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November 19, 1984


The opinion of the court was delivered by: SHAPIRO



 This action is the penultimate phase of the litigation arising from the decision of the General Executive Board ("GEB"), International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("IBT") to merge Local 1 (ACA) Broadcast Employees of the IBT ("Local 1") into the Highway Truck Drivers and Helpers Local 107 ("Local 107"). Prior to the merger, Local 1 was a small local union predominately representing workers in the radio broadcast and insurance industries whose members were citizens of New York and Pennsylvania. William Bender, former Secretary-Treasurer, Business Agent, and Chief Executive Officer of Local 1, was and is a citizen of New York. Local 107 is a large union predominately representing truck drivers that, in July 1975, had no active members who were citizens of New York.

 In an earlier phase of this litigation, Bender and Local 1 filed suit against IBT and Local 107 to enjoin the GEB's merger order. Additionally, Bender appended a claim against IBT and Local 107 for salary allegedly owed him for services he rendered to Local 1's membership both before and after the merger order. IBT counterclaimed for enforcement of the merger order. The Honorable Edward R. Becker, then a judge of this court, *fn1" denied plaintiff's motion for a preliminary injunction against the merger order on March 26, 1976. Local No. 1 (ACA), et al. v. International Brotherhood of Teamsters, et al., 419 F. Supp. 263, 269 (E.D.Pa. 1976).

 Following trial on the merits, Judge Becker made his denial of an injunction against the merger order final and entered judgment to enforce it. On Bender's pendent claim for salary, the court held Local 107 liable as the successor union for Bender's salary for work performed for Local 1 prior to the merger but denied Bender recovery of any salary for post-merger services. Local No. 1 (ACA), William Bender, et al. v. International Brotherhood of Teamsters, Local 107, et al., 461 F. Supp. 961 (E.D.Pa. 1978).

 A series of cross-appeals followed: Local 1 and Bender appealed the court's denial of injunctive relief; Bender appealed the court's denial of any post-merger salary; and Local 107 cross-appealed the court's salary award for pre-merger services. The Court of Appeals affirmed the validity of the GEB's merger order. However, it held there was no pendent jurisdiction over Bender's salary claim and vacated the salary judgments. Local No. 1 (ACA), William Bender, et al. v. International Brotherhood of Teamsters, Local 107, et al., 614 F.2d 846 (3d Cir. 1980).

 Following its partial vacation of Judge Becker's 1978 decision, the Court of Appeals granted Bender's motion to amend his pleadings under 28 U.S.C. § 1653 to allege diversity of citizenship as the jurisdictional basis for his salary claim. Id. at 852-53 (as amended February 26, 1980). Bender then amended his original action (Civil Action No. 75-2684) by dropping the merger claim. Bender also re-filed his salary claim in a new action against Local 107 only (Civil Action No. 80-534). On July 27, 1982, Judge Becker held that Bender could not drop the merger claim to create diversity jurisdiction at such a late date. But Judge Becker permitted the new action; since Bender had never become a member of Local 107, there was complete diversity between Bender and Local 107 in 1980 when the new action was commenced. Local No. 1 (ACA), et al. v. International Brotherhood of Teamsters, et al., (Civil Action No. 76-6284) and William Bender v. Highway Truck Drivers and Helpers Local 107, (Civil Action No. 80-534), 543 F. Supp. 1321 (E.D.Pa. 1982). This case, William Bender v. Highway Truck Drivers and Helpers Local 107, Civil Action No. 80-534, was transferred to the docket of this court on April 10, 1983. Now before this court is Bender's 1980 action against Local 107 as Local 1's successor union for salary allegedly owed him for servicing the Local 1 membership. Also before this court is Local 107's counterclaim, asserting that Bender must reimburse Local 107 both for salary he paid himself and for all expenditures he made on behalf of Local 1 subsequent to July 21, 1975, when IBT ordered Local 1 merged into Local 107.

 To understand the claims asserted by both sides, the allegations are summarized according to the relevant time periods.

 Period I: January 1, 1972 - July 21, 1975

 This is the period prior to merger when Local 1 did not pay Bender. (Bender was paid $200 per week from his election as Secretary-Treasurer and member of the Local 1 Executive Board in May, 1971 through December, 1971.) In both 1974 and 1975, Local 1's Executive Board voted to pay Bender a salary for 1972-75 "when and if" Local 1 obtained the money. It is undisputed that Local 1 never had sufficient funds to pay Bender any salary prior to its merger with Local 107.

