Opinion
04 CIV. 5205 (DLC).
January 28, 2005
OPINION AND ORDER
This case presents the question of whether a district court has subject matter jurisdiction under the Labor Management Relations Act ("LMRA") over an alleged violation of a union constitution when the employees constituting the union are largely municipal workers. In a September 16, 2004 Order, this Court requested supplemental briefs from the parties as to this question. Having reviewed the parties' submissions, and for the reasons stated herein, this Court has subject matter jurisdiction over the plaintiffs' complaint.
Background
The instant action concerns the governance of District Council 37 ("DC 37"), American Federation of State, County, and Municipal Employees ("AFSCME"), and that of DC 37's Health and Security Plan Trust (the "Trust"). DC 37, which is comprised by 56 local unions, represents over 125,000 employees of the City of New York as well as employees of several non-profit cultural institutions, such as the New York Public Library, the American Museum of Natural History, and the Metropolitan Museum of Art, that receive funding from the City of New York. The Trust, which has more than 150,000 participants, is, according to plaintiffs' first amended class complaint, "an employee welfare fund whose participants are employees and retired employees of the City of New York represented for collective bargaining purposes by DC 37." According to plaintiffs, the Trust is funded by the City of New York and has an annual operating budget of approximately $175 million.
Under the Trust's Amended and Restated Agreement and Declaration of Trust ("Trust Agreement"), the Trust must be administered by between three and eleven trustees (the "Trustees") who "shall be appointed by the Executive Board of D.C. 37 . . . for a term as set by the Executive Board of D.C. 37." The Trust Agreement further states that "[i]n the event of the resignation, death, disqualification, disability, refusal to act or resignation of any Trustee, a successor Trustee shall be appointed" by the DC 37 Executive Board. The Trust Agreement also empowers DC 37's executive board to "remove any trustee from office by exercising its sole, complete, and uncontrolled discretion, without consideration of whether there exists cause, to do so." (Emphasis supplied). "[S]o long as there are at least three (3) Trustees qualified to serve and in office," as well as a quorum of three, however, the Trustees may act. Notably, the Trust Agreement provides that the "Trust may be amended by majority vote of the Trustees in office at the relevant time" so long as such amendment does not violate the purpose of the Trust or conflict with other agreements between DC 37, the Trust, and the City of New York.
Decisions of the Trustees must either be made by a majority vote of those present at a meeting at which there is a quorum or alternatively by unanimous written consent.
The nineteen named plaintiffs in this case are members of DC 37, all but one of whom purports to sue on behalf of the Trust or its participants. Fifteen of the plaintiffs are employed by the City of New York or are retired therefrom. In a supplemental declaration submitted at this Court's request, plaintiffs' counsel represents that Raymond Markey ("Markey") is employed by the New York Public Library and that Robert Schirmer ("Schirmer") is employed by the Metropolitan Museum of Art. He further represents that two other employees, Mark Rosenthal ("Rosenthal") and Faye Moore ("Moore"), are on leave from their City of New York jobs and work on a full-time basis for their respective locals. Just as plaintiffs are not all City employees, Markey, Schirmer, and Moore are also not Trust participants, despite plaintiffs' collective claim to sue on behalf of the trust.
Stuart Liebowitz, according to the first amended class complaint, claims to sue on behalf of the DC 37's Retirees Association.
Each of the plaintiffs holds a leadership role within DC 37. Seventeen are elected vice presidents of DC 37 and hold seats on the DC 37's twenty-eight-member executive board. Of the two remaining plaintiffs, Rosenthal currently serves as President of Local 983 of DC 37, which consists of approximately 4,000 City workers, and is the former Treasurer of DC 37. The other remaining plaintiff, Stuart Liebowitz, is the President of the DC 37 Retirees Association, which has 50,000 members, most of whom are Trust participants.
Like plaintiffs, the defendants, Lillian Roberts ("Roberts") and Oliver Gray ("Gray"), also belong to DC 37's leadership. Roberts currently serves as DC 37's Executive Director, a position to which she was elected, and serves both on the executive board and as a trustee of the Trust. Gray was appointed assistant executive director of DC 37, and he serves as a trustee as well.
