The opinion of the court was delivered by: JOHN T. CURTIN
This case involves an internecine feud between two factions of the membership of Niagara-Genesee & Vicinity Carpenters Local 280 ("Local 280"), over control of Local 280 and consequent union representation on the board of trustees of the Local 280 Welfare and Pension Funds ("the Funds"). On December 13, 1993, a complaint was filed alleging, inter alia, that on October 19, 1993, certain of the plaintiffs were wrongfully removed as officers and trustees of Local 280 by certain of the defendants, and that the defendants had thereby improperly wrested control of the local from the plaintiff officers and trustees, who had comprised a majority of the governing body of Local 280, the "Executive Board." The complaint alleged further that shortly thereafter, defendant United Brotherhood of Carpenters and Joiners of America ("the International") improperly imposed a trusteeship over Local 280. Local 280 was named as a plaintiff. The complaint stated that the plaintiffs' claims are cognizable under § 301(a) of the Labor-Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185(a), §§ 102 and 304(a) and of the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. §§ 412 and 464(a), and § 502(a) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a). The relief requested included:
(1) an order restoring the individual plaintiffs as officers and trustees of Local 280 and as trustees of the Funds;
(2) an order voiding the trusteeship imposed by the International over Local 280;
(3) an injunction ordering the defendants to refrain from taking any action as the Executive Board of Local 280 or as trustees of the Funds; and
At a meeting with the court on December 17, 1993, it was decided that the Funds should be joined as necessary parties, so that jurisdiction could be exerted over those entities. An amended complaint was filed on December 29, 1993, naming the Funds as defendants.
On January 18, 1994, defendants Santo Scrufari and Gordon Knapp, represented by Eugene Salisbury, Esq., of Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria ("Lipsitz, Green"), filed a motion to compel Norman LeBlanc, Esq., to withdraw as plaintiffs' counsel. The essence of the motion was that Mr. LeBlanc should be disqualified because he was in law partnership with David Herrmann, Esq., who was himself prohibited from representing the plaintiffs because of his position as general counsel to the local's Pension and Welfare Funds. In an order issued on February 25, 1994, I granted that motion. Niagara-Genesee & Vicinity Carpenters Local 280 v. United Brotherhood of Carpenters and Joiners of America, 843 F. Supp. 855 (W.D.N.Y. 1994). The plaintiffs obtained new counsel, and have now brought a motion to compel the withdrawal of Lipsitz, Green as counsel for defendants Scrufari and Knapp, on the grounds that there is a conflict between the firm's representation of those defendants and both its status as general counsel to Local 280 and its role as attorneys for the Funds. Scrufari and Knapp, for their part, have filed a cross-motion to drop Local 280 as a party plaintiff, pursuant to Fed. R. Civ. P. 21. Oral argument was heard on July 15, 1994.
As are all of the individual plaintiffs, Santo Scrufari and Gordon Knapp are members of Local 280 and participants in the Pension and Welfare Funds. Scrufari is employed as the Funds' Plan Manager, and as such is a fiduciary of the Funds. Knapp is the duly elected General Agent (business manager) of Local 280. By virtue of this position, Knapp is a trustee of the Welfare Fund. The plaintiffs maintain that since August, 1992, there has been a dispute between the plaintiff faction of Local 280 and Scrufari, arising out of Scrufari's allegedly improper administration of the Fund office -- in particular, his payment of unauthorized salary increases to himself and to his son, Russell Scrufari, an employee in the office. They claim that as a result of this dispute, Scrufari, with the aid of Knapp and the other defendants, engaged in a course of improper conduct designed to result in the removal of the duly elected plaintiff officers and trustees of Local 280 from office, and so from their positions as union-appointed trustees of the Funds, in order to secure Scrufari's position as the Funds' Plan Manager. They maintain that the wrongful actions of Scrufari, Knapp and the other defendants did in fact culminate in the improper removal of the plaintiff officers and trustees from office on October 19, 1993, and in the subsequent wrongful imposition of a trusteeship by the International. If there is merit in the plaintiffs' allegations, the interests of Scrufari and Knapp in this litigation are plainly adverse not only to those of the individual plaintiffs, but also to those of Local 280 and its members as a whole, who have legitimate interests in the democratic functioning of the organization and the proper adherence to its constitution and bylaws, and in the impartial behavior, as fiduciaries, of both Knapp, as General Agent of Local 280, and Scrufari, as Plan Manager of its Pension and Welfare Funds.
I must consider the propriety of Lipsitz, Green's representation of Scrufari and Knapp, therefore, in the context of the plaintiffs' allegations concerning the behavior of those defendants, and in the light of the law firm's assertion that it acts as general counsel to Local 280. I note, first of all, that Lipsitz, Green states that it was hired to act as general counsel to Local 280 on October 29, 1993, ten days after the meeting at which the plaintiff officers and trustees were removed from office. Item 40, Affidavit of Eugene W. Salisbury, P 17. It continues to represent the local in that capacity. Id.1 It 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 ...