cohen, weiss and simon llp susan davis* evan hudson...

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COHEN, WEISS AND SIMON LLP SUSAN DAVIS* [email protected] EVAN HUDSON-PLUSH* [email protected] WENDY LAMANQUE* [email protected]

*Pro Hac Vice Application Pending 330 West 42nd Street New York, New York 10036 Telephone: (212) 356-0207 Facsimile: (646) 473-8207 BUSH GOTTLIEB IRA L. GOTTLIEB (SBN 103236) [email protected] LISA C. DEMIDOVICH (SBN 245836) [email protected] 500 North Central Avenue, Suite 800 Glendale, California 91203-3345 Telephone: (818) 973-3200 Facsimile: (818) 973-3201 Attorneys for Defendant ACTORS’ EQUITY ASSOCIATION

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

ED ASNER, et al.,

Plaintiffs,

vs. ACTORS’ EQUITY ASSOCIATION,

Defendant.

CASE NO. 15-cv-8169 (TJH)(JPR) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION OF DEFENDANT ACTORS’ EQUITY ASSOCIATION TO DISMISS THE COMPLAINT

Date: August 29, 2016 Time: UNDER SUBMISSION Courtroom: 17

00765435.1

Case 2:15-cv-08169-TJH-JPR Document 24-1 Filed 07/21/16 of 32 Page ID #:200

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TABLE OF CONTENTS

Page PRELIMINARY STATEMENT .................................................................................... 1

STATEMENT OF FACTS ............................................................................................. 2

The Parties ............................................................................................................ 2

The History of the 99-Seat Plan ........................................................................... 3

The Jens v. Equity Settlement Agreement ........................................................... 4

The February 6, 2015 Proposed Changes to the Plan .......................................... 5

The April 21, 2015 Council Action ...................................................................... 7

Procedural History ................................................................................................ 8

ARGUMENT .................................................................................................................. 9

I. THE APPLICABLE STANDARD FOR A MOTION TO DISMISS IN A CASE INVOLVING INTERNAL UNION AFFAIRS ........................................ 9

A. Rule 12(b)(6) Standard of Review ............................................................. 9

B. Unions are Owed Substantial Deference in Matters Involving Internal Union Affairs ............................................ 10

II. THE COURT SHOULD DISMISS ALL OF THE PLAINTIFFS’ CLAIMS ............................................................................ 11

A. The Breach of Contract Allegations Fail on Their Face .......................... 11

B. The Breach of Covenant of Good Faith and Fair Dealing Claim Fails for the Same Reasons as the Breach of Contract Claim ................. 15

C. The DFR Does Not Govern Internal Union Affairs and, In Any Event, Plaintiffs Fail to Set Forth a Plausible DFR Claim ...................... 16

1. The DFR Does Not Apply to Internal Union Affairs .................... 17

2. The Complaint Fails to State a DFR Claim ................................... 18

D. The LMRDA Claim Fails as a Matter of Law ......................................... 20

1. The LMRDA Does Not Apply to Advisory Referendums ............ 20

2. This Case Should Be Dismissed Under LMRDA 101(a)(4) because Interested Employers Have Financed this Suit ................ 22

3. The Complaint States No Cognizable LMRDA Claim ................. 23

CONCLUSION ............................................................................................................. 25


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TABLE OF AUTHORITIES

Page(s) Cases

21st Century Ins. Co. v. Superior Court, 47 Cal. 4th 511 (2009) ......................................................................................... 15, 16

Acker v. BLE, 1977 WL 15551 (D. Minn. Apr. 22, 1977) ......................................................... 21, 22

Ackley v. W. Conf. of Teamsters, 958 F.2d 1463 (9th Cir. 1992) ............................................................................passim

Adamszewski v. Local Lodge 1487, IAM, 496 F.2d 777 (7th Cir. 1974) ............................................................................... 22, 23

AFGE Local 1 v. Stone, 502 F.3d 1027 (9th Cir. 2007) ................................................................................... 13

Ajifu v. IAM, 205 Fed. Appx. 488 (9th Cir. 2006) .......................................................................... 17

ALPA v. O’Neill, 499 U.S. 65 (1991)..............................................................................................passim

Amalgamated Assoc. of Streetcar Employees v. Lockridge, 403 U.S. 274 (1971)............................................................................................. 17, 20

ASARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203 (9th Cir. 2015) ................................................................................... 11

Ashcroft v. Iqbal, 556 U.S. 662 (2009)..................................................................................................... 9

Augspurger v. Bhd. of Locomotive Eng’rs, 510 F.2d 853 (8th Cir. 1975) ..................................................................................... 19

Bank of the West v. Superior Court, 2 Cal. 4th 1254, 833 P.2d 545 (1992) ........................................................................ 11

Bass v. Boilermakers, 630 F.2d 1058 (5th Cir. 1980) ................................................................................... 18

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)..................................................................................................... 9

Canas v. Ocwen Loan Servicing LLC, 2015 WL 5601838 (C.D. Cal. Sept. 21, 2015) .................................................... 15, 16


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Cavanaugh v. S. Cal. Permanente Med. Group, 583 F. Supp. 2d 1109 (C.D. Cal. 2008) ..................................................................... 17

Colony Cove Props., LLC v. City of Carson, 640 F.3d 948 (9th Cir. 2011) ....................................................................................... 9

Complete Infusion Care, CIC, Inc. v. Aetna Life Ins. Co., 2016 WL 471207 (C.D. Cal. Feb. 4, 2016) ............................................................... 11

Cove Partners, LLC v. Speciality Ins. Co., 2016 WL 461918 (C.D. Cal. Feb. 2, 2016) ......................................................... 11, 15

Davis v. Prof. Musicians Local 47, 2012 WL 5929909 (C.D. Cal. Nov. 26, 2012) .................................................... 17

Diaz v. ILWU Local 13, 474 F.3d 1202 (9th Cir. 2007) ................................................................................... 18

Distler v. UMW, 711 F.2d 76 (7th Cir. 1983) ....................................................................................... 18

Douglas v. USW, 1989 WL 201627 (S.D.W.Va. 1989) ......................................................................... 19

Eclectic Props. v. Marcus & Millichap, 751 F.3d 990 (9th Cir. 2014) ....................................................................................... 9

Emporium Capwell Co. v. W. Addition Commt’y Org., 420 U.S. 50 (1975)..................................................................................................... 19

Flores v. City of Baldwin Park, 2015 WL 756877 (C.D. Cal. Feb. 23, 2015) ................................................... 9, 10, 22

Ford Motor Co. v. Huffman, 345 U.S. 330 (1953)................................................................................................... 16

Garity v. APWU, 585 Fed. Appx. 383 (9th Cir. 2014) .......................................................................... 17

Estate of Graham v. Sotheby’s, Inc., 2016 WL 1464229 (C.D. Cal. Apr. 11, 2016) ..................................................... 10, 22

Gurton v. Arons, 339 F.2d 371 (2d Cir. 1964) ...................................................................................... 10

Guz v. Bechtel Nat. Inc., 24 Cal. 4th 317 (2000) ............................................................................................... 15


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Hanich v. Citimortgage, Inc., 2015 WL 3889617 (C.D. Cal. June 24, 2015) ........................................................... 15

Harris v. Plasterers Local 406, 619 F.2d 1164 (7th Cir. 1980) ................................................................................... 22

Hays v. Nat’l Elec. Contractors Ass’n, 781 F.2d 1321 (9th Cir. 1985) ................................................................................... 17

Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) ............................................................... 10, 22

Humphrey v. Moore, 375 U.S. 335 (1964)................................................................................................... 16

Inlandboatmens Union v. Dutra Group, 279 F.3d 1075 (9th Cir. 2002) ..................................................................................... 9

Jeffreys v. CWA, 354 F.3d 270 (4th Cir. 2003) ............................................................................... 20, 25

Johnson v. USPS, 756 F.2d 1461 (9th Cir. 1985) ................................................................................... 16

