Noble v. Sombrotto

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 26, 2007 Decided May 16, 2008

No. 06-7170

DAVID W. NOBLE, JR.,

APPELLANT

v.

VINCENT R. SOMBROTTO, PRESIDENT, NATIONAL

ASSOCIATION OF LETTER CARRIERS, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 94cv00302)

Bernadette C. Sargeant argued the cause and filed the briefs

for appellant.

Bruce H. Simon argued the cause for appellees. With him

on the brief were Brian A. Powers, Nicholas R. Femia, Peter

Herman, and Victoria L. Bor. Keith R. Bolek entered an

appearance.

Before: SENTELLE, Chief Judge, KAVANAUGH, Circuit

Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed PER CURIAM.

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Separate opinion concurring in part and dissenting in part

filed by Circuit Judge KAVANAUGH.

Separate opinion concurring in part and dissenting in part

filed by Senior Circuit Judge WILLIAMS.

PER CURIAM: David W. Noble, Jr., is a member and former

employee of the National Association of Letter Carriers

(“NALC” or the “union”). In 1994 he brought suit against

Vincent R. Sombrotto, then president of the union, as well as

eleven other union officers, accusing them of violating their

fiduciary duties under § 501(a) of the Labor-Management

Reporting and Disclosure Act (“LMRDA”), 29 U.S.C. § 401 et

seq. He later joined the union itself as an additional defendant.

Noble alleged that the officers had directed union funds to

their personal benefit in three ways: (1) an unmonitored

“in-town” expense allowance; (2) union reimbursement of the

employee portion of the officers’ Federal Insurance

Contributions Act (“FICA”) taxes; and (3) unnecessary “per

diem” payments made during the union’s biennial National

Conventions. By way of relief, he sought an accounting from

the officers and the recovery by the union of all unlawful

expenditures. He also sought the release of certain financial

documents under § 201(c) of the LMRDA, 29 U.S.C. § 431(c).

After a bench trial, the district court dismissed all of

Noble’s claims. Noble v. Sombrotto, No. 94-302, slip op.

(D.D.C. Sept. 20, 2006). The court held that the various

payments to the officers had been properly authorized under the

union’s constitution and internal procedures, and therefore could

not have violated § 501(a). Id. at 15-19. It also dismissed

Noble’s § 201(c) claim as moot. Id. at 20-21.

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We reverse the district court’s judgment as to the expense

allowance program and vacate its dismissal of Noble’s § 501(a)

claim on this issue. We affirm the district court’s dismissal of

Noble’s § 501(a) claims on the FICA reimbursements and the

per diem payments. Finally, because we cannot identify the

factual basis for the district court’s mootness finding, we vacate

its dismissal of his § 201(c) claim.

I. Background

In 1959, Congress passed the Landrum-Griffin Act, also

known as the Labor-Management Reporting and Disclosure Act

(“LMRDA”) to protect against misuse of union funds by corrupt

union officials. See, e.g., Tile, Marble, etc. v. Ceramic Tile

Finishers Union Local 25, 972 F.2d 738 (7th Cir. 1992).

LMRDA’s § 501(a) makes union officers fiduciaries of union

funds and commands that they keep and use those funds solely

for the benefit of the organization and its members. It also

forbids unions from adopting provisions or resolutions

purporting to absolve union officials for breaches of these

duties. LMRDA’s § 501(b) gives union members a private right

of action to sue officers in breach of their fiduciary duties in

federal or state court to recover damages on behalf of the labor

organization. LMRDA’s § 201(c) requires unions to make

available to their members all information the organizations are

required to file with the Secretary of Labor. That section also

provides a private cause of action by which members may

compel the union to allow them to inspect records necessary for

the members to verify the accuracy of a union’s report.

The National Association of Letter Carriers (“NALC” or the

“union”) is a labor union that represents approximately 300,000

active and retired letter carriers of the U.S. Postal Service.

NALC is governed by a constitution which may be amended by

majority vote of its biennial National Convention. NALC’s

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constitution provides for the union to be administered by an

Executive Council, whose power is secondary only to that of the

National Convention, and gives the council authority to “act

between Conventions on all matters related to the welfare of the

Union not specifically prohibited by the membership.” NALC

Const. art. 9, § 11(e) (1992) (The relevant sections of the

constitution have been renumbered over time; for the sake of

convenience we use the 1992 numbering throughout unless

noted otherwise.). The Executive Council is made up of 28

union officers, including 10 “Resident Officers” (including the

President), 15 “National Business Agents,” and 3 “Trustees.”

The Executive Council has explicit authority to act between

Conventions to “authorize and/or ratify the payment of salaries,

wages, expenses, allowances, and other disbursements which it

deems necessary and appropriate to the purpose and functioning

of this Union, other than provided for.” Id. § 11(e)(3).

Following the 1992 National Convention, appellant David

W. Noble, Jr., then a union employee as well as a longtime

union member, became aware of various union expenditures

authorized by the Executive Council that redounded to its

members’ personal benefit. Conducting his own investigation,

Noble determined that union officials had longstanding practices

of taking $500 monthly expense allowances without providing

any supporting documentation justifying such payments; that

NALC officers were accepting per diem during meetings of the

National Convention even if they incurred no personal expenses;

and that the council had decided to reimburse their members for

their share of Social Security and Medicare taxes withheld from

their NALC paychecks. Noble also found records from past

conventions revealing that union officials who had been

challenged by union members on some of these practices had

given misleading responses, leaving union members under the

incorrect impression that the accusations were inaccurate.

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Noble filed internal charges against the NALC officers on

August 16, 1993, by hand-delivering his accusations to union

president Vincent Sombrotto. Sombrotto immediately

suspended Noble from his job without pay, after which Noble

returned from his long-term leave from the U.S. Postal Service

to work as a letter carrier. In accordance with the NALC

constitution, Sombrotto called for a five-member investigating

committee to investigate Noble’s charges and report to a special

meeting of the NALC convention. The investigating committee,

constituted of NALC members who were not members of the

Executive Council, rejected Noble’s attempts to participate in

the investigation by attending investigatory meetings and calling

witnesses, and denied his request to receive a copy of its report

in advance of the special convention. After conducting its

investigation, which confirmed that Noble’s complaints were

based in fact, the investigating committee presented its findings

to the special convention on October 13, 1993.

At the meeting, the investigating committee reported that

the $500 monthly “in-town” expense allowance was a

longstanding practice dating to the 1950s. Similarly, it reported

that officers’ receipt of per diem during convention weeks was

both longstanding and justified by a ban on reimbursement for

other expenses incurred during that period. The committee also

found that NALC was reimbursing officers and staff for their

share of Social Security taxes because those members were

simultaneously required to pay into the Civil Service Retirement

System (“CSRS”). Delegates to the special convention roundly

rejected each of Noble’s charges of wrongdoing by an average

margin of 25 to 1.

On February 17, 1994, Noble filed suit against Sombrotto

and eleven other NALC officers alleging that they had breached

their fiduciary duties to the union in violation of 29 U.S.C.

§ 501(a) by (1) authorizing a monthly “in-town” expense

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allowance without requiring that expenses be documented;

(2) authorizing union reimbursement for the officers’ employee

portion of their FICA taxes; and (3) collecting per diem

payments far in excess of their actual expenses during NALC’s

biennial National Conventions. Noble sought recovery of all

unlawful expenditures from the officers named in his complaint

on behalf of the union. Further, Noble brought a claim under

LMRDA § 201(c), alleging that he had been denied financial

documentation necessary to verify NALC’s annual financial

reports.

During the subsequent regular National Convention in 1994,

NALC membership rejected proposed amendments that would

have (1) limited per diem payments to full-time officers during

convention weeks, (2) limited the Executive Council’s power to

authorize salaries and benefits for elected officers, and (3) would

have governed future instances when all members of the

Executive Council were charged simultaneously. During the

1996 convention, proposed amendments to limit the Executive

Council’s authority to set wages and benefits and limit their

receipt of per diem payments during conventions met the same

fate. The 1996 National Convention, however, passed a

resolution that approved and confirmed the constitutionality of

the $500 “in-town” expense allowance for NALC officers,

payment of officers’ half of FICA taxes, and payment of per

diem to officers during National Convention meetings at the

same rate as that paid to other delegates. This resolution

received 88% of the nearly 4,500 votes cast.

The district court held a bench trial on Noble’s claims on

April 13 and 14, 2004. On September 30, 2005, the court issued

a memorandum opinion and order dismissing Noble’s case with

prejudice. Noble subsequently filed a motion to alter or amend

the district court’s judgment, but the district court denied

Noble’s motion and on September 20, 2006, issued its final

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opinion and order entering judgment in favor of the union

officials. Noble, slip op. at 20–21. Noble appeals the district

court’s dismissal of his three claims under LMRDA § 501(a)

and his § 201(c) claim.

