U.S. v. International Broth. of Teamsters, Chauffeurs, Warehousemen & Helpers of America

• Citation: 156 F.3d 354
• Decision Date: 18 September 1998
• Docket Number: AFL-CIO,Docket No. 98-6014
• Parties: 159 L.R.R.M. (BNA) 2277, 136 Lab.Cas. P 10,243 UNITED STATES of America, Plaintiff-Appellee, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA,et al., Defendants, Ron Carey, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 354

156 F.3d 354

159 L.R.R.M. (BNA) 2277, 136 Lab.Cas. P 10,243

UNITED STATES of America, Plaintiff-Appellee, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,

WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO et

al., Defendants,

Ron Carey, Defendant-Appellant.

Docket No. 98-6014.

United States Court of Appeals,

Second Circuit.

Argued July 13, 1998.

Decided Sept. 18, 1998.

Reid H. Weingarten, Steptoe & Johnson, Washington, D.C. (Mark J. Hulkower, Jeffrey R. Gans, Bruce C. Bishop, Steptoe & Johnson, on the brief), for Appellant.

Karen B. Konigsberg, Assistant United States Attorney, Southern District of New York, New York, N.Y. (Mary Jo White, United States Attorney for Southern District of New York, Andrew W. Schilling, Steven M. Haber, Assistant United States Attorneys, on the brief), for Appellee.

Before: MINER and CABRANES, Circuit Judges, and CHATIGNY, ^* District Judge:

JOSE A. CABRANES, Circuit Judge:

Ron Carey appeals from an order of the United States District Court for the Southern District of New York (David N. Edelstein, Judge ), United States v. Int'l Bhd. of Teamsters ("Carey "), 988 F.Supp. 759 (S.D.N.Y.1997). That order affirmed a decision of the Election Officer ("EO"), an official appointed under the consent decree that had been entered in United States v. Int'l Bhd. of Teamsters, No. 88 Civ. 4486 (S.D.N.Y. Mar. 14, 1989) ("Consent Decree"). ¹

Following an investigation into campaign financing violations by Ron Carey's campaign for re-election as general president of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("IBT" or the "Teamsters") during the 1996 IBT general election, the Election Officer determined that Carey knew of and participated in his campaign's misconduct. The Election Officer's selected remedy was to disqualify Carey from standing as a candidate in the 1998 rerun of the 1996 general election. The district court affirmed the EO's decision, and Carey now appeals. He argues that (i) the Election Officer's investigation and decision did not comport with constitutional or statutory due process guarantees; (ii) the district court erred in affirming the Election Officer's decision without a full evidentiary record before it; and (iii) the Election Officer's decision, on its face, was arbitrary, capricious, and an abuse of discretion. We disagree, and affirm the district court's order upholding the Election Officer's decision.

I.

Following balloting in the 1996 IBT general election, in which incumbent IBT General President Ron Carey prevailed by a narrow margin, then-Election Officer Barbara Zack Quindel initiated an investigation into alleged violations of the 1996 Election Rules by the Carey campaign. EO Quindel's investigation resulted in a report dated August 21, 1997 that detailed significant campaign financing abuses. In particular, the report identified a "swap scheme" by which IBT general treasury funds were contributed to various political causes in exchange for contributions to Carey's campaign from individual supporters of those causes. EO Quindel determined that within an eight-day period in October 1996, the IBT made some $735,000 in contributions, as a result of which the Carey campaign received at least $100,000--money that was used principally to finance a last-minute direct mail campaign in support of the Carey slate in November 1996.

The 1996 Election Rules promulgated under the Consent Decree prohibit, inter alia, the direct or indirect use of union funds to promote the candidacy of any individual. See 1996 Election Rules art. XII § 1(b)(3); see also 1996 Election Rules art. XII § 1(b)(1) (prohibiting employers and labor unions, including the IBT, from contributing "directly or indirectly, anything of value, where the purpose, object or foreseeable effect of the contribution is to influence" the election of a candidate, and prohibiting candidates from accepting or using such contributions). ² Because the Carey campaign's swap scheme violated the 1996 Election Rules, and because she found that the direct mailing made possible by those violations may have affected the outcome of the 1996 balloting, EO Quindel refused to certify the 1996 results and ordered a rerun of the IBT election. Neither Carey nor his campaign challenged EO Quindel's factual findings.

