The Meaning of Actors’ Equity’s Motion to Dismiss LA Lawsuit

actors equity motion to dismiss lawsuit duelFollowing the LA actors serving a lawsuit on their union (Actor’s Equity), the Union has countered with a motion to dismiss that lawsuit.  The complete text of the motion can be found here in PDF format.  (It’s a 45 MB file.  A lighter, text-version of the primary document appears below.)

Lawsuits are often about the rules of the conflict – and how they apply to the conflict – and not the conflict itself.  That is true here.  The court will have to decide whether Equity terminated the 99-Seat Plan in a manner consistent with the original 1989 Settlement and any internal Union rules.

Here are some key reasons Equity is arguing that the lawsuit should be dismissed:

(a) Outsiders to the Union are trying to push the Union in certain directions.
Implicit in this argument is that most union members are happy with their union’s actions and it’s those on the outside who are “agitating.”  Equity cites as evidence that non-Union members are plaintiffs and non-Union members contributed money to a fund to allow for mediation.

It’s ironic that the Union is using the idea that outsiders are trying to drive internal union business.  Historically, the charge of “outside agitator” was levied on unions  which, so claimed the employers, were upsetting the otherwise happy employees.  Employers argued that the unions  were trying to drive internal corporate conditions.

Nevertheless, the Union has a point:  There are two non-Union members involved as plaintiffs – both of whom sit on the Review Committee. This is the body representing LA in any change of the 99-Seat Plan.  After years of serving on this committee, however, it’s hard to consider these individual as outsiders.   In any case, the overwhelming majority of plaintiffs are Union members.  As for non-Union members funding an activity, that’s quite typical. People can financially back any cause they wish.  For instance, unions commonly provide financial support in elections, both local and national, all the time.

It is also pretty obvious from the 2-1 landslide results against Equity’s proposal that the Los Angeles theater community is broadly, and strongly, against the union actions.

(b) The procedures set about in the Settlement were followed to the letter.
This is true so far as it goes.  It’s true that Equity held town hall meetings, sent out a survey, and held focus groups.  The problem is that none of these inputs seemed to influence Equity’s proposals.  The town hall meetings saw a theater community that wanted to see the 99-Seat Plan evolve  not eliminated.  In fact, a proper interpretation of Equity’s own survey results is consistent with that observation of the theater community.  So the court will have to determine whether Equity followed the spirit, and not just the letter, of the Settlement.

(c) Equity was allowed to openly support its own position and inform its members about it.
Again, this makes sense. However, there are a number of times that Equity appeared to game the system by misrepresenting things.  This includes communications that even obscured what the referendum was about.  At one point it was claimed, for example, that a rejection of the union proposal was a statement of keeping the 99-Seat Plan untouched.  That was the reason for the “Change but not this Change” slogan adopted by those against the proposal.  Again, the court will have to decide if Equity presented the information to its members fairly and accurately or if Equity had a breach of good faith.

(d) The courts have limited authority in this case.
Equity claims significant precedent that courts in the past have limited their authority when concerned with internal union matters.  That’s because the courts cannot have the level of expertise as the union itself when it comes to internal matters.  In other words, Equity claims it followed the court-ordered Settlement to the letter, checking off all the appropriate boxes, and, consequently, there is no case at all.

Anyone living in Los Angeles in the past 18 months will certainly feel that’s exactly what Equity did:  check off boxes.  For example, just a few days after the decisive rejection of Equity’s first plan, this large entity was able to turn around a second plan that was considerably more involved.  It was obvious to anyone that the second plan was done in haste and with deliberate speed – even the page numbers were screwed up in the originally released form.  That’s not carefully considering a complex solution for the city that boasts the second largest union membership.

The tragedy in all of this is that the Los Angeles theater community was already going down a road  to evolve the 99-Seat Plan.  The original plan, drawn up by Equity, had served its purpose.  Los Angeles actors could create artistic opportunities for themselves, including become their own producers, all the while enjoying important union oversight.  As a result, the Los Angeles theater community in 2015 was nothing like that of 1989.  It had grown substantially.  It had developed a significant infrastructure around it.

And theater was no longer a dying art in the City of Angels.  Instead, riskier work, with more complex themes and larger casts, could be considered a viable option for a theater company.  Los Angeles had become a place for developing important shows that could influence the culture and provide real contract work.

As a result, a large number in Los Angeles recognized it was time to take the next step forward.  That’s why a local movement, Re-Imagine LA Theatre, had developed grass root support.  In fact, many who are now fighting Equity were proponents  of Re-Imagine LA Theatre!  Had Equity been interested in evolving the 99-Seat Plan, all the time and energy burned up fighting in the past 18 months could have been spent on more constructive, art-enabling purposes.

But by word and by action, the Union was intent on the elimination of the plan.  The motive for this act remains unclear.  But the motive is also no longer relevant.  The only thing that matters now is for the court to decide if Equity’s 99-Seat Plan – a plan it conceived, a plan which benefited its members tremendously, and a plan which made actors in other cities envious – was properly eliminated under the terms of the Settlement of 1989.

________________________________________________________

The primary text of the Motion to Dismiss follows:

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 8 of 32 Page ID #:207

1                                                            PRELIMINARY STATEMENT

2    Defendant Actors’ Equity Association (“Equity” or the “Union”) is a national

3    labor union that represents more than 50,000 actors and stage managers throughout the

4    United States. It has, for more than a century, advocated to improve its members’

5    wages and working conditions and protect their rights at work. One way in which it

6    does so is to maintain an internal union rule that prohibits members from working

7    without the benefit of an Equity contract. Equity has, however, since the early 1970’s,

8    waived this rule for members working in Los Angeles theaters of 99 seats or fewer,

9    permitting members to work without a contract and, generally, without wages or

10   benefits, essentially for free, in these theaters. Compl. ¶¶ 13-14.

11   On April 21, 2015, after several months of methodically and meticulously

12   following the procedures of a settlement agreement it entered into more than 25 years

13   ago, Equity changed its internal membership rules in Los Angeles and narrowed the

14   scope of this waiver so that more of its members would have the opportunity to be paid

15   at least minimum wage. Ignoring the “well-established” policy of “avoiding

16   unnecessary [judicial] interference in the internal affairs of unions,” Motion Picture &

17   Videotape Editors Guild, Local 776 v. Int’l Sound Technicians, 800 F.2d 973, 975 (9th

18   Cir. 1986), the plaintiffs — many of whom are also producers / employers and two of

19   whom are not even members of Equity — challenge this judgment, primarily on

20   procedural grounds. Their allegations fail to state a claim and should be dismissed.

21   We demonstrate in Part II.A and II.B that applying the unambiguous terms of the

22   settlement agreement to the allegations of the complaint, the plaintiffs have failed to set

23   forth any plausible breach of contract or breach of good faith and fair dealing claims.

24   In Part II.C we show that the duty of fair representation (“DFR”) is inapplicable to this

25   matter because it involves internal union affairs and, in any event, the complaint does

26   not set forth a plausible claim under established DFR precedent narrowly confining that

27   doctrine. Finally, in Part II.D, we demonstrate that plaintiffs’ Labor Management

28   Reporting and Disclosure Act (“LMRDA”) § 101(a)(1) equal right to vote claim fails

 

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1    as a matter of law for a host of independent reasons, including that the statute does not

2    apply to advisory referendums (the only relevant vote here), that this lawsuit has been

3    financed by interested employers, and that the allegations do not rise to the level of a

4    LMRDA violation as no member was denied the right to vote.

5    For all of these reasons, the Court should dismiss the Complaint.

6                                                         STATEMENT OF FACTS

7    The Parties

8    Equity is a labor union representing approximately 50,000 actors and stage

9    managers working in live theater throughout the United States. Compl. ¶ 11; Decl. of

10   Evan Hudson-Plush (“Plush Decl.”), Ex. 1 (AEA’s Constitution & Bylaws (referenced

11   in Compl. ¶¶ 11, 13)), Preamble. Mary McColl, who originally was a Defendant in this

12   lawsuit, is the Executive Director of Equity, the highest-ranking staff member of the

13   Union. Compl. ¶ 12; Bylaws Art. III, § 6(a). On December 4, 2015, the plaintiffs

14   dismissed all claims against Ms. McColl with prejudice. Docket No. 9.

