Opposition Brief — Bryan v. Erkins

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Supreme Court, U.S.

FILED

OCT 24 1986

SP ANIOL, JR.

IN THE SUPREME COURT OF THE U

OCTOBER TERM, 1986

BILLY BRYAN, ARTHUR COMER,

GEORGE BULLARD and CHARLIE GREENE,

(No. 85-2077)

and

UNITED STEELWORKERS OF AMERICA,

(No. 86-372)

Petitioners,

Vs.

ELBERT ERKINS, SAMUEL DENSON,

and U.S. FIDELITY & GUARANTY CORP.,

Respondents.

On Petitions For Writs Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

BRIEF OF RESPONDENTS ELBERT ERKINS

AND SAMUEL DENSON IN OPPOSITION

TO THE PETITIONS FOR WRITS OF

CERTIORARI

Counsel of Record: WALTER F. KELLY

Sutton & Kelly

1409 East Capitol Drive

Milwaukee, WI 53211

(414) 961-0802

THOMAS M. JACOBSON

Jacobson, Sodos & Krings, S.C.

152 West Wisconsin Avenue

Milwaukee, WI 53203

WILLIAM I. GRUBB II

O. Box 357

ufaula, AL 36027

eS ee oe

QUESTIONS PRESENTED

1. Whether certiorari, having once

already been denied, should now be granted

on the issue of LMRDA §501 union membership

enforcement, in view of the factual nature

of the issue and the absence of any conflict

among the Courts of Appeals on the issue?

2. Whether certiorari should be

granted to reconsider the unanimous

decisions of the lower federal courts that

the timeliness of §501(b) fiduciary

accounting proceedings is determined in

equity by principles of laches and on the

basis of those principles this equitable

accounting action was timely?

3. Whether certiorari should be

granted to consider the unbroken line of

authority, indicating the absence of any

conflict among the Courts of Appeals, and

extending over twenty years and thirty

federal judges, that §501(b) allows common-

benefit attorneys' fee awards and authorizes

fee awards to exceed the amount of the funds

recovered in §501(b) equitable accounting

proceedings?

TABLE OF CONTENTS

QUESTIONS PRESENTED

TABLE OF AUTHORITIES

INTRODUCTION . .

OPINIONS BELOW .

JURISDICTION . .

STATUTES INVOLVED

STATEMENT OF THE CASE

The Fair Representation Suit .

Un mbershi ° °

Timeliness .... ea

Attorneys' es .. °

Steelworkers’ Status +s

REASONS FOR NOT GRANTING THE WRIT.

I. The Membership Issue

II. The Timeliness Issue .

IiIt.

CONCLUSION...

TABLE OF AUTHORITIES

ses e

Alvey vs. General Electric Compa

622 F.2d 1279 (7th Cir. 1980) ....

Alyeska Pipeline Service Co. Vv.

Wilderness Society, 421 U.S.

240 (1975) . * . . o . . a - . .

Axelrod v. Stoltz, 264 F. Supp. 536

(E.D. Pa. 1967) . . 7 . ~~ 7 7 * 7 7 .

Bake ectiona Workers

v. Ratner, 335 F.2d 691 (D.C. Cir.

1964) - . . — a . . o i . J . aa . *

Basilicato v. International Alliance,

479 F. Supp. 1232 (D. Conn. 1979) °

Vv. , 453 F. Supp. 272

(D. Md. 1978) . . 2 . o . - o 2 ° . .

151 (1983) * . . . . 7 7 7 + . . . .

Vv ’

784 F.2d 98 (2nd Cir.),

U.S. ’

55 U.S.L.W. 3219 (1986) oe ee ee e

Erkins v. Bryan, 663 F.2d 1048

(12th Cir. 1981), cert. denied,

ee eS Se =e P

Erkins v. Bryan, 598 F. Supp. 240

(M.D. Ala. 1984), aff'd, 785 F.2d

3338 (1300 Cir. 1966) . « «+ «© « « 2S,

- 39

»- 48

2 039

49,51

._ ww

- 48

41,43

» 49

11,34

43,51

Erkins v. Bryan, 785 F.2d

1538 (llth Cir. 1986) .. . 34,41-44,50,51

Erkins v. United Steelworkers of

America, 723 F.2d 837 (llth Cir.),

cert. denied, 467 U.S. 1243 (1984) ... 10

, 386 U.S.

tam (aeete ee ee ee ee 8 8 43,46,48,49

Hall _ v. Cole, 412 U.S.

1 (1973) . . . . . . . . . . . . . 44,46,48

Highway Truck Drivers Local 107

v. Cohen, 220 F.Supp. 735 (E.D. Pa.

1963) . . o . . . . > 7 . * . . . . 49,51

Holmberg v. Axabresht 327 U.S. 392

(1946) >. >. s >. - — >. > >. . >. . . . . 42

Hughes v. Local Eleven International

Association of Bridge Workers,

4287 7.24 810 (S3r@ Caf. 1960) . « « 2 « « 39

Johnson v. Georgia Highway EARISER

488 F.2d 714 (5thCir. 1974) P 6 ease

Johnson v. Nelson, 325 F.2d 646

(8th Cir. 1963) ea) a ee ee ae On a a ee ee

Kerr v. Shanks, 466 F.2d 1271

(pe me EE, ls OSs aS oe ec ee es UR

Local 92, International Association

of Bridce Workers_v. Norris, 383 F.2d

735 (5th Cir. 1967) ee casey < 42,50

Mills v. Electric Auto-Lite Co.,

“5 SE. 2s ere 48,49

Milone v. English, 306 F.2d 814

ois Gas GED é4\ sles 2 * 4

Monzillo v. Biller, 735 F.2d 1456

(D.C. Cir. 1984) * * . * * . * .

