Court Opinion

ID: 868684
Source: CourtListenerOpinion
Date Created: 2013-05-22 17:16:53.204476+00
Date Added: 2024-06-11T10:33:46.886479
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

SERVICES EMPLOYEES                        No. 10-16549
INTERNATIONAL UNION ; DAVID
REGAN ; ELISEO MEDINA , as Trustees          D.C. No.
for SEIU United Healthcare                3:09-cv-00404-
Workers-West and fiduciaries of the           WHA
SEIU United Healthcare Workers-
West and Joint Employer Education
Fund; SEIU UNITED HEALTHCARE              ORDER AND
WORKERS-WEST , an unincorporated           AMENDED
association and fiduciary of the            OPINION
SEIU United Healthcare Workers-
West and Joint Employer Education
Fund; REBECCA COLLINS, as a
participant in the SEIU United
Healthcare Workers-West and Joint
Employer Education Fund,
                  Plaintiffs-Appellees,

                  v.

NATIONAL UNION OF HEALTHCARE
WORKERS; JOHN BORSOS; SAL
ROSSELLI; JOHN VELLARDITA ;
RALPH CORNEJO ; MARTI GARZA ;
GLENN GOLDSTEIN ; JASON JOHNSON ;
MARK KIPFER; GABE KRISTAL;
JORGE RODRIGUEZ; FRED SEAVEY ;
PHYLLIS WILLETT ,
            Defendants-Appellants.
2                         SEIU V . NUHW

         Appeal from the United States District Court
           for the Northern District of California
          William Alsup, District Judge, Presiding

                     Argued June 13, 2012
                   Submitted March 26, 2013
                    San Francisco, California

                      Filed March 26, 2013
                     Amended May 22, 2013

       Before: Ronald M. Gould, Richard C. Tallman,
             and Carlos T. Bea, Circuit Judges.

                    Opinion by Judge Tallman

                           SUMMARY*

                            Labor Law

    The panel affirmed the district court’s judgment, after a
jury trial, in an action under § 501 of the Labor Management
Reporting and Disclosure Act against local union officials
who diverted union resources in an attempt to establish a new
competing local union.

     The panel held that § 501 creates a fiduciary duty to the
union as an organization, not merely to the union’s rank-and-
file members. The panel held that in actively attempting to

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                        SEIU V . NUHW                           3

obstruct the international union executive committee’s
decision to consolidate all of its California unionized long-
term healthcare workers from three different local unions into
one, the local union officials breached the fiduciary duty they
owed their own union as an organization. This breach
involved a pattern of conduct of engaging in dual unionism
that was not protected speech. Because this breach
contravened the union’s constitution, it could not have been
authorized.

    The panel also held that the district court did not err in
excluding evidence, nor in issuing a permanent injunction. In
addition, the district court did not err in reading the verdict to
impose several liability, and not joint-and-several liability, on
the defendants.

                          COUNSEL

Dan Siegel, Siegel & Yee, Oakland, California, for
Defendants-Appellants.

Jeffrey B. Demain & Jonathan Weissglass, Altshuler Berzon
LLP, San Francisco, California; Robert M. Weinberg,
W. Gary Kohlmann, Leon Dayan, and Ramya Ravindran,
Bredhoff & Kaiser, PLLC, Washington, D.C.; Glenn Rothner,
Rothner, Segall & Greenstone, Pasadena, California, for
Plaintiffs-Appellees.
4                     SEIU V . NUHW

                          ORDER

    The Opinion filed on March 26, 2013, is amended as
follows:

   Slip opinion page 9, lines 17–18: Replace 
with 

    Slip opinion page 9, line 25: After , insert 

  Slip opinion page 28, line 5: After , insert 

    With this amendment, the panel has voted to deny the
petition for panel rehearing and to deny the petition for
rehearing en banc.

    The full court has been advised of the petition for
rehearing en banc and no judge has requested a vote on
whether to rehear the matter en banc. Fed. R. App. P. 35.

    The petition for panel rehearing and petition for rehearing
en banc are DENIED. No future petitions for rehearing or
petitions for rehearing en banc will be entertained.
                           SEIU V . NUHW                                 5

                              OPINION

TALLMAN, Circuit Judge:

   This appeal presents a classic union power struggle. We
must resolve whether § 501 of the Labor Management
Reporting and Disclosure Act creates a fiduciary duty to the
union as an organization, not merely the union’s rank-and-file
members. We hold that it does.

    The defendants, who by jury verdict1 were determined to
be rogue local union officials who diverted union resources
in an attempt to establish a new competing local union,
breached this duty. The international union’s executive
committee had decided to consolidate all of its California
unionized long-term healthcare workers from three different
local unions into one. The defendants actively attempted to
obstruct this consolidation, breaching the fiduciary duty they
owed their own union as an organization. This breach
involved a pattern of conduct of engaging in dual unionism
that is not protected speech. Because this breach contravened
the union’s constitution, it could not have been authorized.
We affirm the jury’s verdict and uphold its award of
damages.

