CORE TERMS: Fifth
Amendment, carting, disgorgement, memorandum, summary judgment,
predicate, invocation, invoked, genuine issue of material fact,
affirmation, illegal conduct, discovery, withdraw, disgorge, restrain,
bribery, separate trial, pleaded guilty, racketeering, guidelines,
consent judgment, organized crime, enjoined, Hobbs Act, coercion,
declaration, misdemeanor, antagonism, favoritism, allocution
LexisNexis(R) Headnotes
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Headnotes
COUNSEL: [**1] For
Plaintiff: Christopher Lehmann, Esq., Assistant U.S. Attorney.
Paul Battista, Esq., New York, New York, Attorney for Defendants Unique
and U-Need-A-Roll Off.
JUDGES: I. Leo Glasser, United States District Judge. Hon. A.
Simon Chrein, Chief Magistrate Judge
OPINIONBY: I. Leo Glasser
OPINION: [*896]
MEMORANDUM AND ORDER
GLASSER, United States District Judge:
The Motion for Summary Judgment is Granted.
The standards to be observed in determining whether a motion for summary
judgment should or should not be granted have been so frequently stated
in treatise, law review and judicial literature, that even a cursory
attempt to review it would be as foolhardy as it would be superfluous.
It will suffice to give recognition to the fairly recent trilogy of
United States Supreme Court cases on that subject.
E.g., In
Celotex Corp. v. Catrett, 477 U.S. 317, at 327, 91 L. Ed. 2d 265, 106 S.
Ct. 2548 (1986), the Court wrote that:
Summary judgment procedure is properly regarded not as a disfavored
procedural shortcut, but rather as an integral part of the Federal
Rules as a whole, which are designed to secure the just, speedy and
inexpensive determination of every action. . . . Rule 56 must be
construed with due regard [**2] not
only for the rights of persons asserting claims and defenses that
are adequately based in fact to have those claims and defenses tried
to a jury, but also for the rights of persons opposing such claims
and defenses to demonstrate in the manner provided by the Rules
prior to trial, that the claims and defenses have no factual basis.
In
Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574
at 586-87, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986), the Court
wrote:
When the moving party has carried its burden under Rule 56(c) its
opponent must do more than simply show that there is some
metaphysical doubt as to the material facts. . . . In the language
of the Rule, the nonmoving party must come forward with "specific
facts showing that there is a genuine issue for trial." . . . Where
the record, taken as a whole could not lead a rational trier of fact
to find for the nonmoving party, there is no "genuine issue for
trial."
And finally in
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S.
Ct. 2505 (1986), the Court again emphasized the absence of a genuine
issue of material fact and wrote that "if the evidence is merely
colorable
[**3] . . . or
is not significantly probative, summary judgment may be granted."
477 U.S. at 249-50.
With those principles in mind, the court is driven to conclude that
summary judgment must be granted against Unique Sanitation and
U-Need-A-Roll Off Corp.
In a Memorandum and Order dated October 13, 1994 this court granted
summary judgment against Nicholas Ferrante after finding that there were
no genuine issues of material fact which precluded a determination that
he violated the RICO statute in exercising control over the Long Island
Carting Industry. The order issued enjoined him from participating in
the carting industry and commercially associating with members of
organized crime or with other defendants in the case; to divest his
interests in Unique Sanitation and U-Need-A-Roll Off; and to disgorge
the proceeds derived from his unlawful conduct with a court administered
fund. Familiarity with that Memorandum and Order is presumed. Nicholas
Ferrante moved the Court of Appeals for a stay of that order pending
appeal and for an expedited appeal. The court granted his motion for an
expedited appeal but denied a stay.
U.S. v. PSIA, 44 F.3d 1082 (1995). Thereafter, on January
[**4] 23,
1995, the court affirmed this court's decision of October 13, 1994 in a
summary order.
U.S. v. PSIA, 47 F.3d 1158 (1995), cert. denied,
U.S. , 116 S. Ct. 50 (1995).
