GARY ANDERSON, LOUIS SCOHY, and GEORGE SQUIER v. the International Union, United Plant Guard Workers of America (upgwa),…

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0170P (6th Cir.)
File Name: 04a0170p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
GARY ANDERSON, LOUIS
SCOHY, and GEORGE SQUIER,
Plaintiffs-Appellees,
v.
THE INTERNATIONAL UNION,
UNITED PLANT GUARD
WORKERS OF AMERICA
(UPGWA), INTERNATIONAL
EXECUTIVE BOARD OF THE
UPGWA, PENSION
COMMITTEE OF THE UPGWA,
and RETIREMENT PLAN OF
THE UPGWA,
Defendants-Appellants.
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No. 01-1253
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 96-70710—Gerald E. Rosen, District Judge.
Argued: September 11, 2003
Decided and Filed: June 7, 2004
Before: MERRITT, MOORE, and GILMAN, Circuit
Judges.
2 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
_________________
COUNSEL
ARGUED: Barbara M. Harvey, Detroit, Michigan, for
Appellants. E. Michael Morris, MORRIS & DOHERTY,
Birmingham, Michigan, for Appellees. ON BRIEF: Barbara
M. Harvey, Detroit, Michigan, for Appellants. E. Michael
Morris, MORRIS & DOHERTY, Birmingham, Michigan,
Charles J. Porter, OFFICE OF CHARLES J. PORTER,
Clarkston, Michigan, for Appellees.
MOORE, J., delivered the opinion of the court, in which
GILMAN, J., joined. MERRITT, J. (pp. 24-26), delivered a
separate dissenting opinion.
_________________
OPINION
_________________
KAREN NELSON MOORE, Circuit Judge. This appeal
addresses the question of whether the doctrine of apparent
authority bound a union to its officers’ self-dealing
transaction entered into in clear violation of the union’s
constitution. We hold that it did not.
Gary Anderson (“Anderson”), Louis Scohy (“Scohy”), and
George Squier (“Squier”), Plaintiffs-Appellees, are all former
officers of Defendant-Appellant, International Union, United
Plant Guard Workers of America (“UPGWA”). The other
defendants in this action are the International Executive
Board of the UPGWA (“IEB”), the Pension Committee of the
UPGWA (“Pension Committee”), and the retirement plan of
the UPGWA (“Retirement Plan”). While Plaintiffs-Appellees
were officers of UPGWA and members of the IEB, they voted
in favor of resolutions that would eliminate their positions as
officers and provide them with early-retirement benefits

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
3
above those permitted by UPGWA’s constitution. After the
IEB was threatened with litigation, it deferred implementation
of the increased early-retirement benefits until presentation
for a vote at the upcoming International Convention.
Subsequently, none of the Plaintiffs-Appellees continued in
their positions as officers, and the International Convention
voted against a resolution providing for the increased early-
retirement benefits.
Plaintiffs-Appellees brought suit in the United States
District Court for the Eastern District of Michigan, asserting
that this denial of the promised early-retirement benefits
violated several provisions of the Employee Retirement
Income Security Act (“ERISA”) of 1974. After the district
court granted summary judgment to Defendants-Appellants
on all of Plaintiffs-Appellees’ claims, a panel of this court
reversed and remanded, requesting the district court to make
further factual findings on the issue of whether the Union
President and the IEB had apparent authority to bind
UPGWA to the December 7, 1994 resolution. On remand, the
district court denied the parties’ cross-motions for summary
judgment, conducted a bench trial, and issued an opinion
concluding that the Union President and the IEB did have
apparent authority to so bind UPGWA, and accordingly
awarded Plaintiffs-Appellees the increased early-retirement
benefits.
We conclude that Plaintiffs-Appellees could not have
reasonably relied on the Union President’s or the IEB’s
representations because the increased early-retirement
benefits clearly violated UPGWA’s constitution. Moreover,
we will not enforce this contract, which Plaintiffs-Appellees
entered into in violation of their fiduciary duties under
§ 501(a) of the Labor-Management Reporting and Disclosure
Act (“LMRDA”) of 1959. Therefore, we REVERSE the
district court’s judgment awarding Plaintiffs-Appellees the
increased early-retirement benefits.
4 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
1W e are relying upon the district court’s January 17, 1997 summ ary
judgment opinion for uncontested background facts, and upon the district
court’s January 4, 2001 bench trial opinion for further factual findings,
except to the e xtent that we consider tho se factual findings to be clearly
erroneo us.
I. OVERVIEW
A. Factual Background
Plaintiffs-Appellees are former officers of UPGWA and
former members of the IEB. UPGWA is a union that
represents “Plant Guards, Security Officers, Security Police
Officers, fire protection and other employees performing
protection and security activities for private and governmental
employers.” Joint Appendix (“J.A.”) at 307 (UPGWA Const.
Art. II). UPGWA’s officers are elected “at the union’s
convention which is held every five years.” J.A. at 22 (Dist.
Ct. Op. 1/17/97).1 Anderson and Squier were elected regional
directors for UPGWA in 1990, and their terms both expired
in 1995. Scohy was a vice-president of UPGWA, who was
also elected in 1990, and his term also expired in 1995.
In 1993 and 1994, while Plaintiffs-Appellees were in office,
“the UPGWA experienced severe financial difficulties and the
IEB began exploring ways to cut costs and save money. In
November 1994, in order to stem the union’s financial losses,
UPGWA President Eugene McConville [(“McConville”)]
proposed that the union be restructured so as to eliminate
some regional directorships as well as the position of vice-
president.” J.A. at 23 (Dist. Ct. Op. 1/17/97). As part of this
restructuring, McConville proposed offering early retirement
to all full-time officers and directors who met certain
eligibility requirements. McConville further proposed that
the IEB effectuate the restructuring and offer the early-
retirement benefits in February 1995, rather than wait for
approval “at the international convention in May 1995,
because the union’s accountants had advised that there would

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
5
be a large savings to the union if it could eliminate the full-
time positions prior to the convention.” J.A. at 23 (Dist. Ct.
