cohen, weiss and simon llp susan davis* evan hudson...
TRANSCRIPT
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COHEN, WEISS AND SIMON LLP SUSAN DAVIS* [email protected] EVAN HUDSON-PLUSH* [email protected] WENDY LAMANQUE* [email protected]
*Pro Hac Vice Application Pending 330 West 42nd Street New York, New York 10036 Telephone: (212) 356-0207 Facsimile: (646) 473-8207 BUSH GOTTLIEB IRA L. GOTTLIEB (SBN 103236) [email protected] LISA C. DEMIDOVICH (SBN 245836) [email protected] 500 North Central Avenue, Suite 800 Glendale, California 91203-3345 Telephone: (818) 973-3200 Facsimile: (818) 973-3201 Attorneys for Defendant ACTORS’ EQUITY ASSOCIATION
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
ED ASNER, et al.,
Plaintiffs,
vs. ACTORS’ EQUITY ASSOCIATION,
Defendant.
CASE NO. 15-cv-8169 (TJH)(JPR) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION OF DEFENDANT ACTORS’ EQUITY ASSOCIATION TO DISMISS THE COMPLAINT
Date: August 29, 2016 Time: UNDER SUBMISSION Courtroom: 17
00765435.1
Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 Page 1 of 32 Page ID #:200
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TABLE OF CONTENTS
Page PRELIMINARY STATEMENT .................................................................................... 1
STATEMENT OF FACTS ............................................................................................. 2
The Parties ............................................................................................................ 2
The History of the 99-Seat Plan ........................................................................... 3
The Jens v. Equity Settlement Agreement ........................................................... 4
The February 6, 2015 Proposed Changes to the Plan .......................................... 5
The April 21, 2015 Council Action ...................................................................... 7
Procedural History ................................................................................................ 8
ARGUMENT .................................................................................................................. 9
I. THE APPLICABLE STANDARD FOR A MOTION TO DISMISS IN A CASE INVOLVING INTERNAL UNION AFFAIRS ........................................ 9
A. Rule 12(b)(6) Standard of Review ............................................................. 9
B. Unions are Owed Substantial Deference in Matters Involving Internal Union Affairs ............................................ 10
II. THE COURT SHOULD DISMISS ALL OF THE PLAINTIFFS’ CLAIMS ............................................................................ 11
A. The Breach of Contract Allegations Fail on Their Face .......................... 11
B. The Breach of Covenant of Good Faith and Fair Dealing Claim Fails for the Same Reasons as the Breach of Contract Claim ................. 15
C. The DFR Does Not Govern Internal Union Affairs and, In Any Event, Plaintiffs Fail to Set Forth a Plausible DFR Claim ...................... 16
1. The DFR Does Not Apply to Internal Union Affairs .................... 17
2. The Complaint Fails to State a DFR Claim ................................... 18
D. The LMRDA Claim Fails as a Matter of Law ......................................... 20
1. The LMRDA Does Not Apply to Advisory Referendums ............ 20
2. This Case Should Be Dismissed Under LMRDA 101(a)(4) because Interested Employers Have Financed this Suit ................ 22
3. The Complaint States No Cognizable LMRDA Claim ................. 23
CONCLUSION ............................................................................................................. 25
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TABLE OF AUTHORITIES
Page(s) Cases
21st Century Ins. Co. v. Superior Court, 47 Cal. 4th 511 (2009) ......................................................................................... 15, 16
Acker v. BLE, 1977 WL 15551 (D. Minn. Apr. 22, 1977) ......................................................... 21, 22
Ackley v. W. Conf. of Teamsters, 958 F.2d 1463 (9th Cir. 1992) ............................................................................passim
Adamszewski v. Local Lodge 1487, IAM, 496 F.2d 777 (7th Cir. 1974) ............................................................................... 22, 23
AFGE Local 1 v. Stone, 502 F.3d 1027 (9th Cir. 2007) ................................................................................... 13
Ajifu v. IAM, 205 Fed. Appx. 488 (9th Cir. 2006) .......................................................................... 17
ALPA v. O’Neill, 499 U.S. 65 (1991)..............................................................................................passim
Amalgamated Assoc. of Streetcar Employees v. Lockridge, 403 U.S. 274 (1971)............................................................................................. 17, 20
ASARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203 (9th Cir. 2015) ................................................................................... 11
Ashcroft v. Iqbal, 556 U.S. 662 (2009)..................................................................................................... 9
Augspurger v. Bhd. of Locomotive Eng’rs, 510 F.2d 853 (8th Cir. 1975) ..................................................................................... 19
Bank of the West v. Superior Court, 2 Cal. 4th 1254, 833 P.2d 545 (1992) ........................................................................ 11
Bass v. Boilermakers, 630 F.2d 1058 (5th Cir. 1980) ................................................................................... 18
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)..................................................................................................... 9
Canas v. Ocwen Loan Servicing LLC, 2015 WL 5601838 (C.D. Cal. Sept. 21, 2015) .................................................... 15, 16
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Cavanaugh v. S. Cal. Permanente Med. Group, 583 F. Supp. 2d 1109 (C.D. Cal. 2008) ..................................................................... 17
Colony Cove Props., LLC v. City of Carson, 640 F.3d 948 (9th Cir. 2011) ....................................................................................... 9
Complete Infusion Care, CIC, Inc. v. Aetna Life Ins. Co., 2016 WL 471207 (C.D. Cal. Feb. 4, 2016) ............................................................... 11
Cove Partners, LLC v. Speciality Ins. Co., 2016 WL 461918 (C.D. Cal. Feb. 2, 2016) ......................................................... 11, 15
Davis v. Prof. Musicians Local 47, 2012 WL 5929909 (C.D. Cal. Nov. 26, 2012) .................................................... 17
Diaz v. ILWU Local 13, 474 F.3d 1202 (9th Cir. 2007) ................................................................................... 18
Distler v. UMW, 711 F.2d 76 (7th Cir. 1983) ....................................................................................... 18
Douglas v. USW, 1989 WL 201627 (S.D.W.Va. 1989) ......................................................................... 19
Eclectic Props. v. Marcus & Millichap, 751 F.3d 990 (9th Cir. 2014) ....................................................................................... 9
Emporium Capwell Co. v. W. Addition Commt’y Org., 420 U.S. 50 (1975)..................................................................................................... 19
Flores v. City of Baldwin Park, 2015 WL 756877 (C.D. Cal. Feb. 23, 2015) ................................................... 9, 10, 22
Ford Motor Co. v. Huffman, 345 U.S. 330 (1953)................................................................................................... 16
Garity v. APWU, 585 Fed. Appx. 383 (9th Cir. 2014) .......................................................................... 17
Estate of Graham v. Sotheby’s, Inc., 2016 WL 1464229 (C.D. Cal. Apr. 11, 2016) ..................................................... 10, 22
Gurton v. Arons, 339 F.2d 371 (2d Cir. 1964) ...................................................................................... 10
Guz v. Bechtel Nat. Inc., 24 Cal. 4th 317 (2000) ............................................................................................... 15
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Hanich v. Citimortgage, Inc., 2015 WL 3889617 (C.D. Cal. June 24, 2015) ........................................................... 15
Harris v. Plasterers Local 406, 619 F.2d 1164 (7th Cir. 1980) ................................................................................... 22
Hays v. Nat’l Elec. Contractors Ass’n, 781 F.2d 1321 (9th Cir. 1985) ................................................................................... 17
Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) ............................................................... 10, 22
Humphrey v. Moore, 375 U.S. 335 (1964)................................................................................................... 16
Inlandboatmens Union v. Dutra Group, 279 F.3d 1075 (9th Cir. 2002) ..................................................................................... 9
