[00:00:01] Speaker 01:
Case number 17-7025.

[00:00:47] Speaker 03:
Whenever you're ready, Council.

[00:00:50] Speaker 03:
Take your time.

[00:01:00] Speaker 00:
Good morning.

[00:01:01] Speaker 00:
Good morning.

[00:01:02] Speaker 00:
I'm Virginia Hotman, and here with Jerry Madden, we represent David Noble, who's the plaintiff appellant in this case.

[00:01:11] Speaker 00:
Mr. Noble's claims in this case embody the very heart of sections 201 and 501 of the LMRDA.

[00:01:19] Speaker 00:
And if left standing, the district court essentially gets these protections provided by the statute.

[00:01:26] Speaker 03:
A lot of the broader concerns that you address have been narrowed by this court's prior opinion.

[00:01:36] Speaker 03:
Yes.

[00:01:36] Speaker 03:
Particularly on your 501 claim.

[00:01:40] Speaker 03:
very specific remand instructions to the district court to consider all of the circumstantial evidence, all of the bad faith evidence, all of the evidence that both sides could proffer and make a finding whether these two remaining defendants

[00:02:04] Speaker 03:
used the funds at issue for an improper personal purpose, and the district court did all of that.

[00:02:13] Speaker 03:
Every category of evidence he addressed pretty carefully, and he made a finding of fact that's subject only to clear error review, and it seems a pretty difficult case for you to say that that finding was clearly erroneous.

[00:02:30] Speaker 03:
It seems like that's the only open question on your 501 claim.

[00:02:36] Speaker 00:
Well, I don't think that's true with respect to the 501 claim, because I think the panel decision... What part of that is not true?

[00:02:42] Speaker 00:
Well, I think the panel decision in 2008 determined the Constitution itself did not prohibit the allowance in question.

[00:02:51] Speaker 00:
You said it was ambiguous.

[00:02:52] Speaker 00:
It was ambiguous.

[00:02:54] Speaker 02:
And the district court agreed with that.

[00:02:58] Speaker 02:
that said that the Council had the authority to interpret it.

[00:03:02] Speaker 00:
Said that the Council had the authority to interpret it, but the Council interpretation essentially has to involve the expenditure of union funds in accordance with the Constitution.

[00:03:19] Speaker 00:
And the way in which these officials

[00:03:22] Speaker 00:
used and described and viewed this allowance is not consistent.

[00:03:28] Speaker 03:
Our opinion was maybe not a model of clarity, but there were at least two votes for the proposition that the Constitution was ambiguous, and there were at least two votes for the proposition that the interpretive question was subject to deferential review.

[00:03:49] Speaker 03:
And the union officials win if their interpretation is a reasonable one.

[00:03:54] Speaker 00:
If it's reasonable and made in good faith.

[00:03:57] Speaker 00:
And that part of the decision is not subject to clearly erroneous review.

[00:04:04] Speaker 03:
That portion of the decision, whether or not it was reasonably... Well, I understand why you make that argument and we'll talk about it on the merits in a second.

[00:04:16] Speaker 03:
But in terms of what is or isn't open on remand, we did say that the district court did not err in applying the deferential standard of review under, I think, Manzilla.

[00:04:32] Speaker 00:
Right, but the deferential standard of review under Mozilla does not absolve the union officials from construing, basing their construction on a good faith reasonable construction of the Constitution.

[00:04:51] Speaker 00:
And I think we need to separate here the fact that in this particular case, the allowance itself was,

[00:05:01] Speaker 00:
the resolution itself that authorized the allowance, which is what was really in front of the court the first time.

[00:05:08] Speaker 00:
It required

[00:05:10] Speaker 00:
even though you didn't have to itemize and submit receipts ahead of time, it required these union members, as does Section 201, as do the implementing regulation, it required these officials to keep records, because if they do not keep records, there's no way to have compliance with either their obligations under 201.

[00:05:32] Speaker 03:
That's your position on the underlying interpretive question.

[00:05:36] Speaker 03:
And we said the opposite position was at least reasonable.

[00:05:40] Speaker 03:
Now, your position... No, I said that's not true.

