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Opinions – 8/15/11: U.S. District Court of Maryland

Civil Procedure

Removal

BOTTOM LINE: In a lawsuit originally filed in state court involving federal claims against two defendants, it was sufficient for one defendant’s notice of removal to state that defendant had confirmed with co-defendant’s counsel that co-defendant had agreed to the removal of the action to federal court.

CASE: Mayo v. Board of Education of Prince George’s County, Civil No. JFM-11-1-52 (filed July 14, 2011) (Judge Motz). RecordFax No. 11-0714-40, 7 pages.

FACTS: Larry Mayo and other plaintiffs were temporary school district employees. Plaintiffs instituted a putative class action in circuit court against the Board of Education of Prince George’s County, Maryland (the “Board”), Verjeana Jacobs, the Association of Classified Employees/American Federation of State, County, and Municipal Employees, Local 2250, AFL–CIO (“Local 2250”).

The dispute arose from the fact that for many years the Board employed numerous persons, including plaintiffs and the members of the putative class, as “temporary employees.” Plaintiffs asserted state law claims against Local 2250 and the Board, and federal constitutional claims against the Board and Jacobs.

The Board and Jacobs removed the action to federal district court. In their notice of removal, their counsel stated that they confirmed with counsel for Local 2250 and that Local 2250 agreed with the removal of the action. Plaintiffs filed a motion to remand the case to state court, arguing that Local 2250 did not file its own notice of removal or any other writing with the court reflecting that it consented to the removal.

The Board and Jacobs filed a motion to dismiss or for summary judgment, and Local 2250 filed a motion to dismiss.

The district court denied plaintiffs’ motion to remand and granted defendants’ motions to dismiss.

LAW: The basis of plaintiffs’ motion to remand was that Local 2250 did not file its own notice of removal or any other writing with the court reflecting that it consented to the removal.

While there was some authority to support plaintiffs’ position, those cases were factually distinguishable in that in those cases, the notice of removal filed by one defendant either did not mention other defendants at all or stated that other defendants “did not object to removal,” rather than that they “consented to removal.” See, e.g., Roe v. O’Donohue, 38 F.3d 298 (7th Cir.1994).

In contradistinction to those cases, the Sixth Circuit has squarely held that where the removing defendant expressly states that counsel for the removing defendant has obtained concurrence to the removal from another defendant whose consent to removal was required, the removal is effective. See Harper v. AutoAlliance Int’l, Inc., 392 F.3d 195 (6th Cir.2004). The Fourth Circuit likewise appears to have so ruled. See Darcangelo v. Verizon Commc’ns, Inc., 292 F.3d 181 (4th Cir.2002). The rule enunciated in Harper and followed in Darcangelo is the preferable one.

Although the removal statute should be strictly construed, there is a difference between strictly construing a statute and creating requirements that a statute itself does not impose. Nothing in 28 U.S.C. §1441 or §1446 imposes a requirement that a defendant submit a writing to the court reflecting consent to removal. Rather, all that the removal statutes require is that the defendant consent to the removal. It may be assumed that generally attorneys will act professionally and will not represent in a notice of removal that another defendant has consented to the removal unless that defendant has, in fact, consented, either orally or in writing. Moreover, Fed.R.Civ.P. 11 provides a fully satisfactory deterrent to misrepresentation by an attorney as to whether a co-defendant has consented to removal.

Therefore, the removal statute did not require that local union submit written consent to removal. Accordingly, the district court denied plaintiffs’ motion to remand the case to state court.

COMMENTARY: The only federal claim asserted by plaintiffs was one against the Board and Jacobs, the Board chair. Plaintiffs sought compensatory damages against those defendants under 42 U.S.C. §1983 on the ground that they violated the due process clause of the Fourteenth Amendment by not paying them wages compensation as permanent employees.

However, state agencies are not “persons” within the meaning of §1983. See Will v. Mich. Dep’t of State Police, 491 U.S. 58 (1989). Furthermore, the Eleventh Amendment bars damage claims against state agencies and their officials. See Huang v. Bd. of Governors, 902 F.2d 1134, 1138 (4th Cir.1999). As plaintiffs themselves averred their complaint, the Board is a component of the State of Maryland under the Maryland State Department of Education and the Maryland State Board of Education. Likewise, Jacobs, the Board chair, was therefore a state official. As such, plaintiffs’ claims against these entities were not cognizable.

