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Keywords

lawsuitdefendantlitigationmotionfiduciarytrustharassmentfiduciary duty
motionfiduciarytrustwilllegislative intent

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International Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. Hoffa, 242 F.Supp. 246, 59 L.R.R.M. (BNA) 2460, 51 Lab.Cas. P 19,750

Facts

The action was brought by six individuals as trustees ad litem for the International Brotherhood of Teamsters, who claimed membership through local unions. The individual defendants were officers of the International, accused of authorizing improper expenditures from union funds for the defense of the General President in criminal proceedings. Prior to the lawsuit, fourteen members had demanded action from the General Executive Board, but the two trustees ad litem in question did not participate in this demand.

This action is brought in the name and for the benefit of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, an unincorporated labor organization, by six individuals, as its trustees ad litem, who claim membership in it through membership in good standing in one of its affiliated local unions.

Issue

The main legal issue was whether the two trustees ad litem had standing to maintain a derivative action against the union officers for breach of fiduciary obligations, given their lack of participation in the pre-litigation demand.

The complaint charges that prior to the commencement of this suit, fourteen members in good standing of a local affiliate, four of whom are trustees ad litem herein, made demand upon, and met refusal by, the International's General Executive Board to take necessary action to prevent funds from being spent for these purposes and to recover funds allegedly already so spent.

Rule

Under the Labor-Management Reporting and Disclosure Act, a member may sue for breaches of fiduciary duty only if they have made a demand for action that was refused by the labor organization.

The Act imposes upon ‘officers, agents, shop stewards, and other representatives of a labor organization' fiduciary obligations inuring to the benefit of both the organization and its collective membership.

Analysis

The court analyzed the statutory language of the Labor-Management Reporting and Disclosure Act, emphasizing that the requirement for a demand is mandatory. Since the two trustees ad litem did not participate in the demand made by other members, they were found to lack standing to bring the action. The court noted that the Act was designed to protect union officials from unjust harassment and that the absence of a demand precluded the lawsuit.

Despite the danger that in particular applications literalness may tend to stifle true legislative intent, it is clear that here the statutory language must be given its natural meaning.

Conclusion

The court granted the motion to drop the two trustees ad litem from the case, concluding that their failure to make a demand for action disqualified them from maintaining the suit.

The International's motion to drop these parties is procedurally proper and its position thereon factually and legally sound.

Who won?

The International Brotherhood of Teamsters prevailed in the motion to drop the two trustees ad litem from the case because they lacked standing due to their failure to participate in the necessary pre-litigation demand.

The motion will be granted.

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