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UNITED STATES v. INTERNATIONAL BHD. OF TEAMSTERS

November 30, 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 CXVII OF THE INDEPENDENT ADMINISTRATOR


Edelstein


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 who supervised the electoral process that culminated in the 1991 election for International Officers. The goal of the Consent Decree is to rid the IBT of the influence of organized crime through the election and disciplinary provisions.

 Application CXVII presents for this Court's review the decision of the Independent Administrator regarding disciplinary charges brought by the Investigations Officer against Harold Friedman ("Friedman"), former president of IBT Local 507 in Cleveland, Ohio, and against officers and agents of IBT Local 507 including Gerald Yontek, William Jurevicius, Barbara Walden, Paul LaBuda, Ed Thomas, John Letner, Daniel Kolar, Douglas Schuetz, Stephen R. Kapelka, Philip Lukic, and Rudy Anthony Nativio ("respondent officers and agents"). The Investigations Officer charged Friedman with violating the IBT Constitution by violating the terms of his one-year suspension from any officer or trusteeship position with the IBT or any IBT-affiliated entity, and violating 29 U.S.C. § 504, which bars Friedman from advising or acting as consultant to any labor organization as a result of his 1989 criminal conviction. The Investigations Officer charged respondent officers and agents with violating the IBT Constitution by facilitating Friedman's ongoing imposition of influence and control over IBT Local 507 in violation of his suspension and of 29 U.S.C. § 504. The Independent Administrator found that respondent Friedman had violated his one-year suspension as well as his statutory debarment. The Independent Administrator also found that respondent officers and agents acquiesced to, and in some instances actively assisted, Friedman's improper involvement in IBT Local 507.

 For these violations, the Independent Administrator permanently barred Friedman from membership in the IBT. Furthermore, the Independent Administrator ordered that the IBT and IBT-affiliated persons and entities not make contributions to employee benefit plans on Friedman's behalf, regardless of whether such plans are under the exclusive control of the IBT. Consistent with prior rulings in this case, see, e.g., June 10, 1993 Memorandum & Order, 824 F. Supp. 406, 409 n.3 (S.D.N.Y. 1993), the Independent Administrator did not alienate Friedman's vested benefits. The Independent Administrator barred respondent officers and agents from holding or drawing compensation from any IBT-affiliated officer or trusteeship position for terms varying in accordance with each individual's culpability. The independent Administrator directed that contributions by the IBT or any IBT-affiliated entities to the employee benefit plans of each of these individuals attributable to his or her position as an officer or agent cease during his or her period of suspension. Finally, the Independent Administrator ruled that respondents are not entitled to have any of their legal expenses paid by the IBT or any IBT-affiliated entity. The Independent Administrator stayed the imposition of penalties pending this Court's review.

 Respondents contend that the Independent Administrator's decision is arbitrary and capricious, an abuse of discretion, contrary to law, and unsupported by the evidence. These arguments are without merit. The decision of the Independent Administrator is both legally sound and well supported by the evidence. Accordingly, the decision of the Independent Administrator is affirmed in all respects.

 I. BACKGROUND: INDEPENDENT ADMINISTRATOR'S FINDINGS

 The Investigations Officer charged that, while suspended from all officer and trusteeship positions in IBT Local 507, respondent Friedman brought reproach upon the IBT, interfered with and induced others to interfere with the performance of the Union's legal obligations, and violated his membership oath, in violation of Article II, Section 2(a) and Article XIX, Section 7(b)(1), (2), and (5) of the IBT Constitution. The Investigations Officer further charged that respondent officers end agents brought reproach upon the IBT, interfered with and allowed others to interfere with the performance of the Union's legal obligations, and violated their membership oaths, in violation of Article II, Section 2(a) and Article XIX, Section 7(b)(1), (2) and (5) 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. The three specific Section 7(b) charges brought against respondents are: (1) violating the IBT Constitution, a Local Union Bylaw or other Union rule; (2) violating the IBT membership oath; and (3) engaging in conduct that is disruptive of, interferes with, or induces others to disrupt or interfere with, the performance of any Union's legal or contractual obligations. See IBT Const., Art. XIX, § 7(b)(1), (2), and (5).

