The opinion of the court was delivered by: ROBERT W. SWEET
Plaintiffs Mason Tenders District Council of Greater New York (the "District Council"), James Lupo, former president of the District Council ("Lupo") and the members of the Executive Board of the District Council, have moved by order to show cause for a preliminary injunction pursuant to Rule 65, Fed. R. Civ. P., preventing defendant Laborers' International Union of North America ("LIUNA"), the District Council's parent union, from: (a) maintaining a trusteeship imposed on the District Council by the parent union in November of 1994; (b) implementing the provisions of a certain consent decree (the "Consent Decree") entered into on December 27, 1994 on behalf of the District Council by the trustee in December of 1994 in the case of United States v. Mason Tenders District Council of Greater New York, 94 Civ. 6487 (RWS); and (iii) causing the assets of the District Council to be used to fund the activities of a monitor and investigative officer required by the terms of the Consent Decree. Defendant has moved for judgment on the pleadings pursuant to Rule 12(c), Fed. R. Civ. P., on grounds that plaintiffs action is barred by the doctrine of res judicata, and pursuant to Rule 56, Fed. R. Civ. P., for summary judgment on all of plaintiffs claims. For the reasons set forth below, all of these motions are denied.
The District Council, which represents and controls twelve local labor unions in the greater New York region (the "Local Unions"), is headquartered in New York City. The other plaintiffs listed below claim to bring this action on behalf of the District Council as well as on their own behalf; defendant contests their standing to sue on behalf of the District Council although no motion was ever advanced nor relief requested specifically with respect to standing. Lupo was President of the District Council from November 1992 until the imposition of the trusteeship. He is also a union Delegate, representing one of the Local Unions. The remaining plaintiffs are individuals who were the members of the Executive Board of the District Council prior to the imposition of the trusteeship. The Executive Board of the District Council, as an entity, is also a plaintiff.
Defendant Laborers' International Union of North America ("LIUNA"), is a national labor organization headquartered in Washington, D.C., that oversees the operations of various local unions and district councils, including the Local Unions and District Council.
Plaintiffs filed their complaint in the action on January 19, 1995 and the case was assigned to this Court based on its relation to United States v. Mason Tenders District Council, 94 Civ. 6487 (the "Civil RICO Action") which action is presently sub judice before this Court upon the certification of the Attorney General pursuant to 18 U.S.C. § 1966.
Plaintiffs brought on the instant motion for preliminary injunction by Order to Show Cause filed January 30, 1995. LIUNA filed its Answer on February 8, 1995 and also moved on that date by notice of motion for judgment on the pleadings on the theory that plaintiffs claims were precluded by the results of proceedings in the Civil RICO Action. LIUNA filed opposition papers to the preliminary injunction motion on February 8, 1995 and the hearing on the preliminary injunction was scheduled. LIUNA filed its summary judgment motion on February 10, 1995. Argument on the motions for judgment on the pleadings and summary judgment was heard on February 15, 1995. An evidentiary hearing on the motion for a preliminary injunction was conducted on February 27, 1995. Final submissions were made and argument was beard on March 23, 1995 at which time all motions were considered fully submitted.
The District Council is an elected body composed of thirty-nine delegates elected by and representing the Local Unions. The members of the Local Unions perform a wide variety of laborers' jobs, including general labor, bricklaying, masonry and asbestos removal. The District Council engages in collective bargaining with employers on behalf of the members of the Local Unions. The District Council also manages pension and health insurance funds for the members. As of the end of 1993 these funds included a pension fund of approximately $ 180 million; an annuity fund of approximately $ 71 million; a welfare fund of $ 21 million; and a legal services fund of approximately $ 2 million.
From 1989 to 1992 Frank Lupo, then the President of the District Council, participated in real estate frauds benefiting him and his co-conspirators and causing the Trust Funds to suffer monetary losses measured in the tens of millions. He resigned the Presidency in November of 1992 and three months later pleaded guilty to criminal RICO charges. He was sentenced to four years imprisonment. Roger Levin, an attorney ("Levin"), also pleaded guilty to charges growing out of his involvement in those fraudulent transactions. Frank Lupo and Levin both ultimately cooperated with the Government in its investigation of the District Council.
In November of 1992 plaintiff Lupo was elected President of the District Council.
Between 1988 and 1990 LIUNA imposed trusteeships upon three of the local unions because of known criminal activities of elected officials and appointees of these locals.
From December 1993 to September 1994 Allan Taffet, Assistant United States Attorney in the Southern District of New York ("Taffet") held conversations and corresponded with David Elbaor, outside counsel to LIUNA ("Elbaor")
and its President, Arthur Coia ("Coia"), on a number of occasions inquiring whether and when LIUNA intended to impose a trusteeship on the District Council and indicating Taffet's sense that a trusteeship should be imposed in order to put an end to systemic corruption in the District Council and the Local Unions. All of the facts discussed above were known to Elbaor and Coia throughout the period from December 1993 to September 1994 and Coia knew of Taffet's repeated inquiries concerning LIUNA's imposition of trusteeship on the District Council.