EO Quindel declined to impose the additional remedy of disqualifying Carey or members of his slate of candidates because her investigation had not disclosed evidence that they knew of or participated in the improper fundraising. Noting, however, that "important questions remain[ed] unanswered" regarding Carey's knowledge and conduct, EO Quindel warned that "[i]f, subsequent to the issuance of this decision, evidence is brought to the Election Officer's attention that could warrant disqualification of Mr. Carey or other members of his slate, the Election Officer will consider it."

On September 18, 1997 three individuals affiliated with the Carey campaign--including Jere Nash, Carey's campaign manager--pled guilty to felonies arising out of their conduct in the 1996 campaign. Shortly thereafter, EO Quindel reopened her investigation into whether Carey had knowledge of or participated in the improper campaign fundraising activities. On September 29, 1997, Kenneth Conboy ³ was designated by the district court as the Election Officer "for the sole purpose of investigating and deciding the issue of the disqualification of Ronald Carey from the rerun election."

In addition to reviewing documentary evidence of the IBT's and the Carey campaign's finances, EO Conboy questioned Carey under oath, and interviewed witnesses such as Nash and Monian Simpkins, Carey's secretary, both of whom later provided sworn affidavits. On November 17, 1997, EO Conboy issued a 74-page decision detailing not only the swap scheme identified in EO Quindel's August 1997 report (as to which he revised the estimate of funds improperly obtained by the Carey campaign to $227,500), but also additional improper fundraising activities conducted by the Carey campaign, including raising campaign funds from individuals--specifically, several non-IBT union officials and an employer--whose contributions were impermissible under the 1996 Election Rules, see 1996 Election Rules art. XII § 1(b)(1), (3). More importantly, however, EO Conboy concluded, based on his investigation, that Carey knew of and participated in his campaign's violations of the 1996 Election Rules.

Central evidence of Carey's knowledge and involvement was provided by Nash and Simpkins, whose testimony EO Conboy credited over Carey's denials. With respect to the swap scheme, Nash stated under oath that, after Carey (in his capacity as IBT General President) had initially refused to approve one of the "swap" contributions, Nash had advised Carey that "the proposed IBT contribution would help [Martin] Davis [a Carey campaign consultant] with fundraising for the Carey campaign," and that Carey "indicated that he would approve the contribution." Simpkins stated under oath that Nash had explained to her the contribution swap scheme and requested her assistance in expeditiously processing the requests for disbursements of IBT funds; she attested that she subsequently had a conversation with Carey in which she told him "that Nash had talked to [her] about the IBT making contributions." Simpkins also stated in her sworn testimony that she obtained Carey's approval for each of the swap contributions and that, each time, she indicated to Carey that the contribution request "was one that Jere Nash had called about." Carey claimed under oath to have no specific recollection of authorizing the IBT contributions (though he did not deny that he did so) ⁴ or of discussing them with Nash, Simpkins or others in the union.

With respect to raising campaign funds from individuals who were ineligible contributors under the 1996 Election Rules, Nash stated under oath that he had specifically discussed the contributions of one ineligible individual with Carey on several occasions. Nash also stated that he had supplied Carey with documentary updates on the campaign's finances that included information about the improper contributions. Carey generally denied knowledge of these fundraising efforts.

Having concluded that Carey knew of and participated in the swap scheme "based on his understanding that those contributions would assist his campaign's fundraising efforts," and that Carey knew of and failed to put a halt to fundraising from ineligible contributors, EO Conboy disqualified Carey from standing for office in the 1998 rerun of the 1996 election. Such action was necessary EO Conboy concluded, "to ensure a fair rerun election and to protect the integrity of the [IBT] electoral process." The district court affirmed the Election Officer's decision over Carey's objections, concluding that Carey had received all the procedural protections to which he was entitled, and that neither the EO's factual determinations nor his selection of disqualification as a remedy was arbitrary or capricious. See Carey, 988 F.Supp. at 766-68. This appeal followed.

II.

Carey first challenges the Election Officer's decision on due process grounds. He contends that EO Conboy's investigation and decisionmaking did not afford him procedural protections to which he was entitled under (i) the Due Process Clause of the Constitution and (ii) the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. § 401 et seq. In particular, Carey objects to the fact that he was not afforded an evidentiary hearing at which to cross-examine witnesses and confront the evidence relied upon by EO Conboy in his November 17, 1997 disqualification decision. The government responds that neither the Due Process Clause nor the LMRDA was implicated by the Election Officer's investigation and decision. We review these questions of law de novo. See United States v. Cruz-Flores, ...