DANIELS 399 AFL CIO v. Sanitarium Association, Inc., a corporation, Robert H. Brown, et al., . . . (and ten other persons), Defendants. (1962)

In this action for damages for libel, the plaintiff appeals from a judgment of dismissal, entered after general demurrers to the complaint had been sustained with leave to amend and plaintiff had declined to amend.

In the complaint it was stated that Luther Daniels, in a representative capacity for and on behalf of Service and Maintenance Employees Union Local 399, Building Service International Union, AFL-CIO, alleges as follows: The defendants at all times acted with full knowledge of the libelous nature of the publication hereinafter alleged, and participated and conspired with each other to publish said letter. Plaintiff Daniels is the president of said Local Union 399, which is an unincorporated association representing approximately 7,000 members in the Los Angeles County area, and is a labor union affiliated with the Building Service International Union, AFL-CIO. For many years and presently said Local 399 has represented employees of hospitals and sanitariums, and has negotiated collective bargaining agreements with hospitals and sanitariums in the Los Angeles County area. Said agreements provide for wages, hours, working conditions, and other benefits for employees of hospitals and sanitariums. By reason of such representation and agreements, said Local 399, its officers, members, and representatives have built up an excellent reputation in labor-management relations and in the community in general in California and in Los Angeles County. The publication hereinafter alleged held said union (399), its officers, members, and representatives up to public hatred, ridicule, and contempt, and has greatly injured them in their reputation, business, and credit in the community. The issues stated herein and the questions to be litigated are of common and general interest to all the members of said union in exactly the same manner as this plaintiff is affected, and the members are so numerous, amounting to thousands of members, that it is impractical to bring all of said members before the court as individual plaintiffs; and therefore plaintiff sues for the benefit of said officers, members, and representatives, and on behalf of said Local Union 399. About September 23, 1960, the defendants caused to be printed and published a letter on the stationery, containing the names of the defendants, and distributed, published, and circulated said letter to approximately fifty sanitariums, hospitals, and nursing homes within the State of California, and many within Los Angeles County. The said institutions received said letter and recognized it as intended to apply to plaintiff, the Local Union 399, its officers, members, and representatives. A copy of said letter is attached to the complaint and incorporated in the complaint by reference. (The letter is long, consisting of six pages of single-spaced typewriting. It will not be necessary to copy the letter herein, in view of the determination to be made of this appeal. Statements by counsel for the respective parties, however, are set forth in a footnote¹ as a general indication of the nature of the letter.) The said letter contained libelous, false, and defamatory statements, and among other items contained the following libelous, false, and defamatory matter. (Twenty-five excerpts from the letter are set forth at this place in the complaint but, for the same reason that the letter is not copied herein, the excerpts will not be copied.) The letter and publication were made by defendants with the purpose, design, and intent of injuring, disgracing, and defaming the said Local Union 399, its officers, members, and representatives. The said publication was made by defendants with hatred, ill will, and malice to said Union, its officers, members, and representatives, and said publication was false and known by defendants to be false at the time it was made, and defendants did not have probable or any cause for believing said statements to be true. That by means of the publication, the Union, its officers, members, and representatives have been exposed to hatred, contempt, ridicule, and obloquy, and they have been shunned and avoided, and have suffered injury in their business, standing, and reputation in the sum of $300,000. That said publication was made by defendants for ‘the malicious purpose, intent, and design to injure the reputation and credit’ of said Union, its officers, members, and representatives, and to bring the Union into disrepute as the collective bargaining representative of employees, and into public contempt and ridicule, and was published with ill will, hatred, and malice to them, and by reason thereof plaintiffs demand punitive damages in the sum of $200,000.

In the minute order sustaining the demurrers, it was stated: ‘Demurrers sustained 15 days to amend. (An unincorporated association can not sue; and insofar as this is a suit on behalf of the association, an unincorporated association does not have a cause of action for libel.)’

