Opinion ID: 485224
Heading Depth: 1
Heading Rank: 2

Heading: the union's obligation to release its records

Text: 20 The IBEW raises three challenges to the District Court's January order granting summary judgment against it. 21
22 The IBEW first contends that Mallick failed to make a proper pre-litigation demand. Although the union acknowledges that the statute does not explicitly require any pre-litigation demand, the IBEW claims that [a]mong the prerequisites to the right to examine a union's records pursuant to Section 201(c) is that the requesting party make a demand on the union which demonstrates his or her claim of just cause to seek examination. Appellants' Brief at 33. The IBEW attacks the District Court's decision ordering the union to disclose its records as overlooking this prerequisite. 23 According to the IBEW, a union member cannot satisfy this prerequisite unless he or she explains to the union that the information is requested to verify an LM-2 report. Thus, the IBEW argues that neither before nor during this lawsuit did Mallick actually state that the reason he wished to examine the union's records was to verify an IBEW LM-2 report. In the union's own words, Mallick never articulated a connection between the IBEW's 1980-81 LM-2 report and his request for documents, although given ample opportunity to do so. Indeed, even as late as his July 10, 1985 deposition, Mr. Mallick still did not appear to see any particular link between any items in the LM-2 report and his request.... Appellants' Brief at 37. 24 This contention is entirely spurious. First of all, it has been evident to IBEW from the beginning what information plaintiffs seek and why they seek it. As we detailed in Mallick I, 749 F.2d at 773-74, the information requested concerns litigation expenses that the IBEW incurred while defending another LMRDA lawsuit known as the Boswell case. The IBEW's 1980-81 LM-2 report showed an unexpected drop between $300,000 and $400,000 in the balance of a special reserve fund the IBEW maintains for legal expenses, id. at 775, and plaintiffs seek to determine whether this unexpected drop represents the cost of litigating the Boswell case. Id. at 776. 25 Second, the IBEW's assertion about Mallick's deposition is incorrect. His deposition testimony shows that he articulated a connection between the IBEW's 1980-81 LM-2 report and his request for documents. Appellants' Brief at 37. When asked by IBEW's counsel whether he knew of any of the financial terms of the settlement of the Boswell case, Mallick responded: No. Only that there was--like it showed like a six figure digit--[sic] ... in the LM-2 report was unaccounted for. You get nosey. Mallick Deposition at 28-29. When the counsel for the union then said, I don't understand. What do you mean? Mallick replied: Well, if you see like a $300,000 discrepancy, if you see where there was $300,000 spent, and you don't know why, you try to find out why. So I just figured that part of that went to Boswell. I didn't know what part. Id. 26 Third, Mallick's verified complaint in this lawsuit, which is equivalent to a sworn affidavit, also articulates a connection between the LM-2 report and the information sought. The complaint reads: 27 The IBEW has filed with the Department of Labor financial reports, known as Forms LM-2, for the fiscal years beginning July 1, 1979 and July 1, 1980. On neither form does the IBEW indicate that a specific amount of money was expended in connection with Boswell v. IBEW. The form for 1980-1981 does, however, indicate that the reserve for the Defense Fund dropped by almost $400,000 during that year.... 28 By learning how much Boswell and his counsel were paid, and what records the IBEW obtained to determine the appropriate amount of these payments, plaintiff MALLICK and all other members of the IBEW will be aided in determining whether the payments were excessive or otherwise improper. 29 Complaint for Injunctive Relief at 4-5 (April 19, 1982). 30 Finally, it is evident from the pre-litigation correspondence between the parties' counsel that the union knew that Mallick was seeking information relating to the Boswell litigation expenses pursuant to his statutory right to verify his union's LM-2 reports. Indeed, in a letter written to Mallick's counsel, the IBEW's attorney states: You have cited several sections of the LMRDA in support of your client's request.... The one LMRDA section covering disclosure of union records, Section 201(c), requires disclosure when a member demonstrates 'just cause' to examine documents necessary to verify the union's LM-2 report. Letter of Laurence J. Cohen (February 26, 1982), identified in the record as Exhibit J to Plaintiff's Motion for Summary Judgment (June 18, 1982). Of course, it is true that from the beginning the IBEW had a different interpretation of Sec. 201 than Mallick had. Our decision in Mallick I resolved this dispute. Nonetheless, as this letter shows, prior to the commencement of this lawsuit, the IBEW was on notice that Mallick was requesting the information pursuant to his Sec. 201 rights. Thus, even if we assume that in order to examine union records, a union member must explain to the union that he requests the information in order to verify an LM-2 report, as provided in Sec. 201, such a requirement has been amply satisfied in this case. 7 31
