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MENOLA v. INTERNATIONAL UNION OF ELEVATOR CONSTRUCTORS

June 23, 2005.

DANIEL MENOLA, ANTHONY LYNCH, STANLEY BRZOZOWSKI, THOMAS P. LaDUCA, AND BRADLEY A. STEWART, Plaintiffs,
v.
THE INTERNATIONAL UNION OF ELEVATOR CONSTRUCTORS, AFL-CIO, IUEC LOCAL #2, AND FRANK CHRISTENSEN, Defendants.



The opinion of the court was delivered by: JAMES ZAGEL, District Judge

MEMORANDUM OPINION AND ORDER

On January 6, 2005, Plaintiffs filed a six-count Complaint naming as Defendants the International Union of Elevator Constructors (IUEC), its autonomous Local 2, and Frank Christensen, principal officer of Local 2. Plaintiffs, who are elevator mechanics and Journeyman helpers with Local 2, allege that Defendants engaged in violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Plaintiff Menola, an outspoken critic of Christensen and the union, alleges that Christensen convinced Menola's employer to terminate his employment and thereafter ensured that Menola remain unemployed. Plaintiffs Lynch, Brzozowski, LaDuca and Stewart allege that Defendants failed to assist them when they were laid-off by their employers or otherwise became unemployed, and that Defendants' refusal was part of a course of harassment and retaliation directed against them because of their previous complaints against Defendants. Defendants moved to dismiss the Complaint under Fed.R.Civ.P. 12(b)(6), arguing that the five RICO allegations are improperly pled and that Plaintiff Menola's claim of "potential interference with business advantage" is pre-empted by section 301(a) of the Labor Management Relations Act.*fn1

A Rule 12(b)(6) motion tests the sufficiency of a complaint, not the merits of a case. Autry v. Northwest Premium Servs., Inc., 144 F.3d 1037, 1039 (7th Cir. 1998). I should grant Defendants' Motion to Dismiss only if Plaintiffs cannot prove any set of facts in support of their claim that would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Furthermore, I must accept all well-pleaded factual allegations in the Complaint as true, drawing all reasonable inferences from those facts in the Plaintiffs' favor. Cleveland v. Rotman, 297 F.3d 569, 571 (7th Cir. 2002). Stated another way, I should not grant Defendants' motion "unless no relief could be granted `under any set of facts that could be proved consistent with the allegations.'" Nance v. Vieregge, 147 F.3d 589, 590 (7th Cir. 1998) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)). A. Failure to Plead RICO Violations

  Five of Plaintiffs' six counts allege violations of § 1962(c) of RICO.*fn2 Plaintiffs alleging RICO violations under this section must show "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering." Viacom, Inc. v. Harbridge Merchant Servs., 20 F.3d 771, 778 (7th Cir. 1994) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)). Defendants contend that Plaintiffs failed to properly plead the latter three elements. Addressing these elements in reverse order, I find that Defendants have met their burden and are entitled to dismissal of the Complaint.

  1. Failure to Allege Racketeering Activity

  In Count I of the Complaint, Plaintiff Menola alleges that Defendants "set upon a course of illegal retaliation and actives (sic) designed to punish" him and other members of Local 2 and the IUEC. In Counts III through VI, Defendants Lynch, Brzozowski, LaDuca and Stewart repeat or make similar allegations. According to Plaintiffs, Defendants' illegal activities include "failure to represent members at grievances, mismanaging union affairs, mismanagement of the spending of union funds, retaliation against members, interference with members' employers, [and] attempting to use union power and rules in an illegal and arbitrary manner in order to punish dissident members" such as Plaintiffs. Pl. Compl. Count I ¶ 11, Counts III-VI ¶ 9. Defendants argue that these allegations fall far short of pleading racketeering activity. "Racketeering activity" is a term specifically defined within the RICO statute. See 18 U.S.C. § 1961(1)(A)-(G). None of the allegations in Plaintiffs' original complaint constitute racketeering activity under the statute. However, in their Response to Defendant's Motion, Plaintiffs explain that by alleging mismanagement of union funds they actually alleged "embezzlement of union funds." An act of embezzlement of union funds indictable under 29 U.S.C. § 501(c) does constitute racketeering activity under § 1961(1)(C). That said, an act does not rise to the level of "embezzlement of union funds" under RICO unless the act "enrich[ed] the officers (or their friends) at the expense of the union." United States v. Vandenbergen, 969 F.2d 338, 339 (7th Cir. 1992).