Morrissey v. Curran, 483 F.2d 480

(2nd Cir. 1973)

Morrissey v. Curran, 482 F. Supp. 3l

(S.D. N.Y. 1979) s 2 6 «8 *

Moschetta v. Cross, 241 F. Supp.

347 (D. D.C. 1964), on remand

from 335 F.2d 691 © e

Philadelphia Div. v. Pennsylvania

Tel. Guild, 573 F. Supp. 314

(E.D. Pa. 1983) i

Phillips v. Osborne, 403 F.2d 826

(9th Cir. 1968) ar aa

Ratner v. Bakery and Confectionary

Workers, 354 F.2d 504 (D.C. Cir.

1965) . . * . * . . . * . . .

Retail Clerks Local 648 v. Retail

Clerks Int. Ass'n, 299 F. Supp.

1012 (D. D.C. 1969) “a er oe

Shimman v. Local 18, International

Union of Operating Engineers, 744

F.2d 1226 (6th Cir. 1984) “ter ae ee

Taylor v. Great Lakes Seaman's Union,

Local 5000, 701 F.2d 590 (6th Cir.

1983) * . * * 7 . * . . . * * .

Usery v. Local 639, I.B.T., 543 F.2d

369 (D.C. Caf. i976) « «

43,50

49,51

Yoblonski v. U.M.W., 80 L.R.R.M. (BNA)

2594 (D. D.C. 1971) ens 6 «© ¢ © « e 41

Statutes Cited

eee eee

TEE TS Oo. . . . . ... 18

29 U.S.C. 501(b) eat eie e e e 1 et seq.

Other Authorities Cited

1 Leg. Hist. of LMRDA of 1959

(NLRB 1959) Tees & «6 2 © « « « 4§

Comment: Counsel Fees For Union

Officers Under The Fiduciary Provision

Of Landrum-Griffin, 73 Yale L. J. 443

(1964) . * * . * * a > 7 >. _ . > — . * 51

Elliott Bill, H.R. 8342, 86th Cong.

ES ee 44,45

Kennedy-Ervin Bill, s.1555, §109(b) .. 45

Securities Exchange Act of 1934,

§14 (a) 7 . . *. . . - . . . . . . . . 7 49

INTRODUCTION

The respondents, Elbert Erkins’ and

Samuel Denson, request that this Court deny

the petitions for writs of certiorari to

review the decision of the Court of Appeals

for the Eleventh Circuit entered on April 8,

1986 because that decision does not conflict

with any decision of this Court or of any

federal Court of Appeals, and there are no

other special and important reasons for

granting the writs.

OPINIONS BELOW

Respondents accept petitioners'

statements of the opinions below with the

Single nctable exception of the trial

court's opinion, upon remand from 663 F.2d

1048 (llth Cir. 1981), cert. denied, 459

U.S. 989 (1982), on the merits of the §501

accounting, which is reprinted at R. App.

A-l.

JURISDICTION

Respondents agree with the statements

of jurisdictional grounds set forth in the

petitions for writs of certiorari.

STATUTES INVOLVED

Respondents agree with the petitioners'

identification of the statutes involved.

STATEMENT OF THE CASE

The petitioners in both petitions fail

to state the facts fully and accurately.

Therefore, plaintiffs-respondents supplement

and correct those statements as follows.

The Fair Representation Suit

)

Petitioners in No. 85-2077 state that a

suit (denominated by them as "Erkins II")

initiated by plaintiffs-respondents herein

and dismissed for untimeliness was "a second

suit in equity ..." (Pet. 6) That is

incorrect; the suit was a class action on

behalf of all the union members who lost

their jobs against the union for damages for

breach of the duty of fair representation.

Erkins v. United Steelworkers of America,

723 F.2d 837 (llth Cir.), cert. denied, 467

U.S. 1243 (1984). The individual

petitioners sought unsuccessfully in both

the trial and appellate courts below to

argue that the fair representation

limitations' principle should control the

§501 timeliness issues.

Union Membership

Petitioners in both No. 85-2077 and No.

86-372 incorporate only select facts on the

issue of membership standing to enforce

§50l1. (No. 85-2077 Pet. 5-7; No. 86-372

Pet. 3, 5, 9-10) The facts of membership

were set forth in the original decision of

the Court of Appeals in Erkins v. Bryan, 663

F.2d 1048 (llth Cir. 1981), cert. denied,

459 U.S. 989 (1982), were stipulated in the

trial court upon remand and trial of the

merits, and formed the basis for the instant

decision of the Court of Appeals, for which

review is sought, that “findings of

fact ... [affirmed] by an appellate court

bind all subsequent proceedings on the same

case ...." (No. 86-372, App. 4a)

Respecting the issue of the membership

status of Erkins and Denson at the time of

the commencement of the action, in addition

to the facts set forth in the original

opinion of the Court of Appeals, the

following undisputed facts should be noted.

Erkins and Denson were members in good

standing of both the Steelworkers and the

local throughout the duration of the strike

between December, 1976 and July, 1978.

Decertification of a local union as

bargaining representative has no effect at

all upon the continued existence of the

local union; it means only that certified

bargaining representative status from the

NLRB is lost. When the union was

decertified the Steelworkers put the local

under the control of an administrator for

purposes of “winding up" its affairs,

presumably because it was a single-

bargaining unit local union. The local

union, however, has never finally been wound

up, and its existence and chartering are

still in effect. Neither Erkins nor Denson

has ever voluntarily withdrawn from nor been

suspended nor expelled from the union's

membership. Each remains fully within the

Steelworker's constitutional definition of

eligibility for membership. There has been

no termination of the union either pursuant

to the procedures established under the

Landrum-Griffin Act with the United States

Department of Labor or pursuant to internal

union procedures within the Steelworkers.

