Gardner v. International Association of Machinists et al

Filing 27

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 9/25/2024. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:

SANDRA GARDNER

:

v.

: Civil Action No. DKC 24-454

:
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE WORKERS,:
et al.
MEMORANDUM OPINION
Presently pending and ready for resolution in this breach of
fiduciary duty case is the verified application for leave to file
a complaint pursuant to 29 U.S.C. § 501(b) filed by Sandra Gardner
(“Plaintiff”).

(ECF No. 1).

The issues have been briefed, and

the court now rules, no hearing being deemed necessary.
Rule 105.6.

Local

For the following reasons, Plaintiff’s application

for leave will be denied.
I.

Background
A. Factual Background 1
The International Association of Machinists and Aerospace

Workers

(“IAM”)

is

an

international

labor

organization

that

represents employees working in several industries including the
aerospace,

1

transportation,

and

automotive

industries.

(ECF

Unless otherwise noted, the following facts are undisputed.

No. 17, at 9).

Plaintiff has been a member of IAM since 1999.

(ECF No. 24-2 ¶ 4).
In

2021,

Plaintiff

became

concerned

that

then

General

Secretary-Treasurer Dora Cervantes (“Ms. Cervantes”) was using
union funds for personal travel in breach of her fiduciary duties.
(ECF No. 1-1, ¶ 20).

Plaintiff alleges the information regarding

Ms. Cervantes’ misappropriation of funds came from the 2015-2019
Weekly Expense Reports of Ms. Cervantes.

(ECF No. 1 ¶ 19).

On May 5, 2022, Plaintiff and another IAM member wrote a
letter to IAM President Robert Martinez (“President Martinez”) and
the IAM Executive Council detailing the alleged misappropriation
of funds by Ms. Cervantes.

(ECF No. 1-2).

The letter demanded

that President Martinez and the IAM Executive Council:
[A]uthorize and take any and all necessary
legal action against Dora Cervantes and Robert
Martinez
to
obtain
an
accounting
and
restitution of lost funds to the IAM due to
personal travel by such officers unrelated to
legitimate union business, as well as the
removal from office of Dora Cervantes and
Robert Martinez for the loss of union funds
described above[.]
(Id.).

On May 12, 2022, IAM responded to Plaintiff’s demand

letter,

notifying

her

that

IAM

intended

to

investigation and analysis of [Plaintiff’s] claims.”
8, at 2).

“conduct

an

(ECF No. 17-

Plaintiff and Mr. O’Neil responded in a letter dated

May 20, 2022, informing IAM that they “expect more than a cursory
audit or superficial investigation” of their claims.
2

(Id. at 4).

IAM responded on June 2, 2022, and explained that some of the
allegations about Ms. Cervantes had been raised in 2021 by other
IAM

members

and

that

those

allegations

had

already

been

investigated by an independent auditing firm, Calibre CPA Group
(“Calibre”).

(Id. at 9).

IAM stated that Calibre concluded “the

per diem payments and transportation expenses for Ms. Cervantes
relating to 2015-2019 are in compliance with the IAM’s expense
policies,

Internal

Revenue

Service

and

Department

Regulations, and are adequately documented.”

(Id.).

of

Labor

IAM informed

Plaintiff that IAM hired Withum, Smith, and Brown PC (“Withum”) to
investigate the additional concerns and claims raised by Plaintiff
in her May 12, 2022, letter.
On

July

28,

2022,

(Id. at 9).

Plaintiff

sent

another

letter

to

IAM

President Martinez and the IAM Executive Council expanding the
demand to include an account of the travel and related expenses of
General Vice President Mark Blondin (“Mr. Blondin”) and seeking
unredacted records related to Mr. Blondin’s travel for the period
he resided in the Upper Marlboro, MD and Dallas, TX areas
16).

(Id. at

IAM responded on August 9, 2022, declining to investigate

the allegations against Mr. Blondin because Plaintiff did not
explain why the requests related to Mr. Blondin were not included
in the May 5, 2022, letter and because Mr. Blondin had not “worked
in either location [Plaintiff] identified in many years.”
18).

(Id. at

IAM informed Plaintiff that before they would determine if
3

further action regarding Mr. Blondin was appropriate, Plaintiff
needed to provide “the specific expenditures on the specific [Labor
Management]

reports

for

records

verify,

and . . . objective

belief

that

to

reasonable

expenditures.”

which

it

[Plaintiff

is

claimed

facts

necessary

she

setting
to

needed]
forth

verify

a

those

(Id. at 19).

On July 28, 2022, Withum completed its investigation and sent
its report to IAM’s Executive Board.

(ECF No. 17-11, at 2-7).