Jeffreys v. CWA, 354 F.3d 270 (4th Cir. 2003) ............................................................................... 20, 25
Johnson v. USPS, 756 F.2d 1461 (9th Cir. 1985) ................................................................................... 16
Kahn v. Hotel & Rest. Emp. & Bartenders Int’l Union, 469 F. Supp. 14 (N.D. Cal. 1977) aff’d, 597 F.2d 1317 (9th Cir. 1979) ................... 21
Kavowras v. N.Y. Times Co., 328 F.3d 50 (2d Cir. 2003) .......................................................................................... 3
Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) ..................................................................................... 9
L.H. v. Chino Valley Unified Sch. Dist., 944 F. Supp. 2d 867 (C.D. Cal. 2013) ......................................................................... 9
Lee v. Los Angeles, 250 F.3d 668 (9th Cir. 2001) ....................................................................................... 9
Local 1052 v. L.A. County Dist. Council of Carpenters, 944 F.2d 610 (9th Cir. 1991) ..................................................................................... 10
Local 48 v. United Bhd. of Carpenters, 920 F.2d 1047 (1st Cir. 1990) .................................................................................... 10
Mamula v. USW, 304 F.2d 108 (3d Cir. 1962) ...................................................................................... 25
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Marquez v. Screen Actors Guild, Inc., 525 U.S. 33 (1998)............................................................................................... 17, 19
Matthews v. Nat’l Football Council, 688 F.3d 1107 (9th Cir. 2012) ............................................................................. 10, 22
Members For a Better Union v. Bevona, 152 F.3d 58 (2d Cir. 1998) .................................................................................. 12, 24
Motion Picture & Videotape Editors Guild, Local 776 v. Int’l Sound Technicians, 800 F.2d 973 (9th Cir. 1986) ......................................... 1, 10
Nanavati v. Adecco USA, Inc., 99 F. Supp. 3d 1072 (N.D. Cal. 2015). ........................................................................ 3
O’Neill v. ALPA, 939 F.2d 1199 (5th Cir. 1991) ................................................................................... 17
O’Toole v. Northrop Grumman Corp., 499 F.3d 1218 (10th Cir. 2007) ................................................................................. 22
Parrino v. FHP, Inc., 146 F.3d 699 (9th Cir. 1998) ....................................................................................... 9
Racine & Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 4th 1026 (1992) .............................................................................. 15, 16
Scofield v. NLRB, 394 U.S. 423 (1969)................................................................................................... 10
Sergeant v. Inlandboatmen’s Union, 346 F.3d 1196 (9th Cir. 2003) ................................................................................... 21
Simo v. UNITE, 322 F.3d 602 (9th Cir. 2003) ..................................................................................... 22
Spellacy v. ALPA, 156 F.3d 120 (2d Cir. 1988) ...................................................................................... 17
Steele v. Louisville & N.R. Co., 323 U.S. 192 (1944)................................................................................................... 19
Stelling v. IBEW, 587 F.2d 1379 (9th Cir. 1978) ................................................................................... 23
Steven Stripling, 316 NLRB 710 (1995) ............................................................................................... 10
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Teamsters Joint Council No. 42 v. IBT, 82 F.3d 303 (9th Cir. 1996) ....................................................................................... 10
Thompson v. Permanente Med. Group, 623 Fed. Appx. 400 (9th Cir. 2015) .......................................................................... 17
United Bhd. of Carpenters v. Metal Trades Dep’t, 770 F.3d 846 (9th Cir. 2014) ..................................................................................... 18
USW v. Rawson, 495 U.S. 362 (1990)............................................................................................. 16, 17
USW v. Sadlowski, 457 U.S. 102 (1982)................................................................................................... 10
Weiss v. Torpey, 987 F. Supp. 212 (E.D.N.Y. 1997) ............................................................................ 25
Wolf v. Walt Disney Pictures & Television, 162 Cal. App. 4th 1107 (2008) .................................................................................. 11
Statutes
29 U.S.C. § 411 ........................................................................................................passim
Cal. Civ. Code § 1638 ..................................................................................................... 11
Cal. Civ. Code § 1639 ..................................................................................................... 11
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PRELIMINARY STATEMENT
Defendant Actors’ Equity Association (“Equity” or the “Union”) is a national
labor union that represents more than 50,000 actors and stage managers throughout the
United States. It has, for more than a century, advocated to improve its members’
wages and working conditions and protect their rights at work. One way in which it
does so is to maintain an internal union rule that prohibits members from working
without the benefit of an Equity contract. Equity has, however, since the early 1970’s,
waived this rule for members working in Los Angeles theaters of 99 seats or fewer,
permitting members to work without a contract and, generally, without wages or
benefits, essentially for free, in these theaters. Compl. ¶¶ 13-14.
On April 21, 2015, after several months of methodically and meticulously
following the procedures of a settlement agreement it entered into more than 25 years
ago, Equity changed its internal membership rules in Los Angeles and narrowed the
scope of this waiver so that more of its members would have the opportunity to be paid
at least minimum wage. Ignoring the “well-established” policy of “avoiding
unnecessary [judicial] interference in the internal affairs of unions,” Motion Picture &
Videotape Editors Guild, Local 776 v. Int’l Sound Technicians, 800 F.2d 973, 975 (9th
Cir. 1986), the plaintiffs -- many of whom are also producers / employers and two of
whom are not even members of Equity -- challenge this judgment, primarily on
procedural grounds. Their allegations fail to state a claim and should be dismissed.
We demonstrate in Part II.A and II.B that applying the unambiguous terms of the
settlement agreement to the allegations of the complaint, the plaintiffs have failed to set
forth any plausible breach of contract or breach of good faith and fair dealing claims.
In Part II.C we show that the duty of fair representation (“DFR”) is inapplicable to this
matter because it involves internal union affairs and, in any event, the complaint does
not set forth a plausible claim under established DFR precedent narrowly confining that
doctrine. Finally, in Part II.D, we demonstrate that plaintiffs’ Labor Management
Reporting and Disclosure Act (“LMRDA”) § 101(a)(1) equal right to vote claim fails
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as a matter of law for a host of independent reasons, including that the statute does not
apply to advisory referendums (the only relevant vote here), that this lawsuit has been
financed by interested employers, and that the allegations do not rise to the level of a
LMRDA violation as no member was denied the right to vote.
For all of these reasons, the Court should dismiss the Complaint.
STATEMENT OF FACTS
The Parties
Equity is a labor union representing approximately 50,000 actors and stage
managers working in live theater throughout the United States. Compl. ¶ 11; Decl. of
Evan Hudson-Plush (“Plush Decl.”), Ex. 1 (AEA’s Constitution & Bylaws (referenced
in Compl. ¶¶ 11, 13)), Preamble. Mary McColl, who originally was a Defendant in this
lawsuit, is the Executive Director of Equity, the highest-ranking staff member of the
Union. Compl. ¶ 12; Bylaws Art. III, § 6(a). On December 4, 2015, the plaintiffs
dismissed all claims against Ms. McColl with prejudice. Docket No. 9.
Equity is governed by its Constitution and Bylaws. Compl. ¶ 11. A fundamental
tenet of Equity’s constitutional structure is that its national governing body, the
National Council (“Council”), sets the policies and priorities of the organization.
Const. Art. III, § 1(a). The Council is given Constitutional authority for the “general
management, direction and control of the affairs, funds and property of the
Association, and the determination of the relations and obligation of members to the
Association . . . .” Const. Art. III, § 1(a). The Council consists of 75 members and 8
officers, who are elected by the membership of Equity every two years. Const. Art. III,
§§ 2(a), 4(a), 5.
