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10/11/07

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U.S. Department of Justice
Criminal Division
Organized Crime and Racketeering Section

Civil RICO:
A Manual for
Federal Attorneys

October 2007

Civil RICO:
18 U.S.C. §§ 1961-1968
A Manual for
Federal Attorneys
October 2007

Prepared by the Staff of the Organized Crime and Racketeering Section
United States Department of Justice, Washington, DC 20005
Douglas E. Crow, Principal Deputy Chief
Amy Chang Lee, Assistant Chief
(202) 514-3594
Written By:
Frank J. Marine, Consultant
Patrice M. Mulkern
The assistance of the following is acknowledged and greatly appreciated:
David M. Brink
Gregory C.J. Lisa
James Francis McKenzie
Melissa Marquez-Oliver
Melvin Otey
Gerald Toner
Catherine M. Weinstock
Cover Design by Linda M. Baer

TABLE OF CONTENTS

PREFACE

PAGE
i

TABLE OF CONTENTS

ii

I.

INTRODUCTION AND APPROVAL PROCESS

1

A.

Introduction

1

1.

Overview

1

2.

Guidelines for Bringing Civil RICO Lawsuits

3

B.

II.

Prior Approval by the Organized Crime and Racketeering Section
of All Government Civil RICO Lawsuits is Required

6

1.

Approval Authority and Process

6

2.

Post-Complaint Duties

8

OVERVIEW OF EQUITABLE RELIEF, CIVIL RICO, AND ITS
LEGISLATIVE HISTORY

10

A.

Origins and General Nature of Courts’ Equitable Authority

10

1.

Origins of Court’s Equitable Authority

10

2.

Courts Are Vested With Broad Equitable Powers To Remedy
Unlawful Conduct, Including Ordering Intrusive, Structural
Changes in Wrongdoers’ Entities and Practices

13

B.

Congressional Findings and Purposes Regarding Civil RICO

16

C.

Congress Designed 18 U.S.C. § 1964 (a) to Authorize District Courts
To Impose the Full Panoply of Equitable Relief

18

1.

Injunctions

21

2.

Divestiture, Dissolution and Reorganization

21

3.

Disgorgement

22
iii

PAGE
4.

5.
D.

E.

III.

Limitations on Future Activities and Removal from Positions
in an Entity

25

Appointment of Court Officers

26

Civil RICO, 18 U.S.C. § 1964, is Patterned After Antitrust Laws,
and Hence Vests the Attorney General of the United States With the
Exclusive Authority to Obtain Equitable Relief, and Vests Private
Litigants, But Not the United States, With the Authority to Sue for
Treble Damages

26

Equitable Relief Available Under Civil RICO is at Least As Broad As
Equitable Relief Under the Antitrust Laws, If Not Broader

33

ELEMENTS OF GOVERNMENT CIVIL RICO LAWSUITS AND
DEFENSES

38

A.

38

Standards For Obtaining Equitable Relief
1.

2.
B.

38

Making Due Provision for the Rights of Innocent Persons

41

Substantive Issues In Proving Government Civil RICO Claims
1.

43

A Defendant’s Liability For A Racketeering Act May Be Based
On “Aiding and Abetting”

43

2.

Principles of Respondeat Superior

47

3.

A Corporation’s or Labor Union’s Scienter May Be Established
By The Collective Knowledge of The Corporation’s or Labor
Union’s Employees and Representatives

52

The Prohibition Against Intracorporate Conspiracies Under
The Antitrust Laws Does Not Apply To Government Civil
RICO Lawsuits

59

4.

C.

The Government Must Establish a Reasonable Likelihood of
Future Violations By a Preponderance of the Evidence

Certain Defenses Do Not Apply to Government Civil RICO Actions
For Equitable Relief

iv

61

1.

Laches and Statute of Limitations

PAGE
61

2.

United States’ Civil RICO Claims Cannot Be Implicitly Waived

64

3.

Equitable Estoppel Can Not Lie Against the United States, If
Ever, Absent Affirmative Misconduct

66

The United States Is Not Subject to the Defenses of Unclean
Hands or In Pari Delicto

69

4.

D.
IV.

Collateral Estoppel

71

JURISDICTION AND VENUE

75

A.

Serving the Summons

75

B.

General Principles Governing Subject Matter and Personal Jurisdiction

79

1.

Subject Matter Jurisdiction

79

2.

Due Processing Requirements for State Courts’ Exercise of In
Personam Jurisdiction Under the Fourteenth Amendment as to
State Claims

79

Due Process Requirements Under the Fifth Amendment for
Federal Courts’ Exercising In Personam Jurisdiction Over
Federal Causes of Action

85

3.

C.

Civil RICO’s Jurisdiction and Venue Provision

87

1.

Overview of Civil RICO’s Jurisdiction and Venue Provision

88

2.

The Bases for Venue Under Section 1965(a)

91

a.
b.
c.
d.

91
91
92
92

3.

The District In Which Such Person “Resides”
“Found”
“Has an Agent”
“Transacts His Affairs”

Nationwide Service of Process Under Section 1965(b)

v

93

4.
V.

PROCEDURAL MATTERS

96

A.

Expedition of Actions

96

B.

Adequacy of the Pleading and Drafting the Complaint

96

1.

Adequacy of the Pleading

96

a.
b.

96
100

2.

VI.

Transfer of Venue - Forum Non-Conveniens

PAGE
95

General Principles
Application of Civil Rule 9(b)

Drafting the Complaint

102

C.

There is No Right to a Jury Trial on Claims for Equitable Relief

104

D.

Standards Governing Motions for Summary Judgment

109

1.

General Principles

109

2.

Issues of Intent Generally are Ill-Suited for Summary Judgment

113

DISCOVERY

114

A.

Civil Investigative Demands (CID)

114

1.

RICO’s CID Provisions

114

2.

Background

117

3.

Issuance of a CID

120

4.

Content of a CID

122

5.

Proper Service of a CID

123

6.

Racketeering Documents Custodians

124

7.

Enforcement and Litigation of CIDs

126

a.

126

Petitions by the Attorney General
vi

b.
c.

127
129

B.

Discovery in General

130

C.

Privileges

137

1.

VII.

Petitions by the CID Recipient
Powers of the District Court

Deliberative Process, Presidential Communications and
Investigatory Files Privileges

137

a.
b.
c.

138
139
143

The Deliberative Process Privilege
The Presidential Communications Privilege
The Investigatory Files Privilege

2.

Confidential Informant Privilege

145

3.

Fifth Amendment Privilege

153

JUDGMENTS, CONSENT DECREES, AND ENFORCEMENT

157

A.

157

Judgments and Consent Decree
1.

2.

The General Nature of Consent Decrees and Rules of Their
Construction

157

Courts Have Authority to Modify Judgments and Consent
Decrees Under Some Circumstances

162

B.

Default Judgments

164

C.

Scope Of Injunctions, Requisite Specifity, And Their Application
To Non-Parties

166

1.

Scope of Injunctions and Requisite Specifity

166

2.

An Injunction May Apply to Non-Parties in Various
Circumstances

172

D.

E.

Removal Orders and Prohibition of Future Activities May
Implicate Property Rights Protected By Due Process

177

Court-Appointed Officers in General

186

vii

PAGE
1.

2.

3.
F.

Courts Have Inherent Authority to Appoint Officers to Assist
Them in Executing Their Duties

186

Court-Appointed Officers Perform Varied Functions

190

a.

Devising Remedies

190

b.

Administering Operations

192

c.

Monitoring Compliance and Adjudicatory Functions

192

Article III Considerations

193

Contempt

198

1.

Determining Whether Contempt is Civil or Criminal in Nature

198

a.
b.

199
202

2.

3.

The Bagwell Decision
Decisions Following Bagwell

Different Elements and Procedures Apply to Criminal and
Civil Contempt

205

a.
b.

206
207

Principles Governing Criminal Contempt
Principles Governing Civil Contempt

A Jury Trial for Criminal Contempt is Required When the
Sanction Involves A “Serious Fine” or Imprisonment of More
Than Six Months

211

VIII. GOVERNMENT CIVIL RICO CASES INVOLVING LABOR UNIONS

213

A.

Overview of Government Civil RICO Cases Involving Labor Unions

213

1.

Overview of Labor Racketeering

213

2.

Congress Designed Civil RICO to Combat the LCN’s Corrupt
Influence Over Labor Unions

216

The United States Department of Justice Adopted A Strategy
to Eliminate the LCN’s Corrupt Influence Over Labor Unions

217

3.

viii

4.
B.

Specific Relief Obtained in Government Civil RICO Cases Involving
Labor Unions

221

1.

Injunctions

221

2.

Dissolution, Divestiture and Reorganization

223

3.

Court-Appointed Officers

224

(a)
(b)

Officers to Administer the Affairs of a Union
Adjudication Officers

224
228

(i)
(ii)
(iii)

228
229
229

4.

C.

Overview of Essential Relief

PAGE
219

General Powers
Review Authority
Disciplinary Powers

Imposition of Ethical Practices Codes and Disciplinary
Procedures

231

a.
b.

231
234

Disciplinary Procedures
Due Process and Article III Considerations

5.

Election Reform

238

6.

Removal of Persons From Union Office and Membership,
and Prohibitions on Holding Union Office or Membership

240

7.

Disgorgement

242

8.

Relief Against Non-Parties

243

Relief Obtained In Contested Civil RICO Cases Involving Labor Unions

245

1.

The IBT Local 560 Case

245

2.

The Local 30, Roofers Union Case

247

3.

The ILA Local 1804-1 Case

250

4.

The IBT Local 295 Case

251
ix

D.

5.

The IBT Local 282 Case

PAGE
253

6.

The Mason Tenders District Council of LIUNA Case

256

7.

The Private Sanitation Industry Ass’n Case

258

8.

The LIUNA Local 6A Case

261

Union Officials and Entities As Nominal Defendants
1.

2.

E.

Evidence of Wrongdoing is Not Required to Obtain Relief
Against a Nominal Defendant

262

Nominal Defendants in Government Civil RICO Cases
Involving Labor Unions

264

Specific Issues in Government Civil RICO Cases Involving Labor
Unions

267

1.

State Action and Due Process Considerations

267

2.

First Amendment Issues

270

3.

Equitable Relief in Government Civil RICO Cases Does Not
Violate, And Is Not-Pre-empted By, The NLRA, The LMRDA
or Other Labor Laws

272

a.
b.
c.
d.

F.

262

General Procedures
The NLRA Does Not Pre-empt Government Civil
RICO Lawsuits
The LMRDA Does Not Pre-empt Government Civil
RICO Lawsuits
Other Labor Laws Do Not Pre-empt Government Civil
RICO Lawsuits

Extortion Of Union Members’ Rights To Free Speech and To
Participate In Internal Union Democracy Guaranteed By The LMRDA
1.

272
274
277
281

282

Union Members’ Rights Under the LMRDA Constitute Intangible
Property Within The Meaning of the Hobbs Act
282

x

PAGE
2.

IX.

X.

A Defendant “Obtains” or Seeks to “Obtain” Intangible
Property Rights From A Victim Within The Scope of the
Hobbs Act When He Uses Extortionate Means In Order to
Exercise Those Rights For Himself or a Third Party in a Way
That Would Profit Them Financially

290

GOVERNMENT CIVIL RICO CASES NOT INVOLVING LABOR
UNIONS

299

MISCELLANEOUS ISSUES

308

A.

Prior or Parallel Criminal Proceeding

308

B.

Use of Court-Ordered Electronic Surveillance

309

C.

Federal Rule of Criminal Procedure 6(e)

313

1.

2.

3.

A Government Attorney May Not Disclose “A Matter
Occurring Before the Grand Jury” Unless It Falls Within An
Exception Set Forth in Rule 6(e)(3)

313

A Government Attorney Who Has Had Lawful Access to a
Matter Occurring Before a Grand Jury May Use Such Matter
in Handling a Civil RICO Action, But May Not Disclose Such
Matter, Without a Court-Disclosure Order, to Another Person
to Assist in Handling a Civil Action

315

A District Court May Order Disclosure of a Grand Jury Matter
Preliminary to or in Connection With a Judicial Proceeding

321

APPENDICES
A.

United States Attorneys’ Manual Sections on Review and Approval

B.

Summary of Each Government Civil RICO Case Involving Labor Unions

xi

PREFACE
This manual is intended to assist federal attorneys in the preparation and litigation of
cases involving the civil provisions of the Racketeer Influenced & Corrupt Organization Act, 18
U.S.C. §§ 1961-1968. Federal attorneys are encouraged to contact the Organized Crime and
Racketeering Section of the United States Department of Justice (“OCRS”) early in the
preparation of their case for advice and assistance.
All Government civil RICO complaints, RICO Civil Investigative Demands and all
proposed settlements of Government civil RICO suits must be submitted, with a supporting
prosecution memorandum, to OCRS for review and approval before being issued or filed with
the court. The submission should be approved by the Government attorney’s office before being
submitted to OCRS. Due to the volume of submissions received by OCRS, Government
attorneys should submit the proposal three weeks prior to the date final approval is needed.
Government attorneys should contact OCRS regarding the status of pending submissions and
must refrain from finalizing any settlement agreement concerning a proposed civil RICO lawsuit
before final approval has been obtained from OCRS.
The policies and procedures set forth in this manual and elsewhere relating to 18 U.S.C.
§§ 1961-1968 are internal Department of Justice policies and guidance only. They are not
intended to, do not, and may not be relied upon to, create any right, substantive or procedural,
enforceable at law by any party in any matter civil or criminal. Nor are any limitations hereby
placed on otherwise lawful litigative prerogatives of the Department of Justice.

i

I
INTRODUCTION AND APPROVAL PROCESS
A.

Introduction
1.

Overview

RICO was enacted October 15, 1970, as Title IX of the Organized Crime Control Act of
19701 and is codified at 18 U.S.C. §§ 1961-1968. RICO provides for both criminal and civil
remedies. RICO’s civil remedies are set forth in 18 U.S.C. § 1964(a), (b) and (c), which provide
as follows:
(a) The district courts of the United States shall have jurisdiction to
prevent and restrain violations of section 1962 of this chapter by
issuing appropriate orders, including, but not limited to: ordering
any person to divest himself of any interest, direct or indirect, in
any enterprise; imposing reasonable restrictions on the future
activities or investments of any person, including, but not limited
to, prohibiting any person from engaging in the same type of
endeavor as the enterprise engaged in, the activities of which affect
interstate or foreign commerce; or ordering dissolution or
reorganization of any enterprise, making due provision for the
rights of innocent persons.
(b) The Attorney General may institute proceedings under this
section. Pending final determination thereof, the court may at any
time enter such restraining order or prohibitions, or take such other
actions, including the acceptance of satisfactory performance
bonds, as it shall deem proper.
(c) Any person injured in his business or property by reason of a
violation of Section 1962 of this chapter may sue therefor in any
appropriate United States district court and shall recover threefold
the damages he sustains and the cost of the suit, including a
reasonable attorney’s fee, except that no person may rely upon any
conduct that would have been actionable as fraud in the purchase
or sale of securities to establish a violation of section 1962. The
1

Pub. L. No. 91-452, 84 Stat. 941 (1970).
1

exception contained in the preceding sentence does not apply to an
action against any person that is criminally convicted in connection
with the fraud, in which case the statute of limitations shall start to
run on the date on which the conviction becomes final.
Section 1964(a) vests the Attorney General of the United States with the exclusive
authority to sue for equitable relief, whereas Section 1964(c) vests private litigants, but
not the United States, with authority to sue for treble damages for injury to their business
or property. See Section II (D) below. Because the United States may not sue for treble
damages under Section 1964(c), this Manual does not address such suits for treble
damages.2
To obtain civil equitable relief under 18 U.S.C. § 1964(a), the United States must
prove by a preponderance of the evidence that: (1) a defendant committed or intended to
commit a RICO violation by establishing the same elements as in a criminal RICO case,
except that criminal intent is not required; and (2) that there is a reasonable likelihood
that the defendant will commit a violation in the future. See Section III (A) below.
However, this Manual does not address the elements of a criminal RICO violation or the
substantial body of law interpreting criminal RICO because those matters are addressed in
the Organized Crime and Racketeering Section (“OCRS”) manual entitled: Racketeer
Influenced and Corrupt Organizations: A Manual for Federal Prosecutors (4th Ed. July

2

To obtain relief under Section 1964(c), a plaintiff must establish that a defendant
committed a violation of the RICO statute, and that such RICO violation was the proximate
cause of injury to the plaintiff’s business or property. See, e.g., Anza v. Ideal Steel Supply Corp.,
547 U.S. ____, _____, 126 S.Ct. 1991, 1996 (2006); Beck v. Prupis, 529 U.S. 494, 496-503
(2000); Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992).
2

2000) (“Criminal RICO Manual”).3 Therefore, Government attorneys handling civil
RICO lawsuits should consult OCRS’ Criminal RICO Manual in addition to this Manual.
This Manual first discusses the origins and general nature of courts’ equitable
authority and then addresses the specific equitable relief Congress intended civil RICO to
authorize. This Manual also includes an analysis of: (1) the elements of Government
civil RICO lawsuits; (2) principles of liability and certain defenses; (3) various procedural
and discovery issues that are likely to arise in Government civil RICO lawsuits; and (4)
analysis of the law governing judgments, consent decrees, enforcement, injunctions,
contempt and the authority of court-appointed officers. This Manual also includes
detailed analyses of the Government’s civil RICO lawsuits involving labor unions and
issues likely to arise in such lawsuits as well as other matters.
2.

Guidelines for Bringing Civil RICO Lawsuits

Civil RICO, 18 U.S.C. § 1964(a), authorizes potentially intrusive remedies,
including injunctive relief, reasonable restrictions on defendants’ future activities,
disgorgement of unlawful proceeds, divestiture, dissolution, reorganization, removal from
positions in an entity, and appointment of court officers to administer and supervise the
affairs and operations of defendants’ entities and to assist courts in monitoring
compliance with courts’ orders and in imposing sanctions for violations of courts’ orders.
See Sections II (C), VII (C), (D) and (E), and VIII (A), (B), and (C) below. Because such
civil RICO remedies may be powerful and intrusive, the Government should bring a civil
RICO lawsuit only when the totality of the circumstances clearly justify imposition of

3

(Available at www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/rico.pdf).
3

such remedies, and not in a routine case where there has been a RICO violation.
Moreover, Government civil RICO lawsuits typically are brought against
defendants that are collective entities such as corporations and labor unions, and hence
such suits may affect innocent third parties such as union members and corporate
shareholders. See Sections III(A)(2) and (B)(2) and (3) below. Therefore, the
Government should consider the adverse effects, if any, of a civil RICO lawsuit upon
innocent third parties. Generally, Government attorneys should apply the same factors in
determining whether to bring a civil RICO lawsuit against a collective entity as they do
with respect to individual defendants. Thus, Government attorneys must weigh the
sufficiency of the evidence, the likelihood of success at trial and the consequences of a
finding of liability.
In addition, Government attorneys should consider the following factors, among
others, in determining whether to bring a civil RICO lawsuit against an individual and/or
a collective entity:
(1)

the nature and seriousness of the predicate racketeering offenses;

(2)

whether the predicate racketeering offenses were committed over a
substantial period of time, and/or pose a threat of continuing
unlawful activity;

(3)

whether an organized crime group participated in any of the
predicate racketeering offenses or exercised corrupt influence over
any proposed enterprise, defendant or related entity;

(4)

whether there is a reasonable likelihood that the defendant will
commit unlawful activity in the future;

(5)

the pervasiveness of wrongdoing within a collective entity that is a
proposed defendant, including the complicity in, or condonation of,
the wrongdoing by the collective entity’s officers and management;
4

(6)

the defendant’s history of similar unlawful conduct, including prior
criminal, civil or regulatory enforcement actions against it;

(7)

whether the defendant has derived unlawful proceeds from his
RICO violation that are subject to disgorgement;

(8)

the defendant’s timely and voluntary disclosure of wrongdoing and
his/her or its willingness to cooperate with the authorities to
eliminate corruption involving the defendant or related entities;

(9)

the existence and adequacy of a collective entity’s compliance
program and other remedial actions;

(10)

collateral consequences, including harm, if any, to innocent third
parties, including a collective entity’s shareholders, employees, or
union members;

(11)

whether and to what extent the sought remedies are likely to be
effective; and

(12)

the availability and adequacy of other remedies.4

No single factor is dispositive. Rather, these factors must be considered under the totality
of the circumstances. Moreover, the factors listed are intended to be illustrative of those
that should be considered and not a complete or exhaustive list.
For example, it may be especially appropriate to bring a Government civil RICO
lawsuit where injunctive relief and structural reform is necessary to eliminate extensive
and prolonged corruption in an entity and to cure its ill effects, such as in the cases
involving Government civil RICO lawsuits against labor unions. In these labor unionrelated civil RICO cases, La Cosa Nostra figures and corrupt union officials had exercised
corrupt control and influence over the labor unions involved for many years, and
4

The factors listed are similar to the factors to be considered in determining whether to
bring criminal charges against a corporation. See Department of Justice Memorandum from Paul
J. McNulty, Deputy Attorney General on Principles of Federal Prosecution of Business
Organizations (December 12, 2006).
5

successful criminal prosecution of many of those wrongdoers was not sufficient to
eliminate such systemic corruption from those unions. In such circumstances, civil
RICO’s equitable remedies, especially injunctive relief, removal of corrupt union officers
and members from the unions, and appointment of court officers to administer and
oversee aspects of the unions’ operations, achieved substantial success in eliminating and
reducing such corruption within the unions involved and related businesses. See Section
VIII below.
B.

Prior Approval by the Organized Crime and Racketeering Section of All
Government Civil RICO Lawsuits is Required
1.

Approval Authority and Process

The Code of Federal Regulations, 28 C.F.R. § 0.55, provides, in relevant part, as
follows:
§ 0.55 General Function
The following functions are assigned to and shall be
conducted, handled or supervised by, the Assistant Attorney
General, Criminal Division
...
(d) Civil or criminal forfeiture or civil penalty actions
(including petitions for remission or mitigation of forfeiture
and civil penalties, offers in compromise, and related
proceedings under the . . . Organized Crime Control Act of
1970 . . . [i.e., RICO, 18 U.S.C. § 1961 et. seq.].
...
(g) Coordination of enforcement activities directed against
organized crime and racketeering.
Pursuant to USAM § 9-110.010, such authority has been delegated to the
Organized Crime and Racketeering Section of the Criminal Division. Accordingly, the
following procedures must be followed in all civil RICO lawsuits brought by or against
6

the United States:
(1)

No civil RICO complaint shall be filed, and no RICO investigative

demand shall be issued, without the prior approval of OCRS.
(2)

No civil RICO complaint shall be settled or dismissed, in whole or

in part, without prior approval of OCRS.
(3)

No remedy in any civil RICO lawsuit brought by the United States

shall be sought without prior approval by OCRS.
(4)

In any civil RICO lawsuit brought by, or against, the United States,

any adverse decision on an issue involving an interpretation of the RICO statute from any
District Court or any Circuit Court of Appeals shall be timely reported to OCRS, in
addition to reporting to the Solicitor General’s Office and the appropriate Appellate
Section of the Civil or Criminal Divisions, to enable OCRS to submit a recommendation
to the Solicitor General’s Office whether to seek further review of the decision.
(5)

In any civil RICO lawsuit brought by, or against, the United States,

any brief submitted in any appeal to any Circuit Court of Appeals involving an issue of an
interpretation of the RICO statute must be timely submitted to OCRS for review prior to
filing the brief in the Court of Appeals.
These requirements are necessary to enable OCRS to carry out its supervisory
authority over all Government uses of the RICO statute and to promote consistent,
uniform interpretations of the RICO statute. See, e.g., USAM § 110.300 “RICO
Guidelines Policy”, which provides that “[i]t is the purpose of these guidelines to
centralize the RICO review and policy implementation functions in the section of the
7

Criminal Division having supervisory responsibility for this statute,” i.e., OCRS.
The review process for authorization of all Government civil and criminal suits
pursuant to the RICO statute is set forth in the United States Attorneys Manual. See
USAM §§ 9-110.010 -- 9-110.400, which provisions are attached as Appendix A. To
commence the formal review process, submit a final draft of the proposed complaint,
including the remedies sought, and a detailed prosecution memorandum to OCRS. The
prosecution memorandum should be similar, in organization and types of information
provided, to a RICO criminal prosecution memorandum, which is described in the
Criminal Resource Manual at section 2071 et seq. The prosecution memorandum should
also address the factors to be considered in determining whether to bring a civil RICO
lawsuit set forth in Section I (A)(2) above. Before the formal review process begins,
Government attorneys are encouraged to consult with OCRS in order to obtain
preliminary guidance and suggestions.
The review process can be time-consuming, especially in light of the complexity
of Government civil RICO lawsuits and the sensitive remedies involved; and also because
of the likelihood that modifications will be made to the complaint, and the heavy
workload of the reviewing attorneys. Therefore, unless extraordinary circumstances
justify a shorter time frame, a period of at least 15 working days must be allowed for the
review process.
2.

Post-Complaint Duties

Once a civil RICO complaint has been approved and filed, it is the duty of the
Government’s attorney handling the matter to submit to OCRS a copy of the complaint,
8

including all attachments, bearing the seal of the clerk of the district court. In addition,
the Government’s attorney should send OCRS copies of the Government’s filings for pretrial motions and should keep OCRS informed of adverse decisions as noted above and
legal problems that arise in the course of the case to enable OCRS to provide assistance
and carry out its supervisory functions.

9

II
OVERVIEW OF EQUITABLE RELIEF,
CIVIL RICO, AND ITS LEGISLATIVE HISTORY
A.

Origins and General Nature of Courts’ Equitable Authority
1.

Origins of Courts’ Equitable Authority

Article III, Section 2 of the United States Constitution provides, in relevant part,
that A[t]he judicial Power shall extend to all Cases, in Law and Equity, arising under this
Constitution, the Laws of the United States, and Treaties Made, or which shall be made,
under their Authority.@ A[E]quity is that portion of the law which was developed by the
English and American courts of chancery to remedy defects in the common law.@
Howard L. Oleck, Historical Nature of Equity Jurisprudence, 20 FORDHAM L. REV . 23, 24
(1951) (AEquity Jurisprudence@).
At the time the United States Constitution was adopted and continuing for a
considerable period thereafter, various states had separate equity courts, and federal
courts recognized separate causes of action for equity that were distinguished from suits
at common law. See generally Parsons v. Bedford, 28 U.S. 433, 446 (1830); Equity
Jurisprudence, 20 FORDHAM L. REV . at 23-26, 40-43; Leonard J. Emmerglick, J.
Emmerglick, A Century of the New Equity, 23 Tex. L. Rev. 244 (1944-45) (AThe New
Equity@). However, commencing in 1845, states began to abandon their separate equity
courts, and in 1938, federal courts adopted new Federal Rules of Civil Procedure for all
civil matters, wherein a single form of civil action is provided for all civil suits. See
Equity Jurisprudence, 20 FORDHAM L. REV . at 41-43; The New Equity,
23 Tex. L. Rev. at 244-250.
10

Classification of a cause of action as to whether it seeks a remedy Aat law@ or Ain
equity@ remains important for several reasons of general significance: (1) Aequitable
remedies are generally enforceable by contempt while legal remedies are not”; (2)
generally, litigants do not have a right to a jury trial to obtain equitable relief, whereas in
many cases a right to a jury trial attaches to the suits Aat law”; and (3) Aequitable relief is
discretionary.@ DAN B. DOBBS, DOBBS LAW OF REMEDIES, Vol. One at 11-12, 56-57
(West Publ’g Co. 2d ed. 1993) (ADOBBS@).
However, determining whether a particular cause of action seeks remedies Aat
law@ or Ain equity@ is not an easy task. As one commentator perceptively observed, A[t]he
description of equity as that law which was administered by the old English Courts of
Chancery, of course, is hardly a definition.@ Equity Jurisprudence, 20 FORDHAM L. REV .
at 24. To determine Awhether [a cause of] action is more similar to suits tried in courts of
law,” the Supreme Court examines Aboth the nature of the action and of the remedy
sought.@ Tull v. United States, 412 U.S. 412, 417 (1987). First, the Court compares the
action at issue Ato 18th Century actions brought in the courts of England prior to the
merger of the courts of equity,@ and second, the Court examines Athe remedy sought and
determine[s] whether it is legal or equitable in nature.@ Tull, 481 U.S. at 417-418. See
also Section V (C) below, which addresses whether an action is equitable, and hence does
not carry a right to a jury trial.
Under these principles, courts have ruled that a wide variety of causes of actions
constitute actions for equitable relief, including injunctions,5 disgorgement of
5

See, e.g., Mertens v. Hewitt Assocs., 508 U.S. 248, 255 (1993); Tull, 481 U.S. at 423;
(continued...)
11

wrongdoers= ill-gotten gains,6 restitution of illegally obtained profits, 7 divestiture or
dissolution,8 appointment of a receiver and others to assist the court in executing its
duties,9 and constructive trusts.10
Moreover, “[g]enerally, an action for money damages@ is a remedy Aat law.”
Teamsters Local No. 391 v. Terry, 494 U.S. 558, 570 (1990). However, an award of
monetary relief is not necessarily legal relief. Id. at 570. The Supreme Court has
Acharacterized damages as equitable where they are restitutionary, such as in >actions for

5

(...continued)
Mitchell v. Robert De Mario Jewelry, Inc., 361 U.S. 288, 291-92 (1960); United Steelworkers of
America v. United States, 361 U.S. 39, 40-41 (1959); Porter v. Warner Holding Co., 328 U.S.
395, 399 (1946); Barton v. Barbour, 104 U.S. 126, 133-34 (1881).
6

See, e.g., Harris Trust & Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238,
250 (2000); Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 352 (1998); Teamsters
Local No. 391 v. Terry, 494 U.S. 558, 570 (1990); Tull, 481 U.S. at 424; FTC v. Gem
Merchandising Corp., 87 F.3d 464, 468-70 (11th Cir. 1996); SEC v. Rind, 991 F.2d 1486, 1493
(9th Cir. 1993); SEC v. Tome, 833 F.2d 1086, 1096 & n. 7 (2d Cir. 1987); SEC v.
Commonwealth Chem. Securities, 574 F.2d 90, 94-96 (2d Cir. 1978); Bradford v. SEC, 278 F.2d
566, 567 (9th Cir. 1960); United States v. Philip Morris, 273 F. Supp. 2d 3, 8 (D.D.C. 2002);
SEC v. Asset Mgmt. Corp., 456 F. Supp. 998, 999-1000 (S.D. Ind. 1978); SEC v. Petrofunds,
Inc., 420 F. Supp. 958, 959 (S.D.N.Y. 1976); SEC v. Associated Minerals, Inc.,
75 F.R.D. 724, 726 (E.D. Mich. 1977). Cf. SEC v. Blavin, 760 F.2d 706, 713 (6th Cir. 1985)
(“the district court possesses the equitable power to grant disgorgement”); SEC v. Williams,
884 F. Supp. 28, 30-31 (D. Mass. 1995).
7

See, e.g., Porter v. Warner Holding Co., 328 U.S. 399, 402 (1946).

8

See, e.g., California v. American Stores Co., 495 U.S. 271, 281-95 (1990); United
States v. E.I. DuPont de Nemours & Co., 366 U.S. 316, 326-27 (1961); Schine Chain Theatres v.
United States, 334 U.S. 110, 128 (1948).
9

See Gordon v. Washington, 295 U.S. 30, 37 (1935). See also cases cited in Sections
VII (E) and VIII (B)(3) below.
10

See DOBBS, Vol. One at 157.
12

disgorgement of improper profits.’” or when Aa monetary award [is] >incidental to or
intertwined with injunctive relief.=@ Id. at 570-71 (citations omitted). Generally speaking,
Aa claim could be deemed equitable if it sought a coercive remedy like injunction,” or Aif
the plaintiff sought to enforce a right that was originally created in the equity courts, or a
right that was traditionally decided according to equitable principles.@ DOBBS, Vol. One
at 155.11
2.

Courts Are Vested With Broad Equitable Powers To Remedy
Unlawful Conduct, Including Ordering Intrusive, Structural Changes
in Wrongdoers’ Entities and Practices

The Supreme Court has repeatedly emphasized that courts are vested with
extensive equitable powers to fashion appropriate remedies to redress unlawful conduct.
For example, in Swann v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 1 (1971), the
Supreme Court stated:
Once a right and a violation have been shown, the scope of
a district court’s equitable powers to remedy past wrongs is
broad, for breadth and flexibility are inherent in equitable
remedies.
“The essence of equity jurisdiction has been the power of
the Chancellor to do equity and to mould each decree to the
necessities of the particular case. Flexibility rather than
rigidity has distinguished it. The qualities of mercy and
practicality have made equity the instrument for nice
adjustment and reconciliation between the public interest
and private needs as well as between competing private
claims.” Hecht Co. v. Bowles, 321 U.S. 321, 329-330
(1944).

11

For a comprehensive discussion of equitable remedies, see DOBBS, Vol. One at 55-81,
148-275, 586-655.
13

Swann, 402 U.S. at 15. Accord California v. American Stores, Co., 495 U.S. 271, 284
(1990).
Moreover, the Supreme Court has pointedly ruled that where “the public interest
is involved. . . those equitable powers assume an even broader and more flexible
character than when only a private controversy is at stake.” Porter v. Warner Holding,
Co., 328 U.S. 395, 398 (1946). Accord Virginian Ry. Co. v. Sys. Fed’n. No. 40, 300 U.S.
515, 552 (1937) (“Courts of equity may, and frequently do, go much farther both to give
and withhold relief in furtherance of the public interest than they are accustomed to go
when only private interests are involved.”) (collecting cases); Golden State Bottling Co.
v. NLRB, 414 U.S. 168, 179-80 (1973) (same).12
In accordance with these principles, courts have imposed a wide variety of highly
intrusive equitable remedies in institutional reform litigation to remedy constitutional
violations and to foster paramount public interests, including various structural reforms.13
Typically in such cases, the equitable relief afforded exceeds an injunction enjoining the

12

See also Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 291-92 (1960)
(“When Congress entrusts to an equity court the enforcement of prohibitions contained in a
regulatory enactment, it must be taken to have acted cognizant of the historic power of equity to
provide complete relief in light of the statutory purpose. As this Court has long ago recognized,
‘there is inherent in the Courts of Equity a jurisdiction to. . . give effect to the policy of
legislature.’ Clark v. Smith, 38 U.S. (13 Pet. ) 195, 203, 10 L. Ed. 123.”).
13

See generally DOBBS, Vol. Two at 349-353 (“Some civil rights injunctions. . . [seek] to
halt a group of wrongful practices by restructuring a social institution such as a mental hospital,
school or prison. Structural injunctions are not limited to civil rights cases; one might restructure
a private corporation in an effort [to] make its compliance with legal rules more likely.”) (id. at
349). See also Special Project: The Remedial Process in Institutional Reform Litigation,
78 COLUM . L. REV . 784 (1978) (hereinafter “Special Project”); William Fletcher The
Discretionary Constitution: Institutional Remedies and Judicial Legitimacy, 91 YALE L.J. 635
(1982).
14

proscribed conduct, and also encompasses compelled changes in practices, structural
changes and prolonged court-supervision over implementation of the equitable relief. See
generally, DOBBS, Vol. Two at 348-353.
For example, in Brown v. Bd. of Educ., 349 U.S. 294, 300-01 (1955), the
Supreme Court ruled that courts had very broad equitable powers to order structural
changes in school systems to desegregate schools, including “ordering the immediate
admission of plaintiffs to schools previously attended only by white children.” Similarly,
in Swann, 402 U.S. at 9-10, 18-32, the Supreme Court upheld a district court’s equitable
authority to order a school district to implement a comprehensive plan to desegregate a
school system, including various structural changes such as re-zoning, busing of students,
and re-assignment of teachers to different schools. Moreover, in Milliken v. Bradley, 433
U.S. 267, 279-91 (1977), the Supreme Court upheld the equitable powers of a district
court, as part of a desegregation decree, to “order compensatory or remedial educational
programs for schoolchildren who have been subjected to past acts of de jure
segregation.” Id. at 267.
Similarly, in Local 28 of the Sheet Metal Worker’s Int’l Assoc. v. EEOC, 478
U.S. 421 (1986), the district court found that Union Local 28 discriminated against nonwhite workers in recruitment, selection, training and admission to the union. The
Supreme Court upheld the district court’s imposition of an affirmative action program
requiring Local 28 to adopt various changes its practices and policies, including requiring
Local 28 “to offer annual, nondiscriminatory journeyman and apprentice examinations,
select members according to a white-non-white ratio to be negotiated by the parties,
15

conduct extensive recruitment and publicity campaigns aimed at minorities, secure the
[court-appointed] administrator’s consent before issuing temporary work permits, and
maintain detailed membership records.” Id. at 432-33.14
The Supreme Court has, likewise, recognized courts’ expansive equitable
authority to order structural changes and other intrusive remedies to redress
unconstitutional prison conditions. See, e.g., Hutto v. Finney, 437 U.S. 678, 683 (1978)
(describing district court’s orders to change various prisons practices and policies to
remedy constitutional violations).15 Courts, likewise, have afforded similar equitable
relief to compel changes in conditions and policies to remedy unconstitutional treatment
of mental patients.16
B.

Congressional Findings and Purposes Regarding Civil RICO
Congress found that organized crime, particularly La Cosa Nostra (ALCN@), had

extensively infiltrated and exercised corrupt influence over numerous legitimate
businesses and labor unions throughout the United States, and hence posed Aa new threat
14

Courts have upheld similar intrusive equitable relief in other cases to remedy racial
discrimination in schools and other institutions and entities. See, e.g., EEOC v. Local 638, 565
F.2d 31, 33-35 (2d Cir. 1977); Evans v. Buchanan, 555 F.2d 373, 378-82 (3d Cir. 1977); Morgan
v. McDonough, 540 F.2d 527, 533-35 (1st Cir. 1976); EEOC v. Local 638, 532 F.2d 821, 829-31
(2d Cir. 1976); Hart v. Cmty. School Bd. of Ed., N.Y. Sch. Dist. #21, 512 F.2d 37, 52-55 (2d Cir.
1975).
15

For similar expansive equitable relief in cases involving unconstitutional prison
conditions, see Miller v. Carson, 563 F.2d 741, 748-52 (5th Cir. 1977); Rhem v. Malcom,
507 F.2d 333, 340-41 (2d Cir. 1974) (collecting cases); Gates v. Collier, 501 F.2d 1291, 1303-05,
1309-10 (5th Cir. 1974); Hamilton v. Landrieu, 351 F. Supp. 549 (E.D.La. 1972); Jones v.
Wittenberg, 330 F. Supp. 707 (N.D. Oh. 1971), aff’d, 456 F.2d 854 (6th Cir. 1972).
16

See, e.g., Sharp v. Weston, 233 F.3d 1166, 1173-74 (9th Cir. 2000); New York State
Ass’n for Retarded Children, Inc. v. Carey, 706 F.2d 956, 962-66 (2d Cir. 1983); Davis v.
Watkins, 384 F. Supp. 1196 (N.D. Ohio 1974).
16

to the American economic system.” See S. REP. NO . 617, 91st Cong., 1st Sess. at 76-78
(1969) (“S. REP. NO . 91-617”); see also Organized Crime Control Act of 1970,
Congressional Statement of Findings and Purpose, Section 904(a) of PUB. L. NO . 91-452,
84 Stat. 922, 947.
The Senate Report regarding RICO further found that existing remedies Aare
inadequate to remove criminal influences from legitimate endeavor organizations.@
S. REP. NO . 91-617 at 78. In that respect, the Senate Report stated:
The arrest, conviction, and imprisonment of a Mafia lieutenant can
curtail operations, but does not put the syndicate out of business.
As long as the property of organized crime remains, new leaders
will step forward to take the place of those we jail.
S. REP. NO . 91-617 at 78 (quoting H.R. Doc. No. 91-105, at 6; the President’s message on
“Organized Crime” (1969)).
Accordingly, the Senate Report concluded that:
What is needed here. . . are new approaches that will deal not only
with individuals, but also with the economic base through which
those individuals constitute such a serious threat to the economic
well-being of the Nation. In short, an attack must be made on their
source of economic power itself, and the attack must take place on
all available fronts.
...
What is ultimately at stake is not only the security of individuals
and their property, but also the viability of our free enterprise
system itself. The committee feels, therefore, that much can be
accomplished here by adopting the civil remedies developed in the
antitrust field to the problem of organized crime.
S. REP. NO . 91-617 at 79, 80-81.

17

C.

Congress Designed 18 U.S.C. § 1964 (a) To Authorize Courts To Impose the Full
Panoply of Equitable Relief
In accordance with the above-referenced legislative history regarding civil RICO,

18 U.S.C. ' 1964 vests district courts with authority to impose extensive equitable relief and
provides, in relevant part, as follows:
(a) The district courts of the United States shall have jurisdiction to
prevent and restrain violations of section 1962 of this chapter by
issuing appropriate orders, including, but not limited to: ordering
any person to divest himself of any interest, direct or indirect, in
any enterprise; imposing reasonable restrictions on the future
activities or investments of any person, including, but not limited
to, prohibiting any person from engaging in the same type of
endeavor as the enterprise engaged in, the activities of which affect
interstate or foreign commerce; or ordering dissolution or
reorganization of any enterprise, making due provision for the
rights of innocent persons.
(b) The Attorney General may institute proceedings under this
section. Pending final determination thereof, the court may at any
time enter such restraining order or prohibitions, or take such other
actions, including the acceptance of satisfactory performance
bonds, as it shall deem proper. (emphasis added).17
Thus, to remedy a civil RICO violation, the plain language of ' 1964(a) explicitly
authorizes district courts to impose intrusive, structural reforms including, but not limited to,
divestiture, Adissolution or reorganization of any enterprise,@ Areasonable restrictions on the
future activities or investments of any person” and Aprohibiting any person from engaging in

17

See United States v. Cappetto, 502 F.2d 1351, 1357 (7th Cir. 1974) (ASection 1964
provides for a civil action in which only equitable relief can be granted. The relief authorized by
the section is remedial not punitive and is of a type traditionally granted by courts of equity.”);
NSC Int’l Corp. v. Ryan, 531 F. Supp. 362, 363 (N. D. Ill. 1981) (“§ 1964 (a) . . . authorizes
only equitable relief.”).
18

the same type of endeavor as the enterprise engaged in.”(emphasis added).18
Indeed, the Senate Committee Report regarding RICO emphasized the expansive and
flexible nature of the equitable relief authorized under ' 1964(a), stating:
The use of such remedies as prohibitory injunctions and the issuing
of orders of divestment or dissolution is explicitly authorized.
Nevertheless, it must be emphasized that these remedies are not
exclusive, and that [RICO] seeks essentially an economic, not a
punitive goal. However remedies may be fashioned, it is necessary
to free the channels of commerce from predatory activities, but
there is no intent to visit punishment on any individual; the purpose
is civil.
...
Although certain remedies are set out, the list is not exhaustive,
and the only limit on remedies is that they accomplish the aim set
out of removing the corrupting influence and make due provisions
for the rights of innocent persons.
S. REP. NO . 91-617 at 81 and 160. Accord H.R. REP. No. 1549, 91st Cong., 2d Sess. at
57(1970). Moreover, the Senate Committee Report noted that to achieve RICO=s remedial
purposes, courts would need broad equitable powers:
Where an organization is acquired or run by defined racketeering
methods, then the persons involved can be legally separated from
the organization, either by the criminal law approach . . . or
through a civil law approach of equitable relief broad enough to do
all that is necessary to free the channels of commerce from illicit
RICO, 18 U.S.C. ' 1961(3), provides that “‘person’ includes any individual or entity
capable of holding a legal or beneficial interest in property,” which includes a corporation, union,
partnership and a sole proprietorship. See, e.g., United States v. Goldin Indus., Inc., 219 F.3d
1268, 1270-71 (11th Cir. 2000) (en banc); 219 F.3d 1271, 1275-77 (11th Cir. 2000); Living
Designs, Inc. v. E.I. DuPont De Nemours & Co., 431 F.3d 353, 362-62 (9th Cir. 2005); Nat’l
Elec. Benefit Fund v. Heary Bros. Lightning Prot. Co. Inc., 931 F. Supp. 169, 186-87 (W.D.N.Y.
1965); C& W Constr. Co. v. Bhd. of Carpenters and Joiners of America, Local 745, 687 F. Supp.
1453, 1466 (D. Hawaii 1988).
18

Moreover, RICO=s definition of Aenterprise@ (18 U.S.C. ' 1961(4)) Aincludes any
individual, partnership, corporation, association, or other legal entity, and any union or group of
individuals associated in fact although not a legal entity.”
19

activity.
S. REP. NO . 91-617 at 79.
The Senate Report regarding RICO also quoted approvingly the Department of Justice=s
view that Athese equitable remedies would also seem to have a greater potential than that of the
penal sanctions for actually removing the criminal figure from a particular organization and
enjoining him from engaging in similar activity,@ and that Athese remedies are flexible, allowing
of several alternate courses of action for dealing with a particular type of predatory activity, and
they may also be effectively monitored by the court to insure that its decrees are not violated.@
S. REP. NO . 91-617 at 82-83. The Senate Report further stated that civil RICO was patterned
after the equitable relief available under the antitrust laws, and hence “brings to bear. . . the full
panoply of civil remedies . . . now available in the antitrust arena.” S. REP. NO . 91-617 at 81.19
Moreover, as noted above, Congress stated that the purpose of RICO=s remedial
provisions was to afford Aenhanced sanctions and new remedies,” and accordingly mandated that
RICO Ashall be liberally construed to effectuate its remedial purposes.@ Section 904(a) of PUB. L.
NO . 91-452, 84 Stat. 922, 923, 947. The Supreme Court has similarly characterized Section 1964
as a Afar-reaching civil enforcement scheme,” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 483
(1985), and has explained that Aif Congress= liberal-construction mandate is to be applied
anywhere, it is in ' 1964, where RICO=s remedial purposes are most evident.@ Id. at 491 n.10.
See also Russello v. United States, 464 U.S. 16, 27 (1983); United States v. Turkette, 452 U.S.
19

In accordance with this legislative history, the Supreme Court has repeatedly stated
that RICO’s civil remedies provision, 18 U.S.C. § 1964, was patterned after the equitable relief
provisions of the antitrust laws. See e.g., Klehr v. A.O. Smith Corp., 521 U.S. 179, 189 (1997);
Holmes v. Sec. Investor Prot. Corp, 503 U.S. 258, 267-68 (1992); Agency Holding Corp. v.
Malley-Duff & Assoc., 483 U.S. 143, 150-52 (1987); Sedima, S.P.R.L. v. Imrex, 473 U.S. 479,
486-90 (1985).
20

576, 587 & n. 10 (1981).
Thus, Section 1964 ’s legislative history demonstrates that Congress intended Section
1964(a) to vest district courts with powerful new weapons to eliminate and prevent corruption in
organizations, and accordingly authorized district courts to impose the full panoply of equitable
relief, including, but not limited to, the intrusive remedies discussed below:
1.

Injunctions - An injunction is the quintiessential equitable order designed “to

prevent and restrain” violations of law under 18 U.S.C. § 1964(a). An injunction is a “coercive
remedy” whereby the “defendant is enjoined by a prohibitory injunction to refrain from doing
specific acts; or he is commanded by a mandatory injunction to carry out specified acts.” DOBBS,
Vol. One at 59; see also id. at 223-277. See Section VIII(B)(1) below, which discusses
injunctions obtained in civil RICO cases involving labor unions.
2.

Divestiture, Dissolution and Reorganization - Section 1964(a) explicitly

includes the equitable remedies of divestiture, dissolution and “reorganization of any enterprise.”
“‘[D]issolution’ refers to a . . . judgment which dissolves or terminates an illegal combination or
association - putting it out of business, so to speak. ‘Divestiture’ is used to refer to situations
where the defendants are required to divest or dispossess themselves of specified property in
physical facilities, securities, or other assets.” California v. American Stores Co., 495 U.S. 271,
290 n.16 (1990). Divestiture “deprives a defendant of the gains from his wrongful conduct” and
“is an equitable remedy designed in the public interest to undo what could have been prevented
had the defendants not outdistanced the government in their unlawful project.” Schine Chain
Theaters v. United States, 334 U.S. 110, 128 (1948). Both dissolution and divestiture serve to
put “an end to the [unlawful] combination or conspiracy” and to “deprive . . . defendants of the
21

benefits of their conspiracy.” Id. at 129.20
The Government has obtained divestiture, dissolution and reorganization of an enterprise
in various civil RICO cases involving labor unions. See Sections VIII (B) (2) and (5) below. See
also United States v. Cappetto, 502 F.2d 1351, 1358-59 (7th Cir. 1974) (noting that divestiture
under 18 U.S.C. § 1964 is an equitable remedy); United States v. Ianniello, 646 F. Supp. 1289,
1297-1300 (S.D.N.Y. 1986) (appointing a receiver for a restaurant that was subject to divestiture
for a violation of civil RICO).
3.

Disgorgement - Although “disgorgement” is not explicitly listed in the remedies

set forth in 18 U.S.C. § 1964, it is well established that “disgorgement” is a traditional equitable
remedy. See Sections II(A)(1) above and V(C) below. In particular, disgorgement requires a
wrongdoer to yield the proceeds derived from his unlawful conduct, and “is an equitable remedy
designed to deprive a wrongdoer of his unjust enrichment and to deter others from violating the
. . . laws.” SEC v. First City Financial Corp., 890 F.2d 1215, 1230 (D.C. Cir. 1989).21

20

“Divestiture has been called the most important of antitrust remedies.” United States
v. E.I. DuPont DeNemours & Co., 366 U.S. 316, 330-31 (1961).
21

Accord SEC v. Bilzerian, 29 F.3d 689, 697 (D.C. Cir. 1994) (“The primary purpose of
disgorgement is not to refund others for losses suffered but rather ‘to deprive the wrongdoer of
his ill-gotten gain.’” (citation omitted)); SEC v. Banner Fund Int’l, 211 F.3d 602, 617 (D.C. Cir.
2000); SEC v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998); SEC v. Palmisano,
135 F.3d 860, 865-66 (2d Cir. 1998); SEC v. Hughes Capital Corp., 124 F.3d 449, 455 (3d Cir.
1997); SEC v. First Jersey Sec., Inc., 101 F.3d 1450, 1475 (2d Cir. 1996); FTC v. Gem Merch.
Corp., 87 F.3d 466, 470 (11th Cir. 1996); SEC v. Tome, 833 F.2d 1086, 1096 (2d Cir. 1987);
SEC v. Blavin, 760 F.2d 706, 713 (6th Cir. 1985); CFTC v. Hunt, 591 F.2d 1211, 1222 (7th Cir.
1979); SEC v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978); SEC v. Manor Nursing Ctr., Inc., 458
F.2d 1082, 1104 (2d Cir. 1972); SEC v. Texas Gulf Sulphur Co., 446 F.2d 1301, 1308 (2d Cir.
1971).
22

Because disgorgement of unlawful proceeds merely requires the wrongdoer to “give up
only his ill-gotten gains” to which he has no right, such disgorgement is entirely remedial and “is
not punishment.” Bilzerian, 29 F.3d at 696. Accord First City Financial Corp., 890 F.2d at
1230-31; SEC v. Tome, 833 F.2d 1086, 1096 (2d Cir. 1987); CFTC v. Hunt,
591 F.2d 1211, 1222 (7th Cir. 1979); see also Mitchell v. Robert DeMario Jewelry, Inc.,
361 U.S. 288, 293 (1960)(equitable remedy of restitution of lost wages for violation of statute is
not “punitive”).22
As of this writing, there is a conflict among the circuits as to whether disgorgement is a
remedy available under 18 U.S.C. § 1964. In United States v. Carson, 52 F.3d 1173, 1181 (2d
Cir. 1995), the Second Circuit held that “disgorgement is among the equitable powers available

22

Moreover, because “[r]ules for calculating disgorgement must recognize that
separating legal from illegal profits exactly may at times be a near-impossible task . . .
disgorgement need only be a reasonable approximation of profits causally connected to the
violation,” and that once the plaintiff establishes such a “reasonable approximation,” the burden
shifts to the defendants “clearly to demonstrate that the disgorgement figure was not a reasonable
approximation.” First City Fin. Corp., 890 F.2d at 1231-32. Accord SEC v. Bilzerian,
29 F.3d 689, 697 (D.C. Cir. 1994) (“Calculations of [the causal nexus] are often imprecise – it is
impossible to say with certainty what portion of [the defendant’s] profits is attributable to his
securities violations. [The Defendant], however, bears the burden of establishing” that the
approximation of his unlawful profits was not reasonable.). See also SEC v. First Jersey Sec.,
101 F.3d 1450, 1475 (2d Cir. 1996); United States Dep’t of Housing & Urban Dev. v. Cost
Control Mktg. & Sales Mgt. of Va., Inc., 64 F.3d 920, 927 (4th Cir. 1995); SEC v. Patel,
61 F.3d 137, 140 (2d Cir. 1995); SEC v. Kenton Capital, Ltd., 69 F. Supp. 2d 1, 16 (D.D.C.
1998). Moreover, “the causal connection required is between the amount by which the defendant
was unjustly enriched and the amount he can be required to disgorge,” not merely the actual
money that he wrongfully obtained. SEC v. Banner Fund Int’l, 211 F.3d 602, 617 (D.C. Cir.
2000). Furthermore, “the risk of uncertainty should fall on the wrongdoer whose illegal conduct
created that uncertainty.” First City Fin. Corp., 890 F.2d at 1232. Accord SEC v. Hughes
Capital Corp., 124 F.3d 449, 455 (3d Cir. 1997); First Jersey Sec., 101 F.3d at 1475; SEC v.
Lorin, 76 F.3d 458, 462 (2d Cir. 1996); Patel, 61 F.3d at 140. See also Bigelow v. RKO Radio
Pictures, 327 U.S. 251, 265 (1946) (“The most elementary conceptions of justice and public
policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong has
created.”).
23

to the district court by virtue of 18 U.S.C. § 1964.” However, the Second Circuit also held that
since § 1964(a) authorizes district courts “to prevent and restrain violations” of RICO, it creates
remedies that are “forward looking, and calculated to prevent RICO violations in the future.”
Therefore, the Second Circuit concluded that disgorgement must be limited to the amount
designed “solely to ‘prevent and restrain’ future RICO violations,” and hence must be limited to
unlawful proceeds that “are being used to fund or promote the illegal conduct, or constitute
capital available for that purpose.” Id. at 1182.23
In United States v. Philip Morris USA Inc., 396 F.3d 1190 (D.C. Cir. 2005), the panel
majority ruled that RICO’s grant of judicial authority under 18 U.S.C. § 1964 (a) to “prevent and
restrain” statutory violations does not include the power to order equitable disgorgement. Philip
Morris, 396 F.3d at 1197-1202. The majority opinion declared that “[t]his language indicates
that the jurisdiction is limited to forward looking remedies that are aimed at future violations,”
whereas disgorgement, in the majority’s view, “is a quintessentially backward-looking remedy
focused on remedying the effects of past conduct to restore the status quo.” Id. at 1198.
The United States filed an interlocutory petition for a writ of certiorari, which was denied.
See United States v. Philip Morris USA Inc., 126 S. Ct. 478 (2005).24 Subsequently, the United
23

See Section VIII(B)(7) below, which discusses disgorgement in Government civil
RICO cases involving labor unions.
24

The Government’s petition for a writ of certiorari is available at
http://www.supremecourtus.gov/opinions/opinions.html In its petition for a writ of certiorari, the
Government argued, among other matters, that the limitations imposed upon RICO disgorgement
in Carson, supra, and the majority decision in Philip Morris, supra, were inconsistent with: (1)
decisions of the Supreme Court and other courts of appeals holding that when a statute confers
equitable jurisdiction upon district courts, as does 18 U.S.C. § 1964, it is presumed that all
inherent equitable powers of the district courts are granted, unless otherwise provided by statute;
(2) decisions of the Supreme Court and lower courts holding that disgorgement serves a crucial
(continued...)
24

States District Court for the District of Columbia found defendants liable for RICO violations
after a nine-month bench trial. See United States v. Philip Morris USA Inc., 449 F. Supp. 2d 1,
851-52, 867-73, 901-07 (D.D.C. 2006). See also Section IX below. As of this writing, that
decision is pending appeals to the District of Columbia Circuit. See United States v. Philip
Morris USA Inc., Appeal Nos. 06-5267-5272.
4.

Limitations on Future Activities and Removal From Positions In An Entity -

18 U.S.C. § 1964 (a) explicitly authorizes district courts to impose “reasonable restrictions on the
future activities. . . of any person, including, but not limited to, prohibiting any person from
engaging in the same type of endeavor as the enterprise engaged in.” Courts have held that this
provision empowers courts to remove persons found liable for RICO violations or for violating
courts’ judgment orders in Government civil RICO cases from positions in an entity and to
prohibit them from holding such positions in the future. See Sections VII (D) and VIII(B)(6)
below.
Section 1964 (a)’s legislative history confirms that Congress intended Section 1964 (a) to
authorize district courts to impose such relief. For example, the Senate Report regarding civil
RICO states:
Where an organization is acquired or run by defined racketeering
methods, then the persons involved can be legally separated from
the organization, either by the criminal law approach of fine,
imprisonment and forfeiture, or through a civil law approach of
equitable relief broad enough to do all that is necessary to free the
channels of commerce from all illicit activity.
...
24

(...continued)
deterrent, and hence forward-looking, function; and (3) the text of Section 1964 (a) and its
legislative history establishing that Section 1964 (a) is not limited to the relief explicitly listed
therein.
25

Through this new approach, it should be possible to remove the
leaders of organized crime from their sources of economic power.
S. REP. NO . 91-617 at 79-80. The Senate Report also quoted with approval the Department of
Justice’s statement that:
The relief offered by these equitable remedies would also seem to
have a greater potential than that of the penal sanctions for actually
removing the criminal figure from a particular organization and
enjoining him from engaging in similar activity.
S. REP. No. 91-617 at 82.
5.

Appointment of Court Officers - Courts have long had the inherent authority to

appoint non-judicial persons to assist them in the performance of their judicial duties.
Accordingly, in Government civil RICO cases involving labor unions, courts have appointed
“officers” to, among other matters, administer the affairs and operations of corrupted unions and
related entities, and assist the courts in monitoring compliance with the courts’ orders and in
imposing sanctions for violations of the courts’ orders. See Sections VII(E) and VIII(B), (3), (4),
(5), and (6) below.
D.

Civil RICO, 18 U.S.C. § 1964, is Patterned After Antitrust Laws, and Hence Vests
the Attorney General of the United States with the Exclusive Authority to Obtain
Equitable Relief, and Vests Private Litigants, But Not the United States, With the
Authority to Sue For Treble Damages
RICO’s civil remedies provision, 18 U.S.C. § 1964, authorizes two causes of action: a

public enforcement action for equitable relief by the Attorney General and a treble damages
action by private parties. The Attorney General’s right to sue for equitable relief derives from
Sections 1964(a) and (b), and those provisions, in combination, make the Attorney General’s
right exclusive.

26

Section 1964(a) grants district courts “jurisdiction to prevent and restrain violations” of
RICO by issuing the full range of “appropriate orders” available to courts of equity, 18 U.S.C.
§ 1964(a). Section 1964(a) does not identify who can seek such relief, but Section 1964(b) does.
That provision states that “[t]he Attorney General may institute proceedings under this section”
and that, “[p]ending final determination thereof,” the court may enter interim restraining orders
or take such other actions as it shall deem proper. 18 U.S.C. § 1964(b).
By empowering the Attorney General to institute proceedings “under this section,”
Congress signaled its intent that the district court’s equitable jurisdiction under Section § 1964(a)
must be invoked by the Attorney General. Congress further manifested its intent that the
Attorney General alone may seek equitable relief by providing in subsection (b) that temporary
equitable relief may be awarded “[p]ending final determination” of a proceeding instituted by the
Attorney General for permanent equitable relief. There is no corresponding provision that
authorizes a private party to institute proceedings “under this section” or to seek temporary
equitable relief pending final disposition of a claim. Under Sections 1964(a) and (b), therefore,
the sole power to seek final and interim equitable relief against racketeering activities and
enterprises is reposed in the Attorney General.
Rather than authorize private civil RICO plaintiffs to seek equitable remedies, Congress
in Section 1964(c) granted private parties the right to bring suit to recover treble damages and
attorney’s fees. Section 1964(c) provides that “(a)ny person injured in his business or property
by reason of a [RICO] violation . . . may sue . . . and shall recover threefold the damages he
sustains and the cost of the suit, including a reasonable attorney’s fee.” 18 U.S.C. § 1964(c).
That provision has been construed to authorize private parties, and not the Government, to seek
27

treble damages. See United States v. Bonnano, 879 F.2d 20, 22-24 (2d Cir. 1989) (reasoning
that the United States is not a “person” under Section 1964(c), and therefore may not sue for
treble damages); see also Sedima, S.P.R.L. v. Imrex Co. Inc., 473 U.S. 479, 487 (1985)
(observing that Section 1964(c) creates “a private treble-damages action”).
Section 1964’s “inclusion of a single statutory reference to private plaintiffs, and the
identification of a damages and fees remedy for such plaintiffs in [Section 1964(c)], logically
carries the negative implication that no other remedy was intended to be conferred on private
plaintiffs.” Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076, 1083 (9th Cir. 1986), cert.
denied, 479 U.S. 1103 (1987). Coupled with the fact that Congress in Section 1964(b) explicitly
authorized the Attorney General to initiate proceedings to obtain equitable relief under Section
1964(a), but did not similarly grant private parties that right, the statute makes it clear that
Congress did not authorize private parties to bring actions for equitable relief.
2.

Section 1964 ’s legislative history confirms that it vests the Attorney General of

the United States with the exclusive authority to bring suits for equitable relief, and authorizes
private litigants to bring suits for treble damages. The Supreme Court has repeatedly observed
that RICO’s civil remedies provision, 18 U.S.C. § 1964, was patterned after virtually identical
provisions of the antitrust laws.25 In that regard, at a time when Congress had provided no
express authority for private antitrust plaintiffs to seek equitable relief, the antitrust laws were
construed to preclude such relief. The parallels between the antitrust laws at that time and the
25

See, e.g., Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 267-68 (1992); Klehr v.
A.O. Smith Corp., 521 U.S. 179, 189 (1997); Agency Holding Corp. v. Malley-Duff & Assocs.
Inc., 483 U.S. 143, 150-152 (1987); Sedima, S.P.R.L. v. Imrex, 473 U.S. 479, 486-90 (1985).
See also S. REP. No. 91-617 at 81 (RICO’s Section 1964 “brings to bear. . . the full panoply of
civil remedies . . . now available in the antitrust area.”).
28

language of RICO support the same conclusion for RICO — particularly since RICO lacks the
explicit provision for private injunctive relief that Congress added to the antitrust laws.
As the Supreme Court has explained, “[a] treble-damages remedy for persons injured by
antitrust violations was first provided in § 7 of the Sherman Act and was re-enacted in 1914
without substantial change as § 4 of the Clayton Act.” Pfizer, Inc. v. India, 434 U.S. 308, 311
(1978); accord Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 267 n.13 (1992);
Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 644 n.16 (1981).26 Section 4 of the
Sherman Act also authorized courts to issue equitable relief in actions brought by the United
States. 26 Stat. 209-10.27 The Supreme Court repeatedly recognized that those provisions of the
Sherman Act did not authorize private parties to bring suit for injunctive relief.28 Private parties

26

Section 7 of the Sherman Act provided that “(a)ny person who shall be injured in his
business or property . . . by reason of anything forbidden or declared to be unlawful by this act
may sue therefor . . . and shall recover three fold the damages by him sustained, and the cost of
suit, including a reasonable attorney’s fee.” 26 Stat. 210.
27

Section 4 of the Sherman Act provided:
The several circuit courts of the United States are hereby invested
with jurisdiction to prevent and restrain violations of this act; and it
shall be the duty of the several district attorneys of the United
States, in their respective districts, under the direction of the
Attorney-General, to institute proceedings in equity to prevent and
restrain such violations. . . . (P)ending [a] petition and before final
decree, the court may at any time make such temporary restraining
order or prohibition as shall be deemed just in the premises.”

26 Stat. 209-10.
28

See General Inv. Co. v. Lake Shore & Mich. S. Ry. Co., 260 U.S. 261, 286 (1922);
Geddes v. Anaconda Copper Mining Co., 254 U.S. 590, 593 (1921); Paine Lumber Co. v. Neal,
244 U.S. 459, 471 (1917); D.R. Wilder Mfg. Co. v. Corn Prods. Ref. Co., 236 U.S. 165, 174
(1915); Minnesota v. Northern Sec. Co., 194 U.S. 48, 70-71 (1904).
29

were not authorized to seek injunctive relief for violations of the antitrust laws until Congress
passed Section 16 of the Clayton Act (15 U.S.C. § 26) explicitly authorizing such a right.
California v. American Stores Co., 495 U.S. 271, 287 (1990) (Ҥ 4 of the Sherman Act, which
authorizes equitable relief in actions brought by the United States, was reenacted as § 15 of the
Clayton Act, while § 16 filled a gap in the Sherman Act by authorizing equitable relief in private
actions.”); accord General Inv. Co. v. Lake Shore & Mich. S. Ry., 260 U.S. 261, 287 (1922).
The Sherman Act thus “envisaged two classes of actions,— those made available only to
the Government, . . . and, in addition, a right of action for treble damages granted to redress
private injury.” United States v. Cooper Corp., 312 U.S. 600, 608 (1941) (holding that the
United States may not recover treble damages under the Sherman Act). The Court reached that
conclusion despite the fact “that there are no words of express exclusion of the right of
individuals to act in the enforcement of the statute, or of courts generally to entertain complaints
on that subject.” D.R. Wilder Mfg. Co. v. Corn Prods. Ref. Co., 236 U.S. 165, 174 (1915). The
Court explained that “such exclusion must be implied . . . because of the familiar doctrine that
‘where a statute creates a new offense and denounces the penalty, or gives a new right and
declares the remedy, the punishment or the remedy can be only that which that statute
prescribes.’” Id. at 174-75 (quoting Farmers’ & Mechs. Nat’l Bank v. Dearing, 91 U.S. 29, 35
(1875)).
Although the Sherman Act authorizes suits in equity in one paragraph (Section 4), while
RICO does so in two paragraphs (Section 1964(a) and (b)), the statutes are parallel in the critical
respects here. First, both confer on courts “jurisdiction” to prevent and restrain violations
through permanent and preliminary equitable relief, but expressly authorize only the Attorney
30

General to seek such relief. Second, both provide private parties a separate right to recover treble
damages and attorney’s fees, but no other forms of relief. In light of the Supreme Court’s
precedents construing the Sherman Act, Congress is presumed to be aware when it enacted RICO
that, absent inclusion of an express private right to obtain injunctive relief, the language it
selected would be construed to exclude such a right. Holmes, 503 U.S. at 268 (construing the
term “by reason of ” in Section 1964(c) and observing that the Court “may fairly credit the 91st
Congress, which enacted RICO, with knowing the interpretation federal courts had given the
words earlier Congresses had used first in § 7 of the Sherman Act, and later in the Clayton Act’s
§ 4”).
Indeed, to authorize private antitrust plaintiffs to seek equitable relief, Congress enacted a
separate section of the Clayton Act, Section 16. RICO, however, lacks any provision comparable
to Section 16 of the Clayton Act. Section 16 expressly provides that private persons “shall be
entitled to sue for and have injunctive relief.” 15 U.S.C. § 26. Juxtaposed with Congress’s
explicit modeling of RICO’s private treble damages provision “on the civil-action provision of
the federal antitrust laws, § 4 of the Clayton Act,” Holmes, 503 U.S. at 267, the absence of a
counterpart to Section 16 makes clear that Congress did not intend to create a private right to
equitable relief under RICO.
3.

The legislative history of RICO confirms that Congress made a deliberate choice

in omitting authority for a private injunctive action. “The civil remedies in the bill passed by the
Senate, S.30, were limited to injunctive actions by the United States and became §§ 1964(a), (b),
and (d).” Sedima, 473 U.S. at 486-487; Agency Holding Corp. v. Malley-Duff & Assocs., Inc.,
483 U.S. 143, 152 (1987) (same). “During hearings on S. 30 before the House Judiciary
31

Committee, Representative Steiger proposed the addition of a private-treble damages action” that
was modeled after Section 4 of the Clayton Act. Sedima, 473 U.S. at 487. That Amendment
also would have authorized private parties to seek injunctive relief and the government to seek
damages, as well as making other procedural changes. 116 CONG . REC. 27,739 (1970). When
the Judiciary Committee responded by passing only the private treble damages provision,
Representative Steiger complained that the bill did “not do the whole job,” since it “fail[ed] to
provide . . . two important substantive remedies included in the Clayton Act: compensatory
damages to the United States when it is injured in its business or property, and equitable relief
in suits brought by private citizens.” Id. at 35,227, 35,228 (emphasis added).
Representative Steiger subsequently offered another amendment, again to authorize a
private injunctive action and a public damages action. Sedima, 473 U.S. at 487; 116 CONG . REC.
35,228; 35,346 (1970). Concerned about “the potential consequences that this new remedy might
have,” Representative Poff asked Representative Steiger to withdraw the amendment for further
study by the Judiciary Committee, and Representative Steiger agreed. Agency Holding Corp.,
483 U.S. at 154-55 (citing 116 CONG . REC. at 35,346).
Shortly after RICO was enacted, Senators Hruska and McClellan, RICO’s sponsors,
introduced S. 16, a bill that again would have authorized damage actions by the United States
and injunctive actions by private persons. Agency Holding Corp., 483 U.S. at 155 (“[T]he
purpose of [S. 16] was to broaden even further the remedies available under RICO. In particular,
. . . it would have further permitted private actions for injunctive relief.”). The Senate, but not
the House, passed S. 16, and therefore it never became law. Wollersheim, 796 F.2d at 1086.

32

Congress thus passed RICO without authorizing private injunctive actions despite
repeated attempts to do so, and despite Congress’s explicit grant of such a right in Section 16 of
the Clayton Act. Congress shortly thereafter rejected an amendment to RICO that would have
added such a right. The clear conclusion to be drawn from the legislative history is that,
consistent with RICO’s text, Congress intended to create a private right of action only for treble
damages.29
E.

Equitable Relief Available Under Civil RICO is at Least As Broad as Equitable
Relief Under the Antitrust Laws, If Not Broader
It is clear that civil RICO, 18 U.S.C. § 1964, was patterned after the equitable relief

provisions under the antitrust laws. See Section II (C), fn. 19 and Section II (D) above. Indeed,

29

As of this writing, there is a conflict among the circuit courts of appeals as to whether
18 U.S.C. § 1964 vests the Attorney General of the United States with the exclusive authority to
seek equitable relief. The majority of courts to decide this issue have held that private parties
may not obtain equitable relief under 18 U.S.C. § 1964. See Conkling v. Turner, 18 F.3d 1285,
1296 (5th Cir. 1994) (collecting cases); Lincoln House, Inc. v. Dupre, 903 F.2d 845, 848 (1st Cir.
1990); Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076, 1080-89 (9th Cir. 1986), cert.
denied, 479 U.S. 1103 (1987); Sterling Suffolk Racecourse v. Burrillville Racing Ass’n, 802 F.
Supp. 662, 671 (D.R.I. 1992), aff’d, 989 F.2d 1266 (1st Cir.), cert. denied, 510 U.S. 1024 (1993);
Vietnam Veterans of America v. Guerdon Indus., 644 F. Supp. 951, 960-61 (D. Del. 1986);
Volkmann v. Edwards, 642 F. Supp. 109, 115 (N.D. Cal. 1986). Cf. Tran Co. v. O’Connor Secs.,
718 F.2d 26, 28-29 (2d Cir. 1983); Dan River, Inc. v. Icahn, 701 F.2d 278, 290 (4th Cir. 1983);
Kaushal v. State Bank of India, 556 F. Supp. 576, 583 (N.D. Ill. 1983).
In Nat. Org. for Women, Inc. v. Scheidler, 267 F.3d 687 (7th Cir. 2001), reversed on
other grounds, 537 U.S. 393 (2003), the Seventh Circuit held that Section 1964 authorizes
private litigants to sue for equitable relief. In the course of the Scheidler litigation, the United
States filed two Amicus Curiae briefs, before the United States Supreme Court, arguing that
private litigants lacked such authority and that Section 1964 vests the Attorney General with the
exclusive authority to obtain equitable relief. On both occasions, the Supreme Court explicitly
refused to decide that issue, and instead reversed the decisions of the Seventh Circuit on other
grounds. See Scheidler v. Nat. Org. for Women, Inc., 547 U.S. 9, 16 (2006); Scheidler v. Nat.
Org. for Women, Inc., 537 U.S. 393, 411 (2003). The foregoing analysis is derived from the
Government’s Amicus briefs in the Scheidler litigation.
33

the “prevent and restrain” language under the antitrust laws is virtually identical to the “prevent
and restrain” language under RICO’s Section 1964(a).30 As the Supreme Court has observed,
when Congress has used the same words in RICO’s Section 1964 as in the corresponding relief
provision of the Sherman Act that later was enacted in the Clayton Act, “we can only assume it
intended them to have the same meaning that courts had already given them.” Holmes, 503 U.S.
at 268. Therefore, the scope of a district court’s equitable authority under RICO is at least as
broad as the scope of its equitable authority under the antitrust laws. Indeed, Congress indicated
that it intended the scope of RICO’s equitable relief to be even broader than that available under
the antitrust laws. In that respect, Senator McClellan, RICO’s principal sponsor, stressed that the
references to antitrust precedents were not meant to “limit the remedies available [under RICO]
to those which have already been established. The ability of our chancery courts to formulate a
remedy to fit the wrong is one of the great benefits of our system of justice. This ability is not
hindered by the bill.” 115 CONG . REC. 9567 (1969).
The Supreme Court and lower courts have repeatedly interpreted the “prevent and
restrain” language of the antitrust laws to not only authorize injunctions, dissolution and
divestiture, but also to broadly encompass orders designed to ameliorate ongoing and future ill
effects of defendants’ past violations. For example, in United States v. United States Gypsum
Co., 340 U.S. 76 (1950), the Supreme Court ruled that:
A trial court upon a finding of a conspiracy in restraint of
trade and a monopoly has the duty to compel action by the
conspirators that will, so far as practicable, cure the ill effects
30

Compare Section 4 of the Sherman Act as originally enacted -- “Courts are hereby
invested with jurisdiction to prevent and restrain violations of this act.” (see Section II (D), fn.
27, above) with Section 1964(a) - - courts “shall have jurisdiction to prevent and restrain
violations of Section 1962.” (see Section II (C) above).
34

of the illegal conduct, and assure the public freedom from its
continuance. Such action is not limited to prohibition of the
proven means by which the evil was accomplished, but may range
broadly through practices connected with acts actually found to be
illegal. Acts entirely proper when viewed alone may be prohibited.
The conspirators should, so far as practicable, be denied future
benefits from their forbidden conduct.
Id. at 88-89 (emphasis added) (footnote omitted).
Accordingly, in that case the Supreme Court sanctioned a variety of equitable relief that
went “beyond the narrow limits of the proven violation,” including ordering the defendants to
undertake actions in the future that would cure the ill effects arising from the defendants’ past
proven violations.31 Consistent with the Supreme Court’s decisions in this area, the Eighth
31

See also United States v. Glaxo Group Ltd., 410 U.S. 52, 64 (1973) (“The purpose of
relief in an antitrust case is ‘so far as practicable, [to] cure the ill effects of the illegal conduct,
and assure the public freedom from its continuance’”) (citation omitted); Ford Motor Co. v.
United States, 405 U.S. 562, 573 n.8 (1972) (“The suggestion that antitrust ‘violators may not be
required to do more than return the market to the status quo ante.’. . . is not a correct statement of
the law. . . Rather, the relief must be directed to that which is ‘necessary and appropriate in the
public interest to eliminate the effects of the acquisitions offensive to the statute.’”) (citation
omitted); United States v. Ward Baking Co., 376 U.S. 327, 331-34 (1964) (holding that the
Government should not be foreclosed from offering evidence at trial justifying its request for
relief to “cure the ill effects of the illegal conduct” that violated antitrust laws where the sought
relief was “‘connected’ with and ‘related’ to practices which the companies may in the past have
followed.”); United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 326, 334 (1961)
(“courts are. . . required to decree relief effective to redress the [antitrust] violations, whatever
the adverse effect of such a decree on private interests,” and may include “complete
divestiture.”); Int’l Boxing Club v. United States, 358 U.S. 242, 262 (1959) (holding that
antitrust “relief to be effective, must go beyond the narrow limits of the proven violations” and
hence may prohibit certain contracts “until the effects of the conspiracy are fully dissipated”)
(citation omitted); United States v. E.I. du Pont de Nemours & Co., 353 U.S. 586, 607 (1957)
(antitrust relief must “eliminate the effects” of the unlawful acquisition); United States v. United
Liquors Corp., 352 U.S. 126 (1956) (“The defendants have been found to have violated the
antitrust laws and the decree has been framed by the judge of the trial court to correct the evils
which resulted from the acts found unlawful.”); Schine Chain Theatres v. United States, 334 U.S.
110, 128 (1948) (Divestiture and dissolution “deprives the antitrust defendants of the benefits of
their conspiracy”); United States v. Crescent Amusement Co., 323 U.S. 173, 188-89 (1944) (“the
Government should not be confined to an injunction against further violations”, and accordingly
(continued...)
35

Circuit has stated:
Upon finding an antitrust defendant guilty of a violation of the
Sherman Act, a district court is “empowered to fashion
appropriate restraints on [the defendant’s] future activities
both to avoid a recurrence of the violation and to eliminate its
consequences.” National Soc. of Professional Engineers v.
United States, 435 U.S. 679, 697 (1978). In fashioning a remedy, a
district court should endeavor to ensure that the conspirators “so
far as practicable, be denied future benefits from their forbidden
conduct” [quoting Gypsum]. Thus, the district court may
consider both the “continuing effects of past illegal conduct,”
[citation omitted], and the possibility of “lingering efforts” by the
conspirators to capitalize on the benefits of their past illegal
conduct. [citation omitted].
ES Dev., Inc. v. RWM Enters., 939 F.2d 547, 557 (8th Cir. 1991) (emphasis added).32
The foregoing antitrust cases establish that equitable relief to prevent and restrain future
violations is not limited to relief prohibiting future conduct, but also broadly encompasses relief
designed to cure the ill effects of violators’ past and/or ongoing misconduct and to deprive them
of the fruits of their misconduct. For the reasons stated above, RICO’s equitable relief must be
interpreted to be at least as broad as antitrust equitable relief. Moreover, it is important to bear in
31

(...continued)
the court ordered “each corporate exhibitor to divest itself of the ownership of any stock or other
interest in any other corporate defendant or affiliated corporation.”); United States v. Bausch &
Lomb Optical Co., 321 U.S. 707, 724, 726 (1944) (“Equity has power to eradicate the evils of a
condemned scheme by prohibition of the use of admittedly valid parts of an invalid whole. . .
[this Court’s precedents] ‘uphold equity’s authority to use quite drastic measures to achieve
freedom from the influence of the unlawful restraint of trade. . . . The test is whether or not the
required action reasonably tends to dissipate the restraints and prevent evasions. Doubts are to
‘be resolved in favor of the government and against the conspirators.’”) (citations omitted).
32

See also Wilk v. American Med. Ass’n, 895 F.2d 352, 367-70 (7th Cir. 1990)
(affirming district court’s grant of injunction against antitrust defendant on several grounds,
including “lingering effects” of unlawful conduct); In re Multidistrict Vehicle Air Pollution,
538 F.2d 231, 236 (9th Cir. 1976) (“affirmative equitable remedies may be granted to eliminate
the harmful residual effects of past [antitrust] violations . . . .”); United States v. Coca-Cola
Bottling Co. of Los Angeles, 575 F.2d 222, 229, 231 (9th Cir. 1978).
36

mind that the Supreme Court has admonished that “once the Government” has established a
violation of law, “all doubts as to the remedy are to be resolved in its favor.” United States v. E.
I. du Pont de Nemours & Co., 366 U.S. 316, 334 (1961). Accord United States v. Bausch &
Lomb Optical Co., 321 U.S. 707, 726 (1944).

37

III
ELEMENTS OF GOVERNMENT CIVIL RICO LAWSUITS AND DEFENSES
A.

Standards For Obtaining Equitable Relief
1.

The Government Must Establish a Reasonable Likelihood of Future
Violations By a Preponderance of the Evidence

In Government civil RICO suits to obtain equitable relief, the United States need only
prove the same elements as in a RICO criminal case, except that criminal intent is not required.
See, e.g., United States v. Local 560, Int’l Bhd. of Teamsters, 780 F. 2d 267, 284 (3d Cir. 1985);
United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp. 1303, 1309 (S.D.N.Y.
1993), modified on other grounds, 831 F. Supp. 167 (S.D.N.Y. 1993), aff’d sub nom. United
States v. Carson, 52 F.3d 1173 (2d Cir. 1995). Moreover, the burden of proof in Government
civil RICO lawsuits for equitable relief is a preponderance of the evidence.33 Therefore, to obtain
equitable relief, the United States must establish by a preponderance of the evidence that unless
relief is granted there is a reasonable likelihood of a future violation by the defendant.34
Typically, the Government has carried its burden in that regard by, inter alia, proving a pattern of
past violations, although such proof of past violations is not necessarily required. Thus, federal
33

See United States v. Local 560 of Int’l Bhd. of Teamsters, 780 F.2d 267, 279 n.12 (3d
Cir. 1985); United States v. Philip Morris USA, Inc., 449 F. Supp. 2d at 851; United States Local
1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp. 1303, 1311-12 (S.D.N.Y. 1993); United States
v. Local 295 of Int’l Bhd. of Teamsters, 784 F. Supp. 15, 19 (E.D.N.Y. 1992); United States v.
Local 359, 705 F. Supp. 894, 897 (S.D.N.Y.), aff’d in part and rev’d in part, 899 F.2d 1232 (2d
Cir. 1989); United States v. Local 30, United Slate, Tile, etc., 686 F. Supp. 1139, 1165 (E.D. Pa.
1988), aff’d, 871 F. 2d 401 (3d Cir.), cert. denied, 493 U.S. 953 (1989); United States v. Local
560, Int’l Bhd. of Teamsters, 581 F. Supp. 279, 329-30 (D.N.J. 1984) (collecting cases). See
also S. Rep. No. 91-617 at 82. Cf., Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 491 (1985)
(stating that under Section 1964, “[t]here is no indication that Congress sought to depart from
[the] general principle” that the “preponderance standard” applies to civil suits).
34

See cases cited n. 33 above and notes 35 and 36 below.
38

courts have held that evidence of past violations may establish the requisite reasonable likelihood
of future violations in view of the totality of the circumstances, particularly where the
defendant’s past violations were: (1) “part of a pattern” and not isolated; (2) were “deliberate”
and not “merely technical in nature”; and (3) “the defendant’s business will present opportunities
to violate the law in the future.”35
The Supreme Court and other federal courts also have emphasized that mere “cessation of
violations. . . is no bar to the issuance of an injunction” because past violations are “highly
suggestive of the likelihood of future violations.”36
In accordance with these principles, courts have granted the United States injunctive and
other equitable relief in many civil RICO cases based on past violations and have rejected
arguments that injunctive relief was not necessary because the unlawful activity had supposedly
ceased. In these cases, courts ordered injunctive relief even though many of the wrongdoers had
been convicted of crimes and were not in a position to continue their unlawful conduct because

35

SEC v. First City Financial Corp., Ltd., 890 F.2d 1215, 1228-29 (D.C. Cir. 1989).
Accord SEC v. Bilzerian, 29 F.3d 689, 695 (D.C. Cir. 1994); SEC v. Gruenberg, 989 F.2d 977,
978 (8th Cir. 1993); CFTC v. Hunt, 591 F.2d 1211, 1220-21 (7th Cir. 1979); SEC v. Savoy
Indus., Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978); SEC v. Commonwealth Chemical Securities
Inc., 574 F.2d 90, 98-100 (2d Cir. 1978); SEC v. Management Dyn. Inc., 515 F.2d 801, 807-08
(2d Cir. 1975); SEC v. Advance Growth Capital Corp., 470 F.2d 40, 53 (7th Cir. 1972); SEC
v.Manor Nursing Ctrs., Inc., 458 F.2d 1082, 1100-01 (2d Cir. 1972); Pullum v. Greene, 396 F.2d
251, 256-57 (5th Cir. 1968); United States v. Philip Morris USA, Inc., 449 F. Supp. 2d at 909-10;
United States v. Philip Morris USA, 316 F. Supp. 2d 6, 10 n. 3 (D.C. Cir. 2004) (collecting
cases); United States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 148-49 (D.D.C. 2000).
36

Hecht Co. Bowles, 321 U.S. 327 (1944); SEC v. Management Dyn., Inc., 515 F.2d
801, 807-08 (2d Cir. 1975). Accord City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283,
289 and n.10 (1982); United States v. Parke, Davis & Co., 362 U.S. 29, 47-49 (1960); United
States v. Odessa Union Warehouse Co-Op., 833 F.2d 172, 176 (9th Cir. 1987); Campbell v.
McGruder, 580 F.2d 521, 540 (D.C. Cir. 1978); SEC v. Commonwealth Chem. Sec., Inc., 574
F.2d 90, 98-99 (2d Cir. 1978); Pullum v. Greene, 396 F.2d 251, 256-57 (5th Cir. 1968).
39

they were imprisoned or removed from office in the corrupt enterprise.37 Many of these courts
found it particularly significant that these cases involved the corrupt influence of organized crime
because the threat of future violations “may virtually be presumed” from such organized crime
involvement. See United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp.
1303, 1316 (S.D.N.Y. 1993) (citing cases).
Moreover, where the United States seeks equitable relief to protect the public against
wrongdoing, as is the case in Government civil RICO suits for equitable relief, the United States
need not show an inadequate remedy at law, irreparable injury, or that the harm suffered in the
absence of injunctive relief outweighs the harm the defendant will suffer if the injunction is
granted, as is required for a private litigant to obtain equitable relief. The Seventh Circuit
explained in United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), cert. denied, 429 U.S.
925 (1975):
It was plainly the intention of Congress in adopting Section 1964
to provide for injunctive relief against violations of Section 1962
without any requirement of a showing of irreparable injury other
than that injury to the public which Congress found to be inherent
in the conduct made unlawful by Section 1962. It is also obvious
that Congress did not intend to require a showing of inadequacy of
the remedy at law. If as defendants contend the existence of the
criminal remedy at law under Section 1963 would defeat an action
in equity under Section 1964, the latter Section would be a nullity.
...
37

See United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995); United States v.
Private Sanitation Indus. Ass’n, 995 F.2d 373, 377-78 (2d Cir. 1993); United States Local 30,
United Slate, Tile, 871 F.2d 401, 405-09 (3d Cir. 1989); United States v. Local 295 of Int’l Bhd.
of Teamsters, 784 F. Supp. 15, 18, 21-22 (E.D.N.Y. 1992); United States v. Local 30, United
Slate, Tile, et al., 686 F. Supp. 1239, 1262-74 (E.D. Pa. 1988), aff’d, 871 F.2d 401 (3d Cir.
1989); United States v. Ianniello, 646 F. Supp. 1289, 1299-1300 (S.D.N.Y. 1986); United States
v. Local 560, Int’l Bhd. of Teamsters, 581 F. Supp. 279, 319-26 (D.N.J. 1984), aff’d, 780 F.2d
269, 292-94 (3d Cir. 1986); United States v. Mason Tenders Dist.Council, 1995 WL 679245, at *
7-13 (S.D.N.Y. Nov. 15, 1995).
40

[Therefore] whether equitable relief is appropriate depends, as it
does in other cases in equity, on whether a preponderance of the
evidence shows a likelihood that the defendants will commit
wrongful acts in the future, a likelihood which is frequently
established by inferences drawn from past conduct.
Id. at 1358-59.38 Also, there is no requirement that before a civil RICO action can be brought,
the defendant must have been previously convicted of a RICO violation or a RICO predicate act.
Sedima, 479 U.S. at 488-93.
2.

Making Due Provision for the Rights of Innocent Persons

Section 1964(a) of RICO provides, in relevant part, that “district courts of the United
States shall have jurisdiction” to impose various equitable remedies “making due provision for
the rights of innocent persons.” The legislative history to RICO’s Section 1964(a) contains only
a passing reference that “due provision for the rights of innocent persons be made.” See S. REP.
No. 91-617 at 160; H.R. Rep. No. 91-1549, at 2 (1970). This provision has not been the subject

38

It is well established that different standards than apply to private litigants’ request for
injunctive relief govern the Government’s request for injunctive relief to enforce laws to protect
the public’s interests, and that accordingly the Government is entitled to injunctive relief when it
demonstrates a reasonable likelihood that the defendants and/or their cohorts will commit
wrongful acts in the future, without any showing of an inadequate remedy at law or of irreparable
injury beyond the injury inherent in the unlawful conduct. See generally United States v. City of
San Francisco, 310 U.S. 16, 30-31 (1940); Hunt, 591 F.2d at 1220; United States v. Fed. Deposit
Ins. Corp., 881 F.2d 207, 210 (5th Cir. 1989); United States v. Odessa Union Warehouse Co-op,
833 F.2d 172, 175-76 (9th Cir. 1987); Gov. of V.1., Dept. of Conservation v. V.1. Paving, 714
F.2d 283, 286 (3d Cir. 1983) (and cases cited thereat); United States V. Siemens Corp.,
621 F.2d 499, 505-06 (2d Cir. 1980); SEC v. Management Dyn., Inc., 515 F.2d 801, 808 (2d Cir.
1975); United States v. Diapulse Corp. of America, 457 F.2d 25, 27-28 (2d Cir. 1972); Shafer v.
United States, 229 F.2d 124, 128 (4th Cir.), cert. denied, 351 U.S. 931 (1956); SEC v. Stratton
Oakmont, Inc., 878 F. Supp. 250, 255 (D.D.C. 1998); F.T.C. v. Virginia Homes Mfg. Corp., 509
F. Supp. 51, 59 (D. Md. 1981); United States v. Ingersoll-Rand Co., 218 F. Supp. 530, 544-45
(W.D. Pa.), aff’d, 320 F.2d 509 (3d Cir. 1963).
41

of extensive litigation, and therefore courts have not fully explicated its meaning.39
For example, in United States v. Sasso, 215 F.3d 283, 291-92 (2d Cir. 2000), the Second
Circuit ruled that requiring a corrupt former union official to contribute toward the cost of a
court-authorized monitorship of the union to rid it of corruption was within the district court’s
discretion under Section 1964(a), because, inter alia, it reduced the cost of monitorship to be
borne by “innocent” union members. Similarly, in United States v. Local 560 (I.B.T.),
974 F.2d 315, 347-48 (3d Cir. 1992), the Third Circuit held that removing a corrupt union
official from a union, and preventing him from associating with union members, made “due
provision for the rights of innocent” union members because such relief would help eliminate
corruption within the union. Accord United States v. Local 30, United Slate Tile, 871 F.2d 401,
407-08 (3d Cir. 1989) (rejecting the argument that the district court’s removal of 13 union
officers and members found to have violated RICO did not protect the rights of innocent third
parties because it stripped control of the union from its members, because such relief was
necessary to eliminate corruption within the union).40
39

The forfeiture provision under RICO’s Section 1963(c), which was enacted at the same
time as § 1964(a), similarly provided that “[t]he United States shall dispose of all [forfeited]
property as soon as commercially feasible, making due provision for the rights of innocent
persons.” See S. REP. NO . 91-617, at 23-24 (emphasis added). Under interpretations of the
original Section 1963(c), the Attorney General had the exclusive authority to make “due
provision for the rights of innocent persons” and provide relief, if any, in a petition for remission
or mitigation. However, in 1984, RICO’s Section 1963, but not Section 1964(a), was amended
to authorize the district court to make due provision for the rights of innocent persons in ancillary
proceedings. See United States v. Gilbert, 244 F.3d 888, 909 (11th Cir. 2001); United States v.
BCCI Holdings (Luxembourg), S.A. (Petition of Chawla), 46 F.3d 1185, 1190 (D.C. Cir. 1995);
S. Rep. No. 98-225 at 205-09 (1990), reprinted in 1984 U.S.C.C.A.N. 3182, 3388-92. Therefore,
it may be that under § 1964(a) the Attorney General retains the authority to make “due provision
for the rights of innocent persons” via a petition for remission or mitigation.
40

See also Ashland Oil, Inc. v. Gleave, 540 F. Supp. 81, 85 (W.D.N.Y. 1982) (holding
(continued...)
42

B.

Substantive Issues In Proving Government Civil RICO Claims
1.

A Defendant’s Liability For A Racketeering Act May Be Based On “Aiding
and Abetting”

To establish the commission of a pattern of racketeering activity, 18 U.S.C. §§ 1961(5)
and 1962(c) require that each defendant commit at least two acts of racketeering, “the last of
which occurred within ten years . . . after the commission of a prior” racketeering act. See H.J.
Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 237 (1989). The federal circuits have
repeatedly held in both criminal41 and civil42 RICO cases that a defendant’s liability for
40

(...continued)
that the “concern expressed for the rights of innocent persons cannot be stretched to include” a
private litigant’s right to sue for an order of attachment under section 1964(a) since section
1964(a) confers a right only on the Attorney General to bring actions for equitable relief, not
private litigants.).
41

See, e.g., United States v. Coon, 187 F.3d 888, 896 (8th Cir. 1999); United States v.
Shifman, 124 F.3d 31, 36-37 (1st Cir. 1997); United States v. Darden, 70 F.3d 1507, 1526 (8th
Cir. 1995); United States v. Pungitore, 910 F.2d 1084, 1131-32 (3d Cir. 1990); United States v.
Hobson, 893 F.2d 1267, 1269 (11th Cir. 1990); United States v. Hogan, 886 F.2d 1497, 1501-02
(7th Cir. 1989); United States v. Rastelli, 870 F.2d 822, 832 (2d Cir. 1989); United States v.
Wyatt, 807 F.2d 1480, 1482-83 (9th Cir. 1987); United States v. Qaoud, 777 F.2d 1105, 1117-18
(6th Cir. 1985); United States v. Cauble, 706 F.2d 1322, 1339-40 (5th Cir. 1983); United States
v. Phillips, 664 F.2d 971, 1039 (5th Cir. 1981).
42

See, e.g., Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1560 (1st Cir. 1994);
Cox v. Admin. U.S. Steel & Carnegie, 17 F.3d 1386, 1410 (11th Cir. 1994); McLaughlin v.
Anderson, 962 F.2d 187, 192-93 (2d Cir. 1992); Petro-Tech, Inc. v. Western Co. of N. Am., 824
F.2d 1349, 1356-57 (3d Cir. 1987); Armco Indus. Credit Corp. v. SLT Warehouse Co., 782 F.2d
475, 485 (5th Cir. 1986); Local 560, 780 F.2d at 283-86. See also Baumer v. Pachl, 8 F.3d
1341, 1347 (9th Cir. 1993); In re American Honda Motor Co. Dealerships Relations Litig., 958
F. Supp. 1045, 1057-59 (D. Md. 1997); Park v. Jack’s Food Systems, Inc., 907 F. Supp. 914,
918-19 (D. Md. 1995); Downing v. Halliburton & Assocs., Inc., 812 F. Supp. 1175, 1182 (M.D.
Ala. 1993); Wait Radio by Rosenfield v. Price Waterhouse, 691 F. Supp. 102, 108 (N.D. Ill.
1988);. Cf. First Am. Corp. v. Al-Nahyan, 17 F. Supp. 2d 10, 23-4 (D.D.C. 1998) (stating,
without deciding, that “with respect to RICO, Congress intended there to be aiding and abetting
liability in civil actions”).
(continued...)
43

personally committing a predicate racketeering act may be established by proof that the defendant
aided and abetted the commission of the racketeering act.
Moreover, such imposition of aiding and abetting liability for racketeering acts does not
conflict with Third Circuit’s ruling that in a civil action for treble damages brought by “a private
plaintiff,” a defendant’s liability for an entire RICO violation may not be based upon aiding
and abetting the RICO violations. See, e.g., Pennsylvania Ass’n of Edwards Heirs v. Rightenour,
235 F.3d 839, 841-44 (3d Cir. 2000); Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644,
656-57 (3d Cir. 1998), abrogation on other grounds recognized, Forbes v. Eagleson, 228 F.3d
471 (3d Cir. 2000). The rationale of those cases is that “Congress has not enacted a general civil
aiding and abetting statute . . . under which a person may sue and recover damages from a private
defendant,” and that 18 U.S.C. § 2 “has no application to private causes of action.” Rolo, 155 F.
3d at 656-57 (quoting Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511
U.S. 164, 181 (1994)). However, a Government civil RICO suit for equitable relief, in contrast,
is not a private action for damages. The Third Circuit itself, and other courts as well, has held
that in such Government civil RICO suits, liability for predicate acts may be established by
aiding and abetting under 18 U.S.C. § 2. See Local 560, 780 F.2d at 283-89. Accord Local
1804-1, 812 F. Supp. at 1338-39; United States v. District Council, 778 F. Supp. 738, 748-49
(S.D.N.Y. 1991). See also cases cited in notes 41 & 42 above. As the court stated in Local 1804,
812 F. Supp. at 1347: “In a civil RICO suit [brought by the United States] the Court applies the

42

(...continued)
“To prove aiding and abetting, the evidence must show that the defendant in some way
associated himself with the criminal venture as something he wished to bring about and that he
sought by his actions to make it succeed.” Pungitore, 910 F.2d at 1132 (internal quotations and
citation omitted).
44

criminal standard in determining aiding and abetting liability.” Accord Local 560, 780 F.2d at
284.
Furthermore, Rightenour and Rolo, turned on whether a defendant’s liability for all the
elements of a RICO violation could be based entirely on an aiding and abetting ground. That
issue is significantly different from the issue of whether a defendant’s liability for only the
element involving the commission of racketeering acts may be based on aiding and abetting.43
As stated above, every court to decide that narrow issue has held in the affirmative. For example,

43

Indeed, thus far the cases holding that aiding and abetting liability does not apply in
civil RICO cases have involved suits for treble damages by private plaintiffs seeking to
impose aiding and abetting liability for the entire alleged RICO violations, and not just the
predicate racketeering acts. See, e.g., Rightenour, 235 F.3d at 841 (“a private plaintiff could not
maintain a claim of aiding and abetting an alleged RICO violation”) (emphasis added); Rolo,
155 F.3d at 656-57 (same); In re Mastercard Int’l Inc., Internet Gambling Litig., 132 F. Supp. 2d
468, 493 (E.D. La. 2001) (“it is doubtful that an aiding and abetting liability cause of action
exists” for private plaintiffs seeking treble damages); Jubelirer v. Mastercard Int’l, Inc., 68 F.
Supp. 2d 1049, 1054 (W.D. Wis. 1999) (“Central Bank’s analysis is controlling and requires
dismissal of [private] plaintiff’s claim for aiding and abetting a RICO violation.”); Touhy v.
Northern Trust Bank, No. 98-6302, 1999 WL 342700, at *4 (N.D. Ill. May 17, 1999) (same);
Soranno v. N.Y. Life Ins. Co., No. 96-1882, 1999 WL 104403, at *7-8 (N.D. Ill. Feb. 24, 1999)
(same); Ross v. Patrusky, Mintz & Semel, No. 90-1356, 1997 WL 214957, at *11 (S.D.N.Y.
April 29, 1997) (same); Hayden v. Paul, Weiss, Rifkind, Wharton & Garrison, 955 F. Supp. 248,
256 (S.D.N.Y. 1997) (“Following the reasoning in Central Bank, this Court declines to create a
private right of action for aiding and abetting a RICO violation”) (citation deleted) (emphasis
added); La Salle Nat. Bank v. Duff & Phelps Credit Rating Co., 951 F. Supp. 1071, 1088-89
(S.D.N.Y. 1996); Department of Econ. Dev. v. Arthur Anderson & Co., 924 F. Supp. 449, 475
(S.D.N.Y. 1996) (the private plaintiff’s “claim for aiding and abetting a RICO violation must be
dismissed because there is no such tort”).
Moreover, Bowdoin Constr. Corp. v. Rhode Island Hosp. Trust Nat. Bank, 869 F. Supp.
1004, 1009 (D. Mass. 1994), does not support preclusion of aiding and abetting liability for
racketeering acts in Government civil RICO suits because Bowdoin’s preclusion of aiding and
abetting liability was limited to racketeering acts under Section 10(b) of the Securities and
Exchange Act of 1934 under a private civil RICO claim for treble damages because “[t]o hold
otherwise would enable [private] plaintiffs to use RICO to circumvent the interpreted intent of
the Securities Act.”
45

in Department of Economic Development, the court stated:
[O]ne can commit a primary civil violation of § 1962(a) if one has
aided and abetted racketeering activity. But this does not mean
that someone who aids and abets another person’s violation of §
1962(a) is liable to private parties for damages.
924 F. Supp. at 475.44
Furthermore, imposition of aiding and abetting liability for only the commission of
racketeering acts does not run afoul of the Supreme Court’s decision in Reves v. Ernst & Young,
507 U.S. 170, 185 (1993), which held that a defendant is not liable for a substantive RICO
violation under 18 U.S.C. § 1962(c) unless the defendant “participate[s] in the operation or
management of the enterprise itself.” Imposition of aiding and abetting liability for racketeering
acts does not eliminate Reves’ requirement for proving a substantive RICO offense that the
defendant participate in the operation or management of the enterprise. See, e.g., 131 Main
Street Associates v. Manko, 897 F. Supp. 1507, 1528 n.17 (S.D.N.Y. 1995) (“We do not read the
operation-or-management rule enunciated in Reves as changing the rule that ‘[c]ivil RICO
liability can be predicated on aiding and abetting the commission of the predicate acts by the
primary offender.’ . . . Clearly, a person can operate or manage an enterprise and yet, through
delegation, avoid directly committing predicate acts.” (citation omitted)); Fidelity Federal Sav. &
Loan Ass’n v. Felicetti, 830 F. Supp. 257, 261 (E.D. Pa. 1993) (aider and abettor liability for
44

Moreover, aiding and abetting liability for racketeering acts is not inconsistent with the
requirement for a substantive RICO claim that the defendant personally commit at least two
racketeering acts. Pursuant to 18 U.S.C. § 2, aiding and abetting racketeering activity “makes
one punishable as a principal and amounts to [personally] engaging in that racketeering activity”;
it does not constitute vicarious liability. See Shifman, 124 F.3d at 36. Accord Pungitore,
910 F.2d at 1131-32; Rastelli, 870 F.2d at 832. If aiding and abetting racketeering acts did not
constitute personally committing racketeering acts, then such aiding and abetting liability would
not apply in criminal RICO cases. However, numerous decisions have held that aiding and
abetting liability applies to racketeering acts in criminal cases. See cases cited above in n. 41.
46

RICO predicate acts is not inconsistent with Reves’ requirement for operation or management of
the RICO enterprise).
2.

Principles of Respondeat Superior

Government civil RICO suits typically are brought against collective entities such as
corporations and labor unions. It is well established that a collective entity, such as a corporation
or labor union, may act only through its agents, and hence may be held liable for the acts of its
officers, employees, and other agents. This is true in both criminal prosecutions, see United
States v. Wise, 370 U.S. 405 (1962); United States v. Najjar, 300 F.3d 466, 483 (4th Cir. 2002);
United States v. Sun-Diamond Growers of California, 138 F.3d 961, 970 (D.C. Cir. 1998), aff’d,
526 U.S. 398 (1999), as well as in civil cases. See United States v. Brothers Constr. Co. of Ohio,
219 F.3d 300, 310-311 (4th Cir. 2000). See also Davis v. Mutual Life Ins. Co. of New York, 6
F.3d 367, 378-80 (6th Cir. 1993) (respondeat superior liability in RICO cases permissible, since
“corporate principals may act only through their agents.”). Accord, United States v. Philip
Morris USA, Inc., 449 F. Supp. 2d at 892-93.45 Therefore, a collective entity may be held liable
for the statements or wrongful acts of its agents or employees when they are acting within the
scope of their authority or the course of their employment, see Burlington Indus., Inc. v. Ellerth,
524 U.S. 742, 756 (1998); Restatement (Second) of Agency § 219 et seq. (1958), so long as the
action is motivated, at least in part, to benefit the principal. See Sun-Diamond Growers, 138
F.3d at 970; Local 1814, Int’l Longshoremen’s Ass’n v. NLRB, 735 F.2d 1384, 1395 (D.C. Cir.
45

See also Oki Semiconductor Co. v. Wells Fargo Bank, 298 F.3d 768, 775-76 (9th Cir.
2002) (“This possibility of respondeat superior liability for an employee’s RICO violations
encourages employers to monitor closely the activities of their employees to ensure that those
employees are not engaged in racketeering. It also serves to compensate the victims of
racketeering activity. Vicarious liability based on the doctrine of respondeat superior thereby
fosters RICO’s deterrent and compensatory goals.”) (citations omitted).
47

1984); Restatement (Second) of Agency § 228 (1958). However, a plaintiff need not show that
the agent was acting exclusively for the Defendant collective entity; it is enough that the
employee was acting in part for the benefit of the collective entity.46 Likewise, “it is not
necessary for agent’s actions to have actually benefited the corporate entity.” Automated
Medical Labs., Inc., 770 F.2d at 407 (citing Old Monastery Co. v. United States, 147 F.2d 905,
908 (4th Cir. 1945)); United States v. Carter, 311 F.2d 934, 942 (6th Cir. 1963); United States v.
Sun-Diamond Growers of California, 964 F. Supp. 486, 490 (D.D.C. 1997) (citing cases).

46

For instance, in United States v. Gold, 743 F.2d 800 (11th Cir. 1984), the defendant (a
corporate medical center) was prosecuted for violations of 18 U.S.C. § 1001 and § 371 for
defrauding, and conspiring to defraud, the Government through the corporation’s employees. On
appeal, the corporation argued that, because the employees were acting primarily for their own
benefit, rather than that of the corporation, the company could not be found liable. Rejecting this
argument, the court noted that the motivations were not mutually exclusive, and that, in fact, the
employees had acted to benefit themselves (via larger bonuses) as well as the corporation (via
increased revenue). Moreover, the court reasoned, so long as the employees were acting in part
for the benefit of the corporation, the corporation may be held liable for their acts. Id. at 823
(citing United States v. Beusch, 596 F.2d 871, 877-78 & n.7 (9th Cir. 1979); United States v.
Demauro, 581 F.2d 50, 54 & n.3 (2d Cir. 1978); and Prosser, Torts, § 70 at 461 (4th Ed. 1971)).
See also Curtis, Collins & Holbrook Co. v. United States, 262 U.S. 215, 223-24 (1923); United
States v. Cincotta, 689 F.2d 238, 241-42 (1st Cir. 1982) (agent must be “performing acts of the
kind which he is authorized to perform, and those acts must be motivated – at least in part – by
an intent to benefit the corporation” (emphasis added)); United States v. Automated Medical
Labs., Inc., 770 F.2d 399, 407 (4th Cir. 1985) (“It would seem entirely possible, therefore, for an
agent to have acted for his own benefit while also acting for the benefit of the corporation.”).
Likewise, in United States v. 141st Street Corp., 911 F.2d 870 (2d Cir. 1990), the Government
sought forfeiture from the defendant, 141st Street Realty Corporation, of an apartment building
that had been used to facilitate narcotics trafficking. At trial, the Government established that the
building superintendent, Nahmias, accepted bribes and collected exorbitant rents from drug
dealers in exchange for their use of the building for drug-related activities. On appeal, the
corporation argued that the agent acted adversely to its interests “and therefore any knowledge
that Nahmias may have had of the narcotics trafficking cannot be imputed to the corporation.”
Id. at 876. The Court of Appeals for the Second Circuit rejected the corporation’s argument,
noting that “Nahmias’ actions were adverse to the corporation only in the sense that his actions
contributed to the imputation of knowledge to Realty Corp.,” and that, under the corporation’s
faulty logic, imputation of knowledge could never be used to impose liability “because the very
actions of the agent that cause an imputation of knowledge are ‘adverse’ to the principal.” Id.
48

Moreover, in civil actions, “there may be no need to show that the agent acted to further
the principal’s interests – a showing of ‘apparent authority’ is often enough.” Sun-Diamond
Growers, 138 F.3d at 970 n.9 (D.C. Cir. 1998) (citing American Soc’y of Mech. Eng’rs v.
Hydrolevel Corp., 456 U.S. 556, 573-74 (1982)). And, even where the agent’s action is beyond
the original express, implied, or apparent authority, an act may be attributed to the principal if it
is later ratified, either explicitly or by implication. See Cox v. Administrator U.S. Steel &
Carnegie, 17 F.3d 1386, 1409 (11th Cir. 1994); IBJ Schroder Bank & Trust Co. v. Resolution
Trust Corp., 26 F.3d 370, 375 (2d Cir. 1994); Yellow Bus Lines, Inc. v. Drivers, Chauffeurs, &
Helpers Local Union 639, 883 F.2d 132, 136 (D.C. Cir. 1989), rev’d in part on other grounds,
913 F.2d 948 (D.C. Cir. 1990) (en banc). Indeed, if the act is done within the course of
employment and with intent to benefit the collective entity, the collective entity is liable even if
the act was unlawful,47 or was done contrary to instructions or policies.48
Furthermore, it is well-established that “the knowledge of the employees is the
knowledge of the corporation.” Apex Oil Co. v. United States, 530 F.2d 1291, 1295 (8th Cir.
1976). See, e.g., United States v. Investment Enters., Inc., 10 F.3d 263, 266 (5th Cir. 1993)
(corporation liable for offenses arising from interstate transportation of obscenity based on
president’s actions); In re Adams Labs. Inc., 3 B.R. 495, 499 & n.2 (Bankr. E.D. Va. 1980) (“The
knowledge acquired by a secretary and treasurer who conducts negotiations with a third party
47

United States v. American Radiator and Standard Sanitary Corp., 433 F.2d at 204-05;
United States v. Automated Medical Labs., 770 F.2d 399, 407 (4th Cir. 1985); Egan v. United
States, 137 F.2d 369, 379 (8th Cir. 1943).
48

Automated Medical Labs., 770 F.2d at 407; United States v. Beusch, 596 F.2d 871,
877 (9th Cir. 1979); United States v. Hilton Hotels Corp., 467 F.2d 1000, 1004 (9th Cir. 1972);
United States v. Harry L. Young & Sons, Inc., 464 F.2d 1295, 1296-97 (10th Cir. 1972); Egan,
137 F.2d at 379.
49

with authority from the corporation to do so will be imputed to the corporation.”); Duplex
Envelope Co. v. Denominational Envelope Co., 80 F.2d 179, 182 (4th Cir. 1935) (corporation
affected with constructive knowledge “of all material facts of which an officer acquires
knowledge while acting in the course of his employment and within the scope of his authority.”);
United States v. Josleyn, 206 F.3d 144, 159 (1st Cir. 2000) (citing cases for agent’s knowledge
being imputed to the company).49
49

See also United States v. Josleyn, 206 F.3d 144, 159 (1st Cir. 2000) (there is no
requirement that a person be a “central figure” at a corporation in order for that person’s
knowledge to be imputed to the corporation); Askanase v. Fatjo, 130 F.3d 657, 666 (5th Cir.
1997) (imputing corporate officer’s knowledge to corporations for statute of limitations
purposes); St. Paul Fire and Marine Ins. Co. v. FDIC, 968 F.2d 695, 700-701 (8th Cir. 1992) (“in
general, an agent’s actual notice or knowledge may be imputed to the agent’s principal.”); Nat’l
Petrochemical Co. of Iran v. M/T Stolt Sheaf, 930 F.2d 240, 243-44 (2d Cir. 1991) (corporation
owned by Iranian government imputed with knowledge of its agent, United Arab Emirates
intermediary, and therefore had imputed knowledge of illegal nature of shipment of chemicals
from United States to Iran); Mallis v. Bankers Trust Co., 717 F.2d 683, 689 & n.9 (2d Cir. 1983)
(“It is a basic tenet of the law of agency that the knowledge of an agent, or for that matter a
partner or joint venturer, is imputed to the principal.” (citing cases)); Wyle v. R.J. Reynolds
Indus., Inc., 709 F.2d 585, 590 (9th Cir. 1983) (knowledge of four senior officers of corporation
that corporation’s agent had rebated was imputable to corporation; thus, record supported district
court’s finding that corporation’s denial that it had engaged in rebating was knowingly false);
Am. Standard Credit, Inc. v. Nat’l Cement Co., 643 F.2d 248, 270-71 (5th Cir. 1981) (imputation
of joint venturer’s knowledge to entire corporation); Delbrueck & Co. v. Mfrs. Hanover Trust
Co., 609 F.2d 1047, 1051-52 (2d Cir. 1979) (notice to bank’s paying and receiving agent imputed
to bank); Eitel v. Schmidlapp, 459 F.2d 609, 614-16 (4th Cir. 1972) (where defendant’s agent
fraudulently conveyed property to defendant, agent’s knowledge of fraud would be imputed to
principal even where no evidence of actual knowledge on part of principal: “the principal cannot
claim the fruits of the agent’s acts and still repudiate what the agent knew.”); Ritchie Grocer Co.
v. Aetna Cas. & Sur. Co., 426 F.2d 499, 500 (8th Cir. 1970) (knowledge possessed by branch
manager for one of corporate insured’s stores that employee had previously committed tire theft
was fully attributable to insured within exclusion provision of employee fidelity policy
precluding coverage after insured or officer of insured discovers or has knowledge or information
that employee has committed any fraudulent or dishonest act in service of insured or otherwise);
Bergeson v. Life Ins. Corp. of Am., 265 F.2d 227, 232 (10th Cir. 1959) (corporation necessarily
acts vicariously and can acquire knowledge only through its officers and agents and their
knowledge is knowledge of corporation); Mollohan v. Masters, 45 App. D.C. 414, 421-22 (D.C.
App. 1916) (where promissory notes infected with usury come into the possession of a
(continued...)
50

Furthermore, a principal is attributed with the knowledge acquired by its agent even if the
information is never communicated to it, see, e.g., New York University v. First Fin. Ins. Co.,
322 F.3d 750, 753-54 & n.2 (2d Cir. 2003),50 or even after termination of the services of that
officer, employee, or agent. See Acme Precision Prods., Inc. v. Am. Alloys Corp., 422 F.2d
1395, 1398 (8th Cir. 1970) (knowledge by a corporation, obtained by and through its officers and
key employees, of facts of continuing importance to business of the corporation, even after
termination of services of that officer or employee, is conclusive upon the corporation).
In affirming corporate criminal liability, the Supreme Court has noted that:
[w]e see no valid objection in law, and every reason in public policy, why
the corporation, which profits by the transaction, and can only act through
its agents and officers, shall be held punishable by fine because of the
knowledge and intent of its agents to whom it has intrusted authority to act
in the subject-matter of making and fixing rates of transportation, and
whose knowledge and purposes may well be attributed to the corporation
for which the agents act.
New York Cent. & Hudson River R.R. Co. v. United States, 212 U.S. 481, 495 (1909).