Op. 1/17/97).
The IEB held a special meeting on December 6 through 9,
1994, to consider various cost-cutting measures, including
McConville’s restructuring and early-retirement proposal. At
the special IEB meeting, David Kaufman (“Kaufman”),
UPGWA’s accountant, made a presentation detailing the state
of UPGWA’s finances and the cost savings projected for
McConnville’s restructuring and early-retirement proposal.
Kaufman reported to the IEB that eliminating the vice-
president’s position would save UPGWA $535,000 over five
years and that eliminating three regional directors would save
UPGWA an additional $1.70 million over five years. The
resolution proposed by McConville contemplated offering
early retirement to officers and directors who met the
following eligibility requirements:
1. Must be 50 years of age or over as of December 31,
1994.
2. Retirement must cause one full-time position to be
eliminated.
3. Retirement must be taken on February 15, 1995.
4. Acceptance of this window must be made by
December 8, 1994.
J.A. at 25 (Dist. Ct. Op. 1/17/97). The resolution further
specified that the early-retirement package would contain the
following benefits:
1. An officer or director will receive ten (10) years
allocated to age and/or service, at their discretion for
pension benefit computation.
2. An officer or director shall be entitled to all benefits
as stated in Article XI, Sections 1 and 2(e) of the
Constitution and By-Laws of the International
6 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
2Article III of UPG W A’s constitution specifies that the constitution
“can be amended only by a majority vote of the delegates at succeeding
Conventions; provided , however, that d uring the interim between
Conventions, this Constitution and By-Laws can be amended by a
majo rity vote o f the total International Membership voting in all Local
Unions.” J.A. at 307 . This article further provides that the IE B, by a two-
thirds vote, is em pow ered “to make such interim chang es in this
Constitution and By-Laws applicable only until the next regular
Constitutional Convention, as m ay from tim e to time be n ecessary to
conform this Constitution and By-Laws with any applicable laws.” J.A.
at 307-08 (UP GW A Const. Art. III) (emphasis added).
McCo nnville conceded at trial that the early-retirement benefits
embodied in the December 7, 1994 resolution “were not ‘in accordance
Union, United Plant Guard Workers of America
(UPGWA), dated May 19, 1990.
J.A. at 25 (Dist. Ct. Op. 1/17/97).
The district court found that absent the December 7, 1994
resolution, none of the Plaintiffs-Appellees would have been
eligible for early retirement under the Retirement Plan, and
that UPGWA’s constitution prohibited offering early
retirement to Plaintiffs-Appellees. Article XI, Section 2 of
UPGWA’s constitution provides:
The International Executive Board is empowered to
formulate, maintain, and amend a Pension Retirement
Plan to include, but not to exceed the following:
(A) All full-time elected officers and appointed
International Union representatives who have at
least five years of service shall be eligible under
such Plan.
(B) The normal retirement age shall be Sixty (60)
years. Disability and early retirement benefits
shall be in accordance with the normal
retirement age.2

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
7
with normal retirement age’ under Article XI, Section 2(b).” J.A. at 616
(Dist. Ct. Op. 1/4/01).
3Article XI of UP GW A’s Retirement Plan specifies that the IEB has
“the right at any time and from time to time to terminate, modify or
amend in whole or in p art any or all of the p rovisions of the Plan.” J.A.
at 292 . The IEB is designated as the “Plan Administrator” for purposes
of the Employee Retirement Income Security Act (“ERISA”) of 1974, but
a Pension Comm ittee, composed of three members designated by the IEB,
is responsible for daily administration and interpretation of the Retirement
Plan. W hen the events giving rise to this litigation occurred, Scohy was
the Chairman of the Pension Committee.
J.A. at 310 (UPGWA Const. Art. XI, § 2 (emphases added)).
Under the Retirement Plan, “a covered employee is entitled
to full retirement only if he is at least 60 years of age, or a
reduced retirement benefit if he is under age 60 but over age
55 and has completed at least five years of service. No
provision is made for retirement under age 55.”3 J.A. at 25-
26 (Dist. Ct. Op. 1/17/97). To be eligible for either normal or
early-retirement benefits under the Retirement Plan,
employees must have completed five years of service. As of
February 15, 1994, neither Anderson nor Scohy was fifty-five
years old and neither had completed at least five years of
service; Squier was fifty-nine years old, but had not
completed at least five years of service.
On December 7, 1994, before voting on the early-
retirement proposal, Plaintiffs-Appellees asked Gordon
Gregory (“Gregory”), UPGWA’s attorney, whether he
foresaw any legal problems with the early-retirement
proposal. According to Anderson and Scohy, Gregory told
them that he was not aware of any problems. However, two
days earlier, on December 5, 1994, Gregory had written to
McConville stating the opinion “that he believed that it was
likely that there would be an administrative and/or judicial
challenge to the early retirement window based upon a
violation of Article XI, Section 2 of the Union Constitution
8 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
4Jack W ebb, Ronald W arfield, and Denise Sylvestre voted against the
Decemb er 7, 1994 resolution.
and Section 501(a) of the Labor Management Reporting and
Disclosure Act.” J.A. at 26 (Dist. Ct. Op. 1/17/97). Although
it is not reflected in the district court’s January 4, 2001
opinion, at trial all of the Plaintiffs-Appellees testified that
Article XI, Section 2 of the UPGWA’s Constitution was
discussed at the IEB meeting prior to the vote on the early-
retirement proposal.