  Plaintiffs failed to allege that any of Defendants' acts enriched union officers at the expense of the union, or that Christensen's actions "feathered [his] own nest? to the detriment of the union." Id. Even construed as broadly as Plaintiffs' Response would like, the allegations do not rise to the level of a RICO violation. In reaching this conclusion, I do not believe that I am holding Plaintiffs to an unduly high pleading standard. No actual allegation of embezzlement of union funds appears in the Complaint, nor are there sufficient facts in the Complaint to support an inference that Plaintiffs intended to or could have alleged of embezzlement of funds within the meaning of § 501(c) and § 1961. Plaintiffs clearly failed to plead a racketeering activity.

  2. Failure to Allege a Pattern of Racketeering Activity

  Even if Plaintiffs had successfully alleged racketeering activity, in order to withstand Defendants' Motion their Complaint must also have alleged a "pattern of racketeering," which is a "crucial element of a section 1962 claim." See Elliot v. Chicago Motor Club Ins., 809 F.2d 347, 349 (7th Cir. 1986). Failure to plead the pattern element renders a complaint inadequate as a matter of law. See J.D. Marshall Int'l, Inc. v. Redstart, Inc., 935 F.2d 815, 820 (7th Cir. 1991) (concluding that plaintiff's inability to plead a RICO pattern rings "death knell" for RICO count in proposed amended complaint).

  A pattern of racketeering activity is comprised of at least two acts of racketeering activity (predicate acts) within a 10-year period. 18 U.S.C. § 1961(5). These activities must be continuous and related.

 
[F]or the predicate acts to be sufficiently continuous to amount to a pattern of racketeering activity, "the predicate acts must be ongoing over an identified period of time so that they can be fairly viewed as constituting separate transactions, i.e., `transactions somewhat separated in time and place.'" And at the same time, there must be a "relationship among activities — i.e., activities leading up to coordinated action."
Medical Emergency Service Assoc., S.C. v. Foulke, 844 F.2d 391, 395 (7th Cir. 1988) (citations omitted). "Predicate acts are related if the acts `have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.'" Hartz v. Friedman, 919 F.2d 469, 472 (7th Cir. 1990) (quoting H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 240 (1989) (citation omitted)). Four factors determine whether a RICO pattern exists, including "(1) the number and variety of predicate acts and the length of time over which they were committed; (2) the number of victims; (3) the presence of separate schemes; and, (4) the occurrence of distinct injuries." Hartz, 919 F.2d at 472 (citations omitted).

  At best, Plaintiffs' five RICO claims allege that Defendants failed to assist each of them in maintaining or securing employment when they were laid off or otherwise dismissed by their employers; in one case, Defendants are alleged to have interfered actively with a Plaintiff's employment status. Plaintiffs also allege practices including the mismanagement of union affairs and union funds but fail to connect these allegations in any way to the primary allegation of failing to adequately represent and assist union members. The mere mention of these acts (or, in Plaintiffs' words, "practices") does not help Plaintiffs to establish a pattern of racketeering activity. Moreover, Plaintiffs generally failed to provide any dates on which the alleged acts occurred so as to establish the presence of a pattern of racketeering.*fn3 Plaintiffs fail to offer any factual allegations that the acts against them were related, continuous or the product of a scheme against them, although they do offer this conclusion. In fact, throughout the Complaint Plaintiffs offer mostly conclusory allegations about Defendants' activities, e.g., Plaintiffs were "harassed, retaliated against and singled out for [their] legitimate complaints against the union activities," or "the activities of the defendants are all part of an illegal course of conduct designed to punish dissident union members for speaking out . . ."). Pl. Compl. Count III-VI ¶¶ 6, 8.

  While the Complaint may be construed to allege five predicate acts against five different victims, nothing about the Complaint suggests the existence of separate schemes that comprise a pattern. In their Response to Defendants' Motion, Plaintiffs assert that "[o]ver the course of three or four years the union, Local, and its leaders have set forth a pattern of racketeering activity towards the individual plaintiffs" and that the "element of continuity has been plead with specificity." Once again, however, Plaintiff is offering nothing more than a conclusion that Defendants' activities were part of a pattern of racketeering activity. Conclusions of this nature, lacking factual support, do not satisfy the requirements of § 1962(c). Jones v. Lampe, 845 F.2d 755, 758 (7th Cir. 1988) ("[m]erely stating these conclusions [that defendants engaged in fraud, extortion and conversion and that their actions constituted schemes], however, does not make the allegations sufficient . . . plaintiffs' characterization of events must be consistent ...


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