The opinion of the court was delivered by: CHARLES S. HAIGHT, JR.
The defendants in this much-litigated case are former officers of plaintiff Local 1199, Drug, Hospital and Health Care Employees Union, RWDSU AFL-CIO (the "Union"). Eight of the eleven individual defendants, having been granted summary judgment dismissing all of plaintiffs' claims against them, now move for reimbursement of their attorneys' fees, costs and disbursements.
Plaintiffs commenced this action in April of 1986 against defendants who were then officers of the Union. Plaintiffs filed an amended complaint in late 1986 and a second amended complaint in 1990. The second amended complaint alleged claims under the Racketeer Influence and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1961 et. seq.; and Section 501(a) of the Labor Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. § 401 et. seq.
Since the inception of the litigation, all the defendants except for Philip Kamenkowitz have been represented by Gareth W. Stewart, Esq. and attorneys with whom he is associated. In opinions dated May 26, 1993 and July 5, 1994, addressing plaintiffs' second amended complaint, the Court directed that summary judgment enter dismissing all claims against defendants Claude Ferrara, Ramon P. Malave, Jo-Ann Marshall, Herb Binger, Barrington Moore, Carl Rath, Floris Saunders, and Floyd Shephard. These defendants now move for an order directing payment of their attorney's fees and costs. While the motion papers do not specify the expected source of those monies, presumably defendants' principal target is the Union itself.
The moving defendants rely upon three sources of authority. First, they claim that the requested relief may be had under Section 501 of the LMRDA, 29 U.S.C. § 501, as interpreted by case law. Secondly, defendants rely upon the "bad faith" exception to the usual American Rule in respect of attorney's fees, contending that plaintiffs acted in bad faith in initiating and continuing this action against them. Third, defendants rely upon provisions of New York law applicable to the reimbursement of corporate officers and directors who have been vindicated in litigation against them. See N.Y. Not-For-Profit Corporation Law, §§ 722-725; N.Y. Business Corporation Law, §§ 724(c), 725(c), 726(a) (McKinney's Supp. 1995).
Plaintiffs contend that there is no authority entitling defendants to Court-directed payment of attorney's fees and costs.
Section 501(a) of the LMRDA provides that officers of a Labor Union "occupy positions of trust in relation to such organization and its members as a group." Section 501(b) authorizes suits by members of labor organizations against officers who have breached their fiduciary duty. That subsection provides in part:
No such proceeding shall be brought except upon leave of the court obtained upon verified application and for good cause shown which application shall be made ex parte. The trial judge may alot a reasonable part of the recovery in any action under this subsection to pay the fees of counsel prosecuting the suit at the instance of the member of the labor organization and to compensate ...