49

(...continued)
corporation through its agents, who had notice of the usury, the corporation is not in a position to
claim that it is an innocent purchaser; notice to the agents being notice to the principal).
50

See also Bowen v. Mount Vernon Sav. Bank, 105 F.2d 796, 799 (D.C. Cir. 1939)
(presumption that a principal knows what his agent knows is irrebuttable, and cannot be avoided
by showing that the agent did not in fact communicate his knowledge nor by showing that the
agent had such an adverse interest that he would not likely communicate his knowledge); Hand
& Johnson Tug Line v. Canada S.S. Lines, 281 F. 779, 783 (6th Cir. 1922) (corporation cannot
avoid responsibility by showing that, when a written notice by mail was received in its general
office, it was sent to the wrong department).
51

3.

A Corporation’s or Labor Union’s Scienter May Be Established By The
Collective Knowledge of The Corporation’s or Labor Union’s Employees and
Representatives

Insofar as a principal can be attributed with the knowledge of a single agent or employee,
see Section III (B)(2) above, a corporation, or a labor union, as a collection of employees and
agents, “is considered to have acquired the collective knowledge of its employees and is held
responsible for their failure to act accordingly.” United States v. T.I.M.E.-D.C. Inc., 381 F.
Supp. 730, 738-39 (W.D. Va. 1974). Therefore, such collective entities are liable for the
aggregate knowledge of all employees and agents within (and acting on behalf of) the collective
entity, and cannot “plead ignorance” by claiming that the representative making the fraudulent
statement, or obtaining the knowledge of its falsity, somehow was insulated from the rest of the
corporation or labor union.
The seminal case on the “collective knowledge” doctrine is United States v. Bank of New
England, N.A., 821 F.2d 844 (1st Cir. 1987). In that case, the bank was convicted of violating
the Currency Transaction Reporting Act for failing to report various financial transactions. At
trial, the district court stressed that, unlike a natural person, the jury must consider the bank “as
an institution.” The trial court instructed the jury as follows:
In addition, however, you have to look at the bank as an institution.
As such, its knowledge is the sum of the knowledge of all of the
employees. That is, the bank’s knowledge is the totality of what
all of the employees know within the scope of their
employment. So, if Employee A knows one facet of the currency
reporting requirement, B knows another facet of it, and C a third
facet of it, the bank knows them all. So if you find that an
employee within the scope of his employment knew that CTRs had
to be filed, even if multiple checks are used, the bank is deemed to
know it. The bank is also deemed to know it if each of several
employees knew a part of that requirement and the sum of what the
separate employees knew amounted to knowledge that such a
52

requirement existed.
Id. at 855 (emphasis added). After conviction, the bank on appeal challenged the trial court’s
instructions regarding the bank’s knowledge and intent, by allowing the jury to consider the
aggregate knowledge of various employees, including the tellers at the bank window (who
participated in the withdrawals) and the other employees (who might not have even known of the
withdrawals). The individual making the withdrawals was acquitted on all counts, and none of
the bank employees had been charged with a crime. Id. at 847. Therefore, the bank contended,
“it is error to find that a corporation possesses a particular item of knowledge if one part of the
corporation has half the information making up the item, and another part of the entity has the
other half.” Id. at 856.
The First Circuit rejected the bank’s argument, noting that “[a] collective knowledge
instruction is entirely appropriate in the context of corporate criminal liability. . . . [T]he
knowledge obtained by corporate employees acting within the scope of their employment is
imputed to the corporation.” Id. at 856. In addition, the court stressed that it would be unjust to
allow a corporation to avoid liability merely because it chose to divide its knowledge, thus
allowing it to “plead ignorance”:
Corporations compartmentalize knowledge, subdividing the
elements of specific duties and operations into smaller
components. The aggregate of these components constitutes the
corporation’s knowledge of a particular operation. It is irrelevant
whether employees administering one component of an operation
know the specific activities of employees administering another
aspect of the operation . . . . Since the Bank had the
compartmentalized structure common to all large corporations, the
court’s collective knowledge instruction was not only proper but
necessary.
Id. at 856.
53

Earlier cases also demonstrate that corporate knowledge should be aggregated, and
accordingly notice and knowledge of a fact by an employee-representative is imputed to the
corporation-principal. For instance, in Inland Freight Lines v. United States, 191 F.2d 313, 315
(10th Cir. 1951), the court ruled that a corporation could be held responsible for the mistakes and
falsification by its drivers in preparation of drivers’ logs even where no individual agent or
employee was shown to have actual knowledge of discrepancies between the business logs and
reports. The court explained:
The logs and the reports did not find their way into the hands of a
single agent or representative of the company after they were filed.
No single agent or representative in the offices of the company had
actual knowledge of their conflicts and falsities. But one agent or
representative had knowledge of the material contents of the logs
and another had knowledge of the material contents of the reports.
And the knowledge of both agents or representatives was attributed
to the company.
Id. at 315.51

51

See also Matter of Pubs., Inc., 618 F.2d 432, 438 (7th Cir. 1980) (collective knowledge
of all employees and departments within the corporation is generally imputed to the corporation);
Steere Tank Lines, Inc. v. United States, 330 F.2d 719, 721-22 (5th Cir. 1963) (“It is now beyond
doubt that a corporation may be held criminally liable. [citing cases]. These cases also settle the
proposition that knowledge of employees and agents of the corporation is attributable to the
corporation, and that their acts may amount to wilfulness on the part of the corporation.”); United
States v. U.S. Cartridge Co., 198 F.2d 456, 464 (8th Cir. 1952) (collective knowledge doctrine
case in False Claims Act context); Camacho v. Bowling, 562 F. Supp. 1012, 1025 (N.D. Ill.
1983) (“Other organizations, such as private corporations or partnerships, are held to have
constructive notice of the collective knowledge of all the employees and departments within the
organization.”); United States v. Sawyer Transport, Inc., 337 F. Supp. 29, 31 (D. Minn. 1971),
aff’d, 463 F.2d 175 (8th Cir. 1972) (knowledge of employees may be joined and imputed to the
corporation); United States v. E. Brooke Matlack, Inc., 149 F. Supp. 814, 819-20 (D. Md. 1957)
(corporation liable for knowingly and wilfully violating ICC regulations even where main office
in Philadelphia did not know or suspect that branch agents in Baltimore were violating duties);
People v. Amer. Med. Ctrs., 324 N.W.2d 782, 793 (Mich. App. 1982) (“The combined
knowledge of those employees may be imputed to the corporation to find it liable for fraudulent
(continued...)
54

Moreover, in United States v. Shortt Accountancy Corp., 785 F.2d 1448 (9th Cir. 1986),
an accounting firm was convicted for making and subscribing false tax returns, in violation of 26
U.S.C. § 7206(1), for preparing and submitting tax returns claiming deductions for illegal
“straddle” investments. The firm’s chief operating officer, Ashida, advised the customer about
the investment, and provided information to another employee of the firm, Whatley, for the
actual preparation of the customer’s return. Id. at 1450-51. At trial, the firm contended that a
corporation cannot be guilty of a § 7206 offense “when the person who actually subscribes the
false return believes it to be true and correct.” Id. at 1451. The district court denied the motion,
and the jury ultimately convicted the firm.
On appeal, the defendant claimed that six of the convictions should be overturned
because there was no evidence that Whatley, the preparer and subscriber of these six tax returns,
possessed the requite intent to wilfully make and subscribe a false tax return. The firm conceded
that “Ashida, who supplied Whatley with all of his information regarding the straddle losses, did
have the requisite intent,” but pointed out that Ashida did not physically subscribe to the return.
After considering the argument, the court of appeals concluded that it was “completely
meritless”:
If it were accepted by the courts, any tax return preparer could
escape prosecution for perjury by arranging for an innocent
employee to complete the proscribed act of subscribing a false
return. This interpretation of section 7206(1) defies logic and has
no support in the case law. A corporation will be held liable under
section 7206(1) when its agent deliberately causes it to make and
subscribe to a false income tax return.
51

(...continued)
acts.”); Gem City Motors Inc. v. Minton, 137 S.E.2d 522, 525 (Ga. App. 1964) (corporation
“chargeable with the composite knowledge acquired by its officers and agents” (emphasis
added)).
55

Id. at 1454.
Likewise, since Bank of New England, several other courts have allowed such agents’
knowledge to be aggregated and imputed to the corporation as a whole. For example, in United
States v. Philip Morris USA, Inc., 449 F. Supp. 2d at 893-98, the district court held in a
Government civil RICO lawsuit that the defendants-corporations’ knowledge and specific intent
to commit fraud were properly established by the collective knowledge of their officers,
employees and agents. The district court explained:
There is “every reason in public policy” why a corporation, which
can only act through its agents and officers, and which profits by
their actions, should be held liable when the totality of
circumstances demonstrate that such corporation collectively knew
what it was doing or saying was false, by did it or said it
nevertheless, even if it is impossible to determine the state of mind
of the individual agent or officer at the time. Indeed, if it were
otherwise, Defendants could avoid liability by simply dividing up
duties to ensure that fraudulent statements were only made by or
[sic] uninformed employees.
Id. at 896-97.
Similarly, in United States v. Sun-Diamond Growers, 964 F. Supp. 486 (D.D.C. 1997),
the court noted that the defendant “makes much of the fact that purportedly no other corporate
officials knew about Mr. Douglas’ activities. However, knowledge obtained by a corporate agent
acting within the scope of his employment is imputed to the corporation.” Id. at 491 n.10. In
addition, the Court noted that, under agency principles, the defendant could still be liable for
Douglas’ actions “even if Mr. Douglas had acted against corporate policy or the corporation’s
express instructions or even if Sun-Diamond had derived no benefit from Mr. Douglas’ actions.”
Id.

56

In CPC Intern., Inc. v. Aerojet-General Corp., 825 F. Supp. 795 (W.D. Mich. 1993), the
court stressed that “a corporation cannot plead innocence by asserting that the information
obtained by several employees was not acquired by any one individual employee.” 825 F. Supp
at 811-812 (citations and internal quotations omitted); United States v. T.I.M.E. - D.C. Inc., 381
F. Supp. 730, 738-39 (W.D. Va. 1974) (a corporation “cannot plead innocence by asserting that
the information obtained by several employees was not acquired by any one individual employee
who then would have comprehended its full import. Rather the corporation is considered to have
acquired the collective knowledge of its employees and is held responsible for their failure to act
accordingly.”); United States v. LBS Bank-New York Inc., 757 F. Supp. 496, 501 (E.D. Pa.
1990) (knowledge from different employees can be joined in order to establish corporate
knowledge, but specific intent cannot be so aggregated); United States v. Farm & Home Sav.
Ass’n, 932 F.2d 1256, 1259 (8th Cir. 1991) (imputing collective knowledge of employees
participating in multiple illegal transactions to employer).
Similarly in United States ex rel. Harrison v. Westinghouse Savannah River Co., 352
F.3d 908, 919 (4th Cir. 2003), a False Claims Act case, though not formally needing to reach the
“corporate scienter” rule, the court of appeals declined to adopt the defendant’s proposed “single
actor” requirement that the same employee know both the certifying requirement and the
wrongful conduct. Under that rule, the court reasoned, “corporations would establish segregated
‘certifying’ offices that did nothing more than execute government contract certifications, thereby
immunizing themselves against FCA liability.” Id. As acknowledged by the California Supreme
Court, the single actor rule is “fraught with danger and would open up avenues of fraud which
would lead to incalculable hazards. It would permit a corporation, by not letting its right hand
57

know what is in its left hand, to mislead and deceive . . . .” Sanders v. Magill, 70 P.2d 159, 163
(Cal. 1937).
Thus, under the collective knowledge doctrine “[t]he knowledge necessary to adversely
affect the corporation does not have to be possessed by a single corporate agent; the cumulative
knowledge of several agents can be imputed to the corporation.” WILLIAM M. FLETCHER,
FLETCHER CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS, § 790, at 16 (perm. Ed.)
(emphasis added); accord WILLIAM E. KNEPPER & DAN A. BAILEY , LIABILITY OF CORPORATE
DIRECTORS AND OFFICERS, § 1.02, at 4 (Supp. 1992).
Imposing the collective scienter upon the corporation follows equity as well as the
extensive legal authority cited above. As the First Circuit noted in Bank of New England, the
collective knowledge doctrine prevents a corporation from “plead[ing] innocence by asserting
that the information obtained by several employees was not acquired by any one individual who
then would have comprehended its full import.” 821 F.2d at 856 (citing T.I.M.E.-D.C.,
381 F. Supp. at 738). Indeed, numerous courts have prevented corporations (and other
organizations) from taking advantage of their corporate form by attempting to “ostrich”
themselves away from liability by insulating the actors (or spokespersons) of a corporation from
those within the organization who have certain information. As one commentator noted:
Given the often complex and decentralized nature of many
corporations, it is sometimes difficult, if not impossible, to prove
that any single corporate agent acted with the necessary intent and
knowledge to commit an offense. Under the judicially created
“collective knowledge” doctrine, however, this will not preclude a
corporation’s conviction. That doctrine deems a corporation’s
knowledge to be the combined knowledge and intent of all of its
employees. Thus, even if no single employee has the intent and
knowledge necessary to commit a crime, the corporation can be
convicted on the basis of its employees [sic] collective knowledge
58

and intent.
Dan K. Webb et al., Understanding and Avoiding Corporate and Executive Criminal Liability,
49 BUS. LAW 617, 625 (1994).52
4.

The Prohibition Against Intracorporate Conspiracies Under The Antitrust
Laws Does Not Apply To Government Civil RICO Lawsuits

In Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), the Supreme
Court held that a parent corporation “and its wholly owned subsidiary . . . are incapable of
conspiring with each other for purposes of § 1 of the Sherman Act,” 15 U.S.C. § 1. 467 U.S. at
752. But, the Supreme Court rested its decision in Copperweld on the Sherman Act’s distinctive
intent and purpose. Section 1 of the Sherman Act prevents two or more enterprises from joining
52

See also Charles J. Walsh & Alissa Pyrich, Corporate Compliance Programs as a
Defense to Criminal Liability: Can a Corporation Save its Soul?, 47 RUTGERS L. REV . 605, 625
(1995) (noting that corporations can be convicted of intent-based crimes even where none of
their employees possessed the requisite intent); Kevin B. Huff, The Role of Corporate
Compliance Programs in Determining Corporate Criminal Liability: A Suggested Approach,
96 COLUM . L. REV . 1252, 1256 n.26 (1996) (“Under the ‘collective knowledge’ doctrine, courts
have found the required intent by imputing to the corporation the aggregate knowledge of more
than one employee.”); Steere Tank Lines v. United States, 330 F.2d 719, 721 (5th Cir. 1963)
(“knowledge of employees’ agents of the corporation is attributable to the corporation, and . . .
their acts may amount to wilfulness on the part of the corporation”).
See also FLETCHER, CORPORATIONS, § 790 (absent collective knowledge doctrine,
“corporations could avoid the adverse implications of the [imputed knowledge] rule by
restricting the intracorporate flow of information.”). As noted by the Fifth Circuit in Continental
Oil Co. v. Bonanza Corp., 706 F.2d 1365, 1376 (5th Cir. 1983), “Because a corporation operates
through individuals, the privity and knowledge of individuals at a certain level of responsibility
must be deemed privity and knowledge of the organization, ‘else it could always limit its
liability.’” (citing Coryell v. Phipps, 317 U.S. 406, 410-11 (1943)); Silver Line, Ltd. v. United
States, 94 F.2d 776, 780 (9th Cir. 1937) (ship owner may not escape liability by giving
management functions to employee acting as agent)). As the Eleventh Circuit emphasized in
First Ala. Bank v. First State Ins. Co., 899 F.2d 1045, 1060 n.8 (11th Cir. 1990), the reason that
courts impose constructive knowledge upon the principal “is to avoid the injustice which would
result if the principal could have an agent conduct business for him and at the same time shield
himself from the consequences which would ensue from knowledge of conditions or notice of the
rights and interests of others had the principal transacted his own business in person.”
59

their economic power to restrain trade; it does not apply to unilateral action by a single
enterprise. See id. at 771-775. Because Congress recognized that a prohibition on unilateral
action could impede the ability of a single enterprise to compete in the marketplace, the Court
held in Copperweld that Section 1 of the Sherman Act does not apply to intra-enterprise
agreements. Id. at 775 (“Subjecting a single firm’s every action to judicial scrutiny for
reasonableness would threaten to discourage the competitive enthusiasm that the antitrust laws
seek to promote.”).
In fact, numerous courts have held that these antitrust considerations simply do not apply
to RICO. For example, in Haroco v. Am. Nat’l Bank & Trust Co. of Chicago, 747 F.2d 384, 403
n.22 (7th Cir. 1984), aff’d on other grounds, 473 U.S. 606 (1985), the court ruled that
Copperweld did not apply to civil RICO conspiracy charges, explaining that “the Sherman Act is
premised, as RICO is not, on the ‘basic distinction between concerted and independent action.’
The policy considerations discussed in Copperweld therefore do not apply to RICO, which is
targeted primarily at the profits from patterns of racketeering activity.”
747 F.2d at 403 n.22 (citation omitted). Similarly, in Ashland Oil, Inc. v. Arnett, 875 F.2d 1271
(7th Cir. 1989), the court stated:
Since a subsidiary and its parent theoretically have a community of
interest, a conspiracy “in restraint of trade” between them poses no threat
to the goals of antitrust law – protecting competition. In contrast,
intracorporate conspiracies do threaten RICO’s goals of preventing the
infiltration of legitimate businesses by racketeers and separating racketeers
from their profits.
875 F.2d at 1281 (citations omitted). In accordance with the foregoing reasoning, numerous
courts have likewise ruled that the rationale of Copperweld does not apply to civil RICO claims
and that, therefore, a civil RICO conspiracy claim properly applies to a conspiracy between a
60

parent corporation and its subsidiary, between affiliated corporations, or between a corporation
and its own officers and representatives.53
C.

Certain Defenses Do Not Apply to Government Civil RICO Actions For Equitable
Relief
1.

Laches and Statute of Limitations

The Supreme Court has repeatedly held that the United States is not bound by a statute of
limitations or subject to the defense of laches54 when it brings a lawsuit in its sovereign capacity
to enforce a public right or to protect the public’s interest. See, e.g., Utah Power & Light Co. v.
United States, 243 U.S. 389, 409 (1917) (“As a general rule, laches or neglect of duty on the part

53

See, e.g., Webster v. Omnitrition Intern., Inc., 79 F.3d 776, 787 (9th Cir. 1996);
Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1166-67 (3d Cir. 1989); Fed. Reserve Bank
of S.F. v. HK Sys., Inc., No. C-95-1190 MHP, 1997 WL 765952, at *3-*4 (N.D. Cal. Nov. 12,
1997); N. Shore Med. Ctr., Ltd. v. Evanston Hosp. Corp., No. 92 C 6533, 1996 WL 435192, at
*3 (N.D. Ill. July 31, 1996); Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., No. 95-1698,
1996 WL 135336, at *5 (E.D. Pa.. Mar. 19, 1996); Bowman v. W. Auto Supply Co., 773 F.
Supp. 174, 180 (W.D. Mo. 1991), rev’d on other grounds, 985 F. 2d 383 (8th Cir. 1993); DunRite Tool & Fabricating Co. v. Am. Nat’l Bank of DeKalb, No. 89 C 20370, 1991 WL 293092,
at *5 (N.D. Ill. Apr. 11, 1991); Rouse v. Rouse, No. 89-CV-597, 1990 WL 160194, at *14
(N.D.N.Y. Oct. 17, 1990); Atlass v. Tex. Air Corp., Civ. A. No. 88-9637, 1989 WL 51724, at *5
(E.D. Pa. May 10, 1989); Curley v. Cumberland Farms Dairy, Inc., 728 F. Supp. 1123, 1135
(D.N.J. 1989); Pandick Inc. v. Rooney, 632 F. Supp. 1430, 1435 (N.D. Ill. 1986); Callan v. State
Chemical Mfg. Co., 584 F. Supp. 619, 623 (E.D. Pa. 1984); Saine v. A.I.A., Inc., 582 F. Supp.
1299, 1307 n.9 (D. Colo. 1984); Mauriber v. Shearson/Am. Express, Inc., 567 F. Supp. 1231,
1241 (S.D.N.Y. 1983).
Moreover, Copperweld’s prohibition on intracorporate conspiracies does not apply to
criminal RICO conspiracy charges or other criminal conspiracy charges. See, e.g., United States
v. Hughes Aircraft Co., 20 F. 3d 974, 979 (9th Cir. 1994) (collecting cases); Crockett,
979 F.2d at 1218 n.12.
54

For laches to apply, a defendant must establish two elements: (1) unreasonable delay in
bringing the claim; and (2) prejudice caused by the delay. See, e.g., Trustees of Centennial State
Carpenters Pension Trust Fund v. Centric Corp. (In re Centric Corp.), 901 F.2d 1514, 1519 (10th
Cir. 1990); Independent Bankers Ass’n of America v. Heimann, 627 F.2d 486, 488 (D.C. Cir.
1980); Allen v. Carmen, 578 F. Supp. 951, 962-63 (D.D.C. 1983).
61

of officers of the government is no defense to a suit by it to enforce a public right or protect a
public interest.”). Accord Nevada v. United States, 463 U.S. 110, 141 (1983); United States v.
California, 332 U.S. 19, 40 (1947); United States v. Summerlin, 310 U.S. 414, 416 (1940); Bd.
of County Comm’rs v. United States, 308 U.S. 343, 351 (1939); Guaranty Trust Co. of New
York v. United States, 304 U.S. 126, 132 (1938); Davis v. Corona Coal Co., 265 U.S. 219, 222
(1924); Chesapeake & Delaware Canal Co. v. United States, 250 U.S. 123, 125 (1919); United
States v. Insley, 130 U.S. 263, 266 (1889); United States v. Thompson, 98 U.S. 486, 489 (1878);
United States v. Kirkpatrick, 22 U.S. 720, 735-37 (1824). Accord United States v. Angell, 292
F.3d 333, 338 (2d Cir. 2002); Herman v. South Carolina Nat’l Bank, 140 F.3d 1413, 1427 (11th
Cir. 1998); United States v. Arrow Transp. Co., 658 F.2d 392, 394 (5th Cir., Unit B, Oct. 1981);
United States v. Weintraub, 613 F.2d 612, 618-19 (6th Cir. 1979). “This principle protects
public rights vested in the government for the benefit of all from ‘the inadvertence of the agents
upon which the government must necessarily rely.’” Herman, 140 F.3d at 1427 (quoting United
States v. Alvarado, 5 F.3d 1425, 1427 (11th Cir. 1993)); accord SEC v. Rind, 991 F.2d 1486,
1491 (9th Cir. 1993).
The RICO statute itself does not contain any time limitations upon the United States’
ability to bring civil RICO suits for equitable relief. Indeed, Congress recognized in RICO’s
legislative history that “there is no general statute of limitations applicable to civil suits brought
by the United States to enforce public policy, nor is the doctrine of laches applicable.” S. REP.
No. 91-617 at 160. Therefore, it is clear that, consistent with the general principles discussed
above, Congress did not intend to, and affirmatively decided not to, apply a statute of limitations
or the doctrine of laches to civil RICO suits for equitable relief brought by the United States.
62

In accordance with the foregoing authority, every court that has considered the issue has
held that a statute of limitations and the doctrine of laches do not apply against claims of the
United States to obtain injunctive and other equitable relief under RICO. See United States v.
Philip Morris Inc., 300 F. Supp. 2d 61, 72-74 (D.D.C. 2004); United States v. Private Sanitation
Indus. Ass’n of Nassau/Suffolk, Inc., 793 F. Supp. 1114, 1152 (E.D.N.Y. 1992); United States v.
Int’l Bhd. of Teamsters, 708 F. Supp. 1388, 1402 (S.D.N.Y. 1989); United States v. Bonanno
Organized Crime Family, 695 F. Supp. 1426, 1430-31 (E.D.N.Y. 1988). Moreover, courts in
other analogous enforcement contexts similarly have held that the doctrine of laches does not
apply against actions of the United States to enforce the securities laws,55 antitrust laws,56 or fair
trade laws.57 Likewise, in various other civil enforcement actions, courts have concluded that
limitations periods will not be imposed on suits brought by the United States. See Dole v. Local
427, Int’l Union of Elec. Radio & Mach. Workers, 894 F.2d 607, 610-16 (3d Cir. 1990) (no
statute of limitations applies when Secretary of Labor sues under Labor-Management Reporting
and Disclosure Act (“LMRDA”) to enjoin local union from refusing to allow one of its members
to review collective bargaining agreements); Donovan v. West Coast Detective Agency, Inc., 748
F.2d 1341, 1343 (9th Cir.1984) (Secretary of Labor suit to compel filing of requisite reports

55

See, e.g., SEC v. Rind, 991 F.2d 1486, 1491 (9th Cir. 1993); SEC v. McCaskey,
56 F. Supp. 2d 323, 327 (S.D.N.Y. 1999); SEC v. Willis, 777 F. Supp. 1165, 1174 (S.D.N.Y.
1991); SEC v. Gulf & Western Indus., Inc., 502 F. Supp. 343, 348-49 (D.D.C. 1980); SEC v.
Penn Central Co., 425 F. Supp. 593, 599 (E. D. Pa. 1976).
56

See, e.g., United States v. Firestone Tire & Rubber Co., 374 F. Supp. 431, 433 (N.D.
Ohio 1974).
57

See, e.g., FTC v. Verity Int’l, Ltd., 194 F. Supp. 2d 270, 286 (S.D.N.Y. 2002); FTC v.
Crescent Pub. Group, Inc., 129 F. Supp. 2d 311, 324 (S.D.N.Y. 2001); United States v. Reader’s
Digest Ass’n, Inc., 464 F. Supp. 1037, 1043 (D. Del. 1978).
63

under LMRDA); Donovan v. Square D Co., 709 F.2d 335, 341 (5th Cir. 1983) (Secretary of
Labor’s anti-retaliation suit under Occupational Safety and Health Act); Marshall v.
Intermountain Elec. Co., 614 F.2d 260, 263 (10th Cir. 1980) (same); Nabors v. NLRB, 323 F.2d
686, 688-89 (5th Cir. 1963) (National Labor Relations Board enforcement of National Labor
Relations Act); see also United States v. Ali, 7 F.2d 728 (E.D. Mich. 1925) (laches inapplicable
to denaturalization proceeding brought by the government); United States v. Brass, 37 F. Supp.
698 (E.D.N.Y. 1941) (same).
2.

United States’ Civil RICO Claims Cannot Be Implicitly Waived

As a matter of law, the United States cannot be found to have implicitly waived its
sovereign capacity to protect public interests through civil RICO suits for equitable relief. In
United States v. California, 332 U.S. 19 (1947), the Supreme Court considered a dispute between
a state and the federal government over ownership and control of submerged coastal land. The
state argued, inter alia, that the federal government’s policies, decisions and actions, as well as
the “conduct of its agents” served to waive the United States’ claim to the lands. See id. at 39.
The Supreme Court squarely rejected this analysis:
even assuming that Government agencies have been negligent in
failing to recognize or assert the claims of the Government at an
earlier date, the great interests of the Government in this ocean area
are not to be forfeited as a result. The Government, which holds
its interests here as elsewhere in trust for all the people, is not
to be deprived of those interests by the ordinary court rules
designed particularly for private disputes . . . .
Id. at 39-40 (emphasis added); see also cases in Section III (C)(3) below (demonstrating that
equitable estoppel does not lie against the United States acting as sovereign to protect the public

64

interest).58
RICO vests the Attorney General with the exclusive authority to bring civil RICO suits
for injunctive and equitable remedies to vindicate the public’s paramount interests in eliminating
corruption from the channels of commerce. See Section II (D) above; United States v. Int’l Bhd.
of Teamsters, 3 F.3d 634, 638 (2d Cir. 1993) (when it proceeds under § 1964, “the government
sues in its sovereign capacity pursuant to a ‘compelling governmental interest’ and ‘strong
congressional policy’”) (citations omitted). The public interest vindicated by RICO enforcement
actions cannot be understated. The Congressional Statement of Findings and Purpose underlying
RICO explains that, among other things, RICO was designed to combat activities that
weaken the stability of the Nation’s economic system, harm
innocent investors and competing organizations, interfere with free
competition, seriously burden interstate and foreign commerce,
threaten the domestic security, and undermine the general welfare
of the Nation and its citizens . . . .
Pub. L. No. 91-452, 84 Stat., at 922, 923. Indeed, Congress created RICO to provide new and
expanded criminal and civil remedies to vindicate the public’s interest in combating racketeering
activity and “to free the channels of commerce” from such unlawful conduct. See Sections II (B)
and (C) above.
Consequently, the United States’ right to maintain a civil RICO action, so clearly
“charged or colored with public interest,” Brooklyn Savs. Bank, 324 U.S. at 704, cannot be
58

Similarly, the Supreme Court has explained, in the context of a private right granted
by federal statute, “Where a private right is granted in the public interest to effectuate a
legislative policy, waiver of a right so charged or colored with the public interest will not be
allowed where it would thwart the legislative policy which it was designed to effectuate.”
Brooklyn Savs. Bank v. O’Neil, 324 U.S. 697, 704 (1945). See also Tompkins v. United
Healthcare of New England, Inc., 203 F.3d 90, 97 (1st Cir. 2000) (“[a] statutory right may not be
disclaimed if the waiver could ‘do violence to the public policy underlying the legislative
enactment.’”) (internal quotations and citation omitted).
65

implicitly waived as a matter of law.59
3.

Equitable Estoppel Can Not Lie Against the United States, If Ever, Absent
Affirmative Misconduct

a. It is well settled that “equitable estoppel will not lie against the Government as it lies
against private litigants.” OPM v. Richmond, 496 U.S. 414, 419 (1990). The Supreme Court has
succinctly stated the rationale for this rule: “When the Government is unable to enforce the law
because the conduct of its agents has given rise to an estoppel, the interest of the citizenry as a
whole in obedience to the rule of law is undermined.” Heckler v. Community Health Servs. of
Crawford County, Inc., 467 U.S. 51, 60 (1984). See also FDIC v. Hulsey, 22 F.3d 1472, 1489
(10th Cir. 1994) (Where estoppel against the United States would “frustrate the purpose of the
statutes expressing the will of Congress or unduly undermine the enforcement of the public

59

Even assuming arguendo that the right of the United States to bring a civil RICO claim
could be waived, a defendant would have an exacting burden to establish a waiver. “A waiver ‘is
ordinarily an intentional relinquishment or abandonment of a known right or privilege.’” United
States v. Robinson, 459 F.2d 1164, 1168 (D.C. Cir. 1972) (quoting Johnson v. Zerbst, 304 U.S.
458, 464 (1938)); see also United States v. Olano, 507 U.S. 725, 733 (1993); Britamco
Underwriters, Inc. v. Nishi, Papagjika & Assocs., Inc., 20 F. Supp. 2d 73, 77 n.2 (D.D.C. 1998).
In the context of a right expressly reserved to the United States as sovereign, the waiver must be
“unmistakable.” See Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 148 (1982) (“Without
regard to its source, sovereign power, even when unexercised, is an enduring presence that
governs all contracts subject to the sovereign’s jurisdiction, and will remain intact unless
surrendered in unmistakable terms.”) (emphasis added); United States v. Cherokee Nation of
Okla., 480 U.S. 700, 707 (1987) (“waiver of sovereign authority [to ensure that navigable waters
remain free to interstate and foreign commerce] will not be implied, but instead must be
surrendered in unmistakable terms”) (internal quotation and citation omitted); Bowen v. Public
Agencies Opposed to Social Sec. Entrapment, 477 U.S. 41, 52 (1986) (“we have declined in the
context of commercial contracts to find that a sovereign forever waives the right to exercise one
of its sovereign powers unless it expressly reserves the right to exercise that power in the
contract.” (internal quotation and citation to Merrion omitted)); United States v. Philip Morris
Inc., 300 F. Supp. 2d at 69 (“any waiver [of the Government’s right to bring a civil RICO
lawsuit] must be made in unmistakable terms”); cf. also United States v. Mitchell, 445 U.S. 535,
538 (1980) (“A waiver of sovereign immunity cannot be implied but must be unequivocally
expressed.”) (internal quotation and citation omitted).
66

laws,” it should not be invoked); Alacare Home Health Servs. Inc. v. Sullivan, 891 F.2d 850, 855
(11th Cir. 1990) (equitable estoppel should not apply when Government acting in its sovereign,
rather than proprietary, function); Chapman v. Santa Fe Pac. R. Co., 198 F.2d 498, 519 (D.C. Cir.
1952) (“It is settled law that no estoppel can arise against the Government in the exercise of a
public or governmental function as distinguished from a proprietary one.”) (citations omitted).
While the Supreme Court has not absolutely foreclosed the possibility that estoppel
could lie against the United States in “extreme circumstances,” it has never applied the doctrine
of equitable estoppel against the United States. See OPM v. Richmond, 496 U.S. at 434; see
also id. at 422 (“Courts of Appeals have taken our statements as an invitation to search for an
appropriate case in which to apply estoppel against the Government, yet we have reversed every
finding of estoppel that we have reviewed.”) (emphasis added). Accord ATC Petroleum, Inc.
v. Sanders, 860 F.2d at 1104, 1111 (D.C. Cir. 1988). For example, in Utah Power & Light Co. v.
United States, 243 U.S. 389, 409 (1917), the Supreme Court stated:
As presenting another ground of estoppel it is said that the agents in the
forestry service and other officers and employees of the government, with
knowledge of what the defendants were doing, not only did not object
thereto, but impliedly acquiesced therein until after the works were
completed and put in operation. This ground also must fail. As a general
rule, laches or neglect of duty on the part of officers of the government is
no defense to a suit by it to enforce a public right or protect a public
interest.
b. Before equitable estoppel could ever lie against the United States, a Defendant would
have to present evidence of significant “affirmative misconduct” on the part of the Government.
See, e.g., INS v. Hibi, 414 U.S. 5, 8 (1973); Montana v. Kennedy, 366 U.S. 308, 314-15 (1961);
Long v. Area Manager, Bureau of Reclamation, 236 F.3d 910, 916 (8th Cir. 2001); Drozd v. INS,
155 F.3d 81, 90 (2d Cir. 1998); City of New York v. Shalala, 34 F.3d 1161, 1168 (2d Cir. 1994).
67

Such “affirmative misconduct” must consist, at minimum, of active misrepresentation or
concealment; negligent, indifferent, or passive conduct by the Government will not suffice. See,
e.g., United States v. Marine Shale Processors, 81 F.3d 1329, 1348-51 (5th Cir. 1996); United
States v. Harvey, 661 F.2d 767, 775 (9th Cir. 1981); United States v. City of Toledo, 67 F. Supp.
603, 607 (N.D. Ohio 1994); United States v. City of Menominee, 727 F. Supp. 1110, 1121 (W.D.
Mich. 1989). For example, in Alaska Limestone Corp. v. Hodel, 614 F. Supp. 642, 647 (D.
Alaska 1985), the court rejected an estoppel claim even though Government officials had failed
to comply with certain congressionally mandated deadlines. In so doing, the Alaska Limestone
court concluded that the party claiming estoppel had offered nothing to show that the
Government had “intentionally ignored” its responsibilities or “affirmatively sought to deceive or
mislead” others. 614 F. Supp. at 648.
Moreover, “[t]he case for estoppel against the government must be compelling,” and, at a
minimum, requires proof of (1) a false representation of fact; (2) a purpose to invite action by the
party to whom the representation was made; (3) ignorance of the true facts by that party; (4)
reasonable reliance; (5) a showing of injustice; and (6) lack of undue damage to the public
interest. ATC Petroleum, 860 F.2d at 1111; Graham, 222 F.3d at 1007; United States v. Philip
Morris Inc., 300 F. Supp. 2d at 71-72; Moore v. Blue Cross & Blue Shield of the Nat’l Cap.
Area, 70 F. Supp. 2d 9, 31 (D.D.C. 1999). Defendants must demonstrate that all these elements
are satisfied in order for equitable estoppel to apply. See, e.g., Heckler, 467 U.S. at 61
(“[H]owever heavy the burden might be when an estoppel is asserted against the Government,
the private party surely cannot prevail without at least demonstrating that the traditional elements
of an estoppel are present.”); ATC Petroleum, 860 F.2d at 1111; Trustees of Michigan Laborers’
68

Health Care Fund v. Gibbons, 209 F.3d 587, 591 (6th Cir. 2000); Kennedy v. United States,
965 F.2d 413, 417 (7th Cir. 1992).
4.

The United States Is Not Subject to the Defenses of Unclean Hands or In Pari
Delicto

a. The doctrine of unclean hands derives from the equitable maxim that one “who comes
into equity must come with clean hands.” See, e.g., Precision Instrument Mfg. Co. v. Auto.
Maint. Mach. Co., 324 U.S. 806, 814 (1945). Just as with waiver, equitable estoppel, and laches,
this doctrine generally may not be invoked against the United States when it is “attempting to
enforce a congressional mandate in the public interest.” See SEC v. Gulf & Western Indus., Inc.,
502 F. Supp. 343, 348 (D.D.C. 1980); Pan-American Petroleum & Transp. Co. v. United States,
273 U.S. 456, 505-506 (1927) (stating that principle that “he who seeks equity must do equity . . .
will not be applied to frustrate the purpose of [the United States’] laws or to thwart public
policy”); SEC v. Sprecher, 1993 WL 544306, *2 (D.D.C. 1993) (“an unclean hands defense does
not lie in a civil enforcement action brought by a federal agency”).60 As noted above,
Government civil RICO actions for equitable relief seek to enforce Congress’ mandate to protect
the public’s interests. Thus, such civil RICO suits “enforc[e] a congressional mandate in the
public interest,” Gulf & Western, 502 F. Supp. at 348, thereby precluding the application of the
doctrine of “unclean hands” against it. Accord United States v. Philip Morris Inc., 300 F. Supp.
2d at 74-76.
b. The doctrine of in pari delicto, which “literally means ‘of equal fault,’” Pinter v. Dahl,
486 U.S. 622, 632 (1988), is closely related to the defense of “unclean hands.” This defense is

60

Accord Kelley v. Thomas Solvent Co., 714 F. Supp. 1439, 1451 (W.D. Mich. 1989);
United States v. Vineland Chem. Co., 692 F. Supp. 415, 423-24 (D.N.J. 1988).
69

not applicable to Government civil RICO lawsuits for the reasons discussed above, but for other
legal reasons as well. In order for in pari delicto to apply, “[t]he plaintiff must be an active
voluntary participant in the unlawful activity that is the subject of the suit.” Pinter, 486 U.S. at
636. Indeed, “[p]laintiffs who are truly in pari delicto are those who have themselves violated
the law in cooperation with the defendant.” Id.
However, an action can only be barred by in pari delicto “if preclusion of suit does not
offend the underlying statutory policies.” Id. at 637-38; Perma Life Mufflers, Inc. v.
International Parts Corp., 392 U.S. 134, 138 (1968) (rejecting in pari delicto defense to private
treble damages antitrust suit where nothing in the statutory language indicated that Congress
wanted to make in pari delicto defense available, and recognizing “inappropriateness of invoking
broad common-law barriers to relief where a private suit serves important public purposes”). It
is beyond question that permitting the in pari delicto defense to bar a RICO suit brought by the
United States to address alleged violations of RICO and thus protect the American public would
offend the important public purposes served by RICO. Accord United States v. Philip Morris
Inc., 300 F. Supp. 2d at 76.
Further, the United States is not a “person” within the meaning of the RICO statute. See
United States v. Bonanno Organized Crime Family, 879 F.2d 20, 21-27 (2d Cir. 1989); Peia v.
United States, 152 F. Supp. 2d 226, 234 (D. Conn. 2001). Thus, the United States cannot, as a
matter of law, participate in a RICO Enterprise under 18 U.S.C. § 1962(c) (“It shall be unlawful
for any person . . . to conduct or participate, directly or indirectly, in the conduct of such
enterprise’s affairs. . . .”) (emphasis added), or participate in a RICO conspiracy to violate
1962(c) under 18 U.S.C. § 1962(d) (“It shall be unlawful for any person to conspire to violate
70

[the RICO statute].”) (emphasis added). Thus, because the United States is not a person within
the meaning of RICO, it may not be held liable for a violation of RICO.
D.

Collateral Estoppel
Civil RICO, 18 U.S.C. § 1964 (d), explicitly authorizes the Government to invoke

collateral estoppel to prove its civil RICO charges, and provides as follows:
A final judgment or decree rendered in favor of the United States
in any criminal proceeding brought by the United States under this
chapter shall estop the defendant from denying the essential
allegations of the criminal offense in any subsequent civil
proceeding brought by the United States.
Collateral estoppel “means simply that when an issue of ultimate fact has once been
determined by a valid and final judgment, that issue cannot again be litigated between the same
parties in any future lawsuit.” Ashe v. Swenson, 397 U.S. 436, 443 (1970). Accord United
States v. Console, 13 F.3d 641, 664 (3d Cir. 1993). Moreover, a party invoking collateral
estoppel bears the burden of demonstrating that the issue of fact whose litigation he seeks to
foreclose was actually decided in his favor by a valid and final judgment in an earlier proceeding.
See Dowling v. United States, 493 U.S. 342, 350-51 (1990) (collecting cases); Console, 13 F.3d
at 665, n. 28. To determine whether a party has carried his burden of establishing that a jury in a
prior prosecution necessarily resolved a particular fact in his favor, “requires a court to ‘examine
the record of a prior proceeding, taking into account the pleadings, evidence, charge, and other
relevant matter, and conclude whether a rational jury could have grounded its verdict upon an
issue other than that which the defendant seeks to foreclose from consideration.’” Ashe, 397 U.S.
at 444 (citation deleted). Accord Dowling, 493 U.S. at 350; Console, 13 F.3d at 665, n.28.

71

In accordance with the foregoing authority, courts in several Government civil RICO
cases have collaterally estopped defendants from contesting issues and facts which underlaid
defendants’ prior criminal convictions.61 For example, in United States v. Private Sanitation
Indus. Ass’n, 899 F. Supp. 974, 980-81 (E.D.N.Y. 1994), the court held that under principles of
collateral estoppel, a defendant’s guilty plea in state court to the New York State offense of
coercion in the first degree conclusively established that the defendant committed one predicate
act of extortion, in violation of the Hobbs Act (18 U.S.C. § 1951), that was charged in the

61

However, collateral estoppel does not bar the United States from relitigating in a civil
RICO case an issue upon which a defendant was acquitted in a prior criminal prosecution
because a lesser standard of proof applies in a civil proceeding. In United States v. One
Assortment of 89 Firearms, 465 U.S. 354 (1984), the Supreme Court held that a gun owner’s
acquittal on criminal charges involving firearms did not preclude a subsequent in rem civil
forfeiture proceeding against those same firearms, explaining:
[The acquittal did] not prove that the defendant is innocent; it merely proves the
existence of a reasonable doubt as to his guilt. . . [T]he jury verdict in the criminal
action did not negate the possibility that a preponderance of the evidence could
show that [the defendant] was engaged in an unlicensed firearms business. . . It is
clear that the difference in the relative burdens of proof in the criminal and civil
actions precludes the application of the doctrine of collateral estoppel.
Id. at 361-62. Accord Dowling, 493 U.S. at 349 (“an acquittal in a criminal case does not
preclude the Government from relitigating an issue when it is presented in a subsequent action
governed by a lower standard of proof”); One Lot Emerald Cut Stones v. United States, 409 U.S.
232, 235 (1972) (holding that the Double Jeopardy Clause did not bar a forfeiture action
subsequent to acquittal on the underlying offense because “the difference in the burden of proof
in criminal and civil cases precludes application of the doctrine of collateral estoppel”);
Helvering v. Mitchell, 303 U.S. 391, 397 (1938) (ruling that “[t]he difference in degree in the
burden of proof in criminal and civil cases precludes application of the doctrine of res judicata”).
See also, United States v. IBT, 787 F. Supp. 345, 351 (S.D.N.Y. 1992) (holding that a union
officer’s acquittal on criminal assault charges did not preclude a subsequent civil disciplinary
charge, brought by a court-appointed officer in a Government civil RICO suit, based on the same
conduct where the preponderance of evidence standard applied); United States v. Ianniello,
646 F. Supp. 1289, 1290-91 (S.D.N.Y. 1986), aff’d, 824 F.2d 203 (2d Cir. 1987) (holding that
the defendant’s prior acquittal on a criminal RICO conspiracy charge did not preclude a
subsequent Government civil RICO suit based on the same conduct).
72

Government’s civil RICO complaint. The court explained that even though the “state offense of
coercion in the first degree does not constitute a RICO predicate act. . . a conviction for the state
felony of coercion in the first degree can establish the elements of a Hobbs Act violation.” Id. at
981. Accord United States v. Private Sanitation Indus. Ass’n, 811 F. Supp. 808, 813-15
(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993) (same as to New York State conviction for
coercion in the second degree, and also holding that the defendant’s prior guilty plea in state
court to the New York misdemeanor offense of conspiring to commit the felony of Second
Degree Bribery conclusively established in a subsequent Government civil RICO suit that he
committed several state bribery offenses that constitute a predicate act of bribery under
18 U.S.C. § 1961 (1)(A)).
Moreover, in United States v. Local 30, United Slate, Tile, 686 F. Supp. 1139, 1165-66
(E.D.Pa. 1988), aff’d 871 F.2d 401 (3d Cir. 1989), the district court held that the individual union
officials-defendants’ prior criminal RICO convictions for conspiring to conduct, and conducting,
the Roofers Union through a pattern of racketeering activity “collaterally estop them from
denying [in a subsequent Government civil RICO lawsuit] that they conducted the affairs of the
Roofers Union through a pattern of racketeering activity.” 686 F. Supp. at 1165. The district
court also held that:
The statutory estoppel provided in 18 U.S.C. § 1964 (d) operates
against the Union defendant as well, because the Union (the
principal) is estopped and bound by the actions of its agents (the
Union officials and representatives).
686 F. Supp. at 1166.62
62

See also United States v. IBT, 905 F.2d 610, 620-23 (2d Cir. 1990), aff’g, 725 F. Supp.
162 (S.D.N.Y. 1989) (holding that the defendants were collaterally estopped from denying the
(continued...)
73

As noted above, collateral estoppel bars relitigation of finally resolved issues “between
the same parties in any future lawsuit.” Ashe v. Swenson, 397 U.S. at 443. For example, in
United States v. IBT, 754 F. Supp. 333, 338 (S.D.N.Y. 1990), the district court rejected a
defendant’s argument that disciplinary charges, brought by the Investigations Officer appointed
by the district court pursuant to a consent decree in a Government civil RICO lawsuit, were
barred by the doctrines of collateral estoppel and res judicata because the General President of
the IBT had conducted a trusteeship hearing into the matter. The district court explained that
“since the Investigations Officer was neither a party to the trusteeship proceeding nor in privity
with the General President, those defenses were unavailable.” 754 F. Supp. at 338.

62

(...continued)
facts underlying their state criminal convictions in a disciplinary action brought by a courtappointed officer pursuant to a consent decree in a Government civil RICO lawsuit); United
States v. IBT, 777 F. Supp. 1133, 1137 (S.D.N.Y. 1991), aff’d, 970 F.2d 1132 (2d Cir. 1992)
(holding in the same Government civil RICO suit that “[b]ecause Parise entered a guilty plea to
the criminal charge arising from the September 4, 1987 incident, he is collaterally estopped from
contesting the facts underlying the disciplinary charge arising from the same incident.”).
74

IV
JURISDICTION AND VENUE
A.

Serving the Summons
“[S]ervice of summons is the procedure by which a court having venue and jurisdiction of

the subject matter of the suit asserts jurisdiction over the person of the party served.” Mississippi
Pub. Corp. V. Murphree, 326 U.S. 438, 444-45 (1946). “[S]ervice of process in a federal action
is covered generally by Rule 4 of the Federal Rules of Civil Procedure.” (“Rule 4 ”). Omni
Capital Int’l. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987).
Rule 4(a) sets forth the required contents of a summons, and Rule 4(b) and (c) provides
for the manner of issuance and service of a summons. Service of a summons may be waived
pursuant to Rule 4(d).63
Rule 4(e) authorizes serving an individual within a judicial district of the United States
and provides as follows:
(e) Serving an individual within a Judicial District of the
United States. Unless federal law provides otherwise, an
individual -- other than a minor, an incompetent person, or a
person whose waiver has been filed -- may be served in a judicial
district of the United States by:
(1) following state law for serving a summons in an action brought
in courts of general jurisdiction in the state where the district court
is located or where service is made; or
(2) doing any of the following:
(A) delivering a copy of the summons and of the compliant to the
63

This Section addresses the amendments to the Federal Rules of Civil Procedure,
including Rule 4, that absent Congressional action, will go into effect December 1, 2007. These
amendments were undertaken to make the Rules more easily understood, and to make style and
terminology consistent. The changes are primarily stylistic in content; however, where
substantive changes are included, they will be specifically noted. See Memorandum from James
C. Duff, Sec’y, Judicial Conference of the U.S., to The Chief Justice of the U.S. and the Assoc.
Justices of the Supreme Court (Dec. 21, 2006) (Westlaw).
75

individual personally;
(B) leaving a copy of each at the individual’s dwelling or usual
place of adobe with someone of suitable age and discretion who
resides there; or
(C) delivering a copy of each to an agent authorized by
appointment or by law to receive service of process.
Service of an individual in a foreign country is covered by Rule 4(f), which provides:
(f) Serving an Individual in a Foreign Country. Unless federal
law provides otherwise, an individual -- other than a minor, an
incompetent person, or a person whose waiver has been filed -may be served at a place not within any judicial district of the
United States:
(1) by any internationally agreed means of service that is
reasonably calculated to give notice, such as those authorized by
the Hague Convention on the Service Abroad of Judicial and
Extrajudicial Documents;
(2) if there is no internationally agreed means, so if an international
agreement allows but does not specify other means, by a method
that is reasonably calculated to give notice:
(A) as prescribed by the foreign country’s law for service in that
country in an action in its courts of general jurisdiction;
(B) as the foreign authority directs in response to a letter rogatory
or letter of request; or
(C) unless prohibited by the foreign country’s law, by:
(i) delivering a copy of the summons and the complaint to the
individual personally; or
(ii) using any form of mail that the clerk addresses and sends to the
individual and that requires a signed receipt; or
(3) by other means not prohibited by international agreement, as
the court orders.
Rule 4(h) provides for serving a corporation, partnership, or association as follows:
(h) Serving a Corporation, Partnership, or Association. Unless
federal law provides otherwise or the defendant’s waiver has been
filed, a domestic or foreign corporation, or a partnership or other
unincorporated association that is subject to suit under a common
name, must be served:
(1) in a judicial district of the United States:
(A) in the manner prescribed by Rule 4(e)(1) for serving an
individual; or
(B) by delivering a copy of the summons and of the complaint to
76

an officer, a managing or general agent, or any other agent
authorized by appointment or by law to receive service of process
and - - if the agent is one authorized by statute and the statute so
requires - - by also mailing a copy of each to the defendant; or
(2) at a place not within any judicial district of the United States, in
any manner prescribed by Rule 4(f) for serving an individual,
except personal delivery under (f)(2)(C)(i).
Rule 4(m), provides as follows:
(m) Time Limit for Service. If a defendant is not served [with a
summons] within 120 days after the complaint is filed, the court -on motion or on its own after notice to the plaintiff -- must dismiss
the action without prejudice against that defendant or order that
service be made within a specified time. But if the plaintiff shows
good cause for the failure, the court must extend the time for
service for an appropriate period. This subdivision (m) does not
apply to service in a foreign country under Rule 4(f) or 4(j)(1).
“[T]he core function of service [of a summons] is to supply notice of the pendancy of a
legal action, in a manner and at a time that affords the defendant a fair opportunity to answer the
complaint and present defenses and objections.” Henderson v. United States, 517 U.S. 654, 673
(1996).
Pursuant to Rule 4(m), a summons must be dismissed if it is not served “within 120 days
after the complaint is filed,” unless the court either has ordered “that service be made within a
specified time” or the court has found that the plaintiff has shown “good causes for the failure” to
timely serve the summons.64 “If good cause exists, the extension must be granted. If good cause
does not exist, the district court must consider whether to grant a discretionary extension of
time.” Boley v. Kaymark, 123 F.3d 756, 758 (3d Cir. 1997) (internal citations omitted). Accord
Troxell v. Fedders of North America, Inc., 160 F.3d 381, 382-83 (7th Cir. 1998); CFTC v. Wall
64

See, e.g., Henderson v. United States, 517 U.S. 654, 661-64 (1996); Boley v. Kaymark,
123 F.3d 756, 758-59 (3d Cir. 1997); CFTC v. Wall Street Underground, Inc., 221 F.R.D. 554,
556 (D. Kan. 2004).
77

Street Underground, Inc., 221 F.R.D. 554, 556 (D. Kan. 2004).
As one court noted, although “good cause” is not defined by Rule 4, it “seems to require a
demonstration of good faith on the part of the party seeking an enlargement and some reasonable
basis for noncompliance within the time specified in the rules.” Dominic v. Hess Oil V. I. Corp.,
841 F.2d 513, 517 (3d Cir. 1988) (quoting WRIGHT & MILLER, FEDERAL PRACTICE AND
PROCEDURE , § 1165 (2d ed. 1987)).
Courts consider various factors in deciding whether good cause exists, including:
1) whether the inadvertence reflected professional incompetence
such as ignorance of rules of procedure, 2) whether an asserted
inadvertence reflects an easily manufactured excuse incapable of
verification by the court, 3) counsel’s failure to provide for a
readily foreseeable consequence, 4) a complete lack of diligence or
5) whether the inadvertence resulted despite counsel’s substantial
good faith efforts towards compliance. . . . [6] whether the
enlargement of time will prejudice the opposing party.
Dominic, 841 F. 2d at 517 (citations omitted). Accord MacCauley v. Wahlig, 130 F.R.D. 302,
304 (D. Del. 1990).
Likewise, a court may grant a discretionary extension of time within which to serve a
summons for a variety of reasons, including, “for example, if the applicable statute of limitations
would bar the refiled action.” Boley, 123 F. 3d at 758 (quoting FED .R.CIV .P. 4(m) Adv. Comm.
Notes (1993)).
A district court’s decision to dismiss the complaint for failure to comply with Rule 4(m)
or whether to extend the time to serve a summons is reviewed under the above of discretion
standard.65

65

See, e.g., Thompson v. Maldonado, 309 F.3d 107, 110 (2d Cir. 2002) (collecting
cases); Boley, 123 F.3d at 758; Dominic, 841 F.2d at 516.
78

B.

General Principles Governing Subject Matter and Personal Jurisdiction
1.

Subject Matter Jurisdiction

Section 1331 of Title 28, United States Code, provides that “[t]he district courts shall
have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the
United States,” and hence confers subject matter jurisdiction upon federal district courts to hear a
claim arising from an alleged violation of a federal law or statute (i.e., a federal question). See,
e.g., Sec. Investor Prot. Corp. v. Vigman, 764 F.2d 1309, 1314 (9th Cir. 1985). Therefore,
federal district courts are empowered to hear civil claims arising from an alleged violation of the
RICO statute, 18 U.S.C. §§ 1961, et seq. See e.g., Rolls-Royce Motors, Inc. v. Charles Schmitt
& Co., 657 F. Supp. 1040, 1055 (S.D.N.Y. 1987).
2.

Due Process Requirements for State Courts’ Exercise of In Personam
Jurisdiction Under the Fourteenth Amendment as to State Claims

Regarding personal jurisdiction, it is well established that “the judgment of a [state] court
lacking [personal] jurisdiction is void” and “violate[s] the Due Process Clause of the Fourteenth
Amendment as well.” Burnham v. Superior Court of California, County of Marin, 495 U.S. 604,
608-09 (1990). “The requirement that a court have personal jurisdiction flows not from Art. III,
but from the Due Process Clause. . . . It represents a restriction on judicial power not as a matter
of sovereignty, but as a matter of individual liberty.” Omni Capital Int’l Ltd. v. Rudolf Wolff &
Co., Ltd., 484 U.S. 97, 104 (1987) (quoting Ins. Corp. of Ireland v. Campagnie des Bauxities de
Guinee, 456 U.S. 694, 702 (1982)).
The Supreme Court has addressed due process limitations upon courts’ exercise of
personal jurisdiction under the Due Process Clause of the Fourteenth Amendment as they apply
to state courts, but “has never addressed the scope of Due Process Protections under the Fifth
79

Amendment in the jurisdictional context” in federal suits in federal courts. See Republic of
Panama v. BCCI Holdings (Luxembourg), S.A., 119 F. 3d 935, 944 (11th Cir. 1997).66
For example, in Burnham v. Superior Court of California, 495 U.S. 604, 608 (1990), the
Supreme Court held that consistent with the requirements of due process, California state courts
had personal jurisdiction over a non-resident individual, who was personally served with process
while temporarily in California, in a suit that was unrelated to his activities in California. The
Supreme Court explained:
Among the most firmly established principles of personal
jurisdiction in American tradition is that the courts of a state have
jurisdiction over non-residents who are physically present in the
State. . . . [P]ersonal service upon a physically present defendant
[is] sufficient to confer jurisdiction, without regard to whether the
defendant was only briefly in the state or whether the cause of
action was related to activities there.
Id. at 610, 612.
In the seminal case of International Shoe Co. v. State of Washington, 326 U.S. 310
(1945), the Supreme Court set forth due process requirements to obtain personal jurisdiction in
state courts over defendants who were not physically present in the forum state. In International
Shoe, the State of Washington sought to collect from International Shoe contributions to an
unemployment compensation fund required by a state statute to be made by employers, and
personally served a notice of assessment for the years in question upon a sales solicitor employed
66

On at least two occasions, the Supreme Court has noted that “the question of whether
the Due Process Clause of the Fifth Amendment could be satisfied solely by reference to a
defendant’s contacts with the nation as a whole was not properly before it.” Republic of Panama,
119 F.3d at 944 n.15, citing Omni Capital Int’l, 484 U.S. at 102 n.5; Asahi Metal Indus. v.
Superior Court of California, 480 U.S. 102, 113 n.107 (1987) (plurality opinion). Due Process
requirements under the Fifth Amendment regarding federal causes of action in federal courts are
somewhat different than those under the Fourteenth Amendment as to causes of action under
state law. See Section IV(B)(3) below.
80

by International Shoe in the State of Washington. International Shoe contended that the
assessment violated due process because it “was not a corporation of the State of Washington
and was not doing business within the State; that it had no agent within the State upon whom
service could be made; and that appellant [International Shoe] is not a employer and does not
furnish employment within the meaning of the statute.” Id. at 312.67
67

The Supreme Court stated that the following facts were not in dispute:
Appellant is a Delaware corporation, having its principal place of
business in St. Louis, Missouri, and is engaged in the manufacture
and sale of shoes and other footwear. It maintains places of
business in several states, other than Washington, at which its
manufacturing is carried on and from which its merchandise is
distributed interstate through several sales units or branches located
outside the State of Washington.
Appellant has no office in Washington and makes no contracts
either for sale or purchase of merchandise there. It maintains no
stock of merchandise in that state and make there no deliveries of
goods in intrastate commerce. During the years from 1937 to
1940, now in question, appellant employed eleven to thirteen
salesmen under direct supervision and control of sales managers
located in St. Louis. These salesmen resided in Washington; their
principal activities were confined to that state; and they were
compensated by commissions based upon the amount of their sales.
The commission for each year totaled more that $31,000.
Appellant supplies its salesmen with a line of samples, each
consisting of one shoe of a pair, which they display to prospective
purchasers. On occasion they rent permanent sample rooms, for
exhibiting samples, in business buildings, or rent rooms in hotels
or business buildings temporarily for that purpose. The cost of
such rentals is reimbursed by appellant.
The authority of the salesmen is limited to exhibiting their samples
and soliciting orders from prospective buyers, at prices and on
terms fixed by appellant. The salesmen transmit the orders to
appellant’s office in St. Louis for acceptance or rejection, and
when accepted the merchandise for filling the orders is shipped
f.o.b. from points outside Washington to the purchasers within the
(continued...)
81

The Supreme Court rejected these arguments, finding that International Shoe’s activities
in the State of Washington were sufficient to establish in personam jurisdiction over it regarding
a cause of action that arose from International Shoe’s activities in the forum state consistent with
the requirements of due process under the Fourteenth Amendment. The Supreme Court
explained:
[D]ue process requires only that in order to subject a defendant to a
judgment in personam, if he be not present within the territory of
the forum, he have certain minimum contacts with it such that the
maintenance of the suit does not offend “traditional notions of fair
play and substantial justice.”
326 U.S. at 316 (citations omitted). The Supreme Court added that:
“Presence” in the state in this sense has never been doubted when
the activities of the corporation there have not only been
continuous and systematic, but also give rise to the liabilities sued
on, even though no consent to be sued or authorization to an agent
to accept service of process has been given. . . . Conversely it has
been generally recognized that the casual presence of the corporate
agent or even his conduct of single or isolated items of activities in
a state in the corporation’s behalf are not enough to subject it to
suit on causes of action unconnected with the activities there. . . .
[The Due Process Clause of the Fourteenth Amendment] does not
contemplate that a state may make binding a judgment in personam
against an individual or corporate defendant with which the state
has no contacts, ties, or relations.
326 U.S. at 317, 319 (internal citations omitted).

67

(...continued)
state. All the merchandise shipped into Washington is invoiced at
the place of shipment from which collections are made. No
salesman has authority to enter into contracts or to make
collections.

International Shoe, 326 U.S. at 313-14.
82

The Supreme Court concluded that International Shoe’s activities “in the State of
Washington were neither irregular or causal. They were systematic and continuous throughout
the years in question,” and were sufficient to establish in personam jurisdiction over International
Shoe regarding a lawsuit that “arose out of those very activities.” 326 U.S. at 320.
In so ruling, the Supreme Court also noted that “there have been instances in which the
continuous corporate operations within a state were thought so substantial and of such a nature as
to justify suit against it on causes of action arising from dealings entirely distinct from those
activities.” 326 U.S. at 318.
Courts have interpreted International Shoe and its progeny to allow in personam
jurisdiction in a forum state over a foreign corporation to enforce causes of action not arising out
of that corporation’s activities in the forum state where the corporation’s activities in the forum
state are “substantial” and “continuous and systematic,” but to disallow in personam jurisdiction
where a foreign corporation’s activities in the forum state are minimal unless the cause of action
at issue arises from those forum contacts. For example, in Wells Fargo & Co. v. Wells Fargo
Exp. Co., 556 F.2d 406 (9th Cir. 1977), the court stated:
The rules which emerge from these [Supreme Court] cases may be
summarized as follows: If the defendant corporation has sufficient
deliberate “minimum contacts” with the forum state, a court may
acquire in personam jurisdiction over it in actions which arise from
those forum contacts. If, however, a corporation’s activities in the
forum are so “continuous and systematic” that the corporation may
in fact be said already to be “present” there, it may also be served
in causes of action unrelated to its forum activities.
Id. at 413 (collecting cases). Accord Butcher’s Union Local No. 498 v. SDC Inv., Inc., 788 F.2d

83

535, 540 (9th Cir. 1986).68
Moreover, the Supreme Court has explained that the requisite “minimum contacts” with a
forum state may be established when a foreign corporation “purposely avails itself to the
privilege of conducting activities within the forum State”, such as when a foreign “corporation.. .
delivers its products into the stream of commerce with the expectation that they will be
purchased by consumers in the forum State.” World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297-98 (1980) (citations omitted). Accord Asahi Metal Ind. Co. v. Super. Ct. of
Cal., Solano Cty., 480 U.S. 102, 111-12 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462,
475-77 (1985).
Furthermore, the Supreme Court has stated that even when such minimum contacts are
established, due process requires that a state’s exercise of personal jurisdiction over an out of
state defendant not offend “‘traditional notions of fair play and substantial justice.’” Asahi Metal
Ind., 480 U.S. at 113 (citations omitted). In determining whether the “traditional notions of fair
play and substantial justice,” have been satisfied,

68

See, e.g., Burnham, 495 U.S. at 620 (stating that where jurisdiction of an absent
defendant is based on minimum contacts with the forum state, those contacts must be related to
the litigation at issue); Helicopteros Nacionales De Colombia, S.A. v. Hall, 466 U.S. 408, 414
(1984) (“When a controversy is related to or ‘arises out of’ a defendant’s contacts with the
forum, the Court has said that a ‘relationship among the defendant, the forum, and the litigation’
is the essential foundation of in personam jurisdiction. . . . Even when the cause of action does
not arise out of or relate to the foreign corporation’s activities in the forum State, due process is
not offended by a State’s subjecting the corporation to its in personam jurisdiction when there are
sufficient contacts between the State and the foreign corporation.” (citations and footnotes
omitted)); Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 447 (1952) (ruling that it does
not violate due process to exercise in personam jurisdiction over a foreign corporation when the
corporation’s activities in the forum State “was sufficiently substantial. . . . where the cause of
action arose from activities entirely distinct from its activities in [the forum State]”).
84

A court must consider the burden on the defendant, the interests of
the forum State, and the plaintiff’s interest in obtaining relief. It
must also weigh in its determination “the interstate judicial
system’s interest in obtaining the most efficient resolution of
controversies; and the shared interest of the several States in
furthering fundamental substantive social policies.”
Id. at 113 (citations omitted).69
3.

Due Process Requirements Under the Fifth Amendment for Federal Courts’
Exercising In Personam Jurisdiction Over Federal Causes of Action

As noted above in Section IV(B)(2), the Supreme Court has not squarely decided the
requirements of due process under the Fifth Amendment as they apply to claims arising under
federal law in federal courts. Some courts have ruled that although some of the considerations
underlying the Supreme Court’s personal jurisdiction jurisprudence under the Fourteenth
Amendment are relevant to the dictates of due process under the Fifth Amendment, they are not
parallel. For example, in BCCI Holdings (Luxembourg), 119 F. 3d at 945-48, the Eleventh
Circuit explained that “contacts with the forum state - the relevant sovereign - are relevant under
the Fourteenth Amendment primarily to justify the sovereign exercise of power in asserting
jurisdiction [over a foreign defendant]. . . . Because minimum contacts with the United States the relevant sovereign - satisfy the ‘purposeful availment’ prong in federal question cases,
contacts with the forum state are not constitutionally required.” Id. at 946 n.21 (citations
omitted). “A court must therefore examine a defendant’s aggregate contacts with the nation as a
whole rather than his contacts with the forum state in conducting the Fifth Amendment analysis.”

69

Generally, a district court’s dismissal on jurisdictional grounds is reviewed under the
de novo standard of review. See, e.g., PT United Can Co. Ltd. v. Crown Cork & Seal Co., 138
F.3d 65, 69 (2d Cir. 1998). Moreover, the due process requirements “of personal jurisdiction
may be intentionally waived, or for various reasons a defendant may be estopped from raising the
issue.” Ins. Corp. of Ireland, 456 U.S. at 704.
85

Id. at 946-47 (collecting cases).
The Eleventh Circuit ruled that where, as under civil RICO, “Congress has provided for
nationwide service of process, courts should presume that nationwide personal jurisdiction is
necessary to further congressional objectives.” Id. at 948; See Section IV(C)(3) below. The
Eleventh Circuit further ruled that a defendant may overcome this presumption and establish a
violation of due process under a two-part balancing test. First, “[t]he burden is on the defendant
to demonstrate that the assertion of jurisdiction in the forum will ‘make litigation ‘so gravely
difficult and inconvenient’ that [he] unfairly is at a ‘severe disadvantage’ in comparison to his
opponent.’” BCCI Holdings (Luxembourg), 119 F.3d at 948 (quoting Burger King,
471 U.S. at 478). Only if the defendant carries this burden, then the court must determine “if the
federal interest in litigating the dispute in the chosen forum outweighs the burden imposed on the
defendant.” BCCI Holdings (Luxemborg), 119 F.3d at 948.
The Eleventh Circuit added:
In evaluating the federal interest, courts should examine the federal
policies advanced by the statute, the relationship between
nationwide service of process and the advancement of these
policies, the connection between the exercise of jurisdiction in the
chosen forum and the plaintiff’s vindication of his federal right,
and concerns of Judicial efficiency and economy.”
Id. at 948.70
70

Applying this balancing test, the Eleventh Circuit concluded that the defendant did not
carry its initial burden of demonstrating “any constitutionally significant inconvenience,” and,
therefore, it was not necessary to “balance the federal interest at stake in this lawsuit.” BCCI
Holdings (Luxembourg), 119 F.3d at 948. In that respect, the court stated:
First, we note that the First American defendants are large
corporations providing banking services to customers in major
metropolitan areas along the eastern seaboard. The fact that they
(continued...)
86

Other courts, however, have eshewed such balancing tests, ruling that where a federal
statute authorizes nationwide service of process, “due process requires only that a defendant in a
federal suit have minimum contacts with the United States, ‘the sovereign that has created the
court’” FTC v. Jim Walker Corp., 651 F.2d 251, 256 (5th Cir. 1981) (citation omitted). Accord
Action Embroidery Corp. v. Atlantic Embroidery, Inc., 368 F. 3d 1174, 1179-80 (9th Cir. 2004);
In Re Automotive Refinishing Paint Antitrust, 358 F.3d 288, 297-99 (3d Cir. 2004). Cf. Pinker
v. Roche Holdings Ltd., 292 F.3d 361, 369-70 (3d Cir. 2002) (collecting cases). See also cases
cited in Section IV (C)(3) below.
C.

Civil RICO’s Jurisdiction and Venue Provision
In order for a district court to adjudicate the merits of a lawsuit, it must have personal

jurisdiction over the defendants, as discussed above in Section IV(B), and also venue must
properly lie in the district where the lawsuit is brought. The Supreme Court has explained the
distinction between “personal jurisdiction” and “venue”, stating “personal jurisdiction. . . goes to
the court’s power to exercise control over the parties . . . [whereas] venue . . . is primarily a
matter of choosing a convenient forum.” Leroy v. Great Western United Corp., 443 U.S. 173,
180 (1979). Accord Sec. Investor Prot. Corp. v. Vigman, 764 F.2d 1309, 1313 (9th Cir. 1985)
70

(...continued)
may not have had significant contacts with Florida is insufficient to
render Florida an unreasonably inconvenient forum. In addition,
the fact that discovery for this litigation would be conducted
throughout the world suggests that Florida is not significantly more
inconvenient than other districts in this country. The First
American defendants have presented no evidence that their ability
to defend this lawsuit will be compromised significantly if they are
required to litigate in Miami.

Id.
87

(“jurisdiction is the power to adjudicate, while venue, which relates to the place where judicial
authority may be exercised is intended for the convenience of the litigants”) (citations omitted).
The Supreme Court has admonished that “[i]n most instances, the purpose of statutorily specified
venue is to protect the defendant against the risk that a plaintiff will select an unfair or
inconvenient place of trial.” Leroy, 443 U.S. at 183-84.
1.

Overview of Civil RICO’s Jurisdiction and Venue Provision

Civil RICO’s jurisdiction and venue provision, 18 U.S.C. § 1965, provides as follows:
(a) Any civil action or proceeding under this chapter against any
person may be instituted in the district court of the United States
for any district in which such person resides, is found, has an
agents, or transacts his affairs.
(b) In any action under section 1964 of this chapter in any district
court of the United States in which it is shown that the ends of
justice require that other parties residing in any other district be
brought before the court, the court may cause such parties to be
summoned, and process for that purpose may be served in any
judicial district of the United States by the marshal thereof.
(c) In any civil or criminal action or proceeding instituted by the
United States under this chapter in the district court of the United
States for any judicial district, subpenas issued by such court to
compel the attendance of witnesses may be served in any other
judicial district, except that in any civil action or proceeding no
such subpena shall be issued for service upon any individual who
resides in another district at a place more than one hundred miles
form the place at which such court is held without approval given
by a judge of such court upon a showing of good cause.
(d) All other process in any action or proceeding under this chapter
may be served on any person in any judicial district in which such
person resides, is found, has an agent, or transacts his affairs.

88

Section 1965 was patterened after the antitrust statutes,71 and it supplements the general
federal venue provision set forth in 28 U.S.C. § 1391.72

Therefore, both 18 U.S.C. § 1965 and

28 U.S.C. § 1391 may provide the basis for venue in a civil RICO lawsuit.73 Moreover,
71

See S. Rep. No. 91-617 at 160-61. See also Cory v. Aztec Steel Bldg., Inc., 468 F.3d
1226, 1231 (10th Cir. 2006); City of New York v. Cyco. Net, Inc., 383 F. Supp. 2d 526, 541
(S.D.N.Y. 2005); Bulk Oil (USA) Inc. v. Sun Oil Trading Co., 584 F. Supp. 36, 39 (S.D.N.Y.
1983); Farmers Bank of State of Del. v. Bell Mtg. Corp., 452 F. Supp. 1278, 1280 (D. Del.
1978).
72

When federal jurisdiction is premised on a federal question, as is involved in a civil
RICO suit, 28 U.S.C. § 1391(b) establishes that venue is proper in:
(1) a judicial district where any defendant resides, if all defendants
reside in the same State, (2) a judicial district in which a substantial
part of the events or omissions giving rise to the claim occurred, or
a substantial part of property that is the subject of the action is
situated, or (3) a judicial district in which any defendant may be
found, if there is no district in which the action may otherwise be
brought.
Moreover, 28 U.S.C. § 1391(c) provides:
For purposes of venue under this chapter, a defendant that is a
corporation shall be deemed to reside in any judicial district in
which it is subject to personal jurisdiction at the time the action is
commenced. In a State which has more than one judicial district
and in which a defendant that is a corporation is subject to personal
jurisdiction at the time an action is commenced, such corporation
shall be deemed to reside in any district in that State within which
its contacts would be sufficient to subject it to personal jurisdiction
if that district were a separate State, and, if there is no such district,
the corporation shall be deemed to reside in the district within
which it has the most significant contacts.
73

See, e.g., Cyco. Net, Inc., 383 F. Supp. 2d at 543-44 (collecting cases); Crenshaw v.
Antokol, 287 F. Supp. 2d 37, 41-42 (D.D.C. 2003); Gatz v. Penboldt, 271 F. Supp. 2d 1143,
1158-59 (D. Neb. 2003); Eastman v. Initial Invs., Inc., 827 F. Supp. 336, 338 (E.D. Pa. 1993);
Monarch Normandy Square Partners v. Normandy Square Assoc., 817 F. Supp. 899, 904 (D.
Kansas 1993); Shuman v. Computer Assocs. Int’l, Inc., 762 F. Supp. 114, 116 (E.D. Pa. 1991);
Delta Educ. Inc., v. Langlois, 719 F. Supp. 42, 49 (D. N.H. 1989); Anchor Glass Container Corp.
(continued...)
89

“[a]lthough 18 U.S.C. § 1965 is entitled ‘venue and process,’ the fact that it also authorizes
service of process makes it relevant to personal jurisdiction because of Federal Rules of Civil
Procedure 4 (k)(1)(D).” Esab Group, Inc. v. Centricut, Inc., 126 F.3d 617, 626 (4th Cir. 1997).
Accord Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1229-32 (10th Cir. 2006).
In PT United Can Co. Ltd. v. Crown Cork & Seal Co. Inc., 138 F.3d 65, 70 (2d Cir.
1998), the Second Circuit stated that Section “1965 must be read to give effect to all its sections
in a way that renders a coherent whole.” Accordingly, the Second Circuit succintly explained the
different coverage of the subsections of Section 1965 as follows:
First, § 1965(a) grants personal jurisdiction over an initial
defendant in a civil RICO case to the district court for the district
in which that person resides, has an agent, or transacts his or her
affairs. In other words, a civil RICO action can only be brought in
a district court where personal jurisdiction based on minimum
contacts is established as to at least one defendant.
Second, § 1965(b) provides for nationwide service and jurisdiction
over “other parties” not residing in the district, who may be
additional defendants of any kind, including co-defendants, third
party defendants, or additional counter-claim defendants. This
jurisdiction is not automatic but requires a showing that the “ends
of justice” so require.
Id. at 71. The Second Circuit added that Section
1965(c) simply refers to service of subpoenas on witnesses. Thus,
§ 1965(d)’s reference to “[a]ll other process,” means process other
than a summons of a defendant or subpoena of a witness. This
73

(...continued)
v. Stand Energy Corp., 711 F. Supp. 325, 327 n.7 (S.D. Miss. 1989); Miller Brewing Co., v.
Landau, 616 F. Supp. 1285, 1291 (D. Wis. 1985); So-Comm, Inc. v. Reynolds, 607 F. Supp. 663,
665-66 (N.D. Ill. 1985); Sunray Enterprises Inc. v. David C. Bouza & Assocs., Inc., 606 F. Supp.
116, 119 (S.D.N.Y. 1984); Clement v. Pehar, 575 F. Supp. 436, 443 (N.D. Ga. 1983); DeMoss v.
First Artists Prod. Co., 571 F. Supp. 409, 411 (N.D. Ohio 1983); VanShaick v. Church of
Scientology of Cal., Inc., 535 F. Supp. 1125, 1133 n.6 (D.MA. 1982); Farmers Bank of State of
Del., 452 F. Supp. at 1280.
90

interpretation, one which gives meaning to the word “other” by
reading sequentially to understand “other” as meaning “different
from that already stated in subsections (a)-(c),” gives coherent
effect to all sections of § 1965, and effectively provides for all
eventualities without rendering any of the sections duplicative,
without impeding RICO actions and without unnecessarily
burdening parties.
Id. at 72.
2.

The Bases for Venue Under Section 1965(a)
a.

The District In Which Such Person “Resides”

For venue purposes, a corporation “resides” in the district in which it is incorporated,74
and a natural person resides in the district wherein he/she maintains his/her domicile.75
b.

“Found”

“The term ‘is found’ has been construed to mean presence and continuous local activity.”
Shuman v. Computer Associates International, Inc., 762 F. Supp. 114, 116 (E.D. Pa. 1991).76
“For a corporate defendant in a private action under [§ 1965(a)] to be ‘found’ in the district
within the meaning of this section, it must be present in the district by its officers and agents
carrying on the business of the corporation.”77

74

See, e.g., Wood v. Barnette, Inc., 648 F. Supp. 936, 939 (E.D. Va. 1986); Grappone,
Inc. v. Subaru of America, Inc., 403 F. Supp. 123, 127-28 (D. N.H. 1975).
75

See, e.g., Farmers Bank of State of Del., 577 F. Supp. at 35; 15 WRIGHT , MILLER &
COOPER , FEDERAL PRACTICE AND PROCEDURE § 3805 (1986).
76

Accord Eastman, 827 F. Supp. at 338; Berry v. New York State Dept. of Corr.
Services, 808 F. Supp. 1106, 1111 (S.D.N.Y. 1992) (“to be ‘found’ under [§ 1965(a)] demands
more than mere occasional physical presence; some acts relevant to the RICO claim must have
occurred in the venue sought by plaintiff, some kind of business must have been conducted”).
77

Van Shaick, 535 F. Supp. at 1133. Accord DeMoss, 571 F. Supp. at 411; Grappone,
Inc., 403 F. Supp. at 128.
91

c.

“Has an Agent”

The meaning of the third clause (“any district in which such person . . . has an agent”) has
apparently not yet been litigated in a civil RICO case. However, cases decided under Section 4
of the Clayton Antitrust Act, which contains identical language, suggest that the courts look
primarily at the amount of control exercised by the alleged principal as well as “the extent to
which the public is led to believe that it is dealing with the principal when it deals with the
supposed agent” in determining whether the defendant has an agent present in the district.
15 WRIGHT , MILLER & COOPER , FEDERAL PRACTICE AND PROCEDURE § 3818 (1986).
d.

“Transacts His Affairs”

The “‘transacts his affairs’ language of Section 1965(a) has been held to be synonymous
with the ‘transacts business’ language of section 12 of the Clayton Act, 15 U.S.C. § 22,” which
was the model for Section 1965(a). City of New York v. Cyco. Net, Inc., 383 F. Supp. 2d 526,
542 (S.D.N.Y. 2005). “Moreover, ‘[t]he test for transacting business for venue purposes under
the antitrust law is co-extensive with the test for jurisdiction under New York CPLR § 302.’” Id.
at 542 (citation omitted). Accordingly, “[t]he ‘transacts his affairs’ language in Section 1965(a)
has been interpreted to mean that the defendants ‘regularly transact business of a substantial and
continuous character within the district.’” Gatz v. Pensoldt, 271 F. Supp. 2d 1143, 1158 (D. Neb.
2003) (citations omitted).78

78

Accord Eastman, 827 F. Supp. at 338; Shuman, 762 F. Supp. at 116; Dody v. Brown,
659 F. Supp. 541, 545 (W.D. Mo. 1987); Miller Brewing Co., 616 F. Supp. at 1288; Bukoil
(USA) Inc., 584 F. Supp. at 39-40.
92

3.

Nationwide Service of Process Under Section 1965(b)

The relevant legislative history states that “[s]ubsection (b) [of 18 U.S.C. § 1965]
provides Nationwide service of process on parties, if the ends of justice require it,” and that the
“broad provisions [of § 1965] are required by the nationwide nature of the activity of organized
crime in its infiltration efforts.” S. REP. NO . 91-617 at 161. Thus, “Congress intended [Section
1965(b)] to enable plaintiffs to bring all members of a nationwide RICO conspiracy before a
court in a single trial,” and hence Section 1965(b) allows nationwide service of process to
defendants residing outside the forum district court provided that the forum district court has
“personal jurisdiction over at least one of the participants in the alleged multidistrict conspiracy,”
and the ends of justice require such service.79
Where, “nationwide service of process is authorized,” as under Section 1965(b), the
plaintiff need not establish that each defendant has contacts with the forum state. Rather,
the plaintiff’s prima facie burden is met by showing that a
defendant has contacts with the United States. Minimum contacts
with the forum state, as required under the traditional long-term
jurisdiction analysis, is not necessary. A defendant’s contact with
the United States is sufficient to satisfy the requirements of due
process.
Dooley v. United Technologies Corp., 786 F. Supp. 65, 71 (D.D.C. 1992).80
79

Butchers Union Local No. 498 v. SDC Inv., Inc., 788 F. 2d 535, 539 (9th Cir. 1986).
Accord Cory, 468 F.3d at 1231; PT United Can Co., 138 F.3d at 70-72; Stauffacher v. Bennett,
969 F. 2d 455, 460-61 (7th Cir. 1992); Boon Partners v. Advanced Financial Concepts, Inc., 917
F. Supp. 392, 397 (E.D.NC. 1996); Hawkins v. Upjohn Co., 890 F. Supp. 601, 604 (E.D. Tex.
1994); Magic Toyota, Inc., v. Southwest Toyota Distributors, 784 F. Supp. 306, 311 (D.S.C.
1992); Bridge v. Invest America, Inc., 748 F. Supp. 948, 951 (D. RI. 1990); Rolls-Royce Motors
v. Charles Schmitt, 657 F. Supp. 1040, 1055 (S.D.N.Y. 1987).
80

Accord Cory, 468 F.3d at 1230-31; Boon Partners, 917 F. Supp. at 397; Herbstein v.
Bruetman, 768 F. Supp. 79, 81 (S.D.N.Y. 1991); University Sav. Ass’n v. Bank of New Haven,
(continued...)
93

As noted above, nationwide service of process upon non-resident defendants pursuant to
Section 1965(b) is not automatic; rather, “the ends of justice” must require such service. As of
this writing, courts have not definitively interpreted the requirements of “the ends of justice.”
For example, the Ninth Circuit has ruled that to establish the requisite “ends of justice,” “the
plaintiff must show that there is no other district in which a court will have personal jurisdiction
over all the alleged co-conspirators.” Butcher’s Union Local No. 498, 788 F. 2d at 539. Other
courts, however, have taken a more flexible approach, ruling that the absence of another district
having personal jurisdiction over all the defendants is a relevant, but not a dispositive factor.
See, e.g., Cory, 468 F.3d at 1231-32; Magic Toyota, Inc., 784 F. Supp. at 311-12; Southmark
Prime Plus, L.P. v. Falzone, 768 F. Supp. 487, 490-92 (D.Del. 1991).
Moreover, although Section 1965(b) “authorizes nationwide service of process,” it does
not authorize “international service. For that the RICO plaintiff must rely on the long-arm
statute of the state in which he files his suit.” Stauffacher v. Bennett, 969 F. 2d 455, 460-61 (7th
Cir. 1992). Accord Nat’l Asbestos Medical Fund v. Philip Morris, 86 F. Supp. 2d 137, 142
(E.D.N.Y. 2000); Michelson, 709 F. Supp. at 1285.81
80

(...continued)
765 F. Supp. 35, 37 (D. Conn. 1991); Bridge, 748 F. Supp. at 951; Rolls-Royce Motors,
657 F. Supp. at 1055; Soltex Polymer Corp. v. Fortex Industries, Inc., 590 F. Supp. 1453, 1458
(E.D.N.Y. 1984); Hodgden v. Needham-Skyles Oil Co., 556 F. Supp. 75, 77 (D.D.C. 1982).
81

Some courts have indicated that 18 U.S.C. § 1965(d) provides for nationwide service
of a summons against defendants. See, e.g., Esab Group, Inc. v. Centricut, 126 F. 3d 617, 626-27
(4th Cir. 1997); Republic of Panama v. BCCI Holdings (Luxembourg), 119 F.3d 935, 942 (11th
Cir. 1997); Michelson v. Merrill Lynch, Pierce, Fenner & Smith, 709 F. Supp. 1279, 1285
(S.D.N.Y. 1989). However, that position arguably cannot be reconciled with the text of Section
1965 or its legislative history. As the Second Circuit stated in PT United Can Co. Ltd., 138 F.3d
at 71-72, because Section 1965(b) refers to the service of a summons and Section 1965(c) refers
to the service of a subpoena, Section 1965(d)’s reference to the service of “[a]ll other process,”
(continued...)
94

4.

Transfer of Venue - Forum Non-Conveniens

Even if venue properly lies in a district, the district court has discretion to transfer a civil
RICO suit to another district pursuant to the doctrine of forum non conviens. To obtain such a
transfer, the defendant has the burden of establishing that “the litigation may be conducted
elsewhere against all defendants,” which may include a foreign country. PT United Can Co. Ltd.,
138 F.3d at 73. “If there is no adequate alternative forum, the inquiry ends. . . . If the existence
of an adequate alternative forum is established,” the district court must consider “private factors
includ[ing] the access to sources of proof, cost of obtaining willing witnesses, availability of
compulsory process for unwilling witnesses, and other practical concerns,” and “public factors
[including] court congestion, interest of forums in deciding local disputes, and interest in issues
of foreign law being decided by foreign tribunals.” Id. at 73-74.82

81

(...continued)
“means process other than a summons of a defendant or subpoena of a witness.” Moreover, as
noted above, the Senate Report regarding Section 1965 states that “[s]ubsection (b) [of 1965]
provides nationwide service of process on parties,” and not subsection (d). Accord Cory, 468 F.
3d at 1230-31.
82

Accord Republic of Panama v. BCCI Holdings (Luxembourg), 119 F.3d at 951-53;
Transunion Corp. v. Pepsico, Inc., 811 F. 2d 127, 129-30 (2d Cir. 1987); United States v.
International Bhd. of Teamsters, 708 F. Supp. 1388, 1404 (S.D.N.Y. 1989); So-Comm, Inc. v.
Reynolds, 607 F. Supp. at 665-67; Clement v. Pehar, 575 F. Supp. at 443-46; Hodgdon,
556 F. Supp. at 78-79.
95

V
PROCEDURAL MATTERS
A.

Expedition of Actions
Section 1966 of Title 18, United States Code, provides as follows:
Expedition of actions
In any civil action instituted under this chapter by the United States
in any district court of the United States, the Attorney General may
file with the clerk of such court a certificate stating that in his
opinion the case is of general public importance. A copy of that
certificate shall be furnished immediately by such clerk to the chief
judge or in his absence to the presiding district judge of the district
in which such action is pending. Upon receipt of such copy, such
judge shall designate immediately a judge of that district to hear
and determine action.
As of this writing, there are no reported decisions interpreting Section 1966. The explicit

terms of Section 1966 do not require that the district court give Government civil RICO lawsuits
priority over other civil suits. However, its requirement that, upon receipt of the specified
certification, a judge shall be designated immediately to hear and determine the action, implies
that the action should be expeditiously considered.
B.

Adequacy of the Pleading and Drafting the Complaint
1.

Adequacy of the Pleading
a.

General Principles

Rule 8(a), FED . R. CIV . P. provides, in relevant part, that:
A pleading which sets forth a claim for relief. . . shall contain (1) a
short and plain statement of the grounds upon which the court’s
jurisdiction depends, unless the court already has jurisdiction and
the claim needs no new grounds of jurisdiction to support it, (2) a
short and plain statement of the claim showing that the pleader is
entitled to relief and (3) a demand for judgment for the relief the
96

pleader seeks. Relief in the alternative of several different types
may be demanded.83
Pursuant to Rule 12(b)(6), FED . R. CIV . P., a complaint may be dismissed for “failure to
state a claim upon which relief can be granted.” “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations. . . [it] requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do. . . .
Factual allegations must be enough to raise a right to relief above the speculative level” and
demonstrate “plausible grounds” for relief. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955,
1964-65 (2007). Accord Iqbal v. Hasty, 490 F.3d 143, 155-58 (2d Cir. 2007); Kuhns Brothers,
Inc. v. Fushi Int’l, Inc., 2007 WL 2071622 (D. Conn. July 16, 2007); Hyland v. Homeservices of
America, Inc., 2007 WL 2407233 (W.D. Ky. Aug. 17, 2007). Moreover, “once a claim has been
stated adequately, it may be supported by showing any set of facts consistent with the allegations
in the complaint.” Bell Atlantic Corp., 127 S. Ct. at 1969..
Furthermore, in considering a motion to dismiss a complaint for alleged failure to state a
claim, the court must view the factual allegations in the complaint in the light most favorable to
the plaintiff, and those allegations must be presumed to be true. Papasan v. Allain, 478 U.S. 265,
283 (1986). See also Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“What Rule 12(b)(6) does
not countenance are dismissals based on a judge’s disbelief of a complaint’s factual allegations”);
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other arounds by Davis v. Sherer,
468 U.S. 183, 191 (1984); Harris, 127 F.3d at 1123; Shear v. National Rifle Ass’n of America,
606 F.2d 1251, 1253 (D.C. Cir. 1979) . As the Supreme Court stated in Scheuer, 416 U.S. at 236:
83

The above-quoted version is in effect through November 30, 2007. Rule 8(a) will be
amended effective December 1, 2007. This amendment clarifies Rule 8(a) but does not change
the substance of the Rule.
97

When a federal court reviews the sufficiency of a complaint, before
the reception of any evidence either by affidavit or admissions, its
task is necessarily a limited one. The issue is not whether a
plaintiff will ultimately prevail but whether the claimant is entitled
to offer evidence to support the claims. Indeed it may appear on the
face of the pleadings that a recovery is very remote and unlikely
but that is not the test. Moreover, it is well established that, in
passing on a motion to dismiss, whether on the ground of lack of
jurisdiction over the subject matter or for failure to state a cause of
action, the allegations of the complaint should be construed
favorably to the pleader.
Accord Caribbean Broad. Sys., 148 F.3d at 1086. Indeed, the United States Court of Appeals for
the District of Columbia pointedly stated: “The rule that the allegations of the complaint must be
construed liberally and most favorably to the pleader is so well recognized that no authority need
be cited.” Sinclair v. Kleindienst, 711 F.2d 291, 293 (D.C. Cir. 1983).
Furthermore, in determining whether the complaint is sufficient, the court is limited to
consideration of the four corners of the complaint. Shear, 606 F.2d at 1253; Caudle v. Thomason,
942 F. Supp. 635, 638 (D.D.C. 1996).
Moreover, it is also well established “that the Federal Rules of Civil Procedure do not
require a claimant to set out in detail the facts upon which he bases his claim. To the contrary,
all the Rules require is ‘a short and plain statement of the claim’ that will give the defendant fair
notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson,
355 U.S. 41, 47 (1957)(quoting Rule 8(a) (2), FED . R. CIV . P.) Accord Sinclair, 711 F.2d at 293
(“notice pleading’ is sufficient”) . “[U]nder Rule 8(a), [a] complaint need not state facts or
ultimate facts or facts sufficient to constitute a cause of action.” United States v. Private
Sanitation Indus. Ass’n, 793 F. Supp. 1114, 1124 (E.D.N.Y. 1992) (internal quotations and
citation deleted). Accord Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786,
98

790 (3d Cir. 1984). All that is required is that the complaint “provides enough factual
information to make clear the substance of that claim.” Caribbean Broad. Sys., 148 F.3d at 1086.
“Plaintiffs . . .need only ‘adduce a set of facts’ supporting their legal claims in order to survive a
motion to dismiss” under Rule 12(b)(6) . Wells v. United States, 851 F.2d 1471, 1473 (D.C. Cir.
1988). For more details and facts, the defendants must rely upon “the liberal opportunity for
discovery and other pretrial procedures established by the Rules to disclose more precisely the
basis of both claim and defense and to define more narrowly the disputed facts and issues.”
Conley, 355 U.S. at 47-48. Accord Seville Indus. Mach. Corp., 742 F.2d at 790.
Indeed, motions to dismiss pursuant to Rule 12(b)(6) are “viewed with disfavor and [are]
rarely granted.” 5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND
PROCEDURE § 1357 at 321 (1990 ed.); Wilkerson v. United States, 839 F. Supp. 440, 442 (E.D.
Tex. 1993). Courts are reluctant to dismiss a case on technical grounds and, consistent with the
federal rules, prefer to decide cases on their merits. See, e.g., Kauffman v. Moss, 420 F. 2d
1270, 1276 (3d Cir.)(citing Foman v. Davis, 371 U.S. 178, 181 (1962)) (relying on Conley, court
stated “[i]t is too late in the day and entirely contrary to the spirit of the Federal Rules of Civil
Procedure for decisions on the merits to be avoided on the basis of . . . mere technicalities.”);
Texas v. Am. Tobacco Co., 14 F. Supp. 2d 956, 961 (E.D. Tex. 1997); Yeitrakis v. ScheringPlough Corp., 804 F. Supp. 238, 240 (D.N.M. 1992).
In accordance with these principles, courts have repeatedly denied defendants’ motions
under Rule 12(b)(6) to dismiss the Government’s civil RICO complaints.84
84

See, e.g., United States v. Philip Morris Inc., 116 F. Supp. 2d 131, 152-155 (D.D.C.
2000); United States v. Private Sanitation Indus. Ass’n, 793 F. Supp. 1114. 1123-49 (E.D.N.Y.
1992); United States v. Dist. Council of New York, 778 F. Supp. 738, 746-60 (S.D.N.Y. 1991);
(continued...)
99

b.

Application of Civil Rule 9(b)

Rule 9(b), FED . R. CIV . P. provides as follows:
In all averments of fraud or mistake, the circumstances constituting
fraud or mistake shall be stated with particularity. Malice, intent,
knowledge, and other condition of mind of a person may be
averred generally.85
This particularity requirement serves two primary interests: “Protecting a defendant from
reputational harm and ‘strike’ suits, and providing defendant sufficient information to respond to
plaintiff’s claims.” Firestone v. Firestone, 76 F.3d 1205, 1211 (D.C. Cir. 1996) . Generally, Rule
9(b) is satisfied when the complaint “state[s] the ‘time, place and content of the false
misrepresentations, the fact misrepresented and what was retained or given up as a consequence
of the fraud,’” and the identity of the party making the representation. Firestone, 76 F.3d at 1211
(citations deleted). Accord, Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1068 (5th
Cir. 1994).
Although such allegations are sufficient to satisfy Rule 9(b), the Rule does not require
such allegations. “Plaintiffs are free to use alternative means of injecting precision and some
measure of substantiation into their allegations of fraud.” Seville Indus. Mach. Corp,
742 F.2d at 791. Accord, Mayer v. Dell, 1991 WL 21567 (D. D.C. 1991) .

84

(...continued)
United States v. Int’l Bh’d. of Teamsters, 708 F. Supp. 1388, 1395-1401 (S.D.N.Y. 1989);
United States v. Bonanno Organized Crime Family of La Cosa Nostra, 683 F. Supp. 1411, 142240 (E.D.N.Y. 1988), aff’d, 879 F. 2d 20 (2d Cir. 1989).
85

The above-quoted version is in effect through November 30, 2007. Rule 9(a) will be
amended effective December 1, 2007. This amendment clarifies Rule 9(a) but does not change
the substance of the Rule.
100

At bottom, the complaint “must provide enough detail about the underlying facts which
illustrate that [the defendant’s] statements were fraudulent to allow a court to evaluate the claim
in a meaningful way.” Arazie v. Mullane, 2 F.3d 1456, 1465 (7th Cir. 1993). “However, the
“plaintiff need not allege specific evidentiary details needed to prove his claim at trial in order to
satisfy Rule 9(b) specificity.” Formax, Inc. v. Hostert, 841 F.2d 388, 391 (Fed. Cir. 1988),
(citing Seville Indus. Corp., 742 F.2d at 791-92). Cf. Shahmirzadi v. Smith Barney, Harris
Upham & Co., 636 F. Supp. 49, 53 (D.D.C. 1985) (“Rule 9 should not be treated as requiring
allegations of facts in the pleadings”) (citations deleted). See also Brady v. Games, 128 F. 2d
754, 755 (D.C. Cir. 1942). Rather, “bare bones averments of fraudulent schemes coupled with
plaintiff’s allegations that defendant used the mails” in furtherance of the scheme to defraud is
sufficient to allege mail fraud and wire fraud predicate acts. Formax, Inc., 841 F.2d at 391.
Although Rule 9(b) explicitly provides that intent and knowledge “may be averred
generally,” courts have held that the complaint must allege “specific facts that support an
inference of fraud.” Tuchman, 14 F.3d at 1068. See also, Greenstone v. Cambex Corp.,
975 F.2d 22, 25 (1st Cir. 1992) (The complaint must allege “specific facts that make it
reasonable to believe that defendant knew that a statement was materially false or misleading.”);
DiLeo v. Ernest & Young, 901 F.2d 624, 629 (7th Cir. 1990) (“the complaint still must provide a
basis for believing that plaintiffs could prove scienter”); Powers v. British Vita, P.L.C., 57 F. 3d
176, 184 (2d Cir. 1995) (the plaintiff must “allege a motive for committing fraud and a clear
opportunity for doing so”).
Such inference of fraud and the requisite mental state “can be satisfied by alleging facts
that show a defendant’s motive to commit [the charged] fraud. Where a defendant’s motive is
101

not apparent, a plaintiff may adequately plead scienter by identifying circumstances that indicate
conscious behavior on the part of the defendant, though the strength of the circumstantial
allegations must be correspondingly greater.” Tuchman, 14 F.3d at 1068. Accord, Beck v.
Manufacturers Hanover Trust Co., 820 F.2d 46,50 (2d Cir. 1987), cert. denied, 484 U.S. 1005
(1988), overruled on other grounds by United States v. Indelicato, 865 F.2d 1370 (2d Cir.) (en
banc), cert. denied, 493 U.S. 811 (1989).
Moreover, the pleading requirements of Rule 9(b) apply only to RICO predicate offenses
sounding in fraud, and not to the other elements of RICO claims.86
2.

Drafting the Complaint

Of course, the precise content of a civil RICO complaint will depend upon the particular
circumstances of each case. However, several guidelines apply to virtually all Government civil
RICO complaints. First, although short “notice pleading” is permitted by the Rules of Civil
Procedure (see Section V(B)(1) above), it is the policy of OCRS that to the extent feasible, civil
RICO complaints at least be as detailed as criminal RICO charges.87 Therefore, attorneys should
consult OCRS’ Criminal RICO Manual, which provides guidance in drafting criminal RICO
charges.

86

See, e.g., Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 26 n.4 (2d Cir.
1990); Rose v. Bartle, 871 F.2d 331, 366 (3d Cir. 1989); United States v. Dist. Council of New
York, 778 F. Supp. at 746-47 (collecting cases); Federal Ins. Co. v. Ayers, 741 F. Supp. 1179,
1185-86 (E.D. Pa. 1990); United States v. IBT, 708 F. Supp. at 1395-96; United States v.
Bonnano Organized Crime Family, 683 F. Supp. at 1427-28.
87

Indeed, most Government civil RICO complaints have included lengthy, detailed
allegations in excess of 75 pages.
102

For example, the complaint should include a distinct section describing the alleged RICO
enterprise, including identifying the specific known components of the enterprise.88 Where the
alleged enterprise is an association-in-fact, the complaint should include an allegation, in
substance, that the members of the enterprise functioned as a continuing unit over a period of
time to achieve a shared objective or objectives of the enterprise. It is also preferable to allege a
brief factual basis that supports such allegations.
The enterprise section of the complaint should also allege the principal purposes of the
enterprise, the manner and means the members of the enterprise used to carry out its affairs, and
a brief description of the enterprise’s structure and the roles of the defendants in the enterprise.
Moreover, where the RICO complaint alleges a substantive RICO violation under
18 U.S.C. § 1962(c), the enterprise section should include allegations that satisfy the “operation
or management” test of Reves v. Ernst & Young, 507 U.S. 170, 177-83 (1993) (holding that to
establish liability for a substantive RICO violation under Section 1962(c), the United States must
prove that the defendant participated in the operation or management of the enterprise). See
OCRS’ Criminal RICO Manual’s discussion of Reves’ “operation or management” test.
A substantive RICO violation under 18 U.S.C. § 1962(a),(b) or (c) should allege, in
substance, that the defendant engaged in a pattern of racketeering activity that extended over a
substantial period of time and/or posed a threat of continuing unlawful activity and that the
alleged predicate racketeering acts were related to each other and/or to the affairs of the
enterprise. See H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989); OCRS’
Criminal RICO Manual’s discussion of pattern of racketeering activity.
88

This requirement does not preclude alleging, in appropriate circumstances, that the
enterprise included unspecificed persons or entities.
103

Furthermore, where the Government’s civil RICO complaint alleges that a defendant is
estopped from contesting certain predicate offenses or facts that were the basis of a defendant’s
prior conviction (see Section III(D) above), it is preferable to plead those offenses, to the extent
feasible, just as they were alleged in the criminal indictment and to incorporate those allegations
by reference to facilitate the application of collateral estoppel. It is also preferable to attach to
the complaint certified copies of the indictment and the defendant’s judgment of conviction that
provide the basis for application of collateral estoppel.
Moreover, the complaint must allege that there is a reasonable likelihood that the
defendant will commit a RICO violation in the future and include supporting factual allegations,
as appropriate. For example, the Government’s civil RICO complaints involving labor unions
(see Section VIII below) typically have included extensive allegations of defendants’ past
unlawful activities, prior criminal convictions, and systemic corruption of the unions involved,
and how the defendants obtained and exercised corrupt influence over the unions involved, that
give rise to an inference that the defendants are reasonably likely to engage in similar unlawful
activities in the future.
Finally, the complaint should include a separate section for the relief sought which
provides, at minimum, a brief description of the specific relief sought.
C.

There is No Right to a Jury Trial on Claims for Equitable Relief
1.

The Seventh Amendment to the United States Constitution provides, in relevant

part:
In Suits at common law, where the value in controversy shall
exceed twenty dollars, the right of trial by jury shall be preserved....

104

The Supreme Court has long held that the Seventh Amendment creates a right to a jury
trial only in suits at “common law,” but not in suits within the courts’ equity jurisdiction. Thus,
the Court stated in Parsons v. Bedford, 28 U.S. 433, 446 (1830):
The phrase “common law,” found in [the Seventh Amendment], is
used in contradistinction to equity, and admiralty, and maritime
jurisprudence. . . . It is well known, that in civil causes, in courts
of equity and admiralty, juries do not intervene, . . . .
Accord Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989) (“We have consistently
interpreted the phrase ‘Suits at common law’ to refer to ‘suits in which legal rights were to be
ascertained and determined, in contradistinction to those where equitable rights alone were
recognized, and equitable remedies were administered.’”)(quoting Parsons v. Bedford, 28 U.S. at
447); Tull v. United States, 481 U.S. 412, 417 (1987) (“The Court has construed [the Seventh
Amendment] to require a jury trial on the merits in those actions that are analogous to ‘Suits at
common law.’. . . In contrast, those actions that are analogous to 18th - century cases tried in
courts of equity or admiralty do not require a jury trial. . . . This analysis applies not only to
common-law forms of action, but also to causes of action created by congressional enactment.”);
Barton v. Barbour, 104 U.S. 126, 133 (1881) (“[T]he right of trial by jury . . . does not extend to
cases of equity jurisdiction.”). See also Colgrove v. Battin, 413 U.S. 149, 155 & n. 9 (1973).
The Supreme Court has adopted a two-pronged test to determine whether a Seventh
Amendment right to a jury trial attaches:
To determine whether a statutory action is more similar to cases
that were tried in courts of law than to suits tried in courts of equity
or admiralty, the Court must examine both the nature of the action
and of the remedy sought. First, we compare the statutory action to
18th - century actions brought in the courts of England prior to the
merger of the courts of law and equity. . . . Second, we examine
the remedy sought and determine whether it is legal or equitable in
105

nature.
Tull, 481 U.S. at 417-18 (citations omitted). Moreover, the Court has admonished that “[t]he
second inquiry is the more important in [its] analysis.” Teamsters v. Terry, 494 U.S. 558, 565
(1990). Accord Granfinanciera, 492 U.S. at 42; Crocker v. Piedmont Aviation, Inc., 49 F.3d 735,
745 (D.C. Cir. 1995) (“the second part of this test (the nature of the remedy) is more important
that the first.”).
It is particularly significant that the Supreme Court has repeatedly recognized that civil
suits to obtain restitution or “disgorgement” of ill-gotten profits are equitable in nature. See, e.g.,
Harris Trust & Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 250 (2000) (“an
action for restitution of the property (if not already disposed of) or disgorgement of proceeds (if
already disposed of), and disgorgement of the third person’s profits derived therefrom” is
“appropriate equitable relief”); Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 352
(1998) (“we have characterized as equitable, such as actions for disgorgement of improper
profits”); Teamsters, 494 U.S. at 570 (“we have characterized damages as equitable where they
are restitutionary, such as in actions for disgorgement of improper profits”) (citation and internal
quotation omitted); Tull, 481 U.S. at 424 (“[A]n action for disgorgement of improper profits [is]
traditionally considered an equitable remedy”); Porter v. Warner Holding Co., 328 U.S. 399, 402
(1946) (restitution of illegally obtained profits is “within the recognized power and within the
highest tradition of a court of equity.”). Likewise, the Supreme Court has repeatedly stated that
suits to obtain injunctive relief, including to enjoin unlawful conduct, are equitable in nature, and
are not “suits at common law.”89
89

See, e.g., Mertens v. Hewitt Ass’n, 508 U.S. 248, 255 (1993); Tull, 481 U.S. at 423;
(continued...)
106

In Barton v. Barbour, the Supreme Court noted that such suits for injunctive relief and
disgorgement of improperly obtained profits are suits in equity to be tried without a jury, stating:
Thus, upon a bill filed for an injunction to restrain the infringement
of letters - patent, and for an account of profits for past
infringement, it is now the constant practice of courts of equity to
try without a jury issues of fact relating to the title of the patentee,
involving questions of the novelty, utility, prior public use,
abandonment, and assignment of the invention patented. The
jurisdiction of a court of equity to try such issues according to
its own course of practice is too well settled to be shaken.
104 U.S. at 133-34 (emphasis added).
2.

In accordance with the foregoing authority, courts have held that there is no right

to a jury trial in Government suits pursuant to 18 U.S.C. § 1964(a). For example, in United
States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388 (S.D.N.Y. 1989), the court stated:
The Government’s complaint clearly seeks equitable relief in that it
seeks injunctions and the appointment of a “court liaison officer.”
The only demand for relief that would result in the payment of
money is the demand for disgorgement of proceeds derived from
alleged RICO violations and attorney’s fees. Disgorgement and
attorney’s fees are incidental to equitable relief, and thus not
considered actions at law. . . . As such, the relief is equitable in
nature, thereby not giving rise to the right to a jury trial.
Id. at 1408. Accord United States v. Philip Morris Inc., 273 F. Supp. 2d 3 (D.D.C. 2002)
(holding that defendants did not have a right to a jury trial in Government’s civil RICO suit for
equitable relief, including injunctive relief, disgorgement of unlawful proceeds, appointment of
court officers, a medical monitoring fund and other equitable remedies).

89

(...continued)
Mitchell v. Robert De Mario Jewelry, Inc., 361 U.S. 288, 291-92 (1960); United Steelworkers of
America v. United States, 361 U.S. 39, 40-41 (1959); Porter, 328 U.S. at 399; Barton, 104 U.S.
at 133-34.
107

Likewise, courts have repeatedly held that a Seventh Amendment right to a jury trial does
not attach in suits by the Securities and Exchange Commission (“SEC”) to enjoin violations of
the securities laws and to obtain disgorgement of profits, even if paid to the United States,
because such suits are clearly “equitable in nature.”90
As the Second Circuit explained in SEC v. Commonwealth, supra:
The [demand for a jury trial] seems surprising since it has been
assumed for decades that a suit for an injunction, whether by the
Government or a private party, was the antithesis of a suit “at
common law” in which the Seventh Amendment requires that the
right to trial by jury “shall be preserved.” In 1791, when the
Seventh Amendment became effective, injunctions, both in
England and in this country, were the business of courts of equity,
not of courts of common law.
...
A historic equitable remedy was the grant of restitution “by which
defendant is made to disgorge ill-gotten gains”. . . [for which] there
is no right to jury trial. . . Disgorgement of profits in an action
brought by the SEC to enjoin violations of the securities laws
appears to fit this description; the court is not awarding damages
to which plaintiff is legally entitled but is exercising the
chancellor’s discretion to prevent unjust enrichment.
574 F.2d at 95 (internal quotations and citations deleted) (emphasis added).91
90

See, e.g., SEC v. Rind, 991 F.2d 1486, 1493 (9th Cir. 1993); SEC v. Tome, 833 F.2d
1086, 1096 & n. 7 (2d Cir. 1987); SEC v. Commonwealth Chem. Sec., 574 F.2d 90, 94-96 (2d
Cir. 1978); Bradford v. SEC, 278 F.2d 566, 567 (9th Cir. 1960); SEC v. Asset Mgmt. Corp., 456
F. Supp. 998, 999-1000 (S.D. Ind. 1978); SEC v. Petrofunds, Inc., 420 F. Supp. 958, 959-60
(S.D.N.Y. 1976); SEC v. Associated Minerals, Inc., 75 F.R.D. 724 (E.D. Mich. 1977). Cf. SEC
v. Blavin, 760 F.2d 706, 713 (6th Cir. 1985) (“the district court possesses the equitable power to
grant disgorgement”); SEC v. Williams, 884 F. Supp. 28, 30-31 (D. Mass. 1995).
91

Courts have likewise held that a right to a jury trial does not apply to suits by private
litigants to obtain a wide variety of equitable relief, including suits for recovery of money. See,
e.g., Klein v. Shell Oil Co., 386 F.2d 659, 663-64 (8th Cir. 1967) (suit for specific performance
of an executory contract, pursuant to an option agreement); Railex Corp. v. Joseph Guss & Sons,
Inc., 40 F.R.D. 119, 123 (D.D.C. 1966) (patent infringement suit for “final injunctions and an
(continued...)
108

D.

Standards Governing Motions for Summary Judgment
1.

