BUTCHERS'UNION, LOCAL NO. 498 v. SDC Inv., Inc.

• Decision Date: 14 March 1986
• Docket Number: No. CIV. S-83-325 LKK.,CIV. S-83-325 LKK.
• Court: U.S. District Court — Eastern District of California
• Parties: BUTCHERS' UNION, LOCAL NO. 498, UNITED FOOD AND COMMERCIAL WORKERS; the United Food & Commercial Workers International Union, AFL-CIO; United Food and Commercial Workers International Union, Local 26, AFL-CIO; United Food and Commercial Workers International Union, Local 7; and James Conley, on his own behalf and on behalf of a class of persons similarly situated, Plaintiffs-Appellants, v. SDC INVESTMENT, INC.; Donald E. Callhan; Les Oesterreich; Eastern Market Beef Processing Corporation; Marcus Rothbart; James Richardson; Douglas A. Hyman; Denver Lamb Company; Verner Averch; Montfort of Colorado, Inc.; Gene Meakins; Ken Montfort; Tate, Bruckner & Sykes; Alaniz, Bruckner & Sykes; Richard Alaniz; Charles Sykes; John Tate; William Bruckner; Henry Dooley; John Guay; Jim Zaporowski; Tom Blessie; John Hiatt; Steve Hiatt; George Sersantes, Defendants-Appellees.

631 F. Supp. 1001

BUTCHERS' UNION, LOCAL NO. 498, UNITED FOOD AND COMMERCIAL WORKERS; the United Food & Commercial Workers International Union, AFL-CIO; United Food and Commercial Workers International Union, Local 26, AFL-CIO; United Food and Commercial Workers International Union, Local 7; and James Conley, on his own behalf and on behalf of a class of persons similarly situated, Plaintiffs-Appellants, v. SDC INVESTMENT, INC.; Donald E. Callhan; Les Oesterreich; Eastern Market Beef Processing Corporation; Marcus Rothbart; James Richardson; Douglas A. Hyman; Denver Lamb Company; Verner Averch; Montfort of Colorado, Inc.; Gene Meakins; Ken Montfort; Tate, Bruckner & Sykes; Alaniz, Bruckner & Sykes; Richard Alaniz; Charles Sykes; John Tate; William Bruckner; Henry Dooley; John Guay; Jim Zaporowski; Tom Blessie; John Hiatt; Steve Hiatt; George Sersantes, Defendants-Appellees.

No. CIV. S-83-325 LKK.

United States District Court, E.D. California.

March 14, 1986.

David A. Rosenfeld, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, Cal., for plaintiffs-appellants.

William B. Shubb, Diepenbrock, Wulff, Plant & Hannegan, Sacramento, Cal., for defendants-appellees SDC Inv., Inc., Donald E. Callahan, Les Oesterreich, Tate, Bruckner & Sykes, Alaniz, Bruckner & Sykes, Richard Alaniz, William Bruckner, and Charles Sykes.

Arthur T. Carter, Alaniz, Bruckner & Sykes, Lincoln, Neb., for defendants-appellees SDC Inv., Inc.; Donald E. Callahan, and Les Oesterreich.

MEMORANDUM AND DECISION

KARLTON, Chief Judge.

Plaintiffs filed suit pursuant to the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. After a Status (Pre-trial Scheduling) Conference, I permitted plaintiffs to file an amended complaint and allowed defendants to move to dismiss this complaint on any grounds other than grounds relating to the substantive contents of the RICO statute.¹ The RICO arguments were reserved because of the two RICO cases that were then pending before the United States Supreme Court.²

I ALLEGATIONS OF THE SECOND AMENDED COMPLAINT

The plaintiffs are (1) labor unions who were, or would like to be, the bargaining representatives for the defendant employer, SDC Investment, Inc. ("SDC"), and (2) James Conley and Moses Esquivel, employees who seek to represent a class of employees who allegedly were injured by virtue of the conduct forming the gravamen of the complaint. Second Amended Complaint at ¶¶ 5-7.

There are three sets of defendants remaining in the action, (1) the employer defendants (SDC and its officers), (2) the lawyer defendants, and (3) the National Maritime Union defendants³. SDC is an employer with its principal place of business within the Eastern District of California. Callahan and Oesterreich are its president and general manager, respectively. Prior to the incidents allegedly giving rise to this action, SDC was a party to a Collective Bargaining Agreement (CBA) with plaintiff Butchers' Union Local 498 (Butchers' Union). ¶¶ 5-7. These defendants are referred to collectively as the SDC defendants.

Two law firms and their partners or employees are also named as defendants. The law firms "Alaniz, Bruckner & Sykes," and "Tate, Bruckner & Sykes" (the law firm) were legal counsel to the employer defendant SDC. Alaniz, Sykes, and Bruckner are partners, members, or employees of the law firm.⁴ ¶ 18.

Defendants John Hiatt, Steve Hiatt⁵ and George Sersantes are alleged to be agents, employees or representatives of the other defendants, as well as agents of the National Maritime Union which is not a party to this action. ¶¶ 13-14.

