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UNITED STATES v. INTERNATIONAL BHD. OF TEAMSTERS

September 2, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO, et al., Defendants. IN RE: APPLICATION CIX OF THE INDEPENDENT ADMINISTRATOR



The opinion of the court was delivered by: DAVID N. EDELSTEIN

 EDELSTEIN, District Judge:

 This opinion emanates from the voluntary settlement of an action commenced by plaintiff United States of America (the "Government") against defendants International Brotherhood of Teamsters (the "IBT" or the "Union") 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 that culminated in the 1991 election for International Officers. One goal of the Consent Decree is to rid the IBT of the influence of organized crime through the disciplinary provisions.

 Application CIX presents for this Court's review the decision of the Independent Administrator finding that the Investigations Officer had proven charges filed against Walter Caldwell ("Caldwell"), Henry Martinelli ("Martinelli"), Carl Purpura ("Purpura"), Greg Rasczyk ("Rasczyk") and Gary Richardson ("Richardson"), Executive Board members of IBT Local Union ("Local") 945. Local 945 is located in Wayne, New Jersey. Only Respondents Rasczyk and Richardson have appealed the Independent Administrator's decision.

 BACKGROUND

 The Investigations Officer alleged that Respondents 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, *fn1" and breached their fiduciary duties to the members of IBT Local 945, by embezzling and unlawfully converting to the benefit of others the funds of Local 945. Article II, Section 2(a) is the IBT membership oath, which provides in relevant part that every IBT member shall "conduct himself or herself in a manner so 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. Sanctionable conduct under Article XIX, Section 7(b) includes:

 
(1). Violation of any specific provision of the Constitution, Local Union Bylaws or rules of order, or failure to perform any of the duties specified thereunder.
 
(2). Violation of oath of office or of the oath of loyalty to the Local Union and the International Union.
 
(3). Breaching a fiduciary obligation owed to any labor organization by any act of embezzlement or conversion of union's funds or property.

 IBT Constitution, Article XIX, ยงยง 7 (b)(1) - (3).

 On June 12, 1992, Joseph Abbate ("Abbate"), then president of Local 945, invoked his Fifth Amendment privilege against self-incrimination, refusing to answer certain questions posed by the Investigations Officer during a sworn in-person examination. On June 19, 1992, Anthony Rizzo ("Rizzo"), then secretary-treasurer of Local 945, also invoked his Fifth Amendment privilege against self-incrimination and refused to answer any questions asked by the Investigations Officer during a sworn in-person examination. On June 15, 1992 and June 19, 1992, the Investigations Officer wrote to each Respondent informing them that Abbate and Rizzo had refused to answer questions concerning, inter alia, their association with members of organized crime and whether they had received money from employers of Local 945 members. These letters formally advised Respondents that using Local 945's funds to pay Abbate's or Rizzo's legal fees "may well be in violation of the IBT[] Constitution's prohibition on embezzlement and its restriction on the payment of legal fees." Ind. Admin. Dec. at 4.

 On June 23, 1992, Local 945's Executive Board held a meeting attended by Caldwell, Martinelli, Purpura, Rasczyk, Richardson, Abbate, Rizzo, the Local's counsel and others. At this meeting, Rizzo informed Respondents that he would be removed or forced to resign as an officer of Local 945 as a result of his refusal to answer the Investigations Officer's questions. Both Abbate and Rizzo also refused to answer questions posed by Respondents at the meeting. Respondents thus decided that the Executive Board should file charges against Abbate and Rizzo for their refusal to answer questions at the Executive Board meeting. Accordingly, the Local's counsel was instructed to draft charges against Abbate and Rizzo.

 The Independent Administrator found, and Respondents do not dispute, that at the June 23, 1992 meeting of Local 945's Executive Board,

 
despite Respondents' knowledge that Abbate and Rizzo had refused to answer the Investigations Officer's questions, despite Abbate's and Rizzo's refusal to answer any of Respondents' questions regarding their actions, and despite Respondents' recognition that internal Union charges would need to be filed against Abbate and Rizzo, Respondents approved the Local's payment of the legal fees incurred by Abbate and Rizzo in connection with their appearances before the Investigations Officer. The amount totalled $ 3,231.25.

 Ind. Admin. Dec. at 6-7. The minutes of the June 23, 1992 meeting reflect that, before Respondents approved the disbursement to cover Abbate's and Rizzo's legal fees, counsel for Local 945 orally informed the Executive Board that, in his opinion, payment of the fees was permissible. Id. at 7. On June 26, 1992, pursuant to Executive Board approval, a check in the amount of $ 3,231.25 was issued by Local 945 to cover Abbate's and Rizzo's legal expenses.

 Pursuant to paragraph F.12(C) of the Consent Decree, the Independent Administrator must decide disciplinary hearings 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 at which Respondents were represented by counsel, and receiving briefs from the parties, the Independent Administrator issued a sixteen-page decision. The Independent Administrator found that the Investigations Officer had sustained his burden of proving the charges filed against Respondents and that Respondents acted with fraudulent intent to deprive Local 945 of funds when they approved the payment of Abbate's and Rizzo's legal fees. See Ind. Admin. Dec. at 7-8.

 As a penalty for this conduct, the Independent Administrator ordered Respondents to "remove themselves from all of their IBT-affiliated officer positions and draw no money or compensation therefrom." Ind. Admin. Dec. at 14. In addition, the Independent Administrator permanently barred Respondents from holding such positions in the future and prohibited Respondents from obtaining future employment, consulting or other work with the IBT, or any IBT-affiliated entity. Id. The Independent Administrator allowed Respondents to retain their IBT membership, however, so that they may secure employment as rank-and-file members with non-IBT-affiliated entities that have collective bargaining agreements with the IBT. Id. at 14-15. Furthermore, the Independent Administrator exercised his authority to impose sanctions upon Respondents' employee benefits. See December 28, 1990 Memorandum & Order, 753 F. Supp. 1181 (S.D.N.Y. 1990), aff'd, 941 F.2d 1292 (2d Cir.), cert. denied, 112 S. Ct. 76 (1991). The Independent Administrator prohibited the IBT or any affiliated entity from contributing funds to sustain benefits or Third-Party Plans available to Respondents by virtue of their serving, or having served, as officers of the IBT or any IBT-affiliate. *fn2" Finally, the ...


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