"[D]irect evidence rebuts [Noble's] circumstantial evidence and shows that [the individual defendants] used their in-town allowances for union-related business."
How later courts described this case
- "[D]irect evidence rebuts [Noble's] circumstantial evidence and shows that [the individual defendants] used their in-town allowances for union-related business."
- "At most, then, the in-town allowances had been concealed by a prior [Union] administration.... This differs enough from DeFries that the Court cannot say that these individual defendants ... sought to conceal the existence of the challenged payments."
- “Under the CCRAA, Grigoryan can recover actual damages 18 and punitive damages of not less than $100 and not more than $5,000 per willful 19 violation.”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
________________________________
)
DAVID W. NOBLE, JR., )
)
Plaintiff, )
)
v. ) Civil Action No. 94-302 (EGS)
)
VINCENT R. SOMBROTTO, et al., )
)
Defendants. )
________________________________)
SUPPLEMENTAL FINDINGS AND CONCLUSIONS
David Noble, a member of the National Association of Letter
Carriers (“NALC”), brought this lawsuit in 1994 against Vincent
Sombrotto, the NALC’s then-president, as well as nine other
officers of the NALC, an officer of the union’s Mutual Benefit
Association, and an officer of the union’s Health Benefit Plan.1
Mr. Noble accused the individual defendants of violating their
fiduciary duties to the NALC under Section 501 of the Labor-
Management Reporting and Disclosure Act (“LMRDA”), 29 U.S.C. §
401, et seq., by accepting: (1) an in-town allowance of $500 per
month to cover costs incurred in the performance of their
1 Over the course of this litigation, five of the individual
defendants—Vincent Sombrotto, Francis Conners, Walter Couillard,
George Davis, and Richard O’Connell—have died. As to each
individual, the defendants filed a suggestion of death pursuant
to Federal Rule of Civil Procedure 25(a)(1) and no motion to
substitute was filed. The Court accordingly dismissed those
individuals from this case. See Order, ECF No. 173; Minute Order
of August 30, 2013; Minute Order of December 2, 2013.
duties; (2) reimbursement for the employee portion of their
Federal Insurance Contributions Act taxes; and (3) per-diem
payments during the union’s national conventions. Mr. Noble also
alleged that the defendants violated their obligations under
Section 201 of the LMRDA by refusing his requests to inspect
certain documents in order to verify the contents of financial
reports that the NALC filed with the Department of Labor.
On April 28, 2003, this Court denied the parties’ cross
motions for summary judgment. See Noble v. Sombrotto (“Noble
I”), 260 F. Supp. 2d 132 (D.D.C. 2003). The Court subsequently
held a trial and received proposed findings of fact and
conclusions of law. On September 30, 2005, the Court adopted the
defendants’ proposed findings, and dismissed Mr. Noble’s claims.
See Order, ECF No. 239. The Court denied Mr. Noble’s motion to
reconsider on September 20, 2006. See Noble v. Sombrotto (“Noble
II”), No. 94-302, 2006 WL 2708796 (D.D.C. Sept. 20, 2006).
Mr. Noble appealed to the D.C. Circuit, which affirmed in part
and reversed in part. See Noble v. Sombrotto (“Noble III”), 525
F.3d 1230 (D.C. Cir. 2008). The D.C. Circuit affirmed this
Court’s dismissal of Mr. Noble’s Section 501 claims with respect
to the tax reimbursements and per-diem payments. Id. at 1237–39.
As for the in-town allowances, the Circuit disagreed with this
Court’s finding that Mr. Noble had failed to produce evidence
that the allowances had been used for personal gain. See id. at
2
1236. The Circuit also vacated this Court’s conclusion that Mr.
Noble’s Section 201 claim was moot. Id. at 1241–42.
After the case was remanded, the Court held a status hearing,
decided to proceed with the existing record, and directed the
parties to submit proposed supplemental findings of fact and
conclusions of law, containing citation to evidence in the
record, and addressing the issues before the Court on remand.
See Minute Order of January 7, 2010. The parties have now
submitted proposed supplemental findings of fact and conclusions
of law. See Pl.’s Suppl. Proposals (“Pl.’s Proposals”), ECF No.
270; Defs.’ Suppl. Proposals (“Defs.’ Proposals”), ECF No. 272;
Individual Defs.’ Additional Suppl. Proposals (“Individual
Defs.’ Proposals”), ECF No. 274; Pls.’ Objs. to Defs.’ Suppl.
Proposals (“Pl.’s Objs.”), ECF No. 284.
The Court subsequently “determined that the trial exhibits
that were introduced during the April 2004 bench trial are not
available on the docket in this case and that any hard copies
were returned to the parties sometime after the trial
concluded.” Minute Order of December 2, 2013. For that reason,
the Court directed the parties to file copies of their trial
exhibits “by no later than December 16, 2013.” Id. The
defendants filed their exhibits on December 16, 2013, but Mr.
Noble repeatedly requested an extension of this deadline. The
defendants did not oppose his first three extension requests,
3
but noted that they might oppose future requests. See Defs.’
Response to Third Extension Mot., ECF No. 292 at 1.
On January 20, 2014, Mr. Noble made a fourth request,
asserting that “I located all of my trial exhibits except six by
January 9, 2014.” Fourth Extension Mot., ECF No. 293 at 2. The
remaining six exhibits, he said, were lost by him, and located
and provided by the NALC, but without sufficient time for Mr.
Noble to review them for accuracy. See id. at 2. The defendants
proposed a shorter extension, Opp. to Fourth Extension Mot., ECF
No. 294 at 2, but the Court granted Mr. Noble the full extension
to February 3, 2014, stating that “[f]urther requests for
extensions of time will be viewed with disfavor.” Minute Order
of January 24, 2014.
Mr. Noble nonetheless sought a fifth extension of the deadline
for filing his exhibits, even though he had found “all of my
trial exhibits except six by January 9, 2014” and obtained the
remaining six by January 21, 2014. See Fifth Extension Mot., ECF
No. 295 at 1–2. He claimed that on January 28, 2014, he
discovered that one of the exhibits provided by the NALC was
incomplete, and that he did not receive a complete copy of that
exhibit until January 31, 2014. Id. at 2. Mr. Noble did not
explain how this prevented him from filing copies of the other
exhibits, which he had located by January 9, 2014. The Court
granted Mr. Noble’s motion in part, directing him to file by no
4
later than February 5, 2014 copies of all of the trial exhibits
except for Exhibit 1—the one he received on January 31, 2014.
See Minute Order of February 4, 2014. The Court gave Mr. Noble
until February 17, 2014 to file Exhibit 1. See id. On February
5, 2014, Mr. Noble filed only a small number of his trial
exhibits. See Exhibits, ECF No. 296 (Plaintiff’s Exhibit Nos. 2–
8, 13–14, 31, 38, 75, 76, 79, 89, and 91). He filed Exhibit 1 on
February 17, 2014. See Exhibit One, ECF No. 297.
Notwithstanding Mr. Noble’s failure to comply with Court-
imposed deadlines, the Court granted Mr. Noble another chance in
July 2014, directing him to file a complete set of his trial
exhibits by August 18, 2014. See Minute Order of July 14, 2014.
Mr. Noble again failed to comply. On August 18, 2014, he filed a
motion “to vacate the July 14, 2014 Minute Order,” which
requested an additional one-month extension and asked that the
Court stay the case pending an election for the office of NALC
President. See Noble Declaration, ECF No. 298-1 at 1–2. The
Court denied both requests. See Minute Order of October 9, 2014.
The Court therefore relies on the existing record, including
documents in the summary-judgment record that correspond to some
of Mr. Noble’s trial exhibits. Upon consideration of that
record, as well as the parties’ proposed supplemental findings
and the applicable law, the Court finds that (1) the Mutual
Benefit Association and the Health Benefit Plan are sufficiently
5
separate from the NALC that defendants Dunn and Vincenzi are
outside the scope of Section 501; (2) the remaining individual
defendants reasonably interpreted the NALC Constitution to
permit the in-town allowances and they used the money for union
business; and (3) the existing record is insufficient to resolve
Mr. Noble’s Section 201 claim. Accordingly, the Court enters
judgment in favor of the defendants on Mr. Noble’s Section 501
claims, and will direct the filing of additional pleadings
regarding his Section 201 claim.
I. Findings of Fact
The NALC is governed by a Constitution, which creates two
bodies for the governance of the union. See Noble III, 525 F.3d
at 1233. The national convention of union members meets
biennially, is empowered to amend the Constitution, and is the
union’s supreme body. Id. The Executive Council, which is made
up of twenty-eight officers, ten of whom are resident officers
who work in Washington, D.C., is charged with running the
union’s day-to-day operations. Id.
