Appendix — Hooper v. Perrino
Supreme Court brief1995
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| Ia Oe
Supreme Court of the United States
October Term 1995
JAMES L. HOOPER, M.D., et al.,
Petitioners,
Vv.
PERRINO, DOLINSKY, KARESH, WITHROW,
JUARBE & BAIER, M.D., P.A., et al.,
Respondents.
APPENDIX TO PETITION
FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
William A. Beeton, Jr.
Counsel of Record for Petitioners
Allen H. Sachsel
Of Counsel for Petitioners
10521 Judicial Drive
Suite 307
Fairfax, Virginia 22030
(703) 385-9400
———————————————————————————————_——
LIBERTY LEGAL SERVICES
1111 East Main Street @ Richmond, VA 23219 ¢ (804) 643-6054
nae oy bette tr ne rere BPE AP OS
CONTENTS
Cases
Opinion of the United States Court of
Appeals of the Fourth Circuit................00...0...000000.
Memorandum and Order of District Court of
May 14, 1992, Denying Defendants'
Motion to Disqualify Plaintiff's
SETI SINT Ie en EE a
Memorandum of December 11, 1992, of
Magistrate Judge Kenkel ...).........0:......c..cssccecccccseeee.
Order of December 11, 1992, of Magistrate
PT a oii Kthedaae snd dabbese ce ds Py reyheies ccesensasees
Memorandum and Order of January 26, 1993,
of Magistrate Judge Kenkel ....................:...c:cccccccee.
Memorandum and Order of District Court of
June 30, 1993, Granting Defendants’
Motion for Summary Judgment on
Re I nacre clea ooconcesenticespcesscsonies
Memorandum and Order of District Court
of November 15, 1993, Denying Motion
for Partial Vacation of Order of
PO I Bd ctatee nisi ares eek via coer enanansadskhindsbiass
Corrected Judgment Order of District Court of
pe SE.” © GRRE icant 7 anaes 3 2D aT ee ee
ee eee re eee)
Memorandum and Order of District Court
of November 29, 1993, Awarding $5,000
in FRCP Rule 11 Sanctions Against
Plaintiff's Counsel and Awarding Plaintiff
$500 in Attorney's Fees for Count VIII .............0.0..0.0..0008. 61
Order of November 29, 1993, Imposing $5,000 in FRCP
Rule 11 Sanctions Against Plaintiffs Counsel ...................... 71
Memorandum and Order of District Court of
December 14, 1993, Purporting to Correct
Failure to Consider Plaintiff's Timely
ae ees iy pings Ni cuacasrosecdssaeckeeesenccvevenscs 72
Memorandum and Order of District Court
of December 20, 1993, Imposing $500 in
Additional FRCP Rule 11 Sanctions
I ohn cer ccorcpancscesessisensecsooseenvens 74
Order of District Court of December 20, 1993,
Imposing $500 in Additional FRCP Rule 11
Sanctions Against Plaintiffs Counsel ..................0..000.0..00.. 77
Order of United States Court of Appeals for
the Fourth Circuit Denying by 2 to 1
Vote Appellants’ Timely Filed Petition
eG op n. cs tivakossaesonsecivnpsosusevuenseeansc 78
eI URINE © ROONEY oo. ccc kn ccctonecncesescacvenstaeetouess 82
Plaintiff's Opposition to Defendant's Motion
aaa onc ancchrecteartevipsevausvenpietssns vans 101
SNR ME INE Ba, PMCID soos sve ycicensdusaseiecdednussenns 136
A. il
tenant ~
Plaintiff's Opposition to Defendants’ Motion for
WR ST CS oi 145
Plaintiffs Motion for Partial Vacation
sig ee | c/a 159
Memorandum in Support of Plaintiff's Motion for
Partial Vacation of Order of June Wr BOR es ae 160
Letter of November 5, 1993, to Judge Garbis
from Albert D. Brault, Esquire ...................................... 165
Letter of November 8, 1993, to Judge Garbis
from Allen H. Sachsel, ea ce a yo IS 167
Reply to Opposition to Motion for Partial
Vacation of Order of June 30, 1993... 168
Opposition to Defendants' Request for
Wee I a i Se 175
Letter of July 23, 1991, to MMG Board of Directors
WO we SOE DE 189
Letter of December 13, 1993, to Judge Garbis
from Allen H. Sachsel, Esquire ..0.0.....0000.0cccccccccccccceccesn.. 195
oe MELTING LI RM ARN AIR 197
A. ili
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
™~
James L. Hooper, M.D..,
Plaintiff-Appellant,
Vv.
Montcomery MepicaL Group, P.A.:
Susan J. WitHrow, M.D.: Cuarces
KareshH, M.D.; Steven Dotwsxy,
M.D.; Pasquat Perrino, M.D.:
CaroLyn Barer, M.D.:; Hersert f No. 93-2631
Juarse, M.D..,
Defendants-Appellees,
and
Pau R. WeIseNFELD: Jou~ H.
CONRAD,
Parties in Interest
Al
Hooper v. MONTGOMERY MEDICAL Grove, P.A.
James L. Hooper, M.D..,
Plaintff-Appellant,
Vv.
MONTGOMERY MepicaL Group, P.A.;
Susan J. WitHrow, M.D.; CHARLES
KaresH, M.D.; Steven Do.twsxy,
M.D.; PasquaL Perrino, M.D.;
CarOLYN Baier, M.D.; Hersert
Juarse, M.D.,
Defendants-Appellees,
Vi
Pau R. WEISENFELD; JOHN H.
ConRAD,
Parties in Interest.
No. 94-1022
BEST AVAIL
Hooper v2 Moxtcomery Mepica Group. PA
In Re: Actes H. Sacuset.
Appellant,
James L. Hooper, M.D..
Plaintiff.
v;
MonTcomery Mepicat Group, P.A.:
Susan J. Wrrurow, M.D.: Cuarces
KaresH, M.D.; Steven Do.insxy. f No. 94-1038
M.D.; Pasquat Perrino, M.D.:
Caro_yn Baier, M.D.; Hersert
Juarse, M.D.,
Defendants-Appeilees,
Vv.
Pact R. WeiseNretp: Jou~ H.
CONRAD.
Parties in Interest
Hooper v. MONTGOMERY MeEpicaL Grove, P.A.
James L. Hooper, M.D.,
Plaintiff-Appellant,
Vv.
MonTGOMERY Mepicat Group, P.A.;
Susan J. WitHrRow, M.D.; CHarces
KaresH, M.D.; Steven Douinsky,
M.D.; Pasquat Perrino, M.D.;
CarOLyn Baier, M.D.; Hersert
Juarse, M.D.,
Defendants-Appellees,
Vv.
PauL R. WEISENFELD; JOHN H.
CONRAD,
Parties in Interest.
A4
No. 94-1056
Hooper v. Montcomery MepicaL Group, P.A.
sy
In Re: Atten H. Sacuset,
Appellant,
James L. Hooper, M.D.,
Plaintiff.
Vv.
MonTGOMERY Mepicat Group, P.A.;
Susan J. Wrrurow, M.D.; Cuarces
Karesh, M.D.; Steven Dotwsky,
M.D.; Pasquac Perrino, M.D.;
CaroLyn Baier, M.D.; Hersert
Juarse, M.D.,
Defendants-Appellees,
and
Paut R. WEISENFELD; JOHN H.
CONRAD,
Parties in Interest.
P
y
No. 94-1141
Appeals from the United States District Court
for the District of Maryland, at Bzitimore.
M. J. Garbis, District Judge.
(CA-92-529-MJG)
Argued: February |, 1995
Decided: March 2, 1995
Before HALL and WILKINS, Circuit Judges,
and CHAPMAN, Senior Circuit Judge.
Affirmed by unpublished per curiam opinion.
A.5
Hooper v. MONTGOMERY Mepicat Group, P.A.
COUNSEL
ARGUED: Allan Huberth Sachsel, Fairfax, Virginia, for Appellants.
Albert David Brault, BRAULT, GRAHAM, SCOTT & BRAULT,
Rockville, Maryland, for Individual Appellees; Jeffrey Martin Schwa-
ber, STEIN, SPERLING, BENNET, DEJONG, DRISCOLL,
GREENFEIG & METRO, P.C., Rockville, Maryland, for Appellee
Montgomery Medical Group. ON BRIEF: David G. Mulquin,
BRAULT, GRAHAM, SCOTT & BRAULT, Rockville, Maryland,
for Individual Appellees.
Unpublished opinions are not binding precedent in this circuit. See
LO.P. 36.5 and 36.6.
OPINION
PER CURIAM:
James L. Hooper, M.D., appeals a decision of the district court
granting summary judgment in favor of Montgomery Medical Group,
P.A. (MMG) and the members of its Board of Directors’ on various
claims related to his discharge from employment with MMG. Hoop-
er’s attomey, Allen Sachsel, appeals from a decision of the district
court imposing sanctions against him pursuant to Federal Rule of
Civil Procedure 11. We affirm.
Considered in the light most favorable to Hooper, the facts are as
follows. MMG was conwolled by a Board of Directors, the members
of which were referred to as partners, and all of whom were practic-
ing physicians and shareholders of MMG. Hooper had served as Pres-
‘The Board members were Susan J. Withrow, M.D., Charles Karesh.
M.D., Steven Dolinsky, M.D., Pasqual Perrino, M.D., Carolyn Baicr,
M.D., and Herbert Juarbe, M.D.
AL6
nn
|
Hooper v. MONTGOMERY MEDICAL Group, P.A.
ident of MMG since he founded it in 1964. The partners, including
Hooper, were employed pursuant to employment agreements that pro-
vided, inter alia, that they could be terminated by the Board after 60
days written notice.
In early 1989, the Board leamed that MMG had failed to pay
approximately $1 million in federal employment withholding taxes
and that each partner was personally liable for this obligation. Soon
thereafter, the relationship between Hooper and the other partners
began to deteriorate for reasons unrelated to the tax liability, and
Hooper resigned as President of MMG in May 1989. Hooper initially
refused to cooperate with the other partners in securing a loan to pay
the overdue taxes. However, after Hooper was reelected President of
the Board in the summer of 1989, he subsequently agreed to serve as
a guarantor of the loan and use his home as a portion of the collateral.
According to Hooper, his concessions with respect to the loan were
made in exchange for the partners’ oral commitment that he would be
permitted to serve as President until the loan was paid in full.
In September 1990, the Board— including Hooper—unanimously
voted to elect partner Susan Withrow as President. Soon after this
vote, another partner, Steven Dolinsky, was Overheard Saying that
“we voted Dr. Hooper's old ass out as President and now we have
younger blood running through the corporation. . . . It is just a matter
of time until we get his old ass out completely."
In April 1991, Hooper presented to Withrow a handwritten memo-
randum, which she signed, indicating that he would take an unpaid
leave of absence effective April 29, 1991 "while accountants and
attomeys and the Board of Directors work{ed] out an acceptable buy
out of [his] stock." On the same day, Hooper signed an employment
contract with a competing health care provider in violation of his
employment agreement with MMG. At its July 1991 meeting, the
Board voted to discharge Hooper and provided him with the required
60 days notice of termination.
Hooper filed a complaint with the Equal Employment Opportunity
Commission (EEOC) in September 1991, claiming that he was termi-
nated because of his age. He later amended his EEOC complaint to
allege that the partners retaliated against him for filing the complaint
A.7
Hooper v. MonTGOMERY Mepicat Group, P.A.
by, inter alia, not allowing him access to certain of his patient lists.
Additionally, during this time Hooper was negotiating with MMG for
benefits he claimed he was due from a pension plan formerly admin-
istered by MMG, which was subject to the Employee Retirement
Income Security Act (ERISA).
Hooper brought this action in February 1992. In a second amended
complaint, he alleged: (1) age discrimination in violation of the Age
Discrimination in Employment Act, 29 U.S.C.A. § 621 et seq. (West
1985 & Supp. 1994); (2) retaliation for filing the EEOC complaint,
see 29 U.S.C.A. § 623(d) (West 1985); (3) breach of a written con-
tract with MMG to keep him on an unpaid leave of absence while the
partners negotiated to purchase his stock; (4) breach of an oral con-
tract with the individual Board members to retain him as President
until the loan was paid in full; (5) fraud; (6) breach of fiduciary duty;
(7) civil conspiracy; and (8) ERISA violations. The district court
granted summary judgment to the defendants on all claims except the
ERISA violations, and later imposed $5,500 in sanctions against
Sachsel pursuant to Federal Rule of Civil Procedure 11. Hooper and
Sachsel now appeal.
I].
A.
The district court ruled in favor of MMG on the age discrimination
claim because it concluded that MMG had articulated a legitimate,
nondiscriminatory explanation for the discharge and that isolated
comments such as the one bv Dolinsky were insufficient to create a
genuine issue of material fact. See Gagne v. Northwestern Nat'l Ins.
Co., 881 F.2d 309, 314 (6th Cir. 1989). And, the district court granted
summary judgment on the retaliation claim because it concluded that
the evidence was insufficient to create a genuine issue of material fact
conceming a causal connection between the filing of the EEOC com-
plaint and the denial of access to the patient information; the district
court reasoned that Hooper would have been denied access in any
event because of his discharge. The district court alsc concluded that
the alleged written contract was not violated by MMG because even
Hooper admitted that the contract did not supersede his employment
agreement. The district court next found the evidence insufficient as
A.8
ee
Hooper v. MONTGOMERY Mepicat Group, P.A.
a matter of law for a jury to find an oral contract and explained that
even if there were sufficient evidence to make the existence of the
oral contract a jury question, Hooper suffered no damage by the part-
B.
The parties settled Hooper’s ERISA claim after the district court
refused to grant summary judgment on this issue. The district court
later granted Hooper $500 in attomey’s fees, an award Hooper now
appeals as being insufficient.
A district court may, in its discretion, award attomey’s fees in an
ERISA action, but there is no presumption in favor of awarding fees
of this fact. We find no abuse of discretion and affirm for the reasons
Stated in the order of the district court. Hocper vy. Montgomery Medi-
cal Group, P.A., C/A No. 92-529 (D. Md. Nov. 29, 1993) (order
awarding attomey’s fees and imposing a $5,000 sanction)?
III.
The district court imposed a $5,000 sanction against Sachsel for fil-
ing the second amended complaint because Hooper’s claims had no
merit and because the case had been pursued "with a purpose of cost-
*MMG moved for this court to impose additional sanctions pursuant
to Federal Rule of Appellate Procedure 38 {or the filing of this appeal,
arguing that it is frivolous. We deny the motion.
A.9
Hooper V. Montcomery Mepicat Grove, P.A.
ing the Defendants as much as possible to defend against it." Further,
when Hooper moved to partially vacate the summary judgment order
to allow the breach of fiduciary duty claim to be brought in state
court, the district court imposed an additional $500 sanction against
Sachsel. Sachsel appeals the sanctions. In reviewing an award of
sanctions, the issue for us is not whether we would have awarded
sanctions were we deciding the question in the first instance, but
whether the district court abused its discretion in choosing to award
sanctions and selecting the amount of sanctions. See Robeson Defense
Comm. v. Britt (In Re Kunstler), 914 F.2d 505, 513 (4th Cir. 1990),
cert. denied, 499 U.S. 969 (1991). After carefully reviewing the
orders of the district court detailing the reasons for its imposition of
sanctions, we find no abuse of discretion and affirm. Hooper v. Mont-
gomery Medical Group, P.A., C/A No. 92-529 (D. Md. Nov. 29,
1993) (order awarding attorney's fees and imposing a $5,000 sanc-
tion); Hooper v. Montgomery Medical Group, P.A., C/A No. 92-529
(D. Md. Dec. 20, 1993) (order imposing a $500 sanction).
IV.
We have considered the other arguments advanced by Hooper,
including his claims of error regarding discovery rulings, and find
them to be without merit. Accordingly. we affirm the district court in
all respects.
AFFIRMED
A.10
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al.,
Defendants. ?
Civil Action No. 92-529-MJG
MEMORANDUM AND ORDER
(Entered May 18, 1992)
The Court has before it the Motion to Disqualify Allen
H. Sachsel as Plaintiff 's Counsel and the materials submitted
in connection therewith. The Court finds that a hearing is
unnecessary to resolve the issues presented.
The Cause of Action!
Plaintiff James L. Hooper, M.D. ("Hooper") was the
founder, and remains a stockholder, of Defendant
Montgomery Medical Group, P.A. (MMG), a professional
corporation engaged in medical practice. The individual
Defendants were at all relevant times stockholders as well as
officers and/or directors of MMG.
In September of 1990 the individual Defendants
replaced Hooper as President of MMG with Defendant Susan
J. Withrow, M.D. ("Withrow") and began a campaign of
harassment, etc. to force him to terminate employment.
Hooper took a leave of absence pursuant to an agreement
1
The cause of action in issue is stated as alleged by Plaintiff. Of
course, the Court is assuming, and not finding, these allegations to be
true.
A.l11
(with MMG) providing that he would retain his employment
status during the process of negotiating for the sale of his
stock in MMG. On August 20, 1991 Hooper's employment
was terminated.
In this context, Hooper has sued MMG for breach of
contract and all Defendants for age discrimination.
Facts Regarding Disqualification
The following facts are relevant to the Motion to
Disqualify:
1. Allen H. Sachsel, Esquire was counsel
for Hooper in various matters starting
in the late 1970's and also, from time to
time, represented MMG in some
matters which are not contended to be
material to the instant case.
2. As described below Sachsel defended
MMG, Hooper and Withrow against
claims made in the EEOC and state
court by an independent contractor
physician named Cooper. These
proceedings, referred to herein
collectively as "the Cooper Case." are
alleged by Defendants to be materially
related to the instant case.
3. In 1988 an independent contractor
physician (Cooper) filed an EEOC
complaint against MMG, Hooper and
Withrow. Sachsel represented these
three parties and succeeded in having
the case dismissed due to lack of
At
jurisdiction in that Cooper was not an
employee.
In 1988 or 1989 Cooper also filed a
State court law suit against MMG,
Hooper and Withrow alleging racial
discrimination, breach of contract and
intentional infliction of emotional
distress. |
Prior to the trial of the Cooper law suit,
problems in the instant case had arisen
between Hooper and the individual
Defendants (including = Withrow).
