New Beckley Min. Corp. v. International Union, United Mine Workers of America
| Decision Date | 04 March 1994 |
| Docket Number | 93-1140,Nos. 93-1100,s. 93-1100 |
| Citation | 18 F.3d 1161 |
| Parties | 145 L.R.R.M. (BNA) 2673, 127 Lab.Cas. P 11,041, RICO Bus.Disp.Guide 8501 NEW BECKLEY MINING CORPORATION, Plaintiff-Appellant, v. INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA; Joe Carter; Ken Peterson; Virgil Pyatt; Larry Flint; Harvey Stover; Robert Burdette; Paul Daniels; George "Tex" Bailey; Herman Stanley; Ronnie Scarbro; Robert "Buck" Tyree; Ken Toler; Roger McKinney; John Does, Defendants-Appellees, v. Donn A. CHICKERING; Quaker Coal Company, Incorporated; Billy E. Little; Earl Howell; Douglas Epling; Mahon Enterprises, Incorporated; Amon Mahon, Third Party Defendants. NEW BECKLEY MINING CORPORATION, Plaintiff-Appellee, v. INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, Defendant-Appellant, and Joe Carter; Ken Peterson; Virgil Pyatt; Larry Flint; Harvey Stover; Robert Burdette; Paul Daniels; George "Tex" Bailey; Herman Stanley; Ronnie Scarbro; Robert "Buck" Tyree; Ken Toler; Roger McKinney; John Does, Defendants, v. Donn A. CHICKERING; Quaker Coal Company, Incorporated; Billy E. Little; Earl Howell; Douglas Epling; Mahon Enterprises, Incorporated; Amon Mahon, Third Party Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Mark Anthony Carter, Smith, Heenan & Althen, Charleston, WV, for appellants New Beckley Mining, Quaker Coal, Chickering, Little, Howell and Epling; Shawn P. George, George, Ferguson & Lorensen, Charleston, WV, for appellants Mahon and Mahon Enterprises. John Robert Mooney, Beins, Axelrod, Osborne, Mooney & Green, P.C., Washington, DC, for appellees. ON BRIEF: Forrest H. Roles, Smith, Heenan & Althen, Charleston, WV, for appellants New Beckley Min., Quaker Coal, Chickering, Little, Howell and Epling. Richard W. Gibson, Beins, Axelrod, Osborne, Mooney & Green, P.C., Washington, DC; Robert H. Stropp, Jr., United Mine Workers of America, Washington, DC; George N. Davies, Longshore, Nakamura & Quinn, Birmingham, AL, for appellees.
Before ERVIN, Chief Judge, MURNAGHAN, Circuit Judge, and BUTZNER, Senior Circuit Judge.
New Beckley Mining Corporation appeals the judgment of the district court dismissing its complaint against the International Union, United Mine Workers of America, and several individuals alleged to be members of the International. The complaint charged violations of the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Secs. 1961-1968, and of state law. The International cross-appeals the dismissal of its counterclaim and its complaint against various third-party defendants for RICO violations. We affirm the judgments of dismissal.
After union members engaged in a selective strike, New Beckley filed suit in federal district court against the International for violations RICO and of state tort laws. The district court initially dismissed the federal suit because New Beckley was seeking injunctive relief in state court. We reversed on the grounds that the two suits were sufficiently different to render abstention inappropriate. New Beckley Mining Corp. v. International Union, United Mine Workers, 946 F.2d 1072 (4th Cir.1991).
On remand, the district court determined that New Beckley had failed to state a claim upon which relief could be granted and dismissed the complaint. It also denied New Beckley's motion to amend its complaint. The district court subsequently dismissed the counterclaim and third-party complaint for failing to allege a cause of action under RICO and for lack of standing. Both parties appeal.
We review de novo the dismissal of New Beckley's complaint. Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir.1991).
New Beckley charged the International with violations of 18 U.S.C. Secs. 1962(c) and (d). Section 1962(c) makes it unlawful for a person "employed by or associated with any enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity...." This proscription envisions the enterprise as "being different from, not the same as or part of, the person." United States v. Computer Sciences Corp., 689 F.2d 1181, 1190 (4th Cir.1982). In Busby v. Crown Supply, Inc., 896 F.2d 833 (4th Cir.1990) (en banc), we reaffirmed the necessity of distinction between the "person" and the "enterprise" in actions alleging a violation of Sec. 1962(c). But, overruling Computer Sciences in part, we held that a violation of Sec. 1962(a) did not require the "person" and the "enterprise" to be separate. 896 F.2d at 841.
