Multnomah Legal Services Workers Union v. Legal Services Corp.

• Decision Date: 25 June 1991
• Docket Number: No. 89-35762,89-35762
• Parties: MULTNOMAH LEGAL SERVICES WORKERS UNION; National Organization of Legal Services Workers; District 65, Plaintiffs-Appellees, v. LEGAL SERVICES CORP., a nonprofit District of Columbia Corporation, Defendant-Cross-Claimant-Appellant, v. MULTNOMAH COUNTY LEGAL AID SERVICE, INCORPORATED, a nonprofit Oregon Corporation, Defendant-Cross-Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1547

936 F.2d 1547

MULTNOMAH LEGAL SERVICES WORKERS UNION; National

Organization of Legal Services Workers; District

65, Plaintiffs-Appellees,

v.

LEGAL SERVICES CORP., a nonprofit District of Columbia

Corporation, Defendant-Cross-Claimant-Appellant, v. MULTNOMAH COUNTY LEGAL AID SERVICE, INCORPORATED, a

nonprofit Oregon Corporation,

Defendant-Cross-Defendant-Appellee.

No. 89-35762.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 14, 1990.

Decided June 25, 1991.

David A. Bledsoe, Calvin L. Keith, Perkins & Coie, Portland, Or., for defendant-cross-claimant-appellant.

Rosemarie Cordello, Don S. Willner, Willner & Associates, Portland, Or., for plaintiffs-appellees.

Robert C. Weaver, Jr., Garvey, Schubert & Barer, Portland, Or., for defendant-cross-defendant-appellee.

Appeal from the United States District Court for the District of Oregon.

Before CANBY, KOZINSKI and TROTT, Circuit Judges.

TROTT, Circuit Judge:

Multnomah County Legal Aid Service, Incorporated ("MCLAS") is a legal services organization funded in part by the Legal Services Corporation ("LSC"). This dispute arises from LSC's request to view the personnel files of two MCLAS employees, which was immediately resisted by MCLAS's union. The district court held that LSC's demand for documents was neither necessary nor reasonable, and granted a permanent injunction prohibiting (1) release of the files, and (2) termination of MCLAS's funding for failure to release the files. 723 F.Supp. 1398. LSC timely appeals. We have jurisdiction under 28 U.S.C. Sec. 1291, and we reverse.

I

LSC is a federally-created, nonprofit corporation that distributes and administers federal funds to approximately 350 legal services programs across the country. MCLAS provides civil legal assistance to indigent clients and receives approximately fifty percent of its $1.2 million annual budget from LSC.

LSC has a statutorily-imposed duty to assure that grantee programs operate properly, and that staff attorneys maintain high professional standards:

With respect to grants or contracts in connection with the provision of legal assistance to eligible clients under this subchapter, [LSC] shall--

(1) insure the maintenance of the highest quality of service and professional standards, the preservation of attorney-client relationships, and the protection of the integrity of the adversary process from any impairments in furnishing legal assistance to eligible clients;

....

(4) insure that attorneys employed full time in legal assistance activities supported in major part by [LSC] refrain from (A) any compensated outside practice of law, and (B) any uncompensated outside practice of law except as authorized in guidelines promulgated by [LSC];

....

(6) insure that all attorneys engaged in legal assistance activities supported in whole or in part by [LSC] refrain, while so engaged, from--

(A) any political activity, or

(B) any activity to provide voters or prospective voters with transportation to the polls or provide similar assistance in connection with an election (other than legal advice and representation), or

(C) any voter registration activity (other than legal advice or representation)

....

(10) insure that all attorneys, while engaged in legal assistance activities supported in whole or in part by [LSC], refrain from the persistent incitement of litigation and any other activity prohibited by the Canons of Ethics and Code of Professional Responsibility of the American Bar Association, and insure that such attorneys refrain from personal representation for a private fee in any cases in which they were involved while engaged in such legal assistance activities.

42 U.S.C.A. Sec. 2996f(a) (West Supp.1989). ¹

Congress also requires LSC to "monitor and evaluate and provide for independent evaluation of programs supported in whole or in part under this subchapter to insure that the provisions of this subchapter and the bylaws of [LSC] and applicable rules, regulations and guidelines promulgated pursuant to this subchapter are carried out." 42 U.S.C.A. Sec. 2996f(d). To carry out its monitoring responsibility, LSC is authorized to

prescribe the keeping of records with respect to funds provided by grant or contract and shall have access to such records at all reasonable times for the purpose of insuring compliance with the grant or contract or the terms and conditions upon which financial assistance was provided.

