                              In the

United States Court of Appeals
               For the Seventh Circuit

No. 08-1631

INTERNATIONAL U NION OF O PERATING E NGINEERS,
L OCAL 150, AFL-CIO,
                                     Plaintiff-Appellant,
                         v.

JOSEPH P. W ARD ,
                                                 Defendant-Appellee.


             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
              No. 07 C 00142—Ruben Castillo, Judge.



     A RGUED O CTOBER 27, 2008—D ECIDED A PRIL 16, 2009




 Before K ANNE, W ILLIAMS, and SYKES, Circuit Judges.
  K ANNE, Circuit Judge. In early 2007, the appellant,
International Union of Operating Engineers, Local 150,
AFL-CIO, filed a two-count complaint against one of its
former officers, the appellee, Joseph P. Ward, in the
Northern District of Illinois. Count I of the complaint
alleged violations of § 501 of the Labor-Management
and Reporting Disclosure Act of 1959 (LMRDA), 29 U.S.C.
2                                                   No. 08-1631

§ 501, which establishes fiduciary duties owed by a labor
organization’s officers to the organization and its mem-
bers. Following the close of discovery, the district court
granted Ward’s motion to dismiss the Union’s § 501 claim
for lack of subject-matter jurisdiction. The district court
determined that § 501 did not provide the labor organiza-
tion, as an entity, with a federal cause of action against its
officers for alleged violations of the duties set forth there-
in. Local 150 appeals this decision. For the reasons that
follow, we conclude that § 501 does contain an implied
cause of action for a labor organization to sue its officers
for breaches of their fiduciary duties. We reverse the
decision of the district court and remand for further
proceedings.


                       I. B ACKGROUND
  The plaintiff, Local 150, is a labor organization that
represents approximately 22,000 employees in Illinois,
Indiana, and Iowa. Defendant Joseph Ward served as the
treasurer of Local 150 from the time the organization
elected him to that position in 1986 until his resignation
in 2007.
  In its complaint, Local 150 accused Ward of purchasing
a piece of real estate that Ward knew Local 150 was
interested in purchasing for itself. The property in ques-
tion was an empty parcel located adjacent to Local 150’s
District 2 offices in Joliet, Illinois. In 1994, the seller of the
property contacted Local 150’s president, Bill Dugan, who
confirmed the Union’s interest in purchasing the prop-
erty. Dugan gave Ward the responsibility of monitoring the
No. 08-1631                                                 3

situation. Local 150 alleged that soon thereafter Ward told
the seller that the Union was no longer interested in
purchasing the parcel and falsely informed Dugan that the
property had been sold to a third party. In fact, however,
the property was not sold until several months later, when
an investment group that included Joe Ward as a
member purchased it for approximately $75,000. Ward’s
investment group sold the same property in 2003 for
$885,000, netting a handsome profit for its constituents.
  In January 2007, Local 150 named Joe Ward as the sole
defendant in a two-count complaint filed in the United
States District Court for the Northern District of Illinois.
Count I of the complaint sought damages for alleged
violations of § 501 of the LMRDA, which codifies the
fiduciary duties that a labor organization’s officers owe
to the organization and its membership. Count II alleged
similar breaches of fiduciary duties under Illinois state law.
  Ward filed a motion to dismiss the complaint pursuant
to Federal Rule of Civil Procedure 12(b)(1), which the
district court granted on February 14, 2008. The district
court concluded that § 501 does not contain a private
cause of action for labor unions to bring claims under the
LMRDA in federal court, rendering the district court
without subject-matter jurisdiction to hear the dispute.
The court dismissed the Union’s federal claim with preju-
dice. In so doing, the district court, in its discretion,
also refused to exercise supplemental jurisdiction over
the state law claim, dismissing it without prejudice.
Local 150 now appeals the district court’s decision that it
lacked subject-matter jurisdiction to hear the Union’s
federal claim.
4                                                   No. 08-1631

                         II. A NALYSIS
   We review de novo whether a district court properly
dismissed a case for lack of subject-matter jurisdiction.
Peters v. Vill. of Clifton, 498 F.3d 727, 729-30 (7th Cir. 2007).
We begin our analysis with a brief examination of the
contents and history of the LMRDA. We then discuss the
limited nature of federal courts’ jurisdiction and the
general prerequisite to that jurisdiction of a federal
cause of action. With that context, we finally turn our
attention to the decisive question in this case: whether
§ 501 of the Act creates a private cause of action for
labor organizations to sue in federal court for alleged
violations of the duties it establishes. We conclude that
it does.


