October 27, 1992
UNITED STATES OF AMERICA, Plaintiff, - v - INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO, THE COMMISSION OF LA COSA NOSTRA, ANTHONY SALERNO, a/k/a "Fat Tony," MATTHEW IANNIELLO, a/k/a "Matty the Horse," ANTHONY PROVENZANO, a/k/a "Tony Pro," NUNZIO PROVENZANO, a/k/a "Nunzi Pro," ANTHONY CORALLO, a/k/a "Tony Ducks," SALVATORE SANTORO, a/k/a "Tom Mix," CHRISTOPHER FURNARI, SR., a/k/a "Christie Tick," FRANK MANZO, CARMINE PERSICO, a/k/a "Junior," "The Snake," GENNARO LANGELLA, a/k/a "Gerry Lang," PHILIP RASTELLI, a/k/a "Rusty," NICHOLAS MARANGELLO, a/k/a "Nicky Glasses," JOSEPH MASSINO, a/k/a "Joey Messina," ANTHONY FICAROTTA, a/k/a "Figgy," EUGENE BOFFA, SR., FRANCIS SHEERAN, MILTON ROCKMAN, a/k/a "Maishe," JOHN TRONOLONE, a/k/a "Peanuts," JOSEPH JOHN AIUPPA, a/k/a "Joey O'Brien," "Joe Doves," "Joey Aiuppa," JOHN PHILLIP CERONE, a/k/a "Jackie the Lackie," "Jackie Cerone," JOSEPH LOMBARDO, a/k/a 'Joey the Clown," ANGELO LAPIETRA, a/k/a "The Nutcracker," FRANK BALISTRIERI, a/k/a "Mr. B," CARL ANGELO DELUNA, a/k/a "Toughy," CARL CIVELLA, a/k/a "Corky," ANTHONY THOMAS CIVELLA, a/k/a "Tony Ripe," GENERAL EXECUTIVE BOARD, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, JACKIE PRESSER, General President, WELDON MATHIS, General Secretary-Treasurer, JOSEPH TREROTOLA, a/k/a "Joe T," First Vice President, ROBERT HOLMES, SR., Second Vice President, WILLIAM J. McCARTHY, Third Vice President, JOSEPH W. MORGAN, Fourth Vice President, EDWARD M. LAWSON, Fifth Vice President, ARNOLD WEINMEISTER, Sixth Vice President, JOHN H. CLEVELAND, Seventh Vice President, MAURICE R. SCHURR, Eighth Vice President, DONALD PETERS, Ninth Vice President, WALTER J. SHEA, Tenth Vice President, HAROLD FRIEDMAN, Eleventh Vice President, JACK D. COX, Twelfth Vice President, DON L. WEST, Thirteenth Vice President, MICHAEL J. RILEY, Fourteenth Vice President, THEODORE COZZA, Fifteenth Vice President, DANIEL LIGUROTIS, Sixteenth Vice President, SALVATORE PROVENZANO, a/k/a "Sammy Pro," Former Vice President Defendants.
The opinion of the court was delivered by: DAVID N. EDELSTEIN
EDELSTEIN, District Judge:
This opinion emanates from the voluntary settlement in the action commenced by the plaintiff 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 provides for three Court-appointed officials: the Independent Administrator to oversee the Consent Decree's remedial provisions, the Investigations Officer to bring charges against corrupt IBT members, and the Election Officer to oversee the electoral process leading up to and including the 1991 election for International Officers (collectively, the "Court-Appointed Officers"). The election, which the Election Officer certified on January 22, 1992, resulted in Ronald C. Carey assuming the office of IBT General President. The goal of the Consent Decree is to rid the IBT of the hideous influence of organized crime through the electoral and disciplinary provisions.
The Government seeks to enforce a settlement of its civil contempt action against respondents, who are current and former officers of Local 493, Kenneth Morrill, Frank Scopino, William Warner, Dennis Shippee, and Glen Lawton (the "respondent officers"), as well as their former attorney Burton Rosenberg (collectively, the "respondents"). The contempt proceedings stemmed from charges filed by the Investigations Officer against the respondent officers. At the time of the charges, respondents constituted the Executive Board of Local 493, located in Uncasville, Connecticut. The Investigations Officer charged respondents with bringing reproach upon the IBT by failing to perform their duties as union officers and by embezzling $ 107,273 in union funds for the use of a fellow officer, Philip Guarnaccia. Respondents provided Guarnaccia, the former Secretary-Treasurer of Local 493, with the $ 107,273 by granting him severance payments after he had been convicted of willfully failing to maintain accurate and complete union records, in violation of 29 U.S.C. §§ 1027 & 1131.