Indeed, the local union treasury last

reflected a continuing balance of

approximately $2,000, and the bank accounts

from which the misappropriations occurred

continued. While it is true that Erkins and

Denson have not paid union dues' since

October, 1978, that fact alone is

misleading, because Erkins and Denson have

not been obligated to pay dues, by virtue of

the appiication of the out-of-work waiver of

dues provisions of the Steelworkers'

constitution. Moreover, Erkins and Denson

as employees retain recall rights with the

employer, as well as transfer rights within

the union. Thus, should they be recalled,

or should they obtain employment with

another employer that recognizes a local

union affiliated with the Steelworkers, then

their active dues obligation would

immediately, without more, recur. It is on

the basis of all these facts, together with

the facts stated in its opinion, that the

Eleventh Circuit Court of Appeals concluded

originally that Erkins and Denson made a

sufficient showing of local union membership

at the time of the initiation of the §501(b)

suit to warrant the issuance of leave to

proceed.

Timeliness

Petitioners in No. 85-2077 distort both

the record facts and the trial court's

analysis of those facts in their treatment

of the issue of plaintiffs-respondents'

timeliness in commencing this §501 action.

The trial court analyzed the facts

concerning timeliness (R. App. A-20-36), and

the appellate court accepted that analysis.

(No. 86-372 App. 8a) Some further

exposition of those facts is necessary.

The initial concern of the union

membership in June, 1979 was the loss of the

strike. At a meeting on June 10, 1979

Steelworkers International representative,

Caldwell, told plaintiffs, Erkins and

Denson, that the union lawyers had not

advised the strike leaders correctly

regarding the right of the members to vote

in the union decertification election.

Caldwell also told Erkins and Denson that

the union lawyers had filed charges with the

NLRB against the company, but that these

charges were dismissed. A cousin of

plaintiff Erkins lived in Milwaukee and this

is how Milwaukee attorney Thomas M. Jacobson

became known to the plaintiffs. At a

meeting in late June, 1979 Jacobson was

informed of Caldwell's statements but stated

he could not take the case until a retainer

was paid to provide for costs and expenses.

The plaintiffs returned to Jacobson's office

on October 30, 1979 with the money to retain

his services. Jacobson researched the law

and in November, 1979 corresponded with the

Steelworkers regarding internal procedures

available to the membership to obtain

answers for their concerns as to why the

strike was lost. The Steelworkers' response

was unsatisfactory.

On November 30, 1979 Jacobson went to

Eufaula, Alabama, and a meeting was held at

a Baptist church in Eufaula where the

plaintiffs as well as other union members

discussed the concerns of those present as

to why the strike was lost. Denson thought

the company and the union leaders were all

in on it together; he was suspicious that

the company bought the union leaders off--

paid them off. It was at this meeting that

Erkins and Jacobson received information

from union member, J. L. Pittman, which in

turn resulted in an early morning meeting on

December 1, 1979 with Sandra and Walter

Ward. Sandra Ward showed cancelled checks

for the period April-May, 1978 to Jacobson.

The Wards had not previously shared the

cancelled checks with anyone from the union

membership. It was not until the early-

morning meeting with the Wards on

December 1, 1979 that the strike leaders,

individual petitioners herein, clearly

surfaced as the target for concern over why

the strike was lost.

After this information was received,

Jacobson again contacted Steelworkers in

December, 1979 and, receiving no response,

yet again in Janaury, 1980. His

correspondence specifically requested the

Steelworkers, pursuant to 29 U.S.C. §501, to

file suit against the strike leaders,

individual petitioners here, for violating

their fiduciary responsibilities to the

membership during the strike. On

January 16, 1980 the Steelworkers' response

was received, refusing the demand to file

suit. Thereafter, Jacobson obtained in hand

an affidavit from Sandra Ward containing the

cancelled check expenditures for the period

April-May, 1978. This information was

furnished to the Steelworkers on

February 11, 1980. The membership renewed

its request that Steelworkers commence suit

for an accounting pursuant to §50l.

A Steelworkers' response on

February 15, 1980 was indicative of some

willingness to pursue the union members'

request and therefore additional contact was

made. Jacobson told the Steelworkers about

personal property of substantial value which

the strike leaders had accumulated at the

end of and shortly after the strike. On

March 6, 1980 Steelworkers changed its

position and refused to file suit or

otherwise pursue the plaintiff union

members' request and, instead, turned over

Local 7326's strike records to the U.S.

Department of Labor.

Between March 6, 1980 and May 1, 1980

plaintiffs' attorney searched for’ and

retained local counsel and drafted

pleadings. A federal judge had to be found

to obtain permission for the filing of the

§501 lawsuit; Judge Varner was ill during

this period of time; Judge Johnson had

recently been elevated to the Eleventh

Cirucit Court of Appeals. Shortly after

Judge Truman Hobbs was confirmed, Jacobson

and the plaintiffs went to Montgomery,

Alabama, and received the trial court's

permission to file the suit on May 1, 1980.

Thus, even if a six-month limitations’

period was applied to this case, the action

was timely commenced.

Attorneys’ Fees

Petitioners in both No. 85-2077 and No.

86-372 incorporate limited and incomplete

facts respecting plaintiffs-respondents'

entitlement to attorneys’ fees. (No. 85-

2077 Pet. 14 & n. 11; No. 86-372 Pet. 7-8)

A brief examinaton of the record reveals the

enormous amout of fact development and legal

research that went into plaintiffs-

respondents' effort to enforce what was

regarded by Congress as the key fiduciary

provision of LMRDA.1

For this quantity of representation,

plaintiffs' counsel claimed 1,649 hours, all

supported by contemporaneous time records,

none of which was duplicative. All time

spent by plaintiff's counsel on the parallel

criminal and fair representation litigation

was excluded from this computation. In

1 The docket entry sheets in this case

themselves run to a dozen pages and reveal

complete legal research on the legislative

history of §501 and its interpretation

respecting "membership," standing,

conditions precedent, notice and clain,

showing of "good cause," fiduciary

violations, the remedy of accounting,

intervention, indemnification, timeliness,

costs, interest, fees, parallel criminal

litigation, disqualification, and analogies

to shareholder derivative litigation;

investigation and examination of

approximately 6500 documents; nearly a dozen

depositions; the presentation of fourteen

witnesses at the accounting hearing; dozens

of motions and briefs; three full-dress

appeals; briefing on an earlier petition for

certiorari; travel and communications from

far-away distances; and an incalculable host

of meetings, telephone calls, memos, smaller

research projects, correspondence, and

affidavits.

short, on the record, the quantification of

plaintiffs' counsel's time was conservative

and limited to the essence of their

representation. 2

Plaintiffs-respondents' counsel valued

their time at $125.00 per hour for Mr.

