Holmes v. Grooms

391 F.Supp.3d 536

Oliver W. HOLMES, Plaintiff,

v.Sylvia GROOMS, et al., Defendants.

Civil Action No. 3:18-cv-709

United States District Court, E.D. Virginia, Richmond Division.

Signed July 1, 2019

Stephanie B. Holland, Esquire, Ernest Law Group, PLC, 500 South Independence Blvd., Suite 103, Virginia Beach, Virginia 23452, (757) 289-2499, Attorney for Plaintiff.

Patrick D. Houston, Esquire, Stephen M. Faraci, Esquire, Jennifer E. Wuebker, Esquire, Whiteford Taylor & Preston LLP, 901 E. Cary Street, Suite 500, Richmond, Virginia 23219, (804) 977-3310, Attorneys for Individual Defendants.

Samuel J. Kaufman, Esquire, Jeremiah M. Yourth, Esquire, Owen & Owens, PLC, Post Office Box 717, Midlothian, Virginia 23113, (804) 594-1911, Attorneys for Union.

MEMORANDUM OPINION

Robert E. Payne, Senior United States District Judge

By ORDER entered on May 17, 2019 (ECF No. 48), the Court directed the parties to provide supplemental briefing on whether the Court has subject matter jurisdiction over the claims asserted in the FIRST AMENDED COMPLAINT ("FAC") (ECF No. 27). Having considered PLAINTIFF OLIVER HOLMES' SUPPLEMENTAL BRIEF REGARDING SUBJECT MATTER JURISDICTION (ECF No. 49), DEFENDANTS' JOINT SUPPLEMENTAL BRIEF REGARDING SUBJECT MATTER JURISDICTION (ECF No. 50), and PLAINTIFF OLIVER HOLMES' SUPPLEMENTAL REPLY BRIEF REGARDING SUBJECT MATTER JURISDICTION (ECF No. 51), the Court concludes that it lacks subject matter jurisdiction over the claims asserted in the FAC. However, the FAC will be dismissed without prejudice to the filing of an action in compliance with the requirements of 29 U.S.C. § 501(b).

BACKGROUND

Oliver Holmes ("Holmes") is a member of the American Postal Workers Union Local 199 ("APWU" or the "Union"). See FAC ¶ 1. He brings this action against the Union and three of its current officers, Sylvia Grooms ("Grooms") (the current President), Sherry Gay ("Gay") (the current Secretary), and Jerome Cosby ("Cosby") (the current Director of Industrial Relations) (collectively, the "Defendants"). Id. ¶¶ 3-5.

The FAC alleges that Holmes attempted to investigate certain perceived improper expenditures by the Union on behalf of Gay and Cosby.¹ Holmes also alleges that he was improperly thwarted in his efforts to investigate these matters by the Defendants. See generally FAC ¶¶ 9-23. Holmes also alleges that Grooms maliciously prosecuted him for defamation and slander "to retaliate against Plaintiff for speaking out about misuse of union funds. "Id. ¶¶ 24-28.

Count I of the FAC alleges a violation of fiduciary duties by Grooms, Gay, and Cosby under the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 501(a). Count II of the FAC alleges a state law claim for breach of fiduciary duty against Grooms, Gay, and Cosby. Counts III and IV of the FAC allege state law breach of contract claims against the Union. And, Count V alleges a state law malicious prosecution against Grooms.

In response to the FAC, the Defendants filed DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT (ECF No. 29) pursuant to Fed. R. Civ. P. 12 (b) (6). In reviewing that Motion, and the parties' supporting and opposing memoranda thereto (ECF Nos. 30, 36, 37), it appeared that the Court might lack subject matter jurisdiction over the case because: (1) 29 U.S.C. § 501(b) requires that "[n]o such proceeding [for violations of fiduciary duties under 29 U.S.C. § 501(a) ] shall be brought except upon leave of the court obtained upon verified application and for good cause shown," and Holmes did not seek leave of court to file the action; and (2) the FAC alleged that supplemental jurisdiction over the state law claims in Counts II through V was proper under 28 U.S.C. § 1343, but that statute pertains to "civil rights and elective franchise." The FAC made no reference to 28 U.S.C. § 1367, the statute pertaining to supplemental jurisdiction over state law claims. Because of these concerns, the Court ordered additional briefing on whether it had subject matter jurisdiction over all five Counts in the FAC. See ECF No. 48.

The parties have submitted their supplemental briefing on subject matter jurisdiction. ECF Nos. 49, 50, 51. Having considered the supplemental briefing, the Court is satisfied that the facts and legal contentions are adequately presented in the materials before the Court; and that, therefore, oral argument would not aid the decisional process. The matter is ripe for decision.