This Court approved a settlement of the charges (the "Agreement") against respondents on January 17, 1991. Respondents agreed to reimburse Local 493 in the amount of $ 65,000 if Guarnaccia failed to honor his reimbursement obligation. They also agreed to "propose to and support before the [Local 493 Executive] Board and after its passage to the Local 493 membership" an amendment (the "Amendment") to the Local's bylaws and constitution concerning limits on the amount and type of permissible severance payments. In order to implement the provision calling for a membership vote on the Amendment, Local 493's bylaws and constitution required that respondents read the Amendment at two consecutive general membership meetings.
The Government alleges that respondents failed to honor the portion of the settlement compelling them to propose the Amendment to the general membership. A Local 493 member, Mr. Donald Villa, informed the Government that at the first reading of the Amendment to the general membership, Mr. Morrill stated that "Carberry's office" wrote the Amendment and that "we have to read this and recommend it to you." Declaration of Peter C. Sprung, Assistant United States Attorney (April 29, 1991), at 6, P 10. Another Local 493 member, Mr. John Sarantopolous, allegedly informed the Government that at the second reading of the Amendment, Mr. Scopino stated that respondents had been forced to sign the Agreement and that while "we have to recommend the Amendment to you," the membership did not have to approve it. Id., at P 11. Both Mr. Villa and Mr. Sarantopolous concluded that respondents were encouraging the membership to reject the Amendment when it came up for a vote at a later meeting.
Mr. Sarantopolous informed the Government that at the third and final reading of the Amendment, which occurred on April 14, 1991, Mr. Rosenberg stated that respondents had not acted improperly and that they settled the charges under duress from the Independent Administrator. He supposedly added that the Amendment limited "the compensation of your officials when they leave office, when in fact you, the membership want to reward them with compensation and other items as you've done in the past." Id., at 7, P 12. Mr. Rosenberg concluded by urging the membership to reject the Amendment. Following Mr. Rosenberg's presentation, Mr. Morrill told the general membership that they were free to reject the amendment and then both Mr. Morrill and Mr. Scopino urged rejection of the Amendment. Mr. Scopino then tried to bring the Amendment to a vote without further discussion; Mr. Sarantopolous objected, however, and was allowed to speak in support of the Amendment, although several respondents allegedly attempted to shout him down as he spoke. The membership then voted to reject the proposed Amendment by a margin of 94 to 32; Mr. Sarantopolous represents that following the vote, several members stated that they would have voted for the Amendment had the vote been by secret ballot, but voted against it out of a fear of retaliation given the non-secret nature of the vote.
On the basis of declarations by Mr. Villa and Mr. Sarantopolous, the Government, on April 29, 1991, brought an order to show cause why respondents should not be held in contempt of the Agreement. This Court signed the order and scheduled an evidentiary hearing for May 2, 1991. At that hearing, however, the Government declined to submit evidence on the issue of contempt because the parties had reached a settlement, the terms of which were contained in a letter dated May 2, 1991 (the "Settlement"). The Settlement bound respondents to pass an Executive Board resolution adopting the Amendment, present it to the general membership for a secret-ballot vote, which the Government would supervise. Respondents also agreed never to receive severance pay in an amount greater than that set forth in the resolution, to terminate Mr. Rosenberg and his law firm with respect to all Local 493 matters and to reimburse the Local for fees paid to Mr. Rosenberg in connection with their disciplinary and contempt proceedings. Finally, respondents consented to pay the Government's costs and attorney's fees for the contempt proceeding and to include in the formal settlement of the contempt action an admission that they violated the Agreement. This Court ordered the parties to frame the letter agreement as an order. The following statements were then made by Mr. Edward T. Ferguson, III, Assistant United States Attorney, Mr. Marc Bogatin, former counsel for the respondent officers, and Mr. Jerome Tauber, former counsel for Mr. Rosenberg:
Mr. Ferguson: I would like to get on the record a statement from counsel for both Mr. Rosenberg and counsel for the five executive board members here that they agree to the provisions set forth in the May 2nd, 1991 letter, to which your Honor referred, just so there is no mistake about that.