                                    I

   The Services Employees International Union (“SEIU”)
consists of 2.2 million members who work in healthcare,

 1
    Because a jury heard three weeks’ worth of evidence before rendering
its finding that the defendants were liable, we recite the facts and all
reasonable inferences therefrom in the light most favorable to the verdict.
See Lassiter v. City of Bremerton, 556 F.3d 1049, 1053 (9th Cir. 2009).
6                     SEIU V . NUHW

public services, and property services. United Health
Workers (“UHW”) is one of many “local” unions affiliated
with SEIU. At the time its dispute with the international
union arose, UHW represented approximately 150,000
healthcare workers in California.

    The SEIU constitution, which is binding on UHW,
defines the relationship between SEIU and UHW. The SEIU
constitution vests SEIU’s International Executive Board with
authority regarding alignment and jurisdiction of local unions
like UHW. For at least the last decade, SEIU has regularly
merged and realigned local unions.

                              A

    The UHW itself was formed as the result of SEIU’s
merger of two local healthcare unions in California in 2005.
Harmony between the international and its newly created
local union was short-lived. Shortly after UHW’s creation,
UHW officials began to spar with SEIU leadership over
SEIU’s jurisdictional plan for long-term care workers in
California. The international union intended to move 150,000
long-term care workers from three separate unions, including
some 65,000 from UHW, into a new local union chartered by
SEIU.

    The controversy began to heat up in 2008. In January of
that year, an SEIU executive vice president issued a report
concluding that long-term care workers would be better
served if they had a union of their own. On January 25, 2008,
the UHW Executive Board passed a resolution instructing
UHW officers “to take any and all appropriate measures” to
protect the ability of UHW long-term care workers to vote on
any plans to split them into a new union. For good measure,
                       SEIU V . NUHW                          7

the UHW Executive Board passed an additional, similarly
worded measure in March 2008.

    SEIU decided to appoint a “hearing officer” in early 2008
to further analyze the long-term care workers issue. In
August 2008, the hearing officer released his findings,
endorsing the creation of a new SEIU union of long-term care
workers. Based on this recommendation and other findings,
SEIU’s International Executive Board issued a written
resolution on January 9, 2009, directing consolidation of
long-term care workers into a new California union.

                               B

    As the long-term care worker realignment controversy
accelerated and tensions escalated between officials of the
international union and UHW, SEIU began to consider
placing UHW into “trusteeship.” The SEIU constitution
grants SEIU the authority to place a local union into
trusteeship “to protect the interests of the membership” from
local union malfeasance. Instituting a trusteeship allows
SEIU to appoint new officers to “take charge and control of
the affairs of a Local Union” with the “effect of removing the
officers of the Local Union.” Essentially, a trusteeship allows
the parent union to replace the existing local union leadership.

    In August 2008, while SEIU’s appointed hearing officer
was recommending the realignment of UHW’s long-term care
workers, SEIU convened a hearing to discuss whether to
place UHW in trusteeship. Former United States Secretary of
Labor Ray Marshall presided over the trusteeship hearing.
Secretary Marshall eventually issued his report on January
21, 2009, twelve days after SEIU had adopted its realignment
plan. The report recommended that UHW be placed into
8                     SEIU V . NUHW

trusteeship if it “refuse[d] to abide by and cooperate with”
SEIU’s realignment decision regarding long-term care
workers. Secretary Marshall suggested that UHW be given
five days to accept the long-term care decision or face
trusteeship.

    The SEIU International Executive Board approved
Secretary Marshall’s recommendations on January 22, 2009,
giving UHW until January 27, 2009, to confirm in writing
that it would not oppose the creation of the new long-term
care workers union. The UHW would not so promise, and
SEIU placed UHW into trusteeship on January 27, 2009.

                             C

    The jury found that the defendants did not take these
developments kindly. Before the controversy reached its
climax, the defendants, local UHW officials, took a number
of actions that SEIU proved at trial violated the officials’
fiduciary duties to UHW. The jury, by its verdict, found that
defendants, while still employed as UHW officers, engaged
in action designed to weaken UHW in the event of a
trusteeship while acting to form and promote a rival union.

    The evidence at trial showed that UHW officials sought
to create an ungovernable situation for trustees appointed to
administer UHW by: (1) blocking access to UHW buildings
to prevent the SEIU-appointed trustees from entering; (2)
removing UHW property from UHW buildings, including
office equipment, computers, and employee grievance files;
(3) instructing lower-level UHW officials and rank-and-file
members not to recognize the authority of the trustees; (4)
harassing SEIU staff by storming SEIU’s Alameda,
                       SEIU V . NUHW                          9

California, office; and (5) terminating UHW collective
bargaining agreements with California employers.

