Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

International Association of Machinists and Aerospace Workers, Afl-Cio v. Bonnie Werner-Masuda

December 11, 2012

INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO, PLAINTIFFS,
v.
BONNIE WERNER-MASUDA, KEVIN MCCORMICK, VICKIE WARLICK, RAY YOKOYAMA, EVERGREEN MANAGEMENT, AND EVERGREEN MANAGEMENT II, DEFENDANTS, AND UNION OF INDEPENDENT FLIGHT ATTENDANTS, DEFENDANT-APPELLANT/ CROSS-RESPONDENT, AND MCCORMICK ADVISORY GROUP, DEFENDANT-RESPONDENT/ CROSS-APPELLANT. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO, PLAINTIFFS,
v.
BONNIE WERNER-MASUDA, UNION OF INDEPENDENT FLIGHT ATTENDANTS, KEVIN MCCORMICK, VICKIE WARLICK, RAY YOKOYAMA, EVERGREEN MANAGEMENT, AND EVERGREEN MANAGEMENT II, DEFENDANTS, AND MCCORMICK ADVISORY GROUP, DEFENDANT-RESPONDENT/CROSS-APPELLANT.
IN THE MATTER OF HEROLD LAW, P.A., AND CHARLES F. WASKEVICH, JR., ESQUIRE, APPELLANTS/CROSS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-0537-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 29, 2012

Before Judges Cuff, Waugh, and St. John.

Defendants Union of Independent Flight Attendants (UIFA) and McCormick Advisory Group (MAG) appeal orders entered by the Law Division in connection with UIFA's claims against MAG for breach of contract. In a separate appeal, Herold Law, P.A. (Herold Law), and Charles F. Waskevich, Jr., a partner at Herold Law, appeal from an order of the Law Division imposing sanctions in connection with the mistrial declared during the first trial of UIFA's claims against MAG, at which they represented UIFA. The appeals were argued together, and we now consolidate them for the purposes of this opinion. We affirm all orders on appeal except the order dismissing the claims concerning successor liability, which we vacate and remand for further consideration.

I.

We discern the following facts and procedural history from the record on appeal.

A.

UIFA was formed by a group of flight attendants who worked for Continental Airlines. They were unhappy with their existing union, the International Association of Machinists and Aerospace Workers (IAM), which is affiliated with the AFL-CIO. After attempting to reform IAM from within, they decided to create a new union and seek its certification to replace IAM as the representative of Continental's flight attendants.

In the spring of 2003, Vickie Warlick, a Continental flight attendant who had been an officer of IAM's Newark local, approached Andrea Estelle for advice on creating a new union. Estelle, a Continental flight attendant based in Houston, had been involved in an earlier, unsuccessful attempt to create a new union. Estelle told Warlick about her experience, agreed to assist her, and recommended that they consult Kevin McCormick at MAG.

MAG's brochure described the company as an advisor, assisting "labor organizations, professional and non-profit associations," and other membership associations achieve their goal of vesting control with the membership. MAG offered "a full range of consulting, management, financial, and administrative services, specializing in the creation, development, and ongoing operations of associations." The only reference to legal services in the brochure was under the heading of consulting. It stated that MAG could "[a]dvise on and recommend legal, insurance, accounting, and labor relations professionals" for use by its client associations.

In December 2003, Estelle contacted McCormick and set up a meeting for early 2004. Estelle also attempted to enlist the support of Bonnie Werner-Masuda, a Newark-based Continental flight attendant who had been Warlick's ally in connection with efforts at internal reform of IAM. However, Werner-Masuda was still an officer in IAM's Newark local. Although she declined to attend the MAG meeting because she wanted to continue her efforts to reform IAM from within, Werner-Masuda told Estelle that she had a list containing the names and addresses of Continental flight attendants.

On January 20, 2004, Warlick, Estelle, Ray Yokoyama, Jo Anne Allen, Nelson Lee, and Jeffrey Palledino, all Continental flight attendants, met with McCormick and his assistant Darlene Bolduc. McCormick told them that MAG would help set UIFA up "as a legal entity" by "get[ting them] templates of constitutions and bylaws so they [could] start creating their own." MAG would also assist them with writing their campaign strategy. In addition, MAG would do UIFA's "books and records, [its] tax returns, and keep [its] . . . dues collection, . . . and report that back to the Board," as well as keep UIFA's files, answer the telephone, and handle newsletters or correspondence.