[00:05:43] Speaker 00:
The underlying argument with respect to the Constitution was that the Constitution allowed only

[00:05:50] Speaker 00:
itemized receded expenses under, I think it's Article 6 of the Constitution.

[00:05:56] Speaker 00:
And the decision in 2008 was no, it doesn't specifically prohibit this kind of allowance, but on remand, the district court needs to consider evidence of that faith, because the deferential standard does not apply.

[00:06:08] Speaker 03:
You're saying, as I understand it, I don't want to put words in your mouth, but I want to make sure we're on the same page.

[00:06:15] Speaker 03:
You're saying that the remand instruction to consider bad faith has not only evidentiary significance on the question of what these two defendants were doing,

[00:06:32] Speaker 03:
but it has interpretive significance on construing the Union Constitution.

[00:06:38] Speaker 00:
Yes, because I think that's what defrees is, and that's what this Court would be able to support.

[00:06:42] Speaker 03:
Fair enough, and I'm not sure that's open, but let's assume it is, and let's assume, even let's assume that there was bad faith.

[00:06:54] Speaker 03:
The most that would get you is that the union officials who were involved in the 1976 and 1986 misconduct, their interpretations can't be the predicate for deference, right?

[00:07:12] Speaker 00:
I don't think so.

[00:07:13] Speaker 03:
I mean, I think that's... I mean, you have to take that position, right?

[00:07:17] Speaker 03:
That is your position, right?

[00:07:19] Speaker 00:
No, if I heard you correctly, that's not my decision.

[00:07:24] Speaker 03:
You're trying to wriggle out of our arguable holding that the union's position on what is or is not permissible is entitled to deference on the interpretation of the governing document.

[00:07:36] Speaker 00:
Yes, the union is entitled to deference.

[00:07:40] Speaker 00:
However, that deferential thumb comes off the scale if the union officials are acting in bad faith or if their constructions are reasonable.

[00:07:48] Speaker 03:
Fair enough.

[00:07:48] Speaker 03:
But a separate basis for deference can be a ratification by the union convention.

[00:07:59] Speaker 03:
and all of so all of your if we give you everything everything you're asking for on bad faith being open an open question on remand and bad faith being present in the case all you have is that the union presidents in 1976 and 1986 were misbehaving and what they say

[00:08:21] Speaker 03:
about what these documents mean and can't be the basis for deference.

[00:08:25] Speaker 03:
You still have the separate problem that 10 years later, the convention ratified this interpretation.

[00:08:33] Speaker 03:
And I don't think you have any colorable argument that that 1996 ratification was tainted by what some prior presidents had said 20 years earlier.

[00:08:45] Speaker 00:
No, but the ratification itself, the resolution itself,

[00:08:51] Speaker 00:
with its requirement that receipts and records be maintained even though they need not be submitted for future review by the fiscal committee, by the Department of Labor, and by members who want to review the accuracy of the handling of union funds under 201.

[00:09:12] Speaker 00:
That requirement in the resolution, had it been the practice and the way in which

[00:09:18] Speaker 00:
the officials viewed, used, testified about this allowance, then I would agree with you.

[00:09:27] Speaker 03:
But the fact that they... But that was all before us in the private appeal.

[00:09:32] Speaker 00:
No, that aspect of this case was not part of the prior appeal.

[00:09:35] Speaker 00:
The part of the prior appeal essentially had to do with whether or not Noble had presented no evidence and whether or not the Constitution itself limited the payment or reimbursement of expenses to those specifically provided in the Constitution in Article 6.

[00:09:54] Speaker 03:
You didn't argue in the prior appeal when there was this whole debate about the permissibility of getting reimbursement without the receipts.

[00:10:07] Speaker 03:
You didn't argue that this aspect of the resolution.

[00:10:10] Speaker 00:
That argument was based on the Constitution itself.

[00:10:13] Speaker 00:
which says that expenses to officials may be reimbursed when itemized.

[00:10:19] Speaker 00:
And this particular allowance gives $500 a month.

[00:10:23] Speaker 03:
That resolution was on the books.

[00:10:26] Speaker 03:
I mean, right?

[00:10:27] Speaker 03:
It was in existence at the time of this prior appeal.

[00:10:32] Speaker 00:
The Constitution itself.

[00:10:33] Speaker 03:
The resolution of the resolution.

