Amalgamated Transit Union, Local 1300 v. Lovelace ( 2015 )

Amalgamated Transit Union, Local 1300 and David A. McClure v. William T. Lovelace, Jr.,
No. 25, September Term, 2014, Opinion by Adkins, J.
LABOR LAW — EXHAUSTION OF INTERNAL UNION REMEDIES —
DEFAMATION — MONETARY DAMAGES: When a union member claims that his
union and a fellow union member are liable for defaming him and seeks monetary damages,
if the union’s internal remedies do not provide monetary damages, they are inadequate and
the union member is not required to exhaust them before filing suit in court.
Circuit Court for Baltimore City
Case No.: 24-C-10-006258
Argued: November 10, 2014
IN THE COURT OF APPEALS
OF MARYLAND
No. 25
September Term, 2014
AMALGAMATED TRANSIT UNION,
LOCAL 1300 AND DAVID A. MCCLURE
v.
WILLIAM T. LOVELACE, JR.
Barbera, C.J.
Harrell
Battaglia
Greene
Adkins
McDonald
Watts,
JJ.
Opinion by Adkins, J.
McDonald and Watts, JJ., concur.
Harrell, J., dissents.
Filed: February 4, 2015
Maryland law has long recognized the rule that a union member must exhaust the
union’s internal remedies before filing suit in court. Walsh v. Commc’ns Workers of Am.,
Local 2336, 259 Md. 608, 612, 271 A.2d 148, 150 (1970). If these procedures are
procedurally or substantively inadequate, however, exhaustion is excused. Id. In this case,
we consider whether union remedies are inadequate when they do not provide the monetary
damages a union member1 seeks when he sues his union and a fellow union member for
defamation.
FACTS AND LEGAL PROCEEDINGS
Respondent, William T. Lovelace, Jr., worked for the Maryland Transit
Administration (“MTA”) and was a member of Petitioner, Amalgamated Transit Union,
Local 1300 (“Local 1300”).2 Lovelace and Petitioner, David McClure (collectively with
Local 1300, “the Union”), served together as officers on Local 1300’s Executive Board
between 2007 and 2010—Lovelace as Financial Secretary, a position to which he was first
elected in 2001, and McClure as President. During the three years they served together,
1
We recognize that “union members” and “union officers” are often addressed as
separate groups. See, e.g., Batson v. Shiflett, 325 Md. 684, 712, 602 A.2d 1191, 1205
(1992) (discussing the dispute between the union member and union officers in Farmer v.
United Bhd. of Carpenters, 430 U.S. 290, 97 S. Ct. 1056, 51 L. Ed. 2d 338 (1977)). In this
opinion, however, when we use the term “union members” we are referring to all those
employees who are part of a union, regardless of whether they have been elected as officers.
2
Local 1300 serves the Greater Baltimore region and is one of 264 local unions in
44 states and nine provinces of Canada that compose the Amalgamated Transit Union.
About Local 1300, History of Amalgamated Transportation Union, A.T.U. Local 1300
Baltimore MD, http://atu-local1300.com/frameset1.htm (last visited Dec. 9, 2014). With
approximately 190,000 members, the Amalgamated Transit Union, founded in 1892, is the
largest labor organization representing transit workers in the United States and Canada. Id.Lovelace and McClure often disagreed about Local 1300’s financial matters, and became
“political enemies.” When both men ran for reelection in 2010, McClure prevailed, and
Lovelace was defeated. Lovelace blamed his defeat on the allegedly false and defamatory
statements that McClure made prior to and during the campaign.
Lovelace filed a defamation action in the Circuit Court for Baltimore City against
the Union, seeking $1 million in compensatory damages and $3 million in punitive
damages for his defeat in the 2010 election, reputational injury, pain and suffering, and
emotional distress. He alleged that between 2007 and 2010, McClure, acting within the
scope of his employment, published—to numerous Local 1300 members—false and
defamatory statements accusing Lovelace of stealing from Local 1300 and
misappropriating funds. Lovelace averred that in several instances, McClure specifically
implored others not to reelect Lovelace because he was stealing from Local 1300. Lovelace
alleged that McClure knew the defamatory statements were false or acted with reckless
disregard as to whether they were false. Regarding Local 1300’s vicarious liability,
Lovelace alleged that it ratified McClure’s statements because it had knowledge of the
statements but failed to adequately investigate their truthfulness or stop them.
The Union filed Motions to Dismiss, asserting, in part, that Lovelace failed to
exhaust Local 1300’s internal remedies before filing suit. The Circuit Court denied the
Motions, concluding that Lovelace was not required to exhaust Local 1300’s remedies
because without the availability of monetary damages, the remedies were inadequate as a
matter of law.
2
The case was tried before a jury in April and May 2012. Several witnesses testified
that McClure told them that Lovelace was stealing from Local 1300. Ultimately, the jury
rendered a verdict in Lovelace’s favor, finding that McClure defamed Lovelace with actual
malice and that Local 1300 was vicariously liable for the defamation. The jury awarded
$200,000 for injury to reputation, $60,000 for financial loss, and $75,000 for mental
anguish. The jury also awarded punitive damages—$7,500 against McClure and $82,500
against Local 1300.
The Union appealed, contending, in part, that the trial court erred when it denied
their Motions to Dismiss because Lovelace was required to exhaust Local 1300’s internal
remedies before filing suit. See McClure v. Lovelace, 214 Md. App. 716, 725, 78 A.3d
934, 939 (2013). Lovelace responded that he was not required to pursue these remedies
because they were “procedurally and substantively inadequate.” Id. In a reported opinion,
the Court of Special Appeals affirmed the Circuit Court, concluding that Local 1300’s
internal remedies were inadequate because they could not provide the monetary damages
Lovelace sought. Id. at 735, 78 A.3d at 945. The Union filed a Petition for Writ of
Certiorari, which this Court granted on February 21, 2014, to answer the following
question:
Whether an internal union remedy is “inadequate,” thus
excusing a plaintiff from exhausting internal union procedures
for resolving a dispute before seeking relief in court, if it does
not provide the monetary damages the plaintiff seeks?
Because we answer yes, we shall affirm the judgment of the Court of Special Appeals.
3
STANDARD OF REVIEW
In reviewing the denial of a motion to dismiss, “we must assume the truth of all
relevant and material facts that are well pleaded and all inferences which can be reasonably
drawn from those pleadings.” Ronald M. Sharrow, Chartered v. State Farm Mut. Auto.
Ins., 306 Md. 754, 768, 511 A.2d 492, 500 (1986). The facts we may consider are limited
“to the four corners of the complaint and its incorporated supporting exhibits, if any.”
Converge Servs. Grp. v. Curran, 383 Md. 462, 475, 860 A.2d 871, 879 (2004); accord
Nickens v. Mount Vernon Realty Grp., 429 Md. 53, 62, 54 A.3d 742, 748 (2012)
(“Ordinarily, when a trial court purports to grant a motion to dismiss, we review that
action based solely on the allegations contained within the four corners of the complaint
. . . .”). Pursuant to Maryland Rule 2-322(c), however, “when a trial judge is presented
with factual allegations beyond those contained in the complaint to support or oppose a
motion to dismiss and the trial judge does not exclude such matters, then the motion shall
be treated as one for summary judgment.” Nickens, 429 Md. at 62–63, 54 A.3d at 748
(internal quotation mark and citation omitted); see Md. Rule 2-322(c); see also Ray v.
Mayor of Balt., 430 Md. 74, 91, 59 A.3d 545, 555 (2013) (treating motion to dismiss as
motion for summary judgment because trial court considered materials outside the
pleadings).
