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Local 1498 v. American Federation of Government Employees


as amended september 3 1975.: August 20, 1975.



Forman, Van Dusen and Garth, Circuit Judges.

Author: Garth


GARTH, Circuit Judge:

This appeal brings before us an order of the district court denying plaintiffs leave to bring suit under the provisions of the Labor-Management Reporting and Disclosure Act of 1959 (L.M.R.D.A.), 29 U.S.C. § 401 et seq. The district court held that it lacked jurisdiction inasmuch as plaintiffs' action for mismanagement of a local union's financial affairs was brought by a federal employee against a federally-recognized union and its national and local officers. The district court also held that jurisdiction was lacking under the other jurisdictional bases alleged by the plaintiffs. Accordingly, the district court denied plaintiffs' application for leave to sue, the only relief sought by plaintiffs. We agree with the district court that no jurisdictional basis exists, but we are obliged to remand for entry of an order dismissing the complaint to dispose of the entire proceeding.*fn1

The individual plaintiffs*fn2 are present members of Local 1498 of the American Federation of Government Employees (AFL-CIO) who seek to sue the national union (hereinafter "AFGE") and certain officers of both the national and local unions for alleged violations of fiduciary duties imposed by § 501(a) of the LMRDA.*fn3 The complaint which plaintiffs sought to serve on defendants reveals that plaintiffs seek recovery of monies alleged to have been misappropriated by officers of the local union who, along with officers of the national union, are charged with various misrepresentations and omissions concerning union procedures.*fn4 See Complaint, P7; App. at 37b. The defendant union AFGE and the plaintiff Local 1498 are unincorporated associations which limit membership to, and which represent only, Federal government employees.

Insofar as plaintiffs' cause of action is predicated upon the defendants' alleged breach of fiduciary duties imposed by § 501(a), we agree with the district court's conclusion that it lacks subject matter jurisdiction over that cause of action. We believe it settled in this Circuit that the provisions of the LMRDA are not applicable to government unions. A union consisting exclusively of government employees is not subject to the statutory prohibitions and rights created by the LMRDA. New Jersey County and Municipal Council #61 v. American Fed'n of State, County and Municipal Employees, 478 F.2d 1156, 1160 (3d Cir.), cert. denied, 414 U.S. 975, 38 L. Ed. 2d 218, 94 S. Ct. 290 (1973). Accord Stevens v. Carey, 483 F.2d 188, 191 (7th Cir. 1973); Colorado Labor Council v. American Fed'n of Labor and Congress of Industrial Organizations, 481 F.2d 396 (10th Cir. 1973); Wright v. Baltimore Teachers Union, 369 F. Supp. 848 (D. Md. 1974).

Although Title V of the LMRDA, the section of the Act which concerns us here, was not under consideration in the cases above cited, those cases involved the same determinative jurisdictional issue, dependent upon the same statutory language,*fn5 as is present in this case. We are concerned here, as were the cases cited, with whether a union was a "labor organization" within the meaning of that term as used in the LMRDA.

A brief analysis of the statute itself reveals the LMRDA's lack of application to government unions. We first recognize that the district court's jurisdiction under the Act may be invoked by "any person whose rights secured by the provisions of this [Act] . . . have been infringed by any violation of this [Act] . . . ." 29 U.S.C. § 412. Section 501(a) imposes duties for "officers . . . of a labor organization", while § 501(b) provides that:

"When any officer . . . of any labor organization is alleged to have violated the duties declared in subsection (a) [29 U.S.C. § 501(a)] . . . [a] member [of the labor organization] may sue such officer . . . to recover damages . . . ."

29 U.S.C. § 501(b) (emphasis supplied). The question then raised is whether the defendant officers are officers of "any labor organization" within the meaning of that term as used in the LMRDA, and specifically § 501.