 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 respondents were represented by counsel, and after receiving post-hearing submissions, the Independent Administrator issued a thirty-six page decision. The Independent Administrator found that the Investigations Officer had satisfied his burden of proving that Friedman brought reproach upon the Union by continuing to interject himself in the affairs of IBT Local 507, playing a significant role in the running of IBT Local 507, and holding himself out as a figure of continuing authority, in violation of his suspension and his statutory bar from union activity. (Decision of the Independent Administrator ("Ind. Admin. Dec.") at 2). The Independent Administrator also found that the Investigations Officer had satisfied his burden of proving that respondent officers and agents brought reproach upon the Union by permitting Friedman to interject himself in the affairs of IBT Local 507. (Ind. Admin. Dec. at 2).

 A. Respondent Friedman's Violation of his One-Year Suspension

 In an earlier action, Harold Friedman ("Friedman"), president of IBT Local 507 and president of Bakery, Confectionery and Tobacco Workers International Union, Local 19 ("Bakers Local 19") in Cleveland, Ohio, was charged by the Investigations Officer with bringing reproach upon the IBT by: (1) embezzling funds from Bakers Local 19 in 1981 while he was the president of that Local; (2) conspiring to and engaging in racketeering activity in connection with Bakers Local 19; and (3) filing a false form LM-2 with the Department of Labor on behalf of Bakers Local 19. On January 11, 1990, the Independent Administrator ordered Harold Friedman "to remove [himself] from all of [his] IBT affiliated Union positions and draw no money or compensation therefrom, or from any other IBT affiliated source," for a period of one year. This Court affirmed the Independent Administrator's ruling, at which time the one-year suspension commenced. March 8, 1990 Opinion & Order, 735 F. Supp. 506 (S.D.N.Y.), aff'd, 905 F.2d 610 (2d Cir. 1990). Although Friedman was prohibited by the Independent Administrator's ruling from assuming any officer or trusteeship position within IBT Local 507, he was permitted to retain his IBT membership. Because of the Consent Decree's limited application, Friedman retained his position as president of Bakers Local 19.

 In addition, Friedman's conduct as president of Bakers Local 19 resulted in his criminal conviction in 1989 in the United States District Court for the Northern District of Ohio. United States v. Friedman, 86 Cr. 114 (N.D. Oh. 1989). As a result of that conviction, Friedman was prohibited from acting as a consultant or advisor to any labor organization for a period of three years beginning on January 3, 1991, pursuant to 29 U.S.C. § 504. This prohibition applies to Friedman's status in IBT Local 507 as well as in Bakers Local 19.

 In the current action, the Investigations Officer charged that Friedman continued to exert substantial influence and control over IBT Local 507 during the period of his suspension, as well as subsequent to the commencement of his three-year statutory bar from union activities under 29 U.S.C. § 504. The Investigations Officer identified several instances when Friedman sought to maintain influence and control over IBT Local 507, or to derive benefits as an officer or trustee, in spite of his one-year suspension and his three-year statutory bar.

 The Independent Administrator found that, although Friedman relinquished his formal title to all IBT-affiliated positions, he continued to play a significant role in running IBT Local 507 after the commencement of his suspension. Thus, the Independent Administrator concluded that while Friedman had complied with the terms of his suspension in part, he continued to interject himself in the affairs of IBT Local 507 and hold himself out as a figure of continuing authority, in violation of the terms of his suspension. In addition, the Independent Administrator found that Friedman continued to advise IBT Local 507 after the commencement of his three year statutory bar, in violation of 29 U.S.C. § 504. These conclusions were based on the Independent Administrator's findings with regard to the following instances of improper conduct charged by the Investigations Officer.

 1. Friedman's Involvement in Bakers Local 19

 The Independent Administrator found that Friedman used his position as president of Bakers Local 19 to continue to exercise control over IBT Local 507. The Independent Administrator found that these two unions, although separate entities, are "run almost as one." (Ind. Admin. Dec. at 7). They share the same office space and personnel, run many joint events, and share the same executive board, business agents, and president. (Ind. Admin. Dec. at 7). Respondent officers and agents were officers and agents of Bakers Local 19 as well as officers and agents of IBT Local 507. Thus, as president of Bakers Local 19, Friedman was in a position to continue to influence the affairs of IBT Local 507, and the Independent Administrator found that he did so in a number of ways.

