it unnecessary to decide whether a union could sue under section 501 without meeting the procedural
prerequisites of the statute.” Tile, Marble, Terrazzo, Finishers, Shopworkers and Granite Cutters
Int'l Union, AFL-CIO v. Ceramic Tile Finishers Union, Local 25,972 F.3d 738, 745 n.4 (7° Cir.
1992).

Plaintiff argues that Section 501(b) “certainly contemplates that a union may bring suit
against its officers in some forum.” (R-8 at 1), The Court, however, agrees with Judge Zagel that
the plain language of the Section 501(b) only provides for a member to file suit under the statute.
International Bhd. of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers, AFL-CIO,
y. Freeman, 683 F.Supp. 1190, 1192 (N.D. Ill. 1988). See also Building Material & Dump Truck
Drivers Local 420 v. Traweek, 867 F.2d 500 (9" Cir. 1989) (no cause of action by union); Operative
Plasterers & Cement Masons Int'l Assoc. of the United States & Canada v. Benjamin, 776 F.Supp.
1360, 1364 (N.D. Ind. 1991) (Section 501(b) does not provide for a cause of action by union); Local
443, Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am. v. Pisano, 753 F Supp.
434, 436 (D. Conn.1991). Section 501(b) clearly states that a member can bring suit, and the
definition of a member does not include a union. This Court will not amend the statute as written
by Congress. Further, the Court respects the “federal policy of noninterference in the internal affairs
of unions and labor matters.” Traweek, 867 F.2d at 506.

B. Section 501(a)

There is a split of authority, however, as to whether Section 501(a) provides for a private
right of action by a union. As the Supreme Court acknowledged without resolving the issue: “Courts
have reached inconsistent positions on the question whether a union may bring suit under § 501.”

Guidry v. Sheet Metal Workers Nat’l Pension Fund, 493 U.S. 365, 375, 110 S.Ct. 680, 686 (1990).


fund committee. The Seventh Circuit concluded that the pension fund committee fell within Section
501(a)’s definition of “officers, agents, or other representatives,” id. at 1354, and therefore had
fiduciary responsibilities. Hood did not create a separate cause of action and does not support one
here. -

The Court’s ruling is also consistent with Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d
26 (1975). In Cort, the Supreme Court set forth a four part test to determine whether the courts can
imply a private cause of action from a statute: (1) whether the plaintiff is “one of the class for whose
especial benefit the statute was enacted;” (2) whether there is “any indication of legislative intent,
explicit or implicit, either to create such a remedy or to deny one;” (3) whether it is “consistent with
the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff.” and (4)
whether the purported cause of action is “one traditionally relegated to state law, in an area basically
the concern of the States, so that it would be inappropriate to infer a cause of action based solely on
federal law.” Id. at 78, 95 S.Ct. at 2088. These factors do not support an implied right of action by
the Union. See Dunlop-McCullen, 2002 WL 31521012 at *9 (Cort factors not met); SantaMaria, 162
F.Supp.2d at 75-81 (same); Bottalico, 120 F.Supp.2d at 408-10 (same); Spear, 1998 WL 83684 at
*7 (same). But see Teamsters, Chauffeurs, Warehousemen & Helpers, Local 764 v. Greenawalt, 880
F.Supp. 1076, 1080-81 (M.D. Pa.1995) (Cort factors satisfied for Section 501 implied right of
action by union). Accordingly, the Union cannot proceed against Defendants under Section 501,

thus the case is hereby dismissed with prejudice.



Il. Section 501

Defendants contend that Section 501 of the Labor Management Reporting and Disclosure

Act does not provide for a private cause of action by a Union against former members. Plaintiff

counters that the issue of whether Section 501 creates a cause of action has not been decided by the

Seventh Circuit and remains open.' Plaintiff further asserts that it can bring a cause of action under

either Section 501(b) or Section 501(a). Plaintiff’s arguments fail.

A.

Section 501(b)

Section 501(b) provides, in relevant part:

When any officer, agent, shop steward, or representative of any labor organization
is alleged to have violated the duties declared in subsection (a) of this section and the
labor organization or its governing board or officers refuse or fail to sue or recover
damages or secure an accounting.or other appropriate relief within a reasonable
period of time after being requested to do so by any member of the labor
organization, such member” may sue such officer, agent, shop steward, or
representative in any district court of the United States . . . to recover damages or
secure an accounting or other appropriate relief for the benefit o the labor
organization. No such proceeding shall be brought except upon leave of the court
obtained upon verified application and for good cause shown, which application may
be made ex parte.