    At the same time, the defendants, while still on the UHW
payroll, began to create and promote the new union. The
evidence showed that the defendants: (1) searched and
prioritized office space for the new union in December 2008
and January 2009; (2) instructed staff to collect signatures on
a “disaffiliation” petition in an attempt to disaffiliate UHW
from SEIU; (3) researched the “decertification” of UHW,
which would have terminated UHW’s role as collective
bargaining agent for its members, thus allowing a new union
to become the bargaining representative of those members;
(4) announced to members three days before the trusteeship
was imposed that members could decertify and join a “new,
independent, democratic, progressive union;” (5) created an
off-line database of member contact information before the
trusteeship was imposed for use after the trusteeship went
into effect, at least in part to solicit UHW members to join the
new union; and (6) registered the domain NUHW.org and
drafted a press release announcing the new union on January
27, 2009, the day the UHW trusteeship was imposed.

    Within a week after the trusteeship was announced, the
individually named defendants had created the National
Union of Healthcare Workers (“NUHW”) and had filed
petitions to have UHW removed as the bargaining
representative for its current members.

                               D

   Litigation began in March 2009 when SEIU sought a
temporary restraining order (“TRO”) from the United States
District Court for the Northern District of California requiring
10                    SEIU V . NUHW

the return of all UHW property possessed by the defendants.
The defendants resisted the TRO on the grounds that they did
not possess any UHW property. The defendants argued that,
because they did not possess any property, a TRO would be
“an exercise in futility.” Still, SEIU prevailed, a TRO issued,
and the defendants appealed. We previously upheld the
issuance of injunctive relief on appeal. Serv. Emps. Int’l
Union v. Nat’l Union of Healthcare Workers, 598 F.3d 1061,
1072 (9th Cir. 2010).

    Notwithstanding counsel’s representations that the
defendants possessed no UHW property, the defendants
eventually returned scores of boxes of records belonging to
UHW. SEIU claimed that not all missing property had been
returned, and the district court granted a permanent injunction
extending the TRO’s requirement that the defendants return
all UHW property.

     The case proceeded to trial on SEIU’s claims for breach
of fiduciary duties under § 501 of the LMRDA and California
state law. In the spring of 2010, the case was tried before a
jury, which found in favor of SEIU. The jury returned a
verdict awarding damages against the individual defendants
in various amounts, and the district court entered judgment
against the defendants for varying amounts awarded by the
jury. The individual judgments ranged from $31,400 to
$77,850, and NUHW was assessed damages of $724,000 for
aiding and abetting, participating in, or knowingly benefitting
from a breach of duty under California law.

    Although the jury instructions allowed the jury to impose
either individual or joint-and-several liability, the special
verdict form contained no place for the jury to indicate which
they had chosen. The verdict form required the jury to list
                       SEIU V . NUHW                          11

damages under four different columns: “Salary and
Benefits,” “Diversion of Resources,” “Increased Security,”
and “Lost Dues.” On the form, the jury entered specific
amounts for each defendant in each of the four categories.
The final column of the form asked the jury to indicate the
total liability of each defendant. The district court interpreted
the form to impose several liability on each defendant for the
amount in the final column.

    The defendants moved: (1) for judgment as a matter of
law; (2) for new trial; and (3) to alter the damages awards.
The district court denied these respective motions, and the
defendants timely appealed. We have jurisdiction under
28 U.S.C. § 1291.

                               II

    We must first resolve what duty federal law imposes on
local union officials who act to subvert the directives of a
parent union in contravention of their own union’s
constitution.

    Under § 501 of the Labor Management Reporting and
Disclosure Act (“LMRDA”), officers of labor unions are held
to the highest standards of responsibility and ethical conduct
in administering the affairs of the union. 29 U.S.C. § 501.
What makes this case unusual, and one of first impression for
us, is that usually a union member, not a parent organization
like SEIU, asserts a § 501 claim against union officers. See,
e.g., Kerr v. Shanks, 466 F.2d 1271, 1274 (9th Cir. 1972);
Stelling v. Int’l Bhd. of Elec. Workers, Local Union No. 1547,
587 F.2d 1379, 1381 (9th Cir. 1978). In this case, however,
the international union asserts that the defendants violated
their duty to UHW, their own organization. The question
12                     SEIU V . NUHW

before us, one that underpins the majority of the defendants’
claims on appeal, is exactly to whom union officials owe that
fiduciary duty.