Here, Lovelace did not attach the Local 1300 Constitution to his Complaint or
Amended Complaint as a supporting exhibit. The Union attached the Local 1300
Constitution to their Motions to Dismiss, and the Circuit Court judge considered it when
denying the Motions. Therefore, we will treat the Motions to Dismiss as Motions for
4
Summary Judgment3 and review the Circuit Court’s denial of summary judgment as a
matter of law.4 See Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591,
578 A.2d 1202, 1206 (1990) (“[T]he standard for appellate review of a trial court’s grant
or denial of a motion for summary judgment is whether the trial court was legally correct.”).
DISCUSSION
The Union asserts that when the Court of Special Appeals concluded that the
Union’s internal remedies were inadequate, it “held, in effect, that an internal union remedy
could be adequate only if it provided the identical form of relief that the litigant sought in
the subsequent civil action.” (Emphasis in original.) The Union contends that in order to
3
Pursuant to Maryland Rule 2-322(c), a motion to dismiss may only be treated as
one for summary judgment if all the parties are “given reasonable opportunity” to present
all pertinent material. Here, because the contents of the Local 1300 Constitution are
undisputed, both parties were given a reasonable opportunity to present all pertinent
material.
4
This Court has held that “a denial (as distinguished from a grant) of a summary
judgment motion, as well as foregoing the ruling on such a motion either temporarily until
later in the proceedings or for resolution by trial of the general issue, involves not only pure
legal questions but also an exercise of discretion as to whether the decision should be
postponed until it can be supported by a complete factual record[.]” Metro. Mortgage
Fund, Inc. v. Basiliko, 288 Md. 25, 29, 415 A.2d 582, 584 (1980). “[O]n appeal, absent
clear abuse . . . the manner in which this discretion is exercised will not be disturbed.” Id.Here, when the hearing judge ruled on the Union’s Motions for Summary Judgment the
factual record was complete with respect to the issue under consideration because the
contents of the Local 1300 Constitution was undisputed. Therefore, the hearing judge did
not exercise discretion to deny the Motions until there was a complete factual record, but
rather only answered a pure legal question. Accordingly, the abuse of discretion standard
does not apply and we will review the hearing court’s pure legal determination as a matter
of law.
5
be adequate, internal union remedies need not provide an identical remedy—they need only
permit a union member to avoid or mitigate an injury.
Petitioners then argue that § 22.1 and § 14.8 of the Local 1300 Constitution are
adequate remedies because they could have restored Lovelace’s reputation within the union
community and led to his reelection. Section 22.1 provides a mechanism for a Local 1300
member to be charged with and disciplined for misconduct:
Any officer or member may be charged with specific activities
involving: a violation of any specific provision of the
Constitution and General Laws or the bylaws of the member’s
L[ocal] U[nion]; gross disloyalty or conduct unbecoming a
member; malfeasance or nonfeasance in office; financial
malpractice; corrupt or unethical practices or racketeering;
dual unionism, decertification or secession; or a violation of
duly established and applicable rules, regulations, policies or
practices of a [Local Union.]
The charges are tried before a Local 1300 trial board. Any Local 1300 member charged
under § 22.1 may be suspended from office, suspended or expelled from union
membership, fined, declared ineligible for office, or otherwise disciplined. Petitioners
assert that had Lovelace successfully pursued charges under § 22.1, the ensuing public trial
would have cleared his name and vindicated his reputation, thereby permitting him to
compete on a level playing field during the 2010 election.
Section 14.8 permits Local 1300 members to “challenge the conduct or results of an
election.” It does not limit the grounds upon which an election may be challenged. The
Union contends that had Lovelace successfully contested the 2010 election on the grounds
that it was tainted by McClure’s defamatory statements, Local 1300 could have determined
6
that Lovelace had been unfairly slandered during the election campaign and ordered that
the election be rerun.
Finally, the Union cautions that the conclusion of the Court of Special Appeals
undermines the exhaustion requirement and the policies on which it rests—union self-
government and judicial economy. Specifically, Petitioners argue that if union members
could seek monetary damages in a civil suit without first pursuing internal union remedies
that could have avoided or mitigated the injury, union members “would have a powerful
incentive to skip the internal union procedures entirely.”
In response, Lovelace urges us to affirm the Court of Special Appeals. He contends
that § 22.1 and § 14.8 of the Local 1300 Constitution provide inadequate relief because by
not providing monetary damages, they do not offer “complete relief” as required by the
holding of the Supreme Court of the United States in Clayton v. Int’l Union, 451 U.S. 679,
101 S. Ct. 2088, 68 L. Ed. 2d 538 (1981).
Clayton And McPhetridge
In the four decades since this Court decided Walsh, we have devoted very little, if
any, attention to the question of what constitutes an “inadequate” internal union remedy.
Because Congress codified the exhaustion requirement in the Labor Management
7
Reporting and Disclosure Act (“LMRDA”),5 29 U.S.C. § 411(a)(4) (2012),6 the majority
of cases addressing the inadequacy of internal union remedies arise in federal courts.
Petitioners rely, almost exclusively, on two federal cases: (1) Clayton, supra; and
(2) McPhetridge v. IBEW, Local Union No. 53, 578 F.3d 886 (8th Cir. 2009).7 They assert
5
“The Labor-Management Reporting and Disclosure Act of 1959 (LMRDA)
provides standards for the reporting and disclosure of certain financial transactions and
administrative practices of labor organizations and employers; the protection of union
funds and assets; the administration of trusteeships by labor organizations; and the election
of officers of labor organizations. The Act also guarantees certain rights to all union
members.” The Labor-Management Reporting and Disclosure Act of 1959, United States
Department of Labor, http://www.dol.gov/compliance/laws/comp-lmrda.htm (last visited
Dec. 9, 2014).
6
29 U.S.C. § 411(a)(4) (2012) protects the right of union members to sue their union
but requires union members to exhaust internal union remedies before filing suit:
No labor organization shall limit the right of any member
thereof to institute an action in any court, or in a proceeding
before any administrative agency, irrespective of whether or
not the labor organization or its officers are named as
defendants or respondents in such action or proceeding, or the
right of any member of a labor organization to appear as a
witness in any judicial, administrative, or legislative
proceeding, or to petition any legislature or to communicate
with any legislator: Provided, That any such member may be
required to exhaust reasonable hearing procedures (but not to
exceed a four-month lapse of time) within such organization,
before instituting legal or administrative proceedings against
such organizations or any officer thereof: And provided
further, That no interested employer or employer association
shall directly or indirectly finance, encourage, or participate in,
except as a party, any such action, proceeding, appearance, or
petition.
7
Petitioners also cite Fabian v. Freight Drivers & Helpers Local No. 557, 448 F.
Supp. 835 (D. Md. 1978) and Winter v. Local Union No. 639, 569 F.2d 146 (D.C. Cir.
1977). In Fabian, the district court concluded that the union’s “procedures are not rendered
inadequate because of the unavailability of the money damages requested here by the
plaintiffs.” 448 F. Supp. at 839 (citation omitted). In Winter, the federal appellate court,
8
that “as Clayton makes clear, and as McPhetridge explicitly holds, an internal union
procedure is not inadequate because of the unavailability of monetary damages if it offers
a remedy that allows the union member to avoid or mitigate the injury for which monetary
damages are sought in litigation.”
