Williams v. Poulos
| Decision Date | 04 August 1993 |
| Docket Number | Nos. 93-1366,s. 93-1366 |
| Citation | 11 F.3d 271 |
| Parties | George C. WILLIAMS, et al., Plaintiffs, Appellants, v. Richard E. POULOS, et al., Defendants, Appellees. George C. WILLIAMS, et al., Plaintiffs, Appellees, v. Richard E. POULOS, et al., Defendants, Appellees, Ralph A. Dyer, Intervenor, Appellant. George C. WILLIAMS, et al., Plaintiffs, Appellees, v. Richard E. POULOS, et al., Defendants, Appellees, Rodney P. Rodrigue, Defendants, Appellants. George C. WILLIAMS, et al., Plaintiffs, Appellees, v. Richard E. POULOS, et al., Defendants, Appellants. - 93-1368, 93-1680. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Allen S. Rugg, with whom Ronald R. Massumi, Kutak, Rock & Campbell, Washington, DC, John S. Whitman, Richardson & Troubh, Portland, ME, were on brief, for plaintiffs-appellants George C. Williams, Allied Capital Corp., Allied Inv. Corp., Allied Venture Partnership, Allied Capital Corp. II, David P. Parker, David Gladstone, Brooks H. Browne, Frederick L. Russell, Jr., and Thomas R. Salley, E. Stephen Murray, with whom Murray, Plumb & Murray, Portland, ME, were on brief, for intervenor-appellant Ralph A. Dyer.
John A. McArdle, III, with whom Daniel G. Lilley and Daniel G. Lilley Law Offices, P.A., Portland, ME, were on brief, for defendants/appellees/cross-appellants Rodney P. Rodrique, Wayne E. Bowers, Sr. and John Robichaud.
Peter J. DeTroy, III, with whom Norman, Hanson & DeTroy, Portland, ME, were on brief, for defendants/appellees/cross-appellants Richard E. Poulos, John S. Campbell and Poulos & Campbell, P.A.
Before SELYA and STAHL, Circuit Judges, and FUSTE, * District Judge.
Following a six-day civil bench trial, the district court ruled that the former principal Each of the three sides to this controversy has appealed from various rulings made by the district court. Both the CAR defendants and the Poulos defendants challenge sundry factual findings and legal judgments, arguing essentially that their respective actions did not run afoul of Title III and the Maine anti-wiretap statute. Plaintiffs' primary claim is that the court's injunction does not sufficiently remedy the harm they have suffered and are continuing to suffer. After carefully reviewing the record and the parties' arguments, we affirm the judgment below.
owners of Consolidated Auto Recyclers, Inc. ("CAR"), defendants Wayne Bowers, Rodney Rodrigue, and John Robichaud (hereinafter "the CAR defendants"), violated the federal and Maine anti-wiretap statutes when they intercepted and recorded telephone calls made by and to plaintiffs, who were employees or former employees of Allied Capital Corporation ("Allied") and certain of its subsidiaries and affiliates. 1 See 18 U.S.C. Sec. 2511(1)(a) and 15 M.R.S.A. Sec. 710(1). 2 The court also held that counsel retained by the CAR defendants, defendants Richard E. Poulos and the law firm of Poulos, Campbell & Zendzian, P.A. (hereinafter "the Poulos defendants"), violated 18 U.S.C. Sec. 2511(1)(c) and (d) and 15 M.R.S.A. Sec. 710(3)(A) and (B) when they disclosed and used the recordings of the telephone calls at issue with the requisite mens rea. 3 As a result, the court enjoined all defendants "from further using and disclosing information contained in the subject interceptions except to obtain rulings regarding admissibility in [an] underlying suit [brought by the CAR defendants against plaintiffs]." 4 See 18 U.S.C. Sec. 2520. 5
The following detailed recitation is derived from the factual findings made by the district This case is but one in a series of civil lawsuits and bankruptcy proceedings which can be traced to the collapse of CAR. CAR was founded in 1988 in order to dismantle automobiles and resell used parts. By May 1990, CAR employed approximately one hundred and forty people and operated throughout New England and in the Atlantic provinces of Canada. Twenty people worked in CAR's East Vassalboro, Maine, headquarters, including Bowers, Rodrigue, and Robichaud, the CAR defendants. These three owned 95% of CAR's stock and were members of CAR's Board of Directors ("the Board"). In addition, Bowers was CAR's Chief Executive Officer ("CEO") and Treasurer, while Rodrigue served as CAR's President.
court in conjunction with Allied's motion for preliminary injunctive relief, see Williams v. Poulos, 801 F.Supp. 867, 868-72 (D.Me.1992) ("Poulos I"), and after the conclusion of the bench trial. See Williams v. Poulos, Civ. No. 92-0069-B, slip op. at 3-10 (D.Me. February 4, 1993) ("Poulos II "). 6
To finance its early growth and operations, CAR developed a banking relationship with Casco Northern Bank. In February 1990, Casco Northern refused to increase CAR's lines of credit. As a result, CAR found itself in a serious financial bind because it had already spent the additional money it expected to receive. Accordingly, CAR turned to Allied, a venture capital firm which had previously invested in it. Allied responded with a large infusion of capital that raised its total investment in CAR to approximately $4,500,000.
