Opinion
08 Civ. 2369 (VM).
March 12, 2009
DECISION AND ORDER
Plaintiffs Charles R. Bembry ("Bembry") and Michael Poole ("Poole") (collectively, "Plaintiffs") filed the complaint in this action against the New York Metro Area Postal Union (the "Union"), the American Postal Workers Union, the American Federation of Labor and Congress of Industrial Organizations (the "AFL-CIO") and Clarice Torrence ("Torrence") (collectively, "Defendants"), alleging that Defendants violated Plaintiffs' rights under the Labor Management Reporting and Disclosure Act of 1959 (the "LMRDA"), 29 U.S.C. §§ 401- 531. Specifically, Plaintiffs alleged that Defendants denied them access to Union documents in violation of Section 201(c) of the LMRDA ("Section 201(c)" or "§ 201(c)"). Defendants moved for partial dismissal of the complaint pursuant to Fed. Rule of Civ. Procedure 12(b)(6) ("Rule 12(b)(6)") by motion dated April 25, 2008. After a conference with the Court on May 16, 2008 regarding the motion to dismiss, Plaintiffs filed the first amended complaint, dated June 6, 2008 ("Amended Compl."), which narrowed the scope of Plaintiffs' requests. Defendants then asked the Court, by letter dated June 26, 2008, to dismiss the Amended Complaint in its entirety ("June 26 Letter"). Plaintiffs opposed the motion to dismiss on October 17, 2008 ("Pls.' Opp.") and Defendants replied on October 27, 2008 ("Defs.' Reply").
I. BACKGROUND
A. FACTS AND PROCEDURAL HISTORY
The Court accepts the facts below, which are taken from the Amended Complaint, as true for the purpose of ruling on a motion to dismiss. See Spool v. World Child Int'l Adoption Agency, 520 F.3d 178, 180 (2d Cir. 2008) (citing GICC Capital Corp. v. Tech. Fin. Group, Inc., 67 F.3d 463, 465 (2d Cir. 1995)). Except where directly quoted, no further specific reference to this Amended Complaint will be made below.
The Union is a labor organization affiliated with the American Postal Workers Union, AFL-CIO. Bembry and Poole are members of the Union, in which Bembry serves as the elected Executive Secretary and Poole as the elected Coordinating Vice President. Defendant Torrence is the elected President of the Union.
The Union owns a building, located at 350 West 31st Street, New York, New York (the "Union Building"), which is operated by the Local 10 Building Corporation (the "Building Corporation"). There are also rental office units in the Union Building on floors 1 through 8. The Union entered into a contract with Sprint, under which Sprint erected a cell phone tower atop the Union Building in exchange for rent. While serving on the Building Corporation's Board of Directors, Bembry questioned Torrence regarding the cell phone tower but Torrence refused to answer Bembry's inquiries.
By letter dated August 21, 2007, Plaintiffs asked Torrence to produce certain Union documents for their review including:
(a) an accounting of monies received and spent relating to a cell phone tower at 350 West 31st Street, NYC; (b) details of rents received concerning the operation of floors 1-8 for Local 10 Building Corporation; (c) all minutes for Local 10 Building Corporation Board of Directors; and (d) a copy of the most recent Trustee Board Report with the names of the Trustees attending.
Amended Compl. ¶ 19.
Torrence responded by letter dated August 24, 2007 denying the request. Plaintiffs wrote Torrence again on November 9, 2007, asking to review certain Union documents, including: "(a) contracts for the cell phone tower located on the roof at 350 W. 31st Street, New York, NY 10001; (b) financial statements concerning the cell phone tower; and (c) the dates and amounts of deposits for the money received from the cell phone towers." (Id. ¶ 21.) Torrence denied Plaintiffs' second request by letter dated November 13, 2007. Unable to access the documents by requesting them from Torrence, Plaintiffs then instituted this action.
B. AMENDED COMPLAINT
The Amended Complaint seeks documents containing information on the Union's rental income from the cell phone tower and rental units at the Union Building from the periods of April 1, 2004 through March 31, 2005, April 1, 2005 through March 31, 2006 and April 1, 2006 through March 31, 2007. Pursuant to Section 201(b) of the LMRDA, the Union files a report (the "LM-2 Report" or the "LM-2") every year with the Secretary of Labor detailing the Union's assets, liabilities and disbursements from the past year. Plaintiffs allege that they requested the documents from Defendants because there was no information regarding the rental incomes in the 2005-2006 and 2006-2007 LM-2s filed by the Union, and there was no information about income from the cell phone tower in the Union's 2004-2005, 2005-2006 and 2006-2007 LM-2s. In addition, Plaintiffs allege that Torrence's refusal to answer questions about the cell phone tower, the absence of minutes from meetings held or reports by the Local 10 Building Corporation Board of Directors and the Union's Board of Trustees, along with Plaintiffs' belief that these boards have failed to meet on a regular basis, strengthened their concern that the funds from the cell phone tower and rental units may have been, and may continue to be, mismanaged or misappropriated.
