Source: https://law.justia.com/cases/federal/appellate-courts/F2/383/735/429209/
Timestamp: 2020-07-04 16:55:14
Document Index: 7243686

Matched Legal Cases: ['§ 501', '§ 501', '§ 501', '§ 501', '§ 501', '§ 501']

Local No. 92, International Association of Bridge, Structural and Ornamental Iron Workers, Afl-cio, Appellant, v. M. E. Norris et al., Appellees.h. L. Thacker, Appellant, v. M. E. Norris et al., Appellees, 383 F.2d 735 (5th Cir. 1967) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Fifth Circuit › 1967 › Local No. 92, International Association of Bridge, Structural and Ornamental Iron Workers, Afl-cio,...
Local No. 92, International Association of Bridge, Structural and Ornamental Iron Workers, Afl-cio, Appellant, v. M. E. Norris et al., Appellees.h. L. Thacker, Appellant, v. M. E. Norris et al., Appellees, 383 F.2d 735 (5th Cir. 1967)
US Court of Appeals for the Fifth Circuit - 383 F.2d 735 (5th Cir. 1967) October 2, 1967
§ 501(b) of the Act (see note 1 supra) provides that " [t]he trial judge may allot a reasonable part of the recovery in any action under this subsection to pay the fees of counsel prosecuting the suit at the instance of the member of the labor organization and to compensate such member for any expenses necessarily paid or incurred by him in connection with the litigation." The first issue we must decide is what is meant by the term "recovery." Does it mean, as contended by the Local, that the Union's liability for counsel's fees as the result of a § 501(b) suit is conditioned upon the recovery of a substantial monetary judgment which has been satisfied by the union officials who breached their fiduciary responsibilities? We think not.
Nothing in our examination of the legislative history of this particular provision discloses the Congressional meaning underlying the word "recovery" in § 501(b).24 But courts have had to construe this statutory language have uniformly rejected the restrictive interpretation urged by the Local. Bakery & Confectionery Workers International Union of America v. Ratner, 1964, 118 U.S.App. D.C. 269, 335 F.2d 691; Milone v. English, 1962, 113 U.S.App.D.C. 207, 306 F.2d 814; Highway Truck Drivers & Helpers Local 107 v. Cohen, E.D. Pa. 1963, 220 F. Supp. 735. These decisions reflect the view that the award of attorney's fees should be based primarily upon the benefits that have been realized by the union as a result of the suit instituted for it by its members. Thus Ratner phrases it this way. " [T]he services rendered by * * * [counsel for the members of the union] are to be measured in terms of the value of the benefits afforded to the International and its membership. * * * [T]he accomplishment of benefits to the membership as `appropriate relief' might well be achieved under court authority without monetary `recovery' as such. The payment of fees earned and reimbursement of expenses incurred became the obligation of International under traditional equitable principles which were simply called into play pursuant to the authorization for action under § 501. * * * [T]he language [of § 501 (b)] is permissive. It means no more than this: where a monetary recovery has in fact been achieved, that fund may constitute a source from which the trial judge `may allot a reasonable part' for the payment of counsel fees and disbursements." 335 F.2d at 696-697.
The computations were limited to unauthorized authorized allowances subsequent to September 14, 1959, the effective date of § 501, on the ground that the amendments to the Act are not retroactive. In support the District Court cited Highway Truck Drivers & Helpers Local 107 v. Cohen, D.C.Pa., 1960, 182 F. Supp. 608, affirmed 3 Cir., 284 F.2d 162, cert. denied 365 U.S. 833, 81 S. Ct. 747, 5 L. Ed. 2d 744; Holton v. McFarland, D. Alaska, 1963, 215 F. Supp. 372; and Flaherty v. McDonald, S.D. Cal., 1960, 183 F. Supp. 300
Special Master $ 3001.13 Accountants 1216.00 Attorneys 15729.47 __________ $19,946.60 ==========
McCraw v. United Association of Journeymen, etc., 6 Cir., 1965, 341 F.2d 705. The McCraw court held that the right to a jury trial preserved by the Seventh Amendment "has not application to cases where recovery of money damages is an incident to an action seeking equitable relief, even though damages might have been recovered in an action at law. It does not apply where the proceeding is not in the nature of a suit at common law. The present case is not a suit at common law or in the nature of such a suit. It is a statutory proceeding, unknown to the common law."
Beacon Theatres, Inc. v. Westover, 1959, 359 U.S. 500, 79 S. Ct. 948, 3 L. Ed. 2d 988; Dairy Queen, Inc. v. Wood, 1962, 369 U.S. 469, 82 S. Ct. 894, 8 L. Ed. 2d 44
See our decisions in Vess v. Fred Astaire Dance Studios, 5 Cir., 1956, 229 F.2d 892; H. B. Zachry Co. v. Terry, 5 Cir., 1952, 195 F.2d 185, cert. denied 344 U.S. 819, 73 S. Ct. 14, 97 L. Ed. 637; and Harlan, J., concurring in Dairy Queen, supra, 369 U.S. at 480, 82 S. Ct. at 901.
The only reference to this particular portion of the statute is found in the concern voiced by Senator Goldwater that the term "recovery" might be construed in a manner to impede the purposes of the provision. He noted that the proposed bills, as worded, conditioned "the payment of costs of actions under the fiduciary provisions by the defendant upon `recovery' by the plaintiff. Since under the House Bill the recovery of misused funds is not the only relief which may appropriate under that provision, limitations on payments of costs of defense to instances in which there is a recovery may defeat one of the purposes of the provision, namely, to facilitate member actions to enforce the duties and responsibilities imposed by the Bill." II Legislative History at 1359; 105 Daily Cong.Rec. 15119 (August 20, 1959). Unfortunately, the Senator's concern was never clarified. This Congressional inaction was early interpreted to mean that "the plaintiff's attorney's fee and the member's expenses [could] be paid only when the Court awards a money judgment." Dugan, Fiduciary Obligations Under the New Act, 48 Geo. L.J. 277, 302 (1959).
In Cohen, for example, the suit prosecuted on behalf of the union resulted in a verdict of $24,921.41, yet the Court awarded attorney's fees and expenses of $38,470.90. Moreover, the Court concluded that "the Union has benefited although up to date there has been no money paid. The fact of benefit is enough." 220 F. Supp. at 738.
Counsel for the members of the Local cite Holdemen v. Sheldon, S.D.N.Y., 1962, 204 F. Supp. 890, affirmed 2 Cir., 311 F.2d 2; Tucker v. Shaw, E.D.N.Y., 1966, 269 F. Supp. 924, 54 L.C. ¶ 11,502; Nelson v. Johnson, D. Minn., 1962, 200 F. Supp. 559, 212 F. Supp. 233, affirmed, 8 Cir., 1963, 325 F.2d 646; Schonfeld v. Rarback S.D.N.Y., 1965, 61 LRRM 2043; Robinson v. Weir, D. Neb., 1966, 54 L.C. ¶ 11,536
"Plainly the foundation for the historic practice of granting reimbursement for the costs of litigation other than the conventional taxable costs is part of the original authority of the chancellor to do equity in a particular situation. Whether one professes to sue representatively or formally makes a fund available for others may, of course, be a relevant circumstance in making the fund liable for his costs in producing it. But when such a fund is for all practical purposes created for the benefit of others, the formalities of the litigation * * * hardly touched the power of equity in doing justice as between a party and the beneficiaries of his litigation." Sprague v. Ticonic Nat'l Bank, 1939, 307 U.S. 161, 166-167, 59 S. Ct. 777, 780, 83 L. Ed. 1184, 1187