    The UHW defendants posit that they owed this duty to
only the rank-and-file members of their local union. Because
they subjectively believed their actions assisted those
members by establishing a more democratic union with
localized control, they maintain they have done no wrong
under § 501. Their argument ignores the fact that they
diverted union resources to weaken their own union and form
a rival union merely because they did not agree with the
constitutionally permissible decision of the international
union. Because no construction of the LMRDA allows such
conduct based merely on the defendants’ subjective motives,
we reject the defendants’ argument.

    The SEIU Executive Committee, under the authority
given to it by both its constitution and the UHW constitution,
carefully considered and adopted a measure it believed would
better serve its members. The UHW officers disagreed,
which they may do, and they voiced their opposition, which
they also may do. See 29 U.S.C. § 411 (protecting union
officials’ speech). What they may not do under the law is use
their union’s resources to actively obstruct implementation of
the final decision.

    The international union has the authority, under its
constitution, to place a local union into trusteeship. The facts
adduced at trial show that SEIU did not take this decision
lightly; it appointed a respected former Department of Labor
Secretary to preside over a fact-finding hearing and
considered the issue for six months. Based on the
recommendation from this hearing and the defendants’
                       SEIU V . NUHW                         13

refusal to accept SEIU’s decision to create a new
consolidated local union under SEIU control, the international
placed UHW into trusteeship.

    Local unions are not completely at the mercy of their
international unions. The trusteeship must be respected only
if SEIU imposed it properly. If the international union takes
action that violates its own fiduciary duties under federal law,
or if the international union improperly impresses a
trusteeship contrary to its constitution or federal laws
regarding trusteeship, see 29 U.S.C. §§ 462–64, the local
union can challenge the international union’s decision. See,
e.g., Navarro v. Gannon, 385 F.2d 512, 519 (2d Cir. 1967)
(allowing a local union to bring an action under § 501 against
the international union when the international did not follow
the LMRDA’s trusteeship provisions or its own constitution).
The defendants considered such a legal challenge, but they
were told by their counsel that their chances of success were
“nil.” The international union had followed the law.

    The defendants were left with no legal right to stand in
the way of the implementation of SEIU’s consolidation
decision. Instead, they opted for an extensive, extra-legal
challenge with one mission: to discard the charred remains
of a weakened UHW while simultaneously starting a new
competing local union of their own.

    Now, after engaging in a pattern of conduct aimed at
weakening the very union they represented, the defendants
assert that, under the plain language of § 501, this extra-legal
strategy nonetheless deserves the law’s protection. They
argue that Congress intended that the LMRDA ensure that
unions are “internally democratic,” and yet they also seek
14                        SEIU V . NUHW

judicial exoneration for their decidedly anarchistic methods
of opposition.2

    Their argument that the fiduciary duty of § 501 is owed
only to the rank-and-file members of their local union fails.
The plain language of the statute demonstrates that union
officers owe this duty to the organization as a whole, not
merely to the rank and file. Inherent in this duty is a
requirement that officials spend union money “solely for the
benefit of the organization and its members . . . in accordance
with its constitution and bylaws.” 29 U.S.C. §501(a). Using
union resources to weaken the union itself constitutes a
breach of this duty, even when the officers believe they are
acting in the best interest of the rank-and-file members.

                                  A

    To determine § 501’s scope, we look first to the text.
“[S]tatutory interpretation begins with the statutory text. If
the statutory language is unambiguous and the statutory
scheme is coherent and consistent, judicial inquiry must
cease.” Miranda v. Anchondo, 684 F.3d 844, 849 (9th Cir.
2012) (citation and internal quotation marks omitted). The
text of § 501 provides:

         The officers . . . of a labor organization
         occupy positions of trust in relation to such
         organization and its members as a group. It is,

  2
    W e note that Secretary M arshall, when recommending that SEIU
impose a trusteeship on UHW , properly observed, “no democratic labor
organization can permit local unions to nullify international decisions
reached through the democratic processes specified in their Constitution
and Bylaws.” (emphasis added).
                       SEIU V . NUHW                         15

       therefore, the duty of each such person . . . 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.

29 U.S.C. § 501(a) (emphasis added). The statutory language
explicitly highlights the duty of union officers to the
organization itself, not merely the union’s members.

    Even if the defendants believed they were acting in the
best interest of the union’s members, they needed to consider
their actions in relation to the interests of the union as an
institution. The UHW constitution “shall at all times be
subordinate to” the SEIU constitution, which prohibits local
union officers from engaging in dual unionism or assisting in
efforts to disaffiliate. The defendants’ actions directly
contravened the constitutional provisions of the union they
represented. “Expenditures by union officers that violate the
union’s constitutions represent the classic case of breach of
fiduciary duty under section 501.” Guzman v. Bevona,
90 F.3d 641, 647 (2d Cir. 1996). We find no reason to
change course merely because the union officers believed
their actions indirectly benefitted rank-and-file members.
The text of the LMRDA does not suggest a defense of “Trust
us, we know what’s best for our members.”

