Fruit and Vegetable Packers and Warehousemen Local 760, and James Farrington v. Terry C. Morley, Vincent Kuntz and Lumina Brownlee

738 rеferee, presented pursuant were permit 68a before To a set-off Court, those issues will be

necessarily preference the District in a results —a proceedings remanded for further not in- preference”. re Pottier & [In “lawful opinion. 955, (2nd consistent Stymus Co., with Cir. 262 F. 956 Bankruptcy Collier, 1919); 60.15 see 3 fí (14th compare 1964); National Bank ed. County Newport National Herkimer v. Bank, supra, U.S. S.Ct. Co., Miller Tire Fisk F.2d v. Royal (D.Minn.1926), Shapiro with v. Indemnity Co., supra, It 224 F.2d 89.] enough preference is to sanction such a PACKERS FRUIT AND VEGETABLE the claim as set-off has been when used AND WAREHOUSEMEN LOCAL legal acquired аs a of direct obli- result Farrington, Appellants, and James gation. But in our it would view grossly inequitable MORLEY, Terry Kuntz and Vincent C. here, sought where, set-off claim Brownlee, Appellees. Lumina used effect deliberate- be. No. 21327. ly purpose. “manufactured” for hardly necessary It is to add that Appeals States Court of United we view the District Court’s order Ninth Circuit. confirming the referee’s action as an 3,May

exercise of sound discretion. decision announced makes it unnecessary pass upon remaining set-off,

issues which relate to the claimed

such as the trustee’s contention that the

general contractоr for Tucson House was legal entity general the same as the Hospital.

contractor for Lincoln holding ‍‌‌‌​​​​‌​​​​‌‌​‌​‌‌‌‌​‌‌‌​‌‌​‌‌​​‌‌‌​‌​‌​​‌​​​​‌‍of the District Court as to

appellants’ liability to the trustee for at-

torneys’ finding fees is correct and the attorneys’ as to the amount of fees recov-

erable clearly the trustee er- roneous, and hence is affirmed.

The award January of interest from

11, 1965, being thirty days receipt after general pay- of final contractor House, Tucson in accord-

ment on the provisions of the Fike sub-

ance with contract; finding implied and the date, despite from that

interest accrued contingent liability under the one- Fike’s

year warranty provision, will not be dis-

turbed. stated, the order of the For the reasons confirming the referee’s District Court However, ap-

order affirmed. since

pellants’ as to one- Fike’s contentions ‍‌‌‌​​​​‌​​​​‌‌​‌​‌‌‌‌​‌‌‌​‌‌​‌‌​​‌‌‌​‌​‌​​‌​​​​‌‍year obligations, alleg- warranty hearing

edly ripened subsequent to the

741 request Bassett, for the Donaldson, in their Unsuccessful Donald- P. Richard information, in the Hafer, Wash., appel- filed suit Seattle, son & n compel court lants. Farrington examination of Whitaker, & Whit- Ronald F. Walters reports. the LM-2 aker, Yakima, Wash., appellees. challenged, it be- Jurisdiction below was Judge, MADDEN, Before U. S. Senior 431(c): alleged to rest on 29 U.S.C. § Claims,* Court of and BARNES “Every organization required labor Judges. DUNIWAY, Circuit subchap- report under submit BARNES, Judge. Circuit ter the informa- shall make available in such tion to be contained appel- Appellees are members members, every report to all of its Farrington union, appellant lant of which organization its officers such labor by secretary-treasurer. required As duty enforceable at shall be under union, 431(b), by sec- the its U.S.C. § organ- any the suit of member of such retary-treasurer Farrington, finan- filed any competent in ization State court (called reports) cial statements LM-2 jurisdiction in court or the district 1962, years government the with the for in the the district United States for 1964, copies 1963 and were ob- of which organization such labor main- open by appellees. At union tained office, principal tains its to meeting Farrington in asked was just such member cause to examine salary dis- what his was but refused to any books, records, neces- and accounts appellees, on close Thereafter the it. sary verify report. court to such 16, 1965, July the union sent letter to discretion, may, in in such action in its reading as follows: any judgment to to addition awarded “Gentlemen: plaintiff plaintiffs, or a rea- the allow attorney’s by paid fee the sonable to be copies “We have obtained defendant, and costs of action.” reports years for the LM-2 added.) (Emphasis by 1964 filed Local 760. and Teamsters jurisdiction, The court found it had “We, undersigned, request entered an order the examination person accountant in and with an permitted appellees at- and awarded choosing, of our examine all оwn to torney’s fees the examina- and costs of supporting relating to documents sal- jurisdiction appeal tion. We have of the paid expenses aries officers and and to under 28 U.S.C. 1291.1 employees of Local 760 Teamsters years 1962, 1963 and within the Appellants specifications of raise five relating and all documents error: to Teamsters Local 760 loans made failing The court in 1. erred below during years 1962, 1964. 1963 and appellees’ inspect to to hold demand addition, right, request in In we union’s insufficient be- was person our and with an accountant appellees did indicate to choosing, support- own to examine all any “just inspec- union cause” for relating receipts documents tion; during disbursements holding 1963 and 1964.” The court in 2. erred below appellees “just had cause” for The letter re- never was received but inspection; sponded any way. to in information failing requested The court in has been made available 3. below erred pre- appellees. appellees’ was to hold action * appeal apparently Appellants Madden, sitting by designation on this J. Warren jurisdiction of the district concede Justice. Chief p, (Appellants’ Brief, 1.) court. can be sustained. mature were which that burden and that Congress in has not fixed their the un- its wisdom

