United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

UNITED HEALTHCARE WORKERS-WEST, 

et al.,

Plaintiffs,

 v.

JOHN BORSOS, GAIL BUHLER, RALPH

CORNEJO, JOAN EMSLIE, MARTI GARZA,

GLENN GOLDSTEIN, EMILY GORDON,

JASON JOHNSON, MARK KIPFER, GABE

KRISTAL, MICHAEL KRIVOSH, PAUL

KUMAR, LAURA KURRE, BARBARA

LEWIS, DANIEL MARTIN, FREJA NELSON,

ANDREW REID, JORGE RODRIGUEZ,

SAL ROSSELLI, FRED SEAVEY, IAN SELDEN,

PETER TAPPEINER, JOHN VELLARDITA,

PHYLLIS WILLETT, AND NATIONAL UNION

OF HEALTHCARE WORKERS,

Defendants. /

No. C 09-00404 WHA

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

AFTER BENCH TRIAL

The recent trial included both jury and bench issues. After the jury segment wherein the

evidence did double-duty, some supplemental evidence was received pertinent only to the bench

issues. This order addresses the bench issues and constitutes the Court’s findings of fact and

conclusions of law. Although proposed findings were submitted and considered, this order has

found its own way and made its own findings rather than picking and choosing between the

competing versions. Although a few have been, that a proposed finding has not been expressly

incorporated does not necessarily mean it has been rejected; rather, it means that this order has

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 The criteria for a Taft-Hartley fund are set forth in 29 U.S.C. 186(c)(5): that the trust fund is

established for the sole and exclusive benefits of the employees, that payments are made to the trust by

employers, that there is a written agreement with the contributing employers, that “employees and employers are

equally represented in the administration of such fund,” and that there be a deadlock procedure. These criteria

are made applicable to a training fund, such as the education fund in question, by 29 U.S.C. 186(c)(6). 

2

found it unnecessary to adopt or reject it per se. To the extent, however, that any proposed

finding was expressly admitted by the responding party in the recent round of proposals and

responses, this order hereby adopts the proposal (to the extent expressly admitted). It is

unnecessary for this order to cite the record and it will not do so except as to particulars that

may assist the court of appeals. No damage claim is asserted for the bench-trial issues. 

Only declaratory and injunctive relief are sought. 

FINDINGS OF FACT

1. At stake is control of the SEIU United Healthcare Workers West and Joint

Employer Education Fund. The fund was established in 2004. It is a California-based

Taft-Hartley fund, although no claim is based on the Taft-Hartley Act.1

 The fund’s charter was

the SEIU United Healthcare Workers West and Joint Employer Education Fund Trust Agreement,

Trial Exhibit 114. It began: 

This Trust Agreement is made effective December 1, 2004, by and

between United Healthcare Workers West (hereinafter referred to

as “Union”) and Kaiser Foundation Health Plan, Inc., a California

nonprofit public benefit corporation, Kaiser Foundation Hospitals,

a California nonprofit public benefit corporation, and The

Permanente Medical Group, Inc., a California professional

corporation (collectively “Kaiser Permanente”), and Catholic

Healthcare West, a California nonprofit corporation (hereinafter

referred to jointly in the singular as the “Employer”). 

The first recitals stated: 

1. The Employer is signatory to collective bargaining

agreements with the Union, which provide that the Employer shall

pay contributions under the terms of various collective bargaining

agreements to the SEIU United Health Care Workers West

Education Fund (hereinafter “Fund”) at rates specified from time

to time in said agreements. 

2. The parties have agreed that such contributions

shall be payable to and be deposited in the Trust Fund created and

established by this trust agreement. 

3. The purpose of this Trust Agreement is to provide

for the establishment of such Trust Fund and for the provision of

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any and all employee training and education benefits as may be

allowed by Internal Revenue Code Section 501(c)(9), and in

accordance with the terms of various collective bargaining

agreements and subscriber agreements. 

2. Article II created the trust fund: 

Section 1. There is hereby created the Trust Fund which shall

consist of all contributions required by the collective bargaining

agreements, memorandums of understanding, or subscriber

agreements to be made for the establishment and maintenance of

the Training Plan, and all interest, income and other returns

thereon of any kind whatsoever. 