Jacobson and Mr. Kelly and $80.00 per hour

for Mr. Grubb. Mr. Jacobson valued his

travel time at 20% of his average hourly

fee. These hourly rates were well within

the prevailing market rate for this kind of

representation in the Alabama federal courts

2 The record on quantification consisted of

the original affidavits of Thomas MM.

Jacobson (R. 704-729), Walter F. Kelly

(R. 730-738), and William I. Grubb, MII

(R. 691-695), with attached contemporaneous

time records, the master affidavit of Walter

F. Kelly (R. 697-703), the reply affidavit

of Thomas M.Jacobson (R. 826-829), and the

reply affidavit of Walter F. Kelly (R. 817-

819). These documents evidenced, without

rebuttal, that plaintiffs' counsel allocated

work to avoid duplication, maintained

contemporaneous time records, accumulated

assignments to save time, excluded time

spent on the parallel fair representation

litigatin, and were required to deal with

difficult obstacles erected by defense

counsel and Steelworkers' counsel.

et.

in this kind of litigation, as attested by

two highly respected Alabama attorneys with

federal trial practices and 58 years of

Alabama trial experience between then. ?

Plaintiffs-respondents' counsel all

have considerable trial experience and high

reputations for professional excellence,

including various awards and professional

recognition, as well as formidable results

obtained in a wide variety of litigation.

All the Johnson factors were met by

plaintiffs-respondents' counsel;* indeed,

3 The record on hourly rates and prevailing

market rates consisted of the original

affidavits of Thomas M. Jacobson (R. 704-

729), Walter F. Kelly (R. 730-738), William

I. Grubb, II (R. 691-695), Jack E. Held

(R. 820-823), and Maury D. Smith (R. 823-

826).

4 Johnson v. Georgia Highway Express, 488

F.2d 714 (5th Cir. 1974). The record on the

satisfaction of the Johnson factors

consisted of the original affidavits of

Thomas M. Jacobson (R. 704-729), Walter F.

Kelly (R. 730-738), William I. Grubb, II

(R. 691-695), the master affidavit of Walter

F. Kelly (R. 700-702), the fee petition

(R. 697-698), the fee petition brief

(R. 739-752), and reply brief (R. 802-816).

not a single Johnson factor disfavored fee

compensation, while nearly all such factors

attizmatively tevetes fee compensation.

The plaintiffs-respondents retained Mr.

Jacobson's firm on the basis of an initial

$10,000 flat fee agreement with an ongoing

hourly fee thereafter. This fee agreement

was thereafter modified to reflect the facts

that all initial retainer fees were devoted

to costs and expenses, and that counsel

could receive as fees only whatever could be

obtained by recovery under §501, LMRDA. The

fee requested in the case thus conformed to

the fee agreement. In fact, the entire

retainer fee was utilized for costs and

expenses, and Mr. Jacobson's firm advanced

an additional $3,000 for further costs and

expenses.

On the basis of this substantial and

uncontradicted factual record, plaintiffs-

respondents! counsel computed 1,428.50 hours

at $125.00 per hour, plus 93 (travel) hours

at $25.00 per hour, plus 127.50 (local

counsel) hours at $80.00 per hour, for a

"lodestar" of $203,587.50 for 1,649 total

hours, at an average hourly rate of $123.40,

a rate well within the prevailing market

range in the Alabama federal trial courts

for litigation of this complexity.

The trial court awarded a fee of

$42,000, prejudgment interest at the legal

rate from July 14, 1978, and costs of

$3,123.99. rkins v. Bryan, 598 F. Supp.

240 (M.D. Ala. 1984). Without substan-

tiation, and based upon conjecture

unsupported by the record, the trial court

reduced plaintiffs' counsels' hours’ to

"hundreds of hours," or by inference from

the trial court's "lodestar-only" estimation

to between 950 and 1000 hours, or to "a

thousand or more productive hours." Also,

in the face of uncontradicted affidavits

respecting the market reasonableness of

counsels' hourly rates, the trial court set

the lodestar hourly rate at $90.00 per hour.

Even though the trial court determined,

on the basis of the fee petition and

supporting materials "more than adequate to

serve as a basis for an informed decision,"

that "in order to secure this judgment

against defendants, plaintiffs had to

overcome difficult legal and factual

obstacles that arose during the course of

this protracted litigation," that

",.. plaintiffs conferred some benefit upon

the union which is in excess of their

monetary judgments," that "plaintiffs were

represented by able, dedicated attorneys,"

who “demonstrated skill and tenacity in

persevering in the representation of their

clients, despite many obstacles," that based

upon the lodestar, "the fee should be no

less than $95,000.00 to $100,000.00," that

"the case presented a novel question on the

issue of standing that was resolved in favor

of plaintiffs on appeal," that "plaintiffs'

proof depended on the difficult chore of

assembling and reviewing numerous checks in

an effort to make sense out of the local's

chaotic financial records," that plaintiffs’

"representation should invoke consideration

similar to a contingent fee case," that "the

Court will treat all claims as related," and

"(njone of plaintiffs' fees will be

disallowed for unsuccessfully pursuing an

unrelated claim," and that "the length of

time from the filing of the suit to its

conclusion and the travel involved for all

of plaintiffs' attorneys" made the case

"“undesireable," nevertheless "... the Court

has reduced the amount that plaintiffs may

require the union and/or the defendants to

pay for plaintiffs' attorneys based on the

results obtained and the amount § in

controversy." In fact, of course, the trial

court cut counsels’ hours by nearly 40% and

counsels’ hourly market rates by 25%,

eliminated any contingency factor in a case

that required one, and then reduced that

already depleted base fee by another 60%,

thus lowering plaintiffs’ counsels’

petitioned fee by 85% to an award that

computes at $26.25 per hour.

