Opinion
No. 90 Civ. 5722 (CSH).
October 28, 2004
MEMORANDUM OPINION AND ORDER
Plaintiff Eugene Clarke is a rank-and-file member of Local Union No. 608, United Brotherhood of Carpenters and Joiners of America, AFL-CIO ("Local 608"), a constituent local union of the District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America (the "District Council"). Clarke moves, first, to enforce a consent decree (the "Consent Decree") this Court entered on March 4, 1994 in this civil RICO action commenced by the government against the District Council and certain of its former officers, and, second, to impose monetary sanctions upon Michael J. Forde, the Executive Secretary-Treasurer ("EST") of the District Council, for violating the Consent Decree. The gravamen of Clarke's charge against Forde is that Forde behaved improperly with respect to job referrals.
I. BACKGROUND
The captioned case and related cases have generated numerous opinions by this Court and the Second Circuit. Familiarity with them all is assumed. The facts that give rise to this complaint have been documented in 2002 WL 31873460 (S.D.N.Y. Dec. 24, 2002) ( "Clarke I"), 2003 WL 21035292, (S.D.N.Y. May 7, 2003) ( "Clarke II"), and 2004 WL 48885 (S.D.N.Y. Jan. 9, 2004) ( "Clarke III"), familiarity with which is assumed. I will recite the procedural history that gives rise to the present motions.
After finding that Clarke had standing to sue ( Clarke II), and that he need not exhaust the union's internal remedies before coming to this Court ( Clarke III), I engaged the parties in a conference on February 25, 2004 to determine how to proceed. By this point in time, Forde, previously represented by counsel for the District Council, had obtained new representation. District Council continued to be represented by the law firm of O'Dwyer and Bernstien, LLP ("OB").
At the conference, the question was raised as to the District Council's continued participation in the matter in view of the allegations in Clarke's motion to enforce the Consent Decree. I directed the District Council to remain as a party for the next phase of the case, which included preparation of the Fed.R.Civ.P. 26(f) report, and to facilitate discovery. Forde's counsel also sought from Clarke a Bill of Particulars, giving notice to Forde of the specific claims against him.
On March 30, 2004, Clarke served and filed a Notice of Misconduct Complained of Under Rule 71 Motion to Enforce Consent Decree, a motion brought pursuant to Fed.R.Civ.P. 71 to enforce the terms of the Consent Decree, and detailing the specific allegations against Forde. Neither Forde nor the District Council answered Clarke's Notice of Misconduct.
There are now three separate motions before me. First, Clarke seeks to disqualify OB from representing the District Council in connection with Clarke's Rule 71 motion to enforce the Consent Decree. Second, the District Council cross-moves, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss Clarke's motion to enforce the Consent Decree as to it for failure to state a claim upon which relief can be granted. Finally, Clarke moves for summary judgment, pursuant to Fed.R.Civ.P. 56, against Forde. I shall address the first two motions in Part II.A. of this opinion, and then address the third motion in Part II.B.
II. DISCUSSION A
Clarke submits that this Court should disqualify OB as counsel for District Council due to a conflict of interest. Clarke notes that OB attorney Gary Rothman, Esq., along with Scott Danielson, the supervisor of the out-of-work list ("OWL") office, authored the "Report to the Executive Committee of the Investigation Committee into the Complaint of Eugene Clarke" (the "Report"), dated January 2002, which purported to exonerate Forde of Clarke's claims that Forde had violated the referral rules. As Clarke points out, were this Court to find that Forde violated the Consent Decree, counsel for the District Council might be obligated to take action against Forde for claims of its own (such as to recover any fees it may have advanced him in the past). This may create a conflict of interest for OB, for it would require it to repudiate its own Report and advise the District Council to file a claim against a former client.
Regardless of the merits of Clarke's claim, the District Council asserts that it is a moot issue, as it should not be a party to this case. The District Council submits that Clarke's Notice of Misconduct does not contain any allegations of wrongdoing against it. Nor, the District Council asserts, does it set forth a basis for a finding of contempt consistent with the standards of this Court. For these reasons, the District Council argues that Clarke's motion should be dismissed against it. The District Council further argues that once I grant that motion to dismiss, Clarke's disqualification motion will be moot.
To survive a motion to dismiss, a complaint must allege facts which, if true, confer a judicially cognizable right of action. See York v. Assoc. of the Bar of the City of New York, 286 F.3d 122, 125 (2d Cir. 2002). Here, Clarke concedes that of the five violations alleged in its Notice of Misconduct, all five are directed against Forde, and none against the District Council. Therefore, there are no claims pending against the District Council. Nevertheless, Clarke submits two factors in support of preserving the District Council as a party to this action. First, Clarke asserts that in the event I order Forde to pay sanctions, the District Council must then confirm that payment has been made in the proper amount and allocated to the appropriate expenditures. Second, Clarke seeks an order directing Forde to reimburse the District Council for the cost of preparing and drafting the investigative report, and for fees charged by OB in defending Forde.