Sachsel advised Withrow and other
MMG directors that he was
representing Hooper in the MMG
dispute and would not discuss with
them any problems with Hooper.
In the Cooper case, the racial
discrimination charge was dropped
promptly after Cooper obtained
counsel. The case eventually
proceeded to trial only on the breach of
contract claim against MMG and
resulted in a judgment for MMG based
on a Statute of Frauds defense.
There is nothing presented to this Court
which establishes that there was any
confidential communication to Sachsel
which might be relevant to the instant
case other than, possibly,
communications from Hooper to
Sachsel.
A.13
The Substantial Relationship Test
A client who entrusts a confidential communication to
an attorney must be secure in his expectation that the attorney
will not make unauthorized disclosure or use of the
confidence. While the outer limits of the client's rights in this
regard may sometimes be subject to debate, at the very core is
the client's right not to have the confidential communication
disclosed to, or used for, a party adverse to the client.
Accordingly, there is an absolute rule that an attorney (absent
consent in appropriate circumstances) cannot simultaneously
represent parties with adverse interests. See The Maryland
Lawyers’ Rules of Professional Conduct, Rule 1.7.
When the representation is not simultaneous, the
prohibition is not absolute. A lawyer is not necessarily
prohibited from representing a client whose interests are
adverse to a former client. As stated in Satellite Fin.
Planning v. Ist Nat. Bk. Wilmington, 652 F. Supp. 1281,
1282-83 (D.Del. 1987):
The appropriate standard in ruling on a
motion to disqualify counsel based upon prior
representation of a present adversary is the
"substantial relationship" test. Westinghouse
Electric Corp. v. Gulf Oil Corp., 588 F. 2d
221, 223 (7th Cir. 1978)... Disqualification is
appropriate when the subject matter of the new
litigation is substantially related to the subject
matter of the past representation. .. The
underlying purpose for the rule is to ensure that
a client's confidential communications to his
lawyer are not used against that client when his
lawyer later represents a party adverse to the
former client. ...
A.14
TT
Despite this strong policy rationale, the
rule prohibiting representation of a new client
against a former client is not a per se rule.
Instead, a court should undertake a
"painstaking analysis of the facts" and evaluate
applicable precedent before disqualifying
counsel. Duncan v. Merrill Lynch, Pierce,
Fenner & Smith, 646 F 2d 1020, 1029 (Sth
Cir. 1981), cert. denied, 454 U.S. 895, 102 S.
Ct. 394, 70 L.Ed.2d 211 (1981). Only if the
moving party proves the requisite substantial
relationship should a lawyer be disqualified. A
movant for disqualification must have evidence
to buttress his claim of conflict because a
litigant should, as much as possible, be able to
use the counsel of his choice.
The United States Court of Appeals for the Fourth
Circuit has recognized that the courts must be careful not to
disqualify a party's attorney of choice by the adherence to rigid
rules which may not fit the particular case. In Aetna Cas. and
Sur. Co. v. The United States, 570 F. 2d 1197, 1202 (4th Cir.)
cert. denied, 439 US. 82] (1978) the appellate court
reversed the district court's order disqualifying government
counsel from representing four individual air controllers in an
airplane crash case. Although Aetna does not relate to the
precise issues presented herein, the decision contains the
significant pronouncement by the Fourth Circuit that it was "in
full accord" with the Statement the Connecticut Bar
Association had made to the Second Circuit? that:
"[I]t behooves this Court, therefore, while
mindful of the existing codes [of ethics], to
examine afresh the problems sought to be met
See Jnternational Electronics Corp. v. Flanzer, 527 F.2d 1288
(2nd Cir. 1975).
A.15
by that code, to weigh for itself what those
problems are, how real in the practical world
they are in fact, and whether a mechanical and
didactic application of the Code to ll
situations automatically might not be
productive of more harm than good, by
requiring that client and the judicial system
sacrifice more than the value of the presumed
benefits."
The prior representation of two Defendants here must
be analyzed to determine whether it was likely that
confidential communications substantially related to the
present lawsuit were made to Sachsel. As stated by Judge
Wright in Satellite, supra, 652 F.Supp at 1284:
"In determining whether a fact [relevant to the
present litigation] might have been disclosed
[in the prior representation], the Court should
consider whether a client and lawyer ought to
have discussed the relevant facts or whether it
would not have been unusual for the lawyer
and client to have discussed the relevant facts.
* * *
When resolving this ... question, ‘ the court
should not allow its imagination to run free
with a view of hypothesizing conceivable but
unlikely situations in which confidential
information 'might' have been disclosed which
would be relevant to the present suit.’ JNA
Underwriters, 594 F.Supp.
at 1206."
This Court would state the essential question to be
whether there is a realistic probability any confidential
A.16
communications from Defendants Withrow or MMG to
Sachsel could be used to their detriment in this case.
Insofar as the breach of contract claim is concerned,
there is no relationship at all between the instant dispute and
the Cooper case. As to the age discrimination claim in Count
I, there is at most a minimal relationship because Cooper, also,
made a claim on a discrimination theory. However, other than
the label of discrimination claims, the two causes of action
have no real similarity. Moreover, Cooper never even got to
the merits on his discrimination claim.
In the particular context of this case, it is important to
note that Hooper (the present client) was a Co-Defendant with
Withrow and MMG in the Cooper case. Therefore, any
attorney now representing Hooper would, necessarily,
properly be receiving and using any information that Hooper
could provide. Accordingly, in this case, the proper question
is whether, other than information which Hooper can provide
or has properly provided, there was any materially related
information communicated in confidence to Sachsel.
The case of Stitz v. Bethlehem Steel Corp., 650
F.Supp. 914 (D.Md. 1987) involved a situation far different
from that presented here. In Stitz the plaintiff 's attorney has
been a Bethlehem Steel employee for 10 years working as
counsel in the corporate labor department seeking to represent
an employee in a labor dispute against the Corporation. In
this context, Judge Young of this Court disqualified the
aitorney, but did not disqualify a co-counsel law firm absent
evidence of any transmission of confidential information to the
firm. Here, Sachsel's representation of Defendants MMG and
Withrow was, as relates to this case, a "one shot" deal in a
case involving only limited relationship to the instant dispute.
On the sparse record presented by Defendants, the
Court sees no evidence of, and no likelihood that, confidential
disclosures were made by any present Defendant to Sachsel
A.17
that could in any realistic fashion be used in their detriment.
In sum, this court concludes that Defendants have established
no likelihood much less the fact that they made any
confidential communication to Sachsel which bears any
substantial relationship to the present lawsuit.
For the foregoing reasons:
1. Motion to Disqualify Allen H. Sachsel as
Plaintiff 's Counsel is DENIED.
2. Counsel for Plaintiff shall arrange a
telephone conference prior to June 5, 1992 to
set the scheduling of further proceedings in this
case.
SO ORDERED this 14th day of May, 1992.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
A.18
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff.
V.
MONTGOMERY MEDICAL GROUP, P.A., etal,
Defendants.
Civil Action No. 92-529-MJG
MEMORANDUM
(Entered December 23, 1992)
By order dated October 5, 1992 ( Garbis, J.), this case
was referred for determination of all discovery disputes. On
December 3, 1992 a hearing was held on the following
pending motions: (1) Plaintiff 's Motion to Compel More
Complete Answers to Interrogatories and for the Production
of Documents; (2) Plaintiff 's Second Motion to Compel;
and (3) Plaintiff's Motion to Quash Subpoena.
Plaintiff brings this action under the Age
Discrimination and Employment Act, 29 U.S.C. § 621 ef seq.
Plaintiff claims that the defendants, the Montgomery Medical
Group (MMG) and the individual physicians, discriminated
against him on the basis of age when the Board of Directors of
MMG voted plaintiff out as President of the MMG and
subsequently terminated his employment. MMG was
comprised of seven medical doctors, including plaintiff, who
all served as Directors and who were the sole shareholders of
the corporation. Plaintiff served as the President of the Board
up until tne events leading to this litigation.
A.19
(1) Plaintiff's Motion to Compel
Two issues remained outstanding at the time of the
hearing. Plaintiff sought the addresses and telephone numbers
of persons identified as having factual information in response
to Interrogatory No 2. Defendants agreed to provide the
addresses and to provide the last known telephone numbers if
reasonably available.
Next, through Interrogatory No. 4, plaintiff seeks a list
and description of every malpractice claim made or pending
against each of the individual defendants. Defendants object
on the ground that this information is not reasonably
calculated to lead to the discovery of admissible evidence. At
the hearing, defendants proffered that their defense to the age
discrimination claim, i.e. the legitimate business reason for
plaintiff 's leaving MMG, in no way relies on the issue of
medical conduct or misconduct. Instead, defendant's will seek
to show that the plaintiff 's "termination", was the result of
disagreements over personnel matters and compensation
issues. Plaintiff argued that the issue of medical proficiency
was raised by other Group members during depositions and
that malpractice claims against other group members still with
the group will tend to show disparate treatment on the part of
the MMG against Plaintiff.
Under Fed. R. Civil P. 26, a matter is discoverable,
unless otherwise privileged, “which is relevant to the subject
matter involved in the pending action." Rule 26(1).
Relevance, for discovery purposes, is broadly and liberally
construed. Information is "relevant" even if not admissible at
trial, as long as it is “reasonably calculated to lead to the
discovery of admissible evidence." Moore's Manual, Federal
Practice and Procedure, Vol. Il, § 15.02{1]. Applying this
standard, the court is not convinced that at this point in the
litigation, the information on medical malpractice claims
against other Medical Group members is "relevant" under
A.20
Rule 26. Unless and until defendants, or other facts revealed
during the course of this litigation, place plaintiff 's medical
competency at issue, the existence of such claims cannot
reasonably be calculated to lead to the discovery of admissible
evidence.
laintiff ' nd Motion to Compe!
Through this motion, plaintiff seeks disclosure of
communications between the Directors of MMG sand
corporate counsel. The first request involves the "1989
Consultations". The underlying facts involving these
communications are for the most part not in dispute. On or
about May 1, 1989 plaintiff, who had been serving as
President since the formation of the corporation, submitted a
tape recording to be played at the Board Meeting. In the
transcript (Exhibit 1 of Defendants’ Opposition), plaintiff
States, inter alia, that
"I hereby as of this date resign as president of
the corporation. This decision is irrevocable
and not open for discussion. [Court's
repetition of same sentence deleted] I would
hope that you will select a new president prior
to my returning and I will make available to
him or her my office and I will move to another
area. Henceforth I will do Only what is
necessary of me as a partner and nothing more
or less."
Thereafter, by handwritten note dated May 8, 1989 (Exhibit 2
to Defendants’ Opposition), plaintiff resigns from the Board of
Directors and as an employee effective ninety days from that
date. However, the parties agree that plaintiff 's resignation
was never acted upon and that except for approximately a
month following the May meeting, he served as President as
the Board until being voted out in September 1990. Plaintiff
A.21
further argued at the hearing on the motion, and not
challenged by defendants, that he remained a director of the
corporation up until July 31, 1991.
Based on the tape recorded resignation, "[a]s a result
of Dr. Hooper's unilateral and unexpected actions, the other
shareholders of MMG consulted with corporate counsel in an
effort to determine how best to respond and/or react."
(Affidavit of Pasqual Perrino, M.D. attached to Defendants’
Opposition.) Defendants argue that these attorney/client
communications are protected from disclosure to plaintiff
since plaintiff 's position was "adversarial" to the corporation
when he resigned as president.
The next communication at issue involve the "1990
Buy/Sell Consultations". In October 1990, corporate counsel
received a letter from S. David Elling, Esq. writhing on behalf
of his client, the plaintiff. (Exhibit 3 of Defendants'
Opposition). In essence the letter seeks to set
"non-negotiable" terms for the continued operation of the
MM.G including the drafting of a Buy/Sell Agreement. The
letter also sets out the consequences of failure to agree on the
terms, including dissolution of Medical Group, equitable
distribution of assets and defamation action against an
unidentified member. In response to this letter, "[o]n or about
November 1, 1990 MMG engaged the law firm of Stein,
Sperling, Bennett, De Jong, Driscoll, Greenfeig & Metro, P.A.
to investigate and respond to demands and threats" made in
the letter from attorney Elling. (Affidavit of Pasqual Perrino,
Attachment to Defendants' Opposition). Again, defendants
argue that these communications are protected in that at the
time of the communications, plaintiff was in a adversarial
position to MMG. Plaintiff, focusing on the buy/sell
agreement alluded to in Elling's letter, and noting two of the
other directors’ deposition testimony, argues that corporate
counsel was retained to draft a but/sell agreement to be
reviewed, and if agreed executed, by all of the directors, and
A.22
therefore, as a_ director, he is entitled to those
communications.
The Fourth Circuit has recently explored the
complicated application of the attorney work product doctrine
to corporate entities. In Sandberg v. Virginia Bankshares,
Inc., __F.2d___, 1992 WL 29706] (4th Cir. Va.) the court
addressed the rights of shareholders to gain access to
communications protected by the privilege. Before addressing
this specific issue, the court noted that the purpose of the
attorney client privilege is to encourage full and frank
communications between attorneys and their clients which
supports the broader public interest in the observance of law
and the administration of justice and that the privilege applies
with equal force where the client is a corporation. /d. at 12.
However, it is not an absolute privilege and "is subject to the
qualification that any injury which would inure to the relation
by the disclosure of the communications must be greater than
the benefit thereby gained for the correct disposal of the
litigation. Since the privilege impedes the full and free
discovery of the truth and is in derogation of the public's right
to every person's evidence, it is not favored by the federal
courts. Accordingly, the privilege is to be strictly confined in
the narrowest possible limits consistent with the logic of the
principles." /d.(citations omitted).
In Sandberg, minority shareholders brought suit
alleging unlawful solicitation of proxies and breach of
fiduciary duties by defendants. During the course of the
litigation, plaintiffs were denied access to notes and
information concerning a meeting between one of the directors
and corporate legal counsel concerning the upcoming merger
which was the subject matter of the litigation. The court,
adopting the analysis of Garner vy. Wolfinbarger, 430 F.2d
1093 (Sth Cir. 1970) held that where the corporation's
shareholders charge that the corporation's directors have acted
inimically to shareholders interests, the shareholders may show
A.23
"good cause" why the corporation should not be able to
invoke the attorney client privilege. A nine factor test is
applied to determine whether good cause supports disclosure.
Sandberg at 13-14.
Applying the Sandberg factors in the instant case, the
resulting conclusions may weigh in favor of disclosure.
However, because plaintiff in the instant case was both a
minority shareholder and a director at the time of the
communications and because of the facts underlying the
communications at the issue, application of the privilege in the
instant case is not fully settled by the nine factors of Sandberg.
In fact, the court in Sanderberg addressed the essential
problem presented in the instant case and argued by MMG:
"[Defendant] Bankshares argues that the good
cause exception does not apply because the
communication...involve legal advice sought by
management in defending against a_ suit
brought by shareholders. Jf a corporation
cannot assert the attorney client privilege to
protect such communications...then a
corporation could never effectively defend
themselves in legal proceedings commenced by
shareholders since they could not obtain
confidential legal advice. If the sole purpose
of the ...meeting were consultation regarding
legal strategies in the state court proceedings,
then this argument might persuade us."
Id. at 14. Here, MMG argues that the sole purpose for the
two consultations were as a direct response to plaintiff 's
actions in first, tendering his resignation as President and
second, in retaining legal counsel to threaten litigation if
plaintiff 's demands for future business terms were not met.
While in Sandberg the litigation had actually been instituted,
the argument that a corporation, faced with an adversarial
A.24
sinnsnccceteamtiiisiamamate. iii Si i lace
board member, must be entitled to secure confidential legal
advice in such situations is persuasive.'
However, as directed by the Fourth Circuit,
application of this principal in particular case must be "strictly
confined within the narrowest possible limits consistent with
the logic of its principle." Sandberg at 12. Here, since the
issue in the major issue in the pending litigation is the
defendants’ motives in removing plaintiff as President and not
continuing the contractual relationship between plaintiff and
MMG, the defendants should not be able to hide behind the
privilege to shield potential evidence of unlawful motive.
Further, if from the documents centering on the buy/sell
agreement it appears that counsel was retained to draft a
common agreement for the benefit of all the directors, plaintiff
would surely be entitled to those communication. In light of
these facts, and with the court's preliminary ruling that the
communications are protected, defendants, through counsel,
shall produce to the court the communications to which they
assert the privilege for an in camera inspection.
(3) Plaintiff's Motion to Quash Subpoena
Defendant MMG has subpoenaed plaintiff 's attorney,
Allen H. Sachsel, to appear for a deposition and for the
production of documents. The scope of these requests is
focused on Mr. Sachsel's prior representation of MMG and all
documents related thereto. As stated by this court during the
motions hearing, Judge Garbis' order denying MMG's motion
]
The instant case should be distinguished from the factual setting
in Gottlier v. O. T. Wiles, et al., 143 F.R.D. 241 (D.Colo. 1992). In that
case the court found that a former director and officer of the corporation
was entitled to protected communications gencrated during his tenure
even though by the filing of the law suit his interests were adverse to the
corporation's. The court found that the documents were generated during
a period “of common interest". Jd at 246. In the instant case the reverse
is true; the documents and communications were generated as a direct
result of the parties adverse interests.
A.25
for disqualification of Mr. Sachsel is dispositive of this issue.
Judge Garbis found that the prior representation did not have
"any substantial relationship to the present lawsuit.:" (Paper
15 at 7). Defendant MMG's argument that Mr. Sachsel may
have formed an opinion as to whether MMG discriminated in
the prior case and that such an opinion is relevant here, is
without merit.
Based on the foregoing, a separate order shall be
entered consistent with this Memorandum
/s/ James E. Kenkel
James E. Kenkel
U.S. Magistrate Judge
Filed: December 11, 1992
A.26
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., et al.,
Defendants.
Civil Action No. 92-529-MJG
ORDER
(Entered December 23, 1992)
Based on the foregoing Memorandum it is this 11th
day of December, 1992, hereby ORDERED,
1. That Plaintiff 's Motion to Compel Answer to
Interrogatory No. 2 be and the same is hereby GRANTED.