Every Councillor and officer must be a member in good standing of the union.
Const. Art. II, § 11(b). Of the 75 Councillors, 22 come from Equity’s Western Region,
which includes L.A. See Const. Art. III, §2(a) & App. A; By-Laws Art. II, §§ 2-3. All
members in good standing of Equity, regardless of the Region in which they reside, are
entitled to vote for all Officer and Councillor positions. Const. Art. III, § 7. The
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Western Regional Board (“WRB”) of Equity “assist[s]” the National Council in the
business of the Association.1 Const. Art. III, §1(b). The WRB is composed of the 22
elected actors and stage managers that are part of the Council. Const. App. A.
Two plaintiffs -- John Flynn and Simon Levy -- are not members of Equity and
purport to “participate in this lawsuit as designees” of parties to the settlement
agreement. Compl. ¶ 9. Various of the plaintiffs claim to be third-party beneficiaries
of the agreement. Id. ¶ 10. About half of the plaintiffs are also producers (including
the two that are not Equity members) -- that is they own or operate entities that produce
theatrical engagements or represent employer interests in those engagements.2 Other
than Flynn and Levy, the plaintiffs are members of Equity. Id. ¶¶ 9, 10.
The History of the 99-Seat Plan
One way that Equity seeks to preserve decent wages and working conditions for
working actors and stage managers, Const. Preamble, is to maintain an internal union
membership rule that subjects a member to discipline if he or she works without the
benefit of an Equity contract. By-Laws Art. X, § 1(d); Compl. ¶ 13. Equity decided in
the early 1970’s to waive this rule for small theaters in L.A. with fewer than 100 seats.
Compl. ¶ 14. In 1988, Equity’s National Council voted to adopt what would later be
known as the 99-Seat Theatre Plan, which was a unilateral rule that permitted members
to work in L.A.’s small theaters only if certain minimum working conditions were met;
1 The WRB was previously known, and is denominated in the Settlement
Agreement, as the Western Advisory Board. 2 Plaintiffs do not disclose their employer status in the Complaint. Should this
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 his capacity as a Union member and in his capacity as the President of the Skylight 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 v. Adecco USA, Inc., 99 F. Supp. 3d 1072, 1075 n.2 (N.D. Cal. 2015).
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the actors were considered “volunteers” that received no wages, small stipends for
performances and no compensation for rehearsals. Compl. ¶¶ 17, 19, 24 & Ex B.
In 1989, members, many of whom also were employers that owned or operated
theaters or were producers, sued the Union (before this Court) to try to prevent
implementation of the Plan. Compl. ¶¶17-18; Plush Decl. Ex. 3 (Jens v. Equity Compl.
¶17). The plaintiffs in Jens included Gary Grossman, Thomas Ormeny, and Joseph
Stern, who are also plaintiffs in this action. This action, of course, seeks to enjoin the
elimination of the availability of the very Plan that these same plaintiffs fought in Jens
to stop Equity from implementing (due to the small stipends they would have to pay).
After the Jens plaintiffs unsuccessfully moved for a temporary restraining order and a
preliminary injunction to stop Equity’s implementation of the Plan, the parties to that
lawsuit settled, resulting in a settlement agreement (the “Settlement Agreement”).
Compl. Ex. A at 2 (mentioning unsuccessful TRO / PI attempts).
The Jens v. Equity Settlement Agreement
The Settlement Agreement (Exhibit A to the Complaint), provided that Equity
would not make any modifications to its November 29, 1988 version of the Plan for
two years -- until April 1, 1991. Compl. Ex. A ¶1. The Agreement also created a
“Review Committee” -- composed of four Jens “plaintiffs (or their designates) and four
members appointed” by Equity -- to “monitor and study the impact, implementation,
problems, and operations of the 99-Seat Theatre Plan[.]” Id. ¶2.
After April 1, 1991, “the Review Committee, W[R]B, or any member or
executive” may propose to Council to make changes to the Plan. Id. ¶3. If the
proposal would make a “substantial change” to the Plan, including to the “availability
of the Plan,” id. ¶4, then Equity would need to follow certain procedures outlined in
Paragraph 4 of the Settlement Agreement. Those procedures included:
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x Providing the Review Committee and membership with the details of the proposed changes at least 45 days in advance of when the Council “will act on the proposal” to make the changes. Id. ¶4(a)(i).
x Prior to acting on the proposal, arranging for a reasonable number of meetings with the Review Committee for the “purpose of receiving the recommendations and opinions” of the Review Committee. Id. ¶4(a)(ii).
x 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).
x If the Council decides to hold an “advisory referendum,” establishing certain procedures, including providing 45 days advance notice to the membership, providing the Review Committee with the opportunity to write a “differing viewpoint” to be included in the referendum materials “mailed to the membership,” and holding a membership meeting to explain, comment, and debate the proposed changes. Id. ¶4(a)(iv).
Council retained the right to make the ultimate decision on the proposal. See
Compl. Ex. A ¶4; Const. Art. III, §1(a).
The February 6, 2015 Proposed Changes to the Plan
The core feature of the 99-Seat Theatre Plan had remained unchanged for more
than 25 years: actors, who were considered “volunteers” rather than employees, were
not paid wages but, instead, were provided with minimal stipends ranging from $7 to
$25 per performance. Compl. ¶¶ 24(c), 24(h) & Compl. Ex. B §§ Forward (B), 21.
Actors received no compensation whatsoever for rehearsals, which often lasted for
weeks. Compl. ¶ 24(c) & Compl. Ex. B §§ Forward (B), 10.
On September 23, 2014, Equity announced a “member mobilization and
communications effort” to “learn more about its membership’s ideas and concern about
theater in L.A.” Compl. ¶30 (referencing and quoting press release, which is attached
as Exhibit 4 to the Plush Decl.). The union announced that it would conduct a survey
and focus groups of the membership. Id. The survey of more than 600 L.A. members
was conducted by the independent Hart Research Associates from October 8 to 28,
2014. Compl. Ex. C at 2. Amongst other things, the survey showed that a majority of
members believed the Plan benefited producers more than actors, Compl. Ex. C. at 10,
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and more than 70% believed that the Plan needed changes (with 50% saying “major”
changes were needed). Id. The union also conducted focus groups and held a
membership meeting on January 13, 2015 at which members expressed their views on
the Plan. Compl. ¶¶33, 34.
On February 6, 2015, the Council held a meeting to consider a proposal from its
Western Regional Board to make changes to the 99-Seat Plan. Plush Decl. Ex. 5 at p.
66 (complete meeting minutes and resolution discussed in Compl. ¶¶35-36 and
attached only in partial form to the Complaint as Exhibit D). The Council resolved to
“act on a proposal” on April 21, 2015 to make a substantial change to the Plan, and
stated that it “will adhere to the procedures in paragraph 4 of the April 1989 Jens v.
AEA Settlement Agreement.” Id. The resolution includes a specific attachment setting
forth precisely how the Union would comply with those procedures. Id. at pp. 4-5.
The proposal consisted of the elimination of the availability of the current 99-
Seat Plan, two new internal union rules, the L.A. Self-Produced Project Code and the
L.A. Membership Company Rule, as well as new template 99-Seat Theatre Agreement
that “would be bargained with individual producers and/or a multi-employer group”
and that would ensure that all actors be paid at least minimum wage for all time
worked, including in rehearsals and performances. Plush Decl. Ex. 5 at p. 66
(resolution); Compl. ¶¶ 36(a), 36(b) & Ex. D. As Ms. McColl explained, the proposal
sought to synthesize and balance all members’ concerns -- that “members want the
Plan to change” to more fairly value actors’ contributions, but that the changes “must
preserve” the opportunities “for actors to collaborate and develop artistically.” Plush
Decl. Ex. 6 (referred to in Complaint ¶35). The proposal did this by providing
opportunities for members to work (whether for free or not) without the benefit of an
Equity contract in member-produced theatrical productions or for membership
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companies3 of which they were members. Compl. Ex. D at p. 16. But at the same
time, for those actors that sought to earn at least a partial living by acting, the 99-Seat
Theatre Agreement would guarantee a salary of at least minimum wage for all hours
worked. Id. at p. 9; Plush Decl. Ex. 5 at p. 79.
