                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-19-2004

Carino v. Stefan
Precedential or Non-Precedential: Precedential

Docket No. 03-3679




Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004

Recommended Citation
"Carino v. Stefan" (2004). 2004 Decisions. Paper 435.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/435


This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
                         PRECEDENTIAL        Winston C. Extavour
                                             203 Kings Highway East
         UNITED STATES                       Haddonfield, NJ 08033
        COURT OF APPEALS                       Counsel for Appellant
      FOR THE THIRD CIRCUIT

                                             James Katz
              No. 03-3679                    Jennings Sigmond
                                             1040 North Kings Highway, Suite 300
                                             Cherry Hill, NJ 08034
           GISELA CARINO,                      Counsel for Appellees
                 Appellant

                    v.
                                                   OPINION OF THE COURT
     MARC STEFAN, ESQ;
BUTSAVAGE & ASSOCIATES, LLC.
                                             RENDELL, Circuit Judge.
    Appeal from the United States                   Gisela Carino brought suit against
        District Court for the               attorney Marc Stefan and Stefan’s
        District of New Jersey               employer, Bustavage & Associates, for
     (D.C. Civil No. 03-cv-01894)            legal malpractice in representing her in
            District Judge:                  connection with a labor grievance
    Honorable Joseph H. Rodriguez            proceeding against her employer. The
                                             District Court granted a motion to dismiss
                                             on the basis that the attorneys were
           Submitted Under                   immune from liability under 29 U.S.C. §
       Third Circuit LAR 34.1(a)             185(b), Section 301(b) of the Labor
             May 26, 2004                    Management Relations Act (“LMRA”).
                                             We agree with the District Court and with
    Before: SCIRICA, Chief Judge,            those courts of appeals who have spoken
            RENDELL and                      on this issue, and will affirm.
     ALARCÓN*, Circuit Judges.

          (Filed July 19, 2004)                                  I.
                                                    Carino, a New Jersey resident, was
                                             employed as an insurance agent with
                                             Prudential Insurance Company of America
* Honorable Arthur L. Alarcón, Senior
                                             from 1989 to 1998. During this time
Judge, United States Court of Appeals for
                                             period, she was a member of the United
the Ninth Circuit, sitting by designation.
Food and Commercial Workers                                 2001, at the Sheraton Convention Center
International Union, which had entered                      in Atlantic City, New Jersey. The firm
into a collective bargaining agreement                      appointed Marc Stefan, Esquire, to appear
with Prudential.                                            on her behalf.
       Prudential terminated Carino’s                               Carino alleges that the following
employment in October 1998, because it                      events occurred two days prior to her
believed that she had engaged in                            hearing. Stefan telephoned her and asked
professional misconduct by selling                          her to meet him at the Radisson Hotel in
insurance policies to individuals in poor                   Mt. Laurel, New Jersey. At this meeting,
health and naming disinterested parties as                  Stefan advised her that the venue for the
the beneficiaries of the policies, and the                  arbitration meeting had been changed to
company referred the charges against                        the Radisson Hotel. Furthermore, he
Carino to the Federal Bureau of                             indicated that Prudential and FBI
Investigation (“FBI”). 1                                    investigators were at the hotel interviewing
                                                            witnesses who would testify against her
           F o l l o wi n g   the     proced ures
                                                            regarding her alleged misconduct, that they
established by the collective bargaining
                                                            were prepared to take her to jail, and that
agreement, the Union filed a grievance on
                                                            she would need $100,000.00 to get out of
C a r i n o ’ s b e h a l f , c o n t e s ti n g h er
                                                            jail.
termination. Dissatisfied with the review
of the grievance, the Union exercised its                           Stefan then asked what Carino
right to take the matter to arbitration.2 The               hoped to get out of the arbitration hearing.
Union retained Butsavage & Associates                       Carino replied that she wanted her
(“Butsavage”), a Washington, D.C. law                       employment record cleared of Prudential’s
firm, to represent Carino at the arbitration                false charges; the FBI investigation closed;
hearing, which was to be held July 27-29,                   a promise that Prudential would not sue
                                                            her for attorney’s fees; and her pension
         1
                                                            reinstated. Stefan claimed “that would be
         According to Carino, the FBI                       no problem and that he could work that out
investigation disclosed no evidence of                      with Prudential.” Carino agreed she would
wrongdoing on her part.                                     withdraw the grievance in return for
     2                                                      Prudential’s acceptance of her conditions.
     Article 28 of the CBA provides that
the Union may refer any grievance                                   Stefan then suggested they go
regarding the termination of a Prudential                   downstairs to the bar and wait for the
Representative to arbitration if the Union                  arbitrating judge.      After an hour of
is dissatisfied with the outcome of the                     waiting, he told Carino that they could
grievance procedure. Furthermore, it                        leave and “call it a mutual agreement.” He
indicates that the Union is the only entity                 presented her with various forms,
with the power to refer a matter to                         including a two-page document entitled
arbitration.

