Austin v. Trandell

207 F. Supp. 2d 616, 2002 U.S. Dist. LEXIS 10416, 2002 WL 1306906
CourtDistrict Court, E.D. Michigan
DecidedMay 28, 2002
Docket00-74166
StatusPublished
Cited by5 cases

This text of 207 F. Supp. 2d 616 (Austin v. Trandell) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Austin v. Trandell, 207 F. Supp. 2d 616, 2002 U.S. Dist. LEXIS 10416, 2002 WL 1306906 (E.D. Mich. 2002).

Opinion

MEMORANDUM AND ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

COHN, District Judge.

I. Introduction

This is a labor case under section 501(b) of the Labor Management Reporting Dis *618 closure Act, 29 U.S.C. § 501 (LMRDA) claiming breach of fiduciary duty. As will be explained below, the case as it is currently configured, based on plaintiffs’ most recent pleading, consists of plaintiffs Eugene Austin, Janice Austin, Dale Garrish (Garnish) and Gerald McDonald (McDonald) who are suing union officers, Larry Trandell, Ron Miller, Roger Coats, and Rick Maks for their alleged improper use of union funds to the settlement of a sexual harassment lawsuit against another union officer, Donny Douglas. Before the Court is defendants’ motion to dismiss on the grounds that certain plaintiffs lack standing, that plaintiffs’ § 501 claims are time-barred, and plaintiffs fail to state a valid claim under § 501. For the reasons which follow, the motion will be granted and this case will be dismissed.

II. Background

A. Factual Background

Plaintiffs are members of UAW Local 594 (Local 594), which 'is the collective bargaining unit for employee of General Motors Corporation at its Pontiac, Michigan Truck and Bus facility. As of 1995, defendants Larry Trandell (Trandell), Roger Coats (Coats), and Rick Maks (Maks) were the highest ranking officers of Local 594; Donny Douglas (Douglas) was president, Trandell was vice-president, Coats was financial-secretary, and Maks was recording secretary.

In November, 1995, Cynthia Van Dusen (Van Dusen), Douglas’s secretary, sued Douglas for sexual harassment and assault and battery (the ‘Van Dusen lawsuit”). Van Dusen also included Local 594, as Douglas’s employer, as a defendant in the case.

Local 594 retained a number of attorneys to represent it in defending against the Van Dusen lawsuit: Carlton R. Rouser, Terry J. Pawlowski of the law firm of Harvey, Kruse, Westen & Milan, P.C., and the law firm of Brady Hathaway. Douglas retained, as his personal attorney, Phillip Seymour of the law firm Cooper, Sehiff-man, Gabs, Quinn & Seymour. All of the attorneys and law firms involved were originally named defendants in this case.

Douglas denied any wrongdoing and Local 594 argued that it had no liability because Douglas’s conduct was outside the scope of his authority as President of Local 594. The Van Dusen lawsuit was settled January 1999, in paying Van Dusen $80,000 in workers’ compensation benefits and an additional $150,000.

Under the terms of the settlement agreement, which was confidential, each party was to pay its own attorney fees. Initially, ULICO, Local 594’s insurance carrier, paid the legal fees of Pawlowski and Harvey Kruse under the indemnification clause of Local 594’s insurance agreement. However, in late 1996-1997, ULI-CO obtained a declaratory judgment in state court that it did not have to indemnify Local 594 for Douglas’s actions. Local 594 paid the attorney fees of both firms, as well as the fees of Douglas’s attorney, out of its treasury; Douglas, Miller, Trandell, Coats, and Maks approved the payments of the attorney fees.

The Van Dusen lawsuit was the subject of a union meeting on November 8, 1998. None of the named plaintiffs objected to the unions actions at that time. It is not known whether any other union members raised any concerns or objections.

On February 21, 1999, a union meeting was held at which Eugene Austin and Janice Austin demanded an accounting of the monies spent out of the union’s treasury regarding the Van Dusen lawsuit. Defendants apparently refused to answer questions about the Van Dusen lawsuit and the payments to the attorneys. Eugene Austin also requested permission to move that the union members not be responsible for any monies spent on the Van Dusen law *619 suit. Eugene Austin was ruled “out of order.”

On February 10, 2002, at another union meeting, McDonald offered a motion that Local 594 sue defendants to recover all monies spent in the settlement of the Van Dusen case, including attorney fees. The motion was ruled “out of order.” Also at the meeting, Eugene Austin asked Tran-dell if the union dues were used to pay Trandell’s attorney in the Van Dusen ease. Trandell replied no. J. Austin then stated that she had information that Local 594 paid Douglas’ attorney for the Van Dusen lawsuit, to which Trandell replied he “did not know anything about that.”

B. Procedural History

On September 18, 2000, Garrish and McDonald, as individuals and “on behalf of a class of 5000 members of the UAW Local 594” filed a Complaint and jury demand naming Douglas, Miller, Trandell, Coats, and Maks, as well the law firms and lawyers that represented UAW Local 594 in the Van Dusen lawsuit, as defendants (the Initial Complaint). The complaint asserted a claim of criminal conspiracy under 18 U.S.C. § 1961 (RICO) and a breach of fiduciary claim under § 501.

In November and December 2000, all of the defendants filed motions to dismiss or for summary judgment. These motions were not acted on.

On January 12, 2001, before responding to defendants’ motions, Garrish and McDonald filed a First Amended Complaint against Douglas, Miller, Coats, Trandell and Maks, and the various law firms and lawyers involved in the Van Dusen lawsuit. The First Amended Complaint was also filed “on behalf of a class of 5000 members of the UAW Local 594.” The First Amended Complaint made the following three claims:

1. Violation of 29 U.S.C. § 501 by Douglas, Miller, Trundle, Coats, and Maks, for breach of fiduciary duty for paying Douglas’s attorney fees out of the Local 594 treasury without informing the union members or Executive Board as such, as well as for paying the settlement money to Van Dusen without prior approval by the union members;
2. Criminal conspiracy under RICO, 18 U.S.C. § 1961, by all the defendants for conspiring to embezzle funds from Local 594 to pay for Douglas’s personal attorney and the settlement funds paid to Van Dusen. . Plaintiffs say that Douglas, Miller, Trundle, Coats, and Maks had no authority to authorize payments for attorney fees without the members’ approval and that all the attorneys and law firms knew so when they accepted the money. Plaintiffs also say that the defendants conspired ■ together to defraud Local 594, and protect Douglas, by causing Local 594 to pay for Douglas’s personal tortious conduct by failing to have Local 594 bring a third-party complaint against Douglas. Plaintiffs further say that Douglas, Miller, Trundle, Coats, and Maks lied to the UAW International Union as to the reason why Local 594 needed to borrow money from it; '
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Cite This Page — Counsel Stack

Bluebook (online)
207 F. Supp. 2d 616, 2002 U.S. Dist. LEXIS 10416, 2002 WL 1306906, Counsel Stack Legal Research, https://law.counselstack.com/opinion/austin-v-trandell-mied-2002.