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The Epic Story of Labor Law's Saul Goodman
In a world of seedy lawyers, one attorney's depraved NLRB saga stands above all others.
While most of my posts on here concern current events in political or legal discourse, I occasionally want to use this space to relay interesting historical information that I glean from reading old case law. Sometimes I come across a fact pattern so fascinating that it swims in my head for days. I recently encountered such a case when perusing precedent for alter ego/single employer cases, and I haven’t been able to get it out of my head since. This post will count as my attempt to finally do so.
We all love a good crime drama. Lawyers especially seem to enjoy stories regarding a fellow attorney’s criminal misconduct, which I can only guess is mostly a product of schadenfreude. Such activity is not especially common in the realm of labor law, but it is far from unprecedented; the National Labor Relations Board’s trial manual includes a section of precedents for suspending or even disbarring wayward counsel. I could probably spend a later post detailing some of the more sordid examples, but today we will examine the case that convinced the NLRB to review and ultimately tighten its rules against practitioners’ wrongdoing. It involves a lawyer who makes Bob Odenkirk’s iconic Saul Goodman character look like a saint.
The star of this story is David M. Somers. Born on August 2, 1951, Somers cut his teeth in labor law as a field attorney for the NLRB in its Peoria regional office after graduating from DePaul University College of Law in 1977. Somers was apparently a lawyer of some skill or talent, or at least someone in the office thought so—for example, he first-chaired the trial of a complex organizing case that alleged numerous Section 8(a)(1), (3) and (5) unfair labor practices at a time when he was still 29-years-old. (Of course, this was back when the Labor Board was virtually drowning in litigation and employee turnover in the regional offices was much higher than it is now, which may mean Somers was just a tenured hand.)
Somers transferred to the Hartford regional office at some point in the 1980s and continued litigating cases for the Board there, but he left the agency later in the decade and opened a solo practice in a Connecticut suburb. Interestingly, Somers focused his practice on family law rather than labor law, and he appeared to make a lot of money doing it. (More on this later.) But Somers represented some local companies in a corporate capacity, applying the knowledge he gained from his many years investigating and prosecuting charged parties as a Labor Board attorney. Certainly, one of the things he would have observed from his time in the regional offices was how employers could often allude remedies under the National Labor Relations Act by manipulating corporate forms. (More on this later, too.)
The H.P. Townsend Manufacturing Co. was a small, Hartford-area maker of riveting machines and related equipment. It was a subsidiary of a larger Connecticut manufacturer and had been organized by Local 281 of the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers (IUE) since 1952. Townsend enjoyed relative levels of success and stability until a decline in sales befell it in the 1980s, which was exacerbated by a products liability suit against one of its sister subsidiaries that resulted in a massive settlement. Townsend’s parent company split the losses among its subsidiaries, shuttering many and downsizing others.
While Townsend survived the immediate fallout of the settlement, it was running on a skeleton crew when Richard Barrett became president and treasurer in 1989. He had hired on as the company’s controller in 1973 and eventually secured jobs there for his entire family, including a shop-sweeping gig in the Union for his stepson and secretary positions for his wife and daughter. Whatever was left of the business by this point was basically Barrett’s to do what he wanted with, as the parent company had shrunk to the point of only owning Townsend.
From Barrett’s perspective, Townsend possessed major liabilities. The Union, whose bargaining unit numbered in the single digits by this point, boasted a generous pension fund and free employer-provided health insurance from past negotiating wins. And bankruptcy loomed large thanks to the $635,000 settlement burden that Townsend had no realistic hopes of paying off. The little manufacturer did not seem long this for this world, at least in its current form.
That’s when Barrett hired David Somers.
Somers ostensibly came to represent Townsend as its chief negotiator in the 1990 round of contract talks with the Union. The hire made plenty of sense on paper; Somers was a former Labor Board attorney in the city with extensive knowledge of labor law and the legal terrain of collective bargaining. In reality, Somers approached Barrett with the idea of busting the Union and carrying on Townsend’s manufacturing business under a new name. How Somers came to know Barrett or target Townsend for this scheme is unclear from the record, but the plan was hatched shortly after Barrett ascended to the role of company president.