We first consider Clayton, the seminal Supreme Court case addressing whether
union members must exhaust internal union remedies. There, after being discharged from
his employment due to alleged misbehavior, Clayton asked his union representative to file
a grievance on his behalf. Clayton, 451 U.S. at 682, 101 S. Ct. at 2091–92, 68 L. Ed. 2d
538. The union pursued the grievance but ultimately abandoned it before arbitration. Id.,101 S. Ct. at 2092, 68 L. Ed. 2d 538. Although the union’s internal procedures permitted
him to appeal the decision not to pursue arbitration, Clayton, instead, filed suit in federal
district court under § 301(a) of the Labor Management Relations Act, 1947, 29 U.S.C. §
185(a).8 Id. at 683, 101 S. Ct. at 2092, 68 L. Ed. 2d 538. Alleging that the union breached
acknowledging that “Winter probably could not have obtained money damages through
union disciplinary channels,” nevertheless held that exhaustion was required because
“Winter could . . . have obtained some of what he seeks, . . . an injunction, by a favorable
outcome in the union proceedings.” 569 F.2d at 149. These two cases, however, were
decided before Clayton v. Int’l Union, 451 U.S. 679, 101 S. Ct. 2088, 68 L. Ed. 2d 538(1981). Because Clayton created a new test for whether an internal union remedy is
inadequate, Fabian and Winter are not persuasive.
8
The Labor Management Relations Act, 1947, § 301(a), 29 U.S.C. § 185(a) (2012),
provides the basis for a union member’s right to sue the employer for a violation of the
collective bargaining agreement and grants federal courts jurisdiction to enforce collective
bargaining agreements:
Suits for violation of contracts between an employer and a
labor organization representing employees in an industry
affecting commerce as defined in this chapter, or between any
such labor organizations, may be brought in any district court
9
its duty of fair representation and the employer breached the collective-bargaining
agreement by terminating him without just cause, id., 101 S. Ct. at 2092, 68 L. Ed. 2d 538,
he sought reinstatement from the employer and monetary damages from both the employer
and the union, id. at 690, 101 S. Ct. at 2096, 68 L. Ed. 2d 538. As an affirmative defense,
the employer and the union pleaded failure to exhaust the union’s internal appeals
procedures. Id. at 683, 101 S. Ct. at 2092, 68 L. Ed. 2d 538. The federal district court
sustained this defense and dismissed the suit, concluding that the internal appeals
procedures were adequate as a matter of law and Clayton had failed to exhaust them. Id.at 683–84, 101 S. Ct. at 2092, 68 L. Ed. 2d 538.
Following an appeal to the United States Court of Appeals for the Ninth Circuit, the
Supreme Court granted certiorari to resolve the issue of when a union member is required
to exhaust internal union remedies before filing suit. Id. at 685, 101 S. Ct. at 2093, 68 L.
Ed. 2d 538. The Court declined to impose a universal exhaustion requirement, instead
outlining three factors a court should consider when deciding whether to require
exhaustion:
[F]irst, whether union officials are so hostile to the employee
that he could not hope to obtain a fair hearing on his claim;
second, whether the internal union appeals procedures would
be inadequate either to reactivate the employee’s grievance or
to award him the full relief he seeks under § 301; and third,
whether exhaustion of internal procedures would unreasonably
delay the employee’s opportunity to obtain a judicial hearing
on the merits of his claim.
of the United States having jurisdiction of the parties, without
respect to the amount in controversy or without regard to the
citizenship of the parties.
10
Id. at 689, 101 S. Ct. at 2095, 68 L. Ed. 2d 538 (emphasis added). If any of these factors
exists, “a court may properly excuse the employee’s failure to exhaust.” Id. The Court
applied the second factor (the “Clayton inadequacy test”), holding that “where an internal
union appeals procedure cannot result in reactivation of the employee’s grievance or an
award of the complete relief sought in his § 301 suit, exhaustion will not be required with
respect to either the suit against the employer or the suit against the union.” Id. at 685, 101
S. Ct. at 2093, 68 L. Ed. 2d 538. Although the union’s internal appeals procedures could
provide “at least some monetary relief,” the Court observed that “the union can neither
reinstate Clayton in his job . . . nor reactivate his grievance.” Id. at 691, 101 S. Ct. at 2096,
68 L. Ed. 2d 538. Consequently, the Court held that the union’s internal appeals procedures
were inadequate and Clayton was not required to exhaust them before suing the union or
the employer. Id. at 696, 101 S. Ct. at 2099, 68 L. Ed. 2d 538.
Without disputing that Lovelace never pursued a grievance, Petitioners nevertheless
focus on the first part of the Clayton inadequacy test and equate reactivating a grievance9
9
Many collective bargaining agreements between labor unions and employers
provide that employees who are union members may only be terminated for just cause.
See, e.g., Childers v. Chesapeake & Potomac Tel. Co., 881 F.2d 1259, 1260 (4th Cir. 1989)
(“The terms and conditions of [the union member’s] employment with [the employer] were
governed by a collective bargaining agreement between [the employer] and the union,
which prohibited termination of employees without ‘just cause’ . . . .”). In many instances,
when a union member believes that he has been terminated without just cause, he will ask
his union to file a grievance with the employer on his behalf. See, e.g., Clayton, 451 U.S.
at 682, 101 S. Ct. at 2091–92, 68 L. Ed. 2d 538. Collective bargaining agreements often
outline a multi-step process for pursuing and resolving grievances, with the final step being
arbitration. See, e.g., Vaca v. Sipes, 386 U.S. 171, 175 n.3, 87 S. Ct. 903, 909 n.3, 17 L.
Ed. 2d 842 (1967) (discussing the collective bargaining agreement’s five-step procedure
for handling grievances). If the union elects not to pursue arbitration of the grievance or
abandons the grievance at one of the earlier steps in the process, the member can sue his
11
with avoiding or mitigating an injury. Specifically, Petitioners argue that reactivating a
union member’s grievance avoids or mitigates the member’s damages by restoring the
member to the situation he would have been in had the union not abandoned the grievance.
Relying on this premise, they ask us to read Clayton broadly, contending that it
stands squarely for the proposition that, to be adequate, an
internal union remedy need not necessarily provide for money
damages, even if that is what the plaintiff seeks from the
judicial forum, as long as the union’s procedures—if
successfully pursued—would permit the member to avoid or
mitigate the injury for which damages are sought in court.
(Emphasis added.)
We decline, however, to read Clayton so broadly. Most of the federal cases that
have cited Clayton have not utilized the standard of “avoiding or mitigating” an injury to
measure what is an adequate remedy. See, e.g., Bell v. DaimlerChrysler Corp., 547 F.3d
796, 807 (7th Cir. 2008) (measuring what is an adequate remedy based on whether the
union can reactivate a grievance or award complete relief); Bassett v. Local Union No. 705,
773 F.2d 932, 937 (7th Cir. 1985) (same); Scoggins v. Boeing Co., 742 F.2d 1225, 1230
union for breach of the duty of fair representation. See Clayton, 451 U.S. at 683, 101 S.
Ct. at 2092, 68 L. Ed. 2d 538. When a member sues his union under this cause of action,
one of the remedies the union can provide is reactivating the member’s grievance. A
member’s grievance is “reactivated” when it is reinstated in the grievance procedure at the
step at which the union abandoned the original grievance. See Nanney v. Chrysler Corp.,
600 F. Supp. 1248, 1253 n.5 (D. Del. 1984) (stating that “a reactivated grievance is
reinstated in the grievance procedure at the step at which the original disposition of the
grievance occurred” (internal quotation marks omitted)); see also Bassett v. Local Union
No. 705, 773 F.2d 932, 936 (7th Cir. 1985) (“The [Supreme] Court’s discussion of
reactivation in Clayton is directed exclusively to the situation where a union can resubmit
the plaintiff’s grievance to some kind of collectively bargained dispute-resolution
procedures.” (citation and internal quotation marks omitted)).