Because of UIFA's initial inability to pay, McCormick told them that MAG would keep track of the hours spent by MAG on consulting and administrative services, and would bill UIFA once it had been certified. Until that time, UIFA would only be required to pay for out-of-pocket expenses, the funding for which could come from donations and fundraisers held by the initial UIFA members. If UIFA were to be unsuccessful in obtaining certification, McCormick and MAG would not be compensated for their efforts.

Bolduc explained that she would handle "the administrative end," including filing reports with the United States Department of Labor, data entry, and financials. She would also keep count of the cards signed by Continental flight attendants authorizing an election to choose a new union. Bolduc told the group that UIFA would have one year from commencement of its campaign to obtain authorizations from fifty percent plus one of the Continental flight attendants, approximately 5000 cards. They could then file for an election with the National Mediation Board.

There was a discussion of legal services, the nature of which was a hotly disputed issue during the trial and is central to this appeal. Warlick claimed that McCormick told them "that he was in the business of providing administrative, legal, and financial assistance to groups like ours that" were restricted by "the AFL/CIO umbrella" in such a way that their only alternative was to form an independent union. According to Warlick, McCormick said that UIFA would have the "top legal labor firm, Seham, Seham, and Peterson [(the Seham firm)], working for" them.

Warlick further claimed that McCormick showed them letters and literature from Seham regarding their work with flight attendants and a mechanics association involving another airline. Based on the letters, Warlick understood that, if UIFA used MAG, the Seham firm would be their attorneys and would be paid on a contingency basis. She asserted that McCormick promised that they would receive the same services and the same legal firm as flight attendants for other airlines who had worked with MAG.

Allen agreed that McCormick told the group that he was able to provide an attorney for UIFA and its members, and they "would have access to Mr. Seham anytime we may have needed him." She claimed McCormick made it sound like he had "a partnership" with the Seham firm. "He indicated to us and told us that he and Lee Seham worked together, and that any legal questions we had, he would refer them to Mr. Seham, and that was part of the entire offer coming from him." According to Allen, McCormick never told them they were required to go to Seham themselves if they wanted to retain him, although she believed they had asked whether it was necessary for them to do so.

Allen asserted that McCormick referred them to a website created by United flight attendants, which explained what MAG was doing for them as they attempted to start up the United Flight Attendant Union (UFAU). Warlick claimed that, when she viewed the UFAU site in January 2004, it included a statement that MAG "provid[ed] professional, legal, financial, and administrative services."

Lee similarly claimed that McCormick promised to provide legal assistance, in addition to administrative and financial services. However, he conceded that McCormick did not go into specific detail about the legal services, stating only that "he had a law firm" that would be available when UIFA "needed help." Lee understood McCormick to mean that "whoever was counsel for MAG, was also a counsel for us as well." Although Lee conceded that McCormick did not specifically explain the process of legal fee payment, he assumed the expenses "were all in one."

McCormick did not dispute that he told the flight attendants at the January 20 meeting that the Seham firm was available to assist them if they needed legal support in the future. However, he denied telling them that MAG would provide or pay for such legal services. Lee Seham similarly denied making any arrangement with MAG to provide legal services to UIFA and its members at MAG's expense, subject to reimbursement in the event UIFA became certified.

Estelle also disagreed with Warlick, Lee, and Allen's understanding regarding McCormick's promises. She maintained that McCormick only told them that "[MAG] would provide administrative services" and that it had "the Seham law firm available . . . at that time if we chose to retain them as our legal staff." According to Estelle, neither McCormick nor Bolduc said that MAG provided legal services or would provide or pay for such services. Unlike the other UIFA members, Estelle understood that UIFA would be responsible for paying the Seham firm for any assistance it might provide to UIFA.

McCormick warned the flight attendants at the January 20 meeting that the IAM would attack them each personally and try to demean them. Warlick claimed they were told that such attacks should be described in an incident report and sent to Bolduc, who would pass the information along to the Seham firm.

McCormick suggested the UIFA members raise $150,000 for expenses, including the money needed to send three rounds of mailers to the entire staff of Continental flight attendants. McCormick did not tell the UIFA members how to obtain a mailing list. Although McCormick mentioned that the address list "just appeared" one day in the case of another start-up union, Estelle and Bolduc claimed that McCormick instructed the flight attendants to get the information if they could, but warned them against doing anything illegal.

UIFA, through Estelle, subsequently agreed to retain MAG. The agreement between MAG and UIFA was oral. According to Estelle, she did not see any reason for a written agreement.