3. Article III created the board of trustees and provided for selection and removal

of trustees. This article is much in play herein. In presenting these excerpts, italics are used

hereafter to highlight passages of particular importance. The original form of Article III

provided: 

Section 1. The Trust Fund shall be administered by a Board of

Trustees which shall consist of six (6) Trustees. The three initial

Trustees representing the Employer shall be appointed in writing,

one by Catholic Healthcare West and two by Kaiser Permanente. 

The three initial Trustees representing the employees shall be

appointed by the Union by an instrument in writing signed by the

Executive Officer of the Union. The Employer and the Union

expressly designate the Trustees jointly as named fiduciaries, who

shall have exclusive authority and discretion acting as the Board

of Trustees as herein provided, to control and manage the

operation and administration of the Trust Fund and the Training

Plan. Each of the Trustees expressly accepts designation as a

fiduciary and as Trustee by written acceptance and signature of his

Trust Agreement and assumes the duties, responsibilities, and

obligations of the Trustees as created and established by this Trust

Agreement and under applicable law. Any Trustee named

hereafter shall do likewise by signing the Trust Agreement or a

written acceptance thereof, in a form approved by and filed with

the Board of Trustees. 

* * *

Section 5. Any Employer Trustee may be removed from office at

any time, for any reason, by a writing signed by the employer who

appointed the Trustee and served on the Secretary of the Board of

Trustees. Any Employee Trustee may be removed from office at

any time, for any reason, by an instrument in writing signed by the

Executive Officer of the Union and served on the Secretary of the

Board of Trustees. The Secretary shall promptly notify in writing

the Trustees, including the Trustee being removed, and the

Employer and the Union. 

Section 6. If any Trustee dies, resigns, or is removed from office,

a successor Trustee shall be appointed forthwith by an instrument

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in writing signed by the appropriate Executive Officer of the

Union, or the Employer which appointed the prior Trustee, as the

case may be. 

Therefore, as first embodied, Article III placed the selection and removal of the employee

trustees completely in the hands of the executive officer of the UHW. The three employer

trustees, in parallel fashion, served at the pleasure of Kaiser Permanente and Catholic Healthcare

West. Amendments later made to Article III will be addressed presently. 

4. Article IV listed the functions and powers of the board of trustees. Although it

was lengthy, it included no power to appoint or remove trustees. Subparagraph (k) provided that

the board was authorized: 

[t]o construe the provisions of this Trust Agreement and the Plan

and any such construction adopted by the Board of Trustees in

good faith which shall be binding upon any and all parties or

persons affected thereby. 

5. Article VII, entitled “General Provisions,” included a notice

provision: 

Section 3. Any notice required to be given under the terms of this

Trust Agreement, the Training Plan, or the rules and regulations of

the Board of Trustees shall be deemed to have been duly served if

delivered personally to the person to be notified, or if mailed in a

sealed envelope, postage prepaid, or such person at his or her last

known address as shown in the records of the Trust Fund, or if sent

by wire or other means of written communication to such person at

said last known address. 

6. Finally, Article IX entitled “Amendment and Termination” provided in relevant

part: 

Section 1. The provisions of this Trust Agreement may be

amended, altered, or modified at any time, and from time to time,

by the Board of Trustees, including any amendments necessary to

obtain and maintain the tax-exempt status of the Trust Fund and

the deductibility of the Employer contributions. All such

amendments shall be in writing, and notice and a copy of the

amendment shall be furnished to the Union and the Employers;

provided, however, that no amendment shall be adopted which: 

(a) Alters the basic principles of this Trust or the Plan;

(b) Conflicts with the terms of any collective bargaining

agreement, memorandum of understanding and/or any

applicable law or governmental regulation; 

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 Oddly, while the amended Section 1 set forth how the fourth employer trustee would be selected, it

omitted to say how the fourth employee trustee would be chosen. This glitch became moot upon the next

amendment, discussed in the text. 

5

This amendment provision is also much in play herein, for the crux of the matter is whether a

disputed amendment violated the two prohibitions, italicized above. This order eventually will

hold that the amendment in dispute violated both of these prohibitions. 

