Camelio v. American Federation

• Decision Date: 03 October 1997
• Docket Number: No. 97-1355,97-1355
• Citation: 137 F.3d 666
• Parties: 157 L.R.R.M. (BNA) 2661, RICO Bus.Disp.Guide 9441 Augustus John CAMELIO, Plaintiff--Appellant, v. AMERICAN FEDERATION, etc., et al., Defendants--Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 666

137 F.3d 666

157 L.R.R.M. (BNA) 2661, RICO Bus.Disp.Guide 9441

Augustus John CAMELIO, Plaintiff--Appellant, v. AMERICAN FEDERATION, etc., et al., Defendants--Appellees.

No. 97-1355.

United States Court of Appeals, First Circuit.

Heard Oct. 3, 1997.

Decided March 5, 1998.

Lee H. Kozol with whom Debra Dyleski-Najjar, Penny Kozol and Friedman & Atherton, Boston, MA, were on brief, for appellant.

Andrew D. Roth with whom Devki K. Virk, Bredhoff & Kaiser, P.L.L.C., Washington, DC, William J. Hardy, Prescott M. Lassman and Kleinfeld, Kaplan & Becker, Washington, DC, were on brief, for appellees.

Before TORRUELLA, Chief Judge, GODBOLD, ^* Senior Circuit Judge, and BARBADORO, ^** District Judge.

BARBADORO, District Judge.

Augustus Camelio, a former employee and member of a labor union, brought this suit in state court against the union and fourteen members of its leadership. Camelio alleges that defendants had him fired from his job and forced him out of the union in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.A. §§ 1961-1968 (West 1994 & Supp.1997), and several provisions of Massachusetts state law. After defendants removed the case to federal court, the district court below dismissed Camelio's RICO claim and several of his state law causes of action for failure to state a claim. The court then remanded the remaining claims to state court. Camelio appeals the dismissal of his federal and state claims. We affirm in part, concluding that the court properly dismissed his RICO claim. We disagree, however, with the district court's decision to dismiss the state law causes of action. Rather than dismissing these claims, the court should have remanded them to state court along with the rest of the state law claims.

I. BACKGROUND ¹

Augustus Camelio served for nearly thirty years as General Counsel to Council 93 of the American Federation of State, County and Municipal Employees ("AFSCME"). In 1995, the United States Department of Labor and the Internal Revenue Service initiated investigations into Council 93's financial affairs that threatened to expose an ongoing scheme to misappropriate union funds by several members of the union's leadership. In response, Camelio alleges, defendants engaged in a concerted effort to thwart the two federal investigations.

Camelio launched his own investigation into Council 93's financial affairs after learning of the federal inquiries. He claims that the individual defendants, all members of the union leadership, initially rebuffed his requests for information and later had him fired when he persisted with his investigation. Camelio continued to investigate even after he lost his job, this time relying on his right as a union member to inspect the union's books and records. He also announced his candidacy for vice president of AFSCME's northern New England region, a position that would allow him to further his investigation. In an attempt to thwart Camelio's candidacy and keep him from uncovering any evidence of defendants' criminal scheme, however, several of the individual defendants first threatened Camelio and ultimately forced him out of the union when their threats were not heeded.

Camelio sued Council 93 and the individual defendants in Massachusetts state court. He alleged claims based on Massachusetts law for breach of contract, wrongful discharge, tortious interference with contract, violations of the state constitution, intentional and negligent infliction of emotional distress, defamation, and false light invasion of privacy. He also alleged that the individual defendants violated the federal RICO statute. See 18 U.S.C.A. §§ 1962(c), 1964(c).

Relying on Camelio's RICO claims, defendants removed the case to federal court in the District of Massachusetts. See 28 U.S.C.A. § 1441(a) & (b) (West 1994). Defendants then moved to dismiss for failure to state a claim. The district court allowed Camelio to amend his complaint to more specifically state his allegations, but ultimately concluded that he had failed to sufficiently allege a RICO claim against any of the defendants. The court also dismissed three of Camelio's state law claims against all defendants (breach of contract, negligent infliction of emotional distress, and false light invasion of privacy) and parts of two other claims as to some defendants (state constitutional violations and intentional infliction of emotional distress) before remanding the remaining claims to state court.

II. DISCUSSION

The district court dismissed Camelio's RICO claims because it concluded Camelio's complaint failed to sufficiently allege that his injuries were proximately caused by any of the predicate acts of racketeering on which the RICO claims were based. The court gave only a cursory explanation for its dismissal of the state law claims over which it retained jurisdiction. Camelio challenges both rulings.

