Chicago District Director, Office of
Labor-Management Standards, Employment Standards Admin. v. Nat'l Council of Field
Labor Locals, Council 73, AFGE, 1998-SOC-1 (ALJ May 12, 1999)
U.S. Department of Labor Office of Administrative Law Judges
800 K Street, NW
Washington, DC 20001-8002
DATE: May 12, 1999
CASE NO: 98-SOC-1
In the Matter of:
CHICAGO DISTRICT DIRECTOR,
OFFICE OF LABOR-MANAGEMENT STANDARDS
EMPLOYMENT STANDARDS ADMINISTRATION Complainant
NATIONAL COUNCIL OF FIELD LABOR
LOCALS, COUNCIL 73, AMERICAN
FEDERATION OF GOVERNMENT EMPLOYEES, Respondent
Appearances:
Rory K. McGinty
Attorney for Respondent
Donald D. Carter, Jr.
Office of the Solicitor
Attorney of Complainant
Before: JOHN M. VITTONE
Chief Administrative Law Judge
RECOMMENDED DECISION AND ORDER ON
MOTIONS FOR SUMMARY DECISION
This case arises under Title VII of the Civil Service Reform Act of 1978
(hereinafter "CSRA") [Act of October 18, 1978, 92 Stat. 1192, et seq., 5 U.S.C.
§ 7101 et seq.], and the reporting requirements for labor organizations as set forth in
Section 201 of the Labor Management Reporting and Disclosure Act of 1959 (hereinafter
"LMRDA"), as amended [29 U.S.C. § 401, et seq.]. The federal
regulations pertinent to this case are provided at 29 C.F.R. Parts 402, 403, 408 and 458.
[Page 2]
The CSRA requires public sector labor organizations that represent civilian
employees of the United States Government to comply with certain standards of conduct in order
to assure that said organizations are free from "corrupt influences and influences opposed to
basic democratic principles." 5 U.S.C. § 7120(a). In carrying out this purpose,
Congress granted authority to the Assistant Secretary of Labor to adopt "such regulations as
are necessary to carry out the purpose of this section." 5 U.S.C. § 7120(d). In order to
guide the Assistant Secretary in his or her duties, Congress required that any such regulations
"conform generally to the principles applied to labor organizations in the private sector."
5 U.S.C. § 7120(d).
The Assistant Secretary, in complying with the mandate of Congress, adopted
regulations under the CSRA which closely resemble the minimum standards of conduct contained
in the Labor Management Reporting and Disclosure Act (the "LMRDA"), 29 U.S.C.
§ 401 et seq., which is applicable to private sector labor organizations. One set of
provisions contained in the LMRDA, which were adopted by the Assistant Secretary in promulgating
the regulations under the CSRA, are what are commonly referred to as the "Bill of Rights of
Members of Labor Organizations." 29 C.F.R. § 458.2; see also 29 U.S.C.
§ 411 et seq.
In the case at bar, the Chicago District Director, Office of Labor-Management
Standards, Employment Standards Administration, United States Department of Labor (hereinafter
"District Director"), filed the complaint involved in this case on December 16, 1997.
The District Director alleges in his complaint that an investigation was conducted pursuant to 29
C.F.R. § 458.50 which led to the conclusion that there was probable cause to believe that the
National Council of Field Labor Locals, Council 73, American Federation of Government
Employees (hereinafter "Council") violated the CSRA and 29 C.F.R. § 403.8 by
its refusal to permit William Wheatley, a member of an American Federation of Government
Employees Local (hereinafter "AFGE") affiliated with the council, to examine all books,
records, and accounts of the Council necessary to verify the Labor Organization Annual Reports
(Reports) filed by the Council with the United States Department of Labor for fiscal years 1991-
1996.
Specifically, the District Director contends that there is just cause for such
examination, including but not limited to substantial reductions in cash on hand in fiscal year 1991,
expenditures in excess of income in fiscal year 1992, substantial increases in "other
disbursements" in fiscal years 1993 and 1994, absence of reported investment income in fiscal
years 1991-1996, expenditures for legal fees in connection with Mr. Wheatley's request to review
Respondent's records, and possible multiple reimbursements for travel expense in fiscal year 1996.
The District Director further contends that the Council's parent body, the AFGE, has expressly
acknowledged that just cause has been established with respect to at least some of the requested
records, and that the Council itself has expressly agreed to allow examination of at least some of the
requested records.
[Page 3]
Accordingly, the District Director seeks an order directing Respondent to
allow Mr. Wheatley and/or his auditors or attorneys to examine the books, records, and accounts of
the Council necessary to verify its Reports for fiscal years 1991 through and including 1996; for the
costs of this action; and for such other relief as may be appropriate.
On March 26, 1998 and March 30, 1998, the District Director and Respondent,
respectively, filed motions for summary decision. On April 6, 1998, the District Director filed an
answer in opposition to Respondent's summary decision motion. Respondent filed a reply to the
District Director's motion on April 8, 1998.