15   Equity is governed by its Constitution and Bylaws. Compl. ¶ 11. A fundamental

16   tenet of Equity’s constitutional structure is that its national governing body, the

17   National Council (“Council”), sets the policies and priorities of the organization.

18   Const. Art. III, § 1(a). The Council is given Constitutional authority for the “general

19   management, direction and control of the affairs, funds and property of the

20   Association, and the determination of the relations and obligation of members to the

21   Association . . . .” Const. Art. III, § 1(a). The Council consists of 75 members and 8

22   officers, who are elected by the membership of Equity every two years. Const. Art. III,

23   §§ 2(a), 4(a), 5.

24   Every Councillor and officer must be a member in good standing of the union.

25   Const. Art. II, § 11(b). Of the 75 Councillors, 22 come from Equity’s Western Region,

26   which includes L.A. See Const. Art. III, §2(a) & App. A; By-Laws Art. II, §§ 2-3. All

27   members in good standing of Equity, regardless of the Region in which they reside, are

28   entitled to vote for all Officer and Councillor positions. Const. Art. III, § 7. The

 

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 10 of 32 Page ID #:209

1    Western Regional Board (“WRB”) of Equity “assist[s]” the National Council in the

2    business of the Association.1 Const. Art. III, §1(b). The WRB is composed of the 22

3    elected actors and stage managers that are part of the Council. Const. App. A.

4    Two plaintiffs — John Flynn and Simon Levy — are not members of Equity and

5    purport to “participate in this lawsuit as designees” of parties to the settlement

6    agreement. Compl. ¶ 9. Various of the plaintiffs claim to be third-party beneficiaries

7    of the agreement. Id. ¶ 10. About half of the plaintiffs are also producers (including

8    the two that are not Equity members) — that is they own or operate entities that produce

9    theatrical engagements or represent employer interests in those engagements.2 Other

10   than Flynn and Levy, the plaintiffs are members of Equity. Id. ¶¶ 9, 10.

11   The History of the 99-Seat Plan

12   One way that Equity seeks to preserve decent wages and working conditions for

13   working actors and stage managers, Const. Preamble, is to maintain an internal union

14   membership rule that subjects a member to discipline if he or she works without the

15   benefit of an Equity contract. By-Laws Art. X, § 1(d); Compl. ¶ 13. Equity decided in

16   the early 1970’s to waive this rule for small theaters in L.A. with fewer than 100 seats.

17   Compl. ¶ 14. In 1988, Equity’s National Council voted to adopt what would later be

18   known as the 99-Seat Theatre Plan, which was a unilateral rule that permitted members

19   to work in L.A.’s small theaters only if certain minimum working conditions were met;

20

21   ________________________

22   1 The WRB was previously known, and is denominated in the Settlement Agreement, as the Western Advisory Board.

23   2 Plaintiffs do not disclose their employer status in the Complaint. Should this

24   matter proceed beyond this motion to dismiss, Equity will put forth evidence of this
status. For example, plaintiff Gary Grossman has filed a concurrent NLRB charge in

25   his capacity as a Union member and in his capacity as the President of the Skylight

26   Theatre Company. Hudson-Plush Decl. Ex. 2. The court may take judicial notice of
NLRB charges. Kavowras v. N.Y. Times Co., 328 F.3d 50, 57 (2d Cir. 2003); Nanavati

27   v. Adecco USA, Inc., 99 F. Supp. 3d 1072, 1075 n.2 (N.D. Cal. 2015).

28

 

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1    the actors were considered “volunteers” that received no wages, small stipends for

2    performances and no compensation for rehearsals. Compl. ¶¶ 17, 19, 24 & Ex B.

3    In 1989, members, many of whom also were employers that owned or operated

4    theaters or were producers, sued the Union (before this Court) to try to prevent

5    implementation of the Plan. Compl. ¶¶17-18; Plush Decl. Ex. 3 (Jens v. Equity Compl.

6    ¶17). The plaintiffs in Jens included Gary Grossman, Thomas Ormeny, and Joseph

7    Stern, who are also plaintiffs in this action. This action, of course, seeks to enjoin the

8    elimination of the availability of the very Plan that these same plaintiffs fought in Jens

9    to stop Equity from implementing (due to the small stipends they would have to pay).

10   After the Jens plaintiffs unsuccessfully moved for a temporary restraining order and a

11   preliminary injunction to stop Equity’s implementation of the Plan, the parties to that

12   lawsuit settled, resulting in a settlement agreement (the “Settlement Agreement”).

13   Compl. Ex. A at 2 (mentioning unsuccessful TRO / PI attempts).

14   The Jens v. Equity Settlement Agreement

15   The Settlement Agreement (Exhibit A to the Complaint), provided that Equity

16   would not make any modifications to its November 29, 1988 version of the Plan for

17   two years — until April 1, 1991. Compl. Ex. A ¶1. The Agreement also created a

18   “Review Committee” — composed of four Jens “plaintiffs (or their designates) and four

19   members appointed” by Equity — to “monitor and study the impact, implementation,

20   problems, and operations of the 99-Seat Theatre Plan[.]” Id. ¶2.

21   After April 1, 1991, “the Review Committee, W[R]B, or any member or

22   executive” may propose to Council to make changes to the Plan. Id. ¶3. If the

23   proposal would make a “substantial change” to the Plan, including to the “availability

24   of the Plan,” id. ¶4, then Equity would need to follow certain procedures outlined in

25   Paragraph 4 of the Settlement Agreement. Those procedures included:

26

27

28

 

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1    • Providing the Review Committee and membership with the details of the proposed changes at least 45 days in advance of when the Council “will

2    act on the proposal” to make the changes. Id. ¶4(a)(i).

3    • Prior to acting on the proposal, arranging for a reasonable number of

4    meetings with the Review Committee for the “purpose of receiving the

5    recommendations and opinions” of the Review Committee. Id. ¶4(a)(ii).

6    • Considering a request from any member to hold an “advisory referendum”
of the L.A. County membership on the proposed changes. Id. ¶4(a)(iii).

7

8    • If the Council decides to hold an “advisory referendum,” establishing certain procedures, including providing 45 days advance notice to the

9   membership, providing the Review Committee with the opportunity to

10   write a “differing viewpoint” to be included in the referendum materials “mailed to the membership,” and holding a membership meeting to

11   explain, comment, and debate the proposed changes. Id. ¶4(a)(iv).

12   Council retained the right to make the ultimate decision on the proposal. See

13   Compl. Ex. A ¶4; Const. Art. III, §1(a).

14   The February 6, 2015 Proposed Changes to the Plan

15   The core feature of the 99-Seat Theatre Plan had remained unchanged for more

16   than 25 years: actors, who were considered “volunteers” rather than employees, were

17   not paid wages but, instead, were provided with minimal stipends ranging from $7 to

18   $25 per performance. Compl. ¶¶ 24(c), 24(h) & Compl. Ex. B §§ Forward (B), 21.

19   Actors received no compensation whatsoever for rehearsals, which often lasted for

20   weeks. Compl. ¶ 24(c) & Compl. Ex. B §§ Forward (B), 10.

