Gordon v. Francois
| Decision Date | 02 March 2021 |
| Docket Number | INDEX NO. 654437/2020 |
| Citation | 2021 NY Slip Op 30694 (U) |
| Parties | ANTHONY GORDON and PAUL BRAITHWAITE, Plaintiffs, v. SHAUN FRANCOIS, President, Local 372, Board of Education Employees, American Federation of State, County and Municipal Employees, in his personal capacity; DAVID KEYE, Treasurer, Local 372, Board of Education Employees, American Federation of State, County and Municipal Employees in his personal capacity; ANTONIO JORDAN, Trustee, Local 372, Board of Education Employees, American Federation of State, County and Municipal Employees in his personal capacity; MAYRA VEGA, Trustee, Local 372, Board of Education Employees, American Federation of State, County and Municipal Employees in her personal capacity; WILLIE MITCHELL, Trustee, Local 372, Board of Education Employees, American Federation of State, County and Municipal Employees in his personal capacity; and LOCAL 372, BOARD OF EDUCATION EMPLOYEES, AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, Defendants. |
| Court | New York Supreme Court |
The following e-filed documents, listed by NYSCEF document numbers (Motion 001) 17, 18, 19, 21, 22, 24, 25, 26, 27, 28, 29, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49 were read on this motion by plaintiffs for PREL INJUNCTION/TEMP REST ORDR.
The following e-filed documents, listed by NYSCEF document numbers (Motion 002) 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 53, 54, 55, 56 were read on this motion by defendants to DISMISS.
Upon the foregoing documents, and after argument, the motion of plaintiffs Anthony Gordon and Paul Brathwaite1 for an order restraining and enjoining defendants for the pendencyof this action (motion seq. no. 001) is granted to the extent set forth herein; and the motion of defendants Shaun Francois, David Keye, Antonio Jordan, Mayra Vega, Willie Mitchell, and Local 372, Board of Education Employees, American Federation of State, County and Municipal Employees to dismiss the verified complaint (motion seq. no. 002) is denied, in accord with the following memorandum. The motions are consolidated here for decision.
This is an action for an accounting and breach of fiduciary duty commenced against officers and trustees of a local public employees' union. New York Board of Education Employees Local 372 ("Local 372") is a local union representing non-pedagogical employees at the New York City Department of Education (Verified Complaint ¶ 4).2 Local 372 is affiliated with the American Federation of State, County and Municipal Employees ("AFSCME"), and is a constituent of AFSCME's administrative subdivision, District Council 37 ("DC 37") (id. ¶ 4). Plaintiffs Anthony Gordon and Paul Brathwaite are members of Local 372 (id. ¶ 2). Defendant Shaun Francois is the President of Local 372, a position he has held since July 2014 (id. ¶ 3). Defendant David Keye is the Secretary-Treasurer of Local 372, a position he has held since July 2014 (id. ¶ 5). Defendants Antonio Jordan, Mayra Vargas, and Willie Mitchell are Trustees of Local 372 (together, the "Trustees"), and have held their respective positions since at least 2017 (id. ¶ 6).
Plaintiffs allege that defendants have breached their fiduciary duties to Local 372 and violated the Local 372 Constitution by "overspending" the union's funds (id. ¶ 23) and by failing to make required financial disclosures to the union membership. Plaintiffs allege that, since his election as President of Local 372 in July 2014, Mr. Francois has "engaged in profligatespending" of the union's funds on "his own and other staff salaries, and some on numerous junkets and trips, car services, and redecoration of the Union's offices," causing Local 372's net assets to decline from $15,267,943 in 2014 to $10,069,757 in 2018, as reported on the union's IRS Form 990 (id. ¶ 11). Plaintiffs allege that this was done "with the indulgence of" Mr. Keye and the defendant Trustees (id.). Plaintiffs also object to Local 372's purchase of an office condominium located at 20 West 33rd Street (the "office condominium") for $9,289,821, partially financed by a $5,000,000 mortgage (id. ¶ 12).
