Petition — Retail Store Employees Union, Local No. 919 v. United Food & Commercial Workers International Union

Supreme Court brief1980

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FILED

MAY 20 1980

# RODAK, JR., CLER

Neher cence

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

— 79-1848

RETAIL STORE EMPLOYEES UNION,

LOCAL No. 919; ARNALDO F. ESPINOSA, et al.,

Petitioners,

UNITED FOOD AND COMMERCIAL WORKERS

INTERNATIONAL UNION; WILLIAM H. WYNN, et al.,

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

MOZART G. RATNER

MOZART G. RATNER, P.C.

1900 M Street, N.W.

Washington, D.C. 20036

J. WILLIAM GAGNE, JR.

207 Washington Street

Hartford, Connecticut 06106

Counsel for Petitioners

May 20, 1980

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF CONTENTS

Fe TE TRON cssccsesinsstnnnsysisnciheseaiespheneruieatanscounduuedsiaalieaias

TE stahinesisicecsaisasossnamnccscnticionnlanisseabateailanaciaeshi

QUESTION PRESENTED ........ hshpovioniviciagnneaiesienlideneeabnan

STATUTORY PROVISIONS INVOLVED

B. The Court of Appeals’ Decision

REASONS FOR GRANTING THE WRIT

II.

III.

IV.

ee ee ween eee eee eee en eeeeneseeene

| EN oR ADE I On Re Ae RE et ORR Ls A Ls,

THE COURTS BELOW REJECTED APPLI-

CATION OF THIS COURT’S ILLEGAL MO-

TIVE TEACHINGS TO THE ACT’S PROTEC-

TION OF LOCAL AUTONOMY 0.00...

EVEN ON THE ASSUMPTION THAT DIS-

CRIMINATORY, UNLAWFULLY MOTIVAT-

ED, AUDIT IS NOT A “TRUSTEESHIP,”

THE DECISION BELOW CONFLICTS IN

PRINCIPLE WITH DECISIONS OF OTHER

CIRCUITS AND WITH FUNDAMENTAL

TEACHINGS OF THIS COURT .......

CERTIORARI SHOULD BE GRANTED TO

IMPLEMENT THE BALANCE CONGRESS

STRUCK BETWEEN PROTECTION OF LO-

CAL AUTONOMY BY LAW AND AVOID-

ANCE OF UNDUE INTERFERENCE IN

INTERNAL UNION AFFAIRS ....W02 2.

UNEXPLICATED DISREGARD OF THIS

COURT’S TEACHINGS WARRANTS EXER-

CISE OF THE SUPERVISORY POWER OF

EEE SUITES, si cniienincseilitiatciancineanmbbinapeeeaaniatall

& ii

TABLE OF AUTHORITIES

CASES: Page

Albermarle Paper Co. v. Moody, 422 U.S. 405

Na sicccnreneneceecntstancnsintasornscnenecemesencmececens 13

American Federation of Musicians v. Wittstein,

I MII occ nese nces cerenenvseseencocnonswnonsenes 22

Benda v. Grand Lodge of Intern. Ass’ n, Ete., 584

F.2d 308 (9 Cir. 1978), cert. dismissed, 441 U.S.

I hs cislsictanesnetsnseoneesinennernertnevmsaseaseowacesser 17, 18

Brotherhood of Painters v. Brotherhood of Paint-

ers, L.U. 127, 264 F.Supp. 301 (N.D. Cal., 1966) .. 17, 18

Cannon Electric Company, 151 NLRB 1465

| ___, eE OE NO 21

Cooke v. Orange Belt Dist. Council of Painters,

IE, MC, BUDO D onecensecnnceencsnecsncesreeccccece 19

Council +61 v. AFSCME, 80 LRRM 2942 (D.N.J.,

1972) (not officially reported), rev’d on other

grounds, 478 F.2d 1156 (3 Cir. 1973), cert. de-

I I asc senieeccnpnccyensevecveserracnnnsenesenreeee= 18

Cross v. Mine Workers, 82 LRRM 2614 (S.D. IIL,

ga 17, 18

Davis v. Wechsler, 263 U.S. 22 (1923) .................... 1

Delaware v. Prouse, 440 U.S. 648 (1979) ................ 7

Deposit Guaranty National Bank v. Roper,

U.S. ——, No. 78-904, 48 L.W. 4279 (March 19,

a sckcnenatsctniyectnensiorswnscensrnceeavorensecnsonses 12

Goldberg v. Truck Drivers Local Union No. 299,

AS: Sn 19

Gomillion v. Lightfoot, 364 U.S. 339 (1960) .......... 18

ON ES ES 6s) seen 11

Hendrix Manufacturing Company v. NLRB, 321

gE RE 21

Hurwitz v. Directors Guild, 364 F.2d 67 (2 Cir.,

1966), cert. denied, 385 U.S. 971 -............-...--....- 23

Johnson Vv. Nelson, 325 F.2d 246 (8 Cir. 1963)...... 19, 20

Jolly v. Gorman, 428 F.2d 960 (5 Cir., 1970),

cert. denied, 400 U.S. 1028 ..0.......2.----ee eee 15, 17, 28

Labor Board v. Erie Resistor Corp., 373 U.S. 221

I acct taretaciesercnsvenercrdurncnrvecnosoueomeransconeeesececene 14, 19, 20

ili

TABLE OF AUTHORITIES—Continued

Labor Board v. Mexia Textile Mills, 339 U.S. 563

IE MUPIIINET cdcecosetocehstesoveesianiacDnnessnadibstedeiemetediecaaastiaaniauaiotustaenhale

Local No. 1 ACA; Etc. v. IBT, C.W. & H., 419

F.Supp. 263 (E.D. Pa., 1976), aff’d, —— F.2d

——, 108 LRRM 2268 (8 Cir., 1980) ................

Local U. 138410, United Mine Workers v. United

Mine Workers, 154 U.S. App. D.C. 332, 475 F.2d

I I soccer atictsas altars tein cacaatinaainbkeseabiedps

McDonald v. Oliver, 525 F.2d 1217 (5 Cir., 1976),

OG, CO, Ge Gee OE helices wrt

Machinists Local v. Labor Board, 362 U.S. 411

pRB STS care ee ar See Arse IRC UT PO MSR AE OO

Maness Vv. Meyers, 419 U.S. 449 (1975) ..........0.......

Memphis Light, Gas & Water Div. v. Craft, 4386

AGENT 8 TIE sautibdeccccceahanieateneabasnalencsditacsiakinaionaaetines

Mincy V. District of Columbia, 218 A.2d 507 (D.C.

I I ocaieiscssdenschenccussbcateaciataecsueedchetcanspbiclbaas abel e

Monborne v. United Mine Workers, 342 F.Supp.

Se ey a, NE Sets eticenicennen

Mt. Healthy City Board of Ed. v. Doyle, 429 U.S.

6 RIRRIROPR RE CSRS Settee Soc Coa IC See Ne HOS

N.A.A.C.P. v. Button, 371 U.S. 415 (1968) ............

National Association of Letter Carriers v. Som-

brotto, 449 F.2d 915 (2 Cir., 1971) -.........000........

NLRB v. Clark Bros. Co., 163 F.2d 373 (2 Cir.

5, Si aR A rE UTED nay ATC SIRES ENOR VE ng Poe SSE IM

NLRB v. Mueller Brass Co., 509 F.2d 704 (5 Cir.,

I Sacral ci nls colic’ qahegeidageaeamanicemealeameeiomemminte

NLRB v. Threads, Inc., 308 F.2d 1 (4 Cir., 1962)...

New York ex rel. Bryant v. Zimmerman, 278 U.S.

Oe CE eicrine cece seater ete tactenlere asaneeenteines

Parks v. International Brotherhood of Electrical

Workers, 314 F.2d 886 (4 Cir., 1963), cert. de-

eh Fe es, GE aceon sce sites

Pignotti v. Local +3 Sheet Metal Workers’ Int.

Ass’n, 477 F.2d 825 (8 Cir.), cert. denied, 414

oF | fi. : Babee PERF ELAS AP POTN

Page

17, 18

TABLE OF AUTHORITIES—Continued

Retail Clerks Union, Local 648 v. Retail Clerks

International Association, 299 F.Supp. 1012

RE oe annie Ba SE Sas EARN Ass Oe Oe

Rust Sales Company, 157 NLRB 1681 (1966) ........

Sablosky v. Budzanoski, 457 F.2d 1245 (3 Cir.,

1972), cert. denied, 409 U.S. 853 --...........000222..-...

Scofield v. NLRB, 394 U.S. 423 (1969) ...................-

Steele Apparel Co., Inc., 172 NLRB 903 (1968),

_ enforced on point, 437 F.2d 933 (8 Cir., 1971)...

Steelworkers v. Usery, 429 U.S. 305 (1977) ............

Super Tire Engineering Co. v. McCorkle, 416 U.S.

EIRENE eal Ete aera on oa Oe

Turner v. Air Transport Lodge 1894, Etc., 590

F.2d 409 (2 Cir., 1978), cert. denied, 442 U.S.

RR era Ne Elect in Peet ONO Or ge ap

United Bro. of Carpenters & Joiners of America

v. Brown, 348 F.2d 872 (10 Cir., 1965) .......... ies

United States v. Boyle, 482 F.2d 755 (D.C. Cir.,

1973), cert. denied, 414 U.S. 1076 _........0000.........

United States v. Di Re, 332 U.S. 581 (1948) -.........

United States v. DuPont & Co., 366 U.S. 316

hg URNA Sa EASA BS SE me eNO Gee ne OO

United States v. Ryan, 320 F.2d 500 (6 Cir., 1963) ..

Wallace Press, Inc., 146 NLRB 1236 (1964) ..........

Wirtz v. Bottle Blowers Assn., 389 U.S. 463

EARS 2 RA AES cee RECS eRe ne ney ROPE Coe rel eA

Wong Sun Vv. United States, 371 U.S. 471 (1963)...

STATUTES AND RULES

I Ti aa cla ceslpebananiaanne

Labor Management Relations Act of 1947

Section 301(a), 29 U.S.C.A. §185(a) —.........

Labor Management Reporting and Disclosure Act

of 1959, as amended 78 Stat. 519, 29 U.S.C.

Oe aki lasasen ccoeecnten cecedinte sincera peciaigulaten ation

Page

11, 22

15, 18

TABLE OF AUTHORITIES—Continued

Page

Section 3(h), 29 U.S.C.A. § 402(h) ....3, 15, 16, 17, 18, 19

Section 3(i) (j), 29 U.S.C.A. § 402 (i) (j) -..02222.2..... 3

Section 201 (a), 29 U.S.C.A. § 431(a) .......... Rel Ae 2

Section 802, 29 U.S.C.A. § 462 ..............-...--.---- enn 2, 20

Section 304 (a) (c), 29 U.S.C.A. § 464 (a) (c)......2, 3, 4, 20

Section 501(a), 29 U.S.C.A. § 501 (a) -0000 2... 3, 20

Re Le Ten eenEn ane 19

Section 609, 29 U.S.C.A. § 529 2... 3, 20

BE ree een er 4

MISCELLANEOUS:

Black’s Law Dictionary (Fourth Ed., 1961) .......... 16

Horowitz, Possible Effects of LMRDA’s Trustee-

ship Provisions, in Slovenko, Symposium on

eR re ae Pee 15

Landrum-Griffin and the Trusteeship Imbroglio,

ok 2 Rt ernment ee 15

Levitan, The Federal Law of Union Trusteeship, in

Slovenko, Symposium on LMRDA (1961) 443.... 15

Stern & Gressman, Supreme Court Practice (5th

STAD -seosisassiesidib iccennndeahioiidatieibneatitsnisats beioianeidinenpe tae atau 11

Union Trusteeship, A Report to the Congress by

the Secretary of Labor, p. 1538 ...........0200.-.2. oe. 15

Webster’s Dictionary of Synonyms (G. & C. Mer-

SURG BS hk: GND sicireriscee nie 16

Webster’s Third New International Dictionary

CUI, CIE ivcctis cicecneciecrcemnaiticch tees 16

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

No.