II. Standard of Review

Our decision in Monzillo v. Biller, 735 F.2d 1456 (D.C. Cir.

1984), requires that we defer to “an interpretation of a union

constitution rendered by officials of a labor organization . . .

unless the court finds the interpretation was unreasonable or

made in bad faith.” Id. at 1458.1 We give even greater

deference to the union officials’ interpretation when, as here, a

union convention has approved the officers’ interpretation of the

union constitution because such approval “undermines a finding

that the [officers’] interpretation was unreasonable and made in

bad faith.” Id. at 1464. We review de novo the district court’s

conclusion that the union officials’ interpretation of the

constitution was reasonable, and we exercise clearly erroneous

review over the district court’s factual findings.

III. In-Town Expense Allowance

Noble’s first challenge is to the dismissal of his claim that

appellees violated LMRDA § 501(a) by authorizing an “expense

allowance” for NALC’s Resident Officers. The Executive

Council passed resolutions authorizing these payments in 1975,

1977, and 1980, pursuant to its authority under NALC Const.

art. 9, § 11(e)(3), to cover the expenses NALC officers residing

1

An interpretation that conflicts with the “stark and

unambiguous language” of the union’s constitution is ordinarily

unreasonable. Loretangeli v. Critelli, 853 F.2d 186, 194-95 (3d Cir.

1988). Conversely, an interpretation that accords with the plain

language of the union constitution is ordinarily reasonable.

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in Washington, D.C. incurred in the performance of their official

duties. The 1980 resolution noted that these officials were

expected to incur “transportation, entertainment, and other

expenses for the benefit of the [union] in the Washington, D.C.

Metropolitan Area,” and it allowed them to draw “up to $500.00

each month as an allowance for official in-town expenses.”

Resident Officers and Staff In-Town Expense Allowance

Resolution (Dec. 8, 1980). Sombrotto, as president, was

reimbursed for “all official expenditures made by him, both in

town and out of town.” To claim their allowance for a month’s

expenses, the officers did not need to submit itemized receipts.

Instead, the resolution deemed any request for reimbursement as

itself a representation that “the sum requested was expended on

behalf of [NALC] in the course of performance of official

duties.” The resolution did, however, require officers to

personally keep their receipts for a “reasonable period” of up to

five years. NALC reported all reimbursements not documented

by receipts as part of the officers’ taxable income. Noble, slip

op. at 5.

Noble argues that the officers’ participation in the expense

allowance program violated their duty under 29 U.S.C. § 501(a)

to manage union funds “in accordance with [the union’s]

constitution and bylaws.” Executive Council members receive

salaries that are specified in the NALC constitution and thus

beyond the council’s power to control, NALC Const. art. 9, §§

1-10, and Article 6 provides that “[i]n addition to their salaries,

all elected officers [i.e., Executive Council members] shall be

entitled to reimbursement of all itemized expenses legitimately

incurred in conduct of the affairs of the Union.” Id. art. 6, § 1.

Additionally, Article 11 makes it the duty of a three-member

Fiscal Committee to “examine all bills submitted for payment

and, if found to be correct, to approve them and authorize

payment to be made,” noting that “[a]ll bills shall be itemized.”

Id. art. 11, § 2(b). On this basis, Noble argues that the Executive

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Council had no authority to relax the constitution’s itemization

and documentation requirements. The district court disagreed,

finding as reasonable the Executive Council’s interpretation of

Article 9, § 11(e) and (e)(3) as authorizing the expenditures, and

buttressing this conclusion by observing that Noble had

presented no evidence “that the in-town expense allowance was

utilized by Resident Officers for purely personal reasons,

unrelated to union business.” Noble, slip op. at 17.

While we agree with the district court’s finding that the

NALC constitution was ambiguous on this point, id. at 16, we

must reverse the court’s dismissal of Noble’s claim on this issue

because a key factual finding underlying its conclusion that the

interpretation was reasonable was clearly erroneous. Though

NALC Const. art. 6, § 1 expressly entitles all elected union

officers to obtain reimbursement of itemized expenses, that

minimum entitlement does not unambiguously prohibit the

council from providing additional payment for expenses or

allowances. Neither Article 6, § 1 nor Article 11, § 2(b)

unambiguously requires a contrary interpretation. Thus, it was

not improper for the district court to use Monzillo’s more

deferential standard of review in evaluating the reasonableness

of the NALC Executive Council’s interpretation of their

authority to authorize the expenses.

Nonetheless, in finding the Executive Council’s repeated

authorization of the “in-town” expense allowance reasonable,

the district court relied on a clearly erroneous factual finding:

that Noble produced “[n]o evidence” that officers had used the

allowance for “purely personal reasons, unrelated to union

business.” Noble, slip op. at 17. To the contrary, Noble

presented ample circumstantial evidence that officers were using

the allowance for personal use. The officers had a direct

financial incentive to keep receipts for all union-related

expenses because any difference between their documented

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expenses and the $500 per month allowance amount was

reported as taxable income. Thus, each officer could easily have

avoided a substantial additional tax liability by keeping and

submitting receipts for legitimate union-related expenses he or

she incurred each month. Additionally, the 1980 Executive

Council resolution authorizing the challenged allowance

specifically charged each officer with retaining receipts for all

expenses incurred and to keep them for a “reasonable period” of

up to five years. The fact that the vast majority of allowances

paid to Executive Council members during the pertinent period

were not supported by receipts is thus considerable

circumstantial evidence suggesting that much of this money

went to officers’ personal use.

The district court may have been under the misapprehension

that proof of personal use may only be made by direct evidence.

Under circumstances closely analogous to those before us, the

Second Circuit did imply a requirement of direct proof for such

an allegation in Morrissey v. Curran, 650 F.2d 1267, 1283–84

(2d Cir. 1981). There, the Second Circuit rejected for

insufficient evidence a district court’s finding “that all of the

weekly allowances paid to the officers were used for their

personal expenses” supported by the fact that the officers lacked

receipts showing the expenses were made for union business.

Id. Though Morrissey is unclear on whether those union

officers were under an obligation to retain receipts as the NALC

officers were here, if the Second Circuit has indeed adopted a

requirement that allegations of personal use are susceptible of

proof only by direct evidence, then we must part ways with our

sister circuit on this point. A union member complaining of

personal use of union funds by its officers will hardly ever be

able to put on direct proof of such use unless an officer

confesses to such. Here, Noble presented about as much

evidence as one could hope a § 501 plaintiff could gather—that

the union had disbursed far more funds for purportedly union-

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related expenses than officers responsible for the payments

could account for. On remand, the district court must reach the

issue of how the union’s money was actually used, weighing

Noble’s circumstantial evidence of misuse against any evidence

the officers present to the contrary.

We note as well that the district court’s memorandum

opinion made no mention of Noble’s evidence of bad faith

regarding the “in-town” expense allowance. The evidence

Noble presented showing that NALC presidents twice

misleadingly denied the allowance’s existence when challenged

on the issue at National Conventions is troubling. While the

district court need not specifically reference all contrary

evidence in its factual findings, see Schilling v. Schwitzer-

Cummins Co., 142 F.2d 82 (D.C. Cir. 1944), some mention of

this evidence would have been welcome here. On remand, we

would refer the district court to our decision in United States v.

DeFries, 129 F.3d 1293 (D.C. Cir. 1997), which suggests that

courts should closely scrutinize self-serving courses of conduct

when union officers conceal vital information from union

members. See id. at 1307 (holding that when union executive

committee concealed information on challenged severance

payments from its members, it was not “reasonable to say that

the severance payments were ‘authorized’” despite union bylaws

expressly empowering the executive committee to set its own

compensation).

Finally, two of the appellees purport to be outside the scope

of § 501 for the purposes of this claim. William M. Dunn, Jr.,

and Robert W. Vincenzi received their expense allowances and

FICA reimbursements not from NALC itself, but from other

corporate entities affiliated with NALC (the Mutual Benefit

Association and the Health Benefit Plan, respectively). The

officers argue that Dunn and Vincenzi cannot be held liable

under § 501(a), which concerns only the use of union funds, and

12

that as to them we should affirm the judgment on this alternative

ground regardless of our resolution as to the other defendants.

The district court found that the Mutual Benefit Association and

the NALC Health Benefit Plan were “separate and distinct”

from NALC. Slip. op. at 13-14. Noble does not appeal this

finding, which makes it conclusive on remand. See, e.g.,

Kimberlin v. Quinlan, 199 F.3d 496, 500 (D.C. Cir. 1999). But

because the district court neither explained the scope of its

factual finding nor drew from it any legal conclusions, and

because the degree of separation necessary to avoid § 501’s

application is itself uncertain, compare Yager v. Carey, 910 F.

