U.S. v. Local 30, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Ass'n, s. 88-1508

• Decision Date: 23 March 1989
• Docket Number: Nos. 88-1508,88-1620,s. 88-1508
• Citation: 871 F.2d 401
• Parties: 130 L.R.R.M. (BNA) 3058, 111 Lab.Cas. P 11,091 UNITED STATES of America v. LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, Residential Reroofers Local 30B, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, Stephen Traitz, Jr., Edward P. Hurst, Michael Mangini, Robert Crosley, Michael Daly, Daniel Cannon, Mark Osborn, Robert Medina, Ernest Williams, James Nuzzi, Stephen Traitz, III, Joseph Traitz, Richard Schoenberger. Appeal of LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION and Residential Reroofers, Local 30B, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, Appellants.
• Court: U.S. Court of Appeals — Third Circuit

Page 401

871 F.2d 401

130 L.R.R.M. (BNA) 3058, 111 Lab.Cas. P 11,091

UNITED STATES of America v. LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, Residential Reroofers Local 30B, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, Stephen Traitz, Jr. Edward P. Hurst, Michael Mangini, Robert Crosley, Michael Daly, Daniel Cannon, Mark Osborn, Robert Medina, Ernest Williams, James Nuzzi, Stephen Traitz, III, Joseph Traitz Richard Schoenberger Appeal of LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION and Residential Reroofers, Local 30B, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, Appellants.

Nos. 88-1508, 88-1620.

United States Court of Appeals Third Circuit.

Argued Dec. 2, 1988.

Decided March 23, 1989.

Richard H. Markowitz (argued), Stephen C. Richman, Markowitz & Richman, Philadelphia, Pa., for appellants.

Thomas H. Lee, II, Acting U.S. Atty., Walter S. Batty, Asst. U.S. Atty., Catherine Votaw (argued), Asst. U.S. Atty., Philadelphia, Pa., for appellee.

Before SEITZ, STAPLETON, and COWEN, Circuit Judges.

OPINION OF THE COURT

SEITZ, Circuit Judge.

Appellants Local 30, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association and Residential Reroofers Local 30B, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association ("the Roofers Union" or "appellants") appeal, at No. 88-1508, the district court's order granting the government's motion for a preliminary injunction. They also appeal, at No. 88-1620, the district court's order converting without objection the preliminary injunction into a final decree. The district court had jurisdiction under 28 U.S.C. Sec. 1331 and 18 U.S.C. Sec. 1964.

The appeal of the order granting a preliminary injunction, at No. 88-1508, is moot. Once the order granting the permanent injunction was entered, the order granting the preliminary injunction merged with it, and appeal is only proper from the order granting the permanent injunction. See Securities & Exchange Commission v. First Financial Group of Texas, 645 F.2d 429, 433 (5th Cir.1981). However, we have jurisdiction over No. 88-1620 under 28 U.S.C. Sec. 1291. The fact that the district court retained jurisdiction in this case to provide such further relief as might be necessary to effectuate the permanent injunction does not deprive the district court's order of its finality under Sec. 1291. See Securities & Exchange Commission v. Suter, 832 F.2d 988, 990 (7th Cir.1987).

I.

This appeal was taken after lengthy civil proceedings in the district court brought by the United States against the Roofers Union and thirteen of its leaders under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Secs. 1961-1968 (RICO). The facts as found by the district court are set forth in great detail in the district court's opinion at 686 F.Supp. 1139 (E.D.Pa.1988) and are not challenged as clearly erroneous by the parties to this appeal.

The government's civil complaint, filed in December 1987, alleged that the thirteen individual defendants violated 18 U.S.C. Sec. 1962(c) ¹ by conducting the affairs of the Roofers Union through a pattern of racketeering (Count One) and violated 18 U.S.C. Sec. 1962(d) ² by conspiring to participate in and conduct the affairs of the Roofers Union through a pattern of racketeering (Count Two). The government prayed for preliminary and permanent injunctive relief in order to bar the individual defendants from participating in the affairs of the Roofers Union and to appoint a trustee pendente lite to discharge all duties of the Roofers Union's officers until an election of new officers could be held.

After conducting an evidentiary hearing, the district court granted in part the government's motion for a preliminary injunction. The district court denied the government's request for the appointment of a trustee pendente lite and to set aside the December 1987 election of new Roofers Union officers. ³ However, the district court enjoined the individual defendants from participating in the Union's affairs and from continuing to be employed in the construction industry within the Union's jurisdiction.

