Hearn v. McKay
| Decision Date | 24 October 2008 |
| Docket Number | No.: 07-60209-CIV.,: 07-60209-CIV. |
| Citation | 642 F.Supp.2d 1330 |
| Court | U.S. District Court — Southern District of Florida |
| Parties | John N. ("Jack") HEARN, Christopher O. Bartlett, John Rousselle, Timothy Harkins, and Henry P. Mallon, Plaintiffs, v. Michael McKAY et. al., Defendants. |
Alan Michael Grunspan, David James Smith, Carlton Fields, P.A., Miami, FL, Jason J. Valtos, William W. Osborne, Jr., Osborne Law Offices, PC, Washington, DC, for Plaintiffs.
Robert McKay, Dania, FL, pro se.
Joel C. Glanstein, O'Donnell, Schwartz, Glanstein & Lilly, New York, NY, Kenneth Wade Donnelly, Howrey, Simon, Arnold & White, Richard E. Dizinno, Stephen Weissman, Howrey, LLP, Washington, DC, for Defendants.
COURT'S FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Court held a non-jury trial in this case on July 7, 8, and 9, 2008. Plaintiffs filed a Complaint against Defendants, alleging violations of the Labor Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 401 et seq. and the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185 et seq.1 See (D.E. No. 1). The Complaint was originally filed against the American Maritime Officers Union ("AMO") and a number of current and former officers of the AMO. Counts I and III asserted against both the AMO and the individual officers alleged violations of section 101(a)(2) of the LMRDA, 29 U.S.C. § 411(a)(2) and section 301(a) of the LMRA, 29 U.S.C. § 185(a) respectively. These claims in Count I and III, as well as all claims against Defendants Edward Kelly and John Hafner, were dismissed pursuant to the parties' joint stipulation of dismissal. See (D.E. No. 192). In addition, by dismissing Counts I and III, no claims remained pending against Defendant the American Maritime Officers Union ("AMO").
After this dismissal, only Count II, asserting a violation of section 501(a) of the LMRDA, 29 U.S.C. § 501(a) remained pending against Defendants Michael McKay, Robert McKay, Thomas Bethel ("Bethel"), Donald Nilsson ("Nilsson"), Paul Cates ("Cates"), Daniel Smith ("Smith"), Donald Cree ("Cree"), Joseph Gremelsbacker ("Gremelsbacker"), and Robert Kiefer ("Kiefer"). The Court then granted in part and denied in part a motion for summary judgment on this count filed by Defendants Bethel, Nilsson, Cates, Smith, Cree, Gremelsbacker, and Kiefer.2 See (D.E. No. 199). In granting in part this motion for summary judgment, no claims remained pending against Defendant Cates. A Clerk's Default for failure to answer or otherwise respond to the Complaint was entered against Defendants Michael McKay and Robert McKay, see (D.E. Nos. 32, 45), and this Court has separately entered Default Final Judgments against Defendants Michael McKay and Robert McKay.
The only claims which remain for this Court to resolve are Plaintiffs' Count II claims that the remaining non-defaulting Defendants breached their fiduciary duties relating to the awarding of year-end bonuses and the rigging of elections and referenda. The Court has carefully considered the testimony of the witnesses, the exhibits in evidence, the applicable law, and the arguments presented by counsel. The Court now enters the following findings of fact and conclusions of law in accordance with Federal Rule of Civil Procedure 52. Any findings of fact which should be treated as conclusions of law are to be treated as such, and any conclusions of law that should be treated as findings of fact should also be treated as such.
Plaintiffs and Defendants are members of the former Defendant AMO, which is a maritime labor organization headquartered in Dania Beach, Florida. (D.E. No. 190, Joint Stipulation at 6-8). Its members are licensed officers in the United States merchant marine fleet that operate ocean-going commercial vessels and commercial vessels on inland waters in the United States. Id. at 6.
Plaintiffs were all unsuccessful candidates for office in the December 6, 2006 AMO National Officers Election. Id. Specifically, Plaintiff John N. Hearn ("Hearn") was an unsuccessful candidate for AMO National President, Plaintiff Christopher O. Bartlett ("Bartlett") was an unsuccessful candidate for AMO National Executive Vice President, Plaintiff Tim Harkins ("Harkins") was an unsuccessful candidate for AMO National Vice President, Deep Sea, Plaintiff John Rousselle ("Rouselle") was an unsuccessful candidate for AMO National Assistant Vice President, At Large, and Plaintiff Henry Mallon ("Mallon") was an unsuccessful candidate for AMO National Executive Board Member, Inland Waters. Id. The AMO has since held a rerun election in June of 2008 and Plaintiff Christopher Bartlett is the current AMO National Executive Vice President. (D.E. No. 229 at 4); (D.E. No. 230 at 3). All other Plaintiffs remained unsuccessful in their bids for office. See id.