A. History of the In-Town Allowances.
The Constitution charges the Executive Council to “‘act
between Conventions on all matters related to the welfare of the
Union not specifically prohibited by the membership,’” and to
“‘authorize and/or ratify the payment of salaries, wages,
expenses, allowances, and other disbursements which it deems
6
necessary and appropriate to the purpose and functioning of this
Union, other than provided for.’” Id. (quoting NALC Const. art.
9, § 11(e) (1992)). Pursuant to these powers, the Executive
Council has, since the 1950s, authorized the payment of a $500
per month in-town allowance to its resident officers. Id. at
1234. The Executive Council reauthorized the same payments in
resolutions passed in 1975, 1977, and 1980. Id. at 1235.
The in-town allowances are intended “to cover the expenses
NALC officers residing in Washington, D.C. incurred in the
performance of their official duties.” Id. These expenses
include costs for “transportation, entertainment, and other
expenses for the benefit of the Association in the Washington,
D.C., Metropolitan Area,” which were estimated to “approximate,
on the average” $500 per month. 1980 Resolution, Defs.’ Ex. 2,
ECF No. 288-3 at 5; see also Noble II, 2006 WL 2708796, at *2.
The NALC President was authorized to receive an in-town
allowance in excess of $500 per month for “all official
expenditures made by him, both in town and out of town.” Noble
III, 525 F.3d at 1235. The $500 per month limit on in-town
expenditures has remained constant since the 1950s. Id. at 1234.
An officer was required to request the in-town allowance each
month the officer wished to receive it, and any officer seeking
reimbursement for over $500 was required to provide a receipt
and the express authorization of the NALC President to incur the
7
extra expense. See Noble II, 2006 WL 2708796, at *2; 1980
Resolution, Defs.’ Ex. 2, ECF No. 288-3 at 6. Officers were not
required to submit receipts to receive an in-town allowance of
up to $500 per month; rather, the Resolution stated,
“[a]pplication for allowances pursuant to this Resolution
constitute[s] a representation by the applying officer or
employee that the sum requested was expended on behalf of the
Association in the course of performance of official duties.”
1980 Resolution, Defs.’ Ex. 2, ECF No. 288-3 at 5; see also
Noble III, 525 F.3d at 1235; Transcript of April 13, 2004 Bench
Trial, ECF No. 224 at 98:22–24 (Mr. Sombrotto: “It’s assumed
that you’re using it for the Union activities. That’s what the
resolution is there for.”). Officers were, however, required to
“personally keep their receipts for a ‘reasonable period’ of up
to five years.” Noble III, 525 F.3d at 1235 (quoting 1980
Resolution, Defs.’ Ex. 2, ECF No. 288-3 at 5).
B. Evidence of How the In-Town Allowances Were Used.
NALC officers testified that no officer would have incurred
less than $500 per month in expenses. President Sombrotto
testified that “I don’t know any officer” who claimed the $500
each month despite not having incurred at least $500 in
expenses. Transcript of April 13, 2004 Bench Trial, ECF No. 224
at 100:14-19. Indeed, testimony of NALC officials indicated that
it would be difficult for an officer to spend less than $500 in
8
a given month. President Young stated: “[s]ince I’ve been here
in 1990, I’m not aware of a single resident officer that doesn’t
spend in excess of $500 a month for all these various things
we’re talking about.” Id. at 176:24-177:12.
It nonetheless appears that NALC officers understood the
resolution to permit a hypothetical officer who incurred less
than $500 per month in expenses to claim the full $500
allowance. For example, when asked whether “Chuck Overby [who]
suffered a stroke and was in the hospital for several months”
could “draw[] $500 a month in in-town expenses,” Mr. Sombrotto
answered “Yeah. If he applied for it, he received it. Whether he
did it or not . . . . I can’t testify to that. But if he had, he
would have received it.” Id. at 103:21-104:1; see also id. at
96:14-19 (Mr. Sombrotto agreed that an officer could claim $500
without incurring as much in expenses, “[b]ut if you do and you
don’t receipt it, then you have to pay taxes”); id. at 179:5-10
(when asked whether “a hypothetical officer spent $100 on in-
town expenses” was “entitled to $500 for the month,
notwithstanding the fact that she or he spent only $100,” Mr.
Young responded “you get $500”). These general assertions about
the in-town allowances are supplemented by additional testimony
9
from Presidents Sombrotto and Young, as well as receipts that
were submitted by NALC officials.2
President William Young submitted receipts for nearly all of
the expenses he incurred between December 1990 and July 1993.
Defs. Ex. 8, ECF No. 288-9 at A-12 (Mr. Young incurred $16,358
in expenses during this period, received $16,000 in in-town
expense allowances, and submitted receipts for $15,798 of those
expenditures); Transcript of April 13, 2004 Bench Trial, ECF No.
224 at 177:16-17 (President Young: “My initial history in the
Union from 1990 until about 1994 or 5 was to receipt
everything”); Young Receipts, Pl.’s Ex. 7, ECF No. 296-6. Mr.
Young stopped submitting receipts “because it wasn’t worth the
aggravation.” Id. at 177:17-18. He explained:
So I just decided [for] my own benefit that I wasn’t
going to receipt much. And now I’m somewhere in between
the two. Every now and then I’ll throw in a receipt if
it’s easy, especially the ones where I use credit cards.
2 Mr. Noble objects generally to the Court’s consideration of the
trial testimony of Mr. Sombrotto and Mr. Young. See Pl.’s Objs.
at 2–3. According to plaintiff, “[t]o the extent that they
testified about what they were told by INDs other than
themselves[,] their testimony was hearsay,” and “[w]hen they
testified about themselves[,] their testimony was wholly
conclusory.” Id. The Court largely relies on testimony by Mr.
Sombrotto and Mr. Young about their own practices. Mr. Noble
does not explain why this evidence is so conclusory that the
Court cannot consider it. See id. To the extent that Mr. Noble
intended to object to the Court’s consideration of statements
regarding Mr. Sombrotto’s and Mr. Young’s perceptions of other
individual’s practices, the testimony relied upon by the Court
relates to their own understanding, not to what any other
officer told them. Mr. Noble does not explain why he believes
this testimony is hearsay or conclusory.
10
But if I just pay cash money, I’m not going to receipt
it because it isn’t worth the hassle in the long run.
Id. at 177:24-178:4.
Mr. Young’s receipts reflect, for example, expenditures on
meals with visiting union officials to discuss a potential
“prescription co-pay that could benefit [the] members,” id. at
164:18-165:2, Christmas gifts to union secretaries, drivers, and
cooks, and expenses for mailing Christmas cards to union
officials. Id. at 165:3-166:3; see also Young Receipts, Pl.’s
Ex. 7, ECF No. 296-6. Ultimately, Mr. Young used the in-town
allowance “for any legitimate expenses that I incurred while in-
town not on an assignment from the president.” Transcript of
April 13, 2004 Bench Trial, ECF No. 224 at 166:6-20.
President Sombrotto kept some receipts during the course of
his tenure as an NALC officer, ranging from some months in which
he submitted no receipts, to others in which he submitted over
$100 worth of receipts. See Sombrotto Receipts, Pl.’s Ex. 1, ECF
No. 297. Many of the receipts were for restaurants in
Washington, D.C., and President Sombrotto testified that these
expenses were often incurred while having dinner with Richie
O’Connell, a union officer. See id. at 112:8-115:13.
President Sombrotto testified that he regularly incurred
union-related expenses in excess of $500 per month. See
Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 96:9–13
11
(Sombrotto: ”I spent more than $500 a month, I guarantee you
that.”); Sombrotto Decl. (“2001 Sombrotto Decl.”), Ex. to ECF
No. 128 ¶ 15; see also Young Decl. (“2001 Young Decl.”), Ex. to
ECF No. 128 ¶ 4.3 As President, he and President Young could have
claimed an amount in excess of $500, Noble II, 2006 WL 2708796,
at *3, but neither did. See Sombrotto Decl. ¶ 15; Young Decl. ¶
4. Instead, each paid for any additional expenses out of their
own pocket. See Sombrotto Decl. ¶ 15; Young Decl. ¶ 4.
Defendant Lawrence Hutchins submitted receipts for a large
portion of his in-town expenses. See Investigative Committee
Report, Defs.’ Ex. 8, ECF No. 288-9 at A-10 (reflecting that Mr.