7. In December 2004, Sal Rosselli, the Executive Officer of the SEIU United

Healthcare Workers West Union, which will be referred to hereinafter as the UHW, appointed

the following as the employee trustees: 

• Laura Kurre;

• John Borsos; and

• Ralph R. Cornejo.

8. Thereafter, the size of the board was increased from six to eight and a provision

was added concerning death, resignation or removal by a trustee. This was done by amending

Article III to state as follows (TX 115):2

 

Section 1. The Trust Fund shall be administered by a Board of

Trustees which shall consist of eight (8) Trustees. The three initial

Trustees representing the Employer shall be appointed in writing,

one by Catholic Healthcare West and two by Kaiser Permanente. 

The three initial Trustees representing the employees shall be

appointed by the Union by an instrument in writing signed by the

Executive Officer of the Union. The fourth Trustee representing

the Employer shall be appointed in writing by the other three

Employer Trustees after consultation with the Union Trustees. 

The Employer and the Union expressly designate the Trustees

jointly as named fiduciaries, who shall have exclusive authority

and discretion acting as the Board of Trustees as herein provided,

to control and manage the operation and administration of the

Trust Fund and the Training Plan. Each of the Trustees expressly

accepts designation as a fiduciary and as Trustee by written

acceptance and signature of this Trust Agreement and assumes the

duties, responsibilities, and obligations of the Trustees as created

and established by this Trust Agreement and under applicable law. 

Any Trustee named hereafter shall do likewise by signing the Trust

Agreement or a written acceptance thereof, in a form approved by

and filed with the Board of Trustees. 

Article III, Section 6 is amended as follows: 

Section 6. If any Trustee dies, resigns, or is removed from office,

a successor Trustee shall be appointed forthwith by an instrument

in writing signed by the appropriate Executive Officer of the

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 Three were appointed by the two employers and, in turn, the three selected a fourth to represent

acute-care facilities other than Kaiser and Catholic Healthcare West and a fifth employer trustee to represent the

long-term care industry.

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Union, or the Employer which appointed the prior Trustee, or the

Employer Trustees, as the case may be. 

9. Thereafter, Article III, Section 1 was amended yet again to expand the board to

ten (TX 436): 

Article III, Section 1. The Trust Fund shall be administered by a

Board of Trustee which shall consist of ten (10) Trustees, Two

Employer Trustees shall be appointed by Kaiser Permanente, and

one Employer Trustee shall be appointed by Catholic Healthcare

West, and these three Employer Trustees shall appoint a fourth

Employer Trustee to represent other acute care facilities, and a

fifth Employer Trustee to represent the Long Term Care industry. 

The five Trustees representing employees shall be appointed by the

Union by an instrument in writing signed by the Executive Officer

of the Union. 

10. From the foregoing, it is readily seen and this order so finds that a fundamental

rule of governance of the trust fund was that the employers would appoint the employer trustees

and “the union” — meaning the UHW (and more specifically its executive officer) — would

appoint the employee trustees. This was because the trust fund was the product of collective

bargaining negotiations between the UHW and Kaiser/Catholic Healthcare West. The UHW had

every right to insist that the contributions it bargained for would be spent as approved by UHW

appointees. All of the amendments to this time were fully consistent with this principle. 

11. This brings us to the amendment in controversy. On March 21, 2008, the board

of trustees adopted a further amendment to Article III, Section 1. It provided that the employee

trustees would thenceforth be appointed by a majority of the incumbent employee trustees rather

than by the UHW. In this way, the UHW was cut out of the appointment process and the

incumbents were free to keep themselves or their friends or anyone else in office. By contrast,

the employer trustees continued to be ultimately appointed by the employers (TX 1002).3

 

12. By this time, the five employee trustees were Sal Rosselli, John Borsos, Laura

Kurre, Ralph Cornejo and Will Clayton. (Later, Will Clayton resigned and was replaced by

John Vellardita.) All of these were closely allied with Sal Rosselli and were high in the

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leadership of the UHW in March 2008. All of these are referred to herein as the “employee

trustee defendants” or the “incumbent employee trustees.” 

