Opinion ID: 4248956
Heading Depth: 2
Heading Rank: 1

Heading: Initial Proceedings in the District Court

Text: On June 3, 2015, UDEM filed suit against the ILA under Title III of the LMRDA, see 29 U.S.C. § 464, challenging on - 3 - numerous grounds the lawfulness of the trusteeship imposed on UDEM by the ILA. UDEM sought a declaratory judgment that the trusteeship was invalid, a permanent injunction prohibiting the ILA from continuing the trusteeship, a permanent injunction prohibiting ILA from interfering with its operations and management, and damages. After the ILA answered the complaint, UDEM filed a motion for a preliminary injunction. In the motion, UDEM alleged that it had disaffiliated from the ILA at a meeting of its membership on May 9, prior to being informed of the emergency trusteeship on May 12, and thus the ILA could not lawfully impose the trusteeship. Further, UDEM argued that the trusteeship was imposed for purposes that were illegitimate under the LMRDA, including preventing UDEM's disaffiliation, penalizing UDEM for opposing a proposed merger, and circumventing the grievance and arbitration procedure in the work-sharing agreement between UDEM and other local unions. The ILA then filed an opposition to UDEM's motion for a preliminary injunction and a motion to strike UDEM as a plaintiff, arguing that UDEM in fact did not disaffiliate before the trusteeship was imposed because it failed to give notice to its members that a vote on disaffiliation was being held, as required for a disaffiliation vote to be effective under the ILA constitution. Additionally, the ILA argued that the purposes for which the trusteeship was imposed -- UDEM's opposition to the - 4 - merger, financial misconduct, undermining of collective bargaining relationships with employers, and refusal to cooperate with the work-sharing agreement -- were all legitimate under the LMRDA. Because UDEM was under a lawful trusteeship at the time the suit was filed, the ILA contended, no one could file a complaint in UDEM's name without the authorization of the trustee. The old officers of UDEM, who were removed when the trusteeship was put in place, no longer had authority to initiate this action on behalf of UDEM, and, if they sued at all, should have done so individually. The case was referred to a magistrate judge, who held a hearing on both motions and issued a report and recommendation. B. The Magistrate Judge's Findings of Fact UDEM, which was founded in 1938, represented certain workers in the Port of San Juan. In 1961, after UDEM affiliated with the ILA, it became known as Local 1901 of the ILA. René A. Mercado-Álvarez (Mercado) was elected president of UDEM in 2012 and was president during the time relevant to this case. In addition to UDEM, there were three other local ILA unions in the Port: Local 1575, Local 1740, and Local 1902. The present dispute began in January 2015 when Horizon Lines, a major stevedoring company, closed its operations in the Port and was replaced by another stevedoring company, Luis Ayala Colón - 5 - (Ayala).1 Prior to closing, Horizon Lines employed members of ILA Local 1575 under a collective bargaining agreement (CBA) with that union. Following the closure of Horizon Lines, Local 1575 asserted that its members had the right to work for Ayala because, pursuant to the CBA with Horizon Lines, Ayala was a successor employer. On the other hand, UDEM and Locals 1902 and 1740 each had existing CBAs with Ayala and believed that they, not Local 1575, were entitled to work for Ayala in Horizon Lines's former terminals. In February and March of 2015, the ILA held a series of meetings with the four locals involved in the dispute over bargaining with Ayala. At those meetings, ILA representatives took the position that the other locals needed to accommodate Local 1575 so that its members would not be out of work, and they proposed a work-sharing agreement to achieve that goal. UDEM and Local 1902 both opposed the proposed arrangement, and no agreement among the locals was reached. Subsequently, the ILA's president wrote a letter to UDEM and Local 1902 directing them to execute the worksharing agreement or more stringent measures would be taken against them. Mercado, the president of UDEM, testified that he understood this threat to mean possible merger of the local unions or a trusteeship. 1 A chronology of important dates is provided as an appendix to help make sense of the complex sequence of events in this case. - 6 - At the end of March, all four locals consented to a worksharing agreement that had been drafted by Mercado. Following the ratification of that agreement, the ILA informed the locals that, in order to implement it, UDEM and Locals 1902 and 1740 would have to accept transfers of some unemployed members of Local 1575 to jobs held by their members, even though such transfers were not expressly required in the agreement. The ILA was later informed that UDEM had not complied with this directive. On April 14, the leadership of UDEM met with ILA officials, who told Mercado that the ILA was planning to merge the locals and that the reason for the merger was the dispute with Local 1575. After learning of the ILA's intention to merge the locals, Mercado called a meeting of UDEM's executive board on April 23. The board voted unanimously against a potential merger and in favor of disaffiliating from the ILA. Following this vote, however, Mercado continued to refer to UDEM as affiliated