maintains that upon commencement of this action in December, 1993, Local 280 requested that it represent Scrufari and Knapp, and that the local "has recognized and acknowledged the obligation to pay Lipsitz, Green's legal fees." Id. at P 20. It asserts that it has disclosed to both Local 280 and defendants Scrufari and Knapp "any and all potential conflicts of interest that may arise as a result of its representation herein," and that following disclosure, both Local 280 and Scrufari and Knapp consented to the representation. Id. at P 21. It does not purport to represent Local 280 in this action, and indeed, it has moved on behalf of Scrufari and Knapp to drop the local as a plaintiff.
There is great potential for conflict between Lipsitz, Green's representation of Scrufari and Knapp in this litigation and its role as general counsel to Local 280. As counsel to Scrufari and Knapp, the firm has an obligation to zealously defend against the claims brought by the plaintiffs in this action.
Those claims include charges that, inter alia, Scrufari and Knapp participated, and indeed played a central role, in the wrongful ejection of the officers and trustees of Local 280 from office -- an action which could not conceivably have been in the best interests of the local. As general counsel to Local 280, in contrast, Lipsitz, Green's allegiance is to the local as an entity, and thus to all of its members.
In the face of charges by one group of members that another group has usurped control of the organization by wrongfully removing its duly elected officers and trustees, the general counsel's role must be to keep paramount the interests of the organization as a whole, and not to align itself with any individual or faction.
The potential for conflict here is illustrated by the motion to drop Local 280 as a plaintiff in this action, which was brought by Lipsitz, Green on behalf of Scrufari and Knapp. It is clear enough that Local 280 should be a party, since it has a very strong interest in the outcome of the litigation. At oral argument Mr. Salisbury of Lipsitz, Green, representing Scrufari and Knapp, suggested that the local might be more appropriately named as a defendant. Yet, it is apparent from the papers supporting Scrufari and Knapp's motion that the reason these defendants wish to have Local 280 removed as a plaintiff is that they believe that as long as the local remains as at least a nominal plaintiff, Lipsitz, Green may indeed be presented with a conflict or potential conflict. The motivating force behind the motion seems to be Scrufari and Knapp's interest in retaining Lipsitz, Green as counsel.
However, the question of whether or not Local 280 should be a plaintiff here is one about which Lipsitz, Green, as the local's general counsel, should be able and prepared to provide impartial advice, uncolored by Scrufari and Knapp's interests.
In Tucker v. Shaw, 378 F.2d 304 (2d Cir. 1967), the Second Circuit affirmed the disqualification of a union local's regularly retained counsel from acting as attorney for the defendant officers of the local, under circumstances quite similar to those in the present case. The plaintiffs, three members of the local, had filed an action on the local's behalf against three of its officials and three employer-trustees of a jointly-administered welfare fund. Tucker v. Shaw, 378 F.2d at 305. The complaint alleged various breaches of fiduciary obligations, including charges that the officials had misappropriated union funds, used false and misleading accounting practices, and managed two welfare funds improperly. Id. at 305-306. The plaintiffs moved to enjoin the local from expending funds for counsel fees or otherwise defending the defendants, and to disqualify the union's general counsel from acting as their attorney. Id. at 306. The district court granted the plaintiffs' motion for disqualification, and denied the other prayers for relief as moot. Id. The Second Circuit affirmed, observing that:
defendants argued that Local 70 was not a party to this suit, and therefore there was no conflict. Judge Rosling correctly found that while not formally a party yet, the union's interest in the outcome of the litigation might well be adverse to defendants'.
Id. Similarly, in the present case, it is not Local 280's formal presence as a party that is of concern. What is troubling is that the local's interest in the outcome of the litigation may well be adverse to those of Scrufari and Knapp.
In Tucker, the Second Circuit made it clear that in situations like the present one, plaintiffs must make a reasonable showing that they are likely to succeed on the merits of their claims if they are to prevail on a motion to disqualify a local's general counsel from representing officials of the local. Tucker v. Shaw, 378 F.2d at 306-307 (citing Holdeman v. Sheldon, 311 F.2d 2, 3 (2d Cir. 1962)). What should represent a "reasonable showing" at this stage of the litigation is not clear. However, I am convinced, from a reading of the plaintiffs' voluminous submissions in the form of affidavits and supporting documents, that there are serious questions to be addressed in this case. Disqualification of Lipsitz, Green from representing Scrufari and Knapp would serve to "nip any potential conflict of interest in the bud." Tucker v. Shaw, 378 F.2d at 307 (citing International Bhd. of Teamsters v. Hoffa, 242 F. Supp. 246, 257 (D.D.C. 1965)).
For the reasons given above, the motion to disqualify Lipsitz, Green as counsel for defendants Scrufari and Knapp is granted. Scrufari and Knapp will obtain substitute representation forthwith.
Under the circumstances, it would be inappropriate to rule on the cross-motion to drop Local 280 as a plaintiff at this time. Scrufari and Knapp may, if they wish, renew their motion after they have obtained new counsel. Local 280 unquestionably has a strong interest in the outcome of this litigation. Whether or not it should remain as a nominal plaintiff or be realigned as a defendant may not be particularly important. But in any event, I will not make a determination as to the proper alignment of Local 280 until I have received submissions from all parties purporting to represent the interests of the local.
A meeting shall be held on August 16, 1994, at 3:00 p.m., so that defendants Scrufari and Knapp can appear with new counsel, ready to proceed.
JOHN T. CURTIN
United States District Judge
Dated: July 25, 1994