AVERHART v. COMMUNICATION WORKERS OF AMERICA et al
Filing
86
OPINION. Signed by Judge Anne E. Thompson on 4/9/2013. (gxh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Jesse J. AVERHART,
Plaintiff,
Civ. No. 10-6163
v.
OPINION
COMMUNICATIONS WORKERS OF
AMERICA, et al.,
Defendants.
THOMPSON, U.S.D.J.
I. INTRODUCTION
This matter has come before the Court upon the Motion to Disqualify Counsel filed by
Plaintiff Jesse J. Averhart (“Plaintiff”). (Docket Entry No. 67). Defendants Communications
Workers of America (“CWA”) and the Communications Workers of American Local 1033
(“CWA Local 1033”) (collectively, “Union Defendants”), as well as Lawrence Cohen
(“Cohen”), Christopher Shelton (“Shelton”), Hetty Rosenstein (“Rosenstein”), and Rae Roeder
(“Roeder”) (collectively, “Individual Defendants”) oppose the motion. (Docket Entry Nos. 76,
78, 80). The Court has decided the matter upon consideration of the parties’ written submissions
and without oral argument, pursuant to Federal Rule of Civil Procedure 78(b). For the reasons
given below, Plaintiff’s Motion to Disqualify Counsel is denied.
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II. BACKGROUND
This case involves CWA Local 1033’s officer elections, financial reporting and efforts to
organize new members. Plaintiff alleges that CWA Local 1033’s activities in these areas fall
short of meeting its obligations under the CWA’s constitution (“CWA Constitution”) as well as
federal law.
A. The Parties
Plaintiff is a member of Defendant CWA, a nationwide union with various subordinate
affiliates. (Docket Entry No. 1 at ¶¶ 4, 8, 10, 14). The complaint (“Complaint”) also lists a
number of CWA’s subordinate affiliates as defendants, including regional affiliate
Communications Workers of America District 1 (“CWA District 1”), statewide affiliate
Communications Workers of America New Jersey (“CWA New Jersey”), and local affiliate
CWA Local 1033. (Id. at ¶¶ 8, 10, 12). CWA President Cohen, CWA District 1 Vice President
Shelton, CWA New Jersey Director Rosenstein, and CWA Local 1033 President and Chairman
Roeder are also defendants. (Id. at ¶¶ 7, 9, 11, 13).
B. Allegations
The Complaint alleges that CWA Local 1033 has failed to meet its contractual and
fiduciary obligations. (Id. at ¶¶ 48-76). Count One pertains to the efforts of CWA Local 1033 to
organize new members. (Id. at ¶¶ 48-58). Plaintiff alleges that while Roeder has served as
president, CWA Local 1033 has not maintained an active organizing committee or organized any
new members in violation of the CWA Constitution. (Id. at ¶¶ 50-53).
Count Two pertains to the financial reporting practices of CWA Local 1033. (Id. at ¶¶
59-68). According to Plaintiff, upon learning that CWA Local 1033 “claims expenditures of
millions of dollars of members (sic) dues for organizing when no unorganized workers have been
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organized,” Plaintiff sought information about CWA Local 1033’s finances. (Id. at ¶ 21). While
Plaintiff was able to obtain “generic” financial reports, CWA Local 1033 has not provided “full
itemized financial or penny by penny accounting of disbursements of members (sic) dues” as
required by the CWA Constitution and Title II of the Labor Management Reporting and
Disclosure Act (“LMRDA”). (Id. at ¶¶ 19, 61).
Finally, Count Three pertains to CWA Local 1033’s officer elections. (Id. at ¶¶ 69-76).
According to the Complaint, during the 2005 officer elections, “identifying marks (serial
numbers) were on the ballots allegedly because of error by the printer and purportedly too late to
have the ballots reprinted.” (Id. at ¶ 40). Additionally, members were incorrectly “advised they
could sign only one candidate’s nominating petition” under New Jersey Law, which created
confusion that also affected the 2008 officer elections. (Id. at ¶ 41). Furthermore, during both
the 2005 and 2008 officer elections, a single mailbox was used instead of two, and the mailbox
selected was located approximately 17 miles from Local 1033. (Id. at ¶¶ 42, 43). Plaintiff
contends that these procedures constituted a failure to provide secret balloting in violation of the
CWA Constitution and Title IV of the LMRDA. (Id. at ¶¶ 69-71).