Appellant contends that a labor union, even though it is an unincorporated association, should be recognized as a legally existing entity, separate from its members, and capable of maintaining an action for libel. He argues that under modern conditions and development of labor unions, a labor union, as an unincorporated association, is a special type of organization that functions in a manner similar to a corporation and, in order to exist and work for its objectives, it should be regarded as similar to a corporation and as entitled to equal protection of the law; and just as a corporation can be libeled as an entity, a labor union can be so libeled. He also states that several of the text books on libel and the Restatement of Torts indicate that the California law is that an unnincorporated association, including a labor union, does not have a cause of action for libel of the organization as a separate entity; that the texts state that the rule is otherwise in various other states; that the authority frequently cited for that general statement is Noral v. Hearst Publications. Inc., 40 Cal.App.2d 348, 104 P.2d 860, but that case did not decide the question involved here as to whether the organization (union) as a separate entity could be libeled. (In that case the plaintiff, as president of the Workers' Alliance, sued in his own behalf and claimed that the alleged libelous publication referred to him individually;—the court held, however, that the publication was directed to the Alliance only and since the association consisted of a large group of persons, it could not be concluded that the alleged libel referred to the individual plaintiff.)

Appellant cites California cases wherein it has been held that an unincorporated labor union may enter into a contract (McCarroll v. Los Angeles County etc. Carpenters, 49 Cal.2d 45, 315 P.2d 322; Alpha Beta Food Markets v. Retail Clerks, 45 Cal.2d 764, 291 P.2d 433); may be held responsible in damages for tort (Garmon v. San Diego Bldg. Trades Council, 49 Cal.2d 595, 320 P.2d 473); and may be held in contempt of court (Oil Workers Intl. Union v. Superior Court, 103 Cal.App.2d 512, 230 P.2d 71). Those California cases pertained to proceedings against unincorporated unions—they were not actions by the unions. Section 388 of the Code of Civil Procedure provides that persons associated in business under a common name may be sued under such name. Appellant also cites New York, Pennsylvania, and Wisconsin cases wherein it has been held that such a union may maintain an action for damages for libel. He quotes at length from Kirkman v. Westchester Newspapers, 287 N.Y. 383, 39 N.E.2d 919.) It is to be noted, however, that a basis for maintaining the Kirkman case was a statute of New York known as the General Associations Law. Section 12 of that statute provided: ‘An action or special proceeding may be maintained, by the president or treasurer of an unincorporated association to recover any property, or upon any cause of action, for or upon which all of the associates may maintain such an action or special proceeding, by reason of their interest or ownership therein, either jointly or in common. * * *’ The Pennsylvania cases, so referred to, are based upon statutes which provide in substance that unincorporated associations may sue and be sued in their own names. The Wisconsin case, so referred to, was a circuit court case (Foundry Workers v. Whitewater Mfg. Co., 47 Labor Relations Reference Manual 2636), and it seems that under Wisconsin law unincorporated associations are recognized, for certain purposes, as entities and are allowed to sue and to be sued.

In California, as above stated, there is a statute (Code of Civil Procedure, § 388) to the effect that persons associated in business under a common name may be sued under that name. That section does not provide that such persons may sue under the common name. Said section 388 of the Code of Civil Procedure provides: ‘When two or more persons, associated in any business, transact such business under a common name, whether it comprises the names of such persons or not, the associates may be sued by such common name * * *; and the judgment * * * shall bind the joint property of all the associates * * * in the same manner as if all had been named defendants and had been sued upon their joint liability.’

In Juneau etc. Corp. v. Intl. Longshoremen, 37 Cal.2d 760, 235 P.2d 607, the motion of the defendant union, an unincorporated association, for a change of venue was denied, and on appeal the union contended that its rights to a change of venue should be determined by the rules of law applicable to a corporation. In that case it was said (p. 763, 235 P.2d p. 609): ‘In this state an unincorporated association is not recognized as a jural entity for all procedural purposes. The general rule is that the entity theory is rejected except where specifically provided for by statute. For example, persons associated in business under a common name may be sued under that name. Code Civ.Proc., § 388; Jardine v. Superior Court, 213 Cal. 301, 2 P.2d 756, 79 A.L.R. 291. However, it does not follow that the association may be regarded as an entity for all other purposes. ‘* * * this statutory relaxation of the common law applies only to associated defendants. Associated plaintiffs still must sue in their individual names.’ * * * Case v. Kadota Fig Assn., 35 Cal.2d 596, 602, 220 P.2d 912, 916.'

