NOBLE v. SOMBROTTO, et al, No. 1:1994cv00302 - Document 306 (D.D.C. 2015)
Court Description: MEMORANDUM OPINION. Signed by Judge Emmet G. Sullivan on March 27, 2015. (lcegs2)
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NOBLE v. SOMBROTTO, et al Doc. 306 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ________________________________ ) DAVID W. NOBLE, JR., ) ) Plaintiff, ) ) v. ) Civil Action No. 94-302 (EGS) ) VINCENT R. SOMBROTTO, et al., ) ) Defendants. ) ________________________________) SUPPLEMENTAL FINDINGS AND CONCLUSIONS David Noble, a member of the National Association of Letter Carriers (“NALC”), brought this lawsuit in 1994 against Vincent Sombrotto, the NALC’s then-president, as well as nine other officers of the NALC, an officer of the union’s Mutual Benefit Association, and an officer of the union’s Health Benefit Plan.1 Mr. Noble accused the individual defendants of violating their fiduciary duties to the NALC under Section 501 of the LaborManagement Reporting and Disclosure Act (“LMRDA”), 29 U.S.C. § 401, et seq., by accepting: (1) an in-town allowance of $500 per month to cover costs incurred in the performance of their 1 Over the course of this litigation, five of the individual defendants—Vincent Sombrotto, Francis Conners, Walter Couillard, George Davis, and Richard O’Connell—have died. As to each individual, the defendants filed a suggestion of death pursuant to Federal Rule of Civil Procedure 25(a)(1) and no motion to substitute was filed. The Court accordingly dismissed those individuals from this case. See Order, ECF No. 173; Minute Order of August 30, 2013; Minute Order of December 2, 2013. Dockets.Justia.com duties; (2) reimbursement for the employee portion of their Federal Insurance Contributions Act taxes; and (3) per-diem payments during the union’s national conventions. Mr. Noble also alleged that the defendants violated their obligations under Section 201 of the LMRDA by refusing his requests to inspect certain documents in order to verify the contents of financial reports that the NALC filed with the Department of Labor. On April 28, 2003, this Court denied the parties’ cross motions for summary judgment. See Noble v. Sombrotto (“Noble I”), 260 F. Supp. 2d 132 (D.D.C. 2003). The Court subsequently held a trial and received proposed findings of fact and conclusions of law. On September 30, 2005, the Court adopted the defendants’ proposed findings, and dismissed Mr. Noble’s claims. See Order, ECF No. 239. The Court denied Mr. Noble’s motion to reconsider on September 20, 2006. See Noble v. Sombrotto (“Noble II”), No. 94-302, 2006 WL 2708796 (D.D.C. Sept. 20, 2006). Mr. Noble appealed to the D.C. Circuit, which affirmed in part and reversed in part. See Noble v. Sombrotto (“Noble III”), 525 F.3d 1230 (D.C. Cir. 2008). The D.C. Circuit affirmed this Court’s dismissal of Mr. Noble’s Section 501 claims with respect to the tax reimbursements and per-diem payments. Id. at 1237–39. As for the in-town allowances, the Circuit disagreed with this Court’s finding that Mr. Noble had failed to produce evidence that the allowances had been used for personal gain. See id. at 2 1236. The Circuit also vacated this Court’s conclusion that Mr. Noble’s Section 201 claim was moot. Id. at 1241–42. After the case was remanded, the Court held a status hearing, decided to proceed with the existing record, and directed the parties to submit proposed supplemental findings of fact and conclusions of law, containing citation to evidence in the record, and addressing the issues before the Court on remand. See Minute Order of January 7, 2010. The parties have now submitted proposed supplemental findings of fact and conclusions of law. See Pl.’s Suppl. Proposals (“Pl.’s Proposals”), ECF No. 270; Defs.’ Suppl. Proposals (“Defs.’ Proposals”), ECF No. 272; Individual Defs.’ Additional Suppl. Proposals (“Individual Defs.’ Proposals”), ECF No. 274; Pls.’ Objs. to Defs.’ Suppl. Proposals (“Pl.’s Objs.”), ECF No. 284. The Court subsequently “determined that the trial exhibits that were introduced during the April 2004 bench trial are not available on the docket in this case and that any hard copies were returned to the parties sometime after the trial concluded.” Minute Order of December 2, 2013. For that reason, the Court directed the parties to file copies of their trial exhibits “by no later than December 16, 2013.” Id. The defendants filed their exhibits on December 16, 2013, but Mr. Noble repeatedly requested an extension of this deadline. The defendants did not oppose his first three extension requests, 3 but noted that they might oppose future requests. See Defs.’ Response to Third Extension Mot., ECF No. 292 at 1. On January 20, 2014, Mr. Noble made a fourth request, asserting that “I located all of my trial exhibits except six by January 9, 2014.” Fourth Extension Mot., ECF No. 293 at 2. The remaining six exhibits, he said, were lost by him, and located and provided by the NALC, but without sufficient time for Mr. Noble to review them for accuracy. See id. at 2. The defendants proposed a shorter extension, Opp. to Fourth Extension Mot., ECF No. 294 at 2, but the Court granted Mr. Noble the full extension to February 3, 2014, stating that “[f]urther requests for extensions of time will be viewed with disfavor.” Minute Order of January 24, 2014. Mr. Noble nonetheless sought a fifth extension of the deadline for filing his exhibits, even though he had found “all of my trial exhibits except six by January 9, 2014” and obtained the remaining six by January 21, 2014. See Fifth Extension Mot., ECF No. 295 at 1–2. He claimed that on January 28, 2014, he discovered that one of the exhibits provided by the NALC was incomplete, and that he did not receive a complete copy of that exhibit until January 31, 2014. Id. at 2. Mr. Noble did not explain how this prevented him from filing copies of the other exhibits, which he had located by January 9, 2014. The Court granted Mr. Noble’s motion in part, directing him to file by no 4 later than February 5, 2014 copies of all of the trial exhibits except for Exhibit 1—the one he received on January 31, 2014. See Minute Order of February 4, 2014. The Court gave Mr. Noble until February 17, 2014 to file Exhibit 1. See id. On February 5, 2014, Mr. Noble filed only a small number of his trial exhibits. See Exhibits, ECF No. 296 (Plaintiff’s Exhibit Nos. 2– 8, 13–14, 31, 38, 75, 76, 79, 89, and 91). He filed Exhibit 1 on February 17, 2014. See Exhibit One, ECF No. 297. Notwithstanding Mr. Noble’s failure to comply with Courtimposed deadlines, the Court granted Mr. Noble another chance in July 2014, directing him to file a complete set of his trial exhibits by August 18, 2014. See Minute Order of July 14, 2014. Mr. Noble again failed to comply. On August 18, 2014, he filed a motion “to vacate the July 14, 2014 Minute Order,” which requested an additional one-month extension and asked that the Court stay the case pending an election for the office of NALC President. See Noble Declaration, ECF No. 298-1 at 1–2. The Court denied both requests. See Minute Order of October 9, 2014. The Court therefore relies on the existing record, including documents in the summary-judgment record that correspond to some of Mr. Noble’s trial exhibits. Upon consideration of that record, as well as the parties’ proposed supplemental findings and the applicable law, the Court finds that (1) the Mutual Benefit Association and the Health Benefit Plan are sufficiently 5 separate from the NALC that defendants Dunn and Vincenzi are outside the scope of Section 501; (2) the remaining individual defendants reasonably interpreted the NALC Constitution to permit the in-town allowances and they used the money for union business; and (3) the existing record is insufficient to resolve Mr. Noble’s Section 201 claim. Accordingly, the Court enters judgment in favor of the defendants on Mr. Noble’s Section 501 claims, and will direct the filing of additional pleadings regarding his Section 201 claim. I. Findings of Fact The NALC is governed by a Constitution, which creates two bodies for the governance of the union. See Noble III, 525 F.3d at 1233. The national convention of union members meets biennially, is empowered to amend the Constitution, and is the union’s supreme body. Id. The Executive Council, which is made up of twenty-eight officers, ten of whom are resident officers who work in Washington, D.C., is charged with running the union’s day-to-day operations. Id. A. History of the In-Town Allowances. The Constitution charges the Executive Council to “‘act between Conventions on all matters related to the welfare of the Union not specifically prohibited by the membership,’” and to “‘authorize and/or ratify the payment of salaries, wages, expenses, allowances, and other disbursements which it deems 6 necessary and appropriate to the purpose and functioning of this Union, other than provided for.’” Id. (quoting NALC Const. art. 9, § 11(e) (1992)). Pursuant to these powers, the Executive Council has, since the 1950s, authorized the payment of a $500 per month in-town allowance to its resident officers. Id. at 1234. The Executive Council reauthorized the same payments in resolutions passed in 1975, 1977, and 1980. Id. at 1235. The in-town allowances are intended “to cover the expenses NALC officers residing in Washington, D.C. incurred in the performance of their official duties.” Id. These expenses include costs for “transportation, entertainment, and other expenses for the benefit of the Association in the Washington, D.C., Metropolitan Area,” which were estimated to “approximate, on the average” $500 per month. 