Doyle v. Turner, No. 86 CIV 2792 (CSH).

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtHaight
Citation90 F.Supp.2d 311
PartiesAngela DOYLE, Frederick Gilliam, Betty Hughley, Georgianna Johnson, and Local 1199, Drug, Hospital and Health Care Employees Union, Rwdsu, AFL-CIO, Plaintiffs, v. Doris TURNER, Telbert King, Claude Ferrara, Philip Kamenkowitz, Ramon P. Malave, Jo-Ann Marshall, Herb Binger, Barrington Moore, Karl Rath, Floris Saunders and Floyd Shephard, Defendants.
Decision Date07 March 2000
Docket NumberNo. 86 CIV 2792 (CSH).

Page 311

90 F.Supp.2d 311
Angela DOYLE, Frederick Gilliam, Betty Hughley, Georgianna Johnson, and Local 1199, Drug, Hospital and Health Care Employees Union, Rwdsu, AFL-CIO, Plaintiffs,
v.
Doris TURNER, Telbert King, Claude Ferrara, Philip Kamenkowitz, Ramon P. Malave, Jo-Ann Marshall, Herb Binger, Barrington Moore, Karl Rath, Floris Saunders and Floyd Shephard, Defendants.
No. 86 CIV 2792 (CSH).
United States District Court, S.D. New York.
March 7, 2000.

Page 312

COPYRIGHT MATERIAL OMITTED

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Kornstein Veisz & Wexler, William B. Pollard III, Louis S. Ruffine, of counsel, New York City, for plaintiffs.

Gareth W. Stewart, New York City, for Defendants.

MEMORANDUM OPINION AND ORDER

HAIGHT, Senior District Judge.


This case is before the Court on remand from the Court of Appeals. See Doyle v. Kamenkowitz, 114 F.3d 371 (2d Cir.1997). At issue is the right of former officers of a labor union to recover from that union attorney's fees incurred by those former officers in successfully defending against claims for wrongdoing asserted against them by the union and its successor officers.

The union refuses to pay its former officers' attorney's fees. This Court held, in Doyle v. Turner, 886 F.Supp. 399 (S.D.N.Y.1995), that § 501(b) of the Labor-Management Reporting Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. § 401 et seq., could be invoked by the former union officers to compel the union to pay their attorney's fees.

In a case of first impression in this Circuit, the Court of Appeals reasoned that while § 501(b) has been judicially construed "so as not to bar payment of successful defendants' legal expenses out of the union's coffers, ... neither section 501 nor any general equitable principle compels a union to grant reimbursement." 114 F.3d at 375, 376. The Court of Appeals remanded the case to this Court for determination of whether an award of the defendant officers' attorney's fees may be based upon "other grounds or rationales," id. at 379.

The former union officers in question1 now reassert their claims for union reimbursement of their attorneys fees. The union again resists any payment.

I.

The facts and circumstances of this prolonged litigation are set forth in the decisions of the Court of Appeals and this Court previously cited, together with earlier opinions of this Court whose citations the Court of Appeals collected at 114 F.3d at 373 n. 1. Familiarity with all these opinions is assumed. For present purposes, it is sufficient to say that the defendants identified in footnote 1, all former officers of plaintiff Local 1199, Drug, Hospital and Health Care Employees Union, RWDSU, AFL-CIO (the "Union"), succeeded in obtaining judgments dismissing all the plaintiffs' claims of wrongdoing against them, and also succeeded on their counterclaims alleging that the Union was unlawfully withholding severance pay and vacation benefits from them. In all these successful litigation efforts, the former Union officers in question were represented by Gareth W. Stewart, Esq., and attorneys associated with him. Mr. Stewart's fees and expenses underlie the present claims against the Union for reimbursement.

In their initial fee application before this Court, the defendants in question (hereinafter "the defendants") asserted three bases for recovery: (1) § 501(b) of the LMRDA, as interpreted by caselaw; (2) the "bad faith" exception to the usual American Rule in respect of attorney's fees; and (3) provisions of New York law applicable to the reimbursement of corporate officers and directors who have been vindicated in litigation against them. See 886 F.Supp. at 400. I held that the defendants were entitled to claim reimbursement

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of attorney's fees from the Union "under the LMRDA and the cases construing it," and, having arrived at that conclusion, did not "reach the other asserted bases for payment." Id. at 402.

