U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc.

• Decision Date: 11 January 1995
• Docket Number: Docket No. 94-6278
• Citation: 44 F.3d 1082
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. PRIVATE SANITATION INDUSTRY ASSOCIATION OF NASSAU/SUFFOLK, INC., et al., Defendants, Nicholas Ferrante, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

Page 1082

44 F.3d 1082

UNITED STATES of America, Plaintiff-Appellee, v. PRIVATE SANITATION INDUSTRY ASSOCIATION OF NASSAU/SUFFOLK INC., et al., Defendants Nicholas Ferrante, Defendant-Appellant.

Docket No. 94-6278.

United States Court of Appeals Second Circuit.

Argued Nov. 29, 1994.

Decided Nov. 30, 1994.

Opinion Filed Jan. 11, 1995.

Christopher G. Lehmann, Asst. U.S. Atty., E.D.N.Y., Brooklyn, NY (Zachary Carter, U.S. Atty., of counsel), for plaintiff-appellee.

Paul A. Batista, New York City, for defendant-appellant.

Before: MAHONEY, McLAUGHLIN, and HEANEY, ^* Circuit Judges.

MAHONEY, Circuit Judge:

Defendant-appellant Nicholas Ferrante moves this court for a stay pending appeal and an expedited appeal of a judgment entered October 18, 1994 in the United States District Court for the Eastern District of New York, I. Leo Glasser, Judge, that granted summary judgment and injunctive relief in favor of the United States on a civil complaint alleging a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1961 et seq. On November 30, 1994, we denied the motion for a stay and granted the motion for an expedited appeal, indicating that this opinion supporting our decision would follow.

Ferrante is one of many defendants, including various organized crime families, labor unions, and private sanitation companies, named in a complaint alleging a massive conspiracy to control the solid waste disposal industry on Long Island through the use and threatened use of force in violation of RICO. See United States v. Private Sanitation Indus. Ass'n, 793 F.Supp. 1114, 1121-23 (E.D.N.Y.1992) (describing alleged conspiracy in detail).

This appeal stems from the district court's grant of summary judgment against Ferrante. See United States v. Private Sanitation Indus. Ass'n, No. CV-89-1848, slip op. (E.D.N.Y. October 13, 1994). Ferrante had pled guilty in the Supreme Court of the State of New York to coercion in the first degree, in violation of New York Penal Law Sec. 135.65(1), for threatening certain private contractors with damage to their property if they bid for waste disposal work. Id. at 2-3. The district court held that the conduct underlying this conviction, as established in Ferrante's plea allocution, was clearly indictable under the Hobbs Act, 18 U.S.C. Sec. 1951, and was therefore a RICO predicate act under 18 U.S.C. Sec. 1961(1)(B). Slip op. at 9-10.

In addition, the government alleged that Ferrante had bribed officials at the Oyster Bay dump in order to receive a reduction in the amount of money that his companies were required to pay for use of the town's refuse disposal services. Id. at 10-11. The government submitted three affidavits by former Oyster Bay employees in support of this claim. Id. at 11. Ferrante's only response was an affidavit by his son that to the best of the son's knowledge, Ferrante had not paid any bribes. Because this statement was not based upon personal knowledge, it did not suffice to create an issue of fact precluding summary judgment. See Gatling v. Atlantic Richfield Co., 577 F.2d 185, 188 (2d Cir.) (per curiam), cert. denied, 439 U.S. 861, 99 S.Ct. 181, 58 L.Ed.2d 169 (1978); cf. Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 643 (2d Cir.1988) (motion for summary judgment must be supported by affidavit based upon personal knowledge); United States v. Bosurgi, 530 F.2d 1105, 1111 (2d Cir.1976) (same). Further, Ferrante asserted his Fifth Amendment privilege against self-incrimination in response to deposition questions concerning these alleged bribe payments. Id. The district court found, based upon this invocation and the essentially uncontroverted evidence submitted by the government, that Ferrante had clearly committed bribery in violation of New York State Penal Law Sec. 200.00, a RICO predicate act under 18 U.S.C. Sec. 1961(1)(A). Slip op. at 11-12.

Finally, the district found no material dispute of fact that these acts were sufficiently related to constitute a pattern, id. at 12-13, and that Ferrante was sufficiently involved in the Private Sanitation Industry Association, the RICO enterprise, to be subject to RICO liability. Id. at 13-15.

Having determined that the government was entitled to summary judgment with respect to liability, the court enjoined Ferrante from participating in the waste disposal business, violating RICO, and associating with his codefendants for any commercial purpose, and ordered him to divest his interests in various enterprises and to disgorge the proceeds derived from his unlawful conduct into a court-administered fund. Id. at 15-17. Ferrante appealed and filed the motion to which this opinion responds.

