IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

EUGENIO VARGAS,

 Plaintiff/Counterclaim Defendant,

v.

ASSOCIATION OF PROFESSIONAL 

FLIGHT ATTENDANTS, et al., 

 Defendants/Counterclaim Plaintiff.

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 Civil Action No. 4:22-cv-430-Y

 Judge Terry R. Means

APFA’S RESPONSE IN OPPOSITION TO 

PLAINTIFF’S SECOND MOTION TO DISMISS

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TABLE OF CONTENTS

Page

I. INTRODUCTION......................................................................... 1

II. STATEMENT OF THE CASE............................................................ 2

III. ARGUMENT AND AUTHORITIES....................................................... 5

A. Legal Standard.................................................................................. 5

B. The Counterclaim States A Claim Under The LMRDA For 

Breach Of Fiduciary Duty................................................................. 6

C. Plaintiff’s Reliance On Hoffman v. Kramer And Section 501(b) Caselaw 

Applying A Heightened Pleadings Requirement 

Is Misplaced..................................................................................

12

D. Plaintiff’s Motion To Dismiss APFA’s Counterclaim To Enforce 

The APFA’s Constitution Is Moot....................................................... 16

IV. CONCLUSION.............................................................................. 16

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TABLE OF AUTHORITIES

Cases Page

Adams-Lundy v. APFA (Adams-Lundy II),

792 F.2d 1368 (5th Cir. 1986)........................................................... 11

Adams-Lundy v. APFA (Adams-Lundy III),

844 F.2d 245 (5th Cir. 1988) ............................................................ 11-12

Ashcroft v. Iqbal, 

556 U.S. 662 (2009)...................................................................... 5

Bell Atlantic Corp. v. Twombly, 

550 U.S. 544 (2007)...................................................................... 5, 12

Brink v. DaLesio, 

667 F.2d 420 (4th Cir. 1981)............................................................. 9

Colle v. Brazos Cty., Texas, 

981 F.2d 237 (5th Cir. 1993)............................................................. 5

Collins v. Morgan Stanley Dean Witter, 

224 F.3d 496 (5th Cir. 2000)............................................................. 5

Gilvin v. Fire, 

 259 F.3d 749 (D.C. Cir. 2001)...................................................... 10-11

Guzman v. Bevona, 

90 F.3d 641 (2d Cir. 1996)............................................................... 9

Hoffman v. Kramer, 

362 F.3d 308 (5th Cir. 2004)............................................................. Passim

Int’l Union of Elec., Salaried, Mach. & Furniture Workers v. Statham, 

97 F.3d 1416 (11th Cir. 1996)............................................................ 7

Int’l Union of Operating Engr’s, Loc. 150 v. Ward, 

563 F.3d 276 (7th Cir. 2009)............................................................. 6, 7

Isquith v. Middle South Util., Inc., 

847 F.2d 186 (5th Cir. 1988)............................................................. 6

Kovac v. Wray, 

363 F. Supp. 3d 721 (N.D. Tex. 2019)................................................. 6

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TABLE OF AUTHORITIES, con’t

Cases, con’t Page

Lormand v. U.S. Unwired, Inc.,

565 F.3d 228 (5thCir. 2009)............................................................. 5

Morrisey v. Curran, 

650 F.2d 1267 (2d Cir. 1981)............................................................ 7, 9, 15

Ray v. Young, 

753 F.2d 386 (5th Cir. 1985)............................................................. Passim

Stewart v. Int’l Ass’n of Machinists & Aerospace Workers, 

16 F. Supp. 3d 783 (S.D. Tex. 2014).................................................... Passim

United States v. Goad, 

 490 F.2d 1158 (8th Cir. 1974)............................................. ......... 10

United States v. Int’l Bhd. of Teamsters, 

652 F. Supp. 2d 447 (S.D.N.Y. 2009).................................................. 9

United States v. Stockton, 

 788 F.2d 210 (4th Cir. 1986)............................................................ 10

Statutory Authority and Other Rules

Labor Management Reporting and Disclosure Act,

 29 U.S.C. § 501(a)........................................................................ Passim

 29 U.S.C. § 501(b)........................................................................ Passim

Labor Management Relations Act,

29 U.S.C. § 185........................................................................... 16

Fed. R. Civ. P. 12(b)(1)....................................................................... 4-5

Fed. R. Civ. P. 12(b)(6)....................................................................... 4-5, 13

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I. INTRODUCTION.