Steelworkers' Status

Petitioner in No. 86-372 asserts that

it is "not a party to the lawsuit," its

"limited intervention was exhausted with the

resolution of the ‘'member' issue," it was

"not a party to the litigation on the

merits," that it "did not participate at the

trial,” and that upon the filing of

plaintiffs-respondents' fee petition it

"intervened once again, this time to resist

the fee award ...," and to renew “its

contention that plaintiffs were not

‘members’ entitled to prosecute this §501(b)

action." (No. 86-372 Pet. 4,6 & n. 5) At

the outset of its argument for granting the

writ on the attorneys' fees issues, it again

remarks that it was "not a party to this

litigation." (No. 86-372 Pet. 15)

In its original Reply Brief in Support

of cCertiorari in this Court, Steelworkers

asserted at pp. 1-3 its party status,

informing this Court that the trial court

had permitted it to intervene, and that in

the Court of Appeals, "USWA filed a brief as

a party and presented oral argument as a

party." (Emphasis suppled.] At pp. 7-8 of

its June 6, 1984 decision on the merits (R.

App. A-11-12), the trial court stated "[ojn

June 12, 1980 the International filed a

motion to intervene in this lawsuit for the

special purpose of seeking a vacation of

this court's order allowing plaintiffs to

commence this action. The court allowed the

International to intervene." Thereafter,

having disclaimed party status during the

§501 accounting hearing on the merits,

precisely because it wanted to avoid

liability for fees and costs,> Steelworkers

again reversed itself (Steelworkers' Brief

in the Court of Appeals at pp. 1&n. 1, 17

n. 13) because it wanted party status in

order once again to petition this Court on

the "membership" issue, in the event it was

unsuccessful in the Court of Appeals.

Whatever Steelworkers tactical motive, its

behavior reflects that "[ijt has also been

the moving force behind most of the work in

defense of this suit."

Steelworkers' unresponsiveness to the

individual petitioners' misappropriations,

both before and during the §501 proceedings,

has been readily apparent throughout this

case. Rather than sue for an accounting,

5 Steelworkers’ recurring point in

opposition to a fee award against it in the

trial court was that it was not a party to

this action. (Steelworkers' Brief in Trial

Court at pp. 2-4 & n. 2, 5, 6-9, & 22-25)

That argument was abandoned in its Brief in

the Court of Appeals.

Steelworkers obstructed and delayed the §501

suit in every conceivable fashion, while the

individual petitioners' attorneys

successfully defended them against a limited

criminal indictment covering only a few

thousand dollars of the total

misappropriation of strike money. None of

the $40,000-plus trip money was part of the

indictment. Further, the checks taken for

purposes such as house payments, car

payments, and medical bills, which were

pocketed personally by the strike

leaders,were not part of the indictment.

The record reveals just how resistant

Steelworkers was to effective investigation

and revelation of the individual

petitioners' wrongdoing. Close examination

of portions of a Steelworkers' affidavit

reveals a complete avoidance of vigorous

union investigation. Specifically, the

Steelworkers' Streigel did not proceed

directly to work auditing tre local. The

Steelworkers' Frankel and Streigel took two

to three weeks to schedule a conference with

their auditor. A check on expenditures was

delayed until after receipt of the Ward

affidavit. Further evidence of possible

fiduciary violations was resisted, and its

provider's motives were attacked. The

Steelworkers' Frankel committed himself to

inform plaintiffs-respondents' counsel of

preliminary audit findings, yet this was

never done, and the proposed audit was

falsely characterized as "in progress." The

Steelworkers' Streigel and Steinbaugh did

not act at all until a full month after the

Ward affidavit's receipt, and no explanation

has ever been offered for their failure to

act or for why the use of a private

accounting firm excluded an immediate audit

check. Upon filing of the Steelworkers'

Streigel affidavit in August, 1984 it was

revealed that ordinary audit between 1978

and 1980 of the Local had been backlogged

for months.

Nor was. Steelworkers cooperative in

obtaining the relevant union records for

plaintiffs-respondents. Those records were

obtained by subpoena and inspection in the

parallel fair representation action of U.S.

Department of Labor records in Atlanta on

August 11-12, 1981. An affidavit of the

inspection and its results was’ filed

thereafter in this case, and it became one

of the bases for plaintiffs-respondents'

successful motion to amend their complaint,

upon return of this case to the trial court,

to cover all strike-fund payments.

Finally, Steelworkers alleged non-

participation upon return of the case to the

trial court is disingenuous; it never

produced the documents set forth in its

Streigel affidavit until after the §501

merits hearing, even though those documents

had been subpoenaed; it never offered to

produce Streigel for deposition prior to

trial; it provided documents and its outside

accountant Mr. Prystash, only upon

plaintiffs-respondents' counsel's repeated

insistence; and individual petitioners’

witness, Steelworkers District Director

Strevel did everything he could to excuse,

justify, and exonerate the individual

petitioners’ §501 violations at the hearing

on the merits.

REASONS FOR NOT GRANTING THE WRIT

I. The Membership Issue

The same arguments respecting

membership in the union were presented to

this Court upon petition to review Erkins v.

