Court Opinion

ID: 8408402
Source: CourtListenerOpinion
Date Created: 2022-11-02 16:42:53.735834+00
Date Added: 2024-06-11T16:47:34.326142
License: Public Domain

STRAUB, Circuit Judge,
dissenting.
The majority construes the phrase “to institute an action” in section 101(a)(4) of the Labor-Management Reporting and Disclosure Act (“LMRDA”), 29 U.S.C. § 411(a)(4), as meaning only to file a complaint, and not to assert a counterclaim. This reading has two consequences. First, under this reading, the section’s second proviso does not bar counterclaims financed by interested employers. Second, this reading means that section 101(a)(4) gives a union member no protection against being disciplined by a union for asserting a counterclaim. Because I do not think that the majority’s reading is compelled by the plain language of the phrase “to institute an action,” and because I find the consequences of the majority’s reading clearly at odds with the purposes of both the right protected by section 101(a)(4) and the second proviso, I respectfully dissent. I believe that the second proviso of section 101(a)(4) bars a union member’s counterclaim that is funded by an interested employer and I would vacate and remand to the District Court for a finding as to whether Anthony Pelel-la’s counterclaim was so financed.
Section 101(a)(4) provides that “[n]o labor organization shall limit the right of any member thereof to institute an action in any court.” Section 101(a)(4) contains two provisos, the second of which states that “no interested employer or employer association shall directly or indirectly finance, encourage, or participate in, except as a party, any such action.”
The majority reasons that the phrase “any such action” in the second proviso refers back to the right of a member “to institute an action in any court.” The majority says that although the word “action” is arguably broad enough to encompass a counterclaim, the phrase “to institute an action” means simply to file a complaint and does not include filing a counterclaim. The majority concludes that the second proviso does not prevent a member from pursuing a counterclaim funded by an interested employer because the assertion of a counterclaim does not “institute an action.”
I agree with the majority that the phrase “any such action” in the second proviso refers back to the phrase “to institute an action.” Under the second proviso, an interested employer may not finance an action instituted by a union member. However, in my view, the right “to institute an action” includes the right to assert a counterclaim. If “to institute an action” includes asserting a counterclaim, then the phrase “any such action” in the second proviso refers not only to initial claims by plaintiffs but also to counterclaims. Thus, I would hold that the second proviso bars counterclaims financed by interested employers. I reach this conclusion both because I think it is consistent with the plain language of the statute, and because my reading furthers the purpose of the right protected by section 101(a)(4) and also the purposes of the second proviso.
It bears emphasizing that the construction of the phrase “to institute an action” affects the scope of both the right protected by section 101(a)(4) and the scope of the second proviso. A narrow construction of the phrase gives a narrow scope not only to the proviso, but also to a union member’s rights under the section.
The purpose of section 101(a)(4) is to protect a union member’s ability to assert his rights in court without fear of reprimand by the union. The majority says that “to institute an action” means to file a complaint — not to file a counterclaim. Thus, under the majority’s reading, the first part of section 101(a)(4) says in effect: “No labor organization shall limit the right of any member thereof to file a complaint.” *93Under this reading, section 101(a)(4) does not prevent a union from limiting the right of a member to file a counterclaim. A union could sue a member and then discipline the member for asserting a counterclaim. I view this consequence as contrary to the purpose of the right-to-sue provision. My reading of “to institute an action” protects the ability of a member to assert a counterclaim without fear of discipline. Notably, at oral argument, Pelella’s counsel agreed that a union could not limit the right of a member to assert a counterclaim, a statement I find at odds with the position that counterclaims financed by interested employers are not barred by the second proviso.
In addition, my view that the second proviso bars counterclaims financed by interested employers furthers the two purposes of the proviso: To protect unions from harassing or divisive claims caused by interested employers and to protect members from being misled or coerced by employers into filing claims against their interests.
The majority claims that its reading is consistent with the purposes of section 101(a)(4) and its second proviso. But in fact, as I explain below, the majority’s reading leaves union members vulnerable to discipline by unions and coercion by interested employers, and does not protect unions from harassing or divisive counterclaims supported by interested employers.