This lawsuit arises out of an internal union arbitration which addressed charges of financial 

misconduct by Plaintiff Eugenio Vargas during his term as National Treasurer of the Association 

of Professional Flight Attendants (“APFA” or “Union”). See APFA’s Counterclaims, Doc. 76 at 

17; Doc. 11-1 (Arbitration Award dated Feb. 18, 2022) and Doc. 76 at ¶ 27 (referencing Award); 

Doc. 39-1 (Supplemental Award dated Aug. 24, 2022); Doc. 46 (taking judicial recognition of 

Supplemental Award). Plaintiff filed suit challenging the decision of a neutral third-party arbitrator 

finding him guilty of dereliction in the performance of his fiduciary responsibilities as the APFA 

National Treasurer resulting in the Union overpaying thousands of dollars in unauthorized 

compensation to himself and his fellow officers and spending thousands more to finance his own 

personal expenses. Id. In the counterclaim at issue here, APFA seeks, pursuant to Section 501(a) 

of the Labor-Management Reporting and Disclosure Act (“LMRDA”), 29 U.S.C. § 501(a), to hold 

Mr. Vargas – who held the keys to the vault in his role as National Treasurer – responsible for 

violating his fiduciary obligation to the Union and to recover expenses held owed to the Union in 

accordance with the arbitrator’s final and binding determination.

This is Plaintiff’s second motion to dismiss. In his first motion Plaintiff argued, among 

other things, that APFA’s Section 501(a) counterclaim should be dismissed based on caselaw 

applying the heightened pleadings requirements applicable to Section 501(b) claims, specifically

arguing that the Union must first prove to the Court “good cause” before proceeding on its claim. 

Denying that motion, the Court found these 501(b) requirements inapplicable to APFA’s 

counterclaim under Section 501(a). Order, Doc. 70 at ECF 3-4. In this second motion to dismiss, 

Plaintiff relies on the same legal authority and reasserts a variant of his Section 501(b) argument 

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despite the Court’s prior ruling. For the reasons stated below, Plaintiff’s motion to dismiss AFPA’s 

fiduciary duty claim should be denied. 

II. STATEMENT OF THE CASE. 

Pursuant to the APFA Constitution, two rank-and-file Union members filed internal charges 

against Mr. Vargas alleging a range of financial misconduct during his term as APFA National

Treasurer. APFA’s Counterclaims, Doc. 76, ¶¶ 5-24 (ECF 19-24-23). A nationally respected 

arbitrator, Ruben R. Armendariz, served as the impartial arbitrator in the hearing on these charges

held in accordance with the procedures outlined in the AFPA’s Constitution. Id. at ¶¶ 7-27 (ECF 

20-24).

After an extensive hearing, Arbitrator Armendariz concluded that Mr. Vargas had, among 

other things, “attempted to benefit monetarily and thus failed in his fiduciary duty as National 

Treasurer by willfully changing the formula” for calculation of certain benefits paid to himself and 

three other National Officers. Award, Doc. 11-1 at ECF 35, 37. In reaching this decision, t

Arbitrator Armendariz found that Mr. Vargas “failed in his fiduciary duty as National Treasurer by 

willfully changing the formula for the payouts for [National Officers] Bob Ross, Nena Martin and 

Marcy Dunaway as well as himself,” costing the Union tens of thousands of dollars. Id. at ECF 37, 

38 (emphasis added) (finding that all of the officers, except for Ross, paid the improper funds back 

to the Union). Finding merit to the charges that Mr. Vargas had regularly and willfully improperly 

charged personal meals to the Union, the Arbitrator also ordered an independent audit to determine

the exact amount owed for these improper charges. Id. at ECF 39. In a supplemental ruling based 

on an independent financial review, id. at ECF 32, he determined that Mr. Vargas had made 

approximately $14,000 in “[i]nappropriate credit card charges related to meals.” Supp. Award, 

Doc. 39-1 at ECF 2; see also Order, Doc. 46 at ECF 1 (taking judicial notice of the supplemental 

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arbitral decision). Mr. Vargas was ordered to repay that amount, the cost of the independent 

financial review, and half of the arbitrator’s fee and was “prohibited from serving in any APFA 

National Officer position or Regional Officer position for life.” Supp. Award, Doc. 39-1 at ECF 2. 

While Mr. Vargas did agree to repay APFA for some of his improper expenditures, Doc. 11-1 at 

ECF 37 (noting that Mr. Vargas had “entered into a payment agreement to repay the overage debt” 

in one regard), he did not comply with the obligation to repay the Union for other improper 

expenditures or other costs ordered by the arbitrator. APFA’s Counterclaims, Doc. 76 ¶¶ 31, 34 

(ECF 25).