to exhaust remedies within relief; demonstrating seeking particular judicial mode ion before cause, any particular time nor failing 4. The court erred below Congress doing re- of it. could have compel appellees’ dis- action to hold that quired setting forth written demand substantiating the closure of the records not, alleged and it cause. It did report union’s 1962 LM-2 was barred impose our function to such limita- Washington two-year limi- statute Congress not. tions where ; tations Teamsters, 56 L.R.R.M. In Zastrow v. ordering 5. The court erred in below (Wis.Cir.Ct.1961), the court sus- appellant pay appellees’ at- petition to a tained union’s demurrer torney’s of examination fee costs seeking ex- to enforce certain members’ of the union’s records. rights. amination The court held that pre- We in the order will them treat make a members must written sented. upon demand “(1) forth his union which sets I. The Demand- examine; (2) cause to state- argue Appellants linking specific the de ment records to a re- presented port.” re the union was mand 56 L.R.R.M. at 2874. court’s “just quired specify authority cause” of sole the case result Sarle, proposed the union examination before of Henderson 3037 v. 45 L.R.R.M. (N.Y.Sup.Ct.1960). There, any duty a to that exam was under to submit without authority, supporting to ination. district court concluded the court said: contrary, surrounding duty the the that facts examination] “Such a [to and circumstances are tо be considered arise de- cannot until there has been a setting relating determining just cause whether was the mand forth cause agree books, court. the district the specific report.” a shown. We with and accounts to (cid:127)Opinion “just as to constitutes at what 45 L.R.R.M. may amorphous It differ. is an (cid:127)cause” correctly point Appellees out thing may (cid:127)concept. It mean one to a authority. by are that we not this bound member, something entirely union expressly disapprove any We absolute to Yet the different a uniоn officer. by the Hen rule established Zastrow and by judged statutory requirement must be Congress it derson cases. estab when objective the reasonable the standard of right examine the lished members’ to pro that we man.' It is on that basis fully union aware of records was ceed. right would circumstances which members, un be exercised. Individual The statute itself does not law, in the niceties will schooled of labor showing just specify must make who request items in verification certain thereof, it to the lack when is cause or reports. not the union Often will made, it is to be made. Nor or how anticipate even form verifica what that demand, suit, any prior require to it (cid:127)does opinion it tion take. In our was will Nevertheless, or otherwise. we written that exercise never intended right seeking party can that the to ex assume inspection re be restricted ‍‌‌‌​​​​‌​​​​‌‌​‌​‌‌‌‌​‌‌‌​‌‌​‌‌​​‌‌‌​‌​‌​​‌​​​​‌‍to amine the union records has burden quiring a demand with all technical showing just he (cid:127)of has cause. cause Just pleading. ritual of a formal prerequisite is in the nature of a to right examine, rely up to can and we Appеllants attention direct our general rule that the on the burden legislation. history to the of this When person seeking upon the enforce a to (which Bill 1555 later became Senate right prerequisites that all of to show Labor-Management Reporting Dis precedent met. and conditions have been 86-257, Act Pub.L. closure (1959)) Ascertaining upon was the floor of whom burden Stat. on Senate, falls, however, offered not limit the manner Goldwater does Senator just give requesting mem- has member would amendment an right un- cause to seek examination. to examine unqualified bers fearing Kennedy, ion records. Senator in this The demand case did inspection right unqualified that an any set forth facts which would consti objected harassment, to lead would just argue Appellants tute cause. compromise Senator As amendment. right just to have the his amendment amended Goldwater presented judicial cause to it before the “proper inspection provide holding process is invoked. cases amended, the amendment cause,” and, as support that a demаnd must be made language Although this adopted. position. See International Brother ver- House in favor was omitted Wirtz, Teamsters, hood of etc. cause”, clear “just seems it sion U.S.App.D.C. 346, 346 F.2d require- just Congress designed cause (1965) (assuming required), a demand is undue prevent continuous ment Roberto, Coratella v. 56 L.R.R.M. any to a harassment, pose barrier not to 2071, order withdrawn for reasons inquiry into honest union member’s here, (U.S. material 56 L.R.R.M. 2668 just re- cause records. agree Dist.Conn.1964). We it is on in a narrow quirement read must be ly reasonable the union have thе exam- to resist an sense when invoked opportunity any alleged first to consider admittedly har- not for ination which presented by cause its members. re- rule on such can we assment. Nor right union, That of the how The facts quirement in a vacuum. ever, to advance is not an absolute notice Here, think vary. one each ease prerequisite jurisdiction to the courtesy ordinary court. does The statute improper they suspected officers, if only it make so. It after reference through ap- harassment motive or unduе enforce suit is made that pellees’ letter, at least