I respond first to the majority’s “plain meaning” argument. The majority asserts that under the plain language of the statute, “to institute an action” means only to file a complaint and does not include filing a counterclaim. The majority admits that the word “action” is arguably broad enough to encompass any type of judicial proceeding, including counterclaims. Indeed, the authority for that proposition is extensive.1 However, the majority says *94that although the word “action” standing alone might include a counterclaim, the phrase as a whole — “to institute an action” — means simply to file a complaint. The majority points out that “institute” means to “begin,” “commence,” or “initiate by performing the first act or step.” According to the majority, an action is instituted when the plaintiff files a complaint, as “that constitutes the first step invoking the judicial process.” Ante at 82. In the majority’s view, a defendant does not “institute” an action when he asserts a counterclaim.
In my view, if an “action” can encompass a counterclaim, then “to institute an action” can mean to assert a counterclaim. A defendant commences or initiates a claim for relief against the plaintiff by asserting a counterclaim in the answer. Filing a counterclaim is the first step in the defendant’s action against the plaintiff. I read section 101(a)(4) as protecting the right of a union member to assert a claim on which relief is sought — whether it be in an initial complaint or as a counterclaim. It is worth noting that a literal reading of section 101(a)(4) would mean that a union could not limit the right of a member to “institute” or file a claim for relief, but could discipline the member for further pursuing a claim after filing it. Surely the right-to-sue provision protects not only the initial filing of a claim but also the maintenance of a claim. Otherwise, the right protected by section 101(a)(4) would be rendered meaningless.
As the majority has noted, in Koolik v. Markowitz, 40 F.3d 567 (2d Cir.1994) (per curiam), we read a provision that operated to stay the “commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor” upon the filing of a bankruptcy petition to stay a counterclaim asserted against the debtor. See 11 U.S.C. § 362(a)(1). According to the majority, in Koolik, a broad construction of the language furthered the purpose of the statute at issue. The majority argues that a broad construction of the language is inappropriate in the present case because it does not further the purpose of the LMRDA.
I disagree. In my view, construing the phrase “to institute an action” to include the assertion of counterclaims furthers the purpose of the basic right guaranteed to union members by section 101(a)(4), and also the purposes of the second proviso.2
The LMRDA was “Congress’ first major attempt to regulate the internal affairs of labor unions,” Local No. 82, Furniture and Piano Moving v. Crowley, 467 U.S. 526, 528, 104 S.Ct. 2557, 81 L.Ed.2d 457 (1984), and “was the product of congressional concern with widespread abuses of power by union leadership,” Finnegan v. Leu, 456 U.S. 431, 435, 102 S.Ct. 1867, 72 L.Ed.2d 239 (1982). See also 29 U.S.C. § 401; H. REP. NO. 86-741 (1959), reprinted in 1959 U.S.C.C.A.N. 2424, 2428-29.
The legislation that ultimately became Title I of the LMRDA — the “Bill of *95Rights” for union members — was introduced on the floor of the Senate by Senator McClellan. See 105 CONG. REC. 6475-76 (1959), reprinted, in 2 NLRB, LEGISLATIVE HISTORY OF THE LABOR-MANAGEMENT REPORTING AND DISCLOSURE ACT OF 1959, at 1102 (1959) [hereinafter LEGISLATIVE HISTORY]; see also United Steelworkers of Am. v. Sadlowski, 457 U.S. 102, 109, 102 S.Ct. 2339, 72 L.Ed.2d 707 (1982). The Senate Committee on Labor and Public Welfare had reported out a bill containing provisions that were the forerunners of Titles II through VI of the LMRDA. Sadlowski 457 U.S. at 109, 102 S.Ct. 2339. However, “Senator McClellan and other legislators feared that the bill did not go far enough because it did not provide general protection to union members who spoke out against the union leadership. Senator McClellan therefore proposed an amendment that he described as a ‘Bill of Rights’ for union members.” Id. (citing 105 CONG. REC. 6469-93 (1959), reprinted in 2 LEGISLATIVE HISTORY 1096-1119).