13. The March 2008 amendment deserves to be quoted in full, although this order

will do so by chapters. The lead-in was a set of recitals that summarized the three changes: 

Pursuant to Article IX, Section 1, the Trustees of the SEIU United

Healthcare Workers West and Joint Employers Education Fund

hereby amend the Trust Agreement, effective December 1, 2004,

and thereafter amended, as follows: 

1. The sentence of Article III, Section 1,

commenting “The five Trustees representing

employees . . . .” shall be deleted, and shall be replaced

with the following sentence: “The five Trustees

representing the employees shall be appointed hereafter by

an instrument in writing signed by a majority of the

employee Trustees.” 

2. The first two sentences of Article III, Section 5

shall be deleted and shall be replaced with the following

sentences: “Any Employer Trustee may be removed from

office at any time, for any reason, by a writing signed by

the employer who appointed the Trustee, or by an

instrument in writing signed by a majority of the appointing

trustees, and served on the Secretary of the Board of

Trustees. Any employee Trustee may be removed from

office at any time, for any reason, by an instrument in

writing signed by a majority of the employee Trustees and

served on the Secretary of the Board.” 

3. Article III, Section 6 shall be deleted in its

entirety, and shall be replaced with the following new

Section 6: “If any Trustee dies, resigns, or is removed from

office, a successor Trustee shall be appointed forthwith by

an instrument in writing signed by the appropriate

employee Trustees, or the Employer which appointed the

Trustee, or the appropriate employer Trustees, as the case

may be.” 

14. As noted, the employer side continued to be controlled (ultimately) by Kaiser

and Catholic Healthcare. Only the employee side was affected by the March 2008 amendment. 

The remainder of the March 2008 amendment then revised Article III as follows: 

Section 1. The Trust Fund shall be administered by a Board

of Trustees which shall consist of ten (10) Trustees. 

Two Employer Trustees shall be appointed by Kaiser

Permanente, and one Employer Trustee shall be appointed by

Catholic Healthcare West, and these three Employer Trustees

shall appoint a fourth Employer Trustee to represent other acute

care facilities, and a fifth Employer Trustee to represent the

Long Term Care industry. The five Trustees representing the

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employees shall be appointed hereafter by an instrument in

writing signed by a majority of the employee Trustees.

The Employer and the Union expressly designate the Trustees

jointly as named fiduciaries, who shall have exclusive authority

and discretion acting as the Board of Trustees as herein

provided, to control and manage the operation and

administration of the Trust Fund and the Training Plan. Each of

the Trustees expressly accepts designation as a fiduciary and as

Trustee by written acceptance and signature of this Trust

Agreement and assumes that duties, responsibilities, and

obligations of the Trustees as created and established by this

Trust Agreement and under applicable law. Any Trustee named

hereafter shall do likewise by signing the Trust Agreement or a

written acceptance thereof, in a form approved by and filed with

the Board of Trustees. 

Section 2. The Board of Trustees shall select one of their

number to act as Chairman of the Board of Trustees and one to

act as Secretary, to serve for such period as the Board of

Trustees shall determine. When the Chairman is selected from

among the Employer Trustees, the Secretary shall be selected

from among the Employee Trustees, and vice versa. 

Section 3. Each Trustee shall serve until his death, resignation,

or removal from office. 

Section 4. A Trustee may resign at any time by serving written

notice of such resignation upon the Secretary of the Board of

Trustees, at least 30 days prior to the date on which such

resignation is to be effective. The Secretary shall promptly

notify in writing the Trustees, and the Employer and the Union

of such resignation. 

Section 5. Any Employer Trustee may be removed from office

at any time, for any reason, by a writing signed by the employer

who appointed the Trustee, or by an instrument in writing

signed by a majority of the appointing trustees, and served on

the Secretary of the Board of Trustees. Any Employee Trustee

may be removed from office at any time, for any reason, by

an instrument in writing signed by a majority of the

employee Trustees and served on the Secretary of the Board.

The Secretary shall promptly notify in writing the Trustees,

including the Trustee being removed, and the Employer and the

Union. 