On

July 29, 2022, IAM sent a letter to Plaintiff summarizing Withum’s
investigation:
[Withum] conducted an in-depth analysis of the
expenses the International President incurred
for his trips to or from Dallas, Texas and the
surrounding areas whether on the Union’s jet
or by commercial air during 2015-2021. They
also conducted an in-depth analysis of the
expenses the General Secretary Treasurer
incurred for her trips to or from Houston,
Texas
during
2015-2021.
Their
analysis
included:
• reviewing all expense statements for both
officers for their trips identified above,
• reviewing all receipts submitted for those
trips,
• interviewing both officers,
• obtaining
and
reviewing
additional
documentation such as other individual’s
weekly
expense
statements,
other
individual’s calendars,
invitations
to
events, photographs, agendas of meetings
attended, articles posted on the internet
about
the
events
and
additional
corroborating evidence.

4

(ECF Nos. 17-9, at 3; ECF 17-11).

Withum concluded there was no

“evidence of misappropriation of Union funds or abuse of Union
resources

by

either

officer”

and

that

“the

Union

appears

to

maintain outstanding records of officer expenses to fulfill the
recordkeeping requirements of Section 206 of the Labor Management
Reporting and Disclosure Act.”

(ECF No. 17-11, at 7).

The IAM Executive Council reviewed the Withum report and
determined there was no support for Plaintiff’s allegations and
that

there

was

no

basis

Plaintiff’s allegations.

for

taking

further

action

(ECF No. 17-9, at 3).

regarding

Plaintiff now

seeks leave of this court to file a complaint against Ms. Cervantes
under 29 U.S.C. § 501 and against IAM under 29 U.S.C. § 431(c). 2
B. Procedural Background
On February 15, 2024, Plaintiff filed a verified application
for leave under 29 U.S.C. § 501(b) requesting leave of the court
to file her complaint.

(ECF No. 1).

On February 21, 2024,

Defendants filed a response to Plaintiff’s application, proposing
a procedure for resolving the application. (ECF No. 4). Plaintiff
filed a reply to Defendants’ response on February 28, 2024.
No. 13).

(ECF

On March 1, 2024, the court provided additional time for

Defendants to file an opposition, and for Plaintiff to reply. (ECF
No. 14). On April 22, 2024, Defendants filed their response to
Count II of the proposed complaint under 29 U.S.C. § 431(c)
does not require leave of the court to file.
2

5

Plaintiff’s request (ECF No. 17), and on May 20, 2024, Plaintiff
filed a reply memorandum in support of her application for leave.
(ECF No. 22).
II.

Standard of Review
The Labor-Management Reporting and Disclosure Act (“LMRDA”)

creates a cause of action against union officials who violate their
fiduciary duties.
enumerates

the

29 U.S.C. § 501.
fiduciary

duties

Section 501(a) of the LMRDA
of

a

labor

organization’s

officers, stating:
The officers . . . of a labor organization
occupy positions of trust in relation to such
organization and its members as a group. It
is therefore, the duty of each such person
. . . to hold [the organization’s] money and
property solely for the benefit of the
organization and its members and to manage,
invest, and expend the same in accordance with
[the organization’s] constitution and bylaws
and any resolutions of the governing bodies
adopted thereunder, to refrain from dealing
with such organization as an adverse party or
in behalf of an adverse party in any matter
connected with his duties and from holding or
acquiring any pecuniary or personal interest
which conflicts with the interests of such
organization,
and
to
account
to
the
organization for any profit received by him in
whatever
capacity
in
connection
with
transactions conducted by him or under his
direction on behalf of the organization.
29 U.S.C. § 501(a).

Section 501(b) of the LMRDA lists the

perquisites to bringing a claim for a violation of section (a),
providing in relevant part:

6

When
any
officer
. . .
of
any
labor
organization is alleged to have violated the
duties declared in subsection (a) and the
labor organization or its governing board or
officers refuse[s] or fail[s] to sue or
recover damages or secure an accounting or
other appropriate relief within a reasonable
time after being requested to do so by any
member of the labor organization, such member
may sue such officer . . . in any district
court of the United States . . . .
No such
proceeding shall be brought except upon leave
of
the
court
obtained
upon
verified
application and for good cause shown[.]
29 U.S.C. § 501(b).
There are three prerequisites to filing a complaint: (1) there
must be a failure or refusal of the governing board “to sue or
recover damages or secure an accounting or other appropriate
relief,” (2) leave of court must be sought, and (3) good cause
must be shown.

29 U.S.C. § 501(b).

There is some variation among

the standards employed in the circuits to evaluate the good cause
requirement of 501(b). 3

It will not be necessary to choose among

them because Plaintiff’s application fails at the threshold.
III. Analysis
The fiduciary responsibilities created in section 501(a) are
designed to protect union members.

See Gould ex rel. St. Louis –

The United States Courts of Appeals for the Third, Ninth,
Eleventh, and D.C. Circuits follow Horner v. Ferron, 362 F.2d 224
(9th Cir. 1966). The United States Courts of Appeals for the Second
and Eighth Circuits have adopted the standard explained in Dinko
v. Wall, 531 F.2d 68 (2d Cir. 1976). Finally, the United States
Court of Appeals for the Fifth Circuit follows Hoffman v. Kramer,
362 F.3d 308 (5th Cir. 2004). The Fourth Circuit has not weighed
in.
3

7

Kan. City Carpenters Reg’l Council v. Bond, 1 F.4th 583, 589 (8th
Cir. 2021); Dinko, 531 F.2d at 73.