A party seeking a stay of a lower court's order bears a difficult burden. We consider (1) whether the movant will suffer irreparable injury absent a stay; (2) whether a party will suffer substantial injury if the stay is granted; (3) whether the movant has established a substantial possibility, which need not be a likelihood, of appellate success; and (4) the public interest. Hirschfeld v. Board of Elections, 984 F.2d 35, 39 (2d Cir.1992) (collecting cases).

There is no basis for a stay in this case. Ferrante points to no material issue of fact to establish a substantial possibility that the district court's summary judgment regarding liability will be reversed on appeal. Indeed, we affirmed the district court's grant of summary judgment and imposition of identical injunctive relief with respect to Ferrante's codefendant, Salvatore Avellino, Jr., in United States v. Private Sanitation Industry Ass'n, 995 F.2d 375, 377-78 (2d Cir.1993) (per curiam). See also United States v. Private Sanitation Indus. Ass'n, 811 F.Supp. 808, 818 (E.D.N.Y.1992) (addressing constitutionality of broad injunctive relief and specifying terms of injunctive relief against Avellino), aff'd, 995 F.2d 375 (2d Cir.1993) (per curiam). Like Ferrante, Avellino's RICO liability was based upon extortion and bribery in connection with Avellino's trash-hauling companies. Id. at 810-11. Moreover, once liability is established, the trial court has broad discretion in fashioning relief, see 995 F.2d at 377, and is explicitly authorized to "order[ ] any person to divest himself of any interest, direct or indirect, in any enterprise." 18 U.S.C. Sec. 1964(a); see also United States v. Private Sanitation Indus. Ass'n, 793 F.Supp. at 1150-52 (discussing divestiture and disgorgement as RICO remedies).

In deciding to deny Ferrante's motion for a stay, we have also considered the other factors pertinent to the issue whether to grant a stay. While Ferrante may well suffer irreparable harm from the divestiture of his companies, the interests of the government and the public in terminating the control of trash handling on Long Island by criminal conspirators weigh heavily against granting a stay. Because of the scope of the relief ordered against Ferrante, however, his appeal will be heard on an expedited basis, and arrangements have been made by the parties with staff counsel regarding the details of that expedition. See order entered November 29, 1994.

HEANEY, Senior Circuit Judge, dissenting:

In my view, the quasi-criminal nature of the remedies sought by the government in this RICO action render summary judgment an inappropriate means by which to impose liability on Ferrante. I recognize, however, that this circuit has held to the contrary in United States v. Private Sanitation Indus. Ass'n, 995 F.2d 375 (2d Cir.1993) ("Avellino" ) I recognize that we are bound by that holding, but believe that this case can and should be distinguished from Avellino. While I fully accept the federal government's compelling interest in purging the Long Island private sanitation industry of organized crime, I also believe that Ferrante has met his burden of establishing a substantial possibility of success on appeal. Hirschfeld v. Board of Elections, 984 F.2d 35, 39 (2d Cir.1992). Consequently, I would concur in a stay designed both to preserve Ferrante's assets for possible future disgorgement and to delay the government from commencing disgorgement and disinvestment proceedings pending the resolution of Ferrante's appeal.

As to the appropriateness of summary judgment, I must emphasize at the outset that this is a close case. I can find little fault in the majority's identification and use of relevant case law. Nevertheless, the government's use of summary civil procedures to impose punitive sanctions for alleged criminal behavior represents a further erosion of citizens' protections in criminal proceedings, particularly in light of RICO's wide applicability outside the bounds of organized crime. My conviction that Ferrante need not be denied his day in court is reinforced by the fact that the prosecution would suffer no appreciable harm if it were required to sever Ferrante from his co-defendants and bring him individually to trial. The evident strength of the government's case against Ferrante cannot justify the circumvention of the judiciary's duty to put the government to its proofs: In a quasi-criminal RICO action, the government should be required to establish each element of liability before a trier of fact.

I. THE QUASI-CRIMINAL NATURE OF THIS ACTION

The Supreme Court has prescribed a highly deferential test to determine when an apparently civil statutory penalty is, in fact, criminal:

First, we ... set out to determine whether Congress, in establishing the penalizing mechanism, indicated either expressly or impliedly a preference for one label or the other. Second, where Congress has indicated an intention to establish a civil penalty, we ... inquire[ ] further whether the statutory scheme was so punitive in purpose or effect as to negate that intention....

United States v. Ward, 448 U.S. 242, 248-49, 100 S.Ct. 2636, 2641, 65 L.Ed.2d 742 (1980). Once determined to be criminal, actions to enforce such a statute must be accompanied by...