Kahn v. Hotel & Rest. Emp. & Bartenders Int’l Union, 469 F. Supp. 14 (N.D. Cal. 1977) aff’d, 597 F.2d 1317 (9th Cir. 1979) ................... 21

Kavowras v. N.Y. Times Co., 328 F.3d 50 (2d Cir. 2003) .......................................................................................... 3

Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) ..................................................................................... 9

L.H. v. Chino Valley Unified Sch. Dist., 944 F. Supp. 2d 867 (C.D. Cal. 2013) ......................................................................... 9

Lee v. Los Angeles, 250 F.3d 668 (9th Cir. 2001) ....................................................................................... 9

Local 1052 v. L.A. County Dist. Council of Carpenters, 944 F.2d 610 (9th Cir. 1991) ..................................................................................... 10

Local 48 v. United Bhd. of Carpenters, 920 F.2d 1047 (1st Cir. 1990) .................................................................................... 10

Mamula v. USW, 304 F.2d 108 (3d Cir. 1962) ...................................................................................... 25


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Marquez v. Screen Actors Guild, Inc., 525 U.S. 33 (1998)............................................................................................... 17, 19

Matthews v. Nat’l Football Council, 688 F.3d 1107 (9th Cir. 2012) ............................................................................. 10, 22

Members For a Better Union v. Bevona, 152 F.3d 58 (2d Cir. 1998) .................................................................................. 12, 24

Motion Picture & Videotape Editors Guild, Local 776 v. Int’l Sound Technicians, 800 F.2d 973 (9th Cir. 1986) ......................................... 1, 10

Nanavati v. Adecco USA, Inc., 99 F. Supp. 3d 1072 (N.D. Cal. 2015). ........................................................................ 3

O’Neill v. ALPA, 939 F.2d 1199 (5th Cir. 1991) ................................................................................... 17

O’Toole v. Northrop Grumman Corp., 499 F.3d 1218 (10th Cir. 2007) ................................................................................. 22

Parrino v. FHP, Inc., 146 F.3d 699 (9th Cir. 1998) ....................................................................................... 9

Racine & Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 4th 1026 (1992) .............................................................................. 15, 16

Scofield v. NLRB, 394 U.S. 423 (1969)................................................................................................... 10

Sergeant v. Inlandboatmen’s Union, 346 F.3d 1196 (9th Cir. 2003) ................................................................................... 21

Simo v. UNITE, 322 F.3d 602 (9th Cir. 2003) ..................................................................................... 22

Spellacy v. ALPA, 156 F.3d 120 (2d Cir. 1988) ...................................................................................... 17

Steele v. Louisville & N.R. Co., 323 U.S. 192 (1944)................................................................................................... 19

Stelling v. IBEW, 587 F.2d 1379 (9th Cir. 1978) ................................................................................... 23

Steven Stripling, 316 NLRB 710 (1995) ............................................................................................... 10


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Teamsters Joint Council No. 42 v. IBT, 82 F.3d 303 (9th Cir. 1996) ....................................................................................... 10

Thompson v. Permanente Med. Group, 623 Fed. Appx. 400 (9th Cir. 2015) .......................................................................... 17

United Bhd. of Carpenters v. Metal Trades Dep’t, 770 F.3d 846 (9th Cir. 2014) ..................................................................................... 18

USW v. Rawson, 495 U.S. 362 (1990)............................................................................................. 16, 17

USW v. Sadlowski, 457 U.S. 102 (1982)................................................................................................... 10

Weiss v. Torpey, 987 F. Supp. 212 (E.D.N.Y. 1997) ............................................................................ 25

Wolf v. Walt Disney Pictures & Television, 162 Cal. App. 4th 1107 (2008) .................................................................................. 11

Statutes

29 U.S.C. § 411 ........................................................................................................passim

Cal. Civ. Code § 1638 ..................................................................................................... 11

Cal. Civ. Code § 1639 ..................................................................................................... 11


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1

PRELIMINARY STATEMENT

Defendant Actors’ Equity Association (“Equity” or the “Union”) is a national

labor union that represents more than 50,000 actors and stage managers throughout the

United States. It has, for more than a century, advocated to improve its members’

wages and working conditions and protect their rights at work. One way in which it

does so is to maintain an internal union rule that prohibits members from working

without the benefit of an Equity contract. Equity has, however, since the early 1970’s,

waived this rule for members working in Los Angeles theaters of 99 seats or fewer,

permitting members to work without a contract and, generally, without wages or

benefits, essentially for free, in these theaters. Compl. ¶¶ 13-14.

On April 21, 2015, after several months of methodically and meticulously

following the procedures of a settlement agreement it entered into more than 25 years

ago, Equity changed its internal membership rules in Los Angeles and narrowed the

scope of this waiver so that more of its members would have the opportunity to be paid

at least minimum wage. Ignoring the “well-established” policy of “avoiding

unnecessary [judicial] interference in the internal affairs of unions,” Motion Picture &

Videotape Editors Guild, Local 776 v. Int’l Sound Technicians, 800 F.2d 973, 975 (9th

Cir. 1986), the plaintiffs -- many of whom are also producers / employers and two of

whom are not even members of Equity -- challenge this judgment, primarily on

procedural grounds. Their allegations fail to state a claim and should be dismissed.

We demonstrate in Part II.A and II.B that applying the unambiguous terms of the

settlement agreement to the allegations of the complaint, the plaintiffs have failed to set

forth any plausible breach of contract or breach of good faith and fair dealing claims.

In Part II.C we show that the duty of fair representation (“DFR”) is inapplicable to this

matter because it involves internal union affairs and, in any event, the complaint does

not set forth a plausible claim under established DFR precedent narrowly confining that

doctrine. Finally, in Part II.D, we demonstrate that plaintiffs’ Labor Management

Reporting and Disclosure Act (“LMRDA”) § 101(a)(1) equal right to vote claim fails


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as a matter of law for a host of independent reasons, including that the statute does not

apply to advisory referendums (the only relevant vote here), that this lawsuit has been

financed by interested employers, and that the allegations do not rise to the level of a

LMRDA violation as no member was denied the right to vote.

For all of these reasons, the Court should dismiss the Complaint.

STATEMENT OF FACTS

The Parties

Equity is a labor union representing approximately 50,000 actors and stage

managers working in live theater throughout the United States. Compl. ¶ 11; Decl. of

Evan Hudson-Plush (“Plush Decl.”), Ex. 1 (AEA’s Constitution & Bylaws (referenced

in Compl. ¶¶ 11, 13)), Preamble. Mary McColl, who originally was a Defendant in this

lawsuit, is the Executive Director of Equity, the highest-ranking staff member of the

Union. Compl. ¶ 12; Bylaws Art. III, § 6(a). On December 4, 2015, the plaintiffs

dismissed all claims against Ms. McColl with prejudice. Docket No. 9.

Equity is governed by its Constitution and Bylaws. Compl. ¶ 11. A fundamental

tenet of Equity’s constitutional structure is that its national governing body, the

National Council (“Council”), sets the policies and priorities of the organization.

Const. Art. III, § 1(a). The Council is given Constitutional authority for the “general

management, direction and control of the affairs, funds and property of the

Association, and the determination of the relations and obligation of members to the

Association . . . .” Const. Art. III, § 1(a). The Council consists of 75 members and 8

officers, who are elected by the membership of Equity every two years. Const. Art. III,

§§ 2(a), 4(a), 5.

Every Councillor and officer must be a member in good standing of the union.

Const. Art. II, § 11(b). Of the 75 Councillors, 22 come from Equity’s Western Region,

which includes L.A. See Const. Art. III, §2(a) & App. A; By-Laws Art. II, §§ 2-3. All

members in good standing of Equity, regardless of the Region in which they reside, are

entitled to vote for all Officer and Councillor positions. Const. Art. III, § 7. The


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Western Regional Board (“WRB”) of Equity “assist[s]” the National Council in the

business of the Association.1 Const. Art. III, §1(b). The WRB is composed of the 22

elected actors and stage managers that are part of the Council. Const. App. A.

