M & S Bldg. Supplies, Inc. v. Keiler

• Decision Date: 29 June 1984
• Docket Number: Nos. 83-1751,83-1755 and 83-1756,s. 83-1751
• Parties: 116 L.R.R.M. (BNA) 2963, 238 U.S.App.D.C. 73 M & S BUILDING SUPPLIES, INC., Blake Construction Company, Inc. v. Joel I. KEILER, Esq., Appellant. M & S BUILDING SUPPLIES, INC., Appellant, Blake Construction Company v. Joel I. KEILER, Esq. M & S BUILDING SUPPLIES, INC., a District of Columbia Corporation, Blake Construction Company, Inc., a District of Columbia Corporation, Appellant, v. Joel I. KEILER, Esq.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 467

738 F.2d 467

116 L.R.R.M. (BNA) 2963, 238 U.S.App.D.C. 73

M & S BUILDING SUPPLIES, INC., Blake Construction Company, Inc. v. Joel I. KEILER, Esq., Appellant.

M & S BUILDING SUPPLIES, INC., Appellant, Blake Construction Company v. Joel I. KEILER, Esq.

M & S BUILDING SUPPLIES, INC., a District of Columbia Corporation,

Blake Construction Company, Inc., a District of Columbia

Corporation, Appellant, v. Joel I. KEILER, Esq.

Nos. 83-1751, 83-1755 and 83-1756.

United States Court of Appeals, District of Columbia Circuit.

Argued April 9, 1984.

Decided June 29, 1984.

Appeals from the United States District Court for the District of Columbia (Civil Action No. 81-0357).

Joseph F. Cunningham, Washington, D.C., with whom David D. Hudgins, Washington, D.C., was on the brief, for Keiler, appellant in No. 83-1751 and cross-appellee in Nos. 83-1755 and 83-1756. Alan D. Keiler, Washington, D.C., also entered an appearance for Keiler.

Geoffrey P. Gitner, Washington, D.C., with whom William F. Krebs, Washington, D.C., was on the brief, for M & S Bldg. Supplies, Inc., et al., appellees in No. 83-1751 and cross-appellants in Nos. 83-1755 and 83-1756.

Before WRIGHT, EDWARDS and SCALIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.

HARRY T. EDWARDS, Circuit Judge:

This case is an appeal from a decision of the District Court in a legal malpractice action brought by plaintiffs Blake Construction Company ("Blake") and M & S Building Supplies, Inc. ("M & S"), against their former labor attorney, Joel I. Keiler. Following a bench trial, the District Court found that Blake had employed Keiler to advise and represent it with regard to a labor problem, that Keiler negligently advised Blake, and that this negligence was the proximate cause of $63,761.61 in damages to Blake. See M & S Building Supplies, Inc. v. Keiler, 564 F.Supp. 1566 (D.D.C.1983). Keiler appeals from the trial court's judgment awarding damages to Blake, and Blake and M & S appeal from the court's exclusion of one element of alleged damages from the judgment. We conclude that all of the alleged damages were proximately caused by the plaintiffs' egregiously anti-union conduct that was beyond the scope of Keiler's advice and that Blake took of its own volition. Accordingly, because it has not been shown that Keiler's legal counsel was the proximate cause of any compensable injury to the plaintiffs, we reverse the judgment of the District Court awarding damages to Blake.

I. BACKGROUND

A. The Facts

Blake is a District of Columbia corporation engaged in the construction business. Until February 1978, Blake owned and operated a yard and warehouse located at 5700 Columbia Park Road, Landover, Maryland (the "Landover Yard" or "Yard"). As a member of the Construction Contractors Council, Inc. ("3Cs"), a multiemployer bargaining unit, Blake was subject to the collective The work force at the Landover Yard generally comprised between 40 and 70 employees, including six or seven truck drivers and various other workers collectively referred to as "warehousemen." Although the warehousemen performed work that fell within job classifications under the contract, Blake construed the agreement to cover only the truck drivers and not the warehousemen. In addition, all of the truck drivers but none of the warehousemen were members of the Union.

bargaining agreement (the "contract") entered into by the 3Cs and Local 639 of the International Brotherhood of Teamsters (the "Union"), which was in effect from August 1, 1975 to April 30, 1978.

Until mid-1977, the Union apparently acquiesced in the company's interpretation excluding warehousemen from coverage under the Union contract. In mid-1977, however, a new slate of Union officers was elected. Thereafter, the Union aggressively sought to represent the warehousemen and have Blake apply the contract to the warehousemen as well as to the truck drivers. Blake refused to accede to these demands and the Union responded on January 19, 1978, by filing an unfair labor practice charge with the National Labor Relations Board ("NLRB" or "Board"). The Union charged Blake with violating sections 8(a)(1) and (5) of the National Labor Relations Act (the "Act"), ¹ alleging that:

On or about August 1, 1977, and continuing since such date, the Employer has unilaterally changed the terms of an existing contract by refusing to pay the contract rate to its employees represented by the charging party herein; and furthermore has refused to bargain with the recognized bargaining representative concerning such matter.