The facts on which this action is based are essentially undisputed. On May 12, 2004, the executive board removed four trustees from office because of a concern over the growing depletion of funds from the Trust due to rising health care costs. This action reduced the number of trustees from seven to three, including Roberts and Gray. The plaintiffs assert that the executive board intended to fill the vacancies at their June meeting. Before the board appointed new trustees to fill the vacancies it created, however, Roberts introduced a resolution among the remaining trustees to amend the Trust Agreement so that the executive board would no longer have power to appoint or remove trustees. The resolution instead would vest these powers solely in the hands of DC 37's executive director. On June 7, Roberts, Gray, and the third remaining trustee, Lenora Gates ("Gates"), unanimously approved this amendment.
Shortly thereafter, the plaintiffs filed this lawsuit in New York state court to challenge the amendment to the Trust Agreement as a breach of the trustees' fiduciary duty and a violation of the DC 37 Constitution, which, inter alia, charges the executive director with "carry[ing] out all decisions . . . of the executive board" and imposes upon all officers a "high fiduciary duty and a sacred trust to honestly and faithfully serve the best interests of the membership." The defendants then removed the action to this Court.
The executive board met again on July 14, and by a vote of nineteen to four, it adopted a resolution voiding the above-described resolution and appointing seven new trustees. The next day, at a pretrial conference held on the record, plaintiffs sought a temporary restraining order to void the June 7 amendment and ensure that the seven new trustees would be seated. Concluding that there had not yet been any change in the administration of the Trust and that the defendants could agree to seat the seven trustees appointed by the executive board, the Court declined to issue the requested order. The Court did express, however, that the defendants' actions appeared, at first blush, to be in violation of their fiduciary duties. Of particular concern was whether Trust participants were being harmed by the remaining trustees' lack of action as to the Trust's mounting financial losses, which plaintiffs represented to be in the range of $4 to 5 million each month. Consequently, a briefing schedule was set on the plaintiffs' motion for a preliminary injunction.
On July 28, in an attempt to cure legal deficiencies in their earlier resolution and "protect and advance the best interest of the Plan participants in a manner that is neutral and independent of partisan objectives," the defendants passed another amendment to the Trust Agreement. This amendment placed the power to oversee, appoint, and remove trustees in the hands of a newly-created DC 37 Health and Security Plan Executive Committee ("Executive Committee"), consisting of DC 37's executive director, president, secretary, and treasurer, and provided that no member of the Executive Committee could serve as a trustee. This amendment was unanimously agreed to in writing by the three trustees who were in place following the executive board's May 12 meeting: Roberts, Gray, and Gates. According to Roberts' July 28, 2004 affidavit, she subsequently resigned as a trustee and appointed Leonard Allen to take her place.
A conference was held on August 13 to resolve plaintiffs' motion for a preliminary injunction, which the Court granted for reasons stated on the record. Despite having removed the case to federal court, the defendants contested federal subject matter jurisdiction over this action; therefore, before turning to the merits of the motion, subject matter jurisdiction was addressed. The Court found that subject matter jurisdiction was not proper under the Employee Retirement Income Security Act ("ERISA"), on which the plaintiffs' complaint wholly relied as a basis of jurisdiction, as the Trust is a governmental plan as defined by ERISA and is therefore not covered by that statute. See 29 U.S.C. §§ 1002(32), 1003(b).
This Court noted, however, that plaintiffs' Memorandum of Law in support of their motion for a preliminary injunction contained a footnote in which they asserted that subject matter jurisdiction also exists under the LMRA. Understanding this footnote as an implicit request for leave to amend plaintiffs' complaint, this Court found that as "[a] union's constitution is a contract among the union members within the plain meaning of Section 301(a) of the LMRA . . . federal subject matter jurisdiction pursuant to the LMRA exists over suits by union members against union officials for violating the union's constitution."
The relevant footnote in plaintiffs' brief cites Section 301(b), 29 U.S.C. § 185(b), as the alternative basis for subject matter jurisdiction in this case. The case to which plaintiffs refer for the proposition that the LMRA provides jurisdiction over suits for violations of union constitutions, however, is one involving Section 301(a). See United Ass'n of Journeymen and Apprentices of the Plumbing and Pipefitting Indus. v. Local 334 of the United Ass'n of Journeymen and Apprentices of the Plumbing and Pipefitting Indus., 452 U.S. 615, 619-20, 627 (1981). Thus, this Court understood plaintiffs' citation to Section 301(b) to be a typographical error and considered whether jurisdiction would be appropriate under Section 301(a).
