John Mallick v. International Brotherhood of Electrical Workers

MacKINNON, Senior Circuit Judge,

concurring.

I concur in the opinion of Judge Wald and have some additional observations.

At oral argument we requested the Union to file with the clerk its complete Form LM-2 as allegedly filed under the Labor-Management Reporting and Disclosure Act of 1959. This was done and in item 63 it discloses “Professional Fees $2,082,887.” This figure first surfaced in this case during oral argument in response to a question from the bench. Before that disclosure the court never knew that we were not considering merely a figure of around $400,-000 which had been determined by the plaintiff by noting the reduction in the “reserve for defense fund” during the Fiscal Year July 1, 1980 to June 30, 1981. Up to the disclosure of the $2 million figure, so far as would appear from the material that was in the record before the court, the only other item in the LM-2 report that would exclude expenses in connection with litigation, including the Boswell case, would be schedule 14, “Other Disbursements,” for which a “schedule attached” notation appeared in the filed material the court had. But there was no “schedule attached” to the record filed with this court.

We have now been given what appears to be the complete Form LM-2 as allegedly filed with the Department of Labor. We do not know whether this complete report had earlier been given to Mallick in response to this request of the Union as it was required to do. If the Union only gave him the few pages from the LM-2 report that we found in the record in this court, the Union’s response to Mallick’s request as a union member was insufficient. For such possible insufficiency, if it existed, the Union would be subject to the court granting a motion for summary judgment.

This brings us to the complete LM-2 report as we now have it, and to the “just cause” requirement of the statute which must be shown for a union member to be able to investigate the Union books.

Item 63 shows “Professional Fees $2,082,887.” It is noted that this figure purports to be all paid for “fees.” That designation “fees” would not be sufficient to cover any sum paid as damages, or in lieu of damages, by the Union for its tor-tious conduct or specifically on behalf of its officers for their tortious treatment of Boswell.

However, assuming that some sum was paid to Boswell as damages for the officers’ individual breach of their duties, or for the Union’s breach of its duties, that item of “damages” is not indicated as being shown in item 63, which is restricted to “professional fees” — it still might be shown elsewhere in the report. The only other place that I can find it might be disclosed is schedule 14 — “Other Disbursements.” For this item there is a “schedule attached” itemizing the total sum of $6,744,109. This schedule 14 which breaks down the “Other Disbursements” to total exactly the total sum shown on the face of the regular report contains 11 specific items. These run as low as $897.66 and as high as $2,710,757.77. But the description of none of the items include any sum paid by way of “damages” to Boswell in any litigation, or to any other person. Thus, if any sum was paid for “damages” to Boswell, it does not appear that the LM-2 report properly discloses it in any item. *788 That, to me, would seem to be an item that a union member might seek to “verify” if there was any reasonable supposition for concluding that any substantial sum in “damages” had been paid. And since the LM-2 report is completely devoid of any indication as to what any such amount was, or that any such payment was made, it would seem that such facts would constitute “just cause” under the statute authorizing an examination of the relevant books and records of the Union. However, if there were no payment of damages in any settlement, the Union could adequately respond to the inquiry merely by stating that no such payment was made. If such were the case, inquiry by the Union member into the Union books would be foreclosed in the absence of some substantial showing that the statement might be incorrect.

If there is such an item as damages paid to Boswell to settle the litigation, and the Union contends that they filled out the report completely, that claim could be negated by pointing out that such item is not called for by the professional fees item and is not disclosed in the “Other Disbursements” item.

In addition to the foregoing, the magnitude of the “Professional Fees” item of $2,082,887, and the absence of any detailed specification of the expenditures it covered, cries out for closer examination. This is particularly so when the Union in schedule 14, “Other Disbursements,” considered that they should disclose items as small as $897.66.