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LOCAL 851 OF INT'L BROTHERHOOD v. THYSSEN HANIEL LOGISTICS

September 30, 2004.

LOCAL 851 OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, by its court-appointed Independent Supervisor and Union Trustee, Plaintiff,
v.
THYSSEN HANIEL LOGISTICS, INC., formerly known as AMERFORD INTERNATIONAL CORPORATION, THYSSEN HANIEL LOGISTIC GMBH and ANTHONY RAZZA, Defendants. IN RE: LOCAL 851 OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, by its court-appointed Independent Supervisor and Union Trustee, Petitioner, v. GEORGE QUINLAN, RONALD GOLSTOCK, MARTIN ARONCHICK, the ATTORNEY GENERAL, State of New York, in his Official Capacity, and the DEPUTY ATTORNEY GENERAL, New York State Organized Crime Task Force, in his Official Capacity, Respondents. LOCAL 851 OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, by its court-appointed Independent Supervisor, Plaintiff, v. MARTIN ARONCHICK, Defendant.



The opinion of the court was delivered by: FREDERIC BLOCK, District Judge

MEMORANDUM AND ORDER

This consolidated action involves allegations leveled by plaintiff Local 851 of the International Brotherhood of Teamsters ("Local 851") that former New York Deputy Attorney General George Quinlan ("Quinlan"), former Director of the New York State Organized Crime Task Force ("OCTF") Ronald Goldstock ("Goldstock"), and former Attorney-In-Charge of Civil Enforcement for OCTF Martin Aronchick ("Aronchick") (collectively "respondents")*fn1 violated Local 851's due process rights by failing to comply with the requirements of the New York forfeiture law (CPLR Article 13-A). Pending before the Court is respondents' consolidated motion to dismiss both cases, pursuant to Fed.R. Civ. P. 12(b)(1) and 12(b)(6), on an assortment of grounds, including lack of standing and absolute and qualified immunity, and Local 851's motion for summary judgment in each case. For the reasons that follow, the Court grants the respondents' motion to dismiss on qualified immunity grounds.

BACKGROUND

  These actions and the current motions follow extensive proceedings in the Eastern District of New York, the New York Court of Claims, and New York State criminal investigations arising out of corruption and racketeering activities involving Local 851, Amerford International Corporation ("Amerford") and the Luchese organized crime family, among other parties. In a prior opinion dismissing Local 851's claims raised in the Ancillary Proceeding to Action I against government officials in their official capacity, Judge Nickerson*fn2 provided a detailed summary of the factual and procedural background of the case. See Local 851 of the Int'l Bhd. of Teamsters v. Thyssen Haniel Logistics, Inc., 90 F. Supp. 2d 237, 239-42 (E.D.N.Y. 2000). The Court summarizes its salient aspects as follows.

  I. Prior Proceedings Before Judge Nickerson

  A. Criminal Investigation and Forfeiture Agreements

  In December 1990, Amerford and its president and chief executive officer, Harold Niehenke ("Niehenke"), illegally terminated a number of employees, all of whom were members of Local 851, and shared the resulting cost savings with organized crime.*fn3 Anthony Razza ("Razza"), Local 851's secretary and treasurer at the time and a member of the Luchese crime family, participated in the scheme and used his position within the union to maintain labor peace following the terminations.

  On June 30, 1993, following a criminal investigation by the New York Attorney General's office, Amerford and OCTF entered into a written agreement (the "Amerford Agreement") whereby OCTF agreed not to prosecute Amerford in exchange for Amerford's cooperation with the investigation, independent internal oversight at Amerford, and forfeited funds. Amerford Agreement at ¶ 6 (Am. Pet., Ex. A). Amerford agreed to retain an Independent Private-Sector Inspector General ("IPSIG") for purposes of monitoring Amerford's business practices "and for identifying and determining the appropriate amount of restitution for past or present [Amerford] employees as a result of alleged improper labor activities and practices of [Amerford]." Amerford Agreement at ¶ 1(a).

  The parties further agreed that:
3. [Amerford] will pay two and one-half million dollars ($2,500,000) to OCTF in settlement of its forfeiture liability under Article 13-A of the Civil Practice Law and Rules ("CPLR"), at the time this agreement is executed. . . . All settlement payments to OCTF will be distributed in accordance with the provisions of Article 13-A of the CPLR.
4. [Amerford] agrees that it will enter into a consent decree in a form to be prepared by OCTF within two weeks following the conclusion of the IPSIG's employment and final report providing for the distribution of the settlement amounts in accordance with the provisions of Article 13-A of the CPLR and the restitution determinations of the IPSIG as approved by OCTF.
5. [Amerford] will waive the criminal conviction requirement for its forfeiture liability under Article 13-A of the CPLR. Notwithstanding this waiver, if Harald Niehenke . . . is convicted of any felony, related to alleged improper labor activities and practices within one year of the date of execution of this agreement, [Amerford] will plead guilty within six months thereafter to any appropriate Class E felony superior court information. . . .
Id. at ¶¶ 3-5. Goldstock executed the agreement on behalf of OCTF; Aronchick was listed therein as the OCTF representative to whom notices should be sent.