21   On September 23, 2014, Equity announced a “member mobilization and

22   communications effort” to “learn more about its membership’s ideas and concern about

23   theater in L.A.” Compl. ¶30 (referencing and quoting press release, which is attached

24   as Exhibit 4 to the Plush Decl.). The union announced that it would conduct a survey

25   and focus groups of the membership. Id. The survey of more than 600 L.A. members

26   was conducted by the independent Hart Research Associates from October 8 to 28,

27   2014. Compl. Ex. C at 2. Amongst other things, the survey showed that a majority of

28   members believed the Plan benefited producers more than actors, Compl. Ex. C. at 10,

 

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 13 of 32 Page ID #:212

1    and more than 70% believed that the Plan needed changes (with 50% saying “major”

2    changes were needed). Id. The union also conducted focus groups and held a

3    membership meeting on January 13, 2015 at which members expressed their views on

4    the Plan. Compl. ¶¶33, 34.

5    On February 6, 2015, the Council held a meeting to consider a proposal from its

6    Western Regional Board to make changes to the 99-Seat Plan. Plush Decl. Ex. 5 at p.

7    66 (complete meeting minutes and resolution discussed in Compl. ¶¶35-36 and

8    attached only in partial form to the Complaint as Exhibit D). The Council resolved to

9    “act on a proposal” on April 21, 2015 to make a substantial change to the Plan, and

10   stated that it “will adhere to the procedures in paragraph 4 of the April 1989 Jens v.

11   AEA Settlement Agreement.” Id. The resolution includes a specific attachment setting

12   forth precisely how the Union would comply with those procedures. Id. at pp. 4-5.

13   The proposal consisted of the elimination of the availability of the current 99-

14   Seat Plan, two new internal union rules, the L.A. Self-Produced Project Code and the

15   L.A. Membership Company Rule, as well as new template 99-Seat Theatre Agreement

16   that “would be bargained with individual producers and/or a multi-employer group”

17   and that would ensure that all actors be paid at least minimum wage for all time

18   worked, including in rehearsals and performances. Plush Decl. Ex. 5 at p. 66

19   (resolution); Compl. ¶¶ 36(a), 36(b) & Ex. D. As Ms. McColl explained, the proposal

20   sought to synthesize and balance all members’ concerns — that “members want the

21   Plan to change” to more fairly value actors’ contributions, but that the changes “must

22   preserve” the opportunities “for actors to collaborate and develop artistically.” Plush

23   Decl. Ex. 6 (referred to in Complaint ¶35). The proposal did this by providing

24   opportunities for members to work (whether for free or not) without the benefit of an

25   Equity contract in member-produced theatrical productions or for membership

26

27

28

 

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1    companies3 of which they were members. Compl. Ex. D at p. 16. But at the same

2    time, for those actors that sought to earn at least a partial living by acting, the 99-Seat

3    Theatre Agreement would guarantee a salary of at least minimum wage for all hours

4    worked. Id. at p. 9; Plush Decl. Ex. 5 at p. 79.

5    In accordance with the procedures the Council adopted at the February 6 Council

6    meeting, Equity representatives met with the Review Committee on February 18, 20,

7    and 21, 2015. Compl. ¶40. It also conducted the advisory referendum and included a

8    differing viewpoint from the producer-side of the Review Committee in the balloting

9    materials mailed to the voting members on March 25, 2015. Compl. ¶¶ 37, 41, 42.

10   The results of the advisory referendum were 2,046 votes against the proposal and 1,075

11   votes for the proposal. Compl. ¶43.

12   The April 21, 2015 Council Action

13   On April 21, 2015, the Council met to act on the proposals. Compl. ¶45.

14   Having considered the substantial membership input since February 6, including the

15   advisory referendum vote, Council resolved to adopt in part and modify in part the

16   February 6 proposal. Plush Decl. Ex. 7 (April 21 Council Resolution discussed in

17   Compl. ¶¶45, 47); Compl. ¶47. Council adopted the proposal to eliminate the

18   availability of the 99-Seat Plan as well as the proposal to create the L.A. Self-Produced

19   Project Code as an internal union rule. Plush Decl. Ex. 7. It modified the proposal by

20   adopting a modified version of the L.A. Membership Company Rule, a slightly revised

21   version of the 99-Seat Agreement to be bargained with producers but requiring the

22

23

24

25   3 The rule defined a membership company as “an entity that is not organized to

26   make a profit for the company or its members, and operates primarily for the mutual benefit of the members . . . for the purpose of regularly producing . . . in venues of 99

27   seats or fewer.” Compl. Ex. D at p. 16, ¶2.

28

 

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1    payment of at least minimum wage, a new internal membership rule, the L.A. 50 Seat

2    Showcase Code, and a Transitional L.A. 99-Seat Theatre Code.4 Id.

3    The modifications of the original proposal included:

4    • The addition of a Transitional Code that essentially maintained the status

5    quo of the 99-Seat Plan for more than a year. Compl. ¶45; Plush Decl. Ex.

6    7 at pp. 127-141.

7    • The adoption of a new internal membership rule (the 50 Seat Showcase Code) that permits members to work without a contract (without wages) in

8    productions in theaters of 50 seats or fewer where the production budget

9    does not exceed $20,000, for a maximum of 16 performances. Compl. ¶47(e); Plush Decl. Ex. 7 at pp. 108-125.

10

11   • A broadening of the L.A. Membership Company Rule to permit actors to
join a membership company “thereby permitting Membership Companies

12   to admit new members” and allow those members to utilize the new rule

13   (new company members could not utilize the originally-proposed rule).  Compl. ¶47(d) & Plush Decl. Ex. 7 at p. 107.

14   An April 21, 2015 announcement, referenced in Complaint ¶45, explained

15   Equity’s reasons for the modifications. Plush Decl. Ex. 8 (“Equity’s Council believes

16   that these rules and agreements balance concerns raised by L.A. members about the

17   original proposals, while doing what’s needed to represent the interests of the

18   membership in L.A. and around the country.”).

19   Procedural History

20   Plaintiffs filed the Complaint on October 17, 2015. Docket No. 1. The

21   complaint asserts four claims against Equity, for breach of contract, breach of the

22   covenant of good faith and fair dealing, breach of the DFR, and violation of the

23   LMRDA. Id. The complaint also asserts two claims against Ms. McColl, for breach of

24   fiduciary duty and for a violation of the LMRDA. Id. On December 4, 2015, the

25

26   ________________________
4 The Council also made its Small Professional Theatres Agreement available in

27   L.A. Hudson-Plush Decl. Ex. 7.

28

 

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1    plaintiffs dismissed, with prejudice, all claims asserted against Ms. McColl and she

2    therefore is no longer a defendant in this lawsuit. Docket No. 9.

3                                                             ARGUMENT

4    I. THE APPLICABLE STANDARD FOR A MOTION TO DISMISS IN A

5    CASE INVOLVING INTERNAL UNION AFFAIRS

6    A. Rule 12(b)(6) Standard of Review

7    Although the court “construes the pleadings in the light most favorable to the

8    nonmoving party” in considering a motion to dismiss under Rule 12(b)(6),

9    “[t]hreadbare recitals of the elements of a cause of action, supported by mere

10   conclusory statements, do not suffice” to state a claim. Ashcroft v. Iqbal, 556 U.S. 662,

11   678 (2009); accord L.H. v. Chino Valley Unified Sch. Dist., 944 F. Supp. 2d 867, 872-

12   73 (C.D. Cal. 2013). To avoid dismissal, “a complaint must contain sufficient factual

13   matter, accepted as true, to ‘state a claim to relief that is plausible on its face,’” Iqbal,

14   556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, (2007)), and

15   not merely “conceivable” or “speculative.” Twombly, 550 U.S. at 555, 570; accord

16   Eclectic Props. v. Marcus & Millichap, 751 F.3d 990, 995 (9th Cir. 2014). The

17   complaint must be dismissed if “the well-pleaded facts do not permit the court to infer

18   more than the mere possibility of misconduct.” Iqbal, 556 U.S. at 667, 679.