Townsend was already in rough waters with the Union before CBA negotiations began. Barrett had decided to stop funding the pension before 1990, earning him a Section 8(a)(5) unfair labor practice charge from the Union and a complaint issued by the NLRB. Somers further decided to change Townsend’s health insurance policy overnight from the generous benefits of Blue Cross Blue Shield to a bare-bones plan under “Guardian Health.” As described by the later Administrative Law Judge decision:
the plan provided only for hospitalization and doctor visits for employees and not retirees, and did not provide life insurance, or cover accidental death and dismemberment for anyone. There was also no prescription plan as in the prior Blue Cross plan. Rather, the prescription bill was included as part of the worker's medical bills. The Guardian Plan provided for certain cost containment procedures whereby with respect to hospitalization and surgery, in non-emergency situations, under the new Guardian plan, the employee must obtain “pre-hospital” and “pre-surgical” second opinion review by having his doctor call The Guardian plan. In emergency cases, the plan must be called the next working day. These requirements were different than the previous Blue Cross plan, which did not require pre-treatment review. The Guardian plan document provides that the penalty for non-compliance with its pre-hospital and pre-surgical review, and emergency call requirement is that the plan would pay only 50% of what it normally would pay.
Needless to say, this unilateral change earned another complaint from the Labor Board. But Somers didn’t care, because under his strategy the ULPs wouldn’t matter. Somers proceeded to swiftly and viciously bargain the Union to an alleged impasse, refusing to compromise on virtually any provisions of interest while forcing Union officials to meet in his office almost an hour away from the plant after the work day. When the lead negotiator finally expressed disgust with these antics, Somers cut off talks, implemented the company’s final offer, and refused to speak any further with the Union. The new contract, needless to say, was rife with concessions that fundamentally undermined the entire existence of the Union.
In an uncontested process, an ALJ for the NLRB found Townsend guilty of numerous refusal-to-bargain violations, including the failure to make pension payments, the unilateral change to the health insurance plan, and the bad-faith bargaining tactics of Somers, especially his premature declaration of impasse and unlawful implementation of the company’s final offer. The opinion [1991 NLRB LEXIS 1329] ordered Townsend to reverse these changes and make over $50,000 in delinquent pension contributions while reinstating the terms of the expired 1987 CBA until a new one was negotiated in good faith.
But Townsend was long gone by the time the ALJ made his recommendations in November 1991. Earlier that year, before the bank had seized its assets and all employees were laid off, Barrett and Somers had triggered the first step of their plan by forming a new company entirely and positioning it to buy Townsend’s assets. This company, named “TCE Corporation”, needed a different face than Barrett himself to pass initial scrutiny of Townsend’s creditors, so Somers decided to install Barrett’s 21-year-old daughter Kimberly as president. Kimberly was a recent college graduate with zero experience in manufacturing besides working as a Townsend secretary in her off-time, but she was admittedly a better candidate than the first candidate for president: Barrett’s 11-year-old son!
But Somers knew that TCE, without another layer of deception, would still be vulnerable to a finding of successorship liability under NLRB case law. This doctrine requires a purchasing employer to recognize and bargain with the previous employer’s union where the job description remains virtually unchanged and a majority of the employees hired by the new employer were previously represented by the union. More importantly for Somers’s purposes, such a successor employer would likely inherit the previous company’s unfair labor practices. So Somers created another corporation, “MT Assembly”, to contract with TCE and maintain appearances of an arm’s-length relationship. But as with Kimberly Barrett, Somers needed to install an insider as president who he could trust to not blow up the scheme at the start. Who did he decide on? His 25-year-old legal secretary and girlfriend, Gigette Coudriet.
Thus began a charade where Kimberly and Coudriet would exchange letters, written by Somers, which “established” their newfound passion for manufacturing entrepreneurship and their wish to purchase an ailing company to restore to profitability. The letters conveyed a commitment by Coudriet to fund TCE’s acquisition of Townsend’s bank-seized assets (with $70,000 secured from personal loans by Somers and Richard Barrett’s mother) and to supply the labor for restarted production. Behind the scenes, Somers had funneled the Barretts to a sit-down with two executives of the Small Business Institute, which promised the new TCE/MT hybrid a $500,000 loan at a later date.
