Carino v. Stefan

Opinions of the United

2004 Decisions States Court of Appeals

for the Third Circuit

7-19-2004

Carino v. Stefan

Precedential or Non-Precedential: Precedential

Docket No. 03-3679

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PRECEDENTIAL Winston C. Extavour

203 Kings Highway East

UNITED STATES Haddonfield, NJ 08033

COURT OF APPEALS Counsel for Appellant

FOR THE THIRD CIRCUIT

James Katz

No. 03-3679 Jennings Sigmond

1040 North Kings Highway, Suite 300

Cherry Hill, NJ 08034

GISELA CARINO, Counsel for Appellees

Appellant

v.

OPINION OF THE COURT

MARC STEFAN, ESQ;

BUTSAVAGE & ASSOCIATES, LLC.

RENDELL, Circuit Judge.

Appeal from the United States Gisela Carino brought suit against

District Court for the attorney Marc Stefan and Stefan’s

District of New Jersey employer, Bustavage & Associates, for

(D.C. Civil No. 03-cv-01894) legal malpractice in representing her in

District Judge: connection with a labor grievance

Honorable Joseph H. Rodriguez proceeding against her employer. The

District Court granted a motion to dismiss

on the basis that the attorneys were

Submitted Under immune from liability under 29 U.S.C. §

Third Circuit LAR 34.1(a) 185(b), Section 301(b) of the Labor

May 26, 2004 Management Relations Act (“LMRA”).

We agree with the District Court and with

Before: SCIRICA, Chief Judge, those courts of appeals who have spoken

RENDELL and on this issue, and will affirm.

ALARCÓN*, Circuit Judges.

(Filed July 19, 2004) I.

Carino, a New Jersey resident, was

employed as an insurance agent with

Prudential Insurance Company of America

* Honorable Arthur L. Alarcón, Senior

from 1989 to 1998. During this time

Judge, United States Court of Appeals for

period, she was a member of the United

the Ninth Circuit, sitting by designation.

Food and Commercial Workers 2001, at the Sheraton Convention Center

International Union, which had entered in Atlantic City, New Jersey. The firm

into a collective bargaining agreement appointed Marc Stefan, Esquire, to appear

with Prudential. on her behalf.

Prudential terminated Carino’s Carino alleges that the following

employment in October 1998, because it events occurred two days prior to her

believed that she had engaged in hearing. Stefan telephoned her and asked

professional misconduct by selling her to meet him at the Radisson Hotel in

insurance policies to individuals in poor Mt. Laurel, New Jersey. At this meeting,

health and naming disinterested parties as Stefan advised her that the venue for the

the beneficiaries of the policies, and the arbitration meeting had been changed to

company referred the charges against the Radisson Hotel. Furthermore, he

Carino to the Federal Bureau of indicated that Prudential and FBI

Investigation (“FBI”). 1 investigators were at the hotel interviewing

witnesses who would testify against her

F o l l o wi n g the proced ures

regarding her alleged misconduct, that they

established by the collective bargaining

were prepared to take her to jail, and that

agreement, the Union filed a grievance on

she would need $100,000.00 to get out of

C a r i n o ’ s b e h a l f , c o n t e s ti n g h er

jail.

termination. Dissatisfied with the review

of the grievance, the Union exercised its Stefan then asked what Carino

right to take the matter to arbitration.2 The hoped to get out of the arbitration hearing.

Union retained Butsavage & Associates Carino replied that she wanted her

(“Butsavage”), a Washington, D.C. law employment record cleared of Prudential’s

firm, to represent Carino at the arbitration false charges; the FBI investigation closed;

hearing, which was to be held July 27-29, a promise that Prudential would not sue

her for attorney’s fees; and her pension

1

reinstated. Stefan claimed “that would be

According to Carino, the FBI no problem and that he could work that out

investigation disclosed no evidence of with Prudential.” Carino agreed she would

wrongdoing on her part. withdraw the grievance in return for

2 Prudential’s acceptance of her conditions.

Article 28 of the CBA provides that

the Union may refer any grievance Stefan then suggested they go

regarding the termination of a Prudential downstairs to the bar and wait for the

Representative to arbitration if the Union arbitrating judge. After an hour of

is dissatisfied with the outcome of the waiting, he told Carino that they could

grievance procedure. Furthermore, it leave and “call it a mutual agreement.” He

indicates that the Union is the only entity presented her with various forms,

with the power to refer a matter to including a two-page document entitled

arbitration.