In its first Answer in this matter, APFA filed a counterclaim against Mr. Vargas alleging 

that he had breached his federal fiduciary duty by “paying and accepting payment of monies from 

APFA while National Treasurer which the arbitrator has found ... were overpayments and/or 

wrongful payments ... in violation of the APFA Constitution and Policy Manual, and in refusing 

to repay” some of the fees incurred by the Union as ordered by the arbitrator. APFA’s Counterclaim, 

Doc. 11 at ECF 29-30. Plaintiff moved to dismiss that counterclaim as barred by the statute of 

limitations and for failing to meet the “good cause” requirement of 29 U.S.C. § 501(b). Pl.’s First 

Mot. Dismiss, Doc. 58 at ECF 9, 11-12. In support of his “good cause” argument, Plaintiff relied 

on the Fifth Circuit’s decision in Hoffman v. Kramer, 362 F.3d 308 (5th Cir. 2004), involving 

Section 501(b) of the Act. This Court denied that part of Plaintiff’s motion to dismiss, holding that 

the state statute of limitations did not apply to the federal fiduciary duty claim and that the “good—

cause” provision of § 501(b) “is inapplicable to the APFA’s claim under section 501(a).” Order, 

Doc. 70 at ECF 3-4.

Subsequently, Plaintiff filed an Amended Complaint (Doc. 55-1) and APFA reasserted its 

federal fiduciary duty counterclaim, as well as a claim for “Enforcement of the APFA Constitution 

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as Interpreted and Applied by the Arbitrator’s Decision and Order.” APFA’s Counterclaims, Doc. 

76 at ECF 26. Plaintiff did not move to dismiss within the time for a responsive pleading, see Rule 

12(b), Fed. R. Civ. P., but instead filed an Answer (Doc. 79). Then, over five months after that 

counterclaim was filed, Plaintiff filed the present motion to dismiss, premised again on Rule 

12(b)(1) and Rule 12(b)(6). Pl.’s Second Mot. to Dismiss, Doc. 107.

While the present motion seeks dismissal of both counterclaims, APFA has since moved 

for leave to amend its counterclaims and will not be prosecuting the counterclaim based 29 U.S.C. 

§ 185 seeking to enforce the APFA Constitution. APFA’s Mot. Amend, Doc. 108. Accordingly, we 

address only the fiduciary duty counterclaim herein. 

With respect to the fiduciary duty counterclaim, Plaintiff again relies on Hoffman, 362 F.3d 

308, to assert under Rule 12(b)(6) that “APFA fails to state a claim for breach of fiduciary duty,” 

because, in his view, the conduct which gave rise to the counterclaim consisted merely of “business 

decisions ... regarding which expenses incurred fall within the scope of the APFA Policy.” Doc. 

107 at ECF 10. Plaintiff makes a range of factual assertions to the effect that the “expenses 

incurred” by him were “not payments made and received by the Ross administration,” id. at ECF 

9; that “expenses and payments made with union funds during the Ross administration followed 

APFA procedures,” ibid.; and that various audits and governmental filing not in the record support 

his characterization of the facts, id. at ECF 11-12. Characterizing certain government filings not 

in the record as “testimony”, Plaintiff claims to have been exonerated notwithstanding the findings 

of the arbitrator. Ibid. None of these alleged facts are in the counterclaim.

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III. ARGUMENT AND AUTHORITIES.

A. Legal Standard.

Plaintiff describes the motion as brought pursuant to both Rule 12(b)(6) and 12(b)(1), Fed. 

R. Civ. P. However, Plaintiff’s principal argument is that APFA has failed to state a viable claim 

under Section 501 of the Labor-Management Reporting and Disclosure Act (“LMRDA”), which 

falls squarely within the purview of Rule 12(b)(6) and should be evaluated against that standard. 

Stewart v. Int’l Ass’n of Machinists & Aerospace Workers, 16 F. Supp. 3d 783, 790 (S.D. Tex. 

2014) (finding motion to dismiss challenging union’s standing to bring an action under Section 

501(a) should be considered under Rule 12(b)(6), not Rule 12(b)(1)).

Motions to dismiss under Rule 12(b)(6) “are viewed with disfavor and are rarely granted.” 

Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5thCir. 2009). It is well settled that in deciding 

such motions courts “accept all factual allegations as true” and “draw all reasonable inferences” 

in the pleader’s favor. Id.; see also Hoffman, 362 F.3d at 318, n.7 (Under Rule 12(b)(6), “[t]he 

complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint 

must be taken as true”) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 

2000)). Dismissal should be rejected so long as the pleading alleges “enough facts to state a claim 

to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). 

“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to 

draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009). 

Moreover, in adjudicating a Rule 12(b)(6) motion, a court “may not go outside the 

pleadings.” Colle v. Brazos Cty., Texas, 981 F.2d 237, 243 (5th Cir. 1993). A document that is part 

of the record but not referred to in the challenged pleading and not attached to a motion to dismiss 

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may not be considered by the court in ruling on a 12(b)(6) motion. Kovac v. Wray, 363 F. Supp. 3d 

721, 739 (N.D. Tex. 2019). Throughout Plaintiff’s motion, he references documents and alleged 

facts that are neither referenced in nor central to the counterclaim being challenged here.1 The 

Court should therefore exclude them from its consideration. See Isquith v. Middle South Util., Inc., 

847 F.2d 186, 193 n.3 (5th Cir. 1988). 

For the reasons stated below, Plaintiff’s second motion to dismiss should be denied. 

