Opinion ID: 509547
Heading Depth: 2
Heading Rank: 2

Heading: Interpreting the Union Constitution

Text: 27 The plaintiffs' cause of action faces yet another hurdle. The defendants admit expending union funds on rebates of per capita payments to Locals 17 and 195. They contend, however, that these rebates were constitutionally authorized by Article X and not prohibited by Article XVIII of the Federation's constitution. The parties thus present conflicting interpretations of the Executive Council's constitutional authority. In ruling on the good cause issue, the district court examined the merits of this interpretive dispute. It rejected the plaintiffs' complaint because the Federation's construction of the constitution was not patently unreasonable. See, e.g., Local 334 v. United Ass'n of Journeymen, 669 F.2d 129, 131 (3d Cir.1982) (quoting Stelling v. Inter. Brotherhood of Elec. Workers, 587 F.2d 1379, 1388 (9th Cir.1978), cert. denied, 442 U.S. 944, 99 S.Ct. 2890, 61 L.Ed.2d 315 (1979)). Under the Horner approach reaffirmed here, the district court erred in considering the union's interpretation of its constitution at the good cause stage of the proceedings. 28 The plaintiffs submitted a verified complaint that quoted the article of the union constitution that had allegedly been violated. The provision at issue appeared to explicitly prohibit the grant of rebates. The plaintiffs thus established good cause for leave to sue in the ex parte proceeding. Compare Sabey v. Steelworkers Local 12230 of United Steelworkers of America, 113 L.R.R.M. (BNA) 3603 (W.D.N.Y.1982) (no good cause where plaintiffs unable to show source of fiduciary duty in constitution). 29 The defendants exercised their right to challenge the ex parte determination. Under Horner, the district court could have considered defendants' claims that the plaintiffs had failed to meet the procedural prerequisites for suit or that their cause of action was barred by the statute of limitations or the operation of res judicata or collateral estoppel. 362 F.2d at 229. Here, however, the defendants asserted factual and legal arguments going to the merits of the dispute. They proffered an alternative interpretation of the Federation constitution under which their actions would have been authorized and argued that this interpretation must be granted deference. This approach created a question of fact regarding the interpretation of the constitution's provision, making dismissal at the good cause stage inappropriate. In addition, the defendants' invocation of the deference principle raised a complex question of law going to the merits of the dispute. 30 In Sabolsky, 457 F.2d at 1249, this court reviewed a district court's dismissal of a complaint charging union officials with the breach of fiduciary duties under section 501. The defendants argued that the district court was bound to defer to the union's interpretation of its constitution. We rejected the dismissal of the complaint based on this argument, holding that in the absence of any criteria in the record by which a union interpretation can be measured, the principle of judicial deference cannot be used to give carte blanche to union activity which is alleged to constitute a violation of the broad fiduciary duties of union officials under the LMRDA. 457 F.2d at 1252. Here too, the record remains incomplete. The precise nature of the Federation's interpretation of Article XVIII is in question. The plaintiffs argue, for example, that financial assistance in the form of rebates is a recent phenomenon and that there is no long-standing binding union interpretation of the treatment of rebates under Article XVIII. Questions of fact thus remain. 31 We therefore hold that the serious interpretive dispute at issue in this case cannot be resolved at the good cause stage of the proceedings because it poses a complex question of law going to the substance of the case whose resolution also necessitates the determination of a genuine issue of material fact. Horner, 362 F.2d at 229. The plaintiffs' complaint must therefore be reinstated.