there was evidence that non-union labor was hired, and that practice was the subject of testimony by the Investigations Officer.
In sum, in the instant circumstances, where the GEB's interpretation of LIUNA's governing documents does not contradict a specific constitutional limitation and is supported by evidence, and is not "patently unreasonable," that interpretation must be upheld. See Millwright Local 1079, 878 F.2d at 962-65 (rejecting challenge to merger based on argument that merger infringed on members' voting rights guaranteed by other constitutional provisions, where international union's interpretation was not unfair or unreasonable); Local 1, 143 L.R.R.M. at 2110 (rejecting challenge to consolidation of seven locals because, inter alia, union constitution did not provide locals with veto power over consolidations); Musicians' Protective Local 274, 329 F. Supp. at 1236 ("There is nothing in the Constitution or By-Laws which prohibits an order of merger.").
To the extent the public interest is relevant, it has been noted that the Government also has concluded that the Plan is reasonable and appropriate.
The Locals Have Not Established LIUNA's Bad Faith
In the absence of a showing that LIUNA's interpretation of its Constitution was patently unreasonable, the Locals must demonstrate that the Plan was undertaken in bad faith. See Local 48, 920 F.2d at 13 ("a union's action, though arguably authorized by, and not patently unreasonable under, its governing documents, may still be blocked by the courts if undertaken in bad faith"). The Local 48 standard, that "bad faith in ordering a merger can be found on evidence that union officials acted contrary to the International's best interests, out of self-interest, or in an unconscionable or outrageous way," Local 48, 920 F.2d at 1055, was adopted by the Second Circuit in Local 810. Local 810, 19 F.3d at 794. The Locals contend that the Reorganization Plan here was proposed and ratified in bad faith, because (i) the implementation of the Plan is not in the best interests of the rank-and-file and will result in reduction of job opportunities and access to elected representatives; (ii) the adoption of the Plan was procedurally deficient; and (iii) the Plan is a pretext intended to achieve the results of extending the trusteeship and disciplining Local union officers without following the relevant requirements under the IUC and the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 464.
As to the best interests of the membership, LIUNA submitted evidence that benefits would flow to the rank-and-file members as a result of the consolidation. Those benefits would principally consist of the elimination of past practices which were found by the government to increase the influence of criminal elements over the affairs of the Locals. Although the Locals have expressed their view that the Plan is not in the members' best interests, that view of the Plan's impact is contradicted by certain of the factual findings set forth above.
Moreover, even if this Court agreed with the Locals' view that the Plan was not in the best interests of the rank-and-file members, such a view would not necessarily support a finding of bad faith as defined in Local 48. The standard set forth by the First Circuit in Local 48 and adopted by the Second Circuit in Local 810 defines bad faith as actions contrary to the best interests of the international, not the rank-and-file.
Further, as set forth above, the process by which the Reorganization Proposal was adopted was appropriate. It has not been established, as the Locals allege, that the Hearings Panel and the GEB decided in advance of the Hearing to approve the Plan regardless of the harm it would cause the Locals and their members. The Locals' contentions regarding the lack of due process do not, in and of themselves, demonstrate that LIUNA acted "contrary to [its] best interests, out of self-interest, or in an unconscionable or outrageous way," as required to demonstrate bad faith. See Local 810, 19 F.3d at 794 (quoting Local 48, 920 F.2d at 1055).
The Locals' central substantive allegation of bad faith is that the Plan was proposed and ratified to remove elected officials of the affected Locals without adhering to the requirements imposed by the LMRDA in the context of disciplinary and trusteeship proceedings. The Locals correctly point out that the Plan's implementation would very closely approximate the effect of disciplinary proceedings, or the extension of a trusteeship to the Locals.
In support of this pretext theory, the Locals point to the September 7 Memo.
