have held that an IBT officer's fiduciary duty includes the obligation to investigate and take action with respect to allegations of corruption in the IBT. (Ind. Admin. Dec. at pp. 14-17).
Respondents also averred that they lacked the resources to initiate an investigation, instead facing this responsibility on the Government. The Independent Administrator first noted that respondents admitted to having disciplinary authority over Union officials. The Independent Administrator added that the respondents could have employed any number of investigative techniques had they desired to discharge this disciplinary authority and satisfy their fiduciary duty. For instance, respondents could have sought assistance from the Government or arranged for a trained professional to conduct in depth interviews of Patsy and Robert. (Ind. Admin. Dec. at pp. 17-18).
The respondents argue that the decision of the Independent Administrator is not supported by substantial evidence and, as a result, is arbitrary and capricious. Essentially, respondents contend that they had no duty to conduct an investigation into the allegations, and that if they did have such a duty, their conduct in this matter constituted an adequate investigation.
In reviewing decisions of the Independent Administrator, it is well settled that the findings of the Independent Administrator "are entitled to great deference." United Stated v. IBT, 905 F.2d 610, 616 (2d Cir. 1990), aff'g March 13, 1990 Opinion & Order, 743 F. Supp. 155 (S.D.N.Y. 1990). This Court will overturn the findings of the Independent Administrator when it determines that they are, on the basis of all the evidence, "arbitrary or capricious." United States v. IBT, 964 F.2d 1308 (2d Cir. 1992); August 27, 1990 Opinion & Order, 745 F. Supp. 908, 911 (S.D.N.Y. 1990), aff'd, 941 F.2d 1292 (2d Cir.), cert. denied, 112 S. Ct. 76 (1991); March 13, 1990 Opinion & Order, 743 F. Supp. 155, 165 (S.D.N.Y. 1990), aff'd 905 F.2d 610 (2d Cir. 1990); see July 9, 1992 Opinion & Order, slip opinion, at 6-8 (S.D.N.Y. 1992); May 15, 1992 Opinion & Order, slip opinion, at 13-14 (S.D.N.Y. 1992); April 27, 1992 Memorandum & Order, slip opinion, at 8-9 (S.D.N.Y. 1992); February 11, 1992 Memorandum & Order, slip opinion, at 9 (S.D.N.Y 1992); January 20, 1992 Memorandum & Order, 782 F. Supp. 256, 259 (S.D.N.Y 1992); January 16, 1992 Memorandum & Order, slip opinion, at 6-7 (S.D.N.Y. 1992); November 8, 1991 Memorandum & Order, slip opinion, at 4-5 (S.D.N.Y 1991); October 29, 1991 Opinion & Order, 776 F. Supp. 144, 152-53 (S.D.N.Y. 1991), aff'd, 954 F.2d 801 (2d Cir. 1992), cert. denied, 60 U.S.L.W. 3858 (U.S. June 22, 1992); October 25, 1991, Order, slip opinion, at 4-5 (S.D.N.Y. 1991); October 24, 1991 Memorandum & Order, 777 F. Supp. 1133, 1136 (S.D.N.Y 1991); October 16, 1991 Memorandum & Order, 777 F. Supp. 1130, 1132 (S.D.N.Y. 1991), aff'd, No. 91-6280 (2d Cir. May 27, 1992); October 11, 1991 Memorandum & Order, 777 F. Supp. 1127, 1128 (S.D.N.Y. 1991), aff'd, No. 91-6292, unpublished slip. op. (2d Cir. Jan. 28, 1992); October 9, 1991 Memorandum & Order, 777 F. Supp. 1123, 1125 (S.D.N.Y. 1991); August 14, 1991 Memorandum & Order, slip opinion, at 4 (S.D.N.Y. 1991); July 31, 1991 Memorandum & Order, slip opinion, at 3-4 (S.D.N.Y. 1991), aff'd, No. 91-6200, unpublished slip. op. (2d Cir. Sep. 12, 1991); July 18, 1991 Memorandum & Order, slip opinion at 3-4 (S.D.N.Y. 1991), aff'd, No. 91-6198, unpublished slip op. (2d Cir. Sep. 12, 1991); July 16, 1991 Opinion & Order, slip opinion, at 3-4 (S.D.N.Y. 1991); June 6, 1991 Opinion & Order, 775 F. Supp. 90, 93 (S.D.N.Y. 1991), aff'd in relevant part, 948 F.2d 1278 (2d Cir. 1991); May 13, 1991 Memorandum & Order, 764 F. Supp. 817, 820-21 (S.D.N.Y. 1991); May 9, 1991 Memorandum & Order, 764 F. Supp. 797, 800 (S.D.N.Y. 1991) aff'd, No. 91-6144, unpublished slip. op. (2d Cir. Jan. 28, 1992); May 6, 1991 Opinion & Order, 764 F. Supp. 787, 789 (S.D.N.Y.), aff'd, 940 F.2d 648 (2d Cir.), cert. denied, 112 S. Ct. 76 (1991); December 27, 1990 Opinion & Order, 754 F. Supp. 333, 337 (S.D.N.Y. 1990); September 18, 1990 Opinion & Order; 745 F. Supp. 189, 191-92 (S.D.N.Y. 1990); January 17, 1990 Opinion & Order, 728 F. Supp. 1032, 1045-57, aff'd, 907 F.2d 277 (2d Cir. 1990).