Hutchins provided receipts for approximately $12,700 of the
3 Mr. Noble objects to the Court’s consideration of the November
19, 2001 declarations of defendants Sombrotto, Young, Vincenzi,
and Dunn because “[e]ach of the declarations concludes with a
statement that ‘the foregoing is true and correct to the best of
my knowledge and belief.” Pl.’s Objs. at 2. Plaintiff argues
that, because the declarations do not make clear “which parts
were statements of knowledge and which were statements of
belief,” they are inadmissible under Federal Rule of Evidence
602 and 28 U.S.C. § 1746. These provisions, which seek to ensure
that evidence admitted—and specifically, evidence admitted via
affidavit—is within the personal knowledge of the declarant,
would require a sufficient foundation for a finding that the
matters discussed were within the declarants’ personal
knowledge. See, e.g., Lux v. Great N. Ins. Co., No. 12-cv-2632,
2013 WL 6076157, at *4 (D. Colo. Nov. 19, 2013) (“although the
qualifier ‘to the best of my knowledge’ is a limitation that
raises significant concern,” the Court relied on the challenged
affidavits where the declarant “adequately described facts which
show that he has personal knowledge”). The Court accordingly
relies on these declarations only for propositions that are
clearly supported by such a foundation.
12
$18,000 he received between 1988 and 1990, and for nearly all of
the $16,000 he received between 1991 and July 1993); Hutchins
Receipts, ECF Nos. 296-7, 296-8, 296-9. Mr. Hutchins’s receipts
largely reflect expenditures at restaurants, as well as taxi and
parking charges. See Hutchins Receipts, ECF Nos. 296-7, 296-8,
296-9. Defendant Michael O’Connor appears only to have received
an in-town allowance during 1994, but the record contains
receipts for over $400 of the $500 he received each month. See
O’Connor Receipts, Pl.’s Ex. 6, ECF No. 296-5. Mr. O’Connor’s
receipts related to restaurants, taxis, and parking. See id.
The record contains no evidence regarding defendants Souza and
Worsham, who appear never to have received an in-town allowance
because they did not reside in Washington, D.C. See 2001
Sombrotto Decl. ¶ 6 (noting that Souza and Worsham “while not
‘Resident Officers,’ were members of the Executive Council”).
The remaining individual defendants, Francis Connors, Richard
O’Connell, George Davis, and Walter Couillard have died during
the course of this litigation. See supra at 1 n.1.4
4 The record contains minimal evidence regarding these
defendants’ use of in-town expenses, with the exception of
Francis Conners. See Transcript of April 13, 2004 Bench Trial,
ECF No. 224 at 119:10-24; Frank Conners Receipts, Pl.’s Ex. 5,
ECF No. 296-4. President Young testified that Mr. Conners “made
the decision for his own reasons, and I don’t know what they
were, not to receipt anything. Just to go ahead and pay the
taxes rather than go through the hassle of writing on the
receipts who he’s entertaining, what it was about, where he was,
13
C. The In-Town Allowances Provided by the Mutual Benefit
Association and the Health Benefit Plan.
The Mutual Benefit Association and the Health Benefit Plan are
“separate and distinct” from the NALC. See Noble II, 2006 WL
2708796, at *7; see also Noble III, 525 F.3d at 1237 (noting
that this factual finding is “conclusive on remand”). Indeed,
the plans each have their own constitution, separate from the
NALC constitution. Transcript of April 14, 2004 Bench Trial, ECF
No. 225 at 73:1-11. They are governed separately, and have
separate offices and staff. See id. at 72:19–22, 75:2–4;
Vincenzi Decl. (“2001 Vincenzi Decl.”), Ex. to ECF No. 128 ¶ 4;
Dunn Decl. (“2001 Dunn Decl.”), Ex. to ECF No. 128 ¶ 3.
The Mutual Benefit Association is incorporated in Tennessee.
Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 72:19-
25; Dunn Decl. Ex. A. It is a fraternal benefit corporation that
offers life and disability insurance, and receives its funds
through the sale of those insurance policies, as well as through
investment income earned through investing the premiums.
Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 72:19-
73:19; Dunn Decl. ¶ 4.
Defendant William Dunn served as the NALC’s Director of
Insurance, which made him Director of the Mutual Benefit
all of that.” Transcript of April 13, 2004 Bench Trial, ECF No.
224 at 176:20-177:9.
14
Association, until 1994. Dunn Decl. ¶ 2. Mr. Dunn’s role was
governed by the Mutual Benefit Association’s Constitution. Id. ¶
5. His salary, benefits, business expenses, and $500 per month
in-town allowance were all paid by the Mutual Benefit
Association, not the NALC. Dunn Decl. ¶¶ 4, 6; Transcript of
April 14, 2004 Bench Trial, ECF No. 225 at 73:25-74:6. Mr. Dunn
used his in-town allowance on various business-related
expenditures, including transportation and meals with union
officials. Dunn Decl. ¶ 9.
The Health Benefit Plan is “part of the federal employee
health benefit plan operated under rules promulgated by the
Office of Personnel Management” and makes its money by selling
insurance policies “to members of [the NALC] and other federal
employees.” Transcript of April 14, 2004 Bench Trial, ECF No.
225 at 74:13-19. Mr. Vincenzi served as the Health Benefit
Plan’s director from 1986 until 1994. Vincenzi Decl. ¶ 2. His
duties were governed by the Plan’s Constitution. Id. ¶ 5. Mr.
Vincenzi’s salary, benefits, and in-town allowances were paid by
the Health Benefit Plan from its funds. Id. ¶¶ 6, 7; Transcript
of April 14, 2004 Bench Trial, ECF No. 225 at 75:5–24. Mr.
Vincenzi spent the allowance on union-related business at
restaurants, as well as for transportation and the costs of
hosting colleagues at his home to discuss union business. Id. ¶
9.
15
D. Discussion and Authorization of the In-Town Allowances at
NALC National Conventions.
The in-town allowances were discussed during a number of NALC
National Conventions. See Noble III, 525 F.3d at 1234, 1237.
First, during the 1976 National Convention, when James
Rademacher was President, a delegate named John Bourlon informed
the Convention that “I am advised that sometime in 1975 the
Executive Council approved the expenditure for the National
Officers for in-town expenses” and 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.” Minutes of 1976 NALC
Convention, Pl.’s Ex. 13, ECF No. 296-10 at 1–2. President
Rademacher responded “[w]ell, your information is incorrect. The
Chair stands here in front of 5,000 delegates and says your
information is incorrect.” Id. at 2. The Resolution in existence
at that time permitted resident officers “to draw up to $500.00
each month as an allowance for official in-town expenses,”
stated that “[a]pplication for allowances pursuant to this
Resolution constitute[s] a representation . . . that the sum
requested was expended on behalf of the Association in the
course of performance of official duties,” and made it “the
responsibility of each officer . . . to make and preserve for a
reasonable period, not exceeding five years, records and
receipts.” 1975 Resolution, ECF No. 288-9 at 32–33.
16
In 1980, soon after Vincent Sombrotto became President, the
Executive Council reauthorized the in-town allowances. See 1980
Resolution, Defs.’ Ex. 2, ECF No. 288-3. That resolution
recognized that “resident officers . . . in the performance of
their official duties are expected to and regularly do incur and
pay transportation, entertainment, and other expenses for the
benefit of the Association in the Washington, D.C., Metropolitan
Area, in amounts which are estimated to approximate, on the
average [$500].” Id. at 5. Just like the prior resolutions, the
1980 Resolution made any application for an in-town allowance “a
representation by the applying officer or employee that the sum
requested was expended on behalf of the Association in the
course of performance of official duties” and required officers
“to make and preserve for a reasonable period, not exceeding
five years, records and receipts of expenditures covered by
allowance for examination by the Fiscal Committee and by any
other legally authorized authority.” Id. at 5–6.
The in-town expenditures were not discussed again until the
1986 National Convention, when the following discussion occurred
in connection with a debate over a proposal to increase the
salaries of NALC officers:
DELEGATE LIPPE: . . . I personally believe that all the
national officers deserve a salary increase. However, I
want to take a look at what it is that we are going to
decide today. You have always said that you want the
membership to be completely informed, and I have some
17
information that I would like them to know. Based on the
figure of $65,038, which is currently in the
Constitution, there are some unseen salary increases
that the membership needs to be made aware of. In
addition to the salary of $65,038, the Constitution
provides for the membership to pay for the
noncontributory retirement program. Based on that
figure, the number is $14,959. Additionally, the NALC
pays 7 percent of all national officers’ salary into
their civil service retirement fund based on the $65,000
figure. That cost is approximately $3,500. Additionally,
the NALC pays both sides of the Social Security taxes,
7.15 percent, which is approximately $3,003.
Additionally, all resident national officers receive a
sum of $6,000 per annum unaccountable expense money. If
you add to the salary of $65,038, the $14,000 as well as
the other benefits that are paid by the Union, the salary
is $90,750. . . .
PRESIDENT SOMBROTTO: Thank, you Sister. (Applause.)
Microphone No. 1 on privilege.
DELEGATE MCNULTY: Gene McNulty, Branch 9, Minneapolis.
I would like to correct the Sister. As a National
Business Agent and one of your employees, you do not pay
for the 7 percent of the retirement contribution. That
is taken out of my check just like it is taken out of
yours. 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.
PRESIDENT SOMBROTTO: Microphone No. 2, against.