Having found subject matter jurisdiction over this action, an August 20 Order preliminarily enjoined the defendants from "acting in any manner pursuant to the June 7, 2004 amendment to the Trust Agreement and Declaration of Trust" and from "failing to recognize the appointment of seven new trustees by the D.C. 37 Executive Board on July 14, 2004." As the Court stated on the record at the August 13 conference, the defendants' June 7 amendment to the Trust Agreement constituted "an unlawful attempt by the defendants to structurally entrench themselves and to bypass the wishes of the Board with respect to the management of the Trust" in violation of DC 37 Constitution and the defendants' fiduciary duties as trustees. The defendants' actions on June 7 also jeopardized "the proper administration of the Trust" by concentrating "extraordinary and unreviewable control in the hands of Lillian Roberts." The August 20 Order also voided the July 28 amendment to the Trust Agreement and the appointment of any new trustees on that day were also voided.
On September 16, defendants, having replaced their former counsel, moved for reargument and reconsideration of the preliminary injunction on the ground that no subject matter jurisdiction exists. Specifically, defendants argued that this action concerns the legality of amendments to the Trust Agreement, not the propriety of actions under a union constitution. As the Court found that the Trust is a governmental plan under ERISA and therefore exempt therefrom, the defendants contended that plaintiffs cannot reframe this suit as appropriate under the LMRA. Because defendants' motion was untimely under Local Civil Rule 6.3, it was rejected in an October 18 Order.
As a court may raise issues of subject matter jurisdiction at any time, however, see, e.g., Oscar Gruss Son, Inc. v. Hollander, 337 F.3d 186, 193 (2d Cir. 2003), the October 18 Order requested supplemental briefing from the parties on an issue not addressed by any of their prior submissions: whether a district court may find subject matter jurisdiction in this case given the definitions of "employer," "employee," and "labor organization" within the LMRA.
Discussion
Where a complaint seeks relief either under the Constitution or a law of the United States, a federal court must entertain the suit except "where the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous." Bell v. Hood, 327 U.S. 678, 682-83 (1946); see also Carlson v. Principal Fin. Group, 320 F.3d 301, 306 (2d Cir. 2003).
[I]n cases where the asserted basis for subject matter jurisdiction is also an element of the plaintiff's allegedly federal cause of action, we ask only whether — on its face — the complaint is drawn so as to seek recovery under federal law or the Constitution. If so, then we assume or find a sufficient basis for jurisdiction, and reserve further scrutiny for an inquiry on the merits.Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1189 (2d Cir. 1996) (citation omitted).
As stated previously, plaintiffs' complaint premised this action solely on ERISA. Nonetheless, the complaint alleged facts essential to a claim under Section 301(a) of the LMRA through its pleading that the defendants' actions had violated the union's constitution. Moreover, plaintiffs implicitly sought leave to amend their complaint to identify the LMRA as an alternative basis for jurisdiction, and in granting a preliminary injunction, this request was granted as well. Therefore, it is entirely appropriate to reevaluate the conferral of subject matter jurisdiction over this matter under Section 301 of the LMRA. Section 301(a) of the LMRA provides:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount of controversy or without regard to the citizenship of the parties.29 U.S.C. § 185(a).
It is unambiguously the law that union constitutions constitute contracts within the meaning of the LMRA and that individual union members may sue their union under that statute for a violation of a union constitution, despite the fact that individual members are not parties to such an "interunion contract." Woodell v. Int'l Bhd. of Elec. Workers, Local 71, 502 U.S. 93, 101 (1991). Individual union members may also sue union officials under Section 301 for alleged violations of a union constitution and may seek both injunctive and equitable relief. Shea v. McCarthy, 953 F.2d 29, 32 (2d Cir. 1992). Nevertheless, the reach of Section 301 is not without limit. The LMRA incorporates the meanings of "employer," "employee," and "labor organization," inter alia, as defined within the National Labor Relations Act ("NLRA"). 29 U.S.C. § 142(3); see also Ayres v. Int'l Bhd. of Elec. Workers, Local Union No. 125, 666 F.2d 441, 442-43 (9th Cir. 1982); Crilly v. S.E. Penn. Trans. Auth., 529 F.2d 1355, 1359 (3d Cir. 1976). Therefore, these terms must be understood in order to construe appropriately the grant of subject matter jurisdiction under Section 301.
29 U.S.C. § 142(3) states, "The terms `commerce,' `labor disputes,' `employer,' `employee,' `labor organization,' `representative,' `person,' and `supervisor' shall have the same meaning as when used in subchapter II of this chapter."