Two plaintiffs -- John Flynn and Simon Levy -- are not members of Equity and

purport to “participate in this lawsuit as designees” of parties to the settlement

agreement. Compl. ¶ 9. Various of the plaintiffs claim to be third-party beneficiaries

of the agreement. Id. ¶ 10. About half of the plaintiffs are also producers (including

the two that are not Equity members) -- that is they own or operate entities that produce

theatrical engagements or represent employer interests in those engagements.2 Other

than Flynn and Levy, the plaintiffs are members of Equity. Id. ¶¶ 9, 10.

The History of the 99-Seat Plan

One way that Equity seeks to preserve decent wages and working conditions for

working actors and stage managers, Const. Preamble, is to maintain an internal union

membership rule that subjects a member to discipline if he or she works without the

benefit of an Equity contract. By-Laws Art. X, § 1(d); Compl. ¶ 13. Equity decided in

the early 1970’s to waive this rule for small theaters in L.A. with fewer than 100 seats.

Compl. ¶ 14. In 1988, Equity’s National Council voted to adopt what would later be

known as the 99-Seat Theatre Plan, which was a unilateral rule that permitted members

to work in L.A.’s small theaters only if certain minimum working conditions were met;

1 The WRB was previously known, and is denominated in the Settlement

Agreement, as the Western Advisory Board. 2 Plaintiffs do not disclose their employer status in the Complaint. Should this

matter proceed beyond this motion to dismiss, Equity will put forth evidence of this status. For example, plaintiff Gary Grossman has filed a concurrent NLRB charge in his capacity as a Union member and in his capacity as the President of the Skylight Theatre Company. Hudson-Plush Decl. Ex. 2. The court may take judicial notice of NLRB charges. Kavowras v. N.Y. Times Co., 328 F.3d 50, 57 (2d Cir. 2003); Nanavati v. Adecco USA, Inc., 99 F. Supp. 3d 1072, 1075 n.2 (N.D. Cal. 2015).


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the actors were considered “volunteers” that received no wages, small stipends for

performances and no compensation for rehearsals. Compl. ¶¶ 17, 19, 24 & Ex B.

In 1989, members, many of whom also were employers that owned or operated

theaters or were producers, sued the Union (before this Court) to try to prevent

implementation of the Plan. Compl. ¶¶17-18; Plush Decl. Ex. 3 (Jens v. Equity Compl.

¶17). The plaintiffs in Jens included Gary Grossman, Thomas Ormeny, and Joseph

Stern, who are also plaintiffs in this action. This action, of course, seeks to enjoin the

elimination of the availability of the very Plan that these same plaintiffs fought in Jens

to stop Equity from implementing (due to the small stipends they would have to pay).

After the Jens plaintiffs unsuccessfully moved for a temporary restraining order and a

preliminary injunction to stop Equity’s implementation of the Plan, the parties to that

lawsuit settled, resulting in a settlement agreement (the “Settlement Agreement”).

Compl. Ex. A at 2 (mentioning unsuccessful TRO / PI attempts).

The Jens v. Equity Settlement Agreement

The Settlement Agreement (Exhibit A to the Complaint), provided that Equity

would not make any modifications to its November 29, 1988 version of the Plan for

two years -- until April 1, 1991. Compl. Ex. A ¶1. The Agreement also created a

“Review Committee” -- composed of four Jens “plaintiffs (or their designates) and four

members appointed” by Equity -- to “monitor and study the impact, implementation,

problems, and operations of the 99-Seat Theatre Plan[.]” Id. ¶2.

After April 1, 1991, “the Review Committee, W[R]B, or any member or

executive” may propose to Council to make changes to the Plan. Id. ¶3. If the

proposal would make a “substantial change” to the Plan, including to the “availability

of the Plan,” id. ¶4, then Equity would need to follow certain procedures outlined in

Paragraph 4 of the Settlement Agreement. Those procedures included:


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x Providing the Review Committee and membership with the details of the proposed changes at least 45 days in advance of when the Council “will act on the proposal” to make the changes. Id. ¶4(a)(i).

x Prior to acting on the proposal, arranging for a reasonable number of meetings with the Review Committee for the “purpose of receiving the recommendations and opinions” of the Review Committee. Id. ¶4(a)(ii).

x Considering a request from any member to hold an “advisory referendum” of the L.A. County membership on the proposed changes. Id. ¶4(a)(iii).

x If the Council decides to hold an “advisory referendum,” establishing certain procedures, including providing 45 days advance notice to the membership, providing the Review Committee with the opportunity to write a “differing viewpoint” to be included in the referendum materials “mailed to the membership,” and holding a membership meeting to explain, comment, and debate the proposed changes. Id. ¶4(a)(iv).

Council retained the right to make the ultimate decision on the proposal. See

Compl. Ex. A ¶4; Const. Art. III, §1(a).

The February 6, 2015 Proposed Changes to the Plan

The core feature of the 99-Seat Theatre Plan had remained unchanged for more

than 25 years: actors, who were considered “volunteers” rather than employees, were

not paid wages but, instead, were provided with minimal stipends ranging from $7 to

$25 per performance. Compl. ¶¶ 24(c), 24(h) & Compl. Ex. B §§ Forward (B), 21.

Actors received no compensation whatsoever for rehearsals, which often lasted for

weeks. Compl. ¶ 24(c) & Compl. Ex. B §§ Forward (B), 10.

On September 23, 2014, Equity announced a “member mobilization and

communications effort” to “learn more about its membership’s ideas and concern about

theater in L.A.” Compl. ¶30 (referencing and quoting press release, which is attached

as Exhibit 4 to the Plush Decl.). The union announced that it would conduct a survey

and focus groups of the membership. Id. The survey of more than 600 L.A. members

was conducted by the independent Hart Research Associates from October 8 to 28,

2014. Compl. Ex. C at 2. Amongst other things, the survey showed that a majority of

members believed the Plan benefited producers more than actors, Compl. Ex. C. at 10,


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and more than 70% believed that the Plan needed changes (with 50% saying “major”

changes were needed). Id. The union also conducted focus groups and held a

membership meeting on January 13, 2015 at which members expressed their views on

the Plan. Compl. ¶¶33, 34.

On February 6, 2015, the Council held a meeting to consider a proposal from its

Western Regional Board to make changes to the 99-Seat Plan. Plush Decl. Ex. 5 at p.

66 (complete meeting minutes and resolution discussed in Compl. ¶¶35-36 and

attached only in partial form to the Complaint as Exhibit D). The Council resolved to

“act on a proposal” on April 21, 2015 to make a substantial change to the Plan, and

stated that it “will adhere to the procedures in paragraph 4 of the April 1989 Jens v.

AEA Settlement Agreement.” Id. The resolution includes a specific attachment setting

forth precisely how the Union would comply with those procedures. Id. at pp. 4-5.

The proposal consisted of the elimination of the availability of the current 99-

Seat Plan, two new internal union rules, the L.A. Self-Produced Project Code and the

L.A. Membership Company Rule, as well as new template 99-Seat Theatre Agreement

that “would be bargained with individual producers and/or a multi-employer group”

and that would ensure that all actors be paid at least minimum wage for all time

worked, including in rehearsals and performances. Plush Decl. Ex. 5 at p. 66

(resolution); Compl. ¶¶ 36(a), 36(b) & Ex. D. As Ms. McColl explained, the proposal

sought to synthesize and balance all members’ concerns -- that “members want the

Plan to change” to more fairly value actors’ contributions, but that the changes “must

preserve” the opportunities “for actors to collaborate and develop artistically.” Plush

Decl. Ex. 6 (referred to in Complaint ¶35). The proposal did this by providing

opportunities for members to work (whether for free or not) without the benefit of an

Equity contract in member-produced theatrical productions or for membership


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companies3 of which they were members. Compl. Ex. D at p. 16. But at the same

time, for those actors that sought to earn at least a partial living by acting, the 99-Seat

Theatre Agreement would guarantee a salary of at least minimum wage for all hours

worked. Id. at p. 9; Plush Decl. Ex. 5 at p. 79.