[00:10:36] Speaker 02:
The 1996 resolution that came out of the Convention.

[00:10:41] Speaker 00:
Is the same.

[00:10:43] Speaker 00:
It's not here, what we're saying here and what wasn't addressed in 1996 is that- Is the receipt part of it?

[00:10:54] Speaker 00:
Is that right?

[00:10:55] Speaker 00:
Well, 1996, the 2008 decision focused on the lack of receipts and also the fact that the district court had not considered evidence of bad faith.

[00:11:10] Speaker 03:
But it seems like this argument that you're making about the significance, the interpretive significance of the resolution is one that either was made or should have been made when all of these issues were teed up the last time around.

[00:11:30] Speaker 00:
Well, the last time around, at least in the district court, the district court found no evidence.

[00:11:36] Speaker 00:
So when it came out to this court of appeals, the posture was very different than it was in this particular appeal.

[00:11:44] Speaker 03:
But when we said that an interpretation of the governing documents that would permit compensation for these expenses, even without receipts,

[00:12:01] Speaker 03:
was a reasonable one, we had before us all of these resolutions that you're now talking about.

[00:12:06] Speaker 00:
It was possible, yes.

[00:12:08] Speaker 00:
You did.

[00:12:08] Speaker 00:
I've run out of time.

[00:12:11] Speaker 00:
I'm reserved three minutes.

[00:12:20] Speaker 01:
May it please the court, Peter De Chiaro from the law firm of Cohen, Weiss & Simon, LLP.

[00:12:26] Speaker 01:
We are counsel to the defendant appellee, National Association of Letter Carriers, AFL-CIO.

[00:12:32] Speaker 01:
I will be presenting argument today on behalf of all of the defendant's appellees.

[00:12:38] Speaker 01:
Your honors, after 24 years of litigation... You're presenting argument.

[00:12:43] Speaker 02:
The union is not a party to the 501 claim, right?

[00:12:47] Speaker 01:
That is correct, Your Honor.

[00:12:49] Speaker 02:
Are you presenting the argument on the 501 claim?

[00:12:51] Speaker 01:
Yes, Your Honor.

[00:12:52] Speaker 01:
Our side has 10 minutes.

[00:12:54] Speaker 01:
We decided it would be more efficient to have one lawyer make the argument.

[00:12:59] Speaker 01:
After 24 years of litigation, just two narrow issues remain in this case following remand.

[00:13:05] Speaker 01:
The first on Mr. Noble's section 501 claim, which remains only against two former officers, Mr. Young and Mr. Hutchins,

[00:13:13] Speaker 01:
is the question of whether the district court on remand clearly erred in its fact-finding.

[00:13:21] Speaker 01:
In its 2008 decision, this court charged the district court with weighing plaintiff's circumstantial evidence of misuse of the allowance money, namely the lack of receipts, against the defendant's evidence to the contrary.

[00:13:36] Speaker 01:
And the district court did exactly what this court charged it with doing.

[00:13:40] Speaker 01:
It weighed the evidence, as Judge Sullivan explained in his carefully crafted decision.

[00:13:46] Speaker 01:
Judge Sullivan found, based primarily on the testimony of Defendant Young, that the lack of receipts for many of the expenses reflected the administrative burden of submitting receipts, not that the allowances were used for personal expenses.

[00:14:01] Speaker 01:
And the Supreme Court has said that a district court fact finding on testimony

[00:14:05] Speaker 01:
And recall, Judge Sullivan presided at the trial where Mr. Young testified and heard that evidence live, saw his demeanor.

[00:14:14] Speaker 01:
The Supreme Court has said that as long as such testimony is facially plausible, not internally inconsistent or contradicted by external evidence,

[00:14:24] Speaker 01:
This is the Supreme Court's wording, can virtually never be clear error.

[00:14:29] Speaker 03:
I'll give you the point that his fact findings on whether these two defendants misused funds was not clearly erroneous.

[00:14:42] Speaker 03:
Is there this separate interpretive issue that I was discussing with your colleague?

[00:14:47] Speaker 03:
Because we said in the prior opinion, deference unless bad faith, right?

[00:14:57] Speaker 03:
And then we remand with a specific instruction to consider bad faith.