32 The IBEW's next challenge to the District Court's decision is that it does not address the issue of whether Mr. Mallick satisfied his burden of proving 'just cause' sufficient to satisfy Section 201(c). Appellants' Brief at 38. The union, however, misreads Mallick I in arguing that on remand Mallick was required to introduce further evidence to establish just cause. Mallick I held that plaintiff had established what amounted to a prima facie right to inspect the IBEW's records relating to litigation expenses. Mallick I decided that when the union's LM-2 reports show abrupt and unexplained shifts, a union may not simply dig in its heels and refuse to explain what the change means. 749 F.2d at 781. Moreover, the court went on to say Mallick has clearly satisfied this principle.... [T]he 8% change in the balance of the [IBEW's Litigation] Defense Fund was far greater than changes in preceding years, and the significance of the change was entirely unclear. Id. at 783. Thus, from these facts alone, which were in the record at the time of Mallick I, plaintiff had established a presumption that he was entitled to examine the union records. The only question that remained was whether even if Mallick is otherwise entitled to inspect the records, the union could introduce sufficient evidence of harm to defeat Mallick's request for examination. Id. 33 The IBEW points to a sentence in Mallick I stating that plaintiff had gone a very long way to proving just cause. 749 F.2d at 784. The union reads this sentence as requiring plaintiff on remand to present additional evidence to go the rest of the way. Appellants' Brief at 49. This language, however, does not carry the implication ascribed to it by the union. Rather, this court meant simply that just cause is not conclusively established until after the union member's showing is evaluated together with the union's evidence of harm. 8 34 In this case, plaintiff was not required to offer any additional evidence establishing just cause unless the union introduced evidence of harm from disclosure that sufficiently negated plaintiff's initial showing. The correctness of this interpretation of Mallick I can best be demonstrated by the opinion's concluding sentences on the subject: 35 If the IBEW demonstrates that disclosure of this information would be comparable to, for example, a corporation's disclosure of trade secrets, ... then examination should be refused. If, however, the IBEW's fears prove speculative and remote, Mallick's request should be granted. 36 749 F.2d at 785 (emphasis added). The District Court properly understood and carried out the instructions of this court in focusing on this question on remand. Consequently, the union's claim that the District Court erred by not demanding additional proof of just cause lacks merit.
37 The IBEW's final argument is that on remand it proffered a sufficient showing of harm to defeat plaintiff's motion for summary judgment. We disagree. The District Court was correct in concluding that the IBEW failed to raise a genuine issue of material fact because the harm asserted by the IBEW in its submissions was not one which would outweigh the union member's interest in disclosure. J.A. at 15. Therefore, summary judgment against the defendants was proper. See Fed.R.Civ.P. 56(c). 38 In Mallick I, we held that the strong [congressional] policy favoring access to [records] for union members who have otherwise satisfied the statutory requirements for examination requires that the harm from disclosure be genuine and significant. 749 F.2d at 785. As examples of cases in which the union would meet this burden we observed that the information requested should not be revealed if doing so would lead to the public dissemination of a union's organizing strategy or negotiating plan. We also stated that the harm to a union's financial interests, which allegedly would result from disclosure of the requested information, would have to be comparable to the harm to a corporation caused by disclosure of its trade secrets or confidential earnings protections. In remanding the case to the District Court, we instructed that the specific harm alleged by the union must outweigh the specific interest asserted by the union member. 39 In this case, the union members' interest in disclosure is basic to the entire purpose of the LMRDA. Members of the IBEW have observed a precipitous drop in the union's legal defense account, as listed in its LM-2 report, and seek to examine relevant union records in order to substantiate or refute their belief that this drop reflects their union's policy of defending LMRDA lawsuits without regard to cost or the interests of the membership. See Mallick I, 749 F.2d at 774, 776. The Boswell case, we recall, involved a union member's claim under the free speech provision of the LMRDA. See 29 U.S.C. Sec. 411(a)(2). If the IBEW spent substantial--even excessive--sums of money to litigate the Boswell case, this information may reflect costly intransigence on the part of the union leadership simply to discourage members from bringing such [LMRDA] lawsuits. 749 F.2d at 774. How the union leadership responds to LMRDA claims is obviously a valid concern to the union's rank-and-file members. Since the LMRDA specifically grants union members union democracy rights like the free speech right at issue in the Boswell case, the policy of the Act obviously favors disclosure of information to verify an indication in an LM-2 report that the union is hostile to, or at least unsolicitous of, these LMRDA rights. 40 Once again we refer to passages from the House Report, which we quoted extensively in Mallick I, 749 F.2d at 780: 41 The members of a labor organization are the real owners of the money and property. Because such union funds belong to members they should be expended only in the common interest.... 42