 1 that the absence of by-laws was of any consequence: up until July, 1975, the IBT accepted regular monthly per capita payments from the Executive Board on behalf of the local, accepted and approved regular trustees reports from the Executive Board of the Local, and in short treated Local 1's Executive Board as a bona fide regularly-constituted organization that was empowered to take actions on behalf of the membership of Local 1.
Article XXV defines the Executive Board of the local as follows:
Unless specifically provided otherwise, wherever this Constitution provides for action by the Executive Board of the International Union or any subordinate body, the words "Executive Board" shall mean "a majority of the members of the Executive Board present and voting at a duly called meeting."
We find that this provision was complied with on the two occasions material to Bender's salary claim the March, 1974 resolution setting his salary for 1972-74, and the June, 1975 resolution setting his salary for 1975. On both occasions, the full Executive Board complement voted. The fact that they did so in two "sessions" as it were, with a group of three voting in New York and a group of four in Philadelphia does not alter this fact of compliance, since the two groups voted on identical salary resolutions, and since the resolutions were taken within ten days of each other. See p. 969 Infra.
The foregoing are the only provisions of the IBT Constitution which the parties have pointed out to us, or which we have been able to locate in an independent review of the IBT Constitution, as relevant to whether the Executive Board of Local 1 had the authority to vote Bender a salary. We think it important to note what the IBT Constitution does Not say. First, there is no provision describing which local union officials should be compensated, or in what amount. Second, there is no provision that spells out the authority of the Executive Board of the IBT's local unions, or describes what their powers are regarding, Inter alia, voting salary for local officials. Nor are there any provisions requiring membership ratification of any actions taken by a local executive board. Third, there is no provision stating the consequence for failure of a local to adopt by-laws; in other words, although Article XXII § 1 makes by-laws mandatory ("shall adopt"), it is nowhere stated that in the Absence of by-laws all actions by the executive board of a local are void Ab initio, or that any other consequences flow from not having by-laws. Whether we should construe this interpretation into Article XXII § 1 is a legal matter, which we leave for the legal discussion to follow. In this fact-finding section, we simply find the IBT Constitution to be silent on the question of what consequences follow from a failure of a local Executive Board to adopt by-laws.
3. The Executive Board Salary Resolutions at Issue
As stated previously, Bender worked without compensation for Local 1 after January 1, 1972. On March 4, 1974, four members of the Executive Board of Local 1 met in Philadelphia (President Borrow, Vice President Jost, Secretary-Treasurer Bender and Trustee Myers). Bender was listed in the minutes as "not voting." Trustee Sam Van Fossen was listed in the minutes as "absent but in favor." The first order of business was to pass a resolution concerning Hoffa, which does not appear in the minutes of record. However, at a three-man Executive Board meeting in New York a week before, the following resolution had been adopted: "The Executive Board authorizes the Union's officers to join on behalf of the Union in a suit to be instituted by Mr. James R. Hoffa to challenge the validity of the conditions attached to the commutation of his sentence to permit him to participate in union activity." We assume the absent March 4 resolution by the Philadelphia branch of the Executive Board was to the same, if not identical effect. The suit referred to was Hoffa v. Saxbe, 378 F. Supp. 1221, filed March 13, 1974, in the United States District Court for the District of Columbia. Local 1 joined as a plaintiff in this suit, which challenged the restrictions on Hoffa's union activities which were imposed as a condition of the commutation of his sentence.