Clarke's initial moving papers attributed ten violations against Forde. Five of those violations were subsequently withdrawn. See Memo in Support of Motion for Summary Judgment, at 9 n. 2.
Clarke's concerns in these regards may be understandable, particularly given my prior opinion on standing, where I found that Clarke has "a direct economic stake in a fair referral system that is protected by the Consent Decree." 2003 WL 21035292, at *5 (S.D.N.Y. May 7, 2003). In that opinion, I also held, citing and discussing Friends of the Earth, Inc. v. Laidlaw Envtl. Services, 528 U.S. 167 (2000), that should Forde be found liable, a civil penalty paid by Forde to the District Council would provide a deterrent effect for future harm, and thereby redress Clarke's injury. Id., at *6-7.
But that opinion solely related to Clarke's standing before this Court, and did not consider whether Clarke's claims were sufficient to preserve the District Council as a party. Clarke asserts no enforceable rights against the District Council, in law or equity. His assertions that the District Council must confirm payments pertain to the District Council's financial interests rather than to his own. Therefore, I grant the District Council's 12(b)(6) motion to dismiss Clarke's action against it, for failure to state a cognizable claim.
This decision renders Clarke's motion to disqualify counsel moot. However, Clarke's concerns with respect to OB's potentially divided loyalties are duly noted. Should there come a time when these alleged conflicts of interests interfere with the District Council's institutional interests, I may consider revisiting this issue at that juncture; provided, of course, that counsel for the District Council shall be afforded a full opportunity to be heard.
Indeed, in an opinion reported at 2004 WL 1237553 (S.D.N.Y. June 3, 2004), I held that District Council need not respond to Clarke's disqualification motion until its motion for dismissal was first resolved.
For these reasons, Clarke's motion to disqualify counsel is denied, without prejudice, as moot. The District Council's motion to dismiss Clarke's complaint against it is granted.
B
Clarke also moves for summary judgment against Forde. His principal allegations against Forde relate to five referrals which Clarke asserts were unlawful. Following a brief overview of the referral process, I will describe each of the referrals in question, in chronological order.
Under the constituent unions' collective bargaining agreements ("CBAs"), a contractor is required to fill half of the jobs on each project with referrals from the union's OWL. To meet this requirement, the contractor telephones a request into the local union in whose geographic jurisdiction the jobsite is located. The request is then processed by the local's business manager or one of its agents, who then faxes the form to the OWL office.
Each request lists the skills required by the contractor that an out of work union worker must possess in order to receive the job. The request is then processed in a computer system. Out of work union workers also submit their registration form on the OWL, listing the specialty skills that they possess. The request is then matched with a worker who has the skills requested and who has the highest priority on the OWL. That person is then offered the job.
Under the Consent Decree, the following rules must be followed when offering referrals:
Only members who are not currently employed at the trade may register their availability for referral (Rule 4C).
When the Local Union determines that the member who is first on the out-of-work list cannot be referred because of refusal, unavailability, or lack of required skills, the Local Union shall then refer the next member on the out-of-work list who is willing, available and has the required skills. (Rule 5F).
Rule 5F, cited above, is also applicable to shop steward appointments:
Shop stewards must be selected from the individuals referred from the out-of-work list to a given job. If there is no individual among those referred who qualified to serve as a steward, the next available individual on the out-of-work list in order of priority who either has served as a steward, or who is qualified to serve as a steward, shall be referred to the job as steward. . . . (IRO Decision No. 1 at 5).
The five referrals challenged by Clarke matched job requests with the following three people: John Corrigan, John Hearty, and Edward Maudsley. Clarke submits that Corrigan and Hearty co-chaired a fundraiser for Forde's criminal defense, on or about March 25, 2001, following his indictment on New York state charges. Meanwhile, while Forde was president of Local 608, he appointed Maudsley as the local union's representative to the District Council committee that oversaw the 1999 election for District Council EST. Forde later appointed Maudsley as business agent for Local 608.
1) The Five Referrals
On April 23, 1999, Maudsley added the following to his list of skills: Lab Furn, FRMN/LYT. The following day, Forde filled out a request for a Eurotech job at 111 8th Avenue. He requested a carpenter to serve as both foreman and steward for the job, and to possess the skill of laboratory furniture installer, and forwarded it to the OWL office. Maudsley, who was #1,807 on the OWL, received the job.
On November 1, 1999 Corrigan received a referral as a steward to a job for North Berry Concrete at 59th Street and Twelfth Avenue. He was #609 on the OWL. The manning request asked for a steward with a "40-hour OSHA certificate" which Clarke alleges is a fictitious skill. Clarke also notes that November 1st was the day Forde was nominated to run for the position of EST, and was also the day that Corrigan was referred to a job, ten days in advance.
