Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

تمرين 23

FACTS The Services Employees International Union (SEIU) consists of 2.2 million members who work in health care, public services, and property services. United Health Workers (UHW) is affiliated with SEIU and represents 150,000 healthcare workers in California. Under its constitution, the SEIU has the authority to realign local unions. The SEIU's constitution also grants it the authority to place a local union into trusteeship "to protect the interests of the membership."
The SEIU proposed moving 150,000 long-term healthcare workers from three separate unions-including 65,000 from the UHW-into a new union chartered by SEIU. The UHW opposed the move. The SEIU placed the UHW into trusteeship. As a result, UHW officials blocked access to its buildings to prevent the trustees from entering, removed UHW property from the buildings, and instructed its members not to recognize the trustees' authority.
Meanwhile, the UHW officials, while still on the UHW payroll, created and promoted a new union-the National Union of Healthcare Workers (NUHW). The SEIU filed a suit in a federal district court against the NUHW and the UHW officials for breach of fiduciary duties -that is, the duty to act primarily for another's benefit. The jury returned a verdict against the NUHW and the UHW, on which the court entered a judgment. The defendants appealed.
ISSUE Did the UHW officials violate the standards imposed by the Labor-Management Reporting and Disclosure Act (LMRDA)?
DECISION Yes. The U.S. Court of Appeals for the Ninth Circuit affirmed the lower court's judgment.
REASON Section 501 of the LMRDA creates a fiduciary duty owed by union officials to the union as an organization, not only the union's rank-and-file members. Officials who divert union resources to establish a new competing union breach this duty. The reviewing court pointed out that officials of labor unions are required to uphold the highest standards "of responsibility and ethical conduct in administrating the affairs of the union."
The reviewing court was not swayed by the defendants' statement that they believed that their actions assisted those union members by establishing a more democratic union with localized control. In reality, the defendants diverted union resources to weaken their own union and to form a rival union 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 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."
for critical Analysis-Legal Environment Consideration If the defendants in this case had only expressed their opinions against the SEIU's imposition of trusteeship and charter of a new union, could they have been held liable for a breach of fiduciary duty? Discuss.