B. The Counterclaim States A Claim Under The LMRDA For Breach Of 

Fiduciary Duty. 

APFA has clearly stated a viable Section 501(a) counterclaim against the Plaintiff. 

Section 501 of the LMRDA was enacted to fight fraud and corruption by union officials 

and to ensure that union funds were being expended in the best interest of the union membership. 

Int’l Union of Operating Engr’s, Loc. 150 v. Ward, 563 F.3d 276, 278, 283-89 (7th Cir. 2009) 

(discussing history of Section 501). 

Section 501(a) thus sets forth the federal fiduciary duties of union “officers ... and other 

representatives” who “occupy positions of trust in relation to such organization and its members 

as a group.” 29 U.S.C. § 501(a). Among other specified federal duties, “[e]ach such person” has 

the duty “to refrain ... from holding or acquiring any pecuniary or personal interest which conflicts 

with the interests of such organization, and to account to the organization for any profit received 

1 For example, Plaintiff references in his Motion a letter from an accounting firm and several 

of the Union’s annual LM-2 filings; makes a range of unsupported factual assertions concerning 

the alleged propriety of certain expenditures of union funds and who was or was not authorized to 

approve same; and raises factual challenges as to how the arbitration was conducted. Pl.’s Second 

Mot. to Dismiss, Doc. 107 at ECF 4-6, 9-11. Notably, none of these documents or factual assertions 

are referenced in the APFA’s counterclaims, nor are they supported by any affidavits or other 

proper documentation attached to the motion to dismiss. These unsupported factual assertions 

cannot support dismissal under Rule 12(b)(6). See Hoffman, 362 F.3d at 318, n. 7. 

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by him in whatever capacity in connection with transactions conducted by him or under his 

direction on behalf of the organization.” Id.

Under the Act, expenditures of union funds must not only be authorized by the union’s 

“constitution and by-laws and any resolutions of the governing bodies,” they must also be for the 

benefit of the organization. 29 U.S.C. § 501(a). Even if funds are arguably disbursed in accordance 

with a union’s internal procedures, the expenditure is improper under Section 501(a) if it is for the 

personal benefit of the recipients, rather than for the benefit of the union membership. See Morrisey 

v. Curran, 650 F.2d 1267, 1273-74 (2d Cir. 1981) (“authorization cannot be used to shield the very 

acts that prompted the legislation, misappropriation and abuse of union funds by officers for their 

personal benefit.”); see also Ray v. Young, 753 F.2d 386, 389 (5th Cir. 1985) (quoting same).

It bears emphasis that among a union officer’s responsibilities under 501(a) is the duty “to 

account to the organization.” This duty “fairly implies that the union has a specific remedy -- that 

it may sue an unfaithful officer in federal court for an accounting of ill-gotten gains.” Ward, 563 

F.3d at 287. Accordingly, a union can seek to recover improperly expended funds through a Section 

501(a) lawsuit, as is the case here. See id. at 289 (“labor organizations have an implied cause of 

action under § 501(a) to sue in federal court for violation of the fiduciary duties imposed by the 

statute. The text and structure of the statute as a whole demonstrate Congress’ intent to confer upon 

unions federal rights and a federal remedy”); Int’l Union of Elec., Salaried, Mach. & Furniture 

Workers v. Statham, 97 F.3d 1416, 1421 (11th Cir. 1996) (“section 501(a) was intended to create a 

federal cause of action that can be asserted by the union on its own behalf”); see also Stewart, 16 

F. Supp. 3d at 793 (denying motion to dismiss union counterclaims; finding “unions have an 

implied federal cause of action under Section 501(a) to sue for violations of the fiduciary duties 

imposed by the statute”).

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The claims here include breaches of the statutory duty “to refrain ... from holding or 

acquiring any pecuniary or personal interest which conflicts with the interests of [the] ... 

organization,” and the duty “to account to the organization for any profit received by him in 

whatever capacity in connection with transactions conducted by him or under his direction on 

behalf of the organization.” 29 U.S.C. § 501(a). Section 501(a) also requires officers to “to hold [a 

union’s] money and property solely for the benefit of the organization and its members and to ...

expend the same in accordance with its constitution and bylaws and any resolutions of the 

governing bodies adopted thereunder.” Id.

