Court Opinion

ID: 771243
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:47:48+00
Date Added: 2024-06-11T17:55:56.186791
License: Public Domain

233 F.3d 508 (7th Cir. 2000)
Charles Chathas, et al., Plaintiffs-Appellants,v.Local 134 IBEW, Unified Social Club,  and Mike Fitzgerald, Defendants-Appellees.
No. 99-4314
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 30, 2000Decided October 18, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 99 C 0400--James B. Zagel, Judge.[Copyrighted Material Omitted]
Before Posner, Coffey, and Kanne, Circuit Judges.
Posner, Circuit Judge.

1
This appeal presents a  tangle of jurisdictional, equitable, and labor-  law issues. The plaintiffs are members of a local  of the electricians union who are on the outs  with the local's current business manager (that  is, president), Mike Fitzgerald. They brought  this suit under section 302 of the Taft-Hartley  Act, 29 U.S.C. sec. 186, which forbids union  officers to solicit employer contributions,  against the local, Fitzgerald, and the "Unified  Social Club," a social organization of members of  the local. The suit charges that Fitzgerald  solicited and received tens of thousands of  dollars in contributions to the Club from  employers with which the local bargains, the  purpose being to solidify Fitzgerald's hold over  the union by enabling the Club to provide  attractive social outings for union members.  Fitzgerald created the Unified Social Club, and  it is closely identified with him and his faction  of the local. The more lavish its outings, the  more likely he is to be reelected business  manager.

2
The plaintiffs moved for a preliminary  injunction forbidding the defendants to solicit  or receive contributions to the Unified Social  Club from employers doing business with the  local. In September, the defendants submitted an  offer of judgment under Rule 68 of the Federal  Rules of Civil Procedure. The essence of the  offer was that the preliminary injunction would  be made permanent, but that the offer was not to  be construed as an admission of liability. Rule  68 offers are much more common in money cases  than in equity cases, but nothing in the rule  forbids its use in the latter type of case.  Liberty Mutual Ins. Co. v. EEOC, 691 F.2d 438,  439-40 (9th Cir. 1982) (a case much like this);  People v. Operation Rescue National, 80 F.3d 64,  68 (2d Cir. 1996); Goodheart Clothing Co. v.  Laura Goodman Enterprises, Inc., 962 F.2d 268,  270-71 (2d Cir. 1992); Spencer v. General  Electric Co., 894 F.2d 651, 655 and n. 5 (4th  Cir. 1990), overruled on other grounds, Farrar v.  Hobby, 506 U.S. 103 (1992); RCA/Ariola Int'l,  Inc. v. Thomas & Grayston Co., 845 F.2d 773, 780-  81 (8th Cir. 1988).

3
The plaintiffs rejected the offer. The  defendants--not the plaintiffs--then moved the  district court to enter a permanent injunction.  The court did so, whereupon the defendants moved  the court to dismiss the suit as moot. The  plaintiffs objected, arguing that they were  entitled to a declaratory judgment or at least to  a finding in or accompanying the permanent  injunction that the defendants had violated the  law. At the same time the plaintiffs asked for  leave to amend their complaint to add a claim  under section 502 of the Labor-Management  Reporting and Disclosure Act, 29 U.S.C. sec. 501,  which (in subsection a) imposes on an officer of  the union, so far as bears on this case, a duty  "to refrain from dealing with [the union] 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." The relief sought was  disgorgement of the moneys that the Unified  Social Club had received from employers doing  business with the local.

4
The district judge granted the motion to dismiss  the suit as moot on the ground that the entry of  the permanent injunction had eliminated the  controversy between the parties, except insofar  as the request to amend the complaint was  concerned. That request the district court denied  on the ground that "the solicitation of money  from employers does not involve union funds or  property, thus does not state a claim under 29  U.S.C. sec. 501."

5
The plaintiffs appeal, renewing the arguments  that the district court rejected when it  dismissed the suit. The appeal from the denial of  declaratory relief (whether in the form of a  declaratory judgment, or merely a judicial  finding that the defendants did indeed violate  section 302 of the Taft-Hartley Act) is  independent of their appeal from the judge's  refusal to let them amend the complaint to add a  claim under section 501 of the Labor-Management  Reporting and Disclosure Act, and it will promote  clarity to treat them as if they were two  separate appeals.

6
A winning party cannot appeal merely because the  court that gave him his victory did not say  things that he would have liked to hear, such as  that his opponent is a lawbreaker. Adverse dicta  are not appealable rulings. California v. Rooney,  483 U.S. 307, 311 (1987) (per curiam); United  States v. Accra Pac, Inc., 173 F.3d 630, 632-33  (7th Cir. 1999); Grinnell Mutual Reinsurance Co.  v. Reinke, 43 F.3d 1152, 1154 (7th Cir. 1995);  Atlantic Mutual Ins. Co. v. Northwest Airlines,  Inc., 24 F.3d 958, 961 (7th Cir. 1994); Abbs v.  Sullivan, 963 F.2d 918, 924 (7th Cir. 1992). They  can cause harm, but not the sort of harm that the  courts, in an effort to limit litigation, deem to  create a genuine controversy within the meaning  of Article III of the Constitution. Judgments are  appealable; opinions are not.