19   On a motion to dismiss under Rule 12(b)(6), the court may consider documents

20   attached to the complaint and also those documents, though not physically attached to

21   that complaint, that are referred to or relied on in the complaint whose authenticity is

22   not in dispute. See Colony Cove Props., LLC v. City of Carson, 640 F.3d 948, 955 (9th

23   Cir. 2011); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Inlandboatmens

24   Union v. Dutra Group, 279 F.3d 1075, 1083 (9th Cir. 2002); Lee v. Los Angeles, 250

25   F.3d 668, 688 (9th Cir. 2001), Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998).

26   A court may also take judicial notice of matters of public record, Colony Cove, 640

27   F.3d at 955; Lee, 250 F.3d at 689, and it “is not uncommon for courts to take judicial

28   notice of factual information found on the world wide web.” Flores v. City of Baldwin

 

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 17 of 32 Page ID #:216

1    Park, 2015 WL 756877, at *2 (C.D. Cal. Feb. 23, 2015) (quoting O’Toole v. Northrop

2    Grumman Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) and citing Matthews v. Nat’l

3    Football Council, 688 F.3d 1107, 1113 & n.5 (9th Cir. 2012) (granting a request for

4    judicial notice of statistics available on the NFL’s website)); Estate of Graham v.

5    Sotheby’s, Inc., 2016 WL 1464229, at *17 (C.D. Cal. Apr. 11, 2016) (taking judicial

6    notice of information on ebay’s website); Hendrickson v. eBay, Inc., 165 F. Supp. 2d

7    1082, 1084 (C.D. Cal. 2001) (same).

8    B. Unions are Owed Substantial Deference in Matters

9    Involving Internal Union Affairs

10   The context of this case is also important in considering the standard of review.

11   Equity is a labor union, and this matter exclusively involves internal union affairs.

12   Courts “have no special expertise in the operation of unions which would justify a

13   broad power to interfere,” Gurton v. Arons, 339 F.2d 371, 375 (2d Cir. 1964), and there

14   is a “well-established” policy of “avoiding unnecessary interference in the internal

15   affairs of unions.” Motion Picture Guild, 800 F.2d at 975; see Teamsters Joint Council

16   No. 42 v. IBT, 82 F.3d 303, 306 (9th Cir. 1996) (“Courts must be careful not to

17   undermine union self-government.”). Similarly, courts grant unions “substantial

18   deference” in the interpretation of their own internal union documents, e.g., Local 1052

19   v. L.A. County Dist. Council of Carpenters, 944 F.2d 610, 614 (9th Cir. 1991); Local

20   48 v. United Bhd. of Carpenters, 920 F.2d 1047 (1st Cir. 1990), and unions have broad

21   latitude in adopting “reasonable rules” to govern the institution and the responsibilities

22   of its members, e.g. 29 U.S.C. § 411(a)(2); USW v. Sadlowski, 457 U.S. 102, 110

23   (1982) (LMRDA “preserves the union’s right to adopt reasonable rules governing the

24   responsibilities of its members”); Scofield v. NLRB, 394 U.S. 423, 430 (1969) (union

25   free to enforce a properly adopted rule which reflects a legitimate union interest);

26   including rules revolving around prohibiting members from working for non-union

27   employers, Steven Stripling, 316 NLRB 710, 711 (1995) (union may “maintain and

28   enforce rules prohibiting members from working for nonunion employers”). In light of

 

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1    this context and these principles, the Settlement Agreement should be interpreted so as

2    not to permit any limitation on Equity’s authority to adopt internal union rules except

3    where it is specifically and clearly stated in the Agreement itself.

4    II. THE COURT SHOULD DISMISS ALL OF THE PLAINTIFFS’ CLAIMS

5    A. The Breach of Contract Allegations Fail on Their Face

6    To survive a motion to dismiss, plaintiffs must plausibly allege that Equity

7    actually breached the Settlement Agreement. Complete Infusion Care, CIC, Inc. v.

8    Aetna Life Ins. Co., 2016 WL 471207, at *3 (C.D. Cal. Feb. 4, 2016) (citing Oasis West

9    Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011)).5 When interpreting the contract

10   to determine whether there is a breach, a court gives “effect to the mutual intention of

11   the parties,” Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1264, 833 P.2d 545

12   (1992), which is determined “solely by reference to the contract’s terms.” Wolf v. Walt

13   Disney Pictures & Television, 162 Cal. App. 4th 1107, 1126 (2008); see also Cal. Civ.

14   Code § 1639 (“When a contract is reduced to writing, the intention of the parties is to

15   be ascertained from the writing alone, if possible . . . .”); Cal. Civ. Code § 1638 (“The

16   language of a contract is to govern its interpretation . . . .”); Cove Partners, LLC v.

17   Speciality Ins. Co., 2016 WL 461918, at *6 (C.D. Cal. Feb. 2, 2016) (granting 12(b)(6)

18   motion to dismiss; holding that “mutual intention of parties” to be inferred if possible

19   “solely from the written provisions of the contract”). Thus, where the contract

20   language is clear, “it governs.” Bank of the W., 2 Cal. 4th at 1264.

21   As Council’s February 6 resolution makes plain, it went to great lengths to

22   scrupulously comply with the Settlement Agreement. Plush Decl. Ex. 5 at p. 66 (“The

23

24   ________________________
5 Although the Settlement Agreement has no choice of law provision, because it

25   was negotiated and executed in California to settle a lawsuit in the Central District of

26   California, we assume that California law applies. Moreover, interpretation of the
Settlement Agreement is governed by standard contract interpretation principles.

27   A SARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203, 1212 n.4 (9th Cir. 2015).

28

 

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1    Council will adhere to the procedures in Paragraph 4 of the April 1989 Jens v. AEA

2    Settlement Agreement….”); id. at p. 68 (establishing detailed procedures set forth to

3    ensure Settlement Agreement compliance). Nevertheless, the First Claim for Relief in

4    the Complaint alleges that Equity breached the Settlement Agreement in five related

5    ways. See Compl. ¶¶ 35(a)-(e) and 53 (incorporating by reference the allegations of

6    ¶35). First, it alleges that by not remaining neutral on the proposal, but instead

7    supporting it in communications to the members, Equity “made the proposal its own”

8    and thus “adopted” it prematurely, Compl. ¶35 & 35(c) & 35(e); second, that the

9    proposal to make a substantial change to the 99-Seat Plan was not, but should have

10   been, made by the Review Committee, the WRB, or an individual member or executive

11   of the Union, Compl. ¶ 35(a); third, that the Council “did not provide the Review

12   Committee and Equity membership with the details of the proposed change at least 45

13   days before it acted,” Compl. ¶ 35(b); fourth, that no meetings were held with the

14   Review Committee before the National Council acted, Compl. ¶ 35(c); and fifth, that

15   the Council held an advisory referendum without being requested to do so by a

16   member, Compl. ¶ 35(d).