                                                        2
“Grievance Release,” and asked her to sign           Carino filed a timely Notice of Appeal.
them. He did not explain what the forms
were or why she had to sign them. After
she signed them, Stefan said he would                                    II.
meet with Prudential and obtain its
                                                            Our review of a district court’s
agreement to what she wanted without any
                                                     dismissal of a complaint under Rule
problem.
                                                     12(b)(6) for failure to state a claim is
        Thereafter, Carino realized that the         plenary, and we apply the same standard as
documents she had signed made no                     the district court. Oatway v. Am. Int’l
reference to Prudential’s concessions in             Group, Inc., 325 F.3d 184, 187 (3d Cir.
return for her withdrawal and release. She           2003). In deciding a motion to dismiss, we
contacted Stefan and his firm to complain,           must accept all well-pleaded allegations in
but heard no reply. In fact, she never               the complaint as true, and view them in the
heard from them again.                               light most favorable to the plaintiff. Id.
                                                     We may grant such a motion only where
       Carino argues that Stefan deceived
                                                     “it appears beyond doubt that the plaintiff
her into settling her grievance in return for
                                                     can prove no set of facts in support of his
various promises which were never kept.
                                                     claim which would entitle him to relief.”
She claims that, as a result of Stefan’s
                                                     Conley v. Gibson, 355 U.S. 41, 45-46
alleged misconduct, she lost her
                                                     (1957).
opportunity to arbitrate her claims, her
employment record remains blemished and
her pension was never restored.
                                                                         III.
        Carino filed a four count complaint
                                                             This appeal presents a question of
in the Superior Court of New Jersey
                                                     first impression for our Court, namely,
against Stefan and Butsavage alleging: (1)
                                                     whether an attorney hired by a union to
legal malpractice against Stefan; (2)
                                                     perform services on behalf of a union
intentional misrepresentation against
                                                     member in connection with an arbitration
Stefan; (3) breach of attorney’s fiduciary
                                                     hearing conducted pursuant to a collective
duty against Stefan; and (4) liability under
                                                     bargaining agreement is immune from suit
the doctrine of respondeat superior against
                                                     for malpractice by that member. We
Butsavage.      Defendants removed the
                                                     conclude that the LMRA bars such a suit.
action to federal court based on diversity
jurisdiction and, alternatively, based on
federal jurisdiction under § 301 of the                     Section 301(b) of the LMRA
LMRA. The defendants then moved to                   provides, in part, that “[a]ny money
dismiss the complaint pursuant to Fed. R.            judgment against a labor organization in a
Civ. P. 12(b)(6) for failure to state a claim.       District Court of the United States shall be
The District Court granted this motion, and          enforceable only against the organization