Minutes of 1986 NALC Convention, Defs.’ Ex. 11, ECF No. 288-
12 at 2.
In 1994, the NALC Convention rejected proposed amendments that
would have limited the Executive Council’s ability to authorize
salaries, wages, expenses, allowances, and other disbursements
for itself. See Noble II, 2006 WL 2708796, at *6; Minutes of
1994 NALC Convention, Defs.’ Ex. 12, ECF No. 288-13 at 4–5. The
18
1996 Convention rejected similar amendments. See Minutes of 1996
NALC Convention, Defs.’ Ex. 13, ECF No. 288-14 at 3–5. The 1996
Convention also adopted a resolution—by a vote of 3,952 to 541—
that specifically confirmed that the payment of the in-town
allowances comported with the NALC Constitution. See id. at 6
(resolution stating “[t]hat the following NALC past practice
payments are hereby approved and confirmed: 1. Up to $500 per
month allowance to Resident Officers for in-town expenses”).
E. Mr. Noble’s Internal Charges Against the NALC and
Requests for Documents.
Mr. Noble sent a letter on August 16, 1993, asking the NALC to
permit him to inspect “any and all documents, receipts, records,
bills, checks, ledgers, account books, petty cash receipts,
charge slips, minutes, and resolutions that relate to the
violations set forth in the enclosed charges and described
above.” August 16, 1993 Letter from David Noble to Vincent
Sombrotto, Pl.’s Ex. 31, ECF No. 296-12 at 3. He justified this
request as based on his concerns regarding “discrepancies
between the constitutionally authorized amounts of compensation
and expenses payable to [NALC officers] . . . and the amounts
disclosed under oath to the Department of Labor on the NALC’s
LM-2 Reports for the years 1984 through the present.” Id. at 1.
President Sombrotto responded to Mr. Noble on August 31, 1993.
See August 31, 1993 Letter from Vincent Sombrotto to David
19
Noble, Ex. Q to NALC’s Mot. for Summ. J., ECF No. 126.5 While he
maintained the NALC’s right to object that Mr. Noble “ha[d] not
established just cause for such review within the meaning of .
. . 29 U.S.C. 431(c),” President Sombrotto stated:
[T]here will be made available for your examination, at
NALC Headquarters on or after September 13, 1993, copies
of NALC records which are relevant to your charges and
necessary to verify the NALC’s LM-2 reports for 1988-
1993. Please telephone Jerry Gutshall to arrange an
appointment to examine these records.
Id.
Before taking President Sombrotto up on this offer, Mr. Noble
wrote to Jerry Gutshall on September 14, 1993. See September 14,
1993 Letter from David Noble to Jerry Gutshall, Pl.’s Ex. 38,
ECF No. 296-13 at 1. Mr. Noble’s September 14, 1993 letter
vastly expanded the scope of documents he sought to review. Mr.
Noble listed eighteen categories of documents in total. See
September 14, 1993 Letter from David Noble to Jerry Gutshall,
Pl.’s Ex. 38, ECF No. 296-13 at 1-3. Some related to the salary
issues Mr. Noble had previously raised, while others raised
entirely new issues. See id. On October 7, 1993, Mr. Noble
reviewed NALC records in person. See Noble Decl., ECF No. 215 ¶
58.
5 This letter appears to have been Mr. Noble’s Exhibit No. 34.
See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3 at 29
n.102.
20
The Investigating Committee convened by President Sombrotto
ultimately “confirmed that Noble’s complaints were based in
fact” and “presented its findings to the special [NALC]
convention on October 13, 1993.” Noble III, 525 F.3d at 1234;
see also Investigating Committee Report, Defs.’ Ex. 8, ECF No.
288-9. “Delegates to the special convention roundly rejected
each of Noble’s charges of wrongdoing by an average margin of 25
to 1.” Noble III, 525 F.3d at 1234. Mr. Noble then wrote to
President Sombrotto on November 7, 1993 to request “the
videotape and a copy of the transcript of the October 13th
Special Meeting of the Convention,” as well as “copies of
payroll registers for several officers for the years 1988
through 1993.” November 7, 1993 Letter from David Noble to
Vincent Sombrotto, Ex. V. to NALC’s Mot. for Summ. J., ECF No.
126.6 President Sombrotto denied both requests on November 30,
1993. See November 30, 1993 Letter from Vincent Sombrotto to
David Noble, Ex. W to NALC’s Mot. for Summ. J., ECF No. 126.7
F. Mr. Noble’s Discovery Requests During this Case.
6 This letter appears to have been Mr. Noble’s Exhibit No. 28.
See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3 at 29
n.104.
7 This letter appears to have been Mr. Noble’s Exhibit No. 39.
See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3 at 30
n.105.
21
In his February 26, 2002 declaration in support of his motion
for summary judgment, Mr. Noble asserted that “NALC has not yet
provided me with all of the material it indicated in discovery
that it would furnish.” February 26, 2002 Noble Decl., ECF No.
139 ¶ 16. He elaborated: “For example, NALC has not yet provided
me with: a) videotapes of the 1986 convention debate concerning
officers’ salaries, b) videotapes of the 1993 special
convention, c) transcripts or tape recordings of all of the
witnesses who appeared before the investigating committee, d)
copies of Bill Young’s in-town expense applications.” Id. Mr.
Noble also stated that he had “attempted to use discovery to
develop information about the Minneapolis regional office’s
unauthorized bank account,” and that “[w]hen and if the court
orders NALC to permit me to inspect records in order to verify
NALC’s LM-2 reports I will use that opportunity to develop more
information.” Id. ¶ 52.
Shortly thereafter, the Court denied the parties’ cross
motions for summary judgment and issued an Order directing the
parties “to file a single, concise, specific, and final
statement of each party’s outstanding requests for documents or
other tangible evidence, as well as efforts made to date to
obtain them, by no later than October 31, 2002, and responses
thereto by no later than November 15, 2002.” Order, ECF No. 151.
On October 31, 2002, Mr. Noble asserted that he had “no
22
outstanding discovery requests to the individually named
defendants” and only “four outstanding discovery requests to
defendant NALC.” Pl.’s Discovery Statement, ECF No. 152 at 1.
Those four requests were for: (1) “transcripts and audio tapes
of witnesses who testified before an internal NALC committee”;
(2) “video tapes of the October 1993 special convention”; (3)
“video tapes of the third session of the 1986 convention”; and
(4) “in-town expense applications for the individually named
defendants.” Id. at 2. Mr. Noble listed no other documents.
On November 15, 2002, the defendants jointly responded to Mr.
Noble’s statement. See Defs.’ Second Joint Discovery Statement,
ECF No. 154. They indicated that they had given Mr. Noble the
opportunity to inspect all responsive documents in 1996 and that
Mr. Noble “requested and received copies of the produced
documents.” Id. at 3. After a 1999 hearing before Magistrate
Judge Kay, defendants claimed, they offered to let Mr. Noble
inspect documents again, he “reviewed the documents between
March 5 and 8, stated that he would like to continue reviewing
the files on March 29,” but “did not appear on March 29 . . .
and cancelled another date arranged for April 6” and then “never
reappeared to continue his review of documents.” Id. at 5.
On March 31, 2003, the Court issued an Order regarding these
discovery matters. See Order, ECF No. 155. The Court ordered the
defendants to “make the documents, videotapes and transcripts
23
identified as the subject of outstanding discovery requests by
Mr. Noble in his October 15, 2002 submission to the Court
available to Mr. Noble for viewing by no later than April 28,
2003, for a period of five business days ending on May 2, 2003.”
Id. at 2. The Court further directed Mr. Noble to “provide
defendants with a specific list of documents, tapes and
videotapes he wishes to obtain copies of by no later than May
15, 2003, along with reasonable payment as agreed to by the
parties for those copies.” Id. Finally, the Court directed the
defendants to “provide plaintiff with all copies of documents,
tapes and videotapes requested and paid for by plaintiff by no
later than May 30, 2003.” Id. The NALC asserts that it “fully
complied with that Order; [Mr.] Noble has never claimed
otherwise.” Defs.’ Proposals at 9. Mr. Noble does not contest
this assertion. See generally Pl.’s Objs.
II. Conclusions of Law
A. Mr. Noble’s Section 501 Claims
Mr. Noble’s remaining Section 501 claim relates to the in-town
expenditures. Before addressing the merits of the claim, the
Court must assess which defendants remain subject to it.
First, the claim cannot be made against the NALC directly
because “claims made pursuant to Section 501 of the LMRDA cannot
be brought against labor organizations . . . but rather can be
made only against officers acting in their official capacities.”
24
Saunders v. Hankerson, 312 F. Supp. 2d 46, 58 (D.D.C. 2004); see
also Sabolsky v. Budzanoski, 457 F.2d 1245, 1249 (3d Cir. 1972);
Pignotti v. Local No. 3 Sheet Metal Workers’ Int’l Ass’n, 477
F.2d 825, 832 (8th Cir. 1973); Commer v. McEntee, 145 F. Supp.