On December 7, 1994, the IEB voted in favor of adopting
the early-retirement proposal by a margin of eight in favor
and three against; Plaintiffs-Appellees all voted in favor of the
proposal.4 On December 8, 1994, Plaintiffs-Appellees all
accepted in writing the increased early-retirement benefits.
According to their acceptance letters, Anderson would receive
a monthly pension of $1,682.95, Scohy would receive a
monthly pension of $3,437.87, and Squier would receive a
monthly pension of $2,478.82.
“On December 9, [1994], the IEB passed another
resolution, this one consolidating, rearranging, and dissolving
certain regions.” J.A. at 30 (Dist. Ct. Op. 1/17/97). The
regions for which Squier and Anderson had been directors
were “to be dissolved effective February 15, 1995, i.e., the
date on which Plaintiffs retirements under the December 7
resolution were to become effective.” J.A. at 30 (Dist. Ct.
Op. 1/17/97). The resolution did not eliminate the vice-
president’s position held by Scohy because that required
amending UPGWA’s constitution through a vote at the
International Convention in May 1995.
On December 22, 1994, Jack Webb (“Webb”), a regional
director, wrote a letter to McConville asserting that by voting
in favor of the increased early-retirement benefits, members
of the IEB violated Article XI, Section 2 of UPGWA’s

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
9
constitution and their fiduciary duties, and threatening to sue
if the IEB did not withdraw the December 7, 1994 resolution.
In an opinion letter written on January 4, 1995, Gregory
confirmed the possibility of a viable legal challenge to the
early-retirement benefits embodied in the December 7, 1994
resolution. On January 5, 1995, in response to Webb’s
threatened lawsuit, McConville circulated a referendum ballot
to members of the IEB asking whether they wanted to delay
implementation of the early-retirement benefits and
restructuring until authorized through a vote at the
International Convention. The IEB voted to defer
implementation of the resolutions until the International
Convention, and the Plaintiffs-Appellees continued in their
offices until that time. At the International Convention,
Squier “ran for re-election as regional director, but lost.
Anderson did not seek re-election,” and the membership
voted to eliminate the vice-president’s position held by
Scohy. J.A. at 33 (Dist. Ct. Op. 1/17/97). Additionally, the
membership voted against adopting the increased early-
retirement benefits.
B. Procedural Background
Plaintiffs-Appellees filed various lawsuits against UPGWA
and other defendants, including two state-court actions and
this federal action asserting ERISA violations. On
January 17, 1997, the district court issued an opinion rejecting
all of Plaintiffs-Appellees’ ERISA claims and granting
summary judgment to Defendants-Appellants. Then, on July
31, 1998, a panel of this court reversed and remanded,
indicating that the relevant issue was whether McConville and
the IBE had apparent authority to bind UPGWA to the
December 7, 1994 resolution. Anderson v. Int’l Union,
United Plant Guard Workers, 150 F.3d 590, 592 (6th Cir.
1998).
In this court’s 1998 opinion, the panel explained that
“apparent authority (1) results from a manifestation by a
10 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
person that another is his agent, regardless of whether an
actual agency relationship has been formed and (2) exists only
to the extent that it is reasonable for the third person dealing
with the agent to believe that the agent is authorized.” Id. at
593. Because the record on the issue of apparent authority
was limited, the panel remanded this case instructing the
district court “to make further factual findings on whether
principles of apparent authority can bind the union to the
December 7, 1994 resolution.” Id. (emphasis added). More
specifically, the panel instructed the district court to:
determine if union president McConville, as president of
the union and a member of the [IEB], and the [IEB],
were acting within their apparent or actual authority as
representatives of the union’s retirement plan and
whether plaintiffs reasonably relied upon this authority
to enter into the agreement for early retirement benefits.
Whether plaintiffs’ reliance was reasonable may turn, in
part, on whether they were aware of the possible legal
challenges to the December 7, 1994, resolution before
they accepted the early retirement offer.
Id. (citations omitted). The panel further instructed that,
“Apparent authority . . . may attach even when the agent’s
acts are unauthorized [and] that even in the presence of a
ratification requirement, a third party may rely upon the
apparent authority of the union representatives to enter into an
agreement where there is a reasonable basis for such
reliance.” Id.
On August 31, 1999, the district court issued an opinion
denying the parties’ post-remand motions for summary
judgment. The court concluded that Article XI, Section 1 of
the UPGWA Retirement Plan, Article XII, Section 5 of the
UPGWA constitution, and McConville’s statements
manifested apparent authority in McConville and the IEB to
offer the early-retirement benefits encompassed in the
December 7, 1994 resolution. The district court found it

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
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relevant that the Retirement Plan document provides: “The
Union, acting through its International Executive Board,
reserves and shall have the right at any time and from time
to time to terminate, modify or amend in whole or in part
any and all provisions in the Plan.” J.A. at 74 (Dist. Ct.
Op. 8/31/99) (emphases in original). The district court also
found it relevant that the UPGWA constitution “provides that
the IEB ‘shall decide all questions involving interpretation of
this Constitution and By-Laws, between Conventions.” J.A.
at 75. Additionally, the district court found that prior to their
accepting the early-retirement benefits, McConville assured
Plaintiffs-Appellees that the early-retirement proposal had
been checked by the attorneys and accountants and was legal,
and that Gregory had assured Plaintiffs-Appellees that the
early-retirement proposal was legal.
