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,
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
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 ...