2

“Grievance Release,” and asked her to sign Carino filed a timely Notice of Appeal.

them. He did not explain what the forms

were or why she had to sign them. After

she signed them, Stefan said he would II.

meet with Prudential and obtain its

Our review of a district court’s

agreement to what she wanted without any

dismissal of a complaint under Rule

problem.

12(b)(6) for failure to state a claim is

Thereafter, Carino realized that the plenary, and we apply the same standard as

documents she had signed made no the district court. Oatway v. Am. Int’l

reference to Prudential’s concessions in Group, Inc., 325 F.3d 184, 187 (3d Cir.

return for her withdrawal and release. She 2003). In deciding a motion to dismiss, we

contacted Stefan and his firm to complain, must accept all well-pleaded allegations in

but heard no reply. In fact, she never the complaint as true, and view them in the

heard from them again. light most favorable to the plaintiff. Id.

We may grant such a motion only where

Carino argues that Stefan deceived

“it appears beyond doubt that the plaintiff

her into settling her grievance in return for

can prove no set of facts in support of his

various promises which were never kept.

claim which would entitle him to relief.”

She claims that, as a result of Stefan’s

Conley v. Gibson, 355 U.S. 41, 45-46

alleged misconduct, she lost her

(1957).

opportunity to arbitrate her claims, her

employment record remains blemished and

her pension was never restored.

III.

Carino filed a four count complaint

This appeal presents a question of

in the Superior Court of New Jersey

first impression for our Court, namely,

against Stefan and Butsavage alleging: (1)

whether an attorney hired by a union to

legal malpractice against Stefan; (2)

perform services on behalf of a union

intentional misrepresentation against

member in connection with an arbitration

Stefan; (3) breach of attorney’s fiduciary

hearing conducted pursuant to a collective

duty against Stefan; and (4) liability under

bargaining agreement is immune from suit

the doctrine of respondeat superior against

for malpractice by that member. We

Butsavage. Defendants removed the

conclude that the LMRA bars such a suit.

action to federal court based on diversity

jurisdiction and, alternatively, based on

federal jurisdiction under § 301 of the Section 301(b) of the LMRA

LMRA. The defendants then moved to provides, in part, that “[a]ny money

dismiss the complaint pursuant to Fed. R. judgment against a labor organization in a

Civ. P. 12(b)(6) for failure to state a claim. District Court of the United States shall be

The District Court granted this motion, and enforceable only against the organization

3

as an entity and against its assets, and shall and was in violation of an existing

not be enforceable against any individual bargaining agreement. Id. at 402. The

member or his assets.” 29 U.S.C. § 185(b). Court noted that “the legislative history of

Viewed narrowly, this language could be § 301 clearly reveals Congress’ intent to

said to only exempt union members from shield individual employees from liability

personal liability for judgments against the for damages arising from their breach of .

union. However, the Supreme Court has . . a collective bargaining agreement,

given the statute a more expansive reading, whether or not the union participated in or

stating that § 301(b) “evidences ‘a authorized the illegality.” Id. at 407.

congressional intention that the union as

Our court has recognized that

an entity, like a corporation, should in the

Atkinson provides individual union

absence of an agreement be the sole

members and officers immunity from suit

recovery for injury inflicted by it.’”

for union wrongs . See, e.g., Wilkes-Barre

Atkinson v. Sinclair Refining Co., 370

Pub. Co. v. Newspaper Guild of Wilkes-

U.S. 238, 249 (1962) (quoting Lewis v.

Barre, Local 120, 647 F.2d 372, 377 (3d

Benedict Coal Corp., 361 U.S. 459, 470

Cir. 1981); Republic Steel Corp. v. United

(1960)). Confronted by an action against

Mine Workers of America, 570 F.2d 467,

a union and several of its officers in their

478 (3d Cir. 1978). And, “with

individual capacities, the Court in

monotonous regularity, [other courts of

Atkinson dismissed the count against the

appeals have] cited Atkinson to foreclose

officers, stating that § 301 “cannot be

state-law claims, however inventively

evaded or truncated by the simple device

cloaked, against individuals acting as

of suing union agents or members, whether

union representatives within the ambit of

in contract or tort, or both, in a separate

the collective bargaining process.”

count or in a separate action for damages

Montplaisir v. Leighton, 875 F.2d 1, 4 (1st

for violation of a collective bargaining

Cir. 1989); see also Morris v. Local 819,

contract for which damages the union

Int’l Bhd. of Teamsters, 169 F.3d 782, 784

itself is liable.” Id. As a result, the law is

( 2 d C i r . 1 999); Eva nge l i st a v.

clear that individual union officers are not

Inlandboatmen’s Union of the Pacific, 777

personally liable to third parties for actions

F.2d 1390, 1400 (9th Cir. 1985); Ramsey

taken on behalf of the union in the

v. Signal Deliver Service, Inc., 631 F.2d

collective bargaining process.

