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Cassidy v. Horan

decided: December 30, 1968.

FRED CASSIDY, PLAINTIFF-APPELLANT,
v.
RICHARD HORAN ET AL., DEFENDANTS-APPELLEES



Appeal from a judgment of the United States District Court for the Western District of New York, Harold P. Burke, Chief Judge, dismissing an action under 29 U.S.C. § 501 for damages against union officers for alleged breach of duty to the union.

Lumbard, Chief Judge, and Smith and Anderson, Circuit Judges. Lumbard, Ch. J. (concurring and dissenting).

Author: Smith

SMITH, C. J.:

Plaintiff, a member and officer of Rochester Independent Workers Union Local No. 1, sued defendants, who in 1964 were officers, committee chairmen or committee members of Local No. 1, for breach of fiduciary duty to the union, purportedly under Section 501 of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 501. After trial by the Court, Chief Judge Harold P. Burke presiding, the action was dismissed and plaintiff appeals. We find no error and affirm the judgment dismissing the action.

Plaintiff made demand by letter on the defendants for return to the union of sums of money which he alleged had been received from the union and had been spent against the interests of the union. No demand was ever made that the officers institute suit for these sums on behalf of the union. They included sums allegedly spent for publication of a union publication, a pamphlet, meetings, officers' salaries and expenses, during a period when defendants were advocating affiliation of RIW Local 1 with International Union of Electrical, Radio and Machine Workers AFL-CIO, known as IUE, and during an NLRB representation election in the two plants in which Local 1 had members, in which Local 1 lost to IUE in one production, maintenance and factory clerical unit while winning in one production, maintenance and factory clerical unit and both office clerical and technical units.

The court held that plaintiff could not maintain the action because he had not complied with the procedural requirements of § 501(b), and that there could be no recovery for breach of fiduciary responsibility, since the challenged expenditures were for proper union purposes.

We agree that the procedural requirements of § 501(b) have not been met and therefore find it unnecessary to reach the other questions raised by appellant.*fn1 Section 501(b), so far as pertinent here, provides:

When any officer, agent . . . of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent . . . in any district court of the United States . . . for the benefit of the labor organization.

Plaintiff claims that a demand for a sum of money is sufficient and that, in any event, a request that defendants sue themselves would be futile. With regard to the latter claim, this court has stated:

We hold that this provision of the statute is mandatory and that its requirements cannot be met by anything short of an actual request. An allegation of the futility of such a request will not suffice.

Coleman v. Brotherhood of Ry. & Steamship Clerks, etc., 340 F.2d 206, 208 (2d Cir. 1965); see Horner v. Ferron, 362 F.2d 224, 231 (9th Cir.), cert. denied 385 U.S. 958, 87 S. Ct. 397, 17 L. Ed. 2d 305 (1966).

A demand for a sum of money is not sufficient. The statutory language requiring a request that the labor organization "sue or recover" has been construed to mean "sue to recover"; Penuelas v. Moreno, 198 F. Supp. 441 (S. D. Calif. 1961); Persico v. Daley, 239 F. Supp. 629, 630 (S.D.N.Y. 1965), pointing out that both House and Senate reports referred to § 501(b) as being worded " to recover."

This construction, to which we adhere, is fatal to plaintiff's claim.

Defendants seek counsel fees, by analogy to cases involving corporate officers and directors acquitted of wrongdoing. This claim, however, would seem to be one to be made, if at all, to the local union, through its governing board and members; see Highway Truck Drivers, etc. v. Cohen, 284 F.2d 162, 164 (3d Cir. 1960); Holdeman v. Sheldon, 311 F.2d 2, ...


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