Young v. WEST COAST INDUST. RELATIONS ASS'N, INC.

• Citation: 763 F. Supp. 64
• Decision Date: 17 April 1991
• Docket Number: Civ. A. No. 88-692 LON.
• Parties: James C. YOUNG, et al., Plaintiffs, v. WEST COAST INDUSTRIAL RELATIONS ASSOCIATION, INC., et al., Defendants.
• Court: U.S. District Court — District of Delaware

763 F. Supp. 64

James C. YOUNG, et al., Plaintiffs, v. WEST COAST INDUSTRIAL RELATIONS ASSOCIATION, INC., et al., Defendants.

Civ. A. No. 88-692 LON.

United States District Court, D. Delaware.

April 17, 1991.

Perry F. Goldlust of Heiman, Aber & Goldlust, Wilmington, Del. (Hugh J. Beins, and John R. Mooney of Beins, Axelrod, Osborne & Mooney, Washington, D.C., of counsel), for plaintiffs.

Michael B. McCauley of Palmer Biezup & Henderson, Wilmington, Del. (Martin E. Crandall of Stringari, Fritz, Kreger, Ahearn, Hunsinger, Bennett & Crandall, Detroit, Mich., of counsel), for defendant West Coast Indus. Relations Ass'n, Inc. Robert F. Stewart, Jr., Ronald F. Kidd, Teresa N. Cavenagh of Duane, Morris & Heckscher, Wilmington, Del., for remaining defendants.

Carolyn T. Greene, U.S. Attorney's Office, Wilmington, Del. (Eric G. Moskowitz, N.L.R.B., Washington, D.C., of counsel), for intervenor N.L.R.B.

OPINION

LONGOBARDI, Chief Judge.

This is a civil action brought pursuant to Sections 1962(c) and (d) of the Racketeer Influenced and Corrupt Organizations ("RICO") provisions of United States Code, 18 U.S.C. § 1961, et seq., and tortious interference with contract rights which are grounded in Section 301 of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185, and state law.

This Court has jurisdiction pursuant to 18 U.S.C. § 1964, 28 U.S.C. § 1331, 28 U.S.C. § 1337 and under the doctrine of pendant jurisdiction. Defendants have moved for dismissal under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Intervenor, the National Labor Relations Board (the "NLRB"), has moved for a partial dismissal of Plaintiffs' complaint on the ground that, because certain allegations expressed therein are based exclusively on the protections afforded employees under Section 7 of the National Labor Relations Act, 29 U.S.C. § 157 (the "NLRA" or "Labor Act"), those allegations are preempted and not properly part of a RICO suit.

I. FACTS

Defendants NKS Distributors, Inc. ("NKS"), Century Wine & Spirits, Inc. ("Century"), Delaware Beverage Company, Inc. ("Delaware Beverage") and Standard Distributing Company ("Standard") are corporations engaged in the wholesale liquor distribution business in the State of Delaware. These Defendants are collectively referred to as the "Employers."

Defendants J. Paul Tigani, James Tigani, Sr., James Tigani, Jr., Robert Tigani, Joe Renzette and Michael Fusca are individuals who are officers, agents and/or representatives of the Employers (the "Tiganis"). Defendant West Coast Industrial Relations Association, Inc. ("WCIRA") is a California corporation engaged by the Employers as a labor relations consultant. Plaintiff Teamsters Local Union No. 326 (the "Union") is a labor organization which is the exclusive bargaining representative of individual Plaintiffs named in the complaint who are employees of the Employers.

The Union has been a party to collective bargaining agreements with each of the respective Employers for a period spanning the last twenty to thirty years. The collective bargaining agreements currently in dispute were unquestionably effective from April 1, 1985, to at least March 31, 1988. These contracts included a duration clause that provided for the renegotiation or, in the alternative, for the termination of the agreement upon sixty days notice prior to the contractual expiration date.

The parties commenced negotiations for new collective bargaining agreements on March 4, 1988. On April 1, 1988, one day after the alleged "termination" of the collective bargaining agreements in dispute, the Employers repudiated the grievance and arbitration provisions of the agreements. On September 20, 1988, the Employers unilaterally implemented their "final offer" which contained new terms and conditions of employment for their employees. The changes included wage cuts and withdrawal from the Union's health and welfare and pension plans.

On September 26, 1988, January 11, 1989, and February 10, 1989, the Union filed unfair labor practice charges against the Employers with the NLRB's Fourth Region in Philadelphia, Pennsylvania. A consolidated complaint was subsequently issued alleging that the Employers unilaterally changed terms of employment during the term of an existing agreement in violation of Sections 8(a)(1), (3) and (5) of the Labor Act, 29 U.S.C. §§ 158(a)(1), (3) and (5).¹ The complaint asserted that the collective bargaining agreements were never properly terminated, remained in effect at least through March 31, 1989, and that the Employers thus unlawfully implemented their final offer during the operational term of the agreements.