Supp. 704, 728 (D.D.C. 1995), with Morrissey, 650 F.2d at

1284, and Hood v. Journeymen Barbers Int’l Union, 454 F.2d

1347, 1351-54 (7th Cir. 1972), no final determination of this

special defense is appropriate at this time. The district court

should resolve this issue on remand.

IV. Reimbursement of FICA Payroll Taxes

Noble’s second challenge is to the union’s reimbursement

of the officers’ FICA payroll taxes. In December 1980, the

Executive Council decided to reimburse all full-time officers

and staff for each employee’s share of FICA taxes, which is

comprised of an employee’s mandatory Social Security and

Medicare contributions. The Council made this expenditure

under the authority of NALC Const. art. 9, § 11(e)(4) (1980),

which authorized the council to “establish such benefits as may

be required to attract and retain competent personnel, including

but not limited to annuity, welfare, vacations, holidays,

severance pay, tuition or scholarship, and insurance benefits.”

The council took this action because all union staff and officers,

even while working away from their letter carrier positions with

the U.S. Postal Service, were required to pay a fixed percentage

of their income into CSRS. CSRS-covered employees did not

then contribute into, nor were covered by, Social Security. By

13

law, Social Security retirement benefits are only payable to

those who have paid a minimum amount into the system for at

least ten years. See 42 U.S.C. § 414. Thus, when letter carriers

took full-time positions with the NALC, they found themselves

compelled to pay into two different retirement systems—one of

which, unless they remained in NALC’s employ for ten years or

had held another job that paid into Social Security, might never

provide them any benefits.

The district court found that Article 9, § 11(e)(4) provided

the Executive Council with authority to make this

reimbursement an employment benefit, reasoning that the move

satisfied that constitutional provision’s intent of attracting and

retaining competent personnel by “lessen[ing] the financial

burden on individuals who chose to hold appointed or elected

position within NALC.” Noble, slip op. at 17–18. Here, as

below, Noble challenges this reimbursement as a violation of

NALC’s constitution, which fixes the salaries that each

Executive Council member receives.

We cannot say that the Executive Council’s “interpretation

conflicted with the stark and unambiguous language of the

constitution.” Loretangeli, 853 F.2d at 194–95. Because the

Executive Council’s interpretation of the constitution permitting

the FICA tax reimbursement as a benefit under Article 9,

§ 11(e)(4) was neither unreasonable nor made in bad faith, the

district court properly deferred to that interpretation. Where, as

here, the union constitution explicitly incorporates policy

concerns into the Board’s grant of authority by directing the

Board to establish benefits as “required to attract and retain

competent personnel,” a given benefit’s wisdom as a policy

matter is germane to the Board’s constitutional authority to

authorize it. We see no reason to disturb the district court’s

dismissal of this claim.

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V. Per Diem Expenses During National Conventions

Noble’s remaining § 501(a) claim concerns the payment of

“per diem” allowances to Executive Council members during

meetings of the biennial National Convention. NALC provides

daily expense allowances to a small group of attendees at the

Conventions to cover lost wages, hotel rooms, meals, and

incidentals. (In 2002, for example, the allowance was $420 per

day, based on $166.93 for lost time, $158.48 for hotels, and

$94.59 for meals and incidentals.) The officers Noble named in

this suit attended every Convention ex officio and received per

diem payments despite the fact that they lost no wages by

attending and frequently stayed in free or reduced-rate rooms at

the hotels hosting the Conventions. Noble alleges that the

officers’ acceptance of these per diems violated § 501 because

they took union funds as “reimbursements” for expenses they

did not actually incur. Noble further alleges that Convention

delegates were misled as to the nature of the payments and that

the officers gained Convention approval of their per diem

payments without adequate disclosure.

The NALC Const. art. 13, § 2 provides that “[p]er diem

shall be paid to each officer as the National Association, while

in session, may direct” and Article 11, § 6 directs that “[t]he

Committee on Mileage and Per Diem shall compute and report

to the National Convention the name, residence, and amount due

each member eligible for mileage and per diem.” The district

court found that in 1964 a majority of Convention delegates

voted to dispense with the reading of the individual payees and

substituted a procedure by which the Mileage and Per Diem

Committee provided the Convention a summary report of the

total per diem allowance per eligible delegate for each day.

Noble, slip op. at 19. The district court found that this practice

had continued ever since. Id.

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While we take no view on the propriety of per diem

payments made to delegates other than Executive Council

members which were approved by this summarized procedure,

we do not find the Executive Council members’ acceptance of

payments in this way to be clearly contrary to NALC’s

constitution. Reading Article 11, § 6 as clearly and

unambiguously prohibiting payments of per diem to Executive

Council members during the Convention without their names

and payment amounts having been read aloud to Convention

delegates would flatly conflict with Article 13, § 2. The 1980

and 1992 versions of NALC’s constitution explicitly state at

Article 13, § 2 that “[p]er diem shall be paid to each officer as

the National Association, while in session, may direct.” The

1992 NALC constitution lists as “officers” all 28 members of

the Executive Council—and no one else. Thus, Article 13, § 2

appears to direct per diem payments to the very group Noble

accuses of having violated § 501 by accepting them. We

certainly cannot say that NALC’s constitution unambiguously

forbade them from receiving per diem if their names and

addresses were not read aloud.

Thus, NALC officials’ interpretation of their constitution as

authorizing their acceptance of per diem payments via this

summarized approval procedure is owed deference unless shown

unreasonable or in bad faith. In determining reasonableness, a

district court may consider the union’s consistent past practices,

see Conley v. Parton, 116 L.R.R.M. (BNA) 3071, 3075–76

(N.D. Ind. 1984). We agree with the district court that the

Executive Council’s reliance on past practice and a plain

language reading of other provisions in NALC’s constitution as

authorizing per diem payments to Executive Council members

without having read their names aloud to the Convention was

reasonable and entitled to deference.

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We further find no merit to Noble’s argument that

Convention delegates were “misled” about the nature of

payments or uninformed that the officers would receive full per

diem payments. The total per diem was a set figure and Noble

concedes that, even under the streamlined procedure followed

through 1992, the Convention was informed of the total per

diem amount determined by the Mileage and Per Diem

Committee. Combining that information with a basic reading of

NALC’s constitution would alert delegates that Executive

Council officers were receiving those sums, even if no names

were read aloud to the Convention delegates. Thus, we cannot

say that the district court erred by finding both the summarized

procedure and the officers’ acceptance of per diem payments

during Convention meetings neither unreasonable nor in bad

faith.

VI. President Sombrotto’s Failure To Report

While it is unclear in his brief, Noble may have attempted

to renew an argument he made below that President Sombrotto

personally violated § 501(a) by failing to report his official

actions to the biennial Convention in accordance with NALC

Const. art. 9, § 1(k). In the district court, Noble specifically

complained that Sombrotto should have reported his approval of

the Executive Council resolutions authorizing the in-town

expense allowance and FICA reimbursements to the

Convention. The district court found that:

[A]lthough Art. 9, § 1(k) requires that the President “shall

submit at each Convention a written report of all his/her

official acts during his/her term of office,” the Executive

Council resolutions at issue in this case were official acts

of the Executive Council, not the President. Therefore,

NALC’s interpretation of its Constitution that it does not

require such reporting of resolutions is reasonable.

17

Noble, slip op. at 21–22. We agree with the district court’s

reasoning and affirm its dismissal of this claim.

VII. Noble’s “Manifest Unreasonableness” Argument

Noble argues that even if the in-town expense allowances,

FICA reimbursements, and per diem payments were fully

authorized, the officers violated their fiduciary duties under

§ 501(a) by personally enriching themselves with union funds.

Noble urges this Court to adopt the Second Circuit’s approach,

such that “where a union officer personally benefits from union

funds, a court in a § 501(b) suit may determine whether the

payment, notwithstanding its authorization, is so manifestly

unreasonable as to evidence a breach of the fiduciary obligation

imposed by § 501(a).” Morrissey, 650 F.2d at 1274. The

defendants ask us to reject the Second Circuit’s standard,

quoting legislative history of the LMRDA to the effect that

compliance with the constitution means that the officers did not

breach their duties.