Section 6. If any Trustee dies, resigns, or is removed from

office, a successor Trustee shall be appointed forthwith by an

instrument in writing signed by the appropriate employee

Trustees, or the Employer which appointed the Trustee, or the

appropriate employer Trustees, as the case may be. 

15. This amendment was proposed by the incumbent employee trustees, particularly

by Sal Rosselli (see, e.g., TX 169 at 3460). During the six-week run-up to the March 2008

amendment, all or most of the employee trustees, including beyond all doubt Sal Rosselli and

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 The SEIU, in fact, imposed a trusteeship in January 2009. The concept “trusteeship” over the UHW

under the SEIU constitution should not be confused with the concept “trustee” of the fund. 

9

John Borsos, feared that the SEIU might soon institute a trusteeship over UHW.4

 This was

because Rosselli and other defendants were at war with the SEIU over the latter’s plan to revamp

the healthcare locals in California. Rosselli and other defendants were free to speak out against

the proposal but they were not free, if and when the proposal was enacted, to resist it. If a

trusteeship was imposed, the UHW (under a new trusteeship executive officer) could remove

Rosselli and all other employee trustees. As part of a more comprehensive plan to sabotage

more broadly the ability of the SEIU trusteeship to function, the incumbents desired to lock

themselves in control of the fund. (The larger plan was the main focus of the jury trial, which

resulted in a damages verdict against most defendants.) Eventually, the larger scheme

blossomed into the formation of a rival union, the NUHW. It is doubtful that the NUHW was

yet part of the scheme in March 2008. There is no doubt, however, that during the run-up to the

March 2008 amendment an SEIU trusteeship loomed large on the horizon, the incumbents feared

they would lose control of the fund, and they wished to sabotage the ability of a trusteeship to

remove them from the labor side of the fund. Indeed, that was the principal and motivating

reason for the March 2008 amendment — to lock control of the employee side of the fund into

the hands of the incumbent employee trustees so as to prevent the SEIU and the UHW from

removing them in the event of a trusteeship. The contrary testimony was not credible. This is a

key finding. 

16. The defense arguments that the March 2008 amendment had no such purpose but

was motivated by legitimate considerations is rejected. In this connection, there is precious little

contemporaneous support for defendants’ supposed rationales. For example, defense witness

Joan Braconi testified that the concept of having a majority of the employee trustees appoint

and remove other employee trustees arose a year earlier. There is, however, no

contemporaneous writing to support this claim. The paper trail on the amendment (including

emails) began only days before the amendment was adopted (TX 197). To take another

example, at trial, defendants claimed that the reason for the amendment was to diversify the

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employee trustees and to bring onto the board someone not affiliated with Sal Rosselli. But

when a post-amendment vacancy actually arose, due to the resignation of Will Clayton, the

purported new power was used to appoint yet another Rosselli ally, John Vellardita, not someone

from a different local. Seen against the backdrop of the simultaneous scheming of defendants to

resist the feared trusteeship, the March 2008 amendment was drenched in self-dealing and

resistance to the SEIU. 

17. The management side trustees had no reason to vote against the amendment, for

it in no way diluted their own powers. Again, the self-perpetuation feature was adopted only for

the employee side. 

18. To be sure, one can understand why the incumbents felt abused. They were the

leaders who had achieved labor gains for healthcare workers in California. They had bargained

for and obtained the fund. Now, their hard-won victories seemed on the verge of being taken

from them and delivered to a trusteeship. Resentment would have been natural. But it should

also be remembered that the hard-won victories had been achieved as part of the SEIU and with

the support of the larger organization. In turn, that organization had rules. One was the power

of the SEIU to re-align the jurisdiction of the locals and the power to impose a trusteeship if the

decision of the SEIU to re-align the locals, once made, was frustrated by the leadership of any

local. 