7
Nor can a party force his opponent to confess to  having violated the law, as it is always open to  a defendant to default and suffer judgment to be  entered against him without his admitting  anything--if he wants, without even appearing in  the case. Reynolds v. Roberts, 202 F.3d 1303,  1315 (11th Cir. 2000). And if the defendant has  thus thrown in the towel there is nothing left  for the district court to do except enter  judgment. The absence of a controversy (in the  constitutional sense) precludes the court from  issuing an opinion on whether the defendant  actually violated the law. Such an opinion would  be merely an advisory opinion, having no  tangible, demonstrable consequence, and is  prohibited. Alliance To End Repression v. City of  Chicago, 820 F.2d 873, 875-76 (7th Cir. 1987).

8
The plaintiffs acknowledge that their principal  dissatisfaction with the permanent injunction  that the district court entered is the absence of  a finding of illegality, which they wish to  brandish in their continuing struggle with  Fitzgerald and his clique for control of Local  134. Had the injunction that the judge entered  been narrower than the plaintiffs wanted, they  could have appealed just like any other plaintiff  who obtains only partial relief in the trial  court and is dissatisfied. See, e.g., Deposit  Guaranty National Bank v. Roper, 445 U.S. 326,  332-33 (1980); EEOC v. Chicago Club, 86 F.3d  1423, 1431 (7th Cir. 1996); see also Electrical  Fittings Corp. v. Thomas & Betts Co., 307 U.S.  241 (1939) (appeal by prevailing defendant);  LaBuhn v. Bulkmatic Transport Co., 865 F.2d 119,  121-22 (7th Cir. 1988) (ditto). The plaintiffs  drafted the preliminary injunction that the judge  entered, however, and so far as the terms of the  permanent injunction are concerned all the  plaintiffs wanted was for him to make the  preliminary injunction permanent, and he did so.  The permanent injunction forbids exactly what the  plaintiffs want it to forbid. But they argue that  it is invalid because of its lack of a finding  that the defendants violated the law, and if this  is right it means that the relief they obtained  was illusory--a proper basis for a "winning"  plaintiff to appeal.

9
The requirements for a valid injunction are  found in Rule 65(d) of the Federal Rules of Civil  Procedure, which provides, so far as pertinent  here, that "every order granting an injunction .  . . shall set forth the reasons for its issuance;  shall be specific in terms; shall describe in  reasonable detail, and not by reference to the  complaint or other document, the act or acts  sought to be restrained." The order granting the  injunction in this case does not contain the  material required by the rule; all it says is  that the court grants the defendants' motion to  enter a permanent injunction. The order contains  no reasons and no terms, and in conspicuous  contradiction of the rule incorporates by  reference another document, namely the  preliminary injunction. The order, in short, is a  clear violation of Rule 65(d), International  Longshoremen's Ass'n v. Philadelphia Marine Trade  Ass'n, 389 U.S. 64, 74-76 (1967); Schmidt v.  Lessard, 414 U.S. 473 (1974) (per curiam); PMC,  Inc. v. Sherwin-Williams Co., 151 F.3d 610, 619-  20 (7th Cir. 1998), but also a harmless one, and  it does not render the injunction unenforceable  and so the plaintiffs have no legal basis for  complaining. When the terms of an injunction,  although not set forth in a separate document as  the rule requires, can be inferred from the  documentary record with sufficient clarity to  enable a violation of those terms to be punished  as a contempt, the injunction is enforceable.  Metzl v. Leininger, 57 F.3d 618, 619 (7th Cir.  1995); Chicago & North Western Transportation Co.  v. Railway Labor Executives' Ass'n, 908 F.2d 144,  149-50 (7th Cir. 1990). That is the case here.  The preliminary injunction that the judge had  entered in February of last year complied with  Rule 65(d); the defendants' motion which the  judge granted asked him to make the preliminary  injunction permanent; and so the granting of the  motion was the equivalent of reissuing the  preliminary injunction but striking through the  word "preliminary," just as in Chicago & North  Western Transportation Co. v. Railway Labor  Executives' Ass'n, supra, 908 F.2d at 150; see  also Advent Electronics, Inc. v. Buckman, 112  F.3d 267, 273 (7th Cir. 1997).

