Marshall v. American Feder. of Government Employees

• Decision Date: 06 January 1998
• Docket Number: No. CIV-96-609-R.,CIV-96-609-R.
• Parties: Gene MARSHALL, Plaintiff, v. AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, Defendant.
• Court: U.S. District Court — Western District of Oklahoma

996 F.Supp. 1334

Gene MARSHALL, Plaintiff, v. AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, Defendant.

No. CIV-96-609-R.

United States District Court, W.D. Oklahoma.

January 6, 1998.

Emmanuel E. Edem, Nicole M. Vernier-Gelven, Norman, Edem, McNaughton & Wallace, Larry D. Muse, Larry D. Muse & Assoc., Oklahoma City, OK, for Gene Marshall, plaintiff.

Thomas P. Howell, IV, Joe E. Edwards, Ricki V. Sonders, Day, Edwards, Federman, Propester & Christensen, Oklahoma City, OK, Joe Goldberg, American Federation of Government Employees, General Counsel, Washington, DC, for American Federation of Government Employees, AFL-CIO, John Sturdivant, defendants.

ORDER

DAVID L. RUSSELL, Chief Judge.

Before the Court is "Plaintiff's Motion for Summary Judgment Regarding Defendants' Amended Counterclaim." Since the filing of this motion, the parties have stipulated to the dismissal with prejudice of Plaintiff's claims against Defendant John Sturdivant and the Court has granted the motion of American Federation of Government Employees, AFL-CIO ("AFGE"), for summary judgment on Plaintiff's Amended Complaint. Accordingly, AFGE is now the Plaintiff herein on which claims Gene Marshall, who is now the Defendant, seeks summary judgment. To avoid any possible confusion as a result of these developments, however, the Court will simply refer to the parties as "Marshall" and "AFGE" and to what were AFGE's counterclaims as its claims.

Marshall seeks summary judgment on AFGE's claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68, on grounds that 1) that claim is barred by the four-year statute of limitations; 2) there are no facts to support it; 3) no private cause of action for mail fraud exists and therefore no private cause of action under RICO utilizing mail fraud as racketeering activity exists; 4) there is no factually-based scheme because Local 916 and the Foundation were separate legal entities, the separate financial activities of which and separate reporting thereof were proper, Local 916 was not entitled to profits earned by Foundation using other entities' bingo licenses and the Foundation as a separate entity was not required to obtain the union's approval to refinance its property or make capital improvements thereto; 5) AFGE has not alleged and cannot prove the existence of a "pattern" of racketeering because the acts alleged or shown do not amount to or pose a threat of continued criminal activity, and, in any event, there is no proof of any specific mailings by Marshall or that he engaged in any fraud and Marshall did in fact turn over the books and records of the Foundation when he resigned in April of 1993; and 6) since Wallace had no facts to support any of the allegations, Local 916 and the Foundation could not have assigned any claim to AFGE.

Marshall's statute of limitations argument, as the Court understands it, is really twofold. First, he asserts, based on the undisputed fact that his term as President of Local 916 ended in December of 1992, when he was not re-elected, that the statute of limitations on a RICO claim began to run at that time and ran in December of 1996. Since the claims of Local 916 against Marshall were not even assigned until March of 1997, the RICO claim is barred by the statute of limitations. Secondly, Marshall asserts that "the basic premise of the claims alleged in the Defendants' counterclaim is the same as charges alleged in the Petition filed by Larry Wallace, President of AFGE Local 916, as a member and on behalf of the Foundation against Mr. Marshall." Marshall's Brief at p. 9. Since the case brought by Wallace was dismissed on October 27, 1994, Marshall implies, but does not specifically say in connection with the RICO claim, that pursuant to Okla. Stat. tit. 12, § 100, AFGE's claim is barred by res judicata or collateral estoppel and/or the statute of limitations because it was not filed by October 27, 1995.

AFGE does not rely on Okla. Stat. tit. 12, § 100 and the suit brought by Larry Wallace as a member and on behalf of the Foundation to avoid the bar of the statute of limitations. Marshall cannot use Okla. Stat. tit. 12, § 100 as "sword" herein merely because AFGE's RICO claims and claims made on behalf of the Foundation in Wallace's suit arise from the same operative facts. AFGE would be bound by what occurred in Wallace's suit only to the extent claim or issue preclusion would apply and neither does because either requires, among other things, a judgment on the merits in the prior case.¹ See Fox v. Maulding, 112 F.3d 453, 456 (10th Cir.1997); King v. Union Oil Company of California, 117 F.3d 443, 445 (10th Cir.1997); Petromanagement Corp. v. Acme-Thomas Joint Venture, 835 F.2d 1329, 1335-37 (10th Cir.1988).