In accordance with the procedures the Council adopted at the February 6 Council

meeting, Equity representatives met with the Review Committee on February 18, 20,

and 21, 2015. Compl. ¶40. It also conducted the advisory referendum and included a

differing viewpoint from the producer-side of the Review Committee in the balloting

materials mailed to the voting members on March 25, 2015. Compl. ¶¶ 37, 41, 42.

The results of the advisory referendum were 2,046 votes against the proposal and 1,075

votes for the proposal. Compl. ¶43.

The April 21, 2015 Council Action

On April 21, 2015, the Council met to act on the proposals. Compl. ¶45.

Having considered the substantial membership input since February 6, including the

advisory referendum vote, Council resolved to adopt in part and modify in part the

February 6 proposal. Plush Decl. Ex. 7 (April 21 Council Resolution discussed in

Compl. ¶¶45, 47); Compl. ¶47. Council adopted the proposal to eliminate the

availability of the 99-Seat Plan as well as the proposal to create the L.A. Self-Produced

Project Code as an internal union rule. Plush Decl. Ex. 7. It modified the proposal by

adopting a modified version of the L.A. Membership Company Rule, a slightly revised

version of the 99-Seat Agreement to be bargained with producers but requiring the

3 The rule defined a membership company as “an entity that is not organized to

make a profit for the company or its members, and operates primarily for the mutual benefit of the members . . . for the purpose of regularly producing . . . in venues of 99 seats or fewer.” Compl. Ex. D at p. 16, ¶2.


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payment of at least minimum wage, a new internal membership rule, the L.A. 50 Seat

Showcase Code, and a Transitional L.A. 99-Seat Theatre Code.4 Id.

The modifications of the original proposal included:

x The addition of a Transitional Code that essentially maintained the status quo of the 99-Seat Plan for more than a year. Compl. ¶45; Plush Decl. Ex. 7 at pp. 127-141.

x The adoption of a new internal membership rule (the 50 Seat Showcase Code) that permits members to work without a contract (without wages) in productions in theaters of 50 seats or fewer where the production budget does not exceed $20,000, for a maximum of 16 performances. Compl. ¶47(e); Plush Decl. Ex. 7 at pp. 108-125.

x A broadening of the L.A. Membership Company Rule to permit actors to join a membership company “thereby permitting Membership Companies to admit new members” and allow those members to utilize the new rule (new company members could not utilize the originally-proposed rule). Compl. ¶47(d) & Plush Decl. Ex. 7 at p. 107.

An April 21, 2015 announcement, referenced in Complaint ¶45, explained

Equity’s reasons for the modifications. Plush Decl. Ex. 8 (“Equity’s Council believes

that these rules and agreements balance concerns raised by L.A. members about the

original proposals, while doing what’s needed to represent the interests of the

membership in L.A. and around the country.”).

Procedural History

Plaintiffs filed the Complaint on October 17, 2015. Docket No. 1. The

complaint asserts four claims against Equity, for breach of contract, breach of the

covenant of good faith and fair dealing, breach of the DFR, and violation of the

LMRDA. Id. The complaint also asserts two claims against Ms. McColl, for breach of

fiduciary duty and for a violation of the LMRDA. Id. On December 4, 2015, the

4 The Council also made its Small Professional Theatres Agreement available in

L.A. Hudson-Plush Decl. Ex. 7.


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plaintiffs dismissed, with prejudice, all claims asserted against Ms. McColl and she

therefore is no longer a defendant in this lawsuit. Docket No. 9.

ARGUMENT

I. THE APPLICABLE STANDARD FOR A MOTION TO DISMISS IN A CASE INVOLVING INTERNAL UNION AFFAIRS A. Rule 12(b)(6) Standard of Review

Although the court “construes the pleadings in the light most favorable to the

nonmoving party” in considering a motion to dismiss under Rule 12(b)(6),

“[t]hreadbare recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice” to state a claim. Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009); accord L.H. v. Chino Valley Unified Sch. Dist., 944 F. Supp. 2d 867, 872-

73 (C.D. Cal. 2013). To avoid dismissal, “a complaint must contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on its face,’” Iqbal,

556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, (2007)), and

not merely “conceivable” or “speculative.” Twombly, 550 U.S. at 555, 570; accord

Eclectic Props. v. Marcus & Millichap, 751 F.3d 990, 995 (9th Cir. 2014). The

complaint must be dismissed if “the well-pleaded facts do not permit the court to infer

more than the mere possibility of misconduct.” Iqbal, 556 U.S. at 667, 679.

On a motion to dismiss under Rule 12(b)(6), the court may consider documents

attached to the complaint and also those documents, though not physically attached to

that complaint, that are referred to or relied on in the complaint whose authenticity is

not in dispute. See Colony Cove Props., LLC v. City of Carson, 640 F.3d 948, 955 (9th

Cir. 2011); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Inlandboatmens

Union v. Dutra Group, 279 F.3d 1075, 1083 (9th Cir. 2002); Lee v. Los Angeles, 250

F.3d 668, 688 (9th Cir. 2001), Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998).

A court may also take judicial notice of matters of public record, Colony Cove, 640

F.3d at 955; Lee, 250 F.3d at 689, and it “is not uncommon for courts to take judicial

notice of factual information found on the world wide web.” Flores v. City of Baldwin


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Park, 2015 WL 756877, at *2 (C.D. Cal. Feb. 23, 2015) (quoting O’Toole v. Northrop

Grumman Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) and citing Matthews v. Nat’l

Football Council, 688 F.3d 1107, 1113 & n.5 (9th Cir. 2012) (granting a request for

judicial notice of statistics available on the NFL’s website)); Estate of Graham v.

Sotheby's, Inc., 2016 WL 1464229, at *17 (C.D. Cal. Apr. 11, 2016) (taking judicial

notice of information on ebay’s website); Hendrickson v. eBay, Inc., 165 F. Supp. 2d

1082, 1084 (C.D. Cal. 2001) (same).

B. Unions are Owed Substantial Deference in Matters Involving Internal Union Affairs

The context of this case is also important in considering the standard of review.

Equity is a labor union, and this matter exclusively involves internal union affairs.

Courts “have no special expertise in the operation of unions which would justify a

broad power to interfere,” Gurton v. Arons, 339 F.2d 371, 375 (2d Cir. 1964), and there

is a “well-established” policy of “avoiding unnecessary interference in the internal

affairs of unions.” Motion Picture Guild, 800 F.2d at 975; see Teamsters Joint Council

No. 42 v. IBT, 82 F.3d 303, 306 (9th Cir. 1996) (“Courts must be careful not to

undermine union self-government.”). Similarly, courts grant unions “substantial

deference” in the interpretation of their own internal union documents, e.g., Local 1052

v. L.A. County Dist. Council of Carpenters, 944 F.2d 610, 614 (9th Cir. 1991); Local

48 v. United Bhd. of Carpenters, 920 F.2d 1047 (1st Cir. 1990), and unions have broad

latitude in adopting “reasonable rules” to govern the institution and the responsibilities

of its members, e.g. 29 U.S.C. § 411(a)(2); USW v. Sadlowski, 457 U.S. 102, 110

(1982) (LMRDA “preserves the union’s right to adopt reasonable rules governing the

responsibilities of its members”); Scofield v. NLRB, 394 U.S. 423, 430 (1969) (union

free to enforce a properly adopted rule which reflects a legitimate union interest);

including rules revolving around prohibiting members from working for non-union

employers, Steven Stripling, 316 NLRB 710, 711 (1995) (union may “maintain and

enforce rules prohibiting members from working for nonunion employers”). In light of


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this context and these principles, the Settlement Agreement should be interpreted so as

not to permit any limitation on Equity’s authority to adopt internal union rules except

where it is specifically and clearly stated in the Agreement itself.

II. THE COURT SHOULD DISMISS ALL OF THE PLAINTIFFS’ CLAIMS A. The Breach of Contract Allegations Fail on Their Face

To survive a motion to dismiss, plaintiffs must plausibly allege that Equity

actually breached the Settlement Agreement. Complete Infusion Care, CIC, Inc. v.

