Unpublished Disposition, 902 F.2d 42 (9th Cir. 1988)

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US Court of Appeals for the Ninth Circuit - 902 F.2d 42 (9th Cir. 1988)

Victor Z. WORDEN, Plaintiff-Appellant,v.Edward E. GAY, et al., Defendant,andPeter Maturino; Anna Fernandez; Froilan Medina,Defendants-Appellees.

No. 88-15684.

United States Court of Appeals, Ninth Circuit.

Argued March 12, 1990.Submitted March 28, 1990.Decided April 30, 1990.As Amended July 5, 1990.

Before BOOCHEVER, WIGGINS and NOONAN, Circuit Judges.


Plaintiff-appellant Victor Z. Worden ("appellant") appeals from the district court's grant of summary judgment dismissing the defendants-appellees Peter Maturino, Anna Fernandez, and Froilan Medina (collectively, "appellees") from his civil action brought under the Labor Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. §§ 401-531. We affirm.


The eighteen named defendants in the underlying district court action, including the three appellees, are former business agents of General Teamsters, Warehousemen and Helpers Union, Local 890 ("Local 890" or "the Local"), employed during the period September 16, 1979 through September 13, 1985. During this period, defendant Edward E. Gay ("Gay") was the Local's principal officer/business agent, having been elected to successive three-year terms of office. The appellees were business agents for the Local, hired by Gay during his six-year term in office. In September 1985, Gay was defeated in his bid for re-election and a new administration assumed control of the Local; most of the remaining defendants, including the appellees, either resigned or were terminated from employment with the Local within the ensuing year.

Each of the eighteen defendants subsequently claimed entitlement to back wages under the terms of alleged "deferred compensation" agreements. The wage claims were brought before the California State Department of Industrial Relations, and the defendants (then claimants) received an award in their favor. The Local appealed, and a trial de novo was held in California Superior Court before Judge John M. Phillips, with the result that Judge Phillips awarded back wages to each of the claimants.1 

The present action was initiated on November 18, 1987 by appellant, a long-time member of Local 890, pursuant to section 501 of the LMRDA. The complaint alleges that the defendants breached their fiduciary duties to the Local and its members by failing to hold the money and property of the Local solely for the benefit of the Local; by failing to disclose the existence of deferred payment agreements; by charging personal expenses to Local 890 accounts; and by mismanagement of the Local's funds.

On August 5, 1988, the district court granted summary judgment in favor of all the defendants as to the claim that the wage deferral agreements constituted a breach of the defendants' fiduciary duties. In addition, the district court found that appellant had conceded by stipulation that no evidence exists as to wrongdoings committed by the appellees with respect to charging personal expenses as business expenses and mismanagement of union funds, and therefore granted summary judgment in favor of the appellees and ordered that they be dismissed from the action.

The district court denied appellant's motion for reconsideration. By separate order on November 7, 1988, the district court entered final judgment for the appellees herein. The appellant filed a timely notice of appeal. We have jurisdiction over this appeal of a final judgment of the district court. 28 U.S.C. § 1291. We emphasize at the outset that the only question before us is whether summary judgment (and dismissal) is appropriate with respect to the three appellees. With this in mind, we turn to the merits of appellant's contentions.


We review an order granting summary judgment de novo. Kruso v. International Telephone & Telegraph Corp., 872 F.2d 1416, 1421 (9th Cir. 1989). We apply the same standard as that applied by the district court and will affirm a grant of summary judgment "only if it appears from the record, after viewing all evidence and factual inferences in the light most favorable to the appellant, that there are no genuine issues of material fact and that the appellee is entitled to prevail as a matter of law." Heiniger v. City of Phoenix, 625 F.2d 842, 843 (9th Cir. 1980); Fed. R. Civ. P. 56(c). Once the party moving for summary judgment meets the initial burden of showing the absence of such a genuine issue, the opposing party may avoid summary judgment by making "a showing sufficient to establish the existence of an element essential to the party's case." Celotex v. Catrett, 477 U.S. 317 (1986); see also Lake Nacimiento Ranch Co. v. San Luis Obispo Cty, 841 F.2d 872, 876 (9th Cir. 1987), cert. denied, --- U.S. ----, 109 S. Ct. 79 (1988).