[00:15:01] Speaker 03:
One would think that maybe we were leaving open this question whether deference would be appropriate if there were a finding of bad faith.

[00:15:15] Speaker 01:
Your Honor, certainly this Court in 2008 instructed the District Court, and actually if you read the 2008 decision, I'm not sure it was quite an instruction, it was maybe an invitation to consider the evidence of the Union President's statements at the two conventions in light of the DeFries case.

[00:15:38] Speaker 01:
I'm sorry, Your Honor.

[00:15:39] Speaker 02:
Judge Sullivan did consider that.

[00:15:41] Speaker 01:
He absolutely did.

[00:15:42] Speaker 01:
He carefully looked at the as he as he the court asked him to.

[00:15:45] Speaker 02:
He carefully looked at the other aspect of it was that the union officials involved then were

[00:15:53] Speaker 02:
using the 500 for personal expenses and he considered that as well.

[00:15:58] Speaker 01:
He did.

[00:15:59] Speaker 01:
Judge Sullivan considered everything this court in 2008 asked him to consider.

[00:16:03] Speaker 01:
I would say they were lengthy, carefully crafted decisions.

[00:16:08] Speaker 02:
He really made an effort to... Is it true that $500 a month

[00:16:13] Speaker 02:
in-town expense account or what, dated back to the 1950s?

[00:16:17] Speaker 01:
That's what the record reflects, Your Honor.

[00:16:21] Speaker 02:
What was it worth in the 1950s?

[00:16:23] Speaker 01:
A lot more than it's worth today, that's for sure.

[00:16:25] Speaker 02:
And most of the expenses that they testified, as I remember, they said that the union officials said it was hardly, wouldn't have been a month go by where we didn't spend at least $500.

[00:16:38] Speaker 02:
That's a dinner in a fancy restaurant in Washington.

[00:16:41] Speaker 02:
And they were going to having taken people out to dinner all the time.

[00:16:45] Speaker 02:
So that seems plausible.

[00:16:47] Speaker 01:
I think it's certainly plausible, more than plausible.

[00:16:50] Speaker 01:
These are officers of a large national union who are representing a constituency of a couple hundred thousand members, meeting with public officials, meeting with postal service officials.

[00:17:02] Speaker 01:
They have a demanding job.

[00:17:03] Speaker 01:
They're constantly having meetings, meals,

[00:17:09] Speaker 01:
incurring expenses like parking, taxis, as they testified at trial and in support of summary judgment.

[00:17:17] Speaker 01:
And as the defendant's expert witness put in his report, easily an official in those circumstances would incur at least $500 a month in expenses.

[00:17:32] Speaker 01:
As Your Honors

[00:17:35] Speaker 01:
Note, the judge below did look at the evidence of what was said at the conventions, and he considered it in light of defrauds.

[00:17:46] Speaker 01:
And Judge

[00:17:49] Speaker 01:
Sullivan permissibly and properly concluded that the evidence of what was said at the two conventions, considered in light of defrauds, did not compel a finding of a Section 501 violation.

[00:18:03] Speaker 03:
Could we talk a little bit about the 201 issue?

[00:18:06] Speaker 03:
What do you think the phrase necessary to verify means?

[00:18:11] Speaker 03:
It seems like there's not a whole lot of case law on that point.

[00:18:16] Speaker 01:
I think one could formulate the test or articulate the test in different ways, but I think conceptually, at bottom, it's a two-part test.

[00:18:28] Speaker 01:
There's just cause, so you have to, and then there's

[00:18:33] Speaker 01:
It's written right into the statute.

[00:18:35] Speaker 03:
I agree, it's two parts.

[00:18:36] Speaker 03:
I'm asking you what the second part is.

[00:18:39] Speaker 02:
Judge Sullivan said what he thought it was, and I think he was correct, and what he said was... How can you have just cause if it's not necessary for the documents to be produced?

[00:18:52] Speaker 01:
I'm sorry, Your Honor, I don't follow the question.

[00:18:54] Speaker 02:
Well, you said there are two parts to it, but what I don't understand is how can you ever have just cause

[00:19:00] Speaker 02:
for requesting the documents when the documents aren't necessary to be produced.