Despite this additional funding, CAR was unable to resolve its financial difficulties. On May 29, 1990, Casco Northern declared CAR in default on its obligations. Two days later, Allied followed suit. On June 28, 1990, in an attempt to resolve the crisis, the CAR defendants entered into an agreement with Allied which came to be known as the "Midnight Agreement." Under its terms, Ralph A. Dyer was made CAR's CEO and Chairman of the Board, three representatives of Allied, plaintiffs George C. Williams, David Gladstone, and Frederick Russell, Jr., became members of the Board, and David Parker became an officer. The Agreement also provided that the CAR defendants would remain on the Board, that Bowers would retain his position as Treasurer, and that Rodrigue would continue as President.
Meanwhile, in May 1990, the CAR defendants had commissioned Michael Leighton, who owned Probe Investigating Service, Inc. ("Probe"), to provide a system for electronically monitoring employee phone calls. 7 The CAR defendants felt that a surveillance system was needed (1) to reduce CAR's telephone bills, and (2) decrease employee theft. At the time they installed the system, the CAR defendants apparently received impromptu advice from Attorney Nicholas Lanzilotta that "monitoring would not be illegal if notice was first given to the monitored employees."
After examining CAR's telephone system, Leighton concluded that he lacked the skill and expertise to create an appropriate monitoring system. He therefore sought assistance from Jonathan Broome. Broome's principal business was repairing consumer electronics; he was not an authorized telephone system technician. Although Broome considered the project to be unusual, Leighton assured him of its legality.
On or about June 17, 1990, Broome, working after hours along with CAR security officer David Fisher, installed a custom-designed monitoring system 8 in CAR's East Vassalboro headquarters. In its findings of fact, the district court described the system as follows:
The system ... consisted of small alligator clips attached to a microphone cable at one end and a "punch-down" at the other. The wires to all the extension lines in CAR's offices were assembled on the punch-down. Calls could be intercepted by attaching the alligator clips and microphone wire to a designated extension line on the punch-down. The system could only monitor one extension at a time.
The monitoring system designed by Broome also involved an interface connecting the microphone cable to a VCR and a video camera. The VCR allowed the system to record calls for up to eight hours. The video camera recorded the view meter on the VCR, allowing a person to fast forward the VCR tape until the meter indicated the presence of audio information. The VCR, video camera and interface were mounted together on a plywood board and set up in an unused bathroom next to the area containing the punch-down. Connecting wires were run through and over a suspended ceiling.
Poulos II, slip op. at 4-5.
At some point in June 1990, Rodrigue informed the managers at CAR that all telephone calls at CAR's offices would be subject to random monitoring and recording. He also instructed the managers to inform their subordinates of the new monitoring policy. At about the same time, Rodrigue directed employees to record long distance phone calls on provided telephone logs. The employees were told that the logging system was to be used in conjunction with the monitoring system to reduce costs. On June 29, 1990, Rodrigue told the new CEO, Dyer, that CAR had a system in place to deter employee phone abuse by randomly monitoring employee phone calls.
David Fisher learned how to operate the monitoring system. At first, he was instructed by the CAR defendants to monitor the extension lines randomly. After a short time, however, the CAR defendants told him which lines to intercept. Fisher was further instructed to deliver the tapes of recorded conversations to Wayne Bowers each day. Bowers then made cassette tapes of those telephone conversations he wished to save.
On June 21, 1990, Fisher was instructed to monitor the telephone line of CAR Chief Financial Officer Richard Lee, who had been hired on Allied's recommendation. Apparently, Rodrigue and Bowers doubted Lee's loyalty to CAR. A few weeks later, however, the monitoring system was attached to the phone line of Jim Starr, an accountant from an outside firm who had been assigned to audit CAR. The CAR defendants suspected that Starr was misusing the telephone system.
During this same general time period, Dyer's relationship with the CAR defendants, which had been strained from the beginning, was rapidly deteriorating. By July 10, 1990, Rodrigue and Robichaud were openly feuding with him. On July 12, 1990, Dyer fired Rodrigue and Robichaud. About a week after the firing, Dyer...
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