As set forth above and as detailed in the pleadings, we allege that Plaintiff breached these 

duties (as found in the final and binding arbitration) by misusing his Union position to improperly 

receive Union funds for his own personal gain and to expend funds for the personal gain of his 

fellow National Officers at the expense of the APFA’s membership in a manner contrary to its 

governing documents. 

Because “Section 501 was adopted primarily to address the problem of corrupt 

management of funds by union officials” the Fifth Circuit has found that it “must be given its 

strongest reading in a case involving a union officer’s diversion of union funds or property into his 

own hands.” Ray, 753 F.2d at 389.

We wish to stress, however, that we do not use the term “personal benefit” solely 

in th[e] narrow sense. By way of example only, we think that a union officer 

benefits, in a way that justifies heightened judicial scrutiny, (1) from the 

expenditure of union funds to purchase things for his personal use or for his family 

and friends, (2) by the use of union property for personal purposes; or (3) by 

receiving reimbursement for expenses not related to union business. We do not 

think that authorization in cases like these should shield the union officer from 

liability under Section 501 any more than it should when the union officer receives 

cash directly from the union treasury.

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Id. at 390 (citations omitted).

2

Here, the neutral arbitrator found that Plaintiff misappropriated Union funds for his own 

personal benefit, at the expense of the membership, and in a manner contrary to the Union’s 

governing documents and procedures. APFA seeks, by its counterclaim, restitution of these funds

to the membership. This claim is squarely within the scope of Section 501(a). See id.; Hoffman, 

362 F.3d at 313 (“officials must also account to union membership for any gains they receive in 

connection with their union office”).

The claims at issue here are also “primarily pecuniary in nature.” Hoffman, 362 F.3d at 316 

n.3. They involve funds rightly owed to the Union membership, which were diverted or converted 

by Plaintiff under color of his Union office and for his own personal gain and for the personal gain 

of others. Remarkably, Plaintiff’s motion discusses and tries to defend, largely through conclusory 

statements and gratuitous assertions, only one piece of the disputed payments – the $5,436.47 

overpayment for sick and vacation leave which he approved to be paid to Ross and which has not 

been repaid. These same arguments were made to, but rejected by, the arbitrator. Award, Doc. 11-

1 at ECF 28-30, 35-38. He also entirely ignores the fact that he admitted that he also had overpaid 

himself and other officers’ similar amounts. See Award, Doc. 11-1 at 37 (“Vargas attempted to 

2 See also Guzman v. Bevona, 90 F.3d 641, 646 (2d Cir. 1996) (union officer violated the Act 

by improperly spending nearly $20,000 in union funds “to order surveillance of a loyal but 

outspoken union member” and that union “authorization” of the improper expense was irrelevant; 

“Such abuse of union funds directly violates the fiduciary duty imposed on union officers by 

section 501(a)”); Morrissey, 650 F.2d at 1285 (affirming district court’s order for an accounting to 

determine if foreign travel and commuting expenses between New York and Florida were for valid 

business purpose of union); Brink v. DaLesio, 667 F.2d 420, 426 (4th Cir. 1981) (officer must pay 

difference between excessive rent, under lease he negotiated with friend, and reasonable rent for 

union offices); United States v. Int’l Bhd. of Teamsters, 652 F. Supp. 2d 447, 449 (S.D.N.Y. 2009) 

(upholding Independent Review Board determination that union president violated his fiduciary 

duty when he caused the union “to pay for Cleveland Cavalier playoff and season tickets, his wife’s 

travel expenses, and other personal expenses for which there was no union purpose”).

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benefit monetarily and thus failed in his fiduciary duty as National Treasurer by willfully changing 

the formula for the payouts for Bob Ross, Nena Martin and Marcy Dunaway as well as himself” 

without proper authorization.). His claim of innocence here is further belied by the fact that he and 

the other officers (except Ross) paid the improper amounts back to the Union. Plaintiff admits in 

his motion to dismiss that these expenditures fell “squarely within [his] duties” as National 

Treasurer. Pl.’s Second Mot. to Dismiss, Doc. 107 at ECF 10. He cannot escape liability here 

because some of the improperly expended funds were paid back, particularly because these 

unauthorized funds were only paid out in the first place because he and his fellow officers failed 

in their fiduciary duty to the membership. See United States v. Goad, 490 F.2d 1158, 1165 (8th 

Cir. 1974) (finding salary increase for officers “approved” by union president and secretarytreasurer violated Section 501 when the increases “were not approved by the Executive Board” as 

required by the union’s constitution and “effectively were kept secret” until the next election; “The 

exercise of power by union officials is not unfettered, but checked in the first instance by proper 

approval within its own ranks.”) (emphasis added); United States v. Stockton, 788 F.2d 210, 217 

(4th Cir. 1986) (“The permission of the union is lacking if the appropriation or expenditure is 

outside the scope of the fiduciary trust placed in the defendant by the union as a whole and outside 

the scope of the powers of any superior union official on whose permission the defendant has 

sought to rely.”). Moreover, it is not disputed that Ross refused to repay these funds, which were 

improperly expended under Plaintiff’s supervision and, as found by the arbitrator, violated his 

fiduciary duty to the membership. 