[00:19:06] Speaker 02:
Well, here, this case is a... He had just cause, and now we'll examine whether these were necessary documents.

[00:19:15] Speaker 02:
They weren't necessary, but he still had just cause, and it makes no sense at all.

[00:19:19] Speaker 01:
Well, that's exactly what the judge below determined in this case.

[00:19:24] Speaker 01:
For example, in the case of the Minneapolis bank account records, Judge Sullivan found, we don't agree that that was correct, but he found that Mr. Noble had just caused because someone told Mr. Noble that this allegedly unauthorized bank account existed and the person told him he was concerned about how the money was being used.

[00:19:49] Speaker 01:
So Judge Sullivan said that met the standard for just cause.

[00:19:54] Speaker 01:
But what Judge Sullivan concluded correctly was it did not meet the necessary to verify standard, because Mr. Nobles.

[00:20:05] Speaker 02:
Is there another way of saying it didn't have just cause?

[00:20:07] Speaker 01:
I guess, Your Honor, again, you could lump them and make it one big test, or you could separate them out.

[00:20:12] Speaker 01:
That's why I said at the beginning, I think you could play with, and courts have played with different formulations, but I think conceptually,

[00:20:19] Speaker 03:
You need to satisfy both the district court said whether this goes into the just cause bucket or the necessary to verify bucket district court says as to as to the bank account.

[00:20:35] Speaker 03:
He's talked to a union official in the local office.

[00:20:40] Speaker 03:
I think it was the president, the president of the local, who says, there is this bank account.

[00:20:45] Speaker 03:
I have concern about it.

[00:20:47] Speaker 03:
Judge Sullivan says that that is enough to put a reasonable union member, enough to raise concern for further inquiry.

[00:21:02] Speaker 03:
If that's true, why couldn't he satisfy the necessary to verify?

[00:21:10] Speaker 03:
He says, I need to see any documents related to this bank account.

[00:21:18] Speaker 03:
And the reason I need to see them is I want to see if this bank account

[00:21:24] Speaker 03:
is reflected in the LM-2, which looks like it's a pretty comprehensive document with the balance sheet, all the assets, all the liabilities.

[00:21:35] Speaker 03:
If there is such a bank account, presumably it should be on the form and that's what I want to verify.

[00:21:41] Speaker 01:
That was exactly Judge Sullivan's analysis.

[00:21:45] Speaker 03:
Why isn't that a perfectly good theory, at least as to documents related to the bank accounts?

[00:21:51] Speaker 01:
Judge Sullivan found there was just cause.

[00:21:54] Speaker 01:
He found that Mr. Noble said that

[00:21:59] Speaker 01:
So Judge Sullivan divided the just cause into two elements.

[00:22:04] Speaker 01:
And the first element, according to the judge, was satisfied, that Mr. Noble said what he wanted to verify, which was that whether or not the Minneapolis bank account was in the LM-2, where, according to the judge, Mr. Noble fell short, is showing how

[00:22:21] Speaker 01:
obtaining those Minneapolis bank records would have assisted him in verifying whether those records were in the LM-2.

[00:22:28] Speaker 03:
And when asked... But his, Judge Sullivan's theory is essentially that Mr. Noble pleaded himself out of court with this rather remarkable statement that only by seeing every document in the union file will I be able to resolve this concern about the bank account.

[00:22:49] Speaker 03:
Which seems transparently ridiculous, but I'm not sure it answers the question, why couldn't he, why wasn't he entitled to see any records about the bank account?

[00:23:05] Speaker 01:
because the burden rests on the plaintiff, this Section 201 plaintiff, to articulate how the documents he was seeking, or he is seeking, would assist him in what he's trying to bear.

[00:23:18] Speaker 02:
Did the reports designate the banks by name and then itemized?

[00:23:28] Speaker 02:
what the deposits and withdrawals were in each individual bank, or was it a lump sum?

[00:23:34] Speaker 01:
I'm glad you asked that question, Your Honor.

[00:23:36] Speaker 01:
The LM-2s are attached to the amended complaint, and what they show, or what the form requires, is an indication of the total that's in the union's bank, all of the union's bank accounts, at the beginning and at the end of the reporting period.

[00:23:54] Speaker 02:
So, Nova was exactly right.