McCormick, Bolduc, Estelle, Warlick, and Yokoyama attended a second meeting in early March. Estelle was elected to be UIFA's president, with Yokoyama as secretary/treasurer.

Werner-Masuda stopped by the meeting to visit her friends and to meet McCormick and Bolduc. She stayed for about an hour. According to Werner-Masuda, she brought a copy of the IAM Newark local's address list with her and handed it to Estelle. She also asserted that Estelle then gave it to McCormick and Bolduc. Estelle, however, denied receiving an address list at the meeting.

On March 24, a third meeting was held in Houston. Scott Peterson, an attorney from the Seham firm, attended the meeting to discuss UIFA's constitution. In April, the founding members of UIFA decided to remove Estelle from her role as president because of disagreements between her and Warlick, as well as a general consensus that Estelle was not doing enough for UIFA.

Warlick then spoke to Werner-Masuda about joining UIFA.

Allen believed that Werner-Masuda became interested in UIFA in March or April 2004, but was not actively participating at that time. Estelle, however, testified that Werner-Masuda was involved with UIFA in March.

On April 1, 2004, while Werner-Masuda was still an IAM officer, she was included in an e-mail from Yokoyama regarding UIFA campaign materials. The e-mail was sent to the founding UIFA members, McCormick, and Bolduc. The campaign materials from Yokoyama included a statement that "[UIFA] has legal representation with expertise in aviation labor and the Railway Labor Act"*fn1 and that "[UIFA] has a professional administrative staff with years of experience in labor organizations." After reviewing the e-mail and attachment, McCormick assumed that UIFA had entered into an agreement with the Seham firm. Werner-Masuda was included in a second e-mail on April 2.

In May 2004, Werner-Masuda resigned her position with IAM and accepted the UIFA members' offer to become its president.

Warlick and Werner-Masuda assembled address lists for the mailings to be sent out during UIFA's campaign. According to Estelle, Werner-Masuda was able to get address lists from IAM by downloading it from an IAM program known as V-Lodge. Warlick, however, claimed that an unknown person left address lists for Cleveland, Guam, and part of Texas in her file at Newark Airport. She forwarded those lists to Bolduc. Warlick did not know whether Werner-Masuda accessed V-Lodge to obtain additional addresses for the campaign.

Werner-Masuda admitted that a list she obtained from an IAM official in 2003 was used in the UIFA campaign. She also admitted using V-Lodge to obtain at least some information for UIFA.

According to Allen, the majority of addresses the members provided "came from friends and then friends of friends." She related that she had a lot of contacts and obtained a significant number of addresses from those people. Her address list contained about six hundred names. She testified that she sent it to Warlick.

The official UIFA campaign commenced on June 20, 2004, with a letter sent to Continental. UIFA sent out between 7300 and 7800 letters to Continental flight attendants, launched its website, and issued a press release. About 1000 of the letters were returned by the post office because of incorrect addresses. Approximately 1000 signed cards were collected in the first month of the campaign. There were approximately 4000 cards by the beginning of August.

UIFA's mailing included a statement that it had "legal representation with expertise in labor and the Railway Labor Act" in addition to "a professional administrative staff with years of experience in labor organizations." Bolduc, like McCormick, understood the comment about legal representation to indicate that UIFA had entered into an agreement with the Seham firm. She further understood the comment regarding administrative staff to refer to UIFA's separate agreement with MAG.

The MAG profile posted on UIFA's website around late August 2004 explained that:

MAG is a full service administrative services firm established in 1989 specializing in providing financial, administrative, and day-to-day business services to member control organizations. . . . Its founder, Kevin F. McCormick, has 25 years progressive experience in finance, accounting, association management and administration and labor contract negotiations.

It related that MAG was hired to serve as an advisor and a "home office," and would provide "clerical, accounting, reporting, and consulting" services, but was not involved in UIFA's decision-making. There was no mention of the provision of legal services by MAG.

Prior to the commencement of any litigation, the UIFA organizers started exchanging e-mails concerning how they would explain the source of their address lists. On June 30, Yokoyama sent McCormick an e-mail suggesting they say the address list "just showed up on our desk one day anon[ymously]." McCormick suggested that "the best thing to say is that the mailing list was developed from a variety of sources over time and that the data was provided to UIFA's administrators."