As National Treasurer, Plaintiff’s fiduciary violations in overpaying himself and friends 

from Union funds without proper authorization is particularly egregious. See Gilvin v. Fire, 259 

F.3d 749, 757 n. 9 (D.C. Cir. 2001) (finding union National Secretary-Treasurer “could not 

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lawfully have signed a check that ... violated his fiduciary obligations as Secretary–Treasurer” 

and citing Section 501(a) “setting forth the fiduciary obligations of the officers of a labor 

organization with respect to the organization’s ‘money and property’”). Notably, Plaintiff does not 

– and cannot – justify the approximately $14,000 in Union funds he was found to have spent on 

his personal meals in violation of his fiduciary duty as also found by the arbitrator. 

Plaintiff also incorrectly asserts that the Section 501(a) claim “rest[s] solely on the basis of 

Plaintiff’s alleged breach of APFA Constitution and APFA Policy” and is therefore not within this 

Court’s jurisdiction under Adams-Lundy v. APFA, 792 F.2d 1368 (5th Cir. 1986). Pl.’s Second 

Mot. to Dismiss, Doc. 107 at ECF 12-13. Plaintiff misunderstands the statute and misreads both 

the counterclaim and Adams-Lundy. 

The counterclaim is for breach of the federal fiduciary duty, as defined by the LMRDA. 

That duty expressly includes the obligation -- enforceable in court -- “to hold [the Union’s] money 

... solely for the benefit of the organization ... and to ... expend the same in accordance with its 

constitution and bylaws and any resolution of the governing bodies adopted thereunder.” 29 U.S.C. 

§ 501(a) (emphasis supplied). Courts thus necessarily look to the Union’s Constitution and Policy 

in resolving a Section 501 claim. See 29 U.S.C. § 501(a); see also Ray, 753 F.2d at 390 (finding 

an expense must first be “validly authorized in compliance with the union’s constitution, bylaws, 

and resolutions” to be proper under Section 501).

And Adams-Lundy is not to the contrary. That case was before the Court of Appeals three 

times. The decision relied on by Plaintiff, Adams-Lundy II, held that there was no federal 

jurisdiction to “enforce an arbitration award that is based solely on an internal union constitution.” 

792 F.2d at 1373. But that was not a ruling under Section 501, which was taken up in the next 

appellate ruling, Adams-Lundy v. APFA, 844 F.2d 245 (5th Cir. 1988) (Adams-Lundy III). In that 

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decision, the Court addressed the very point now asserted by Plaintiff and firmly rejected it: “No 

panel has decided the § 501 issue.... This statement [in Adams-Lundy II regarding jurisdiction to 

enforce a union constitution] ... was not a decision on the merits of the § 501 claim.” 844 F.2d at 

248. Describing the Section 501 claim in that case as founded on allegations that union officers 

had, among other things, “fail[ed] to expend money in accordance with the union constitution” 

and “without the authorization of the governing board,” the Court in Adams-Lundy III denied a 

motion to dismiss that claim. Id. at 248-250. Contrary to Plaintiff’s assertions, the fiduciary duty 

counterclaim here is wholly consistent with Adams-Lundy.

Based on the foregoing, the Union has alleged here a “right to relief above the speculative 

level” as required by Twombly, 550 U.S. at 555, and Plaintiff’s motion to dismiss should be denied. 

C. Plaintiff’s Reliance On Hoffman v. Kramer And Section 501(b) Caselaw 

Applying A Heightened Pleadings Requirement Is Misplaced. 

In support of his motion to dismiss, Plaintiff relies heavily – as he did in his first motion to 

dismiss – on the Fifth Circuit’s decision in Hoffman v. Kramer, 362 F.3d 308 (5th Cir. 2004). 

Plaintiff’s reliance on Hoffman, which arose under Section 501(b) of the LMRDA, not Section 

501(a), is wholly misplaced here. 

