Presser v. Brennan

• Decision Date: 27 February 1975
• Docket Number: Civ. A. No. C 75-83.
• Citation: 389 F. Supp. 808
• Parties: William PRESSER, Plaintiff, v. Peter J. BRENNAN, Secretary of Labor, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

389 F. Supp. 808

William PRESSER, Plaintiff, v. Peter J. BRENNAN, Secretary of Labor, et al., Defendants.

Civ. A. No. C 75-83.

United States District Court, N. D. Ohio, E. D.

February 27, 1975.

COPYRIGHT MATERIAL OMITTED

Robert J. Rotatori, Gold, Rotatori, Messerman & Hanna, Cleveland, Ohio, for plaintiff.

Leonard A. Sands, U. S. Dept. of Justice, Cleveland, Ohio, S. Cass Weiland, Mitchell B. Dubick, U. S. Dept. of Justice, Washington, D. C., for federal defendants.

Charles S. Tricarichi, Charles S. Rhyne, Courts Oulahan for defendant central states, etc., Pension Fund.

MEMORANDUM AND ORDER

WILLIAM K. THOMAS, District Judge.

Plaintiff William Presser brings his action for a declaratory judgment. He asks this court to adjudge

. . . that Section 411 of the Pension Reform Act Employment Retirement Income Security Act requires a hearing before the United States Parole Board prior to that Act's retroactive application to the plaintiff . . ..

Plaintiff states that he does this to prevent irreparable damage to himself by the Department of Justice of the United States as directed by the Attorney General of the United States, Edward Levi.

Plaintiff alleges that his action arises under the Fifth Amendment of the United States Constitution and section 411 of the Pension Reform Act. Section 411(a) first provides that no person who has been convicted of, or has been imprisoned as a result of his conviction of certain designated federal or state crimes, including a violation of section 302 of the Labor-Management Relations Act, 1947 (29 U.S.C. § 186), shall serve or be permitted to serve

(1) as . . . trustee . . . of any employee benefit plan, or

(2) as a consultant to any employee benefit plan, during or for five years after such conviction or after the end of such imprisonment, whichever is the later, unless prior to the end of such five-year period, in the case of a person so convicted or imprisoned, . . . (B) the Board of Parole of the United States Department of Justice determines that such person's service in any capacity referred to in paragraph (1) or (2) would not be contrary to the purposes of this title.

I.

Jurisdiction is asserted by the plaintiff, and it is determined that jurisdiction exists, under 28 U.S.C. § 1331(a), since the complaint raises questions under section 411 of the Pension Reform Act and the Due Process Clause of the Fifth Amendment.

The United States Department of Justice has announced its intention of prosecuting the plaintiff William Presser under section 411.

Section 411(v) makes it a misdemeanor for any person to intentionally violate the section. The Department of Justice by certified letter dated January 28, 1975, has informed each of the trustees of the Central States Pension Fund¹ that Mr. Presser is barred from serving as a trustee or in other designated capacities in connection with the Central States Pension Fund.

Parenthetically the announced bar is based on the conviction of plaintiff William Presser in the United States District Court for the Northern District of Ohio on January 22, 1971, of violations of section 186(b), Title 29 (the Labor Management Relations Act of 1947, also known as the Taft-Hartley Act) and section 2, Title 18, U.S.C. Mr. Presser was fined $12,000 on these convictions.

The letter of the Department of Justice also informs each of the trustees that

Section 411 imposes this disability upon Mr. Presser and further provides that no person shall knowingly permit him to serve in any capacity in violation of its terms.

Finally, the letter advises each trustee that any wilful violation of the section is a misdemeanor punishable as indicated.

The threatened prosecution under section 411 of plaintiff Presser and the trustees of Central States Pension Fund is not illusory or in futuro. It is happening. It is definite and real. Hence whether the case is regarded as one for declaratory or injunctive relief there is a "case and controversy" under Article III, Section 2 of the United States Constitution.