answer reference to occurs. Ad letter, asking to the members members’ procedural step vance a notice is in en just cause was. their state what forcing rights, designed the members’ recognition right to facilitate the of the facts disclosed further There are two judicial process. without resort to the un- this case make in the which record right possessed by union, It was a the usual. and one which could waived. We are be question (1) the at unanswered The oрinion of the it that was waived. Here meeting hav- preceding the letter union presented the members a written demand secretary-treasurer’s ing to do with the inspect to The the records. an union’s salary; ignore swer was to the demand. it Had right wished to to a exercise its have (2) appellants’ the concession showing just cause, of union the should just cause have did this case demanding have asked to the members discrepancy be- to raise admitted the allege completely ignore such cause. To supporting and its tween the statement the members’ demand is inconsistent respect amounts to the schedule with purpose right with the of the union’s to paid to officers. allegation. just first consider cause the - just ignore re cause hold the To We the members’ demand a is 431(c) quirement not need of 29 U.S.C. reflection of the § union officers’ attitude to the in written demand be established are unconcerned with the de permission mand, to for supported by union or its officers whether or not it is if, just sight It at examine is sufficient records. cause. We cannot losе of the reasonably relationship to de the time concurrent between a union officer and oral, mand, union it or the member. be written The officer is the owner sought charge of or monarch officers in the of union. He is a trus know, know, tee, or should be to examined servant of the members’ interests. though cause, to property, the test must be whether reason union entrusted belongs require possession, to substantiation. an officer’s abnegation of- of It an members. above, open As at an mentioned high position trust and sоlemn of ficer’s meeting Farrington union neglect disdainfully responsibility to salary asked refused what his was. He member, application from a kind to dis answer. There was an admitted absolutely with- it was unless convinced crepancy its between a statement any conclude that or merit. We out basis regarding schedule, right to forewarned union be had paid re amounts The 1964 officers. inspection just for was waived cause port Century shows a loan to Associated after union receiv- the conduct $50,000, total half of the local’s оver ing demand. therefore conclude We assets, conforming without the statu that, circumstances within facts and tory requirement purpose of the case, of this was sufficient. the demand 3; (Plaintiffs’ 1, p. loan be shown. Exh. II. The Just Cause 431(b) (4).) undis U.S.C. These puted just permitting items are cause Beyond question of union’s an examination of union’s records.2 right exist- to be first informed may ence of that a member think which III. Exhaustion Remedies just cause, question is the whether union contends that Though the such cause in fact existed. grant requested court could not relief might by conduct waive the its until all of members had exhausted right informed, it cannot be first support their intraunion To remedies. statutory pro- alter structure proposition 101(a) it cites section vides that shall ordered enforcement be (4) Labor-Management Reporting only cause. The court below (now Act of 1959 29 U.S. Disclosure existed, found that and we 411(a) (4)): C. § agree. organization “No labor limit shall The standard determin any insti- thereof member just cause nec whether there was * * * any court, tute an action in essarily minimal. need Just cause may Prоvided, That such member beyond doubt, be nor shown a reasonable be reasonable exhaust preponderance It of the evidence. * * * hearing procedures within enough need a reason convince instituting organization, such before wrong able man that some has been legal proceedings or administrative done; enough it is if union a reasonable against organizations any of- such or put inquiry. member would to further be * * ficers thereof: Perhaps it will be a certain item that Apparently disproportionatеly high, that the court below felt as in Rekant v. 411(a) Rabinowitz, requirement F.Supp. (E.D.Pa. “exhaustion” of 194 194 § (4) 1961), apply proceeding Roberto, supra, under did not to a v. Coratella 431(c). probably courts or that an he Some § officer contends that did Long disagree. expenses, incur in Harris v. International the claimed Ass’n, 1291, F.2d Operating Eng’rs, 12, shoremen’s Local 321 v. Deacon Local 52 (3d 1963). Contra, 1965). 801 16,609 (Calif.Super.Ct. Cir. Coratella v. L.C. Ir 3 Roberto, supra. Edsberg Local respective In v. of nature of the asserted apparently (E.D.Pa.1961), consider it 2. we need not court that Tlie felt ample Farrington’s salary $20,470 in cause we have found of and reim- since expenses $6,272 mentioned. of were items bursed in 1964 high, expenses that the amount of Variety Detroy Though of American Guild cause. it v. alone would be 1961), 75, (2d expense item, Artists, might Cir. F.2d 81 that this stand- 286 be cert, 1650, 929, alone, cause, might 6 81 S.Ct. Re- U.S. be see denied 366 suggests Rabinowitz, F.Supp. (1961), failure that 194 194 L.Ed.2d kant v. 388