Bryan, 663 F.2d 1048 (llth Cir. 1981), and

that petition was denied. 459 U.S. 989

(1982). Petitioners state that the matter

was then interlocutory, but the facts were

finally found, stipulated upon remand in the

trial court, and reaffirmed by the appellate

court in this case. Erkins v. Bryan, 785

F.2d 1538, 1542 (llth Cir. 1986). Thus the

case comes to this Court in no different

posture than it did in 1982.

Steelworkers opine that the definition

of membership applied in this case

substantially burdens all unions as well as

the case load of the federal courts.

Neither proposition is true. The

constitutional definitions of eligibility

for membership and limitations upon

membership in various unions affiliated with

the AFL-CIO are as varied as are the

politics and identities of the unions so

affiliated. The interplay between the

statutory definition of membership under the

Landrum-Griffin ‘ct and the constitutional

membership provisions of various unions will

always differ from case to case depending

upon the facts of each case, the

constitutional provisions involved, the

substantive Landrum-Griffin rights being

asserted, and the membership provisions of

the Act. It is to construct a strawman for

the Steelworkers to contend that the highly

factual construction of "membership" in the

instant case constitutes a per se rule

respecting all membership in all unions for

all purposes. Moreover, in order to

construct the strawman, Steelworkers have

assumed that full statutory "due process"

provisions must be applied in order

administratively, as an intra-union matter,

to accomplish a suspension or termination of

membership for non-disciplinary reasons such

as final termination of local union

existence and bargaining status. No case so

holds. For these reasons, Steelworkers’

contentions respecting the practical impact

of the decision below upon the

administration of labor unions are illusory.

tee cence eseeetnetenincsncenmesteaat oe OCR, | 46 lm Oe ee.

The Steelworkers also contend that the

"membership" determination below will

greatly burden the federal district courts

in their statutory obligations respecting

the fiduciary duties of union officials.

However, the balance struck by Congress

respecting the tension between union

members' access to the federal courts and

union officials' duties to be honest is a

balance that under §501(b) vests substantial

discretion in federal district court judges

as to whether or not the grant leave to

proceed. Indeed, the door to federal court

is more closely guarded by §501(b) than it

is in any other kind of federal district

court civil litigation. Thus, there is no

undue burden upon the federal courts by

virtue of the decisions of either the

Eleventh Circuit or the trial court.

Steelworkers' and the individuals’

petitions argue for a certain construction

of the membership definitional provisions of

the Landrum-Griffin Act, so that fulfillment

of the requirements for membership in a

labor organization is a functional category

based on intra-union constitutional

membership status at the time of

commencement of the litigation. On the

basis of the actual facts of record in this

case, whether any court prefers the

Steelworkers' construction of the Act is

irrelevant, because Erkins and Denson

satisfied even the Steelworkers'

requirements for membership. To phrase it

differently, the Court of Appeals originally

did not premise its decision on a purely

temporal reading of the statute but rather

upon all the factual variables demonstrating

membership on this record. Indeed, the

reason that this case is actually a mine-run

case respecting the statutory meaning of

"membership" is because virtually every

federal court that has considered

"membership" has followed the approach of

examining all factual and union

constitutional variables respecting

membership and then deciding each case on

its own particular facts. See, e.g., Alvey

Vv. c Co , 622 F.2a 1279

(7th Cir. 1980); ughes _v cal Eleven

Inte ss tion o idge Workers,

287 F.2d 810 (3rd Cir. 1960); Basilicato v.

International Alliance, 479 F. Supp. 1232

(D. Conn. 1979); Axelrod v. Stoltz, 264 F.

Supp. 536 (E.D. Pa. 1967).

Steelworkers' and the individuals'

petitions seek to present a_ supposed

conflict between the foregoing decisions and

the Sixth Circuit's decision in Taylor v.

Great Lakes Seaman's Union, Local 5000, 701

F.2d 590 (6th Cir. 1983). However, as

Taylor recognizes, 701 F.2d at 592, and as

petitioners seek to minimize or ignore,

"Brennan and Alvey involved former union

members whose employment within their

unions! jurisdiction had been terminated

involuntarily through ... replacement of

striking workers ...," and "Steelworkers'

membership policy presently in dispute would

not apply to persons whose positions were

similar to those occupied by the Brennan and

Alvey plaintiffs." Characterizing this

distinction as "crucial," the Sixth Circuit

also continues on to remark the nature of

that case as one under §101(a)(1) of LMRDA

and to note the reasonableness of the

union's rule on the issue of membership for

voting purposes under LMRDA. Of course, the

issue in the instant case concerns

reasonableness of the definition of

membership with respect to §501(b)

enforcement in a local union dormancy

setting, an issue as to which there is

absolutely no conflict amongst the Courts of

Appeals.

II. The Timeliness Issue

Individual petitioners in No. 85-2077

argue that this Court's decision in Del

Costello _v. International Brotherhood of

Teamsters, 462 U.S. 151 (1983), should be

applied to §501(b) equitable accounting

actions. Petitioners can point to no

decisions of this Court or of any Court of

Appeals conflicting with the trial court's

and the Court of Appeals' decision that

"(t)he cause of action under consideration

here is quite different from those described

and we conclude that the limitation period

for filing a §501 action is not governed by

Del_ Costello, Erkins II, or Davis. Erkins

Vv. Bryan, 785 F.2d 1538, 1543 (llth Cir.

1986). The case law is unanimous that

§501(b) equitable accounting proceedings are

governed by laches as ‘an appropriate test

for timeliness(,)' Morrissey v. Curran, 482

F. Supp. 31, 40 (S.D. N.Y. 1979), Yoblonski

v. U.M.W., 80 L.R.R.M. (BNA) 2594 (D. D.C.

1971), ({s]jince a §501 suit for an accounting

is essentially equitable in nature ...."