17   These allegations are all premised on the notion that by supporting and not

18   remaining neutral on the February 6 proposal, Council “made the proposal its own,”

19   thereby “adopting” and “acting on” it prior to engaging in the required Paragraph 4

20   procedures of the Settlement Agreement. Compl. ¶35. But Council’s February 6

21   resolution explicitly states that it “will act on a proposal” after following the

22   procedures in Paragraph 4 of the Settlement Agreement, Plush Decl. Ex. 5 at p. 66; see

23   id. at p. 68 (procedures stating that “[b]efore the Council acts on the proposal to make

24   the change . . . .”), and nothing in external law or the Settlement Agreement required

25   Equity to remain neutral on the proposal. Under the LMRDA, a union has every right

26   to communicate with its members and urge a particular result in an internal

27   referendum. Ackley v. W. Conf. of Teamsters, 958 F.2d 1463, 1474 (9th Cir. 1992);

28   Members For a Better Union v. Bevona, 152 F.3d 58, 65-66 (2d Cir. 1998). Similarly,

 

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1    plaintiffs point to no language in the Settlement Agreement — because there is none —

2    that would bar Equity from supporting or promoting a proposal or that requires Equity

3    to remain neutral on the matter in the advisory referendum. The position that Equity

4    acted improperly by supporting the proposal, Compl. ¶35(e), or that by supporting it

5    somehow formally “adopted” or “acted on” the proposal, id. ¶35, fails to state a claim.

6    With respect to the second argument concerning who made the proposal,

7    Paragraph 3 of the Agreement provides that the “W[R]B, or any member or executive”

8    may make a proposal to change the Plan “to the Council.” Compl. Ex. A at 4 ¶ 3.

9    Plaintiffs refer to the minutes and resolution adopted by the Council on February 6, see

10   Compl. ¶¶ 35-36, and they attach a portion – but not all – of those minutes and the

11   resolution as Exhibit D to the Complaint. The complete minutes and resolution reflect

12   that on February 6 Council considered a proposal made by its Western Regional Board.

13   See Plush Decl. Ex. 5 at p. 66 (“based on the recommendation of the Western Regional

14   Board…”).

15   Even if the proposal had not been made by the WRB, “any member” under

16   Paragraph 3 may also make the proposal to Council. By definition, even if the Council

17   made the initial proposal, it still is a proposal of members of Equity since all members

18   of the Council are members of Equity. Equity is an unincorporated “voluntary

19   Association,” Cont. Preamble, and a labor organization under federal labor law.

20   Compl. ¶ 11. A union “can act only through its members.” AFGE Local 1 v. Stone,

21   502 F.3d 1027, 1033 (9th Cir. 2007). The Council is comprised of 75 elected

22   Councillors and the eight officers of Equity. Const. Art. III, Sec. 2(a). Councillors and

23   officers must be members of Equity. Const. Art. II, Sec. 11(b). Paragraph 3 of the

24   Agreement does not limit members who may propose changes to those who are not

25   members of the Council or non-officers. Since under the plain language of the

26   Agreement “any member” is permitted to propose changes, members of the Council

27   were free to do so. The claim then that Paragraph 3 was somehow violated because

28   certain members of Equity made the proposal (¶35 & 35(a) & 35(c)) is implausible.

 

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1 Once the flawed premises of plaintiffs’ arguments are exposed — that Equity

2 could not support the proposal and that by supporting it the Council somehow itself

3 made or adopted the proposal in violation of Paragraph 3 — the remainder of the breach

4 of contract allegations tied to the timing of the Council’s action necessarily also fail.

5 Thus, plaintiffs’ assertion that Paragraph 4(a)(ii) of the Settlement Agreement was

6 breached because “no meetings were held with the Review Committee before the

7 National Council acted,” Compl. ¶ 35(c) (emphasis added), is inconsistent with the

8 Complaint. The modified final proposal was “formally adopted” “on April 21, 2015[,]”

9 Compl. ¶45, and Equity had “full Joint Review Committee Meetings on February 18,

10 20 and 21, 2015.” Compl. ¶ 40. Thus, after the Council resolved on February 6, 2015

11 that it “will act on a proposal” to make the change, Plush Decl. Ex. 5 at p. 66, Equity

12 met on no fewer than three occasions with the Review Committee before “formally

13 adopt[ing]” the plan “on April 21, 2015,” Compl. ¶ 45. The claim in ¶ 35(c) based on

14 the supposed failure to meet with the Review Committee should be dismissed.

15 So should plaintiffs’ claim that the Council did not provide the membership with

16 the details of the proposed modification 45 days before “the Council will act on the

17 proposal to make those changes[]” as required by Paragraph 4(a)(i). Compl. ¶35(b).

18 Plaintiffs concede that Equity advised members of the proposed modifications on

19 February 6, Compl. ¶ 35, see Plush Decl. Ex. 6 (McColl correspondence referenced in

20 Compl. ¶ 35), and February 6 is more than 45 days before the Council “formally

21 adopted” the plan “on April 21, 2015,” Compl. ¶ 45. The claim in ¶ 35(b) premised on

22 the supposed failure to provide notice is baseless and should be dismissed.

23 Finally, the claim that the Council “did not consider a request by any Union

24 member for an advisory referendum” but instead “decided that an advisory referendum

25 should be held without any request[,]” Compl. ¶ 35(d), fails for the same reason as

26 plaintiffs’ claim under Paragraph 3. Paragraph 4(a)(iii) states that “[t]he Council will

27 receive and consider a request from a member . . . that an advisory referendum” be

28 held. Paragraph 4(a)(iii) does not limit the class of “member[s]” who may request an

 

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1 advisory referendum with respect to the 99-Seat Plan. The Council, like the union

2 itself, acts through its members, who are all Equity members. There thus was no

3 violation of Paragraph 4(a)(iii) when the Council authorized the advisory referendum.

4 In sum, plaintiffs’ claim that Equity breached the Settlement Agreement (First

5 Claim for Relief) should be dismissed as a matter of law.

6 B. The Breach of Covenant of Good Faith and Fair Dealing Claim Fails

7 for the Same Reasons as the Breach of Contract Claim

8 The covenant of good faith and fair dealing implied in a contract “prevent[s] one

9 contracting party from unfairly frustrating the other party’s right to receive the benefits

10 of the agreement actually made.” Guz v. Bechtel Nat. Inc., 24 Cal. 4th 317, 349 (2000).

11 The implied covenant, critically, however, does not “impose substantive duties or

12 limits on the contracting parties beyond those incorporated in the specific terms of their

13 agreement.” Id. at 349-50; see Cove Partners, 2016 WL 461918, at *11 (dismissing

14 good faith/fair dealing claim under Rule 12(b)(6)); Canas v. Ocwen Loan Servicing

15 LLC, 2015 WL 5601838, at *5-6 (C.D. Cal. Sept. 21, 2015) (same). It is thus “limited”

16 to assuring compliance “with the express terms of the contract.” Racine & Laramie,

17 Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 4th 1026, 1032 (1992); accord

18 Hanich v. Citimortgage, Inc., 2015 WL 3889617, at *2 (C.D. Cal. June 24, 2015)

19 (dismissing good faith/fair dealing claim on motion to dismiss); see also 21st Century

20 Ins. Co. v. Superior Court, 47 Cal. 4th 511, 526-27 (2009) (parties may not invoke the

21 covenant in order to “impose substantive duties or limits . . . beyond those incorporated

22 in the specific terms of their agreement”).

23 Here, as shown above in Part II.A, plaintiffs have failed to set forth any plausible

24 allegations demonstrating a breach of the Settlement Agreement. The gravamen of the

25 breach of the covenant of good faith and fair dealing claim is virtually identical to the

26 breach of contract claim: that Equity adopted a “proposal to eliminate the Equity

27 waiver system and t[ook] action on that proposal before following the procedures

28 outlined in Paragraph 4 of the Settlement Agreement”; “attempting to sway” the

 

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1 membership in numerous ways by advocating for the passage of its proposal, and

2 “resolving to implement the proposal before the Paragraph 4 process was followed.”