General Principles

Under Rule 56, summary judgment on a particular issue is appropriate “if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” Rule 56(c), FED . R. CIV . P. When “the record taken
as a whole could not lead a rational trier of fact to find for the non-moving party, there is no
‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986) (citation omitted). A dispute about a material fact is genuine “if the evidence is such that
a reasonable [trier of fact] could return a verdict for the non-moving party.” Anderson v. Liberty
Lobby Inc., 477 U.S. 242, 248 (1986). Whether a fact is “material” is determined by reference to
the substantive law – “[o]nly disputes over facts that might affect the outcome of the suit under
the governing law will properly preclude the entry of summary judgment. Factual disputes that
are irrelevant or unnecessary will not be counted.” Id.
A court should consider motions for summary judgment “with caution so that no person
will be deprived of his or her day in court to prove a disputed material factual issue.” Greenberg
v. FDA, 803 F.2d 1213, 1216 (D.C. Cir. 1986); Public Citizen Health Research Group v. FDA,
953 F. Supp. 400, 402 (D.D.C. 1996); Virtual Def. & Dev. Int’l, Inc. v. Republic of Moldova,

91

(...continued)
accounting of profits, with a prayer for incidental legal relief in the form of an award of money
damages”), aff’d, 382 F.2d 179 (D.C. Cir. 1967); Gauthreaux v. Baylor Univ. Med. Ctr., 876 F.
Supp. 847, 848-49 (N.D. Tex. 1994) (Plaintiff’s suit for backpay for age discrimination under the
Rehabilitation Act, 29 U.S.C. § 701 et seq.); Nedd v. Thomas, 316 F. Supp. 74, 76-78 (M.D. Pa.
1970) (suit by retired union members to compel trustees of a union benefit fund to redress a
breach of trust by restoring money lost to the fund).
109

133 F. Supp. 2d 9, 15 (D.D.C. 2001). Consistent with this principle, a court “should review all
of the evidence in the record,” Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150 (2000),
and must accept the evidence of the nonmoving party as true and draw all reasonable inferences
in favor of the nonmovant. Anderson, 477 U.S. at 255.92 Additionally, “[i]f the evidence
presented on a dispositive issue is subject to conflicting interpretations, or reasonable persons
might differ as to its significance, summary judgment is improper.” Greenberg, 803 F.2d at
1216. At the summary judgment stage, “the court is not to make credibility determinations or
weigh the evidence.” Dunaway, 310 F.3d at 761 (citing Reeves, 530 U.S. at 150).
A party may move for partial summary judgment on particular elements of its claim for
liability. See, e.g., United States v. Philip Morris USA, Inc., 327 F. Supp. 2d 13, 18 (D.D.C.
2004) (granting the United States’ motion for partial summary judgment, finding that the
Government proved that the RICO defendants were distinct from the alleged RICO enterprise);
Virden v. Graphics One, 623 F. Supp. 1417 (C.D. Cal. 1986) (granting plaintiff summary
judgment on certain elements of civil RICO claim).
A party also may appropriately seek summary judgment to resolve issues of law. See
Philip Morris USA, Inc., 327 F. Supp. 2d at 17 (“summary judgment is appropriate for purely
legal questions”); United States v. Philip Morris USA Inc., et al., 263 F. Supp. 2d 72, 76 (D.D.C.
2003) (“In the pending [Summary Judgment] Motions, we are concerned with issues of law,
rather than factual disputes.”); see also Crain v. Board of Police Comm’rs, 920 F.2d 1402, 140506 (8th Cir. 1990); Adler v. Madigan, 939 F.2d 476, 478 (7th Cir. 1991); Wyoming Outdoor

92

See also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Dunaway v. Int’l Bhd. of Teamsters, 310 F.3d 758, 761 (D.C. Cir. 2002); Borgo v. Goldin, 204
F.3d 251, 254 (D.C. Cir. 2000).
110

Council v. Dombeck, 148 F. Supp. 2d 1, 7 (D.D.C. 2001) (“When the unresolved issues are
primarily legal rather than factual, summary judgment is particularly appropriate.”) (citing
Crain); Swan v. Clinton, 932 F. Supp. 8, 10 (D.D.C.), aff’d, 100 F.3d 973, 976 (D.C. Cir. 1996)
(recognizing that district court’s grant of summary judgment “was based on a pure question of
law”).93
Moreover, summary judgment is appropriate to dispose of affirmative defenses that are
insupportable as a matter of law.94 As a defendant bears the burden of proving his affirmative
defenses at trial, Rule 56(c) mandates summary judgment rejecting any such defense where the
defendant has “fail[ed] to make a showing sufficient to establish the existence of an element
essential to” that affirmative defense. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
see also id. at 323-24 (“One of the principal purposes of the summary judgment rule is to isolate
and dispose of factually unsupported claims or defenses” (emphasis added). Id. at 327 (Rule 56
must be construed to permit parties opposing affirmative defenses to demonstrate, prior to trial,
that the defenses have no factual basis).

93

See also Warner v. United States, 698 F. Supp. 877, 880-82 (S.D. Fla. 1988) (resolving
legal issue on motion for partial summary judgment to “narrow the issues in the case, advance
the progress of the litigation, and provide the parties with some guidance in how they proceed
with the case.”).
94

See, e.g., Paraskevaides v. Four Seasons Washington, 292 F.3d 886 (D.C. Cir. 2002)
(statutory defense of D.C. Code § 30-101 unavailable as a matter of law); Gray v. Bell, 712 F.2d
490, 496 (D.C. Cir. 1983) (qualified immunity); Reed Research, Inc. v. Schumer Co., 243 F.2d
602 (D.C. Cir. 1957); United States v. Philip Morris USA Inc., 327 F. Supp. 2d at 6-7 (granting
United States’ motion to dismiss several affirmative defenses); United States v. Philip Morris,
263 F. Supp. 2d at 81 (granting United States’ motion for summary judgment, denying
defendants’ affirmative defense based on pre-emption); see also United States v. Bailey,
444 U.S. 394, 412-413 n.9 (1980) (“In a civil action, the question whether a particular
affirmative defense is sufficiently supported by testimony to go to the jury may often be resolved
on a motion for summary judgment.”).
111

The moving party bears the initial burden of “‘showing’ – that is, pointing out to the
district court – that there is an absence of evidence to support the nonmoving party’s case.” Id. at
325. However, the party opposing summary judgment “may not rest upon the mere allegations or
denials of [its] pleading, but . . . must set forth specific facts showing that there is a genuine issue
for trial.” FED . R. CIV . P. 56(e); Celotex, 477 U.S. at 323-25. The “mere existence of a scintilla
of evidence” is insufficient to oppose a summary judgment motion under Rule 56. Liberty
Lobby, 477 U.S. at 252. Indeed, if the evidence presented by the opposing party is “merely
colorable” or “not significantly probative,” summary judgment may be granted. Id. at 249-50
(citations omitted); see also Matsushita, 475 U.S. at 586 (party opposing summary judgment
“must do more than simply show that there is some metaphysical doubt as to the material facts”).
Accordingly, conclusory denials and statements by the party opposing summary judgment are
insufficient to preclude summary judgment.95
95

See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)(“Rule 56(e) therefore
requires the nonmoving party to go beyond the pleadings and. . . designate ‘specific facts
showing that there is a genuine issue for trial.’”); Ben-Kotel v. Howard University, 319 F.3d
532, 536 (D.C. Cir. 2003)(“If the evidence is merely colorable, or is not significantly probative,
summary judgment may be granted); Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999)
(holding that “conclusory” statements and “unsubstantiated allegations” are not sufficient to
defeat a properly supported motion for summary judgment); Harding v. Gray, 9 F.3d 150, 154
(D.C. Cir. 1993) (“a mere unsubstantiated allegation . . . creates no ‘genuine issue of fact’ and
will not withstand summary judgment”); Alyeska Pipeline Service Co. v. U.S. E.P.A., 856 F.2d
309, 314 (D.C. Cir. 1988)(“a motion for summary judgment adequately underpinned is not
defeated simply by a bare opinion or an unaided claim that a factual controversy persists.”);
Gardels v. CIA, 689 F.2d 1100, 1106 n.5 (D.C. Cir. 1982) (affiant’s “views” insufficient to raise
triable issue); Dickerson v. SecTek, Inc., 238 F. Supp. 2d 66, 72-73 (D.D.C. 2002) (“the
nonmoving party’s opposition must consist of more than mere unsupported allegations or denials
and must be supported by affidavits or other competent evidence setting forth specific facts
showing that there is a genuine issue for trial.”); Williams v. Verizon Washington DC, Inc.,
266 F. Supp. 2d 107, 115 (D.D.C. 2003)(“the non-movant may not rely on conclusory
allegations, but must present specific facts from which a reasonable jury could conclude in the
non-movant’s favor”); Cooper v. First Government Mort. & Investors, 238 F. Supp. 2d 50, 53
(continued...)
112

2.

Issues of Intent Generally are Ill-Suited for Summary Judgment

Generally, issues of intent and credibility are inappropriate for summary judgment. See,
e.g., Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 711 (2d Cir. 1991).96 For example, in a
fraud case, the issue of whether a defendant acted with the requisite fraudulent intent is “purely a
question of fact.” Id.97 Likewise, courts have repeatedly held that where the non-movant
adduces expert opinions in support of his claims regarding intent summary judgment is
inappropriate.98

95

(...continued)
(D.D.C. 2002)(“the non-moving party may not rely solely on allegations or conclusory
statements”).
96

Accord Leggett & Platt, Inc. v. Hickory Springs Mfg. Co., 285 F.3d 1353, 1361-62
(Fed. Cir. 2002); Provenz v. Miller, 102 F.3d 1478, 1489-90 (9th Cir. 1996); National Soffit &
Escutcheons, Inc. v. Superior Sys., Inc., 98 F.3d 262, 267 (7th Cir. 1996); Kand Med., Inc. v.
Freund Med. Prods., Inc., 963 F.2d 125, 127 (6th Cir. 1992); Clements v. County of Nassau, 835
F.2d 1000, 1005 (2d Cir. 1987); ABB Daimler-Benz Transport. (N. Amer.), Inc. v. Nat’l RR
Passenger Corp., 14 F. Supp. 2d 75, 86 (D.D.C. 1998); In re McGuirl, 162 B.R. 630, 634 (D.D.C.
1993); Mandelkorn v. Patrick, 359 F. Supp. 692, 697 (D.D.C. 1973).
97

See also Provenz, 102 F.3d at 1489; Kand Med. Inc., 963 F. 2d at 127; Clements, 835
F. 2d at 1005; In re McGuirl, 162 B.R. at 634. Just as “the mere incantation of intent or state of
mind [does not] operate as a talisman to defeat an otherwise valid [summary judgment] motion,”
Citizens Bank of Clearwater, 927 F. 2d at 711 (internal quotation and citation omitted), the mere
denial of fraudulent intent does not justify granting a defendant’s summary judgment motions in
the face of evidence of fraudulent intent.
98

See, e.g., Hunt v. Cromartie, 526 U.S. 541, 549-54 (1999) (holding that district court
erred in granting summary judgment where non-movant provided expert testimony which
supported the inference that moving defendant had necessary intent); Provenz, 102 F.3d at 149091; In Re Worlds of Wonder Sec. Litig., 35 F.3d 1407, 1425-26 (9th Cir. 1994); See generally
Echazabal v. Chevron USA, Inc., 336 F.3d 1023, 1035 (9th Cir. 2003); TFWS, Inc. v. Schafer,
325 F.3d 234, 242 (4th Cir. 2003) (same); Rodgers v. Monumental Life Ins. Co., 289 F.3d 442,
449 (6th Cir. 2002).
113

VI
DISCOVERY
A.

Civil Investigative Demands (“CID”)
1.

RICO’s CID Provisions

Title 18, United States Code, Section 1968 provides as follows:
(a) Whenever the Attorney General has reason to believe that any person or
enterprise may be in possession, custody, or control of any documentary materials
relevant to a racketeering investigation, he may, prior to the institution of a civil
or criminal proceeding thereon, issue in writing, and cause to be served upon such
person, a civil investigative demand requiring such person to produce such
material for examination.
(b) Each such demand shall-(1) state the nature of the conduct constituting the alleged racketeering violation
which is under investigation and the provision of law applicable thereto;
(2) describe the class or classes of documentary material produced thereunder
with such definiteness and certainty as to permit such material to be fairly
identified;
(3) state that the demand is returnable forthwith or prescribe a return date which
will provide a reasonable period of time within which the material so demanded
may be assembled and made available for inspection and copying or
reproduction; and
(4) identify the custodian to whom such material shall be made available.
(c) No such demand shall-(1) contain any requirement which would be held to be unreasonable if
contained in a subpena (sic) duces tecum issued by a court of the United States
in aid of a grand jury investigation of such alleged racketeering violation; or
(2) require the production of any documentary evidence which would be privileged
from disclosure if demanded by a subpoena duces tecum issued by a court of the United
States in aid of a grand jury investigation of such alleged racketeering violation.

114

(d) Service of any such demand or any petition filed under this section may be
made upon a person by-(1) delivering a duly executed copy thereof to any partner, executive officer,
managing agent, or general agent thereof, or to any agent thereof authorized by
appointment or by law to receive service of process on behalf of such person, or
upon any individual person;
(2) delivering a duly executed copy thereof to the principal office or place of
business of the person to be served; or
(3) depositing such copy in the United States mail, by registered or certified
mail duly addressed to such person at its principal office or place of business.
(e) A verified return by the individual serving any such demand or petition setting
forth the manner of such service shall be prima facie proof of such service. In the
case of service by registered or certified mail, such return shall be accompanied by
the return post office receipt of delivery of such demand.
(f)(1) The Attorney General shall designate a racketeering investigator to serve as
racketeer document custodian, and such additional racketeering investigators as he
shall determine from time to time to be necessary to serve as deputies to such
officer.
(2) Any person upon whom any demand issued under this section has been duly
served shall make such material available for inspection and copying or
reproduction to the custodian designated therein at the principal place of business
of such person, or at such other place as such custodian and such person thereafter
may agree and prescribe in writing or as the court may direct, pursuant to this
section on the return date specified in such demand, or on such later date as such
custodian may prescribe in writing. Such person may upon written agreement
between such person and the custodian substitute for copies of all or any part of
such material originals thereof.
(3) The custodian to whom any documentary material is so delivered shall take
physical possession thereof, and shall be responsible for the use made thereof and
for the return thereof pursuant to this chapter. The custodian may cause the
preparation of such copies of such documentary material as may be required for
official use under regulations which shall be promulgated by the Attorney
General. While in the possession of the custodian, no material so produced shall
be available for examination, without the consent of the person who produced
such material, by any individual other than the Attorney General. Under such
reasonable terms and conditions as the Attorney General shall prescribe,
documentary material while in the possession of the custodian shall be available
115

for examination by the person who produced such material or any duly authorized
representatives of such person.
(4) Whenever any attorney has been designated to appear on behalf of the United States
before any court or grand jury in any case or proceeding involving any alleged violation
of this chapter, the custodian may deliver to such attorney such documentary material in
the possession of the custodian as such attorney determines to be required for use in the
presentation of such case or proceeding on behalf of the United States. Upon the
conclusion of any such case or proceeding, such attorney shall return to the custodian any
documentary material so withdrawn which has not passed into the control of such court or
grand jury through the introduction thereof into the record of such case or proceeding.
(5) Upon the completion of-(i) the racketeering investigation for which any documentary material was produced
under this chapter, and
(ii) any case or proceeding arising from such investigation,
the custodian shall return to the person who produced such material all such material
other than copies thereof made by the Attorney General pursuant to this subsection which
has not passed into the control of any court or grand jury through the introduction thereof
into the record of such case or proceeding.
(6) When any documentary material has been produced by any person under this section
for use in any racketeering investigation, and no such case or proceeding arising
therefrom has been instituted within a reasonable time after completion of the
examination and analysis of all evidence assembled in the course of such investigation,
such person shall be entitled, upon written demand made upon the Attorney General, to
the return of all documentary material other than copies thereof made pursuant to this
subsection so produced by such person.
(7) In the event of the death, disability, or separation from service of the custodian of any
documentary material produced under any demand issued under this section or the official
relief of such custodian from responsibility for the custody and control of such material,
the Attorney General shall promptly-(i) designate another racketeering investigator to serve as custodian thereof, and
(ii) transmit notice in writing to the person who produced such material as to the
identity and address of the successor so designated.
Any successor so designated shall have with regard to such materials all duties and
responsibilities imposed by this section upon his predecessor in office with regard thereto,
116

except that he shall not be held responsible for any default or dereliction which occurred
before his designation as custodian.
(g) Whenever any person fails to comply with any civil investigative demand duly
served upon him under this section or whenever satisfactory copying or
reproduction of any such material cannot be done and such person refuses to
surrender such material, the Attorney General may file, in the district court of the
United States for any judicial district in which such person resides, is found, or
transacts business, and serve upon such person a petition for an order of such
court for the enforcement of this section, except that if such person transacts
business in more than one such district such petition shall be filed in the district in
which such person maintains his principal place of business, or in such other
district in which such person transacts business as may be agreed upon by the
parties to such petition.
(h) Within twenty days after the service of any such demand upon any person, or
at any time before the return date specified in the demand, whichever period is
shorter, such person may file, in the district court of the United States for the
judicial district within which such person resides, is found, or transacts business,
and serve upon such custodian a petition for an order of such court modifying or
setting aside such demand. The time allowed for compliance with the demand in
whole or in part as deemed proper and ordered by the court shall not run during
the pendency of such petition in the court. Such petition shall specify each ground
upon which the petitioner relies in seeking such relief, and may be based upon any
failure of such demand to comply with the provisions of this section or upon any
constitutional or other legal right or privilege of such person.
(i) At any time during which any custodian is in custody or control of any
documentary material delivered by any person in compliance with any such
demand, such person may file, in the district court of the United States for the
judicial district within which the office of such custodian is situated, and serve
upon such custodian a petition for an order of such court requiring the
performance by such custodian of any duty imposed upon him by this section.
(j) Whenever any petition is filed in any district court of the United States under
this section, such court shall have jurisdiction to hear and determine the matter so
presented, and to enter such order or orders as may be required to carry into effect
the provisions of this section.
2.

Background

RICO’s CID provisions were modeled after the CID provisions of antitrust laws, i.e.,
15 U.S.C. §§ 1311-1314. See H.R. REP. No. 91-1549, 91st Cong., 2d Sess. 58 (1970);
117

see also Section II(D) above; United States v. Forsythe, 429 F. Supp. 715, 721 (W.D. Pa. 1977),
rev’d on other grounds, 560 F.2d 1127 (3d Cir. 1977)(observing in dicta that a RICO civil
investigative demand is an “analogy to antitrust litigation”). A CID, while similar to a subpoena,
is a pre-litigation discovery tool that the Government may use to compel document production
before commencing a civil or criminal investigation. Specifically, pursuant to 18 U.S.C.
§ 1968(a), the Attorney General99 is authorized to issue and serve a written CID upon any person
and/or enterprise believed to possess or be in control of materials that may be relevant to a civil
or criminal RICO investigation.100 Unlike a federal grand jury subpoena, however, a CID may
not compel testimony but, instead, only the production of “documentary materials.” A CID
requires the recipient to comply absent a successful challenge for unreasonableness or
privilege.101
Despite RICO’s enactment in 1970, there is a dearth of case law discussing CIDs’
application in RICO cases. In fact, as of the time of this writing, there are no published cases
which squarely analyze CIDs in the RICO context. Instead, the published cases that reference
RICO CIDs make only fleeting references to the statute in discussing collateral matters.
See, e.g., Doe v. Ashcroft, 334 F. Supp. 2d 471, 487 (S.D. N.Y. 2004), vacated on other grounds,
Doe v. Gonzales, 449 F.3d 415 (2d Cir. 2006)(observing, in dicta, that “the Government may
99

18 U.S.C. § 1961(10) defines the “Attorney General.” (See Section VI(A)(3) below).

100

See 18 U.S.C. § 1968(a). Although section 1968(a) explicitly authorizes the use of
CIDs prior to the institution of a criminal proceeding, CIDs are most often used in civil
investigations. Once a criminal investigation has commenced, however, it may be much more
expeditious to use a grand jury subpoena to acquire materials, given the power to compel both
testimony and physical evidence.
101

See 18 U.S.C. § 1968(a); see also 18 U.S.C. § 1968(d). These limitations will
be discussed below in this section.
118

issue subpoenas related to criminal investigations even without initiating a formal criminal
proceeding” in prosecuting racketeering cases under the RICO statute and that the process is
governed by rules that allow for judicial review); Nagle v. Merrill Lynch, 790 F. Supp. 203, 208
(S.D. Iowa 1992)(notes that Section 1968 allows the Attorney General to issue a CID to any
“‘person or enterprise’ to produce relevant materials”); Intel Corp. v. Hartford Acc. & Indem.
Co., 662 F. Supp.1507, 1510 (N.D. Cal. 1987), abrogated on other grounds, Tafflin v. Levitt,
493 U.S. 455 (1990) (citation omitted); Karel v. Kroner, 635 F. Supp. 725, 730 (N.D. Ill.
1986)(recognizing that Section 1968 authorizes “Attorney General and his designees” to issue
CIDs); Kinsey v. Nestor Exploration, Ltd., 604 F. Supp. 1365, 1370 (E.D. Wash. 1985),
abrogated on other grounds, Tafflin, 493 U.S. 455 (recognizing that Section 1968 gives Attorney
General exclusive power to issue CIDs); United States v. Hossbach, 518 F. Supp. 759, 766 n.1
(E.D. Pa. 1980) (noting, in dicta in a non-RICO narcotics case, that “the Attorney General was
granted executive subpoena power in conducting investigations under the [RICO] Act, 18 U.S.C.
§ 1968 ”).102 Accordingly, throughout this Section, references will be made to antitrust and
grand jury subpoena case law as supporting authority where appropriate and instructive.

102

Similarly, the smattering of unpublished cases that involve RICO CIDs provide only
cursory observations about statutory language or note the exclusive province of the Attorney
General (or his designees) to issue CIDs. See, e.g., Prince v. Schofield, 1999 WL 1007344
(E.D.N.Y. Sept. 23, 1999) (unpublished) (observing that only the Attorney General, and not a
private citizen, has power to issue a CID); United States v. Eisenberg, 773 F. Supp. 662, 702
(D.N.J. 1991)(mentions CIDs in a footnote that discusses U.S. Attorney Manual
§ 9-110.101 noting that before CIDs may issue, prior approval is needed from the Criminal
Division); United States v. Benjamin, 1986 WL 15567 (E.D. Cal. May 1, 1986) (same as
Eisenberg).
119

3.

Issuance of a CID

Under Section 1968(a), the Attorney General may issue a CID when there is “reason to
believe”103 that any person or enterprise may have “documents” relevant to a racketeering
investigation.104 Title 18, United States Code, Section 1961(9) defines “documents” to include
recordings as well as books and papers. The “reason to believe” standard has not been defined
under RICO and has not been significantly developed under the analogous antitrust case law.
The CID is designed to be an investigative tool. Because it is issued prior to the filing of
a complaint, it allows a civil investigation to continue without being involved in “full-blown
litigation.” Materials submitted in response to a CID are privileged from disclosure, except for
certain statutory exemptions. See 18 U.S.C. § 1968(f)(3). If the civil investigation uncovers
evidence of criminal violations, the information can be presented to a grand jury. See 18 U.S.C. §
1968(f)(4). Also, the document custodian may make CID materials available to government
attorneys for use in a court or grand jury proceeding which involves racketeering activity. See 18
U.S.C. § 1968(f)(4). It is clear that CID material can be used for a criminal grand jury
investigation, and there is no requirement that CID authority cease upon the commencement of a
criminal investigation.105
103

See, e.g., Australia/Eastern U.S.A. Shipping Conference v. United States, 1981 WL
2212 (D.D.C. Dec. 23, 1981)(Government argued that it was not required to have probable cause
in order to investigate with antitrust CID; court did not reach issue.).
104

Under 18 U.S.C. § 1961(8), a racketeering investigation is defined as “any inquiry
conducted by any racketeering investigator for the purpose of ascertaining whether any person
has been involved in any violation of this chapter or of any final order, judgment, or decree
of any court of the United States, duly entered in any case or proceeding arising under this
chapter.”
105

Under 18 U.S.C. § 1968(f)(4), the document custodian may deliver CID materials to
(continued...)
120

A CID can be served upon any person or enterprise believed to have possession, custody,
or control of relevant documents. Because the CID power enables the Government to obtain
documents from individuals or companies, which are not targets of the investigation, the
Government may often obtain more information than is normally available under civil discovery.
See generally FED . R. CIV . P. 26(b).
Pursuant to 18 U.S.C. § 1968(a), the Attorney General must issue the CID. However, 18
U.S.C. § 1961(10) defines the “Attorney General” to include:
the Attorney General of the United States, the Deputy Attorney
General of the United States, any Assistant Attorney General of the
United States, or any employee of the Department of Justice or any
employee of any department or agency of the United States so
designated by the Attorney General to carry out the powers
conferred on the Attorney General by this chapter. Any department
or agency so designated may use in investigations authorized by
this chapter either the investigative provisions of this chapter or the
investigative power of such department or agency otherwise
conferred by law.
Thus, pursuant to this provision, the Attorney General, the Deputy Attorney General or any
Assistant Attorney General of the United States may issue a CID. Any other employee of the
Department of Justice or any other Department may issue a CID only if the Attorney General of
the United States specifically designates such person to carry out the powers conferred on the
Attorney General by the RICO statute.106

(...continued)
any attorney for the United States designated to appear before any court or grand jury. The
Antitrust Division*s CID authority, however, ceases when the CID uncovers evidence of criminal
violations necessitating investigation by a grand jury. See H.R. REP. No. 94-1343, 94th Cong.,
2d Sess. 11, reprinted in 1976 U.S.C.C.A.N. 2603.
106

See 18 U.S.C. § 1968(a)(Attorney General may issue a CID in writing).
121

Moreover, the U.S. Attorney’s Manual, Section 9-110.320, requires the review and
approval of the Organized Crime and Racketeering Section before a CID may be issued. The
submitting attorney should allow three weeks for review of the CID. Prior to submitting a
proposed CID for review, the Government attorney should ensure that the CID does not
contravene any other statutes or departmental regulations. For example, a CID should not be
issued to an attorney for information relating to representation of a client unless the Assistant
Attorney General finds that certain conditions are met.107 Also, no CID may be issued to a
reporter or news media organization except as permitted by 28 C.F.R. § 50.10. Lastly, CIDs
should not be used to obtain customer transaction records from a financial institution without
complying with the Right to Financial Privacy Act of 1978. 108
4.

Content of a CID

Section 1968(b) sets forth the criteria for a valid CID. Specifically, the CID must
adequately describe, with “definiteness and certainty,” the class of documents sought to be
produced.109 In particular, the CID must:
(1)
(2)
(3)

state the nature of the conduct constituting the alleged racketeering violation
which is under investigation and the provision of law applicable thereto;
describe the class or classes of documentary material produced thereunder with
such definiteness and certainty as to permit such material to be fairly identified;
state that the demand is returnable forthwith or prescribe a return date which will
provide a reasonable period of time within which the material so demanded may
be assembled and made available for inspection and copying or reproduction; and

107

See United States Attorneys* Manual § 9-13.410.

108

See 12 U.S.C. §§ 3401- 422; United States Attorneys* Manual § 9-13.800.

109

See 18 U.S.C. § 1968(b)(2). RICO’s legislative history states that the CID should
“fairly identify the documents being demanded.” H.R. REP. No. 91-1549, 91st Cong., 2d Sess.
58, reprinted in 1970 U.S.C.C.A.N. 4035.
122

(4)

identify the custodian to whom such material shall be made available.110

The information in (1), (3), and (4) can be provided in a standard cover page that attaches a list of
documents demanded under the CID.
The nature of the conduct, under (1) above, need only be generally described. For
example, in Petition of Gold Bond Stamp Co., 221 F. Supp. 391, 397 (D. Minn. 1963), aff*d, 325
F.2d 1018 (8th Cir. 1964), the court rejected a challenge to an antitrust CID, and held that the
nature of the conduct being investigated could be set forth in general terms. The test, the court
explained, was whether the description of the nature of the conduct being investigated was
“sufficient to inform adequately the person being investigated and sufficient to determine the
relevancy of the documents demanded for inspection.” Gold Bond, 221 F. Supp. at 397.111
Finally, the CID must identify the custodian for the documents. The custodian is appointed by
the Attorney General. See Section VI(A)(6) below for a discussion of the custodian*s duties and
responsibilities.
5.

Proper Service of a CID

Sections 1968(d) and (e) discuss service and return of service requirements related to
CIDs. The CID, and any petitions filed in relation to the CID, may be served upon a person (as

110

111

See 18 U.S.C. § 1968(b).

In Gold Bond, the CID described the subject of the investigation as “[r]estrictive
practices and acquisitions involving the dispensing, supplying, sale or furnishing of trading
stamps and the purchase and sale of goods and services in connection therewith.” See 221 F.
Supp. at 397. Several other circuits have followed the Gold Bond decision. See Lightning Rod
Mfrs. Ass’n v. Staal, 339 F.2d 346, 347 (7th Cir. 1964); Hyster Co. v. United States, 338 F.2d
183 (9th Cir. 1964); Material Handling Inst. Inc. v. McLaren, 426 F.2d 90 (3d Cir. 1970); Finnell
v. United States Department of Justice, 535 F. Supp. 410 (D. Kan. 1982); First Multiple Listing
Serv. v. Shenefield, 1980 WL 1962 (N.D. Ga. Sept. 3, 1980); Petition of EniPrise Corp., 344 F.
Supp. 319, 322-23 (W.D.N.Y. 1972)
123

defined by 18 U.S.C. § 1961(3)) by delivery of an executed copy to the specified person, to the
person*s authorized agent, or to the person*s principal office or place of business. Service can
also be made by certified or registered mail to the person*s principal office or place of business.
See 18 U.S.C. § 1968(d). Any individual may serve the CID.112 If an individual delivers the
CID, proof of service is provided by a verified return that the person served the CID. When a
CID is mailed, proof of service is verified by the return post office receipt of delivery.
6.

Racketeering Documents Custodians

Section 1968(f) addresses the authority, duties and responsibilities of the Attorney
General and “racketeering document custodians” in the issuing of CIDs and in receiving, keeping
and maintaining any documents compelled to be produced by the CID. Section 1968(f)(1)
compels the Attorney General to designate a “racketeering investigator” to serve as document
custodian. Title 18, United States Code, Section 1961(7) defines a “racketeering investigator” as
“any attorney or investigator so designated by the Attorney General and charged with the duty of
enforcing or carrying into effect this chapter.” The Attorney General may appoint additional
racketeering investigators as necessary to serve as deputies and assist the document custodian. A
custodian should be designated for each CID that is issued; in practice, it is likely that the same
person will be the custodian for every CID in a given investigation. This is a significant decision
as notice of a replacement custodian must be submitted to the producing party in writing if the
original document custodian dies, becomes disabled, is separated from service, or is relieved
from responsibility. 113 The successor custodian has all of the same duties and responsibilities as
112

See 18 U.S.C. § 1968(e) (“by the individual serving any such demand”).

113

This written notice must include the identity and address of the successor. See
(continued...)
124

his predecessor except that he is not responsible for any “default or dereliction which occurred
before his designation as custodian.” See 18 U.S.C. 1968(f)(7).
The custodian is charged with responsibility for the documents and takes physical
possession of them. He or she is authorized to copy the documents for official use and, absent
consent of the person who produced the material, is prohibited from disclosing the documents to
anyone other than the Attorney General, the person who produced the material, or the person*s
authorized representative.114 The custodian may also make the documents available to any
attorney for the United States for use in a court or grand jury proceeding involving the United
States. See 18 U.S.C. § 1968(f)(4). Upon the conclusion of any such case, the attorney is
required to return to the custodian any provided materials which were not made part of the record
of the particular proceeding. See 18 U.S.C. § 1968(f)(4).
At the close of the racketeering investigation, or any case or proceeding arising out of
such investigation, the custodian is required to return all submitted documents (other than those
in control of a court or grand jury) to the person who produced them. See 18 U.S.C.
§§ 1968(f)(5). If, after a reasonable time, no case or proceeding has been instituted after the
completion of the analysis and examination of the evidence, the person who submitted the
documents is entitled to their return upon a written request to the document custodian. See
113

(...continued)
18 U.S.C. § 1968(f)(7). A senior official should be appointed as custodian because of the strict
notice requirements imposed by 18 U.S.C. § 1968(f)(7). Therefore, the United States Attorney,
First Assistant United States Attorney, Strike Force Attorney-in-Charge, or other person at a
comparable level should be listed as document custodian, with one or more of the attorneys
assigned to the matter serving as deputy custodians.
114

See 18 U.S.C. § 1968(f)(3). Specifically, the statute notes that the Attorney General
must proscribe “reasonable terms and conditions” for the CID recipient or her authorized
representatives to examine the materials provided while in the government’s custody.
125

18 U.S.C. § 1968(f)(6). In both cases, the Government is only required to return the submitted
documents and need not turn over copies made from the submitted documents. See 18 U.S.C.
§ 1968(f)(5) & (6) (“other than copies thereof”).
7.

Enforcement and Litigation of CIDs

The person receiving a CID is required to make the requested material available to the
custodian for inspection and copying or reproduction at the person*s principal place of business
on the return date specified in the CID. See 18 U.S.C. § 1968(f)(2). The document custodian
and the CID recipient can, in writing, designate another date and/or place than the date and place
specified in the CID for return of the documents, and may also agree that copies be submitted in
lieu of originals.115 Should difficulties arise with regard to compliance, the statute provides for a
district court to intervene to settle any disputes raised in petitions by the parties.
a.

Petitions by the Attorney General

A recipient objecting to a CID can either refuse to respond to the CID or file a petition to
modify or set aside the CID. See 18 U.S.C. §§ 1968(g)-1968(h). Section 1968(g) outlines the
Attorney General’s recourse for compelling compliance. If the person refuses to comply,116 the
115

See 18 U.S.C. § 1968(f)(2). There is no provision setting forth the amount the
Government would pay for copying. However, because it may be more expensive for the
Government attorney to view and copy documents at the CID recipient*s place of business, it
may be economical to reimburse the recipient for reproduction and shipping. There is no
authority requiring CID recipients to be reimbursed for the actual cost of the search, and
Government attorneys should not enter into any agreements with regard to such reimbursement.
See, e.g., Finnell, 535 F. Supp. at 415 (antitrust CID recipients sought to be reimbursed for cost
of search; court found they had not substantiated claim without discussing whether Antitrust
Division would be required to reimburse them).
116

The statute specifically provides examples of failing to comply to include “wherever
satisfactory copying or reproduction of any such material cannot be done and such person refuses
to surrender such material.” See 18 U.S.C. § 1968(g).
(continued...)
126

Attorney General may petition a district court to enforce the CID. The petition may be filed in
any judicial district in which the person resides, is found, or transacts business, except where (1)
the person transacts business in more than one district, and therefore the petition must be filed in
the district in which the person maintains a principal place of business, or (2) the parties agree
that the Attorney General will file the enforcement petition in another district in which the person
transacts business.
b.

Petitions by the CID Recipient

It is important to note that CID recipients also have explicit rights to challenge their
compliance. Specifically, Sections 1968(c) and (h) describe certain limitations that affect the
issuance of CIDs and the avenues of relief that may be afforded to an individual upon whom a
CID has been served. These limits are similar to those which control the issuance of grand jury
subpoenas. Therefore, Government attorneys should rely upon the relevant case law governing
the enforcement of grand jury subpoenas. Specifically, § 1968(c) prohibits the Attorney General
from making an “unreasonable” demand or to seek the production of documentary evidence that
would be otherwise privileged from disclosure “if contained in a subpoena duces tecum before a
grand jury [investigating] a racketeering violation.”117 In addition, it is conceivable that a CID
may be attacked on relevance grounds, although it is not likely that such a challenge would be

116

117

(...continued)

See 18 U.S.C. § 1968(c). The legislative history expands on the term “unreasonable”
by also proscribing the seeking of “information which would [be] privileged from disclosure.”
H.R. REP. No. 91-1549, 91st Cong., 2d Sess. 58, reprinted in 1970 U.S. Code Cong. & Admin.
News 4035. Applicable grand jury subpoena case law may also be consulted to determine
whether the description of documents sought meets the statutory standard and whether the return
date is a reasonable one.
127

successful.118
The most significant challenges have arisen when there have been claims that complying
with the CID would prove too costly. For example, the district court in Multiple Listing Serv. v.
Shenefield, 1980 WL 1962 (N.D. Ga. Sept. 3, 1980), enforced an antitrust CID only after certain
modifications were made by both the Department of Justice and the court. The court reasoned
that, absent such modifications, the financial burden on the recipient would be too great. Id. at *
3.
As a practical matter, the CID recipient may either refuse to respond to the CID or
challenge the CID in court. Besides challenges based on the content or format of the CID, a CID
may be successfully challenged if the Government issued it in bad faith (e.g., for the purpose of
intimidating a witness or for political reasons),119 or if the Department does not have jurisdiction
to conduct the investigation.120 Other challenges may become evident as the RICO CID is
utilized.121
118

Accord United States v. R. Enterprises, Inc., 498 US 292, 301 (1991)(in evaluating
relevancy challenge to grand jury subpoena, the Supreme Court held that “where subpoena is
challenged on relevancy grounds, the motion to quash must be denied unless the district court
determines that there is no reasonable possibility that the category of materials the Government
seeks will produce information relevant to general subject of the grand jury’s investigation.”).
119

See Chattanooga Pharmaceutical Ass*n v. United States Dept. of Justice, 358 F.2d
864, 866-67 (6th Cir. 1966); Petition of Cleveland Trust, 1969 WL 230 (N.D. Ohio March 4,
1969).
120

See Australia/Eastern U.S.A. Shipping Conference, 1981 WL 2212 (no clear antitrust
exemption from alleged illegal conduct and therefore CID recipient must comply); Amateur
Softball Ass*n of America v. United States, 467 F.2d 312 (10th Cir. 1972) (recipients alleged that
they were not engaged in commerce; court refused to decide issue at CID stage).
121

RICO’s CID provision, 18 U.S.C. § 1968, does not explicitly make the Federal Rules
of Civil Procedure applicable, see antitrust provision, 15 U.S.C. § 1312(c)(1)(B) and 15 U.S.C.
(continued...)
128

Section 1968(h) provides a person who has been served with a CID with the right to
petition to modify or set aside a CID. Specifically, this section authorizes the served person to
file a petition for such relief in the district court for the judicial district in which the person
resides, is found or transacts business. Such a motion must be filed within the shorter of the
following time periods: (1) twenty (20) days after the service of the demand or (2) at any time
before the return date of the demand.122 This petition must be served upon the racketeering
document custodian of the issuer of the CID. The petition must “specify each ground upon
which the petitioner relies in seeking such relief, and may be based upon any failure of such
demand to comply with the provisions of [Section 1968] or upon any constitutional or other legal
right or privilege of such person.” See 18 U.S.C. § 1968(h). Similarly, section 1968(i) permits a
person who has complied with a CID by providing documents to a racketeering custodian to
compel the custodian to perform a duty imposed upon him by law by petitioning the appropriate
district court for such relief and serving a copy of the petition on the racketeering custodian.
c.

Powers of the District Court

Section 1968(j) explicitly provides that when a CID petition is filed, the district court has
jurisdiction to litigate and decide these matters and “to enter such order or orders as may be
required to carry into effect the provisions of this section.”
(...continued)
§ 1314. However, RICO’s legislative history provides that the “subsection in the antitrust laws
(15 U.S.C. § 1314(e)) which refers to the applicability of the Federal Rules of Civil Procedure, is
unnecessary since rule 1 makes the civil rules applicable in this situation.” H.R. REP. No. 911549, 91st Cong., 2d Sess. 59, reprinted in 1970 U.S.C.C.A.N. 4035. Thus, it appears that CID
recipients may base challenges on the Federal Rules of Civil Procedure in addition to challenges
which may be brought against grand jury subpoenas.
122

Once the petition is filed and is pending with the Court, the time allowed for
compliance is stayed. See 18 U.S.C. § 1968(h).
129

B.

Discovery in General
1.

The Federal Rules of Civil Procedure provide for broad avenues of civil

discovery, including oral depositions, FED .R.CIV . P. 30, written depositions, FED .R.CIV . P. 31,
interrogatories to parties, FED .R.CIV . P. 33, examinations of persons, FED .R.CIV . P. 35, and
requests for admission, FED .R.CIV . P. 36.123 FED .R.CIV . P. 26 sets forth the general provisions
governing discovery, and affords “[l]iberal discovery . . . for the sole purpose of assisting in the
preparation and trial, or the settlement, of litigation disputes.” Seattle Times Co. v. Rhinehart,
467 U.S. 20, 34 (1984). FED .R.CIV . P. 26(a) requires certain discovery “without awaiting a
discovery request.”124 FED .R.CIV . P. 26(b)(1), provides, in relevant part, that unless otherwise
limited by a court,
[p]arties may obtain discovery regarding any matter, not privileged,
that is relevant to the claim or defense of any party, including the
existence, description, nature, custody, condition, and location of
any books, documents, or other tangible things and the identity and
location of persons having knowledge of any discoverable matter.
For good cause, the court may order discovery of any matter
relevant to the subject matter involved in the action. Relevant
information need not be admissible at the trial if the discovery
appears reasonably calculated to lead to the discovery of admissible evidence
FED . R. CIV . P. 26(b)(1).

123

This Section discusses the rules of discovery that will be effective December 1, 2007.
See Section IV, n.63 above.
124

Such required disclosures includes: the name and address of each individual likely to
have discoverable information, FED . R. CIV . P. 26(a)(1)(A); copies of documents or electronic
information that the disclosing party will use to support or defend its claim, FED . R. CIV . P.
26(a)(1)(B); a computation of damages and the documents supporting the computation, FED . R.
CIV . P. 26(a)(1)(C); insurance agreements, FED . R. CIV . P. 26(a)(1)(D); the identity of all expert
witnesses and the basis and reasoning of their opinions, FED . R. CIV . P. 26(a)(2); and the identity
and contact information of any potential witnesses - including those presented only through
deposition, FED . R. CIV . P. 26(a)(3).
130

“Under [Rule 26], the only express limitations are that the information sought is not
privileged, and is relevant to the subject matter of the pending action.” Seattle Times,
467 U.S. at 30. The phrase “relevant to the subject matter” “has been construed broadly, to
encompass any matter that bears on, or that reasonably could lead to other matter that could bear
on, any issue that is or may be in the case.” Oppenheimer Fund Inc. v. Sanders, 437 U.S. 340,
351 (1978). “Much of the information that surfaces during pretrial discovery may be unrelated,
or only tangentially related, to the underlying cause of action.” Seattle Times, 467 U.S. at 33.
Thus, discovery “is not limited to matters that will be admissible at trial so long as the
information sought ‘appears reasonably calculated to lead to the discovery of admissible
evidence.’” Seattle Times, 467 U.S. at 29-30. “Nor is discovery limited to the merits of a case,
for a variety of fact-oriented issues may arise during litigation that are not related to the merits.”
Oppenheimer, 437 U.S. at 351. Likewise, “discovery is not limited to issues raised by the
pleadings, for discovery itself is designed to help define and clarify the issues.” Id. at 351.
“While the Federal Rules unquestionably allow broad discovery, [the] right to discovery
is not unlimited.” Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1322 (Fed. Cir. 1990).
Under Rule 26, a court is authorized to limit the frequency or extent of discovery if it determines
that:
(i) the discovery sought is unreasonably cumulative or duplicative, or is
obtainable from some other source that is more convenient, less
burdensome, or less expensive; (ii) the party seeking discovery has had
ample opportunity by discovery in the action to obtain the information
sought; or (iii) the burden or expense of the proposed discovery outweighs
its likely benefit, taking into account the needs of the case, the amount in
controversy, the parties' resources, the importance of the issues at stake in
the litigation, and the importance of the proposed discovery in resolving
the issues.
131

FED . R. CIV . P. 26(b)(2)(C). Moreover, “[a] party need not provide discovery of electronically
stored information from sources that the party identifies as not reasonably accessible because of
undue burden or cost,” unless the requesting party can show good cause; and, the court may set
the conditions for the discovery. FED . R. CIV . P. 26(b)(2)(B). In addition, a trial court may deny
discovery requests for matters “relevant only to claims or defenses that have been stricken,”
“information for use in proceedings other than the pending suit,” or “when a party’s aim is to
delay bringing a case to trial, or embarrass or harass the person from whom he seeks discovery,”
Oppenheimer, 437 U.S. at 352, 353 & n.17, or requests based upon a party’s mere suspicion or
speculation. Micro Motion, 894 F.2d at 1326. “The discovery rules are designed to assist a party
to prove a claim it reasonably believes to be viable without discovery, not to find out if it has any
basis for a claim.” Id. at 1327. Furthermore, trial courts may issue protective orders where “civil
discovery [is being used] to evade restrictions on discovery in criminal cases.” Degan v. United
States, 517 U.S. 820, 826 (1996).125
2.

Given the potential breadth of discovery, trial courts are vested with wide

discretion in handling pre-trial discovery matters and in fashioning appropriate protective orders.
See, e.g., Degen, 517 U.S. at 826; Seattle Times Co., 467 U.S. at 36; Cruden v. Bank of New
York, 957 F.2d 961, 972 (2d Cir. 1992). Accordingly, a district court’s orders regarding

125

For agencies and individuals filing on behalf of the United States, there are additional
regulations regarding discovery, to further “promote just and efficient resolution of civil claims.”
Exec. Order No. 12,988, 61 Fed. Reg. 4,729, 4,729 (Feb. 5, 1996). Litigation counsel is expected
to “streamline and expedite discovery in cases under [his] control.” Exec. Order No. 12,988, 61
Fed. Reg. at 4730. Federal agencies are expected to coordinate discovery procedures within the
agency, including “review by a senior lawyer prior to . . . filing of the request in litigation, to
determine that the request is not cumulative or duplicative, unreasonable, oppressive, unduly
burdensome, or expensive.” Id. Additionally, before petitioning the trial court to resolve
discovery motions, “counsel shall attempt to resolve the issue with opposing counsel.” Id.
132

discovery matters may be reversed only upon a clear showing of an abuse of discretion.126
“As a general rule, a district court’s order enforcing a discovery request is not a final
order subject to appellate review under 28 U.S.C. § 1291.” Church of Scientology of Cal. v.
United States, 506 U.S. 9, 18 n.11 (1992).127 “Federal appellate jurisdiction generally depends on
the existence of a decision by the District Court that ends the litigation on the merits and leaves
nothing for the court to do but execute judgment.” Coopers & Lybrand v. Livesay, 437 U.S. 463,
467 (1978) (quoting Catlin v. United States, 324 U.S. 229, 233 (1945)). “A party that seeks to
present an objection to a discovery order immediately to a court of appeals must refuse
compliance, be held in contempt, and then appeal the contempt order.” Church of Scientology of
Cal., 506 U.S. at 18 n.11; see also Ryan, 402 U.S. at 533.
“However, under the so-called Perlman doctrine, see Perlman v. United States, 247 U.S.
7. . . (1918), a discovery order directed at a disinterested third party is treated as an immediately
appealable final order because the third party presumably lacks a sufficient stake in the
proceeding to risk contempt by refusing compliance.” Church of Scientology of Cal., 506 U.S. at
18 n.11. Moreover, some circuits permit a party to take an immediate appeal from an order

126

See, e.g., Ins. Corp. of Ireland Ltd. v. Compagnie desBauxities, 456 U.S. 694, 707
(1982); Nat’l Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642 (1976);
Cruden, 957 F.2d at 972.
127

Accord Bennett v. City of Boston, 54 F.3d 18, 20 (1st Cir. 1995); In re Att’y Gen.of
the United States, 596 F.2d 58, 61 (2d Cir. 1979); In re Ford Motor Co., 110 F.3d 954, 958 (3rd
Cir. 1997); MDK, Inc. v. Mike’s Train House, Inc., 27 F.3d 116, 119 (4th Cir. 1994); Piratello v.
Phillips Elecs. N. Am. Corp., 360 F.3d 506, 508 (5th Cir. 2004); U.S. ex rel. Pogue v. Diabetes
Treatment Ctrs. of Am., Inc., 444 F.3d 463, 471 (6th Cir. 2006); Simmons v. City of Racine,
PFC, 37 F.3d 325, 327 (7th Cir. 1994); Coleman v. Sherwood Med. Indus., 746 F.2d 445, 446-47
(8th Cir. 1984); Boughton v. Cotter Corp., 10 F.3d 746, 748 (10th Cir. 1993); see also United
States v. Ryan, 402 U.S. 530, 532 (1971); Petroleum Prod. Antitrust Litig. v. Standard Oil Co.,
747 F.2d 1303, 1305 (9th Cir. 1984).
133

compelling discovery of alleged privileged materials, provided that the order satisfies the
collateral order doctrine.128 See, e.g., In Re Ford Motor Co., 110 F.3d 954, 963-64 (1997)
(appealing an order compelling discovery of documents allegedly protected by attorney-client
privilege); United States v. Phillip Morris Inc., 314 F.3d 612, 617-20 (D.C. Cir. 2003) (same);
Koch v. Cox, 489 F.3d 384 (D.C. Cir. 2007) (appealing an order compelling discovery of
medical records allegedly protected by psychotherapist-patient privilege); Bittaker v. Woodford,
331 F.3d 715, 717-718 (9th Cir. 2003) (appealing an order precluding use of attorney-client
privileged documents for proceedings other than litigating the federal habeas corpus petition at
issue).
Although a few courts have held that discovery orders involving disclosure of alleged
privilege matters are immediately appealable under the collateral order doctrine, most courts
have held otherwise, ruling that such orders are not appealable until a final judgment has been
rendered. See, e.g., Bennett, 54 F.3d at 20 (order compelling disclosure of various allegedly
privileged investigative materials held non-appealable); In re Att’y Gen., 596 F.2d at 61-62
(order compelling disclosure of the identities of several police-informants); MDK, Inc., 27 F.3d
at 120-22 (order compelling non-party to disclose trade secrets); Piratello, 360 F.3d at 508-09
(order compelling defendant to submit to depositions and disclose potentially self-incriminating
information); Pogue, 444 F.3d at 471-72 (order compelling disclosure of documents allegedly
protected by attorney-client privilege); Simmons, 37 F.3d at 327-29 (order compelling discovery

128

The collateral order doctrine permits an immediate appeal before final judgment from
a “small class” of orders that “conclusively determine the disputed question, resolve an important
issue completely separate from the merits of the action, and [are] effectively unreviewable on
appeal from a final judgment.” Coopers & Lybrand, 437 U.S. at 468. See also Cohen v.
Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949).
134

of informant’s identity); Coleman, 746 F.2d at 447 (order imposing attorney’s fees on party for
failing to comply with discovery order); Boughton, 10 F.3d at 749-50 (order compelling
discovery of documents allegedly protected by attorney-client, work-product, and non-testifying
expert privilege).
3.

A party seeking discovery may move for an order compelling disclosure or

discovery. FED . R. CIV . P. 37(a). If a party or a party’s officer, director, managing agent, or
witness fails to obey an order to provide or permit discovery, the court is authorized to make such
orders as are just. FED . R. CIV . P. 37(b)(2). These orders may include:
An order that the matters regarding which the order was made or
any other designated facts shall be taken to be established for
purposes of the action in accordance with the claim of the party
obtaining the order;
An order refusing to allow the disobedient party to support or
oppose designated claims or defenses, or prohibiting that party
from introducing designated matters in evidence;
An order striking out pleadings or parts thereof, or staying further
proceedings until the order is obeyed, or dismissing the action or
proceeding or any part thereof, or rendering a judgment by default
against the disobedient party;
In lieu of any of the foregoing orders or in addition thereto, an
order treating as a contempt of court the failure to obey any orders
except an order to submit to a physical or mental examination.
....
In lieu of any of the foregoing orders or in addition thereto, the court shall
require the party failing to obey the order or the attorney advising that
party or both to pay the reasonable expenses, including attorney's fees,
caused by the failure, unless the court finds that the failure was
substantially justified or other circumstances make an award of expenses
unjust.
FED . R.CIV . P. 37(b)(2)(A)-(E).
135

Rule 37 “allows a court all the flexibility it might need in framing an order appropriate to
a particular situation.” Societe Internationale Pour Participations Industrielles et Commerciales
v. Rogers, 357 U.S. 197, 208 (1958); B.F. Goodrich Tire Co. v. Lyster, 328 F.2d 411, 415 (5th
Cir. 1964). The District Court has wide latitude in imposing sanctions for failure to obey
discovery orders; accordingly, a decision will not be reversed absent a clear abuse of discretion.
See, e.g., Ins. Corp. of Ireland, 456 U.S. at 707; see also cases cited n.126 above. For example,
permissible sanctions in appropriate circumstances include dismissal of an action,129 contempt,130
or other appropriate sanction.131
“Although a trial judge’s latitude in framing orders and in penalizing failures to comply is
broad, his discretion is not limitless.” BF Goodrich Tire Co., 328 F.2d at 415; see also Indep.
Prods., Inc. v. Loew’s, Inc., 283 F.2d 730, 733 (2d Cir. 1960). District courts are not required “to
select the least drastic or most reasonable sanction,” Melendez, 79 F.3d at 672; however, courts
may only impose sanctions that are just and specifically related to the circumstances surrounding
a party’s failure to comply with the discovery rules. Ins. Corp. of Ireland, 456 U.S. at 707;
Melendez, 79 F.3d at 672; Daval Steel Prods., 951 F.2d at 1366. “A district court may be found

129

See, e.g., Degen, 517 U.S. at 827; National Hockey League, 427 U.S. at 641-42.

130

See, e.g., Church of Scientology of Cal., 506 U.S. at 18 n.11; see also cases cited n.

127 above.
131

See, e.g., Daval Steel Prods. v. M/V Fakredine, 951 F.2d 1357, 1365 (2d Cir. 1991)
(prohibiting defendant from introducing evidence); Melendez v. Ill. Bell Tel. Co., 79 F.3d 661,
671 (7th Cir. 1996) (sole expert witness barred from testifying); Boardman v. Nat’l Med. Enters.,
106 F.3d 840, 843 (8th Cir. 1997) (plaintiff’s witness prohibited from testifying); Marchand v.
Mercy Med. Ctr., 22 F.3d 933, 936 (9th Cir. 1994) (defendant ordered to pay plaintiff’s
expenses); Orjias v. Stevenson, 31 F.3d 995, 1005 (10th Cir. 1994) (witness testimony
excluded); Ins. Corp. of Ireland v. Compagnie Des Bauxites, 456 U.S. 694, 707 (1982) (certain
facts taken as established).
136

to have abused its discretion if the exclusion of testimony results in fundamental unfairness in the
trial of the case.” Orjias, 31 F.3d at 1005. “[T]here are constitutional limitations upon the
power of courts, even in aid of their own valid processes, to dismiss an action without affording a
party the opportunity for a hearing on the merits of the case.” Societe Internationale, 357 U.S. at
209. Rule 37 does not authorize severe sanctions such as dismissal of a complaint when failure
to comply is “due to inability, and not to wilfulness, bad faith, or any fault” of the offending
party. Id. at 212; Nat’l Hockey League, 427 U.S. at 640; Melendez, 79 F.3d at 671; Daval Steel,
951 F.2d at 1367; BF Goodrich Tires, 328 F.2d at 415; Indep. Prods., 283 F.2d at 733. “Bad
faith, however, is not required for a district court to sanction a party for discovery abuses.”
Melendez, 79 F.3d at 671.
C.

Privileges
1.

Deliberative Process, Presidential Communications and Investigatory Files
Privileges

The United States, but not private litigants, may rely upon several privileges to shield
information from discovery, including the deliberative process, Presidential communications and
investigatory files privileges.132

132

For a detailed analysis of the law and procedures governing these and other
Government privileges, Government attorneys should consult DOJ’s Civil Division Commercial
Litigation Branch’s Monograph “The Governmental Privileges” (September 2006) (hereinafter
“The Governmental Privileges Monograph”). Prior approval from the Civil Division is required
before a Government attorney may make a formal claim of privilege available only to the
Government. See USAM § 4-6.332 (E). This Section of the Manual is derived, in part, from
The Governmental Privileges Monograph and is limited to a brief description of the deliberative
process, Presidential communications and investigatory files privileges.
137

a.

The Deliberative Process Privilege

The deliberative process privilege protects the “decision making process of government
agencies” and hence protects from discovery “documents ‘reflecting advisory opinions,
recommendations and deliberations comprising part of a process by which governmental
decisions and policies are formulated.’” NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150
(1975) (citations omitted). Generally, “pre-decisional communications . . . are privileged . . . and
communications made after the decision and designed to explain it . . . are not” privileged. Id. at
151-52. Accord Renegotiation Bd. v. Grumman Aircraft Eng’g. Corp., 421 U.S. 168, 184
(1975). See The Governmental Privileges Monograph at 9-27.133
As the Supreme Court explained, “the ultimate purpose of this long-recognized privilege
is to prevent injury to the quality of agency decision. The quality of a particular agency decision
will clearly be affected by the communications received by the decisionmaker on the subject of
the decision prior to the time the decision is made.” Sears, Roebuck, 421 U.S. at 151.
Assertion of the deliberative process privilege “requires: (1) a formal claim of privilege
by the ‘head of the department’ having control over the requested information; (2) assertion of
the privilege based on actual personal consideration by that official; and (3) a detailed
specification of the information for which the privilege is claimed, with an explanation why it
properly falls within the scope of the privilege.” Landry v. F.D.I.C., 204 F.3d 1125, 1135 (D.C.
Cir. 2000). Some courts have interpreted the term “head of the department” broadly to include
“supervisory personnel of sufficient rank to achieve the necessary deliberations in assertion of the

133

Congress codified the deliberative process privilege under Exemption No. 5 of the
Freedom of Information Act (“FOIA”), 5 U.S.C. § 552. See, e.g., Grumman Aircraft Eng’g.
Corp. , 421 U.S. at 183-84; EPA v. Mink, 410 U.S. 75, 85-87 (1973).
138

deliberative process” privilege. Id. at 1135-36. See The Governmental Privileges Monograph at
11.
The deliberative process privilege “is not absolute. After the government makes a
sufficient showing of entitlement to the privilege, the district court should balance the competing
interests of the parties. The party seeking discovery bears the burden of showing that its need for
the documents out-weights the government’s interest.” Redland Soccer Club v. Dept. of Army of
the Untied States, 55 F. 3d 827, 854 (3d Cir. 1995). See also The Government Privileges
Monograph at pp. 21-22. In balancing the interests, courts consider various factors, including:
“(i) the relevant of the evidence sought to be protected; (ii) the availability of other evidence; (iii)
the ‘seriousness’ of the litigation and the issues involved; (iv) the role of the government in the
litigation; [and] (v) the possibility of future timidity by government employees who would be
forced to recognize that their secrets are violable.” Redland Soccer Club, 55 F. 3d at 854,
quoting First Eastern Corp. V. Mainwaring, 21 F.3d 465, 468 n.5 (D.C. Cir. 1994).
b.

The Presidential Communications Privilege

In United States v. Nixon, 418 U.S. 683, 686 (1974), the President of the United States
sought “to quash a third-party subpoena duces tecum issued by the United States District Court
for the District of Columbia, pursuant to Fed. R. Crim. Proc. 17(c). The subpoena directed the
President to produce certain tape recordings and documents relating to his conversations with
aides and advisers,” to be used by a Special Prosecutor in a criminal case against third parties.
The President argued, among other matters, that the Constitution provided “an absolute privilege
of confidentiality for all Presidential communications.” Id. at 703. However, the Supreme Court
rejected this claim, holding that confidential Presidential communications are only
139

“presumptively privileged,” and that such a “privilege is fundamental to the operation of
Government and inextricably rooted in the separation of powers under the Constitution.” The
Supreme Court explained:
The expectation of a President to the confidentiality of his
conversations and correspondence, like the claim of confidentiality
of judicial deliberations, for example, has all the values to which
we accord deference for the privacy of all citizens and, added to
those values, is the necessity for protection of the public interest in
candid, objective, and even blunt or harsh opinions in Presidential
decision-making. A President and those who assist him must be
free to explore alternatives in the process of shaping policies and
making decisions and to do so in a way many would be unwilling
to express except privately. These are the considerations justifying
a presumptive privilege for Presidential communications.
Id. at 708.
The Supreme Court found it highly significant that the President did not base his claim of
privilege “to protect military, diplomatic, or sensitive, national security secrets,” where the
President’s interest in confidentiality is greatest. Id. at 706.134 The Supreme Court explained:
In this case the President challenges a subpoena served on him as a
third party requiring the production of materials for use in a
criminal prosecution; he does so on the claim that he has a
privilege against disclosure of confidential communications. He
does not place his claim of privilege on the ground they are
military or diplomatic secrets. As to these areas of Art. II duties
the courts have traditionally shown the utmost deference to
Presidential responsibilities. In C. & S. Air Lines v. Waterman
134

Pursuant to the state secrets privilege, “matters the revelation of which reasonably
could be seen as a threat to the military or diplomatic interests of the Nation - are absolutely
privileged from disclosure in the courts . . . . Once the court is satisfied that the information poses
a reasonable danger to secrets of state, ‘even the most compelling necessity cannot overcome the
claim of privilege . . . .’” Harkin v. Helm, 690 F. 2d 977, 990 (D.C. Cir. 1982) (quoting United
States v. Reynolds, 345 U.S. 1, 11 (1953)). The states’ secret privilege also protects against
disclosure of information that would impair the Government’s “intelligence - gathering methods
or capabilities.” Black v. United States, 62 F. 3d 1115, 1118 (8th Cir. 1995). See also The
Governmental Privileges Monograph at 3-5.
140

S.S. Corp., 333 U.S. 103, 111 (1948), dealing with Presidential
authority involving foreign policy considerations, the Court said:
“The President, both as Commander-in-Chief and as the Nation’s
organ for foreign affairs, has available intelligence services whose
reports are not and ought not to be published to the world. It
would be intolerable that courts, without the relevant information,
should review and perhaps nullify actions of the Executive taken
on information properly held secret.”
Nixon, 418 U.S. at 710. The Court then weighed “the importance of the general privilege of
confidentiality of Presidential communication in performance of the President’s responsibilities
against” the interests in the “fair administration of criminal justice,” id. at 711-12, and concluded
that the privilege was outweighed by those interests, stating:
when the ground for asserting privilege as to subpoenaed materials
sought for use in a criminal trial is based only on the generalized
interest in confidentiality, it cannot prevail over the fundamental
demands of due process of law in the fair administration of
criminal justice. The generalized assertion of privilege must yield
to the demonstrated, specific need for evidence in a pending
criminal trial.
Id. at 713.135 Accord In Re Sealed Case, 121 F.3d 729, 745 (D.C. Cir. 1997) (“the privilege is

135

In a related case, Senate Select Committee on Presidential Campaign Activities v.
Nixon, 498 F.2d 725 (D.C. Cir. 1974) (en banc), the District of Columbia Circuit held that the
Presidential communications privilege protected the President from complying with a subpoena
duces tecum, directing him to produce original electronic tape recordings of five conversations
between the President and his former Counsel, John W. Dean, III, to a Senate Committee
investigating “‘illegal, improper or unethical activities’ occurring in connection with the
presidential campaign and election of 1972.” Id. at 726. The appellate court held that the Senate
Select Committee did not carry its burden of showing that “the subpoenaed evidence is
demonstrably critical to the responsible fulfillment of the Committee’s [legislative] functions.”
Id. at 731. The court explained that: (1) the Senate Select Committee’s need for the subpoenaed
materials to perform its oversight functions was “merely cumulative” since the House Judiciary
Committee had copies of the tape recordings at issue, id. at 732; and (2) because “Congress
frequently legislates on the basis of conflicting information provided in its hearings,” id. at 732,
the Select Committee’s alleged need for the tape recordings “to resolve particular conflicts in the
voluminous testimony it has heard,” id. at 731, did not outweigh the presumption of
confidentiality.
141

qualified, not absolute, and can be overcome by an adequate showing of need”).
The Presidential communications privilege “is limited to communications ‘in
performance of [a President’s] responsibilities . . . of his office’ . . . and made ‘in the process of
shaping policies and making decisions.’” Nixon v. Admin. of Gen. Servs., 433 U.S. 425, 449
(1977) (quoting United States v. Nixon, 418 U.S. at 708, 711, 713 (citations omitted)). However,
the privilege is not limited “to direct communications with the President,” but also extends to
“communications made by presidential advisers in the course of preparing advice for the
President.” In re Sealed Case, 121 F.3d at 746, 751-52. The District of Columbia Circuit
explained the scope of the Presidential communications privilege as follows:
Given the need to provide sufficient elbow room for advisers to
obtain information from all knowledgeable sources, the privilege
must apply both to communications which these advisers solicited
and received from others as well as those they authored
themselves. The privilege must also extend to communications
authored or received in response to a solicitation by members of a
presidential adviser’s staff, since in many instances advisers must
rely on their staff to investigate an issue and formulate the advice
to be given to the President.
...
Not every person who plays a role in the development of
presidential advice, no matter how remote and removed from the
President, can qualify for the privilege. In particular, the privilege
should not extend to staff outside the White House in executive
branch agencies. Instead, the privilege should apply only to
communications authored or solicited and received by those
members of an immediate White House adviser’s staff who have
broad and significant responsibility for investigating and
formulating the advice to be given the President on the particular
matter to which the communications relate. Only communications
at that level are close enough to the President to be revelatory of
his deliberations or to pose a risk to the candor of his advisers. See
AAPS, 997 F.2d at 910 (it is “operational proximity” to the
President that matters in determining whether “[t]he President’s
confidentiality interest” is implicated) (emphasis omitted).
142

Of course, the privilege only applies to communications that these
advisers and their staff author or solicit and receive in the course of
performing their function of advising the President on official
government matters. This restriction is particularly important in
regard to those officials who exercise substantial independent
authority or perform other functions in addition to advising the
President, and thus are subject to FOIA and other government
statutes.
In Re Sealed Case, 121 F.3d at 752.136 See also The Governmental Privileges Monograph at 2730. It is not clear whether the President must assert the privilege personally. See id. at 29.
c.

The Investigatory Files Privilege

The investigatory files privilege protects from discovery investigatory files compiled for
both civil and criminal law enforcement purposes and testimony about the information in the
files. See, e.g., In Re Sealed Case, 856 F.2d 268, 271 (D.C. Cir. 1988); Friedman v. Bache
Halsey Stuart Shields, Inc., 738 F.2d 1336, 1341 (D.C. Cir. 1984); McPeek v. Ashcroft, 202
136

The court in In re Sealed Case also explained that:
[W]hile the presidential communications privilege and the
deliberative process privilege are closely affiliated, the two
privileges are distinct and have difference scopes. Both are
executive privileges designed to protect executive branch
decisionmaking, but one applies to decisionmaking of executive
officials generally, the other specifically to decisionmaking of the
President. The presidential privilege is rooted in constitutional
separation of powers principles and the President’s unique
constitutional role; the deliberative process privilege is primarily a
common law privilege. . . . Consequently, congressional or judicial
negation of the presidential communications privilege is subject to
greater scrutiny than denial of the deliberative privilege.
...
In addition, unlike the deliberative process privilege, the
presidential communication privilege applies to documents in their
entirety, and covers final and post-decisional materials as well as
pre-deliberative ones.

121 F.3d at 745 (citations omitted).
143

F.R.D. 332, 335-36 (D.D.C. 2001); The Government Privileges Monograph at 36-41. Congress
incorporated the principles underlying this privilege in exemption (b)(7) of the FOIA, 5 U.S.C. §
552 (b)(7), which allows the Government to withhold:
investigatory records compiled for law enforcement purposes, but
only to the extent that the production of such records would (A)
interfere with enforcement proceedings, (B) deprive a person of a
right to a fair trial or an impartial adjudication, (C) constitute an
unwarranted invasion of personal privacy, (D) disclose the identity
of a confidential source and, in the case of a record compiled by a
criminal law enforcement authority in the course of a criminal
investigation, or by an agency conducting a lawful national security
intelligence investigation, confidential information furnished only
by the confidential source, (E) disclose investigative techniques
and procedures, or (F) endanger the life or physical safety of law
enforcement personnel.
See, e.g., NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 223 (1978); see also, United
States Dept. of Justice v. Landano, 508 U.S. 165, 171-72 (1993); John Doe Agency v. John Doe
Corp., 493 U.S. 146, 153-54 (1989).
To successfully invoke this privilege, the Government must meet three requirements:
(1) there must be a formal claim of privilege by the head of the
department having control over the requested information; (2)
assertion of the privilege must be based on actual personal
consideration by that official; and (3) the information for which the
privilege is claimed must be specified, with an explanation why it
properly falls within the scope of the privilege.
In re Sealed Case, 856 F.2d at 271. Accord Landry v. F.D.I.C., 204 F.3d 1125, 1135 (D.C. Cir.
2000). The “head of the department” requirement has been broadly interpreted to include, in
addition to the head of the department, “supervisory personnel. . . of sufficient rank to achieve
the necessary deliberateness in assertion of the [privilege].” Landry, 204 F.3d at 1136.

144

“[T]he law enforcement privilege is qualified. The public interest in non-disclosure must
be balanced against the need of a particular litigant for access to the privileged information.” In
re Sealed Case, 856 F.2d at 272. Accord Friedman, 738 F.2d at 1341. The District of Columbia
Circuit has ruled that in applying this balancing test the district court should consider:
(1) the extent to which disclosure will thwart governmental
processes by discouraging citizens from giving the government
information; (2) the impact upon persons who have given
information of having their identities disclosed; (3) the degree to
which governmental self-evaluation and consequent program
improvement will be chilled by disclosure; (4) whether the
information sought is factual data or evaluative summary; (5)
whether the party seeking discovery is an actual or potential
defendant in any criminal proceeding either pending or reasonably
likely to follow from the incident in question; (6) whether the
police investigation has been completed; (7) whether any
interdepartmental disciplinary proceedings have arisen or may arise
from the investigation; (8) whether the plaintiff’s suit is nonfrivolous and brought in good faith; (9) whether the information
sought is available through other discovery or from other sources:
(10) the importance of the information sought to the plaintiff’s
case.
In re Sealed Case, 856 F.2d at 272 (citations omitted). See also The Governmental Privileges
Monograph at 39.
2.

Confidential Informant Privilege

a.

The United States also has the exclusive right to rely upon the confidential

informant privilege in both civil and criminal cases regarding information furnished by a
confidential informant relating to a violation of the law.137 Specifically, the confidential
137

See, e.g., Gill v. Gulfstream Park Racing Ass’n, Inc., 399 F.3d 391, 401 (1st Cir.
2005)(“The privilege is applicable in both criminal and civil proceedings.”); Lawmaster v.
United States, 993 F.2d 773, 774 (10th Cir. 1993) (“the privilege is applicable in civil cases as
well”); Dole v. Local 1942, IBEW, AFL-CIO, 870 F.2d 368, 372 (7th Cir. 1989); Suarez v.
United States, 582 F.2d 1007, 1011-12 (5th Cir. 1978); In re United States, 565 F.2d 19, 22 (2d
(continued...)
145

informant privilege allows the United States to shield the identity of those individuals who assist
law enforcement officers by providing information about violations of law with the expectation
that their identity will remain confidential. See Roviaro v. United States, 353 U.S. 53, 60-61
(1957). These individuals are commonly referred to as “confidential informants” (CIs).
“Exemption 7(D) of the Freedom of Information Act, 5 U.S.C. § 552 (FOIA), exempts
from disclosure agency records ‘compiled for law enforcement purposes . . . by criminal law
enforcement authority in the course of a criminal investigation’ if release of those records ‘could
reasonably be expected to disclose’ the identity of, or information provided by, a ‘confidential
source.’ § 552(b)(7)(D).” Landano, 508 U.S. at 167. In Landano, the Supreme Court held that
the Government is not entitled to a presumption that all sources supplying information to the FBI
in the course of a criminal investigation are confidential sources within the meaning of
Exemption 7(D). Id. at 171-78. Rather, the Supreme Court held that:
A source should be deemed confidential if the source furnished
information with the understanding that the FBI would not divulge
the communication except to the extent the Bureau thought
necessary for law enforcement purposes.
Id. at 174.

137

(...continued)
Cir. 1977); Mitchell v. Roma, 265 F.2d 633, 635 (3d Cir. 1959); Cofield v. City of LaGrange,
913 F. Supp. 608, 619 (D.D.C. 1996); Michelson v. Daly, 590 F. Supp. 261, 264 (N.D.N.Y.
1984).
146

The confidential informant privilege, which is broader than Exemption 7(D) of FOIA,138
is grounded in the United States Supreme Court’s long-standing recognition of the importance of
protecting the flow of information about criminal violations to the Government. See, e.g., In re
Quarles and Butler, 158 U.S. 532, 535-536 (1895)(observing that “information, given by a
private citizen [to law enforcement officials], is a privileged and confidential communication . . .
the disclosure of which cannot be compelled without the assent of the government”). As the
Second Circuit has observed:
[I]t has been the experience of law enforcement officers that the
prospective informer will usually condition his cooperation on an
assurance of anonymity, fearing that if disclosure is made, physical
harm or other undesirable consequences may be visited upon him
or his family. By withholding the identity of the informer, the
government profits in that the continued value of informants placed
in strategic positions is protected, and other persons are encouraged
to cooperate in the administration of justice.
United States v. Tucker, 380 F.2d 206, 213 (2d Cir. 1967); The Governmental Privileges
Monograph at 32-33.
It is important to note that, as a general rule, only the identity of the informant is
privileged. However, if disclosure of information that the confidential informant provided would
reveal his identity, the Government may move to shield that information from disclosure as well.
See, e.g., Roviaro, 353 U.S. at 60; Simon v. Dep’t of Justice, 980 F.2d 782, 784 (D.C. Cir. 1992);

138

Unlike the common law confidential informant privilege, the FOIA Exemption 7(D) is
limited to disclosure of “agency records,” and in civil cases, the information need not relate to a
crime, but may relate to a violation of a regulatory provision or other civil law. See, e.g.,
Brennan v. Engineered Prods., Inc., 506 F.2d 299, 302-04 (8th Cir. 1974); Wirtz v. HooperHolmes Bureau, Inc., 327 F.2d 939, 961-43 (5th Cir. 1964); Wirtz v. Continental Fin. & Loan
Co. of West End, 326 F.2d 561, 563 (5th Cir. 1964); Culinary Foods, Inc. v. Raychem Corp., 150
F.R.D. 122, 126-27 (N.D. Ill. 1993); Schultz v. Farino Excavating Co., 55 F.R.D. 346, 347 (E.D.
Mich. 1972).
147

United States v. Tenorio-Angel, 756 F.2d 1505, 1509-10 (11th Cir. 1985). Of course, this
privilege may not apply if the informant testifies at a proceeding. See Banks v. Dretke, 540 U.S.
668, 698 (2004)(stating that the Government may not “examine an informant at trial, withholding
acknowledgment of his informant status in the hope that (the) defendant will not catch on”).
Moreover, the confidential informant privilege is not absolute. Lawmaster,
993 F.2d at 774. A district court may reject the Government’s privilege claim where the
information sought is essential to the opposition’s case and there is no other manner to acquire
the information. See Roviaro 353 U.S. at 60-61 (noting that, if the requested information is
“relevant and helpful to the defense of an accused, or is essential to a fair determination of a
cause, the privilege must give way”). Under Roviaro, the courts must apply a balancing test to
determine whether disclosure of an informant’s identity and related information is required. As
the Supreme Court stated in Roviaro:
We believe that no fixed rule with respect to disclosure is
justifiable. The problem is one that calls for balancing the public
interest in protecting the flow of information against the
individual’s right to prepare his defense. Whether a proper balance
renders nondisclosure erroneous must depend on the particular
circumstances of each case, taking into consideration the crime
charged, the possible defenses, the possible significance of the
informer’s testimony, and other relevant factors.
Roviaro, 353 U.S. at 62.139 The person seeking disclosure has the burden of showing that “his
need for the information outweighs the government’s entitlement to the privilege.” Dole,

139

Accord Lawmaster, 993 F.2d at 774; United States v. Alexander, 761 F.2d 1294, 1303
(9th Cir. 1985); Tenorio-Angel, 756 F.2d at 1509; United States v. Grisham, 748 F.2d 460, 46263 (8th Cir. 1984).
148

870 F.2d at 372-73.140 Significantly, a person seeking disclosure of matters protected by the
confidential informant privilege may not meet his burden by mere speculation, supposition or
conclusory allegations that an informant may be able to provide information helpful to his
defense. Rather, such person must make a particularized showing that the confidential informant
can provide material evidence that “would significantly aid in establishing an asserted defense”
Tenorio-Angel, 756 F.2d at 1511, or establish “a reasonable probability that the evidence would
change the outcome,” Elnasher, 484 F.2d at 1053, or “show that the disclosure is vital to a fair
trial.” United States v. Weir, 575 F.2d 668, 673 (8th Cir. 1978).141
For example, the Supreme Court upheld the Government’s invocation of the confidential
informant privilege in a criminal case where a defendant claimed he needed the identity of the
informant to properly attack an affidavit in support of a search warrant. See Rugendorf v. United
States, 376 U.S. 528, 533-36 (1964). In Rugendorf, the Supreme Court determined that the
defendant had failed to meet his burden to show that the informant’s identity was essential to
establish his innocence. Id.; see also McCray v. Illinois, 386 U.S. 300, 309-312 (1967)(holding
that the Government was not required under either the Due Process Clause or the Confrontation
Clause to disclose the identity of an informer during a pretrial probable cause hearing); Scher v.

140

Accord Elnasher v. Speedway Superamerica, LLC, 484 F.3d 1046, 1052-53 (8th Cir.
2007); Lawmaster, 993 F.2d at 774; Alexander, 761 F.2d at 1303; Grisham, 748 F.2d at 463-64;
In re United States, 565 F.2d at 23.
141

Accord Carpenter v. Lock, 257 F.3d 775, 779 (8th Cir. 2001); Holman, 873 F.2d at
946; Alexander, 761 F.2d at 1303; United States v. Kerris, 748 F.2d 610, 614 (11th Cir. 1984);
Grisham, 748 F.2d at 463; United States v. Aguierre Aguierre, 716 F.2d 293, 301 (5th Cir. 1983);
United States v. Diaz, 655 F.2d 580, 588 (5th Cir. 1981); United States v. Manley, 632 F.2d 978,
985 (2d Cir. 1980); United States v. Larson, 612 F.2d 1301, 1304 (8th Cir. 1980); United States
v. Gonzales, 606 F.2d 70, 75 (5th Cir. 1979); United States v. Kim, 577 F.2d 473, 478 (9th Cir.
1978); In re United States, 565 F.2d at 23.
149

United States, 305 U.S. 251, 254 (1938) (holding that a police officer was not required to reveal
the identity of a confidential informant who provided information leading to the arrest of the
defendant and stating that “public policy forbids disclosure of an informer’s identity unless
essential to the defense”).
In civil cases, the Government’s invocation of the confidential informant privilege is
similarly tested. However, in civil cases, “the informer’s privilege is arguably stronger, because
the constitutional guarantees assured to criminal defendants are inapplicable.”142
Applying the foregoing principles, courts have frequently denied disclosure of
confidential informant matters where the informant was a mere “tipster” who provided valuable
information to law enforcement,143 or the informant was a witness to a crime but did not actively
or substantially participate in it,144 or where the person seeking disclosure failed to carry his
burden of showing that the sought information was material to an asserted defense and necessary

142

Lawmaster, 993 F.2d at 774-775; accord Elnasher, 484 F.3d at 1053; United States v.
One 1986 Chevrolet Van, 927 F.2d 39, 43 (1st Cir. 1991); Holman v. Cayce, 873 F.2d 944, 947
(6th Cir. 1989); Dole v. Local 1942, Int’l Bhd. of Elec. Workers, 870 F.2d 368, 372 (7th Cir.
1989); In re United States, 565 F.2d at 22 (collecting cases); Westinghouse Elec. Corp. v.
Burlington, 351 F.2d 762 (D.C. Cir. 1965); Wirtz, 326 F.2d at 563; Michelson, 590 F. Supp. at
264.
143

See, e.g., Carpenter, 257 F.3d at 779; United States v. Moore, 129 F.3d 989, 992-93
(8th Cir. 1997); Grisham, 748 F.2d at 463-64; United States v. Buras, 633 F.2d 1356, 1359-60
(9th Cir. 1980); United States v. Arrington, 618 F.2d 1119, 1125-26 (5th Cir. 1980); United
States v. Larson, 612 F.2d 1301, 1303-04 (8th Cir. 1980).
144

See, e.g., United States v. Moralez, 908 F.2d 565, 567 (10th Cir. 1990); Holman, 873
F.2d at 946-47; Diaz, 655 F.2d at 588; United States v. Shursen, 649 F.2d 1250, 1254 (8th Cir.
1981); United States v. Anderson, 627 F.2d 161, 164 (8th Cir. 1980); Gonzales, 606 F.2d at 7576; Suarez v. United States, 582 F.2d 1007, 1012 (5th Cir. 1978).
150

to secure a fair trial.145
Regarding the Government’s countervailing interests in maintaining informant
confidentiality, such confidentiality is essential to enable the Government to obtain valuable
information from informants to carry out its important obligations to uncover unlawful activity.
Therefore, the public interest in effective law enforcement strongly supports non-disclosure of
confidential informant matters. See, e.g., Roviaro, 353 U.S. at 59; Scher, 305 U.S. at 254;
Grisham, 748 F.2d at 462.
Moreover, courts frequently have ruled that the likelihood of danger to an informant or
others is a crucial factor weighing heavily in favor of non-disclosure of informant information,
and accordingly have relied upon such potential danger as a ground to withhold an informant’s
identity.146
b.

There appears to be some tension among the federal circuits about whether an

interlocutory appeal may be taken from an order denying discovery of privileged matters or
granting discovery and rejecting a claim of privilege. Specifically, the First, Second, Fifth,
Seventh, Ninth and Tenth Circuits have held that an interclocutory appeal from such orders may
not be taken, including from orders upholding assertion of the confidential informant privilege,

145

See Alexander, 761 F.2d at 1303 and cases cited in notes 143 & 144 above and
accompanying text.
146

See, e.g., Aguirre Aguirre, 716 F.2d at 300; United States v. Ward, 703 F.2d 1058,
1062 (8th Cir. 1983); United States v. Lanci, 669 F.2d 391, 393 (6th Cir. 1982); United States v.
Jiles, 658 F.2d 194, 198 (3d Cir. 1981); United States v. Garcia, 625 F.2d 162, 165-66 (7th Cir.
1980); United States v. Hernandez-Berceda, 572 F.2d 680, 682-83 (9th Cir. 1978); United States
v. McLaughlin, 525 F.2d 517, 519 (9th Cir. 1975); United States v. Toombs, 497 F.2d 88, 94
(5th Cir. 1974); United States v. Picard, 464 F.2d 215, 217 (1st Cir. 1972); United States v.
Turchick, 451 F.2d 333, 338 (8th Cir. 1971); United States v. Drew, 436 F.2d 529, 534 (5th Cir.
1970); Gonzales v. Beto, 425 F.2d 963, 971 (5th Cir. 1970).
151

and instead require the litigants to use the contempt or mandamus processes to seek appellate
review.147 See, e.g., Simmons v. City of Racine, PFC, 37 F.3d 325, 327-329 (7th Cir.
1994)(rejecting claim of collateral order doctrine to appeal discovery order denying disclosure of
confidential informant information and observing that litigants may use the contempt process or
mandamus to receive immediate review of an adverse discovery order); In re Coordinated Pretrial
Proceedings in Petroleum Products Antitrust Litigation, 747 F.2d 1303, 1304-06 (9th Cir. 1984)
(denying interlocutory review of a discovery order denying disclosure of confidential informant
matters); In re Attorney General of the United States, 596 F.2d 58, 61 (2d Cir. 1979) (holding
that an order holding the Attorney General of the United States in civil contempt for refusing to
disclose certain confidential informant files was not appealable, but granting the Government’s
Petition for a Writ of Mandamus); In re United States, 565 F.2d at 21-22 (denying interlocutory
appeal of an order requiring in camera inspection of confidential informant files); see also
Bennett v. City of Boston, 54 F.3d 18, 20-21 (1st Cir. 1995)(holding that the appellate court did
not have jurisdiction to hear an interlocutory appeal of a discovery order denying invocation of
privilege against “disclosure of sensitive investigative techniques” and noting that “contempt
citation is the ordinary route to appellate review in this context”); Boughton v. Cotter Corp., 10
F.3d 746, 749-751 (10th Cir. 1993)(disallowing interlocutory appeal of a discovery order denying
invocation of attorney-client and work product privileges, but noting mandamus relief may be
available in some circumstances “to correct a clear abuse of discretion”); Chase Manhattan Bank,
N.A. v. Turner & Newall, PLC, 964 F.2d 159, 162-63 (2d Cir. 1992)(holding the court lacked
jurisdiction to conduct interlocutory review of district court’s discovery order rejecting
147

For a discussion of interlocutory appeals involving privilege matters under the
collateral order doctrine, see Section VI(B)(2) above.
152

invocation of attorney client privilege).
However, some courts have allowed interlocutory appeals from discovery orders rejecting
privilege claims other than the confidential informant privilege. See, e.g., Koch v. Cox, 489 F.3d
384, 387-388 (D.C. Cir. 2007) (stating that the court of appeals has “jurisdiction over the
interluctory appeal of an order denying a motion to quash based upon a privilege,” and allowing
an interlocutory appeal of a discovery order rejecting an assertion of the psychotherapist-patient
privilege); United States v. Phillip Morris Inc., 314 F.3d 612, 617-621 (D.C. Cir. 2003)(allowing
interlocutory appeal of a discovery order denying assertion of attorney-client privilege under the
collateral order doctrine without requiring the litigants to resort to the contempt process noting
that “[i]t would be impossible for a court to sort out and redress the harm caused by the incorrect
disclosure,” id. at 619); In re Ford Motor Co., 110 F.3d 954, 957-964 (3rd Cir. 1997)(allowing
interlocutory appeal of a discovery order denying a claim of attorney-client and work product
privileges).
3.

Fifth Amendment Privilege

The Fifth Amendment of the United States Constitution provides, in relevant part, that no
person “shall be compelled in any criminal case to be a witness against himself.” “The
Amendment not only protects the individual against being involuntarily called as a witness
against himself in a criminal prosecution but also privileges him not to answer official questions
put to him any other proceeding, civil or criminal, formal or informal, where the answers might
incriminate him in future criminal proceedings.” Lefkowitz v. Turley, 414 U.S. 70, 77 (1973).
Accord Baxter v. Palmigiano, 425 U.S. 308, 316-17 (1976); McCarthy v. Arndstein, 266 U.S. 34,

153

40 (1924).148 “The privilege protects a mere witness as fully as it does one who is a party
defendant.” Id. at 40. Accord Malloy v. Hogan, 378 U.S. 1, 11 (1964).
To validly assert the privilege, a witness must establish that he “reasonably believes that
the information sought, or discoverable as a result of his testimony, could be used in a
subsequent state or federal criminal proceeding.” United States v. Balsys, 524 U.S. 666, 672
(1998). Accord Kastigar v. United States, 406 U.S. 441, 444-45 (1972); Hoffman v. United
States, 341 U.S. 479, 486 (1951). In that regard, “[t]o sustain the privilege, it need only be
evident from the implications of the question, in the setting in which it is asked, that a responsive
answer to the questions or an explanation of why it cannot be answered might be dangerous
because injurious disclosure could result.” Hoffman, 341 U.S. at 486-87. Accord N.L.R.B. v.
Trans Ocean Export Packing, Inc., 473 F.2d 612, 617 (9th Cir. 1973). However, the Fifth
Amendment privilege does not apply where the danger of incrimination is “remote, unlikely, or
speculative.” McCoy v. Comm. of Internal Revenue, 696 F.2d 1234, 1236 (9th Cir. 1983).149
Significantly, a witness’ assertion of his Fifth Amendment privilege does not end the inquiry
since the court makes the final determination whether the privilege has been properly invoked.150
148

However, as a general rule, a person who fears only a future criminal prosecution by a
foreign country may not invoke the privilege. See United States v. Balsys, 524 U.S. 666, 698-99
(1998). Moreover, the Fifth Amendment privilege against self-incrimination applies only to
natural persons, and not to corporations. See Hale v. Henkel, 201 U.S. 43, 74-75 (1906).
149

See also Mason v. United States, 244 U.S. 362, 367 (1917) (holding that a witness
lacked reasonable cause to fear incrimination from his sought testimony about his participation in
a card-game that was not itself illegal); Martin-Trigona v. Gouletas, 634 F.2d 354, 360-62 (7th
Cir. 1980) (ruling that the Fifth Amendment privilege did not preclude a witness’ testimony
about his financial transactions that had “only the most tenuous relationship to any potentially
incriminating financial transactions”).
150

See, e.g., Hoffman, 341 U.S. at 486; Rogers v. United States, 340 U.S. 367, 375
(continued...)
154

Moreover, in a civil proceeding, unlike in a criminal prosecution,151 the fact-finder may
draw an adverse inference from a party’s refusal to testify based on his assertion of his Fifth
Amendment privilege against self incrimination. See, e.g., Baxter v. Palmigiano, 425 U.S. at
316-19; United States v. 4003-05 5th Ave., Brooklyn, N.Y., 55 F. 3d 78, 83 (2d Cir. 1995);
United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F. Supp. 808, 812
(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993); United States v. Bonanno Organized Crime
Family, 683 F. Supp. 1411, 1449-50 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989).
Likewise, the fact-finder may draw an adverse inference against a party from the assertion of the
Fifth Amendment privilege by a non-party witness whose interests are aligned with a party, such
as a party’s agents or representatives,152 current and former employees,153 and others whose
relationships to a party warrant drawing an adverse inference against a party.154 Indeed, an
150

(...continued)
(1951); Martin-Trigona, 634 F.2d at 360; In re Corrugated Container Antitrust Litig., 662 F.2d
875, 882 (D.C. Cir. 1981).
151

See Griffin v. California, 380 U.S. 609 (1965) (holding that it violates a defendant’s
protection against self-incrimination under the Fifth Amendment to instruct a jury in a criminal
case that it may draw an adverse influence of guilt from a defendant’s failure to testify about
facts relevant to his case).
152

See, e.g., Curtis v. M&S Petroleum, Inc., 174 F. 3d 661, 673-75 (5th Cir. 1999);
United States v. Dist. Council of N.Y. City, 832 F. Supp. 644, 651-52 (S.D.N.Y. 1993).
153

See, e.g., Rad Servs, Inc. v. Aetna Cas. and Sur. Co., 808 F.2d 271, 273-75 (3d Cir.
1986); Brink’s Inc. v. City of New York, 717 F. 2d 700, 707-10 (2d Cir. 1983).
154

See, e.g., LiButti v. United States, 107 F. 3d 110, 123-24 (2d Cir. 1997) (holding that
it was proper to draw an adverse inference from the assertion of the Fifth Amendment privilege
by a party’s father based on considering the nature of the relationship between the party and the
witness, the degree of control of the party over the witness, the compatibility of the interests of
the party and the witness in the outcome of the litigation and the role of the non-party witness in
the litigation); Cerro Gordo Charity v. Fireman’s Fund Am. Life Ins., 819 F.2d 1471, 1481-82
(continued...)
155

opposing party may even call a non-party witness to the stand to invoke his Fifth Amendment
privilege before the jury, provided that the probative value of such evidence is substantially
outweighed by the danger of unfair prejudice.155
Although the fact-finder may draw an adverse inference from a party’s or witness’
assertion of his Fifth Amendment privilege, such adverse interest standing alone is not sufficient
to impose liability156 or to defeat or carry a motion for summary judgment.157
In accordance with the foregoing principles, courts in Government civil RICO cases have
drawn an adverse inference against a party or a witness aligned with a party from their assertion
of their Fifth Amendment Privilege against self-incrimination.158

154

(...continued)
(8th Cir. 1987) (adverse inference from party’s brother’s assertion of his Fifth Amendment
privilege).
155

See, e.g., Cerro Gordo Charity, 819 F.2d at 1480-82; Brink’s Inc., 717 F.2d at 707-10;
Farace v. Independant Fire Ins. Co., 699 F.2d 204, 210-211 (5th Cir. 1983). Likewise, a witness’
deposition in which he asserted his Fifth Amendment privilege is admissible under some
circumstances. See, e.g., Koester v. Am. Republic Invs., Inc., 11 F.3d 818, 823 (8th Cir. 1993);
Rad Servs., Inc., 808 F.2d at 274, 280-81.
156

See, e.g., Baxter v. Palmigiano, 425 U.S. at 317-18; La Salle Bank Lake View v.
Seguban, 54 F.3d 387, 390 (7th Cir. 1995); Private Sanitation Indus. Ass’n, 811 F. Supp. at 812;
Bonanno Organized Crime Family, 683 F. Supp. at 1451-52.
157

See, e.g., Curtis, 174 F.3d at 675; 4003-4005 5th Ave., Brooklyn, N.Y., 55 F.3d at 83;
LaSalle Bank Lake View, 54 F.3d at 392-93; Avirgan v. Hull, 932 F.2d 1572, 1580 (11th Cir.
1991).
158

See, e.g., Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 995 F.2d at 377;
Dist. Council of N.Y. City, 832 F. Supp. at 651-52; United States v. Bonanno Organized Crime
Family, 683 F. Supp. at 1449-52; United States v. Ianniello, 646 F. Supp. 1289, 1296-97
(S.D.N.Y. 1986), aff’d, 824 F.2d 203 (2d Cir. 1987).
156

VII
JUDGMENTS, CONSENT DECREES, AND ENFORCEMENT
A.

Judgments and Consent Decree
1.

The General Nature of Consent Decrees and Rules of Their Construction

A consent decree is a voluntary agreement, subject to the court’s approval, entered into by
consent of the parties to a lawsuit to resolve a lawsuit. “The parties waive their right to litigate
the issues involved in the case and thus save themselves the time, expense, and inevitable risk of
litigation.” United States v. Armour & Co., 402 U.S. 673, 681 (1971). As the Supreme Court
has explained, consent decrees have a “hybrid nature”:
[C]onsent decrees bear some of the earmarks of judgments entered
after litigation. At the same time, because their terms are arrived at
through mutual agreement of the parties, consent decrees also
closely resemble contracts. See United States v. ITT Continental
Banking Co., 420 U.S. 223, 235-237 (1975); United States v.
Armour & Co., 402 U.S. 673 (1971). . . . [C]onsent decrees “have
attributes both of contracts and of judicial decrees,” a dual
character that resulted in different treatment for different purposes.
United States v. ITT Continental Banking Co., supra, at 235-237,
and n. 10. The question is not whether we can label a consent
decree as a “contract” or a “judgment,” for we can do both.
Local No. 93, Int’l Ass’n of Firefighters v. City of Cleveland, 478 U.S. 501, 519 (1986)
(“Firefighters”).159
Insofar as consent decrees share attributes of contracts, consent decrees are interpreted
like contracts; that is, “the scope of a consent decree must be discerned within its four corners,
and not by reference to what might satisfy the purposes of one of the parties to it.” Armour &
159

Accord System Federation v. Wright, 364 U.S. 642, 650-51 (1961); United States v.
Local 359, United Seafood Workers, 55 F.3d 64, 68-69 (2d Cir. 1995); EEOC v. Local 580, Int’l
Ass’n of Bridge, Structural and Ornamental Ironworkers, 925 F. 2d 588, 592 (2d Cir. 1991).
United States v. Int’l Bhd. of Teamsters, 803 F. Supp. 761, 777 (S.D.N.Y. 1992) (“IBT”).
157

Co., 402 U.S. at 682. 160 Accordingly, “reliance upon certain aids to construction is proper, as
with any other contract. Such aids include the circumstances surrounding the formation of the
consent order, any technical meanings words may have had to the parties, and any other
documents expressly incorporated in the decree.” United States v. ITT Continental Banking Co.,
420 U.S. 223, 238 (1975) (“ITT Continental Baking Co.”).161
Moreover, a “court is not entitled to expand or contract the agreement of the parties as set
forth in the consent decree. . . .” Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985). Accord
EEOC v. New York Times Co., 196 F.3d 72, 78 (2d Cir. 1999); United States v. Iint’l Bhd. of
Teamsters, 998 F.2d 1101, 1107 (2d Cir. 1993); IBT, 803 F. Supp. at 777. It follows that a
consent decree “should be interpreted in a way that gives effect to what the parties have agreed
to, as reflected in the judgment itself,” and courts should reject “restrictive and narrow
interpretations of the Consent Decree that would thwart implementation of the parties’
agreement.” IBT, 803 F. Supp. at 778 (citations omitted). Accord Taitt v. Chemical Bank ,
810 F.2d 29, 33 (2d Cir. 1987). “[U]ltimately the question for the lower court, when it interprets
a consent decree. . . is what a reasonable person in the position of the parties would have thought
the language meant.” Richardson v. Edwards, 127 F.3d 97, 101 (D.C. Cir. 1997).

160

Accord Firefighters, 478 U.S. at 522; Firefighters v. Stotts, 467 U.S. 561, 574 (1984);
ITT Continental Banking Co., 420 U.S. 223, 236-38 (1975); EEOC v. New York Times Co.,
196 F.3d 72,78 (2d Cir. 1999); United States v. IBT, 998 F. 2d 1102, 1106 (2d Cir. 1993); United
States v. O’Rourke, 943 F.2d 180, 187 (2d Cir. 1991); S.E.C. v. Levine, 881 F.2d 1165, 1178-79
(2d Cir. 1989); Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985); IBT, 803 F. Supp. at 777.
161

Accord United States v. Int’l Bhd. of Teamsters, 998 F.2d 1101, 1106 (2d Cir. 1993);
O’Rourke, 943 F.2d at 187; SEC v. Levine, 881 F.2d at 1179; IBT, 803 F. Supp. at 778.
158

Insofar as consent decrees share attributes of a court judgment, “a District Court’s order
denying entry of a consent decree is appealable under 28 U.S.C. § 1292 (a)(1)”;162 noncompliance
with a consent decree is enforceable as a court order through a citation for contempt of court or
other sanctions;163 and, as a general rule, a consent decree binds only the parties to the consent
decree.164
Moreover, district courts allow parties a wide latitude in the terms of their agreement
under a consent decree; and as a general rule, a district court may not reject proposed consent
decrees merely because the court might have fashioned different terms or does not believe that

162

Firefighters, 478 U.S. at 517. Accord Carson v. American Brands, Inc., 450 U.S. 79,
83-90 (1981); United States v. Microsoft Corp., 56 F.3d 1448, 1455-57 (D.C. Cir. 1995).
Moreover, “[a] district court’s interpretation of a consent decree that it has approved deserves
‘substantial deference.’” Ellis v. Gallatin Steel Co., 390 F.3d 461, 473 (6th Cir. 2004) (citation
omitted).
163

See, e.g., Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 378,
380 (1994); Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 378-79 (1992); Firefighters,
478 U.S. at 518; ITT Continental Baking Co., 420 U.S. at 226 n.2, 236 n.10; United States v.
Local 359 United Seafood Workers, 55 F.3d 64, 69 (2d Cir. 1995); E.E.O.C. v. Local 580,
925 F. 2d 588, 592 (2d Cir. 1991); Berger, 771 F.2d at 1568-69; Investigations Officer v. Lanza,
1996 WL 514871 (S.D.N.Y. Sept. 10, 1996) at * 11.
164

See, e.g., Firefighters, 478 U.S. at 529; United States v. Ward Baking Co., 376 U.S.
327, 334 (1964); Ashley v. City of Jackson, Miss., 464 U.S. 900, 902 (1983) (Rehnquist, J.,
dissenting from a denial of certiorari) (stating that “[t]his rule can be traced to an opinion of
Chief Justice Marshall in Davis v. Wood, 1 Wheat 6, 8-9 (1816)”). There are “several
exemptions” to this general rule. See Sea-Land Services Inc. v. Gaudet, 414 U.S. 573, 593-94
(1974); see also Section VII (C) below, which discusses such exceptions to the general rule that
judgments bind only the parties to a lawsuit.
Moreover, “a consent decree is not enforceable directly or in collateral proceedings by
those who are not parties to it even though they were intended to be benefitted by it.” Blue Chip
Stamps v. Manor Drug Stores, 421 U.S. 723, 750 (1975).
159

the agreement is ideal.165 Indeed, because consent decrees constitute voluntary agreements
between parties to a lawsuit, “a federal court is not necessarily barred from entering a consent
decree merely because the decree provides broader relief than the court could have awarded after
a trial.” Firefighters, 478 U.S. at 525.166
However, there are limits on the parties’ voluntary agreements pursuant to a consent
decree. As the Supreme Court has explained, “a consent decree must spring from and serve to
resolve a dispute within the court’s subject-matter jurisdiction. Furthermore, consistent with this
requirement, the consent decree must ‘come within the general scope of the case made by the
pleadings’. . . and must further the objectives of the law upon which the complaint was based.”
Firefighters, 478 U.S. at 525 (citations omitted). A “District Court’s authority to adopt a consent
decree comes only from the statute which the decree is intended to enforce.” System Federation
No. 91, Railway Employees’ Department, AFL-CIO v. Wright, 364 U.S. 642, 651 (1961)
(“System Federation No. 91”). Accordingly, “the parties may [not] agree to take action that
conflicts with or violates the statute upon which the complaint was based.” Firefighters,
478 U.S. at 526.167 A district court’s approval of a consent decree that does not satisfy these
standards may be overturned as an abuse of discretion.168
165

See, e.g., United States v. Cannons Engineering Corp., 899 F.2d 79, 84 (1st Cir.
1990); Janus Films, Inc. v. Miller, 801 F.2d 578, 582-83 (2d Cir. 1986).
166

Accord Swift & Co. v. United States, 276 U.S. 311, 327-31 (1928); Komyatti v. Bayh,
46 F.3d 955, 962 (7th Cir. 1996); Kozlowski v. Coughlin, 871 F.2d 241, 244 (2d Cir. 1989);
United States v. Mason Tenders Dist. Council of Greater New York, 1997 WL 97836 (S.D.N.Y.
March 6, 1997) at * 8.
167

Accord System Federation No. 91, 364 U.S. at 650-51.

168

See, e.g., System Federation No. 91, 364 U.S. at 650-53; Biodiversity Associates v.
(continued...)
160

For example, in Firefighters v. Stotts, 467 U.S. 561, 572-76 (1984) and System
Federation No. 91, 364 U.S. at 650-52, the Supreme Court held that district courts had authority
“to reject agreed-upon terms as not in furtherance of statutory objectives” and “to modify the
terms of a consent decree when a change in law brings those terms in conflict with statutory
objectives.” 364 U.S. at 651. See also Firefighters, 478 U.S. at 526-28.169
Moreover, a district court has greater authority to review and reject a proposed consent
decree that resolves a suit “affecting the public interest,” and accordingly, in such cases should
not enter a proposed consent decree unless it “decides that it is fair, reasonable, and equitable and
does not violate the law or public policy.” Sierra Club, Inc. v. Electronic Controls Design, Inc.,
909 F.2d 1350, 1355 (9th Cir. 1990).170 Furthermore, as many of the above-referenced cases
168

(...continued)
Cables, 357 F. 3d 1152, 1169-70 (10th Cir. 2004); Komyatti v. Bayh, 96 F.3d 955, 961-62 (7th
Cir. 1996); United States v. Charles George Trucking, Inc., 34 F.3d 1081, 1084-85 (1st Cir.
1994); Sierra Club Inc. v. Electronic Controls Design, Inc., 909 F.2d 1350, 1355 (9th Cir. 1990);
Kozlowski, 891 F.2d at 244; United States v. Wheeling-Pittsburg Steel Corp., 866 F.2d 57, 59-62
(3d Cir. 1988); United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp. 192,
193 (S.D.N.Y. 1993).
Moreover, a proposed consent decree may be rejected where consent of one of the parties
is lacking or was procured through fraud. Swift & Co., 276 U.S. at 324; United States v. Ward
Baking Co., 376 U.S. 327, 334-35 (1964).
169

In Firefighters v. Stotts, 467 U.S. at 576-78, the Supreme Court held that the district
court exceeded its authority in imposing injunctive relief and modifications to a consent decree
because such relief conflicted with, and was prohibited by, the statute underlying the relief. See
also Firefighters, 478 U.S. at 527-28.
Similarly, in System Federation No. 91, 364 U.S. at 646-51, the Supreme Court held that
the district court abused its discretion in refusing to modify an injunction and related consent
decree when a change in law rendered the relief at issue contrary to the governing law. See also
Firefighters, 478 U.S. at 526-27.
170

Accord Charles George Trucking, Inc., 34 F.3d at 1084-89; Cannons Engineering
(continued...)
161

indicate, a consent decree also may authorize the district court to retain exclusive jurisdiction
over a consent decree to ensure full compliance with it.171
2.

Courts Have Authority to Modify Judgments and Consent Decrees Under
Some Circumstances

Pursuant to Rule 60(b), FED . R. CIV . P., courts are authorized to modify judgments and
consent decrees in some circumstances. In that respect, Rule 60(b), FED . R. CIV . P., provides, in
relevant part, as follows:
On motion and upon such terms as are just, the court may relieve a party or a
party’s legal representative from a final judgment, order, or proceeding for the
following reasons: . . . (4) the judgment is void; (5) the judgment has been
satisfied, released, or discharged, or a prior judgment upon which it is based has
been reversed or otherwise vacated, or it is no longer equitable that the judgment
should have prospective application; or (6) any other reason justifying relief from
the operation of the judgment.
In accordance with the principles embodied in Rule 60(b), it is well established that
courts have the authority to modify a consent decree over the objection of the parties to the
consent decree “when a change in law brings those terms in conflict with statutory objectives,” or
when such a change in law otherwise renders the terms of a consent decree unlawful. System
Federation No. 91, 364 U.S. at 651. Accord Firefighters v. Stotts, 467 U.S. at 576, n.9;
Biodiversity Assoc. v. Cables, 35 F.3d 1152, 1166-67 (10th Cir. 2004). Modifications of

170

(...continued)
Corp., 899 F.2d at 84-92; Janus Films, Inc. v. Miller, 801 F.2d 578, 582-83 (2d Cir. 1986);
Citizens for a Better Env’t v. Gorsuch, 718 F.2d 1117, 1126-27 (D.C. Cir. 1983) (collecting
cases).
171

See, e.g., Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 381-82
(1994); Firefighters, 478 U.S. at 512; Railway Employees, 364 U.S. at 646-47; Pigford v.
Veneman, 292 F.3d 918, 923-25 (D.C. Cir. 2002); Local 359, 55 F.3d at 69; E.E.O.C. v. Local
580, 925 F.2d at 593; Berger v. Heckler, 771 F.2d at 1568; United States v. IBT,
728 F. Supp. 1032, 1044-45 (S.D.N.Y. 1990), aff’d, 907 F.2d 277 (2d Cir. 1990).
162

consent decrees by district courts are reviewed under an abuse of discretion standard. See Juan
F. v. Weicker, 37 F. 3d 874, 878 (2d Cir. 1994).
In Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367 (1992), the Supreme Court
adopted greater flexibility in determining whether to modify consent decrees in institutional
reform litigation. In United States v. Swift & Co., 286 U.S. 106, 119 (1932), the Supreme Court
had ruled that “[n]othing less than a clear showing of grievous wrong evoked by new and
unforeseen conditions should lead us to change what was decreed after years of litigation with
the consent of all concerned.” In Swift, the defendants agreed to a consent decree, resolving antitrust litigation, that “enjoined them from manipulating the meat-packing industry and banned
them from engaging in the manufacture, sale, or transportation of other foodstuffs.” Rufo,
502 U.S. at 379.
However, in Rufo, 502 U.S. at 380-81, the Supreme Court ruled that the Swift “grievous
wrong” standard was too rigid, and that the lower courts should employ “a flexible approach” to
modifications of consent decrees that “is often essential to achieving the goals of reform
litigation.” Accordingly, in Rufo, 502 U.S. at 383, the Supreme Court ruled that “a party seeking
modification of a consent decree bears the burden of establishing that a significant change in
circumstances warrants revision of the decree. If the moving party meets this standard, the court
should consider whether the proposed modification is suitably tailored to the changed
circumstances.” The Supreme Court added that “[m]odification of a consent decree may be
warranted when changed factual conditions make compliance with the decree substantially more
onerous” (id. at 384), or when “one or more of the obligations placed upon the parties has

163

become impermissible under federal law.” Id. at 388.172
In the wake of Rufo, the lower courts have approved of173 and rejected174 modifications of
consent decrees in a wide variety of circumstances.
B.

Default Judgments
Rule 55(a), FED . R. CIV . P. provides as follows:
(a) Entry. When a party against whom a judgment for affirmative
relief is sought has failed to plead or otherwise defend as provided
by these rules and that fact is made to appear by affidavit or
otherwise, the clerk shall enter the party’s default.
Pursuant to Rule 55(a), a district court may enter an order of default “where the party

against whom the judgment is sought has engaged in ‘wilful violations of court rules,
contumacious conduct, or intentional delays.’” Forsythe v. Hales, 255 F.3d 487, 490 (8th Cir.

172

The Supreme Court cautioned that “[a] proposed modification should not strive to
rewrite a consent decree so that it conforms to the constitutional floor. . . [t]he focus should be on
whether the proposed modification is tailored to resolve the problems created by the change in
circumstances. A court should do no more, for a consent decree is a final judgment that may be
reopened only to the extent that equity requires.” Rufo, 502 U.S. at 391. See also Bd. of Educ. of
Oklahoma City Pub. Schs. v. Dowell, 498 U.S. 237 (1991) (holding that the Swift “ grievous
wrong” standard does not apply to injunctions entered in school desegregation cases).
173

For cases approving of modifications of consent decree, see, e.g., Evans v. Williams,
206 F.3d 1292, 1297-99 (D.C. Cir. 2000); United States v. Western Elec. Co. Inc., 46 F.3d 1198
(D.C. Cir. 1995); Patterson v. Newspaper & Mail Deliveries’Union, 13 F.3d 33, 36-39(2d Cir.
1993); Roadtechs, INC. V. MJ Highway Technology, Ltd., 83 F. Supp. 2d 677, 687-88 (E.D. Va.
2000).
174

For cases rejecting proposed modifications of consent decrees, see, e.g., Pigford v.
Veneman, 292 F.3d 918, 925-26 (D.C. Cir. 2002); N.L.R.B. v. Harris Teeter Supermarkets,
215 F.3d 32, 35-37 (D.C. Cir. 2000); Thompson v. U.S. Dept of H. U. D., 220 F.3d 241 246-50
(4th Cir. 2000); Alexander v. Britt, 89 F.3d 194 (4th Cir. 1996); Building & Const. Trades v.
NLRB, 64 F.3d 880, 888-91 (3d Cir. 1995); In Re Midlands Utility, Inc., 253 B. R. 683, 688-90
(Bankr. D.S.C. 2000).
164

2001) (citation omitted).175 However, default judgments are disfavored, and should be entered
only when clearly supported by the record.176
Rule 55(c), FED . R. CIV . P. provides that “[f]or good cause shown the court may set aside
an entry of default and, if a judgment by default has been entered, may likewise set it aside in
accordance with Rule 60(b).”177 “[T]he standard to set aside an entry of default under Rule 55(c)
is essentially the same as the standard for vacating a default under Rule 60(b)”;178 and hence

175

Accord Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir. 2003) (“Where it appears that
the defaulting party has willfully chosen not to conduct its litigation with the degree of diligence
and expediency prescribed by the trial court, this Circuit has repeatedly upheld the trial court’s
[refusal to grant relief from the default]”) (quoting C.K.S. Eng’rs, Inc. v. White Mountain
Gypsum Co., 726 F. 2d 1202, 1205 (7th Cir. 1984)); Johnson v. Dayton Elec. Mfg. Co., 140 F.
3d 781, 783 (8th Cir. 1988); New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996)
(“A default occurs when a defendant has failed to plead or otherwise respond to the complaint
within the time required by the Federal Rules”); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61,
65 (2d Cir. 1981) (“failing to appear for a deposition, dismissing counsel, giving vague and
unresponsive answers to interrogatories, and failing to appear for trial were sufficient to support a
finding [of default]”).
176

See, e.g., Comiskey v. JFTJ Corp., 989 F.2d 1007, 1009 (8th Cir. 1993); C.K.S.
Engineers, Inc., 726 F.2d at 1205; Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981); E.F.
Hutton & Co., Inc. v. Moffatt, 460 F.2d 284, 285 (5th Cir. 1972).
177

Rule 60(b), FED . R. CIV . P. provides, in relevant part, as follows:

On motion and upon such terms as are just, the court may relieve a party or a
party’s legal representative from a final judgment, order, or proceeding for the
following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2)
newly discovered evidence which by due diligence could not have been
discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether
heretofore denominated intrinsic or extrinsic), misrepresentation, or other
misconduct of an adverse party; (4) the judgment is void; (5) the judgment has
been satisfied, released, or discharged, or a prior judgment upon which it is based
has been reversed or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or (6) any other reason justifying
relief from the operation of the judgment.
178

Davis v. Hutchins, 321 F.3d at 646 n.2 (citations omitted).
165

under both Rules 55(c) and 60(b), to have an entry of default vacated, “the moving party must
show: (1) good cause for the default; (2) quick action to correct it; and (3) a meritorious defense
to the complaint.” Sun v. Bd. of Trustees of Univ. of Illinois, 473 F.3d 799, 810 (7th Cir.
2007).179 However, “[m]ost decisions . . . hold that relief from a default judgment [under Rule
60(b)] requires a stronger showing of excuse than relief from a mere default order.”180
A district court’s decision to impose a default judgment and whether to set aside a default
order or default judgment under Rules 55(c) or 60(b) are reviewable under the abuse of discretion
standard.181
C.

Scope Of Injunctions, Requisite Specifity, And Their Application To Non-Parties
1.

Scope of Injunctions and Requisite Specifity

The permissible breadth of an injunction depends upon the circumstances of the particular
case, “the purpose being to prevent violations, the threat of which in the future is indicated
because of their similarity or relation to those unlawful acts. . . found to have been committed
. . . . in the past.” NLRB v. Express Publ’g. Co., 312 U.S. 426, 436-37 (1941). Therefore, courts
in equitable actions may not only enjoin unlawful acts, but also may enjoin otherwise lawful
conduct to ensure effective relief. As the Supreme Court explained in United States v. Loew’s
179

Accord Forsythe v. Hales, 255 F.3d at 490; Robinson Eng’g Co. Pension Plan and
Trust v. George, 223 F.3d 445, 453 (7th Cir. 2000); Johnson v. Dayton Elec. Mfg. Co.,
140 F.3d at 783-84; Commercial Bank of Kuwait v. Rafidain, 15 F.3d 238, 243 (2d Cir. 1994);
Meehan v. Snow, 652 F.2d at 276-77.
180

181

Johnson v. Dayton Elec. Mfg. Co., 140 F.3d at 783 (citations omitted).