In accordance with the procedures the Council adopted at the February 6 Council
meeting, Equity representatives met with the Review Committee on February 18, 20,
and 21, 2015. Compl. ¶40. It also conducted the advisory referendum and included a
differing viewpoint from the producer-side of the Review Committee in the balloting
materials mailed to the voting members on March 25, 2015. Compl. ¶¶ 37, 41, 42.
The results of the advisory referendum were 2,046 votes against the proposal and 1,075
votes for the proposal. Compl. ¶43.
The April 21, 2015 Council Action
On April 21, 2015, the Council met to act on the proposals. Compl. ¶45.
Having considered the substantial membership input since February 6, including the
advisory referendum vote, Council resolved to adopt in part and modify in part the
February 6 proposal. Plush Decl. Ex. 7 (April 21 Council Resolution discussed in
Compl. ¶¶45, 47); Compl. ¶47. Council adopted the proposal to eliminate the
availability of the 99-Seat Plan as well as the proposal to create the L.A. Self-Produced
Project Code as an internal union rule. Plush Decl. Ex. 7. It modified the proposal by
adopting a modified version of the L.A. Membership Company Rule, a slightly revised
version of the 99-Seat Agreement to be bargained with producers but requiring the
3 The rule defined a membership company as “an entity that is not organized to
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 seats or fewer.” Compl. Ex. D at p. 16, ¶2.
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payment of at least minimum wage, a new internal membership rule, the L.A. 50 Seat
Showcase Code, and a Transitional L.A. 99-Seat Theatre Code.4 Id.
The modifications of the original proposal included:
x The addition of a Transitional Code that essentially maintained the status quo of the 99-Seat Plan for more than a year. Compl. ¶45; Plush Decl. Ex. 7 at pp. 127-141.
x The adoption of a new internal membership rule (the 50 Seat Showcase Code) that permits members to work without a contract (without wages) in productions in theaters of 50 seats or fewer where the production budget does not exceed $20,000, for a maximum of 16 performances. Compl. ¶47(e); Plush Decl. Ex. 7 at pp. 108-125.
x A broadening of the L.A. Membership Company Rule to permit actors to join a membership company “thereby permitting Membership Companies to admit new members” and allow those members to utilize the new rule (new company members could not utilize the originally-proposed rule). Compl. ¶47(d) & Plush Decl. Ex. 7 at p. 107.
An April 21, 2015 announcement, referenced in Complaint ¶45, explained
Equity’s reasons for the modifications. Plush Decl. Ex. 8 (“Equity’s Council believes
that these rules and agreements balance concerns raised by L.A. members about the
original proposals, while doing what’s needed to represent the interests of the
membership in L.A. and around the country.”).
Procedural History
Plaintiffs filed the Complaint on October 17, 2015. Docket No. 1. The
complaint asserts four claims against Equity, for breach of contract, breach of the
covenant of good faith and fair dealing, breach of the DFR, and violation of the
LMRDA. Id. The complaint also asserts two claims against Ms. McColl, for breach of
fiduciary duty and for a violation of the LMRDA. Id. On December 4, 2015, the
4 The Council also made its Small Professional Theatres Agreement available in
L.A. Hudson-Plush Decl. Ex. 7.
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plaintiffs dismissed, with prejudice, all claims asserted against Ms. McColl and she
therefore is no longer a defendant in this lawsuit. Docket No. 9.
ARGUMENT
I. THE APPLICABLE STANDARD FOR A MOTION TO DISMISS IN A CASE INVOLVING INTERNAL UNION AFFAIRS A. Rule 12(b)(6) Standard of Review
Although the court “construes the pleadings in the light most favorable to the
nonmoving party” in considering a motion to dismiss under Rule 12(b)(6),
“[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice” to state a claim. Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009); accord L.H. v. Chino Valley Unified Sch. Dist., 944 F. Supp. 2d 867, 872-
73 (C.D. Cal. 2013). To avoid dismissal, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face,’” Iqbal,
556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, (2007)), and
not merely “conceivable” or “speculative.” Twombly, 550 U.S. at 555, 570; accord
Eclectic Props. v. Marcus & Millichap, 751 F.3d 990, 995 (9th Cir. 2014). The
complaint must be dismissed if “the well-pleaded facts do not permit the court to infer
more than the mere possibility of misconduct.” Iqbal, 556 U.S. at 667, 679.
On a motion to dismiss under Rule 12(b)(6), the court may consider documents
attached to the complaint and also those documents, though not physically attached to
that complaint, that are referred to or relied on in the complaint whose authenticity is
not in dispute. See Colony Cove Props., LLC v. City of Carson, 640 F.3d 948, 955 (9th
Cir. 2011); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Inlandboatmens
Union v. Dutra Group, 279 F.3d 1075, 1083 (9th Cir. 2002); Lee v. Los Angeles, 250
F.3d 668, 688 (9th Cir. 2001), Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998).
A court may also take judicial notice of matters of public record, Colony Cove, 640
F.3d at 955; Lee, 250 F.3d at 689, and it “is not uncommon for courts to take judicial
notice of factual information found on the world wide web.” Flores v. City of Baldwin
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Park, 2015 WL 756877, at *2 (C.D. Cal. Feb. 23, 2015) (quoting O’Toole v. Northrop
Grumman Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) and citing Matthews v. Nat’l
Football Council, 688 F.3d 1107, 1113 & n.5 (9th Cir. 2012) (granting a request for
judicial notice of statistics available on the NFL’s website)); Estate of Graham v.
Sotheby's, Inc., 2016 WL 1464229, at *17 (C.D. Cal. Apr. 11, 2016) (taking judicial
notice of information on ebay’s website); Hendrickson v. eBay, Inc., 165 F. Supp. 2d
1082, 1084 (C.D. Cal. 2001) (same).
B. Unions are Owed Substantial Deference in Matters Involving Internal Union Affairs
The context of this case is also important in considering the standard of review.
Equity is a labor union, and this matter exclusively involves internal union affairs.
Courts “have no special expertise in the operation of unions which would justify a
broad power to interfere,” Gurton v. Arons, 339 F.2d 371, 375 (2d Cir. 1964), and there
is a “well-established” policy of “avoiding unnecessary interference in the internal
affairs of unions.” Motion Picture Guild, 800 F.2d at 975; see Teamsters Joint Council
No. 42 v. IBT, 82 F.3d 303, 306 (9th Cir. 1996) (“Courts must be careful not to
undermine union self-government.”). Similarly, courts grant unions “substantial
deference” in the interpretation of their own internal union documents, e.g., Local 1052
v. L.A. County Dist. Council of Carpenters, 944 F.2d 610, 614 (9th Cir. 1991); Local
48 v. United Bhd. of Carpenters, 920 F.2d 1047 (1st Cir. 1990), and unions have broad
latitude in adopting “reasonable rules” to govern the institution and the responsibilities
of its members, e.g. 29 U.S.C. § 411(a)(2); USW v. Sadlowski, 457 U.S. 102, 110
(1982) (LMRDA “preserves the union’s right to adopt reasonable rules governing the
responsibilities of its members”); Scofield v. NLRB, 394 U.S. 423, 430 (1969) (union
free to enforce a properly adopted rule which reflects a legitimate union interest);
including rules revolving around prohibiting members from working for non-union
employers, Steven Stripling, 316 NLRB 710, 711 (1995) (union may “maintain and
enforce rules prohibiting members from working for nonunion employers”). In light of
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this context and these principles, the Settlement Agreement should be interpreted so as
not to permit any limitation on Equity’s authority to adopt internal union rules except
where it is specifically and clearly stated in the Agreement itself.