Hearings in these cases are governed by the regulations promulgated at 29
C.F.R. § 458.69, et seq., and, as those regulations are silent on the filing/granting of
motions for summary decision, this Court must utilize our Rules of Practice and the standard for
granting summary decision is set forth at 29 C.F.R. § 18.40(d). This section, which is derived
from Federal Rule of Civil Procedure 56, permits an Administrative Law Judge to recommend
summary decision for either party where "there is no genuine issue as to any material
fact." 29 C.F.R. § 18.40(d). The non-moving party must present affirmative evidence
in order to defeat a properly supported motion for summary judgment. Gillian v. Tennessee
Valley Authority, 91-ERA-31 (Sec'y Aug. 28, 1995) (citing Anderson v. Liberty Lobby,
Inc., 477 U.S. 242,247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)).
The determination of whether a genuine issue of material fact exists must be made viewing all the
evidence and factual inferences in the light most favorable to the non-movant. Id.
(citingOFFCS v. CSX Transp., Inc., 88-OFC-24 (Asst. Sec'y Oct. 13, 1994).
This Administrative Law Judge, having reviewed the pleadings filed in support
of their respective motions, finds and concludes that there are no genuine issues of material fact at
issue, that a formal hearing is not necessary, that summary judgment is appropriate and I shall now
proceed to weigh and evaluate all of the evidence and to draw the appropriate factual inferences
based upon applicable statutory precedents.
On the basis of the totality of this closed record I make the following:
Findings of Fact
1. Respondent is, and at all times relevant to this matter has been, an
unincorporated association with a street address of 230 S. Dearborn Street, Room 468, Chicago,
Illinois 60690, and a mailing address of P.O. Box 2317, Chicago, Illinois 60690, affiliated with and
subordinate to the American Federation of Government Employees.
2. The Council is, and at all times relevant to this matter has been, a labor
organization within the meaning of section 701 of the CSRA (5 U.S.C. §§ 7103(a)(4),
7120(c))
3. Pursuant to 29 C.F.R. Part 403, Respondent filed Labor Organization
Annual Reports (Reports) for fiscal years 1991 through 1996.
[Page 4]
4. William Wheatley is a member in good standing of Local Union 648 of the
American Federation of Government Employees, which is a local affiliated with Respondent.1
17. In the letter referenced in item 5 above, Wheatley asked to be allowed to
see all minutes, financial records, budgets, audits, books and accounts necessary to verify the
information contained in the LM Reports for fiscal years 1991-1994.
18. William Wheatley, by memorandum dated September 11, 1995, to the
Council's Executive Committee, advised the Council that he was concerned about the possible use
of Council funds to handle potential litigation regarding his request to review Council records.
19. William Wheatley, by letter dated October 20, 1995 to John N. Sturdivant,
President, AFGE, advised the AFGE of his request to review the Council's records, and his concern
regarding the possible use of Council funds to handle potential litigation regarding his request to
review Council records.
20. Mark D. Roth, General Counsel, AFGE, by letter dated December 11,
1995 to Jesse M. Rios, advised the Council that while it was not clear whether Wheatley was entitled
to review all of the Council's records, "he has raised with sufficient specificity questions
concerning expenditures on legal fees in 1994/1995. Thus, just cause would be established for Mr.
Wheatley to review all records pertinent to the Council's budgets, fees expended, and
authorizations."7[Page 6]
1The District Director does not allege that
Mr. Wheatley is a member of the Respondent labor organization, but rather a member of a labor
organization affiliated with the Respondent.
2Further, Respondent, in his
Reply to the District Director's Motion for Summary Decision, contends that it has sought to
negotiate an amicable resolution of the issues in dispute with Mr. Wheatley and the District Director.
Respondent further contends that it has reserved and not waived the issues of membership and just
cause presented in its Motion for Summary Decision.
3In Respondent's Reply to the
District Director's Motion for Summary Decision, Respondent contends that records for fiscal
years 1993, 1994, and 1995 (not merely records for fiscal year 1994) were in the possession of the
AFGE until mid-February 1998.
4According to the affidavit of Jesse
Rios, Respondent had no income-producing investments during fiscal years 1991-1996. Respondent
had two certificates of deposits (CDs) during this period, but such CDs were not cashed out during
this period.
5According to the affidavit of Jesse
Rios,Respondent was engaged in contract negotiations during fiscal years 1991 and 1992.
The contract had not been re-written for 10 years preceding such negotiations. Negotiators for
Respondent made trips around the country to discuss contract proposal with field employees in each
region of the country in aid of negotiations. At one point, negotiations continued for 30 days
straight.
7Respondent contends that Mr. Roth's
December 11, 1995 letter refers only to books, records and accounts of legal expenses for fiscal year
1995. However, upon review of the letter, it is clear that such refers to both fiscal year 1994 and
fiscal year 1995. While Mr. Roth concludes that "Mr. Wheatley clearly has at the very least
the right to review a significant number of the Council's 1995 financial records," this
conclusion is inconsistent with his earlier assertion in the same letter which states Mr. Wheatley is
entitled to review all records pertaining to 1994/1995 assuming just cause is established. See
Complainant's Exhibit K, page 2.