                                                 3
as an entity and against its assets, and shall       and was in violation of an existing
not be enforceable against any individual            bargaining agreement. Id. at 402. The
member or his assets.” 29 U.S.C. § 185(b).           Court noted that “the legislative history of
Viewed narrowly, this language could be              § 301 clearly reveals Congress’ intent to
said to only exempt union members from               shield individual employees from liability
personal liability for judgments against the         for damages arising from their breach of .
union. However, the Supreme Court has                . . a collective bargaining agreement,
given the statute a more expansive reading,          whether or not the union participated in or
stating that § 301(b) “evidences ‘a                  authorized the illegality.” Id. at 407.
congressional intention that the union as
                                                             Our court has recognized that
an entity, like a corporation, should in the
                                                     Atkinson provides individual union
absence of an agreement be the sole
                                                     members and officers immunity from suit
recovery for injury inflicted by it.’”
                                                     for union wrongs . See, e.g., Wilkes-Barre
Atkinson v. Sinclair Refining Co., 370
                                                     Pub. Co. v. Newspaper Guild of Wilkes-
U.S. 238, 249 (1962) (quoting Lewis v.
                                                     Barre, Local 120, 647 F.2d 372, 377 (3d
Benedict Coal Corp., 361 U.S. 459, 470
                                                     Cir. 1981); Republic Steel Corp. v. United
(1960)). Confronted by an action against
                                                     Mine Workers of America, 570 F.2d 467,
a union and several of its officers in their
                                                     478 (3d Cir. 1978).           And, “with
individual capacities, the Court in
                                                     monotonous regularity, [other courts of
Atkinson dismissed the count against the
                                                     appeals have] cited Atkinson to foreclose
officers, stating that § 301 “cannot be
                                                     state-law claims, however inventively
evaded or truncated by the simple device
                                                     cloaked, against individuals acting as
of suing union agents or members, whether
                                                     union representatives within the ambit of
in contract or tort, or both, in a separate
                                                     the collective bargaining process.”
count or in a separate action for damages
                                                     Montplaisir v. Leighton, 875 F.2d 1, 4 (1st
for violation of a collective bargaining
                                                     Cir. 1989); see also Morris v. Local 819,
contract for which damages the union
                                                     Int’l Bhd. of Teamsters, 169 F.3d 782, 784
itself is liable.” Id. As a result, the law is
                                                     ( 2 d C i r . 1 999); Eva nge l i st a v.
clear that individual union officers are not
                                                     Inlandboatmen’s Union of the Pacific, 777
personally liable to third parties for actions
                                                     F.2d 1390, 1400 (9th Cir. 1985); Ramsey
taken on behalf of the union in the
                                                     v. Signal Deliver Service, Inc., 631 F.2d
collective bargaining process.
                                                     1210, 1212 (5th Cir. 1985).
       The Supreme Court thereafter
                                                            The only courts of appeals to have
extended the Atkinson rule in Complete
                                                     considered the specific question presented
Auto Transit, Inc. v. Reis, 451 U.S. 401
                                                     here, where attorneys acted on behalf of
(1981), holding that a damage claim may
                                                     the union, have uniformly concluded that
not be maintained against an individual
                                                     Atkinson prohibits claims made by a union
union officer even if the individual’s
                                                     member against attorneys employed by or
conduct was unauthorized by the union
                                                     retained by the union to represent the