In the Juneau case, just referred to, the court said further (37 Cal.2d p. 764, 235 P.2d p. 609): ‘In Sperry Products v. Association of American R. R., 2 Cir., 132 F.2d 408, 411, 145 A.L.R. 694, the court said: ‘Thus, for most purposes the law still looks at such associations as mere aggregations of individuals. Since, however, for the purpose of suit it has come to regard them as jural entities, we can see no reason why that doctrine should not be applied consistently to other procedural incidents than service of process, and venue is one of such incidents. Certainly that promotes simplicity * * *.’ The discussion in the Sperry case, as argued by the I.L.W.U., is persuasive, but persuasive only for legislative or constitutional change. Contrary to the existing law in California, the Federal Rules of Civil Procedure, 28 U.S.C.A., permit a partnership or unincorporated association to sue as well as be sued in its common name Rule 17(b), and process may be served in the same manner as upon a corporation. Rule 4(d)(3). Under section 388 of the Code of Civil Procedure process in an action against an association sued in its common name must be served on ‘one or more of the associates'. The different procedures in the two jurisdictions are too great to regard the Sperry case as being other than a rational argument for a change in the existing law embodied in our statutes and Constitution.’

It thus appears that the union could not maintain this action in its own name.

Recent cases in which an unincorporated association has been regarded as an entity are Marshall v. International Longshoremen's & Warehousemen's Union, 57 A.C. 829, 22 Cal.Rptr. 211, 371 P.2d 987; and Inglis v. Operating Engineers Local Union No. 12, 58 A.C. 272, 23 Cal.Rptr. 403, 373 P.2d 467.) Those cases are distinguishable from the present case in that they are actions against the unions—not actions by the unions. The plaintiff in each of those cases was a member of the defendant union and was suing for damages for a negligent or intentional wrong.

Appellant (Mr. Daniels) asserts, however, in substance that although said section 388 of the Code of Civil Procedure ‘does not provide for such an entity to bring suit in its common name * * *, the technique of the representative suit has been developed to fill the need and prevent a legal injustice.’ He cites Alpha Beta Food Markets v. Retail Clerks, 45 Cal.2d 764, 291 P.2d 433, wherein there was an appeal from a declaratory judgment holding valid an arbitration award relative to a wage agreement. In that case an officer and member of the defendant union filed an amended cross-complaint on his own behalf and on behalf of all the officers and members of the union. It was said therein (pp. 773 and 774, 291 P.2d p. 438): ‘However, since an unincorporated association cannot sue, a representative or class suit may be brought on its behalf by one of its officers.’ As above stated, that action was on behalf of the said officer and all the members of the union—it was not alleged to be on behalf of the union itself. The officer who filed the cross-complaint had been made a party defendant, and thereby it was indicated that plaintiffs believed that he had an interest in the litigation. The plaintiffs therein were seeking declaratory relief pertaining to the terms, conditions, and rates of pay for many employees who were union members. The statement therein regarding a representative suit, under the cross-complaint, was limited in its application, of course, to the circumstances in that particular case—a representative suit on behalf of numerous persons. In the present case the appellant asserts that the action was brought in a representative capacity on behalf of the union; and that his position, as presented to the trial judge and on this appeal, is that the theory of the complaint is not that any individual officer or representative of the union was libeled but that the union was libeled. (It appears, however, that there are several allegations in the complaint indicating that plaintiff was purporting to state causes of action for libel as to the members of the union—some of those allegations are that the publication held up to public hatred, ridicule, and contempt not only the union but its members, officers, and representatives; that the publication was made with malice and intent to injure and defame not only the union but the members, officers, and representatives.) In any event, the publication did not contain the name of plaintiff nor any of the 7,000 members of the union. (One McDermott was named in the publication, but there is no allegation that he is a member or officer of the union.) It thus appears that the complaint did not identify or name any ascertainable persons who allegedly were libeled, and therefore no cause of action for libel was stated as to any of the numerous individual members of the union. (See Noral v. Hearst Publications, Inc., supra, 40 Cal.App.2d 348, 350–351, 104 P.2d 860.) In view of appellant's assertion that he is proceeding in a representative capacity on behalf of the union, and is not proceeding on the theory that any officer or representative of the union was libeled, the result is that he is purporting to maintain a representative suit on behalf of one alleged entity, i. e., the union—and not on behalf of numerous persons.