In its August 31, 1999 opinion, the district court also
concluded, however, that there was a genuine issue of
material fact regarding whether Plaintiffs-Appellees’ reliance
on these manifestations of apparent authority was reasonable.
J.A. at 77 (Dist. Ct. Op. 8/31/99). The district court noted
that “whether Plaintiffs’ reliance was reasonable turns on
whether they were aware of the [UPGWA] constitution’s
requirement of a vote of the full membership on the early
retirement proposal and whether they were aware of the
possible legal challenges to the December 7, 1994 resolution
before the[y] accepted the early retirement offer.” J.A. at 77
(Dist. Ct. Op. 8/31/99) (citing Anderson, 150 F.3d 590)). The
district court found that the parties had presented conflicting
testimony regarding whether the Plaintiffs-Appellees were
told prior to accepting the early-retirement proposal that there
was the possibility of a legal challenge to the December 7,
1994 resolution, thereby creating a genuine issue of material
fact and precluding summary judgment.
The district court conducted a six-day bench trial in
December 1999. After hearing testimony and considering
exhibits, the district court issued an opinion on January 4,
12 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
2001. In its opinion, the district court adhered to its previous
conclusion that UPGWA manifested authority in the IEB and
McConville to offer the early-retirement benefits. Based
upon testimony heard at trial, the district court then concluded
that Plaintiffs-Appellees’ reliance on the IEB’s and
McConville’s manifestations of authority was reasonable.
Specifically, Ronald Warfield (“Warfield”), an IEB member
and also a Pension Committee member, testified that the
Retirement Plan could be amended via an IEB resolution.
Additionally, all three Plaintiffs-Appellees testified that they
relied upon Gregory’s assurances “that there were no legal
problems with the early retirement proposals.” J.A. at 643
(Dist. Ct. Op. 1/4/01). Although Gregory testified that he told
Plaintiffs-Appellees that he had written on December 5, 1994,
an opinion letter for McConville explaining the possibility of
a § 501 challenge, the district court credited Plaintiffs-
Appellees’ testimony that Gregory had not told them about
the letter. Moreover, all of the witnesses at trial, including
Gregory and Webb, testified that in response to an inquiry by
Webb, Gregory had stated that he was not aware of any legal
problems with the early-retirement proposal under either
Article XI, Section 2 of UPGWA’s constitution or under
§ 501 of the LMRDA. Because Gregory had been UPGWA’s
legal counsel for more than thirty-five years, the district court
found “that it was reasonable for Plaintiffs to rely upon Mr.
Gregory’s assurances that there were no legal problems with
the early retirement plan.” J.A. at 643-44 (Dist. Ct. Op.
1/4/01). Moreover, the district court found that even if
Plaintiffs-Appellees may have heard that Webb might
challenge the early retirement proposals, it was reasonable for
Plaintiffs-Appellees to rely upon Gregory’s and McConville’s
assurances that there were no legal problems with the plan.
Therefore, the court concluded that Plaintiffs-Appellees
“reasonably relied upon the apparent authority of the IEB to
adopt the Resolution on December 7, 1994 providing for an
early retirement plan in accepting early retirement pursuant to
that Resolution on December 8, 1994” and that UPGWA “is
bound by the terms of the resolution passed December 7,

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
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1994 modifying the UPGWA Retirement Plan to grant early
retirement benefits to Plaintiffs.” J.A. at 645 (Dist. Ct. Op.
1/4/01).
All defendants timely appealed the district court’s
January 4, 2001 order.
II. ANALYSIS
A. Standard of Review
“In considering a district court’s decision following a bench
trial,” we review for clear error the district court’s findings of
fact, and we review de novo the district court’s conclusions of
law. Overton Distribs., Inc. v. Heritage Bank, 340 F.3d 361,
366 (6th Cir. 2003) (internal quotation marks omitted). When
deciding cases that turn upon the interpretation of a union’s
constitution, “Courts are reluctant to substitute their judgment
for that of union officials in the interpretation of the union’s
constitution, and will interfere only where the official’s
interpretation is not fair or reasonable.” United Food &
Commercial Workers Int’l Union Local 911 v. United Food
& Commercial Workers Int’l Union, 301 F.3d 468, 478 (6th
Cir. 2002) (quoting United Bhd. of Carpenters, Dresden
Local No. 267 v. United Bhd. of Carpenters, S. Cent. Ohio
Dist. Council, 992 F.2d 1418, 1423 (6th Cir. 1993)).
B. Apparent Authority
When we remanded this case, we instructed the district
court to make further findings on the issue of whether
McConville or the IEB had apparent authority to bind
UPGWA to the early-retirement benefits embodied in the
December 7, 1994 resolution. Anderson, 150 F.3d at 592-93.
After conducting a bench trial, the district court found that
UPGWA manifested to Plaintiffs-Appellees that McConville
and the IEB were its agents for the purposes of amending the
Retirement Plan, and that Plaintiffs-Appellees’ reliance upon
14 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
those manifestations was reasonable; therefore, the district
court concluded that McConville and the IEB had apparent
authority to bind UPGWA to December 7, 1994 resolution.
Although we commend the district court for its thorough and
thoughtful opinion, we conclude that the district court
committed clear error by finding that the Plaintiffs-Appellees’
reliance on McConville’s and the IEB’s ostensible authority
to bind UPGWA in this manner was reasonable.