Aetna Life Ins. Co., 2016 WL 471207, at *3 (C.D. Cal. Feb. 4, 2016) (citing Oasis West

Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011)).5 When interpreting the contract

to determine whether there is a breach, a court gives “effect to the mutual intention of

the parties,” Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1264, 833 P.2d 545

(1992), which is determined “solely by reference to the contract’s terms.” Wolf v. Walt

Disney Pictures & Television, 162 Cal. App. 4th 1107, 1126 (2008); see also Cal. Civ.

Code § 1639 (“When a contract is reduced to writing, the intention of the parties is to

be ascertained from the writing alone, if possible . . . .”); Cal. Civ. Code § 1638 (“The

language of a contract is to govern its interpretation . . . .”); Cove Partners, LLC v.

Speciality Ins. Co., 2016 WL 461918, at *6 (C.D. Cal. Feb. 2, 2016) (granting 12(b)(6)

motion to dismiss; holding that “mutual intention of parties” to be inferred if possible

“solely from the written provisions of the contract”). Thus, where the contract

language is clear, “it governs.” Bank of the W., 2 Cal. 4th at 1264.

As Council’s February 6 resolution makes plain, it went to great lengths to

scrupulously comply with the Settlement Agreement. Plush Decl. Ex. 5 at p. 66 (“The

5 Although the Settlement Agreement has no choice of law provision, because it

was negotiated and executed in California to settle a lawsuit in the Central District of California, we assume that California law applies. Moreover, interpretation of the Settlement Agreement is governed by standard contract interpretation principles. ASARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203, 1212 n.4 (9th Cir. 2015).


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Council will adhere to the procedures in Paragraph 4 of the April 1989 Jens v. AEA

Settlement Agreement....”); id. at p. 68 (establishing detailed procedures set forth to

ensure Settlement Agreement compliance). Nevertheless, the First Claim for Relief in

the Complaint alleges that Equity breached the Settlement Agreement in five related

ways. See Compl. ¶¶ 35(a)-(e) and 53 (incorporating by reference the allegations of

¶35). First, it alleges that by not remaining neutral on the proposal, but instead

supporting it in communications to the members, Equity “made the proposal its own”

and thus “adopted” it prematurely, Compl. ¶35 & 35(c) & 35(e); second, that the

proposal to make a substantial change to the 99-Seat Plan was not, but should have

been, made by the Review Committee, the WRB, or an individual member or executive

of the Union, Compl. ¶ 35(a); third, that the Council “did not provide the Review

Committee and Equity membership with the details of the proposed change at least 45

days before it acted,” Compl. ¶ 35(b); fourth, that no meetings were held with the

Review Committee before the National Council acted, Compl. ¶ 35(c); and fifth, that

the Council held an advisory referendum without being requested to do so by a

member, Compl. ¶ 35(d).

These allegations are all premised on the notion that by supporting and not

remaining neutral on the February 6 proposal, Council “made the proposal its own,”

thereby “adopting” and “acting on” it prior to engaging in the required Paragraph 4

procedures of the Settlement Agreement. Compl. ¶35. But Council’s February 6

resolution explicitly states that it “will act on a proposal” after following the

procedures in Paragraph 4 of the Settlement Agreement, Plush Decl. Ex. 5 at p. 66; see

id. at p. 68 (procedures stating that “[b]efore the Council acts on the proposal to make

the change . . . .”), and nothing in external law or the Settlement Agreement required

Equity to remain neutral on the proposal. Under the LMRDA, a union has every right

to communicate with its members and urge a particular result in an internal

referendum. Ackley v. W. Conf. of Teamsters, 958 F.2d 1463, 1474 (9th Cir. 1992);

Members For a Better Union v. Bevona, 152 F.3d 58, 65-66 (2d Cir. 1998). Similarly,


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plaintiffs point to no language in the Settlement Agreement -- because there is none --

that would bar Equity from supporting or promoting a proposal or that requires Equity

to remain neutral on the matter in the advisory referendum. The position that Equity

acted improperly by supporting the proposal, Compl. ¶35(e), or that by supporting it

somehow formally “adopted” or “acted on” the proposal, id. ¶35, fails to state a claim.

With respect to the second argument concerning who made the proposal,

Paragraph 3 of the Agreement provides that the “W[R]B, or any member or executive”

may make a proposal to change the Plan “to the Council.” Compl. Ex. A at 4 ¶ 3.

Plaintiffs refer to the minutes and resolution adopted by the Council on February 6, see

Compl. ¶¶ 35-36, and they attach a portion – but not all – of those minutes and the

resolution as Exhibit D to the Complaint. The complete minutes and resolution reflect

that on February 6 Council considered a proposal made by its Western Regional Board.

See Plush Decl. Ex. 5 at p. 66 (“based on the recommendation of the Western Regional

Board…”).

Even if the proposal had not been made by the WRB, “any member” under

Paragraph 3 may also make the proposal to Council. By definition, even if the Council

made the initial proposal, it still is a proposal of members of Equity since all members

of the Council are members of Equity. Equity is an unincorporated “voluntary

Association,” Cont. Preamble, and a labor organization under federal labor law.

Compl. ¶ 11. A union “can act only through its members.” AFGE Local 1 v. Stone,

502 F.3d 1027, 1033 (9th Cir. 2007). The Council is comprised of 75 elected

Councillors and the eight officers of Equity. Const. Art. III, Sec. 2(a). Councillors and

officers must be members of Equity. Const. Art. II, Sec. 11(b). Paragraph 3 of the

Agreement does not limit members who may propose changes to those who are not

members of the Council or non-officers. Since under the plain language of the

Agreement “any member” is permitted to propose changes, members of the Council

were free to do so. The claim then that Paragraph 3 was somehow violated because

certain members of Equity made the proposal (¶35 & 35(a) & 35(c)) is implausible.


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Once the flawed premises of plaintiffs’ arguments are exposed -- that Equity

could not support the proposal and that by supporting it the Council somehow itself

made or adopted the proposal in violation of Paragraph 3 -- the remainder of the breach

of contract allegations tied to the timing of the Council’s action necessarily also fail.

Thus, plaintiffs’ assertion that Paragraph 4(a)(ii) of the Settlement Agreement was

breached because “no meetings were held with the Review Committee before the

National Council acted,” Compl. ¶ 35(c) (emphasis added), is inconsistent with the

Complaint. The modified final proposal was “formally adopted” “on April 21, 2015[,]”

Compl. ¶45, and Equity had “full Joint Review Committee Meetings on February 18,

20 and 21, 2015.” Compl. ¶ 40. Thus, after the Council resolved on February 6, 2015

that it “will act on a proposal” to make the change, Plush Decl. Ex. 5 at p. 66, Equity

met on no fewer than three occasions with the Review Committee before “formally

adopt[ing]” the plan “on April 21, 2015,” Compl. ¶ 45. The claim in ¶ 35(c) based on

the supposed failure to meet with the Review Committee should be dismissed.

So should plaintiffs’ claim that the Council did not provide the membership with

the details of the proposed modification 45 days before “the Council will act on the

proposal to make those changes[]” as required by Paragraph 4(a)(i). Compl. ¶35(b).

Plaintiffs concede that Equity advised members of the proposed modifications on

February 6, Compl. ¶ 35, see Plush Decl. Ex. 6 (McColl correspondence referenced in

Compl. ¶ 35), and February 6 is more than 45 days before the Council “formally

adopted” the plan “on April 21, 2015,” Compl. ¶ 45. The claim in ¶ 35(b) premised on

the supposed failure to provide notice is baseless and should be dismissed.

Finally, the claim that the Council “did not consider a request by any Union

member for an advisory referendum” but instead “decided that an advisory referendum

should be held without any request[,]” Compl. ¶ 35(d), fails for the same reason as

plaintiffs’ claim under Paragraph 3. Paragraph 4(a)(iii) states that “[t]he Council will

receive and consider a request from a member . . . that an advisory referendum” be

held. Paragraph 4(a)(iii) does not limit the class of “member[s]” who may request an


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advisory referendum with respect to the 99-Seat Plan. The Council, like the union

itself, acts through its members, who are all Equity members. There thus was no

violation of Paragraph 4(a)(iii) when the Council authorized the advisory referendum.