8Respondent makes an erroneous
assertion in his Reply to the District Director's Summary Decision Motion. Specifically,
he asserts that Robert C. Nelson's letter of February 20, 1996 refers solely to books, records, and
accounts of legal expenses for fiscal year 1995. However, upon review of the document it is clear
that such refers to both fiscal year 1994 and fiscal year 1995. See Complainant's Exhibit L,
page 1.
Every labor organization required to submit a report under section 201(b) of
the Act and under this part shall make available to all its members the
information required to be contained in such reports, and every such labor
organization and its officers shall be under a duty to permit such member for
just cause to examine any books, records, and accounts necessary to verify
such report.
11An LM-2 Report is a financial
report that a union is required to submit under Section 201(b) of the LMRDA.
12Respondent, in its Memorandum
in support of its Summary Decision Motion, contends that the scope of examination sought by Mr.
Wheatley is overbroad, and in the event that just cause is established, such examination should be
limited to (a) cash on hand records for fiscal year 1991; (b) accounts for fiscal years 1991 and 1992;
(c) accounts showing "other expenditures" for fiscal year 1994; (d) records of
investments during fiscal years 1991-1996; (e) records of legal fees incurred in connection with Mr.
Wheatley's requests for fiscal years 1991-1996; and (f) travel expense reimbursements in connection
with the conference at Torrey Pines in 1996. However, Respondent appears to misinterpret the
purpose and the reach of the statute. Such examination shall not be limited to specific records, but
to all books, records and accounts necessary to verify the alleged discrepancies.
13Line 22(A) of the Council's FY
1991 LM Report shows cash on hand at the beginning of fiscal year 1991 as $53,454, and line 22(b)
of the same report shows cash on hand at the end of the fiscal year to be $22,990.
Complainant's Exhibit A.
14Line 37 of the Council's fiscal
year 1991 LM Report shows total receipts of $67,671 and line 45 of the same report shows total
expenditures of $98,135, reflecting expenditures of $30,464 in excess of income. Complainant's
Exhibit B. Line 37 of the Council's fiscal year 1992 LM Report shows total receipts of $72,524
and line 45 of the same report shows total expenditures of $78,150, reflecting expenditures of $5,626
in excess of income. Complainant's Exhibit B.
15Respondent contends that it was
engaged in contract negotiations during fiscal years 1991 and 1992. The Complainant does not
contest such a statement. See District Director's Answer In Opposition To Respondent's Motion
For Summary Decision, footnote 2. In the memorandum in support of its summary decision
motion and in the supporting affidavit of Jesse Rios, Respondent attempts to explain some of its
financial changes for fiscal years 1991-1996. However, such an attempt does not defeat Wheatley's
showing of just cause. No explanation of the items asserted as just cause is found on the fact of the
Council's LM Reports. The purpose of Section 201(c) would be frustrated if a labor organization,
faced with a showing of just cause, could defeat it by tendering an explanation. See Cook v.
Teamsters Local 705, 1997 WL 433659 (N.D. Ill. July 28, 1997) ("[P]laintiffs need not
accept the Local's explanation, but rather may independently verify . . ."); Campbell v.
Local 234 Transportation Workers Union of America, 151 L.R.R.M. (BNA) 2837 (E.D. Pa.
1996) ("The fact that defendants provided plaintiff with plausible explanations for all of the
questioned items in the LM-2 reports and for all of the discrepancies between the LM-2 reports and
the financial statements provided to TWU members does not defeat the claim by plaintiff as plaintiff
has a right, having demonstrated just cause, to reject the reasons proffered by defendants and instead
to verify the areas of concern by his own examination of the relevant financial records.");
Spinowitz v. Herrity, 672 F. Supp. 670, 672 (E.D. N.Y. 1987) (affidavits offering
explanations of all challenged items do not defeat a member's right to examine records to verify
expenses).
16Line 44 of the Council's LM
Report for fiscal year 1993 shows "other disbursement" in the amount of $52,013.
Complainant's Exhibit C. Line 44 of the Council's LM Report for fiscal year 1994 shows
"other disbursement" in the amount of $74,218, and increase of about 43% over fiscal
year 1993. Complainant's Exhibit D.
17The total assets reported by the
Council at the beginning of each fiscal year were as follows: $53,454 (FY 1991, Line 28 (A));
$22,990 (FY 1992, Line 28(A)); $19,518 (FY 1993, Line 28(A)); $24,704 (FY 1994, Line 28(A));
$46,366 (FY 1995, Line 31(A)); $48,346 (FY 1996, Line 31(A)). Complainant's Exhibit A-
F.
18According the affidavit of Jesse
Rios, Respondent had no income-producing investments during fiscal years 1991-1996.
19In 1996, Paul Tracy, James
Weyrauch and Jesse Rios received reimbursements from the U.S. Department of Labor for travel
expenses in connection with the conference at Torrey Pines, California. Complainant's Exhibit
CC. An attachment to the Council's LM Report for fiscal year 1996 (Line 24) shows expense
reimbursements in the amount of $2,147 to Tracy; ,014 to Weyrauch; and $4,521 to Rios.
Complainant's Exhibit F.
The court in such action may, in its discretion, in addition to any judgment awarded
to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the
defendant, and costs of the action.