Section 101(a)(4), entitled “[protection of the right to sue,” was intended to ensure that union members could assert their rights in court without interference from their unions. See 105 CONG. REC. 17,899 (1959), reprinted in 2 LEGISLATIVE HISTORY 1432 (“The basic intent and purpose of the provision was to insure the right of a union member to resort to the courts, administrative agencies, and legislatures without interference or frustration of that right by a labor organization.”) (statement of Sen. John F. Kennedy); 105 CONG. REC. 6478 (1959), reprinted in 2 LEGISLATIVE HISTORY 1105 (recounting an instance where a local union leader was expelled from his union after suing an international officer and saying that “we are certainly on the right track when we guarantee to ... the present-day leaders of labor, who want to have honesty in their union, the right to sue and to bring into court the persons who are divesting them and their unions of their funds”) (statement of Sen. Mundt).
Section 101(a)(4) is written inclusively. The union cannot limit a member’s right to sue “irrespective of whether or not the labor organization or its officers are named as defendants or respondents.” 29 U.S.C. § 411(a)(4). Congress rejected a version of the bill that restricted the application of the provision to suits “against such labor organizations or any officer thereof.” See Glasser v. Am. Fed’n of Musicians, 354 F.Supp. 1, 5 (S.D.N.Y. 1973) (citing H.R. 8342, 86th Cong. (1959), reprinted in 1 LEGISLATIVE HISTORY 698). Courts have interpreted the right-to-sue provision broadly in other contexts. See, e.g., Moore v. Local 569 of the Int’l Bhd. of Elec. Workers, 53 F.3d 1054, 1056-57 (9th Cir.1995) (holding that a fee-shifting provision in a collective bargaining agreement requiring employees to pay the attorneys’ fees of the prevailing party in legal proceedings undertaken to challenge an arbitrator’s decision violated section 101(a)(4), noting that the statute “is worded in the most inclusive terms, which are clearly intended to preclude restraints upon members’ rights to seek relief from courts and agencies” and “we must be vigilant in assuring that union members’ rights are not ground down”), cert. denied, 516 U.S. 1111, 116 S.Ct. 908, 133 L.Ed.2d 840 (1996) and 517 U.S. 1234, 116 S.Ct. 1878, 135 L.Ed.2d 174 (1996); Pawlak v. Greenawalt, 628 F.2d 826, 831 (3d Cir. 1980) (holding that section 101(a)(4) prevents a union from fining a member for suing the union without first exhausting union procedures regardless of whether the member’s claim concerns matters “internal” or “external” to the union), cent. denied, 449 U.S. 1083, 101 S.Ct. 869, 66 *96L.Ed.2d 808 (1981); Phillips v. Inti Ass’n of Bridge, Structural and Ornamental Iron Workers, Local 118, 556 F.2d 939, 942 (9th Cir.1977) (holding that a union violates section 101(a)(4) when it sues members to punish them for their prior suit against the union, noting that “[i]f a union member’s right to sue is to have any-meaning, courts must be ever vigilant in protecting that right against indirect and subtle devices as well as against direct and obvious limitations”); Operating Eng’rs Local Union No. 3 v. Burroughs, 417 F.2d 370, 373 (9th Cir.1969) (“Section 411(a)(4) speaks of ‘an action in any court.’ The word ‘action’ is in no way limited and there is nothing in the Act which distinguishes between suits involving member as opposed to employee rights, between suits involving internal as opposed to external union problems, or between suits brought in good faith as opposed to those brought in bad faith.... [W]e do not condone the use of lawsuits for harassment purposes and do not suggest that a union would not have all of the rights which the law gives to those who are so harassed. What we do say is that the freedom to sue is precious; that the winner in a lawsuit should not have the right to discipline the loser; that the potential suitor should not be subjected to the threat of such discipline .... ” (footnotes omitted)), cert. denied, 397 U.S. 916, 90 S.Ct. 921, 25 L.Ed.2d 97 (1970); cf. Gilvin v. Fire, 259 F.3d 749, 760 (D.C.Cir. 2001) (holding that a plaintiffs appearance in court in response to a subpoena was protected by section 101(a)(4); rejecting District Court’s view that a member is protected by the provision’s guarantee of the right to appear as a witness only if the member actually testifies and noting that there “is no justification for such a narrow reading of such an important element of a union member’s Bill of Rights”).