12
(9th Cir. 1984) (same); Keiper v. United Auto. Workers’ Union, Local 677, 867 F. Supp.
298, 302 (E.D. Pa. 1994) (measuring what is an adequate remedy based on whether the
union can reactivate a grievance); Williams v. United Auto Workers Local 501, AFL-CIO,
841 F. Supp. 499, 504 (W.D.N.Y. 1993) (measuring what is an adequate remedy based on
whether the union can reactivate a grievance or award complete relief); Nanney v. Chrysler
Corp., 600 F. Supp. 1248, 1254 (D. Del. 1984) (measuring what is an adequate remedy
based on whether the union can reactivate a grievance). Likewise, at least two of our sister
states have applied the Clayton inadequacy test, and neither of them have utilized that
standard. See Murad v. Prof’l & Admin. Union Local 1979, 239 Mich. App. 538, 546, 609
N.W.2d 588, 592–93 (2000) (measuring what is an adequate remedy based on whether the
union can reactivate a grievance or award complete relief); Swieton v. City of Chi., 129 Ill.
App. 3d 379, 384–85, 472 N.E.2d 503, 507 (1984) (measuring what is an adequate remedy
based on whether the union can award complete relief).
We now turn to McPhetridge, Petitioners’ primary authority. There, the union
charged three members with working for a non-union contractor. McPhetridge, 578 F.3d
at 888. The union notified the members that the union trial board would conduct a hearing
to consider the charges. Id. The members did not attend the hearing. Id. After the trial
board upheld the charges and fined the members $5,000 each, the union notified the
members of the trial board’s decision and advised them that under the union constitution,
they could appeal the decision within forty-five days. Id. Instead of appealing, however,
the members filed suit in federal court, alleging, in part, that the union violated the LMRDA
13
by denying their due process rights during the disciplinary proceedings.10 Id. at 889. The
United States District Court for the District of Missouri dismissed the free speech claim on
the merits and dismissed the due process claim because the members did not exhaust the
union’s internal remedies. Id.
On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the
district court’s decision to require exhaustion. The members argued that their failure to
exhaust should be excused because the union’s internal remedies could not provide them
complete relief, specifically, the monetary damages they sought in their suit. Id. at 891.
The court disagreed, concluding that
had [the members] attended the Trial Board hearing and
successfully raised the substantive and procedural issues now
urged in this lawsuit, they would have avoided all injury.
Moreover, successful appeals of the Trial Board’s adverse
decisions would have abated the fines and relieved Plaintiffs of
most or all the mental anguish, attorneys fees, and forced
resignations now claimed as compensatory damages.
Id. The court affirmed the district court’s dismissal of the due process claims, ruling that
the members were required to exhaust the union’s internal remedies.
McPhetridge explicitly addressed the issue of avoiding or mitigating an injury. We
agree with the Union that McPhetridge required the union members to exhaust the union’s
10
29 U.S.C. § 411(a)(5) (2012) outlines the due process rights of union members:
No member of any labor organization may be fined, suspended,
expelled, or otherwise disciplined except for nonpayment of
dues by such organization or by any officer thereof unless such
member has been (A) served with written specific charges; (B)
given a reasonable time to prepare his defense; (C) afforded a
full and fair hearing.
14
internal remedies, and used Petitioners’ standard—whether those remedies could have
“avoided or mitigated” the injuries claimed by the members.11 Nevertheless, as we explain
below, McPhetridge does not carry the day for the Union.
First, McPhetridge is an outlier—it is the only federal case Petitioners cite (and we
have found no others), in which a federal court analyzing whether internal union remedies
were inadequate under Clayton addressed whether the remedies could “avoid or mitigate”
damages. In all the other federal cases we have reviewed, the courts applied the Clayton
inadequacy test to ascertain whether the unions’ internal remedies could reactivate a
grievance or provide complete relief. See, e.g., Bell, 547 F.3d at 807 (“Clayton expressly
(and repeatedly) states that appeals which can result in either the reactivation of a grievance
or the provision of full relief must ordinarily be exhausted.” (emphasis in original));
Hammer v. Int’l Union, United Auto., Aerospace & Agr. Implement Workers of Am., 178
F.3d 856, 859 (7th Cir. 1999) (“[The union’s] internal procedures could ultimately have
resulted in both money damages and the reinstatement of Hammer’s grievance—complete
relief and more.”); Rogers v. Bd. of Educ. of Buena Vista Sch., 2 F.3d 163, 167 (6th Cir.
1993) (holding that the district court properly dismissed the plaintiff’s complaint for failure
to exhaust his internal union remedies because, although plaintiff’s grievance could not be
reactivated, the union could award all the money damages the plaintiff sought); Bassett,
773 F.2d at 937 (“Because [the union’s] remedies were inadequate either to provide
plaintiffs complete relief . . . or to reactivate [the union member’s] grievance . . . we must
11
These injuries originated from the fines the union ordered the members to pay.
15
hold that plaintiffs were not required to exhaust these remedies . . . .”); Hayes v. Bhd. of
Ry. & Airline Clerks, 727 F.2d 1383, 1386 (5th Cir. 1984) (requiring exhaustion because
“while it is clear that the internal union appeals procedures would have been inadequate to
award [the union member] the full relief he seeks in this suit, that is, compensatory and
punitive damages,” the union member’s “basic grievances could have been reactivated in
the arbitration process.”); Curry v. Ford Motor Co., 646 F. Supp. 261, 264 (W.D. Ky. 1983)
(granting summary judgment in favor of defendants because the union member “not only
could obtain reactivation of his grievance, but could appeal within the UAW appeals
process for rei[m]bursement of his lost wages for the time the grievance was
withdrawn[.]”); Mabane v. Metal Masters Food Serv. Equip. Co., 541 F. Supp. 981, 987
n.10 (D. Md. 1982) (concluding exhaustion would not be required because the union had
no internal remedies that could reactivate the employees’ grievances or award them
complete relief). Thus, federal case law provides no basis for endorsing the McPhetridge
court’s analysis.
Second, the facts of McPhetridge are distinguishable from this case. Local 1300’s
internal procedures could not have avoided all the damages Lovelace suffered and it is
uncertain whether they could have mitigated his damages.
In McPhetridge, if the union members had prevailed before the trial board, the union
would not have imposed the fines. Here, there is no Local 1300 procedure that could have
prevented McClure from making the false and defamatory statements about Lovelace.
16
Also, the jury found that McClure defamed Lovelace with actual malice12. When a plaintiff
proves, by clear and convincing evidence, that he was defamed with actual malice,
damages are presumed. See Jacron Sales Co. v. Sindorf, 276 Md. 580, 601, 350 A.2d
688, 700 (1976) (concluding that a plaintiff cannot recover presumed damages unless he
establishes actual malice); see also Samuels v. Tschechtelin, 135 Md. App. 483, 549–50,
763 A.2d 209, 245 (2000) (stating that “damages are presumed when a plaintiff can
demonstrate actual malice, by clear and convincing evidence, even in the absence of proof
of harm”). Therefore, no Local 1300 procedure could have adequately avoided or
compensated for all of Lovelace’s damages because once he proved actual malice, the jury
was justified in awarding damages without further proof of loss.
