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Thompson v. United Transportation Union9/14/2005
United Transportation Union appeals a ruling on the plaintiffs' class certification motion. AFFIRMED.
Heard by Sackett, C.J., and Huitink and Vaitheswaran, JJ.
A union appeals a ruling on a motion for class certification. We conclude the district court did not abuse its discretion in granting the motion.
I. Background Facts and Proceedings
The plaintiffs were employees of Chicago and Northwestern Railway Company (CNW) who had contractual claims against the company. CNW merged with Union Pacific Railroad Company which, in turn, settled the CNW employee claims for $9.5 million. A settlement fund was created in that amount.
United Transportation Union (UTU) is an unincorporated labor organization. One of its intermediate bodies serves as collective bargaining representative for former CNW employees. UTU representatives formulated rules for allocating and distributing the settlement fund. Under the rules, adopted and published in Circular Letter No. 30, a three-member review panel was to "determine the validity of each claim" and assign a monetary figure to these claims. To arrive at the figure, the panel was to first calculate a "payment percentage," which involved "dividing the total amount in the claim fund by the total value of all valid claims." Then, the panel was to multiply the value by the payment percentage.
After completing its review, the panel determined that the total sum in the settlement fund had risen to approximately $11.3 million, with interest. The panel also determined that the total value of all valid claims against the settlement fund was approximately $6.5 million. This left a surplus in the fund of approximately $4.8 million.
Union representatives voted on several options for allocating these surplus funds. A majority chose not to distribute the money solely to union members with valid claims but also to active union members without valid claims. This method was ratified by the union membership and the funds were distributed.
Following the distribution, several former CNW employees sued UTU, alleging the organization breached an obligation to hold the settlement fund in constructive trust for their benefit and breached a contract by modifying the distribution terms. They moved for class certification, claiming:
he application of the published rules of Circular Letter No. 30 would have provided payment as follows:
d. The payment percentage will be determined by dividing the total amount in the claim fund [$11,356,642.00] by the total value of all valid claims [approximately $6,500,000].
e. Distribute the money on each valid claim by multiplying the value times the payment percentage [175%] determined in item d above.
(Emphasis in original). They asserted 2,028 people "should have received the $4.8 million that was wrongfully paid to the Defendant UTU and others."
The district court granted the motion and UTU appealed. On appeal, UTU challenges the class certification ruling on the following grounds: (1) 528 class members are entitled to less money if the plaintiffs prevail, (2) class members are divided over the issue being litigated as reflected, in part, by votes rejecting the named plaintiffs' position, (3) class members failed to exhaust intra-union appeal remedies, (4) the named plaintiffs intend to use this lawsuit to further their political interests, and (5) class certification contravenes federal labor policy. Our review is for an abuse of discretion. Vos v. Farm Bureau Life Ins. Co., 667 N.W.2d 36, 44 (Iowa 2003).
II. Interests of 528 Proposed Class Members
UTU claims that 52
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