2d 333, 339–40 (S.D.N.Y. 2001), aff’d in relevant part sub nom.
Commer v. Giuliani, 34 F. App’x 802, 805 (2d Cir. 2002). Nor
does Mr. Noble appear to press this claim as to the NALC.
Compare First Am. Compl., ECF No. 25 ¶¶ 115–19 (bringing the
Section 501 claims against the NALC), with Pl.’s Proposals at 3
(discussing only the individual defendants in connection with
the claim).
Second, five of the twelve individual defendants have died
during the course of this litigation and were dismissed, without
objection by Mr. Noble or any attempt to file a motion to
substitute. See supra at 1 n.1. In light of that, Mr. Noble’s
Section 501 claims against those individuals—Vincent Sombrotto,
Francis Conners, Walter Couillard, George Davis, and Richard
O’Connell—are no longer part of the case.8
8 See, e.g., Cowger v. Rohrbach, 734 F. Supp. 914, 916 (C.D. Cal.
1990) (“The goals which underlie the LMRDA and the
practicalities of a trial necessarily involving uniquely
individual actions lead [the court] to the conclusion that
justice is best served by abatement of this [Section 501] cause
of action.”); Fed. R. Civ. P. 25(a)(1) (“If a party dies and the
claim is not extinguished, the court may order substitution of
the proper parties,” but “[i]f the motion [for substitution] is
not made within 90 days after service of a statement noting the
25
Third, Mr. Noble never raised a Section 501 claim against
defendants Souza and Worsham related to in-town expenses. See
1993 Investigation Report, Defs.’ Ex. 8, ECF No. 288-9 at 3
(list of officials Mr. Noble had charged internally with
accepting the in-town allowances, which does not include
defendants Souza or Worsham); First Am. Compl., ECF No. 25 ¶ 8
(Souza and Worsham were not listed as NALC “resident officers”);
id. ¶¶ 115–19 (Souza and Worsham were omitted from Count II,
which raises a Section 501 claim regarding the in-town
expenses). They are therefore not subject to this claim.
Accordingly, Mr. Noble’s Section 501 claim relates only to
William Dunn, Lawrence Hutchins, Michael O’Connor, Robert
Vincenzi, and William Young. Defendants Dunn and Vincenzi argue
that they cannot be subject to a Section 501 claim because they
are not union officials, and the Court addresses this argument
first. After finding that defendants Dunn and Vincenzi are
correct, the Court analyzes Mr. Noble’s Section 501 claims
against defendants Hutchins, O’Connor, and Young.
1. Officers of the Mutual Benefit Association and Health
Benefit Plan Are Outside the Scope of Section 501.
Section 501(a) of the LMRDA defines the duty owed by “[t]he
officers, agents, shop stewards, and other representatives of a
death, the action . . . against the decedent must be
dismissed.”).
26
labor organization” to “such organization and its members as a
group.” 29 U.S.C. § 501(a). The Act therefore requires covered
individuals, “taking into account the special problems and
functions of a labor organization, to hold its money and
property solely for the benefit of the organization and its
members and to manage, invest, and expend the same in accordance
with its constitution and bylaws and any resolutions of the
governing bodies adopted thereunder.” Id. The D.C. Circuit
directed this Court to consider on remand whether defendants
Dunn and Vincenzi, as officers of the Mutual Benefit Association
and Health Benefit Plan, are subject to Section 501. See Noble
III, 525 F.3d at 1237. This Court had previously found the
Mutual Benefit Association and Health Benefit Plan to be
“separate and distinct” from the NALC, Noble II, 2006 WL
2708796, at *7, a finding the D.C. Circuit noted was “conclusive
on remand.” Noble III, 525 F.3d at 1237. Nonetheless, the
Circuit stated that “the degree of separation necessary to avoid
§ 501’s application is itself uncertain.” Id.
Mr. Dunn and Mr. Vincenzi argue that they are not covered by
Section 501 because their in-town expenditures were paid using
funds of the Mutual Benefit Association and Health Benefit Plan,
not the NALC. See Individual Defs.’ Proposals at 6–8. Although
the D.C. Circuit remanded for this Court to consider this issue,
Mr. Noble did not mention it in his proposed supplemental
27
findings. See generally Pl.’s Proposals. Nor did he respond in
his opposition brief to the defendants’ arguments on this point.
See generally Pl.’s Objs. For this reason, Mr. Noble has
conceded that defendants Dunn and Vincenzi are outside the scope
of Section 501. See, e.g., McGinnis v. District of Columbia, No.
13-1254, 2014 WL 4243542, at *15 (D.D.C. Aug. 28, 2014) (when a
party “fails to address [an argument] in its motion and fails to
respond to [an opposing party’s] point in its reply, the Court
will deem it abandoned”).
In any event, the Court finds that the Mutual Benefit
Association and Health Benefit Plan are sufficiently distinct
from the NALC that their officers are not covered by Section
501(a) with respect to their in-town allowances. Claims under
Section 501(a) “may only relate to the misuse of union funds.”
Hearn v. McKay, No. 07-60209, 2008 WL 2694005, at *4 (S.D. Fla.
July 1, 2008), aff’d 603 F.3d 897 (11th Cir. 2010). For that
reason, a Section 501(a) claim may not be made in connection
with allegations of misuse of funds in benefit plans that “are
not union funds.” Id. As another Judge of this Court has held,
“Section 501 only applies to activities affecting union money,”
so such a claim may not be brought with respect to “money in the
Plan [that] was no longer property of the union.” Yager v.
Carey, 910 F. Supp. 704, 728 (D.D.C. 1995). This conclusion
flows from the plain language of the statute, which applies only
28
to “officers, agents, shop stewards, and other representatives
of a labor organization” and dictates that, with respect to that
labor organization, the officers must use “its money and
property solely for the benefit of the organization and its
members and to manage, invest, and expend the same in accordance
with its constitution and bylaws and any resolutions of the
governing bodies adopted thereunder.” 29 U.S.C. § 501(a)
(emphasis added).
Trustees of employee-benefit plans that are related to unions
will therefore be outside the scope of Section 501(a) when “the
funds in these plans are not union money or property but rather
the property of the plans or trusts.” Hearn, 2008 WL 2694005, at
*4 (documents establishing the plan “state[d] that the union
does not ‘have any right, title or interest in or to the Fund,
or any part thereof,” and that “[o]nce funds are transferred
into these plans they are part of an ‘irrevocable trust’ and
‘assets of the Plan.’”); see also Yager, 910 F. Supp. at 728
(“the Plan is funded by the [union] on behalf of its
affiliates,” but “once the [union] makes a payment to the plan,
‘that money belongs to the . . . Plan and is no longer [union]
property”). Both the Mutual Benefit Association and Health
Benefit Plan receive their funds through their own activities,
rather than from the union. See Transcript of April 14, 2004
Bench Trial, ECF No. 225 at 72:19-73:19, 74:13-19; Dunn Decl. ¶
29
4. The in-town allowances of Mr. Dunn and Mr. Vincenzi,
moreover, were paid entirely by their respective plans, not by
the NALC. See Dunn Decl. ¶¶ 4, 6; Vincenzi Decl. ¶¶ 6, 7;
Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 73:25-
74:6, 75:5-24. Accordingly, the in-town allowances of defendants
Dunn and Vincenzi were not paid for using union funds and
therefore any claim against them alleging the misuse of those
funds cannot be brought under Section 501.
This conclusion is bolstered by the possibility that trustees
of such plans may be “subject to their own fiduciary
requirements under the Employment Retirement Income Security
Act, [29 U.S.C. § 1001, et seq.]” Hearn, 2008 WL 2694005, at *4.
If so, ERISA makes such plans “distinct legal entities separate
from the union . . . controlled exclusively by the trustees for
the benefit of the plan participants and beneficiaries.” Hearn,
603 F.3d at 902 (citing 29 U.S.C. §§ 1104(a)(1), 1132(d)). “When
a plan’s assets are misused, the breach of duty is one between
the trustees and the plan’s beneficiaries (a separate
constituency from the union and its members as a group).” Id.
Nor would the fact that a plan trustee is also a union officer
affect the analysis. “[A]n employee benefit fund trustee is a
fiduciary whose duty to the trust beneficiaries must overcome
any loyalty to the interest of the party that appointed him.”
NLRB v. Amax Coal Co., 453 U.S. 322, 334 (1981); see also Hearn,
30
603 F.3d at 902–03 (“when a union official is acting in his role
as an ERISA benefit plan trustee, he does so exclusively for the
benefit (or to the detriment) of the plan participants and
beneficiaries, not the union or its members as a group”).9
2. Mr. Noble’s Section 501 Claims Against Defendants
Hutchins, O’Connor, and Young Fail.