Erkins v. Bryan, 785 F.2d 1538, 1543 (llth

Cir. 1986), citing, Local 92, International

Association of Bridge Workers v. Norris, 383

F.2d 735, 741 (5th Cir. 1967). That law in

turn is consistent with this Court's

decision in Holmberg v. Armbrecht, 327 U.S.

392 (1946), as the Erkins Court recognized.

Id.

There is yet a further reason to deny

the petitioned writ on the timeliness

question, and that is because, as

respondents have described in their

Statement of the Case, the trial court

determined and the Court of Appeals accepted

that this action was commenced May 1, 1980,

less than six months after plaintiffs-

respondents’ discovery on December 1, 1979

of the cancelled checks of April and May,

1978, which provided the factual basis for

pursuit of their §501(b) case. Thus, even

if Del Costello and its progeny applied to

§501(b) equitable accounting proceedings,

there would be no basis for reversal.

III. The Attorneys’ Fees Issue

Both the individual petitioners in No.

85-2077 and the Steelworkers petitioner in

No. 86-372 assail decisions of the trial

court, Erkins v. Bryan, 598 F. Supp. 240

(M.D. Ala. 1984), and the Court of Appeals,

Erkins v. Bryan, 785 F.2d 1538, 1544-49

(llth Cir. 1986), that they "pay $42,000.00

for plaintiffs’ attorneys’ fees."

Petitioners Claim that the fee award

decisions conflict with the plain language

of §501(b), its legislative history, this

Court's decision in Fleischmann Distilling

Corp. v. Maier Brewing Co., 386 U.S. 714

(1967), and the Sixth Circuit's decision in

Shimman v. Local 18, International Union of

Operating Engineers, 744 F.2d 1226, 1235

n. 13 (6th Cir. 1984). On all points, the

petitioners are in error.

The “plain language” argument has

repeatedly been rejected by this Court in

the context of LMRDA because, as the Court

of Appeals noted, 785 F.2d at 1547, "“"LMRDA

reflects ‘calculated ambiguity {and}

political compromise' rather than a precise

congressional directive." See, Hall v.

Cole, 412 U.S. 1 (1973).

The legislative history argument fails

because “we can never be sure, in the

absence of an explicit statement, why

Congress fails to act[{,]" and because it,

too, was the product of "calculated

ambiguity [and] political compromise." For

example, Steelworkers' recitation of the

legislataive history fails to consider inter

alia the important developments that

occurred in the House Labor Committee in

reporting the Elliott bill, H.R. 8342, 86th

Cong., lst Sess. (1959) to the House, when

key sponsors of the legislation, speaking of

the fee recovery enforcement remedial

provisions of §501 of that bill, a bill

identical in that respect to the Landrunm-

Griffin bill, H.R. 8400, and substantially

t similar in that respect to original §109(b)

| of the Kennedy-Ervin bill, s.1555, stated in

) their Supplemental Views:

) The bill also authorizes a union

| member to bring an action against

any official or agent who violates

his fiduciary obligations, if the

union refuses to sue -- and again

such member may recover counsel

fees and costs if he prevails.

(Emphasis added. ]

) H. Rep. No. 741 on H.R. 8342 (July 30,

1959), 1 Leg. Hist. of LMRDA of 1959 at

p. 840 (NLRB 1959). Those Supplemental

Views are extremely important because they

| were expressed by key supporters of the

"realist" labor position in the House, Reps.

Carl Elliott, Edith Green, Frank

Thompson,Jr., Stewart L. Udall, and James G.

O'Hara, and thus they likely carried to the

floor and the conference this understanding

of §501. This sequence of events is not

unlike that analyzed by the Supreme Court in

Hall, 412 U.S. at pp. 11-14 & nn. 17-19, and

strongly suggests that key sponsors and

supporters of the Elliott legislation

believed that the identical provisions of

the Landrum-Griffin legislation "allowed the

union member to recover counsel fees."

Hall, 412 U.S. at p. 12 n. 19.

The supposed conflict between this

Court's decision in Fleischmann Distilling

Corp. v. Maier Brewing Co., 386 U.S. 714

(1967), and the decision below was

repudiated by the Court of Appeals, 785 F.2d

at 1546-47, because "(t]he remedies provided

under §501 of the LMRDA do not approach the

specificity of those considered in

Fleischmann, an action for trademark

infringement under the Lanham Act ...," and

§501 “hardly sets forth the comprehensive

remedies found in the Lanham Act."

Moreover, other decisions of this Court

illuminate the limited bearing of

Fleischmann upon §501 fees. Not the least

of the reasons for declining to grant

Steelworkers' petition is the decision of

this Court in Hall v. Cole, 412 U.S. 1

(1973). In Hall the Court held that a

nine SN ete aA a al Rat

prevailing LMRDA Title I "Bill of Rights"

Claimant could recover a full award of

attorneys' fees for his "free speech," non-

monetary victory, notwithstanding the

absence of statutorily express language

authorizing the award. The Court reasoned

that the correction of "free speech" abuse |

by the particular intra-union political

claimant was a correction benefitting the

entire union membership and remarked in

particular the important LMRDA purpose of

exposing fiduciary abuse by union officials.

Hall, 412 U.S. at 6-7 & n. 7. The Court

noted the analogy between the conferral of a

common non-monetary benefit upon the union

membership in Hall and the conferral of a

common benefit in pre-Hall common benefit

fee award cases, Hall, 412 U.S. at 6-7, 12-

13, and the equity basis for such an award,

Hall, 412 U.S. at 5, and emphasized the

statutory enforcement purposes of private

party LMRDA litigation. The Court further

noted the express statutory authorization

for such an award in §501 litigation,

thereby confirming that provision's a

fortiori alowance for fee awards. Hall, 412

U.S. at ll-12 & n. 17. Hall is particularly

devastating to the Steelworkers' petition

for two reasons: (i) 3% expressly

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incorporates the non-monetary common benefit

rationale developed in shareholder

derivative suits and recognized by this

Court in Mills v. Electric Auto-Lite Co.,

396 U.S. 375 (1970), into LMRDA fee

analysis, and §501(b), of course, was

patterned after private enforcement in such

derivative litigation, see, e.g., Phillips

v. Osborne, 403 F.2d 826, 831-32 & n.8 (9th

Cir. 1968), Brink v. DalLesio, 453 F. Supp.