The Court also considered plaintiffs’ state law claims against Local 2250 and the Board. In Count I, plaintiffs sought a judgment against all defendants declaring that plaintiffs and the temporary employees become permanent employees of the Board after 60 days employment, that plaintiffs and the Temporary Employees were entitled to damages for the period commencing 60 days after their employment with the Board started, and the amount of plaintiffs’ and the Temporary Employees’ damages. Count I was flawed in that it requested that the court render a merely advisory opinion. Moreover, it failed to state a claim upon which relief can be granted because the arbitration decision upon which it was based was absolutely inconsistent with the requested relief, as the arbitrator expressly declined to convert temporary employees to permanent employees and to order that they be given back pay.

In Count II, plaintiffs asserted a claim for a breach of duty of fair representation against Local 2250. However, the arbitrator declined to convert temporary employees to permanent employees and expressly recognized that because Local 2250 was not the exclusive bargaining agent for temporary employees, Local 2250 did not owe a duty of fair representation to plaintiffs. See Md.Code Ann., Educ. § 6–509(b). Moreover, even assuming that Local 2250 did owe a duty of fair representation to plaintiffs, plaintiffs’ claim was untimely, because the most analogous limitations period for the bringing of claims for the breach of a duty of fair representation under Maryland law is the 90-day period established by the regulations of the State Labor Relations Board. See Md.Code Regs. 14.32.05.01.

With regard to Count III, in which plaintiffs asserted a breach of contract claim against the Board, plaintiff’s appropriate remedy was to seek administrative relief from the PSLRB. Cf. Bd. of Educ. v. Hubbard, 305 Md. 774 (Md.1986).

Thus, none of plaintiffs’ state law claims against these defendants were cognizable.

PRACTICE TIPS: Even if a plaintiff does not attach a copy of an arbitration decision to a complaint, a district court reviewing the plaintiff’s claim may consider the arbitration decision if the decision is integral to the plaintiff’s claim.

Civil Procedure

Standing

BOTTOM LINE: A nonprofit organization dedicated to ensuring equal opportunities in housing for persons with disabilities had organizational standing to sue a residential property company under the Fair Housing Act because the defendant company’s violations perceptibly impaired the organization’s ability to advance its mission.

CASE: Equal Rights Center v. Equity Residential, Civil Action No. CCB-06-1060 (filed July 22, 2011) (Judge Blake). RecordFax No. 11-0722-40, 34 pages.

FACTS: The Equal Rights Center (“ERC”), a nonprofit organization based in Washington, sued Equity Residential and ERP Operating L.P. (collectively, “Equity”), alleging that Equity repeatedly and continually designed and constructed properties that violated the Fair Housing Act (FHA), 42 U.S.C. §§3601–3619, and Title III of the Americans with Disabilities Act, 42 U.S.C. §§12181 et seq. The ERC alleged that those violations rendered the properties inaccessible to persons with disabilities.

Equity moved to dismiss the complaint, arguing that the ERC did not allege facts sufficient to establish standing under Article III of the Constitution. The district court judge to whom the case was then assigned, denied the motion.

Equity then moved for partial summary judgment, also for lack of standing, but this time on the basis of facts established through discovery. The district court granted Equity’s motion in part and denied it in part, finding that the ERC showed standing to pursue its claims under the FHA, but not under Title III of the ADA.

LAW: The only issue before the court was the ERC’s standing to sue. The court first considered the ERC’s standing to pursue its claim under the Fair Housing Act (“FHA”), which authorizes any “aggrieved person,” defined as any person who claims to have been injured by a discriminatory housing practice or believes that such person will be injured by a discriminatory housing practice that is about to occur, to commence a civil action in an appropriate United States district court or State court to obtain appropriate relief” for violations of the Act. 42 U.S.C. §§3602(i); 3613(a)(1)(A). The term “person” includes associations.

