U.S. v. International Broth. of Teamsters

• Decision Date: 30 December 1997
• Docket Number: No. 88 Civ. 4486(DNE).,88 Civ. 4486(DNE).
• Citation: 988 F.Supp. 759
• Parties: UNITED STATES of America, Plaintiffs, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

988 F.Supp. 759

UNITED STATES of America, Plaintiffs, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, et al., Defendants.

No. 88 Civ. 4486(DNE).

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

December 30, 1997.

COPYRIGHT MATERIAL OMITTED

OPINION & ORDER

EDELSTEIN, District Judge.

BACKGROUND

This opinion emanates from the voluntary settlement of an action commenced by the United States of America against, inter alia, the International Brotherhood of Teamsters ("IBT" or "the union") and the IBT's General Executive Board. The settlement is embodied in the voluntary consent order entered March 14, 1989 ("Consent Decree"). The goals of the Consent Decree are to rid the IBT of the hideous influence of organized crime and establish a culture of democracy within the union. The long history of this case has been set forth in this Court's numerous prior opinions. Accordingly, only those facts necessary for resolving the instant appeal shall be set forth.

The 1996 IBT Election took place in the final months of 1996 and the ballot count concluded on February 27, 1997. See Declaration of Barbara Zack Quindel, dated August 21, 1997 ("Quindel decl.") at ¶ 4. Following Election Officer Quindel's announcements of the winning candidates, post-election protests were filed. Quindel decl. ¶ 4. Election officer Quindel conducted an investigation of the post-election protests and uncovered serious violations of the 1996 Election Rules. On August 21, 1997 she issued her decision concerning certain post-election protests. See In re: Jeraldine Cheatem, et al., Post-27-EOH (BZQ) (Aug. 21, 1997) (Rerun Decision) ("Cheatem, (Rerun Decision)").

In her decision, Election Officer Quindel found that in September 1996, Ron Carey ("Carey") campaign operatives met and concluded that the race was close and that the James Hoffa ("Hoffa") Campaign was raising between four and five times what the Carey Campaign was raising. Cheatem, (Rerun Decision) at 68. The Carey Campaign operatives determined that Carey would lose without additional money, and that the race was winnable but not unless the right people voted. Id.

Thus, in October 1996, Carey Campaign operatives implemented a scheme whereby IBT general treasury funds would be disbursed to certain political organizations upon the understanding that those organizations would make payments to the Carey campaign. Id. at 69-71. Carey personally authorized certain of these disbursements from IBT general treasury funds. Id. at 72-75. The Election Officer further found that in October and November 1996, other improper or illegal contributions in substantial amounts were made to the Carey Campaign. Id. at 75-78.

In addition, Election Officer Quindel determined that a "large, direct mail campaign" was a key part of the "final efforts" of the Carey Campaign, and that during the week prior to the end of the voting period, between November 4 and November 9, 1996, the Carey Campaign mailed 1,697,214 pieces of campaign literature. Id. at 78-79. The campaign targeted the mailings so that members in certain groups would receive anywhere from one to five pieces of mail over the course of a week, id. at 79, and the contributions that supported the mailings, were "the product of employer solicitations and/or employer-created schemes to inject employer and IBT funds into the Carey Campaign, as well as to induce individuals to contribute through the improper manipulation of IBT spending." Id. at 96.

Election Officer Quindel concluded that "[t]he Carey Campaign and each member of the Carey slate violated Article XII, Section 1(b) of the Rules by receiving the use and benefit of the prohibited contributions." Id. at 98. Based on these findings, she determined that these impermissible campaign contributions may have affected the outcome of the races of every member of the Carey slate nationwide. Thus, she issued her decision refusing to certify the results of the 1996 Election and ordering a new election for all positions except for those won by the Hoffa slate, and the President of Teamsters Canada, an uncontested race. Id. at 114-15.

Election Officer Quindel further determined, based on the evidence available to her at that time, that (1) individuals working on the Carey campaign were responsible for soliciting these improper contributions and (2) Carey himself did not have knowledge of, or involvement in, these violations. Notwithstanding the latter determination, Election Officer Quindel stated that "[i]f, subsequent to the issuance of this decision, evidence is brought to the Election Officer's attention that could warrant disqualification of Mr. Carey ... the Election Officer will consider it." Id. at 119.