The individual Defendants are all either current or former officers of the AMO. Defaulting Defendant, Michael McKay, was the AMO National President from 1994 until January 5, 2007. (D.E. No. 190, Joint Stipulation at 7). He was forced to resign following his felony convictions for violations of the LMRDA and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), in United States v. Michael McKay, et al., case number 05-60149-CR-COHN. Id. Defaulting Defendant Robert McKay is Michael McKay's brother and was the AMO Secretary Treasurer from 1994 until he was defeated in the December 6, 2006 election. Robert McKay was also convicted of violations of the LMRDA and RICO in United States v. Michael McKay, et al., case number 05-60149-CR-COHN. Id.
The remaining non-defaulting Defendants are all former members of Michael McKay's administration who with one exception also hold current positions in the AMO. Defendant Bethel was previously an AMO National Assistant Vice President, and on December 6, 2006, he was a successful candidate for election to the position of AMO National Executive Vice President. Id. at 7. Bethel Tr. Testimony July 7 at 30, 90, 96.3 He also served as the AMO National President after Michael McKay resigned. D. Exh. 124. In the rerun election held in June of 2008, he was elected AMO National President. Bethel Tr. Testimony July 7 at 30.
Defendant Nilsson was a representative of the AMO, and as of January 1, 2002, he is a member of the AMO National Executive Board. (D.E. No. 190, Joint Stipulation at 7); Nilsson Tr. Testimony July 8 at 181. Defendant Smith served as AMO National Vice President, Great Lakes. (D.E. No. 190, Joint Stipulation at 7-8). On January 8, 2007, Defendant Smith became the AMO National Executive Vice President, in which office he served until he was defeated by Plaintiff Bartlett in the June 24, 2008 rerun election. Smith Tr. Testimony July 9 at 26-29. Defendant Cree was the AMO National Assistant Vice President, Great Lakes, and as of January 8, 2007, he is the AMO National Vice President, Great Lakes. (D.E. No. 190, Joint Stipulation at 8); Cree Tr. Testimony July 9 at 77. Defendant Gremelsbacker was a member of the AMO National Executive Board, and as of January 1, 2002, he is the AMO National Vice President, Deep Sea. Gremelsbacker Tr. Testimony July 7 at 125. Defendant Kiefer was a member of the AMO National Executive Board, and as of 2005, he is the AMO National Assistant Vice President, At Large. (D.E. No. 190, Joint Stipulation at 8).
In 2000, the United States Department of Justice ("DOJ") began a criminal investigation to determine whether certain AMO officers used their position to violate federal law. Id. at 9. Upon receipt of grand jury document subpoenas by the DOJ, the AMO through its National Executive Board4 retained special counsel, Joseph diGenova and his firm diGenova & Toensing, to advise and assist the AMO in fully cooperating with the government investigation. Bethel Tr. Testimony July 7 at 78-79. The AMO also initiated an internal investigation which was coordinated by special counsel and two FBI agents, Joseph Lucca ("Lucca") and Raymond Maria ("Maria"). Id. at 79, 146-47. Lucca Tr. Testimony July 9 at 58-59.
One of the matters which was investigated was the current officers' knowledge regarding whether then-President McKay had granted bonuses as reimbursement for campaign contributions to Congressman Bud Shuster in 1998 and 1999. Lucca Tr. Testimony July 9 at 58-59. Lucca and Maria conducted numerous face-to-face interviews with union officials and the officers' statements in regard to the bonuses were consistent with each other. Id. at 59, 64-65. The interviews were not conducted under oath. Id. at 66. However, all the officers interviewed stated that there was no connection between the bonuses and the political contributions. Id. at 64-65.5
In October 2001, special counsel advised the National Executive Board that after interviews with union officials and a review of financial records, "he had found little or nothing to question," and he found "no evidence of financial irregularities on the union's side." D. Exh. 119 at 3-4.6 He also stated that he found no need for a "broad based comprehensive review of the AMO." Id. at 3. Special counsel did recommend that the AMO undertake certain steps to establish guidelines of conduct for officers, and controls and procedures for incoming and outgoing funds. Id. at 3-4. He also recommended that the AMO hire two former FBI agents, Dan Sullivan and Dan Anderson, to help implement these recommendations. Id. at 4. The AMO followed each of these recommendations. Bethel Tr. Testimony July 8 at 147-49.
In June 2005, defaulting Defendants, Michael McKay and Robert McKay were indicted.7 (D.E. No. 190, Joint Stipulation at 9). A superseding indictment was filed in July 2005, and in September of 2005, a second superceding indictment was filed. Id. These indictments were sealed and not unsealed until September 14, 2005. (D.E. Nos. 2, 8,12, and 25 in Case No. 05-60149-CR-COHN). In the second...
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