29 U.S.C. § 501(b) (emphasis added).

Plaintiff correctly notes that the Seventh Circuit has not decided whether a union has a

private right of action pursuant to Section 501(b). The Seventh Circuit only has stated “[w]e find

Plaintiff also argues that a cause of action also exists under 29 U.S.C. §185. Because
Plaintiff did not include such a count in its Complaint, this issue is not properly before the Court

at this time.

? Section 402(0) defines the term “member” to include “any person who has fulfilled the
requirements for membership in such organization, and who neither has voluntarily withdrawn
from membership nor has been expelled or suspended from membership after appropriate
proceedings consistent with lawful provisions of the constitution and bylaws of such
organization.” 29 U.S.C. § 402(o).


Several courts have held that Section 501 (a) creates an implied cause of action for unions to proceed,
and that Section 1331 or Section 1337? of Title 28 provides federal courts with the jurisdictional
hook to entertain such cases. See e.g., International Union of Elec., Elec. Salaried, Mach. &
Furniture Workers, AFL-CIO vy. Statham, 97 F.3d 1416, 1421 (11" Cir. 1996) (Section 1331
provides jurisdiction for Section 501(a) causes of action by unions); International Longshoremen’s
Ass'n, Steamship Clerks Local 1624, AFL-CIO vy. Virginia Int'l Terminals, Inc., 914 F.Supp. 1335,
1340 (E.D. Va. 1996) (union can sue under Section 501(a) and Section 1337 provides for
jurisdiction); Benjamin, 776 F.Supp. at 1365 (Section 501(a) creates a cause of action; 28 U.S.C.
§1337 gives the court jurisdiction to hear that cause of action), On the other hand, many courts have
rejected that Section 501 (a) provides a private right ofaction for unions. See e.g., Dunlop-McCullen
v. Pascarella, No. 97 C 0195, 2002 WL 31521012, at *9 (S.D.N.Y. Nov. 13, 2002) (“there is no
claim created for unions by § 501”); Local 1150 int'l Bhd. of Teamsters v. SantaMaria, 162
F.Supp.2d 68, 81 (D. Conn. 2001) (no cause of action for unions); United Transp. Union v.
Bottalico, 120 F.Supp.2d 407, 408-09 (S.D.N.Y. 2002) (“Congress did not intend to create a right
of action for unions” under § 501(a)); Znternational Longshoremen’s Association, AFL-CIO v. Spear,
No. Civ. A. 97-2438, 1998 WL 83684, at *5 (E.D. Pa, Feb. 25, 1998). The Union urges this Court
to agree with those courts holding that Section 501(a) provides for a cause of action by a union for
a breach of a fiduciary duty by one of its members. The Union heavily relies on the non-binding

opinion in Benjamin in support of its argument.

3 Sections 1331 and 1337 both give federal courts jurisdiction. Section 1331 grants
federal courts jurisdiction over “all civil actions arising under the Constitution, laws, or treaties
of the United States.” 28 U.S.C. § 1331. Section 1337 provides for jurisdiction over “any civil
actions or proceedings arising under any Act of Congress regulating commerce.” 28 U.S.C.
§1337(a). Plaintiff has alleged Section 1337 as a basis for jurisdiction in its complaint.

5


CONCLUSION

Defendants’ Motion to Dismiss is granted. Plaintiffs complaint is dismissed with prejudice.

DATED: December 31, 2002 ENTERED

Quel bh. ©

AMY J. SIEVE
United Statésistrict Judge



“\: Minute Order Form (06/67)

United States District Court, Northern District of Illinois

Na Assfgiied Pudge Sitting Judge if Other
oA strate Yudge Amy J. St. Eve than Assigned Judge
cash NUMBER 02 C 6464 DATE 12/31/2002
CASE IBEW vs. O'Reilly
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
qd) oO Filed motion of [ use listing in “Motion” box above.]
(2) im) Brief in support of motion due
(3) oO Answer brief to motion due . Reply to answer brief due.
(4) QO Ruling/Hearing on set for at
(5) im Status hearing[held/continued to] [set for/re-set for] on set for at
(6) Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) im Trial[set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) oO This case is dismissed [with/without] prejudice atid without costs[by/agreement/pursuant to]
OFRCP4(m) OLocal Rule 41.1 OFRCP41(a)(1) O FRCP41(a)(2).
ao) i [Other docket entry] | Enter Memorandum Opinion and Order. Defendants’ motion to dismiss is
granted. Status hearing set for 2/10/03 is stricken. Any other pending dates are stricken. Any pending
motions are denied as moot.
(11) [For further detail see order attached to the original minute order.]
No notices required, advised in open court. /
No notices required. ster of notices
Notices mailed by judge’s staff. INN 4 2 7003
Notified counsel by telephone. dae dockoted
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Section 501 (a) provides:

The officers, agents, shop stewards, and other representatives ofa labor organization occupy

positions of trust in relation to such organization and its members as a group. It is, therefore,

the duty of each such person, 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, to
refrain from dealing with such organization as an adverse party or in behalf of an adverse
patty in any matter connected with his duties and 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 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).