We have not yet given precise content to § 501’s fiduciary

duties, cf. Mallick v. Int’l Bhd. of Elec. Workers, 749 F.2d 771,

780-81 (D.C. Cir. 1984), nor have the parties exhausted the

possible tests that could be employed—or even those proposed

by the Second Circuit, see Morrissey, 650 F.2d at 1274-75

(suggesting that courts apply “judicial scrutiny of the

reasonableness and fairness of the transaction . . . at least as

rigorous as that undertaken when the fiduciary is a corporate

director who has an interest in the challenged transaction”). But

we need not decide these questions here. Noble relies solely on

his proposed “manifestly unreasonable” standard, which as he

presents it, imposes liability on union officers when they

approve their receipt of excessive benefits, significantly above

a fair range of reasonableness.” Noble Br. 30 (emphasis added)

18

(quoting Morrissey, 650 F.2d at 1275); see also Noble Reply Br.

16 & n.4 (contesting the reasonableness of the amounts

involved). As to the FICA reimbursements and the per diem

payments, however, Noble has failed to show that the payments

were outside the kinds and amounts of payments that are

generally reasonable in the ordinary course of union officers’

activities. They represented at most a small percentage increase

in the total compensation of the officers, which was not itself

excessive. Thus the payments, if authorized, did not violate

§ 501 on Noble’s own theory. (Noble suggests obscurely that

§ 501 may impose broader limitations on self-dealing without

respect to amount, a possibility he does not develop in any detail

and on which we express no opinion.)

As to the in-town expense allowances, the district court will

resolve on remand whether the officers used any portion of the

allowances for their personal benefit rather than on legitimate

union expenses. If so, it would be unnecessary for us to decide

whether their actions also violated other duties under § 501. If

not, then the officers received no personal benefit that we could

review for manifest unreasonableness. The outcome of the

remand will moot the issue either way.

VIII. Claim for Release of Documents Under § 201(c)

Finally, Noble brings a claim under § 201(c) for the release

of documents relevant to verifying the union’s annual financial

reports. The district court dismissed this claim as moot, stating

that “[d]uring the course of this case, plaintiff has been given

access to all of the pertinent NALC records. Further, he no

longer contends that he is being denied access to any documents

necessary to verify an annual financial report. Therefore, this

claim is moot and is dismissed.” Noble, slip op. at 20-21.

Noble contends that the factual findings underlying this ruling

are clearly erroneous.

19

A case is moot if the judgment, regardless of which way it

goes, “will neither presently affect the parties’ rights nor have a

more-than-speculative chance of affecting them in the future.”

Pharmachemie B.V. v. Barr Labs., Inc., 276 F.3d 627, 631 (D.C.

Cir. 2002) (quoting Clarke v. United States, 915 F.2d 699,

700–01 (D.C. Cir. 1990)). By contrast, a holding that the

plaintiff lacks legal entitlement to his requested relief is plainly

a resolution of the merits. See In re Papandreou, 139 F.3d 247,

255 (D.C. Cir. 1998). Because the district court characterized

its holding as resting on mootness alone, we read the opinion as

stating that Noble has been given everything he asked for and

can be offered no further relief—not that his requests are

unfulfilled but meritless.

While the district court had previously identified “genuine

issues of material fact regarding which documents were

requested by plaintiff as well as what responsive documents

were provided,” Noble v. Sombrotto, 260 F. Supp. 2d 132, 146

(D.D.C. 2003), the record does not reveal any basis for its later

finding that Noble’s requests had been fulfilled. The court did

note in its findings of fact that Noble had made document

requests in a letter to Sombrotto, that the union had contested his

right to access but “nonetheless[] made available to plaintiff

copies of NALC records relevant to his charges,” and that Noble

“inspected documents on October 7, 1993.” Noble, slip op. at 9.

But the source the court cites for the proposition that the

defendants made copies available—Letter from Vincent R.

Sombrotto to David W. Noble, Jr. (Aug. 31, 1993), Defs’

Ex. 7—makes clear that even the defendants did not claim to

have provided everything Noble sought. Thus there is no

indication whether NALC made available to Noble the many

documents whose relevance was contested between them, which

is what a finding of mootness requires. Nor is it clear which

documents Noble was able to review on October 7, 1993.

20

Noble did contend before the district court that he had been

denied documents that were relevant to verifying the union’s

annual reports, Pl.’s Am. Proposed Findings of Fact 30, 42, and

he alleged a variety of document requests made to NALC, not

all of which had been fulfilled, id. at 29 & nn.103-04, 30 &

n.105; see also Pl.’s Exs. 28, 31. In a supplemental filing to this

Court, Noble identified nine categories of documents listed in a

September 14, 1993 request which he claims never to have

received from the union, including records from a union bank

account in Minneapolis.

The defendants reply that NALC “produced thousands of

pages of financial and other documents to plaintiff,” Sombrotto

Supplemental Resp. 4, but they do not claim that Noble has

received the particular documents he has identified, such as the

Minneapolis bank records. Instead, the defendants argue two

propositions unrelated to mootness: (1) that Noble failed to

establish just cause to obtain the documents, which is a

necessary element of a § 201(c) claim; and (2) that Noble

forfeited his claim to any further documents by failing to request

them properly in the course of discovery on his § 501(a) claims.

Because we cannot identify the factual basis for the district

court’s mootness determination, we cannot affirm it, even under

the deferential standard of clear error. Cf. 19 Moore’s Federal

Practice-Civil § 206.03[6]. Moreover, because the district court

has passed on neither the merits of Noble’s claim nor the

forfeiture issue, we decline to reach these alternative grounds.

Rather, we vacate the dismissal of Noble’s § 201(c) claim and

leave these questions, as well as the factual determination of

what (if any) records Noble has requested but not yet received,

to be resolved on remand.

21

IX. Conclusion

For the aforementioned reasons, we affirm the judgment as

to the FICA reimbursements, per diem payments, and President

Sombrotto’s non-disclosure but reverse the judgment as to the

in-town expense allowances and as to the § 201(c) claim and

vacate the dismissal of each. The case is remanded for further

proceedings.

So ordered.

KAVANAUGH, Circuit Judge, concurring in part and

dissenting in part: I would reject all of Noble’s § 501 claims,

affirm the District Court’s § 501 judgment, and end this 14-

year litigation odyssey.

Section 501(a) of the Labor-Management Reporting and

Disclosure Act provides that union officers “occupy positions

of trust” and that it is the officers’ duty “to manage, invest,

and expend” the union’s money and property “in accordance

with its constitution and bylaws.” 29 U.S.C. § 501(a). A

union member such as Noble may sue a union officer for

alleged violations of § 501(a) in order “to recover damages or

secure an accounting or other appropriate relief” – but only

“for the benefit of the labor organization.” § 501(b)

(emphasis added). Under § 501(b) of the LMRDA, postal

union member Noble filed suit against postal union officers;

he claimed that the officers misinterpreted and violated the

union constitution in granting themselves various payments

and benefits.

In my judgment, this case turns on the nature of the

judicial role in § 501 disputes. Our precedents and the

statutory text and structure establish a basic principle of

judicial restraint in these cases. When a union member sues

union officers under § 501 and alleges that they violated the

union constitution, we have held that the reviewing court

owes “considerable deference” to the officers’ interpretation

of the constitution; we uphold their interpretation unless it is

“unreasonable or made in bad faith.” Monzillo v. Biller, 735

F.2d 1456, 1458 (D.C. Cir. 1984). Of particular importance

here, we afford even greater deference to union officials when

the union convention has approved the officers’ interpretation

of the union constitution; we have said that union approval

“undermines a finding that the [officers’] interpretation was

unreasonable and made in bad faith.” Id. at 1464. This is the

same kind of rule that applies to analogous shareholder

derivative actions where it is a “settled proposition that

2

shareholder ratification by a majority of the disinterested

shareholders acts as a safe harbor in situations where

directors’ potentially conflicting self-interests are at issue.

Thus, in a classic self-dealing transaction the effect of a fully-

informed shareholder vote in favor of that particular

transaction is to maintain the business judgment rule’s

presumptions.” Solomon v. Armstrong, 747 A.2d 1098, 1115

(Del. Ch. 1999) (internal citation omitted); see also Sample v.

Morgan, 914 A.2d 647, 663 (Del. Ch. 2007).

The critical point in this case, therefore, is the following:

On two occasions, the union convention, which under the

union constitution is the union’s “supreme body,”

overwhelmingly voted against Noble’s claims and approved

the officers’ challenged payment practices. Art. 1, § 4. At a

Special Convention, 95 percent of approximately 2,000 voting

union members specifically rejected the merits of Noble’s

allegations. A few years later, by a vote of nearly 90 percent

of approximately 4,500 voting union members, the National

Convention adopted a resolution affirmatively approving the

officers’ payment practices and confirming that they properly

exercised their authority. Because the union approved its

officers’ interpretation of the union constitution, the federal

courts have limited authority under our precedents to upset

that interpretation, at least absent an unusual or egregious set

of facts.