                                                 4
member in a labor dispute. See Waterman          Appeals rejected the athlete’s contention
v. Transport Workers’ Union Local 100,           that an exception to the Atkinson rule
176 F.3d 150 (2d Cir. 1999); (“[U]nder           should be fashioned for attorneys
Atkinson, a union’s attorneys may not be         employed by or retained by the union.
sued by an individual union member for           Peterson, 771 F.2d at 1257. The court
actions taken pursuant to a collective           noted that a union may choose to have its
bargaining agreement.”); Arnold v. Air           members’ labor grievances handled by a
Midwest, Inc., 100 F.3d 857, 862 (10th           union representative with no legal training,
Cir. 1996) (“[A]n attorney who performs          or by an attorney. Id. at 1258. If the union
services for and on behalf of a union may        chooses to make use of an attorney, that
not be held liable in malpractice to             attorney has not “entered into an ‘attorney-
individual grievants where the services          client’ relationship in the ordinary sense
performed constitute a part of the               with the particular union member who is
collective bargaining process.”); Breda v.       asserting the underlying grievance,” but
Scott, 1 F.3d 908, 909 (9th Cir. 1993)           merely “assume[s] a function that often is
(holding that employees cannot sue inside        performed by a union’s business agents or
or outside counsel for services rendered         representatives.” Id. Although “[t]hat
under a collective bargaining agreement);        union member is surely justified in
Montplaisir, 875 F.2d at 7 (“[F]or               expecting the attorney to perform in a
purposes of the Atkinson principle,              competent and professional manner . . .
[attorneys] must be treated the same as          when the union is providing the services, it
other union agents.”); Peterson v.               is the union, rather than the individual
Kennedy, 771 F.2d 1244, 1258 (9th Cir.           business agent or attorney, that represents
1985), cert. denied, 475 U.S. 1122 (1986)        and is ultimately responsible to the
(“Where, as here, the attorney performs a        member.” Id. Based on this “functional
function in the collective bargaining            assessment of the attorney’s role as a
process that would otherwise be assumed          union representative within the collective
by the union’s business agents or                bargaining process,” the court concluded
representatives, the rationale behind the        that Atkinson protected union attorneys
Atkinson rule is squarely applicable.”).         from individual liability for acts performed
                                                 on behalf of the union. Id. at 1259.
       In Peterson, the first case to
consider the question, a professional                    In addition to relying on the rule
football player brought a malpractice suit       promulgated by the Supreme Court in
against two attorneys provided by the            Atkinson, the courts have identified
player’s union, claiming that they had           several policy considerations weighing
furnished him with inaccurate advice upon        against the imposition of malpractice
which he had detrimentally relied in             liability on union attorneys representing
pursuing his grievance against his former        union members in labor grievances under
employer. The Ninth Circuit Court of             a collective bargaining agreement. First,


                                             5
while a plaintiff with a breach of the duty                state law claim,3 and that, as a result, §
of fair representation claim against a union               301(b) cannot be a basis for barring her
must prove that the union’s conduct was                    claim. But the question of whether the
arbitrary, discriminatory, or in bad faith, a              preemptive power of § 301 of the LMRA
plaintiff with a malpractice claim against                 is so complete as to transform her state law
an attorney must only prove that the                       claim into a federal claim is distinct from
attorney’s conduct was negligent. As a                     the question of whether § 301(b) applies so
result, it would be “anomalous” if the                     as to bar her claim. Any court considering
union attorney could be liable if merely                   her suit against the union attorneys,
negligent, while the union would be liable                 whether it be a federal court with federal
only if a higher standard were met,                        question jurisdiction, a federal court sitting
namely, arbitrariness or bad faith. See,                   in diversity, or a state court, would be
e.g, Arnold, 100 F.3d at 862. Second,                      compelled, as a matter of substantive law,
state statutes of limitations for malpractice              to conclude that § 301(b) bars her claim
are generally longer than the time limit for               under Atkinson. In Aragon v. Papy,
the filing of suits by union members                       Kaplon, Vogel and Phillips, 262 Cal. Rptr.
claiming that their employer or their union                646 (Cal. Ct. App. 1989), after the Ninth
mishandled their labor grievances. “If                     Circuit had held that complete preemption
union attorneys were sub ject to                           did not apply to plaintiff’s malpractice
malpractice liability in such cases, litigants             claim against attorneys provided by her
would be able to proceed against the                       union and remanded the case to state court,
attorney long after the expiration of the                  see Aragon v. Federated Dept. Stores, 750
statutory period for suits against both the                F.2d 1447 (9th Cir.), cert. denied, 474 U.S.
union and the employer.” Peterson, 771                     902 (1985), the California Court of Appeal
F.2d at 1259.          Finally, were union                 concluded “federal case law and policy
members permitted to sue union attorneys,                  considerations provide immunity under §
the attorneys could be held liable for
damages “flow[ing] from the union’s
political or tactical choices,” which “could,                 3
                                                               The doctrine of complete preemption,
in turn, severely hamper unions in
                                                           an “independent corollary” to the well-
enlis ting q u a l i ty re p r e s e n ta t i o n .”
                                                           pleaded complaint rule, applies where a
Montplaisir, 875 F.2d at 7.
                                                           federal law with “extraordinary”
       We note that Carino has advanced                    preemptive force essentially transforms a
several arguments in an effort to avoid the                claim under state law into a claim under
Atkinson rule, but we find them                            federal law for jurisdictional purposes.
unconvincing. First, she contends that the                 See Caterpillar, Inc v. Williams, 482 U.S.
LMRA does not completely preempt her                       386, 393 (1987). It is to be distinguished
                                                           from the use of preemption as a defense,
                                                           which applies federal law to bar state law
                                                           claims.