    Otherwise, the LMRDA would essentially provide an
unmitigated avenue for rebellious local officers to circumvent
the constitutional hierarchy of an organization like UHW.
The UHW, at its founding, adopted the SEIU constitution and
recognized its authority; that authority is meaningless if local
16                         SEIU V . NUHW

officers can attempt to scuttle the ship on the union’s dime
merely by invoking the putative interest of their members.

    The defendants propose that despite this misconduct,
SEIU may pursue only one remedy: injunctive relief under
§ 301 of the Labor Management Relations Act. See
29 U.S.C. § 185. But in a case such as this, where a
malcontent officer has already resigned, the organization
would have no remedy for those financial resources that the
officer skimmed to assist the rebellion. We do not believe
Congress intended to write such a blank check for internal
insurrection.

    We do not decide whether § 501 imposes a duty owed to
the international union itself. But see Operative Plasterers &
Cement Masons v. Benjamin, 843 F. Supp. 1267, 1274 (N.D.
Ind. 1993) (“When the interests of a local and its International
conflict, a local union officials’ fiduciary duty under § 501
attaches primarily to the local union, not the International.”).3

 3
    The defendants have made Operative Plasterers the lynchpin of their
case. It is not binding authority, and we find it unpersuasive for several
reasons. Most significantly, the Operative Plasterers court did not
interpret the statute according to its plain language when it held that the
defendant only owed his § 501 duty to the membership, and not to the
organization.     See Operative Plasterers, 843 F. Supp. at 1274.
Additionally, the court was all too willing to characterize its case as one
between the local members and the international union, instead of between
the defendant and the organization he was entrusted to represent. See id.
(“[I]t would be contrary to the intent of the LMRDA to apply § 501(a) as
a tool of insuring local officials’ compliance with the wishes of the
International leadership.”). SEIU does not seek to use § 501(a) as a tool
to ensure compliance with its directives; it seeks to use § 501(a) to regain
the resources the defendants spent to undermine their own union. Finally,
the Operative Plasterers court decided only that it could not grant
summary judgment against the local official because “the record is silent
                           SEIU V . NUHW                                17

We decide only that § 501 imposes a duty to the local union
as an organization. Under § 501, the defendants owed a duty
to spend UHW resources in accordance with its constitution,
which “shall at all times be subordinate to the International
Constitution.” Any expenditure that violates the SEIU
constitution—including “[g]ross disloyalty,” “[f]inancial
malpractice,” and “engaging in dual unionism”—would
violate this duty. The mere subjective belief that any of these
overarching violations would nonetheless be justified as
benefitting the rank-and-file membership does not absolve the
defendants of liability.

                                    B

    We turn now to the district court’s jury instruction
defining this duty, which we review de novo for statements
of law and under abuse of discretion for its formulation.
Hunter v. County of Sacramento, 652 F.3d 1225, 1232 (9th
Cir. 2011). We repeatedly have held that “[j]ury instructions
must fairly and adequately cover the issues presented, must
correctly state the law, and must not be misleading.” Id.
(quoting Dang v. Cross, 422 F.3d 800, 804 (9th Cir. 2005)).
A party is entitled to an instruction on its theory of the case
only if it is supported by law and has foundation in the
evidence. Id.

as to the effect of [the defendant’s] action on Local 101 or its members’
interest.” Id. Our trial record is replete with evidence that the defendants
used union resources to attempt to weaken UHW .
18                             SEIU V . NUHW

    When instructing the jury on the defendants’ duty to
UHW under § 501, the district court repeated the entirety of
§ 501, except for the statute’s inapplicable final sentence,
verbatim. The instruction did not tell the jury that the
defendants owed any duty specifically to the international
union.4 It instructed only that, as § 501 states, the defendants
had a duty “to hold its money and property solely for the
benefit of the organization and its members . . . in accordance
with its constitution and bylaws.” 29 U.S.C. § 501. Because
we hold that § 501, by its plain language, created a duty that
the defendants owed to their own union, the instruction did
not misstate the law.

 4
     The instruction stated:

          The officers, agents, shop stewards and other
          representatives of a 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 party 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.
                      SEIU V . NUHW                        19

                              C

    The defendants propose that even if § 501 creates a
fiduciary duty to the organization, another provision of the
LMRDA shields them from any liability because their actions
constituted protected free-speech activities. See 29 U.S.C.
§ 411.

    Whether the LMRDA protects the defendants’ conduct is
reviewed de novo; whether the court properly formulated its
instructions on this protection is reviewed for abuse of
discretion. Hunter, 652 F.3d at 1232. Because our precedent
demonstrates that the defendants engaged in conduct, not
merely speech, we affirm the district court’s application of
law and its formulation of the instructions.