 Bender asserts that the Local 1 Executive Board resolutions imposed an obligation to pay his 1972-75 salary, amounting to $40,801.37, on Local 1 and Local 107, its financially solvent successor. Local 107 contends that Local 1's actions were procedurally irregular and cannot bind Local 107.

 Period II: July 21, 1975 - November 8, 1978

 This is the interval between the IBT order that Locals 1 and 107 be merged and the district court decision upholding the validity of the merger. During this time, Bender used funds of the former Local 1 *fn2" to finance litigation aimed at invalidating the merger, pay himself a salary of $7,591.68, and pay other Local 1 expenses (e.g., rent, telephone). Local 107 counterclaims for these and any other expenditures on the grounds that following the merger order, Local 1 of the IBT ceased to have a legal existence. Furthermore, Local 107 asserts that Bender was not authorized to expend funds on behalf of Local 1 members, as Local 107 had expressly ordered Bender not to continue servicing the Local 1 membership. Bender contends that the legal status of Local 1 was in doubt until the court ruled on the merits of the merger order.

 Period III: November 8, 1978 - Present

 This period is not covered by the present claims. Judge Becker's November 8, 1978 order required Bender to turn over all property and funds under Local 1's control to IBT or Local 107. On October 5, 1982, Judge Becker held Bender in contempt and ordered him to pay $2,968.26 to Local 107 within thirty (30) days to purge himself. See Memorandum dated September 11, 1982 and Order dated October 5, 1982. Following his unsuccessful appeal, Bender satisfied this judgment. On October 23, 1983, Local 107 acknowledged receipt of Bender's check for $2,968.26; its petition for attorneys' fees in connection with the contempt proceedings is pending.

 This Opinion constitutes the court's findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a). The findings of fact in Judge Becker's 1976 and 1982 Opinions as well as the Court of Appeals' 1980 Opinion are res judicata and, where relevant, are relied on by this court. The record before this court for Period I is identical to the record that was before Judge Becker in his vacated 1978 Opinion. We will quote his Opinion where, following our independent determination, we agree with his thorough and thoughtful analysis of the relevant considerations. The record before this court for Period II includes additional documents as stipulated by the parties: Documents attached to the Affidavit of William J. Einhorn, submitted in support of defendant's Cross-Motion for Summary Judgment Dismissing Plaintiff's Complaint and Granting it Judgment on its Counterclaim, and labeled Exhibits A, B, and C. This court's findings are based on this record and statements of counsel at closing arguments before this court on January 13, 1984.


 This court finds that:

 Period I : Bender is entitled to salary of $40,801.37 for services rendered the membership of Local 1 from January 1, 1972 through July 21, 1975.

 Period II : Since an International union may exert substantial authority over its subordinate locals (including the power to order mergers), Bender had no right to take actions and make expenditures on behalf of Local 1 subsequent to the July 21, 1975 merger order. Accordingly, $15,837.73 is a set-off to Bender's salary award; this represents all post-July 21, 1975 expenditures on behalf of Local 1, its officers, and its litigation, with the sole exception of dues paid to the International union on behalf of members of Local 1 (regarded by the International union as due payments on behalf of new Local 107 members).

 Period I: January 1, 1972 - July 1975 William Bender's Salary Claim

 The relevant history is summarized in Judge Becker's 1976 Opinion. *fn3" Local 1 was originally affiliated with the American Communications Association ("ACA"), "a labor organization which pioneered in the representation of employees in the radio broadcast industry," in the 1930's and 1940's. 419 F. Supp. at 277. However, the ACA subsequently came upon "hard times" and, in 1966, sought affiliation with the large IBT. At that time, the ACA consisted of four local unions; Local 1 was the smallest, with only 50 members. *fn4" "Local 1's IBT charter application was filed on November 2, 1966. The signers, including . . . Bender, pledged themselves "to be governed by the International Constitution. ' Local 1's charter was granted on November 15, 1966. The charter contract, signed on April 21, 1967, on behalf of Local 1 . . . obligated Local 1 to 'abide by the provisions of the International Constitution. '" 419 F. Supp. at 278.

 Following affiliation, Bender worked as an organizer, particularly directing his energies to the insurance industry. Bender successfully organized a small number of insurance industry employees; however, for a variety of reasons, see 419 F. Supp. at 279, his efforts resulted in few new Local 1 members. Local 1's membership during 1967-1972 never rose above 115. Judge Becker found that,


In the wake of these developments, Local 1 has remained a tiny local union whose resources are as limited as its membership. Local 1 had been in poor financial condition since affiliation. It had no paid employees between November 1966 and May 1971. Although Local 1 paid plaintiff Bender a salary from May 1971 to December 1971, it was not able to continue these payments and has had no paid full-time representative since that time. It owes the Eastern Conference of Teamsters money for printing authorization cards, a debt it has been unable to pay since incurred in 1972. It had assets in 1972 of approximately $1,000.


