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July 13, 1993



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, who supervised the electoral process that culminated in 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 electoral and disciplinary provisions.

 Application CX presents for this Court's review the decision of the Independent Administrator regarding disciplinary charges brought by the Investigations Officer against Mr. Arnold Ross, ("respondent"), the President IBT Local Union 97, which is located in Newark, New Jersey. The Independent Administrator found that Mr. Ross brought reproach upon the IBT by failing to investigate and act when confronted with allegations that Mr. John "John the Greek" Agathos, *fn1" an organizer and trustee for Local 97, had engaged in criminal activity and other wrongful conduct. The Independent Administrator also found that Mr. Ross violated the IBT Constitution and Local 97's Bylaws when Mr. Ross caused Local 97 to pay his and Mr. Agathos' legal fees in connection with a Department of Labor ("DOL") investigation into Mr. Agathos' union activities. For these violations of the IBT Constitution, the Independent Administrator ordered Mr. Ross' removal as President of Local 97, prohibited him from drawing compensation from Local 97, and permanently barred Mr. Ross from holding any officer position, or obtaining any type of employment, with the IBT or any IBT-affiliated entity. The Independent Administrator permitted Mr. Ross to retain his IBT membership so that he can secure work, if he chooses, as a rank-and-file member with non-IBT affiliates. Furthermore, the Independent Administrator precluded IBT-affiliated entities from making contributions on respondent's behalf to employment benefit plans, whether controlled by IBT-affiliates or third-parties, although the Independent Administrator did not alienate his vested benefits. Finally, the Independent Administrator prohibited any IBT-affiliated entity from paying Mr. Ross' legal expenses. The Independent Administrator stayed the imposition of penalties pending this Court's review.

 Mr. Ross contends that the Independent Administrator's decision is arbitrary and capricious because it is not supported by substantial evidence. Respondent also argues that the penalties imposed are disproportionate to the conduct charged. These arguments are without merit. The decision of the Independent Administrator is fully supported by the evidence. For the reasons stated below, the decision of the Independent Administrator is affirmed.


 The Investigations Officer charged that Mr. Ross brought reproach upon the IBT in violation of Article II, Section 2(a) and Article XIX, Sections 7(b)(1), (2), and (3) of the IBT Constitution. Article II, Section 2(a), the IBT membership oath, provides in relevant part that every IBT member shall "conduct himself or herself at all times in such a manner as not to bring reproach upon the Union." Article XIX, Section 7(b) is a non-exhaustive list of disciplinary charges that may be filed against IBT members. Three such charges are: (1) violating the IBT Constitution, a Local Union Bylaw or other Union rule; (2) violating the IBT membership oath; and (3) breaching a fiduciary duty by embezzling or converting union funds or property. See IBT Const., Art. XIX, §§ 7(b)(1)-(3).

 Pursuant to Section F.12(C) of the Consent Decree, the Independent Administrator must adjudicate disciplinary charges using a "just cause" standard. The Investigations Officer has the burden of establishing just cause by a preponderance of the evidence. December 27, 1990 Opinion & Order, 754 F. Supp. 333, 337 (S.D.N.Y. 1990). After conducting a hearing (the "hearing") at which Mr. Ross was represented by counsel, and after receiving post-hearing submissions, the Independent Administrator issued a thirty-page decision. The Independent Administrator found that the Investigations Officer satisfied his burden of proving that respondent brought reproach upon the Union by failing to investigate allegations that Mr. Agathos engaged in wrongful conduct, and by improperly causing Local 97 to pay his and Mr. Agathos' legal fees. (Decision of the Independent Administrator ("Ind. Admin. Dec.") at 1, 14).

 A. Mr. Ross' Failure to Investigate Allegations of Mr. Agathos' Wrongdoing

 1. Mr. Agathos' Assault Conviction

 The Independent Administrator found that Mr. Ross' relationship with Mr. Agathos began in the late 1970's, when they met at a Joint Council meeting. At that time, Mr. Agathos was Secretary-Treasurer of IBT Local 966, located in New York City. In response to a request from Mr. Agathos in early 1984, Mr. Ross hired Mr. Agathos as a Local 97 organizer. Two factors allegedly motivated Mr. Ross' decision to hire Mr. Agathos: He believed that he "owed" Mr. Agathos, who had assisted in effectuating a merger between Local 97 and IBT Local 286, which increased Local 97's membership, and he believed that Mr. Agathos would make a good organizer. Respondent's Legal Memorandum in Opposition to Application by Independent Administrator Seeking Review and Affirmation of Decision ("Respondent's Memorandum"), at 2-3. From the time of his hiring, Mr. Agathos reported directly to Mr. Ross "ninety-nine percent of the time." (Ind. Admin. Dec. at 5). Although upon hiring Mr. Agathos, Mr. Ross did not know, and did not ask, whether Mr. Agathos was still associated with Local 966, Mr. Agathos did tell Mr. Ross of his continuing role as President of Hotel and Restaurant Employees Union ("HREU") Local 69.