In sum, plaintiffs’ claim that Equity breached the Settlement Agreement (First

Claim for Relief) should be dismissed as a matter of law.

B. The Breach of Covenant of Good Faith and Fair Dealing Claim Fails for the Same Reasons as the Breach of Contract Claim

The covenant of good faith and fair dealing implied in a contract “prevent[s] one

contracting party from unfairly frustrating the other party’s right to receive the benefits

of the agreement actually made.” Guz v. Bechtel Nat. Inc., 24 Cal. 4th 317, 349 (2000).

The implied covenant, critically, however, does not “impose substantive duties or

limits on the contracting parties beyond those incorporated in the specific terms of their

agreement.” Id. at 349-50; see Cove Partners, 2016 WL 461918, at *11 (dismissing

good faith/fair dealing claim under Rule 12(b)(6)); Canas v. Ocwen Loan Servicing

LLC, 2015 WL 5601838, at *5-6 (C.D. Cal. Sept. 21, 2015) (same). It is thus “limited”

to assuring compliance “with the express terms of the contract.” Racine & Laramie,

Ltd. v. Dep't of Parks & Recreation, 11 Cal. App. 4th 1026, 1032 (1992); accord

Hanich v. Citimortgage, Inc., 2015 WL 3889617, at *2 (C.D. Cal. June 24, 2015)

(dismissing good faith/fair dealing claim on motion to dismiss); see also 21st Century

Ins. Co. v. Superior Court, 47 Cal. 4th 511, 526-27 (2009) (parties may not invoke the

covenant in order to “impose substantive duties or limits . . . beyond those incorporated

in the specific terms of their agreement”).

Here, as shown above in Part II.A, plaintiffs have failed to set forth any plausible

allegations demonstrating a breach of the Settlement Agreement. The gravamen of the

breach of the covenant of good faith and fair dealing claim is virtually identical to the

breach of contract claim: that Equity adopted a “proposal to eliminate the Equity

waiver system and t[ook] action on that proposal before following the procedures

outlined in Paragraph 4 of the Settlement Agreement”; “attempting to sway” the


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membership in numerous ways by advocating for the passage of its proposal, and

“resolving to implement the proposal before the Paragraph 4 process was followed.”

Compl. ¶57. For the same reasons these allegations fail to set forth a breach of contract

claim, they also fail to set forth a breach of fair dealing claim (Second Claim for

Relief). See supra Part II.A; Canas, 2015 WL 5601838, at *5-6 (where no breach of

contract, there is no breach of good/faith fair dealing).6

C. The DFR Does Not Govern Internal Union Affairs and, In Any Event, Plaintiffs Fail to Set Forth a Plausible DFR Claim

The DFR is a judicially-derived corollary to a union’s statutory status as

employees’ exclusive collective bargaining representative. ALPA v. O’Neill, 499 U.S.

65, 75-76 (1991). Since the “complete satisfaction of all who are represented is hardly

to be expected,” Ford Motor Co. v. Huffman, 345 U.S. 330, 338 (1953), and “[c]onflict

between employees represented by the same union is a recurring fact,” Humphrey v.

Moore, 375 U.S. 335, 349-50 (1964), the DFR is a “purposefully limited check” on a

union’s discretion, USW v. Rawson, 495 U.S. 362, 374 (1990), that the Ninth Circuit,

like the Supreme Court, “narrowly constru[es].” Johnson v. USPS, 756 F.2d 1461,

1465 (9th Cir. 1985). Judicial review of union action “must be highly deferential,”

O’Neill, 499 U.S. at 78, and a union violates the DFR only if its actions are “arbitrary,

discriminatory, or in bad faith.” Id. at 67, 76-78.7

6 The allegation that Equity refused to “confer with the Plaintiff-side members of

the Review Committee or any other person [or] to consider the advice of the 2-1 majority of Union members who voted to reject the proposal,” Compl. ¶57, cannot state a claim for breach of the covenant of good faith and fair dealing because there was no requirement to do so in the Settlement Agreement and a breach of fair dealing claim cannot add terms to a contract. E.g., Racine, 11 Cal. App. 4th at 1032; 21st Century Ins. Co., 47 Cal. 4th at 526-27. The assertion that Equity repeatedly refused to convene the Review Committee, Compl. ¶57, is contradicted by the allegations of the Complaint itself, see Compl. ¶¶ 27 and 40 (Equity held Review Committee meetings on May 31, June 27, July 19, September 27 and November 1, 2013, February 18, 20, and 21, 2015).

7 The Complaint does not allege any discriminatory action. See Compl. ¶66.


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To be “arbitrary,” the union’s conduct must be “wholly irrational,” O’Neill, 499

U.S. at 78. A plaintiff must show that the union’s challenged decisions or acts were

“without a rational basis or explanation.” Marquez v. Screen Actors Guild, Inc., 525

U.S. 33, 46 (1998); Hays v. Nat’l Elec. Contractors Ass’n, 781 F.2d 1321, 1324 (9th

Cir. 1985). Allegations that a union made a mistake in judgment, or was negligent, are

insufficient to establish a breach. Rawson, 495 U.S. at 372-73, 376; Marquez, 525 U.S.

at 45-46 (no DFR breach even if union’s judgments are “ultimately wrong”).

To establish a “bad faith” DFR breach, there “must be ‘substantial evidence of

fraud, deceitful action or dishonest conduct.” Amalgamated Assoc. of Streetcar

Employees v. Lockridge, 403 U.S. 274, 301 (1971); Spellacy v. ALPA, 156 F.3d 120,

126 (2d Cir. 1988); Cavanaugh v. S. Cal. Permanente Med. Group, 583 F. Supp. 2d

1109, 1130 (C.D. Cal. 2008) (same). The bad faith must be “sufficiently egregious”

and so “intentionally misleading” as to be “invidious” in order to breach the duty.

O’Neill v. ALPA, 939 F.2d 1199, 1203 (5th Cir. 1991) (on remand from Supreme

Court). It is thus “invoked only to remedy the most egregious union conduct.” Id.8 1. The DFR Does Not Apply to Internal Union Affairs

As discussed above, the DFR is a corollary to a union’s status as exclusive

bargaining representative; the duty protects union-represented employees when the

union handles representation matters (administering or negotiating a CBA) with the

employees’ employer. O’Neill, 499 U.S. at 75-77; cf. Compl. ¶65 (“Equity owes

employees whom it represents for collective bargaining purposes a duty of fair

representation.”) (emphasis added). In “other words, the DFR extends only to matters

involving an employee’s dealings with his employer and ordinarily does not affect an

8 In light of these heightened standards, courts frequently dismiss DFR claims on

motions to dismiss. E.g., Thompson v. Permanente Med. Group, 623 Fed. Appx. 400, 400 (9th Cir. 2015); Garity v. APWU, 585 Fed. Appx. 383, 383 (9th Cir. 2014) (same); Ajifu v. IAM, 205 Fed. Appx. 488, 490-91 (9th Cir. 2006); Davis v. Prof. Musicians Local 47, 2012 WL 5929909, at **3-5 (C.D. Cal. Nov. 26, 2012).


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employee’s relationship with the union structure.” United Bhd. of Carpenters v. Metal

Trades Dep’t, 770 F.3d 846, 849 (9th Cir. 2014). Thus, courts have “‘usually excluded

internal union affairs’ from the duty to provide fair representation” unless there is

substantial impact upon the negotiation and administration of a CBA. Id. (citation

omitted); see Diaz v. ILWU Local 13, 474 F.3d 1202, 1206 (9th Cir. 2007) (DFR does

not apply to internal union affairs); Distler v. UMW, 711 F.2d 76, 78-79 (7th Cir. 1983)

(same); Bass v. Boilermakers, 630 F.2d 1058, 1062 (5th Cir. 1980) (same).

