UNITED STATES OF AMERICA and ROBERT B. REICH, Secretary of the United States Department of Labor, Plaintiffs, - against -MASON TENDERS DISTRICT COUNCIL OF GREATER NEW YORK, et al., Defendants.

1997 U.S. Dist. LEXIS 17734, *; 156 L.R.R.M. 3104

94 Civ. 6487 (RWS)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

1997 U.S. Dist. LEXIS 17734; 156 L.R.R.M. 3104

November 5, 1997, Decided
November 7, 1997, Filed

DISPOSITION: [*1] Affirmed.

CORE TERMS: monitor, consent decree, severance, racketeering, constituent, payoff, credible, affiliated, membership, appointed, knowingly, Proscribed Acts, crime family, trusteeship, contractor, organized crime, likelihood of success, substantial evidence, set forth, et seq, preponderance, disciplinary, incidental, capricious, expulsion, hardships, fleeting, Prohibited Acts, business judgment rule, union organizer

COUNSEL: MICHAEL R. LaBARBARA, Pro Se, Holtsville, NY.

J. ERIK SANDSTEDT, ESQ., Of Counsel, LATHAM & WATKINS, New York, NY, for Court-Appointed Monitor.

JUDGES: ROBERT W. SWEET, U.S.D.J.

OPINIONBY: ROBERT W. SWEET

OPINION: OPINION

Sweet, D.J.

Michael R. LaBarbara ("LaBarbara") has appealed from the decision of the court-appointed monitor dated May 20, 1997, barring him from membership in, association with, or employment by the Mason Tenders District Council of Greater New York (the "MTDC"), or any of its affiliated unions or trust funds and imposing a fine of $ 10, 000, payable to General Building Laborers Local Union Number 66 ("Local 66"). For the reasons set forth below, the appeal is denied. n1

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n1 LaBarbara also moved for a stay of the Monitor's decision. Because this opinion affirms that decision, the motion for a stay is rendered moot. Even if this were not the case, however, it is doubtful that a stay could issue. The Consent Decree explicitly rejects the proposition that disciplinary decisions be stayed pending appeal. Consent Decree P 7(c)(2) (Monitor's disciplinary decisions effective immediately on issuance). Moreover, LaBarbara has not satisfied the requirements for issue of a stay, i.e., irreparable harm and either likelihood of success on the merits or a sufficiently serious question going to the merits, and balance of hardships tipping in favor of the moving party. United States v. Local 6A, 832 F. Supp. 674, 682 (S.D.N.Y. 1993). While LaBarbara cannot seek work with the Mason Tenders union, he is free to work elsewhere. There is no likelihood of success, as shown by the affirmation set forth above, nor does the balance of hardships tip in LaBarbara's favor, since the expulsion from MTDC is predicated on a determination that LaBarbara's membership imposes substantial harm on the union. Since the Consent Decree was enacted in order to rectify intractable corruption within the union, its measures must be enforced in order to meet that goal whenever that necessity is supported by the evidence.

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Parties

The MTDC is chartered by the Laborers' International Union of North America ("LIUNA"), a national labor organization, to oversee the operations of LIUNA's constituent local unions in the New York City metropolitan area.

LaBarbara has been a long-time member of Local 66. He has also served as union organizer and Business Manager of that Local.

Facts and Prior Proceedings

The facts of this proceeding have been set forth in greater detail in several prior opinions of the Court, familiarity with which is assumed. See United States v. Mason Tenders District Council, ("Lanza"), 1997 U.S. Dist. LEXIS 2360, No. 94 Civ. 6487, 1997 WL 97836 (S.D.N.Y. March 6, 1997); United States v. Mason Tenders Council of Greater New York, ("Messana"), 1997 U.S. Dist. LEXIS 8715, No. 94 Civ. 6487, 1997 WL 97836 (S.D.N.Y. June 20, 1997); United States v. Mason Tenders Council of Greater New York, ("Wasnofski"), 1997 U.S. Dist. LEXIS 8741, No. 94 Civ. 6487, 1997 WL 97836 (S.D.N.Y. June 20, 1997). Facts relevant to the instant opinion are set forth below.

A. The Consent Decree

MTDC is currently subject to a consent decree (the "Consent Decree") entered by the Government, the MTDC and the employer-trustees of the MTDC Trust Funds [*3] and approved by the Court on December 27, 1994, as a result of a civil action brought by the United States on September 8, 1994. The Government action claimed violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1964 and the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.