 In September 1984, Mr. Agathos was indicted in the United States District Court for the Southern District of Florida for assault. The incident received coverage in the press, and one newspaper reported that:

A 76-year-old man strapped into his seat was severely beaten Monday by a father and son angered in a dispute over their reclining chair backs just after their Delta Air Lines jet took off on a flight to New Jersey, according to the FBI. Witnesses said Harry Klinghoffer of Fort Lauderdale, a newspaper distributor, was struck more than 20 times by John N. Agathos, 42, and his son, John R. Agathos, both New Jersey local union officials, Knight Rider newspapers reported. . . . FBI spokesman Del Campo said Klinghoffer "had to have at least 20 stitches . . . . He was beaten severely. . . ." An Assistant United States Attorney commented that "any time a 76-year-old man gets beaten up for no good reason -- while still strapped in his seat -- well, that's pretty outrageous.

 (Ind. Admin. Dec. at 7-8 (quoting Washington Post, July 25, 1984)). Mr. Agathos was convicted of misdemeanor assault pursuant to U.S.C. § 113(d), and sentenced to six months imprisonment. Following his release from prison, Mr. Agathos resumed employment with Local 97.

 Despite admittedly having read accounts of this incident in the press, Mr. Ross "never conducted any investigation into the beating incident . . . [and] did not even see fit to ask Agathos what he had done." (Ind. Admin. Dec. at 8); see Respondent's Memorandum, at 4. Members of Local 97's Executive Board confirmed the absence of an inquiry into this incident. Mr. Ross consulted with the Local's attorney, who reportedly told him that Mr. Agathos could return to work if convicted of a misdemeanor, but could not resume employment upon a felony conviction. (Ind. Admin. Dec. at 10).

 The Independent Administrator found that Mr. Ross breached his fiduciary duty when he failed to investigate this incident, and in doing so, he violated both the membership oath of the IBT Constitution and Section 13(B) of Local 97's Bylaws, which require an investigation into a breach of fiduciary duty when "circumstances so warrant." (Ind. Admin. Dec. at 11). The Independent Administrator also concluded that the legal opinion received by Mr. Ross concerning Mr. Agathos' return to work does not insulate Mr. Ross: "The issues raised by Agathos' beating of a 74-year-old man strapped to his seat on an airplane demanded further inquiry by Ross." (Ind. Admin. Dec. at 11).

 2. Department of Labor Investigation into Mr. Agathos' Activities

 DOL conducted an investigation into whether Mr. Agathos was a "no-show" employee of Local 97, and also inquired into Mr. Agathos' relationship with HREU Local 69, Mr. Ross learned of the "no-show" prong of the investigation close to, but before, May 23, 1988, when he suggested that Local 97's Executive Board hire outside counsel in connection with the investigation. Although Mr. Agathos told Mr. Ross of his relationship with HREU Local 69, Mr. Ross did not learn that this relationship was also a focus of DOL's investigation until that probe terminated. Mr. Ross also knew that Mr. Agathos paid HREU Local 69 $ 3,500 to resolve DOL's claim that the Local improperly paid certain of Mr. Agathos' personal expenses. (Ind. Admin. Dec. at 14). Mr. Ross testified before a Grand Jury on June 16, 1988 in connection with DOL's investigation, at which time he refused to testify and invoked his Fifth Amendment privilege against self-incrimination. (Ind. Admin. Dec. at 12). Indeed, Mr. Ross refused to answer the following question: "Do you know John Agathos?" (Ind. Admin. Dec. at 14 n.7). Although refusing to testify, Mr. Ross did provide the Government with documents and he also submitted to an interview with DOL. (Ind. Admin. Dec. at 12).

 Despite his awareness of DOL's investigation, the Independent Administrator found that Mr. Ross "never made any independent inquiry as to whether Agathos had engaged in any wrongdoing." (Ind. Admin. Dec. at 12). Local 97's Executive Board confirmed that the issue of conducting an independent investigation never arose. (Ind. Admin. Dec. at 13). The Independent Administrator rejected Mr. Ross' contention that conducting an independent investigation would have been an exercise in repetition given the existence of DOL's probe. The Independent Administrator reasoned that although Mr. Ross knew of Mr. Agathos' ties to HREU Local 69, he did not know that DOL was investigating this relationship until the close of DOL's inquiry. In addition, Mr. Ross admittedly did not attempt to uncover the scope of DOL's investigation. (Ind. Admin. Dec. at 13-14). Thus, "Ross' suggestion that he was simply faced with the proposition of 'duplicating the efforts [of] the federal government and grand jury,' is . . . disingenuous . . . [because] Ross did not even attempt to learn what the scope of those efforts were." (Ind. Admin. Dec. at 14). Accordingly, the Independent Administrator found that in failing to conduct an independent inquiry Mr. Ross breached his fiduciary duty to the general membership of Local 97.

 B. Mr. Ross' Role in Causing Local 97 to Pay ...

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