Olms interpretative Manual

PROPRIETYOFEXPENDITURES

512.800DEFENSEOFACCUSEDOFFICER

A stated purpose of the Act is “to eliminateimproper practices on the part of labororganizations and their officers.”(Emphasis added.)To allow a union officer to use the powerandwealth ofthe very unionwhich he isaccused ofpilfering,to defendhimself against such

charges,canbeinconsistentwithCongress’efforttoeliminatetheundesirableelementwhichhasbeenuncovered inthe labor-management field.

Based on this principle, a union cannot provide an attorney for an officer or pay for anofficer’s legal expenses during litigation if the union and officer might have conflicting interestsinthe outcome of the case. That will usually betruein casesinvolvingaclaimof breach of

fiduciary duty by an officer. See Urichuckv. Clark, 689 F.2d 40, 111 LRRM 2323 (3d Cir. 1982);McNamarav. Johnston, 522 F.2d 1157, 1167 (7th Cir.1975), cert. denied, 425 U.S. 911 (1976);Highway Truck Drivers and Helpers Local 107,International Brotherhood of Teamstersv. Cohen,182F.Supp. 608, 45 LRRM3050 (E.D. Pa. 1960),aff'd, 284 F.2d 162(3d Cir.1960),cert. denied,
365 U.S. 833 (1961). Federal courts will grant injunctions to prevent union officers fromexpending union funds to pay for officer expenses in defending against lawsuits brought underSection501ofthe LMRDA.See Kerrv.Shanks,466 F.2d1271,81 LRRM2366(9thCir. 1972);
Holdemanv.Sheldon, 204F.Supp 890,51LRRM 2758(S.D.N.Y. 1962), aff’d, 311F.2d2 (2d
Cir. 1962).

Althoughaunion canreimbursea unionofficerifinlitigation itisfoundthattheunionofficer did not breach the LMRDA, nothing in the LMRDA requires a union to reimburse anofficerforattorneys’ feesandlitigation expenses,evenif theofficer prevailsonall LMRDA

claims.See Doylev. Kamenkowitz, 114 F.3d 371, 377-78, 155 LRRM 2435 (2d Cir. 1997). If theauthorization to pay legal fees for defending its officers was beyond the powers of a union asderived from its constitution, a mere majority vote at a regular union meeting cannot authorizesuchexpenditures. SeeMorrisseyv.Curran, 650F.2d 1267, 107LRRM 2233 (2d Cir. 1981);
McNamarav. Johnston, 522 F.2d 1157, 1167 (7th Cir. 1975), cert.denied, 425 U.S. 911 (1976).However, because of LMRDA’s “retention of rights under state laws” provision, §603(a), statelaw claims on issues not governed by federal law can be brought by union officers to seekreimbursement of legal fees and expenses.SeeSchepisv. Local Union No. 17, UnitedBrotherhoodof Carpenters and Joiners, 989 F.Supp. 511 (S.D.N.Y.1998).
“[E]ven assuming that Congress intended to leave a union free to use its funds for the purpose ofpaying its officers’ legal expenses in actions brought against them under the new Act, if under thelaw of Pennsylvania, the state in which the union membership contractual relationship arose, suchexpenditures are illegal, a union officer could not consistent with his duty to the union (whichduties ultimately flow from its Constitution) expend union funds for this purpose.” Highway TruckDrivers& Helpers Local107 v.Cohen, 182 F. Supp. 608, 621-22(E.D. Pa. 1960), aff’d, 284F.2d
162(3d Cir.1960 Highway Truckersand HelpersLocal 107 v. Cohen, 182 F. Supp. 608,621-22
(E.D.Pa.1960), aff’d,284 F.2d162(3d Cir.1960), cert.denied,365 U.S.833 (1961).,365 U.S.
833 (1961).

(Revised: Dec. 2016 and Jan. 2021)512.810DUALLEGALREPRESENTATION

The United States Court of Appeals for District of Columbia in commenting on the use ofunion funds and counsel in the defense of union officers charged with wrongdoing against theunion stated:

“As a general proposition we think funds of a union are not available to defend officers chargedwithwrongdoingwhich,ifthe chargeswere true,would beseriously detrimentalto theunionandits membership.See, e.g., Highway Truck Drivers and Helpers Local 107, InternationalBrotherhoodof Teamstersv.Cohen, 182 F.Supp.608, 619-22 (E.D.Pa. 1960), aff’d,284 F.2d

162 (3d Cir. 1960), cert. denied, 365 U.S. 833 (1961).Cf. Witherspoon v. Hornbein, 70 Colo. 1(Sup. Colo. 1921), involving officers of a corporation.The treasury of a union is not at thedisposal of its officers to bear the cost of their defense against charges of fraudulently deprivingthe members of their rights as members.It is clear the complaint in this case charged individualofficer defendants with conduct which was seriously detrimental to the interests of theInternationalandto therightsof itsmembers.Andin decidingwhether ornotunion fundsmaybeused to defend such a suit the final outcome of the charges is not determinative; for if the chargeshave substance a sound resolution may be prevented by the very fact of dual representation duringthe process leading to a decision with respect to the charges.Different counsel would be requiredin this process.In other words, counsel who are chosen by and represent officers charged with themisconduct,and who alsorepresent the union,are not abletoguide thelitigation in thebest
interest of the union because of the conflict in counsel’s loyalties.In such a situation it would beincumbentupon counselnot to represent both theunion and the officers.”


Milonev. English, 306F.2d 814, 50LRRM 2773 (D.C.Cir. 1962).

(TechnicalRevisions:Dec. 2016)