This hybrid re-opened the Townsend facility and hired back most of the former workers. They used the same machinery that had never left the plant. TCE “hired” Richard Barrett as plant manager and his step-son and wife in their old positions. Barrett, ostensibly still acting as Townsend’s president, handed over the lease of the property to TCE free-of-charge. Nothing was different about the operation except the name on the door and the corporate forms.
Lest anyone be unsure of why this scheme was undertaken, it was tremendously profitable to Somers and the Barretts. Richard increased his salary over a third of what it was at Townsend despite his “demotion.” Kimberly, now overseeing the intertwined books of TCE and MT Assembly, wrote checks to herself whenever she wanted. Somers billed the parties for over $125,000 in busting the union, handling the bankruptcy, and forming the new corporations. Even Gigette Coudriet benefitted, earning $300 per month in hush money for a no-show job with TCE/MT while continuing to serve as Somers’s secretary. The TCE/MT operation never turned a profit and the now union-less workers labored for a fraction of their previous earnings.
Of course, the amounts shelled out to Somers far exceeded what it would have cost Townsend simply to fund the union’s pension in the first place. But the Barretts, empowered by Somers, clearly preferred this Wild West system of no oversight or accountability to running an honest business.
Cracks Begin Emerging
In the spring of 1992, the regional representative and former lead negotiator for the Union noticed that the former Townsend facility appeared to be up and running. He called up a former member of Local 281 and confirmed that, yes, the facility was operating under a different company’s name, and yes, that member was working there along with most of the old bargaining unit. The Union official promptly demanded recognition of Local 281 as the representative of TCE’s employees and requested that the company begin bargaining with it.
In response, TCE denied that it was a successor employer of Townsend and rejected the official’s request. Richard also “laid off” the employee who spoke to the official. The Union subsequently filed unfair labor practice charges with the NLRB, which sought statements from the Barretts and Gigette Coudriet as part of its investigation. The three came to Somers asking what in the world they were to do.
Somers represented all three before the Labor Board in early 1993 and counseled them to lie in their affidavits. Why would he tell his clients to lie under oath before a federal agency? Probably because he knew from his time as a Board attorney that the agency has very little discovery power in its investigations. The Hartford regional officials may not ultimately believe the testimony that Kimberly and Coudriet randomly chose to go into a business that neither had any experience in or that Richard had zero role in the formation of TCE or MT Assembly, but they would need something more than suspicion to prove successorship at trial. Somers’s only move was to deny, deny, and deny some more.
The Board issued a complaint in September 1993 which sought bargaining rights for Local 281, but a trial was not held until the fall of 1994. Between that time, the parties’ scheme came crashing down around them.
The Jig Is Up
The warning signs came when the Small Business Institute, always vague in its promises, told the Barretts that it would not be able to deliver on the $500,000 loan. But the real nail in the coffin came when Coudriet broke up with Somers in late 1993. Somers went ballistic, firing her from his firm and demanding that the Barretts remove her from her straw positions with TCE and MT Assembly. He also demanded that they return him the loan he originally paid to the companies’ start-up and notified the Barretts that he would be withdrawing as their counsel. Kimberly, apparently the only one with any sense left in the conspiracy, begged Somers to hold his horses:
Kimberly’s reaction to Somers’ action was to plead with him not to withdraw and to argue that ‘‘having Ms. Coudriet retained as corporate secretary will lend more credibility to her involvement throughout the histories of MT and TCE. There is no doubt in my mind that removing her so close to the hearing will hurt us.’’ Further she noted that ‘‘you have just as much at stake in this as we all do.’’ She wanted ‘‘to spend 100% of our time preparing our defenses,’’ and implored him to stay on: ‘‘please let me reaffirm my opinion that we must all focus on the priority matter at hand—defense against the NLRB, first and foremost.’’
But the pleas were for naught. When the Barretts refused his demands, Somers withdrew as counsel and filed a lawsuit in state court to recover the loan money. Naturally, the complaint was rife with falsehoods that concealed the true nature of the loan and his involvement with the Barretts’ scheme, placing the father-daughter duo in an impossible decision: continue lying and return Somers’s money (which they didn’t appear to have), or come clean and expose themselves in the NLRB trial.
The Barretts chose the latter. Their answer and counterclaims revealed virtually the entire conspiracy dating back to Somers’s original demolition of Local 281. Crucially, the counterclaims included an affidavit from Kimberly which admitted that every action taken with regards to the formation of TCE/MT was to avoid successorship liability and evade creditors.