2. That Plaintiff 's Motion to Compel Answers and
Documents relating to Interrogatory No. 4 be and the same is
hereby DENIED.
3. That Plaintiff 's Second Motion to Compel be and
the same is hereby DENIED.
4. That within 20 days of the date of this order
defendants provide to the court for in camera review the
documents at issue in Plaintiff's Second Motion to Compel.
5. That Plaintiff 's Motion to Quash Subpoena is
GRANTED.
A.27
/s/James E. Kenkel
James E. Kenkel
U.S. Magistrate Judge
Filed: December 11, 1992
A.28
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al.,
Defendants.
Civil Action No. 92-529-MJG
MEMORANDUM AND ORDER
(Entered January 27, 1993)
By order dated October 5, 1992 (Garbis, J.), this case
was referred for determination of all discovery disputes. On
January 25, 1993 a hearing was held on the following pending
motions: (1) plaintiff's Motion for Leave to File a Second
Amended Complaint; (2) defendants’ Motion to Compel More
Complete Answers to Interrogatories and Request for
Documents; and (3) plaintiff's and deponents' Motion to
Quash Subpoenas to Paul Weisenfeld and John H. Conrad.
After consideration of the pleadings and argument of counsel,
and for the reasons stated in open court, it is the 26th day of
January, 1993, hereby
ORDERED:
1. That plaintiff's Motion for Leave to File a Second
Amended Complaint be and the same is hereby GRANTED,
provided that plaintiff shall serve on the defendants within
fifteen (15) days of the date of this order "core information" as
follows:
A.29
A. The name and address of each person likely to
have discoverable information that may bear significantly on
any of the facts alleged in the Second Amended Complaint;
B. The description by category and location of all
discoverable documents and other tangible items in the.
possession, custody or control of the Plaintiff that may bear
significantly on any of the facts alleged in the Second
Amended Complaint; :
C. An itemization of any damages claimed by the
Plaintiff, making available for inspection and copying
documents or other evidentiary material bearing on the nature
and extent of damages claimed;
D. The name and address of each person whom the
Plaintiff experts to call as an expert witness at trial, the subject
matter on which the expert is expected to testify and the name
and address of the custodian of copies of any report prepared
by the expert.
2. That the prior date for the completion of discovery,
as to the defendants only, be and the same is hereby extended
to close of business Friday, February 26, 1992.
3. That the prior date for the filing of motions for
Summary Judgment or other dispositive motions be and the
same is hereby extended to close of business Friday, March
12, 1992.
4. That plaintiff and deponents' Motion to Quash
Subpoena is hereby GRANTED in part and DENIED in part
with leave granted to defendants to proceed to take the
testimony of the witnesses, Paul Weisenfeld, Esq. and John
Conrad, Esq. by deposition upon written questions as
provided by Fed.R.Civ.P.31.
A.30
5. That defendant Montgomery Medical Group's
Motion to Compel be GRANTED IN PART AND DENIED
IN PART as ordered in open court.
6. That defendant Montgomery Medical Group's
Motion for Production of Documents be GRANTED IN
PART AND DENIED IN PART as stated in open court.
/s/ James E. Kenkel
James E. Kenkel
U.S. Magistrate Judge
A.31
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al.,
Defendants.
Civil Action No. 92-529-MJG
MEMORANDUM AND ORDER
(Entered July 7, 1993)
The Court has before it Defendants’ Motion for
Summary Judgment, Plaintiff 's Motion for Leave to File
Supplemental Complaint and Third Amended Complaint and
to Open Discovery, and all the materials submitted by the
parties relating thereto. The Court has held a hearing and had
the benefit of counsel's arguments.
I. BACKGROUND!
Plaintiff James L. Hooper ("Hooper") is a physician
who, in 1964, founded Montgomery Medical Group, P.A.”
(hereafter referred to as "MMG"), the corporate Defendant.
Hooper served as corporate president until 1989.
In accordance with the summary judgment standard, the facts
stated herein are as alleged by Plaintiff, the non-moving party.
1
—
The corporation was first named Hooper and Kordon, P.A.; later
became Deer Park Medical Group, P.A.; in 1986, became MMG; and, in
April of 1993 became Perrino, Dolinsky, Karesh, Withrow, Juarbe &
Baier, M.D., P.A.
A.32
——————
In early 1989 the parties to this suit discovered that
MMG had failed to meet its employment tax (including
withholding) obligations and had developed a liability in
excess of $1,000,000. All of the individual parties to this suit
were "responsible persons" subject to personal liability for
much of the corporate tax liability. 26 U.S.C. § 6672. MMG
sought a loan to pay off the tax liability.
In May of 1989 Hooper resigned as MMG president
because of his unhappiness with the treatment given an MMG
employee and expressed his refusal to guarantee a corporate
loan. Later in May, Hooper agreed to guarantee the corporate
loan in return for an agreement that he would be president
until the loan was satisfied.’ Accordingly, Hooper was
re-elected president in the summer or fall of 1989 and, in early
1990. Hooper and the individual defendants personally
guaranteed and secured by their residences a loan from
Potomac Valley Bank to MMG. The loan proceeds were used
to pay the corporate tax liabilities.
In September of 1990, Dr. Withrow ("Withrow") was
elected president of MMG. Hooper contends that this action
was in violation of the agreement to retain him as president
until the loan was satisfied. However, Hooper himself voted
for Withrow in the election.
There were, obviously, bad personal relationships
between Hooper and several MMG physicians. On October
17, 1990, Dr. Hooper sent a letter to MMG apologizing for
his abusive behavior and promising to support Dr. Withrow's
actions as MMG President.
On October 26, 1990, just nine days after his letter of
apology, Dr. Hooper retained an attorney who sent
; In accordance with the summary judgment standard, this is
Hooper's version of the facts.
A.33
"non-negotiable" demands to MMG. It is unclear what came
of these exact demands, although Plaintiff proceeded to obtain
and participate in other employment despite an exclusive
services contract with MMG that remained in effect.
Subsequently, in April of 1991, Dr. Hooper submitted a letter
stating that he would be on an unpaid leave of absence until
the_attorneys and accountants were able to arrange a suitable
buy-out of his MMG stock; Dr. Hooper's letter emphasized
that he was not resigning.*
Finally, on July 31, 1991, MMG held a Board of
Directors meeting, at which time the Board voted to terminate
Plaintiff 's employment contract. A letter dated August 20,
1991 was sent to Plaintiff notifying him that he would be
officially terminated on October 19, 1991 (giving him sixty
days’ notice in accordance with his employment contract) and
would remain on an unpaid leave of absence until that time.
On September 30, 1991, Plaintiff filed an EEOC
charge alleging age discrimination. Plaintiff amended the
charge to include a claim for retaliation on December 30,
1991. The present lawsuit was filed on February 24, 1992 and
is now based on the Second Amended Complaint.
Specifically, Plaintiff alleges: (1) age discrimination, (2)
retaliation for filing a complaint with the Equal Employment
Opportunity Commission, (3) breach of contract against
MMG, (4) breach of contract against the individual
defendants, (5) fraud against the individual defendants, (6)
breach of fiduciary duty owed by the individual defendants, (7)
conspiracy against the individual defendants and (8) ERISA
violations.
The proffered Third Amended Complaint seeks to add
claims relating to an April, 1993, transaction involving a sale
: Plaintiff 's counsel conceded at oral argument that Dr. Hooper's
leave was unpaid.
A.34
of MMG assets. It is apparent that if the Court should dismiss
Counts I through VII then the new claims in the Third
Amended Complaint should proceed, if at all, in state court.
Il. LEGAL STANDARD
In Celotex Corp. v. Catrett, 477 U.S. 317 (1986), the
Supreme Court addressed in detail the analysis a court should
use in considering a motion for summary judgment under Rule
56 of the Federal Rules of Civil Procedure.
In our view, the plain language of Rule 56(c)
mandates the entry of summary judgment, after
adequate time for discovery and upon motion,
against a party who fails to make a showing
sufficient to establish the existence of an
element essential to that party's case, and on
which that party will bear the burden of proof
at trial. In such a situation, there can be 'no
genuine issue as to any material fact, since a
complete failure of proof concerning an
essential element of the non-moving party's
case necessarily renders all other facts
immaterial.
Id. at 322-23.
This standard "mirrors" the standard for the directed
verdict under Fed. R. Civ. P. 50(a), which provides that the
trial judge must direct a verdict if. under the governing law,
there can be but one reasonable conclusion as to the verdict.
Id. at 250; Federal R. Civ. P. 50(a). In an ordinary civil case,
"[t]he mere existence of a scintilla of evidence in support of
the plaintiff 's position will be insufficient: there must be
evidence on which the jury could reasonably find for the
plaintiff." Jd at 252.
A.35
On a motion for summary judgment, "the evidence of
the non-movant is to be believed, and all justifiable inferences
are to be drawn in his favor." Jd. at 255. See also Adickes v.
S.H. Kress & Co., 398 U.S. 144, 158-59 (1970). However,
although the Court must view the evidence in the light most
favorable to the non-moving party, Rule 56 does not relieve
the non-movant of all responsibility to rebut the motion.
As Judge Winter said in Bland v. Norfolk and
Southern Railroad Company, 406 F.2d 863, 866 (4th Cir.
1969):
While a day in court may be a constitutional
necessity when there are disputed questions of
fact, the function of a motion for summary
judgment is to smoke out if there is any case,
i.é., any genuine dispute as to any material fact,
and, if there is no case, to conserve judicial
time and energy by avoiding an unnecessary
trial and by providing a speedy and efficient
summary disposition.
More recently, in Felty v. Graves-Humphrey Co., 818 F.2d
1126 (4th Cir. 1987), (quoting Ce/otex, supra, 477 U.S. at
323-24), Judge Wilkinson emphasized that trial judges have
"an affirmative obligation ... to prevent ‘factually unsupported
claims and defenses’ from proceeding to trial." 818 F.2d at
1128 (quoting Celotex, supra, 447 U.S. at 323-24).
lil. SUMMARY JUDGMENT RULING
1. Count I - Age Discrimination
To establish a prima facie case of age discrimination
under the Age Discrimination in Employment Act ("ADEA"),
29 U.S.C. § 621 et seg, Hooper must demonstrate that he is in
the protected age group; that he was discharged or demoted;
A.36
that at the time of discharge or demotion, he was performing
his job at a level that met his employer's legitimate
expectations; and that he was replaced by an employee outside
the protected class with comparable qualifications.
Conkwright v. Westinghouse Elec. Corp. , 933 F.2d 231, 234
(4th Cir. 1991).° If Plaintiff establishes a prima facie case,
Defendants then have the burden of presenting "a legitimate,
non-discriminatory reason for" the action sued upon. /d. If
this burden is met, and it is a low burden, Plaintiff has the
ultimate burden of persuasion to establish that the reason
offered by Defendants is pretextual and that the Defendants
engaged in improper discriminatory conduct.
a. Plaintiff's Prima Facie Case
It is undisputed that Hooper, over the age of 50, was a
member of a protected class and, because this is the
Defendants’ Motion for Summary Judgment, the Court
assumes at this point that he was discharged by MMG. The
Court further assumes, in accordance with summary judgment
standard, that Hooper was satisfactorily performing his job.°
There is, however, no evidence that Hooper was replaced by
anyone, much less a younger individual. The Court notes this
fact as supporting Defendants’ claim that Hooper was
terminated for his abusive behavior. Thus, this Court is not
certain that Plaintiff has met his burden of establishing a prima
facie case. Nevertheless, for present purposes, the Court will
assume Plaintiff has done so.
5
Plaintiff has specifically stated that he is not claiming age
discrimination based on a demotion, namely his loss of the Presidency of
MMG.
. There is considerable evidence that Hooper was not performing
up to his employer's standard, including the October 17, 1990, letter
written by Hooper apologizing for his abusive behavior. At this point,
however, the Court will assume that his medical care of his patients met
MMG's standards and, therefore, Hooper was performing adequately as a
physician with MMG.
A.37
b. Defendants’ Legitimate Business
Reasons
Defendants argue that Plaintiff was not terminated
because of his age but simply because of his poor behavior.
He was abusive to employees, disrespectful of his colleagues,
disdainful of policies and procedures, and generally behaved in
a manner which was both hostile and destructive. Further,
several of the individual defendant doctors believed that Dr.
Hooper was self-dealing and negotiating certain financial
arrangements for himself with others, arrangements which
were contrary to his obligations to his employer, MMG.
There is ample evidence to support Defendants’
position that Dr. Hooper was abusive to both employees and
colleagues, starting with the letter of October 17, 1990, from
Dr. Hooper himself apologizing for his abusive behavior and
promising to cooperate in the future.
This Court finds that Defendants have more than
sufficiently met their burden of articulation a legitimate
non-discriminatory reason for Hooper's discharge.
re Defendants’ Reasons as Pretext
Plaintiff alleges that Defendants engaged in a plan to
end Dr. Hooper's employment with the practice he founded as
a result of his age. Plaintiff concedes that he is making no
claim for age discrimination based on his loss of the
A.38
presidency of MMG to Dr. Withrow.’ Rather, Plaintiff alleges
that the loss of the presidency, the continued subsequent
harassment an his eventual discharge form MMG all comprise
the proscribed discrimination See, Plaintiff 's Supplemental
Memorandum in Opposition to Motion for Summary
Judgment, ¥ 1.
As specific evidence of discrimination, Plaintiff first
cites comments by Dr. Dolinsky overheard while Dr. Dolinsky
was on the telephone with some unknown party during
September of 1990. The comments are: "[{W]Je voted Dr.
Hooper's old ass out as President and now we have younger
blood ... running the corporation ... It is just a matter of time
until we get his old ass out completely." Rankin Dep., A.181.
The Court does not find this evidence sufficient to
establish that the Defendant's proffered reasons were
pretextual. One isolated comment made over the phone to an
unknown party does not prove a claim of age discrimination.
Miller v. Beneficial Management Corp., 776 F. Supp. 936,
967-68 (D.N.J. 1991); Gagne v. Northwestern Nat. Ins. Co.,
881 F.2d 309, 314 (6th Cir. 1989) (holding that isolated and
ambiguous statements are too abstract and prejudicial to
support a finding of age discrimination). Discovery is
concluded. Plaintiff must produce more evidence than
isolated or ambiguous statements to raise an issue of material
fact. This comment simply does not indicate, in context, that
Dr. Dolinsky's concern was with Dr. Hooper's age rather than
. Even if Plaintiff were making a claim of age discrimination
based on this loss of the presidency of MMG in September of 1990, such
a claim would fail. While Plaintiff was a member of a protected class
and replaced by a younger individual as President, Plaintiff himself voted
for Dr. Withrow to be President of MMG and continued to work for
MMG until April of 1991. At no time has Plaintiff asserted a claim for
age discrimination based on demotion and there is simply no evidence of
age discrimination based on the loss of the MMG presidency.
A.39
Dr. Hooper's management style, a style Dr. Hooper concedes
was abusive. See Letter from Dr. Hooper of October 17,
1990. Additionally, this comment was made at the time Dr.
Withrow was voted in as President, an action for which
Plaintiff does not allege age discrimination and an action to
which Plaintiff did not object. Further, even if considered
meaningful, the September, 1990, statement was temporally
far removed from an allegedly discriminatory act occurring a
year or so later.
Two other comments are offered by Plaintiff as
evidence of discrimination. In one comment it is suggested
that Dr. Hooper was "getting close to retirement age" and in
the other comment it is suggested that Dr. Hooper take
emeritus status. See Plaintiff 's Appendix to Opposition to
Motion for Summary Judgment, at 29; Defendant's Appendix
to Motion for Summary Judgment, Part 8, at 18. Dr. Hooper
argues that these comments demonstrate the discriminatory
motive on the part of all Defendants. The Court disagrees.
Neither of these comments indicates that Dr. Hooper was
being terminated as a result of his age. These comments more
likely demonstrate that Dr. Dolinsky recognized the problems
Dr. Hooper's abusive behavior created in the office and wished
to find a workable solution to the situation short of
termination, a solution that would involve Dr. Hooper
voluntarily changing his work status with MMG. Isolated or
ambiguous statements are insufficient to establish a claim of
age discrimination at this time. See, Gagne, infra.
The three comments referred to above are the only
evidence Plaintiff offers to establish that Defendants’ offered
business reason for its actions are pretextual. These three
comments, taken in context, establish only that there was a
long-standing disagreement between parties. The comments
do not establish that Plaintiff was discriminated against
because of his age. In light of the fact that Dr. Hooper was
not replaced by anyone, much less a younger individual, and
A.40
ss
that the Defendants have produced evidence demonstrating
that they acted based on Dr. Hooper's poor behavior, the
Court finds that Plaintiff 's evidence is insufficient at this stage
to raise a genuine question of material fact. Plaintiff has failed
to present evidence from which a reasonable jury could find,
despite having all inferences being drawn in his favor, that
Defendants actions were motivated by Plaintiff 's age."
2. Count II - Retaliation
Plaintiff claims that Defendants unlawfully retaliated
against him for filing his claim of age discrimination with the
EEOC. To establish a claim of retaliation, Plaintiff must
demonstrate that: (1) he was engaged in protected activity;
(2) the employer was aware of the protected activity, (3) the
employer took adverse action against the employee engaged in
protected activity; and (4) there is a casual connection
between the adverse action and the protected activity. See
Lewis v. AT&T Technologies, Inc., 691 F. Supp. 915, 921-22
(D.Md. 1988).
Plaintiff filed a claim with the EEOC on September 30,
1991, which is protected activity, and Defendants
acknowledge they learned of the EEOC charge. Assuming the
facts most favorable to Plaintiff, Plaintiff was officially
terminated as of October 19, 1991. To establish a causal
connection in this case, any actions of retaliation against
Plaintiff must have occurred within those nineteen days.’ The
: Further, even assuming that Plaintiff ‘s evidence established that
age was a motivating factor in Dr. Hooper's termination, Defendants’
have proven that the same decision would have been reached if age had
not been a factor. See Price Waterhouse v. Hopkins, 490. U.S. 228,258
(1989).