Additionally, in McPhetridge, it was certain that the union could mitigate the
members’ damages because the union had the authority to revoke the fines it had imposed.
Here, while there is a possibility that pursuing § 22.1 and § 14.8 of the Local 1300
Constitution might have mitigated some of Lovelace’s damages, any mitigation is
uncertain and speculative. Petitioners argue that had Lovelace successfully brought
charges against McClure under § 22.1 and challenged the 2010 election under § 14.8, his
reputation within the union community might have been restored and he might have won
reelection. This argument consists of several layers of speculation—it assumes that a
12
“‘Actual malice,’ sometimes referred to as constitutional malice, is established by
clear and convincing evidence that a statement was made ‘with knowledge that it was false
or with reckless disregard of whether it was false or not.’” Batson, 325 Md. at 728, 602
A.2d at 1213 (quoting New York Times Co. v. Sullivan, 376 U.S. 254, 279–80, 84 S. Ct.
710, 725–26, 11 L. Ed. 2d 686, 706 (1964)).
17
sufficient number of union members would learn about the outcome of the union trial,
change their opinions about Lovelace, and change their votes to reelect him. Although the
Union can control whether an election is rerun, the Union ultimately has no control over
Lovelace’s reputation, either within the union community or without. Nor could it control
the results of a new election. Also, the record does not reveal any mechanism in the Local
1300 Constitution for informing all of the union’s membership about the results of a union
trial. Thus, unlike McPhetridge, it is uncertain whether Local 1300’s internal remedies
would have mitigated any of the damages Lovelace claimed.
Applying The Clayton Inadequacy Test
In the state and federal cases cited, supra, the courts applied the Clayton inadequacy
test when determining whether exhaustion is required in suits claiming breach of the duty
of fair representation. Although Lovelace, unlike Clayton, did not sue for breach of the
duty of fair representation, we will apply the Clayton inadequacy test to this case because
Maryland shares one of the major policy objectives influencing the Supreme Court’s
analysis in Clayton—encouraging private resolution of disputes.
The Clayton Court reasoned that “where internal union appeals procedures can
result in either complete relief to an aggrieved employee or reactivation of his grievance,
exhaustion would advance the national labor policy of encouraging private resolution of
contractual labor disputes.” Clayton, 451 U.S. at 692, 101 S. Ct. at 2097, 68 L. Ed. 2d 538.
Maryland’s support for arbitration demonstrates that it is also concerned with encouraging
the private resolution of disputes. See Shailendra Kumar, P.A. v. Dhanda, 426 Md. 185,
208, 43 A.3d 1029, 1042 (2012) (“There is no doubt that arbitration is favored and
18
encouraged in Maryland because it provides an informal, expeditious, and inexpensive
alternative to conventional litigation.” (citation and internal quotation marks omitted));
Cheek v. United Healthcare of Mid-Atl., Inc., 378 Md. 139, 152, 835 A.2d 656, 664 (2003)
(“Maryland’s Arbitration Act expresses the legislative policy favoring enforcement of
agreements to arbitrate.” (citation and internal quotation marks omitted)). The Clayton
inadequacy test encourages the private resolution of disputes because, when internal union
remedies reactivate a member’s grievance or provide complete relief, there is no need for
the member to seek judicial resolution of his dispute.
Here, the first part of the Clayton inadequacy test does not apply because Lovelace
did not pursue a grievance. Therefore, we look to the second part of the test: whether Local
1300’s remedies provide complete relief. Numerous federal courts applying the Clayton
inadequacy test have concluded that internal union remedies do not offer complete relief if
they do not provide monetary damages. See, e.g., Maddalone v. Local 17, United Bhd. of
Carpenters of Am., 152 F.3d 178, 187 (2d Cir. 1998) (excusing exhaustion where the union
failed to show that it could have paid the compensatory or punitive damages that the union
member sought); Achilli v. John J. Nissen Baking Co., 989 F.2d 561, 564 (1st Cir. 1993)
(excusing exhaustion where the union failed “to demonstrate the existence of an internal
remedy that might have given [the union member] the damages he seeks”); Beyene v.
Coleman Sec. Servs., Inc., 854 F.2d 1179, 1183 (9th Cir. 1988) (excusing exhaustion where
the union failed to show that it could award monetary damages); Cantrell v. Int’l Bhd. of
Elec. Workers, Local 2021, 860 F. Supp. 783, 786 (W.D. Okla. 1991) (excusing exhaustion
where the union failed to show that the union member could have received back pay or a
19
monetary assessment), aff’d, 32 F.3d 465 (10th Cir. 1994); cf. Chapman v. UAW Local
1005, 670 F.3d 677, 685–86 (6th Cir. 2012) (requiring exhaustion where the union’s
Preliminary Review Board had the authority to require the union to pay money damages,
back pay, or both), cert. denied, 133 S. Ct. 438, 184 L. Ed. 2d 260 (2012); Rogers, 2 F.3d
at 167 (requiring exhaustion where the union’s internal procedures provided monetary
damages); Tinsley v. UPS, 665 F.2d 778, 780 (7th Cir. 1981) (same); Murman v. Renold
Power Transmission Corp., 632 F. Supp. 853, 857 (M.D. Pa. 1985) (“[T]he [u]nion would
have been able to afford plaintiff complete relief since [it] has the power to grant monetary
damages.”).
Lovelace sought compensatory and punitive damages for his defeat in the 2010
election, reputational injury, pain and suffering, and emotional distress. Neither § 22.1 nor
§ 14.8 of the Local 1300 Constitution, however, provide monetary damages. Thus, we
conclude that Local 1300’s internal remedies were inadequate and Lovelace was not
required to exhaust them.
CONCLUSION
In conclusion, we hold that when a union member claims that his union and a fellow
union member are liable for defaming him and seeks monetary damages, if the union’s
internal remedies do not provide monetary damages, they are inadequate and the union
member is not required to exhaust them. Accordingly, we affirm the judgment of the Court
of Special Appeals.
JUDGMENT OF THE COURT OF
SPECIAL APPEALS AFFIRMED.
20
COSTS TO BE PAID BY
PETITIONERS.
21
Circuit Court for Baltimore City
Case No. 24-C-10-006258
Argued: November 10, 2014
IN THE COURT OF APPEALS
OF MARYLAND
No. 25
September Term, 2014
______________________________________
AMALGAMATED TRANSIT UNION,
LOCAL 1300 AND DAVID A. MCCLURE
v.
WILLIAM T. LOVELACE, JR.
______________________________________
Barbera, C.J.
Harrell
Battaglia
Greene
Adkins
McDonald
Watts,
JJ.
______________________________________
Concurring Opinion by Watts, J., which
McDonald, J., joins
______________________________________
Filed: February 4, 2015
Respectfully, I concur. I would affirm the judgment of the Court of Special Appeals
and hold that William T. Lovelace, Jr.’s (“Lovelace”), Respondent’s, tort claim for
defamation with actual malice sought monetary damages that Amalgamated Transit Union,
Local 1300 (“Local 1300”), Petitioner, could not provide1 as Local 1300 lacked a sufficient
internal remedy to process and adjudicate such a claim; therefore, Lovelace was not
required to exhaust internal union remedies. The Majority recognizes that the defamation
claim is different from claims that are anticipated by Local 1300’s constitution, but does
not expand upon the idea or append the distinction to its holding. See Maj. Slip Op. at 17.
I would.