1210, 1212 (5th Cir. 1985).

The Supreme Court thereafter

The only courts of appeals to have

extended the Atkinson rule in Complete

considered the specific question presented

Auto Transit, Inc. v. Reis, 451 U.S. 401

here, where attorneys acted on behalf of

(1981), holding that a damage claim may

the union, have uniformly concluded that

not be maintained against an individual

Atkinson prohibits claims made by a union

union officer even if the individual’s

member against attorneys employed by or

conduct was unauthorized by the union

retained by the union to represent the

4

member in a labor dispute. See Waterman Appeals rejected the athlete’s contention

v. Transport Workers’ Union Local 100, that an exception to the Atkinson rule

176 F.3d 150 (2d Cir. 1999); (“[U]nder should be fashioned for attorneys

Atkinson, a union’s attorneys may not be employed by or retained by the union.

sued by an individual union member for Peterson, 771 F.2d at 1257. The court

actions taken pursuant to a collective noted that a union may choose to have its

bargaining agreement.”); Arnold v. Air members’ labor grievances handled by a

Midwest, Inc., 100 F.3d 857, 862 (10th union representative with no legal training,

Cir. 1996) (“[A]n attorney who performs or by an attorney. Id. at 1258. If the union

services for and on behalf of a union may chooses to make use of an attorney, that

not be held liable in malpractice to attorney has not “entered into an ‘attorney-

individual grievants where the services client’ relationship in the ordinary sense

performed constitute a part of the with the particular union member who is

collective bargaining process.”); Breda v. asserting the underlying grievance,” but

Scott, 1 F.3d 908, 909 (9th Cir. 1993) merely “assume[s] a function that often is

(holding that employees cannot sue inside performed by a union’s business agents or

or outside counsel for services rendered representatives.” Id. Although “[t]hat

under a collective bargaining agreement); union member is surely justified in

Montplaisir, 875 F.2d at 7 (“[F]or expecting the attorney to perform in a

purposes of the Atkinson principle, competent and professional manner . . .

[attorneys] must be treated the same as when the union is providing the services, it

other union agents.”); Peterson v. is the union, rather than the individual

Kennedy, 771 F.2d 1244, 1258 (9th Cir. business agent or attorney, that represents

1985), cert. denied, 475 U.S. 1122 (1986) and is ultimately responsible to the

(“Where, as here, the attorney performs a member.” Id. Based on this “functional

function in the collective bargaining assessment of the attorney’s role as a

process that would otherwise be assumed union representative within the collective

by the union’s business agents or bargaining process,” the court concluded

representatives, the rationale behind the that Atkinson protected union attorneys

Atkinson rule is squarely applicable.”). from individual liability for acts performed

on behalf of the union. Id. at 1259.

In Peterson, the first case to

consider the question, a professional In addition to relying on the rule

football player brought a malpractice suit promulgated by the Supreme Court in

against two attorneys provided by the Atkinson, the courts have identified

player’s union, claiming that they had several policy considerations weighing

furnished him with inaccurate advice upon against the imposition of malpractice

which he had detrimentally relied in liability on union attorneys representing

pursuing his grievance against his former union members in labor grievances under

employer. The Ninth Circuit Court of a collective bargaining agreement. First,

5

while a plaintiff with a breach of the duty state law claim,3 and that, as a result, §

of fair representation claim against a union 301(b) cannot be a basis for barring her

must prove that the union’s conduct was claim. But the question of whether the

arbitrary, discriminatory, or in bad faith, a preemptive power of § 301 of the LMRA

plaintiff with a malpractice claim against is so complete as to transform her state law

an attorney must only prove that the claim into a federal claim is distinct from

attorney’s conduct was negligent. As a the question of whether § 301(b) applies so

result, it would be “anomalous” if the as to bar her claim. Any court considering

union attorney could be liable if merely her suit against the union attorneys,

negligent, while the union would be liable whether it be a federal court with federal

only if a higher standard were met, question jurisdiction, a federal court sitting

namely, arbitrariness or bad faith. See, in diversity, or a state court, would be

e.g, Arnold, 100 F.3d at 862. Second, compelled, as a matter of substantive law,

state statutes of limitations for malpractice to conclude that § 301(b) bars her claim

are generally longer than the time limit for under Atkinson. In Aragon v. Papy,

the filing of suits by union members Kaplon, Vogel and Phillips, 262 Cal. Rptr.