In its action, the Government alleged that executives and officers of the MTDC, as well as of its affiliated locals, were intimately linked with the Genovese, Lucchese, and Gambino Organized Crime Families, organized criminal groups that operate throughout the New York City area and elsewhere ("La Cosa Nostra"). See United States v. Salerno, 868 F.2d 524, 528-29 (2d Cir. 1989); United States v. Salerno, 631 F. Supp. 1364 (S.D.N.Y. 1986) order vacated by 794 F.2d 64 (2d Cir. 1996). More specifically, the Government alleged that over a period of twenty years, executives and appointees of the MTDC had: (1) extorted payoffs from employers in exchange for permitting the employers to use non-union labor and avoid making payments to the MTDC Trust Funds as required by collective bargaining agreements; (2) engaged in kickback schemes with companies [*4] and individuals providing services to the MTDC and its constituent local unions; and (3) knowingly condoned similar activities within the constituent local unions of the MTDC.

The Consent Decree was designed to achieve the following purposes: (1) to end any direct or indirect involvement by the La Cosa Nostra in the MTDC and its constituent locals; and (2) to ensure that the District Council shall be maintained and run democratically, with integrity, solely for the benefit of its members, and without unlawful outside influence. Consent Decree at 4. All officers, members and employees of the MTDC and its constituent locals are required by the consent decree "to assist the officers appointed by the Court pursuant to this Consent Decree" to achieve its purposes. Id.

The Consent Decree sets forth the following three categories of prohibited conduct (hereinafter "Proscribed Acts"): (a) any acts of racketeering as defined in the RICO Statute; (b) any knowing association with any member or associate of any La Cosa Nostra crime family ("LCN") or any other criminal group, or with any person prohibited from participating in union affairs; and (c) any obstruction or interference with the [*5] work of the court-appointed officers or with the purposes of the Consent Decree. PP 3, 4(a). The Consent Decree permanently enjoins all current and future officers, agents, representatives, employees, and members of the MTDC and its constituent locals from engaging in any Proscribed Acts. It also provides for the appointment of a Monitor (the "Monitor") to oversee union activities and to ensure the goals of the Consent Decree are fulfilled, and for the appointment of an Investigations Officer ("IO") to investigate any Proscribed Acts and to bring charges based on such conduct before the Monitor for a hearing. n2 Id. P 5(a).

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n2 On January 17, 1995, this Court appointed Lawrence B. Pedowitz, Esq. and Michael Chertoff, Esq. to act as Monitor and Investigations Officer, respectively, under the Consent Decree.

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The Monitor conducts the hearing "in conformity with the rules and procedures generally applicable to labor arbitrations." Id. P 7(b)(2). The Monitor decides charges according to the "just cause" standard. [*6] Id. P 7(c)(1). The preponderance of the evidence standard is used to determine if violations have occurred. United States v. International Bhd. of Teamsters, 754 F. Supp. 333, 337 (S.D.N.Y. 1990). Violations of the Consent Decree or of the union constitution proven by a preponderance of the evidence are just cause for discipline. See, United States v. International Bhd. of Teamsters 19 F.3d 786, 820 (2d Cir. 1994); United States v. International Bhd. of Teamsters, 814 F. Supp. 1165, 1185 (S.D.N.Y. 1993); International Bhd. of Teamsters, 754 F. Supp. at 339-40.

B. Background of LaBarbara's Local 66 Activities

In 1985, LaBarbara was appointed as a union organizer in Local 66 by his father, who was then the Business Manager of the Local and a member of MTDC's Executive Board. In 1989, LaBarbara assumed the position of Business Manager when his father and two other officers of Local 66 were indicted and convicted on labor racketeering charges based on their misconduct as officers of the union, including the solicitation and acceptance of payoffs from union contractors in violation of the Taft-Hartley Act.

In 1990, LIUNA imposed a trusteeship over Local [*7] 66. As a result of the trusteeship, LaBarbara was removed as Business Manager and appointed a "deputy trustee" of the union. Upon termination of the trusteeship in 1992, he became Vice-President and Business Manager of the Local. As Business Agent, LaBarbara was responsible for ensuring that contractors within his geographic area of responsibility complied with the Local's collective bargaining agreement. In June of 1995, LaBarbara resigned his official positions, but maintained active membership in the union until the issue of the Monitor's decision on May 20, 1997.

C. The Disciplinary Hearing

On October 1, 1996, the Monitor and Investigations Officer held a hearing regarding charges against LaBarbara. The charges contained in sixteen counts outlining five broad categories of Prohibited Acts: (i) racketeering; (ii) breach of obligation of loyalty to Local 66; (iii) interference with the proper conduct of union business; (iv) knowing association with members and associates of LCN; (v) obstruction of the work of the IO. LaBarbara was represented by counsel at the hearing.

The Monitor then issued a 24 page opinion adopting charges that LaBarbara had committed racketeering [*8] activities, had interfered with proper union business, and had associated with known members of the LCN, all of which constitute Prohibited Acts under the Consent Decree.