19. The notion that Attorney William Sokol was the sponsor of the amendment or

somehow blessed it is rejected. There is no such proof. The record shows that he drafted the

March 2008 amendment. Defendants have refused to waive the attorney-client privilege, which

is their right, but no inference is warranted that Attorney Sokol advised that the amendment was

valid. For all the record shows, Attorney Sokol advised to the contrary. Without a waiver of the

privilege, we cannot know the actual communications that took place. The most that one can

legitimately infer is that Attorney Sokol was asked to draft the amendment and that he produced

a document he thought had, in his judgment, the best chance of being upheld, however great or

small that chance might be. The overall trial record, including the testimony and subsequent

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unguarded remark of Ms. Joan Braconi, show that the sponsors doubted that the amendment

would hold up in court. 

20. That any of the trustee defendants acted in good faith in reliance on counsel’s

general involvement or otherwise is rejected because the true motive and purpose was to insulate

the individual defendants from removal in the event of an SEIU trusteeship, an improper motive

and purpose. 

21. That any of the defendants “construed” the trust agreement (such that deference is

somehow due their construction under Article IV(k)) is rejected because none of them

“construed” anything in the trust agreement. There is no evidence that any defendant had in

mind any interpretation of Article IX (regarding amendments). There is nothing to defer to. 

22. Although the jury found that defendant Laura Kurre was not guilty on the

damages issues, she had gone on a medical leave and was not active for the time period of

concern for the jury, January 2009. But in March 2008, she was still in the thick of the plan

to resist a trusteeship. Even if she and all others acted in good faith — which this order

rejects — the fact is that the March 2008 amendment in its effect was so at war with the limits

placed on the amendment power that it must be deemed void. 

23. After the January 2009 trusteeship was imposed, the UHW sent a memo to the

fund removing the employee trustees from the board. Defendants’ response was to invoke the

March 2008 amendment and to assert that UHW no longer had the power to remove them. 

24. With regard to the inadequate notice, the irregular board procedure, and the

purpose behind the amendment, this order adopts and accepts plaintiffs’ proposed findings

Nos. 5, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20, 21, 22, and 23. This order adopts and accepts

defense proposed finding Nos. 1, 4, 5, 6, 14, 15, 16, 18, 21, 22, 24, 26, 27, 29, 31 and 32. 

CONCLUSIONS OF LAW

1. This order holds that the March 2008 amendment violated the basic principles of

the trust. The UHW had negotiated for the establishment of the fund for the benefit of its

members, and it bargained for employer contributions to the fund. To protect its stake in the

fund, the UHW was to appoint half of the fund trustees with power at will to remove them and to

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 And, a requirement of a Taft-Hartley fund is that control of the fund be evenly shared between

employers and employees. When the union appoints the employee trustees, there is no doubt that employees are

represented. When, however, private individuals are appointed with the perpetual power to substitute other

private individuals, there is no guaranteed nexus between the employees and the employee trustees. The private

individuals may favor polices undesired by employees and their unions. 

6

 The record shows no change in the collective bargaining agent. Therefore, the record indicates that

the UHW is still the agent and still has the authority to appoint the employee trustees. 

12

appoint others. The employer had the right to appoint the other half, directly or indirectly, also

at will. This was spelled out first in the collective bargaining agreement and then in the

trust-fund charter. The power to appoint and remove was an important prerogative of the UHW. 

It rested with the UHW, through its executive officer. If the executive officer changed, then so

did the appointment/removal power. The executive officer would always owe a fiduciary duty to

the UHW and could be counted on to use the appointment/removal power in the best interests of

the UHW. That was the clear-cut structure of the trust and the entire arrangement. The intent

and the effect of the March 2008 amendment was to rob the UHW of this prerogative and to

misappropriate it to a self-perpetuating body of dissidents.5 

2. The March 2008 amendment was invalid under the trust agreement for at least

two reasons. First, for the reason just stated, it altered the basic principles of the trust in

violation of Article IX of the Trust Agreement. Second, it further violated Article IX because it

conflicted with the terms of the collective bargaining agreement called out on the opening page

of the trust agreement and thus further violated Article IX. That collective agreement (TX 121

at 18) provided that the trust would “be governed by an equal number of labor and management

trustees. Labor trustees are selected by labor; management trustees by management.” It is clear

that “labor” meant the UHW, the relevant collective bargaining agent. The word “labor” was

consistently used in the collective bargaining agreement to refer to the bargaining agent, the

UHW. The March 2008 amendment repudiated this collective bargaining agreement

requirement by robbing the UHW of this prerogative.6

 

3. The fund is an employee-benefit plan governed by ERISA. Both sides agree to

this much. Both sides agree that ERISA § 502(a)(3) authorizes civil actions to enjoin any act

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 Plaintiffs’ motion to re-open the trial record to prove standing by Rebecca Collins is DENIED. 