First, Hoffman did not involve either the specific provisions of Section 501(a) which are 

involved here, or a motion to dismiss. Rather, Hoffman involved review of the district court’s ruling 

denying leave to bring a Section 501(b) derivative suit brought by a union member. Under Section 

501(b), an individual union member may sue for violations of Section 501(a), but only after first 

petitioning the court for leave to do so and only after meeting the strict requirements established 

in Section 501(b), which includes requesting the union “to sue or recover damages or secure an 

accounting or other appropriate relief.” 29 U.S.C. § 501(b). If the union refuses to take action 

within a reasonable time after being requested to do so, the member may seek leave to file a

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derivative lawsuit to recover the improperly expended funds on behalf of the union. Because the 

member seeks to act in the place of the union in filing such a suit and to avoid harassing litigation, 

courts will only grant a Section 501(b) plaintiff leave to file a complaint if they can show “good 

cause.” The 501(b) proceeding in Hoffman, therefore, involved a Verified Application and a 

“hearing before the district judge where [plaintiff’s] claims were explored and vetted.” 362 F.3d at 

319. No such verification and vetting process is at issue here. 

Second, Hoffman did not involve a motion to dismiss but rather the heightened pleading 

requirements for bringing a claim under Section 501(b), which is more than APFA is required to 

show for pleading a viable claim under Section 501(a). As made clear by the Fifth Circuit in 

Hoffman, “[t]he standard for determining whether an applicant has stated such a claim [under 

501(b)] goes beyond the analysis of a motion to dismiss under FED. R. CIV. P. 12(b)(6).” Id. at 

318, n. 7 (emphasis added). It bears emphasis here that this Court has already found that Section 

501(b) is not at issue in this action nor is its heightened pleadings requirements.

3 Order dated Feb. 

22, 2023, Doc. 70 at ECF 3 (“given that the counterclaim was filed by the APFA, rather than a 

member acting after the APFA’s refusal to file suit, the good-cause requirement of LMRDA section 

501(b) is inapplicable to the APFA’s claim under section 501(a)”). Accordingly, Plaintiff’s 

continued reliance on caselaw applying the heightened Section 501(b) pleadings standard here is 

particularly puzzling and can be seen as nothing but a backdoor effort to reargue claims already 

rejected by this Court. 

3 Even under that heightened standard, however, for purposes of determining if a complaint 

can be filed under Section 501(b), “the court must keep in mind ... that it is ‘inappropriate to 

consider ... defenses which require the resolution of complex questions of law going to the 

substance of the case’ or ‘[d]efenses which necessitate the determination of a genuine issue of 

material fact....’” Hoffman, 362 F.3d at 318, n. 7.

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Third, Hoffman is further distinguishable because the allegations at issue in Hoffman are 

nothing like the allegations at issue here. The portion of Hoffman Plaintiff relies upon dealt with 

allegations that two union officers, who received full-time salaries from the union, failed to 

actually work “full-time”; in essence, that they misused union funds by not working hard enough. 

362 F.3d at 322. The Fifth Circuit held, not surprisingly, that “the statute cannot be plausibly read 

to give rise to a cause of action against a union officer whenever there is a disagreement concerning 

his work schedule and work ethic.” Id. at 322. There was also no allegation in Hoffman, like there 

is here, that funds were expended without proper authorization and contrary to the Union’s 

governing documents. Further, unlike the present case, defendants in Hoffman “are not alleged to 

have benefitted personally.” Id. at 323. In contrast, APFA alleges that Plaintiff wrongly took 

thousands of dollars for his own personal gain and made expenditures for the personal benefit of 

his fellow officers; these are not mere “administrative” actions like the one at issue in Hoffman, 

but rather a clear breach of his fiduciary duty and abuse of office as envisioned by Section 501. 4

See Stewart, 16 F. Supp. 3d at 794 (denying motion to dismiss union’s 501(a) counterclaims 

finding that “[u]nlike the plaintiff in Hoffman, the Union has alleged that [counterclaim defendant] 

4 Plaintiff also incorrectly asserts in his Motion that the charges and the arbitrator’s 

jurisdiction were limited to the issue of whether Vargas violated Section 1.F of the APFA 

Constitution, which prohibits willful violations of the Union’s governing documents. Pl.’s Second 

Mot. to Dismiss, Doc. 107 at ECF 14. However, the grounds for the charges and the arbitrator’s 

decision were much broader and included, among other things, Section 1.E of the APFA 

Constitution, which addresses“[t]heft or embezzlement of Association monies or property.” See

Award, Doc. 11-1 at ECF 6-7 (discussing various charges); see also, e.g., id. at ECF 37 (finding 

“Vargas attempted to benefit monetarily and thus failed in his fiduciary duty as National Treasurer 

by willfully changing the formula for the payouts for Bob Ross, Nena Martin and Marcy Dunaway 

as well as himself”); id. at ECF 32 (ordering an audit of Vargas’ APFA credit card charges to 

determine scope of Vargas’ failure “in his fiduciary duty as National Treasurer”) and Supp. Award, 

Doc. 39-1 at ECF 2 (finding audit revealed Vargas improperly charged approximately $14,000 in 

personal meals to the Union).