Discussion

A. Standard of Review

The Consent Decree provides that decisions of the Monitor shall be final and binding, subject only to this Court's review. Consent Decree P 4(g). In reviewing decisions of the Monitor, the Court shall apply the same standard applicable to review of final federal agency action under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. (the "APA"). Id. P 4(g)(2).

Under section 10(e) of the APA, a reviewing court determines de novo "all relevant questions of law." 5 U.S.C. § 706; see also Lanza, 1997 WL 97836 at * 6; United States v. District Council of New York City, 941 F. Supp. 349, 361 (S.D.N.Y. 1996). In considering a relevant question of law under the APA, "the reviewing court asks whether the agency's action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." District Council, 941 F. Supp. at 362; see also 5 U.S.C. § 706(2)(A).

An agency's findings of fact "are entitled to affirmance [*9] on review if they are reasonable and supported by substantial evidence in the record as a whole." District Council, supra (quoting NLRB v. Gridon, 792 F.2d 29, 32 (2d Cir. 1986)). The APA "permits agency findings to be set aside only if they are 'unsupported by substantial evidence.'" United States v. International Bhd. of Teamsters, 964 F.2d 1308, 1311 (2d Cir. 1992). Substantial evidence is more than a mere scintilla, id. at 1311-12, but "something less than the weight of the evidence, and the substantial evidence standard may be met despite the possibility of drawing two inconsistent conclusions from the evidence." United States v. International Bhd. of Teamsters, 19 F.3d at 820 (citations omitted).

In sum, the scope of review is narrow, and the reviewing court must ensure only that the agency has examined the relevant data and articulated a satisfactory explanation for its action, including a rational connection between the facts found and the choice made. Motor Vehicle Mfrs. Ass'n. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 77 L. Ed. 2d 443, 103 S. Ct. 2856 (1983); accord Henley v. Food and Drug Admin., 77 F.3d 616, 620 (2d Cir. 1996); Lanza, [*10] 1997 WL 97836 at *7; RSR Corp. v. Browner, 924 F. Supp. 504, 510 (S.D.N.Y. 1996) aff'd 1997 U.S. App. LEXIS 5523, 1997 WL 134413 (2d Cir. March 26, 1997). The district court is not to substitute its own judgment for that of the agency. Henley, 77 F.3d at 620; RSR Corp., 924 F. Supp. at 510; see also United States v. International Bhd. of Teamsters, 981 F.2d 1362, 1368 (2d Cir. 1992) ("the district court must give 'great deference' to the decisions of the Independent Administrator") (quoting United States v. International Bhd. of Teamsters, 970 F.2d 1132, 1137 (2d Cir. 1992)).

B. The Monitor's Findings were Supported by the Evidence

The evidence presented at the hearing supported the Monitor's adoption of the following charges against LaBarbara.

1. Racketeering: Acceptance of Improper Loan

The IO charged that, in or about 1988 through 1989, LaBarbara received benefits from Al Barone, the principal of Strathmore Commercial Operations and other associated construction entities, in the form of a de facto interest-free loan worth over of $ 37,000 to cover the costs of materials for the construction of LaBarbara' s new home. Strathmore received a fee of only $ 1,500 [*11] for performing the construction. In his defense, LaBarbara asserted there was no loan, only a 10 month delay in payment because he was unsatisfied with the work performed. The Monitor did not find this reason credible on the following grounds: the large amount of the loan in proportion to the very slight fee received by Strathmore; Barone's testimony that Strathmore typically did not cover costs for materials when working as a construction manager; LaBarbara's testimony that Strathmore did not typically work on home alterations; and the existence of an unlawful conspiracy between LaBarbara's father and Barone to defraud Local 66 through a series of real estate transactions, as substantiated in testimony by LaBarbara's father in United States v. Michael LaBarbara, Jr., 94 Cr. 1091-01 (E.D.N.Y. 1994).

As discussed in the Monitor's opinion, it does not appear that arms-length bargaining would result in the arrangements made between LaBarbara and Strathmore. This inference is strengthened by the long-standing illegal arrangements between LaBarbara's father and the principal of Strathmore, Barone. Accordingly, the Monitor's adoption of this charge will be upheld.

2. Interference [*12] with Proper Conduct of Union Business: the Severance Awards

The IO charged that in 1990, LaBarbara voted in favor of severance awards for his father and another officer of Local 66 in the form of two new Lincoln Town cars, although at the time both LaBarbara's father and the other officer had been indicted for labor racketeering charges arising from their activities as officers at Local 66. In his defense, LaBarbara asserted that the severance awards were proper because they were made pursuant to a standing union severance policy approved by the membership. The Monitor concluded that union members may not effectively authorize a breach of fiduciary duty by their officers. LaBarbara also asserted that he did not personally benefit from the award, and therefore his vote was proper under the business judgment rule. The Monitor found that the severance awards were manifestly unreasonable, and therefore the business judgment rule did not apply. Finally, LaBarbara contended that the local attorney had advised the officers that the severance awards were not improper. The record indicates that this opinion only pertained to whether another officer named Peter Vario had satisfied the [*13] minimum service requirement necessary for a severance award. The evidence regarding LaBarbara's vote on the severance awards is not in conflict, and the Monitor's conclusion that the awards constituted interference in proper union business is not arbitrary and capricious. The Monitor's adoption of this charge will therefore be upheld.

