Appeal from dismissal of complaint in the United States District Court for the Southern District of New York, Henry F. Werker, J., for lack of jurisdiction because of inadequacy of demand to union to sue and failure to show good cause required by 29 U.S.C. § 501 (b) of the Labor-Management Reporting and Disclosure Act of 1959.
Anderson, Feinberg and Mulligan, Circuit Judges.
Andy Dinko, a member of the National Maritime Union of America, appeals from a judgment of the United States District Court for the Southern District of New York, Henry F. Werker, J., dismissing plaintiff's action, brought individually and on behalf of members of the Union, against various past and present officers of the Union and Trustees of a current union pension plan and its predecessor. The complaint alleged that defendants had committed various breaches of fiduciary obligations imposed by the Labor-Management Reporting and Disclosure Act of 1959 (the Act), 29 U.S.C. § 501 (a).*fn1 The district court held that plaintiff had not complied with the requirements of that Act, 29 U.S.C. § 501 (b), that he first request the Union to sue on its own behalf and that he show good cause for the legal action. We reverse the first ruling and remand for further findings on the second.
The relevant facts may be stated briefly. On December 17, 1974, plaintiff wrote two of the defendants, demanding that a vote on a recent proposed revision of a union pension plan be declared void. Plaintiff set forth the basis for his demand and claimed that the vote was illegal under both federal law and the union constitution. Plaintiff also demanded an accounting of union expenditures and benefits under the plan, an independent audit, and other measures to protect union members against alleged "continuous misappropriation" of union funds. Plaintiff's letter is reproduced in the margin.*fn2
In January 1975, in accordance with the unusual provisions of section 501 (b) of the Act,*fn3 plaintiff sought the district court's permission to sue defendants on behalf of the Union. The application was ex parte as permitted by section 501 (b). Judge Marvin E. Frankel, by order dated January 27, 1975, granted leave to proceed. After defendants served their answers, they took plaintiff's deposition and served written interrogatories. In May, plaintiff moved to disqualify the Union's counsel as attorney for these defendants and to enjoin the expenditure of union funds for their defense. See Tucker v. Shaw, 378 F.2d 304 (2d Cir. 1967). Relying on portions of plaintiff's deposition and other documents, defendants cross-moved to dismiss the complaint. By this time, the case had been assigned to Judge Werker. In August 1975, the judge granted defendants' motion in an unpublished memorandum opinion. The basis of the district court's decision was that plaintiff had not met two requirements of section 501 (b): Plaintiff had failed to request that the Union "take court action" before bringing his suit, and he had not made "an adequate showing of 'good cause'." On appeal, plaintiff claims that the district court erred in both respects.
Section 501 (b), see note 3 supra, authorizes any union member to bring suit in a federal district court or state court against union officials for alleged violations of section 501 (a) only if
the labor organization or its governing board or officers refuse or fail to sue or*fn4 recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so . . .
by the union member. Plaintiff argues that his letter of December 17, 1974, and the Union's inaction thereafter, met this requirement. Judge Werker held that the letter was an insufficient request because:
Nowhere in the letter of December 17 does the plaintiff request that the officers of the NMU initiate court action to achieve the demands made by him [plaintiff].
The question of what constitutes a sufficient request under section 501 (b) has not been litigated frequently in this circuit. In Coleman v. Brotherhood of Railway, etc., 340 F.2d 206 (1965), we affirmed the dismissal of a claim against union officials under the Act because plaintiff there had made no demand to the union at all. The case is therefore not on point except for the emphasis in the opinion that:
This [request] provision of the statute is mandatory and . . . its requirements cannot be met by anything short of an actual request. An allegation of the futility of such a request will not suffice. Together with the further requirement of a showing of good cause and of securing court permission to proceed, the provision requiring a request is clearly designed to protect union officials from ...