A representative suit has developed as a substitute for suits by numerous persons in their own names, and the purpose of such development has been the convenience to the numerous persons and the avoidance of multiplicity of actions. Section 382 of the Code of Civil Procedure provides in part: ‘[W]hen the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.’ That section ‘permits an action to be brought by one or more parties on behalf of others when the parties are numerous. This is a statutory provision based upon the common law theory of convenience to the parties when one or more fairly represent the rights of others similarly situated who could be designated in the controversy.’ (Price v. Communications Workers of Amer., 167 Cal.App.2d 524, 528, 334 P.2d 632.) ‘A representative suit is proper only to conserve a common fund or property in which all of those represented have an interest.’ (Ibid.) Since appellant has limited his complaint to one asserted cause of action, namely, an action for libel on behalf of the union only, a fundamental requisite for maintaining a representative suit is lacking, that is, that the parties with similar rights of action are so numerous that it would be impracticable to bring them all before the court. In effect, the appellant is seeking to maintain a representative suit wherein he represents one alleged litigant, and not numerous litigants or persons. Such a representative suit as that which is contemplated herein is in effect a suit by an unincorporated association for damages for an alleged tort against itself. Such a proceeding is not a representative suit. Since the unincorporated association herein cannot maintain the suit in its own name, the asserted representative suit herein, if maintained, would in effect be doing indirectly that which the association could not do directly.

Whether or not there should be a change of public policy with respect to an unincorporated association maintaining an action is a matter for determination by the Legislature.

In view of the above conclusions, it is not necessary to discuss other contentions of respondents to the effect that a cause of action was not stated. Some of those contentions are that the alleged defamatory letter is not libelous per se, was made in the course of a labor dispute, and as a result thereof a conditional privilege existed; that there was no allegation that plaintiff was a member of the union (only an allegation that he was president); and that there was no allegation that he was authorized to commence the action in a representative capacity.

The judgment is affirmed.

FOOTNOTES

1.  The letter is addressed: ‘Dear Hospital, Sanitarium, Rest Home or Nursing Home Administrator.’ Appellant (plaintiff) states that: ‘A natural and fair constraction of the publication would lead the persons reading the letter to believe that the Union committed acts, and had the policy of abandoning critically ill patients, were more interested in collecting dues than helping employees or patients; committed many acts of violence; engaged upon a deliberate drive to destroy the profits of any employer that hires Union members. The letter further states: that the Union is corrupt and more interested in private enrichment and collecting dues, than helping employees; that the Union officials spend dues for their own private benefit; that the Union officials tap private telephone lines; that the Union conducts its activities at night in order to terrify persons; that the Union causes violence to employees and many other acts and conduct which are too numerous to repeat in this brief.’ Respondents state: ‘The letter is divided into three separate and distinct parts. The first part entitled ‘I. What Has Happened?’, refers initially to the attempted organization of the employees of Edgemont Hospital by both Local Union 399 and by United Mine Workers Local No. 50. The remainder of Part I goes on to relate certain happenings and events in the course of an effort by Local Union 399 to organize the employees of Lincoln Park Retreat, another mental institution. ‘The second part of the publication is headed ‘II. What Does All This Mean To Me As Administrator of This Institution?’. Here are pointed out certain possible consequences of union organization of such institutions, such as the effect on profits, costs and control of operations. There is no reference whatsoever in Part II to Local Union 399 or any of its officers, representatives or members. Indeed, all references are to unions in general. ‘In the third part, entitled ‘III. What Action Should I Take?’, the purpose of the letter is acknowledged. The question posed in the heading is answered in the very first sentence as follows: ‘Join an association of your choice which can help and guide you.’ Suggestions follow with respect to the benefits which might be obtained from association membership and the steps that should be taken by such institutions to prepare for attempts at union organization. Toward the end the purpose is again emphasized by the statement that ‘the above remarks have been sent to you, not to acquaint you fully with the situation as it exists today since it would be impossible to put all this information in one letter but primarily to impress upon you the desirability of joining an association, and to attend its meetings, and pay its dues.’ Again, there is no reference in Part III to Local Union 399, its officers, representatives or members and no reference to any other particular union, the obvious intent being to speak of unions in general.'

WOOD, Presiding Justice.

LILLIE, J., concurs.