On September 20, 1989, an Administrative Law Judge ("ALJ") held that the NLRB had failed to prove that the Employers had violated Sections 8(a)(1), (3) and (5) of the Labor Act as alleged in the complaint. The ALJ based his holding on the finding that the collective bargaining agreements between the Union and each of the respective Employers terminated on March 31, 1988. As the contracts terminated on that date, the Employers did not act unlawfully when they unilaterally implemented their final offer in September.

Prior to the ALJ's decision, Plaintiffs commenced the present action by filing their initial complaint on or about December 12, 1988, amended on December 21, 1988. On January 18, 1990, the NLRB filed a motion to dismiss eight allegations of the Plaintiffs' complaint.² The NLRB contends that eight of the allegations in Plaintiffs' amended complaint are based exclusively on the protections afforded employees under Section 7 of the NLRA, 29 U.S.C. § 157, and that those allegations are preempted by and not properly part of a RICO suit. Defendants have moved to dismiss the Plaintiffs' amended complaint under Federal Rules of Civil Procedure 12(b)(1) and (6) on the grounds that Plaintiffs have failed to plead a proper RICO claim; Plaintiffs are collaterally estopped from relitigating the issues previously dismissed by the ALJ; Plaintiffs' amended complaint is preempted by the exclusive jurisdiction of the NLRB; and that the pendant state law claims must be dismissed for lack of subject matter jurisdiction.

II. DISCUSSION

A. Legal Standard

The Court, in determining a motion to dismiss for failure to state a claim upon which relief may be granted, must presume that all the factual allegations stated in the complaint are true and make all reasonable inferences in favor of the non-moving party. Miree v. DeKalb County, Georgia, 433 U.S. 25, 27 n. 1, 97 S.Ct. 2490, 2492 n. 1, 53 L.Ed.2d 557 (1976); Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3rd Cir.1989). A complaint should not be dismissed unless it can be established that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984); see also 2A Moore's Federal Practice, ¶ 12.072.-5 at 12-65 (2d ed. 1988 & supp. 1990).

The burden of demonstrating that no claim has been stated upon which relief can be granted is on the movant. Johnsrud v. Carter, 620 F.2d 29, 33 (3rd Cir. 1980). Claims under RICO are subject to the same pleadings standards as other claims under Rule 12(b)(6). See H.J., Inc. v. Northwestern Bell, 492 U.S. 229, 109 S.Ct. 2893, 2906, 106 L.Ed.2d 195 (1989); Rose v. Bartle, 871 F.2d 331, 355-56 (3rd Cir.1989).

B. RICO Claims

In Counts I and II of the amended complaint, Plaintiffs allege that the Defendants' conduct in unilaterally altering the terms of the collective bargaining agreements and conspiring to do the same violated 18 U.S.C. §§ 1962(c) and (d) of the RICO Act.³ Defendants brought the present motion to dismiss on the grounds that Plaintiffs have failed to plead proper predicate racketeering acts of mail and wire fraud, 18 U.S.C. §§ 1341, 1343, or embezzlement, 18 U.S.C. § 664; Plaintiffs have failed to allege a proper RICO pattern of racketeering activity; Plaintiffs have failed to plead a proper RICO enterprise; and that RICO is unconstitutionally vague and violative of due process.⁴ The Court will address those arguments which are necessary to the disposition of Defendants' 12(b)(6) motion.

1. Mail and Wire Fraud

Racketeering activity, as defined by Section 1961(1) of RICO, includes both state law crimes such as murder or extortion and a specified list of federal crimes such as mail and wire fraud. 18 U.S.C. § 1961(1). In order to successfully plead a pattern of racketeering activity, it must be demonstrated that a defendant has committed at least two predicate acts of racketeering activity within a ten year period. 18 U.S.C. § 1961(5). In the complaint, Plaintiffs allege predicate acts of mail and wire fraud, 18 U.S.C. §§ 1341, 1343. Specifically, Plaintiffs assert that Defendants participated in a scheme to defraud Plaintiffs of economic rights and benefits guaranteed them under the collective bargaining agreements. Plaintiffs contend that as the mails and wires were used to further the alleged scheme, Defendants have committed the requisite predicate acts of mail and wire fraud.

(a) Predicate Acts

The statutory provisions dealing with mail and wire fraud, 18 U.S.C. §§ 1341, 1343, encompass "any scheme to deprive another of money or property by means of false or fraudulent pretenses, representations, or promises." Carpenter v. United States, 484 U.S. 19, 27, 108 S.Ct. 316, 321, 98 L.Ed.2d 275 (1987). The term "to defraud" in this context has the "common understanding" of "wronging one in his property rights by dishonest methods or schemes and usually signifies the deprivation of something of value by trick, deceit, chicane or overreaching." McNally v. United States, 483 U.S. 350, 358, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987) (quoting Hammerschmidt v. U.S., 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968 (1924)).

The elements of a mail fraud statute violation are a scheme to defraud, participation by ...