The requirements of 501(b) are

“designed to protect union officials from unjust harassment.”
Gould, 1 F.4th at 589 (quoting Coleman v. Brotherhood of Ry. &
S.S. Clerks, 340 F.2d 206, 208 (2d Cir. 1965)); see also Hoffman,
362 F.3d at 314.

These two important policies must be balanced in

interpreting section 501(b).

Dinko, 531 F.2d at 73.

“[T]he first step a court should undertake in reviewing a
claim

[under

29

U.S.C.

§

501(b)]

is

to

ascertain

that

allegations meet the minimal requirements of the statute.”

the

Gould,

1 F.4th at 589 (quoting Hoffman, 362 F.3d at 316).
Defendants

argue

that

Plaintiff

has

failed

to

meet

the

requirements of section 501(b) because (1) she failed to submit a
required second demand letter following the Withum report findings
and (2) her application is not supported by “good cause.”
No. 17, at 17-29).

(ECF

Plaintiff argues in response that she has met

the requirements of section 501(b) because (1) section 501(b) does
not require a second demand letter to be sent and (2) she has shown
good cause exists for her claim.

(ECF No. 24, at 15-20).

A. Request Requirement
As a prerequisite to filing suit under 501(b), a plaintiff
must first make a request that the union “sue or recover damages
or secure an accounting or other appropriate relief,” and the union
or its governing officers must fail or refuse to act on the request
8

within a reasonable time.

29 U.S.C. § 501(b).

Put simply, 501(b)

“addresses the situation where a union does not respond, leaving
the complaining member ‘no alternative but to invoke the power of
the . . . the court[.]’”

Gould, 1 F.4th at 590 (quoting Filippini

v. Austin, 106 F.R.D. 425, 430 (C.D.Cal. 1985)).
In this case, Plaintiff’s May 5, 2022 4 letter to President
Martinez and the IAM Executive Council demanded an “accounting of
the funds misappropriated by . . . [Ms. Cervantes] and that the
[IAM] International President and Grand Lodge bring suit against
. . . [Ms. Cervantes] to recover such monies.” 5

(ECF Nos. 1-2; 1-

3).

IAM responded in a June 2, 2022 letter advising Plaintiff

that

IAM

hired

Withum

Plaintiff’s concerns.

to

conduct

an

investigation

regarding

(ECF No. 17-8, at 9).

IAM secured an accounting and Withum concluded “that there
was no evidence of wrongdoing, misappropriation or abuse in the
expenses submitted[.]”

(ECF No. 17-9, at 3).

The IAM Executive

Council reviewed the Withum report and Plaintiff’s demand and
notified Plaintiff that there was “no basis for taking any further
Plaintiff sent another letter to President Martinez and the
IAM Executive Council on July 28, 2022, outlining the same issues
presented in her May 5, 2022, letter.
4

In her May 5, 2022, letter, Plaintiff also demanded that
IAM provide an accounting for and bring suit against President
Martinez (ECF No. 1-2). Plaintiff only seeks permission of this
court under section 501(b) to bring suit against Ms. Cervantes.
(ECF No. 1, at 2).
5

9

action.”

(ECF No. 17-9, at 3).

This is not a refusal or failure

to act.

See Gould, 1 F.4th at 589-90 (finding a union who met

plaintiff’s demand, secured an accounting, and concluded that no
legal action was appropriate did not fail or refuse to act under
section 501(b)).

A different result is found in Brink v. DaLesio,

453 F.Supp. 272, 277 (D.Md. 1978), where the union executive board
failed to respond to plaintiff’s demand for over two months.
While Plaintiff disagrees with the accounting conducted by
Withum, she has not shown that IAM failed or refused to act on her
May 5, 2022 demand. 6

IAM secured an accounting showing that no

other relief was necessary.

Because Plaintiff has not met one of

the conditions precedent to filing under 501(b), she may not bring
suit pursuant to 501(b), and her request for leave will be denied.
B. Good Cause Requirement
The parties have spent a great deal of time briefing the
requirements of good cause.

And, as noted in footnote 3, the

circuits are somewhat at odds over the proper standard.

Because

Plaintiff has not shown that IAM ignored or failed to act on her
demand, the court need not decide the issue of good cause.
The parties spar about whether Plaintiff needed to make a
“second” demand, but that formulation is misplaced. The record is
clear that the Union did not ignore her first request and she
cannot sue based on it.
If she was dissatisfied, she could
presumably make another request and see whether it was ignored or
not.
She made no such further request so this court can only
evaluate whether the Union’s response to her first request was
sufficient. It was.
6

10

IV.

Conclusion
For the foregoing reasons, Plaintiff’s application for leave

to file her verified complaint under 29 U.S.C. § 501(b) will be
denied.

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

11