Plaintiffs allege that the LM-2s at issue in this action were filed on or about June 28, 2007, July 11, 2006 and June 28, 2005. However, they also allege that all three of these LM-2s reported financial data for the period April 1, 2006 through March 31, 2007. Defendants assume that Plaintiffs intended to list the periods covered as April 1, 2004 through March 31, 2005, April 1, 2005 through March 31, 2006 and April 1, 2006 through March 31, 2007. (June 26 Letter at 1 n. 1.) The Court will proceed under this assumption as well and will refer to the 2004-2005 LM-2, the 2005-2006 LM-2 and the 2006-2007 LM-2.
II. DISCUSSION
A. LEGAL STANDARD
1. Rule 12(b)(6)
In evaluating the sufficiency of the pleadings on a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts all factual allegations in the complaint as true and draws all reasonable inferences in plaintiff's favor. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). To survive a motion to dismiss, a plaintiff "must assert a cognizable claim and allege facts that, if true, would support such a claim." Boddie v. Schnieder, 105 F.3d 857, 860 (2d Cir. 1997). Thus, the plaintiff's complaint must set forth enough factual allegations "to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). The task of a court in ruling on a motion to dismiss is to "assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." In re Initial Pub. Offering Sec. Litig., 383 F. Supp. 2d 566, 574 (S.D.N.Y. 2005). Courts may consider any documents that are attached to, referenced in, or integral to the preparation of the pleadings. See Miller v. Lazard, Ltd., 473 F. Supp. 2d 571, 578 (S.D.N.Y. 2007) (citing Chambers, 282 F.3d at 152-53).
2. LMRDA Section 201(c)
Congress enacted the LMRDA after conducting extensive hearings that revealed corruption among many union officials who were treating the unions as their own "private fiefdoms." Mallick v. International Bhd. of Elec. Workers, 749 F.2d 771, 776-77 (D.C. Cir. 1984) (citing S. Rep. No. 1417 (1958)). The LMRDA was an attempt to increase transparency and protect the rights and interests of union members. See id. at 777. Among the safeguards put in place was what is now known as Section 201, which requires unions to adopt constitutions and bylaws and report these to the Secretary of Labor; to file annual financial reports; and to make certain documents available to union members to verify those reports. See 29 U.S.C. § 431(a)-(c). Plaintiffs assert a claim under this last provision, 29 U.S.C. § 431(c), also known as Section 201(c), which allows for suits by union members against labor organizations that have refused to make available the "books, records, and accounts necessary to verify" the financial reports, such as the LM-2 Reports, filed by unions. 29 U.S.C. § 431(c). Courts have found that the Section 201(c) disclosure requirements aid union members, who are often in the best position to discover corruption within their organizations. See Kinslow v. American Postal Workers Union, 222 F.3d 269, 273 (7th Cir. 2000).
To prevent this right from being used to harass and otherwise unduly burden unions, Senator Barry Goldwater, the proponent of what became § 201(c), proposed adding a requirement that union members demonstrate "proper cause" for their document requests.Mallick, 749 F.2d at 778 (citing 105 Cong. Rec. 6520 (1959) (memorandum of Sen. Goldwater)). The statute as enacted replaced the phrase "proper cause" with "just cause," although the legislative history does not explain the purpose of this change.Id. at 779.
