Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639

• Decision Date: 04 September 1990
• Docket Number: Nos. 86-5135,86-5136,s. 86-5135
• Citation: 286 U.S.App.D.C. 182,913 F.2d 948
• Parties: 135 L.R.R.M. (BNA) 2177, 286 U.S.App.D.C. 182, 59 USLW 2177, 116 Lab.Cas. P 10,275, RICO Bus.Disp.Guide 7554 YELLOW BUS LINES, INC., Appellant, v. DRIVERS, CHAUFFEURS & HELPERS LOCAL UNION 639, et al. James F. WOODWARD v. Michael DiPALERMO, et al. Maria Triggs, Secretary/Treasurer, Yellow Bus Lines, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 948

913 F.2d 948

135 L.R.R.M. (BNA) 2177, 286 U.S.App.D.C.

182, 59 USLW 2177,

116 Lab.Cas. P 10,275, RICO Bus.Disp.Guide 7554

YELLOW BUS LINES, INC., Appellant, v. DRIVERS, CHAUFFEURS & HELPERS LOCAL UNION 639, et al.

James F. WOODWARD v. Michael DiPALERMO, et al.

Maria Triggs, Secretary/Treasurer, Yellow Bus Lines, et al.,

Appellants.

Nos. 86-5135, 86-5136.

United States Court of Appeals, District of Columbia Circuit.

Argued May 9, 1990.

Decided Sept. 4, 1990.

Appeal from the United States District Court for the District of Columbia (Civil Action Nos. 82-03154, 83-01232).

Thomas G. Corcoran, Jr., with whom Henry M. Lloyd, Washington, D.C., was on brief, for appellants in No. 86-5135 and No. 86-5136.

John R. Mooney, with whom Hugh J. Beins, Washington, D.C., was on brief, for appellees in both cases.

Robert M. Weinberg, Lawrence Gold, Jack Levine and George Kaufmann, Washington, D.C., were on brief, for amicus curiae, urging that the panel's decision be reversed and the District Court ruling be reinstated and affirmed.

Before WALD, Chief Judge, and MIKVA, EDWARDS, RUTH B. GINSBURG, SILBERMAN, BUCKLEY, WILLIAMS, D.H. GINSBURG, SENTELLE, and THOMAS, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

Concurring opinion filed by Circuit Judge MIKVA.

SENTELLE, Circuit Judge:

In 18 U.S.C. Sec. 1962(c), the Racketeer Influenced and Corrupt Organizations Act ("RICO") makes it "unlawful for any person employed by or associated with any enterprise engaged in ... interstate ... commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity." In this case, the issue is: Does a union merely by conducting a recognition strike against an employer "conduct or participate, directly or indirectly, in the conduct of" the employer's affairs within the meaning of section 1962(c)? Our answer is that it does not. In reaching that conclusion, we examine the breadth of the "participation" element of the statutory cause of action under civil RICO.

I. BACKGROUND

A. The Statute

In 1970, Congress enacted RICO as Title IX of the Organized Crime Control Act of 1970, Pub.L. No. 91-452, 84 Stat. 941. RICO is codified at 18 U.S.C. Secs. 1961-68. Although codified in Title 18, Crimes and Criminal Procedure, the RICO statute also establishes civil remedies in section 1964. That section provides in pertinent part that

[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.

18 U.S.C. Sec. 1964(c).

Thus, although section 1964 creates the civil remedy, it is to section 1962 that we must look for the substantive law underlying the civil claim. In the present action, the claim arises under subsection (c) of section 1962 It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

18 U.S.C. Sec. 1962(c). ¹

To make out a claim for relief "a civil RICO claimant must prove (1) a violation of the substantive RICO statute, 18 U.S.C. Sec. 1962, and (2) an injury to the plaintiff's 'business or property by reason of a violation of section 1962.' " Alcorn County, Miss. v. U.S. Interstate Supplies, Inc., 731 F.2d 1160, 1167 (5th Cir.1984). Thus, in addition to the element of injury, a civil RICO plaintiff making a claim under subsection (c) must prove:

(1) the existence of an enterprise which affects interstate or foreign commerce;

(2) that the defendant was "employed by" or "associated with" the enterprise;

(3) that the defendant participated in the conduct of the enterprise's affairs; and

(4) that the participation was through a pattern of racketeering activity....

Id. at 1168 (internal brackets omitted) (citing United States v. Phillips, 664 F.2d 971, 1011 (5th Cir. Unit B 1981)). ²

In the present en banc review, we address the scope of the third or "participation in the conduct of affairs" element. ³

B. The Litigation

The factual background of this litigation is set forth in some detail in the two panel opinions previously issued in the case. Yellow Bus Lines, Inc. v. Local Union 639, 839 F.2d 782 (D.C.Cir.1988), vacated, --- U.S. ----, 109 S.Ct. 3235, 106 L.Ed.2d 583 (1989) (Panel Op. I); Yellow Bus Lines, Inc. v. Local Union 639, 883 F.2d 132 (D.C.Cir.1989), reh'g granted (Oct. 17, 1989) (Panel Op. II). We will not detail those facts unrelated to the issue before the en banc Court, but a brief review is necessary to provide a context for our decision.