II. THE COURT SHOULD DISMISS ALL OF THE PLAINTIFFS’ CLAIMS A. The Breach of Contract Allegations Fail on Their Face
To survive a motion to dismiss, plaintiffs must plausibly allege that Equity
actually breached the Settlement Agreement. Complete Infusion Care, CIC, Inc. v.
Aetna Life Ins. Co., 2016 WL 471207, at *3 (C.D. Cal. Feb. 4, 2016) (citing Oasis West
Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011)).5 When interpreting the contract
to determine whether there is a breach, a court gives “effect to the mutual intention of
the parties,” Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1264, 833 P.2d 545
(1992), which is determined “solely by reference to the contract’s terms.” Wolf v. Walt
Disney Pictures & Television, 162 Cal. App. 4th 1107, 1126 (2008); see also Cal. Civ.
Code § 1639 (“When a contract is reduced to writing, the intention of the parties is to
be ascertained from the writing alone, if possible . . . .”); Cal. Civ. Code § 1638 (“The
language of a contract is to govern its interpretation . . . .”); Cove Partners, LLC v.
Speciality Ins. Co., 2016 WL 461918, at *6 (C.D. Cal. Feb. 2, 2016) (granting 12(b)(6)
motion to dismiss; holding that “mutual intention of parties” to be inferred if possible
“solely from the written provisions of the contract”). Thus, where the contract
language is clear, “it governs.” Bank of the W., 2 Cal. 4th at 1264.
As Council’s February 6 resolution makes plain, it went to great lengths to
scrupulously comply with the Settlement Agreement. Plush Decl. Ex. 5 at p. 66 (“The
5 Although the Settlement Agreement has no choice of law provision, because it
was negotiated and executed in California to settle a lawsuit in the Central District of California, we assume that California law applies. Moreover, interpretation of the Settlement Agreement is governed by standard contract interpretation principles. ASARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203, 1212 n.4 (9th Cir. 2015).
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Council will adhere to the procedures in Paragraph 4 of the April 1989 Jens v. AEA
Settlement Agreement....”); id. at p. 68 (establishing detailed procedures set forth to
ensure Settlement Agreement compliance). Nevertheless, the First Claim for Relief in
the Complaint alleges that Equity breached the Settlement Agreement in five related
ways. See Compl. ¶¶ 35(a)-(e) and 53 (incorporating by reference the allegations of
¶35). First, it alleges that by not remaining neutral on the proposal, but instead
supporting it in communications to the members, Equity “made the proposal its own”
and thus “adopted” it prematurely, Compl. ¶35 & 35(c) & 35(e); second, that the
proposal to make a substantial change to the 99-Seat Plan was not, but should have
been, made by the Review Committee, the WRB, or an individual member or executive
of the Union, Compl. ¶ 35(a); third, that the Council “did not provide the Review
Committee and Equity membership with the details of the proposed change at least 45
days before it acted,” Compl. ¶ 35(b); fourth, that no meetings were held with the
Review Committee before the National Council acted, Compl. ¶ 35(c); and fifth, that
the Council held an advisory referendum without being requested to do so by a
member, Compl. ¶ 35(d).
These allegations are all premised on the notion that by supporting and not
remaining neutral on the February 6 proposal, Council “made the proposal its own,”
thereby “adopting” and “acting on” it prior to engaging in the required Paragraph 4
procedures of the Settlement Agreement. Compl. ¶35. But Council’s February 6
resolution explicitly states that it “will act on a proposal” after following the
procedures in Paragraph 4 of the Settlement Agreement, Plush Decl. Ex. 5 at p. 66; see
id. at p. 68 (procedures stating that “[b]efore the Council acts on the proposal to make
the change . . . .”), and nothing in external law or the Settlement Agreement required
Equity to remain neutral on the proposal. Under the LMRDA, a union has every right
to communicate with its members and urge a particular result in an internal
referendum. Ackley v. W. Conf. of Teamsters, 958 F.2d 1463, 1474 (9th Cir. 1992);
Members For a Better Union v. Bevona, 152 F.3d 58, 65-66 (2d Cir. 1998). Similarly,
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plaintiffs point to no language in the Settlement Agreement -- because there is none --
that would bar Equity from supporting or promoting a proposal or that requires Equity
to remain neutral on the matter in the advisory referendum. The position that Equity
acted improperly by supporting the proposal, Compl. ¶35(e), or that by supporting it
somehow formally “adopted” or “acted on” the proposal, id. ¶35, fails to state a claim.
With respect to the second argument concerning who made the proposal,
Paragraph 3 of the Agreement provides that the “W[R]B, or any member or executive”
may make a proposal to change the Plan “to the Council.” Compl. Ex. A at 4 ¶ 3.
Plaintiffs refer to the minutes and resolution adopted by the Council on February 6, see
Compl. ¶¶ 35-36, and they attach a portion – but not all – of those minutes and the
resolution as Exhibit D to the Complaint. The complete minutes and resolution reflect
that on February 6 Council considered a proposal made by its Western Regional Board.
See Plush Decl. Ex. 5 at p. 66 (“based on the recommendation of the Western Regional
Board…”).
Even if the proposal had not been made by the WRB, “any member” under
Paragraph 3 may also make the proposal to Council. By definition, even if the Council
made the initial proposal, it still is a proposal of members of Equity since all members
of the Council are members of Equity. Equity is an unincorporated “voluntary
Association,” Cont. Preamble, and a labor organization under federal labor law.
Compl. ¶ 11. A union “can act only through its members.” AFGE Local 1 v. Stone,
502 F.3d 1027, 1033 (9th Cir. 2007). The Council is comprised of 75 elected
Councillors and the eight officers of Equity. Const. Art. III, Sec. 2(a). Councillors and
officers must be members of Equity. Const. Art. II, Sec. 11(b). Paragraph 3 of the
Agreement does not limit members who may propose changes to those who are not
members of the Council or non-officers. Since under the plain language of the
Agreement “any member” is permitted to propose changes, members of the Council
were free to do so. The claim then that Paragraph 3 was somehow violated because
certain members of Equity made the proposal (¶35 & 35(a) & 35(c)) is implausible.
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Once the flawed premises of plaintiffs’ arguments are exposed -- that Equity
could not support the proposal and that by supporting it the Council somehow itself
made or adopted the proposal in violation of Paragraph 3 -- the remainder of the breach
of contract allegations tied to the timing of the Council’s action necessarily also fail.
Thus, plaintiffs’ assertion that Paragraph 4(a)(ii) of the Settlement Agreement was
breached because “no meetings were held with the Review Committee before the
National Council acted,” Compl. ¶ 35(c) (emphasis added), is inconsistent with the
Complaint. The modified final proposal was “formally adopted” “on April 21, 2015[,]”
Compl. ¶45, and Equity had “full Joint Review Committee Meetings on February 18,
20 and 21, 2015.” Compl. ¶ 40. Thus, after the Council resolved on February 6, 2015
that it “will act on a proposal” to make the change, Plush Decl. Ex. 5 at p. 66, Equity
met on no fewer than three occasions with the Review Committee before “formally
adopt[ing]” the plan “on April 21, 2015,” Compl. ¶ 45. The claim in ¶ 35(c) based on
the supposed failure to meet with the Review Committee should be dismissed.