Thus, union member plaintiffs seeking to judicially enforce their rights under Section 201(c) must show just cause for their requests. See, e.g., Kinslow, 222 F.3d at 274. Courts have found that the just cause requirement is met if the circumstances presented "would put a reasonable union member on notice that further inquiry is warranted." Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 285 (5th Cir. 1993); see also Johnson v. Local 1199 Hosp. Health Care Employees Union, No. 85 Civ. 5358, 1986 WL 166 (S.D.N.Y. Jan. 31, 1986) (citing Fruit Vegetable Packers and Warehouseman Local 760 v. Morley, 378 F.2d 738, 744 (9th Cir. 1967)); Spinowitz v. Herrity, 672 F. Supp. 670, 672 (E.D.N.Y. 1987) (citing Fruit Vegetable Packers, 378 F.2d at 744). A plaintiff asserting a claim under § 201(c) will survive a motion to dismiss where the Court finds that the circumstances the plaintiff claims prompted him to seek supporting documentation from the union were "sufficient `to arouse[] sensible suspicions.'" Ellis v. Civil Serv. Employees Ass'n, Inc., No. 95 Civ. 105, 1995 WL 779266, at *3 (N.D.N.Y. Dec. 29, 1995) (quoting Spinowitz, 672 F. Supp at 673) (alteration in original). The just cause requirement "strike[s] a balance between the union member's need to know and the union's need to protect itself against needless harassment." Fernandez-Montes, 987 F.2d at 285 n. 10.
Courts have noted that the showing required for a finding of just cause is "necessarily minimal." Fruit Vegetable Packers, 378 F.2d at 744. A minimal standard is appropriate because "it may sometimes be difficult for a union member to know whether the federal filings contain discrepancies until he has seen the union's records." Fernandez-Montes, 987 F.2d at 285 (emphasis in original). Therefore, "[j]ust cause need not be shown beyond a reasonable doubt, nor by a preponderance of the evidence."Kinslow, 222 F.3d at 274.
Plaintiffs need not allege "specific misuse or misappropriation" on the part of the union in order to satisfy the just cause showing. Local 1199, 1986 WL 166, at *2. "Indeed, a union member need not even suspect impropriety, although a reasonably-based suspicion would certainly constitute just cause." Kinslow, 222 F.3d at 274. Therefore, "[a] finding of just cause to examine a union's books is not a finding of impropriety by the union and its officers." Spinowitz, 672 F. Supp. at 672. Accordingly, "[p]ermitting a union member to inspect union records is not a method of punishing a union or its officials; it is simply a method of ensuring that union members are sufficiently well-informed to participate intelligently in union affairs." Mallick, 749 F. 2d at 781.
B. APPLICATION
Defendants argue that they have complied with the disclosure requirements of the LM-2 form and that there is nothing further for Plaintiffs to verify. They assert that the 2004-2005 LM-2 contained accurate information about income to the Building Corporation and that Plaintiffs have not raised reasonable grounds to doubt its accuracy, and thus that no further documentation need be produced. As to the Union's 2005-2006 and 2006-2007 LM-2s, Defendants contend that the law regarding these forms was in flux at the time they were filed and the Building Corporation information was not required to be disclosed in those years. (June 26 Letter at 2-3.) Defendants assert that it is "legally impossible to . . . verify entries on an LM-2 report when the entries need not be and are not included on the LM-2 report," and thus Plaintiffs' requests should be denied. (Dfs.' Reply at 4.) They also argue that Plaintiffs have failed to demonstrate just cause for their requests, as required by the statute.
1. Lack of Information Regarding Building Corporation on 2005-2006 and 2006-2007 LM-2 Forms
Prior to the 2005-2006 reporting period, the Department of Labor required that unions file "Subsidiary Reports," providing detailed information regarding any subsidiary organizations, like the Building Corporation, as an attachment to its LM-2. The parties to this action agree that some information regarding the Building Corporation was disclosed on the "Subsidiary Report" attached to the 2004-2005 LM-2, although, as discussed below, there is some dispute as to the particular information covered by those disclosures. Defendants do not dispute that the same information was not provided on the Union's 2005-2006 and 2006-2007 LM-2s. (June 26 Letter at 2.) In fact, they argue that Plaintiffs' requests relating to those years should be denied because there are no figures on the LM-2s to verify.
a. Reporting Requirements in the 2005-2006 and 2006-2007 Reporting Cycles
As the parties recognize in their filings, in 2003, the Secretary of Labor changed the reporting requirements for unions prior to the 2005-2006 reporting cycle (the "2003 Rule"). The new reporting requirements, had they been implemented, would have required more reporting by unions, including the filing of a "T-1" form disclosing information about any trust in which the union had an interest.
The 2003 Rule was challenged in federal court by the AFL-CIO, and eventually the Court of Appeals for the District of Columbia vacated certain portions of the 2003 Rule. See American Fed'n of Labor Congress of Industrial Orgs. v. Chao ("Chao I"), 409 F. 3d 377, 391 (D.C. Cir. 2005). Specifically, the Court struck down provisions relating to the "T-1" form, holding that general trust reporting requirements exceeded the Secretary's authority to require only reporting that is "necessary to prevent circumvention or evasion of [LMRDA] Title II reporting requirements." Id. (internal quotation marks omitted).