    A. The Labor-Management and Reporting Disclosure Act
       of 1959
  In 1959, Congress passed the LMRDA, also known as the
Landrum-Griffin Act, Pub. L. No. 86-257, 73 Stat. 519
(codified as amended at 29 U.S.C. § 401 et seq.), in
response to growing concerns over corruption, violence,
and racketeering within the leadership of labor organiza-
tions across the country, see Hood v. Journeymen Barbers,
Hairdressers, Cosmetologists & Proprietors Int’l Union, 454
F.2d 1347, 1354 (7th Cir. 1972); Phillips v. Osborne, 403 F.2d
826, 828 (9th Cir. 1968). A year earlier, a congressional
committee known as the Select Committee on Improper
Activities in the Labor Management Field released a
report, popularly referred to as the McClellan Committee
No. 08-1631                                                      5

Report, detailing these problems. See S. Rep. No. 85-1417
(1958); see also Phillips, 403 F.2d at 828. This report served
as the catalyst that prompted Congress to promulgate
the LMRDA. See Hood, 454 F.2d at 1354 (“[Section 501]
was a direct and far-reaching response to the mischief
exposed and dramatized by the McClellan Committee.
That mischief was the misuse of union funds and property
by union officials in its every manifestation.”). This case
focuses on the first two subsections of § 501 of the Act.
  Subsection (a) imposes many fiduciary duties on a
labor organization’s “officers, agents, shop stewards, and
other representatives.” 1 29 U.S.C. § 501(a).2 Specifically, the


1
  Throughout this opinion, we will refer to these various
organizational representatives under the collective term of
“officers.”
2
    The text of 29 U.S.C. § 501(a) reads as follows:
      The officers, agents, shop stewards, and other represen-
      tatives 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 mem-
      bers and to manage, invest, and expend the same in
      accordance with its constitution and bylaws and any
      resolutions of the governing bodies adopted thereun-
      der, 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
                                                     (continued...)
6                                                      No. 08-1631

Act requires those individuals, all of whom “occupy
positions of trust in relation to such organization and its
members as a group,” to hold and manage the union’s
money for the sole benefit of the organization, to refrain
from self-dealing, and to remain loyal to the organization.
Id. The statute makes it clear that these duties inure to
the benefit of the labor organization and the people it
represents as a body, not to the members as individuals. Id.
  The duty of loyalty is at the forefront of this case. The
Act states that a covered individual shall “refrain from
dealing with [the] 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 pecuni-
ary or personal interest which conflicts with the inter-
ests of such organization.” Id. If a union officer engages in
such conduct, the Act requires him to account to the
organization for any resulting profits he received. Id.
  If an officer commits violations of the fiduciary duties
set forth in subsection (a), subsection (b) creates a federal


2
    (...continued)
       acquiring any pecuniary or personal interest which
       conflicts with the interests of such organization, and to
       account to the organization for any profit received by
       him in whatever capacity in connection with transac-
       tions conducted by him or under his direction on
       behalf of the organization. A general exculpatory
       provision in the constitution and bylaws of such a labor
       organization or a general exculpatory resolution of a
       governing body purporting to relieve any such person
       of liability for breach of the duties declared by this
       section shall be void as against public policy.
No. 08-1631                                                         7

cause of action for individual union members to sue and
“recover damages . . . for the benefit of the labor organization.”
Id. § 501(b) (emphasis added).3 Because these member suits
serve to benefit the union, they are derivative, much
like shareholder derivative suits brought on behalf of
corporations. See Hoffman v. Kramer, 362 F.3d 308, 317 n.4
(5th Cir. 2004); Chathas v. Local 134 IBEW, 233 F.3d 508,
514 (7th Cir. 2000); O’Hara v. Teamsters Union Local No.
856, 151 F.3d 1152, 1161 (9th Cir. 1998). As with share-
holder derivative suits, the Act permits a union member
to file such a suit only if he first takes prescribed steps.
See Int’l Union of Elec., Elec., Salaried, Mach. & Furniture
Workers v. Statham, 97 F.3d 1416, 1419 (11th Cir. 1996)
(comparing the prerequisites for claims brought under


3
    The relevant text of 29 U.S.C. § 501(b) reads as follows:
      When any officer, agent, shop steward, or representa-
      tive of any labor organization is alleged to have vio-
      lated the duties declared in subsection (a) of this section
      and the labor organization or its governing board or
      officers refuse or fail to sue or recover damages or
      secure an accounting or other appropriate relief within
      a reasonable time after being requested to do so by any
      member of the labor organization, such member may
      sue such officer, agent, shop steward, or representative
      in any district court of the United States or in any State
      court of competent jurisdiction to recover damages or
      secure an accounting or other appropriate relief for the
      benefit of the labor organization. No such proceeding
      shall be brought except upon leave of the court ob-
      tained upon verified application and for good cause
      shown, which application may be made ex parte. . . .
8                                                No. 08-1631

§ 501(b) to those required for shareholder derivative
suits). First, the union member must request, and the
union must refuse, that the union take appropriate action
to censure its own officer. Hoffman, 362 F.3d at 313-14;
see also 29 U.S.C. § 501(b). Second, if the union refuses
to take action, the union member must then show good
cause for the suit and receive the court’s permission to
bring the action. Hoffman, 362 F.3d at 314; see also 29
U.S.C. § 501(b). This allows the court to assess the mem-
ber’s claim and ensure that the member seeks the type
of remedy that would ultimately benefit the union. See
Hoffman, 362 F.3d at 319.
  The statute, therefore, openly declares that union mem-
bers may sue in federal court for violations of the
duties that it establishes. The Act is silent, however, on
whether it creates a similar federal cause of action for
unions. As we discuss below, in this context such a
cause of action is a prerequisite for a union to proceed in
federal court.