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. XVI, § 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). *fn5" 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.

 419 F. Supp. at 279-80 (footnote omitted).

 Local 1's small size and financial condition made it a likely candidate for merger. As Judge Becker related,


In the latter part of 1972, General Secretary-Treasurer Miller began a review of local unions with memberships of under 100 to determine whether to recommend a merger. A review of the situation of Local 1 revealed its small membership and poor financial condition, its inability to maintain a full-time, paid representative, its late per capita payments, its failure to adopt bylaws, and its failure to hold regular monthly membership meetings. . . . [Miller] brought the matter to the attention of the GEB at one of its quarterly meetings, held on July 17-20, 1973. He recommended that Local 1 be merged because of its small size, poor financial condition, failure to adopt bylaws, failure to hold regular monthly meetings, inability to maintain a full-time paid representative, and lateness in per capita payments. At its session of July 18, 1973, the GEB voted unanimously in favor of merger of Local 1 into an appropriate local union for the reasons advanced by Miller.


Implementation of the decision to merge Local 1 traveled a more troubled course. On July 27, 1973, Miller wrote Treretola, directing him to implement the Board decision by finding a local with which to merge Local 1. . . .


On April 1, 1974, Treretola wrote Miller that he was unable to find a local willing to merge with Local 1. On April 30, 1974, Treretola moved before the GEB to dissolve Local 1's charter, but then withdrew his motion. . . . This motion was made solely because of difficulty in finding an accommodating local union into which Local 1 could merge. On May 2, 1974, the GEB voted to merge Locals 1 and 115. Local 115 opposed this merger. Moreover, on June 18, 1974, Local 1 and William Bender filed suit in the Court of Common Pleas of Philadelphia County to enjoin the merger. Named as defendants were the IBT, Frank E. Fitzsimmons and Edward Nangle. . . . This lawsuit was dismissed by the court on December 31, 1974.


On January 24, 1975, after the dismissal of the state court suit, the GEB reaffirmed its decision to proceed with the Local 1's merger. Bender was notified and directed to take certain steps to facilitate an orderly merger. Bender refused to comply. Thereafter, on March 4, 1975, Bender wrote to Miller to request a stay because of an organizing drive which Bender hoped would increase the size of Local 1. On March 17, 1975, Miller wrote to Bender that the request for a stay had been denied by the GEB because no substantial reason for changing its decision had been presented. At a GEB meeting held between April 28 and May 1, 1975, the GEB once again reaffirmed its decision. On July 7, 1975, Bender wrote Miller to suggest the organizing possibilities in the insurance industry, to no avail. The GEB reviewed its previous decisions, reviewed Bender's letter and position, and concluded that Local 1's recent "organizing success" did not substantially change the situation or affect the reasons for the original merger decision.


On July 8, 1975, the GEB ordered that the previous decision merging Local 1 with Local 115 be amended to substitute Local 107 for Local 115, and Fitzsimmons wrote to Bender on July 16, 1975, notifying him of this decision. Local 107 is a large Philadelphia based local, the vast bulk of whose members are truck drivers. Local 107's recent history has been marked by internal strife, its fabric frequently tattered by violence. On July 21, 1975, Messrs. Cotter and Barlow, as representatives of the IBT, appeared in the office of Local 1 and demanded that Bender immediately turn over the local's charter, books, records, seal, bank accounts, membership lists, collective bargaining agreements, minutes, etc., and handed him two letters dated July 16, 1975, one from Murray W. Miller and the other from Frank E. Fitzsimmons. Bender continued to protest the merger. Local 107, which had a complete executive board, made no provision to include Bender thereon. On September 9, 1975, Louis J. Bottone, President of Local 107, sent out formal notification to members of Local 1 informing those who were given notice that their membership obligations would thenceforth accrue to Local 107, as the successor to Local 1. ' This notice was followed by a certified letter on September 17, 1975, from Bottone to Local 1's members containing dues checkoff forms, personal data sheets and a membership card in defendant Local 107 with the Local 1 member's name inscribed on it. These notices were prepared by the IBT for use by Bottone. Shortly thereafter the present lawsuit [to enjoin the merger] was filed.