Mr. Noble’s in-town-expense claim thus remains only as to
three individuals: Lawrence Hutchins, Michael O’Connor, and
William Young. Mr. Noble’s claim that their in-town allowances
were not properly authorized cannot stand if the in-town
allowances were made “in accordance with [the union’s]
constitution and bylaws and any resolutions of the governing
bodies adopted thereunder.” 29 U.S.C. § 501(a). The D.C. Circuit
has affirmed that, in evaluating whether an action comports with
9 The Court is not persuaded by pre-ERISA cases involving plans
that “were an exclusively union undertaking.” Hearn II, 603 F.3d
at 903 n.8 (describing Hood v. Journeyman Barbers, Hairdressers,
Cosmetologists & Proprietors Int’l Union, 454 F.2d 1347 (7th
Cir. 1972) and Morrissey v. Curran, 423 F.2d 393 (2d Cir.
1970)). Pre-ERISA decisions are especially unpersuasive because
“ERISA obviated the need for federal courts to strain to imply a
cause of action in favor of employee benefit fund participants
and beneficiaries.” Hearn, 2008 WL 2694005, at *5 (quotation
marks omitted). Nor is the Court persuaded by Morrissey v.
Curran, 650 F.2d 1267 (2d Cir. 1981), where allegedly improper
payments from a pension fund jointly run by a union and its
members’ employers fell within the scope of Section 501 because
the pension fund’s assets “belong to union members.” Id. at
1284. By contrast, the Mutual Benefit Association and Health
Benefit Plan both sell to non-members, and their funds come not
from union or member contributions, but from the payment of
insurance premiums and investments of those premiums.
31
a union’s constitution and bylaws, the Court must “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.” Noble
III, 525 F.3d at 1235 (quotation marks omitted; alteration in
original). This deference is even greater “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. (quotation marks and alteration
omitted); see also Monzillo v. Biller, 735 F.2d 1456, 1458 (D.C.
Cir. 1984). This deference takes into account “whether there was
arguable authority for the officer’s act from the officer’s
viewpoint at the time, not from a court’s more sophisticated
hindsight.” Stelling v. Int’l B’hood of Elec. Workers, 587 F.2d
1379, 1389 n.10 (9th Cir. 1978).
This Court previously concluded that Article 9, § 11(e) of the
NALC Constitution could reasonably be viewed as authorizing the
individual defendants’ actions. See Noble II, 2006 WL 2708796,
at *8–9. This holding was based on the following provisions:
“Second only to the Convention in legislative and policy-
making authority, [the Executive Council] shall act between
Conventions on all matters related to the welfare of the
Union not specifically prohibited by the membership.”
“[The Executive Council may] authorize and/or ratify the
payment of salaries, wages, expenses, allowances, and other
32
disbursements which it deems necessary and appropriate to
the purpose and functioning of this Union, other than
provided for.”
Id. Because the NALC Constitution does not “specifically
prohibit or otherwise provide for the payment of either an in-
town expense allowance or the reimbursement of un-itemized
expenses,” this Court agreed with the defendants that the above
provisions had been “reasonably interpreted . . . to permit a
$500 per month in-town expense allowance resolution for Resident
Officers” and that “the Council’s determinations for many years
that it would not require Resident Officers to submit receipts
for in-town expenses were reasonable and made in good faith.”
Id. at *9.
The D.C. Circuit “agree[d] . . . that the NALC constitution
was ambiguous.” Noble III, 525 F.3d at 1236. It held that
“[t]hough 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” and that other provisions relied upon by Mr. Noble
do not “unambiguously require[] a contrary interpretation.” Id.
Accordingly, the Circuit agreed with this Court’s application of
a “more deferential standard of review in evaluating the
reasonableness of the NALC Executive Council’s interpretation of
their authority to authorize the expenses.” Id. The individual
33
defendants’ interpretation of the NALC Constitution to permit
the in-town expense allowance was therefore reasonable under the
deferential standard applicable to this case, giving them
arguable authority for accepting $500 per month pursuant to the
resolution for use in connection with union-related business in
Washington, D.C.
The D.C. Circuit reversed this Court’s dismissal of Mr.
Noble’s claim because it disagreed with the factual finding that
Mr. Noble “produced no evidence that officers had used the
allowance for purely personal reasons, unrelated to union
business.” Id. at 1236 (quotation marks omitted). Although no
direct evidence of misuse had been provided, the Circuit held
that personal use may be proven by indirect evidence. See id. at
1236–37. Mr. Noble, the Circuit found, had produced two relevant
forms of circumstantial evidence: (1) the evidence of bad faith
provided by two misleading statements by NALC officers regarding
the in-town allowances, and (2) defendants’ failure to submit
receipts despite the resolution’s requirement that they retain
receipts for a reasonable period and their “direct financial
incentive” to do so. See id. The Circuit directed this Court on
remand to “weigh[] Noble’s circumstantial evidence of misuse
against any evidence the officers present to the contrary.” Id.
at 1237.
a. The Statements at the 1976 and 1986 NALC Conventions
34
This Court’s analysis is framed by two statements made during
NALC National Conventions held a decade apart, which arguably
support an inference of “bad faith regarding the in-town expense
allowance.” Id. As the Circuit summarized it: “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.” Id. The Circuit therefore
directed this Court to apply 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.” Noble
III, 525 F.3d at 1237.
DeFries arose in connection with criminal proceedings against
individuals who had been officers of a union that subsequently
merged with another union. See 129 F.3d at 1297. Those officers,
pursuant to the merger agreement, became officers in the new
union. Id. Despite this, the officers received severance
payments totaling $2,000,000 upon consummation of the merger, as
a result of a severance plan adopted by the former union’s
leadership committee. Id. In assessing the officers’ contention
that the severance plan was permitted by the union’s bylaws, the
D.C. Circuit noted that the officers had “t[aken] steps to
conceal from the union membership the adoption, terms, and
35
triggering event of the plan.” Id. The officers “failed to
mention the plan in the minutes of the meeting at which they
adopted it, direct[ed] the union’s controller not to reveal any
details of the plan,” and “failed to disclose the plan’s
existence to the union’s independent auditor until more than a
year after its adoption.” Id. Moreover, the Circuit noted, “the
membership was kept completely in the dark as to any of [the
severance plan’s] details until after the unions were merged and
the payments were made.” Id. at 1307. Accordingly, the D.C.
Circuit held, “the membership was prevented through [the
officers’] subterfuge from exercising its ultimate authority to
prevent this looting of the union treasury, and authorization
secured without disclosure of material information is a
nullity.” Id. (quotation marks and alteration omitted). The
situation in this case is not as clear as DeFries.
The first statement at issue here is indeed troubling. In
1976, then-President Rademacher appeared to deny the existence
of “in-town expenses” for which officers were “allowed $500,”
without needing to “list it on an expense account” while
speaking to the National Convention. Minutes of 1976 NALC
Convention, Pl.’s Ex. 13, ECF No. 296-10 at 1–2; see id. at 2
(President Rademacher’s response: “Well, your information is
incorrect. The Chair stands here in front of 5,000 delegates and
says your information is incorrect.”). No reading of the in-
36
town-expense resolution in existence at the time can be squared
with this statement. See 1975 Resolution, ECF No. 288-9 at 32–
33.
President Rademacher’s statement, then, bears some resemblance
to the concealment found in DeFries. To be sure, there is no
evidence that President Rademacher or his officers engaged in
additional conduct that was also present in DeFries: There is no
evidence that the in-town allowances were omitted from any
meeting minutes or other official records, and no evidence
exists that auditors or other officials were kept in the dark or
instructed to keep the allowances quiet. Nonetheless, President
Rademacher’s statement denies the existence of the payments.
The key difference between this statement and the defendants’
actions in DeFries is that President Rademacher is not a
defendant in this case, and the individuals who are defendants
in this case were officers during the administration of
President Sombrotto, which occurred five years later and after
the intervening administration of President Vaca. The in-town
allowances authorized by President Sombrotto and at issue in
this case were made pursuant to a 1980 Resolution, which
superseded President Vaca’s 1977 Resolution, which itself
superseded the 1975 Resolution in effect when President
Rademacher spoke in 1976. President Rademacher’s statement
surely sets the stage for concern, especially in light of the
37
similarity between the 1975, 1977, and 1980 Resolutions, but
unlike the actions in DeFries, it is not probative of the intent
of the defendants in this case and therefore makes it difficult
to infer, as the D.C. Circuit could in DeFries, that the
defendants sought to conceal the payments.