A. Duty to Investigate the Allegations The respondents contend that they had no duty to investigate the allegations concerning links between LCN and Local 27 officers. Such an argument is baseless. It is now well settled that all IBT members are bound by the disciplinary provisions of the Consent Decree. See United States v. IBT, 905 F.2d 610, 621 (2d Cir. 1990); May 6, 1991 Opinion & Order, 764 F. Supp. 787, 789-90 (S.D.N.Y. 1991), aff'd, 940 F.2d 648 (2d Cir.), cert. denied, 112 S. Ct. 76 (1991). The disciplinary power vested in the Independent Administrator by the Consent Decree "plainly includes the power to interpret the disciplinary provisions of the IBT Constitution." United States v. IBT, 905 F.2d at 619. Moreover, the Independent Administrator's "comprehensive right to review disciplinary charges . . . necessarily includes the final authority to determine what constitutes an offense subject to discipline Under the IBT Constitution." Id. The Independent Administrator and this Court have determined that failing to investigate allegations a that a fellow IBT member has ties to organized crime is a breach of fiduciary duty that brings reproach upon the Union, in violation of the IBT Constitution. See, e.g., May 15, 1992 Opinion & Order, slip opinion (S.D.N.Y. 1992). Accordingly, respondents are subject to discipline, under the provisions of the Consent Decree and the IBT Constitution, for failing to investigate allegations of corruption in Local 27.
Most recently, this Court issued an opinion, dated May 15, 1992, in which it set forth a detailed justification for holding a Union officer to this obligation. See id. at 15-16. After tracing the damaging effects of LCN influence in the IBT, this Court stated that
Quite simply, mafia influence in the IBT is wholly inconsistent with the interests of the rank and file. Accordingly, every IBT officer must, with unstinting effort and steely resolve, wage an active campaign to purge the Union of the hideous influence of organized crime. While appropriate responses will vary given the unique facts of different situations, a Union officer must in all cases take affirmative steps to eradicate LCN influence. LCN influence is most insidious, and its stranglehold on the IBT greatest, when a member of organized crime holds high Union office. Such a situation provides organized crime with direct and unrestricted access to a position of power within the IBT. Half-hearted responses to any information suggesting mafia influence in the IBT constitute a breach of fiduciary duty. An impotent reaction to allegations that a mob leader holds Union office is nothing less than a gross abdication of responsibility and a blatant betrayal of the membership's trust.
May 15, 1992 Opinion & Order, slip opinion at pp. 16-17 (citations omitted).
B. Adequacy of the Purported Investigation
The respondents also contend that they conducted an adequate and reasonable investigation into this matter. This argument is without merit. This Court has held that "upon receiving information that a fellow officer or IBT member has ties to organized crime, an IBT officer will discharge his or her fiduciary duty only by employing whatever means are necessary to verify or refute the information and then implementing appropriate remedial measures." May 15, 1992 Opinion & Order, slip opinion at p. 18. The respondents' conduct in this matter does not remotely resemble even a cursory investigation into the allegations.
1. Respondents' Conduct in this Matter
The Independent Administrator found that respondents did nothing at all in response to the allegations. (Ind. Admin. Dec. at p. 18). In so holding, he did not credit respondents testimony at the hearing, where they suddenly "remembered" having conducted an inquiry into the allegations. This Court agrees with the Independent Administrator's finding. The respondents first testified to having conducted an investigation only after the filing of charges by the Investigations Officer. This testimony was inconsistent with their testimony before the Investigations Officer, where they admittedly failed to conduct any investigation in connection with this matter. Such a change in testimony suggests a desperate effort to avoid punishment rather than a truthful recitation of past events. Clearly, by failing to act at all in the face of repeated allegations of Patsy's and Robert's criminal involvement, respondents breached their fiduciary duty.
Moreover, even if this Court credited respondents' testimony a at the hearing, their purported investigation falls pathetically short of a meaningful inquiry into this matter. Respondents contended at the hearing that: (1) they each spoke with accountants and lawyers associated with Local 27 about this matter; (2) Patrick asked his father and brother about the veracity of the allegations; (3) Lanza checked the financial records of Local 27 for financial impropriety; and (4) Lanza asked Patrick about the allegations, and Patrick told him that Patsy and Robert had denied the allegations.