Lovelace’s claim could have arisen in any employment context, but simply
happened to arise within the union election context. Nothing within Local 1300’s
constitution provided for the handling and resolution of the type of claim brought by
Lovelace—a tort claim for defamation. Section 22 of Local 1300’s constitution, entitled
“Charges, Trials and Penalties,” sets forth the union’s “chargeable offense” procedure
through which a union member can prefer charges against another union member or officer
for various offenses, including “conduct unbecoming a member” and “financial
malpractice.” If charges are preferred against a union member or officer, the charges may
thereafter be referred to the Executive Board or a trial committee for investigation and trial.
If charges are sustained against a union member or officer, that member or officer “may be
1
I agree with the Majority that, where a union member claims that he has been
defamed by the union and a fellow union member “and seeks monetary damages, if the
union’s internal remedies do not provide monetary damages, they are inadequate and the
union member is not required to exhaust them.” Maj. Slip Op. at 20.
subjected to discipline and penalty in accordance with the applicable provisions of” Local
1300’s constitution. Possible discipline includes suspension from office, suspension or
expulsion from the union, fines, a declaration that the offender is ineligible to hold office,
or “other[] discipline[.]” In addition, Section 14 of Local 1300’s constitution, concerning
election of local union officers, provides a procedure for challenging the results of an
election, stating: “Any member who is entitled to vote may challenge the conduct or results
of an election by filing, within ten (10) days of the counting of the ballots, a challenge to
the incumbent [Secretary-Treasurer] of his or her [Local Union] to such effect.”
In short, even if Lovelace had brought his defamation claim under Local 1300’s
constitution, it is unclear whether Local 1300 would have been equipped to process and
resolve the matter under either Section 22 or Section 14, let alone award monetary
damages. The Majority is in accord but does not make this obvious distinction a part of its
holding. See Maj. Slip Op. at 17. Specifically, the Majority states that, “while there is a
possibility that pursuing § 22.1 and § 14.8 of the Local 1300 Constitution might have
mitigated some of Lovelace’s damages, any mitigation is uncertain and speculative.” Maj.
Slip Op. at 17. The Majority notes that Local 1300 “has no control over Lovelace’s
reputation, either within the union community or without. Nor could it control the results
of a new election. Also, the record does not reveal any mechanism in the Local 1300
Constitution for informing all of the union’s membership about the results of a union trial.”
Maj. Slip Op. at 18. Stated otherwise, Local 1300’s constitution did not provide a
mechanism by which the union could adjudicate and provide complete relief to Lovelace,
even absent Local 1300’s inability to provide the monetary damages that were sought.
-2-
Where, as here, a tort claim for defamation with actual malice seeking monetary
damages is at issue, a trial court—not a union trial board—is best positioned to adjudicate
the tort claim. Defamation is a common law tort, and “to present a prima facie case for
defamation, a plaintiff must ordinarily establish that the defendant made a defamatory
statement to a third party; that the statement was false; that the defendant was legally at
fault in making the statement; and that the plaintiff thereby suffered harm.” Gohari v.
Darvish, 363 Md. 42, 54, 767 A.2d 321, 327 (2001) (citations and paragraph break
omitted). The first element involves “publication,” and the fourth element involves
“special harm.” See Restatement (Second) of Torts, § 558 (1977). These elements are
technical legal concepts that courts have applied and developed through the case law for
decades. Moreover, as an officer of Local 1300, Lovelace was a public figure, and thus
had to prove actual malice, yet another technical legal concept. See Chesapeake Publ’g
Corp. v. Williams, 339 Md. 285, 297, 661 A.2d 1169, 1175 (1995) (“[F]or a person to be
held liable for defaming a public figure, actual or constitutional malice must be shown.
Proving actual malice requires clear and convincing evidence that a statement was made
with knowledge that it was false or with reckless disregard of whether it was false or not.”
(Citations and internal quotation marks omitted)). Trial courts routinely address these legal
concepts in resolving tort claims for defamation; a union’s trial board is unlikely to ever be
called upon to resolve defamation claims, especially if they are unrelated to a labor dispute.
In sum, I would hold that, under the circumstances of this case, Lovelace was not
required to exhaust Local 1300’s internal remedies—not only due to the unavailability of
monetary damages, but also due to the lack of an internal union remedy sufficient to process
-3-
and adjudicate such a claim.
For the above reasons, respectfully, I concur.
Judge McDonald has authorized me to state that he joins in this opinion.
-4-
Circuit Court for Baltimore City
Case No. 24-C-10-006258
Argued: November 10, 2014
IN THE COURT OF APPEALS OF
MARYLAND
No. 25
September Term, 2014
AMALGAMATED TRANSIT UNION,
LOCAL 1300 and DAVID A. McCLURE
v.
WILLIAM T. LOVELACE, JR.
Barbera, C.J.,
Harrell,
Battaglia,
Greene,
Adkins,
McDonald,
Watts,
JJ.
Dissenting Opinion by Harrell, J.
Filed: February 4, 2015
I dissent. I do so because the Majority opinion fails to persuade me that adoption
by Maryland of the “Clayton inadequacy test” announced in Clayton v. Int’l Union, 451
U.S. 679, 689, 101 S.Ct. 2088, 2095 (1981) (quoted in Maj. Slip. Op. at 10), fits
comfortably the circumstances of the present case. First, the Clayton inadequacy test for
exceptions from the general exhaustion requirement is limited explicitly to claims under
§ 301 of the Labor Management Relations Act, 1947, 29 U.S.C. § 185(a) (2012), for
“violation[s] of contracts between an employer and a labor organization representing
employees in an industry affecting commerce . . . , or between any such labor
organizations.” See Maj. Slip. Op. at 9–10 n.8. The present case does not fit within the
universe of claims for which the Clayton test was devised. Second, the application of the
rule announced in the Majority opinion would allow a plaintiff to avail him or herself of
the Clayton test exceptions to skirt the exhaustion requirement merely by including in the
complaint a prayer for monetary relief and allegations that the relevant labor organization’s
procedures do not authorize a remedy that contemplates the direct award of money
damages or restitution.1
1
The Majority opinion, in its efforts to singularize the present case, conflates pleading and
proof, an obfuscation that will allow a plaintiff to avoid the exhaustion requirement through
mere pleading, without proof. Maj. Slip. Op. at 16–17. The Majority opinion holds “that
when a union member claims that his union and a fellow union member are liable for
defaming him and seeks monetary damages, if the union’s internal remedies do not provide
monetary damages, they are inadequate and the union member is not required to exhaust
them.” Maj. Slip. Op. at 20 (emphasis added). This suggests that Lovelace need only have
pleaded the magic words in order to skate safely past the obstacle of exhaustion. Yet in
attempting to explain why Maryland should adopt a bastardized version of the Clayton test,
I find greater comfort in deciding the present case by analogy to Maryland
administrative law explicating how Maryland courts resolve issues of primary and
concurrent jurisdiction regarding maintenance of a proceeding before an administrative
agency and pursuit of judicial action. On this score, Converge Services Group, LLC v.
Curran, 383 Md. 462, 860 A.2d 871 (2004), is instructive. In Converge, we held that,
where the courts and an administrative agency have concurrent jurisdiction over a claim,
the claim should first run its course through the appropriate administrative scheme before
court action may be appropriate. Converge, 383 Md. at 482–86, 860 A.2d at 883–85. Even
see Clayton v. Int’l Union, 451 U.S. 679, 689, 101 S.Ct. 2088, 2095 (1981), the Majority
opinion suggests:
Here, there is no Local 1300 procedure that could have
prevented McClure from making the false and defamatory
statements about Lovelace. Also, the jury found that McClure
defamed Lovelace with actual malice. When a plaintiff proves,
by clear and convincing evidence, that he was defamed with
actual malice, damages are presumed. Therefore, no Local
1300 procedure could have adequately avoided or
compensated for all of Lovelace’s damages because once he
proved actual malice, the jury was justified in awarding
damages without further proof of loss.