Under the NLRA, and therefore the LMRA, the term "employer" does not include "the United States or any wholly owned Government corporation . . . or any State or political subdivision thereof." 29 U.S.C. § 152(2). While neither the NLRA nor the LMRA elaborate on the phrase "political subdivision," the Supreme Court has utilized the National Labor Relations Board's (the "NLRB") framework to determine whether an entity is a political subdivision. According to the NLRB, an entity comes within the political subdivision exception only if it is "created directly by the state, so as to constitute departments or administrative arms of the government, or administered by individuals who are responsible to public officials or to the general electorate." NLRB v. Natural Gas Util. Dist., 402 U.S. 600, 604-05 (1971) (citation omitted). Consequently, courts within this Circuit have assumed, without discussion, that New York City and its various agencies and corporations constitute political subdivisions and are not employers under the LMRA. See, e.g., Cunningham v. Local 30, Int'l Union of Operating Engineers, 234 F. Supp. 2d 383, 391 (S.D.N.Y. 2002); Naum v. City of New York, No. 94 Civ. 5747 (DAB), 1996 WL 140305, *2 (S.D.N.Y. Mar. 28, 1996). In a related vein, the term "employee" does not apply to those employed by any person or entity who is not an employer under the NLRA, 29 U.S.C. § 152(3), and therefore excludes all federal, state, and other public workers. Finally, the NRLA's definition of "labor organization," 29 U.S.C. § 152(5), is restricted both by the definition of employer and employee, encompassing only organizations "in which employees participate and which exist for the purpose, in whole or in part, of dealing with employers."Id.
29 U.S.C. § 152(2) provides:
The term "employer" includes any person acting as an agent of an employer, directly or indirectly, but shall not include the United States or any wholly owned Government corporation, or any Federal Reserve Bank, or any State or political subdivision thereof, or any person subject to the Railway Labor Act, as amended from time to time, or any labor organization (other than when acting as an employer), or anyone acting in the capacity of officer or agent of such labor organization.Id. (citation omitted).
As set forth in the NLRA, the term "employee"
shall include any employee, and shall not be limited to the employees of a particular employer, unless this subchapter explicitly states otherwise, and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because or any unfair labor practice, and who has not obtained any other regular and substantially equivalent employment, but shall not include any individual employed as an agricultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse, or any individual having the status of an independent contractor, or any individual employed as a supervisor, or any individual employed by an employer subject to the Railway Labor Act, as amended from time to time, or by any other person who is not an employer as herein defined.29 U.S.C. § 152(3) (citation omitted) (emphasis supplied).
The entire definition of "labor organization" refers to "any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work." 29 U.S.C. § 152(5).
Given the above-referenced definitions, particularly those of "employer" and "employee," courts have repeatedly held that federal district courts do not have subject matter jurisdiction over claims brought by public employees under Section 301 of the LMRA. Some of these courts have supplied narrow holdings in this regard, explaining, for instance, that "[t]he LMRA . . . does not vest federal district courts with subject matter jurisdiction over claims by public employees against their unions for breach of the duty of fair representation." Straker v. Metro. Transp. Auth., 333 F. Supp. 2d 91, 104 (E.D.N.Y. 2004); see also Muhlrad v. Mitchell, No, 96 Civ. 3568 (DLC), 1997 WL 182614, at *3 (S.D.N.Y. Apr. 14, 1997).
Other courts, however, have rejected public employees' claims pursuant to Section 301 more broadly. In 1976, for instance, inCrilly, 529 F.2d 1355, the Third Circuit upheld a district court's dismissal of a municipal bus driver's claims under Section 301(a) against his transit authority employer for breach of a collective bargaining agreement and against his union for breach of the duty of fair representation. While concluding that "coverage of state and local government employees might be consistent with the dominant purposes" of the LMRA, the Crilly court's thorough review of the legislative history of the LMRA convinced it that "Congress probably did intend to exclude state and local government employees from the coverage" of the LMRA generally. Id. at 1357, 1362. Similarly, in Ayres, 666 F.2d 441, the Ninth Circuit upheld the dismissal of a public utility employee's claims under Section 301. Reasoning that had Congress intended to "extend the protections of section 301(a) to public employees, . . . that purpose would have been stated more clearly," the court ultimately concluded that Section 301 "does not grant this court jurisdiction over the claims of an individual employed by a political subdivision of a state." Id. at 443-44. Following the Ninth and Third Circuits, several courts within this District have dismissed cases on the grounds that federal district courts lack jurisdiction under Section 301 over public employees' claims, irrespective of who the defendants are.See, e.g., Cunningham, 234 F. Supp. 2d at 383 (local union);Naum, No. 94 Civ. 5747 (DAB), 1996 WL 140305, at *2 (S.D.N.Y. Mar. 28, 1996) (city agencies, city comptroller, and local union); Tadros v. Pub. Employees Fed'n, No. 94 Civ. 6893 (RPP), 1995 WL 746371, at *3 (S.D.N.Y. Dec. 15, 1995) (union, union president, and union representative).
