The opinion of the court was delivered by: Edelstein, District Judge:
This opinion emanates from the voluntary settlement in the
action commenced by the plaintiffs United States of America
(the "Government") against the defendants International
Brotherhood of Teamsters (the "IBT") and the IBT's General
Executive Board (the "GEB") embodied in the voluntary consent
order entered March 14, 1989 (the "Consent Decree"). The
Consent Decree provided for three Court-appointed officials,
the Independent Administrator to oversee the remedial
provisions, an Investigations Officer to bring charges against
corrupt IBT members, and an Election Officer to oversee the
electoral process leading up to and including the 1991 election
for International Officers (collectively, the "Court
Officers"). The goal of the Consent Decree is to rid the IBT of
the hideous influence of organized crime through the election
and prosecution provisions.
The instant matter, Application XV of the Independent
Administrator, presents for this Court's review the Independent
Administrator's letter-decision (the "veto decision," annexed
hereto as the Appendix) vetoing the appointment of IBT member
Jack B. Yager to the GEB as an International Vice president,
and as director of the 700,000 member Central Conference of
Teamsters (the "appointments"). The Independent Administrator
determined that appointing Yager to these positions would (i)
further an act of racketeering activity within the definition
of Title 18 U.S.C. § 1961, and (ii) contribute directly or
indirectly to the association of the IBT or any of its members
with La Cosa Nostra. As a result, the Independent Administrator
exercised his power to veto such appointments pursuant to his
authority at ¶ F.12.(B)(iii) of the Consent Decree.
Because the Independent Administrator's decision to veto the
Yager appointment is not arbitrary or capricious and fully
supported by the evidence, the veto decision is hereby affirmed
in all respects.
I. The Independent Administrator's Findings
The Independent Administrator considered an exhaustive
factual record in making his determination to veto the
appointments of Yager. In his decision, the Independent
Administrator considered (i) the deposition testimony of Yager;
(ii) the deposition testimony of 15 members of the GEB,
including General-President McCarthy; (iii) an investigator's
report on Yager, (iv) the declaration of FBI Special Agent
Peter J. Wacks, which included extensive information compiled
by the FBI regarding the IBT and La Cosa Nostra; (v) extensive
information relating to former IBT General President and
convicted felon Roy L. Williams, including discovery from this
case; and (vi) certain other materials from discovery from the
instant case taken before the signing of the Consent
In vetoing the appointments of Yager, the Independent
Administrator relied on two separate grounds under ¶
F.12.(B)(iii) of the Consent Decree, set out below.*fn2 First,
he determined that the appointment of Yager would further an
act of racketeering — the aiding and abetting of the extortion
of the IBT members rights to union democracy. The Independent
Administrator found that former IBT General President Roy L.
Williams had extorted IBT members rights to a democratic union,
and that as Williams' close confidant and assistant, Yager had
aided and abetted Williams in that extortion. Second, he found
that the appointment would directly and indirectly further and
contribute to the association of the La Cosa Nostra with the
A. The Act of Racketeering
The IBT concedes that the Independent Administrator conducted
"a massive factual investigation" (Br. at 12) and does not
challenge any aspect of the facts supporting this
determination. Yager had been an IBT officer for many years.
Since 1981, he served as a member of the Policy Committee of
the Central Conference of Teamsters, and as Administrative
Assistant to Roy Williams. Prior to 1981, Yager had served as
a business agent for IBT local 41, and as an organizer for the
Central Conference of Teamsters, Freight Chairman, and Freight
The Independent Administrator found numerous facts concerning
Roy L. Williams' ties to organized crime, notably Kansas City
La Cosa Nostra boss Nick Civella, Williams' approval of the
Central States Pension Fund loans to organized crime controlled
entities, and Williams' conviction for conspiring to bribe
former United States Senator Howard Cannon at the expense of
the Central States Pension Fund. These facts, the Independent
Administrator concluded, provided reasonable belief that
Williams had committed the act of racketeering of extorting the
IBT rank and file's rights under the Labor-Management Reporting
and Disclosure Act ("LMRDA"), 29 U.S.C. § 411, in violation of
the Hobbs Act, 18 U.S.C. § 1951.
In the context of this case, it has previously been found
that extortion of rights by IBT officials may constitute a
violation of the Hobbs Act. March 6, 1989 Opinion & Order,
708 F. Supp. 1388, 1397-1401 (S.D. N.Y.1989); see United States v.
Local 560, International Brotherhood of Teamsters,
780 F.2d 267, 281-82 (3d Cir.1985), and that aiding and abetting that
extortion may constitute an act of racketeering. March 6, 1989
Opinion & Order, supra, 708 F. Supp. at 1399.