Maj. Slip. Op. at 16–17 (emphasis in original) (footnote omitted) (citations omitted). The
Majority opinion puts the cart before the horse by referencing the legal principle that
defamation damages are presumed once—and only if—the plaintiff demonstrates
successfully at trial that he was defamed with actual malice. Id. The Majority opinion
seeks to bolster this premise by citation to a case, Jacron Sales Co. v. Sindorf, 276 Md.
580, 601, 350 A.2d 688, 700 (1976), that bears on the elements of proof at trial where the
same measure of damages are presumed if a plaintiff proves defamation with actual malice.
Maj. Slip. Op. at 16–17. Because the Majority cannot make up its mind whether the rule
it announces is one of pleading sufficiency or proof sufficiency, I conclude that my reliance
on the comparative clarity of our State administrative law principles discussed infra is
preferable.
2
though the claims in Converge implicated areas of law in which the relevant agency had
no statutorily-recognized expertise, we concluded that a claim should still run its course
through the administrative procedures before judicial oversight may be appropriate.
Converge, 383 Md. at 486, 860 A.2d at 885. Reasoning from these circumstances by
analogy, Lovelace should have exhausted the remedies available to him through the
constitution of Amalgamated Transit Union, Local 1300 (“the Union”) before bringing in
court his defamation action, even though the Union may not have expertise in defamation
law per se and could not award directly monetary relief.
The dispute in Converge was between Converge Services Group, LLC, d/b/a
SureDeposit, Inc. (“SureDeposit”), and the Consumer Protection Division of the Office of
the Maryland Attorney General (“the Division”). Converge, 383 Md. at 466, 860 A.2d at
873. After SureDeposit began marketing and selling “surety bond product[s]” to Maryland
residential real estate tenants to be used by those tenants in lieu of traditional security
deposits, the Division commenced an investigation. Id. The Division believed that
SureDeposit’s trade practices violated the Maryland Consumer Protection Act, Md. Code
(1975, 2000 Repl. Vol.), §§ 13-101, et seq., of the Commercial Law Article (“CPA”), and
the Maryland Security Deposit Law and Application Fee Law, Md. Code (1974, 2003 Repl.
Vol.), §§ 8-203 and 8-213 of the Real Property Article (collectively, “SDL”). Id.
Unsatisfied by the course of negotiations with the Division, and anticipating a potential
contested administrative process regarding the Division’s probable filing of administrative
charges, SureDeposit filed pre-emptively a complaint in the Circuit Court for Baltimore
County seeking declaratory relief that the SDL did not apply to SureDeposit’s “surety bond
3
product” and, assuming that relief was granted, that SureDeposit had not violated the CPA.
Id.; see Converge, 383 Md. at 470–71, 860 A.2d at 876. Very shortly thereafter, the
Division filed an administrative statement of charges against SureDeposit, alleging
multiple violations of the SDL and CPA. Id.The actions proceeded briefly on parallel tracks. Converge, 383 Md. at 471, 860
A.2d at 876. The Division moved eventually for dismissal of the complaint in the Circuit
Court action arguing, inter alia, that the Division, as an administrative agency with
recognized expertise with regard to administering and interpreting the CPA, exercised
primary jurisdiction over the entire dispute because the dispute included an interpretation
of a law in its area of specific expertise—the CPA. Converge, 383 Md. at 466–67, 473,
860 A.2d at 873, 877. SureDeposit disagreed, arguing that the alleged violations of the
CPA were dependent on whether the SDL applied, an area of law in which the Division
possessed no particular expertise. Converge, 383 Md. at 474, 860 A.2d at 878. The Circuit
Court dismissed SureDeposit’s complaint, at which point SureDeposit noted an appeal to
the Court of Special Appeals. Converge, 383 Md. at 467, 860 A.2d at 873. We issued a
writ of certiorari, on our initiative and before the intermediate court could decide the
appeal. Converge, 383 Md. at 467, 860 A.2d at 873–74. Because declaratory judgments
are inappropriate remedies where the primary jurisdiction doctrine properly is implicated,
Converge, 383 Md. at 478, 860 A.2d at 880, we were asked to consider whether the
Division had “primary jurisdiction” over the subject matter of the complaint where the
4
issues raised in the complaint required interpretation of the SDL before reaching the
interpretation of the CPA.2 Converge, 383 Md. at 467, 860 A.2d at 874.
We began by discussing primary jurisdiction principles:
“[Primary jurisdiction] is a judicially created rule designed to
coordinate the allocation of functions between courts and
administrative bodies. The doctrine is not concerned with
subject matter jurisdiction or the competence of a court to
adjudicate, but rather is predicated upon policies of judicial
restraint: “which portion of the dispute-settling apparatus—the
courts or the agencies—should, in the interests of judicial
administration, first take the jurisdiction that both the agency
and the court have.” It comes into play when a court and
agency have concurrent jurisdiction over the same matter, and
there is no statutory provision to coordinate the work of the
court with that agency.
...
[P]rimary jurisdiction is relevant only . . . where the claim is
initially cognizable in the courts but raises issues or relates to
subject matter falling within the special expertise of an
administrative agency.”
Converge, 383 Md. at 478–79, 860 A.2d at 880–81 (quoting Maryland-National Capital
Park and Planning Commission v. Washington National Arena, 282 Md. 588, 601–02, 386
A.2d 1216, 1225–26 (1978) (footnote omitted) (citations omitted)); see SEFAC Lift &
Equipment Corp. v. Mass Transit Administration, 367 Md. 374, 380, 788 A.2d 192, 196
(2002) (“We have long held, and have recently confirmed, that ‘[w]here an administrative
agency has primary or exclusive jurisdiction over a controversy, the parties to the
2
We were asked to consider two additional questions as well, but did not reach them,
resolving the appeal on the first question. Converge Services Group, LLC v. Curran, 383
Md. 462, 467 n.2, 860 A.2d 871, 874 n.2 (2004).
5
controversy must ordinarily await a final administrative decision before resorting to the
courts for resolution of the controversy.’” (citations omitted)). We identified several policy
concerns underlying the primary jurisdiction doctrine, including preservation of a uniform
regulatory scheme, and the benefit to a reviewing court of the “‘special expertise and
technical knowledge normally employed in administrative fact-finding and rule-making.’”
Converge, 383 Md. at 479, 860 A.2d at 881 (quoting Washington National Arena, 282 Md.
at 603, 386 A.2d at 1227).
We noted that in some situations, the “administrative remedy is intended by the
Legislature to be exclusive and must be exhausted before recourse may be appropriate to
the courts.” Converge, 383 Md. at 481, 860 A.2d at 882. In others, the administrative
process and remedy might be “intended to be primary, but not exclusive, relative to seeking
judicial relief.” Converge, 383 Md. at 482, 860 A.2d at 883; see Prince George’s County
v. Ray’s Used Cars, 398 Md. 632, 645, 922 A.2d 495, 503 (2007) (“Moreover, while there
is no presumption that an administrative remedy is intended to be exclusive when a
recognized alternative judicial remedy exists, there is a strong presumption that the
administrative remedy is intended to be primary, and . . . a claimant cannot maintain the
alternative judicial action without first invoking and exhausting the administrative
remedy.” (internal quotations omitted)); Public Service Commission v. Wilson, 389 Md.