It appears from the Court of Appeals' opinion that on the appeal the defendants advanced three new grounds for affirming the fee award in their favor, not previously asserted before this Court: (1) the "common benefit" exception to the American Rule, on the theory that § 501(b) is a "trust statute;" (2) "promissory-equitable estoppel," because the Union promised in writing when the litigation started to pay the costs of a successful legal defense; and (3) the policy theory that vacating the award would "emasculate union democracy" by permitting a union to reimburse exonerated officers (or not) at the union's whim. See 114 F.3d at 374.

II.

With all due respect, for this reader at least the Court of Appeals' opinion remanding the case contains two Delphic phrases.2

A.

The Court of Appeals said of its opinion that "our discussion is limited to analyzing whether § 501(b) requires reimbursement of vindicated officers' attorney's fees," 114 F.3d at 375, a question the Court answered in the negative. Thus the Court of Appeals did not address the other two bases for reimbursement defendants initially asserted before this Court (and which I did not reach): the "bad faith" exception to the American Rule; and New York law applicable to vindicated corporate officers and directors. See 886 F.Supp. at 400.

Similarly, the Court of Appeals did not address the three bases for reimbursement that defendants asserted for the first time in that Court: a "common benefit" analysis; a "promissory-equitable estoppel" theory founded on contract; and a "union democracy" analysis. See 114 F.3d at 374.

After discussing § 501(b) and cases interpreting that section of the LMRDA, the Court of Appeals stated its conclusion at 114 F.3d 379:

We therefore hold that union officials who successfully defend against claims under the LMRDA for breach of fiduciary duty may not—by invoking § 501(b) or general equitable principles—compel reimbursement from the union for the costs of their legal defense (including attorney's fees). (emphasis added)

The Court of Appeals did not define the phrase "general equitable principles." Thus the first Delphic obscurity relates to the phrase's limiting effect, if any, upon the alternative grounds for reimbursement that this Court is permitted to consider on remand.

Not surprisingly, during oral argument on remand counsel for the parties disagreed about the phrase's meaning and effect. Counsel for defendants expressed the view that "general equitable principles" should be read as limited "to concepts of equity arising directly out of and directly implicating § 501(b)," but not intended "to preclude other equitable principles." Transcript of Oral Argument (hereinafter "Tr.") at 10. Counsel for the Union argued that the effect of the phrase was to limit defendants' reimbursement theories "to a specific statute that empowers them or a specific common law right acknowledged by this Court of general application and there are none"; specifically, counsel asserted, the phrase foreclosed reimbursement based upon "common benefit and union democracy." Tr. 27-28.

B.

The second Delphic uncertainty is found in the Court of Appeals' language directing remand, following immediately upon the passage just quoted. The Court said:

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Accordingly, we vacate the district court's order awarding attorney's fees to the defendant officers in this case. Because the district court based its fee award solely on § 501(b), without considering other possible grounds, we remand this case to the district court to determine whether the defendant officers may be awarded attorney's fees (and have preserved the right to seek such fees) on other grounds or rationales, including those proffered in the district court (i.e., the "bad faith" exception to the "American Rule" and various provisions of New York state law) and those argued here on appeal (i.e., "common benefit" analysis, promissory estoppel, or preservation of union democracy).

114 F.3d at 379 (emphasis added).

By the emphasized phrase, the Court of Appeals appears to contemplate determination by this Court on remand of the question whether defendants "preserved the right to seek such fees" (i.e., fees based upon the several alternative grounds) in this Court. I specify "in this Court" because it would lie beyond a district court's competence to decide whether a particular claim or issue has been preserved for resolution at the appellate level.

But the Court of Appeals' opinion does not accompany this passing reference to preservation of defendants' rights with any analysis of the factors which result in preservation or abandonment of a particular ground for reimbursement of attorney's fees. That leaves the parties free to quarrel about the meaning of the phrase, and of course they do.

Counsel for defendants contended that "the preserve language means whether the defendants have abandoned or decided not to rely on any ground that was pressed in the Court of Appeals and any ground pressed here," Tr. 12, and further that none of the grounds initially raised in the District Court or in the Court of Appeals has been abandoned, so that all the grounds previously asserted in either forum have been preserved for reassertion on remand. Counsel for the Union argued that the "preserved" language limited defendants to the three grounds initially relied upon before the District Court (§ 501(b), New York State law, and the bad faith exception), that the Court of Appeals' opinion eliminated § 501(b), and counsel for defendants "has now waived" the other two grounds because "[h]e does not advocate in his present motion [on remand] either of those grounds," Tr. 21, leading to the conclusion that, by reason of one phrase or the other, not one of the alternative grounds or rationales defendants asserted in either forum survives to fight another day on remand. Counsel's interpretations come down to a choice between everything and nothing: a difference in reasoning characteristic of this bitterly contested litigation.

