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GEORGOPOULOS v. INTERNATIONAL BHD. OF TEAMSTERS

October 7, 1996

JOHN GEORGOPOULOS and PAUL AURIEMMA, Plaintiffs, against INTERNATIONAL BROTHERHOOD OF TEAMSTERS, AFL-CIO, Defendant.


The opinion of the court was delivered by: EDELSTEIN

 EDELSTEIN, District Judge :

 Currently pending before the Court are cross motions for summary judgment, pursuant to Federal Rule of Civil Procedure ("Rule") 56. These motions are brought respectively by plaintiffs John Georgopoulos ("Georgopoulos") and Paul Auriemma ("Auriemma") ("plaintiffs"), and defendant the International Brotherhood of Teamsters ("IBT"). For the reasons discussed below, plaintiffs' motion is denied, defendant's motion is granted, and plaintiffs' Amended Complaint is dismissed in its entirety.

 BACKGROUND

 This opinion emanates from the voluntary settlement of an action commenced by the Government against the IBT and the IBT's General Executive Board. This settlement was embodied in the voluntary consent order entered March 14, 1989 ("the 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 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 International Union Office. In the second phase of the Consent Decree, the Independent Administrator was replaced by a three-member Independent Review Board ("the 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, 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).

 The instant case involves the disposition of internal union disciplinary charges against plaintiffs. Plaintiff Georgopoulos was a member and President of Local Union 138 of the IBT ("Local 138" or "the Local"), located in Long Island City, New York. (First Amended Complaint, Georgopoulos v. International Bhd. of Teamsters, 95 Civ. 5145 ("Amended Complaint"), at 2-3 (Aug.1, 1995).) Plaintiff Auriemma also was a member of Local 138, as well as its Secretary-Treasurer. Id. at 2-3. Defendant IBT is a labor organization with which Local 138 is affiliated. Id. Plaintiffs claim that they were subjected to discipline by the IBT without the due process required under Section 101(a)(5) of the Labor Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 411(a)(5), and seek to void the discipline imposed upon them by the IBT. Id. at 1.

 On July 16, 1993, the IRB submitted "Proposed Charges Against Local 138 Officers John Georgopoulos and Paul Auriemma" to the General Executive Board of the IBT ("GEB"). (Independent Review Board, Proposed Charges Against Local 138 Officers John Georgopoulos and Paul Auriemma ("IRB Report"), at 1 (July 16, 1993).) In this report, the IRB detailed the results of an investigation regarding wrongdoing by Georgopoulos and Auriemma, and recommended that charges be brought against each. The IRB recommended that Auriemma be charged as follows:

 
During the White Rose strike, you submitted forged members' signatures on the IBT's out-of-work benefit forms to the International and caused to be distributed out-of-work benefits in violation of specific provisions of the IBT Constitution and the IBT Secretary Treasurers Manual. By forwarding the out-of-work benefit forms containing forged signatures to the IBT, you represented to the IBT that these members were eligible to receive benefits when, pursuant to the IBT Constitution and the IBT Secretary Treasurers Manual, they were not entitled to benefits. Furthermore, not all members whom you represented to the International had received benefits actually received their out-of-work benefits. By this conduct, you engaged in an embezzlement scheme which defrauded the International of out-of-work benefits.
 
While Secretary Treasurer of IBT Local 138 you brought reproach upon the IBT, violated your fiduciary duties and your oath of office, failed to follow a bookkeeping system as prescribed by the IBT General Secretary Treasurer, and failed to require out-of-work members during the White Rose strike to personally sign the IBT's out-of-work benefit form in violation of Article II, Section 2(a), Article XII, Section 16(c), Article XXIII, Section 4 and Article XIX, Section 7(b)(1) and (2) of the IBT Constitution and Section 8.73(5) of the Manual for Local Union Secretary-Treasurers to wit
 
During the White Rose strike, you knowingly permitted the forgery of members' signatures on the IBT's weekly out-of-work benefit forms, which were then submitted to the International. You also permitted members to collect out-of-work benefits without personally signing the out-of-work benefits form as required by the IBT Constitution and the IBT Secretary Treasurers Manual.