    B. The Cause of Action Component of Federal Question
       Jurisdiction
  Federal courts are courts of limited jurisdiction. Kokkonen
v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994);
Newell Operating Co. v. Int’l Union of United Auto., Aerospace
& Agric. Implement Workers, 532 F.3d 583, 587 (7th Cir.
2008). The circumscribed nature of the federal judiciary’s
jurisdiction is a function of restrictions placed upon it by
both the United States Constitution and federal statutory
No. 08-1631                                                   9

law, both of which must authorize a federal court to
hear a given type of case. See Kokkonen, 511 U.S. at 377;
Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541
(1986).
  The Constitution permits federal courts to hear only
certain claims, including those claims between parties of
diverse state citizenship and, most importantly for
present purposes, “federal question” claims, or those
“arising under” the laws of the United States. U.S. Const.
art. III, § 2, cl. 1. This constitutional grant of judicial
authority is broad. See Verlinden B.V. v. Cent. Bank of
Nigeria, 461 U.S. 480, 495 (1983); Osborn v. Bank of the
U.S., 22 U.S. (9 Wheat.) 738, 823 (1824).
  Despite this broad grant of authority, the Constitution
gives Congress the power to further refine the actual
scope of federal jurisdiction. 4 See U.S. Const. art. I, § 8,
cl. 9 (granting Congress the power “[t]o constitute
tribunals inferior to the Supreme Court”); Ins. Corp. of Ir. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982)
(“Jurisdiction of the lower federal courts is further
limited to those subjects encompassed within a statutory
grant of jurisdiction.”). In so doing, however, Congress
may not exceed its constitutional authority. See Verlinden



4
  Only the jurisdiction of the Supreme Court of the United
States is self-executing. California v. Arizona, 440 U.S. 59, 65
(1979) (“The original jurisdiction of the Supreme Court is
conferred not by the Congress but by the Constitution itself.
This jurisdiction is self-executing, and needs no legislative
implementation.”).
10                                                  No. 08-1631

B.V., 461 U.S. at 491 (“Congress may not expand the
jurisdiction of the federal courts beyond the bounds
established by the Constitution.”); Marquette Cement Mfg.
Co. v. FTC, 147 F.2d 589, 593 (7th Cir. 1945) (“There are no
limitations upon this congressional power [to grant
jurisdiction to the federal courts] other than the Constitu-
tion.”). In this way, the Constitution imposes a ceiling,
albeit a high one, on the potential jurisdiction of the
federal courts.
  As we will discuss, Congress, by means of statutory
grant, uses its constitutional authority to more
narrowly restrict the federal courts’ subject-matter juris-
diction. Ins. Corp. of Ir., 456 U.S. at 701; Teamsters Nat’l Auto.
Transporters Indus. Negotiating Comm. v. Troha, 328 F.3d 325,
327 (7th Cir. 2003) (“Federal courts . . . may only exercise
jurisdiction where it is specifically authorized by federal
statute.”); Marquette Cement Mfg. Co., 147 F.2d at 593 (“The
jurisdiction and authority of [the federal courts] is
confined solely to that which Congress bestows.”). This
allows Congress to exercise significant control over the
types of cases federal courts may hear and is one of the
many checks and balances built into the three-branch
system of American government. See Steel Co. v. Citizens
for a Better Env’t, 523 U.S. 83, 101 (1998).
  For many years, Congress withheld from federal courts
the ability to hear claims based solely on federal law. It
was not until 1875, in fact, that Congress furnished
federal courts with general federal question jurisdiction.
Act of Mar. 3, 1875, ch. 137, 18 Stat. 470. Today, federal
question jurisdiction is codified at 28 U.S.C. § 1331, which
No. 08-1631                                                 11

states that “[t]he district courts shall have original juris-
diction of all civil actions arising under the Constitution,
laws, or treaties of the United States.”
  Although the language of § 1331 is similar to that of
Article III, courts have interpreted § 1331 much more
narrowly than its constitutional counterpart. See Verlinden
B.V., 461 U.S. at 494-95 (“[T]his Court never has held
that statutory ‘arising under’ jurisdiction is identical to
Art. III ‘arising under’ jurisdiction. . . . Art. III ‘arising
under’ jurisdiction is broader than federal-question
jurisdiction under § 1331 . . . .”). What “arises under”
§ 1331 has been the subject of much debate among the
courts. See Franchise Tax Bd. v. Constr. Laborers Vacation
Trust, 463 U.S. 1, 8-9 (1983) (discussing the difficulties of
interpreting “arising under”). When, however, as here, a
case presents a pure federal question, i.e., a claim that
alleges only direct violations of federal law, the answer, at
least in theory, is fairly straightforward. See Grable &
Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308,
312 (2005) (“This [‘arising under’] provision [of 28
U.S.C. § 1331] for federal-question jurisdiction is invoked
by and large by plaintiffs pleading a cause of action
created by federal law.”). For purposes of exercising
federal jurisdiction under § 1331, such a claim “arises
under” federal law if the law in question creates a federal
cause of action. See Am. Well Works Co. v. Layne & Bowler
Co., 241 U.S. 257, 260 (1916); Bennett v. Sw. Airlines Co., 484
F.3d 907, 909 (7th Cir. 2007).
  Thus, when the basis of the action is a federal statute, a
federal cause of action must exist as well for a federal
12                                                      No. 08-1631

