Donohue v. Teamsters Local 282 Welfare, Pension, 97 CV 5418(TCP).

• Decision Date: 16 July 1998
• Docket Number: No. 97 CV 5418(TCP).,97 CV 5418(TCP).
• Citation: 12 F.Supp.2d 273
• Parties: Theresa DONOHUE, Plaintiff, v. TEAMSTERS LOCAL 282 WELFARE, PENSION, ANNUITY, JOB TRAINING AND VACATION AND SICK LEAVE TRUST FUNDS, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

12 F.Supp.2d 273

Theresa DONOHUE, Plaintiff, v. TEAMSTERS LOCAL 282 WELFARE, PENSION, ANNUITY, JOB TRAINING AND VACATION AND SICK LEAVE TRUST FUNDS, et al., Defendants.

No. 97 CV 5418(TCP).

United States District Court, E.D. New York.

July 16, 1998.

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Robert M. Baptiste, William R. Wilder, Baptiste & Wilder, P.C., Washington, D.C., Phillip C. Landrigan, White Plains, New York, for Plaintiff.

William K. Wolf, David S. Rich, Friedman & Levine, New York, NY, for Defendants Trustees and Fiduciaries of the Teamsters Local 282 Welfare, Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds and Teamsters Local 282 Welfare, Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds.

Russell Hollander, Peter Zwiebach, Richard A. Brook, Cohen, Weiss & Simon, New York, NY, for Defendants International Brotherhood of Teamsters, Ron Carey and Local 282, International Brotherhood of Teamsters.

MEMORANDUM AND ORDER

PLATT, District Judge.

Defendants Teamsters International Brotherhood of Teamsters ("IBT"), Ron Carey and Local 282 (collectively, "Local 282" or "Union defendants") and defendants the Trustees and Fiduciaries of the Teamsters Local 282 Welfare, Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds (collectively, "the Fund defendants") move to dismiss the counts in the Complaint alleging two violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., two violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., violation of the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), 29 U.S.C. §§ 1161-66, intentional infliction of emotional distress and, violation of the March 23, 1995 Consent Judgment between the United States of America and the Union defendants pursuant to Rule 12(b)(6).

BACKGROUND

This is an action for retaliation and breach of fiduciary duty under ERISA, violations for RICO, and violations of COBRA. Plaintiff Theresa Donohue also asserts a pendent State claim for intentional infliction of emotional distress. Finally, plaintiff seeks Court enforcement of the Consent Judgment between the defendants and the United States. Compl. ¶ 1.

On April 8, 1994, plaintiff was employed as the Fund Manager of the Teamsters Local 282 Welfare Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds. Subsequently, plaintiff entered into an Employment Agreement for a term to expire on April 7, 1997, with an option to extend for two additional years. Compl. ¶ 26.

Plaintiff alleges that during her employment, she discovered that the Funds were not operated for the exclusive benefit of the participants and beneficiaries.¹ In the Complaint, plaintiff alleges that the trustees would obtain monies from the funds for their own benefit and employers would underpay their required contributions. Compl. ¶¶ 26-34, 40-42, 46. According to plaintiff, certain parties acted both as Fund trustees and as the appointed officers of Local 282 in implementing the schemes. The schemes also allegedly involved efforts to conceal the defendants' corrupt activities from discovery. Compl. ¶ 42. To that end, plaintiff argues, defendants engaged in violent threats and intimidation against Donohue in response to her efforts to reveal the defendants' corruption. Compl. ¶¶ 30-35, 42, 45. In furtherance of their scheme, plaintiff maintains defendants engaged in extortion of Donohue, embezzlement from the Funds, and fraudulent communications with the government and participants. Compl. ¶¶ 42, 45.

Plaintiff urges that after she brought these instances of corruption to the attention of the Board of Trustees, rather than taking corrective action, the Board became upset with plaintiff. In retaliation for her alleged disclosures of defendants' violations of federal law and the Consent Judgment with the Government, plaintiff asserts she became a target of vandalism, abuse, intimidation, and threats. Compl. ¶¶ 29-30. Finally, on September 19, 1996, defendants fired plaintiff.

DISCUSSION

A. Rule 12(b)(6) Standard of Review

In deciding a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a court must accept all allegations in the complaint as true and draw all inferences in favor of the non-moving party. Wynn v. Uhler, 941 F.Supp. 28 (N.D.N.Y.1996). A court should not dismiss a complaint unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim. Sunrise Indus. Joint Venture v. Ditric Optics, Inc., 873 F.Supp. 765, 769 (E.D.N.Y.1995).