In a July 15 e-mail string, McCormick told Yokoyama he was "uncomfortable with the statements that we were supplied a mailing list accidentally" from IAM. McCormick forwarded the e-mails to Peterson at the Seham firm for his opinion. When Peterson asked how the list was obtained, Warlick responded: "[Werner-Masuda] was sent the names and addresses by [an IAM official] to her personal e-mail for the [IAM] elections in [Newark]" in either late May or early June 2003.

On July 16, Yokoyama sent an e-mail to Peterson and McCormick, stating:

The primary method [by which] we obtained the list was internally while [Werner-Masuda] still had access to the IAM's website and while she was being sent the mailing addresses in order to fulfill her duties; however, in one instance, [an IAM official] sent [Werner-Masuda] an e-mail to her personal e-mail with the address list attached.

Yokoyama noted that Werner-Masuda also obtained addresses from the Cleveland IAM local's secretary/treasurer, and that other UIFA members collected data from various other sources.

In a July 17 e-mail, Werner-Masuda explained that she went into V-Lodge and extracted the addresses for IA[M] A-S and [Warlick] did [Cleveland], [Guam], and IA[M] T-Z. The Newark list was sent to my personal e-mail address by [an IAM official]. Also an ex-officer in [Cleveland] sent me her [Cleveland] list. I also tried to update my list with corrections of addresses that I knew were bad.

On August 23, Bolduc sent an e-mail to UIFA, attaching a letter from McCormick outlining the terms of the relationship between MAG and UIFA and requesting proposed changes. Bolduc explained that the purpose of the letter was to memorialize the agreement and "make it clear to the officers and committee and the membership of the campaign that an agreement was made with [MAG]."

In the letter, McCormick noted that MAG had advised the UIFA members that IAM "would focus their efforts on demonizing MAG, the UIFA legal team, and the UIFA Organizing Committee Leadership." In response to the IAM's assertions that UIFA was controlled by MAG and was locked into a long-term contract, McCormick laid out the terms of the arrangement between MAG and UIFA:

MAG has agreed to assist the UIFA Organizing Committee by providing administrative, accounting, and general consulting services during the organizational campaign. The decision-making authority for all aspects of the campaign rests solely with the Interim Officers of UIFA and the Organizing Committee. MAG is to be compensated for its services only in the event UIFA is certified by the National Mediation Board to represent the Continental Flight Attendants. MAG will be reimbursed during the campaign for its out of pocket expenses, which must be authorized by the Interim Executive Board.

There was, however, no mention of the provision of legal services. Bolduc received no objections to the language used in McCormick's letter.

On August 27, Yokoyama sent an e-mail to the founding UIFA members, McCormick, and Bolduc, attaching a new "Hot Chatter," or web update, regarding MAG's role, as well as MAG's August 23 letter and profile. The UIFA website was updated consistent with the e-mail, providing links to MAG's profile and the August 23 letter.

B.

On August 5, IAM filed a complaint against Werner-Masuda, UIFA, and MAG in the United States District Court for the District of Maryland, alleging federal- and state-law causes of action, all of which centered on the allegation that Werner-Masuda, while an IAM officer, had improperly accessed IAM's V-Lodge in order to compile addresses for the mailings to be sent out by MAG and UIFA.

After IAM filed the federal suit, Seham, via a telephone call arranged by Bolduc, told the UIFA members that his firm could not represent UIFA or Werner-Masuda because there was a conflict of interest based on his relationship with McCormick and MAG. Warlick described herself as "shocked" and "angry," because she felt Seham "was supposed to be our attorney." Estelle was not surprised by Seham's decision, however, since he had a long-standing relationship with MAG, not UIFA.

Two or three weeks after the call with Seham, McCormick, Bolduc, Estelle, Warlick, Werner-Masuda, Yokoyama, Allen, and some others met in Newark. McCormick told them that UIFA would need "to pay the entire bill for the entire lawsuit." Warlick complained to McCormick that he should have let them know they would not be represented if they were sued by IAM. She claimed that if she had known, she never would have started the campaign or would have saved money for representation. McCormick and Bolduc explained that provision of or payment for legal services were never part of MAG's agreement with UIFA.

Although Werner-Masuda felt that MAG had abandoned the UIFA defendants, she and Warlick requested that MAG continue providing consulting services, and MAG agreed to do so. Seham also continued performing work for UIFA on an occasional basis into December, but did represent UIFA or MAG for purposes of the federal lawsuit.