The statements during the 1986 National Convention are less
clear. A delegate, Karen Lippe, was speaking in favor of
providing a more modest salary increase to NALC officers than
had been proposed. She sought to make clear the additional non-
salary compensation that NALC officers were receiving, and in
the process mentioned: (1) “pay for the noncontributory
retirement program”; (2) “7 percent of all national officers’
salary into their civil service retirement fund”; (3) “both
sides of the Social Security taxes”; and (4) “a sum of $6,000
per annum unaccountable expense money.” Minutes of 1986 NALC
Convention, Defs.’ Ex. 11, ECF No. 288-12 at 2. President
Sombrotto at this time was essentially moderating the debate on
the proposed salary increase, by alternately calling on
individuals in favor of and against the proposal based upon
which microphone they were standing at. See id. After Delegate
Lippe spoke, President Sombrotto stated “[t]hank, you Sister,”
the audience applauded, and President Sombrotto recognized
“Microphone No. 1 on privilege.” Id. Another delegate, Gene
McNulty, stated:
38
I would like to correct the Sister. As a National
Business Agent and one of your employees, you do not pay
for the 7 percent of the retirement contribution. That
is taken out of my check just like it is taken out of
yours. 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.
Id. President Sombrotto then recognized “Microphone No. 2,
against.” Id.
The effect of this dialogue is much less clear than President
Rademacher’s 1976 denial of the existence of the payments. No
one in 1986 disputed that the payments existed or that they
amounted to $500 per month. The dialogue thus cannot be read as
evidence that anyone sought to hide the payments or their
amounts. The misstatement was Delegate McNulty’s when he stated
that NALC officers “have to account for” the in-town allowances.
Delegate McNulty is not a defendant in this case, so it is
difficult to attribute his statement to the remaining individual
defendants. President Sombrotto did not step in to correct
Delegate McNulty’s statement, but neither did he ratify it.10
At most, then, the in-town allowances had been concealed by a
prior administration, and described by the administration with
which the individual defendants are affiliated as if they
10The Court notes, moreover, that President Sombrotto is no
longer a defendant in this case, further attenuating the
connection between the 1986 dialogue and the intent of the
remaining individual defendants.
39
required “accounting,” when in fact they did not. This differs
enough from DeFries that the Court cannot say that these
individual defendants—Lawrence Hutchins, Michael O’Connor, and
William Young—sought to conceal the existence of the challenged
payments. At the same time, the history of prior concealment and
the confusion about accounting in 1986 paint a picture that
counsels in favor of a more careful review of how the individual
defendants used their in-town allowances.
b. Direct Evidence of How Defendants Hutchins,
O’Connor, and Young Used the In-Town Allowances
With this framework in mind, the Court reviews Mr. Noble’s
additional circumstantial evidence of misuse. This evidence
stems from the incentive officers faced to keep receipts, based
in the Resolution itself, which tasked them with “mak[ing] and
preserv[ing] for a reasonable period, not exceeding five years,
records and receipts of expenditures covered by allowance for
examination by the Fiscal Committee and by any other legally
authorized authority.” 1980 Resolution, ECF No. 288-3 at 5–6. So
tasked, an officer had a financial incentive to submit such
receipts because any portion of the in-town expense for which a
business-related receipt was provided would be exempt from
income taxation. See Noble III, 525 F.3d at 1236.
Against this circumstantial case, the Court must weigh the
evidence presented by the individual defendants in support of
40
their contention that they did not misuse the in-town
allowances. At least with respect to defendants Hutchins,
O’Connor, and Young, direct evidence rebuts this circumstantial
evidence and shows that these three defendants used their in-
town allowances for union-related business.
Of the three remaining defendants, the record is most
illuminating as to the practices of President William Young.
President Young submitted receipts—largely reflecting meals and
transportation expenses—for nearly all of the expenses he
incurred between December 1990 and July 1993. Defs. Ex. 8, ECF
No. 288-9 at A-12 (Mr. Young incurred $16,358 in expenses during
this period, received $16,000 in in-town expense allowances, and
submitted receipts for $15,798); Transcript of April 13, 2004
Bench Trial, ECF No. 224 at 177:16-17 (President Young: “[My]
initial history in the Union from 1990 until about 1994 or 5 was
to receipt everything”); Young Receipts, Pl.’s Ex. 7, ECF No.
296-6. Mr. Young later chose to stop submitting receipts
“because it wasn’t worth the aggravation.” Id. at 177:17-18.
Thus, although there was a financial incentive to submit
receipts for the $500 or more President Young incurred in the
course of his official duties—and President Young had for years
been incurring that amount and saving receipts in response to
that incentive—he decided “[for] my own benefit that I wasn’t
going to receipt much. . . . [B]ecause it isn’t worth the hassle
41
in the long run.” Id. at 177:24-178:4. President Young’s prior
practice over the course of several years of providing receipts
for nearly every dollar he received strongly supports the
inference that he stopped submitting receipts for the reason he
gave: the inconvenience of preparing them, not because he was
suddenly able to do his job while incurring fewer expenses and
decided to pocket the difference.
Defendant Lawrence Hutchins similarly submitted receipts for a
substantial portion of his in-town expenses. See Investigative
Committee Report, Defs.’ Ex. 8, ECF No. 288-9 at A-10
(reflecting that Mr. Hutchins provided receipts for
approximately $12,700 of the $18,000 he received between 1988
and 1990, and for nearly all of the $16,000 he received between
1991 and July 1993); Hutchins Receipts, ECF Nos. 296-7, 296-8,
296-9. Mr. Hutchins’s receipts largely reflect expenditures at
restaurants, as well as taxi and parking receipts. See Hutchins
Receipts, ECF Nos. 296-7, 296-8, 296-9. Defendant Michael
O’Connor appears only to have received an in-town allowance
during 1994, but the record contains receipts for over $400 of
the $500 he received each month. See O’Connor Receipts, Pl.’s
Ex. 6, ECF No. 296-5. Mr. O’Connor’s receipts included charges
for restaurants, taxis, and parking. See id.
Accordingly, all three individual defendants provided receipts
for a substantial portion of the in-town allowances they
42
received, and President Young’s testimony explains why they
might not have provided every single receipt: Although an
income-tax benefit could be realized by providing receipts for
everything, even an officer who kept receipts for essentially
all of his expenses for years might decide that continuing to do
so was not worth the administrative burden. In light of this
record, the Court finds that direct evidence of how the
remaining individual defendants actually used the in-town
allowances demonstrates that these three individual defendants
largely accounted for their expenses. To the extent they did not
account for them, the record reflects that the financial
incentive for submitting receipts that the Resolution required
be kept for a “reasonable period” of time was outweighed by the
administrative burden experienced by those, like President
Young, who once sought to submit receipts for every expense.
Finally, the existence of a significant record of receipts
describing the types of union-related expenses contemplated by
the Resolution supports testimony that $500 per month was a
reasonable amount that a resident officer could expect to have
to spend in order to perform the job. See supra at 9. This
bolsters the conclusion that any unreceipted portion of these
defendants’ allowances was not used for personal gain.
Mr. Noble challenges the receipts themselves, calling them
“worthless as evidence.” Pl.’s Objs. at 3–4. Although phrased as
43
an evidentiary objection, Mr. Noble does not appear to dispute
their admissibility. Instead, he appears to argue that the
receipts cannot form the requisite evidence “of how the union’s
money was actually used,” Noble III, 525 F.3d at 1237, because
they do not contain a written notation of the purpose for which
the expense was incurred. This argument relies on an alleged
requirement that receipts contain such a notation. See Pl.’s
Objs. at 3-4.
Even if Mr. Noble were correct about the existence of an
independent requirement that receipts contain such a notation,
that does not render the receipts useless for the narrow purpose
to which the Circuit has directed this Court’s focus: Weighing
against Mr. Noble’s circumstantial evidence of misuse any
evidence put forth by the defendants of how they actually used
the in-town allowances. The defendants claim to have used the
allowances for union-related expenses at restaurants and for
transportation expenses. The receipts support this claim by
reflecting the contemporaneous submission by the individual
defendants of receipts for such expenses in connection with
applications for the monthly in-town allowance. Thus, even if
the failure to provide a written notation violated some other
44
legal requirement, not before the Court, the receipts would
still bear on the narrow question that is before the Court.11
B. Mr. Noble’s Section 201 Claim
In addition to his breach-of-fiduciary-duty claims under
Section 501, Mr. Noble brought a claim pursuant to Section 201
of the LMRDA. That provision requires labor unions to “file
annually with the Secretary [of Labor] a financial report,”
known as an LM-2 Report. 29 U.S.C. § 431(b). “The primary
purpose of § 201 is to make full information related to the
financial affairs of unions available to union members to
11Indeed, Mr. Noble’s various citations do not bear on whether
the receipts are useful evidence regarding the Section 501 claim
that is before this Court. Mr. Noble’s argument that NALC policy
or the NALC Constitution requires such notations is belied by
this Court’s finding that the individual defendants had arguable
authority for accepting the in-town allowances without
accounting for them, pursuant to a distinct section of the NALC
Constitution that did not require itemized receipts. See supra
at 33-34; Noble III, 525 F.3d at 1235-36. Mr. Noble’s reliance
on a December 9, 2004 letter from the Department of Labor is
unhelpful because that letter is not part of the record of this
case—it was created after discovery closed and the trial had
been held. See Pl.’s Objs. at 4. Moreover, the letter, which was
attached to a status report Mr. Noble filed in 2009, addressed
the Department of Labor’s findings with respect to an entirely
distinct section of the LMRDA. See December 9, 2004 Letter, ECF
No. 257-2. Finally, Mr. Noble’s assertion that IRS Regulations
require such notations is based solely on a 1985 letter from
Richard O’Connell to NALC officers, which directs officers to
supply certain information “which is required by I.R.S.
regulation when entertaining,” including the purpose for the
expense. February 27, 1985 Letter, Pl.’s Ex. 76, ECF No. 296-15.