In sum, the Union defendants argue that the RICO claims against the Union defendants should be dismissed because: (1) plaintiff lacks standing under RICO to assert claims against any of the defendants based upon the predicate acts alleged in the Complaint; (2) plaintiff fails to allege sufficient facts to demonstrate that the Union defendants engaged in a "pattern" of racketeering activity by aiding or abetting the commission of two or more RICO predicate acts; and (3) plaintiff fails to allege sufficient facts to show that the Union defendants conspired to commit two or more RICO predicate acts in violation of 18 U.S.C. § 1962(c). In addition, defendants contend that the Consent Judgment claims should be dismissed because plaintiff lacks standing to assert such claims. See Union Defs'. Mem. at 2-3.

B. Standing Under RICO

As a threshold issue, the Court first must determine whether the plaintiff has standing to bring the RICO claims she asserts in her Complaint. "Section 1964(c) of Title 18 of the United States Code authorizes private actions for treble damages for `[a]ny person injured in [her] business or property by reason of a violation of [the RICO Act's substantive provisions].'" Burdick v. American Express Co., 677 F.Supp. 228, 229 (S.D.N.Y.1988) (citation omitted in original). Furthermore, a plaintiff only has standing if she has been proximately injured in her business or property by the conduct constituting the violation. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496-97, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985).

The RICO standing requirement is satisfied only if plaintiff demonstrates that the commission of the RICO predicate acts proximately caused her injury. In re American Express Co. Shareholder Litig., 39 F.3d 395, 399 (2d Cir.1994). A defendant who violates § 1962 is not liable for treble damages to everyone he might have injured by alleged violations, but only to those who can establish a direct relationship between their asserted injury and the injurious conduct. Burdick v. American Express Co., 865 F.2d 527, 529 (2d Cir.1989). A remotely related injury is insufficient to support a claim under RICO. Id.

The Second Circuit's position on retaliatory discharges is unambiguous — loss of employment, does not constitute an injury to business or property sufficient to satisfy RICO's standing requirement. See Id. (the purpose of civil RICO liability does not extend to deterring any illegal act such as retaliatory firings for which there are state and common law remedies); Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 24 (2d Cir.1990); see also O'Malley v. O'Neill, 887 F.2d 1557, 1563 (11th Cir.1989); Cullom v. Hibernia Nat'l Bank, 859 F.2d 1211, 1216 (5th Cir.1988). "Although [plaintiff's] loss of employment may have been factually caused by defendants' RICO violations, it was not a foreseeable natural consequence sufficient for proximate causation." Hecht, 897 F.2d at 24. Accordingly, plaintiff does not have standing based on her termination.

Attempting to overcome the hurdle presented by the Second Circuit's position on retaliatory loss of employment, plaintiff argues that she suffered a loss to her "property" in that she was deprived benefits under ERISA which, plaintiff claims constitute "property." Specifically, plaintiff alleges that her right, as Fund Manager, to inform the fund participants and others of any violations, and her right to sue on behalf of the funds to recover for defendants' fiduciary breaches constitute property under RICO, sufficient to confer standing. In sum, plaintiff urges, her property was taken away because her rights were extinguished by defendants' threats of violence and thereafter by her termination. Plaintiff's reasoning is both novel and creative, however it is unsupported by existing legal authority. This Court agrees with the Fifth and Ninth Circuits, which hold that an "[i]njury to mere expectancy interests or to an `intangible property interest' is not sufficient to confer RICO standing." Price v. Pinnacle Brands, Inc., 138 F.3d 602, 607 (5th Cir.1998) (citation omitted); see also Oscar v. University Students Co-op. Ass'n, 965 F.2d 783, 785 (9th Cir.1992). Plaintiff's lost rights are too speculative and insufficient to confer standing under RICO.

Indeed, even if this Court agreed that plaintiff suffered a loss to her property because her rights to inform and sue were extinguished, her injury merely would be a collateral result of defendants' alleged violations and insufficient to confer standing. Plaintiff lost her rights because she was terminated. Accordingly, because a retaliatory termination does not confer RICO standing under RICO, Burdick, 865 F.2d at 529; Hecht, 897 F.2d at 24, it follows that any injury plaintiff suffered as a result of the alleged retaliatory termination does not confer RICO standing.

Next, plaintiff alleges that she was the target of extortion in that she was victimized by threats of physical violence and bodily harm in order to induce her silence, and that as a victim of this extortion she has standing to maintain a RICO action. Compl. ¶ 42. However, any extortion that may have occurred was remote and an incidental by-product of defendants' alleged racketeering. Because plaintiff was not proximately injured by reason of defendants' alleged RICO violations, ...