This motion is predicated upon the same facts and resisted upon the same
grounds and therefore need not detain us long. That is to say, the
requisite predicate racketeering acts were found to have been
established as
[*897] were
the "pattern" and "participation" elements necessary to establish RICO
liability. The only issue presented for resolution now is whether there
is any genuine issue of material fact that would preclude granting
summary judgment against the corporations, Unique Sanitation Corp. and
U-Need-A-Roll Off Corp.
On October 17, 1986 Unique Sanitation and Nicholas Ferrante pleaded
guilty to Count II of an Indictment numbered 2626.83 in the County Court
of the State of New York for Suffolk County which charged them with
compelling and inducing another person to adhere to an illegal contract,
agreement, combination and conspiracy in restraint of competition which
that person had a legal right to abstain from engaging in and to abstain
from competitive bidding for and solicitation
[**5] of
carting contracts in which that person had a legal right to engage, by
instilling in that person a fear that if the demands were not complied
with the defendants or others would cause physical injury to that person
or others and damage to property, including damage to the person's
carting business, the carting company's place of business, its
containers, trucks and other equipment or its customers' businesses or
places of business -- in violation of Penal Law § 136.65(1) -- Coercion
in the First Degree.
Ferrante pleaded guilty to coercion in the first degree, a Class D
felony, and Unique pleaded guilty to attempted coercion in the second
degree, a Class B misdemeanor.
In his plea allocution, Ferrante admitted that between December 1981 and
October 1983 he intentionally and knowingly induced Robert and Jerome
Kubecka to refrain from bidding for and soliciting carting customers by
instilling in them a fear that he would damage their property.
In the Memorandum and Order of October 13, 1994, the court decided that
the allocution established a Hobbs Act violation and was affirmed by the
Court of Appeals in that determination. The corporation's allocution was
the same as Ferrante's
[**6] and
although the corporation pleaded guilty to a misdemeanor, the element of
the two crimes are precisely the same and the facts to which the
corporation allocuted is what gives rise to a Hobbs Act violation and
the technical appellation of the crime to which it pleaded as a
misdemeanor is immaterial. It is the facts to which it allocuted which
bespeaks the Hobbs Act violation.
The defendant's contention that the state court judgment should not be
given collateral estoppel effect has been foreclosed by the affirmance
of the October 13, 1994 order as well as by the previous decisions in
U.S. v. PSIA, 811 F. Supp. 808, 813-14 (E.D.N.Y. 1992), aff'd,
995 F.2d 375 (2d Cir. 1993) (PSIA II). The first RICO predicate act
is thus established as against Unique.
The additional predicate acts are also established against Unique and
U-Need-A-Roll Off Corp. by the repeated commission by Ferrante of the
state crime of second degree bribery which is punishable by more than
one year's imprisonment and thus is a RICO predicate. The finding of the
commission of this crime by Ferrante was held to be established in the
court's Memorandum and Order of October 13, 1994, a determination which
was
[**7] also
affirmed by the Court of Appeals. That finding also establishes the
additional predicate racketeering acts against Unique and U-Need-A-Roll
Off Corp. by virtue of §§ 10.00(7), 20.20(1)(a) and 20.20(2)(b) of the
N.Y. Penal Law. See
United States v. Kaplan, 886 F.2d 536 (2d Cir. 1989), cert. denied,
493 U.S. 1076, 107 L. Ed. 2d 1033, 110 S. Ct. 1127 (1990) (separate
and distinct acts of bribery may constitute the predicate acts in
satisfaction of the "pattern" requirement of
18 U.S.C. § 1962(c));
United States v. Private Sanitation Industry Association (PSIA I), 793
F. Supp. 1114 (E.D.N.Y. 1992)
Section 10.00(7) defines "person" as including private corporations, and
Section 20.20(2)(b) addressing the criminal liability of corporations
provides that a corporation is guilty of an offense when the conduct
constituting the offense is engaged in by the board of directors or by a
high managerial agent acting within the scope of his employment and on
behalf of the corporation.
Section 20.20(1)(a) defines "Agent" to mean any director, officer or
employee of a
[*898]
corporation, or any other person authorized to act in behalf of the
corporation.