Even assuming the truth of this assertion, that does not make
the receipts irrelevant to the Court’s assessment of Mr. Noble’s
Section 501 claim.
45
strengthen their efforts to rid their unions of unworthy or
corrupt officers.” McGinnis v. Local Union No. 710, Int’l B’hood
of Teamsters, 664 F. Supp. 1212, 1213 (N.D. Ill. 1987). The
report must include specified information related to the union’s
finances, including assets, receipts, salaries, and similar
matters. See 29 U.S.C. § 431(b). Section 201(c) creates a right
of action for union members who (1) made a request to inspect
documents “to verify” an LM-2 Report, (2) that was supported by
“just cause,” and (3) was denied by the union. See 29 U.S.C. §
431(c).
“The burden of proof in demonstrating just cause is on the
union member, and he may not inquire into union records out of
idle curiosity.” Mallick v. Int’l B’hood of Elec. Workers, 749
F.2d 771, 784 (D.C. Cir. 1984) (citations omitted). The
demonstration of just cause, moreover, is keyed to the
particular information on an LM-2 report that the union member
seeks to verify. See Krokosky v. United Staff Union, 291 F.
Supp. 2d 835, 843 (W.D. Wisc. 2003) (“The statute’s structure
indicates that just cause ought to relate to the LM-2.”).
“Establishing ‘just cause’ requires the union member to state
what he wishes to verify in the LM Reports and how the
particular records he is requesting are expected to assist him
in doing so.” Fernandez-Montes v. Allied Pilots Ass’n, 987 F.2d
278, 285 (5th Cir. 1993).
46
The precise scope of Mr. Noble’s Section 201 claim has
remained vague throughout this case. What is clear is that Mr.
Noble sent the NALC three letters in 1993 that contained
requests for the inspection of documents. See supra Part I.E.
His August 16 and September 14 letters included requests for
inspection of a variety of documents related both to his
internal charges regarding payments to members of the Executive
Committee, as well as other issues. See supra at 19-21. The NALC
appeared to grant the August 16 request, did not respond to the
September 14 request, and permitted Mr. Noble to inspect an
unspecified set of records on October 7, 1993. See id. It is not
clear whether that inspection granted access to everything Mr.
Noble had requested.
Mr. Noble’s third request was rejected by the NALC. His
November 7, 1993 letter sought “a videotape and a copy of the
transcript of the October 13th Special Meeting of the
Convention,” as well as “copies of payroll registers for several
officers for the years 1988 through 1993.” November 7, 1993
Letter from David Noble to Vincent Sombrotto, Ex. V. to NALC’s
Mot. for Summ. J., ECF No. 126. President Sombrotto rejected the
requests in full on November 30, 1993. See November 30, 1993
47
Letter from Vincent Sombrotto to David Noble, Ex. W to NALC’s
Mot. for Summ. J., ECF No. 126.12
In his post-trial proposed findings of fact regarding the
Section 201 claim, Mr. Noble recited the chronology of this
correspondence, but did not explain which, if any of the
requests made in his August 16 and September 14 letters had been
refused. See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3
¶¶ 77–81. Rather, Mr. Noble made the general and conclusory
statement that “[w]hile plaintiff has been furnished with some
financial information while conducting discovery in the instant
case, and a smaller amount after filing the charges, the
material he has been permitted to review has been insufficient
for him to verify even one of the NALC’s annual LM-2 reports,”
id. ¶ 83, which was itself a verbatim quotation from Mr. Noble’s
pre-trial affidavit. See April 2, 2004 Noble Decl., ECF No. 215
¶ 57.
This Court previously found that during the course of
proceedings in this case—and in the lead up to the filing of
this case—Mr. Noble had been given “access to all of the
pertinent NALC records,” rendering his Section 201 claim moot.
12Although it is clear from the record that Mr. Noble received
in discovery copies of the videotape and transcript of the
October 1993 Special Meeting, rendering that portion of the
request moot, April 2, 2004 Noble Decl., ECF No. 215 ¶¶ 82, 84,
it is not clear whether the other request has been satisfied.
48
Noble II, 2006 WL 2708796, at *11. The D.C. Circuit disagreed
that a factual record existed to find that Mr. Noble had been
permitted to inspect all documents he had requested to view, and
therefore vacated this finding. See Noble III, 525 F.3d at 1241.
It left for this Court to address the merits of the claim, “as
well as the factual determination of what (if any) records Noble
has requested but not yet received.” Id. at 1242.
The existing record and the parties’ post-remand pleadings do
not permit the Court to make this determination. Mr. Noble’s
post-remand proposed findings made only a conclusory assertion
that he has not been provided sufficient documents. See Pl.’s
Proposals at 2, 4. The defendants’ proposals reiterated that Mr.
Noble has been provided access to a significant amount of
documents, and noted that the limited set of discovery disputes
he raised in 2002 had been fully complied with, but did not
explain precisely what he has been given access to. See Defs.’
Proposals at 8-9.
Nor can the Court rule in favor of either party’s legal
argument without a clearer explanation of which requests are at
issue. The defendants’ argument that Mr. Noble has not
demonstrated just cause to inspect “any financial records other
than those to which NALC has already given him access,” Defs.’
Proposals at 16, neither explains what Mr. Noble has been given
access to, nor establishes why every single request Mr. Noble
49
made was entirely unsupported by just cause. At the same time,
Mr. Noble’s argument that his discovery of the challenged
payments entitles him to a “broad review” of the NALC’s finances
cannot be evaluated without explanation of how that discovery
provides just cause for specific requests that were rejected by
the NALC.13 Accordingly, the Court will direct the filing of
supplemental briefs, which shall include citation to the trial
record and any additional evidence the parties feel is necessary
to resolve the Section 201 claim.
The Court notes that the burden is on Mr. Noble to explain to
the Court why he is entitled to relief on his Section 201 claim.
He must explain which inspection requests the NALC rejected, how
the requests relate to the verification of the union’s LM-2
Report, and the basis for a finding that the requests were
supported by just cause. Mr. Noble’s past unsupported and
conclusory statements were insufficient and the Court may treat
another failure by Mr. Noble to explain or provide evidentiary
support for his claim as a forfeiture of the claim. Cf. Jackson
v. Finnegan, Henderson, Farabow, Garrett & Dunner, 101 F.3d 145,
13Mr. Noble’s other argument, that the defendants waived their
ability to contest his Section 201 claim because they raised no
defense to it other than mootness, Pl.’s Proposals at 4, is
incorrect: The D.C. Circuit referred to the defendants’
arguments regarding the merits of the Section 201 claim, and
suggested that this Court reach those arguments on remand. Noble
III, 525 F.3d at 1242.
50
153 (D.C. Cir. 1996) (refusing, in connection with summary-
judgment rule requiring clear and concise statements of material
facts, to “plac[e] the burden on the court, rather than on the
opposing party or his counsel, ‘to winnow the wheat from the
chaff’”).
* * *
Mr. Noble shall therefore file a pleading setting forth in
precise detail, with corresponding evidentiary citations, which
requests for the inspection of documents he claims were refused
by the NALC, and why his Section 201 claim should succeed as to
each individual request.
The defendants shall file a response to these arguments, which
shall include, among whatever other arguments the defendants
deem appropriate, an explanation, with corresponding evidentiary
citations, whether any requests still pursued by Mr. Noble have
been fully complied with.
Mr. Noble may file a reply brief, which shall respond to the
defendants’ arguments but may not raise new arguments. See
Herbert v. Nat’l Acad. of Sciences, 974 F.2d 192, 196 (D.C. Cir.
1992) (noting the general rule that courts “refuse[] to
entertain arguments raised for the first time in an appellant’s
reply brief”).
III. Conclusion
51
For the foregoing reasons, the Court enters judgment in favor
of the defendants on Mr. Noble’s Section 501 claims and requests
supplemental briefing regarding Mr. Noble’s Section 201 claim.
An appropriate Order accompanies this Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
March 27, 2015
52