3 Compl. ¶57. For the same reasons these allegations fail to set forth a breach of contract

4 claim, they also fail to set forth a breach of fair dealing claim (Second Claim for

5 Relief). See supra Part II.A; Canas, 2015 WL 5601838, at *5-6 (where no breach of

6 contract, there is no breach of good/faith fair dealing).6

7 C. The DFR Does Not Govern Internal Union Affairs

8 and, In Any Event, Plaintiffs Fail to Set Forth a Plausible DFR Claim

9 The DFR is a judicially-derived corollary to a union’s statutory status as

10 employees’ exclusive collective bargaining representative. ALPA v. O’Neill, 499 U.S.

11 65, 75-76 (1991). Since the “complete satisfaction of all who are represented is hardly

12 to be expected,” Ford Motor Co. v. Huffman, 345 U.S. 330, 338 (1953), and “[c]onflict

13 between employees represented by the same union is a recurring fact,” Humphrey v.

14 Moore, 375 U.S. 335, 349-50 (1964), the DFR is a “purposefully limited check” on a

15 union’s discretion, USW v. Rawson, 495 U.S. 362, 374 (1990), that the Ninth Circuit,

16 like the Supreme Court, “narrowly constru[es].” Johnson v. USPS, 756 F.2d 1461,

17 1465 (9th Cir. 1985). Judicial review of union action “must be highly deferential,”

18 O’Neill, 499 U.S. at 78, and a union violates the DFR only if its actions are “arbitrary,

19 discriminatory, or in bad faith.” Id. at 67, 76-78.7

20 _________________________
6 The allegation that Equity refused to “confer with the Plaintiff-side members of

21 the Review Committee or any other person [or] to consider the advice of the 2-1

22 majority of Union members who voted to reject the proposal,” Compl. ¶57, cannot state
a claim for breach of the covenant of good faith and fair dealing because there was no

23 requirement to do so in the Settlement Agreement and a breach of fair dealing claim cannot add terms to a contract. E.g., Racine, 11 Cal. App. 4th at 1032; 21st Century

24 Ins. Co., 47 Cal. 4th at 526-27. The assertion that Equity repeatedly refused to convene

25 the Review Committee, Compl. ¶57, is contradicted by the allegations of the Complaint itself, see Compl. ¶¶ 27 and 40 (Equity held Review Committee meetings on May 31,

26 June 27, July 19, September 27 and November 1, 2013, February 18, 20, and 21, 2015).

27 7 The Complaint does not allege any discriminatory action. See Compl. ¶66.

28

 

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1 To be “arbitrary,” the union’s conduct must be “wholly irrational,” O’Neill, 499

2 U.S. at 78. A plaintiff must show that the union’s challenged decisions or acts were

3 “without a rational basis or explanation.” Marquez v. Screen Actors Guild, Inc., 525

4 U.S. 33, 46 (1998); Hays v. Nat’l Elec. Contractors Ass’n, 781 F.2d 1321, 1324 (9th

5 Cir. 1985). Allegations that a union made a mistake in judgment, or was negligent, are

6 insufficient to establish a breach. Rawson, 495 U.S. at 372-73, 376; Marquez, 525 U.S.

7 at 45-46 (no DFR breach even if union’s judgments are “ultimately wrong”).

8 To establish a “bad faith” DFR breach, there “must be ‘substantial evidence of

9 fraud, deceitful action or dishonest conduct.” Amalgamated Assoc. of Streetcar

10 Employees v. Lockridge, 403 U.S. 274, 301 (1971); Spellacy v. ALPA, 156 F.3d 120,

11 126 (2d Cir. 1988); Cavanaugh v. S. Cal. Permanente Med. Group, 583 F. Supp. 2d

12 1109, 1130 (C.D. Cal. 2008) (same). The bad faith must be “sufficiently egregious”

13 and so “intentionally misleading” as to be “invidious” in order to breach the duty.

14 O’Neill v. ALPA, 939 F.2d 1199, 1203 (5th Cir. 1991) (on remand from Supreme

15 Court). It is thus “invoked only to remedy the most egregious union conduct.” Id.8

16 1. The DFR Does Not Apply to Internal Union Affairs

17 As discussed above, the DFR is a corollary to a union’s status as exclusive

18 bargaining representative; the duty protects union-represented employees when the

19 union handles representation matters (administering or negotiating a CBA) with the

20 employees’ employer. O’Neill, 499 U.S. at 75-77; cf. Compl. ¶65 (“Equity owes

21 employees whom it represents for collective bargaining purposes a duty of fair

22 representation.”) (emphasis added). In “other words, the DFR extends only to matters

23 involving an employee’s dealings with his employer and ordinarily does not affect an

24 8 In light of these heightened standards, courts frequently dismiss DFR claims on

25 motions to dismiss. E.g., Thompson v. Permanente Med. Group, 623 Fed. Appx. 400,

26 400 (9th Cir. 2015); Garity v. APWU, 585 Fed. Appx. 383, 383 (9th Cir. 2014) (same);
Ajifu v. IAM, 205 Fed. Appx. 488, 490-91 (9th Cir. 2006); Davis v. Prof. Musicians

27 Local 47, 2012 WL 5929909, at **3-5 (C.D. Cal. Nov. 26, 2012).

28

 

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1 employee’s relationship with the union structure.” United Bhd. of Carpenters v. Metal

2 Trades Dep’t, 770 F.3d 846, 849 (9th Cir. 2014). Thus, courts have “‘usually excluded

3 internal union affairs’ from the duty to provide fair representation” unless there is

4 substantial impact upon the negotiation and administration of a CBA. Id. (citation

5 omitted); see Diaz v. ILWU Local 13, 474 F.3d 1202, 1206 (9th Cir. 2007) (DFR does

6 not apply to internal union affairs); Distler v. UMW, 711 F.2d 76, 78-79 (7th Cir. 1983)

7 (same); Bass v. Boilermakers, 630 F.2d 1058, 1062 (5th Cir. 1980) (same).

8 Plaintiffs allege in their Fourth Claim for Relief that Equity breached the DFR

9 by “eliminating the Equity Waiver system.” Compl. ¶66. But the plaintiffs concede

10 that the 99-Seat Plan was an internal union rule — that is, the waiver in L.A. of Equity’s

11 rule against working without being covered by an Equity collective bargaining

12 agreement. Compl. ¶1 (Plan was a “rule imposed on Equity members”), 13, 14, 19,

13 24(a), 24(c). It was thus not a CBA, but an internal union rule – and, as an internal

14 union rule, it exclusively involved a matter of internal union affairs and policy, not

15 touching on the negotiation or administration of a collective bargaining agreement.

16 The DFR, then, does not apply and the claim fails as a matter of law. E.g., Metal

17 Trades, 770 F.3d at 849; Diaz, 474 F.3d at 1206; Distler, 711 F.2d at 78-79; Bass, 630

18 F.2d at 1062; see Compl. ¶66 (Equity action “undermined the ability of members to

19 improve their skills through volunteer activities”).

20 2. The Complaint Fails to State a DFR Claim

21 The DFR claim asserts that by “eliminating the Equity waiver system in

22 violation of the Settlement Agreement and over the unambiguous objections of two-

23 thirds of its Los Angeles members,” Equity violated the DFR. Compl. ¶66. This

24 assertion fails to state a claim because it does not allege in more than conclusory

25 fashion that Equity engaged in “arbitrary” or “bad faith” action as those terms are

26 defined under DFR law.