Moreover, the possible penalties to the plaintiff and the Fund trustees if they are prosecuted are sufficiently severe to force these parties to forego their legal position rather than to risk criminal prosecution if they are unable to seek a prior adjudication of their rights. In considering whether equity will act in anticipation of criminal prosecutions

one important factor is whether the penalties are so great that unless declaratory relief is entertained, the plaintiffs will, as a practical matter, be compelled to forego their legal position and be obliged to submit. See Terrace v. Thompson, 263 U.S. 197, 212, 44 S.Ct. 15, 68 L.Ed. 255 (1923). See also Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070 (1925).²

The Government defendants argue that this action is one which must be determined by a three-judge court under 28 U.S.C. § 2282, should this court determine that there is a substantial constitutional question. However, because the plaintiff seeks declaratory relief only,³ and because section 2282 is a technical statute which is to be narrowly construed, it is concluded that a three-judge court need not be convened. See Kennedy v. Mendoza-Martinez, 372 U.S. 144, 154-155, 83 S.Ct. 554, 9 L.Ed.2d 644 (1963).

Thus, this court has jurisdiction to determine all issues on the merits.

This case has been heard on evidence that is largely undisputed. It consists of oral testimony and documentary exhibits. Written briefs have been submitted and oral arguments have been presented. Defendant Secretary of Labor Brennan and Attorney General Levi have moved to dismiss plaintiff's complaint. Defendant Central States Pension Fund has moved for summary judgment. Each of these motions is respectfully and respectively overruled. The trial being completed, the case will now be decided on its merits.

II.

Plaintiff acknowledges that section 411 has retroactive application to persons convicted of one of the designated crimes prior to January 1, 1975, the effective date of the Pension Reform Act. Plaintiff correctly notes that House Conference Report No. 93-1280 states:

This provision is to apply to crimes committed before the date of enactment.

Thus the legislative history of the Pension Reform Act shows that Congress specifically intended the prohibitions of section 411(a) to apply retroactively to crimes committed before January 1, 1975, the effective date of the Act.

However, it is the plaintiff's position

that under the circumstances of this case, with respect to the retroactive application of § 411, Congress intended that the strict application of the Act's sanctions not be applied until the plaintiff can receive a determination of his qualifications for exemption from the Board of Parole.

Plaintiff Presser asserts that the substantive due process challenge in De Veau v. Braisted, 363 U.S. 144, 80 S.Ct. 1146, 4 L.Ed.2d 1109 (1960) is not dispositive of the procedural due process issue raised in the present case.

As Mr. Justice Powell makes clear in his concurring opinion in Arnett v. Kennedy, 416 U.S. 134, 164, 94 S.Ct. 1633, 1649, 40 L.Ed.2d 15 (1974)

The applicability of the constitutional guarantee of procedural due process depends in the first instance on the presence of a legitimate "property" or "liberty" interest within the meaning of the Fifth or Fourteenth Amendment.

Counsel for Central States Pension Fund suggests that there is a liberty interest present in this case by reason of the stigma that would attach to an indictment brought against either plaintiff Presser or the Fund trustees under section 411 of the Act. Arguably this is true and therefore for purposes of this court's consideration of the procedural due process argument, the existence of a liberty interest in both the plaintiff and the Fund trustees will be assumed.

A different question, however, arises with reference to the existence of a property interest.

Under the revised and amended trust agreement of the Pension Fund, the Board of Trustees consists of 16 persons. Eight trustees are employer trustees and are designated by certain employer groups. The employee trustees are designated jointly by the Union as defined in Section 2 of Article I of the Agreement.

Under this designation procedure it is assumed that employee trustees serve at the pleasure of the Union. Similarly, the employer trustees serve at the pleasure of the designated employer groups.

But in any event, it is concluded that occupancy of the position of trustee of the Pension Fund, at all times being subject to designation by either employer groups or the Union, does not constitute a property interest within the contemplation of the Fifth Amendment.

It developed in the evidence that in each of the last two years plaintiff Presser has received substantial sums of money in per diem fees for services rendered the Pension Fund. It was suggested in oral argument that the receipt of these fees showed that plaintiff Presser has a property interest as a trustee. However, the trust agreement serves to discount this argument. Article IV, Section 15 provides that

The Employer Trustees and Employee Trustees shall not be paid any compensation for their services hereunder for attendance at regular or special meetings of the Trustees.

The same section goes on to provide that

Trustees who are not receiving full-time pay from an Employer, Employer Association or Union may be paid reasonable compensation on a per hour and/or per day basis for services rendered as a member of a committee, subcommittee, or while performing specific assignments, which rate shall be established and reestablished by the Trustees from time to time. Such request for expense reimbursement and/or compensation shall be submitted on a voucher form approved by the Trustees.

It is apparent that the fees which plaintiff Presser has received, though sizable in total amount, represent per diem fees. The test of a property interest...