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UNITED STATES v. LOCAL 6A

September 13, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
LOCAL 6A, CEMENT AND CONCRETE WORKS, LABORERS INTERNATIONAL UNION OF NORTH AMERICA, et. al., Defendants. THOMAS MADERA, Defendant/Appellant, v. UNITED STATES OF AMERICA, Plaintiff/Appellee. DISTRICT COUNCIL OF THE CEMENT AND CONCRETE WORKERS UNION, LABORERS INTERNATIONAL UNION OF NORTH AMERICA and OFFICERS OF THE DISTRICT COUNCIL, Defendants/Appellants, v. UNITED STATES OF AMERICA, Plaintiff/Appellee.



The opinion of the court was delivered by: VINCENT L. BRODERICK

 VINCENT L. BRODERICK, U.S.D.J.

 I

 This case was brought by the United States, alleging violations of the Racketeering Influenced and Corrupt Organizations ("RICO") Act, 18 USC § 1964, involving Local 6A of the Cement and Concrete Workers, Laborers International Union of North America ("Local 6A"), the District Council of the Cement and Concrete Workers (the "District Council"), *fn1" the officers of those unions, including Thomas Madera ("Madera"), and the Colombo Organized Crime Family and various of its members. On March 18, 1987, I approved a Judgment (On Consent) Against Union Defendants ("the Consent Judgment") under which sixteen of the twenty-five union officer defendants resigned and were enjoined from participating in the affairs of the union for varying lengths of time.

 The Consent Judgment provided, among other things, for the appointment of a trustee to oversee the operation of Local 6A and the District Council (the "Trustee"). Madera was one of the union officer defendants who were permitted to remain as such subject to the Trustee's disciplinary authority. The Trustee was empowered to remove officers or employees of Local 6A or the District Council under certain circumstances, including malfeasance on their part.

 On December 31, 1992 the Trustee rendered a decision *fn2" removing Madera, a signatory of the Consent Judgment, from his position as president of the District Council and from his position on the Board of Trustees of the District Council Fringe Benefit Funds, effective immediately, based on misconduct by Madera occurring after the entry of the Consent Judgment. The Trustee recommended that "if there is no change of circumstances" during a six-month period of removal, Madera upon application to this court be reinstated. Decision of the Trustee In the Matter of Thomas Madera, December 31, 1992 (the "Trustee's Dec."), at 1.

 Madera filed this appeal *fn3" from the Trustee's decision and seeks to stay implementation of the Trustee's decision pending resolution of the appeal. Madera obtained interim relief staying his removal pending my determination of this application. *fn4"

 I find that under the Consent Judgment Madera may pursue this appeal, but by separate order vacate a current interim stay and deny any further stay of his removal under the Trustee's decision. I deny the appeal on the merits but delay entry of judgment to that effect for forty-five (45) days. *fn5"

 II

 Such intervention under either statute may be essential where a significant pattern of racketeering is found which threatens or stymies self-government in the labor movement.

 For intervention under RICO or the LMRDA to be effective, prompt action to root out corrupt behavior is essential. Such action should not be deferred merely because litigation for the purpose of blocking it is initiated. At the same time, access to review by an Article III court not directly involved in administration of the process is important and is called for by the necessity to avoid serious constitutional issues. Availability of review by a tribunal independent of short-term pressures is crucial to avoid the medicine, becoming in some instances at least, almost as dangerous as the disease. *fn6"

 Similarly, in keeping with the Bill of Rights contained in the LMRDA, 29 USC §§ 411-415, it is critical that union members retain the right to vote for candidates of their choice for union office, and that the right to run for office be preserved so that the members can exercise their choice. This membership function of expression of an initial choice involves First Amendment interests which may be asserted even if the officers involved may then or later be prosecuted or removed from office.

 By analogy, I note that the federal government does not interfere with the right of corrupt local officials to run in state or local elections (an interference which would perhaps disrupt the republican form of government guaranteed by Article IV § 4 of the Constitution), but rather prosecutes violators of federal law notwithstanding any local office they may hold. Hence prompt, effective, judicially reviewable suspension or dismissal, but not disqualification from running for office, are in accord with the underlying objectives of RICO and the LMRDA.

 These considerations form a background against which I approach the more specific questions posed here.

 III

 In removing Madera, the court-appointed Trustee exercised power granted by Paragraph 8(a) of the Consent Judgment ("Paragraph 8(a)"), which authorizes the Trustee to:

 
remove from his or her position any officer, supervisor, agent, representative or employee of Local 6A or the District Council (including but not limited to the . . . President . . . and District Council designees on the Board of Trustees of any affiliated Fund).

 The Trustee grounded the decision with respect to Madera on two provisions of the Consent Judgment which set forth grounds for removal: first, "whenever the Trustee reasonably believes that the person or firm (i) has engaged in conduct which constitutes or furthers an act of racketeering or malfeasance," and second, "whenever the Trustee reasonably believes that the person or firm . . . (iii) has violated any of the terms of [the Consent] Judgment." Consent Judgment, Paragraph 8(a).

 Because the term was not defined in the Consent Judgment, the Trustee relied on the relevant portion of the definition of "malfeasance" in Black's Law Dictionary:

 
Evil doing; ill conduct. The commission of some act which is positively unlawful; the doing of an act which is wholly wrongful and unlawful; the doing of an act which person ought not to do at all or the unjust performance of some act which the party had no right or which he had contracted not to do. Comprehensive term including any wrongful conduct that affects, interrupts or interferes with the performance of official duties.

 (6th ed. 1990) (emphasis added in Trustee's Dec., at 2).

 Based on a record of improprieties provided by an investigation undertaken by the United States, and on depositions he took of Madera and the District Council Secretary-Treasurer, the Trustee found three instances constituting malfeasance. In summary, as more fully explained in part V below, he found that the following acts of malfeasance were committed by Madera:

 (1) conduct after Madera learned about the embezzlement by a District Council clerical employee of union initiation fees, violating both the Consent Judgment and 29 USC § 501;

 (2) acts prohibited by the Employment Retirement Income Security Program ("ERISA"), 29 USC § 1002 et seq., and the LMRDA provision dealing with the fiduciary responsibility of officers of labor organizations, 29 USC § 501(a), in connection with Madera's participation as a member of the Board of Trustees of the Fringe Benefit Funds in investment recommendations resulting in the earning of substantial commissions by Madera's son; and

 (3) direction by Madera to invest union Dues Escrow Account monies so that Madera's son earned substantial commissions, violating 29 USC § 501(a) and the District Council Constitution.

 After issuing his decision, the Trustee determined that the provisions of the Consent Judgment prohibited Madera from appealing the Trustee's removal decision and that the decision could not be stayed pending resolution of any appeal, concluding that only the union officers could appeal and that Madera's removal was immediate.

 IV

 My evaluation of a removed employee's right to appeal from the Trustee's exercise of removal authority under the Consent Judgment is based on two provisions of the Consent Judgment and general principles of law. Paragraph 8(a) states in relevant part:

 
In any case where the Trustee exercises removal authority, the removal shall take place immediately. The Trustee, upon request of the officers of Local 6A or the District Council, shall, within three (3) days, advise those officers of the reason for any removal. For a period of up to fourteen (14) days after the Trustee's decision, the ...

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