RETAIL STORE EMPLOYEES UNION,

LocAL No. 919; ARNALDO F. ESPINOSA, et al.,

Petitioners,

UNITED FooD AND COMMERCIAL WORKERS

INTERNATIONAL UNION; WILLIAM H. WYNN, et al.,

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioners, Retail Store Employees Union, Local 919

(hereinafter Local 919), Arnaldo F. Espinosa, its Presi-

dent, and the other officers of Local 919, defendants-

appellants below, respectfully pray that a writ of cer-

tiorari issue to review the judgment and opinion of the

United States Court of Appeals for the Second Circuit

entered in this proceeding on November 26, 1979.

OPINIONS BELOW

The opinion of the Court of Appeals, 23a-24a, infra,

is unpublished, 614 F.2d 1291. The opinion of the Dis-

trict Court, 4a-20a, infra, is reported unofficially at 104

LRRM 2089.

JURISDICTION

A timely petition for rehearing and a suggestion for

rehearing in banc of the judgment and opinion entered

November 26, 1979, were denied on January 23, 1980,

25a-28a. On April 8, 1980, Mr. Justice Marshall entered

an order extending the time for filing a petition for

certiorari to and including May 22, 1980, and this peti-

tion was filed prior to that date. The jurisdiction of this

Court is invoked under 28 U.S.C. § 1254(1).

QUESTION PRESENTED

Does the Labor Management Reporting and Disclosure

Act of 1959, as amended, 78 Stat. 519, 29 U.S.C. § 401

et seq., hereinafter the Act or LMFDA, legalize or

prohibi+ discriminatory and unlawfully motivated audit

of ar. autonomous subordinate body by its parent labor

organization?

STATUTORY PROVISIONS INVOLVED

The text of the relevant provisions of the Act is set out

in the Statute Appendix, la-3a, infra. Synopsized, the Act

provides that “[e]very labor organization shall adopt a

constitution and bylaws” (Section 201(a), 29 U.S.C.A.

§ 431(a) ) ; prohibits imposition of trusteeship by a parent

labor organization over a subordinate body except “in

accordance with the constitution * * * of the organiza-

tion which has assumed trusteeship over the subordinate

body and for the purpose of correcting corruption or

financial malpractice * * *” (Section 302, 29 U.S.C.A.

§ 462) ; illegalizes, and authorizes members and subordi-

nate bodies to sue to enjoin, trusteeships which are not

“established * * * in good faith for a purpose allowable

under Section 302” (Section 304(a), (c), 29 U.S.C.A.

§ 464(a), (c)); defines “trusteeship” as “any * * *

method of supervision or control whereby a labor orga-

nization suspends the autonomy otherwise available to

a subordinate body under its constitution * * *” (Section

3(h), 29 U.S.C.A. § 402(h)); declares that union offices

are “positions of trust in relation to [the labor] orga-

nization and its members as a group”; requires officers

to administer the organization’s affairs “in accordance

with its constitution * * *” and “solely for the benefit

of the organization and its members” (Section 501(a),

29 U.S.C.A. § 501(a)); and makes it unlawful for of-

ficers of a labor organization to in any manner “discipline

any of its members, for exercising any right to which

he is entitled under the provisions of this Act” (Section

609, 29 U.S.C.A. § 529).

STATEMENT OF THE CASE

This case arises out of a suit filed by United Food

and Commercial Workers International Union (herein-

after UFCW), successor to Retail Clerks International

Association, William H. Wynn, its President and its

other officers, to enforce a trusteeship against Local 919,

an autonomous subordinate body of UFCW, with head-

quarters in Hartford, Connecticut (5a-6a). Both UFCW

and Local 919 are “labor organizations” within the mean-

ing of Section 3(i) and (j) of the Act, 29 U.S.C.A.

§ 402(i) and (j) (5a-6a, 1la-13a).

UFCW filed suit on July 3, 1979, and simultaneously

applied ex parte for a temporary restraining order to

enforce the trusteeship it had imposed on Local 919 on

July 2, 1979, effective July 3, 1979 (J.A. 2, 55-61, 219).

1 The symbol “J.A.” refers to the Joint Appendix in the

court below. The symbol “R.A.” refers to the “Reply Ap-

pendix” to petitioners’ reply brief in the court below. “Tr.

Jurisdiction was invoked under Section 304(c) of the Act,

29 U.S.C.A. § 464(c), and Section 301(a) of the Labor

Management Relations Act of 1947, (LMRA) 29

U.S.C.A. $185(a).2 Local 919 counterclaimed (4a; J.A.

10-18, 19), for injunctive, declaratory and other relief,

including damages and attorneys’ fees and costs on the

ground that the trusteeship had not been imposed in good

faith for the ostensible purpose of “correcting corruption

or financial malpractice,” but for the purpose of ousting

Espinosa from office because of Wynn’s personal animus

against him arising out of Espinosa’s refusal to submit

to Wynn’s dictates in the Local’s internal affairs, and

that the audit upon which the charge of “corruption or

financial malpractice” was based was undertaken dis-

criminatorily, in bad faith, for the purpose of providing

a pretextual foundation for a charge of “corruption or

financial malpractice.”

Vol. ——” refers to portions of the stenographic transcript

of the hearing on the motion for preliminary injunction not

included in either appendix.

2 Section 304(c) contains no provision for suit by a parent

body to enforce a trusteeship allegedly properly imposed for

a purpose enumerated in Section 302. It provides only for

suits by “subordinate bodies” for injunctive and other relief

against trusteeships threatened or imposed by a parent body

in an unlawful manner or for an unlawful purpose. It has

been held, however, that jurisdiction of an action by a parent

body to enforce a trusteeship lies under Section 801(a) of

the LMRA and that LMRDA Section 304(c) does not defeat

LMRA Section 301 jurisdiction. National Association of

Letter Carriers v. Sombrotto, 449 F.2d 915, 918-919 (2 Cir.,

1971). Where, as in this case, a parent body initiates the

action, the subordinate body is compelled to seek the injunc-

tive and other relief for which the statute provides by way of

counterclaim under Rule 13(a), Fed. R. Civ. P. (11a-13a, 19a).

A. The District Court’s Findings, Conclusions and Order

In its opinion and order of July 23, 1979, the District

Court specifically found:

(1) “The trusteeship was not imposed for any of

the purposes permitted by federal law, but in-

stead was imposed in bad faith by the UFCW

in an attempt to oust the president of Local 919

from his office.” (5a; 18a, 19a) ;

(2) “The entire factual background indicates that

UFCW was using the audit as a pretext to re-

move Espinosa and take over the Local, because

of the personal difficulties which had arisen be-

tween him and Wynn” (19a) ;

(3) The “difficulties” reflected Wynn’s personal

animosity toward Espinosa stemming from

Espinosa’s refusal to submit to Wynn’s dictates

in matters of Local 919’s internal affairs (8a-

9a) ;*

3 The court described these as follows (id.) :

“Espinosa had refused to appoint Joe DiFlumera, who

had been removed as president of the Springfield, Massa-

chusetts local, to a position on the staff of Local 919.

DiFlumera is now employed by the International as a

representative in the Boston area. Epinosa had also re-

fused the request of Wynn and Dority that he appoint a

Richard Abdow trustee of Local 919’s joint union em-

ployer pension and welfare funds. Espinoso had declined

to recommend the removal of Attorney Richard Van

Duren as counsel for said welfare funds, despite Wynn’s

dissatisfaction with Van Duren. Wynn had also disap-

proved of Espinosa’s running for election as a director

of the International Foundation of Welfare Benefit Plans,

an organization engaged in education of labor, manage-

ment and public participants in jointly administered

health and welfare pension matters.”

It is undisputed that the matters in which Wynn attempted

to interfere are, by the UFCW Constitution, committed exclu-

sively to local control.

(4) “the International was not sincerely interested

in auditing Local 919’s books; its purpose was

the removal of Espinosa” (19a) ;

(5) “the information found in the audit was insuf-

ficient to indicate corruption or financial mal-

practice” (17a) ;

(6) “Most of the claimed irregularities uncovered

during the audit [14a-17a] could have been ex-

plained by the officers and employees of Local

919, if an explanation had been sought” (14a) ;

(7) “the trusteeship was not in fact imposed be-

cause of these claimed irregularities” (14a).

There is no evidence and no finding that but for

Wynn’s animus against Espinosa, and his need for a

pretext to justify removal of Espinosa and take over

of the Local, a recommendation or a decision to audit

Local 919 would ever have been made. Article 11(M) of

the UFCW Constitution provides (18a, n.4):

The International Union shall have the authority,

without notice, to obtain or make a routine audit,

inspection, or examination of all books and records

of any chartered body. The International Union is

authorized to audit, inspect, or examine any of the

books, records or other documents as may be reason-

able and necessary to assure that the laws or Code

of Ethical Practices established by the International

Executive Board are being respected.” (Emphasis

added. )

The District Court found that Wynn authorized the

audit of Local 919 upon a recommendation from Vice

President and Director of the Northeastern Region,

Dority, assertedly based upon Dority’s observation in a

Local 919 trustees’ report of “unusually high expendi-

tures” for specified union business purposes and “hear-

say rumors” of occasional non-union related personal ex-

penditures (6a). There is no evidence that UFCW had

ever before undertaken to audit a local union or a local

union official on such slight grounds.t What was decided

upon and conducted was not a “routine” audit, but rather

a “fraud audit” (7a, 18a-19a),° or investigation (R.A.

61-62).

Although UFCW employs a full-time auditor (J.A.

103-104), he was not used for the Local 919 audit. In-

stead, UFCW decided to and did retain a big-eight ac-

counting firm, Touche Ross & Co. (6a, 16a; J.A. 247,

248).° However, far from giving Touche Ross a free

hand, Dority sharply limited the materials it could re-

view; dictated the subject matter of reports it would

prepare; forbade it to consult Local 919’s long-time

certified public accountant, Kravet of Coopers Lybrand,

and its bookkeeper, Micha, and prohibited it from mak-

ing professional evaluations and judgments as to whether

there was ground for finding financial misconduct or

malpractice (Tr. Vol. I, 188-193, 202-203). In short,

* To the contrary, the record shows (J.A. 163-164; Exh. S),

that in the case of one local official, Joseph Sarbora, President

of Local 1407, Pittsburgh, Pennsylvania, presumably a friend

of Wynn, even after Sarbora’s federal court conviction for

massive fraud and embezzlement of local union funds, Wynn

took no step to remove him from office or place his local in

trusteeship until Sarbora himself asked for a trusteeship.