C. Complaint Process
According to Plaintiff, on November 11, 2008, five “charges complaints” were filed with
Shelton against CWA Local 1033, including the charge that CWA Local 133 “has not
established and maintained an active and functioning organizing committee during the entire 15
year tenure of [Roeder].” (Id. at ¶¶ 15, 16). Shortly thereafter, Shelton indicated that he would
investigate the charges. (Id. at ¶ 23). In May 2009, Plaintiff was notified that Gail MassonMassey (“Masson-Massey”), a CWA District 1 staff member, had been designated to investigate
the charges, and not long after, Plaintiff was interviewed by Masson-Massey. (Id. at ¶ 24).
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After inquiring about the status of the charges, Plaintiff was notified on June 15, 2010
that Masson-Massey’s investigative report had been issued on March 29, 2010. (Id. at ¶¶ 26-27).
That same day, Plaintiff received a copy of the report, which addressed only whether the charges
were properly before Shelton. (Id. at ¶ 28). Shelton provided Plaintiff with 15 days to respond
to the report, however, when Plaintiff submitted an appeal on June 25, 2010, it was dismissed as
untimely. (Id. at ¶¶ 28-30).
D. Instant Lawsuit
Plaintiff initiated this lawsuit by filing the Complaint with the Superior Court of New
Jersey, Chancery Division. (Docket Entry No. 1). Defendants subsequently removed the case to
federal court on November 24, 2010. (Id.). Plaintiff unsuccessfully sought to amend the
Complaint to add new parties and claims. (Docket Entry Nos. 49, 50, 60, 61, 84, 85).
On October 25, 2012, Plaintiff filed the instant motion to disqualify counsel. (Docket
Entry No. 67). The law firm of Weissman & Mintz, LLC (“Weissman”) represents CWA,
Cohen, Shelton, and Rosenstein, (see Docket Entry No. 1), and the law firm of Walter R. Bliss.
Jr. (“Bliss”) represents CWA Local 1033 and Roeder. (See Docket Entry No. 4). Plaintiff
contends that joint representation of Union Defendants and Individual Defendants is
impermissible under the New Jersey Rules of Professional Conduct (RPCs) and the LMRDA.
(Docket Entry No. 67). For the reasons given below, Plaintiff’s motion is denied.
III. ANALYSIS
When making a motion to disqualify counsel, the “party seeking to disqualify carries a
heavy burden and must satisfy a high standard of proof.” Essex Chem. Corp. v. Hartford
Accident & Indem. Co., 992 F. Supp. 241, 246 (D.N.J. Jan. 28, 1998). “Motions to disqualify are
viewed with disfavor as disqualification is a drastic remedy with often far-reaching, sometimes
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devastating implications.” Id. Courts should, therefore, “hesitate to impose [disqualification]
except when absolutely necessary.” Carlyle Towers Condominium Ass’n, Inc. v. Crossland
Savings, FBS, 944 F. Supp. 341, 345 (D.N.J. July 1, 1996).
In this case, Plaintiff argues that disqualification of Weissman and Bliss is required (1)
under RPCs 1.7 and 1.13, which govern concurrent conflicts of interest and the representation of
organizational clients; and (2) under RPC 3.7, which generally prohibits lawyers from serving as
witnesses at trial.
A. Concurrent Conflict of Interest
Plaintiff first argues that disqualification of Weissman and Bliss is necessary under RPCs
1.7 and 1.13 because a concurrent conflict of interest exists. Under RPC 1.13, a “lawyer
employed or retained by an organization represents the organization acting through its duly
authorized constituents.” RPC 1.13(a). “A lawyer representing an organization may also
represent any of its directors, officers, employees, members, shareholders or other constituents,
subject to the provisions of Rule 1.7.” RPC 1.13(g).