[00:23:56] Speaker 02:
The only way that he could decide or determine whether the Minneapolis bank account was not being properly reported is if he had information on every bank account throughout the country that the Union had.

[00:24:09] Speaker 01:
That's, however, not what he asked for.

[00:24:11] Speaker 01:
He asked for the entirety of the Union's records.

[00:24:16] Speaker 01:
So that universe of things plus

[00:24:19] Speaker 01:
everything else, every computer file, every piece of paper, every file in this large national union.

[00:24:24] Speaker 01:
So you can call it, you could characterize it.

[00:24:29] Speaker 03:
So suppose he had made the request Judge Randolph said, which is broader than the one I was thinking of, particular to the bank, but narrower than the one that Judge Sullivan lampooned, which is everything in the files.

[00:24:44] Speaker 03:
Why isn't that a good request?

[00:24:46] Speaker 01:
Your Honor, that's a hypothetical.

[00:24:49] Speaker 01:
I don't know whether that would be a legitimate request, whether Judge Sullivan would have thought that that would have satisfied the requirement, but that was not this case.

[00:25:00] Speaker 01:
That was the district court asked Mr. Noble what he was seeking and the answer he got from Mr. Noble.

[00:25:08] Speaker 01:
And I know counsel for Mr. Noble now want to back away from that, but the answer he got was the ludicrous answer that he wanted to see the entirety of the union's files.

[00:25:18] Speaker 01:
And Judge Sullivan's determination should be based on what was before him, not some hypothetical.

[00:25:25] Speaker 03:
That was the statement in his, what was it, an affidavit or a filing?

[00:25:30] Speaker 03:
Correct.

[00:25:31] Speaker 03:
Was there any briefing associated with that?

[00:25:35] Speaker 01:
I believe Mr. Noble filed a brief and a declaration at the same time.

[00:25:41] Speaker 03:
And if we looked at all of that material and charitably construed it to avoid forfeiture, is there any way of

[00:25:51] Speaker 03:
You know, reading into that some minimal relevancy limitation.

[00:25:56] Speaker 03:
You know, I'm saying all the documents, but in the context of a request about bank records, what I mean is all the documents about bank records.

[00:26:06] Speaker 01:
I don't think so, Your Honor.

[00:26:08] Speaker 02:
Do local unions have to file reports too?

[00:26:12] Speaker 02:
Yes, Your Honor.

[00:26:13] Speaker 02:
Okay.

[00:26:13] Speaker 01:
And there is a local union in Minneapolis, I think.

[00:26:17] Speaker 01:
There is, the union has hundreds of local unions around the country, the Minneapolis bank account, allegedly.

[00:26:27] Speaker 01:
And let me just say, we said this in our brief, let me just say it again.

[00:26:31] Speaker 02:
It's not a local union bank account.

[00:26:34] Speaker 01:
No, what Mr. Noble is speaking about, and we, the union is not aware of this bank account existing, but what Mr. Noble is talking about is I understand it.

[00:26:42] Speaker 01:
is a bank account that was held at the Minneapolis region of the National Union.

[00:26:50] Speaker 01:
So the Union is divided into about 15 separate regions, and the region that includes Minneapolis, the allegation or the suspicion is that that region of the National Union, that administrative subdivision of the National Union, had created this unauthorized bank account.

[00:27:15] Speaker 02:
Do they go into the locals or the nation?

[00:27:21] Speaker 01:
Your Honor, I am not sure of the answer to that question.

[00:27:24] Speaker 01:
I believe the – I don't want to venture an answer to that because I just don't know, and there's nothing in the record here that I think it bears on it.

[00:27:31] Speaker 02:
I'm just thinking about what – if you got the records from the region, even the region with the Minneapolis bank, you'd still need a heck of a lot more to make the kind of determination

[00:27:45] Speaker 02:
that Mr. Noble was seeking to make.

[00:27:47] Speaker 01:
Agreed.

[00:27:49] Speaker 03:
I assume you're going to give me the same answer, but let's just go through this exercise with regard to the housing allowance.

[00:27:57] Speaker 03:
So he says the union is paying money to the landlords for the housing expense of the president, and that's unauthorized compensation.

