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INTERNATIONAL BHD. OF TEAMSTERS, & BUCK v. LOCAL U

August 29, 1996

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, and JAMES BUCK as TRUSTEE of LOCAL UNION NUMBER 745, affiliated with the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Plaintiff, against LOCAL UNION 745, affiliated with, the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, T.C. STONE, JR., CHARLES E. ROGERS, CLARENCE KNOWLES, FORREST TYSON JOHNSON, ALLEN STANDFORD, MICHAEL KLINE, and GILL JOHNSON, Defendants.


The opinion of the court was delivered by: EDELSTEIN

 EDELSTEIN, District Judge:

 This opinion emanates from the voluntary settlement of an action commenced by plaintiff United States of America ("the Government") against, inter alia, the International Brotherhood of Teamsters ("the IBT" or "the Union") and the IBT's General Executive Board. The settlement is embodied in the voluntary consent order entered March 14, 1989 ("Consent Decree"). The goal of the Consent Decree is to rid the IBT of the hideous influence of organized crime through a two-phased implementation of the Consent Decree's various remedial provisions. In the first phase of the Consent Decree, these provisions provided for three court-appointed officers: the Independent Administrator ("IA") to oversee the Consent Decree's provisions, the Investigations Officer to bring charges against corrupt IBT members, and the Election Officer to supervise the electoral process that led up to and included the 1991 election for IBT International Union Office. In the second phase of the Consent Decree, the IA was replaced by a three-member Independent Review Board ("IRB").

 During its more than seven-year history, the Consent Decree has spawned a tremendous amount of litigation that has required this Court to issue numerous opinions. In one of those opinions, pursuant to this Court's authority under the All Writs Act, 28 U.S.C. § 1651(a), this Court enjoined "all local unions, joint councils, area conferences, and other entities subordinate to or affiliated with the IBT, and any members, officers, representatives, agents and employees of the IBT or any such IBT affiliated entity, from filing or taking any legal action that challenges, impedes, seeks review of or relief from, or seeks to prevent or delay any act of any of the court officers appointed by this Court pursuant to the Consent Order in this action, in any court or forum in any jurisdiction except this Court[.]" December 15, 1989, Order at 3; see also United States v. International Bhd. of Teamsters [All Writs Act Decision], 728 F. Supp. 1032 (S.D.N.Y.), modification denied, 735 F. Supp. 502 (S.D.N.Y.), aff'd, 907 F.2d 277 (2d. Cir. 1990).

 Plaintiff IBT filed the instant action against defendants Local Union 745 of the IBT ("Local 745" or "the Local"), located in Dallas, Texas, and its Executive Board ("defendants"), as a related case to both United States v. International Bhd. of Teamsters, 88 Civ. 4486, and International Bhd. of Teamsters v. Teamsters Local 745, 95 Civ. 9766, another Consent Decree related litigation currently pending before this Court. (Verified Complaint, International Bhd. of Teamsters v. Local Union 745, 96 Civ. 6328 ("Verified Complaint"), at 2 (Aug. 21, 1996).) This action arises from defendants' refusal to abide by a trusteeship imposed upon Local 745 by the IBT pursuant to the terms of the IBT Constitution, the Consent Decree, and relevant provisions of the Labor Management Relations Act ("LMRA") and the Labor Management Reporting and Disclosure Act ("LMRDA"). Id. at 1-2. On August 21, 1996, the IBT moved this Court, pursuant to Federal Rule of Civil Procedure 65 ("Rule 65"), to enjoin defendants from interfering and refusing to cooperate with the IBT's imposition of trusteeship on Local 745. That same day, this Court entered a Temporary Restraining Order enjoining defendants from: (1) interfering and refusing to cooperate with the IBT's imposition of trusteeship on Local 745; and (2) from commencing or pursuing any legal action, other than defense of the instant action before this Court, that challenges or delays the imposition of the trusteeship by the IBT on Local 745. (Temporary Restraining Order and Order to Show Cause, International Bhd. of Teamsters v. Local Union 745, 96 Civ. 6328 (Aug. 21, 1996) ("TRO").) This Court further ordered defendants to show cause why this Court should not grant plaintiff a preliminary injunction enjoining defendants from: (1) interfering and refusing to cooperate with the IBT's imposition of trusteeship on Local 745; and (2) from commencing or pursuing any legal action, other than defense of the instant action before this Court, that challenges or delays the imposition of the trusteeship by the IBT on Local 745. Id. This Court held oral argument regarding this matter on August 22, 1996, and ruled from the bench in favor of plaintiff IBT. Pursuant to Rule 65(d), this Opinion and Order sets forth the reasons this Court granted plaintiff's motion for a preliminary injunction.