claiming that their employer or their union 646 (Cal. Ct. App. 1989), after the Ninth

mishandled their labor grievances. “If Circuit had held that complete preemption

union attorneys were sub ject to did not apply to plaintiff’s malpractice

malpractice liability in such cases, litigants claim against attorneys provided by her

would be able to proceed against the union and remanded the case to state court,

attorney long after the expiration of the see Aragon v. Federated Dept. Stores, 750

statutory period for suits against both the F.2d 1447 (9th Cir.), cert. denied, 474 U.S.

union and the employer.” Peterson, 771 902 (1985), the California Court of Appeal

F.2d at 1259. Finally, were union concluded “federal case law and policy

members permitted to sue union attorneys, considerations provide immunity under §

the attorneys could be held liable for

damages “flow[ing] from the union’s

political or tactical choices,” which “could, 3

The doctrine of complete preemption,

in turn, severely hamper unions in

an “independent corollary” to the well-

enlis ting q u a l i ty re p r e s e n ta t i o n .”

pleaded complaint rule, applies where a

Montplaisir, 875 F.2d at 7.

federal law with “extraordinary”

We note that Carino has advanced preemptive force essentially transforms a

several arguments in an effort to avoid the claim under state law into a claim under

Atkinson rule, but we find them federal law for jurisdictional purposes.

unconvincing. First, she contends that the See Caterpillar, Inc v. Williams, 482 U.S.

LMRA does not completely preempt her 386, 393 (1987). It is to be distinguished

from the use of preemption as a defense,

which applies federal law to bar state law

claims.

6

301(b) to retained counsel functioning as consistently been found to be immune.”

union agents in the collective bargaining Arnold, 100 F.3d at 863; see Peterson, 771

process.” Aragon, 262 Cal. Rptr. at 654. F.2d at 1251, 1261 (applying Atkinson

In reaching its conclusion, the court immunity to pre-arbitration counseling).

reiterated that the Ninth Circuit’s decision

Lastly, Carino notes that under New

regarding complete preemption had no

Jersey law “a lawyer’s duty may run to

bearing on “whether the immunity set forth

third parties who foreseeably rely on the

in Section 301(b) . . . was available to the

lawyer’s opinion or other legal services.”

[attorneys] as a defense.” Id. at 650.

Petrillo v. Bachenburg, 655 A.2d 1354,

Again, the issue is not one of preemption,

1359-60 (1995). As a result, she argues

but, rather, one of applicable substantive

that while Stefan was retained by the

law.

Union, he still owed a duty of care to her.

Second, Carino maintains that even While this may indeed be true, this does

if § 301(b) applies, the immunity it not alter the fact that he was acting on

provides to union attorneys does not apply behalf of the Union. The fact that he may

because Stefan performed no services have also have owed a duty to her does not

within the collective bargaining process. remove the Atkinson bar.

Carino is correct that the protection of §

301(b) only applies where a union agent’s

liability grows out of activities performed IV.

in relation to a collective bargaining

Accordingly, guided by Atkinson

agreement. Wilkes-Barre, 647 F.2d at 377.

and Reis and the logic of the opinions of

However, her assertion that Stefan

our sister courts of appeals, we join these

provided no services because he convinced

courts in holding that § 301 of the LMRA

her to withdraw her grievance rather than

immunizes attorneys employed by or hired

arbitrate it is clearly incorrect. Stefan’s

by unions to perform services related to a

actions, tortious or otherwise, grew out of

collective bargaining agreement from suit

the retention of his law firm by the Union

for malpractice. Thus, for all of the

to represent Carino during the arbitration

reasons above, we will affirm.

of the grievance the Union had filed on her

behalf under the collective bargaining

agreement. While he may have deceived

Carino into withdrawing her grievance,

advising her to withdraw was an activity

performed in relation to the collective

bargaining agreement. The fact that he did

not take the matter to arbitration “is

insufficient to distinguish it from the

activity by union attorneys which has

7