court to hear a given claim; the general grant of federal
question jurisdiction contained in § 1331, without a federal
cause of action, is not enough.5 Nat’l R.R. Passenger Corp. v.
Nat’l Ass’n of R.R. Passengers, 414 U.S. 453, 456 (1974). As
the Supreme Court has said: “[T]he threshold question
clearly is whether the [Act] . . . creates a cause of action
whereby a private party . . . can enforce duties and obliga-
tions imposed by the Act; for it is only if such a right of
action exists that we need consider . . . whether the
District Court had jurisdiction to entertain it.” Id. at 456.
This appeal calls for us to answer that “threshold ques-
tion” in the context of § 501.




5
   In certain situations not before us today, a state law cause of
action may also raise a federal question sufficient to permit
federal court jurisdiction. See Grable & Sons Metal Prods., Inc.,
545 U.S. at 312 (“[I]n certain cases federal-question jurisdiction
will lie over state-law claims that implicate significant federal
issues.”); City of Chi. v. Int’l Coll. of Surgeons, 522 U.S. 156,
164 (1997) (citing Franchise Tax Bd., 463 U.S. at 13); see, e.g., Smith
v. Kan. City Title & Trust Co., 255 U.S. 180, 199-202 (1921)
(recognizing federal jurisdiction to hear a state law cause of
action where “the right to relief depends upon the construc-
tion or application of the Constitution or laws of the United
States”); Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 817
(1986) (recognizing, albeit narrowing, the continued validity
of the Smith doctrine before finding no such cause of action
in that case). But see Moore v. Chesapeake & O. Ry. Co., 291 U.S.
205, 214-15 (1934) (declining to recognize federal jurisdiction
in a situation similar to that in Smith).
No. 08-1631                                                 13

  C. Federal Causes of Action Created by § 501 of the LMRDA
  The question before us is whether § 501 creates a
private federal cause of action for a labor organization as
an entity. Although on appeal the parties couch their
arguments only in terms of § 501(b), we are not limited
by the parties’ arguments regarding questions of juris-
diction. See Bender, 475 U.S. at 541; United States v. County
of Cook, Ill., 167 F.3d 381, 387 (7th Cir. 1999) (“[N]either
the parties nor their lawyers may stipulate to jurisdiction
or waive arguments that the court lacks jurisdiction.”);
Hawxhurst v. Pettibone Corp., 40 F.3d 175, 179 (7th Cir. 1994).
Indeed, we are bound to evaluate our own jurisdiction, as
well as the jurisdiction of the court below, sua sponte if
necessary. See Bender, 475 U.S. at 541; Mansfield, C. & L.M.
Ry. Co. v. Swan, 111 U.S. 379, 382 (1884); Craig v. Ontario
Corp., 543 F.3d 872, 875 (7th Cir. 2008). If we determine that
§ 501 creates a federal cause of action for unions to sue, the
district court will have erred in dismissing the Union’s
claim; just as the law requires a court to refrain
from hearing a case over which it lacks jurisdiction, it also
obligates a court to hear any case for which a proper
jurisdictional basis does exist. See New Orleans Pub. Serv.,
Inc. v. Council of New Orleans, 491 U.S. 350, 358 (1989)
(“[F]ederal courts lack the authority to abstain from
the exercise of jurisdiction that has been conferred. . . .
‘We have no more right to decline the exercise of jurisdic-
tion which is given, than to usurp that which is not giv-
en. The one or the other would be treason to the Constitu-
tion.’ ” (quoting Cohens v. Virginia, 19 U.S. (6 Wheat.) 264,
404 (1821))).
14                                               No. 08-1631

   Federal causes of action may be created either
expressly or by implication. See Transamerica Mortgage
Advisors, Inc. v. Lewis (TAMA), 444 U.S. 11, 15 (1979).
Whether express or implied, however, we remain
mindful that it is Congress, not this or any other court, that
creates private causes of action to enforce federal law.
Alexander v. Sandoval, 532 U.S. 275, 286-87 (2001) (“Without
[statutory intent], a cause of action does not exist and
courts may not create one, no matter how desirable
that might be as a policy matter, or how compatible
with the statute.”). Thus, as we discuss in detail below,
we must determine whether Congress intended the
statute in question to create, either expressly or by im-
plication, such a cause of action. See id. at 286 (calling
statutory intent “determinative”); Touche Ross & Co. v.
Redington, 442 U.S. 560, 568 (1979) (“[O]ur task is limited
solely to determining whether Congress intended to
create the private right of action asserted . . . .”). The
question, then, becomes one of statutory construction.
Touche Ross & Co., 442 U.S. at 568; Cannon v. Univ. of Chi.,
441 U.S. 677, 688 (1979). As with any such question, we
turn as our starting point to the language of § 501 itself,
see Touche Ross & Co., 442 U.S. at 568, and ask whether
it evinces Congress’s intent to create, expressly or im-
pliedly, a private cause of action for labor organizations
to enforce its provisions.