The Government filed its complaint in the Civil Rico Action (the "Civil RICO Complaint") on September 8, 1994. The Civil RICO Complaint alleged inter alia that over a period of the last twenty years, executives and appointees of the District Council repeatedly extorted payoffs from employers in exchange for those officials' and appointees' condoning the employers' use of non-union labor and the employers' failure to make payments to the Trust Funds in accordance with collective bargaining agreements; embezzled and converted Trust Fund monies through fraudulent real estate transactions; engaged in kickback schemes with companies and individuals providing services to the District Council and the Local Unions; failed to police and knowingly condoned similar activities on the part of officials of some of the Local Unions.
The Civil RICO Complaint also listed convictions and guilty pleas of numerous individuals charged with extortion of payoffs from employers of laborers represented by the District Council:
In March 1989, Basil Cervone was convicted of RICO conspiracy involving illegal labor payments and embezzlement committed while serving as Vice-President of the District Council.
In March 1989, Joseph Cervone was convicted of five counts of receipt of illegal labor payments and embezzlement committed while serving as president of one of the Local Unions.
In March 1989 Peter A. Vario was convicted of RICO conspiracy involving the receipt of illegal labor payments while serving as Business Manager of one of the Local Unions.
In September of 1989 Michael LaBarbara pleaded guilty to six counts of receiving illegal labor payments while serving as Business Manager of one of the Local Unions.
In March 1990 Peter "Jocko" Vario (not the Peter A. Vario mentioned above) was convicted of one count of RICO conspiracy involving the receipt of illegal labor payments while President of one of the Local Unions.
In March of 1987, Louis Giardina was convicted of RICO conspiracy, aiding and abetting the receipt of illegal labor payments and obstruction of a criminal investigation while serving as Treasurer of the District Council and President of one of the Local Unions.
In November of 1990 Louis Casciano pleaded guilty to RICO conspiracy involving loansharking and receiving illegal labor payments while he was Field Representative of the Trust Funds and Assistant to the President of the District Council.
In November 1990 Albert Soussi pleaded guilty to RICO conspiracy involving loansharking and aiding and abetting Casciano's receipt of illegal labor payments while Soussi was a Field Representative of the Trust Funds.
In December of 1992 Carmine Mandragona pleaded guilty to RICO conspiracy involving the receipt of illegal labor payments while serving as President of one of the Local Unions.
The Civil RICO Complaint sought the removal of the elected leaders of the District Council; control by the Government over the election of new officers; appointment of a special Investigations Officer with power to charge and prosecute union members suspected of wrongdoing; and appointment of a monitor to oversee the administration of the District Council and the management of the Trust Funds, the services of such monitor and Investigations Officer to be paid for out of the District Council's funds.
In September 1994, after the Civil RICO Complaint was filed Taffet renewed his inquiry with Elbaor as to when LIUNA was going to impose a trusteeship on the District Council. Coia knew of the Civil RICO Complaint and its filing, read it, and was again told in September of 1994 that Taffet wanted LIUNA to impose a trusteeship on the District Council.
On November 1, 1994, the Government filed a notice of motion in the Civil RICO Action seeking partial summary judgment and a preliminary injunction against the District Council (the "November 1 Motion"). Affidavits of Frank Lupo and Levin and other materials were filed by the Government in support of that motion.
On November 4, 1994, Paul Coffey, Chief of the Organized Crime and Racketeering Section of the United States Department of Justice ("Coffey") conveyed a copy of a draft civil RICO complaint (the "Draft Complaint") to LIUNA's outside counsel with his own cover letter. The Draft Complaint had been prepared by the office of the United States Attorney for the Northern District of Illinois. It alleged, inter alia, civil RICO violations on the part of LIUNA, its General Executive Board, Coia, Rollin Vinall, the General Secretary-Treasurer of LIUNA and other officials of the parent union. The Draft Complaint named Coia as a defendant in both his official and individual capacities and charged him with associating with known members of organized crime, soliciting and receiving illegal payoffs, receiving kickbacks and violating the Hobbs Act. By the Draft Complaint the Government sought to take over LIUNA at the national level and to remove Coia from the Presidency.
Coia himself received the Draft Complaint on November 7. He sent out a notice calling an emergency meeting of LIUNA's General Executive Board that same day. There is no direct evidence of any discussions between the Government and Coia or his counsel connecting the Draft RICO Complaint presented to Coia by the Justice Department and the Civil RICO Complaint and November 1 Motion in this District. Nor is there any direct evidence linking the Draft RICO Complaint to the imposition of the trusteeship. The record ...