So should plaintiffs’ claim that the Council did not provide the membership with
the details of the proposed modification 45 days before “the Council will act on the
proposal to make those changes[]” as required by Paragraph 4(a)(i). Compl. ¶35(b).
Plaintiffs concede that Equity advised members of the proposed modifications on
February 6, Compl. ¶ 35, see Plush Decl. Ex. 6 (McColl correspondence referenced in
Compl. ¶ 35), and February 6 is more than 45 days before the Council “formally
adopted” the plan “on April 21, 2015,” Compl. ¶ 45. The claim in ¶ 35(b) premised on
the supposed failure to provide notice is baseless and should be dismissed.
Finally, the claim that the Council “did not consider a request by any Union
member for an advisory referendum” but instead “decided that an advisory referendum
should be held without any request[,]” Compl. ¶ 35(d), fails for the same reason as
plaintiffs’ claim under Paragraph 3. Paragraph 4(a)(iii) states that “[t]he Council will
receive and consider a request from a member . . . that an advisory referendum” be
held. Paragraph 4(a)(iii) does not limit the class of “member[s]” who may request an
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advisory referendum with respect to the 99-Seat Plan. The Council, like the union
itself, acts through its members, who are all Equity members. There thus was no
violation of Paragraph 4(a)(iii) when the Council authorized the advisory referendum.
In sum, plaintiffs’ claim that Equity breached the Settlement Agreement (First
Claim for Relief) should be dismissed as a matter of law.
B. The Breach of Covenant of Good Faith and Fair Dealing Claim Fails for the Same Reasons as the Breach of Contract Claim
The covenant of good faith and fair dealing implied in a contract “prevent[s] one
contracting party from unfairly frustrating the other party’s right to receive the benefits
of the agreement actually made.” Guz v. Bechtel Nat. Inc., 24 Cal. 4th 317, 349 (2000).
The implied covenant, critically, however, does not “impose substantive duties or
limits on the contracting parties beyond those incorporated in the specific terms of their
agreement.” Id. at 349-50; see Cove Partners, 2016 WL 461918, at *11 (dismissing
good faith/fair dealing claim under Rule 12(b)(6)); Canas v. Ocwen Loan Servicing
LLC, 2015 WL 5601838, at *5-6 (C.D. Cal. Sept. 21, 2015) (same). It is thus “limited”
to assuring compliance “with the express terms of the contract.” Racine & Laramie,
Ltd. v. Dep't of Parks & Recreation, 11 Cal. App. 4th 1026, 1032 (1992); accord
Hanich v. Citimortgage, Inc., 2015 WL 3889617, at *2 (C.D. Cal. June 24, 2015)
(dismissing good faith/fair dealing claim on motion to dismiss); see also 21st Century
Ins. Co. v. Superior Court, 47 Cal. 4th 511, 526-27 (2009) (parties may not invoke the
covenant in order to “impose substantive duties or limits . . . beyond those incorporated
in the specific terms of their agreement”).
Here, as shown above in Part II.A, plaintiffs have failed to set forth any plausible
allegations demonstrating a breach of the Settlement Agreement. The gravamen of the
breach of the covenant of good faith and fair dealing claim is virtually identical to the
breach of contract claim: that Equity adopted a “proposal to eliminate the Equity
waiver system and t[ook] action on that proposal before following the procedures
outlined in Paragraph 4 of the Settlement Agreement”; “attempting to sway” the
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membership in numerous ways by advocating for the passage of its proposal, and
“resolving to implement the proposal before the Paragraph 4 process was followed.”
Compl. ¶57. For the same reasons these allegations fail to set forth a breach of contract
claim, they also fail to set forth a breach of fair dealing claim (Second Claim for
Relief). See supra Part II.A; Canas, 2015 WL 5601838, at *5-6 (where no breach of
contract, there is no breach of good/faith fair dealing).6
C. The DFR Does Not Govern Internal Union Affairs and, In Any Event, Plaintiffs Fail to Set Forth a Plausible DFR Claim
The DFR is a judicially-derived corollary to a union’s statutory status as
employees’ exclusive collective bargaining representative. ALPA v. O’Neill, 499 U.S.
65, 75-76 (1991). Since the “complete satisfaction of all who are represented is hardly
to be expected,” Ford Motor Co. v. Huffman, 345 U.S. 330, 338 (1953), and “[c]onflict
between employees represented by the same union is a recurring fact,” Humphrey v.
Moore, 375 U.S. 335, 349-50 (1964), the DFR is a “purposefully limited check” on a
union’s discretion, USW v. Rawson, 495 U.S. 362, 374 (1990), that the Ninth Circuit,
like the Supreme Court, “narrowly constru[es].” Johnson v. USPS, 756 F.2d 1461,
1465 (9th Cir. 1985). Judicial review of union action “must be highly deferential,”
O’Neill, 499 U.S. at 78, and a union violates the DFR only if its actions are “arbitrary,
discriminatory, or in bad faith.” Id. at 67, 76-78.7
6 The allegation that Equity refused to “confer with the Plaintiff-side members of
the Review Committee or any other person [or] to consider the advice of the 2-1 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 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 Ins. Co., 47 Cal. 4th at 526-27. The assertion that Equity repeatedly refused to convene 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, June 27, July 19, September 27 and November 1, 2013, February 18, 20, and 21, 2015).
7 The Complaint does not allege any discriminatory action. See Compl. ¶66.
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To be “arbitrary,” the union’s conduct must be “wholly irrational,” O’Neill, 499
U.S. at 78. A plaintiff must show that the union’s challenged decisions or acts were
“without a rational basis or explanation.” Marquez v. Screen Actors Guild, Inc., 525
U.S. 33, 46 (1998); Hays v. Nat’l Elec. Contractors Ass’n, 781 F.2d 1321, 1324 (9th
Cir. 1985). Allegations that a union made a mistake in judgment, or was negligent, are
insufficient to establish a breach. Rawson, 495 U.S. at 372-73, 376; Marquez, 525 U.S.
at 45-46 (no DFR breach even if union’s judgments are “ultimately wrong”).
To establish a “bad faith” DFR breach, there “must be ‘substantial evidence of
fraud, deceitful action or dishonest conduct.” Amalgamated Assoc. of Streetcar
Employees v. Lockridge, 403 U.S. 274, 301 (1971); Spellacy v. ALPA, 156 F.3d 120,
126 (2d Cir. 1988); Cavanaugh v. S. Cal. Permanente Med. Group, 583 F. Supp. 2d
1109, 1130 (C.D. Cal. 2008) (same). The bad faith must be “sufficiently egregious”
and so “intentionally misleading” as to be “invidious” in order to breach the duty.
O’Neill v. ALPA, 939 F.2d 1199, 1203 (5th Cir. 1991) (on remand from Supreme
Court). It is thus “invoked only to remedy the most egregious union conduct.” Id.8 1. The DFR Does Not Apply to Internal Union Affairs
As discussed above, the DFR is a corollary to a union’s status as exclusive
bargaining representative; the duty protects union-represented employees when the
union handles representation matters (administering or negotiating a CBA) with the
employees’ employer. O’Neill, 499 U.S. at 75-77; cf. Compl. ¶65 (“Equity owes
employees whom it represents for collective bargaining purposes a duty of fair
representation.”) (emphasis added). In “other words, the DFR extends only to matters
involving an employee’s dealings with his employer and ordinarily does not affect an
8 In light of these heightened standards, courts frequently dismiss DFR claims on
motions to dismiss. E.g., Thompson v. Permanente Med. Group, 623 Fed. Appx. 400, 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 Local 47, 2012 WL 5929909, at **3-5 (C.D. Cal. Nov. 26, 2012).