Thus, construing a union member’s right “to institute an action” to include the right to assert a counterclaim furthers the purpose of section 101(a)(4): To guarantee a member’s right to seek relief from a court without being disciplined or otherwise frustrated by his union. Under the majority’s reading of the phrase “to institute an action,” section 101(a)(4) does not prevent a union from limiting a member’s right to assert a counterclaim. Rather, the section prevents only a union from limiting a member’s right to file a complaint. Under this reading, the right-to-sue provision permits a union to discipline a member for asserting a counterclaim when sued. In fact, a union that fears a member has a valid claim against it can sue the member preemptively and then limit the member’s ability to file a counterclaim against it. This reading gives a narrow scope to the rights of union members that I find at odds with the purpose of the provision.
As explained above, I read “to institute an action” to encompass the assertion of a counterclaim and thus read section 101(a)(4) as preventing a union from limiting a member’s right to assert a counterclaim. Because I think the phrase “to institute an action” includes asserting a counterclaim, the second proviso necessarily bars counterclaims funded by interested employers — as the phrase “any such action” in the second proviso refers back to the phrase “to institute an action.”
Holding that the second proviso bars employer-supported counterclaims furthers the purposes of the proviso. It is apparent from the legislative history that Congress had two purposes in enacting the second proviso. The majority discusses the first purpose: Congress wanted to deny employers the power to put pressure on unions or create divisions in unions by encouraging suits by members. See Int’l Union, United Auto., Aerospace and Agric. Implement Workers of Am. v. Nat’l Right to Work Legal Defense and Educ. *97Found., Inc., 590 F.2d 1139, 1151 (D.C.Cir. 1979) (“We think Congress wanted to deny employers the power to cause harassing suits or otherwise to create divisions in the unions with which they had relationships.”); Adamszewski v. Local Lodge 14.87, Int’l Ass’n of Machinists and Aerospace Workers, 496 F.2d 777, 783 (7th Cir.) (“In the explanation of Senator Javits, it was brought out that the word ‘interested’ was inserted to allow a friend or bank to finance a suit but not an employer who may gain an advantage over the union from such suit. Otherwise, an employer with such an interest could bring undue pressure on the union.”), cert. denied, 419 U.S. 997, 95 S.Ct. 311, 42 L.Ed.2d 271 (1974); Int’l Union, United Auto., Aerospace and Agric. Implement Workers of Am. v. Nat’l Right to Work Legal Defense and Educ. Found., Inc., 366 F.Supp. 46, 48 (D.D.C.1974) (stating that the second proviso “serves to protect unions from harassing litigation and illegal management interference with their internal disputes with dissident workers” and gives “express assurance to labor organizations that they shall be immune from ‘interested employer’ intrusion in their judicial disputes with workers”); 105 CONG. REC. 6725 (1959), reprinted in 2 LEGISLATIVE HISTORY 1237 (“I have in mind the fact that an employer who has an interest in the litigation ought not to bring pressure upon a union. In the eventuation of a relationship of the litigant to the union, an interested employer should not be a party to finance the suit.”) (statement of Sen. Javits);3 105 CONG. REC. A7915 (1959), reprinted in 2 LEGISLATIVE HISTORY 1811 (“The last proviso in section 101(a)(4) was added to make sure that interested employers do not take advantage of rights accorded union members by encouraging or financing harassing suits or proceedings brought by union members against their unions.”) (statement of Rep. Griffin).