More importantly, the Independent Administrator found that
Yager aided and abetted this extortion, through action, and
inaction. The Independent Administrator specifically found that
Yager developed a special relationship with Roy Williams, since
Yager "rose through the ranks [of the IBT] on Williams'
coattails." Once in a position of fiduciary responsibility to
the IBT membership, Yager took no action with respect to the
undeniable fact that Williams was controlled by organized
crime. At his deposition, Yager admitted that he was aware of
the charges that Roy Williams was controlled by the Kansas City
La Cosa Nostra. The extent of Yager's breach of his
responsibility to the membership is reflected by his voting to
re-elect Williams as chairman of the Central Conference of
Teamsters Policy Committee after Williams had both been
convicted of conspiring to bribe United States Senator Cannon,
and cited by the Senate for his ties
to organized crime, and after Yager himself had concluded that
Williams was unfit to lead that segment of the IBT.
The Independent Administrator stated that Yager's failure to
act under those circumstances "amount[ed] to an egregious
breach of his responsibility as an officer of the IBT." The
Independent Administrator concluded that "rewarding Mr. Yager
with appointments to the powerful General Executive Board and
as the Director of the Central Conference of Teamsters would
only serve to further the very extortion of the members' rights
which was initiated by Mr. Williams and fostered by Yager's
silence and incomprehensible passivity." (Veto-decision at 30).
The Independent Administrator further found that the
appointment of Yager would have an extortionate effect on the
members' rights by the failure of the IBT General President and
GEB to conduct any inquiry into Yager's fitness for these
offices. The Independent Administrator concluded that the
absence of such an inquiry would send a message that "the
General President and General Executive Board [were] simply not
concerned with ridding the IBT of the type of corruption that
was epitomized by Williams himself." (Veto-decision at 35).
B. Contributing to the Association of La Cosa Nostra
The Independent Administrator found as an independent ground
for vetoing the Yager appointment that it would contribute to
the association between the IBT and La Cosa Nostra. The
Independent Administrator noted that the IBT is susceptible to
infiltration by La Cosa Nostra as demonstrated in the extensive
materials that form the record. The facts show that Yager was
seen with members of La Cosa Nostra, including Civella, and
members of the Chicago La Cosa Nostra. Further, the evidence
indicates that Yager could not have been so closely affiliated
with Williams without Yager having received La Cosa Nostra
approval. At the very least, Yager, having longstanding
knowledge of this infiltration, took no steps to impede it.
(Veto-decision at 36-37).
The IBT argues that this Court may only affirm the decision
of the Independent Administrator if it is supported by
"substantial evidence." But this argument mistakes the
well-settled standard of review that this Court and the Court
of Appeals have given to determinations of the Independent
Paragraph K.16 of the Consent Decree provides that this Court
shall review the actions of the Independent Administrator using
the "same standard applicable to review of final federal agency
action under the Administrative Procedure Act." Consent Decree
at 25. It is beyond dispute that under the Consent Decree, the
decisions of the Independent Administrator are "entitled to
great deference." United States v. International Brotherhood of
Teamsters, 905 F.2d 610, 616 (2d Cir.1990), aff'g March 13,
1990 Opinion & Order, 743 F. Supp. 155 (S.D.N.Y.1990).
In their submission, the IBT argues that the evidence relied
upon by the Independent Administrator amounts to "guilt by
association" and would be insufficient to find that Yager
criminally aided and abetted the violation of any law. But
whether Yager could be convicted of a crime is not relevant.
The authority and findings that must be made by the Independent
Administrator in this matter are determined by the Consent
Decree, which specifically enumerated the two grounds upon
which the Independent Administrator can veto an appointment,
and what standard that veto must meet. Consent Decree at
F.12.(B)(iii). The Independent Administrator must only
"reasonably believe" that an appointment would further an act
of racketeering or contribute to the association of the IBT
with organized crime. Id. Further, that finding is then given
the deference this Court and the Court of Appeals must give
determinations of the Independent Administrator.
Accordingly, the findings of the Independent Administrator in
his veto decision will be reviewed, as always, under the
standard set out by the parties in the Consent Decree.
III. The IBT's Challenges
The IBT challenges the veto decision of the Independent
Administrator on the grounds that the facts demonstrate that
Yager acted honestly and ethically throughout his career, and
that the evidence does not establish that Yager either (i)
committed the act of racketeering, or (ii) contributed to the
IBT's association with organized crime. These challenges are
without merit, and must be dismissed.
A. Yager Aided and Abetted an Act of Racketeering
The IBT argues that the Independent Administrator erred by
finding that Yager committed an act of racketeering by aiding
and abetting Roy Williams' extortion of IBT members rights to
a democratic union. The IBT contends that Yager's inaction
rather than action cannot constitute aiding and abetting. This
argument is contrary to the established law.