The Secretary of Labor then issued a new final rule in late 2006 (the "2006 Rule"), hoping to address the infirmities identified by the D.C. Circuit's opinion in Chao I. See American Fed'n of Labor and Congress of Industrial Orgs. v. Chao ("Chao II"), 496 F. Supp. 2d 76, 80 (D.D.C. 2007). The 2006 Rule purported to "narrow the scope" of the trust reporting requirements by requiring reporting of trusts only in cases in which the unions appointed a majority of the governing board or in which the union's contributions constitute more than half of the trust's revenue for the fiscal year. Id. at 80-81 (citing Labor Organization Annual Financial Reports for Trusts in Which a Labor Organization is Interested, Form T-1, 71 Fed. Reg. 57,716 at 57,727; 57,733, 57,737 (Sept. 29, 2006) (to be codified at 29 C.F.R. § 403.2(d)(1))). The AFL-CIO challenged the 2006 Rule and succeeded in having it vacated by the D.C. District Court. Id. at 79; 93. The court in Chao II found that the Secretary of Labor had failed to comply with the proper procedures in enacting the 2006 Rule, had not shown good cause for failing to comply with those procedures and had not shown that her failure to comply with the proper procedures was harmless. Id.
Defendants claim that they did not disclose the Building Corporation information on the 2005-2006 and 2006-2007 LM-2s because the LM-2 forms did not require reporting of subsidiary organizations, as the Secretary of Labor had intended for this information to be reported on the "T-1" forms. (June 26 Letter at 3.) The Union did not file a "T-1" form because that portion of the 2003 Rule had been vacated by the courts. Therefore, Defendants conclude that "unions have not been required to report subsidiary corporations such as the Building Corporation on their LM-2 reports since the 2004-2005 reporting cycle." (Id.)
Plaintiffs disagree with this interpretation of the Union's reporting requirements. They assert that Chao I struck down only the portion of the 2003 Rule that required reporting that was "unrelated to preventing circumvention or evasion of . . . reporting requirements." (Pls.' Opp. at 18 (citing LMDRA, §§ 201, 208, 29 U.S.C. §§ 431, 438).) They argue that disclosure of the rental income at issue was not excluded by the court in Chao I, and that any reporting that was not vacated by the courts is still required of the Union, regardless of the forms. Plaintiffs conclude that "[t]he ruling affected the use of the Form T-1, but disclosures that were previously required to be reported on the LM-2 were expanded and not eliminated by the Court's ruling." (Id. at 21.)
Defendants concede that Plaintiffs' interpretation of Chao I's effect on LM-2 forms is "largely correct" but contend that, because the Building Corporation is a separate entity from the Union, disclosures regarding the rental incomes were nonetheless not required. (Dfs.' Reply at 3.) Defendants admit that there was confusion in the wake of Chao I, and explain that the financial affairs of the Building Corporation were not reported on the 2005-2006 and 2006-2007 LM-2s "because the law was in flux as to where and how the information was to be reported." (Dfs.' Reply at 7.) Defendants contend that they complied with the disclosures required by the LM-2 form and accompanying instructions as they existed at the time of the filing of the 2005-2006 and 2006-2007 LM-2s, which they argue did not require itemization of the Building Corporation receipts and disbursements. They note, however, that limited information regarding the Building Corporation was provided in Schedule 5 of the Union's 2005-2006 and 2006-2007 LM-2s. which requires reporting of unions' investment vehicles. At the very least, it is clear that the law concerning unions' required disclosures was in flux during the 2005-2006 and 2006-2007 reporting periods, a point that Plaintiffs and Defendants concede.
Defendants point out that, as of the date of the filing of their motion, the Secretary of Labor had once again proposed a "T-1" reporting requirement. Thus, the reporting requirements for the Union remain in flux.
Plaintiffs have alleged that "[r]eceipts stemming from the [cell phone tower and office space] rents are income to the Union; however [they] are not reflected on the LM-2s filed on July 11, 2006 and June 28, 2007 but [are] reflected on the LM-2 filed on June 28, 2005 where an amount of $816,585 is recorded." (Amended Complaint ¶ 25.) The $816,585 figure was reported on the "Subsidiary Report" filed as an attachment to the Union's 2004-2005 LM-2, and not on the LM-2 form itself. (June 26 Letter, Ex. A at Subsidiary Report p. 4.) Plaintiffs' assertion that the rental information should have been reported on the 2005-2006 and 2006-2007 LM-2s, can be reasonably interpreted to mean that this information should have been reported on the LM-2 forms or their attachments.