5 In the context of audit, the terin “routine” is generally

understood to mean “automatic” or “in normal course”’. E.g.,

Mincy V. District of Columbia, 218 A.2d 507, 508 (D.C. App.,

1966) (“routine interrogation”); Delaware vy. Prouse, 440

U.S. 648, 650-51 (1979) (“routine” stop). “Routine” is used

in this sense in the first sentence of Article 11 (M), where it

contrasts with the power “to audit, inspect, or examine” con-

ferred in the second sentence.

* The record shows only one prior occasion on which the

International ever retained an outside accounting firm to

audit a local union (J.A. 162; Exh. Q-1).

the “fraud audit” was a “witch hunt” (J.A. 110, 116),

or frame-up (R.A. 61-62; p. 11, n. 9 wfra).

The trial court found that Dority and his executive

assistant, Novicoff, deliberately deceived Espinosa as to

the “true purpose” and kind of audit which was to be

conducted (7a, 18a-19a), and falsely charged Espinosa

with: (1) intentionally “double billing” by submitting

“both the soft copy and the hard copy of credit card

billing slips” (14a-15a); (2) violating a non-existent

expense documentation requirement (15a) ; and (3) fail-

ing to satisfy the UFCW Constitution’s “itemized state-

ment” requirement (15a-17a).

The District Court also found that UFCW used the

audit as a cover for take over of the Local by stealth

or by force (8a, 9a, 18a-19a). Novicoff tried to gull

Micha into giving Novicoff a key to Local 919’s office

for use in gaining entry on Saturday and Sunday, when

it was known that no Local 919 employee would be

present (8a, 9a), by misrepresenting to Micha that “Espi-

nosa had authorized Dority to have a key to the office”

(id.). Initially, upon being informed of the audit,

Espinosa “readily consented, expressed his cooperation

and so instructed the Local’s personnel. He interfered

only when it became apparent that he had been deceived

as to the purpose of the audit” (18a). At that point,

Espinosa “anticipated and feared the imposition of a

trusteeship without notice and the actual strong-arm

physical takeover of the Local’s premises by Dority and

his aides” (8a). Upon advice of counsel, he barred their

access to Local 919’s premises (7d.).

One of the asserted grounds for trusteeship was that

by barring access Espinosa had “interrupted UFCW’s

union audit” (17a; J.A. 219). The district court opined

that this was the “most serious charge made against

Espinosa” (17a). The court found Espinosa’s interrup-

tion of the audit “unwarranted” because (17a-18a):

“Article 11(M) of the International’s constitution

grants it an unqualified right to audit the Local’s

books at any time without notice. Therefore, Espi-

nosa’s interruption of the audit was a clear viola-

tion of the International’s constitution * * *.”7 (Em-

phasis added. )

The court concluded that this constitutional violation did

not warrant trusteeship, however, because Espinosa

(18a):

7 Petitioners from the very beginning charged that the audit

was outlawed by the Act because it was discriminatory and

illegally motivated and that Article 11(M) of the UFCW

Constitution does not, and cannot legally be construed to,

authorize discriminatory, illegally motivated, audits. Tran-

script of Proceedings in Chambers on July 3, 1979, pp. 17-18;

Opening Statement of Defendants’ Counsel, Tr. Vol. I, pp. 32-

35 (July 6, 1979) (R.A. 34-37) ; Defendants-Counterclaimants’

Memorandum of Law in Support of Proposed Findings of

Fact, Conclusions and Order, pp. 7-8 (July 17, 1979) (R.A.

4-11) ; Transcript of Proceedings of July 31, 1979, pp. 13-15

(R.A. 50-52).

Petitioners immediately contested Judge Clarie’s interpreta-

tion of Article 11(M) as conferring an “unqualified right’ to

audit. Defendants’ Memorandum in Support of Motion for

Stay Pending Appeal and Injunction Pending Appeal, pp. 3-7

(July 25, 1979) (R.A. 18-17); Emergency Motion [to the

Court of Appeals] for Stay and Injunction Pending Appeal,

pp. 3-5 (July 26, 1979) (R.A. 19-21) ; Defendants-Appellants’

[telerraphed] Reply to Opposition [to Motion for Stay] {7

(July 27, 1979) (R.A. 21); Emergency Motion [to Hon.

Thurgood Marshall] for Stay “2nding Appeal and for Stay

of Order Requiring Defendants vo Show Cause at 10:00 a.m.,

July 31, 1979, Why They Should Not be Held in Contempt,

p. 5-9 (July 30, 1979) (R.A. 25-29); Transcript of Proceed-

ings of July 31, 1979, pp. 6-18 (R.A. 43-55).

“took that action in good faith, believing the audit

to be a frame-up or a pretext to oust him from his

position as local president and thet it was designed

as a mechanism for the International to assume

control over the Local.”

On the other hand, on the premise that Article 11(M)

lawfully grants UFCW “an unqualified right to audit

at any time,” the court set aside the trusteeship, but only

“on the basis of the present record” (19a); authorized

UFCW to resume the audit ard “impose a trusteeship at

a later date if it develops credible facts to support such a

move” (5a, 19a), and required Local 919 and its of-

ficers to submit to resumption of the audit instanter

(id.; J.A. 48, 44).8

8In his formal Order issued on July 31, 1979 (21a-22a),

Chief Judge Clarie declined to include a provision proposed by

petitioners (J.A. 47), declaring that Article 11(M), inter

alia, is “not in conflict with the autonomy guaranteed local

unions by Title III of the Landrum-Griffin Act” on the ground

that the court had not found it necessary to pass upon Local

919’s prayer for declaratory relief against the Constitutional

provisions (J.A. 205-211). Petitioners also appealed from that

Order (J.A. 50). Inasmuch as the validity of Article 11(M)

as construed by the District Court is the sine qua non of up-

holding resumption of the audit, the Order of July 23, 1979,

necessarily rejects petitioners’ claim of conflict. The effect

of that Order as rejection cannot be avoided or obscured by

the Court’s refusal to consider the conflict claim in the con-

text of a specific prayer for declaratory relief. Cf. New York

ex rel. Bryant v. Zimmerman, 278 U.S. 68, 67 (1928) ; Davis

v. Wechsler, 263 U.S. 22, 24 (1923).

The trial court subsequently, on September 24, 1979, granted

petitioners leave to file their amended counterclaim specifically

requesting declaratory relief against Article 11(M) (among

other Articles) of the UFCW Constitution, but it has not yet

scheduled hearing on petitioners’ motion for summary judg-

ment thereon, although that motion has been pending since

October 25, 1979.

Petitioners’ motions to the District Court, to the

Court of Appeals and to this Court for stay of the audit

pending appeal were denied (J.A. 42, 48, 44, 212-213)

and, under petitioners’ protest, the audit resumed on

August 1, 1979.°

® The audit continues. On January 30, 1980, UFCW issued

an interim report of its auditor which revealed that UFCW

had been unable to substantiate any of the grounds for

suspicion Dority originally advanced to justify the audit (6a)

and reargued the contentions Judge Clarie had _ rejected

(14a-17a).

Whatever the final outcome of the audit, it will not moot this

case. If wrongdoing is found, adjudication of the validity of the

audit ab initio will be unavoidable, for a “fraud audit,” like any

other kind of search for wrongdoing, “is not * * * made legal

by what it turns up. In law it is good or bad when it starts

and does not change character from its success.” United

States v. Di Re, 332 U.S. 581, 595 (1948); Wong Sun v.

United States, 371 U.S. 471, 484 (1963). Petitioners sub-

mitted to resumption of the audit “under protest” and “the

forced performance of acts sought to be enjoined [will not]

render a case moot when the consequences of the conduct may

be set aside if the injunction is subsequently granted.” Stern

& Gressman, Supreme Court Practice (5th Ed.), p. 892, and

note 15, citing cases. The consequences envisioned by the

District Court (J.A. 37), use of adverse findings to predicate

imposition of a trusteeship, may certainly “be set aside,”

even if it is impossible in all respects to “unring the bell.”

Maness Vv. Meyers, 419 U.S. 449, 460 (1975).

If no wrongdoing is found the issue will remain justiciable

because petitioners’ counterclaims pray for award of damages

and attorneys’ fees (J.A. 14, 18) (Memphis Light, Gas &

Water Div. v. Craft, 486 U.S. 1, 8-9 (1978) ), and petitioners’

counterclaim for a declaratory judgment that Article 11(M)

as construed by the District Court is invalid is pending

(J.A. 46, 48; p. 10 n.8, supra), Super Tire Engineering

Co. v. McCorkle, 416 U.S. 115, 122-127 (1974). Respond-

ents’ potential liability for attorneys’ fees under Hall v. Cole,

B. The Court of Appeals’ Decision

The Court of Appeals, in a two sentence opinion, af-

firmed the District Court’s order of July 23, 1979 (23a-

24a):

“We find no abuse of discretion in Chief Judge

Clarie’s order requiring Local 919 to submit to an

audit pursuant to Article 11M of the International

Constitution. The argument that an audit constitutes

a trusteeship as defined in 29 U.S.C. § 402(h), is

not persuasive.”

In their petition for rehearing, petitioners demon-

strated that this opinion obscures and evades rather than

addresses the important questions of statutory construc-

tion presented (Pet. for Rehearing, pp. 1-2):

“It is small wonder that the Court found. ‘un-

persuasive’ ‘{t]he argument that an audit consti-

tutes a trusteeship as defined in 29 U.S.C. § 402 (h).’

For that is not ‘the argument.’ In even the narrow-

est terms, Local 919’s argument is that an audit is a

‘method of supervision or control’ (Br. 20-21; R.

Br. n. 6, p. 7), which, if illegally motivated, ‘sus-

pends the autonomy otherwise available to [the]

subordinate body under [the UFCW] constitution

* * * (within the meaning of § 402(h)] because

the Constitution on its face does not purport to

authorize (Br. 44-46; R. Br. 11), and cannot com-

patibly with Title III’s local autonomy policy (Br.

21-47; R. Br. 18), and the implied obligation of

good faith and fair dealing (R. Br. 13-14), be con-

strued to authorize, audits for unlawful motives or

to achieve forbidden ends. More broadly, and cor-

rectly, stated, the argument is that power to audit,

even if not a ‘method of supervision or control,’ is

not an ‘unqualified right’ as Judge Clarie held (JA

412 U.S. 1 (1973), alone would prevent exoneration of

Espinosa from mooting this case. Deposit Guaranty National

Bank v. Roper, USS. , No. 78-904, 48 L.W. 4279

(March 19, 1980).

36), but is, instead, subject to and qualified by

LMRDA’s prohibitions and policy against exertion

of constitutional power by International officers

against subordinate bodies and officials for unlawful

motives, to achieve personal ends or in reprisal

against exercise of statutory rights (Br. 21-30; R.

Br. 9-12).

To reject this argument is to hold that the audit

power, unlike all other International powers, whether

covered by § 402(h) or not (R. Br. 9), is exempt

from LMRDA’s local autonomy policy and from its

prohibitions against abuse by International officers

of their constitutional powers: that International

officials may, in consequence, lawfully use audits as

instruments of reprisal and persecution to bend and

break elected local union officers to their will (Br.

27-28) .”