1980 Resolution, Defs.’ Ex. 2, ECF No. 288-3 at 5; see also Noble II, 2006 WL 2708796, at *2. The NALC President was authorized to receive an in-town allowance in excess of $500 per month for “all official expenditures made by him, both in town and out of town.” Noble III, 525 F.3d at 1235. The $500 per month limit on in-town expenditures has remained constant since the 1950s. Id. at 1234. An officer was required to request the in-town allowance each month the officer wished to receive it, and any officer seeking reimbursement for over $500 was required to provide a receipt and the express authorization of the NALC President to incur the 7 extra expense. See Noble II, 2006 WL 2708796, at *2; 1980 Resolution, Defs.’ Ex. 2, ECF No. 288-3 at 6. Officers were not required to submit receipts to receive an in-town allowance of up to $500 per month; rather, the Resolution stated, “[a]pplication for allowances pursuant to this Resolution constitute[s] a representation by the applying officer or employee that the sum requested was expended on behalf of the Association in the course of performance of official duties.” 1980 Resolution, Defs.’ Ex. 2, ECF No. 288-3 at 5; see also Noble III, 525 F.3d at 1235; Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 98:22–24 (Mr. Sombrotto: “It’s assumed that you’re using it for the Union activities. That’s what the resolution is there for.”). Officers were, however, required to “personally keep their receipts for a ‘reasonable period’ of up to five years.” Noble III, 525 F.3d at 1235 (quoting 1980 Resolution, Defs.’ Ex. 2, ECF No. 288-3 at 5). B. Evidence of How the In-Town Allowances Were Used. NALC officers testified that no officer would have incurred less than $500 per month in expenses. President Sombrotto testified that “I don’t know any officer” who claimed the $500 each month despite not having incurred at least $500 in expenses. Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 100:14-19. Indeed, testimony of NALC officials indicated that it would be difficult for an officer to spend less than $500 in 8 a given month. President Young stated: “[s]ince I’ve been here in 1990, I’m not aware of a single resident officer that doesn’t spend in excess of $500 a month for all these various things we’re talking about.” Id. at 176:24-177:12. It nonetheless appears that NALC officers understood the resolution to permit a hypothetical officer who incurred less than $500 per month in expenses to claim the full $500 allowance. For example, when asked whether “Chuck Overby [who] suffered a stroke and was in the hospital for several months” could “draw[] $500 a month in in-town expenses,” Mr. Sombrotto answered “Yeah. If he applied for it, he received it. Whether he did it or not . . . . I can’t testify to that. But if he had, he would have received it.” Id. at 103:21-104:1; see also id. at 96:14-19 (Mr. Sombrotto agreed that an officer could claim $500 without incurring as much in expenses, “[b]ut if you do and you don’t receipt it, then you have to pay taxes”); id. at 179:5-10 (when asked whether “a hypothetical officer spent $100 on intown expenses” was “entitled to $500 for the month, notwithstanding the fact that she or he spent only $100,” Mr. Young responded “you get $500”). These general assertions about the in-town allowances are supplemented by additional testimony 9 from Presidents Sombrotto and Young, as well as receipts that were submitted by NALC officials.2 President William Young submitted receipts for nearly all of the expenses he incurred between December 1990 and July 1993. Defs. Ex. 8, ECF No. 288-9 at A-12 (Mr. Young incurred $16,358 in expenses during this period, received $16,000 in in-town expense allowances, and submitted receipts for $15,798 of those expenditures); Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 177:16-17 (President Young: “My initial history in the Union from 1990 until about 1994 or 5 was to receipt everything”); Young Receipts, Pl.’s Ex. 7, ECF No. 296-6. Mr. Young stopped submitting receipts “because it wasn’t worth the aggravation.” Id. at 177:17-18. He explained: So I just decided [for] my own benefit that I wasn’t going to receipt much. And now I’m somewhere in between the two. Every now and then I’ll throw in a receipt if it’s easy, especially the ones where I use credit cards. 2 Mr. Noble objects generally to the Court’s consideration of the trial testimony of Mr. Sombrotto and Mr. Young. See Pl.’s Objs. at 2–3. According to plaintiff, “[t]o the extent that they testified about what they were told by INDs other than themselves[,] their testimony was hearsay,” and “[w]hen they testified about themselves[,] their testimony was wholly conclusory.” Id. The Court largely relies on testimony by Mr. Sombrotto and Mr. Young about their own practices. Mr. Noble does not explain why this evidence is so conclusory that the Court cannot consider it. See id. To the extent that Mr. Noble intended to object to the Court’s consideration of statements regarding Mr. Sombrotto’s and Mr. Young’s perceptions of other individual’s practices, the testimony relied upon by the Court relates to their own understanding, not to what any other officer told them. Mr. Noble does not explain why he believes this testimony is hearsay or conclusory. 10 But if I just pay cash money, I’m not going to receipt it because it isn’t worth the hassle in the long run. Id. at 177:24-178:4. Mr. Young’s receipts reflect, for example, expenditures on meals with visiting union officials to discuss a potential “prescription co-pay that could benefit [the] members,” id. at 164:18-165:2, Christmas gifts to union secretaries, drivers, and cooks, and expenses for mailing Christmas cards to union officials. Id. at 165:3-166:3; see also Young Receipts, Pl.’s Ex. 7, ECF No. 296-6. Ultimately, Mr. Young used the in-town allowance “for any legitimate expenses that I incurred while intown not on an assignment from the president.” Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 166:6-20. President Sombrotto kept some receipts during the course of his tenure as an NALC officer, ranging from some months in which he submitted no receipts, to others in which he submitted over $100 worth of receipts. See Sombrotto Receipts, Pl.’s Ex. 1, ECF No. 297. Many of the receipts were for restaurants in Washington, D.C., and President Sombrotto testified that these expenses were often incurred while having dinner with Richie O’Connell, a union officer. See id. at 112:8-115:13. President Sombrotto testified that he regularly incurred union-related expenses in excess of $500 per month. See Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 96:9–13 11 (Sombrotto: ”I spent more than $500 a month, I guarantee you that.”); Sombrotto Decl. (“2001 Sombrotto Decl.”), Ex. to ECF No. 128 ¶ 15; see also Young Decl. (“2001 Young Decl.”), Ex. to ECF No. 128 ¶ 4.3 As President, he and President Young could have claimed an amount in excess of $500, Noble II, 2006 WL 2708796, at *3, but neither did. See Sombrotto Decl. ¶ 15; Young Decl. ¶ 4. Instead, each paid for any additional expenses out of their own pocket. See Sombrotto Decl. ¶ 15; Young Decl. ¶ 4. Defendant Lawrence Hutchins submitted receipts for a large portion of his in-town expenses. See Investigative Committee Report, Defs.’ Ex. 8, ECF No. 288-9 at A-10 (reflecting that Mr. Hutchins provided receipts for approximately $12,700 of the 3 Mr. Noble objects to the Court’s consideration of the November 19, 2001 declarations of defendants Sombrotto, Young, Vincenzi, and Dunn because “[e]ach of the declarations concludes with a statement that ‘the foregoing is true and correct to the best of my knowledge and belief.” Pl.’s Objs. at 2. Plaintiff argues that, because the declarations do not make clear “which parts were statements of knowledge and which were statements of belief,” they are inadmissible under Federal Rule of Evidence 602 and 28 U.S.C. § 1746. These provisions, which seek to ensure that evidence admitted—and specifically, evidence admitted via affidavit—is within the personal knowledge of the declarant, would require a sufficient foundation for a finding that the matters discussed were within the declarants’ personal knowledge. See, e.g., Lux v. Great N. Ins. Co., No. 12-cv-2632, 2013 WL 6076157, at *4 (D. Colo. Nov. 19, 2013) (“although the qualifier ‘to the best of my knowledge’ is a limitation that raises significant concern,” the Court relied on the challenged affidavits where the declarant “adequately described facts which show that he has personal knowledge”). The Court accordingly relies on these declarations only for propositions that are clearly supported by such a foundation. 