The district court granted full summary judgment in favor of the appellees, and dismissed them from the action, on the grounds that there existed, at the time the motion was heard, no genuine issue of material fact as to appellant's claims regarding (1) the wage deferral agreements, and (2) the misuse of expense accounts and mismanagement of union funds.2 

The district court granted summary judgment in favor of all defendants on appellant's first claim on the grounds that the wage deferral agreements had been duly authorized. However, in the course of denying the appellant's motion for reconsideration, the district court revised its grounds, finding that the appellant had sued the defendants for failing to disclose, but not for having entered into, the wage agreements; the court then ruled that as a matter of law the defendants had no duty to disclose the agreements. The district court granted summary judgment in favor of the appellees on appellant's second claim on the ground that appellant had conceded by stipulation that there was no evidence of wrongdoing by the appellees. Appellant challenges each of these findings.

As a threshold matter, the appellant contends that the district court erred in finding that the complaint fails to state a claim based on the defendants' entering into the wage agreements. We will assume, for purposes of this appeal, that the appellant's complaint is sufficient to state a claim both on nondisclosure of the agreements and on the agreements themselves.

The appellant concedes on appeal that the wage deferral agreements had been entered into, and that the Local's Executive Board had the power to authorize the agreements without membership ratification. He contends, however, that such authorization is not a complete defense to the appellees' entering into the agreements. He also contends that the appellees had a separate duty to disclose the agreements to the general membership.

Section 501(a) of the LMRDA sets out the fiduciary duties of labor organization "officers, agents, shop stewards, and other representatives." Business agents are fiduciaries within the meaning of section 501(a). See 29 U.S.C. § 402(q). Section 501(b) gives individual members of a labor organization the right to sue any official who violates these fiduciary duties. It has been long recognized that the precise scope and nature of the duty imposed on union officials by section 501(a) is not obvious on the face of the statute. See Trustee of Op. Plasters v. Journeymen Plasters, 794 F.2d 1217, 1219-20 (7th Cir. 1986); Ray v. Young, 753 F.2d 386, 389 (5th Cir. 1985). Hence, it has been left to the federal courts to delineate the contours of section 501. Brink v. DaLesio, 667 F.2d 420, 425 (4th Cir. 1981).

The appellant's contention that authorization is not a complete defense under section 501(a) is, as a general proposition, supported by the case law. As the court in what has become one of the leading cases under section 501(a) has put it:

We thus adopt the view, consistent with the thrust of Sec. 501, that where a union officer personally benefits from union funds, a court in a Sec. 501(b) suit may determine whether the payment, notwithstanding its authorization, is so manifestly unreasonable as to evidence a breach of the fiduciary obligation imposed by Sec. 501(a).

Morrissey v. Curran, 650 F.2d 1267, 1274 (2d Cir. 1981); see also Ray, 753 F.2d at 389; Council 49 AFSCME, By Adkins v. Reach, 843 F.2d 1343, 1347 (11th Cir. 1988). The Ninth Circuit adopted this view in Cowger v. Rohrbach, 868 F.2d 1064, 1068 (9th Cir. 1989). The rule established in Morrissey is that " [t]he fiduciary standards for union officers impose liability upon them when they approve their receipt of excessive benefits, significantly above a fair range of reasonableness." 650 F.2d at 1275.

The Morrissey rule, however, imposes no liability here for the simple reason that the appellees were neither business agents nor fiduciaries for the Local at the time they negotiated and entered into their respective wage agreements. In other words, the appellees cannot be accused of self-dealing: they represented only themselves in their wage negotiations. Moreover, appellant has not cited, nor have we found, a single case which even suggests that a business agent would be liable where he has no part in, or influence over, the authorization for his compensation. Cf. Morrissey, 650 F.2d at 1274 (" [T]he individuals receiving the payments are the same persons who established the compensation schedule.") Here, the appellees have presented uncontroverted evidence that the wage agreements were approved by the Local's Executive Board and that they were not members of the Board. The appellant has not made even a slight showing that the appellees were in a position to influence the Board's decision. Under these circumstances, the appellees cannot be held liable for the compensation they received.

