Amalgamated Transit Union v. Lovelace

• Decision Date: 04 February 2015
• Docket Number: No. 25,25
• Parties: AMALGAMATED TRANSIT UNION, LOCAL 1300 AND DAVID A. MCCLURE v. WILLIAM T. LOVELACE, JR.
• Court: Court of Special Appeals of Maryland

AMALGAMATED TRANSIT UNION, LOCAL 1300 AND DAVID A. MCCLURE v. WILLIAM T. LOVELACE, JR.

No. 25

COURT OF APPEALS OF MARYLAND

Argued: November 10, 2014

September Term, 2014

February 4, 2015

LABOR LAW — EXHAUSTION OF INTERNAL UNION REMEDIES — DEFAMATION — MONETARY DAMAGES: When a union member claims that his union and a fellow union member are liable for defaming him and seeks monetary damages, if the union's internal remedies do not provide monetary damages, they are inadequate and the union member is not required to exhaust them before filing suit in court.

Circuit Court for Baltimore City

Case No.: 24-C-10-006258

Barbera, C.J. Harrell Battaglia Greene Adkins McDonald Watts, JJ.

Opinion by Adkins, J.

McDonald and Watts, JJ., concur.

Harrell, J., dissents.

Maryland law has long recognized the rule that a union member must exhaust the union's internal remedies before filing suit in court. Walsh v. Commc'ns Workers of Am., Local 2336, 259 Md. 608, 612, 271 A.2d 148, 150 (1970). If these procedures are procedurally or substantively inadequate, however, exhaustion is excused. Id. In this case, we consider whether union remedies are inadequate when they do not provide the monetary damages a union member¹ seeks when he sues his union and a fellow union member for defamation.

FACTS AND LEGAL PROCEEDINGS

Respondent, William T. Lovelace, Jr., worked for the Maryland Transit Administration ("MTA") and was a member of Petitioner, Amalgamated Transit Union, Local 1300 ("Local 1300").² Lovelace and Petitioner, David McClure (collectively with Local 1300, "the Union"), served together as officers on Local 1300's Executive Board between 2007 and 2010—Lovelace as Financial Secretary, a position to which he was first elected in 2001, and McClure as President. During the three years they served together,Lovelace and McClure often disagreed about Local 1300's financial matters, and became "political enemies." When both men ran for reelection in 2010, McClure prevailed, and Lovelace was defeated. Lovelace blamed his defeat on the allegedly false and defamatory statements that McClure made prior to and during the campaign.

Lovelace filed a defamation action in the Circuit Court for Baltimore City against the Union, seeking $1 million in compensatory damages and $3 million in punitive damages for his defeat in the 2010 election, reputational injury, pain and suffering, and emotional distress. He alleged that between 2007 and 2010, McClure, acting within the scope of his employment, published—to numerous Local 1300 members—false and defamatory statements accusing Lovelace of stealing from Local 1300 and misappropriating funds. Lovelace averred that in several instances, McClure specifically implored others not to reelect Lovelace because he was stealing from Local 1300. Lovelace alleged that McClure knew the defamatory statements were false or acted with reckless disregard as to whether they were false. Regarding Local 1300's vicarious liability, Lovelace alleged that it ratified McClure's statements because it had knowledge of the statements but failed to adequately investigate their truthfulness or stop them.

The Union filed Motions to Dismiss, asserting, in part, that Lovelace failed to exhaust Local 1300's internal remedies before filing suit. The Circuit Court denied the Motions, concluding that Lovelace was not required to exhaust Local 1300's remedies because without the availability of monetary damages, the remedies were inadequate as a matter of law.

The case was tried before a jury in April and May 2012. Several witnesses testified that McClure told them that Lovelace was stealing from Local 1300. Ultimately, the jury rendered a verdict in Lovelace's favor, finding that McClure defamed Lovelace with actual malice and that Local 1300 was vicariously liable for the defamation. The jury awarded $200,000 for injury to reputation, $60,000 for financial loss, and $75,000 for mental anguish. The jury also awarded punitive damages—$7,500 against McClure and $82,500 against Local 1300.

The Union appealed, contending, in part, that the trial court erred when it denied their Motions to Dismiss because Lovelace was required to exhaust Local 1300's internal remedies before filing suit. See McClure v. Lovelace, 214 Md. App. 716, 725, 78 A.3d 934, 939 (2013). Lovelace responded that he was not required to pursue these remedies because they were "procedurally and substantively inadequate." Id. In a reported opinion, the Court of Special Appeals affirmed the Circuit Court, concluding that Local 1300's internal remedies were inadequate because they could not provide the monetary damages Lovelace sought. Id. at 735, 78 A.3d at 945. The Union filed a Petition for Writ of Certiorari, which this Court granted on February 21, 2014, to answer the following question:

Whether an internal union remedy is "inadequate," thus excusing a plaintiff from exhausting internal union procedures for resolving a dispute before seeking relief in court, if it does not provide the monetary damages the plaintiff seeks?