 FACTS

 This is an action to enforce an emergency trusteeship imposed by the IBT over Local 745 upon the recommendation of the IRB. Pursuant to the authority vested in the IRB by the IBT Constitution and the Consent Decree, the IRB investigated allegations of corruption and misconduct by Local 745 and its officers and Executive Board. (Verified Complaint at 9.) Following this investigation, the IRB issued an investigative report detailing evidence of wrongdoing at Local 745, such as financial malpractice, including the issuance of interest-free loans to Local 745 officers and business agents, nepotism and favoritism in work referrals, and serious conflicts of interest of Local 745 officers arising from ongoing private business dealings between these officers and Local 745 employers. Id. at 10-12; see (Independent Review Board, Trusteeship Recommendation Concerning Local 745 (Aug. 5, 1996) ("IRB Report").) The IRB forwarded the IRB Report to IBT General President Ron Carey ("Carey"), and recommended that he impose a trusteeship over the Local. (Verified Complaint at 9); (IRB Report at 47.)

 On August 20, 1996, Carey imposed a temporary emergency trusteeship over the affairs of Local 745 effective August 21, 1996. (Verified Complaint at 9.) By letter dated, August 20, 1996, Carey appointed James Buck ("Buck") as Trustee over the affairs of Local 745, pursuant to the powers vested in the General President by Article VI, Section 5 of the IBT Constitution. Id. at 10; IBT Const., Art. VI, § 5. Also on August 20, 1996, Carey issued a Notice to the officers and members of Local 745, stating that he was imposing a temporary emergency trusteeship over Local 745 and explaining the reasons for the trusteeship. (Verified Complaint at 10.)

 On August 21, 1996, Buck appeared at the address of Local 745 to present his Certificate of Appointment and Notice of Trusteeship and to begin carrying out his duties as Trustee. Id. at 12. The Local 745 Executive Board refused to recognize the trusteeship or to cooperate with Buck, and prevented Buck from carrying out his duties as Trustee. Id. at 13. Defendants claimed that the IBT did not act in good faith or reasonably in imposing an emergency trusteeship over Local 745 without a prior hearing, and that the IBT therefore violated the IBT Constitution. (Local 745's Memorandum of Law in Support of Motion to Dismiss or Transfer and in Opposition to Application for Temporary Restraining Order, International Bhd. of Teamsters v. Local Union 745, 96 Civ. 6328 ("Local 745 Memo"), at 12-15 (Aug. 22, 1996).) In addition, Local 745 initiated suit in Federal District Court in Texas in an attempt to enjoin the IBT from imposing the trusteeship on Local 745. Id. at 8.

 Plaintiff IBT alleges that defendants' actions violated the IBT Constitution, the Consent Decree, Section 301(a) of the LMRA, and Sections 302 and 304 of the LMRDA. Id. at 14. In order to stop defendant from violating the IBT Constitution, the Consent Decree, and federal labor law, to prevent defendant from further obstructing the actions of the IBT and its Trustee, and to enjoin defendant from commencing or pursuing any legal action that challenges or impedes the IBT's imposition of a trusteeship on Local 745, other than defense of the litigation currently pending before this Court, plaintiffs sought a Temporary Restraining Order and Order to Show Cause from this Court on August 21, 1996. (TRO at 2-4.) After conferring with this Court, Judge Chin, who was sitting in Part I, signed plaintiff's Temporary Restraining Order and Order To Show Cause that same day. Id. at 4. The Order To Show Cause ordered the IBT, Local 745, the office of the United States Attorney for the Southern District of New York, and the IRB to appear the next day, August 22, 1996, to present oral argument on the question of whether this Court should grant plaintiff IBT's request for a preliminary injunction enjoining defendants from violating the IBT Constitution and the Consent Decree, obstructing the actions of the IBT and its trustee, and from commencing or pursuing any legal action that challenges or impedes the IBT's imposition of a trusteeship on Local 745, other than defense of the litigation currently pending before this Court. Id. at 2.

 At oral argument, this Court heard from all four parties. This Court asked each party to address four specific issues: (1) whether this Court has jurisdiction and venue over the instant litigation; (2) the applicability of the All Writs Act to the instant dispute; (3) the standard for issuing a preliminary injunction to enforce an emergency trusteeship under relevant Second Circuit case law, the LMRA, and the LMRDA; and (4) the propriety of the General President's imposition of the emergency trusteeship on Local 745. (Hearing Transcript, International Bhd. of Teamsters v. Local Union 745, 96 Civ. 6328 ("Tr."), at 5-6 (Aug. 22, 1996).) This Court also heard from Local 745 and the IBT regarding the appropriate amount of security that plaintiff IBT should give in the event this Court granted plaintiffs' request for a preliminary injunction. Id. at 41-45.