Under RPC 1.7, “a lawyer shall not represent a client if the representation involves a
concurrent conflict of interest.” RPC 1.7. A concurrent conflict of interest occurs if (1) “the
representation of one client will be directly adverse to another client”; or (2) “there is a
significant risk that the representation of one or more clients will be materially limited by the
lawyer’s responsibilities to another client . . . .” Id. Plaintiff contends that a concurrent conflict
of interest exists because (1) there is a significant risk that the representation of either Union
Defendants or Individual Defendants will be materially limited by counsels’ responsibilities to
the other client; and (2) Weissman and Bliss, as counsel for Union Defendants, also represent
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Plaintiff as a union member, and therefore, representation of Union Defendants is directly
adverse to Plaintiff.
1. Conflict of Interest Between Union Defendants and Individual Defendants
The Court addresses first whether joint representation of Union Defendants and
Individual Defendants creates a concurrent conflict of interest that necessitates disqualification.
Plaintiff argues that disqualification is required generally as a result of the derivative nature of
the lawsuit as well as under the LMRDA.
a.Derivative Action
First, Plaintiff contends that the instant lawsuit is a derivative action and disqualification
is generally required in such cases. To advance this argument, Plaintiff relies on Bell Atlantic
Corp. v. Bolger, 2 F.3d 1304 (3d Cir. 1993), in which the Third Circuit expressed “no hesitation
in holding that-except in patently frivolous cases-allegations of directors’ fraud, intentional
misconduct, or self-dealing require separate counsel.” 2 F.3d at 1317. Specifically, Plaintiff
relies on language stating that “if the claim involves serious charges of wrongdoing by those in
control of the organization, a conflict may arise between the lawyer’s duty to the organization
and the lawyer’s relationship with the board.” Id. at 1316.
In Bell Atlantic, however, the Court found disqualification unnecessary because the
plaintiffs had “alleged only mismanagement” and there were “no allegations of self-dealing,
stealing, fraud, intentional misconduct, conflicts of interest, or usurpation of corporate
opportunities by defendant directors.” Id. at 1316. In his memorandums to the Court, Plaintiff
appears to contend that Individual Defendants’ handling of the appeals process constitutes
serious charges of wrongdoing, which, therefore, require disqualification. (Docket Entry No. 82
at 5). The Court cannot say, however, that these allegations sufficiently demonstrate acts of self-
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dealing, stealing, fraud, intentional misconduct, conflicts of interest, or usurpation of corporation
opportunities that the Third Circuit identified as serious wrongdoing in Bell Atlantic.
Furthermore, a review of the pleadings does not undercover such allegations either. The
Complaint contains allegations that funds were not spent on organizing activities in violation of
the CWA Constitution and were, therefore, “misappropriated.” 1 Again, the Court finds,
however, that such claims fall short of the allegations of self-dealing and intentional misconduct
discussed in Bell Atlantic that generally require disqualification in derivative actions. As such,
the Court finds Plaintiff’s arguments regarding Bell Atlantic do not favor disqualification at this
time.
b.LMRDA
Plaintiff also argues that a concurrent conflict of interest arises under the LMRDA. The
Third Circuit has recognized that in cases arising under the LMRDA, a “union may not provide
counsel for its officers in a suit brought against them if the interest of the union and its officers in
the outcome of the case may be adverse . . . .” Urichuck v. Clark, 689 F.2d 40, 42 (3d Cir.
1982). Plaintiff argues that the interests of Defendants are adverse as a result of claims arising
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It is unclear from reading the Complaint exactly what claims Plaintiff asserts against
Defendants. In the Complaint, Plaintiff alleges that “Defendant [CWA Local 1033] has not
established and maintained an active and functioning organizing committee” or “organized
unorganized workers either from the public or private sector workforce during the entire 15 year
tenure of Defendant [Roeder],” yet CWA Local 1033 “represents organizing in generic financial
audit reports as ‘Organizing – Labor v. State.’” (Compl., Docket Entry No. 1, Attach. 2 at ¶¶ 16,
17). As such, Plaintiff appears to take issue with the expenditures of CWA Local 1033.