                                                       6
301(b) to retained counsel functioning as          consistently been found to be immune.”
union agents in the collective bargaining          Arnold, 100 F.3d at 863; see Peterson, 771
process.” Aragon, 262 Cal. Rptr. at 654.           F.2d at 1251, 1261 (applying Atkinson
In reaching its conclusion, the court              immunity to pre-arbitration counseling).
reiterated that the Ninth Circuit’s decision
                                                           Lastly, Carino notes that under New
regarding complete preemption had no
                                                   Jersey law “a lawyer’s duty may run to
bearing on “whether the immunity set forth
                                                   third parties who foreseeably rely on the
in Section 301(b) . . . was available to the
                                                   lawyer’s opinion or other legal services.”
[attorneys] as a defense.” Id. at 650.
                                                   Petrillo v. Bachenburg, 655 A.2d 1354,
Again, the issue is not one of preemption,
                                                   1359-60 (1995). As a result, she argues
but, rather, one of applicable substantive
                                                   that while Stefan was retained by the
law.
                                                   Union, he still owed a duty of care to her.
        Second, Carino maintains that even         While this may indeed be true, this does
if § 301(b) applies, the immunity it               not alter the fact that he was acting on
provides to union attorneys does not apply         behalf of the Union. The fact that he may
because Stefan performed no services               have also have owed a duty to her does not
within the collective bargaining process.          remove the Atkinson bar.
Carino is correct that the protection of §
301(b) only applies where a union agent’s
liability grows out of activities performed                           IV.
in relation to a collective bargaining
                                                          Accordingly, guided by Atkinson
agreement. Wilkes-Barre, 647 F.2d at 377.
                                                   and Reis and the logic of the opinions of
However, her assertion that Stefan
                                                   our sister courts of appeals, we join these
provided no services because he convinced
                                                   courts in holding that § 301 of the LMRA
her to withdraw her grievance rather than
                                                   immunizes attorneys employed by or hired
arbitrate it is clearly incorrect. Stefan’s
                                                   by unions to perform services related to a
actions, tortious or otherwise, grew out of
                                                   collective bargaining agreement from suit
the retention of his law firm by the Union
                                                   for malpractice. Thus, for all of the
to represent Carino during the arbitration
                                                   reasons above, we will affirm.
of the grievance the Union had filed on her
behalf under the collective bargaining
agreement. While he may have deceived
Carino into withdrawing her grievance,
advising her to withdraw was an activity
performed in relation to the collective
bargaining agreement. The fact that he did
not take the matter to arbitration “is
insufficient to distinguish it from the
activity by union attorneys which has


                                               7