: Because the Cour: treats Plaintiff as an employee until October
19, 1991 it need not resolve the issue of retaliation against a former
employee.
A.41
Court addresses each action that Plaintiff alleges as retaliation
in turn.
Plaintiff first alleges that Defendants deviated from
standard policy by not allowing Dr. Hooper to notify his
patients that he was leaving MMG. Dr. Hooper first
requested this access to his patient files in early October of
1991. Defendants did not allow Plaintiff access because the
panel of patients, as it is referred to by both parties, belongs to
MMG and MMG has not itself allowed a doctor access to
such information once the employment _ relationship is
terminated. Defendants acknowledge that other physicians
have had access to the information in the past but not as a
result of actions taken by MMG, i.e., the Defendants did not
know how the other physicians came to possess the
information. Plaintiff does not dispute this claim. Thus, the
Court cannot find that there was an established norm of
allowing a physician access to the patient information once the
physician ceased to work for MMG.
More importantly, the timing of the request for patient
information was controlied by Plaintiff. Had he asked for the
information prior to the filing of the EEOC complaint, he
would have been denied access to the information at that point
and there would be no claim for retaliation. Plaintiff is
essentially alleging retaliation under these circumstances based
solely on the timing of the request, timing that was within
Plaintiff 's control. Thus, there is no causal connection
between the filing of the EEOC claim and the denial of access
to the patient information; rather, there is only a coincidence
in timing that was controlled by Plaintiff.
Second, Plaintiff alleges that MMG failed to pay for
Dr. Hooper's malpractice insurance and that the first
non-payment occurred after September 30, 1991. There is no
factual evidence in the record to support this claim, a point
conceded by Plaintiff 's counsel at oral argument. With no
A.42
a
facts to support this allegation and discovery closed, summary
judgment for Defendants on this claim is appropriate.
Last, Plaintiff alleges that he was banned from MMG's
premises and refers to Dr. Perrino's deposition for evidentiary
support.'° See, Plaintiff 's Appendix to Opposition to Motion
Jor Summary Judgment, at 157. Dr. Perrino referred to a
letter in his deposition which states that Dr. Hooper is not to
enter the building. There is, however, no date on the letter
and Plaintiff cannot recall whether or not the letter was
received after the EEOC charge was filed. Thus, there is no
factual evidence to support this allegation and summary
judgment is appropriate for Defendants on this claim."'
pF Count Ill - Breach of Contract by MMG
Plaintiff 's third claim is for breach of contract by
MMG. In April of 1991, Plaintiff submitted to Dr. Withrow a
letter stating that effective April 24, 1991, he would be on a
leave of absence "while the attorneys, accountants and Board
of Directors work out an acceptable buy out of [his MMG]
stock." See, Letter from Dr. Hooper to Dr. Withrow, April
18, 1991. The letter also states "[t]his is not a resignation."
(emphasis in original). Plaintiff contends that this letter
constituted a contract between Plaintiff and Defendants to
e Plaintiff, through his counsel at oral argument, withdrew his
retaliation claims based on Defendants’ alleged refusal to pay Dr. Hooper
for his last sixty days' employment (from August 20, 1991 through
October 19, 1991) and Defendants’ Notification to HMOs and Hospitals
of Dr. Hooper's Termination of his affiliation with MMG, a letter dated
August 23, 1991.
"3 Further, Dr. Hooper was given sixty days' notice of his
termination in a letter dated August 20, 1991. It is appropriate to ban an
individual who is, for all practical purposes as a result of an unpaid leave
of absence, an ex-employee from that point forward. This action alone,
under the circumstances of this case, would not serve as a_ basis for a
retaliation claim.
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keep Dr. Hooper on an unpaid leave of absence until this
buy-out occurred and to bargain in good faith. Plaintiff
contends that both Plaintiff and Dr. Withrow, as MMG's
President, signed the letter, which contains all essential
contract terms. Plaintiff alleges that Defendants breached this
agreement by terminating Dr. Hooper and never negotiating in
good faith.
The Court finds that there is no evidence that Dr.
Withrow's signature indicated acceptance of its terms,
whatever those may be, rather than acknowledge most of
receipt [sic]. In fact, Dr. Withrow's deposition testimony and
the context establish the latter. See Affidavit of Dr. Withrow,
at 43-44.
Dr. Hooper was employed pursuant to a written
contract dated July 25, 1986. As a part of this employment
contract, inter alia, are two clauses requiring any superseding
agreement to be in writing and requiring MMG to give Dr.
Hooper sixty days’ notice of termination. Plaintiff, through
counsel at oral argument, argues that the agreement of April,
1991, supplemented, rather than superseded, the employment
contract. The Court does not agree. There is simply no way
to claim this letter (even when viewed most favorably to
Hooper) would supplement, rather than supersede, the
employment contract. The employment contract enables
MMG to terminate Plaintiff at any time with sixty days’ notice
while the letter (according to Hooper) requires MMG not to
terminate Plaintiff while Plaintiff 's stock buy-out is
negotiated. These are contradictory terms. Thus, the Court
concludes that this letter does not constitute a contract
between Plaintiff and Defendants.
Even assuming this letter did constitute an agreement,
it was at most an agreement to consider Dr. Hooper on leave
of absence (rather that having resigned) when he ceased
coming to work. Nothing in the letter, which Plaintiff indicates
A.44
in his deposition constitutes the whole of the contract terms,
'? modifies the employment contract which enabled MMG to
terminate Dr. Hooper on sixty days’ notice.'’ Thus, this Court
finds that, at best, any agreement did not involve the promise
to employ Dr. Hooper indefinitely but only to consider him as
an employee on leave of absence when he stopped reporting
to work.'* There was no promise by MMG not to terminate
Dr. Hooper and no modification of MMG's right to do so in
accordance with the employment contract.
4. Count IV - Breach of Contract by the
Individual Defendants
Plaintiff contends that there was an oral contract
between Defendants Karesh, Dolinsky, Perrino, Baier and
Juarbe to retain Dr. Hooper as President of MMG until such
time as MMG's loan with Potomac Valley Bank was paid in
full. Dr. Hooper contends that this promise was a condition
he insisted upon before he would personally guarantee the
loan and use his home as collateral for the loan.
There is no "hard" evidence supporting Hooper's claim
that there was an oral agreement. The Court must note that it
is doubtful that, even on the summary judgment standard,
Hooper has presented evidence to support a finding that the
oral agreement existed; the circumstances plainly indicate that
there was no such agreement.
™ See Dr. Hooper's first deposition, at 158-59.
, Plaintiff 's counsel conceded at oral argument that Dr. Hooper
could have returned to MMG on any given day and been fired with sixty
days’ notice the moment he walked into the office.
* Based on this conclusion, the Court finds it unnecessary to
determine whether or not there was a promise to bargain in good faith --
the Court simply does not find that there was an agreement to buy out Dr.
Hooper's MMG stock.
A.45
First, Dr. Hooper was not the only individual who
personally guaranteed the loan nor was he the only MMG
Physician to use his home as collateral for the loan. All the
MMG physicians personally guaranteed the loan and three,
including Dr. Hooper, used their homes as collateral. Thus,
there is no evidence that either Dr. Hooper's guarantee or the
value of his home was necessary to secure the loan.
Second, Dr. Hooper was jointly and severally liable for
the tax liability that created the need for the loan. Dr. Hooper
received the same benefit as the other MMG physicians by
securing the loan because the IRS could have place a lien
against Dr. Hooper's home if MMG did not pay off the tax
liability. Dr. Hooper had no choice -- he either had to enter
into the load agreement or pay the tax liability himself.
Third, the terms of the alleged agreement are illogical.
Based on Hooper's version of the facts, there was an oral
contract to retain him as President while the written
employment contract remained in effect. Under the written
agreement, MMG could terminate Dr. Hooper at any time
with sixty days’ notice. Thus, under Hooper's scenario, he
could remain President of MMG while not employed by
MMG. This makes no sense.
The Court concludes that Hooper has not, in view of
all of the relevant evidence, presented enough evidence to
support a finding that there was an oral agreement as alleged.
Even if there could be a finding that there was such an oral
agreement, however, Hooper's claim must fail because this
oral contract to retain Dr. Hooper as MMG President was
modified when Dr. Hooper joined the individual defendants in
voting for Dr. Withrow as the new President of MMG at the
September, 1990, Board of Directors meeting. Furthermore,
Hooper waived any right he may have had to seek
enforcement of the alleged agreement to retain him as
A.46
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sini tibiae dhe Aligs aa apo toma amiable dil nas
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&
‘4
President until the loan was paid off when he voted for his
replacement. See, e.g., Fairchild Strators Corp. v. Siegler
Corp., 225 F. Supp. 135 (D.Md. 1963) (failure to object to
issue jeopardizes right to claim breach as to that matter); Md.
Corps. & Ass'ns Code Ann. § 2-410(b) (1993) ("The right to
dissent does not apply to a director who: (1) voted in favor of
the action")
In view of the foregoing, summary judgment will be
entered for Defendants on Count IV.
S. Count V - Fraud
In Count V of the Second Amended Complaint,
Plaintiff alleges that the individual Defendants named in Count
IV made the promise to retain Dr. Hooper as President of
MMG fraudulently. Specifically, Dr. Hooper maintains that
each individual Defendant made the promise to Dr. Hooper
but intended to replace him as President after he pledged his
home for the loan, that Dr. Hooper relied on the promises of
these Defendants as an inducement to pledge his home as
collateral for the loan, he would not have pledged his home
absent such a promise and that the conduct of the Defendants
was "willful, knowing, malicious, and fraudulent." Second
Amended Complaint, 9 53.
In order to establish a cause of action for fraud,
Plaintiff must establish: "(1) that a representation made by a
party was false; (2) that either its falsity was known to that
party or the misrepresentation was made with such reckless
indifference to truth to impute knowledge to him; (3) that the
misrepresentation was made for the purpose of defrauding
some other person; (4) that that person not only relied upon
the misrepresentation but had the right to rely upon it with full
belief of its truth, and that he would not have done the thing
from which damage resulted if it had not been made; and (5)
that that person suffered damage directly resulting from the
A.47
misrepresentation.” B.N. v. K.K., 312 Md. 135, 148, 538
A.2d 1175, 1182 (Md.. 1988) (citation omitted).
The Court finds no evidence of an intent on the part of
the individual Defendants not to abide by the oral agreement,
assuming it was made, to retain Dr. Hooper as President of
MMG at the time such a promise was made. To establish
fraud, Plaintiff must produce evidence that the Defendants did
not intend to keep their alleged promise at the time their
promise was made. It is insufficient for Hooper to argue that
a year and a half after the promises were made, there was a
breach of the promise. That is only an allegation of breach of
contract.
Furthermore, there is no evidence of detrimental
reliance on Dr. Hooper's part. The fact is that Dr. Hooper
never suffered any loss due to the use of his credit to secure
the loan. The loan was never in default, the loan is now fully
repaid, and Plaintiff never attempted to borrow against any
portion of the value of his home, neither against the $170,000
in unencumbered equity nor the encumbered portion.
Accordingly, Dr. Hooper has not established any detrimental
reliance on his part.
Moreover, Plaintiff has presented no evidence of any
damages. Plaintiff may have suffered from the alleged fraud
and proof of harm is an element of the tort. Hooper argues
that his damages are the difference in the interest rate available
for a secured versus an unsecured loan. The Court disagrees.
Hooper secured the benefit, not the detriment, of the lower
interest rate. Also, at least two of the Defendant physicians
secured the loan with their own homes so that Hooper's
collateral was not the sole cause for MMG obtaining the lower
interest rate available for secured loan.
Hooper also argues that the value of being able to
obtain a loan versus the consequences of not obtaining a loan
A.48
can be the measure of damages here. However, Hooper was
jointly and severally liable with the individual Defendants for
MMG's tax liability. If Hooper had not participated in
securing the corporate loan to repay the tax liability, he faced
personal joint and several liability. Hence, he benefited from
the loan to the same extent - if not more - than the individual
Defendants.
Finally, the Court must again note that Hooper voted
to have Withrow replace him as president. Hence, Hooper
himself participated or acquiesced in the alleged fraud.
For the foregoing reasons summary judgment will be
granted on Count V.
6. Count VI - Breach of Fiduciary Duty
Plaintiff alleges that at all relevant times, Dr. Hooper
and the individual Defendants referred to themselves as
"partners" in a close corporation. Accordingly, Plaintiff
alleges that certain actions by Defendants breached the
fiduciary duties owed as shareholder/"partners” in a close
corporation to Plaintiff and that they failed to deal in good
faith with Plaintiff. Second Amended Complaint, 9 61. The
actions include "denying Plaintiff office keys, ordering him to
vacate his office, writing sarcastic memos, encouraging and
soliciting MMG employees to complain about Plaintiff,
seeking to force Plaintiff to work in a satellite office, and
otherwise seeking to humiliate and embarrass Plaintiff.”
Second Amended Complaint, § 58. Additionally, Plaintiff
complains that Defendants excluded Plaintiff from meetings
and met secretly away from MMG premises in order to make
corporate policy and plan actions against Plaintiff. Such
meetings included consultations with counsel to MMG from
which Plaintiff, a member of the Board of Directors, was
excluded and which were kept secret from him. /d.
A.49
First, it is important to not that MMG was organized
as a Maryland corporation, not as a close corporation nor as a
partnership, where there would be fiduciary duties as alleged.
It is well-settled in Maryland that directors owe a fiduciary
duty to the corporation and its shareholders. Toner v.
Baltimore Envelope Co., 498 A.2d 642 (Md. 1985). The
fiduciary duties that bind directors of a corporation are to
protect the corporation and its shareholders from a director
taking financial advantage of his or her position as a director.’®
As a result, "directors must demonstrate the financial fairness
of transactions between themselves and the corporation.
Directors may not waste corporate assets. Directors must
prove a proper corporate purpose for, and the fairness of,
exchanges and issuances of stock affecting corporate funds
and control." J/d., at 648 (citations omitted). There is,
however, no general fiduciary duty between stockholders nor
is there a general fiduciary duty between Directors.'® For that
reason, any actions by Defendants in denying plaintiff access
to MMG's premises (i.e., denial of office keys and/or changing
Plaintiff 's office against his wishes) or making MMG a
generally unpleasant place for Plaintiff to practice medicine
are neither illegal nor violations of some generalized fiduciary
duty which Plaintiff claims he is owed.
Plaintiff further argues that MMG is small like a
partnership and conducted itself as if it were a close
corporation or partnership. Therefore, Plaintiff argues, the
: Directors’ fiduciary dutics to the corporation and _ its
shareholders include an obligation to avoid conflicts of interest and
self-dealing, and to act in the best interest of the corporation. These
fiduciary obligations, however, do not include an obligation to behave in
a friendly manner.
. There are Maryland cases which have recognized the fiduciary
obligation of majority shareholders, in certain matters involving share
repurchase, to minority shareholders. This situation is not presented
here, nor has Plaintiff based his claim on fiduciary duty on such a
circumstance. See Toner v. Baltimore Envelope Co., 498 A.2d 642,
647-48 (Md. 1985)
A.50
fiduciary duties among partners are applicable to this case and,
accordingly, there is a general fiduciary duty owed between
the directors and between the shareholders of MMG. The
Court disagrees. There is no legal bases for imposing a
fiduciary duty upon the Defendants to behave nicely towards
Hooper. The size of the corporation simply is not
determinative of the corporation's status. The Court has
neither found any nor been directed by counsel towards any
Maryland case law indicating that partnership duties should be
imposed on closely-held corporations. In this case, MMG
| conducted all activities as a regularly formed corporation - - it
F held Board of Director's meetings, maintained all corporate
books, maintained corporate minutes, elected officers and
Directors, and received the legal benefits of corporate status.
There is simpiy no reason to impose partnership status on
these Defendants, who have behaved in a cooperate manner
and have held themselves out to the public in a corporate
form. :
do Count VII - Conspiracy
Plaintiff alleges that there was a conspiracy among the
individual Defendants to carry out the objectives stated in
Count VI of the Second Amended Complaint. Under
Maryland law, civil conspiracy is not a free-standing claim, but
= is dependent on Plaintiff 's ability to establish the substantive
claim in Count Six. Yousef v. Trust Bank Sav. F.S. B., 81 Md.
App. 527, 538, 568 A.2d 1134, 1139 (1990) ("The agreement
to commit an unlawful act or use unlawful means to
accomplish a lawful act is not, by itself, sufficient to establish a
claim for civil conspiracy"). This Court has ruled against |
Plaintiff on the substantive claim and, therefore, will enter
A.51
summary judgment for Defendants on this Count."
8. Count VII - ERISA Violation
In this Count, Plaintiff alleges that MMG failed to
provide to him pension plan benefits pursuant to the Employee
Retirement Income Security Act ("ERISA"). Specifically, Dr.
Hooper alleges that interest income is due to him on a pension
plan account that was formerly maintained on his behalf by
MMG. The pension plain was terminated in July of 1990 and
the monies were distributed in December of 1990. Earnings
on the funds were not paid for a five month period - - July 31,
1990 through December 21, 1990. In conjunction with this
Count, Dr. Hooper requests that he be awarded attorney's
fees.
Defendants state that Plaintiff 's claim to interest due
him was mooted before the Count was even filed. In support
of this argument, Defendants state that Dr. Hooper has been
offered the amount of the interest due him, that counsel for
MMG has supplied Plaintiff with certain information requested
by Plaintiff to confirm these interest income calculations, and
to date, Dr. Hooper has simply failed to accept the money
offered.
The Court finds that there remains a dispute regarding
the computation of the interest income due to Dr. Hooper.
Plaintiff maintains that while Dr. Hooper was provided
information demonstrating how Dr. Hooper's interest earned
was Calculated, he has not been provided with figures to verify
the amount of Dr. Hooper's share of the pension plan. See
Letter form Plaintiff 's Counsel to Judge Garbis, May 24,
1993. Therefore, while the Court remains hopeful that the
17
In fact, the Court has ruled for Defendants on each of
substantive claims in Counts One through Six. Thus, Plaintiff ‘s
conspiracy allegation would fail regardless of the Count on which he
based the conspiracy allegation.
A.52
parties will resolve this dispute, the Court cannot resolve the
existing factual questions on motions for summary judgment.