The second purpose of the proviso was to protect a union member from being coerced or misled by an employer into taking action against the member’s best interests. See Nat’l Right to Work, 590 F.2d at 1149 (“The debate clearly shows that the proviso was primarily ‘an attempt to protect a union member who may be engaged in a dispute with the (labor) organization.’ Congress apparently was concerned that if employers were permitted to encourage, finance, or participate in suits by their employees against unions, they would be able, through subtle coercion or otherwise, to lead union members into action contrary to the members’ desires or best interests.”) (citation omitted); 105 CONG. REC. 6725 (1959), reprinted in 2 LEGISLATIVE HISTORY 1237 (“The provision is an attempt to protect a union member who may be engaged in a dispute with the organization.”) (statement of Sen. Kuchel).4
The majority focuses on the first purpose of the proviso — to deny employers the power to cause harassing suits or to otherwise create divisions in unions. According to the majority, these concerns have less force when the union has already initiated legal action against its member. See ante at 84. I agree that the circumstances differ to some degree when the union has itself brought a dispute to court. *98However, I think that an employer can disrupt or create divisions in unions by financing counterclaims by members. An employer could hinder a union’s efforts to discipline members by financing the litigation of members’ counterclaims against the union when the union sues to collect fines. The majority says that by taking the member to court, “the union itself introduces the outside actor into what once had been an internal grievance and opens the door to some measure of interference.” Ante at 84. However, the “outside actor” to which the majority refers is the court. The proviso is concerned about a different outside actor — the employer. Permitting an interested employer to fund counterclaims has the potential to cause the type of harm that the proviso sought to avoid.
In addition, in enacting the second proviso, Congress was concerned about an interested employer misleading or coercing a union member into taking action against his best interests. This concern applies with respect to counterclaims. Under certain circumstances, a union member may be better off simply defending against a union’s claims, but an interested employer in an attempt to further its own interests could mislead or coerce a member into asserting a counterclaim.
The majority reasons that “denying members the ability to secure resources from interested employers so that they can protect themselves under these circumstances — where the union invokes judicial assistance to enforce disciplinary charges and the fines that result therefrom — may leave the members vulnerable to the same abuses of union power that the LMRDA seeks to remedy.” Ante at 85. The majority points to the rule of statutory construction “that a proviso states an exception from the general policy which a law embodies, and should be strictly construed and so interpreted as not to destroy the remedial processes intended to be accomplished by the enactment.” Ante at 85 (quoting Shilkret v. Musicraft Records, 131 F.2d 929, 931 (2d Cir.1942) (internal quotation marks omitted)). According to the majority, a “narrow interpretation” of the proviso “better comports with Title I’s purpose of protecting union members from abusive union practices.” Ante at 85.
I do not think that the rule of statutory interpretation to which the majority refers — that provisos should be strictly construed — applies here because the scope of both the basic right protected by section 101(a)(4) and the second proviso turn on the meaning of the phrase “to institute an action.” Construing the phrase narrowly gives a narrow scope to the second proviso, but also gives a narrow scope to the rights of union members under section 101(a)(4). Although the majority expresses concern that construing the second proviso to bar employer-supported counterclaims will leave union members vulnerable to abuses of union power, reading the right-to-sue provision to give no protection to a member’s ability to assert a counterclaim leaves members more vulnerable to abusive union practices then they would be under my reading of section 101(a)(4) and its second proviso. My reading protects union members from discipline by unions for asserting counterclaims and from being misled or coerced by interested employers. Furthermore, under my reading, unions are protected from harassing and divisive counterclaims financed by interested employers.
The majority, responding to my dissent, argues that we are asked in this appeal to construe only the second proviso and the effect of our interpretation on the right protected by the main body of section 101(a)(4) should not be considered. See ante at 85. However, I am engaging in *99simple statutory interpretation — not hypothetical analysis. Our task is to construe the meaning of the second proviso. The meaning of the proviso depends on the meaning of the phrase “any such action,” which appears in that proviso. The majority and I agree that the_ phrase “any such action” refers back to the phrase “to institute an action,” which appears in the main body of section 101(a)(4). To determine what Congress meant when it said “to institute an action,” I look at the impact of various constructions on the meaning of the main body of section 101(a)(4), which is where the phrase actually appears in the statute.
In the majority’s view, the phrase “to institute an action” does not encompass the filing of a counterclaim. Based in part on my belief that Congress did not intend section 101(a)(4) to give no protection to a member’s right to file a counterclaim, I conclude that Congress did not intend the phrase “to institute an action” to have the meaning the majority gives it. The words “to institute an action,” which the majority holds do not encompass the filing of a counterclaim, could not somehow have a different meaning when we consider the meaning of the main body of section 101(a)(4). This is not even a case where a phrase appears twice in a statute and we would presume ordinarily that the phrase has the same meaning in both places. Rather, here we are discussing the meaning of the same words in the same place in the statute. The majority has given those words a certain meaning and cannot suggest that the words do not retain that meaning when the scope of members’ rights under the main body of section 101(a)(4) is considered.