Charge Against Employer (Jan. 19, 1978), reprinted in Joint Record Excerpts ("J.R.E.") 61a.

On February 10, 1978, the president of Blake called attorney Keiler and asked him to meet with company officials to advise Blake on how to handle the labor problem with the Teamsters. Keiler, a Virginia resident and a member of the District of Columbia bar, had handled miscellaneous labor matters for Blake in the past. The parties offer different accounts of what occurred at the meeting between Keiler and company officials. It is clear, however, that a plan was adopted to subcontract the Yard work to M & S, and that Keiler offered Blake advice about how to carry out the plan. M & S is a District of Columbia corporation formed in 1974 by Blake principals to make wholesale purchases of equipment and supplies for Blake. M & S has the same corporate headquarters and the same principal shareholders and officers as Blake. As of February 10, 1978, M & S employed only a single person part-time to experiment with a "tire fill" process to repair damaged tires on construction equipment.

On February 17, 1978, a week after the meeting between Keiler and company officials, Blake and M & S entered into a contract providing that M & S would furnish all personnel for the operation of the On February 27, 1978, the Union filed an amended unfair labor practice charge with the NLRB. The amended charge reiterated the allegation of the original charge and in addition alleged that Blake violated sections 8(a)(1), (3) and (5) of the Act by terminating the employment of all of its employees on or about February 17, 1978, because of their membership in and activities on behalf of the Union. On March 14, 1978, the Union filed a second amended charge, which added M & S as a charged party but otherwise was identical to the first amended charge.

Landover Yard and for the operation of all Blake trucks transporting materials and supplies. Blake management then informed the Yard employees that they were being laid off, but that they would be offered jobs at M & S beginning on February 20, 1978, the following Monday. A Union representative who investigated the layoff was told that the company would not honor the contract but would deal directly with the employees on an individual basis. M & S offered the Yard warehousemen the same jobs they had been performing at Blake at the same rates of pay. M & S also offered the Yard truck drivers the same jobs they had been performing at Blake, but at substantially reduced rates of pay that varied with the individual. One of the truck drivers, the Union shop steward, refused to work at a reduced rate of pay and left the company.

On March 30, 1978, the NLRB General Counsel issued a complaint against Blake and M & S. The complaint alleged that M & S was at all material times the alter ego of Blake and that as a result of its conduct on February 17 and 20, 1978, with respect to the truck drivers, Blake had engaged in and was engaging in unfair labor practices as defined in sections 8(a)(1), (3) and (5) of the Act. Specifically, the complaint alleged that:

On or about February 17, 1978, Respondent Blake discriminated against the employees named below by ostensibly ceasing its business operations and terminating their employment, all because of their membership in, assistance to and activities on behalf of the Union and to avoid its bargaining obligation with the Union:

[Names of six truck drivers]

Complaint and Notice of Hearing p 8 (Mar. 30, 1978), reprinted in J.R.E. 66a-67a. The complaint also specifically alleged that Blake constructively discharged, because of his Union membership and activities, the truck driver who had refused to accept employment with M & S at a reduced rate of pay. The complaint, unlike the Union's original charge, did not include any specific allegations that Blake violated the Act by failing or refusing to apply the contract to the warehousemen or by refusing to deal with the Union on behalf of the warehousemen. See NLRB v. Blake Construction Co., 663 F.2d 272, 277, 279 (D.C.Cir.1981).

Keiler defended Blake and M & S at the hearing before an Administrative Law Judge ("ALJ"). The ALJ ruled that M & S was at all material times the alter ego of Blake and that Blake had violated sections 8(a)(1), (3) and (5) of the Act as alleged in the General Counsel's complaint. The ALJ's proposed remedy required Blake and M & S, inter alia, to recognize and bargain with the Union and to apply the contract retroactively "to the employees of Blake and M & S at the Columbia Park Road facility, and make them whole for any wage and benefit losses they may have suffered by reason of Respondents' failure to apply the contract to them." ALJ's Decision and Order at 13-14, reprinted in J.R.E. 106a-107a. It was not clear, however, whether this remedy applied only to the truck drivers, or to the warehousemen as well. On appeal, the NLRB affirmed the ALJ's decision and adopted his recommended order with one modification: the Board added a bargaining unit description that made it clear that the remedy applied to all employees, i.e., including warehousemen and truck drivers, working for the company within the job classifications listed in the contract.

In the summer of 1980, Blake dismissed Keiler as its attorney and retained Seyfarth, Shaw, Fairweather & Geraldson to assess its prospects on an appeal...