 Id. at 24-26. The IRB recommended that Georgopoulos be charged as follows:

 
While the President of Local 138, you brought reproach upon the IBT, violated your fiduciary duties and engaged in an embezzlement scheme to defraud the IBT of out-of-work benefits in violation of Article II, Section 2(a) and Article XIX, Section 7(b)(1), (2) and (3) [of the IBT Constitution] to wit :
 
During the White Rose strike, you schemed with others to have forged members' signatures on the IBT's out-of-work benefit forms submitted to the International and caused out-of-work benefits to be distributed in violation of specific provisions of the IBT Constitution and the Secretary Treasurers Manual. By forwarding the out-of-work benefit forms containing forged signatures to the International, you and your co-schemers represented to the International that these members were eligible to receive benefits when, pursuant to the IBT Constitution and the IBT Secretary Treasurers Manual, they were not entitled to benefits. Furthermore, not all members whom you and your co-schemers represented to the International had received benefits actually received their out-of-work benefits. By this conduct, you engaged in an embezzlement scheme which defrauded the International of out-of-work benefits.
 
While the President and principal officer of IBT Local 138 you brought reproach upon the IBT, violated your fiduciary duties and your oath of office, failed to require out-of-work members during the White Rose strike to personally sign the IBT's out-of-work benefit form in violation of Article II, Section 2(a), Article XII, Section 16(c), and Article XIX, Section 7(b)(1) and (2) of the IBT Constitution and Section 8.73(5) of the Manual for Local Union Secretary-Treasurers to wit :
 
During the White Rose strike, you conspired with others to submit forged members' signatures on the IBT's weekly out-of-work benefit forms to the International and to distribute out-of-work benefits in violation of the International's requirement that all recipients personally sign the out-of-work benefits form.

 Id. at 26-27.

 The IRB advised the GEB that it "had sixty days within which to hold a hearing and to forward a final written report to the IRB." (Letter from John J. Cronin, Jr., Administrator of the IRB, to the Members of the General Executive Board of the International Brotherhood of Teamsters (July 16, 1993).) The IBT then referred the charges against Georgopoulos and Auriemma to the Ethical Practices Committee of the IBT ("EPC") for further action.

 The EPC was established and operates pursuant to the authority granted to the IBT General President by Article XIX, Section 11 of the IBT Constitution. IBT Const. art. XIX, § 11; International Brotherhood of Teamsters Ethical Practices Committee Rules and Procedures ("EPC Rules"), P1(a). It consists of an Administrator and fifteen members who comprise five three-person regional hearing panels. EPC Rules, P1(b). The EPC exists "for the purpose of ensuring the high moral and ethical standards in the administrative and operative practices of the International Union and its subordinate bodies, and to further strengthen the democratic processes and appeal procedures within the Union as they affect the rights and privileges of individual members or subordinate bodies. . . ." IBT Const. art. XIX, § 14(a). Pursuant to the EPC Rules, in cases where the EPC Administrator finds a basis for exercising jurisdiction over disciplinary charges and referring them to an EPC panel, the Administrator must draw up a Specification of Charges setting forth the disciplinary charges against the individuals involved. EPC Rules, PP 5(a)(i), 5(d).

 By letter dated August 20, 1993, EPC Administrator Aaron Belk determined that the IRB's proposed charges against Georgopoulos and Auriemma "involve serious allegations of financial impropriety, and therefore merit EPC jurisdiction." (Letter from Aaron Belk, International Vice President and EPC Administrator, to Tom Gilmartin, Jr., Eastern Conference of Teamsters Ethical Practices Committee Panel ("Belk Letter"), at 1 (Aug. 20, 1993).) Accordingly, the EPC Administrator issued a Specification of Charges as follows:

 
1. Local 138 President John Georgopoulos and Secretary-Treasurer Paul Auriemma allegedly violated the International Constitution and the Manual for Local Union Secretary-Treasurers by not requiring each out of work member to personally sign the out-of-work benefits form ("OWB forms") provided by the International for the benefits received during the White Rose strike, and by knowingly submitting forged signatures on the OWB Forms.
 
2. Brother Georgopoulos and Brother Auriemma allegedly engaged in an embezzlement scheme by which the International was defrauded into paying out-of-work benefits that it would not have otherwise paid. Brothers Georgopoulos and Auriemma allegedly executed this embezzlement through causing the International to send money each week for distribution of strike benefits as a result of forged signatures submitted to the International.

 Id. at 2. Plaintiffs received a copy of this letter and the Specification of Charges. Id. at 3. The EPC panel to which this matter was referred scheduled a hearing on these specifications for September 10, 1993 ("the September EPC hearing"). On August 30, 1993, the EPC provided Georgopoulos and Auriemma written notice of this hearing, and further advised them "to bring to this hearing any information . . . and witnesses that you wish to submit to the E.P.C. panel." (Letter from Tom Gilmartin, IBT Vice President, to John Georgopoulos and John Auriemma (Aug. 30, 1993) ("August 30, 1993 Gilmartin Letter").)

