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Legal Memorandum: Fiduciary Duty of Officers of Labor Organization

Issue: What rights do the retirees have to obtain information regarding how their retirement fund is operated?

Area of Law: Employee Law
Keywords: Right to information; Retirement fund; Labor-Management Reporting and Disclosure Act
Jurisdiction: Federal
Cited Cases: None
Cited Statutes: 29 U.S.C. § 501, § 501(a), § 501(b)
Date: 05/01/2007

A breach of fiduciary duty claim could be supported by 29 U.S.C. § 501, under which the Labor-Management Reporting and Disclosure Act (LMRDA) establishes that union officers, agents, and other labor organization representatives occupy positions of trust in relation to the labor organization and its members.  Id. § 501(a).  “It is, therefore, the duty of each such person . . . to hold [the union’s] money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder . . . .”  Id. (emphasis added). It appears quite clear in this case that the directors breached this duty.

Section 501 of the LMRDA further provides that

[w]hen any officer, agent,  . . or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent, . . . or representative in any district court of the United States or in any State court of competent jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization.  No such proceeding shall be brought except upon leave of court . . .  The trial judge […]

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