[00:28:13] Speaker 03:
union's response is, yeah, we're paying the money, but it's not unauthorized.

[00:28:17] Speaker 03:
We're deducting it from his salary.

[00:28:20] Speaker 03:
So why couldn't he?

[00:28:22] Speaker 03:
I'm looking at the LM2, and there's a line item, very specific line item on here.

[00:28:31] Speaker 03:
compensation of officers, Sombroto, officer Sombroto, title president, salary $131,000.

[00:28:40] Speaker 03:
Why couldn't he have a perfectly good claim that he needs to see the underlying records regarding those payments, the rent payments and the Sombroto compensation associated with it to verify that this

[00:29:00] Speaker 03:
$131,000 salary is only his authorized salary rather than an illicit side payment for the housing allowance.

[00:29:11] Speaker 01:
Again, Your Honor, you're right.

[00:29:13] Speaker 01:
I will give you the same answer.

[00:29:14] Speaker 01:
That's not this case.

[00:29:16] Speaker 01:
That's not what Mr. Noble asked for.

[00:29:18] Speaker 01:
Whether in a hypothetical alternative universe that might have been an appropriate request, I'd prefer not to speculate.

[00:29:26] Speaker 03:
That's what I thought you were going to say.

[00:29:29] Speaker 03:
Thank you.

[00:29:29] Speaker 01:
Thank you very much.

[00:29:37] Speaker 03:
I'm sorry, we didn't really let you talk about the Section 201 issues, speaking only for myself.

[00:29:43] Speaker 03:
I'll tell you that is of somewhat more interest to me.

[00:29:48] Speaker 00:
Okay.

[00:29:49] Speaker 00:
Well, I also did speak about the evidentiary question in 501, but I'll focus first on Section 201.

[00:29:55] Speaker 00:
First of all, the counsel for the defendants, we don't agree with their statement that he has requested from the beginning every item, every computer item, et cetera.

[00:30:06] Speaker 00:
That is simply not true.

[00:30:08] Speaker 00:
If you look in our briefs, we go through the request that Mr. Noble made from the beginning with respect to these specific transactions.

[00:30:18] Speaker 03:
the the money quote on which the district or paragraph 30 you know what I'm going to say right it is only by looking only by looking at the entirety of the unions records that I will be able to determine what I want to determine right but but that particular

[00:30:40] Speaker 00:
quote, which is obviously a pro se plaintiff's attempt at explaining to the district court what has existed throughout the record.

[00:30:49] Speaker 03:
I'm sorry, he was pro se at the time?

[00:30:51] Speaker 00:
Yes.

[00:30:51] Speaker 00:
Okay.

[00:30:52] Speaker 00:
And which the district court understood by himself describing what the requests were, okay?

[00:30:58] Speaker 00:
He had been asking from the beginning with respect to the bank account, he names the bank account, but he can't just look at the bank account, the LN2,

[00:31:07] Speaker 00:
involves the union making some determinations with respect to how certain payments are categorized.

[00:31:13] Speaker 00:
And then those categorizations are lumped together

[00:31:16] Speaker 00:
into lump sum amounts that are in the LM-2.

[00:31:20] Speaker 00:
So the necessary to verify test here by the district court is unprecedented.

[00:31:25] Speaker 00:
Where here, Mr. Noble is talking about he got just clause to inquire with respect to specific expenditures of union funds.

[00:31:34] Speaker 00:
Those funds are necessarily included in the LM-2s.

[00:31:39] Speaker 00:
And so the necessary to verify link to the LM-2 is there.

[00:31:44] Speaker 03:
In terms of, do you quarrel with the district court's articulation of the legal standard?

[00:31:53] Speaker 03:
But put aside how he applies it here, but it seems like the statute says it has to be necessary to verify the records.

[00:31:59] Speaker 00:
Well, I think there's a question, and this court has not adopted, I'm sure you've read the Malik case, this court has not adopted this two-part test.

[00:32:08] Speaker 00:
But whether it's viewed as a two-part test or a one-part test,

[00:32:11] Speaker 00:
The Malik Court talks about the fact that the language of the statute is just cause to examine any books, records, or accounts necessary to verify such report.

[00:32:24] Speaker 00:
So the first question is whether necessary to verify is just defining what you are examining or whether it's part of a separate.

