Virginia Lawyers Weekly VA Lawyers Weekly
A union’s claim against its former business manager under § 501(a) of the Labor Management Reporting and Disclosure Act, or LMRDA, is subject to the two-year statute of limitations applicable to breach of fiduciary duty claims under Virginia law. This suit, which was not filed within two years from the date of the breach, was untimely even under a laches analysis, and was dismissed.
Background
Plaintiff Plumbers and Steamfitters Union Local No. 10 brings this action against Stuart Waters. Defendant previously served as the union’s business manager between 1992 and 2016.
Plaintiff alleges that, before leaving office, defendant used his position to cause a union office employee to issue a check to him for $7,938.00 from the union’s bank account, allegedly for unused vacation time. Plaintiff asserts that the check was not supported by a proper voucher, that defendant did not report the check to the union membership and that the check was not issued for the benefit of the union or its members, as the bylaws require.
Defendant has refused to reimburse the union. As such, plaintiff brings one cause of action, alleging a breach of fiduciary duty, in violation of § 501(a) of LMRDA. This matter comes before the court on defendant’s motion to dismiss for failure to state a claim.
Statute of limitations
Congress did not include a statute of limitations in the LMRDA. It is well established, and the parties agree, that when Congress does not provide a statute of limitations, courts should look to the analogous state law statute of limitations.
Therefore, the relevant question becomes which analogous Virginia cause of action provides the appropriate statute of limitations. Defendant asserts that a state breach of fiduciary duty claim, which affords a two-year statute of limitations, proves most analogous to the instant case. Plaintiff contends that the court should analogize its claim to a shareholder derivative suit, which provides a five-year statute of limitations. The court agrees with defendant.
In analogizing its claim to a shareholder derivative suit, plaintiff incorrectly conflates a suit brought under § 501(a) with one brought under § 501(b) of the LMDRA. Section 501(a) outlines the fiduciary duties and responsibilities that union officers owe to a union and its members. Separately, § 501(b) confers on individual union members a right of action only after the union itself refuses or fails to bring a suit against an officer who has breached his fiduciary duty.
Here, individual members have not brought suit on behalf of the union. Instead, the union itself asserts its own rights against defendant. Accordingly, the court remains unpersuaded that this case should similarly apply a derivative action statute of limitations. The court finds that the appropriate analogous state statute of limitations to be one for breach of fiduciary duty.
The court finds that the two-year statute of limitations, applicable to breach of fiduciary duty claims under Virginia law, provides the appropriate statute of limitations for the instant suit brought by plaintiff pursuant to § 501(a). Plaintiff alleges that the breach occurred June 30, 2016, yet it did not file suit until Jan. 2, 2020 – far beyond the applicable statute of limitations.
Laches
Plaintiff argues that because a claim brought pursuant to 29 U.S.C. § 501(a) proves equitable in nature, the court should conduct a laches analysis and find plaintiff’s complaint timely. Defendant contends that the court need not engage in a laches analysis and, even if it does, that laches also bars plaintiff’s claim.
If plaintiff’s claim proves equitable in nature, the court should engage in a laches analysis to determine the timeliness of the complaint. However, if plaintiff’s claim is legal in nature, the court may simply dismiss the complaint as time-barred by the two-year statute of limitations.
Courts have not universally determined whether a cause of action brought pursuant to § 501(a) constitutes an equitable claim and the Fourth Circuit has not spoken to the issue. Here, the court need not make a conclusive determination whether plaintiff’s claim constitutes an equitable claim because the complaint proves time-barred under either framework
Defendant’s motion to dismiss granted.
Plumbers and Steamfitters Union Local No. 10 v. Waters, Case No. 20-cv-003, April 2, 2020. EDVA at Richmond (Novak). VLW 020-3-202. 15 pp.