This litigation arose out of events surrounding a four-day strike for recognition conducted by Local Union 639 ("the Union") against Yellow Bus Lines, Inc. ("Yellow Bus" or "the bus line") in 1981. Yellow Bus asserted a number of claims, most of them nonfederal tort matters. We do not address those nonfederal causes of action as an en banc Court, but leave intact the dispositions entered by the panel opinions cited above. In the claims we examine in the present review, Yellow Bus alleged violations of RICO, 18 U.S.C. Secs. 1962(c) & (d), by the Union and its business agent and trustee James Woodward.

The bus line's original RICO complaint alleged that defendants Union and Woodward constituted "an enterprise" within the meaning of section 1962. The District Court, in an order of June 1, 1984, supported by a memorandum of June 28, 1984, dismissed the RICO action against the Union. The District Court reasoned:

The language of Sec. 1962 clearly contemplates the interaction of a person and an enterprise, both separately defined by the Act. RICO prohibits any person employed by or associated with an enterprise, from participating in the conduct of such enterprise through a pattern of racketeering activity. RICO does not hold the enterprise ... liable, but only those persons who seek to participate in the affairs of the enterprise through a pattern of racketeering activity.... The language of RICO has been found to be ambiguous on other issues, but we find this language is clear and that our interpretation is supported by the case law.

Yellow Bus Lines, Inc. v. Local Union 639, No. 83-1232, slip op. at 8, 1984 WL 2915 (D.D.C. June 28, 1984) ("Memorandum of June 28") (quoting Bays v. Hunter Savings Assoc., 539 F.Supp. 1020, 1023-24 (S.D.Ohio 1982)).

Each of our panel opinions has affirmed that decision of the District Court, reasoning, inter alia:

Logic alone dictates that one entity may not serve as the enterprise and the person associated with it because, as Judge Posner of the Seventh Circuit has stated, "you cannot associate with yourself."

Panel Op. I, 839 F.2d at 790 (quoting McCullough v. Suter, 757 F.2d 142, 144 (7th Cir.1985)); Panel Op. II, 883 F.2d at 139 (same). This nonidentity between the "person" liable as a RICO defendant, and the "enterprise" in whose affairs the person has participated has been required by a nearly unanimous majority of courts that have considered the question (see cases collected in Panel Op. I, 839 F.2d at 790, and Panel Op. II, 883 F.2d at 139), although the Eleventh Circuit may constitute a minority of one to the contrary. See United States v. Hartley, 678 F.2d 961, 989-90 (11th Cir.1982), cert. denied, 459 U.S. 1170, 103 S.Ct. 815, 74 L.Ed.2d 1014 (1983). As with the claims decided under the District Court's pendent jurisdiction, the en banc Court leaves the panel reasoning undisturbed as to the nonidentity requirement.

Although dismissing the RICO action against the Union, the District Court initially permitted the RICO action to continue against Woodward. The court reasoned that "the 'enterprise' ... is properly viewed as Local 639," Memorandum of June 28 at 10, and Woodward served as the "person" or defendant who participated in the enterprise's affairs under section 1962(c). Subsequently the District Court allowed summary judgment in favor of Woodward on the RICO claim on other grounds explained in a memorandum of October 29, 1984. In that memorandum, the District Court followed the reasoning of the Second Circuit in Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482 (2d Cir.1984), rev'd, 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985), that a distinct "RICO injury," different in kind from injury resulting in normal course from predicate acts, was required for a civil RICO action. Between the time of the District Court's entry of summary judgment and our panel's review, the Supreme Court handed down its decision reversing the Second Circuit in Sedima. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). Therefore, our panel reversed the District Court's grant of summary judgment as to the RICO claim against Woodward and remanded the case for trial. Panel Op. I, 839 F.2d at 789; Panel Op. II, 883 F.2d at 139. Again we leave this portion of the panel's decision undisturbed.

The question which does command the attention of this en banc Court relates to a motion by Yellow Bus to amend its complaint to name itself, Yellow Bus Lines, Inc., as the enterprise with which Local 639 as person or defendant was associated, and in the conduct of whose affairs that defendant participated by a pattern of racketeering activity. The District Court denied Yellow Bus's motion, reasoning that "the union's acts were not committed in the conduct of Yellow Bus' affairs; Yellow Bus was, if anything, merely the 'setting' for the union's activities." Memorandum of June 28 at 10 n. 5. On appeal, the panel reversed this ruling, concluding that the District Court erroneously applied an "overly restrictive" interpretation of the...