Plaintiffs allege that the rental income from the cell phone tower and office units is income to the Union. This assertion can be interpreted one of two ways: the rents are paid directly to the Union or the rents are paid to the Building Corporation that is, for all relevant purposes, equivalent to the Union. If the rents are paid directly to the Union, they should have been reported on the LM-2 form itself. However, the second construction appears to be more likely. The Union considered the Building Corporation to be a "subsidiary organization" in the 2004-2005 reporting cycle, as evidenced by its disclosures regarding the Building Corporation on the "Subsidiary Report" that year. The Court in Chao I faulted the T-1 provisions in the 2003 Rule for overstepping the Secretary of Labor's authority by requiring reporting of trusts in which the union did not have "management control," "financial domination" or "any other characteristic found by the Secretary that might give rise to circumvention or evasion of reporting requirements." Chao I, 409 F.3d at 391. As long as discovery reveals that the relationship between the Union and the Building Corporation was substantially unchanged from the 2004-2005 reporting period to the 2005-2006 and 2006-2007 reporting periods, the Court finds that the Building Corporation information should have been disclosed even after the decision in Chao I. Disclosures necessary to prevent circumvention or evasion of the reporting requirements are within the Secretary of Labor's power to require. If disclosures regarding a subsidiary organization that is separate in name alone from the Union were not required, unions could easily circumvent and evade reporting requirements. It may be true that the forms provided by the Department of Labor did not cover these type of disclosures due to the rapidly changing legal status of the 2003 and 2006 Rules, and, therefore, this finding is not one of wrongdoing on the part of the Union. However, Union members have now requested this information, and the Union may not hide behind meeting the technical requirements of the forms when the information should have been disclosed under the law.
b. Effect of Reporting Requirements on 201(c) Claims
Defendants argue that the absence of Building Corporation information from the 2005-2006 and 2006-2007 LM-2s makes a § 201(c) claim regarding this information a legal impossibility because there is no information on the LM-2s to confirm. (June 26 Letter at 4.) Defendants' argument is based on the requirement that a union member "state `what he wishes to verify in the LM-2 Reports and how the particular union records he is requesting are expected to assist him in doing so.'" Ellis, 1995 WL 779266, at * 4 (citing Fernandez-Montes, 987 F.2d at 285). This requirement is meant to guard against the "wholesale random audits" of unions' financial records. Ellis, 1995 WL 779266, at * 4 (citing Johnson v. Local 1199, No. 85 Civ. 5358, 1986 WL 166 (S.D.N.Y. 1986)).
Where there is no link between the requested information and the LM-2 report, courts have denied union members' requests for documentation. See Fernandez-Montes, 987 F.2d at 286 (denying a request for audiotapes of union meetings because the union was not required to tape meetings and holding that § 201(c) "demands the establishment of a direct connection between records sought to be accessed and the union's federal filings"); Flaherty v. Warehouseman, Garage Serv. Station Employees' Local Unions No. 334, 574 F.2d 484, 486 (9th Cir. 1978) (denying request for documents that union members did not allege were related to LM-2 reports and had not raised any questions regarding those reports); Mayes v. Local 106, Int'l Union of Operating Eng'rs, No. 86 Civ. 41, 1995 WL 30575, at * 27 (N.D.N.Y. 1995) (denying union member's request for "Out of Work List Books" and "Job Call Sheets," as union member failed to link these documents to union's LM-2 reports).
Unlike the cases cited above, Plaintiffs in this case claim that the information they seek relates to material that Defendants wrongly omitted from the LM-2s, or omitted due to confusion regarding the required forms. Defendants urge the Court to hold that Plaintiffs' requests fail because there is no reported information to verify on the LM-2s.
If the rental income from the office units or cell phone tower should have been reported under the rules as they existed for the 2005-2006 and 2006-2007 reporting cycles, as the Court has found they should have based on the facts as Plaintiffs have alleged them, Plaintiffs' § 201(c) claims must survive Defendants' motion. Defendants' argument to the contrary would encourage the very behavior that the LMDRA intended to discourage. If Defendants' reasoning were to prevail, unions that wished to shield certain information from scrutiny would omit it from their LM-2 filings and would effectively preclude any subsequent § 201(c) actions demanding the information.
