Opinion ID: 755760
Heading Depth: 2
Heading Rank: 2

Heading: The Impact of Dunlop-McCullen's Previous Cases

Text: 20 On February 24, 1994, Dunlop-McCullen filed a pro se complaint (the 1994 Complaint) in the district court against the Union, two of the individual defendants in this action, and the Retail Wholesale and Department Store Union AFL-CIO (the International). See Dunlop-McCullen v. Local 1-S RWDSU-AFL-CIO, No. 94 Civ. 1254, 1994 WL 478495 (S.D.N.Y. Sept. 1, 1994) (finding that Dunlop-McCullen's complaint survives defendants' Fed.R.Civ.P. 12(e) motion for a more definite statement); Dunlop-McCullen v. Local 1-S RWDSU-AFL-CIO, No. 94 Civ. 1254, 1996 WL 3940 (S.D.N.Y. Jan. 3, 1996) (granting defendants' motion for summary judgment). His complaint contained several causes of action including violations of § 301 of the National Labor Relations Act, 29 U.S.C. § 185, and various sections of LMRDA, 29 U.S.C. §§ 411, 501(b), & 529. Dunlop-McCullen, 1996 WL 3940, at  1. 21 The 1994 Complaint was based on the following facts. In September 1992, Dunlop-McCullen became a candidate for Executive Vice-President of the Union. 1996 WL 3940, at  1. Pursuant to Department of Labor rules, he was entitled, at his own expense, to have the union mail his campaign literature. Id. On December 21, 1992, he was billed $1601.50, the amount the Union incurred from his election mailing. Id. Dunlop-McCullen lost the election. 22 In April 1993, Dunlop-McCullen filed for bankruptcy. On November 24, 1993, the Union commenced an adversary proceeding against Dunlop-McCullen, under § 523(a) of the Bankruptcy Code (the Code), objecting to the discharge of the debt owed by him to the Union under §§ 727(a)(4)(A) and (D) of the Code. See In re Dunlop-McCullen, No. 1-93-12859-352, at 1 (Bankr.E.D.N.Y. July 31, 1995) (hereinafter Order Dismissing Adversary Proceeding). Dunlop-McCullen counterclaimed alleging that the Union violated the automatic stay provisions of § 362(a) of the Code and moved to dismiss the adversary proceeding. Id. at 1-2. 23 In September 1993, Dunlop-McCullen was elected the Queens Chairperson, entitled to sit on the Executive Board (the Board) of the Union. Dunlop-McCullen, 1996 WL 3940, at  1. On September 23, 1993, the Board voted to void Dunlop-McCullen's election because, according to the Union Constitution, he was ineligible to be elected officer. Id. To be eligible for any Union office, members have to be in continuous good standing for twelve months prior to being nominated for elective office. Id. at  2. According to the Union, in January 1993, Dunlop-McCullen ceased to be a member in good standing when he failed to pay the Union for mailing his 1992 campaign literature. Id. 24 In the 1994 Complaint, he alleged that when the Board voided his 1992 election and removed him from office in September 1993, he was disciplined without a hearing required under LMRDA, 29 U.S.C. § 411(a)(5), 529, and under the Local and International Unions' Constitutions. Id. at  2. Secondarily, Dunlop-McCullen alleged that the Union failed to process his grievances fairly, circumvented its obligations under collective bargaining agreements, committed fraud in persuading members to accept a new collective bargaining agreement, libeled him, and violated his rights to free speech and due process. Finally, similar to the instant action, Dunlop-McCullen claimed that the Union breached its fiduciary duties by allowing the non-member daughter of Samuels, a union official, to make use of a car rented by Local 1-S for Samuels, in violation of 29 U.S.C. § 501(b). 25 Meanwhile, on July 26, 1994, the Bankruptcy Court held a trial to resolve the adversarial proceeding initiated by the Union and Dunlop-McCullen's counterclaims; both parties were represented by counsel. Almost a year later, on July 31, 1995, the bankruptcy court found from the evidence that there was no false oath or account or withheld information such as would bar discharge of the debt and that Local 1-S was not fraudulently induced to incur the Debtor's debt to it within Section 523(a)(2)(A). Order Dismissing Adversary Proceeding, at 2. Furthermore, the bankruptcy court held that Local 1-S had willfully violated the automatic stay provisions. Id. As a result, the bankruptcy court ordered the Union to pay Dunlop-McCullen $800 in punitive damages and fees and disbursements to his attorney under Section 362(h) for willful violation of the automatic stay. Id. at 3. There is no evidence that these sums have been paid to Dunlop-McCullen by the Union. 26 In a separate order, the bankruptcy court ordered that Local 1-S will treat the Debtor as though he had been in good standing continuously for purposes of seniority, advancement, elective office, and any similar purpose and that Local 1-S will restore Debtor to his elected office as Chairman of the Macy's Queens Store for the remainder of the term for which he was elected in 1992. In re Dunlop-McCullen, No. 1-93-12859-352, at 2 (E.D.N.Y. July 31, 1995) (hereinafter Order Directing Remedial Relief). Further, the bankruptcy court determined that Dunlop-McCullen is now and has always been a member ... in good standing ... entitled to all the privileges ... attendant thereto, including his ... right to stand for future election. Id. at 2. As a result, Dunlop-McCullen regained his position on Local 1-S's Executive Board--a position he still holds. 