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McClure v. Lovelace

Court of Special Appeals of Maryland

November 4, 2013


Meredith, Hotten, Salmon, James P. (Retired, Specially Assigned), JJ.


Hotten, J.

Appellee, a union member, brought a defamation action against appellants, local union and its president, predicated on alleged disparaging statements made by the president. Following a jury trial in the Circuit Court for Baltimore City, a verdict was reached in favor of appellee and damages were awarded. Appellants noted a timely appeal and present six questions for our consideration:

1. Did the trial court err by holding as a matter of law that [appellee] was not required to exhaust all available internal union remedies before filing the Complaint?
2. Could the jury permissibly find, on the trial record, that [appellant] McClure acted with "actual malice"?[1]
3. Did the trial court err by instructing the jury to presume damages if it found that [appellant] McClure defamed [appellee] with actual malice?
4. Did the trial court err by permitting the jury to award damages based on allegedly defamatory publications which took place outside the statute of limitations?
5. Should a new trial be awarded based on ex parte communications between the trial judge's law clerk and [appellee]'s counsel which took place during the trial but were not disclosed on the record until after the jury's verdict?
6. Did the trial court err by awarding [appellee] economic damages? For the reasons that follow, we shall affirm the judgment of the circuit court.


In June 2007, appellant, David McClure ("Mr. McClure"), was elected President of Local 1300, Amalgamated Transit Union ("Union"). Appellee, William Lovelace, Jr., was reelected to his third term as Financial Secretary in the same election. Initially, the work relationship between Mr. McClure and appellee was amicable. However, in early 2008, Mr. McClure became suspicious of appellee's financial practices. As a result, a series of disagreements ensued between the two regarding the management of the Union and its finances. Other Union executive board members were aware of the conflict, as several arguments between appellee and Mr. McClure occurred during monthly board meetings. On September 2, 2009, during an executive board meeting, at which the vice president of the International Union was present, a Union member attended the meeting to request assistance with a grievance. While addressing the board, the member stated that in April 2009, Mr. McClure said to him that appellee "has been caught red handed misappropriating funds and stealing money to finance his family personal vacations." Both parties ran for their respective positions on the 2010 executive board. By the time campaigning began for the election, Mr. McClure and appellee were "political enemies." Mr. McClure was reelected as Union president, but appellee lost.

On September 2, 2010, appellee filed a complaint in the Circuit Court for Baltimore City against appellants, Mr. McClure and the Union, alleging defamation. In his complaint, appellee pled that Mr. McClure made defamatory statements about him, alleging that appellee was stealing money from the Union.

Prior to trial, appellants filed a motion to dismiss, arguing that appellee did not exhaust the available internal Union remedies and that if he had, the alleged harm suffered may have been avoided. At a hearing on January 5, 2011, the trial court denied the motion. The court reasoned that because the internal Union procedures could not provide monetary damages as a remedy, they were inadequate; therefore, appellee was not required to exhaust them. Appellee filed an amended complaint on June 20, 2011, alleging that the defamatory statements occurred as far back as 2007, but that he first became aware of them in September 2009. In his complaint, appellee contended that his election defeat was a direct result of Mr. McClure's defamatory statements, resulting in injury to his reputation and financial losses. In their answers, both appellants pled the affirmative defenses of failure to exhaust internal Union remedies and statute of limitations.

At the summary judgment stage, both parties moved for judgment. Appellee was granted partial summary judgment on the question of whether appellee stole from the Union. In appellants' motions for summary judgment, they argued first, that the "actual malice" standard should have applied at trial and second, that the court should have barred any pre-September 2009 statements. The motions court denied the request to apply the actual malice standard, concluding that the trial judge should resolve the issue, but the request to bar the pre-September 2009 statements based on the statute of limitations, was granted. However, the court later granted appellee's motion for reconsideration, reasoning that appellants bore the burden to establish that the statements were barred.