Plaintiffs allege in their Fourth Claim for Relief that Equity breached the DFR

by “eliminating the Equity Waiver system.” Compl. ¶66. But the plaintiffs concede

that the 99-Seat Plan was an internal union rule -- that is, the waiver in L.A. of Equity’s

rule against working without being covered by an Equity collective bargaining

agreement. Compl. ¶1 (Plan was a “rule imposed on Equity members”), 13, 14, 19,

24(a), 24(c). It was thus not a CBA, but an internal union rule – and, as an internal

union rule, it exclusively involved a matter of internal union affairs and policy, not

touching on the negotiation or administration of a collective bargaining agreement.

The DFR, then, does not apply and the claim fails as a matter of law. E.g., Metal

Trades, 770 F.3d at 849; Diaz, 474 F.3d at 1206; Distler, 711 F.2d at 78-79; Bass, 630

F.2d at 1062; see Compl. ¶66 (Equity action “undermined the ability of members to

improve their skills through volunteer activities”).

2. The Complaint Fails to State a DFR Claim

The DFR claim asserts that by “eliminating the Equity waiver system in

violation of the Settlement Agreement and over the unambiguous objections of two-

thirds of its Los Angeles members,” Equity violated the DFR. Compl. ¶66. This

assertion fails to state a claim because it does not allege in more than conclusory

fashion that Equity engaged in “arbitrary” or “bad faith” action as those terms are

defined under DFR law.

To the extent the DFR claim is predicated on a violation of the Settlement

Agreement, there has been no such violation. See supra pp. 11-15. Nor can plaintiffs


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rest their DFR claim on Equity’s decision to proceed despite the outcome of the

advisory referendum. According to the Complaint, a minority (44.6%) of Equity’s

L.A. membership – which is itself a small minority of Equity’s total membership –

participated in the advisory vote, and fewer than two-thirds of that minority voted

against Equity’s plan. See Compl. ¶43. But even if a majority of Equity’s membership

had voted in the advisory referendum against the proposal, that would still not support

a DFR claim. First, the vote was merely advisory; the Council remained free to

determine what it believed to be the proper course of action. Cf. Augspurger v. Bhd. of

Locomotive Eng’rs, 510 F.2d 853, 859 (8th Cir. 1975) (DFR claim regarding employee

vote fails to state a claim when vote “was simply an advisory one”); Douglas v. USW,

1989 WL 201627, at *22 (S.D.W.Va. 1989) (rejecting claim that union breached duty

of fair representation in connection with “advisory, straw vote”). Second, whatever the

wishes of a group of employees, even a majority, a union has a duty though its elected

representatives to serve fairly the interests of all the represented employees. See

Emporium Capwell Co. v. W. Addition Commt’y Org., 420 U.S. 50, 64 (1975) (in

crafting unions’ representational authority, Congress did not “authorize a tyranny of the

majority”); Steele v. Louisville & N.R. Co., 323 U.S. 192, 202-03 (1944). Like a

legislature, see Steele, 323 U.S. at 202, a union acts as a representative of its

constituency, balancing competing interests, and is allowed by law to act as it deems

best, within a “‘wide range of reasonableness.’” O’Neill, 499 U.S. at 67, 78 (citation

omitted). Here, no facts alleged in the complaint show that Equity’s plan, despite

plaintiffs’ opposition to it, exceeded the wide bounds of the union’s permitted range of

conduct.

Moreover, there is no plausible argument that a union advocating changes so that

more of its members would have the opportunity be paid at least a minimum wage

could be considered arbitrary, which is defined as “without a rational basis or

explanation.” Marquez 525 U.S. at 46; O’Neill, 499 U.S. at 78. That the plaintiffs

disagree with this judgment as a matter of policy does not make the judgment arbitrary.


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Jeffreys v. CWA, 354 F.3d 270, 275-77 (4th Cir. 2003) (neither courts nor litigants may

“substitute [their] judgment for” that of a union’s elected leadership).

Finally, other than slapping the label “bad faith” on Equity’s action, see Compl.

¶66, the plaintiffs make no factual allegations of the “substantial evidence of fraud,

deceitful action or dishonest conduct,” Lockridge, 403 U.S. at 299, required to plead a

DFR claim. The purported basis that Equity overrode the objections of those voting in

the advisory referendum -- itself not an allegation of fraud, deceit, or dishonesty -- is

contradicted by the admissions in the Complaint that Equity modified the initial

proposals (in order to take the vote into account). Compl. ¶47. D. The LMRDA Claim Fails as a Matter of Law

Plaintiffs’ Fifth Claim for Relief is asserted under LMRDA § 101(a)(1), 29

U.S.C. § 411(a)(1). Compl. ¶¶ 68-74. Plaintiffs essentially contend that the manner in

which Equity made the substantial change to the 99-Seat Plan and conducted the

advisory referendum violates § 101(a)(1). Compl. ¶¶ 71-74. This claim should be

dismissed for numerous reasons. First, LMRDA § 101(a)(1) is not applicable here

because the advisory referendum is not binding and § 101(a)(1) applies only where a

vote binds the decision makers. Second, because interested employers have financed

and encouraged this lawsuit, it must be dismissed pursuant to the terms of LMRDA §

101(a)(4). Third, on its face, the complaint does not state a cognizable LMRDA claim.

1. The LMRDA Does Not Apply to Advisory Referendums

LMRDA § 101(a)(1) provides that union members have “equal rights . . . to vote

in elections or referendums of the labor organization, to attend membership meetings,

and to participate in the deliberations and voting upon the business of such meetings.”

29 U.S.C. § 411(a)(1). It is an “anti-discrimination provision, pure and simple.”

Ackley, 958 F.2d at 1473. Plaintiffs do not and could not allege that they were denied

the opportunity to attend membership meetings or the opportunity to participate or vote

in such meetings. See Compl. ¶¶71-74; Ackley, 958 F.2d at 1473-74. Their claim,


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then, is limited to the argument that they were somehow treated unequally with respect

to participation in the advisory referendum. See Compl. ¶¶71-74.

The advisory referendum in this case, however, is not required by the LMRDA,

see Sergeant v. Inlandboatmen’s Union, 346 F.3d 1196, 1201 (9th Cir. 2003) (Section

101(a)(1) “accords no right to vote on any matter to union members”); Ackley, 958

F.2d at 1476 (same), but it is instead required only by the Settlement Agreement. In

the Ninth Circuit, it is unclear whether Section 101(a) even applies to votes that are not

required by the LMRDA (such as the election of union officers). See Ackley, 958 F.2d

at 1473, 1476 (where the vote is not required by the LMRDA, there is no requirement

to refer to LMRDA rules on how the vote is to be conducted and “Section 101(a) of the

LMRDA affords no remedy”). Ackley, at least, suggests no. Id. at 1466.

What is more clear, however, is that where the vote is advisory only to a body

that has ultimate decision-making authority, then LMRDA Section 101(a) is not and

should not be applicable. Thus in Kahn v. Hotel & Rest. Emp. & Bartenders Int’l

Union, 469 F. Supp. 14, 18 (N.D. Cal. 1977) aff’d, 597 F.2d 1317 (9th Cir. 1979), the

referendum was for “consultation” only, and whether “there were irregularities in the

[advisory] voting has no bearing on the validity” of the final action taken by ultimate

decision maker. Id. at 17-18. Although the plaintiffs claimed that they “were denied

an equal opportunity to vote” under the LMRDA, the court held that “the fact remains

that the decision . . . was committed solely to the discretion of [the p]resident” and

LMRDA Section 101(a) therefore did not apply. Id. at 18. Similarly, in Acker v. BLE,

1977 WL 15551 (D. Minn. Apr. 22, 1977), the court held that Section 101(a)(1) is not

implicated in an advisory referendum “poll” of members and that union leaders can

“decline to follow the preferences of the membership, although, of course, they do so at

the peril of being ousted from office in the next election.” Id. at *1.

Accordingly, because the vote was advisory only and the Council was the

ultimate-decision maker, even if Section 101(a) applied to referenda votes not required

by the LMRDA, the LMRDA would not apply and the claims should be dismissed.