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employee’s relationship with the union structure.” United Bhd. of Carpenters v. Metal
Trades Dep’t, 770 F.3d 846, 849 (9th Cir. 2014). Thus, courts have “‘usually excluded
internal union affairs’ from the duty to provide fair representation” unless there is
substantial impact upon the negotiation and administration of a CBA. Id. (citation
omitted); see Diaz v. ILWU Local 13, 474 F.3d 1202, 1206 (9th Cir. 2007) (DFR does
not apply to internal union affairs); Distler v. UMW, 711 F.2d 76, 78-79 (7th Cir. 1983)
(same); Bass v. Boilermakers, 630 F.2d 1058, 1062 (5th Cir. 1980) (same).
Plaintiffs allege in their Fourth Claim for Relief that Equity breached the DFR
by “eliminating the Equity Waiver system.” Compl. ¶66. But the plaintiffs concede
that the 99-Seat Plan was an internal union rule -- that is, the waiver in L.A. of Equity’s
rule against working without being covered by an Equity collective bargaining
agreement. Compl. ¶1 (Plan was a “rule imposed on Equity members”), 13, 14, 19,
24(a), 24(c). It was thus not a CBA, but an internal union rule – and, as an internal
union rule, it exclusively involved a matter of internal union affairs and policy, not
touching on the negotiation or administration of a collective bargaining agreement.
The DFR, then, does not apply and the claim fails as a matter of law. E.g., Metal
Trades, 770 F.3d at 849; Diaz, 474 F.3d at 1206; Distler, 711 F.2d at 78-79; Bass, 630
F.2d at 1062; see Compl. ¶66 (Equity action “undermined the ability of members to
improve their skills through volunteer activities”).
2. The Complaint Fails to State a DFR Claim
The DFR claim asserts that by “eliminating the Equity waiver system in
violation of the Settlement Agreement and over the unambiguous objections of two-
thirds of its Los Angeles members,” Equity violated the DFR. Compl. ¶66. This
assertion fails to state a claim because it does not allege in more than conclusory
fashion that Equity engaged in “arbitrary” or “bad faith” action as those terms are
defined under DFR law.
To the extent the DFR claim is predicated on a violation of the Settlement
Agreement, there has been no such violation. See supra pp. 11-15. Nor can plaintiffs
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rest their DFR claim on Equity’s decision to proceed despite the outcome of the
advisory referendum. According to the Complaint, a minority (44.6%) of Equity’s
L.A. membership – which is itself a small minority of Equity’s total membership –
participated in the advisory vote, and fewer than two-thirds of that minority voted
against Equity’s plan. See Compl. ¶43. But even if a majority of Equity’s membership
had voted in the advisory referendum against the proposal, that would still not support
a DFR claim. First, the vote was merely advisory; the Council remained free to
determine what it believed to be the proper course of action. Cf. Augspurger v. Bhd. of
Locomotive Eng’rs, 510 F.2d 853, 859 (8th Cir. 1975) (DFR claim regarding employee
vote fails to state a claim when vote “was simply an advisory one”); Douglas v. USW,
1989 WL 201627, at *22 (S.D.W.Va. 1989) (rejecting claim that union breached duty
of fair representation in connection with “advisory, straw vote”). Second, whatever the
wishes of a group of employees, even a majority, a union has a duty though its elected
representatives to serve fairly the interests of all the represented employees. See
Emporium Capwell Co. v. W. Addition Commt’y Org., 420 U.S. 50, 64 (1975) (in
crafting unions’ representational authority, Congress did not “authorize a tyranny of the
majority”); Steele v. Louisville & N.R. Co., 323 U.S. 192, 202-03 (1944). Like a
legislature, see Steele, 323 U.S. at 202, a union acts as a representative of its
constituency, balancing competing interests, and is allowed by law to act as it deems
best, within a “‘wide range of reasonableness.’” O’Neill, 499 U.S. at 67, 78 (citation
omitted). Here, no facts alleged in the complaint show that Equity’s plan, despite
plaintiffs’ opposition to it, exceeded the wide bounds of the union’s permitted range of
conduct.
Moreover, there is no plausible argument that a union advocating changes so that
more of its members would have the opportunity be paid at least a minimum wage
could be considered arbitrary, which is defined as “without a rational basis or
explanation.” Marquez 525 U.S. at 46; O’Neill, 499 U.S. at 78. That the plaintiffs
disagree with this judgment as a matter of policy does not make the judgment arbitrary.
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Jeffreys v. CWA, 354 F.3d 270, 275-77 (4th Cir. 2003) (neither courts nor litigants may
“substitute [their] judgment for” that of a union’s elected leadership).
Finally, other than slapping the label “bad faith” on Equity’s action, see Compl.
¶66, the plaintiffs make no factual allegations of the “substantial evidence of fraud,
deceitful action or dishonest conduct,” Lockridge, 403 U.S. at 299, required to plead a
DFR claim. The purported basis that Equity overrode the objections of those voting in
the advisory referendum -- itself not an allegation of fraud, deceit, or dishonesty -- is
contradicted by the admissions in the Complaint that Equity modified the initial
proposals (in order to take the vote into account). Compl. ¶47. D. The LMRDA Claim Fails as a Matter of Law
Plaintiffs’ Fifth Claim for Relief is asserted under LMRDA § 101(a)(1), 29
U.S.C. § 411(a)(1). Compl. ¶¶ 68-74. Plaintiffs essentially contend that the manner in
which Equity made the substantial change to the 99-Seat Plan and conducted the
advisory referendum violates § 101(a)(1). Compl. ¶¶ 71-74. This claim should be
dismissed for numerous reasons. First, LMRDA § 101(a)(1) is not applicable here
because the advisory referendum is not binding and § 101(a)(1) applies only where a
vote binds the decision makers. Second, because interested employers have financed
and encouraged this lawsuit, it must be dismissed pursuant to the terms of LMRDA §
101(a)(4). Third, on its face, the complaint does not state a cognizable LMRDA claim.
1. The LMRDA Does Not Apply to Advisory Referendums
LMRDA § 101(a)(1) provides that union members have “equal rights . . . to vote
in elections or referendums of the labor organization, to attend membership meetings,
and to participate in the deliberations and voting upon the business of such meetings.”
29 U.S.C. § 411(a)(1). It is an “anti-discrimination provision, pure and simple.”
Ackley, 958 F.2d at 1473. Plaintiffs do not and could not allege that they were denied
the opportunity to attend membership meetings or the opportunity to participate or vote
in such meetings. See Compl. ¶¶71-74; Ackley, 958 F.2d at 1473-74. Their claim,
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then, is limited to the argument that they were somehow treated unequally with respect
to participation in the advisory referendum. See Compl. ¶¶71-74.
The advisory referendum in this case, however, is not required by the LMRDA,
see Sergeant v. Inlandboatmen’s Union, 346 F.3d 1196, 1201 (9th Cir. 2003) (Section
101(a)(1) “accords no right to vote on any matter to union members”); Ackley, 958
F.2d at 1476 (same), but it is instead required only by the Settlement Agreement. In
the Ninth Circuit, it is unclear whether Section 101(a) even applies to votes that are not
required by the LMRDA (such as the election of union officers). See Ackley, 958 F.2d
at 1473, 1476 (where the vote is not required by the LMRDA, there is no requirement
to refer to LMRDA rules on how the vote is to be conducted and “Section 101(a) of the
LMRDA affords no remedy”). Ackley, at least, suggests no. Id. at 1466.