An agent acting with apparent authority may bind his or her
principal to a contract with a third party. Id. As we explained
in Anderson, apparent authority arises in situations when the
principal manifests to a third party that an agent is authorized
to act upon the principal’s behalf and the third party
reasonably relies upon that authority. A third party may not,
however, reasonably rely upon an agent’s ostensible authority
if the third party knows that the agent is not authorized to act
in a particular manner. See Dayton Bread Co. v. Montana
Flour Mills Co., 126 F.2d 257, 261 (6th Cir. 1942). In
Dayton Bread Co., we held that the third party did not
reasonably rely upon the agent’s authority to bind the
principal because it is well established that a salesman “has
no implied authority to bind his principal by an absolute sale
or contract,” and because the contracts at issue were
prohibited under applicable law. Id. In Dayton Bread Co.,
we explained
The principal is often bound by the acts of his agent in
excess of or in abuse of his actual authority, but this is
only true between the principal and third persons who,
believing and having a right to believe that the agent was
acting within and not exceeding his authority, would
sustain a loss if the act was not considered that of the
principal. . . . If . . . a third person dealing with an agent
knows he is acting under a circumscribed and limited
authority and that his act is in excess of or an abuse of
the authority actually conferred, then clearly the
principal is not bound.

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
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5Although Dayton Bread Co. v. Montana Flour Mills Co., 126 F.2d
257 (6th C ir. 194 2), is a diversity case applying O hio law, we find its
discussion of general agency principles instructive and consistent with
other authorities. See Brandin g Iron M otel, Inc. v. Sandlian Equity, Inc.
(In re Bra ndin g Iron M otel, Inc.), 798 F.2d 396, 401 (10th Cir. 1986);
Pasco County Peach Ass’n v. J.F. Solley & Co., 146 F.2d 880, 883 (4th
Cir. 1945); Harold Gill Reuschlein & W illiam A. G regory, The Law of
Agency and Partne rship 63-64 (2d ed . 1990).
6Plaintiffs-Appellees’ actual and imputed knowledge sufficiently
distinguishes the present case from Cen tral States Southeast & Southwest
Areas Pension Fund v. Kraftco, Inc., 799 F.2d 1098 (6th Cir. 1986) (en
banc), cert. denied, 479 U.S. 1086 (1987), in which we held that a union’s
agent could bind the union based upon the doctrine of appa rent authority
even in the presence of a m emb ership-ratification requirement.
7Although throughout much of this litigation the parties have focused
on ERISA, we note that our outcome today does not disrupt the terms of
an ERISA plan. P laintiffs-App ellees may not claim benefits under the
terms of the Retirement Plan because the plan was never validly amended.
Sprague v. Gen. Motors Corp., 133 F.3d 388, 403 (6th Cir.) (en banc),
cert. denied, 524 U.S. 923 (1998). As will be discussed below, P laintiffs-
Appellees have not established all of the elements of estoppel. Moreover,
even if Plaintiffs-Appellees had established all of the elements of
Id. (emphases added).5
In this case, Plaintiffs-Appellees had actual knowledge of
the limitations on pension benefits imposed by Article XI,
Section 2 of UPGWA’s constitution and should have known
the appropriate procedures for amending UPGWA’s
constitution.6 Although Plaintiffs-Appellees may have
believed that McConville and the IEB had the authority to
bind UPGWA to the December 7, 1994 resolution, we
conclude that Plaintiffs-Appellees’ actual knowledge and
imputed knowledge made this reliance unreasonable.
Therefore, we conclude that McConville and the IEB did not
have apparent authority to offer the increased early-retirement
benefits, and thus UPGWA is not bound by the December 7,
1994 resolution.7
16 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
estop pel, we are reluctant “to allow estopp el to override the clear terms”
of an ERISA plan. Marks v. Newcourt Credit Group, Inc., 342 F.3d 444,
456 (6th Cir. 2003).
8Subsection (a) provides, in pertinent part:
The officers, agents, shop stewards, and other representatives of
a labor organization occupy positions of trust in relation to such
organization and its members as a group. It is, therefore, the
duty of each such person, taking into account the special
problems and functions of a labor organization, to hold its
money and property solely for the benefit of the organization
and its members and to manage, invest, and expe nd th e sam e in
accordance with its constitution and bylaws and any resolutions
of the governing bodies adopted thereunder, to refrain from
dealing with such organization as an adverse party or in behalf
of an adverse party in any matter connected with his duties and
from holding or acquiring any p ecuniary or personal interest
which conflicts with the interests of such organization, and to
account to the organization for any profit received b y him in
whatever capacity in connection with transactions conducted by
him or under his direction on behalf of the organization.
29 U.S.C. § 50 1(a).
C. Section 501 of the LMRDA
As an alternative basis for our holding, we conclude that
Plaintiffs-Appellees may not enforce the increased early-
retirement benefits because Plaintiffs-Appellees violated
§ 501(a) of the LMRDA. Section 501 of the LMRDA
imposes fiduciary duties upon the officers and agents of labor
unions and provides union members with a cause of action
against union officers and agents who violate those duties.
Section 501(a)8 defines the scope of union officers’ and
agents’ fiduciary duties, and § 501(b) specifies prerequisites
to bringing suit to redress violations of § 501(a). We
recognize that when defining the scope of fiduciary duties
imposed by § 501(a), courts must be cognizant of “the special
problems and functions of a labor organization.” 29 U.S.C.
§ 501(a). We also recognize, however, that Congress passed
§ 501(a) to curb abusive practices by union officials.

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
17
9Our position is consistent with other circuits that have add ressed this
issue. See, e.g., Guzman v. Bevona, 90 F.3d 641, 647-48 (2d Cir. 1996)
(holding that union officers violate d § 501(a) by expending union funds
on surveillance of union member, who criticized the union’s leadership,
in violation of the union’s constitutio n); Brink v. DaLesio, 667 F.2d 420
(4th Cir. 19 81); Stelling v. Int’l Bhd. of Elec. Workers Local Union No.