Additional evidence did come to light after Election Officer Quindel's decision of August 21, 1997. On September 18, 1997, Jere Nash ("Nash"), Martin Davis ("Davis"), and Michael Ansara ("Ansara"), each pled guilty in the United States District Court for the Southern District of New York to felonies arising out of their conduct on behalf of the Carey campaign.¹ As part of their respective plea agreements, Nash, Davis, and Ansara each agreed to cooperate fully with the United States Attorney's Office.

Based on this new information, Election Officer Quindel reopened her investigation into whether Carey had knowledge of, or involvement in, the illegal acts perpetrated by these three individuals. However, during the course of her inquiry, Election Officer Quindel discovered information which led her to recuse herself from any further investigation. See Letter from Barbara Zack Quindel, Election Officer for IBT, to Honorable David N. Edelstein (Sept. 23, 1997). Thus, by Order dated September 29, 1997, this Court designated Honorable Kenneth Conboy as Election Officer "for the sole purpose of investigating and deciding the issue of disqualification of Ronald Carey from the rerun election" (the "Election Officer"). See September 29, 1997 Order at 2.

After a comprehensive investigation, by decision dated November 17, 1997, the Election Officer found that Carey had knowledge of and engaged in extensive violations of the Rules governing the 1996 election. See In re: Jeraldine Cheatem, et al., Post-27-EOH (KC) (Nov. 17, 1997) (Carey Disqualification Decision) ("Cheatem, (Carey Disqualification Decision)"). Based on these findings, the Election Officer disqualified Carey from running as a candidate in the rerun election.

On December 2, 1997, Carey filed with this Court an appeal of the Election Officer's decision disqualifying him from running as a candidate in the rerun election. Additionally, the Hoffa slate filed an appeal requesting an order requiring members of the Carey slate, jointly and severally, to repay the improper campaign contributions identified in the Election Officer's decision, and an order disqualifying the entire Carey slate from the rerun election.

DISCUSSION

In his appeal to this Court Carey makes three arguments. First, he charges that he was denied due process because he was not afforded a hearing before the Election Officer. Appeal of Ron Carey from the November 17, 1997 Decision of the Election Officer ("Carey Br.") at 19-41. Second, he argues that the Election Officer should have credited his testimony over that of his campaign manager, his personal secretary, and the IBT's Director of Government Affairs. Carey Br. at 11-18. Finally, he asserts that, notwithstanding the Election Officer's findings, disqualification is an inappropriate remedy. Id. at 75. Each of these arguments is addressed below.

I. DUE PROCESS & LMRDA

Carey argues that by not holding a hearing, the procedures followed by the Election Officer failed to satisfy the Due Process Clause of the United States Constitution, and section 101(a)(5) of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 401 et seq. (the "LMRDA"). See Carey Br. at 18-41. In response, the Government and the Election Officer assert that "the Election Officer's disqualification decision implicates neither the Due Process Clause nor the LMRDA," and thus Carey was not entitled to a hearing before the Election Officer. Letter from Karen Konigsberg, Assistant United States Attorney, to Honorable David N. Edelstein (Dec. 18, 1997) ("Konigsberg Letter") at 12; Election Officer's Statement Regarding the Appeal of Ronald Carey from the November 17, 1997 Decision of the Election Officer ("EO Br.") at 11-19.

A. DUE PROCESS

Due process protections apply only to government action, and not to that of private parties. United States v. IBT ("Senese"), 941 F.2d 1292, 1295 (2d Cir.1991). "[A] litigant claiming that his constitutional rights have been violated must first establish that the challenged conduct constitutes `state action.'" Id. In order to qualify as state action, "the conduct in question `must be caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible' and `the party charged with the [conduct] must be a person who may fairly be said to be a state actor.'" Id., at 1296 (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2753-54, 73 L.Ed.2d 482 (1982)).

This Court and the Second Circuit have held that the Election Officer is not a state actor. United States v. IBT ("Star Market"), 954 F.2d 801, 806-07 (2d Cir.1992); See also, United States v. IBT ("1996 Election Rules Order"), 896 F.Supp. 1349, 1363 (S.D.N.Y.1995), aff'd as modified, 86 F.3d 271 (2d Cir.1996); United States v. IBT, No. 86 Civ. 4486, 1991 WL 334242, *11 (S.D.N.Y. Nov.19, 1991).² Carey's assertion, that a number of factors require this Court to reach a different result this time, is without merit.

In arguing that the Election Officer is a state actor, Carey first stresses that the Election Officer "was compensated by the federal government." Carey Br. at 22. He further argues that the Election Officer is a state actor because the...