12 $18,000 he received between 1988 and 1990, and for nearly all of the $16,000 he received between 1991 and July 1993); Hutchins Receipts, ECF Nos. 296-7, 296-8, 296-9. Mr. Hutchins’s receipts largely reflect expenditures at restaurants, as well as taxi and parking charges. See Hutchins Receipts, ECF Nos. 296-7, 296-8, 296-9. Defendant Michael O’Connor appears only to have received an in-town allowance during 1994, but the record contains receipts for over $400 of the $500 he received each month. See O’Connor Receipts, Pl.’s Ex. 6, ECF No. 296-5. Mr. O’Connor’s receipts related to restaurants, taxis, and parking. See id. The record contains no evidence regarding defendants Souza and Worsham, who appear never to have received an in-town allowance because they did not reside in Washington, D.C. See 2001 Sombrotto Decl. ¶ 6 (noting that Souza and Worsham “while not ‘Resident Officers,’ were members of the Executive Council”). The remaining individual defendants, Francis Connors, Richard O’Connell, George Davis, and Walter Couillard have died during the course of this litigation. See supra at 1 n.1.4 4 The record contains minimal evidence regarding these defendants’ use of in-town expenses, with the exception of Francis Conners. See Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 119:10-24; Frank Conners Receipts, Pl.’s Ex. 5, ECF No. 296-4. President Young testified that Mr. Conners “made the decision for his own reasons, and I don’t know what they were, not to receipt anything. Just to go ahead and pay the taxes rather than go through the hassle of writing on the receipts who he’s entertaining, what it was about, where he was, 13 C. The In-Town Allowances Provided by the Mutual Benefit Association and the Health Benefit Plan. The Mutual Benefit Association and the Health Benefit Plan are “separate and distinct” from the NALC. See Noble II, 2006 WL 2708796, at *7; see also Noble III, 525 F.3d at 1237 (noting that this factual finding is “conclusive on remand”). Indeed, the plans each have their own constitution, separate from the NALC constitution. Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 73:1-11. They are governed separately, and have separate offices and staff. See id. at 72:19–22, 75:2–4; Vincenzi Decl. (“2001 Vincenzi Decl.”), Ex. to ECF No. 128 ¶ 4; Dunn Decl. (“2001 Dunn Decl.”), Ex. to ECF No. 128 ¶ 3. The Mutual Benefit Association is incorporated in Tennessee. Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 72:1925; Dunn Decl. Ex. A. It is a fraternal benefit corporation that offers life and disability insurance, and receives its funds through the sale of those insurance policies, as well as through investment income earned through investing the premiums. Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 72:1973:19; Dunn Decl. ¶ 4. Defendant William Dunn served as the NALC’s Director of Insurance, which made him Director of the Mutual Benefit all of that.” Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 176:20-177:9. 14 Association, until 1994. Dunn Decl. ¶ 2. Mr. Dunn’s role was governed by the Mutual Benefit Association’s Constitution. Id. ¶ 5. His salary, benefits, business expenses, and $500 per month in-town allowance were all paid by the Mutual Benefit Association, not the NALC. Dunn Decl. ¶¶ 4, 6; Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 73:25-74:6. Mr. Dunn used his in-town allowance on various business-related expenditures, including transportation and meals with union officials. Dunn Decl. ¶ 9. The Health Benefit Plan is “part of the federal employee health benefit plan operated under rules promulgated by the Office of Personnel Management” and makes its money by selling insurance policies “to members of [the NALC] and other federal employees.” Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 74:13-19. Mr. Vincenzi served as the Health Benefit Plan’s director from 1986 until 1994. Vincenzi Decl. ¶ 2. His duties were governed by the Plan’s Constitution. Id. ¶ 5. Mr. Vincenzi’s salary, benefits, and in-town allowances were paid by the Health Benefit Plan from its funds. Id. ¶¶ 6, 7; Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 75:5–24. Mr. Vincenzi spent the allowance on union-related business at restaurants, as well as for transportation and the costs of hosting colleagues at his home to discuss union business. Id. ¶ 9. 15 D. Discussion and Authorization of the In-Town Allowances at NALC National Conventions. The in-town allowances were discussed during a number of NALC National Conventions. See Noble III, 525 F.3d at 1234, 1237. First, during the 1976 National Convention, when James Rademacher was President, a delegate named John Bourlon informed the Convention that “I am advised that sometime in 1975 the Executive Council approved the expenditure for the National Officers for in-town expenses” and that “they will be allowed $500 and it does not say if they list it on an expense account. It says they will be given $500.” Minutes of 1976 NALC Convention, Pl.’s Ex. 13, ECF No. 296-10 at 1–2. President Rademacher responded “[w]ell, your information is incorrect. The Chair stands here in front of 5,000 delegates and says your information is incorrect.” Id. at 2. The Resolution in existence at that time permitted resident officers “to draw up to $500.00 each month as an allowance for official in-town expenses,” stated that “[a]pplication for allowances pursuant to this Resolution constitute[s] a representation . . . that the sum requested was expended on behalf of the Association in the course of performance of official duties,” and made it “the responsibility of each officer . . . to make and preserve for a reasonable period, not exceeding five years, records and receipts.” 1975 Resolution, ECF No. 288-9 at 32–33. 16 In 1980, soon after Vincent Sombrotto became President, the Executive Council reauthorized the in-town allowances. See 1980 Resolution, Defs.’ Ex. 2, ECF No. 288-3. That resolution recognized that “resident officers . . . in the performance of their official duties are expected to and regularly do incur and pay transportation, entertainment, and other expenses for the benefit of the Association in the Washington, D.C., Metropolitan Area, in amounts which are estimated to approximate, on the average [$500].” Id. at 5. Just like the prior resolutions, the 1980 Resolution made any application for an in-town allowance “a representation by the applying officer or employee that the sum requested was expended on behalf of the Association in the course of performance of official duties” and required officers “to make and preserve for a reasonable period, not exceeding five years, records and receipts of expenditures covered by allowance for examination by the Fiscal Committee and by any other legally authorized authority.” Id. at 5–6. The in-town expenditures were not discussed again until the 1986 National Convention, when the following discussion occurred in connection with a debate over a proposal to increase the salaries of NALC officers: DELEGATE LIPPE: . . . I personally believe that all the national officers deserve a salary increase. However, I want to take a look at what it is that we are going to decide today. You have always said that you want the membership to be completely informed, and I have some 17 information that I would like them to know. Based on the figure of $65,038, which is currently in the Constitution, there are some unseen salary increases that the membership needs to be made aware of. In addition to the salary of $65,038, the Constitution provides for the membership to pay for the noncontributory retirement program. Based on that figure, the number is $14,959. Additionally, the NALC pays 7 percent of all national officers’ salary into their civil service retirement fund based on the $65,000 figure. That cost is approximately $3,500. Additionally, the NALC pays both sides of the Social Security taxes, 7.15 percent, which is approximately $3,003. Additionally, all resident national officers receive a sum of $6,000 per annum unaccountable expense money. If you add to the salary of $65,038, the $14,000 as well as the other benefits that are paid by the Union, the salary is $90,750. . . . PRESIDENT SOMBROTTO: Thank, you Microphone No. 1 on privilege. Sister. (Applause.) DELEGATE MCNULTY: Gene McNulty, Branch 9, Minneapolis. I would like to correct the Sister. As a National Business Agent and one of your employees, you do not pay for the 7 percent of the retirement contribution. That is taken out of my check just like it is taken out of yours. Also, another piece of misinformation by the Sister, there is not for the resident national officers $6,000 unaccountable. They have to account for that. If you don’t believe me, check with the IRS. PRESIDENT SOMBROTTO: Microphone No. 2, against. Minutes of 1986 NALC Convention, Defs.’ Ex. 11, ECF No. 28812 at 2. In 1994, the NALC Convention rejected proposed amendments that would have limited the Executive Council’s ability to authorize salaries, wages, expenses, allowances, and other disbursements for itself. See Noble II, 2006 WL 2708796, at *6; Minutes of 1994 NALC Convention, Defs.’ Ex. 12, ECF No. 288-13 at 4–5. The 18 1996 Convention rejected similar amendments. See Minutes of 1996 NALC Convention, Defs.’ Ex. 13, ECF No. 288-14 at 3–5. The 1996 Convention also adopted a resolution—by a vote of 3,952 to 541— that specifically confirmed that the payment of the in-town allowances comported with the NALC Constitution. See id. at 6 (resolution stating “[t]hat the following NALC past practice payments are hereby approved and confirmed: 1. Up to $500 per month allowance to Resident Officers for in-town expenses”). E. Mr. Noble’s Internal Charges Against the NALC and Requests for Documents. Mr. Noble sent a letter on August 16, 1993, asking the NALC to permit him to inspect “any and all documents, receipts, records, bills, checks, ledgers, account books, petty cash receipts, charge slips, minutes, and resolutions that relate to the violations set forth in the enclosed charges and described above.” August 16, 1993 Letter from David Noble to Vincent Sombrotto, Pl.’s Ex. 31, ECF No. 296-12 at 3. He justified this request as based on his concerns regarding “discrepancies between the constitutionally authorized amounts of compensation and expenses payable to [NALC officers] . . . and the amounts disclosed under oath to the Department of Labor on the NALC’s LM-2 Reports for the years 1984 through the present.” Id. at 1. President Sombrotto responded to Mr. Noble on August 31, 1993. See August 31, 1993 Letter from Vincent Sombrotto to David 19 Noble, Ex. Q to NALC’s Mot. for Summ. J., ECF No. 126.5 While he maintained the NALC’s right to object that Mr. Noble “ha[d] not established just cause for such review within the meaning of . . . 29 U.S.C. 431(c),” President Sombrotto stated: [T]here will be made available for your examination, at NALC Headquarters on or after September 13, 1993, copies of NALC records which are relevant to your charges and necessary to verify the NALC’s LM-2 reports for 19881993. Please telephone Jerry Gutshall to arrange an appointment to examine these records. Id. Before taking President Sombrotto up on this offer, Mr. Noble wrote to Jerry Gutshall on September 14, 1993. See September 14, 1993 Letter from David Noble to Jerry Gutshall, Pl.’s Ex. 38, ECF No. 296-13 at 1. Mr. Noble’s September 14, 1993 letter vastly expanded the scope of documents he sought to review. Mr. Noble listed eighteen categories of documents in total. See September 14, 1993 Letter from David Noble to Jerry Gutshall, Pl.’s Ex. 38, ECF No. 296-13 at 1-3. Some related to the salary issues Mr. Noble had previously raised, while others raised entirely new issues. See id. On October 7, 1993, Mr. Noble reviewed NALC records in person. See Noble Decl., ECF No. 215 ¶ 58. 5 This letter appears to have been Mr. Noble’s Exhibit No. 34. See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3 at 29 n.102. 20 The Investigating Committee convened by President Sombrotto ultimately “confirmed that Noble’s complaints were based in fact” and “presented its findings to the special [NALC] convention on October 13, 1993.” Noble III, 525 F.3d at 1234; see also Investigating Committee Report, Defs.’ Ex. 8, ECF No. 288-9. “Delegates to the special convention roundly rejected each of Noble’s charges of wrongdoing by an average margin of 25 to 1.” Noble III, 525 F.3d at 1234. Mr. Noble then wrote to President Sombrotto on November 7, 1993 to request “the videotape and a copy of the transcript of the October 13th Special Meeting of the Convention,” as well as “copies of payroll registers for several officers for the years 1988 through 1993.” November 7, 1993 Letter from David Noble to Vincent Sombrotto, Ex. V. to NALC’s Mot. for Summ. J., ECF No. 126.6 President Sombrotto denied both requests on November 30, 1993. See November 30, 1993 Letter from Vincent Sombrotto to David Noble, Ex. W to NALC’s Mot. for Summ. J., ECF No. 126.7 F. Mr. Noble’s Discovery Requests During this Case. 6 This letter appears to have been Mr. Noble’s Exhibit No. 28. See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3 at 29 n.104. 7 This letter appears to have been Mr. Noble’s Exhibit No. 39. See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3 at 30 n.105. 21 In his February 26, 2002 declaration in support of his motion for summary judgment, Mr. Noble asserted that “NALC has not yet provided me with all of the material it indicated in discovery that it would furnish.” February 26, 2002 Noble Decl., ECF No. 139 ¶ 16. He elaborated: “For example, NALC has not yet provided me with: a) videotapes of the 1986 convention debate concerning officers’ salaries, b) videotapes of the 1993 special convention, c) transcripts or tape recordings of all of the witnesses who appeared before the investigating committee, d) copies of Bill Young’s in-town expense applications.” Id. Mr. Noble also stated that he had “attempted to use discovery to develop information about the Minneapolis regional office’s unauthorized bank account,” and that “[w]hen and if the court orders NALC to permit me to inspect records in order to verify NALC’s LM-2 reports I will use that opportunity to develop more information.” Id. ¶ 52. Shortly thereafter, the Court denied the parties’ cross motions for summary judgment and issued an Order directing the parties “to file a single, concise, specific, and final statement of each party’s outstanding requests for documents or other tangible evidence, as well as efforts made to date to obtain them, by no later than October 31, 2002, and responses thereto by no later than November 15, 2002.” Order, ECF No. 151. On October 31, 2002, Mr. Noble asserted that he had “no 22 outstanding discovery requests to the individually named defendants” and only “four outstanding discovery requests to defendant NALC.” Pl.’s Discovery Statement, ECF No. 152 at 1. Those four requests were for: (1) “transcripts and audio tapes of witnesses who testified before an internal NALC committee”; (2) “video tapes of the October 1993 special convention”; (3) “video tapes of the third session of the 1986 convention”; and (4) “in-town expense applications for the individually named defendants.” Id. at 2. Mr. Noble listed no other documents. On November 15, 2002, the defendants jointly responded to Mr. Noble’s statement. See Defs.’ Second Joint Discovery Statement, ECF No. 154. They indicated that they had given Mr. Noble the opportunity to inspect all responsive documents in 1996 and that Mr. Noble “requested and received copies of the produced documents.” Id. at 3. After a 1999 hearing before Magistrate Judge Kay, defendants claimed, they offered to let Mr. Noble inspect documents again, he “reviewed the documents between March 5 and 8, stated that he would like to continue reviewing the files on March 29,” but “did not appear on March 29 . . . and cancelled another date arranged for April 6” and then “never reappeared to continue his review of documents.” Id. at 5. On March 31, 2003, the Court issued an Order regarding these discovery matters. See Order, ECF No. 155. The Court ordered the defendants to “make the documents, videotapes and transcripts 23 identified as the subject of outstanding discovery requests by Mr. Noble in his October 15, 2002 submission to the Court available to Mr. Noble for viewing by no later than April 28, 2003, for a period of five business days ending on May 2, 2003.” Id. at 2. The Court further directed Mr. Noble to “provide defendants with a specific list of documents, tapes and videotapes he wishes to obtain copies of by no later than May 15, 2003, along with reasonable payment as agreed to by the parties for those copies.” Id. Finally, the Court directed the defendants to “provide plaintiff with all copies of documents, tapes and videotapes requested and paid for by plaintiff by no later than May 30, 2003.” Id. The NALC asserts that it “fully complied with that Order; [Mr.] Noble has never claimed otherwise.” Defs.’ Proposals at 9. Mr. Noble does not contest this assertion. See generally Pl.’s Objs. II. A. Conclusions of Law Mr. Noble’s Section 501 Claims Mr. Noble’s remaining Section 501 claim relates to the in-town expenditures. Before addressing the merits of the claim, the Court must assess which defendants remain subject to it. First, the claim cannot be made against the NALC directly because “claims made pursuant to Section 501 of the LMRDA cannot be brought against labor organizations . . . but rather can be made only against officers acting in their official capacities.” 24 Saunders v. Hankerson, 312 F. Supp. 2d 46, 58 (D.D.C. 2004); see also Sabolsky v. Budzanoski, 457 F.2d 1245, 1249 (3d Cir. 1972); Pignotti v. Local No. 3 Sheet Metal Workers’ Int’l Ass’n, 477 F.2d 825, 832 (8th Cir. 1973); Commer v. McEntee, 145 F. Supp. 2d 333, 339–40 (S.D.N.Y. 2001), aff’d in relevant part sub nom. Commer v. Giuliani, 34 F. App’x 802, 805 (2d Cir. 2002). Nor does Mr. Noble appear to press this claim as to the NALC. Compare First Am. Compl., ECF No. 25 ¶¶ 115–19 (bringing the Section 501 claims against the NALC), with Pl.’s Proposals at 3 (discussing only the individual defendants in connection with the claim). Second, five of the twelve individual defendants have died during the course of this litigation and were dismissed, without objection by Mr. Noble or any attempt to file a motion to substitute. See supra at 1 n.1. In light of that, Mr. Noble’s Section 501 claims against those individuals—Vincent Sombrotto, Francis Conners, Walter Couillard, George Davis, and Richard O’Connell—are no longer part of the case.8 8 See, e.g., Cowger v. Rohrbach, 734 F. Supp. 914, 916 (C.D. Cal. 1990) (“The goals which underlie the LMRDA and the practicalities of a trial necessarily involving uniquely individual actions lead [the court] to the conclusion that justice is best served by abatement of this [Section 501] cause of action.”); Fed. R. Civ. P. 25(a)(1) (“If a party dies and the claim is not extinguished, the court may order substitution of the proper parties,” but “[i]f the motion [for substitution] is not made within 90 days after service of a statement noting the 25 Third, Mr. Noble never raised a Section 501 claim against defendants Souza and Worsham related to in-town expenses. See 1993 Investigation Report, Defs.’ Ex. 8, ECF No. 288-9 at 3 (list of officials Mr. Noble had charged internally with accepting the in-town allowances, which does not include defendants Souza or Worsham); First Am. Compl., ECF No. 25 ¶ 8 (Souza and Worsham were not listed as NALC “resident officers”); id. ¶¶ 115–19 (Souza and Worsham were omitted from Count II, which raises a Section 501 claim regarding the in-town expenses). They are therefore not subject to this claim. Accordingly, Mr. Noble’s Section 501 claim relates only to William Dunn, Lawrence Hutchins, Michael O’Connor, Robert Vincenzi, and William Young. Defendants Dunn and Vincenzi argue that they cannot be subject to a Section 501 claim because they are not union officials, and the Court addresses this argument first. After finding that defendants Dunn and Vincenzi are correct, the Court analyzes Mr. Noble’s Section 501 claims against defendants Hutchins, O’Connor, and Young. 1. Officers of the Mutual Benefit Association and Health Benefit Plan Are Outside the Scope of Section 501. Section 501(a) of the LMRDA defines the duty owed by “[t]he officers, agents, shop stewards, and other representatives of a death, the action . . . against the decedent must be dismissed.”). 26 labor organization” to “such organization and its members as a group.” 29 U.S.C. § 501(a). The Act therefore requires covered individuals, “taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder.” Id. The D.C. Circuit directed this Court to consider on remand whether defendants Dunn and Vincenzi, as officers of the Mutual Benefit Association and Health Benefit Plan, are subject to Section 501. See Noble III, 525 F.3d at 1237. This Court had previously found the Mutual Benefit Association and Health Benefit Plan to be “separate and distinct” from the NALC, Noble II, 2006 WL 2708796, at *7, a finding the D.C. Circuit noted was “conclusive on remand.” Noble III, 525 F.3d at 1237. Nonetheless, the Circuit stated that “the degree of separation necessary to avoid § 501’s application is itself uncertain.” Id. Mr. Dunn and Mr. Vincenzi argue that they are not covered by Section 501 because their in-town expenditures were paid using funds of the Mutual Benefit Association and Health Benefit Plan, not the NALC. See Individual Defs.’ Proposals at 6–8. Although the D.C. Circuit remanded for this Court to consider this issue, Mr. Noble did not mention it in his proposed supplemental 27 findings. See generally Pl.’s Proposals. Nor did he respond in his opposition brief to the defendants’ arguments on this point. See generally Pl.’s Objs. For this reason, Mr. Noble has conceded that defendants Dunn and Vincenzi are outside the scope of Section 501. See, e.g., McGinnis v. District of Columbia, No. 13-1254, 2014 WL 4243542, at *15 (D.D.C. Aug. 28, 2014) (when a party “fails to address [an argument] in its motion and fails to respond to [an opposing party’s] point in its reply, the Court will deem it abandoned”). In any event, the Court finds that the Mutual Benefit Association and Health Benefit Plan are sufficiently distinct from the NALC that their officers are not covered by Section 501(a) with respect to their in-town allowances. Claims under Section 501(a) “may only relate to the misuse of union funds.” Hearn v. McKay, No. 07-60209, 2008 WL 2694005, at *4 (S.D. Fla. July 1, 2008), aff’d 603 F.3d 897 (11th Cir. 2010). For that reason, a Section 501(a) claim may not be made in connection with allegations of misuse of funds in benefit plans that “are not union funds.” Id. As another Judge of this Court has held, “Section 501 only applies to activities affecting union money,” so such a claim may not be brought with respect to “money in the Plan [that] was no longer property of the union.” Yager v. Carey, 910 F. Supp. 704, 728 (D.D.C. 1995). This conclusion flows from the plain language of the statute, which applies only 28 to “officers, agents, shop stewards, and other representatives of a labor organization” and dictates that, with respect to that labor organization, the officers must use “its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder.” 29 U.S.C. § 501(a) (emphasis added). Trustees of employee-benefit plans that are related to unions will therefore be outside the scope of Section 501(a) when “the funds in these plans are not union money or property but rather the property of the plans or trusts.” Hearn, 2008 WL 2694005, at *4 (documents establishing the plan “state[d] that the union does not ‘have any right, title or interest in or to the Fund, or any part thereof,” and that “[o]nce funds are transferred into these plans they are part of an ‘irrevocable trust’ and ‘assets of the Plan.’”); see also Yager, 910 F. Supp. at 728 (“the Plan is funded by the [union] on behalf of its affiliates,” but “once the [union] makes a payment to the plan, ‘that money belongs to the . . . Plan and is no longer [union] property”). Both the Mutual Benefit Association and Health Benefit Plan receive their funds through their own activities, rather than from the union. See Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 72:19-73:19, 74:13-19; Dunn Decl. ¶ 29 4. The in-town allowances of Mr. Dunn and Mr. Vincenzi, moreover, were paid entirely by their respective plans, not by the NALC. See Dunn Decl. ¶¶ 4, 6; Vincenzi Decl. ¶¶ 6, 7; Transcript of April 14, 2004 Bench Trial, ECF No. 225 at 73:2574:6, 75:5-24. Accordingly, the in-town allowances of defendants Dunn and Vincenzi were not paid for using union funds and therefore any claim against them alleging the misuse of those funds cannot be brought under Section 501. This conclusion is bolstered by the possibility that trustees of such plans may be “subject to their own fiduciary requirements under the Employment Retirement Income Security Act, [29 U.S.C. § 1001, et seq.]” Hearn, 2008 WL 2694005, at *4. If so, ERISA makes such plans “distinct legal entities separate from the union . . . controlled exclusively by the trustees for the benefit of the plan participants and beneficiaries.” Hearn, 603 F.3d at 902 (citing 29 U.S.C. §§ 1104(a)(1), 1132(d)). “When a plan’s assets are misused, the breach of duty is one between the trustees and the plan’s beneficiaries (a separate constituency from the union and its members as a group).” Id. Nor would the fact that a plan trustee is also a union officer affect the analysis. “[A]n employee benefit fund trustee is a fiduciary whose duty to the trust beneficiaries must overcome any loyalty to the interest of the party that appointed him.” NLRB v. Amax Coal Co., 453 U.S. 322, 334 (1981); see also Hearn, 30 603 F.3d at 902–03 (“when a union official is acting in his role as an ERISA benefit plan trustee, he does so exclusively for the benefit (or to the detriment) of the plan participants and beneficiaries, not the union or its members as a group”).9 2. Mr. Noble’s Section 501 Claims Against Defendants Hutchins, O’Connor, and Young Fail. Mr. Noble’s in-town-expense claim thus remains only as to three individuals: Lawrence Hutchins, Michael O’Connor, and William Young. Mr. Noble’s claim that their in-town allowances were not properly authorized cannot stand if the in-town allowances were made “in accordance with [the union’s] constitution and bylaws and any resolutions of the governing bodies adopted thereunder.” 29 U.S.C. § 501(a). The D.C. Circuit has affirmed that, in evaluating whether an action comports with 9 The Court is not persuaded by pre-ERISA cases involving plans that “were an exclusively union undertaking.” Hearn II, 603 F.3d at 903 n.8 (describing Hood v. Journeyman Barbers, Hairdressers, Cosmetologists & Proprietors Int’l Union, 454 F.2d 1347 (7th Cir. 1972) and Morrissey v. Curran, 423 F.2d 393 (2d Cir. 1970)). Pre-ERISA decisions are especially unpersuasive because “ERISA obviated the need for federal courts to strain to imply a cause of action in favor of employee benefit fund participants and beneficiaries.” Hearn, 2008 WL 2694005, at *5 (quotation marks omitted). Nor is the Court persuaded by Morrissey v. Curran, 650 F.2d 1267 (2d Cir. 1981), where allegedly improper payments from a pension fund jointly run by a union and its members’ employers fell within the scope of Section 501 because the pension fund’s assets “belong to union members.” Id. at 1284. By contrast, the Mutual Benefit Association and Health Benefit Plan both sell to non-members, and their funds come not from union or member contributions, but from the payment of insurance premiums and investments of those premiums. 