As with Section 501(b), a plain reading of Section 501(a)’s language does not create a cause
of action for unions. See Bottalico, 120 F Supp.2d at 408 (‘“(t}he plain language of §501 cannot be
read to create a claim for unions”). Section 501(a) only sets forth fiduciary duties. Furthermore,
Congress expressly provided for a cause of action for union members in Section 501(b). It is an
“elemental canon’ of statutory construction that where a statute expressly provides a remedy, courts
must be especially reluctant to provide additional remedies.” Karahalios v. National Fed’n of Fed.
Employees, Local 1263, 489 U.S. 527, 533, 109 S.Ct. 1282, 1286, 103 L.Ed.2d 539 (1989)(quoting
Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 19, 100 S.Ct. 242, 246, 62 L.Ed.2d
146 (1979)). If Congress had wanted to give the union the same cause of action, they could have
done so. Accordingly, the Court finds that Section 501(a) does not provide a cause of action for
unions to sue in federal court.

Plaintiff's reliance on Hood v. Journeyman Barbers, Hairdressers, Cosmetologists &

Proprietors Int'l Union of Am., 454 F.2d 1347 (7" Cir. 1972) in misplaced. In Hood, the Seventh

Circuit held that members of a union could bring suit under Section 501 against the union’s pension


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

LOCAL 15 OF THE INTERNATIONAL
BROTHERHOOD OF ELECTRICAL
WORKERS, No. 02 C 6464

Plaintiffs, Judge Amy J. St. Eve

v.

)
)
)
)
)
)
}
THOMAS O’REILLY and WILLIAM STARR, __)
)
)

Defendants.
MEMORANDUM OPINION AND ORDER
Defendants Thomas O’Reilly and William Starr have moved to dismiss Plaintiffs complaint
for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set
forth below, Defendants’ motion is granted.
FACTUAL BACKGROUND
Plaintiff Local 15 of the International Brotherhood of Electrical Workers (the “Union”) is a
labor organization. Defendant Thomas O’Reilly was a former business agent of the Union.
Defendant William Starr is the former president, business manager and financial secretary of the
Union. Both Defendants were removed from their Union positions on March 8, 2002.
Plaintiff has filed a complaint alleging that Defendants failed to properly maintain and keep
the Union’s records and receipts while in their Union positions, and improperly received salary
overpayments which they failed to return to the Union. Plaintiff has sued Defendants for an alleged

breach of their fiduciary duty and for an accounting pursuant to 29 U.S.C.§ §501(a) and 501(b).



ANALYSIS

1 Legal Standard

The purpose ofa motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is to test
the legal sufficiency of a complaint, not the merits of the case. Triad Assocs., Inc. v. Chicago Hous.
Auth., 892 F.2d 583, 586 (7" Cir. 1989); Majchrowski v. Norwest Mortgage, Inc., 6 F.Supp.2d 946,
952 (N.D. Ill. 1998). In ruling on a motion to dismiss for failure to state a claim, the court considers
“whether relief is possible under any set of facts that could be established consistent with [the]
allegations.” Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7" Cir. 1992). The Court
views all the facts alleged in the complaint, as well as any reasonable inferences drawn from those
facts, in the light most favorable to the plaintiff, and construes the allegations liberally. Stachon v.
United Consumers Club, Inc.,229 F.3d 673, 675 (7" Cir. 2000); Doherty v. City of Chicago, 75 F.3d
318, 322 (7" Cir. 1996); Taiz v. Nanophase Techs. Corp., No. 01 C 8440, 2002 WL 31269485, at
*3 (ND. Ill. Oct. 9, 2002). Dismissal is appropriate only where it appears beyond doubt that under
no set of facts would plaintiff's allegations entitle him to relief. Henderson v. Sheahan, 196 F.3d
839, 846 (7" Cir. 1999); Kennedy v. National Juvenile Det. Ass'n, 187 F.3d 690, 695 (7" Cir. 1999).
The complaint, however, must allege that each element of a cause of action exists in order to
withstand a motion to dismiss. Lucien v. Preiner, 967 F.2d 1166, 1168 (7" Cir. 1992). Furthermore,
a plaintiff “cannot satisfy federal pleading requirements merely by attaching bare legal conclusions
to narrated facts which fail to outline the bases of their claims.” Collins v. Snyder, No. 02 C 4493,

2002 WL 31749173, at *1 (N.D. Ill. Dec. 2, 2002) (citations and quotations omitted).