745 charges filing remedy Union No. 12 of International Union that for of- Engineers, Operating against 300 785 F.2d fenses Constitu- the Teamster (9th policy 1962), accepted the we Cir. tion. most should in circum- the сourts duty permit examination order to intra- stances forbear in upon placed union It is arises elsewhere. adjustment union of difficulties. There Congress. union by ofAct officers may strong support union’s be its own provides for violation remedies 411(a) (4) applies to contention that § necessarily, rules, not, for violation proceedings 431(c), precise but under § Without United States. the laws ruling question in on the is not pro showing some there was this case. by futile, cedure, nor uncertain neither Edsberg recog might redressed In we have casе which the statutory to- nized of intraunion exhaustion of their violation records, be apply cannot unless inspect doctrine cannot remedies to ex there for failure from union a rem available from the courts barred edy nor futile. which is remedies. neither uncertain intraunion haust proposition Inherent is the idea this Washington Limita- Statute IV. principle to invoke exhaustion tions there show that must procedure available to the members contention The union advances reasonably within the union structúre by part the Wash- action is in barred particular calculated redress limitations, Rev.Code ington statute grievance complained of. “Where for re- “An action 4.16.130: of Wash. § complaint, union moves for, to dismiss shall provided not hereinbefore lief place it should es before the court after two facts commenced within tablishing that union remedies avail are As accrued.” have of action shall plaintiff plaintiff able to the and that records, union contends 1962 to the neglected v. use them.” Forline on the arose of action the cause Helpers 315, 42, F.Supp. Local No. 211 filing 1, April date. (E.D.Pa.1962) (emphasis speaking court Judge Ely, court).4 It should be noted that § Engi Operating Union International (a) (4) only allows “reasonable” hear Inc., Moore, neers, Fischbach etc. ing procedures to bar court action. 1965), (9th de cert. Cir. F.2d 936 argu- present In Draucker, case union’s Inc. v. C. D. sub nom. nied Engi ment on Operating exhaustion intraunion reme- Union International premised dies is on assertion that its neers, etc., 86 S.Ct. 384 U.S. charges against could have been filed (1966), that actions held 16 L.Ed.2d 358 Fаrrington XIX, Labor-Manage under Article Section damages under 6 of the International Constitution Act of Reporting Disclosure ment (Def. (29 the Teamsters Union. Exh. 1959, particularly thereof U.S. pp. 107-108.) That section lists certain state 187), are controlled C. § breaches, none of which are involved of' The rationale of limitations. statute here, Congress- for which a member or officer can since was that that decision be tried union. lan- limit, the There is Rules no the time had indicated guage exclusive, 1652) that (28 the list is not but re U.S.C. Act § of Decision 1(a) Ap~ Sеction of XIX Article indicates the state law. quired to reference to exhaust intraunion remedies is a not show burden of that the remedy bar the adequate procedures. unless available has been ing of the existence specifically brought to Murphy the attention of of Brotherhood International v. complainant. the (W.D.Ky. Teamsters, L.R.R.M. 2885 56 1964). Contra, New of under the law authority proposi 4. There is some for the York, Sarle, L.R.R.M. Henderson v. 45 that to tion failure exhaust intraunion (N.Y.Sup.Ct.1960). remedies is an affirmative defense so 3037