This remedial provision extends standing under the Act to the full extent permitted by Article III of the Constitution. See Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209 (1972). Because Congress has precluded courts from imposing additional standing barriers to claims arising under the FHA, a plaintiff has standing under the FHA so long it as can establish constitutional standing. One aspect of the case-or-controversy requirement is Article III standing, which requires that any plaintiff, including an organizational plaintiff, allege and prove that it has “such a personal stake in the outcome of the controversy as to warrant” the exercise of federal jurisdiction. Warth v. Seldin, 422 U.S. 490, 498 (1975). To establish constitutional standing, a plaintiff must establish that: (1) it has suffered an “injury in fact” that is concrete and particularized and actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely that the injury will be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000).

An organization may establish standing either by suing on its own behalf when it seeks redress for an injury suffered by the organization itself, or by suing on behalf of its members. White Tail Park, Inc. v. Stroube, 413 F.3d 451, 458 (4th Cir. 2005). The former is generally known as organizational standing, the latter as associational standing. Here, the ERC asserted standing based solely on organizational standing. Specifically, it asserted that Equity’s alleged discriminatory practices injured the organization itself because they required the ERC to divert a substantial amount of resources away from other organizational activities, which in turn frustrated its mission of ensuring equal housing opportunities for people with disabilities.

The Supreme Court addressed the standing of organizations to bring FHA claims in Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982). In Havens, the Court held that a concrete and demonstrable injury to an organization’s activities, with the consequent drain on the organization’s resources, constituted far more than simply a setback to the organization’s abstract social interests. Thus, an organization suffers an injury-in-fact sufficient to satisfy the first prong of the Article III standing analysis where the organization incurs expenditures in identifying and counteracting a company’s violations of the FHA and those expenditures perceptibly impair the organization’s ability to advance its mission.

In this case, there was at least a genuine issue of material fact as to the ERC’s standing. The evidence showed that the ERC suffered an injury when, pursuant to its mission to promote fair housing for persons with disabilities, it expended resources to investigate and counteract Equity’s alleged discriminatory practices through pre-testing investigation, testing, and a post-testing floor-plan review. The ERC also expended resources counteracting Equity’s alleged FHA violations. By expending those resources to identify and counteract Equity’s alleged violations of the FHA, the ERC’s ability to advance its mission of promoting accessible housing for persons with disabilities was perceptibly impaired. As such, under Havens, the ERC did suffer an injury-in-fact sufficient to satisfy the first prong of the Article III standing analysis.

The next question was whether that injury was traceable to Equity’s alleged violations of the FHA. When the ERC began investigating in the summer of 2005 whether Equity was complying with the FHA, it knew that various other multifamily housing developers, including every developer with properties tested in Washington, were in violation of the Act. Based on the substantial evidence of widespread violations by other developers, the ERC decided that it was worth expending resources on an investigation of Equity. As soon as it began sending testers to inspect Equity properties, it found violations of the Act. Indeed, the ERC tested 61 Equity properties, and found violations of the FHA at every property tested.

Equity argued that the expenses the ERC incurred in conducting these tests could not be traced to Equity because the ERC did not have reason to believe before it began investigating Equity that Equity specifically, as opposed to any other developer, had violated the Act. However, Havens does not require that an organization suffer an injury before it begins an investigation; in fact, the Havens Court expressly held that an organization’s diversion of resources to “identify and counteract” the defendant’s discriminatory practices are sufficient to allege standing under the FHA, so long as the need to divert those resources frustrated its mission. Indeed, the Court expressly did not require that an organization show that the resources it spent to “identify and counteract” the defendants’ actions were expended before it began investigating those actions. Havens, 455 U.S. at 379. Thus, even assuming without deciding that the cost of sending testers to the very first Equity property tested was not traceable to a violation of the FHA by Equity, it was clear that as soon as the ERC discovered that at least one Equity property was in violation of the Act, every subsequent expense associated with the ERC’s investigation of Equity and counteraction of its alleged violations is traceable to those violations.

Equity also argued that even if the ERC expended resources in response to Equity’s actions prior to filing suit, it could not show that resources were specifically expended to investigate Equity’s properties. However, the ERC separately accounted for the time and expense devoted to investigating Equity, disaggregating the resources expended on those efforts from those expended on efforts to investigate and combat discrimination by other multifamily housing developers. Therefore, the fact that the ERC was investigating other developers at the same time it was investigating Equity did not defeat the ERC’s standing to sue Equity.