Furthermore, the determination of whether Plaintiff is entitled
to an award of attorney's fees is not now capable of resolution
on summary judgment.
VI. AMENDED COMPLAINTS
i Second Amended Complaint
The record may not contain an Order expressly
granting the Plaintiff leave to file the Second Amended
Complaint. However, the parties have proceeded, justifiably,
as if leave had been granted for its filing. Under the
circumstances, the Court will, formally grant the Plaintiff leave
to file to insure that the record is clear.
, Third Amended Complaint
The proffered Third Amended Complaint would add to
this case claims arising from a transaction involving the sale of
MMG's assets that occurred in April of 1993. The new
Counts might have sufficient relationship to Counts I through
VII to warrant permitting the amendment. The new claims,
however, have no substantial (if any) relationship to Count
VII (ERISA). Accordingly, the new claims - to the extent
they are of merit - can be, and should be, the subject of a
separate state court action.
Vv. CONCLUSION
For the foregoing reasons:
:. Plaintiff 's Motion for Leave to File
Second Amended Complaint is
GRANTED.
A.53
2. Defendants’ Motion for Summary Judgment
is:
a. GRANTED as to Counts I
through VII inclusive.
b. DENIED as to Count VIII.
3. Plaintiff 's Motion for Leave to File
Supplemental Complaint and Third Amended
Complaint, and to Open Discovery is
DENIED.
4. By July 30, 1993, Plaintiff shall either
submit an agreed proposed Order rescheduling
further proceedings herein or arrange a
telephone conference for this purpose.
SO ORDERED this 30th day of June, 1993
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
A.54
et ee Co aS) ho SI
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al.,
Defendants.
Civil Action No. 92-529-MJG
MEMORANDUM AND ORDER
(Entered November 17, 1993)
The Court has before it Plaintiff 's Motion For Partial
Vacation Of Order Of June 30, 1993, Defendants’ Motion for
Further Sanctions and the material submitted by the parties
relating thereto. The Court also has a letter of November 5,
1993 from counsel for Defendants which shall be treated as an
informal Motion for Entry Of Judgment together with
Plaintiff 's response thereto. The Court finds that a hearing is
unnecessary.
The Court includes by reference herein the
Memorandum Of June 30, 1993 (the "First Decision") as
background. As set forth more fully in the First Decision the
Plaintiff brought the Defendants into federal court by asserting
age discrimination and ERISA claims and appended to the
federal causes of action various state law claims including
Count VI based on a theory of breach of fiduciary
responsibility. For reasons set forth in the First Decision, the
Court granted summary judgment for the Defendants on all
Counts other than the ERISA count.
A.55
I. Motion For Partial Vacation Of Order
Plaintiff and his counsel brought a breach of fiduciary
duty claim into federal court and put the Defendants to the
expense of discovery and presentation of a motion for
summary judgment in response to Plaintiff's claim. The Court
has ruled that the claim is without merit. Now, the Plaintiff
seeks to have this Court - after the matter has at great expense
been presented and decided against him - exercise discretion
to decline jurisdiction over the subject claim.
Plaintiff now wishes to be able to present his breach of
fiduciary duty claim all over again in state court, with a new
judge and, presumably a new round of expensive proceedings.
The Plaintiff 's motion is beyond frivolous and well into the
area of utterly outrageous.
Plaintiff chose this Court as the forum to consider his
breach of fiduciary claim. This Court has considered the
claim and found it meritless. This Court sees no reasonable
basis for it to consider exercising discretion to decline
jurisdiction and allow the Plaintiff to cost the Defendants even
more in legal fees by litigating the same claim in another court.
II. Sanctions
Defendants seek sanctions against Plaintiff's counsel
for filing the subject motion. Rule 11, Federal Rules of Civil
Procedure. Under Local Rule 105.8 the Court may not
impose sanctions prior to directing Plaintiff ‘s counsel to
provide a response to the motion. This will be done.
Il. Judgment
It is apparent that the Defendants are entitled to have a
Judgment Order entered in this case even if motions for
sanctions and fees are not yet fully resolved. Accordingly, a
A.56
separate Judgment Order will be entered. Said Order will
reflect that, to the extent it may be necessary to do so, the
Court is exercising authority under Rule 54(b) to enter a final
judgment regarding some, but not all, of the matters pending
herein.
It should also be noted that the Judgment Order will
include an award of costs to the Defendants. Anticipating the
Plaintiff 's motion seeking an alteration, it is best to address
the matter at this point. It is true that the Plaintiff would
consider himself to have prevailed as to Count VIII because
he received full payment of the amount which he claimed was
due with respect to that Count. However, the Court does not
find this happenstance adequate - in the context of this case -
to warrant costs for the Plaintiff or to warrant a withholding
of an award of costs for the Defendants. The fact that there
was included in this law suit a relatively minor claim which the
Defendants did not consider worth the cost of litigation does
not, in this Court's view, justify the withholding of an award of
assessable costs against the Plaintiff. Therefore, there will be
an award of assessable costs. The matter of sanctions and
legal fees remains pending.
IV. Conclusion
For the foregoing reasons:
1. Plaintiff 's Motion for Partial Vacation Of
Order of June 30, 1993 is DENIED
2. By November 30, 1993:
a. Plaintiff 's Counsel, Allen H.
Sachsel, Esquire, shall respond
to Defendants’ Motion seeking
further sanctions for his signing
A.57
Plaintiff 's Motion For Partial
Vacation Of Order Of June 30,
1993 and the memoranda
submitted therewith.
b. Defendants shall submit a
statement, including an affidavit
with supporting evidence, of the
costs incurred in responding to
said motion.
3. By December 14, 1993 Mr. Sachsel and
Defendants may each file a response to the
November 30, 1993 filings required herein.
4. Judgment shall be entered by separate Order.
SO ORDERED this 15th day of November, 1993.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
A.58
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al.,
Defendants.
Civil Action No. 92-529-MJG
CORRECTED JUDGMENT ORDER
(Entered November 23, 1993)
By separate Order issued June 30, 1993, the Court has
granted the Motion For Summary Judgment filed by the
Defendants with respect to all Counts other than Count VIII
of the Amended Complaint. The Court has been advised that,
by virtue of payment of the disputed amount, Count VIII is
moot. There remains pending only the parties’ respective
motions for legal fees and sanctions.
To the extent that the pendency of motions for fees
and sanctions might be an impediment to the entry of a
Judgment Order, the Court finds that there is no just reason
for delay and that there are valid affirmative reasons for the
prompt entry of a Judgment Order as to resolved matters.
Accordingly, the Court hereby directs that a final judgment be
entered. This action is taken pursuant to Rule 54(b) of the
Federal Rules of Civil Procedure to the extent that such Rule
may be here applicable.
Accordingly:
1. Judgment shall be and is hereby entered in
favor of Defendants Montgomery Medical
A.59
Group, P.A., Susan Withrow, M.D., Charles
Karesh, M.D., Steven Dolinsky, M.D., Pasqual
Perrino, M.D., Carolyn Baier, M.D., and
Herbert Juarbe, M.D. against Plaintiff James L.
Hooper, M.D.
2. Judgment with respect to the ERISA claim
in Count VIII (and only that claim) is entered
because the asserted liability was paid in full
rendering the Count moot.
3. Judgment with respect to all other claims is
entered by virtue of an adjudication in favor of
the Defendants and against the Plaintiff.
4. The Defendants are awarded all of their
assessable costs.
SO ORDERED this 17th day of November, 1993.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge -
A.60
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
Vv.
MONTGOMERY MEDICAL GROUP, P.A., ef al.,
Defendants. ,
Civil Action No. 92-529-MJG
MEMORANDUM AND ORDER
(Entered November 30, 1993)
The Court has before it Defendants’ Motion for
Attorneys' Fees and Costs and Plaintiff's Motion for
Attorney's Fees for Count VIII and the materials submitted by
the parties relating thereto. The Court finds that a hearing is
unnecessary.
DEFENDANTS' MOTION
In its Second Amended Complaint, Plaintiff presented
eight Counts. As detailed in the Memorandum and Order
issued June 30, 1993 (the "Decision"), the Court granted the
Defendants ("MMG") summary judgment as to the first seven
Counts. Count VIII, based upon ERISA, was rendered moot |
by payment of the amount claimed.
Defendants seek sanctions under Rule 11 of the
Federal Rules of Civil Procedure for the actions of Plaintiff 's
counsel in signing the Second Amended Complaint and the
submissions in opposition to summary judgment with regard
to Counts I through VII.
A.61
Rule 105.8 of the Local Rules of this Court provides:
Unless otherwise ordered by the Court, a party
need not respond to any motion filed under
Fed. R. Civ. P. 11 or 28 U.S.C. § 1927. The
Court shall not grant any motion without
requesting a response.
Md. Dist. Ct. R. 105.8(b).
In accordance with Rule 105.8, Plaintiff and his
counsel, Allen H. Sachsel, Esquire, were directed to respond
to the Defendants’ motion seeking sanctions. A response has
been filed.
Rule 11 of the Federal Rules of Civil Procedure
provides, in pertinent part that:
The signature of an attorney ... constitutes a
certificate by the signer that the signer has read
the pleading, motion, or other paper; that to
the best of the signer's knowledge, information,
and belief formed after reasonable inquiry it is
well grounded in fact and is warranted by
existing law or a good faith argument for the
extension, modification, or reversal of existing
law, and that it is not interposed for any
improper purpose, such as to harass or to
cause unnecessary delay or needless increase in
the cost of litigation. ... If a pleading, motion,
or other paper is signed in violation of this rule,
the court, upon motion or upon its own
initiative, shall impose upon the person who
signed it, a represented party, or both, an
appropriate sanction, which may include an
order to pay to the other party or parties the
amount of the reasonable expenses incurred
A.62
because of the filing of the pleading, motion, or
other paper, including a reasonable attorney's
fee.
Fed. R. Civ. P. 11.
The Court's rationale for granting summary judgment
as to each of Counts I through VII has been set forth in the
Decision and need not be repeated here. A review of its
ruling, the underlying filings, and the response to the pending
motion for sanctions does not change the Court's view of the
result reached in the Decision. Nor do these materials lead the
Court to conclude that the positions taken by Plaintiff and his
counsel were "well grounded in fact ... warranted by existing
law or a good faith argument for the extension, modification
or reversal of existing law." Fed. R. Civ. P. 11. Moreover the
Court cannot conclude that the positions taken were not
"interposed for any improper purpose, such as to harass or to
cause unnecessary delay or needless increase in the cost of
litigation." Id. Indeed, it is this Court's abiding conviction
that this case was pursued by the Plaintiff, with the knowing
assistance of his counsel, with a purpose of costing the
Defendants as much as possible to defend against it.
Plaintiff 's counsel has proven to be a creative attorney.
However, he must have known, or certainly should have
known, that the positions taken herein were beyond the limits
allowed by Rule 11. The assertion of an age discrimination
claim -- brought for the purpose of getting the case into
federal court in the first place -- was based upon the flimsiest
of justifications. Following discovery -- if not before --
Plaintiff 's counsel had no reasonable basis for pursuing this
claim.
The retaliation claim had no substance. The contract
claims are based upon what can be most charitably described
as an unrealistic view of the evidence. The fraud claim is
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baseless altogether. The breach of fiduciary duty claim --
although novel since it has not specifically been rejected by a
Maryland precedent -- is also without even arguable merit.
The conspiracy assertion is, necessarily, dependent upon and
of no greater value than the substantive claims on which it is
based.’
In this case, the Court finds that Plaintiff's counsel did
not meet the Rule 11 standard with regard to his assertions
and defenses against summary judgment of each and every one
of Counts I through VII. Moreover, it is apparent to the
Court that this action was filed and pursued without regard to
the merit, or lack thereof, of Plaintiff's claims. While Plaintiff
may have had some glimmer of hope’ that some of the Counts
might survive summary judgment, the Plaintiff also intended
to, and regretfully has succeeded in, causing the Defendants as
much expense and inconvenience as possible in defending this
action.
The Defendants have sought sanctions against Plaintiff
and his attorney. The Court will not undertake to ascertain
whether sanctions can or should be imposed on the Plaintiff
himself. From all appearances, Plaintiff relied on his counsel
and not vice versa. It is readily apparent that Plaintiff 's
counsel, by signing the aforementioned documents, is subject
to Rule 11 sanctions. Thus, sanctions will be imposed on
counsel. The extent to which Plaintiff 's counsel believes that
: Plaintiff 's counsel states that, at argument, the Court said
that “there no doubt was a conspiracy." Assuming (in the absence
of a transcript) that this is what was said, it is appropriate to make
clear what was meant. That is, there is no doubt that the actions of
the Defendants could be said to have been jointly undertaken.
However, none of those actions gave rise to a valid cause of action
for the Plaintiff.
, But, counsel should have had no realistic hope.
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eee om
the Plaintiff himself should bear, or share in, those sanctions is
a matter for them to resolve among themselves.
The Defendants have submitted evidence that, they
contend, would support a determination that the Plaintiff 's
sanctionable action has cost them well over one hundred
thousand dollars. | However, it is not necessary that the
sanction reimburse the victims for their costs. Indeed, the
United States Court of Appeals for the Fourth Circuit has
stated that the district court should impose "the least severe
sanction adequate to accomplish the purpose of Rule 11." Jn
re Kunstler, 914 F.2d 505, 522 (4th Cir. 1990), cert. denied,
111 S. Ct. 1607 (1991); see also Cabell v. Petty, 810 F.2d
463, 466 (4th Cir. 1987). The Supreme Court has stated
"'Rule 11 is not a fee-shifting statute.'" Business Guides, Inc.
v. Chromatic Communications Enters., Inc., 111 §. Ct. 922,
934 (1991) (quoting Cooter & Gell v. Hartmarx Corp., 110 S.
Ct. 2447, 2462 (1990)). While compensation of a Rule 11
victim is an appropriate consideration, the primary purpose of
the Rule is to deter future litigation abuse. Kunstler, 914 F.2d
at 522. The Court need not equate a "reasonable sanction"
with an amount equaling "actual expenses and attorney's fees."
Id. at 523 (quoting Fahrenz v. Meadow Farm Partnership,
850 F.2d 207, 211 (4th Cir. 1988)).
Here, even if an appellate court were to disagree with
this Court as to the imposition of sanctions regarding Count
VI’ or some other Count,’ the bottom-line result would remain
the same. Plaintiff 's counsel has pursued at least several
Counts in violation of Rule 11. Accordingly, the sanction
amount -- being in this Court's judgment the least adequate to
carry Out the purpose of Rule 11 -- is being set at the same
Because of the novelty of the legal position taken.
On a basis this Court cannot now foresee.
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level as would be imposed if Count VI (or even one or two
other Counts) were not subject to sanctions.
While necessarily a matter of discretion, the Court
concludes that a sanction of Five Thousand Dollars is
appropriate. This sum -- though by no means adequate to
reimburse the victims of the violation -- is sufficient to be
meaningful to Plaintiff 's counsel and will serve to make him
and others desist from further Rule 11 violations
PLAINTIFF 'S MOTION
Plaintiff has moved for legal fees with respect to Count
VIII of the Second Amended Complaint. In brief, Plaintiff
found an arguable bases to question the computation of the
amount to be distributed to him from the Pension Plan
administered by Defendant MMG. Plaintiff 's counsel sent a
letter, dated September 10, 1992, advising of Plaintiff 's
position. In response, MMG took the position that its
computations were correct. Through December 3, 1992 there
were communications in which each side sought to persuade
the other to concede altogether. Plaintiff 's counsel sent a
letter on December 3, 1992, setting a deadline of December
7th for a meeting to resolve the matter. In response, on
December 7, 1992, Defendant's counsel sent (by fax) a letter
advising that a meeting on December 7th (that date) was
impossible but that he would meet with MMG "in the near
future" to consider Plaintiff 's request and "a final response
[will be] provided to [Plaintiff's counsel]."
On December 17, 1992, Plaintiff filed a motion seeking
leave to file a Second Amended Complaint including Count
VIII, the ERISA Count herein. By letter of the same date,
counsel for MMG expressed surprise at the receipt of the
ERISA claim in the Second Amended Complaint and, in
effect, indicated an intent to pursue discussions to resolve the
ERISA dispute. Thereafter, MMG decided that, in view of
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the amount at issue, it was not sensible to incur the expense of
litigation of the claim. On January 14, 1993, MMG took
formal action to agree to Plaintiff's method of computation.
It appears that, despite the January 14, 1993 action,
Plaintiff 's counsel was not advised of MMG's concession until
counsel were about to enter the Courtroom on January 27,
1993, to present argument on Plaintiff's motion to amend the
Complaint to add the ERISA Count.
The United States Court of Appeals for the Fourth
Circuit has found the following criteria pertinent in deciding
whether to award fees in an ERISA case: (1) the degree of
culpability or bad faith of the party resisting the claim; (2) the
ability of the opposing party to pay; (3) the deterrent effect
of the award; (4) whether the party seeking the fee sought to
benefit others or resolve a significant legal question; and (5)
the relative merits of the parties’ positions. Reinking v.
Philadelphia Am. Life Ins. Co., 910 F.2d 1210, 1217-18 (4th
Cir. 1990), overruled on other grounds by Quesinberry v. Life
Ins. Co. of North Am., 987 F.2d 1017 (4th Cir. 1993). The
Quesinberry court clarified that, while the awarding of fees
under ERISA is discretionary, there is no mandatory
presumption in favor of the prevailing insured. Quesinberry,
987 F.2d at 1029-30.
In this case the factors, while closely balanced, do tip
slightly in favor of the Plaintiff who is, in view of the
Defendants’ payment of the amount in dispute, the prevailing
party.
There was no bad faith in regard to the Defendants'
Original substantive position and the Court cannot determine
which side actually had the better case. The Defendant here
made the decision that the amount in issue did not warrant its
incurring the expense to litigate what appears to have been a
fairly debatable issue. The Defendant certainly has the ability
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to pay a fee in this case. The Plaintiff filed the case in his own
self-interest even though the result may be to benefit others.
Finally, there inevitably will be a determent effect of a fee
award in that the award will influence other defendants to take
action to avoid such fee awards.