3. Racketeering: Acceptance of Payments for Use of Non-Union Labor

The IO charged that LaBarbara demanded and accepted a payoff in exchange for allowing Dovin Construction, a union contractor, to perform work as a Strathmore subcontractor in the Local 66 jurisdiction without using union labor. At the time, 1988 or 1989, LaBarbara was labor organizer for Local 66. The payoff was negotiated by an employee of Dovin, Frank Falco, and was delivered to LaBarbara in two installments. LaBarbara denied any acquaintance with Falco. The Monitor found these denials to be not credible on the grounds that Falco received no benefit for his testimony, that LaBarbara confirmed certain physical details regarding the location of the hotel where Falco asserted the payoffs occurred, and finally on the ground that LaBarbara's demeanor during his testimony on this [*14] issue raised doubts as to his credibility. The Monitor's determination, especially as to witness credibility, is supported by the evidence in the record as a whole and will be upheld.

4. Knowing Association with LCN

The IO charged that LaBarbara knowingly associated with Lucchese organized crime family members Peter Vario, ("Vario"), Salvatore Avellino and Carmine Avellino in or around 1990 through 1992. Paragraph 3 of the Consent Decree directs the Monitor to evaluate a charge of "knowing association" based on the meaning ascribed that phrase in United States v. International Bhd. of Teamsters, 88 Civ. 4486 (DNE) (S.D.N.Y.). Under the standard, LaBarbara may be said to "knowingly associate" if he makes a "calculated choice" to associate with one known to be a member or associate of LCN. See International Bhd of Teamsters, 19 F.3d at 822. More must be shown than "incidental or fleeting" contact with such a person to establish knowing association. International Bhd of Teamsters, 824 F. Supp. at 414. Contact, however, need not be for an illegal purpose; contact for a social or business purpose is prohibited as well. Id.

LaBarbara's first incident of "knowing [*15] association" occurred at a meeting in the Local 66 parking lot where Vario and his cousin, also named Peter Vario ("P. Vario") instructed LaBarbara to vote for the trustees of the Local 66 fringe benefit funds in order to elect Camillo Leone, who would be "easier to control." After the conversation, LaBarbara abstained from voting. The second meeting occurred in a diner near Local 66 between LaBarbara, Vario, Gerald LoSquadro and the Avellinos where Vario instructed LaBarbara that he should do Vario's bidding with regard to running Local 66. In his defense, LaBarbara asserted that he was unaware that Vario and the Avellinos were associated with the Lucchese crime family. The Monitor did not find this denial credible, because LaBarbara testified that he recognized Vario and the Avellinos as representing an "outside force." In addition, Gerald LoSquadro had testified that he was aware of crime family connections to Vario and Sal Avellino, and it did not seem credible that LoSquadro would not have shared this information with LaBarbara. LoSquadro also testified that LaBarbara was very upset when he returned from the parking lot meeting with Vario, and that LaBarbara had been planning [*16] to vote for James P. Abbatiello rather than Vario's candidate, but abstained after Vario's instructions. Finally, the Monitor based his determination on the fact that Vario and Salvatore Avellino had been named as made members of the Lucchese organized crime family in the indictment of LaBarbara's father. Although LaBarbara denied ever having seen the indictment, the Monitor did not find that denial credible.

The Monitor's determination that LaBarbara must have known of Vario's and Avellino's association with LCN was supported by the evidence. Moreover, the two encounters meet the standard for "knowing association" set forth in the Second Circuit; they were not fleeting or incidental, and the fact that they were related to local business does not defeat the Monitor's conclusion. That conclusion will be upheld.

C. The Monitor's Imposition of Expulsion from the Union was not Arbitrary and Capricious

After adopting the charges listed above, the Monitor imposed sanctions in the form of expulsion from the union and any affiliated union or trust fund. LaBarbara contends that the Monitor's decision caused him to lose a position with Local 1298, which he asserts is outside the [*17] guidelines of the Consent Decree. The Consent Decree authorizes the Monitor to expel members for misconduct, Consent Decree P 4(e); Lanza, 94 Civ. 6487, 1997 WL 97836, and its provisions govern each local affiliated with LIUNA.

Conclusion

For the reasons set forth above, the Monitor's decision will be affirmed.

It is so ordered.

New York, N. Y.
November 5, 1997

ROBERT W. SWEET

U.S.D.J.