Local 1001 v. Laborers' Int'l Unio ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 04-1654 & 04-8006
COUNTY, MUNICIPAL EMPLOYEES’ SUPERVISORS’ AND
FOREMEN’S UNION LOCAL 1001 (CHICAGO, ILLINOIS),
Plaintiff-Appellant,
v.
LABORERS’ INTERNATIONAL UNION OF NORTH AMERICA,
Defendant-Appellee.
____________
Appeal (and request for permission to appeal)
from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 04 C 1677—Robert W. Gettleman, Judge.
____________
SUBMITTED APRIL 5, 2004—DECIDED APRIL 22, 2004
____________
Before POSNER, EASTERBROOK, and ROVNER, Circuit
Judges.
EASTERBROOK, Circuit Judge. The Laborers’
International Union sought to put its Local 1001 into
trusteeship. Authority to approve trusteeships is vested
in an independent hearing officer as a result of a consent
decree settling a racketeering suit by the United States. See
Serpico v. Laborers’ International Union, 97 F.3d 995 (7th
Cir. 1996). Concluding that the Local’s leadership had been
infiltrated by organized crime, was engaged in financial
2 Nos. 04-1654 & 04-8006
mischief, and had undermined the Local’s democratic
processes, the independent hearing officer imposed a trus-
teeship. After the Trustee assumed control, the law firms
that had previously represented the Local filed a suit—in
the name of the Local rather than of the ousted officers— in
state court. The Trustee promptly fired the law firms
(Winston & Strawn LLP and Faraci & Faraci) and directed
them to take no further action in the Local’s name; mean-
while the International removed the suit to federal court on
the ground that disputes about trusteeships arise under
§302 of the Labor-Management Reporting and Disclosure
Act, 29 U.S.C. §462.
Still purporting to act for the Local, the law firms filed
two motions: first for a remand on the ground that Local
1001 represents only municipal employees and hence is
outside the scope of the LMRDA even though the
International is a “labor organization” covered by that stat-
ute; and second (in the event the first should be denied)
for a temporary restraining order that would block the
Trustee from exercising any authority over the Local. The
district judge denied both motions but certified his decision
on the first for interlocutory appeal under 28 U.S.C.
§1292(b). The judge stated that the subject ordinarily would
not meet the criteria of that statute but that, as the law
firms are entitled to appeal from the order denying their
request for a TRO, this court should have the whole dispute
before it. The law firms then filed a petition for leave to
appeal under §1292(b) plus an appeal from the denial of the
request for a TRO. They concede in this court that denial of
a TRO is not appealable—as indeed it is not, for a TRO is
not an “interlocutory injunction” within the meaning of 28
U.S.C. §1292(a)(1). See Sampson v. Murray, 415 U.S. 61, 86
& n.58 (1974). Instead they argue that the district court’s
order is appealable because it has the “effect” of denying an
interlocutory injunction. See Gulfstream Aerospace Corp. v.
Mayacamas Corp., 485 U.S. 271, 287-88 (1988); Carson v.
Nos. 04-1654 & 04-8006 3
American Brands, Inc., 450 U.S. 79 (1981). But the only
reason it might have such an effect would be their own
strategy; rather than asking for a preliminary injunction,
the law firms immediately appealed. That maneuver cannot
be allowed to work. Jumping the gun does not turn an
otherwise non-final action into an appealable order. Only
when resort to the regular processes of litigation is unavail-
ing, and the judge is unwilling to make a prompt decision
even though delay erodes or obliterates the rights in
question, does inaction have the “effect” of denying injunc-
tive relief. This district judge has not shown any disposition
to dawdle. Thus the premise underlying the district court’s
use of §1292(b) is false. We could deny the petition for leave
to appeal on that ground alone, but there is a more funda-
mental problem: the two law firms have no business
purporting to speak on behalf of Local 1001. Both the notice
of appeal (No. 04-1654) and the petition for leave to appeal
(No. 04-8006) have been filed against express instructions
of the litigant purportedly represented.
Article IX §7 of the International’s constitution provides
that a trustee takes full control of a local and exercises all
powers that the local’s directors and officers could exercise.
This entitles the Trustee to fire the law firms whether or
not the LMRDA applies (and, if it does, its provisions give
a trustee the same powers; see 29 U.S.C. §464(c)). A trus-
tee’s powers vest immediately on appointment; judicial
approbation is unnecessary. See, e.g., Letter Carriers v.