The defendant corporations do
[**8] not
dispute that "Mr. Ferrante owned both corporations and was their
president during the relevant period." (Def.'s Memorandum in Opposition
to Plaintiff's Motion for Summary Judgment, 23). They argue, however,
that notwithstanding those facts, it doesn't follow that the
corporations committed bribery. Acknowledging the provisions of the New
York Penal Law referenced above, they nevertheless question whether the
bribery payments made by Ferrante to the employees of the Oyster Ray
dump should be attributed to the corporations under the doctrine of
respondeat superior or any other doctrine and thus establishing the
existence of additional predicate racketeering acts supporting a finding
of a violation of the RICO statutes. That question, they contend, raises
a genuine issue of material fact which precludes granting the
plaintiff's motion. The questions posed are illusory as even the most
cursory reading of the declarations of Joseph R. Vittorio, Jerome J.
Kowalski and Peter Straniello reveal. See exhibits P, Q and R to
plaintiff's 3(g) statement. The affirmation of Nicholas Ferrante
interposed as raising an issue of fact will be subsequently discussed.
The affirmation of Joseph
[**9] Ferrante
is, for the most part, a replication of his submission in opposition to
the government's motion for summary judgment against his father which,
the court concluded in the Memorandum and Order of October 13, 1994, did
not raise any genuine issue of material fact. The affirmation of Daniel
Turchin, the accountant for the defendant corporations, also interposed
in opposition to the government's motion, raises no genuine issue of
material fact which would defeat this motion. His assertion that the
corporations paid all the dumping fee bills submitted by the Town of
Oyster Ray is not a refutation of the fact that those bills did not
accurately represent the fees for the waste accurately dumped by the
corporations' trucks as the declarations of the scalehouse employees
irrefutably demonstrate.
In the declaration of Joseph Vittorio, under penalty of perjury, he
stated that the scalehouse employees of the Town of Oyster Bay (with one
possible exception) regularly underweighed or under-recorded refuse
dumped by Unique and U-Need-A-Roll Off trucks in exchange for bribes,
many of which were paid to him personally by Nicholas Ferrante. Jerome
Kowalski and Peter Stramiello, corroborated
[**10]
Vittorio's sworn statement. The suggestion that Nicholas Ferrante was
not acting on behalf of the corporations can only be regarded as
frivolous.
The conclusion that the necessary predicate racketeering acts have been
established as against the corporations is inescapable. That conclusion,
together with the conclusions reached in the Memorandum and Order of
October 13, 1994 as regards the other RICO elements which were affirmed
on appeal, drives this court to grant the plaintiff's motion for summary
judgment.
Before passing to the specific relief requested by the government, it is
appropriate to address the cross-motions of the defendants.
I. The Disqualification Motion
The defendants have moved for my disqualification pursuant to the
following statutes:
28 U.S.C. § 455(a):
Any justice, judge or magistrate of the United States shall
disqualify himself in any proceeding in which his impartiality might
reasonably be questioned.
28 U.S.C. § 455(b)(1):
He shall also disqualify himself . . . where he has a personal bias
or prejudice concerning a party or personal knowledge of disputed
evidentiary facts concerning the proceeding;
The defendants place
[**11]
principal reliance upon prior decisions rendered over the years during
which this litigation has been before me and upon statements made by me
during an ancillary proceeding to the effect that organized crime was
involved in the carting industry on Long Island. The defendants also
rely upon
Liteky v. United States, 127 L. Ed. 2d 474, U.S. 114 S. Ct. 1147
(1994).
The reliance upon prior decisions of this court is premised upon the
remarkable assumption
[*899] that
if those decisions were adverse to the defendants the court must be
partial to the plaintiff. The prior decisions in this complex litigation
have affected numerous individuals and corporate defendants and not
until now has it ever been suggested that this court was not impartial.
Prior rulings adverse to other defendants in this litigation were
reviewed and affirmed by the Court of Appeals on three occasions. See
United States v. PSIA, et al., 47 F.3d 1158 (2d Cir. 1995);
44 F.3d 1082 (2d Cir. 1995);
995 F.2d 375 (2d Cir. 1993). The government in its memorandum in
opposition also notes that when deemed to be appropriate, the court was
critical of the government (Gov't Memo at 6 and 7 n.1) and made
determinations
[**12]
favorable to the defendants in
793 F. Supp. 1114 (E.D.N.Y. 1992) and
862 F. Supp. 861 (E.D.N.Y. 1994). Reliance upon this ground is
totally devoid of merit.