The Act defines "person" and "enterprise" separately. " '[P]erson' includes any individual or entity capable of holding a legal or beneficial interest in property." 18 U.S.C. Sec. 1961(3). New Beckley named as defendants the International and certain of its members, known and unknown, alleging that they were the "persons" who violated Sec. 1962(c). For the purpose of its case, New Beckley described the International as follows:
The term "International" shall refer to the International Union, United Mine Workers of America, its officers, directors, employees, agents, subagents, and any other person or entity acting on the counsel, command, induction, procurement, instigation or direction of the International.
The Act defines "enterprise" as follows: " '[E]nterprise' includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. Sec. 1961(4). For the purpose of this case, New Beckley described the "enterprise" as follows:
The International, in concert with District and Local Unions, operates under a written ordinance called the "Constitution of the International Union, United Mine Workers of America" (hereinafter "UMWA Constitution") and is part of an association known as the "United Mine Workers of America" (hereinafter "UMWA").
Each constituent organization of the UMWA constitutes a separate legal entity responsible for areas specified by the UMWA Constitution to achieve the overall objectives of the association. This association of unincorporated associations constitutes an enterprise within the meaning of 18 U.S.C. Section 1961(4) and the International has participated in and has conducted the affairs of this UMWA enterprise.
It is quite apparent from these allegations that the "persons" described by New Beckley are not distinct from the "enterprise" that it described. Both the "person" and the "enterprise" are part and parcel of the International Union, United Mine Workers of America. The district court, applying the interpretation of the Act found in Computer Sciences, 689 F.2d at 1190, properly dismissed New Beckley's cause of action based on Sec. 1962(c).
We cannot accept New Beckley's assertion that Carbon Fuel Co. v. United Mine Workers, 444 U.S. 212, 100 S.Ct. 410, 62 L.Ed.2d 394 (1979), requires reversal of the district court. Carbon Fuel held that section 301 of the Taft Hartley Act, 29 U.S.C. Sec. 185(e), incorporated general agency principles. Consequently, in the absence of proof of authorization or ratification, the International was not liable for local unions' wildcat strikes. 444 U.S. at 216-17, 100 S.Ct. at 413-414. Carbon Fuel, in interpreting a labor relations statute, did not decide the relationship of the International, its districts, local unions, and members for the purpose of applying RICO provisions.
New Beckley's attempt to correct this flaw by amending the description of the "enterprise" in its complaint was misguided. The proposed amendments read:
The International, in association with District and Local Unions, operates under a written ordinance called the "Constitution of the International Union, United Mine Workers of America" (hereinafter "UMA Constitution") and is associated with, while not a part of, an association of autonomous District labor organizations, Local labor organizations, and individuals acting on behalf of the Local and District labor organizations titled here as the "United Mine Workers of America" (hereinafter "UMWA").
Each constituent organization of the "UMWA" constitutes a separate legal entity responsible for areas specified by the UMWA Constitution to achieve overall objectives. This association of unincorporated associations consisting of all Districts and Local unions of the UMWA constitutes an enterprise within the meaning of 18 U.S.C. Section 1961(4) and the International has participated in and has conducted the affairs of this UMWA enterprise through a pattern of racketeering activity.
The district court determined that justice would not be served by allowing the amendment and denied the motion. In reaching this conclusion, the court found: "[T]he International Union, United Mine Workers of America ("International") and its District and Local organizations are inextricably linked by virtue of their numerous ties, not the least of which is the United Mine Workers of America Constitution."
We review the court's decision refusing New Beckley leave to amend its complaint for abuse of discretion. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). The proposed amendment would not have corrected the fundamental defect in the complaint, namely the lack of distinction between the International and its districts, locals, and members. A court may refuse to allow leave to amend pleadings when the proposed changes would be futile. Foman, 371 U.S. at 182, 83 S.Ct. at 230. The court did not abuse its discretion in denying New Beckley's motion to amend.
In addition, the court did not err in relying upon the UMW constitution to assess the relationship between the union and its districts and locals. New Beckley referred to the constitution in its complaint and its proposed amended complaint to justify its cause of action under 1962(c). Its disagreement over the court's...
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