 The Independent Administrator found that on or about May 1, 1990, the IBT Local 507 Health and Welfare Fund was merged into the Bakers Local 19 Health and Welfare Fund. (Ind. Admin. Dec. at 14-15). Friedman was a trustee of the Bakers Local 19 fund, and acted as chairman of the merged funds. On or about October 3, 1990, the IBT Local 507 Pension Fund was merged into the Bakers Local 19 Pension Fund. The Independent Administrator found that "through these mergers, using his position with Bakers Local 19, Friedman was able to retain a certain measure of authority over a significant amount of funds earmarked for IBT Local 507 members' health, welfare, and pension benefits." (Ind. Admin. Dec. at 15).

 Friedman also participated in and spoke at a number of IBT Local 507 meetings in his capacity as president of Bakers Local 19. The Independent Administrator found that Friedman used his position in Bakers Local 19 at these meetings as a means of circumventing his one-year suspension, as discussed below.

 2. Friedman's Attendance at IBT Local 507 Meetings

 The Independent Administrator found that Friedman's attendance at a contract ratification meeting on October 27, 1990 was for the purpose of influencing the vote by the membership of IBT Local 507 on a contract with Riser Foods, an IBT employer. (Ind. Admin. Dec. at 11-13). This meeting occurred during Friedman's suspension from IBT Local 507, but before he was barred from his presidency of Bakers Local 19 as a result of his criminal conviction. The Independent Administrator noted that either Friedman or respondent Nativio ordered the court reporter transcribing the meeting to remove Friedman's comments from the record, and determined that this was an effort to cover up Friedman's improper participation in the meeting. (Ind. Admin. Dec. at 13 n.6). Friedman argues that his comments concerning ratification of the Riser Foods contract had no effect upon the contract's ultimate acceptance by IBT Local 507, and that he had a legitimate reason for speaking at the meeting in his capacity as president of Bakers Local 19.

 The Independent Administrator rejected these arguments, stating that "regardless of whether Friedman's comments affected the outcome of the vote for the Riser Foods contract, the fact remains that Friedman attempted to influence that vote." (Ind. Admin. Dec. at 12). Furthermore, the Independent Administrator found that "Friedman's endorsement of the Riser Foods contract is a clear example of his holding himself out as someone who was still a figure of authority within the IBT." (Ind. Admin. Dec. at 12). Friedman asserts that he prefaced his remarks at the meeting by reminding the membership that he was speaking only in his capacity as president of Bakers Local 19. The Independent Administrator found that, even if true, such a preface was insufficient to legitimate Friedman's actions. (Ind. Admin. Dec. at 13 (footnote omitted) ("Such words, even if they were spoken, were not, however, a talisman that magically transformed Friedman's comments into those that were non-violative of his suspension. To say that they were would allow a person suspended from the IBT to speak to the membership with a wink and a nod as an interested outsider, while still retaining influence over the Union. This is not permitted.")).

 Friedman also attended a general membership meeting on April 14, 1990, shortly after his suspension went into effect. The Independent Administrator rejected the notion that Friedman appeared at this meeting solely in his capacity as president of Bakers Local 19, noting that respondent Nativio, who chaired the meeting, admitted at the hearing that the meeting was called to order "in the name of Teamsters Local No. 507," and that most if not all of the people in attendance at the meeting were IBT Local 507 members. Furthermore, respondent Letner stated at the hearing that IBT Local 507 and Bakers Local 19 did not hold joint meetings. (Ind. Admin. Dec. at 13 n.7). At the meeting, respondent Nativio, acting as chair, encouraged IBT members to get together with Friedman on a Saturday, urging them to "come down on a Saturday with all your Business Agents, Harold [Friedman] and [his wife, Respondent] Barbara [Walden] and everybody together, and make sure that your company knows that you are sticking together. That is good." (Ind. Admin. Dec. at 14). The Independent Administrator found that Friedman's attendance at this meeting and Nativio's remarks were intended to convey the message that Friedman continued to be involved in the running of IBT Local 507. (Ind. Admin. Dec. at 13-14).