42 U.S.C.A. Sec. 2996g(b) (West Supp.1989) (emphasis added). LSC may "terminate, after a hearing in accordance with section 2996j of this title, financial support to a recipient which fails to comply" with the rules, regulations and guidelines articulated in the LSC Act. 42 U.S.C.A. Sec. 2996e(b)(1)(A).

LSC and MCLAS have also entered into an agreement entitled "Assurances Given By Applicant/Recipient As Conditions For Approval Of Grant" (the "Agreement"), which provides in relevant part:

[MCLAS] will, upon request, cooperate with all information collection, including ... monitoring ... and compliance evaluation activities undertaken by [LSC], and during normal business hours give any authorized representative of [LSC] ... access to and copies of all records, books, papers and documents, in the possession, custody or control of [MCLAS], except for that properly subject to the attorney-client privilege.

(emphasis added).

Multnomah Legal Services Workers Union and the National Organization of Legal Service Workers, District 65, UAW (collectively, the "Union") represent MCLAS attorneys and staff. The collective bargaining agreement between MCLAS and the Union (the "CBA") provides that "no information from an employee's personnel file shall be released without the employee's consent, except pursuant to court process."

LSC began monitoring MCLAS on April 24, 1989. LSC's monitoring work plan stated that MCLAS personnel files should be reviewed to "assess evaluation process of staff," and to examine staff grievances. On April 27, 1989, David de Latour, an LSC "team leader," arrived at the MCLAS offices and requested five personnel files, those of three non-Union employees and two Union members, Stelle Kednay and Donna Fausnaught.

MCLAS allowed LSC to review the personnel files of the three non-Union employees but refused to turn over the files of Fausnaught and Kednay. Louis Savage, Executive Director of MCLAS, showed de Latour a letter from Rosemarie Cordello, a Union attorney, objecting to the release of personnel files. De Latour left, apparently to consult with his superiors in Washington, D.C.

Subsequently, de Latour told Savage he wanted access to all personnel files. When Savage asked what specific information de Latour wanted from the files, de Latour responded that LSC policy was to review entire files. Savage then asked to speak to Michelle Ryan, the Union president, to see whether Kednay and Fausnaught would consent to release of their files.

At Savage's request, Ryan agreed to ask the employees whether they would consent to release. Ryan also gave Savage a list of items that the Union considered confidential: (1) reasons for personal leave or leave of absence; (2) medical information; (3) names of emergency contact persons; (4) financial information; (5) salary reduction agreements; (6) grievance complaints; (7) disciplinary actions; and (8) home addresses and phone numbers.

Bruce McDonald, assistant manager of LSC's Office of Monitoring, Audit, and Compliance, told Emilia DiSanto, the office director, that MCLAS would not allow LSC access to the personnel files. DiSanto asked McDonald whether the document request was reasonable and necessary, and McDonald told her de Latour thought it was. DiSanto does not remember determining whether de Latour could obtain the information he sought from other sources. She told McDonald to telephone MCLAS and seek access to the documents.

McDonald telephoned Savage, demanding that MCLAS release the personnel files, and informed him that LSC would consider MCLAS in breach of the Agreement unless the files were released. Savage told McDonald that the information LSC wanted was available from non-confidential sources, and McDonald insisted that the issue was not the information in the files, but rather the "right to see the files."

Savage then tried to compromise with de Latour. After de Latour reviewed the Union's list of confidential items, he agreed not to review medical records or emergency contact persons, but he still wanted to review personal leave requests, grievances, and disciplinary actions. Savage told de Latour the information he requested was either available from other files or not in the personnel files at all. de Latour insisted on seeing entire personnel files. de Latour requested and received Kednay's grievance file, which was not in her personnel file.

Savage again met with Ryan. She told Savage that the employees would not consent to release.

Savage was trapped. He could either breach the CBA by releasing the personnel files, or risk losing half of MCLAS's annual budget by disobeying LSC's demands. Savage decided to release the files. On the afternoon of April 27, 1989, Savage notified the Union that he would release the files on April 28. The Union's attorneys informed Savage that the Union would seek a temporary restraining order ("TRO") to block the release. The Union also filed grievances on behalf of Kednay and Fausnaught, which went directly to arbitration.

The Union then filed a complaint in the district court against MCLAS and LSC, alleging MCLAS's proposed release of the files would breach the CBA. The district court granted a TRO prohibiting MCLAS from releasing the files to LSC, and prohibiting LSC from initiating any procedure to terminate MCLAS's funding for its failure to provide the documents.

After the TRO was granted, MCLAS and the Union held an arbitration hearing to determine their rights and duties to each other under the CBA. The arbitrator...