1547, 587 F.2d 1379 (9th Cir. 197 8), cert. denied, 442 U .S. 944 (1979 );
Sabolsky v. Budzanoski, 457 F.2d 124 5 (3d Cir.), cert. denied, 409 U.S.
853 (19 72).
Morrissey v. Curran, 650 F.2d 1267, 1272-73 (2d Cir. 1981).
Although the precise contours of the fiduciary duties imposed
by § 501(a) are not fully delineated in the statutory text, it is
clear that Congress intended unions’ constitutions and by-
laws to play a major role in shaping these duties. See
Guzman v. Bevona, 90 F.3d 641, 648 (2d Cir. 1996). Section
501(a) directs union officers and agents to expend the union’s
money and property, “in accordance with its constitution and
bylaws and any resolutions of the governing bodies adopted
thereunder.” 29 U.S.C. § 501(a) (emphasis added). We have
previously held that union officers and agents violate § 501(a)
by engaging in transactions that provide a direct personal
benefit to themselves and that contravene their union’s
constitution. McCabe v. Int’l Bhd. of Elec. Workers Local
Union No. 1377, 415 F.2d 92, 97-98 (6th Cir. 1969) (holding
that union officers violated § 501(a) by accepting
reimbursement for out-of-pocket expenses incurred while
conducting union business in addition to per diem payments
that were not authorized by their union’s constitution).9
Although § 501(a) imposes fiduciary duties beyond those
outlined in a union’s constitution and by-laws, it is not
necessary for us to expound upon the boundaries of § 501(a)
because in this case the early-retirement benefits Plaintiffs-
Appellees seek to enforce violate UPGWA’s constitution.
UPGWA’s constitution empowers the IEB to create a
pension plan for all full-time officers and appointed
representatives. J.A. at 310 (UPGWA Const. Art. XI, § 2).
18 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
10Mo reover, the IEB could not have am ended U PG W A’s
constitution in this manner, as the IEB is only authorized to amend
temporarily the constitution to conform the constitution to changes in the
law. J.A. at 307-08 (U PGW A Const. Art. III).
11Because the December 7, 1994 resolution was not validly
authorized by the International Convention, see supra Part II.B., the more
deferential “manifestly unreasonable” standard that the Sec ond Circuit
first enunciated in Morrissey v. Curran, 650 F.2d 12 67, 1274 (2d Cir.
1981), is inapplicable. In Morrissey, the Second Circuit held that
authorization is not a complete defense to self-dealing transactions entered
UPGWA’s constitution specifies, however, that only full-time
officers and union representatives who have attained at least
five years of service are eligible for pension benefits.
Moreover, UPGWA’s constitution specifies that qualifying
individuals may receive normal retirement benefits at age
sixty and that “early retirement benefits shall be in
accordance with the normal retirement age.” J.A. at 310
(emphasis added). It is clear that UPGWA’s constitution
allows for early-retirement benefits to be offered only on a
reduced basis, and also requires pension recipients to have
worked for UPGWA for at least five years; a contrary
interpretation would be unreasonable and not entitled to
deference. It is undisputed that as of December 7, 1994,
Plaintiffs-Appellees were not entitled to any retirement
benefits under the Retirement Plan and that the early-
retirement benefits encompassed in the December 7, 1994
resolution exceeded the limits imposed by UPGWA’s
constitution. Plaintiffs-Appellees were to receive a direct
personal benefit from the December 7, 1994 resolution,
because at that time none of them were eligible for any
retirement benefits. Additionally, the retirement benefits
embodied in the December 7, 1994 resolution exceeded the
limits imposed by UPGWA’s constitution, and the IEB did
not amend the constitution.10 Therefore, we conclude that
Plaintiffs-Appellees violated their fiduciary duties under
§ 501(a).11 This conclusion does not end our analysis,

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
19
into by union officers and agents, b ut that if such tra nsactions are validly
authorized, then courts should no t interfere unless the transaction “is so
manifestly unreasonable as to evidence a breach of fiduciary obligation
imposed by § 501(a).” Id.
however, because Defendants-Appellants did not bring a
§ 501 suit against Plaintiffs-Appellees.
The procedural posture of this case is unique, in that neither
UPGWA nor its members brought a § 501 action against
Plaintiffs-Appellees; rather Defendants-Appellants assert that
§ 501(a) provides a defense to Plaintiffs-Appellees’ breach of
contract action. No circuit has yet issued a published opinion
expressly deciding whether § 501(a) can be asserted as a
defense to a breach of contract action. But see Trs. of the
Operative Plasterers’ & Cement Masons’ Local Union
Officers & Employees Pension Fund v. Journeymen
Plasterers’ Protective & Benevolent Soc’y, Local Union No.
5, 794 F.2d 1217, 1220 (7th Cir. 1986) [hereinafter Cement
Masons] (questioning whether § 501(a) can be raised as a
defense to a breach of contract action because a violation of
§ 501(a) does not render a contract intrinsically illegal). A
basic principle of contract law supports our conclusion that
§ 501(a) can be asserted as a defense to this breach of contract
action.