Somers’s lawsuit was sunk, but the NLRB’s attorneys now had their smoking gun (to put it mildly). In a trial in which the Barretts and Coudriet testified but Somers refused to appear, the Administrative Law Judge made the following findings and conclusions:
TCE and MT Assembly were alter egos of each other and constituted a single employer.
TCE and MT Assembly were operated without even nominal regard to corporate formalities.
The TCE/MT hybrid was a successor employer and were the alter egos of the original Townsend company.
The Barretts and Somers, in their individual capacities, were alter egos of the TCE/MT hybrid and were personally liable for any of its unfair labor practices, dating back to the Townsend litigation.
Attorney’s fees and costs should be awarded to Local 281 straight from the Barretts’ and Somers’s pocketbooks.
The ALJ, writing in an incredulous tone throughout the decision, saved his most potent venom for Somers:
The record reflects that David Somers is a former Board attorney who is knowledgeable about Board law, procedures, and ethics. The evidence adduced, if true, demonstrates that he has used his knowledge to attempt to circumvent the NLRA and suborn perjury to further that attempt. Having heard the testimony, I do not question the truthfulness of the Barretts and Coudriet with respect to their testimony that they lied at the taking of their sworn depositions at the direction of Somers. This evidence reflects that Somers holds the Board and the NLRA in total distain and likewise reflects a total lack of professional ethics. As Somers willfully chose not to appear in this proceeding, though subpoenaed to appear and named as a Respondent, I will defer any recommendation for discipline to the Board or its designated representative.
In The H. P. Townsend Manufacturing Co., Inc., 317 NLRB 1169 (1995), the NLRB affirmed the ALJ’s decision in full but declined to discipline Somers because its rules at the time only accounted for misconduct that occurred during hearings. As Somers’s actions all took place well before the hearing stage (indeed, he never even appeared at the hearing), the Labor Board was without power to act. But it did forward the record of the case to the Connecticut bar association for appropriate action. (The NLRB eventually amended its rules shortly after deciding the Townsend case.)
David Somers wasn’t long for lawyering. The bogus lawsuit he filed against the Barretts earned him sanctions in 1998, and he was disbarred the very next year for his role in the NLRB saga. It turns out Somers was already on the bar’s radar for his family law practice, as he had developed a reputation for overbilling clients and over-litigating their cases to ridiculous degrees. He spent the rest of the 2000s suing past clients for unpaid attorney’s fees or being sued by several others for botched representation, and courts threw out many of Somers’s bills as unjustifiable or unconscionable. (In one demonstrative case, Somers convinced a client to take out a second mortgage on her home in favor of Somers’s firm to pay for his quixotic (and likely fraudulent) pursuit of funds allegedly held in a foreign trust by the client’s husband.)
I wasn’t able to find anything else on Somers after this, nor was I was able to find out the fates of the Barretts or anyone else involved in the Townsend case. I hope all of them put their collective energies towards doing good in their lives over the last thirty years, or at least refrain from playing corporate shell games with workers’ lives. But I confess to being deadly curious in what went wrong with Somers. When did he break bad? Was he always a monster, or did he have a heart-of-gold origin story like Better Caul Saul’s Jimmy McGill? Was his NLRB career just one long training session to learn how to profit off union-busting in the most convoluted way possible? Why didn’t he just join a management-side firm?
[UPDATE: Readers uncovered that Somers went into real estate after being disbarred and now runs a bed-and-breakfast off a yacht in Florida. According to corporate filings, the Barretts still do business together in Hartford.]
One thing is clear: the sort of flagrant legal violations committed by Somers and the Barretts would have led to far more consequences for them if they were breaking any federal law other than the National Labor Relations Act. In fact, while most cases don’t involve the sort of cartoonish villainy exhibited by Somers, alter ego/single employer situations in labor law all emerge from the same vat of greed and antipathy and rarely lead to serious punishment. But the manipulation of corporate forms to deprive workers of bargaining rights is always scandalous, even if it rarely garners page-one treatment. If there’s a silver lining to this story, it’s that pending legislation like the PRO Act would go a long way to allowing the NLRB to actually penalize people like David M. Somers.