The observation of this court that the carting industry on Long Island
was heavily infiltrated by organized crime is factually correct and
unassailable. See
793 F. Supp. 1114 (E.D.N.Y. 1992);
United States v. PSIA, 811 F. Supp. 808 (E.D.N.Y. 1992), aff'd,
995 F.2d 375 (2d Cir. 1993); the Memorandum and Order dated October
13, 1994 which was affirmed in
47 F.3d 1158 (2d Cir. 1995); the testimony of Alphonse D'Arco and
Peter Chiodo in United States v. Vittorio Amuso, CR-90-446(S-1) related
in affirmation of Donald W. McCormick, Ex. N to plaintiff's 3(g)
statement.
The reliance upon Liteky is similarly misplaced. The Court there
decided, at p. 1157:
First, judicial rulings alone almost never constitute valid basis
for a bias or partiality motion. . . . In and of themselves (i.e.,
apart from surrounding comments or accompanying opinion), they
cannot possibly show reliance upon an extra-judicial source; and can
only in the rarest circumstances evidence the degree of favoritism
or antagonism required . . [**13] .
when no extrajudicial source is involved. Almost invariably, they
are proper grounds for appeal, not for recusal. Second, opinions
formed by the judge on the basis of facts introduced or events
occurring in the course of the current proceedings, or of prior
proceedings, do not constitute a basis for a bias or partiality
motion unless they display a deep-seated favoritism or antagonism
that would make fair judgment impossible.
The defendants do not claim, nor can they, that the court has been
adversely inclined toward them by virtue of some extra-judicial source,
nor do they claim, nor can they, that the court has displayed some
deep-seated favoritism or antagonism toward them that would make it
impossible to judge them fairly. Their motion for disqualification is
denied.
II. Withdrawal of the October 13, 1994 Order
The defendants move this court to withdraw its October 13, 1994 order
which rested, in part, upon adverse inferences drawn from the invocation
by Nicholas Ferrante of his Fifth Amendment privilege against
self-incrimination during pretrial discovery. Mr. Ferrante now wishes to
testify and requests the court to consider his submission made in an
affirmation annexed
[**14] to
this cross-motion. Reliance for this motion is placed upon
United States v. Certain Real Property, etc., 55 F.3d 78 (2d Cir. 1995).
Rather than support Mr. Ferrante's motion to have his testimony
considered by this court, United States v. Certain Real Property
confirms that Mr. Ferrante's application to testify on matters regarding
which he previously invoked his Fifth Amendment privilege should be
denied. The Second Circuit's decision and the guidelines it set forth in
Certain Real Property make clear that it is most appropriate for this
court to refuse to allow Mr. Ferrante to withdraw his earlier invocation
of his Fifth Amendment privilege.
Mr. Ferrante's argument that Certain Real Property directs the district
court to grant his request to testify is based on the statements made by
the Second Circuit that a "district court should, in general, take a
liberal view towards" a litigant's application to withdraw a previous
invocation of his Fifth Amendment privilege, (
Certain Real Property, 55 F.3d at 84) (emphasis added) and that
"courts must take care not to punish valid
[*900]
invocations of the privilege against self-incrimination and must try to
accommodate
[**15] those
who would properly seek to claim the privilege."
Certain Real Property, 55 F.3d at 80.
However, as the Second Circuit also stated in Certain Real Property, its
instructions that district courts take a "liberal view" towards
litigants' applications to testify after they had previously invoked
their Fifth Amendment privilege "does not mean that withdrawal of the
claim of privilege should be permitted carelessly."
55 F.3d at 84. Taking note of the fact that "an assertion of the
Fifth Amendment is an effective way to hinder discovery and provides a
convenient method for obstructing a proceeding," the Second Circuit
instructed district courts to "pay particular attention to how and when
the privilege was originally invoked," and to "be especially alert to
the danger that the litigant might have invoked the privilege primarily
to abuse, manipulate or gain an unfair strategic advantage over opposing
parties."