    The free-speech provision of the LMRDA provides that
“[e]very member of any labor organization shall have the
right to meet and assemble freely with other members; and to
express any views, arguments, or opinions.” 29 U.S.C.
§ 411(a)(2). This section, while broad, does not provide
blanket protection for all union activities a member wishes to
characterize as free speech. The statute preserves the union’s
right to “adopt and enforce reasonable rules as to the
responsibility of every member toward the organization as an
institution and . . . conduct that would interfere with its
performance of its legal or contractual obligations.” Id.
(emphasis added).

    Our case law distinguishes between speech critical of a
union—which § 411 protects—and “conduct designed to
impair the union’s ability to function”—which § 411 does not
protect. Ferguson v. Int’l Ass’n of Bridge, Structural &
Ornamental Iron Workers, 854 F.2d 1169, 1174 (9th Cir.
20                     SEIU V . NUHW

1988). In Ferguson, officers of a local union actively
opposed the imposition of a trusteeship by their parent union.
After the parent union imposed the trusteeship, the local
officers formed a rival union and urged members of the local
union to join. Id. at 1171. When the trustees filed internal
misconduct charges, the officers brought an action arguing
that § 411 protected their activities. Id. at 1172.

    We rejected their argument. We explained that “a union
[that] has disciplined union members who established a rival
union, became its leaders and promoted it, and interfered
directly with the union’s efforts to function as an institution”
has not punished the members for protected free speech. Id.
at 1175. The officers’ conduct was not free speech; it was
“part of a pattern of conduct designed to destroy the union
and to interfere with the performance of its legal obligations.”
Id. at 1174. The conduct was not protected by the LMRDA.

    We find no reason to distinguish Ferguson from the case
at hand. The defendants, faced with trusteeship, wrongfully
engaged in a pattern of conduct designed to weaken the local
union while simultaneously setting up a rival union to
compete as the local union’s collective bargaining agent. The
defendants’ portrayal of these obstructionist activities—
which included actively blocking the trustees’ access to UHW
facilities and instructing employees to “[t]ake everything out
of the office”—as “symbolic slumber parties” goes beyond
the pale. Under Ferguson, § 411 does not shield from
liability those who engage in subversive conduct.

    The LMRDA does protect some of the defendants’
activities, such as simply speaking out in their individual
member capacities. The district court carefully formulated its
instructions to ensure that “defendants were free to make their
                      SEIU V . NUHW                         21

case within the system” and were “free to express their
opinions as union members on the jurisdiction and trusteeship
decisions.” But the district court also instructed the jury,
consistent with Ferguson, that defendants “owed a duty to
UHW and SEIU to refrain from obstructing or frustrating any
formal decision made by SEIU or UHW.” The instructions
adequately explained that speech alone was not the type of
conduct that could constitute “obstructing or frustrating,” but
the defendants did not have a right “while employed by
UHW, to plan for the creation of a union or to undermine the
ability of UHW to function after their departure.”

    The instructions adequately protected defendants from
punishment for voicing their dissenting opinions while
retaining a proper explanation of defendants’ liability for
their acts undermining UHW’s ability to function and for
establishing a new union. The district court did not abuse its
discretion in formulating a correct statement of the law to be
applied once the jury had decided on the relevant facts.

                              D

    Before we can declare that ample evidence at trial
supported the jury’s verdict, we must finally consider the
defendants’ proposed authorization defense. Because no
union can authorize expenditures in violation of its
constitution, the district court did not err in excluding this
defense in its final charge to the jury. We review the district
court’s decision de novo. Dang v. Cross, 422 F.3d 800, 804
(9th Cir. 2005).
22                    SEIU V . NUHW

                              1

    The defense of authorization derives from a general rule
that “[c]ourts are reluctant to substitute their judgment for
that of union officials in the interpretation of the union’s”
governing documents. Stelling, 587 F.2d at 1388 (quoting
Vestal v. Hoffa, 451 F.2d 706, 709 (9th Cir. 1971)) (internal
quotation marks omitted). Often, if a union official’s act has
been authorized by constitution, bylaw, resolution, or by a
vote of the membership, liability under § 501 attaches only if:
(1) the officer benefitted personally from the act; or (2) the
act is patently unreasonable or taken in bad faith. See
Guzman, 90 F.3d at 647; Local No. 48, United Bhd. of
Carpenters & Joiners v. United Bhd. of Carpenters &
Joiners, 920 F.2d 1047, 1052 (1st Cir. 1990).