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2. This Case Should Be Dismissed Under LMRDA § 101(a)(4) because Interested Employers Have Financed this Suit

Section 101(a)(4) of the LMRDA provides that “no interested employer or

employer association shall directly or indirectly finance, encourage, or participate in,

except as a party” any LMRDA action. 29 U.S.C. § 411(a)(4). If an interested

employer encourages or finances an LMRDA action, it must be dismissed. Simo v.

UNITE, 322 F.3d 602, 612 (9th Cir. 2003); see Harris v. Plasterers Local 406, 619

F.2d 1164, 1170 (7th Cir. 1980) (dismissing LMRDA suit because, among other

reasons, it was “encouraged by an interested employer”); Adamszewski v. Local Lodge

1487, IAM, 496 F.2d 777, 784 (7th Cir. 1974) (employer is interested in litigation if it

“is concerned with it or is liable to be affected by it or has some self-interest in it”).

Here, the plaintiffs have utilized the “Go Fund Me” website to create a “L.A.

Intimate Theatre Legal Fund” in part to “to cover the legal fees” of the plaintiffs in this

action. Plush Decl. Ex. 9.9 The funds go into a “trust account through the lead

attorney, Steven Kaplan.” Id. The Fund explains that any “theater company . . . or a

passionate stakeholder of any kind” may contribute, and that it was created “at the

behest of interested stakeholders that include both theater companies, plaintiffs in the

case, and members of AEA.” Id. (fund was created by members of the “Theatrical

Producers League of Los Angeles” and two theaters’ “managing directors”). And there

can be no dispute that interested employers that are not a party to this action have

funded it, including but not limited to the Odyssey Theatre Ensemble ($2,000) and The

9 The court may take judicial notice of this website. Matthews, 688 F.3d at 1113

& n.5; O’Toole., 499 F.3d at 1225; Flores, 2015 WL 756877, at *2; Estate of Graham, 2016 WL 1464229, at *17; Hendrickson, 165 F. Supp. 2d at 1084.


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Blank Theatre ($500).10 Id. This interested employer financing independently requires

dismissal of plaintiffs’ LMRDA claim. 3. The Complaint States No Cognizable LMRDA Claim

Plaintiffs allege that Equity violated their equal right to vote in the advisory

referendum when it (a) did not remain neutral in its support of the initial proposal

without first giving all members an opportunity to hear all contending positions on the

proposal, Compl. ¶¶71, 73; (b) when it omitted the opposition statement from the

electronic ballot for three days of voting, id. ¶72, and (c) when it “directed members of

the 99-Seat Committee” to vote in favor of the referendum, id. ¶74. Independently or

taken together, none of these allegations state a plausible LMRDA § 101(a)(1) claim.

Jurisdiction under 101(a)(1) exists only when “discrimination” in the right to

vote has been alleged, and without such discrimination such claims should be

dismissed for failure to state a claim. Stelling v. IBEW, 587 F.2d 1379, 1385 (9th Cir.

1978). As stated above, it is an “anti-discrimination provision, pure and simple” and to

“state a claim under section 101(a)(1), a union member must allege a denial of rights

accorded to other members.” Ackley, 958 F.2d at 1473. Here, because there is no

allegation that any plaintiff was denied the right to vote in the referendum or denied the

opportunity to attend or speak at a membership meeting, or discriminated against in

some way in comparison to other members, there is no cognizable LMRDA claim. Id.

The argument that Equity violated Section 101(a)(1) by expressing its support

for the initial proposal prior to all parties expressing their views has no merit. Equity

has the absolute right under the LMRDA to communicate with its members and urge a

particular result on an internal union (non-election) referenda issue. See Ackley, 958

F.2d at 1474 (the question whether union’s information was “biased toward a particular

10 These theatres undisputedly are interested employers under the statute. See

Adamszewski, 496 F.2d at 784 (employer is interested in litigation if it “is concerned with it or is liable to be affected by it or has some self-interest in it”).


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outcome is irrelevant for purposes of section 101(a)(1)”); Bevona, 152 F.3d at 66

(dismissing plaintiffs’ claim that union’s conduct, inter alia, advocating a position on

the referendum “tainted” the vote). The fact that Equity supported the proposal as a

matter of law therefore does not violate § 101(a)(1). Ackley, 958 F.2d at 1474.

Plaintiffs’ two other arguments fare no better. Plaintiffs first assert that Equity

violated the equal rights of L.A. members by omitting the producer-side opposition

statement in the electronic ballot for the first three days of the voting. Compl. ¶72.

This argument is fatally flawed for at least two reasons. First, there is no requirement

for the union under the LMRDA to distribute an opposition statement or otherwise

publicize opposing views. Ackley, 958 F.2d at 1466, 1474. As long as all members

have the right to vote and were not discriminated against, there is no violation. Id. at

1466, 1474. Nor was there any requirement in the Settlement Agreement to include the

opposition statement in the electronic ballot. The only requirement was to include it in

the “materials mailed to the membership,” Compl. Ex. A ¶4(a)(iv)(2), which it was, see

Compl. ¶¶41-42. Second, it ignores plaintiffs’ own allegation that the electronic ballot

“omitted the Council’s endorsement and the Review Committee’s opposition

statement.” Compl. ¶42. In other words, both sides of the issue were not distributed

for those three days. And the balloting period lasted 24 days, see Plush Decl. Ex. 6 at

p. 87 (balloting period from March 25 to April 17), so both the Council’s position and

the opposition statement were included not only in all mail ballots, but in the electronic

ballot for 21 of the 24 days of the voting period.

Finally, plaintiffs allege that Equity violated § 101(a)(1) when it directed

members of the 99-Seat Committee to vote in favor of the referendum. Compl. ¶74.

As alleged, that Committee is a “subcommittee” of the WRB. Id. ¶39. The WRB are

all members of Council. Const. Art. III, §2(a), (b). Plaintiffs allege that an Equity

“staff member” told 99-Seat Committee members to vote “yes.” Compl. ¶39. This

allegation does not state an LMRDA equal rights claim. First, the plaintiffs “lack

standing” to assert the “rights of other union members,” particularly ones that are a


1 subcommittee of the Council that they are suing. Weiss v. Torpey, 987 F. Supp. 212,

2 218 (E.D.N.Y. 1997); Mamula v. USW, 304 F.2d 108, 113 (3d Cir. 1962). Second, it

3 would not violate § 101 (a)( 1) even if a "staff member" told members to vote yes when

4 that staffer had no ability to know or control how a member voted in the secret ballot.

5 Council supported the proposal and urged members to vote yes. It had every right to

6 do so. Ackley, 958 F.2d at 1474. An allegation of being told how to vote does not set

7 forth the type of unfair discrimination that would possibly violate § 101 (a)( 1).

8 *** 9 In sum, plaintiffs criticize the Council for making the judgment to eliminate the

10 availability of the Plan in order to create the opportunity for some Equity members to

11 actually begin to be paid a wage in Los Angeles' small theaters. A different policy

12 judgment could have been made; it would have been made had plaintiffs been the

13 Union's elected leaders. But they are not, and the law recognizes that such judgments

14 are necessary for union leadership, including at "difficult and trying times," and

15 courts nor litigants are "empowered to substitute [their] judgment for" that of a union's

16 elected leaders. Jeffreys, 354 F.3d at 275-77. In light of this principle, and Equity's

1 7 compliance with the unambiguous provisions of the Settlement Agreement, Equity is

18 entitled to dismissal of all claims in this case.

19 CONCLUSION

20 For the reasons set forth above, the Complaint should be dismissed with

21 prejudice.

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n Da IS

Evan Hudson-Plush Wendy M. LaManque Cohen, Weiss and Simon LLP 330 West 42nd Street New York, NY 10036

lsi Ira L. Gottlieb

25

Ira L. Gottlieb (SBN 103236) Lisa C. Demidovich (SBN 245836) Bush Gottlieb A Law Corporation 500 North Central Avenue, Suite 800 Glendale, California 91203-3345


cohen, weiss and simon llp susan davis* evan hudson...

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