Here, the Court would not have imposed a fee were
the Defendant to have simply cc ded the case reasonably
soon after being served with the proffered Second Amended
Complaint. After all, the record does not establish that the
Defendants were being unreasonable or unduly tardy in
seeking to provide information to the Plaintiff to convince him
of the correctness of MMG's computation. Plaintiff's counsel
was sufficiently "quick on the trigger" in regard to filing the
ERISA count to warrant denial of a fee award up to the point
of filing and a reasonable time thereafter. Moreover, it may
well have been reasonable -- taking into account the time of
year -- for the Defendant to have delayed until early January
to have reached a final decision to concede the issue.
However, the last stage of the delay in conceding the case is
inexcusable. Once the decision was made, on January 14,
1993, to agree to the Plaintiff 's computation, the Defendants
should have told the Plaintiff. There was no further
justification for requiring the Plaintiff to incur any fees or
expenses in supporting his ability to present, and the
correctness of, his position regarding the computation. Under
the circumstances, then, the Court will exercise its discretion
to award the Plaintiff legal fees with regard to Count VIII.
The amount of the fees to be incurred is a matter of
this Court's discretion. This Court does not accept the
Plaintiff 's suggestion that he is entitled to fees going back to
the beginning of the controversy. Rather, the Court finds that
the amount to be awarded is an amount that will reasonably
5
The end of the year is particularly difficult time for professionals
engaged in pension plan matters, due largely to year-end deadlines and
compounded by the holiday season.
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compensate for the costs incurred as a result of the
Defendants’ unjustified actions. In this case, the Plaintiff 's
submission is not a model of adequacy to make this
determination. However, it is possible for the Court, utilizing
Mr. Sachsel's affidavit and its own observation of the case and
knowledge of legal practice, to conclude that the sum of Five
Hundred Dollars is reasonable in this regard. Accordingly, the
Court will award Plaintiff legal fees and costs in the total
amount of Five Hundred Dollars with regard to Count VIII.
Because the Court has awarded assessable costs to the
Defendants in this case, the instant fee award shall constitute
an offset against any award of costs.
CONCLUSION
For the foregoing reasons:
l. Defendants’ Motion for Attorneys' Fees and
Costs is GRANTED.
a. This Court, by separate Order,
is imposing sanctions of Five
Thousand Dollars ($5,000.00)
on Allen H. Sachsel, Esquire,
with regard to his signing of the
Second Amended Complaint
and Memoranda in Opposition
to Defendants’ Motion of
Summary Judgment with regard
to Counts I through VII,
inclusive, in violation of Rule 11
of the Federal Rules of Civil
Procedure.
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2. Plaintiff 's Motion for Attorney's Fees for
Count VIII is GRANTED.
a. Plaintiff is entitled to recover the
sum of Five Hundred Dollars
($500.00) from Defendant
Montgomery Medical Group,
P.A. with respect to fees and
costs for Count VIII.
b. Defendant Montgomery Medical
Group, P.A. may satisfy this
award by an offset of Five
Hundred Dollars ($500.00)
against the assessable costs
awarded in this case against
Plaintiff in favor of any
Defendant.
SO ORDERED this 29th day of November, 1993.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al.
Defendants.
Civil Action No.: 92-529-MJG
RDER IMPOSING SANCTIONS
(Entered November 30, 1993)
For reasons stated in the Memorandum and Order
issued this date, pursuant to Rule il of the Federal Rules of
Civil Procedure, the Court hereby assesses sanctions in the
amount of Five Thousand Dollars ($5,000.00) against Allen
H. Sachsel, Esquire to be paid to Defendants by February 22,
1994.
SO ORDERED this 29th day of November, 1993.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
A.7]1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M.D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., efal.,
Defendants.
Civil Action No. 92-529-MJG
MEMORANDUM AND ORDER
(Entered December 20, 1993)
The Court has before it the Reply to Opposition to
Motion for Partial Vacation of order of June 30, 1993, which
the Court is treating as a Motion for Reconsideration of the
Memorandum and Order issued November 15, 1993. The
Court finds that a hearing is unnecessary.
On November 15, 1993, the Court issued a
Memorandum and Order denying Plaintiff's Motion for Partial
Vacation of Order of June 30, 1993. This Memorandum and
Order was inadvertently issued prior to receipt of Plaintiff 's
timely filed Reply to Opposition to Motion for Partial
Vacation of Order of June 30, 1993. Plaintiff was entitled to
have his Reply considered. It now has been.
The Court has reviewed and considered carefully the
aforesaid Reply. The document does not, in any way, change
the Court's conclusion nor warrant any redrafting of the
Memorandum and Order issued November 15, 1993. The
Court continues to find most inappropriate the idea that the
Plaintiff would wait until receiving this Court's decision and
after seeing that it is adverse before seeking to have the matter
resolved in another forum.
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CONCLUSION
For the foregoing reasons:
1. Plaintiff's Motion for Reconsideration of the
Memorandum and Order issued November 15,
1993 is DENIED.
2. The Court, after reviewing the Reply to
Opposition to Motion for Partial Vacation of
Order of June 30, 1993 hereby reconfirms its
Memorandum and Order issued November 15,
1993
SO ORDERED this 14th day of December, 1993.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
A.73
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M.D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., etal,
Defendants.
Civil Action No. 92-529-MJG
MEMORANDUM AND ORDER
(Entered December 21, 1993)
The Court has before it the Defendant's Motion For
Further Sanctions and the materials submitted by the parties
relating thereto. The Court finds that a hearing is
unnecessary.
For reasons discussed herein the Court again finds it
necessary to impose sanctions on counsel for Plaintiff for
violation of Rule 11 of the Federal Rules of Civil Procedure.
The instant sanctions do not relate to the lack of merit
of Plaintiff 's substantive position regarding Count VI. Nor do
they relate to any general procedural inability to file post
decisional motions. Rather, the instant sanctions are imposed
because of the gross impropriety of Plaintiff's counsel in filing
Plaintiff 's Motion For Partial Vacation Of Order Of June 30,
1993 in the context of this case.
Even if the underlying legal position (i.e. Count VI)
had a reasonable basis, the subject motion to vacate should
not have been filed. It is most inappropriate for Plaintiff 's
counsel to have played the game that was played with the
Court and the Defendants regarding the subject motion.
A.74
As noted in the Memorandum And Order issued
November15, 1993 Plaintiff 's counsel brought the fiduciary
duty claim into this Court and presented it to this Court rather
than a state court for resolution. He waited to see how he
would do in this Court before revealing his idea that the issue
would "better" be resolved in state court. Hence, he sought
to obtain an expensive "free shot" at the issue in this Court on
a "heads I win, tails we play again" basis. Without doubt, had
this Court decided that the claim had merit, Plaintiff would
have been delighted to proceed in this Court. However,
having obtained an adverse decision from this Court,
Plaintiff 's counsel seeks a “second opinion" from the state
court.
In view of the discussion in the Memorandum And
Order issued November 29, 1993 it is not necesary to restate
the principles applicable to Rule 11 and the amount of the
sanctions to be imposed.
This Court concludess that Plaintiff 's counsel, Allen
H. Sachsel, has again violated Rule 11 of the Fedral Rules of
Civil Procedure. This time the violative conduct was the
signing of Plaintiff's Motion For Partial Vacation Of Order of
June 30, 1993 and the materials relating thereto.
The amount of the sanction shalll be the minimal
amount adequate to accomplish the purpose of Rule 11, i.e. to
deter further future violations. In this instance, the Court
finds that the sum of $500 is the minimum adequate for this
purpose.
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NCLUSION
For the foregoing reasons:
1. Defendant's Motion For Further Sanctions is
GRANTED.
2. This Court, by separate Order, is imposing
sanctions of Five Hundred Dollars ($500.00)
on Allen H. Sachsel, Esquire, with regard to his
signing of Plaintiff 's Motion For Partial
Vacation Of Order June 30, 1993 and materials
in support in violation of Rule 11 of the
Federal Rules of Civil Procedure.
SO ORDERED this 20th day of December, 1993.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
A.76
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
Vv.
MONTGOMERY MEDICAL GROUP, P.A., ef al,
Defendants.
Civil Action No. 92-529-MJG
ORDER IMPOSING SANCTIONS
(Entered December 21, 1993)
For reasons stated in the Memorandum and Order
issued this date, pursuant to Rule 11 of the Federal Rules of
Civil Procedure, the Court hereby assesses sanctions in the
amount of Five Hundred Dollars ($500.00) against Allen H.
Sachsel, Esquire to be paid to Defendants by February 22,
1994.
SO ORDERED this 20th day of December, 1993.
/s/ Marvin J. Garbis
Marvin J. Garbis
United States District Judge
A.77
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
FILED
April 17, 1995
No. 93-2631
CA-92-529-MJG
JAMES L. HOOPER, M_D.,
Plaintiff - Appellant
v.
MONTGOMERY MEDICAL GROUP, P.A.; SUSAN J.
WITHROW, M.D.; CHARLES KARESH, M.D.; STEVEN
DOLINSKY, M.D.; PASQUAL PERRINO, M_D.;
CAROLYN BAIER, M.D.; HERBERT JUARBE, M.D.
Defendants - Appellees
and
PAUL R. WEISENFELD; JOHN H. CONRAD
Parties in Interest
No. 94-1022
CA-92-529-MJG
JAMES L. HOOPER, M_D.,
Plaintiff - Appellant
7.
MONTGOMERY MEDICAL GROUP, P.A.; SUSAN J.
WITHROW, M.D.; CHARLES KARESH, M.D.; STEVEN
DOLINSKY, M.D.; PASQUAL PERRINO, M_D.;
CAROLYN BAIER, M.D.; HERBERT JUARBE, M.D.
Defendants - Appellees
A.78
V.
PAUL R. WEISENFELD; JOHN H. CONRAD
Parties in Interest
No. 94-1038
CA-92-529-MJG
In Re: ALLEN H. SACHSEL
Appellant
JAMES L. HOOPER, M.D.
Plaintiff
V.
MONTGOMERY MEDICAL GROUP, P.A.; SUSAN J.
WITHROW, M.D.; CHARLES KARESH, M.D.; STEVEN
DOLINSKY, M.D., PASQUAL PERRINO, MD.
CAROLYN BAIER, M.D.; HERBERT JUARBE, M_D.
Defendants - Appellees
V.
PAUL R. WEISENFELD; JOHN H. CONRAD
Parties in Interest
No. 94-1056
CA-92-529-MJG
JAMES L. HOOPER, M.D.
Plaintiff - Appellant
V.
A.79
MONTGOMERY MEDICAL GROUP, P.A.; SUSAN _ J.
WITHROW, M.D.; CHARLES KARESH, M.D.; STEVEN
DOLINSKY, M.D.; PASQUAL PERRINO, MD;
CAROLYN BAIER, M.D.; HERBERT JUARBE, M_D.
Defendants - Appellees
v.
PAUL R. WEISENFELD; JOHN H. CONRAD
Parties in Interest
No. 94-1141
CA-92-529-MJG
In Re: ALLEN H. SACHSEL
Appellant
JAMES L. HOOPER, M.D.
Plaintiff
v.
MONTGOMERY MEDICAL GROUP, P.A.,; SUSAN J.
WITHROW, M.D.; CHARLES KARESH, M.D.; STEVEN
DOLINSKY, M.D.; PASQUAL PERRINO, MD;
CAROLYN BAIER, M.D.; HERBERT JUARBE, M.D.
Defendants - Appellees.
and
PAUL R. WEISENFELD; JOHN H. CONRAD
Parties in Interest
ORDER
Appellants have filed a petition for rehearing.
The Court denies the petition for rehearing.
A.80
Entered at the direction of Judge Wilkins, with the
concurrence of Judge Chapman. Judge Hall voted to grant
rehearing.
For the Court,
/s/ Bert M. Montague
Bert M. Montague
CLERK
A.81
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_.D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al.,
Defendants.
Civil Action No. 92-529-MJG
SECOND AMENDED COMPLAINT FOR
AGE DISCRI ATION, RETALIATION, BREACH OF
CONTRACT FRAUD, BREACH OF FIDUCIARY DUTY,
CONSPIRACY, AND ERISA VIOLATION
Plaintiff, by counsel, alleges:
COUNT I
(Age Discrimination in Employment)
1. Jurisdiction of this Court is invoked pursuant to 29
U.S.C. 626 (c) and (d), and 28 U.S.C. 1331 and 1391 (b) and
(c).
2. Plaintiff is a resident and citizen of Maryland. He
is, and at all times hereto relevant was, over the age of 40.
3. Defendant Montgomery Medical Group, P.A.
("MMG"), is a Maryland Professional Corporation, having its
principal office and place of business in Rockville, Maryland,
within this judicial district.
4. Defendants Withrow, Karesh, Dolinsky, Perrino,
Baier, and Juarbe are individuals who are, and at all times
hereto relevant were, stockholders as weil as officers and/or
directors of defendant MMG and are, and at all times hereto
A.82
el
relevant were, responsible for the management of MMG,
including, but not limited to, its employment policies and
decisions. They reside in, and have their principal place of
business in, Maryland, within this judicial district.
5. Defendants, and each of them, are, and at all times
hereto relevant were, employers within the meaning of the
Age Discrimination in Employment Act, 29 U.S.C. 621, ef
seq.
6. More than 27 years ago, plaintiff founded what is
now MMG.
7. From the founding of what is now MMG, plaintiff
was a director of, and President of, the corporation. (Plaintiff
was not President of the Corporation for less than one (1)
month in 1989. See, Counts IV and V, infra.)
8. All of the individual defendants were hired by
plaintiff.
9. All of the individual defendants in this action are
younger than plaintiff. At the time this cause of action arose,
all but one of the individual defendants were in their 30's or
40's. The sole exception is defendant Perrino, who is, and
was, over 50, but is a number of years younger than plaintiff.
10. In September, 1990, plaintiff suddenly was voted
out as President of MMG. Defendant Withrow was elected to
replace plaintiff. At that time, plaintiff was 59 years of age.
11. Following voting plaintiff out as President, MMG,
through defendant Withrow and other individual defendants
began a campaign to harass, discriminate against, humiliate,
and embarrass plaintiff for the purpose of causing him to
terminate his employment with MMG. Said campaign was
begun because of plaintiff 's age.
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12. In April, 1991, plaintiff, because of the matters
alleged in paragraph 11 hereof, arranged with MMG to
purchase his stock in the corporation. The agreed leave of
absence was on the specific written agreement that plaintiff
would maintain his status as an employee of MMG while such
negotiations were ongoing and until an agreement was
reached. See, exhibit 1 (attached hereto).
13. The agreement referenced in paragraph 12 hereof
implies that the parties would negotiate in good faith for such
purchase.
14. Despite the agreement referenced in paragraph 12
hereof, defendants failed and refused to negotiate in good
faith.
15. Notwithstanding the matters set forth above and
the specific written agreement (Exhibit 1) between plaintiff
and MMG, MMG and the individual defendants, on August
20, 1991, summarily terminated plaintiff 's employment. At
the time of his discharge, plaintiff was 60 years of age, and
was the most productive of all physician owners of MMG.
16. In addition to his productivity, as alleged in
paragraph 15 hereof, plaintiff had not had malpractice and
other professionally related problems certain other of the
named individual defendants had had. All such younger
physicians were retained despite such problems, whereas
plaintiff was discharged. Moreover, defendants have claimed
plaintiff was terminated because of his management of MMG.
However, under the younger physician who replaced plaintiff
as President, MMG lost money, whereas under plaintiff it
made a substantial profit. Yet, the younger physician has been
retained, whereas plaintiff was discharged.
17. Almost simultaneously with plaintiff 's discharge
the named individual defendants voted themselves salary
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increases. The total of said increases is substantially identical
to the salary plaintiff had been receiving.
18. By reason of the matters set forth above,
defendants, and each of them, have violated, and are violating,
29 U.S.C. 623 (a) in that the actions taken against plaintiff, as
set forth above, were taken against him because of his age.
19. The discrimination by defendants against plaintiff
because of his age was intentional.
20. On or about September 30, 1991, plaintiff filed a
Charge of discrimination with the United States Equal
Employment Opportunity Commission ("EEOC"). See,
Exhibit 2 (attached hereto).
COUNT II - 29 U.S.C. 623 (d) (1)
(Retaliation)
21. Plaintiff repeats and realleges each and every
allegation of paragraphs 1, 2, 3, 4, 5, and 20 hereof, as if fully
set forth.
22. Following receipt of notice of plaintiff 's Charge,
defendants, and each of them, began, in violation Of 29 U.S.C.
623 (d) (1), taking actions to retaliate against plaintiff for his
having filed with EEOC the Charge referenced in paragraph
20 hereof.
23. On or about December 30, 1991, plaintiff
amended his EEOC Charge to allege the acts of retaliation
taken against him by defendants. See, Exhibit 3 (attached
hereto).
24. The Amended Charge alleges the following acts of
retaliation by defendants, the substance of which plaintiff
realleges here:
A.85
a. Defendants failed and refused to comply
with, or even respond to, plaintiff 's written
request that he be furnished with the names of
persons who had selected him individually as
their Health Maintenance Organization Plan
principal physician. (Such persons are called a
physician's Panel.) This is in contravention of
the policy of MMG to allow a departing
physician to notify members of his or her Panel
so that he or she has the opportunity to retain
the patients, and to give the patients the option
of choice.
b. Defendants notified the Health Maintenance
Organizations and Shady Grove Hospital that
plaintiff was no longer affiliated with MMG
prior to the effective date of his termination.
c. Defendants failed and refused to make
payments on a loan taken out by plaintiff for
malpractice insurance even though MMG had
agreed at the time the loan was taken that it
would make the payments. It honored that
obligation until plaintiff filed the Charge
referenced in paragraph 20 hereof. Such
payments total Eight Hundred Eight Dollars
($808.00).
d. Defendants barred plaintiff from the
premises of MMG, even for the purpose of
picking up his personal mail, and then failed
promptly to forward his mail, and in fact
opened his personal mail prior to forwarding.
e. MMG keeps the records for a partnership in
which plaintiff is involved with several other
MMG physicians for the lease of computer
A.86
equipment to MMG. No payment or
accounting with respect to said partnership has
been furnished plaintiff since he filed the
Charge referenced in paragraph 20 hereof.
f Defendants did not pay plaintiff his last 60
days pay.
g. In addition to barring plaintiff from the
premises, defendants have sought untrue
statements from employees of MMG to the
effect that plaintiff was "disruptive." After the
particular employees refused to give such a
statement on the grounds that they would be
saying something untrue, = defendants
terminated their employment with MMG.