See, e.g., Sun v. Bd. of Trustees of Univ. of Illinois, 473 F.3d at 810; Davis v.
Hutchins, 321 F.3d at 646; Johnson v. Dayton Elec. Mfg. Co., 140 F.3d at 784-85; Inman v.
American Home Furniture Placement, Inc., 120 F.3d 117, 118 (8th Cir. 1997); Pretzel & Stouffer
v. Imperial Adjusters, 28 F.3d 42, 44-45 (7th Cir. 1994); Commercial Bank of Kuwait, 15 F.3d at
243; Hal Commodity Cycles Management Co. v. Kirsh, 825 F.2d 1136, 1138 (7th Cir. 1987).
166

Inc., 371 U.S. 38 (1962), abrogated on other grounds by Illinois Tool Works Inc. v. Independent
Ink, Inc., 547 U.S. 28 (2006):
Some of the practices which the Government seeks to have
enjoined . . . are acts which may be entirely proper when viewed
alone. To ensure, however, that relief is effectual, otherwise
permissible practices connected with the acts found to be illegal
must sometimes be enjoined.
Loew’s Inc., 371 U.S. at 53.182
An injunction, however broad, must satisfy the particularity requirements of Rule 65(d),
FED . R. CIV . P., which provides, in relevant part, as follows:
Every order granting an injunction and every restraining order shall
set forth the reasons for its issuance; shall be specific in terms;
shall describe in reasonable detail, and not by reference to the
complaint or other document, the act or acts sought to be
restrained.
This “Rule was designed to prevent uncertainty and confusion on the part of those faced with
injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague

182

Accord United States v. Gypsum Co., 340 U.S. 76, 88-89 (1950) (Equitable relief in
antitrust cases “is not limited to prohibition of the proven means by which the evil was
accomplished, but may range broadly through practices connected with acts actually found to be
illegal. Acts entirely proper when viewed alone may be prohibited.”); Hecht Co. v. Bowles,
321 U.S. 321, 329 (1944) (“The essence of equity jurisdiction has been the power of the
Chancellor to do equity and to mold each decree to the necessities of the particular case”); EEOC
v. Wilson Metal Casket, Co., 24 F.3d 836, 842 (6th Cir. 1994) (“The proper scope of an
injunction is to enjoin conduct which has been found to have been pursued or is related to the
proven unlawful conduct.”); United States v. Holtzman, 762 F.2d 720, 726 (9th Cir. 1985)
(“[F]ederal courts have the equitable power to enjoin otherwise lawful activity if they have
jurisdiction over the general subject matter and if the injunction is necessary and appropriate in
the public interest to correct or dissipate the evil effects of past unlawful conduct.”); Kentucky
Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 390 (5th Cir. 1977) (“In
fashioning relief against a party who has transgressed the governing legal standard, a court of
equity is free to proscribe activities that, standing alone would have been unassailable.”).
167

to be understood.” Marshall v. United States, 414 U.S. 473, 476 (1974).183
Accordingly, an injunction when “read as a whole. . . [must provide] people of ordinary
intelligence. . . a reasonable opportunity to know what is prohibited.” Schenck v. Pro-Choice
Network of Western New York, 519 U.S. 357, 383 (1997) (citations and internal quotations
omitted). Accord Reno Air Racing Ass’n, Inc. V. McCord, 452 F.3d 1126, 1133-34 (9th Cir.
2006); Coca-Cola Co. v. Purdy, 382 F.3d 774, 790-91 (8th Cir. 2004); S.C. Johnson & Son, Inc.
v. Clorox Co., 241 F.3d 232, 240-41 (2d Cir. 2001).184
Regarding the requisite specificity, “Rule 65(d) requires only that the enjoined conduct be
described in reasonable, not excessive, detail.” Reliance Ins. Co. v. Mast Const. Co., 159 F.3d
1311, 1316 (10th Cir. 1998). Rule 65(d) “does not require the impossible. There is a limit to
what words can convey. . . . The right to seek clarifications or modification of the injunction
provides assurance, if any be sought, that proposed conduct is not proscribed.” Scandia Down
Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1431-32 (7th Cir. 1985). Accord Pye v. Teamsters Local
Union No. 122, 61 F.3d 1013, 1025 (1st Cir. 1995) (“The requirement that. . . injunctions be
clear and specific, Fed. R. Civ. P. 65(d), does not mean that they must read like the working
plans for building hydrogen bombs”); Medtronic, Inc. v. Benda, 689 F.2d 645, 649 (7th Cir.
1983) (“It would be impossible for any court to identify every conceivable act that would be

183

Accord Reno Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126, 1132 (9th Cir. 2006);
S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 241 (2d Cir. 2001); CPC Intern., Inc. v.
Skippy Inc., 214 F.3d 456, 459 (4th Cir. 2000); Reliance Ins. Co. v. Mast Constr. Co., 159 F.3d
1311, 1316 (10th Cir. 1998).
184

In constructing an injunction “as a whole,” some circuits allow courts to consider
materials incorporated by reference (see, e.g., Reno Air Racing Ass’n Inc., 452 F.3d at 1130-32
(collecting cases)); while some circuits do not allow such incorporation. See, e.g., Dupuy v.
Samuels, 465 F.3d 757, 758 (7th Cir. 2006) (collecting cases).
168

covered by [an injunction]”); Sucrs De A. Mayol & Co. v. Mitchell, 280 F.2d 477, 482 (1st Cir.
1960) (“Some compromise must be effected in a decree between the need for articulation, and
the need for sufficient comprehensiveness to prevent ‘easy evasion.’”).
Moreover, to determine whether an injunction provides the requisite specific notice,
courts evaluate an injunction “‘in the light of the circumstances surrounding (the injunction’s)
entry: the relief sought by the moving party, the evidence produced at the hearing on the
injunction, and the mischief that the injunction seeks to prevent.’” Common Cause v. Nuclear
Regulatory Comm., 674 F.2d 921, 927 (D.C. Cir. 1982) quoting United States v. Christie Indus.,
Inc., 465 F.2d 1000, 1007 (3d Cir. 1972).
In accordance with the foregoing authority, courts in a wide variety of circumstances have
held that broad injunctions satisfy the particularity requirement of Rule 65(d).185 On the other
hand, courts have held that “an injunction broadly to obey” a statute or the law, which in essence
restrains “the commission of unlawful acts which are. . . dissociated from those which a

185

See, e.g., S.C. Johnson & Son, Inc., 241 F.3d at 240-41 (enjoining false and
misleading advertisements); Pye, 61 F.3d at 1018, n. 4, 1025 (enjoining “organizing and
conducting mass demonstrations. . . where an object thereof is to force or require [named
entities] or any other person to cease using, selling, handling, transporting or otherwise dealing in
the products of or to cease doing business with August A. Busch & Co.”, and also enjoining “in
any manner or by any means, threatening, coercing or restraining [any person]” to achieve the
above objectives); Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir.
1985) (enjoining the defendant from “using any name, designation or material. . . likely to cause
confusion, mistake or deception as to source relative to plaintiff’s trademark”); Pacific Maritime
Ass’n v. Int’l Longshoremen’s and Warehousemen’s Union, 517 F.2d 1158, 1162-63, & n. 2 (9th
Cir. 1975) (ordering a union and its members “[t]o cease and desist from using any coercion to
nullify the right of Container Stevedoring Co., Inc. to use Steady Men or inducing, encouraging
or causing such coercion; and [t]o take all necessary action to stop any [such] coercion”);
Mitchell, 280 F.2d at 479, 481-82 (enjoining “defendant from violating the minimum wage and
overtime provisions of the [Fair Labor Standards Act of 1938]”); F.T.C. v. Think Achievement
Corp., 144 F. Supp. 2d 1013, 1017 (N.D. Ind. 2000) (“Defendants may be enjoined from making
misrepresentations or false representations” in violation of the F.T.C. Act.).
169

defendant has committed,” does not satisfy the particularity requirement of Rule 65(d).186 The
Supreme Court, however, has limited the potential breadth of that principle, and has stated that
“[a] federal court has broad power to restrain acts which are of the same type or class as unlawful
acts which the court has found to have been committed or whose commission in the future unless
enjoined, may fairly be anticipated from the defendant’s conduct in the past.” NLRB v. Express
Pub. Co., 312 U.S. at 435.
For example, in McComb v. Jacksonville Paper Co., 336 U.S. 187, 191-92 (1949), the
district court ordered the defendants “to obey the provisions of the [Fair Labor Standards] Act
dealing with minimum wages, overtime, and the keeping of records.” The Supreme Court upheld
the injunction, stating:
Decrees of that generality are often necessary to prevent further
violations where any proclivity for unlawful conduct has been
shown. . . [Defendants’] record of continuing and persistent
violations of the Act would indicate that that kind of a decree was
wholly warranted in this case. Yet if there were extenuating
circumstances or if the decree was too burdensome in operation, . .
. [defendants] could have petitioned the District Court for a
modification, clarification or construction of the order.
Id. at 192.
Similarly, in United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp.
177, 191-92 (S.D.N.Y. 1993), following a bench trial, the district court enjoined certain
defendants found to have violated RICO: (1) “from committing any acts of racketeering activity
defined in [18 U.S.C. § 1961]”; (2) “from having any dealings, directly or indirectly, with any

186

See NLRB v. Express Publishing Co., 312 U.S. 426, 435-36 (1941). Accord
Belitskus v. Pizzingrilli, 343 F.3d 632, 650 (3d Cir. 2003); Peregrine Myanmar Ltd. v. Segal,
89 F.3d 41, 51 (2d Cir. 1996); Keyes v. School Dist. No. 1, Denver, Colo., 895 F.2d 659, 668-69
(10th Cir. 1990).
170

members or associates of organized crime for any commercial purpose concerning the affairs of
the [alleged RICO] Waterfront [Enterprise]. . . or any labor organization”; (3) “from having any
dealings, directly or indirectly, with any other defendant in this action for any commercial
purpose concerning the affairs of the Waterfront [Enterprise] or any labor organization”; (4)
“from participating in any way in the affairs of or having any dealings, directly or indirectly, with
(i) any labor organization. . . .(ii) any officer, agent, representative, employee, or member of
[several ILA locals], (iii) any other officer, agent, representative, employee, or member of the
ILA, or any other labor organization concerning the affairs of such organization or the Waterfront
[Enterprise]”; “and (iv) any person or entity that does business on the Waterfront; and (5) from
visiting the site of any ILA entity or other labor organization or communicating with any person
who is at the site of any ILA entity or other labor organization.”
On appeal, the Second Circuit rejected the argument that this injunction was overly broad.
See United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995). The Second Circuit
explained that this injunction was necessary to prevent future unlawful activity in light of the
scope of the defendants’ unlawful activity, involving the creation of a climate of fear and
intimidation within the ILA by the defendant and his LCN co-conspirators. Id. at 1185.
Courts have approved similar broad injunctive relief in other Government civil RICO
cases involving labor unions, including prohibiting any act of racketeering activity as defined in
18 U.S.C. § 1961(1), where such relief was necessary to prevent future unlawful activity in light
of the extensive unlawful activity by the defendants and their co-conspirators. See Sections
VIII(B)(1) and (C) below.187
187

See also McLendon v. Continental Can Co., 908 F.2d 1171, 1174, 1182 (3d Cir. 1990)
(continued...)
171

It is also significant to note that failure to satisfy the requirements of Rule 65 (d) does not
render an injunction unenforceable when the error is harmless. See, e.g., Dupuy, 465 F.3d at
759-60; Chathas v. Local 134 IBEW, 233 F. 3d 508, 512-13 (7th Cir. 2000).
2.

An Injunction May Apply to Non-Parties in Various Circumstances

a.

It has long been the general rule that a non-party is “not bound by a judgment . . .

in a litigation in which he is not designated as a party or to which he has not been made a party
by service of process.” Hansberry v. Lee, 311 U.S. 22, 40 (1940).188 “This rule is part of our
deep-rooted historic tradition that everyone should have his own day in court.’” Martin v. Wilks,
490 U.S. 755, 762 (1989).
There are several exceptions to this general rule. For example, a non-party may be bound
by a judgment order, including an injunction, when the non-party “has his interests adequately
represented by someone with the same interests who is a party.” Martin, 490 U.S. at 762 n.2.189
187

(...continued)
(holding that a nationwide injunction barring the defendant from using a particular program of
operation to violate Section 510 of the ERISA statute was “not an ‘obey the law’ injunction”);
United States v. Miller, 588 F.2d 1256, 1261 (9th Cir. 1978) (holding that “the mere fact that
[an] injunction is framed in language almost identical to the statutory mandate does not make the
language vague. . . [where] the statutory terms adequately describe the impermissible conduct”);
SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1103 (2d Cir. 1972) (upholding an
injunction “enjoining further violations of the antifraud provisions of the federal securities laws
. . . in language virtually identical to that of Rule 10b-5”); Interstate Commerce Comm’n v.
Keeshin Motor Exp. Co., 134 F.2d 228, 231 (7th Cir. 1943) (holding that while “courts may not
issue a blanket order enjoining any violation of a statute upon a showing that the Act has been
violated in some particular respects, nevertheless, they do possess authority to restrain violations
similar to those already committed”).
188

Accord Martin v. Wilks, 490 U.S. 755, 761-62 (1989); Zenith Radio Corp. v.
Hazeltine Research, Inc., 395 U.S. 100, 110 (1969); Pennoyer v. Neff, 95 U.S. 714 (1877).
189

Accord Hansberry v. Lee, 311 U.S. at 41 (“[T]he judgment in a ‘class’ or
‘representative’ suit, to which some members of the class are parties, may bind members of the
(continued...)
172

“Additionally, where a special remedial scheme exists foreclosing successive litigation by
nonlitigants, as for example in bankruptcy or probate, legal proceedings may terminate
preexisting rights if the scheme is otherwise consistent with due process.” Martin, 490 U.S. at
762, n. 2.190
Rule 65(d), FED . R. CIV . P. also sets forth several exceptions to the general rule that nonparties are not bound by a judgment, and provides, in relevant part, that:
Every order granting an injunction and every restraining order . . .
is binding only upon the parties to the action, their officers, agents
servants, employees, and attorneys, and upon those persons in
active concert or participation with them who receive actual notice
of the order by personal service or otherwise.
The Supreme Court stated that this rule:
is derived from the common-law doctrine that a decree of
injunction not only binds the parties defendant but also those
identified with them in interest, in “privity” with them, represented
by them or subject to their control. In essence it is that defendants
may not nullify a decree by carrying out prohibited acts through
aiders and abettors, although they were not parties to the original
proceeding.
Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14 (1945).

189

(...continued)
class or those represented who were not parties to it”); Montana v. United States, 440 U.S. 147,
154-55 (1979) (collateral estoppel barred a non-party, the United States, from relitigating an
issue resolved in prior litigation over which the non-party exercised control). See also Section
VIII(B)(8) below, which discusses various exceptions to the general rule that non-parties are not
bound by judgment in Government civil RICO lawsuits involving labor unions.
190

See, e.g., NLRB v. Bildisco & Bildisco, 465 U.S. 513, 529 (1984) (“Under the
Bankruptcy Code a proof of claim must be presented to the Bankruptcy Court for administration,
or be lost when a plan of reorganization is confirmed”); Tulsa Professional Collection Services,
Inc. v. Pope, 485 U.S. 478, 479-80 (1988) (a probate statute that “requires creditors to file claims
against an estate within a specified time period. . . .generally bars untimely claims”).
173

Rule 65(d) establishes two distinct, abeit related, bases of liability for a non-party. Under
the first basis, a non-party, who is in “privity” with an enjoined party and hence bears a close
relationship with the enjoined party, may be subject to the provisions of an injunction and liable
for its violation on the rationale that the enjoined party has adequately represented the interests of
the non-party. Whereas under the second basis, the focus is on the non-party’s conduct after an
injunction has been imposed - - that is, a non-party, regardless of whether the non-party is
otherwise “in privity” with the party, may be held in contempt when the non-party aids and abets
an enjoined party’s violation of an injunction. In such circumstances, the non-party is not
otherwise compelled to comply with the injunction; rather, such non-party is merely liable for
aiding and abetting an enjoined party’s violation of an injunction.191
As one court explained, “a non-party may be enjoined under [the “in privity” rationale of]
Rule 65(d) only when its interests closely ‘identify with’ those of the defendant, when the nonparty and defendant stand in ‘privity,’ or when the defendant ‘represents’ or ‘controls’ the nonparty.” Thompson v. Freeman, 648 F.2d 1144, 1147 (8th Cir. 1981). For example, under the
first “in privity” rationale, “[p]ersons acquiring an interest in property [such as successors and
assigns] that is a subject of litigation are bound by, or entitled to the benefit of, a subsequent
judgment”, and are deemed “in privity” with their predecessor for purposes of

191

See, e.g., Regal Knitwear Co., 324 U.S. at 13-14; Chase National Bank v. Norwalk,
291 U.S. 431, 436-37 (1934); Goya Foods, Inc. v. Wallack Management Co., 290 F.3d 63, 75-76
(1st Cir. 2002); Microsystems Software, Inc. v. Scandinavia Online AB, 226 F.3d 35, 42-43 (1st
Cir. 2000); Chicago Truck Drivers v. Brotherhood Labor Leasing, 207 F.3d 500, 507 (8th Cir.
2000); United States v. Kirschenbaum, 156 F.3d 784, 794-96 (7th Cir. 1998); Additive Controls
& Measurement Sys. v. Flowdata, Inc., 96 F.3d 1390, 1395 (Fed. Cir. 1996); Rockwell Graphics
Systems, Inc. v. DEV Industries, Inc., 91 F.3d 914, 919 (7th Cir. 1996) (collecting cases);
Alemite Mfg. Corp. v. Staff, 42 F.2d 832, 833 (2d Cir. 1930); Paramount Pictures Corp. v. Carol
Publ’g Group, Inc., 25 F. Supp. 2d 372, 374 (S.D.N.Y. 1998).
174

Rule 65(d). Golden State Bottling Co. v. NLRB, 414 U.S. 168, 179-80 (1973). Accord Regal
Knitwear Co., 324 U.S. at 13-14; Walling James v. Reuter, Inc., 321 U.S. 671, 674-75 (1944).
Similarly, Rule 65(d)’s application of an injunction to a party’s “officers, agents, servants,
employees, and attorneys,” even though they may be non-parties to a litigation, is grounded in the
recognition that such employees and agents are identified with their principal and that because
corporations and other business entities can act only through such natural persons, such business
entities may easily avoid compliance with an injunction’s mandates through the actions of their
agents unless the injunction also applied to their agents.192
Turning to the aiding and abetting basis of liability under Rule 65(d), a non-party who is
not otherwise subject to an injunction may be held in contempt only for post-injunction activity
of aiding and abetting an enjoined party’s violation of an injunction.193 Moreover, although such
a non-party must have actual knowledge of the injunction, personal service of it is not required.194
It also bears emphasis that under the second basis of liability imposed by Rule 65(d), a district
192

See, e.g., Walling, 321 U.S. at 674-75; FTC v. Standard Education Society, 302 U.S.
112, 119 (1937); Ex Parte Lennon, 166 U.S. 548, 553-55 (1897); Doctor’s Associates, Inc. v.
Reinert & Duree, P.C.,191 F.3d 297, 302-03 (2d Cir. 1999); Petersen v. Fee International, Ltd.,
435 F. Supp. 938, 941-42 (W.D. Okla. 1975). Cf. Wilson v. United States, 221 U.S. 361, 376-77
(1911).
However, such a corporate employee, agent, or officer “is bound by an injunction against
his corporation only in his capacity as an officer.” Saga International, Inc. v. John D. Brush &
Co., Inc., 984 F. Supp. 1283, 1287 (C.D. Cal. 1997).
193

See, e.g., Additive Controls & Measurement Sys., 96 F.3d at 1395; Spindelfabrik
Suessen-Schurr v. Schubert & Salzer, 903 F.2d 1568, 1580-81 (Fed. Cir. 1990); G&C Merriam
Co., 639 F.2d at 35; Paramount Pictures Corp., 25 F. Supp. 2d at 374-75. See also cases cited
supra n.191.
194

See, e.g., Goya Foods, Inc., 290 F. 3d at 75; Chicago Truck Drivers, 207 F.3d at 507;
Vuitton et Fils S.A. v. Carousel Handbags, 592 F.2d 126, 129 (2d Cir 1979) (collecting cases);
Reich v. United States, 239 F.2d 134, 137-38 (1st Cir. 1956).
175

court may not enforce an injunction against all persons having notice of an injunction, or against
persons acting independently from an enjoined party, but rather must confine its enforcement to
those persons who aid and abet an enjoined party’s violation of the injunction.195
b.

Apart from the authority to enjoin non-parties under Rule 65(d), FED .R.CIV .P., the

All Writs Act196 vests federal courts with the authority to enjoin “non-parties who interfere with
the implementation of court orders establishing public rights.” Washington v. Fishing Vessel
Ass’n, 443 U.S. 658, 692 n.32 (1979).197 The Supreme Court has also emphasized that “[t]he
power conferred by the [All Writs] Act extends, under appropriate circumstances, to persons
who, though not parties to the original action or engaged in wrongdoing, are in a position to
frustrate the implementation of a court order or the proper administration of justice... and
encompasses even those who have not taken any affirmative action to hinder justice.” United
States v. New York Telephone Co., 434 U.S. 159, 174 (1977) (citations omitted).
Accordingly, the All Writs Act vests district courts with the authority to issue orders to
non-parties “when needed to preserve the court’s ability to reach or enforce its decision in a case
over which it has proper jurisdiction.” In re Baldwin-United Corp., 770 F.2d 328, 338 (2d Cir.

195

See, e.g., Regal Knitwear Co., 324 U.S. at 13; Chase National Bank v. Norwalk Ohio,
291 U.S. at 436-37; Doctor’s Associates, Inc. v. Reinert & Duree, P.C., 191 F.3d 297, 303 (2d
Cir. 1999); Max’s Seafood Café ex rel. Lou-Ann v. Quinteros, 176 F.3d 669, 674-75 (3d Cir.
1999); Heyman v, Klein, 444 F.2d 65 (2d Cir. 1971); Alemite, 42 F.2d at 832 (“a court of equity.
. . cannot lawfully enjoin the world at large, no matter how broadly it words its decree”).
196
In that respect, the All Writs Act, 28 U.S.C. § 1651(a), provides that federal courts
“may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable
to the usages and principles of law.”
197
Accord United States v. Paccione, 964 F.2d 1269, 1274-75 (2d Cir. 1992) (“A court
may bind non-parties to the terms of an injunction or restraining order to preserve its ability to
render a judgment in a case over which it has jurisdiction.”); Vuitton et Fils S.A., 592 F.2d at 129
n. 6 (same); United States v. Hall, 472 F.2d 262, 265 (5th Cir. 1972) (same); NAACP, Jefferson
County Branch v. Brock, 619 F. Supp. 846, 852 (D.D.C. 1985) (same).
176

1985). Accord United States v. City of Detroit, 329 F.3d 515, 522-24 (6th Cir. 2003); United
States v. IBT, 911 F.Supp. 743, 750 (S.D.N.Y. 1996). For example, “[a] court can obtain
equitable relief from a non-party against whom no wrong doing is alleged if it is established that
the non-party possesses illegally obtained profits but has no legitimate claim to them. Courts
have jurisdiction to decide the legitimacy of ownership claims made by non-parties alleged to be
[illegal] proceeds.” S.E.C. v. Cherif, 933 F.2d 403, 414 n.11 (7th Cir. 1991).198 See Section
VIII (B)(8) below, which discusses relief against non-parties in Government Civil RICO cases
involving labor unions.
D.

Removal Orders and Prohibition of Future Activities May Implicate Property
Rights Protected By Due Process
1.

As noted above in Section II (C)(4), civil RICO, 18 U.S.C. § 1964(a), empowers

district courts to remove a person from a position of employment with an entity and to prohibit
such person from holding that position in the future. This remedy should be carefully considered
because it may implicate an individual’s constitutional protection to due precess. The Fifth
Amendment to the United States Constitution provides, in relevant part, that “[n]o person shall
be... deprived of life, liberty, or property, without due process of law.” However, such property
interests subject to due process protections “are not created by the Constitution. Rather, they are
created and their dimensions are defined by existing rules or understandings that stem from an
independent source such as state law - rules or understandings that secure certain benefits and
that support claims of entitlement to those benefits .” Bd. of Regents of State Colleges v. Roth,

198

Accord S.E.C. v. Antar, 831 F. Supp. 380, 399 (D.N.J. 1993) (collecting cases);
S.E.C. v. Shiv, 379 F. Supp.2d 609, 619 (S.D.N.Y. 2005); F.T.C. v. Think Achievement Corp.,
144 F. Supp.2d 1013, 1020 (N.D. Ind. 2000) (collecting cases); S.E.C. v. The Infinity Group Co.,
27 F. Supp. 2d 559, 563 (E.D. Pa. 1998).
177

408 U.S. 564, 577 (1972). Accord Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001 (1984).
Federal law, regulations, contractual agreements and licenses may also give rise to property
interests protected by due process.199 Moreover, while the underlying property right may be
created by state law or regulation, “federal constitutional law determines whether that interest
rises to the level of a legitimate claim of entitlement protected by the Due Process Clause.”
Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1, 9 (1978) (citations omitted).
In accordance with these principles, it has long been recognized that a person has a
property right in continued employment when a person has “more than an abstract need or desire
for it,” but rather can demonstrate that he has “a legitimate claim of entitlement to it.” Roth,
408 U.S. at 577.200 For example, in Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538-39
(1985), the Supreme Court ruled that a public civil service employee had a property right in his
job when a state statute provided that such civil service employees were “entitled to retain their
positions ‘during good behavior and efficient service,’ [and] could not be dismissed ‘except...
for... misfeasance, malfeasance, or nonfeasance in office.’” (citations omitted).

199

See, e.g., Perry v. Sindermann, 408 U.S. 593, 600-01 (1972); Lynch v. United States,
292 U.S. 571, 579 (1934); United States v. Gotti, 459 F.3d 296, 327-28 (2d Cir. 2006); United
States v. Granberry, 908 F.2d 278, 279-80 (8th Cir. 1990); United States v. Rastelli, 870 F.2d
822, 831 (2d Cir. 1989); United States v. Local 560 of Int’l Bhd. of Teamsters, 780 F.2d 267,
280-82 (3d Cir. 1985).
200

Accord Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538-39 (1985); Bishop
v. Wood, 426 U.S. 341, 344-45 (1976); Perry v. Sindermann, 408 U.S. 593 599-602 (1972);
Greene v. McElroy, 360 U.S. 474, 492 (1959) (“[T]he right to hold specific private employment
and to follow a chosen profession free from unreasonable government interference comes within
the ‘liberty’ and ‘property’ concepts of the Fifth Amendment.”); DiMartini v. Ferrin, 906 F.2d
465, 466 (9th Cir. 1950) (A person “has a clearly established constitutional right to be free from
unreasonable government interference with his private employment.”).
178

Moreover, in Perry v. Sindermann, 408 U.S. 593, 599-602 (1972), the Supreme Court
held that notwithstanding the absence of a formal contractual tenure provision, a college
professor “might be able to show from the circumstances of [his service for a number of years] and from other relevant facts - that he has a legitimate claim of entitlement to job tenure.” 408
U.S. at 602. In particular, the Supreme Court stated that the college teacher at issue could
establish such an entitlement from: (1) his college’s “official Faculty Guide” that stated that “the
College wishes the faculty member to feel that he has permanent tenure as long as his teaching
services are satisfactory and as long as he displays a cooperative attitude toward his co-workers
and his superiors, and as long as he is happy in his work,” and (2) upon guidelines that a person
“who had been employed as a teacher in the state college and university system for seven years or
more has some form of job tenure.” 408 U.S. at 600. The Court remanded the case to allow the
petitioner to make such a showing.201
2.a.

Applying the forgoing authority, an officer or employee of a private corporation or

other legitimate private entity may have a property interest in continued employment protected by
due process from governmental interference when he demonstrates that he has a legitimate claim
of entitlement to it, such as when he has an employment contract guaranteeing continued
employment for a term of years, unless removed for just cause, misconduct or malfeasance.
201

See also Bishop v. Wood, 426 U.S. 341, 344-45 (1976)(stating that “[a] property
interest in employment can, of course, be created by ordinance, or by an implied contract,” but
that a property right in employment is not established by a “position [held] at the will and
pleasure” of the employer); Bd. of Regents v. Roth, 408 U.S. at 567-68 (holding that a teacher,
with no-tenure rights, hired for one year who is not rehired at the end of the one-year period does
not have a property right in continued employment); Federal Deposit Ins. Corp. v. Henderson,
940 F.2d 465, 475 (9th Cir. 1991) (“[I]n most states, the general rule is that a public employee
terminable at will does not have a property interest in continued employment, while an employee
whose contract provides, either expressly or by implication, that he may only be terminated for
cause does have such an interest.”) (citations omitted).
179

For example, in Federal Deposit Ins. Corp. v. Henderson, 940 F.2d 465, 467-70 (9th Cir.
1991), a former bank president sued the Supervisor of Banking for the State of Washington under
42 U.S.C. § 1983, alleging, among other matters, that actions of the Supervisor of Banking
pressuring his employer, a private bank, to fire him deprived him of his property interest to
continued employment. The Ninth Circuit held that the bank president’s employment contract,
requiring that he be given ninety days notice if he was to be terminated, created a property
interest in his continued employment with the bank for ninety days. 940 F.2d at 476. The Ninth
Circuit also held that:
The fact that the private employer and not the governmental
officials actually fired the plaintiff did not shield the officials from
liability, because they “set in motion a series of acts by others
which they knew or reasonably should have known would cause
others to inflict the constitutional injury.”
940 F.2d at 476 (citations omitted).
Similarly, in Merrit v. Mackey, 827 F.2d 1368, 1370 (9th Cir. 1987), the plaintiff sued
federal and state officials under 42 U.S.C. § 1983, alleging that they caused his termination from
employment with a private corporation providing alcohol and drug counseling services without a
hearing, thereby depriving him of liberty and property interests without due process, in violation
of the Fifth and Fourteenth Amendments. The Ninth Circuit held that the plaintiff had a property
interest in continued employment because his employer’s “personnel policies stated that
permanent employees could be fired only for cause.” Id. at 1371. The Ninth Circuit also held
that even though the plaintiff was fired by a private employer, state activity was responsible for
the plaintiff’s discharge because government officials threatened to cut off state and federal
funding for the employer unless it fired the plaintiff. Id. at 1370-72. Accordingly, the Ninth
180

Circuit concluded that the plaintiff was entitled to “some predeprivation process.” Id. at 1372.
See also Stein v. Bd. of City of New York, 792 F.2d 13, 15-17(2d Cir. 1986) (holding that a bus
driver’s contract, providing that he could not be discharged except for “good cause,” created a
property interest in continued employment, entitling him to adequate notice and a hearing before
being discharged); McLaurin v. Fischer, 768 F.2d 98, 102-03 (6th Cir. 1985) (ruling that a
reasonable jury could find that the plaintiff had a property interest in his continued employment
as the head of the Division of Neurosurgery of a university hospital where there was a mutual
understanding between the plaintiff and his employer that his employment was permanent unless
he became physically unable to perform his job or he resigned).
b.

A labor union official or union employee, likewise, may have a property interest

in his continued employment or union position when the terms of his employment contract or his
union’s constitution or bylaws guarantee his continued employment or his position for a fixed
term, or unless removed for cause.202 Operation of federal law may also give rise to a union
official’s property right in his union office.203
202

The constitution and bylaws of a union constitute a contract between a union member
and his union. See, e.g., Shea v. McCarthy, 953 F.2d 29, 31-32 (2d Cir. 1992); Doty v. Sewall,
908 F.2d 1053, 1060 (1st Cir.1990) (citing cases).
203

In that respect, 29 U.S.C. § 481(a) provides:
Every national or international labor organization, except a
federation of national or international labor organizations, shall
elect its officers not less often than once every five years either by
secret ballot among the members in good standing or at a
convention of delegates chosen by secret ballot.

In turn, 29 U.S.C. §§ 481(h) and (i) provide:

(continued...)
181

For example, in Brennan v. Silvergate District Lodge No. 50, Int’l Ass’n of Machinists,
503 F.2d 800, 807 (9th Cir. 1974), the court held that an order denying an incumbent union local
officer’s motion to intervene as a party-defendant in an action by the Secretary of Labor to have
the officer’s election set aside, did not deprive “him of property, the right to hold his office,
without due process, because” the officer had another remedy under 29 U.S.C. § 464(a) to assert
his claims.
Moreover, in United States v. Local 560, Int’l Bhd. of Teamsters, 780 F.2d 267, 275, 28182 (3d Cir. 1986), the Third Circuit held that provisions of the Labor Management Reporting and
Disclosure Act (LMRDA), 29 U.S.C. § 411, which guarantee the rights of union members to,
inter alia, “nominate candidates, to vote in elections or referendums of the labor organization,”
gave rise to union members’ property rights to participate in internal union democracy. In so
ruling, the Third Circuit quoted with approval a statement by another court that:
203

(...continued)
(h) Removal of officers guilty of serious misconduct
If the Secretary [of Labor], upon application of any member of a
local labor organization, finds after hearing in accordance with
subchapter II of chapter 5 of Title 5 that the constitution and
bylaws of such labor organization do not provide an adequate
procedure for the removal of an elected officer guilty of serious
misconduct, such officer may be removed, for cause shown and
after notice and hearing, by the members in good standing voting
in a secret ballot, conducted by the officers of such labor
organization in accordance with its constitution and bylaws insofar
as they are not inconsistent with the provisions of this subchapter.
(i) Rules and regulations for determining adequacy of removal procedures
The Secretary [of Labor] shall promulgate rules and regulations
prescribing minimum standards and procedures for determining the
adequacy of the removal procedures to which reference is made in
subsection (h) of this section.
182

If a member has a “property right” in his position on the roster. . . .
he has an equally enforceable property right in the election of men
who will represent him in dealing with his economic security and
collective bargaining where that right exists by virtue of express
contract in the language of a union constitution.
Id. at 281. See also United States v. Gotti, 459 F.3d 296, 321, 327 (2d Cir. 2006) (stating that
“the right of the members of a union to democratic participation in a union election is property,”
and upholding a jury instruction that union members have a property right in “union positions.”204
3.

A person who has such a property interest in continued employment may,

nonetheless, be removed from his employment, provided he is afforded “due process.” The
Supreme Court has described the process that is due in such circumstances as follows:
An essential principle of due process is that a deprivation of life,
liberty, or property “be preceded by notice and opportunity for
hearing appropriate to the nature of the case.”. . .. We have
described “the root requirement” of the Due Process Clause as
being “that an individual be given an opportunity for a hearing
before he is deprived of any significant property interest.” . .. . This
principle recognizes “some kind of hearing” prior to the discharge
of an employee who has a constitutionally protected property
interest in his employment.”
Loudermill, 470 U.S. at 542 (citations omitted). Accord Bd. of Regents v. Roth, 408 U.S. at 57071.
The Supreme Court has not specified “any minimally acceptable procedures for
termination of employment” that govern all such cases. See Davis v. Scherer, 468 U.S. 183, 193
n .10 (1984). Rather, the determination of what process is due “would require a careful
balancing of the competing interests - of the employee and the [government] - implicated in the
official decision at issue.” Id. at 192 n.10. Accord Bell v. Burson, 402 U.S. 535, 541-42 (1971)
204

For a discussion of union members’ property rights to participation in union
democracy, see Section VIII(F) below.
183

(“The hearing required by the Due Process Clause must be ‘meaningful’ . . . and ‘appropriate to
the nature of the case’”) (citations omitted); Boddie v. Connecticut, 401 U.S. 371, 377-80 (1971)
(same); Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 313-15 (1950) (same).
For example, in Arnett v. Kennedy, 416 U.S. 134, 150 (1974), a federal statute created a
property right to continued employment by providing that an employee had the right not to be
discharged “except for such cause as will promote the efficiency of said service.” The Supreme
Court rejected a claim by a covered employee that his discharge for misconduct violated due
process because he was not afforded “a right to a trial-type hearing before an impartial officer
before he could be removed from his employment.” Id. at 137. The Supreme Court held that due
process was satisfied because prior to his discharge, the employee was given notice of the
charges and the opportunity to respond orally and in writing. Id. at 140-58.
Similarly, in Davis v. Scherer, 468 U.S. at 192, the Supreme Court held that procedural
due process was satisfied where a state highway patrol officer was discharged without a formal
pretermination hearing, but was informed several times of the basis for his discharge and had
several opportunities to present his reasons for his retention. See also Barry v. Barchi, 443 U.S.
55, 65 (1979) (holding that due process was satisfied where a horse trainer, whose license was
suspended without “a formal hearing,” was notified of the basis for suspension “and he was
given more than one opportunity to present his side of the story to the state’s investigators.”).
4.

Under the forgoing authority, OCRS maintains that under civil RICO, 18 U.S.C.

§ 1964(a), a person who has a property right to continued employment in a position or office may
be removed, and barred from holding such a position or office, in compliance with due process
when:
184

(1)

Such person is a named defendant in a civil RICO action pursuant to
18 U.S.C. § 1964(a), and is found to have violated RICO after due notice and a
trial, summary judgment, or other appropriate adjudicatory proceeding, or by
default; or

(2)

Such person, whether or not named as a defendant in a civil RICO action, is
subject to an injunction issued pursuant to 18 U.S.C. § 1964(a), and is found after
due notice and an appropriate adjudicatory proceeding, or by default, to have
violated, or aided and abetted one or more named defendant’s violation of a
provision of a district court’s injunction or judgment order that warrants removal;
or

(3)

Such person, even though not named as a defendant in a civil RICO action nor
otherwise subject to an injunction issued pursuant to 18 U.S.C. § 1964(a), is
found after due notice and an appropriate adjudicatory proceeding, or by default,
to have aided and abetted an enjoined person’s violation of a district court’s
injunction or judgment order that warrants removal.

See Sections II(C)(4) and VII(D) above and VIII(B)(6) below.
Manifestly, imposition of such a sanction following a full scale trial, as in (1) above,
affords more rights than is minimally required by due process to discharge a person from
employment or a union office. In the same vein, the adjudicatory procedures typically employed
during the enforcement phase of Government civil RICO cases (which often involve notice of the
charges, an evidentiary hearing in a trial-like adversary proceeding, a right to counsel, and a right
of review by the district court) before removing and barring a person from holding a particular
position or office for a violation of an injunction or judgment order issued pursuant to 18 U.S.C.
§ 1964(a), afford greater rights than the minimum requirements of due process.205

205

For a discussion of such removal orders, adjudicatory procedures, and due process in
Government civil RICO cases involving labor unions, see Sections VIII(B)(4) and (6) below.
185

E.

Court-Appointed Officers in General
1.

Courts Have Inherent Authority to Appoint Officers to Assist Them in
Executing Their Duties

As discussed in Section II(A)(2) above, courts are vested with broad equitable powers to
impose highly intrusive remedies to redress unlawful conduct, especially in institutional reform
cases. As a corollary principle,
Courts have . . . inherent power to provide themselves with
appropriate instruments required for the performance of their
duties. . . . This power includes authority to appoint persons
unconnected with the court to aid judges in the performance of
specific judicial duties. . . . From the commencement of our
Government, it has been exercised by the federal courts, when
sitting in equity, by appointing, either with or without the consent
of the parties, special masters, auditors, examiners and
commissioners. To take and report testimony; to audit and state
accounts; to make computations; to determine, where the facts are
complicated and the evidence voluminous, what questions are
actually in issue; to hear conflicting evidence, and make findings
thereon; these are among the purposes for which such aids to the
judges have been appointed.
Ex Parte Peterson, 253 U.S. 300, 312-13 (1920) (citations omitted) (emphasis added).
One commentator has noted:
These court appointed agents are identified by a confusing plethora
of titles: “receiver,” “Master,” “Special Master,” “Master Hearing
Officer,” “Monitor,” . . . . “Administrator” . . . . Terminological
confusion is compounded by functional confusion. A “Master”
may at the same time gather information, make recommendations,
and act to implement a decree. While the first two activities are
part of the Master’s traditional role, the latter is not.
Special Project: The Remedies Process in Institutional Reform Litigation, 78 COLUM . L. REV .
784, 826-27 (1978) (footnotes omitted) (“Special Project”).

186

An examination of Rules 53 and 66, FED . R. CIV . P., illustrates this potentially confusing
mix of labels and functions. Rule 53 provides, in relevant part, as follows:
(a)

Appointment.
(1)

(d)

(g)

Unless a statute provides otherwise, a court may appoint a master only to:
(A)
perform duties consented to by the parties;
(B)
hold trial proceedings and make or recommend findings of fact on
issues to be decided by the court without a jury if appointment is
warranted by
(i)
some exceptional condition,206 or
(ii)
the need to perform an accounting or resolve a difficult
computation of damages; or
(C)
address pretrial and post-trial matters that cannot be addressed
effectively and timely by an available district judge or magistrate
judge of the district.
. . . .
Evidentiary Hearings. Unless the appointing order expressly directs otherwise, a
master conducting an evidentiary hearing may exercise the power of the
appointing court to compel, take, and record evidence.
. . . .
Action on Master’s Order, Report, or Recommendations.
(1)

206

Action. In acting on a master’s order, report, or recommendations, the
court must afford an opportunity to be heard and may receive evidence,
and may: adopt or affirm; modify; wholly or partly reject or reverse; or
resubmit to the master with instructions.

In LaBuy v. Howes Leather Co., 352 U.S. 249 (1957), the Supreme Court held that
“an extremely congested calendar” (id. at 253) did not satisfy the “exceptional condition”
requirement of Rule 53(a), and accordingly ruled that the trial court abused its discretion in
appointing a special master to “hear” the case and to conduct hearings and prepare findings of
fact and conclusions of law in a civil anti-trust case that was expected to take six weeks to try.
“[S]everal cases decided subsequent to LaBuy indicate that the trial court’s authority to appoint
special masters is not [unduly] limited” by LaBuy. See United States v. Conservation Chemical
Co., 106 F.R.D. 210, 218-222 (W.D. Mo. 1985) (collecting cases). Indeed, the “United States
Supreme Court, exercising its original jurisdiction to resolve governmental boundary disputes
pursuant to Art. III § 2 of the Constitution, regularly appoints Special Masters to hold and
conduct hearings and to submit comprehensive recommendations resolving contested issues.” Id.
at 218, citing United States v. Louisiana, 470 U.S. 93, 97-101, 115 (1985); United States v.
Maine, 469 U.S. 504, 506, 526 (1985); Oklahoma v. Arkansas, 469 U.S. 1101 (1985); Texas v.
New Mexico, 465 U.S. 1063 (1984). See also cases cited below in Sections VII(E)(2) and (3)
and VIII(B)(3) and (4).
187

(2)

(3)

(4)
(5)

Time To Object or Move. A party may file objections to - - or a motion to
adopt or modify - - the master’s order, report, or recommendations no later
than 20 days from the time the master’s order, report, or recommendations
are served, unless the court sets a different time.
Fact Findings. The court must decide de novo all objections to findings of
fact made or recommended by a master unless the parties stipulate with the
court’s consent that:
(A)
the master’s findings will be reviewed for clear error, or
(B)
the findings of a master appointed under Rule 53(a)(1)(A) or (C)
will be final.
Legal Conclusions. The court must decide de novo all objections to
conclusions of law made or recommended by a master.
Procedural Matters. Unless the order of appointment establishes a
different standard of review, the court may set aside a master’s ruling on a
procedural matter only for an abuse of discretion.

Rule 66, FED . R. CIV . P. provides:
An action wherein a receiver has been appointed shall not be
dismissed except by order of the court. The practice in the
administration of estates by receivers or by other similar officers
appointed by the court shall be in accordance with the practice
heretofore followed in the courts of the United States or as
provided in rules promulgated by the district courts. In all other
respects the action in which the appointment of a receiver is sought
or which is brought by or against a receiver is governed by these
rules.
Rules 53 and 66 address only some of the functions often assigned to court-appointed
officers. Significantly, Rules 53 and 66 do not squarely address the various roles of courtappointed officers to assist the court in devising and implementing remedies207 or in
administering the operations of public or private wrongdoers to carry out court-ordered relief and
to prevent future unlawful conduct. See Special Project, 78 COLUM . L. REV . at 826, n.322 (“The
terms ‘master’ and ‘receiver’ are used in the federal rules. Fed. R. Civ. P. 53, 66. However, the
207

In that regard, Rule 53 specifically addresses only a master’s functions involving
making or recommending findings of fact, “accounting” or “difficult computation of damages,”
and does not address a court-officer’s broader services in devising appropriate remedies,
especially in institutional reform cases. See Sections II(A)(2) above, and VIII(B)(3) below.
188

use of ‘masters’ as court-appointed agents to administer the remedy bears little relation to the
traditional use of masters envisaged in the federal rules”).
More fundamentally, Rules 53 and 66 are not the exclusive bases of authority for
appointing officers. Rather, as noted above, “courts have. . . inherent authority. . . to appoint
persons. . . to aid judges in the performance of specific judicial duties.” Ex Parte Peterson,
253 U.S. at 312. As Judge Irving Kaufman observed:
Over and above the authority contained in Rule 53 to direct a
reference, there has always existed in the federal courts an inherent
authority to appoint masters as a natural concomitant of their
judicial powers. . . .[R]ule 53 was intended merely as a codification
of pre-existing procedures, and it may be assumed that references
sanctioned by long usage and practice in the federal courts were
not intended to be forever foreclosed by the rule.
Irving R. Kaufman, Masters in the Federal Courts: Rule 53, 58 COLUM . L. REV . 452, 462
(1958).208
208

See, e.g., Trull v. Dayco Products, LLC, 178 Fed. Appx. 247, at * 3 (4th Cir. 2006)
(unpublished) (“Defendants’ reliance on Rule 53 of the Federal Rules of Civil Procedure is
misguided, as the district court appointed the special master based on its inherent authority to
fashion appropriate post-verdict relief.”); Jenkins by Agyei v. State of Mo., 890 F.2d 65, 67 (8th
Cir. 1989) (“The district court did not rely upon Rule 53 when it created the Monitoring
Committee, and we need not decide whether its actions are consistent with that Rule” because
“‘Rule 53 does not terminate or modify the district court’s inherent equitable power to appoint a
person, whatever be his title, to assist it in administering a remedy.’”)(citation omitted); Reilly v.
United States, 863 F.2d 149, 154 n.4 (1st Cir. 1988) (noting that because district court’s authority
to appoint a technical advisor “inheres generally in a district court,” court of appeals need not
decide whether Rule 53 served as additional source of such authority); Nat’l Org. for the Reform
of Marijuana Laws v. Mullen, 828 F.2d 536, 544 (9th Cir. 1987) (ruling that in addition to Rule
53, district court had inherent authority under the All Writs Act to appoint a special master to
monitor compliance with an injunction); Ruiz v. Estelle, 679 F.2d 1115, 1161 (5th Cir. 1982),
vacated in part on other grounds, 688 F.2d 266 (5th Cir. 1982) (“[R]ule 53 does not terminate or
modify the district court’s inherent equitable power to appoint a person, whatever be his title, to
assist it in administering a remedy”); Reed v. Cleveland Bd. of Ed., 607 F.2d 737, 743 (6th Cir.
1979) (“[A] judge in equity has inherent power to appoint persons from outside the court system
for assistance,” especially “in the remedial phase of a school desegregation or institutional reform
(continued...)
189

2.

Court-Appointed Officers Perform Varied Functions

In light of above-referenced concerns regarding confusing titles, OCRS’ analysis below
focuses on three distinct, albeit related, categories of functions typically performed by courtappointed officers to assist courts in executing their equitable powers, rather than focusing on the
titles of such officers: (1) devising remedies; (2) administering operations of an institutional
defendant; and (3) monitoring compliance with court-ordered relief and related adjudicatory
functions. Of course, in any particular case, a court-appointed officer may perform more than
one of these functions and may be given different titles.209
a.

Devising Remedies --

Court-appointed officers are often assigned the tasks of gathering information and making
recommendations as to appropriate remedies in complex litigation. For example, in Swann v.
Bd. of Educ., 402 U.S. at 9-11, 18-32, a court-appointed expert devised a comprehensive school
desegregation plan, adopted by the district court, involving re-zoning, busing of students, and re-

208

(...continued)
case”); Schwimmer v. United States, 232 F.2d 855, 865 (8th Cir. 1956) (“Beyond the provisions
of Rule 53 . . . for appointing and making references to Masters, a Federal District Court has ‘the
inherent power to supply itself with this instrument for the administration of justice when
deemed by it essential’”) (citation omitted); United States v. State of Conn., 931 F. Supp. 974,
984 (D. Conn. 1996) (“It is well settled in the law that federal courts have the inherent power to
appoint an agent to oversee the implementation of its consent decrees. . . ‘[b]eyond the
provisions of [FED . R. CIV . P. 53]’”) (citation omitted); Powell v. Ward, 487 F. Supp. 917, 935
(S.D.N.Y. 1980), aff’d 643 F. 2d 924 (2d Cir. 1981) (“Courts have inherent authority to appoint
nonjudicial officers to aid in carrying out their judicial functions.”); Jordan v. Wolke, 75 F.R.D.
696, 701 (E.D. Wis. 1977) (appointing a special master “pursuant to the court’s general equity
powers and not under Rule 53 ”). Cf. Young v. United States ex rel. Vuitton et Fils S.A., 481
U.S. 787 (1987) (holding that courts have inherent authority to appoint counsel to investigate and
prosecute violations of a court’s order).
209

See Section VIII(B)(3) below, which discusses court-appointed officers’ performance
of these functions in Government civil RICO case involving labor unions.
190

assignment of teachers to different schools.
Similarly, in Sheet Metal Workers v. EEOC, supra, 478 U.S. 421, the district court found
that Local 28 of the Sheet Metal Workers Union (“Local 28”) discriminated against non-white
workers in recruitment, selection, training and admission to the union. The district court ordered
the parties “to devise and to implement recruitment and admission procedures designed to
achieve [a goal of 29% non-white membership] under the supervision of the court-appointed
administrator.” Id. at 432. The court-appointed administrator proposed, and the district court
adopted, an affirmative action program requiring Local 28 to adopt various changes to its
practices and policies, including requiring Local 28 “to offer annual, nondiscriminatory
journeyman and apprentice examinations, select members according to a white-non-white ratio to
be negotiated by the parties, conduct extensive recruitment and publicity campaigns aimed at
minorities, secure the administrator’s consent before issuing temporary work permits, and
maintain detailed membership records.” Id. at 432-33.
The Supreme Court rejected Local 28's argument that “the District Court’s appointment
of an administrator with broad powers to supervise its compliance with the court’s orders [was]
an unjustifiable interference with its statutory right to self-governance.” Id. at 481-82. The
Supreme Court stated: “While the administrator may substantially interfere with petitioner’s
membership operations, such ‘interference’ is necessary to put an end to [Local 28's]
discriminatory ways.” Id. at 482.210
210

See also EEOC v. Local 638, 532 F.2d 821, 829-30 (2d Cir. 1976) (approving courtappointed administrator with broad powers to develop and enforce detailed plans to remedy
racially discriminatory employment practices); Hart v. Cmty. Sch. Bd. of Educ., N.Y. Sch. Dist.
#21, 512 F.2d at 42-43, 52 (approving court-appointed master to devise plans for school
desegregation); SEC v. Heritage Trust Co., 402 F. Supp. 744, 754 (D. Ariz. 1975) (“appointment
(continued...)
191

b.

Administering Operations - -

Court appointed officers, typically titled “Administrator,” “Trustee” or “Receiver,” are
also assigned the duties of taking over the management of all or parts of an institutional
defendant’s operations. Such function “extends beyond that of the Master, Monitor, or
Mediator.” See generally Special Project, 78 COLUM . L. REV . at 831.211
c.

Monitoring Compliance and Adjudicatory Functions --

The Supreme Court has long recognized the authority of courts in equity to appoint
officers “[t]o take and report testimony. . . to hear conflicting evidence, and make findings
thereon.” Ex Parte Peterson, 253 U.S. at 313. See also California v. Texas, 459 U.S. 963 (1982)
(Mem.) (The Supreme Court approved of the appointment of a Special Master “with authority to
fix the time and conditions for the filing of additional pleadings and to direct subsequent
proceedings, and with authority to summon witnesses, issue subpoenas, and take such evidence
as may be introduced and such as he may deem necessary to call for . . . [and] to submit such

210

(...continued)
of a receiver. . . to take charge of all books, records and assets of defendant corporation [found
liable for violations of securities laws], and to investigate and make recommendations to the
Court as to proceedings to be taken in the interest of and for the protection of all investors and
trustors”).
211

See e.g., Morgan v. McDonough, 540 F.2d 527, 529-35 (1st Cir. 1976) (upholding the
power of the district court to appoint a receiver for South Boston High School with broad powers
to devise plans to enroll students and to renovate the school, to evaluate the qualifications of
personnel and to transfer personnel, and to make other proposals to achieve school
desegregation); EEOC v. Local 638, 532 F.2d at 829 (“a court-appointed administrator is granted
extensive supervisory power over Local 28” including authority “to develop and enforce”
detailed plans to remedy racially discriminatory employment practices); SEC v. Bartlett, 422
F.2d 475 (8th Cir. 1970) (appointing a receiver to liquidate corporate defendant’s assets where
the defendant violated securities laws); Turner v. Goolsby, 255 F. Supp. 724, 730 (S.D. Ga.
1966) (receiver appointed to implement a plan to desegregate a school system); see also
Section VIII(B)(3) below.
192

reports as he may deem appropriate.”); Mississippi v. Arkansas, 402 U.S. 926 (1971) (same);
Arizona v. California, 347 U.S. 986 (1954) (same); City of Richmond v. United States, 422 U.S.
358, 366-67 (1995) (special master appointed to hold evidentiary hearings and submit
recommended findings of fact and conclusions of law regarding the effect of a municipal
annexation plan on diluting the right of black persons to vote).
Lower courts, likewise, have sanctioned appointing court-officers to assist district courts
in pre-liability adjudication functions, as well as monitoring compliance with court-ordered
relief, including performing adjudicatory functions such as investigating allegations of violations
of court orders, conducting evidentiary hearings, making factual findings, and recommending
sanctions.212
3.

Article III Considerations

Appointment of a non-Article III officer to perform adjudicatory functions may constitute
an unconstitutional delegation of judicial powers in violation of Article III of the Constitution
when such a non-judicial officer’s adjudicatory functions usurp the judicial authority of the
district court to decide the dispositive issues in a lawsuit.213 As the Supreme Court stated, absent
212

See, e.g., Juan F. v. Weicker, 37 F.3d 874, 879-80 (2d Cir. 1994); In Re Pearson, 990
F.2d 653, 659 (1st Cir. 1993); Nat’l. Org. for the Reform of Marijuana Laws, 828 F.2d at 542-45;
United States v. Suquamish Indian Tribe of Washington, 901 F.2d 772, 774-75 (9th Cir. 1990);
Williams v. Lane, 851 F.2d 867, 884 (7th Cir. 1988); In Re Armco, Inc., 770 F.2d 103, 105 (8th
Cir. 1985); New York State Ass’n For Retarded Children v. Carey, 706 F.2d 956, 962-65 (2d Cir.
1983); Ruiz, 679 F.2d at 1159-62; Rosen v. Tennessee Com’r of Finance and Admin., 204 F.
Supp. 2d 1061, 1095 (M.D. Tenn. 2001); United States v. Connecticut, 931 F. Supp. at 984
(collecting cases); Taylor v. Perini, 413 F. Supp. 189 (N.D. Ohio 1976); Bell v. Hall, 392 F.
Supp. 274 (D. Mass. 1975); United States v. Conservation Chem. Co., 106 F.R.D. 210, 218-222
(W.D. Mo. 1985) (collecting cases).
213

See, e.g., Cobell v. Norton, 392 F.3d 461, 476-78 (D.C. Cir. 2004); Stauble v.
Warrob, 977 F.2d 690, 695-96 (1st Cir. 1992); In Re Bituminous Coal Operators’ Ass’n, Inc.,
(continued...)
193

consent of the parties, Article III bars a district court, “of its own motion, or upon the request of
one party,” from “abdicat[ing] its duty to determine by its own judgment the controversy
presented, and devolve that duty upon any of its officers.” Kimberly v. Arms, 129 U.S. 512, 524
(1889).
However, the Supreme Court has made clear that, in equitable suits involving “public
rights,”214 “there is no requirement that, in order to maintain the essential attributes of the judicial
power, all determination of fact in constitutional courts shall be made by judges.” Crowell v.
Benson, 285 U.S. 22, 51 (1932). The Supreme Court added:
In cases of equity and admiralty, it is historic practice to call to the
assistance of the courts, without the consent of the parties, masters
and commissioners or assessors, to pass upon certain classes of
questions, as, for example, to take and state an account or to find
the amount of damages. While the reports of masters and
commissioners in such cases are essentially of an advisory nature,
it has not been the practice to disturb their findings when they are
properly based upon evidence, in the absence of errors of law and
the parties have no right to demand that the court shall
redetermine the facts.
Crowell, 285 U.S. at 51-52 (emphasis added).
In Crowell, the Supreme Court rejected an Article III challenge to a statutory scheme that
authorized an administrative agency to make initial factual determinations pursuant to a federal

213

(...continued)
949 F.2d 1165, 1168-69 (D.C. Cir. 1991).
214

In Northern Pipeline Co. v. Marathon Pipe Line Co., 458 U.S. 50, 69 (1982), the
Supreme Court stated that “[t]he distinction between public rights and private rights has not been
definitively explained in our precedents . . . [but] it suffices to observe that a matter of public
rights must at a minimum arise ‘between the government and others’”) (citation omitted).
Manifestly, civil RICO equitable suits brought by the Government under 18 U.S.C. § 1964(a) to
vindicate the public’s interests to reform corrupt institutions involve such “a matter of public
rights.” See Section VIII below.
194

statute requiring employers to compensate their employees for work-related injuries occurring
upon the navigable waters of the United States. Id. at 37-45. The Court noted that, under that
statutory scheme, “[i]n conducting investigations and hearings, the [Administrative Agency] is
not bound by common law or statutory rules of evidence, or by technical or formal rules of
procedure, except as the Act provides.” Id. at 43.
In upholding this statutory scheme, the Supreme Court found it significant that the
administrative agency had the “limited” role “of determining the questions of fact,” the statute
reserved “full authority of the court to deal with matters of law” (id. at 54), and that the
administrative agency did not have the power to enforce any of its compensation orders. Rather,
“every compensation order was appealable to the appropriate federal district court, which had the
sole power to enforce it or set it aside, depending upon whether the court determined it to be ‘in
accordance with law’ and supported by evidence in the record.” See Northern Pipeline Co. v.
Marathon Pipeline Co., 458 U.S. 50, 78 (1982) quoting Crowell, 285 U.S. at 44.
Similarly, in United States v. Raddatz, 447 U.S. 677 (1980), the Supreme Court held that
the 1978 Federal Magistrates Act, which permitted district court judges to refer certain pretrial
motions, including motions to suppress evidence based on alleged constitutional violations, to a
magistrate for initial determination, did not violate Article III of the Constitution. The Act also
provided that the district court shall make a “de novo determination” of those portions of the
magistrate’s report, findings, or recommendations to which objection is made. Id. at 673. The
Supreme Court stated that:
although the statute permits the district court to give to the
magistrate’s proposed findings of fact and recommendations “such
weight as [their] merit commands and the sound discretion of the
judge warrants,”. . . that delegation does not violate Art. III so long
195

as the ultimate decision is made by the district court.
Id. at 683 (citation omitted; brackets in original).
Morever, in Atlas Roofing Co. v. Occupational Safety and Health Review Comm’n., 430
U.S. 442 (1977), the Supreme Court held that the Seventh Amendment does not prohibit
Congress from assigning to an administrative agency the task of adjudicating violations of the
Occupational Safety and Health Act of 1970. The administrative agency’s findings of a violation
and imposition of sanctions were final, subject to judicial review in the appropriate court of
appeals. Id. at 446-47. The Supreme Court explained:
At least in cases in which “public rights” are being litigated - e.g.,
cases in which the Government sues in its sovereign capacity to
enforce public rights created by statutes within the power of
Congress to enact - the Seventh Amendment does not prohibit
Congress from assigning the factfinding function and initial
adjudication to an administrative forum with which the jury would
be incompatible.
...
In cases which do involve only “private rights,” this Court has
accepted factfinding by an administrative agency, without
intervention by a jury, only as an adjunct to an Art. III court,
analogizing the agency to a jury or a special master and permitting
it in admiralty cases to perform the function of the special master.
Id. at 450 and n.7.
The foregoing authority demonstrates that it does not violate Article III to assign
adjudicatory functions, including making factual findings, to a non-Article III body, when the
court retains its authority to decide dispositive issues of liability and remedies. In accordance
with the foregoing authority, courts have noted that it did not violate Article III to assign a variety
of adjudicatory functions to court-appointed officers, provided that the district court retains
sufficient authority to decide the dispositive issues. For example, in Stauble v. Warrob, Inc.,
196

977 F.2d 690 (1st Cir. 1992), the court stated:
Article III does not require that a district judge find every fact and
determine every issue of law involved in a case. In respect to . . .
remedy-related issues . . . a master may be appointed to make
findings of fact and recommend conclusions of law. As long as the
district court discerns sufficient supporting evidence and is
satisfied that the master applied the correct legal standards, it may
rely on the master’s report as part of its own determination of
liability.
Id. at 695.
Similarly, in In Re Armco, Inc., 770 F.2d 103 (8th Cir. 1985), the court ruled:
If the district court determines that liability rests with some or all
of the parties, it may request the master to conduct evidentiary
rehearings with respect to damages and alternative relief and make
recommendations with respect to these matters. It may also direct
the magistrate to monitor and supervise any injunctive relief
granted and to make reports to it with respect to compliance with
any decrees entered.
Id. at 105.
Moreover, in United States v. Conservation Chem. Co., 106 F.R.D. 210 (W.D. Mo.
1985), the district court appointed a Special Master with “the power to order and preside over
pretrial hearings, the authority to supervise and issue recommendations regarding pretrial
matters, and the authority to hold hearings and issue recommendations on the claims for
inclusion in any injunctive relief order and appointment of costs.” Id. at 216. The “court
expressly reserved its judicial authority and responsibility to make the ultimate determinations on
all issues.” Id. The court concluded that the scope of the Special Master’s authority “does not
violate the constraints of Article III because the ultimate decision making authority clearly

197

remains with the District Court.” Id. at 234.215
F.

Contempt
1.

Determining Whether Contempt is Civil or Criminal in Nature

Courts have inherent authority to enforce their orders through contempt sanctions and to
appoint private attorneys to investigate and prosecute a violation of a court’s order.216 Moreover,
18 U.S.C. § 401217 authorizes courts to impose both civil and criminal contempt sanctions218
under the following principles.

215

See also In re Pearson, 990 F.2d 653, 655, 659 (1st Cir. 1993) (holding that Article III
was not violated by appointing a special master to assist in the implementation of a consent
decree “to analyze ‘the impact of existing and pending legislation on the consent decree’ and on
‘the operation of the Treatment Center’; to study all unresolved claims alleging violations of the
consent decrees; and to advise the court concerning the Treatments Center’s operation and the
continued viability of the King decrees.”); Jenkins By Agyei, 890 F.2d at 66-67 (authorizing
court-appointed officers to decide any dispute involving interpretation of the district court’s
desegregation orders did not violate Article III when the district court retained de novo review).
216

See, e.g., Kokkonem v. Guardian Life Ins. Co. of America, 511 U.S. 375, 380 (1994);
Young, 481 U.S. at 793-96; Shillitani v. United States, 384 U.S. 364, 370 (1966); Michaelson v.
United States ex rel Chicago, St. P., M., & R. Co., 266 U.S. 42, 65-66 (1924); Armstrong v.
Guccione, 470 F.3d 89, 103-106 (2d Cir. 2006).
217

18 U.S.C. § 401 provides as follows:

A court of the United States shall have power to punish by fine or imprisonment,
or both, at its discretion, such contempt of its authority, and none other, as (1)

misbehavior of any person in its presence or so near thereto
as to obstruct the administration of justice;
(2)
misbehavior of any of its officers in their official
transactions;
(3)
disobedience or resistence to its lawful writ, process, order,
rule, decree, or command.
See also 28 U.S.C. § 1826.
218

See, e.g., Armstrong, 470 F.3d at 100-05.
198

a.

The Bagwell Decision

In Int’l Union, United Mine Workers of America v. Bagwell, 512 U.S. 821 (1994)
(“Bagwell”), the Supreme Court set forth the basic principles to determine whether a contempt
sanction is considered civil or criminal, stating:
In the leading early case addressing this issue in the context of
imprisonment, Gompers v. Bucks Stove & Range Co., 221 U.S., at
441, the Court emphasized that whether contempt is civil or
criminal turns on the “character and purpose” of the sanction
involved. Thus, a contempt sanction is considered civil if it “is
remedial, and for the benefit of the complainant. But if it is for
criminal contempt the sentence is punitive, to vindicate the
authority of the court.” Ibid.
Id. at 827-28.
The Bagwell Court added:
As Gompers recognized, however, the stated purposes of a
contempt sanction alone cannot be determinative. Id., at 443.
“[W]hen a court imposes fines and punishments on a contemnor, it
is not only vindicating its legal authority to enter the initial court
order, but it also is seeking to give effect to the law’s purpose of
modifying the contemnor’s behavior to conform to the terms
required in the order.” Hicks, 485 U.S., at 635. Most contempt
sanctions, like most criminal punishments, to some extent punish a
prior offense as well as coerce and offender’s future obedience . . .
The paradigmatic coercive, civil contempt sanction, as set forth in
Gompers, involves confining a contemnor indefinitely until he
complies with an affirmative command such as an order “to pay
alimony, or to surrender property ordered to be turned over to a
receiver, or to make a conveyance.” 221 U.S. at 442; see also
McCrone v. United States, 307 U.S. 61, 64 (1939) (failure to
testify). Imprisonment for a fixed term similarly is coercive when
the contemnor is given the option of earlier release if he complies.
Shillitani v. United States, 384 U.S. 364, 370, n.6 (1966)
(upholding as civil “a determinate [2-year] sentence which includes
a purge clause”). In these circumstances, the contemnor is able to
purge the contempt and obtain his release by committing an
affirmative act, and thus, “‘carries the keys of his prison in his own
199

pocket.’” Gompers, 221 U.S. , at 442, quoting In re Nevitt, 117 F.
448, 451 (CA8 1902).
By contrast, a fixed sentence of imprisonment is punitive and
criminal if it is imposed retrospectively for a “completed act of
disobedience,” Gompers, 221 U.S., at 443, such that the contemnor
cannot avoid or abbreviate the confinement through later
compliance. Thus, the Gompers Court concluded that a 12-month
sentence imposed on Samuel Gompers for violating an antiboycott
injunction was criminal. When a contempt involves the prior
conduct of an isolated, prohibited act, the resulting sanction has no
coercive effect. “[T]he defendant is furnished no key, and he
cannot shorten the term by promising not to repeat the offense.”
Id., at 442.
Bagwell, 512 U.S. at 828-29.
Thus, affording a contemnor the opportunity to purge his contempt by complying with the
order at issue renders a sanction of imprisonment civil in nature. The same principles apply to
contempt sanctions involving fines. In that respect, the Bagwell Court stated:
This dichotomy between coercive and punitive imprisonment has
been extended to the fine context. A contempt fine accordingly is
considered civil and remedial if it either “coerce[s] the defendant
into compliance with the court’s order, [or] . . . compensate[s] the
complainant for losses sustained.” United States v. Mine Workers,
330 U.S. 258, 303-304 (1947). Where a fine is not compensatory,
it is civil only if the contemnor is afforded an opportunity to purge.
See Penfield Co. of Cal. v. SEC, 330 U.S. 585, 590 (1947). Thus,
a “flat, unconditional fine” totaling even as little as $50 announced
after a finding of contempt is criminal if the contemnor has no
subsequent opportunity to reduce or avoid the fine through
compliance. Id., at 588.
Bagwell, 512 U.S. at 829. Thus, as in the case of imprisonment, affording the contemnor an
opportunity to purge a non-compensatory contempt fine will render the contempt civil in
nature.219
219

See, e.g., Armstrong, 470 F. 3d at 101-02; N.Y. State Nat’l Org. for Women v. Terry,
(continued...)
200

Applying these principles, the Bagwell Court concluded that the fines involved rendered
the contempt criminal in nature. In Bagwell, the trial court enjoined a union and its members
from conducting certain unlawful strike-related activities against certain mining companies, and
“ordered the union to take all steps necessary to ensure compliance with the injunction, to place
supervisors at picket sites, and to report all violations to the court.” 512 U.S. at 823-24.
Following a civil contempt hearing, the trial court found that the union and its members
committed 72 violations of the injunction. The trial court also stated that “it would fine the
union $100,000 for any future violent breach of the injunction and $20,000 for any future nonviolent infraction.” Id. at 824.
In seven subsequent contempt hearings, the trial court found the union in contempt for
more than 400 separate violations of the injunction, many of them violent, and levied
approximately $52 million in fines against the union, payable to the State of Virginia and two
counties most affected by the union’s unlawful activity. “The trial court required the
contumacious acts to be proved beyond a reasonable doubt, but did not afford the union a right to
a jury trial.” Id. at 824.
On appeal, the Supreme Court of Virginia held that “[b]ecause the trial court’s
prospective fine schedule was intended to coerce compliance with the injunction and the union
could avoid the fines through obedience . . . . . the fines were civil and coercive and properly
imposed in civil proceedings.” Id. at 826.

219

(...continued)
159 F.3d 86, 94-95 (2d Cir. 1998) (collecting cases). See also cases cited in Section VII(F)(1)(b)
below.
201

The Supreme Court reversed, finding that the “serious” contempt fines were criminal and
constitutionally could be imposed only through a jury trial. Id. at 826-39. First, the Court noted
that because none of the parties argued that the challenged fines are “compensatory,” they are
civil only if they were designed to coerce the defendants into compliance with the Court’s orders
and the defendants were afforded an opportunity to purge. Id. at 834. Second, the Court rejected
the argument that “the mere fact that the sanctions were announced in advance rendered them
coercive and civil as a matter of constitutional law.” Id. at 837. In that regard, the Court
reasoned that the trial court’s statement that it would impose “determinate fines of $20,000 or
$100,000 per violation” for future contempts made them “more closely analogous to fixed,
determinate, retrospective criminal fines which [the union] had no opportunity to purge once
imposed.” Id. at 837. Finally, the Court stated:
Other considerations convince us that the fines challenged here are
criminal . . . [T]he union’s contumacy [did not] involve simple,
affirmative acts, such as the paradigmatic civil contempts
examined in Gompers. Instead, the Virginia trial court levied
contempt fines for widespread, ongoing, out-of-court violations of
a complex injunction. In so doing, the court effectively policed
petitioners’ compliance with an entire code of conduct that the
court itself had imposed. The union’s contumacy lasted many
months and spanned a substantial portion of the State. The fines
assessed were serious, totaling over $52 million. Under such
circumstances, disinterested factfinding and evenhanded
adjudication were essential, and petitioners were entitled to a
criminal jury trial.
Id. at 837-38.
b.
(1.)

Decisions Following Bagwell

Following Bagwell, circuit courts have held that various contempt fines and

sanctions were civil in nature. For example, in NLRB v. Ironworkers Local 433, 169 F.3d 1217
202

(9th Cir. 1999), the district court imposed a contempt fine on the Ironworkers union for picketing
in violation of a consent decree. The Ninth Circuit held that, although the fine was for past
conduct and had a punitive aspect, the fine was civil in nature because it had a remedial purpose
to compel future compliance. Id. at 1221-22.
Similarly, in N.Y. State Nat’l Org. for Women v. Terry, 159 F.3d 86, 89-90 (2d Cir.
1998), the district court imposed “coercive civil penalties” in the amount of $100,000 against
anti-abortion protestors for violating a court order which enjoined them from blocking access to
abortion clinics. The penalties were subject to a “purge provision” by which the defendants
could avoid the contempt penalties if they obeyed the injunction. Id. at 91. The Second Circuit
held that the penalties were civil in nature because they had a coercive purpose and allowed the
defendants to purge the contempt. Id. at 94.
In Chadwick v. Janecka, 312 F.3d 597 (3d Cir. 2002), Chadwick petitioned the district
court for habeas corpus relief from his civil contempt incarceration for failure to pay $2.5 million
in a divorce proceeding. The district court granted the petition, finding that, after petitioner had
spent seven years in prison, the incarceration had lost its coercive effect and had become
punitive. Id. at 599. The Third Circuit reversed, holding that there was no federal constitutional
bar to indefinite confinement for civil contempt, so long as the contemnor could still comply with
the order and purge the contempt. Id. at 613.
Finally, in F.T.C. v. Kuykendall, 312 F.3d 1329 (10th Cir. 2002), the district court
imposed a $39 million contempt fine on defendants for violating an injunction relating to
telemarketing activities. The fine was payable to the FTC to redress injuries to consumers for the
violations. The Tenth Circuit held that consumer redress was a classic remedial sanction, was
203

“not designed to vindicate the authority of the court, and that therefore the fine was civil in
nature.” Id. at 1337.
(2.)

Following Bagwell, circuit courts have held that various contempt fines and

sanctions were criminal in nature. For example, in Cobell v. Norton, 334 F.3d 1128 (D.C. Cir.
2003), the district court found the Secretary of Interior “in civil contempt of court,” id. at 1136,
for failing to comply with a court order regarding Native American land trust accounts and
failing to disclose information to the court related to these accounts. Although the district court
denominated the contempt as “civil,” and there was no “clear sanction,” the Appellate Court held
that it was criminal contempt because it was for past conduct and clearly intended to punish for
violation of a court order. Id. at 1145-47.
In Evans v. Williams, 206 F.3d 1292 (D.C. Cir. 2000), the district court sanctioned the
District of Columbia for violating a consent decree concerning the management of institutions for
the mentally retarded, and ordered the defendant to pay over $5 million in fines. The United
States Court of Appeals for the District of Columbia held that this sanction was criminal in
nature because of the complexity of the consent decree,220 the lack of an opportunity to purge,
and the fact that the fine was designed more to punish the city agency for past violations, rather
than gain compliance with the consent decree. Id. at 1296-97.
In F.J. Hanshaw Enterprises, Inc. v. Emerald River Dev, Inc., 244 F.3d 1128 (9th Cir.
2001), the district court sanctioned Frederick Hanshaw for $500,000 and ordered $200,000 in
compensatory civil award to the opposing party after Hanshaw attempted to bribe a court receiver
220

In that respect, the court stated that the consent “decree governs the administration of
an entire governmental program in the District of Columbia. It prescribes a complete code of
conduct - originally covering everything from bill payments to staffing to air conditioning - that
the district court has enforced for years.” Evans, 206 F.3d at 1297.
204

in a partnership dissolution. The Ninth Circuit held that the $500,000 sanction was criminal in
nature, because it was “clearly punitive and intended to vindicate the court's authority and the
integrity of the judicial process.” Id. at 1138. However, the court held that the $200,000 award
to the opposing party was civil in nature, because it was intended to compensate the opposing
party for costs attributable to the bribe attempt. Id. at 1143.221
2.

Different Elements and Procedures Apply to Criminal and Civil Contempt

In Bagwell, the Supreme Court explained the fundamental differences in procedures that
apply to civil and criminal contempts, stating:

221

See also Jake’s, Ltd. v. City of Coates, 356 F.3d 896 (8th Cir. 2004) (the district court
enjoined the owner of an adult club from operating in violation of city zoning laws and ordered
payment of $1,000 per day if the operation continued. Id. at 898. The club continued to operate
but with clothed dancers in an attempt to comply with zoning. Id. The district court again found
the owner in contempt and ordered a $68,000 contempt fine based on the $1,000 per-day penalty.
The Eighth Circuit held that the $68,000 fine was criminal in nature, because of the complexity
of city zoning laws, the lack of an opportunity to purge, and the non-compensatory nature of
payment to the court. Id. at 902-03.); Mellon v. Cessna Aircraft Co., 229 F.3d 1164 (10th Cir.
2000) (the district court found Cessna in contempt for refusing to service plaintiff’s aircraft in
violation of a court order. The district court ordered Cessna to pay the plaintiff for service by
another aircraft company. The Tenth Circuit held that, although the order appears compensatory,
the penalty was criminal in nature because it was imposed before the plaintiff had actually
incurred any losses.); United States v. Ayres, 166 F.3d 991 (9th Cir. 1999) (the district court held
the defendant in contempt for failing to testify before the IRS, but allowed a 10-day grace period
during which the defendant could testify and purge the contempt. Id. at 994. For each day
beyond the grace period, the defendant would be fined $500. The defendant agreed to testify on
the last day of the grace period, but due to scheduling problems attributable to the IRS, he was
not able to do so. The district court imposed a contempt fine of $1500 on the defendant for
testifying too late. Id. at 993-94. The Ninth Circuit held that although the contempt was
originally intended to coerce compliance, it became punitive when Ayres was not permitted to
purge by testifying, thereby invoking the heightened procedural protections of Bagwell. Id. at
997.); Crowe v. Smith, 151 F.3d 217, 221-28 (5th Cir. 1998) (the district court sanctioned
defendants $5 million payable to the court for concealing an insurance policy in a civil RICO
case. Id. at 221. The Fifth Circuit held that the fines were criminal in nature because they were
not compensatory, and there was no opportunity to purge.)
205

“Criminal contempt is a crime in the ordinary sense,” Bloom v.
Illinois, 391 U.S. 194, 201 (1968), and “criminal penalties may not
be imposed on someone who has not been afforded the protections
that the Constitution requires of such criminal proceedings,” Hicks
v. Feiock, 485 U.S. 624, 632 (1988). See In re Bradley, 318 U.S.
50 (1943) (double jeopardy); Cooke v. United States, 267 U.S. 517,
537 (1925) (rights to notice of charges, assistance of counsel,
summary process, and to present a defense); Gompers v. Bucks
Stove & Range Co., 221 U.S. 418, 444 (1911) (privilege against
self-incrimination, right to proof beyond a reasonable doubt). For
“serious” criminal contempts involving imprisonment of more than
six months, these protections include the right to jury trial. Bloom,
391 U.S., at 199; see also Taylor v. Hayes, 418 U.S. 488, 495
(1974). In contrast, civil contempt sanctions, or those penalties
designed to compel future compliance with a court order, are
considered to be coercive and avoidable through obedience, and
thus may be imposed in an ordinary civil proceeding upon notice
and an opportunity to be heard. Neither a jury trial nor proof
beyond a reasonable doubt is required.
Id. at 862-27.222
a.

Principles Governing Criminal Contempt

To convict a person for criminal contempt for violation of a court’s order, the plaintiff
must establish beyond a reasonable doubt that: (1) the contemnor violated the court’s order; (2)

222

The Bagwell Court added:
We address only the procedures required for adjudication of
indirect contempts, i.e., those occurring out of court. Direct
contempts that occur in the court’s presence may be immediately
adjudged and sanctioned summarily, see, e.g., Ex parte Terry, 128
U.S. 289 (1888), and, except for serious criminal contempts in
which a jury trial is required, Bloom v. Illinois, 391 U.S. 194, 209210 (1968), the traditional distinction between civil and criminal
contempt proceedings does not pertain, cf. United States v. Wilson,
421 U.S. 309, 316 (1975).

Bagwell, 512 U.S. at 826 n.2.
206

the order was clear and reasonably specific; and (3) the contemnor’s violation was willful.223
And, as noted above, the full panoply of constitutional rights that apply to criminal proceedings
also apply to criminal contempt proceedings. Moreover, a criminal contempt sanction is
immediately appealable,224 and is reviewed under an abuse of discretion standard.225
b.

Principles Governing Civil Contempt

To establish a person’s liability for civil contempt for violating a court’s order, the
plaintiff must prove by clear and convincing evidence that the contemnor had notice of the
court’s order and violated the court’s order.226 Significantly, however, the plaintiff need not
establish that the contemnor acted willfully or with any other wrongful intent. In McComb v.
Jacksonville Paper Co., 336 U.S. 187 (1949), the Supreme Court held that civil contempt did not
require wilfulness, explaining:

223

See, e.g., Panico v. United States, 375 U.S. 29, 30 (1963); United States v. United
Mine Workers of America, 330 U.S. 258, 303 (1947); Cobell v. Norton, 334 F.3d 1128, 1147
(D.C. Cir. 2003); In re Smothers, 322 F.3d 438, 441-42 (6th Cir. 2003); United States v. Mourad,
289 F.3d 174, 188 (1st Cir. 2002); United States v. Vezina, 165 F.3d 176, 178 (2d Cir. 1999);
United States v. Rapone, 131 F.3d 188, 192-95 (D.C. Cir. 1997); United States v. Nynex Corp.,
8 F.3d 52, 54 (D.C. Cir. 1993); Taberer v. Armstrong World Indus., Inc., 954 F.2d 888, 908 (3d
Cir. 1992).
224

See, e.g., Union Tool Co. v. Wilson, 259 U.S. 107, 110 (1922); S. Railway Co. v.
Lanham, 403 F.2d 119, 124 (5th Cir. 1968).
225

226

See, e.g., F.J. Hanshaw Enterprises, 244 F.3d at 1135.

See, e.g., United States v. Dist. Council of N.Y. City & Vicinity, 2007 WL 1157143 at
* 3 (2d Cir. April 18, 2007); United States v. Dowell, 257 F.3d 694, 699 (7th Cir. 2001); United
States v. Ayres, 166 F.3d 991, 995 (9th Cir. 1999); United States v. Mircosoft Corp., 147 F.3d
935, 940 (D.C. Cir. 1998); Local 1804-1 Int’l Longshoremen’s Ass’n., 44 F.3d at 1096; Howard
Johnson Co., Inc. v. Khimani, 892 F.2d 1512, 1516 (11th Cir. 1990); Perfect Fit Indus., Inc. v.
Acme Quilting Co., Inc., 646 F.2d 800, 808 (2d Cir. 1981).
207

The absence of wilfulness does not relieve from civil contempt . . .
Since the purpose [of civil contempt] is remedial, it matters not
with what intent the defendant did the prohibited act. The decree
was not fashioned so as to grant or withhold its benefits dependent
on the state of mind of respondents. It laid on them a duty to obey
specified provisions of the statute. An act does not cease to be a
violation of a law and of a decree merely because it may have been
done innocently.
Id. at 191 (footnote and citations omitted). Accord NLRB v. Blevins Popcorn Co., 659 F.2d
1173, 1184 (D.C. Cir. 1981) (holding “the intent of the recalcitrant party is irrelevant”).227
“An alleged contemnor may defend against a finding of contempt by demonstrating a
present inability to comply.” United States v. Ayres, 166 F.3d 991, 994 (9th Cir. 1999). The
contemnor bears the burden of establishing his present inability to comply with a court’s order.228
However, such “present inability to comply” is not the same as continuing to refuse to comply.
In that regard, the Supreme Court has stated that a court may imprison a civil contemnor
“indefinitely until he complies with [a court’s order],” Bagwell, 512 U.S. at 828, or he “adduces
evidence as to his present inability to comply with that order.” United States v. Rylander, 460
U.S. 752, 761 (1983). Accord Maggio v. Zeitz, 333 U.S. 56, 74, n.7 (1948) (“The defendant can
not, of course, be committed for the failure to do something which is beyond his power”)
(citation omitted); Shillitani, 384 U.S. at 371 (“[T]he justification for coercive imprisonment as
applied to civil contempt depends upon the ability of the contemnor to comply with the court’s
order . . . Where the grand jury has been finally discharged, a contumacious witness can no
227

Moreover, as noted above, a civil contemnor does not have a right to a jury trial or to
other procedural constitutional rights that attach to criminal proceedings.
228

See, e.g., McPhaul v. United States, 364 U.S. 372, 379 (1960); In re Lawrence,
279 F.3d 1294, 1297 (11th Cir. 2002); Chicago Truck Drivers v. Bhd. Labor Leasing, 207 F.3d
500, 506 (8th Cir. 2000); United States v. Jenkins, 760 F.2d 736, 739-40 (7th Cir. 1985); Falstaff
Brewing Corp. v. Miller Brewing Co., 702 F.2d 770, 781-82 (9th Cir. 1983).
208

longer be confined since he then has no further opportunity to purge himself of contempt.”)
The decision in Armstrong v. Guccione, 470 F.3d 89 (2d Cir. 2006), illustrates the
distinction between “a present inability to comply” with a court’s order and a contemnor’s
persistent refusal to comply with a court’s order notwithstanding his ability to comply with it. In
Armstrong, the contemnor was held in civil contempt for his refusal to return to a courtappointed receiver corporate records and assets totaling approximately $16 million, and was
imprisoned until he complied with the court’s order. Id. at 92. Over nearly seven years, the
district court afforded the contemnor numerous opportunities to either comply with the court’s
orders or demonstrate his inability to comply with them, but he did neither. Id. at 95-96.
On appeal, the contemnor argued, among other matters, that his length of incarceration
without compliance with the court’s orders warranted an inference of his inability to comply and
rendered any further imprisonment “coercive” in violation of due process. Id. at 110-112. The
Second Circuit rejected this argument, explaining that persistence in refusing to comply with a
court’s order does not by itself establish a present inability to comply. Id. at 111-12. The Second
Circuit added that “[t]he Due Process Clause does not demand that the test of [the contemnor’s]
obduracy end today, or for that matter, at any specific time.” Id. at 113. Accordingly, the Second
Circuit remanded for a determination of whether the contemnor’s continued failure to comply
with the district court’s orders was due to his present inability to comply or to his refusal to
comply, notwithstanding his present ability to comply. Id. at 113.
Similarly, in Chadwick v. Janecka, 312 F.3d 597 (3d Cir. 2002), the Third Circuit refused
to release a contemnor who had been incarcerated for nearly seven years for refusing to comply
with a court’s order, and rejected the contemnor’s claim that he should be released because there
209

was no substantial likelihood of his compliance with the court’s order. The Third Circuit stated:
The Supreme Court has never endorsed the proposition that
confinement for civil contempt must cease when there is “no
substantial likelihood of compliance” . . . [T]here is no federal
constitutional bar to [the contemnor’s] indefinite confinement for
civil contempt so long as he retains the ability to comply with the
order requiring him to pay over the money at issue.
Id. at 613. Accord Wronke v. Madigan, 26 F. Supp. 2d 1102, 1106 (C.D. Ill. 1998) (“a civil
contemnor may be incarcerated until he either complies with the court’s order or adduces
evidence as to his present inability to comply with that order”.)229
Moreover, as a general rule, a party to a lawsuit may not appeal a civil contempt sanction
until a final judgment is rendered in the underlying lawsuit. As the Supreme Court stated in Fox
v. Capital Co., 299 U.S. 105 (1936):
The rule is settled in this Court that except in connection with an
appeal from a final judgment or decree, a party to a suit may not
review upon appeal an order fining or imprisoning him for the
commission of a civil contempt.
229

However, some courts have held that incarceration for civil contempt “cannot last
forever,” and that a contemnor should be released from prison when a contemnor who has been
incarcerated for a substantial period of time persists in his refusal to comply with a court’s order
and there is no “realistic possibility” that the contemnor will comply with the court’s order,
notwithstanding his present ability to comply with the court’s order. In such circumstances,
courts have concluded that “contempt sanctions lose their coercive effect [and] become punitive
and violate the contemnor’s due process rights.” In re Lawrence v. Goldberg, 279 F.3d 1294,
1300 (11th Cir. 2002) (citations omitted). Accord CFTC v. Wellington Precious Metals, Inc.,
950 F.2d 1525, 1530-31 (11th Cir. 1992) (collecting cases); United States v. Jenkins, 760 F.2d
736, 740 (7th Cir. 1985).
The Supreme Court has not resolved the tension between the rulings of these cases and
the rulings in Armstrong v. Guccione, Chadwick v. Janecka, and Wronke v. Madigan discussed
above. Cf. McNeil v. Director, Patuxent Inst., 407 U.S. 245, 251 (1972) (noting that if after a
hearing on remand petitioner’s confinement, “potentially for life” “were explicitly premised on a
finding of contempt, then it would be appropriate to consider what limitations the Due Process
Clause places on the contempt power. The precise contours of that power need not be traced
here.”).
210

Id. at 107.230 However, an order holding a non-party in civil contempt is immediately
appealable,231 and a post-judgment, non-contingent order holding a party in contempt is
immediately appealable.232 A civil contempt sanction is reviewable under the abuse of discretion
standard.233
3.

A Jury Trial for Criminal Contempt is Required When the Sanction Involves
A “Serious Fine” or Imprisonment of More Than Six Months

In Bagwell, 512 U.S. at 826-27, the Supreme Court stated that “criminal contempts
involving imprisonment of more than six months” trigger a constitutional right to a jury trial.
Accord Taylor v. Hayes, 418 U.S. 488, 495 (1974); Bloom v. State of Illinois,
391 U.S. 194 (1968).234 The Bagwell Court also held that the imposition “of serious criminal
contempt fines triggers the right to jury trial,” 512 U.S. at 837, n.5,235 and that the fines imposed
in Bagwell, totaling over $52 million were “serious,” and hence required a jury trial. 512 U.S. at

230

Accord United States v. Philip Morris Inc., 314 F.3d 612, 620 (D.C. Cir. 2003);
Howard Johnson Co., Inc., v. Khimani, 892 F.2d 1512, 1515 (11th Cir. 1990); S. Railway Co. v.
Lanham, 403 F.2d 119, 124 (5th Cir. 1968).
231

See, e.g., U.S. Catholic Conference v. Abortion Rights Mobilization, 487 U.S. 72, 76
(1988); United States v. Accetturo, 842 F.2d 1408, 1412 (3d Cir. 1988) (collecting cases); Union
of Professional Airmen v. Alaska Aeronautical Industries, Inc., 625 F.2d 881, 884 (9th Cir.
1980).
232

See, e.g., Gates v. Shinn, 98 F.3d 463, 467 (9th Cir. 1999); Combs v. Ryan’s Coal
Co., 785 F.2d 970, 976-77 (11th Cir. 1986).
233

See, e.g., United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 44 F.3d 1091,
1095 (2d Cir. 1995); Armstrong v. Executive Office of President, 1 F.3d 1274, 1289 (D.C. Cir.
1993).
234

See also Frank v. United States, 395 U.S. 147 (1969) (holding that a sentence of three
years probation for criminal contempt was not a serious offense and did not require a jury trial).
235

Accord Bloom, 391 U.S. at 210.
211

837-39.
The Bagwell Court added that “to date [it] has not specified what magnitude of contempt
fine may constitute a serious criminal sanction, although it has held that a fine of $10,000
imposed on a union was insufficient to trigger the Sixth Amendment right to jury trial.” 512 U.S.
at 837, n.5, citing Muniz v. Hoffman, 422 U.S. 454, 477 (1975). The Bagwell Court concluded:
We need not answer today the difficult question where the line
between petty and serious contempt fines should be drawn, since a
$52 million fine unquestionably is a serious contempt sanction.
512 U.S. at 838 n.5.
Lower courts have held that various fines for contempt were “serious,” which required a
jury trial,236 while other fines were not “serious” and did not require a jury trial.237

236

See, e.g., Jake’s Ltd. v. City of Coates, 356 F.3d 896, 903 (8th Cir. 2004) (requiring a
jury trial for a $68,000 contempt fine against an adult club owner for violating a court order to
comply with city zoning laws, where state law would have provided a jury trial for the city
zoning violations); F. J. Hanshaw Enterprises, Inc., 244 F.3d at 1139-41 (requiring a jury trial for
a $500,000 contempt fine for attempted bribery); Evans, 206 F.3d at 1297-99 (requiring a jury
trial for a $5 million contempt fine against the District of Columbia for its failure to comply with
a consent decree); Crowe v. Smith, 151 F.3d 217, 228, n. 13 (5th Cir. 1998) (stating that
contempt fines of $75,000 for an individual and $5 million for a corporation were “non-petty”
sanctions, requiring a jury trial); Mackler Productions, Inc. v. Cohen, 146 F.3d 126, 129-130 (2d
Cir. 1998) (holding that a $10,000 punitive sanction on an individual required a jury trial); N.Y.
State Nat’l Org. for Women v. Terry, 41 F.3d 794, 798 (2d Cir. 1994) (holding that noncompensatory contempt fines of $500,000 for defendants’ anti-abortion activities in violation of
an injunction required a jury trial).
237

See, e.g., United States v. Linney, 134 F.3d 274, 280-81 (4th Cir. 1998) ($5,000
criminal contempt fine for an individual did not require a jury trial); United States v. Troxler
Hosiery Co., Inc., 681 F.2d 934 (4th Cir. 1982) ($80,000 contempt fine for a corporation did not
require a jury trial); Musidor, B.V. v. Great American Screen, 658 F.2d 60, 62 (2d Cir. 1981)
($10,000 contempt fine for a corporation’s violation of a court order did not require a jury trial).
212

VIII
GOVERNMENT CIVIL RICO CASES INVOLVING LABOR UNIONS
A.

Overview of Government Civil RICO Cases Involving Labor Unions
As of this writing, the United States has obtained relief in 23 civil RICO cases involving

labor unions.238 The initiation of each civil RICO case was prompted by evidence of the La Cosa
Nostra’s extensive corrupt influence over the labor unions involved.
1.

Overview of Labor Racketeering

The La Cosa Nostra (“LCN”) gained substantial corrupt influence, and even control in
some instances, over labor unions through creating a climate of fear and intimidation by threats
and acts of violence. Through such domination, the LCN was able to place its associates in key
official positions of various unions, and then use their control over such union officers to place
additional LCN associates in union positions, and to use such control over union officials to
exploit the unions, and derive illegal proceeds from the operation of the unions’ affairs.239
238

Appendix B (“App.” B) includes an index and detailed summary of each of these 23
cases. RICO suits were filed in 22 of these 23 cases. Only one case involving the Laborers’
International Union of North America (“LIUNA”) was settled before a complaint was filed,
which resulted in the United States obtaining relief similar to the relief obtained in the RICO
suits that were filed. See App. B at 178-90 and Section VIII(A)(4) and (B) below.
For the sake of brevity, these 23 RICO cases sometimes will be cited by a shorthand
reference after the initial full cite, as indicated in summary headings in App. B. For example, the
case involving the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America will be cited as the IBT or the Teamsters Union case, and Local 560 of the
International Brotherhood of Teamsters case will be cited as the IBT Local 560 case.
239

See, e.g., United States v. Gotti, 459 F.3d 296, 302-08, 324-30 (2d Cir. 2006); United
States v. Bellomo, 176 F.3d 580, 592-93 (2d Cir. 1999); United States v. Local 560 of the Int’l
Bhd. of Teamsters, 581 F. Supp. 279, 303-21 (D.N.J. 1984), aff’d, 780 F.2d 267, 278-79 (3d Cir.
1986). See generally, The President’s Commission on Organized Crime: THE EDGE:
ORGANIZED CRIME , BUSINESS AND LABOR UNIONS (U.S. Government Printing Office,
(continued...)
213

For example, the LCN was able to use its control and influence over labor unions and
their assets to derive illegal proceeds through a variety of typical labor racketeering activities,
including the following: (1) obtain illegal payoffs in exchange for loans or vendor contracts from
union-related pension, health and welfare, and other benefit funds established for the benefit of
union members;240 (2) extort payments and obtain unlawful payoffs from employers in exchange
for labor peace, relaxed enforcement of costly union work rules, and other benefits;241 (3) obtain
no show jobs or superfluous jobs for friends and associates of the LCN through extortion and
other illegal means,242 (4) embezzlement of union funds and other assets;243 and (5) obtain illegal
payoffs for “sweet heart” contracts that reduce costs to the employers and benefits to their union

239

(...continued)
Washington, DC 1986) (“PCOC: THE EDGE”) at 1-6, 9-11, 33-40, 72-75, 89-98, 114-127, 146160. See also cases cited below in Section VIII and accompanying text.
240

See, e.g., United States v. Norton, 867 F.2d 1354, 1357-59 (11th Cir. 1989); United
States v. Cerone, 830 F.2d 938 (8th Cir. 1987); United States v. Robilotto, 828 F.2d 940, 944,
946 (2d Cir. 1987); United States v. Caporale, 806 F.2d 1487, 1495-97 (11th Cir. 1986).
241

See, e.g., Gotti, 459 3d at 305-12, 331-35; United States v. Cervone, 907 F.2d 332,
336-40 (2d Cir. 1990); United States v. Rastelli, 870 F.2d 822, 826, 828-29 (2d Cir. 1989);
United States v. Davidoff, 845 F.2d 1151, 1153 (2d Cir. 1988); United States v.Daly, 842 F.2d
1380, 1383-90 (2d Cir. 1986); Robilotto, 828 F.2d at 942-44; United States v. Kopituk, 690 F.2d
1289, 1294-1305 (11th Cir. 1982); United States v. Provenzano, 688 F.2d 194, 196-98 (3d Cir.
1982); United States v. Provenzano, 620 F.2d 985, 989-91 (3d Cir. 1980).
242

See, e.g., Bellomo, 176 F.3d at 592; United States v. Presser, 844 F.2d 1275, 1276-77
(6th Cir. 1988); Robilotto, 828 F.2d at 943, 945-46. See generally United States v. Green,
350 U.S. 415, 417, 412 (1956); United States v. Quinn, 514 F.2d 1250, 1257 (5th Cir. 1975);
Bianchi v. United States, 219 F.2d 182, 186-87 (8th Cir. 1955).
243

See, e.g., United States v. Lore, 430 F.3d 190, 197-204 (3d Cir. 2005); Carson,
52 F.3d at 1176-78; United States v. Int’l Bhd. of Teamsters, 753 F. Supp. 1181, 1190-91
(S.D.N.Y. 1990); United States v. Int’l Longshoremen Ass’n, Local 1814, 1993 WL 330578 at *
5-8, 10-11 (S.D.N.Y. Jan. 14, 1993); PCOC: THE EDGE at 12-15.
214

employees.244
Perhaps the most lucrative illegal scheme involving the LCN’s corrupt influence over
labor unions entails establishing illegal cartels that control awarding contracts and allocation of
business in a particular industry or business sector. Such illegal cartels involve conspiracies
among LCN members and associates and corrupt labor union officials and businessmen, whereby
the conspirators threaten businesses with physical harm and/or labor strife and other forms of
economic harm unless they participate in their unlawful scheme to rig bids to control or allocate
business in a particular industry. Typically, the LCN and labor union conspirators obtain
unlawful payoffs from the proceeds of the ensuing contracts for business and, in exchange, the
corrupt businesses receive lucrative contracts, labor peace, relaxed enforcement of costly union
work rules and other benefits. For example, the LCN previously established such illegal cartels
in the commercial moving and storage industry in Metropolitan New York City,245 the wastehauling industry in New York City and Long Island,246 the construction industry involving
concrete pouring contracts in Metropolitan New York City,247 window replacement248 and
244

See, e.g., United States v. Local 560 of the Int’l Bhd. of Teamsters, 974 F.2d 315,
325-27 (3d Cir. 1992); United States v. Boffa, 688 F.2d 919, 923-24 (3d Cir. 1982); PCOC: THE
EDGE at 10, 16-18.
245

See, e.g., Rastelli, 870 F.2d at 829-30.

246

See, e.g., Sanitation and Recycling Indus. v. City of New York, 107 F.3d 985 (2d Cir.
1997); United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 793 F. Supp.
1114 (E.D.N.Y. 1992); App. B at 82-94.
247

See, e.g., United States v. Salerno, 868 F.2d 524, 528-32 (2d Cir. 1989); United States
v. Scopo, 861 F.2d 339, 341-42 (2d Cir. 1988); United States v. Persico, 832 F.2d 705, 707-09
(2d. Cir. 1987).
248

See, e.g., United States v. Gigante, 166 F.3d 75, 78-79 (2d Cir. 1999); United States v.
(continued...)
215

commercial painting249 industries in New York City.
2.

Congress Designed Civil RICO to Combat the LCN’s Corrupt Influence
Over Labor Unions

RICO’s legislative history makes clear that Congress specifically intended the civil RICO
remedies provided in 18 U.S.C. §§ 1964(a) and (b) to be used vigorously by the United States to
eliminate organized crime’s control and influence over labor unions. See
S. REP. No. 91-617 at 77-83; H.R. REP. No. 1574, 90th Cong., 2d Sess. at 5-9 (1968); see also
Sections II(B) and (C) above; Local 1814, Int’l Longshoremen’s Ass’n v. New York Shipping
Ass’n. Inc., 965 F.2d 1224, 1236-37 (2d Cir. 1992), cert. denied, 506 U.S. 953 (1992). For
example, the Senate Report regarding RICO states:
Closely paralleling its takeover of legitimate businesses, organized
crime has moved into legitimate unions. Control of labor supply
through control of unions can prevent the unionization of some
industries or can guarantee sweetheart contracts in others. It
provides the opportunity for theft from union funds, extortion
through the threat of economic pressure, and the profit to be gained
from the manipulation of welfare and pension funds and insurance
contracts. Trucking, construction, and waterfront entrepreneurs
have been persuaded for labor peace to countenance gambling,
loan sharking and pilferage. As the takeover of organized crime
cannot be tolerated in legitimate business, so, too, it cannot be
tolerated here.
...
[RICO] recognizes that present efforts to dislodge the forces of
organized crime from legitimate fields of endeavor have proven
unsuccessful. To remedy this failure, the proposed statute adopts
the most direct route open to accomplish the desired objective.
Where an organization is acquired or run by defined racketeering
methods, then the persons involved can be legally separated from
248

(...continued)
McGowan, 58 F.3d 8 (2d Cir. 1995); United States v. Gigante, 39 F.3d 42, 44-45 (2d Cir. 1994);
United States v. Amuso, 21 F.3d 1251, 1254 (2d Cir. 1994).
249

See, e.g., People v. Capaldo, 572 N.Y.S.2d 989 (Sup. Ct. N.Y. County 1991).
216

the organization, either by the criminal law approach of fine,
imprisonment and forfeiture, or through a civil law approach of
equitable relief broad enough to do all that is necessary to free the
channels of commerce from all illicit activity.
S. REP. No. 91-617 at 78-79 (footnote omitted).
It also bears emphasis that, because the public interest is involved in the Government’s
efforts to reform corrupt institutions through its civil RICO suits involving labor unions, the
courts’ equitable powers are at their zenith. See Sections II(A)(2) and VII(E) above.
3.

The United States Department of Justice Adopted A Strategy to Eliminate
the LCN’s Corrupt Influence Over Labor Unions

In March, 1986, The President’s Commission on Organized Crime (“PCOC”) issued a
report to the President and the Attorney General entitled: THE EDGE: ORGANIZED CRIME,
BUSINESS AND LABOR UNIONS (U.S. Government Printing Office, Washington, DC 1986)
(“PCOC: THE EDGE”). The PCOC concluded that the LCN had for decades controlled and
corruptly influenced major labor unions in the United States, including “the International
Brotherhood of Teamsters (IBT), the Laborers International Union of North American (LIUNA),
the Hotel Employees and Restaurant Employees International Union (HEREIU), and the
International Longshoreman’s Association (ILA).” PCOC: THE EDGE at 4.
In particular, the PCOC stated that “since the 1950’s,” the Teamsters Union had been
“The Most Controlled Union” by the LCN, and that during the period 1952-1985, the LCN
“exercised substantial influence” over the Teamsters Union through its control of the five
persons who served as President of the Teamsters Union during that period. See PCOC: THE
EDGE at 89. Similarly, the PCOC found that for many years the LCN, particularly the Chicago
LCN Family or “Outfit,” had controlled the principal officials of LIUNA, including its
217

Presidents, as well as officials in many LIUNA Locals. See id. at 145-163, 217-32.
The PCOC also found that since the 1920’s, “the International Longshoremen’s
Association (ILA) has been virtually a synonym for organized crime in the labor movement.” Id.
at 33. The PCOC added that, “[i]n 1937, New York La Cosa Nostra leader Albert Anastasia
muscled into” control of “the Brooklyn Waterfront,” and that the ILA did “little, if anything, to
disturb La Cosa Nostra influence in its locals.” Id. at 36-37. The PCOC further found that, since
at least the late 1930’s, the LCN had exercised substantial corrupt influence over the HEREIU
and its locals, including the selection of Edward Hanley to be President of HEREIU. Id. at 7185.
The PCOC recommended a national strategy to eliminate the LCN’s corrupt domination
of labor unions. Id. at 307-59. In particular, the PCOC recommended that the Department of
Justice “should use the RICO statute more aggressively in civil and criminal proceeding, and it
should pursue more vigorously breaches of fiduciary duty by union officers and employee benefit
plan trustees.” Id. at 314. In accordance with the PCOC’s recommendations, the OCRS,
working with the United States Attorneys’ Offices in the Eastern and Southern Districts of New
York, the District of New Jersey and the Northern District of Illinois, devised a strategy to bring
civil RICO lawsuits against the four most corrupt international unions (The Teamsters Union,
The LIUNA, the HEREIU, and the ILA) to eliminate the LCN’s corrupt influences. See App. B
at 42-79, 178-208, 243-55. In addition, the Department of Justice brought 17 civil RICO
lawsuits against LCN dominated local unions in New York and New Jersey (see App. B at 1-33,
40-42, 79-178, 220-243), and one civil RICO lawsuit in the Eastern District of Pennsylvania and
one in the Northern District of Illinois. See App. B at 33-40, 208-20. These Government civil
218

RICO lawsuits have achieved considerable success toward eliminating the LCN’s corrupt
domination of labor unions. See App. B.
4.

Overview of Essential Relief

Although the relief obtained in these civil RICO lawsuits vary somewhat, they typically
have involved the issuance of injunctions to prohibit unlawful activities and conduct that might
facilitate union corruption. District courts also have appointed officers, usually experienced
former prosecutors and law enforcement investigators, to assist the district courts to implement
relief designed to eliminate corruption by the defendants and in the alleged RICO enterprises and
to prevent future unlawful activity. District courts have authorized such officers to exercise
broad powers, subject to review by the district courts, including the following: (1) conduct the
legitimate business of the defendants and the RICO enterprises; (2) review and approve hiring,
certain contracts and financial expenditures of defendants and affiliated entities; (3) impose and
implement various structural reforms in the defendants and entities comprising the RICO
enterprises, including union election reform, revised rules and practices for conducting business;
(4) impose and implement ethical practices codes governing the defendants and members of the
RICO enterprises; (5) investigate, prosecute, and adjudicate in civil proceedings allegations of
violations of the consent decrees, judgment orders and related ethical practices codes; and (6)
imposition of fines, discipline or removal from the defendants’ entities or RICO enterprises and
prohibition of certain activities in the future for individuals found guilty of such violations.250
250

See e.g., United States v. Local 359, United Seafood Workers, 55 F.3d 64 (2d Cir.
1995); United States v. Local 1804-1, Int’l Longshoreman’s Ass’n, 44 F.3d 1091, 1093-95 (2d
Cir. 1995); United States v. Int’l Bhd. of Teamsters, 948 F.2d 98, 106 (2d Cir. 1991); United
States Int’l Bhd. of Teamsters, 907 F.2d 277, 279-81 (2d Cir. 1990); United States v. Int’l Bhd.
of Teamsters, 905 F.2d 610, 613-17 (2d Cir. 1990); United States v. Int’l Bhd. of Teamsters,
(continued...)
219

Such relief has significantly contributed to the Government’s success in combating the LCN’s
corrupt control over labor unions and related businesses, and is discussed in more detail below in
this Section.251
250

(...continued)
899 F.2d 143, 145-46 (2d Cir. 1990); United States v. Hotel Employees & Rest. Employees, Int’l
Union, 974 F. Supp. 411 (D.N.J. 1997); United States v. Dist. Council of New York City,
941 F. Supp. 349, 355 (S.D.N.Y. 1996); United States v. Local 6A, Cement and Concrete
Workers, 832 F. Supp. 674 (S.D.N.Y. 1993); United States v. Local 1804-1, Int’l
Longshoremen’s Ass’n, 831 F. Supp. 192, 193-95 (S.D.N.Y. 1993); United States v. Int’l Bhd. of
Teamsters, 803 F. Supp. 761, 766-71 (S.D.N.Y. 1992); United States v. Int’l Bhd. of Teamsters,
782 F. Supp. 243, 248-51 (S.D.N.Y. 1992); United States v. Int’l Bhd. of Teamsters,
723 F. Supp. 203 (S.D.N.Y. 1989), aff’d as modified, 931 F.2d 177 (2d Cir. 1991). See also
Sections VIII(B) and (C) below.
251

In the LIUNA civil RICO matter (see App. B at 178-90), the United States agreed to
settle a civil RICO lawsuit before it was filed, and for the first time agreed to allow a union an
opportunity to implement a reform program without court supervision and court-appointed
officers. The Initial Settlement Agreement provided that if after 90 days “the Assistant Attorney
General for the Criminal Division determines, in her sole discretion, that the imposition of a
consent decree is necessary or desirable, after having given LIUNA an opportunity to have a
meeting to be heard, the parties agree to the filing of the attached complaint and entry and
implementation of the attached consent decree.” See App. B at 183-84.
The attached consent decree provided for, among other matters: (1) a permanent
injunction against LIUNA officers, representatives and members from committing any act of
racketeering and other misconduct; (2) court-appointed officers to investigate, prosecute, and
discipline LIUNA officers, representatives, employees and members for misconduct; (3)
adoption of procedures to conduct investigations and adjudication of disciplinary charges; (4)
various reforms in LIUNA’s Job Referral Rules and financial practices; and (5) union election
reforms. See App. B at 184.
This agreement provided the Government with virtually unlimited discretion to obtain
imposition of court-supervision and court-appointed officers if it believed that such relief was
“necessary or desirable.” However, the United States did not seek such court-supervised relief
because LIUNA achieved considerable success in eliminating LCN influence over its affairs
through the efforts of experienced, independent attorneys and investigators. See App. B at 18588. Throughout the period of LIUNA’s reform efforts, the Government closely monitored
LIUNA’s reform efforts through regular meetings and discussions, insisted upon various reforms
and provided information and evidence to enable LIUNA’s reform team to eliminate corruption.
Thus, the United States obtained essentially the same relief regarding LIUNA that it would have
(continued...)
220

B.

Specific Relief Obtained in Government Civil RICO Cases Involving Labor Unions
1.

Injunctions

Courts have granted similar broad injunctive relief in 20 of the 22 filed Government civil
RICO cases involving labor unions.252 The injunctive relief granted under a Consent Decree in
United States v. Local 69 of the Hotel Employees and Rest. Employees Int’l Union, Civil No.
1733, U.S. District Court for the District of New Jersey (hereinafter “HEREIU Local 69”), is
typical of the injunctions granted in those 20 cases, and it provided, in substance, as follows (see
App. B at 231-32):
All current and future officers, agents, employees, representatives,
members of, and persons holding positions of trust in Local 69 or
its affiliated entities (other than representatives of employers) and
any and all persons in active concert or participation with any or all
of them, were permanently restrained and enjoined from directly or
indirectly:
a.

committing any crime listed in 18 U.S.C. § 1961(1);

b.

knowingly associating with any member or associate of any criminal group
or with any barred person;

c.

knowingly permitting any member or associate of any criminal group or
any barred person to exercise any control or influence, directly or
indirectly, in any way or degree, in the conduct of the affairs of Local 69
and its affiliated entities; and

251

(...continued)
obtained through court-supervision. See App. B at 188.
252

The two exceptions were the John F. Long (see App. B at 40-42) and Vincent Gigante
cases (see App. B at 79-82), which imposed limited injunctive relief, barring certain persons
from specified union-related activities.
It bears repeating that injunctive relief is not limited to enjoining future unlawful conduct,
but also may broadly encompass relief necessary to cure the ill-effects of the defendants’ past
unlawful conduct, and may also include enjoining otherwise lawful practices connected to the
unlawful conduct. See Sections II(E) and VII(C)(1) above.
221

d.

obstructing or otherwise interfering, directly or indirectly, with the efforts
of anyone effectuating or attempting to effectuate the terms of this Consent
Decree or in attempting to prevent any criminal groups or barred person
from exercising influence on the conduct of the affairs of the Local 69 and
its affiliated entities.

As used in the HEREIU Local 69 Consent Decree, the term “knowingly associating”
meant that: (a) an enjoined party knows or should know that the person with whom he or she is
associating is a member or associate of any criminal group or is a barred person; and (b) the
association is more than fleeting.
As used in the HEREIU Local 69 Consent Decree, a “barred person” was defined as: (a)
any member or associate of any organized crime family or other criminal group, or (b) any person
prohibited from participating in the affairs of any union pursuant to or by operation of this
Consent Decree, other court order or statute, and/or a disciplinary disposition or agreement by the
HEREIU’s Public Review Board.253

253

Similar injunctions were also granted in the following additional 19 Government civil
RICO cases involving labor unions:
(1) The Teamsters Local 560 Case; see App. B at 6-7; United States v. Local 560, Int’l
Bhd. of Teamsters, 581 F. Supp. 279, 337 (D.N.J. 1984), aff’d, 780 F.2d 267 (3d Cir. 1986);
United States v. Local 560 Int’l Bhd. of Teamsters, 974 F.2d 315, 324 (3d Cir. 1992);
(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17;
(3) The Bonanno Family Case; see App. B at 22-24;
(4) The Fulton Fish Market Case; see App. 30-31;
(5) The Roofers Union Case; see App. B at 37-38; United States v. Local 30, United
Slate, Tile and Composition Roofers, 686 F. Supp. 1139, 1162-74 (E.D. Pa. 1988) (“Local 30
Roofers Union”);
(6) The International Brotherhood of Teamsters Union Case; see App. B at 47, and cases
cited in App. B at 51, n. 7;
(7) The Private Sanitation Industry of Long Island Case; see App. B at 85-86, 91; United
States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F. Supp. 808, 818
(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993) (“Private Sanitation Indus. Case”); United
States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F. Supp. 974, 983-84
(continued...)
222

2.