[00:32:32] Speaker 03:
But in either case, where you're talking about the spending... Whether you think of it as one step for reasons Judge Randolph expressed, or two as it seems to be articulated in the statute, what is wrong with the proposition that

[00:32:54] Speaker 03:
The statute says you need just cause to think that the records are necessary to verify the LM-2.

[00:33:01] Speaker 03:
What that means at a minimum is that you have to take the LM-2 and point to something that you want to verify and explain why the records that you're seeking will help you make that verification.

[00:33:19] Speaker 00:
Well, the courts in the past have not required, and even Judge Sullivan recognized, you don't have to point to something specific in the LMTL.

[00:33:26] Speaker 03:
Or something general.

[00:33:27] Speaker 00:
Because how it gets there depends on what happens with the records.

[00:33:30] Speaker 03:
When I say specific, I don't necessarily mean a narrow line item like Sombroto's salary.

[00:33:38] Speaker 03:
It could be, you know, the assets that generally encompass bank records.

[00:33:44] Speaker 00:
Well, I think that was done here, and that was done in conjunction with the Just Cause requirement, because in this particular case, Mr. Noble is pointing to expenditures, whether it is the use of the bank account to put NLSC money into it and use it to pay for individual officers' election expenses, whether it is the housing payments made for officers.

[00:34:10] Speaker 00:
Each of those things

[00:34:12] Speaker 00:
are ultimately need to be reflected accurately either as deductions from salary or expenses or additional salary in the LM-2 reports.

[00:34:23] Speaker 00:
And so in this particular case, the necessary to verify language in terms of having separate and independent importance comes up in cases like the Fernandez-Motors case.

[00:34:36] Speaker 02:
I want to just interrupt you.

[00:34:39] Speaker 02:
I can see how

[00:34:41] Speaker 02:
Various documents would be necessary to verify what's in the report.

[00:34:47] Speaker 02:
As a separate requirement, if the union member comes in and is asked the question now, why do you want these documents?

[00:34:58] Speaker 02:
I want them to verify what's in the report.

[00:35:01] Speaker 02:
And they said – and the questioner says, well, why?

[00:35:04] Speaker 02:
He said, I don't know, I'm just curious.

[00:35:06] Speaker 02:
Is that just cause?

[00:35:07] Speaker 00:
That does not satisfy just cause.

[00:35:09] Speaker 00:
Okay, okay.

[00:35:10] Speaker 02:
I can understand that, but what I can't understand is how you could have just cause when the documents you're seeking are not necessary to verify the material in the report.

[00:35:20] Speaker 00:
Well, I think that's because in this context they do, because they involve union expenditure of funds, which are necessarily in the LM-2s.

[00:35:29] Speaker 00:
So if you establish just cause,

[00:35:32] Speaker 00:
then the statute tells you you are entitled to examine any books and records that are necessary to verify.

[00:35:38] Speaker 00:
And so Mr. Noble here, and as you can see on page nine of our reply brief, we quote portions of the district court decision where he actually described what Mr. Noble's requests were, and it was to examine all NLC documents and records

[00:35:55] Speaker 00:
for a period of years pertaining to the bank account number X, Y, and Z. It was a request to examine the documents and records for that same period pertaining to NLC payments for housing expenses for Sombreta and O'Connell.

[00:36:09] Speaker 00:
And then the third grab bag has a similar language to it.

[00:36:13] Speaker 00:
And in fact, that's where he went wrong was in the application of the test because that is sufficient

[00:36:19] Speaker 00:
to satisfy both sides of the requirement.

[00:36:21] Speaker 00:
And without examining the records, you can't know exactly where on the LM-2 those transactions and expenditures are reported.

[00:36:31] Speaker 03:
I assume you would agree that there is no just cause for the request as construed by Judge Sullivan, right, which is give me everything in all your files.

[00:36:45] Speaker 00:
Well, I would say as considered by council for the labor union, this describes as every item.

[00:36:52] Speaker 00:
It was never what he requested.

[00:36:54] Speaker 00:
He did not request every item of paper that the union had ever had dealt with.

[00:37:02] Speaker 00:
Any further questions?

[00:37:03] Speaker 00:
Thank you.