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in violation of ERISA or the terms of the plan or to enforce the plan and that here the plan

documents include the trust agreement in question. 

4. They disagree over whether the UHW has standing to sue. Contrary to

defendants’ position, this order holds that the UHW is a fiduciary with standing to sue. 

The UHW is seeking in this suit to vindicate its authority to appoint and to remove trustees

under the trust agreement. The Ninth Circuit has specifically held that the function of appointing

and removing trustees is a “fiduciary” function and that the person or entity carrying out that

function is a “fiduciary.” Batchelor v. Oak Hill Med. Group, 870 F.2d 1446, 1448–49 (9th Cir.

1989). See also Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1466 (4th Cir. 1996); 29 C.F.R.

2509.75-8(D-4). Licensed Div. Dist. No. 1 MEBA/MNU v. Defries, 943 F.2d 474, 478 (4th Cir.

1991), held that where a union asserts the authority to remove and replace fund trustees, but the

incumbent trustees refuse to recognize the union’s authority, the union has standing as a

“fiduciary” to vindicate that authority.7

 

5. On the merits, ERISA § 404(a)(1)(D) required the trustees to administer the plan

“in accordance with the documents and instruments governing the plan.” This was violated by

the March 2008 amendment, for the two reasons stated above. This order holds that the

March 2008 amendment must be enjoined, that the UHW has the right to remove the defendant

employee trustees, and to appoint such replacements as the UHW sees fit. This is dispositive. 

6. In the alternative, this order also grants plaintiffs’ LMDRA § 501 claim. 

Under LMRDA § 501(a), “[t]he officers . . . and other representatives of a labor organization

occupy positions of trust in relation to such organization,” and “[i]t is, therefore, the duty of

each such person . . . to hold its money and property solely for the benefit of the organization

and its members and . . . to refrain from dealing with such organization as an adverse party.” 

29 U.S.C. 501(a). This provision imposes on union officers and agents a duty to refrain from

“undisclosed self-dealing.” See Morrissey v. Curran, 650 F.2d 1267, 1274 (2d Cir. 1981). 

Union agents violate this duty when they cause the union to engage in a transaction that confers

a benefit on themselves and fail to (i) obtain authorization from the members or a disinterested

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body of union officers such as its executive board; or (ii) fully disclose the facts surrounding the

transaction to the authorizing body. See Brink v. DaLesio, 667 F.2d 420, 424 (4th Cir. 1981);

Noble v. Sombrotto, 260 F. Supp. 2d 132 (D.D.C. 2003); McCabe v. IBEW Local 1377, 415 F.2d

92 (6th Cir. 1969). Defendants Rosselli, Borsos, Cornejo, Kurre and Clayton transferred UHW’s

appointment power to themselves without obtaining approval from UHW’s executive board or

its members, and without disclosing to a disinterested person in the UHW that they were

proposing to give away that power. That, by itself, constituted a violation of defendants’

fiduciary duty to the UHW. For this reason as well, the March 2008 amendment must be

enjoined and the authority restored to the UHW to remove and to appoint trustees. It is

unnecessary to reach various other theories of relief. 

INJUNCTIVE AND DECLARATORY RELIEF

For the foregoing reasons, the March 2008 amendment is hereby declared VOID AND

UNENFORCIBLE. The UHW, through its executive officer, is hereby restored in its power to

appoint and to remove employee trustees of the fund. The employee trustee defendants

(Rosselli, Borsos, Cornejo, Kurre and Vellardita) are hereby REMOVED as employee trustees,

and the employer trustees are hereby ORDERED to recognize the appointees made by the current

executive officer of the UHW as the valid employee trustees of the fund and henceforth to

recognize said executive officer’s authority to remove and to appoint any employee trustee. 

IT IS SO ORDERED.

Dated: May 10, 2010. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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