    Against this backdrop of judicial reluctance to intervene
in union affairs, however, stands § 501 of the LMRDA and a
union’s constitution. Section 501 requires that union funds be
spent only for the benefit of the organization and its members
in accordance with the union constitution. See 29 U.S.C.
§ 501. The resolution of this conflict requires that the
authorization defense apply only when the authorizing
document, as then-Senator John F. Kennedy explained before
§ 501’s passage, is “not in conflict with the [union’s]
constitution and by-laws.” Local No. 92, Int’l Ass’n of
Bridge, Structural & Ornamental Iron Workers v. Norris,
383 F.2d 735, 739 n.13 (5th Cir. 1967) (quoting 105 Daily
Cong. Rec. 16415 (Sept. 3, 1959) (remarks of Senator John
F. Kennedy)). Local union officials cannot assert the
authorization defense when they take actions “in direct
conflict with, and contravention of, provisions of the
constitution of the International Union which remained
applicable to the Local.” Id. at 739.
                      SEIU V . NUHW                         23

    The defendants used union resources to undermine and
weaken their own union and promote a rival union. These
actions contravene the SEIU constitution, and, therefore, also
the UHW constitution. Thus, as a matter of law, no bylaw or
board resolution could authorize their actions.

                              2

    Even assuming the defendants had a legal claim to such
an instruction, the UHW Executive Board resolutions could
not, as a matter of fact, authorize the officers’ acts. The
resolutions authorized the officers “to take any and all
appropriate measures to protect our members’ right to vote,
to remain in UHW, by giving nursing home-care workers the
means and time to be able to freely cast their secret ballot to
vote to stay in UHW.” (emphasis added). The resolution
authorizes only “appropriate measures.” The defendants
executed a strategy to weaken UHW, leaving it ungovernable,
while simultaneously planning the creation of a new union to
compete with UHW. These actions expressly violated the
UHW and SEIU constitutions. They cannot be read as
“appropriate measures” that the UHW Executive Board could
authorize.

                              E

    Once we conclude that § 501 creates a duty that the
defendants owed to UHW and that they could not claim a
defense based on free speech or authorization, the defendants’
appeal of the jury verdict amounts only to a challenge to the
sufficiency of the evidence.

    Jury verdicts are reviewed for substantial evidence, which
“is evidence adequate to support the jury’s conclusion, even
24                    SEIU V . NUHW

if it is also possible to draw a contrary conclusion from the
same evidence.” Johnson v. Paradise Valley Unified Sch.
Dist., 251 F.3d 1222, 1227 (9th Cir. 2001) (citation and
internal quotation marks omitted).

    From our review of the trial record, we are satisfied that
the plaintiffs provided ample evidence that the defendants
diverted union resources to weaken UHW and form a rival
union. We will not rehash the facts here. Because the
defendants were not entitled to an authorization defense, the
record was sufficient in our judgment to support the jury’s
finding that defendants violated their fiduciary duty to UHW
under § 501.

                             III

    The defendants claim that the district court committed
prejudicial error when it excluded evidence that would
question the ethics, motives, and leadership of SEIU. We
review a district court’s exclusion of evidence for abuse of
discretion and will reverse only when an error is prejudicial.
Harper v. City of Los Angeles, 533 F.3d 1010, 1030 (9th Cir.
2008).

    The evidence excluded was irrelevant. The defendants’
fiduciary duty under LMRDA §501 to hold and spend union
funds for the benefit of the organization itself remains
regardless of whether SEIU is a model international union.
Any evidence showing SEIU had questionable leadership and
ethics would not lessen the defendants’ obligation to refrain
from using union resources to weaken their own union and
engage in dual unionism. This evidence could only prove
facts that were not “of consequence in determining the
                       SEIU V . NUHW                          25

action.” Fed. R. Evid. 401(b). The district court did not
abuse its discretion by excluding irrelevant evidence.

                               IV

    The defendants deserve some recognition for their gall.
Having once told the district court that they possessed no
UHW property before later returning substantial amounts of
that property (but not all that remains missing), they now
invite us to trust that they do not possess any property still at
large. We decline the invitation.

    The district court issued a permanent injunction that
required the return of all UHW property possessed by the
defendants. The defendants argue “there is no evidence in the
record that they continue to possess any UHW property.” We
review the factual findings underlying a district court’s
decision to issue an injunction for clear error. Scott v.
Pasadena Unified Sch. Dist., 306 F.3d 646, 653 (9th. Cir.
2002).

    The first skirmish in this case centered on the issuance of
a temporary restraining order requiring the defendants to
return any and all UHW property to UHW. The defendants
opposed the order, insisting to the district court that they did
not possess any UHW property. After the district court
issued the order and we upheld it, Serv. Emps. Int’l Union,
598 F.3d at 1072, the defendants returned more than sixty
boxes of material to UHW. Then, shortly before trial, the
defendants deposited seventeen more boxes with their
counsel, who turned the property over to UHW.