The term "labor organization" as used in the LMRDA is as defined by statute:

"(i) 'Labor organization' means a labor organization engaged in an industry affecting commerce and includes any organization of any kind, any agency, or employee representation committee, group, association, or plan so engaged in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours, or other terms or conditions of employment."

29 U.S.C. § 402(i) (emphasis supplied). Consequently, within the ambit of the LMRDA, and thus § 501, a "labor organization" must deal with an employer and act as the representatives of employees of an employer. See 29 U.S.C. § 402(j)(2). "[A] labor organization is not covered unless it represents, or is chartered to represent, or is actively seeking to represent 'employees' of an 'employer' as those terms are defined in the act." Smith, The Labor-Management Reporting and Disclosure Act of 1959, 46 Va. L. Rev. 195, 199 (1960). "Employer," in turn, expressly excludes the United States as such term is statutorily defined as to

" not include the United States or any corporation wholly owned by the Government of the United States or any State or political subdivision thereof."

29 U.S.C. § 402(e) (emphasis supplied). See New Jersey County and Municipal Council #61 v. American Fed'n of State, County and Municipal Employees, supra.

As the federal government is expressly excluded from the statutory definition of employer, the organization which represents its workers does not represent "employees" of an "employer" within the meaning of the LMRDA. Here, the defendant national union AFGE limits its membership to, and represents only, federal government employees in their dealings with the federal government. As such, AFGE is excepted from the application of the LMRDA and, as it is excepted from statutory coverage, officers of the union are similarly not subject to those proscriptions of conduct which are established by the LMRDA. Consequently, however else the activities of government union officers may otherwise be subject to legal actions, no cause of action will lie against such officers under the LMRDA as the jurisdictional requirement cannot be met. See 29 U.S.C. § 412.

The other jurisdictional bases alleged by plaintiffs similarly fail to confer jurisdiction upon the district court. Plaintiffs cannot establish federal jurisdiction under 28 U.S.C. § 1332 (diversity of citizenship) as it is apparent from plaintiffs' complaint, filed with the application for leave to sue, that complete diversity of citizenship is lacking as between the plaintiffs and defendants. See Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L. Ed. 435 (1806).

Neither is "federal question" jurisdiction, 28 U.S.C. § 1331, available to plaintiffs. 28 U.S.C. § 1331 confers original jurisdiction on the district courts over "federal question" cases where "the matter in controversy . . . arises under the Constitution, laws, or treaties of the United States." Here, plaintiffs refer to no law or constitutional provision giving rise to their claims which would provide jurisdiction under § 1331. The only federal law invoked by the complaint is the LMRDA which, as we have earlier held, is inapplicable to the circumstances here.

Nor could we accept as a jurisdictional predicate the Executive Order which imposes the same fiduciary standards upon officers of federal government unions as are imposed on officers of non-governmental unions under 29 U.S.C. § 501(a). The fiduciary obligations listed in § 501(a) are applicable to the defendant officers, not by statute, but by virtue of Executive Order No. 11491, § 18d, as amended, 5 U.S.C. § 7301 (Supp. 1975).*fn6 Pursuant to this Executive Order an administrative regulation adopting the duties expressed in § 501(a) was promulgated. 29 C.F.R. § 204.31 (1974).*fn7 Accordingly, any allegation that officers of a government union breached their fiduciary duties constitutes an allegation that the Executive Order, rather than the LMRDA, was violated. As such, a union member's remedy must invoke the administrative procedures established pursuant to Executive Order No. 11491. See Executive Order No. 11491, § 18d, as amended, 5 U.S.C. § 7301 at 108; 29 C.F.R. §§ 204.53, 204.54.