27 To the extent the DFR claim is predicated on a violation of the Settlement

28 Agreement, there has been no such violation. See supra pp. 11-15. Nor can plaintiffs

 

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1 rest their DFR claim on Equity’s decision to proceed despite the outcome of the

2 advisory referendum. According to the Complaint, a minority (44.6%) of Equity’s

3 L.A. membership – which is itself a small minority of Equity’s total membership –

4 participated in the advisory vote, and fewer than two-thirds of that minority voted

5 against Equity’s plan. See Compl. ¶43. But even if a majority of Equity’s membership

6 had voted in the advisory referendum against the proposal, that would still not support

7 a DFR claim. First, the vote was merely advisory; the Council remained free to

8 determine what it believed to be the proper course of action. Cf. Augspurger v. Bhd. of

9 Locomotive Eng’rs, 510 F.2d 853, 859 (8th Cir. 1975) (DFR claim regarding employee

10 vote fails to state a claim when vote “was simply an advisory one”); Douglas v. USW,

11 1989 WL 201627, at *22 (S.D.W.Va. 1989) (rejecting claim that union breached duty

12 of fair representation in connection with “advisory, straw vote”). Second, whatever the

13 wishes of a group of employees, even a majority, a union has a duty though its elected

14 representatives to serve fairly the interests of all the represented employees. See

15 Emporium Capwell Co. v. W. Addition Commt’y Org., 420 U.S. 50, 64 (1975) (in

16 crafting unions’ representational authority, Congress did not “authorize a tyranny of the

17 majority”); Steele v. Louisville & N.R. Co., 323 U.S. 192, 202-03 (1944). Like a

18 legislature, see Steele, 323 U.S. at 202, a union acts as a representative of its

19 constituency, balancing competing interests, and is allowed by law to act as it deems

20 best, within a “‘wide range of reasonableness.’” O’Neill, 499 U.S. at 67, 78 (citation

21 omitted). Here, no facts alleged in the complaint show that Equity’s plan, despite

22 plaintiffs’ opposition to it, exceeded the wide bounds of the union’s permitted range of

23 conduct.

24 Moreover, there is no plausible argument that a union advocating changes so that

25 more of its members would have the opportunity be paid at least a minimum wage

26 could be considered arbitrary, which is defined as “without a rational basis or

27 explanation.” Marquez 525 U.S. at 46; O’Neill, 499 U.S. at 78. That the plaintiffs

28 disagree with this judgment as a matter of policy does not make the judgment arbitrary.

 

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1 Jeffreys v. CWA, 354 F.3d 270, 275-77 (4th Cir. 2003) (neither courts nor litigants may

2 “substitute [their] judgment for” that of a union’s elected leadership).

3 Finally, other than slapping the label “bad faith” on Equity’s action, see Compl.

4 ¶66, the plaintiffs make no factual allegations of the “substantial evidence of fraud,

5 deceitful action or dishonest conduct,” Lockridge, 403 U.S. at 299, required to plead a

6 DFR claim. The purported basis that Equity overrode the objections of those voting in

7 the advisory referendum — itself not an allegation of fraud, deceit, or dishonesty — is

8 contradicted by the admissions in the Complaint that Equity modified the initial

9 proposals (in order to take the vote into account). Compl. ¶47.

10 D. The LMRDA Claim Fails as a Matter of Law

11 Plaintiffs’ Fifth Claim for Relief is asserted under LMRDA § 101(a)(1), 29

12 U.S.C. § 411(a)(1). Compl. ¶¶ 68-74. Plaintiffs essentially contend that the manner in

13 which Equity made the substantial change to the 99-Seat Plan and conducted the

14 advisory referendum violates § 101(a)(1). Compl. ¶¶ 71-74. This claim should be

15 dismissed for numerous reasons. First, LMRDA § 101(a)(1) is not applicable here

16 because the advisory referendum is not binding and § 101(a)(1) applies only where a

17 vote binds the decision makers. Second, because interested employers have financed

18 and encouraged this lawsuit, it must be dismissed pursuant to the terms of LMRDA §

19 101(a)(4). Third, on its face, the complaint does not state a cognizable LMRDA claim.

20 1. The LMRDA Does Not Apply to Advisory Referendums

21 LMRDA § 101(a)(1) provides that union members have “equal rights . . . to vote

22 in elections or referendums of the labor organization, to attend membership meetings,

23 and to participate in the deliberations and voting upon the business of such meetings.”

24 29 U.S.C. § 411(a)(1). It is an “anti-discrimination provision, pure and simple.”

25 Ackley, 958 F.2d at 1473. Plaintiffs do not and could not allege that they were denied

26 the opportunity to attend membership meetings or the opportunity to participate or vote

27 in such meetings. See Compl. ¶¶71-74; Ackley, 958 F.2d at 1473-74. Their claim,

28

 

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1 then, is limited to the argument that they were somehow treated unequally with respect

2 to participation in the advisory referendum. See Compl. ¶¶71-74.

3 The advisory referendum in this case, however, is not required by the LMRDA,

4 see Sergeant v. Inlandboatmen’s Union, 346 F.3d 1196, 1201 (9th Cir. 2003) (Section

5 101(a)(1) “accords no right to vote on any matter to union members”); Ackley, 958

6 F.2d at 1476 (same), but it is instead required only by the Settlement Agreement. In

7 the Ninth Circuit, it is unclear whether Section 101(a) even applies to votes that are not

8 required by the LMRDA (such as the election of union officers). See Ackley, 958 F.2d

9 at 1473, 1476 (where the vote is not required by the LMRDA, there is no requirement

10 to refer to LMRDA rules on how the vote is to be conducted and “Section 101(a) of the

11 LMRDA affords no remedy”). Ackley, at least, suggests no. Id. at 1466.

12 What is more clear, however, is that where the vote is advisory only to a body

13 that has ultimate decision-making authority, then LMRDA Section 101(a) is not and

14 should not be applicable. Thus in Kahn v. Hotel & Rest. Emp. & Bartenders Int’l

15 Union, 469 F. Supp. 14, 18 (N.D. Cal. 1977) aff’d, 597 F.2d 1317 (9th Cir. 1979), the

16 referendum was for “consultation” only, and whether “there were irregularities in the

17 [advisory] voting has no bearing on the validity” of the final action taken by ultimate

18 decision maker. Id. at 17-18. Although the plaintiffs claimed that they “were denied

19 an equal opportunity to vote” under the LMRDA, the court held that “the fact remains

20 that the decision . . . was committed solely to the discretion of [the p]resident” and

21 LMRDA Section 101(a) therefore did not apply. Id. at 18. Similarly, in Acker v. BLE,

22 1977 WL 15551 (D. Minn. Apr. 22, 1977), the court held that Section 101(a)(1) is not

23 implicated in an advisory referendum “poll” of members and that union leaders can

24 “decline to follow the preferences of the membership, although, of course, they do so at

25 the peril of being ousted from office in the next election.” Id. at *1.

26 Accordingly, because the vote was advisory only and the Council was the

27 ultimate-decision maker, even if Section 101(a) applied to referenda votes not required

28 by the LMRDA, the LMRDA would not apply and the claims should be dismissed.

 

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1 2. This Case Should Be Dismissed Under LMRDA § 101(a)(4) because Interested Employers Have Financed this Suit

2 Section 101(a)(4) of the LMRDA provides that “no interested employer or

3 employer association shall directly or indirectly finance, encourage, or participate in,

4 except as a party” any LMRDA action. 29 U.S.C. § 411(a)(4). If an interested

5 employer encourages or finances an LMRDA action, it must be dismissed. Simo v.

6 UNITE, 322 F.3d 602, 612 (9th Cir. 2003); see Harris v. Plasterers Local 406, 619

7 F.2d 1164, 1170 (7th Cir. 1980) (dismissing LMRDA suit because, among other

8 reasons, it was “encouraged by an interested employer”); Adamszewski v. Local Lodge

9 1487, IAM, 496 F.2d 777, 784 (7th Cir. 1974) (employer is interested in litigation if it

10 “is concerned with it or is liable to be affected by it or has some self-interest in it”).