with the ILA.2 On May 1, the ILA sent a letter to members of the four local unions explaining that it had decided that merging the locals 2 The magistrate judge harbor[ed] real doubts about whether this vote actually occurred, but nonetheless assumed that it did because she concluded, as we do, that this vote had no legal significance because it was not a vote of the membership of UDEM. UDEM does not contend that this vote had the effect of disaffiliating UDEM from the ILA, a position that is consistent with Mercado's actions noted above. - 7 - was the best course of action and that it would move forward with that plan. A few days later, it informed the locals that Local 1740's charter would be amended to add job classifications that were currently included in UDEM's charter. Mercado saw this move as a first step toward removing those job classifications from UDEM, as the ILA generally did not permit two locals to cover the same job classifications. On May 8, the ILA informed UDEM's membership that a meeting would be held on May 11 to discuss the merger. The letter reiterated the reasons that the ILA felt the merger was necessary, and it alleged that Mercado had spread false information to UDEM's membership about the merger. On May 9, the day after that letter was sent, Mercado called an emergency UDEM membership meeting. At the meeting, a motion was put forth for the Board of Directors to continue making the efforts that it understands pertinent as up to the present and that every effort be made which is not limited to any action which must be taken to protect [the] Union and for every action taken by the Board to be accepted, including the disaffiliation from the ILA. The motion was seconded unanimously.3 A motion was then made to reject the merger, which was also unanimously approved. The 3 This is the vote that is at the heart of the controversy between the parties regarding the validity of the trusteeship. UDEM contends that the adoption by the membership of this motion constituted a valid vote to disaffiliate from the ILA because it served to ratify the April vote on disaffiliation by the executive board. As we explain in detail below, the district court concluded - 8 - membership also voted to inform the ILA that UDEM did not accept the merger, but they did not discuss informing the ILA that they had voted to disaffiliate. Few members of UDEM showed up for the ILA's May 11 meeting, and the ILA was informed that Mercado was at a nearby location attempting to dissuade UDEM members from attending. An ILA representative tried to convince Mercado to attend the meeting and air his concerns. Although Mercado testified that, in declining this invitation, he told the representative that UDEM had voted to disaffiliate from the ILA, the magistrate judge found more credible the ILA representative's testimony that Mercado did not mention disaffiliation.4 That same day, Mercado sent the ILA a letter informing it that UDEM had unanimously voted to oppose the merger. It did not mention disaffiliation. The next day, May 12, Mercado sent another letter to the ILA stating that UDEM had voted to disaffiliate. Also on May 12, the ILA sent a letter to Mercado stating that, following an investigation into UDEM's conduct, the that this vote was invalid because UDEM members were not provided with sufficient notice that a meeting was being held to vote on disaffiliation. 4The timing of the ILA's knowledge of UDEM's vote on disaffiliation is important to the magistrate judge's conclusion, discussed in section III.B infra, that preventing UDEM's disaffiliation was not a purpose of the trusteeship because the ILA did not know of UDEM's plans to disaffiliate. - 9 - ILA had decided to place UDEM in an emergency trusteeship.5 Mercado testified that the trusteeship letter arrived after he sent the disaffiliation letter to the ILA and that, in fact, he had written the disaffiliation letter on May 11, 2015, per its dateline, but had failed to send it that day due to problems with UDEM's fax machine. The magistrate judge concluded that this testimony was not credible because the fax machine appeared to be working when Mercado sent the letter opposing the merger, and there was no reason why Mercado would write two different letters on the same day and fax them separately. Instead, the magistrate judge found that the disaffiliation letter was sent only after Mercado learned of the emergency trusteeship, and that therefore the ILA did not know about UDEM's disaffiliation vote prior to imposing the trusteeship. 5 In relevant part, the letter stated: After receiving numerous complaints regarding Local 1901's practices and Local 1901's refusal to honor its obligations under a work sharing agreement entered into by Locals 1901, 1902, 1575, and 1740, I conducted an investigation into these matters. I have determined that it is necessary to impose an emergency trusteeship on Local 1901 in accordance with Article XXI of the ILA Constitution to correct financial malpractice, to assure the performance of collective bargaining agreements, to assure the performance of the duties of a collective bargaining representative, to restore democratic procedures, and to otherwise carry out the objectives and purposes of the ILA. - 10 - On May 14, Mercado again wrote to the ILA, stating that the imposition of the trusteeship was illegal under the ILA's constitution and that the ILA and UDEM should go before the corresponding forums6 