746 point рellants argue it to and Moore deem advisable that Fischbach We here; Congress question of controlling imposed no out our resolution of that the is Washington Washington is limit, ap of statute of the effect the time so the law Congress, limi plies. Appellees of not a that state statutes decision contend that 29 requiring actions based on U.S.C. in tations control possi 436), 431(c), (29 kept nor it the does foreclose for five U.S.C. § § five-year bility 436 established that 29 U.S.C. in effect statute § established five-year for such of limitations under 431 statute limitations ‍‌‌‌​​​​‌​​​​‌‌​‌​‌‌‌‌​‌‌‌​‌‌​‌‌​​‌‌‌​‌​‌​​‌​​​​‌‍for actions goes only (c). far as actions. Our decision must, appellants’ affirmative as it The limi bar of a statute of prove for failure to defense is not valid defense, ap tations is an as affirmative necessary of that defense. element pellants (C.T. pp. noted in answer their Attorney’s Ex- the Y. Fees Costs of 8-9). They prove required to were thus amination every Belling- element the defense. The which creates statute Belling- Syndicate, ham Securities Inc. v. the cause of action vests 370, Mines, Inc., ham Coal 13 Wash.2d court tо the award with discretion as (1942). only 125 P.2d 668 statute 431(c). attorney’s fee. 29 U.S.C. § they allege which as a bar is Wash find no abuse of that discretion We ington quoted statute We find above. However, no there is affirm that award. Washington that under law awarding statutory authority action accrues when all of the conditions or costs of therefore examination.6 We precedent Washington have been met. der modified the district court’s order Security 197, State, Co. v. 9 Wash.2d of the costs of exam delete the award (1941). P.2d 135 A.L.R. 1330 respects ination. In affirm. all other we bring precedent Where condition making Order, modified, an action is the of a de as affirmed. mand, period from time runs Judge. DUNIWAY, Circuit when it could first been have made. decision, in I not concur in the but Jacobson, Jones 45 Wash.2d reasoning. all of its (1954); Oyster P.2d 979 Edison Co. v. 1. demand. Oyster Co., Pioneer Wash.2d (1945). P.2d case, In this under the my opinion Barnes As the Brother statutory requirement just cause, de points out, require does not statute mand could any agree, not have been made until the I I conclude demand. from this that suit could have been had cause. It was inсum making demand. filed without upon appellants bent prove is In such suit itself a demand. element, they They did not. seem allege, suit, plaintiffs would have suggest of action could they here, they do would have day have accrued later than the last proving, burden had filing reports question. (Ap only protection cause. That is pellants’ Brief, pp. 28-29.) it But against Congress has harassment prove their burden to the time when the given Although are the union. there appellees actually just cause, had not many exceptions, particularly they might Having when have.5 failed general contracts, rule field prove element, the action against if A of action has a cause Washington barred B, statute. first make a demand he need Indeed, appellants authority continue to for an award of the take 6. There position (in briefs, though action, their award not at costs of the but no such argument) oral that there was no was made here. so, period cause. If of limitations yet begun run, could not have much expired. less have pro- quired reported perform he can to be which will upon B B before that necessary simply if he in detail the file suit vide sufficient B. He can sue way. from data Yet we basic information and proceed chooses to by lawyer documents filed with is retained which the who know may verified, Secretary explained usually first communi- be A sue B will accuracy lawyer clarified, for B, he is if or and checked or B’s cate with with completeness, one, include and and shall whether to have see known ap- worksheets, vouchers, receipts, disposed suit. and of without mаtter can be resolutions, keep plicable Presumably, in most cases and shall occur will 431(c). arising But the such records available examination under section for period com- less than or not to as to whether decision for of five filing prospective defendant of the documents based after the municate with by normally they on which con- left the information before suit is filed judgment plaintiff [Emphasis of the tain.” added.] the law to usually me, language lawyer; a con- his it is not To this indicates right right Congress preserve I of sue. dition to would wanted to by here, examination, requiring preservation impose Con- when such a condition Ap- gress years. of for done records at least 5 has not so. pellants point legislative of one bit opinion express as to I no therefore they history that, claim, shows that demand, sufficiency because pre- purpose section has a narrower —to required. I thus think that none prosecutions for use in serve agree disap- my Barnes in with Brother perjury. They rely upon a statement proving of in Zastrow v. the decisions by Goldwater, portion of which Senator Sarle, cited Teamsters and Henderson v. is: by disapprove I of him. also decisions Team- International Brotherhood of merely passed “The Bill as Senate sters, and Coratella v. etc. v. Wirtz required preservation these Roberto, my also cited Brother under conditions basic records they suggest Barnes, that a insofar as periods prescribed the Sec- of time precedent demand is a condition bill, retary. as The Landrum-Griffin right to sue. report, eliminate well the conference authority discretionary of the Sec- 2 & 3. Just Cause and Exhaustion of retary lay un- flat and down a Remedies. order, permits equivocal of no which agree my I with Brother Barnes kept exceptions, that available be shown, and that the cause has been pe- 5-year years. for at least doctrine exhaustion internal length of the riod coincides with applicable under facts remedies is for crim- limitations statue [sic] adequate If shown here. there were inally prosecuting perjury un- acts of might remedy, intra-union be the result [Legislative His- Federal der law.” different. Management Report- tory of the Labor Washington 4. The Limita- Statute Act Titles Disclosure tions. I-VI, p. 625.] Washington I hold that stat- year may period It well be that the five apply, ute of limitations does not because by the was chosen for reason stated during Congress provided for a time language of Senator. But the the section involved, records, as are here such I think is far than that. broader kept must be and be available for exam- safeguard the purposes of its is to one (29 ination. Act U.S. Seсtion 206 un- union members’ examination 436) C. reads: 431(c). of this der section The value drastically safeguard if “Every person curtailed to file can limitations, providing subchapter