For these reasons, the ERC proffered sufficient evidence from which a reasonable jury could find that Equity’s alleged discriminatory practices perceptibly impaired the ERC’s ability to provide its existing services and thereby frustrated its mission of ensuring equal housing opportunities for people with disabilities. Equity did not dispute that a favorable decision would redress the injury. As such, the ERC had standing to sue Equity based on Equity’s alleged violations of the FHA.

Accordingly, insofar as Equity’s cross-motion for partial summary judgment concerns the ERC’s standing under the FHA, it was denied.

COMMENTARY: The court also considered the issue of the ERC’s standing to sue under Title III of the ADA. Title III authorizes a person to seek injunctive relief if the person “is being subjected to discrimination on the basis of disability” or “has reasonable grounds for believing that such person is about to be subjected to discrimination. 42 U.S.C. §12188(a)(1). The language of Title III’s remedial provision is narrower than the corresponding provisions in Titles I and II of the ADA.

Because the ERC pointed to no evidence that the organization itself was being subjected to discrimination on the basis of disability or that it had reasonable grounds for believing that it was about to be subjected to discrimination, it did not have statutory standing under Title III of the ADA.

PRACTICE TIPS: Some courts have treated “diversion of resources” and “frustration of mission” as independent, alternative ways an organization can show injury-in-fact. However, the Supreme Court has described “diversion of resources” and “frustration of mission” as two aspects of the same damages: an organization has standing where the defendant’s practices require the organization to divert resources to investigating and counteracting those practices, which in turn frustrates the organization’s ability to advance its mission. Although it is conceivable that a distinction between “diversion of resources” and “frustration of mission” could become relevant at the damages stage, the court will treat them as one and the same for standing purposes.

Labor & Employment

Labor-Management Reporting and Disclosure Act

BOTTOM LINE: Secretary of Labor was entitled to judgment as a matter of law in lawsuit seeking to overturn a union election on the grounds that the election violated the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”), where it was undisputed that the union used the employer’s fax machines, copiers, computers, and email system on behalf of candidates.

CASE: Solis v. Local 9477, Civil Action No. JKB-09-3375 (filed July 21, 2011) (Judge Bredar). RecordFax No. 11-0721-40, 8 pages.

FACTS: In this action, the Secretary of Labor, Hilda Solis, sought to overturn a union election conducted by Local 9477 of United Steelworkers at the Severstal Sparrows Power Plant on April 20, 2009. Specifically, the Secretary claimed that the election violated the standards set forth in the Labor–Management Reporting and Disclosure Act of 1959 (“LMRDA”).

The Secretary filed a motion for summary judgment, which was granted by the district court.

LAW: To ensure free and fair union elections, the LMRDA provides that “no moneys of an employer shall be contributed or applied to promote the candidacy of any person in any election.” 29 U.S.C. §481(g). In §401(g), the Department of Labor promulgated a regulation designed to clarify this statutory ban on use of employer resources in union elections. Section 401(g) provides that no money of an employer is to be contributed or applied to promote the candidacy of any person in an election subject to the provisions of Title IV.

In this case, Defendant Local 9477 did not dispute that it was subject to the Labor–Management Reporting and Disclosure Act of 1959 (“LMRDA”), or that the union officer election it conducted on April 20, 2009, at the Severstal Sparrows Point Plant in Maryland was subject to the LMRDA’s prohibition on contribution of employer funds to promote any individual’s candidacy. Neither did Local 9477 dispute that Sparrow Point’s fax machines, copiers, computers, and email system were utilized on behalf of candidates in the time leading up to the election. Examples of conduct drawing the attention of the Secretary of Labor included the faxed transmission of a biography of the incumbent slate’s candidate for vice president, Jeff Mikula, and the mass photocopying of the Mikula flier and a letter from the incumbent president, John Cirri, that raised questions about the United Steelworkers for Action, who, apparently after the letter was written, formed the insurgent slate. In addition, an email message was sent to 14 employees asking them to hand out campaign literature.

