Carpenters & Joiners of Am. v. Bldg. & Constr. Trades Dep't,
E.D. Wash., No. 2:12-cv-00109, 12/4/12
A federal district court in Washington Dec. 4 dismissed Carpenters and Joiners of America's claim that the AFL-CIO's Building & Construction Trades Department violated the Racketeer Influenced and Corrupt Organizations Act, the Labor-Management Reporting and Disclosure Act, and state law by waging an extortionate campaign to force the Carpenters to reaffiliate with BCTD (Carpenters & Joiners of Am. v. Bldg. & Constr. Trades Dep't, E.D. Wash., No. 2:12-cv-00109, 12/4/12).
The Carpenters' complaint charged BCTD, its president, and four other labor officials with attempting to extort the Carpenters to make monthly payments to BCTD in perpetuity, to allow BCTD to exercise the Carpenters' rights to recruit, accept, and train dues-paying members, to enter into BCTD-negotiated agreements, to be bound to BCTD's Plan for the Settlement of Jurisdictional Disputes, and to let BCTD control the Carpenters' political activity, among other things.
However, the Carpenters failed on their RICO Act claims because they did not adequately plead that the BCTD engaged in racketeering activity causing injury to the Carpenters' business or property, the U.S. District Court for the Eastern District of Washington concluded. It also found that the Carpenters' LMRDA claim--that Metal Trades Department (MTD) officers revoked the Carpenters' participation in the MTD without providing them with required due process rights--also failed.
The court declined to exercise supplemental jurisdiction over the Carpenters' state law claims, including equivalents of the federal RICO Act claims, a tortious interference with contract claim, and a breach of fiduciary duties claim. Judge Thomas Rice, writing for the court, also declined to grant the Carpenters leave to amend the complaint.
The Carpenters claimed that the defendants violated 18 U.S.C. § 1962(d) by conspiring to breach Section 1962(a), which prohibits any person from using income derived from a “pattern of racketeering activity” to acquire any interest in a covered enterprise, and Section 1962(b), which bars the acquisition of control of the Carpenters through a pattern of racketeering activity. The Carpenters also alleged violations of two analogous sections of the Revised Code of Washington.
The complaint charged the five individual defendants with violating and conspiring to violate 18 U.S.C. § 1962(c), which makes it unlawful for a person to use a pattern of racketeering activity to conduct a covered enterprise's affairs. In addition, the Pacific Northwest Regional Council of Carpenters brought a Washington state law claim against BCTD for tortious interference with the council's contract with a Seattle law firm.
The Carpenters also accused Ault, Hill, Williams, and Molnaa of not providing due process rights required by Section 411 of the LMRDA. It also brought common law breach of fiduciary duty claims against those four individual defendants.
“Here, Plaintiffs blame their alleged loss of jobs, loss of dues and members on Defendants' unlawful extortionate attacks,” the court said. “They claim they lost business opportunities, employee productivity and time, and have incurred additional costs and expenses. However, the Court finds no direct link between the attempted extortion allegedly committed by Defendants and Plaintiffs' losses. [P]laintiffs' harms here are too attenuated from the alleged conspiracy and attempted extortion to give them standing under the civil RICO Act.”
The court also determined that the Carpenters failed to plead that any property damaged through the defendants' alleged acts of vandalism--ranging from damaged trucks used by Carpenters members to a destroyed fence at a Carpenters worksite--belonged to the Carpenters or to any named plaintiff.
For the Carpenters to allege a predicate act amounting to “racketeering activity” in their RICO suit, the defendants' alleged conduct needed to involve a “wrongful use of force, fear, or threats” to obtain property, the court found.
The parties disputed whether BCTD had engaged in “lawful” hard bargaining or “unlawful” extortion. Specifically, the defendants argued that their attempts to reaffiliate the Carpenters with BCTD was a “legitimate business transaction” involving an “exchange” of “valuable consideration” between the parties.
The court agreed with BCTD that the Carpenters' allegation that reaffiliation with BCTD was “unwanted”--because the costs of reaffiliation outweighed the benefits--did not automatically defeat this argument. The court also said it could not find a basis for the Carpenters' “pre-existing entitlement” to be free of any fear that might be subdued if the plaintiffs gave the defendants certain property.
“Thus, the Court determines that in the context of this case, the Complaint fails to adequately plead the 'wrongful use' of economic fear that would amount to extortion, as opposed to hard bargaining, when two unions are competing for members, such that one union should be unfettered to pursue members and recruits, collect monthly dues from members, recruit and train members and otherwise participate in union business free from interference, negotiate their own labor agreements, resolve jurisdictional disputes, [and] determine which political candidates to support or oppose,” the court said.
The Carpenters also alleged that BCTD used death threats and other physical violence, threatened or damaged the plaintiffs' property, and publicly disseminated video footage of a violent attack on Carpenters members. However, the court agreed with BCTD that there was no adequate allegation--under theories of attempt and conspiracy, co-conspirator liability, or agency liability--that any defendant or agent thereof committed the alleged threats or vandalism.
Williams told BNA Nov. 11 that he “couldn't be happier” with the court's dismissal of the case. The Carpenters' complaint was “full of allegations that could never be proven,” he said. He added that Carpenters General President Doug McCarron intended to intimidate Williams and other presidents of BCTD-affiliated trade unions but that the “strategy backfired.”
“What might have been something to put a wedge between us, it hasn't worked,” Williams said.
Neither McCarron, Carpenters General Vice President Doug Banes, nor the BCTD replied to requests for comment.
Daniel Shanley of DeCarlo Connor & Shanley in Los Angeles and C. Matthew Andersen of Winston & Cashatt in Spokane, Wash., represented the plaintiffs. Leon Dayan of Bredhoff & Kaiser in Washington, D.C., and Carl Oreskovich of Etter McMahon Lamberson Clary & Oreskovich in Spokane represented the defendants.
By Elliott T. Dube
Text of the opinion is available at /uploadedFiles/Content/News/Legal_and_Business/Bloomberg_Law/Legal_Reports/carpenters-RICO-suit-dismissal(1).pdf.
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