Because we answer yes, we shall affirm the judgment of the Court of Special Appeals.

STANDARD OF REVIEW

In reviewing the denial of a motion to dismiss, "we must assume the truth of all relevant and material facts that are well pleaded and all inferences which can be reasonably drawn from those pleadings." Ronald M. Sharrow, Chartered v. State Farm Mut. Auto. Ins., 306 Md. 754, 768, 511 A.2d 492, 500 (1986). The facts we may consider are limited "to the four corners of the complaint and its incorporated supporting exhibits, if any." Converge Servs. Grp. v. Curran, 383 Md. 462, 475, 860 A.2d 871, 879 (2004); accord Nickens v. Mount Vernon Realty Grp., 429 Md. 53, 62, 54 A.3d 742, 748 (2012) ("Ordinarily, when a trial court purports to grant a motion to dismiss, we review that action based solely on the allegations contained within the four corners of the complaint . . . ."). Pursuant to Maryland Rule 2-322(c), however, "when a trial judge is presented with factual allegations beyond those contained in the complaint to support or oppose a motion to dismiss and the trial judge does not exclude such matters, then the motion shall be treated as one for summary judgment." Nickens, 429 Md. at 62-63, 54 A.3d at 748 (internal quotation mark and citation omitted); see Md. Rule 2-322(c); see also Ray v. Mayor of Balt., 430 Md. 74, 91, 59 A.3d 545, 555 (2013) (treating motion to dismiss as motion for summary judgment because trial court considered materials outside the pleadings).

Here, Lovelace did not attach the Local 1300 Constitution to his Complaint or Amended Complaint as a supporting exhibit. The Union attached the Local 1300 Constitution to their Motions to Dismiss, and the Circuit Court judge considered it when denying the Motions. Therefore, we will treat the Motions to Dismiss as Motions forSummary Judgment³ and review the Circuit Court's denial of summary judgment as a matter of law.⁴ See Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591, 578 A.2d 1202, 1206 (1990) ("[T]he standard for appellate review of a trial court's grant or denial of a motion for summary judgment is whether the trial court was legally correct.").

DISCUSSION

The Union asserts that when the Court of Special Appeals concluded that the Union's internal remedies were inadequate, it "held, in effect, that an internal union remedy could be adequate only if it provided the identical form of relief that the litigant sought in the subsequent civil action." (Emphasis in original.) The Union contends that in order tobe adequate, internal union remedies need not provide an identical remedy—they need only permit a union member to avoid or mitigate an injury.

Petitioners then argue that § 22.1 and § 14.8 of the Local 1300 Constitution are adequate remedies because they could have restored Lovelace's reputation within the union community and led to his reelection. Section 22.1 provides a mechanism for a Local 1300 member to be charged with and disciplined for misconduct:

Any officer or member may be charged with specific activities involving: a violation of any specific provision of the Constitution and General Laws or the bylaws of the member's L[ocal] U[nion]; gross disloyalty or conduct unbecoming a member; malfeasance or nonfeasance in office; financial malpractice; corrupt or unethical practices or racketeering; dual unionism, decertification or secession; or a violation of duly established and applicable rules, regulations, policies or practices of a [Local Union.]

The charges are tried before a Local 1300 trial board. Any Local 1300 member charged under § 22.1 may be suspended from office, suspended or expelled from union membership, fined, declared ineligible for office, or otherwise disciplined. Petitioners assert that had Lovelace successfully pursued charges under § 22.1, the ensuing public trial would have cleared his name and vindicated his reputation, thereby permitting him to compete on a level playing field during the 2010 election.

Section 14.8 permits Local 1300 members to "challenge the conduct or results of an election." It does not limit the grounds upon which an election may be challenged. The Union contends that had Lovelace successfully contested the 2010 election on the grounds that it was tainted by McClure's defamatory statements, Local 1300 could have determinedthat Lovelace had been unfairly slandered during the election campaign and ordered that the election be rerun.

Finally, the Union cautions that the conclusion of the Court of Special Appeals undermines the exhaustion requirement and the policies on which it rests—union self-government and judicial economy. Specifically, Petitioners argue that if union members could seek monetary damages in a civil suit without first pursuing internal union remedies that could have avoided or mitigated the injury, union members "would have a powerful incentive to skip the internal union procedures entirely."

In response,...