With respect to the "best interests" and "unconscionable or outrageous" tests, this Court may not infer "bad faith" based upon the decision of the GEB to adopt the Reorganization Plan rather than employing other means, such as trusteeship or disciplinary proceedings, to reach the same goal. Such opinions "go to the very heart of what the internal union hearing [was] designed to accomplish, and are essentially unrelated to whether [LIUNA] acted in bad faith" when it adopted the Reorganization Plan. Local 810, 19 F.3d at 794 (international union entitled to injunction enforcing trusteeship where local union's references to bad faith focussed on whether or not trusteeship was warranted). See Local 1052 v. Los Angeles County District Council of Carpenters, 944 F.2d 610, 615 (9th Cir. 1991) (rejecting the argument that a union merger was effected in bad faith based on allegations concerning the merger's implementation, the lack of an investigation, and the lack of specific findings). Courts have consistently held that the procedural requirements of the LMRDA with respect to trusteeships are inapplicable to the situation of a charter revocation or other union restructuring. See Local 1, 143 L.R.R.M. at 2112; Local No. 267, 992 F.2d at 1425; Local 48, 920 F.2d at 1057; Millinery Workers' Union Local 55/56, 495 F. Supp. at 63; Brewery Bottlers Union Local 1345 v. International Bhd. of Teamsters, 202 F. Supp. 464, 467-68 (E.D.N.Y. 1962).
In addition, our Circuit has held that a merger or revocation decision may only constitute a trusteeship if there is continuing supervision over the subordinate body by the international union following the restructuring. San Filippo v. United Bhd. of Carpenters, 525 F.2d 508, 513 (2d Cir. 1975).
Here, the Reorganization Plan completely dissolves the Locals and there will be no ongoing supervision of the two new local unions by LIUNA, the District Council, or Hammond, other than in the normal course of affairs under the LIUNA Constitution. The members in good standing of the dissolved Locals retain all membership rights and will continue to govern themselves in the two newly constituted autonomous local unions. The officers provisionally appointed by Hammond to comprise the Executive Boards of the two new locals have been sworn in and will act with the same rights and duties under the LIUNA Constitution as the officers of any other LIUNA affiliate, including the former Locals.
Here, LIUNA, through the Trustee, has appointed provisional officers of the two new locals for terms barely more than one year, with rank-and-file elections set for May-June 1997. The LMRDA and its accompanying regulations permit these appointments. Local 1, 143 LRMM at 2111 (citing 29 C.F.R. § 452.14) (two-year appointment of provisional officers in newly-constituted locals). See also Kahn v. Hotel & Rest. Emp., 469 F. Supp. 14, 21-22 (N.D. Cal. 1977), aff'd, 597 F.2d 1317 (9th Cir. 1979). This one-year appointment is well below the term set out in the ULUC, see ULUC Art. VI, § 1(h), which provides for provisional appointments of officers for any unexpired period of the statutory three-year term of office. Id. at Art. VI, § 3(m).
Almost every union determination, particularly those involving restructuring, is likely to be opposed by some groups and officials. The Second Circuit, the First Circuit, and the Ninth Circuit have instructed that the inquiry into bad faith should be employed where there is evidence that a union official had a "sinister motive" or intent to benefit personally, such as some pecuniary gain. See, e.g., Local 810, 19 F.3d at 794; Local 48, 920 F.2d at 1054-55 (rejecting plaintiffs' claim that a defendant union official benefitted personally from an alleged "deal" between international union and merger beneficiary); Local 1, 143 L.R.R.M. at 2113 (dismissing "bad faith" challenge to merger of locals in absence of evidence that any Executive Board member personally benefitted from merger).
The Locals have not established that any GEB member acted upon a sinister motive to achieve a pecuniary gain or other type of impermissible personal benefit from the Reorganization Plan. Nor is there any evidence that, as a result of the Plan's implementation, any GEB member received or will receive the type of personal benefit required for a finding of bad faith, such as a monetary inducement or exchange. See Local 48, 920 F.2d at 1055 (personal financial gain is the type of self-interest establishing that a union official acted in "bad faith"). No authority has been adduced for the proposition that complying with the public interest and acting to eliminate the possibility of corruption constitutes bad faith.
In sum, "at the heart of this dispute lies a simple conflict between the best interests of [the] Local Union . . . and the best interests of the International. The Court cannot resolve that conflict. The Court can only decide whether or not the International acted in conformity with [its] Constitution and with federal law. The Court finds that it did." Local 1, 143 L.R.R.M. at 2113.
While both LIUNA and the Locals have made the requisite showing of irreparable injury, only LIUNA has demonstrated a probability of success on the merits. Therefore, LIUNA's application for injunctive relief will be granted, and the Locals' will be denied.
The relief granted by this opinion will be stayed for ten (10) days from the date hereof to permit an application for further proceedings before the Court of Appeals. The prior temporary restraint will be continued for that purpose.
It is so ordered.
New York, N. Y.
May 2, 1996
ROBERT W. SWEET