Petitioners had argued on brief (p. 31), that if the

discriminatory, illegally motivated, audit violated the

Act, the courts below were obligated to enjoin, not auth-

orize, its continuation or resumption. Albermarle Paper

Co. v. Moody, 422 U.S. 405, 415-422 (1975); United

States v. DuPont & Co., 366 U.S. 316, 326 (1961);

Labor Board v. Mexia Textile Mills, 339 U.S. 563, 567-

568 (1950). “A bar against resumption * * * is neces-

sary ‘to the assurance of those rights’ which Title III

protects. Mt. Healthy City Board of Ed. v. Doyle, 429

U.S. 274, 287 (1977)” (Br. p. 34). In their petition for

rehearing (p. 6), petitioners said:

“The issue, therefore, is not, as stated in the Opinion,

whether Chief Judge Clarie’s order is an ‘abuse of

discretion.” So to frame the issue is to misconceive

both its substance and its importance. The actual

issue is whether disregard or subordination of Con-

gress’ policy of protecting local autonomy and pro-

hibiting abuse of International power [presumably in

order] to maximize potential exposure [of] hypo

thetical corruption or financial malpractice exceeds

judicial power.”

REASONS FOR GRANTING THE WRIT

I. THE COURTS BELOW REJECTED APPLICATION

OF THIS COURT’S ILLEGAL MOTIVE TEACH-

INGS TO THE ACT’S PROTECTION OF LOCAL

AUTONOMY

This is a case of first impression. It is the first re-

ported in which an audit was used discriminatorily by

an International Union as a weapon of reprisal and dis-

cipline against the chief executive officer of a subordinate

local for resisting dictation by the International Presi-

dent in local internal affairs, and to establish a plausible

pretext for imposing a formal trusteeship upon the Local

Union in order to oust him from office.

In Labor Board v. Erie Resistor Corp., 373 U.S. 221,

227-228 (1963), this Court defined the role of findings

of “subjective intent * * * to encroach upon protected

rights” in the construction and application of statutes.

“When specific evidence of a subjective intent to

discriminate or [encroach] is shown, and found,

many otherwise innocent or ambiguous actions which

are normally incident to the conduct of a business

[or of parent-subordinate body union affairs] may,

without more, be converted [into illegal acts]. * * *

Conduct which on its face appears to serve legitimate

business [or union] ends in these cases is wholly

impeached by the showing of an intent to encroach

upon protected rights. The [actor’s] claim of legiti-

macy is totally dispelled.” (7d.).

The failure and refusal of the courts below to apply this

teaching to the findings of subjective illegal motivation

and intent to encroach upon protected rights in this case

should be reviewed by this Court because that failure

and refusal frustrates and defeats Congressional policy

in the important field of internal union affairs.

Title III was enacted to protect and effectuate under

federal law “the right of the subordinate bodies to be

free from abusive use of [International] power.” Jolly

v. Gorman, 428 F.2d 960, 966 (5 Cir., 1970), cert. de-

nied, 400 U.S. 1023. The object of Title III is “preven-

tion of undue interference by national officers in the

affairs of subordinate units * * *.” Levitan, The Federal

Law of Union Trusteeship, in Slovenko, Symposiwm on

LMRDA (1961), 448. The policy is that “[llocal af-

fairs are to be governed by local members under demo-

cratic processes.” United Bro. of Carpenters & Joiners

of America v. Brown, 343 F.2d 872, 882-882 (10 Cir.

1965).

Although the legality of unlawfully motivated audits

has here surfaced for the first time, because illegal mo-

tive has not heretofore been shown or found, the danger

that audit power would be abused by despotic officials of

parent bodies was perceived from the very beginning.

Levitan, op. cit. supra, pp. 443-444, 451; Horowitz,

Possible Effects of LMRDA’s Trusteeship Provisions, in

Slovenko, op. cit. supra, pp. 459-460, 462-463; see also,

Landrum-Griffin and the Trusteeship Imbroglio, 71 Yale

L.J. 1460, 1470-1471 (1962). In 1962, the Secretary of

Labor reported to Congress (Union Trusteeships, A Re-

port to the Congress by the Secretary of Labor, p. 153) :

“The use of trusteeship may be only one part of a

larger struggle for the assertion of control by the

parent over the subordinate. The means of action

in such disputes are not limited to trusteeship, or to

opposition to it by the subordinate, but extend to the

full range of powers either side may potentially use,

and ultimately to the question of the continued exist-

ence of the subordinate body.”

Congress defined “trusteeship” broadly in Section 3(h)

to reach every power which may be used illegitimately to

undermine local automony. Judicial interpretation must,

if possible, prevent frustration of Congress’ purpose.

Wirtz v. Bottle Blowers Assn., 389 U.S. 463, 475 (1968).

“Congress, although committed to minimal intervention

[in internal union affairs] was obviously equally com-

mitted to making that intervention, once warranted, ef-

fective * * *.” Id. at 473.

That perspective renders inadmissible the conclusion

of the court below that discriminatory, illegally moti-

vated, audit is not “trusteeship” as defined in Section

3(h). To begin with, audit is, even literally, a ‘‘method

of supervision or control” of financial affairs.’° Of course,

non-discriminatory, legally motivated, audit of an an-

tomonous subordinate body, if authorized by the parent

body’s constitution or bylaws, is nevertheless not “trus-

teeship”, because it does not “suspend[] the autonomy

otherwise available to a subordinate body under its con-

stitution and bylaws.” But discriminatory, illegally

motivated, audit, whether authorized by the parent

body’s constitution or not, is “trusteeship,” because a

union constitution cannot legally authorize conduct which

the terms or policy of the Act forbids. Scofield v. NLRB,

394 U.S. 428, 429-430 (1960).

10 Black’s Law Dictionary (Fourth Ed., 1961), p. 166,

col. 2, defines “audit” as an “official examination of an ac-

count or claim, comparing vouchers, charges, and fixing the

balance.” It defines “control” as “[p]Jower or authority to

* * * superintend * * * or oversee,” id. at 399, col. 2. And

it defines “supervision” as “inspection” (id. at 1607, col. 2).

Webster’s Third New International Dictionary (unabridged,

1965), defines “control” as “verification, scrutiny.” Jd. at 496,

col. 3. The same work defines ‘‘audit” as “‘a formal or official

examination and verification of books of account;” “a me-

thodical examination and review of a situation or condition

‘as within a business enterprise) concluding with a detailed

report of findings ;” and “to audit” as “to examine and verify

(as the bocks of account of a company or a treasurer’s ac-

count)”. Id. at 148, col. 1. Webster’s Dictionary of Synonyms

(G. & C. Merriam & Co., 1951), p. 90, equates “audit” with

“examination, inspection, scrutiny, scanning,” and lists “con-

trol” as an anologous word.

Courts are required to strike down any clauses or pro-

visions of Union constitutions which are inconsistent with

“existing Congressional [local autonomy] policy.” Parks

v. International Brotherhood of Electric Workers, 314

F.2d 886, 917 (4 Cir., 1968), cert. denied, 372 U.S. 976;

Brotherhood of Painters v. Brotherhood of Painters, L.U.

127, 264 F.Supp. 301 (N.D. Cal., 1966). A parent body’s

constitution may not lawfully deprive autonomous sub-

ordinate bodies of autonomous status. Monborne v.

United Mine Workers, 342 F.Supp. 718 720-722 (W.D.

Pa., 1972) ; Cross v. Mine Workers, 82 LKRM 2614 (S.D.

Ill., 1973). The policy of Title III, Title V and Section

609 of the Act forbids authorizing International officials

to utilize any method of “supervision or control” to usurp

local autonomy or to punish local officials for refusing to

yield to parental dictation in local internal affairs. Any

constitutional provision purporting to do so is therefore a

nullity, p. 23, infra.

The language and policy of the Section 3(h) definition

suffice to reach any suspension of autonomy, however par-

tial or temporary. The distinction between discrimina-

tory, or unlawfully motivated, audits and nondiscrimina-

tory, lawfully motivated, ones, which the court below re-

fused to draw, is thus implicit in Section 3(h) and essen-

tial to its proper construction. To effectuate Congress’

policy, Section 3(h) must be construed to permit parent

bodies to audit only to serve “legitimate” parent body

interests, never “arbitrarily or capriciously” (Jolly v.

Gorman, supra, 428 F.2d at 966) ; never to interfere with

local control of local internal affairs, and never as a

pretext, or as part and parcel of a plan, to impese trus-

teeship for an unlawful reason."

11 Benda v. Grand Lodge of Intern. Ass’n, Etc., 584 F.2d

308, 316-317 (9 Cir. 1978), cert. dismissed, 441 U.S. 937

II. EVEN ON THE ASSUMPTION THAT DISCRIMINA-

TORY, UNLAWFULLY MOTIVATED, AUDIT IS

NOT A “TRUSTEESHIP,” THE DECISION BELOW

CONFLICTS IN PRINCIPLE WITH DECISIONS OF

OTHER CIRCUITS AND WITH FUNDAMENTAL

TEACHINGS OF THIS COURT

In treating the Section 3(h) definition as if that were

the end of the matter, the decision of the court below is in

square conflict with Parks v. International Brotherhood

of Electrical Workers, supra. The Parks court held that

although charter revocation does not constitute imposi-

tion of “‘trusteeship” as defined in Section 3(h), because

revocation effects dissolution rather than ‘“suspen[sion

of] autonomy,” revocation cannot legally “be used as a

means of evading the trusteeship provisions of Title III.”

314 F.2d at 924 and note 78. That holding is dictated

by the seminal teaching of this Court that no power,

however unfettered, may be used “as an instrument for

circumventing a federally protected right.’’ Gomillion v.

Lightfoot, 364 U.S. 339, 347 (1960). Therefore, even if

it were arguable that audit is too small an invasion to be

considered a “suspen|sion of] autonomy” for the purposes

of Section 3(h), discriminatory, illegally motivated, audits

would still be condemned by the policy of Sections 501

and 609.

(1979) ; United Bro. of Carpenters & Joiners of America V.

Brown, supra, 343 F.2d at 882-883; Pignotti v. Local +3

Sheet Metal Workers’ Int. Ass’n, 477 F.2d 825, 831, 832-836

(8 Cir.), cert. denied, 414 U.S. 1067 (1973); Sablosky v.

Budzanoski, 457 F.2d 1245, 1248, 1250-1251 (3 Cir., 1972),

cert. denied, 409 U.S. 853; McDonald v. Oliver, 525 F.2d 1217,

1232 (5 Cir., 1976), cert. denied, 429 U.S. 817; Brotherhood of

Painters v. Brotherhood of Painters, supra; Council +61

v. AFSCME, 80 LRRM 2942, 2954 (D.N.J., 1972) (not offi-

cially reported), rev’d on other grounds, 478 F.2d 1156 (3

Cir., 1973), cert. denied, 414 U.S. 975; Monborne v. United

Mine Workers, supra; Cross v. Mine Workers, supra.

Section 3(h) does not exhaust the scope of Congres-

sional concern with protection of local autonomy against

despotic officials of parent bodies.’ “[I]t is the entire

Act, and not merely one portion of it, which embodies

the definitive statement of national policy”. Machinists

Local v. Labor Board, 362 U.S. 411, n. 7 at 418 (1960).

“It may be asserted without fear of contradiction, that

the interest in [local autonomy] is one of those given

large recognition by the Act * * *.” IZd., at 428.