31 a union’s constitution and bylaws, the Court must “defer to an interpretation of a union constitution rendered by officials of a labor organization . . . unless the court finds the interpretation was unreasonable or made in bad faith.” Noble III, 525 F.3d at 1235 (quotation marks omitted; alteration in original). This deference is even greater “when, as here, a union convention has approved the officers’ interpretation of the union constitution because such approval undermines a finding that the officers’ interpretation was unreasonable and made in bad faith.” Id. (quotation marks and alteration omitted); see also Monzillo v. Biller, 735 F.2d 1456, 1458 (D.C. Cir. 1984). This deference takes into account “whether there was arguable authority for the officer’s act from the officer’s viewpoint at the time, not from a court’s more sophisticated hindsight.” Stelling v. Int’l B’hood of Elec. Workers, 587 F.2d 1379, 1389 n.10 (9th Cir. 1978). This Court previously concluded that Article 9, § 11(e) of the NALC Constitution could reasonably be viewed as authorizing the individual defendants’ actions. See Noble II, 2006 WL 2708796, at *8–9. This holding was based on the following provisions: “Second only to the Convention in legislative and policymaking authority, [the Executive Council] shall act between Conventions on all matters related to the welfare of the Union not specifically prohibited by the membership.” “[The Executive Council may] authorize and/or ratify the payment of salaries, wages, expenses, allowances, and other 32 disbursements which it deems necessary and appropriate to the purpose and functioning of this Union, other than provided for.” Id. Because the NALC Constitution does not “specifically prohibit or otherwise provide for the payment of either an intown expense allowance or the reimbursement of un-itemized expenses,” this Court agreed with the defendants that the above provisions had been “reasonably interpreted . . . to permit a $500 per month in-town expense allowance resolution for Resident Officers” and that “the Council’s determinations for many years that it would not require Resident Officers to submit receipts for in-town expenses were reasonable and made in good faith.” Id. at *9. The D.C. Circuit “agree[d] . . . that the NALC constitution was ambiguous.” Noble III, 525 F.3d at 1236. It held that “[t]hough NALC Const. art. 6 § 1 expressly entitles all elected union officers to obtain reimbursement of itemized expenses, that minimum entitlement does not unambiguously prohibit the council from providing additional payment for expenses or allowances” and that other provisions relied upon by Mr. Noble do not “unambiguously require[] a contrary interpretation.” Id. Accordingly, the Circuit agreed with this Court’s application of a “more deferential standard of review in evaluating the reasonableness of the NALC Executive Council’s interpretation of their authority to authorize the expenses.” Id. The individual 33 defendants’ interpretation of the NALC Constitution to permit the in-town expense allowance was therefore reasonable under the deferential standard applicable to this case, giving them arguable authority for accepting $500 per month pursuant to the resolution for use in connection with union-related business in Washington, D.C. The D.C. Circuit reversed this Court’s dismissal of Mr. Noble’s claim because it disagreed with the factual finding that Mr. Noble “produced no evidence that officers had used the allowance for purely personal reasons, unrelated to union business.” Id. at 1236 (quotation marks omitted). Although no direct evidence of misuse had been provided, the Circuit held that personal use may be proven by indirect evidence. See id. at 1236–37. Mr. Noble, the Circuit found, had produced two relevant forms of circumstantial evidence: (1) the evidence of bad faith provided by two misleading statements by NALC officers regarding the in-town allowances, and (2) defendants’ failure to submit receipts despite the resolution’s requirement that they retain receipts for a reasonable period and their “direct financial incentive” to do so. See id. The Circuit directed this Court on remand to “weigh[] Noble’s circumstantial evidence of misuse against any evidence the officers present to the contrary.” Id. at 1237. a. The Statements at the 1976 and 1986 NALC Conventions 34 This Court’s analysis is framed by two statements made during NALC National Conventions held a decade apart, which arguably support an inference of “bad faith regarding the in-town expense allowance.” Id. As the Circuit summarized it: “The evidence Noble presented showing that NALC presidents twice misleadingly denied the allowance’s existence when challenged on the issue at National Conventions is troubling.” Id. The Circuit therefore directed this Court to apply United States v. DeFries, 129 F.3d 1293 (D.C. Cir. 1997), “which suggests that courts should closely scrutinize self-serving courses of conduct when union officers conceal vital information from union members.” Noble III, 525 F.3d at 1237. DeFries arose in connection with criminal proceedings against individuals who had been officers of a union that subsequently merged with another union. See 129 F.3d at 1297. Those officers, pursuant to the merger agreement, became officers in the new union. Id. Despite this, the officers received severance payments totaling $2,000,000 upon consummation of the merger, as a result of a severance plan adopted by the former union’s leadership committee. Id. In assessing the officers’ contention that the severance plan was permitted by the union’s bylaws, the D.C. Circuit noted that the officers had “t[aken] steps to conceal from the union membership the adoption, terms, and 35 triggering event of the plan.” Id. The officers “failed to mention the plan in the minutes of the meeting at which they adopted it, direct[ed] the union’s controller not to reveal any details of the plan,” and “failed to disclose the plan’s existence to the union’s independent auditor until more than a year after its adoption.” Id. Moreover, the Circuit noted, “the membership was kept completely in the dark as to any of [the severance plan’s] details until after the unions were merged and the payments were made.” Id. at 1307. Accordingly, the D.C. Circuit held, “the membership was prevented through [the officers’] subterfuge from exercising its ultimate authority to prevent this looting of the union treasury, and authorization secured without disclosure of material information is a nullity.” Id. (quotation marks and alteration omitted). The situation in this case is not as clear as DeFries. The first statement at issue here is indeed troubling. In 1976, then-President Rademacher appeared to deny the existence of “in-town expenses” for which officers were “allowed $500,” without needing to “list it on an expense account” while speaking to the National Convention. Minutes of 1976 NALC Convention, Pl.’s Ex. 13, ECF No. 296-10 at 1–2; see id. at 2 (President Rademacher’s response: “Well, your information is incorrect. The Chair stands here in front of 5,000 delegates and says your information is incorrect.”). No reading of the in- 36 town-expense resolution in existence at the time can be squared with this statement. See 1975 Resolution, ECF No. 288-9 at 32– 33. President Rademacher’s statement, then, bears some resemblance to the concealment found in DeFries. To be sure, there is no evidence that President Rademacher or his officers engaged in additional conduct that was also present in DeFries: There is no evidence that the in-town allowances were omitted from any meeting minutes or other official records, and no evidence exists that auditors or other officials were kept in the dark or instructed to keep the allowances quiet. Nonetheless, President Rademacher’s statement denies the existence of the payments. The key difference between this statement and the defendants’ actions in DeFries is that President Rademacher is not a defendant in this case, and the individuals who are defendants in this case were officers during the administration of President Sombrotto, which occurred five years later and after the intervening administration of President Vaca. The in-town allowances authorized by President Sombrotto and at issue in this case were made pursuant to a 1980 Resolution, which superseded President Vaca’s 1977 Resolution, which itself superseded the 1975 Resolution in effect when President Rademacher spoke in 1976. President Rademacher’s statement surely sets the stage for concern, especially in light of the 37 similarity between the 1975, 1977, and 1980 Resolutions, but unlike the actions in DeFries, it is not probative of the intent of the defendants in this case and therefore makes it difficult to infer, as the D.C. Circuit could in DeFries, that the defendants sought to conceal the payments. The statements during the 1986 National Convention are less clear. A delegate, Karen Lippe, was speaking in favor of providing a more modest salary increase to NALC officers than had been proposed. She sought to make clear the additional nonsalary compensation that NALC officers were receiving, and in the process mentioned: (1) “pay for the noncontributory retirement program”; (2) “7 percent of all national officers’ salary into their civil service retirement fund”; (3) “both sides of the Social Security taxes”; and (4) “a sum of $6,000 per annum unaccountable expense money.” Minutes of 1986 NALC Convention, Defs.’ Ex. 11, ECF No. 288-12 at 2. President Sombrotto at this time was essentially moderating the debate on the proposed salary increase, by alternately calling on individuals in favor of and against the proposal based upon which microphone they were standing at. See id. After Delegate Lippe spoke, President Sombrotto stated “[t]hank, you Sister,” the audience applauded, and President Sombrotto recognized “Microphone No. 1 on privilege.” Id. Another delegate, Gene McNulty, stated: 38 I would like to correct the Sister. As a National Business Agent and one of your employees, you do not pay for the 7 percent of the retirement contribution. That is taken out of my check just like it is taken out of yours. Also, another piece of misinformation by the Sister, there is not for the resident national officers $6,000 unaccountable. They have to account for that. If you don’t believe me, check with the IRS. Id. President Sombrotto then recognized “Microphone No. 2, against.” Id. The effect of this dialogue is much less clear than President Rademacher’s 1976 denial of the existence of the payments. No one in 1986 disputed that the payments existed or that they amounted to $500 per month. The dialogue thus cannot be read as evidence that anyone sought to hide the payments or their amounts. The misstatement was Delegate McNulty’s when he stated that NALC officers “have to account for” the in-town allowances. Delegate McNulty is not a defendant in this case, so it is difficult to attribute his statement to the remaining individual defendants. President Sombrotto did not step in to correct Delegate McNulty’s statement, but neither did he ratify it.10 At most, then, the in-town allowances had been concealed by a prior administration, and described by the administration with which the individual defendants are affiliated as if they 10 The Court notes, moreover, that President Sombrotto is no longer a defendant in this case, further attenuating the connection between the 1986 dialogue and the intent of the remaining individual defendants. 39 required “accounting,” when in fact they did not. This differs enough from DeFries that the Court cannot say that these individual defendants—Lawrence Hutchins, Michael O’Connor, and William Young—sought to conceal the existence of the challenged payments. At the same time, the history of prior concealment and the confusion about accounting in 1986 paint a picture that counsels in favor of a more careful review of how the individual defendants used their in-town allowances. b. Direct Evidence of How Defendants Hutchins, O’Connor, and Young Used the In-Town Allowances With this framework in mind, the Court reviews Mr. Noble’s additional circumstantial evidence of misuse. This evidence stems from the incentive officers faced to keep receipts, based in the Resolution itself, which tasked them with “mak[ing] and preserv[ing] for a reasonable period, not exceeding five years, records and receipts of expenditures covered by allowance for examination by the Fiscal Committee and by any other legally authorized authority.” 1980 Resolution, ECF No. 288-3 at 5–6. So tasked, an officer had a financial incentive to submit such receipts because any portion of the in-town expense for which a business-related receipt was provided would be exempt from income taxation. See Noble III, 525 F.3d at 1236. Against this circumstantial case, the Court must weigh the evidence presented by the individual defendants in support of 40 their contention that they did not misuse the in-town allowances. At least with respect to defendants Hutchins, O’Connor, and Young, direct evidence rebuts this circumstantial evidence and shows that these three defendants used their intown allowances for union-related business. Of the three remaining defendants, the record is most illuminating as to the practices of President William Young. President Young submitted receipts—largely reflecting meals and transportation expenses—for nearly all of the expenses he incurred between December 1990 and July 1993. Defs. Ex. 8, ECF No. 288-9 at A-12 (Mr. Young incurred $16,358 in expenses during this period, received $16,000 in in-town expense allowances, and submitted receipts for $15,798); Transcript of April 13, 2004 Bench Trial, ECF No. 224 at 177:16-17 (President Young: “[My] initial history in the Union from 1990 until about 1994 or 5 was to receipt everything”); Young Receipts, Pl.’s Ex. 7, ECF No. 296-6. Mr. Young later chose to stop submitting receipts “because it wasn’t worth the aggravation.” Id. at 177:17-18. Thus, although there was a financial incentive to submit receipts for the $500 or more President Young incurred in the course of his official duties—and President Young had for years been incurring that amount and saving receipts in response to that incentive—he decided “[for] my own benefit that I wasn’t going to receipt much. . . . [B]ecause it isn’t worth the hassle 41 in the long run.” Id. at 177:24-178:4. President Young’s prior practice over the course of several years of providing receipts for nearly every dollar he received strongly supports the inference that he stopped submitting receipts for the reason he gave: the inconvenience of preparing them, not because he was suddenly able to do his job while incurring fewer expenses and decided to pocket the difference. Defendant Lawrence Hutchins similarly submitted receipts for a substantial portion of his in-town expenses. See Investigative Committee Report, Defs.’ Ex. 8, ECF No. 288-9 at A-10 (reflecting that Mr. Hutchins provided receipts for approximately $12,700 of the $18,000 he received between 1988 and 1990, and for nearly all of the $16,000 he received between 1991 and July 1993); Hutchins Receipts, ECF Nos. 296-7, 296-8, 296-9. Mr. Hutchins’s receipts largely reflect expenditures at restaurants, as well as taxi and parking receipts. See Hutchins Receipts, ECF Nos. 296-7, 296-8, 296-9. Defendant Michael O’Connor appears only to have received an in-town allowance during 1994, but the record contains receipts for over $400 of the $500 he received each month. See O’Connor Receipts, Pl.’s Ex. 6, ECF No. 296-5. Mr. O’Connor’s receipts included charges for restaurants, taxis, and parking. See id. Accordingly, all three individual defendants provided receipts for a substantial portion of the in-town allowances they 42 received, and President Young’s testimony explains why they might not have provided every single receipt: Although an income-tax benefit could be realized by providing receipts for everything, even an officer who kept receipts for essentially all of his expenses for years might decide that continuing to do so was not worth the administrative burden. In light of this record, the Court finds that direct evidence of how the remaining individual defendants actually used the in-town allowances demonstrates that these three individual defendants largely accounted for their expenses. To the extent they did not account for them, the record reflects that the financial incentive for submitting receipts that the Resolution required be kept for a “reasonable period” of time was outweighed by the administrative burden experienced by those, like President Young, who once sought to submit receipts for every expense. Finally, the existence of a significant record of receipts describing the types of union-related expenses contemplated by the Resolution supports testimony that $500 per month was a reasonable amount that a resident officer could expect to have to spend in order to perform the job. See supra at 9. This bolsters the conclusion that any unreceipted portion of these defendants’ allowances was not used for personal gain. Mr. Noble challenges the receipts themselves, calling them “worthless as evidence.” Pl.’s Objs. at 3–4. Although phrased as 43 an evidentiary objection, Mr. Noble does not appear to dispute their admissibility. Instead, he appears to argue that the receipts cannot form the requisite evidence “of how the union’s money was actually used,” Noble III, 525 F.3d at 1237, because they do not contain a written notation of the purpose for which the expense was incurred. This argument relies on an alleged requirement that receipts contain such a notation. See Pl.’s Objs. at 3-4. Even if Mr. Noble were correct about the existence of an independent requirement that receipts contain such a notation, that does not render the receipts useless for the narrow purpose to which the Circuit has directed this Court’s focus: Weighing against Mr. Noble’s circumstantial evidence of misuse any evidence put forth by the defendants of how they actually used the in-town allowances. The defendants claim to have used the allowances for union-related expenses at restaurants and for transportation expenses. The receipts support this claim by reflecting the contemporaneous submission by the individual defendants of receipts for such expenses in connection with applications for the monthly in-town allowance. Thus, even if the failure to provide a written notation violated some other 44 legal requirement, not before the Court, the receipts would still bear on the narrow question that is before the Court.11 B. Mr. Noble’s Section 201 Claim In addition to his breach-of-fiduciary-duty claims under Section 501, Mr. Noble brought a claim pursuant to Section 201 of the LMRDA. That provision requires labor unions to “file annually with the Secretary [of Labor] a financial report,” known as an LM-2 Report. 