Additionally, plaintiffs allege that defendants have failed to make certain financial disclosures to the union membership, as required by Local 372's Constitution, the Bill of Rights of Union Members, and AFSCME's Financial Standards Code (id. ¶¶ 14-16). Plaintiffs contend that "the monthly financial reports given to the Executive Board [of Local 372] have the barest of details"; that no report was given at the meeting where the office condominium purchase was reported to membership; and that the annual audit "has never been presented to a Membership Meeting, and is not attached to the minutes of those meetings" (id. ¶ 16). Plaintiffs plead that Mr. Gordon attempted to review Local 372's financial records in 2016 and 2017, but "was given extremely limited access" (id. ¶ 17). Mr. Gordon then brought charges against Mr. Francois "within the AFSCME Judicial procedure" pursuant to the AFSCME constitution (id.).3 The majority of Gordon's charges in that proceeding were dismissed on the stated basis that he did not carry his burden of proof; but Gordon asserts in this action that he was handicapped in that proceeding on account of his inability to gain access to Local 372's financial records (id.). In short, plaintiffs allege that "[a]s a result of the individual defendants' breach of their fiduciaryduties, and the secretive manner in which records were kept, defendants have caused Local 372 to lose in excess of $10 million" (id. ¶ 21).
The verified complaint interposes a cause of action sounding in breach of contract for breach of the Local 372 Constitution and a cause of action for breach of fiduciary duty for "[t]he failure of the Defendants to act in a prudent manner, both by overspending, and then by purchase of a 9.2 million dollar office at a time when the union's net assets were barely more than that sum" (id. ¶ 22-23). Plaintiffs also seek a temporary restraining order, preliminary injunction, and permanent injunction, restraining and enjoining defendants from preventing plaintiffs from examining Local 372's books and records, including all check ledgers, credit card reports, and audits, prior to the mailing of ballots in a forthcoming Local 372 election of officers and delegates, and seeking $10,000,000 in restitution of Local 372's funds (id. [prayer for relief] ¶¶ 1-2). Finally, plaintiffs seek to enjoin the individual defendants from utilizing union funds or union counsel to defend this lawsuit.
This action was commenced concurrently with an action regarding the forthcoming Local 372 election, captioned Paul Braithwaite and Anthony Gordon against Shaun Francois, as President of New York City Board of Education Employees Local 372, American Federation of State, County and Municipal Employees, and Yvette Elliott, or her successor in office, as Chairperson of the Election Committee of The New York City Board of Education Employees Local 372, American Federation of State County and Municipal Employees, New York County index Number 654162/2020 (the "Related Action"). In the Related Action, plaintiffs seek a stay and other relief in connection with Local 372's upcoming election for officers and union delegates to DC 37. At commencement, plaintiffs moved by order to show cause in both actions for temporary restraining orders staying the upcoming election pending the outcome of eachcase. The order to show cause in the Related Action, which includes a temporary restraining order that restrained defendants from mailing a ballot to the members of Local 372 for the election of officers and delegates, was signed and entered on September 2, 2020, and that stay remains in effect.4
By Notice of Removal (28 USC 1441 [c] [1] [A]), defendants caused this action to be removed to U.S. District Court, S.D.N.Y. (see, NYSCEF Doc. No. 20). That notice specifically relied upon federal law through its reference to "a claim arising under the Constitution, laws, or treaties of the United States" and its citation to "Title IV of the Labor-Management Reporting and Disclosure Act (29 U.S.C. §482(a)-(c); ('LMRDA'))" (NYSCEF Doc. No. 20 ¶¶ 1-2) and its further citation to federal case law, i.e., Brown v Sambrotto (523 F Supp 127 [SDNY 1981], appeal dismissed 685 F2d 423 [1982]) (NYSCEF Doc. No. 20 ¶ 2; see also, id., ¶¶ 11, 16 [making further reference to federal law]).
By order dated September 25, 2020, the U.S. District Court remanded this action to this court (see, NYSCEF Doc. No. 23).
Defendants move to dismiss the complaint in this action on the grounds that Plaintiffs are precluded from bringing this action because they failed to exhaust all administrative remedies; that Plaintiffs have failed to state a cause of action; and that they have failed to demonstrate their entitlement to injunctive relief.
On a motion to dismiss brought under CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d 83, 87-88 [1994] [citations omitted]). "Whether aplaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" (Cortlandt St. Recovery Corp. v Bonderman, 31 NY3d 30, 38 [2018]), but a pleading consisting of "bare legal conclusions" is insufficient (Leder v Spiegel, 31 AD3d 266, 267 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied sub nom Spiegel v Rowland, 552 US 1257 [2008]) and "the court is not required to accept factual allegations that are plainly contradicted by the documentary evidence or legal conclusions that are unsupportable based upon the undisputed facts" (...
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