However, Count 1 alleges that Defendants “failed to organize unorganized members,” and Count
2 claims that Defendants have failed to fully disclose financial disbursements. As such, it is not
clear whether Plaintiff has actually stated a claim for misappropriation of funds or whether
Plaintiff merely seeks relief for failing to organize workers and failing to properly disclose
financial activities. As it is not necessary to decide the issue at this time, the Court declines to
decide whether Plaintiff has stated a claim for misappropriation of CWA Local 1033 funds.
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under Titles I and V of the LMRDA. The Court addresses each separately, considering a
potential conflict of interest arising under Title V first.
i.
Title V
In Urichuck, the Third Circuit recognized in dicta that a “[c]onflict of interest between a
union and its officers is most clearly apparent in a suit brought pursuant to Title V of the
LMRDA charging union officers with pilfering union funds.” Id. at 42-43. Under Title V, union
officers “occupy a position of trust in relation to [the] organization and its members” and
therefore, owe a duty “to hold its money and property solely for the benefit of the organization
and its members and to manage, invest, and expend the same in accordance with its constitution
and bylaws and any resolutions of the governing bodies adopted thereunder . . . .” 29 U.S.C. §
501(a). When an officer is alleged to have violated these duties and the union 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
[union], such member may sue” the officer. 29 U.S.C. § 501(b). No such claim may be brought,
however, “except upon leave of the court obtained upon verified application and for good cause
shown . . . .” Id.
Here, Plaintiff argues that he has stated a claim under Title V of the LMRDA and, relying
heavily on the dicta in Urichuck, argues that disqualification is, therefore, necessary. At this
time, however, the Court cannot agree. First, it is not clear that Plaintiff’s pleadings are
sufficient to state a claim under Title V of the LMRDA, or that Plaintiff sought leave of court
before bringing such a claim as required by 29 U.S.C. § 501(b).
Additionally, even if Plaintiff has stated a claim under Title V, Plaintiff has simply not
met his heavy burden and high standard of proof to show disqualification is warranted. While
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the Third Circuit recognized in Urichuck that conflicts of interest are “most clearly apparent” in
Title V claims “charging union officers with pilfering union funds,” the discussion in Urichuck
focused on instances in which union officers were alleged to have misappropriated union funds
for their own benefit. Plaintiff simply has not made such allegations in this case. The Complaint
alleges only that CWA Local 1033 has failed to expend funds on organizing activities and does
not explain how any defendant benefitted from this action.
Of additional relevance, Union Defendants and Individual Defendants contend that funds
were, in fact, lawfully spent and intend to defend against Plaintiff’s claims by showing that they
adequately met their obligations under the CWA Constitution. (Docket Entry No. 78 at 5). As
such, the Court finds it is conceivable that the interests of Union Defendants and Individual
Defendants are aligned in defending against a Title V claim and the Court, therefore, declines
Plaintiffs’ invitation to read Urichuck to prohibit joint representation of a union and its officers
in any matter in which a Title V claim is alleged. Therefore, as Plaintiff relies solely on the
language in Urichuck and offers no explanation for how the interests of the Union Defendants
and Individual Defendants diverge in the present matter, the Court finds that Plaintiff has not met
his burden of showing that disqualification is warranted at this time.
c. Title I
Plaintiff also relies on Urichuck to support his contention that joint representation of
Union Defendants and Individual Defendants is prohibited due to a concurrent conflict of interest
arising under Title I of the LMRDA. In Urichuck, the Third Circuit recognized that joint
representation of a union and its officers may be impermissible in a Title I case as “union
officers could be guilty of a Title I violation without vicarious liability flowing to the union.”
Urichuck, 689 F.2d at 43. Therefore, in defending against such a Title I claim, a union could
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make a number of arguments, including “that its officers were acting outside the scope of their
authority and, therefore, that the union, at least is not liable to the plaintiff.” Id. The Third
Circuit reasoned that, in such an instance, “surely the interest of the union and the interest of its
officers in the outcome of the litigation is adverse.” Id. The issue, therefore, becomes whether
the actions of the officers fall within the scope of their authority. Id.; Mulligan v. Parker, 805 F.