As this Court has already held in the context of this case,
the IBT rank and file's rights under the LMRDA, 29 U.S.C. § 411(a),
are extortable property under the Hobbs Act, and the
extortion of those rights may constitute an act of racketeering
under the RICO statute, 18 U.S.C. § 1961(1). March 6, 1989
Opinion & Order, supra, 708 F. Supp. at 1399; see also United
States v. Local 560, supra, 780 F.2d at 281-82.
This Court also directly held that failure by officers of the
IBT to redress wrongdoing within the IBT could support
liability for aiding and abetting the extortion of the IBT
"Each defendant officer is a fiduciary with
respect to the union members. They have a duty to
disclose and remedy wrongdoing by the IBT. . . .
[Such action may mean the GEB] aided and abetted
other by failing to act when they had such a
March 6, 1989 Opinion & Order, supra, 708 F. Supp. at 1401. As a
result, when a union fiduciary such as Yager fails to act to
remedy wrongdoing within the union, that constitutes aiding and
abetting the extortion of IBT members' rights to democracy and
free speech. Importantly, this Court has also noted that in the
context of this case, the inaction of an IBT officer to redress
corruption could only be through "conscious avoidance" given
the scope of that corruption. Id. The Third Circuit has also
held that the failure of an IBT officer to act when he had an
affirmative duty to do so constituted aiding and abetting the
extortion of the IBT members' rights. United States v. Local
560, supra, 780 F.2d at 284.
Further, aiding and abetting the extortion of members' rights
to union democracy through failure to take action in the face
of corruption is an act of racketeering, and thus formed part
of the parties' background understanding as to what acts of
racketeering would subject IBT appointments to veto pursuant to
¶ F.12.(B)(iii) of the Consent Decree. Indeed, the Court of
Appeals has explicitly stated that "we deem the Consent Decree
to incorporate prevailing legal standards," United States v.
International Brotherhood of Teamsters, 931 F.2d 177, 189 (2d
Cir.1991), and there can be no doubt that aiding and abetting
the extortion of members' rights formed part of the background
to this very case. Union officers owe an enhanced duty of care
to their membership. Id. The IBT's argument that inaction in
the face of union corruption could not constitute aiding and
abetting is without merit.
The IBT further argues that the evidence is insufficient to
find that Yager aided and abetted Roy Williams in extorting the
IBT rank and file's rights to a democratic union. This argument
is also without merit. The IBT does not dispute the corruption
of Roy Williams, rather, it claims that Yager is the victim of
"1950's vintage" guilt by association. Indeed, the IBT does not
dispute any of the evidence relied upon by the Independent
Administrator. Rather, they argue that Yager was low-level IBT
official who was in no position to take any affirmative action
with respect to the corruption he saw around him.
But this argument misses the fundamental point that as an IBT
officer, Yager owed the membership the utmost duty to stop
corrupt elements from extorting the memberships' rights. In
1983, Yager voted to re-elect Williams, a convicted felon with
known and undisputed mob ties, to the chair of the Central
Conference of Teamsters Policy Committee when Yager had
determined that Williams was not fit for that office. Further,
when himself a member of the Central Conference Policy
Committee, Yager voted to expend IBT funds for Williams'
defense in the Cannon bribery prosecution. Such action is
improper "prior to a full determination on the merits."
Morrissey v. Segal, 526 F.2d 121, 127 (2d Cir.1975). Yager
co-chaired Williams' legal defense fund and solicited
contributions for those fees.
Finally, the report by FBI Special Agent Wacks stated that
Yager had associated with known organized crime figures,
including Chicago La Cosa Nostra members Alan Dorfman, James
Cozzo, and associates Amos Massa and Thomas O'Malley, Kansas
City La Cosa Nostra members Paul Varsolona, Nick Civella, Carl
Civella, Phil Simone, Sam Ancona, and Frank Todaro, and Detroit
La Cosa Nostra member Anthony LaPiana. The open association of
IBT leaders with figures involved with La Cosa Nostra results
in the membership "surrender[ing] their right to democratic
participation in the affairs of the union." United States v.
Local 560, supra, 780 F.2d at 286.
Accordingly, considering all of the evidence relied upon by
the Independent Administrator, his findings are sufficient to
"reasonably believe" that the appointments of Yager would
further the act of racketeering of aiding and abetting the
extortion of the IBT members' rights to union democracy. At the
very least, Yager's record of association with known organized
crime figures would satisfy the second criteria relied upon by
the Independent Administrator, that the appointment of Yager
would directly or indirectly further the association of La Cosa
Nostra with the IBT.