 At the September EPC hearing, the EPC Administrator introduced as exhibits the IRB Report and supporting documentation. (Transcript, International Brotherhood of Teamsters Ethical Practices Committee, Investigation re: Local 138 ("Tr."), at 3.) Both Georgopoulos and Auriemma appeared at the hearing, testified, called witnesses, introduced documents, and made opening and closing statements. See generally id. During the hearing, Georgopoulos and Auriemma each admitted that out-of-work benefits were distributed to Local 138 members in violation of both the IBT Constitution and the Secretary-Treasurers Manual. Id. at 45-49; 99. Each man also admitted knowing that: (1) persons other than the named recipients of benefits signed the IBT's out-of-work benefit forms, in direct violation of the IBT Constitution; and (2) that out-of-work benefits were distributed to individuals other than named beneficiaries. Id. at 22-23; 90-98; 123-27; 135-37; 145-54. Georgopoulos and Auriemma each defended his conduct by claiming that the violations of the IBT's out-of-work benefit procedures has been necessary in their judgment to keep strikers on the picket line and to sustain the White Rose strike. Id. at 21-24; 45-48; 52-55; 123-24; 141-48. Plaintiffs further asserted that the individuals whose names were forged on the benefit forms actually received the benefits, and that in plaintiffs' view, plaintiffs' actions did not constitute embezzlement. Id. at 22-23; 56-58; 89-90; 124-25; 188; 223-24.

 Following the September EPC hearing, the EPC panel asked the office of the IBT General Secretary-Treasurer to compare the out-of-work benefit forms from the White Rose strike with Local 138's tax reports of out-of-work benefits paid to members in 1991 and 1992 in order to determine the existence of discrepancies between the two. (Declaration of David Neigus, Counsel to the IBT Ethical Practices Committee, Georgopoulos v. International Bhd. of Teamsters, 96 Civ. 5145 ("Neigus Decl."), P 22 (April 1995)); (Amended Complaint at 5-6.)

 Based upon this comparison, the Secretary-Treasurer's office discovered discrepancies between the out-of-work benefit forms from the White Rose strike and the IRS forms prepared by Local 138. (Neigus Decl. P 22.) As a result of this discovery, the Secretary-Treasurer's office prepared schedules showing the discrepancies, and the EPC scheduled a second day of hearings on this matter for April 6, 1994 ("the April EPC hearing"). Id. The EPC requested the attendance of fifteen Local 138 members whose tax forms under-reported by more than $ 1,000 the out-of-work benefits actually distributed to them by the International. Id. The EPC panel also asked that persons in the IBT General Secretary-Treasurer's office having direct knowledge of the Local 138 investigation be available to testify in person or by telephone. Id.

 At the April EPC hearing, two witnesses testified via telephone--Richard Bell, Administrative Assistant to the IBT General Secretary-Treasurer ("Bell"), and Theresa Bailor, an employee in the Secretary-Treasurer's office familiar with the Local 138 investigation ("Bailor"). (Tr. at 265-94); (Amended Complaint at 6.) Bell and Bailor each advised the EPC panel about IBT's general out-of-work benefit procedures, and specifically described their preparation of the schedules that set forth the discrepancies between the IBT's benefit records and Local 138's tax filings. (Tr. at 265-94.) Georgopoulos and Auriemma were given the opportunity to question both Bell and Bailor. Id. at 290-94. Copies of the schedules prepared by the Secretary-Treasurer's office were made part of the hearing record, as was correspondence between the General Secretary-Treasurer and the charged parties concerning these schedules. Id. at 307-09.

 Also during the April EPC hearing, Auriemma advised the EPC that the General Secretary-Treasurers office had sent questionnaires to individual Local 138 strikers concerning the financial discrepancies uncovered by the Local 138 investigation ("the EPC questionnaires" or "the questionnaires"). Id. at 321. Neither plaintiffs nor the EPC Administrator, however, sought to enter the questionnaires or the responses to the questionnaires part of the hearing record. (Neigus Decl. PP 24-25); (Amended Complaint at 6); see generally (Tr.) Moreover, neither Georgopoulos nor Auriemma questioned Bell or Bailor about the information contained in the responses to the questionnaires. (Tr. at 290-94.) Except for the fact that these questionnaires were sent to Local 138 strikers, id. at 321, the EPC Panel neither heard testimony regarding the EPC questionnaires or their responses, nor reviewed the EPC questionnaires or their responses. See generally id. ; (Affidavit of John Georgopoulos, Georgopoulos v. International Bhd. of Teamsters, 95 Civ. 5145, ("Georgopoulos Affidavit"), P 43).

