Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639

• Citation: 883 F.2d 132,280 U.S.App. D.C. 60
• Decision Date: 22 August 1989
• Docket Number: Nos. 86-5135,86-5136,s. 86-5135
• Parties: 132 L.R.R.M. (BNA) 2164, 132 L.R.R.M. (BNA) 2752, 280 U.S.App.D.C. 60, 113 Lab.Cas. P 11,530, 113 Lab.Cas. P 11,669, RICO Bus.Disp.Guide 7286, RICO Bus.Disp.Guide 7364 YELLOW BUS LINES, INC., Appellant, v. DRIVERS, CHAUFFEURS & HELPERS LOCAL UNION 639, et al. James F. WOODWARD v. Michael DiPALERMO, et al. Maria Triggs, Secretary/Treasurer, Yellow Bus Lines, et al., Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 132

883 F.2d 132

132 L.R.R.M. (BNA) 2164, 132 L.R.R.M. (BNA) 2752,

280 U.S.App.D.C. 60, 113 Lab.Cas. P 11,530,

113 Lab.Cas. P 11,669, RICO Bus.Disp.Guide 7286,

RICO Bus.Disp.Guide 7364

YELLOW BUS LINES, INC., Appellant, v. DRIVERS, CHAUFFEURS & HELPERS LOCAL UNION 639, et al.

James F. WOODWARD v. Michael DiPALERMO, et al. Maria Triggs, Secretary/Treasurer, Yellow Bus Lines, et al., Appellants.

Nos. 86-5135, 86-5136.

United States Court of Appeals, District of Columbia Circuit.

Aug. 22, 1989.

Rehearing En Banc Granted Oct. 17, 1989.

On Remand from the United States Supreme Court.

Before WALD, Chief Judge, MIKVA and EDWARDS, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

Concurring statement filed by Circuit Judge HARRY T. EDWARDS.

MIKVA, Circuit Judge:

This litigation arises from events surrounding a four day strike by employees of Yellow Bus Lines, Inc. for recognition by the company of a union local, Drivers, Chauffeurs, and Helpers Local 639 ("Local 639" or "the Local"), as their collective bargaining representative. Believing that the union had engaged in a campaign of violence to sabotage the company and obtain labor concessions, Yellow Bus and three of its officers ("Yellow Bus" or "appellants") filed claims and counterclaims in these consolidated cases against the Local and its business agent and trustee James Woodward, accusing them of engaging in a "pattern of racketeering activity" in violation of section 1962(c) and (d) of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. sections 1961 et seq. (1982) and alleging violations of tort law.

After the judge dismissed the RICO charges, the remaining counts were tried before a jury. The jury awarded damages against the Local and Woodward on three tort claims. Yellow Bus appeals from the district court judge's partial grant of appellees' motion for judgment notwithstanding the verdict (JNOV) setting aside each verdict except that against Woodward for malicious destruction of property. Appellants also challenge various pre-trial orders, including denial of leave to amend the RICO complaint and dismissal of the RICO counts.

On June 27, 1989, the Supreme Court vacated an earlier opinion of this court in this matter and remanded the case for our consideration in light of the Court's teaching in H.J. Inc. v. Northwestern Bell Telephone Company, --- U.S. ----, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). The decision in Northwestern only impacted this court's opinion on the RICO issues. Having considered the Court's teaching, we iterate our finding that the dismissal of the RICO counts by the district court and the denial of leave to amend were error. Accordingly, we reverse and remand on that ground. For reasons set forth below (and unaffected by the Court's decision in Northwestern ) we also vacate the judgment notwithstanding the verdict against the Local on malicious destruction of property. In all other respects, we affirm the judgment of the district court.

I. BACKGROUND

In 1979, appellants Maria Triggs, Paula Westgate, and her brother Peter McKinnon created Yellow Bus Lines, Inc., a Virginia corporation located and operated in the District of Columbia. In October 1981, a number of Yellow Bus employees met with Local 639 business director Woodward for the purpose of organizing the company employees.

After Yellow Bus refused to recognize and bargain with the union, a strike was called on November 9, 1981.

According to Yellow Bus, the strike was marred by threats and violence against company property by Woodward and other strikers. As a result of one incident in which Woodward allegedly threatened to "burn the company buses," Ms. Triggs called the police. Woodward was briefly arrested and charged in a three-count felony indictment for threatening to damage the buses.

