Fonti v. Health Prof'ls & Allied Emps., Civil Action No. 13-4231 (ES)

CourtUnited States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
Writing for the CourtSALAS, DISTRICT JUDGE
PartiesKATHLEEN FONTI, et al., Plaintiffs, v. HEALTH PROFESSIONALS & ALLIED EMPLOYEES, et al., Defendants.
Decision Date02 April 2015
Docket NumberCivil Action No. 13-4231 (ES)

KATHLEEN FONTI, et al., Plaintiffs,

Civil Action No. 13-4231 (ES)


April 2, 2015




Pending before the Court is Defendant Hannah Twomey's appeal of United States Magistrate Judge Joseph A. Dickson's July 11, 2014 Opinion and Order (the "Order"), (D.E. Nos. 49, 50), granting Plaintiffs' request to file the Second Amended Complaint. (D.E. No. 57-2). The Court has considered the parties' submissions and decides the motion without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons that follow, the Court AFFIRMS the Order.


Kathleen Fonti, Judith Freemantle, Linda Hegarty, Anne Picogna, and Adrian Rojas (collectively, "Plaintiffs") are members of the Health Professionals & Allied Employees AFT/AFL-CIO labor union (the "Union" or "HPAE"). (D.E. No. 51, Second Amended Complaint ("Sec. Am. Compl.") ¶¶ 1-5). Initially, Plaintiff Kathleen Fonti ("Fonti") filed a complaint in the Superior Court of New Jersey, Bergen County Law Division, on May 17, 2013. (D.E. No. 1-1, Ex. A, Complaint). The original complaint asserted claims of breach of fiduciary duty against the Union and its plan administrator under the Employee Retirement Income Security Act ("ERISA"),

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29 U.S.C. §§ 1104, 1132(c), 1022, 1024. (Id. ¶ 27). Fonti later filed the First Amended Complaint on June 5, 2013, adding claims for breach of fiduciary duty under ERISA against the Union; Hannah Twomey ("Twomey"), President of the Union; and Michael Slott, Education and Communication Director of the Union (collectively, "Defendants"). (D.E. No. 1-2, Ex. B, Amended Complaint, ¶¶ 8, 11-12).

On June 10, 2013, Defendants removed the case to United States District Court for the District of New Jersey. (D.E. No. 1, Notice of Removal). Thereafter, the Union and Twomey filed an answer to the First Amended Complaint and cross-claims against Fonti for defamation. (D.E. No. 15, Amended Answer and Counterclaim). On December 3, 2013, Judge Dickson entered a Pretrial Scheduling Order that provided the parties the opportunity to amend their pleadings until April 1, 2014. (D.E. No. 25). Fonti timely filed a motion seeking leave to file the Second Amended Complaint. (D.E. No. 34).

In the Second Amended Complaint, Fonti sought to add a claim against Twomey for violating the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 501.1 (D.E. No. 34-1, Brief in Support of Motion to File Second Amended Complaint ("Pl. Am. Br.") at 1). According to Fonti, Twomey was involved in a romantic relationship with Richard Loccke, a named partner at the law firm Loccke, Correia, Limsky & Buksoky. (Sec. Am. Compl. ¶ 58). Based on publicly available information, Twomey resides at Loccke's home. (Id.). As president of the Union, Twomey awarded legal work to Loccke's law firm, without question, on a no-bid basis. (Id. ¶ 61). The Union paid Loccke's firm approximately $1.4 million in legal fees. (Id. ¶

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59). Twomey's relationship with Loccke, according to Fonti, created a conflict of interest with the Union that Twomey failed to disclose. (Id. ¶ 63).

Fonti further asserted that she approached Twomey and questioned her about the conflict of interest, which Twomey failed to address. (Id. ¶ 62). Moreover, Fonti asserted that in or about 2008, she sent a letter to the Union's State Executive Council regarding Twomey's conflict. (Id. ¶ 64). However, the Union failed to investigate the matter. (Id.). Fonti went on to publish details surrounding Twomey's alleged conflict of interest on her website. (Id. ¶ 65). Other members of the union became aware of Fonti's website and the allegations contained therein. (Id.).

Twomey filed a brief in opposition to Fonti's motion for leave to amend. (D.E. No. 40-1, Defendant's Brief in Opposition to Plaintiff's Motion to Amend ("Def. Am. Opp. Br.")). In her opposition, Twomey argued that: (1) Fonti's amendment was futile; (2) the amended pleading was merely harassment and vexatious litigation (bad faith); (3) the proposed LMRDA claim was barred by the statute of limitations; (4) the proposed amendments would prejudice the Defendants; (5) Fonti failed to meet the pleading prerequisites under the LMRDA; (6) the doctrine of laches barred Fonti's LMRDA claim; and (7) Fonti was attempting to create a conflict of interest for the Union. (See id.). Ultimately, Judge Dickson concluded that Fonti sufficiently pled a LMRDA claim, that Fonti's LMRDA claim constituted good cause pursuant to 29 U.S.C. § 501(b), that Twomey failed to articulate a bad faith argument, and that the amendment would not result in prejudice. (D.E. No. 49, Judge Dickson's July 11, 2014 Opinion ("Op.") at 7, 9, 10). Thus, Judge Dickson granted Fonti's motion to amend. (D.E. No. 50, Judge Dickson's July 11, 2014 Order). Following Judge Dickson's Order, Fonti filed the Second Amended Complaint. (D.E. No. 51).