In seeking to regulate labor relations in the federal government and internal matters of unions representing federal government employees, Executive Order No. 11491 was not issued under statutory authority providing for presidential implementation or effectuation of statutory provisions. Compare Farkas v. Texas Instrument, Inc., 375 F.2d 629 (5th Cir.), cert. denied, 389 U.S. 977, 19 L. Ed. 2d 471, 88 S. Ct. 480 (1967); Farmer v. Philadelphia Elec. Co., 329 F.2d 3, 4-8 (3d Cir. 1964).*fn8 We recognize that 5 U.S.C. § 7301 provides that:

"The President may prescribe regulations for the conduct of employees in the executive branch."*fn9

However, we do not read that statute as providing the necessary congressional authority to constitute Executive Order No. 11491 as a "law of the United States" within the meaning of § 1331. Unlike the Executive Orders in Farkas and Farmer which were designed to implement and effectuate the statutes under which they were promulgated, here § 7301 has no such relationship with the substance of Executive Order No. 11491. Hence, while Executive Order No. 11491 regulates and implements federal government personnel policies, it does so solely as a product of executive authority and not as a consequence of congressional law making. Accordingly, this Executive Order implementing presidential personnel policies cannot attain the status as a "law of the United States" for purposes of 28 U.S.C. § 1331. Stevens v. Carey, 483 F.2d 188 (7th Cir. 1973); cf. Manhattan-Bronx Postal Union v. Gronouski, 121 U.S. App. D.C. 321, 350 F.2d 451, 452, 456 (1965), cert. denied, 382 U.S. 978, 15 L. Ed. 2d 469, 86 S. Ct. 548 (1966).*fn10

Furthermore, regardless of the force and effect of the Executive Order, and assuming the allegations made by plaintiffs to be true, this complaint nevertheless fails to state a claim upon which relief can be granted. By its terms, the Executive Order imposing fiduciary duties upon officers of federal government unions, even if it gives rise to § 1331 jurisdiction, does not contemplate a private civil action in the federal courts to enforce its terms. The Executive Order expressly provides an administrative remedy for complaints alleging violations of fiduciary obligations.*fn11 No provision is expressed, nor can one be implied, that union members may seek vindication of rights created by the Executive Order in the federal courts. The implementation of federal government personnel policies does not contemplate enforcement of Executive Orders by private civil actions and we will not undertake to create such a method of enforcement by the intrusion of the federal courts into the process of regulating federal government unions. Stevens v. Carey, supra; Manhattan-Bronx Postal Union v. Gronouski, supra; accord Farkas v. Texas Instrument, Inc., 375 F.2d at 632-33; Farmer v. Philadelphia Elec. Co., 329 F.2d at 8-9.

Plaintiffs urge that our disclaimer of federal court jurisdiction over the allegations of their complaint deprives them of due process*fn12 and, as such, establishes the factual predicate for § 1331 jurisdiction. We find no merit to this contention. The Due Process Clause of the Fifth Amendment applies to only the federal government; it is inapplicable to private persons. Public Utilities Comm'n v. Pollak, 343 U.S. 451, 461, 96 L. Ed. 1068, 72 S. Ct. 813 (1952). Here, the defendants are non-governmental parties. Although private parties may be found to have engaged in "governmental" action sufficient to subject their activities to the Fifth Amendment,*fn13 even a liberal reading of the complaint reveals no allegations by which governmental participation can be inferred from the alleged activities of the private defendants.

No matter how sympathetic we might be to plaintiffs' plight, where federal courts are without jurisdiction we are only to announce that fact and do no more. "Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause." Ex Parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L. Ed. 264 (1868). Our holding that federal courts lack jurisdiction, however, does not necessarily suggest that there is no other forum in which plaintiffs' claims may be asserted.

Having found no jurisdictional basis on which to sustain the plaintiffs' application and complaint, we would affirm the district court's Order of September 12, 1974. However, as we have noted previously, that Order was restricted to only the plaintiffs' leave to sue and did not dispose of the separately filed complaint. Therefore, to dispose of the complaint as well as plaintiffs' application, we will affirm the Order of the district court dated September 12, 1974 and we will remand to the district court with the direction that an order be entered dismissing the complaint in accordance with this opinion.

Each party to bear its own costs.

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