Due to its factual resemblance to the case at bar, the opinion in the Cunningham case merits particular attention. InCunningham, over thirty City of New York employees, who are represented by a local union with both public and private employees as members, asserted claims against their local union under Section 301, inter alia, for conducting a ratification vote in violation of the international union's constitution. Faced with the union's motion for summary judgment, the Honorable Michael B. Mukasey sua sponte confronted the apparent lack of subject matter jurisdiction under Section 301 against a local union "for violation of the international constitution, when that local union represents both public and private employees."Cunningham, 234 F. Supp. 2d at 395. Judge Mukasey observed that "[i]f plaintiffs were private employees, there is no doubt that this court would have subject matter jurisdiction under Section 301(a) to consider the claim." Id. at 394.
In his thoughtful opinion, Judge Mukasey initially contemplated importing case law under the Labor Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. §§ 411-12, which applies to "mixed" unions of private and public employers and features definitions of "employer," "employee," and "labor organization" that parallel those of the LMRA and NLRA, 29 U.S.C. § 402 (e), (f), (i). Specifically, he reasoned
It could be argued that [the local union] is a "labor organization" within the meaning of the LMRA, because it deals with private employers in addition to New York City. Similarly, the [international] Constitution deals with private employers. Thus, it could be argued, the [international] Constitution is a contract within the meaning of Section 301(a), and any union member, public or private, can bring a claim alleging a violation of the Constitution.Cunningham, 234 F. Supp. 2d at 395. Yet after surveying the body of LMRA opinions involving public employees, Judge Mukasey concluded that "[t]hese rulings that public employees may not sue under NLRA and LMRA supports the view that these laws do not cover public employee claims in the present situation — even though Local 30 represents both public and private employees."Id. at 396.
The instant action differs from Cunningham in several ways. Most significantly, not all of plaintiffs in this action are employed by or on leave from jobs with the City of New York. Rather, both Schirmer and Markey are employed by non-profit cultural institutions that, despite receiving government funds, do not constitute political subdivisions as that term is commonly understood by the NLRB and federal courts. Defendants have presented no evidence to suggest that the New York Public Library or the Metropolitan Museum of Art are entities either created by the state so as to constitute arms of the government or administered by those who are responsible to public officials or to the general public. Nor have defendants argued that either of these institutions are "so substantially controlled" by the City of New York as to not fit within the definition of "employer" as outlined in the NLRA, and thus, the LMRA. See Museum Assoc. v. NLRB, 688 F.2d 1278, 1280 (9th Cir. 1982) (noting in NLRA case that "courts have declined to extend jurisdiction in situations where a government funded or regulated employer lacks sufficient autonomy over working conditions"). Therefore, Schirmer and Markey qualify as employees within the meaning of the LMRA.
Furthermore, it is true that a majority of the local unions comprising DC 37 exclusively represent public employees and therefore cannot qualify as "labor organization[s] representing employees" as the terms "labor organization" and "employee" are defined under the LMRA. A few of the local unions, however, solely represent those who work in non-profit institutions. As the Second Circuit observed in Shea v. McCarthy, 953 F.2d 29, "a single contract may be a complex transaction involving multiple promisors and multiple promisees." Id. at 31. Thus, even if notall of the local unions who are parties to the DC 37 Constitution constitute "labor organization[s] representing employees" within the meaning of the LMRA, the DC 37 Constitution remains a contract between at least two local unions that satisfy this standard. Consequently, subject matter jurisdiction over the instant action brought to redress alleged violations of the union's constitution is appropriate under Section 301(a) of the LMRA.
Conclusion
For the foregoing reasons, this Court has subject matter jurisdiction over the plaintiffs' complaint. The preliminary injunction granted through the Court's August 20 Order remains in effect.SO ORDERED.