  1. Express Federal Cause of Action
  Congressional intent is unmistakably evident in the
case of an express cause of action. An express federal
No. 08-1631                                                     15

cause of action states, in so many words, that the law
permits a claimant to bring a claim in federal court. Section
501(b) of the LMRDA, which expressly authorizes mem-
bers of a labor union to bring a claim for violations of
§ 501(a) “in any district court of the United States,” opens
to these members the doors of the federal court system.
Congress’s intent is unequivocal, establishing § 501(b) as
a clear example of an express federal cause of action.
  A plain reading of both subsections (a) and (b) of § 501
makes it equally clear that neither provision contains
an express federal cause of action for a labor organiza-
tion. See Guidry v. Sheet Metal Workers Nat’l Pension Fund,
493 U.S. 365, 374 n.16 (1990). Both circuit courts to have
considered the issue have reached this same conclusion.
See Statham, 97 F.3d at 1419; Bldg. Material & Dump Truck
Drivers, Local 420 v. Traweek, 867 F.2d 500, 506-07 (9th Cir.
1989). The absence of an express cause of action does not
end our inquiry, however. We next ask whether the
statute creates an implied federal cause of action.


    2. Implied Federal Cause of Action
  District and circuit courts alike are divided on whether
§ 501 creates an implied federal cause of action for labor
organizations.6 Although the Supreme Court has recog



6
  For examples of decisions implying such a cause of action, see
Statham, 97 F.3d at 1421; Int’l Longshoremen’s Ass’n, Steamship
Clerks Local 1624 v. Va. Int’l Terminals, Inc., 914 F. Supp. 1335,
                                                     (continued...)
16                                                  No. 08-1631

nized the difficulty of interpreting § 501, it has thus
far declined to resolve the issue. See Guidry, 493 U.S. at
374 n.16 (“Courts have reached inconsistent positions on
the question whether a union may bring suit under § 501.
We need not resolve that question here.” (citations omit-
ted)).
  Only two circuit courts, the Ninth and Eleventh Circuits,
have addressed the question, and they have reached
opposite conclusions. In Traweek, the Ninth Circuit, focus-
ing exclusively on § 501(b), declined to recognize an
implied federal cause of action for suits by labor unions.
867 F.2d at 506-07. The court based its conclusion on
four grounds. First, the court focused on the plain
language of subsection (b), stating that “[t]he clear lan-
guage of the statute does not contemplate a suit brought
by a union.” Id. at 506. Second, the court claimed adherence
to “the federal policy of noninterference in the internal
affairs of unions and labor matters.” Id. Third, the court
believed its decision to be consistent with “the general


6
  (...continued)
1339 (E.D. Va. 1996); Operative Plasterers & Cement Masons Int’l
Ass’n v. Benjamin, 776 F. Supp. 1360, 1365 (N.D. Ind. 1991); and
Glenn v. Mason, No. 79 Civ. 3918, 1980 WL 140904, at *1-2
(S.D.N.Y. Aug. 18, 1980). Decisions reaching the opposite
conclusion include, for example, Traweek, 867 F.2d at 507; Local
443, Int’l Bhd. of Teamsters v. Pisano, 753 F. Supp. 434, 436
(D. Conn. 1991); Int’l Bhd. of Boilermakers v. Freeman, 683 F.
Supp. 1190, 1192 n.3, 1193 (N.D. Ill. 1988); and Local 624, Int’l
Union of Operating Eng’rs v. Byrd, 659 F. Supp. 274, 276 (S.D.
Miss. 1986).
No. 08-1631                                              17

principle . . . that the scope of federal jurisdictional
statutes should be construed narrowly.” Id. at 507. And
fourth, the Ninth Circuit found evidence of Congress’s
intent to grant the remedy solely to the union members
in § 501(b)’s requirement that union members request
leave of the court before suing. Id. at 506.
  The Eleventh Circuit viewed the statute differently. In
Statham, the court read subsections (a) and (b) of § 501
together and concluded that the statute as a whole
created an implied federal cause of action for labor organi-
zations. 97 F.3d at 1421. Relying on the Act’s plain lan-
guage and its legislative history, the court found that
Congress intended labor organizations to have access to
the federal courts for suits to enforce the fiduciary
duties imposed by § 501(a). See id. at 1421 (“We conclude
that section 501(a) was intended to create a federal cause
of action that can be asserted by the union on its own
behalf.” (emphasis added)).
  In looking to the duty-creating language of § 501(a), the
Eleventh Circuit said that “[i]t would make no sense to
impose federal duties and simultaneously deny the
unions the right to enforce those duties.” Id. at 1420. The
court hypothesized that “[i]f Congress had only enacted
section 501(a) without section 501(b), no one would
suggest that Congress meant to deny the union the right
to enforce 501(a).” Id. The court saw no reason that sub-
section (b)’s mere existence should detract from what it
viewed as the obvious import of subsection (a). See id. at
1421 (“We should not infer from the mention of
individual suits that Congress did not intend to give
unions a cause of action.”).
18                                                 No. 08-1631