The only apparent, albeit unarticulated, explanation

for immunizing discriminatory, illegally motivated, aud-

its from the reach of the Act is that even such audits

may uncover “corruption or financial malpractice.” But

that is to make the end justify the means. That Nietz-

schean philosophy is at war with a most fundamental

premise of our legal system, as expounded by this Court

in Erte Resistor, supra, p. 14. Courts are empowered

to prevent even public officials from conducting audits

and financial investigations “for any improper purpose.”

Goldberg v. Truck Drivers Local Union No. 299, 293

F.2d 807, 813 (1961) (Secretary of Labor under

LMRDA §601, 29 U.S.C. $521). Authority exists

only if “the investigation is being made in good faith

for one of the purposes authorized by the statute * * *.”

United States v. Ryan, 320 F.2d 500, 502 (6 Cir. 1963)

(Internal Revenue Service) (emphasis added.) Was for-

mer President Nixon’s transmittal of his “enemies list”

to the Internal Revenue Service lawful? If even public

12 B.g., Johnson v. Nelson, 325 F.2d 246 (8 Cir., 1963);

Cooke v. Orange Belt Dist. Council of Painters, 529 F.2d 815,

819 (9 Cir., 1976), and cases cited; Retail Clerks Union, Local

648 v. Retail Clerks International Association, 299 F.Supp.

1012, 1021-1022, 1024 (D.D.C., 1969) ; Local No. 1 ACA; Fte.

v. IBT., C.W. & H., 419 F.Supp. 263, 272-274 (E.D. Pa.,

1976), aff'd, —— F.2d ——, 103 LRRM 2268 (3 Cir. 1980).

officials are not allowed to conduct fraud audits and finan-

cial investigations in bad faith and for improper pur-

poses, a fortiori must courts prevent such conduct on the

part of union officials, against whose potential abuses of

power Congress found it necessary specially to legislate.

Rejection of the Erie Resistor philosophy, moreover, is at

war with Congress’ approach in this very statute to the

problem of “correcting corruption or financial malprac-

tice’, 29 U.S.C.A. § 462.

Congress recognized that trusteeships are necessary

to “correct[] corruption or financial malpractice”. Never-

theless, it prohibited imposition of trusteeship as a pre-

text for correcting “corruption or financial malpractice,”

or in bad faith (29 U.S.C.A. §§ 462, 464(c)), even

though, as a result, existing corruption or financial

malpractice will go uncorrected. Whether a discrimina-

tory or illegally motivated audit is considered part and

parcel of a scheme to impose illegal trusteeship, or as a

means of circumventing or evading the prohibition

against illegally motivated trusteeship, or as discipline

imposed in violation of Section 609 in reprisal against

protected resistance to interference with local autonomy,

or as breach of officers’ fiduciary duty under Section 501

to exercise official power only for lawful ends," its

judicial legalization to maximize potential exposure of

hypothetical corruption or financial malpractice cannot

be reconciled with Congress’ preference for other inter-

ests and other values. Congress’ resolution of the com-

peting interests leaves no room for judicial reevaluation.

Machinists Local v. Labor Board, supra, 362 U.S. at 429.

Fraud audit or investigation is a search for financial

wrongdoing. When discriminatory or illegally motivated,

13 United States v. Boyle, 482 F.2d 755, 764 (D.C. Cir.

1973), cert. denied, 414 U.S. 1076; Johnson v. Nelson, supra,

325 F.2d at 653 (8 Cir., 1963).

such a search is no less unlawful interference with local

autonomy than a similarly discriminatory or illevally

motivated search designed to trap or frame a union

supporter is unlawful interference with rights protected

by the National Labor Relations Act. NLRB v. Threads,

Inc., 308 F.2d 1, 11 (4 Cir., 1962); NLRB v. Mueller

Brass Co., 509 F.2d 704, 708 (5 Cir., 1975). A holding

that International officials are “privileged” to audit for

illegal motives, or in reprisal against activity which

LMRDA protects is not less likely “to deter” local of-

ficers from resisting usurpation of their protected

autonomy by officials of the parent body than “[a] ruling

that the employer was privileged to engage in intentional

eavesdropping would be likely to deter free discussion by

employees of self-organizational matters.” NLRB v.

Clark Bros. Co., 163 F.2d 373, 375 (2 Cir., 1947). Just

as discriminatory or illegally motivated “[s]urveillance

becomes illegal because it indicates an employer’s opposi-

tion to unionization * * *” (Hendrix Manufacturing

Company v. NLRB, 321 F.2d 100, 104, n. 7 (5 Cir.,

1963) ), so does discriminatory or illegally motivated

audit become illegal because it indicates the parent body’s

opposition to local autonomy. Cannon Electric Company,

151 NLRB 1465, 1469 (1965), quoting Wallace Press,

Inc., 146 NLRB 1236, 1238-1239 (1964) ; Steele Apparel

Co., Inc., 172 NLRB 903, 907 (1968), enforced on point,

437 F.2d 933 (8 Cir., 1971); Rust Sales Company, 157

NLRB 1681, 1683 (1966).

Courts are not authorized to carve out an exception

from the scope and policy of the NLRA for illegally

motivated surveillance or credit or theft investigations.

Steele Apparel and Rust cases, supra. By the same token,

they are not authorized to carve out an exception for

illegally motivated fraud audits or investigations from

the scope and policy of LMRDA. Doing so shrivels and

blunts the protection Congress deemed necessary to assure

local autonomy and cabins the inhibitions Congress

deemed necessary to impose upon abuse of power by

National and International union officials.

III. CERTIORARI SHOULD BE GRANTED TO IMPLE-

MENT THE BALANCE CONGRESS STRUCK BE-

TWEEN PROTECTION OF LOCAL AUTONOMY

BY LAW AND AVOIDANCE OF UNDUE INTER-

FERENCE IN INTERNAL UNION AFFAIRS

This Court has not previously considered the balance

Congress struck between the competing values of pro-

tection of local autonomy by law and preservation to

labor organizations of power to control their internal

affairs. It is of large moment that the Court do so now,

in this case, because the decision below chills the freedom

of officers of all autonomous subordinate bodies in the

labor movement to exercise independence in their conduct

of purely local business. N.A.A.C.P. v. Button, 371 US.

415, 483 (1963); Super Tire Engineering Co. v. Mc-

Corkle, 416 U.S. 115, 122 (1974). Unless abusive parent

body audits are condemned by this Court, local officers

will be cowed into submission by their potential, recreat-

ing the very serfdom against which the Act is aimed.

An audit provision is a feature of virtually every

National and International Union Constitution. Whether

such a provision can lawfully by construed as authorizing

discriminatory, illegally motivated, audits is “an impor-

tant [question] of first impression under the LMRDA.”

American Federation of Musicians v. Wittstein, 379 U.S.

171, 175 (1964); cf. Steelworkers v. Usery, 429 U.S.

305, 307, n. 3 (1977).

IV. UNEXPLICATED DISREGARD OF THIS COURT’S

TEACHINGS WARRANTS EXERCISE OF THE

SUPERVISORY POWER OF THIS COURT.

Sub silentio rejection of fundamental teachings of this

Court by the courts below calls for exercise of this Court’s

power of supervision. On the underlying legal question—

whether authorization under a union constitution im-

munizes conduct which the Act in terms and policy con-

demns—the decision below conflicts with other decisions

of the Second Circuit itself. Turner v. Air Transport

Lodge 1894, Etc., 590 F.2d 409, 411 (2 Cir., 1978), cert.

denied, 442 U.S. 919 (a union constitutional provision

cannot legalize what “the plain words of LRMDA for-

bid”),; id. at 412, n. 1 and accumponying text (Mulli-

gan, J. concurring): (“Of course, since union constitu-

tions and rules are formulated and enforced by the union,

a private entity,” they are subordinate to statutory law

and policy) ; Hurwitz v. Directors Guild, 364 F.2d 67, 73

(2 Cir., 1966), cert. denied, 385 U.S. 971 (union consti-

tutions and bylaws are subordinate at common law to

public policy and the demands of “natural justice’).

The approach taken in this case is in glaring contrast

to that of the District of Columbia Circuit in Local

U. 13410, United Mine Workers v. United Mine Work-

ers, 154 U.S. App. D.C. 332, 340, 475 F.2d 906, 914

(1973), which joined the Fifth Circuit in Jolly v. Gor-

man, supra, in declaring: “This court will not frustrate

the clear intent of Congress by making the remedies

available to the Local less effective than they were be-

fore Congress acted.”

CONCLUSION

Congressional protection of local union autonomy is an

important subject which this Court has not previously

had occasion to explore. It should do so now. This peti-

tion should be granted.

Respectfully submitted,

MOZART G. RATNER

MOZART G. RATNER, P.C.

1900 M Street, N.W.

Suite 610

Washington, D.C. 20036

(202) 223-9472

J. WILLIAM GAGNE, JR.

207 Washington Street

Hartford, Connecticut 06106

(203) 522-5049

Counsel for Petitioners

May 20, 1980

APPENDIX

STATUTE APPENDIX

Relevant provisions of the Labor Management Report-

ing and Disclosure Act of 1959, as amended, 78 Stat.

515, 29 U.S.C. 401, et seg., are as follows:

Sec, 201. (a) Every labor organization shall adopt

a constitution and bylaws * * *

Sec. 8302. Trusteeships shall be established and ad-

ministered by a labor organization over a subordinate

body only in accordance with the constitution and

bylaws of the organization which had assumed trus-

teeship over the subordinate body and for the pur-

pose of correcting corruption or financial malprac-

tice, assuring the performance of collective bargain-

ing agreements or other duties of a bargaining rep-

resentative, restoring democratic procedures, or

otherwise carrying out the legitimate objects of such

labor organization.

* * * *

Sec. 304. (a) * * * Any member or subordinate

body of a labor organization affected by any viola-

tion of this title (except section 301) may bring a

civil action in any district court of the United States

having jurisdiction of the labor organization for

such relief (including injunctions) as may be ap-

propriate, * * *,

trusteeship established by a labor organization in

conformity with the procedural requirements of its

constitution and bylaws and authorized or ratified

after a fair hearing either before the executive board

or before such other body as may be provided in ac-

cordance with its constitution or bylaws shall be

presumed valid for a period of eighteen months from

the date of its establishment and shall not be sub-

ject to attack during such period except upon clear

and convincing proof that the trusteeship was not

established or maintained in good faith for a pur-

pose allowable under section 302.

Sec. 3(h) “Trusteeship” means any receivership,

trusteeship, or other method of supervision or con-

trol whereby a labor organization suspends the au-

tonomy otherwise available to a subordinate body

under its constitution or bylaws.

See. 501. (a) The officers, agents, shop stewards,

and other representatives of a labor organization oc-

cupy positions of trust in relation to such organiza-

tion and its members as a group. It is, therefore, the

duty of each such person, taking into account the

special problems and functions of a labor organiza-

tion, 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

wiih its constitution and bylaws and any resolutions

of the governing bodies adopted thereunder, to re-

frain from dealing with such organization as an

adverse party or in behalf of an adverse party in

any matter connected with his duties and from hold-

ing or acquiring any pecuniary or personal interest

which conflicts with the interests of such organiza-

tion, and to account to the organization for any

profit received by him in whatever capacity in con-

nection with transactions conducted by him or under

his direction on behalf of the organization. A gen-

eral exculpatory provision in the constitution and

bylaws of such a labor organization or a general

exculpatory resolution of a governing body purport-

ing to relieve any such person of liability for breach

of the duties declared by this section shall be void

as against public policy.