25. By reason of the matters set forth above, and by
other acts and conduct, defendants have violated, and are
violating 29 U.S.C. 623 (d) (1).
26. The violations by defendants of 29 U.S.C. 623 (d)
(1) were and are intentional.
COUNT III
(Breach of Contract - MMG, only)
27. Plaintiff repeats and realleges each and every
allegation of paragraph 1, 2, 3, 4, 6, Fat Wy: Ahs Ae bey 04,
15, 16, and 17 hereof, as if fully set forth.
28. Plaintiff invokes the jurisdiction of this Court with
respect to this Court III as pendent to his Federal claims.
29. By reason of the matters set forth above,
defendant MMG has breached its contract with plaintiff, as set
forth in paragraphs 12-17 hereof.
A.87
30. As a direct and proximate result of the breach by
defendant MMG of its contract with plaintiff, plaintiff has
suffered, and is suffering, loss of payment of his medical
malpractice insurance premiums, as well as the loss of other
benefits provided to employees of MMG, and to which
plaintiff, as an employee, would be entitled.
31. As a direct and proximate result of defendant
MMG's breach of its contract with plaintiff, plaintiff has
suffered, and is suffering, humiliation and embarrassment,
which it was a specific purpose of said contract to avoid and
prevent.
32. By reason of the matters set forth above in this
Count III, plaintiff is entitled to recover from defendant MMG
the sum of One Million One Hundred Thousand Dollars
($1,100,000.00).
33. By reason of the matters set forth above in this
Count III, plaintiff is entitled to an Order directing defendant
MMG to negotiate in good faith a purchase of his MMG
stock.
COUNT IV
(Breach of Contract - Defendants Karesh, Dolinsky,
Perrino, Baier, and Juarbe, only)
34. Jurisdiction with respect to this Count is invoked
as pendent to plaintiff 's Federal claims.
35. In May, 1989, plaintiff orally resigned as President
of MMG.
36. On May 8, 1989, plaintiff resigned in writing as a
director and employee of MMG, to be effective 90 days
hence.
A.88
37. In May, 1989, and at all times hereto relevant, to
and including part of the day on July 31, 1991, the Board of
Directors of MMG consisted of defendants Karesh, Dolinsky,
Perrino, Juarbe, Baier, and Withrow, and plaintiff Hooper.
38. Shortly after plaintiff submitted his resignations,
defendants Karesh, Dolinsky, Perrino, Baier and Juarbe, asked
him to return as President of MMG and not to otherwise
resign.
39. The primary reason the above-named defendants
asked plaintiff not to resign was because said defendants
wished plaintiff to obtain a loan MMG and the said defendants
needed to pay a Federal tax liability.
40. Defendants knew and understood that plaintiff
would not assist in obtaining the needed loan if he were not
President of MMG. They were so informed directly by
plaintiff.
41. In order for MMG to obtain the needed loan, it
was necessary that plaintiff agree to secure the loan with his
personal residence (owned by him and his wife).
42. At the time plaintiff was returned to the
Presidency of MMG, plaintiff stated that he and his wife
would not pledge their home as collateral for a loan to MMG
unless he were President of MMG and had assurances he
would remain President of MMG until satisfaction of the loan.
The above-named defendants, who, together with plaintiff
Hooper, constituted six-sevenths of the Board of Directors of
MMG, agreed that plaintiff would remain President of MMG
until satisfaction of the loan. (Defendant Withrow did not
make such a promise, and, therefore, is not included as a
defendant in this Count.)
A.89
43. In accordance with the agreement of the
above-named defendants, said defendants re-elected plaintiff
as President of MMG, and, thereafter, again in the late
Summer or early Fall of 1989 re-elected plaintiff as President
of MMG.
44. In early 1990, MMG was successful in obtaining
the loan referenced above.
45. The loan referenced above could not have been
obtained without the pledge of plaintiff's house as collateral.
46. Plaintiff pledged his home as collateral in order to
obtain said loan.
47. In September, 1990, at the first election of MMG
officers following obtaining the loan referenced above, which
loan remained and remains unsatisfied, defendants Karesh,
Dolinsky, Perrino, Baier and Juarbe voted against retaining
plaintiff as President of MMG, in violation and breach of their
agreement referenced above. As a direct and proximate result
of said breach by the above-named defendants, plaintiff was
not elected as President of MMG in 1990.
48. By reason of the matters set forth above,
__ defendants Karesh, Dolinsky, Perrino, Baier, and Juarbe, and
each of them, have breached their agreement with plaintiff.
49. By reason of the matters set forth above in this
Count IV, plaintiff is entitled to recover compensatory
damages, jointly and severally, from the above-named
defendants.
A.90
COUNT V
(Fraud - Defendants Karesh, Dolinsky, Perrino,
Baier, and Juarbe, only)
50. Plaintiff repeats and realleges each and every
allegation of Count IV hereof, as if fully set forth.
51. At the time the above-named defendants made the
promises alleged in Count IV hereof, they, and each of them,
intended to replace plaintiff as President after he had pledged
his home to obtain the loan described in Count IV hereof.
52. Plaintiff relied on the promises of the
above-named defendants as an inducement to pledge his home
as collateral for the loan described in Count IV hereof, and
would not have pledged his home absent such promises.
53. The conduct of the above-named defendants was
willful, knowing, malicious, and fraudulent.
54. By reason of the matters set forth in this Count V,
plaintiff is entitled to recover from defendants Karesh,
Dolinsky, Perrino, Baier, and Juarbe, jointly and severally,
compensatory and punitive damages.
COUNT VI
(Breach of Fiduciary Duty -- Defendants Withrow,
Karesh, Dolinsky, Perrino, Baier, and Juarbe, only)
55. Plaintiff invokes the jurisdiction of this Court with
respect to this Count VI as pendent to his Federal claims.
56. Plaintiff repeats and realleges each and every
allegation of paragraphs 2, 3, 4, 6, 7, 8, 10, 11, 16, and 17
hereof as if fully set forth.
A.91
57. The purpose of defendants’ campaign of
harassment was not only to force plaintiff to abandon his
employment, but, in addition, was to deprive plaintiff of the
value of his ownership of MMG stock and of his anticipated
intent, as an owner and "partner" of MMG, to practice his
profession in a dignified manner as an owner of a medical
practice, and, in addition, was to appropriate to the use of the
above-named defendants plaintiff's panels of patients.
58. Defendants, and each of them, took and/or
authorized actions designed to humiliate and embarrass
plaintiff and cause him to leave and abandon his practice.
Such actions included denying plaintiff office keys, ordering
him to vacate his office, writing sarcastic memos, encouraging
and soliciting MMG employees to complain about plaintiff,
and seeking to force plaintiff to work in a satellite office, and
otherwise seeking to humiliate and embarrass plaintiff. In
addition, the above-named defendants excluded plaintiff from
meetings and met secretly away from MMG to make
corporate policy and plan actions against plaintiff. Such
meetings included consultations with counsel to MMG from
which plaintiff, a member of the Board of Directors, was
excluded, and which were kept secret from him.
59. At all times hereto relevant, the above-named
defendants and plaintiff were the only stockholders and
directors of MMG.
60. At all times hereto relevant, the above-named
defendants and plaintiff referred to themselves as "partners" in
a close corporation.
61. By reason of the matters set forth above, and by
other acts and conduct, defendants, and each of them,
breached fiduciary duties owed as shareholder/"partners" in a
close corporation to plaintiff, and failed, as required by law, to
deal in good faith with plaintiff.
A.92
62. The conduct of the above-named defendants was
willful, knowing, deliberate, and malicious, and was intended
to create, and did create, an oppressive atmosphere for
plaintiff, and in addition to other damages caused plaintiff the
loss of his patient panels.
63. By reason of the matters set forth in this Count
VI, plaintiff is entitled to recover from the above-named
defendants, jointly and severally, compensatory damages
(including, but not limited to, the value of plaintiff 's patient
panels), and punitive damages.
UNT VII
(Conspiracy - Defendants Withrow, Karesh, Dolinsky,
Perrino, Baier, and Juarbe, only)
64. Plaintiff repeats and realleges each and every
allegation of Count VI hereof, as if fully set forth.
65. The actions of defendants, and each of them, was
an agreed course of conduct carried out in concert to
accomplish through lawful and unlawful means the unlawful
objectives described in Count VI hereof.
66. The acts of the above-named defendants, as set
forth above, constituted an unlawful and actionable civil
conspiracy.
67. By reason of the matters set forth above in this
Count VII, plaintiff is entitled to recover from the
above-named defendants, jointly and severally, compensatory
damages (including, but not limited to, the value of plaintiff 's
patient panels), and punitive damages.
A.93
Vill
(Monetary and Declaratory Relief for Failure
to Provide Pension Plan Benefits and
for Breach of Fiduciary (ERISA) - MMG, only)
68. Jurisdiction of this Court is invoked pursuant to
Section 502, 29 U.S.C. 1132, of the Employee Retirement
Income Security Act ("ERISA"), and 28 U.S.C. 1331,
1391(b), and 2201 (a).
69. Effective August 1, 1970, a Money Purchase
Pension Plan (the "Pension Plan") was established for the
purpose of providing retirement benefits for the employees of
MMG (then known as Deer Park Medical Group, P.A.).
Plaintiff became a participant in the Pension Plan as of its
effective date.
70. Pursuant to Section 6.01 of the Pension Plan,
MMG was designated as its "Named Fiduciary" within the
meaning of ERISA Sec. 402, 29 U.S.C. 1102, and was in
charge of its operation and administration. MMG also had
authority to amend and terminate the Pension Plan pursuant to
Section 7.01.
71. In accordance with the Pension Plan's provisions,
MMG made annual contributions on behalf of each
participant, such contributions being based on_ stated
percentages of participant compensation. The contributions
made on behalf of each participant were credited to an
account maintained for such participant. The Pension Plan
also provided for the proportionate allocation to each
participant's account of interest and investment gains and
losses derived from Pension Plan assets. Assets of the Pension
Plan were commingied for investment purposes with the assets
of a Profit Sharing Plan which was also maintained by MMG
for its employees.
A.94
72. The Pension Plan was terminated by MMG,
effective June 10, 1989, and accordingly no contributions
were made by MMG for the plan year ending July 31, 1989,
or any subsequent plan year. Because of the need to resolve
various accounting matters, distribution of participants’
account balances pursuant to the termination did not begin
until late December, 1990.
73. As of the plan year ending July 31, 1990, the ;
Pension Plan had net assets of $945,070. Plaintiff's account
balance as of such date was valued at $326,521, or
approximately 34.5% of the Pension Plan's net assets.
74. On or about December 21, 1990, plaintiff received
a distribution of his Pension Plan account balance as of July
31, 1990, as did almost all other Pension Plan participants. At
the time of this distribution, plaintiff was advised by MMG's
actuarial consultant that a calculation would thereafter be
made of each participant's share of the interest and investment
gains earned on the $945,070 in Pension Plan assets since July
31, 1990. However, plaintiff has never been paid any share of
such interest or investment gains, and believes that no other
plan participant has been paid the promised interest or
investment gains.
75. Annual reports (Forms 5500-C/R) filed by MMG
with the Internal Revenue Service for the plan year ending
July 31, 1991 show that a total of $45,005 was earned during
the plan year by the combined assets of the Pension Plan and
the Profit Sharing Plan. However, the reports indicate that of
this amount, only $1,067 in earnings was apportioned to the
Pension Plan, notwithstanding that the Pension Plan had
$945,070 in net assets from July 31, 1990 until late December,
1990. The Profit Sharing Plan, with net assets of only
$210,541 as of July 31, 1990 and $168,253 as of July 31,
1991, was apportioned $43,938 of the combined earnings for
the plan year.
A.95
76. Ina letter dated September 10, 1992, an attorney
representing plaintiff objected on his behalf to the grossly
disparate apportionment of earnings in favor of the Profit
Sharing Plan for the plan year ending July 31, 1991, and
requested that MMG pay plaintiff his proportionate share of
properly calculated Pension Plan earnings for that plan year.
77. In response to the September 10, 1992 letter,
MMG provided an explanation, prepared by its actuarial
consultant, to the effect that under the provisions of both the
Pension Plan and Profit Sharing Plan, interest and other
investment earnings are to be allocated only as of the end of
each plan year, based on plan-year-end account balances, and
that no earnings for a plan year are allocated to any participant
whose account balance was distributed during the plan year.
Since almost all Pension Plan accounts had been distributed
during the plan year pursuant to the termination of that Plan
(only $4,087 remained undistributed as of plan year end), the
procedure adopted by MMG resulted in almost all of the
Pension Plan's share of earnings during that plan year being
allocated to those Profit Sharing Plan participants who had
account balances in the latter plan as of July 31, 1991. As
plaintiff did not have an account balance in either Plan as of
July 31, 1991, neither he nor other similarly situated Pension
Plan participants received any share of Pension Plan earnings
for the plan year ending July 31, 1991.
78. MMG's treatment of Pension Plan earnings during
the plan year ending July 31, 1991 is not justified by the
provisions of the Pension Plan or the Profit Sharing Plan.
Sections 4.04 and 4.05 of the Pension Plan and IV(2) and (3)
of the Profit sharing Plan do provide for the valuation of
assets as of the end of each plan year, and the allocation of
interest and other investment gains and losses to individual
participants in proportion to their plan-year-end account
balances. However, Sections IV(2) and (3) of the Profit
Sharing Plan also provide that such valuations and allocations
A.96
may be made as of other dates as well. It was the evident
intent of the Pension Plan to provide similarly. Section
4.05(c) of the Pension Plan states in pertinent part (emphases
added):
As of the last day of each Plan Year or
other valuation date, as is provided above in
Sec. 4.04 of this Article IV, before allocation
of Forfeitures and Employer Contributions, any
interest, dividends, other income, and the total
realized and unrealized capital gains and losses
(net appreciation or net depreciation) which
have arisen since the last valuation date of the
Trust Fund shall be allocated in the same
proportion that each Participant's and former
Participant's nonsegregated Accounts bear to
the total of all Participants’ and former
Participants’ nonsegregated Accounts as of
such date.
79. The practice of valuing plan assets only as of the
end of each plan year, and allocating earnings in proportion to
participant account balances as of such date, is generally
appropriate for an ongoing plan. However, once MMG had
terminated the Pension Plan, which action resulted in the
distribution of almost all account balances during the middle
of, rather than at the end of. a plan year, MMG should have
exercised its authority to establish an alternative valuation and
allocation date which would have provided Pension Plan
participants with an equitable share of interest and investment
gains earned by the Pension Plan's assets subsequent to July
31, 1990. By failing to do so, MMG deprived Pension Plan
participants, including plaintiff, of earnings attributable to the
assets of their Plan, and provided a windfall to those Profit
Sharing Plan participants who had account balances as of July
31, 1991, including defendants (in other Counts of this action)
Withrow, Karesh, Dolinsky, Perrino, Baier, and Juarbe.
A.97
80. Pursuant to ERISA Sec. 403(c)(1), 29 U.S.C.
1103(c)(1), the assets of the Pension Plan were required to be
held for the exclusive purpose of providing benefits to
participants in the Plan. Moreover, as the "named fiduciary”
of the Pension Plan, MMG was obliged by ERISA Sec.
404(a)(1)(A), 29 U.S.C. 1104 (a)(1)(A), to discharge its
duties with respect to the Pension Plan solely in the interest of
its participants and for the exclusive purpose of providing
benefits to those participants.
81. By allocating earnings on Pension Plan assets to
Profit Sharing Plan participants, as described in paragraph 77
hereof, rather than to Pension Plan participants, MMG
violated the express mandates of ERISA Sec. 403(c)(1), and
breached its fiduciary duty under ERISA Sec. 404(a)(1)(A),
all to plaintiff's damage. This breach of fiduciary duty inured
primarily to the benefit of defendants Withrow, Karesh,
Dolinsky, Perrino, Baier, and Juarbe, and to the detriment of
plaintiff Hooper and other participants in the Pension Plan
who received distributions and no longer had account balances
in the Profit Sharing Plan.
82. Pursuant to ERISA Sec. 502(g), 29 U.S.C.
1132(g), plaintiff is entitled to recover reasonable attorney's
fees and costs incurred in the bringing of this action.
WHEREFORE plaintiff respectfully prays with respect
to Count I that he be awarded damages in such amount as will
compensate him for his lost income and employment and
benefits from the date of his discharge to age 70. With respect
to Count II, plaintiff respectfully prays that he be awarded
damages of Five Million dollars ($5,000,000.00) to
compensate him for loss of his HMO Panels, compensation of
Eight Hundred Eight Dollars ($808.00) for payment on his
malpractice insurance loan, as alleged in paragraph 24 c
hereof, 60 days pay of $13,500.00, an Order directing
defendants not to ban plaintiff from MMG's premises, an
A.98
Order directing defendants not to open plaintiff 's mail and to
forward such mail promptly, and an Order directing
defendants to account for and pay over monies due from the
partnership referenced in paragraph 24e hereof. Plaintiff
further prays with respect to Counts I and II that he be
awarded liquidated damages as provided in 29 U.S.C. 626 and
216, attorney's fees, punitive damages of One Million Dollars
($1,000,000.00) for Counts I and II, each, and all costs and
disbursements of this action.
With respect to Count III, plaintiff respectfully prays
that he be awarded damages of One Hundred Thousand
Dollars ($100,000.00) to compensate him for his lost benefits,
as set forth in paragraph 30 hereof and damages of One
Million Dollars ($1,000,000.00) for humiliation and
embarrassment. Plaintiff further prays for an Order directing
defendants to negotiate in good faith a purchase of his MMG
stock.