Id. at 84. In setting forth guidelines for the district courts, the
Second Circuit wrote that when "the litigant's request to waive comes
only at the 'eleventh hour' and appears to be part of a manipulative,
'cat-and-mouse approach' to the litigation, a trial court
[**16] may be
fully entitled . . . to bar a litigant from testifying later about
matters previously hidden from discovery through an invocation of the
privilege."
Id. at 85. The court concluded that "a trial court, to prevent
prejudice to opposing parties and to control attempts to manipulate
discovery, may in appropriate cases bar litigants from testifying
concerning those matters about which they had previously improperly
impeded discovery through an invocation of the Fifth Amendment."
Id. at 87.
In Certain Real Property, where the defendant's decision to wive his
Fifth Amendment rights came six months after an interrogatory in which
he had last invoked his privilege, the Second Circuit relied on the
defendant's "history of obstruction" to conclude that he was "simply
using all available techniques -- including the Fifth Amendment -- to
hinder and delay the Government's action," and upheld the district
court's decision rejecting the petitioner's submission of testimony on
matters regarding which he had previously asserted his Fifth Amendment
privilege. Certain Real Property at 86. The court held that "the lengthy
delay" that the petitioner "precipitated, and the timing
[**17] of his
attempt to withdraw his prior assertion of the Fifth Amendment" allowed
the court to presume that the government had been prejudiced because of
the manner in which he had utilized the privilege. Id.
The holding and guidelines set forth in Certain Real Property speak
directly to this case. Mr. Ferrante's attempt to testify comes after
more than two years of repeatedly invoking his Fifth Amendment rights in
response to lengthy deposition questions posed to him by the government.
His repeated assertion of the Fifth Amendment has greatly extended this
litigation and has undoubtedly given him a "strategic advantage" over
his opposing party. See Certain Real Property at 84. His decision to
provide testimony now is nothing more than an attempt to use the Fifth
Amendment "to abuse or obstruct the discovery process" and this court is
therefore fully justified in refusing to allow his testimony on issues
regarding which he has previously invoked his Fifth Amendment rights.
Because this court denies Mr. Ferrante's newly submitted testimony,
there are no grounds to reconsider for withdrawing its order of October
1994 granting summary judgment against Mr. Ferrante.
III.
[**18]
Disgorgement of the Corporate Profits
The defendants argue that disgorgement against Mr. Ferrante is precluded
by the recent decision of the Second Circuit in
United States v. Carson, 52 F.3d 1173 (2d Cir. 1995), petitioner for
cert. filed, (U.S. Nov. 28, 1995) (No. 95-6929). In Carson, the Second
Circuit vacated a district court's order ofdisgorgement against a union
leader found to have violated RICO, and held that disgorgement as a
remedy is limited to amounts intended solely to prevent and restrain
future RICO violations. Because the vast majority of the money the
district court ordered the defendant in Carson to disgorge was received
by him long before the suit was brought, the Second Circuit found that
the
[*901] money
was acquired too far in the past for disgorgement to be part of an
effort to prevent and restrain future conduct. Carson at 1182. Based on
this reasoning, the defendants argue that disgorgement is not an
available remedy in this case because the most recent alleged RICO
misconduct took place in February 1985, a date more than ten years
before the present motion was filed.
However, the situation at hand presents a sharp contrast to the facts in
[**19] Carson
and does fit within the guidelines drawn by the Second Circuit for a
proper order of disgorgement in a civil RICO case. "Ordinarily, the
disgorgement of gains ill-gotten long in the past will not serve the
goal of 'preventing and restraining]' 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. The
disgorgement of gains ill-gotten relatively recently is more easily
justifiable on the basis of the same analysis."
Id. at 1182.