Sec. 609. It shall be unlawful for any labor organi-

zation, or any officer, agent, shop steward, or other

representative of a labor organization, or any em-

ployee thereof to fine, suspend, expel, or otherwise

discipline any of its members for exercising any

right to which he is entitled under the provisions of

this Act. The provisions of section 102 shall be ap-

plicable in the enforcement of this section.

Sec. 102. Any person whose rights secured by the

provisions of this title have been infringed by any

violation of this title may bring a civil action in a

district court of the United States for such relief

(including injunctions) as may be appropriate.

UNITED STATES DISTRICT COURT

DISTRICT OF CONNECTICUT

Civil No. H-79-384

[Filed July 23, 1979—4:37 P.M.]

UNITED Foop AND COMMERCIAL WORKERS INTERNATIONAL

UNION; WILLIAM H. WYNN; SAMUEL J. TALARICO;

Harry R. PooLeE; THOMAS G. WHALEY; JAY H. FORE-

MAN and DouG.as H. Dorirty,

Plaintiffs,

—vs.—

RETAIL STORE EMPLOYEES UNION LOCAL No. 919; AR-

NALDO F. ESPINOSA; BERNARD MAGNANT; JAMES

LOOKE; RENE PISANI; VIOLET LANGUELL; ESTHER

RAvoSA; JOSEPH GAGNON; ALFRED KROOPNECK and

GORDON Soucy,

Defendants.

RULING ON CROSS-MOTIONS

FOR PRELIMINARY INJUNCTION

This case arises from the attempt of an international

union to impose a trusteeship over one of its chartered

locals for the avowed purpose of preventing corruption

and financial malpractice within the local union. The

plaintiffs, the United Food and Commercial Workers In-

ternational Union (“UFCW’’) and its officers, seek a

preliminary injunction restraining the officers and em-

ployees of Retail Store Employees Union Local No. 919

(“Local 919’) from interfering with the trusteeship im-

posed by UFCW over Local 919 on July 3, 1979. The de-

fendant [2] on the other hand, request in their counter-

claim a preliminary injunction enjoining the International

from implementing the trusteeship. The Court concludes,

after hearing five days of testimony on the issues, that

the trusteeship was not imposed for any of the purposes

permitted by federal law, but instead was imposed in

bad faith by the UFCW in an attempt to oust the presi-

dent of Locai 919 from his office. The Court accordingly

denies the plaintiffs’ motion for preliminary injunction

and grants that of the defendants. Nevertheless, the

Court orders the officers of Local 919 to permit the

UFCW to proceed with its audit of the Local’s books

and records, as provided in the UFCW’s constitution.

Furthermore, the Local’s officers are directed to return

all funds which were temporarily removed from bank

accounts in the Hartford area for the purpose of safe-

guarding them, back to their original depositories.

Statement of Facts

The United Food and Commercial Workers Interna-

tional Union is the successor to the Retail Clerks Inter-

national Association and is a labor organization within

the meaning of the Labor-Management Reporting and

Disclosure Act of 1959, 29 U.S.C.A. § 402(i) and (j) and

$§ 462 and 464.' William H. [3] Wynn is the president

of UFCW and the plaintiffs Wynn, Samuel J. Talarico,

Harry R. Poole, and Jay H. Foreman constitute its execu-

tive committee. The plaintiff Douglas H. Dority is

UFCW’s vice-president and the director of its North-

‘The UFCW constitution was adopted in June 1979 by

special merged conventions of the Retail Clerks International

Union and the Amalgamated Meat Cutters and Butcher Work-

men of North America, which voted to merge into a unified

organization to be governed by the terms of the UFCW con-

stitution. The UFCW constitution’s provisions with respect

to local union financial obligations and structure are largely

identical to those of the RCIU’s constitution. Many of the

events which occurred in this case occurred prior to the

merger and thus were governed by the RCIU Constitution

(Plaintiff’s Exhibit 1).

eastern Region. Local Union 919 is a chartered body

of the plaintiff UFCW and has its principal office in

Hartford, Connecticut. Named as defendants in this

action are Local 919, Arnaldo F. Espinosa, its president,

and other officers of the Local.

Dority testified that, in the normal course of his duties

as director of the Northeastern Region, he had reviewed

the trustees’ report of Local 919 and noted unusually

high expenditures for printing, local union awards, pro-

motional items, building repairs and for liquor during

the month of December, 1978. He said that he had

been advised by one Joe DiFlumera, a former chief ex-

ecutive officer of the Springfield, Massachusetts local,

that he had been in the company of Espinosa on trips

outside of Hartford on non-union related purposes, when

Espinosa expended local union funds for himself and

guests. He also said that he had seen him on two oc-

easions at convention locations with female company

and that similar hearsay rumors had reached him from

other sources. Dority stated that based on the trustees’

[4] report, and this hearsay information, he directed a

letter on June 15, 1979 to President Wynn, requesting

permission to conduct an audit of Local 919’s books and

records, pursuant to Article 11(M) of the International

constitution. This Article provides in relevant part:

“The International Union shall have the authority,

without notice, to obtain or make a routine audit,

inspection, or examination of all books and records

of any chartered body.”

On June 25, 1979, International President Wynn directed

a letter to Dority authorizing him to make provisions

to conduct the audit.

On June 26, 1979, Dority, accompanied by his execu-

tive assistant Novicoff and members of the professional

auditing firm of Touche Ross and Company, went to the

—_

offices of Local 919 to conduct said audit. Showing the

letter from President Wynn, Dority advised Espinosa that

they intended to conduct the audit and that the purpose

was to assist the local union in complying with the new

federal laws and regulations. Espinosa agreed that the

audit could be beneficial, and was a good idea and sug-

gested that if anything were learned from it, it could

be discussed at the next union seminar. The audit pro-

ceeded smoothly from Tuesday, June 26, through Friday,

June 29, while President Espinosa was attending [5] a

business related pension fund conference on the West

Coast. He had planned to remain in California the fol-

lowing week on vacation. There was no apparent concern

on his part that the audit was taking place. When Espi-

nosa called in to the office during the week, the Local’s

bookkeeper advised him that a general audit was not in

fact being conducted. The bookkeeper explained that spe-

cial audits and accounting analysis were occurring in

what appeared to be labeled as suspect areas, such as

printing costs, leasing of cars, construction costs, local

union awards, travel, and hotel expenses. Espinosa then

learned for the first time that the audit was not for the

purposes represented to him by Dority, but was in fact a

fraud audit directed only at him personally.

President Espinosa communicated with Dority by tele-

phone and the latter advised him that he should return

to Hartford immediately, because there were several ac-

counting discrepancies which indicated that the Local’s

records were not complete or correct. Dority told him

that it was a serious matter and that he should give his

immediate attention to it. Espinosa flew back to Hartford

on Sunday, went to the Local’s office and took home with

him the carton of records which had been or were being

photostated, so that his accountant might come to his

house and review them. The accountant, Gordon Kravet,

was not immediately available that day, but did come to

Espinosa’s home for that purpose on July 4, 1979.

[6] Dority requested that the audit continue on Satur-

day and Sunday, but after Espinosa learned from the

bookkeeper that the nature of the audit was directed at

him personally, he advised that the audit could not con-

tinue over the weekend, stating the office employees did

not work Saturdays and Sundays. On Monday, July 2,

1979, Espinosa communicated with his legal counsel, ad-

vised him what had happened and inquired what steps he

should take to protect the local union’s interests. Es-

pinosa anticipated and feared the imposition of a trus-

teeship without notice and the actual strong-arm physical

takeover of the Local’s premises by Dority and his aides.

Upon the advice of counsel, he engaged off duty officers

from the Hartford Police Department to guard the en-

trance to the Local’s office building and gave him instruc-

tions to admit no one except officers and employees of

Local 919. These instructions have been carried out since

July 2, 1979.

In a telephone conversation on Monday, July 2, 1979,

Espinosa requested that Dority communicate to Wynn his

desire to meet with Wynn in Washington immediately;

in fact, he practically begged him to arrange the meet-

ing. Dority said he relayed the request to Wynn, who

refused to meet with Espinosa or to discuss the matter

with him. Espinosa then telegraphed his own request

for a meeting and Wynn responded negatively. (Defend-

ants’ Exhibits 6, 7).

[7] Espinosa claims that he and President Wynn were

not on good speaking terms, because of Espinosa’s refusal

to carry out certain demands which Wynn had made

upon him concerning the internal affairs of Local 919.

Espinosa had refused to appoint Joe DiFlumera, who

had been removed as president of the Springfield, Massa-

chusetts local, to a position on the staff of Local 919.

DiFlumera is now employed by the International as a

representative in the Boston area. Espinosa had also

refused the request of Wynn and Dority that he appoint

a Richard Abdow trustee of Local 919’s joint union em-

ployer pension and welfare funds. Espinosa had declined

to recommend the removal of Attorney Richard Van

Duren as counsel for said welfare funds, despite Wynn’s

dissatisfaction with Van Duren. Wynn had also dis-

approved of Espinosa’s running for election as a director

of the International Foundation of Welfare Benefit Plans,

an organization engaged in education of labor, manage-

ment and public participants in jointly administered

health and welfare pension matters. As a result of their

successive disagreements and Espinosa’s apparent lack

of cooperation, Espinosa claims that Wynn was hostile to

him personally. He asserts that this dislike was not only

expressed verbally on occasion, but was also manifested

in Wynn’s refusal to shake Espinosa’s hand after the

latter had finally consented to appointing Abdow within

a period of one year.

[8] On Friday, June 29, the Local’s bookkeeper, Roy

Micha, advised Dority that the office would be closed

Saturday and Sunday; however, Novicoff, Dority’s assist-

ant, told Micha that Espinosa had authorized Dority to

have a key to the office. When Micha refused to give

him a key, he claims Novicoff said “How are we supposed

to get in, kick in a window?” Espinosa testified that

Dority had not in fact asked him for a key and he had

never offered to let him have one. When these circum-

stances were relayed by Micha to Espinosa that same

day, the latter feared that the International was bent

on imposing a trusteeship without a hearing and that

they were likely to seize the building in which Local 919’s

business was conducted.

On July 2, 1979, the UFCW Executive Committee

authorized Wynn, at his request, which was based upon

information supplied by Dority, to impose a temporary

trusteeship on Local No. 919. The effective date of the

10a

imposition of the temporary trusteeship was July 3, 1979.

Wynn appointed Dority trustee and authorized him to

appoint one or more deputy trustees to assist him and

to delegate such duties and responsibilities to them as he

deemed advisable. The letter further authorized him to

make a complete examination and audit of all books,

records, funds, property and other assets of Local 919

and directed him to submit an audit 2nd complete [9]

report to the UFCW Executive Committee at the conclu-

sion of said examination. The letter established July

31, 1979 as the date when a fair hearing would be con-

vened to determine whether further maintenance of the

trusteeship were unwarranted.

Espinosa has devoted much of his adult life to the

cause of unionism. He came to the United States from

Cuba in 1948 and was first employed as a dishwasher.