Further, the Independent Administrator's finding that the
IBT's failure to conduct any background check on Yager before
General-President McCarthy submitted Yager's name for approval
by the GEB constitutes additional grounds for his veto is also
supported by the evidence. The facts demonstrate that the
General President McCarthy and the GEB failed to make any
inquiry into Yager's fitness for office. General President
("G-P") McCarthy admitted so at his deposition.
JUDGE LACEY: Did you, yourself, conduct any interview of Mr.
Yager before putting his name before the board?
G-P MCCARTHY: No, but I knew he was a good man and especially
since the executive board voted unanimously and all hugged
him and kissed him and so forth after it was over. I then
knew definitely he was a good man.
JUDGE LACEY: . . . [D]id you conduct any investigation of any
kind into Mr. Yager's background before he was named?
(Deposition of William McCarthy, October 23, 1990, at 17-18).
As a result, the IBT's challenges to the Independent
Administrator's determination that the Yager appointments would
further the act of racketeering are without merit and denied.
B. Furthering the Direct or Indirect Association with La
The Independent Administrator determined as a full
independent ground for his veto that the Yager appointments
would further the direct or indirect association of the IBT
with La Cosa Nostra. The extensive evidence linking Yager with
organized crime associates demonstrates that this determination
was neither arbitrary nor capricious.
The evidence relied upon by the Independent Administrator
focused on the history of La Cosa Nostra influence on the IBT,
particularly on the Central States Pension Fund, of which Yager
was an officer. La Cosa Nostra engaged in a scheme to bribe
former United States Senator Cannon by selling Pension Fund
real estate to an investor group headed by Cannon at below
market rates. The Independent Administrator concluded that such
actions show how vulnerable the IBT is to the influence of La
Cosa Nostra. The Independent Administrator found that Yager,
having knowledge of this influence, did nothing to "prevent or
impede it." As a result, the Independent Administrator
concluded that the appointment of Yager would (i) signal that
the IBT was still open to La Cosa Nostra infiltration by
appointing the former protegee of Williams to the GEB, and (ii)
send the message to the membership that the leadership has no
intention to rid itself of the type of corruption typified by
Roy Williams, and thus must be vetoed.
In its opposition to the veto, the IBT argues that (i) the
evidence does not support that Yager himself has associated
with organized crime figures, and (ii) the Independent
Administrator's conclusion that appointing Yager would further
IBT association with La Cosa Nostra was unsupported
speculation. Neither challenge has merit.
First, as previously discussed, the factual record is replete
with evidence linking Yager with organized crime figures. The
IBT does not even discuss that evidence. Second, considering
the evidence linking Yager with convicted felon Roy Williams,
and the extent of Yager's contact with organized crime, the IBT
has in no way rebutted the reasonable finding that the
appointment of Yager would further the association of the IBT
with La Cosa Nostra is arbitrary or capricious.
Accordingly, the IBT's challenges to the veto decision of the
Independent Administrator on the grounds that it did not
establish that such appointments would further the association
of the IBT with La Cosa Nostra is without merit and must be
For the reasons stated above, the challenges to the veto
decision of the Independent Administrator are without merit and
must be denied.
IT IS HEREBY ORDERED that Application XV of the Independent
Administrator is affirmed in all respects.
OFFICE OF THE INDEPENDENT ADMINISTRATOR
c o LeBOEUF, LAMB, LEIBY & MacRAE
Gateway Center I, Suite 603
Newark, NJ 07102-5311
Frederick B. Lacey
James T. Grady, Esq.
International Brotherhood of Teamsters
25 Louisiana Avenue, N.W.
Washington, D.C. 20001
I have completed my review of the appointments of Mr. Yager
as an International Vice President and as the Director of the
Central Conference of Teamsters. In reviewing these two
appointments, I have considered the following:
1. In-person sworn examination testimony of Jack B. Yager
taken on October 24-25, 1990.[fn1a]
2. In-person sworn examination testimony of General President
William McCarthy taken October 23, 1990.
3. Testimony of IBT Vice President Arnold Weinmeister taken by
telephone deposition on August 30, 1990.
4. Testimony of IBT Vice President Edward Lawson taken by
telephone deposition on August 30, 1990.
5. Testimony of IBT Vice President Joseph Trerotola taken by
telephone deposition on September 19, 1990.
6. Testimony of IBT Secretary-Treasurer Weldon Mathis taken by
telephone deposition on August 16, 1990.
7. Testimony of IBT Vice President Jack Cox taken by telephone
deposition on September 11, 1990.
8. Testimony of IBT Vice President Don West taken by telephone