A civil RICO cause of action, which is subject to a four-year statute of limitations, see Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 156, 107 S.Ct. 2759, 2767, 97 L.Ed.2d 121, 134 (1987), accrues as soon as the plaintiff discovers or reasonably should discover both the existence and source of his injury and that the injury is part of a pattern. Bath v. Bushkin, Gaims, Gaines, & Jonas, 913 F.2d 817, 820 (10th Cir.1990). Marshall asserts that the RICO claim accrued when Marshall's term as President of Local 916 ended in December of 1992 but, as AFGE points out, AFGE's RICO claim is based upon Marshall's alleged conduct of the affairs of the Foundation, alleged to be the RICO "enterprise," through a pattern of racketeering activity that caused injury to the business and property of Local 916, which claim was assigned to AFGE, and AFGE has submitted evidence which is uncontroverted that Marshall did not resign as Chairman of the Board of Foundation until April 20, 1993 and that he did turn over books and records of the Foundation, including its accounting records for the last quarter and its general ledger, until after July 29, 1993. It may reasonably be inferred from this and other evidence before the Court, see Transcript Excerpt Investigative Hearing (Testimony of Casey Russell) at 423-26, 428-29 & 710-14 and Affidavit of David R. Payne (Exhibit "10" to Defendants' Brief) at ¶¶ 5-10, that the local union could not reasonably have discovered the existence, source and extent of its injury and that the injury was the result of a pattern of racketeering activity until April 20, 1993 or until after July 29, 1993. AFGE filed its RICO counterclaim on April 18, 1997, having received an assignment of all of the local union's claims in March of 1997. Thus genuine issues of material fact exist as to whether AFGE's RICO claim is barred by the statute of limitations because reasonable jurors could find from evidence before the Court that the local union could not reasonably have made the discovery necessary to accrual of a RICO cause of action until less than four years before the RICO counterclaim was brought by AFGE.

Marshall's argument that there are no facts to support AFGE's RICO claim based upon the lack of knowledge of Larry Wallace, President of AFGE Local 916, of any facts to support it is unavailing because AFGE has submitted evidence from other sources to support its RICO claim.

Marshall's argument that mail fraud cannot serve as a predicate for a RICO claim because there is no private cause of action for mail fraud is patently frivolous. Mere reference to the RICO statutes would have informed Marshall's counsel that "racketeering activity" specifically includes any act indictable under 18 U.S.C. § 1341, i.e., mail fraud. 18 U.S.C. § 1961(1)(B).

AFGE alleges a scheme by the Foundation to divert the benefit of the Foundation's bingo operations from Local 916 and its members, Amended Counterclaim at ¶ 9(a), which was effected by, among other things, financial deconsolidation of Local 916 and the Foundation. Id. at ¶ 9(B). Marshall essentially argues that the acts alleged by AFGE do not amount to or cannot form the basis for a scheme to defraud because Local 916 and the Foundation were separate entities. Because they were separate entities, Marshall argues, the Foundation didn't need the approval of Local 916 or its members as to the use of profits from Foundation's bingo operations, could refinance property owned by it without AFGE's approval and never should have been consolidated for financial reporting or on any basis with Local 916. However, it may reasonably be inferred from evidence before the Court that the Foundation was formed solely for the purpose of holding legal title to the real property which belonged to Local 916; that the Foundation was created by Local 916 for the exclusive benefit of the members of Local 916, membership in the Foundation, a non-stock corporation, was limited to members of Local 916 and its directors were the members of the Executive Council of Local 916; that the Foundation utilized the bingo license of Local 916 to run bingo games at the property equitably owned by Local 916, title to which was held by Foundation, for or ostensibly for the benefit of Local 916; that thereafter Marshall and others without the approval or knowledge of the members of Local 916 or a quorum thereof amended the bylaws of the Foundation to open the membership to the general public and provide that the officers of Local 916 would not automatically be the officers of the Foundation for the purpose of obtaining tax-exempt status from the IRS so that the Foundation could get its own bingo license; and that thereafter, the Foundation utilized the bingo licenses of Local 916, the Foundation and other entitles and Local 916 did not obtain the benefit of even the net profits of Foundation's bingo operations carried on on the local's own license and/or of its operations carried on using Foundation's or others bingo licenses. In short, there is evidence in the record from which reasonable jurors could find that although Foundation was always a nominally separate legal entity from...