Proceedings in the court below were initiated one year after the strike, when Woodward filed suit on November 4, 1982 against District of Columbia police officer Michael DiPalermo, the city, and three officers of Yellow Bus alleging abuse of process and false arrest. The defendants in that action, Woodward v. DiPalermo, et al., Civ. No. 82-3154, then counterclaimed, alleging malicious destruction of property and intentional interference with contract as well as intentional infliction of emotional distress. They also charged Woodward and the Local with abuse of process, claiming that Woodward filed his false arrest claim to discover information essential to his criminal defense and to induce Yellow Bus to agree to the Local's proposed contract terms. In April 1983, Yellow Bus filed additional charges against Woodward and the Local alleging violations of RICO, 18 U.S.C. sections 1962(c) and (d). By October 1984, the district court had dismissed all the federal claims, but elected to retain jurisdiction over the tort claims. In May 1984, Woodward's false arrest claim was dismissed after Woodward reached a settlement with the District of Columbia. The trial on the remaining counts began in February 1985, and the jury returned a verdict in favor of appellants on three counts, awarding a total of $133,200. Yellow Bus was awarded $1,280 against Woodward and $1,920 against Local 639 for malicious destruction of property, and $40,000 against Woodward and $60,000 against the Local for intentional interference with contractual relations. The jury also awarded the company and its three officers $15,000 against Woodward and $15,000 against the Local for abuse of process. In March 1985, the court entered judgment for these amounts. In January 1986, the court partially granted appellees' JNOV motion and set aside all except the $1,280 judgment against Woodward for malicious destruction of property. 686 F.Supp. 1.

II. JNOV ON MALICIOUS DESTRUCTION OF PROPERTY

In support of its claim of malicious destruction, Yellow Bus introduced testimony of damage to vehicles observed by employees at the strike site. Although no employee saw Woodward participate directly in vandalism, the court found that "circumstantial" evidence linking Woodward to property damage, coupled with threats made by Woodward and other strikers, was sufficient to support the jury determination that Woodward was liable for the property damage. The court decided, however, that the evidence against the Local was insufficient to support liability under section 6 of the Norris-LaGuardia Act, which requires clear proof of union responsibility for the acts of its agents.

Section 6 of the Norris-LaGuardia Act states that

No officer or members of any association or organization, and no association or organization participating or interested in a labor dispute shall be held responsible or liable in any court of the United States for the unlawful acts of individual officers, members, or agents, except upon clear proof of actual participation in, or actual authorization of, such acts, or of ratification of such acts after actual knowledge thereof.

29 U.S.C. section 106 (1982). Section 6 applies in "federal court adjudications of state tort claims arising out of labor disputes." United Mine Workers v. Gibbs, 383 U.S. 715, 737, 86 S.Ct. 1130, 1144, 16 L.Ed.2d 218 (1966); see also Ramsey v. United Mine Workers, 401 U.S. 302, 310, 91 S.Ct. 658, 663, 28 L.Ed.2d 64 (1970). In order to support a grant of the motion for JNOV, the trial judge could not have found "clear proof" of the union's participation or In evaluating whether Local 639 "ratified" the destructive acts ascribed to Woodward "after actual knowledge" of their perpetration, the district court failed to take into account a crucial piece of evidence concerning the Local's awareness of the events which transpired during the Yellow Bus strike. At trial, counsel for Yellow Bus introduced without objection a letter sent to Yellow Bus and received by Mr. George, President of Teamster Local 639, on November 10, 1981. This letter described with particularity "numerous incidents of threats, violence, property damage, and verbal abuse" by Woodward and other strike participants. Following this communication, the record shows that business continued as usual at the Yellow Bus strike and Mr. Woodward remained on-site as the Local's man in charge. There is nothing in the record to indicate that the union took action to investigate the allegation or to curb any excesses of Woodward or the strikers.

authorization. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2512-13, 91 L.Ed.2d 202 (1986). After reviewing the record and taking all justifiable inferences in favor of appellants, we conclude that a reasonable jury could have found "clear proof" of union ratification or authorization of Woodward's actions, and that the damage award against the Local on this count should not have been set aside.

In the circumstances of this case, the combination of the Local's notification of events early in the strike, coupled with the complete failure to act on that knowledge, fulfills the requirement of "proof, either that the union approved the violence which occurred, or that it participated actively or by knowing tolerance in further acts which were themselves actionable under state law." Gibbs, 383 U.S. at 739, 86 S.Ct. at 1146. A union may "ratify" or "authorize" without going so far as to openly encourage or embrace the tactics of its official representative. Section 6 does not impose a requirement of such formal authorization by the union. See James R. Snyder Co. v. Edward Rose & Sons, Inc., 546 F.2d 206 (6th Cir.1976). Rather, "proof of authorization or ratification can be based upon circumstantial evidence, but that proof, although circumstantial, must nevertheless be clear." Id. at 209. From the Local's apparent lack of concern with the violence brought to its attention, the jury plausibly could conclude that the Local "knowingly tolerated" this state of affairs. No more is required to support a finding of ratification. In short, there was...