At trial, the crux of appellee's case was that he lost the election because of unfounded rumors initiated by Mr. McClure. Appellee presented a number of witnesses who testified that Mr. McClure stated that appellee should not be reelected because he was stealing money from the Union. Appellants introduced evidence of instances when appellee incorrectly applied Union policy and improperly reimbursed executive board members for expenses. In one instance, appellee reimbursed executive board members for travel mileage to a Union convention, even though they were only passengers in a vehicle. Mr. McClure asserted that these practices led him to believe appellee was mismanaging funds. Appellants also introduced evidence that Mr. McClure requested the Union's financial books from appellee, but appellee refused to provide them. The external auditor hired to perform the audit, testified that he also attempted to obtain the financial documents from appellee, but that appellee refused. Additionally, after the auditor and Mr. McClure entered appellee's office through the use of a locksmith, they observed shredded material on the ground and could not locate relevant records for the audit.

At the close of appellee's case, appellants moved for judgment on the grounds that appellee was aware of some of the alleged pre-September 2009 statements which should have been excluded on statute of limitations grounds. Appellants also argued that in applying the actual malice standard, appellee had not established liability. The trial court denied the motion. At the conclusion of all the evidence, appellants unsuccessfully renewed their motions for judgment predicated on the same basis and on the ground that there was insufficient evidence of economic loss.

The trial court instructed the jury that it had to find that Mr. McClure acted with actual malice to find him liable. The court also instructed the jury that if it found actual malice, it may presume damages. Appellants objected to the presumed damages instruction and to the jury being permitted to award damages for economic loss.

After the jury began its deliberations, the trial court's law clerk approached appellee's counsel regarding an employment application she intended to submit to his law firm. The law clerk inquired whether she should apply directly to the hiring partner or instead give her application to appellee's counsel. Appellee's counsel responded that he would submit the application for her. The next day, the law clerk emailed the hiring partner stating "[i]n the last week or so, I have had the pleasure of watching [appellee's counsel] try a defamation case before [the trial judge], for whom I serve as a judicial law clerk. [Counsel] have graciously agreed to hand-deliver to you my application materials." Later that day, appellee's counsel informed appellants' counsel regarding the conversation with the law clerk and that he was submitting her application to his law firm. Soon after, the jury returned with a verdict in favor of the appellee, awarding him $200, 000 for injury to reputation, $60, 000 for financial loss, and $75, 000 for mental anguish. The jury then resumed deliberations on the issue of punitive damages. During the deliberations, the law clerk entered the jury room on two occasions, once to deliver written punitive damages instructions and once to deliver a pot of coffee. The jury later announced its verdict of $90, 000 in punitive damages.

Both appellants filed post-verdict motions for judgment notwithstanding the verdict, motions for a new trial and motions to amend the judgment. The grounds for the motions included the propriety of the interaction between the law clerk and appellee's counsel. The trial court denied the motions, reasoning that its law clerk's involvement in the case was "very limited."

Appellants noted a timely appeal. Appellee filed a motion to dismiss the Union's appeal for lack of standing. On October 2, 2012, this Court denied the motion.

Additional facts shall be provided, infra, to the extent they prove relevant in addressing the issues presented.


Under Md. Rule 2-322(b)(2), a defendant may seek dismissal of a complaint if the complaint fails "to state a claim upon which relief may be granted." "The appropriate standard of review of the grant or denial of a motion to dismiss is whether the well-pleaded allegations of fact contained in the complaint, taken as true, reveal any set of facts that would support the claim made. Rivera v. Prince George's County Health Dept., 102 Md.App. 456 (1994) (citing Flaherty v. Weinberg, 303 Md. 116, 135-36, 492 A.2d 618 (1985).

"We review a trial judge's decision whether to give a jury instruction under the abuse of discretion standard." See Thompson v. State, 393 Md. 291, 311 (2006). "[T]o merit an instruction, the issue as to which the request is made must have been generated by the evidence adduced." State v. Martin, 329 Md. 351, 357 (1993).