Federal courts may not enforce a contract if the result
would be to compel a violation of the law. Kaiser Steel Corp.
v. Mullins, 455 U.S. 72, 77 (1982). As explained above, the
early-retirement benefits resolution violated § 501(a) of the
LMRDA. In Kaiser Steel, the Supreme Court refused to
enforce a collective bargaining agreement provision that was
illegal under federal labor and antitrust laws. Kaiser Steel,
455 U.S. at 85-87. It is true that the federal labor and antitrust
laws at issue in Kaiser Steel made intrinsically illegal the
collective bargaining provision under consideration, whereas
§ 501(a) does not make intrinsically illegal the early-
20 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
12Because § 50 1(a) is being raised as a de fense, neither M ichigan’s
statute of limitations for breach of fiduciary duty claims nor the doctrine
of laches prevents Defendants-App ellants from relying upon this
provision. Likewise, the procedural requirements contained in § 501(b)
are not applicable.
retirement proposal; however, we do not think that this
distinction warrants a different result in this case. See id;
Cement Masons, 794 F.2d at 1220. A union or its members
can ordinarily obtain an injunction prohibiting payments that
were authorized by union officers in breach of their fiduciary
duties or obtain reimbursement for such payments. 29 U.S.C.
§ 501(a); see also Guzman, 90 F.3d at 648; Council 49, Am.
Fed’n of State, County & Mun. Employees Union v. Reach,
843 F.2d 1343, 1347-49 (11th Cir. 1988); Kerr v. Shanks, 466
F.2d 1271, 1276 (9th Cir. 1972); McCabe, 415 F.2d at 98;
Local No. 92, Int’l Ass’n of Bridge, Structural & Ornamental
Iron Workers v. Norris, 383 F.2d 735, 737-40 (5th Cir. 1967).
In the case at bar, because the IEB deferred implementation
of the increased early-retirement benefits and the International
Convention ultimately voted against their implementation, an
injunction against implementation of the benefits was not a
possibility. Denying UPGWA and its members use of
§ 501(a) as a defense in this situation, where they were unable
to use it offensively, makes little sense and would thwart the
purposes of that provision.12 Moreover, “Refusing to enforce
a promise that is illegal under the antitrust or labor laws is not
providing an additional remedy contrary to the will of
Congress. . . .[A]ny one sued upon a contract may set up as a
defen[s]e that it is a violation of the act of Congress, and if
found to be so, that fact will constitute a good defen[s]e to the
action.” Kaiser Steel, 455 U.S. at 82 n.7 (quotation omitted).
Plaintiffs-Appellees argue that UPGWA may not rely upon
illegality as a defense to enforcement of the early-retirement
benefits because either the IEB or the convention delegates

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
21
could have eliminated the § 501 problem by amending
UPGWA’s constitution. We reject this argument. First, the
IEB did not have the authority to amend UPGWA’s
constitution in this manner. Second, if UPGWA was required
to amend its constitution when its officers exceeded their
powers thereunder, the constitution would not serve its
purpose of limiting the officers’ powers. Third, we question
whether a vote to amend UPGWA’s constitution could cure
after-the-fact this self-dealing violation of § 501(a). See
Janice R. Bellace & Alan D. Berkowitz, THE LANDRUM-
GRIFFIN ACT: Twenty Years of Federal Protection of Union
Members’ Rights 299 (1979).
Therefore, we hold that § 501(a) can properly be raised by
a union or its members as a defense to a transaction entered
into by union officials, which grants those officials a direct
personal benefit in violation of the union’s constitution. This
holding is necessary to ensure that union officers or agents do
not thwart the purposes of § 501(a) by binding unions to
contracts with union officials that violate this provision.
D. Estoppel and Ratification
Our holding that the December 7, 1994 resolution
constitutes an unenforceable contract should not be
interpreted as foreclosing the possibility of estoppel in an
appropriate case. This, however, is not an appropriate case.
The elements of estoppel are: (1) conduct or language
amounting to a representation of fact; (2) the party to be
estopped must be aware of the true facts; (3) the party to
be estopped must intend that the representation be acted
on such that the party asserting the estoppel has the right
to believe it was so intended; (4) the party asserting the
estoppel must be unaware of the true facts; and (5) the
party asserting the estoppel must detrimentally and
justifiably rely on the representation.
22 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
Brown-Graves Co. v. Central States, Southeast & Southwest
Areas Pension Fund, 206 F.3d 680, 684 (6th Cir. 2000).
Here, Plaintiffs-Appellees did not detrimentally or justifiably
rely upon the December 7, 1994 resolution. In January 1995,
the IEB voted to rescind the resolutions authorizing the
increased early-retirement benefits, and Plaintiffs-Appellees
all continued in their respective offices until the end of their
terms in May 1995. Therefore, Plaintiffs-Appellees did not
rely to their detriment on the increased early-retirement
benefits. As discussed above, the IEB exceeded its authority
under UPGWA’s constitution in offering the early-retirement
benefits, and Plaintiffs-Appellees had actual knowledge of the
limitations imposed by Article XI, Section 2 of UPGWA’s
constitution. Therefore, Plaintiffs-Appellees’ expectation that
they would receive the increased early-retirement benefits
was not justifiable. Moreover, Plaintiffs-Appellees cannot
assert estoppel when the passage of the December 7, 1994
resolution constituted a breach of fiduciary duty under
§ 501(a) of the LMRDA. See Meyers v. Moody, 693 F.2d
1196, 1208 (5th Cir. 1982), cert. denied, 464 U.S. 920 (1983)
(“The doctrine of estoppel is for the protection of innocent
persons, and only innocent persons may invoke it.”).
Nor may Plaintiffs-Appellees obtain the early-retirement
benefits embodied in the December 7, 1994 resolution on the
theory of ratification. On appeal, Plaintiffs-Appellees
strenuously assert that UPGWA ratified the early-retirement
benefits by eliminating their positions and thereby retaining
the cost savings associated with the early-retirement proposal.