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15

converted money that was owed to union members.”); see also Ray, 753 F.2d at 390 (listing types 

of claims within scope of Section 501).

Fourth, the Court in Hoffman recognized and applied the well-settled principle cautioning 

against judicial interference in internal union affairs. 362 F.3d at 317; see also Morrisey, 650 F.2d 

at 1273-74 (“We have recognized, as have many other courts, that the Act does not give courts a 

license to interfere broadly in internal union affairs”). Specifically, the Court in Hoffman found 

that the purpose of the heightened pleading requirements of Section 501(b) “is to discourage 

misuse of litigation” by individual union members “and to minimize judicial interference in the 

management of labor organizations.” 362 F.3d at 314. Accordingly, the Court in Hoffman found 

that “an objectively reasonable decision by union leadership not to pursue” the claim at issue in 

that case “is entitled to some deference.” Id. at 317. This judicial deference applied in Hoffman

weighs in favor of the APFA here, not the Plaintiff. This Court should also apply a similar level of 

deference in favor of the APFA’s internal union process here, including both the underlying 

arbitration held in accordance with its Constitution as well as its decision to pursue its breach of 

fiduciary duty claim against a former officer found to have misappropriated union funds for his 

own personal gain and for the gain of his fellow officers at the expense of the Union’s membership. 

In summary, this case is nothing like Hoffman and Plaintiff’s reliance on it in support of 

his motion to dismiss is unavailing. This case, unlike Hoffman, involves a found pattern and 

practice of misappropriating thousands of dollars in Union funds for Plaintiff’s personal gain at 

the expense of the APFA membership and in violation of Plaintiff’s fiduciary duty. We submit that, 

based on the pleadings and applying all reasonable factual inferences in favor of the APFA, 

Plaintiff simply cannot meet his burden of establishing that we “can prove no set of facts in support 

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16

of [t]his claim which would entitle [us] to relief.” Id. at 318 n.7. Accordingly, Plaintiff’s motion 

to dismiss should be denied.

D. Plaintiff’s Motion To Dismiss APFA’s Counterclaim To Enforce The APFA’s 

Constitution Is Moot. 

APFA has moved for leave to amend its counterclaims and will not be prosecuting the 29 

U.S.C. § 185(a) counterclaim seeking to enforce the APFA Constitution. APFA’s Mot. Amend, 

Doc. 108. Plaintiff has not opposed the withdrawal of that claim in his response to that motion. 

Accordingly, Plaintiff’s motion to dismiss this claim is moot. 

IV. CONCLUSION.

For the foregoing reasons, the APFA respectfully submits that Plaintiff’s motion to dismiss 

the counterclaims should be denied. 

Dated: September 19, 2023 Respectfully submitted, 

 /s/ James D. Sanford

JAMES D. SANFORD

Tex. Bar No. 24051289

Gillespie Sanford LLP

4803 Gaston Ave.

Dallas, TX 75246

Tel.: (214) 800-5111; Fax.: (214) 838-0001

Email: jim@gillespiesanford.com

JEFFREY A. BARTOS (pro hac vice)

D.C. Bar No. 435832

Guerrieri, Bartos & Roma, PC

1900 M Street, N.W. Suite 700

Washington, DC 20036

Tel.: (202) 624-7400; Fax: (202) 624-7420

Email: jbartos@geclaw.com

Counsel for Defendant and Counterclaim Plaintiff 

Association of Professional Flight Attendants, and 

Defendants Julie Hedrick and Erik Harris

Case 4:22-cv-00430-Y Document 116 Filed 09/19/23 Page 20 of 22 PageID 3855
17

CHARLETTE L. MATTS (pro hac vice)

Tex. Bar No. 24133870

Association of Professional Flight Attendants

1004 W. Euless Blvd.

Euless, TX 76040

Tel.: (682) 301-8454

Email: Cmatts@apfa.org

Counsel for Defendant and Counterclaim Plaintiff 

Association of Professional Flight Attendants

Case 4:22-cv-00430-Y Document 116 Filed 09/19/23 Page 21 of 22 PageID 3856
CERTIFICATE OF SERVICE

I certify that on September 19, 2023, a true and correct copy of the foregoing APFA 

Response in Opposition to Plaintiff’s Second Motion to Dismiss was served upon all persons who 

have requested notice and service of pleadings in this case via the Court’s ECF system. 

KERRI PHILLIPS

K.D. Phillips Law Firm, PLLC 

6010 W. Spring Creek Parkway 

Plano, TX 75024

Phone: (972) 327-5800

Fax: (940) 400-0089

Email: kerri@KDphillipslaw.com

 

/s/ James D. Sanford

JAMES D. SANFORD

Case 4:22-cv-00430-Y Document 116 Filed 09/19/23 Page 22 of 22 PageID 3857