In this case, the officers’ interpretation of the constitution

was at least reasonable – which no doubt is why the union

twice overwhelmingly approved their interpretation. As to

each of the three issues Noble raises, his contrary reading of

the constitution is debatable at best. Noble certainly cannot

find the kind of unambiguous constitutional language that,

under our precedents, would justify a decision by Article III

3

judges to override the union conventions’ twice-considered

judgment of what is in their best interests.

First, contrary to Noble’s idiosyncratic views, the union

constitution did not unambiguously prohibit the Executive

Council from authorizing reimbursement of un-itemized in-

town expenses; in fact, it permitted the Executive Council to

“authorize . . . the payment of . . . expenses, allowances, and

other disbursements which it deems necessary and appropriate

to the purpose and functioning of this Union, other than

provided for.” Art. 9, § 11(e)(3). Noble seems to equate any

un-itemized expense reimbursement or allowance with a

prohibited salary increase, but the constitution simply does

not say that. Moreover, un-itemized expense reimbursements

or allowances are hardly so uncommon as to raise an

inference of an under-the-table “salary increase,” at least if

the reimbursements are reasonable in amount, as they were

here. To be sure, un-itemized expense accounts sometimes

result in windfalls and uncertain tax complications, but they

also can save both the employer and employee from

burdensome administrative paperwork, which is why they can

make sense when the amounts in question are relatively

minimal. That likely explains why an overwhelming

percentage of the rank-and-file voting union members had no

problem with the officers’ in-town expense reimbursements

and voted to approve them.

Second, contrary to Noble’s argument, the union

constitution did not unambiguously bar reimbursement of

officers’ FICA taxes; in fact, it authorized the Executive

Council to “establish such benefits as may be required to

attract and retain competent personnel.” Art. 9, § 11(e)(4).

Noble’s strained interpretation would treat many “benefits” as

prohibited salary increases, largely erasing the constitution’s

clear distinction between salary and benefits. Under Noble’s

4

interpretation, for example, an increase in health insurance

benefits for the officers would amount to a prohibited salary

increase. But the union constitution says no such thing. So

too with respect to reimbursement of FICA taxes. The

decision to pay the FICA taxes was entirely reasonable,

moreover, because it avoided the “double taxation” that some

officers otherwise would face with respect to their retirement

benefits as a result of their participation in the Civil Service

Retirement System.

And third, contrary to Noble’s submission, the union

constitution did not unambiguously prohibit officers’

acceptance of per diems during the National Conventions; in

fact, it stated that “[p]er diem shall be paid to each officer as

the National Association, while in session, may direct.” Art.

13, § 2. The per diems were reasonable in amount, moreover,

particularly given that union officers went “off expenses”

during convention week, meaning that they otherwise were

not reimbursed for out-of-pocket expenses.

To be sure, Noble offers a plausible interpretation of the

somewhat convoluted constitutional language on these three

issues, and he may have a good policy argument why union

officers should have been even more tightly monitored. But

the officers’ interpretation of the constitutional language is

not unreasonable and is nowhere near the kind of egregious

interpretation that would warrant a judicial override of the

union’s overwhelming approval of the officers’ interpretation.

I do not agree, moreover, with Noble’s contention that the

union votes somehow constituted unlawful “exculpatory

resolutions.” See 29 U.S.C. § 501(a). As the District Court

rightly concluded, the union votes did not excuse prior

constitutional violations; rather, they reflected the union’s

conclusion that no violations had ever occurred.

5

Finally, for the reasons already explained, the payments

in question also were not otherwise “manifestly

unreasonable,” even assuming that formulation qualifies as a

separate test for § 501 claims. Cf. Morrissey v. Curran, 650

F.2d 1267, 1274 (2d Cir. 1981).

I would affirm the judgment of the District Court on the

§ 501 issue. I join all but Parts III and IX of the per curiam

opinion.*

*

I concur in the per curiam opinion’s reversal of the District

Court’s mootness finding as to Noble’s § 201 claim. But the merits

of Noble’s § 201 claim appear frivolous. In any event, the District

Court can dispose of the § 201 claim on remand.

WILLIAMS, Senior Circuit Judge, concurring in part and

dissenting in part: I join Parts I, II, VI, VII, and VIII of the

per curiam opinion, as well as those portions of Part III

concerning the district court’s fact-finding and the separate

arguments of defendants Dunn and Vincenzi. I respectfully

dissent from the resolution of Noble’s other claims under 29

U.S.C. § 501(b).

The majority’s central error lies in its readiness to accept

interpretations of the union’s constitution that gut that

document’s minutely detailed salary caps. These

interpretations allow the officers to help themselves to union

money at will by:

— dispensing with the constitution’s requirement of

itemized receipts for expense reimbursement (the $500

monthly in-town expense allowances), and

— interpreting “benefits” to encompass salary increases

whenever they believe the extra money will help the

union “retain competent personnel,” namely themselves

(the FICA reimbursement issue).

Not content with that, the court short-circuits fact-finding on

whether the convention delegates, in approving per diem

payments, had any notice that the per diems covered officers’

costs that the union itself had already met.

In his separate opinion, Judge Kavanaugh would go even

further. He would hold that, in all but the most exceptional

cases, the courts have essentially no role whenever delegates

to a subsequent union convention accept an interpretation of

the union’s constitution presented by officers to justify their

past conduct. As I develop below, this contradicts both the

language and the purpose of the Labor Management

Reporting and Disclosure Act (“LMRDA”).

2

I would find the officers’ interpretations with respect to

the in-town expense allowances and FICA reimbursements to

be unreasonable in light of the relevant text; the extrinsic

evidence only strengthens this conclusion. The dispute over

the per diem payments, meanwhile, doesn’t involve

interpretation of the union constitution at all, but rather factual

claims—never addressed by the district court—that the

officers failed to adequately disclose the nature of their double

compensation before the union convention approved the

payments. I will address the three in that order.

I. The $500 Monthly In-Town Expense Allowances

The in-town expense allowance program, which handed

NALC’s officers $500 a month on their say-so alone, cannot

be justified on any reasonable reading of NALC’s constitution.

Article 9 of that constitution determines the precise salary that

each officer will receive, down to the last dollar. NALC

Const. art. 9, §§ 1-10. (E.g., $62,699.00 for the executive vice

president in 1992; no promiscuous rounding here!) Only the

National Convention may alter this salary, and only by

constitutional amendment. The Executive Council may act

“on all matters . . . not specifically prohibited by the

membership,” id. art. 9, § 11(e), but this does not mean

prohibited matters must be mentioned by name. In fixing the

officers’ salaries, the constitution never explicitly forbids

payment of under-the-table salaries, but that hardly means the

officers could vote themselves one; there is no ambiguity or

textual “gap” on the point. Rather, NALC’s constitution

guards against officers’ subverting the limit via sinecures,

providing that no officer “shall receive more than one salary

from the NALC.” Id. art. 14, § 6.

Along with fixing the salaries of the Executive Council,

the constitution provides that “[i]n addition to their salaries,

3

[the officers] shall be entitled to reimbursement of all itemized

expenses legitimately incurred in conduct of the affairs of the

Union.” Id. art. 6, § 1 (emphasis added). This clause is

phrased as an exception to an otherwise-applicable limit on

compensation, and it directly implies that unitemized

expenses are not to be reimbursed. Placing union money in

the officers’ hands, solely on those same officers’ bland

assurances that it will be used for union business, completely

subverts the clause’s obvious goal of preserving accountability.

According to the union’s independent auditor, Sombrotto

personally received $34,000 in reimbursements from

November 1988 to July 1993, for which he provided only

$5132 in receipts. See Joint Appendix (“J.A.”) 685. Defeat

of the provision for reimbursement of itemized expenses

could hardly be more complete.

The per curiam opinion reads the provision for

reimbursement of itemized expenses as merely setting a floor,

guaranteeing reimbursement for the officers’ itemized

expenses without restricting what else they may receive. Maj.

Op. at 9. But on that reading, the Executive Council could

always vote itself whatever reimbursements it thought

appropriate, making a guarantee for reimbursement of

itemized expenses entirely unnecessary. Rather than mere

surplusage, the facially permissive language of Article 6 must

be read as an implicit restriction, just as the power of

Congress “[t]o establish . . . uniform Laws on the subject of

Bankruptcies” is read to limit, rather than supplement, any

power to adopt non-uniform bankruptcy laws. See U.S.

Const. art. I, § 8, cl. 4; Ry. Labor Executives’ Ass’n v.

Gibbons, 455 U.S. 457, 468-69 (1982).

Judge Kavanaugh’s separate opinion provides no better

solution. He does not address the meaning of this provision,

nor does he join Part III of the per curiam opinion. Rather, he

considers the unitemized allowances within the officers’

4

power to set “salaries, wages, expenses, allowances, and other

disbursements . . . other than provided for.” NALC Const. art.

