Communications Workers of America, Local 9423 v. Alvarado

Background

Communications Workers of America, Local 9423, filed an amended complaint asserting one claim against Monica Alvarado under Section 501 of the Labor-Management Reporting and Disclosure Act of 1959. The claim alleged that Alvarado, the union’s elected Secretary-Treasurer, breached fiduciary duties owed under the statute.

The union alleged that Alvarado did not turn over usernames and passwords for the union’s computers, accounting software, and bank accounts; did not train another officer on financial tasks; and did not produce requested financial records and union property. It also alleged, based on information and belief, that union funds may have been transferred without authorization before the current president’s tenure and that Alvarado may have been involved. The union requested injunctive relief and compensatory damages.

Alvarado moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), arguing that the court lacked subject-matter jurisdiction, and under Rule 12(b)(6), arguing that the complaint did not state a legally sufficient claim. She also argued that the claim was barred by the statute of limitations.

Analysis

The court focused first on whether the union had a federal cause of action—that is, a legal basis to sue—in federal court under Section 501. Section 501(a) describes fiduciary duties of union officers, including duties concerning union money and property. Section 501(b) expressly allows a union member to sue an officer for the benefit of the union after the union or its governing officials refuse or fail to bring an action within a reasonable time.

The court held that Section 501 does not give the union itself an express cause of action. It also rejected the union’s argument that such a right could be implied from Section 501(a). The court interpreted the Ninth Circuit’s decision in Building Material & Dump Truck Drivers Local 420 v. Traweek as holding that a union standing alone cannot bring a Section 501 suit. The court treated that decision as binding and concluded that the union could not sue Alvarado in federal court to enforce the fiduciary duties in Section 501(a).

The court acknowledged that other federal appellate courts and some district courts had recognized an implied right for unions to sue under Section 501. It also considered the union’s reliance on another Ninth Circuit decision, but found that decision did not address whether such a cause of action could be implied and did not change the court’s reading of Traweek.

Ruling

The court granted Alvarado’s motion to dismiss because Local 9423 could not bring the Section 501 claim against her in federal court. Because that issue resolved the case, the court did not reach whether the amended complaint adequately alleged violations of the fiduciary duties or whether the statute of limitations barred the claim. The order states only that the motion to dismiss was granted; it does not state that the dismissal was with or without prejudice.