  On June 30, 1993, Amerford paid $2,500,000 in escrow to OCTF (the "Amerford Fund"). Under the direction of Goldstock and Aronchick, the following distributions were made from the escrow account: on June 30, 1993, OCTF distributed $1,149,337.53 from the Amerford Fund to itself to cover budget deficits; in October 1993, OCTF distributed $6,562 to itself and $544,000 to the Office of Alcoholism and Substance Abuse Services ("OASAS"), and in March 1994, OCTF distributed $209,440 of the fund to itself and $98,560 to OASAS. In total, OCTF received $1,365,340 of the fund and OASAS received $642,560.

  Between March and November 1994, the IPSIG identified the employees who were entitled to restitution, determined the amount of their losses, and oversaw, together with OCTF, the distribution to them of approximately $500,000 from what remained of the Amerford Fund. Although the Amerford Agreement spoke only of compensating "employees," Aronchick authorized an additional $50,000 distribution from the Amerford Fund to the Local 851 Employer Group Pension Fund and the Local 851 Employer Group Welfare Fund to settle claims for unpaid pension and welfare contributions.

  On November 3, 1993, OCTF entered into a voluntary forfeiture agreement with Niehenke (the "Niehenke Agreement"). Pursuant to that agreement, Niehenke agreed to pay $100,000 in settlement of his individual forfeiture liability in exchange for being permitted to plead guilty to a single Class E felony (grand larceny in the fourth degree) relating to the Amerford scheme. On November 4, 1993, Niehenke pled guilty to this felony and later paid the stipulated $100,000 to OCTF (the "Niehenke Fund").*fn4 Unlike the Amerford Agreement, the Niehenke Agreement did not contain provisions reserving any part of the forfeiture proceeds as restitution to victims. At Aronchick's direction, OCTF retained $68,495 of the Niehenke Fund and paid the remainder to OASAS.

  OCTF has never commenced a civil forfeiture action against either Amerford or Niehenke pursuant to CPLR Article 13-A, and no judgment, order or decree of forfeiture has been entered against either Amerford or Niehenke with respect to the Amerford Fund or the Niehenke Fund.

  B. Local 851's Litigation Against Amerford

  On December 15, 1995, Local 851, through its court-appointed Independent Supervisor and Union Trustee,*fn5 initiated Action I before Judge Nickerson against Amerford, Razza, and others. Local 851's amended complaint alleged RICO violations and Amerford's participation in breaching Razza's fiduciary duty to Local 851 in violation of New York Labor Law § 725 ("section 725"). Local 851 sought damages, including Razza's salary, as well as attorneys' fees and costs. Local 851 claims that it did not learn of the existence of the Amerford Agreement and the Amerford Fund until March 1997, during discovery.

  As memorialized in a consent order "so ordered" by Judge Nickerson on June 16, 1998 ("Amerford Consent Order") (Am. Pet. Ex. C), Local 851 settled its claims against Amerford in Action I. As to the alleged RICO violations, Amerford paid Local 851 $1,200,000. In settlement of Amerford's alleged participation in the breach of Razza's fiduciary duty to Local 851, Amerford "assign[ed] to [Local 851] any rights it has under the [Amerford Agreement] with respect to the distribution of the [Amerford Fund] in accordance with the provisions of Article 13-A of the CPLR and any interest it has in the [Amerford Fund]." Amerford Consent Order at 4. Amerford further stipulated that it was liable to Local 851 for $2,000,000 "as restitution, reparations and damages . . . to Local 851, a victim of Amerford within the meaning of Article 13-A of the CPLR; provided however, that said award can only be satisfied from an apportionment of the [Amerford Fund]. . . ." Id. at 5. Neither OCTF nor any of the respondents was a party to the Consent Order.

  Shortly after Judge Nickerson approved the Amerford Consent Order, Local 851's attorney met with Quinlan. Apparently unaware that OCTF had long since distributed nearly all of the Amerford Fund, Local 851's attorney demanded that the OCTF pay $2,000,000 to Local 851 pursuant to the Amerford Consent Order. Local 851's demand was premised on two grounds: (1) that Local 851 was a "victim" within the meaning of Article 13-A and, therefore, should have received payment from the Amerford Fund; and (2) that Local 851 had been assigned Amerford's rights to the Amerford Fund. Quinlan ...


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