   Instead, the Eleventh Circuit read subsection (b) as a
complement to subsection (a). Subsection (b), the court
noted, had two purposes. The first was to enable individ-
ual union members to sue on the union’s behalf. Id.
The second was “to make sure that individuals do not
preempt a union’s right to prosecute its own claims.”
Id. Despite these dual purposes, the court noted that
§ 501(b) itself, which requires that unions have the
first opportunity to sue for violations of the duties set
forth in subsection (a), “makes the first purpose subservi-
ent to the second.” Id.; see also id. at 1419 (“[S]ection 501(b)
shows Congress preferred that the union, rather than
individual members, sue on its own behalf.”). The
Eleventh Circuit summarized the interplay between
subsections (a) and (b) as follows: “It is far more in
keeping with the statute as a whole to conclude that,
having given the unions certain rights, Congress thought
it implicit that the unions could enforce those rights in
court. Allowing the individuals to assert the unions’ claims
was more extraordinary and therefore had to be spelled
out.” Id. at 1421.
  The Eleventh Circuit also looked to the LMRDA’s
legislative history for evidence of Congress’s intent. The
court noted that the Act was a broad and wide-ranging
attempt to reign in corruption within union leadership. Id.
at 1420-21 (citing Hood, 454 F.2d at 1354). When Congress
passed the LMRDA, few states had imposed fiduciary
duties upon union officials, and members of Congress
perceived the remedies available for breaches of those
duties to be inadequate. Id. at 1420 (citing S. Rep. No. 86-
187 (1959), reprinted in 1959 U.S.C.C.A.N. 2318, 2376). The
No. 08-1631                                                19

court concluded from this historical background that
“Congress intended to supplement the remedies avail-
able to unions by creating new federal protections.” Id.
Because § 501 was intended to compensate for inadequate
state remedies, the court held that it would “frustrate
congressional intent to relegate the union to state reme-
dies.” Id.
  It is incumbent on this court, it appears, to break the tie
between the Ninth and Eleventh Circuits on this issue.
We begin with the Supreme Court’s current views on
implied private federal causes of action. The Court’s
guidance on when a court should recognize an implied
cause of action has evolved over time. Originally, the
Court would find an implicit cause of action if doing so
would effectuate a statute’s purpose and there was
nothing in its legislative history to counter the implica-
tion. See J.I. Case Co. v. Borak, 377 U.S. 426, 431-35 (1964).
The Court later adopted a series of questions to help
courts decide whether to imply a federal cause of action.
See Cort v. Ash, 422 U.S. 66, 78 (1975). The four factors
the Court considered were (1) whether the statute
created a federal right in favor of the plaintiff; (2) whether
there existed explicit or implicit evidence of con-
gressional intent either to create or deny a cause of action;
(3) whether implying a cause of action was consistent
with the underlying purpose of the legislative scheme;
and (4) whether the cause of action was one traditionally
relegated to the states. Id.
  Most recently, however, the Court has distanced itself
from the approaches discussed in both Borak and Cort. See
20                                                No. 08-1631

Alexander, 532 U.S. at 287; TAMA, 444 U.S. at 15-16; see
also Thompson v. Thompson, 484 U.S. 174, 189 (1988)
(Scalia, J., concurring in the judgment) (calling Cort “effec-
tively overruled”). Instead, as we have noted, the Court
has now focused solely on the question of congressional
intent. See Alexander, 532 U.S. at 286-87; Karahalios v. Nat’l
Fed’n of Fed. Employees, Local 1263, 489 U.S. 527, 532-33
(1989) (looking at congressional intent as the sole factor
in its implied-cause-of-action analysis); TAMA, 444 U.S. at
15-16; Touche Ross & Co., 442 U.S. at 568; see also Thompson,
484 U.S. at 189 (Scalia, J., concurring in the judgment)
(referring to congressional intent as “the determinative
factor” in evaluating the existence of a private cause of
action).
  In Alexander, 532 U.S. 275, the Court, while interpreting
a section of Title VI of the Civil Rights Act, attempted to
bring some clarity to the implied cause of action analy-
sis. Justice Scalia, writing for the Court, said: “The judicial
task is to interpret the statute Congress has passed to
determine whether it displays an intent to create not just a
private right but also a private remedy.” Id. at 286. The
inquiry into congressional intent, therefore, is two-fold:
Congress must have intended to create both a private right
and a private remedy. Id. Such is the inquiry that we now
must undertake in the context of § 501.
  We begin with the text of the statute. Touche Ross & Co.,
442 U.S. at 568. As required by Alexander, we look specifi-
cally for “rights-creating language” and an enforcement
regime suggesting the existence of a private remedy
for labor organizations. 532 U.S. at 288-89. Subsection
No. 08-1631                                                  21