   The district court found, and the trial record shows, that
some equipment remains missing.            The court justly
26                          SEIU V . NUHW

considered the defendants’ obvious lack of credibility and
wisely concluded that “there is reason to expect yet more
missing files will turn up. There is still a need for an
injunction.”

   Having previously cried wolf in the federal courts before,
only to have their cry exposed, the defendants merit no trust
when they cry again. The district court properly issued the
permanent injunction.

                                     V

    Finally, we turn to the defendants’ challenge to the district
court’s interpretation of the verdict form. They contend that
the district court erred when it read the verdict to impose
several liability, and not joint-and-several liability, on the
twenty-four individual defendants and defendant NUHW.
This argument, though, carries a significant burden, one the
defendants have not overcome.

     “[W]hen confronted by seemingly inconsistent answers to
the interrogatories of a special verdict, a court has a duty
under the seventh amendment to harmonize those answers, if
such be possible under a fair reading of them.” Floyd v.
Laws, 929 F.2d 1390, 1396 (9th Cir. 1991).5 We review a
trial court’s interpretation of a verdict and its decision to alter
or amend a judgment for abuse of discretion. Id. at 1397–98.
With respect to whether the jury intended joint-and-several
liability or several liability, we must determine whether the
district court’s interpretation was “(1) illogical, (2)
implausible, or (3) without support in inferences that may be

  5
    “[O]nly if all attempts at reconciliation fail” can the court order a new
trial or resubmit the special verdict to the jury. Id.
                       SEIU V . NUHW                          27

drawn from the facts in the record.” United States v.
Hinkson, 585 F.3d 1247, 1262 (2009) (en banc) (internal
quotation marks and citation omitted).

    The verdict form in this case left much to be desired.
Although the district court instructed the jury to “enter all
amounts for which you find that defendant liable, including
any amounts for which others may also be jointly liable,”
nothing in the instructions nor the verdict form explained
exactly how the jury should demarcate between several and
joint-and-several liability. It comes as little surprise that the
jury returned a verdict open to debate.

    The defendants raise several coincidences in the verdict
that joint-and-several liability could possibly explain. Most
glaringly, the amount entered for defendant NUHW under
“Diversion of Resources,” $720,000, totals the exact
combined amount of the remaining defendants, indicating the
possibility that each individual defendant’s liability would be
joint and several to NUHW’s liability. The defendants argue
that the jury also entered identical amounts for some of the
defendants in each category of conduct, which would be a
reasonable way for a jury to express its desire for joint-and-
several liability.

    The concern that the amounts entered could possibly
indicate joint-and-several liability, however, leads us astray
from the proper focus of our inquiry. Rather, we must answer
only one question: whether the district court’s interpretation
of the verdict and the jury’s intent was illogical, implausible,
or without support in inferences that may be drawn from facts
in the record. Id. We cannot fairly quarrel with the district
court’s reading in this manner.
28                    SEIU V . NUHW

    The district court’s reading is both logical and plausible.
On the verdict form, the jury awarded different amounts
against different defendants, granting specific amounts for
each defendant in each of the four categories of possible
damages. This result is consistent with the jury imposing
liability against each defendant in the amount of harm caused
by that particular defendant’s actions. Also, although the
amount assessed against NUHW under “Diversion of
Resources” equaled the exact combined amount of the other
defendants, the jury did not follow the same pattern when
awarding damages under “Lost Dues.” There, the combined
amount of the individual defendants equaled $12,000; yet the
jury only assessed $4,000 against NUHW. These facts
plausibly support the district court’s inference from the
special verdict that the jury intended to reject joint-and-
several liability and instead embraced several liability.

    The defendants also gloss over the most significant
column on the verdict form: the final one, in which the jury
entered discrete amounts for each defendant. Ultimately, the
district court did no more than impose the exact liability for
each defendant that the jury had entered on the special verdict
form.

    The defendants contend that SEIU has failed to reconcile
the mathematical coincidences they have raised, but that
burden does not fall on SEIU. The defendants cannot meet
their burden by merely proving there may be other plausible
interpretations of the verdict form. They must show that the
district court’s interpretation was implausible. Because we
believe the defendants have not met that burden, we uphold
the district court’s interpretation of the verdict form and its
denial of the defendants’ motion to alter or amend the
judgment.
                       SEIU V . NUHW                         29

                              VI

    The judgment of liability was properly entered when a
correctly instructed jury, on a sufficient factual record, found
the defendants in breach of their fiduciary duties under § 501
of the LMRDA and California state law. There was no abuse
of discretion in the district court’s ruling on the challenge to
the special verdict the jury returned.

   AFFIRMED.