The district court also imposed a "decreeship" against the Roofers Union and appointed a "court liaison officer" as the principal enforcement officer of the decree. The decree provided, inter alia, (1) that the Roofers Union develop a grievance/arbitration procedure for resolving contractual disputes between the Union and employers, (2) that an audit of the Roofers Union and its affiliated entities ⁴ be conducted, (3) that the district court "establish direct control of all matters within the jurisdiction of the Union that require expenditure of any funds of the Union" or its affiliated entities, (4) that all face-to-face collective bargaining agreement negotiations between Union representatives and any other person take place under the supervision of the court liaison officer, and (5) that all Union records be made available to the court liaison officer.

After the district court converted the preliminary injunction into a "final decree," the Roofers Union timely filed a notice of appeal. The individual defendants did not appeal the district court's orders.

II.

Appellants challenge both the district court's authority under 18 U.S.C. Sec. 1964(a) to enter the decree against the Roofers Union and the terms of the decree itself. In considering appellants' claims, we review the district court's grant of injunctive relief under the abuse of discretion standard. John F. Harkins Co. v. Waldinger Corp., 796 F.2d 657, 658 (3d Cir.1986). The district court's findings of fact are reviewed under the clearly erroneous standard, and its legal conclusions are subject to plenary review. See e.g., International Union, UAW v. Mack Trucks, Inc., 820 F.2d 91, 95 (3d Cir.1987).

A. The Authority to Grant Injunctive Relief

We first address the district court's authority to impose the decree against the Roofers Union. 18 U.S.C. Sec. 1964(a) provides

The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for the rights of innocent persons.

In enacting Sec. 1964(a) Congress intended to give the district court expansive authority to remedy RICO violations. See United States v. Local 560 of the International Brotherhood of Teamsters, 780 F.2d 267, 295 (3d Cir.1985). As the House Report which accompanied the proposed RICO legislation states, "[Section 1964(a) ] contains broad provisions to allow for reform of corrupted organizations." H.R.Rep. No. 91-1549, 91st Cong., 2nd Sess. 2, reprinted in 1970 U.S.Code Cong. & Ad.News 4007, 4034. In addition, the Supreme Court has instructed that

RICO is to be read broadly. This is the lesson not only of Congress' self-consciously expansive language and overall approach, but also of its express admonition that RICO is to "be liberally construed to effectuate its remedial purposes"

Sedima v. Imrex Co. Inc., 473 U.S. 479, 497-98, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985) (citations omitted). It is in light of the unambiguous language of Sec. 1964(a) and the admonitions to construe RICO's provisions broadly that we consider appellants' contentions regarding the district court's authority to impose a decree against the Roofers Union.

First, relying on Petro-Tech, Inc. v. Western Company of North America, 824 F.2d 1349 (3d Cir.1987), appellants argue that since the Union was found to be the underlying RICO enterprise, it is improperly named as a defendant in this action and cannot be liable for the acts of the individual defendants, who were found liable as the RICO "persons" under Sec. 1962(c). We view appellants' reliance on our decision in Petro-Tech as unavailing. In Petro-Tech we held that "a corporation which is alleged to be a RICO enterprise under 18 U.S.C. Sec. 1962(c) cannot be held vicariously liable for RICO violations committed by its employees if the employees are the 1962(c) persons named in the complaint as having conducted the affairs of the enterprise through a pattern of racketeering activity." Petro-Tech, 824 F.2d at 1351. We based our holding in Petro-Tech on the rationale that imposing liability on the Sec. 1962(c) enterprise would disrupt the intended operation of Sec. 1962(c) by making liable the victim of racketeering activity, namely the Sec. 1962(c) enterprise. Id. at 1359. See also Hirsch v. Enright Refining Co., 751 F.2d 628 (3d Cir.1984).

However, Petro-Tech, and the cases upon which it relied, involved claims for damages to third parties under 18 U.S.C. Sec. 1964(c) and did not entail subjecting the enterprise to an equitable remedy under Sec. 1964(a). See Petro-Tech v. Western Co. of North America, No. 85-308 Erie slip op. at 5 (W.D.Pa. May 29, 1986), aff'd in part, rev'd in part, Petro-Tech, 824 F.2d 1349 (3d Cir.1987); B.F. Hirsch v. Enright Refining Co., 577 F.Supp. 339 (D.N.J.1983), aff'd in part, vacated in part, B.F. Hirsch, 751 F.2d 628 (3d Cir.1984); Haroco v. American National Bank and Trust Co. of Chicago, 747 F.2d 384 (7th Cir.1984). Petro-Tech's concern that a corporation victimized by the racketeering activities of its own employees should not be liable, under Sec. 1964(c), for damages to third parties is not implicated here. This...