Other courts have found that information that was not reported on an LM-2 can, in certain circumstances, be the basis for a valid § 201(c) claim. The court in Spinowitz held that a union could potentially be required to disclose financial information relating to a time period for which no LM-2 had yet been filed, as "[f]ailure to report should not insulate a union from its duty to disclose." 672 F. Supp. at 673. The Third Circuit has held that "when a union member has sufficient cause to require a union to open its books for inspection under Section 201(c), he is not restricted to only such records as precede its last annual report." United States v. Budzanoski, 462 F.2d 443, 452 (3d Cir. 1972). The Budzanoski Court found that the that the goal of the statute — "to stop all questionable financial practices" — required disclosure. (Id.) Even though Plaintiffs' requests regarding information from the 2005-2006 and 2006-2007 reporting periods are not explicitly tied to particular lines on the LM-2 is not a bar to relief in this action.
2. Information Regarding 2004-2005 Reporting Period
Plaintiffs also seek financial documents from the 2004-2005 period. Plaintiffs allege that none of the Union's LM-2s have provided information regarding the cell phone tower and that this information should have been disclosed because rent from the cell phone tower is income to the Union. They allege that Union leadership announced to Union members, when the Union bought the building and entered into a contract with the cell phone company, that the Union would be receiving $35,000 per year in rent, an amount that was later increased to $60,000 per year.
Defendants contend that Building Corporation rental receipts, as well as other receipts and disbursements, were included in the 2004-2005 Subsidiary Report. They point to line 48 of that report, which they say lists over $800,000 in rental income — "well over the $35,000 to $60,000 plaintiffs allege the Building Corporation was receiving for the cell phone tower." (June 26 Letter at 5.) Defendants conclude that Plaintiffs' requests relating to the 2004-2005 time period should be dismissed because the 2004-2005 LM-2 contained the Building Corporation information, including the cell phone tower income, and Plaintiffs have not presented just cause to question the accuracy of this information.
While some courts have found that § 201(c) allows for requests that go beyond mere "verification" of LM-2 figures, at a minimum, the statute allows for requests that seek to verify those disclosures. See, e.g., Kinslow, 222 F.3d at 274 n. 2 (finding that "[a] verification rationale is too narrow because it `reduces the right of examination to a check on the union's arithmetic'" (citing Mallick, 749 F.2d at 781)). Thus, even if the information reported on the 2004-2005 Subsidiary Report reflects a complete disclosure of rental receipts, Plaintiffs are still entitled to seek supporting documentation under § 201(c), provided that they can show just cause for their requests.
3. Just Cause
Plaintiffs cite the following allegations as just cause for their requests: the lack of information regarding the Building Corporation on the 2005-2006 and 2006-2007 LM-2 forms; the lack of detailed information regarding the cell phone tower on any of the Union's disclosures; the failure of Union leadership to provide Plaintiff with information regarding the rental income when it was requested; and the failure of the governing boards to meet or circulate minutes from meetings to the Union membership. As discussed above, the standard for a showing of just cause is "necessarily minimal." Fruit Vegetable Packers, 378 F.2d at 744. Union members may not be able to know that there are discrepancies in federal filings until they see the supporting documentation. See Fernandez-Montes, 987 F.2d at 285. "[D]ismissal of the entire action," as Defendants request in their June 26 Letter, "is not proper unless plaintiff fails to make any proper showing of `just cause.'" Ellis, 1995 WL 779266, at *5. The allegations that the Building Corporation information has not been disclosed for at least two years and that income from the cell phone tower was never reported are enough to put an ordinary Union member to further inquiry regarding the management of those funds. This just cause for suspicion is especially understandable in this case, where plaintiff Union members also believe that the boards charged with overseeing these funds are not fulfilling their duties. The Court finds that the allegations in the Amended Complaint, which are taken as true at this stage of the litigation, are sufficient to "put a reasonable union member on notice that further inquiry is warranted." Fernandez-Montes, 987 F.2d at 285.
III. ORDER
For the reasons stated above, it is hereby
ORDERED that the motion (Docket No. 20) of defendants New York Metro Area Postal Union, the American Postal Workers Union, the American Federation of Labor and Congress of Industrial Organizations and Clarice Torrence to dismiss the First Amended Complaint of plaintiffs Charles R. Bembry and Michael Poole is DENIED; and it is further
ORDERED that a conference with the Court is scheduled for March 20, 2009 at 4:30 p.m., and that the parties confer to prepare and submit to the Court at such conference a proposed case management plan in the form provided by the Court.