Dissolution, Divestiture and Reorganization

As noted in Section II(C)(2) above, 18 U.S.C. § 1964 (a) explicitly authorizes equitable
relief involving divestiture, dissolution and reorganization. Accordingly, courts have approved
of such relief in Government civil RICO cases involving labor unions. See, e.g., United States v.
Local 30, United Slate, Tile and Composition Roofers and Waterproof Workers Ass’n, 871 F.2d
401, 407 (3d Cir. 1989); United States v. Local 560 of Int’l Bhd. of Teamsters, 780 F.2d 267, 295
(3d Cir. 1985); United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F.
Supp. 974, 983-84 (E.D.N.Y. 1994) and 811 F. Supp. 808, 818 (E.D.N.Y. 1992), aff’d, 995 F.2d
375 (2d Cir. 1993); United States v. Bonanno Organized Crime Family of La Cosa Nostra, 683 F.
Supp. 1411, 1442-44 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989).

253

(...continued)
(E.D.N.Y. 1994), aff’d 47 F.3d 1158 (2d Cir. 1995) (Table);
(8) The ILA Local 10804-1 Case; see App. B at 98-102; United States v. Local 1804-1,
Int’l Longshoremen’s Ass’n, 831 F. Supp. 177, 191-92 (S.D.N.Y. 1993), aff’d and vacated in
part on other grounds, 52 F.3d 1173 (2d Cir. 1995); (“ILA Local 1804-1”);
(9) The IBT Local 295 Case; see App. at 113-115, 118;
(10) The New York Carpenters Union Case; See App. B at 123-25; United States v. Dist.
Council of New York City, 409 F. Supp.2d 439, 442 (S.D.N.Y. 2006);
(11) The HEREIU Local 54 Case; see App. B at 136-38;
(12) The HEREIU Local 100 Case; see App. B at 145;
(13) The Teamsters Local 282 Case; see App. B at 149; United States v. Local 282 of the
Int’l Bhd. of Teamsters, 13 F. Supp.2d 401, 402 (E.D.N.Y. 1988); aff’d in part, and vacated and
remanded in part on other grounds, 215 F.3d 283 (2d Cir. 2000) (“Teamsters Local 282 Case”);
(14) The Mason Tenders District Council of Greater New York Case; see App. B at 16162, 173-75; United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL
742637 (S.D.N.Y. Dec. 27, 1994); United States v. Mason Tenders Dist. Council of Greater New
York, 1995 WL 679245 (S.D.N.Y. Nov. 15, 1995) (“Mason Tenders District Council”);
(15) The Hotel Employees and Restaurant Employees International Union Case; see App.
B at 194-95;
(16) The Chicago District Council of LIUNA Case; see App. B at 211-12;
(17) The LIUNA Local 210 Case; see App. B at 222, 225-26;
(18) The ILA Bellomo Case; see App. B at 241-42; and
(19) The International Longshoremen’s Ass’n Case; see App. B at 250-55.
223

Moreover, in numerous Government civil RICO cases involving labor unions, courts
have authorized a wide variety of relief that required wrongdoers to change their business
practices and policies, such as adopt new union and job referral rules, and restructure other
aspects of their operations. See United States v. Dist. Council of New York City, 409 F. Supp.
2d 439, 442-44 (S.D.N.Y. 2006).254
3.

Court-Appointed Officers
(a)

Officers to Administer the Affairs of a Union

In 17 of the 22 filed Government civil RICO cases involving labor unions, courts have
appointed officers to administer the affairs of unions with broad powers to, among other things,
oversee or carryout various aspects of the unions’ operations; negotiate, approve or void
contracts and expenditures; and discipline union officers and members. For example, in the
HEREIU Local 69 civil RICO case, the district court appointed a Monitor with the powers, rights
and authority of all officers and other persons holding positions of trust in Local 69 including the
powers, rights and authority of the Local 69 President; the Executive Board of Local 69; the
union’s other committees; the union trustees on Local 69’s pension, and health and welfare
funds; and any other officer, agent, employee or representative of Local 69. Accordingly, the
Monitor was authorized to:
a.

254

oversee, approve or disapprove of all disbursements and distributions of
Local 69 funds and other assets, purchases and financial obligations of
Local 69;

See also, App. B at 3-8, 16-17, 22-24, 37-39, 47-49, 86, 99-102, 107, 115-18, 123-26,
136-38, 142-45, 149-54, 162-174, 195-96, 199-200, 213-15, 218, 223-25, 232-36. See also
Section VIII(B)(5) below, which discusses reorganization of unions’ election procedures.
224

b.

approve or disapprove of the hiring, appointment, discharge or
reassignment of Local 69 officers and others holding positions of trust in
Local 69, employees, agents, representatives, commissioners and
committee members of Local 69;

c.

carry on and supervise the legitimate activities of Local 69;

d.

hold (or designate the persons who hold) the positions currently held by
Local 69 representatives in Local 69’s affiliated entities;

e.

review, oversee and otherwise take action upon all collective bargaining
agreements, the processing of grievances, grievance awards, or other
matters involving employers with whom Local 69 deals or seeks to deal;

f.

investigate, audit and review all aspects of Local 69 and its affiliated
entities. These powers shall include the power of the Monitor to conduct
investigatory interviews and sworn depositions;

g.

issue subpoenas and serve such subpoenas in this or any other judicial
district pursuant to 18 U.S.C. § 1965(c) without the need for prior
application to the district court. Such subpoenas shall be issued only for
good cause if the individuals reside in another district at a place more than
one hundred miles from the district court;

h.

initiate charges or disallow nominations or elections of persons in
accordance with this Consent Decree;

i.

refer matters to the Public Review Board of the HEREIU for disciplinary
action or, in the alternative, exercise the disciplinary authority and powers
described in this Consent Decree over any person described in Paragraph
(3)(a) above;

j.

refer any matter to the United States Attorney for appropriate action or
request the United States Attorney or any agency of the United States to
provide legal, audit and investigative personnel to assist in the execution
of the Monitor’s duties;

k.

retain legal, investigative, accounting and other support personnel at Local
69’s expense;

l.

attend any and all meetings of Local 69 and its affiliated entities,
including, but not limited to, meetings of the Local 69 Executive Board,
the membership, committees, negotiation meetings or grievance
proceedings regarding Local 69 members involving employers with whom
225

Local 69 deals or seeks to deal and meetings of employee benefit plans in
which Local 69 members participate;
m.

enter into, disapprove or terminate any contract (including, but not limited
to, contracts with service providers or vendors), lease, or other obligation
of Local 69 or any of Local 69’s affiliated entities for which
representatives of Local 69 otherwise have authority to enter into,
disapprove or terminate;

n.

oversee and monitor all affairs of Local 69, including, but not limited to,
any Local 69 elections;

o.

act to preclude actions or inactions that violate the law or otherwise are
inimical to the remedial objectives of this Consent Decree;

p.

perform all such functions and duties not specifically enumerated herein in
order to fulfill his/her duties as Monitor; and

q.

delegate any of his/her powers or duties to any other person(s).

See Appendix B at 232-34.
The HEREIU Local 69 Consent Decree also provided, in substance, that:
a.

The Monitor was given unfettered access to, and the right to make copies
of, all records or documents of officials, agents, employees, and members
of Local 69 and its affiliated entities.

b.

The Monitor was required to report to the district court at least every 6
months or when requested by the court regarding the progress of Local 69
and its affiliated entities in achieving the remedial objectives of this
Consent Decree.

c.

The term of the Monitor would expire four years from the date the
Consent Decree was entered.

d.

The Consent Decree also provided that the Monitor, the United States or
the HEREIU may make application to the district court to modify or
enforce this Consent Decree and the court may grant such relief as may be
equitable and just, having due regard for the purposes of the underlying
litigation, the remedial purposes of this Consent Decree and the
circumstances at the time of the application.

226

e.

The district court retained jurisdiction over the parties and signatories to
the Consent Decree and the subject matter of the litigation in order to
implement the terms of the Consent Decree.

f.

Pursuant to the All Writs Act, 28 U.S.C. § 1651, all parties and non-parties
to the Consent Decree were permanently restrained and enjoined from
litigating any and all issues relating to the Consent Decree or arising from
the interpretation or application of the Consent Decree in any court or
forum in any jurisdiction except the United States District Court for the
District of New Jersey. Such issues relating to the Consent Decree include,
but are not limited to, challenges to actions of the Monitor and/or his
delegates and challenges to issuance of or compliance with subpoenas.

See App. B at 236.255

255

Courts appointed officers with similar or some of the administrative powers granted
the Monitor in the HEREIU Local 69 case in the following 16 additional Government civil RICO
cases involving labor unions:
(1) The Teamsters Local 560 Case; see App. B at 3-7; Local 560 Int’l Bhd. of Teamsters,
780 F.2d at 295-96; United States v. Sciarra, 851 F.2d 621, 623-24, 632-33 (3d Cir. 1988); Local
560 Int’l Bhd. of Teamsters, 694 F. Supp. 1158, 1160-62 (D.N.J. 1988); see also, Section
VIII(C)(1) below.
(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17;
(3) The Bonanno Family Case; see App. B at 22-24;
(4) The Fulton Fish Market Case; see App. B at 30-31, 32; United States v. Local 359
United Seafood Workers Union, 1991 WL 172962 (S.D.N.Y. August 21, 1991);
(5) The Local 30 Roofers Union Case; see App. B at 37-39; United States v. Local 30,
United Slate, Tile, 871 F.2d 401, 404-07 (3d Cir. 1989); United States v. Local 30, United Slate,
Tile, 686 F. Supp. 1139, 1162, 1169-74 (E.D. Pa. 1988);
(6) The International Brotherhood of Teamsters Union Case; see App. B at 47-51; United
States v. Int’l Bhd. of Teamsters, 905 F.2d 610, 613 (2d Cir. 1990); United States v. Int’l Bhd. of
Teamsters, 899 F.2d 143, 145 (2d Cir. 1990); United States v. Int’l Bhd. of Teamsters, 765 F.
Supp. 1206 (S.D.N.Y. 1991); United States v. Int’l Bhd. of Teamsters, 761 F. Supp. 315, 316-17
(S.D.N.Y. 1991);
(7) The ILA Local 1804-1 Case; see App. B at 99-102;
(8) The IBT Local 295 Case; see App. B at 115-18; United States v. Local 295 of the Int’l
Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y. 1992);
(9) The New York Carpenters Union Case; see App. B at 123-26;
(10) The HEREIU Local 54 Case; see App. B at 136-38;
(11) The HEREIU Local 100 Case; see App. B at 142-45;
(12) The Teamsters Local 282 Case; see App. B at 149-54;
(continued...)
227

(b)

Adjudication Officers

In most of the Government civil RICO cases involving labor unions, district courts have
also appointed officers to carry-out various adjudication functions, including to investigate
violations of the district courts’ injunctions and judgment orders, other misconduct by union
members, and to recommend or impose sanctions for such violations; all subject to the district
court’s review. For example, in the HEREIU civil RICO case, the district court appointed a
Monitor for a 4-year term, subject to extensions. The Monitor’s powers included the following:
(i)

255

General Powers
a.

To investigate, audit and review all aspects of the HEREIU and its
constituent entities to advance the remedial objective of this action.
These powers shall include the power of the Monitor to conduct
investigatory interviews and sworn depositions to advance the
remedial objective of this action;

b.

To request the United States Attorney or any agency of the United
States to provide legal, audit and investigative personnel to assist
in the execution of the Monitor’s duties;

c.

To retain legal, investigative, accounting and other support
personnel at the HEREIU’s expense and delegate any of his/her
powers or duties to such persons, where, in the Monitor’s
discretion, such personnel and delegation are necessary to execute
the Monitor’s duties as set forth herein;

d.

To attend all HEREIU Executive Board meetings and HEREIU
committee meetings (with the exception of bargaining committee
meetings);

(...continued)
(13) The Mason Tenders District Council of Greater New York Case; see App. B at 16266, 172-74; United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL
742637 (S.D.N.Y. Dec. 27, 1994);
(14) The HEREIU Case; see App. B at 195-96;
(15) The Chicago District Council of LIUNA Case; see App. B at 218;
(16) The LIUNA Local 210 Case; see App. B at 223-25.
228

(ii)

e.

To refer matters to the HEREIU or the United States Attorney for
appropriate action;

f.

To perform all such functions and duties not specifically
enumerated herein in order to fulfill his/her duties as Monitor.

Review Authority
Whenever the Monitor reasonably believes that any
of the following actions, proposed actions, or
omissions to act (a) may violate the injunctive
prohibitions of this Consent Decree, (b) may
constitute any crime involving labor organizations
or employee benefit plans, or (c) may further the
direct or indirect influence of any organized crime
group or the threat of such influence now or in the
future, he or she has the power to:
a.

disapprove the hiring, appointment, reassignment or
discharge of any person or business entity by the HEREIU
or its constituent entities; and

b.

disapprove or terminate any contract (including, but not
limited to, contracts with service providers or vendors)
lease, or other obligation of the HEREIU or its constituent
entities.

The HEREIU had a right to appeal any such decision to the district court.
(iii)

Disciplinary Powers
The Monitor had the right and power to remove,
suspend, expel, fine or forfeit the benefits (with the
exception of vested employee retirement benefits
subject to title I of the Employee Retirement Income
Security Act -- 29 U.S.C. § 1001, et seq.) of any
officer, representative, agent, employee or person
holding a position of trust in the HEREIU and its
constituent entities or member of HEREIU when
such person engages or has engaged in actions or
inactions which (i) violate the injunctive
prohibitions of this Consent Decree, (ii) violate any
criminal law involving the operation of a labor
organization or employee benefit plan, or (iii)
229

further the direct or indirect influence of any
organized crime group or the threat of such
influence now or in the future.
See App. B at 195-97.256

256

Courts appointed officers with similar adjudication powers in the following 17
additional Government civil RICO cases involving labor unions:
(1) The Teamsters Local 560 Case; see App. B at 4;
(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17; United
States v. Local 6A, Cement & Concrete Workers, Laboreres Int’l Union of North America,
832 F. Supp. 674 (S.D.N.Y. 1993);
(3) The Bonanno Family Case; see App. B at 22-24;
(4) The Fulton Fish Market Case; see App. B at 30-31; United States v. Local 359 United
Seafood Workers, 55 F.3d 64 (2d Cir. 1995);
(5) The Local 30 Roofers Union Case; see App. B at 38; United States v. Local 30,
United Slate, Tile and Composition Roofers, 686 F. Supp. 1139, 1171 (E.D. Pa. 1988); United
States v. Local 20, United Slate, Tile and Composition Roofers, 871 F.2d 401 (3d Cir. 1989);
(6) The International Brotherhood of Teamsters Union Case; see App. B at 48-51; United
States v. Int’l Bhd. of Teamsters, 745 F. Supp. 908 (S.D.N.Y. 1990), aff’d, 941 F.2d 1292, 129495 (2d Cir. 1991); United States v. Int’l Bhd. of Teamsters, 743 F. Supp. 155 (S.D.N.Y. 1990),
aff’d, 905 F.2d 610 (2d Cir. 1990);
(7) The Private Sanitation Industry of Long Island Case; see App. B at 86-87;
(8) The ILA Local 1804-1 Case; see App. B at 99-100; United States v. Local 1804-1,
Int’l Longshoremen’s Ass’n, 831 F. Supp. 192 (S.D.N.Y. 1993);
(9) The IBT Local 295 Case; see App. B at 115-118; United States v. Local 295 of the
Int’l Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y. 1992);
(10) The New York Carpenters Union Case; see App. B at 123-26;
(11) The HEREIU Local 54 Case; see App. B at 136-38;
(12) The HEREIU Local 100 Case; see App. B at 144-45;
(13) The IBT Local 282 Case; see App. B at 150-53;
(14) The Mason Tenders District Council of Greater New York Case; see App. B at 162,
164-66;
(15) The LIUNA Chicago District Council Case; see App. B at 212-15;
(16) The LIUNA Local 210 Case; see App. B at 224-25;
(17) The HEREIU Local 69 Case; see App. B at 232-35.
230

4.

Imposition of Ethical Practices Codes and Disciplinary Procedures
a.

Disciplinary Procedures

In conjunction with appointing adjudication officers, courts have also approved
ethical practices codes and disciplinary procedures designed to prevent future misconduct and to
impose appropriate sanctions for violations of the courts’ injunctions and other orders. For
example, in the HEREIU civil RICO case, the district court approved of the following procedures
for imposing disciplinary sanctions (see App. B 196-200):
i.

Disciplinary Procedure. In order to discharge disciplinary duties under this
decree, the Monitor shall have the same rights and authority as the HEREIU
General President, the HEREIU General Executive Board, and any other officer,
agent, employee, or representative of the HEREIU as well as the full authority
derived from any and all provisions of law. When exercising his/her disciplinary
rights and powers, the Monitor shall afford the subject of the potential disciplinary
action written notice of the charge(s) against him/her and an opportunity to be
heard. The Monitor shall conduct any hearing on any disciplinary charges, render
the final decision regarding whether discipline is appropriate and impose the
particular discipline. The charged party shall have 20 days to answer the charges
against him/her and may be represented by counsel at any hearing conducted by
the Monitor. Any hearing shall be conducted under the rules and procedures
generally applicable in labor arbitration proceedings and decisions shall be made
using a “just cause” standard. In conducting any hearing, the Monitor shall have
the right and power:
231

ii.

i.

to administer oaths. All testimony and other evidence shall
be subject to penalties of perjury to the same extent as if
such evidence was submitted directly to the district court;

ii.

to examine witnesses or conduct depositions;

iii.

to receive evidence. The Monitor may receive evidence
withheld from the charged party and the public which
contains or constitutes sensitive information provided by a
law enforcement agency, and can choose what weight, if
any, to give such evidence, but in no case shall the identity
of a confidential source of law enforcement information be
required to be disclosed; and

iv.

to issue subpoenas requiring the attendance and
presentation of testimony of any person and/or the
production of documentary or other evidence. In the case
of contumacy or failure to obey a subpoena issued under
this Paragraph, the Monitor may: (i) impose discipline upon
the person in accordance with this Consent Decree; and/or
(ii) seek an order from the Court requiring the person to
testify or to produce documentary or other evidence.

Appeal of Disciplinary Action. Any discipline imposed by the Monitor shall be
final and binding, subject to review by the district court. A person disciplined by
the Monitor may obtain review of the Monitor’s decision regarding such
discipline by filing a written appeal of such decision with the Court within thirty
(30) days of such decision by the Monitor. The Monitor’s decision, all papers or
other material relied upon by the Monitor and the papers filed or issued pursuant
to this appeal procedure shall constitute the exclusive record for review. The
Monitor’s decisions pursuant to this Paragraph shall be reviewed by the district
court, if necessary, under the substantial evidence standard set forth in 5 U.S.C.
§ 706(2)(E). Materials considered by the Monitor but withheld from the appellant
and the public which contain sensitive information provided by a law enforcement
232

agency shall be submitted to the district court for ex parte, in camera
consideration and shall remain sealed. The person disciplined by the Monitor
may appeal the Monitor’s decision regarding the discipline imposed against
him/her and any decision by the Monitor regarding discipline imposed against a
person which is not appealed in accordance with this Paragraph may not be
appealed or otherwise challenged. HEREIU or the United States may seek the
district court’s review of the Monitor’s decision not to impose discipline.
iii.

The Public Review Board. The Consent Decree further provided that the
HEREIU would create a three-member Public Review Board (PRB) within the
HEREIU to enforce an Ethical Practices Code (EPC) attached to the Consent
Decree. The PRB and EPC were to be presented to the HEREIU Convention in
1996 for incorporation within the HEREIU Constitution. If these steps were taken
by the HEREIU, the Consent Decree further provided that the Monitor would
become a member of the PRB and his independent disciplinary authority would
expire within 6 months of the date when the PRB became effective, or not later
than March 5, 1997. All new matters arising after the Monitor’s appointment to
the PRB would be jointly investigated and pursued by the Monitor and the two
other members of the PRB.

See App. B at 196-200.
Moreover, courts in 13 additional Government civil RICO cases involving labor unions
have adopted similar disciplinary procedures, which typically require written notice of the
charges, the rights to representation by an attorney and to present a defense at an evidentiary
233

hearing that is fair, impartial and adversarial in nature, and a right of review by the district
court.257
b.

Due Process and Article III Considerations

The disciplinary procedures in these cases do not violate Article III of the Constitution
because the district courts retain their authority to decide dispositive issues of liability and
sanctions. See Section VII(E)(3) above. Furthermore, even assuming, arguendo, that due

257

See:

(1) The Fulton Fish Market Case; see App. B at 30; United States v. Local 359, United
Seafood Workers, 55 F.3d 64, 66-69 (2d Cir. 1995);
(2) The International Brotherhood of Teamsters Union Case; see App. B at 48-50. See
also the following decisions that are all entitled United States v. Int’l Bhd. of Teamsters:
998 F.2d 1101 (2d Cir. 1993); 998 F.2d 120 (2d Cir. 1993); 968 F.2d 1506 (2d Cir. 1992); 725 F.
Supp. 162 (S.D.N.Y. 1989), aff’d, 905 F.2d 610 (2d Cir. 1990); 741 F. Supp. 491 (S.D.N.Y.
1990); 764 F. Supp. 787 (S.D.N.Y. 1991); 775 F. Supp. 90 (S.D.N.Y. 1991), aff’d in part and
reversed in part, 948 F.2d 1278 (2d Cir. 1991) (Table); 803 F. Supp. 761 (S.D.N.Y. 1992), aff’d
and reversed in part, 998 F.2d 1101 (2d Cir. 1993); 829 F. Supp. 602 (S.D.N.Y. 1993); 842 F.
Supp. 1550 (S.D.N.Y. 1994);
(3) The Private Sanitation Industry of Long Island Case; see App. B at 86-88;
(4) The ILA Local 1804-1 Case; see App. B at 99, 106-07; United States v. Local 1804-1,
Int’l Longshoremen’s Ass’n, 831 F. Supp. 192, 194-198 (S.D.N.Y. 1993);
(5) The IBT Local 295 Case; see App. B at 117-18; United States v. Local 295 of the Int’l
Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y. 1992);
(6) The New York Carpenters Union Case; see App. B at 123-26; United States v. Dist.
Council of New York City, 409 F. Supp.2d 439, 442-44 (S.D.N.Y. 2006) and 941 F. Supp. 349,
355, 361-64 (S.D.N.Y. 1996);
(7) The HEREIU Local 54 Case; see App. B at 137-38;
(8) The HEREIU Local 100 Case; see App. B at 144-45;
(9) The Teamsters Local 282 Case; see App. B at 150-53;
(10) The Mason Tenders District Council of Greater New York Case; see App. B at 164171; United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL 742637
(S.D.N.Y. Dec. 27, 1994);
(11) The LIUNA Chicago District Council Case; see App. B at 214-17;
(12) The LIUNA Local 210 Case; see App. B at 224-25;
(13) The HEREIU Local 69 Case; see App. B at 234-35.
234

process applies to these disciplinary procedures,258 they afford greater rights than the minimum
requirements of due process, and hence do not violate due process. See Section
VII(D)(3) above; see also the following cases ruling that the disciplinary and adjudicatory
procedures employed in Government civil RICO cases involving labor unions satisfy due
process: United States v. Int’l Bhd. of Teamsters, 954 F.2d 801, 807 (2d Cir. 1992); United
States v. Int’l Bhd. of Teamsters, 948 F.2d 98, 104-105 (2d Cir. 1991); United States v. Int’l Bhd.
of Teamsters, 941 F.2d 1292, 1297-98 (2d Cir. 1991); United States v. Int’l Bhd. of Teamsters,
791 F. Supp. 421, 426 (S.D.N.Y. 1992).
Analogous case law under 29 U.S.C. § 411(a)(5) of the LMRDA also supports the
Government’s position that the disciplinary procedures adopted in Government civil RICO cases
involving labor unions satisfy the requirements of due process. Indeed, it is the policy of OCRS
that court-ordered disciplinary procedures in Government civil RICO cases involving labor
unions comply with the due process requirements embodied in 29 U.S.C. § 411(a)(5). Section
411(a)(5), which applies to internal union disciplinary procedures, provides as follows:
No member of any labor organization may be fined, suspended,
expelled, or otherwise disciplined except for nonpayment of dues
by such organization or by any officer thereof unless such member
has been (A) served with written specific charges; (B) given a
reasonable time to prepare his defense; (C) afforded a full and fair
hearing.
“The ‘full and fair hearing’ requirement of the LMRDA incorporates the ‘traditional
concepts of due process.’” United States v. Int’l Bhd. of Teamsters, 247 F.3d 370, 385 (2d Cir.
2001), quoting Kuebler v. Central Lithographers & Photoengravers Union Local 24-P, 473 F.2d
258

See Section VIII(E)(1) below, which indicates that due process and other
Constitutional protections may not apply to procedures to discipline union members under a
Consent Decree because the requisite state action is lacking in some circumstances.
235

359, 363-64 (6th Cir. 1973).259 To obtain relief for a violation of a union member’s LMRDA
rights, it is not enough to establish that an internal union disciplinary hearing violated the union’s
constitution or bylaws; rather, the union member must also establish that the violation deprived
him of a fair trial within the meaning of the LMRDA.260
Moreover, Section 411 (a) (5) of the LMRDA “was not intended to authorize courts to
determine the scope of offenses for which a union may discipline its members,” and therefore
unions have wide discretion to decide the scope of proscribed conduct, provided that the union
does not violate the protections afforded union members under the LMRDA.
Int’l Bhd. of Boilermakers v. Hardeman, 401 U.S. 233, 244 (1971)(“Hardeman”).261 Indeed, the
LMRDA “does not require that these charges to be valid, must be based on activity that the union
had proscribed prior to the union member having engaged in such activity.” Hardeman, 401 U.S.
at 244 (internal quotations and citation omitted).

259

Accord N.L.R.B. v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 194 (1967); Holmes v.
Donovan, 984 F.2d 732, 737-38 (6th Cir. 1993); Wellman v. Int’l Union of Operating Engineers,
812 F.2d 1204, 1205 (9th Cir. 1987); Tincher v. Piasecki, 520 F.2d 851, 854 (7th Cir. 1975);
Falcone v. Dantinne, 420 F.2d 1157, 1163-65 (3d Cir. 1970); Parks v. Int’l Bhd. of Electrical
Workers, 314 F.2d 886, 911-12 (4th Cir. 1963); Loekle v. Hansen, 551 F. Supp. 74, 82 (S.D.N.Y.
1982). See generally, Risa L. Lieberwitz, Due Process and the LMRDA: An Analysis of
Democratic Rights in the Union and at the Workplace, 29 B. C. L. REV . 21 (1987).
260

See, e.g., United States v. Int’l Bhd. of Teamsters, 247 F.3d at 387; Wellman,
812 F.2d at 1206; Yager v. Carey, 910 F. Supp. 704, 713 (D.D.C. 1995).
261

Accord Ferguson v. Int’l Ass’n of Bridge, Structural and Ornamental Iron Workers,
854 F.2d 1169, 1174-75 (9th Cir. 1988); Rosario v. Amalgamated Ladies Garment Cutters
Union, 605 F.2d 1228, 1240 (2d Cir. 1979) (collecting cases); Tincher v. Plasecki, 520 F.2d 851,
854 (7th Cir. 1975); Kuebler v. Cleveland, Lithographers & Photo Union Local 24-P, 473 F.2d
359, 363-64 (6th Cir. 1973); Falcone, 420 F.2d at 1163-65; Hurley v. Steamfitters Local Union
No. 464, 714 F. Supp. 996, 1001 (D. Neb. 1989).
236

Regarding the requisite specificity, the “charges must be . . . specific enough to inform
the accused member of the offense that he has allegedly committed,”262 and provide “the
information needed to conduct a meaningful investigation and prepare a defense.”263 Moreover,
Section 411(a)(5) of the LMRDA does not specify a time period to satisfy “as reasonable time to
prepare [the accused’s] defense.” One court has noted that “[a]t a minimum, however, due
process does require that the accused be told [of the charges], far enough in advance of trial to be
of some use to him. . . .” Reilly v. Sheet Metal Workers’ Int’l Ass’n, 488 F. Supp. 1121, 1127
(S.D.N.Y. 1980).264
The right to a “full and fair hearing” encompasses the rights to be present and “a
reasonable opportunity to be heard - including the right to present evidence and the right to
confront and cross examine witnesses.” Milne v. Int’l Ass’n of Bridge, Structural, Ornamental &
Reinforcing Iron Workers, AFL-CIO Local 15, 156 F. Supp.2d 172, 178 (D. Conn. 2001)
(internal quotations and citations omitted).265 Accordingly, courts have found that an accused
was denied a right to a “full and fair hearing” under the LMRDA when: (1) the discipline was
262

Hardeman, 401 U.S. at 245 (finding sufficient notice of the charges based on a
detailed statement of facts underlying the charges) (internal quotations omitted).
263

Gleason v. Chain Serv. Rest., 422 F.2d 342, 343 (2d Cir. 1970). See also, Curtis v.
Int’l Alliance of Theatrical Stage Emp., 687 F. 2d 1024, 1027 (7th Cir. 1982) (Section 411 (a) (5)
“does not require the elaborate specificity of a criminal indictment”) (collecting cases); Null v.
Carpenters Dist. Council of Houston, 239 F. Supp. 809, 815 (S.D. Tex. 1965).
264

See, e.g., Wellman, 812 F. 2d at 1206 (28 days was sufficient notice); Stewart v. St.
Louis Typographical Union No. 8, 451 F. Supp. 314, 315-16 (E.D. Mo. (1978) (14 days was
sufficient); Null, 239 F. Supp. at 815 (20 days was sufficient).
265

Accord Ritz v. O’Donnell, 566 F.2d 731, 735 (D.C. Cir. 1977); Parks v. Int’l Bhd. of
Electrical Workers, 314 F.2d 886, 912 (4th Cir. 1963); Yager v. Carey, 910 F. Supp. 704, 715
(D.D.C. 1995); Loekle, 551 F. Supp. at 82; Reilly, 488 F. Supp. at 1127; Steward, 451 F. Supp.
316.
237

unsupported by any evidence; 266 (2) the tribunal was not impartial;267 (3) the accused was not
allowed to record the trial when the union did not do so;268 and (4) the accused’s rights to crossexamination and to present a defense were unduly limited.269
However, while courts “apply traditional due process concepts, [courts] recognize that a
union has a significant interest in controlling internal discipline, and so do not require the union’s
disciplinary proceeding to incorporate the same protections found in criminal proceedings.”
Wellman v. Int’l Union of Operating Eng’rs, 812 F.2d 1204, 1205 (9th Cir. 1987).270
5.

Election Reform

In light of the LCN’s corrupt influence over union officials and union elections (see
Section VIII(A) above), union election reform is essential to eliminate such corruption and
266

See, e.g., Hardeman, 401 U.S. at 246 (collecting cases).

267

See, e.g., Murphy v. Int’l Union of Operating Eng’rs, Local 18, 774 F.2d 114, 125
(6th Cir. 1985); Semancik v. United Mineworkers of America, Dist. No. 5, 466 F.2d 144, 159
(3d Cir. 1972); Falcone, 420 F.2d at 1166-67.
268

See, e.g., Knight v. Int’l Longshoremen’s Ass’n, 457 F.3d 331, 340-42 (3d Cir. 2006);
Rosario, 605 F.2d at 1240-42; Tincher, 520 F.2d at 854-56.
269

See, e.g., Kuebler, 473 F.2d at 362-64; Milne, 156 F. Supp. 2d at 177-81; Loekle,
551 F. Supp. at 82-83.
270

Accord United States v. Int’l Bhd. of Teamsters, 247 F.3d at 385-86 (rights to
compulsory process and to subpoena witness are not required); United States v. Boggia, 167 F.3d
113, 118-19 (2d Cir. 1999) (right to representation of counsel at a disciplinary hearing is not
required and reliable hearsay is admissible); Wilderger v. AFGE, 86 F.3d 1188, 1193-95 (D.C.
Cir. 1996) (overlap of investigative, prosecutorial, and adjudicatory functions in the union’s
president did not violate due process); Curtis, 687 F.2d at 1027-29 (right to counsel at
disciplinary hearing is not required) (collecting cases); Yager v. Carey, 910 F. Supp. 704, 714-15
(D.D.C. 1995) (no rights to be represented by counsel or to the application of the “technical rules
of pleading, procedure and evidence”) (citations omitted); Hurley v. Steamfitters Local Union
No. 464, 714 F. Supp. 996, 1002 (D. Neb. 1988) (union members “need not be provided with the
full panoply of procedural safeguards afforded to criminal defendants”); Null v. Carpenters Dist.
Council of Houston, 239 F. Supp. 809, 814 (S.D. Tx. 1965).
238

restore union democracy to rank-and-file union members. Accordingly, in most of the
Government civil RICO cases involving labor unions, courts have imposed various union
election reforms, including: (1) requiring election of new officers; and (2) appointing courtofficers to promulgate election rules, conduct and oversee union elections to guarantee uncoerced
and untainted elections, and to review and approve candidates for union office.271 Indeed, in the
International Brotherhood of Teamsters Union Case, the district court approved a consent decree
requiring the IBT to amend its Constitution to provide, for the first time, elections of the IBT
General President and other International Officers by direct rank-and-file secret balloting. See

271

See:

(1) The Teamsters Local 560 Case; App. B at 3-6; United States v. Local 560 (I.B.T.),
736 F. Supp. 601 (D.N.J. 1990);
(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17;
(3) The Bonanno Family Case; see App. B at 22-24;
(4) The International Brotherhood of Teamsters Union Case; see App. B at 47-51; see
also the following decisions all entitled United States v. Int’l Bhd. of Teamsters: 247 F.3d 370
(2d Cir. 2001); 723 F. Supp. 203 (S.D.N.Y. 1989), aff’d as modified, 931 F.2d 177 (2d Cir.
1991); 742 F. Supp. 94 (S.D.N.Y. 1990), aff’d as modified, 931 F.2d 177 (2d Cir. 1991); 764 F.
Supp. 787 (S.D.N.Y. 1991); 782 F. Supp. 243 (S.D.N.Y. 1992); 803 F. Supp. 761 (S.D.N.Y.
1992), aff’d and reversed in part, 998 F.2d 1101 (2d Cir. 1993);
(5) The ILA Local 1804-1 Case; see App. B at 100-02;
(6) The IBT Local 295 Case; see App. B at 117;
(7) The New York Carpenters Union Case; see App. B at 125-27; United States v. Dist.
Council of New York City & Vicinity of the United Bhd. of Carpenters and Joiners of America,
880 F. Supp. 1051 (S.D.N.Y. 1995);
(8) The HEREIU Local 54 Case; see App. B at 135-38;
(9) The Teamsters Local 282 Case; see App. B at 154;
(10) The Mason Tenders District Council of Greater New York Case; see App. B at 166;
United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL 742637 (S.D.N.Y.
Dec. 27, 1994); 1997 WL 340993 (S.D.N.Y. June 20, 1997); and 1997 WL 345036 (S.D.N.Y.
June 20, 1997);
(11) The HEREIU Case; see App. B at 200-2001;
(12) The Chicago District Council of LIUNA Case; see App. B at 214-15, 218;
(13) The LIUNA Local 210 Case; see App. B at 221-25;
(14) The HEREIU Local 69 Case; see App. B at 234.
239

App. B at 47-48; United States v. Int’l Bhd. of Teamsters, 931 F.2d 177 (2d Cir. 1991); United
States v. Int’l Bhd. of Teamsters, 803 F. Supp. 761, 767-772, 774-76 (S.D.N.Y. 1992) (the IBT
election rules are set forth as exhibit A at 803 F. Supp. at 800-806), aff’d and reversed in part,
998 F.2d 1101 (2d Cir. 1993).
6.

Removal of Persons From Union Office and Membership, and Prohibitions
on Holding Union Office or Membership

As demonstrated in Sections II(C)(4) and VII(D) above, 18 U.S.C. § 1964(a) authorizes
district courts to remove a person from a position or office and to bar a person from holding a
position or engaging in specified activity in the future when:
(1)

Such person is a named defendant in a civil RICO action pursuant to
18 U.S.C. § 1964(a) and is found to have violated RICO after due notice and a
trial, summary judgment, or other appropriate adjudicatory proceeding, or by
default; or

(2)

Such person, whether or not named as a defendant in a civil RICO action, is
subject to an injunction issued pursuant to 18 U.S.C. § 1964(a), and is found after
due notice and an appropriate adjudicatory proceeding, or by default, to have
violated, or aided and abetted one or more named defendant’s violation of a
provision of a district court’s injunction or judgment order that warrants removal;
or

(3)

Such person, even though not named as a defendant in a civil RICO action nor
otherwise subject to an injunction issued pursuant to 18 U.S.C. § 1964(a), is
found after due notice and an appropriate adjudicatory proceeding, or by default,
to have aided and abetted an enjoined person’s violation of a district court’s
injunction or judgment order that warrants removal.

Accordingly, in many Government civil RICO cases involving labor unions, courts have
removed persons found to have violated RICO from membership or holding an office in a labor
union, and prohibited such persons from holding membership or office in a labor union in the
future, or have otherwise prohibited such person from engaging in activities related to union

240

matters.272
Moreover, in all 22 filed Government civil RICO cases involving labor unions, courts
have authorized such sanctions and other sanctions for persons who consented to such sanctions,
or who, after an appropriate adjudicatory procedure, were found to have violated the district
courts’ injunctions or other court orders.273 But see United States v. Local 30, United Slate, Tile,

272

See:
(1) The Teamsters Local 560 Case, see App. B at 3-12; United States v. Local 560 of the
Int’l Bhd. of Teamsters, 581 F. Supp. 279, 321, 336-37 (D.N.J. 1984), aff’d, 780 F.2d 267, 29596 (3d Cir. 1985), cert. denied, 476 U.S. 1140 (1988); United States v. Local 560 of the Int’l
Bhd. of Teamsters, 694 F. Supp. 1158, 1160-62, 1191-92 (D.N.J. 1988), aff’d, 865 F.2d 252 (3d
Cir. 1986) (Table); United States v. Sciarra, 851 F.2d 621, 623-24, 632-33 (3d Cir. 1988);
(2) The Local 6A Cement and Concrete Workers Case, see App. B at 17;
(3) The Local 30, Roofers Union Case, see App. B at 30-32; United States v. Local 30,
United Slate, Tile and Composition Roofers, 686 F. Supp. 1139, 1162, 1171-74 (E.D. Pa. 1988),
aff’d, 871 F.2d 401, 407-09 (3d Cir. 1989);
(4) The Private Sanitation Industry of Long Island Case, see App. B at 89-94; United
States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F. Supp. 808, 818
(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993); United States v. Private Sanitation Indus.
Ass’n of Nassau/Suffolk, Inc., 899 F. Supp. 974, 983-84 (E.D.N.Y. 1994), aff’d 47 F.3d 1158 (2d
Cir. 1995) (Table);
(5) The ILA Local 1804-1 Case, see App. B at 101-02, 105-07; United States v. Local
1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp. 177, 191-92 (S.D.N.Y. 1993), aff’d and
vacated in part on other grounds, United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995);
(6) The IBT Local 295 Case, see App. B at 117-18; United States v. Local 295 of the Int’l
Bhd. of Teamsters, 784 F. Supp. 15, 19 (E.D.N.Y. 1992);
(7) The Teamsters Local 282 Case, see App. B at 152-54; United States v. Local 282 of
the Int’l Bhd. of Teamsters, 13 F. Supp.2d 401, 402 (E.D.N.Y. 1998), aff’d in part and vacated
and remanded on other grounds in part, 215 F.3d 283 (2d Cir. 2000);
(8) The Mason Tenders District Council Case, see App. B at 173-74; United States v.
Mason Tenders Dist. Council of Greater New York, 1995 WL 679245 (S.D.N.Y. Nov. 15, 1995).
273

See: (1) App. B at 3-7; United States v. Local 560 of the Int’l Bhd. of Teamsters,
736 F. Supp. 601 (D.N.J. 1990), United States v. Local 560 of the Int’l Bhd. of Teamsters,
754 F. Supp. 395 (D.N.J. 1991), aff’d 974 F.2d 315 (3d Cir. 1992);
(2) App. B at 16-17; United States v. Local 6A, Cement & Concrete Workers, Laborers
Int’l Union of North America, 832 F. Supp. 674 (S.D.N.Y. 1993);
(3) App. B at 23-24;
(continued...)
241

and Composition Roofers, 686 F. Supp. 1139, 1167-68 (E.D. Pa. 1988), aff’d,
871 F.2d 401 (3d Cir. 1989) (the district court rejected the Government’s argument that the court
should remove newly elected union officers who were not defendants and who were not found to
have violated RICO, because they were close to the defendants found liable for RICO violations
and were likely “to follow the course that the old regime did”).
7.

Disgorgement

As noted in Section II(C)(3) above, there is a conflict between the Second Circuit and the
District of Columbia Circuit regarding the issue whether disgorgement is an available remedy

273

(...continued)
(4) App. B at 30;
(5) App. B at 37-39;
(6) App. B at 41;
(7) App. B at 47-51; United States v. Int’l Bhd. of Teamsters, 247 F.3d 370 (2d Cir.
2001) and cases cited at App. B at 51, n. 7;
(8) App. B at 81;
(9) App. B at 86, 91;
(10) App. B at 101-102; United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, et
al., 831 F. Supp. 192 (S.D.N.Y. 1993);
(11) App. B at 115-18;
(12) App. B at 123, 126; United States v. Dist. Council of New York City of the United
Bhd. of Carpenters and Joiners of America., 941 F. Supp. 349, 364-87 (S.D.N.Y. 1996);
(13) App. B at 136-38;
(14) App. B at 144-46;
(15) App. B at 152, 154-55;
(16) App. B at 165, 167-68, 173-75; United States v. Mason Tenders Dist. Council of
Greater New York, 1994 WL 742637 (S.D.N.Y. Dec. 27, 2994); Investigations Officers v. Lanza,
1996 WL 514871 (S.D.N.Y. Sept. 10, 1996); United States v. Mason Tenders Dist. Council of
Greater New York, 1998 WL 23214 (S.D.N.Y. Jan. 13, 1998);
(17) App. B at 196, 201-06; United States v. Hotel Employees and Rest. Employees Int’l
Union, 974 F. Supp. 411 (D.N.J. 1997);
(18) App. B at 211-14, 219;
(19) App. B at 223-25;
(20) App. B at 231-34, 236-37;
(21) App. B at 241-42;
(22) App. B at 250-55.
242

under 18 U.S.C. § 1964. Courts in the Second Circuit have repeatedly held that disgorgement of
a wrongdoer’s ill-gotten gains is an equitable remedy available to the United States under 18
U.S.C. § 1964 (a).274
8.

Relief Against Non-Parties

In accordance with the authority set forth in Section VII(C)(2) above, courts have
frequently imposed equitable relief against non-parties in Government civil RICO lawsuits. For
example, in the Government’s civil RICO suit against the International Brotherhood of
Teamsters Union, courts have held that provisions of the Consent Decree entered into by the
Government and the International Teamsters Union defendant, involving application of
disciplinary rules and related sanctions and rules governing union elections, applied to Teamsters
Union members and Teamsters Union affiliated entities that were non-parties and non-signatories
to the Consent Decree on the grounds that: (1) the interests of such non-parties were adequately
represented by the International Teamsters Union defendant, and (2) because the investigatory
and disciplinary powers of the officers appointed under the Teamsters’ Consent Decree are
proper delegations of the powers of the IBT General President and the IBT’s General Executive
Board within the scope of the IBT Constitution that binds all members of the IBT.275
274

See United States v. Carson, 52 F.3d 1173, 1180-82 (2d Cir. 1995); United States v.
Private Sanitation Indus. Ass’n, 914 F. Supp. 895, 900-01 (E.D.N.Y. 1996); United States v.
Private Sanitation Indus. Ass’n, 899 F. Supp. 974, 983-84 (E.D.N.Y. 1994), aff’d, 47 F.3d 1158
(2d Cir. 1995); United States v. Private Sanitation Indus. Ass’n, 811 F. Supp. 808, 818 (E.D.N.Y.
1992), aff’d, 995 F.2d 375 (2d Cir. 1993); United States v. Int’l Bhd. of Teamsters, 708 F. Supp.
1389, 1408 (S.D.N.Y. 1989); United States v. Bonanno Organized Crime Family, 683 F. Supp.
1411, 1446-49 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989).
275

See, e.g., United States v. Int’l Bhd. of Teamsters, 998 F.2d 120, 124 (2d Cir. 1993);
United States v. Int’l Bhd. of Teamsters, 964 F.2d 180, 183 (2d Cir. 1992); United States v. Int’l
Bhd. of Teamsters, 931 F.2d 177, 184-87 (2d Cir. 1991); United States v. Int’l Bhd. of
(continued...)
243

Moreover, courts have enforced consent decrees against non-parties and non-signatories
under the All Writs Act, 28 U.S.C. § 1651(a), when “necessary or appropriate in aid of their
respective jurisdiction and agreeable to the usages and principles of law.” See, e.g., United
States v. Int’l Bhd. of Teamsters, 954 F.2d 801, 806-07 (2d Cir. 1992) (affirming district court
order directing an employer to comply with the decision of a court officer appointed pursuant to
the IBT Consent Decree to reinstate a union employee whom it had dismissed in retaliation for
engaging in Teamsters union campaign activity, which was protected by election rules
promulgated pursuant to the IBT Consent Decree); United States v. Int’l Bhd. of Teamsters, 948
F.2d 98, 101-105 (2d Cir. 1991) (approving district court’s authority to issue an order affirming a
ruling by an officer appointed by the district court pursuant to the Teamsters Consent Decree
granting non-employee members of the IBT access to the premises of the employer to campaign
for union office, which order was necessary to effectuate the provisions of the Teamsters Consent
Decree relating to holding open and fair elections for union officers); United States v. Int’l Bhd.
of Teamsters, 907 F.2d 277, 279-281 (2d Cir. 1990) (affirming district court’s order enjoining all
members and affiliates of the IBT from litigating issues related to a Consent Decree between the
IBT and the Government in any court other than the Southern District of New York, where the
Consent Decree was entered, as necessary to aid the Southern District of New York’s jurisdiction
because collateral lawsuits in other jurisdictions “created a ‘significant risk of subjecting the

275

(...continued)
Teamsters, 905 F.2d 610, 622 (2d Cir. 1990); United States v. Int’l Bhd. of Teamsters,
808 F. Supp. 279, 282 (S.D.N.Y. 1992); United States v. Int’l Bhd. of Teamsters, 777 F. Supp.
1123, 1125-26 (S.D.N.Y. 1991) (collecting cases); United States v. Int’l Bhd. of Teamsters,
764 F. Supp. 787, 789-90 (S.D.N.Y. 1991); United States V. Int’l Bhd. of Teamsters,
745 F. Supp. 908, 912 (S.D.N.Y. 1990); Joint Council 73 v. Int’l Bhd. of Teamsters,
741 F. Supp. 491, 493 (S.D.N.Y. 1990).
244

Consent Decree to inconsistent interpretations and the Court Officers to inconsistent
judgments.’”276
C.

Relief Obtained In Contested Civil RICO Cases Involving Labor Unions
For the most part, the equitable relief discussed in Section VIII(B) above was obtained

through consent decrees voluntarily agreed upon by the parties in the litigation. Substantially
similar equitable relief also has been obtained in eight contested Government civil RICO cases
involving labor unions over the objections of defendants, as discussed below.277
1.

The IBT Local 560 Case -

United States v. Local 560 of the Int’l Bhd. of Teamsters, 581 F. Supp. 279 (D.N.J. 1984)
(“Local 560”), was the first civil RICO suit brought by the United States against a labor union.
In Local 560, 581 F. Supp. at 321, 336-37, following a bench trial, and over the objection of the
defendants, the district court imposed an injunction, enjoining two defendants “from any future
contacts of any kind with Local 560.” The district court also removed the members of the Local
560 Executive Board, who the court found had violated RICO, ordered a court-supervised
election of new officers for Local 560, and appointed a Trustee who conducted the business and
operations of Local 560. The trusteeship was imposed in order “to effectively dispel the existing
atmosphere of intimidation within Local 560, to restore union democracy, and to ensure (to the
276

See also United States v. Sciarra, 851 F.2d 621, 629-633 (3d Cir. 1988) (affirming an
order of the district court compelling non-parties to submit to depositions to effectuate the
administration of a court imposed trusteeship over the defendant-union).
277

Moreover, the case law involving equitable relief obtained through consent decrees is
also relevant to the issue of what equitable relief is available in contested Government civil
RICO cases over the objections of defendants, because a court may not approve a consent decree
unless it determines that the terms of the consent decree are consistent with, and do not violate,
the governing law, and that they further the objectives of the statute underlying the cause of
action. See Section VII(A)(1) above.
245

extent possible) that racketeers do not obtain positions of trust within the Local.” Id. at 326.278
In United States v. Local 560 of the Int’l Bhd. of Teamsters, 780 F.3d 267, 295-96 (3d
Cir. 1986), cert. denied, 476 U.S. 1140 (1986), the Third Circuit affirmed the district court’s
relief, stating that the power to appoint “a trustee to be in charge of Local 560 . . . falls within the
broad equitable powers granted to district courts under Section 1964(a), ” Id. at 296 n. 39,
particularly the “broad remedial powers of ‘divestiture’ and ‘reasonable restrictions’ provided for
under Section 1964.” Id. at 295.
During the course of the trusteeship, which was in place for over twelve years, the district
court authorized the Trustee, subject to review by the district court, to, among other matters,
administer the affairs of Local 560, negotiate contracts, hire and discharge employees and
investigate acts of wrongdoing within the union.279
In particular, the powers of the court-appointed Trustee included, but were not limited to,
the following:
a.

All powers accorded to the members of the Local 560 Executive Board,
either individually or collectively, by virtue of the bylaws and,
constitutions of the Local and International Union;

278

The district court found that various defendants, including members and associates of
the LCN and corrupt Local 560 officials, had created a climate of intimidation that induced Local
560 members to surrender their rights to union democracy through a pattern of racketeering
activity involving several murders, extortion and the systematic appointment and re-appointment
to union positions of persons with ties to organized crime and/or serious and extensive criminal
records. See Local 560, 581 F. Supp. at 284-85, 290-92, 306-19.
279

See App. B at 3-12. See also United States v. Local 560 of the Int’l Bhd. of
Teamsters, Civil No. 82-689 (D.N.J. Opinion and Order dated May 12, 1987); United States v.
Local 560 of the Int’l Bhd. of Teamsters, 694 F. Supp. 1158, 1160-62, 1191-92 (D.N.J. 1988),
aff’d, 865 F.2d 252 (3d Cir. 1988)(Table); United States v. Sciarra, 851 F.2d 621, 623-24, 63233 (3d Cir. 1988).
246

b.

All powers accorded to the offices formerly held by those persons
removed from office pursuant to the Judgment Order of March 16, 1984,
by virtue of the bylaws and constitutions of the Local and International
Union;

c.

The power to enter into negotiations, execute contracts, pursue grievances,
conduct organizing campaigns, and otherwise direct and engage in all
lawful activities of Local 560;

d.

The power to initiate pursue, defend or settle litigation on behalf of Local
560 or its members in accordance with the lawful powers of the Union;

e.

The power to hire and discharge employees of Local 560 and set the
wages, terms and conditions of employment, subject to any limitations that
may be created by law or existing written contracts;

f.

The power to appoint and remove business agents, stewards and other
representatives of Local 560, subject to any limitations that may be created
by the bylaws and constitutions of the Local and International Unions;

g.

The power to retain or terminate any legal counsel, accountants,
consultants or other professionals that he may deem necessary to the
accomplishment of his duties under such terms and conditions as he may
determine appropriate, including the fixing of compensation which shall
be paid by Local 560;

h.

The power to make all determinations with respect to the affairs of Local
560 in any and all aspects of its operations; and

i.

The power to participate in the affairs of the Joint Council, the Benefit
Plans and other bodies related to Local 560 to the same extent as was
customary for Executive Board members prior to the imposition of, the
Trusteeship.

See United States v. Local 560 of the Int’l Bhd. of Teamsters, Civ. No. 82-689 (D.N.J.
Opinion and Order dated May 12, 1987) at 6-7.
2.

The Local 30, Roofers Union Case -

In United States v. Local 30, United Slate, Tile and Composition Roofers,
686 F. Supp. 1139, 1162-1174 (E.D. Pa. 1988) (“Local 30, United Slate, Tile”), following an
247

evidentiary hearing, the district court found that defendants had violated RICO and imposed a
“Decreeship” over the Roofers Union that included the following equitable relief over the
defendants’ objections:
a.

The district court barred defendants who violated RICO “from the roofing
industry within the jurisdiction of Local 30/30B.” Id. at 1162.

b.

The district court appointed a Chief Liaison Officer “who will serve as the
principal enforcement officer of all provisions of the Decree,” id. at 1171,
and “will have the authority, upon application and approval of [the
District] Court, to hire such assistants and support services as will be
needed to fulfill his responsibilities under the Decree.” Id. at 1169.

c.

The district court ordered an audit of all accounts of Local 30/30B and any
affiliated entity by a designee of the Court. Id. at 1169, 1172.

d.

The district court barred all defendants found to have violated RICO “from
holding, occupying, or controlling any position of leadership or influence
in respect to any matter within the jurisdiction of Local 30/30B or any of
its affiliated entities”and “from engaging in employment in the roofing or
related construction industries, in any capacity, within the geographical
area of the jurisdiction of Local 30/30B”. Id. at 1171.

e.

The district court ordered that Local 30/30B develop with the appropriate
employer representative groups an industry-wide grievance/arbitration
procedure for resolving contractual disputes between the union and
employers, subject to the court’s approval. Id. at 1172-73.

f.

The district court ordered that all face-to-face collective bargaining
agreement negotiations take place under the supervision of the Court
Liaison Officer. Id. at 1172-73.

g.

The district court prohibited any collective bargaining agreement from
taking effect until it was approved by the Court Liaison Officer. Id. at
1173.

h.

The district court established “direct control of all matters within the
jurisdiction of the union that require the expenditure of any funds of the
Union or any affiliated entity for the transfer of any of its assets” and
enjoined defendants “from transferring any funds, property, or interests in
any assets of any kind of Local 30/30B or any of its affiliated entities,
except in the ordinary course of business without the express written
248

consent of the court.” Id. at 1172.
i.

The district court ordered that the “Court Liaison Officer shall have the
right, without prior notice, to have access to any records, wherever located,
at the offices, locations and other property of Local 30/30B or any
affiliated entity” and to copy such records. Id. at 1173.

j.

The district court required the union to “provide written notice to the court
of all meetings, proceedings, or decisions providing for nominations
and/or elections for offices or positions within Local 30/30B, or any
affiliated entity.” Id. at 1173.

k.

The district court prohibited the union and any affiliated entity and the
individual defendants “in respect to any member within the jurisdiction of
Local 30/30B, or any affiliated entity, from intimidating, inflicting
violence, fear, or threats of personal or property damage upon any person,
corporation or entity, or attempting to do so.” Id. at 1174.

l.

The district court retained jurisdiction of all matters relating to the union
and any affiliated entity and ordered that “[a]ll costs incurred in the
administration of the Decreeship shall be borne by Local 30/30B and,
where appropriate, its affiliated entities.” Id.

In United States v. Local 30, United Slate, Tile and Composition Roofers, 871 F.3d 401,
404 (3d Cir. 1989), the Third Circuit affirmed this equitable relief, noting that “the District Court
converted the preliminary injunction into a ‘final decree.’” The Third Circuit concluded that the
relief granted was authorized by 18 U.S.C. § 1964(a), and that the District Court did not abuse its
discretion in imposing a decreeship against the Roofers Union and deciding that the ordered
relief was necessary to eliminate and prevent corruption in the union. Id. at 404-09.
The Third Circuit stated that, under Section 1964 of RICO, “[t]he district court is
empowered not only to restrain but also to prevent future violations of § 1962 by ordering
reorganization or even dissolution of any enterprise, as long as the court makes due provision for
the rights of innocent parties.” Id. at 407. The Third Circuit also explained that the intrusive
relief was necessary because the evidence “supports the district court’s finding that the removal
249

of the thirteen individual defendants would not have eliminated that corrupt influence from the
Roofers Union.” Id. at 407. Finally, the court of appeals noted that the evidence showed:
that the newly elected officials are long time associates and allies
of the thirteen individual defendants in this case, which indicates
that corrupt influences continue to exist within the Union.
[Consequently] the district court properly found a likelihood of
wrongful acts continuing into the future.
Id. at 409.
3.

The ILA Local 1804-1 Case -

In United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp. 177, 191-192
(S.D.N.Y. 1993), following a bench trial, the district court enjoined certain defendants found to
have violated RICO:
(1) from committing any acts of racketeering, as defined in [18
U.S.C. § 1961]; (2) from having any dealings, directly or
indirectly, with any members or associates of organized crime for
any commercial purpose concerning the affairs of the Waterfront
[Enterprise]. . . or any labor organization; and (3) from having any
dealings, directly or indirectly, with any other defendant in this
action for any commercial purpose concerning the affairs of the
Waterfront [Enterprise] or any labor organization; and (4) from
participating in any way in the affairs of or having any dealings,
directly or indirectly, with (i) any labor organization. . . .(ii) any
officer, agent, representative, employee, or member of [several ILA
locals], (iii) any other officer, agent, representative, employee, or
member of the ILA, or any other labor organization concerning the
affairs of such organization or the Waterfront [Enterprise]; and (iv)
any person or entity that does business on the Waterfront; and (5)
from visiting the site of any ILA entity or other labor organization
or communicating with any person who is at the site of any ILA
entity or other labor organization.
In United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995), the Second Circuit
upheld this injunctive relief. The Second Circuit ruled that the above restrictions on the
defendants were “reasonable,” not overly broad, were specifically authorized by Section 1964 (a)
250

that allows “reasonable restrictions on the future activities” of RICO violators (id. at 1183), and
did not violate the defendants’ First Amendment rights to freedom of association.
4.

The IBT Local 295 Case -

In United States v. Local 295 of the Int’l Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y.
1992), over the objection of Local 295, the district court imposed a court - trusteeship to conduct
various operations of Local 295 and to conduct investigations to eliminate corruption within
Local 295. The district court stated that it had authority to “appoint a trustee to oversee the
affairs of a local union under [Section 1964(a) of RICO].” Id. at 19. The district court also
quoted a Senate Report stating that “‘[t]he implementation of trusteeships under civil RICO is no
longer a novel, one-time experiment. It is quickly being recognized as an extremely valuable part
of effective law enforcement.’” Id. at 19.
In a subsequent order, the district court authorized the Trustee, among other matters:
a.

b.

c.

“To conduct, administer and supervise the daily affairs of Local 295,
including the power to handle grievances, arbitration and collect and
disburse monies (including member dues) on behalf of the Local; [and
negotiate, enter, and terminate contracts and leases]”.
...
“To investigate corruption and abuse within Local 295, with or without
probable cause, and with such investigative assistance as he deems
appropriates.”
...
To discipline, remove and replace any officer, administrator, organizer,
business agent, employee, shop steward, negotiator, or trustee of Local
295, for just cause as follows:
i.

The Trustee’s decisions with respect to discipline of members shall
be final and binding. Any member’s appeal shall be to the United
States District Court for the Eastern District of New York within
fourteen days of receipt of the Trustee’s decision.

251

ii.

In any appeal pursuant to paragraph 2(e)(1), the standard of review
shall be whether the Trustee’s decision is supported by a
preponderance of the evidence. Such evidence may consist of or
include hearsay.

iii.

d.

Any actions of the Trustee pursuant to this subparagraph shall be
reviewable, exclusively by this Court, and are not subject to
arbitration or other challenge under the IBT Constitution or Local
295 By-Laws.
...
To take possession of and review all current and past books, records, files,
accounts and correspondence of Local 295 and the Executive Board.

e.

[To conduct and supervise union elections].

f.

“To subpoena witnesses and documents.”

g.

“To take testimony formally or informally, on the record under oath before a court
reporter or otherwise as the circumstances may require in the Trustee’s sole
discretion.”

h.

“To receive assistance of federal and local law enforcement” and to “refer
possible violations of criminal law to federal or local law enforcement
authorities.”

i.

“To apply to the [district] Court for such assistance as may be necessary and
appropriate to carry out the powers conferred upon the Trustee.”

j.

To provide periodic written reports to the district court and the government.

k.

To provide the Trustee with “all powers granted to Trustees of locals pursuant to
the IBT Constitution and all powers formerly held by the Executive Board of
[Local 295] to the extent that such powers, including the power to conduct
hearings, discipline, remove and replace officers, employees and members, are
broader than those emumerated [in the district court’s order].”

l.

To petition the district court for modification of any of the terms of the district
court’s order.

See App. B at 117-18.

252

5.

The IBT Local 282 Case -

In United States v. Local 282 of the Int’l Bhd. of Teamsters, 13 F. Supp.2d 401 (E.D.N.Y.
1998), aff’d in part, and vacated and remanded in part, by 215 F.3d 283 (2d. Cir. 2000), based on
Robert Sasso’s guilty plea to a RICO conspiracy charge, the district court granted the
Government’s motion for summary judgment in its civil RICO action “to the extent of finding
Sasso liable in that he ‘conspired with the other individual defendants and members of organized
crime to conduct the affairs of defendant Local 282 of the International Brotherhood of
Teamsters as an enterprise through a pattern of labor racketeering activities, including acts of
extortion and illegal receipt of money from employers, from the late 1970s through 1991 in
violation of 18 U.S.C. § 1962(c).’” Id. at 402. The district court also permanently enjoined Sasso
from: (1) “owning, operating, or working for any business in the construction, demolition, or
excavation industries or part of the trucking industry which was engaged in construction,
demolition, or excavation”; (2) “working in any capacity for any person or business doing
business with the construction, demolition, or excavation industries and from associating for any
commercial purpose with any member or associate of organized crime”; and (3) “from visiting
the work sites of the International Brotherhood of Teamsters and, with limited exceptions,
communicating with any person at these sites.” Id. at 402.
The district court also ordered Sasso to pay 15% of the costs of a monitorship (i.e.,
$136,000) that the district court had imposed over Local 282 pursuant to a Consent Decree. In so
ruling, the district court stated:
The broad discretion in fashioning remedies granted by section
1964(a) affords this Court the power to order Sasso to fund the
monitorship which the Consent Judgment created. Ordering Sasso to
fund the monitorship does not violate the restraints on district courts’
253

powers under § 1964(a) emphasized in [United States v. Carson, 52
F. 3d 1173 (2d Cir. 1995)]. In Carson, the Second Circuit warned
that district courts have the power to “‘prevent and restrain’ future
conduct” but not the power to “punish past conduct.” Carson, 52
F.3d at 1182 (emphasis in original). The Second Circuit held that the
Carson district court overstepped its jurisdiction by ordering Carson
to disgorge profits he illicitly acquired eight years before the launch
of the civil suit. Id. at 1182. Carson’s profits were garnered “too far
in the past to be part of an effort to ‘prevent’ and ‘restrain future
conduct.’” Id. (emphasis in original).
Here, in contrast, the plaintiff does not request that Sasso disgorge
profits. Rather, plaintiff only moves the Court to order Sasso to
contribute to the funding of the monitorship. As Judge Glasser noted,
funding a monitorship furthers the prevention and the restraint of
future illegal conduct. See Private Sanitation Indus. Ass’n., 914 F.
Supp. at 901, surpra. Here, there is no question that additional
funding for the Local 282 monitorship will help prevent the illegal
conduct Sasso fostered at Local 282. Indeed, the monitorship in this
case was created for the express purpose of eradicating the possibility
of future labor racketeering by Local 282 officials. Additionally,
funding the monitorship will further prevent future illegal conduct by
Sasso. Sasso will be deterred from engaging in labor racketeering
because a fully funded monitorship is difficult to evade.
Id. at 403.
In United States v. Sasso, 215 F.3d 283 (2d Cir. 2000), on appeal of the above-referenced
opinion, the Second Circuit held that the district court’s order requiring Sasso to fund a portion
of the costs of the court-imposed Monitorship of Local 282 fell within the district court’s broad
equitable powers under 18 U.S.C. § 1964. The Second Circuit distinguished its earlier opinion in
United States v. Carson, 52 F.3d 1173 (2d Cir. 1995), stating:
In Carson, we dealt with a disgorgement order, not with an order of
contribution to the funding of a monitorship; and we reversed only to
the extent that the sums ordered disgorged were not meant for the
prevention of future RICO violations. Our remand plainly allowed
an order requiring the payment of any amounts that were “intended
soley to prevent and restrain future RICO violations.” 52 F.3d at
1182 (internal quotation marks omitted).
254

In the present case, we deal with an order for Sasso’s payment of
money into a fund that plainly is to be used to prevent further
violations of section 1962.
Sasso, 215 F.3d at 291.
The Second Circuit also rejected Sasso’s argument “that ordering contribution from him
is inappropriate because he has now been enjoined from engaging in the pertinent activities,
thereby preventing him from committing any future RICO offense.” Id. at 291. The Second
Circuit explained:
First, there was evidence from the Corruption Officer that Sasso,
while imprisoned following his RICO conviction, had hundreds of
communications with persons associated with organized crime,
persons associated with Local 282, persons whose businesses were
within the Local’s jurisdiction, and persons who had previously made
illegal payments to corrupt Local officials. That evidence easily
demonstrates that there can be no effective monitorship without
attention to Sasso’s own current activities. Sasso’s suggestion that
such attention is unnecessary because he has been enjoined rings
hollow in light of his postconviction conduct and in light of the
pattern of concealment previously engaged in by the individual
defendants, which included clandestine meetings, surreptitious money
transfers, and lying under oath. Second, even if Sasso himself had
not continued to have suspicious contacts with the persons described
above, it would be well within the court’s equity powers to conclude
that Sasso, having engaged in conduct that corrupted the union,
should bear part of the cost of eliminating that corruption.
Id. at 291.
The Second Circuit remanded the matter to the district court to make appropriate
findings as to “how it arrived at 15 percent as Sasso’s appropriate share of the [monitorship]
expense.” Id. at 292.

255

6.

The Mason Tenders District Council of LIUNA Case In United States v. Mason Tenders Dist. Council of Greater New York,

1995 WL 679245 (S.D.N.Y. Nov. 15, 1995), the Government sought permanent injunctive relief
against individual defendants Casciano, LaBarbara, Mandragona, Messera, Soussi, and Vario
(Athe Individual Defendants@), seeking to limit their involvement in organized crime, union
affairs, and the construction and asbestos removal industries. Each of these defendants was at
one time an official of the Mason Tenders District Council, the Trust Funds, or a constituent
local union. Between 1989 and 1992, each had pled guilty to various racketeering charges. At
the time the Government’s proposed injunctions were submitted, all of the Individual Defendants
either had been recently released from prison for those offenses or were pending imminent
release. The District Court rejected defendants’ argument that their guilty plea agreements
precluded any relief in this action, noting that “[t]he RICO statute specifically contemplates
simultaneous criminal and civil liability for the identical acts of a single defendant.” Id. at * 21.
The district court also rejected defendant Vario’s argument that the conditions of his supervised
release subjected him to conditions that made the injunctive relief unnecessary.
The Government’s proposed injunction sought various restraints on the activities of the
Individual Defendants, barring them from any further racketeering activity, all contacts with LCN
members, all association with labor unions or the trust funds, all commercial activities involving
the District Council or its unions, and involvement in the construction and asbestos removal
industries. Several defendants filed various objections to the breadth and scope of these
proposed restraints, asserting that the terms of the requested relief were vague and overbroad and
violated their First Amendment rights. However, the District Court ruled that, under United
256

States v. Carson, 52 F.3d 1173 (2d Cir. 1995), and other government civil RICO cases, the
court’s authority to fashion equitable relief in order to accomplish RICO’s purposes was very
broad. In particular, the District Court enjoined the defendants from:
a.

committing any act of racketeering as defined in 18 U.S.C. § 1961;

b.

knowingly associating for commercial purposes, directly or indirectly,
with any member or associate of organized crime, with any defendant in
this action, with any member of the MTDC or its constituent locals, or
with any owner, officer, agent, or employee of any business employing
members of LIUNA, the MTDC, or the MTDC’s constituent local unions;

c.

visiting any social clubs where commercial activities are discussed, or
which is known to be frequented by members or associates of organized
crime;

d.

participating in any way in the affairs of, or continuing as a member of, or
having any dealings, directly or indirectly, with any labor organization or
employee benefit fund, including, without limitation, any entity or
employee benefit fund affiliated with LIUNA, the MTDC, or an MTDC
constituent local, provided that nothing in this judgment shall prohibit any
one of the Six Individual Defendants from (a) making application for or
receiving a pension from the MTDC Pension Fund, or from
communicating with the MTDC Pension Fund concerning these pension
payments; (b) permitting any business not employing members of LIUNA,
the MTDC, or the MTDC constituent local unions, which business
employs any one of the Six Individual Defendants, from deducting money
from his wages and from remitting such money to a labor organization not
affiliated with LIUNA, the MTDC, or any MTDC constituent local; or (c)
seeking and receiving benefits provided for by a collective bargaining
agreement binding on any business not employing members of LIUNA,
the MTDC, or the MTDC constituent local unions, which business
employs any one of the Six Individual Defendants, or provided for by an
ERISA-protected employee benefit plan established by that business;

e.

knowingly associating for any commercial purpose, directly or indirectly,
with any officer, agent, delegate, representative, shop steward, or
employee of any labor organization or employee benefit fund, including,
without limitation, any labor organization or employee benefit fund
affiliated with LIUNA, the MTDC, and the MTDC constituent locals;

257

f.

owning, operating, having any interest in or control of, doing business
with, or having any commercial dealings, directly or indirectly, with any
entity that employs members of LIUNA or the MTDC, including, but not
limited to, such entities in the construction or asbestos removal industries.

Masson Tenders Dist. Council of Greater New York, 1995 WL 679245 at * 22-23.
7.

The Private Sanitation Industry Ass’n Case -

(1.)

In United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F.

Supp. 808 (E.D.N.Y. 1992), aff’d, 995 F. 2d 375 (2d Cir. 1993), the district court granted the
Government’s motion for partial summary judgment, providing for broad injunctive relief against
defendant Salvatore Avellino, and denied Avellino’s request for a continuance to conduct
discovery pursuant to FED . R. CIV . P. 56(f).
The complaint alleged, and the district court found, that Avellino, a capo in the Luchese
LCN Family and hidden owner in two corporate defendant carting companies, collected extortion
payments and tribute from area carters. Avellino divided these illegal proceeds between the
Luchese LCN Family and the Gambino LCN Family, which controlled IBT Local 813, the union
that represented workers employed by employers engaged in the solid waste industry on Long
Island. To control the carting industry, Avellino used and threatened to use force against rebel
carters, controlled bidding on certain jobs, and bribed public and union officials to ensure
continued control of the carting industry. 811 F. Supp. at 810-11.
The district court rejected Avellino’s contention that the broad injunctive relief sought by
the Government impermissibly infringed on his constitutional right of association. In that
respect, the district court ordered that:
a.

defendant Avellino refrain from participating directly or indirectly in the
carting industry, any company engaged in the business of carting, any trade
waste association and in the affairs of Local 813;
258

b.

defendant Avellino be divested of his interests in the carting industry and
in PSIA enterprises;

c.

defendant Avellino disgorge the illicit proceeds of his racketeering
activity;

d.

defendant Avellino refrain from associating with the other defendants in
this action for any commercial purpose; and

e.

defendant Avellino refrain from associating with known members and
associates of organized crime for any commercial purpose.

811 F. Supp. at 818.
The district court, citing United States v. Bonanno Organized Crime Family of La Cosa
Nostra, 683 F. Supp. 1411, 1441 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989), ruled that
18 U.S.C. § 1964(a) granted the court authority “‘to enter reasonable injunctions against violators
restricting their future business activities.’” 811 F. Supp. at 818. The district court found that the
injunction against associating with other defendants and with known members and associates of
organized crime was “designed to further the significant governmental interest in eliminating the
insidious impact upon a captive community of corruption and racketeering in the Long Island
carting industry.” Id.
(2.)

In United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F.

Supp. 974 (E.D.N.Y. 1994), aff’d 47 F.3d 1158 (2d Cir. 1995) (table), the district court granted
the Government’s motion for summary judgment and broad injunctive relief against defendant
Nicholas Ferrante. The complaint alleged, and the district court found, that Ferrante, a reputed
associate of the Lucchese LCN Family and owner of two Long Island carting companies, was a
close associate of Salvatore Avellino, an alleged Capo in the Lucchese LCN Family, and assisted
Avellino on a regular basis in collecting extortion payments and tribute from area carters. In
259

reaching its conclusion that Ferrante failed to show a genuine issue of fact as to his civil liability,
the district court found that under principles of collateral estoppel, Ferrante’s guilty plea in state
court to coercion in the first degree conclusively established that he had committed one predicate
racketeering act and that undisputed evidence submitted by the Government established the
second predicate act alleged, second degree bribery under New York State Penal Law Section
200.00. 899 F. Supp. at 980-82. Ferrante’s liability for the bribery charge, the district court
found, was based on the adverse inference which arises when a defendant invokes the privilege
against self-incrimination and “independent corroborative evidence of the matters to be inferred”
presented by the Government. Id. at 982 (citations omitted).
The district court found Ferrante liable for a RICO violation and enjoined Ferrante from:
(i) engaging in any activities involved in connection with the
collection, transportation or disposal of solid waste, (ii) violating,
aiding or abetting the violation of, and/or conspiring to violate any
of the provisions of Title 18, United States Code Section 1961 et
seq., (iii) participating in the affairs of PSIA or other trade waste
association, and from participating in the affairs of Local 813 and
its Trust Funds, any other union and its trust funds, (iv) associating
with any other defendant or member or associate of organized
crime for any commercial purpose and (b) ordered to divest his
interests in the named enterprises and to disgorge the proceeds
derived from his unlawful conduct and participation therein into a
Court-administered fund.
899 F. Supp. at 983-84.
(3.)

In United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 914 F.

Supp. 895 (E.D.N.Y. 1996), the district court granted the Government’s motion for summary
judgment against defendants Sanitation and U-Need-a-Roll Off. Corp., finding that under
principles of collateral estoppel, the corporate-defendants’ guilty pleas to criminal charges
conclusively established that they committed the racketeering acts charged against them in the
260

civil RICO suit. Id. at 896-98.
The district court ruled that United States v. Carson, 52 F.3d 1173 (2d Cir. 1995), did not
preclude its order requiring Ferrante and the corporate defendants to disgore the proceeds of their
RICO violations because “unlike Carson, the defendants in this case continue to be actively
involved in the identical activities upon which this RICO suit is predicated,” and hence “the
monies these corporations gained illegally obviously constitute capital available for the purpose
of funding or promoting the illegal conduct.” 914 F. Supp. at 901.
The district court also ordered that the defendants were subject to the same equitable
relief provided in the Consent Judgment entered by the district court on February 28, 1994. Id. at
901-02. See App. B at 85-87.
8.

The LIUNA Local 6A Case -

In United States v. Local 6A, Cement and Concrete Workers, Laborers International
Union of North America, Complaint No. 86 Civ. 4819 (S.D.N.Y.), in an order entered April 23,
1987, the district court granted the Government’s motion for summary judgment against eight
alleged organized crime figures and permanently enjoined them from:
a.

participating in any way, in the affairs of Local 6A, Cement and Concrete
Workers, Laborers International Union of North America (“Local 6A”),
the District Council of Cement and Concrete Workers, Laborers
International Union of North America (the “District Council”), or any
other labor organization or employee benefit plan, as defined in Title 29 of
the United States Code;

b.

having any dealings with any officer, auditor or employee of Local 6A, the
District Council or any other labor organization or employee benefit plan,
about any matter which relates, directly or indirectly, to the affairs of Local
6A, the District Council or any other labor organization; and

c.

participating in any way in, or profiting from, any concrete construction
business in the Southern District of New York or elsewhere.
261

See App. B at 17.
D.

Union Officials and Entities As Nominal Defendants
1.

Evidence of Wrongdoing is Not Required to Obtain Relief Against a Nominal
Defendant

Rule 19 (a), FED . R. CIV . P. provides as follows:
Rule 19. Joinder of Persons Needed for Just Adjudication
(a) Persons to be Joined if feasible. A person who is subject to
service of process and whose joinder will not deprive the court of
jurisdiction over the subject matter of the action shall be joined as
a party in the action if (1) in the person’s absence complete relief
cannot be accorded among those already parties, or (2) the person
claims an interest relating to the subject of the action and is so
situated that the disposition of the action in the person’s absence
may (i) as a practical matter impair or impede the person’s ability
to protect the interest or (ii) leave any of the persons already parties
subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations by reason of the claimed
interest. If the person has not been so joined, the court shall order
that the person be made a party. If the person should join as a
plaintiff but refuses to do so, the person may be a defendant, or, in
a proper case, an involuntary plaintiff. If the joined party objects to
venue and joinder of that party would render the venue of the
action improper, that party shall be dismissed from the action.
Pursuant to Rule 19(a)(1), FED . R. CIV . P., a person may be joined as a “nominal
defendant” when joinder is necessary to afford “complete relief . . . among those already
parties,” even though: (1) no cause of action is asserted against the nominal defendant; (2) the
nominal defendant is not liable for any wrongdoing; and (3) there is no evidence of wrongdoing
by the nominal defendant.280
280

See, e.g., Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 400 (1982); Int’l Bhd. of
Teamsters v. United States 431 U.S. 324, 355-56 n.43 (1977); Providence Bank v. Patterson,
390 U.S. 102, 107-08 (1968); City of Syracuse v. Onondaga County, 464 F.3d 297, 307-11 (2d
Cir. 2006); Commodity Future Trading Comm’n v. Kimberlynn Creek Ranch, Inc., 276 F.3d 187,
(continued...)
262

For example, in Teamsters v. United States, 431 U.S. 324 (1977), the United States
brought a civil rights suit against a nationwide common carrier and a union that represented
many of the company’s employees, alleging that the company had engaged in a pattern of
discrimination against “Negroes and Spanish-surnamed” persons by giving them lower paying,
less desirable jobs than whites. The Supreme Court ruled that the union did not engage in any
misconduct and that the injunction against it must be vacated. However, the Court ruled that the
union should remain “as a defendant so that full relief may be awarded the victims of the
employer’s . . . discrimination.” Id. at 356 n.43. In that regard, the Supreme Court directed that,
on remand, the district court was to determine which minority members were actual victims of
discrimination and “balance the equities of each minority employee’s situation in allocating the
limited number of vacancies that were discriminatorily refused to class members.” 431 U.S. at
371-72.
Similarly, in EEOC v. MacMillian Bloedel Containers, Inc., 503 F.2d 1086, 1095-96 (6th
Cir. 1974), the Equal Employment Opportunity Commission (“EEOC”) sued MacMillian
Bloedel Containers, Inc., (“MacMillian”) for alleged race and sex discrimination. A union which
represented MacMillian’s employees argued that it was improperly joined as a nominal defendant
under Rule 19(a), FED . R. CIV . P., because it was not charged with any unlawful conduct and that

280

(...continued)
191-93 (4th Cir. 2002); Local 1351 Int’l Longshoreman’s Ass’n v. Sea-Land Servs. Inc. 214 F.3d
566, 569-70 (5th Cir. 2002); SEC v. Cavanagh, 155 F.3d 129, 136 (2d Cir. 1998); SEC v.
Colello, 139 F.3d 674, 675-77 (9th Cir. 1998); Shaw v. Dow Brands, Inc., 994 F.2d 364, 369 (7th
Cir. 1993); SEC v. Cherif,, 933 F.2d 403, 414 (7th Cir. 1991), EEOC v. MacMillian Blodedel
Containers, Inc., 503 F.2d 1086, 1095-96 (6th Cir. 1974); Selfix, Inc. v. Bisk, 867 F. Supp. 1333,
1335-36 (N.D. Ill. 1994); SEC v. Egan, 856 F. Supp. 401, 402 (N.D. Ill. 1993); SEC v. Antar,
831 F. Supp 380, 399 (D.N.J. 1993); Eldredge v. Carpenters 46 N. Cal. Joint Apprenticeship and
Training Comm., 440 F. Supp. 506, 518 -524 (N.D. Cal. 1977).
263

it was “inequitable [to be] put through the expense of hiring an attorney and doing involuntary
discovery work for EEOC.” Id. at 1096. The Court of Appeals rejected the union’s arguments,
upholding the district court’s finding that it was appropriate to join the union as a nominal
defendant “because the decree entered by the court may affect, in some way, its collective
bargaining agreement” with MacMillian. Id. at 1095.281
Moreover, in Commodity Futures Trading Commission v. Kimberlynn Creek Ranch, Inc.,
276 F.3d 187, 191-93 (4th Cir. 2002), the Fourth Circuit rejected nominal defendants’ argument
that an injunction, which froze their assets and directed them to transfer those assets to a court
appointed receiver, could not be imposed against them because they were not accused of any
unlawful conduct. The Fourth Circuit explained that the district court had broad equitable
authority to order the transfer of assets alleged to be unlawful proceeds held by the nominal
defendants because the nominal defendants were simply holding the alleged proceeds on behalf
of the defendants who were charged with unlawful conduct, and hence the relief against the
nominal defendants was necessary to effectuate the relief against defendants accused of
wrongdoing.
2.

Nominal Defendants in Government Civil RICO Cases Involving Labor
Unions

In accordance with the above-referenced authority, the Government has often named
union entities and union officials as nominal defendants in order to obtain full and effective
relief. See App. B at 1, 27-28, 43, 95, 133, 139, 157-58, 243-44. As the court observed in
United States v. Local 359, United Seafood Workers, Smoked Fish & Cannery Union,
281

The Court of Appeals added that “[a]s a practical matter, the union need not play a
role in the litigation until the court finds that MacMillian” had engaged in the alleged violations.
503 F.2d at 1095.
264

1991 WL 230613, *2 (S.D.N.Y. Oct. 24, 1991), “it is common practice in [Government] civil
RICO cases to add as nominal defendants entities that are not themselves charged with RICO
violations but that would be directly affected by the equitable relief sought.”
For example, in United States v. Local 560 of the Int’l Bhd. of Teamsters,
581 F. Supp. 279, 337 (D.N.J. 1984), aff’d, 780 F.2d 267 (3d Cir. 1986), the district court found
that various defendants, including corrupt union officials and persons associated with organized
crime, had created a climate of intimidation in Local 560 through murder and other acts of
violence and misconduct, that induced Local 560 members to surrender their rights to democratic
participation in internal affairs. See Section VIII(C)(1) above. The district court ruled that Local
560 and its benefit funds and plans were not liable for violating RICO because, although their
employees and representatives had committed the charged racketeering acts in the scope of their
employment, such persons were not intending to benefit their principals, as is required to impose
liability against a principal under the principles of “Respondeat Superior.” See generally,
Section III(B)(2) above. However, the district court retained Local 560 “as a nominal defendant
to effectuate the equitable relief heretofore specified and as may be ordered in the future.” Local
560, 581 F. Supp. at 337.
In that regard, the district court removed the Executive Board of Local 560, who were
found to have violated RICO, and the district court appointed a trustee to administer and oversee
the affairs of Local 560, and ordered new elections for Local 560’s offices. See App. B at 3-4;
Section VIII(C)(1) above. Therefore, it was necessary to retain Local 560 as a nominal defendant
because the relief granted directly effected Local 560 and was necessary to cure the ill effects on
Local 560 caused by the defendants’ wrongdoing.
265

In United States v. Dist. Council of New York City and Vicinity of the United Bhd. of
Carpenters and Joiners of America, 778 F. Supp. 738, 752, n.7 (S.D.N.Y. 1991), the district court
rejected a defendant’s argument that the RICO complaint should be dismissed against him
because he was not charged with committing any racketeering acts. The district court explained
that the defendant “is a nominal defendant who must be included to ensure effective relief.” Id.
at 752, n.7. Similarly, in United States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388, 1401-02
(S.D.N.Y. 1989), the district court rejected the pre-trial argument of the General Executive Board
(“GEB”) of the IBT that the RICO complaint should be dismissed against it because the GEB
was charged only as a nominal defendant, was not charged with any wrongdoing, and was not a
“person” within the meaning of RICO that could be charged as a defendant. The district court
explained that if the evidence demonstrated that the GEB is not a proper defendant because it is
in fact not a person under 18 U.S.C. § 1963(3), then the GEB could not be included as a nominal
defendant, and the RICO complaint would be dismissed against the GEB. Id. at 1402.
In United States v. Local 1804-1, Int’l Longshoremans Ass’n, 831 F. Supp. 192, 194-99
(S.D.N.Y. 1993), the district court approved a consent decree between the Government and the
New York Shipping Association’s (“NYSA”) employers which imposed equitable relief against
the NYSA employers who were nominal defendants, including the appointment of court officers
to take necessary actions to remove and prohibit organized crime figures and other corrupt
persons from employment on the alleged waterfront RICO enterprise.282
282

See also United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp.
1303, 1308, n.2 (S.D.N.Y. 1993) (The district court noted in passing that “[t]he union locals, the
waterfront employers, and the employers’ organizations were not named as RICO violators, but
as nominal defendants in order to effectuate complete relief.”); United States v. Local 359,
United Seafood Workers, Smoked Fish & Cannery Union, 1991 WL 230613 (S.D.N.Y. Oct. 24,
(continued...)
266

In sum, courts may order relief against unions and other entities that are named as
nominal defendants even though they are not accused of, or found liable for, RICO violations in
order to enable the United States to obtain full and effective relief against defendants found to
have committed RICO violations. This is especially the case when it is necessary to impose
relief to cure the adverse effects upon unions by corrupt union officials and their conspirators
found to have violated RICO, such as ordering new, untainted elections for union officials and
appointing officers to administer and oversee union operations to eliminate corruption and
prevent future corruption within unions.
E.

Specific Issues in Government Civil RICO Cases Involving Labor Unions
1.

State Action and Due Process Considerations

a.

It is well established that the constitutional guarantees of due process of law and

most other constitutional rights “are protected only against infringement by governments,” and
such rights afford no protection against purely private conduct. Lugar v. Edmonson Oil Co., 457
U.S. 922, 936 (1982), quoting Flagg Bros, Inc. v. Brooks, 436 U.S. 149, 156 (1978). Accord
Blum v. Yaretsky, 457 U.S. 991, 1002-03 (1982); Moose Lodge No. 107 v. Irvis, 407 U.S. 163,
171-73 (1972); Shelley v. Kraemer, 334 U.S. 1, 13 (1948). Therefore, a person claiming that his
constitutional rights have been violated must establish that the alleged violation was “fairly
attributable” to “state action” before he is entitled to relief for such violations. See, e.g., Lugar,
457 U.S. at 936-39. Accord Blum, 457 U.S. at 1002-05.

282

(...continued)
1991) (denying motion of nominal defendants Benefits Funds for an award of attorneys’ fees and
cost, finding that the Government acted with reasonable justification in naming the Benefit Funds
as nominal defendants to effectuate the prospective equitable relief it sought).
267

The Supreme Court has adopted a two-part approach to determine whether an alleged
deprivation of a constitutional right is “fairly attributable” to the requisite “state action”:
First, the deprivation must be caused by the exercise of some right
or privilege created by the State or by a rule of conduct imposed by
the State or by a person for whom the State is responsible . . . .
Second, the party charged with the deprivation must be a person
who may fairly be said to be a State actor. This may be because he
is a State official, because he has acted together with or has
obtained significant aid from State officials, or because his conduct
is otherwise chargeable to the State.
Lugar, 457 U.S. at 937.
Moreover, “‘[t]he mere fact that a business is subject to state regulation does not by itself
convert its action into that of the state for purposes’” of establishing the requisite state action.
Blum, 457 U.S. at 1004 quoting Jackson v. Metro Edison Co., 419 US 345, 350 (1974). “The
complaining party must also show that ‘there is a sufficiently close nexus between the state and
the challenged action of the regulated entity so that the action of the latter may be fairly treated as
that of the State itself.’” Blum, 457 U.S. at 1004 quoting Jackson, 419 U.S. at 350-51. Likewise,
“[m]ere approval of or acquiescence in the initiative of a private party is not sufficient to justify
holding the State responsible for those initiatives” for purposes of establishing the requisite state
action. Blum, 457 U.S. at 1004-05. However, “the required nexus may be present if the private
entity has exercised powers that are ‘traditionally the exclusive prerogative of the state.’” Blum,
457 U.S. at 1005 quoting Jackson, 419 U.S. at 353.
b.

Applying these principles, courts repeatedly have held in the Teamsters Union

civil RICO case brought by the United States that various actions by the court-officers appointed
by the district court pursuant to the Teamsters Union Consent Decree did not constitute the
requisite “state action,” and therefore could not provide the basis for alleged violations of
268

complainants’ constitutional rights. For example, in United States v. Int’l Bhd. of Teamsters,
941 F.2d 1292, 1294-97 (2d Cir. 1991), the Investigations Officer (“IO”) appointed by the district
court pursuant to the Teamsters Union Consent Decree found, after an evidentiary hearing, that
two officials of IBT Locals (Dominic Senese and Joseph Talerico) had violated the IBT
Constitution by conducting themselves in a manner to bring reproach upon the IBT in that they,
inter alia, knowingly associated with members of the LCN. As sanctions, the Independent
Administrator (“IA”) permanently removed the two officials from all of their IBT positions,
expelled them from the IBT, and prohibited them from drawing any money from the IBT or its
affiliated entities.
Senese and Talerico argued that the IA’s imposition of sanctions violated their First,
Fifth, and Eighth Amendment rights under the United States Constitution. The Second Circuit
held that Senese and Talerico did not establish the requisite state action, stating:
First, in sanctioning Sanese and Talerico, the IA acted pursuant to
the IBT Constitution - a private agreement - and not pursuant to a
“right or privilege created by the State.” Thus, the charges he
brought were premised on violations of Article II, section 2(a) of
the IBT Constitution, not on violations of any federal or state law.
Similarly, the IA’s authority to impose the sanctions stemmed from
the post-Decree amendments to the IBT Constitution, which
established the IA and empowered him to oversee the IBT’s
internal disciplinary affairs, see United States v. International
Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers,
AFL-CIO, 905 F.2d 610, 622 (2d Cir. 1990), and not from any
provision of federal or state law. Thus, Senese and Talerico fail to
satisfy the first element of the definition of state action set forth
above [in Lugar].
Senese and Talerico are also unable to establish that the IA “may
fairly be said to be a state actor.” Lugar, 457 U.S. at 937, 102 S.
Ct. at 2754. The IA has offices that are provided by the IBT, and
the IBT pays his salary. Thus, the position is under the control of
the IBT, and remains a private, not a governmental role.
269

United States v. Int’l Bhd. of Teamsters, 941 F.2d at 1296. The Second Circuit also ruled that
the district court’s affirmance of the IA’s disciplinary action and the “governmental oversight of
a private institution does not convert the institution’s decisions into those of the State, as long as
the decision in question is based on the institution’s independent assessment of its own policies
and needs.” Id. at 1297. The Second Circuit concluded that “because the IA’s decision to
sanction Senese and Talerico was based on the policies and procedures embodied in the IBT’s
own Constitution, and not on state or federal law, the decision was not state action.” Id. at
1297.283 In any event, the Second Circuit also ruled that “Senese and Talerico’s constitutional
claims are entirely without merit.” Id.284
2.

First Amendment Issues

Union members and officers have substantial First Amendment protections, involving
their rights to associate together in a union to further their common interests and to participate in
internal union affairs. See Section VIII(F) below and cases cited below in this Section.
However, courts have repeatedly held in Government civil RICO cases involving labor unions
that such First Amendment rights “may be curtailed” to further the Government’s “compelling

283

Accord United States v. Int’l Bhd. of Teamsters, 954 F.2d at 806-07; United States v.
Int’l Bhd. of Teamsters, 838 F. Supp. 800, 811-12 (S.D.N.Y. 1993) (collecting cases); United
States v. Int’l Bhd. of Teamsters, 791 F. Supp. 421, 425-26 (S.D.N.Y. 1992); United States v.
Int’l Bhd. of Teamsters, 787 F. Supp. 345, 351 (S.D.N.Y. 1992), aff’d, 970 F.2d 1132 (2d Cir.
1992); United States v. Int’l Bhd. of Teamsters, 777 F. Supp. 1123, 1126, (S.D.N.Y. 1991);
United States v. Int’l Bhd. of Teamsters, 777 F. Supp. 1133-1138 (S.D.N.Y. 1991); United
States v. Int’l Bhd. of Teamsters, 764 F. Supp. 797, 801 (S.D.N.Y. 1991), aff’d 956 F. 2d 1162
(2d Cir. 1992) (Table).
284

Other courts have likewise ruled in the alternative that the challenged conduct did not
constitute “state action,” and in any event did not violate the claimants’ rights to due process (see
Section VIII(B)(4)(b) above) or rights guaranteed by the First Amendment. See Section
VIII(E)(2) below.
270

interest in eliminating the public evils of crime, corruption, and racketeering in union activity.”
United States v. Int’l Bhd. of Teamsters, 941 F. 2d at 1297 (citations and internal quotations
omitted).285
For example, courts have upheld, against First Amendment challenges, injunctions
prohibiting union members and officials from knowingly associating with union members,
organized crime members and others associated with organized crime, or from participating in
union affairs,286 and have upheld disciplinary sanctions for such knowing association and other
misconduct, including contempt and removal and permanent bar from holding union membership
or union office.287 Courts have also rejected First Amendment challenges to equitable relief
285

See generally Nat’l Society of Prof’l Eng’r v. United States, 435 U.S. 679 (1978),
where the Court stated:
“[T]he District Court was empowered to fashion appropriate
restraints on the Society’s future activities both to avoid a
recurrence of the violation and eliminate its consequences. . . .
While the resulting order may curtail the exercise of liberties that
the Society might otherwise enjoy, that is a necessary and, in cases
such as this, unavoidable consequence of the violation. . . . The
First Amendment does not “make it . . . impossible ever to enforce
laws against agreements in restraint of trade.”
Id. at 697 quoting Giboney v. Empire Storage & Ice Co., 336 U.S. 490, 502 (1949) (internal
citations omitted).
286

See, e.g., Carson, 52 F. 3d at 1179, 1185; United States v. Private Sanitation Indus.
Ass’n, 995 F. 2d 375, 377-78 (2d Cir. 1993); United States v. Local 560 of the Int’l Bhd. of
Teamsters, 974 F.2d at 321, 339-46; United States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388,
1392-94 (S.D.N.Y. 1989); United States v. Mason Tenders Dist. Council of Greater New York,
1995 WL 679245 at * 11-12 (S.D.N.Y. Nov. 15, 1995).
287

See, e.g., United States v. Int’l Bhd. of Teamsters, 19 F.3d 816, 819, 823 (2d Cir.
1994); United States v. Int’l Bhd. of Teamsters, 998 F.2d at 124-27, n.4; United States v. Int’l
Bhd. of Teamsters, 941 F.2d at 1295, 1297; United States v. Int’l Bhd. of Teamsters, 838 F.
Supp. 800, 811-12 (S.D.N.Y. 1993), aff’d, 33 F. 3d 50 (2d Cir. 1994) (Table); United States v.
(continued...)
271

involving holding new union elections and imposition of union election procedures.288
3.

Equitable Relief in Government Civil RICO Cases Does Not Violate, And Is
Not-Pre-empted By, The NLRA, The LMRDA or Other Labor Laws
a.

General Principles

Courts have repeatedly rejected claims that various federal labor laws pre-empt charges
and relief in Government civil RICO cases. The general principles governing such pre-emption
claims are well established. “It is a cardinal principle of construction that repeals by implication
are not favored. When there are two [federal] acts upon the same subject, the rule is to give
effect to both if possible . . . the intention of the legislature to repeal must be clear and manifest.”
United States v. Borden Co., 308 U.S. 188, 198 (1939)(citations and internal quotations omitted).
Moreover, to trigger pre-emption the two statutes must:
be in “irreconcilable conflict” in the sense that there is a positive
repugnancy between them or that they cannot mutually coexist. It
is not enough to show that the two statues produce differing results
when applied to the same factual situation, for that no more than
states the problem. Rather, when two statutes are capable of coexistence, it is the duty of the courts . . . to regard each as effective.
Radzanower v. Touche Ross & Co., 426 U.S. 148, 155 (1976) (citations and internal quotations
omitted). Accord United States v. Batchelder, 442 U.S. 114, 122 (1979).
In making these determinations, courts consider various factors, including the primary
purposes of the statutes, the degree of overlap in the statutory provisions, evidence of Congress’

287

(...continued)
Int’l Bhd. of Teamsters, 764 F. Supp. at 800-801. Cf. Hotel and Rest. Employees & Bartenders
v. Read, 597 F. Supp. 1431, 1446-48 (D.N.J. 1984).
288

See, e.g., United States v. Dist. Council, 778 F. Supp. at 762-64; United States v. Int’l
Bhd. of Teamsters, 742 F. Supp. 94, 99-100 (S.D.N.Y. 1990), aff’d as modified, 931 F.2d 177
(2d Cir. 1991). Cf. United States v. Int’l Bhd. of Teamsters, 803 F. Supp. at 784-788.
272

clear intent to repeal, and whether the statutes are irreconcilably inconsistent such that it is
necessary to pre-empt one to make the other work. See, e.g., Batchelder, 442 U.S. at 118-22;
Radzanower, 426 U.S. at 155-58; Borden Co., 308 U.S. at 198-203.
These factors weigh heavily against pre-emption of RICO charges. RICO was enacted in
1970 (Pub. L. No. 91-452, 84 Stat. 941 (1970)), and its principal, although not exclusive, purpose
was “to seek the eradication of organized crime in the United States . . . by establishing new
penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the
unlawful activities of those engaged in organized crime.” See 84 Stat. 922-23; United States v.
Turkette, 452 U.S. 576, 588-89 (1981); see also, Sections II(B) and VIII(A)(2) above. To that
end, RICO created new and expansive offenses – participating in the affairs of an enterprise
through a pattern of racketeering activity, and conspiring to do so (18 U.S.C.
§§ 1962(c) and (d)). By definition, the pattern of racketeering activity includes an extensive list
of state and federal offenses, (see 18 U.S.C. § 1961 (1)), thereby indicating that Congress
intended RICO to augment existing remedies.
The legislative history to RICO likewise firmly establishes that Congress adopted the
civil and criminal remedies of RICO to add to, not subtract from, existing remedies. See
Turkette, 452 U.S. at 589 (observing that Congress stated that it intended RICO to provide
“enhanced sanctions and new remedies,” which expressly denotes Congress’ intent that RICO
add remedies to existing ones.). See generally United States v. Sutton, 700 F.2d 1078, 1080-81
(6th Cir. 1983); United States v. Hartley, 678 F.2d 961, 992 (11th Cir. 1982), abrogated on other
grounds, United States v. Goldin Indus, Inc., 219 F.3d 1268 (11th Cir. 2000). Moreover,
Congress explicitly mandated that RICO “shall be liberally construed to effectuate its remedial
273

purposes.” Turkette, 452 U.S. at 587, quoting 84 Stat. 947. In sum, RICO’s broad purposes and
legislative history compels the conclusion that, as a general rule, Congress did not intend RICO
to be supplanted by other available remedies.289
b.

The NLRA Does Not Pre-empt Government Civil RICO Lawsuits

In San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 240-44 (1959), the
Supreme Court held under federal supremacy analysis that Congress intended, as a general rule,
to vest the National Labor Relations Board (NLRB) with exclusive authority to decide: (1)
whether an employee’s rights under Section 7 of the NLRA (29 U.S.C. § 157) to join a union, “to
bargain collectively . . . and to engage in other concerted activities” were violated, and (2)
whether an unfair labor practice was committed in violation of Section 8 (29 U.S.C.
§ 158) of the NLRA. In that regard the Court stated:
When it is clear or may fairly be assumed that the activities which
a State purports to regulate are protected by § 7 of the National
Labor Relations Act, or constitute an unfair labor practice under §
8, due regard for the federal enactment requires that state
jurisdiction must yield.

289

See also United States v. Kragness, 830 F.2d 842, 864 (8th Cir. 1987) (“[n]othing in
[RICO] shall supersede any provision of Federal . . . law imposing criminal penalties . . . in
addition to those provided for in [RICO].”)(quoting Pub. L. No. 91-452, §§ 904(b), 84 Stat. 947);
United States v. Deshaw, 974 F.2d 667, 671-72 (5th Cir. 1992)(“RICO’s statutory language
reflects congressional intent to supplement, rather than supplant, existing crimes and penalties.”);
Nat’l Asbestos Workers Med. Fund v. Philip Morris, 74 F. Supp.2d 221, 235-36 (E.D.N.Y. 1999)
(“There are alternative remedies for every injury caused by the predicate acts of racketeers. A
victim whose window or arm was broken by racketeering has a number of alternative tort claims
from which to choose. The purpose of RICO was to superimpose another layer of remedies in
order to deter racketeering. As the statute’s preface states, RICO is designed to ‘seek the
eradication of organized crime in the United States . . . by providing enhanced sanctions and
new remedies.’ Pub.L. No. 91-452, §§ 1, 84 Stat. 922, 923 (1970)”)(emphasis added).
274

359 U.S. at 244 (emphasis added).290
The Supreme Court, however, has cautioned that the doctrine of NLRA pre-emption is
grounded in the specific congressional intent underlying the NLRA and “special factors” which
do not readily apply to other regulatory schemes. See English v. Gen. Elec. Co., 496 U.S. 72, 8687, n.8 (1990). Moreover, in United States v. Palumbo Bros. Inc., 145 F.3d 850, 861-76 (7th Cir.
1998), the Seventh Circuit held that well-established pre-emption principles compel the
conclusion that the NLRA and other federal labor laws do not pre-empt a federal criminal RICO
case (as distinguished from pre-empting state law) brought by the United States to vindicate the
public’s interest in enforcement of the criminal laws, especially because of the differences in
various statutes’ purposes, scope and remedies. Cf. Smith v. Nat’l Steel & Shipbuilding Co., 125
F.3d 751, 755 (9th Cir. 1997)(“the Supreme Court has indicated on several occasions that
Garmon pre-emption is not implicated where the potential conflict is with federal law.”); United
States v. Int’l Bhd. of Teamsters, 948 F.2d at 105 (“where federal laws and policies other than
the NLRA are implicated, the Garmon rule is frequently considered inapplicable”).
In any event, the Garmon pre-emption doctrine is somewhat limited. Under Garmon and
its progeny, the NLRA pre-empts a civil RICO charge “only when the Court would be forced to
determine whether some portion of the defendant’s conduct violated [the NLRA] before a RICO
predicate act would be established.” Tamburello v. Comm-Tract Corp., 67 F.3d 973, 978 (1st
Cir. 1995)(citations omitted). Accord Brennan v. Chestnut, 973 F.2d 644, 646 (8th Cir.
1992)(“If the Court must look to the [NLRA] to define the fraud, then pre-emption applies.”).
290

The Supreme Court has recognized several exceptions to the general rule announced
in Garmon. See Tamburello v. Comm-Tract Corp., 67 F.3d 973, 977 (1st Cir. 1995); Linn v.
United Plant Guard Workers, 383 U.S. 53 (1966); Smith v. Evening News Ass’n, 371 U.S. 195
(1962).
275

Conversely, courts have repeatedly held that the NLRA does not pre-empt a RICO case
where either the right or legal duty at issue is derived from law independent of the NLRA or the
court is not required to determine whether the charged conduct violated the NLRA, even if the
charged conduct violated both the NLRA and RICO’s definition of unlawful racketeering
activity.291 Put another way, “civil RICO charges may survive Garmon pre-emption if the
predicate acts are violative of federal law independent of the NLRA. However, if the predicate
acts are only illegal because of the proscriptions of the NLRA, then the civil RICO charge
must fail.” Mariah Boat, Inc. v. Laborers Int’l Union of North America, 19 F. Supp.2d 893, 899
(S.D. Ill. 1998)(emphasis added).
291

See, e.g., Palumbo, Bros. Inc., 145 F.3d at 871-76 (holding that RICO predicate acts
of mail fraud, based upon employers’ scheme to defraud their employees of monetary benefits
obtained through collective bargaining within the ambit of the NLRA, were not pre-empted since
the unlawfulness of the charged conduct is determined by “the scope of the mail fraud statute”;
the court stated (145 F.3d at 875) that “[t]he unfair labor practices implicated in the indictment
cannot be defined solely in relation to federal labor law and policy; rather, that conduct also must
be defined and analyzed in the context of the criminal offenses charged in the indictment”);
United States v. Boffa, 688 F.2d 919, 930 (3d Cir. 1982)(holding that the NLRA did not preempt mail fraud and RICO charges where employees were defrauded of property rights
independently derived from their rights under a collective bargaining agreement even though
such rights “may have been obtained as a result of employees’ exercise of rights guaranteed by
section 7 of the NLRA”); United States v. Thordarson, 646 F.2d 1323, 1330-31 (9th Cir.
1981)(holding that the NLRA did not pre-empt RICO predicate acts involving union violence
even if “the federal labor laws do reach union violence” where the charged conduct was made
unlawful by criminal statutes independent of the NLRA); Mariah Boat, Inc. v. Laborers Int’l
Union, 19 F. Supp.2d 893, 899 (S.D. Ill. 1998)(holding that mail and wire fraud predicate acts
not pre-empted since the charged conduct was not illegal solely because of the NLRA); A. Terzi
Productions, Inc. v. Theatrical Protective Union, 2 F. Supp.2d 485, 502-04 (S.D.N.Y.
1998)(same as to extortion predicate acts); Teamsters Local 372 v. Detroit Newspapers, 956
F.Supp. 753, 761 (E.D. Mich. 1997) (“predicate acts alleging robbery, arson, destruction of
property . . . do not require an interpretation of labor law” and are not pre-empted); Nat’l Elec.
Benefit Fund v. Heary Bros. Lightning Prot. Co., 931 F. Supp. 169, 185 (W.D.N.Y. 1995)(“while
these allegations also describe conduct proscribed by the NLRA as unfair labor practices . . . they
are not pre-empted by the NLRA because they state RICO claims which do not require the
resolution of labor law questions”). See also O’Rourke v. Crosley, 847 F. Supp. 1208, 1212-13
(D.N.J. 1994); Hood v. Smith’s Transfer Corp., 762 F. Supp. 1274, 1286-87 (W.D. Ky. 1991).
276

In accordance with the foregoing authority, in United States v. Int’l Bhd. of Teamsters,
948 F.2d at 105-106, the Second Circuit held that provisions of the NLRA, 29 U.S.C. §§ 157 and
158(a)(1), did not vest exclusive jurisdiction in the NLRA and did not pre-empt a decision by the
Independent Administrator, appointed by the district court pursuant to the Teamsters Union
Consent Decree, “that granted non-employee members of the IBT access to premises of [an
employer] to campaign for union office, and denied [the employer’s] application for declaratory
and injunctive relief from that determination.” Id. at 99. See also, United States v. Private
Sanitation Indus. Ass’n, 793 F. Supp. 1114, 1153-54 (E.D.N.Y. 1992) (holding that the NLRA
did not pre-empt a Government civil RICO lawsuit against a labor union and other defendants);
United States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388, 1394-95 (S.D.N.Y. 1989) (same).
c.

The LMRDA Does Not Pre-empt Government Civil RICO Lawsuits

The Labor Management Reporting and Disclosure Procedure Act, 29 U.S.C. § 401-531
(“LMRDA”), guarantees union members the rights to vote in secret and to participate in fair and
honest union elections, and provides causes of action to vindicate these rights. In particular, 29
U.S.C. §§ 411(a)(1) and (2) provide as follows:
(a)(1) Equal Rights
Every member of a labor organization shall have equal rights and
privileges within such organization to nominate candidates, to vote
in elections or referendums of the labor organization, to attend
membership meetings, and to participate in the deliberations and
voting upon the business of such meetings, subject to reasonable
rules and regulations in such organization’s constitution and
bylaws.

277

(a)(2) Freedom of Speech and Assembly
Every member of any labor organization shall have the right to
meet and assemble freely with other members; and to express any
views, arguments, or opinions; and to express at meetings of the
labor organization his views, upon candidates in an election of the
labor organization or upon any business properly before the
meeting subject to the organization’s established and reasonable
rules pertaining to the conduct of meetings: Provided, That
nothing herein shall be construed to impair the right of a labor
organization to adopt and enforce reasonable rules as to the
responsibility of every member toward the organization as an
institution and to his refraining from conduct that would interfere
with its performance of its legal or contractual obligations.
29 U.S.C. § 412 provides as follows:
Any person whose rights secured by the provisions of this
subchapter have been infringed by any violation of this subchapter
may bring a civil action in a district court of the United States for
such relief (including injunctions) as may be appropriate. Any
such action against a labor organization shall be brought in the
district court of the United States for the district where the alleged
violation occurred, or where the principal office of such labor
organization is located.
29 U.S.C. §§ 481(a), (b), (d), and (e) provide as follows:
(a)

Officers of national or international labor organizations; manner of
election

Every national or international labor organization, except a
federation of national or international labor organizations, shall
elect its officers not less often than once every five years either by
secret ballot among the members in good standing or at a
convention of delegates chosen by secret ballot.
(b)

Officers of local labor organizations; manner of election

Every local labor organization shall elect its officers not less often
than once every three years by secret ballot among the members in
good standing.

278

(d)

Officers of intermediate bodies; manner of election

Officers of intermediate bodies, such as general committees,
system boards, joint boards, or joint councils, shall be elected not
less than once every four years by secret ballot among the members
in good standing or by labor organization officers representative of
such members who have been elected by secret ballot.
(e)

Nomination of candidates; eligibility; notice of election; voting
rights; counting and publication of results; preservation of ballots
and records

In any election required by this section which is to be held by
secret ballot a reasonable opportunity shall be given for the
nomination of candidates and every member in good standing shall
be eligible to be a candidate and to hold office (subject to section
504 of this title and to reasonable qualifications uniformly
imposed) and shall have the right to vote for or otherwise support
the candidate or candidates of his choice, without being subject to
penalty, discipline, or improper interference or reprisal of any kind
by such organization or any member thereof. Not less than fifteen
days prior to the election notice thereof shall be mailed to each
member at his last known address. Each member in good standing
shall be entitled to one vote. No member whose dues have been
withheld by his employer for payment to such organization
pursuant to his voluntary authorization provided for in a collective
bargaining agreement shall be declared ineligible to vote or be a
candidate for office in such organization by reason of alleged delay
or default in the payment of dues. The votes cast by members of
each local labor organization shall be counted, and the results
published, separately. The election officials designated in the
constitution and bylaws or the secretary, if no other official is
designated, shall preserve for one year the ballots and all other
records pertaining to the election. The election shall be conducted
in accordance with the constitution and bylaws of such
organization insofar as they are not inconsistent with the provisions
of this subchapter.
29 U.S.C. § 501(a) and (c) provide as follows:
(a)

Duties of Officers; exculpatory provisions and
resolutions void

279

The officers, agents, shop stewards, and other representatives of a
labor organization occupy positions of trust in relation to such
organization and its members as a group. It is, therefore, the duty
of each such person, taking into account the special problems and
functions of a labor organization, to hold its money and property
solely for the benefit of the organization and its members and to
manage, invest and expend the same in accordance with its
constitution and bylaws and any resolutions of the governing
bodies adopted thereunder, to refrain from dealing with such
organization as an adverse party or in behalf of an adverse party in
any manner connected with his duties and from holding or
acquiring any pecuniary or personal interest which conflicts with
the interests of such organization for any profit received by him in
whatever capacity in connection with transactions conducted by
him under his direction on behalf of the organization. A general
exculpatory provision in the constitution and bylaws of such a
labor organization or a general exculpatory resolution of a
governing body purporting to relieve any such person of liability
for breach of the duties declared by this section shall be void as
against public policy.
(c)

Embezzlement of assets: penalty

Any person who embezzles, steals, or unlawfully and willfully
abstracts, converts to his own use or, or the use of another, any of
the moneys, funds, securities, property, or other assets of a labor
organization of which he is an officer, or by which he is employed,
directly or indirectly, shall be fined not more than $10,000 or
imprisoned for not more than five years, or both.
Defendants in various Government civil RICO cases involving labor unions have argued
that equitable relief in those cases (such as disciplinary procedures and sanctions, ordering new
union elections, and procedures governing union elections) contravenes the rights and procedures
set forth in the above-referenced provisions of the LMRDA, and that the LMRDA pre-empts
such equitable relief because the LMRDA is the exclusive vehicle for vindicating the rights
guaranteed by the LMRDA. Courts have uniformly rejected these claims under the pre-emption

280

principles set forth in Section VIII(E)(3)(a) and (b) above.292
d.

Other Labor Laws Do Not Pre-empt Government Civil RICO
Lawsuits

Courts have likewise held that other labor laws do not pre-empt Government civil RICO
lawsuits. See, e.g., Local 1814 v. New York Shipping Ass’n, 965 F.2d 1224, 1231-39 (2d Cir.
1992) (holding that the anti-injunction provisions of the Norris-LaGuardia Act (29 U.S.C. §§
101-115), which divests courts of jurisdiction to issue any injunction in a case involving or
growing out of a labor dispute, did not pre-empt injunctive relief to further RICO’s civil remedial
purposes); United States v. Int’l Bhd. of Teamsters, 954 F.2d 801, 807-10 (2d Cir. 1992)
(holding that the binding arbitration provisions of the Labor-Management Relations Act, 29
U.S.C. § 185, did not pre-empt the decisions of the Independent Administrator appointed by the
district court pursuant to the Teamsters Union Consent Decree); United States v. Local 560 of the
Int’l Bhd. of Teamsters, 694 F. Supp. 1158, 1187 (D.N.J. 1988) (holding that 29 U.S.C. § 504,
which prohibits certain persons from holding union office, was not “the exclusive means by
which a court can bar a person from holding union office,” and hence did not pre-empt such
relief in a Government civil RICO suit).293

292

See, e.g., United States v. Int’l Bhd. of Teamsters, 19 F.3d 816, 823 (2d Cir. 1994);
United States v. Local 560 of the Int’l Bhd. of Teamsters, 974 F.2d 315, 346-47 (3d Cir. 1992);
United States v. Int’l Bhd. of Teamsters, 931 F.2d 177, 188-89 (2d Cir. 1991); United States v.
Local 560 of the Int’l Bhd. of Teamsters, 780 F.2d at 282-83; United States v. Int’l Bhd. of
Teamsters, 838 F. Supp. at 812; United States v. Private Sanitation Indus, Ass’n, 793 F. Supp. at
1153-54; United States v. Int’l Bhd. of Teamsters, 782 F. Supp. 243, 249-250 (S.D.N.Y. 1992);
United States v. Int’l Bhd. of Teamsters, 708 F. Supp. at 1394.
293

Cf. United States v. Philip Morris Inc., 263 F. Supp.2d 72 (D.D.C. 2003) (holding that
the Government’s civil RICO suit against manufacturers of cigarettes and other tobacco-related
entities was not pre-empted by Congress’ regulatory scheme governing tobacco products,
including the Federal Trade Commission Act (15 U.S.C. §§ 1331-40)).
281

F.

