SEIU v. NUHW

Section 501 of the Labor Management Reporting and Disclosure Act creates a fiduciary duty to the union as an organization, not just to the union’s rank-and-file members, and union officials who divert union resources for the purposes of establishing a new competing local union violate their fiduciary duties to the organization itself.

Defendants were officers with the United Health Workers (“UHW”), an affiliate of Services Employees International Union (“SEIU”). SIEU’s International Executive Board “direct[ed] consolidation of long-term care workers into a new California union.” UHW officers balked; UHW faced consolidation or trusteeship, which would allow SEIU to appoint new officers. UHW denied the consolidation, and SEIU enacted the trusteeship. The jury found Defendants then took actions “to weaken UHW in the event of a trusteeship while acting to form and promote a rival union.” Defendants created the National Union of Healthcare Workers (“NUHW”) and “filed petitions to have UHW removed as the bargaining representative for its current members.” Under § 501 of the Labor Management Reporting and Disclosure Act (LMRDA), officers are “held to the highest standards of responsibility and ethical conduct in administrating the affairs of the union.” Looking at whether defendants owed this fiduciary duty to UHW itself, the panel rejected Defendants’ arguments that this duty was only to members. Defendants took actions “designed to weaken UHW,” and no interpretation of the LMRDA allows for this conduct based on subjective motives by officers. Since the SEIU took action under authority granted by its constitution, the Defendants were not free to circumvent that process, and using union resources “to weaken the union itself constitutes a breach of this duty….” The language of § 501 highlights the duty of union officers to the organization itself, not just to the union’s members. The panel rejected Defendants’ free speech arguments because “the defendants engaged in conduct, not merely speech[.]…” Furthermore, LMRDA § 411 does not protect “conduct designed to impair the union’s ability to function.” AFFIRMED.