Mr. Tauber: Yes, your Honor. I represent Mr. Rosenberg, and on his behalf, I also represent to the court that he has authorized me to state on the record that he agrees to the conditions of the settlement outlined in the letter of May 2nd, 1991.
Transcript of May 2, 1991 Hearing, at 15-16.
Following this Court's direction, the Government prepared a stipulation and order that embodied the terms of the Settlement. On May 17, 1991, Mr. Bogatin represented orally to Mr. Ferguson that the respondent officers were willing to resign as officers, which was not a term of the Agreement or the Settlement. Assistant United States Attorney Peter C. Sprung responded by letter dated February 25, 1992 with the terms upon which respondents' resignations would be an acceptable substitute for the terms of the Settlement. These terms included the appointment of a temporary trustee pending the election of new officers and the termination of Mr. Rosenberg and his firm. Mr. Sprung added that "if these terms are unacceptable to your clients . . . . the Government will immediately apply to the Court to enforce the terms of the May 2 agreement." Letter from Peter C. Sprung, Assistant United States Attorney, to Marc Bogatin, former counsel for respondent officers (February 25, 1992) (on file in the Southern District of New York).
From March through June 1992, the Government and new counsel for all respondents, Mr. John R. Williams, negotiated the terms of a settlement of the contempt proceeding that centered on the respondents' resignations from Local 493 offices. During the course of these negotiations, respondents Warner, Shippee and Lawton resigned their positions. By letter dated June 19, 1992, Mr. Williams stated to Mr. Sprung that "I have reviewed your letter [of June 9, 1992] . . . and believe we may have an agreement here." Letter of John R. Williams, counsel for respondents, to Peter C. Sprung, Assistant United States Attorney (June 19, 1992) (on file in the Southern District of New York). Despite this representation, respondents refused to execute the stipulation sent to them by Mr. Sprung.
The Government then made this motion for entry of judgment enforcing the terms of the Settlement contained in the May 2, 1991 letter agreement. The gist of the motion is that by their conduct at the general membership meetings, respondents violated their obligation, contained in the Agreement, to support the Amendment. The Government also asserts that in failing to support the Amendment, Mr. Rosenberg, acting as the Executive Board members' agent and attorney, violated the Agreement. Respondents proffer several arguments in opposition to the Government's application. They contend that: (1) this Court lacks personal jurisdiction over respondents due to inadequate service of process; (2) the parties abandoned the Settlement by subsequently engaging in further negotiations; (3) laches bars the Government's application; (4) the attorneys who appeared on their behalf at May 2, 1991 hearing had no authority to enter into the Settlement; and (5) performance of the provisions of the Settlement calling for Executive Board action is impossible. This Court held a hearing on this matter on October 13, 1992, at which the parties presented their arguments. Noting that respondents Morrill and Scopino are nominees for Local 493 office in an election that had been scheduled for Sunday, October 18, 1992, this Court stayed the election pending resolution of this matter.
A. Inadequate Service of Process
Respondents contend that this Court lacks personal jurisdiction because they did not receive proper service of process. They claim that they appeared at the May 2, 1991 hearing in response to a telecopy sent to Mr. Rosenberg's office and not in response to valid service of process. Moreover, they claim that raising the issue now is appropriate given the absence of any responsive pleading in this matter. Raising such a defense implicates "the manner in which service has been made and not . . . the court's power to adjudicate [respondents'] rights and liabilities." Santos v. State Farm Fire & Casualty Co., 902 F.2d 1092, 1095 (2d Cir. 1990) (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1353, at 277 (2d ed. 1990)). Indeed, it is well settled "that the disciplinary and investigatory provisions of the Consent Decree are binding on non- signatory members of the IBT." August 27, 1990 Opinion & Order, 745 F. Supp. 908, 912 (S.D.N.Y. 1990), aff'd, 941 F.2d 1292 (2d Cir.), cert. ...
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