If a violation of LMRDA is shown by the preponderance of the evidence, then a prima facie case has been established. Wirtz v. Hotel, Motel and Club Emp. Union, Local 6, 391 U.S. 492, 506–07 (1968). The burden then shifts to the defendant to produce evidence to support a finding that the violation did not affect the result. Id. at 507. Here, the union’s argument rested on the theory that use of an employer’s email system has not been held to constitute a violation of the LMRDA, and on the assertion that the use of the email system in this instance had no effect on the outcome of the election.

There is, however, no legal distinction between the use of an email system to promote someone’s candidacy and the use of a fax machine or photocopier to do the same. Accordingly, the use of an employer’s email system to promote a candidate in a union election constituted a violation of the LMRDA. And, while Local 9477 argued that the email message had no effect on the election, the applicable standard is merely whether a violation may have affected an election. 29 U.S.C. §482(c)(2).

Local 9477 produced no evidence to rebut the prima facie case established by the LMRDA violation; it simply noted that the email message was sent to 14 people asking them to hand out campaign literature and somehow deduced from that the conclusion that the message did not affect the election’s outcome. As noted, this deduction had no evidentiary support, and Local 9477 failed to rebut the prima facie case.

Consequently, the Secretary established that the email message may have affected the outcome of the union election. Moreover, regardless of the result reached on this one violation, the other statutory violations were well established and provided an independent basis for concluding the election was not free and fair as contemplated by the LMRDA. Thus, there existed no genuine dispute of material fact, and the Secretary was entitled to judgment as a matter of law.

Accordingly, the Secretary’s motion for summary judgment was granted.

COMMENTARY: Local 9477 further argued that any violations by the incumbent slate of the LMRDA were “more than offset” by violations of the statute by the insurgent slate. Local 9477 cited a number of instances in which the insurgent slate put up stickers in the areas frequented by employees, used the company’s golf cart and a company truck to travel to a different department to campaign and to distribute campaign literature, and utilized the company’s telephone system, photocopy machines, and email system for campaign purposes. However, while the union cited two cases to support its argument, those cases arose in a significantly different procedural posture and did not support the union’s position.

In the first case, Bernsen v. U.S. Dept. of Labor, the defendant Department of Labor determined that opposing candidates’ violations of the LMRDA offset each other and had no net effect on the outcome of the union election, thus concluding the election should not be overturned. The district court there held the defendant’s use of a “net effect” analysis was rational and defensible and was neither arbitrary nor capricious nor contrary to law. Bernsen v. U.S. Dept. of Labor, 979 F.Supp. 32, 38 (D.D.C.1997). However, the instant case developed in a different manner. In the present case, the Secretary did not render a decision that was in issue and would thus be subject to the Court’s review; rather, the present case presented, through the Secretary’s complaint, the issue of whether the violations of the LMRDA may have affected the outcome of the election. The Secretary is accorded a measure of discretion under the LMRDA in the investigation of complaints under the Act to determine whether probable cause exists to support an enforcement action. 29 U.S.C. §§482(b), 521(a). That a “net effect” analysis has been used by the Secretary in other circumstances did not mandate its use here, and the Bernsen case did not require a different conclusion.

Local 9477 also cited Shelley v. Brock, in which the Secretary had declined to bring suit to set aside a union election, and union members sought a writ of mandamus to compel suit for alleged LMRDA violations. See Shelley v. Brock, 793 F.2d 1368 (D.C.Cir.1986). The Shelley court found the Secretary’s reasons insufficient for the court to determine if the Secretary applied the statutory standard to his determination. Id. at 1374. However, the Shelley case did not mandate utilization of a “net effect” analysis. Indeed, a violation by the insurgent slate is as much a violation of the LMRDA as it is by the incumbent slate. Thus, neither of the cases relied upon by the union was procedurally apposite to the instant case or substantively persuasive.

PRACTICE TIPS: In the context of the LMRDA provision that “no moneys” of an employer shall be contributed or applied to promote the candidacy of any person in any election, the term “moneys” has been interpreted to mean anything of value, whether the expenditure be direct or indirect. No minimum amount is required before this prohibition is applied. The legislative history of the Act does not indicate that Congress meant to encourage troublesome factual disputes over how much (or little) money constitutes a “de minimis” amount; instead, any use of employer resources to promote a candidate’s campaign is prohibited.