9, § 11(e)(3); cf. Kavanaugh Op. at 3. This clause, however,

confers discretion only over questions left unresolved by other

constitutional provisions. The officers obviously could not

rely on it to pay themselves the dual salaries prohibited by

Article 14, nor to avoid Article 6’s limits on reimbursement of

expenses.

The per curiam opinion’s reading is further weakened by

the NALC constitution’s method of administering

reimbursements. Article 11 charges the Fiscal Committee

with “examin[ing] all bills submitted for payment,” requiring

that “[a]ll bills shall be itemized.” NALC Const. art. 11,

§ 2(b). The word “bills” includes requests for reimbursement,

so Article 11 on its face appears to cover the demands for the

$500 allowance. But let us assume arguendo that there is

ambiguity in the term. In that case, the range of reasonable

readings is limited by the factual context. As Sombrotto

conceded in his testimony at trial, he considered Article 11’s

requirements to apply to internal expenses incurred away from

Washington, D.C. See Trial Tr. 4/13/04 at 129:4-9, :25,

130:1-2. Yet Article 11 makes no distinction as to where the

expenses are incurred. The district court did not address the

matter, despite Noble’s request, see Pl.’s Am. Proposed

Findings of Fact & Conclusions of Law 6-7, Doc. No. 241,

Ex. A (“Pl.’s Am. Proposed Findings of Fact”), but any

contrary finding of fact would have been clearly erroneous in

light of Sombrotto’s concession. Thus, the officers themselves

considered Article 11 to apply to internal expenses. The

officers might have interpreted “bills” to be unrelated to

internal expenses, posing a different issue for review, but they

never did so, and a fortiori they never did so reasonably.

Assuming that some ambiguity remains, then, the extrinsic

evidence merely confirms the text’s evident sense.

5

Judge Kavanaugh rests his concurrence (as to all three

issues) on the union convention’s votes against Noble’s

claims. Kavanaugh Op. at 1-2. Of course, these were not

votes of the full union membership, but rather votes of

delegates to the annual convention. Such delegates have no

exact counterpart in the corporate-shareholder analogy. They

are elected agents of the members, and are more subject to

personal influence by union officers, especially when they

vote through public “teller” proceedings requiring them to

stand and be counted individually rather than through secret

ballot. They are, moreover, likely in some degree to share the

officers’ viewpoints, interests, and perspectives. Thus

“agency” problems—the tendency of agents to a degree to

scant their principals’ interests in favor of their own—render

the convention’s blessing a less effective absolution than a

vote of the whole membership.

Nonetheless, convention resolutions, if adopted in a fair

vote after informed disclosure, would indeed “undermine[] a

finding that the [officers’] interpretation was unreasonable and

made in bad faith.” Monzillo v. Biller, 735 F.2d 1456, 1464

(D.C. Cir. 1984). But Monzillo treats a delegates’ resolution

(a form of post-enactment legislative history) only as an

interpretive thumb on the scale, not a conclusive extra weight.

Section 501 precludes our allowing it any greater impact.

Individual suits may be brought only after “the labor

organization or its . . . officers refuse or fail to sue,” § 501(b)

(emphasis added), language that encompasses non-suit at the

direction of a majority vote as well as any other process.

Requiring an “unusual or egregious set of facts” to overcome

a convention resolution, as Judge Kavanaugh would do,

Kavanaugh Op. at 2, will commonly turn this procedural

precondition to suit into a virtually insurmountable barrier.

Judge Kavanaugh’s theory would also contradict the

premise behind LMRDA’s mandatory reporting and fiduciary

6

requirements: that even majorities of union members may

lack the skill or incentives to protect themselves from

predatory officials. To this end, § 501(a) declares any

“general exculpatory resolution . . . purporting to relieve

any . . . person of liability for breach of [fiduciary] duties” to

be “void as against public policy”; giving near-conclusive

effect to subsequent interpretive resolutions would enable

union leaders to evade that ban. Cf. Morrissey v. Curran

(“Morrissey I”), 423 F.2d 393, 399 (2d Cir. 1970) (“[T]he

provisions of § 501 would be completely emasculated if,

every time a court . . . found that the officers had breached

their duties, the officers could find sanctuary by putting

through a constitutional amendment or by-law retroactively to

legitim[ize] their former derelictions of duty.”). And since

some bylaws are designed to protect a minority of union

members from their fellows, ending the legal inquiry after a

majority vote would be perverse, especially in light of closed-

shop or union-shop rules that curtail employee exit. In this

particular appeal, the resolutions cannot have so powerful an

effect as to overcome the comparatively plain language of the

union constitution.

Although I would reverse the district court’s judgment on

the expense allowances in full, I join the per curiam opinion’s

finding of clear error as to the historical fact of how the

union’s money was used. Maj. Op. at 9-11. Such misuse

represents a violation of § 501’s independent duty to “account

to [NALC] for any profit received . . . [in] transactions . . . on

behalf of the organization,” § 501(a), as well as the more

general fiduciary duties the statute imposes, see Maj. Op. pt.

VII. Noble alleges not only that the expense allowance

program was unauthorized, but that in collecting

“reimbursements” the officers falsely represented that they

had spent the requested amount on union business, a plain

violation of these statutory duties. Given that Sombrotto

encouraged the officers to apply for $500 monthly even when

7

it exceeded their actual expenses, see Sombrotto Tr. 9/15/93,

Pl.’s Ex. 47, at 4, the district court clearly erred by finding “no

evidence” of this practice. Noble, slip op. at 17.1

Judge Kavanaugh does not address these additional

allegations, see Kavanaugh Op. at 3, but the subsequent

interpretive votes are surely irrelevant here. The convention

delegates voted only on whether the expense allowance

program was constitutional, not whether the officers had

actually used the money as the program required. The latter is

a question of fact, not interpretation.

I also join the per curiam opinion with respect to the

officers’ bad faith. Maj. Op. at 11. The convention records

on the matter are striking. At the 1976 Convention, in the

course of a debate over an increase in dues, delegate John

Bourlon rose to ask whether it was true that the officers were

receiving $500 per month for “in-town expenses.” J.A. 165.

James H. Rademacher, then president of the union—who had

personally signed the 1975 Executive Council resolution

approving the unitemized reimbursements—answered by

alluding to the constitutional provision for officers’ itemized

expenses. The exchange proceeded as follows:

1

We have not yet determined what burdens of production and

persuasion apply to such questions, but the district court on remand

may find it useful to consider the views of other circuits. E.g.,

Morrissey v. Curran (“Morrissey II”), 650 F.2d 1267, 1284 (2d Cir.

1981) (“A plaintiff in a § 501 suit need not prove the impropriety of

every expenditure within a challenged category, but he must

provide sufficient evidence of abuses within the category to justify

a detailed accounting. At that point the burden will be upon the

defendants to prove the propriety of each expenditure.”).

8

[Rademacher:] There is no stipulation in that

Constitutional amendment, in-town, out-[of-]town or

wherever it happens to be. If they itemized expenses they

receive reimbursement according to the Constitution. . . .

Does that answer you, Microphone 1?

[Bourlon:] No, sir, I’m sorry, it doesn’t answer it. I can

agree with what the Chair has said[,] that the Constitution

contains it and if they do itemize this thing, then I would

agree, but the information I have says that they will be

allowed $500 and it does not say if they list it on an

expense account. It says they will be given $500.

[Rademacher:] Well, your information is incorrect. The

Chair stands here in front of 5,000 delegates and says

your information is incorrect.

J.A. 165-66.

Ten years later, at the 1986 Convention, Sombrotto

presided over the statement of a similar misrepresentation in

the context of a proposal to raise his own salary. Delegate

Karen Lippe proposed limiting the increase for a variety of

reasons, among them the FICA reimbursements (discussed

below) and the fact that “all resident national officers receive

a sum of $6,000 per annum unaccountable expense money.”

J.A. 734. In response, Sombrotto recognized a speaker “on

privilege,” namely Gene McNulty, a National Business Agent

and a member of the Executive Council. McNulty stated as

follows:

I would like to correct the Sister. . . .

Also, another piece of misinformation by the Sister, there

is not for the resident national officers $6,000

unaccountable. They have to account for that. If you

don’t believe me, check with the IRS.

9

Id. This was also false: while some officers did submit a

limited number of receipts, they were never required to

“account” for the actual use of the expense allowance,

whether to the IRS or anyone else (although in the absence of

receipts NALC evidently reported reimbursements as taxable

income). Sombrotto did not correct this misrepresentation,

though he had personal knowledge of the situation (and had

commented from the chair on other measures). After

McNulty’s “correct[ion],” the debate did not return to the

truth of Lippe’s charges; the convention voted her amendment

down and approved the proposal to raise Sombrotto’s salary.