With respect to Count IV, plaintiff respectfully prays
that he be awarded compensatory damages in such amount as
will compensate him for having pledged his home against
defendants Karesh, Dolinsky, Perrino, Baier, and Juarbe,
jointly and severally.
With respect to Count V, plaintiff respectfully prays
that he be awarded compensatory damages, as prayed in
Count IV hereof, jointly and severally, against defendants
Karesh, Dolinsky, Perrino, Baier, and Juarbe, and punitive
damages, jointly and severally, against said defendants in the
sum of Ten Million Dollars ($10,000,000.00).
With respect to Counts VI and VII, plaintiff
respectfully prays that he be awarded compensatory damages
against defendants Withrow, Karesh, Dolinsky, Perrino, Baier,
and Juarbe, jointly and severally, in the sum of Five Million
Dollars ($5,000,000.00), and punitive damages against said
A.99
defendants, jointly and severally, in the sum of Ten Million
Dollars ($10,000,000.00).
With respect to Count VIII, plaintiff respectfully prays
that this Court declare that defendant MMG violated its duties
and obligations under ERISA and the Pension Plan by failing
to provide participants with their proper share of Pension Plan
interest earnings during the Plan Year ending July 31, 1991,
and that he be awarded damages in an amount to be
determined, representing his proportionate share of interest
and other investment earnings on Pension Plan assets during
the period from July 31, 1990 until December 21, 1990, and
for interest on such unpaid amount to the date of judgment.
Additionally, plaintiff respectfully prays that he be awarded
attorney's fees pursuant to 29 U.S.C. 1132 (g).
With respect to all Counts, plaintiff respectfully prays
he be awarded all costs and disbursements of this action, and
such other and further relief as this Court deems just,
equitable, and proper.
Plaintiff demands trial by jury on all Counts of this
Complaint.
Respectfully submitted,
/s/ Allen H. Sachsel
ALLEN H. SACHSEL
Counsel for Plaintiff
3817 Plaza Drive
Fairfax, Virginia 22030
(703) 385-9400
Bar No. 09272
A.100
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff.
Vv
MONTGOMERY MEDICAL GROUP, P.A., etal.
Defendants.
Civil Action No. :92-529-MJG
PLAINTIFF'S OPPOSITION TO
DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
ALLEN H. SACHSEL
Counsel for Plaintiff
10603 Judicial Drive
Fairfax, Virginia 22030
(703) 385-9400
Bar No. 09272
A.101
CONTENTS
Page
I PACTS ssh AS a a ee ee l
II AISNE icin ie ee 9
A. The Summary Judgment Standard ........... 9
B. Age Discrimination ...................:cc00ccceee. 20
(.. A os OG ana ee 14
D. Breach of Contract -- The Leave of
Absence Agreement ....................0..00800- 15
E. The 1989 Oral Contract ..............5....0.... 19
5. POON go zencdesances. AWE UeL en REPU RET Ty 20
G. Breach of Fiduciary Duty ........................ aa
Fi. CE ae a ee 25
Be WI se toto cach Reds is canoes deena eeucs 26
Oe err nies os ets snc cae 28
CER EPC Pa hoe Cr ORS oe ikeccserccnestiivences 29
A.102
TABLE OF AUTHORITIES
Page
Cases:
Ballinger v. North Carolina Agr. Extension Service,
815 F.2d 1001 (4th Cir. 1987), certiorari denied
Py I II irdeicscada vod castneechsnicnttionechcaxtelorcscanns, 9
Bonnes v. Long, 599 F.2d 214 (4th Cir. 1979) 0000000000... 27,28
Bonnes v. Long, 651 F.2d 214 (4th Cir. 1981) ..00...00... 27
Cain v. Cain, 334 N.E.2d 650 (Mass. App. 1975) ..0....0....... 23
Charbonnages De France v. Smith, 579 F.2d 406
SAS 2 5 SEILER REARS SE STI Cert Bae Oath G00 Aa SAN? ARO 9,16
Columbia R.E. Title Ins. Co. v. Caruso, 39 Md.
See ig PE Pale NE CE IUD ne saacc ence cctncta sens cccheccecssectnee 25
Daughterty v. Kessler, 264 Md. 281, 286 A.2d 95
Hi) ERS ellie Plc IA Ret St aie ete thy, es es RED ye 26
De Long Equip. v. Washington Mills Abrasive Co.,
Bod Dime ae Chat Cw. TROD) oe ih cdi necceeecnes 26
Donahue v. Rodd Electrotype Co. of New England,
INC., S26 Tie. aee et CEE, TOTS oe cee ieen 23
Dresden v. Willcock, 518 F.2d 281 (3rd Cir. 1985) ............. 24
E.E.0.C. v. Peterson Howell & Heather, Inc.,
FR Ey I, SRE PI, OD via vicocessndic bende cnigssincoccesesaces 12
Evans v. Blesi, 345 N.W.2d 775 (Minn. App. 1984) ........... 24
A.103
Page
Fairchild Stratos Corp. v. Siegler Corp., 225 F. Supp.
R95 GE Ue EE biactteccasinderdnseuks Bhbiepnegeaadiinweidie meres 19
Featherson v. Montgomery County Public Schools,
739 FB. Sete. FUSE Cee BSG OD vv cccscnscsepiindicwccnegs ctjemere 10
Green v. Wash. Sub. San. Comm'n, 259 Md. 206, 269
Pa Ee CO OME ves iain sctccccaccdeatighstuntnces eased Gmtengien 25
Goodman v. Poland, 395 F. Supp. 660 (D.Md. 1975) ......... 24
Hartung v. Architects Hartung/Olde/Burke, Inc.,
301 N.E.Z6 240 (UGGR PA NTI ois fics corte sccm cts deecsseserssece 23
Helms v. Duckworth, 249 F.2d 482 (D.C. Cir. 1957) .......... 24
Lewis v. AT&T Technologies, Inc.,
COL F.. POD. Fs 2 hoi thainitianheninninntauad 10,15
Lovelace v. Sherwin-Williams Co., 681 F.2d 230
CREM A I UI 6 cpscniisSiciicsipecsoon ace ctes eidedsies daclanmigins 10
McDonnell Douglas v. Green,
GED UB. FU Gere entrees sip tistewasstncdesoint 10,15
Moran v. Hammersla, 188 Md. 378, 32 A.2d 727
CRIED cess Reicacud sping viveh andes ede oadak abel 16
Myers v. Josselyn, 212 Md. 266, 129 A.2d 158
|: , | DE ont AONE SU aR Ty Re: Brn s mr 16
Newman v. Piggie Park Enterprises, Inc., 390 U.S.
MD CDI. sini snares in ngs cbicstnei ccm nepe abba tasicaceiatacaand’ 27
A.104
Orchard v. Covelli, 590 F. Supp. 1548
iia sodccssehvaceosenerrrecsooassébascasssoas 24
Parker v. Federal Nat. Mtg. Ass'n, 741 F.2d 975
I le a8 hsidetbct iva india idcscdevene susierecsi a Sa 12
Pettway v. American Cast Iron Pipe Co.,
TI, OMI vcs scsspinseckccsctecavessecsecacsesecsreoces: 15
Polsby v. Chase, 970 F.2d 1360 (4th Cir. 1992),
petition for a writ of certiorari pending
RE ee ed ales odscsnapdbedeustanrsstececesoeeasee, 14
Price Waterhouse v. Hopkins, 490 U.S. 288 (1989). ..........13
Reinking v. Philadelphia Am. Life Ins. Co.,
910 F.2d 1210(4th Cir. 1990) 000000. TY eee 27
Rodriguez v. MEBA Pension Trust, 956 F.2d 468
Gee Ral ats sth sdSincinib tee yocseNertaclevesecJaloacucdes 27,28
Shimp v. Shimp, 287 Md. 372, 412 A.2d 1228 (1980)........ 18
Thompkins v. Morris Brown College, 752 F.2d 558
ola csi ccaassoifaonnhobssecasesaicrecens 13
In re: W.S.M. Enter., Inc., 102 B.R. 461
sich ci cabbicaiabdnile reded-voene 16
Tufts v. Poore, 219 Md. 1, 147 A.2d 717 (1959) 220000000... 21
Wilson v. S&L Acquisition Co., L.P., 940 F.2d 1429
5 assess db paslicinbivesopeces 2}
Statute:
FP RM WN sigan cae on chp can onan ape eas tas 10
Miscellaneous:
Black's Law Dictionary (6th ed. 1990) ................cecceeeeeees 23
nF Milan GRIN IR RE isc em Pe pO Be 17,18
Restatement (SeCONG) COMUACtS <......055....ccccescccesscocsccnrsonapes 17
Ruzicho, Jacobs, and Thrasher, Employment
DiscriminationLitigation (Anderson Pub. Co. 1989)........... 15
A.106
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES L. HOOPER, M_D.,
Plaintiff,
V.
MONTGOMERY MEDICAL GROUP, P.A., ef al,
Defendants.
Civil Action No.:92-529-MJG
OPPOSITION TO DEFENDANTS' MOTION
FOR SUMMARY JUDGMENT
I. FACTS
In 1964, James L. Hooper, M.D., plaintiff in this case,
founded a medical practice in Gaithersburg, Maryland
(Hooper Aff., A. 1).' The practice was known as Hooper and
Kordon, P.A., later became Deer Park Medical Group, P.A.,
and finally, in 1986, Montgomery Medical Group, P.A.
("MMG").’ Except for a brief period in May, 1989 (see,
infra), Dr Hooper was President of the corporation from its
inception until September, 1990 (Hooper Aff., A. 2-3).
"A." references, except as otherwise indicated, are to the
Appendix submitted with this opposition. Other references are to
attachments and exhibits submitted by defendants. We have attempted to
avoid reproducing materials already furnished by defendants. The
original of Dr. Hooper's affidavit is attached to the original of this
opposition. The affidavit is not attached to the copies of the opposition
since it is reproduced in the Appendix.
; As stated, infra, MMG has sold substantially all of its assets in
such a way as to attempt to defraud Dr. Hooper of his equity. In April,
1993, the name of MMG was changed to Perrino, Dolinsky, Karesh,
Withrow, Juarbe & Baier, M.D., P.A. (Hooper Aff., A.1).
A.107
Over the years the practice grew. While the form of
the practice was a professional corporation, in fact, it was
operated much like a partnership. Thus, the number shares
purchased by persons hired by Dr. Hooper directly related to
their scheduled hours of work -- those working full-time
owning 50 shares each, and those working 3/4 time owning
37p shares each’. A physician who accepted an offer to
become a "partner" automatically was elected to the board of
directors and, regardless of the number of shares owned, had
an equal voice in the management of the practice -- one vote
per partner. Payments to the principals, who considered
themselves "partners", were based solely on their hours
worked. Hooper Aff., A.2-3
As stated, supra, all of the Individual Defendants in
this case were hired by Dr. Hooper. At the time this case
arose, there were, in addition to Dr. Hooper, six shareholder/
"partner"/directors of MMG, all younger than Dr. Hooper.
Hooper Aff., A.3.; Withrow Dep., A.103, 128-129. In 1989,
it was discovered that MMG had failed to deposit employee
withholding taxes for an approximate two-year period and
owed in excess of $1,000,000 in principal, interest, and
penalties. The liability was unknown to any of the partners, all
of whom had check signing authority, until the IRS
telephoned. All of the partners had liability, jointly and
severally, for the IRS obligation to the full extent an individual
may be held liable for such a corporate obligation. All had
benefited from the fact the funds not paid were available to the
practice. Hooper Aff., A.2-3.
As a result of the obligation, MMG and Dr. Hooper,
through counsel, began negotiating with the IRS for time to
pay, and began seeking bank loans to satisfy the IRS debt. Dr.
Hooper, who, as stated above, was President of MMG, was
: All of the Individual Defendants were hired by Hooper (Hooper
Aff, A.1).
A.108
critical to obtaining a loan, which appeared to be necessary if
MMG were to survive. This was so because of his own
assets, and because of his relationship with a particular bank
president. Hooper Aff., A.3; Dolinsky Dep., A.23-26.
In May, 1989, Dr. Hooper resigned as President of
MMG because of his unhappiness with the other partners’
treatment of an employee. At that time he stated he would not
guarantee any bank loan and struck out his signature on
papers relating thereto. Hooper Aff, A.2-4; Dolinsky Dep.,
23-26.
After MMG had been turned down by other banks,
and after Dr. Hooper resigned as President and stated he
would not guarantee a loan for MMG, five of the six other
partners, all of whom are defendants in this action, requested
Dr. Hooper to return as:President. The admitted primary
reason for wanting Dr. Hooper back as President was his
ability to obtain the loan. Hooper Aff., A.2-4; Dolinsky Dep.,
A.23-26; Perrino Dep., A.133-139; Withrow Dep., A. 114.
Dr. Hooper agreed to return as President in May,
1989, on the specific agreement, entered into by five of the six
individual defendants, that he would remain President of
MM6G until the loan for the IRS obligation ("IRS loan") would
be satisfied.* This was important to Dr. Hooper because his
home, the largest single item of non-corporate collateral, was
to be pledged to secure the loan. Hooper Aff, A.3. Prior to
the time the loan was obtained, Dr. Hooper was re-elected as
President at the annual meeting held in the late Summer or
early Fall of 1989. (Perrino Dep., A.139).
In early 1990, the IRS loan was finalized. Dr.
Hooper's home was pledged. Hooper Aff., A.2-4.
: Defendant Withrow did not enter into the agreement with Dr.
Hooper (Hooper Aff., A.3.).
A.109
The first election of MMG officers after securing the
loan occurred in September, 1990. At that very next election
after Dr. Hooper had obtained and guaranteed the loan, he
was voted out as President. Susan Withrow was elected.’
Hooper Aff., A.4.
Just after the September, 1990 election, Steven
Dolinsky, the Individual Defendant who had nominated
Withrow (Hooper Aff., A.4), received a phone call in the
office. According to Tina Rankin, Dolinsky's secretary,
Dolinsky stated to the caller:
[W]e voted Dr. Hooper's old ass out as
President and now we have younger blood .. .
running the corporation. It is just a matter of
time until we get his old ass out completely.
(Rankin Dep., A.181). Dolinsky then told Ms. Rankin to "just
act like you did not hear the phone conversation" (Rankin
Dep., A.182).
Almost immediately after Withrow was elected
President, MMG and the Individual Defendants began a
campaign of harassment against Dr. Hooper. Specifically, it
was demanded that Dr. Hooper vacate the office he had
occupied for years. Then, he was ordered not to work in the
main office, but instead was to work at a satellite office 20
miles away. See, Perrino Dep., A. 163. He was subjected to
verbal abuse and was generally treated in a demeaning fashion,
and he was denied keys to the office. (Hooper Aff., A.4; Exh.
1 (attached hereto)). He also was excluded from what were,
in effect, directors’ meetings held secretly among the other six
shareholder/partner/directors. See, Rankin Dep., A. 186-187,
190, 195; Miles Dep., A. 128. The other partners treated Dr.
5
Dr. Hooper initially did not vote for Withrow. When the matter
of her election was a fait accompli, Dr. Hooper stated he would go along
with it. Hooper Aff., A.4.
A.110
Hooper as less than a full partner. Hooper Aff., A.4-7. See
also, Miles Dep., A. 37-38.
Understandably, Dr. Hooper did not take kindly to this
treatment. He responded both calmly and emotionally to such
behavior by people whom he had hired into the practice he
founded, and whom he had made his partners. Hooper Aff,
A.6-7. |
Finally, in early 1991, Dr. Hooper concluded that the
others, all of whom he had brought into the practice, wished
him to leave. He was prepared do so if the corporation
bought his stock at a fair price. Hooper Aff., A.5-7.
In early April, 1991, Dr. Hooper reached an oral
agreement with Susan Withrow, who, as part of her duties as
President (see, Perrino Dep., A. 161), was authorized to deal
with "Dr. Hooper problems" (A.229), that he would take a
leave of absence while an agreement was worked out
concerning the purchase of his MMG stock. On April 18,
1991, this agreement was reduced to writing and signed by
. As stated above, MMG and the Individual Defendants, after
Withrow was elected President, began a campaign of harassment against
Dr. Hooper. Criticism was leveled at him at every turn and any
perceived problems were handled in condescending and sarcastic ways.
MMG and the Individual Defendants stated they believed he was
damaging to the corporation. By contrast, as alleged in the complaint,
other partner physicians were not treated in this manner. In fact, one of
the other partners who had taken sexual liberties in the office with a
female patient, gone to her apartment, overdosed her with drugs, and
sodomized her had no action taken against him. Dr. Hooper had wished
to terminate him, but the others refused to, one of them stating to excuse
the behavior that the offending partner was "a young and unmarried
fellow." See, Hooper Aff., A.5-6. We have been denied discovery with
regard to this and malpractice and dereliction of duty claims against
another partner physician. Objections to those rulings are pending before
the Court. We believe that evidence is relevant to the question of
disparate treatment.
A.l11
both Dr. Hooper and Withrow.’ Withrow testified that she
took the memorandum to the Board. She testified (Withrow
Dep, A.111):
All of the partners were aware and given
copies of this note [the April 18 agreement].
Dr. Hooper took a unilateral action and chose
to take a leave of absence which all of us chose
to accept.
Thereafter, memoranda were circulated at MMG confirming
that Dr. Hooper was on a leave of absence (A.228).
Negotiations stalled with regard to purchase of Dr.
Hooper's stock. There was a complete lack of good faith by
MMG in that, as part of the buy-out, MMG demanded that
Dr. Hooper give MMG and the Individual Defendants a
general release, and that MMG and its partners give Dr.
Hooper no release of claims. No price ever was offered by
MMG for the stock.* Hooper Aff., A.7. -
With the negotiations placed in this posture by MMG's
bad faith failure to honor its agreement to negotiate, MMG
determined unilaterally, without any discussion with Dr.
Hooper, to terminate Dr. Hooper's employment. A meeting
was called for that purpose for July 31, 1991.
Notwithstanding that Dr. Hooper requested a rescheduling of
the meeting to a time when he could attend, the MMG board
: Defendants state (Mem. at 18, 19) that the agreement was
initialed by Withrow. The document shows on its face Dr. Withrow's
signature. Moreover, Withrow testified (Withrow Dep., A.104-105
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