The appellant's contention that the appellees had a duty to disclose the wage agreements to the Local's general membership fails on similar reasoning. In the case relied upon by appellant to establish a duty to disclose, Brink v. DaLesio, 498 F. Supp. 1350 (D. Md. 1980), modified, Brink v. DaLesio, 667 F.2d 420 (4th Cir. 1981), the court held that the defendant union officer had breached his fiduciary duties by securing approval for his severance benefits without making adequate disclosures to the union's Executive Board. See Brink, 667 F.2d at 424-25. Here, by contrast, the undisputed evidence shows that the appellees had no part in the approval of their wage agreements and the Local's Executive Board was fully aware of the agreements. The appellees, who were not members of the Executive Board, had no duty to disclose the existence of the wage agreements to the general membership.

The appellant concedes that the parties' stipulation states that he had no evidence other than the specified letter and LM2 reports of specific wrongdoing by the appellees regarding his claims of expense account abuse and mismanagement of union funds. He contends, however, that the district court's grant of summary judgment on these claims is nevertheless inappropriate for two reasons: (1) the district court should have allowed further discovery; and (2) in any event, he made a sufficient showing that the appellees had engaged in such wrongdoing.

Rule 56(f) of the Federal Rules of Civil Procedure provides:

Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

The opposing party has the burden under Rule 56(f) to show what facts the party hopes to discover to raise an issue of material fact. Hancock v. Montgomery Ward Long Term Disability, 787 F.2d 1302, 1306 n. 1 (9th Cir. 1986) (citing Taylor v. Sentry Life Ins. Co., 729 F.2d 652, 656 (9th Cir. 1984)). "An affidavit by counsel which does not do so fails to meet the requirements of Rule 56(f)." Id. However, an opposing party need not specifically request a continuance. Id.; Program Engineering v. Triangle Publications, 634 F.2d 1188, 1193 (9th Cir. 1980). We review the district court's refusal to allow further discovery for an abuse of discretion. Id. at 1306.

The appellant argues that he met his burden under Rule 56(f) with the Supplemental Declaration of Edith J. Benay. That declaration states that the Local's financial records, including credit card statements and charge account bills, were subpoenaed on July 8, 1988, and had not been subpoenaed earlier because they were being used in another action. However, the declaration in no way states that these subpoenaed items are needed to oppose the motion for summary judgment, nor does the declaration indicate what facts the appellant hopes to discover to raise an issue of material fact. Hence, the district court was justified in granting summary judgment without further discovery. Taylor, 729 F.2d at 656.

The appellant's second argument is that notwithstanding the stipulation, there was sufficient evidence presented in opposition to raise an issue of fact regarding misuse of expense accounts by the appellees. He points to his own declaration which states that he reviewed certain check vouchers for credit card bills and that there was no record of any verification of the business nature of those charges. He also points to the Supplemental Declaration of Edith Benay which states that at least two bar bills in appellant's possession indicate participation by "Roy" at "Staff Meetings" consisting of bar service billed to the Local.

This evidence wholly fails to link any of the appellees to the alleged wrongdoing. Hence, given the stipulation entered into by the appellant, summary judgment was appropriate.


The grant of summary judgment and dismissal from the action in favor of the appellees was appropriate. The district court's final judgment entered on November 7, 1988 is AFFIRMED.


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Cir.R. 36-3


Judge Phillips reduced the total award by approximately $40,000 to offset the unauthorized distribution by Gay, following his electoral defeat, of severance pay to several of the claimants. He also denied the claimants request for pre-judgment interest and attorney fees. The Local appealed Judge Phillips' award of back wages, and the claimants cross-appealed. The California Court of Appeals, in an unpublished decision, affirmed in both appeals. Raymond Kuss v. General Teamsters, Warehousemen and Helpers Union, Local 890, No. H004189 (Cal.App. November 27, 1989)


In denying the appellant's motion for reconsideration, the district court further found that there was no claim regarding receipt of unauthorized severance pay in the appellant's complaint. In his brief on appeal, appellant challenges this finding. We need not consider appellant's challenge, however, because the California Court of Appeal affirmed the trial court's offset of severance pay against the back wage claims. Thus, the receipt of severance pay is no longer a potential item of damages