Extortion Of Union Members’ Rights To Free Speech and To Participate In
Internal Union Democracy Guaranteed By The LMRDA
In many of its civil RICO lawsuits involving labor unions, the Government has alleged

that LCN figures and corrupt union officials have extorted union members’ rights to democratic
participation in internal union affairs, as guaranted by the LMRDA, in violation of the Hobbs
Act, 18 U.S.C. § 1951. See Section VIII(A)(1) above.294 Such alleged violations raise two
significant issues: (1) whether such rights of union members constitute “property” within the
meaning of the Hobbs Act; and (2) under what circumstances does a defendant “obtain” or “seek
to obtain” such property rights within the meaning of the Hobbs Act.295
1.

Union Members’ Rights Under the LMRDA Constitute Intangible Property
Within The Meaning of the Hobbs Act

a.

The Hobbs Act, enacted in 1946, was modeled on two New York sources: the

Penal Code of New York and the Field Code, a 19th Century Model Penal Code.296 New York
law then defined extortion as “the obtaining of property from another, with his consent, induced
by a wrongful use of force or fear” and further provided that “[f]ear . . . may be induced by a
threat . . . [t]o do an unlawful injury to . . . property.” N.Y. Penal Code §§ 850, 851 (Consol.

294

It bears repeating that statutory protections, such as the LMRDA, may create property
rights. See Section VII(D) above.
295

The Hobbs Act, 18 U.S.C. § 1951(b)(2), provides, in relevant part, that:
The term “extortion” means the obtaining of property from
another, with his consent, induced by wrongful use of actual or
threatened force, violence, or fear, or under color of official right.

296

See 89 Cong. Rec. 3227 (1943); 91 Cong. Rec. 11, 900, 11, 906, 11, 910 (1945). See
Scheidler v. Nat’l Org. For Women, Inc., 537 U.S. 393, 403 (2003); Evans v. United States,
504 U.S. 255, 261-62, 269 n.9, 264 (1992); United States v. Enmons, 410 U.S. 396, 406 n.16
(1973).
282

1909); accord Commissioners of the Code, Proposed Penal Code of the State of New York
§§ 613 and 614 (1865). By the time the Hobbs Act was adopted, it was well-established that the
meaning of “property” under New York’s extortion statute broadly extended to “real and
personal property, things in action, money, bank bills and all articles of value,” as well as to
intangible property; and that an injury to a business in the form of work stoppages occasioned by
a strike constituted an “injury to property.” See People v. Barondes, 31 N.E. 240, 241-42 (N.Y.
1892). Accord People v. Hughes, 137 N.Y. 29, 37-39, 32 N.E. 1105 (N.Y. 1893)(head of union
who threatened manufacturer that he would compel retail dealers to cease doing business with
manufacturer unless the manufacturer hired union apprentices and paid him money threatened the
requisite “injury to [manufacturer’s] property” and committed extortion); People v. Weinseimer,
117 A.D. 603, 102 N.Y.S. 579, 614 (1st Dept. 1907)(“an injury to one’s business is an injury to
property within the provisions of the Penal Code defining the Crime of extortion, and that a loss
resulting from the suspension or interruption of business would constitute an injury to
property.”); People ex rel Short v. Warden of City Prison, 145 A.D. 861, 130 N.Y.S. 698, 700
(1st Dept. 1911), aff’d, 206 N.Y. 632 (N.Y. 1912)(“Property” under the extortion statute, Penal
Law § 850, “is intended to embrace every species of valuable right and interest whatever tends in
any degree, no matter how small, to deprive one of that right, or interest, deprives him of his
property.”); People v. Wisch, 58 Misc. 2d 766, 296 N.Y. S. 2d 882, 885-86 (N.Y. Sup. Ct.
1969)(holding that “intangible property may be the subject of Extortion” under N.Y. Penal Law
§ 850, “[a] milk route which has a pecuniary value is property and may be the subject of an
extortion,” and that threats to put milk dealers out of business are sufficient to support a charge
of extortion). See also People v. Spatarella, 34 N.Y. 2d 157, 160, 162, 356 N.Y.S. 2d 566 (N.Y.
283

1994)(stating that the foregoing New York decisions have “consistently held” that the term
“property” under the New York extortion statute includes “intangible rights,” such as a demand
under threat of force that a business “give up a business customer”).297
By using New York extortion law as the model for the Hobbs Act, Congress specifically
understood that “[i]t is a cardinal principle of the law, that a law when adopted in another state,
or when being construed, it it [sic] be a state law, by a Federal court, carries with it all reasonable
constructions placed upon it by the courts of the state of its origins.” See 89 Cong. Rec. 3197
(1943).298 Therefore, it must be presumed that Congress intended the Hobbs Act to embrace the
expansive meaning of property that was within the ambit of New York extortion law as
established in the foregoing cases, which includes “everything of value” such as the intangible
property rights to conduct one’s business and control its assets free from interruption caused by
wrongful threats of force, violence or fear. Indeed, in accordance with the broad meaning of
“extortion” under New York State law, federal courts have long interpreted “property” covered

297

By 1946, the Supreme Court had likewise held in a variety of contexts that “property”
included intangible rights. See, e.g., Dorchy v. State of Kansas, 272 U.S. 306, 311 (1926) (“The
right to carry on business - be it called liberty or property - has value. To interfere with this right
without just cause is unlawful.”); Duplex Printing Press Co. v. Deering, 254 U.S. 443, 465
(1921) (holding that the “complainant’s business of manufacturing printing presses and disposing
of them in commerce is a property right.”). See also Carpenter v. United States, 484 U.S. 19, 2627 (1987) (holding that property under the mail and wire fraud statutes (18 U.S.C. §§ 1341 and
1343) includes the “right to exclusive use” of confidential business information, including
control over the timing of the release of the information, “for exclusivity is an important aspect
of confidential business information and most private property for that matter.”). See also fn.
303 below.
298

See generally Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992) (stating
that when Congress enacted civil RICO, it is presumed to know the interpretations courts had
given earlier statutes that served as the model for civil RICO); Estate of Cowart v. Nicklos
Drilling Co., 505 U.S. 469, 479 (1992) (noting “basic canon of statutory construction that
identical terms within an Act bear the same meaning”).
284

by the Hobbs Act broadly to encompass “any valuable right or interest considered primarily as a
source or element of wealth.” Bianchi v. United States, 219 F.2d 182, 189 (8th Cir. 1955)
(quoting Webster’s New Int’l Dictionary (2d Ed. 1936).
b.

The LMRDA guarantees the rights of union members to, inter alia, vote in secret

in union elections, participate in fair and honest union elections, nominate candidates, attend
membership meetings, meet and assemble freely with other members, and to express any views,
arguments or opinions in such union meetings and union elections. See Section
VIII(E)(3)(c) above. The Second, Third and Sixth Circuits and district courts in the Second and
Third Circuits have held that such LMRDA rights constitute intangible “property” within the
meaning of the Hobbs Act on the ground that such rights constitute “a source or element of
wealth” since the exercise of these rights enable union members to secure financial benefits
through collective bargaining, and corrupt deprivation of these rights may cause union members
economic deprivation through loss of livelihood and/or reduced benefits.299
The rationale underlying these decisions is firmly supported by the scope of New York
extortion law that served as the model for the Hobbs Act, discussed above, as well as by the
299

See, e.g., United States v. Gotti, 459 F.3d 296, 320-21 (2d Cir. 2006); United States v.
Bellomo, 176 F.3d 580, 592-93 (2d Cir. 1999); United States v. Debs, 949 F.2d 199, 201-02 (6th
Cir. 1991), cert. denied, 504 U.S. 975 (1992); United States v. Local 560 of the Int’l Bhd. of
Teamsters, 780 F.2d 267, 281-282 (3rd Cir. 1985), cert. denied, 476 U.S. 1140 (1986), affirming,
581 F. Supp. 279, 311-316 (D.N.J. 1984); United States v. Dist. Council of New York City and
Vicinity of the United Bhd. of Carpenters and Joiners of America, 778 F. Supp. 738, 753-56
(S.D.N.Y. 1991), cert. denied, 112 S. Ct. 975 (1992); United States v. International Brotherhood
of Teamsters, 708 F. Supp. 1388, 1397-99 (S.D.N.Y. 1989); United States v. Local 560 of the
Int’l Bhd. of Teamsters, 694 F. Supp. 1158, 1188-90 (D.N.J.), aff’d, 865 F.2d 252 (3d Cir. 1988),
cert. denied, 489 U.S. 1068 (1989); Rodonich v. House Wreckers Union, Local 95, 627 F. Supp.
176, 178-79 (S.D.N.Y. 1985); United States v. Local 560 of the Int’l Bhd. of Teamsters,
550 F. Supp. 511, 513-525 (D.N.J. 1982). But see United States v. DeFries, 129 F.3d 1293, 1304
(D.C. Cir. 1997)(ruling that ‘union members’ right to a fair [union] election is an ‘ethereal’
interest that does not constitute ‘property’ under [the mail fraud statute]”).
285

LMRDA’s legislative history, the Supreme Court’s decision noting that union members’
LMDRA rights are economic rights designed to secure union members’ economic interests, and
the common law understanding that extortion broadly encompassed the taking of any “thing of
value.”300
In that respect, both the Senate and House Reports accompanying the LMRDA adopted
the same statement of the purpose concerning the election provisions:
It needs no argument to demonstrate the importance of free and
democratic union elections. Under the National Labor Relations
and Railway Labor Acts the union which is the bargaining
representative has power, in conjunction with the employer, to fix a
man’s wages, hours, and conditions of employment. The
individual employee may not lawfully negotiate with his employer.
He is bound by the union contract. In practice, the union also has
significant role in enforcing the grievance procedure where a man’s
contract rights are enforced. The Government which gives the
union this power has an obligation to insure that the officials who
wield it are responsive to the desires of the men and women who
they represent. The best assurance which can be given is a legal
guaranty of free and periodic elections.
SEN . REP. NO . 187, 86th Cong., 1st Sess., at 20 (1959); H.R. REP. No. 741, 86th Cong., 1st Sess.,
at 15 (reprinted in 1 National Labor Relations Board, Legislative History of the LaborManagement Reporting and Disclosure Act of 1959 at 417, 773 (1959)). Further, in floor debate,
300

1 W. Russell, Crimes and Misdemeanors, 573-574 (8th ed. 1923) (“Extortion . . .
signifies the unlawful taking by any officer, by colour of his office, of any money or thing of
value.”); 2 J. Bishop, Criminal Law § 401, at 331-332 (9th ed. 1923) (“In most cases, the thing
obtained is money . . . . But probably anything of value will suffice.”); 3 F. Wharton, A Treatise
on Criminal Law § 1898, at 2095 (1912) (“it is enough if any valuable thing is received”); 2 E.
Coke, Institutes of the Laws of England pt. 1, at 368b (1832) (“Extortion . . . is a great
misprision, by wresting or unlawfully taking by any officer, by colour of his office, any money or
valuable thing.”); 4 W. Blackstone, Commentaries *141 (extortion is “an abuse of public justice,
which consists in an officer’s unlawfully taking, by colour of his office, from any man, any
money or thing of value.”). The phrase “thing of value” is a term of art that includes intangible
rights. See, e.g., United States v. Girard, 601 F.2d 69, 71 (2d Cir. 1979); cf. Bell v. United States,
462 U.S. 356, 360 (1983).
286

senators specifically underscored the economic nature of the rights created by the LMRDA:
Sen. Carroll: They are economic rights, as I have said. They arise from economic
problems and deal with economic democracy. They are not constitutional
rights arising under the 14th amendment, dealing with political democracy.
Sen. Kennedy:

The Senator is correct.

105 CONG . REC. 5919 (daily ed. April 22, 1959)(reprinted in 1 National Labor Relations Board,
Legislative History of the Labor-Management Reporting and Disclosure Act of 1959 at 1111
(1959)).
Moreover, in Finnegan v. Leo, 456 U.S. 431, 435-36 (1982), the Supreme Court stated
that the LMRDA protects “the rights of union members to freedom of expression without fear of
sanctions by the union, which in many instances could mean the loss of union membership and in
turn loss of livelihood.” See also Rodonich v. House Wreckers Union,
627 F. Supp. 176, 179 (S.D.N.Y. 1985)(court rejected defendants’ contention that union
members’ rights were “any less a ‘source of wealth’ than ordinary rights to do business. To the
contrary, it would appear that LMRDA rights provide union members with a source of
livelihood.”). It is also particularly significant that by the time the Hobbs Act was enacted in
1946, New York law recognized that union members’ rights to union democracy constituted
“property.” For example, in Dusing v. Nuzzo, 177 Misc. 35, 29 N.Y.S. 2d 882 (N.Y. Sup. Ct.),
aff’d, 263 A.D. 59, 31 N.Y.S. 2d 849 (3d Dept. 1941), the court held that union members’ right
to union elections constituted a “property” right which entitled the union members to an
injunction mandating that a proper election be held. The court explained:
[A] labor union is not a social club. It is an economic
instrumentality conceived in the necessity of making a living . . .
The right to membership in a union is empty if the corresponding
right to an election guaranteed with equal solemnity in the
287

fundamental law of the union is denied. If a member has a
“property right” in his position on the roster, I think he has an
equally enforceable property right in the election of men who will
represent him in dealing with his economic security and collective
bargaining where that right exists by virtue of express contract in
the language of a union constitution. Where an election is required
by the law of a union, the member denied the right to participate is
denied a substantial right which is neither nebulous nor ephemeral.
29 N.Y.S.2d at 884. Accord United States v. Local 560 of the Int’l Bhd. of Teamsters,
780 F.2d at 281.301
In sum, union members’ rights guaranteed by the LMRDA constitute economic rights and
“a source or element of wealth,” and hence constitute intangible property within the meaning of
the Hobbs Act.
c.

In McNally v. United States, 483 U.S. 350 (1987), the Supreme Court held that a

citizen’s intangible right to honest state government did not constitute “property” under the mail
fraud statute, 18 U.S.C. § 1341. The Supreme Court explained that it read the mail fraud statute
narrowly in that case to avoid adverse effects upon the due regard for federalism, stating:
Rather than construe the statute in a manner that leaves its outer
boundaries ambiguous and involves the Federal Government in
setting standards of disclosure and good government for local and
state officials, we read § 1341 as limited in scope to the protection
of property rights.
McNally, 483 U.S. at 360.

301

See also Carroll v. Electrical Workers, IBEW, Local 269, 133 N.J. Eq. 144, 147, 31
A.2d 223, 225 (N.J. 1973) (the court stated that without union democracy union members “would
be deprived of their constitutional right to earn a livelihood.”); Dorrington v. Manning,
135 Pa. Super. 194, 201, 4 A.2d 886, 890 (Pa. Sup. Ct. 1939)(“The right to work . . . constitutes a
property right” which union officials may not interfere with); Bianco v. Eisen, 190 Misc. 609,
610, 75 N.Y.S.2d 914, 916 (N.Y. Sup. Ct. 1944) (holding that the right to be elected to a union’s
executive board constitutes property since the executive board has authority to “make decisions
affecting . . . the economic interests of its members.”).
288

McNally, however, involved an interpretation of the mail fraud statute, and did not
address the scope of “property” under the Hobbs Act. More fundamentally, union members’
rights under the LMRDA are significantly different from a citizen’s “political” right to fair and
honest elections for public officials involved in McNally because LMRDA rights are essentially
“economic rights” which constitute “a source or element of wealth,” which has long been
recognized to be an important attribute of a “property” right.
Moreover, the federalism concerns that were paramount in the Supreme Court’s analysis
in McNally are not implicated by a ruling that union members’ LMRDA rights constitute
property under the Hobbs Act. As one court perceptively ruled, rejecting McNally’s application
to the Hobbs Act and LMRDA rights:
First, assuming property carries the same meaning in the mail and
wire fraud statutes as in the Hobbs Act, in McNally the Supreme
Court was clearly concerned with federalism. The Court read the
statute narrowly in order to prevent the federal government from
“setting standards of disclosure and good government for local and
state officials.” [483 U.S. at 360].
McNally’s federalism rationale has no analogue in the union arena.
With regard to the federal-state balance in this case, there is no
doubt that Congress has had a longstanding interest in regulating
the affairs of labor unions. McNally therefore cannot control the
federal government’s obligations toward the conduct of union
business.
Second, the intangible right to honest government at issue in
McNally is substantially different from the right to participate in
union elections. Honest government is subject to control by an
informed electorate operating in a vital two-party system. The
federal government need not impose its will where a regime of
political accountability is already in place.
By contrast, union politics is more like one-party government. The
statutory right to participate in union government is not held
accountable by anything remotely like a thriving two-party system.
289

Here, the federal legislature and courts have a greater duty to
combat labor corruption and electoral vice. The Hobbs Act is an
important instrument in service of this democratic objective. For
all of these reasons, LMRDA rights are property under the Hobbs
Act.
United States v. Debs, 949 F.2d 199, 201-02 (6th Cir. 1991).302
2.

A Defendant “Obtains” or Seeks to “Obtain” Intangible Property Rights
From A Victim Within The Scope of the Hobbs Act When He Uses
Extortionate Means In Order to Exercise Those Rights For Himself or a
Third Party in a Way That Would Profit Them Financially

a.

In Scheidler v. Nat. Org. for Women, Inc., 537 U.S. 393 (2003), the Supreme

Court reversed the Seventh Circuit’s holding that the plaintiffs (an organization that supports
availability of abortion services and two clinics that provide medical services including
abortions) were entitled to a permanent injunction against the defendants (individuals and
organizations engaged in anti-abortion activities) and treble damages under RICO’s civil
remedies, 18 U.S.C. § 1964. The Seventh Circuit ruled that the defendants had committed a
302

Accord, United States v. Int’l Bhd. of Teamsters, 708 F. Supp. at 1399, where the
court stated:
Even assuming McNally . . . were to apply in the Hobbs Act
context, the court finds that the rights guaranteed by the LMRDA
to union members are “property” within the meaning of the Hobbs
Act . . . . The holding of McNally is limited to the “standards of
disclosure and good government for local and state officials.”
McNally, supra, 107 S.Ct at 2881. In the instant case, there is no
doubt as to the standards to which labor officials ought to be held;
the LMRDA sets forth with particularity the standards of disclosure
to which labor leaders must adhere and the fiduciary nature of
labor leaders position. Thus, characterizing those rights created by
the federal labor statutes as “property” does not involve the federal
government in setting arbitrary standards for conduct in the way
that the same characterization of the ethereal and changeable
notions of “good government” or “honest and faithful services”
would.
290

pattern of Hobbs Act and state extortions arising from their use of force, violence and fear to
cause the plaintiffs “‘to give up’ property rights, namely, ‘a woman’s right to seek medical
services [i.e., abortion services] from a clinic, the right of the doctors, nurses or other clinic staff
to perform their jobs, and the right of the clinics to provide medical services free from wrongful
threats, violence, coercion and fear.’” Id. at 400 n.4, quoting the jury instructions. The Seventh
Circuit had also ruled that “as a legal matter, an extortionist can violate the Hobbs Act without
either seeking or receiving money or anything else. A loss to, or interference with the rights of,
the victim is all that is required.” Id. at 399-400 (citation and internal quotations omitted).
The Supreme Court granted certiorari to decide two questions: (1) whether private
litigants may obtain injunctive relief in a civil RICO action pursuant to 18 U.S.C. § 1964; and (2)
whether the defendants “obtained” or sought to obtain “property” in violation of the Hobbs Act,
18 U.S.C. § 1951. The Supreme Court explicitly stated that it need not address the first question
because it reversed the Seventh Circuit’s decision on the second question. Scheidler, 537 U.S. at
397.
Regarding the Hobbs Act question, the Supreme Court also did not decide whether the
matters the defendants sought constitute “property” within the meaning of the Hobbs Act. Id. at
401-02. The Court then decided that the defendants did not “obtain” or seek to obtain property
within the meaning of the Hobbs Act, stating:
But even when [the defendants’] acts of interference and disruption
achieved their ultimate goal of “shutting down” a clinic that performed
abortions, such acts did not constitute extortion because [defendants] did
not “obtain” [plaintiffs’] property. [Defendants] may have deprived or
sought to deprive [plaintiffs] of their alleged property right of exclusive
control of their business assets, but they did not acquire any such property.
[Defendants] neither pursued nor received “something of value from”
[plaintiffs] that they could exercise, transfer, or sell. United States v.
291

Nardello, 393 U.S. 286, 290, 89 S. Ct. 534, 21 L.Ed. 2d 487 (1969). To
conclude that such actions constituted extortion would effectively discard
the statutory requirement that property must be obtained from another,
replacing it instead with the notion that merely interfering with or
depriving someone of property is sufficient to constitute extortion.
Scheidler, 537 U.S. at 404-05. The Court further explained that:
Eliminating the requirement that property must be obtained to constitute extortion
would not only conflict with the express requirement of the Hobbs Act, it would
also eliminate the recognized distinction between extortion and the separate crime
of coercion -- a distinction that is implicated in these cases. The crime of
coercion, which more accurately describes the nature of [defendants’] actions,
involves the use of force or threat of force to restrict another’s freedom of action.
Coercion’s origin is statutory, and it was clearly defined in the New York Penal
Code as a separate, and lesser offense than extortion when Congress turned to
New York law in drafting the Hobbs Act. New York case law applying the
coercion statute before the passage of the Hobbs Act involved the prosecution of
individuals who, like [defendants], employed threats and acts of force and
violence to dictate and restrict the actions and decisions of businesses. See, e.g.,
People v. Ginsberg, 262 N.Y. 556, 188 N.E. 62 (1933)(affirming convictions for
coercion where defendant used threatened and actual property damage to compel
the owner of a drug store to become a member of a local trade association and to
remove price advertisements for specific merchandise from his store’s windows);
People v. Scotti, 266 N.Y. 480, 195 N.E. 162 (1934)(affirming conviction for
coercion where defendants used threatened and actual force to compel a
manufacturer to enter into an agreement with a labor union of which the
defendants were members); People v. Kaplan, 240 App. Div. 72, 269 N.Y.S. 161
(1934)(affirming convictions for coercion where defendants, members of a labor
union, used threatened and actual physical violence to compel other members of
the union to drop lawsuits challenging the manner in which defendants were
handling the union’s finances).
Scheidler, 537 U.S. at 405-06 (footnotes omitted).
The Court explained the distinction between “extortion” and “coercion,” stating:
Under the Model Penal Code § 223.4, Comment 1, pp. 201-202,
extortion requires that one “obtains [the] property of another”
using threat as “the method employed to deprive the victim of his
property.” This “obtaining” is further explained as “bring[ing]
about a transfer or purported transfer of a legal interest in the
property, whether to the obtainer or another.” Id., § 223.3,
Comment 2, at 182, Coercion, on the other hand, is defined as
292

making “specified categories of threats . . . with the purpose of
unlawfully restricting another’s freedom of action to his
detriment.” Id., § 212.5, Comment 2, at 264.
Scheidler, 537 U.S. at 408 n.13. The Court added that:
[W]hile coercion and extortion certainly overlap to the extent that
extortion necessarily involves the use of coercive conduct to obtain
property, there has been and continues to be a recognized
difference between these two crimes, see, e.g., ALI, Model Penal
Code and Commentaries §§ 212.5, 232.4 (1980) . . . and we find it
evident that this distinction was not lost on Congress in
formulating the Hobbs Act.
Id. at 407-08. Accordingly, the Supreme Court concluded that the defendants “did not obtain or
attempt to obtain property from [the plaintiffs].” Id. at 409.
Scheidler establishes a general rule that a defendant does not “obtain” or seek to obtain
property within the meaning of the Hobbs Act by merely interfering with or depriving someone
of property, or by merely depriving or seeking to deprive someone of his “exclusive control of
[his] business assets.” Id. at 404-05. However, the Supreme Court did not foreclose the view
that a violation of the Hobbs Act may be based upon a defendant’s obtaining or attempting to
obtain for himself or a third party the exercise of a victim’s intangible property rights in such a
way that would profit the defendants or his cohorts financially.
For example, the Court stated:
We need not now trace what are the outer boundaries of extortion
liability under the Hobbs Act, so that liability might be based on
obtaining something as intangible as another’s right to exercise
exclusive control over the use of a party’s business assets.
...
Accordingly, the dissent is mistaken to suggest that our decision
reaches, much less rejects, lower court decisions such as United
States v. Tropiano, 418 F.2d 1069, 1076 (1969), in which the
Second Circuit concluded that the intangible right to solicit refuse
collection accounts “constituted property within the Hobbs Act
293

definition.”
Id. at 402 and n.6.303
These statements indicate that the Scheidler Court did not necessarily reject Tropiano’s
holding. In Tropiano, the defendants, who were partners in C&A Refuse Removal Company
(“C&A”), were convicted of attempted and completed Hobbs Act extortion offenses arising from
their threats of force, violence and fear to competitor refuse removal dealers, including one

303

It was settled when Congress passed the Hobbs Act in 1946 that the term “property”
includes the exclusive right to control the use of business assets, such as buildings and
equipment, in any legitimate manner. It is “elementary” that “[p]roperty is more than the mere
thing which a person owns,” and “consists of the free use, enjoyment, and disposal of a person’s
acquisitions without control or diminution save by the law of the land.” Buchanan v. Warley,
245 U.S. 60, 74 (1917) (citing 1 W. Blackstone, Commentaries 127 (Cooley’s Ed. 1872)). In
other words, the “bundle of rights,” Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979), that
constitutes property includes the exclusive “power over [the] use” of physical assets. Marsh v.
Nichols, Shepard & Co., 128 U.S. 605, 612 (1888).
Because “[t]here can be no conception of property aside from its control and use,”
73 C.J.S. Property § 5, at 170 (1983), the Supreme Court has recognized in a variety of contexts
that the intangible right to use property is itself property. See, e.g., United States v. Craft,
535 U.S. 274, 280 (2002)(observing that “essential property rights” include “the right to use the
property”); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982)
(“Property rights in a physical thing have been described as the rights ‘to possess, use, and
dispose of it.’”) (quoting United States v. Gen. Motors Corp., 323 U.S. 373, 378 (1945)); Crane
v. Comm’r of Internal Revenue, 331 U.S. 1, 6 (1947) (observing that “ordinary, everyday”
understanding of “property” includes “the aggregate of the owner’s rights to control and dispose
of [a physical] thing”); Dobbins v. City of Los Angeles, 195 U.S. 223, 236 (1904) (describing
constitutional rights “to use and enjoy property”); Carpenter v. United States, 484 U.S. 19, 26-27
(1987) (holding that property under the mail and wire fraud statutes includes the ‘right to
exclusive use’ of confidential business information).
Accordingly, federal courts have repeatedly held that “property” within the ambit of the
Hobbs Act includes intangible rights to conduct one’s business and to control it free from the
wrongful use or threat of force, violence, or fear. See, e.g,, United States v. Gigante, 39 F. 3d 42,
45-46 (2d Cir. 1994); United States v. Lewis, 797 F.2d 358, 363-64 (7th Cir. 1986); United
States v. Zemek, 634 F.2d 1159 (9th Cir. 1980); United States v. Santoni, 585 F.2d 667, 673 (4th
Cir. 1978); United States v. Franks, 511 F.2d 25, 31-32 and n. 8 (6th Cir. 1975); United States v.
Glasser, 443 F.2d 994, 1007 (2d Cir. 1971).
294

Leonard Caron, to induce Caron to stop attempting to take away any of the defendants’
customers and to stop competing with the defendants in soliciting any business in Milford,
Connecticut.
The defendants conceded that “rubbish removal accounts which are purchased and sold
are probably property,” but argued that “the right to solicit business” did not constitute
“property.” Tropiano, 418 F. 2d at 1075. The Second Circuit rejected this argument, stating:
Obviously, Caron [the victim] had a right to solicit business from
anyone in any area without any territorial restrictions by the
[defendants] and only by the exercise of such a right could Caron
obtain customers whose accounts were admittedly valuable. Some
indication of the value of the right to solicit customers appears
from the fact that when the C&A accounts were sold for $53,135,
C&A’s agreement not to solicit those customers was valued at an
additional $15,000.
Id. at 1076.
Tropiano is distinguishable from Scheidler in that the defendants in Tropiano sought to
“obtain” or “acquire” for themselves “property” from the victim -- i.e., “the right to solicit
customers,” -- and that “property” was “something of value. . . that [the defendants] could
exercise, transfer or sell.” The interpretation of “obtain” under Scheidler, therefore, was
satisfied. In contrast, the defendants in Scheidler did not seek to obtain for themselves
something of value from the plaintiffs’ abortion clinics; rather they merely wanted to shut down
the clinics and interfere with the clinics’ business.
b.

In United States v. Gotti, 459 F.3d 296, 320-26 (2d Cir. 2006), the Second Circuit

held that Tropiano was still good law in light of the Scheidler decision, and that union members’
rights guaranteed by the LMRDA constitute “property” within the ambit of the Hobbs Act. The
Second Circuit also held that the defendants, members and associates of the LCN, “obtained”
295

union members’ LMRDA rights when the defendants used extortionate means to cause “the
relinquishment of the union members’ LMRDA rights . . . in order to exercise those rights for
themselves . . . in a way that would profit them financially.” Gotti, 459 F.3d at 325.
The Second Circuit ruled that the indictment alleged facts which satisfied Scheidler’s
requirement that a defendant must obtain or seek to obtain property for himself or a third party.
For example, the Second Circuit stated:
[T]he indictment alleged that the defendants sought to obtain, and
did obtain, the union members’ LMRDA rights to free speech and
democratic participation in union affairs as well as their LMRDA
rights to loyal representation by their officers, agents, and other
representatives. It further stated that the defendants sought to
exercise those rights themselves, by telling various delegates whom
to vote for in certain leadership positions, and by controlling
various elected officials’ performance of their union duties. We
believe that these allegations satisfy our interpretation of Scheidler
II.
...
Similarly, as to the MILA-related extortion counts, the indictment
alleges that the defendants sought to obtain, and did obtain, the
MILA participants’ and beneficiaries’ rights to have the MILA
trustees contract with the service provider of prescription drugs of
the trustees’ choice, and to have MILA trustees and fiduciaries
discharge their duties in MILA’s best interest. The indictment
further asserts that the defendants sought to exercise these rights
for themselves by telling the MILA trustees which service provider
to support, and thereby ensuring the selection of a Gambinoassociated enterprise (GPP/VIP) that would pay kickbacks. Here,
too, the allegation is that the defendants exercised the rights in
question in order to profit themselves. Thus, the MILA-related
Hobbs Act extortion counts satisfy the dictates of Scheidler II.
Gotti, 459 F.3d at 325-26. The Second Circuit also stated:
[T]he indictment alleges that the defendants obtained Alayev’s
intangible property rights to make various business decisions (such
as whether to keep illegal gambling machines on the premises) free
from outside pressure. As the government aptly states in its brief,
“[t]he defendants did not seek merely to ‘shut down’ Alayev’s
296

business but essentially made themselves his silent partners and
exercised his rights to their own advantage.” Because here the
allegation is that the defendants sought to exercise for themselves
Alayev’s rights in a manner that would profit them, the Alayev
Counts survive Scheidler II.
...
Finally, the Seagal Counts also satisfy the Scheidler II standard.
Here it is alleged that the defendants sought to exercise for
themselves Seagal’s right to make his own business decisions, by
threatening him with possible violence unless he worked with Jules
Nasso again. Thus, here the defendants sought to exercise for
themselves Seagal’s intangible right to decide with whom to work,
in order to secure profit for themselves. This constitutes Hobbs
Act extortion under Scheidler II.
Id. at 327.
The Second Circuit also held that the district court’s jury instructions satisfied the
requirements of Scheidler. In that respect, the district court identified the alleged property that
was the subject of the extortion charges, and instructed the jury, among other matters, that:
[Y]ou should find the defendant guilty of extortion provided the
government has proven that as a consequence thereof the defendant
obtained money or something else of value from the victims that
the defendant could exercise and transfer or sell.
In other words, merely interfering and depriving someone of
property is insufficient to constitute extortion. You have to be [sic]
the obtaining of money or something else of value from the victims
that the defendant could exercise, transfer or sell as well.
...
Before you can find the defendant guilty of extortion under these
sub parts, you must find the government has proven that as a result
of wrongfully inducing the victim to part with the property right
identified in those sub parts, the defendant obtained money as [sic]
something else of value from the victim that the defendant could
exercise, transfer or sell. So, in other words, it is not enough just
to discourage somebody or coerce somebody from not selling his
business, you have to get something because of that type of
activity.
Gotti, 459 F. 3d at 327-28.
297

OCRS agrees with the Second Circuit’s analysis in Gotti. Moreover, the ruling of Gotti is
supported by the legislative history to RICO and the Hobbs Act, which makes clear that Congress
intended those statutes to provide new and expansive remedies to eliminate organized crime’s
corrupt control and influence over labor unions, which the LCN obtained through extortion. See
Sections VIII(A)(1) and (2) and VIII(F)(1)(a) above.

298

IX
GOVERNMENT CIVIL RICO CASES NOT INVOLVING LABOR UNIONS
The United States has brought at least seventeen civil RICO cases seeking equitable relief
that did not involve labor unions.
1.

For example, in United States v. Philip Morris, Civ. No. 1:99 CV 02496 (filed

September 22, 1999, D.D.C.), the United States brought a civil RICO suit against nine tobacco
companies and two affiliated entities, alleging a pattern of mail and wire fraud predicate offenses
from the early 1950’s to the date the complaint was filed to defraud consumers of tobacco
products through false and misleading information about, among other matters, the health effects
of smoking, tobacco products’ addictiveness and the targeting of underage consumers to buy
tobacco products.
Following a nine month non-jury trial, the district court issued its 945-page final opinion.
See United States v. Philip Morris USA, Inc., 449 F. Supp.2d 1 (D.D.C. 2006). Regarding
liability, the district court found that the Government established the alleged enterprise and that
each defendant was liable for a substantive RICO violation (18 U.S.C. § 1962(c)) and that each
defendant, except for one defendant, was liable for conspiring to violate RICO (18 U.S.C.
§ 1962(d)). Id. at 851-52, 867-73, 901-907. The district court found that the Government proved
an overarching scheme to defraud the public, stating:
[O]ver the course of more than 50 years, Defendants lied,
misrepresented, and deceived the American public, including
smokers and the young people they avidly sought as “replacement
smokers,” about the devastating health effects of smoking and
environmental tobacco smoke, they suppressed research, they
destroyed documents, they manipulated the use of nicotine so as to
increase and perpetuate addiction, they distorted the truth about
low tar and light cigarettes so as to discourage smokers from
299

quitting, and they abused the legal system in order to achieve their
goal -- to make money with little, if any, regard for individual
illness and suffering, soaring health costs, or the integrity of the
legal system.
...
In order to carry out this scheme, Defendants made the following
false and fraudulent statements in a number of areas, including: (1)
deceiving consumers into starting and continuing to buy and smoke
cigarettes by misrepresenting and concealing the adverse health
effects caused by smoking and exposure to environmental cigarette
smoke, by maintaining that there was an “open question” as to
whether smoking cigarettes causes disease and other adverse
effects, despite the fact that Defendants knew otherwise, and by
ensuring that their research, development, and marketing of
cigarettes remained consistent with these core public positions (see
Findings of Fact V(A)); (2) deceiving consumers into becoming or
staying addicted to cigarettes by maintaining that neither smoking
nor nicotine is addictive, despite the fact that Defendants knew
these positions were false (see Findings of Fact V(B)); (3)
deceiving consumers into becoming or staying addicted to
cigarettes by manipulating the design of cigarettes and the delivery
of nicotine to smokers, while at the same time denying that they
engaged in such efforts (see Findings of Fact V(C)); (4) deceiving
consumers, particularly parents and young people, by denying that
they marketed to youth, while engaging in such marketing and
advertising with the intent of addicting young people and enticing
them to become lifelong smokers (see Findings of Fact V(F)); and
(5) deceiving consumers through deceptive marketing and cigarette
design modifications to exploit smokers’ desire for less hazardous
and “low tar” cigarettes which Defendants knew to be no safer than
full-flavor cigarettes (see Findings of Fact V(G)).
Id. at 852-53.
The district court ordered various injunctive relief against all but three of the
defendants,304 including the following:
304

The district court ruled that remedies were not available against defendants The
Liggett Group, Inc. (“Liggett”), The Council for Tobacco Research - U.S.A., Inc. (“CTR”), and
the Tobacco Institute, Inc. (“TI”). See Philip Morris USA, Inc., 449 F.Supp. 2d at 915-19. The
district court reasoned that corporate defendants CTR and TI had been dissolved and were no
(continued...)
300

(1)

Finding that the defendants fraudulently marketed certain cigarettes as “low tar,”

“light,” “mild” and similar terms as being less harmful than other “full flavor” cigarettes, id. at
923-24, the district court “prohibited [defendants] from using any descriptors indicating lower tar
delivery -- including, but not limited to, “low tar,” “light,” “mild,” “medium,” and “ultra light” -which create the false impression that such cigarettes are less harmful to smokers.” Id. at 925.
(2)

Finding that defendants made numerous false and deceptive public statements

regarding smoking and health issues, the district court ordered defendants “to make corrective
statements about addiction (that both nicotine and cigarette smoking are addictive); the adverse
health effects of smoking (all the diseases which smoking has been proven to cause); the adverse
health effects of exposure to ETS [Environmental Tobacco Smoke] (all diseases which exposure
to ETS has been proven to cause); their manipulation of physical and chemical design of
cigarettes (that Defendants do manipulate design of cigarettes in order to enhance the delivery of
nicotine); and light and low tar cigarettes (that they are no less hazardous than full-flavor
cigarettes).” Id. at 928; see also id. at 938-41.
(3)

Defendants were required to “create and maintain document depositories and

websites which provide the Government and the public with access to all industry documents
disclosed in litigation from this date forward.” Id. at 928. This requirement included: (a) making
“public the documents [defendants] produce or use in future litigation or administrative actions”,
id. at 929; (b) maintaining previous depository obligations in other litigation (the Minnesota and
Guildford Depositories) for an additional 15 years (id. at 930); (c) maintaining public websites
304

(...continued)
longer able to continue their past RICO violations. See id. at 915-18. The district court also
found that there was no reasonable likelihood of defendant Liggett’s committing future violations
because it had withdrawn from the RICO conspiracy. See id. at 906-07, 918-19.
301

for all documents which have been produced in litigation for fifteen years, id. at 930-31; (d)
requiring defendants “to provide accurate and updated indices of all documents they are
withholding on grounds of privilege or confidentiality” and “regularly-updated information
concerning all waivers and losses of privilege and confidentiality.” id. at 931; (e) to prevent
defendants from youth marketing, requiring “Defendants to provide their disaggregated
marketing data to the Government according to the same schedule on which they provide it to the
FTC.” Id. at 932; see also id. at 941-44.
(4)

The district court also entered an injunction stating:
Defendants will be ordered to refrain from engaging in any act of
racketeering, as defined in 18 U.S.C. § 1961(1) relating in any way
to manufacturing, marketing, promotion, health consequences or
sale of cigarettes in the United States.
Defendants will also be ordered not to participate in the
management and/or control of any of the affairs of CTR, TI, CIAR,
or any successor entities.
Defendants will also be ordered not to reconstitute the form or
function of CTR, TI, or CIAR.
Finally, because this is a case involving fraudulent statements
about the devastating consequences of smoking, Defendants will
be prohibited from making, or causing to be made in any way, any
material, false, misleading or deceptive statement or representation
concerning cigarettes that is disseminated in the United States.

Id. at 932-33, 938.
The district court also required Defendants to pay costs pursuant to Rule 54,
FED . R. CIV . P. Id. at 937.305
305

The district court refused to impose several other proposed remedies, including the
appointment of court officers. See Philip Morris USA, Inc., 449 F. Supp.2d at 933-37. Appeals
from the district court’s decision by the defendants and the United States are pending before the
(continued...)
302

2.

In United States v. International Boxing Federation (IBF), Civ. No. 99-5442

(JWB) (filed November 22, 1999, D.N.J.), the United States brought a civil RICO lawsuit against
the International Boxing Federation, United States Boxing Association (“USBA”) and the
Executive Committee of the International Boxing Federation (“IBF”)/United States Boxing
Association, as nominal defendants, and against Robert W. Lee, Sr., Robert W. Lee, Jr., Don
William Brennan and Francisco Fernandez. The alleged enterprise was a group of entities
associated in fact consisting of the USBA, the IBF non-profit, IBF for-profit and the IBF
International, including its leadership, members and associates. The complaint alleged that the
defendants falsely represented that the enterprise maintained fair and unbiased systems for
ratings of boxers and, based on these false representations, the defendants obtained annual dues
from the IBF - USBA memberships, registration fees from boxing promoters, sanction fees from
boxers and their promoters and other contributions. However, in truth, the defendants solicited
and accepted bribes from certain boxing promoters and managers and others in order to alter
these ratings and to provide other favorable treatment to those who paid bribes.
The suit sought a permanent injunction and an order requiring the defendants to divest
their interests in the enterprise and to disgorge all the proceeds of their violations. On January
12, 2000, the district court granted a preliminary injunction restraining the defendants from,
among other matters, committing any act of racketeering, and the court appointed a monitor to
conduct the legitimate business of the enterprise.

305

(...continued)
United States Court of Appeals for the District of Columbia. See United States v. Philip Morris
USA, Inc., Appeal Nos. 06-5267-5272.
303

Subsequently, the district court entered a Consent Decree permanently barring Robert W.
Lee, Sr. and Robert W. Lee, Jr., from affecting the affairs of the IBF and any other boxing
organization or entity. Whereupon, the IBF installed new leadership and worked with the IBF
Monitor to eliminate corruption within the IBF.
On September 29 2004, the district court entered a Consent Decree that dissolved the IBF
Monitorship, finding that “the IBF has substantially improved its internal financial and
accounting controls and has instituted many reforms including a Code of Conduct, compliance
with extant Congressional enactments and regulations including the implementation of a fair and
honest rating system (with grievance rights for boxers), a corporate restructuring, regularly
scheduled open annual meetings of members, Board of Directors’ meetings, Director and Officer
elections and updated its corporate documentation with new Articles of Incorporation and new
By-Laws.” Consent Decree at 3, United States v. Int’l Boxing Fed., Civ. No. 99 CV5442 (filed
September 29, 2004 D.N.J.).
The district court retained jurisdiction over the parties and signatories to the Consent
Decree which was binding on the “current and future officers and others holding positions of
trust in the IBF, current and future employees, agents, representatives, members, committee
members of the IBF and any and all persons in active concert or participation with any or all of
them.” Id. at 4.
The Consent Decree also provided that:
[1]

The IBF shall hereafter be operated exclusively as a notfor-profit entity under the laws of the State of New Jersey.

[2]

The IBF shall permanently maintain and enforce its Code of
Conduct as well as its Internal Control Procedures in
substantially the same form as they currently exist.
304

[3]

The IBF shall promptly establish and maintain for a
minimum of five (5) years from its establishment, an
Independent Review Board (the “Board”). The purpose of
the Board shall be to review complaints and conduct
hearings whenever necessary regarding, (a) all matters
arising under the IBF’s Code of Conduct, and (b) all
matters relating to compliance with the injunctive
provisions of this Consent Decree. The Board shall be
comprised of three individuals who are independent of the
IBF (for example, persons who are not officers, Executive
Board members, agents, employees, representatives and/or
other persons holding positions of trust in the IBF). The
IBF, upon prior notice to the United States, shall have the
power to appoint persons to the Board, provided, that the
United States shall have the power to veto any appointment
to the Board. The Board shall have the right and power,
inter alia, to impose discipline including removal,
suspension or expulsion. The IBF shall be responsible to
fund the activities of the Board, including providing
reasonable compensation to is members. The Board or any
member thereof shall have the power to refer matters to the
United States Attorney for appropriate action. The Board
shall also have the power to refer matters to the IBF for
appropriate action. The Board shall provide the IBF and
the United States a comprehensive written report of its
activities at least once per year for the next three (3) years.

[4]

The Board, the IBF, as well as its directors, officers, agents,
employees, representatives, other persons holding positions
of trust in the IBF or members of the IBF shall have the
power to refer matters to the United States Attorney’s
Office for the District of New Jersey for appropriate action
at any time.

Id. at 4-5.
The Consent Decree also permanently enjoined all persons bound by the Consent Decree
from directly or indirectly:
a.

committing any crime under the laws of the State of New
Jersey and of the United States, including, but not limited
to any crime listed in 18 U.S.C. § 1961(1);

305

b.

soliciting, accepting, or attempting to accept any money,
fee, compensation, commission, credit, gift, gratuity, and/or
any other thing of value or of any kind whatsoever for any
official action of the IBF, including, but not limited to,
actions which have any direct or indirect relation to ranking
of boxers;

c.

soliciting, accepting, or attempting to accept any money,
fee, compensation, commission, credit, gift, gratuity, and/or
any other thing of value or of any kind whatsoever where
such actions may directly or indirectly (i) be adverse to the
interests of the IBF, or (ii) be contrary to the remedial
objectives of this Consent Decree;

d.

permitting any “barred person”[306]to exercise any control
or influence, directly or indirectly, in any way or degree, in
the conduct of the affairs of the IBF; and

e.

obstructing or otherwise interfering, directly or indirectly,
with the efforts of anyone effectuating or attempting to
effectuate the terms of this Consent Decree.

Id. at 6.
The Consent Decree also provided that: (1) if any person bound by the Consent Decree
violates it, “in addition to other sanctions or penalties, be subject to removal, suspension or
expulsion from office and/or the IBF by the Court,” and be subject to contempt; and (2) “Upon a
showing to the Court pursuant to any application by the United States that probable cause exists
to believe that: (a) the IBF’s Independent Review Board (as described [above]) has ceased to
function, is functioning ineffectively or is otherwise not functioning as set forth [above], (b) there

306

The Consent Decree provided that: “As used in this Consent Decree, a ‘barred
person’ is: (a) Robert W. Lee, Sr., Robert W. Lee, Jr., Don Brennan and/or Francisco Fernandez,
(b) any person prohibited from participating in the affairs of the IBF pursuant to or by operation
of an Order in this matter or other court order, administrative order or statute, or (c) any person
under disciplinary suspension or other action or order by any federal or state boxing commission
or other similar authority, including authorities that may come into existence under the laws of
the United States or any state.” Id. at 7.
306

exists corruption in the IBF and/or (c) the remedial objectives of this Consent Decree are not
being met, the Court may order such relief as is necessary and proper, including reinstatement of
the Monitorship.” Id. at 7-8.
3.

Other civil RICO lawsuits brought by the United States to obtain equitable relief

include suits to enjoin illegal gambling businesses,307 to recover money obtained through
defrauding the United States,308 and to enjoin defendants from operating restaurants and to divest
their interests in a restaurant (Umberto’s Clam House) from which they skimmed proceeds.309

307

See: (1) United States v. Leonard L. Cappetto, Civ. No. 74-C-503 (filed February 22,
1974, N.D. Il.); United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), cert. denied, 420 U.S.
925 (1975); (2) United States v. Winstend, Civ. No. 76-C-2513 (filed July 1976, N.D.Il.); and (3)
United States v. Lummi Indian Tribe, Civ. No. C83-94C (filed January 27, 1983, W.D. Wash.).
308

See United States v. Larry D. Barnette, Civ. No. 85-0754-Civ-J-16 (filed May 16,
1985, M.D. Fla.); United States v. Barnette, 10 F.3d 1553 (11th Cir.), cert. denied, 513 U.S. 816
(1994).
309

See United States v. Ianniello, Civ. No. 86 Civ. 1552 (LSH) filed February, 1986,
S.D.N.Y.); United States v. Ianniello, 646 F. Supp. 1289 (S.D.N.Y. 1986), aff’d, 824 F.2d 203
(2d Cir. 1987).
307

X
MISCELLANEOUS ISSUES
A.

Prior or Parallel Criminal Proceeding
Although a defendant’s prior criminal conviction for a RICO violation or a predicate

racketeering offense is not required before a civil RICO action may be filed against a
defendant,310 Congress contemplated that the United States likely would bring civil RICO
lawsuits against defendants following a defendant’s conviction on related offenses or
simultaneously with criminal prosecutions for related criminal conduct. In that regard, the
Senate Report regarding RICO states that civil RICO was designed to provide new and powerful
civil remedies to augment criminal remedies, especially where prior criminal prosecutions had
not fully succeeded in eliminating corruption within an organization or enterprise. See, e.g.,
S. REP. No. 91-617 at 78-83. The Senate Report added that:
Where an organization is acquired or run by defined racketeering
methods, then the persons involved can be legally separated from
the organization, either by the criminal law approach of fine,
imprisonment and forfeiture, or through a civil law approach of
equitable relief broad enough to do all that is necessary to free the
channels of commerce from all illicit activity.
Id. at 79. See also cases cited n.289 in Section VIII(E)(3)(b) above.
Moreover, 18 U.S.C. § 1964(d) explicitly authorizes the Government to invoke collateral
estoppel to prove its civil RICO charges by providing that a defendant’s prior criminal conviction
“shall estop the defendant from denying the essential allegations of the criminal offense in any
subsequent civil proceeding brought by the United States.” See Section III(D) above. Therefore,
Congress clearly contemplated that, under some circumstances, civil RICO charges would be
310

See Sedima, 479 U.S. at 488-93.
308

brought against a defendant following a defendant’s conviction on a related criminal offense.
In accordance with the foregoing authority, the Government may bring either civil or
criminal RICO actions, or both, against a defendant for the same or overlapping unlawful
conduct. See, e.g., Dist. Council of N.Y. City and Vicinity, 778 F. Supp. at 763; United States v.
Bonanno Organized Crime Family of La Cosa Nostra, 683 F. Supp. 1411, 1450 (E.D.N.Y. 1988);
see also cases cited Section III(D) above.
B.

Use of Court-Ordered Electronic Surveillance
Procedures for the interception and use of wire, oral or electronic communications

(hereinafter “court-authorized electronic surveillance”) are set forth in 18 U.S.C. §§ 25102522.311 Court-authorized electronic surveillance is an extremely important source of evidence in
both criminal and civil RICO cases brought by the United States. In that respect, 18 U.S.C.
§ 2516 empowers the Government to obtain court-authorized electronic surveillance when “such
interception may provide or has provided evidence of ” violations of the RICO statute (“Section
1963 (violations with respect to racketeer influenced and corrupt organizations”)) and many
criminal violations that are also predicate acts of racketeering under RICO (18 U.S.C. § 1961(1)).
Title 18, United States Code, Section 2517(1) and (2) provide as follows:
(1) Any investigative or law enforcement officer who, by any
means authorized by this chapter, has obtained knowledge of the
contents of any wire, oral, or electronic communication, or
evidence derived therefrom, may disclose such contents to another
investigative or law enforcement officer to the extent that such
disclosure is appropriate to the proper performance of the official
duties of the officer making or receiving the disclosure.

311

A comprehensive discussion of the law governing electronic surveillance is beyond
the scope of this Manual. Rather, this Section is limited to a brief discussion of the use of courtauthorized electronic surveillance in Government civil RICO cases.
309

(2) Any investigative or law enforcement officer who, by any
means authorized by this chapter, has obtained knowledge of the
contents of any wire, oral, or electronic communication or evidence
derived therefrom may use such contents to the extent such use is
appropriate to the proper performance of his official duties.
Pursuant to these provisions, duly authorized Government attorneys and law enforcement
officers312 who are handling a civil RICO matter may, without a court-disclosure order, use
evidence derived from court-authorized electronic surveillance and disclose such evidence “to
another investigative or law enforcement officer” to the extent that such use or disclosure “is
appropriate to the proper performance of the official duties of the officer making or receiving the
disclosure.”313
However, such a duly authorized Government attorney or other law enforcement officer
may not disclose evidence derived from such court-authorized electronic surveillance while
giving testimony in a civil RICO proceeding without a court-order authorizing such disclosure.
In that respect, 18 U.S.C. §§ 2517(3) and (5) provide as follows:
(3) Any person who has received, by any means authorized by this
chapter, any information concerning a wire, oral, or electronic
communication, or evidence derived therefrom intercepted in
accordance with the provisions of this chapter may disclose the
contents of that communication or such derivative evidence while
312

See 18 U.S.C. § 2516 which specifies the Government attorneys authorized to apply
to the district court for an electronic surveillance order and which provides that such authorized
interceptions may be made “by the Federal Bureau of Investigation, or a federal agency having
responsibility for the investigation of the offense as to which the application is made.” See also
18 U.S.C. § 2510 (7) which defines “Investigative or law enforcement officer.”
313

18 U.S.C. § 2518(8)(a) requires the judge issuing an electronic surveillance order to
seal the original recordings of intercepted conversations “[i]mmediately upon the expiration of
the period of the order.” However, that section also provides that “[d]uplicate recordings may be
made for subsections (1) and (2) of Section 2517 of this chapter for investigations.” See United
States v. Maldonado-Rivera, 922 F.2d 934, 954 (2d Cir. 1990)(“duplicate tapes need not be
judicially sealed”).
310

giving testimony under oath or affirmation in any proceeding held
under the authority of the United States or of any State or political
subdivision thereof.
...
(5) When an investigative or law enforcement officer, while
engaged in intercepting wire, oral, or electronic communications in
the manner authorized herein, intercepts wire, oral, or electronic
communications relating to offenses other than those specified in
the order of authorization or approval, the contents thereof, and
evidence derived therefrom, may be disclosed or used as provided
in subsections (1) and (2) of this section. Such contents and any
evidence derived therefrom may be used under subsection (3) of
this section when authorized or approved by a judge of competent
jurisdiction where such judge finds on subsequent application that
the contents were otherwise intercepted in accordance with the
provisions of this chapter. Such application shall be made as soon
as practicable.
First, Section 2517(3) of Title 18 authorizes the use of evidence derived from courtauthorized electronic surveillance by an authorized Government official “while giving testimony
under oath or affirmation in any proceeding held under the authority of the United States or of
any state or political subdivision thereof,” which includes a civil proceeding. (emphasis added).
See, e.g., In Re Electronic Surveillance Evidence, 990 F.2d 1015, 1018-20 (8th Cir. 1993)
(holding that 18 U.S.C. § 2517 authorizes Government officials to use evidence derived from
court-authorized electronic surveillance in civil proceedings, but does not authorize pretrial
disclosure of such evidence to private civil RICO litigants); Nat’l Broad. Co. v. United States
Dept. of Justice, 735 F.2d 51, 53-55 (2d Cir. 1984) (same);314 S. Rep. No. 91-617 at 161 (stating
that “18 U.S.C. § 2517 [permits] evidence obtained through the interception of wire or oral

314

But see In Re High Fructose Corn Syrup Antitrust Litig., 46 F. Supp.2d 819, 828-32
(C.D. Ill. 1999).
311

communications under court order to be employed in civil actions.”)315
However, a disclosure order is required to disclose evidence obtained from court-ordered
electronic surveillance while giving testimony in a civil RICO proceeding because 18 U.S.C.
§ 2516 authorizes electronic surveillance only to obtain evidence of criminal offenses specified
in Section 2516, and not to obtain evidence of civil violations. Therefore, a civil RICO violation
constitutes an offense “other than those specified in the order of authorization or approval”
within the meaning of Section 2517(5) and a disclosure order is required.
Moreover, one court has held that private plaintiffs in a civil action were entitled to
subpoena the Government to obtain tape recordings that were derived from court-authorized
electronic surveillance which “were admitted into evidence and played in open court” on the
rationale that “[o]nce the material has been [publicly] revealed, however, the purpose of Section
2517(3) ceases and the requirements of that section no longer govern.” County of Oakland by
Kuhn v. City of Detroit, 610 F. Supp. 364, 368 (E.D. Mich. 1984).

315

See United States v. Private Sanitation Indus. Ass’n, 811 F. Supp. 808, 815-17
(E.D.N.Y. 1992) (admitting evidence derived from court-authorized electronic surveillance in a
Government civil RICO lawsuit). Moreover, courts have allowed evidence derived from lawful
court-authorized electronic surveillance to be used in civil tax enforcement proceedings.
See, e.g., Dickens v. United States, 671 F.2d 969 (6th Cir. 1982); Griffin v. United States, 588 F.
2d 521, 523-26 (5th Cir. 1979); Fleming v. United States, 547 F.2d 872, 873-75 (5th Cir. 1977);
United States v. Iannelli, 477 F.2d 999, 1001 (3d Cir. 1973). See also Matter of Electronic
Surveillance, 596 F. Supp. 991 (E.D. Mich. 1984) (allowing disclosure of evidence derived from
court-authorized electronic surveillance to the Grievance Administrator of the Michigan Attorney
Grievance Commission).
312

C.

Federal Rule of Criminal Procedure 6(e)
1.

A Government Attorney May Not Disclose “A Matter Occurring Before the
Grand Jury” Unless It Falls Within An Exception Set Forth in Rule 6(e)(3)

Rule 6(e)(2)(B)(vi), FED . R. CRIM . P. prohibits “an attorney for the government” from
disclosing “a matter occurring before the grand jury,” unless such disclosure falls within one of
the exceptions set forth in Rule (6)(e)(3). Rule 6(e) does not define “a matter occurring before
the grand jury.” Courts have noted that the phrase “a matter occurring before the grand jury”
“encompasses ‘not only what has occurred and what is occurring, but also what is likely to
occur,’ including ‘the identities of witnesses or jurors, the substance of testimony as well as
actual transcripts, the strategy or direction of the investigation, the deliberations or questions of
jurors, and the like.’” In Re Sealed Case No. 99-3091, 192 F.3d 995, 1001 (D.C. Cir. 1999),
quoting In Re Motions of Dow Jones & Co., 142 F.3d 496, 500 (D.C. Cir. 1998). Accord In Re
Special Grand Jury 89-2, 450 F.3d 1159, 1175-77 (10th Cir. 2006).
However, courts have warned that the above-quoted phrase from Rule 6(e) should not be
given an unduly broad reading, and that Rule 6(e) does not require a “veil of secrecy to be drawn
over all matters occurring in the world that happen to be investigated by a grand jury.” In Re
Sealed Case No. 99-3091, 192 F.3d at 1001-02, quoting Securities & Exch. Comm. v. Dresser
Indus., Inc., 628 F.2d 1368, 1382 (D.C. Cir. 1980)(en banc). The majority of courts that have
considered the issue have held that Rule 6(e) does not per se prohibit disclosure of records
subpoenaed by or presented to the grand jury which were created independently of the grand jury.
In a leading case, United States v. Interstate Dress Carriers, Inc., 280 F.2d 52 (1960), the Second
Circuit explained:

313

[I]t is not the purpose of the Rule [6(e)]to foreclose from all future
revelation to proper authorities the same information or documents
which were presented to the grand jury. Thus, when testimony or
data is sought for its own sake – for its intrinsic value in the
furtherance of a lawful investigation – rather than to learn what
took place before the grand jury, it is not a valid defense to
disclosure that the same information was revealed to a grand jury
or that the same documents had been, or were presently being,
examined by a grand jury.
Id. at 54.
The above-referenced rationale of the majority rule is especially true of normal business
records that are routinely created independently of a grand jury investigation and maintained in
the normal course of business.316 However, the courts have not taken a uniform approach to this
issue, and have indicated that in some circumstances disclosure of such records subpoenaed by or
presented to the grand jury may be prohibited by Rule 6(e), in the absence of an appropriate

316

The following cases adopted the majority rule, finding that normal business records
and other documents that were created independently of a grand jury investigation and were not
sought to learn what took place before the grand jury were not protected from disclosure under
Rule 6(e): First Circuit Cases: Capitol Indem. Corp. v. First Minn. Constr. Co., 405 F. Supp.
929, 930-31 (D. Ma. 1975); In Re Grand Jury Proceedings, 505 F. Supp. 978, 982 (D. Me. 1981);
Second Circuit Cases: United States v. Interstate Dress Carriers, Inc., 280 F.2d 52, 54 (2d Cir.
1960); DiLeo v. Commissioner of IRS, 959 F.2d 16, 19-20 (2d Cir. 1992); Third Circuit Cases:
In Re Grand Jury Matter, 640 F. Supp. 63, 65 (E.D. Pa. 1986); United States v. OMT
Supermarket, Inc., 995 F. Supp. 526, 531-32 (E.D. Pa. 1998); In Re Grand Jury Investigation,
630 F.2d 996, 1000-01 (3d Cir. 1980); United States v. Chang, 47 Fed. Appx. 119, 121-22 (3d
Cir. 2002); Fourth Circuit Cases: United States v. Reiners, 934 F. Supp. 721, 723-24 (E.D. Va.
1996); Sixth Circuit Cases: Matters of Grand Jury Investigation, (90-3-2), 748 F. Supp. 1188,
1208 (E.D. Mich. 1990); Rugiero v. United States Department of Justice, 257 F.3d 534, 549 (6th
Cir. 2001); Seventh Circuit Cases: Dexia Credit Local v. Rogan, 395 F. Supp. 2d 709, 715-19
(N.D. Ill. 2005); United States v. Sandford, 589 F.2d 285, 290-91 (7th Cir. 1978); In the Matter
of Special March 1981 Grand Jury, 753 F.2d 575, 577-79 (7th Cir. 1985); Ninth Circuit Cases:
United States v. Dynavac, Inc., 6 F.3d 1407, 1411-14 (9th Cir. 1993); Kersting v. United States,
206 F.3d 817, 821 (9th Cir. 2000); Tenth Circuit Cases: United States ex rel. Woodard v. Tynan,
757 F.2d 1085, 1087-88 (10th Cir. 1985); District of Columbia Circuit Cases: SEC v. Dresser
Indus., 628 F.2d 1368, 1382-83 (D.C. Cir. 1980)(en banc).
314

disclosure order.317
2.

A Government Attorney Who Has Had Lawful Access to a Matter Occurring
Before a Grand Jury May Use Such Matter in Handling a Civil RICO
Action, But May Not Disclose Such Matter, Without a Court-Disclosure
Order, to Another Person to Assist in Handling a Civil Action

It is not unusual for a Government attorney to participate in both a criminal prosecution
and a related civil action, and hence the question arises whether and under what circumstances
may a Government attorney use information or evidence that is protected from disclosure by
Rule 6(e), FED . R. CRIM . P., in connection with a civil RICO investigation or lawsuit. In sum, a
Government attorney who has had lawful access to matters protected from disclosure by Rule
6(e) may use such matters without a court-disclosure order in connection with a civil RICO
investigation or lawsuit, but may not disclose such matter, without a court-disclosure order, to
another person to assist in handling a civil RICO investigation or lawsuit.
In United States v. Sells Eng’r, Inc., 463 U.S. 418 (1983) (“Sells”), after a defendant pled
guilty to participating in a conspiracy to obstruct the Internal Revenue Service (“IRS”), the
Government moved under Rule 6(e) for disclosure of all grand jury materials relating to the case
to attorneys in the Civil Division of the Justice Department and their staff assistants for use in
preparing and conducting a possible civil suit against the defendant. The district court granted
the Government’s motion on the ground that Government attorneys in the Civil Division were

317

See, e.g., Fourth Circuit Cases: In Re Grand Jury Disclosure, 550 F. Supp. 1171,
1176-77 (E.D. Va. 1982); Sixth Circuit Cases: In Re Grand Jury Subpoenas, 454 F.3d 511, 522
(6th Cir. 2006); In Re Grand Jury Proceedings, 851 F.2d 860, 862-67 (6th Cir. 1988); FDIC v.
Ernst & Whinney, 921 F.2d 83, 87 (6th Cir. 1990); Eighth Circuit Cases: In Re Milk Products
Antitrust Litigation, 84 F. Supp. 2d 1016, 1026-27 (D. Minn. 1997), aff’d on other grounds,
195 F.3d 430 (8th Cir. 1999); In Re Grand Jury Proceedings Relative To Perl, 838 F.2d 304, 307
(8th Cir. 1988); Eleventh Circuit Cases: In Re May 6, 1997 Grand Jury, 76 F. Supp. 2d 1262,
1268-69 (M. D. Ala. 1999).
315

entitled to automatic disclosure as a matter of right without a court-disclosure order under Rule
6(e)(3)(A)(i), which authorized disclosure of a grand jury matter to “an attorney for the
government for use in performing such attorney’s duty.” See Sells, 463 U.S. at 421-22, 426.
The Supreme Court rejected the Government’s contention that all attorneys in the Justice
Department qualify for automatic disclosure of grand jury materials under
Rule 6(e)(3)(A)(i) regardless of the nature of the litigation in which they intend to use the
materials. The Supreme Court stated:
We hold that (A)(i) disclosure is limited to use by those attorneys
who conduct the criminal matters to which the materials pertain.
This conclusion is mandated by the general purposes and policies
of grand jury secrecy, by the limited policy reasons why
Government attorneys are granted access to grand jury materials
for criminal use, and by the legislative history of Rule 6(e).
Sells, 463 U.S. at 427. The Supreme Court added that “Rule 6(e) was never intended to grant
free access to grand jury materials to attorneys not working on the criminal matters to which the
materials pertain.” Id. at 429. Accordingly, the Supreme Court concluded:
“Federal prosecutors” are given a free hand concerning use of
grand jury materials, at least pursuant to their “duties relating to
criminal law enforcement;” but disclosure of “grand jurydeveloped evidence for civil law enforcement purposes” requires a
(C)(i) court order . . . . Congress did not intend that “attorneys for
the government” should be permitted free civil use of grand jury
materials.
Id. at 441-42.
Subsequently, in United States v. John Doe, Inc. I, 481 U.S. 102 (1987) (hereafter “John
Doe, Inc. I”), the Supreme Court held that a Government attorney who had conducted a criminal
anti-trust investigation before a grand jury could, without prior court-authorization, continue to
utilize the evidence obtained by the grand jury in a subsequent civil anti-trust and False Claims
316

Act investigation. In John Doe, Inc. I, attorneys from the Anti-Trust Division of the Department
of Justice conducted a grand jury investigation into alleged price fixing by three corporations. At
the conclusion of the investigation, the attorneys concluded that, although there had been
violations of the Sherman Anti-Trust Act, these violations were not sufficient to warrant criminal
prosecution. Thereafter, without seeking a court order authorizing them to do so, the same
attorneys reviewed the evidence they had developed in the grand jury for the purpose of
determining whether a civil suit should be filed and took various steps pursuant thereto. In the
course of their review of the grand jury evidence, the attorneys concluded that in addition to the
Sherman Act violations, there were potential violations of the False Claims Act and other
statutes. Therefore, they obtained court orders pursuant to Rule 6(e), authorizing the disclosure
of the grand jury material to additional Anti-Trust Division Attorneys and to Civil Division
Attorneys. The team of attorneys, including the attorneys who had conducted the grand jury
investigation, thereafter prepared and filed a civil complaint against the three corporations and
various individuals. Significantly, the complaint did not contain or refer to any of the grand jury
materials. See John Doe, Inc. I, 481 U.S. at 104-110.
Upon the defendants’ claim that the use of the evidence developed in the grand jury to
prepare the civil case violated Rule 6(e), the Second Circuit held that review of the evidence by
the attorneys who conducted the grand jury investigation for the purpose of determining whether
a civil suit should be filed constituted a further “disclosure” of matters occurring before the grand
jury under Rule 6(e) and that the Government had not made a sufficient showing of
particularized need to warrant the additional disclosure to the new Anti-Trust and Civil Division
attorneys. The Second Circuit therefore, held that the civil suit should be dismissed. United
317

States v. John Doe, Inc., 774 F.2d 34 (2d Cir. 1985).
In reversing the decision of the Second Circuit, the Supreme Court held that the
Government’s attorneys who had conducted the grand jury investigation could lawfully review
and continue to use the evidence developed in the grand jury, provided the attorneys did not
disclose any matter occurring before the grand jury to others not authorized by Rule 6(e) to have
access to such evidence. The Supreme Court stated:
Rule [6(e)] does not contain a prohibition against the continued use
of information by attorneys who legitimately obtained access to the
information through the grand jury investigation. The Court of
Appeals’ reasoning is unpersuasive because it stretches the plain
meaning of the Rule’s language much too far.
John Doe, Inc. I, 481 U.S. at 108.
The Supreme Court also rejected the argument that the Government attorneys, who had
conducted the grand jury investigation, had violated Rule 6(e) by using the grand jury material in
drafting the civil complaint, since the attorneys’ consideration of the grand jury material did not
involve any further disclosure of grand jury matters to others. Noting that the complaint did not
refer to any grand jury material, the Supreme Court stated:
A Government attorney may have a variety of uses for grand jury
material in a planning stage, even thought the material will not be
used, or even alluded to, in any filing or proceeding. In this vein, it
is important to emphasize that the issue before us is only whether
an attorney who was involved in a grand jury investigation (and is
presumably familiar with the “matters occurring before the grand
jury”) may later review that information in a manner that does not
involve any further disclosure to others.
John Doe, Inc. I, 481 U.S. at 110-11 (footnote omitted).
Thus, John Doe, Inc. I makes clear that a Government attorney who participated in a
grand jury investigation may continue to review and consider grand jury materials for civil law
318

enforcement purposes. However, the Supreme Court emphasized that under “Sells [such
attorney] could not disclose [grand jury] information to previously uninvolved attorneys from the
Civil Division or the United States Attorney’s office without a court order pursuant to Rule
6(e)(3)(C)(i).”318 John Doe, Inc. I, 481 U.S. at 111.
Courts following Sells and John Doe, Inc. I, have allowed Government personnel to use
lawfully obtained grand jury evidence and information in civil matters, without a court-disclosure
order, provided that such use did not involve disclosure of grand jury matters to another person
who did not have lawful access to such grand jury matters. For example, in DiLeo v.
Commissioner of Internal Revenue, 959 F.2d 16, 21 (2d Cir. 1992), the Second Circuit held that
a Special Agent of the Criminal Investigations Division of the IRS who had participated in a
grand jury investigation leading to a criminal prosecution could also participate in a later trial
before the Tax Court regarding the civil tax liability of the same defendants and assist attorneys
for the Commissioner during that civil tax trial. The Second Circuit stated that the defendant’s
claim that the participation of the IRS Special Agent in the Tax Court proceeding violated Rule
6(e):
is inconsistent with the principle that a government employee who
has participated in a criminal prosecution may participate in the
civil phase of the dispute without obtaining a court order to do so
under Rule 6(e).
...
There is no evidence that [the IRS Special Agent] disclosed any
Rule 6(e) information to counsel for the Commissioner. There was
therefore nothing improper about his presence as a representative
of the Commissioner at the trial.
DiLeo, 959 F.2d at 21.
318

Former Rule 6(e)(3)(C)(i) is set forth in Rule 6(e)(3)(E)(i) without material change.
319

In In Re of Grand Jury Subpoena of Rochon, 873 F.2d 170 (7th Cir. 1989), the Seventh
Circuit held that the Attorney General, who was named as a defendant in his official capacity in a
civil suit, could participate in a related civil rights grand jury investigation and could use the
information lawfully disclosed to him in the course of the grand jury investigation in the defense
of the civil suit so long as there was no disclosure to the Government’s civil attorneys not
otherwise lawfully entitled to have the information disclosed to them. In this regard, the Seventh
Circuit stated:

Nor do we believe that [the Attorney General’s] participation in the
grand jury investigation will inevitably result in a Rule 6(e)
violation. Rule 6(e) prohibits those participating in a criminal
investigation from disclosing grand jury information to others not
authorized to receive it under the rule. . . . It does not prevent an
attorney from using information that he or she legitimately obtained during a grand jury investigat
873 F.2d at 175. See also In Re Grand Jury Sub. February 28, 2002, March 26, 2003 and
October 4, 2004, 472 F.3d 990, 996-1000 (8th Cir. 2007) (holding that simultaneous work by a
federal special agent, as lead agent in a grand jury investigation of a corporation and head of a
related civil investigation into one of the corporation’s companies, did not in itself violate Rule
6(e)); United States v. Archer-Daniels-Midland Co., 785 F.2d 206, 211-13 (8th Cir. 1986)
(holding that assignment of Justice Department attorneys to a civil antitrust suit against two
corporations after those attorneys participated in a grand jury investigation of the corporations
and the attorneys’ use of grand jury matters in the civil suit without first obtaining a courtdisclosure order did not violate Rule 6(e), absent evidence that those attorneys disclosed a grand
jury matter to someone not authorized to obtain such access).

Based on the foregoing analysis, OCRS concludes that under Rule 6(e)(3)(A)(i), a
320

Government attorney who has had lawful access to grand jury material protected from disclosure
by Rule 6(e) may:
(1) without a court-disclosure order continue to review and use
such grand jury material for his own deliberative process in
connection with a civil RICO investigation or lawsuit; and
(2) without a court-disclosure order may disclose such grand jury
material to an attorney for the Government to assist such attorney’s
duties in handling a criminal matter which pertains to the grand
jury matter, but may not disclose such grand jury material to a
Government attorney or other Government personnel to assist in a
civil proceeding without a prior court-disclosure order.
Accordingly, any Government personnel participating in a civil RICO investigation or
lawsuit who either did not participate in a related grand jury investigation or was not otherwise
authorized to have access to such grand jury matters, should be shielded from such grand jury
matters, unless a prior court-disclosure order is obtained.319
3.

A District Court May Order Disclosure of a Grand Jury Matter Preliminary
to or in Connection With a Judicial Proceeding
a.

Rule 6(e)(3)(E)(i), provides as follows:
(E) The court may authorize disclosure -- at a time,
in a manner, and subject to any other conditions that
it directs -- of a grand-jury matter: (i) preliminary to
or in connection with a judicial proceeding.

In United States v. Baggot, 463 U.S. 476, 480-81 (1983), the Supreme Court held that an

319

In Bank of Nova Scotia v. United States, 487 U.S. 250 (1988), the Supreme Court

stated:
[A] knowing violation of Rule 6 may be punished as a contempt of court. See
Fed. R. Crim. Proc. 6(e)(2). In addition, the court may direct a prosecutor to show
cause why he should not be disciplined and request the bar or the Department of
Justice to initiate disciplinary proceedings against him. The court may also
chastise the prosecutor in a published opinion.
Id. at 263. Accord McQueen v. Bullock, 907 F.2d 1544, 1551 & n.20 (5th Cir. 1990).
321

IRS investigation to determine a taxpayer’s civil tax liability was not “preliminary to or in
connection with a judicial proceeding” within the meaning of Rule 6(e). The Court explained:
[T]he purpose of the audit is not to prepare for or conduct
litigation, but to assess the amount of tax liability through
administrative channels. Assuming, arguendo, that this audit will
inevitably disclose a deficiency on Baggot’s part . . . there is no
particular reason why that must lead to litigation, at least from the
IRS’s point of view. The IRS’s decision is largely self-executing,
in the sense that it has independent legal force of its own, without
requiring prior validation or enforcement by a court. The IRS need
never go into court to assess and collect the amount owed; it is
empowered to collect the tax by nonjudicial means (such as levy on
property or salary, 26 U.S.C. §§ 6331, 6332), without having to
prove to a court the validity of the underlying tax liability. Of
course, the matter may end up in court if Baggot chooses to take it
there, but that possibility does not negate the fact that the primary
use to which the IRS proposes to put the materials it seeks is an
extrajudicial one- - the assessment of a tax deficiency by the IRS.
Id. at 480-81 (footnote omitted).
By contrast, a Government civil RICO investigation is not a “self-executing,”
independent administrative proceeding, but rather is a preliminary step necessary to decide
whether to file a civil RICO lawsuit, and hence falls within the scope of Rule 6(e)(3)(E)(i), and,
therefore, a district court may issue a Rule 6(e) disclosure order in connection with a civil RICO
investigation.320 Moreover, Rule 6(e)(3)(E)(i) authorizes a district court to issue a disclosure
order in connection with a filed civil RICO lawsuit since such a suit manifestly constitutes a
“judicial proceeding” within the meaning of Rule 6(e)(3)(E)(i).321
320

See, e.g., John Doe, Inc. I, 481 U.S. at 111-117 (approving a 6(e) disclosure order to
provide grand jury materials to Justice Department attorneys in the Civil Division to decide
whether to proceed with a civil suit).
321

See, e.g., Atlantic City Elec. Co. v. A.B. Chance Co., 313 F.2d 431, 434 (2d Cir.
1963); In Re Grand Jury Investigation, 55 F.3d 350, 353-55 (8th Cir. 1995); In Re Grand Jury
(continued...)
322

b.

The Supreme Court requires “a strong showing of particularized need for grand

jury materials before any disclosure will be permitted.” Sells, 463 U.S. at 443 (collecting cases).
In particular, the Supreme Court has ruled that:
Parties seeking grand jury [material] under Rule 6(e) must show
that the material they seek is needed to avoid a possible injustice in
another judicial proceeding, that the need for disclosure is greater
than the need for continued secrecy, and that their request is
structured to cover only material so needed.
Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 222 (1979). Accord Sells, 463 U.S. at
443; United States v. Campbell, 294 F.3d 824, 827 (7th Cir. 2002)(the person seeking disclosure
must demonstrate “a compelling need for the material”). The Supreme Court explained that:
Such a showing must be made even when the grand jury whose
transcripts are sought has concluded its operations. . . . For in
considering the effects of disclosure on grand jury proceedings, the
courts must consider not only the immediate effects upon a
particular grand jury, but also the possible effect upon the
functioning of future grand juries. Persons called upon to testify
will consider the likeliehood that their testimony may one day be
disclosed to outside parties. Fear of future retribution or social
stigma may act as powerful deterrents to those who would come
forward and aid the grand jury in the performance of its duties.
Concern as to the future consequences of frank and full testimony
is heightened where the witness is an employee of a company
under investigation. Thus, the interests in grand jury secrecy,
although reduced, are not eliminated merely because the grand jury
has ended its activities.
Douglas Oil Co., 441 U.S. at 222.

321

(...continued)
Proceedings GJ-76-4 & GJ-75-3, 800 F.2d 1293 (4th Cir. 1986). See generally In Re North,
16 F.3d 1234, 1244 (D.C. Cir. 1994) (“A judicial proceeding [under Rule 6(e)] includes every
proceeding of a judicial nature before a competent court or before a tribunal or officer clothed
with judicial or quasi-judicial powers”) (citations omitted).
323

Significantly, the Supreme Court has noted that “[t]he Douglas Oil standard is a highly
flexible one” and “accommodates any relevant considerations, peculiar to Government movants,
that weigh for or against disclosure in a given case.” Sells, 463 U.S. at 445. For example, the
Supreme Court explained that “a district court might reasonably consider that disclosure to
Justice Department attorneys poses less risk of further leakage or improper use than would
disclosure to private parties or the general public;” or “the district court may weigh the public
interest, if any, served by disclosure to a governmental body. . . .” Sells, 463 U.S. at 445 (citation
omitted). Moreover, in John Doe, Inc. I, 481 U.S. at 113, the Supreme Court sanctioned
disclosure of grand jury materials to Justice Department attorneys in the Civil Division “to make
a decision on whether to proceed with a civil action,” where the disclosure “could have had the
effect of saving the Government, the potential defendants, and witnesses the pains of costly and
time-consuming depositions and interrogatories which might have later turned out to be wasted if
the Government decided not to file a civil action after all.”
Applying the foregoing standards, courts have authorized disclosure of grand jury
materials to be used by Government attorneys and others in connection with civil proceedings.
See, e.g., John Doe, Inc. I, 481 U.S. at 111-17; In Re Grand Jury Proceedings Relative to Perl,
838 F.2d 304, 306-08 (8th Cir. 1988); In Re Grand Jury Proceedings GJ-76-4 & GJ-75-3, 800
F.2d at 1298-1305; In Re of Petitions for Disclosure of Documents, 617 F. Supp. 630, 631-32
(S.D. Fla. 1985).

324

APPENDIX A
United States Attorneys'
Manual Sections
9-110.010 to 9-110.400

9-110.000
ORGANIZED CRIME
AND RACKETEERING
9-110.010 Introduction
9-110.100 Racketeer Influenced and Corrupt Organizations (RICO)
9-110.101 Division Approval
9-110.200 RICO Guidelines Preface
9-1 10.2 10 Authorization of RICO Prosecution -- The Review Process
9-110.300 RICO Guidelines Policy
9-1 10.3 10 Considerations Prior to Seeking Indictment
9-110.320 Approval of Organized Crime and Racketeering Section Necessary
9-1 10.330 Charging RICO Counts
9-1 10.400 RICO Prosecution (Pros) Memorandum Format

9-11 OO1 0 Introduction
This chapter focuses on investigations and prosecutions involving RICO, (18 U.S.C. §
1961-1968), illegal gambling (18U.S.C. § 1511 and 1955), loansharking(18 U.S.C. § 891-896),
violent crimes in aid of racketeering (18 U.S.C. § 1959), and gambling ships (18 U.S.C. §
108 1-1083). The Organized Crime and Racketeering Section of the Criminal Division supervises
prosecutions of each of these statutes. For an additional discussion of RICO, see "Racketeer
Influenced and Corrupt Organizations (RICO): A Manual for Federal Prosecutors," available from
OCRS.

9-110100 Racketeer Influenced and Corrupt Organizations (RICO)
On October 15, 1970, the Organized Crime Control Act of 1970 became law. Title IX of the
Act is the Racketeer Influenced and Corrupt Organizations Statute (18 U.S.C. § § 1961-1968),
commonly referred to as the "RICO" statute. The purpose of the RICO statute is "the elimination
of the infiltration of organized crime and racketeering into legitimate organizations operating in
interstate commerce." S.Rep. No. 617, 91st Cong., 1st Sess. 76 (1969). However, the statute is
sufficiently broad to encompass illegal activities relating to any enterprise affecting interstate or
foreign commerce.
Section 1961(10) of Title 18 provides that the Attorney General may designate any department
or agency to conduct investigations authorized by the RICO statute and such department or agency
may use the investigative provisions of the statute or the investigative power of such department or
agency otherwise conferred by law. Absent a specific designation by the Attorney General,
jurisdiction to conduct investigations for violations of 18 U.S.C. § 1962 lies with the agency having
jurisdiction over the violations constituting the pattern of racketeering activity listed in

August 1999 9-110 ORGANIZED CRIME AND RACKETEERING

18 U.S.C. § 1961.

9-11O1O1 Division Approval
No RICO criminal indictment or information or civil complaint shall be filed, and no civil
investigative demand shall be issued, without the prior approval of the Criminal Division. See
Rico Guidelines at USAM 9-110.200.

9-11O2OO RICO Guidelines Preface
The decision to institute a federal criminal prosecution involves balancing society's interest in
effective law enforcement against the consequences for the accused. Utilization of the RICO statute,
more so than most other federal criminal sanctions, requires particularly careful and reasoned
application, because, among other things, RICO incorporates certain state crimes. One purpose of
these guidelines is to reemphasize the principle that the primary responsibility for enforcing state
laws rests with the state concerned. Despite the broad statutory language of RICO and the legislative
intent that the statute". . . shall be liberally construed to effectuate its remedial purpose," it is the
policy of the Criminal Division that RICO be selectively and uniformly used. It is the purpose of
these guidelines to make it clear that not every proposed RICO charge that meets the technical
requirements of a RICO violation will be approved. Further, the Criminal Division will not approve
"imaginative" prosecutions under RICO which are far afield from the congressional purpose of the
RICO statute. A RICO count which merely duplicates the elements of proof of traditional Hobbs
Act, Travel Act, mail fraud, wire fraud, gambling or controlled substances cases, will not be
approved unless it serves some special RICO purpose. Only in exceptional circumstances will
approval be granted when RICO is sought merely to serve some evidentiaiy purpose.
These guidelines provide only internal Department of Justice guidance. They are not intended
to, do not, and may not be relied upon to create any rights, substantive or procedural, enforceable at
law by any party in any matter civil or criminal. Nor are any limitations hereby placed on otherwise
lawful litigative prerogatives of the Department of Justice.

9-11 O21 0 Authorization of RICO Prosecution --The Review Process
The review and approval function for all RICO matters has been centralized within the
Organized Crime and Racketeering Section of the Criminal Division. To commence the review
process, thefinal draft of the proposed indictment or information and a RICO prosecution
memorandum shall be forwarded to the Organized Crime and Racketeering Section. Separate
approval is required for superseding indictments or indictments based upon a previously approved
information. Attorneys are encouraged to seek guidance from the Organized Crime and
Racketeering Section by telephone prior to the time an investigation is undertaken and well before
a final indictment and prosecution memorandum are submitted for review. Guidance on preparing
the RICO prosecution memorandum is in the Criminal Resource Manual at 2071 et seq.
RICO reviews are handled on a first-in-first-out basis. Accordingly, the submitting attorney
must allocate sufficient lead time to permit review, revision, conferences, and the scheduling of the
grand jury. Unless there is a backlog, 15 working days is usually sufficient. The review process will

August 1999 9-110 ORGANIZED CRIME AND RACKETEERING

not be dispensed with because a grand jury, which is about to expire, has been scheduled to meet to
return a RICO indictment. Therefore, submitting attorneys are cautioned to budget their time and
to await receipt of approval before scheduling the presentation of the indictment to a grand jury.
If modifications in the indictment are required, they must be made by the submitting attorney
before the indictment is returned by the grand jury. Once the modifications have been made and the
indictment has been returned, a copy of the indictment filed with the clerk of the court shall be
forwarded to Organized Crime and Racketeering Section. If, however, it is determined that the
RICO count is inappropriate, the submitting attorney will be advised of the Section's disapproval of
the proposed indictment. The submitting attorney may wish to redraft the indictment based upon
the Section's review and submit a revised indictment and/or prosecution memorandum at a later date.

9-110.300 RICO Guidelines Policy
It is the purpose of these guidelines to centralize the RICO review and policy implementation
functions in the section of the Criminal Division having supervisory responsibility for this statute.

9-110.310 Considerations Prior to Seeking Indictment
Except as hereafter provided, a government attorney should seek approval for a RICO charge
only if one or more of the following requirements is present:
1. RICO is necessary to ensure that the indictment adequately reflects the nature and extent of the
criminal conduct involved in a way that prosecution only on the underlying charges would not;
2. A RICO prosecution would provide the basis for an appropriate sentence under all the
circumstances of the case in a way that prosecution only on the underlying charges would not;
3. A RICO charge could combine related offenses which would otherwise have to be prosecuted
separately in different jurisdictions;
4. RICO is necessary for a successful prosecution of the government's case against the defendant
or a codefendant;
5.
Use of RICO would provide a reasonable expectation of forfeiture which is proportionate to the
underlying criminal conduct;
6. The case consists of violations of State law, but local law enforcement officials are unlikely or
unable to successfully prosecute the case, in which the federal government has a significant interest;
7. The case consists of violations of State law, but involves prosecution of significant or
government individuals, which may pose special problems for the local prosecutor.
The last two requirements reflect the principle that the prosecution of state crimes is primarily
the responsibility of state authorities. RICO should be used to prosecute what are essentially
violations of state law only if there is a compelling reason to do so. See also the Criminal Resource
Manual at 2070.

9-110.320 Approval of Organized Crime and Racketeering Section Necessary
A RICO prosecution memorandum and draft indictment, felony information, civil complaint,
or civil investigative demand shall be forwarded to the Organized Crime and Racketeering Section,

August 1999 9-110 ORGANIZED CRIME AND RACKETEERING

Criminal Division, The John C. Keeney Building, 1301 New York Avenue, NW, 7th Floor, Washington, DC 20005, at least
15 working days prior to the anticipated date of the proposed filing or the seeking of an indictment from the
grand jury.

No criminal or civil prosecution or civil investigative demand shall be commenced or issued
under the RICO statute without the prior approval of the Organized Crime and Racketeering Section,
Criminal Division. Prior authorization from the Criminal Division to conduct a grand jury
investigation based upon possible violations of 18 U.S.C. § 1962 is not required.
A RICO prosecution memorandum and draft pleading or civil investigative demand shall be
forwarded to the Organized Crime and Racketeering Section. It is essential to the careful review
which these factually and legally complex cases require that the attorney handling the case in the
field not wait to submit the case until the grand jury or the statute of limitations is about to expire.
Authorizations based on oral presentations will not be given. See the Criminal Resource Manual
at 2071 et seq. for specific guidance.
These guidelines do not limit the authority of the Federal Bureau of Investigation to conduct
investigations of suspected violations of RICO. The authority to conduct such investigations is
governed by the FBI Guidelines on the Investigation of General Crimes. However, the factors
identified here are the criteria by which the Department of Justice will determine whether to approve
the proposed RICO. The fact that an investigation was authorized, or that substantial resources were
committed to it, will not influence the Department in determining whether an indictment under the
RICO statute is appropriate.
Use of RICO in a prosecution, like every other federal criminal statute, is also governed by the
Principles of Federal Prosecution. See USAM 9-27.000, et seq. Inclusion of a RICO count in an
indictment solely or even primarily to create a bargaining tool for later plea negotiations on lesser
counts is not appropriate and would violate the Principles of Federal Prosecution.

9-11O33O Charging RICO Counts
A RICO charge where the predicate acts consist only of state offenses will not be approved
except in the following circumstances:
A. Local law enforcement officials are unlikely to investigate and prosecute otherwise meritorious
cases in which the Federal government has significant interest;
B. Significant organized crime involvement exists; or
C. The prosecution of significant political or governmental individuals may pose special problems
for local prosecutors.

9-110400 RICO Prosecution (Pros) Memorandum Format
A well written, carefully organized prosecution memorandum is the greatest guarantee that a
RICO prosecution will be authorized quickly and efficiently. See the Criminal Resource Manual at
2071 et seq. for specific guidelines on drafting the RICO prosecution memorandum.

August 1999 9-110 ORGANIZED CRIME AND RACKETEERING

Once a RICO indictment has been approved by the Organized Crime and Racketeering Section
and has been returned by the grand jury, a copy of a file-stamped copy of the indictment shall be
provided to the Section. The Section shall also be notified in writing of any significant rulings which
affect the RICO statute--for example, any ruling which results in a dismissal of a RICO count, or any
ruling affecting or severing any aspect of the forfeiture provisions under RICO. In addition, copies
of RICO motions, jury instructions and briefs filed by the United States Attorney's Office (USAO),
as well as the defense, should be forwarded to the Organized Crime and Racketeering Section for
retention in a central reference file. The government's briefs and motions will provide assistance to
other USAOs handling similar RICO matters.
Once a verdict has been obtained, the USAO shall forward the following information to the
Section for retention: (a) the verdict on each count of the indictment; (b) a copy of the judgment
of forfeiture; (c) estimated value of the forfeiture; and (d) judgment and sentence(s) received by
each RICO defendant.

August 1999 9-110 ORGANIZED CRIME AND RACKETEERING

1. TEAMSTERS LOCAL 560
A.

CASE NAME:
United States v. Local 560 of the International Brotherhood of Teamsters, Chauffeurs

Warehousemen, and Helpers of America (IBT), et al., Civil Action. No. 82-689, United States
District Court for the District of New Jersey. Complaint filed March 9, 1982 and amended
September 20, 1982.
B.

DEFENDANTS:
The complaint named as “nominal” defendants Local 560 of the International

Brotherhood of Teamsters, Chauffeurs Warehousemen, and Helpers of America ( IBT) and its
Welfare Fund and Severance Pay Fund, their officers, and five persons in their individual
capacity. Five of the individual defendants formed the “Provenzano Group,” allegedly an
ongoing criminal confederation controlled by the Genovese LCN Family. The Provenzano
Group included Genovese “made” member Anthony Provenzano, his brother Nunzio
Provenzano, Thomas Andretta, Stephen Andretta, and Gabriel Briguglio, also an alleged member
of the Genovese LCN. The seven remaining personal defendants, all members of the Local 560
Executive Board, were charged with aiding and abetting the Provenzano Group. The Executive
Board consisted of President Salvatore Provenzano, Anthony Provenzano’s brother; VicePresident Joseph Sheridan; Secretary-Treasurer Josephine Provenzano Septembre, Anthony
Provenzano’s daughter; Recording Secretary J.W. Dildine; and employee trustees, Thomas
Reynolds, Michael Sciarra, and Stanley Jaronko.
C.

SUMMARY OF THE COMPLAINT:
The complaint alleged that the RICO enterprise consisted of an association-in-fact

comprised of the nominal defendants, Local 560, together with its Welfare and Pension Fund and
its Severance Pay Plan (Local 560 Enterprise). The complaint also alleged that the Local 560

1

Enterprise had become “a captive labor organization,” which, continuously since the 1950s, the
Provenzano Group had infiltrated, dominated, and exploited through a pattern of racketeering
that included murder, systematic extortion, bribery and fraud. By the use of actual and threatened
force, violence and fear of economic and physical injury, the Provenzano Group, aided and
abetted by incumbent and former members of Local 560’s Executive Board, created within Local
560 a climate of intimidation, which induced its members to surrender valuable property--their
rights to union democracy guaranteed by 29 U.S.C. §§ 157 and 411.1
Specifically, members of the Provenzano Group, headed by Anthony Provenzano, ordered
the murders of political rivals in Local 560. The Provenzano Group with the concurrence of the
Executive Board appointed known convicted felons, known murderers, and those with
indictments pending, to positions of trust in Local 560 and allowed convicted felons and reputed
members of organized crime to frequent Local 560. In addition, members of the Provenzano
Group extorted money and property from local businesses in return for “labor peace,” stole,
converted, or embezzled Local 560 funds, schemed to commit mail fraud, voted unlawfully for
an increased salary for Provenzano, took kickbacks in return for influencing the affairs of Local
560, and made or took loans and investments of Local 560 funds in return for labor peace. The
Executive Board at the behest of the Provenzano Group unlawfully contributed Local 560 funds
to the Provenzano and Sciarra defense funds. The complaint alleged that these acts, set forth in
thirty-three predicate acts, violated 18 U.S.C. §§ 1962(b) and (c), and in addition, the defendants
conspired to violate Section 1962(b) and (c), in violation of 18 U.S.C. § 1962(d).
D.

RELIEF SOUGHT:
The Government sought to preliminarily enjoin the Provenzano Group from any dealings,

direct or indirect, with the Local 560 Enterprise, its officers or employees and to remove the
Local 560 Executive Board and replace it temporarily with one or more court-appointed trustees
1

On September 20, 1982, the Government amended the original complaint to add additional
similar predicate acts alleged to have created the climate of intimidation that induced the Local
560 members to surrender their rights to union democracy.
2

to discharge all duties and responsibilities of the Executive Board of Local 560. The
Government also sought court-ordered supervised free elections to select a new Executive Board
and to permanently enjoin the individual defendants and the Provenzano Group from any
participation in the affairs of Local 560 or any other labor organization.
E.

OUTCOME OF CASE:
1.

Prior to trial, on June 15, 1982, the district court entered an order approving a

consent decree between Anthony Provenzano and the United States. Anthony Provenzano was
permanently enjoined from any form of association with any enterprise seeking to dominate,
control, conduct, or otherwise influence the affairs of any labor organization or any employee
benefit plan.
2.

On September 15, 1982, a similar consent decree was approved between Nunzio

Provenzano and the United States.
3.

On January 14, 1983, Thomas Andretta entered into a similar consent decree.

4.

Following a fifty-one day bench trial, the district court by an order entered March

16, 1984, enjoined Stephen Andretta and Gabriel Briguglio from any future dealings with Local
560, removed the Executive Board of Local 560 (Salvatore Provenzano, J.W. Dildine, Joseph
Sheridan, Josephine Provenzano, Michael Sciarra, Stanley Jaronko, and Thomas Reynolds), who
were found to have violated RICO, and appointed in its place a trustee to administer and oversee
the affairs of Local 560 during a curative period, presumptively eighteen months, to be followed
by a supervised election to restore union democracy to Local 560. The district court stayed its
order granting injunctive relief pending appeal. See United States v. Local 560, (I.B.T.), 581 F.
Supp. 279, 321, 337 (D.N.J. 1984), aff’d, 780 F.2d 267 (3d Cir. 1985), cert. denied, 476 U.S.
1140 (1986).
In United States v. Local 560 of Intern. Broth. of Teamsters, 780 F.3d 267, 295-96
(3d Cir. 1986), cert. denied 476 U.S. 1140 (1986), the Third Circuit affirmed the district court’s
relief, stating that the power to appoint “a trustee to be in charge of Local 560 . . . falls within the
3

broad equitable powers granted to district courts under Section 1964(a)” (id. at 296 fn. 39),
particularly the “broad remedial powers of ‘divestiture’ and ‘reasonable restrictions’ provided for
under Section 1964.” Id. at 295.
During the course of the trusteeship, the district court authorized the trustee,
subject to review by the district court, to among other matters, administer the affairs of Local
560, negotiate contracts, hire and discharge employees and to investigate acts of wrongdoing
within the union. See United States v. Local 560, et al., Civ. No. 82-689, Opinion and Order
dated May 12, 1987; United States v. Local 560 (I.B.T.), 694 F.Supp. 1158, 1160-62, 1191-92
(D.N.J. 1988); United States v. Sciarra, 851 F.2d 621, 623-24, 632-33 (3d Cir. 1988).
5.

On January 28, 1988, defendant Stanley Jaronko entered into a consent decree

with the Government wherein he was permanently enjoined from any direct or indirect
participation in or dealings with Local 560, its benefit plan, or any other I.B.T. local or affiliates
of any I.B.T. locals. In addition, Jaronko was enjoined from any association with any member or
associate of the Provenzano Group.
6.

On August 11, 1989, Joseph Sheridan, a member of Local 560’s Executive Board

at the time the complaint was filed and who initially attempted to remain active in the affairs of
Local 560, entered into a consent decree permanently enjoining him from holding any position
within or otherwise endeavoring to influence Local 560 or any of it benefit plans.
7.

In July 1988, twenty-five months into the trusteeship and prior to a trustee-

supervised election, the Government sought additional equitable relief, a permanent bar to
Michael Sciarra’s participation in the affairs of Local 560, one of the two temporarily suspended
Executive Board defendants still active in union politics. See United States v. Local 560 (I.B.T.)
and Sciarra, 754 F. Supp. 395 (D.N.J. 1991). On March 27, 1991, the district court entered an
unpublished final order of injunction, and denied the stay. Sciarra and Local 560 appealed the
March 27, 1991, order. On May 13 1991, in an unpublished opinion, the Third Circuit denied
defendants’ motion to grant a stay.
4

8.

On February 6, 1992, the district court signed a consent decree approving and

implementing the terms of an interim settlement agreement reached between the Government and
defendants Local 560 and its Executive Board, resolving motions filed by Local 560 on
September 10, 1991, seeking dissolution of the trusteeship and the government’s cross motion
for additional equitable relief.
The Government’s cross motion alleged that the Executive Board had abdicated
its responsibilities since taking office in December 1988; that the Board had allowed former
President Michael Sciarra to usurp its powers despite his twice adjudicated status as a
coconspirator of the Genovese LCN Family; and that Michael Sciarra’s de facto domination of
the Local had eroded many of the remedial accomplishments of the trusteeship and threatened to
return the union to racketeer domination.
The Government’s proof demonstrated that the Local’s business agent, long-time
Sciarra associate Freddy Mezzina who controlled job allocations in construction, had given
preferential treatment in job assignments to a Sciarra relative who had twenty-five drug-related
arrests over a ten-year period. When the relative died of a drug overdose in February 1991,
Mezzina pressured two major construction companies to falsify their records and to fraudulently
certify that the deceased had worked for a requisite period, thereby enabling the widow to collect
on a $20,000 union insurance policy.
The consent decree mandated a restructuring of the Executive Board that included
the following provisions: (1) President Daniel Sciarra, who ran in the place of his brother
Michael Sciarra after Michael Sciarra was enjoined by the district court from seeking elective
office during the 1988 elections, was removed from his position as President and was
permanently barred from holding any position higher than that of shop steward; (2) of three
outgoing incumbents, one--Trustee James Bartolomeo--was selected by the incumbents to remain
as a carryover officer for the reconstituted board; the two remaining vacancies were filled by the
court-appointed trustee; (3) the position of President was to remain vacant until such time as the
5

district court ordered an election. In addition, the agreement empowered the district court, upon
the motion of the trustees or the Government, to remove any member of the Executive Board for
misconduct which threatens to undermine the remedial objectives of the trusteeship or otherwise
discredits Local 560 under standards established by the IBT Independent Administrator.
The agreement also provided that Local 560 devise and implement a
comprehensive plan for job referrals in the construction field to be reviewed by the Government
and the court-appointed trustee. The agreement ordered that former business agent Freddy
Mezzina, who resigned immediately prior to the signing of the agreement, was permanently
barred from appointment to any position of trust within the union, and was replaced by a courtappointed officer to control the new construction referral system.
9.

In January 1999, the court-appointed trustee issued a report recommending that

the court-appointed trusteeship, which was imposed in 1987, be terminated. The report noted
that in 1998, Local 560 members had elected an Executive Board who were not controlled by
organized crime.
10.

On February 25, 1999, the district court issued a Consent Decree stating that the

objectives of the trusteeship had been substantially achieved and ordering the following matters:
a.

The court trusteeship was terminated and all powers of the court-appointed
trustee were restored to the officers and Executive Board of Local 560.

b.

The district court retained jurisdiction over the subject matter and the
parties.

c.

All current and future officers, agents, employees, representatives, and
persons holding positions of trust in Local 560 and all current and future
members of Local 560 were permanently enjoined from committing any
crime listed in 18 U.S.C. § 1961(1), knowingly associating with any
member or associate of organized crime or with any barred person, and
from knowingly permitting any member or associate of organized crime or
6

any barred person to exercise any control or influence, directly or
indirectly, in the conduct of the affairs of Local 560.
d.

Any person who violated the injunctive provisions of the Consent Decree
were subject to sanctions, including removal, suspension and/or expulsion
from office or the union.

e.

The district court retained jurisdiction to modify the Consent Decree, and
upon a showing of systematic corruption or organized crime influence in
Local 560 to order any relief that was necessary and proper.

f.
F.

The Consent Decree was to remain in effect for four years.

LEADING COURT DECISIONS:
1.

United States v. Local 560 (I.B.T.), 550 F. Supp. 511 (D.N.J. 1982).

The Government charged that I.B.T. Local 560 was a “captive labor organization”
and sought to place Local 560 under a trusteeship, to divest individual defendants of their
interests in the union, and to prohibit their future involvement in the union’s affairs. Prior to
trial, the district court dismissed the defendants’ motion under Fed. R. Civ. P. 12 (b)(6) to
dismiss the complaint for failure to state a claim.
The complaint alleged that defendant Anthony Provenzano and other defendants
either associated with the Provenzano organized crime group (the Provenzano Group) or aided
and abetted them, in violation of RICO, 18 U.S.C. § 1962(b). The complaint also charged the
predicate offenses of murder and Hobbs Act extortion, 18 U.S.C. § 1951, as the pattern through
which defendants unlawfully acquired and maintained a controlling interest in the “Local 560
Enterprise.” The specific property alleged to have been extorted consisted of union members’
rights guaranteed by 29 U.S.C. §§ 157 and 411 of the Labor Management Reporting and
Disclosure Act of 1959 (LMRDA). The defendants’ acts, which allegedly created a climate of
intimidation and thus induced the surrender of members’ rights to union democracy, included
several murders, the appointment of convicted felons and members of organized crime to
important union positions, and the extortion by these officials of union funds.
The district court held that Section 411 rights to union democracy constituted
“property” within the scope of 18 U.S.C. § 1951, which encompasses both tangible and
intangible property rights. The district court also held that the extortion charges were not preempted by 29 U.S.C. §§ 530 and 610 on the ground that those labor law prohibitions were not the
exclusive remedies for the alleged extortionate conduct. The court noted that RICO and the
LMRDA were intended to supplement the remedies to reach such unlawful racketeering.
2.

United States v. Local 560, I.B.T., 581 F. Supp. 279 (D.N.J. 1984), aff’d, 780
F.2d 267 (3d Cir. 1985), cert. denied, 476 U.S. 1141 (1986).

This lengthy decision constitutes the district court’s findings of facts and
conclusions of law following a fifty-one day bench trial on the Government’s civil RICO claims.
7

The district court found that the Provenzano brothers (Anthony, Nunzio and Salvatore) and the
Provenzano Group (Anthony & Nunzio Provenzano, Andrettas and Gabriel Briguglio) betrayed
the membership of Local 560, and along with the remaining individual defendants, violated 18
U.S.C. §§ 1962(b), (c), and (d). The district court enjoined defendants Andretta and Briguglio
from any future contacts of any kind with Local 560 and removed current members of Local
560’s Executive Board found to have violated RICO in favor of a trusteeship. In that regard, the
district court found it particularly significant that the members of the Executive Board aided and
abetted the creation and maintanence of a climate of intimidation by knowingly appointing and
reappointing associates of the Provenzano Group with criminal records and/or propensity for
violence. The court ordered the trusteeship to continue as long as necessary, presumptively for a
period of eighteen months, to bring about free supervised elections and to ensure during this time
the protection of union funds. The court, however, stayed injunctive relief and deferred the
naming of trustees pending appeal.
The district court concluded that “there is no basis for retaining either Local 560,
the Funds or the Plan as a defendant in this action” because they were the victims of the
individual defendants’ actions. Id. at 537, However, the district court retained “Local 560 as a
nominal defendant to effectuate the equitable relief heretofore specified and as may be ordered in
the future.” Id.
The district court’s evidentiary and legal rulings included the following: (1) the
Government’s burden of proof is measured by a preponderance of the evidence standard because
the defendants did not face criminal sanctions or significant deprivation of liberty or stigma, and
the relief sought was equitable and remedial in nature, not punitive; (2) the business agent of
Local 560 was a managing agent within the meaning of Fed. R. Civ. P. 32(a)(2) and also a
conspirator, and therefore, his deposition was admissible under Fed. R. Evid. 801(d)(2)(D) and
(E); (3) the RICO conspiracy agreement element does not require an agreement by each
defendant to personally commit two predicate acts, but only a showing that the defendant agreed
to the commission of two predicate acts by any of the conspirators and proof is sufficient,
therefore, if it shows agreement through a defendant’s aiding and abetting in at least two
predicate offenses; (4) there is no overt act requirement under 18 U.S.C. § 1962(d); and (5) that
conscious avoidance of knowledge, while knowing the consequences of such inaction, can satisfy
the intent element under aiding and abetting, if the defendant had some interest in the successful
accomplishment of the crime being committed.
3.

United States v. Local 560 of International Brotherhood, 780 F.2d 267 (3d Cir.
1985), aff’g, 581 F. Supp. 279 (D.N.J. 1984).

The Third Circuit affirmed the district court’s decision enjoining certain
defendants from future contacts with Local 560 and removing current members of the Executive
Board and dissolved the stay pending appeal of the above and made the following evidentiary
rulings: (1) the district court abused its discretion by admitting into evidence certain newspaper
and magazine articles, spanning a period of twenty years, and FBI testimony concerning a survey
offered to prove that the Local 560 membership feared their union leadership, because the
Government failed to establish that members of Local 560 actually read the articles in question
(only one witness testified that he had ever read anything in the papers about the Provenzano
Group), but found the error harmless in light of independent testimony to support the district
judge’s finding that the Provenzano Group and Executive Board had extorted LMRDA rights of
a substantial number of Local 560 members; (2) the failure of the Government to establish a
scientific basis for its proof and FBI “survey,” consisting of interviews with Local 560 members
known to be opposed to the Provenzano Group and purporting to show that several current and
former Executive Board members had a reputation for violence and economic retribution, went
8

to its weight, not its admissibility; and (3) “preponderance of the evidence” is the standard of
proof to be applied in a Government civil RICO action.
The Third Circuit further held that: union members’ intangible property right to
democratic participation in the affairs of the union is “property” within the meaning of the Hobbs
Act, and that 29 U.S.C. § 530 is not the exclusive sanction for criminal violations of union
member rights and that the criminal standard for aiding and abetting applies to government civil
RICO charges. The Third Circuit also upheld the district court’s ruling that the Executive Board
defendants aided in extorting member’s rights to union democracy by: (1) making certain
appointments and reappointments of persons with criminal records or propensity for violence to
union officers; (2) failing to remove certain appointees from office; (3) spending union assets for
Anthony Provenzano; (4) permitting access to Local 560’s offices by known or reputed
criminals; and (5) being recklessly indifferent to the above-mentioned systematic misconduct by
follow incumbent officers. Id. at 283.
The Third Circuit also held that the district court’s injunction removing
temporarily the Executive Board and replacing it with a trustee fell within the broad remedial
powers of “divestiture” and “reasonable restrictions” permitted under Section 1962(a); Id. at 29596 and n.39.
The Third Circuit also held at the district court correctly found the Provenzano
Group to be a “person,” and Local 560 the “enterprise” in which the Provenzano Group acquired
an interest for purposes of Section 1962(b), and that under Section 1962(c), the named
Provenzano Group defendants--as individuals--were “persons” and the Provenzano Group, as a
separate entity, represented an “enterprise.” The Third Circuit found that even though the district
court took a somewhat different view than that presented in the complaint, the defendants had
notice of this alternative theory, and it was litigated with the implied consent of the defendants.
Furthermore, the Third Circuit reasoned that the complaint specifically charged that the
Provenzano Group defendants “associated together in fact as an enterprise (the Provenzano
Group) within the meaning of Section 1961,” that ample evidence supported the district’s court’s
factual conclusion that the Provenzano Group was an ongoing enterprise, that the district court’s
findings of individual and vicarious liability for acts of coconspiractors fully supported its
ultimate holding that individual Provenzano Group associates (“persons” within the meaning of
RICO) violated both Section 1962 (b) and (c), thereby obviating the need for the Third Circuit to
rely on the finding of an ongoing Provenzano Group. Id. at 294-95.
The Third Circuit also concluded that the district court’s findings of liability on
the part of each Provenzano Group defendant supported liability under the Government’s original
theory--that is, Local 560 was the relevant enterprise--and there was no doubt that the district
court found in substance that these individual defendants violated Section 1962(c) by conducting
the affairs of Local 560, undoubtedly a Section 1961(4) enterprise, through a pattern of
racketeering activity. The Third Circuit concluded that the term “Provenzano Group” was used
by the district court as a simple designation for the collective defendants--a conspiracy of seven
identifiable, culpable individuals--and was not intended to represent a “person” within the
meaning of Section 1962(b) and these individuals, not the Provenzano Group as a separate entity,
had been identified as “persons” under Section 1962(b). Id. at 294-95.
4.

United States v. Sciarra, 851 F.2d 621 (3d Cir. 1988).

The Government sought information from Sciarra, Sheridan, and former
defendant Stanley Jaronko, who were non-parties, regarding Local 560’s operation, which the
9

Government believed would form the basis for additional relief to prevent future racketeering
activities, domination and exploitation of Local 560.
The Third Circuit ruled as follows: (1) non-party witnesses may obtain appellate
review of a discovery order without first being held in contempt if there is no underlying judicial
action; (2) Sciarra and Sheridan were non-parties since they were no longer parties to the original
action, no subsequent actions had been instituted against them, and the Government sought
additional information related to continued racketeering activities in the union; (3) the ongoing
maintenance and protection of the trusteeship remained an action for purposes of Rule 30(a),
Fed.R.Civ.P. and that the Government remained a party within the meaning of the Rule to take
subsequent investigative activities necessary to effectuate the objectives of the 1984 judgment;
and (4) the RICO statute empowers district courts to compel non-parties to submit to depositions
deemed necessary to protect and maintain the trusteeship--even in the absence of a criminal or
civil proceeding.
The district court also addressed, apparently for the first time in any reported
decision, whether 28 U.S.C. § 455 confers standing upon non-party witnesses who have not been
adjudged in contempt to challenge the partiality of a federal judge. The court held that they
lacked standing.
5.

United States v. Local 560, I.B.T. v. Michael Sciarra, Joseph Sheridan,
694 F. Supp. 1158 (D.N.J.), aff’d, 865 F.2d 252 (3d Cir. 1988) (Table).

The United States attempted to modify and extend equitable relief of the original
Judgment Order, entered March 16, 1984, by rejoining Michael Sciarra and Joseph Sheridan as
party defendants and by enjoining them from further participation in the affairs of Local 560.
The original order, in part, removed from office the entire Executive Board of Local 560, of
which Sciarra and Sheridan were members, and imposed a trusteeship, but did not become
effective until after the district court’s order was affirmed and certiorari was denied. On June
23, 1986, two court-appointed trustees assumed the administration and management of Local
560. The Government alleged that in the time between the 1984 order, the May 1986 denial of
certiorari by the Supreme Court, and the June 23, 1986 implementation of the trusteeship,
Sciarra and Sheridan, in spite of the district court’s orders, failed to renounce participation in the
racketeering conspiracy and acted instead to perpetuate the control of the Genovese LCN Family
over Local 560. Three taped recordings of conversations in November and December of 1984
between members of the Genovese LCN Family established that the group intended to maintain
control over Local 560 during the pendency of the appeal, during the trusteeship, and thereafter.
Of immediate concern was their plan to regain control of Local 560 in the November 1988
election of officers and to thereafter exercise control through Sciarra and Sheridan.
Preliminarily, the district court ruled that Sciarra and Sheridan, who were no
longer parties to the original suit, could not be rejoined as the Government requested, but were
subject to the Government’s request by virtue of Fed. R. Civ. P. 15(a) and (d), permitting the
Government to supplement and amend the complaint on the underlying action on the basis of
new facts. The court enjoined Sciarra and Sheridan from running for union office in the
forthcoming election until a hearing could be held to determine whether additional relief was
required.
In addition, the district court ruled as follows: (1) the Government’s request was
not barred by the doctrines of res judicata or collateral estoppel; (2) 29 U.S.C. § 504 was not the
exclusive means by which a court can bar a person from holding union office; (3) the depositions
of Sciarra and Sheridan were not tainted by Judge Ackerman’s disqualification and could be used
10

in the instant proceeding; and (4) the rule of United States v. McNally, 483 U.S. 350 (1987),
should not be extended to Hobbs Act cases, thereby rejecting defendants’ claim that McNally
undermines the trusteeship, and holding that extortion of teamsters’ rights to democratic
participation in the union constituted a deprivation of union members’ property rights covered by
the Hobbs Act.
6.