272, 279-80 (D. Md. 1978); and (2), it

expressly considered and rejected the

applicability to LMRDA remedies of the

rationale of Fleischmann that "meticulously

detailed" remedies serve to limit otherwise

generally available equitable fee-shifting

powers of the federal courts, a rationale

that serves as the linchpin of Steelworkers’

analysis that the decision below conflicts

with Fleischmann. Hall, 412 U.S. at 9-14.

Because Alyeska Pipeline Service Co. v.

Wilderness Society, 421 U.S. 240 (1975), was

decided after Hal] it is not specifically

distinguished, but as the D.c. Circuit says,

"Hall extends Mills to an express statutory

([LMRDA] cause of action. This developmert

remains undisturbed after Alyeska because

the “common benefit" rationale was not

involved in that case, and [this] Court made

Clear that ‘Congress has not repudiated the

judicially fashioned exceptions to the

general rule against allowing attorneys

fees.’ With respect to LMRDA courts have

uniformally applied a ‘common benefit’

analysis to award attorneys' fees to private

litigants." Usery v. Local 639, I.B.T., 543

F.2d 369, 382 & n.31 (D.C. Cir. 1976).

The Fleischmann rationale was also

rejected in Mills, a shareholder derivataive

suit enforcing provisions of §14(a) of the

Securities Exchange Act of 1934, and seeking

an interim award of fees, by citation to the

fee rationale of the then leading §501(b)

decision, Bakery and Confectionary Workers

v. Ratner, 335 F.2d 691, 696-97 (1964), for

the proposition that “we [eight members of

the Court] cannot fairly infer from the ...

Act... a purpose to circumscribe the

courts’ power to grant appropriate

remedies." The same 8-1 Mills majority also

cited the §501(b) fee award decision in

Highway Truck Drivers Local 107 v. Cohen,

220 F. Supp. 735 (E.D. Pa. 1963), for the

propositin that "petitioners [shareholders]

-++ [were) entitled to an interim award of

litigation expenses and reasonable

attorneys' fees." Mills, 396 U.S. at 389,

391, 393-97. See Donovan v. CSEA Local

Union 1000, 784 F.2d 98, 104 (2nd Cir.),

cert. denied, U.S. , 55 U.S.L.W.

3219 (1986).

Petitioners also argue that’ the

decision below conflicts with Shimmon v.

Local 18, International Union of Operating

Engineers, 744 F.2d 1226, 1235 n. 13 (6th

Cir. 1984). Shimmon, of course, is not a

§501(b) suit, but rather a free speech and

assault suit, and as the Court of Appeals

noted, 785 F.2d at 1548-49, "Shimmon's

primary benefit, in the sum of $225,000.00

ran solely to the named plaintiff .... Any

incentive for change in union policy was

largely ancillary to plaintiff's personal

recover. Here, in contrast, the monetary

recovery, as well as the incentive to

change, directly concerns USW rather than

the plaintiffs."

Indeed, the twenty-year long line of

authority construing §501(b)'s fee award

provision is unbroken that the amount

recovered does not limit the fee award

available under the common benefit

rationale. Not a single federal judge of

the approximately thirty to have considered

this question has agreed with Steelworkers’

analysis. Local __92, International

Association of Bridge Workers v. Norris, 383

F.2d 735 (5th Cir. 1967); Morrissey v.

Curran, 483 F.2d 480 (2nd Cir. 1973);

Johnson v. Nelson, 325 F.2d 646 (8th Cir.

1963); Kerr v. Shanks, 466 F.2d 1271 (9th

Cir. 1972); Milone v. English, 306 F.2d 814

(D.C. Cir. 1962); Bakery and Confectionary

Workers v. Ratner, 335 F.2d 691 (D.C. Cir. .

1964); Ratner v. Bakery and Confectionary

Workers, 354 F.2d 504 (D.C. Cir. 1965),

aff'g. Moschetta v. Cross, 241 F. Supp. 347

(D. D.C. 1964), on remand from 335 F.2d 691,

supra; Usery v. Local 639, I.B.T., 543 F.2d

369 (D.C. Cir. 1976); Monzillo v. Biller,

735 F.2d 1456 (D.C. Cir. 1984); Highway

Truck Drivers & Helpers Local 107 v. Cohen,

220 F. Supp. 735 (E.D. Pa. 1963); Retail

Clerks Loca] 648 v. Retail Clerks

International Association, 299 F. Supp. 1012

(D. D.C. 1969); Philadelphia Div. v.

Pennsylvania Tel. Guild, 573 F. Supp. 314

(E.D. Pa. 1983); and, of course, Erkins v.

Bryan, 598 F. Supp. 240 (M.D. Ala. 1984),

aff'd, 785 F.2d 1538, 1544-49 (lith Cir.

1986). As Judge Hobbs put it, "courts have

consistently rejected the unions'

contentions that counsel fees should be

limited to the amount of the monetary

recovery." See, generally, Comment: Counsel

Fees For Union Officers Under The Fiduciary

Provision Of Landrum-Griffin, 73 Yale L. J.

443, 468-71 & nn. 119-130 (1964).

CONCLUSION

For the reasons set forth above, the

petitions for writs of certiorari in No. 85-

2077 and No. 86-372 should be denied.

Respectfully submitted,