Supp. 592, 595 (N.D. Ill. Oct. 9, 1992) (“If the officers’ actions were outside of the scope of their
official authority, then a conflict of interest exists between the union and the officers . . . .”). In
these cases, the court “should subject the Title I pleadings to close scrutiny to determine if the
defense that the co-defending officers acted ultra vires is realistically available to the union.”
Urichuck, 689 F.2d at 43.
Here, the Court finds no facts to support Plaintiff’s contention that an ultra vires defense
is realistically available to the union. As Plaintiff’s brief does not explain which actions of
Individual Defendants were ultra vires, the Court reviews the factual allegations contained in the
Complaint to determine if any of the Individual Defendants acted outside of the scope of his
authority. First, as previously noted, the Complaint contains no factual allegations as to
Rosenstein. As such, the Court finds no reason to believe that Rosenstein acted ultra vires.
Second, the allegations involving Cohen and Shelton pertain solely to the appeals process.
While Plaintiff is apparently dissatisfied with the outcome of the appeals process, there is no
evidence that Cohen or Shelton lacked authority to participate in the appeals process as they did.
Finally, the allegations concerning Roeder pertain to a failure to expend funds on organizing new
members. Defendants contend that funds were, in fact, spent on organizing but that Plaintiff
merely disagrees with Roeder’s election to prioritize certain organizing activities over others.
Absent any showing by Plaintiff as to how Roeder or any of Individual Defendants’ actions were
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ultra vires, the Court finds no evidence to suggest that the defense of ultra vires is realistically
available to the union at this time. As such, Plaintiff has not met his burden of showing that
disqualification is necessary due to a concurrent conflict of interest arising under Title I of the
LMRDA.
2. Conflict of Interest Between Union Defendants and Plaintiff
Next, Plaintiff argues that Weissman and Bliss must be disqualified because Plaintiff, as
a member of the CWA, “is a current client of both counsel . . . .” (Docket Entry No. 67, Attach.
1 at 18-19). Plaintiff contends that, therefore, Weissman and Bliss are essentially representing
both Plaintiff and Defendants. (Id.). In advancing this argument, Plaintiff argues that Weissman
and Bliss are “bound by the fiduciary duty of a union to its members and this relationship creates
a duty to union members similar to an attorney client relationship.” (Id. at 18). Plaintiff cites no
case law to support his contention that any fiduciary duty owed by a union’s lawyer to a union
member creates an attorney-client relationship; however, and the Court, finding none, declines to
entertain Plaintiff’s argument and grant the relief requested thereon.
B. Lawyer as Witness
Finally, Plaintiff alleges that disqualification is also necessary under RPC 3.7. Rule 3.7
provides that a “lawyer shall not act as advocate at a trial in which the lawyer is likely to be a
necessary witness.” RPC 3.7. “[A] witness is ‘truly necessary’ if there are no documents or
other witnesses that can be used to introduce the relevant evidence.” Oswell v. Morgan Stanley
Dean Witter & Co., Inc., No. 06-5814, 2007 WL 2446529, *4 (D.N.J. Aug. 22, 2007). “[T]he
party seeking to disqualify an attorney must do more than simply make representations that a
lawyer is a necessary witness for the attorney to be disqualified.” Id. at *3. Instead, the party
“must put forth evidence that establishes the likelihood that the attorney will be a necessary
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witness at trial.” Id. “[I]f it is unclear from the record as to whether or not the attorney’s
testimony is necessary, the motion should be denied.” Id.
Here, Plaintiff argues that “[g]iven the totality of the circumstances it is reasonable to
name counsel as witnesses” as “[t]hey may have participated in giving legal advice or is (sic)
aware of the activities that were detrimental to the organization as they relate to plaintiff’s claim
against the union and/or individual officer . . . .” (Docket Entry No. 67, Attach. 1 at 19). In
short, Plaintiff has simply not provided evidence to support such a claim. Instead, Plaintiff relies
on the conclusory statement that it is “reasonable” to name counsel as witnesses. As such, the
Court finds no basis for disqualifying Weissman and Bliss under Rule 3.7.
IV. CONCLUSION
For the foregoing reasons, Plaintiff’s motion to disqualify counsel is denied. An
appropriate order will follow.
/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
Date: April 9, 2013
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