In Carson, the defendant had been removed from his union position five
years before the disgorgement was ordered, and had long been removed
from any involvement in the activities on which his conviction was
based. However, unlike Carson, the defendants in this case continue to
be actively involved in the identical activities upon which this RICO
suit is predicated. Because the corporate defendants in this case will
continue to be involved in the Long Island carting industry even if the
government's requested relief is granted, the monies these corporations
gained illegally obviously constitute capital available for the purpose
of funding
[**20] or
promoting illegal conduct. See Carson at 1182. Similarly, Mr. Ferrante,
although enjoined from participation in the Long Island carting
industry, has the capital obtained through his companies' illegal
activities at his disposal to use in promoting or funding illegal
conduct through family members, who now control the corporations in
which he was enjoined from participating.
In addition, the government has asked for disgorgement for the "express
purpose" of funding the costs of monitoring future carting industry
activities of the defendants. Plaintiff's Reply Memo. of Law at 35.
Thus, the disgorgement in this case is clearly directed towards the
prevention of future illegal conduct, and is therefore a permissible
remedy for civil RICO violations under the limitations imposed by
Carson.
IV. Separate Trials
The defendants also request that the court sever the Unique defendants
for separate trial pursuant to Federal Rule 42(b). In response, the
government argues that a separate trial would result in a duplication of
evidence and witnesses, presenting a waste of judicial resources and
prejudice for the government.
Rule 42(b) provides that "the court, in furtherance of
[**21]
convenience or to avoid prejudice, or when separate trials will be
conducive to expedition and economy, may order a separate trial of any
claim . . ."
Fed. R. Civ. Proc. 42(b). In this case, the defendants have not made
any argument that severing the defendants here would further the court's
convenience or avoid prejudice, nor that severing the defendants would
be conducive to expedition and economy. Because the defendants have not
made any argument that the conditions under which separate trials are
granted under Rule 42(b) have been met, their motion to sever the
defendants for separate trial, although mooted by this decision, is
nevertheless denied.
The Relief Requested
The defendants' objections to the government's request that they be
directed to disgorge the proceeds derived from their participation in
unlawful enterprises has already been addressed and rejected.
The defendants also object to the government's request that they be
subject to the provisions of the Carting Industry Monitorship previously
established by the Consent Judgment entered by this court on February
28, 1994.
18 U.S.C. § 1964 confers jurisdiction upon district courts to
prevent and restrain violations
[**22] of the
RICO statute "by issuing appropriate orders." That broad grant of
authority clearly implies the grant of broad discretion in determining
what orders are
[*902]
appropriate to prevent continuing violation of the statute. The
direction to "restrain violations" also clearly implies the propriety of
issuing injunctions which are the classic remedies for restraining
prohibited conduct. The appointment of trustees, monitors, investigators
or others with similar functions to oversee the continued activities of
defendants to assure that future violations of the RICO statute will not
be committed have been deemed to be "appropriate orders" within the
contemplation and meaning of § 1964. See, e.g.,
United States v. Local 560, International Brotherhood of Teamsters, 581
F. Supp. 279 (D.N.J. 1984), aff'd,
780 F.2d 267 (3d Cir. 1985), cert. denied,
476 U.S. 1140, 90 L. Ed. 2d 693, 106 S. Ct. 2247 (1986);
United
States v. Local 30, United States Tile and Composition Roofers, 686 F.
Supp. 1139 (E.D. Pa. 1988), app. dismissed,
871 F.2d 401 (3d Cir.), cert. denied,
493 U.S. 953 (1989);
United States v. Local 295, International Brotherhood of Teamsters, 784
F. Supp. 15 [**23] (E.D.N.Y.
1992).
Accordingly, the defendants are directed to disgorge the proceeds
derived from their unlawful activities into the court-administered fund
established for the purpose of monitoring the carting industry on Long
Island pursuant to the consent judgment entered by this court dated
February 28, 1994. The amount of those proceeds are to be determined in
appropriate proceedings conducted for that purpose by Chief
Magistrate-Judge Chrein to whom it is referred.
The defendants are, in addition, hereby directed to be subject to all of
the provisions of the Carting Industry Monitorship previously
established by this court by the consent judgment referred to above.
SO ORDERED.
I. Leo Glasser
United States District Judge
Dated: Brooklyn, New York
February 9th, 1996