Unions May Sue Their Directors for Breach of Fiduciary Duty

Published on the SHRM website, 8/25/16

The Labor-Management Reporting and Disclosure Act (LMRDA) contains an implied cause of action for a union to bring a lawsuit for breach of fiduciary duties against an officer or other agent of the union, according to the U.S. Circuit Court of Appeals for the District of Columbia.

The LMRDA sets out fiduciary duties that officers and other agents of unions owe the union that employs them. The statute does not, however, expressly give the union itself a cause of action for breach of fiduciary duty. Rather, the statute gives union members an express right to sue a union agent for breach of fiduciary duties; members may bring suit in their own name for the benefit of the union.

Assane Faye was the nonmember district director of the International Union, Security, Police and Fire Professionals of America. In 2009, the union filed a lawsuit against Faye alleging that while it employed him, Faye breached his fiduciary duties to the union in a number of ways, including by encouraging union members to join a rival union.

The trial court concluded that the LMRDA provides a right for an individual union member—not the union itself—to bring a lawsuit for breach of fiduciary duty. Accordingly, the trial court dismissed the union's lawsuit.

On appeal, the circuit court was asked to determine whether the LMRDA provided the union with implied consent to file a lawsuit on its own behalf. Citing Weaver v. United Mine Workers of America, which held that a union can take over a lawsuit initiated by union members, the circuit court determined that a union has an implied right to initiate the lawsuit as well. The D.C. Circuit reasoned that if a union can take over a lawsuit from one of its members, it surely has the right to initiate one. Accordingly, the appeals court held that the union had an implied right to file a lawsuit against Faye for breach of fiduciary duties.

International Union, Security, Police and Fire Professionals of America v. Faye, D.C. Cir., No. 15-7084 (July 15, 2016).

Professional Pointer: This case provides a clear reminder that courts will look to congressional intent when interpreting a statute and err on the side of giving the statute a meaning that permits the rights granted therein to be vindicated in court.

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