10
Well, almost the equivalent; so far as the legal  basis for the permanent injunction is concerned,  the plaintiffs point out that the order entering  the preliminary injunction recited only that "the  Plaintiffs have made a reasonable showing of  likely success on the merits," whereas the  predicate for a permanent injunction would have  to be that they had prevailed on the merits. A  preliminary injunction is intended to protect the  status quo while the case proceeds, not to  adjudicate the merits. A plaintiff cannot obtain  a permanent injunction merely on a showing that  he is likely to win when and if the merits are  adjudicated. University of Texas v. Camenisch,  451 U.S. 390, 394-95 (1981); Plummer v. American  Institute of Certified Public Accountants, 97  F.3d 220, 229 (7th Cir. 1996); K-Mart Corp. v.  Oriental Plaza, Inc., 875 F.2d 907, 915 (1st Cir.  1989).

11
True; and this is another example of the sloppy  way in which the case was handled in the district  court. But it is not true that a permanent  injunction is invalid unless it recites that the  defendants violated the law. The obvious  counterexample is a permanent injunction entered  pursuant to a consent agreement in which the  defendants deny liability. See, e.g., United  States v. Accra Pac, Inc., supra, 173 F.3d at 631.  In such a case there is no adjudication of the  merits, yet the injunction is valid. The  plaintiffs in this case did not consent to the  entry of the permanent injunction, because it was  unaccompanied by a finding of liability. But that  does not mean that the injunction was invalid, as  would be obvious if the injunction had been  entered after the defendants defaulted, as in SEC  v. Worthen, 98 F.3d 480, 481 (9th Cir. 1996).  Although Rule 65(d) does require that the order  granting the injunction "set forth the reasons  for its issuance," they need not take the form of  findings that the defendant violated the law. The  reason for the injunction might simply be that  the defendant had consented to its entry--that in  fact was the reason the judge gave when he  dismissed the suit. He gave a reason, too, why  the plaintiffs' objection should not be  controlling. He said that the plaintiffs had got  all they were entitled to, and he was right,  given that the injunction is valid and prohibits  exactly the same conduct that the plaintiffs  wanted it to prohibit. All that is missing is a  finding of violation, and we have seen that this  is not a prerequisite to the issuance of a valid  injunction.

12
Let us move now to what we're calling the second  appeal. In defending the judge's refusal to allow  the plaintiffs to amend their complaint to add a  claim under section 501 of the LMRDA Act, the  defendants emphasize that the motion was made  long after the case was filed. The complaint was  filed in January of 1999; the amendment was not  sought until November. But the delay cannot be  dispositive, and for two reasons. First, the  reason the plaintiffs delayed was to give the  local a chance to sue the Club and its officers.  A suit under section 501 by union members is a  derivative suit. See, e.g., O'Hara v. Teamsters,  151 F.3d 1152, 1161 (9th Cir. 1998); Weaver v.  United Mine Workers, 492 F.2d 580, 582 (D.C. Cir.  1973) (per curiam). The officers have defrauded  the union, and only if the union (for example  because controlled by the dishonest officers)  refuses to bring suit are the members permitted  to do so. So the plaintiffs had to give the union  a chance to decide whether to sue (of course it  decided not to). Second, the question whether to  bar an amendment to the complaint because of  undue delay is committed to the discretion of the  district court, Foman v. Davis, 371 U.S. 178, 182  (1962); Chaveriat v. Williams Pipe Line Co., 11  F.3d 1420, 1430 (7th Cir. 1993); Clemmons v.  Delo, 177 F.3d 680, 686 (8th Cir. 1999), and the  court here did not exercise any discretion. It  forbade the amendment on the sole ground that the  claim sought to be added did not state a claim.  If the judge was wrong in this legal ruling, the  case must be returned to him for an exercise of  his discretion.

13
We think he was wrong. Although section 501 is  primarily aimed at preventing officers from  misusing union funds, Tile, Etc., Int'l Union v.  Local 25, 972 F.2d 738, 744 (7th Cir. 1992);  Talbot v. Robert Matthews Distributing Co., 961  F.2d 654, 666 (7th Cir. 1992); Hood v. Journeymen  Barbers, Etc., 454 F.2d 1347, 1354 (7th Cir.  1972); United States v. Hartsel, 199 F.3d 812,  819 (6th Cir. 1999); Morrissey v. Curran, 650  F.2d 1267, 1274 (2d Cir. 1981), it is not limited  to that conduct. The language we quoted earlier  forbids the officers to deal with the union as an  adverse party, which the defendants are accused  of having done here by taking money from  employers in order to solidify their control of  the union. The statute also forbids union  officers to obtain a personal interest adverse to  the union, which the defendants did here by  operating the Unified Social Club with funds from  employers, thus creating a conflict between their  interest in reelection and their duty to deal  with employers at arm's length. Such conduct  violates section 501 too. United States v.  Pecora, 798 F.2d 614, 623 (3d Cir. 1986); United  States v. Cody, 722 F.2d 1052, 1057 (2d Cir.  1983); Johnson v. Nelson, 325 F.2d 646, 650-53  (8th Cir. 1963). It was therefore error for the  district judge to disallow the amendment on the  ground he did, and the case must be remanded to  enable him to make the required discretionary  judgment.

14
Affirmed in Part, Reversed  in Part, and Remanded.