A grant or denial of a motion for judgment or a motion for judgment notwithstanding the verdict is reviewed under the same standard. Orwick v. Moldawer, 150 Md.App. 528, 531 (2003) (citations omitted). We assume the truth of all credible evidence on the issue, and all fairly deducible inferences therefrom, in the light most favorable to the party against whom the motion is made. Id. Consequently, if there is any evidence, no matter how slight, that is legally sufficient to generate a jury question, the case must be submitted to the jury for its consideration. Id. at. 531-32.


A. Was Appellee Required to Exhaust All Available Internal Union Remedies?

Appellants assert that the trial court erred by failing to dismiss appellee's complaint, because appellee declined to pursue the internal Union procedures available, opting instead to file a complaint in court. Appellee responds that he was not required to pursue the internal procedures because they were procedurally and substantively inadequate.[2]

The Court of Appeals has recognized that generally, a union member must exhaust all available remedies before seeking relief from the judicial system. Walsh v. Communications Workers of America, 259 Md. 608 (1970). In Walsh, the defendant violated his union's constitution by working and earning money during a strike. Id. at 609. The union then initiated disciplinary proceedings against him. Id. The defendant did not respond to the disciplinary proceeding notification, attend the hearing, produce any witnesses or speak on his own behalf. Id. at 610. The hearing was held in his absence and a fine was imposed. Id. The defendant neither paid the fine, nor appealed the decision as was his right under the union constitution. Id. The union subsequently filed a lawsuit in court to enforce the fine and received a judgment in its favor. Id.

The defendant appealed, arguing that it was an unfair labor practice to impose a fine on a union member and that federal labor laws prevented the union from seeking enforcement in a state court. Id. The Court of Appeals noted that Maryland law requires that a member of an organization, including labor unions, exhaust available internal remedies before seeking relief from state courts. Id. at 612. The Court also considered that the defendant provided no evidence suggesting that the union appeal procedure was inadequate to protect his rights. Id. at 613. The Court affirmed the trial court's judgment.

Although Maryland requires exhaustion of internal union procedures before seeking judicial relief, this doctrine is not absolute. The United States ("U.S.") Supreme Court outlined the principles governing when exhaustion may be excused in Clayton v. International Union, 451 U.S. 679 (1981). In Clayton, the plaintiff, a union member, was terminated for misbehavior from his position at a plant. Id. at 682. He requested that his union file a grievance on his behalf challenging the termination. Id. The union initially pursued the grievance, but later withdrew from the process. Id. Instead of appealing the decision within the union, the plaintiff filed a lawsuit in federal district court alleging breach of the duty of fair representation. Id. at 683. The plaintiff sought reinstatement from his employer and monetary damages from both the employer and the union. Id. The defendant moved to dismiss the complaint for failure to exhaust internal union appeals procedures. Id. The trial court dismissed the plaintiff's claim. Id. at 684.

The plaintiff appealed to the U.S. Court of Appeals for the Ninth Circuit, which affirmed after deciding the union appeals process was adequate. Id. The Ninth Circuit ruled that because the plaintiff could have received money damages from the union, his failure to exhaust barred his lawsuit against the union. Id. However, it did not bar the plaintiff's suit against the employer because the union appeals would not have resulted in his reinstatement. Id. The plaintiff requested certiorari and the U.S. Supreme Court granted it. Id. at 685.

The Supreme Court held that exhaustion of remedies was not required because the union's procedures could not have provided the complete relief sought. Id. at 691. The Court was opposed to establishing a "universal exhaustion requirement lest employees with meritious[] claims be forced to exhaust themselves and their resources by submitting their claims to potentially lengthy internal union procedures that may not be adequate to redress their underlying grievances." Id. at 689. There are three factors that trial courts should consider when determining whether a party must exhaust:

[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 []; and third, whether exhaustion of the internal procedures would unreasonably delay the employee's opportunity to obtain a judicial hearing on the merits of his ...

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