Plaintiffs allege that on April 3, 1981, SDC began operation of a slaughterhouse in Dixon, California. ¶ 17. On that same day, SDC recognized the National Maritime Union (NMU) as the bargaining representative of its employees, and two days later executed a collective bargaining agreement with NMU. Id. Plaintiffs allege that this recognition was granted so as to prevent plaintiff Butchers' Union from organizing SDC's employees and was part of a conspiracy by defendants to reduce labor costs, maximize profits for SDC, and enrich both NMU and the law firm defendants. Id. In order to accomplish these purposes, defendants SDC, Oesterreich, Callahan and the lawyers allegedly hired and paid organizers of NMU, payment to be made in the form of travel expenses, reimbursements for hotel, meals, and automobile expenses, as well as direct payment of wages. ¶ 18. Subsequent to the recognition of NMU at the SDC facility in Dixon, and continuing up to November, 1982, SDC, Callahan, and Oesterreich continued to pay money and other things of value to NMU, in violation of 29 U.S.C. § 186. ¶ 20.⁶ In the transactions described, the law firm defendants are alleged to have "received substantial fees in their operations and enterprises within the meaning of RICO, 29 sic⁷ U.S.C. § 1961(4)." ¶ 34.

Plaintiffs allege that defendants' activities are in violation of the substantive RICO provisions, 18 U.S.C. § 1962(b), in that defendants have, through a pattern of racketeering activity, acquired or maintained, directly or indirectly, an interest in or control over enterprises which are engaged in or the activities of which affect, interstate commerce. ¶ 35.

Plaintiffs also allege that defendants have conducted or participated in the enterprise's affairs through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c), ¶ 36, and that defendants have conspired to violate the provisions of the RICO statute, 18 U.S.C. § 1962(d). ¶ 37. Plaintiffs allege that defendants' payments to NMU are in violation of the Labor Management Relations Act, 29 U.S.C. § 186.⁸ ¶ 38. Plaintiffs also allege that for the purpose of executing their illegal scheme, defendants used the mail and wire systems in violation of 18 U.S.C. §§ 1341 and 1343. ¶¶ 39-40.⁹

Plaintiffs seek treble damages on their RICO claims, injunctive relief under the labor claim and broad injunctive relief, among other things, in the form of an order dissolving the defendant law firms and prohibiting the defendants from practicing law for twenty-five (25) years. ¶ 42.

II

DISMISSAL STANDARDS UNDER FED.R.CIV.P. 12(b)(6)

On a motion to dismiss, the allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 1081, 31 L.Ed.2d 263 (1972) (per curiam). The court is bound to give the plaintiffs the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks International Ass'n v. Schermerhorn, 373 U.S. 746, 753 n. 6, 83 S.Ct. 1461, 1465 n. 6, 10 L.Ed.2d 678 (1963). Thus, the plaintiffs need not necessarily plead a particular fact if that fact is a reasonable inference from facts properly alleged. See id. See also, Wheeldin v. Wheeler, 373 U.S. 647, 648, 83 S.Ct. 1441, 1443, 10 L.Ed.2d 605 (1963) (inferring fact from allegations of complaint). In general, the complaint is construed favorably to the pleader. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).

So construed, the court may dismiss the complaint for failure to state a claim only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Hishon v. King & Spalding, 467 U.S. 69, ___, 104 S.Ct. 2229, 2233, 81 L.Ed.2d 59 (1984), citing Conley v. Gibson, 355 U.S. 41, 45-6, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). In spite of the deference the court is bound to give to the plaintiffs' allegations, however, it is not proper for the court to assume that "the Union can prove facts that it has not alleged or that the defendants have violated the ... laws in ways that have not been alleged." Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 902, 74 L.Ed.2d 723 (1983).

III THE MOTION

Defendants argue that this action is an attempt by plaintiffs, in the form of civil RICO claims for treble damages and injunctive relief, to litigate in this court matters that are within the exclusive jurisdiction of the National Labor Relations Board (NLRB) and which have already been disposed of under the NLRB's processes. Defendants make three specific arguments. First, they argue that plaintiffs' claims are preempted by the exclusive jurisdiction of the NLRB. Second, they argue that plaintiffs' claims are precluded by a prior NLRB settlement agreement. Third, they argue that plaintiffs' claims are barred by the statute of limitations. Only the first claim requires extended discussion.

Defendants contend that plaintiffs' purported injuries result from three acts: (1) the unlawful recognition of NMU by SDC; (2) the execution of a contract with NMU; and (3) the alleged failure of SDC to hire members of Local 498.¹⁰ As such, defendants argue, they amount to unfair labor practices prohibited by the National Labor Relations Act (NLRA) and are subject to the exclusive jurisdiction of the NLRB. They note that the purpose of the NLRA is to protect against and provide a remedy for precisely the type of conduct alleged by plaintiffs. They rely on cases such as San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959), and Motor Coach Employees v. Lockridge, 403 U.S. 274, 91 S.Ct. 1909, 29 L.Ed.2d 473 (1971). Under Lockridge, defendants argue that the court must look to the conduct being regulated, not the formal description of the governing legal standard. 403 U.S. at 292. Because adjudication of plaintiffs' RICO claim, defendants say, would require this court to ascertain whether defendants had (1) recognized NMU when it did not enjoy the support of the employees, (2) executed contracts with NMU, and (3) deliberately refused to hire members of Local 498, all questions within the exclusive jurisdiction of the NLRB, the complaint must be dismissed.

IV LABOR LAW PREEMPTION AND EXCEPTIONS THERETO

As...