to resolve the legality of the trusteeship. The ILA did not respond to the letter. UDEM then held another membership meeting on May 19, where the membership voted to ratify the previous decision to disaffiliate from the ILA. The ILA constitution requires that an emergency trusteeship be ratified by the ILA after it conducts a fair hearing on the charges against the union and its officers. To that end, two ILA officers, James H. Paylor and Bernard Dudley, were appointed to a committee to investigate misconduct by UDEM and Mercado. On May 26, Paylor filed written charges with the ILA alleging misconduct by Mercado and UDEM, including breaching UDEM's commitments under the work-sharing agreement among the locals, taking action to turn union members against the merger, and undermining collective bargaining with employers. On June 1, Paylor amended the charges to allege financial misconduct by Mercado. Following the receipt of Paylor's recommendation that the trusteeship be continued, three ILA officers -- John Daggett, 6Although it is not clear from the record what Mercado meant by corresponding forums, it appears to be a reference to UDEM’s position that the grievance and arbitration provisions of the worksharing agreement between the locals applied to the ILA’s imposition of the trusteeship, despite the ILA not being a party to the agreement. - 11 - Peter Clark, and Bernard O'Donnell -- were appointed by the president of the ILA to conduct a hearing on the charges against UDEM.7 The hearing was held on June 11 and was attended by Mercado and UDEM's vice president, Ramón Rodríguez, along with counsel. At the hearing, counsel for UDEM insisted that UDEM had disaffiliated and that Mercado was representing UDEM as a separate entity, not as a local of the ILA. Based on those statements, Mercado was told that there was no reason for him to be there unless he would appear as a representative of Local 1901. Mercado started to leave, but a lawyer for the ILA convinced him to stay. Mercado continued to identify himself as a representative of a disaffiliated UDEM, rather than Local 1901, however, causing someone on the hearing committee to again state that there was nothing else to discuss, and Mercado left. The ILA sustained the charges against Mercado and the Union and approved the trusteeship, removing Mercado as president of UDEM and expelling him from the ILA. C. Legal Conclusions of the Magistrate Judge and District Court Based on these factual findings, the magistrate judge concluded that UDEM did not successfully disaffiliate from the ILA 7Although the magistrate judge did not make findings regarding who conducted the investigation and who was on the hearing committee, we provide this information from the record to make clear that the hearing committee was made up of different people than the committee that investigated the charges against UDEM. - 12 - prior to imposition of the trusteeship because its disaffiliation vote was taken at a meeting that did not comply with the notice requirements in the ILA constitution, and that the trusteeship was imposed for lawful reasons, particularly to effectuate the merger between the locals. She therefore concluded that UDEM had failed to overcome the presumption of validity applied to trusteeships under the LMRDA. She recommended that the district court deny the motion for a preliminary injunction and, because the trusteeship was lawfully imposed and the lawsuit was not brought by the trustee, strike UDEM as a party to the case. Given that UDEM was the only plaintiff, she also recommended dismissal of the action. In a short opinion addressing UDEM's objections to the magistrate judge's conclusions, the district court adopted the magistrate judge's report and recommendation in full and dismissed UDEM's claims without prejudice.8 See Union de Empleados de Muelles de P.R., Inc. v. Int'l Longshoremen's Ass'n, 156 F. Supp. 3d 257 (D.P.R. 2016).9 8 Because the district court adopted the magistrate judge's findings and conclusions in full, the discussion in the remainder of this opinion uses district court to refer to both the district court's order and the magistrate judge's report and recommendation. 9 We have provided this short summary of the district court's legal conclusions as background for the discussion that follows. We defer describing the detailed legal conclusions of the court until it is necessary to our legal analysis. - 13 - D. Appeal UDEM appealed both the denial of its motion for a preliminary injunction and the dismissal of its claims, continuing to argue that (1) it had disaffiliated prior to the emergency trusteeship being imposed, (2) the trusteeship was imposed for an improper purpose, and (3) it should be allowed to proceed as plaintiff without authorization from the trustee. In its response, the ILA argued that the appeal was now moot. We directed the parties to file supplemental briefs on the issue of mootness, specifically, whether [the ILA's] mootness argument applies only to the denial of the injunction as to the trusteeship or dismissal of the entire suit. In its supplemental briefing, the ILA informed the court that the trusteeship ended on November 12, 2016, following the completion of the merger between the locals. The ILA argued that, because the trusteeship had been terminated, both UDEM's appeal of the denial of the injunction and UDEM's appeal from the dismissal of the case were moot. We turn to the issue of mootness first.