(a) provides that union officers, agents, and other represen-
tatives “occupy positions of trust in relation to such
organization and its members as a group.” 29 U.S.C. § 501(a)
(emphasis added). This language establishes union
officers as fiduciaries vis-à-vis the union and its mem-
bers. Had the statute stopped there, one might argue
that the text suggests an intent to leave the scope of the
fiduciary relationship to state common law and remit
unions to standard state-law fiduciary remedies.
  But § 501(a) goes further. It articulates a series of specific
fiduciary duties. Union officers must hold the union’s
money and property “solely for the benefit of the organiza-
tion and its members.” Id. They must “refrain from
dealing with such organization as an adverse party or in
behalf of an adverse party.” Id. They must not “hold[]
or acquir[e] any pecuniary or personal interest which
conflicts with the interests of such organization.” Id. And
they must “account to the organization for any profit
received by him . . . in connection with transactions
conducted by him or under his direction on behalf of the
organization.” Id. Finally, the last sentence of § 501(a)
provides that “[a] general exculpatory provision in the
constitution and bylaws of such a labor organization or
a general exculpatory resolution of a governing body
purporting to relieve any such person of liability for
breach of the duties declared by this section shall be
void as against public policy.” Id.
  This language does not simply stipulate that general
state-law fiduciary principles apply. Instead, it prescribes
in some detail the scope of the fiduciary relationship
22                                              No. 08-1631

between union officers and the union. The statutory text
imposes a series of explicit, affirmative fiduciary obliga-
tions and requires an accounting “to the organization” for
profits received by union officers in the course of the
union’s operations. The itemized list includes some
traditional duties of a fiduciary, but the fact that they are
specifically enumerated suggests the imposition of new
federal duties plainly inuring to the benefit of the union
and its members. That much is clear from the statutory
text (union officers “occupy positions of trust in relation
to such organization and its members as a group,” hold
money and property “solely for the benefit of the organiza-
tion and its members,” and must “account to the organization
for any profit”). Id. (emphases added). But it also flows
from the nature of a fiduciary duty. A statute that imposes
fiduciary duties necessarily implies corresponding rights
in the beneficiaries. The statute’s focus is thus not solely
on the persons being regulated but also on those whose
interests are protected—here, the union and, by extension,
its members. Cf. Alexander, 532 U.S. at 289 (“Statutes that
focus on the person regulated rather than the individuals
protected create no implication of an intent to confer
rights on a particular class of persons.” (quotations omit-
ted)).
  Thus, an implication arises that § 501(a) confers federal
rights on labor organizations: the right to the faithful
performance by union officers of the general and specific
fiduciary obligations enumerated in the text; the right to
an accounting; and the right to nullify any exculpatory
clause asserted by union officers as a defense to an
action for liability for breach of the fiduciary duties
No. 08-1631                                               23

imposed by § 501(a). In other words, the statutory lan-
guage as a whole manifests an intent “to create new rights”
for labor unions. See Alexander, 532 U.S. at 289.
  The statutory language implies the creation of a federal
remedy for the union as well. The statutory duty to
“account to the organization for any profit received”
fairly implies that the union has a specific remedy—that it
may sue an unfaithful officer in federal court for an
accounting for ill-gotten gains. The last sentence in
§ 501(a) also suggests the existence of a federal enforce-
ment regime that includes a remedy for the union. It voids
any exculpatory provision in the union’s organizational
documents or resolutions that “purport[s] to relieve any
[union officer] of liability for breach of the duties” de-
clared in the statute. 29 U.S.C. § 501(a). The only
possible role such an exculpatory clause could serve is
as a defense to a claim against a union officer for breach
of the duties imposed by § 501(a), and any such
claim belongs at least to the union.7 By nullifying any
exculpatory provisions, the statute removes a possible
defense to liability. It follows that the union must have a
statutory remedy for liability for breach against which
this sort of defense might potentially be asserted.
  The derivative action created in subsection (b) for
individual union members reinforces rather than under-
mines the implication arising from the text of subsection


7
  We defer momentarily the question of the remedies avail-
able to individual union members, which the statute addresses
in subsection (b).
24                                                  No. 08-1631

(a).8 Section 501(b), by its terms, does nothing more
than grant union members the right to sue on a union’s
behalf. It was necessary for Congress to make this deriva-
tive cause of action explicit because there is nothing in
subsection (a) to suggest that union members themselves
could sue for fiduciary violations committed against the
union. See Statham, 97 F.3d at 1421 (“Allowing the individ-
uals to assert the unions’ claims was more extraordinary
and therefore had to be spelled out.”). In creating this
express cause of action for union members, however,
§ 501(b) neither opens nor closes the federal courthouse
to the unions themselves. Instead, it provides further
evidence that labor organizations have an implied cause
of action under subsection (a).
  Subsection (b) conditions union members’ right to sue
on the union’s refusal or failure to bring suit itself. See
29 U.S.C. § 501(b). Only after union members have re-
quested that the union seek relief for violations of
§ 501(a), and the union has failed or refused to take
such action, may the union member sue. Id. The union
member’s suit may “recover damages or secure an ac-
counting or other appropriate relief for the benefit of the
labor organization.” Id. (emphasis added). By structuring
the union member’s right and remedy in this way, Con-
gress has created a derivative system much like share-



