US Federal Magistrate Judge Joseph Dickson, Martin Luther King Courthouse, Newark, NJ. (Carmen Natale)
A Newark federal judge has given health-care union members a green light to pursue a claim against their union president for her award of $1.4 million in no-bid legal work to her live-in boyfriend.
The union members can proceed with the claim because they pleaded sufficient facts to show that their president violated the Labor-Management Reporting and Disclosure Act on the grounds of breach of fiduciary duty, U.S. Magistrate Judge Joseph Dickson ruled July 11 in Fonti v. Health Professionals & Allied Employees, 13-4231. The union members raised the claim in an amended complaint filed Monday.
The union members claim president Hannah Twomey breached her fiduciary duty by awarding contracts to the Hackensack firm of Loccke, Correia, Limsky & Bukosky, without disclosing that she and a partner in the firm, Richard Loccke, were living together. The firm has collected more than $1.4 million in fees from the union since 2006, as shown by reports from the State Department of Labor, the plaintiffs claim.
The plaintiffs claim that Twomey and Loccke have been in a romantic relationship for nearly 30 years and that they have lived for several years at the same address. They also claim Twomey had a conflict of interest in awarding the legal contracts because they directly benefited her, as a member of Loccke’s household, and that Twomey did not meet her obligation to report the conflict. Furthermore, the plaintiffs claimed, union officials were aware of the conflict allegations but failed to investigate them.
Based on those allegations, the plaintiffs pleaded “sufficient facts to show that Twomey breached her fiduciary duties, Twomey’s failure to report that breach, and a failure of HPAE officials to investigate plaintiffs’ allegations against Twomey. This constitutes good cause pursuant to the LMRDA,” Dickson wrote.
The plaintiffs are now seeking an accounting of funds paid to Locke’s firm and repayment of those funds.
The suit was brought by Kathleen Fonti, a member and former president of Health Professionals & Allied Employees AFT/AFL-CIO Local 5030, which represents employees at Palisades Medical Center in North Bergen, N.J. The suit named as defendants the union, the retiree medical plan, Twomey and Education and Communications Director Michael Slott, a trustee of the plan. Also named was the plan administrator, Benserco Inc., of Englewood Cliffs, N.J.
The suit, first filed in Bergen County in May 2012 and removed to federal court in Newark in July 2013, claims the membership was required to vote on a proposed health benefits plan for retirees after providing them incomplete and misleading information about the plan. The suit claims the benefit plan pays a paltry benefit of no more than $150 a month. What’s more, the suit says, the union collects more than $1 million for the plan from members’ paychecks but pays the bulk of the money to administrative expenses. The suit seeks to have the retiree medical plan declared null and void.
Dickson also gave the plaintiffs permission to add four additional union members, Anne Picogna, Adrian Rojas, Judith Freemantle and Linda Hegarty, as plaintiffs, and to add the plan’s two other trustees, Joan Johnson and Christine O’Hern, as defendants.
Twomey and HPAE brought a counterclaim against Fonti for defamation, citing disparaging statements that include a Facebook page and a website called “Boss Twomey’s Family.” Twomey accused Fonti of having a vendetta because Twomey reported to federal authorities that Fonti misused funds from Local 5030. Fonti was charged in 2009 with using $14,600 of the local’s funds to pay for her son’s wedding expenses. Fonti pleaded guilty to a misdemeanor and was sentenced to two years probation and a $1,000 fine. The deal also included a three-year ban on serving in a union as an officer, trustee, employee or consultant. Fonti has moved to dismiss the counterclaim.
“We’re very pleased that we’re finally allowed to go forward on the full spectrum of complaints,” said A. Ross Pearlson of Wolff & Samson in West Orange, who represents the plaintiffs.
The plaintiffs claimed Loccke’s firm was receiving nearly all the union’s legal work, and that no one was reviewing the firm’s invoices before they were paid. Since the union members raised the issue of Twomey’s ties to Loccke, the union has spread its work out among multiple firms, but has not severed its ties to Loccke’s firm, Pearlson said. The plaintiffs are not seeking to have Loccke’s firm fired but want to establish a means for reviewing its billing to the union, Pearlson said.
Loccke did not return a call. Elizabeth Lorell of Gordon and Rees in Florham Park, N.J., who represented Slott, Johnson, O’Hern and the medical plan, issued a statement in response to the ruling: “Defendants vehemently deny the allegations set forth in Plaintiffs’ amended pleading as they are wholly without merit. We intend to vigorously defend the HPAE trustees, as well as the HPAE Retiree Medical Trust, and will seek all appropriate remedies against Plaintiffs under the law.”
Louis DiLuzio of The Choi Law Group in Ridgefield Park, N.J., who represented the union and Twomey, said his clients “deny the allegations set forth in Ms. Fonti’s amended complaint, which is the product of speculation and conjecture. HPAE and Ms. Twomey will zealously defend themselves against this lawsuit which they believe is without merit and brought solely for retaliatory purposes. They look forward to the truth revealing itself upon conclusion of this litigation.”
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