 3. Friedman's Participation in IBT Local 507 Social Events

 The Independent Administrator found that Friedman continued during his suspension to use regular dinner meetings with respondent officers and agents as an opportunity to discuss IBT Local 507 business. Prior to Friedman's suspension, these dinners were a common occurrence at which respondents discussed IBT Local 507 affairs at the end of the day; the Independent Administrator rejected respondents' contention that after Friedman's suspension, these dinners became purely social occasions at which no business was discussed. (Ind. Admin. Dec. at 16). Instead, the Independent Administrator concluded that these dinners were "a perfect opportunity for Friedman to discuss Union business with small groups of officers and agents, without the worry of having a record being made of the conversations." (Ind. Admin. Dec. at 16). The Independent Administrator concluded further that after January 3, 1991, these dinners also constituted a violation of Friedman's statutory bar pursuant to 29 U.S.C. § 504, which prohibits Friedman from advising or acting as consultant to any union.

 The Independent Administrator also found that Friedman attended and spoke at several joint IBT Local 507 and Bakers Local 19 Christmas parties and blood bank drives. (Ind. Admin. Dec. at 17-18). Respondent Yontek distributed fliers that displayed numerous pictures of Friedman at these events. By way of these fliers, "the appearance was given that Friedman was very much the lone figure of authority at both IBT Local 507 and Bakers Local 19." (Ind. Admin. Dec. at 18 n.10). The Independent Administrator found that, although Friedman was not prohibited from attending these events, his presence in a place of prominence at the meetings combined with the images of Friedman portrayed in Yontek's fliers conveyed the impression that Friedman remained the unofficial leader of IBT Local 507. The Independent Administrator noted that Friedman's presence at these meetings taken alone might not constitute a violation of his suspension, but that in the context of his other violations discussed above, Friedman's presence at these events was part of a pattern of behavior designed to create the overall impression that his suspension was not really in effect on a practical level and that he retained significant authority over IBT Local 507.

 B. Respondent Friedman's violation of 29 U.S.C. § 504

 Beginning on January 3, 1991, Friedman was barred for three years, pursuant to 29 U.S.C. § 504, from acting as advisor or consultant to any labor organization as a result of his criminal conviction in 1989. (Ind. Admin. Dec. at 6-7). The Independent Administrator found that Friedman violated this bar by using regular dinner meetings with respondent officers and agents as an opportunity to discuss the affairs of IBT Local 507 and Bakers Local 19. (Ind. Admin. Dec. at 21). As discussed above, the Independent Administrator found that those dinners occurring during Friedman's one-year suspension were in violation of that suspension. (Ind. Admin. Dec. at 15-17). The Independent Administrator found that the dinner meetings that occurred after January 3, 1993 also violated Friedman's three-year bar from acting as consultant or advisor to any labor organization. (Ind. Admin. Dec. at 21).

 The Independent Administrator also found that Friedman gave IBT Local 507 officers and agents a number of "pep talks" concerning Union activities after the commencement of his statutory bar, and found that these talks violated 29 U.S.C. § 504. (Ind. Admin. Dec. at 20-21). The purpose of these talks apparently was to provide advice and encouragement to the officers and agents of IBT Local 507 and Bakers Local 19 after Friedman had forfeited his positions with both unions. (Ind. Admin. Dec. at 20-21). On another occasion, Friedman discouraged members of IBT Local 507 from attempting to run for a position with the International Union. (Ind. Admin. Dec. at 20-21). The Independent Administrator found that these talks constituted advice to a labor organization, and therefore violated the terms of Friedman's debarment pursuant to 29 U.S.C. § 504. Since the precise dates of these talks appear to be uncertain, the Independent Administrator also noted that to the extent that these talks occurred during Friedman's one-year suspension, they also violated that suspension. (Ind. Admin. Dec. at 21 n.16).

 C. Respondent Friedman's Violation of the IBT Constitution

 The Independent Administrator ruled that Friedman's violations of his one-year suspension and his statutory bar pursuant to 29 U.S.C. § 504 brought reproach upon the IBT under Article II, Section 2(a) of the IBT Constitution. (Ind. Admin. Dec. at 22). The Independent Administrator ruled further that, since the IBT has a legal obligation to ensure that suspensions imposed pursuant to the Consent Decree are carried out completely, properly, and fully, and that all statutory debarments are entirely implemented, Friedman's conduct was disruptive of the ...


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