8
  The Ninth Circuit in Traweek held that § 501(b)’s express cause
of action for individual union members foreclosed any
implied cause of action for the union itself. See 867 F.2d at 506-
07. We disagree, for the reasons we explain.
No. 08-1631                                                25

holder derivative actions seen in corporate law. See
Hoffman, 362 F.3d at 317 n.4; Chathas, 233 F.3d at 514; see
also Fed. R. Civ. P. 23.1.
  We pause here to note that in reordering the analysis
in private-cause-of-action cases, Alexander subordinated
context to text, but it did not eliminate consideration of
legal context entirely, particularly when used to clarify
text. See Alexander, 532 U.S. at 288 (“We have never ac-
corded dispositive weight to context shorn of text. In
determining whether statutes create private rights of
action, as in interpreting statutes generally, legal context
matters only to the extent it clarifies text.” (citation omit-
ted)). Here, there are important parallels between union
member derivative actions under § 501(b) and share-
holder derivative suits; to the extent that the text of § 501
requires clarification, we find it in this legal context.
  At common law and under modern state corporation
law statutes, the derivative action remedy allows share-
holders to bring a corporation’s claim on the corporation’s
behalf when the corporation fails or refuses to act. See
Ross v. Bernhard, 396 U.S. 531, 534 (1970). In Ross, the
Supreme Court discussed the history of shareholder
derivative actions. The Court noted that courts in equity
developed the derivative suit to provide shareholders
redress “against faithless officers and directors [and] also
against third parties who had damaged or threatened
the corporate properties.” Id. The American legal system,
said the Court, viewed a shareholder derivative action
“as a suit to enforce a corporate cause of action against
officers, directors, and third parties.” Id. (emphasis added);
26                                                  No. 08-1631

see also Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 522
(1947) (“The cause of action which such a [derivative]
plaintiff brings before the court is not his own but the
corporation’s.”). The Court went on to say that “one
precondition for the [shareholder] suit was a valid claim
on which the corporation could have sued.” Ross, 396 U.S. at
534 (emphasis added).
   The same principles are at work in the federal derivative
remedy created for union members in § 501(b). The statu-
tory rights conferred by subsection (a) belong to the
union; individual union members are derivative bene-
ficiaries, and under subsection (b) they may sue in federal
court on the union’s behalf to vindicate those rights, but
only if the union itself first fails or refuses to do so. It
would be anomalous indeed to read this statutory
scheme as remitting the union’s own suit—which is
primary under the statutory hierarchy—to state court. See
TAMA, 444 U.S. at 19 & n.8 (interpreting 15 U.S.C. § 80b-15
as implying a limited private cause of action for viola-
tion of the Investment Advisers Act and noting that
Congress could have intended that claims under § 215
would be brought only in state court, but declining “to
adopt such an anomalous construction without some
indication that Congress in fact wished to remit the
litigation of a federal right to state court”); see also Statham,
97 F.3d at 1420. A district court in this circuit has also
recognized this irregularity: “To allow union members to
sue in federal court while foreclosing suit by unions
would create perverse incentives whereby unions would
‘refuse’ to bring suit upon an appropriate demand by one
of its members for the sole purpose of manufacturing
federal jurisdiction.” Benjamin, 776 F. Supp. at 1366.
No. 08-1631                                               27

  As our discussion makes clear, we agree with the Elev-
enth Circuit that the text and remedial structure of § 501(a)
and (b), read together, imply both federal rights and a
federal remedy for labor organizations against union
officers who violate their statutory duties.9 Today’s con-
clusion does not extend our jurisdiction beyond that
contemplated by Congress, as some courts have suggested.
See, e.g., Traweek, 867 F.2d at 506-07; Freeman, 683 F. Supp.
at 1192. We may not, nor have we any desire to, enlarge
our own jurisdiction. Instead, today’s decision arises
by clear implication from the text, structure, and context
of § 501.
  Nor do we believe, as the Ninth Circuit has stated, that
this conclusion represents an unwarranted interference
in the internal affairs of labor organizations. See Traweek,
867 F.2d at 506; Phillips, 403 F.2d at 830. Congress has
weighed the risks and benefits of a federal judicial remedy
for the misconduct of union officers; we are bound to
give effect to the LMRDA as written, with the inter-
pretive guidance we have drawn from the Supreme
Court’s recent implied-cause-of-action jurisprudence.
  In summary, we hold that labor organizations have an
implied cause of action under § 501(a) to sue in federal
court for violation of the fiduciary duties imposed by the
statute. The text and structure of the statute as a whole
demonstrate Congress’s intent to confer upon unions


9
  We part company, however, with the Eleventh Circuit’s use
in Statham of the LMRDA’s legislative history. See 97 F.3d
at 1420.
28                                              No. 08-1631

federal rights and a federal remedy. Because Local 150
has a federal cause of action for violation of § 501, the
district court possessed jurisdiction to hear this case
pursuant to the general grant of federal-question juris-
diction, 28 U.S.C. § 1331, and therefore erred in dis-
missing the suit.


                    III. C ONCLUSION
  For the reasons above, we conclude that the district court
incorrectly dismissed the case for lack of subject-matter
jurisdiction. We R EVERSE the decision of the district court
and R EMAND the case for further proceedings.




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