He became affiliated with the Retail Clerks Association

around 1954, while employed by the Stop & Shop grocery

chain in the Hartford area. Espinosa was one of the

founders of the union and has been a major force in the

union for the past 25 years. By 1958 he had begun to

devote his full time to the office of secretary-treasurer

and business agent of the Retail Clerks Association. Dur-

ing Espinosa’s years with the latter Association, it

flourished from a small union covering four stores with

35 members, to a present union membership of 7,000 to

7,500 members, employed in 110 stores.

Jurisdiction

Subject matter jurisdiction to issue an injunction

which seeks either to prevent the maintenance of an

illegal trusteeship or to impose a trusteeship exists by

virtue of § 304(a) of the Landrum-Griffin Act, 29 U.S.C.

§ 464(a). National Association of Letter Carriers V.

Sombrotto, 449 F.2d 915, 918-19 (2d Cir. 1971).

lla

[10] Discussion of the Law

The principal issue in this action is whether the im-

position of a trusteeship by the UFCW over Local 919

is consistent with § 302 of the Labor-Management Re-

porting and Disclosure Act, 29 U.S.C. § 462. That sec-

tion provides:

“Trusteeships shall be established and administered

by a labor organization over a subordinate body

only in avcordance with the constitution and bylaws

of the organization which has assumed trusteeship

over the subordinate body and for the purpose of

correcting corruption or financial malpractice, as-

suming the performance of collective bargaining

agreements or other duties of a bargaining repre-

sentative, restoring democratic procedures, or other-

wise carrying out the legitimate objects of such

labor organization.”

The plain language of the statute makes it clear that

two conditions must be present for the valid imposition

of a trusteeship: first, the international must comply

with its own constitution in establishing and administer-

ing the trusteeship; and second, the trusteeship can only

be imposed for one of the reasons enunciated in the

statute. Hxecutive Board Local 1302 v. United Brother-

hood of Carpenters, 477 F.2d 612, 613 (2d Cir. 1973).

As here is no contention that the UFCW did not comply

with its constitution in imposing the trusteeship,? the

* Article 9(K) of the International’s constitution makes

specific provision for imposing a trusteeship:

“A trusteeship may be imposed by the International

Union upon a chartered body to correct corruption or

financial malpractice, including mishandling or endanger-

ing Union funds or property, or the funds of property

of any trust in which the Union has an interest; assure

the performance of collective bargaining agreements or

12a

question before the Court is whether the purpose for

which the trusteeship was imposed was one of those

enumerated in the statute.

[11] It should be noted at the outset that the fact that

the imposition of the trusteeship was not preceded by

a hearing at which Local 919 could oppose its imposi-

tion does not ipso facto invalidate the trusteeship. While

the Second Circuit has taken a different view, there is

authority for the proposition that imposing a trustee-

ship prior to a hearing is an extraordinary remedy to

be employed only in emergency situations. Thus, the

District of Columbia Circuit Court of Appeals has held:

“A trusteeship may be imposed without a hearing

only where a parent union could reasonably believe

that an emergency situation does not allow time for

such a hearing.” Local Union 13140 v. United Mine

Workers, 475 F.2d 906, 915 (D.C. Cir. 1973).

other duties of a bargaining representative; restore demo-

cratic procedures; or otherwise carry out the legitimate

objectives of the International Union, including the en-

forcement of compliance with Federal, State, or Pro-

vincial law, the Constitution or laws of the International

Union, the approved bylaws of the chartered body, or the

rules, decisions, or orders of the International Executive

Board, the International Executive Committee, or of

International officers made within the scope of their

authority under this Constitution. Whenever in the judg-

ment of the International Executive Committee such

action is required, it shall have the power to place such

chartered body in temporary trusteeship or take such

other temporary action as it deems necessary. If a tempo-

rary trusteeship is imposed, the International President

shall appoint a trustee, who shall administer the affairs

of the chartered body during trusteeship. Within 30 days

following the imposition of a temporary trusteeship, a

hearing shall commence to determine whether the trustee-

ship is justified and shall be continued.”

13a

A trusteeship is presumed valid if it is imposed pursuant

to the parent union’s constitution and “authorized or rati-

fied after a fair hearing.” 29 U.S.C. § 464(c). Seizing

on the distinction between “authorization” and “ratifica-

tion,” the Second Circuit has held that there is no neces-

sity for a fair hearing prior to the imposition of trustee-

ship, as long as a post hoc hearing is provided for in the

parent’s constitution and the hearing follows with rea-

sonable promptness. National Association of Letter Car-

riers V. Sombrotto, supra, 449 F.2d at 920. Sombrotto

contains no indication that a [12] trusteeship without a

prior hearing is only justified in emergency situations. In

the present case Article 9(k) of the International’s ccn-

stitution expressly permits the imposition of the trustee-

ship prior to a hearing and provides that a hearing must

be convened within thirty days of its imposition. A hear-

ing has been scheduled for July 31, 1979, which is less

than thirty days from July 8, the date the trusteeship

was imposed.

The Second Circuit has held that the two normal pre-

requisites for preliminary injunction—namely, a likeli-

hood of success on the merits and possible irreparable

injury—are not to be rigidly applied to a case where a

parent union is seeking to enforce a trusteeship against

one of its resisting locals. National Association of Letter

Carriers v. Sombrotto, supra, 449 F.2d at 920. The

standard to be applied in such a case was succintly stated

by that court:

“(T]he parent is entitled to a preliminary injunc-

tion imposing a trusteeship on application unless the

local comes forward with adequate proof that the

trusteeship is not being sought in good faith.” Jd.

at 921.

Mindful of Judge Hays’ admonition that in this type

of case “judicial intervention should be undertaken with

only the greatest care and caution,’ Executive Board

14a

Local 1302 v. [18] United Brotherhood of Carpenters,

supra, 477 F.2d at 615, the Court, upon consideration of

all the evidence submitted by both sides, finds that Local

919 has met the onerous burden imposed by Sombrotto

and has proven that the trusteeship is not being sought

in good faith.

The statutory purpose which the UFCW claims is

served by the trusteeship is the correction of “corrup-

tion or financial malpractice.” As evidence of this charge

the International points to three claimed irregularities

which were uncovered by the audit: (1) double reim-

bursement of 13 expenditures incurred by Espinosa on

behalf of Local 919, (2) the approval of certain expendi-

tures by the Local’s Board of Trustees and Executive

Board without appropriate supporting documentation,

and (3) the failure of Espinosa to submit in proper form

an itemized statement of expenditures to the Local’s

Executive Board. The UFCW cites the termination of

the audit, the removal of union records by Espinosa to

his home and the transfer of the Local’s bank accounts

to the Webster 5 Cent Savings Bank as additional in-

dications of corruption or financial malpractice. The

Court finds that none of the circumstances in this in-

stance warrant the imposition of a trusteeship; and

further finds that the trusteeship was not in fact im-

posed because of these claimed irregularities. Rather

[14] the trusteeship was imposed because of the per-

sonal animosity existing between Espinosa and Wynn

and because of the latter’s desire to seize the opportunity

to remove the former as the president of Local 919.

Most of the irregularities uncovered during the audit

could have been explained by the officers and employees

of Local 919, if an explanation had been sought. The

submission of both the soft copy and the hard copy of

credit card billing slips was not done with the purpose

of extracting double payment by Espinosa; rather the

15a

practice was instituted in order to guard against double

payment of bills to the credit card company. Both the

bookkeeper, Micha, and the accountant, Kravet, testified

that Espinosa had given them repeated instructions to

guard against overpayment of charge card expenditures.

There is no indication that the International ever dis-

approved of Local 919’s attempt to avoid overpayment

of credit charges in this manner. Moreover, the double

payment of 13 bills, totaling $562.45 over a three-year

period, in the context of more than one thousand credit

eard charges involving more than $50,000, does not in-

dicate corruption per se or financial malpractice. At

most, it is evidence of human error er sloppy accounting

practice by the bookkeeper, Micha.

The second claimed irregularity was that the Local’s

[15] Board of Trustees and Executive Board approved

expenditures without requiring the appropriate documen-

tation. There was evidence that Espinosa was reimbursed

for expenses when he did not produce the original receipt.

For instance, on one occasion when he lost his travel

ticket, he offered the airline baggage receipt as proof that

he in fact boarded the flight. The International charges

that such evidence does not provide adequate documenta-

tion of the expense. While recognizing that the better

practice is to produce the actual receipt for expenses in-

curred before seeking reimbursement, the Court cannot

conclude that where a receipt has been lost or mislaid

the person incurring the expense should forego reim-

bursement, even where other supporting data has been

substituted. Nothing in the International’s constitution

or by-laws leads to this inflexible conclusion and common

sense would dictate otherwise.

The third claimed irregularity uncovered by the audit

is that Espinosa did not submit a proper itemized state-

ment of expenses to the Local’s Executive Board, sub-

mitting instead the check ledger. Article 34(B)10 of

l6a

the International constitution requires the local presi-

dent to make an “itemized statement” at each local

Executive Board meeting of all income received by and

expenditures made by the local president.* [16] Espinosa

apparently believed that check ledgers constituted appro-

priate documentation. No provision of the International

constitution defines the term “itemized statement; nor

was Espinosa ever informed by the International that

his practice was unacceptable. Thus, even if the two

accounting procedures complained of were in fact tech-

nically faulty, there is no indication that Espinosa em-

ployed them knowing of their deficiencies. Moreover, no

evidence was introduced which indicated that these prac-

tices actually resulted in the payment of expenses which

were not properly incurred on behalf of Local 919. Sig-

nificantly the auditors and Novicoff never asked to pur-

sue the Local’s paid bill files, which could have been

consulted to check on any expenditures which appeared

suspicious or irregular, in spite of the offers of the

Local’s bookkeeper and certified public accountant to

provide them with such assistance. Even Daniel Benson,

the Touche Ross and Company auditor who was employed

by the plaintiffs themselves to audit the Local’s books

stated that no adverse inference could be drawn against

8 Article 34(B)10 provides:

“The Local Union President shall make an itemized

statement at each regular meeting of the Local Union

Executive Board of all moneys received and paid out by

the President, the accuracy of which shall be certified

by the trustees of the Local Union, and the President

shall make the Local Union financial records available

to the trustees at their request. The President shall make

such itemized statement available for inspection by the

members at regular meetings and at the Local Union on a

reasonable basis. The President shall also make a finan-

cial report at each regular meeting of the membership.”

i7a

Espinosa on account of the double billing or the inade-

quacies in the documentation of the Local’s expenses. In

other words, the information found in the audit was in-

sufficient to indicate corruption or financial malpractice.

[17] Neither the removal of union records by Espinosa

to his home nor the transfer of the union bank accounts

to the Webster 5 Cent Savings Bank was done for ulterior

motives. Certain union files which had been audited were

removed temporarily from the Local’s office, only after

Espinosa had been informed by Dority that the audit

had uncovered double billings and that there were very

serious irregularities, which required that Espinosa in-

terrupt his planned vacation in California to return

home. Faced with these accusations, Espinosa removed

these audited files on Sunday, the day he arrived back

in Hartford, not for the purpose of destroying or alter-

ing them, but in order to review them over the week-

end with his accountant, to determine whether there was

any factual basis to the oral charges which had been

made to him by Dority. Similarly the subsequent trans-

fers of the union bank accounts were affected, upon the

advice of legal counsel, not with a view toward looting

the union treasury, but rather to safeguard the Local

from any potential unlawful takeover by the Interna-

tional. This conclusion is buttressed by the fact that

Espinosa did not open the account in the Webster 5 Cent

Savings Bank in his own name, but in the name of Local

919. There is no evidence that Espinosa ever destroyed

or altered any business records or converted any union

[18] assets to his own use, except for the 13 credit card

charges hereinbefore mentioned.