United States v. Local 560 (I.B.T.), 736 F. Supp. 601 (D.N.J. 1990), aff’d, 974
F.2d 315 (3d Cir. 1992).

In earlier phases of this litigation, the district court found at trial that Michael
Sciarra, a member of Local 560’s Executive Board, had violated RICO, and the court removed
the entire Executive Board, including Sciarra, and imposed a trusteeship. In 1988, the courtappointed trustee scheduled an election for officers of Local 560 and its Executive Board.
Following an evidentiary hearing, the district court granted the Government’s motion for a
preliminary injunction, enjoining Sciarra from running for office in that election and from
holding any position of trust within Local 560 or its benefit plan system. The evidence adduced
at the hearing established that Sciarra, through his position as business agent for Local 560, was
asserting de facto control over the union, which was inconsistent with the purposes of the earlier
injunction removing Sciarra from Local 560’s Executive Board.
7.

United States v. Local 560 (I.B.T.) and Michael Sciarra, 754 F. Supp. 395 (D.N.J.
1991), aff’d, 974 F.2d 315 (3d Cir. 1992).

The district court in United States v. Local 560 (I.B.T.), 694 F. Supp. 1158
(D.N.J. 1988), issued a Judgment Order on March 16, 1984, that removed the Executive Board
including Michael Sciarra and barred Michael Sciarra and Joseph Sheridan, former officers and
Executive Board members of Local 560, from running for office in upcoming court-supervised
elections. However, the Teamsters for Liberty party circumvented the court’s order by
substituting as its candidates Sciarra’s brother and Sheridan’s nephew, who were elected to the
Executive Board, as were its other candidates. Thereafter, the new Executive Board appointed
Michael Sciarra and Joseph Sheridan to fill business agent positions. The district court denied
the Government’s initial application to have the two barred from any appointed position in Local
560, but directed the Trustee to continue monitoring the Union’s management. Sheridan
eventually resigned and agreed to no longer participate in the affairs of Local 560.
On February 6, 1990, the Government again moved to bar Sciarra from holding
any position in the Union. After another hearing, the district court concluded that Sciarra had
become the de facto President of Local 560 and permanently enjoined him from holding any
position of trust with the union. The court also found that since the original order in 1984, the
Genovese LCN Family had used Sciarra to regain control of Local 560 and that without Sciarra’s
removal, he would continue to control Local 560 on behalf of the Genovese LCN Family.
The district court also rejected Sciarra’s argument that “to succeed the
government must prove a new RICO offense based on conduct which occurred after” the district
court’s March 16, 1984, Judgment Order removing Michael Sciarra from the Executive Board.
Id. at 403. The district court reasoned that “[t]his is not a new case, beginning with a clean slate.
Rather, it is a facet of the original case. . . .” Id. In so ruling, the district court rejected Sciarra’s
claim that a permanent injunction prevented him from pursuing his only means of livelihood in
violation of the Fifth Amendment, and found that under Section 1964 and United States v. Local
560, 780 F.2d 267 (3d 1985), such relief was proper and constitutional, and, the district court
found that a permanent injunction was a necessary and reasonable restriction within the meaning
of 18 U.S.C. § 1964(a).
11

8.

United States v. Local 560 (I.B.T.), 974 F.2d 315 (3d Cir. 1992), aff’g, 754 F.
Supp. 395 (D. N.J. 1991).

The Third Circuit’s ruling included the following matters: (1) the evidence was
sufficient to establish that Michael Sciarra was controlled by the Genovese LCN Family and to
support the issuance of the injunction against Michael Sciarra that modified an earlier injunction,
and that the government was not required to prove a new violation of 18 U.S.C. § 1962(c) that
occurred after the entry of the March 1984 injunction; (2) the required burden of proof was a
preponderance of the evidence; (3) Local 560 had standing to assert that the injunction violated
its members’ rights under the First Amendment and the LMRDA; (4) that the restrictions on
union members’ exercise of their First Amendment rights were justified by a compelling
government interest in the eradication of organized crime from labor unions and that the
injunction was sufficiently narrowly tailored to pass constitutional scrutiny; and (5) that the
injunction did not violate union members’ rights under the LMRDA.

12

2. LOCAL 6A, CEMENT AND CONCRETE WORKERS
A.

CASE NAME:
United States v. Local 6A, Cement and Concrete Workers, Laborers International Union

of North America (LIUNA), et al., Civil Action No. 86 Civ. 4819, United States District Court
for the Southern District of New York. Complaint filed June 19, 1986, and amended complaints
filed on July 21, 1986 and January 15, 1987, respectively.
B.

DEFENDANTS:
The complaint named thirty-two defendants, separated into five different classifications.

Two of the classes of defendants were labor union entities, LIUNA Local 6A (Local 6A) and the
District Council of Cement and Concrete Workers (District Council), which consisted of four
LIUNA local unions, Local 6A, Local 18A, Local 20, and Local 1175, all located in the New
York City area. The next two classes of defendants were the respective Executive Boards of
Local 6A and the District Council and their individual members numbering ten from Local 6A
and twelve from the District Council. The final class of defendants was the Colombo Family of
La Cosa Nostra (LCN) and four of its alleged members: Carmine Persico, the boss, Gennaro
Langella, the acting boss while Persico was in prison, Dominic Montemarano, a capo, and Ralph
Scopo, a member who was business manager of the District Council and, at various times, an
employee of Local 6A.
C.

SUMMARY OF THE COMPLAINT:
The alleged RICO enterprise consisted of an association-in-fact of Local 6A and the

District Council.
The complaint alleged that the Colombo LCN Family exercised control over and
influenced the decisions of the Executive Boards of Local 6A and the District Council, so as to
make them captive labor organizations. The Colombo LCN Family allegedly used their control of
these union entities to extort cash payments from construction companies based upon an

13

exploitation of the construction company owners’ fear of economic harm resulting from threats
of labor unrest.
The complaint set forth four claims for relief: two are based upon a claim that the
defendants conducted the affairs of the enterprise through a pattern of racketeering activity, and a
conspiracy to do so, in violation of 18 U.S.C. §§ 1962 (c) and (d). The alleged pattern of
racketeering activity consisted of multiple acts of extortion, in violation of 18 U.S.C. § 1951 and
some of the same conduct constituting Taft-Hartley violations, in violation of 29 U.S.C.
§ 186(b). Specifically, the first two claims for relief in the complaint alleged that the defendants
extorted payments from various construction companies that ranged up to one percent or more of
the amount of each concrete pouring contract. Pursuant to the scheme, defendants allegedly
rigged the awarding of concrete pouring contracts and enforced the rules of the scheme by
threatening disobedient contractors with labor problems, stoppage of concrete deliveries, and
other punishment. The complaint also alleged several acts of embezzlement of labor union
funds, in violation of 29 U.S.C. § 501 (c). Fourteen of the defendants, including all of the
Colombo LCN Family defendants and ten of the individual members of the two Executive
Boards, were charged with participating in this pattern of racketeering activity.
The other two claims for relief in the complaint were the obtaining of control of the
enterprise through a pattern of racketeering activity and a conspiracy to do so, in violation of
18 U.S.C. §§ 1962 (b) and (d). The central claim was that the Colombo LCN Family defendants,
aided and abetted by some of the union official defendants, violated the Hobbs Act, 18 U.S.C.
§ 1951, by extorting the members of Local 6A and the District Council of their rights to free
speech and participation in union affairs as guaranteed by the Labor Management Reporting and
Disclosure Act of 1959 (LMRDA), 29 U.S.C. § 411. The racketeering act based on this so-called
intangible property right extortion theory specifically alleged an economic loss to the labor
organizations constituting the enterprise and, therefore, its members. The alleged loss was a

14

severance payment of $200,000.00 (which was the entire corpus of the District Council’s
severance fund) to Ralph Scopo after he was indicted and resigned his positions in the union.
The complaint incorporated two indictments by reference, which were then pending in the
United States District Court for the Southern District of New York. (United States v. Carmine
Persico, et al., No 84 Cr. 809, the so-called “Colombo LCN Family case,” and United States v.
Anthony Salerno, et al., No. 85 Cr. 139 (RO), the so-called “Commission case.”).
D.

RELIEF SOUGHT:
The relief sought in this case included a demand for a preliminary injunction which

would do the following: (1) enjoin the Colombo LCN Family defendants from participating in
any way in the affairs of Local 6A or any affiliated organization, employee, officer, or benefit
plan; (2) enjoin and restrain the Executive Board of Local 6A and its individual members from
taking any action on behalf of the Local; (3) enjoin and restrain the Executive Board of the
District Council and its individual members from taking any action on behalf of the District
Council; (4) appoint a trustee, pendente lite, to discharge all of the duties of the Executive Board
of Local 6A and the District Council; (5) enjoin and restrain the members, officers and
employees of Local 6A, the District Council and of any affiliated benefit plan from taking any
action which would interfere with the trustee in the discharge of his duties; (6) appoint one or
more trustees, pendente lite, to administer any benefit plan found to have been improperly
controlled or influenced by any of the individual defendants; and (7) to grant such other relief as
may be necessary and proper in order to prevent, pendente lite, continuing violations of RICO
with respect to Local 6A or the District Council.
The complaint also sought that following a report by the trustee, elections for officers and
officials of Local 6A and the District Council be held, and that these elections be structured in
such a way as to prevent intimidation of union members in the exercise of their rights.
The complaint further sought a permanent injunction barring all the individual defendants
and all persons in active concert or participation with them from having anything to do with the
15

affairs of either Local 6A or the District Council, with any officer, agent, representative or
employees of Local 6A, the District Council or any other labor organizations, about any matter
which relates directly or indirectly to the affairs of Local 6A, the District Council or any other
labor organization, and from owning, operating or participating in any way in, or profiting from,
any concrete construction business in the Southern District of New York or elsewhere. Finally,
the Government sought that the district court grant such other relief as it finds to be just and
proper.
E.

OUTCOME OF THE CASE:
1.

On September 30, 1986, the district court granted the Government’s request for a

preliminary injunction as to those defendants charged in the Persico indictment. See opinion
below in Section F (1).
2.

On March 18, 1987, the Government and Local 6A and the District Council and

their executive boards entered into a Consent Decree that included the following provisions:
Various defendants were permanently enjoined from seeking or holding any position as an
officer, agent, representative, employee or laborer of Local 6A, the District Council, LIUNA or
any other local that is or becomes a part of LIUNA, from attending any meeting or voting in any
election of the District Council, LIUNA or any of its constitutional locals, and from participating
in the control, management, governance, administration, internal operations or affairs of the
District Council, LIUNA or any of its constituent locals. Several defendants were permanently
enjoined from engaging in some of the above listed activities. Several defendants were allowed
to remain as officers of Local 6A and/or the District Council subject to the powers of the courtappointed trustees, described below.
The Consent Decree provided that the district court shall appoint a Trustee to
oversee the operations of Local 6A and the District Council, whose authority included the
following: (1) the authority, subject to review by the district court, to remove any officer, agent,
representative or employee of Local 6A or the District Council for engaging in any act of
16

racketeering or malfeasance, knowingly associating with any member of the La Cosa Nostra or
any other organized crime group, or for violating any provision of the Consent Decree; (2)
subject to review by the district court, to veto any expenditure, or gift or contract that the Trustee
reasonably believes constitutes an act of racketeering or malfeasance; (3) to review all other
proposed actions by Local 6A and the District Council; (4) to have complete access to all the
books and records of Local 6A and the District Council; (5) to issue reports to the district court
and/or member of Local 6A and the District Council; (6) to hold new elections for officers of
Local 6A and the District Council; and (7) and to employ personnel necessary to assist the
Trustee to carry out the Trustee’s duties.
The compensation and expenses of the Trustee were to be paid by Local 6A and
the District Council.
3.

On April 23, 1987, the district court entered summary judgement against the

Colombo LCN family defendants, enjoining them from participating in any manner in the affairs
of either Local 6A or the District Council.
F.

LEADING COURT DECISOINS:
1.

United States v. Local 6A, Cement & Concrete Workers, 663 F. Supp. 192
(S.D.N.Y. 1986).

The district court held that the Government did not impermissibly delay its
request for preliminary relief even though a conviction upon which the request rested had been
entered more than three years prior to the filing of the complaint because the case was virtually
unprecedented and was unique. Second, the district court also held that there was no need for a
hearing on the request for preliminary relief even though some facts were in dispute because the
Government had demonstrated the need for expeditious action and had based its claim upon a
prior criminal conviction and consequently those convicted defendants were collaterally estopped
from challenging the acts underlying their convictions. The district court also noted that even
though some of the defendants were not parties to that earlier criminal action, the court could rely
on evidence produced in that criminal case in considering whether preliminary relief was
warranted.
2.

United States v. Local 6A, Cement & Concrete Workers (Appeal of Madera),
832 F. Supp 674 (S.D.N.Y. 1993).

This case involved the appeal of an order of the Trustee appointed by the district
court pursuant to the Consent Decree which suspended Thomas Madera as President of the
District Council and trustee of the District Council fringe benefit funds based upon conduct
occurring after the entry of the Consent Decree.
17

The Trustee found that Madera had committed three acts of “malfeasance,” which
justified Madera’s temporary removal from his position. First, Madera had failed to report, or
respond forthrightly to the Trustee’s inquiry concerning an embezzlement of slightly more that
$5,000.00 of fees paid by new union members by a clerical employee of the District Council.
Madera had fired the clerical employee upon learning of the embezzlement, but had concealed
the circumstances of the employee’s departure from the District Council from the Trustee.
Second, the Trustee found that Madera had influenced the Board of Trustees to
redirect money from the Legal Services Fund to an Equitable Retirement Investment Account
(RIA) on which Madera’s son received a commission. The Trustee had found that this
constituted a party-in-interest transaction within the meaning of ERISA.
Third, Madera, without the approval of the District Council Executive Board,
caused money from the dues escrow account maintained by the District Council to be invested in
the RIA sold by Madera’s son. The Trustee found that this was a wilful violation of the District
Council constitution which commits such decisions to a vote of the Executive Board.
The district court ruled that these three acts of malfeasance violated Madera’s duty
of fair representation to the members of the union; and that both the Consent Decree and various
provisions of law, including LMRDA and RICO, contemplate a means of immediate intervention
in the operations of a labor organization where necessary to prevent the influence of racketeering
in the affairs of the labor organization.
The district court also held, based on United States v. International Brotherhood
of Teamsters, 970 F. 2d. 1132, 1137 (2d Cir. 1992), that the decision of the court-appointed
Trustee is entitled to great deference. Applying this standard, the district court ruled that its
review was limited to whether the determination of the Trustee was arbitrary and capricious.
The district court also noted that the Trustee had exercised proper restraint in
allowing Madera to remain in office for a time after learning about the clerical embezzlement
incident and by allowing Madera to run for union office on two occasions while the Trustee had
Madera’s conduct under investigation. The court said that a precipitous denial of a right to run
for union office would constitute an infringement on the sovereignty of the members of the
union. The court ruled that the doctrine of laches did not bar the Trustee’s final action because
no prejudice was shown to have affected Madera.
Finally, the district court upheld the ruling of the Trustee to allow Madera to apply
to the court for reinstatement to union office six months after the entry of the decree. The court
noted that after this opinion the Trustee’s term had expired and the Trustee was relieved of all
further duties.

18

3. BONANNO FAMILY CASE
A.

CASE NAME:
United States v. The Bonanno Organized Crime Family of La Cosa Nostra, Philip

Rastelli, et al. , No. CV-87-2974, United States District Court for the Eastern District of New
York. Complaint filed August 25, 1987, Second Verified Complaint filed April 19, 1988, and
Third Verified Complaint filed October 20, 1988.
B.

DEFENDANTS:
The original and Second Verified Complaint named several groups of individuals as

defendants in the civil RICO action, including the “Bonanno Organized Crime Family of La Cosa
Nostra.” In the Third Verified Complaint, the remaining defendants in the action consisted of:
(1) alleged members of the Bonanno Organized Crime LCN Family including: Philip Rastelli
(Boss of Bonanno Family), Joseph Massino (Capo), Anthony Spero (Consigliere), Louis
Attanasio (Capo), Alfred Embarrato (Capo), Gabriel Infanti (Capo), Frank Lino (Capo), Nicholas
Marangello (Capo), Anthony Riela (Soldier), Michael Sabella (Capo/Soldier), Anthony Graziano
(Soldier/Made Member), Benjamin Ruggiero (Soldier/Made Member); and William Rodini
(Associate of Bonanno/DeCavalcante LCN families; (2) Officers of the Executive Board of the
International Brotherhood of Teamsters Local 814 Van Drivers, Packers and Furniture Handlers,
Warehousemen’s and Appliance Home Delivery union (Local 814) including: Ignatius Bracco
(President), James Vincent Bracco (former President and alleged LCN associate), Vito Gentile
(Secretary-Treasurer); and (3) Local 814 and various components of Local 814, the Executive
Board, the Union Welfare Fund, Union Pension Fund and the Union Annuity Fund.
C.

SUMMARY OF THE COMPLAINT:
The complaint alleged two enterprises: (1) the Bonanno Organized Crime Family and (2)

an enterprise consisting of Local 814, its Executive Board, and its employee benefit funds.

19

The third complaint alleged a total of 327 racketeering acts2, including the following: (1)
six acts involving illegal gambling and three acts of narcotics distribution conducted by members
and associates of the Bonanno LCN Family; (2) three acts involving, separately, trafficking in
untaxed contraband cigarettes, theft from interstate shipments, and robbery by members and
associates of the Bonanno LCN Family; and (3) numerous acts involving the collections of
unlawful debts, using extortionate means to collect debts and other acts of extorting money from
various persons and businesses by members and associates of the Bonanno LCN Family.
The complaint charged various officers and employees of Local 814 and its related
benefit funds and members and associates of the Bonanno LCN Family with 209 racketeering
acts that had been charged in an indictment against those defendants which led to their
convictions on those charges.3 Those racketeering acts involved charges that the LCN members
and corrupt union officer defendants used their control over Local 814 to do the following: (1)
extort payoffs from employers in the moving and storage industry in the New York City area in
exchange for labor peace and relaxed enforcement of collective bargaining agreements, in
violation of 18 U.S.C. § 1951 and 29 U.S.C. § 186(b)(1); (2) receive payoffs from employers to
influence the decisions and operation of Local 814’s benefit funds, in violation of 18 U.S.C. §
1954; (3) commit arson to induce employers to make payoffs and otherwise comply with the
demands of the conspirators; and (4) to engage in an extortionate bid rigging scheme whereby
various LCN members, corrupt employers and union officials fixed bids and eliminated
competition for moving and storage contracts in the New York City area.

2

Indictments that corresponded to some of the alleged racketeering acts were attached to the
complaint.
3

Certified copies of that indictment and judgement and commitment orders were attached to
the complaint. These convictions were affirmed in United States v. Rastelli, 870 F.2d 822 (2d
Cir. 1989).
20

The complaint also charged that various LCN figures and union officer defendants
conspired to murder and murdered persons to control labor activities and also obstructed justice
through intimidating witnesses.
The complaint set forth seventeen claims for relief alleging that the defendants acted
through various associated-in-fact enterprises, including the Bonanno Family Enterprise, in
violation of 18 U.S.C.§§ 1962(a)(b) and (c) to cause Local 814 to be a captive labor organization
through which the defendants could infiltrate, dominate, control and exploit labor organization
and victimize the moving and storage industry.
D.

RELIEF SOUGHT:
The relief sought in the complaint included requests for preliminary and permanent

injunctions: (1) enjoining named defendants from participating in the conduct of the affairs of the
Bonanno Family and from associating together for any business or commercial purpose; (2)
enjoining individual defendants and Local 814 and its components from violating racketeering
acts enumerated in 18 U.S.C.§ 1961, from participating in gambling illegal businesses, and from
participating in extortionate credit transactions; (3) enjoining defendants from participating in
any of the affairs of Local 814 and its welfare funds or any other labor organization; (4) that the
district court retain jurisdiction over the Consent Decree and to oversee the affairs of Local 814
and its benefit funds; (5) that the district court supervise general elections run by court-appointed
Trustees appointed pursuant to any Consent Decree; (6) enjoining defendants from transferring
interest in certain businesses and appointing receivers to oversee certain businesses; (7) that the
district court award monetary damages against named defendants; (8) that the district court order
disgorgement of all defendants’ proceeds of violations; (9) ordering divestiture of defendants’
interests in certain properties acquired by various defendants with income and proceeds derived
from racketeering activities and collections of unlawful debts; (10) ordering forfeiture of
specified businesses, properties and legal entities to the United States; and (11) and ordering such

21

other relief as may be necessary and appropriate to prevent and restrain future violations, plus
award the United States the costs of the suit and attorneys fees.
E.

OUTCOME OF THE CASE:
1.

On March 24, 1988, the treble damages claims by the Government and the suit

against the Bonanno LCN family and many of the claims against its members were dismissed by
the district court. See United States v. Bonanno Organized Crime Family of La Cosa Nostra, et
al., 683 F. Supp 1411 (E.D.N.Y. 1988), aff’d, 879 F. 2d 20 (2d Cir. 1989).
2.

On October 9, 1987, the district court entered a Consent Decree with respect to

Local 814, its Executive Board and two members of the Executive Board. This Consent Decree
generally granted injunctive relief against these defendants. The injunctive relief contained the
following provisions: the immediate resignation of the entire Executive Board; and a five year
ban on, involvement in the affairs of any labor union, except mere membership, for Ignatius
Bracco, the President and Vito Gentile, the Vice President.
The Consent Decree designated a five member Interim Executive Board; directed
an election of officers to be held no later that December 15, 1988, in which any qualified person
other than Bracco and Gentile could stand as candidates; and, established a grievance committee
to restore union democracy.
The Consent Decree also appointed a Trustee to oversee the affairs of Local 814
and granted him broad powers including the following:
a.

To participate fully in the day-to-day activities, meetings and discussions
of the Interim Executive Board and Interim Board of Trustees.

b.

To have complete and unfettered access to all books, records, files
accounts and correspondence of Local 814, the Local 814 Executive Board
and Local 814 Funds.

c.

In the event that any vote taken by the Interim Executive Board results in a
tie, to cast the deciding vote.
22

d.

In the event that the court-appointed Trustee discovers any evidence of
corruption within Local 814, the Local 814 Executive Board or the Local
814 Funds, to petition the district court to grant to the court-appointed
Trustee such additional powers as the court-appointed Trustee deems
necessary to remove such corruption or to seek from the Court such
remedies or relief the court-appointed Trustee deems necessary. For
purposes of the Consent Decree “corruption” means bribery,
embezzlement, extortion, loansharking, any criminal Taft-Hartley or
Hobbs Act violations, bid rigging, or domination, control or influence by
the Bonanno Organized Crime Family of La Cosa Nostra, any other
Organized Crime Family or other organized crime element.

e.

To petition the district court to enjoin any expenditure in excess of $5,000
upon a finding that such expenditure was arbitrary or capricious.

f.

To obtain an accounting of the assets of Local 814 and the Local 814
Funds.

g.

To seek recovery of any and all assets of Local 814 and the Local 814
Funds which may have been unlawfully misappropriated.

h.

To withhold to the extent permitted by law the payment of any and all
funds, salaries or benefits of whatever kind or description from any
claimant who has defrauded or misappropriating assets of Local 814 or the
Local 814 Funds.

i.

To expend the funds of Local 814 and the Local 814 Funds for all
expenses which are reasonable and necessary in order to implement this
agreement.

j.

To apply to the district court for such assistance as it deems necessary and
appropriate to carry out the intent of this agreement.
23

k.

To conduct a study of the job referral system utilized by Local 814 to
determine whether job referrals are made under the Local 814 collective
bargaining agreement and are made through the official referral hall.

l.

To recommend to the Interim Executive Board the removal from his or her
position of any officer, supervisor, agent, representative or employee of
Local 814 or the Local 814 Funds upon a determination that such person
has engaged in conduct which constitutes corruption or who is derelict in
his or her duties as set forth in the Local 814 Constitution and Bylaws,
provided that the employment status of current Local 814 employees will
not be affected by this agreement other than in accordance with this
provision. In the event that the Interim Executive Board does not approve
the recommendation of removal, the court-appointed Trustee has the right
to petition the district court for removal of such individual.

m.

In the event that a vacancy occurs in the Interim Executive Board, to fill
such vacancy from the recommendations made by the remaining Interim
Executive Board member, if any.

n.

To approve of the hiring of any business agent or employee of Local 814,
which consent shall not be unreasonably withheld.

F.

LEADING COURT DECISIONS:
1.

United States v. Bonanno Oganized Crime Family of La Cosa Nostra, 119 F.R.D.
625 (E.D.N.Y. 1988).

The Government applied for review of a United States Magistrate’s Order which
granted a motion by the defendant Spero for a protective order to preclude production of Spero’s
income tax returns. The district court held that the Magistrate had committed clear error in
holding Spero’s tax returns to be protected from discovery because such a request had never been
presented to the Magistrate. The court further ruled that even if such a request had been
presented to the Magistrate, it should not have been granted because tax returns are subject to
discovery even though judicial policy directs caution when ordering the production of such
returns.

24

2.

United States v. Bonanno Organized Crime Family of La Cosa Nostra, et al., 683
F. Supp. 1411 (E.D.N.Y. 1988), aff’d,879 F.2d 20 (2d Cir. 1989).

This opinion is the district court’s ruling on the defendants’ motions to dismiss
the complaint, for a more definite statement, and to strike redundant, immaterial or scandalous
matter.
The district court held the following: (1) that Teamsters Union Local 814, its
Executive Board, and its funds collectively constituted an association-in-fact “enterprise” for
purposes of a RICO suit; (2) that the allegations in a civil RICO complaint that individual and
union defendants participated in the conduct of an organized crime family’s affairs and that the
organized crime family, along with the individual defendants, infiltrated and exploited the
enterprise did not erroneously assert that the organized crime family fulfilled the role of a RICO
“enterprise” and a “person” who had violated RICO; (3) that Rule 9(b), Fed.R.Civ.P., requiring
that fraud be pleaded with particularity, did not apply to RICO claims based on predicate acts not
“sounding” in fraud; (4) that broad allegations that each defendant had aided and abetted the
commission of all of the predicate act were insufficient to satisfy RICO’s requirement that at
least two acts of racketeering per defendant be alleged; (5) that general references that a
defendant was a member of an organized crime family was insufficient to attribute a predicate act
to the defendant; (6) that general allegations that certain defendants had violated New York
gambling laws was insufficient to plead a racketeering act where New York law included both
felony and misdemeanor offenses; (7) that an allegation that a defendant had been convicted of
violating 18 U.S.C. § 1951 was sufficient to plead a racketeering act; (8) that the court was
entitled to draw adverse inferences from a defendant’s assertion of his Fifth Amendment
privilege; (9) that disgorgement was an available equitable remedy under civil RICO and that the
purpose of “disgorgement” was to prevent unjust enrichment regardless of whether any victims
would be entitled to damages; (10) that an organized crime family which existed only as an
association in fact was not a “person” under RICO and hence could not be a RICO defendant;
and; (11) that the United States lacked standing to sue for treble damages to its business or
property under RICO; (12) allegation that a defendant was convicted of a specified offense set
forth in attached exhibits of the indictment and judgement and commitment order was sufficient
to plead a predicate act for a civil RICO claim; (13) motion to dismiss on grounds that injunctive
relief was unconstitutional was premature prior to the Government’s proof in the civil RICO
action; (14) that the granting of injunction and other equitable relief did not necessarily render
the appointment of a receiver unnecessary; (15) allegations that divestiture would deprive
innocent third parties of their property interests were premature prior to establishing defendants’
wrong doing at trial; and (16) the doctrine of laches does not apply to the Government’s civil
RICO suit seeking equitable relief such as injunctions and divestiture.
3.

United States v. Bonanno Organized Crime Family La Cosa Nostra, 695 F. Supp.
1426 (E.D.N.Y. 1988).

This case involved the district court’s ruling on the motion of various of the
individual defendants to dismiss the second amended complaint as to them. The district court
held: (1) that predicate acts which were alleged to have violated a statute which was enacted
subsequent to the time the alleged conduct occurred did not constitute a “racketeering act” in a
civil RICO suit; (2) that the civil four year statute of limitations and the doctrine of laches were
inapplicable to the Government’s equitable claims under RICO; (3) that venue was proper under
the ends of justice standards set forth in 18 U.S.C. § 1965 (b); and, (4) that RICO’s pattern
requirement was satisfied by the allegation of at least two offenses of extortion.

25

4.

United States v. Bonanno Organized Crime Family of La Cosa Nostra,
879 F. 2d 20 (2d Cir. 1989), aff’g, 683 F. Supp. 1411 (E.D.N.Y. 1988).

The court of appeals held that the United States was not a “person” entitled to sue
for treble damages under the provisions of 18 U.S.C. § 1964 (c) and that the Bonanno LCN
Family was not a “person” subject to suit under RICO.

26

4. FULTON FISH MARKET CASE
A.

CASE NAME:
United States v. Local 359, United Seafood Workers, Smoked Fish and Cannery Union,

United Food and Commercial Workers International Union, AFL-CIO, CLC, et al. Complaint
No. 87 Civ. 7351 (TPG), United States District Court for the Southern District of New York.
Complaint filed October 15, 1987, and amended on June 4, 1988.
B.

DEFENDANTS:
The original complaint named several groups of defendants: (1) “union defendants”-i.e.,

Local 359, United Seafood Workers, Smoked Fish and Cannery Union, its Executive Board and
certain officers of Local 359, including Anthony Cirillo, President and Dennis Faicco, SecretaryTreasurer; (2) the union welfare and pension funds-the Fulton Fish Market Welfare Fund and the
Fulton Fish Market Pension Fund-and Anthony Cirillo and Dennis Faicco, in their capacities as
trustees of those funds. Nina Andrew, Executive Administrator of the funds, was also named as
a defendant; (3) the Genovese Organized Crime Family of La Cosa Nostra, and five members
and 24 associates of the Genovese Crime Family, including Thomas Contaldo (allegedly a
“capo” of the family), and the following four made soldiers, Carmine Romano, Colombo
Saggese, Rosario Gange and Alfonso Malangone; and (4) the Fulton Market Employers
Association and Associated Purveyors.
C.

SUMMARY OF THE COMPLAINT:
The original complaint, filed on October 15, 1987, alleged that the RICO enterprise

consisted of an association-in-fact comprised of “certain members of the Genovese LCN Family;
the Genovese Family itself, acting through those members and associates; Local 359 and its
Executive Board; and the businesses operating in or out of the Fulton Fish Market,” which was
referred to as the “Fulton Fish Market Enterprise.” The complaint also alleged that the Genovese
LCN Family had controlled the Fulton Fish Market Enterprise, and Local 359 since the 1930’s
and that commencing in the 1970’s, Carmine Romano, an officer of Local 359, acted for the
27

Genovese LCN Family in controlling the Fulton Fish Market. Specifically, the complaint alleged
that in 1981 Carmine Romano and Peter Romano were convicted of criminal RICO violations
and given prison sentences, and that Local 359 was also convicted under RICO and was fined.
The complaint alleged that, despite these criminal convictions, the influence of the Genovese
LCN Family in the Fulton Fish Market continued, and that Vincent Romano succeeded his
brother Carmine as the principal Genovese representative in the Market. The complaint
contained various allegations of criminal activities by the Genovese LCN Family in the Fulton
Fish Market-extortion, loansharking, gambling, and theft.
The complaint alleged that Local 359 is controlled by the Genovese LCN Family and that
this union “is a vital part” of Genovese LCN Family’s control of the Fulton Fish Market, since
the union can be used to threaten employers with labor problems. It was also alleged that
Anthony Cirillo was merely the “nominal” president of Local 359, and that he was handpicked by
the Genovese LCN Family for this office, and that Vincent Romano was the actual head of Local
359.
Specifically, the original complaint alleged that: (1) the defendants extorted payments
from businesses that used the Fulton Fish Market, including wholesalers in the Fulton Fish
Market, retailers who purchased fish there and trucking firms that transported fish into the Fulton
Fish Market; (2) the defendants stole merchandise from interstate shipments; (3) the defendants
ran an illegal numbers gambling operation at the Fulton Fish Market; (4) the defendants through
their control of Local 359 extorted payments in exchange for labor peace and relaxed
enforcement of the terms of collective bargaining agreements; (5) the defendants made
extortionate extensions of credit and used extortionate means to collect extensions of credit; (6)
the defendant committed murder; and (7) the defendants deprived members of Local 359 of their
property rights to free speech and democratic participation in internal union affairs through
intimidation and threats.

28

On June 4, 1988, the Government filed an amended complaint directed solely against the
union defendants-Local 359 and various officers, including Anthony Cirillo, President, and
Dennis Faicco, Secretary-Treasurer. The amended complaint basically repeated the original
complaint’s allegations and alleged various types of criminal activity committed by Cirillo and
Faicco, acting in conjunction with the Genovese LCN Family. The complaint also alleged that
the union itself illegally received money, in violation of the Taft Hartley Act, (29 U.S.C.§1186)
for which the union was convicted in 1981.
D.

RELIEF SOUGHT:
The relief sought under the original complaint included the following: (1) enjoining

various defendants from participating in the affairs of the Genovese LCN Family, Local 359 and
its related Welfare and Pension Funds; (2) appointment of one or more trustees to discharge all
duties and responsibilities of the Executive Board of Local 359; (3) enjoining officers and
employees of Local 359 and its related Welfare and Pension Funds from interfering with the
court-appointed trustees; (4) ordering the court-appointed trustees to conduct free elections of the
officers and Executive Board of Local 359; (5) appointing an administrator to oversee the
operation of the Fulton Fish Market and to prevent racketeering acts there; (6) enjoining the
Genovese LCN Family and its members charged as defendants from participating in or having
any dealings with Local 359, its officers and employees and its related Pension and Welfare
Funds and the Fulton Fish Market; and (7) that the district court award the United States the costs
of the suit and such other and further relief as may be necessary and appropriate.
The amended complaint requested, as did the original complaint, that certain officers of
Local 359 be removed, that a Trustee be appointed for the union and that election of new officers
be held sometime in the future.

29

E.

OUTCOME OF THE CASE:
1.

On December 1, 1987, the United States stipulated to dismiss the complaint as to

the Welfare Fund, the Pension Fund and against Nina Andrew and Anthony Cirillo and Dennis
Faicco in their capacity as trustees of the funds.
2.

On April 15, 1988, a default judgment was entered against the Genovese LCN

Family and three of its alleged members and associates, Thomas Contaldo, Colombo Saggese
and Robert Gillio. These defendants were enjoined from having any dealings with Local 359 and
from having any business dealings in the Fulton Fish Market or in any commercial seafood
business in the Southern District of New York or elsewhere.
3.

On April 15, 1988, 25 other individual defendants named as being connected with

the Genovese LCN Family entered into a consent judgment which enjoined them from having
dealings with Local 359, but did not enjoin them from engaging in business in the Fulton Fish
Market. All those defendants were made subject to injunctive provisions forbidding extortion,
gambling and loansharking, and also forbidding them from dealing with Local 359 in any illegal
manner. The consent judgment provided for the appointment of an administrator for the Fulton
Fish Market whose duty it is to ensure compliance with the consent judgment and the
default judgment.
4.

The action was dismissed as to the Fulton Market Employers Association and

Associated Purveyors by order dated July 6, 1988, consented to by the Government.
5.

On January 29, 1989, the district court dismissed the complaint against defendant

Cirillo and Faicco.
6.

On appeal November 15, 1989, the Second Circuit remanded the case for

reconsideration on the Taft-Hartley charges and affirmed the dismissal of the complaint in other
respects. (see Section F below).
7.

On remand, the parties agreed by stipulation that when the Administrator’s term is

completed, the Government would dismiss the pending charges against Cirillo and Faico.
30

F.

LEADING COURT DECISIONS:
1.

United States v. Local 359, 705 F. Supp. 894 (S.D.N.Y.), aff’d in part and
remanded in part, 889 F.2d 1232 (2d Cir. 1989).

This opinion constitutes the district court’s findings of fact and conclusions of law
following the non-jury trial of the union defendants, Anthony Cirillo, President of Local 359, and
Dennis Faicco, Secretary-Treasurer of Local 359, who were the only remaining defendants. The
district court found that “the Genovese Crime Family was at one time in control of Local 359.”
Id. at 900. However, the district court found insufficient evidence to support the wire fraud
charges against Cirillo which were premised on telephone conversation between Cirillo and
Vincent Romano, an employer, about the status of ongoing negotiations for a new collective
bargaining agreement. The district court reasoned that neither Romano nor the Genovese LCN
Family directed or influenced Cirillo in the negotiations, that the information conveyed to
Romano and the Genovese Family was not confidential, and that the union members were not
disadvantaged as a result of the disclosed information. Id. at 902-906.
The district court also dismissed the wire fraud charges based on Cirillo’s alleged
efforts to find a job at the Fulton Fish Market for Steve Melfi on the ground that there was no
evidence that Cirillo played any role in obtaining the job for Melfi.
The district court further dismissed the Taft-Hartley racketeering acts (29 U.S.C.
§ 186(b)(1)) that alleged that Cirillo and Faicco, officers of Local 359, aided and abetted by the
Genovese LCN Family, received payoffs from Fulton Fish Market employers of Local 359
members on the ground that there was no evidence that Cirillo and Faicco committed their
unlawful acts on behalf of the Genovese LCN Family, or that the Genovese LCN Family was
involved in these acts or received any of the funds Cirillo and Faicco obtained from the
employers. Id. at 906-908.
The district court also found the evidence insufficient to support other extortion
charges on a wide variety of grounds. Thus, the district court dismissed the RICO complaint
against Cirillo and Faicco. Id. at 908-917.
2.

United States v. Local 359, United Seafood Workers Union, 889 F.2d 1232 (2d
Cir. 1989).

The Second Circuit affirmed the district court’s dismissal of the RICO complaint
against Cirillo and Faicco in all respects, except that it remanded for reconsideration the
dismissal of the Taft-Hartley charges on the ground that the district court applied an erroneous
legal standard. In that respect, the Second Circuit held that the Government was not required to
prove that the Genovese LCN Family participated in, or benefited from, the Taft-Hartley
offenses. The Second Circuit stated:
We hold that Genovese involvement is irrelevant to the Taft-Hartley
charges against Cirillo and Faicco. If Cirillo and Faicco committed
multiple violations of the Taft-Hartley Act in conducting the union’s
affairs, they violated RICO whether or not the Genovese Family was
involved . . .

31

[W]e hold also that proof of a Taft-Hartley violation does not require a
showing that the money unlawfully paid to Local 359 passed ultimately
into the hands of the Genovese Family.
Id. at 1235-36
The court also stated that “we do not pass upon the ultimate question whether the
injunctive relief requested by the Government should be granted”. Id. at 1237.
3.

United States v. Local 359 United Seafood Workers Union, 1991 WL 172962
(S.D.N.Y. August 27, 1991).

The district court granted the court-appointed Administrator’s request for an order
compelling several persons who were non-parties to provide testimony and to produce records on
the ground that there was evidence that those non-parties were acting in concert with various
defendants in activities which might constitute violations of the Consent Decree. The district
court stated that “[i]t should be emphasized that the authority to appoint the Administrator
emanated from the statute [RICO] not merely from the fact that certain defendants gave their
consent.”
4.

United States v. Local 359 United Seafood Workers Union, 1991 WL 230613
(S.D.N.Y. October 24, 1991).
The district court denied several defendants’ motion for an award of attorney’s

fees.
5.

United States v. Local 359 United Seafood Workers Union, 1994 WL 38679
(S.D.N.Y. Feb. 4, 1994), aff’d,55 F.3d 64 (2d Cir. 1995).

The district court affirmed: (1) the findings of the court-appointed Administrator
that several defendants violated the Consent Decree by conspiring to allocate unloading of
deliveries among themselves and which companies could make deliveries to the Fulton Fish
Market and (2) the imposition of fines ranging from $20,000 to $60,000.
6.

United States v. Local 359 United Seafood Workers Union, 55 F.3d 64 (2d Cir.
1995).

The Second Circuit affirmed the imposition of sanctions in the above opinion,
stating that “the factual findings of an administrator [appointed under a consent decree] are
‘entitled to great deference’”, and “that consent judgment called for district court to apply ‘same
standard of review applicable to review of final agency action under the Administrative
Procedure Act.’” Id. at 68, quoting, United States v. IBT, 998 F.2d 120, 134 (2d Cir. 1993).

32

5. ROOFERS UNION CASE
A.

CASE NAME:
United States v. Local 30, United Slate, Tile and Composition Roofers, Damp and

Waterproof Workers Association, et al., Civil Action No. 87-7718, United States District Court
for the Eastern District of Pennsylvania. Complaint filed December 2, 1987.
B.

DEFENDANTS:
The complaint named fifteen defendants: two union entities and thirteen individual

defendants. The two union entities were Local 30, United Slate, Tile and Composition Roofers,
Damp and Waterproof Workers Association (Local 30), and Residential Reroofers Local 30B,
United Slate etc. (Local 30B), an affiliated labor organization. Local 30 and Local 30B are
collectively referred to as “the Roofers Union.” The individual defendants were all officers
and/or employees of the Roofers Union.
C.

SUMMARY OF THE COMPLAINT:
The complaint alleged that the enterprise consisted of the Roofers Union and its affiliated

employee benefit plans. The complaint alleged that the defendants had participated in the
conduct of the affairs of the enterprise through a pattern of racketeering activity, and conspired to
do so, in violation of 18 U.S.C. §§ 1962 (c) and (d), respectively. The complaint charged the
defendants with fifteen violations of the Hobbs Act, 18 U.S.C. § 1951, which were allegedly
committed by extorting employers into entering collective bargaining agreements with the
Roofers Union and paying the defendant officers and employees. The extortion consisted of
threats and acts of physical violence as well as threats of economic harm caused by labor unrest
and threats of violence against persons doing business with non-union roofing companies.
The complaint also charged that the defendants collected extensions of credit by
extortionate means, in violation of 18 U.S.C. § 894. The debtors primarily were contractors
having collective bargaining relationships with the Roofers Union. These extortionate acts were
also alleged to be violations of Pennsylvania law. Two of the defendants were charged with
33

derising a scheme to defraud an insurance company by filing a fraudulent claim on an automobile
owned by the Roofers Union, in violation of 18 U.S.C. § 1341. Each of the individual
defendants had been convicted in an earlier criminal RICO case alleging many of the same
racketeering acts were are alleged in this civil case, and the complaint alleged that those
defendants were collaterally estopped from contesting those charges.
Four Roofers Union officers, who were also trustees of affiliated employee benefit plans,
were charged with accepting kickbacks from a law firm for retention by the union’ s pre-paid
legal services plan, in violation of 18 U.S.C. § 1954. These four officers also were accused in
separate racketeering acts of embezzling money from this pre-paid legal services plan, in
violation of 18 U.S.C. § 664.
The complaint also alleged that a wide ranging scheme to bribe public officials was
carried on by the officers of the Roofers Union. Stephen Traitz, Jr., the Business Manager and
principal officer of the Roofers Union, was charged with 46 separate violations of Pennsylvania
laws relating to bribery by engaging in a scheme to bribe judges of the Philadelphia Court of
Common Pleas. Other defendants were alleged to have participated in some of these bribes.
Twenty additional Pennsylvania bribery violations were alleged to have been committed by
Traitz and other officers of the Roofers Union.
D.

RELIEF SOUGHT:
The Government sought injunctive relief that would do the following:
1.

Enjoin and restrain the individual defendants, and all other persons in active
concert or participation with them, from participating in any way in the affairs of
the Roofers Union or any employee benefit plans with which the Roofers Union is
affiliated or associated, from having any dealings, directly or indirectly, with any
officer, agent, attorney or employee of the Roofers Union or its affiliated benefit
plans or any other labor organization about any matter which relates directly or
indirectly to the affairs of the Roofers Union, and from in any way participating
34

in, or profiting from, any roofing business in the Eastern District of Pennsylvania
or elsewhere;
2.

Enjoin and restrain the current Executive Board members and officers of the
Roofers Union from taking or causing to be taken any action for or on behalf of
nominal defendants Locals 30 and 30B;

3.

Appoint one or more trustees, pendente lite, to discharge all duties and
responsibilities of the officers and Executive Board of Local 30 and 30B,
including but not limited to the following:
a.

To protect the rights of the members of Locals 30 and 30B, consistent with
the provisions of Title 29 of the United States Code and the constitution
and by-laws of Locals 30 and 30B;

b.

To administer and supervise the daily affairs of Locals 30 and 30B;

c.

To remove and/or appoint new employees and officials to oversee the
administrative functions of Locals 30 and 30B, including but not limited to
business agents, organizers, dispatchers and office personnel;

d.

To administer, conserve and obtain an accounting of the assets of Locals
30 and 30B, and any associated or affiliated employee benefit plans;

e.

To seek recovery of any and all assets of Locals 30 and 30B and any
associated or affiliated employee benefit plans that may have been
dissipated or otherwise misappropriated due to malfeasance, misfeasance
or nonfeasance;

f.

To withhold the payment of any and all funds, salaries or benefits of
whatever kind or description from any claimant who may have defrauded
or seeks to defraud Locals 30 and 30B, or any associated or affiliated
employee benefit plans or who otherwise has misappropriated or is about
to misappropriate any assets thereof until the completion of the aforesaid
35

accounting and the resolution of any claims instituted against any
individual or entity by or on behalf of Locals 30 and 30B, or any
associated or affiliated employee benefit plan;
g.

To retain legal counsel and to employ accountants, consultants and experts
to assist in the proper discharge of the aforesaid duties;

h.

To expend the funds of Locals 30 and 30B for all expenses which are
reasonable and necessary in order to execute the mandate of the district
court;

i.

To apply to the district court for such assistance as may be necessary and
appropriate in order to carry out the mandate of the district court; and

j.

To furnish the district court with a complete report concerning the
financial stability of Locals 30 and 30B, and associated or affiliated benefit
plans as well as the status of the members’ rights under 29 U.S.C. §§ 157
and 411 and their entitlements under the various collective bargaining
agreements;

4.

Enjoin and restrain the members, officers and employees of Locals 30 and 30B
and the fiduciaries, employees and beneficiaries of any associated or affiliated
employee benefit plan from any interference with the said trustee(s) in the
execution of their duties as aforesaid;

5.

Enjoin Locals 30 and 30B, and all elected or appointed officials thereof, from
violating the provisions of 18 U.S.C. §§ 1962, 201, 894, 1951, 1954, and 664;

6.

Grant the United States of America such further preliminary relief as may be
necessary and proper in order to prevent, pendente lite, a continuation of the
violations of 18 U.S.C. § 1962 involving control over and exploitation of Locals
30 and 30B by the individual defendants;

36

7.

That, at an appropriate time following the submission and review of the
Trustee(s)’ report, the district court order the trustee(s), with such assistance from
the Department of Labor and the Department of Justice as may be necessary or
practicable, to conduct general elections to elect officers and an Executive Board
of Locals 30 and 30B, respectively, said election to conform to the provisions of
Title IV of the Labor-Management Reporting and Disclosure Act, 29 U.S.C. §§
401, 481-484.

8.

That, following the election, unless the pre-liminary injunction is extended upon a
showing of good cause, the district court issue a permanent injunction prohibiting
all of the defendants herein and all persons in active concert or participation with
them from participating in or having any future dealings of any nature whatsoever,
with any officer, agent, representative or employee of Locals 30 and 30B about
any matter which relates directly or indirectly to the affairs of Locals 30 and 30B
and from owning, operating or participating in any way in, or profiting from, any
roofing business in the Eastern District of Pennsylvania or elsewhere; and

9.

That the district court award the United States of America the costs of this suit,
together with such other and further relief as may be necessary and appropriate to
prevent of 18 U.S.C. § 1962.

E.

OUTCOME OF THE CASE:
See Section F Below.

F.

LEADING COURT DECISIONS:
1.

United States v. Local 30, United Slate, Tile and Composition Roofers, 686 F.
Supp. 1139, 1162-1174 (E.D. Pa. 1988).

Following an evidentiary hearing, the district court found that the defendants had
violated RICO and imposed a “ Decreeship” over the Roofers Union that included the following
equitable relief over the defendants’ objections:
(1)

The district court barred defendants who violated RICO “from the roofing
industry within the jurisdiction of Local 30/30B.” Id. at 1162.
37

(2)

The district court appointed a Chief Liaison Officer “who will serve as the
principal enforcement officer of all provisions of the Decree” Id. at 1171
and “will have the authority, upon application and approval of [the
District] Court, to hire such assistants and support services as will be
needed to fulfill his responsibilities under the Decree.” Id. at 1169.

(3)

The district court ordered an audit of all accounts of Local 30/30B and any
affiliated entity by a designee of the Court. Id. at 1169, 1172.

(4)

The district court barred all defendants found to have violated RICO “from
holding, occupying, or controlling any position of leadership or influences
in respect to any matter within the jurisdiction of Local 30/30B or any of
its affiliated entities” and “from engaging in employment in the roofing or
related construction industries, in any capacity, within the geographical
area of the jurisdiction of Local 30/30B.” Id. at 1171.

(5)

The district court ordered that Local 30/30B develop with the appropriate
employer representative groups an industry-wide grievance/arbitration
procedure for resolving contractual disputes between the union and
employers, subject to the court’s approval. Id. at 1172-73.

(6)

The district court ordered that all face-to-face collective bargaining
agreement negotiations take place under the supervision of the Court
Liaison Officer. Id. at 1172-73.

(7)

The district court prohibited any collective bargaining agreement from
taking effect until it was approved by the Court Liaison Officer. Id. at
1173.

(8)

The district court established “direct control of all matters within the
jurisdiction of the union that require the expenditure of any funds of the
Union or any affiliated entity for the transfer of any of its assets” and
enjoined defendants “from transferring any funds, property, or interests in
any assets of any kind of Local 30/30B or any of its affiliated entities,
except in the ordinary course of business without the express written
consent of the court.” Id. at 1172.

(9)

The district court ordered that the “Court Liaison Officer shall have the
right, without prior notice, to have access to any records, wherever located,
at the offices, locations and other property of Local 30/30B or any
affiliated entity” and to copy such records. Id. at 1173.

(10)

The district court required the union to “provide written notice to the court
of all meetings, proceedings, or decisions providing for nominations
and/or elections for offices or positions within Local 301/30B, or any
affiliated entity.” Id. at 1173.

(11)

The district court prohibited the union and any affiliated entity and the
individual defendants “in respect to any member within the jurisdiction of
Local 30/30B, or any affiliated entity, from intimidating, inflicting
violence, fear, or threats of personal or property damage upon any person,
corporation or entity, or attempting to do so.” Id. at 1174.
38

(12)

The district court retained jurisdiction of all matters relating to the union
and any affiliated entity and ordered that “[a]ll costs incurred in the
administration of the Decreeship shall be borne by Local 30/30B and,
where appropriate, its affiliated entities.” Id.

2.

United States v. Local 30, United Slate Tile and Composition Roofers, 871 F.2d
401, 404-09 (3d Cir. 1989).

The Third Circuit affirmed this equitable relief, noting that “the District Court
converted the preliminary injunction into a ‘final decree.’” The Third Circuit concluded that the
relief granted was authorized by 18 U.S.C. § 1964(a), and that the district court did not abuse its
discretion in imposing a decreeship against the Roofers Union and deciding that the ordered
relief was necessary to eliminate and prevent corruption in the union. Id. at 404-09.
The court of appeals stated that under Section 1964 of RICO, [t]he district court is
empowered not only to restrain but also to prevent future violations of § 1962 by ordering
reorganization or even dissolution of any enterprise, as long as the court makes due provision for
the rights of innocent parties.” Id. at 407. The court of appeals also explained that the intrusive
relief was necessary because the evidence “supports the district court’s finding that the removal
of the thirteen individual defendants would not have eliminated that corrupt influence from the
Roofers Union.” Id. at 407. Finally, the court of appeals noted that the evidence showed “that
the newly elected officials are long time associates and allies of the thirteen individual defendants
in this case, which indicates that corrupt influences continue to exist within the Union. . . . .
[Consequently] the district court properly found a likelihood of wrongful acts continuing into the
future.” Id. at 409.

39

6. THE JOHN LONG CASE
A.

CASE NAME:
United States v. John F. Long and John S. Mahoney, Complaint No. 88 Civ. 3289, United

States District Court for the Southern District of New York. Complaint filed in May, 1988.
B.

DEFENDANTS:
There were two defendants in this case, John F. Long, who was the Secretary-Treasurer of

Local 804, International Brotherhood of Teamsters, etc. (Local 804, I.B.T.), and John S.
Mahoney, who was Secretary-Treasurer of Local 808, I.B.T.
C.

SUMMARY OF THE COMPLAINT:
This case alleged that the RICO enterprise was a group of individuals associated-in-fact,

including the two defendants, Jesse David Hyman, Vincent Joseph Rotondo, and others. Jesse
David Hyman was a dentist who had entered the business of administering pension funds
associated with labor unions and had set up a company, Penvest, Inc. Rotondo was Hyman’s
partner in Penvest and a member of the DeCavalcante LCN Family.
The complaint alleged two claims for relief: that the defendants participated, and
conspired to participate, in the affairs of the alleged enterprise through a pattern of racketeering
activity. The alleged pattern of racketeering activity was the same as alleged in a parallel
criminal case (Indictment No. S 87 Cr. 943 (DNE)), and consisted of a series of racketeering acts
including one ERISA embezzlement, in violation of 18 U.S.C. § 664, three ERISA kickbacks, in
violation of 18 USC §1954, three labor briberies, in violation of 29 U.S.C. § 186(b), one
extortion affecting interstate commerce, in violation of 18 U.S.C. § 1951, one commercial
bribery, in violation of New York Law, and two obstructions of justice, in violation of 18 U.S.C.
§ 1503. The racketeering acts were committed in connection with the purchase of benefit plan
services from Penvest.

40

D.

RELIEF SOUGHT:
The complaint requested three areas of relief: (1) that the district court permanently

restrain and enjoin the defendants from having any involvement whatsoever in the affairs of their
respective I.B.T. local unions; (2) that the district court enter an order requiring the defendants to
disgorge all of the proceeds of their criminal activity; and (3) that the district court award costs to
the United States.
E.

OUTCOME OF THE CASE:
1.

As stated above, this case was based on the parallel criminal case against both

defendants. See Indictment No. S 87 Cr. 943 (DNE). In United States v. Long, 917 F. 2d 691
(2d Cir. 1990), the convictions obtained in that criminal case were reversed for erroneous jury
instructions and admission of improper expert testimony.
2.

In 1992, the defendant John S. Mahoney agreed to be permanently barred from

involvement in union activities as he was ordered by the court-appointed Independent
Administrator in the Government’s civil RICO case against the International Brotherhood of
Teamsters Union (IBT). (see Case Summary number 7 below in Appendix B). Therefore, this
matter was dismissed as to Mahoney.
3.

In 1983, the court-appointed Independent Administrator in the Government’s civil

RICO case against the IBT (see Case Summary number 7 below in Appendix B) permanently
barred defendant John Long from membership in the Teamsters Union activities. The United
States District Court for the Southern District of New York upheld Long’s expulsion from union
affairs. See Long v. Carberry, 1994 WL 163712 (S.D.N.Y. April 28, 1994); Long v. Carberry,
151 F.R.D. 240 (S.D.N.Y. Oct. 13, 1993). In light of Long’s expulsion from union activities, this
case was dismissed against him.
F.

LEADING COURT DECISIONS:
None.

41

7. INTERNATIONAL BROTHERHOOD OF TEAMSTERS UNION CASE
A.

CASE NAME:
United States v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen and

Helpers of America, AFL-CIO, et al., Complaint No. 88 Civ. 4486 (DNE), United States District
Court for the Southern District of New York. Complaint filed June 28, 1988. (IBT Case).
B.

DEFENDANTS:
The complaint charged several groups of defendants:
1.

The IBT International Union - - The International Brotherhood of Teamsters,

Chauffeurs, Warehousemen and Helpers of America (IBT) and its constituent parts. The IBT had
approximately 1.7 million members.
2.

The Commission of La Cosa Nostra (LCN) which consisted of the Bosses and/or

Acting Bosses of the five New York City La Cosa Nostra Families (Genovese, Gambino,
Colombo, Bonanno and Lucchese), and various LCN members. The alleged LCN defendants
included the following:
(1)

Anthony Salerno - Consigliere, Acting Boss and the Boss of the
Genovese Family;

(2)

Matthew Ianniello - Capo in the Genovese Family;

(3)

Anthony Provenzano - Capo in the Genovese Family;

(4)

Nunzio Provenzano - Member of the Genovese Family;

(5)

Anthony Corallo - Boss of the Lucchese Family;

(6)

Salvatore Santoro - Underboss of the Lucchese Family;

(7)

Christopher Furnari - Consigliere of the Lucchese Family;

(8)

Frank Manzo - Capo in the Lucchese Family;

(9)

Carmine Persico - Boss of the Colombo Family;

(10)

Gennaro Langella - Underboss and Acting Boss of the Colombo
Family;
42

3.

(11)

Nicholas Marangello - Underboss of the Bonanno Family;

(12)

Joseph Massino - Acting Boss and/or Capo in the Bonanno Family;

(13)

Anthony Ficarotta - Member of the Genovese Family;

(14)

Eugene Boffa, Sr. - Associate of the Bufalino Family;

(15)

Francis Sheeran - Associate of the Bufalino Family;

(16)

Milton Rockman - Associate of the Genovese Family;

(17)

John Tronolone - Associate of the Genovese Family;

(18)

Joseph John Aiuppa - Boss of the Chicago Family;

(19)

John Phillip Cerone - Underboss of the Chicago Family;

(20)

Joseph Lombardo - Capo in the Chicago Family;

(21)

Angelo LaPietra - Capo in the Chicago Family;

(22)

Frank Balistrieri - Boss of the Milwaukee Family;

(23)

Carl Angelo DeLuna - Underboss of the Kansas City Family;

(24)

Carl Civella - Capo in the Kansas City Family;

(25)

Anthony Thomas Civella - Capo in the Kansas City Family;

The General Executive Board of the IBT, which included the General President

Jackie Presser, the General Secretary-Treasurer, and sixteen Vice Presidents. These officials
were sued in both their individual and official capacities.
The complaint charged a total of forty-five individual defendants.
C.

SUMMARY OF THE COMPLAINT:
The complaint alleged that the RICO enterprise consisted of an association-in-fact of “the

Teamsters International Union and various of its Area Conferences, Joint Councils, Locals and
Benefit Funds.” (The Teamsters International Enterprise). Complaint at ¶ 53. The complaint
also alleged four claims for relief: that the defendants acquired and maintained an interest in the
Teamsters International Enterprise through a pattern of racketeering activity, and conspired to do
so, in violation of 18 U.S.C. §§ 1962 (b) and 1962 (d), respectively, and that the defendants
43

participated in the affairs of the Teamsters International Enterprise through a pattern of
racketeering activity and conspired to do so, in violation of 18 U.S.C. §§ 1962 (c) and (d),
respectively. Id. at ¶¶ 54-113.
The complaint also alleged that from the 1950's to the filing of the complaint, La Cosa
Nostra infiltrated, dominated, exploited and controlled the IBT through a pattern of racketeering
activity and used the IBT and various of its affiliated entities to conduct racketeering activity
throughout the nation. The complaint alleged that the pattern of racketeering activity included
LCN’s control of the IBT through: (1) fraudulent intervention in the elections of Roy Williams
and Jackie Presser as General Presidents of the IBT; (2) murder, violence and fear to intimidate
union membership (at least 20 murders of Teamster officers or members, including numerous
persons who agreed to testify against corrupt LCN figures and union officials, including James
Hoffa, former President of the IBT, numerous beatings and threats of death against others); and
(3) fraudulent obtaining of property from the union’s membership, including money and union
members’ rights to free speech and democratic participation in internal union affairs, as
guaranteed by 29 U.S.C. §§ 411, 501(a), 1104 and 1106. Id. at ¶¶ 56-111.
Paragraphs 3-52 of the complaint described the defendants, including; the various entities
of the IBT; La Cosa Nostra (describing the Commission which serves as the national ruling
council of the LCN, the headquarters of each of the families from New York to Los Angeles and
the LCN’s method of operation); the LCN defendants, their position within each respective LCN
Family and a synopsis of their criminal convictions; and each union defendant and the position
they held in the IBT, as well as their criminal history, if any. The complaint also included a
chronological history of how the LCN gained control of the IBT.
The complaint incorporated allegations from twelve criminal indictments which resulted
in the convictions of various defendants affiliated with La Cosa Nostra and the IBT for various
crimes involving the IBT.

44

As part of the alleged pattern of racketeering, the complaint alleged that from 1975 to
1988, the General Executive Board of the IBT defrauded the IBT of money and property in the
form of union jobs, wages, employee benefits and benefit funds by permitting the LCN to control
the leadership of the IBT, knowing it was for the economic benefit of the LCN. These acts and
failures to act included the following allegations: (1) LCN influence assisted Jackie Presser and
Roy Williams in becoming President of the IBT; (2) IBT Trustees relinquished authority over
investment decisions to LCN controlled officers; (3) IBT Presidents steered $62.5 million
Teamster Central States Pension Fund loans to an LCN backed corporation for the purchase of
two Las Vegas Casinos; (4) IBT officers schemed to bribe a United States Senator to influence
his actions regarding trucking deregulation; and (5) IBT officers promoted an LCN labor-leasing
scheme.
The complaint, in addition, alleged that numerous acts of racketeering were committed by
Jackie Presser. For example, from 1972-1976, Presser tried to prevent the criminal prosecution
of the IBT General President in exchange for $10,000, and in 1975, Presser offered to pay Roy
Williams in exchange for his support of a proposed loan in connection with the Tropicana Casino
and Hotel in Las Vegas Nevada. During 1975-1976, Presser demanded payment of money or
other things of value in the amount of $1,000, 000 in connection with the transfer of ownership
of the Front Row Theater in Cleveland.
The complaint also alleged that from 1975-1984, former IBT International Vice President
Salvatore Provenzano received kickbacks and defrauded various Teamster benefit funds of
money and property.
The complaint also incorporated allegations from the civil RICO action, United States v.
Local 560 of the IBT, Civ. No. 82-689 (District of New Jersey).4 In that case, defendants
Anthony Provenzano and Nunzio Provenzano, both members of the Genovese LCN Family,
entered into consent judgments which permanently barred them from further contact with any
4

See Civil RICO case summary number one above in Appendix B.
45

labor organization and ordered defendant Salvatore Provenzano removed as President of IBT
Local 560. In addition, the complaint cited evidence collected by the President’s Commission on
Organized Crime of La Cosa Nostra’s exploitation of the IBT. Among other findings, that
Report described the IBT as the union “most controlled” by organized crime, stating that the
leaders of the IBT “have been firmly under the influence of organized crime since the 1950’s and
that ‘for decades organized crime has exercised substantial influence over the international union,
primarily through the office of the president.’” Id. at ¶ 115.
D.

RELIEF SOUGHT:
The complaint sought the following preliminary relief: (1) enjoining the named LCN

defendants from participating, directly or indirectly, in the affairs of the IBT or any other labor
organization; (2) immediately requiring current IBT General Executive Board members to
preserve all union records, to take no action to alter or destroy union records, and to deposit and
maintain any payments to IBT entities and benefit funds under their control in appropriate
accounts; (3) appointing one or more court liaison officers pendente lite to discharge the duties of
the IBT President and Executive Board to prevent racketeering activity within the IBT, and to
review certain actions of the IBT General Executive Board during the pendency of the action;
and (4) enjoining and restraining IBT officials from interfering in any way with the duties of
court liaison officers and from committing any racketeering act or associating with any LCN
figure during the pendency of the action. Id. at pp. 104-409.
The complaint also sought the following permanent injunction: (1) prohibiting the LCN
defendants, and all other persons in active concert or participation with them, from participating
in the affairs of the IBT or any other labor organization; (2) prohibiting the named union
defendants, their successors in office, and all persons in active concert or participation with them,
from committing any act of racketeering, as defined in 18 U.S.C. § 1961 (1); (3) prohibiting the
union defendants found to have violated 18 U.S.C. § 1962 from participating in the affairs of the
IBT or any other labor organization about any matter which relates to the affairs of the IBT or
46

any other labor organization; (4) ordering a new general election for the IBT General Executive
Board, to be conducted by a court-appointed Trustee; (5) ordering disgorgement of all proceeds
defendants derived from their RICO violations; (6) authorizing the trustees to discharge, as the
trustees deem necessary, any of the duties of the General Executive Board (other than negotiating
and entering into collective bargaining agreements or participating in the affairs of any IBT
political action committee) until such time as free and fair elections of new union officers were
held; and (7) awarding costs to the United States and any further relief as may be necessary and
proper. Id. at pp. 111-13.
E.

OUTCOME OF THE CASE:
1.

On March 13, 1989, the scheduled trial date, the IBT and the union officer

defendants agreed to a settlement proposal, and on March 14, 1989, the district court entered a
Consent Decree which included the following provisions:
a.

Certain union defendants, and any other or future IBT General Executive

Board member, officer, representative, member and employee of the IBT were permanently
enjoined from: (a) committing any act of racketeering activity, as defined in 18 U.S.C. § 1961;
(b) knowingly associating with any member or associate of the LCN, any other criminal group, or
any person otherwise enjoined from participating in union affairs; and (c) obstructing or
otherwise interfering with the work of the court-appointed officers or the Independent Review
Board.
b.

Various changes were made in the IBT Constitution, including requiring

elections for the IBT General President and other International Officers to be by direct rank-andfile secret balloting.
c.

The Consent Decree required a new election in 1991 for all IBT

International Officers, and established three-court appointed officers, whose duties would
terminate after the certification of the 1991 election results by the newly created Elections
Officer.
47

d.

The Consent Decree gave power to three court-appointed officers to

oversee certain aspects of the affairs of the IBT: an Investigations Officer, an Elections Officer,
and an Independent Administrator. The Investigations Officer was to investigate corruption and
prosecute charges against alleged offenders. The Elections Officer was to supervise the 1991
election of IBT officers. The Administrator was to oversee the actions of the other two officers
and to resolve disputes arising from their activities. The Administrator was authorized to make
“any application to the [District] Court that the Administrator deems warranted” in order to have
the court interpret the Consent Order and facilitate its implementation. The other parties to the
Consent Decree were also allowed to make such applications as well.
The Consent Decree also provided, “This Court [the United States District
Court for the Southern District of New York] shall have exclusive jurisdiction to decide any and
all issues relating to the Administrator’s actions or authority pursuant to this order.”5
e.

The Consent Decree also authorized the court-appointed Administrator to

veto union expenditures, contracts and appointments that the Administrator reasonably believed
would constitute an act of racketeering activity or facilitated organized crime influence in the
union; and authorized the Investigations Officer to, among other matters, examine the books and
records of the IBT and its affiliates, take sworn statements, and to attend meetings of the IBT’s
General Executive Board. See United States v. International Bhd. of Teamsters, 803 F. Supp.
761, 767-68 (S.D.N.Y. 1992).
f.

The Consent Decree also included the following procedures:
When the Investigations Officer files charges, the following procedures

shall be observed:
(a)

the Investigations Officer shall serve written specific
charges upon the person charged;

5

For summaries of the Consent Decree, see United States v. International Bhd. of Teamsters,
899 F.2d 143, 145 (2d Cir. 1990); United States v. International Bhd. of Teamsters, 905 F.2d
610, 613 (2d Cir. 1990).
48

(b)

the person charged shall have at least thirty (30) days prior to
hearing to prepare his or her defense;

(c)

a fair and impartial hearing shall be conducted before the
Administrator;

(d)

the person charged may be represented by an IBT member at the
hearing; and

(e)

the hearing shall be conducted under the rules and procedures
generally applicable to labor arbitration hearings.

The administrator shall preside at hearings in such cases and decide such
cases using a ‘just cause’ standard. The Investigations Officer shall present
evidence at such hearings. As to decisions of the IBT General Executive Board
on disciplinary charges and trusteeship proceedings during the Administrator’s
tenure, the Administrator shall review all such decisions, with the right to affirm,
modify or reverse such decisions and, with respect to trusteeship proceedings, to
exercise the authority granted above in this paragraph. Any decision of the
Administrator shall be final and binding, subject to the Court’s review as provided
herein. For a period of up to fourteen (14) days after the Administrator’s decision,
any person charged or entity placed in trusteeship adversely affected by the
decision shall have the right to seek review by this Court of the Administrator’s
decision. The Administrator shall also have the right to establish and disseminate
new guidelines for investigation and discipline of corruption within the IBT. All
of the above actions of the Administrator and Investigations Officer shall be in
compliance with applicable Federal laws and regulations.
See United States v. International Bhd. of Teamsters, Civil Action No. 88-CIV.4486. (Order
entered March 14, 1989) at pp. 6-7, 9-10.6

6

On October 17, 1989, defendant Frank Balistrieri entered into a consent judgment
permanently enjoining him from any dealing with any employee, representative, or agent of the
IBT or any local union, joint council, benefit fund or any matter which related to the IBT or its
affiliated entities.
Joseph Lambardo, midway through his trial, offered to settle the case by agreeing to pay the
IBT $250,00. In addition he was permanently enjoined from any association or participation in
affairs of the IBT.
Default judgments were entered against the other LCN defendants. Those judgments
basically provided that the defendants permanently enjoined from committing any act of
racketeering, associating with any member of any organized crime family and from participating,
in any way, in the affairs of the IBT.
49

2.

On October 13, 1992, an Independent Review Board (IRB), consisting of three

members, replaced the three court-appointed officers; the Government and the IBT each selected
one member and those two members selected a third member.
The IRB had a Chief Investigator, who was the court-appointed Investigations
Officer during the first stage of the IBT consent decree. To investigate allegations of
misconduct, the Chief Investigator supervised a staff of independent investigators comprised of
attorneys and retired law enforcement officers.
The IRB issued a written report containing its findings regarding alleged
misconduct and its recommended sanctions, if any, to the IBT organization having jurisdiction
over the matter. Within 90 days, the IBT organization was required to report its disciplinary
action or its reasons for declining action, or it may refer the matter back to the IRB for
adjudication. If the IRB finds that the action taken is inadequate, the IRB must take its
objections known to the IBT entity, the IBT General President and the IBT General Executive
Board (GEB). If the IBT entity has not taken or proposed corrective action within 10 days
thereafter, the IRB may recommend further remedies or convene a de novo evidentiary hearing of
its own with notice to the affected parties and prepare a written decision of disciplinary action
which the GEB must implement. The IRB may also modify or reverse a disciplinary or
trusteeship decision of the GEB.
The IRB’s decisions and settlement agreements are submitted to the supervising
district court for approval and entry as court orders. Under the IRB’s rules and procedures, the
IRB, or any individual member, may seek a court order directing the IRB to exercise its authority
when one or more of the other members have “failed or refused to conduct a hearing, issue a
decision, cause a needed vote, or otherwise act as required” by the IRB’s rules. See IRB Rules
and Procedures (Applications) reprinted at United States v. IBT (IRB Rules), 803 F. Supp. 761,
768-69, 800-805 (S.D.N.Y. 1992).

50

Courts have upheld a wide variety of actions of the IBT court-appointed officers
and the IRB pursuant to the Consent Decree, including ordering and supervising union elections,
restrictions on union actions and other activities, and disciplining and/or removing over 600
union members and officers for violations of the Consent Decree.7
The enforcement phase of the Teamsters civil RICO case, which began in 1989, is
ongoing under the supervision of the United States District Court for the Southern District of
New York.
F.

LEADING COURT DECISIONS:
F. Supp Cases
1.

United States v. International Bhd. of Teamsters, 697 F. Supp. 710 (S.D.N.Y.
1988).

The union sought re-assignment of the civil RICO IBT case to a different judge
after Judge Edelstein had ruled that the civil case was related to a criminal RICO case involving
IBT officials.
The district court ruled that designation of the case was consistent with the local
rules and that the local rules were promulgated for internal management of the Court’s caseload.
The court further found that the Government had complied with the Local Rules by noting the
relationship between the cases and the decision to accept the case was for the court alone to
make, and that the Local Rules provided no substantive rights to the parties.
The union also filed a counter-claim charging that the conduct of the Government
leading up to the filing of this action violated the Fifth Amendment due process clause; and
sought expedited discovery, an evidentiary hearing, and a preliminary injunction against the
prosecution of the instant action before this court and further, that prosecution in this court would
create the appearance of impropriety.
The district court rejected the counter-claim, stating that the case cited by the
Union related to prosecutorial misconduct and was inapposite when the Local Rules were
followed and the judge accepted the case.

7

See, e.g., the following decisions that are all entitled United States v. International Bhd. of
Teamsters: 19 F.3d 816 (2d Cir. 1994); 18 F.3d 183 (2d Cir. 1994); 12 F.3d 360 (2d Cir. 1990);
998 F.2d 120 (2d Cir. 1990); 981 F.2d 1363 (2d Cir. 1992); 978 F.2d 68 (2d Cir. 1992); 941 F.2d
1292 (2d Cir. 1994); 931 F.2d 177 (2d Cir. 1991); 905 F.2d 610 (2d Cir. 1990); 899 F.2d 143 (2d
Cir. 1990); 842 F. Supp. 1550 (S.D.N.Y. 1994); 808 F. Supp. 279 (S.D.N.Y. 1992); 803 F. Supp.
761 (S.D.N.Y. 1992); 782 F. Supp. 243 (S.D.N.Y. 1992); 765 F. Supp. 1206 (S.D.N.Y. 1991);
764 F. Supp. 797 (S.D.N.Y. 1991); 761 F. Supp. 315 (S.D.N.Y. 1991); 728 F. Supp. 1032
(S.D.N.Y. 1990).
51

2.

United States v. International Bhd. of Teamsters, 708 F.Supp. 1388 (S.D.N.Y
1989).

Defendants moved to dismiss the civil RICO complaint filed by the Government.
The defendants alleged a violation of their First Amendment rights in that the complaint
intermingled protected activity with properly proscribed activity; pre-emption of RICO by federal
labor laws; and insufficiency of the RICO allegations. The defendants also filed a motion to join
indispensable parties (subordinate Teamster entities); and a motion to transfer venue based upon
convenience (bulk of documents were located in Washington, D.C.). The Government filed
motions for default judgment; summary judgment; to amend the complaint; and for an order
striking the jury demands of the defendants.
The district court rejected the defendants' motions, holding that the complaint
sought only to proscribe alleged violations of RICO, which are not protected by the First
Amendment. The court also held that the exclusivity provisions of federal labor laws (29 U.S.C.
§ 482) applied only to the union membership and not to the Government. The district court ruled
that Congress did not intend provisions of the NLRA, 29 U.S.C. § 157, to preclude application of
RICO to corrupt labor unions. The defendants’ motions to join indispensable parties and to
change venue were rejected by the court as unnecessary. The court further held that the
allegations were sufficient to support the RICO claim, and that Fed. R. Civ. P. 9(b) does not
apply to RICO claims not sounding in fraud. The district court further held that the Hobbs Act,
18 U.S.C. § 1951, covers deprivation of union members’ rights to union democracy protected by
the LMRDA. Regarding the RICO elements, the district court held that the complaint adequately
alleged a pattern of racketeering activity, the roles of the defendants, and the enterprise.
The district court also held that it was proper to name IBT’s General Executive
Board (GEB) as a nominal defendant “for the purpose of effectuating any possible relief,” and
that union had leave to renew its request to dismiss against the GEB if “it becomes clear that the
GEB is not a proper defendant because it is in fact not a person under 18 U.S.C. § 1961 (3).” Id.
at 1402.
Further, the court held that neither statute of limitations nor the doctrine of laches
applied to Government civil RICO actions to enforce public policy. The district court also held
that nationwide service of process satisfied due process requirements and that disgorgement was
an available remedy to the Government under civil RICO.
The district court rejected the Government’s motion for summary judgment
holding that although collateral estoppel barred some defendants from contesting racketeering
acts for which they were convicted, material issues of fact remained to be proved, particularly
the enterprise, and that racketeering acts were committed in furtherance of that enterprise; and
that these acts formed a pattern of racketeering. The court held that the Government was entitled
to amend the complaint to add examples of continuing violations. The court also held that
defendants were not entitled to a trial by jury since the RICO complaint sought equitable, not
legal, relief.
3.

United States v. International Bhd. of Teamsters, 723 F. Supp. 203 (S.D.N.Y.
1989), aff’d and modified, 931 F.2d 177 (2d. Cir. 1991).

The Independent Administrator (IA) submitted an application to the district court
seeking clarification of Paragraph 12(d) of the Consent Decree, regarding delineation of the
scope of the duties of the Elections Officer. The IBT filed a “Cross Application” asking the
district court to limit the Elections Officer to monitoring activities; i.e., supervising the
52

distribution of materials, overseeing the ballot process and certifying the election results.
Furthermore, the IBT refused to pay for activities by the Elections Officers which the IBT
considered ultra-vires.
The district court found that the Consent Decree gave the Elections Officer the
authority to intervene in, and coordinate, the entire electoral process, up to and including
promulgation of electoral rules and procedures for nomination, election, and certification of all
elections. Further, the court held that the IBT would create a $100,000 general operating account
for the purpose of making funds available to Elections Officer and three support staff, consultant
and public relations firm.
4.

United States v. International Bhd. of Teamsters, 725 F. Supp. 162 (S.D.N.Y.
1989), aff’d, 905 F.2d 610 (2d Cir. 1990).

The district court held that the provision of the IBT’s constitution that bars
disciplining elective officers for activities occurring prior to their current terms, “which were not
known generally” by the membership, did not preclude the Independent Administrator (IA) from
disciplining Friedman and Hughes for the acts on which they were convicted. The district court
held that Hughes was bound by the Consent Decree even though he was neither a signatory of the
Consent Decree nor a party to the original RICO suit because: (1) IBT defendants represented
Hughes’ interests; and (2) the purposes of the RICO suit, to eliminate union corruption, are in the
interest of the IBT membership, including Hughes.
The district court also ruled that under the Consent Decree, the actions of the
court-appointed officers are not bound by the statute of limitations, and that the defendants were
collaterally estopped from contesting the disciplinary charges since they were convicted of those
charges. The district court also denied Friedman’s and Hughes’ motion for a preliminary
injunction to prevent the IA from hearing the charges against them.
5.

United States v. International Bhd. of Teamsters, 726 F. Supp 943 (S.D.N.Y.
1989), aff’d and rev’d in part, 899 F.2d 143 (2d Cir. 1990).

Daniel Ligurotis, a defendant in the original IBT suit, informed a membership
meeting of Local 705, that he intended to file a lawsuit, in Chicago, to curb the power of the
Elections Officer stating “we’re not getting a fair shake in New York” and that if the case is
removed from Chicago by New York, “I’m going to drop the suit”.
The district court exercised its power under the All Writs Act, 28 U.S.C. § 1651,
requiring all participants in Chicago lawsuit to refrain from further action except to enter a
voluntary dismissal. The district court further held Ligurotis in contempt, on the ground that he
violated the Consent Decree by interfering with the work of the court-appointed officers. The
district court found that all necessary elements were proven by clear and convincing evidence.
The district court stated that the Consent Decree was clear and unambiguous, and vested the
Southern District of New York with “exclusive jurisdiction to decide any and all issues relating
to the IA’s actions or authority pursuant to this order.” 726 F. Supp, at 946. The Court added
that Ligurotis had signed the Decree, and that the contempt order was properly designed to urge
compliance with Court’s order.

53

6.

United States v. International Bhd. of Teamsters, 728 F. Supp. 924 (S.D.N.Y.
1989).

Friedman and Hughes, union officials, sought a stay of rulings by the Independent
Administrator that they had brought reproach upon the union by knowingly associating with LCN
members and by their convictions for embezzlement, while their appeal of the criminal
convictions were pending.
The district court denied the stay, holding that Friedman and Hughes had failed to
show the likelihood that they would succeed on the merits; failed to show irreparable injury
absent a stay; failed to show that the issuance of a stay would substantially injure other parties
interested in the proceedings; and, finally, failed to show where the public interest in granting a
stay lies.
7.

United States v. International Bhd. of Teamsters, 728 F. Supp. 1032 (S.D.N.Y.),
aff’d. 907 F.2d 277 (2d Cir. 1990).

The Government sought to have the district court enjoin all lawsuits arising under
the Consent Decree filed in any forum other than the Southern District of New York since the
Consent Decree vested exclusive jurisdiction in such matters in the Southern District of New
York. The district court, acting pursuant to the All Writs Act, 28 U.S.C. §1651, so enjoined all
subsequent litigation. More than 350 subordinate IBT entities opposed this injunction.
The district court found that the special circumstances of the litigation supported
the injunction and that it could enjoin subordinate entities, not party to the underlying action, and
that personal jurisdiction was not necessary because the IBT adequately represented interests of
subordinates entities such as locals.
8.

United States v. International Bhd. of Teamsters, In Re: Application VIII by the
Independent Administrator, 735 F. Supp. 502 (S.D.N.Y. 1990).

The IBT refused to publish the names of members facing disciplinary hearings in
the Teamsters’ monthly magazine as part of the Independent Administrator’s (IA) monthly
report. The IA sought to require the IBT to publish the monthly report without editorial changes,
unless pre-approved by the district court. The district court held that the IA was permitted to
publish the names of members facing disciplinary hearings unless the union could prove that the
material was inappropriate. The district court also ordered that all court orders published in the
magazine would be published without editorial changes.
9.

United States v. International Bhd. of Teamsters, In Re: Application IX by
Independent Administrator, 735 F. Supp 519 (S.D.N.Y. 1990).

Members of the union objected to the Independent Administrator’s interpretation
of a provisions of the Consent Decree which empowered the Investigations Officer (IO) to take
sworn statements in furtherance of his access to information about the IBT, arguing that they
were not bound by the Consent Decree and that the IO should be required to issue notices of
reasonable cause which detail the areas of inquiry.
The district court rejected the members’ objection that they were not bound by
the Consent Decree and held that the pertinent provision of the Consent Decree required no
notice to members prior to in person interviews and sworn statements. The district court refused
54

to imply such notice, accepting the IO’s comparison of such statements to the streamlined
procedures in arbitration.
10.

Cozza v. Lacey, 740 F. Supp. 285 (S.D.N.Y. 1990).

The district court denied the motion of Cozza, a member of the General Executive
Board of IBT and a signatory to the Consent Decree, for a preliminary injunction prohibiting,
inter alia, the Independent Administrator from hearing disciplinary charges against him, alleging
that he knowingly associated with organized crime members. The district court stated that at this
juncture any alleged harm to Cozza was speculative, and he has a right to review the IA’s
decisions; therefore he could not demonstrate the requisite irreparable harm.
11.

Joint Council 73 v. International Bhd. of Teamsters, 741 F. Supp. 491 (S.D.N.Y.
1990).

The district court held that the disciplinary provisions of a Consent Decree
between the Government and the parent union, the IBT, were binding on the entire union,
including subordinate entities, which were not parties to the underlying suit.
12.

United States v. International Bhd. of Teamsters, In Re: Application X by the
Independent Administrator, 742 F. Supp. 94 (S.D.N.Y. 1990), aff’d as modified,
931 F.2d 177 (2d Cir. 1991).

The Independent Administrator (IA) presented the district court with a final set of
election rules for review. The district court held that the rules were properly promulgated with
respect to Paragraph F. 12(1) of the Consent Decree. The International Brotherhood of
Teamsters (IBT) objected to the IA’s authority to promulgate the rules and specifically objected
to the rules which set the formula for the number of alternate delegates that each local must elect
as being contradictory to the IBT constitution. Citing that without this rule some locals would
be disenfranchised, the court upheld the action of the Independent Administrator.
The IBT further objected to the rule requiring each local to submit a local union
plan to the Elections Officer as beyond the scope of the Consent Decree. The district court found
such a rule to be within the authority of the Elections Officer to supervise the election. Further,
the IBT objected to the Elections Officer’s intention to conduct all phases of the election of any
local not submitting a plan. The district court found that the Elections Officer’s authority
extended to all phases of the election in order to present fraud or abuse of any kind.
The district court also upheld the Elections Officer’s promulgation of rules
ordering that accredited candidates for office could publish their campaign literature in union
magazine and accredited candidates for office were entitled to a limited release of membership
lists for their campaign purposes.
13.

United States v. International Bhd. of Teamsters, In Re: Application VII by the
Independent Administrator, 743 F. Supp. 155 (S.D.N.Y.), aff’d, 905 F. 2d 610 (2d
Cir. 1990).

Friedman and Hughes, IBT officials, sought a preliminary injunction against the
decision of the Independent Administrator (IA), finding that they had brought reproach on the
Union by associating with known organized crime figures and for conduct which formed the
basis for a criminal conviction of embezzlement.
55

The district court held that the standard of review for the determinations by the
Independent Administrator is abuse of discretion. Applying this standard, the court up held the
IA acted reasonably in his determination and in ruling that and that Friedman and Hughes’
affirmative defense that the criminal conduct was known to the general membership did not
shield them from the IA’s decision. The court further denied a stay of the imposition of the bar
from union activities pending the outcome of Friedman and Hughes’ appeal of their criminal
convictions, but allowed for the possibility of modification if the appellate court reversed their
convictions.
The district court further held that the phrase “bring reproach upon the union” was
not void for vagueness and did not require definition by the IBT’s GEB.
The district court further held that the remedies available to a charged official is to
petition the IA for a listing of particularized charges and, if no relief is afforded, then one may
appeal such convictions to the district court.
The district court further found that the IA properly applied the collateral estoppel
doctrine (see 725 F. Supp. at 167), finding that the instant civil suit alleged the same conduct on
which he had previously been convicted in a criminal case, and therefore the IA properly refused
to allow Friedman to introduce evidence to contest the crimes underlying his conviction. The
court noted that the IA did not deprive Friedman of the opportunity to raise whatever defenses he
could have raised in his criminal trial.
14.

United States v. International Bhd. of Teamsters, In Re: Application XIII by the
Independent Administrator, 745 F. Supp 189 (S.D.N.Y. 1990).

Independent Administrator (IA) sought review of his opinion that the
Investigations Officer had sustained his burden of demonstrating that there was just cause to find
that IBT officers Cirino Salerno and William Cutolo breached their duties under the IBT
constitution by associating with organized crime figures, and should be given lifetime
suspensions from the IBT.
The district court affirmed the opinion of the IA. Salerno did not contest the
findings of the IA, but argued that his subsequent resignation from the union mooted the
penalties and findings of the IA. The district court held that Salerno’s registration would not
prevent his subsequent return to the union at a later date and therefore the penalties and findings
were appropriate. Cutolo argued that the IA did not have jurisdiction over him and that the
evidence was insufficient against him. The district court dismissed these arguments as vacuous.
15.

United States v. International Bhd. of Teamsters, In Re: Application XII by the
Independent Administrator, 745 F. Supp. 908 (S.D.N.Y. 1990), aff’d. 941 F.2d
1292 (2d Cir. 1991).

This case involved the review of Independent Administrator’s (IA) decision on
disciplinary charges against Dominic Senese, Joseph Talerico, and James Cozzo, suspending
them for life from the IBT. Senese was banned for bringing reproach on the union by his
association with known LCN members; Talerico was banned for refusing to testify before a
grand jury; Cozzo was banned for being a member of the LCN.
The district court held that the IA had sustained his burden of establishing “just
cause” for finding the charges proved and resulting sanction of lifetime ban. The district court
56

also held that the lifetime ban did not violate the First Amendment because it served a
compelling interest in keeping the IBT free from the influence of organized crime.
The district court also held that the IA has jurisdiction over the parties because the
consent decree is binding on non-signatory members of the IBT.
Senese and Talerico also raised a due process claim, claiming they did not have
notice that association with LCN would subject them to discipline and, further, that it was a
violation of due process to step up disciplinary enforcement after a period of laxity. The district
court rejected this argument, holding that the IA was not a state actor and that therefore due
process is not implicated, and in any event there was no due process violation because the
Consent Decree did not establish new standards of conduct and; that it defies logic to think
association with LCN members would not bring reproach on the union. Id. at 913.
The district court further held that reliable hearsay is admissible in the disciplinary
hearing because the Consent Decree establishes the rules and procedures generally applicable to
labor relation arbitration hearings and at such arbitration hearings hearsay evidence, if reliable, is
admissible. Specifically, the district court upheld admission of hearsay information supplied to
FBI Agents, and deposition testimony, and physical surveillance. Further, the court upheld the
testimony of an FBI Agent as an expert on organized crime. Id. at 914-15.
The district court further held that because the Consent Decree set the standard of
admissibility as that in labor arbitration and because pleas of nolo contendere are admissible in
labor arbitration such pleas are therefore admissible in disciplinary hearings.
The court found the penalty of lifetime suspension from the IBT imposed by the
IA was not arbitrary and capricious, did not violate the LMRDA, and was well within the power
of the IA to impose.
16.

United States v. International Bhd. of Teamsters, 750 F. Supp. 129 (S.D.N.Y.
1990).

The district court held that a union member did not establish irreparable harm and
therefore was not entitled to a preliminary injunction to enjoin a union’s delegate election due to
the alleged fact that a special meeting ordered by the IA was beyond the scope of election rules.
17.

United States v. International Bhd. of Teamsters, In Re: Application XVI of
Independent Administrator, 753 F.Supp. 1181 (S.D.N.Y. 1990), aff’d, 941 F.2d
1292 (2d Cir. 1991).

Dominic Senese, ex-member and officer of IBT, argued that supplemental
decisions of Independent Administrator (IA), barring post-expulsion payments into benefit plans
on Senese’s behalf, was arbitrary and capricious and beyond the authority of the Consent Decree.
The district court found that the IA’s actions were subject to a review using the
arbitrary and capricious standard; that the IA had the authority to bar future payments into the
benefit plans; and it was not arbitrary and capricious for the IA to permit payments out of plans
where the payments are based upon a constitution made prior to expulsion.

57

18.

United States v. International Bhd. of Teamsters, In Re: Application XIV of the
Independent Administration, 754 F. Supp. 333 (S.D.N.Y. 1990).

Mario Salvatore, Secretary Treasurer of IBT Local 191, appealed the Independent
Administrator’s (IA) decision regarding a disciplinary hearing finding that Salvatore brought
reproach on the Local by embezzling monies from the Health and Insurance Plan and that he
violated his membership oath by his embezzlement. The IA dismissed the first charge as
unproved, but found as to the second charge, that the Investigations Officer had shown just cause
that the charge had been proved.
Salvatore argued that the decision of the IA was arbitrary and capricious because:
(1) the wrong standard was applied; (2) the evidence failed to establish the charge; (3) charge II
was barred by collateral estoppel; (4) the same charge was barred because the membership knew
of the allegations; (5) the penalty was unduly harsh; and (6) Salvatore was not bound by the
Consent Decree.
The district court held that the evidence was sufficient to show fraudulent intent to
deprive the union of funds; that circumstantial evidence is appropriate in internal union
disciplinary hearings; that it is proper to draw negative inferences from union officers’ failure to
act upon an affirmative duty; and that suspension from union office and membership was an
appropriate sanction. The district court also found that charge II was not barred by the doctrines
of res judicata and collateral estoppel because the General President of the IBT conducted a
trusteeship hearing involving Local 191. The court reasoned that the defenses of collateral
estoppel and res judicata unavailable to Salvatore since the IA was not a party to the trusteeship
proceeding nor in privity with the General President.
19.

United States v. International Bhd. of Teamsters, In Re: Application XV of
Independent Administrator, 761 F. Supp. 315 (S.D.N.Y. 1991).

The IBT challenged the Independent Administrator’s (IA) veto of Jack B. Yager’s
appointment to the IBT’s General Executive Board. The IA’s veto was based upon his
determination that such an appointment would further an act of racketeering activity and
contribute, directly or indirectly, to the association of the union with LCN.
The district court found the decision of IA’s to be fully supported by the evidence
that Yeager aided and abetted extortion of union members’ LMRDA rights, and that the standard
of review is whether the IA’s decision was reasonable and not arbitrary or capricious.
20.

United States v. International Bhd. of Teamsters, 764 F. Supp. 787 (S.D.N.Y.
1991), rev’d, 940 F.2d 648 (2d Cir. 1991) (Table).

The voluntary IBT Consent Decree provided for changes to the electoral and
disciplinary provisions of the IBT Constitution. A three-step election process was established by
the Consent Decree. This action involved consideration of paragraph K.16 of the Consent
Decree, two motions to intervene, and the legal status of the vote of IBT delegates at the
upcoming IBT convention.
Paragraph K.16 allowed the district court to “entertain any future applications”
that included interpretations of the Consent Decree. The district court held that K.16 permitted
the court to consider prospective matters which could threaten the intent of the decree.

58

The district court denied the motions to intervene by two groups of IBT members
because neither group had demonstrated that its interest in the instant matter is not adequately
represented by the existing parties. The Government wanted a determination of IBT’s obligation
if, at the convention the delegates voted against the Consent Decree’s provisions for direct rank
and file election of International Officers. The district court found that the changes to IBT’s
Constitution were valid, and the IBT cannot undercut it, and membership could not veto IBT’s
settlement at least with regard to the provision for elections. The district court also held that the
Consent Decree was binding on the membership without the approval at the convention. The
district court also enjoined IBT from taking any action attempting to change the function of the
nominating convention unless such action was expressly authorized in the Consent Decree.
21.

United States v. International Bhd. of Teamsters, In Re: Application XXIII of the
Independent Administrator, 764 F. Supp. 797 (S.D.N.Y. 1991), aff’d 956 F.2d
1161 (2d Cir. 1992) (Table).

Theodore Cozza, ninth Vice President of the IBT’s GEB, appealed Independent
Administrator’s (IA) disciplinary findings that he brought reproach upon the union by knowing
association with LCN members. Cozza alleged that he was denied pretrial discovery; the charge
was unspecific; the charge violates his First and Fifth Amendment rights; and the membership
generally knew of his association with those individuals.
The district court upheld the findings of the IA, stating that the Consent Decree
did not provide a right to pre-hearing discovery; that the charge was sufficiently specific; there
was no violation of First Amendment rights since the union may sanction itself in order to
eliminate corruption. The district court also ruled that there is no state action, which is necessary
to the constitutional argument, because “Cozza is being disciplined by the [IA] as a stand in for
the IBT General President.” (764 F. Supp. at 801). The court also ruled that there was no
violation of due process rights since the IA could, from the length and nature of defendant’s
association with LCN members, properly assume that the defendant knew them to be LCN
members, and he was not being punished for past conduct.
The district court further held that the IA is not limited by any statute of
limitation; contrary to Cozza’s application of a two-year statute of limitation based on
Pennsylvania’s law.
22.

United States v. International Bhd. of Teamsters, In Re: Application XX by the
Teamsters Administration, 765 F. Supp. 1206 (S.D.N.Y. 1991).

A printing contract was awarded to the printing firm of the IBT’s General
President’s son-in-law. The Independent Administrator (IA) vetoed further expenditures to that
printing firm. The IBT General President attempted to intervene in the IA’s action.
The district court held that the IBT General President could not intervene because
his desire to rebut a factual finding that damaged his personal reputation did not implicate a
federal statute nor had he demonstrated any property interest in the action.
The district court further held that the union membership’s right to self
governance was extortable property under the Hobbs Act, and that the extortion of these rights
may constitute a racketeering act under RICO. Additionally, the court held that the aiding and
abetting the extortion of the members’ rights under LMRDA can constitute an act of
racketeering. The IA acted properly to bar further expenditures, which would constitute
59

racketeering activity. The district court stated that the fiduciary duty under LMRDA is
heightened for union officers, particularly the President of the nation’s largest labor union.
23.

United States v. International Bhd. of Teamsters, In Re: Application XXI by the
Independent Administrator, 775 F. Supp 90 (S.D.N.Y. 1991), aff’d in part
rev’d in part, 948 F.2d 1278 (2d Cir. 1991) (Table).

Union official, George Vitale, appealed the Independent Administrator’s (IA)
determination that five disciplinary charges had been proved against Vitale. Vitale contended
that the IA failed to provide a full, fair and impartial hearing; that his prior felony convictions do
not bring reproach on the union; that there was no evidence in the record that Vitale violated
§ 16(c) of Local 283’s bylaws; that there is no evidence to support a finding of embezzlement;
and that Vitale did not violate his fiduciary duty by filing incorrect annual reports.
The district court held that the IA provided a full, fair and impartial hearing; that
the prior felonies involving embezzlement do bring reproach upon the union; and that the IA’s
actions do not amount to double jeopardy or reveal any evidence of bias. The district court
further held that the record revealed evidence of Vitale’s fraudulent intent to embezzle from the
union in that he failed to disclose to either the local or the International that both were paying his
FICA tax and in ordering a new Lincoln Town car before leaving office.
Vitale raised the affirmative defense that what is generally known by union
member about an individual before they elect that individual to office cannot be later held against
that individual. The district court held that this affirmative defense is available only if the
membership has “conclusive knowledge” and the individual asserting the defense must
acknowledge guilt. The district court found that the IA was correct in finding that Vitale did not
provide evidence supporting conclusive knowledge.
Vitale also argued that his convictions were too remote in time to be used against
him in his disciplinary hearing, and relied upon Federal Rule of Evidence 609(b) which bars the
introduction of convictions more than 10 years old for the purpose of attacking the credibility of
a defendant unless the court determines it should be entered in the interest of justice and only if it
is of probative value. Further, Vitale argued that the IA is barred, by the doctrine of laches, from
bringing charges for conduct the union has been aware of and never acted on.
The district court rejected these arguments, stating that the Consent Decree
removed any statute of limitation issues specifically to allow the IA to rely on past criminal acts
in bringing disciplinary charges. The district court held that to allow the defendant to succeed on
the doctrine of laches defense would effectively eviscerate the disciplinary provisions of the
Consent Decree by shielding corrupt officials from discipline.
24.

United States v. International Bhd. of Teamsters, In Re: Application XXXVII of
the 2nd Administration, 777 F. Supp. 1123 (S.D.N.Y. 1991).

Union members McNeil and Morris allegedly participated in a scheme to defraud
IBT Local 707 of money and property by granting unauthorized raises to themselves and other
members of the Local’s Executive Board, and the two had allegedly defrauded the Local of
in excess of $60,000 by giving money and automobiles to departing officials.
The Independent Administrator (IA) found that the charges against McNeil and
Morris were proved and suspended them from IBT membership for 5 years on the first charge
and a concurrent 5 year suspension for the second charge. The IA also prohibited: (1) anyone
60

from paying into the health and pension funds on behalf of Morris or McNeil; (2) the payment of
legal fees for McNeil and Morris by the Locals; and (3) McNeil and Morris from receiving
retirement gifts or automobiles. Morris and McNeil appealed the decision.
The district court found that the officers were bound by the Consent Decree and
that the evidence fully supported the decision of the IA. The district court also rejected the claim
that the disciplinary charges violated the Double Jeopardy Clause of the Constitution, stating that
the Court of Appeals previously held that the actions of the IA does not constitute “state action.”
25.

United States v. International Bhd. of Teamsters, In Re: Application L of
Independent Administrator, 777 F. Supp. 1127 (S.D.N.Y.), aff’d, 956 F.2d 1161
(2d Cir. 1991) (Table).

A Union officer, Thomas Cozza, petitioned the district court to set aside the
decision of the Independent Administrator (IA) permanently banning him from IBT involvement
because of his association with known members of organized crime.
In finding Cozza to have knowingly associated with members of organized crime,
the IA relied upon the statements of an FBI agent which incorporated government surveillance,
reports of state commissions, court records of criminal convictions, wire intercepts, press reports,
surveillance and videotapes of Cozza in present of LCN members, and the testimony of Cozza’s
son and members of International Brotherhood of Teamsters Local 211. The district court upheld
the IA’s decision, rejecting Cozza’s proffered newly discovered evidence.
26.

United States v. International Bhd. of Teamsters, In Re: Application XXXVIII of
the Independent Administrator 777 F. Supp 1130 (S.D.N.Y. 1991), aff’d, 964 F.2d
1308 (2d Cir. 1992).

The Independent Administrator (IA), relying upon evidence which included
hearsay statements, found that a union member knowingly associated with Philadelphia LCN
Boss Nicodemo Scarfo, and permanently barred him from the IBT and its activities.
The district court refuse to upset the IA’s assessment of the union member’s
credibility vis a vis the credibility of the FBI Agent’s signed statement, which was corroborated
by criminal associates of Scarfo. The district court found that hearsay evidence, if reliable, was
permissible in such a proceeding, especially where the charge against the member specifically
identified the person connected to organized crime and the time frame of the association with the
organized crime figure.
27.

United States v. International Bhd. of Teamsters, In Re: Application XLV of the
Independent Administrator, 777 F. Supp. 1133 (S.D.N.Y. 1991), aff’d, 970 F.2d
1132 (2d Cir. 1992).

International Brotherhood of Teamsters member and Secretary - Treasurer of
Local 473, Carmen E. Parise, challenged the Independent Administrator’s (IA) decision
regarding disciplinary charges against him for bringing reproach upon the IBT and violating his
membership oath by threatening a union member with economic and physical harm and by
refusing to answer, under oath, questions regarding corruption in the local.
The district court found the IA’s actions to be fully supported by the evidence.
Parise had pled guilty to the criminal charge and the court found that he was collaterally estopped
from contesting that charge in the disciplinary hearing. The district court rejected Parise’s
61

argument that the second charge, for refusing to answer questions under oath, violated his Fifth
Amendment rights, stating that the IA’s decision to discipline Parise does not constitute state
action.
28.

United States v. International Bhd. of Teamsters, In Re: Application LX of the
Independent Administrator, 782 F. Supp. 238 (S.D.N.Y. 1992).

The Independent Administrator (IA) permanently barred several former IBT
officers from the IBT for knowingly associating with organized crime figures.
The district court found that the evidence was sufficient to support the IA’s
finding that the former officers knowingly associated with, and tolerated the presence of a
member of organized crime, and further found that the IA’s reliance upon hearsay statements,
including those made by FBI Agents, was appropriate in a disciplinary hearing, especially when
the FBI Agent was available for cross-examination.
29.

United States v. International Bhd. of Teamsters, In Re: Application LXVI of the
Independent Administrator, 782 F. Supp. 243 (S.D.N.Y. 1992).

The ballots for election of IBT Local 707 officers were mailed to union members
and contained the names of candidates who were suspended, due to their knowing association
with organized crime members. The IA ordered a rerun election because of the inclusion of the
suspended members names on the original ballots. After the rerun election, the suspended
incumbents refused to relinquish control of Local 707 to the newly elected officers while the
appeal of the IA’s action was pending.
The district court held that: (1) the incumbent officers must relinquish control
regardless of pending protest; (2) the IA had the power to order the rerun election due to the
Consent Decree; and (3) this power was not affected by any provision of Labor Management
Reporting and Disclosure Act of 1959, 29 USC § 482(b), establishing exclusive procedures for
challenging elections.
30.

United States. v. International Bhd. of Teamsters, In Re: Application LVIII of
Independent Administrator, 782 F. Supp. 256 (S.D.N.Y. 1992).

The court held that IA’s disciplinary sanction was supported by evidence;
specifically corroboration by two union employees, photographs of the beaten member, and
admission by Cherilla that his version of the incident did not correspond with member’s injury.
The court further held that ex parte depositions and hearsay evidence were sufficient to support
the charge.
31.

United States v. International Bhd. of Teamsters, In Re: Application of LXIV of
the Independent Administrator, 787 F. Supp. 345 (S.D.N.Y. 1992), aff’d and
vacated in part, 978 F.2d 68 (2d Cir. 1992).

The Independent Administrator (IA) found that charges against three officers of
Local 100, involving assault and embezzlement, were proved by Investigations Officer. The
district court held that the action taken by the IA was not state action for due process purposes,
and under a deferential standard of review, reliable hearsay may be considered in proving the
charges in a disciplinary hearing. The district court also ruled that acquittal on criminal charges
did not preclude disciplinary action for the same conduct premised upon a lesser standard of
proof.
62

32.

United States v. International Bhd. of Teamsters, In Re: Application LXVII of the
Independent Administrator, 791 F. Supp 421 (S.D.N.Y 1992).

John M. Trivizeno, President and Business Representative of IBT Local 398,
appealed a decision of the Independent Administrator (IA) to permanently bar him from union
activities for knowingly associating with LCN members. Trivizeno argued that he was denied a
fair and impartial hearing in violation of due process; that the decision of IA was arbitrary and
capricious; and that the penalty imposed was too severe.
The district court held that the action of IA did not involve state action and
therefore no constitutional issues arose. Further, the court held that the IA’s decision was based
upon sufficient evidence and that the penalty, permanent banishment from union, was reasonable
in light of the purpose of the Consent Decree to rid the IBT of the pervasive, and destructive
influence of organized crime.
33.

United States v. International Bhd. of Teamsters, In Re: Application LXXII of
Independent Administrator, 792 F. Supp. 1346 (S.D.N.Y.), aff’d, 981 F.2d
1362 (2d Cir. 1992).

Robert Samsone, President of IBT Local Union 682, appealed the disciplinary
decision of Independent Administrator that he brought reproach upon the union, and violated his
membership oath, by not fully investigating an allegation of Vice President Parrino’s ties to the
LCN.
The district court found that the evidence established a duty, incumbent upon all
officers of the union, to actively campaign against the influence of organized crime and that
failure to employ all necessary means to verify or rebuke allegations is a gross abdication of that
responsibility. The district court held that permanent debarment from union offices was not too
severe a remedy.
34.

United States v. International Bhd. of Teamsters, In Re: Application LXXIII of
the Independent Administrator, 803 F. Supp. 740 (S.D.N.Y. 1992).

The President Patrick Crapanzano and Vice President Louis Lanza of an IBT
Local appealed their permanent bar from membership in the IBT imposed by Independent
Administrator (IA) for their failure to fully investigate allegations that the local president’s father
and brother had LCN ties.
The district court held that the finding of the IA was supported by the evidence,
was not arbitrary and capricious and was therefore entitled to great deference.
35.

United States v. International Bhd. of Teamsters, 803 F. Supp. 758 (S.D.N.Y.
1992), aff’d, 990 F.2d 623 (2d Cir. 1993) (Table).

Consolidated, an employer, sought to have the district court impose the decision
of the IA in order to preclude a suit by employee Walker challenging his discharge. Walker
claimed that Consolidated fired him in a retaliation for political activity; that he was not properly
represented during his grievance; and that the board which decided against him acted in
retaliation of his political views.
The district court held that the employer was erroneously attempting to view
Walker’s filing of a lawsuit for wrongful discharge as an attempt to “challenge the decision of the
63

Independent Administrator.” The district court rejected this contention, finding that Walker did
not file his action seeking protection of, or relief from, the Election Rules promulgated by the IA.
Walker filed his suit under section 301(a) of the LMRA, 29 U.S.C. §185(a), which is separate
and distinct from the Election Rules. Therefore, the district court rejected the application of the
employer.
36.

United States v. International Bhd. of Teamsters, 803 F. Supp. 761 (S.D.N.Y.
1992), aff’d and rev’d in part, 998 F.2d 1101 (2d Cir. 1993).

The Government sought an order approving certain proposed rules and procedures
promulgated by the Independent Review Board (IRB) in order to govern its operation, which
rules were an exhibit to the district court’s opinion. The Government contended that the
proposed rules were necessary for effective and efficient operation and to implement the express
terms of the Consent Decree, and that the proposed rules were drawn from the terms of the
Consent Decree and the IBT Constitution, as amended.
The IBT opposed the proposed rules, arguing that the Consent Decree authorized
the IRB, not the Government, to promulgate rules for the IRB’s operation; that the adoption of
any rule for IRB operation, regardless of its content, was an impermissible alteration of the
parties’ agreement and was inconsistent with the purpose and structure of the Consent Decree.
The IBT further argued that the Government had waived its rights to promulgate
proposed rules when, in the process of incorporating the Consent Decree into the IBT
Constitution, it failed to raise these issues; that the adoption of rules for IRB operation violated
federal labor policy favoring Government non-intervention in union affairs; that the democratic
election of a new IBT Administration dedicated to eradicating corruption obviated the need for
the Government’s proposed rules; and, finally, that the proposed rules imposed excessive
monetary costs on the IBT.
Several of the proposed rules are based on the premise that an individual IRB
member may take action without the approval of a majority of the IRB. The IBT objected to
these rules, arguing that the Consent Decree required any decision of the IRB to be made by
majority vote. The district court pointed out that the IBT was confusing “action” with a
“decision” as in a disciplinary matter.
Other rules granted the IRB broad investigatory power including taking
depositions under oath, auditing or examining books of any IBT affiliated entity, receiving notice
of and having the right to attend all meetings of any IBT affiliated entity, and establishing a tollfree telephone service to receive reports of corruption.
Dismissing the IBT’s argument that the parties did not intend to grant the IRB
such power, the district court noted that the IBT Constitution does not enumerate the
investigative powers of the General President and General Secretary - Treasurer. The court
further stated that the Consent Decree expressly and unambiguously provided that the IRB shall
have the investigatory and disciplinary authority of the General President and General Secretary Treasurer.
Section K of the proposed rules allows the IRB to require action on the part of
“IBT Entities,” as well as seeking a court order, to implement its decisions. The IBT objected
stating that only the GEB can be required to implement IRB decisions. The district court stated
that the Consent Decree requires the GEB to implement its decisions and it would be absurd to
suggest that an IBT affiliate, while bound by the decision and required to take all action
64

necessary to implement an IRB recommendation, is suddenly absolved of the responsibility to
take any action.
The district court also rejected the IBT’s objection to rules which allowed the IRB
to enforce its decisions through the district court. The court ruled that, although not explicitly set
forth in the Consent Decree, the Decree grants the IRB the authority to take whatever steps
necessary to ensure implementation of its decisions.
The IBT further objected to a rule providing the IRB access to, and notification of
any disciplinary or trusteeship decisions of the GEB, the General President or the IBT Ethical
Practices Committee, arguing that the Consent Decree contemplated only review of such action
taken by the GEB. The district court found this to be an overly restrictive interpretation of the
language of the Consent Decree, ignoring the IBT’s disciplinary review structure and threatening
effective implementation of the Consent Decree.
The district court also rejected the IBT’s opposition to a rule permitting the
publication of IRB materials in “The New Teamster” magazine premised upon the Consent
Decree’s silence regarding the ability of the IRB to communicate with rank and file members.
The court stated that the express goals of the Consent Decree require an informed membership.
The district court also found consistent with the Consent Decree an interpretation
of the Consent Decree which permitted one member of the IRB to conduct a hearing and issue a
written decision if the other two members of the IRB consent and, in the event of a deadlock, the
matter will be referred to the district court for final disposition.
The district court also rejected the IBT’s argument against permitting individual
members of the IRB to hire personal staff at IBT expense; against indemnification of the IRB by
IBT; against the ability of the IRB to seek instruction, direction or order from the Court; against
the compensation of IRB members and staff by the IBT.
The district court ruled, generally, with regard to these proposed rules that the
absence of rules would threaten the IRB’s ability to fulfill its role under the terms of the Consent
Decree and that the promulgation of such rules is consistent with the principles and policies upon
which the Consent Decree is premised such as the alleviation of corrupt influences in the union
and perpetual vigilance against the incursion of such corruption. Further, the district court
rejected the IBT’s arguments that the Government had waived its right to bring this application
when it failed to raise these issues at the IBT convention as revealed by parol evidence including
discussions of how to incorporate the provisions of the Consent Decree into the IBT
Constitution. The district ourt also ruled that federal labor policy generally favored the
promulgation of such rules especially since the IRB is not a government entity, but is an
independent body whose existence, function, and composition are creatures of the parties’
agreement.
Finally, the district court held that the current IBT Administration’s stance
towards reform did not obviate the propriety of the proposed rules and noted that the current
administrator’s performance was questionable especially since it had argued against and
attempted to block the institution of virtually every remedial process intended to implement the
Consent Decree.

65

37.

United States v. International Bhd. of Teamsters, 803 F. Supp. 806 (S.D.N.Y.
1992), aff’d, 12 F.3d 360 (2d Cir. 1993).

Two members of the Independent Review Board (IRB) reached an impasse in
selecting the third member of the Board. In an attempt to break the impasse, former Federal
Judge Frederick Lacey, IRB member, nominated William Webster. The other member of the
Board, Harold Burke, former Special Assistant to IBT President Carey, and the IBT objected to
the nomination. This objection was premised upon the independent role of the IRB and that the
neutral party of the IRB should be a person with knowledge of, and experience with, the work of
labor unions, in addition to having a background in investigation and law enforcement. William
H. Webster had served as a U.S. Attorney, a federal judge on both the District Court and the
Court of Appeals, and as directors of the FBI and CIA.
The district court ruled that the IRB is both investigative and adjudicative in its
authority and would serve as a perpetual agent of reform. Therefore, the district court ruled that
law enforcement, investigative and judicial experience qualifies a candidate for service on IRB.
The district court found William Webster uniquely qualified.
38.

United States v. International Bhd. of Teamsters, In Re: Application I of the
Independent Review Board, 808 F. Supp. 271 (S.D.N.Y. 1992).