report shall statutes under state years (here period than five on the a shorter maintain records matters re- Washington provides for two statute rights. I years), applied to are those curtail them. thus express opinion

I no whether commenced

such a suit as this could be filing more than after ‍‌‌‌​​​​‌​​​​‌‌​‌​‌‌‌‌​‌‌‌​‌‌​‌‌​​‌‌‌​‌​‌​​‌​​​​‌‍the five report. pertinent LM-2 judgment.

I concur in the GENOVESE, Petitioner-Appellant,

Vito America,

UNITED STATES of Respondent-Appellee.

No. Docket 30780. Appeals

United States Court of

Second Circuit.

Argued May 1967. 26,May

Decided Fuller, Washington, Vincent J. D. C. (Edward Bennett Williams Robert Weinberg; Washington, C., L. D. Davis, City,

Wilfred L. New York on the brief), appellant. Dorsen, Atty. David M. Asst. U. S. (Robert Morgenthau, Atty., M. U. S. York, Southern District of New New City, Sprizzo York John E. Michael Attys., Mitchell, W. U. S. on the Asst. brief), appellee.

Case Details

Case Name: Fruit and Vegetable Packers and Warehousemen Local 760, and James Farrington v. Terry C. Morley, Vincent Kuntz and Lumina Brownlee

Court Name: Court of Appeals for the Ninth Circuit

Date Published: May 3, 1967

Citation: 378 F.2d 738

Docket Number: 21327

Court Abbreviation: 9th Cir.