 Following a brief recess, this Court ruled from the bench, granting plaintiff's motion for a preliminary injunction. Id. at 45. This Court then ordered that:

 
Local Union 745 of the International Brotherhood of Teamsters, its officers, employees, agents, attorneys, or other representatives are enjoined from:
 
1. Refusing to deliver all property, funds, books, records, and assets of any kind in their possession to James Buck as Trustee of Local 745 or his designee;
 
2. Representing themselves as the authorized officers and/or representatives of Local 745, unless authorized by the Trustee or his designee;
 
3. Interfering in any manner with the conduct of the emergency trusteeship by the Trustee or his designee;
 
4. Refusing to provide a complete accounting of the financial condition of Local 745 and its funds to the Trustee James Buck or his designee, and refusing to provide any and all financial records and explanation for all receipts, disbursements, and financial transactions of any kind by Local 745 or related to Local 745;
 
5. Destroying, removing, secreting, or altering the financial records of Local 745 or any financial records relating to Local 745; and
 
6. Commencing or pursuing any legal action, other than defense of the instant action before this Court, that challenges, impedes, seeks review of or relief from, or seeks to dissolve, prevent, or delay, any act of the IBT or James Buck or his designee with respect to the trusteeship imposed on Local 745.

 Id. at 45-47. In accordance with Rule 65(c), this Court further ordered that the IBT post security in the amount of $ 50,000. Id. at 47.

 DISCUSSION

 In granting plaintiffs' motion for a preliminary injunction pursuant to Rule 65, this Court considered four issues: (1) whether jurisdiction and venue over the instant litigation were proper in this Court; (2) the applicability of the All Writs Act to the instant dispute; (3) the standard for issuing a preliminary injunction to enforce an emergency trusteeship under relevant Second Circuit case law, the LMRA, and the LMRDA; and (4) the propriety of the General President's imposition of the emergency trusteeship on Local 745. For the following reasons, this Court found that: (1) this Court had jurisdiction over the instant litigation; (2) venue is proper in the Southern District of New York; (3) Carey properly imposed an emergency trusteeship on Local 745 according to the Second Circuit's standard for issuing a preliminary injunction to enforce an emergency trusteeship on a local union; and (4) the All Writs Act demands that the parties be enjoined from commencing or pursuing any legal action, other than the instant action before this Court, that challenges, impedes, seeks review of or relief from, or seeks to dissolve, prevent, or delay, any act of the IBT or James Buck or his designee with respect to the trusteeship imposed on Local 745.

 I. Jurisdiction

 Voluminous and well-settled case law holds that this Court retains jurisdiction over all matters arising under the Consent Decree. Order, United States v. International Bhd. of Teamsters, 88 Civ. 4486, PP A.1, K.16 (March 14, 1989) ("Consent Decree"); United States v. International Bhd. of Teamsters [Darrow], 896 F. Supp. 1339, 1343 (S.D.N.Y. 1995). This Court finds that the instant dispute arises under the Consent Decree because: (1) plaintiff IBT's actions were taken in response to an investigation and report made by the IRB pursuant to the remedial provisions of the Consent Decree; (2) the IRB retains continuing supervisory authority over the IBT's actions pursuant to the remedial provisions of the Consent Decree and the IRB Rules; and (3) defendants' opposition to plaintiff's actions challenges Carey's authority to act in response to a report and recommendation issued by the IRB. Accordingly, this Court finds that it has jurisdiction to adjudicate the instant dispute.

 As an initial matter, Paragraph G of the Consent Decree authorizes the creation of the Independent Review Board, and sets forth the basic rules for its operation. Consent Decree, P G. In addition, the "Rules and Procedures for the Operation of the Independent Review Board of the International Brotherhood of Teamsters" ("the IRB Rules"), drafted pursuant to the Consent Decree and approved by this Court, contain additional rules governing the IRB's operation. United States v. International Bhd. of Teamsters [IRB Rules Decision], 829 F. Supp. 602, 602, 603 (Rule A.2) (S.D.N.Y. 1993). "The IBT, all subordinate entities of the IBT, and all members of the IBT are bound by the [IRB] Rules. . . ." Id. at 602.

 This case arises under the Consent Decree because plaintiff's actions were taken pursuant to the remedial provisions of the Consent Decree and the IRB Rules. The IRB Investigated the allegations of misconduct within Local 745 in accordance with provisions of the Consent Decree and the IRB Rules which state that "the IRB shall investigate any allegations of corruption in the IBT. . . ." Id. at 605 (Rule H.2); see Consent Decree, P G(a). The IRB referred its report regarding this investigation, as well as its recommendation that Local 745 be placed in trusteeship, pursuant to procedures set forth in both the Consent Decree and the IRB Rules. IRB Rules Decision, 829 F. Supp. at 606 (Rules I.1, I.4); Consent Decree, PP G(d)-(e). President Carey, as the IBT entity to which the IBT referred the Local 745 matter, imposed the trusteeship on Local 745 in order to comply with the requirement that "upon referral, the IBT entity to which a matter is referred shall promptly undertake whatever action is appropriate under the circumstances to resolve the referred matter, as provided by the IBT Constitution, applicable law, and [the IRB] Rules." IRB Rules Decision, 829 F. ...


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