Sombrotto, 449 F.2d 915, 921 (2d Cir. 1971) (Friendly, J.).
The law firms insist that this would enable the
International to prevail even if it acts improperly, for a
trustee will block any challenge to his own authority. Yet no
trustee can prevent the ousted officers from suing in their
own names (as in Serpico) and asking the court to restore
them to office. The problem here is that the law firms
purport to represent Local 1001 alone. All litigation must
occur in the name of the real party in interest, see Fed. R.
4 Nos. 04-1654 & 04-8006
Civ. P. 17(a), so the judge was obliged to treat this suit as
exactly what it purports to be: a claim by the Local rather
than by a natural person. Yet these law firms are no longer
authorized to speak for the Local.
Responding to the Trustee’s motion to dismiss the ap-
peals, the law firms assert that they have a fiduciary duty
to the Local and its members that supersedes any instruc-
tions from the Trustee. This breathtaking claim depicts
lawyers as ombudsmen authorized to pursue whatever legal
remedies they think a client should favor, whether the
client agrees or not. It is hard to take seriously. Suppose the
board of directors at Alpha Corp. instructs counsel to
commence a suit charging Beta Inc. with patent infringe-
ment. After a proxy contest in which one issue is the
prudence of spending corporate funds on this suit, the
directors are thrown out of office, and their replacements
direct counsel to dismiss the suit. According to the view
advanced by our two law firms, the lawyers could refuse to
follow that direction and continue the litigation (presum-
ably at corporate expense) after declaring that they have a
“fiduciary duty to the investors” to prosecute any litigation
they deem meritorious. Twaddle! The fiduciary duty rests
on the directors in our hypothetical, and on the Trustee in
the actual events. Counsel’s responsibility is to give good
advice and, if unsuccessful in persuasion, to implement the
client’s decisions, not to thwart or override them.
These law firms have no responsibility at all, fiduciary or
otherwise, for they have been sacked. Clients may dismiss
their attorneys for any reason, good or bad, and a fired
lawyer has no entitlement—certainly no “fiduciary
duty”—to continue acting on the ex-client’s behalf. See
generally American Law Institute, Restatement of the Law
Governing Lawyers §§ 43, 44 (2000) (collecting authority).
Even if the discharge violates a contract, so that the lawyer
is entitled to damages, the client’s authority to control the
litigation remains absolute; an attorney must withdraw
Nos. 04-1654 & 04-8006 5
from the representation as soon as the client so instructs.
What is more, lawyers are obliged not to oppose or other-
wise undermine their ex-client’s legal position, and they
must not reveal confidences they may have received during
the course of the representation. See Restatement §45(2).
These two law firms, by purporting to act on behalf of a
client that has discharged them, and by opposing in court
the position their ex-client has taken on a matter within the
scope of the representation, may well have violated several
disciplinary rules.
One can imagine situations in which someone other than
a corporation’s board (or a union’s officers) would have
authority to speak for the entity, and then an order by the
board or officers firing counsel could be ineffectual. We have
in mind situations of the kind that support derivative
litigation in corporate law, where a court allows investors
to bypass the board and speak for the corporation. Cf. In re
Fraser, 83 Wn. 2d 884, 523 P.2d 921 (1974), overruled on
other grounds by In re Boelter, 139 Wn. 2d 81, 985 P.2d 328(1999). To the extent this analogy has any force, however,
it is the International and the Trustee who stand in for the
elected officers, and as the Trustee wants counsel gone they
are obliged to go gracefully. The law firms have not sued on
behalf of any officer or member of the Local under a theory
that would permit a member to act derivatively on behalf of
the Local; instead they have flouted the Trustee’s orders
and purported to act as the Local’s lawyers without at-
tempting the sort of demonstration that might justify
derivative litigation. Their approach, if countenanced,
would permit self-help by the ousted officers to thwart
implementation of the LMRDA, the International’s constitu-
tion, and the process established by the consent decree.
We dismiss these appeals as unauthorized by the litigant
and refer this matter to the Attorney Registration and
Disciplinary Commission of Illinois. Local 1001, through
counsel engaged by the Trustee, has moved to dismiss the
6 Nos. 04-1654 & 04-8006
complaint and end the litigation; the district judge should
grant that motion promptly.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-22-04