A. The RICO Claims

In addition to criminal penalties, RICO provides a private right of action for treble damages and attorneys fees to "[a]ny person injured in his business or property by reason of a violation of section 1962." 18 U.S.C.A. § 1964(c). Camelio bases his RICO claims on § 1962(c), which makes it unlawful for any person to conduct the affairs of an enterprise affecting interstate commerce by means of a "pattern of racketeering activity." 18 U.S.C.A. § 1962(c). The Act also provides a list of actions and statutory violations that constitute "racketeering activity" and states that a "pattern" of such activity requires at least two acts of racketeering. 18 U.S.C.A. § 1961(1) & (5). When a plaintiff attempts to base a civil RICO claim on § 1962(c), that claim cannot succeed unless the injuries of which the plaintiff complains were caused by one or more of the specified acts of racketeering. ^{2 2} Miranda v. Ponce Fed. Bank, 948 F.2d 41, 46-7 (1991). Moreover, merely proving that the alleged predicate acts were a "cause in fact" of plaintiff's injuries will not be sufficient. Instead, § 1964(c) requires proof that at least one of the defendant's predicate acts was the proximate cause of the plaintiff's injuries. Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268, 112 S.Ct. 1311, 1317-18, 117 L.Ed.2d 532 (1992).

Camelio alleges that defendants injured him by depriving him of his property interests in his job and his union membership. He asserts that defendants engaged in the following pattern of RICO predicate acts: misappropriation of funds in violation of 29 U.S.C.A. § 501(c) (West 1985); attempted extortion in violation of the Hobbs Act, 18 U.S.C.A. § 1961(1) (West 1984 & Supp.1997); and obstruction of justice in violation of 18 U.S.C.A. §§ 1510 and 1512 (West 1984 & Supp.1997). ³ In his complaint, Camelio asserts a myriad of claims in various combinations against fourteen individual defendants as well as against Council 93. For the sake of clarity of our analysis, we treat all of the defendants together, rather than individually. ⁴ Accordingly, to satisfy RICO's causation requirement at the motion to dismiss stage, Camelio's complaint must allege that the injuries of which he complains were proximately caused by one or more of these predicate acts. We examine the sufficiency of the complaint's causation allegations by addressing each category of predicate acts in turn.

1. Misappropriation of Funds Claims

Camelio claims that nine of the fourteen individual defendants misappropriated union funds in violation of 18 U.S.C.A. § 501(c) by taking such funds for personal use and causing union money to be paid for legal services that were never rendered.

A violation of § 501(c) qualifies as a predicate racketeering act under RICO. See 18 U.S.C.A. § 1961(1). However, even if we assume that Camelio has sufficiently alleged that defendants violated § 501(c), these violations cannot satisfy RICO's causation requirement because the connection between the violations and Camelio's injuries is insufficiently close to say that one proximately caused the other. See Miranda, 948 F.2d at 47 (bribery not cause of plaintiff's job loss); Pujol v. Shearson/American Express, Inc., 829 F.2d 1201, 1205 (mail and wire fraud not proximate cause of plaintiff's job loss); Nodine, 819 F.2d at 349 (mail and wire fraud not cause of plaintiff's job loss). In other words, even if defendants did violate § 501(c) by stealing union funds, their misappropriations were too far removed from Camelio's loss of his job and his union membership to serve as the proximate cause of his injuries.

2. Extortion Claims

Camelio continued his investigation after he lost his job, relying on his right as a union member to inspect the union's financial records. See 29 U.S.C.A. § 431(c) (West 1985). He also announced his candidacy for vice president of the union's northern New England region. Camelio claims that several of the defendants attempted to stifle his investigation and force him to abandon his candidacy by threatening to deprive him of his membership in the union if he did not desist. He asserts that such conduct violates the Hobbs Act, 18 U.S.C.A. § 1951(a), a crime which qualifies as a predicate act under RICO. See 18 U.S.C.A. § 1961(1).

Like Camelio's misappropriation claims, his Hobbs Act claims cannot satisfy RICO's causation requirement because the Hobbs Act violations he alleges did not cause the loss of either his job or his union membership. The Hobbs Act punishes any person who "obstructs, delays or affects commerce ... by robbery or extortion or attempts or conspires to do so." 18 U.S.C.A. § 1951(a). The Act defines "extortion" as "the obtaining of property from another, with his consent induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." 18 U.S.C.A. § 1951(b)(2) (emphasis added). If Camelio's complaint successfully pleads any Hobbs Act violations, those violations resulted from defendants' attempts to induce Camelio to...