Labor & Employment – Decertified Union – Civil Practice – Preliminary Injunction – Fund Expenditure

US Airline Pilots Association v. Velez (Lawyers Weekly No. 15-04-0845, 15 pp.) (Robert Conrad Jr., J.) 3:14-cv-00577; W.D.N.C.

Holding: Now that the plaintiff-union is no longer representing the pilots of US Airways, it is preliminarily enjoined from using funds – collected in part from former America West pilots (West Pilots) – to further the seniority claims of pre-merger US Airways pilots (East Pilots) against the West Pilots.

The court grants a preliminary injunction in favor of the West Pilots.

After the union lost its certification as the collective representative for US Airways pilots, the union’s officers deferred dissolution of the union in case the union needed to take action for the pilots, including in the long-running dispute between the East and West Pilots as to seniority.

The West Pilots seek to (1) prohibit the union and its officers (who were East Pilots) from spending union funds, (2) require the union to provide an accounting of its books and records, and (3) prevent the dissolution of the union without prior written notice to the West Pilots and approval by the court.

By sending written demands to the union and its officers, the West Pilots have satisfied the procedural requirements of the Labor Management Reporting and Disclosure Act (LMRDA).

The union is engaged in an industry affecting commerce by acting as the representative of the former US Airways pilots in seniority proceedings and pending litigation by/against the union.

Although it is no longer the bargaining representative for the US Airways pilots, and although it may not currently deal directly with an employer in a certified capacity, the union existed and continues to exist for purposes of dealing with employers; therefore, it is a labor organization. The fact that the union only exists currently as an unincorporated nonprofit organization does not remove it from the jurisdiction of the LMRDA.

The West Pilots were members in good standing as of the union’s decertification, and no evidence has been presented that they have voluntarily withdrawn from or been expelled or suspended from the union; therefore, they continue to be members. The West Pilots have standing to bring their claims.

The union’s constitution only permits its agents to spend funds on “collective legal action on behalf of the pilot group” if the funds are not distributed to the members upon decertification. Therefore, the issue is the meaning of “collective legal action on behalf of the pilot group.” Such actions must be for purposes of advancing the interests of the group as a whole.

Any actions, or expenditures supporting such actions, taken on behalf of a distinct subset of a group which are directly adverse to another subset of that group cannot be taken on behalf of the group as a whole. The union’s actions are meant to advance the interests of the East Pilots to the detriment of the West Pilots. These actions are likely improper under the union’s constitution and violative of the LMRDA. The West Pilots are likely to succeed on the merits.

The union’s expenditure of its finite funds, which are the object of this litigation, can only deplete a treasury that cannot be replenished. Therefore, the West Pilots are likely to suffer irreparable harm in the absence of preliminary relief.

On the other hand, an injunction prohibiting the union’s use of its funds to participate in seniority disputes risks little to no harm to the union or its officers. The East Pilots, like the West Pilots, could seek funding from other sources to finance their continued involvement in the seniority process. The balance of equities tips in favor of the West Pilots.

The public has an interest in seeing that contracts – including union constitutions – are enforced.

Since a business entity acts only through its agents, it is necessary to enjoin the union and its officers, employees and agents.

The union should not be permitted to use funds derived from West Pilots to the detriment of the West Pilots.

Nevertheless, an accounting is not necessary to preserve the status quo, nor would it further the preservation of the union’s funds. Such information is more appropriately exchanged through normal channels of discovery. The West Pilots’ request for an accounting is denied.

Because the court has found that injunctive relief is warranted, the court bars the union from dissolution without prior written notice to the West Pilots and approval of the court.

Where the funds that are the object of the injunction will remain under the union’s care throughout the pendency of this case, the court will not require the West Pilots to post a bond for the issuance of this preliminary injunction.

Motion granted in part.