It is true, “Ratification occurs where the principal receives
and retains the benefits of a transaction with full knowledge
of all of material facts.” Davis v. Mut. Life Ins. Co. of New
York, 6 F.3d 367, 374 (6th Cir. 1993), cert. denied, 510 U.S.
1193 (1994). In this case, however, elimination of Plaintiffs-
Appellees’ positions was not dependent upon providing the
increased early-retirement benefits. Although Plaintiffs-
Appellees, as members of the IEB, may not have voted to
eliminate their positions absent the generous early-retirement

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
23
offer, the elimination of their offices could and did occur
without their consent. UPGWA’s constitution gave the IEB
the authority to consolidate regions and eliminate directors’
positions, which the IEB did through the January 24, 1995
resolution, and UPGWA’s constitution gave the convention
delegates the authority to eliminate the vice-president’s
position, which the delegates did at the International
Convention in May 1995.
III. CONCLUSION
For the foregoing reasons, we REVERSE the district
court’s judgment awarding Plaintiffs-Appellees the requested
increased early-retirement benefits. Additionally, Plaintiffs-
Appellees’ motions to dismiss and motion for costs are
DENIED.
24 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
______________
DISSENT
______________
MERRITT, Circuit Judge, dissenting. The plaintiffs
entered into an agreement with the union to give up their jobs,
salaries and expectations of future retirement benefits in
return for yearly early retirement benefits of approximately
$20,000 for Anderson, $30,000 for Squier and $40,000 for
Scohy — less than half their salaries. There is no showing of
bad faith. They responded to the union’s offer made by its
President, originating with its accountants and blessed as to
legality by its counsel. The district court was correct to
conclude that the Union, through its retirement plan, as well
as the actions of its president and the advice of its counsel,
manifested authority in the Board to offer the early retirement
contracts to the plaintiffs. The Retirement Plan specifically
provides that the Union “acting through its...Board” shall
have the right to modify the plan. Moreover, the Union’s
constitution provides that the Board “shall decide all
questions involving interpretation of the Constitution and By-
Laws, between Conventions.” Both the Union President and
the Union’s attorney, Gordon Gregory, assured the plaintiffs
that there were no legal problems with the retirement plan.
The district court was also correct that the plaintiffs were
reasonable in relying on such manifestations. Their beliefs
that Board approval would bind the Union were reinforced by
Board member Ronald Warfield, who at the time was a
member of the pension committee; by Union President
McConville, who presented the plan to them to begin with as
a way to save the Union money and who assured them that
the Board could bind the Union to such a plan; and by Gordon
Gregory, who had been an attorney for the Union for 35
years, and whose opinion they sought and who repeatedly
assured them that the Board action would be sufficient to
make the plan binding. President McConville and Attorney

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No. 01-1253 Anderson et al. v. Int’l Union, Utd. Plant
Guard Workers et al.
25
Gregory even testified that they thought the plaintiffs were
reasonable in believing that Board approval could make the
plan binding. It is true that the plaintiffs were made aware
that there might be some legal challenge to the retirement
plan, but that alone is not sufficient to make their reliance
unreasonable in light of all the assurances they received,
especially when the plan was not even their idea, but rather
was presented to them as a way for the Union to save money.
Indeed, the plaintiffs were praised for sacrificing their own
jobs in order to save the Union money.
The Union argues that the plaintiffs cannot claim
reasonable reliance on Attorney Gregory’s advice when
Gregory advised them otherwise on January 4th,
recommending that the Board rescind the vote. But
Gregory’s advice on January 4th is irrelevant to the question
of whether a contract had been created on December 7th. By
that point the plaintiffs had already relied on the apparent
authority of the President and the Board and the advice of
counsel. Had the plaintiffs been the ones who sought to get
out of the December 7th agreement while the Union sought to
enforce it, the plaintiffs would likely have been bound.
The Union believes that the early retirement agreement
violates Section 501 of the Labor Management Reporting and
Disclosure Act (LMRDA), which makes it a breach of duty
for a Union official to expend Union money in violation of
the Union constitution, and which provides a cause of action
for individual Union members when the Union’s constitution
is so violated. 29 U.S.C.A. § 501 (2003). But Section 501
does not provide that a Union may itself persuade otherwise
innocent Union officers to sign a contract and then use that
provision as a defense to the contract that the Union has
entered into. As the majority notes, there is no precedent for
allowing a Union to use Section 501 in this manner.
Moreover, even if a Union’s officers had breached a
Section 501 duty by entering into such a contract, that does
26 Anderson et al. v. Int’l Union,
Utd. Plant Guard Workers et al.
No. 01-1253
not void the contract as illegal. Neither the language of the
statute nor the case-law contemplates rendering the union
contract void. The majority seems to admit this point, but
downplays its significance. A contract should not be rendered
void at the behest of the party that induced its formation at the
expense of actors who lack culpability or any wrongful intent.
If the Union members claim a breach of duty by the plaintiffs,
that claim should be pursued in an action for damages in tort
or restitution under the statute. Voiding the contract and
leaving the plaintiffs out in the cold is too drastic a remedy
and has no relation to any damages Union members may have
suffered.
Furthermore, as I explained above, I do not believe the
plaintiffs breached a duty to the Union members in the first
place. Again, there was no showing of bad faith on their part,
and the retirement plan was not their idea, but rather was the
idea of the Union accountant, and was presented to them by
the Union president as a way of saving the Union money. We
should not now allow the Union to avoid the contract it
drafted and asked them to sign, especially by means of a
statutory provision that only provides a cause of action for
third-party Union members. Doing so turns Section 501 into
a one-sided escape route for Unions that Congress never
intended.
For the aforementioned reasons, I respectfully DISSENT.

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