II. Reimbursement of FICA Payroll Taxes

The officers’ vote to have the union reimburse their

personal share of FICA taxes similarly contravened the

constitution’s clear text. Whether or not the reimbursements

were sound policy, the constitution specified a precise salary

for each officer. The majority argues that FICA reimbursements

may be properly categorized as something other than salary,

Maj. Op. at 12-13; but although the Executive Council

described the new payment as a “fringe benefit,” J.A. 598,

under its power to establish “such benefits as may be required

to attract and retain competent personnel,” NALC Const. art.

9, § 11(e)(4), even a purpose of attracting quality personnel

can’t turn a salary increase into a non-salary benefit. Lacking

authority to increase their own salaries other than by

constitutional amendment, the officers necessarily lacked the

power to evade this limitation by using a different label.

As I’ve mentioned above, NALC’s constitution sets forth

a specific dollar amount for each officer as “the sum . . . per

annum, payable weekly,” for “the faithful performance of

[that officer’s] duties.” Id. art. 9, §§ 1-10. This definition

clearly covers the FICA reimbursements, which directly

10

expanded each week’s paycheck by a fixed amount, regularly

increasing the annual payments made for the officers’

services. The constitutional text offers no basis for

distinguishing a 7.65% “FICA reimbursement” from an

illegitimate 7.65% raise. The reimbursements also fall within

generally accepted definitions of salary, see 9 Oxford English

Dictionary 48 (corrected ed. 1933) (“[f]ixed payment made

periodically to a person as compensation for regular work”);

Webster’s Third New International Dictionary 2003 (1981)

(“fixed compensation paid regularly . . . for services”), and

under the tax code are part of the officers’ wages for FICA

purposes. See 26 U.S.C. § 3121(a), (a)(6)(A).

If the officers provided reasonable definitions of

“benefits” and “salary” that included FICA reimbursements

within the former and excluded them from the latter, we

would defer under Monzillo. Cf. English v. Cunningham, 282

F.2d 848, 850 (D.C. Cir. 1960) (“Courts will accept the

correctness of an interpretation fairly placed on union rules by

the union’s authorized officials.” (emphasis added)). But they

have never done so. Before the district court, the officers

stated only that they “have historically interpreted” their

salaries to be “the amount paid annually to each officer for the

services that he or she performs for the Union.” See

Statement of Material Facts as to Which There Is No Dispute

of Individual Defendants Sombrotto et al., Doc. No. 128, pt. 2,

¶ 15, at 4 (Nov. 19, 2001); see also Sombrotto Decl. 11/19/01,

Pl.’s Ex. 21, ¶ 9, at 3-4. The FICA reimbursements fit

comfortably within that definition.

Moreover, if the term “benefits” includes payments

indistinguishable from salary, there is no way to differentiate

the payments that the officers cannot increase from the ones

they can. Any regular payment to the officers (an “extra-

special compensation supplement”?) could be justified on

such grounds. An interpretation that “reads out of the

11

constitution an important protective provision” is “patently

unreasonable,” Loretangeli v. Critelli, 853 F.2d 186, 195 (3d

Cir. 1988); so a reading that decapitates the salary caps should

fail. The constitution describes “benefits” as “including but

not limited to annuity, welfare, vacations, holidays, severance

pay, tuition or scholarship, and insurance benefits.” NALC

Const. art. 9, § 11(e)(4). None takes the form of a fixed,

regular, immediate, and unrestricted cash payment for each

week worked. If such payments are “benefits,” then the

constitution’s last restraint on the officers’ helping themselves

to salary increases appears dead.

Nor does the officers’ theory of “double taxation” alter

the analysis. Their salaries are constitutionally fixed in pre-

tax terms—which they implicitly concede by paying their own

personal income taxes—and, as they themselves allege, are

adjusted at every biennial convention. See Mem. Supp. Mot.

Summ. J. Filed by Individual Defs. Sombrotto et al., Doc. No.

128, pt. 3, at 7. The decision of each convention whether or

not to grant a raise (and, if so, of how much) is made in the

shadow of the governing tax law. Since FICA taxes were a

longstanding obligation of all of the union’s full-time

employees, rather than a new imposition in 1980, the officers

would have had every opportunity to make their case to the

convention beforehand. When NALC’s officers voted to

lighten their own tax burden at the union’s expense—a move

they did not disclose to the membership until after Noble

complained—they usurped the convention’s authority to

determine their salaries.

The majority places great weight on the payments’

“wisdom as a policy matter,” Maj. Op. at 13, but this does

nothing to resolve the interpretive issue. Perhaps the extra

pay was useful “to attract and retain” officers; yet the officers’

authority must still be read consistently with the salary caps,

for an unauthorized raise would have been equally attractive.

12

The policy goal named in the clause is if anything a limitation

on what benefits may be offered; it does not expand the

category of “benefits” to include payments that are really

salary increases. The only constitutional issue is whether the

FICA reimbursements were a (permitted) benefit or a

(forbidden) salary increase; business arguments for the

reimbursements have no bearing on the issue.

Judge Kavanaugh’s opinion goes further, and argues that

Noble’s argument “largely eras[es] the constitution’s clear

distinction between salary and benefits.” Kavanaugh Op. at 3.

Quite the reverse. Although the constitution authorizes the

Executive Council to offer “benefits” in order “to attract and

retain competent personnel,” it gives no license to increase

salaries for that purpose. The distinction may be formalistic,

but it is in practice the only barrier to almost unlimited self-

help. By looking to business reasons for upholding the 7.65%

FICA increase, the majority erases the distinction and the

constraint.

III. “Per Diem” Expenses During National Conventions

The majority rejects Noble’s claims concerning the “per

diem” expenses; in so doing, it misconceives both the record

and the nature of his challenge. Because the district court

failed to rule on the relevant factual issues—and because this

court cannot make the necessary findings on its own—the

claim should be remanded for further development of the

record.

At every biennial convention after 1964, a small group of

unnamed delegates received a “per diem” payment calculated

on the basis of certain estimated expenses: lost wages, hotel

rooms, and meals and incidentals. Noble argued in the district

court that the presidentially appointed Committee on Mileage

13

and Per Diem asked each post-1964 convention to approve

these payments without informing the delegates of two facts:

(1) that the union’s officers were among those receiving per

diem payments, even though they continued to earn their

salaries and thus had no “lost time” (unlike rank-and-file mail

carriers); and (2) that the union had already paid (in full or

part) for most officers’ hotel rooms, transferring the union’s

hotel discount to the officers’ benefit. Thus, the members

were unaware of these costs’ peculiarities—peculiarities that

might well have been material to their decision.

Under our precedent in United States v. DeFries, 129

F.3d 1293 (D.C. Cir. 1997), these allegations state a violation

of § 501(a). Payments to the officers are invalid if made

without informed consent, for “authorization secured ‘without

disclosure of . . . material information’ is a nullity.” Id. at

1307 (omission in original). DeFries’s “nullity” phrase comes

from United States v. Butler, 954 F.2d 114 (2d Cir.1992), a

case with facts strikingly similar to those here. The Butler

court upheld the embezzlement conviction under § 501(c) of a

union official who had secured approval for “fixed expense

payments for attending trustee meetings” without revealing

that he and other recipients “were already being fully

compensated for actual expenses.” Id. at 119. The Second

Circuit held that approval given under these circumstances

was worthless. The Fourth and Fifth Circuits have agreed,

holding that when union officers benefit directly from an

expenditure, they must prove “that the funds . . . were obtained

with the valid authorization of the union after adequate

disclosure.” Ray v. Young, 753 F.2d 386, 389 (5th Cir. 1985);2

accord Brink v. DaLesio, 667 F.2d 420, 424 (4th Cir. 1981).

2

The defendants claim that Ray supports a laxer standard. It

did so, but only for very different sorts of payments. Its point was

14

That union officers would receive a full per diem

payment while having incurred no “lost time” and while

enjoying union-provided hotel rooms could obviously have

been material to the convention’s decision to approve the per

diems. This is not merely a question of whether individual

recipients could save money by eating cheaper meals or

staying at a cousin’s apartment, but whether the factors on

which the per diems were based were categorically

inappropriate for a distinct group of recipients. Thus, while

convention delegates probably understood that the per diems

did not vary with run-of-the-mill variations in individual

expenses, we have no basis to assume—as the district court

made no findings on the matter—that there was adequate

disclosure of the facts that reasonable delegates would have

thought material.