On July 13, 2000, John Greaney — who was appointed by Forde to succeed him as business manager of Local 608, and also elected as Forde's successor as president of Local 608 — forwarded a request from Component Assembly Systems for a steward to serve simultaneously as a foreman. Hearty received this referral while #279 on the OWL.
Hearty placed his name back on the OWL on November 22, 2000, and was assigned position #1,397. Shop steward reports for the Component Assembly systems job show that Hearty worked from July 13, 2000 to January 2, 2001, indicating that he was ineligible to have his name placed back on the OWL on November 22, 2000. See Consent Decree Rule 4C, cited supra. On February 5, 2001, Hearty received another referral as a steward, and also simultaneously to serve as foreman, to a second jobsite of Component Assembly. This request, like the first, was filled out and forwarded to OWL by Greaney.
On March 20, 2001, Corrigan added "concrete" to his list of skills. The following day, he received an out-of-order steward referral from position #198 on the OWL to a jobsite at Columbus Circle. Again, the manning request form listed 40-hour OSHA certificate as a required skill. Clarke notes that the date of the referral, March 21, 2001, coincides with another fundraiser for Forde's criminal defense, held on March 25, 2001. Both Corrigan and Hearty were co-chairmen of the fundraiser. Clarke also notes that Corrigan received the job referral 22 days in advance of the Columbus Circle job.
These are the five referrals which Clarke alleges were improper. On July 24, 2001, Clarke wrote a letter to the District Council's Executive Committee alleging that Forde had manipulated the referrals. This led to an investigation which culminated in the Report, whose developments and findings I have described in a prior opinion. See Clarke I, at *3-*5. The Report concluded that the OWL computerized matching system "is reliable" and that "the referrals were proper under the approved system." Id. at *4. In explaining Corrigan's two matches, and specifically the 40-hour OSHA certification, the Report stated, "[a]ny member motivated to take classes and pass the test can acquire this certification . . . this is a skill that makes a member's profile unique regardless of whatever skills may be requested. Corrigan's 40 hour OSHA certification alone can explain his dispatch[es] as convincingly as any other," since the skill was "possessed by only, approximately 10 people in the entire District Council." Report at ¶ 19.
Clarke submits that the 40 hour OSHA certificate was a fictitious skill, making Corrigan's referrals improper. With respect to Maudsley's and Hearty's referrals, Clarke contends that they violate provisions of the CBAs which contemplate that a foreman should not serve simultaneously as a shop steward. The CBAs provide that "[t]he General Foreman and Foreman shall be the agents of the Employer. The right to hire and discharge employees rests with the authorized representatives of the Employer." See Memo in Support of Motion for Summary Judgment, at 11. Meanwhile, a Job Steward, the on-site representative of the Union, is "to attend to the interest of the Union, and for the performance of such duty, the Employer shall allow reasonable time." Id. Also, a Job Steward "shall have the right to interview the workmen during business hours," but "shall not discriminate against a foreman." Id. Clarke analogizes the CBAs to federal labor law, which prohibits a foreman from serving simultaneously as a shop steward, since the "mere appearance of divided loyalties must be avoided in union-employer dealings in order to comply with the requirements of [the National Labor Relations Act]," as employees have the right to be represented by those who "have a single loyalty to their interests." N.L.R.B. v. General Steel Erectors, Inc., 933 F.2d 568, 571 (7th Cir. 1991) (citations omitted). Finally, Clarke submits that Hearty's November 22, 2000 referral was improper because Hearty was employed while concurrently on the OWL, a violation of the Consent Decree Rule 4C.
A "Job Steward" is for purposes of this opinion the equivalent of a shop steward.
2) Forde's Liability
Clarke blames Forde for these alleged violations in several ways. In submitting the April 23, 1999 referral, Clarke alleges that Forde knowingly manipulated the referral system in a way to favor Maudsley. According to Clarke, Forde is directly responsible for this violation.
Though Forde was not personally responsible for forwarding the referrals to the OWL office, Clarke also submits that he aided and abetted the remaining four violations. Specificially, Clarke asserts that as the officer charged with responsibility under § 16 of the District Council's by-laws for insuring that stewards are appointed in "a manner consistent with" the Consent Decree, Forde had a fiduciary obligation to enforce the terms of the Consent Decree's referral rules. Clarke asserts that Forde therefore had an obligation to suspend or dismiss any business manager or agent who violated the Consent Decree's referral rules, which he failed to do. Greaney was neither suspended nor dismissed for his referrals of July 12, 2000 and February 5, 2001. Clarke asserts that through Forde's inaction, he aided and abetted Greaney's wrongdoing.