11 Here, the plaintiffs have utilized the “Go Fund Me” website to create a “L.A.

12 Intimate Theatre Legal Fund” in part to “to cover the legal fees” of the plaintiffs in this

13 action. Plush Decl. Ex. 9.9 The funds go into a “trust account through the lead

14 attorney, Steven Kaplan.” Id. The Fund explains that any “theater company . . . or a

15 passionate stakeholder of any kind” may contribute, and that it was created “at the

16 behest of interested stakeholders that include both theater companies, plaintiffs in the

17 case, and members of AEA.” Id. (fund was created by members of the “Theatrical

18 Producers League of Los Angeles” and two theaters’ “managing directors”). And there

19 can be no dispute that interested employers that are not a party to this action have

20 funded it, including but not limited to the Odyssey Theatre Ensemble ($2,000) and The

21

22

23

24

25 ________________________

26 9 The court may take judicial notice of this website. Matthews, 688 F.3d at 1113
& n.5; O’Toole., 499 F.3d at 1225; Flores, 2015 WL 756877, at *2; Estate of Graham,

27 2016 WL 1464229, at *17; Hendrickson, 165 F. Supp. 2d at 1084.

28

 

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 30 of 32 Page ID #:229

1 Blank Theatre ($500).10 Id. This interested employer financing independently requires

2 dismissal of plaintiffs’ LMRDA claim.

3 3. The Complaint States No Cognizable LMRDA Claim

4 Plaintiffs allege that Equity violated their equal right to vote in the advisory

5 referendum when it (a) did not remain neutral in its support of the initial proposal

6 without first giving all members an opportunity to hear all contending positions on the

7 proposal, Compl. ¶¶71, 73; (b) when it omitted the opposition statement from the

8 electronic ballot for three days of voting, id. ¶72, and (c) when it “directed members of

9 the 99-Seat Committee” to vote in favor of the referendum, id. ¶74. Independently or

10 taken together, none of these allegations state a plausible LMRDA § 101(a)(1) claim.

11 Jurisdiction under 101(a)(1) exists only when “discrimination” in the right to

12 vote has been alleged, and without such discrimination such claims should be

13 dismissed for failure to state a claim. Stelling v. IBEW, 587 F.2d 1379, 1385 (9th Cir.

14 1978). As stated above, it is an “anti-discrimination provision, pure and simple” and to

15 “state a claim under section 101(a)(1), a union member must allege a denial of rights

16 accorded to other members.” Ackley, 958 F.2d at 1473. Here, because there is no

17 allegation that any plaintiff was denied the right to vote in the referendum or denied the

18 opportunity to attend or speak at a membership meeting, or discriminated against in

19 some way in comparison to other members, there is no cognizable LMRDA claim. Id.

20 The argument that Equity violated Section 101(a)(1) by expressing its support

21 for the initial proposal prior to all parties expressing their views has no merit. Equity

22 has the absolute right under the LMRDA to communicate with its members and urge a

23 particular result on an internal union (non-election) referenda issue. See Ackley, 958

24 F.2d at 1474 (the question whether union’s information was “biased toward a particular

25 ________________________

26 10 These theatres undisputedly are interested employers under the statute. See
Adamszewski, 496 F.2d at 784 (employer is interested in litigation if it “is concerned

27 with it or is liable to be affected by it or has some self-interest in it”).

28

 

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 31 of 32 Page ID #:230

1 outcome is irrelevant for purposes of section 101(a)(1)”); Bevona, 152 F.3d at 66

2 (dismissing plaintiffs’ claim that union’s conduct, inter alia, advocating a position on

3 the referendum “tainted” the vote). The fact that Equity supported the proposal as a

4 matter of law therefore does not violate § 101(a)(1). Ackley, 958 F.2d at 1474.

5 Plaintiffs’ two other arguments fare no better. Plaintiffs first assert that Equity

6 violated the equal rights of L.A. members by omitting the producer-side opposition

7 statement in the electronic ballot for the first three days of the voting. Compl. ¶72.

8 This argument is fatally flawed for at least two reasons. First, there is no requirement

9 for the union under the LMRDA to distribute an opposition statement or otherwise

10 publicize opposing views. Ackley, 958 F.2d at 1466, 1474. As long as all members

11 have the right to vote and were not discriminated against, there is no violation. Id. at

12 1466, 1474. Nor was there any requirement in the Settlement Agreement to include the

13 opposition statement in the electronic ballot. The only requirement was to include it in

14 the “materials mailed to the membership,” Compl. Ex. A ¶4(a)(iv)(2), which it was, see

15 Compl. ¶¶41-42. Second, it ignores plaintiffs’ own allegation that the electronic ballot

16 “omitted the Council’s endorsement and the Review Committee’s opposition

17 statement.” Compl. ¶42. In other words, both sides of the issue were not distributed

18 for those three days. And the balloting period lasted 24 days, see Plush Decl. Ex. 6 at

19 p. 87 (balloting period from March 25 to April 17), so both the Council’s position and

20 the opposition statement were included not only in all mail ballots, but in the electronic

21 ballot for 21 of the 24 days of the voting period.

22 Finally, plaintiffs allege that Equity violated § 101(a)(1) when it directed

23 members of the 99-Seat Committee to vote in favor of the referendum. Compl. ¶74.

24 As alleged, that Committee is a “subcommittee” of the WRB. Id. ¶39. The WRB are

25 all members of Council. Const. Art. III, §2(a), (b). Plaintiffs allege that an Equity

26 “staff member” told 99-Seat Committee members to vote “yes.” Compl. ¶39. This

27 allegation does not state an LMRDA equal rights claim. First, the plaintiffs “lack

28 standing” to assert the “rights of other union members,” particularly ones that are a

 

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 32 of 32 Page ID #:231

1 subcommittee of the Council that they are suing. Weiss v. Torpey, 987 F. Supp. 212,

2 218 (E.D.N.Y. 1997); Mamula v. USW, 304 F.2d 108, 113 (3d Cir. 1962). Second, it

3 would not violate § 101(a)(1) even if a “staff member” told members to vote yes when

4 that staffer had no ability to know or control how a member voted in the secret ballot.

5 Council supported the proposal and urged members to vote yes. It had every right to

6 do so. Ackley, 958 F.2d at 1474. An allegation of being told how to vote does not set

7 forth the type of unfair discrimination that would possibly violate§ 101(a)(1).

8                                                                        ***

9 In sum, plaintiffs criticize the Council for making the judgment to eliminate the

10 availability of the Plan in order to create the opportunity for some Equity members to

11 actually begin to be paid a wage in Los Angeles’ small theaters. A different policy

12 judgment could have been made; it would have been made had plaintiffs been the

13 Union’s elected leaders. But they are not, and the law recognizes that such judgments

14 are necessary for union leadership, including at “difficult and trying times,” and neither

15 courts nor litigants are “empowered to substitute [their] judgment for” that of a union’s

16 elected leaders. Jeffreys, 354 F.3d at 275-77. In light of this principle, and Equity’s

1 7 compliance with the unambiguous provisions of the Settlement Agreement, Equity is

18 entitled to dismissal of all claims in this case.

19                                                          CONCLUSION

20 For the reasons set forth above, the Complaint should be dismissed with

21 prejudice.

About Kevin Delin

monsterid
Kevin Delin took a few writing courses (among other things) at MIT from playwright A.R. Gurney and author Frank Conroy. In addition to writing a monthly column for Footlights, he uses his extensive tech background, including a PhD in Physics, and work experience in both Silicon Valley and NASA to advise those who want to ground their entertainment in science. He's also contributed pieces about art and culture to American Theatre, LA Weekly, Script Magazine, and Stage Raw. You can follow him on Twitter @kdelin.

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