The IBT Consent Decree provided for an Independent Review Board (IRB)
consisting of three members, one of whom was former federal Judge Frederick Lacey. Judge
Lacey was subsequently appointed Special Prosecutor and charged with investigating the conduct
of certain government agencies, including the CIA and DOJ, regarding the Banca Nazionale del
Lavoro (BNL) matter. Judge Lacey sought the district court’s clarification as to whether this
appointment would conflict with his role as a member of the IRB.
The specific rule in question was Section F(3) which provided that “... no member
of the IRB ... shall ... hold any position with the government ....” The issue was whether Judge
Lacey’s role as Special Prosecutor was a “position with the government” as contemplated by the
Section F (3).
The district court held that Judge Lacy did not hold a “position with the
government” as Special Prosecutor. Rather, Judge Lacey’s position as Special Prosecutor was
one of independence from the Government.
39.

United States v. International Bhd. of Teamsters, In Re: Application XC of the
Independent Administrator, 808 F. Supp. 276 (S.D.N.Y 1992).

Former officers of an IBT Local, Buckley and Morris, had been banned from the
IBT by the Independent Administrator (IA) following disciplinary charges arising out of their
knowing association with LCN members. Buckley and Morris sought reinstatement with their
employers. The IA requested an order from the district court stating that the Local may remove
Morris and Buckley from a seniority list in light of their banishment and Morris and Buckley may
be discharged from employment if employers find them to be objectionable to co-workers.
The district court ruled that the NLRA’s prohibition against discrimination against
non-union employees did not apply to the diminution of former members seniority rights when
the diminution is in response to misconduct, as that, it would not be discriminatory to fire nonunion member employees for legitimate reasons.
66

40.

United States v. International Bhd. of Teamsters, In Re: Application XCI of the
Independent Administrator, 808 F. Supp. 279 (S.D.N.Y. 1992), aff’d, 998 F.2d
120 (2d Cir. 1993).

The Independent Administrator (IA) permanently banished Mr. Adelstein from
IBT membership because of his knowing association with LCN figures. On review, the district
court held that the IA’s decision was not arbitrary and capricious because of its reliance upon
hearsay evidence, and that the Consent Decree bound non-party IBT members.
41.

United States v. International Bhd. of Teamsters, 817 F. Supp. 337 (S.D.N.Y.
1993).

The district court stated that the findings of the Independent Administrator (IA)
“are entitled to great deference”, and must be upheld unless they are “arbitrary or capricious.”
817 F. Supp. at 341. The district court upheld the IA’s findings that several IBT officers
breached their fiduciary duties to union members by: (1) participating in an associated member
program, which was designed to enrich the officers rather than to benefit the union; (2)
involvement in payment of loans in excess of the statutory limit of $2000 from a local union; and
(3) embezzlement of union funds. However, the district court remanded the matter to reconsider
its imposition of uniform sanctions, regardless of the degree of culpability.
After remand, the district court upheld the IA’s reasoning and imposition of
uniform sanctions. See United States v. International Bhd. of Teamsters, 824 F. Supp. 406
(S.D.N.Y. 1993).
42.

United States v. International Bhd. of Teamsters, 829 F. Supp. 602 (S.D.N.Y.
1993).

On remand from the Second Circuit Court of Appeals (998 F.2d 1101), the district
court approved the Rules and Procedures for Operation of the Independent Review Board as they
were modified in accordance with the Second Circuit’s decision.
43.

United States v. International Bhd. of Teamsters, In Re: Application CXVII of the
Independent Administrator, 838 F. Supp. 800 (S.D.N.Y. 1993), aff’d, 33 F.3d 50
(2d Cir. 1994) (Table).

In a prior disciplinary action, Harold Friedman, President of IBT Local 507 and
President of Bakers Local 19, was charged by the Investigations Officer (IO) with embezzlement,
conspiring to and engaging in racketeering activity, and filing a false LM-2, all in connection
with Bakers Local 507. The Independent Administrator (IA) imposed a one-year suspension,
which was affirmed by the district court. See 735 F. Supp. 506 (S.D.N.Y.), aff’d, 905 F.2d 610
(2d Cir. 1990).
The same conduct resulted in Friedman’s criminal conviction, and consequently
he was barred from any labor union activity for a period of three years. However, the IA
determined that Friedman continued to play a significant role in the operations of Local 507, held
himself out as a figure of continuing authority, and attended a contract ratification meeting to
influence the union’s vote after the suspension. IBT agents and officers were aware of both the
suspension and the activities, yet were found by the IA to have failed to take steps to prevent the
violation and had, in some cases, assisted in the violation.

67

The district court affirmed the action of the IA in its entirety, rejecting a First
Amendment claim by the respondents, and upheld the sanctions imposed by the IA. 838 F. Supp.
at 811-12. First, the district court held that the action of the IA did not constitute state action,
hence, the First Amendment was not applicable. Alternatively, even if the First Amendment
applied, the district court held that the action of the Independent Administrator did not violate
Friedman’s First Amendment rights since he “was not free to speak or associate in a manner that
violated his one-year suspension and his statutory debarrment.”
The district court also held that the Friedman actions were not protected under 29
U.S.C. § 411 and also violated 29 U.S.C. § 504. Id. at 812.
Friedman was permanently barred from any IBT affiliated union positions,
including membership, and prohibited from receiving any compensation therefrom. Officers and
agents of the union were held to be in violation of the IBT Constitution.
44.

United States v. International Bhd. of Teamsters, In re Application II of the
Independent Review Board, 842 F. Supp. 1550 (S.D.N.Y. 1994).

Under the terms of the Consent Decree, when the Independent Review Board
(IRB) perceives the existence of impermissible conduct, it has a duty to recommend the filing of
disciplinary charges against those allegedly engaged in such conduct. An individual alleged to
have engaged in wrongdoing may enter into a compromise agreement with an IBT local affiliate.
When such an agreement is entered into, it is submitted to the IRB for approval.
In the instant action, the district court approved the IRB’s unopposed application
to submit by application all compromise agreements to the district court for review and approval
and for the entry of a consent decree. The district court found that such a procedure is entirely
consistent with the original Consent Decree, that it has the effect of applying sanctions for the
enforcement of the decree which will serve to assure compliance with the compromise
agreement.
F.2d Cases
1.

United States v. International Bhd. of Teamsters, Appeal of Daniel Ligurotis, 899
F. 2d 143 (2d Cir. 1990), aff’d and rev’d in part, 726 F. Supp. 943.

The Government filed a motion to hold a union officer in contempt for violating
the March 14, 1989, Consent Decree, which precluded interference with court-appointed officers
conducting union affairs. Daniel Ligurotis was a member of the IBT’s General Executive Board
and principal officer of Local 705 in Chicago. Ligurotis told IBT President McCarthy that he
would not comply with the Consent Decree and that nobody could tell him how to run his local.
On November 17, 1989, Ligurotis and the respective officers of five other IBT Locals filed a
lawsuit in the Northern District of Illinois contending that the Consent Order infringed on the
rights of local unions in a proceeding to which they were not parties and thereby violated due
process and the federal labor laws. The Government argued that by suing the Elections Officer,
Ligurotis was violating the provision of the Consent Order permanently enjoining him from
obstructing or otherwise interfering with work of the court-appointed officers. The Government
also pointed out that the Consent Order provided for exclusive jurisdiction in U.S. District Court
for the Southern District of New York to decide “all issues relating to the Administrator’s actions
or authority.” Following a hearing, the Southern District of New York Court entered an order
finding Ligurotis in civil contempt for filing and litigating the Chicago suit. (726 F. Supp. 943).
68

The district court ordered Ligurotis to pay fees and expenses and to withdraw the Chicago action
with prejudice within two days of the order or pay a fine for every day thereafter.
Ligurotis appealed and the Second Circuit held that Ligurotis, as a union officer,
violated the Consent Order by being named as a plaintiff in a law suit which requested that the
court-appointed officer be prevented from supervising local union elections. The Second Circuit
also ruled that the District Court abused its discretion by holding Ligurotis “in contempt until the
Chicago lawsuit is withdrawn with prejudice [since it] either could cause the locals, non-parties
to the contemp order, to yield to its conditions, or alternatively could cause Ligurotis to act
beyond his authority.” 899 F.2d at 149.
2.

United States v. International Bhd. of Teamsters, 905 F.2d 610 (2d Cir. 1990),
aff’g, 725 F. Supp. 162 and 743 F. Supp. 155.

This case involved an appeal of the district court’s rulings (November 2, 1989
and March 13, 1990) upholding the power of the court-appointed administrator, pursuant to the
Consent Decree, to hold disciplinary proceedings against Friedman and Hughes and impose a one
year suspension from elected office.
Hughes and Friedman were suspended from office for one year following criminal
convictions on RICO charges in federal district court. Friedman, a named defendant in the IBT
RICO case in Southern District of New York, was a signatory to the Consent Decree. Hughes
was, until his suspension by the court-appointed administrator, Recording Secretary of Local 507
in Cleveland.
The Second Circuit held: (1) that it had jurisdiction to hear the appeal despite the
Consent Decree provision vesting the district court with exclusive jurisdiction to decide any and
all issues relating to the Independent Administrator’s actions or authority under the Consent
Decree on the ground that the union’s alleged waiver of its right to appeal was not clear and
unmistakable; (2) the standard of review is one of “great deference” to the Administrator’s ruling
under the same standards of review applicable to review of final agency action under the
Administrative Procedure Act; (3) a resolution, which silently repealed sections of the IBT
Constitution, thereby barring the union charges against Friedman and Hughes, was properly
within the Administrator’s responsibilities to review and interpret as not binding upon him; (4)
the Administrator was not collaterally estopped by the criminal proceeding, from enforcing a
suspension pursuant to a disciplinary proceeding; and (5) Hughes, as a non-party to the Consent
Decree, was “bound by the terms of the disciplinary mechanism set in place by the Consent
Decree . . . because the investigatory and disciplinary powers of the court-appointed officers are
proper delegations of the powers of the IBT General President and the GEB within the scope of
the IBT Constitution that binds all members of the IBT, and because the IBT Constitution, in
Article XXVI, Section 2, contemplates amendment by the GEB, under the circumstances of this
case, as a result of judicial direction.” Id. at 622.
3.

United States v. International Bhd. of Teamsters, Appeal of Highway and Local
Motor Freight Drivers, Dockman and Helpers, Local 707, 907 F.2d 277 (2d Cir.
1990), aff’g, 728 F. Supp. 1032.

After entry of the Consent Decree, various members and local affiliates of the IBT
filed lawsuits in districts other than the Southern District of New York, which raised various
issues relating to the IBT Consent Decree. The United States District Court for the Southern
District of New York issued a temporary restraining order enjoining all members and affiliates of
the IBT from “filing or taking any legal action that challenges, impedes, seeks review of, relief
69

from, or seeks to prevent or delay any act of [the court-appointed officers] in any court or forum
in any jurisdiction except the rendering court. The Second Circuit held that the district court had
authority under the All Writs Act to enjoin all members and affiliates of the IBT from litigating
any issue relating to the IBT Consent Decree in any court other than the Southern District of New
York because such collateral lawsuits in other districts created a “significant risk of subjecting
the Consent Decree to inconsistent interpretations and the Court Officers to inconsistent
judgment,” it was “necessary to avoid repetitive and burdensome litigation. . . . [and]
consolidating all litigation relating to the Consent Decree in one forum would promote judicial
economy.” 907 F.2d at 280.
4.

United States v. International Bhd. of Teamsters, 931 F.2d 177 (2d Cir. 1991,
aff’g, 723 F. Supp. 203 and 742 F. Supp. 94.

The Consent Decree provided for changes to the IBT’s electoral process. The
Consent Decree eliminated the ex officio designation of delegates who nominated and elected
IBT officers at the IBT convention. Instead, a secret ballot of the rank-and-file membership was
to elect the convention delegates. At the convention, the delegates would nominate officers. The
rank-and-file membership would then have a secret ballot election of IBT officers.
A number of IBT affiliates appealed because the election procedures were
different from those in the IBT Constitution and they were not a party to the RICO case. The
appellate court found that the order was appealable because if the affiliate had to wait until after
the election, then there would be no effective remedy. The court of appeals held that even
though the affiliates were not a party, their interests were adequately represented in the case by
the IBT when it agreed to the provisions of the Consent Decree. The subject matter of the
election provision related to the governance of the International Union which was delegated to
the IBT’s General President, and it did not intrude upon the IBT’s interest in the elimination of
organized crime from the union. Additionally, the court found that the provision of the Consent
Decree broadened the rights of the membership.
The affiliates also challenged certain provisions of the election rules order. The
court of appeals rejected the challenges, subject to one minor modification. 931 F.2d at 189-190.
5.

United States v. International Bhd. of Teamsters, 941 F.2d 1292 (2d Cir. 1991),
aff’g, 745 F. Supp. 908 and 753 F. Supp. 1181.

Two former IBT members appealed the decision of the district court to uphold
internal union disciplinary sanctions against them for their knowing association with organized
crime. The Independent Administrator (IA), permanently removed defendants Senese and
Talerico from their IBT positions, and expelled them from the IBT and its affiliates. The district
court upheld the sanctions and on remand, upheld the termination of Senese’s IBT employee
benefits.
On appeal, the Second Circuit affirmed the sanctions, ruling that the imposition of
sanctions by the IA was not state action, thus rendering various constitutional arguments raised
by the defendants inapplicable. The court reasoned that the IA was performing a private function
in administering the provisions of the IBT Constitution. Even if there were state action,
however, the court found the defendants’ arguments to be meritless. The court stated that the
disciplinary sanctions did not violate the First Amendment right to freedom of association, since
the government had a compelling countervailing interest in eliminating the influence of
organized crime from the unions.
70

The court also ruled that the sanctions did not violate appellants’ Fifth
Amendment rights to due process on the grounds that they were not parties to the Consent
Decree. A prior decision of the court had found that the IBT membership was adequately
represented when the decree was adopted. The court of appeals also rejected appellants’ claim
that they were denied due process because, until the Consent Decree was adopted, it was not
clear that knowing association with organized crime members was prohibited. The court
explained that the Consent Decree “did not create new standards of conduct for IBT members,
but simply made explicit the longstanding goal of the IBT to be free of corruption.” Id. at 1297.
The court also summarily rejected an argument that the sanctions constituted
“cruel and unusual punishment” in that the Eighth Amendment applies only to punitive actions,
and that the remedial sanctions imposed did not constitute punishment.
6.

United States v. International Bhd. of Teamsters, 948 F.2d 98 (2d Cir. 1991).

Yellow Freight Systems, Inc., appealed the district court’s order requiring access
to Yellow Freight’s premises by non-employees for union campaign purposes. This suit
stemmed from two incidents at Yellow Freight’s facilities. One incident occurred at its Chicago
Ridge, Illinois facility, and the other at its Detroit, Michigan facility. At both places, nonemployees were asked to leave the premises. At one location, the non-employees were able to
campaign on the sidewalk across the street. The Elections Officer, appointed under the IBT
Consent Decree decided that the Election Rule was violated at the Chicago Ridge facility because
no meaningful access was provided; however, he upheld the exclusion at the Detroit facility
because adequate alternative means for campaigning were available.
Yellow Freight alleged that the Consent Decree’s terms could not be enforced
against it because Yellow Freight was not a party to the Consent Decree. The court of appeals
rejected this claim, stating that the district court did not purport to deem Yellow Freight bound by
the Consent Decree. Rather, the district court had authority under the All Writs Act to issue an
order to a non-party to effectuate the Consent Decree. 948 F.2d at 103. However, the court of
appeals remanded the case to consider alternative ways of communicating with the Chicago
Ridge employees of Yellow Freight away from the job site. Id. at 107-08.
The court of appeals also held that the dispute was not within the exclusive
jurisdiction of the National Labor Relations Board. Id. at 105-06.
7.

United States v. International Bhd. of Teamsters, 948 F.2d 1338 (2d Cir. 1991).

The Second Circuit vacated the district court’s order imposing sanctions, and
remanded for further proceedings. The Investigations Officer, appointed under the Consent
Decree, ordered Joint Council 73, an affiliate of the IBT in New Jersey, to produce its books and
records for examination. Joint Council 73 refused, stating that it was not bound by the Consent
Decree as it was not a party to those proceedings. A suit was filed in New Jersey and later
transferred to New York pursuant to Judge Edelstein’s order mandating that all Consent Decree
disputes must be adjudicated in the U.S. District Court for the Southern District of New York.
Eventually, that suit was dismissed. When the Investigations Officer again tried to inspect the
books, access was limited by Joint Council 73. The Government then moved to hold Joint
Council 73 in contempt.
The Investigations Officer also attempted to take depositions of seven officers of
Local 73, and Joint Council 73 filed another law suit. Joint Council 73 again argued that it was
not bound by the Consent Decree. Both the Government and the Investigations Officer moved
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for sanctions, which the district court imposed on Joint Council 73's attorneys, for their conduct
in bringing the second law suit.
The court of appeals stated that these sanctions could have been imposed under
either Rule 11, Fed. R. Civ. P., 28 U.S.C. § 1927, or the inherent power of the court. 948 F.2d at
1343-44. Rule 11 sanctions are based upon the signature of the attorney or client on a pleading,
motion, or paper filed with the court. Under 28 U.S.C. § 1927, sanctions apply to attorneys
whose actions are without merit and undertaken solely to cause delay. Under the inherent power
of the court, sanctions can be imposed because of the court’s need to manage its own affairs.
The time frame of the sanctioned conduct was after the first law suit was
dismissed, but prior to the time when the Government moved for the contempt order. For Rule
11 purposes, only one paper was signed during this time period. If this document merited a Rule
11 sanction, it could only be imposed upon the attorney who signed the paper,and not the entire
Guazzo law firm.
The Second Circuit vacated the district court’s order because the district court did
not articulate which standard it applied when it levied the sanctions, and remanded the matter for
the district court to specify the basis for its ruling.
8.

United States v. International Bhd. of Teamsters, 954 F.2d 801 (2d Cir. 1992),
aff’g, 776 F. Supp. 144 (S.D.N.Y. 1991).

The Second Circuit affirmed the district court’s order to enforce the decision of
the Independent Administrator, pursuant to the Consent Decree, to reinstate an employee with
back pay. The employee was fired for “stealing company time” by leaving his pre-shift overtime
position before the overtime shift ended. The employee admitted leaving his post twenty five
minutes before the end of the shift to obtain cold medicine, eat and perform some union business.
The employee claimed that this was customary within the company and that he was actually fired
in retaliation for union activity.
First, the court of appeals held that “since the IA acted pursuant to the IBT
constitution, a private charter, and the IA was himself a paid official of the IBT, he was not a
state actor.” 954 F.2d at 806. Therefore, the court concluded that the IA’s actions “did not
implicate constitutional due process concerns.” Id. at 807. The Second Circuit also held that by
virtue of the All Writs Acts, 28 USC § 1651(a), the Consent Decree could be applied against
third parties so long as such application was “agreeable to the usages and principles of law,” and
its application to a third party did not violate due process, because the procedures used satisfied
due process even if due process applied.
The Second Circuit also held that the district court did not have to defer to an
arbitrator’s decision where a plaintiff’s labor related claim stems from legal rights separate from
those conferred by a collective bargaining agreement, and the district court’s decision was not
pre-empted by the arbitration provisions of the LMRA, 29 U.S.C. § 185.
9.

United States v. International Bhd. of Teamsters, 955 F.2d 171 (2d Cir. 1992).

Sikorsky Aircraft appealed the order of the district court requiring it to provide
limited access of its facility to non-employee union candidates campaigning for leadership
positions in the IBT. The Elections Officer had found that there was no reasonable alternative
available to the candidates to access the employees because campaigning outside the gates of the
company could place the candidate in jeopardy from traffic. Sikorsky appealed the decision to
72

the Independent Administrator (IA) and then the district court. Both affirmed the ruling and the
district court ordered Sikorsky to comply immediately.
On appeal, the Second Circuit held that an employer may not be ordered to grant
access either when reasonable alternatives exist or when the IA or the district court fails to find
that reasonable alternatives do not exist, and the union candidate has the burden of establishing
the unavailability of reasonable alternatives to compelled access.
The Second Circuit reversed and remanded this case, having found that the burden
had been improperly shifted onto Sikorsky and that the union candidate failed to make even a
minimal showing that access to Sikorsky’s facility was the only reasonable alternative for
communicating with IBT member employees.
10.

United States v. International Bhd. of Teamsters, 964 F.2d 180 (2d Cir. 1992),
vacating in part, 764 F. Supp. 817.

The court of appeals held that a union pension trust fund and its employee trustee
were not bound by the Consent Decree entered between the United States and the IBT where
neither the trust nor trustees were parties to the litigation, had not signed the Consent Decree, and
had not taken any action which would interfere with the court’s ability to implement the Consent
Decree. The court stated that: “normally a person is not bound by an in personam judgment
entered in litigation in which he is neither designated as a party nor served . . . Limited
exceptions exist for persons who are agents of, or acted in concert or participation with, parties
bound by a judgment, See Fed. R. Civ. P. 65 (d), or who were adequately represented in the
litigation that resulted in the judgment.” 964 F.2d at 183.
The court further explained: “We have ruled that IBT affiliates are bound because
their interests were adequately represented by the IBT . . . and that an officer of an IBT local was
bound by the disciplinary mechanism of the Consent Decree because the investigatory and
disciplinary powers of the court-appointed officers are proper delegations of the powers of the
IBT General President and the General Executive Board within the scope of the IBT constitution
that binds all members of the IBT.” Id. at 183.
11.

United States v. International Bhd. of Teamsters, 964 F.2d 1308 (2d Cir. 1992),
aff’g, 777 F. Supp. 1130.

Joseph Cimino, Jr., former President and Business Agent Local 107 in
Philadelphia, was charged with violating Article II, Section 2 (a) and Article XIX, Section 6(b) of
the IBT Constitution because of his knowing association with Nicodemo Scarfo, the Boss of the
Philadelphia LCN family, during his tenure as an officer of Local 107. The Investigations
Officer (IO) relied upon the declaration of an FBI Special Agent which summarized Cimino’s
association with the Philadelphia LCN Family. This declaration was based upon three hearsay
statements from former LCN members, Philip Leonetti, Lawrence Merlino, and Nicholas
Caramandi, which revealed the extent of the relationship between Cimino and the LCN.
The Independent Administrator (IA), affirmed the decision of the IO and
permanently barred Cimino from the IBT; ordered him to relinquish all union positions;
prohibited him from drawing any money from IBT and ordered that no further contributions
should be made on Cimino’s behalf to health or pension trust funds. The district court affirmed
the IA’s decision, and Cimino appealed arguing that the statements used by the Special Agent in
his declaration were inherently unreliable because the statements were hearsay and were made as
part of the declarant’s agreement to cooperate with the government. The court of appeals
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rejected this argument, stating that there was no danger of a criminal conviction based on
unreliable evidence and, therefore, there was no presumption of unreliability. 964 F.2d at 1312.
The Court stated that the standard to be used is whether the admission of such statements calls
into question the “integrity and fundamental fairness” of Cimino’s internal union disciplinary
hearing. Id. Therefore, the court of appeals found the statements were reliable and constituted
“such relevant evidence as a reasonable mind might accept as adequate to support the conclusion
“that Cimino associated knowingly with Scarfo.
The court of appeals also noted that the Consent Decree provided for the same
standard of review for the actions of the IA that applies under the Administrative Procedures Act,
and that under the standards of review that agency findings are “to be set aside only if they are
‘unsupported by substantial evidence’, the district court’s order must be sustained.” Id. at 1311.
12.

United States v. International Bhd. of Teamsters, 968 F.2d 1472 (2d Cir. 1991).

The Second Circuit reversed and vacated an order of the district court mandating
that Commercial Carriers, Inc., permit its union truck drivers to display campaign stickers on
company trucks in connection with the 1991 IBT election.
The issue arose when a truck driver for Commercial Carriers, Inc., was told that
he would not be dispatched unless and until he removed campaign stickers from his truck. A
protest was filed with the IBT Elections Officer (EO) who determined that Commercial Carriers,
Inc., had neither a written policy nor an enforced oral policy against placing campaign stickers of
any sort on the company vehicles. The EO ordered that Commercial Carriers, Inc. permit drivers
to affix stickers. Commercial Carriers, Inc., appealed to the district court, which upheld the
decision of the EO.
On appeal, the Second Circuit stated that it could discern no “pre-existing right”
for the drivers to affix campaign stickers to Commercial Carriers, Inc., vehicles and the fact that
an employee had done so for a few months before he was ordered to remove them did not
establish a company policy. 968 F.2d at 1476. Therefore, the Second Circuit looked to National
Labor Relations Act, 29 U.S.C. §§ 157 and 158(s)(1)(1988), and the cases construing employee’s
rights to distribute union literature in non-working areas of the employer’s property. Id. at 1477.
The Second Circuit emphasized the importance of protecting intra-union
campaigning activity from unlawful interference and noted that affixing stickers to a personal
vehicle, distributing campaign literature in non-work areas, and wearing campaign pins on
company uniforms are all protected activities under 29 U.S.C. §157. The court of appeals,
however, concluded that these activities are very different from what the EO ordered in this case.
The Second Circuit found that such an order is not confined to the premises of the employer,
relates to its vehicles and not employee’s personal property or work clothes and has little, if any,
discernible effect upon the election process. Further, the court found that such an order would
create an appearance that Commercial Carriers, Inc., endorsed certain candidates. Looking to the
All Writs Act, the Second Circuit failed to discover any significant assistance provided to the
objective of a proper IBT election by requiring Commercial Carriers, Inc., to provide “mobile bill
boards” for the campaign. Further, the Court of Appeals found the EO’s order to be a sharp
departure from applicable “usages and principles of law.” The Second Circuit reversed the order
of the district court and vacated the district courts’ order sanctioning Commercial Carriers, Inc.,
for pursuing a “baseless position.” Id. at 1477-78.

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13.

United States v. International Bhd. of Teamsters, 968 F.2d 1506 (2d Cir. 1992).

The Elections Officer (EO) was charged in the IBT Consent Decree with the
promulgation of rules and supervision of the IBT election process. The EO issued an Advisory
of Campaign Contributions and Disclosures wherein two organizations, the Teamsters for a
Democratic Union (TDU) and Teamsters Rank and File Education and Legal Defense
Foundation (TRF), were required to file financial reports subject to inspection by the candidates.
TDU and TRF were denied a preliminary injunction by the district court and filed this appeal.
The issue on appeal was whether the “All Writs Act” authorized the EO to order
the TDU and TRF to file financial disclosure statements. The Second Circuit stated that,
consistent with the holding in Yellow Freight, 948 F.2d 102 (2d Cir. 1991), the action by an EO
attempting to apply the All Writs Act to non-parties to the Consent Decree had to be invalidated
as not agreeable to the usages and principles of law; that the requirement was necessary or
appropriate in aid of the discharge of the EO responsibilities.
14.

United States v. International Bhd. of Teamsters, 970 F. 2d 1132 (2d Cir. 1992),
aff’g, 777 F.Supp. 1133.

The IBT Independent Investigations Officer (IO) charged IBT member Carmen
Parise with bringing reproach on the union by threatening local members with economic and
physical harm and violating his oath of membership by refusing to answer questions regarding
corruption under oath in the IO’s investigation.
Before the scheduled hearing on those charges began, Parise and the IO signed an
agreement, providing for Parise to be suspended from the IBT for three months. The
Independent Administrator (IA) submitted the agreement to the district court. The district court
refused to approve the agreement in light of the severity of the charges. Consequently, the IA
conducted a hearing on the charges, found Parise liable and suspended him from the IBT for 24
months. The district court affirmed the IA’s findings and sanction.
On appeal, the Second Circuit held that “the district court appropriately exercised
its authority in refusing to approve the Proposed Agreement,” 970 F.2d at 1137, and upheld the
district court’s affirmance of the IA’s sanctions.
15.

United States v. International Bhd. of Teamsters, 978 F.2d 68 (2d Cir. 1992),
aff’g, in part and vacating in part, 787 F. Supp. 345.

The court of appeals affirmed the finding of Consent Decree violations of a
business agent who assaulted a union officer and of two officers who embezzled money from an
IBT local. The court rejected the appellants’ contentions that the IA could not base its decision
on hearsay, finding that the hearsay was not unreliable even though the hearsay declarants were
not cross-examined.
But the court of appeals reversed the district court’s increasing the penalty from a
five-year suspension from union activity to a lifetime suspension, in the absence of any finding
by the district court that the administrator’s five-year sanction was arbitrary and capricious.

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16.

United States v. International Bhd. of Teamsters, 981 F.2d 1362 (2d Cir. 1992),
aff’g, 792 F. Supp. 1346.

The court of appeals upheld the IA’s determination that Robert Sansone, a former
President of an IBT Local, had breached his fiduciary duty to investigate allegations that a union
official was a member of the LCN and had associated with LCN members, and imposition of a
sanction permanently barring Sansone from holding an IBT office and from employment with
specified IBT subordinate and affiliated entities without prior approval of the IA.
17.

United States v. International Bhd. of Teamsters, 998 F.2d 120 (2d Cir. 1993).

The court of appeals upheld disciplinary sanctions (permanent bar from the IBT
and loss of IBT related benefits) against Bernard Adelstein, a former member and officer of IBT
Local 813, for knowing association with LCN members based on hearsay evidence consisting of
the declaration of an FBI Agent, Gotti trial testimony of Salvatore Gravano, other hearsay
declaration, and transcripts of court-authorized electronic surveillance. The court also held that
Adelstein is bound by disciplinary provisions of the IBT Consent Decree even though he did not
sign it, because the IBT had through the Consent Decree “merely exercised its discretionary
authority under the [IBT] Constitution to delegate the investigation and discipline of union
misconduct to the court appointed officers.” 998 F.2d at 124.
18.

United States v. International Bhd. of Teamsters, 998 F.2d 1101 (2d Cir. 1993),
aff’g and rev’g in part, 803 F. Supp. 761.

The court of appeals upheld the authority of the district court to approve rules
governing the operation of the Independent Review Board pursuant to the IBT Consent Decree,
subject to several modifications.
F.3d Cases
1.

United States v. International Bhd. of Teamsters, 3 F.3d 634 (2d Cir. 1993).

The court of appeals held that under the express terms of the IBT Consent Decree,
the court-appointed Elections Officer (EO) lacked authority to determine union official’s election
protest after the EO had certified the results of the election, which the official won.
2.

United States v. International Bhd. of Teamsters, 12 F.3d 360 (2d Cir. 1993),
aff’g, 803 F. Supp. 806.

The IBT Consent Decree provided for the appointment of an Independent Review
Board (IRB) upon the expiration of the authority of the IA and IO. Under the terms of the
Decree, the IBT was to select one of the three members, the Attorney General of the United
States was to select one member, and those two members were to agree on the third.
The district court appointed William Webster (former Director or the FBI and
CIA and former Federal Judge) after the two selected members could not agree on a third
member. Ruling that service on an oversight board is not “domination” or “interference” with
the administration of a labor organization within the meaning of the NLRA, the court affirmed
the appointment.

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3.

United States v. International Broth. of Teamsters, 14 F.3d 183 (2d Cir. 1994),
aff’g, 817 F. Supp. 337 and 824 F. Supp. 406.

The court of appeals held that substantial evidence supported the finding of the
Independent Administrator (IA) that union officials breached their fiduciary duties to the union’s
constitution.
4.

United States v. International Broth. of Teamsters, 19 F.3d 816 (2d Cir. 1993),
aff’g, 824 F. Supp. 410.

Following a hearing, the Independent Administrator found that Nicholas
DiGirlamo, a member and employee of IBT Local 41, had knowingly associated with members
of the LCN and ordered DiGirlamo permanently barred from the IBT. The district court
affirmed; DiGirlamo appealed.
Under the terms of the IBT Consent Decree itself, the standard to be applied by
the administrator is a “just cause” standard. The district court is then to review the decision of
the Administrator under the “same standard of review applicable to review of final federal
agency action under the Administrative Procedure Act.” The effect of these provisions is to
require the district court to treat the decisions of the Administrator with “great deference.”
The court of appeals upheld the IA’s finding (based in part on reliable hearsay)
that union employee’s and member’s knowing association with organized crime figures violated
provisions of the Consent Decree, and the IA’s sanction permanently barring the employee from
the IBT. The court of appeals also held that the IA’s sanctions did not violate his rights to free
speech and association guaranteed by the LMRDA or the First Amendment.
5.

United States v. International Bhd. of Teamsters, 170 F. 3d 136 (2d Cir. 1999),
rev’g, 951 F. Supp. 1113.

The court of appeals reviewed the sanctions imposed by the Independent Review
Board (IRB) under the standards applicable to final agency review under the Administrative
Procedure Act. 170 F.3d at 142-43. The court of appeals reversed the IRB’s sanction of a
lifetime ban from union membership for violating various financial control provisions in the IBT
Local’s ByLaws resulting in a loss of $1600 to the union.
6.

United States v. International Bhd. of Teamsters, 266 F.3d 45 (2d Cir. 2001).

Several IBT members were permanently barred from the IBT because they were
found guilty of embezzlement of union funds and other breaches of their fiduciary duties. The
barred IBT members thereafter took control of an independent union, Local 116 of the
Production and Maintenance Employees’ Union, and sought NLRB recognition to have Local
116 become the exclusive collective bargaining representative of a warehouse business. The IBT
sought an order from the district court, pursuant to the IBT Consent Decree, enjoining those IBT
barred members and Local 116's activities insofar as they might affect the current IBT members.
The court of appeals held that the district court had authority under the All Writs Act to enjoin
the former IBT members, who were non-parties, to enable the district court to enforce the
Consent Decree by enjoining them “from acts that would frustrate the consent decree’s operation
on parties that are bound to the decree.” 266 F.3d at 50. The court explained that the barred
members had been permanently enjoined from participating in IBT affairs, and that
“[p]rohibiting them from contacting IBT members to solicit their membership in Local 116 was
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within the district court’s discretion in protecting the operation of the consent decree’s
prohibition on association.” Id. at 51.
However, the court of appeals ruled that the district court’s injunction was
overbroad “[i]nsofar as [the barred members] seek to attract for Local 116 new members who are
not currently members or employees of the IBT or its local unions [because] they pose no threat
to the vitality of the consent decree.” Id. The court of appeals also ruled that the overbroad
aspect of the injunction also interfered with the barred members’ right to petition the NLRB and
their First Amendment right of petition. Id.

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8. VINCENT GIGANTE
A.

CASE NAME:
United States v. Vincent Gigante, et. al., Civ. No. 88-4396, United States District Court

for the District of New Jersey. Complaint filed October 13, 1988; and amended compliant filed
February 10, 1989.
B.

DEFENDANTS:
The complaint charged three individuals, a trucking company, and a law firm as

defendants. The individuals were: Vincent “Chin” Gigante, the alleged boss of the Genovese
LCN Family; Thomas S. DiBiasi, an alleged associate of the Genovese LCN Family and an
attorney who provided a pre-paid legal services plan for members of IBT Local 560; and Myron
Shevell, the chief executive of New England Motor Freight (NEMF). The complaint also named
Shevell’s company, New England Motor Freight, and DiBiasi’s law firm, Citrino, Balsam and
DiBiasi, as defendants.
C.

SUMMARY OF THE COMPLAINT:
The first claim for relief alleged that defendant Gigante and other alleged organized crime

figures conspired from at least February 8, 1984, to maintain the Genovese LCN Family’s
interest in and control of Local 560 of the International Brotherhood of Teamsters Union (Local
560), the alleged RICO enterprise for the first claim for relief, through a pattern of racketeering
activity, in violation of 18 U.S.C. §§ 1962 (b), (c) and (d). The alleged pattern of racketeering
activity included: (1) acts involving a conspiracy among Gigante, other organized crime figures,
Local 560, and businessmen to extort “labor peace” payoffs from various trucking and warehouse
companies; (2) efforts by defendant Shewell and organized crime figures to circumvent the
remedial relief ordered by the district court in the Government’s first civil RICO case against
Local 560 and others (see case summary number one above), and to retain organized crime’s
control over Local 560; and (3) misappropriation of union assets.

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The second claim for relief alleged that defendant Shewell, various organized crime
figures, and Local 560 officials conducted and conspired to conduct the affairs of New England
Motor Freight, Inc., the alleged enterprise for the second claim for relief, through a pattern of
racketeering activity involving fraud and illegal labor payoffs (in violation of 29 U.S.C. §§ 186
and 501(c) and 18 U.S.C. § 1341), all in violation of 18 U.S.C. §§ 1962 (c) and (d).
The third claim for relief alleged that the defendant Thomas Di Biasi did conduct and
conspired to conduct the affairs of the defendant law firm, Citrino, Balsam and Di Biasi, through
a pattern of racketeering activity involving fraud (18 U.S.C. § 664 and 1341 and
29 U.S.C. § 501 (c)), and bribery (29 U.S.C. § 186 and 18 U.S.C. § 1954), all in violation of
18 U.S.C. §§1962 (c) and (d). In particular, the complaint alleged that Di Basi devised a scheme
to defraud trucking companies of money they contributed to pay for pre-paid legal services for
Local 560 members who were employees of the trucking companies.
On February 10, 1989, an amended complaint was filed, which added allegations about
DiBiasi’s activities since 1984. The original pre-paid legal services plan had been sold to IBT
Local 84 which was a predecessor union to Local 560 and in 1984, after DiBiasi had been
convicted of a fraud type offense and was barred from any involvement in an ERISA fund.
D.

RELIEF SOUGHT:
The complaint sought equitable relief to:
1.

Permanently enjoin defendant Gigante from endeavoring to influence or control

the affairs of Local 560 and its related benefit plans and of any other labor organization or
employee benefit plan.
2.

Require defendant New England Motor Freight to restore the Local 560

bargaining unit as it existed prior to 1977.
3.

Enjoin defendant Myron Shewell from: (a) endeavoring to obtain the assistance of

organized crime figures regarding any labor relations matters; (b) engaging in labor negotiations
with representatives of any labor organization or employee benefit plan, unless specifically
80

authorized to do so by the district court; and (c) engaging in corrupt practices similar to those
alleged in the complaint.
4.

Requiring defendants Di Biasi and his law firm to disgorge, and restore to Local

560, the proceeds of their unlawful racketeering acts and enjoining Di Biasi from providing
professional services to any labor organization or employee benefit plan.
D.

OUTCOME OF THE CASE:
1.

On April 5, 1989, DiBiasi and his law firm entered into a Consent Decree in

which it was agreed that for 20 years DiBiasi would provide no professional services of any kind
to any labor organization or employee welfare benefit plan and that he would repay the legal
services plans $50,000 in ten equal monthly installments.
2.

On September 29, 1989, defendants New England Motor Freight and Shevell

entered into a Consent Decree in which they agreed to restore Local 560 members who had been
deprived work as a result of the sweetheart arrangement to the NEMF payroll. Shevell agreed
that he would not personally engage in labor negotiations with the representatives of any labor
organization; and NEMF agreed that it would take no action to undermine its collective
bargaining arrangement with Local 560.
3.

The case against defendant Gigante was stayed pending resolution of his mental

fitness in a criminal case. Defendant Gigante died in 2005.
F.

LEADING COURT DECISIONS:
None.

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9. PRIVATE SANITATION INDUSTRY OF LONG ISLAND
A.

CASE NAME:
United States v. Private Sanitation Industry Association of Nassau/Suffolk Inc., et al.,

Civil No. CV-89-1848, United States District Court for the Eastern District of New York.
Complaint filed February 14, 1989, amended complaint filed June 6, 1989.
B.

DEFENDANTS:
The complaint named 112 defendants who had participated in the solid waste industry.

There were five categories of defendants: (1) the Lucchese and Gambino organized crime
families of the LCN; (2) the union defendant, Private Sanitation Local 813 of the International
Brotherhood of Teamsters Union (IBT); (3) Private Sanitation Industry Association of
Nassau/Suffolk, Inc. (PSIA), a trade association of individuals and entities engaged in the
business of solid waste collection; (4) forty-four Long Island carting companies involved in solid
waste collection, transportation and disposal; and (5) sixty-four individual defendants, including
alleged organized crime members and associates, certain Long Island carters, and former public
officials and employees. The charged individual defendants included Antonio Corallo, and
Salvatore Scanturo, alleged former boss and underboss of the Lucchese LCN Family,
respectively.
C.

SUMMARY OF THE COMPLAINT:
The complaint alleged forty-six (46) separate RICO enterprises including: the PSIA

Enterprise; the Local 813 Enterprise; the Carting Industry Enterprise; a group of individuals and
companies associated-in-fact; and each of the corporate defendants as a separate enterprise and
referred to collectively as the “Corporate Enterprise.” The complaint alleged that organized
crime had controlled the trash disposal industry in Nassau and Suffolk Counties since the 1950's.
Alleged members and associates of organized crime families were directors, officers, employees
and/or shareholders of various carting companies, and had extended their control through IBT

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Local 813, which allegedly provided favorable treatment to the corrupt carting companies and
harassed the legitimate businesses.
The complaint alleged that this cartel operated through an illegal customer allocation
agreement, whereby carters did not seek or accept business from customers serviced by another
carter who was a member of the cartel. The right to service such customers was the “property” of
the carting company, to be bought and sold by the carters. The complaint also alleged that when
larger public contracts were offered through bids, the defendant carters and others agreed among
themselves, prior to the bidding, as to which company would obtain the contract, and the
defendant carters and others then rigged the bids accordingly. Organized crime families enforced
these agreements; any attempt by rebel carters to compete for existing customers or submit
competitive bids was met with threats of violence and economic harm.
The complaint alleged that the carting companies made periodic payments in cash to the
Lucchese and the Gambino LCN crime families in return for protection. It alleged that one
hundred ten (110) defendants had violated RICO, by conducting or participating in the conduct
of an enterprise’s affairs through a pattern of racketeering, or had conspired to do so, or both.
The complaint alleged that the defendants had participated in a total of 486 predicate acts of
racketeering, (RA) including extortion and theft from rebel carting companies (RA 1-221); theft
from the townships of Islip and Oyster Bay and bribery of their employees to permit defendants
to use dumps for solid waste without payment to the townships (RA 221-449); bribery of
Huntington township officials to vote in favor of rate increases for residential carters (RA 450472); bribery of state officials to grant contracts to collect garbage at state parks to defendant
carters and to issue improper permits to transport and incinerate medical waste (RA 473-484);
interstate transportation of stolen vehicles (RA 485); and arson (RA 486).

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D.

RELIEF SOUGHT:
1.

The Government sought a permanent injunction to, among other matters, enjoin:
a.

The Lucchese LCN Family, the Gambino LCN Family, and the individual
defendants from any involvement or connection with the collection,
transportation or disposal of solid waste, and from associating with any
other defendant or member or associate of organized crime for commercial
purposes.

b.

All defendants from violating RICO, 18 U.S.C. §§ 1961, et seq.

c.

The Lucchese and Gambino LCN Families and all the individual
defendants from participating in the affairs of the PSIA, Local 813 and its
Executive Board, or Local 813's various benefit funds.

d.

Defendants PSIA and Local 13 from associating with any member or
associate of organized crime.

e.
2.

Various persons from holding positions in Local 813 and PSIA.

The Government also sought the district court to order:
a.

All defendants to divest themselves of any interest they held in any of the
alleged enterprises, and that all proceeds from such divestiture be
deposited in a fund for innocent victims of defendants’ alleged
racketeering activity.

b.

Restitution to all victims of defendants’ unlawful activities, and that all
proceeds not awarded as restitution be deposited in the United States
Treasury.

c.

The defendants to be jointly and severally liable for monetary relief in
excess of one million dollars.

84

E.

OUTCOME OF THE CASE:
1.

Over several years, numerous defendants entered into substantially similar consent

decrees wherein they agreed to be permanently enjoined from: (1) any activities involving or
connected with the collection, transportation or disposal of solid waste; (2) violating any
provision of RICO, 18 U.S.C. §§ 1961 et seq.; (3) associating with any member or associate of
organized crime for any commercial purpose; and (4) participating in the affairs of PSIA, its
Board of Directors, Local 813, its Executive Board and Local 813's various benefit funds. See
Consent Decrees and district court orders issued October 1989, November 26, 1989, December
1989, May 16, 1990, November 17, 1991, November 16 and 17, 1992, January 21, 1993,
February 17, 1993, May 17 and 18, 1993, June 4, 7, 21 and 23, 1993, January 3, 1994, and
February 4, 1994.
2.

On July 19, 1989, the district court dismissed defendants the Lucchese and

Gambino LCN Families on the ground that an organized crime family is not a “person” within
the meaning of 18 U.S.C. §§ 1961(3) and 1962, and hence was not subject to suit under RICO.
3.

On February 28, 1994, a Consent Judgment was entered which included an

injunction and the appointment of a compliance officer and a Hearing Officer.
a.

The Settling Defendants were enjoined from:
(1) knowingly associating with any member or
associate of an organized crime group for any
commercial purpose;
(2) engaging in conduct, or conspiring to engage in
conduct, which constitutes an act of racketeering, as
defined in 18 U.S.C. § 1961, or an act of corruption
which includes, but is not limited to, bribery,
extortion, larceny and theft;
(3) engaging in conduct, or conspiring to engage in
conduct, which constitutes or promotes an unlawful
customer allocation agreement or property rights
system designed to inhibit a competitive market
system in the solid waste industry;
(4) engaging in conduct, or conspiring to engage in
conduct, which constitutes bid-rigging or which
85

unlawfully interferes with the bidding process with
respect to any public or private contracts involving
the collection, transportation or disposal of solid
waste; and
(5) obstructing the work of the court-appointed
Compliance Officer, Hearing Officer and/or
Receiver described herein or the implementation of
any other relief that may be imposed in this case.
b.

The Compliance Officer was authorized to, among other matters:
(1) monitor compliance with the injunction and to
investigate possible violations.
(2) adopt procedural rules.
(3) inspect the books and records of the settling
defendants and to require them to provide detailed
information about all aspects of their commercial
activities in the waste disposal industry.
(4) use the subpoena power of the district court to
compel sworn testimony and the production of
records.
(5) seek relief before the Hearing Officer for any
violation of the injunction and to appeal the
decisions of the Hearing Officer to the district court.
(6) request assistance from the Government.
(7) employ personnel to assist the Compliance
Officer in carrying out its powers.
(8) issue periodic reports to the district court.

c.

The Hearing Officer was authorized to, among other matters:
(1) adjudicate alleged violations of the injunctive relief in
accordance with the procedures under Administrative Procedures
Act, 5 U.S.C. §§ 551 et seq. and §§ 701 et seq.
(2) implement procedural rules.
(3) use the subpoena power of the district court to compel
testimony and the production of books and records.
(4) impose fines or other sanctions (not in excess of $75,000), issue
cease and desist orders and to order restitution.
(5) request assistance from the government and the district court.
86

d.

The Consent Decree also afforded parties the right to appeal any adverse
decision of the Hearing Officer to the district court under the procedures
set forth in the Administrative Procedures Act, and provided that any
disgorgement shall be paid to the United States Treasurer.

F.

LEADING COURT DECISIONS:
F. Supp. Cases:
1.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 793 F.
Supp. 1114 (E.D.N.Y. 1992).

The district court granted in part and denied in part the motion of one hundred
four defendants to dismiss the Government’s complaint, pursuant to Rules 12(b)(6) and 8(a),
Federal Rules of Civil Procedure, or grant their motions for summary judgment, pursuant to Rule
56, Federal Rules of Civil Procedure.
First, the district court held that the complaint adequately pleaded the requisite
enterprise element in the first, third, and fourth through forty-fourth claims for relief, which
alleged that various unions, including Local 813, PSIA, and forty-one incorporated carting
industry companies, were RICO enterprises. The district court also held that the enterprise
alleged in the Government’s second claim for relief--the carting industry enterprise--was
adequately pleaded for RICO purposes and that the issue whether the enterprise was independent
from the pattern of racketeering was a matter to be decided after the production of proof at trial
or after a timely motion for summary judgment. Id. at 1126-1128.
The district court rejected the claim that the complaint alleged that certain persons
were improperly both the RICO enterprise and the person liable for the RICO violation. The
district court stated that it was proper to allege “that many of the RICO enterprises in the
complaint are also alleged to be defendants” since there was not a complete identity between the
enterprise and all the defendants. Id. at 1127-1128.
The district court dismissed with prejudice all racketeering acts pleaded under the
New York coercion statute, or as “grand larceny . . . involving bribery,” because coercion is not
included as a state law offense under 18 U.S.C. § 1961(l). Id. at 1128-1135. The court ruled,
however, that the 195 acts in question, alleged also as Hobbs Act violations, were alternatively
maintainable as a racketeering activity under 18 U.S.C. § 1961(l)(B). Similarly, the court
dismissed all predicate acts alleging “grand larceny..... involving bribery,” because they were not
chargeable as bribery under New York law. Id. at 1134-1135.
The district court also ruled that the “Mandate of Federal Rule of Civil Procedure
9(B) that allegations of fraud and of mistake be pleaded with particularity is inapplicable to
RICO actions that do not involve claims of fraud.” Id. at 1124.
Turning to the pattern of racketeering activity, the district court dismissed several
claims for relief because the complaint alleged only one properly pled racketeering act under
those claims. However, the district court held that the remaining claims for relief adequately
alleged the requisite “continuity plus relationship” to establish a pattern of racketeering activity.
Id. at 1139-44.
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However, the district court concluded that, in almost every case, no defendant was
put on notice as to which particular predicate acts he was alleged to have committed or to have
agreed to commit. The district court found that the conspiracy allegations were “so vague and so
undifferentiated as to evade analysis,” Id. at 1147, and did not “set out a basis for an inference
that the predicate offenses which the defendants are alleged to have agreed to commit constitute a
pattern of racketeering as to any one defendant.” Id. at 1148. Accordingly, the district court
dismissed the forty-fifth and forty-sixth claims for relief against all defendants. Id. at 1145-48.8
Regarding the remedies sought--damages, injunctions, disgorgement and
divestiture--the district court dismissed the forty-seventh claim for relief for treble damages,
because the Government does not have standing to sue for damages to its business or property
under 18 U.S.C. § 1964(c). The district court denied defendant’s motions to dismiss the claims
for injunctive relief and for divestiture and disgorgement, subject to the court’s review of the
Government’s proof that the interest sought constituted tainted proceeds of racketeering activity.
Id. at 1148-1150.
The district court also denied as without merit Local 813's claim that federal labor
law (29 U.S.C. §§ 401, et seq. and 29 U.S.C. §§ 151, et seq.) divested the court of jurisdiction
and pre-empted the Government’s claims for relief against Local 813. The district court rejected
as a misreading of the complaint the defendant’s view that the Government sought indirectly to
control certain aspects of the activities of the Local by virtue of the RICO violations of other
defendants, rather than seeking to correct RICO violations committed by the union itself. Id. at
1153-1154.
The district court also rejected defendants’ contention that the pattern element of
the RICO statute is unconstitutionally vague, especially in cases which involve organized crime.
Id. at 1156-1161.
The district court denied various other motions raised by the defendants, including
the following arguments: (1) that the complaint was time-barred by the statute of limitations,
because the statute of limitations and doctrine of laches are inapplicable to civil RICO actions
brought by the Government (rejecting the defendants’ demand for a four-year statute of
limitations); (2) that the complaint was violative of Fifth Amendment double jeopardy
provisions because, under the doctrine of dual sovereigns, the defendants’ prior state convictions
do not bar a federal prosecution for the same conduct; (3) that the action was barred by the Tenth
Amendment because regulation of the solid waste industry is a state governmental function; (4)
that RICO liability could not be imposed on the corporate defendants under a theory of
respondeat superior, because the normal rules of agency should apply to the civil liability created
by the RICO statute and respondeat superior furthers the RICO statute’s goals ( relying on
Connors v. Lexington Ins. Co., 666 F. Supp. 434, 453 (E.D.N.Y. 1987)); (5) that the defendants
should have separate trials; and (6) that portions of the complaint alleging defendants’
associations with organized crime figures should be stricken. Id. at 1152, 1154.
The district court also denied, without prejudice, the defendants’ claim-and issuepreclusion arguments. The defendants had argued that the Government’s case was rendered
moot by civil suits brought by certain local governments. The district court ruled this matter
might be suitable as a Rule 56 motion for summary judgment but that any motion for summary
8

The district court repeatedly rebuked the Government for its failure to craft a concise,
clear, and legally adequate complaint. See, 793 F. Supp. at 1127-1128, 1130, 1137 n.30, 1143,
1144, 1146-1147 and 1148.
88

judgment was premature. The district court stated that the fact of the other lawsuits “call(ed] into
question any justification for this action,” Id. at 1155. The court added:
More specifically, the relief already obtained by these civil actions
against many of those defendants--relief that includes injunctions
against future criminal activity as well as substantial payments into
victim-restitution funds--would appear to make this action a
dubious use of precious governmental and judicial resources.
Id.
2.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F.
Supp. 802 (E.D.N.Y. 1992).

The district court denied the defendant Salvatore Avellino’s motion to stay civil
proceedings, pending the outcome of two grand jury investigations.
In determining whether to stay civil proceedings to await the outcome of a
pending parallel criminal investigation, the district court balanced the private interests of the
plaintiff in proceeding expeditiously with civil litigation against prejudice to plaintiffs if delayed;
private interest of and burden on defendant; convenience to courts; interest of persons not parties
to civil litigation; and the public’s interest. The district court noted that preindictment requests
for stay of civil proceedings are generally denied. Id. at 805, citing Arden Way Assocs. v.
Boeskv, 660 F. Supp. 1494, 1497 (S.D.N.Y. 1987). The district court added that the convenience
of courts is best served when motions to stay proceedings are discouraged. Id. at 808.
The district court ruled that Avellino was not entitled to preindictment stay of the
civil RICO action pending the outcome of grand jury investigations against him with respect to
an alleged conspiracy to control Long Island waste collection industry because the Government,
nonparties and the public had an interest in speedy resolution of the civil action and Avellino’s
countervailing interest in avoiding the use of his Fifth Amendment privilege, as well as any
burden he faced if the motion to stay was denied, was minimal. Id. at 807-808.
The district courted further ruled that forcing a defendant to assert his Fifth Amendment
privilege in a civil action is constitutional. Id. at 807.
3.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F.
Supp. 808 (E.D.N.Y. 1992), aff’d, 995 F. 2d 375 (2d Cir. 1993).

The district court granted the Government’s motion for partial summary
judgment, providing for broad injunctive relief against defendant Salvatore Avellino and denied
Avellino’s request for a continuance to conduct discovery pursuant to Fed. R. Civ. P. 56(f).
The complaint alleged that Avellino, a capo in the Luchese LCN and hidden
owner in two corporate defendant carting companies, collected extortion payments and tribute
from area carters. Avellino divided these illegal proceeds between the Luchese LCN family and
the Gambino LCN family, which controlled IBT Local 813, the union that represents workers
employed by employers engaged in the solid waste industry on Long Island. To control the
carting industry, Avellino used and threatened to use force against rebel carters, controlled
bidding on certain jobs, and bribed public and union officials to ensure continued control of the
carting industry.
The Government contended that there were no genuine factual issues in dispute to
preclude granting its motion as a matter of law because all the requisite elements of civil RICO
89

liability were established by Avellino’s several guilty pleas to New York State anti-trust charges
and charges for coercion and bribery, all related to his illegal activities in the carting industry.
In reaching its conclusion that Avellino failed to show a genuine issue of fact as to
his civil liability, the district court rejected Avellino’s claim that the insufficiency of his response
to the Government’s alleged statement of undisputed facts was attributable to his assertion of his
privilege against self-incrimination. Avellino’s liability, the district court found, was not based
on the adverse inference which arises when a defendant invokes the privilege. Instead, the
district court found that the Government had produced sufficient independent corroboration
evidence of the matters to be inferred from such adverse inference and that Avellino’s guilty
pleas conclusively established that he committed at least two predicate acts necessary for RICO
liability.
The district court found that a state court judgment has collateral estoppel effect in
a subsequent federal proceeding to the same extent it would have in a subsequent state
action under state law, and that a guilty plea has the same preclusive effect as a conviction after a
trial. Therefore, the district court ruled that Avellino’s guilty pleas in state court conclusively
established that he committed the two predicate acts based on those two convictions. Id. at 81315.
The district court also found that the defendant’s actions adequately affected
interstate commence under RICO on the ground that the carting companies affected by
Avellino’s threats used garbage trucks that were manufactured out-of-state.
Moreover, the district court found that the Government had proved that Avellino
was employed by or associated with the enterprise and that his racketeering actions constituted a
pattern, stating:
It is beyond cavil that the threats against the rival
carters Kubecka and the bribes are related to the
furtherance of the Luchese (SIC) Family’s control
of the Long Island waste industry, and that Avellino
and the other named defendants embody a threat to
the domination of an industry that has been plagued
with corruption for the past decade.
Id. at 815.
The district court also rejected Avellino’s claim that the transcripts of intercepted
communications involving him and his co-conspirators, which were obtained pursuant to state
court orders, did not meet the authentication requirements of Fed. R. Civ. P. 56(e). The court
reasoned that Avellino could not relitigate the admissibility of tapes which he had challenged in
the earlier state litigation in which he plead guilty, and whose admissibility had been upheld on
appeal. Therefore, Avellino was either collaterally estopped from relitigating the issues
addressed by the state courts or barred by the doctrine of res judicata from litigating any claim
which he could have raised but did not before these courts. Id. at 815-16.
Moreover, the district court found the Government’s evidence, which included
trial testimony from LCN members Alphonso D’Arco, Peter Chiodo, and Salvatore Gravano
referenced in an agent’s declaration, admissible and sufficient to support its motion for summary
judgment. Therefore, there was no need for the court to reach Avellino’s general challenge to all
tapes on the ground that the Government had failed to demonstrate proper resealing after being
90

used in either former proceedings. As to Avellino’s claim that certain statements contained in
the tapes of intercepted conversations were inadmissible hearsay, the court found that they fell
within various exceptions to the hearsay rule, including personal statements of a party opponent
and statements of coconspirators. Id. at 815-17.
The district court rejected Avellino’s request for a continuance under Rule 56(f)
due to the stay of discovery in this action, because he had invoked his Fifth Amendment privilege
in earlier proceedings and intended to do so in current proceedings. Citing F.S.L.I.C. v.
Molinaro, 889 F. 2d 899, 901-03 (9th Cir. 1989), the district court rejected Avellino’s claim that
summary judgment was improper because he was unable to submit an affidavit in opposition
since he had invoked his Fifth Amendment privilege.
The district court rejected Avellino’s contention that the broad injunctive relief
sought by the Government impermissibly infringed on his constitutional right of association.
In that respect, the district court ordered that:
(1) defendant Avellino refrain from participating directly or
indirectly in the carting industry, any company engaged in the
business of carting, any trade waste association and in the affairs of
Local 813;
(2) defendant Avellino be divested of his interests in the carting
industry and in PSIA enterprises;
(3) defendant Avellino disgorge the illicit proceeds of his
racketeering activity;
(4) defendant Avellino refrain from associating with the other
defendants in this action for any commercial purpose; and
(5) defendant Avellino refrain from associating with known
members and associates of organized crime for any commercial
purpose.
Id. at 818.
The district court, citing United States v. Bonanno Organized Crime Family of La
Cosa Nostra, 683 F. Supp. 1411, 1441 (EDNY 1988), aff’d, 879 F.2d 20 (2d Cir. 1989), ruled
that 18 U.S.C. § 1964(a) granted the court authority “to enter reasonable injunctions against
violators restricting their future business activities.” The district court found that the injunction
against associating with other defendants and with known members and associates of organized
crime “(was] designed to further the significant governmental interest in eliminating the insidious
impact upon a captive community of corruption and racketeering in the Long Island carting
industry.” Id. at 818.
4.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 862 F.
Supp. 861 (E.D.N.Y. 1994).

The district court denied defendant Joseph Ferrante’s motions for partial summary
judgment and dismissal of the complaint, which was based on two grounds: (1) that there were
no facts upon which a reasonable jury could conclude that he committed the predicate acts
91

alleged by the Government; and (2) that there are no facts upon which a reasonable jury could
conclude that Ferrante participated in a pattern of racketeering activity. The district court
concluded that the Government had submitted evidence upon which a reasonable jury could
determine that acts of extortion were committed by Ferrante’s company and that it could not be
said that a reasonable jury could not conclude that Ferrante committed, aided or abetted the
commission, or conspired to commit the predicate acts of extortion. The district court also
concluded that the Government had produced evidence that Ferrante participated in a series of
related predicates extending over a substantial period of time, and hence summary judgment
would be inappropriate.
5.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F.
Supp. 974 (E.D.N.Y. 1994), aff’d, 47 F.3d 1158 (2d Cir. 1995) (Table).

The district court granted the Government’s motion for summary judgment,
granted broad injunctive relief against defendant Nicholas Ferrante, and denied Ferrante’s crossmotion requesting a continuance to conduct discovery.
The complaint alleged that Ferrante, a reputed associate of the Lucchese LCN
family and owner of two Long Island carting companies, was a close associate of Salvatore
Avellino, an alleged Capo in the Lucchese LCN Family, and assisted Avellino on a regular basis
in collecting extortion payments and tribute from area carters. In reaching its conclusion that
Ferrante failed to show a genuine issue of fact as to his civil liability, the district court found
under principles of collateral estoppel, that Ferrante’ s guilty plea in state court to coercion in the
first degree conclusively established that he had committed one predicate racketeering act and
that undisputed evidence submitted by the Government established the second predicate act
alleged, second degree bribery under New York State Penal Law Section 200.00. Id. at 980-82.
Ferrante’s liability for the bribery charge, the district court found, was based on the adverse
inference which arises when a defendant invokes the privilege against self-incrimination and
“independent corroborative evidence of the matters to be inferred” presented by the Government.
Id. at 982, citing PSIA, 811 F. Supp. at 812; United States v. Bonanno Organized Crime Family
of La Cosa Nostra, 683 F. Supp.1411, 1452 (E.D.N.Y. 1988), aff’d, 879 F. 2d 20 (2d Cir. 1989).
Regarding other RICO elements, the district court found that the defendant’s
Hobbs Act violation and his briberies were clearly related to his role in the Long Island carting
industry and constitued a pattern of racketeering activity. Moreover, the district court found that
the Government had proved that Ferrante was an integral part of the carting industry and Private
Sanitation Industry Association enterprises.
The district court found Ferrante liable for a RICO violation and imposed the following
equitable relief. Ferrante was enjoined from:
(i) engaging in any activities involved in connection with the
collection, transportation or disposal of solid waste, (ii) violating,
aiding or abetting the violation of, and/or conspiring to violate any
of the provisions of Title 18, United States Code Section 1961 et
seq., (iii) participating in the affairs of PSIA or other trade waste
association, and from participating in the affairs of Local 813 and
its Trust Funds, any other union and its trust funds, (iv) associating
with any other defendant or member or associate of organized
crime for any commercial purpose and (b) ordered to divest his
interests in the named enterprises and to disgorge the proceeds
92

derived from his unlawful conduct and participation therein into a
Court-administered fund.
Id. at 983-84.
Moreover, the district court rejected Ferrante’s request for a continuance under
Fed. R. Civ. P. Rule 56(f) , and denied his request that the court defer ruling on the
Government’s motion for summary judgment to allow him to conduct additional discovery. The
district court found Ferrante’s request disingenuous because he attempted to obtain testimony of
other witnesses, while he continued to assert his Fifth Amendment privilege with respect to the
underlying facts. The court stated that there was no reason to grant a continuance to a litigant
who has “personal and intimate knowledge of the underlying facts for the purported purpose of
conducting discovery to ascertain those identical facts.” Id. at 984, quoting Private Sanitation
Indus. Ass’n of Nassau/Suffolk Inc., 811 F. Supp. at 817-818. The district court also rejected
further deposition of a witness whose declaration was supported by independently admissible
evidence and of further witnesses who Ferrante had not subpoenaed. Id. at 899 F. Supp. at 984.
The district court granted Ferrante’ s motion to strike the Government’s references
to Avellino’s guilty plea allocution to racketeering charges. The Government asserted that
Avellino’s allocution was submitted not to prove the existence of any of the RICO elements, but
rather to prove the full extent and viciousness of the carting enterprise. The district court held
that Ferrante’s liability for the RICO violations did not depend on this element and thus, the
proof related to it was not relevant and was inadmissible under Fed. R. Evid. 402. The district
court also determined that even if the Avellino allocution was admissible, its minimal probative
value would be far outweighted by its prejudicial impact. Fed. R. Evid. 403. Id. at 984-85.
6.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 159
F.R.D. 389 (E.D.N.Y. 1994).

The district court granted the Government’s motion to substitute the estates of two
deceased defendants as parties in place of those two defendants on the ground that a civil RICO
suit survives the death of a party because it is remedial, and not penal in nature.
7.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 914 F.
Supp. 895 (E.D.N.Y. 1996).

The district court granted the Government’s motion for summary judgment
against defendants Sanitation and U-Need-a-Roll Off. Corp., finding that under principles of
collateral estoppel, the corporate-defendants’ guilty pleas to criminal charges conclusively
established that they committed the racketeering acts charged against them in the civil RICO suit.
Id. at 896-98.
The district court also denied defendant Ferrante’s motion to withdraw its earlier
order (see 899 F. Supp. 974), drawing an adverse inference from Ferrante’s invocation of his
Fifth Amendment privilege and his request to allow his testimony. Id. at 899-900.
The district court further ruled that United States v. Carson, 52 F.3d 1173 (2d Cir.
1995), did not preclude the order requiring Ferrante and the corporate defendants to disgore the
proceeds of their RICO violations because “unlike Carson, the defendants in this case continue to
be actively involved in the identical activities upon which this RICO suit is predicated” and
hence “the monies these corporations gained illegally obviously constitute capital available for
the purpose of funding or promoting the illegal conduct.” Id. at 901.
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Finally, the district court ordered that the defendants were subject to the same
equitable relief provided in the Consent Judgment entered by the district court on February 28,
1994. Id. at 901-02. See Section E(3) above.
F. 2d. Cases:
1.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 995 F. 2d
375 (2d Cir. 1993), aff’g, 811 F. Supp. 808 (E.D.N.Y. 1992).

The Second Circuit affirmed the district court’s decision granting the Government
partial summary judgment against defendant Salvatore Avellino. First, the Second Circuit held
that the Government’s evidence, consisting of Avellino’s state court guilty plea to the crimes
underlying the two charged racketeering acts, the testimony of government informants, and the
adverse inference drawn from his failure to testify in the present proceeding, was sufficient to
establish that Avellino committed the two bribery racketeering acts.
Second, the Second Circuit held that the district court did not abuse its discretion
in denying Avellino’s request for a continuance to conduct discovery before the district court
entertained the motion for summary judgment.
Third, the Second Circuit rejected Avellino’s claims that the injunctive relief was
not warranted, was beyond the scope of RICO’s civil remedies, and violated his First
Amendment associational rights.
2.

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 44 F. 3d
1082 (2d Cir. 1995).

The Second Circuit ruled that the defendant was not entitled to a stay, pending
appeal, of the district court’s order finding him liable for violating RICO, enjoining him from
participating in the waste disposal business, and associating with his co-defendants for any
commercial purpose, and directing the defendant to divest his interests in various enterprises and
to disgorge proceeds derived from his unlawful conduct into a court-administered fund.

94

10. ILA LOCAL 1804-1
A.

CASE NAME:
United States v. Local 1804-1, International Longshoremen’s Association, AFL-CIO, et

al., 90 Civ. 0963 (LBS), United States District Court for the Southern District of New York.
Complaint filed on February 14, 1990, amended complaint filed on September 27, 1991.
B.

DEFENDANTS:
The amended complaint named as defendants: (1) six International Longshoremen’s

Association (ILA) locals and their Executive Boards (Locals 1840-1, 1588, 1814, 1809, 824,
1909); (2) thirty-seven then present and former officers and Executive Board members and
delegates of the ILA Locals; (3) 25 alleged members and associates of the Genovese and
Gambino LCN Families; (4) six alleged members of the Westies Organized Crime Group; (5)
two corporate-employers (Nodar Pump Repair, Inc., and Doreen Supply Company, Inc.) and (6)
two associations of employees (the Metropolitan Maintenance Contractors’ Association, Inc.
(MMMCA) and the New York Shipping Association (NYSA)). In addition, pursuant to Fed. R.
Civ. P. 23(a) and (b)(1), (b)(2), and (b)(3), the complaint made class action allegations against
four classes of defendants: The Genovese Organized Crime Family Class, the Gambino
Organized Crime Family Class, the Westies Organized Crime Group Class and the Employer
Class. The four defendant classes were named for the purpose of obtaining effective relief.
The named alleged Genovese LCN defendants included Anthony Salerno, boss; Venero
Mangano, underboss; and soldiers Tino Fiumara, John Barbato, Michael Coppola, Vincent
Colucci, Douglas Rago, George Baronne, and Thomas Buzzanca; and associates Vincent
Colucci, and James Caskin. The named alleged Gambino LCN defendants included boss John
Gotti; capos Anthony Scotto and Anthony Cicconi; underboss of the of Cleveland LCN, Frank
Lonardo; soldiers Anthony Anastasio, and Anthony Pimpinella.

95

C.

SUMMARY OF COMPLAINT:
The complaint alleged that for more than thirty years the Genovese and Gambino LCN

Families had cooperatively exploited the ILA, the Waterfront shipping industry, and the workers
laboring on the Waterfront through a pattern of violence, corruption and other abuses. The
complaint also alleged that the Genovese and Gambino LCN Families continued to exercise
control over the International Union and New York-New Jersey ILA locals.
The alleged RICO association-in-fact enterprise consisted of certain members and
associates of the Genovese and Gambino LCN Families , the Genovese and Gambino LCN
Families themselves, acting through their members and associates, ILA Locals 1804-1, 1588,
1814, 1809, 1909, 824, certain other ILA locals, and certain of their respective Executive Boards
and their related labor councils, and their Pension, Welfare, and Benefit Funds, certain present
and former ILA International and local officials and employees, and certain businesses and
employer associations operating on or about the Waterfront (Waterfront Enterprise).
The complaint alleged four claims for relief: that the individual named defendants
conducted the affairs of the Waterfront Enterprise through a pattern of racketeering activity, and
conspired to do so, in violation of 18 U.S.C. §§ 1962 (c) and (d), respectively (claims one and
two), and that the individual named defendants acquired and maintained an interest in and
control of the Waterfront Enterprise through a pattern of racketeering activity, and conspired to
do so, in violation of 18 U.S.C. §§ 1962 (b) and (d), respectively (claims three and four). The
alleged pattern of racketeering activity underlying the four claims for relief included numerous
violations, including: (1) embezzlement of Local 1804-1 funds through the expenditure of sham,
extra pension payments and no show jobs held by organized crime figures, excessive salaries, in
violation of 29 U.S.C. § 501(c); (2) numerous unlawful payments to union officers and
employees, in violation of 29 U.S.C. § 186; (3) numerous extortions of payments from
employers, in violation of 18 U.S.C. § 1951; (4) extortion of union member’s rights to union
democracy guaranteed by the LMRDA (29 U.S.C. §§ 501(a) and 411), in violation of 18 U.S.C.
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§ 1951; (5) embezzlement of union-benefit funds, in violation of 18 U.S.C. § 664; (6) receipt of
things of value because of defendants’ connection to employee benefit funds, in violation of 18
U.S.C. § 1954; (7) loansharking, in violation of 18 U.S.C. §§ 891-894; and (8) conducting illegal
gambling businesses, in violation of 18 U.S.C. § 1955.
D.

RELIEF SOUGHT:
The relief sought included a preliminary and permanent injunction, enjoining: (1) all

individual defendants, and all other persons in active concert or participation with them in the
affairs of the LCN, from participating in the affairs of the ILA, any of its locals, any of its
affiliated benefit funds, or any other labor organization or employee benefit funds, and from any
dealings, directly or indirectly, with any officer, auditor or any employee of ILA or its affiliated
benefit funds or any other labor organization, about any matter which relates directly or indirectly
to the affairs of the ILA, any of its locals or affiliated benefit funds, or any other labor
organization or benefit funds; (2) the six ILA Executive Boards, their individual members, any of
their successors and all persons in active concert or participation with them, from committing any
act of racketeering activity as defined in 18 U.S.C. §§ 1961 et seq., and from associating directly
or indirectly with any member or others associated with the LCN; (3) any defendant found to
have violated 18 U.S.C. § 1962 from any participating in any way in: (a) any activities of the
Waterfront; (b) the affairs of the ILA, any of its locals, or any other labor organization about any
matter which relates directly or indirectly to the affairs of the ILA, any of its locals or any other
labor organization; or (c) the ownership, operation or employment of or by any business which is
a member of the Employer Class.
The Government also sought the following relief, an order: (1) requiring new elections
for members of the Executive Boards of the six ILA Locals to be conducted by court-appointed
trustees; (2) pending the new elections, appointing trustees for the six ILA Locals to discharge
the duties and responsibilities of the six Locals’ Executive Boards (other than negotiating and
entering into collective bargaining agreements); (3) appointing one or more administrators who
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shall serve until such time as the Waterfront and ILA Locals are free from corruption, to oversee
operations of the Waterfront and to implement reforms to prevent racketeering acts; (4) enjoining
the defendants and the ILA Locals and affiliated entities from interfering with the activities of the
court-appointed trustees; (5) requiring that all defendants found to have violated 18 U.S.C.
§ 1962 disgorge all proceeds of their violations; and (6) requiring that defendants pay the costs of
the court-appointed officers and the costs incurred by the government in this suit.
E.

OUTCOME OF THE CASE:
1.

During the course of the litigation various individual defendants entered into

Consent Judgments wherein they agreed to similar relief, including an agreement to be bound by
any order of the district court appointing court officers in this suit and an injunction permanently
enjoining the settling defendants from: (1) committing any racketeering act as defined in
18 U.S.C. §§ 1961 et seq.; (2) knowingly associating, directly or indirectly, with any member of
the LCN or any person in active concert or participation with any member of the LCN; and (3)
obstructing or interfering with any injunctive relief imposed by the district court in this case.
Some of these settling defendants were also enjoined from having any dealings with any ILA
related entity or their officers, employees or representatives. See orders entered August, 1990,
November 5, 1990, March 12, 1991, May 3, 1991, May 30, 1991, September 5, 1991, September
17, 1991, September 20, 1991, and October 30, 1991.
2.

On March 25, 1991, a Consent Judgment was entered into among the

Government, ILA Local 1804-1, its Executive Board, and several officers of Local 1804-1 that
included the following relief:
a.

the officers of Local 1804-1, its Executive Board and current and future
officers, agents, representatives, employees and members of Local 1804-1
were permanently enjoined from: (a) committing any act of racketeering as
defined in 18 U.S.C. §§ 1961 et seq., (b) knowingly associating with any
member or associate of the LCN or any other criminal group or any person
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prohibited from participating in union affairs, and (c) obstructing,
opposing or otherwise interfering with the work of the court-appointed
officers.
b.

the district court would appoint a Monitor to oversee the operations of
Local 1804-1, whose powers included the following:
(1)

the right to attend every meeting of Local 1804-1 and its Executive
Board.

(2)

the right to have complete and unfettered access to, and to make
copies of, the books, records, files, etc. of Local 1804-1, its
Executive Board and officers.

(3)

to require and take sworn statements or sworn oral depositions of
any officer, agent or employee or member of Local 1804-1 relating
to the Monitor’s duties.

(4)

to obtain an accounting of the assets of Local 1804-1.

(5)

to exercise the powers set forth in the ILA’s Constitution and ByLaws that relate to investigating and disciplining officers, agents,
employees and members of Local 1804-1.

(6)

to supervise elections for officers of Local 1804-1.

(7)

to review all expenditures and proposed contracts (except for
collective bargaining agreements) of Local 1804-1, appointments
to Local 1804-1 office or employment and proposed changes to the
Constitution and By-Laws of Local 1804-1 and to veto such
expenditures, contracts, appointments and changes that would
constitute a racketeering act or would further the association of
Local 1804-1 or any of its members with any element of organized
crime.
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(8)

to hire personnel to assist the Monitor with all the expenses of the
Monitor and such personnel to be paid for by Local 1804-1.

(9)

to submit periodic reports to the district court, the government and
Local 1804-1.

c.

The Consent Judgment also amended Local 1804-1's Constitution and ByLaws regarding compensation and benefits for its officers, and further
provided that any decision of the Monitor was final and binding subject to
the district court’s review under procedures applicable to review of final
agency review under the Administrative Procedure Act.

3.

On March 26, 1991, a Consent Judgment was entered into among the Government

ILA Locals 824, 1809 and 1909 and their respective Executive Boards and Officers that included
the following relief.
a

Two defendants were barred from holding any office or position in ILA
Locals 824, 1809 and 1909 and any other Local or subdivision of the ILA.

b.

The next union election was to be supervised by the United States
Department of Labor.

c.

The district court would appoint a Monitor to oversee certain operations of
ILA Local 1909, with powers similar to those of the court-appointed
Monitor for Local 1804-1, described above.

d.

The district court entered a permanent injunction against officers of ILA
Locals 824, 1809 and 1909 that was virtually the same as the injunction
imposed against officers of Local 1804-1 described above.

4.

On December 17, 1991, a Consent Decree was entered among the Government,

ILA Local 1814, its Executive Board and several individual defendants that included the
following relief:

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a.

The district court entered a permanent injunction against the individual
settling defendants and all current and future officers, agents,
representatives, employees and members of Local 1814 that was virtually
the same as the injunction imposed against officers of Local 1804-1
described above.

b.

The district court was to appoint a Monitor to oversee certain operations of
Local 1814, with powers similar to those of the court-appointed Monitor
for Local 1804-1, described above.

c.

The Constitution and By-Laws of Local 1814 were amended to conform
with all the terms of the Consent Decree, and to require secret-ballot
election of shop stewards by rank and file members and to limit
compensation of Local 1814 officers and employees.

d.

Several defendants were permanently barred from membership or holding
any office or position in Local 1814, the ILA, any other ILA Local or
affiliated entity, or any pension or other benefit plan or fund affiliated with
any ILA entity, and also were permanently barred from any employment or
other participation in the affairs of any entity doing business on the
Waterfront.

5.

On January 3, 1992, a Consent Judgment was entered between the Government

and ILA Local 1588, that included the following relief:
a.

The district court would appoint an Ombudsman, with authority similar to
that granted to the court-appointed Monitor for Local 1804-1 described
above.

b.

The United States Department of Labor would supervise the next election
for officers of Local 1588.

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c.

Two person were barred from holding any office or position in Local
1588, or any entity affiliated with Local 1588 or the ILA.

d.

The district court entered a permanent injunction against the then current
officers of Local 1588 and its Executive Board and future officers, agents,
representatives and members of Local 1588 that was virtually the same as
the injunction imposed against Local 1804-1 and its officers described
above.

e.

The Constitution and By-Laws of Local 1588 were amended to add
provisions relating to disciplining members, officers and employees of
Local 1588 for misconduct.

6.

Following a non-jury trial, the district court found the remaining defendants liable

and imposed equitable relief. See United States v. Local 1804-1, International Longshoremen’s
Ass’n, 812 F. Supp. 1303 (S.D.N.Y. 1993), modified, 831 F. Supp. 167 (S.D.N.Y. 1993), aff’d
and vacated in part, 52 F.3d 1173 (2d Cir. 1995), discussed below in Section F.
F.

LEADING COURT DECISIONS:
F. Supp. Cases
1.

United States v. Local 1804-1, International Longshoremen’s Ass’n, 732 F. Supp.
434 (S.D.N.Y. 1990).

The district court denied defendant’s motion for an order authorizing counsel to
represent simultaneously a local and an officer of that local who was charged with wrongdoing in
his individual capacity (officer defendants) and authorizing the locals to pay attorney fees for the
officer defendants prior to a determination on the merits of the complaint. The district court
explained that the interests of the unions were not, as the unions argued, necessarily aligned with
those of the individual defendants and that, assuming for argument that no conflict of interest
existed in their respective defenses, there was no certainty conflict would not arise in the future.
Further, the district court noted that under case law and 18 U.S.C. § 501(c), union funds were not
available to defend officers charged with union misconduct and that defendants must finance
their defense costs and seek reimbursement if successful.
The district court denied the Government’s motion seeking to bar counsel who
had appeared on behalf of both a defendant local and an individual officer defendant from
continuing to represent the local, but left available the Government’s option to file at later time,
if the facts warranted, an appropriate motion to disqualify.

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2.

United States v. Local 1804-1, International Longshoremen’s Ass’n, 745 F. Supp.
184 (S.D.N.Y. 1990).

The district court denied, as premature in the absence of a fact-finding hearing,
defendants’ motions to dismiss the complaint on the grounds the Government could not prove
the allegations in the complaint, and ruled that the complaint was adequate on its face. The
district court also denied as premature the Government’s motion to strike affirmative defenses
inasmuch as a motion to strike was not intended to provide an opportunity for the determination
of disputed and substantive questions of law. The district court also denied without prejudice the
motion to dismiss certain defendants.
The district court also denied defendants’ motion for summary judgment based on
the Government’s assertion of its good faith belief that it could prove by direct testimony, and
otherwise, the extortion of Local 1809's members, even though some witnesses, fearing physical
harm, had thus far refused to testify. The district court warned the Government that it took
seriously the Local’s protest that it should not be required to participate in a lengthy and complex
trial if the Government could not produce testimony to prove that Local 1809 members were
extorted.
The district court waived, subject to discovery, the requirement of Celatex Corp.
v. Catrett, 477 U.S. 317 (1986), that the respondent (the Government) had a duty to defend
against a motion for summary judgment with specificity and a demonstration of the existence of
material questions fact. The district court reasoned that Celatex, which addressed a commercial
dispute, was not dispositive where the safety of witnesses was advanced as a concern.
3.

United States v. Local 1840-1, International Longshoremen’s Ass’n, 753 F. Supp.
1158 (S.D.N.Y. 1990).

ILA Local 1809 filed a motion to compel disclosure of the names of members of
Local 1809 who stated, on the condition of anonymity, that the Local was controlled by members
of organized crime who would retaliate if union members exercised their union rights. In spite of
earlier representations by the Government that they believed some victim/members of Local
1809 would agree to testify, the Government had failed to obtain the consent of any Local 1809
member to testify at trial or otherwise disclose his or her identity.
The district court rejected the Government’s proposal to submit written
interrogatories to witnesses whose identities could not be disclosed. The district court ruled that
such a procedure would not adequately protect Local 1809's right to a fair trial in a case in which
an FBI agent’s hearsay testimony would be the only evidence as to the victim/members’ state of
mind. The district court also ruled that the Government could not invoke the informant’s
privilege with respect to victim/members identities while at the same time relying on the FBI
agent’s account of their statements to sustain the Government’s burden of proof as to the
members’ state of mind. The district court set a deadline for the Government to advise the court
and defendants whether there would be any testimony by victim/members at the trial. However,
the district court did not compel disclosure.
On December 17, 1990, in an unpublished decision, the district court denied Local
1809's application for disclosure of the names of Local 1809 members.

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4.

United States v. Local 1804-1, International Longshoremen’s Ass’n, Donald
Carson, 812 F. Supp. 1303 (S.D.N.Y. 1993), modified, 831 F. Supp. 177
(S.D.N.Y. 1993), aff’d and vacated in part, 52 F.3d 1173 (2d Cir. 1995).

After a ten-week bench trial, the district court ruled that the Government had
proved by a preponderance of the evidence that the four remaining defendants (Donald Carson,
Anthony Gallagher, George Lachnicht, and Venero Mangano) were liable for RICO violations.
The evidence included live testimony, deposition testimony, and more than ten
thousand trial exhibits. The district court also concluded that defendant Carson, whose action
claiming entitlement to pension benefits was consolidated with this action, was not entitled to
pension benefits from Local 1588.9
The district court found the following evidence sufficient to establish the
existence of an association-in-fact enterprise consisting of ILA Locals and officials local union
employers, Waterfront businesses and members of La Cosa Nostra (LCN):
a.

b.
c.
d.

Public reports documenting conclusions and findings developed from
extensive factual investigations (e.g., Public reports, such as the
President’s Commission on Organized Crime, successful state and federal
criminal investigations and prosecutions);
Eye witness and expert testimony;
Electronic surveillance investigations;
Evidence of wrongdoing by defendants who settled and were no longer
parties in the case.

Id. at 1310-15.
9

Carson filed a lawsuit against Local 1588 in the District of New Jersey to compel the Local
to resume his monthly pension payments and to ensure that in the event of his death the payments
would be made to his widow. The New Jersey action was transferred to the Southern District of
New York and consolidated with the present action.
The court denied Carson’s motion for summary judgment in his civil action (90 Civ.
5618), Carson v. Local 1588 Int’l Longshoremen’s Ass’n, 769 F. Supp 141 (S.D.N.Y. 1991),
where the court held that the Local had conceded that a pension plan had been established, as
defined by ERISA. In its summary judgment opinion, the court found that “top-hat” pensions
plans, such as the one at issue, were exempt from the non-forfeiture and non-alienation rules
which typically apply to employee pension plans under ERISA. Carson, 769 F. Supp. at 144.
The court also held that the union could obtain forfeiture of Carson’s benefits if it could
demonstrate that Carson had breached a fiduciary duty to the pension plan. Id. at 145 n.6. Two
factual circumstances would estop Carson from claiming pension benefits: (1) if Carson failed
to comply with the mandated disclosure and reporting provisions of ERISA as required of those
responsible for managing top-hat pension funds; and (2) if Carson caused injury to Local 1588's
pension fund based on the conduct for which he was criminally convicted in 1988. Id. at 145.
As the union’s plan administrator, Carson clearly owed a fiduciary duty to the pension. And the
evidence demonstrated that Carson’s involvement in the MOTBY scheme caused financial injury
to Local 1588 (By Carson’s not upholding ILA policy that the work in question be done by deepsea longshoremen, members of Local 1588 lost employment opportunities and salaries, resulting
in lost revenues and a diminished treasury for Local 1588.). Thus, under ERISA § 1109(a),
which permits the court to impose equitable or remedial relief against those who breach fiduciary
duty to a pension plan, Carson was estopped from receiving the pension benefits he sought.
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The district court also found that the defendants’ predicate acts, discussed below,
were related to each other and to the Waterfront enterprise by the exploitation of the Enterprise
by LCN figures, their ILA confederates, and their control of ILA Local 1588. The existence of
the pattern of racketeering activity was confirmed by the public report evidence and expert and
fact testimony. The requisite continuity was evident from the fact that the related predicates
themselves involved a distinct threat of long-term racketeering activity. Moreover, the district
court noted that under Second Circuit case law, continuity may virtually be presumed because
“the fact that an act is done at the behest of organized crime makes it likely that a pattern will
continue.” Id. at 1316.
The district court found that the Government proved by a preponderance of the
evidence that the defendants had committed, or aided and abetted, various racketeering acts
involving: (1) the unlawful receipt of payments from employers, in violation of 29 U.S.C. § 186;
(2) embezzlement of union funds, in violation of 29 U.S.C. § 501(c); and (3) extortion of union
members’ rights to union democracy protected by the LMRDA, in violation of 18 U.S.C. § 1951.
Id. at 1308-09, 1318-39, 1349-50.
In particular, the district court stated that the Government presented “persuasive
evidence that the union members were intimidated by [Local 1588's] association with organized
crime” (id. at 1336), including evidence that there were no opposed elections during Carson’s
tenure at the union, and that the union failed to criticize or object to Carson’s leadership when
they would have done so, absent the intimidation. Id. at 1337. In addition, the Government’s
expert witness testified that these facts gave rise to the inference that the union members’ silence
was the result of fear and intimidation. This inference was further supported by circumstances
occurring after the murder of an LCN member who exercised corrupt influence over Local 1588
and Carson’s conviction and retirement from the union: first, union membership increased, and
second, following Carson’s retirement, union members regularly complained of Carson’s abuses
as an officer. Id. at 1334-37.
However, the district court also found that the Government did not prove several
racketeering acts involving embezzlement, illegal employer payments under 29 U.S.C. § 186,
and extortion of union members’ economic rights. Id. at 1326-27, 1334-35, 1339-40.
The district court concluded that the defendants were liable for RICO violations,
but deferred imposition of sanctions.10
5.

United States v. Local 1804-1, International Longshoremen’s Ass’n, 831 F. Supp.
177 (S.D.N.Y. 1993), aff’d and vacated in part, 52 F. 3d 1173 (2d Cir. 1995).

This opinion entailed the remedy phase of the litigation, following the district
court’s finding, after a bench trial, that four defendants were liable for violating RICO as noted
above.

10

The district court granted the Government’s request for a preliminary order, restraining the
defendants from dissipating their assets pending execution of a final judgment in this case. See,
United States v. Local 1804-1 International Longshoremen’s Ass’n, 1993 WL 77319 (S.D.N.Y.
March 15, 1992).
The district court also modified its decision finding defendants’ liable regarding several
evidentiary matters. See United States v. Local 1804-1, International Longshoremen’s Ass’n,
831 F. Supp. 167 (S.D.N.Y. 1993).
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First, the district court ruled that there was no need to receive further evidence
regarding remedies, and rejected defendants’ proffered evidence as irrelevant or immaterial. Id.
at 181-84.
Second, the district court ordered each defendant to disgorge the proceeds of their
RICO violations as follows: Defendants Mangano, Gallagher and Carson were each ordered to
disgorge $16,100 that each received in kickbacks. Id. at 186-88. Defendant Carson was also
ordered to disgorge $60,000 reflecting the portion of his salary that he embezzled. Id. at 188.
Defendant Lachnicht was ordered to disgorge $15,000. Id. at 189.
The district court rejected the Government’s request for prejudgment interest on
the amounts disgorged and declined to impose joint and several liability on the defendants. Id. at
185-88.
The district court also rejected defendant Carson’s claim that his disgorgement
award constitutes a second punishment for his underlying conduct which was the basis for his
prior conviction. The district court explained that disgorgement was “remedial” and not
punishment. Id. at 190-91.
Third, the district court enjoined the defendants who had violated RICO: (1) from
committing any racketeering act as defined in 18 U.S.C. § 1961; (2) “from having any dealings,
directly or indirectly, with any members or associates of organized crime for any commercial
purpose concerning the affairs of the Waterfront [Enterprise] . . . or any labor organization;” (3)
“from having any dealings, directly or indirectly, with any other defendant in this action for any
commercial purpose concerning the affairs of the Waterfront [Enterprise] or any labor
organization;” (4) “from participating in any way in the affairs of or having any dealings, directly
or indirectly, with (i) any labor organizations. . . . (ii) any officer, agent, representative,
employee, or member of [several locals]; (iii) any other officer, agent, representative, employee,
or member of the ILA or any other labor organization concerning the affairs of such organization
or the Waterfront [Enterprise];” and (5) “from visiting the site of any ILA entity or other labor
organization or communicating with any person who is at the site of any ILA entity or other labor
organization.” Id. at 191-92.
6.

United States v. Local 1804-1, International Longshoremen’s Ass’n, 831 F. Supp.
192 (S.D.N.Y. 1993).

The district court approved the Consent Decree, dated July 21, 1993, between the
United States and the New York Shipping Association, Inc., finding that the Consent Decree met
the standards for approval of consent decrees enunciated by the Supreme Court in Local 93,
International Ass’n of Firefighters v. City of Cleveland, 478 U.S. 501 (1986).
The Consent Decree included the following relief:
(a)

The district court appointed the Waterfront Commission of New
York Harbor (Waterfront Commission) to determine a list of
persons to be prohibited from seeking, obtaining, or remaining in
employment on the Waterfront. The list was to include any person
who: (1) defaulted in this case or was found to have violated
RICO; (2) was a member of any organized crime group as defined
in the complaint; (3) knowingly associated with a member of any
organized crime group; and (4) committed a felony under the laws
of the United States or any state.
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(b)

Any person who contested any charge by the Waterfront Commission was
entitled to a hearing conducted in the same manner as proceedings before
administrative law judges. The Government had the burden of proof by the
preponderance of the evidence. Any person found liable had a right to appeal the
decision to the district court who shall uphold the decision if the decision was
supported by substantial evidence, within the meaning of the Administrative
Procedure Act, 5 U.S.C. §§ 701, et seq. Such person also had a right to apply for
a de novo hearing. All questions of law were to be reviewed de novo.

F.2d Cases
1.

Local 1814, Int’l Longshoremen’s Ass’n v. New York Shipping Ass’n, 965 F.2d
1224 (2d Cir. 1992), cert. denied, 506 U.S. 953 (1992).

ILA Local 1814 argued that the proposed RICO Consent Decree (discussed above
in Section F(1)(6)) between the New York Shipping Association, Inc. (NYSA) and the
Government included injunctive relief that exceeded the district court’s jurisdiction.
Specifically, the NYSA argued that the Norris-LaGuardia Act, 29 U.S.C. §§ 101-115, “which
divests federal courts of jurisdiction to enter injunctions in all ‘labor disputes’, takes precedence
over RICO.” Id. at 1225. One provision of the proposed consent judgment would have barred
from waterfront employment any individual who violated RICO, any individual who was a
member of organized crime, and any individual who aided or abetted individuals in the first two
categories. Local 1814 contended that this would create new categories for termination of
employees and would unilaterally impose new terms on the collective bargaining agreement.
The union began an arbitration proceeding and sought an injunction to prevent NYSA from
taking action which would effectuate the consent decree. The Government sought an injunction
to prevent arbitration. The district court granted the Government’s injunction and denied the
union’s requested injunction. Id. at 1226-1231.
The Second Circuit first determined that the issue of arbitrability was one for the
court to decide in the first instance, and that the dispute between NYSA and Local 1814 was
arbitrable. Id. at 1233-34. The Second Circuit next determined that this was a labor dispute
under the Norris-LaGuardia Act because the new categories for termination concerned the terms
and conditions of employment. Id. at 1235-36.
The Second Circuit stated that district courts have jurisdiction to issue injunctions
under two exceptions to the jurisdiction - stripping provisions of the Norris-Laguardia Act.
“First, the federal courts have jurisdiction to issue injunctions in ‘labor disputes’ when necessary
to accommodate Norris-LaGuardia’s ‘strong policy favoring arbitration. . . ‘. Second, the federal
courts have equity jurisdiction when necessary to reconcile Norris-LaGuardia with the mandates
of a specific federal statute.” Id. at 1236. (citations omitted).
The Second Circuit concluded that the injunction under RICO fell within the
second exception. Id. at 1236-38. The Second Circuit explained that Congress specifically
intended RICO’s civil remedies to combat organized crime’s infitration of labor unions and that,
therefore, it had a duty to apply RICO which was specifically designed to apply in the labor
context. Id. at 1236-37. The court added that once subject matter jurisdiction and jurisdiction
over the parties has been acquired, the All Writs Act, 28 U.S.C. § 1651, authorizes federal courts
to protect that jurisdiction. Id. at 1236-37. The Second Circuit concluded, therefore, that
Congress anticipated that RICO injunctions would extend to some labor disputes and that NorrisLaGuardia’s general prohibition against injunctions in labor disputes did not bar the relief
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requested by the Government. Specifically, “the anti-injunction provision of Norris LaGuardia
must yield to the compelling governmental interest of eliminating the hold of organized crime on
labor unions as contemplated by RICO.” Id. at 1238.
The Second Circuit limited its holding as follows:
Our holding today is narrow. We do not hold that “mere unlawfulness
under any law is enough to remove the strictures of the Norris-LaGuardia
Act.” (citations omitted). We hold only that when injunctive relief in what
would otherwise be a “labor dispute” is properly sought to further RICO’s
remedial purposes, the anti-injunction provisions of Norris-LaGuardia are
inapplicable, and a federal court has jurisdiction to grant injunctive relief.
Id. at 1238-39.
2.

United States v. Local 1804-1, International Longshoremen’s Ass’n, 44 F.3d 1091
(2d Cir. 1995).

The Second Circuit held that the district court’s finding a person in civil contempt
for violating the terms of a Consent Decree was reviewable for an abuse of discretion. Id. at
1095-96. Under that standard, the Second Circuit reversed the district court’s finding of
contempt that a former union official violated the Consent Decree by knowingly associating with
organized crime persons or with persons barred from participation in union affairs, finding that
the district court had misinterpreted the relevant provisions of the Consent Decree. In that
regard, the Second Circuit stated that under the specific terms of the Consent Decree at issue:
The mere fact of knowing association with individuals of
prohibited status is not enough; in the absence of a showing of
explicit impropriety, there must also be grounds, based on the
circumstances of the particular contacts in question, for concluding
that those contacts help to perpetuate organized crime’s control
over the union or impinge on the integrity and independence of the
union.
Id. at 1098.
The Second Circuit, however, affirmed the district court’s finding the former
union officer in contempt for violating the Consent Decree by his pursuing pension benefits by
attempting to influence the decision making of an entity doing business on the Waterfront, which
conduct was prohibited by the Consent Decree. Id. at 1099-1100.
3.

United States v. Carson, 52 F.3d 1173 (2d Cir. 1995), aff’g and vacating in part,
831 F. Supp. 177 (S.D.N.Y. 1993).

Following a bench trial, the district court found Donald Carson liable for violating
RICO while he was Secretary-Treasurer of Local 1588 of the ILA, and enjoined Carson from: (1)
committing any act of racketeering as defined in 18 U.S.C. § 1961; (2) having any dealings with
any defendant in this case or any member or associate of organized crime for any commercial
purposes concerning the affairs of the Waterfront or any labor organization; and (3) participating
in any way in the affairs of, or having any dealing, with any labor organization or any officer
agent, representative, employee, or member of any labor organization, subject to several
exceptions. Id. at 1184 and n. 10. See section F (1)(4) and (5) above.
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The Second Circuit upheld this injunction, rejected Carson’s claims that the
injunction was overly broad and violated his First Amendment freedom of association, and
concluded that there was a reasonable likelihood of future wrongdoing. Id. at 1183-85.
The Second Circuit also held that disgorgement of a wrongdoer’s ill-gotten gains
was an available remedy to the Government under civil RICO, and that such disgorgement was
remedial, not punitive, and did not violate the Double Jeopardy Clause of the Constitution. Id. at
1181-83.
However, the Second Circuit held that such disgorgement was confined to
preventing and restraining future violations. The Court added that:
Ordinarily, the disgorgement of gains ill-gotten long in the past
will not serve the goal of “prevent[ing] and restrain[ing]” future
violations unless there is a finding that the gains are being used to
fund or promote the illegal conduct, or constitute capital available
for that purpose.”
Id. at 1182.
In that regard, the Court stated:
The vast majority of the money the district court has ordered
Carson to disgorge was received by him long before the civil suit
was ever brought against him in 1990. All of the $16,100 ordered
disgorged in connection with the MOTBY scheme was received in
1981 and 1982. The $60,000 ordered disgorged in connection with
the salary embezzlement was received between 1982 and 1988.
Much of this money was acquired by Carson too far in the past for
its disgorgement to be part of an effort to “prevent and restrain”
future conduct.
Id. at 1182.
However, the Second Circuit added that:
We do not determine what portion (if any) of the disgorgement
order should ultimately survive. Rather, we vacate the existing
order of disgorgement and remand to the district court for a
determination as to which disgorgement amounts, if any, were
intended solely to “prevent and restrain” future RICO violations.
Id. at 1182.11

11

On remand, the district court concluded that the government was not entitled to
disgorgement of any of the funds at issue. See United States v. Local 1804-1, International
Longshoremen’s Ass’n and Donald Carson, 1996 WL 22377 (S.D.N.Y. Jan. 22, 1996).
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11. IBT LOCAL 295
A.

CASE NAME:
United States v. Local 295, International Brotherhood of Teamsters, et al., Civil Action

No. 90-0970, United States District Court for the Eastern District of New York. Complaint filed
March 20, 1990, amended complaint filed April 25, 1990.
B.

DEFENDANTS:
The complaint named institutional and individual defendants: (1) the union defendants,

Teamsters Locals 295 and 851; (2) the executive boards of each local; and (3) alleged members
or associates of the Lucchese LCN Family including --capo Frank Manzo; Harry Davidoff, and
his son Mark Davidoff, both former officers of Local 851; Frank Calise, a former officer of Local
295; Anthony Calogna and Anthony Calagna, both made members; Leone Manzo and Richard
Schroeder; (4) members or associates of the Gambino LCN Family, including Carmelo Amato
and made member Anthony Guerrieri; Local 295 officers Michael Urso-Pernice, Robert
Reinhardt, Sharon Moskowitz, daughter of Harry Davidoff, and Nancy Siano.
C.

SUMMARY OF THE COMPLAINT:
The amended complaint alleged that since 1978, New York’s John F. Kennedy

International Airport (JFK Airport) had been the site of a wide variety of organized criminal
activities by the Lucchese and Gambino LCN Families which controlled Teamster Locals 295
and 851, and whose members were employed in the air freight industry at JFK Airport. Air
freight companies are particularly vulnerable to threats of strikes, work slowdowns or other labor
difficulties because they must provide on-time service. The defendants allegedly used threats of
labor unrest to extort payments from air freight companies doing business at JFK Airport and had
received payments from air freight companies in return for non-enforcement of collective
bargaining agreements. Federal criminal prosecutions in the Eastern District of New York,

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which led to the incarceration of various individuals, including former high-ranking officers of
Locals 295 and 851, had not ended organized crime’s domination of the unions.12
The amended complaint alleged two association-in-fact RICO enterprises: (1) the
“Airport Union Enterprise,” consisting of IBT Locals 295 and 851, their Executive Boards, Local
851's Pension and Welfare Funds, the Lucchese and Gambino LCN Families and the individual
defendants; and (2) the Lucchese Family Enterprise, consisting of the Lucchese LCN Family.
Through these enterprises the defendants allegedly engaged in the following predicate acts of
racketeering, in violation of 18 U.S.C. §§ 1962 (c) and (d) :
(1) Nineteen acts of racketeering, each the subject of one or more federal indictments in
the Eastern District of New York, were set forth in the first sixteen labor racketeering acts (each
with three to five alternative acts) , alleging violations of 29 U.S. C. § 186 (b), 18 U. S. C.
§ 1951, and New York Penal Law § 155. 3 0 (dealing with labor unrest, e.g. , stoppages,
picketing, and other labor difficulties). Specifically, the complaint alleged that the LCN
defendants and others, who were employed by the various air freight companies or served as
officers of the defendant labor unions, demanded or received kickbacks from the air freight
companies by threats of financial injury to the victim air freight companies and by threatening
and causing work stoppages, picketing, increased labor costs, boycotts, and other labor
difficulties. The complaint alleged that the union defendants and various individual defendants
aided and abetted the defendants by using their positions within the unions, the victim air freight
companies, or the LCN to conceal and protect these illegal acts and/or by sharing the profits of
the alleged illegal conduct;
(2) One act of racketeering (Racketeering Act 17) alleged fraud in the sale of securities,
in violation of 15 U.S.C. §§ 78 j(b), 78ff. The complaint alleged that defendant Calise breached
his fiduciary duties as the President of Local 295 by misappropriating confidential merger

12

See, e.g., United States v. Davidoff, 845 F.2d 1151 (2d Cir. 1988).
111

information for his own profit when he supplied information concerning the proposal merger of
certain air freight companies to the Manzo defendants;
(3) Two acts of racketeering (Racketeering Acts 18 and 19) set forth Thomas Greco’s
convictions for obstruction of justice, in violation of 18 U.S.C. § 1503. Greco caused a witness
to give false testimony and to conceal information from the Special Grand Jury.
In addition, the complaint alleged that the defendants, through the Airport Union
Enterprises and the Luchese Family Enterprise, conspired to violate 18 U.S.C. § 1962 (c), in
violation of 18 U.S.C. § 1962 (d).
D.

RELIEF SOUGHT:
1.

The Government sought a preliminarily injunction to: (a) enjoin defendants from

committing any racketeering act listed in 18 U.S.C. § 1961; (b) enjoin the individual defendants
from participating in the affairs of Locals 295 and 851, their Executive Boards, or their affiliated
employee pension and welfare funds or any other labor organization or employee benefit plan
relating to the affairs of Locals 295 and 861; (c) enjoin the incumbent Executive Boards of
Locals 295 and 851 from any actions on behalf of or related to the locals; (d) remove all officers
and trustees of Locals 295 and 851 and their affiliated employee pension and welfare plans; (e)
appoint one or more trustees pendente lite to discharge all duties and responsibilities of the
Executive Boards and Pensions Welfare Funds of Locals 295 and 851, including to oversee
operation of the locals and their affiliated employee and pension and welfare funds; and to order
supervised free elections in the locals; and to order any other injunctive relief deemed
appropriate.
2.

The government sought a permanent injunction:
a.

prohibiting all of the individual defendants from participating in or having

any future dealings of any nature whatsoever with any officer, agent, representative or employee
of Teamsters Local 295, Teamsters Local 851, Local 295 Executive Board, Local 851 Executive
Board, Local 851 Pension and Welfare Funds, or of any other labor organization, about any
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matter which relates directly or indirectly to the affairs of Teamsters Local 295, Teamsters Local
851 or any other labor organization, and from owning, operating or participating in any way in,
or profiting from, any motor carrier or freight forwarder in the Eastern District of New York or
elsewhere, provided however, that any injunctive relief against defendant Frank Manzo be
limited so as to be consistent with, and not duplicate, relief ordered in a consent judgment against
defendant Frank Manzo in United States v. International Brotherhood of Teamsters, 88 Civ. 4486
(S.D.N.Y. October 17, 1988);
b.

making permanent any provision of the preliminary injunction which the

district court deems appropriate.
Finally, the complaint requested the district court to order the individual
defendants to divest themselves of any interest, direct or indirect, not limited to monies, in the
Union Airport Enterprise.
E.

OUTCOME OF THE CASE:
1.

In a Memorandum and Order dated March 7, 1991, the district court denied

various motions to dismiss the complaint and granted partial summary judgment on behalf of the
United States. The union defendants, joined by defendants Harry and Mark Davidoff, Calagna,
and Schroeder, moved to dismiss, contending that the complaint: (1) failed to give adequate
notice as to how they aided and abetted the predicate acts; (2) failed to allege that the defendants
provided substantial assistance in the commission of the crimes; (3) failed to state sufficient
facts to justify imputing liability under agency law; (4) failed to allege sufficient facts to support
the broad equitable relief requested; (5) alleged that the broad relief sought contravened federal
labor law policy; (6) alleged that the executive boards were not “persons” under RICO and
therefore were not proper defendants; and (7) alleged that the RICO statute is unconstitutionally
vague.
The district court held that the complaint was sufficient, stating that although it
did not specify precisely how union defendants aided and abetted the commission of the
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racketeering acts, the complaint sufficiently alleged that they aided and abetted and generally in
what manner. The district court dismissed, as premature in the absence of a factual inquiry, the
issues of union liability, defendants’ challenge to agency liability, their claims that the requested
relief was too broad and in contravention of labor law policy, and their challenge to the
characterization of the executive boards as “persons.” The district court also concluded that prior
convictions and consent decrees in another case involving Frank and Leone Manzo resolved
different claims and issues than those alleged by the complaint and held that the doctrines of res
judicata and collateral estoppel did not bar the instant action.
The district court granted the Government’ s motion for partial summary
judgment against defendants Frank Calise and Harry Davidoff based on collateral estoppel
because their prior convictions “conclusively establish[ed]” their liability for the RICO
conspiracy alleged in the complaint. The district court found that undisputed Government
evidence established that the conspiracy obtained $961,400 from the victim companies. The
court held Calise and Davidoff jointly and severally liable for $961,400 in damages. In addition,
the district court enjoined defendants Frank Calise and Harry Davidoff from participating in the
affairs of Locals 295 and 851, their Executive Boards, or any other labor organization or
employee benefit plan, or from having any dealings with any officer or employee of any labor
organization relating to the affairs of Locals 295 and 851 or any other labor organization.
2.

Pursuant to the terms of a June 7, 1991, Consent Decree, defendants Thomas

Greco and Carmelo Amato were permanently enjoined from: (1) participating in providing
services to, or the management, representation or control of the IBT, and any local, subordinate
or affiliated labor organization or any affiliated benefit or pension plan, or from having any
dealings with any member, employer, or agent of any local, subordinate or affiliated labor
organization or any affiliated benefit or pension plan about any matter relating to the provision of
services to or the management, control or conduct of the affairs of the IBT or any subordinate or
affiliated labor organization or any affiliated benefit or pension plans, except that Greco and
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Amato were not precluded from being a member of a labor organization or from voting in a
union election; and (2) interfering with any officer appointed by the district court to oversee the
affairs of Locals 298 and 851, or any affiliated pension or benefit plan or any components or
agents thereof.
Defendants Amato and Greco also agreed to be jointly and severally liable for
disgorgement of $65,000 to be paid to the registry of the district court.
3.

In a Memorandum and Order, dated June 28, 1991, 1991 WL 128563, the district

court vacated that part of its March 7, 1991, order holding defendants Davidoff and Calise,
jointly and severally liable for $961,400 in damages. The district court found the evidence,
adduced in support of the motions for summary judgment, which established that the conspiracy
obtained $961,400 from victim companies, did not establish the amount each defendant received
from his participation in the conspiracy. The district court, however, adhered to its previous
finding of civil liability on the part of the defendants and ruled the parties could renew their
motions after discovery.
4.

In United States v. Local 295 of the International Brotherhood of Teamsters, 784

F. Supp. 15 (E.D.N.Y. 1992), the Government moved for a second time for the appointment of a
trustee for Local 295. The district court granted the Government’s motion. The district court
found that corruption in Local 295 had been extensive in terms of diversity, duration, and number
of people involved and that the union membership displayed no interest in reforming the union.
Evidence showed “a smug, almost contemptuous, indifference to the presence of organized crime
in union affairs by a number of former union officials and an active effort by many in Local 295
to thwart reform.” Id. at 19.
For example, following the January 1991 conviction of Lucchese LCN Family
solder Anthony Calagna, Sr., President of Local 295, for extortion and conspiracy to extort
money, Vice President Robert Reinhardt assumed the Presidency, and the Local appointed
Anthony Cuozzo, chairman of Calagna’s defense fund committee, to the position of Vice115

President. The district court found that Cuozzo violated his fiduciary duties and his oath by
interfering with the local’s legal obligation under the Consent Order and by knowingly
associating with Calagna, a member of the LCN. Id. at 19.
The district court stated (Id. at 21) that “the evidence exhibits more than simply a
failure by the Executive Board to act affirmatively in the fact of substantial evidence of
corruption. Local 295's offficers closed ranks against the government’s investigation” when they
(1) violated their fiduciary duties by failing to investigate and to take action on numerous
allegations of criminal acts by and convictions of present and former union officers, including
Calagna, and allegations of LCN involvement in the Local’s affairs; and (2) embezzled the
Local’s funds by paying Calagna’s legal fees and awarding him a substantial pay increase, by
establishing a severance plan for themselves after they learned they were being investigated by
the FBI, by buying a car in violation of the Local’s by-laws for a retiring officer, and by making
payments since 1972 to former vice president Harry Davidoff despite his conviction for extortion
and conspiracy to extort Local 295 employers.
In addition, the district court found (Id. at 21) that the corruption extended to a
membership manipulated by the Local’s officers into sanctioning the Board’s embezzlement, as
demonstrated by the approval of payment of Calagna’s criminal defense by a majority of those
members present at a special meeting of the general membership.
The district court rejected the claim that past corruption was over and did not
warrant injunctive relief, stating, “Defendants’ contention that Local 295 is now free of the
influence of organized crime rings hollow. Previous assertions that all corruption had been
eliminated from the Local proved wrong, and the recent convictions and pleas of its officers
argue for continued, close scrutiny.” Id. at 22.
Furthermore, over the objection of Local 295, the district court imposed a court ordered trusteeship to conduct various operations of Local 295 and to conduct investigations to
eliminate corruption within Local 295. The district court stated that it had authority to “appoint a
116

trustee to oversee the affairs of a local union under [Section 1964(a) of RICO]”. Id. at 19. The
district court also quoted a Senate Report stating that “[t]he implementation of trusteeships under
civil RICO is no longer a novel, one-time experiment. It is quickly being recognized as an
extremely valuable part of effective law enforcement.” Id. at 19.
5.

Pursuant to the above decision, in an order dated April 29, 1992, the district court

appointed a Trustee for Local 295, authorizing the Trustee among other matters:
a.

“To conduct, administer and supervise the daily affairs of Local
295, including the power to handle grievances, arbitration and
collect and disburse monies (including member dues) on behalf of
the Local; [and negotiate, enter, and terminate contracts and leases
and to hire personnel as he deems necessary]”.

b.

“To investigate corruption and abuse within Local 295, with or
without probable cause, and with such investigative assistance as
he deems appropriate.”

c.

“To discipline, remove and replace any officer, administrator,
organizer, business agent, employee, shop steward, negotiator, or
trustee of Local 295, for just cause as follows:
(1)

The Trustee’s decisions with respect to discipline of
members shall be final and binding. Any member’s appeal
shall be to the United States District Court for the Eastern
District of New York within fourteen days of receipt of the
Trustee’s decision.

(2)

In any appeal pursuant to paragraph 2(e)(1), the standard of
review shall be whether the Trustee’s decision is supported
by a preponderance of the evidence. Such evidence may
consist of or include hearsay.

(3)

Any actions of the Trustee pursuant to this subparagraph
shall be reviewable, exclusively by this Court, and are not
subject to arbitration or other challenge under the IBT
Constitution or Local 295 By-Laws.”

d.

“To take possession of and review all current and past books,
records, files, accounts and correspondence of Local 295 and the
Executive Board.”

e.

To conduct and supervise union elections.

f.

“To subpoena witnesses and documents.”

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6.

g.

“To take testimony formally or informally, on the record under oath before
a court reporter or otherwise as the circumstances may require in the
Trustee’s sole discretion.”

h.

“To receive assistance of federal and local law enforcement” and to “refer
possible violations of criminal law to federal or local law enforcement
authorities.”

i.

“To apply to the [district] Court for such assistance as may be necessary
and appropriate to carry out the powers conferred upon the Trustee.”

j.

To provide periodic written reports to the district court and the
government.

k.

To provide the Trustee with “all powers granted to Trustees of locals
pursuant to the IBT Constitution and all powers formerly held by the
Executive Board of [Local 295] to the extent that such powers, including
the power to conduct hearings, discipline, remove and replace officers,
employees and members, are broader t