29 U.S.C. § 431(b). “The primary purpose of § 201 is to make full information related to the financial affairs of unions available to union members to 11 Indeed, Mr. Noble’s various citations do not bear on whether the receipts are useful evidence regarding the Section 501 claim that is before this Court. Mr. Noble’s argument that NALC policy or the NALC Constitution requires such notations is belied by this Court’s finding that the individual defendants had arguable authority for accepting the in-town allowances without accounting for them, pursuant to a distinct section of the NALC Constitution that did not require itemized receipts. See supra at 33-34; Noble III, 525 F.3d at 1235-36. Mr. Noble’s reliance on a December 9, 2004 letter from the Department of Labor is unhelpful because that letter is not part of the record of this case—it was created after discovery closed and the trial had been held. See Pl.’s Objs. at 4. Moreover, the letter, which was attached to a status report Mr. Noble filed in 2009, addressed the Department of Labor’s findings with respect to an entirely distinct section of the LMRDA. See December 9, 2004 Letter, ECF No. 257-2. Finally, Mr. Noble’s assertion that IRS Regulations require such notations is based solely on a 1985 letter from Richard O’Connell to NALC officers, which directs officers to supply certain information “which is required by I.R.S. regulation when entertaining,” including the purpose for the expense. February 27, 1985 Letter, Pl.’s Ex. 76, ECF No. 296-15. Even assuming the truth of this assertion, that does not make the receipts irrelevant to the Court’s assessment of Mr. Noble’s Section 501 claim. 45 strengthen their efforts to rid their unions of unworthy or corrupt officers.” McGinnis v. Local Union No. 710, Int’l B’hood of Teamsters, 664 F. Supp. 1212, 1213 (N.D. Ill. 1987). The report must include specified information related to the union’s finances, including assets, receipts, salaries, and similar matters. See 29 U.S.C. § 431(b). Section 201(c) creates a right of action for union members who (1) made a request to inspect documents “to verify” an LM-2 Report, (2) that was supported by “just cause,” and (3) was denied by the union. See 29 U.S.C. § 431(c). “The burden of proof in demonstrating just cause is on the union member, and he may not inquire into union records out of idle curiosity.” Mallick v. Int’l B’hood of Elec. Workers, 749 F.2d 771, 784 (D.C. Cir. 1984) (citations omitted). The demonstration of just cause, moreover, is keyed to the particular information on an LM-2 report that the union member seeks to verify. See Krokosky v. United Staff Union, 291 F. Supp. 2d 835, 843 (W.D. Wisc. 2003) (“The statute’s structure indicates that just cause ought to relate to the LM-2.”). “Establishing ‘just cause’ requires the union member to state what he wishes to verify in the LM Reports and how the particular records he is requesting are expected to assist him in doing so.” Fernandez-Montes v. Allied Pilots Ass’n, 987 F.2d 278, 285 (5th Cir. 1993). 46 The precise scope of Mr. Noble’s Section 201 claim has remained vague throughout this case. What is clear is that Mr. Noble sent the NALC three letters in 1993 that contained requests for the inspection of documents. See supra Part I.E. His August 16 and September 14 letters included requests for inspection of a variety of documents related both to his internal charges regarding payments to members of the Executive Committee, as well as other issues. See supra at 19-21. The NALC appeared to grant the August 16 request, did not respond to the September 14 request, and permitted Mr. Noble to inspect an unspecified set of records on October 7, 1993. See id. It is not clear whether that inspection granted access to everything Mr. Noble had requested. Mr. Noble’s third request was rejected by the NALC. His November 7, 1993 letter sought “a videotape and a copy of the transcript of the October 13th Special Meeting of the Convention,” as well as “copies of payroll registers for several officers for the years 1988 through 1993.” November 7, 1993 Letter from David Noble to Vincent Sombrotto, Ex. V. to NALC’s Mot. for Summ. J., ECF No. 126. President Sombrotto rejected the requests in full on November 30, 1993. See November 30, 1993 47 Letter from Vincent Sombrotto to David Noble, Ex. W to NALC’s Mot. for Summ. J., ECF No. 126.12 In his post-trial proposed findings of fact regarding the Section 201 claim, Mr. Noble recited the chronology of this correspondence, but did not explain which, if any of the requests made in his August 16 and September 14 letters had been refused. See Pl.’s Post-Trial Proposed Findings, ECF No. 241-3 ¶¶ 77–81. Rather, Mr. Noble made the general and conclusory statement that “[w]hile plaintiff has been furnished with some financial information while conducting discovery in the instant case, and a smaller amount after filing the charges, the material he has been permitted to review has been insufficient for him to verify even one of the NALC’s annual LM-2 reports,” id. ¶ 83, which was itself a verbatim quotation from Mr. Noble’s pre-trial affidavit. See April 2, 2004 Noble Decl., ECF No. 215 ¶ 57. This Court previously found that during the course of proceedings in this case—and in the lead up to the filing of this case—Mr. Noble had been given “access to all of the pertinent NALC records,” rendering his Section 201 claim moot. 12 Although it is clear from the record that Mr. Noble received in discovery copies of the videotape and transcript of the October 1993 Special Meeting, rendering that portion of the request moot, April 2, 2004 Noble Decl., ECF No. 215 ¶¶ 82, 84, it is not clear whether the other request has been satisfied. 48 Noble II, 2006 WL 2708796, at *11. The D.C. Circuit disagreed that a factual record existed to find that Mr. Noble had been permitted to inspect all documents he had requested to view, and therefore vacated this finding. See Noble III, 525 F.3d at 1241. It left for this Court to address the merits of the claim, “as well as the factual determination of what (if any) records Noble has requested but not yet received.” Id. at 1242. The existing record and the parties’ post-remand pleadings do not permit the Court to make this determination. Mr. Noble’s post-remand proposed findings made only a conclusory assertion that he has not been provided sufficient documents. See Pl.’s Proposals at 2, 4. The defendants’ proposals reiterated that Mr. Noble has been provided access to a significant amount of documents, and noted that the limited set of discovery disputes he raised in 2002 had been fully complied with, but did not explain precisely what he has been given access to. See Defs.’ Proposals at 8-9. Nor can the Court rule in favor of either party’s legal argument without a clearer explanation of which requests are at issue. The defendants’ argument that Mr. Noble has not demonstrated just cause to inspect “any financial records other than those to which NALC has already given him access,” Defs.’ Proposals at 16, neither explains what Mr. Noble has been given access to, nor establishes why every single request Mr. Noble 49 made was entirely unsupported by just cause. At the same time, Mr. Noble’s argument that his discovery of the challenged payments entitles him to a “broad review” of the NALC’s finances cannot be evaluated without explanation of how that discovery provides just cause for specific requests that were rejected by the NALC.13 Accordingly, the Court will direct the filing of supplemental briefs, which shall include citation to the trial record and any additional evidence the parties feel is necessary to resolve the Section 201 claim. The Court notes that the burden is on Mr. Noble to explain to the Court why he is entitled to relief on his Section 201 claim. He must explain which inspection requests the NALC rejected, how the requests relate to the verification of the union’s LM-2 Report, and the basis for a finding that the requests were supported by just cause. Mr. Noble’s past unsupported and conclusory statements were insufficient and the Court may treat another failure by Mr. Noble to explain or provide evidentiary support for his claim as a forfeiture of the claim. Cf. Jackson v. Finnegan, Henderson, Farabow, Garrett & Dunner, 101 F.3d 145, 13 Mr. Noble’s other argument, that the defendants waived their ability to contest his Section 201 claim because they raised no defense to it other than mootness, Pl.’s Proposals at 4, is incorrect: The D.C. Circuit referred to the defendants’ arguments regarding the merits of the Section 201 claim, and suggested that this Court reach those arguments on remand. Noble III, 525 F.3d at 1242. 50 153 (D.C. Cir. 1996) (refusing, in connection with summaryjudgment rule requiring clear and concise statements of material facts, to “plac[e] the burden on the court, rather than on the opposing party or his counsel, ‘to winnow the wheat from the chaff’”). * * * Mr. Noble shall therefore file a pleading setting forth in precise detail, with corresponding evidentiary citations, which requests for the inspection of documents he claims were refused by the NALC, and why his Section 201 claim should succeed as to each individual request. The defendants shall file a response to these arguments, which shall include, among whatever other arguments the defendants deem appropriate, an explanation, with corresponding evidentiary citations, whether any requests still pursued by Mr. Noble have been fully complied with. Mr. Noble may file a reply brief, which shall respond to the defendants’ arguments but may not raise new arguments. See Herbert v. Nat’l Acad. of Sciences, 974 F.2d 192, 196 (D.C. Cir. 1992) (noting the general rule that courts “refuse[] to entertain arguments raised for the first time in an appellant’s reply brief”). III. Conclusion 51 For the foregoing reasons, the Court enters judgment in favor of the defendants on Mr. Noble’s Section 501 claims and requests supplemental briefing regarding Mr. Noble’s Section 201 claim. An appropriate Order accompanies this Memorandum Opinion. SO ORDERED. Signed: Emmet G. Sullivan United States District Judge March 27, 2015 52
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