C.

The proper interpretation of these phrases...

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4 practice notes
  • Gate Techs., LLC v. Delphix Capital Mkts, LLC, 12 Civ. 7075 (JPO)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 9, 2013
    ...omitted). "The test is conjunctive and neither meritlessness alone nor improper purpose alone will suffice." Doyle v. Turner, 90 F. Supp. 2d 311, 323 (S.D.N.Y. 2000) (quotations and citation omitted). Here, Plaintiffs patently fail to allege that Defendants have advanced meritless arguments......
  • Sierra v. Williamson, Case No. 4:10–CV–00079.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Western District of Kentucky
    • March 24, 2011
    ...fees in defending a claim for breach of fiduciary duty. See, e.g., Weidlich v. Comley, 267 F.2d 133, 134 (2d Cir.1959); Doyle v. Turner, 90 F.Supp.2d 311, 334 (S.D.N.Y.2000); In re Temple Marital Trust, 278 Mich.App. 122, 748 N.W.2d 265, 272–73 (2008); In re Gerber's Trust, 117 Mich.App. 1,......
  • Sierra v. Williamson, CASE NO. 4:10-CV-00079
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Western District of Kentucky
    • March 24, 2011
    ...in defending a claim for breach of fiduciary duty. See, e.g., Weidlich v. Comley, 267 F.2d 133, 134 (2d Cir. 1959); Doyle v. Turner, 90 F. Supp. 2d 311, 334 (S.D.N.Y. 2000); In re Temple Marital Trust, 748 N.W.2d 265, 272-73 (Mich. Ct. App. 2008); In re Gerber's Trust, 323 N.W.2d 567, 573 (......
  • Hughley v. Drug, Hosp. and Health Employees, GRANT-GUTIERRE
    • United States
    • U.S. Court of Appeals — Second Circuit
    • August 1, 2000
    ...parts II.C, III, and IV.2 of the district court's thorough opinion and affirm for the reasons stated therein. See Doyle v. Turner, 90 F. Supp.2d 311 (S.D.N.Y. The order of the district court is affirmed. ...
4 cases
  • Gate Techs., LLC v. Delphix Capital Mkts, LLC, 12 Civ. 7075 (JPO)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 9, 2013
    ...omitted). "The test is conjunctive and neither meritlessness alone nor improper purpose alone will suffice." Doyle v. Turner, 90 F. Supp. 2d 311, 323 (S.D.N.Y. 2000) (quotations and citation omitted). Here, Plaintiffs patently fail to allege that Defendants have advanced meritless arguments......
  • Sierra v. Williamson, Case No. 4:10–CV–00079.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Western District of Kentucky
    • March 24, 2011
    ...fees in defending a claim for breach of fiduciary duty. See, e.g., Weidlich v. Comley, 267 F.2d 133, 134 (2d Cir.1959); Doyle v. Turner, 90 F.Supp.2d 311, 334 (S.D.N.Y.2000); In re Temple Marital Trust, 278 Mich.App. 122, 748 N.W.2d 265, 272–73 (2008); In re Gerber's Trust, 117 Mich.App. 1,......
  • Sierra v. Williamson, CASE NO. 4:10-CV-00079
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Western District of Kentucky
    • March 24, 2011
    ...in defending a claim for breach of fiduciary duty. See, e.g., Weidlich v. Comley, 267 F.2d 133, 134 (2d Cir. 1959); Doyle v. Turner, 90 F. Supp. 2d 311, 334 (S.D.N.Y. 2000); In re Temple Marital Trust, 748 N.W.2d 265, 272-73 (Mich. Ct. App. 2008); In re Gerber's Trust, 323 N.W.2d 567, 573 (......
  • Hughley v. Drug, Hosp. and Health Employees, GRANT-GUTIERRE
    • United States
    • U.S. Court of Appeals — Second Circuit
    • August 1, 2000
    ...parts II.C, III, and IV.2 of the district court's thorough opinion and affirm for the reasons stated therein. See Doyle v. Turner, 90 F. Supp.2d 311 (S.D.N.Y. The order of the district court is affirmed. ...

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