27 In the district court proceedings, also in late July 1995, defendants filed motions for summary judgment on all of Dunlop-McCullen's claims, which were granted on January 3, 1996. The district court held that under the LMRDA and the Union's Constitution removal from office did not constitute discipline requiring due process and that the Union's good standing requirement was not shown to be unreasonable or unevenly applied to Dunlop-McCullen. Dunlop-McCullen, 1996 WL 3940, at  2. In analyzing Dunlop-McCullen's second set of allegations individually, the district court found them each to be without merit. Lastly, the district court ruled that Dunlop-McCullen failed to adduce evidence sufficient to show that plaintiff formally requested the Executive Board of Local 1-S to institute legal proceedings against Samuels. Id. at  4. On February 22, 1996, judgment was entered dismissing the complaint in favor of defendants. 28 Dunlop-McCullen appealed to this Court, which affirmed the district court by summary order. Dunlop-McCullen v. Local 1-S RWDSU-AFL-CIO, No. 96-7104, 1996 WL 614814 (2d Cir. Oct. 25, 1996). On November 8, 1996, the International and the Local each submitted a separate statement of costs in the amounts of $1037.76 and $1063.83, respectively, but only one was filed. On January 10, 1997, however, the Clerk of this Court filed an amended order for bills of costs for the International and the Local in the amounts of $929.66 and $946.65, respectively. According to the records of the Clerk of the Court for the Southern District of New York, no satisfaction of judgment has been filed on either of these awards. 29 After analyzing Dunlop-McCullen's previous cases involving the Union, we find that the plaintiff does not have unclean hands which would bar him from obtaining leave to file a complaint under section 501(b) of the LMRDA. First, the magistrate judge's Report overstates the causal connection between Dunlop-McCullen's bankruptcy proceeding and his failure to pay his campaign debt to the Union. The district court in the previous case made no finding that Dunlop-McCullen filed for bankruptcy with the express and sole purpose of avoiding his debt to the Union. On the contrary, after a full trial on that very issue, in which the Union's interests were duly represented by counsel, the bankruptcy court found that Dunlop-McCullen was guilty of no wrongdoing that might disentitle him to a discharge of the debt. The bankruptcy court even went so far as to order that Dunlop-McCullen be reinstated to his elective office. We think that it would be inappropriate here to second-guess the bankruptcy court by reaching our own determination that Dunlop-McCullen was bent on wasting the Union's assets in declaring bankruptcy which discharged his debt to the Union. Therefore, we find that the outcome of Dunlop-McCullen's previous bankruptcy proceeding does not provide evidence of plaintiff's unclean hands which would prevent his reasonable likelihood of success in the instant § 501(b) proceeding. 30 In contrast, we think that a plaintiff's failure to pay an assessment of costs awarded to the Union (by prior order of this Court) in a previous case may be evidence of unclean hands where the plaintiff alleges that officers of the same Union wasted its assets in violation of 29 U.S.C. § 501(a). Nonetheless, the Union has outstanding debts to Dunlop-McCullen in the form of punitive damages and attorney's fees from the bankruptcy proceeding that roughly equal what Dunlop-McCullen owes the Union in costs from the appellate proceeding in the previous case. Plus, Dunlop-McCullen received his bankruptcy judgment against the Union in July 1995, more than a year before the Union received its judgment for appellate costs against him in November 1996. Thus, any evidence that Dunlop-McCullen wasted the union's funds in the amount taxed in appellate court costs should be counterbalanced by bankruptcy court damages and fees due to him from the Union. Further, Dunlop-McCullen is correct that because the International Union is not a party to the instant proceeding any costs awarded to it in the previous case have little bearing on our determination of his unclean hands vis a vis a new action against the Local Union. 31 As discussed above, in determining whether the doctrine of unclean hands bars an equitable remedy, courts are permitted to weigh the wrongdoing of the plaintiff against the wrongdoing of the defendant. 11A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Federal Practice and Procedure: Civil 2d § 2946, at 112. Where, as here, the wrongful conduct of both the plaintiff and the defendants are remarkably similar in quality and extent, equity requires this Court to look to whether the defendants' wrongdoing alleged in the complaint is of a greater magnitude than the plaintiff's wrongdoing. Admittedly, more than a few of the claims that Dunlop-McCullen alleged are not actionable under § 501(b). For example, § 501(b) provides no basis for his claims regarding the sweetheart deal with Macy's or the improper tenure of Pizzingrillo as shop steward. See Gurton v. Arons, 339 F.2d 371, 375 (2d Cir.1964) ([Section 501] applies to fiduciary responsibility with respect to the money and property of the union and ... it is not a catch-all provision [permitting suit] on any ground of misconduct.). Dunlop-McCullen, however, has alleged claims that centrally challenge [the] misuse of union 'money and property.'  Guzman v. Bevona, 90 F.3d 641, 646 (2d Cir.1996) (quoting 29 U.S.C. § 501(a)). Especially in view of the fact that any wrongdoing attributable to the plaintiff is counter-balanced by that attributable to the defendants, the additional alleged misdeeds of defendants are sufficient to permit this litigation to proceed further. Therefore, Dunlop-McCullen should not be prevented from being granted leave to file suit under § 501(b) based on the unclean hands doctrine. Accordingly, we remand this case for further consideration by the district court consistent with this opinion. 4