The majority’s reading of the phrase “to institute an action” leads to a meaning of the main body of section 101(a)(4) — and of the second proviso — that I do not think Congress intended. I believe that my reading of the phrase, to include the assertion of counterclaims, better comports with Congressional intent.
In sum, I think that section 101(a)(4)’s guarantee of a union member’s right to sue extends to the right to assert a counterclaim, and that counterclaims which are supported by interested employers are barred by the second proviso. Thus, I would vacate and remand to the District Court for a finding as to whether Anthony Pelella’s counterclaim indeed was financed by an interested employer.

. Support comes not only from Koolik v. Markowitz, 40 F.3d 567 (2d Cir.1994) (per cu-riam), which the majority discusses, but from other cases as well. Courts have read an attorneys' fees provision of the Employee Retirement Income Security Act that states that fees are to be awarded in “any action” by a fiduciary for or on behalf of a plan in which a judgment in favor of the plan is awarded to mandate payment of fees to a pension fund that prevails on a counterclaim. See 29 U.S.C. § 1132(g)(2) (“In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan. . . . (D) reasonable attorney's fees and costs of the action, to be paid by the defendant ....”); Malden Mills Indus., Inc. v. ILGWU Nat’l Ret. Fund, 766 F.Supp. 1202, 1218 (D.Mass.1991) (“Although the literal wording of section 1132(g)(2) refers to an 'action' by a fiduciary, various courts have interpreted this to include a counterclaim by a pension fund for withdrawal liability or delinquent contributions under section 1145.”); see also Penn Elastic Co. v. United Retail and Wholesale Employees Union, Local 115 Joint Pension Fund, 792 F.2d 45, 48 (3d Cir.1986).
In addition, counterclaims are often treated like claims asserted by the plaintiff in the original action. Counterclaims for affirmative relief are generally subject to applicable statutes of limitation. See, e.g., Hurst v. U.S. Dep’t ofEduc., 901 F.2d 836, 837 (10th Cir. 1990) ("It is fairly well established ... that a counterclaim for affirmative relief ... is subject to the operation of pertinent statutes of limitation.”). A court may enter a separate, final judgment on any counterclaim after making an express determination that there is no just reason for delay. See Fed.R.Civ.P. 54(b); Reiter v. Cooper, 507 U.S. 258, 265, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993) (“A defense cannot possibly be adjudicated separately from the plaintiff’s claim to which it applies; a counterclaim can be. Federal Rule of Civil Procedure 54(b) permits a district court to enter separate final judgment on any claim or counterclaim, after making ‘an express determination that there is no just reason for delay.’ ” (citation omitted)). Finally, a court may sever counterclaims for separate trial in furtherance of judicial convenience, to avoid prejudice, or when separate trials will be conducive to expedition and economy. See Fed.R.Civ.P. 13(i) & 42(b); Sound Video Un*94limited.., Inc. v. Video Shack Inc., 700 F.Supp. 127, 146 (S.D.N.Y.1988).

. "Statutory construction begins with the plain text and, if that text is unambiguous, it usually ends there as well.” United States v. Gayle, 342 F.3d 89, 92 (2d Cir.2003). However, "[t]o resolve ... textual ambiguity, we may consult legislative history and other tools of statutory construction to discern Congress’s meaning.” Id. at 93; see also Disabled in Action of Metro. N.Y. v. Hammons, 202 F.3d 110, 124 (2d Cir.2000) ("We focus on the most authoritative and reliable materials of legislative history, including: the conference committee report, committee reports, sponsor/floor manager statement and floor and hearing colloquy.”).

. Senator Javits suggested adding the word "interested” before "employer” in the second proviso. See 105 CONG. REC. 6725 (1959), reprinted in 2 LEGISLATIVE HISTORY 1237.

. Senator Kuchel introduced an amendment which added a version of the second proviso to section 101(a)(4). See 105 CONG. REC. 6693 (1959), reprinted in 2 LEGISLATIVE HISTORY 1220-21. Senator Kuchel's version was identical to the proviso enacted except that it did not contain the word "interested” before "employer.”