27, 86–92, 882 A.2d 849, 884–88 (2005) (requiring exhaustion of an administrative appeal
process where an employee of the Maryland Public Service Commission was terminated);
N.A.A.C.P. v. Golding, 342 Md. 663, 679, 679 A.2d 554, 562 (1996) (“Even when a dispute
between an organization and its members is of a character that warrants judicial
6
intervention, courts have typically required exhaustion of internal remedies as a
prerequisite to judicial involvement.”). Regardless, “‘when there are two forums available,
one judicial and the other administrative, . . . and no statutory directive indicating which
should be pursued first, a party is often first required to run the administrative remedial
course before seeking a judicial solution.’” Converge, 383 Md. at 483, 860 A.2d at 883(quoting Clinton v. Board of Education, 315 Md. 666, 678, 556 A.2d 273, 279 (1989)).
In Converge, we examined the relevant portion of the CPA,3 and concluded that
alleged violators were permitted ordinarily to obtain a judicial remedy only after the person
was aggrieved by an order or decision by the Division. Converge, 383 Md. at 483–84, 860
A.2d at 883–84. We agreed with SureDeposit that the CPA did not commit exclusive
administrative remedies to the Division for resolution of disputes involving the SDL, and
the Division conceded that at least some of the charges were based on the SDL exclusively.
Converge, 383 Md. at 482, 860 A.2d at 883. We concluded, however, that the mere
“mixing of claimed violations from statutes within and without the agency’s particular area
of expertise” did not justify bifurcating the resolution of the global dispute nor did it justify
exempting the matter from the initial administrative dispute resolution process. Id.As SureDeposit’s complaints included a request for a declaration as to the viability
of the Division’s CPA claims, we held that “it would be inappropriate for a court to accept
that invitation in advance of the Division being allowed to bring to bear, through the
3
The relevant portion of the CPA provided: “If a person is aggrieved by an order or
decision of the Division, he may institute any appropriate proceeding he considers
necessary.” Md. Code (1975, 2000 Repl. Vol.), Commercial Law Article, § 13-407.
7
designated regulatory scheme, its particular expertise to render a final administrative
decision regarding the CPA matters.” Converge, 383 Md. at 485, 860 A.2d at 884. We
held further that an administrative determination by the Division as to the charges of
SureDeposit’s alleged violations of the CPA might be helpful to a court considering the
related allegations as to violations of the SDL, Converge, 383 Md. at 483, 860 A.2d at 883,
even though the Division “may not [have] possess[ed] statutorily-recognized expertise
regarding the assessment of matters arising under the SDL.” Converge, 383 Md. at 486,
860 A.2d at 885.
Converge provides a friendly analogy in the present case for two reasons. First, the
Union is similar to an administrative agency in that both have non-judicial processes that
must be exhausted generally before recourse to a Maryland court is appropriate. See Walsh
v. Communications Workers of America, Local 2336, 259 Md. 608, 612, 271 A.2d 148,
150 (1970) (“Maryland law has long recognized the rule that a union member must exhaust
the remedies open to him under the union rules before [he or she] can seek aid from the
courts unless the union procedure is procedurally or substantively inadequate, fraudulent
or otherwise arbitrary and illegal.”). In cases such as this one, where a union and Maryland
courts have a sort of concurrent jurisdiction over a dispute that, at its heart, arises from an
internal union affair, union members should first exhaust their own processes. Requiring
resort first to the internal processes might have resolved creatively and satisfactorily what
8
would otherwise blossom into contentious claims.4 If union members decide to bring a suit
after the internal process has been exhausted, reviewing courts would have the benefit of
the union’s “take” on the claims.
Second, Converge teaches that, even though claims before an administrative agency
may implicate matters outside of their expertise, there are good reasons nonetheless to
allow a reviewing administrative agency to grapple with those parts of the dispute for
which they may be able to do. Converge, 383 Md. at 483, 485–86, 860 A.2d at 883–85.
Because the defamation claim is grounded in a core Union function—namely, the allegedly
false and defamatory statements made by David A. McClure (“McClure”) about
Lovelace’s discharge of his duties as Treasurer of the Union prior to and during a Union
election campaign—the Union is equipped by its own internal processes to deal with the
underlying conflict in a way that might have avoided or mitigated significantly the harms
claimed to have been suffered by Lovelace, thus mitigating his provable damages.
As noted in the Majority opinion, § 22.1 of the Union’s constitution provided a
mechanism for McClure to be charged with and disciplined for misconduct. Maj. Slip. Op.
at 6. McClure could have been suspended potentially from office, declared ineligible for
office, or otherwise disciplined. Id. Section 14.8 permitted Lovelace to challenge the
4
For example in the present case, had Lovelace invoked timely the union process, he may
have been able to secure a determination that what McClure said about him in his conduct
of the role of Union Treasurer was false, similar to what he was able to convince the jury
in the defamation action. Such a determination could have been made public as a means
to clear the air before the Union election. Were that done, perhaps he would not have lost
the election. The relative certainty of this benevolent prediction is not important, only that
it is reasonably possible, in justifying requiring exhaustion of the internal Union remedies
first.
9
conduct or results of an election, apparently on any grounds. Maj. Slip. Op. at 6–7. The
Union could have determined that Lovelace was slandered unfairly leading up to or during
the election campaign and could have ordered that a new election be held. Id. Although
these possible avenues of remedy would not have provided Lovelace with the substantial
monetary damages awarded to him by the jury, all or a substantial part of the damages may
have avoided or mitigated.
The Majority seems unwilling to speculate as to whether the internal union
procedures would have awarded Lovelace the full relief he sought, and instead prefers to
allow the jury verdict to stand. Some speculation, though, is unavoidable on either side of
our respective reasoning. See Public Service Commission, 389 Md. at 90–91, 882 A.2d at
887 (engaging in a similar speculation analysis as to the potential outcome of an
administrative appeal process where an employee of the Maryland Public Service
Commission was terminated); Golding, 342 Md. at 683, 679 A.2d at 563–64 (engaging in
a similar speculation analysis as to the potential outcome of internal mechanisms for
challenging elections of a voluntary membership organization). As noted by the Majority
opinion, Lovelace convinced successfully a jury that McClure defamed him, and he
obtained a verdict against the Union and McClure of approximately $425,000.00. Maj.
Slip. Op. at 2–3. The jury was able to engage in a certain degree of speculation in coming
to its verdict; appellate courts also are able to speculate that exhaustion of internal union
procedures may have obviated the need for Lovelace’s defamation action or at least
mitigated his damages. Who can say with certainty that Lovelace’s apparent ability to
convince a jury would not have translated into a similarly successful effort to convince a
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union trial board that McClure’s remarks were false and/or that a new election would be
appropriate in view of that finding. At the least, allowing the union grievance process to
have run its course would seem provident in order to determine whether mitigation or
elimination of the basis upon which monetary damages could be proven for any vestigial
injury due to defamation or the lost election.
Lovelace’s failure to avail himself of the available union procedures in a timely
manner should result in loss of the victory represented by the jury verdict here. Although
such an outcome for Lovelace may be unfortunate, as enough time has passed such that the
lost election can no longer be run anew, the result is, in my view, required before we cast
aside so quickly the exhaustion requirement. Accordingly, I would reverse the judgment
of the Court of Special Appeals and remand the case to that Court with directions to vacate
the judgment of the Circuit Court for Baltimore City and assess costs in all courts against
Lovelace.
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