 419 F. Supp. at 281-82 (footnotes omitted).

 Although Local 107 was an extremely odd partner for Local 1, it was within the IBT's authority to order the merger. The Constitution and By-Laws of a union constitute a contract between the union and its membership. See International Association of Machinists v. Gonzales, 356 U.S. 617, 618-19, 2 L. Ed. 2d 1018, 78 S. Ct. 923 (1958). Consequently, since the IBT Constitution *fn6" authorized merger of locals without their consent, the merger was valid. 614 F.2d 846, 850 (3d Cir. 1980).

 Bender worked without salary after January, 1972. On March 4, 1974, four members of the Local 1 Executive Board met in Philadelphia and passed the following resolution:


Motion that Brother Bender be paid back to Jan. 1972 on the basis of $10,000 per year (this shall be a liability of a Local and not of any individual member of the Executive Board) when and if the Local has the funds and $12,500 for year 1974.

 Plaintiff's Exhibit No. 1a. The motion was recorded in the Minutes. Bender was present but listed as "not voting." On March 14, 1974, the three-man New York branch of the Executive Board met and with Bender apparently voting this time, adopted an identical resolution. In 1975, the Executive Board met again in split sessions (on June 17 in Philadelphia, on July 22 in New York) and unanimously voted "to approve $15,000 for year of 1975 for salary for William Bender for services." Plaintiff's Exhibit No. 1a. Passage of this resolution was recorded in the Minutes.

 We agree with Judge Becker that,


The above salary resolutions constitute the basis for Bender's claim against defendant Local 107 and defendant IBT in the present suit: $10,000 for the years 1972 and 1973, $12,500 for 1974, and $15,000 for 1975.


The four resolutions contain certain ambiguities on their face. The March 4, 1974 and March 14, 1974 resolutions state that the 1972 and 1973 salaries are expressly conditioned on Local 1 obtaining sufficient funds to pay the amounts. Both resolutions are silent as to whether the 1974 salary obligation is similarly conditional. We resolve this ambiguity by finding the bifurcated Executive Board, voting on March 4, 1974 and March 14, 1974, intended that the 1974 salary was to be conditional on the local obtaining sufficient funds. We base this finding on our inference from the entire record: The Executive Board of Local 1 was scrupulous, during the entire period 1971-75, to conserve the slender resources of Local 1, and not to take any actions in violation of its fiduciary duty as officers of the local. . . . To have approved the 1974 resolutions without the contingency would have been in gross disregard of that fiduciary responsibility. We infer that the Executive Board would not have done so, and therefore resolve the ambiguity in favor of implying the contingency provision into the votes on the 1974 salary. For an identical reason we resolve the ambiguity created by the differences between the June 17, 1975 and the June 22, 1975 *fn7" resolutions pertaining to Bender's 1975 salary (the latter containing the contingency, the former not) in favor of implying the contingency into the June 17, 1975 resolution.


Additionally, we find that the Executive Board meeting procedure utilized on the above occasions, whereby the Board met in bifurcated sessions of respectively four and three members each, constructively complied with Article XXV of the IBT Constitution, . . . . The purpose of that provision is obviously to ensure that not fewer than four of the seven members of the Executive Board would take actions binding the local. The bifurcated meeting structure did not contravene this purpose, since at the two meetings, held within a week or ten days of each other, the full complement of Executive Board members had the opportunity to vote on the identical resolutions.


We find - indeed it was conceded by all - that Local 1 never had enough money to pay Bender a full salary at any time between January, 1972 and July, 1975, the date of the GEB merger order.

 461 F. Supp. at 970-71.

 Bender claims that Local 107 owes him $40,801.37 in back salary. *fn8" Local 107 contends that these salary resolutions are not binding on Local 107 for these reasons: *fn9"


1. Local 1 Executive Board members violated their fiduciary duty by creating salary obligations in the absence of by-laws that delegated such authority and by threatening the solvency of Local 1.


2. The purported contracts between Local 1 and Bender were and are unenforceable because of their indefinite and retroactive character.


3. The purposed contracts were and are sham because they were enacted with knowledge of and on account of the impending merger.

  n8 The amount in controversy is derived as follows: 1972 $10,000.00 1973 10,000.00 1974 12,500.00 1975 8,301.37 ($15,000 pro-rated: $15,000 divided by 365 days $40,801.37 for the year = $41.09 per day. There are 202 days from January 1 through July 21; 202 days multiplied by $41.09 per day = $ 8,301.37


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