On July 25, 2014, Twomey filed an appeal of Judge Dickson's Order. (D.E. No. 57-2, Defendant's Brief in Support of Appeal of Magistrate Judge's Order ("Def. Mov. Br.")). Fonti

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filed an opposition thereafter. (D.E. No. 63, Plaintiff's Brief in Opposition to Appeal of Magistrate Judge's Order ("Pl. Opp. Br.")). The motion is now ripe for adjudication.


Magistrate judges are afford wide discretion in addressing and deciding nondispositive pretrial matters. Fed. R. Civ. P. 72(a); Marks v. Struble, 347 F. Supp. 2d 136, 149 (D.N.J. 2004). On appeal, a "district judge may only set aside an order of a magistrate concerning a nondispositive matter where the order has been shown to be clearly erroneous or contrary to law." Grider v. Keystone Health Plan Cent., Inc., 580 F.3d 119, 146 (3d Cir. 2009) (quoting Snow Machs., Inc. v. Hedco, Inc., 838 F.2d 718, 727-28 (3d Cir. 1988) (internal quotations omitted)). "This is so even if [the district court] would have decided the issue differently." Marks, 347 F. Supp. 2d at 149 (citing Toth v. Alice Pearl, Inc., 158 F.R.D. 47, 50 (D.N.J. 1994)). "A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Id. (quoting Dome Petroleum Ltd. v. Employers Mut. Liab. Ins. Co., 131 F.R.D. 63, 65 (D.N.J. 1990)). A decision is contrary to law "if the Magistrate Judge misinterpreted or misapplied the applicable law." Id. (citing Gunter v. Ridgewood Energy Corp., 32 F. Supp. 2d 162, 164 (D.N.J. 1988)). The party filing the appeal has the burden of demonstrating that the magistrate judge's decision was clearly erroneous or contrary to law. Cardona v. Gen. Motors Corp., 942 F. Supp. 968, 971 (D.N.J. 1996) (citing Exxon Corp. v. Halcon Shipping, Co., 156 F.R.D. 589, 591 (D.N.J. 1994)).


Twomey asserts that the Order granting Fonti leave to file the Second Amended Complaint ought to be reversed. (Def. Mov. Br. at 1). In her opposition to Fonti's motion to amend, Twomey urged Judge Dickson to deny Fonti's motion for several reasons, including: futility, bad faith,

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prejudice, statute of limitations and doctrine of laches, and Fonti's failure to comply with the pleading prerequisites under the LMRDA. (See Def. Am. Opp. Br.).

Now, on her appeal of the Order, Twomey asserts that Judge Dickson's decision to grant Fonti leave to file the Second Amended Complaint was clearly erroneous and contrary to law because Fonti's amendment was futile and failed to establish good cause pursuant the LMRDA. (Def. Mov. Br. at 1-2). Furthermore, Twomey asserts that Judge Dickson failed to address the entirety of her pleading prerequisite, bad faith, statute of limitations, and doctrine of laches arguments. (Id.). The Court will address Twomey's arguments in turn.

A. FutilityFailure to State a Cause of Action

Under Federal Rule of Civil Procedure 15(a), a party may amend a pleading once as a matter of course. Beyond this, a party may amend a pleading only with leave of the court or with the consent of opposing counsel. Fed. R. Civ. P. 15(a). The grant or denial of a motion to amend is within the discretion of the district court. Foman v. Davis, 371 U.S. 178, 182 (1962). "The court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). Reasons a court could deny leave to amend include undue delay, bad faith, dilatory motive, prejudice, and futility. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). An amendment is futile when "the complaint, as amended, would fail to state a claim upon which relief could be granted." Id. (citing Glassman v. Computervision, 90 F.3d 617, 623 (1st Cir. 1996)). "In assessing 'futility,' the district court applies the same standard of legal sufficiency as applies under Rule 12(b)(6)." Id.

Twomey's opposition to the motion to amend asserted three futility arguments: (1) that Fonti failed to assert her LMRDA as a derivative action, as required under 29 U.S.C. § 501;2 (2)

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that the alleged relationship between Twomey and Richard Loccke failed to meet the reporting requirements listed under the Report of Officers and Employees of Labor Organizations section of the LMRDA, 29 U.S.C. § 432(a)(4); and (3) that Fonti's LMRDA allegations were "purely speculative and conclusory" in that they were based "[u]pon information and belief." (Def. Am. Opp. Br. at 4-5). Essentially, Twomey argued that leave to file the Second Amended Complaint was futile because the allegations would not overcome a motion to dismiss. (Id.).

Under the LMRDA, union officers are fiduciaries who have the duty "to hold [the organization's] money and property solely for the benefit of the organization and its members . . . ." 29 U.S.C. § 501(a). Under the same, union officers are to "refrain from . . . holding or acquiring any pecuniary or personal...

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