 
Auriemma and Georgopoulos knowingly violated the provisions of the IBT Constitution and the IBT Secretary Treasurers Manual pertaining to the distribution of out-of-work benefits in that they permitted OWB payments to be distributed to striking members who did not qualify for those benefits; that they deceived the IBT by submitting signatures purporting to be those of striking members in order to have benefits issued to members who did not satisfy the procedural requirements for receiving those benefits; that they permitted the mishandling of the benefits in that the chain of custody of large amounts of cash was not maintained; and that they ignored proscribed record keeping rules designed to ensure the proper distribution of out-of-work benefits.

 Id. at 3.

 The EPC continued, however, that based upon its examination of the evidence adduced at Georgopoulos' and Auriemma's hearing, that the EPC was

 
convinced that there was no plot to embezzle, and that all the benefits distributed during the strike did in fact end up in the possession of the intended beneficiaries. We draw this conclusion not only from the absence of credible evidence showing that members did not actually receive their money, but also from our conviction. having observed Auriemma and Georgopoulos in the course of two days of testimony, that they are telling the truth about what happened.

 Id. at 4. The panel added that "the conflicts between the IBT's OWB records and the Local 138's payout records are purely bookkeeping errors, and not evidence of any malfeasance." Id. at 10. Accordingly, as a penalty for their actions, the EPC Panel recommended only that Georgopoulos and Auriemma be sanctioned in writing. Id. at 11. The EPC noted, however, that its "recommendation here would be different if [it] believed that there was any dishonesty, personal gain or enrichment involved in this case." Id. at 8-9.

 As required by the EPC Rules, the EPC panel submitted its Final Report to the IBT General President. EPC Rules, P 7(a). In accordance with the EPC Rules, on April 11, 1994, the IBT General President issued his decision regarding the EPC Final Report. (Decision of Ron Carey, General President ("Carey Decision") (April 11, 1994).) In this decision, the General President adopted the EPC's finding that there was insufficient evidence to sustain charges of embezzlement against Georgopoulos and Auriemma, stating that "the evidence simply does not show that Brother Auriemma or Brother Georgopoulos either participated in or knew about any schemes to deprive members of out-of-work benefits." Id. at 1. He rejected, however, the EPC's recommendation regarding the sanctions that should be imposed upon Georgopoulos and Auriemma for their misconduct, and imposed upon both consecutive "six[-]month suspension[s] from holding any elective or appointive position with the IBT or any IBT affiliate." Id. at 2. The General President explained his decision:

 
I cannot . . . abide by the recommendation of the EPC Panel that I condone serious violations of the IBT Constitution. The Panel's sympathy, or my own for that matter, for the plight of Local 138 during the White Rose strike, and our unanimous condemnation of union brothers who ignored the pickets of their fellow Teamsters, is largely irrelevant to the difficult decision I must render in this case. I am personally aware of the tremendous hardship borne by members of Local 138 on account of the reprehensible and lawless actions of White Rose which gave rise to the strike and prevented fair and just settlement. Nonetheless, as General President, I have a duty to enforce the Constitution of this Union.
 
As the Panel correctly observed, adherence to the International Constitution is particularly important during times of crisis. I simply cannot permit local union officers to abandon the Constitution whenever hardship strikes. The laws set forth in the International Constitution are our guideposts for negotiating crisis. The Constitution must be followed even when the most emergent situation suggests a more expedient course.

 Id.

 On July 7, 1994, the IRB notified the General President that his April 11, 1994 decision concerning Georgopoulos and Auriemma was "inadequate because it did not properly address the IRB's proposed charge that Georgopoulos and Auriemma embezzled funds from the IBT through the intentional submission of forged signatures in order to obtain out-of-work benefits which would not otherwise have been released." (Letter from the Independent Review Board of the International Brotherhood of Teamsters to Ronald Carey, General President of the International Brotherhood of Teamsters ("IRB Letter"), at 1 (July 7, 1994).) The IRB continued that "the facts found by the [EPC] established the IRB's proposed embezzlement charge," id. at 1, because the Panel's "factual findings established that Georgopoulos and Auriemma had the fraudulent intent to embezzle funds from the IBT when they submitted forged signatures to the IBT each week in order to continue the flow of out-of-work benefits." Id. at 2. The IRB noted that under relevant Second Circuit case law, "the intentional violation of IBT rules gives rise to an inference of the fraudulent intent to embezzle," and that "a finding of personal enrichment was not an element of the IRB's proposed embezzlement charge. . . ." Id.

 Accordingly, the IRB "recommended that a decision be issued finding that Georgopoulos and Auriemma embezzled funds from the IBT through the weekly submission of forged signatures." Id. at 1. The IRB further informed the General President that "appropriate sanctions ...


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