DISCUSSION

A. Legal Framework

Count I of the FAC is based on the LMRDA, 29 U.S.C § 501. Section 501 (a) establishes that certain union officials owe their union fiduciary duties.² If a covered union official violates the provisions of Section 501(a), then subsection (b) comes into play. Subsection (b) is entitled "Violation of duties; action by member after refusal or failure by labor organization to commence proceedings; jurisdiction; leave of court; counsel fees and expenses" (emphasis added).

In relevant part, Section 501(b) reads:

When any [covered union official] is alleged to have violated the duties declared in subsection (a) 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 [covered union official] 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 the court obtained upon verified application and for good cause shown, which application may be made ex parte.

(emphasis added). Based on the plain text of the statute, Section 501(b) imposes three requirements of a plaintiff who files suit thereunder. First, the plaintiff must make certain demands on the union, its governing board, or its officers that are refused or ignored. Second, the plaintiff must receive "leave of the court obtained upon verified application" before bringing such an action. Third, to secure leave of court to sue, the plaintiff must demonstrate "good cause." See 29 U.S.C. § 501(b).

"[C]ourts, including [the Supreme Court], have an independent obligation to determine whether subject matter jurisdiction exits, even in the absence of a challenge from any party." Arbaugh v. Y & H Corp., 546 U.S. 500, 513, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) ; Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ; see also Fed. R. Civ. P. 12 (h) (3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."). Here, the Court has raised the subject matter jurisdiction issue sua sponte. It is now appropriate to turn to that issue.

B. The Court Lacks Subject Matter Jurisdiction Over Count I

a. Section 501 (b) Is Properly Understood As A Subject Matter Jurisdiction Limitation

In their supplemental briefing, the parties are in accord that 29 U.S.C. § 501(b) is a subject matter jurisdiction requirement.³ The parties are correct that Section 501(b) operates as a limit on the subject matter jurisdiction. Thus, the statute must be narrowly construed. See, e.g., Phillips v. Osborne, 403 F. 2d 826, 828 (9th Cir. 1968) ("[S]tatutes extending federal jurisdiction, such as Section 501(b), are narrowly construed so as not to reach beyond the limits intended by Congress."); id. at 830 ("Specific clauses of Section 501(b) have been held to reflect the congressional purpose to limit federal jurisdiction."); Austin v. Trandell, 207 F. Supp. 2d 616, 622 (E.D. Mich. 2002) ("[T]he leave of court requirement is a jurisdictional prerequisite to suit."), see also, Commer v. Am. Fed'n of State, Cty., 272 F. Supp. 2d 332, 337 (S.D.N.Y. 2003) (finding no subject matter jurisdiction when union member provided no evidence of demands on the union and did not seek leave from the Court to file complaint); Operative Plasterers & Cement Masons v. Benjamin, 776 F. Supp. 1360, 1365 (N.D. Ind. 1991) (" Section 501(b) is properly read as both a cause of action on behalf of individual members and limiting federal court jurisdiction over suits by individual members"); Intern. Longshoremen's v. Va. Intern. Terminals, 928 F. Supp. 655, 658 (E.D. Va. 1996) (quoting language from Benjamin ); cf. Brink v. DaLesio, 453 F. Supp. 272, 275-79 (D. Md. 1978) (appearing to assume that § 501(b)'s requirements were jurisdictional but finding them satisfied). But see Dist. of Columbia Nurses Ass'n v. Brown, 153 F. Supp. 3d 1, 3 (D.D.C. 2016).

In recent years, the Supreme Court of the United States has sought to clarify the distinction between "jurisdictional prescriptions and nonjurisdictional claim-processing rules." See Fort Bend Cty. v. Davis, 587 U.S. ––––, 139 S.Ct. 1843, 1849, 204 L.Ed.2d 116 (2019) ; Arbaugh v. Y & H Corp., 546 U.S. 500, 510-16, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). The parties did not address this distinction in their supplemental briefing on jurisdiction. However, the decisions in Fort Bend and Arbaugh support the parties' argument (and the Court's conclusion) that Section 501(b) is jurisdictional.

As the Supreme Court has held, the "word ‘jurisdictional’ is generally reserved for prescriptions delineating a class of cases a court may entertain (subject matter jurisdiction) and the persons over whom the court may exercise adjudicatory authority (personal jurisdiction)." Fort Bend, 139 S.Ct. at 1848. On the other hand, "claims-processing rules" refer to rules that require "parties take certain procedural steps at certain specified times." Id. at 1849 ; see also Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435, 131 S.Ct. 1197, 179 L.Ed.2d 159 (2011).⁴

Where Congress has "clearly state[d] that a threshold limitation on a statute's scope shall count as jurisdictional," courts must so treat it, but where it...