The most serious charge made against Espinosa is

that he interrupted UFCW’s union audit. Article 11(M)

of the International’s constitution grants it an unquali-

fied right to audit the Local’s books at any time without

18a

notice.* Therefore, Espinosa’s interruption of the audit

was a clear violation of the International’s constitution

and the Court finds such action to be unwarranted. How-

ever, he took that action in good faith, believing the audit

to be a frame-up or a pretext to oust him from his posi-

tion as local president and that it was designed as a

mechanism for the International to assume control over

the Local. Granted that Espinosa’s response to the situa-

tion was improper, it does not provide sufficient evidence

of corruption or financial malpractice. The appropriate

reaction to Espinosa’s interruption of the audit would

have been a notice from Wynn that the International

had a right to audit the Local’s books, backed up with

an appropriate court order if that were necessary.

The Court concludes that the Local has sustained its

burden of proving that the imposition of the trusteeship

was arbitrary and carried out in bad faith. From the

outset, it was Espinosa who was acting in a straight-

forward manner. Upon [19] being informed of the audit,

he readily consented, expressed his cooperation and so in-

structed the Local’s personnel. He interfered only when

it became apparent that he had been deceived as to the

purpose of the audit. The International, on the other

hand, practiced deceit from the beginning, misrepresent-

4 “The International Union shall have the authority,

without notice, to obtain or make a routine audit, inspec-

tion, or examination of all books and records of any

chartered body. The International Union is authorized

to audit, inspect, or examine any of the books, records

or other documents as may be reasonable and necessary

to assure that the laws or Code of Ethical Practices

established by the International Executive Board are

being respected. The International Secretary-Treasurer,

in conjunction with the International President, shall

exercise the foregoing authority through the appointment

of authorized representatives or through the employment

of necessary personnel.”

19a

ing to Espinosa the true purpose of the audit. The entire

factual background indicated that UFCW was using the

audit as a pretext to remove Espinosa and take over the

Local, because of the personal difficulties which had

arisen between him and Wynn. A fair, reasonable and

expeditious way of proceeding when faced with Espinosa’s

interruption of the audit would have been for Wynn

to grant the interview Espinosa sought and then to in-

form him of the necessity of submitting to the audit.

The fact that Wynn immediately imposed the trusteeship

rather than pursuing this course, along with the other

evidence, leads the Court to the conclusion that the

International was not sincerely interested in auditing

Local 919’s books; its purpose was the removal of

Espinosa.

This plan, if it had been successful, would have had

a devastating impact on the autonomy of Local 919. The

UFCW was attempting to oust all of the Local’s officers

and to replace them with Wynn’s nominees. This drastic

action was to be taken without a hearing, and after the

July 31 hearing the trusteeship would enjoy an eighteen

months presumption of validity. 29 U.S.C. § 464(c).

[20] Having found that there were insufficient grounds

for imposing the trusteeship and that it was imposed

in bad faith and for an improper purpose, the Court

denies the UFCW’s motion for a preliminary injunc-

tion. The Court also grants the Local’s motion for a

preliminary injunction enjoining the maintenance of the

trusteeship or otherwise interfering with the functions

of the Local on the basis of the present record. This

does not mean, however, that the International may not

impose a trusteeship at a later date if it develops credible

facts to support such a move. To that end Local 919 is

directed to allow the International to audit its books,

without any limitation as to the scope of the audit or the

time period covered and without any interference. The

20a

audit shall be conducted in the Local’s office, the same

quarters in which the audit was begun. Furthermore, the

defendant Espinosa is ordered to withdraw the union

funds from the out of state bank or banks and redeposit

the same into the banks where the monies previously had

been deposited. Due return shall forthwith be made to

the Court that this has been done. The parties shall agree

upon and submit an appropriate order within five (5)

days.

The foregoing opinion shall constitute the findings of

fact and conclusions of law required by Fed. R. Civ. P.

52 (a).

SO ORDERED.

Dated at Hartford, Connecticut, this 23rd day of July,

1979.

/s/ T. Emmet Clarie

T. EMMET CLARIE

Chief Judge

2la

UNITED STATES DISTRICT COURT

DISTRICT OF CONNECTICUT

Civil No. H79-384

[Filed July 31, 1979—4:42 P.M.]

UNITED Foop AND COMMERCIAL WORKERS

INTERNATIONAL UNION, et al.

—vs.—

RETAIL STORE EMPLOYEES UNION, LOCAL No. 919, et al.

ORDER

Upon the findings of fact and conclusions of law en-

tered herein on July 23, 1979, it is hereby ORDERED,

ADJUDGED, AND DECREED that:

1. Plaintiffs’, United Food and Commercial Workers

International Union and its officers, request for a pre-

liminary injunction restraining the officers and employees

of Local 919 from interfering with the temporary trus-

teeship imposed by UFCW over Local 919 on July 3,

1979, is denied.

2. Defendants’, Retail Store Employees Union, Local

No. 919 and its officers, request for a preliminary in-

junction against the UFCW and its officers implementing

at this time the trusteeship of Local 919 is granted.

3. Plaintiffs, their officers, agents, employees and at-

torney, and all persons acting in active concert or par-

ticipation with them, are enjoined from in any manner

attempting to enforce the July 3, 1979, trusteeship

against defendant Local 919, the individual defendants,

their officers, agents or employees and are ordered im-

mediately to remove all restraints they and any of them

have imposed or caused to be imposed upon any and all

22a

of defendant Local’s bank accounts, funds, assets or

properties pursuant to said trusteeship, and they shall

not attempt to reimpose such restaints on the basis of

the record as of July 3, 1979.

4. Defendants, Local 919, Espinosa, Magnant, Looke,

Pisani, Languell, Ravosa, Gagnon, Kroopneck, and Soucy,

shall return all funds which were temporarily removed

from bank accounts in the Hartford area back to their

original depositories.

5. Defendants, Local 919, Espinosa, Magnant, Looke,

Pisani, Languell, Ravosa, Gagnon, Kroopneck, and Soucy,

shall permit the UFCW to proceed with its audit of the

Local’s books and records, as provided in the UFCW

Constitution, and shall do all acts appropriate to permit

an uninterrupted and thorough audit by the UFCW of

Local 919, including, but not limited to, the following:

(a) making available to the auditors all books or

records of Local 919;

(b) instructing Local 919’s accountant and book-

keeper to make themselves available to the auditors

to answer questions and furnish information which

the auditors may request;

direction and control to cooperate with requests of

the auditors for information, books, or records;

(d) providing the auditors with information and

assistance necessary for them to determine the loca-

tion and nature of all books and records.

SO ORDERED.

Dated at Hartford, Connecticut, this 31st day of J uly,

1979.

/s/ T. Emmet Clarie

T. EMMET CLARIE

Chief Judge

23a

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

[Filed Nov. 26, 1979]

At a Stated Term of the United States Court of Ap-

peals, in and for the Second Circuit, held at the United

States Court House, in the City of New York, on the

26th day of November, one thousand nine hundred and

seventy-nine.

Present: Hon. William H. Mulligan

Hon. Thomas J. Meskill

Hon. Amalya L. Kearse

Circuit Judges.

79-7509

79-7597

UNITED FOOD AND COMMERCIAL WORKERS

INTERNATIONAL UNION; WILLIAM H. WYNN, et al.,

Plaintiffs-A ppellees,

—against—

RETAIL STORE EMPLOYEES UNION, LOCAL No. 919;

ARNALDO F’. ESPINOSA, et al.,

Defendants-Counterclaimants-A ppellants.

Appeal from the United States District Court for the

District of Connecticut.

This cause came on to be heard on the transcript of

record from the United States District Court for the

District of Connecticut, and was argued by counsel.

We find no abuse of discretion in Chief Judge Clarie’s

order requiring Local 919 to submit to an audit pur-

24a

suant to Article 11M of the International Constitution.

The argument that an audit constitutes a trusteeship as

defined in 29 U.S.C. § 402(h) is not persuasive. We

therefore affirm the order of the District Court dated

July 23, 1979.

/s/ William H. Mulligan

WILLIAM H. MULLIGAN

/s/ Thomas J. Meskill

THOMAS J. MESKILL

/s/ Amalya L. Kearse

AMALYA L. KEARSE

25a

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

[Filed Jan. 23, 1980]

At a Stated Term of the United States Court of Ap-

peals, in and for the Second Circuit, held at the United

States Court House, in the City of New York, on the 23rd

day of January, one thousand nine hundred and eighty.

Present: HON. WILLIAM H. MULLIGAN,

HON. THOMAS J. MESKILL

HON. AMALYA L. KEARSE,

Circuit Judges.

79-7509

79-7597

UNITED FooD AND COMMERCIAL WORKERS INTERNATIONAL

UNION, WILLIAM H. WYNN, SAMUEL J. TALARICO,

HARRY R. POOLE, THOMAS G. WAHLEY, JAY H. FORE-

MAN and DOUGLAS H. Dorirty,

Plaintiffs-Appellees,

RETAIL STORE EMPLOYEES UNION LOCAL No. 919, AR-

NALDO F’. ESPINOSA, BERNARD MAGNANT, JAMES LOOKE,

RENE PISANI, VIOLET LANGUELL, ESTNER RAVOSA,

JOSEPH GAGNON, ALFRED KROOPNECK and GORDON

Soucy,

Defendants-A ppellants.

A petition for a rehearing having been filed herein by

counsel for the defendants-appellants

Upon consideration thereof, it is

26a

Ordered that said petition be and it hereby is DENIED.

/8/ A. Daniel Fusaro

| A. DANIEL FUSARO |

Clerk

27a

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

[Filed Jan. 23, 1980]

At a stated term of the United States Court of Ap-

peals, in and for the Second Circuit, held at the United

States Court House, in the City of New York, on the

twenty-third day of January, one thousand nine hundred

and eighty.

79-7509

79-7597

UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL

UNION, WILLIAM H. WYNN, SAMUEL J. TALARICO,

HARRY R. POOLE, THOMAS G. WAHLEY, JAY H. FORE-

MAN and DouG.Las H. Dority,

Plaintiffs-A ppellees

RETAIL STORE EMPLOYEES UNION LOCAL No. 919, ArR-

NALDO F.. ESPINOSA, BERNARD MAGNANT, JAMES LOOKE,

RENE PISANI, VIOLET LANGUELL, ESTNER RAVOSA,

JOSEPH GAGNON, ALFRED KROOPNECK and GORDON

Soucy,

Defendants-A ppellants

A petition for rehearing containing a suggestion that

the action be reheard in bane having been filed herein

by counsel for the defendants-counterclaimants-appellants,

and no active judge or judge who was a member of the

panel having requested that a vote be taken on said

suggestion, |

Upon consideration thereof, it is

28a

Ordered that said petition be and it hereby is DENIED.

/s/ Irving R. Kaufman

IRVING R. KAUFMAN

Chief Judge

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