In late August 2004, Werner-Masuda and UIFA retained George Lane to represent UIFA and the other defendants in the federal court action. UIFA had minimal funds at the time, so Warlick paid $1500 for deposition transcripts and Werner-Masuda paid the remainder. Werner-Masuda believed she paid Lane approximately $20,000, but owed $60,000 more. Lane believed Werner-Masuda and UIFA owed him additional fees, but could not quantify the amount because the hard drive on which he maintained his billing records had crashed.

On September 16, the District Court dismissed the federal causes of action for failure to state a claim. The judge declined to retain jurisdiction over the remaining state-law claims, and dismissed them without prejudice.

On November 7, IAM filed a complaint in the Law Division. In addition to the defendants named in the federal action, the New Jersey complaint named McCormick, Warlick, and Yokoyama. We will refer to all of those defendants as the UIFA defendants. The causes of action were based on the same allegation of improper access and use of information derived from V-Lodge. IAM sought return of the information, injunctive relief, and money damages.

Following IAM's filing of the New Jersey action, Werner-Masuda, Warlick, Yokoyama, and UIFA retained Waskevich and Herold Law to represent them. Seham represented McCormick and MAG. Warlick signed a retainer agreement with Herold Law for herself and UIFA, and the others subsequently signed an amended retainer on December 1. Werner-Masuda paid the $5000 retainer fee. Waskevich explained to his clients that each client was jointly and severally liable for the entire bill. At the time, UIFA had no funds, so the three individual UIFA defendants, Warlick, Werner-Masuda, and Yokoyama, agreed to split the legal bills three ways.

On May 5, 2006, the UIFA defendants filed counterclaims against IAM and a third-party complaint against certain IAM officials and local affiliates. On the same day, UIFA and Warlick filed cross-claims against MAG and McCormick (MAG defendants) for indemnification and contribution. The MAG defendants filed cross-claims against the UIFA defendants in July 2006, for breach of contract and damages due to tortious conduct, including the alleged illegal access of IAM's program and distribution of the IAM's address information. In December 2006, UIFA and Warlick filed amended cross-claims against the MAG defendants, adding Werner-Masuda and Yokoyama as cross-claimants, and adding claims for breach of contract and fraud.

Meanwhile, on May 22, IAM accepted the MAG defendants' offer of judgment. The Law Division entered judgment against the MAG defendants, awarding IAM $30,000 in damages, plus costs.

The judgment also enjoined MAG from using address materials obtained from IAM sources.

On June 16, IAM offered to settle with the UIFA defendants for a payment of $10,000 and the return all of address information obtained from IAM sources. The UIFA defendants responded on October 2, demanding damages from IAM, including $8.9 million for UIFA, $950,000 for Werner-Masuda, $800,000 for Warlick, and $790,000 for Yokoyama.

On October 31, IAM again offered to settle with the UIFA defendants, requesting only that they return the address information. The UIFA defendants countered with an offer of judgment requesting $20,000 and dismissal with prejudice for each defendant. In a separate proposal on November 7, the UIFA defendants demanded $25,000 each, a retraction of IAM's accusations of theft, and an apology. On November 15, IAM offered to mediate if the UIFA defendants withdrew their financial demands. No settlement was reached and the litigation continued.

In early 2008, IAM and the UIFA defendants finally reached a settlement. A February 15 stipulation dismissed IAM's claims against the UIFA defendants and their claims against IAM and its officials with prejudice, and no costs to any party.

C.

At oral argument on March 14, 2008, the MAG and UIFA defendants cross-moved for summary judgment on their remaining claims against each other. In light of the UIFA defendants' settlement with IAM, the motion judge granted the MAG defendants' motion for summary judgment in part on March 18. He dismissed the UIFA defendants' claims for contribution and indemnification, but denied the motion as to the UIFA defendants' remaining claims. He granted the UIFA defendants' summary judgment motion with respect to the MAG defendants' claim for reimbursement of their legal fees.

In June, the MAG defendants sought to compel Waskevich's deposition. They argued that he was the only person who could testify concerning the counsel fees the UIFA defendants incurred in defending against IAM's claims. On July 25, a special discovery master appointed by the Law Division denied the motion. The MAG defendants then moved to dismiss the UIFA defendants' claims on the ground that they could not prove their damages in light of Waskevich's refusal to testify. That motion was also denied.

On September 10, the UIFA defendants filed a second amended cross-claim, adding Evergreen Management, Incorporated (EMI), and Evergreen Management, Incorporated II ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.