What is more clear, however, is that where the vote is advisory only to a body
that has ultimate decision-making authority, then LMRDA Section 101(a) is not and
should not be applicable. Thus in Kahn v. Hotel & Rest. Emp. & Bartenders Int’l
Union, 469 F. Supp. 14, 18 (N.D. Cal. 1977) aff’d, 597 F.2d 1317 (9th Cir. 1979), the
referendum was for “consultation” only, and whether “there were irregularities in the
[advisory] voting has no bearing on the validity” of the final action taken by ultimate
decision maker. Id. at 17-18. Although the plaintiffs claimed that they “were denied
an equal opportunity to vote” under the LMRDA, the court held that “the fact remains
that the decision . . . was committed solely to the discretion of [the p]resident” and
LMRDA Section 101(a) therefore did not apply. Id. at 18. Similarly, in Acker v. BLE,
1977 WL 15551 (D. Minn. Apr. 22, 1977), the court held that Section 101(a)(1) is not
implicated in an advisory referendum “poll” of members and that union leaders can
“decline to follow the preferences of the membership, although, of course, they do so at
the peril of being ousted from office in the next election.” Id. at *1.
Accordingly, because the vote was advisory only and the Council was the
ultimate-decision maker, even if Section 101(a) applied to referenda votes not required
by the LMRDA, the LMRDA would not apply and the claims should be dismissed.
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2. This Case Should Be Dismissed Under LMRDA § 101(a)(4) because Interested Employers Have Financed this Suit
Section 101(a)(4) of the LMRDA provides that “no interested employer or
employer association shall directly or indirectly finance, encourage, or participate in,
except as a party” any LMRDA action. 29 U.S.C. § 411(a)(4). If an interested
employer encourages or finances an LMRDA action, it must be dismissed. Simo v.
UNITE, 322 F.3d 602, 612 (9th Cir. 2003); see Harris v. Plasterers Local 406, 619
F.2d 1164, 1170 (7th Cir. 1980) (dismissing LMRDA suit because, among other
reasons, it was “encouraged by an interested employer”); Adamszewski v. Local Lodge
1487, IAM, 496 F.2d 777, 784 (7th Cir. 1974) (employer is interested in litigation if it
“is concerned with it or is liable to be affected by it or has some self-interest in it”).
Here, the plaintiffs have utilized the “Go Fund Me” website to create a “L.A.
Intimate Theatre Legal Fund” in part to “to cover the legal fees” of the plaintiffs in this
action. Plush Decl. Ex. 9.9 The funds go into a “trust account through the lead
attorney, Steven Kaplan.” Id. The Fund explains that any “theater company . . . or a
passionate stakeholder of any kind” may contribute, and that it was created “at the
behest of interested stakeholders that include both theater companies, plaintiffs in the
case, and members of AEA.” Id. (fund was created by members of the “Theatrical
Producers League of Los Angeles” and two theaters’ “managing directors”). And there
can be no dispute that interested employers that are not a party to this action have
funded it, including but not limited to the Odyssey Theatre Ensemble ($2,000) and The
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, 2016 WL 1464229, at *17; Hendrickson, 165 F. Supp. 2d at 1084.
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Blank Theatre ($500).10 Id. This interested employer financing independently requires
dismissal of plaintiffs’ LMRDA claim. 3. The Complaint States No Cognizable LMRDA Claim
Plaintiffs allege that Equity violated their equal right to vote in the advisory
referendum when it (a) did not remain neutral in its support of the initial proposal
without first giving all members an opportunity to hear all contending positions on the
proposal, Compl. ¶¶71, 73; (b) when it omitted the opposition statement from the
electronic ballot for three days of voting, id. ¶72, and (c) when it “directed members of
the 99-Seat Committee” to vote in favor of the referendum, id. ¶74. Independently or
taken together, none of these allegations state a plausible LMRDA § 101(a)(1) claim.
Jurisdiction under 101(a)(1) exists only when “discrimination” in the right to
vote has been alleged, and without such discrimination such claims should be
dismissed for failure to state a claim. Stelling v. IBEW, 587 F.2d 1379, 1385 (9th Cir.
1978). As stated above, it is an “anti-discrimination provision, pure and simple” and to
“state a claim under section 101(a)(1), a union member must allege a denial of rights
accorded to other members.” Ackley, 958 F.2d at 1473. Here, because there is no
allegation that any plaintiff was denied the right to vote in the referendum or denied the
opportunity to attend or speak at a membership meeting, or discriminated against in
some way in comparison to other members, there is no cognizable LMRDA claim. Id.
The argument that Equity violated Section 101(a)(1) by expressing its support
for the initial proposal prior to all parties expressing their views has no merit. Equity
has the absolute right under the LMRDA to communicate with its members and urge a
particular result on an internal union (non-election) referenda issue. See Ackley, 958
F.2d at 1474 (the question whether union’s information was “biased toward a particular
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 with it or is liable to be affected by it or has some self-interest in it”).
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outcome is irrelevant for purposes of section 101(a)(1)”); Bevona, 152 F.3d at 66
(dismissing plaintiffs’ claim that union’s conduct, inter alia, advocating a position on
the referendum “tainted” the vote). The fact that Equity supported the proposal as a
matter of law therefore does not violate § 101(a)(1). Ackley, 958 F.2d at 1474.
Plaintiffs’ two other arguments fare no better. Plaintiffs first assert that Equity
violated the equal rights of L.A. members by omitting the producer-side opposition
statement in the electronic ballot for the first three days of the voting. Compl. ¶72.
This argument is fatally flawed for at least two reasons. First, there is no requirement
for the union under the LMRDA to distribute an opposition statement or otherwise
publicize opposing views. Ackley, 958 F.2d at 1466, 1474. As long as all members
have the right to vote and were not discriminated against, there is no violation. Id. at
1466, 1474. Nor was there any requirement in the Settlement Agreement to include the
opposition statement in the electronic ballot. The only requirement was to include it in
the “materials mailed to the membership,” Compl. Ex. A ¶4(a)(iv)(2), which it was, see
Compl. ¶¶41-42. Second, it ignores plaintiffs’ own allegation that the electronic ballot
“omitted the Council’s endorsement and the Review Committee’s opposition
statement.” Compl. ¶42. In other words, both sides of the issue were not distributed
for those three days. And the balloting period lasted 24 days, see Plush Decl. Ex. 6 at
p. 87 (balloting period from March 25 to April 17), so both the Council’s position and
the opposition statement were included not only in all mail ballots, but in the electronic
ballot for 21 of the 24 days of the voting period.
Finally, plaintiffs allege that Equity violated § 101(a)(1) when it directed
members of the 99-Seat Committee to vote in favor of the referendum. Compl. ¶74.
As alleged, that Committee is a “subcommittee” of the WRB. Id. ¶39. The WRB are
all members of Council. Const. Art. III, §2(a), (b). Plaintiffs allege that an Equity
“staff member” told 99-Seat Committee members to vote “yes.” Compl. ¶39. This
allegation does not state an LMRDA equal rights claim. First, the plaintiffs “lack
standing” to assert the “rights of other union members,” particularly ones that are a
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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
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.
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n Da IS
Evan Hudson-Plush Wendy M. LaManque Cohen, Weiss and Simon LLP 330 West 42nd Street New York, NY 10036
lsi Ira L. Gottlieb
25
Ira L. Gottlieb (SBN 103236) Lisa C. Demidovich (SBN 245836) Bush Gottlieb A Law Corporation 500 North Central Avenue, Suite 800 Glendale, California 91203-3345
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