With respect to Corrigan, Clarke asserts that after he filed his letter with the District Council's Executive Committee, Forde was obligated to demand that Corrigan produce his 40-hour OSHA certificate, which he did not do. Clarke also contends that the Report emanated from Forde's investigation into his own wrongdoing, and that the Report tried to cover up the fraudulent basis for Corrigan's referrals. Therefore, Clarke asserts that the Report imputes knowledge of the fraud onto Forde. Finally, Clarke calls into question the timing of the referrals. The date of Corrigan's referrals — November 1, 1999 and March 21, 2001 — coincided with Forde's nomination for EST and a fundraiser on behalf of his criminal defense, respectively. Based on these totalities of circumstances, Clarke asserts that Forde aided and abetted Corrigan's violations.
In sum, Clarke argues that Forde's own violation, his failure to dismiss or suspend Greaney, and his efforts to cover up the alleged violations demonstrate a complete lack of diligence in making reasonable efforts to insure compliance with the Consent Decree.
3) Analysis
I have previously held that "Clarke accurately regards his motion to `enforce the Consent Decree' as the functional equivalent of a motion to hold Forde in contempt for violating its provisions and the job referral rules promulgated thereunder." Clarke III, at *6. In order to hold a party in contempt of an order, one must show that (1) the order violated is clear and unambiguous, (2) the proof of non-compliance is clear and convincing, and (3) the alleged contemnor was not reasonably diligent in attempting to comply. Id., citing Powell v. Ward, 643 F.2d 924, 931 (2d Cir. 1981) (citations and internal quotation marks omitted). I have held, and continue to adhere to my view that, "If the motion goes forward in this Court, there must be an evidentiary hearing, presumably preceded by discovery." Clarke III, at *6; Clarke I, at *9.
Clarke submits that, pursuant to Local Rule 83.9, Forde waived his right to have oral evidence taken when he did not answer Clarke's Notice of Misconduct. Further, he notes that Forde "has [made] no initial disclosures with respect to persons with discoverable information" that Forde might use to support his defense. Memo in Support of Motion for Summary Judgment, at 9, quoting Forde's Automatic Disclosure Statement, May 6, 2004. Clarke submits that Forde has failed to identify any documents used in his defense and has not served any discovery requests or noticed anyone for depositions. Under the circumstances, Clarke believes that "a hearing is no longer required." Memo in Support of Motion for Summary Judgment, at 9.
Local Civil Rule 83.9 provides, in relevant part:
Contempt Proceedings in Civil Cases
(a) A proceeding to adjudicate a person in civil contempt . . . shall be commenced by the service of a notice of motion or order to show cause. The affidavit upon which such notice of motion or order to show cause is based shall set out with particularity the misconduct complained of, the claim, if any, for damages occasioned thereby and such evidence as to the amount of damages as may be available to the moving party. . . .
(b) If the alleged contemnor puts in issue his or her alleged misconduct or the damages thereby occasioned, said person shall upon demand be entitled to have oral evidence taken, either before the court or before a master appointed by the court. . . .
By contrast, Dino J. Lombardi, Esq., counsel for Forde, asserts that "each and every potential witness and document that pertains to the subject matter of this case has been identified and set forth in the disclosures of Clarke and the District Council," making further discovery requests and initial disclosures by Forde unnecessary. Affidavit in Opposition to Clarke's Motion, June 24, 2004, at ¶ 8. Counsel also states that the documents that Forde will rely upon are in possession of the District Council. Finally, counsel asserts that Forde expects to participate in depositions of any and all designated witnesses and rely upon the documents identified since the onset of this case.
To hold that Forde had waived his right to a hearing because he failed to respond to Clarke's Notice of Misconduct would be a highly technical interpretation of Rule 83.9. Clarke's submitted his Notice of Misconduct after a request by Forde's counsel for a Bill of Particulars during the February 25, 2004 conference. Mr. Lombardi fairly submits that neither he nor Forde contemplated being served a motion that would require a formal response or else waiver of an evidentiary hearing. In any event, Forde has made clear from the initial proceedings and through the February 25th conference that he was contesting Clarke's claims. That he failed to again put his alleged misconduct at issue by responding to Clarke's Notice of Misconduct is not sufficient inaction to forfeit his right to a hearing.
I have no reason to doubt that discovery in this case is on-going, leading towards an evidentiary hearing, in accordance with the Fed.R.Civ.P. 26(f) Scheduling Order. At this juncture of the case, it would be premature to consider granting summary judgment against Forde prior to providing sufficient time for discovery and opportunity to be heard. For these reasons, Clarke's motion for summary judgment is denied, without prejudice.
Counsel for the parties are directed to attend a status conference in Room 17C, 500 Pearl Street, at 2:30 p.m. on November 10, 2004.
SO ORDERED.