These responses, if they ever occurred, do not constitute an adequate investigation into the allegations. In fact, they assured that respondents would never have to learn the truth or falsity of the allegations. Patrick's "questioning" of Patsy and Robert consisted of accepting at face value their denial of the allegations. Similarly, Lanza tacitly accepted this denial by remaining content with Patrick's "questioning." Lanza's supposed perusal of Local 27's financial records would in no way bring him closer to ascertaining the veracity of the allegations. While the respondents supposedly spoke with accountants and lawyers connected with Local 27, the Independent Administrator found that at least some of these discussions may not have involved the allegations. Even if other conversations did deal with this issue, respondents provide no information suggesting that having a chat with Local 27's outside professionals was an adequate or effective way to investigate the allegations.
In sum, both this Court and the Independent Administrator have found that respondents took no action at all in response to persistent allegations of corruption in Local 27. This Court finds that the Independent Administrator correctly refused to credit the respondents' inconsistent, post charge testimony at the hearing, in which they purported to investigate this matter. Moreover, even their alleged investigation was, at best, a feeble endeavor that could only have ensured preservation of the status quo. Their purported efforts simply do not satisfactorily discharge their fiduciary obligation to investigate and act upon allegations of corruption in their midst.
While respondents contend that they lacked the resources to conduct a more thorough investigation, it is apparent that respondents had at their disposal an array of possible responses that would have resulted in a true exploration of the allegations. They could have sought assistance from the authorities; obtained copies of the charges and proofs filed by the Investigations Officer against Patsy and Robert; arranged for a professional to conduct an in depth interview of Patsy and Robert; or asked their advisors to investigate and develop the facts of the case for their review. In addition, the respondents, on their own, could have attempted to verify media reports tying Patsy and Robert to LCN, or they could have conducted substantive, in depth questioning of Patsy, Robert and others having information about the allegations. The respondents instead opted for complete inaction.
Of course, this Court has previously noted that the respondents' "failure to employ any one investigative technique is not tantamount to a failure to investigate. . . . While [respondents'] fiduciary duty required some attempt to uncover the truth, had [they] acted, [they] enjoyed a fair amount of discretion in choosing appropriate methods." May 15, 1992 Opinion & Order, slip opinion at p. 20 (S.D.N.Y. 1992). The respondents, however, did have an obligation to probe into the veracity of the allegations by employing effective investigative measures. Their utter passivity in this situation reveals an alarming and glaring willingness to tolerate, and thus sanction, corruption in Local 27. This type of conduct "is a gross dereliction of [their] responsibility to the rank and file and, thus, a clear breach of [their] fiduciary duty." Id. at 21.
2. Respondents' Attempt to Justify Inaction
In an attempt to justify their utter inaction in this matter, the respondents assert that it would have been futile to conduct their own investigation. Because United States Attorneys Offices in the Southern District of Florida and the Southern District of New York, as well as the Department of Labor, investigated Patsy's and Robert's activities and never filed charges against them, the respondents contend that they had no duty to conduct a separate, independent investigation.
It is important to note that this argument does not support respondents' claim that they conducted an adequate investigation in this matter. Instead, their attempt to blame the Government is an excuse for complete inaction. Once the respondents knew of a threat to the rank and file's interests -- this time in the form of LCN influence in Local 27 -- their duty as Union fiduciaries demanded that they take action. The conduct of third parties, including the Government, does not mitigate, replace or eliminate the duty of an IBT officer to serve the membership's interests by investigating and eradicating LCN influence in the IBT. As this Court noted in its May 15, 1992 order, "if [respondents'] failure to act under the circumstances is accepted as the norm, nothing short of repeated intervention, whether it be by the government or the Court-appointed officers, would suffice to rid the IBT of its organized crime influences." Id. at 22.
The failure of any Government agency to file charges against Patsy and Robert is not wholly irrelevant. The Government's decision not to file charges may have led respondents to believe that their investigation, had they conducted one, would result in absolving Patsy and Robert of any wrongdoing. The Government's decision, however, in no way excused respondents' "obligation as [fiduciaries] to investigate serious allegations of mob influence in the IBT. [Their] oath of office demanded that [they] undertake the investigation, even if [they] believed in [Patsy's and Robert's] innocence." Id. at 24. The relevant issue is the respondents' obligation, not the Government's obligation.
Accordingly, this Court finds that the decision of the Independent Administrator is supported by substantial evidence, and is in no way arbitrary or capricious.
IT IS HEREBY ORDERED that respondents' objections to the Independent Administrator's decision are denied; and
IT IS FURTHER ORDERED that the decision of the Independent Administrator is affirmed in its entirety; and
IT IS FURTHER ORDERED that the stay of penalties imposed by the Independent Administrator is dissolved, effective immediately.
Dated: July 13, 1992
New York, New York
David N. Edelstein