Noble accordingly argued before the district court that the

conventions had been misled. Pl.’s Am. Proposed Findings of

Fact 19 (“Stating to the convention that . . . the recommended

per diem rate is based on consideration of lost time and hotel

rates implies . . . that the payment will be made to people who

lose time and pay for their hotel rooms.”). But the district

court failed to address Noble’s argument. Because he

properly raises this issue on appeal, we could affirm only if

Noble’s theory were inadequate as a matter of law (which it is

not), or if it were unsupported by sufficient evidence in the

record (i.e., if a finding in Noble’s favor would have been

that “heightened scrutiny” was not suitable merely because a

payment provided incidental benefits to an officer; thus, though an

officer reimbursed for a business dinner “has been relieved of the

personal cost, which he otherwise would have incurred, of daily

sustenance,” 753 F.2d at 390, no special scrutiny was in order. But

nothing in Ray suggests a willingness to countenance undisclosed

“double dip[ping],” as Butler put it. 954 F.2d at 117.

15

reversible for clear error). We cannot simply supply the

factual finding ourselves, however, for “where the correctness

of the lower court’s decision depends upon a determination of

fact which only a [fact-finder] could make but which has not

been made, the appellate court cannot take the place of the

[fact-finder].” United States v. Hill, 131 F.3d 1056, 1061 (D.C.

Cir. 1997) (alterations in original) (quoting United States v.

Garrett, 720 F.2d 705, 710 (D.C. Cir. 1983)); see also 19

Moore’s Federal Practice—Civil § 206.03[6].

The majority not only attempts to supply the necessary

finding, but to do so it rests on an inaccurate reading of the

record. The majority asserts that a “basic reading” of the

NALC constitution would have revealed the necessary facts.

Maj. Op. at 16. But the constitution nowhere says that the

officers’ hotel rooms had been paid for, a fact that was only

revealed as a result of Noble’s internal complaints.

Additionally, while the constitution permits officers to receive

per diems, it nowhere indicates that officers must receive

them; that was up to each convention to decide. The

constitution first mentions per diems in providing for a

Committee on Mileage and Per Diem, which during the

relevant period was appointed by Sombrotto. Cf. NALC

Const. art. 9, § 1(g). This committee must “compute and

report to the National Convention the name, residence, and

amount due each member eligible for mileage and per diem,”

id. art. 11, § 6 (emphasis added), which indicates that per

diems may be paid to any delegate. The constitution then

allows officers to receive the payments by making an

exception to their otherwise-applicable salary caps, permitting

them to receive per diems “as the National Association, while

in session, may direct.” Id. art. 13, § 2. This allows

“direct[ion]” by the convention, but not directions occurring

under a complete misapprehension of the facts; nor does it

indicate that the officers will, in fact, be included among those

receiving per diems at any particular convention.

16

To see why union members might have been left in the

dark, a brief supplement to the majority’s account is

necessary. At one time, per diem payments were calculated

by the committee on an individual basis, with each allowance

read aloud to the convention by name and amount. In the

1964 Convention, as the district court found, “a majority of

the Delegates decided to dispense with the reading of the

individual payments.” Slip op. at 6. The convention did not

vote to “substitute[]” a summary report, cf. Maj. Op. at 14,

nor did the district court so find, see slip op. at 6, 19. So far

as appears, rather than approving a change in the system of

individualized accounting, it simply voted—as shown in the

following exchange—to dispense on that occasion with the

recital of a tedious list of names:

In accordance with the National Constitution, . . . we of

the Mileage and Per Diem Committee, having checked

the vouchers, recommend the payment of 47 delegates for

a total sum of $33,044.88.

Do you want me to read the individual payments?

(Chorus of noes.)

J.A. 657.

The record does not reveal any informed decision of the

convention to alter the method of paying per diems, nor were

the delegates again asked to dispense with the reading of

names. Rather, in subsequent years, the committee engaged

in what Noble alleged to be a “verbal shell game.” Pl.’s Am.

Proposed Findings of Fact 18. First, via the Board of

Trustees, it announced estimates of the various components of

the per diem—lost time, hotel costs, and meals and

incidentals—and recommended the total as the figure to be

provided to “those delegates who will be reported as eligible

for the same . . . later in the week.” J.A. 660 (1986

17

Convention); see also Noble, slip op. at 6, 18; J.A. 661 (1992

Convention); id. at 336 (2002 Convention). In the meantime,

President Sombrotto asked these nameless delegates to submit

vouchers for the committee’s review. See J.A. 661 (1992

Convention); id. at 336 (2002 Convention). A subsequent

announcement then disclosed to the convention the total

number of delegates found eligible for per diems and the total

amount to be paid, slip op. at 19, with the committee reporting

that it had “examined each voucher carefully and found it to

be correct.” J.A. 337 (2002 Convention); see also id. at 658

(1966 Convention). The convention then voted up-or-down

on whether or not to pay the per diems. Slip op. at 19. But at

no time did the committee disclose either the identities of

those found “eligible,” or whether any officers were among

them, or the contents of the vouchers, or the extent to which

the union was already bearing the same costs.

The majority argues that the committee’s failure to read

individual names and amounts was consistent with a

“reasonable” reading of the constitution. See Maj. Op. at 15.

This is incorrect, for the constitution unambiguously requires

that the committee “shall compute and report to the National

Convention the name, residence, and amount due each

member eligible for mileage and per diem,” NALC Const. art.

12, § 6 (emphasis added), and NALC officers are also

“members,” see id. art. 6, § 4. But it is also irrelevant, for the

reporting requirement is an independent duty of the committee,

not a condition precedent to the officers’ receipt of per diems.

The legitimacy of that receipt turns not on an interpretation of

the constitution but on whether the delegates, in deciding to

approve the payments, had enough information as to who was

receiving the payments and, for the officers, the systematic

absence of any offsetting burden.

As to the first question, the process itself plainly did not

disclose the inclusion of officers. No names were given; not

18

only were officers merely potential recipients of per diems

among others, but there were more per diems paid (in every

year for which there is evidence in the record) than there were

NALC officers to receive them. See J.A. 657 (1964

Convention) (47 delegates); id. at 658 (1966 Convention) (54

delegates); id. at 337 (2002 Convention) (38 delegates). And

as to the second question, as noted above, the officers never

disclosed the hotel subsidies until after Noble complained.

The convention was told that the recipients’ vouchers had

been examined “carefully,” but this would have led an

ordinary delegate to imagine far more strenuous eligibility

requirements than were actually applied. It thus seems

doubtful that anyone at the convention (beyond the

Sombrotto-appointed committee and the lucky recipients

themselves) had been informed of the relevant facts.

The likelihood that delegates were misled is heightened if

Noble is correct to assert—as he did in a statement that was

apparently uncontradicted and was never addressed by the

district court—that NALC’s own employees, of whom he was

one prior to his internal complaint and subsequent discharge,

were paid a daily convention allowance based only on the

“meals and incidentals” portion of the committee’s per diem

estimate, on the grounds that their salaries continued and their

hotel rooms were paid for by the union. See Pl.’s Am.

Proposed Findings of Fact 18-19; Noble Br. 13; Noble Aff.

4/2/04 ¶ 31, at 13; see also Trial Tr. 4/13/04 at 181:6-18

(testimony of William H. Young). Members may have naively

thought that what was right for a lowly staffer would also be

right for an officer.

The officers contend that they used the excess per diem

payments for legitimate expenses such as entertaining union

associates, which would otherwise have been properly

reimbursable through the usual route. Cf. Kavanaugh Op. at

4. If true, this might be relevant to the size of NALC’s

19

potential recovery, but it has nothing to do with whether the

necessary disclosures were made. The officers also argue that

no convention delegate ever requested the names of those

receiving per diems prior to Noble’s suit. But DeFries

doesn’t require the general membership to guess about

undisclosed material information and then ask for it; rather,

the benefited officers are obliged to disclose material facts to

those whose consent they seek.

Because the district court’s opinion does not reveal

whether adequate disclosure of these facts was made during

the period relevant to this suit, we should remand for

additional findings. If the district court had found on this

record that disclosure was inadequate, we certainly could not

reverse it for clear error, and Noble is entitled to have this

question determined by the original fact-finder in the first

instance. Cf. Summers v. Dep’t of Justice, 140 F.3d 1077,

1083 (D.C. Cir. 1998); U.S. Postal Serv. v. Nat’l Ass’n of

Letter Carriers, 9 F.3d 138, 146 (D.C. Cir. 1993).

* * *

Thanks to the court’s decision, pilfering union chieftains

should sleep more easily tonight. At least in this Circuit, their

interpretation of union rules to permit their self-enrichment

will be deemed reasonable whenever the interpretation passes

a laugh test, free from any need to be consistent with the

union’s efforts to constrain its officers’ self-help.